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Exhibit 10.102
Confidential treatment has
been requested for portions of this exhibit. The copy filed herewith omits the
information subject to the confidentiality request. Omissions are designated as
[***]. A complete version of this exhibit has been filed separately with the
Securities and Exchange Commission.
DISTRIBUTION AGREEMENT
DISTRIBUTION
AGREEMENT, dated as of May 2, 2005, by and between Amphastar
Pharmaceuticals, Inc., a Delaware corporation (“Seller”) and Andrx
Pharmaceuticals, Inc., a Florida corporation (“Purchaser”).
WHEREAS,
Seller desires to appoint Purchaser as Seller’s exclusive distributor of
the Product to Purchaser Customers in the Territory and Purchaser desires to
accept such appointment, all pursuant to the terms of this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises, covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As
used throughout this Agreement and any exhibits, schedules and attachments
hereto, each of the following terms shall have the respective meaning set forth
below:
1.1
“Act” means the Federal Food, Drug, and Cosmetic Act, as
amended.
1.2
“Adverse Event” means any adverse event associated with the use
of the Product in humans, whether or not considered drug-related, including an
adverse event occurring in the course of the use of the Product in professional
practice, in studies, in investigations or in tests or an adverse event
occurring from Product overdose (whether accidental or intentional), from
Product abuse, or from Product withdrawal, as well as any toxicity,
sensitivity, failure of expected pharmacological action, or laboratory
abnormality that is, or is thought by the reporter thereof to be, serious or
associated with relevant clinical signs or symptoms.
1.3
“Adverse Resolution” means any resolution of the Lawsuit,
whether by settlement, summary judgment or trial court decision in the U.S.
District Court, or as a result of any appeal, subsequent review or
reconsideration of such summary judgment or trial court decision, that
prevents, enjoins, materially restricts or imposes royalties on sales of or
otherwise makes commercially unreasonable the manufacture, use, sale or offer
to sell of the Product to Purchaser Customers in the Territory.
1.4
“Affiliate” of a party means any Person directly or indirectly
controlled by, controlling or under common control with such party.
“Control” means the legal power to direct or
cause the direction of the
general management or policies of a Person through more than fifty percent
(50%) of the ownership of voting securities, by contract or by other means.
1.5
“ANDA” means an Abbreviated New Drug Application filed with the
FDA and any amendments or supplements thereto.
1.6
“Anda” shall have the meaning given in Section 2.2.
1.7
“Applicable Laws” means all applicable laws, rules, and
regulations that apply to the development, manufacture, supply, marketing, sale
or distribution of the Product in the Territory, or the performance of either
party’s obligations under this Agreement, including the Act, cGMP and
other current regulations promulgated by the FDA or any other governmental
agency.
1.8
“At-Risk Launch” shall have the meaning given in
Section 2.3.
1.9
“At-Risk Launch Notice” shall have the meaning given in
Section 2.3.
1.10
“Authorized Generic Product” means a therapeutically
equivalent, bioequivalent and legally substitutable generic version of the
brand-name product Lovenox® (including the brand name product sold as a generic)
that is sold and distributed in the Territory by any one or more of Aventis
Pharma S.A., Aventis Pharmaceuticals, Inc., their respective Affiliates,
successors or assigns and/or licensees of any of the foregoing.
1.11
“Bankruptcy Code” shall have the meaning given in
Section 8.2.
1.12
“cGMP” means the current Good Manufacturing Practices
regulations of the FDA (as in effect from time to time) in 21 C.F.R. pts. 210
and 211.
1.13
“Commercially Reasonable Efforts” means, with respect to each
party, efforts and resources normally used by such party to, in the case of
Seller, develop, manufacture, package and supply or, in the case of Purchaser,
market, sell and distribute, a generic pharmaceutical product owned by it or to
which it has rights, which is of similar overall market potential at a similar
stage in its product lifecycle, taking into account, inter alia, the
competitiveness of the marketplace, the proprietary position of the product,
the profitability of the product and other relevant factors. The parties
acknowledge that the level of effort and resources may change at different
times during the product life cycle of the Product.
1.14
“Compensatory Payments” shall have the meaning given in
Section 2.3.
1.15
“Competitive Product” means, other than the Product or an
Authorized Generic Product, a therapeutically equivalent, bioequivalent and
legally substitutable generic version of the brand-name product Lovenox®,
which generic version is in the same dosage and delivery form, has the same
active ingredient and the same strength and is for the same indication as the
Product, that is sold and distributed in commercial quantities in the Territory
by any Person, other than Purchaser or its Affiliates, licensees or assigns.
1.16
“Confidential Information” shall have the meaning given in
Article 14.
1.17
“Damages” shall have the meaning given in Section 17.1.
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1.18
“Effective Date” means the date of this Agreement.
1.19
“Favorable Resolution” means a resolution of the Lawsuit,
whether by settlement, summary judgment, trial court decision in the U.S.
