Exhibit 10.13
DEVELOPMENT, MANUFACTURING AND SUPPLY AGREEMENT
by and between
NOVADEL PHARMA INC.
AND
PAR PHARMACEUTICAL, INC.
* * *
NITROGLYCERIN LINGUAL SPRAY
* * *
JuLY 28, 2004
TABLE OF CONTENTS
Page
----
1. DEFINITIONS.............................................................1
2. DEVELOPMENT.............................................................4
2.1 OBLIGATION TO OBTAIN APPROVAL OF THE PRODUCT........................4
2.2 BRAND NAME..........................................................4
2.3 STATUS REPORTING....................................................5
3. MANUFACTURE AND SUPPLY; COMMERCIALIZATION...............................5
3.1 COMMERCIALIZATION OVERSIGHT.........................................5
3.2 SUPPLY AND DISTRIBUTION.............................................6
3.3 CHANGE IN CIRCUMSTANCES.............................................6
3.4 FORECASTS...........................................................7
3.5 CERTAIN PRELIMINARY ASSESSMENTS.....................................7
3.6 INSUFFICIENCY OF SUPPLY.............................................7
4. PURCHASING; DELIVERY....................................................8
4.1 PURCHASE ORDERS.....................................................8
4.2 PACKAGING...........................................................8
4.3 DELIVERY............................................................9
4.4 QUALITY CONTROL AND ASSURANCES AND RELEASE DOCUMENTATION............9
4.5 ACCEPTANCE AND REJECTION............................................9
5. PRODUCT PURCHASE PRICE AND PAYMENT TERMS...............................10
5.1 PURCHASE PRICE.....................................................10
5.2 ROYALTY PAYMENT....................................................10
5.3 REPORTS............................................................10
6. CERTAIN UNDERTAKINGS...................................................11
6.1 CERTAIN PAYMENTS...................................................11
6.2 CERTAIN LITIGATION COSTS...........................................11
6.3 PRODUCT COMPLAINTS AND ADVERSE DRUG EXPERIENCES....................12
6.4 FACILITY MAINTENANCE; INSPECTION; REPORTS..........................12
6.5 FILING REQUIREMENTS AND MAINTENANCE................................13
6.6 INSURANCE..........................................................13
7. WARRANTIES, INDEMNIFICATION AND LIMITATION OF LIABILITY................13
7.1 CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS OF NOVADEL.......13
7.2 CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS OF PAR...........14
7.3 REPRESENTATION AND WARRANTIES WITH REGARD TO STATUS................15
7.4 PRODUCT RECALL.....................................................15
7.5 NOVADEL'S INDEMNIFICATION OBLIGATIONS..............................16
TABLE OF CONTENTS
(CONTINUED)
7.6 PAR'S INDEMNIFICATION OBLIGATIONS..................................17
7.7 SPECIFIC INDEMNITY.................................................17
7.8 INDEMNIFICATION PROCEDURES.........................................17
8. AUDIT..................................................................18
8.1 PAR'S RIGHT TO AUDIT...............................................18
8.2 NOVADEL'S RIGHT TO AUDIT...........................................18
9. TERM AND TERMINATION...................................................19
9.1 TERM...............................................................19
9.2 TERMINATION FOR BREACH.............................................19
9.3 TERMINATION FOR BANKRUPTCY.........................................19
9.4 TERMINATION FOR SUPPLY INTERRUPTION................................19
9.5 TERMINATION FOR FORCE MAJEURE EVENT................................19
9.6 TERMINATION FOR EXCESS COSTS.......................................20
9.7 POST-TERMINATION...................................................20
10. CONFIDENTIALITY........................................................20
10.1 TREATMENT OF CONFIDENTIAL INFORMATION.............................20
10.2 LIMITS ON DISCLOSURE..............................................20
11. FORCE MAJEURE..........................................................21
11.1 EFFECTS OF FORCE MAJEURE..........................................21
11.2 NOTICE OF FORCE MAJEURE...........................................21
11.3 ALLOCATION OF CAPACITY............................................21
12. MISCELLANEOUS..........................................................22
12.1 DISPUTE RESOLUTION................................................22
12.2 INDEPENDENT CONTRACTORS...........................................22
12.3 ASSIGNMENT........................................................22
12.4 GOVERNING LAW; WAIVER OF JURY TRIAL...............................22
12.5 NO IMPLIED WAIVER.................................................23
12.6 NOTICE............................................................23
12.7 AMENDMENTS........................................................24
12.8 COUNTERPARTS......................................................24
12.9 ENTIRE AGREEMENT..................................................24
12.10BENEFIT; BINDING EFFECT...........................................24
12.11SURVIVAL..........................................................24
12.12FURTHER ASSURANCES................................................25
12.13SEVERABILITY......................................................25
ii
DEVELOPMENT, MANUFACTURING AND SUPPLY AGREEMENT
THIS DEVELOPMENT, MANUFACTURING AND SUPPLY AGREEMENT (this "Agreement"),
dated as of July 28, 2004, by and between NOVADEL PHARMA INC., a Delaware
corporation with an address at 00 Xxxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx
("NOVADEL"), and PAR PHARMACEUTICAL, INC., a Delaware corporation with an
address at Xxx Xxx Xxxxx Xxxx, Xxxxxx Xxxxxx, Xxx Xxxx ("PAR").
WHEREAS, Par is engaged in the business of developing, commercializing and
selling pharmaceutical products;
WHEREAS, NovaDel is engaged in the business of developing, manufacturing
and supplying pharmaceutical products to pharmaceutical companies; and
WHEREAS, the parties agree to use commercially reasonable efforts to
obtain FDA and any other required governmental approvals to allow for the
manufacture and supply of that certain pharmaceutical product set forth on
Exhibit A hereto (the "Product") by NovaDel or its designee(s) and for the
marketing of the Product by Par or its designee(s), all subject to the terms set
forth herein.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS.
FOR PURPOSES HEREOF, THE FOLLOWING TERMS SHALL HAVE THE MEANINGS SET FORTH
BELOW:
"ACT" means the Federal Food, Drug, and Cosmetic Act, as amended from time
to time, and the rules and regulations promulgated thereunder.
"AFFILIATE" means, with respect to any Person, any other Person controlled
by, controlling or under common control with such Person, where control means
more than 50% ownership or voting rights and/or the power to direct management
or policy.
"APPROVAL NOTICE" has the meaning set forth in Section 2.1 hereof.
"CGMP" means the current Good Manufacturing Practices regulations of the
FDA (as in effect from time to time) contained in 21 C.F.R. pts. 210 and 211.
"CLAIM" has the meaning set forth in Section 6.2(a) hereof.
"COMMERCIALIZATION COMMITTEE" has the meaning set forth in Section 3.1
hereof.
"CONFIDENTIAL INFORMATION" means any information that in any way shall
relate to a party hereto or an Affiliate thereof, including, without limitation,
its products, business, know-how, methods, trade secrets, business and marketing
strategies, customer lists and technology, that shall be furnished or disclosed
to the other party in connection with this Agreement, and any other information
that would be reasonably recognized as confidential or proprietary information
(including, but not limited to, in the event applicable, the NDA), or that is
designated Confidential Information by the disclosing party; provided, however,
that Confidential Information shall not include any information:
(i) that, at the time of disclosure, is generally available to the
public;
(ii) that, after disclosure in connection herewith, becomes generally
available to the public, except as a result of a breach of this Agreement by the
recipient of such information;
(iii) that becomes available to the recipient of such information from
a third party that is not legally prohibited from disclosing such Confidential
Information; provided, that such Confidential Information was not acquired,
directly or indirectly, from the disclosing party or its Affiliates; or
(iv) that the recipient of which can demonstrate was developed by or
for such recipient independently of, and without the use of, the Confidential
Information disclosed by the disclosing party or its Affiliates in connection
herewith.
"COST OF GOODS" means, (i) with respect to that portion of the
manufacturing, processing, testing, packaging and/or labeling of the Product
performed by NovaDel or its Affiliate(s), NovaDel's or such Affiliate(s)'
actual, direct cost of such activities (including the cost of raw materials),
and (ii) with respect to that portion of the manufacturing, processing, testing,
packaging and/or labeling of the Product performed by a third-party
subcontractor, the price paid by NovaDel to such third-party subcontractor
directly for such activities.
