LICENSE AND SUPPLY AGREEMENT
THIS
LICENSE AND SUPPLY AGREEMENT (this “Agreement”)
is
made and entered into as of this 15th day of April, 2005 (the “Effective Date”),
between Discus Dental Inc., a corporation organized and existing under the
laws
of California (“DISCUS”)
and
Access Pharmaceuticals, Inc., a corporation organized and existing under
the
laws of Delaware (“ACCESS”).
RECITALS
WHEREAS,
ACCESS
has developed a proprietary oral paste and a proprietary oral mucoadhesive,
erodible patch that contains amlexanox as the active ingredient for the
prevention and treatment of canker sores, and has obtained United States
Patents
No. 6,585,997 and No. 5,362,737 in connection therewith:
WHEREAS,
DISCUS
possesses substantial resources and expertise in the commercialization and
marketing of oral care products; and
WHEREAS,
ACCESS
desires to grant to DISCUS, and DISCUS desires to obtain from ACCESS, certain
licenses with respect to the Products (as defined below), including, without
limitation, certain marketing and distribution rights, all under the terms
and
subject to the conditions set forth herein.
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements set forth herein, and
for
good and valuable consideration the receipt and sufficiency of which are
hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS
|
1.1
|
Definitions.
As used in this Agreement, the following capitalized terms have
the
meanings indicated below:
|
1.1.1 “Accepted Product”
has
the
meaning set forth in Section 2.9.
1.1.2 “ACCESS”
has
the
meaning set forth in the Preamble.
| 1.1.3 |
“ACCESS
Confidential Information” means all information, Specifications, know-how
and data pertaining to the Products and ACCESS’s business or its
Manufacturing operations disclosed to DISCUS or its Affiliates hereunder,
including, without limitation, all information, Specifications, know-how
and data related to the design, implementation, performance and
manufacture of the Products, and any correspondence with the FDA
or any
other Regulatory Authority, clinical study data, new drug applications,
analytical data, or operating procedures.
|
| 1.1.4 |
“ACCESS’s
Third Party Manufacture” means with respect to each Product, the
manufacturer designated to be used in the Manufacture of such Product
until such time as DISCUS exercises any right that it may have to
designate an alternative manufacturer under this Agreement. ACCESS
may
designate itself as an ACCESS’s Third Party Manufacturer provided that in
such case ACCESS may not contract out those responsibilities to a
Third
Party.
|
| 1.1.5 |
“ACCESS
Invention”
has the meaning set forth in Section
11.2.4.
|
| 1.1.6 |
“ACCESS
Trademark” means any trademark, trade name, trade dress, slogan, logo, or
similar item used by ACCESS prior to or as of the Effective Date,
or
subsequent to the Effective Date in connection with any ACCESS product
other than the Products.
|
| 1.1.7 |
“Affiliate”
means, in the case of either Party, any corporation, joint venture,
or
other business entity which directly or indirectly controls, is controlled
by or is under common control with that Party. The term “control,” as used
in this definition, means having the power to direct, or cause the
direction of, the management and policies of an entity, whether through
ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, for purposes of this Agreement, the term “Affiliate” does
not include entities in which a Party or its Affiliates owns a majority
of
the ordinary voting power to elect a majority of the board of directors
but is restricted from electing such majority by contract or otherwise,
until such time as such restrictions are no longer in
effect.
|
| 1.1.8 |
“Aphthasol”
means that certain ACCESS Aphthasol paste as more fully described
in
Exhibit A.
|
| 1.1.9 |
“Batch”
means the volume of finished, packaged Products obtained from a validated
Manufacturing run.
|
| 1.1.10 |
“Best
Price”
has the meaning set forth in the Section
5.2.3.
|
| 1.1.11 |
“Certificate
of Analysis”
means the document identifying the results of the Methods of Analysis
for
a specific Batch of Products in a form agreed to by the Parties in
writing
but which shall include, without limitation, the applicable Products
Batch’s manufacturing date, expiration date, lot number and testing
results and data.
|
| 1.1.12 |
“Confidential
Information”
means DISCUS Confidential Information, ACCESS Confidential Information,
or
both, as the context requires.
|
| 1.1.13 |
“Continuing
Party”
has the meaning set forth in the Section
11.4.2(c).
|
| 1.1.14 |
“Contract
Year”
means each consecutive twelve (12) month period during the Term,
the first
of which shall commence on the date of Launch and end on the first
anniversary thereof.
|
| 1.1.15 |
“Control”
or “Controlled”
means, with respect to any item of information or intellectual property
right, the possession, whether by ownership or exclusive license,
of the
right to grant a license or other right with respect thereto.
|
| 1.1.16 |
“Declining
Party”
has the meaning set forth in the Section
11.4.2(c).
|
| 1.1.17 |
“DISCUS”
has the meaning set forth in the
Preamble.
|
| 1.1.18 |
“DISCUS Confidential
Information”
means all information, Specifications, know-how and data pertaining
to
DISCUS’s business disclosed to ACCESS hereunder, including, without
limitation, marketing and sales plans, artwork, formats, equipment,
logos,
drawings, customer lists, analytical data, operating procedures and
all
ordering and sales information.
|
| 1.1.19 |
“Effective
Date”
has the meaning set forth in the
Preamble.
|
| 1.1.20 |
“Extraordinary
Event Increase”
has the meaning set forth in Section
5.2.2.
|
| 1.1.21 |
“Facility”
means ACCESS’s Third Party Manufacturing facilities, and any subsequent or
replacement Third Party Manufacturing facility identified to DISCUS
in
accordance with Section 2.7.
|
| 1.1.22 |
“FDA”
means the United States Food and Drug Administration, or any successor
entities thereto.
|
| 1.1.23 |
“FD&
C Act”
means the Federal Food, Drug and Cosmetic Act, and all regulations
promulgated thereunder, as the same may be amended or supplemented
from
time to time.
|
| 1.1.24 |
“Field”
means the diagnosis or treatment of oral aphthous ulcers or disease,
lesions, or malady in the oral cavity, including but not limited
to the
alveolar, tongue, gums, jaws, or associated structures, with the
Products.
|
| 1.1.25 |
“Force
Majeure Event”
has the meaning set forth in Section 10.
|
| 1.1.26 |
“Good
Manufacturing Practice”
or “GMP” means (a) the then current standards for the manufacture of
pharmaceuticals, as set forth in the FD&C Act, and (b) any quality
requirements set forth in this Agreement.
|
| 1.1.27 |
“Indemnified
Party”
has the meaning set forth in Section
7.1.3.
|
| 1.1.28 |
“Indemnifying
Party”
has the meaning set forth in Section
7.1.3.
|
| 1.1.29 |
“Intellectual
Property Rights”
means Patents, designs, formulae, trade secrets, know-how, inventions,
industrial models, and technical information and whether now existing
or
coming into existence during the Term and which are necessary for
and/or
related to the use or distribution of the Products, including, without
limitation any research and development information, pre-clinical,
clinical and other technical data, in each case which are not generally
known or available and all information necessary or relating to
development, registration, and
Manufacturing.
|
| 1.1.30 |
“Invention”
means any new or useful method, process, manufacture, compound or
composition of matter, whether or not patentable or copyrightable,
or any
improvement thereof arising during the Term with respect to the Products,
their Manufacture and/or use.
|
| 1.1.31 |
“Joint
Patent Rights”
has the meaning set forth in the Section
11.4.2(a).
|
| 1.1.32 |
“Launch”
means the date, following approval by FDA of the right of any of
ACCESS’s
Third Party Manufacturers to Manufacture OraDisc A and DISCUS’s right to
sell OraDisc A, on which OraDisc A is sold by DISCUS for the first
time to
a Third Party for commercial or consumer use or distribution in the
Territory.
|
| 1.1.33 |
“Manufacture,”
“Manufactured”
or “Manufacturing”
means all activities involved in the production of the Products,
including, without limitation, the preparation, formulation, finishing,
testing, packaging, storage and labeling of the Products and the
handling,
storage and disposal of any residues or wastes generated
thereby.
|
| 1.1.34 |
“Materials”
means all materials, including, without limitation, all raw materials,
ingredients, packaging supplies and labels, required for the Manufacture
of Products:
|
| 1.1.35 |
“Methods
of Analysis”
means the methods of analysis for the Products which are mutually
agreed
upon in writing between the Parties within ninety (90) days after
the
Effective Date and attached hereto as Exhibit
B.
|
| 1.1.36 |
“Net
Sales”
means, with respect to the Products, the gross invoiced sales amount
of
the Products sold by DISCUS or its Affiliates to non-affiliate Third
Parties, after deduction of the following items, to the extent that
such
deductions are reasonable estimates accrued by Discus: (a) trade
and
quantity discounts, net of any give-backs received by DISCUS in return;
(b) refunds, rebates, retroactive price adjustments and service
allowances; (c) credits or allowances given for rejection or return
of
previously sold Products or for wastage replacement actually taken
or
allowed; (d) a reasonable credit or allowance for bad debt, and (e)
any
tax, duties or government charge levied on the sale of Products and
borne
by DISCUS and/or its Affiliates (excluding national, state or local
taxes
based on income), provided that such amounts in (a) - (e) shall be
subsequently adjusted as necessary to an amount actually allowed,
taken or
incurred (and provided that such items do not exceed reasonable and
customary amounts). Such amounts shall be determined from the books
and
records of DISCUS and its Affiliates maintained in accordance with
generally accepted accounting principles, consistently applied. Sales
of
the Products by and between a Party and its Affiliates for further
distribution to a Third Party are not sales to Third Parties and
shall be
excluded from Net Sales calculations for all purposes.
|
| 1.1.37 |
“Net
Unit Sales”
means, with respect to the Products, the gross number of Product
units
shipped by DISCUS or its Affiliates to non- affiliate Third Parties,
after
deduction of the following number of Product units: (a) Units returned
for
credit or (b) Units delivered as samples or promotional purposes.