District Court, or otherwise, that does not prevent, enjoin, materially
restrict or impose royalties on sales of or otherwise make commercially
unreasonable the manufacture, use, sale or offer to sell of the Product to
Purchaser Customers in the Territory, in each case irrespective of any rights
of appeal, subsequent review or reconsideration of the resolution or of the
outcome of such appeal, review or reconsideration.
1.20
“FDA” means the U.S. Food and Drug Administration, and any
successor or replacement agency thereto.
1.21
“Final Favorable Resolution” means a Favorable Resolution that
is not subject to any rights of appeal, subsequent review or reconsideration by
the applicable governmental authority having competent jurisdiction over the
Lawsuit.
1.22
“First Commercial Sale” means, as the context requires, the
first date on which Purchaser sells (i.e., the date of shipment) the Product in
commercial quantities to a third party, or the first date on which Seller sells
(i.e., the date of shipment) the Product in commercial quantities to a third
party pursuant to a Seller Launch.
1.23
“Forecast” shall have the meaning given in Section 5.2.
1.24
“Force Majeure Event” shall have the meaning given in
Article 12.
1.25
“GAAP” means U.S. generally accepted accounting principles.
1.26
“Gross Profit” means Net Sales of Purchaser from sales of
Product during a calendar quarter less the aggregate Transfer Price paid for
such Product. In the event for any calendar quarter the above calculation
results in a negative number, “Gross Profit” shall be deemed zero
for such calendar quarter.
1.27
“Gross Profit Split” shall have the meaning given in
Section 4.2.
1.28
“Initial Purchase Order” shall have the meaning given in
Section 5.1.
1.29
“Label”, “Labeled” or “Labeling” means
all labels and other written, printed or graphic matter upon (i) any
packaging, container or wrapper used with the Product, or (ii) any written
material accompanying the Product, including package inserts; or, as the
context requires, the act of applying and/or using the same.
1.30
“Labor Costs” shall have the meaning given in Section 4.1
1.31
“Lawsuit” means (i) the lawsuit captioned Aventis Pharma
S.A. and Aventis Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc. and
Teva Pharmaceuticals USA, Inc. under Case No. 03-CV-887 RT (SGLx) in the
U.S. District Court in the Central District of California Eastern Division and
(ii) any related or subsequent U.S. trial court action pertaining to the
same subject matter as the lawsuit described in clause (i) above, brought
by Aventis Pharma S.A. and
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Aventis Pharmaceuticals, Inc.
against Seller prior to Seller delivering a Launch Notice, seeking to obtain a
Adverse Resolution.
1.32
“Launch Notice” shall have the meaning given in
Section 2.3.
1.33
“Launch Quantities” shall have the meaning given in
Section 5.1.
1.34
“Maximum Compensatory Payments” shall have the meaning given in
Section 2.3.
1.35
“Maximum Annual Product Units” shall have the meaning given in
Section 5.6.
1.36
“Minimum Annual Product Units” shall have the meaning given in
Section 8.4.
1.37
“Net Sales” means, with respect to the Product, the gross
revenues derived from the sale of the Product by Purchaser or, with respect to
the determination of the Compensatory Payments, by Seller, and their respective
Affiliates, licensees and assignees to independent third parties, minus normal
and customary (i) early pay incentives (i.e., cash discounts),
(ii) trade discounts, quantity discounts, trade rebates, chargebacks,
governmental rebates, such as Medicaid, retroactive price adjustments (i.e.,
shelf stock adjustments) and cash incentive payments, (i.e., slotting
allowances), (iii) Product returns, (iv) freight (inbound and
outbound), (v) marketing allowances, (vi) bad debt allowance which
shall be deemed to be [***] of Net Sales for the first twelve months after
First Commercial Sale and [***] of Net Sales for periods thereafter and
(vii) other normal and customary deductions utilized to calculate net
sales, in each case to the extent applicable to the sale of such Product.
Marketing allowances shall (i) in the case of sales by Purchaser, be the
actual marketing expenses but not in excess of [***] of the applicable Net
Sales and (ii) in the case of sales by Anda, be deemed to be [***] of the
applicable Anda Net Sales of Product. The elements of Net Sales as described
above shall be determined in accordance with GAAP, applied on a basis
consistent with the annual audited financial statements of Purchaser’s
parent corporation or Seller, as the context requires.
1.38
“Non-At-Risk Launch” shall have the meaning given in
Section 2.3.
1.39
“Overdue Interest Amount” means the prime rate of interest
quoted as such in The Wall Street Journal on the first business day of each
month during which an amount is overdue under this Agreement, plus 5%,
calculated on an annual basis, not to exceed the maximum rate permitted by
Applicable Law.
1.40
“Packaging” means all primary and/or bulk (as applicable)
containers, Labels, shipping cases or any other like matter used in packaging
or accompanying the Product; or as the context requires, the act of applying
and/or using the same.
