Exhibit 10.55
Product Development and Patent License Agreement - Page 1
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EXECUTION COPY
PRODUCT DEVELOPMENT AND
PATENT LICENSE AGREEMENT
BETWEEN
PAR PHARMACEUTICAL, INC.
AND
NORTEC DEVELOPMENT ASSOCIATES, INC.
Dated: As of October 22, 2003
Product Development and Patent License Agreement - Page 2
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PRODUCT DEVELOPMENT AND PATENT LICENSE AGREEMENT
TABLE OF CONTENTS
1. Definitions. 1
2. Development of New Products. 4
3. Par's Exclusivity. 5
4. Patent and Know-How License. 6
5. Compensation to Nortec - Advance Payments and Royalties. 8
6. Additional Obligations Relating to Product Development and Marketing. 9
7. Manufacture of New Products. 10
8. Termination of Development Rights. 12
9. Terminination of License or Individual Product. 15
10. Confidentiality. 16
11. Representations and Warranties. 16
12. Indemnification. 18
13. Limitation on Liability. 19
14. Ownership of Inventions. 19
15. Stock Options. 20
16. Publicity. 21
17. Force Majeure. 21
18. Arbitration. 22
19. Notices. 22
20. Miscellaneous. 23
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PRODUCT DEVELOPMENT AND PATENT LICENSE AGREEMENT
This PRODUCT DEVELOPMENT AND PATENT LICENSE AGREEMENT (the "AGREEMENT")
is dated as of October 22, 2003 (the "Effective Date")and is between NORTEC
DEVELOPMENT ASSOCIATES, INC. ("NORTEC"), a New Jersey corporation with an office
at 000 Xxxxx Xxxx, Xxxxxx, XX 00000, and PAR PHARMACEUTICAL, INC. ("PAR"), a
Delaware corporation with an office at 000 Xxxx Xxxxxxxxx, Xxxxxxxxx Xxxx, Xxx
Xxxxxx 00000.
BACKGROUND OF THIS AGREEMENT
Par is in the business of manufacturing and selling generic
pharmaceutical products. Nortec is in the business of developing pharmaceutical
products, including products utilizing the proprietary so-called "CPS
Technology". Par is interested in having Nortec develop a number of
pharmaceutical products for Par, and Nortec desires to do so. Par and Nortec are
entering into this Agreement to set forth the terms and conditions under which
Nortec will develop various pharmaceutical products for Par and arrange to
manufacture those products for clinical testing and biostudies. In consideration
of the mutual promises set forth in this Agreement, Nortec and Par hereby agree
to the provisions of this Agreement.
1. DEFINITIONS.
The following terms shall have the following meanings when used in this
Agreement.
(a) "ACTIVE MOIETY" means, with respect to any New Product, the molecules
or ions having the chemical structure (the "Base Chemical Structure") which is
contained in and is responsible for the physiological or pharmacological action
of that New Product. All salts (including salts with hydrogen or coordination
bonds), esters, complexes, chelates, clathrates or other such structures which
involve the Base Chemical Structure shall be understood to contain such Active
Moiety, but such appended portions are not part of the Active Moiety.
(b) "ADVANCE PAYMENTS" is defined in Section 5(b) below.
(c) "AFFILIATE" with respect to any party means any person, entity or
organization which either directly or indirectly controls, is controlled by, or
is under common control with that party. For these purposes, the term "control"
by a person, entity or organization means possession by that person, entity or
organization of the power to direct, or cause the direction of, any other entity
or organization.
(d) "BULK PRODUCT" means with respect to any New Product that product in
an oral solid dosage form, bulk packaged for intermediate use in bulk containers
which will subsequently be packaged in its final packaging form by Par for Par's
analytical stability studies and pilot and pivotal bio equivalency studies.
(e) "CONTRACT YEAR" means each consecutive 12-month period beginning on
the Effective Date of this Agreement.
(f) "CPS OROCEL" means CPS Orocel LLC, a Delaware limited liability
company.
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(g) "CPS PATENT RIGHTS" means collectively all rights licensed by Nortec
from CPS Orocel under (1) United States Patent Number 6,354,728 entitled "Device
for producing a pourable product with a guide vane therein", issued on March 12,
2002; (2) United States Patent Number 6,449,869 entitled "Device and Method for
Drying Pourable Products", issued September 17, 2002, (3) Patent Application,
entitled "Method of Preparing Biologically Active Formulations" filed with the
USPTO on December 12, 2002, and (4) application for a United States Patent
entitled "Method of Preparing Biologically Active Formulations", filed December
12, 2002, and reissues, extensions, continuations, continuations-in-part or
divisions of any of the foregoing.
(h) "CPS TECHNOLOGY" means the mechanism and technique for developing
pharmaceutical products utilizing what is termed "complex perfect sphere"
technology and which is currently the subject of the CPS Patent Rights.
(i) "DEVELOPMENT FEES" is defined in Section 8(c)(1) below.
(j) "DEVELOPMENT WORK" is defined in Section 2(c)(ii) below.
(k) "FDA" means the United States Food and Drug Administration.
(l) "GAT" means Xxxxx Air Techniques, Inc., a New York corporation.
(m) "KNOW-HOW" means any idea, invention, information, data and other
know-how, whether or not patentable, except that which is otherwise claimed in
the CPS Patent Rights, which are owned by or to which Nortec has rights to or
develops or possesses on or after the date of this Agreement and which are
necessary or useful in the evaluation, development, registration, manufacture,
use or sale of any of the New Products, including, but not limited to, the
following:
(1) copies of all papers relating to patents applied for in the
Territory which relate in any way to any of the New Products;
(2) all data and/or information regarding the procedures for
manufacturing any of the New Products;
(3) all data and/or information, including summaries and completed
case reporting forms, concerning the testing, manufacture,
pharmacology and clinical use of any of the New Products; and
(4) the CPS Technology to the extent that it is not claimed in the
CPS Patent Rights.
(n) "MODIFIED ROYALTIES" is defined in Section 8(c)(2) below.
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(o) "NET SALES" with respect to any New Product means the amounts
invoiced in the first bona fide arm's-length sales of that New Product to
independent unaffiliated third parties by PAR and or by any affiliate or
designee of Par, less the following deductions in each case to the extent
related specifically to that New Product: (i) any sales, use or excise taxes
included in such amount, (ii) discounts allowed and taken, (iii) amounts
refunded or credited by reason of returns, allowances for retroactive price
adjustments, or payments made by Par to independent unaffiliated third parties
as part of rebate arrangements, (iv) charges for freight, handling and
transportation separately itemized on the invoice; and (v) charge-back rebates
and state or federal Medicare or Medicaid rebates. In the event that a New
Product is sold to a customer at a discount which exceeds the discounts afforded
such customer for other Par pharmaceutical products, the Net Sales of that New
Product to such customer shall be deemed to be the average undiscounted Net
Sales of that New Product to all customers for the period in question discounted
to a level consistent with the average discount afforded to such customer on
other pharmaceutical products.
(p) "NEW PRODUCT" means any bulk or finished pharmaceutical product which
is developed or manufactured by Nortec and/or its Affiliates pursuant to this
Agreement.
(q) "NORTEC HOLDING" means Nortec Holding LLC, a Delaware limited
liability company that, as of the date of this Agreement, is the sole
shareholder of Nortec.
(r) "PRIORITY LIST" is defined in Section 3(b) below.
(s) "RIGHTS TERMINATION" is defined in Section 8(a) below.
(t) "ROYALTIES" is defined in Section 5(c) below.
(u) "STOCK PURCHASE AGREEMENT" means the Stock Purchase and Shareholders
Agreement, dated as of the date of this Agreement, among Par, Nortec Holding and
Nortec.
(v) "THIRD PARTY CONTRACT" is defined in Section 4(e) below.
