SUBLICENSING AND DISTRIBUTION AGREEMENT

Exhibit 10.1

SUBLICENSING AND DISTRIBUTION AGREEMENT

Dated as of February 6, 2006

MADE BETWEEN

OSCIENT PHARMACEUTICALS CORPORATION

AND

PFIZER, S.A. DE C.V.

SUBLICENSING AND DISTRIBUTION AGREEMENT

SUBLICENSING AND DISTRIBUTION AGREEMENT (the “Agreement” ) entered into by Oscient Pharmaceuticals Corporation ( “Oscient” ), represented by Steven M. Rauscher, its President and Chief Executive Officer, a corporation constituted and existing under the laws of the Commonwealth of Massachusetts, United States of America, as party of the first part, Pfizer, S.A. de C.V. ( “Pfizer Mexico” ) (both Oscient and Pfizer Mexico may individually be referred to as a “Party” and collectively as the “Parties” ), represented by Jorge Bracero Cotty, its legal representative, a corporation constituted and existing under the laws of Mexico, in accordance with the following recitals and terms:

R E C I T A L S

I. Oscient hereby represents that:

A. It is a corporation incorporated, validly existing and in good standing in accordance with the laws of the Commonwealth of Massachusetts, United States of America (the “United States” ), and has all the requisite corporate power to carry on its business as now being conducted.

B. The person signing this Agreement on its behalf has been duly authorized to do so in accordance with all the corporate and legal requirements applicable to it, which authority has not been revoked or limited in any way.

C. It has acquired from LG Life Sciences, LTD the exclusive license (the “Head License” ) to Develop and Commercialize in Mexico, among other countries, human pharmaceutical oral formulations of any compound containing the active ingredient gemifloxacin as well as the right to continue developing the same.

D. As of and prior to the date of execution of this Agreement, it has not granted to any third party a sublicense in Mexico under the Head License.

E. Patents and Trademarks for the Product have been granted and properly maintained, and patent applications are pending, in accordance with the Mexican Intellectual Property Law. All renewal fees related to such Patents and Trademarks have been paid in full.

F. It wishes to grant Pfizer Mexico an exclusive sublicense to conduct clinical development and to obtain and maintain regulatory approval in Mexico for the Product and to manufacture, package, label, store, maintain, handle, ship, promote, distribute, sell and otherwise Commercialize the Product in Mexico, in accordance with the terms of this Agreement.

G. The Head License is currently in good standing and in full force. Oscient has the right under the Head License to enter into this Agreement and grant the Sublicense, as later defined, to Pfizer Mexico as provided herein.

H. To Oscient’s knowledge, no litigation exists or is threatened which would, if successful, adversely affect the rights granted to Pfizer Mexico under this Agreement.

I. As of the date of execution of this Agreement, the fill-finish manufacture of the Product is completed pursuant to that certain Manufacturing Services Agreement by and between Patheon Pharmaceuticals, Inc. and Oscient dated as of January 20, 2005.

J. To Oscient’s knowledge, the manufacture, use, import and sale of the Product does not, and will not, infringe any claim of any patent rights or any other intellectual property rights of any third party.

K. There are no, nor have there been any, law suits or legal proceedings with respect to the safety, efficacy and quality of the Product, nor does it have knowledge of any review process (other than with respect to certain sNDAs recently filed by Oscient with the FDA related to CAP and ABS) from any Governmental Authority outside Mexico in connection therewith.

II. Pfizer Mexico hereby represents that:

A. It is a company in good standing and incorporated in accordance with the laws of Mexico as set out in public instrument number 19,021, dated April 12, 1951, certified by Roberto Landa Guth, notary public number 22, for the Federal District, Mexico, and duly registered in what was known as the Public Property and Commercial Registry under number 831, on page 375, volume 271, third book on June 26, 1951.

B. It is represented in this Agreement by Jorge Bracero Cotty whose capacity appears in public instrument number 26,605, dated November 24, 2000, certified by Jose Maria Morrera,

 

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notary public number 102, for the Federal District, Mexico, and duly registered in the Public Commercial Registry under number 11,684, dated November 29, 2000, which authority has not been revoked or limited in any way as of the date hereof.