Such
amounts shall be determined from the hooks and records of DISCUS
and its
Affiliates maintained in accordance with generally accepted accounting
principles, consistently applied. Units of the Products delivered
by a
Party to an Affiliate for further distribution to a Third Party are
not
Units and shall be excluded from Net Unit
Sales.
|
| 1.1.38 |
“OraDisc
A”
means that certain ACCESS proprietary oral mucoadhesive, erodible
patch
that contains amlexanox as the active ingredient for the prevention
and
treatment of canker sores, as more fully described in Exhibit
A.
|
| 1.1.39 |
“OTC”
or “Over-the Counter” means sale to consumers of Products without a
prescription.
|
| 1.1.40 |
“Party”
or “Parties”
means DISCUS, ACCESS or both, as the context
requires.
|
| 1.1.41 |
“Patents”
shall mean (a) U.S. Patent No. 6,585,997, (b) US Patent No. 5,362,737,
and
(c) any and all patents, patent applications, patent disclosures
awaiting
filing determination, patent divisionals, continuations,
continuations-in-part, reissues, re-examinations, renewals and extensions
thereof Controlled by ACCESS during the Term, within the Territory,
which
are necessary for to the use or distribution of the
Products.
|
| 1.1.42 |
“Person”
means any natural person, corporation, general partnership, limited
partnership, limited liability company, limited liability partnership
proprietorship, other business organization, trust, union, association
or
governmental authority.
|
| 1.1.43 |
“Pharmacy
Channel”
means sales to wholesalers within the Territory for ultimate sale
through
pharmacies within the Territory.
|
| 1.1.44 |
“PPI
Adjustment”
has the meaning set forth in Section 5.2.
|
| 1.1.45 |
“Products”
means Aphthasol, OraDisc A, and any Accepted
Product.
|
| 1.1.46 |
“Professional
Channel”
means direct sales to any Person licensed to provide health care
services,
including but not limited to group practices, clinics, hospitals,
and
managed care facilities, within the Territory, except for pharmacies
and
pharmacists.
|
| 1.1.47 |
“Recall”
means any action by any Party to recover title to or possession of
any
Products sold or shipped to Third Parties or any action to prevent
or
interrupt the sale or shipment by a Party of the Products to Third
Parties
that would have been subject to recall if it had been sold or
shipped.
|
| 1.1.48 |
“Regulations”
all FDA and any other Regulatory Authority laws and regulations,
occupational health and safety, and environmental laws and regulations,
GMP and warehousing practices and
procedures.
|
| 1.1.49 |
“Regulatory’
Approval”
means all consents, permits, approvals, licenses, authorizations,
qualifications, notices or orders that are issued or granted by Regulatory
Authorities which are required for the manufacture, marketing, promotion,
pricing and sale of the Products in the
Territory.
|
| 1.1.50 |
“Regulatory
Authority”
means any domestic, federal, regional or other administrative, legislative
regulatory or other governmental authority, agency, department, bureau,
commission, or council involved in the granting of Regulatory Approval
for
the Products in the Territory.
|
| 1.1.51 |
“Rolling
Forecast”
means each of the forecasts described in Section
2.3.
|
| 1.1.52 |
“Royalty”
is as defined in Section 5.4.
|
| 1.1.53 |
“Royalty
Period”
is as defined in Section 5.4.
|
| 1.1.54 |
“Seizure”
means any action by the FDA or any other Regulatory Authority to
detain or
destroy the Products or prevent the release of the
Products.
|
| 1.1.55 |
“Short
Fall”
is as defined in Section 2.8.2.
|
| 1.1.56 |
“Single
Channel Period”
means the first twelve months of the Term of this Agreement, commencing
on
the Effective Date.
|
| 1.1.57 |
“Specifications”
means the specifications for the Products mutually agreed upon by
the
Parties within six months after the Effective Date and attached hereto
as
Exhibit C, as the same may be amended from time to time in accordance
with
the provisions of Section 4.
|
| 1.1.58 |
“Standard
Cost”
means no less than the delivered cost of the raw materials, direct
labor
and direct overhead. Direct labor shall include the actual employees
costs
associated with running the manufacturing line of the product including
salary, benefits, and other employee related costs directly associated
with the salary costs. Direct overhead shall include the occupancy
costs
associated with the manufacturing area for the particular product,
depreciation of any specific equipment acquired to support the production
of the product and other costs directly related to the new product
manufacturing that are incremental to the current costs basis of
the
facility.
|
| 1.1.59 |
“Term”
means, the period commencing on the Effective Date and ending upon
the
expiration of the last Patent to expire in the Territory, except
as and if
sooner terminated in accordance with Section
8.
|
| 1.1.60 |
“Territory”
means the United States.
|
| 1.1.61 |
“Third
Party”
means any Person other than DISCUS, ACCESS and their respective
Affiliates.
|
| 1.1.62 |
“Trademark”
means any trademark, trade name, trade dress, slogan, logo, or similar
item selected by DISCUS for use in connection with the
Products.
|
1.2 Construction
of Certain Terms and Phrases. Unless
the context of this Agreement otherwise requires, (a) words of any gender
include each other gender; (b) words using the singular or plural number
also
include the plural or singular number, respectively; (c) the terms “hereof,”
“herein,” “hereby” and derivative or similar words refer to this entire
Agreement; (d) the terms “Section” refer to the specified Section of this
Agreement; and (e) Section headings shall not affect the meaning or construction
of any provision of this Agreement.
2.
SUPPLY
2.1 Grant
of License.
|
2.1
.1
|
Subject
to the terms and conditions of this Agreement, ACCESS hereby grants
to
DISCUS the exclusive right and license for applications of Products in the
Field, in the Territory, under ACCESS’s Intellectual Property Rights
during the Term of this Agreement to (a) market, to offer for sale,
sell
and import Aphthasol in the Professional Channel only, during the
Single
Channel Period, (h) market, to offer for sale, sell and import
Aphthasol
for applications after the Single Channel Period and for the remainder
of
the Term of this Agreement and (c) market, to offer for sale, sell
and
import OraDisc A and all Products except for Aphthasol; provided
that all
of such foregoing rights and licenses are limited to such use as
is
necessary for DISCUS to market, offer for sale, sell and import
the
Products for applications in the Field in the Territory in accordance
with
this Agreement. Except as expressly granted herein. ACCESS retains
all
rights in ACCESS’s Intellectual Property Rights and the Products.
Notwithstanding the foregoing, ACCESS specifically reserves for
itself and
its agents and subcontractors the right under ACCESS’s Intellectual
Property Rights (i) to market, 0ffer for sale, sell and import
Aphthasol
for applications in the Field, in the Territory in the Pharmacy
Channel
during the Single Channel Period, and (ii) to develop, modify,
and
manufacture the Products, and to perform its rights, activities
and
obligations under this Agreement, provided that, subject to Section
2.9,
all developments and modifications of the Products for use in the
Field
shall be Products and shall be covered by the license
hereunder.
|
|
2.1.2
|
Except
as specifically provided to the contrary in Section 2.1.1 and the
rights
granted to DISCUS pursuant to Section 2.8, the licenses granted
in Section
2.1.1 shall not be construed (a) to effect any sale of ACCESS’s
Intellectual Property Rights or any other proprietary ACCESS technology;
(b) to grant any license relating to ACCESS’s methods of formulating,
fabricating and manufacturing the Products, except as provided
for in this
Agreement; (c) to grant DISCUS any rights in or to the use of the
ACCESS
Intellectual Property Rights by implication or otherwise. DISCUS
shall
xxxx or have marked all containers or packages of the Products
in
accordance with the patent marking laws of the jurisdiction in
which such
units of Products are to be used or
distributed.
|
|
2.2
|
Manufacture;
Marketing.
Subject to Section 2.3, ACCESS shall use commercially reasonable
efforts
to create Specifications for the Manufacturing of the Products
with
ACCESS’s Third Party Manufacturers, from which Person DISCUS shall
purchase Products in such quantities and at such times as may be
ordered
by DISCUS in accordance with this Agreement. During the Term, ACCESS
shall
use commercially reasonable efforts to cause all ACCESS’s Manufacturers to
maintain the resources necessary to Manufacture the Products and
shall use
commercially reasonable efforts to ensure that ACCESS’s Third Party
Manufacturers, at its own expense, maintain all Materials and labor
necessary to do so. DISCUS shall use commercially reasonable efforts
to
market, sell, offer for sale and import the Products in the Territory;
provided that without limiting any other right or remedy of ACCESS,
if it
is determined by a court of competent jurisdiction that DISCUS
has failed
to use commercially reasonable efforts to market, offer for sale,
sell,
and import the Products, ACCESS may convert the rights and licenses
granted to DISCUS hereunder to non-exclusive rights and licenses
by
delivery of written notice to such
effect.
|
|
2.3
|
Forecasts.
At
least ninety (90) days prior to the expected Launch as communicated
to
DISCUS by ACCESS at least ninety (90) days prior to the expected
Launch,
DISCUS shall submit to ACCESS a forecast of the quantity of Products
that
DISCUS anticipates ordering from ACCESS prior to DISCUS’s anticipated
Launch of Products. At least ninety (90) days prior to the anticipated
Launch date, DISCUS shall submit to ACCESS and each ACCESS’s Third Party
Manufacturer a forecast of the quantity of OraDisc A that DISCUS
anticipates ordering from ACCESS during the twelve (12) month period
(broken down by month) following Launch and DISCUS shall update
such
forecast on a rolling twelve (12) months basis every month thereafter.
DISCUS shall use commercially reasonable efforts to place purchase
orders
with ACCESS’S Third Party Manufacturers for at least the quantity of the
Products specified in the first three (3) months of each such Rolling
Forecast and the remaining nine (9) months shall be a non-binding
good
faith estimate. For Aphthasol, DISCUS will follow the forecasting
procedure outlined in this Section 2.3 except that the First Rolling
Forecast will not be due until 30 days after the Effective
Date.
|
|
|
|
2.4
|
Orders
and Delivery.
DISCUS shall place its firm orders for the Products with ACCESS’s Third
Party Manufacturers by submitting a purchase order, at least ninety
(90)
days prior to the delivery date requested therein, which sets forth
(a)
the quantity of the Products ordered for delivery; and (h) the
delivery
date for that order. If any ACCESS’s Third Part)’ Manufacturer notifies
DISCUS that it is unable to fill such purchase order, it shall
indicate
the portion of such purchase order it cannot supply by the requested
delivery date and specify alternate delivery dates. Except with
respect to
orders placed to satisfy the binding portion of any Rolling Forecast,
DISCUS may cancel or modify any firm purchase order (in whole or
in part)
at any time prior to the delivery for any quantity of Products
for which
Manufacturing has not been completed pursuant to such purchase
order at
the time that notice of cancellation or modification is received
by any
ACCESS’s Third Party Manufacturer; provided that if Manufacturing has
commenced but not completed pursuant to such firm purchase order,
DISCUS
shall reimburse the applicable ACCESS’s Third Party Manufacturer for
Material and labor costs in respect of any works-in-progress pursuant
to
such cancelled or modified purchase order (or part thereof) at
the time
notice of cancellation or modification is received by such ACCESS’s Third
Party Manufacturer; and provided, further, that DISCUS shall reimburse
such ACCESS’s Third Party Manufacturer for the actual, reasonable
out-of-pocket cost of any other Material purchased by ACCESS’s Third Party
Manufacturer to fill a cancelled purchase order (or part thereof)
that are
unique to the Product and cannot within a reasonable period of
time
otherwise be used in such ACCESS’s Third Party Manufacturer’s operations.
All Products shall be delivered F.O.B. the Facility. Title, possession
and
risk of loss shall pass to DISCUS upon delivery of Products to
DISCUS’s
designated carrier at the Facility’s loading dock. The provisions of this
Agreement shall prevail over any inconsistent statement or provisions
contained in any document related to this Agreement passing between
the
parties hereto including, but not limited to, any purchase order,
acknowledgment, confirmation or
notice.
|
|
2.5
|
Non-Compete.
During the Term, neither DISCUS nor any Affiliate of DISCUS may
directly
or indirectly market, offer for sale, sell, import or distribute
in the
Territory any product with applications in the Field that competes
with
the Products.
|
|
2.6
|
Third-Party
Manufacturers.
ACCESS will use its commercially reasonable efforts to ensure that
each
ACCESS’s Third Party Manufacturer maintains a Manufacturing Facility in
compliance with all Regulations. ACCESS shall provide to DISCUS
written
notice of each of Access’s Third Party Manufacturers. Such written notice
shall include (a) the identity of the Third Party ACCESS has entered
into
agreement with, or with respect to any subsequent Third Party
manufacturer, desires to enter into an agreement with, and (b)
the
location of the Facilities for each Access’s Third Party Manufacturer.
