CONFIDENTIAL TREATMENT
REDACTED VERSION
PRODUCT DEVELOPMENT AND LICENSE AGREEMENT
THIS PRODUCT DEVELOPMENT AND LICENSE AGREEMENT
(together with all
exhibits and
schedules, the "Agreement"), dated as of June 22, 2005 ( the
"Effective Date")
by and between ELITE LABORATORIES, INC., a corporation organized and existing
under the laws of Delaware, and having its principal place of business at 165
Ludlow Avenue, Northvale, NJ 07647 ("ELITE") and PLIVA, INC., a corporation
organized and existing under the laws of New Jersey,
and having its
principal
place of business at 72 Eagle Rock Avenue,
East Hanover, NJ 07936 ("PLIVA").
RECITALS:
PLIVA is engaged in the development,
manufacturing,
marketing and
distribution
of generic pharmaceutical products in the Territory (as defined below) and
possesses qualified marketing and distribution systems and organizations to
enable it to effectively promote, market
and distribute such products throughout
the Territory;
ELITE is the owner of Know-How (as defined below) and other proprietary
technology relative to the Product (as
defined below);
ELITE and PLIVA desire to further develop and market the Product in the
Territory; and
Elite desires to grant to PLIVA the
exclusive right to purchase, market, promote
and distribute the Product in the Territory under PLIVA's label, and PLIVA
desires to accept and exercise the right,
all upon such terms
and conditions as
are set forth in this agreement.
ELITE and PLIVA agree as follows:
1.
DEFINITIONS
The following terms as
used in this Agreement
shall have the meanings
set forth in this Article:
1.1.
"AFFILIATE" shall mean any corporation, firm, partnership or
other entity, which
owns or controls, is
owned or controlled
by, or is under common
control with, PLIVA or
ELITE, as the
case may be. The term "control" means the ownership, directly
or indirectly,
of at least fifty
percent (50%) of the equity
or voting power of the owned or controlled entity.
1.2.
"APPLICABLE LAW" shall
mean the United States Food, Drug and
Cosmetic Act of 1938, as may be amended from time to time, and
the regulations
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and guidelines
promulgated pursuant
thereto, as amended from
time to time, and all
other laws, regulations, rules and
guidelines of any
governmental
authority in the Territory
pertaining to
the development, manufacture, packaging,
labeling, storage,
distribution,
marketing, sale or intended
use of the Product.
1.3.
"CGMP" shall mean all applicable good manufacturing practices,
including but not
limited to current "good manufacturing
practices" and any
other methods used for the manufacturing,
testing, validation,
labeling, packaging,
storage, shipment
and installation
of any and all pharmaceutical products,
equipment and related
materials to ensure
that such products
and materials
meet the legal
requirements
for safety and
effectiveness as
established
by the United
States Food and
Drug
Administration
("FDA") or
comparable
governmental
authority in any country outside the United States where the
Product is
distributed
under this Agreement, including,
specifically, without
limitation,
Title 21, Part 211 of
the
United States Code of Federal Regulations.
1.4.
"CONFIDENTIAL
INFORMATION"
shall mean
any information
pertaining to the Product from time to time communicated by or
on behalf of the disclosing party, including, without
limitation,
trade secrets,
Know-How,
pricing,
costs,
suppliers, licensees,
customer information, patent rights,
scientific,
technical,
commercial and
medical product
development information, manufacturing, methods, processes and
production, contractual arrangements, results, discoveries and
inventions, procedures and forms, financial and other business
information,
forecasts, strategies and other data, whether of
a written, oral or visual nature.
1.5.
"COST OF GOODS" shall mean (i) ELITE's fully absorbed direct
and indirect cost of manufacturing, labeling and packaging the
Product, including
without limitation the
cost of all active
pharmaceutical ingredients, materials, and components included
in the Product, plus (ii) [*]
1.6.
"COMMERCIALIZATION", "COMMERCIALIZING",
or "COMMERCIALIZE"
shall mean all activities relating to manufacture, promotion,
distribution,
marketing and
sale of the Product in the
Territory.
1.7.
"ED-COSTS" shall mean the fees, costs and expenses incurred by
Elite in meeting its
obligations pursuant
to Section 2.1 and
Section 2.2(a)
plus any amount
paid to outside counsel by
ELITE in procuring the freedom to operate opinion provided for
in Section 4.2.
1.8.
"FIELD" shall mean treatment of [*].
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1.9.