"EFFECTIVE DATE" means the date of this Agreement.
"EXCESS COSTS" has the meaning set forth in Section 2.1 hereof.
"FDA" means the United States Food and Drug Administration or successor
government agency in the United States.
"FIRST COMMERCIAL SALE" means the first sale of the Product under this
Agreement in an arms' length transaction to an unaffiliated third party.
"FORCE MAJEURE EVENT" has the meaning set forth in Section 11.1 hereof.
"INELIGIBLE PERSON" has the meaning set forth in Section 7.3(a) hereof.
"INITIAL TERM" has the meaning set forth in Section 9.1 hereof.
"LEGAL EXPENSES" has the meaning set forth in Section 6.2(a) hereof.
"LOSSES" has the meaning set forth in Section 7.5 hereof.
"NDA" means the new drug application to be filed by NovaDel with respect
to the Product seeking approval of the Product by the FDA, as the same may be
supplemented and/or amended from time to time.
2
"NET SALES" means the gross revenue attributable to the sales of the
Product in the United States or Canada, as applicable, less: (a) returns, price
protections, shelf stock adjustments, rebates (including Medicaid, Medicare and
similar rebates), cash and volume discounts; (b) applicable freight and shipping
costs; (c) applicable shipping insurance costs; and (d) applicable taxes, if
any. If the Product is bundled and sold with other products (a "BUNDLED
PRODUCT"), any additional sales allowance given on the Bundled Products shall be
allocated proportionally among all such Bundled Products based upon a weighted
average of the net selling prices (prior to application of any bundling
allowance) of each such Bundled Product sold.
"NOVADEL'S FACILITY" means the manufacturing facility for the Product
designated in the NDA.
"PRODUCT" has the meaning set forth on Exhibit A hereto.
"PRODUCT APPROVAL" means the non-tentative approval of the NDA by the FDA.
"PRODUCT MANUFACTURING REQUIREMENTS" has the meaning set forth in Section
3.2(b) hereof.
"PROPOSED BRAND NAMES" has the meaning set forth in Section 2.2 hereof.
"PERSON" means an individual, corporation, partnership, company or other
entity.
"RENEWAL TERM" has the meaning set forth in Section 9.1 hereof.
"ROYALTY" has the meaning set forth in Section 5.2 hereof.
"SPECIFICATIONS" means the terms and conditions applicable to the Product
and described in the NDA (or similar filing with a governmental agency in
jurisdictions outside the United States) for the Product, as the same may be
supplemented and/or amended from time to time, and as set forth in the standards
published by USP.
"TERM" has the meaning set forth in Section 9.1 hereof.
"TERRITORY" means the United States of America, together with its
territories, possessions and protectorates, and Canada.
"TRANSFER PRICE" means (i) with respect to that portion of the Product
manufactured, processed, tested, packaged and/or labeled by NovaDel or its
Affiliate(s), the Cost of Goods attributable to such activities plus 10% of such
Cost of Goods, which is deemed to be the overhead component of the Cost of
Goods, and (ii) with respect to that portion of the Product manufactured,
processed, tested, packaged and/or labeled by a third-party subcontractor, the
Cost of Goods attributable to such activities only.
"USP" means United States Pharmacopeia.
3
2. DEVELOPMENT.
2.1 OBLIGATION TO OBTAIN APPROVAL OF THE PRODUCT. (a) NovaDel shall
use commercially reasonable efforts to obtain Product Approval on the earliest
possible date (given the timing of the regulatory process); provided, that
nothing herein contained shall constitute a guarantee or warranty by NovaDel
that the Product Approval will be obtained; provided, further, that, if the FDA
requires additional development or testing of the Product at an out-of-pocket
cost to NovaDel (for costs incurred after the Effective Date), excluding (i) the
costs of any and all FDA filing fees and (ii) costs associated with the transfer
of manufacturing to a third-party contract manufacturer, that is reasonably
likely to exceed [***] (such excess being referred to herein as the "EXCESS
COSTS"), NovaDel and Par shall negotiate a mutually satisfactory arrangement for
apportionment of the payment of such Excess Costs between the parties, with the
understanding that such Excess Costs shall be recouped by the party(ies) who
pay(s) them from Net Sales of the Product before the payment of any Royalty
payment pursuant to Section 5.2 hereof. Upon its receipt of an approval letter
from the FDA granting the Product Approval, NovaDel shall promptly provide Par
with written notice of the same, including a copy of such approval letter (the
"APPROVAL NOTICE"). [***]
(b) NovaDel covenants and agrees, on behalf of itself and any applicable
Affiliates, that it shall: (i) devote a commercially reasonable amount of time,
effort, resources and manpower to obtaining the Product Approval; and (ii) not
develop or perform any formulation or developmental or other work on or with
respect to the Product (or any reasonable variant thereof) for its own use or
for the use or benefit of any other Person within the Territory other than as
contemplated by this Agreement.
(c) Except as otherwise provided in this Section 2.1, the costs and
expenses incurred by NovaDel or its Affiliates in the research, development and
acquisition of the NDA shall be borne solely by NovaDel or its Affiliates. The
costs, expenses and obligations of the post-approval maintenance of the NDA
incurred after (but only after) transfer of the NDA to Par shall be borne solely
by Par.
(d) Par may, in its sole discretion, seek regulatory approvals to sell the
Product in Canada; provided, that, if Par does not initiate the process to seek
such regulatory approvals within 18 months after NovaDel's delivery of the
Approval Notice to Par, Canada shall cease to be part of the Territory for the
purposes of this Agreement.
2.2 BRAND NAME.
Par may, at its option, develop up to five proposed Brand names for
intended use as brand names for the Product in the Territory (the "PROPOSED
BRAND NAMES") and may file trademark application(s) with the U.S. Patent and
Trademark Office directed thereto. NovaDel shall submit the Proposed Brand
Names, in the order of preference designated, in writing, by Par, as the
INFORMATION MARKED BY [***] HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTION HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
4
possible brand name(s) for the Product in connection with the NDA, and shall, at
Par's written request, amend the NDA with respect thereto. NovaDel shall
promptly apprise Par of any communication from the FDA bearing upon the FDA's
acceptance or rejection of any of the Proposed Brand Names and shall respond
with respect thereto as directed by Par. Par shall own the Proposed Brand Names,
and their use shall inure to the benefit of Par and no right to or license under
the same is granted hereby. Upon the written request of NovaDel, Par may, in its
sole discretion, grant NovaDel a license to use the Proposed Brand Names and the
trademarks related thereto in a region outside the Territory during the Term.
2.3 STATUS REPORTING.
NovaDel shall:
(a) provide Par with copies of all written communications, and written
summaries of all oral communications, from or with the FDA with respect to the
filing and review of the NDA as soon as practicable after, but in any event
within 72 hours (excluding weekends and holidays) of, its receipt thereof, and
NovaDel shall not respond to such written or oral communications without the
prior written consent of Par, which consent shall not be unreasonably withheld
or delayed; provided, that both parties shall use commercially best efforts to
abide by any FDA-imposed deadlines when responding to FDA inquiries and
observations;
(b) advise Par in writing of any unforeseen material problems or delays
encountered or additional requirements imposed upon NovaDel or its Affiliates,
as the case may be; and
(c) provide Par with such information as Par may reasonably request in
writing from time to time with respect to the status of the approval of the
Product by the FDA.
3 MANUFACTURE AND SUPPLY; COMMERCIALIZATION
3.1 COMMERCIALIZATION OVERSIGHT.
Oversight of the commercialization of the Product shall be vested in a
commercialization committee (the "COMMERCIALIZATION COMMITTEE"). The
Commercialization Committee shall consist of an equal number of appointees of
each party and shall meet on a regular basis to establish an approximate
timeline for commercial launch of the Product in the United States given the
regulatory process and, following commercial launch, to review marketing and
sales efforts. Notwithstanding the foregoing, the Commercialization Committee
shall be advisory only, and sales and marketing of the Product in the Territory
will be the sole responsibility of Par, which shall have the sole right and
discretion to make all marketing and pricing decisions, including the timing of
the First Commercial Sale. Subject to the foregoing, and provided there are no
pending or threatened Claims, Par shall use commercially reasonable efforts to
launch commercial sale of the Product in the United States within six months
after its receipt of the Approval Notice.