1.41
“Person” means an individual, corporation, partnership, limited
liability company or other entity.
1.42
“Product” means Seller’s generic version of the
enoxaparin sodium injectable product, in 30 mg, 40 mg, 60 mg, 80 mg, 100 mg,
120 mg, and/or 150 mg strengths, to the extent
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approved under ANDA 76-684,
that is therapeutically equivalent and bioequivalent to, and legally
substitutable for, the brand-name product Lovenox®.
1.43
“Product Liability Claims” means any claim, action or
proceeding based on personal injury, death or other similar adverse effect to
humans caused by (or alleged to be caused by) use of the Product.
1.44
“Product Warranty” shall have the meaning given in
Section 16.1.
1.45
“Purchase Orders” shall have the meaning given in
Section 5.3.
1.46
“Purchaser Customers” means, in each case to the extent located
in the Territory, (a) chain retail pharmacies and stores, (b) independent
retail pharmacies, (c) grocery and food stores, (d) mail order
pharmacies, (e) certain other types of customers not included within items
(a)-(d) that are pre-approved in writing by Seller pursuant to an amendment to
this Agreement, and (f) drug wholesalers (solely to the extent allocated
for resale to customers included in items (a)—(e) above). Notwithstanding
anything herein to the contrary, Seller expressly retains all rights to all
current and future customers and markets for the Product, other than the
customers expressly included in items (a)-(f) above; and, without limiting the
foregoing and by way of clarification, Seller’s retained rights shall
expressly include the right to sell Product to drug wholesalers so long as
Seller does not supply, sell or distribute Product to drug wholesalers for
resale to any customer included in items (a)-(e) above.
1.47
“Purchaser Recall” shall have the meaning given in
Section 11.3.2.
1.48
“Purchaser Trademarks” shall have the meaning given in
Section 6.3.
1.49
“Raw Material Costs” shall have the meaning given in
Section 4.1.
1.50
“Seller Launch” shall have the meaning given in
Section 2.3.
1.51
“Specifications” means the specifications for the composition,
manufacture, Packaging and/or quality control of the Product as described in
the ANDA for the Product, as the same may be supplemented from time to time as
expressly provided in this Agreement.
1.52
“Territory” means the United States of America and its
territories, including the Commonwealth of Puerto Rico.
1.53
“Third Party Infringement Claim” shall have the meaning given
in Section 17.4.
1.54
“Transfer Price” shall have the meaning given in
Section 4.1.
1.55
“Unit Price” shall have the meaning given in Section 4.1.
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ARTICLE 2
APPOINTMENT; SUPPLY AND PURCHASE OF PRODUCT
2.1
Appointment; Agreement to Supply; Development.
2.1.1
Subject to the terms and conditions of this Agreement, Seller hereby
appoints Purchaser as its exclusive distributor of the Product for sale and
distribution to Purchaser Customers in the Territory, and Purchaser hereby
accepts such appointment. Subject to the terms of this Agreement, Seller shall
use its Commercially Reasonable Efforts to manufacture and supply to Purchaser
its requirements of the Product for sale and distribution to Purchaser
Customers in the Territory in accordance with Purchaser’s Purchase Orders
as provided herein. Seller shall not, and shall cause its Affiliates not to,
manufacture or supply the Product to Purchaser Customers in the Territory.
Notwithstanding anything herein to the contrary, the parties acknowledge and
agree that Seller retains all rights to develop, manufacture, supply, sell,
distribute, market, promote and otherwise commercialize, directly or through
Seller’s Affiliates or third parties, Product to customers other than
Purchaser Customers in the Territory; and without limiting the foregoing and by
way of clarification, Seller’s retained rights shall expressly include
the right to sell Product to drug wholesalers or any other Persons so long as
Seller shall not supply, sell or distribute Product to drug wholesalers or any
other Person for resale to any customer included in items (a)-(e) of
Section 1.46.
2.1.2
Seller hereby represents that it has filed with the FDA ANDA, File
No. 76-684, for the Product. Seller shall, at its expense, use
Commercially Reasonable Efforts to prosecute the ANDA and to obtain approval
from the FDA of the ANDA. Seller shall promptly upon its receipt of same
deliver to Purchaser written notice certifying that Seller has received final
FDA approval of the Product’s ANDA. The ANDA and all other regulatory
approvals related to the manufacture and supply of the Product shall be in
Seller’s name and owned exclusively by Seller. In addition, Seller shall,
at its expense, use Commercially Reasonable Efforts to obtain a Favorable Resolution
to enable FDA approval of the Product’s ANDA and the launch of the
Product in the Territory. Notwithstanding the foregoing, nothing herein shall
constitute a guarantee or warranty from Seller that the ANDA for the Product
will be approved by the FDA, or, if the Product ANDA is approved, any market
exclusivity will be awarded, or any other regulatory approvals will be obtained
by Seller or that a Favorable Resolution will be obtained. Nothing herein shall
limit Purchaser’s right to terminate this Agreement pursuant to its
terms.