(w) "TWO EXISTING AGREEMENTS" means collectively (1) the Patent and Know
How License Agreement, dated as of May 24, 2002, between Par and Nortec relating
to the development, manufacture and sale of a ********* ******* **********
product and (2) the Patent and Know How License Agreement, dated as of June 14,
2002, between Par and Nortec relating to the development, manufacture and sale
of a ********* ******* *********** product.
(x) "TERRITORY" means Canada and the United States of America, including
its territories and possessions, and the Commonwealth of Puerto Rico.
2. DEVELOPMENT OF NEW PRODUCTS.
(a) During each Contract Year, Par shall have right to ask Nortec to
start Development Work on up to three New Products selected by Par in Par's
reasonable discretion. Par shall make a good faith effort to ask Nortec to start
Development Work on at least one New Product each year during the first four
Contract Years. Nortec agrees that it will develop such New Products for Par, up
to a maximum of twelve New Products, and Nortec shall begin that Development
Work on such New Products reasonably promptly after being requested to do so by
Par.
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(b) Par shall supply to Nortec all active pharmaceutical ingredients and
inactive raw material ingredients reasonably required for Nortec's Development
Work in connection with each New Product and for Nortec's manufacture of Bulk
Product for Par's pilot and pivotal bio equivalency studies (referred to here as
"CLINICAL SUPPLIES MANUFACTURING") under this Agreement. Par shall use
reasonable commercial efforts to provide in a timely manner all analytical
testing services that are required to support Nortec's development and Clinical
Supplies Manufacturing activities under this Agreement. Nortec will notify Par
in writing of its requirement for materials, and Par will furnish those
materials in a timely manner. Nortec will not charge any additional fee for
manufacturing Bulk Product for the pilot and pivotal biostudies, other than the
amounts otherwise set forth in this Agreement.
(c) Nortec shall develop each New Product in accordance with a
development plan, as follows:
(1) As soon as reasonably practicable following identification of
each New Product for development by Nortec, Par and Nortec shall prepare a
mutually acceptable plan for the development of such New Product (referred to
here as the "DEVELOPMENT PLAN"). Each Development Plan shall set forth in
writing in reasonable detail the responsibilities of Nortec in developing such
New Product which shall be responsibilities typical in pharmaceutical product
development, including relevant deliverables and timelines. Nortec and Par shall
work together to mutually work out the details of each Development Plan.
(2) Nortec shall develop each New Product in accordance with the
Development Plan for that New Product; such work by Nortec is referred to in
this Agreement as the "DEVELOPMENT WORK".
(3) Nortec shall use its commercially reasonable efforts to perform
the Development Work for each New Product in accordance with the timelines
provided in the Development Plan for that New Product and deliver the
deliverables to Par as provided in that Development Plan.
(4) Nortec shall keep Par fully informed of its progress toward the
completion of the Development Work for each New Product and Par shall keep
Nortec informed regarding its supply of materials and its regulatory activities.
(5) Nortec shall maintain complete and proper records of its
Development Work for each New Product.
(d) Nortec shall provide all documents and information in its possession
that are reasonably required by Par to support Par's filing and prosecution of
an ANDA or other application with the FDA to register any New Product. Any such
application shall be owned by Par and submitted in its name, and Par shall have
the final authority with respect to all decisions concerning the content,
compilation, prosecution, amendment or supplementation of any such ANDA. Nortec
shall not have any obligation to carry out any analytical, stability or clinical
studies in connection with its duty to provide information to Par that Nortec
has in its possession. Nortec shall exercise diligent efforts to assist Par in
the review and compilation of reports to be included in any such ANDA
application. Nortec shall have the right to consult with Par with respect to the
preparation of any such ANDA for any New Product to be filed with the FDA.
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(e) Each party shall provide the other party with all information in its
possession or control that is necessary for the other party to comply with any
applicable reporting requirements. Each party shall promptly notify the other
party of any comments, responses or notices received from, or inspections by,
the FDA or other applicable competent authorities which relate to or may impact
a New Product. Each party shall promptly inform the other party of any responses
to such comments, responses, notices or inspections and the resolution of any
issue raised by the FDA or other competent authorities.
3. PAR'S EXCLUSIVITY.
(a) Commencing on the date that Par asks Nortec to begin development work
on any New Product, Nortec shall not, and shall cause its Affiliates not to,
develop, make, have made, sell, offer for sale, distribute or otherwise make
available (or contract with any third party to do any of the foregoing) that New
Product or any other pharmaceutical product that has the same Active Moiety as
that New Product in the Territory for its own (or such Affiliates own) benefit
or for any other party. The prohibition in the preceding sentence shall
automatically end, however, with respect to any New Product (i) immediately if
and when Par abandons all work involving that New Product under this Agreement
pursuant to Section 9(b) below or (ii) one year following the expiration or
termination of this Agreement with respect to that New Product for any other
reason. For the avoidance of doubt, nothing in this Section 3(a) shall in any
way limit or prohibit Nortec or any Affiliate of Nortec from (1) developing,
making, having made, selling, offering for sale, distributing or otherwise
making available (or contracting with any third party to do any of the
foregoing) any pharmaceutical product that competes with that New Product, as
long as that pharmaceutical product does not contain the same Active Moiety as
that New Product, and (2) manufacturing, developing, selling, distributing or
servicing any Non-CPS Equipment, or providing technical support for any such
equipment, even if that equipment is utilized by any other party to manufacture
any pharmaceutical product that is the same as that New Product or has the same
Active Moiety as that New Product. Non-CPS Equipment is equipment that is not
being provided specifically to a customer for the manufacture of products
embodying the CPS Technology
(b) Within 90 days after the date of this Agreement, Par shall provide to
Nortec a written list (referred to here as the "PRIORITY LIST") that identifies
up to twelve drugs. Within 45 days after receiving the Priority List, Nortec
will notify Par if Nortec or any of its Affiliates have previously granted any
option, right or license to any third person or entity with respect to any of
CPS Patent Rights or Know-How relating to the manufacture, use or sale within
the Territory of any drugs identified in that Priority List; in that event, any
such drug shall be removed from the Priority List, and Par shall have the right,
within 45 days thereafter, to substitute a different drug for the drug that is
so removed from the Priority List. In the event that any third party requests
that GAT or any Affiliate of GAT (including CPS Orocel) begin discussions which
would involve GAT or that Affiliate developing or producing any drug that is
identified on the Priority List utilizing the CPS Technology, Nortec shall
promptly notify Par of that request. That notice will identify only the drug
involved; that notice will not identify the third party. Par shall have fifteen
business days after receiving that notice to provide a notice to Nortec which
sets forth a request for Nortec to begin development work (pursuant to Section
2(a) above) on a New Product that utilizes that drug. If Par provides such a
notice within that 15-business day period, then Nortec shall begin development
work on that New Product for Par (pursuant to Section 2(a) above), and Nortec,
GAT and their respective Affiliates shall not perform or permit to be performed
by their Affiliates any development work or production of any product that
utilizes the drug for that third party or for any other party. If Par does not
provide such a notice within that 15-business day period, then that drug will be
automatically and permanently be removed from the Priority List, and thereafter
Nortec, GAT and their Affiliates may conduct development work and production of
any product utilizing the CPS technology involving that drug for that third
party or for any other party. The restriction set forth in the fifth sentence of
this Section 3(b) shall automatically end, however, with respect to any drug if
and when Par abandons all work under this Agreement involving the New Product
that utilizes that drug.
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4. PATENT AND KNOW-HOW LICENSE.