5
3.2 SUPPLY AND DISTRIBUTION.
(a) NovaDel hereby appoints Par as its sole and exclusive distributor for
the Product in the Territory, and Par hereby accepts such appointment and agrees
to act as such sole and exclusive distributor, all upon the terms, conditions
and limitations set forth herein.
(b) NovaDel shall, directly or through its designee(s), manufacture
and supply to Par, in a timely fashion and in accordance with the terms,
conditions and limitations set forth herein, the Product pursuant to binding
purchase orders submitted by Par pursuant to Section 4.1 hereof. NovaDel, with
the prior written consent of Par, which consent shall not be unreasonably
withheld, shall be allowed to subcontract to a third party the manufacturing
and/or packaging of the Product. NovaDel shall not, and shall not permit its
Affiliates or any other Person to, (i) manufacture for, or supply any of the
Product manufactured by or on behalf of NovaDel to, any Person in the Territory
(other than Par) or outside the Territory to any Person who it has reason to
believe will sell the Product in the Territory, or (ii) sell the Product,
directly or indirectly (other than by Par), in the Territory. NovaDel covenants
that the Product supplied by NovaDel hereunder shall be manufactured (which
shall include, without limitation, all testing, finished dosage form packaging
and labeling) in an FDA-registered facility and in accordance with the following
(collectively, the "PRODUCT MANUFACTURING REQUIREMENTS"): (A) the Specifications
for the Product; (B) applicable cGMP requirements; (C) the most currently
approved version of the NDA; and (D) all other applicable rules, specifications,
regulations and requirements of the FDA relative to the manufacturing of the
Product in the Territory.
(c) Subject to receipt of the Approval Notice, Par shall use commercially
reasonable efforts to market, distribute and sell the Product in the United
States, either directly and/or through its Affiliates, third-party licensees,
agents and/or designees. Subject to Section 2.1(d) and receipt by Par or its
designees of all regulatory approvals necessary to sell the Product in Canada,
Par shall use commercially reasonable efforts to market, distribute and sell the
Product in Canada, either directly and/or through its Affiliates, third-party
licensees, agents and/or designees. Par shall, subject to Section 3.6 and the
receipt of Product Approval and all necessary Canadian regulatory approvals,
purchase exclusively from NovaDel all of its and its Affiliates' requirements of
the Product for sale in the Territory in accordance with the terms, conditions
and limitations set forth herein.
3.3 CHANGE IN CIRCUMSTANCES.
If, at any time, Par reasonably determines that it is not economically
feasible to continue to market and sell the Product in the Territory or in any
portion thereof, Par shall notify NovaDel in writing, and the parties shall
negotiate in good faith for at least 30 days (a) revisions to the Transfer Price
and/or (b) a sublicense of the Product to a third party for marketing in that
portion of the Territory with respect to which Par has made such determination
(which may be the entire Territory). To the extent that the parties shall be
unable to reach an agreement despite the good faith negotiation by the parties,
this Agreement may be terminated by Par upon written notice to NovaDel only with
respect to the rights and obligations to market the Product in such portion of
the Territory (which may be the entire Territory), and Par shall be required to
pay only for Product ordered by or required to be ordered by Par and raw
materials ordered on behalf of Par (which raw materials are not able to be
otherwise reused or resold by NovaDel or its Affiliates or returned to the
6
supplier of such raw materials upon the exercise of commercially reasonable
efforts) in accordance with Section 3.4 hereof; provided, that upon termination
of this Agreement as it applies to the entire Territory by Par under this
Section 3.3 or by NovaDel under Section 9.2 for Par's material breach, Par shall
grant full rights, title and interest in the NDA and the Proposed Brand Names to
NovaDel.
3.4 FORECASTS.
Par shall provide NovaDel with written quarterly forecasts of the
quantities of the Product that it expects to order for each rolling 12-month
period. Such forecasts are estimates and shall represent a commitment for Par to
purchase only the quantity of Product projected for the first month under each
such quarterly forecast and not less than 75% of the amount of Product projected
for the second month and 50% of the amount of Product projected for the third
month under each quarterly forecast. Purchases of Product shall be effected
pursuant to purchase orders submitted by it to NovaDel in accordance with
Section 4.1 hereof. Par shall deliver the first such quarterly forecast no later
than 60 days after the Effective Date, and shall deliver the updated and
extended forecasts every calendar quarter thereafter. NovaDel shall cooperate
with Par in Par's determination of the anticipated First Commercial Sale date
and use commercially reasonable efforts to ship Product to Par at least 60 days
in advance of such date.
3.5 CERTAIN PRELIMINARY ASSESSMENTS.
If Par determines: (a) based upon its good faith assessment of its
independent inspection of NovaDel's proposed manufacturing facilities, that
NovaDel has failed to obtain or arrange for the use of manufacturing facilities
adequate to support the commercial launch of the Product, or (b) based upon its
good faith assessment of the patent position of the Product, that there is a
reasonable likelihood that the Product may infringe the intellectual property
rights of a third party; then, in either case, Par may, in its discretion, elect
to terminate this Agreement upon written notice delivered to NovaDel no later
than thirty (30) days after the Effective Date, and NovaDel shall promptly repay
to Par all monies paid by Par to NovaDel pursuant to Section 6.1(a) and 6.1(b)
hereof.
3.6 INSUFFICIENCY OF SUPPLY.
Subject to Par's delivery of a forecast and purchase order pursuant to
Sections 3.4 and 4.1, respectively, in the event that NovaDel shall fail or
shall be unable to supply Par's reasonable requirements for the Product
hereunder for a period exceeding 90 cumulative days in any given 365 day period,
then Par may, in its discretion, elect to manufacture the Product, whether
directly or through an Affiliate or third-party manufacturer. If Par elects to
manufacture the Product or cause the Product to be manufactured for Par, (a) Par
shall give NovaDel not less than 30 days notice of Par's intention to do so; (b)
Par shall prepare and submit a supplement to the NDA, and Par or NovaDel, as
appropriate, shall prepare and submit a supplement to any applicable Canadian
regulatory approval, seeking permission for Par, its Affiliate and/or
third-party manufacturer to manufacture such Product; (c) NovaDel shall, upon
the reasonable request of Par, cooperate with, assist and provide Par (or its
Affiliate or third-party manufacturer, as applicable) with all and any
documentation and technology necessary or desirable to allow the manufacture of
the Product in a facility designated by Par and to provide the FDA and/or such
other regulatory agencies with the information necessary to obtain timely
7
approval to manufacture the Product in the facility chosen by Par; (d) Section
3.4 and Article 4 hereof shall cease to have effect; (e) no Transfer Price shall
be payable to NovaDel hereunder with respect to any Product manufactured by Par,
its Affiliate or third-party manufacturer; (f) the Royalty payable by Par to
NovaDel pursuant to Section 5.2 hereof shall be [***] of Net Sales derived from
sales of the Product in the United States and [***] of Net Sales derived from
sales of the Product in Canada; and (g) the remainder of this Agreement shall
remain in effect. For purposes hereof, Par's "reasonable requirements" shall be
deemed to be any quantity of Product ordered by Par that is up to 120% of the
quantity of Product forecasted by Par for such period pursuant to Section 3.4.
4 PURCHASING; DELIVERY.
4.1 PURCHASE ORDERS.
Subject to the other provisions of this Agreement, Par shall from time to
time, but not before January 1, 2005, place orders for the Product and identify
the requested delivery dates for each such order. The delivery dates specified
in any such orders shall not be less than 60 days from the dates of such orders.
Each order placed pursuant to this Section 4.1 shall constitute a firm
obligation to purchase the ordered quantities of the Product, subject to the
following sentence. Orders may be modified or cancelled by Par upon written
notice to NovaDel; provided, however, that if any modification or cancellation
of an order shall occur less than 45 days prior to the delivery date, Par shall
pay NovaDel within 30 days after invoice therefor any out-of-pocket costs
incurred by NovaDel as a direct result of such modification or cancellation and
which would not otherwise be recovered by NovaDel hereunder. The terms,
conditions and limitations of this Agreement shall be controlling over any
conflicting terms and conditions contained in any purchase order or other
documentation used by Par in ordering the Product or by NovaDel in accepting or
confirming orders, and any term or condition of such purchase order, acceptance
or other document that shall conflict with, or be in addition to, the terms,
conditions and limitations of this Agreement is hereby expressly rejected.