2.2
Agreement to Purchase.
2.2.1
Subject to the terms of this Agreement, Purchaser shall purchase
exclusively from Seller all of Purchaser’s requirements for the Product
for marketing, sale and distribution to Purchaser Customers in the Territory.
Purchaser shall use Commercially Reasonable Efforts to market, sell and
distribute the Product throughout the Territory to Purchaser Customers. Subject
to the foregoing, Purchaser does not make any guaranty or warranty as to any
minimum level of Gross Profits or Net Sales. Nothing herein shall limit each
party’s right to terminate this Agreement pursuant to its terms,
including Section 8.4. Unless otherwise consented to in writing by Seller,
Purchaser shall not offer the Product as a loss leader, whether alone or in
connection with any other product or sell the Product in combination or
otherwise bundle the Product with other products in any fashion which decreases
the revenue that would otherwise be attributable to the Product had it not been
sold as a loss leader or in combination or otherwise bundled. Subject to the
foregoing and Purchaser performing its obligations hereunder (including its
obligation to use Commercially Reasonably Efforts to sell and distribute the Product),
launch timing, pricing, marketing, sale and distribution and related strategy
for the Product for sale and distribution to Purchaser Customers in the
Territory shall be the sole responsibility of, and shall be solely controlled
by, Purchaser.
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2.2.2
Purchaser shall, and shall cause its Affiliates to, sell and distribute the
Product only to Purchaser Customers in the Territory and only in accordance
with Applicable Law and the Product’s ANDA. Purchaser shall reasonably
cooperate with Seller in investigating and tracing any sales of the Product
outside of the Territory or to any Persons in the Territory other than
Purchaser Customers originating from sales by Purchaser hereunder. Seller shall
not, and shall cause its Affiliates not to, sell and distribute the Product to
Purchaser Customers in the Territory (provided that, by way of clarification,
Seller may sell Product to drug wholesalers or any other Persons so long as
Seller shall not supply, sell or distribute Product to drug wholesalers or any
other Persons for resale to any customer included in items (a)-(e) of Section
1.46). Seller shall reasonably cooperate with Purchaser in investigating and
tracing any sales of the Product to any Purchaser Customers originating from
sales by Seller hereunder.
2.2.3
During the term of this Agreement and, if this Agreement is terminated by
Purchaser pursuant to Section 8.4, for a period of 12 months after
such termination, neither Purchaser nor its Affiliates shall sell or distribute
in the Territory any product that is or purports to be a generic equivalent
(i.e. bioquivalent and legally substitutable) of the LovenoxÒ brand product, other than the Product supplied by
Seller hereunder. [***].
2.3
Commercial Launch of the Product.
2.3.1
Notice of Launch. At any time after Seller receives both (i) a
Favorable Resolution (which may, but is not required to be, a Final Favorable
Resolution) and (ii) FDA approval of the Product’s ANDA and
confirmation from the FDA that Seller has been awarded 180 days of
“first to file” market exclusivity in accordance with
Section 505(j)(5)(B)(iv) of the Act, Seller shall be entitled to deliver
to Purchaser a written notice setting forth Seller’s intention to commence
the commercial sale of the Product in the Territory. Such written notice shall
be referred to herein as an “At-Risk Launch Notice,” unless based
on a Final Favorable Resolution, in which case such written notice shall be
referred to herein as a “Non-At-Risk Launch Notice.” As used herein,
a “Launch Notice” may refer generally to an At-Risk Launch Notice
and/or a Non-At-Risk Launch Notice. Notwithstanding the foregoing, in the event
that Seller receives FDA approval of the Product’s ANDA, but Seller is
not awarded 180 days “first to file” market exclusivity and/or
has not received a Favorable Resolution, Seller, at its option, may notify
Purchaser of Seller’s desire to commence the commercial sale of the
Product in the Territory. In such event, Seller and Purchaser shall negotiate
in good faith the terms and conditions of any Product launch to Purchaser
Customers in the Territory; provided that, by way of clarification, nothing
herein shall prevent (i) Seller from selling and distributing such Product
in the Territory so long as Seller does not sell or distribute such Product to
Purchaser Customers (provided that, by way of clarification, Seller may sell
Product to drug wholesalers or any other Persons so long as Seller shall not
supply, sell or distribute Product to drug wholesalers or any other Persons for
resale to any customer included in items (a)-(e) of Section 1.46) or
(ii) Purchaser from terminating this Agreement pursuant to its terms.