"KNOW-HOW" shall
mean all technology, data, information,
processes and methods
necessary or useful in the production,
testing, registration or marketing of the Product.
1.10.
"LICENSEE" shall mean
the recipient of a
license granted by
ELITE to Commercialize
the Product in the
Territory.
PLIVA
shall be the designated and exclusive Licensee hereunder for
the Territory.
1.11.
"MARKETING AUTHORIZATION" shall mean the final approval of all
regulatory authorities
necessary to market the Product in a
particular country in
the Territory,
including as applicable
pricing and
reimbursement approval
and all other
approvals
required in a
particular
country in the
Territory for the
marketing,
distribution and sale
of the Product in the Field
in the normal course of business.
1.12. "NET
PROFIT" shall mean the Price LESS the Cost of Goods.
1.13.
"PD-COSTS" shall mean the fees, costs and expenses incurred by
PLIVA in connection
with the Studies plus the milestones
actually paid to ELITE pursuant to Section 5.2 plus any amount
paid to outside
counsel by PLIVA in procuring the freedom to
operate opinion provided for in Section 4.2.
1.14.
"PRICE" shall mean the
sales price paid by
third parties to
PLIVA for Product,
less only the following deductions to the
extent actually
incurred, all determined in accordance
with
generally accepted accounting principles:
(1) customs
and excise duties or
other sales taxes (but,
for the avoidance of doubt not income or corporation
tax), directly related to the sale of the Product;
(2) costs
incurred by PLIVA in respect of transport,
shipping and insurance costs; and industry standard
or mandatory discounts or rebates related to the sale
of the Product,
including, without
limitation, any
credit in respect of any Federal or state Medicaid,
Medicare or similar program; and
(3) amounts
repaid or credited by PLIVA, consistent with
its ordinary or
customary business practices for
similar products,
by reason of the rejection or
return of goods
and allowances, including trade,
quantity and
cash
discounts
and any other
adjustments, including
those granted on account of
price or shelf stock
adjustments,
billing errors,
rejected goods,
damaged goods, recalls, returns,
rebates,
chargebacks, reimbursements,
similar
payments granted
or given to
wholesalers
or other
distributors, buying
groups, health care insurance
carriers or other institutions.
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1.15.
"PRODUCT" shall mean
[*] that is approved
by FDA as AB rated
as bioequivalent to [*] (the "REFERENCED DRUG"), for use in
the Field and which meets the specifications set forth in
the
ANDA to
be filed pursuant to this Agreement (the
"SPECIFICATIONS").
1.16.
"TERM" shall have the meaning set forth in Section 12 hereof.
1.17.
"TERRITORY" shall mean the [*].
2.
PRODUCT DEVELOPMENT
2.1.
ELITE shall be responsible for Product formulation, methods
development and validation.
2.2.
ELITE shall obtain and submit to PLIVA, for PLIVA's review and
approval (such
approval not to be unreasonably withheld,
conditioned or
delayed), a proposal
or proposals,
including
costs, from a
third party to conduct pilot and pivotal
bioequivalence
studies for
the Product to evidence
bioequivalence to the Referenced Drug in accordance with study
plan protocols
to be agreed to by ELITE and PLIVA (the
"STUDIES"). Following
its approval,
PLIVA shall engage
such
third party
to conduct the Studies, and the cost of all
Studies shall be borne by PLIVA.
(a) ELITE
shall complete any additional formulation work,
if necessary,
complete
process development and
scale-up,
including in-process
controls and all
necessary stability
studies with respect to the
Product,
and manufacture
Product
biobatches
reasonably required to conduct such Studies.
2.3.
Each of ELITE and PLIVA agrees that, during the Term, except
for the Studies contemplated hereunder, neither it nor any of
its Affiliates
will conduct
clinical studies for any other
generic version of [*], whether for itself or any third party,
for
distribution or sale in the Territory.
2.4.
ELITE and PLIVA shall each have the right to discontinue the
Studies at any time prior to completion of such Studies upon
three (3) days' prior
written notice to the
other party, if
ELITE or PLIVA, as the case may be, reasonably believes that
health and safety issues may arise.
2.5.
ELITE shall
inform PLIVA of any changes in the Product
development plan.
ELITE shall use commercially reasonable
efforts to assure PLIVA
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that the Product shall
be available to PLIVA to market at the
time agreed to by ELITE and PLIVA in writing pursuant to this
Agreement.
2.6.
ELITE shall
perform its obligations in this Section 2 in
accordance with Applicable Laws.