4.2 PACKAGING.
NovaDel shall ensure that the Product is packaged with labels, product
inserts and other labeling as reasonably specified and approved by Par and as
required by the FDA. Par may, in its sole discretion, but subject to the
requirements of applicable laws and regulations in the Territory, make changes
to labels, product inserts and other labeling for the Product, which changes
shall be submitted by NovaDel (with the cooperation of Par) prior to NovaDel's
transfer of the NDA to Par, or by Par thereafter, to all applicable governmental
agencies and other third parties responsible for the review and approval of the
Product in the Territory, if required. Par shall reimburse NovaDel for the
actual costs incurred by NovaDel of any labels, product inserts and other
labeling rendered obsolete due to a change precipitated by Par in its sole
discretion;
INFORMATION MARKED BY [***] HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTION HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
8
provided, that: (a) NovaDel shall provide reasonable documentation of such cost;
(b) the cost of such components shall not be included in the Transfer Price; and
(c) NovaDel shall maintain no more than a reasonable inventory of such labels,
product inserts and other labeling at all times.
4.3 DELIVERY.
NovaDel shall use commercially reasonable efforts to ensure that the
Product ordered by Par in accordance with this Agreement is shipped to the
facility designated by Par in accordance with the delivery dates specified in
Par's purchase orders, and NovaDel shall notify Par promptly of any significant
anticipated delay. All Products ordered under this Agreement shall be delivered
FCA (Incoterms 2000) NovaDel's Facility.
4.4 QUALITY CONTROL AND ASSURANCES AND RELEASE DOCUMENTATION.
NovaDel shall (or shall cause its designee(s) to) perform all in process
quality control tests and quality assurance reviews on the Product as required
by the Product Manufacturing Requirements and shall certify in writing that each
batch of the Product delivered to Par was manufactured in strict conformity with
the Product Manufacturing Requirements and that the Product contained in such
shipment complies with the provisions of Section 7.1(b) and the other terms of
this Agreement. All deliveries of Product by NovaDel or its designee(s) shall be
accompanied by appropriate documentation required under applicable law to import
the Product into, and for Par to offer the Product for sale in, the Territory,
including any quality assurance or quality control audit results and/or
certifications that the Product Approval for the Product has been audited to
ensure that any Product supplied hereunder has been manufactured in conformity
with cGMP and other applicable regulations in the Territory.
4.5 ACCEPTANCE AND REJECTION.
Par shall give written notice to NovaDel of any claims that the Product
manufactured by NovaDel or its designee(s) does not comply with the requirements
of Section 7.1(b) hereof promptly upon its becoming aware of such
non-compliance. In the event that Par shall fail to notify NovaDel of any such
claim within 45 business days of Par's receipt thereof at its facility, such
Products shall be deemed accepted by Par; provided, however, that, other than
with respect to defects or other non-compliance plainly observable from a visual
inspection, any such acceptance or deemed acceptance shall not adversely affect
or otherwise shorten any applicable product warranty period. Any notice by Par
pursuant to this Section 4.5 that any Products do not comply with the terms and
conditions hereof shall be accompanied by a true and correct copy of the results
of any tests conducted by Par thereon, although no such tests are required with
respect to defects or other non-compliance plainly observable from a visual
inspection. The parties shall cooperate in good faith to resolve any disputes
arising therefrom and, in the event that the parties shall be unable to resolve
such dispute within 30 calendar days from the date of Par's notice pursuant to
this Section 4.5, the parties shall submit such dispute to a mutually
satisfactory independent laboratory. The determination by such laboratory shall
be final and binding on the parties and the costs therefor shall be borne by the
non-prevailing party. Par shall not dispose of any Product claimed by it not to
comply with the terms and conditions of this Article 4 until resolution of any
dispute with respect thereto. NovaDel shall (or shall cause its designee(s) to)
promptly replace any Product that does not comply with the terms and conditions
9
thereof, at NovaDel's sole cost and expense, by delivery thereof to Par. Par
shall pay NovaDel within ten business days for any Products delivered by NovaDel
or such designee(s) and found to be in compliance with the terms and conditions
of this Article 4 after a challenge under this Section 4.5.
5. PRODUCT PURCHASE PRICE AND PAYMENT TERMS
5.1 PURCHASE PRICE.
The purchase price payable by Par for the Product supplied to it by
NovaDel or its designee(s) under this Agreement shall be the Transfer Price. The
purchase price shall be paid within 45 days of Par's receipt of the invoice
therefor; provided, however, that no payment shall be required thereon during
the pendency of any dispute pursuant to Section 4.5.
5.2 ROYALTY PAYMENT.
In addition to the amount set forth in Section 5.1, but subject to
reimbursement of Excess Costs pursuant to Section 2.1(a) hereof and the
provisions of Section 6.2(d) hereof, Par shall pay to NovaDel, as a royalty,
[***] of Net Sales derived from sales of the Product in the United States and
[***] of Net Sales derived from sales of the Product in Canada (the "ROYALTY").
Par shall pay the Royalty to NovaDel quarterly, within 45 days after the close
of each calendar quarter; provided, however, that Par may set off such Royalty
payment against any amounts owed to it by NovaDel pursuant to Section 6.2(d)
hereof.
5.3 REPORTS.
(a) Within ten days following the end of the calendar quarter in which the
First Commercial Sale occurs, and within ten days following the end of each
subsequent calendar quarter throughout the Term, either party claiming any
amounts payable to it from Net Sales for reimbursement of Excess Costs pursuant
to Section 2.1(a) hereof shall submit to the other a written statement as to the
basis therefor and documentation in reasonable detail justifying such amount.
(b) Within 45 days following the end of the calendar quarter in which
the First Commercial Sale occurs, and within 45 days following the end of each
subsequent calendar quarter throughout the Term, (i) NovaDel shall submit to Par
a written report in a form reasonably acceptable to both parties setting forth
in reasonable detail NovaDel's calculation of its Cost of Goods and the Transfer
Price with respect to the Product purchased by Par during such calendar quarter
and (ii) Par shall submit to NovaDel a written report in a form reasonably
acceptable to both parties setting forth in reasonable detail Par's calculation
of Net Sales and the Royalty for such calendar quarter.
INFORMATION MARKED BY [***] HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTION HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
10
6. CERTAIN UNDERTAKINGS.
6.1 CERTAIN PAYMENTS.
In consideration for NovaDel's development of the Product, Par shall make
the following payments to NovaDel upon (and subject to) completion of the
designated events, as follows:
(a) Concurrently with the parties' execution of this Agreement, Par
shall pay to NovaDel the sum of [***] by wire transfer of immediately available
funds to a bank account of NovaDel previously designated in writing by NovaDel
to Par.
(b) Within five business days after NovaDel's delivery of written
notice enclosing correspondence from the FDA accepting the NDA for filing, Par
shall pay to NovaDel the sum of [***] by wire transfer of immediately available
funds to a bank account of NovaDel previously designated in writing by NovaDel
to Par. If NovaDel has already received correspondence from the FDA accepting
the NDA for filing at the time of the execution of this Agreement, Par shall,
within five business days after the later of the Effective Date and NovaDel's
delivery of a copy of such correspondence to Par, pay to NovaDel the sum of
[***] by wire transfer of immediately available funds to a bank account of
NovaDel previously designated in writing by NovaDel to Par.
(c) Within five business days after the later to occur of (i)
NovaDel's delivery of the Approval Notice to Par and (ii) NovaDel's successful
completion of validation of the manufacturing process for the Product, Par shall
pay to NovaDel the sum of [***] by wire transfer of immediately available funds
to a bank account of NovaDel previously designated in writing by NovaDel to Par.
6.2 CERTAIN LITIGATION COSTS.
(a) Subject to Section 7 hereof, NovaDel and Par each shall bear [***] of
all legal fees, disbursements and other reasonable expenses incurred to
investigate and defend any claim (including the assertion of any counterclaim
and/or cross-claim) of any Person that the Product infringes any patent or other
proprietary right of such Person enforceable in the Territory (hereafter
referred to as a "CLAIM") (such legal fees, disbursements and other reasonable
expenses, which shall include any judgments, damages, fines, penalties and other
similar assessments in relation to a Claim, being herein referred to
collectively as the "LEGAL Expenses"). NovaDel shall promptly forward to Par
copies of any demands, notices and summonses, cooperate with Par in the
investigation, negotiation, settlement, defense or prosecution of any Claim, and
assist Par, upon Par's request, in the enforcement of any right against any
Person in connection therewith, including by entering into appropriate joint
defense and/or joint privilege agreements.