C. It is engaged, among other things, in conducting the manufacturing of pharmaceutical products, clinical development and activities related to obtaining and/or maintaining regulatory approval in Mexico for pharmaceutical products and in marketing and commercializing such products in Mexico and specifically wishes to enter into this Agreement with Oscient to provide these services with respect to the Product as provided herein.

D. It has the experience, human resources, materials and financial resources required to comply with its obligations under this Agreement and has all the requisite corporate power to carry on its business as now being conducted.

E. It is registered as a taxpayer with the Federal Taxpayers Registry under number PFI 730206-632.

NOW THEREFORE IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL COVENANTS AND AGREEMENTS OF THE PARTIES, THE PARTIES HEREBY AGREE AS FOLLOWS:

T E R M S

SECTION 1. SUBLICENSES AND DISTRIBUTION APPOINTMENT BY OSCIENT

A. Sublicense to Pfizer Mexico

Subject to the terms and conditions of this Agreement, Oscient hereby grants to Pfizer Mexico (and Pfizer Mexico hereby accepts from Oscient) under the Head License an exclusive, royalty-bearing sublicense under the Patents and Know-How solely to Develop the Product in Mexico and Commercialize the Product in Mexico as well as the exclusive right to use the Trademarks in Mexico solely to Commercialize the Product in Mexico (the “Sublicense” ); provided that, following the expiration, termination or invalidation of the last to expire of all of the patents listed in Exhibit “5”, Pfizer Mexico shall retain a non-exclusive right to Commercialize the Product in Mexico using the Know-How licensed hereunder.

 

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Subject to the other terms of this Agreement, as between Oscient and Pfizer Mexico, Oscient retains the exclusive right to use the Know-How and practice the Patents for any and all uses outside of Mexico.

B. Use of Trademarks

Except as granted in this Agreement, Pfizer Mexico has no rights in or to the Trademarks, or any other trademarks, trade names or copyrights owned or used by Oscient and Pfizer Mexico agrees that it shall not in any way infringe upon, harm, contest or otherwise impair the rights of Oscient to the Trademarks.

C. Distribution

Subject to the terms herein Oscient hereby grants to Pfizer Mexico (and Pfizer Mexico hereby accepts from Oscient) the exclusive right to Commercialize the Product in Mexico.

D. Modifications to Product

1. Oscient reserves the right to modify, change, develop or improve the Product, including any change in the manufacturing process of the active pharmaceutical ingredient of the Product (the “ Alteration ”) during the Term of this Agreement and shall give Pfizer Mexico as much prior written notice as is reasonably practicable of any Alteration (for purposes of this Section 1(D)(1), the “ Notice Period ”); provided that, Oscient shall continue to deliver Product and the active pharmaceutical ingredient of the Product (in terms of Section 4 (c) (3)), during such Notice Period upon receipt of a Purchase Order (as defined in Section 4(A)(5)) from Pfizer Mexico pursuant to the Specifications in place prior to any Alteration.

2. Until termination of the Fill-Finish Supply Period (as defined below), Oscient shall give Pfizer Mexico as much prior written notice as is reasonable practicable of any amendment to the manufacturing process and packaging specification (for purposes of this Section 1(D)(2), the “ Notice Period ”); provided that, Oscient shall continue to deliver Product during such Notice Period upon receipt of a Purchase Order from Pfizer Mexico pursuant to the Specifications in place prior to any such amendment to the manufacturing process or packaging specifications.

 

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E. Additional Product Sublicense

1. Oscient hereby grants Pfizer Mexico for the Term of the Agreement an exclusive option (the “Option” ) to acquire an exclusive, royalty-bearing sublicense for Mexico under the Patents (and any other relevant patents to which Oscient has Control), Know-How and Trademarks to Develop and Commercialize Additional Products. Oscient shall notify Pfizer Mexico in the event that it is planning to Commercialize an Additional Product in Mexico (the “Notice” ), and the Notice shall contain all relevant information available in connection therewith. Pfizer Mexico will have ***** days from the date of receipt of such Notice from Oscient to give written notice to Oscient of Pfizer Mexico’s election to exercise the Option, failing which the Option shall expire and be of no further force or effect. In the event that Pfizer Mexico elects to exercise the Option, the Parties shall enter into good faith negotiations regarding the terms and conditions of such sublicense and further agree to negotiate royalty and supply prices that are fair and reasonable to both Parties and consistent with Mexican tax and other laws and regulations.