(a) Subject to the terms and conditions of this Agreement, Nortec hereby
grants to Par, and Par hereby accepts, a license of the CPS Patent Rights and
the Know-How to make, import, use and sell each of the New Products in the
Territory. No license is granted for any other product than the New Products
that are developed by Nortec pursuant to Section 2 above. No license is granted
for any New Product anywhere outside the Territory. Except as otherwise provided
in Sections 8 or 9 below, this license with respect to any New Product shall
remain in effect (1) with respect to any patent, until the expiration of that
patent, including any reissues, extensions, continuations, continuations-in-part
or divisions of that patent, and (2) with respect to any Know-How, for as long
as Par is manufacturing and marketing that New Product.
(b) Except as provided in the next sentence, the license set forth in
Section 4(a) above is exclusive; in other words, for as long as that license
remains in effect under Section 4(a) above with respect to any New Product,
Nortec and its Affiliates shall not grant to any other person or entity any
license to use the CPS Patent Rights or the Know-How anywhere within the
Territory for the purpose of making, using or selling that New Product or any
other pharmaceutical product that contains the same Active Moiety as that New
Product; provided, however, that nothing herein shall prevent Nortec and its
Affiliates from generally selling, distributing or servicing any Non-CPS
Equipment, or providing technical support for any such equipment, even if that
equipment is utilized by any other party to manufacture any pharmaceutical
product that is the same as that New Product or has the same Active Moiety as
that New Product. The license set forth in Section 4(a) above shall become
non-exclusive with respect to any New Product if at any time after three years
from the date of the launch of that New Product, the Net Sales of that New
Product fall below *** of the total generic solid dosage market for the drug
that is contained in that New Product; in that event, Nortec shall have the
right to grant to third parties non-exclusive licenses to the CPS Patent Rights
and Know-How in the Territory relating to that New Product under such terms and
conditions as Nortec deems appropriate.
(c) Within 14 days after Par asks Nortec to start development work on a
New Product (pursuant to Section 2(a) above), Nortec will disclose to Par,
subject to the confidentiality provisions of Section 10 below, all then-existing
Know-How not previously disclosed to PAR to the extent necessary for Par to
describe the manufacture of that New Product in connection with any ANDA or
equivalent document. Thereafter, Nortec shall promptly identify and disclose to
PAR, to the extent PAR requests disclosure, any new or additional Know-How which
comes into the possession or control of Nortec or any of its Affiliates, again
subject to Section 10 below and to the extent necessary for Par to describe the
manufacture of that New Product in connection with any ANDA or equivalent
document. Nortec shall provide to Par, at no additional cost to Par, such
assistance as Nortec deems necessary for Par to describe the manufacture of that
New Product under this Agreement.
(d) Par hereby acknowledges that it does not have, and shall not acquire,
any interest in any trademarks or trade names owned or licensed by Nortec, GAT
or any of their Affiliates that may appear on the labels or packaging materials
for any New Product.
(e) Except as expressly provided in this Section 4(e), Par shall not
assign or sublicense all or any portion of this Agreement or all or any portion
of the license set forth in Section 4(a) above without the prior written consent
of Nortec, which consent shall not be unreasonably withheld. Par may, however,
enter into one or more contracts with third parties (referred to here as "THIRD
PARTY CONTRACTS") pursuant to which those third parties have the right to sell
one or more New Products, subject to the limitations set forth in subparagraphs
(1) through (5) below, inclusive.
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If those limitations are satisfied with respect to any Third Party
Contract, then Par shall have the right to sublicense the CPS Patent Rights and
the Know-How to the third party under that Third Party Contract solely for the
purpose of enabling that third party to sell any New Product that is covered by
such Third Party Contract. The applicable limitations are as follows:
(1) Any such sublicense of the CPS Patent Rights and Know-How to any
such third party is subject to the prior written consent of Nortec for each
subject New Product, which consent shall not be unreasonably withheld or
delayed;
(2) Prior to entering into any such Third Party Contract, Par shall
consult with Nortec regarding the proposed Third Party Contract and shall
provide Nortec with such information as Nortec may reasonably request relating
to that proposed Third Party Contract;
(4) Par shall remain fully liable for all obligations under this
Agreement, notwithstanding any sublicense set forth in any Third Party Contract;
and
(5) Par shall not, and shall not have any right to, sublicense or
assign any other rights under this Agreement, including without limitation
providing a sublicense to develop or manufacture any products utilizing the CPS
Patent Rights or the Know-How, sublicensing or assigning any right under Section
7(c) below to purchase any equipment that embodies the CPS Technology, or
assigning any right to utilize any equipment purchased by Par pursuant to
Section 7(c) below.
5. COMPENSATION TO NORTEC - ADVANCE PAYMENTS AND ROYALTIES.
(a) In consideration for the services to be provided by Nortec under this
Agreement and the license of the CPS Patent Rights and Know-How set forth in
this Agreement, Nortec hereby acknowledges that Par has paid to Nortec the
amount of Five Hundred Thousand Dollars ($500,000) and Par shall additionally
pay to Nortec the Advance Payments set forth in Section 5(b) below and the
Royalties set forth in Section 5(c) below.
(b) Par shall pay to Nortec payments (referred to here as "ADVANCE
PAYMENTS") totaling Two Million Five Hundred Thousand Dollars (US$2,500,000).
Par will pay the Advance Payments as follows: $500,000 on each of October 15,
2003, December 15, 2003, June 15, 2004, September 15, 2004, January 15, 2005.
[In economic terms, the Advance Payments represent advance payments of royalties
that would otherwise have been payable with respect to the New Products.]1
(c) Par shall pay to Nortec a royalty (individually a "ROYALTY" and
collectively the "ROYALTIES") with respect to each New Product based on the Net
Sales and the market share of that New Product, as shown in the following table:
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ROYALTY AMOUNT FOR EACH PAR'S MARKET SHARE (MS) OF THE TOTAL
NEW PRODUCT SUSTAINED RELEASE SOLID DOSAGE MARKET FOR
(% OF NET SALES) THAT NEW PRODUCT
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**% MS > **%
-
------------------------------------------------------------------------------
****% **% > MS > **%
-
------------------------------------------------------------------------------
*% **% > MS > **%
-
------------------------------------------------------------------------------
***% **% > MS > **%
-
------------------------------------------------------------------------------
***% MS < **%
------------------------------------------------------------------------------
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For these purposes, the market share of each New Product shall be based
on the total sales reported for that New Product divided by the total sales of
the branded and generic products in all dosage forms, as reported by IMS at the
end of each calendar year
(d) In the event that Par enters into any Third Party Contract as
permitted pursuant to Section 4(e) above, then solely for purposes of
calculating the Royalty applicable to sales of New Product made by a third party
under that Third Party Contract, Par shall pay to Nortec the Royalty shown in
the table in Section 5(c) above, with the "Net Sales" in that case equal to the
total consideration (both cash and non-cash) received by Par under that Third
Party Contract.
(e) Par shall pay Royalties to Nortec with respect to each New Product
during such time as Par (or its subcontractor) offers the New Product for sale
in the Territory until the date that is fifteen (15) years from the date of
final FDA approval to market such New Product in the Territory. Par shall pay
the Royalty to Nortec with respect to each New Product within 45 days after the
end of each calendar quarter based on the Net Sales of that New Product made
within that calendar quarter and based on Par's reasonable estimate at that time
of the market share of that New Product. If at any time after making any
quarterly payment Par or Nortec determines that the actual market share of that
New Product is different than the market share that was used by Par in
determining the amount of that payment, Par and Nortec shall promptly make an
appropriate payment to the other to account for that difference. Any other
discrepancies in the calculation and payment of the Royalty shall be reconciled
promptly after the delivery of each quarterly sales report pursuant to Section
6(e) below.