3.
REGULATORY FILINGS
Following successful
completion
of the pivotal biostudy for the
Product, ELITE shall
be responsible for the
preparation,
filing and
prosecution with
the FDA of an abbreviated New Drug Application
("ANDA") for the Product. The ANDA shall be in the name of ELITE.
ELITE
shall bear the cost of the ANDA preparation, filing and prosecution.
Each party
shall reasonably cooperate with the other party in
connection with the
preparation of the ANDA. Each party shall have the
right to review and comment upon any and all prepared applications and
filings prior to submission to the relevant governmental
authorities.
4.
INTELLECTUAL PROPERTY OWNERSHIP, MAINTENANCE AND DEFENSE
4.1.
INTELLECTUAL PROPERTY.
All rights, title and
interest in and
to all intellectual
property rights
relating to the Product,
including
without
limitation,
inventions,
discoveries,
creations,
information,
data, reports,
results,
and/or
improvements to any Confidential Information, Know-How, study
inventions, regulatory
filings, patent rights, processes,
techniques, and any improvements, modifications, alterations
thereto and
patents issuing thereon made during the Term
hereof whether
in connection with the Study or otherwise
("Intellectual Property Rights") are and shall, in all events,
be the sole and exclusive property of ELITE. PLIVA shall
take
such actions, and
execute and deliver such documents, as may
be
reasonably requested from time to time by ELITE, at ELITE's
expense, to perfect
ELITE's Intellectual Property Rights.
ELITE grants to PLIVA and PLIVA accepts, during the Term, an
exclusive,
non-transferable
license to ELITE's
Intellectual
Property Rights to
allow PLIVA to offer
for sale the Product
in the Territory.
PLIVA may not grant any sublicense to
ELITE's Intellectual
Property Rights without ELITE's prior
written consent,
which consent may be
granted or withheld in
ELITE's sole discretion.
4.2.
FREEDOM TO
OPERATE. PLIVA and ELITE shall, under a joint
defense agreement,
obtain, within 120 days of the
effective
date, a "freedom to operate" opinion from outside counsel with
respect to the
manufacture,
use and sale of the
Product in
each country in the
Territory.
Either party shall have the
right to terminate this Agreement with respect to a country if
not satisfied
with
the opinion(s) for such country by
notifying the other party in writing within 30 days of receipt
of the opinion.
The obligations of each party accrued to
through the Effective
Date of any such notice,
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including
the obligation to reimburse for costs incurred,
shall survive termination of this Agreement.
4.3.
DEFENSE OF PRODUCT.
PLIVA and ELITE shall be responsible for,
and shall share equally the cost of, defending the Product and
the parties hereto against any lawsuits in accordance with the
terms and conditions of Article 7.
5.
FINANCIAL TERMS
5.1.
PAYMENTS. For
all Product supplied to PLIVA under this
Agreement ELITE
shall invoice PLIVA, referencing in each
invoice the purchase
order(s), if any, to which the invoice
relates, the
Cost of Goods and the quantity of units of
Product shipped.
PLIVA shall pay each
invoice within forty
five (45) days of the
invoice date. Any late payments or
underpayments under
this Agreement shall bear interest at the
prime rate from the initial due date until payment in full.
5.2.
MILESTONES. PLIVA
shall pay to Elite the following milestones
payments:
a) [*]
simultaneously with the execution and delivery of
this Agreement,
or, if later,
on the thirtieth
day
following delivery
by ELITE of the legal opinion
described in Section
4.2 of this Agreement
(unless
the Agreement has theretofore been terminated under
Section 4.2).
b) [*]
upon (i) completion of a successful pivotal
bioequivalence study
where the Product meets the FDA
guidelines for bioequivalence, and (ii) submission to
and acceptance
by the FDA of the ANDA for the
Product.
c) [*]
upon FDA approval of the Product.
5.3 PROFIT
SHARE.
(a) Within forty five (45) days
following the end of each calendar quarter
during the Term
following the first
commercial
sale of the
Product
hereunder, PLIVA shall provide ELITE with a detailed statement for
such
period showing
for all Product
sold by PLIVA
during such period
the
number of units sold, the Price for those units, and the Net Profit
for
such period. PLIVA
shall pay to ELITE a
percentage of the Net
Profit
for such period within
fifteen (15) days of delivery to ELITE of
the
statement showing such calculation.
(b) The percentage payable to
ELITE shall be determined as follows.