2.3.2
At-Risk Launch. In the event that Purchaser receives an At-Risk Launch
Notice, Purchaser shall notify Seller in writing within 10 days of
Purchaser’s receipt thereof whether or not Purchaser agrees to launch the
commercial sale of the Product to Purchaser Customers in the Territory as
contemplated herein based on such At-Risk Launch Notice (an “At-Risk
Launch”). In the event that Purchaser notifies Seller that it has
determined to engage in an At-Risk Launch,
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Purchaser shall proceed
according to the provisions of Section 2.3.3 below. In the event that
Purchaser notifies Seller that it has determined to not engage in an At-Risk
Launch, Seller shall have 10 days from receipt of Purchaser’s notice
to notify Purchaser in writing whether or not Seller has determined to engage
in an At-Risk Launch without Purchaser acting as Seller’s distributor of
the Product to the Purchaser Customers in the Territory (a “Seller
Launch”). In the event that Seller notifies Purchaser that it has
determined to so engage in a Seller Launch, subject to Sections 2.3.4 and
2.3.5 below, this Agreement (including any rights of Purchaser to sell and
distribute the Product in the Territory) shall automatically and immediately
terminate as of the date of such Seller’s notice to Purchaser. In the event
that Seller notifies Purchaser that it has determined to not engage in a Seller
Launch, this Agreement shall continue in full force and effect and Seller may
at any time thereafter submit a new Launch Notice, at which time the parties
shall, among other things, again proceed in accordance with the provisions of
this Section 2.3.
2.3.3
Obligation to Launch. In the event that Seller delivers to Purchaser a
Non-At-Risk Launch Notice or Purchaser notifies Seller that Purchaser has
determined to engage in an At-Risk Launch, Purchaser shall (i) pay the
milestone payment set forth in Section 3.1(b) below in accordance with the
provisions thereof, and (ii) subject to the terms of this Agreement,
Purchaser shall use Commercially Reasonable Efforts to commence with Purchaser’s
First Commercial Sale as soon as commercially practicable thereafter, but in no
event later than 5 business days following Purchaser’s receipt of Launch
Quantities.
2.3.4
Payment of Compensatory Payments upon a Seller Launch. Subject to
Section 2.3.5 below, in the event that Seller engages in a Seller Launch,
Seller shall pay to Purchaser payments (the “Compensatory
Payments”), up to the aggregate amount of [***] (the “Maximum
Compensatory Payments”), equal to:
(a) during
the first six full calendar months following Seller’s First Commercial
Sale pursuant to the Seller Launch, the greater of (i) [***] of Seller’s
Net Sales of Product sold in the Territory and (ii) [***];
(b) during
the second six full calendar months following Seller’s First Commercial
Sale pursuant to the Seller Launch, the greater of (i) [***] of Seller’s
Net Sales for Product sold in the Territory and (ii) [***]; and
(c) [***]
of Seller’s Net Sales of Product sold in the Territory during each
calendar quarter after the first twelve full calendar months after
Seller’s First Commercial Sale pursuant to the Seller Launch.
2.3.5
The Compensatory Payments shall be paid within 30 days of the end of
each calendar quarter following Seller’s First Commercial Sale pursuant
to the Seller Launch. Each Compensatory Payments payment shall include a report
setting forth in reasonable detail the amount of and the basis for such
payment, including a calculation of Seller’s Net Sales (including
itemizing all deductions to gross sales) for such quarterly period. With
respect to any payment due as a result of the [***] minimum Compensatory
Payments amounts set forth in Sections 2.3.4(a) and (b) above, such
payment shall be made within 30 days of the end of the calendar quarter
that contains the sixth month of the applicable six month period for which the
[***] minimum Compensatory Payments amount accrued. Any payments not made
within the specified period of time for payment shall incur
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an interest charge at the
rate of the Overdue Interest Amount on such overdue amounts, excluding any
amounts that are subject to a bona fide dispute between the parties.
2.3.6
Subsequent Suspension of a Seller Launch. In the event that, within
30 days of Seller’s First Commercial Sale pursuant to a Seller
Launch, Seller either voluntarily or as a result of an order of the FDA or any
court having competent jurisdiction ceases to sell in and withdraws the Product
from the market in the Territory, Seller’s obligation to pay the
Compensatory Payments pursuant to such Seller Launch shall immediately
terminate as of the date of such withdrawal and this Agreement shall be
automatically and immediately reinstated and be in full force and effect on and
after the date of such withdrawal pursuant to its terms. Without limiting the
generality of the preceding sentence, in the event that, at any time after such
withdrawal of the Product, Seller determines to engage in a new commercial
launch of the Product in the Territory, Seller shall provide to Purchaser a
Launch Notice pursuant to Section 2.3.1 above and the remaining provisions
of this Section 2.3 shall again apply to such new Launch Notice. In the
event that Seller after such withdrawal of the Product delivers to Purchaser a
Non-At-Risk Launch Notice or Purchaser notifies Seller that it will engage in
an At-Risk Launch in accordance with Section 2.3.2 above following receipt
of an At-Risk Launch Notice, in addition to the payment of the milestone
payment under Section 3.1(b) required in connection therewith, Purchaser
shall refund to Seller any amount of the Compensatory Payments previously paid
to Seller within 10 days of receipt by Purchaser of such Non-At-Risk
Launch Notice or receipt by Seller of Purchaser’s notice of intention to
engage in an At-Risk Launch. In the event that Purchaser determines to not
engage in such subsequent At-Risk Launch and Seller commences a subsequent
Seller Launch, (i) each of the [***] minimum Compensatory Payments amounts
under Sections 2.3.4(a) and (b) shall be reduced to an amount equal
to [***] multiplied by a fraction, the numerator of which is the number of
months of Product sales under all previous Seller Launches pursuant to which
Seller paid Compensatory Payments and the denominator of which is six and
(ii) the Maximum Compensatory Payments shall be reduced by the amount all
Compensatory Payments previously paid to Purchaser.