2. In the event that the Parties fail to reach an agreement regarding the terms and conditions of such sublicense within ***** days after Pfizer Mexico’s exercise of the Option (the “Negotiation Period” ), then Oscient may offer any and all rights to such Additional Products to third parties; provided, however, that, prior to consummating a transaction with a third party, Oscient shall offer to Pfizer Mexico a right to acquire the sublicense on the same terms and conditions as agreed upon with the third party, if the terms and pricing in such sublicense are, in the aggregate, more favorable to such third party than the terms and pricing last offered to Pfizer Mexico by Oscient. Pfizer Mexico shall thereupon have ***** days to accept such terms and pricing in which case, Oscient shall grant such sublicense to Pfizer Mexico.

3. Notwithstanding anything to the contrary herein, in the event that the Parties fail to reach an agreement regarding the terms and conditions of such sublicense during the Negotiation Period, Oscient may elect to either (i) continue to consider offering rights to such Additional Products to third parties pursuant to the terms set forth in Section 1(E)(2) above, or (ii) submit the matter of agreement on a sublicense for such Additional Product to arbitration. In such event, the Parties shall jointly appoint one (1) arbitrator and such arbitration shall be conducted in

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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accordance with the rules and procedures of the American Arbitration Association for commercial arbitration and shall take place in New York, New York. Within the number of days agreed upon by the Parties and the single arbitrator, each Party shall submit to the arbitrator a written proposal for the terms of a sublicense from Oscient to Pfizer Mexico for such Additional Product. The arbitrator shall choose one of the proposals as the final and binding terms of the sublicense of such Additional Product. If a Party does not submit a proposal within the time period agreed upon, the proposal of the other Party shall be binding. In the event that the Parties shall fail to agree upon the choice of an arbitrator, then the arbitration shall proceed in accordance with Section 22(A) of this Agreement.

F. Reservation of Rights

All rights not expressly granted under this Agreement to Pfizer Mexico are reserved to Oscient.

SECTION 2. INFORMATIONAL LICENSE

Subject to the provisions of Section 13(F) herein, Pfizer Mexico hereby grants to Oscient a non-exclusive, perpetual, fully paid-up, irrevocable, fully sub-licensable, worldwide (not including Mexico during the Term) license to use the information, materials, data, documents and plans relating to Products, including regulatory applications and Regulatory Approvals and manufacturing documents, data and plans ( “Pfizer Information” ), which come into the possession or under the Control of Pfizer Mexico in the course of and as a result of Pfizer Mexico’s participation in the Development and Commercialization of the Product and the manufacturing of the Product (as provided in Section 4 below) pursuant to Pfizer Mexico’s rights under this Agreement.

SECTION 3. TERM

The term of this Agreement shall begin on the date of execution set out below and, unless earlier terminated in accordance with this Agreement, shall continue while Patent Royalties (as defined in Section 7(D)) and Trademark and Know-How Royalties (as defined in Section 7(E)) remain payable by Pfizer Mexico to Oscient under this Agreement (the “Term” ).

 

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SECTION 4. PRODUCT SUPPLY TERMS; ACCESS TO MANUFACTURE FACILITY OF THE PRODUCT; TECHNOLOGY TRANSFER

A. Product Supply Terms

1. Oscient shall use best efforts to exclusively supply the Product to Pfizer Mexico in Mexico, and Pfizer Mexico shall exclusively purchase from Oscient, all Pfizer Mexico’s requirements of the Product tablets in final form at a cost per tablet equal to the lower of: (i) Oscient’s *****, or (ii) the per tablet cost for the periods set forth below (such costs set forth below, the “ Maximum Per Tablet Cost ”); provided that, the Parties agree that (A) Pfizer Mexico shall pay, in addition, all *****, (B) Pfizer Mexico will not be under any obligation to purchase from Oscient any inventory that does not meet Mexican regulatory requirements relating to expiration limitations or has less than ***** months of expiration at the moment of transfer of title pursuant to corresponding Purchase Order and (C) Oscient’s obligation to supply the Product hereunder shall terminate on the later to occur of ***** months after the execution of this Agreement or the commencement of commercial manufacture of the Product by Pfizer Mexico unless otherwise mutually agreed to by the Parties (“ Fill-Finish Supply Period ” ) :

 

2. Notwithstanding anything to the contrary in this Agreement or a Purchase Order, Pfizer Mexico shall be responsible for, and the Price does not include, any ocean, air and inland freight charges, insurance, customs broker fees, storage charges, taxes (including use, consumption, sales, excise or value added taxes), tariffs, customs duties and any other charges imposed by any law or shipping practices applicable in Mexico or in the United States, all of which shall be paid by Pfizer Mexico. Notwithstanding the foregoing, the Price does include the cost of *****.

