CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
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ASTERISKS DENOTE SUCH OMISSION
LICENSE AGREEMENT
This
License Agreement ("Agreement") is by and between Mead Johnson &
Company ("Licensor"), having a place of business at 2404
Pennsylvania
Street,
Evansville, IN 47721, Bristol-Myers Squibb Company
("BMS"), having a
place of
business at 345 Park Avenue, New York, NY 10154, and Par
Pharmaceutical,
Inc.
("Licensee"), having a place of business at One
Ram Ridge Road, Spring
Valley,
New York 10977.
WHEREAS,
Licensor is the owner
of the registered
trademark MEGACE in the
United States;
WHEREAS,
Licensee acknowledges and agrees that Licensor has
developed a
certain goodwill in the MEGACE
trademark as
indicating origin and
a very high
degree of quality of goods manufactured, promoted and sold by Licensor in the
United States under and in relation to the
MEGACE trademark;
WHEREAS,
it is the desire and
intention of the
parties that Licensee
be
permitted to use the MEGACE trademark in the United States and
its possessions
and territories solely in connection with
the packaging, promotion and sale of a
certain nanodispersion formulation of megestrol acetate currently being
developed by Licensee; and
WHEREAS,
BMS is willing to
engage in certain promotional activities with
respect to its MEGACE oral suspension
product.
NOW
THEREFORE,
in consideration of the above and other valuable
consideration, the parties hereto agree as
follows:
1. DEFINITIONS
1.1
"Affiliate" means any
corporation or other entity which controls, is
controlled by, or is under common control with a party to this
Agreement.
A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls fifty
percent (50%) or more of the voting
stock or other
ownership interest of the
other corporation or entity,
or if it possesses,
directly or
indirectly, the
power to direct or cause the direction of the management and policies of the
corporation or other entity or the power to
elect or appoint fifty percent (50%)
or more of the members of the governing
body of the corporation or other entity.
1.2 "BMS
Product" means the oral suspension formulation of megestrol
acetate being marketed and sold under the Licensed Trademark by BMS in the
Territory as of the Effective Date.
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1.3
"Confidential
Information" means and
includes, without
limitation,
information and data of the disclosing
party supplied to the
receiving party,
whether communicated in writing or orally
or by other means, in connection with
this Agreement, and which is designated
confidential by the disclosing party at
the time of disclosure, and if disclosed or obtained orally or visually (or
otherwise in a non-written form), such
information is described or summarized in
a writing or other tangible form and
identified as confidential to the receiving
party within thirty (30) days of such disclosure. The terms, but not the
existence of this Agreement, shall be considered Confidential Information of
each party.
1.4
"Effective
Date" means the date
this Agreement
is last signed by
a
party to this Agreement.
1.5 "FDA"
means the United States Food and Drug Administration.
1.6 "First
Commercial Sale" means the first sale for use or consumption by
the public of Product (as defined
below) in the
Territory (as defined below)
after all required approvals to market and
sell Product have been granted by the
FDA.
1.7
"Licensed Trademark" means MEGACE, U.S. Registration No.
834996.
1.8 "NDA"
means a new drug application filed with the FDA.
1.9 "Net
Sales" means the gross invoiced price at which Product is sold
by
Licensee in an arms-length, unbundled transaction to an unaffiliated third
party, less (a) any sales tax, (b) any
cash discount allowed and actually taken
by Licensee's customer and (c) any
allowance to Licensee's customer for returned
or rejected Product, provided that such allowances
relate to sales which
were
previously included in royalty calculations under this Agreement,
(d) payments
or rebates incurred pursuant to federal,
state, and local
government assistance
programs, such as Medicare or Medicaid
programs, whether in existence now or
enacted at any time hereafter, (e) customer rebates paid, (f) chargebacks
paid
on the sale or resale of Product,
and (g) trade and
quantity discounts
given.
The aforementioned deductions shall be the only deductions from the invoice
price allowed for purposes of computing
royalties under this
Agreement.
These
amounts are to be determined on an accrual
basis in accordance
with accounting
principles generally accepted in the United
States.
1.10
"Product" means an oral suspension formulation of megestrol
acetate
that is currently being developed by
Licensee and that is manufactured using the
proprietary nanodispersion technology of Elan Corporation known as
NanoCrystal(R) Technology or similar
technology.
1.11
"Territory"
means
the United States and its possessions and
territories.
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2. LICENSE GRANT
2.1 Licensor hereby grants to Licensee, and Licensee accepts, an
exclusive, non-assignable (except as provided
in Article 16), non-sublicensable
right and license to use the Licensed Trademark in the Territory solely in
connection with the packaging, promotion, and sale of the Product during
the
term of this Agreement, subject to the right of Licensor
and its Affiliates,
including but not limited to BMS, to
manufacture, market,
promote and sell
any
and all of Licensor's own current or future products and any and all of its
Affiliates' current or future products
containing
megestrol acetate
under the
Licensed Trademark, including but not limited to the
BMS Product, which
right
shall not be transferable or assignable to
any third party except as provided in
Article 16. For purposes of clarity Par
shall have the right to sell the Product
under the Licensed Trademark through its
normal distribution
methods by selling
the Product to wholesalers, distributors, retail chains and the like, who
will
then resell the Product bearing the
Licensed Trademark.