(f) While this Agreement is in effect and for a period of six (6) months
thereafter, Nortec shall have the right at its expense to have an independent
certified public accounting firm reasonably acceptable to Par examine the
records described in Section 6(e) below (excluding those records, if any, which
relate to the qualitative commentary of Section 6(e) below) and Section 5.2(c)
above. Nortec may have those records examined during reasonable business hours,
not more often than once each calendar year for then-current year and for
then-preceding three (3) years. That examination shall be made for the sole
purpose of determining whether the amount of the Royalties has been correctly
calculated and paid. That independent certified public accounting firm shall be
required to treat as confidential, and not disclose to Nortec, any information
that it has obtained, except such information which would properly be contained
in a sales report provided by Par to Nortec under this Agreement. In addition,
that independent certified public accounting firm shall not disclose to any
other party any information obtained as a result of such examination, except as
may be required by binding legal process or government requirements, and then
only on reasonable prior notice and in consultation with Par.
6. ADDITIONAL OBLIGATIONS RELATING TO PRODUCT DEVELOPMENT AND MARKETING.
The provisions of this Section 6 shall apply with respect to each New
Product starting on the date that Par asks Nortec to start development work on
that New Product until such time that Par abandons all work involving that New
Product under this Agreement.
(a) PROCEDURES FOR FILING AN ANDA. (1) Par shall use reasonable
commercial efforts to prepare, compile and submit an ANDA for each New Product
in the Territory and, following such submission, Par shall diligently prosecute
that ANDA with the FDA with a view to obtaining timely approval for that New
Product.
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(2) At such time or times as may be reasonably requested by Nortec, Par
shall provide Nortec with written reports on its efforts to obtain from the FDA
marketing approval in the Territory for that New Product, including supporting
documentation reasonably requested by Nortec. Nortec shall have the right to
inspect the ANDA and associated correspondence for each New Product at any time
on prior notice during normal business hours during the term of this Agreement.
(b) MARKETING EFFORTS. Par will use reasonable commercial efforts to
market each New Product in the Territory during the term of the Agreement. Par
shall furnish and label each New Product in compliance with the specifications
and requirements set forth in the FDA's marketing approval documents.
(c) ADVERSE DRUG REACTIONS. Par and Nortec shall promptly, after learning
thereof, notify the other in writing of any report of adverse, or possible or
suspected adverse, effects of any New Product. Whenever either party intends to
report the same to any governmental authority, that party shall, when feasible,
consult with the other party with respect to such notification. Specifically,
and without limiting the foregoing, Par shall provide Nortec with adverse event
data for filing with the FDA.
(d) MARKET REPORTS. Par and Nortec shall meet on a quarterly basis during
the first year following the initial launch of each New Product, on a
semi-annual basis during each of the second and third years following that
initial launch, and on an annual basis during each of the fourth and fifth
years. At those meetings, which will be at a location(s) specified by Par, Par
will report on the ongoing sales performance of each New Product in the
Territory, including without limitation marketing approaches, promotion and
advertising campaigns, sales plans and results, and performance against
competitors. Each of Par and Nortec shall bear all of its own costs and expenses
relating to those meetings. At Nortec's request, Par shall provide similar
information at other times, provided that all information disclosed at any of
those meetings or otherwise shall only be information prepared or maintained by
Par in the ordinary course of its business.
(e) NET SALES REPORTS. Beginning ninety (90) days after the end of the
first calendar quarter in which Net Sales of each New Product are first made,
and ninety (90) days after the end of each subsequent calendar quarter during
the term of this Agreement, Par shall deliver or cause to be delivered to Nortec
a written report showing the Net Sales of each New Product during the preceding
quarterly period.
7. MANUFACTURE OF NEW PRODUCTS.
(a) For all New Products which employ CPS Technology Par will negotiate
in good faith with GAT to enter into one or more Supply Agreements with GAT
pursuant to which GAT will manufacture, at GAT's facility, all CPS pellets for
such New Products (in other words, pellets that are formulated or manufactured
utilizing the CPS Technology), except as provided in Section 7(c) below. It is
envisioned that those Supply Agreements will, among other things, set forth the
terms and conditions under which Par shall purchase all of its requirements for
CPS pellets for all New Products exclusively from GAT and GAT shall sell to Par
all of Par's requirements for CPS pellets for all New Products for sale in the
Territory. It is further envisioned that those Supply Agreements will contain
such other provisions with respect to forecasting, orders, quality control,
adverse event reporting, warranties and indemnities as is usual and customary in
commercial agreements of that type. Within the Territory, GAT shall sell such
CPS pellets for each such New Product exclusively to Par. Except as otherwise
expressly permitted under this Agreement, Par shall not manufacture any CPS
pellets for any New Products itself or purchase any CPS pellets for any New
Products from any other source for sale in the Territory while this Agreement is
in effect.
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(b) The provisions of this Section 7(b) shall apply for determining the
price that Par will pay to GAT for manufacturing CPS pellets for each New
Product under the Supply Agreements. On or about, but no later than the later of
(1) the date on which Par submits a New Product for pivotal bio equivalency
studies and (2) the date on which that New Product demonstrates stability under
accelerated stability conditions, GAT will calculate and present to Par GAT's
transfer price to supply to Par the CPS pellets for that New Product, based on
the process used to manufacture those CPS pellets and Par's anticipated supply
requirements for those CPS pellets as defined and known at that time. GAT's
transfer price shall not be greater than the transfer price charged by GAT for
manufacturing similarly situated products (if any) developed or manufactured by
GAT utilizing the CPS Technology. That transfer price for the CPS pellets for
that New Product may thereafter only be adjusted by GAT to reflect any
subsequent changes in (x) the process used to manufacture those CPS pellets, (y)
Par's supply requirements for those CPS pellets, or (z) inflation costs during
the period commencing with the establishment of the transfer price and ending
with the time of commercial launch of that New Product. In the event that Par
and GAT are not able mutually to agree on a transfer price at the time specified
in this Section 7(b), Par may, at its sole option, elect to terminate this
Agreement with respect to that New Product without any further obligation to
Nortec or to GAT with respect to such New Product.
(c) At any time after Par has entered into a binding Supply Agreement (or
Supply Agreements) with GAT to have GAT manufacture CPS pellets for sale (not
development) for two New Products, Par shall have the right to purchase from GAT
equipment that embodies the CPS Technology. Par may use that equipment solely
for the purpose of producing CPS pellets for New Products, other than the New
Products that are the subject of that Supply Agreement (or Supply Agreements)
and other than the products developed under the Two Existing Agreements. The
purchase price for that equipment will be negotiated in good faith at that time
by Par and GAT. In addition to the purchase price for that equipment, and as a
condition to that purchase, Par shall pay to GAT an additional amount equal to
***% of the Net Sales of any New Product that is manufactured using that
equipment; the calculation and payment of that amount shall be made in the same
manner and at the same time that the Royalty is paid to Nortec pursuant to
Section 5 above. Except as specifically provided in this Section 7(c), GAT shall
not have any obligation to sell any equipment that embodies the CPS Technology,
either to Par or to any other party, that would allow Par to have access to
equipment that embodies the CPS Technology.
(d) To the extent that any part of the process used in manufacturing any
New Product for sale (not development) does not involve the
manufacture of CPS pellets and Par decides (in its sole discretion)
to contract with any party (referred to here as an "UNAFFILIATED
PARTY") that is not an Affiliate of Par to provide such manufacturing
services for such New Products (referred to here as the "NON-CPS
MANUFACTURING SERVICES"), then Par shall give GAT a "right of first
refusal" to provide those Non-CPS Manufacturing Services, as follows:
Promptly after Par has negotiated with the Unaffiliated Party to
provide the Non-CPS Manufacturing Services, Par shall send a notice
to GAT (the "INTENT NOTICE") which states that Par intends to enter
into a contract with an Unaffiliated Party to provide Non-CPS
Manufacturing Services. The Intent Notice shall include a copy of any
written offer, term sheet or proposed contract setting forth the
price and the other terms and conditions of those Non-CPS
Manufacturing Services with that Unaffiliated Party. GAT shall have
the right in its sole discretion, to be exercised by notice (the "GAT
NOTICE") given to Par within five (5) business days after GAT's
receipt of the Intent Notice, to enter into a contract with Par to
provide those Non-CPS Manufacturing Services for Par. If GAT provides
a GAT Notice within that 5-day period, then Par shall not enter into
an agreement with the Unaffiliated Party to provide those Non-CPS
Manufacturing Services, but instead Par shall enter into an agreement
with GAT pursuant to which GAT shall provide those Non-CPS
Manufacturing Services to Par, at the same price and on the same
terms and conditions included with the Intent Notice.