3. Oscient shall submit invoices for all shipments of Product resulting from applicable Purchase Order to Pfizer Mexico. Invoices shall be sent no earlier than the date of Product

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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shipment as set forth in the applicable Purchaser Order. All invoices hereunder shall be payable by Pfizer Mexico in US Dollars within forty (45) days of the date the invoice is received by Pfizer Mexico; provided that such invoices comply with the applicable Mexican tax requirements as stated in the Purchase Order. All payments shall be payable in dollars, legal tender of the United States of America and made into the accounts and currency exchange conditions set out in Section 7(H)(2) herein.

4. Promptly after execution of this Agreement, Pfizer Mexico shall provide Oscient with a written, non-binding ***** month forecast of the volume of each Product that Pfizer Mexico then anticipates will be required to be manufactured, packaged and shipped to Pfizer Mexico during the periods established on the Purchase Order.

5. Pfizer Mexico may only order Products in multiples of the Minimum Run Quantities; provided that, Pfizer Mexico may require packaging of the bulk tablets contained in the Minimum Run Quantity in more than one packaging configuration. In ordering the Product the Parties hereby agree to use the form Purchase Order attached hereto as Exhibit “11” ; provided that, (i) the terms and conditions of this Agreement shall prevail over any terms in the Purchase Order to the extent that the same may be inconsistent with the terms and conditions hereof, and (ii) Sections 3 (Warranties), 6 (Inspection), 14 (Indemnification), 15 (Drawing Prints and Specifications) and 16 (Tools Dies and Molds, Etc.) of the Purchase Order shall be null and void and superseded by the terms of this Agreement (the “Purchase Order”) .

6. Oscient shall permit an independent certified accounting firm selected by Pfizer Mexico to inspect and audit Oscient’s records that relate to the manufacture to verify accuracy of ***** charged to Pfizer Mexico. Oscient shall permit such accounting firm and its employees access to all documents, whether in paper or electronic form, in its possession and control that relate to the Product, and shall allow the same to be copied. A copy of such auditing firm’s conclusions of its audit shall be furnished to Oscient at least ten (10) days prior to disclosure to Pfizer Mexico to allow Oscient an opportunity to review the accuracy of the auditing firm’s conclusions. If any review reveals a deficiency in the calculation in the ***** charged to Pfizer Mexico, then (a) Oscient shall promptly reimburse Pfizer Mexico the difference charged, and (b) if such overpayment is by *****% or more, Oscient shall pay the reasonable out-of-pocket costs and expenses incurred by Pfizer Mexico in connection with such inspection and audit.

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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7. On or before the ***** day preceding the commencement of each calendar month, Pfizer Mexico shall issue a Purchase Order for the Products to be manufactured and shipped to it on a date (the “Required Delivery Date” ) not less than ***** days from the first day of the calendar month immediately following the date that the Purchase Order is submitted; provided that, one binding Purchase Order for packaging related materials (including foil for blister packaging) (the “Packaging Purchase Order”) shall be issued by Pfizer Mexico no later than ***** days prior to the initial Purchase Order for finished Product and, provided further that, Pfizer Mexico has delivered all camera ready art for the final packaging of the Product as set forth in Section 4(A)(9) below. The quantities of Products ordered in each such Purchase Order or materials ordered under Packaging Purchase Order shall be firm and binding on Pfizer Mexico and shall not be subject to reduction by Pfizer Mexico. Pfizer Mexico has the right to reject (i) all or any portion of Products that does not comply with the warranties set forth in Section 11 herein without invalidating any remainder of such shipment, or (ii) all or any portion of materials ordered under a Packaging Purchase Order if such materials do not comply with reasonable industry standards. Pfizer Mexico or its designee shall inspect the Products upon receipt thereof and shall give Oscient written notice (a “Deficiency Notice” ) of all claims for Products that do not comply with the warranty set forth in Section 11 within 25 days after Pfizer Mexico’s receipt thereof (or, in the case of any non-compliance not reasonably susceptible to discovery upon customary inspection on receipt of the Product ( “Latent Defect” ), within 25 days after discovery thereof by Pfizer Mexico, but in no event after the expiration date of the Product). Except in the case of a Latent Defect, should Pfizer Mexico fail to provide Oscient with written notice of its acceptance or rejection of the shipment with 25 days of the receipt of a shipment of Products, then the shipment shall be deemed to have been accepted by Pfizer Mexico on the 25 ^th day after shipment.