2.2 It is
expressly understood and agreed by Licensee that no right
whatsoever to grant any sublicense to use the Licensed Trademark is granted
hereunder, and that no further right to the Licensed Trademark is granted
hereunder except as specifically set forth
herein.
3. OBLIGATIONS OF
LICENSEE
3.1
Licensee shall use the Licensed Trademark in connection with the
sale
of the Product. Such use shall comply with the standards, specifications,
instructions and directions approved by
Licensor in writing.
3.2
In the event that Licensee wants to change the standards,
specifications, instructions and directions
approved by Licensor, Licensee shall
not implement any such change before the
expiration of forty-five (45) days from
the date Licensee gives written notice to
Licensor of the desired change. In the
absence of formal written refusal notified by Licensor to Licensee
within such
forty-five (45) day period, Licensor will be considered as having authorized
such changes. In the event of formal
written refusal, and if Licensee still
wishes to implement such change in the
Product, this Agreement may be terminated
by Licensor subject to a notice period of
three months, during which period such
change shall be withheld.
3.3
Licensee undertakes to
comply with all laws
pertaining to trademarks
in force at any time in the Territory
including, but not
limited to, compliance
with marking requirements and shall indicate on all labeling, packaging or
printed material that the Licensed
Trademark is registered, is owned by Licensor
and is licensed from Licensor.
3.4
Licensee will permit Licensor or one or more duly authorized
representatives or agents of Licensor to
inspect, examine and
test the Product,
on the premises of Licensee at all
reasonable times, and to inspect the offices,
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plants, equipment, facilities, and materials of Licensee
which relate to
the
Licensee's use of the Licensed Trademark. Licensee shall, upon request of
Licensor, submit without cost to Licensor or
its duly authorized representative
or agent samples of the Product which it sells or intends to sell under the
Licensed Trademark for the purpose of ascertaining compliance with the
provisions of this Agreement.
3.5
Licensee agrees that
the Product shall be of a very high standard and
quality so as to protect and enhance the
prestige of the Licensed Trademark and
the goodwill pertaining thereto. Licensor shall advise Licensee of each and
every discrepancy in such very high degree
of quality or in the adherence to the
standards, specifications, instructions and directions approved by Licensor,
whereupon Licensee shall promptly
arrange to the
satisfaction of
Licensor for
correction of each and every such
discrepancy.
3.6
Consistent with the terms hereof, Licensee agrees to use
commercially
reasonable efforts to promote a very high level of good reputation of the
Licensed Trademark in connection with the
manufacture, promotion and sale of the
Product.
3.7
Licensee shall also use commercially reasonable efforts to obtain
FDA
approval for the Product and to commercialize the Product in the Territory.
Licensee shall provide BMS with quarterly written updates on the progress
Licensee is making with respect to
obtaining FDA approval for the Product *****.
3.8
Failure to abide by the quality control provisions in this Agreement
constitutes a material breach of this
Agreement.
4. OBLIGATIONS OF BMS AND
CO-PROMOTION OPTION
4.1 For
the purpose of
building the brand equity and goodwill of the
Licensed Trademark, BMS shall provide those
promotional activities set forth in
Attachment A for the BMS Product during 2003 and 2004. Such promotional
activities shall be completed prior to
January 1, 2005. Licensee shall reimburse
BMS for BMS' external costs and expenses incurred in carrying out these
promotional activities and its internal costs
and expenses incurred in carrying
out the ***** described in Attachment A, up to a total of
$2,000,000.00.
BMS
shall send Licensee quarterly invoices for any such costs and expenses
(including any sales/use taxes imposed on BMS for promotional materials)
incurred in carrying out the promotional activities set forth in Attachment
A,
and Licensee shall pay each invoice
within thirty (30)
days of receipt of each
invoice. At the end of each calendar
quarter, BMS shall
provide Licensee with a
written quarterly update on the promotional
activities
carried out by BMS
in
that calendar quarter and the promotional
activities BMS
contemplates
carrying
out in the upcoming calendar quarter. The amount of each promotional
activity
set forth in Attachment A that is carried out by BMS shall be within the
sole
discretion of BMS, and BMS may even
eliminate a particular
type of
promotional
activity if BMS determines that that particular promotional activity is not
effective in building the brand equity and
goodwill of the Licensed Trademark or
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is less effective than other promotional activities; provided, however, BMS
agrees that it will act in good faith in
making such decisions
and will promote
the BMS Product in a fashion consistent with the terms and spirit of this
Agreement. For the avoidance of doubt,
BMS shall not be
required to incur more
than a total of $2,000,000.00 in internal and external costs and expenses in
carrying out the promotional activities to be provided under
this Section 4.1,
with such costs and expenses being
comprised of the
external costs and expenses
incurred in carrying out the promotional activities and the internal costs
and
expenses incurred in carrying out the *****
described in
Attachment A. For the
further avoidance of doubt, Licensee will not participate in the promotional
activities to be provided under this Section 4.1. It is contemplated that
Licensor will assist BMS in carrying out
the ***** described in Attachment A. In
that case, the internal and external costs
and expenses incurred
by Licensor in
carrying out all or part of the ***** will
be included in the quarterly invoices
sent by BMS under this Section 4.1 and will
be paid by Licensee.