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If GAT does not provide a GAT Notice within that 5-day period, then
Par shall have the right to enter into a contract with the
Unaffiliated Party to provide those Non-CPS Manufacturing Services,
on terms no less favorable to Par than the terms and conditions
included with the Intent Notice, provided that such a contract with
the Unaffiliated Party is signed within 90 days of the date of the
Intent Notice. If for any reason Par does not enter into such a
contract with the Unaffiliated Party within that 90-day period, then
Par may not enter into such a contract with the Unaffiliated Party as
contemplated by the Intent Notice without again providing GAT with
the "right of first refusal" under this section 7(d), and any other
or future contract for such Non-CPS Manufacturing Services shall
again become subject to the provisions of this Section 7(d).
(e) Nothing in this Agreement shall in any way restrict, or require
payments by Par in respect of, Par's right to conduct coating, packaging,
labeling or other post CPS Technology operations for all New Products at any
facility (either Par's or any third party).
8. TERMINATION OF DEVELOPMENT RIGHTS.
(a) Par shall have the right in its sole discretion, as provided in this
Section 8, to terminate its right to have Nortec develop New Products under this
Agreement. Such a termination by Par is referred to here as the "RIGHTS
TERMINATION". Par shall have the right to exercise the Rights Termination only
if that Rights Termination becomes effective on and as of October 15, 2005 and
only by providing notice to Nortec of Par's exercise of the Rights Termination
not later than October 15, 2005. Nortec shall provide a notice to Par, not
earlier than April 1, 2005 and not later than July 15, 2005, reminding Par of
Par's right to exercise the Rights Termination. If Par does not exercise the
Rights Termination by providing such a notice to Nortec by October 15, 2005,
then Par will not have any right to exercise the Rights Termination. If, and
only if, Par exercises the Rights Termination by providing such a notice to
Nortec by October 15, 2005, then the remaining provisions of this Section 8
shall apply.
(b) Par shall not have any further right to have Nortec develop any New
Products not previously initiated under this Agreement. Without limiting the
forgoing, Par will not have any right to have Nortec develop any New Products
based on any of the drugs identified in the Priority List that have not
previously been initiated, and there shall not be any restriction under this
Agreement on the rights of Nortec, GAT or any of their Affiliates to develop or
produce any such drugs for any third parties.
(c) Par, Nortec and GAT shall continue to develop any New Products and
manufacture CPS pellets for any New Products that are under development prior to
the Rights Termination. In that event, however, in lieu of paying Royalties to
Nortec as provided in Section 5(c) above, Par shall pay to Nortec the following
Development Fees and Modified Royalties with respect to such New Products:
(1) Par shall pay to Nortec the following amounts (referred to here
as the "DEVELOPMENT FEES") for each such New Product, subject to Section
8(d) below:
(i) the sum of $125,000 for each such New Product, payable within
ten days after the date of the Rights Termination;
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(ii) the sum of $375,000 for each such New Product on the date
that Nortec submits to Par the formulation and physical
specifications of immediate release beads produced during Nortec's
first immediate release core bead trial campaign for that New
Product. In the event that Nortec has submitted such specifications
to Par with respect to any New Product on or prior to the date of the
Rights Termination, then Par shall pay that amount to Nortec with
respect to that New Product within ten days after the date of the
Rights Termination. In the event that Nortec has not submitted such
specifications to Par with respect to any New Product on or prior to
the date of the Rights Termination, then PAR may, at its sole option,
elect to terminate all development work with respect that New
Product; Par can make this election only by providing a notice of
that termination to Nortec after the date of the Rights Termination
and prior to the date on which Nortec submits those specifications to
Par;
(iii) the sum of $400,000 for each such New Product on the
completion of both (x) a successful pivotal biostudy that
demonstrates bio equivalence of that New Product to the branded
sustained release solid dosage form of the drug containing the same
active ingredient(s) as that New Product, and (y) the demonstration
of stability of that New Product under 90-day accelerated stability
conditions; and,
(iv) the sum of $600,000 for each such New Product on the date
of the first commercial sale of that New Product.
(2) Par shall pay to Nortec a royalty (individually a "MODIFIED
ROYALTY" and collectively the "MODIFIED ROYALTIES") with respect to each
such New Product based on the Net Sales and the market share of that New
Product, as shown in the following table, but subject to Section
8(c)(2)(ii) below:
------------------------------------------------------------------------------
ROYALTY AMOUNT FOR EACH PAR'S MARKET SHARE (MS) OF THE TOTAL
NEW PRODUCT SUSTAINED RELEASE SOLID DOSAGE MARKET FOR
(% OF NET SALES) THAT NEW PRODUCT
------------------------------------------------------------------------------
**% MS > **%
-
------------------------------------------------------------------------------
**% **% > MS > **%
-
------------------------------------------------------------------------------
**% **% > MS > **%
-
------------------------------------------------------------------------------
*% **% > MS > **%
-
------------------------------------------------------------------------------
*% MS < **%
------------------------------------------------------------------------------
For these purposes, the market share of each New Product will be
determined at the end of each calendar year from IMS published data
relating to total sales of such New Product, including both generic
and branded products and including all doses of such products. Par
shall pay the Modified Royalties to Nortec on the dates specified in
Section 5(e) above. Nortec shall have the right to have the amount of
the Modified Royalties examined as provided in Section 5(f) above.
(d) The total amount of the Advance Payments that Par has paid to Nortec
as of the date of the Rights Termination shall be credited against the amount of
any Development Fees that are payable pursuant to Section 8(c)(1). If the total
amount of those Advance Payments is greater than the total amount of those
Development Fees, Par shall not be entitled to a refund of the excess amount.
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(e) If at any time after the Rights Termination Par wants Nortec or GAT
to develop or manufacture any other products utilizing the CPS Technology or the
Know-How, neither Nortec nor GAT shall have any obligation to perform such work
for Par. If Par wants Nortec or GAT to develop or manufacture any other such
product, at that time Par and Nortec or GAT would need to negotiate the terms
and conditions of that work.
(f) After the exercise of the Rights Termination, Par shall not have any
right thereafter to acquire any shares of stock in Nortec as contemplated by the
Stock Purchase Agreement or to otherwise share in any of Nortec's profits.
9 TERMINATION RIGHTS.
(a) Either Nortec or Par may terminate this Agreement in its entirety if
the other party (including its Affiliates) commits a material breach of any of
the material terms of the Agreement and does not remedy that breach within
ninety (90) days after receipt of a notice demanding that any such breach be
remedied, or, if ninety (90) days is an inadequate cure period, such longer
period as is reasonably necessary, provided that such breach is capable of cure,
the breaching party promptly commences to cure that breach, and the breaching
party continues to act with reasonable diligence to cure that breach.