8. Under no circumstances shall Pfizer Mexico return any damaged, defective, returned or recalled Products to Oscient without Oscient’s prior written consent.

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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9. For the period ending upon the termination of the Fill-Finish Supply Period, Pfizer Mexico hereby grants to Oscient a fully-paid, royalty-free, sublicensable, right and license in and to (i) the packaging and labeling (including the package insert, if applicable) that is approved by Governmental Authorities in Mexico for use with Product (other that the Trademarks), and (ii) Pfizer Mexico’s trademark to perform its obligations under this Agreement. As soon as practicable following the execution of this Agreement, Pfizer Mexico shall provide to Oscient camera ready art for the final packaging of the Product, which shall be in compliance with all applicable laws and Regulatory Approvals for the Product in the Mexico and shall otherwise be in compliance with the provisions of this Agreement.

B. Access to Manufacturing Facility of the Product

1. Oscient hereby agrees to cause Patheon Pharmaceuticals Inc. to give reasonable access to Pfizer Mexico and/or its representatives, to Patheon Pharmaceuticals Inc. facilities where the Product is being manufactured, stored, tested or handle (the “ Facility Access ”) with the purpose of inspecting the manufacture, packaging and testing activities of the Product to be sold by Pfizer Mexico in Mexico to review compliance with Specifications and applicable Mexican laws. The Facility Access shall be provided at mutually agreeable times by the Parties, upon reasonable prior written notice to Oscient from Pfizer Mexico and only if Pfizer Mexico and/or its representatives are accompanied by Oscient personnel unless Pfizer Mexico is informed that Oscient personnel are not available for such inspection, in which case Pfizer Mexico’s inspection may proceed without Oscient’s participation. Such Facility Access shall be limited to the number of individuals which Patheon Pharmaceuticals Inc. determines is appropriate as to not disrupt the manufacturing process. For the avoidance of doubt the right provided herein does not include a right to access or inspect Patheon Pharmaceuticals Inc. financial records. Prior to completion of any inspection set forth in this Section 4(B)(1), Pfizer Mexico and/or its shall report any observations concerning the manufacturing process to Oscient and, promptly upon the completion of such inspection, the Parties agree to discuss and mutually agree to take any actions reasonable necessary to address Pfizer Mexico issues or concerns.

2. Oscient hereby agrees to cause Patheon Pharmaceuticals Inc. to give reasonable Facility Access to Pfizer Mexico and/or its representatives, for the purpose of (i) viewing the manufacture process in order for Pfizer Mexico to transfer the technology as described in Section

 

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4(C) below, and (ii) within ***** days of the execution of this Agreement, inspecting the manufacture, packaging and testing activities, including all applicable documentation related thereto, to verify Good Manufacturing Practices related to the Product; provided that, the Parties shall reasonably agree on a date for such inspection within ***** days from the execution of this Agreement. The Facility Access shall be provided at mutually agreeable times by the Parties, upon reasonable prior written notice to Oscient from Pfizer Mexico and only if Pfizer Mexico and/or its representatives are accompanied by Oscient personnel unless Pfizer Mexico is informed that Oscient personnel are not available for such inspection, in which case Pfizer Mexico’s inspection may proceed without Oscient’s participation. Such Facility Access shall be limited to the number of individuals which Patheon Pharmaceuticals Inc. determines is appropriate as to not disrupt the manufacturing process. For the avoidance of doubt the right provided herein does not include a right to access or inspect Patheon Pharmaceuticals Inc. financial records. Oscient agrees that it will have materially breached this Agreement pursuant to the terms of Section 19(A) if it or its third party manufacturer does not give reasonably necessary access to Pfizer Mexico and/or its representatives to conduct the inspection mentioned in Section 4(B)(2)(ii); provided that the outcome of such inspection shall not diminish either Party’s obligations under this Agreement unless otherwise mutually agreed to by the Parties.