ACCESS shall use commercially reasonable efforts to promptly provide
DISCUS with access to the Facility, as reasonably requested by
DISCUS for
inspection purposes under Section 3.5. DISCUS will only correspond
and
interact with ACCESS with respect to the Manufacture of the Products
and
ACCESS shall be responsible for the performance by the Third Parties
of
any obligations to be performed by such Third
Parties.
|
|
2.7
|
Additional
Responsibilities.
|
|
2.7.1
|
In
the event that DISCUS elects, in its sole discretion, to seek Regulatory
Approval for the sale of any Product Over-the-Counter, DISCUS shall
be
responsible, at DISCUS’s cost and expense, for any consumer product
testing and commercialization of the Products, including, without
limitation, all sales and marketing activities related to the Products
and
the design of all Product packaging and related artwork, and the
content
and design of all labeling. ACCESS shall provide any and all reasonable
assistance to DISCUS with respect to any of its efforts with regard
to
consumer product testing and commercialization of the Products,
including,
without limitation, all sales and marketing activities related
to the
Products and the design of all Product packaging and related artwork,
and
the content and design of all labeling, including but not limited
to any
efforts by DISCUS to obtain Regulatory Approval for the sale of
the
Products Over-the-Counter.
|
| 2.7.2 |
DISCUS
shall retain, at its own expense a selling and service organization
with
adequate experience, ability and training for purposes of marketing
and
selling the Products in the Territory.
|
2.8 Alternative
Supply.
|
2.8.1
|
ACCESS
hereby grants to DISCUS a limited, non-exclusive license for applications
in the Field in the Territory under ACCESS’s Intellectual Property Rights
during the Term of this Agreement to Manufacture Aphthasol for
DISCUS’s
distribution of Aphthasol in the Field in the Territory. ACCESS
shall
provide to DISCUS (and if designated by DISCUS, a designated alternative
supplier) copies of or access to all necessary know-how. Specifications,
technology, formulations and ACCESS Intellectual Property Rights
necessary
to Manufacture Aphthasol; provided
that to the extent that such technology and know-how constitutes
ACCESS
Confidential Information (or any information constitutes Confidential
Information of ACCESS’s Third Party Manufacturers) it shall be subject to
the provisions of Section 9 and DISCUS’s designated alternative supplier
shall be required to enter into a confidentiality agreement with
ACCESS
containing substantially the same terms as Section
9.
|
|
2.8.2
|
In
the event that (a) an ACCESS’s Third Party Manufacturer is in default of
its supply obligations under this Agreement with respect to three
(3) firm
purchase orders within any twelve month period or five (5) firm
purchase
orders within any three (3) year period of any Product (a “Shortfall”),
or (b) the bankruptcy or liquidation of ACCESS or such ACCESS’s Third
Party Manufacturer, or (c) DISCUS has achieved an aggregate of
$15,000,000
in aggregate Net Sales of any Product in any calendar year, or
(d) DISCUS
has achieved a cumulative aggregate of $25,000,000 in Net Sales
of any
Product commencing as of the Effective Date, or (e) an ACCESS’s Third
Party Manufacturer is not able to meet the Best Price for any Product
as
provided for in Section 5.2.3, then in any of such foregoing events,
subject to the provisions of Section 2.8.1., (i) DISCUS shall have
the
right to Manufacture the Products Manufactured by such ACCESS’ Third Party
Manufacturer (or ACCESS as the case may be) or for which the foregoing
Net
Sales thresholds were achieved or Best Price was not matched itself
and/or
qualify an alternative supplier of OraDisc A, for distribution
for
applications in the Field, in the Territory, (ii) ACCESS hereby
grants to
DISCUS a limited, non-exclusive license for applications in the
Field in
the Territory under ACCESS’s Intellectual Property Rights during the Term
of this Agreement to Manufacture, make, or have made for DISCUS’s OraDisc
A; and (iii) ACCESS shall provide to DISCUS (and if designated
by DISCUS,
a designated alternative supplier) copies of or access to all necessary
know-how, specifications, technology, formulations and ACCESS Intellectual
Property Rights necessary to Manufacture OraDisc A for distribution
by
DISCUS; provided
that to the extent that such technology and know-how constitutes
ACCESS
Confidential Information (or any information constitutes Confidential
Information of ACCESS’s Third Party manufacturer) it shall be subject to
the provisions of Section 9 and DISCUS’s designated alternative supplier
shall be required to enter into a confidentiality agreement with
ACCESS
containing substantially the same terms as Section
9.
|
|
2.8.3
|
In
the event that DISCUS (or a Third Party designated by DISCUS) exercises
its rights under this Section 2.8 and begins to Manufacture a Product,
ACCESS shall have no continuing obligations to Manufacture such
Product or
any liability with respect to the manufacture
thereof.
|
|
2.9
|
New
Products.
In
the event that ACCESS develops any product (other than OraDisc
A or
Apththasol) with applications in the Field that incorporates or
is based
on the defined chemical structure amlexanox (a “New Product”), then prior
to selling or licensing such New Product in the Field in the Territory,
it
shall provide DISCUS with written notice of such New Product including
the
uses and applications of such New Product in the Field. Within
60 days of
such notice, DISCUS will provide ACCESS with notice as to whether
it
desires to accept such New Product to be subject to the terms of
this
Agreement for sale in the Territory (each such accepted New Product
an
“Accepted Product”).
|
3. COMPLIANCE,
QUALITY AND ENVIRONMENTAL
|
3.1
|
Compliance
with Law.
ACCESS shall cause all Manufacturing operations hereunder to be
conducted
in compliance with all applicable laws and regulations, including
without
limitation, the Regulations, and in compliance with all applicable
provisions of this Agreement. ACCESS shall obtain and maintain
in full
force and effect all necessary Regulatory Approvals with respect
to the
Manufacture of the Products and the activities for which ACCESS
is
responsible under this Agreement.
|
|
3.2
|
Manufacturing
Quality: Storage.
ACCESS shall ensure that ACCESS or ACCESS’s Third Party Manufacturers
shall sample and analyze all Materials upon receipt to ensure that
such
Materials are unadulterated. Free of defects and meet the applicable
specifications therefore. ACCESS shall take all necessary steps
to attempt
to prevent contamination and cross contamination of Products. The
Products
shall be delivered to DISCUS in fully finished form and in their
final,
FDA-approved packaging configuration(s), including all applicable
labeling
and package inserts, and with a minimum shelf-life remaining for
each lot
of Product delivered therein to DISCUS of three months less than
the
approved shelf life. All Products Manufactured by ACCESS shall
be
certified by ACCESS. ACCESS shall or shall cause ACCESS’s Third Party
Manufacturers to (i) meet the standards for identity, quality,
safety,
strength and purity of the ingredients as specified in the approved
New
Drug Application for Products, and that the Products and their
raw
materials were handled and manufactured such that they meet FDA
standards
for identity and purity of the Product as specified in the approved
New
Drug Application for the Product, (ii) certify that each lot of
Product
has been manufactured in full compliance with Good-Manufacturing
Practices
(GMP)/Good Laboratory Practices (GLP) and all ISO regulations applicable
to the manufacture, testing and release of pharmaceuticals, and
certify
that each lot of Product is unadulterated and free from contamination,
dilutents and foreign matter in any amount in accordance with the
Products
specifications and generally accepted pharmaceutical standards,
(iii)
perform the quality control tests (both when the Products are in-process
and when they are finished) with respect to the Products in accordance
with the Methods of Analysis, the cost of such to be included in
the price
hereinafter specified, and shall promptly, upon completion of such
tests,
deliver to DISCUS a Certificate of Analysis for each Batch of Products
which lists the results of such tests and demonstrates that the
products
meet identify and purity standards approved by the FDA in ‘s approved New
Drug Application for the Product and (v) deliver a representative
sample
from each Batch of Products to DISCUS’s designated representative at the
same time each batch is delivered to
DISCUS.
|
|
3.3
|
Testing
by DISCUS.
DISCUS may test the Products samples in accordance with the applicable
Methods of Analysis. If the analysis of any Products performed
by or for
DISCUS differs from ACCESS’ s analysis of the same Batch, DISCUS shall
advise ACCESS and ACCESS and DISCUS agree to consult with each
other in
order to explain and resolve the discrepancy between each other’s
determination. If, after good faith attempt by the Parties to do
so, such
consultation does not resolve the discrepancy, an independent,
reputable
laboratory as mutually agreed by the Parties shall repeat the applicable
Methods of Analysis on representative samples from such Batch provided
by
or for DISCUS. The costs of the independent laboratory referred
to above
shall be borne by (a) DISCUS if such laboratory determines that
the
Products conforms to the Specifications or (b) ACCESS if such laboratory
determines that the Products do not conform to the Specifications.
If so
requested by DISCUS in writing, ACCESS shall promptly send a new
Batch of
the Products (of similar quantity as to the amount of such Products
being
analyzed as set forth above) to DISCUS. DISCUS shall not be obligated
to
pay for any of the Products (and if DISCUS has paid for such Products
ACCESS shall promptly reimburse DISCUS for the cost of replacing
such
Products, including, without limitation, related costs such as
testing and
transportation costs) that such laboratory determines does not
conform to
the Specifications, but shall be obligated to pay for any new Batch
of
Products that is sent as specified above; provided that
DISCUS must return to ACCESS such non-conforming
Products.
|
|
3.4
|
Samples
and Record Retention.
ACCESS shall or shall cause any ACCESS’s Third Party Manufacturers to
retain records and retention samples, as defined in 21 CER 211.170,
of
each Batch of the Products for at least thirty-six (36) months
after the
expiration date the last lot of the drug product containing the
active
ingredient in that Batch and shall make the same available to DISCUS
upon
request. Retention samples shall only be destroyed after the required
holding period. During and after the Term of this Agreement, ACCESS
shall
reasonably assist DISCUS with respect to any complaint, issue or
investigation relating to the
Products.
|
|
3.5
|
Inspection.
ACCESS shall or shall cause all ACCESS’s Third Party Manufacturers to give
access to representatives of DISCUS, at all reasonable times during
regular business hours, to all Facilities and any other facility
in which
Products is Manufactured, tested, packaged and/or stored, and to
all
Manufacturing and Distribution records with respect to the Products,
for
the purpose of compliance inspection. DISCUS shall have the right
while at
any such Facility to inspect ACCESS and ACCESS’s Third Party
Manufacturers’ records, new drug application files, problem files,
complaint files, and Regulatory Approvals to evaluate work practices
and
compliance with all applicable FDA and other Regulatory Authority
laws and
regulations, occupational health and safety, and environmental
laws and
regulations, GMP and warehousing practices and procedures. The
conduct of
(or right to conduct) any inspection under this Section 3.5 does
not
impose upon DISCUS responsibility or liability for the operation
of the
Facility. Such inspection shall be conducted after thirty (30)
days’ prior
written notice to ACCESS or ACCESS’s Third Party Manufacturers, will be
conducted in a manner that is not disruptive to ACCESS’s or any ACCESS’s
Third Party Manufacturer’s operations, and shall not be more frequent than
is reasonable. ACCESS’s Third Party Manufacturers, upon written request by
DISCUS, shall provide DISCUS with evidence of continued compliance
with
current GMP/GLP/ISO regulations as well as a copy of the updated
GMP/GLP/ISO compliance certificates for ACCESS’s Third Party
Manufacturers. ACCESS shall allow or ACCESS shall cause each ACCESS’s
Third Party Manufacturer to allow DISCUS to conduct periodic reviews
of
any of ACCESS or any ACCESS’S Third Party Manufacturers’ Operations and
records pertaining to Manufacturing/Testing, Inspection/Laboratory
Assay/Release/Warehousing and Distribution and associated documentation
and to forward to DISCUS documentation regarding traceability for
Products
purchased by DISCUS from ACCESS. DISCUS shall provide written notice
of
request for review and will agree to a date for inspection within
thirty
(30) days of the written request for inspection. ACCESS’ s Third Party
Manufacturers will not be required to divulge any proprietary information
related to items not related to the Products to DISCUS and DISCUS
shall
limit the scope of such reviews to information needed for DISCUS
to
determine that ACCESS’s Third Party Manufacturer is in compliance with
current GMP/GLP/ISO regulations. DISCUS shall maintain adequate
records
that allow tracking of the storage and shipment history of the
Products
sufficient to determine the location of all Products according
to ACCESS
‘s Third Party Manufacturer’s lot numbers up through the point of purchase
by DISCUS’ customers. DISCUS shall provide that data to ACCESS’s Third
Party Manufacturer upon request but only in the event that a field
corrective action or recall, in the opinion of Access, becomes
necessary.