INFORMATION MARKED BY [***] HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTION HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
11
(b) Par shall have sole control over the defense of any Claim, and
NovaDel shall have the right only to be informed of the progress and status
thereof. If NovaDel wishes to be represented with respect to any Claim by
counsel of its own choosing (which shall act in an advisory role only and shall
not participate in the defense of any Claim), such representation shall be at
NovaDel's sole cost and expense. Par shall notify NovaDel (or, at NovaDel's
option, NovaDel's legal counsel) of any material development in any Claim;
provided, that, in the opinion.
(c) Par may not settle any Claim without the prior written consent of
NovaDel, which consent shall not be unreasonably withheld, delayed or
conditioned; provided, however, that Par may settle or compromise any Claim
without the prior written consent of NovaDel if Par obtains, as a condition of
such settlement or other resolution, a complete and irrevocable release of
NovaDel and its assets.
(d) NovaDel shall reimburse Par for [***] of the Legal Expenses
incurred by Par pursuant to this Section 6.2 promptly upon receipt from Par of
an invoice providing reasonable documentation thereof.
6.3 PRODUCT COMPLAINTS AND ADVERSE DRUG EXPERIENCES.
Par shall be responsible for handling and reporting to the FDA, if
required, all Product complaints and for notifying NovaDel of all such
complaints that relate to manufacturing, packaging or labeling, or where such
notification otherwise is required by FDA regulation, within 30 days of receipt
of any such complaint, and NovaDel shall, upon the reasonable request of Par,
cooperate with and assist Par in its fulfillment of the foregoing obligations.
Par shall notify NovaDel of any report of an adverse drug experience concerning
the Product within five calendar days of receipt of the report and provide
NovaDel with information as required by applicable law and regulations.
6.4 FACILITY MAINTENANCE; INSPECTION; REPORTS.
NovaDel shall (and shall cause its third-party manufacturer, if
applicable, to) maintain and operate the manufacturing facility or facilities
designated in the NDA and implement such quality control procedures so as to
meet the requirements of FDA regulations and so as to be able to perform timely
its obligations hereunder. NovaDel shall (and shall cause its third-party
manufacturer, if applicable, to) permit quality assurance representatives of Par
to inspect such manufacturing facility or facilities at all times upon
reasonable notice, during normal business hours and on a confidential basis. Par
shall also be permitted reasonable periodic visits to such manufacturing
facility to discuss manufacturing and supply issues with management of NovaDel
and/or of its third-party manufacturer, if applicable. NovaDel shall (and shall
cause its third-party manufacturer, if applicable, to) promptly provide Par with
a copy of any FDA Form 483 ("Notice of Observations") received at the conclusion
of an inspection relating to the Product and all follow-up correspondence from
the FDA, if any.
INFORMATION MARKED BY [***] HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTION HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
12
6.5 FILING REQUIREMENTS AND MAINTENANCE.
NovaDel (prior to its transfer of the NDA to Par) and Par (after NovaDel's
transfer of the NDA to it) shall promptly comply with all FDA filing and
reporting requirements with respect to the Product and similar filing and
reporting requirements of equivalent governmental agencies in jurisdictions
outside the United States, including, without limitation, all filing and
reporting requirements necessary to keep the NDA current with the FDA. NovaDel
shall be responsible for all stability studies as may be required for ongoing
marketing and sale of the Product and shall, or shall cause its designee(s) to,
conduct such stability studies in compliance with the NDA and FDA requirements.
6.6 INSURANCE.
Each of Par and NovaDel shall (and shall cause their respective
Affiliates, as required, to), prior to anticipated receipt of Product Approval
and extending through the remaining term of this Agreement and for a period of
not less than 36 months following the termination of this Agreement, carry or be
subject to coverage under (as a named insured), and name the other party as an
additional named insured under, product liability insurance (including blanket
contractual liability) in an amount of not less than $10,000,000 combined single
limit, which insurance will be written on a "claims-made" policy basis with an
insurance carrier reasonably acceptable to the other party. Each party shall
provide the other party with evidence of coverage contemplated hereby, in the
form of certificates of insurance, as reasonably requested. Such certificates
shall be provided by written notice to the other party 15 days prior to any
material change, cancellation or non-renewal of the policy.
7. WARRANTIES, INDEMNIFICATION AND LIMITATION OF LIABILITY.
7.1 CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS OF NOVADEL.
(a) NovaDel hereby represents and warrants to Par that: (i) NovaDel has
the requisite power and authority to enter into this Agreement and perform its
obligations hereunder; (ii) the terms of this Agreement do not conflict with or
breach any agreement to which NovaDel or any Affiliate is a party or by which
NovaDel or any Affiliate is otherwise bound or violate any applicable law; (iii)
NovaDel has developed and tested the Product in a human clinical study; and (iv)
assuming receipt of Product Approval, the proposed marketing and sale of the
Product in the Territory will not, to its knowledge, (A) infringe or violate any
patent or other proprietary right of any other Person (excluding rights in any
trademark utilized at and in accordance with the direction of Par) or (B)
violate any applicable law or regulation.
(b) NovaDel hereby warrants and covenants to Par that all Product supplied
by it or its designee(s) to Par pursuant to this Agreement shall be
manufactured, tested, packaged, labeled, stored and handled in accordance with
the Product Manufacturing Requirements and that, at the time of the delivery of
such Product to Par, such Product: (i) will meet the Specifications and will not
be adulterated or misbranded within the meaning of the Act or within the meaning
of any applicable Canadian, state or municipal law in which the definitions of
adulteration and misbranding are substantially the same as those contained in
the Act, as such Act and such laws are constituted and effective at the time of
13
delivery; (ii) will not be an article which may not be introduced into
interstate commerce under the provisions of Sections 404 and 505 of the Act; and
(iii) will have a minimum shelf life of at least 24 months from the date of
manufacture and 21 months from the date of delivery to Par.
(c) NovaDel hereby represents, warrants and covenants to Par that (i) the
NDA and any other filings made or to be made with the FDA and with equivalent
governmental agencies in jurisdictions outside the United States in connection
with the Product were and shall be, as the case may be, accurate, complete and
truthful when filed and made in good faith upon the best information available
to NovaDel at such time; (ii) the NDA and all other such regulatory filings have
been, or will be, amended, supplemented or otherwise updated in a timely manner
whenever the information contained in any of them is no longer accurate,
complete and truthful, and NovaDel will promptly notify Par in writing of any
such amendment, supplement or other update; and (iii) the Product will be
manufactured, tested, packaged and labeled in accordance with the most current
version of the NDA in effect at the time of manufacturing, testing, packaging
and labeling.
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, NOVADEL MAKE NO
REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE,
CONCERNING THE DEVELOPMENT OR MANUFACTURE OF THE PRODUCT, INCLUDING THE SUCCESS
OR POTENTIAL SUCCESS THEREOF. EXCEPT AS EXPRESSLY SET FORTH HEREIN, NOVADEL
EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
PAR UNDERSTANDS THAT THE PRODUCT IS THE SUBJECT OF ONGOING CLINICAL RESEARCH AND
DEVELOPMENT AND THAT NOVADEL CANNOT ASSURE THAT FDA WILL RENDER A POSITIVE
DECISION ON THE SAFETY OR EFFICACY OF THE PRODUCT. NOVADEL MAKES NO
REPRESENTATION OR WARRANTY EXCEPT AS SET FORTH IN THIS ARTICLE 7 CONCERNING ITS
PATENT RIGHTS OR KNOW-HOW.
7.2 CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS OF PAR.
(a) Par hereby represents and warrants to NovaDel that (i) Par has the
requisite corporate power and authority to enter into this Agreement and perform
it obligations hereunder; and (ii) the terms of this Agreement do not conflict
with or breach any agreement to which Par or any Affiliate is a party or by
which Par or any Affiliate is otherwise bound or violate any applicable law.