3. The Parties hereby agree that the batches manufactured for Oscient by Patheon Pharmaceuticals Inc. for sale by Pfizer Mexico in Mexico may only be sold in Mexico, and Oscient shall not sell or in any way commercialize such batches in any other territory.

C. Technology Transfer

1. Oscient hereby agrees to use reasonable efforts to facilitate and support the activities necessary for the transfer of the technology pertaining to the fill and finish manufacturing of the Products to be sold in Mexico at a Pfizer Mexico facility (the “ Pfizer Facility ”) and shall give Pfizer Mexico and/or its representatives access to any know how or materials that are necessary to enable Pfizer Mexico to provide the fill and finish manufacturing services; provided that, Pfizer Mexico agrees that neither it nor any of its representatives shall have any right to manufacture active pharmaceutical ingredient for the Product (the “ Technology Transfer ”). Pfizer Mexico shall reimburse Oscient for all out-of-pocket expenses, including expenses charged by its sub-contracted manufacturer, reasonably incurred by Oscient in connection with the Technology Transfer, not to exceed $*****.

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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2. Promptly after the execution of this Agreement, Pfizer Mexico hereby agrees to provide Oscient the location of the Pfizer Facility as well its proposed initial timeline for the Technology Transfer and enter into good faith negotiations regarding the terms and conditions of an “Active Pharmaceutical Ingredient Supply Agreement”. The Parties hereby agree that the completion of the Technology Transfer is subject to the execution of an Active Pharmaceutical Ingredient Supply Agreement or another agreement between the Parties covering the supply of Active Pharmaceutical Ingredient by Oscient to Pfizer Mexico in lieu of finished Product. Such Active Pharmaceutical Ingredient Supply Agreement shall include, among other things, the following terms: (i) warranties and indemnities limiting Oscient’s obligations under Sections 11 and 21 herein to account for the fact that Pfizer Mexico will be manufacturing finished product, (ii) Pfizer Mexico’s delivery of yearly non-binding forecasts, updated quarterly, for anticipated orders of Active Pharmaceutical Ingredient, (iii) Oscient’s limited right to have reasonable access and inspect Pfizer Mexico Product manufacturing facilities, and (iv) Pfizer Mexico’s right to commercially manufacture Product.

3. Notwithstanding the foregoing, Oscient hereby agrees to use best efforts to supply Pfizer Mexico with the necessary Active Pharmaceutical Ingredient of the Products in order for Pfizer Mexico to get the necessary approvals from the Governmental Authority to manufacture the Products. Such Active Pharmaceutical Ingredient for use in the Technology Transfer process shall by supplied to Pfizer Mexico at the actual cost to Oscient pursuant to a Purchase Order delivered to Oscient providing at least ***** days prior written notice of delivery. Oscient hereby agrees to supply Active Pharmaceutical Ingredient to Pfizer Mexico for Commercialization of the Product in Mexico upon the execution of an Active Pharmaceutical Ingredient Supply Agreement at a cost per kilogram equal to the lower of: (i) the amount *****, or (ii) the per kilogram cost for the periods set forth below:

 

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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D. Non-Commercial Manufacture of Product

Subject to the terms and conditions of this Agreement, Oscient hereby grants to Pfizer Mexico an exclusive, royalty-bearing, non-transferable, non-sublicensable sublicense under the Patents and Know-How to manufacture the Product in Mexico solely for non-commercial purposes and solely for Pfizer Mexico to obtain the necessary approvals from the Governmental Authority to manufacture the Products upon the execution of an Active Pharmaceutical Ingredient Supply Agreement; provided that, Pfizer Mexico agrees that neither it nor any of its representatives: (i) shall have any right to manufacture active pharmaceutical ingredient for the Product, (ii) shall purchase active pharmaceutical ingredient for the Product from any entity other than Oscient, and (iii) shall manufacture any Product that is to be commercially sold to third parties.