DISCUS will not be required to divulge to ACCESS’s Third Party
Manufacturer any proprietary data regarding DISCUS’ customers or pricing
for the Products.
|
|
3.6
|
Adverse
Drug Experience Reporting.
Each Party shall fully, accurately and promptly provide the other
Party
with all data known to it at any time during the Term of this Agreement
or
thereafter, which data indicate that any Products is or may be
unsafe,
lacks utility, or otherwise does not meet the Specifications. ACCESS
will
act as the sole correspondent with the F.D.A. for adverse event
reporting
and ACCESS accepts all responsibility for submitting such reports
to the
F.D.A. ACCESS will provide to DISCUS copies of all such reports
within 10
days of submission to the F.D.A.
|
|
3.7
|
Recalls
and Seizure.
In
the event that a product complaint, field corrective action or
product
recall requires remedial action to remove the Products from the
field,
DISCUS will have final authority to decide whether such an action
is
needed and will manage and conduct all field actions. Both DISCUS
and
ACCESS agree to cooperate in such field corrective actions or recalls
and
share all pertinent product history records and distribution records
as
needed so that both sides can demonstrate to the FDA or other pertinent
regulatory authorities that all affected product has been identified
and
satisfactorily removed from the field in compliance with 21 CR
7 and other
applicable FDA regulations governing product recalls and/or field
corrective actions. In the event that a field corrective action
or product
recall is required, DISCUS will manage the associated activities
and
provide a report of all activities to ACCESS within thirty (30)
days of
completion of the field corrective action or product recall. In
case of
notification to DISCUS of an accident or injury or serious health
risk to
a patient caused by the Products, DISCUS will inform ACCESS immediately
by
telephone or if not applicable by fax or email in this sequence
to
discuss, what is to be done.
|
| 4. |
MANUFACTURING
CHANGES
|
|
4.1
|
Voluntary
Changes.
Subject to Section 4.2, ACCESS shall not and ACCESS shall ensure
all
ACCESS’s Third Party Manufacturers shall not make any material changes
to
the Manufacturing process, the Manufacturing equipment, the
Specifications, the Product, the Materials, or the Methods of Analysis
without the prior written consent of DISCUS, which shall not be
unreasonably withheld or delayed and without prior written approval
from
the U.S. F.D.A if such prior approval is legally required. If either
Party, or any of ACCESS’s Third Party Manufacturers, requests in writing a
change in the Manufacturing process, the Manufacturing equipment,
the
Specifications, the Materials, or methods of Analysis with respect
to the
Products that is not the result of a requirement of the FDA or
any other
Regulatory Authority, the Parties shall use commercially reasonable
efforts to make or accept such change, as the case may be. The
requesting
Party shall provide the Parties with a detailed written report
of all
proposed changes to the Manufacturing process, the Manufacturing
equipment, the Specifications, the Materials, the sources of Materials
or
the Methods of Analysis.
|
| 4.2 |
Required
Changes.
If
the FDA or any other Regulatory Authority requests or requires, or
takes
any action that requires, any change in the Manufacturing process,
the
Manufacturing equipment, the Specifications, the Materials, or Methods
of
Analysis with respect to the Products, the Parties shall meet and
discuss
an implementation plan for such change and use commercially reasonable
efforts to accommodate as soon as practicable such change to meet
the
FDA’s or such other Regulatory Authority’s requirements. Each Party will
bear its respective costs associated with, or incurred as a result
of,
such change. Each Party agrees to promptly forward to the other copies
of
any written communication received by such Party from the FDA or
any other
Regulatory Authority that may affect the Manufacture, supply, or
distribution of the Products as contemplated
herein.
|
| 5. |
PRICE
AND PAYMENT
|
|
5.1
|
Price.
For so long as either ACCESS or ACCESS’s Third Party Manufacturer is the
Manufacturer of OraDisc A for DISCUS, ACCESS’s Third Party Manufacturer
shall invoice DISCUS for OraDisc A supplied to DISCUS hereunder
at no more
than the applicable price per Product set forth on Exhibit
D.
|
5.2 Price
Adjustment.
5.2.1
Commencing on any date in the second Contract Year, ACCESS may adjust the
then-current price to reflect documented increases in labor costs or the
acquisition cost of Materials per unit of Products at the beginning of the
Contract Year in question as compared to the acquisition cost of such labor
or
Materials per unit of Products at the beginning of the immediately preceding
Contract Year; provided
that
ACCESS gives DISCUS not less than ninety (90) days’ prior written notice of any
price increase and that ACCESS may not increase the price more than once
during
any Contract Year; and provided,
further,
that
except as provided in Section 5.2.2, any price increase per unit of Products
shall not exceed the PPI Adjustment for the Contract Year in question.
“PPI
Adjustment”
will
be
the change over the prior year of the Bureau of Labor Statistics Producer’s
Price Index for Pharmaceutical Preparations (Code 2834)
5.2.2
Notwithstanding anything to the contrary in Section 5.2.1, in the event of
an
extraordinary event that results in the increase in the collective cost of
manufacturing and distributing to DISCUS the Products ordinarily and necessarily
incurred by ACCESS during any annual period (an “Extraordinary
Event Increase”),
ACCESS need not wait until the next annual period to adjust the pricing for
the
Products. Upon ACCESS’s determination that an Extraordinary Event Increase has
occurred, ACCESS shall notify DISCUS in writing of the applicable price
adjustment, together with supporting documentation evidencing such change
including without limitation, evidence that ACCESS shall have used its
commercially reasonable efforts to secure alternative sources of supply for
any
components or consumables, at lesser costs without detracting from the quality
or efficacy of the Products. Any such pricing adjustment will become effective
thirty (30) days following the date of ACCESS’s written notice
thereof.
|
5.2.3
|
DISCUS
shall have the right, at any time. to solicit proposals from Third
Party
manufacturers (and/or to provide a proposal from one of its Affiliates
which shall he at a cost of at least the Affiliate’s Standard Cost) as to
the cost that such Person would charge DISCUS for the Manufacture
of
OraDisc A. DISCUS may deliver the proposal that it would like to
accept
(the “Best Price”) to ACCESS’s Third Party Manufacturer and ACCESS’s Third
Party Manufacturer shall have the option to meet the same terms
as the
Best Price, \which option must be communicated to DISCUS in writing
within
thirty (30) business days.
|
|
5.3
|
License
Payments. During the Tenn. the license payments set forth in Exhibit
E
shall be due and payable from DISCUS to ACCESS no later than within
thirty
(30) days after the quarter in which the occurrence of the applicable
event/milestone set forth in Exhibit
E
occurred; provided that the Launch milestone payment shall be made
within
thirty (30) days after Launch. For purposes of clarity, in the
event that
either party shall terminate this Agreement in accordance with
its rights
set forth in Section 8, no further amounts shall be payable with
respect
to this Section 5.3 other than for events/milestone(s) which occurred
prior to such termination.
|
|
5.4
|
Royalty
Payments. In addition to the payments set forth above, DISCUS shall
pay to
ACCESS a royalty (the “Royalty”),
as outlined on Exhibit
F,
on Net Sales of the Products during each calendar quarter (or portion
thereof) during the Term (each such period, a “Royalty
Period”),
commencing as of the date on which the Products are sold by DISCUS
for the
first time to a Third Party for commercial or consumer use or
distribution. Each Royalty will be payable not later than thirty
(30) days
following the expiration of each applicable Royalty Period. DISCUS
shall
pay the Royalty for so long as the license granted by ACCESS under
Section
2.1 remains in effect. DISCUS will include with each such payment
a
written report detailing (a) the number of Products units and the
sales
price of such Products units by DISCUS and its Affiliates; and
(ii) Net
Sales of the Products during the applicable Royalty Period, all
in a
manner consistent with DISCUS’s internal sales reporting. In the event
that (i) Discus is not the only Person selling an oral mucoadhesive,
erodible patch for use on apthous ulcers within the Territory (other
than
oral mucoadhesive, erodible patches currently under license by
ACCESS),
the royalty on OraDisc A shall be reduced in proportion to the
market
share in dollars of DISCUS’ sales of OraDisc A and the market share of the
competitive product (ii) Discus is not the only Person selling
amlexanox
in the treatment of oral lesions within the Territory, the royalty
on both
OraDisc A and Aphthasol shall both be reduced in proportion to
the market
share in dollars of DISCUS’ sales of OraDisc A and the market share of the
competitive product. In the event that both conditions (i) and
(ii) herein
are met, the royalty on OraDisc A shall be reduced by both
percentages.
|
|
5.5
|
Payment.
DISCUS shall pay invoices under Section 5.1 for Products delivered
hereunder that are Manufactured directly by ACCESS not later than
thirty
(30) days after the later of receipt of delivery of Products covered
by
such invoice or receipt of such
invoice.
|
|
5.6
|
Taxes
and Other Charges.
All Products prices are exclusive of taxes, shipping costs to the
point of
delivery, customs duties and other charges, and DISCUS agrees to
bear and
be responsible for the payment of all such charges imposed, excluding
taxes based upon ACCESS’s net
income.
|
|
5.7
|
Audit
Rights.
|
5.7.1
DISCUS shall maintain books of account with respect to its sales of the Products
in each country in the Territory. ACCESS shall have the right, not more than
once during each calendar year, to have an independent certified public
accountant selected and retained by ACCESS to inspect and examine such books
of
DISCUS during regular business hours for the purpose of verifying the statements
of the aggregate Net Sales resulting from sales of Products and determining
the
correctness of the Royalties paid. If such independent certified public
accountant’s report properly shows any underpayment by DISCUS, DISCUS shall pay
to ACCESS within thirty (30) days after DISCUS’s receipt of such report, (a) the
amount of such underpayment, and (b) if such underpayment exceeds five percent
(5%) of the total amount owed for the period then being audited, the reasonable
fees and expenses of any independent accountant performing the audit on behalf
of ACCESS. Any audit or inspection conducted under this Agreement by ACCESS
or
its agents or contractors will be subject to the confidentiality provisions
of
this Agreement, and ACCESS will be responsible for compliance with such
confidentiality provisions by such agents or contractors.
|
5.7.2
|
ACCESS
shall maintain books of account with respect to the Manufacture
of the
Products. DISCUS shall have the right, not more than once during
each
calendar year, to have an independent certified public accountant
selected
and retained by DISCUS to inspect and examine such books of ACCESS
during
regular business hours for the purpose of verifying the that ACCESS
is not
making money from any ACCESS Third Party Manufacturer from is Manufacture
of the Products, except as provided for in Exhibit
F.
If such independent certified public accountant’s report properly shows
any prohibited payments or compensation to ACCESS, ACCESS shall
(a) pay to
DISCUS within thirty (30) days after DISCUS’s receipt of such report the
amount of such prohibited payments or compensation, and (b) DISCUS
shall
have the right to audit all previous years and (ii) the amount
of any
prohibited payments or compensation from such previous years. Any
audit or
inspection conducted under this Agreement by DISCUS or its agents
r
contractors will be subject to the confidentiality provisions of
this
Agreement, and DISCUS will be responsible for compliance with such
confidentiality provisions by such agents or
contractors.
|
|
5.8
|
Late
Payments.