2.4
Termination of Agreement Relating to Commercial Launch.
2.4.1
In addition to Purchaser’s termination rights set forth elsewhere
herein, Purchaser shall be entitled to terminate this Agreement as set forth in
this Section 2.4.1:
(a) Purchaser
may terminate this Agreement after June 30, 2006, upon 30 days prior
written notice to Seller, if Seller shall not have obtained a Favorable
Resolution on or prior to June 30, 2006, so long as such termination
notice is received by Seller on or before July 15, 2006.
(b) Provided
that Purchaser shall not have notified Seller that it will engage in an At-Risk
Launch prior thereto, Purchaser may terminate this Agreement after
June 30, 2006, upon 30 days prior written notice to Seller, if after
June 30, 2006 an Adverse Resolution then exists, so long as such
termination notice is received by Seller within 15 days after the later of
June 30, 2006 or the date Purchaser is notified of such Adverse
Resolution. Seller shall provide written notice to Purchaser within
10 days of any Adverse Resolution. For purposes of clarification,
Purchaser’s right to terminate this Agreement under this
Section 2.4.1(b) shall not apply after Seller’s delivery to
Purchaser of a Launch Notice, unless such Launch Notice is an At-Risk Launch
Notice, and then only in the event that this Agreement remains in effect
pursuant to Seller’s determination to
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not engage in a Seller Launch
under Section 2.3.2 or this Agreement is reinstated following a Product
withdrawal pursuant to Section 2.3.6.
(c) Purchaser
may terminate this Agreement after June 30, 2007, upon 30 days prior
written notice to Seller, if Seller shall not have delivered to Purchaser a
Launch Notice on or before June 30, 2007, so long as such termination notice is
received by Seller on or before July 15, 2007.
2.4.2
Notwithstanding anything herein to the contrary, Purchaser’s sole
remedy, whether in contract, tort or otherwise, for any failure by Seller to
use Commercially Reasonable Efforts to obtain ANDA approval of the Product or
any market exclusivity with respect thereto and/or any additional regulatory
approvals necessary for the manufacture and supply of the Product and/or to
obtain a Favorable Resolution shall be the termination of this Agreement as
provided in this Section 2.4 and the right to any refund of the milestone
payment under Section 3.2.
2.4.3
This Agreement may be terminated by Seller upon 5 days written notice
to Purchaser, if Purchaser shall have not effected Purchaser’s First
Commercial Sale within 5 business days following Purchaser’s receipt of
Launch Quantities in accordance with Section 2.3.3.
2.5
Sales to Wholesalers. Subject to the terms and conditions of this
Agreement, Purchaser shall have exclusive rights to sell Product to drug
wholesalers or any other Persons for resale and distribution to the customers
in the Territory identified in items (a)-(e) of Section 1.46. Seller
retains all rights to all other current and future customers and markets for
the Product, including the right to sell Product to drug wholesalers or any
other Persons so long as Seller does not supply, sell or distribute Product to
drug wholesalers or any other Persons for resale to any customer included in
items (a)-(e) of Section 1.46. As permitted by Applicable Law, Purchaser
and Seller shall cooperate in creating arrangements with their respective drug
wholesalers and other customers necessary to implement the foregoing. From time
to time upon request, each party shall provide the other with reasonable access
to all information in its possession and control (or which is reasonably
obtainable) to confirm the ultimate customer of the Products sold by it to drug
wholesalers or other Persons. To the extent Seller sells any Products to drug
wholesalers or other Persons that are ultimately purchased by any customer
included in items (a)-(e) of Section 1.46, Seller shall pay Purchaser its
portion of the Gross Profits (i.e., Seller’s Net Sales less the imputed
Transfer Price of the Product times Purchaser’s then applicable portion
of the Gross Profit Split) attributable to such sales by Seller plus the
Overdue Interest Amount on the amount due from the date of the sale to the date
of payment. To the extent Purchaser sells any Product to drug wholesalers or
other Persons that are ultimately purchased by any customer not included in
items (a)-(e) of Section 1.46, then Purchaser shall pay to Seller all of
the Gross Profit attributable to such sales by Purchaser plus the Overdue
Interest Amount on the amount due from the date of the sale to the date of
payment. The above described Gross Profit reimbursement shall be each
party’s exclusive remedy for any inadvertent and unintentional breach by
the other party of its obligations under this Section 2.5. In addition,
without limiting either party’s indemnification obligations under
Article 17, if either party intentionally breaches this Section 2.5,
the party in breach shall indemnify the other party pursuant to Article 17
for all Damages caused thereby.