(b) In the event that Par in good faith determines that it is no longer
economically viable to pursue the development, registration or sale of a New
Product in the Territory, then Par may terminate this Agreement solely as it
applies to that New Product. In the event that Par exercises this right, then
Par shall use reasonable commercial efforts to transfer to Nortec all rights,
contracts, data and information associated with that New Product, including all
rights under any unapproved or approved ANDA. On that termination, Par shall
grant to Nortec, without any cost or fee, a license to any trademark that Par
may have selected as a brand trademark for that New Product. Notwithstanding the
foregoing, in any subsequent promotion of that New Product, Nortec may utilize
in such promotion efforts previously published material, for example clinical
results and studies, that reference Par's trademark for that New Product.
Nortec's right to use any such trademark does not include the right to use Par's
name or any other trademark of Par.
(c) If the license granted pursuant to Section 4 above is terminated
pursuant to Section 9(a) above or if this Agreement is terminated with respect
to any particular New Product pursuant to Section 9(b) above, any such
termination shall be without prejudice to Nortec's right to receive payments
that are unpaid under this Agreement as of the date of such termination,
including but not limited to payment for any New Product delivered to Par and
any work in progress under firm purchase orders issued by Par.
(d) If the license granted pursuant to Section 4 above is terminated
pursuant to Section 9(a) above or if this Agreement is terminated with respect
to any particular New Product pursuant to Section 9(b) above, Par will
nevertheless have the right to sell or otherwise dispose of any inventory of any
such New Product which is then on hand.
(e) In the event that this Agreement is terminated pursuant to Section
9(a) above by Par for a breach of this Agreement by Nortec and/or its
Affiliates,then (1) except as provided in this Section 9(e) neither Par nor
Nortec shall have any further rights or obligations under this Agreement, (2)
Par and Nortec shall remain liable to each other for all obligations that have
accrued prior to such termination, (3) Sections 3(a), 3(b), 4(a), 4(b), 5(c),
5(d), 5(e), 5(f), and 6(e) of this Agreement shall survive such termination with
respect to all New Products for which development has already been initiated
prior to such termination, (4) Sections 10, 12, 13, 16, 17, 18, 19 and 20 of
this Agreement shall survive such termination, and (5) except Nortec shall not
have any obligation to conduct any further Development Work.
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(f) In the event that this Agreement is terminated pursuant to Section
9(a) above by Nortec for a breach of this Agreement by Par, then neither Par nor
Nortec shall have any further rights or obligations under this Agreement,EXCEPT
that Par and Nortec shall remain liable to each other for all obligations that
have accrued prior to such termination, and EXCEPT that Sections 10, 12, 13, 16,
17, 18, 19 and 20 of this Agreement shall survive such termination.
(g) Par and Nortec hereby acknowledgethat Par has certain termination
rights under Sections 8(a) and 8(b) of the Stock Purchase Agreement arising from
a breach of the Stock Purchase Agreement and that those Sections 8(a) and 8(b)
provide that, in that event, there will be corresponding changes in the rights
and obligations of Par and Nortec under this Agreement. Par and Nortec hereby
confirm those provisions of the Stock Purchase Agreement to the extent that
those provisions modify this Agreement.
(H) FOLLOWING THE FINAL CLOSING AND THE COMPLETE ACQUISITION OF NORTEC BY
PAR, PAR SHALL ACQUIRE CERTAIN RIGHTS, AND ASSUME CERTAIN OBLIGATIONS, UNDER THE
CPS PATENT RIGHTS AND THE KNOW-HOW AS SET FORTH IN ARTICLE 6 OF THE STOCK
PURCHASE AGREEMENT.
10. CONFIDENTIALITY.
Par and Nortec shall hold in confidence, and shall cause their respective
Affiliates to hold in confidence, all confidential and other proprietary
information of the other party disclosed to the receiving party and relating to
this Agreement, except for information (a) which is or becomes public knowledge
(through no fault of the receiving party), (b) which is made available to the
receiving party free of an obligation of confidentiality by an independent third
party legally able to do so, (c) which is already in the receiving party's
possession at the time of receipt from the disclosing party (and such prior
possession can be properly demonstrated), (d) which is required by law or
regulation to be disclosed (and only to the extent of such disclosure), or (e)
which becomes publicly known as a result of required disclosures made to or as a
result of FDA regulations under which any New Product is approved for sale in
the Territory. Additionally, each party may provide such information to
governmental agencies to the extent legally required by such agencies and such
information shall not be further disclosable unless made public as a result of
such disclosure to such agencies as required by law. If in connection with
studies which are carried out to obtain FDA approval it is necessary to disclose
confidential information under this Agreement, the disclosing party will make
diligent efforts to bind the receiving party to customary confidentiality and
use restrictions.
11. REPRESENTATIONS AND WARRANTIES.
(a) Nortec hereby represents and warrants the following to Par as of the
date of this Agreement:
(1) Nortec is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey and has the corporate
power and authority and the legal right to enter into this Agreement and to
perform its obligations under this Agreement. Nortec has taken all necessary
corporate action on its part to authorize the execution and delivery of this
Agreement and the performance of its obligations under this Agreement. This
Agreement has been duly executed and delivered by Nortec and does not conflict
with any other obligations or contracts to which it is a party. This Agreement
constitutes a legal, valid and binding obligation, enforceable against Nortec in
accordance with its terms.
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(2) Nortec is the owner of or has sufficient contractual rights to
all of the Patent Rights and Know-how licensed to Par under this Agreement, and
Nortec has the legal power, authority and right to grant the licenses set forth
in Article 4 above and to perform its obligations under this Agreement.
(3) To the best of Nortec's knowledge after reasonable investigation,
the CPS Technology and the Know-How do not infringe any patent rights held by
any third party in the Territory. Nortec does not, however, make any
representation as to whether the CPS Technology and/or the Know-How, when
applied to develop, formulate, manufacture or sell any particular product,
infringes any patent rights held by any third party.
(4) To the best of Nortec's knowledge after reasonable investigation,
Par does not require any further licenses from Nortec, any of its Affiliates or
any third party in order to utilize the CPS Technology or the Know-How in the
Territory to develop, formulate, manufacture or sell any New Products as
authorized by this Agreement.
(5) Nortec does not have any knowledge of any claim or allegation, or
any basis of any such claim or allegation, of misuse of any third party's
confidential or proprietary information with regard to use of the CPS Patent
Rights or the Know-How licensed by Nortec to Par under this Agreement.
(6) If Par has provided to Nortec the Priority List on or before the
execution and delivery of this Agreement, neither Nortec nor any of its
Affiliates have granted any effective option(s) or license(s) to any third
person or entity under any of CPS Patent Rights or Know-How with respect to the
manufacture, use or sale within the Territory of any drugs identified in the
Priority List.
(b) Par hereby represents and warrants the following to Nortec as of the
date of this Agreement:
(1) Par is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority and the legal right to enter into this Agreement and to perform its
obligations under this Agreement. Par has taken all necessary corporate action
on its part to authorize the execution and delivery of this Agreement and the
performance of its obligations under this Agreement. This Agreement has been
duly executed and delivered by Par and does not conflict with any other
obligations or contracts to which it is a party. This Agreement constitutes a
legal, valid and binding obligation, enforceable against Par in accordance with
its terms.
(2) Par will exercise commercially reasonable care regarding the
formulation of each New Product, including but not limited to the design of
biostudies, the selection of qualified test facilities, the funding and review
of final reports from the qualified test facilities carrying out and evaluating
the bioequivalency of the formulation, the storage of the New Product, the
labeling of the New Product, the packaging of the New Product, the shipment of
the New Product, and the selection and use of trademarks on the New Product.
(3) Prior to filing of the ANDA for any New Product, Par will have a
study carried out at Par's expense for the purpose of determining if there are
any unexpired patents in the Territory that would be infringed as a result of
the manufacture, use or sale of that New Product. Following the execution of
mutually acceptable agreements for each New Product concerning joint
attorney-client privilege, Par will disclose the patents obtained as a result of
such studies for each such New Product to Nortec.