If
any payment due to ACCESS under this Agreement is not made when
due, then,
commencing from the date on which such payment was due, the amount
of such
payment shall accrue interest calculated at an annual rate equal
to the
prime rate plus three percent (3%) until such time as payment of
the
overdue amount is made in full; provided that no interest shall
accrue on
any amounts being disputed in good faith by DISCUS with respect
to which
DISCUS is making diligent and good faith efforts to
resolve.
|
| 6. |
REPRESENTATIONS
AND WARRANTIES
|
|
6.1
|
Representation
and Warranties of Each Party. Each of DISCUS and ACCESS hereby
represents,
warrants and covenants to the other Party hereto as
follows:
|
|
6.1.1
|
it
is a corporation or entity duly organized and validly existing
under the
laws of the state or the jurisdiction of incorporation or
formation;
|
|
6.1.2
|
the
execution, delivery and performance of this Agreement by such Party
has
been duly authorized by all requisite corporate action and do not
require
any shareholder action or approval;
|
|
6.1.3
|
it
has the power and authority to execute and deliver this Agreement
and to
perform its obligations hereunder;
|
|
6.1.4
|
the
execution, delivery and performance by such Party of this Agreement
and
its compliance with the terms and provisions hereof does not and
will not
conflict with or result in a breach of any of the terms and provisions
of
or constitute a default under (a) a loan agreement, guaranty, financing
agreement, agreement affecting a product or other agreement or
instrument
binding or affecting it or its property; (b) the provisions of
its charter
or operative documents or by laws; or (c) any order, writ, injunction
or
decree of any court or governmental authority entered against it
or by
which any of its property is bound;
and
|
|
6.1.5
|
it
shall comply with all applicable laws and regulations relating
to its
activities under this Agreement.
|
|
6.2
|
Representations
and Warranties of ACCESS. ACCESS hereby further represents and
warrants to
DISCUS as follows:
|
|
6.2.1
|
As
of delivery of each shipment of Products Manufactured by ACCESS
or an
ACCESS Third Party Manufacturer to a carrier, such Product (a)
has been
Manufactured, stored and shipped in accordance with GMPs, all applicable
laws, rules, regulations or requirements and all applicable Regulatory
Approvals in effect at the time of Manufacture; (b) conforms to
the
Specifications, and is free from defects and are merchantable;
(c) is not
adulterated or misbranded; and (d) has been stored in accordance
with
procedures set forth in this Agreement, if any; and (d) ACCESS
has good
and marketable title to the Products and the Products are free
from all
liens, charges, encumbrances and security
interests;
|
|
6.2.2
|
As
of the Effective Date and as of the date of the delivery of each
shipment
of Products. U.S. Patent No. 6.585,997 and US Patent No. 5,362,737
are (a)
existing and have not been held to be invalid or unenforceable,
in whole
or in part and (b) ACCESS owns or has full and exclusive rights
to use and
exploit under licenses (and to license or sublicense) all their
rights
under the Patents and the Patents are not encumbered by any claims,
liens,
mortgages or security interests;
|
|
6.2.3
|
As
of the Effective Date and as of the date of delivery of each shipment
of
Products, (a) ACCESS has received no actual notice or any basis
to
reasonably conclude that any of ACCESS’s Intellectual Property Rights
relating to or incorporated as a part of the Products is subject
to an
infringement claim of any issued patent owned or possessed by any
Third
Party within the Territory, and (b) no Third Party has any right,
title or
interest in or to the Intellectual Property Rights relating to,
incorporated as a part of or used in the Manufacture of the Products,
and
|
|
6.2.4
|
As
of the Effective Date, ACCESS has received no actual notice or
any basis
to reasonably conclude that OraDisc A has less than reasonable
chance to
receive Regulatory Approval to be sold Over-the
Counter.
|
|
6.3
|
No
Presumption.
Each Party hereto represents that it has been represented by legal
counsel
in connection with this Agreement and acknowledges that it has
participated in the drafting hereof. In interpreting and applying
the
terms and provisions of this Agreement, the Parties agree that
no
presumption shall exist or be implied against the Party which drafted
such
terms and provisions.
|
|
6.4
|
Remedy.
In addition to any other remedy DISCUS may have hereunder, upon
request
from DISCUS, as a remedy for any breach of Section 6.2.1, ACCESS
shall
promptly replace, at its sole cost and expense, any Products which
fail to
comply with the representations set forth in Section 6.2.1; provided
that
such non-conforming Products are returned to ACCESS in accordance
with
ACCESS’s return procedures, and only if after ACCESS’s inspection, such
Products are determined to have been
non-conforming.
|
|
6.5
|
DISCUS
Responsibility. DISCUS shall not be responsible for any loss or
cost
incurred by ACCESS during Manufacture of the Products in compliance
with
the requirements of Section 6.2, except with respect to procedures,
instructions, or directions unilaterally imposed upon ACCESS by
DISCUS
under this Agreement.
|
6.6 Disclaimer.
|
6.6.1
|
THE
FOREGOING WARRANTIES ARE THE SOLE AND EXCLUSIVE WARRANTIES GIVEN
BY ACCESS
WITH RESPECT TO THE PRODUCTS PROVIDED HEREUNDER, AND ACCESS GIVES
AND
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED,
OTHER THAN THE FOREGOING. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING
EXCEPT FOR THE WARRANTIES EXPRESSLY PROVIDED IN SECTION 6, NO IMPLIED
WARRANTY OF MERCHANTABILITY, VALIDITY, NON-INFRINGEMENT, TITLE,
FITNESS
FOR ANY PARTICULAR PURPOSE, AND NO IMPLIED WARRANTY ARISING BY
USAGE OF
TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE IS GIVEN OR MADE
BY
ACCESS OR SHALL ARISE BY OR IN CONNECTION WITH ANY SALE OR PROVISION
OF
PRODUCTS OR SERVICES BY ACCESS, OR DISCUS’ USE OR SALE OF THE PRODUCT, OR
ACCESS’ AND/OR DISCUS’ CONDUCT IN RELATION THERETO OR TO EACH OTHER. NO
REPRESENTATIVE OF ACCESS IS AUTHORIZED TO GIVE OR MAKE ANY OTHER
REPRESENTATION OR WARRANTY OR TO MODIFY THE FOREGOING WARRANTY
IN ANY WAY
OTHER THAN PURSUANT A WRITTEN AMENDMENT OF THIS AGREEMENT THAT
IS EXECUTED
BY ACCESS.
|
|
6.6.2
|
The
limited warranties set forth in this Section 6 do not apply to
any
non-conformity of the Product resulting from (a) repair, alteration,
misuse, negligence, abuse, accident, mishandling or storage in
an improper
environment by any party other than ACCESS (or its contract manufacturer),
or (b) use, handling, storage or maintenance other than in accordance
with
Product specifications or Product
label.
|
| 6.7 |
Limitation
of Liability.
|
ACCESS’
LIABILITY, AND THE EXCLUSIVE REMEDY, IN CONNECTION WITH THE SALE OR USE OF
THE
PRODUCT (WHETHER BASED ON CONTRACT, NEGLIGENCE, BREACH OF WARRANTY. STRICT
LIABILITY OR ANY OTHER LEGAL THEORY), SHALL BE STRICTLY LIMITED TO ACCESS’
OBLIGATIONS AND DISCUS’ RIGHTS AS SPECIFICALLY AND EXPRESSLY PROVIDED IN THIS
AGREEMENT.
EXCEPT
WITH RESPECT TO CLAIMS OR LIABILITY TO THIRD PARTIES, IN NO EVENT WHATSOEVER
SHALL EITHER PARTY HAVE ANY LIABILITY, OBLIGATION OR RESPONSIBILITY TO THE
OTHER
PARTY OR SUCH OTHER PARTY’S AFFILIATES FOR ANY INDIRECT, INCIDENTAL.
CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES ARISING IN ANY WAY
IN
CONNECTION WITH ANY PRODUCT OR ITS PURCHASE, SALE, USE OR INAJ31LITY TO
USE.
| 7. |
INDEMNIFICATION
AND INSURANCE
|
7.1 Indemnification.
|
7.1.1
|
ACCESS
shall defend, indemnify and hold harmless DISCUS, its Affiliates,
directors, officers, employees and agents from and against all
damages,
losses, liabilities, expenses, claims, demands, suits, penalties
or
judgments or administrative or judicial orders (including, without
limitation, reasonable attorneys’ fees and expenses) incurred, assessed or
sustained by or against DISCUS, its Affiliates, directors, officers,
employees or agents with respect to a claim by a third party arising
out
of (a) the negligent acts or omissions of ACCESS; (b) any breach
by ACCESS
of this Agreement or its representations, warranties or covenants
hereunder; (c) any Recall or Seizure attributable to ACCESS’s performance
(including, without limitation, amounts DISCUS is legally required
to pay
or credit to its customers for Products so Recalled or Seized);
(d) any
allegation that the manufacture, importation, sale, offer for sale
or use
of the Products infringes any patent or other Intellectual Property
Rights, proprietary or protected right within the United States;
provided
that ACCESS will not be obligated to indemnify DISCUS if and to
only to
the extent that the alleged infringement is caused by DISCUS’s (including
its Affiliates, agents, contractors, and sub-distributors) or its
customers misuse, mis-handling, mis-storage or modification of
the
Products; or (ii) DISCUS’s (including its Affiliates, agents, contractors,
and sub-distributors) or its customers use of the Products in combination
with any products or materials not provided by ACCESS; and further provided
that the foregoing indemnification obligation shall not apply in
the event
and to the extent that such claim arose as a result of any indemnitee’s
gross negligence, intentional misconduct or breach of this Agreement.