SECTION 5. REGULATORY APPROVAL

A. Regulatory Approval

Subject to Steering Committee review as set forth below, Pfizer Mexico shall use Diligent Efforts in, and be responsible for, all activities (including clinical testing, pricing and reimbursement approvals) relating to obtaining in its name and/or maintaining regulatory approvals, licenses, registrations or authorizations of any kind from Regulatory Authorities in Mexico for the importation, distribution, marketing and sale of the Product in Mexico ( “Regulatory Approval” ); provided that: (i) Pfizer Mexico agrees to consult, in a timely fashion, with Oscient with respect to such regulatory matters, including providing all correspondence, applications, or other documentation or information submitted to or received from Regulatory Authorities and drafts of any material documents, filings, data or other correspondence pertaining to Regulatory Approvals sufficiently in advance of submission (where practical or, otherwise, promptly thereafter) so that Oscient may review, consult with Pfizer Mexico and otherwise have a reasonable opportunity to provide comments to Pfizer Mexico and influence the substance of such filing; (ii) where practical, give reasonable prior notice to Oscient in order to allow Oscient to attend all material meetings with regulatory authorities (including but not limited to meetings related to the inclusion of the Product in the Mexican “Cuadro Basico” and the “Catalogo de Medicamentos” ) when, in Oscient’s good faith

 

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reasonable judgment, such discussion could adversely affect the marketing or safety profile of the Product for the market in the United States; and (iii) Pfizer Mexico shall conduct all such regulatory activities in accordance with applicable laws and regulations, Good Manufacturing Practices and Good Clinical Practices. Subject to Section 5(E) below, costs of Development and related Regulatory Approvals shall be borne by Pfizer Mexico.

B. Government Inspections and Inquiries

1. Pfizer Mexico shall advise Oscient of any government visits to, or written or oral inquires about, any facilities or procedures relating to the manufacture/packaging and Commercialization of the Product, promptly (but in no event later than five (5) business days) after notice of such visit or inquiry. Pfizer Mexico shall, within five (5) business days of receipt or submission, furnish to Oscient any report or correspondence issued by or provided to the governmental authority in connection with such visit or inquiry.

2. Oscient shall advise Pfizer Mexico of any government visits to, or written or oral inquires about, any facilities or procedures relating to the manufacture or storage of the Product, promptly (but in no event later than five (5) business days) after notice of such visit or inquiry.

C. Communication With Regulatory Authorities

Pfizer Mexico shall be responsible for communications with the Regulatory Authorities with respect to the Product. Oscient shall use reasonable efforts to assist Pfizer Mexico in responding to any queries from a Regulatory Authority, and will provide all the necessary documents, data, and information which it has assembled and is in its possession that will assist Pfizer Mexico in preparing the Regulatory Documents to be filed with Regulatory Authorities, including but not limited to, providing Pfizer Mexico free of charge with (i) an authorization letter substantially in the form of Exhibit “8” , (ii) Certificates of Pharmaceutical Product (CPPs), and (iii) Regulatory Samples of the Product for submission to the Regulatory Authority. For information contained in the LG Life Sciences LTD drug master file, Oscient will provide such information to Pfizer Mexico, or use Diligent Efforts to cause LG Life Sciences LTD to provide the information without undue delay directly to the Regulatory Authority and respond to any additional queries from the Regulatory Authority in a timely manner. In the event that information is provided directly to the Regulatory Authority, Pfizer Mexico shall be provided with a copy of the cover

 

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letter submitted with the Regulatory Authority relating to such information. Pfizer Mexico shall advise Oscient of material developments and events relating to regulatory issues in writing within two (2) business days after notice of such material developments and events. To the extend permitted by Mexican law, Pfizer Mexico shall take the steps necessary to ensure that information submitted to Regulatory Authorities is kept confidential.

D. Joint Steering Committee

1. Within thirty (30) days of the date of this Agreement, a joint steering committee, comprised of equal representation by both Parties (the “Steering Committee” ), shall be established by both Parties to review and approve Pfizer Mexico’s regulatory and Development plans (including those for clinical trials) relating to the Product (including review of any Pfizer Information) and all related filings as well as to perform such other functions as appropriate to further the purposes of this Agreement as determined by the Parties. In addition, Pfizer Mexico shall keep Oscient informed of the following matters through the Steering Committee:

(i) Plans and updates relating to the Commercialization of the Product, including updates on achievement of objectives set forth in the Detailing and Promotional Plan (as defined in Section 6(B) below) and Annual Plans (as defined in Section 8(B)(2) below), progress towards sales goals, and related sales and marketing activities;

(ii) Prices, discounts, rebates and similar polices for Products in Mexico;

(iii) Reporting and pricing information to government authorities in accordance with applicable laws;

(iv) Updates on any issues or concerns related to entry of a Generic Product;

(v) Summaries and analysis of any Adverse Event information or other medical inquires specified in Section 12 herein; and

(vi) Issues related to the manufacture of the Product by Pfizer Mexico.