2.6
Information. Seller shall provide Purchaser with copies of all material
study results and other written communications that Seller submits to the FDA
in connection with its attempt to obtain approval of the Product’s ANDA
or otherwise relating to the Product as soon as reasonably
10
practicable after
Seller’s receipt or submission thereof. At Purchaser’s request from
time to time during normal business hours and upon reasonable notice, Seller
shall also provide Purchaser reasonable access to any other study results and
other written communications that Seller submits to the FDA in connection with
its attempt to obtain approval of the Product’s ANDA or otherwise
relating to the Product in Seller’s possession. In addition, Seller shall
provide Purchaser with copies of all material pleadings, motions, briefs and
other written communications relating to the Lawsuit as soon as reasonably
practicable after Seller’s receipt or submission thereof. At
Purchaser’s request from time to time during normal business hours and
upon reasonable notice, Seller shall provide Purchaser with reasonable access
to any other pleadings, motions, briefs and other written communications
relating to the Lawsuit in Seller’s possession. The obligations of Seller
provided above shall be subject to Applicable Law (including compliance with
any protective order or other court or governmental agency order or
requirement), maintaining applicable privileges and the terms of any
confidentiality obligations of Seller owned to third parties.
ARTICLE 3
MILESTONES AND PAYMENTS
3.1
Milestones and Payments. In consideration of Seller’s grant of the
exclusive distribution rights hereunder to Purchaser, Purchaser shall pay Seller
the following amounts upon completion of the applicable milestone:
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Milestone: |
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Amount of Payment Due: |
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(a) The Effective Date of
this Agreement |
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$ |
4,500,000 |
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(b) Within 10 days of
both (x) either (i) Purchaser’s receipt of a Non-At-Risk
Launch Notice under Section 2.3.1 above or (ii) Purchaser’s
written notice to Seller that Purchaser will engage in an At-Risk Launch
under Section 2.3.2 above and (y) delivery to Purchaser of the
Launch Quantities. |
|
$ |
5,500,000 |
|
|
|
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TOTAL: |
|
$ |
10,000,000 |
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3.2
Payment Terms; Refund.
3.2.1
Any payments not made within the specified period of time for payment shall
incur an interest charge at the rate of the Overdue Interest Amount on such
overdue amounts, excluding any amounts that are subject to a bona fide
dispute between the parties. All payments shall be made in U.S. dollars through
electronic transfer of funds or other wire transfers.
3.2.2
Except as expressly set forth in this Section 3.2.2, no milestone
payment shall be refundable in whole or in part under any circumstance,
including a termination of this Agreement pursuant to Seller engaging in a
Seller Launch under Section 2.3.2. The $4,500,000 milestone payment paid
to Seller under Section 3.1(a) above shall be refunded by Seller to
Purchaser in the event this Agreement is terminated pursuant to
Section 2.4.1 above; provided, however, in the event that this Agreement
is terminated pursuant to Section 2.4.1 at any time after Seller shall have
paid Compensatory Payments to Purchaser, the amount of such Compensatory
Payments shall be
11
deducted from such refund of
the milestone payment and any amount of such Compensatory Payments in excess of
the amount of the milestone payment shall be refunded to Seller within 30 days
of such termination. All such refunds shall be made by Seller within
30 days after the applicable termination date; provided that, such amount
remaining outstanding shall bear simple interest at the rate of the Overdue
Interest Amount commencing on the date such amount is due and payable (i.e.,
30 days after the applicable termination date) until paid in full; and
provided further that, if Seller does not have at the time the available funds
to repay Purchaser such amount, such amount shall be repaid no later than one
year from the applicable termination date. If payment is not made within
30 days of termination, upon request of Purchaser, Seller shall (as soon
as reasonably practicable) provide Purchaser with reasonable security for repayment
of any milestone payments not paid when due, including potentially, assignment
of product revenues or a lien on other assets.
ARTICLE 4
PRICING
4.1
Transfer Price.