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(c) Nortec does not make any representation or warranty as to whether the
manufacture, use and sale of any New Product will present any question of
infringement of any adversely held patent in the Territory solely as a result of
the use of the Know-How or the CPS Patent Rights.
12. INDEMNIFICATION.
(a) Par shall indemnify and hold harmless Nortec, GAT and their
respective Affiliates and their respective employees, agents, officers and
directors from and against any costs, claims, judgments, expenses (including
reasonable attorney fees), damages and awards (but not incidental, indirect or
consequential damages) arising out ofa breach of its representations, warranties
or covenants set forth in this Agreement, or from Par's breach of any of the
terms and conditions of this Agreement, whether by act or omission.
(b) Par shall defend, indemnify and hold harmless Nortec, GAT and their
respective Affiliates and their respective employees, agents, officers and
directors from and against any costs, claims, judgments, expenses (including
reasonable attorney fees), damages and awards arising out of any claim for
product liability relating to any New Product, regardless of the identity of the
person or entity making that claim, and regardless of how that claim is
characterized (including without limitation as a negligence claim, a claim for
strict liability, a breach of warranty, a breach of any express or implied
contract, or otherwise), EXCEPT to the extent that any such damages are caused
by a breach of this Agreement by Nortec, GAT or any such Affiliate. While this
Agreement is in effect, Par shall maintain at its expense product liability
coverage covering the manufacture and sale of all New Products, with such
insurance to be in the minimum amount of $**********, and Par shall provide
Nortec with, and periodically update upon Nortec's request, a certificate of
insurance evidencing that insurance.
(c) Par shall also defend, indemnify and hold Nortec, GAT and their
respective Affiliates harmless for any loss (including reasonable attorneys'
fees) arising out of a claim alleging infringement of any patent, except patents
embodying the CPS Technology or the Know-How, relating in any way to the New
Products or to any of the work performed by Nortec under this Agreement. In any
such action, Par shall undertake the defense of such claims. Par shall control
the defense of the action and the prosecution of any relevant counterclaims.
Notwithstanding the foregoing, Par shall not settle any such action on terms
that are materially prejudicial to any right or claim of Nortec in any New
Product, in any of the CPS Patents, or any of the Know-How without the consent
of Nortec, which consent shall not be withheld or delayed unreasonably. Nortec
shall cooperate with Par in the defense of such claims, including without
limitation supplying on a timely basis such witnesses, documents and other
information as is necessary to assist Par in fulfilling Par's obligations
concerning discovery in any such action.
(d) Nortec shall indemnify and hold harmless Par and its Affiliates and
their respective employees, agents, officers and directors from and against any
costs, claims, judgments, expenses (including reasonable attorneys fees),
damages and awards (but not any incidental, indirect or consequential damages)
arising out of or a breach of its representations, warranties or covenants set
forth in this Agreement or from Nortec's breach of any of the terms and
conditions of this Agreement, whether by act or omission. While this Agreement
is in effect, Nortec shall maintain at its expense a commercially reasonable
amount of commercial general liability insurance coverage and shall provide Par
with, and periodically provide on Par's request, a certificate of insurance
evidencing that insurance.
(e) Each party shall give the other party prompt written notice, and in
any event within thirty (30) days, of any claims made which may give
rise to an indemnification obligation under this Section 12,
including any claims asserted or made by any governmental authority
having jurisdiction.
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Each party shall give the other party the opportunity to defend,
negotiate and settle such claims and will provide reasonable
assistance to such other party's defense of such claim. For any suit
covered by a party's indemnification obligation under this Section
12, the indemnified party shall permit the indemnifying party to have
control of the conduct of the defense of such suit, including,
without limitation, the selection of counsel.
13. LIMITATION ON LIABILITY.
None of Par, Nortec or their respective Affiliates shall have any liability to
any other party under or with respect to this Agreement or otherwise at law or
equity for any indirect, incidental or consequential damages, including, without
limitation, lost profits. It is the intention of the parties that any
liabilities of one party to another arising from performance or lack of
performance under this Agreement shall be limited to direct damages as
customarily defined.
14. OWNERSHIP OF INVENTIONS.
During the course of this Agreement, it is contemplated that Nortec and Par
employees will cooperate in the development of each New Product, and it is
recognized that inventions and know-how may be developed which may be applicable
in the manufacture of the New Products and other products which are not covered
by this Agreement. For these reasons, Par shall be the sole and exclusive owner
of all inventions, whether patentable or unpatentable, arising in connection
with the parties' performance of their obligations under this Agreement which
relate solely to analytical methods or to testing procedures applicable to a New
Product and to the particular formulation of each New Product. Nortec, or
Affiliates of Nortec, shall be the sole and exclusive owner of all inventions,
whether patentable or unpatentable, arising in connection with the parties'
performance of their obligations under this Agreement which relate to the CPS
Technology and/or the Know-How, and all equipment that embodies any of the CPS
Technology or any Know-How, and all improvements and modifications to any of the
foregoing; all such inventions relating to the CPS Technology and the Know-How
shall be included in the license granted to Par pursuant to Section 4(a) above.
Ownership of all other inventions shall be allocated between Par and Nortec, or
Affiliates of Nortec, in accordance with United States patent law and, to the
extent that they are owned by Nortec or Affiliates or Nortec, shall be included
in the license granted to Par pursuant to Section 4(a) above. In the event that
Par obtains any patent on any analytical or testing procedure relating to any
New Product, Par shall grant to Nortec and GAT a royalty free license to the
extent that Nortec and/or GAT uses such patented subject matter in the
manufacture of any New Product.
15. STOCK OPTIONS.
(a) Subject to the limitations set forth in this Section 15,
Pharmaceutical Resources, Inc. (the parent company of Par) ("PRI") shall grant
stock options to the following individuals for the following number of shares of
PRI's common stock:
--------------------------------------------------------------------------------
NAME NUMBER OF SHARES ISSUED AS NUMBER OF SHARES
OF MARCH 13, 2003 ANNUALLY THEREAFTER
--------------------------------------------------------------------------------
Xxx Xxxxx ****** ******
--------------------------------------------------------------------------------
Xxxxxx Xxxxx ****** ******
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxx ****** ******
--------------------------------------------------------------------------------
Xxxxxx Xxxxxx ****** *****
--------------------------------------------------------------------------------
Xxxx Xxxxx ****** *****
--------------------------------------------------------------------------------
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(b) These stock options will be covered by PRI's existing employee stock
option plan which deals with such matters as the annual date that such options
are granted, the period of time during which the options will remain in effect,
whether and under what conditions the options will be forfeited (other than as
specifically set forth in this Agreement), whether the options can be
transferred (for example, to a family member), and whether the shares into which
the options are exercisable will be registered (under the Securities Act of
1933, as amended) or, if not, whether the option holders will have any
"piggyback", "demand" or other registration rights to have their shares
registered.
(c) The strike price (purchase price) for the shares acquired pursuant to
these stock options will be the market price of those shares on the date the
option is granted.
(d) PRI has the right to discontinue the annual granting of stock options
at any time after Par purchases all of the shares of stock of Nortec pursuant to
the Stock Purchase Agreement. Such a purchase of Nortec's shares by Par shall
not, however, affect any stock options that have already been issued prior to
that time.
(e) If and when Xxxxxx Xxxxxxx, Xxxxxx Xxxxxx or Xxxx Xxxxx leaves GAT's
employment or is otherwise no longer available to work on the New Products, then
that employee will forfeit all stock options which have not vested as of that
time and that employee will not have any right to receive any future stock
options. (f) PRI has the right to discontinue the annual granting of stock
options at any time after Par has terminated the Stock Purchase Agreement for
any reason. Such a termination by Par shall not, however, affect any stock
options that have already been issued prior to that time.