4.2 *****.
For the avoidance of doubt, BMS shall be free to determine,
in
its sole discretion, whether or not to pursue any
patent infringement
lawsuit
against any third party that files an
abbreviated new drug application (ANDA) in
the Territory against BMS' NDA for the BMS
Product or markets in the Territory a
product containing a suspension of
megestrol acetate.
4.3
BMS shall have the option of co-promoting the Product in the
Territory, but excluding the territories and possessions of the
United States.
BMS shall have ninety (90) days from the
date Licensee
notifies BMS in
writing
of the filing date of the NDA for the
Product to exercise its option. BMS shall
notify Licensee in writing that BMS wants
to exercise its option to co-promote
the Product, whereupon BMS and Licensee
shall negotiate the terms and conditions
of the co-promotion in good faith and
enter into an agreement to co-promote the
Product.
5. RESTRICTIONS ON
USE
5.1
Licensee acknowledges and agrees that:
(a)
Licensee will make no use of and will not seek to register the
Licensed Trademark except as permitted by
this Agreement, and Licensee will make
no use of or seek to register any other
mark which, in whole or in part, either
substantially resembles or is confusingly
similar to the
Licensed Trademark or
any element thereof;
(b)
Licensee recognizes the distinctiveness (whether inherent or
acquired), validity, originality and value of the Licensed
Trademark and the
goodwill relating to the Licensed
Trademark;
(c) The
Licensed Trademark is and shall remain the sole and exclusive
property of Licensor, and all uses by Licensee of the
Licensed Trademark
shall
inure solely to the benefit of Licensor;
and
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(d) The goodwill
in the Licensed Trademark might be significantly impaired
if Licensee were not to maintain a very
high degree of quality of goods.
5.2
Licensee agrees that the form and manner in which the Licensed
Trademark is used on and in relation to the Product, and including on any
advertisements, labeling and in any other manner whatsoever, shall first be
approved in writing by Licensor, which approval shall not be unreasonably
withheld.
6. REPRESENTATIONS AND
WARRANTIES
6.1
Licensor represents
and warrants that it owns the Licensed Trademark
and has the right to grant the license
under Article 2.
6.2 Each
party hereby
represents
and warrants to the other parties as
follows:
(a) Such
party is a corporation
duly organized,
validly existing and
in
good standing under the laws of the
jurisdiction in which it is incorporated.
(b) Such
party (i) has the
requisite power and
authority to enter into
this Agreement and to perform its
obligations hereunder,
and (ii) has taken all
corporate action necessary on its part to authorize
the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such party,
and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
(c)
All necessary consents, approvals and authorizations of all
governmental authorities and other third
parties required to be obtained by such
party in connection with its execution of
this Agreement have been obtained.
(d) The
execution and delivery of this Agreement and the performance of
such party's obligations hereunder (a) do not conflict with or violate any
requirement of applicable laws or
regulations, and (b)
do not conflict with, or
constitute a default under, any contractual
obligation of such party.
7. PAYMENTS, ROYALTIES
AND RECORDS
7.1
Upon signing this Agreement, Licensee shall pay Licensor
$5,000,000.00.
7.2 Upon
the First Commercial Sale of Product under the Licensed
Trademark
in the Territory, Licensee shall pay
Licensor $5,000,000.00.
7.3 For
the avoidance of
doubt, the payments in
Sections 7.1 and 7.2 are
not refundable or creditable towards future
royalties.
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7.4
Licensee shall pay to Licensor as a royalty for the use of the
Licensed Trademark an amount equal to ***** (**) percent of the Net Sales of
Product sold by Licensee under the Licensed Trademark in the Territory
during
the term of this Agreement. The right to the royalty shall
arise at the time of
shipment by Licensee of the Product marked
with the Licensed Trademark.
7.5 Within
thirty (30) days
following the end of
each calendar
quarter
(i.e., 30 days after March 31, June 30,
September 30 and December 31), Licensee
shall furnish to Licensor a complete and
accurate written
statement showing the
Net Sales of Product sold by Licensee
during the preceding
calendar quarter
as
well as the royalties due thereon in accordance with the provisions of this
Article 7. Licensee shall begin providing such statements once the First
Commercial Sale of Product occurs. Thereafter, such statements shall be
furnished to Licensor whether or not any Product has been sold during the
preceding