Alternatively, ACCESS may terminate this indemnification provision with
respect to any subsequent exploitation of DISCUS’ rights hereunder if any
claim is made that the Manufacture, storage, importation, sale,
offer for
sale or use of the Products infringes any patent or other proprietary
or
protected right of any Third Party and ACCESS determines that it
no longer
desires to be involved in the continued sale, offer for sale or
use of the
Products, provided
that such a determination by ACCESS shall terminate any and all
rights
that ACCESS may otherwise have to any payments from DISCUS under
either
Section 5.2 or 5.3 and provided
that ACCESS shall only be required to continue in the Manufacture,
storage, importation, of the Products should DISCUS elect to defend,
indemnify and hold harmless ACCESS from any loss resulting from
those
ongoing activities, provided
that such termination will not change, alter or modify ACCESS’ obligations
or liabilities with respect to any Products Manufactured, delivered
or
distributed prior to such termination or any other breach by ACCESS
occurring prior to such termination. The provisions of this Section
shall
survive the termination or expiration of this
Agreement.
|
|
7.1.2
|
DISCUS
small defend, indemnify and hold harmless ACCESS, its directors,
officers,
employees and agents from and against all damages, losses, liabilities,
expenses, claims, demands, suits, penalties or judgments or administrative
or judicial orders (including, without limitation, reasonable attorneys’
fees and expenses) incurred. Assessed or sustained by or against
ACCESS.
its directors, officers, employees or agents with respect to or
arising
out of (a) the negligent acts or omissions of DISCUS; (b) any breach
by
DISCUS of this Agreement or of its representations, warranties
or
covenants hereunder; (c) any allegation that the Manufacture, importation,
sale, offer for sale or use of the Products under the Trademarks
or DISCUS
packaging or marketing materials infringes any patent or other
proprietary
or protected right of any Third Party; (d) any Recall or Seizure
attributable to DISCUS’s or its Affiliates’ performance or activities; (e)
any enforcement or other action by any Regulatory Authority relating
to
the distribution, the pricing of the Products by DISCUS or sale
of the
Products by DISCUS to Third Parties; (f) DISCUS’s failure to comply with
any applicable law, regulation or order (including, without limitation,
environmental laws, regulations and orders); or (g) is otherwise
caused by
or arises out of a claim of the Manufacture (if DISCUS exercises
any of
its rights under Section 2.8), marketing, distribution, sale and
use of
the Products by DISCUS or its Affiliates, contract manufacturers,
or
sub-distributors. The foregoing indemnification obligation shall
not apply
in the event and to the extent that such claim arose as a result
of any
indemnitee’s negligence, intentional misconduct or breach of this
Agreement. The provisions of this Section shall survive the termination
or
expiration of this Agreement.
|
|
7.1.3
|
To
receive the benefit of indemnification under this Section 7.1,
the Party
and its Affiliates, directors, officers, employees or agents seeking
indemnification (an “Indemnified
Party”)
shall promptly notify the other Party (the “Indemnifying
Party”),
in writing, of any claim asserted or threatened against such Indemnified
Party for which such Indemnified Party is entitled to indemnification
hereunder from the Indemnifying Party. With respect to any such
claim the
Indemnified Party shall, at no out-of-pocket expense to it, reasonably
cooperate with and provide such reasonable assistance to such Indemnifying
Party as such Indemnifying Party may reasonably request. Such reasonable
assistance may include, without limitation, providing copies of
all
relevant correspondence and other materials that the Indemnifying
Party
may reasonably request. The obligations of an Indemnifying Party
under
Sections 7.1.1 and 7.1.2 are conditioned upon the delivery of written
notice to the Indemnifying Party of any asserted or threatened
claim
promptly after the Indemnified Party becomes aware of such claim;
provided
that the failure of the Indemnified Party to give such notice or
any delay
thereof shall not affect the Indemnified Party’s right to indemnification
hereunder, except to the extent that such failure or delay impairs
the
Indemnifying Party’s ability to defend or contest any such claim. The
Indemnified Party may participate in the defense thereof at its
sole cost
and expense. An Indemnifying Party may not settle a suit or claim
without
the consent of the Indemnified Party if (a) such settlement would
impose
any monetary obligation on the Indemnified Party for which indemnification
is not provided hereunder, (b) or require the Indemnified Party
to submit
to an injunction or otherwise limit the Indemnified Party’s rights under
this Agreement, or (c) does not include a release of the Indemnified
Party
from all liability arising out of such suit or claim. Any payment
made by
an Indemnifying Party to settle any such suit or claim shall be
at its own
cost and expense.
|
7.1.4
The
indemnification provided by this Section 7 shall be the Parties’ sole and
exclusive remedy in connection with any third party claim.
| 8. |
TERM
AND TERMINATION
|
|
8.1
|
Term.
This Agreement shall commence on the Effective Date and continue,
unless
sooner terminated as set forth below in this Section 8 or as otherwise
specifically stated in this Agreement, for the duration of the
Term.
|
|
8.2
|
Termination
Without Cause.
DISCUS may terminate this Agreement (a) at any time prior to the
last day
of the twelfth full month after Launch immediately upon giving
written
notice to ACCESS if DISCUS, in its complete and unfettered discretion,
determines to cease marketing the Products; or (b) during the six
(6)
month period after the completion of the third Contract Year upon
giving
written notice to ACCESS if DISCUS, in its complete and unfettered
discretion, determines to cease marketing the Products as a result
of not
meeting DISCUS’s commercial objectives with respect to the Products;
provided,
however,
that in the event that DISCUS terminates this Agreement in accordance
with
this Section 8.2 or Section 8.3, then DISCUS shall transfer to
ACCESS any
data, excluding any customer specific data, relating to the Products
that
DISCUS generated (through marketing studies or otherwise) prior
to such
termination. Such termination shall not give rise to the payment
of any
penalty or damages by either Party.
|
|
8.3
|
Termination
for Regulatory Action or Claim of Infringement.
DISCUS may terminate this Agreement in its entirety immediately
if either
(i) the FDA or any other Regulatory Authority takes any action,
the result
of which is to prohibit or permanently or otherwise restrict the
Manufacture, storage, importation, sale, offer for sale or use
of the
Products in any way that will have a material, adverse effect on
the sale
price or sales volumes of the Products (ii) any claim is made that
the
Manufacture, storage, importation, sale, offer for sale or use
of the
Products infringes any patent or other proprietary or protected
right of
any Third Party. Such termination shall not give rise to the payment
of
any penalty or damages by either
Party.
|
|
8.4
|
Termination
for Breach.
If
either Party has at any time failed to discharge any of its obligations
hereunder and failed to correct such default within thirty (30)
days after
the other Party having given written notice to the non-aggrieved
Party
thereof, the aggrieved Party shall be entitled to notify the non-aggrieved
Party that it intends to terminate this Agreement unless such default
is
corrected and may so terminate ten (10) days after the end of such
thirty
(30) day period if such default is continuing; provided
that (i) if such default by the other Party shall be a recurring
default
and the other Party does not reasonably satisfy the aggrieved party
that
such defaults shall cease to occur, the aggrieved Party shall be
entitled
to terminate this Agreement upon the occurrence of such default
and the
other Party shall not be entitled to correct such default and (ii)
the
non-aggrieved Party shall have the right to contest the aggrieved
Party’s
ability to terminate this Agreement by bringing an action for declaratory
judgment in a court of competent jurisdiction and the termination
shall
not be effective until the court rules. Such termination shall
not give
rise to the payment of any penalty or damages by the terminating
Party.
|
|
8.5
|
Termination
for Bankruptcy.
If
either Party by voluntary or involuntary action goes into liquidation,
dissolves or files a petition for bankruptcy or suspension of payments,
is
adjudicated bankrupt, has a receiver or trustee appointed for its
property
or estate, becomes insolvent or makes an assignment for the benefit
of
creditors, the other Party shall be entitled by notice in writing
to such
Party to terminate this Agreement forthwith. Such termination shall
not
give rise to the payment of any penalty or damages by the terminating
Party.
|
|
8.6
|
Effect
of Termination.
Termination or expiration of this Agreement, in whole or in part,
shall be
without prejudice to the right of either Party to receive all payments
accrued and unpaid at the effective date of such termination or
expiration, without prejudice to the remedy of either Party in
respect to
any previous breach of any of the representations, warranties or
covenants
herein contained and without prejudice to any other provisions
hereof
which expressly or necessarily call for performance after such
termination
or expiration. The following provisions shall survive the expiration
or
termination of this Agreement: Sections
3.4,3.6,3.7,5.5,5.6,5.7,5.8,6,7.1,8.6,9, 11 (except Section 11.6),
12 and
13.
|
| 9. |
CONFIDENTIALITY
|
|
9.1
|
Nondisclosure
Obligation.
Each of ACCESS and DISCUS shall use only in accordance with this
Agreement
and shall not disclose to any Third Party the Confidential Information
received by it from the other Party pursuant to this Agreement,
without
the prior written consent of the other Party. The foregoing obligations
shall survive for a period of five (5) years after the termination
or
expiration of this Agreement. These obligations shall not apply
to
Confidential Information that: (a) is known by the receiving Party
at the
time of its receipt, and not through a prior disclosure by the
disclosing
Party, as documented by business records; (b) is at the time of
disclosure
or thereafter becomes published or otherwise part of the public
domain
without breach of this Agreement by the receiving Party; (c) is
subsequently disclosed to the receiving Party by a Third Party
who has the
right to make such disclosure; (d) is developed by the receiving
Party
independently of the Confidential Information received from the
disclosing
Party and such independent development can be documented by the
receiving
Party; or (e) is required by law, regulation, rule, act or order
of any
governmental authority or agency to be disclosed by a Party, provided that
notice is promptly delivered to the other Party in order to provide
an
opportunity to seek a protective order or other similar order with
respect
to such Confidential Information and thereafter the disclosing
Party
discloses to the requesting entity only the minimum Confidential
Information required to be disclosed in order to comply with the
request,
whether or not a protective order or other similar order is obtained
by
the other Party.
|
|
9.2
|
Permitted
Disclosures.
Each Party may disclose the other Party’s Confidential Information to us
employees and Affiliates on a need-to-know basis and to its agents
or
consultants to the extent required to accomplish the purposes of
this
Agreement; provided
that
the recipient Party obtains prior agreement from such agents and
consultants to whom disclosure is to be made to hold in confidence
and not
make use of such Confidential Information for any purpose other
than those
permitted by this Agreement. Each Party will use at least the same
standard of care as it uses to protect proprietary or confidential
information of its own to ensure that such employees, agents, consultants,
and Affiliates do not disclose or make any unauthorized use of
the other
Party’s Confidential Information.
|
|
9.3
|
Disclosure
of Agreement.
Neither ACCESS nor DISCUS shall release to any Third Party or publish
in
any way any non-public information with respect to the terms of
this
Agreement without the prior written consent of the other Party,
which
consent shall not be unreasonably withheld or delayed, provided
that either Party may disclose the terms of this Agreement (a)
to the
extent required to comply with applicable laws, including, without
limitation, the rules and regulations promulgated by the United
States
Securities and Exchange Commission; provided,
further,
that prior to making any such disclosure, the Party intending to
so
disclose the terms of this Agreement shall (i) provide the nondisclosing
Party with written notice of the proposed disclosure and an opportunity
to
review and comment on the intended disclosure which is reasonable
under
the circumstances and (ii) shall seek confidential treatment for
as much
of the disclosure as is reasonable under the circumstances, including,
without limitation, seeking confidential treatment of any information
as
may be requested by the other Party; or (b) to one or more Third
Parties
and/or their advisors in connection with a proposed spin-off, joint
venture, divestiture, merger or other similar transaction involving
all,
or substantially all, of the Products, assets or business of the
disclosing Party to which this Agreement relates or to lenders,
investment
bankers and other financial institutions of its choice solely for
purposes
of financing the business operations of such Party; provided,
further,
that either (i) the other Party has consented to such disclosure
or (ii)
such Third Parties have signed confidentiality agreements with
respect to
such information on terms no less restrictive than those contained
in this
Section 9; or (c) to its legal
counsel.
|
|
9.4
|
Publicity.
All publicity, press releases and other announcements relating
to this
Agreement or the transactions contemplated hereby shall be reviewed
in
advance by, and shall be subject to the approval of, both
Parties.
|
| 10. |
FORCE
MAJEURE
|
|
10.1
|
If
the production, delivery, acceptance or use of Products specified
for
delivery under this Agreement or if the performance of any other
obligation hereunder is prevented, restricted or interfered with
by reason
of fires, accidents, explosions, earthquakes, floods, embargoes,
government ordinances or requirements, civil or military authorities,
acts
of God or of the public enemy, or other similar causes beyond the
reasonable control of the Party whose performance is affected (any
of the
foregoing a “Force
Majeure Event”),
then the Party affected, upon giving prompt written notice to the
other
Party, shall be excused from such performance on a day-for-day
basis to
the extent of such prevention, restriction, or interference (and
the other
Party shall likewise be excused from performance of its obligations
on a
day-for-day basis to the extent such Party’s obligations relate to the
performance so prevented, restricted or interfered with); provided
that the Party so affected shall use commercially reasonable efforts
to
avoid or remove such causes of non-performance and both Parties
shall
proceed to perform their obligations with dispatch whenever such
causes
are removed or cease. If such Force Majeure Event continues for
a period
of ninety (90) consecutive days or more and as a result either
party has
been unable to perform its obligations under this Agreement for
such
ninety (90) day period, the other Party may terminate this Agreement
effective immediately, upon delivery of a notice of termination
in
writing, provided
that such event of Force Majeure Event is continuing.
|
| 11. |
INTELLECTUAL
PROPERTY
|
|
11.1
|
Trademarks:
DISCUS Intellectual Property. DISCUS may advertise, promote, market
and
sell the Products either separately or as part of other products
under any
of DISCUS’s Trademarks, the OraDisc A Trademark, amlexanox trademark
and/Or DISCUS’s trade dress, whether registered or unregistered, in its
sole discretion; provided that
DISCUS may not use or adopt any other ACCESS Trademark or trade
dress, or
any such item confusingly similar thereto used or intended to be
used
prior to the first use of such Trademark. ACCESS shall have no
right,
title or interest in or to any DISCUS Trademark or trade dress,
and DISCUS
shall have no right, title or interest in or to any ACCESS Trademark,
except as provided for herein. So long as DISCUS or any Affiliate
of
DISCUS shall have any interest in any such Trademark or trade dress,
whether registered or unregistered, whether as proprietor, owner,
or
licensee in any country of the world, ACCESS shall not adopt, use,
apply
for registration, register or own such Trademark or trade dress,
or any
such item confusingly similar thereto in the Territory, or take
any action
which weakens or undermines DISCUS’s proprietary rights therein. So long
as ACCESS or any Affiliate of ACCESS shall have any interest in
any such
ACCESS Trademark or trade dress, whether registered or unregistered,
whether as proprietor, owner, or licensee in any country of the
world,
DISCUS shall not adopt, use, apply for registration, register or
own such
ACCESS Trademark or trade dress, or any such item confusingly similar
thereto in any country of the world, or take any action which weakens
or
undermines ACCESS’s proprietary rights
therein.
|
11.2 Inventions.
11.2.1
Except as otherwise provided for in this Section 11.2, each Party shall own
all
Inventions made solely by employees of such Party (or Third Parties acting
on
behalf of such Party) and shall jointly own with the other Party any Invention
made jointly by employees of both Parties (or Third Parties on behalf of
one or
both Parties); provided that such Inventions were made without violation
of any
term or condition of this Agreement. All determinations of inventorship under
this Agreement shall be made in accordance with United States law.
|
11.2.2
|
With
respect to any Inventions or know-how Controlled by DISCUS or is
part of
DISCUS’s Intellectual Property Rights specifically relating to the
Products, DISCUS hereby grants to ACCESS a (subject to retained
rights in
DISCUS), royalty-free license to use such Invention for the Manufacture
of
the Products exclusively for DISCUS during the
Term.
|
|
11.2.3
|
With
respect to any Inventions or know-how owned jointly by DISCUS and
ACCESS
relating to the Products (but not including the Products), DISCUS
hereby
grants to ACCESS and ACCESS hereby grants to DISCUS an exclusive
(subject
to retained rights in each Party), royalty-free license to use
such
Invention or know-how.
|
|
11.2.4
|
During
the Term of this Agreement both Parties shall require their employees
and
personnel involved in the performance of its duties under this
Agreement
to deliver such assignments, confirmations of assignments or other
written
instruments as are necessary to vest in the respective Party clear
and
marketable title to the Inventions.
|
|
11.2.5
|
All
rights, title and interest in and to the ACCESS Intellectual Property
Rights shall remain exclusively owned by ACCESS. The Inventions
owned by
ACCESS under this Section shall be referred to herein as “ACCESS
Inventions”.
|
|
11.2.6
|
All
rights, title, and interest in and to know-how, which is developed
jointly
by the Parties during the Term of this Agreement and related to
the
Products, its Manufacture and/or use shall be owned jointly by
the
Parties. All rights, title, and interest in and to any Regulatory
Approval
shall be owned exclusively by
ACCESS.
|
11.3 Confidentiality
of Information related to Intellectual Property. Any and all information
and
material, including any and all Intellectual Property Rights therein and
thereto, assigned to a Party pursuant to the terms of this Agreement shall
constitute Confidential Information of such Party which shall be deemed the
Disclosing Party with respect to such Confidential Information.
11
.4 Patent
Rights to New Inventions.
|
11.4.1
|
ACCESS,
at its own expense, shall use commercially reasonable efforts to
prepare,
file, prosecute and maintain its Intellectual Property Rights in
the
Territory, in a manner determined in ACCESS’s sole
discretion.
|
|
11.4.2
|
(a)
|
The
Parties shall mutually agree in good faith on a case-by-case-basis
on
which of the Parties shall have the first right to prepare, file,
prosecute and maintain any jointly owned Invention and patent rights
thereon (“Joint
Patent Rights”)
throughout the world as well as on the split of the applicable
expenses
and costs.
|
|
(b)
|
The
acting Party shall keep the other Party completely informed during
the
whole application procedure as well as during the whole patent
duration.
The acting Party shall provide the other Party advance copies of
any
official correspondence related to the filing, prosecution and
maintenance
of such patent filings, and shall provide the other Party a reasonable
opportunity to comment on all correspondence received from and
all
submission to be made to any government patent office or authority
with
respect to any such patent application or patent, and shall consider
in
good faith the other Party’s suggestions with respect to all submission
made to any government office or
authority.
|
|
(c)
|
If
either Party (the “Declining
Party”)
at any time declines to share in the costs of filing, prosecuting
and
maintaining any such Joint Patent Right, the Declining Party shall
provide
the other Party (the “Continuing
Party”)
with thirty (30) days prior written notice to such effect, in which
event,
the Declining Party shall (i) have no responsibility for any expenses
incurred in connection with such Joint Patent Right and (ii) if
the
Continuing Party elects to continue prosecution or maintenance,
the
Declining Party, upon the Continuing Party’s request, shall execute such
documents and perform such acts, at the Continuing Party’s expense, as may
be reasonably necessary (x) to assign to the Continuing Party all
of the
Declining Party’s right, title and interest in and to such Joint Patent
Rights and (y) to permit the Continuing Party to file, prosecute
and/or
maintain such Joint Patent Right.
|
|
(d)
|
If
DISCUS is (i) the sole owner of a Joint Patent Right or (ii) the
Continuing Party, such Joint Patent Right shall no longer be considered
to
be part of the ACCESS Intellectual Property Rights for purposes
of this
Agreement and thereafter shall be part of DISCUS’s intellectual property.
(e) If ACCESS is (i) the sole owner of a Joint Patent Right or
(ii) is the
Continuing Party, such Joint Patent Rights shall no longer be considered
to be part of DISCUS’s intellectual property for purposes of this
Agreement and thereafter shall be part of the ACCESS Intellectual
Property
Rights.
|
|
11.4.3
|
Each
Party shall, and shall cause its Affiliates, employees, attorneys
and
agents to, cooperate fully with the other Party and provide all
information and data and execute any documents reasonably required
or
requested in order to allow the other Party to prosecute, file,
and
maintain patents and patent applications pursuant to this Section
11.4.
Neither Party shall require the other Party to make any payment
or
reimburse for any expenses in connection with such operation, provision
of
information and data and execution of documents. Each Party shall
agree,
if possible, to wave the Attorney-Client privilege with respect
to the
prosecution of any patents related to the Products and the attorney
representing the acting Party shall be deemed to be the attorney
of both
Parties and shall share equally his or her comments regarding the
applications freely with either
Party.
|
11.5 Enforcement
of Intellectual Property Rights.
11.5.1 If
either
Party becomes aware of any infringement of any of the Intellectual Property
Rights, or the validity of any of the Intellectual Property Rights, which
is the
subject of this Agreement is challenged by a Third Party in the Territory,
such
Party will notify the other Party in writing to that effect. Any such notice
shall include, as applicable, evidence to support an allegation of infringement
by such Third Party.
11.5.2 ACCESS
shall have the first right, but not the obligation, to take action to obtain
a
discontinuance of infringement or bring suit against a Third Party infringer
of
ACCESS’s Intellectual Property Rights in the Territory. Such right shall remain
in effect until ninety (90) days after the date of notice given under Section
11.5.1. In the event that ACCESS exercises such right, then ACCESS shall
bear
all the expenses of any such suit brought by ACCESS claiming infringement
of any
Intellectual Property Rights. If, after the expiration of the ninety (90)
day
period, ACCESS has not obtained, or is not diligently pursuing, a discontinuance
of infringement of the Intellectual Property Rights, filed suit against any
such
Third Party infringer of the Intellectual Property Rights, or provided DISCUS
with information and arguments demonstrating to DISCUS’s reasonable satisfaction
that there is insufficient basis for the allegation of such infringement
of the
Intellectual Property Rights, then DISCUS shall have the right, but not the
obligation, to bring suit against such Third Party infringer of the Intellectual
Property Rights and to join ACCESS as a party plaintiff, provided
that
DISCUS shall bear all the expenses of such suit. In such event, DISCUS shall
not
consent to the entry of any judgment or enter into any settlement with respect
to such an action or suit without the prior written consent of ACCESS (which
consent shall not unreasonably be withheld) if such judgment or settlement
includes a finding or agreement that such Intellectual Property Right is
invalid
or would enjoin or grant other equitable relief against ACCESS. Provided
that
the Parties agree to split the expenses of any action, in the event of monetary
recovery by either ACCESS or DISCUS, the Parties shall share such money,
after
deduction of all expenses related to their recovery (including but not limited
to legal expenses) in proportion to the net income (as that term is generally
defined) of each party from the sale of the Products under this Agreement.
The
Parties shall hire a Third Party audit firm to determine in confidence the
respective net incomes of the Parties from the sale of the Products and shall
deliver to the Parties its determination. The cost of the auditor shall be
considered an expense related to recovery and shall be deducted from the
proceeds.
11.5.3 Each
Party shall cooperate (including, without limitation, by executing any documents
reasonably required to enable the other Party to initiate such litigation,
testifying when requested or providing relevant documents) with the other
Party
in any suit for infringement of Intellectual Property Rights brought by the
other Party against a Third Party in accordance with this Section and shall
have
the right to consult with the other Party and to participate in and be
represented by independent counsel in such litigation at its own
expense.
11.5.4
Neither Party shall be required pursuant to this Section 11.5 to undertake
any
activities, including, without limitation, legal discovery at the request
of a
Third Party except as may be required by lawful process of a court of competent
jurisdiction.
11.5.5
Neither Party shall incur any liability to the other Party as a consequence
of
any such litigation or any unfavorable decision resulting there from, including
any decision holding any of the patents within ACCESS’s Intellectual Property
Rights invalid or unenforceable.
11.5.6
Any recovery obtained by either Party as a result of any such proceeding
against
a Third Party infringer shall be allocated as follows: (a) such recovery
shall
first be used to reimburse each Party for all litigation costs in connection
with such litigation paid by that Party; and (b) the Party bringing the action
shall receive the remaining portion of such recovery after payment of the
amounts specified in clause (a).
11.6
Trademarks.