(1) Within
thirty (30) days of FDA approval of the Product, ELITE
shall provide to PLIVA
a detailed statement
of the ED-Costs
and PLIVA shall
provide to ELITE a detailed statement of the
PD-Costs.
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(2) If the
ED-Costs exceed the PD-Costs, then ELITE shall be
entitled to recover
the amount by which the ED-Costs exceed
the PD-Costs.
(3) If the
PD-Costs exceed the ED-Costs, then PLIVA shall be
entitled to recover
the amount by which the PD-Costs exceed
the PD-Costs.
(4) The Party
entitled to recover the amount of the difference
shall receive or
retain, as the case may be, [*] of the
Net
Profit until such amount is recovered. Thereafter, the Parties
shall [*].
5.4 AUDIT;
INSPECTION.
Within one hundred eighty (180) days
following the close of
each calendar year during the Term and
for a period of twenty four months following expiration or
earlier termination of
this Agreement, upon
the request of a
party ("Requesting
Party") the other
party shall provide the
Requesting Party's
accountants,
at Requesting
Party's sole
cost and expense, with
access, during regular
business hours
and upon reasonable
prior written notice,
and subject to the
confidentiality
undertakings contained
in Section 10 of this
Agreement, to the
other party's books and records relating to
the Product in the Field in the Territory solely for purposes
of verifying costs and
expenses and Net Profit in connection
with this Agreement,
and for verifying the accuracy of the
calculations hereunder
for the calendar
year then ended
and
for the two calendar years prior thereto. If any such
verification
shows any underpayment or overpayment, a
correcting payment or
a refund shall be made
within thirty
(30) days of completion of such verification and submission of
the results thereof, with details of the calculations included
therein. In the event
such verification shows an underpayment
of more than [*] was made by the Requesting Party to the other
party, the other
party will be required
to pay for the costs
reasonably incurred by Requesting Party in connection with its
inspection.
6.
MANUFACTURE, SUPPLY AND COMMERCIALIZATION OF PRODUCT
6.1 During
the Term, and on and subject to the terms and
conditions of this
Agreement,
ELITE shall
manufacture
and
supply or, with PLIVA's prior written consent (such consent
not to be unreasonably
withheld, conditioned or delayed),
subcontract the
manufacture and supply of, the Product in the
Territory exclusively
to PLIVA for resale by PLIVA in the
Territory, in
such quantities and at such times as are
specified in the purchase orders placed by PLIVA
pursuant to
this Agreement.
PLIVA shall
purchase its requirements of
Product for resale in the Territory exclusively from ELITE.
6.2 ELITE will
supply the Product to PLIVA in finished form,
labeled in accordance
with the ANDA, and
packaged ready for
resale in accordance with Section 6.5 (d) hereof. ELITE shall
manufacture, store and
ship the PRODUCT to
PLIVA, and PLIVA
shall store, ship,
market and
distribute the PRODUCT
in
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the Territory, in
accordance with cGMPs, Applicable Laws, the
Specifications,
and the terms and conditions of this
Agreement.
6.3 The
Product to be supplied by ELITE to PLIVA hereunder shall
bear PLIVA's label.
ELITE shall provide to
PLIVA a sample of
the printed labeling and packaging for the Product for PLIVA's
approval. ELITE
shall label and package all Product in
accordance with
the ANDA, cGMPs, and the applicable
requirements of the
FDA. PLIVA
grants to ELITE a limited
license to use PLIVA's
trademarks for
purposes of
packaging
and labeling Product as described in this section.
6.4 PLIVA
shall diligently
market and promote the
Product in the
Territory, using
such commercially reasonable efforts to
maximize Product sales and Net Manufacturing Profits. PLIVA
shall devote such marketing efforts to the Product as it would
exert for products of its own with comparable market size and
profit potential under comparable competitive conditions. At
least once per calendar quarter PLIVA shall provide to
ELITE,
in writing, an outline
of PLIVA's sales
expectations for the
Product for the upcoming three calendar quarters.
6.5 (a)
At least
one hundred twenty
(120) days prior to
the
anticipated
launch date
of the Product in the
Territory, and
thereafter at least thirty days prior
to each calendar quarter during the Term, PLIVA shall
provide ELITE
with a written
forecast of PLIVA's
estimated Product
requirements
for each of the
following four calendar quarters. The forecasts will
be non-binding, except as provided below.
(b) PLIVA
shall make all Product
purchases hereunder
by
submitt