4.1.1
The transfer price (“Transfer Price”) payable by Purchaser for
Product delivered by Seller shall be a payment equal to the product of
(a) the number of units of Product delivered by Seller to Purchaser
pursuant to the applicable Purchase Order (including the Initial Purchase
Order), multiplied by (b) [***] unit, regardless of dosage strength (the
“Unit Price”). Notwithstanding the foregoing, on and after the
[***] of the First Commercial Sale, Seller may increase the Unit Price during
each twelve month period (which begins on an anniversary of the First
Commercial Sale), effective upon 30 days prior written notice to Purchaser
(or upon the later resolution of any disputed price increase, except if such
dispute is resolved in Seller’s favor in which case the Unit Price
increase shall be effective 30 days from Seller’s original notice
thereof to Purchaser), by (i) the actual per unit increase in
Seller’s raw materials costs (the “Raw Material Costs”) for
the Product (including the costs of plunger rods, needle stick prevention
devices, syringes, Packaging and other ingredients and materials used to
manufacture and process the Product) over the 12 month period preceding
the date of Seller’s notice of such price increase not to exceed (subject
to Section 4.1.2) [***] of the amount of Seller’s Raw Material Costs
as at the beginning of the 12-month period immediately prior to such price
increase and (ii) the actual per unit increase in Seller’s direct
labor costs (“Labor Costs”) for the Product over the prior 12 month
period preceding the date of Seller’s notice of such price increase not
to exceed (subject to Section 4.1.2) [***] of the amount of the
Seller’s Labor Costs as at the beginning of the 12-month period
immediately prior to such price increase. Seller shall provide Purchaser with
reasonable documentation evidencing the applicable increases in Seller’s
Raw Material Costs and Labor Costs with Seller’s notice of the price
increase. Purchaser may dispute in good faith any increase to the Unit Price
pursuant to this Section 4.1.1 by written notice to Seller within
10 days of Purchaser’s receipt of Seller’s notice thereof. If
the dispute is not resolved within 30 days of Purchaser’s dispute
notice to Seller, then Purchaser may elect to seek resolution of the dispute
pursuant to the provisions of Section 4.5 by providing written notice to
Seller of such election. If Purchaser does not provide Seller such written
notice within 10 days after the aforementioned 30 day period, then the
dispute shall be deemed resolved in Seller’s favor.
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[***] |
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Confidential Treatment Requested. |
12
4.1.2
At the written request of Seller on and after the [***] of the First
Commercial Sale, the parties shall discuss increases in the Unit Price in
excess of the respective [***] limitations provided in Section 4.1.1 to
the extent such increases are due to increases in Raw Material Costs and/or
Labor Costs attributable to changes required by Applicable Law or governmental
authority, including FDA, as provided in Section 6.2.1. Any such request
for an increase in the Unit Price in excess of the respective [***] limitations
provided in Section 4.1.1 shall be reasonably considered in good faith by
Purchaser but shall not be implemented without Purchaser’s written
consent (which shall not be unreasonably withheld, delayed or conditioned). In
the event Seller’s Raw Material Costs and/or Labor Costs increase by
[***] or more during any twelve month period as a result of changes required by
Applicable Law or governmental authority, including FDA, as provided in Section
6.2.1 (based on reasonable documentation) and Purchaser does not consent to a
corresponding increase as requested by Seller in the Unit Price in excess of
the respective [***] limitations (as the case may be) provided in
Section 4.1.1 within [***] of the date of Seller’s written request
for such increase, then Seller shall (by written notice within [***] of the
date of Seller’s written request for such increase) have the right to
terminate this Agreement upon [***] written notice to Purchaser.
4.2
Gross Profit Split.
4.2.1
Purchaser shall pay to Seller, as additional consideration for
Seller’s supply of Product hereunder to Purchaser, the following portion
of Gross Profit (the “Gross Profit Split”):
(a) 60%
percent of the Gross Profit for so long as there are [***] Competitive
Products;
(b) 55%
percent of the Gross Profit for so long as there is (i) [***] Competitive
Product being sold and distributed to Purchaser Customers in the Territory or
(ii) [***] Competitive Product being sold and distributed to customers in the
Territory other than Purchaser Customers and as a result of the sale and
distribution of such Competitive Product, Purchaser’s Net Sales for the
last completed calendar quarter are more than [***] less than Purchaser’s
Net Sales for the calendar quarter immediately preceding the last completed
calendar quarter; and
(c) 50%
percent of the Gross Profit for so long as there are (i) [***] or more
Competitive Products being sold and distributed to Purchaser Customers in the
Territory or (ii) [***] or more Competitive Products being sold and distributed
to customers in the Territory other than Purchaser Customers and as a result of
the sale and distribution of such Competitive Products, Purchaser’s Net
Sales for the last completed calendar quarter are more than [***] less than
Purchaser’s Net Sales for the calendar quarter immediately preceding the
last completed calendar quarter.
4.2.2 Seller’s Gross Profit Split shall be calculated and paid to Seller quarterly, within 30 days after quarter end. Any adjustment to the Gross Profit Split as required from time to time due to an increase or decrease in the number of Competitive Products or Purchaser