Subject
to the restrictions in Section 11.1, DISCUS shall select and own all of the
Product- related trademarks, trade dress, copyrights and names to be used
by
DISCUS in connection with the marketing, promotion and sale of the Products
in
the Territory. DISCUS hereby grants to ACCESS a limited, non-exclusive,
non-transferable, fully paid, royalty free, sublicensable license in and
to all
DISCUS Trademarks and copyrights to be contained in any such labeling for
the
sole purpose of manufacturing and applying such labels to the Products in
the
conduct of ACCESS’S obligations hereunder; provided, however, that ACCESS agrees
to cooperate with and offer reasonable assistance to DISCUS in facilitating
DISCUS’s control of the quality of the Products branded with DISCUS’s trademarks
hereunder; but further provided that in no event is ACCESS obligated to provide
such cooperation or assistance in any way that will (i) lower the quality
of the
Products below that which ACCESS deems acceptable for general commercial
distribution, (ii) be contrary to or in violation of any regulatory or statutory
obligations, or (iii) increase the cost of manufacturing and delivering the
Products hereunder beyond that contemplated by the parties as of the Effective
Date.
| 12. |
NOTICES
|
|
12.1
|
Ordinary
Notices.
Correspondence, reports, documentation, and any other communication
in
writing between the Parties in the course of ordinary implementation
of
this Agreement shall be delivered by hand, sent by facsimile or
by
overnight courier to the employee or representative of the other
Party who
is designated by such other Party to receive such written communication
at
the address or facsimile numbers specified by such employee or
representative.
|
|
12.2
|
Extraordinary
Notices.
Extraordinary notices and communications (including, without limitation,
notices of termination, Force Majeure Event, material breach, change
of
address, requests for disclosure of Confidential Information, claims
or
indemnification) shall be in writing and shall be delivered by
hand, sent
by facsimile or by overnight courier (and shall be deemed to have
been
properly served to the addressee upon receipt of such written
communication) to the address set forth in Section 12.3 or such
other
address as notified in writing by such Party to the other
Party.
|
|
12.3
|
Addresses.
|
|
If
to Discus:
|
If
to Access:
|
|
Discus
Dental, Inc.
|
0000
Xxxxxxxx Xxxxxxx
|
|
0000
Xxxxxxx Xxxxxx
|
Xxxxx
000
|
|
Xxxxxx
Xxxx, XX 00000
|
Xxxxxx,
Xxxxx 00000-0 107
|
|
Attention:
President
|
Attention:
President
|
|
Facsimile
No.: (000) 000-0000
|
Facsimile
No.: (000) 000-0000
|
|
With
a copy to:
|
With
a copy to:
|
|
C.N.
Xxxxxxxx Xxxxxxx, Esq.
|
Xxxx
X. Xxxxxxxxx, Esq.
|
|
Akin
Gump Xxxxxxx Xxxxx & Xxxx LLP
|
Xxxxxxx
XxXxxxxxx LLP
|
|
2029
Century Park East
|
00
Xxxxxxx Xxxxxx
|
|
Xxxxx
0000
|
Xxxxxx,
XX 00000
|
|
Xxx
Xxxxxxx, XX 00000
|
Facsimile
No.: 000-000-0000
|
|
Facsimile
No. 3l0~229-100l
|
| 13. |
GENERAL
|
|
13.1
|
Governing
Law.
This Agreement shall be construed in accordance with and governed
by the
law of the State of Texas, without giving effect to its conflict
of laws
provisions, and to the exclusion of the provisions of the United
Nations
Convention on Contracts for the International Sale of
Goods.
|
|
13.2
|
Assignment.
This Agreement shall not be assignable or transferable by either
Party
without the prior written consent of the other Party (which consent
shall
not be unreasonably withheld); provided that either Party may assign
this
Agreement and its rights and obligations hereunder without the
other
Party’s consent in connection with the transfer or sale of all or
substantially all of the business of such party to which this Agreement
relates (or, if applicable, the business unit or division of such
Party
primarily responsible for performance under this Agreement) to
another
party, whether by merger, sale of stock, sale of assets or otherwise.
The
rights and obligations of the parties under this Agreement shall
be
binding upon and inure to the benefit of the successors and permitted
assigns of the parties. Any attempted assignment in violation of
this
Section 13.2 shall be null and void, without any force or
effect.
|
|
13.3
|
Entire
Agreement.
This Agreement and all Exhibits attached hereto (as the same may
be
amended from time to time by the written agreement of the Parties)
constitute the entire agreement between the Parties with respect
to the
subject matter hereof and supersedes all other documents, agreements,
verbal consents, arrangements and understandings between the Parties
with
respect to the subject matter hereof. This Agreement shall not
be amended
orally, but only by an agreement in writing, signed by both Parties
that
states that it is an amendment to this
Agreement.
|
|
13.4
|
Severability.
If
any term of this Agreement shall be found to be invalid, illegal
or
unenforceable, it is the intention of the parties that the remainder
of
this Agreement shall not be affected thereby; provided that
neither Party”: rights under this Agreement are materially adversely
affected. It is further the intention of the parties that in lieu
of each
such provision which is invalid, illegal or unenforceable, there
be
substituted or added as part of this Agreement a provision which
shall be
as similar as possible in the economic and business objectives
intended by
the Parties to such invalid, illegal or unenforceable provision,
but which
shall be valid, legal and enforceable. In the event that either
Party’s
rights are materially adversely affected as a result of a change
in this
Agreement as contemplated by this Section. Such Party may terminate
this
Agreement by notice in writing to the other Party given no later
than
sixty (60) days after such change.
|
|
13.5
|
Independent
Contractor.
Each Party shall act as an independent contractor and neither Party
shall
have any authority to represent or bind the other Party in any
way.
|
|
13.6
|
No
Waiver.
Any waiver by one Party of any right of such Party or obligation
of the
other Party must be in writing and shall not operate as a waiver
of any
subsequent right or obligation.
|
|
13.7
|
Counterparts.
This Agreement may be executed in two or more counterparts (including,
without limitation, by facsimile transmission), each of which when
so
executed and delivered shall be an original, but all of which together
shall constitute one and the same
instrument.
|
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
|
DISCUS
DENTAL, INC.
|
ACCESS
PHARMACEUTICALS, INC.
|
|
By:
/s/ Xxx Xxxxxxxxxx
|
By:
/s/ Xxxxx X. Xxxx
|
|
Name: Xxx
Xxxxxxxxxx
Title: COO
|
Name: Xxxxx
Xxxx
Title: President
& CEO
|
EXHIBIT
A
Products
Aphthasol®
is an approved prescription pharmaceutical product comprising 5% amlexanox
as
the active ingredient in a mucoadhesive, hydrophobic paste vehicle. The vehicle
consists of benzyl alcohol, gelatin, glyceryl monostearate, mineral oil,
pectin,
petrolatum, and sodium carboxymethylcellulose. This product is approved by
the
FDA (NDA2O-5 11) for the treatment of aphthous ulcers in people with normal
immune systems. The approved product is currently supplied in 5 gram glaminate
tubes.
OraDisc™
A is an approved prescription pharmaceutical product comprising 2mg amlexanox
as
the active ingredient in an erodible mucoadhesive half-inch diameter disc.
The
product is manufactured as three laminated layers; a mucoadhesive layer,
which
contains the active ingredient plus mucoadhesive and film-forming polymers,
a
formulated pre-formed film layer, and third layer comprising a blend of
hydrophilic and hydrophobic polymers to control erosion rate. OraDisc™A (NDA
21-727) is indicated for the treatment of aphthous ulcers in adults and
adolescentsl2 years of age and older.
EXHIBIT
B
Methods
of Analysis
EXHIBIT
C
Specifications
EXHIBIT
D
PRICES
ORADISC
A: DISCUS guaranteed a per unit price of $1.00 for 20 discs and packaging
(finished goods) with reasonable package design and layout approval rights
held
by DISCUS.
EXHIBIT
E
LICENSE
PAYMENTS
|
Upon
Launch of OraDisc A
|
$750,000
Payment
|
|
Milestones:
|
|
|
$10
Million in Net Sales of OraDisc A in a particular calendar
year
|
$500,000
Payment
|
|
$15
Million in Net Sales of OraDisc A in a particular calendar
year
|
$750,000
Payment
|
|
$20
Million in Net Sales of OraDisc A in a particular calendar
year
|
$1,000,000
Payment
|
|
$30
Million in Net Sales of OraDisc A in a particular calendar year
|
$2,000,000
Payment
|
|
$50
Million in Net Sales of OraDisc A in a particular calendar
year
|
$2,000,000
Payment
|
|
$25
Million in aggregate Net Sales of OraDisc A during the Term of
this
Agreement, commencing as of the Effective Date
|
$2,000,000
Payment
|
Notwithstanding
the foregoing, the parties agree that DISCUS shall not be obligated to pay
more
than one milestone payment in a single Contract Year. In the event that more
than one of the foregoing milestone payments is payable by DISCUS during
a
single Contract Year of the term of this agreement, such milestone payment(s)
will be deferred to the anniversary of the previous milestone payment and
such
twelve month deferral shall apply similarly for any additional milestone
payments; provided that in the event of a termination of this agreement all
milestone payments that have been earned shall remain payable.
EXHIBIT
F
Royalties
| A. |
Royalties
for prescription OraDisc A.
|
| · |
15%
of Net Sales of OraDisc A
|
| B. |
Royalties
for OraDisc A sold Over-the-Counter.
|
| · |
7%
of Net Sales of OraDisc A
|
| C. |
Royalties
for Aphthasol.
|
| · |
During
the Single Channel Period: $3.70 multiplied by the total Net Unit
Sales of
the 5 gram tube of Aphthasol or $3.45 multiplied by the total Net
Unit
Sales of the 3 gram tube of Aphthasol, provided that DISCUS may,
in its
sole discretion, create and distribute portions of Aphthasol to third
parties in packages containing 3 grams or less (“Samples”) on a royalty
free basis provided that such Samples are (i) provided to third parties
free of charge and (ii) clearly marked as “sample not for resale”. ACCESS
agrees that Samples will be supplied to DISCUS at no more than Standard
Cost.
|
| · |
After
the Single Channel period but prior to expiration or invalidation
of U.S.
Patent No. 5,362,737: (i) 15% of Net Sales of Aphthasol achieved
through
the Pharmacy Channel, (ii) 10% of Net Sales of Aphthasol achieved
through
the Professional Channel, and (iii) 7% of Net Sales of Aphthasol
achieved
through Over-the-Counter sales.
|
| · |
After
expiration or invalidation of U.S. Patent No. 5,362,737: No royalty
on
Aphthasol
|
| D. |
Upfront
Royalties.
|
| · |
Within
thirty (30) days after the Effective Date, DISCUS shall pay to ACCESS
an
upfront royalty in the amount of $500,000. Such amount shall be applied
as
a credit against accrued Royalties until the entire $500,000 is
recouped.
|
| · |
Within
thirty (30) days after Launch, DISCUS shall pay to ACCESS an upfront
royalty in the amount of $500,000. Such amount shall be applied as
a
credit against accrued Royalties until the entire $500,000 is
recouped.
|
| · |
In
the event of termination of this Agreement prior to full recoupment
by
DISCUS of either of the foregoing upfront royalty payments, the unapplied
remainder of such upfront royalty payments will be refunded to DISCUS
within thirty (30) days after the effective date of
termination.
|
| E. |
Royalties
for Products other than Apthasol and OraDisc
A.
|
| · |
Subject
to negotiation, but no more than an amount consistent with rates
on the
existing products.
|
| F. |
Equity
Investment.
|
Within
thirty (30) days after Launch, DISCUS shall make an equity investment in
ACCESS
of $750,000 (at then-current market value) on terms and conditions to be
mutually agreed upon by DISCUS and ACCESS, provided, that the parties agree
that
such terms will provide for demand registration rights for any equity issued
in
connection with such investment and customary minority shareholder
protections.