16. PUBLICITY.
Neither party shall publicize or disclose the existence or terms of or the
termination of this Agreement, except (1) as required by law, (2) solely with
respect to information relating to any New Product and the existence (but not
the terms) of this Agreement, when the FDA has issued an approvable letter for
the ANDA for that New Product, or (3) if consented to in writing in advance of
disclosure by an authorized representative of the other party. In addition,
neither party shall release information to the press or the public pertaining to
this Agreement or its performance without first agreeing with the other party
with respect to the content of such disclosure. Notwithstanding the above, both
parties agree that Par will release to the press a public statement announcing
the agreement of the parties to develop one or more oral sustained release
products under an exclusive license to utilize Nortec's intellectual property
including Nortec's rights to the CPS Technology on the effective date of this
Agreement.
17. FORCE MAJEURE.
No failure or omission by a party to this Agreement in the performance of any
obligation of this Agreement shall be deemed a breach of this Agreement, nor
shall any such failure or omission create any liability, provided that party
uses reasonable efforts to resume performance under this Agreement and that
party is capable through the exercise of such efforts in resuming such
performance, if that failure or omission arises from any cause or causes beyond
the control of the affected party, including, but not limited to, the following,
which for purposes of the Agreement shall be regarded as beyond the control of
the party in question: act of God; acts or omissions of any government; any
rules, regulation, or orders issued by any governmental authority or by any
officer, department, agency or instrumentality hereof; fire; storm; flood;
earthquake; accident; war; rebellion; insurrection; riot; invasion; strikes; and
lockouts. This Section 17, however, does not apply to any obligation to pay any
Development Fees under Section 8(c)(1) above.
Product Development and Patent License Agreement - Page 21
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18. ARBITRATION.
Any and all claims, disputes, controversies, and other matters arising out of or
relating to this Agreement, including but not limited to the formation
(including any claim as to fraud in the inducement), breach, performance,
interpretation, or termination Agreement, shall be resolved by binding
arbitration in accordance with the commercial Arbitration Rules of the American
Arbitration Association which are then in effect. Three arbitrators shall
conduct the arbitration in the English language in the State of New York. The
arbitrators must be knowledgeable or experienced in the pharmaceutical industry.
Each party will, within 20 days of the date on which arbitration is requested,
select one arbitrator and advise the opposite party of the name of that
arbitrator, and those two arbitrators will select a third arbitrator. If the two
arbitrators selected by the parties are unable to agree on a third arbitrator
within forty (40) days of the date on which arbitration is requested, the third
arbitrator will be appointed by the American Arbitration Association. The
decision of any two of the three arbitrators will be the decision of the
arbitrators. The costs of arbitration, including reasonable attorney's fees,
shall be borne by as assessed by the Arbitrators. Notwithstanding anything to
the contrary contained in this Section 18, the terms and provisions of this
Section 18 shall not preclude any party from seeking, or a court of competent
jurisdiction from granting, a temporary restraining order, temporary injunction
or other equitable relief for any breach of any restrictive covenant or
confidentiality covenant in this Agreement. The arbitrators' decision shall be
reduced to writing and shall be binding on the parties. Judgment upon the
award(s) rendered by the arbitrators may be entered in any court having
applicable jurisdiction, and execution of that award may be had in any court of
competent jurisdiction or application may be made to such court for a judicial
acceptance of the award and an order of enforcement. In that arbitration, all
evidentiary privileges under state and federal law, including attorney-client
and work-product privileges, shall be preserved and protected to the same extent
that such privileges would be protected in a United States district court
proceeding applying the internal law of the State of New York (other than
Section 5-1401 of the New York General Obligations Laws) without reference to
the law of conflicts of any jurisdiction). Any failure of either party to abide
by the arbitrators' decision shall permit the other party to terminate this
Agreement in whole or in part.
19. NOTICES.
Any notice to be given to a party under or in connection with this
Agreement shall be in writing and shall be delivered by confirmed facsimile,
Express Mail or next day FEDEX to the party at the following address set forth
for such party:
To Nortec:
Nortec Development Associates, Inc.
000 Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, President
Telephone: (000) 000-0000
Fax: 000-000-0000
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With copies to:
Xxxxx Air Techniques, Inc.
00 Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Executive Vice President
Telephone: (000) 000-0000
Fax: (000) 000-0000
And:
Xxxx X. Xxxxxxxx, Esq.
Nadborny & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
To Par:
Par Pharmaceutical, Inc.
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X'Xxxxxx, CFO
Telephone: 000-000-0000
Fax: 000-000-0000
or to such other address as to which the party has given notice thereof. Such
notices shall be deemed given on receipt.
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20. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement together with the Stock Purchase
Agreement constitutes the entire understanding and agreement between the parties
with respect to the subject matter of this Agreement and supersedes any and all
prior agreements, understandings and arrangements, whether oral or written,
between the parties relating to the subject matter of this Agreement. No
amendment, change, modification or alteration of the terms and conditions of
this Agreement shall be binding on either party unless it is in writing and
signed by both parties.
(b) INDEPENDENT CONTRACTORS. The parties specifically acknowledge the
parties are independent contractors and engage in the operation of their own
respective businesses, and neither party is the agent or partner of the other
party for any purpose whatsoever. Neither party has or shall have any authority
(either express or implied) to enter into any contracts or commitments or to
assume any obligations for the other party or make any warranties or
representations on behalf of the other party.
(c) NO ASSIGNMENT. This Agreement shall not be assigned or transferred
(in whole or in part) by either party, except to a wholly-owned Affiliate of
that party, without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed. Par may, however, assign all (and
not less than all) of its rights in and obligations under this Agreement to any
entity that acquires all or substantially all of the assets and business of Par,
including without limitation as a result of a sale of assets, a merger or a
consolidation by or of Par.
(d) SURVIVAL. The representations and warranties contained in the
Agreement, as well as all other provisions of this Agreement, shall survive the
termination or expiration of the Agreement.
(e) PARTIAL INVALIDITY. If and to the extent that any court or tribunal
of competent jurisdiction holds any of the provisions of this Agreement, or the
application of any provisions to any circumstances, to be invalid or
unenforceable in a final nonappealable order, the parties shall use their best
efforts to reform the provisions of the Agreement that have been declared
invalid in order to fully realize, to the extent possible, the intent of the
parties, and the remainder of this Agreement and the application of such invalid
provision to circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each of the remaining
provisions of this Agreement shall be valid and enforceable to the fullest
extent of the law.
(f) LIMITATION ON WAIVERS. The waiver by either of the parties of any
breach of any provision of this Agreement by the other party shall not be
construed to be a waiver of any succeeding breach of such provision or a waiver
of the provision itself.
(g) GOVERNING LAW. This Agreement shall be governed by and construed with
the laws of the State of New York, without application of its choice of law
principles (other than Section 5-1401 of the New York General Obligations Law) .
(h) HEADINGS. The headings in this Agreement have been inserted solely
for the convenience of reference and shall not affect the construction, meaning
or interpretation of the Agreement or any of its terms.
(i) COUNTERPARTS. This Agreement may be signed in counterparts, all of
which together shall constitute a single contract.
Product Development and Patent License Agreement - Page 24
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To evidence their agreement to be bound by this Agreement, Par and Nortec have
executed and delivered this Agreement as of the date that appears at the
beginning of this Agreement.
PAR PHARMACEUTICAL, INC. NORTEC DEVELOPMENT
ASSOCIATES, INC.
By:/s/ Xxxxx Xxxxxxx By:/s/ Xxx Xxxxx
-------------------------------- ----------------------------------
Name: Xxxxx Xxxxxxx Name: Xxx Xxxxx
Title: President and CEO Title: President
Pharmaceutical Resources, Inc. hereby agrees to the provisions
of Section 15 of the above Agreement.
PHARMACEUTICAL RESOURCES, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
Title:
