1
Exhibit 10.75
AGREEMENT
THIS AGREEMENT is entered into as of the 9th day of December, 1999, by and
between Connetics Corporation ("Connetics") and Soltec Research Pty Ltd., A.C.N.
006 363 891 ("Soltec"). Connetics and Soltec are sometimes referred to in this
Agreement individually as a "Party" and collectively as the "Parties."
B A C K G R O U N D
A. Soltec and Connetics are parties to an Exclusive Option Letter Agreement
dated March 25, 1996 as amended on June 14, 1996 and January 6, 1998,
between Connetics (under its former name, Connective Therapeutics, Inc.)
and Soltec with respect to Soltec's "Pharmaceutical Mousse Delivery
System Technology."
B. Soltec and Connetics entered into a Letter of Understanding, dated
September 10, 1999, which outlined the foundation for this Agreement,
and which contemplates the termination of the Option Agreement.
NOW, THEREFORE, for the consideration set forth, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
ADVERSE EXPERIENCE. "Adverse Experience" shall have the meaning set forth in
SECTION 12.1.
AFFILIATE. "Affiliate" means in respect of either Party any corporation or
business entity controlled by, controlling, or under common control with Soltec
or Connetics, respectively. For this purpose "control" means the direct or
indirect beneficial ownership of at least fifty percent (50%) of the voting
stock of, or at least fifty percent (50%) interest in the income of, such
corporation or other business entity, or such other relationship as, in fact,
constitutes actual control.
CLINICAL TRIAL. A Clinical Trial means a clinical investigation for a given
Product, and a Clinical Trial is commenced on the date the first human patient
is dosed.
CLOSING DATE. "Closing Date" means a date at which the initial payment for this
Agreement is to be exchanged, which shall be no less than five (5) business days
after the date this Agreement is signed unless the Parties agree in writing to a
different date.
COGS. "COGS" means Connetics' cost of producing the Product, computed in
accordance with GAAP applied on a consistent basis. Such costs shall include the
reasonable, out of pocket cost (whether incurred directly by such Party or
invoiced by any Third Party) of all raw materials,
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labor and overhead for manufacturing, formulation, storage, filling, finishing,
labeling, packaging, quality assurance and quality control, shipping and
distribution costs from the manufacturer, and technical support incurred
directly and exclusively for, or proportionately allocated to, the production of
the Product, any value added taxes or transportation charges, and any royalties
paid pursuant to licenses in connection with the manufacturing process or
materials used.
CONNETICS STOCK. "Connetics Stock" means the common stock of Connetics traded on
the NASDAQ National Market System under the symbol "CNCT."
XXXXXXX MONEY. "Xxxxxxx Money" means the amount deposited in escrow by Connetics
in connection with the Letter of Understanding.
EXCLUDED TECHNOLOGY. "Excluded Technology" means any and each of (a) Previously
Licensed Technology, and/or (b) the formulations described in greater detail on
EXHIBIT A to this Agreement.
EFFECTIVE DATE. "Effective Date" means the first date written at the beginning
of this Agreement.
FDA. "FDA" means the United States Food and Drug Administration.
FIELD. "Field" means the per topical treatment or prevention of diseases or
disorders of the skin (whether the effect of such treatment or prevention is
mediated locally or systemically), or the per topical moisturization or
protection of the skin.
FORCE MAJEURE. "Force Majeure" means, inter alia, government regulation, fire,
strike, inevitable accident, national emergency, earthquake, or any other cause
outside the reasonable control of the Party having a duty to perform.
FUTURE TECHNOLOGY. "Future Technology" means any platform technology within the
Field not available from Soltec as of the Effective Date, which Soltec develops
during the term of the Research Period.
LAUNCH. "Launch" means the first arms' length sale of a Product to a third party
forming part of a continuous program or campaign designed to market the Product
in the Territory during the Term of this Agreement.
LETTER OF UNDERSTANDING. "Letter of Understanding" means the Letter of
Understanding between the Parties dated September 10, 1999.
LICENSED IP. "Licensed IP" means the Patents and the Trademark.
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LIQUIPATCH ANTIFUNGALS. "Liquipatch Antifungals" means a formulation
incorporating Soltec's Liquipatch(TM) technology as disclosed in [*****] and any
antifungal active agent.
LIQUIPATCH NSAIDs. "Liquipatch NSAIDs" means a formulation incorporating
Soltec's Liquipatch(TM) technology as disclosed in [*****] and any NSAID agent
for the purposes of effecting analgesia or reduction of inflammation.
LOSSES. "Losses" shall have the meaning set forth in SECTION 11.2.
MEDEVA PATENTS. "Medeva Patents" means PCT application [*****] (filed [*****]
and claiming priority from U.K. application [*****] filed [*****]), U.S.
application numbers [*****] (filed *[*****]) and [*****] (filed [*****]), Mexico
application [*****], Canada application [*****] and any patents issuing
therefrom in the Territory, together with any extensions, reissues,
reexaminations, substitutions, renewals, divisions, continuations, or
continuations-in-part of those applications.
MEDEVA/SOLTEC AGREEMENT. "Medeva/Soltec Agreement" means the agreement between
Soltec and Medeva PLC dated 26 April 1994 as amended on 19 June 1996 relating to
patent application [*****].
MINIMUM ROYALTY. "Minimum Royalty" means the following:
Calendar Year Amount
2000 [*****]
2001 [*****]
2002 [*****]
2003 [*****]
2004 [*****]
2005 [*****]
2006 and each subsequent year until [*****]
expiration of the Term pursuant
to SECTION 14.5
NET SALES. "Net Sales" means the proceeds actually received by Connetics, its
Affiliates and sublicensees from the sale of Products to purchasers who are not
Affiliates, less:
(a) trade, quantity and cash discounts actually allowed and taken;
(b) credits actually allowed on account of the rejection or return or
billing error relating to any Product previously billed and paid;
(c) freight, other transportation and insurance costs incurred in the
sale of Product;
(d) taxes imposed on account of such sale (including, without
limitation, sales, value-added and distribution taxes); and
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(e) rebates and adjustments, including charge backs.
OPTION AGREEMENT. "Option Agreement" means the Exclusive Option Agreement
between the Parties, as amended, referred to in Recital A of this Agreement.
OTC PRODUCT. "OTC Product" means any Product which is permitted to be sold over
the counter in the Territory, without prescription.
PATENTS. "Patents" means all patents, and patent applications and any patents
issuing therefrom, together with any extensions, reissues, reexaminations,
substitutions, renewals, divisions, continuations, continuations-in-part and
counterparts thereof or therefor, licensed to or owned by Soltec as of the
Effective Date or during the term of this Agreement, that directly claim or
relate to the manufacture, use or sale of the Technology or the Products,
including without limitation those patents listed on EXHIBIT B to this Agreement
and corresponding national applications filed in the Territory, and including
the Medeva Patents (to the extent that Soltec is permitted to sublicense its
rights to the Medeva Patents).
PREVIOUSLY LICENSED TECHNOLOGY. "Previously Licensed Technology" refers to the
following hydroethanolic aerosol foam formulations, which are excluded by virtue
of existing agreements between Connetics and Soltec:
FORMULATION INCORPORATING: RELEVANT AGREEMENT
-------------------------- ------------------
betamethasone valerate License Agreement between Soltec Research Pty
Limited and Connective Therapeutics, Inc.
dated June 14, 1996
clobetasol propionate License Agreement between
Soltec Research Pty Ltd and Connetics
Corporation, dated January 1, 1998, as
amended effective May 28, 1999
ketoconazole License Agreement between Soltec Research Pty
Limited and Connetics Corporation, effective
as of July 14, 1999
PRODUCT. "Product" means any pharmaceutical product based on or incorporating
the licensed Technology. "Product" does not include any Excluded Technologies.
PRODUCT INFORMATION. "Product Information" means all information in the
possession or under the control of Soltec relating to the specifications of the
Technology, the Products, or the Future Technology, and information relating to
the manufacture (including method, conditions, and process equipment), testing
(including quality control standards, assay methods and stability studies),
storage and use of the Products as of the Effective Date or during the Term of
this Agreement.
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PROPRIETARY INFORMATION. "Proprietary Information" means any information of
value, not generally known to the public, including (but not limited to):
(a) the Product Information; the development status of the
Technology, the Products or the Future Technology; Product
indications and modes of administration; technical information,
such as clinical, biological, pharmaceutical and characterizing
data; and know-how; and
(b) business information, such as reports, records, customer lists,
supplier lists, marketing and sales plans; financial information;
costs; and pricing information.
QUARTER. "Quarter" means calendar quarter, except when used to refer to the
first or last year this Agreement is in effect. The first "Quarter" shall be
deemed to mean the period from the Effective Date until December 31, 1999. The
last "Quarter" shall be deemed to mean the period from the last to occur of the
dates January 1, April 1, July 1 or October 1 and ending on the date of
termination.
REGULATORY APPROVAL. "Regulatory Approval" means all approvals, including
pricing approvals for reimbursement purposes, from the appropriate Regulatory
Authorities (a) in the United States or (b) in each country in the Territory
that are required to promote and market the Product in the relevant country.
REGULATORY AUTHORITY. "Regulatory Authority" means the FDA or any equivalent or
additional governmental or regulatory agencies in the Territory.
RESEARCH PERIOD. "Research Period" means the period during which Connetics
continues to pay Research Support to Soltec pursuant to SECTION 6.1, including
any extensions of time.
RESEARCH SUPPORT. "Research Support" means the fee paid to Soltec pursuant to
SECTION 6.1, and any additional such fees for any extensions of time.
ROYALTY TERM. "Royalty Term" means, with respect to each Product, the longer of
(A) the life of any Patent in respect of that Product, or (B) a minimum of eight
(8) years from the Launch of that Product, regardless of the date of termination
of this Agreement.
SPECIFICATIONS. "Specifications" means the specifications listed on EXHIBIT C
with respect to each specified Product, as it may be amended by the Parties from
time to time. With respect to Products not yet formulated, "Specifications"
means the specifications agreed to by Soltec and Connetics.
TECHNOLOGY. "Technology" means the formulation technologies described briefly as
Aerosol Foam Technologies, Liquipatch(TM), Non-Aqueous Shampoos, Minoxidil
Formulation Technology, Sunscreen 2000, and Ketoconazole Shampoo, which shall
have the meanings as set forth in greater detail in EXHIBIT C.
TERM. The "Term" of this Agreement shall have the meaning set forth in SECTION
14.5.
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TERRITORY. "Territory" means the United States of America, its territories and
possessions; Canada; and Mexico.
THIRD PARTY(ies). "Third Party(ies)" means any person or entity other than
Soltec, Connetics, or an Affiliate of Soltec or Connetics.
VALID CLAIM. "Valid Claim" means a claim of an issued, unexpired Patent in the
Territory that has not been abandoned for any reason, which, but for the license
to Connetics under this Agreement would be infringed by Connetics' manufacture,
use or sale of a Product, which claim (a) has not been invalid or unenforceable
by a decision of a court of competent jurisdiction, nonappealable or unappealed
within the time allowed for appeal, and (b) has not been admitted to be invalid
through reissue, reexamination or disclaimer. With respect to countries in which
patents cannot be "abandoned" or which do not recognize the concept of
"abandonment," the term "Valid Claim" shall mean a claim of any issued,
unexpired Patent in that country.
ARTICLE 2
LICENSE TO CONNETICS
SECTION 2.1 LICENSE TO TECHNOLOGY. Subject to the terms and conditions of this
Agreement, during the Term, Soltec hereby exclusively licenses the Technology to
Connetics in the Territory for use in the Field free and clear from all liens,
interests, or equities, charges and encumbrances, except as contemplated by the
definition of Excluded Technology. Notwithstanding the foregoing, the license
granted under this SECTION 2.1 with respect to [*****].
SECTION 2.2 LICENSE TO PRODUCT INFORMATION. Subject to the terms and conditions
of this Agreement, and to the extent required to enable Connetics to develop,
manufacture, use and/or sell Products directly or indirectly, during the Term,
Soltec hereby exclusively licenses the Product Information to Connetics in the
Territory for use in the Field, free and clear from all liens, interests, or
equities, charges and encumbrances. Notwithstanding the foregoing, the license
granted under this SECTION 2.2 with respect to [*****].
SECTION 2.3 LICENSE TO PATENTS. Subject to the terms and conditions of this
Agreement, during the Term, and to the extent required to enable Connetics to
develop, manufacture, use and/or sell Products directly or indirectly, Soltec
hereby grants to Connetics for use in the Field an exclusive license under the
Patents in the Territory with the right to sublicense, and a non-exclusive
license under the Patents to have the Product manufactured outside the
Territory. Notwithstanding the foregoing, (a) the license granted under this
SECTION 2.3 with respect to [*****],
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and (b) Soltec shall use commercially reasonable efforts to obtain the necessary
consents to sublicense to Connetics the Medeva Patents in the Territory in the
Field.
SECTION 2.4 LICENSE TO TRADEMARKS. Subject to the terms and conditions of this
Agreement, during the Term and unless earlier terminated pursuant to SECTION
14.6, Soltec grants to Connetics an exclusive, royalty-free license to use the
tradenames LIQUIPATCH(TM) and Sunscreen 2000 for the advertising, promotion,
marketing, distribution and sale of Product in the Territory. If Connetics
chooses to use the trademark, Connetics shall display the marks in a style or
size of print distinguishing the xxxx from any accompanying wording or text.
Where feasible, Connetics shall display the appropriate trademark symbol to the
right of and slightly above or below the last letter of the word. Except as
expressly permitted in this Agreement, no right or license is granted to
Connetics to use Soltec's name or any trademarks or tradenames of Soltec in
advertising, publicity or other promotional activities without the express
written approval of Soltec.
SECTION 2.5 RIGHT TO SUBLICENSE. Connetics shall have the absolute right, within
the Territory, to sublicense any of the rights licensed to Connetics under this
Agreement, provided that Connetics complies with the requirements for such a
sublicense set forth in SECTIONS 3.5 and 14.11. Any sublicense pursuant to this
SECTION 2.5 shall be consistent with the terms of this Agreement, and may not
extend beyond the expiration or termination of this Agreement.
SECTION 2.6 REVERSION OF EXCLUDED TECHNOLOGY. If at any time during the Term of
this Agreement any of the Excluded Technology rights (other than [*****]) revert
to Soltec from the parties that currently hold such rights, the Excluded
Technology so returned to Soltec shall be deemed to be added to the definition
of Technology under this Agreement, and shall automatically be treated as though
licensed to Connetics for use in the Field as of the Effective Date, for no
additional consideration from Connetics. Soltec shall notify Connetics in
writing within thirty (30) calendar days after any Excluded Technology is
returned to Soltec. Any such Excluded Technology returned to Soltec and deemed
licensed to Connetics pursuant to this provision shall be confirmed in writing
between the Parties by an amendment to this Agreement and shall be subject to
the milestone, royalty, and sublicense payments described in SECTIONS 3.2, 3.4
and 3.5. The Parties shall negotiate in good faith the price to include
Liquipatch Antifungals in the definition of "Technology," should that technology
revert to Soltec.
SECTION 2.7 LICENSE TO SOLTEC. Subject to the terms and conditions of this
Agreement, during the Term, Connetics hereby licenses to Soltec, for use in
Australia and New Zealand by Soltec and its Affiliates, all clinical and
regulatory data generated by Connetics in connection with the Technology or the
Products.
SECTION 2.8 SALES.
2.8.1 BY CONNETICS. Connetics agrees that neither it nor its
Affiliates will supply, promote, distribute or sell Products outside the
Territory nor for use outside the Field, nor permit any other person to
sell Products outside the Territory, during the Term of this Agreement.
Connetics further agrees not to sell Products to any person whom
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Connetics knows or has reason to believe will resell the Product(s)
outside the Territory. For purposes of this provision, a written
notification from Soltec to Connetics given in good faith to the effect
that Soltec knows or reasonably believes that a person will so resell
the Product(s) shall be deemed to give Connetics a reason to believe of
such resale or proposed resale. Furthermore, Connetics and its
Affiliates will not commercialize an equivalent technology for a
commercially competitive product in the Territory without Soltec's
consent. Soltec's refusal to consent shall have no impact on Connetics'
rights to commercialize the new technology; however, the licenses
granted to Connetics pursuant to this Agreement with respect to the
Product(s) and Technology(ies) affected by Connetics' decision shall
revert to Soltec.
2.8.2 BY SOLTEC. Soltec agrees that neither it nor its Affiliates
will supply, promote, distribute or sell Products within the Territory,
nor permit any other person to sell Products within the Territory,
during the Term of this Agreement. Soltec further agrees not to sell
Products to any person whom Soltec knows or has reason to believe will
resell the Product(s) inside the Territory. For purposes of this
provision, a written notification from Connetics to Soltec given in good
faith to the effect that Connetics knows or reasonably believes that a
person will so resell the Product(s) shall be deemed to give Soltec a
reason to believe of such resale or proposed resale. Nothing in the
language of this SECTION 2.8.2 shall have any impact on the [*****].
ARTICLE 3
PAYMENT TERMS
SECTION 3.1 INITIAL PAYMENT. Connetics shall pay Soltec a license fee in the
amount of One Million U.S. Dollars (US$1,000,000), payable as follows: (a)
US$500,000 cash, payable on the Closing Date, and (b) US$500,000 value of
Connetics Stock, issued as set forth in SECTION 3.3. The cash payment shall be
reduced by the amount, if any, of the Xxxxxxx Money payment previously received
by Soltec. The amount of Twenty-Two Thousand Five Hundred U.S. Dollars
(US$22,500) previously paid by Connetics to Soltec to exercise the option on
hydrocortisone hydroethanolic foam shall not be applied against any payments
under this Agreement, and shall be treated as a non-refundable payment by
Connetics.
SECTION 3.2 MILESTONE PAYMENTS. For each Product, Connetics will pay Soltec
milestone success payments in the amounts stated below (adjusted upwards at a
[*****] per year on each anniversary of the Closing Date):
(a) US$[*****]due the first time [*****];
(b) US$[*****] at the time of [*****];
(c) US$[*****] at the time of [*****].
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SECTION 3.3 EQUITY PAYMENT. Connetics shall issue to Soltec Eighty Thousand One
Hundred Fifty-Four (80,154) shares of Connetics' Stock, pursuant to the terms
set forth in the Stock Issuance Agreement attached to this Agreement as EXHIBIT
D and entered into simultaneously with this Agreement. Connetics shall issue the
shares on the date that Connetics files with the U.S. Securities and Exchange
Commission a Registration Statement on Form S-3, but in any event no later than
January 26, 2000. If the shares to be issued to Soltec pursuant to this SECTION
3.3 have not been registered or are not otherwise freely tradeable without
restriction by Soltec on or by June 30, 2000, then Soltec shall have a one-time
right to demand payment in cash in lieu of stock, on the terms and conditions
set forth in the Stock Issuance Agreement.
SECTION 3.4 ROYALTIES. Connetics shall pay Soltec a royalty on Net Sales of
Product as follows:
(a) [*****] percent ([*****]%) of Net Sales by Connetics, an
Affiliate, or sublicensee, in a country in the Territory where
such Product is covered by a Valid Claim of a Patent;
(b) [*****]percent ([*****]%) of Net Sales by Connetics, an
Affiliate, or sublicensee, in a country in the Territory where
such Product is not covered by a Valid Claim of a Patent.
Notwithstanding the foregoing, (i) for each year in which a Minimum Royalty is
due, Connetics shall pay the Minimum Royalty sixty (60) days after the end of
that year (unless royalties on Net Sales exceed the Minimum Royalty in that
year), (ii) Connetics shall pay royalties on a Product pursuant to this Section
for the full Royalty Term, and, in addition, (iii) with respect to any Product
for which Soltec is required to pay a royalty to Medeva pursuant to the
Medeva/Soltec Agreement, Connetics agrees to reimburse Soltec for [*****]
percent ([*****]%) of the amount due to Medeva (up to, but not to exceed, an
additional [*****]percent ([*****]%) on Connetics' Net Sales).
SECTION 3.5 SUBLICENSE FEES. In addition to the royalties owed pursuant to
SECTION 3.4, Connetics shall pay Soltec a fee as described in this Section if
Connetics sublicenses any Product or Technology to a Third Party, as follows:
(a) [*****] percent ([*****]%) of any [*****] that Connetics receives
in whatever form, including cash or equity, from a sublicensee in
connection with a sublicense entered into [*****];
(b) [*****] percent ([*****]%) of any [*****] that Connetics receives
in whatever form, including cash or equity, from a sublicensee in
connection with a sublicense entered into [*****];
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(c) [*****] percent ([*****]%) of any [*****] that Connetics receives
in whatever form, including cash or equity, from a sublicensee in
connection with a sublicense entered into [*****].
For purposes of this Section, [*****] paid to Connetics [*****].
SECTION 3.6. PAYMENT TERMS. All royalties payable on Net Sales pursuant to this
Agreement shall be paid within two (2) months after the close of the Quarter
during which the Net Sales were actually made. Each royalty payment shall be
accompanied by a statement that sets forth Net Sales (including details of all
amounts deducted from the proceeds invoiced for the purpose of calculating Net
Sales) during the Quarter in question and the royalty payment due thereon.
[*****] Each such payment shall be accompanied by a statement that sets forth
the basis for the calculation of the fee paid to Soltec, in sufficient detail to
permit Soltec to understand how the payment was determined.
SECTION 3.7 CURRENCY OF PAYMENTS. All amounts payable to Soltec by Connetics
pursuant to this Agreement shall be made in U.S. Dollars and by wire transfer to
the bank account(s) specified by Soltec from time to time. Connetics shall apply
a conversion rate from all other currencies to U.S. Dollars for amounts payable
under this Agreement equal to [*****]. The conversion rates to be used in this
Agreement shall be [*****] or such other reference as the Parties may agree
upon.
SECTION 3.8. TAXES. If any taxes, withholding or otherwise, are levied by any
taxing authority in connection with the accrual or payment of royalties under
this Agreement and are required to be paid by Connetics in connection with such
accrual or payment, then Connetics shall pay such taxes to the local taxing
authorities on behalf of Soltec and remit to Soltec in full satisfaction of its
royalty obligations under this Agreement the net amount due after reduction by
the amount of such taxes, together with evidence of payment of such taxes.
SECTION 3.9. INTERCOMPANY TRANSFERS. No royalty payment shall be made with
respect to any non-commercial sale or transfer of a product between and among
Connetics, its Affiliates, and/or its sublicensees where such sale or transfer
is made in the course of a subsequent royalty-
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generating transaction under this Agreement. No multiple royalties shall be
payable on account of the sale of any Product, regardless of whether or not more
than one patent, or patent and other intellectual property rights, exist(s)
covering such Product in any country. No royalty shall be payable with respect
to reasonable quantities of samples provided free of charge to physicians and
reasonable quantities of free "trade goods" including indigent patient programs.
SECTION 3.10 AUDIT. Connetics shall keep records of all items in a manner and in
sufficient detail to accurately and fully determine Net Sales, COGS, and
sublicense fees in accordance with this Agreement and in accordance with U.S.
generally accepted accounting principles and to regularly maintain such records
in sufficient detail to permit calculation of Net Sales, COGS, and payments due
pursuant to sublicenses under this Agreement. Such records shall be retained for
five (5) years after the end of the relevant Quarter. Soltec shall have the
right to nominate an independent firm of certified public accountants reasonably
acceptable to Connetics to verify records of Connetics pertaining to, the
calculation of any royalties payable under this Agreement with respect to the
preceding calendar year, and Connetics shall maintain records for at least five
(5) years after each year to which the records apply. Such verification shall
not occur more than once each calendar year during the term of this Agreement
and shall be conducted during normal business hours. Soltec shall be responsible
for the fees and expenses of the accountants performing such verification. The
accountants appointed under this Agreement shall not be authorized to disclose
to Soltec any information other than the accuracy or inaccuracy of the item(s)
to be verified. If the audit reveals that Connetics has over-reported for the
period of the audit, Connetics shall be entitled to take a credit for the amount
overpaid against future payments. If the audit reveals that Connetics has
under-reported for the period of the audit, Connetics shall immediately remit to
Soltec any balance owing, together with interest at [*****] percent ([*****]%)
over the then-current U.S. prime rate, accruing from the date the original
payment was due. In addition, if the audit reveals that Connetics under-reported
by more than [*****] percent ([*****]%), Connetics shall be responsible for
paying the accountants' fees in connection with the audit. Except in the event
that the audit reveals fraud or a failure during the course of the audit to
disclose full or correct records, Soltec shall have no right under this Section
to audit records for periods that have already been audited under this
provision.
ARTICLE 4
PRODUCT DEVELOPMENT
SECTION 4.1 PRODUCT DEVELOPMENT GENERALLY. Connetics shall have responsibility
for all product development, which includes nominating the Products to be
developed, and conducting or sponsoring all work necessary to secure applicable
product licenses and other marketing authorizations required in the Territory.
Subject to timely performance of Soltec's obligations pursuant to SECTION 4.3,
Connetics shall complete product development as to each Product or Technology in
sufficient time to enable Connetics to comply with its specific obligations
under SECTIONS 4.2.1 through 4.2.6. All product licenses and marketing
authorizations for a Product in the Territory shall be and remain the property
of Connetics, subject to the provisions of ARTICLE 5. Connetics shall assume
responsibility for compliance with governmental regulations in the Territory,
including without limitation adverse event reporting requirements.
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SECTION 4.2 SPECIFIC DILIGENCE REQUIREMENTS OF CONNETICS. Connetics shall have
the specific obligations with respect to the Technology set forth in this
Section. For purposes of this Section, the term "diligently pursue" shall mean
commencing and conducting such pre-clinical and clinical testing and such other
actions as are customary in the development and commercialization of
pharmaceuticals and as may be required to obtain necessary regulatory approvals
in a timely manner consistent with standards generally accepted in the
pharmaceutical industry. [*****] Connetics' specific obligations are as follows:
4.2.1 AEROSOL FOAM TECHNOLOGY. Connetics shall diligently pursue
development of a minimum of [*****] new Products based on the Aerosol
Foam Technology at the rate of [*****] commencing on the Effective Date.
4.2.2 LIQUIPATCH. Connetics shall diligently pursue development
of [*****] Liquipatch Products during the first [*****] after the
Effective Date of this Agreement.
4.2.3 SUNSCREEN 2000. Connetics shall Launch Sunscreen 2000 in
the United States no later than [*****].
4.2.4 NON-AQUEOUS SHAMPOO AND KETOCONAZOLE SHAMPOO. Connetics
shall Launch [*****] Products comprising either Non-Aqueous Shampoo or
Ketoconazole Shampoo, during the first [*****] after the Effective Date
of this Agreement.
4.2.5 MINOXIDIL FORMULATION TECHNOLOGY. Within [*****] after the
Effective Date, Connetics shall diligently pursue development of a
Minoxidil Formulation Technology, which may include a foam formulation
pursuant to SECTION 4.2.1.
4.2.6 HYDROCORTISONE HYDROALCOHOLIC FOAM. Connetics shall
diligently pursue development of a hydroalcoholic aerosol foam product
containing hydrocortisone within [*****] years after the Effective Date
of this Agreement.
SECTION 4.3 SOLTEC'S RESPONSIBILITIES. Soltec shall generate prototype Products.
For purposes of this SECTION 4.3, Soltec's obligation shall be satisfied with
respect to a Product when Soltec delivers to Connetics a prototype (up to
[*****]), and an information package that contains at a minimum the following:
[*****]
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Soltec agrees to use its best efforts to select ingredients (other than the
active therapeutic agent) which are acceptable for pharmaceutical use in the
United States, in developing prototype Products. Any activities that Soltec
undertakes at Connetics' request after meeting these obligations will be treated
as additional research pursuant to ARTICLE 6. To the extent that Soltec's
failure to perform pursuant to this SECTION 4.3 directly impacts Connetics'
ability to achieve the milestones set forth in SECTION 4.2, Connetics' time
requirements shall be extended for the additional number of days directly
attributable to Soltec's failure to perform.
ARTICLE 5
ACCESS TO CONNETICS DATA
SECTION 5.1 ACCESS BY SOLTEC. Connetics agrees that, upon written request by
Soltec and pursuant to the license set forth in SECTION 2.7, Connetics will
provide to Soltec or an Affiliate of Soltec [*****] any information developed by
Connetics in connection with the Technology and/or the Products that Soltec may
require in order to apply for approval to commercialize the Technology and/or
Products in Australia and New Zealand. Soltec shall have no right to furnish
such Connetics information to any Third Party, except in compliance with the
restrictions and requirements of SECTION 5.2.
SECTION 5.2 ACCESS BY THIRD PARTIES. Connetics agrees to grant to Soltec and any
Third Party licensee (or potential licensee) of Soltec outside of the Territory
and outside Australia and New Zealand, access to Connetics' data related to the
Technology or Products, or the clinical studies developed by or for Connetics
under the following circumstances:
(a) Soltec or the Third Party may only review the material at
Connetics' offices, after signing an appropriate confidentiality
agreement with Connetics; and
(b) if Soltec or the Third Party determines that it wants copies of
the material provided by Connetics, then Connetics will establish
a price to share the data based on Connetics' cost of developing
the data, giving consideration to other relevant factors such as
size and value of market
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(c) upon reaching agreement with Connetics as indicated in paragraph
(b), Soltec or the Third Party, as the case may be, shall be
entitled to use the relevant material in any way it deems
appropriate to advance and exploit the Technology or Products
outside of the Territory.
ARTICLE 6
RESEARCH SUPPORT
SECTION 6.1 RESEARCH SUPPORT. Connetics will pay Soltec [*****] per year for the
first [*****] of this Agreement ("RESEARCH SUPPORT"). The first Research Support
payment shall be due when Soltec notifies Connetics that Soltec has hired an
additional employee for Soltec's dermatology team. Subsequent payments shall be
made on the first and second anniversaries of the Effective Date. The Parties
may extend the period of Research Support upon mutual written agreement.
SECTION 6.2 SOLTEC'S RESEARCH OBLIGATIONS. The Parties acknowledge that the
timing of invention cannot easily be dictated. Nevertheless, in the spirit of an
ongoing relationship and in return for the Research Support, Soltec agrees that
it shall continue to conduct research to develop new platform technologies and
products in the Field, and to present those opportunities to Connetics on a
regular basis, during the term of the Research Support.
SECTION 6.3 RESEARCH ASSISTANCE. If Connetics requests research activities from
Soltec beyond those contemplated by SECTION 4.3, Connetics will pay Soltec at an
hourly rate of [*****] per person for such research activities; provided,
however, that the initial payment of [*****] paid pursuant to SECTION 6.1 will
be credited against such fees for service.
SECTION 6.4 CONNETICS LIAISON. In addition to the additional employee to be
hired in connection with SECTION 6.1, Soltec shall designate a Soltec employee
(which may be, but is not required to be, the same individual) to coordinate
Connetics' projects within Soltec.
SECTION 6.5 RIGHT OF REFUSAL. Connetics shall have a right of refusal to any
Future Technology developed during the Research Period, on the terms set forth
in this Section.
6.5.1 If Soltec develops any Future Technology during the
Research Period, and determines to develop and commercialize that Future
Technology, or to license the Future Technology to a Third Party in the
Territory in the Field, then Soltec will first offer to Connetics by
written notice the right to carry out the development, manufacture, use,
distribution, marketing or sale of such Future Technology in the
Territory in the Field.
6.5.2 Connetics shall have [*****] following receipt of such
written notice within which to notify Soltec whether or not Connetics
wishes to exercise its right of refusal to such Future Technology that
is the subject of Soltec's offer.
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6.5.3 If Connetics notifies Soltec that it wishes to exercise its
right of refusal to such Future Technology, then with respect to any
Product or Technology [*****], the provisions of SECTION 6.6 shall
apply.
6.5.4 If the offer relates to [*****], and Connetics notifies
Soltec that it wishes to exercise its right of refusal, Soltec and
Connetics will negotiate in good faith the terms of an appropriate
agreement during a further period of [*****].
6.5.5 If as a consequence of such good faith negotiations the
Parties come to an agreement they will promptly enter into and exchange
any amendments to this Agreement that they deem necessary to carry out
the effect of the decision.
6.5.6 If the Parties are unable to agree to terms despite good
faith negotiations with respect to [*****], Soltec shall be free to
negotiate agreements for such rights with Third Parties; provided,
however, that Soltec will not enter into any agreement with Third
Parties on terms which, if they were offered to Connetics, would be more
favorable to Connetics than the terms offered in the course of the
aforementioned good faith negotiations.
6.5.7 If in response to the written offer Connetics indicates it
does not wish to exercise its right of refusal, or if Connetics fails to
respond to Soltec's offer within the [*****] time period, then Soltec
will be free to negotiate for the grant of such rights to Third Parties
on such terms as it may wish.
SECTION 6.6 FUTURE TECHNOLOGY. If Connetics exercises its right of refusal as to
a particular Future Technology pursuant to SECTION 6.5, Connetics shall pay
Soltec [*****] and the Parties shall negotiate in good faith to set diligence
milestones for such Future Technology. This Agreement shall be amended to
include such Future Technology in the definition of "Product" and "Technology"
pursuant to this Agreement, and all remaining provisions of this Agreement
relating to Connetics' obligations with respect to the Products and the
Technology shall be deemed to apply to such Future Technology.
SECTION 6.7 IMPROVEMENTS. To the extent that it is not prevented from doing so
due to legal obligations of confidentiality, Soltec shall keep Connetics
informed from time to time of any applications of the Technology or the Products
outside of the Field but shall be under no obligations to offer any such
applications to Connetics.
ARTICLE 7
PATENTS
SECTION 7.1 NO OTHER PATENTS. Soltec confirms that the Patents represent the
only patent protection it or its Affiliates have applied for in relation to the
Technology or the Products
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(excluding patent protection for the Excluded Technology).
SECTION 7.2 TITLE TO PATENTS. Soltec or its Affiliates shall retain title to the
Patents and to any patent rights and know-how related to the Products, the
Technology, or the Future Technology developed solely by Soltec in the future.
Connetics shall be granted an exclusive license in the Field in the Territory to
any improvements made by Soltec to the Products or the Technology. Connetics
shall retain title to any patent rights and know-how related to the Products or
the Technology developed solely by Connetics in the future. Connetics and Soltec
shall jointly own any patent rights and know-how related to the Products or the
Technology developed jointly by Soltec and Connetics in the future, in relative
proportions to be agreed upon at the time any patent application is filed (or
prior to any commercialization, in the case of know-how).
SECTION 7.3 PATENT PROSECUTION AND MAINTENANCE. Soltec shall prosecute and
maintain the Patents and shall not take any steps to abandon, or allow to lapse,
nor fail to take any steps which are required to avoid the abandonment or
lapsing of any Patent (nor cause or permit any other person to do so) unless, in
each case, the Parties otherwise specifically agree in writing. Soltec shall
keep Connetics promptly informed of the status of prosecution of the Patents,
including providing copies of all material correspondence with the Patent Office
in each country of the Territory. Connetics shall have the right to comment upon
and make suggestions for such prosecution and Soltec agrees to give such
comments and suggestions due consideration, but the decision whether to
implement Connetics' comments and suggestions shall rest solely with Soltec.
Connetics shall reimburse Soltec for the portion of Patent filing, prosecution,
grant and maintenance fees (including attorneys' fees) allocable to the
Territory, within thirty (30) days after receipt of an invoice from Soltec
containing sufficient detail to support the obligation for payment.
SECTION 7.4 ASSISTANCE FROM CONNETICS. Connetics shall assist Soltec in
prosecuting the Patents as contemplated by SECTION 7.3. If Soltec decides to
discontinue prosecution or maintenance of any or all of the Patents, at its
option Connetics may elect to continue such prosecution and maintenance at its
own expense, upon which election title to such Patent(s) shall be assigned to
Connetics.
SECTION 7.5 INFRINGEMENT ACTIONS.
7.5.1 ACTION. If either Party learns that a Third Party is
infringing the Patents, it shall promptly notify the other in writing.
The Parties shall use reasonable efforts in cooperation with each other
to stop such patent infringement without litigation. If such efforts are
unsuccessful, Soltec may take steps to remove the infringement of the
Patents, including, without limitation, initiating suit. If Soltec
decides not to take such steps to remove the infringement within three
(3) months of discovering or being notified of the infringement,
Connetics may, but shall not be required to, take steps to remove the
infringement.
7.5.2 EXPENSES; CONTROL. Any legal action taken under this
section will be at the expense of the Party by whom suit is filed and
will be controlled by the Party bringing suit. The Party not bringing
suit may choose to be represented in any such
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action by counsel of its own choice at its own expense. The Party
bringing suit shall be reimbursed for its costs associated with bringing
suit with the proceeds of any damages or costs recovered. Any moneys
remaining shall be split between the parties on an equitable basis
proportional to their respective damage from the infringement. If both
Parties bring suit, equitable apportionment of the costs and damages to
be recovered shall be agreed upon before the filing of the suit.
SECTION 7.6 INFRINGEMENT OF THIRD PARTY PATENT. If a notice of infringement is
received by, or a suit is initiated against, either Soltec or Connetics with
respect to the Technology or a Product as made, used or sold in the Territory,
the Parties will in good faith discuss the best way to respond.
SECTION 7.7 NO CHALLENGE TO PATENT RIGHTS. Connetics agrees that it will not,
during the Term of this Agreement, challenge the validity or the enforceability
of any of the Licensed IP in the Territory.
ARTICLE 8
REPRESENTATIONS OF SOLTEC
Soltec represents and warrants to Connetics as follows:
SECTION 8.1 ORGANIZATION; STANDING. Soltec is duly organized, validly existing
and in good standing and has the corporate power and authority to execute and
deliver this Agreement and the other agreements contemplated by this Agreement.
SECTION 8.2 NO CONFLICTS. The execution, delivery and performance of this
Agreement have been validly authorized by Soltec; neither the execution and
delivery of, or the performance of its obligations under this Agreement (a)
conflicts with, or contravenes or constitutes any default under, any agreement,
instrument or understanding, oral or written, to which it is a party, including
without limitation its certificate of incorporation or bylaws, or (b) violates
applicable laws, rules or regulations, or any judgment, injunction, order or
decree of any governmental authority having jurisdiction over it.
SECTION 8.3 RIGHTS TO LICENSED IP. As of the Effective Date, Soltec owns,
controls, or otherwise has the right to use, all Product Information and Patents
required or necessary to develop, manufacture and sell Products (in bulk or
finished form); and further Soltec has the right to grant to Connetics the
rights and licenses under the Licensed IP in this Agreement, including without
limitation the Medeva Patents (subject to Medeva's consent pursuant to the
Medeva/Soltec Agreement).
SECTION 8.4 NO LAWSUITS, ETC. To the best of Soltec's knowledge, as of the
Effective Date and during the immediately preceding five (5) year period, there
have not been any claims, lawsuits, arbitrations, legal or administrative or
regulatory proceedings, charges, complaints or investigations by any government
authority or other Third Party (except for litigation between
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Soltec and Monash University instituted in the Supreme Court of Victoria in May
1998 and finally settled between the parties in 1999) threatened, commenced or
pending against Soltec or its licensors relating to, and Soltec has not received
any notice of infringement with respect to, the Product Information, Patents, or
the Technology, including Soltec's right to manufacture, use or sell Products.
SECTION 8.5 THIRD PARTY RIGHTS. The exercise by Connetics of the rights and
licenses granted to Connetics by Soltec under this Agreement will not violate
any agreement between Soltec and any Third Party nor, to the best of Soltec's
knowledge, infringe any rights owned by any Third Party. Except as disclosed to
Connetics in a separate letter (if any), as of the Effective Date, Soltec is not
aware of any Third Parties that own or control any patents or Product
Information required for the production, manufacture or commercialization of the
Technology.
SECTION 8.6 NO ENCUMBRANCES. As of the Effective Date, Soltec controls or
otherwise is entitled to use throughout the Territory all rights in, to and
under the Patents and Product Information, free and clear of any lien, claim,
charge, encumbrance or right of any Third Party (except as relates to the
Excluded Technology).
SECTION 8.7 NO OTHER AGREEMENTS. No other agreement or understanding, verbal or
written, exists to which Soltec is legally bound regarding the Licensed IP in
the Territory in the Field, except for [*****], all as previously disclosed to
Connetics.
SECTION 8.8 INFORMATION. All information relating to the Technology and the
Products delivered to Connetics by Soltec, its officers, directors,
representatives or agents, was when delivered and is as of the date of this
Agreement in all material respects accurate and correct to the best of Soltec's
knowledge, and Soltec is not aware of any information which would be required to
be disclosed to make any such information not misleading.
SECTION 8.9 INVESTMENT REPRESENTATIONS. Soltec meets the investment
representations set forth in the Stock Issuance Agreement.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF CONNETICS
SECTION 9.1 ORGANIZATION; STANDING. Connetics is duly organized, validly
existing and in good standing and has the corporate power and authority to
execute and deliver this Agreement and the other agreements contemplated by this
Agreement.
SECTION 9.2 NO CONFLICTS. The execution, delivery and performance of this
Agreement have been validly authorized by Connetics; neither the execution and
delivery of, or the performance of its obligations under this Agreement (a)
conflicts with, or contravenes or constitutes any default under, any agreement,
instrument or understanding, oral or written, to which it is a party, including
without limitation its certificate of incorporation or bylaws, or (b) violates
applicable
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laws, rules or regulations, or any judgment, injunction, order or decree of any
governmental authority having jurisdiction over it.
ARTICLE 10
SUPPLY OF MATERIAL
SECTION 10.1 CLINICAL SUPPLIES.
10.1.1 RIGHT TO PURCHASE. Commencing from the Effective Date
until Soltec receives Regulatory Approval to market a Product outside of
the Territory, Soltec and its Affiliates shall have the right (subject
to the terms of this Agreement) to purchase Soltec's required quantities
of that Product for use in Clinical Trials in Australia and New Zealand.
10.1.2 PAYMENT AND INVOICING. Soltec's purchase price shall be
[*****]. Connetics shall invoice Soltec for Product ordered by Soltec.
Each invoice shall be accompanied by a schedule illustrating the
calculation of [*****]. Payment of the invoice shall be due on the later
of thirty (30) days after the date of the invoice or thirty (30) days
after Connetics delivers the product to the common carrier for Soltec.
10.1.3 NO TRANSFER. Neither Soltec nor its Affiliates shall
transfer any such supply of Product to any Third Party at any time
except to the extent transfer is required for clinical development,
regulatory filings or Regulatory Approval related to the Product in
Australia and New Zealand.
10.1.4. CHANGES IN MANUFACTURING. If Connetics decides that
change or modification of the production procedure is necessary during
the Term for any reason, Connetics shall promptly notify Soltec in
writing of the need for such change or modification.
SECTION 10.2 COMMERCIAL SUPPLIES. With respect to any Product for which Soltec
has received Regulatory Approval to market in Australia and New Zealand,
Connetics agrees to use commercially reasonable efforts to manufacture for and
supply to Soltec or its Affiliates all of Soltec's or the Affiliate's
requirements for Product for sale in Australia and New Zealand. The price to
Soltec for commercial supply of Product for sale in Australia and New Zealand
shall be [*****]. The other material terms of the supply arrangement shall be
set forth in a separate supply agreement with respect to the approved Product,
such supply agreement to be entered into by the Parties as soon as practicable,
but in no event later than the date of first sale of Product in Australia or New
Zealand. It is envisioned that each approved Product may require a separate
supply agreement.
SECTION 10.3 SUPPLY TO THIRD PARTIES. Connetics shall have no obligation to sell
Product to Third Parties on any terms. Nevertheless, Connetics agrees that, at
Soltec's request, Connetics
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will enter into good faith negotiations to supply clinical or commercial
supplies of Product to a licensee of Soltec outside of the Territory and/or
outside of the Field.
ARTICLE 11
DISCLAIMER OF WARRANTIES; INDEMNIFICATION; INSURANCE
SECTION 11.1 DISCLAIMER OF WARRANTIES. Except as otherwise expressly provided in
this agreement or by applicable law, neither party makes any warranty with
respect to any technology, goods, services, rights, or other subject matter of
this agreement and hereby disclaims all warranties, conditions or
representations of any kind, express or implied, including, but not limited to,
implied warranties of performance, merchantability, satisfactory quality,
fitness for a particular purpose or non-infringement of third party intellectual
property rights.
SECTION 11.2. INDEMNIFICATION BY CONNETICS. Connetics hereby undertakes to
indemnify Soltec from and against all suits, losses, actions, demands,
investigations, claims, damages, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) (collectively,
"LOSSES") brought by Third Parties arising from or occurring as a result of (a)
any breach (or alleged breach) by Connetics of its representations, warranties,
or obligations under this Agreement; (b) the manufacture or the storage of
Product after Soltec delivers the prototype and information package in
conformance with SECTION 4.3, except to the extent caused by the negligence or
willful misconduct of Soltec or its officers, agents, employees, Affiliates,
sublicensees or customers; or (c) the negligence or willful misconduct of
Connetics or its officers, agents, employees or Affiliates.
SECTION 11.3 INDEMNIFICATION BY SOLTEC. Soltec hereby undertakes to indemnify
Connetics from and against all Losses brought by Third Parties arising from or
occurring as a result of (a) any breach (or alleged breach) by Soltec of its
representations, warranties, or obligations under this Agreement; or (b) the use
or consumption of Products or Technology in Australia or New Zealand stemming
from sales of such Products or Technology by Soltec, save to the extent the
losses arise from or occur as a result of any activity by Connetics.
SECTION 11.4 INSURANCE REQUIREMENTS. At all times during the term of this
Agreement, each Party shall obtain and maintain liability insurance at its sole
cost and expense, as follows:
11.4.1. SOLTEC. Soltec shall provide:
(a) Commercial General Liability, including coverage
for products and completed operations (including
coverage for advertising and personal injury). The
policy shall have a per claim limit of not less
than [*****] and an aggregate limit of not less
than [*****], shall be maintained for a period of
at least [*****] years after the expiration or
termination of this Agreement, and shall provide
coverage for all loss (excluding consequential
damages and loss of profits), liability,
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damage, fee, cost (including legal cost of a
solicitor), expense, suit, claim, demand, judgment
and prosecution directly or indirectly arising from
or incidental to or resulting from the insured
event.
(b) Policy Conditions: All policies under (a) above
shall:
(i) be written by insurance companies with an
A.M. Best's rating of A:VIII or higher (or
if Soltec or its sublicensees policies are
not subject to the Best rating, then by
carriers who are acceptable to Connetics);
and
(ii) note Connetics as a third party for its
rights and interest.
Soltec shall provide Connetics a certificate of insurance which shall
reflect the above coverages and provisions.
11.4.2. CONNETICS. Connetics shall provide:
(a) Commercial General Liability, including coverage
for products and completed operations and
contractual liability (including coverage for
advertising and personal injury). The policy shall
have a per claim limit of not less than [*****] and
an aggregate limit of not less than [*****], shall
be maintained for a period of at least [*****]
years after the expiration or termination of this
Agreement, and shall provide coverage for all loss
(excluding consequential damages and loss of
profits), liability, damage, fee, cost (including
legal cost of a solicitor), expense, suit, claim,
demand, judgment and prosecution directly or
indirectly arising from or incidental to or
resulting from the insured event.
(b) Policy Conditions: All policies under (a) above
shall:
(i) be written by insurance companies with an
A.M. Best's rating of A:VIII or higher (or
if Connetics or its sublicensees policies
are not subject to the Best rating, then by
carriers who are acceptable to Soltec); and
(ii) add Soltec as an additional insured.
Connetics shall provide Soltec a certificate of insurance which shall
reflect the above coverages and provisions.
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ARTICLE 12
REGULATORY MATTERS
SECTION 12.1 ADVERSE EXPERIENCE REPORTING. Each Party shall notify, and shall
cause its Affiliates and sublicensees to notify, the other Party promptly upon
receipt of:
(a) any information concerning any potentially serious or unexpected
side effect, injury, toxicity or sensitivity reaction or any
unexpected incidence or other adverse experience (an "ADVERSE
EXPERIENCE") and the severity thereof associated with the
clinical uses, studies, investigations, tests and marketing of
the Products, whether or not determined to be attributable to the
same;
(b) any information regarding any pending or threatened action which
may affect the safety or efficacy claims of the Products or the
continued marketing of the Products in any nation or
jurisdiction; and
(c) any material communications with or notice from a Regulatory
Authority indicating that it intends to visit or inspect a
Party's facilities, or the facilities of an Affiliate or
sublicensee of such Party, for a purpose relevant to the
development, manufacture of marketing of the Products.
Without limiting the foregoing, Soltec shall use commercially reasonable efforts
to require each Affiliate and sublicensee to notify Connetics' responsible drug
safety department by telephone and facsimile within twenty-four (24) hours after
Soltec first becomes aware of any Adverse Experience that gives cause for
concern or is unexpected or that is fatal, life-threatening (as it occurred),
permanently disabling, requires (or prolongs) inpatient hospitalization,
represents a significant hazard, or is a cancer or a congenital anomaly or
represents an overdose, or any other circumstance that might necessitate a
recall, expedited notification of any Regulatory Authorities or a significant
change in the label of the Product, including without limitation, any deviation
from the specified environmental conditions for shipping or storage of the
Product. Each Party shall make such reports as are necessary to comply with laws
and regulations applicable to it, at its sole expense. Further, in the event a
Party (or its Affiliates or sublicensees) receives a communication or directive
from a Regulatory Authority commencing or threatening seizure of (or other
removal from the market of) a Product, such Party shall transmit such
information to the other Party within twenty-four (24) hours of receipt.
SECTION 12.2 NOTIFICATION AND RECALL. If any Regulatory Authority issues or
requests a recall or takes similar action in connection with a Product, or if
either Party determines that an event, incident or circumstance has occurred
which may result in the need for a recall or market withdrawal, the Party
notified of or wishing to call such recall or similar action shall, within
twenty-four (24) hours, advise the other Party of notification or its
determination by telephone or facsimile, after which the Parties shall promptly
discuss and work together to effect an appropriate course of action; provided,
however, that either Party may initiate a recall or market
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withdrawal thereafter if it deems such action necessary or appropriate. As
between the Parties, Soltec shall be responsible for notification to the
applicable Regulatory Authority with respect to countries other than those in
the Territory and compliance with applicable laws outside the Territory in
conducting such recall. Connetics shall be responsible for notification to the
applicable Regulatory Authority with respect to countries in the Territory and
compliance with applicable laws in the Territory in conducting such recall.
ARTICLE 13
GOVERNANCE
SECTION 13.1 COMMITTEES. The Parties shall establish the committees described
below for the purpose of performing the obligations and governing the
relationship between the Parties pursuant to this Agreement. Each Party will
provide to the relevant committees such data and documentation developed by each
Party necessary to enable the committees to perform the duties described in this
ARTICLE 13. The confidentiality requirements set forth in this Agreement shall
be deemed to apply to all correspondence, minutes, and discussions in connection
with committee meetings. The Committee members shall be duly authorized and
empowered to make decisions pertaining to the performance of this Agreement on
behalf of their respective appointing Parties.
SECTION 13.2 PRODUCT DEVELOPMENT COMMITTEE. The Parties shall establish a
Product Development Committee which shall (a) develop, approve and amend the
development plan with respect to Connetics' duties in the Territory, and (b)
provide overall direction, monitor progress, manage information exchange between
the Parties, decide key strategies and solve problems with respect to the
development of the Technology and of the Products in the Territory. At the first
meeting of the Product Development Committee, the members shall establish a
regular meeting time (which shall be, at a minimum, quarterly) and structure.
Each Party shall appoint a key individual, who shall be responsible for
coordinating timing and agenda of meetings, and for ensuring that the Party is
represented by the appropriate persons at each meeting (based on the proposed
agenda for that meeting).
SECTION 13.3 BUSINESS DEVELOPMENT COMMITTEE. The Parties shall establish a
Business Development Committee which shall be responsible for deciding key
strategies and solving problems with respect to commercialization and promotion
of the Technology and/or the Products outside of the Territory. At the first
meeting of the Business Development Committee, the members shall establish a
regular meeting time and structure. The Business Development Committee shall be
composed of two (2) members, who shall have joint responsibility to coordinate
the timing, notice, and agendas for Business Development Committee meetings.
Connetics agrees to promptly inform Soltec of any inquiries Connetics receives
for acquisition to the Technology or the Products outside of the Territory.
SECTION 13.4 DECISION MAKING. Meetings of the committees may be held in person
at mutually agreed times and locations, or may be held by telephone or video
conference. In general, each of the committees shall strive to make decisions by
consensus. If consensus cannot be reached on
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matters assigned to the Product Development Committee or the Business
Development Committee, then (a) with respect to matters within in the Territory,
Connetics shall have the right to resolve deadlocks, and (b) with respect to
matters outside of the Territory, Soltec shall have the right to resolve
deadlocks. Nothing in this SECTION 13.4 shall be construed to require Connetics
to share regulatory and clinical data with any Third Party, except as otherwise
set forth in this Agreement.
ARTICLE 14
GENERAL MATTERS
SECTION 14.1 CONFIDENTIALITY. In order to facilitate this Agreement it will be
necessary for the parties to exchange certain Proprietary Information, each
recipient of which agrees to retain such Proprietary Information in strict
confidence and not to disclose or transfer to any party or use other than as
authorized by the terms of this Agreement or otherwise in writing by the
discloser. In particular, Connetics agrees that EXHIBIT A and all of the
information contained in it is to be treated in strict confidence and not
disclosed or transferred. It is not able to be used by Connetics for any purpose
whatsoever other than to define the Excluded Technology. The parties hereby
acknowledge that such Proprietary Information can constitute "inside
information" for securities purposes and the responsibility to refrain from any
unauthorized disclosure, trading or other such use. These obligations of
confidentiality and non-use shall not apply to Proprietary Information: (a) that
was previously known to the recipient as evidenced by recipient's written
records, (b) that is lawfully obtained by recipient from a source independent of
the discloser, or (c) that is now or becomes public knowledge other than by
breach of this Agreement. These obligations of confidentiality and non-use shall
survive the expiration or termination of this Agreement.
SECTION 14.2 COMPLIANCE WITH LAWS. In performing this Agreement, each Party
shall comply with all applicable laws and government regulations at all times,
including but not limited to any applicable laws and regulations in the
Territory with respect to the export or re-export or release of technology and
technical data.
SECTION 14.3 GOVERNING LAW; VENUE. This Agreement shall be governed, controlled,
interpreted and defined by and under the laws of the State of New York and the
United States without regard to that body of law known as conflicts of law;
provided that issues relating to the validity and enforceability of patents
shall be governed by the laws of the jurisdiction by which such patent was
granted. The Parties specifically disclaim application to this Agreement of the
Convention on Contracts for the International Sale of Goods.
SECTION 14.4 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach or termination of this Agreement,
shall be dealt with in the following manner:
14.4.1 The dispute, controversy or claim shall first be referred
to the chief executive officer of each of Soltec and Connetics for
resolution at a place to be agreed
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between such chief executive officers and, failing agreement, at the
head office of the Soltec (if Connetics requests the referral) or
Connetics (if Soltec requests the referral).
14.4.2 If the dispute, controversy or claim is not settled or
agreed between such chief executive officers within a period of one (1)
month, then it shall be settled by arbitration in accordance with the
UNCITRAL Rules then in effect. At the written request of either party,
Soltec and Connetics may each nominate one or more appropriately
qualified experts, but both parties must agree to the expert to be
appointed. If the Parties are unable to agree on an expert or experts,
the arbitration will be conducted by a panel of three (3) arbitrators
who are knowledgeable in the subject matter that is at issue in the
dispute, are not affiliated directly or indirectly with either Party,
one of whom is selected by Soltec, one of whom is selected by Connetics,
and one of whom is selected by the mutual agreement of the other two
arbitrators. During the arbitration, the Parties shall have such
discovery rights as the arbitrators may allow, consistent with the
discovery permitted by the Federal Code of Civil Procedure. The place of
arbitration shall be New York, New York. The arbitrators shall apply the
law of the State of New York (regardless of that jurisdiction's or any
other jurisdiction's choice of law principles).
14.4.3 In any arbitration pursuant to this section, the
arbitrators shall be able to decree any and all relief of an equitable
nature, including but not limited to such relief as a temporary
restraining order, a preliminary or permanent injunction, as well as
specific performance. The arbitrators shall also be able to award direct
and indirect damages, but shall not award any other form of damage
(e.g., punitive or exemplary damages). The reasonable fees and expenses
of the arbitrators, the fees and expenses of a court reporter, and any
expenses for a hearing room, shall be borne equally by the Parties. The
decision of the arbitrators shall be final and will be handed down
within a period of sixty days of being appointed. The Party in whose
favor the decision runs may enter, sued on or enforced the decision in
any court of competent jurisdiction at the option of such Party.
SECTION 14.5 TERM. The term of this Agreement and license shall commence on the
Effective Date and continue in full force and effect with respect to each
Product and Technology until the later of (a) the expiration of the last to
expire Patent having a Valid Claim in the Territory; or (b) twelve (12) years
after the Effective Date.
SECTION 14.6 TERMINATION.
14.6.1 TERMINATION FOR BREACH.
(a) Failure of Connetics to Meet Diligence Milestones. If
Connetics fails to meet any of its diligence milestones
set forth in ARTICLE 4 for any reason other than fault of
Soltec or Force Majeure, and if Connetics does not cure or
does not present a plan to cure which is acceptable to
Soltec within [*****] days after written notice from
Soltec, Soltec shall have the right upon further written
notice to terminate Connetics' exclusive license in the
Territory with respect to the Product or Technology at
issue as follows:
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PAGE 25
26
Termination Under Section Reason for Termination Effect
------------------------- ---------------------- ------
4.2.1 [*****] [*****]
Aerosol Foam Technology
4.2.1 [*****] [*****]
Aerosol Foam Technology
4.2.2 [*****] [*****]
Liquipatch
4.2.2 [*****] [*****]
Liquipatch
4.2.3 [*****] [*****]
Sunscreen 2000
4.2.4 [*****] [*****]
Non-Aqueous Shampoo and
Ketoconazole Shampoo
4.2.4 [*****] [*****]
Non-Aqueous Shampoo and
Ketoconazole Shampoo
4.2.5 [*****] [*****]
Minoxidil Formulation
Technology
4.2.6 [*****] [*****]
Hydrocortisone
Hydroalcoholic Foam
(b) Other Breach by Connetics. Upon breach by Connetics of any
of its obligations contained in this Agreement other than
the diligence milestones set forth in ARTICLE 4
("CONNETICS BREACH"), Soltec shall be entitled to give
Connetics notice specifying the nature of the Connetics
Breach and stating its intent to terminate this Agreement
if the Connetics Breach is not cured. This Agreement shall
terminate [*****] after Connetics receives such notice (i)
if Connetics does not cure the Connetics Breach, or (ii)
if a plan, reasonably acceptable to Soltec, is not
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implemented to cure as soon as practicable after notice of
the Connetics Breach.
(c) Breach by Soltec. Upon breach by Soltec of any of its
obligations contained in this Agreement ("SOLTEC BREACH"),
Connetics shall be entitled to give Soltec notice
specifying the nature of the Soltec Breach and stating its
intent to terminate this Agreement if the Soltec Breach is
not cured. This Agreement shall terminate [*****] after
Soltec receives such notice (i) if Soltec does not cure
the Soltec Breach, or (ii) if a plan, reasonably
acceptable to Connetics, is not implemented to cure as
soon as practicable after notice of the Soltec Breach.
14.6.2 TERMINATION FOR INSOLVENCY. Either Party may terminate
this Agreement immediately upon delivery of written notice to the other
Party (a) upon the institution by or against the other Party of
insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of the other Party's debts, provided,
however with respect to involuntary proceedings, that such proceedings
are not dismissed within [*****]; (b) upon the other Party's making an
assignment for the benefit of creditors; or (c) upon the other Party's
dissolution or ceasing to do business.
14.6.3 TERMINATION FOR FORCE MAJEURE. If performance of a Party's
obligations is delayed for a continuous period of not less than [*****]
due to a force majeure event described in SECTION 14.7, the other Party
shall have the right to terminate this Agreement upon written notice to
the non-performing Party; provided, however, that no Party shall have
the right to terminate this Agreement pursuant to this SECTION 14.6.3 if
the terminating Party could have reasonably prevented the non-performing
Party's failure to perform.
14.6.4 TERMINATION BY CONNETICS.
(a) Connetics shall have no rights except for Soltec Breach or
Force Majeure to terminate this Agreement prior to the
[*****] anniversary of the Effective Date.
(b) Connetics shall have a limited right to terminate this
Agreement, as follows:
(i) Beginning on the third anniversary of the Effective
Date, Connetics shall have a [*****] period in
which to terminate this Agreement. Such termination
shall be effective immediately upon delivery of
written notice to Soltec, with respect to any
Products and/or Technologies that Connetics
specifies in the written notice to Soltec.
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(ii) If Connetics does not elect to terminate this
Agreement pursuant to (i) above, then beginning on
the [*****] anniversary of the Effective Date,
Connetics shall have one other opportunity to
terminate, by giving Soltec written notice of
termination within [*****] after the [*****]
anniversary of the Effective Date. Such termination
shall be effective immediately upon delivery of
written notice to Soltec, with respect to any
Products and/or Technologies that Connetics
specifies in the written notice to Soltec.
(c) If Connetics exercises its right to terminate pursuant to
this SECTION 14.6.4, then (i) the Agreement shall continue
in full force and effect with respect to any Products or
Technologies that Connetics does not specify in the
written notice, (ii) in the absence of any agreement
between the Parties to the contrary, the Minimum Royalty
and Royalty obligations shall remain unchanged, (iii) all
rights to the Products and Technologies specified by
Connetics shall revert to Soltec and Connetics shall no
longer have any rights to develop, manufacture, use,
distribute, market or sell such Products and/or
Technologies, and (iv) Connetics' ongoing diligence
obligations shall be as set forth in SECTION 14.6.5(d).
14.6.5 EFFECT OF TERMINATION. Upon the expiration or earlier
termination of this Agreement, the rights licensed under this Agreement
shall be treated as follows:
(a) Upon termination for a Connetics Breach or a Soltec
Breach, or if such a breach is likely to occur, the other
Party shall be entitled to seek equitable relief,
including specific performance or an injunction, in
addition to any other rights or remedies, including money
damages, provided by law, without posting a bond. In
addition, upon termination for a Connetics Breach, all
rights to the Products and the Technology in the Territory
shall revert to Soltec, and all rights of Connetics to
develop, manufacture, use, distribute, market and sell
such Products and Technology in the Territory and the
obligation to pay royalties (including Minimum Royalties)
shall thereupon cease. Thereafter Connetics shall have no
right to use the trademark(s) relating to such Products
and Technology.
(b) Unless previously terminated pursuant to this SECTION
14.6, upon the expiration of the Term, Connetics shall
have a fully paid-up (subject to the Royalty Term and to
the Minimum Royalty payable pursuant to SECTION 3.4),
perpetual, irrevocable, royalty-free, transferable,
non-exclusive right and license to make, have made, use,
offer to sell, and sell Products in the Territory, and to
use the trademark(s) licensed pursuant to this Agreement
on Products on the market in the Territory at the time of
such expiration.
(c) Upon termination by Soltec for Connetics' failure to meet
diligence milestones with respect to a given Product or
Technology pursuant to
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SECTION 14.6.1(a), (i) all rights licensed under this
Agreement to the affected Product or Technology, as the
case may be, in the Territory shall revert to Soltec, (ii)
all rights of Connetics to develop, manufacture, use,
distribute, market and sell such Product in the Territory
and the obligation to pay royalties in relation to such
Product shall thereupon cease, and (iii) thereafter
Connetics shall have no right to use the trademark(s)
relating to such Product. In addition, Soltec shall
automatically be entitled to the information developed by
Connetics in relation to such Product, such rights to
apply solely to use by Soltec or an Affiliate of Soltec
(without the right to sublicense) outside of the
Territory, throughout the world (and not limited to
Australia and New Zealand). No Third Party shall be
entitled to such information developed by Connetics except
on the terms set forth in SECTION 5.2. Nothing in this
paragraph (c) is intended to relieve Connetics' obligation
to remit royalties to Soltec for Product sold prior to
termination of this Agreement, even though Connetics is
not paid for such Products until after the date of
termination.
(d) Upon termination by Connetics pursuant to SECTION 14.6.4,
Connetics shall have no further diligence obligations with
respect to Products that it specifies in the written
notice to Soltec. For any other Product or Technology,
Connetics shall have the same diligence, royalty and other
obligations set forth elsewhere in this Agreement. In
addition, Soltec shall automatically be entitled to the
information developed by Connetics in relation to such
Product, such rights to apply solely to use by Soltec or
an Affiliate of Soltec (without the right to sublicense)
outside of the Territory, throughout the world (and not
limited to Australia and New Zealand). No Third Party
shall be entitled to such information developed by
Connetics except on the terms set forth in SECTION 5.2.
Except as expressly provided in this Agreement, termination of this
Agreement pursuant to the terms and conditions set forth in this
Agreement shall not relieve the parties of any right or obligation,
including but not limited to any payment obligations, accruing prior to
or upon such expiration or termination. Upon expiration or termination
of this Agreement for any reason, each party shall immediately return to
the other party or destroy any Proprietary Information disclosed by the
other party, except that each party may retain one copy of such
Proprietary Information marked and used for legal archival purposes
only.
SECTION 14.7 FORCE MAJEURE. Neither Party shall be considered in default of
performance of its obligations under this Agreement, except any obligation under
this Agreement to make payments when due, to the extent that performance of such
obligations is delayed by contingencies or causes beyond the reasonable control
and not caused by the negligence or willful misconduct of such Party, including
but not limited to strike, fire, flood, earthquake, windstorm, governmental acts
or orders or restrictions, or force majeure, to the extent that the failure to
perform is beyond the reasonable control of the nonperforming Party.
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SECTION 14.8 PUBLICITY. Subject to the requirements of law and/or The Australian
Stock Exchange Limited or the Nasdaq National Market System, any announcements
or publicity (whether verbal or written, including, but not limited to
shareholder reports, prospectuses, communications with stock market analysts,
press releases or other communications with the media) to be made or given in
respect of this Agreement by either party shall be subject to the prior approval
in writing of the other party (such approval not to be unreasonably withheld or
delayed) where such announcement or publicity refers to such other party, the
Product or the Technology. The parties agree that once approval for disclosure
of information has been obtained in accordance with the provisions of this
SECTION 14.8, the party that requested such approval shall be entitled to use
such information without any obligation to seek further approval.
SECTION 14.9 NOTICES. Any notice required or permitted by the terms of this
Agreement shall be given by international overnight courier or registered mail,
prepaid and properly addressed, or delivered by hand, as follows:
If to Soltec, to:
Managing Director
Soltec Research Pty Ltd.
0 Xxxxx Xxxxx
Xxxxxxxx
Xxxxxxxx 0000
Xxxxxxxxx
Facsimile: (x00) 0 0000 0000
With a copy to:
Company Secretary
X. X. Xxxxxxxx and Co., Limited
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx 0000
Facsimile: (00) 0000 0000
If to Connetics, to:
Chief Executive Officer
Connetics Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Either Party may designate a different address by giving notice pursuant to this
Section to the other Party. Any such notice shall be deemed to have been given
when received. All notices to Connetics shall be sent to the attention of its
President.
SECTION 14.10 PARTIAL INVALIDITY. If any provision of this Agreement is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction: (a) such provision will be
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deemed amended to conform to applicable laws of such jurisdiction so as to be
valid and enforceable, or, if it cannot be so amended without materially
altering the intention of the parties, it will be stricken; (b) the validity,
legality and enforceability of such provision will not in any way be affected or
impaired thereby in any other jurisdiction; and (c) the remainder of this
Agreement will remain in full force and effect.
SECTION 14.11 NONASSIGNABILITY AND BINDING EFFECT.
14.11.1 Each Party agrees that its rights and obligations under
this Agreement may not be transferred or assigned directly or
indirectly, except as follows: (a) either Party may transfer or assign
this Agreement to an Affiliate of such Party which agrees in writing to
undertake the obligations under this Agreement provided the assigning
Party remains primarily liable, (b) either Party may transfer or assign
this Agreement in connection with the sale of all or substantially all
of the assigning Party's related business, and (c) either Party may
transfer or assign this Agreement to a non-Affiliate Third Party with
the prior written consent of the other Party, which consent shall not be
unreasonably withheld.
14.11.2 In the case of an assignment by Connetics, Connetics
agrees that Soltec may seek to enforce Connetics' remedies against the
assignee directly against such assignee without first exhausting its
remedies against Connetics if the assignee breaches its agreement so as
to cause Connetics to become liable to Soltec for damages due to
Connetics' breach in accordance with the terms of this Agreement. As to
each such assignee, Connetics shall use commercially reasonable efforts
to cause each assignee to execute and deliver to Soltec prior to the
date of the assignment a letter acknowledging Soltec's right to enforce
Connetics' remedies directly against the assignee. Notwithstanding the
preceding sentence, if Soltec shall seek to exercise such remedies,
Connetics shall remain primarily liable and obligated to Soltec under
all provisions of this Agreement.
14.11.3 Subject to the foregoing, this Agreement shall be binding
upon and inure to, the benefit of the Parties, their successors and
assigns. Any attempted assignment contrary to the provisions of this
SECTION 14.11 shall be deemed ineffective, and either Party shall have
the right to terminate this Agreement, with the effect described in
SECTION 14.6 with respect to a Connetics Breach or a Soltec Breach, as
applicable.
SECTION 14.12 NON-WAIVER. No failure or delay on the part of a party in
exercising any right under this Agreement will operate as a waiver of, or
impair, any such right, unless a waiver is made in writing signed by the waiving
party. No single or partial exercise of any such right will preclude any other
or further exercise thereof or the exercise of any other right. No waiver of any
such right will be deemed a waiver of any other right under this Agreement.
SECTION 14.13 SURVIVAL. The agreements set forth in SECTIONS 3.4 (Royalties),
3.5 (Sublicense Fees, with respect to transactions entered into prior to
termination), 3.7 (Currency of Payments), 3.10 (Audit), 11.2 (Indemnification by
Connetics), 11.3 (Indemnification by Soltec), 11.4 (Insurance Requirements),
14.1 (Confidentiality), 14.4 (Arbitration), and 14.6.5 (Effect of
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Termination) and ARTICLE 12 (Regulatory Matters) shall survive any termination
or expiration of this Agreement and remain in full force and effect regardless
of the cause of termination. All other rights and obligations of the Parties
shall cease upon expiration or termination of this Agreement.
SECTION 14.14 HEADINGS. Section headings contained in this Agreement are
included for convenience only and form no part of the agreement between the
parties.
SECTION 14.15 ENTIRE AGREEMENT. This Agreement, together with its exhibits which
are incorporated in this Agreement by reference, sets forth the entire agreement
of the parties with respect to the subject matter set forth. Specifically, this
Agreement supercedes in their entirety the Option Agreement and the Letter of
Understanding, both of which shall have no further force or effect as of the
Effective Date. This Agreement is not intended to, and shall not be deemed to,
have any effect on the existing agreements between the Parties with respect to
the Excluded Technology. This Agreement may not be modified except by a writing
signed by the Parties' authorized representatives.
SECTION 14.16 INDEPENDENT CONTRACTORS. The Parties to this Agreement are
independent contractors. This Agreement does not establish a relationship of
agency, partnership, joint venture, employment or franchise between the Parties
and neither Party shall have any authority to bind the other Party or incur any
obligation on the other Party's behalf.
SECTION 14.17 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties to this Agreement have entered into this
Agreement as of the Effective Date.
"CONNETICS" "SOLTEC"
Connetics Corporation Soltec Research Pty Ltd.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx X. XxxXxxxxx
-------------------------------- --------------------------------
Xxxxxx X. Xxxxxxx Xxxx X. XxxXxxxxx, Ph.D.
President and Chief Executive Managing Director
Officer
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C O N F I D E N T I A L
EXHIBIT A EXCLUDED TECHNOLOGY
[*****]
34
EXHIBIT B PATENTS
PATENT NUMBER (REFERENCE) NAME OF PATENT/APPLICATION
------------------------- --------------------------
[*****]
35
C O N F I D E N T I A L
EXHIBIT C SPECIFICATIONS
CONFIDENTIAL
[*****]