(b) Par hereby covenants to NovaDel that all Product supplied to it by
NovaDel or its designee(s) pursuant to this Agreement shall be stored and
handled by Par in accordance with cGMP.
(c) Par hereby covenants to NovaDel that it shall not directly promote the
Product for any use other than the uses set forth in the NDA (including any
proposed or approved supplements thereto), except as otherwise permitted by FDA
policy or Par's First Amendment Constitutional rights.
14
(d) Par hereby covenants to NovaDel that it will not engage in promotion
and sale of Product in violation of federal and state fraud and abuse laws,
federal and state anti-kick back laws and the Xxxxxxxx-Xxxxxx Act, other than
activities included within the safe harbors established within any agency's
Office of the Inspector General opinions or guidelines, other relevant
guidelines and case law.
THE FOREGOING WARRANTIES IN THIS SECTION 7.2 ARE MADE BY PAR EXPRESSLY IN LIEU
OF ANY AND ALL OTHER EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT BY WAY OF
LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
7.3 REPRESENTATION AND WARRANTIES WITH REGARD TO STATUS.
(a) Subject to the receipt of the Product Approval and similar necessary
approvals in Canada, Par hereby represents and warrants to NovaDel that neither
it nor any of its Affiliates is prohibited by any law, rule or regulation or by
any order, directive or policy from selling the Product or other pharmaceutical
products within the Territory and that neither Par nor any of its Affiliates is
a Person who is listed by a United States federal agency as debarred, suspended,
proposed for debarment or otherwise ineligible for federal programs in the
United States, its territories and protectorates (an "INELIGIBLE PERSON"). Par
hereby covenants to NovaDel that, in the event it subcontracts to a third party
any portion of the commercialization, marketing, supply or sale of the Product,
it shall obtain the foregoing representation from such party to Par and NovaDel
prior to entering into any such subcontracting arrangement.
(b) Subject to the receipt of the Product Approval and similar necessary
approvals in Canada, NovaDel hereby represents and warrants to Par that neither
it nor any of its Affiliates who have been or are developing the Product or who
is or will be a manufacturer thereof is prohibited by any law, rule or
regulation or by any order, directive or policy from selling the Products and
that neither NovaDel nor any such Affiliate is an Ineligible Person. NovaDel
hereby covenants to Par that, in the event it subcontracts to a third party any
portion of the manufacturing, packaging and/or labeling of the Product, it shall
obtain the foregoing representation from such party to Par and NovaDel prior to
entering into any such subcontracting arrangement.
7.4 PRODUCT RECALL.
(a) In the event that either Par or NovaDel determines that a recall of
the Product is necessary for any reason, Par or NovaDel, as applicable, shall so
notify the other in writing. If Par determines to recall the Product, Par shall
give notice of such recall to each customer to which it has sold any applicable
Product, along with the instructions, if any, prepared by Par and/or NovaDel
relating to the recall. The decision to initiate such actions as described above
shall remain solely with Par.
(b) Except as set forth in Section 7.4(c), in the event of any recall or
seizure of any Product, NovaDel shall, at the written election of Par, either:
15
(i) promptly replace the amount of Product recalled or seized; and/or
(ii) give credit to Par against outstanding receivables due from Par in an
amount equal to the amount paid by Par for the Product (including any portion of
Net Profit payable to NovaDel on such Product) so recalled or seized or
otherwise owing by Par hereunder;
plus promptly reimburse (or, at the election of Par, credit) Par for the
aggregate transportation costs, if any, taxes, freight insurance, handling and
reasonable and verifiable out-of-pocket costs incurred by Par in respect of such
recalled or seized Product; provided, however, that the foregoing shall not
apply if and to the extent that such recall or seizure arises out of any
improper act or omission of Par or any third-party subcontractor engaged by Par.
Any costs incurred by NovaDel in complying with its obligations pursuant to this
Section 7.4(b) shall not be, directly or indirectly, passed on to Par in the
calculation of the Transfer Price or otherwise.
(c) In the event and to the extent that any recall or seizure of any
Product arises out of any act or omission by Par or any third-party
subcontractor engaged by Par, Par shall be responsible (as between Par and
NovaDel) for such recalled or seized product and shall promptly reimburse
NovaDel in cash for any reasonable and verifiable out-of-pocket expenses
incurred by NovaDel in connection therewith.
(d) For purposes of this Section 7.4, "recall" means (i) any action by
NovaDel, Par or any Affiliate of either to recover title to or possession of any
Product sold or shipped (including, but not limited to, market withdrawal)
and/or (ii) any decision by Par not to sell or ship Product to third parties
that would have been subject to recall if it had been sold or shipped, in each
case taken in the good faith belief that such action was appropriate under the
circumstances. For purposes of this Section 7.4, "seizure" means any action by
any government, authority or agency to detain or destroy any Product.
(e) NovaDel and Par shall keep the other fully informed in writing of any
notification or other information, whether received directly or indirectly, that
might affect the marketability, safety or effectiveness of any Product, or that
might result in liability issues or otherwise necessitate action on the part of
either party, or that might result in recall or seizure of any Product. NovaDel
(prior to its transfer of the NDA to Par) and Par (after NovaDel's transfer of
the NDA to it) will be responsible for assuring that such recall is closed-out
with the FDA, unless the FDA shall otherwise require.
7.5 NOVADEL'S INDEMNIFICATION OBLIGATIONS.
NovaDel shall indemnify and hold Par and its Affiliates and their
respective officers, directors, stockholders, employees and agents
(collectively, the "PAR INDEMNITEES") harmless from and against, and pay or
reimburse, any claim, action, suit, proceeding, loss, liability, damage or
expense (including without limitation reasonable attorneys' fees) ("LOSSES")
arising directly or indirectly as a result of (a) NovaDel's and its third-party
contractors' negligent acts or omissions or willful wrongful acts and (b)
NovaDel's breach of any of its representations, warranties, covenants or other
obligations hereunder; provided, however, that NovaDel shall not be required to
indemnify Par with respect to any Losses to the extent arising from or related
to the negligent acts or omissions or willful wrongful acts of any Par
16
Indemnitees or Par's breach of its representations, warranties, covenants or
other obligations hereunder, or from information supplied by Par to NovaDel or
contained in regulatory filings or correspondence prepared or delivered by Par.
7.6 PAR'S INDEMNIFICATION OBLIGATIONS.
Par shall indemnify and hold NovaDel and its Affiliates and their
respective officers, directors, stockholders, employees and agents
(collectively, the "NOVADEL INDEMNITEES") harmless from and against, and pay or
reimburse, any Losses arising directly or indirectly as a result of (a) Par's
and its third-party contractors' negligent acts or omissions or willful wrongful
acts and (b) Par's breach of any of its representations, warranties, covenants
or other obligations hereunder; provided, however, that Par shall not be
required to indemnify NovaDel with respect to any Losses to the extent arising
from or related to the negligent acts or omissions or willful wrongful acts of
any NovaDel Indemnitees or NovaDel's breach of its representations, warranties,
covenants or other obligations hereunder, or from information supplied by
NovaDel to Par or contained in regulatory filings or correspondence prepared or
delivered by NovaDel.
7.7 SPECIFIC INDEMNITY.
In the event that (a) either party or both parties sustains, suffers or
incurs any Losses arising from or relating to any third-party claim to the
extent arising from the use or design of the Product, including product
liability and strict liability claims in respect thereof, or (b) a final,
non-appealable determination shall have been made by a court of competent
jurisdiction that, in respect of such third-party claim, neither party is
negligent or otherwise at fault; then, as applicable, Par shall indemnify
NovaDel from and against [***] ([***]) percent of the Losses sustained by
NovaDel, and NovaDel shall indemnify Par from and against [***] ([***]) percent
of the Losses sustained by Par.
7.8 INDEMNIFICATION PROCEDURES.
A party (the "indemnitee") that intends to claim indemnification under
this Article 7 shall notify the other party (the "indemnitor") promptly in
writing of any action, claim or liability in respect of which the indemnitee
believes it is entitled to claim indemnification; provided, that the failure to
give timely notice to the indemnitor shall not release the indemnitor from any
liability to the indemnitee except to the extent the indemnitor is materially
prejudiced thereby. The indemnitor shall have the right, by written notice to
the indemnitee, to assume the defense of any such action or claim, within the
15-day period after the indemnitor's receipt of written notice of any action or
claim, with counsel of the indemnitor's choice and at the sole cost of the
indemnitor. If the indemnitor so assumes such defense, the indemnitee may
participate therein through counsel of its choice, but at the sole cost of the
indemnitee. The party not assuming the defense of any such claim shall render
all reasonable assistance to the party assuming such defense, and all reasonable
out-of-pocket costs of such assistance shall be for the account of the
indemnitor. No such claim shall be settled other than by the party defending the
INFORMATION MARKED BY [***] HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTION HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
17
same, and then only with the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, that the
indemnitee shall have (a) no obligation to consent to any settlement of any such
action or claim that (i) imposes on the indemnitee any monetary or other
liability or obligation that cannot be assumed and performed in full by the
indemnitor or (ii) adversely affects the indemnitee's rights hereunder or
damages its reputation or business, and (b) no right to withhold its consent to
any settlement of any such action or claim if the settlement involves only the
payment of money by the indemnitor or its insurer and the indemnitor or its
insurer agrees in writing to make such payment.
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES, INCLUDING ANY LOSS OF INCOME, LOSS OF PROFITS, COSTS OF
SUBSTITUTION, COSTS OF COVER OR INCREASED CAPITAL COSTS, REGARDLESS OF THE FORM
OR NATURE OF ACTION, WHETHER IN CONTRACT, BREACH OF WARRANTY, STRICT LIABILITY,
EQUITY, INDEMNITY, NEGLIGENCE, INTENDED CONDUCT, TORT OR OTHERWISE, EVEN IF SUCH
DAMAGES WERE FORESEEABLE OR IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
8. AUDIT.
8.1 PAR'S RIGHT TO AUDIT.
NovaDel shall maintain true and complete books of account containing an
accurate record of all data necessary for proper assessment of the Transfer
Price (including the Cost of Goods) provided in Section 5.1 hereof. Par shall
have the right, through an independent certified public accountant, to examine
NovaDel's books of account related to such matters at any time, on reasonable
prior notice (but not more than twice in any calendar year), within two years
after the end of the calendar year in which the sale was invoiced by NovaDel for
the purpose of verifying the accuracy of such matters. The parties agree that
information furnished to Par as a result of any such examination shall be
limited to a written statement by such certified public accountant to the effect
that they have reviewed the books of account of NovaDel and either (i) NovaDel's
calculations are correct or (ii) setting forth any required adjustments thereto.
If any such audit shows any overpayment by Par, a correcting refund shall be
made within 30 days after receipt of the written statement described above. The
expenses of such audit shall be borne by Par; provided, however, if such audit
shows an overpayment by Par exceeding $10,000, NovaDel shall bear all costs of
the audit.
8.2 NOVADEL'S RIGHT TO AUDIT.
Par shall maintain true and complete books of account containing an
accurate record of all data necessary for proper assessment of the Royalty
payment (including Net Sales) provided in Section 5.2 hereof. NovaDel shall have
the right, through an independent certified public accountant, to examine Par's
books of account related to such payment at any time, on reasonable prior notice
(but not more than twice in any calendar year), within two years after the end
of the calendar year in which the Products that are the subject of such payment
were delivered for sale in the Territory for the purpose of verifying the
accuracy of such payment. The parties agree that information furnished to
NovaDel as a result of any such examination shall be limited to a written
18
statement by such certified public accountant to the effect that they have
reviewed the books of account of Par and either (i) Par's calculations are
correct or (ii) setting forth any required adjustments thereto. If any such
audit shows any underpayment by Par, a correcting payment shall be made within
30 days after receipt of the written statement described above. The expenses of
such audit shall be borne by NovaDel; provided, however, if such audit shows an
underpayment by Par exceeding $10,000, Par shall bear all costs of the audit.
9. TERM AND TERMINATION.
9.1 TERM.
This Agreement shall commence on the Effective Date and continue, unless
otherwise earlier terminated in accordance herewith, for a period that shall
extend ten years from the date of the First Commercial Sale of the Product (the
"INITIAL TERM"); provided, however, that this Agreement may be terminated, at
the election of Par upon written notice thereof to NovaDel, if there shall be no
First Commercial Sale on or before January 1, 2007. Thereafter, this Agreement
shall be automatically renewed for successive two-year periods (each, a "RENEWAL
TERM" and, together with the Initial Term, the "TERM"), unless a party shall
otherwise notify the other in writing at least 12 months prior to the expiration
of the Initial Term or any Renewal Term.
9.2 TERMINATION FOR BREACH.
If either party commits a material breach or default in the performance or
observance of any of its material obligations under this Agreement and such
breach or default is not cured within 30 days after receipt by such party of the
written notice from the non-breaching party specifying the breach or default,
then the non-breaching or non-defaulting party shall have the right to terminate
this Agreement with immediate effect by giving written notice to the breaching
or defaulting party.
9.3 TERMINATION FOR BANKRUPTCY.
This Agreement shall automatically terminate upon the initiation of any
proceeding in bankruptcy, reorganization or arrangement for the appointment of a
receiver or trustee to take possession of the assets of a party hereto or
similar proceeding under the law for release of creditors by or against a party
hereto or if a party hereto shall make a general assignment for the benefit of
its creditors.
9.4 TERMINATION FOR SUPPLY INTERRUPTION.
This Agreement may be terminated by Par, on 30 days' written notice, if
NovaDel shall fail or be unable to supply all Par's requirements for the Product
for a period exceeding 90 cumulative days in any given 365-day period.
9.5 TERMINATION FOR FORCE MAJEURE EVENT.
If, as a result of a Force Majeure Event, a party does not perform its
obligations hereunder for any cumulative period of 90 days within any 365-day
period, the other party shall have the right to terminate this Agreement in its
19
entirety upon providing written notice to the non-performing party, such
termination to be effective within 30 days of such notice.
9.6 TERMINATION FOR EXCESS COSTS.
Either party may terminate this Agreement upon advance written notice to
the other party if, within 30 days of identifying the likelihood of Excess Costs
pursuant to Section 2.1 hereof, the parties fail to reach a mutually
satisfactory arrangement with respect to the payment of Excess Costs.
9.7 POST-TERMINATION.
If this Agreement is terminated pursuant to Section 9.6 hereof, NovaDel
shall promptly repay to Par any and all amounts paid by Par to NovaDel pursuant
to Section 6.1 hereof. Termination or expiration of this Agreement shall not
affect any payment or other obligations or liabilities that have accrued prior
to the date of such termination or expiration and the parties shall retain all
rights and remedies in response to any breach(es) thereof.
10. CONFIDENTIALITY.
10.1 TREATMENT OF CONFIDENTIAL INFORMATION.
Except as required by applicable laws and regulations (including rules or
regulations of any exchange upon which a party's capital stock may be traded) or
as otherwise provided in this Article 10, during the Initial Term and any
Renewal Term, and thereafter, each party shall hold in confidence, and may not
use for purposes other than those contemplated by this Agreement or disclose to
a third party (except as specifically set forth herein or with the express prior
written consent of the other party) any and all Confidential Information.
10.2 LIMITS ON DISCLOSURE.
(a) Without limiting the generality of the foregoing, each party may
disclose Confidential Information to those of its employees, officers,
directors, representatives, contractors, consultants, advisors and agents who
need to receive the Confidential Information in order to further the activities
contemplated in this Agreement; provided, that each such person or entity must
either be made aware of this Article 10 and agree to be bound by it or otherwise
be bound by a duty of confidentiality to such party. Each party shall take
reasonable precautions to safeguard the Confidential Information, including
obtaining appropriate commitments and enforceable confidentiality agreements.
Each party understands and agrees that the wrongful disclosure of Confidential
Information may result in serious and irreparable damage to the other party,
that the remedy at law or any breach of this covenant may be inadequate, and
that the party seeking redress hereunder shall be entitled to injunctive relief,
without prejudice to any other rights and remedies to which such party may be
entitled. Each party shall be liable for the disclosure of confidential
information in violation of this Agreement by its employees, officers,
directors, representatives, contractors, consultants, advisors and agents.
(b) It is acknowledged that Confidential Information may be obtained by a
party from the other party not only in writing or other tangible form (including
electronic), but also through discussions between each party's respective
representatives, demonstrations, observations and other intangible methods.
20
(c) The above notwithstanding, each party shall have the right with the
exercise of reasonable discretion, and insofar as practical under written
confidentiality agreements having provisions no less stringent than those
contained herein, to make disclosures of such portions of Confidential
Information to third party consultants, attorneys, contractors, advisors,
Affiliates and governmental agencies where, in the recipient's judgment, such
disclosure is beneficial to the development, approval or marketing of the
Product pursuant to this Agreement.
(d) Except as otherwise set forth in this Agreement, upon termination or
expiration of this Agreement and at the written request of the disclosing party,
the receiving party shall return all Confidential Information of the disclosing
party (including all copies, excerpts and summaries thereof contained on any
media) or destroy such Confidential Information at the option of the disclosing
party; provided, that the receiving party may retain one copy of all
Confidential Information of the disclosing party for its legal records.
11. FORCE MAJEURE.
11.1 EFFECTS OF FORCE MAJEURE.
No party hereto shall be held liable or responsible for failure or delay
in fulfilling or performing any of its obligations under this Agreement (other
than the payment of money) if such failure or delay is caused by, without
limitation, acts of God, acts of the public enemy, fire, explosion, flood,
drought, war, terrorists, riot, sabotage, embargo, strikes or other labor
disputes, intervention of governmental agency, or by any other event or
circumstance of like or different character to the foregoing beyond the
reasonable control and without the fault or negligence of the affected party (a
"FORCE MAJEURE EVENT"). Such excuse shall continue as long as the Force Majeure
Event continues. Upon cessation of such Force Majeure Event, subject to Section
9.5 hereof, such party shall promptly resume performance hereunder.
11.2 NOTICE OF FORCE MAJEURE.
Each party agrees to give the other party prompt written notice of the
occurrence of any Force Majeure Event, the nature thereof and the extent to
which the affected party will be unable to perform its obligations hereunder.
Each party further agrees to use reasonable efforts to correct or otherwise
address the Force Majeure Event as soon as practicable and to give the other
party prompt written notice when it is again fully able to perform such
obligations.
11.3 ALLOCATION OF CAPACITY.
If NovaDel at any time is unable to fully supply the purchase orders of
Par for the Product in accordance with this Agreement, NovaDel shall use
reasonable best efforts to allocate its available resources and production
capacity to the manufacture of the Product to fill orders placed by Par pursuant
hereto to the fullest extent possible.
21
12. MISCELLANEOUS.
12.1 DISPUTE RESOLUTION.
The parties recognize that a bona fide dispute as to certain matters may,
from time to time, arise during the term of this Agreement which relates to a
party's rights and/or obligations hereunder. In the event of the occurrence of
such a dispute, either party may, by written notice to the other party, have
such dispute referred to their respective officers, designated below, or their
successors, for attempted resolution by good faith negotiation within 30 days
after such notice is received. Such designated officers are as follows:
For NovaDel: Xxxx Xxxxxxxx, President and Chief Executive Officer
For Par: Xxxxx Xxxxxxx, President and Chief Executive Officer
In the event the designated officers are not able to resolve the dispute within
such 30-day period, or such other period of time as the parties may mutually
agree to in writing, each party shall have the right to pursue any and all
remedies available at law or in equity, subject to Section 4.5 hereof.
12.2 INDEPENDENT CONTRACTORS.
The relationship between NovaDel, on the one hand, and, Par on the other
hand, is that of independent contractors and nothing herein shall be deemed to
constitute the relationship of partners, joint venturers nor of principal and
agent between NovaDel on the one hand and Par on the other hand. Neither party
shall have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other party or to bind the other
party to any contract, agreement or undertaking with any third party.
12.3 ASSIGNMENT.
This Agreement may be assigned and delegated by either party in connection
with any sale, merger or other business combination involving all or
substantially all of the parties' assets or capital stock. Except as set forth
in the preceding sentence, neither this Agreement nor any other rights or
obligations hereunder shall be assigned or delegated by either party without the
prior written consent of the other party, which consent shall not be
unreasonably withheld, conditioned or delayed.
12.4 GOVERNING LAW; WAIVER OF JURY TRIAL.
This contract shall be governed by, and construed in accordance with, the
laws of the State of New York. The parties hereby consent to the exclusive
jurisdiction of Federal and New York State courts located in Manhattan, New York
and hereby waive any objection to venue or forum laid therein. The parties
hereby agree that service of process by certified mail, return receipt
requested, shall constitute personal service for all purposes hereof. EACH PARTY
HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY PARTY AGAINST THE OTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
22
TORT CLAIMS OR OTHERWISE. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
12.5 NO IMPLIED WAIVER.
No failure or delay on the part of the parties hereto to exercise any
right, power or privilege hereunder or under any instrument executed pursuant
hereto shall, in itself, operate as a waiver; nor shall any single or partial
exercise of any right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
12.6 NOTICE.
All notices required to be given hereunder shall be in writing and shall
be given by personal delivery, via facsimile transmission followed by mailing,
by a nationally recognized overnight carrier or by registered or certified mail,
postage prepaid with return receipt requested. Notices shall be addressed to the
parties as follows:
If to NovaDel: NovaDel Pharma, Inc.
00 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx, President and Chief Executive
Officer
Xxxxx Xxxxx, Vice President of Business and New
Product Development
Facsimile No.: (000) 000-0000
With a copy Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxxxxx, LLP
(which shall 1177 Avenue of the Americas
not constitute 47th Floor
notice) to: Xxx Xxxx, XX 00000
Attn.: Xxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Par: Par Pharmaceutical, Inc.
Xxx Xxx Xxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx, President and Chief Executive
Officer
Xxxxxxx Xxxxxx, Vice President of Marketing and
Business Development
Facsimile No.: (000) 000-0000
With a copy Xxxxxxxxxxx & Xxxxxxxx LLP
(which shall 000 Xxxxxxxxx Xxxxxx
not constitute Xxx Xxxx, XX 00000
notice) to: Attn: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
23
Notices delivered personally shall be deemed communicated as of actual receipt;
notices sent via facsimile transmission shall be deemed communicated as of
receipt by the sender of written confirmation of transmission thereof; notices
sent via overnight courier shall be deemed received as of one business day
following sending; and notices mailed shall be deemed communicated as of three
business days after proper mailing. A party may change his or its address by
written notice in accordance with this Section 12.6.
12.7 AMENDMENTS.
Any amendment or modification of this Agreement shall be valid only if
made in writing and signed by the parties hereto.
12.8 COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which shall constitute a single document.
12.9 ENTIRE AGREEMENT.
This Agreement constitutes the entire understanding between the parties
with respect to the subject matter hereof and supersedes all prior contracts,
agreements and understandings related to the same subject matter between the
parties. The parties intend this Agreement to be a complete statement of the
terms of their understanding.
12.10 BENEFIT; BINDING EFFECT.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
12.11 SURVIVAL.
Notwithstanding anything to the contrary contained in this Agreement, the
provisions of Sections 6.6 and 9.7 and Articles 1, 7, 8, 10 and 12 shall
survive, in accordance with their respective terms, any termination of this
Agreement; provided, that, in the case of termination pursuant to Section 3.5,
the provisions of only Articles 1 and 10 shall survive such termination.
24
12.12 FURTHER ASSURANCES.
The parties hereto agree that they shall take all appropriate actions,
including the execution or filing of any documents or instruments, that may be
reasonably necessary or advisable to carry out the intent and accomplish the
purposes of any of the provisions hereof.
12.13 SEVERABILITY.
In the event that any provision of this Agreement shall be held invalid or
unenforceable for any reason by a court of competent jurisdiction, such
provision or part thereof shall be considered separate from the remaining
provisions of this Agreement, which shall remain in full force and effect. Such
invalid or unenforceable provision shall be deemed revised to effect, to the
fullest extent permitted by applicable law, the intent of the parties as set
forth therein.
[SIGNATURE PAGE FOLLOWS]
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written by their duly authorized
representatives.
NOVADEL PHARMA, INC.
By: /s/ Xxxxx Xxxxx
---------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President of Business and
New Product Development
PAR PHARMACEUTICAL, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President of Marketing
and Business Development
26
EXHIBIT A
---------
|_| Nitroglycerin lingual spray
27