Further, Oscient, through the Steering Committee, agrees to keep Pfizer Mexico informed of:

(i): Oscient’s marketing plan, any updates therewith, as well as the promotion materials owned or under the control of Oscient (“ Oscient Promotional Materials ”);

 

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(ii) updates to regulatory status for commercialization of the Product in the United States; and

(iii) any material updates regarding the development of Additional Products.

The Parties, through the Steering Committee, shall also discuss and review all matters in connection with the Technology Transfer, the Active Pharmaceutical Ingredient Supply Agreement and any developments and/or updates to the manufacturing process of the Products.

2. A Party may change or replace its representatives on the Steering Committee as it deems appropriate, by notice to the other Party. The Steering Committee shall hold meetings at such times and places as shall be determined by the co-chairpersons. The meetings shall be held quarterly unless otherwise agreed to by the Parties. Steering Committee meetings may be held in person or by telephone or video conference.

3. In the event of a dispute within the Steering Committee such that no decision can be made with respect to a particular issue, the matter may be referred by either Party to Oscient’s chief executive officer and Pfizer Mexico’s Country Manager for attempted resolution by good faith negotiation. If such individuals are unable to resolve the dispute within thirty (30) days after referral, then Pfizer Mexico shall make the final determination to the extent not inconsistent with the terms and provision of this Agreement. Notwithstanding anything contained herein to the contrary, the Parties shall mutually agree on trial designs and clinical protocols to the extent they relate to: (i) the pursuit of indications not currently approved in the United States, (ii) length of therapy, (iii) dosing, and (iv) issues which could otherwise affect the safety profile of the Product.

4. The Steering Committee shall only have such powers as are expressly delegated to it in this Agreement. The Steering Committee is not a substitute for the rights or obligations of the Parties and shall not have the authority to amend this Agreement.

5. Each Party will designate one of its members of the Steering Committee to act as a co-chairperson to facilitate the performance of its rights and satisfaction of its obligations hereunder.

 

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E. Clinical Development

1. The Parties agree that Pfizer Mexico may, but is not obligated to, pursue in Mexico additional indications beyond the currently approved U.S. indications, CAP and AECB, pursuant to the terms herein and pursuant to Steering Committee approval as set forth in Section 5(D)(3) above. Oscient shall provide to Pfizer Mexico Know-How, including information from new clinical studies conducted by Oscient. In addition, the Parties will discuss from time to time, at each Party’s sole discretion, joint development initiatives in which the Parties will jointly define clinical protocols, select trial sites, and establish other development plan details. In the event the Parties agree to pursue such joint initiatives, the Parties will discuss in good faith an appropriate sharing of costs associated with such initiatives. Notwithstanding anything else in this Agreement, all Development activities in Mexico will, at the time of such activities, be consistent with the U.S. label in regard to duration of therapy, dose, and indication, unless otherwise approved in writing by Oscient; provided that, the Parties agree that (i) the regulatory filing for *****, and (ii) in connection with its initial filing for Regulatory Authority, Pfizer Mexico may pursue a ***** subject to Section 5(E)(2) below.

2. If Pfizer Mexico shall elect to pursue a ***** indication pursuant to Section 5(E)(1)(ii) above, Pfizer Mexico shall not (a) Commercialize *****; (b) list the ***** indication in the Product Information for Prescription (“IPP”), (c) permit its Sales Representatives or anyone else acting on behalf of Pfizer Mexico to refer to ***** when Detailing; or (c) otherwise advertise, publicize, or promote the ***** indication, including, without limitation, influencing educators with respect to CMEs, advisory boards, grants or other similar functions, without Oscient’s prior written consent, which shall not be unreasonably withheld. Upon receipt by Pfizer Mexico of Oscient consent, Pfizer Mexico shall take the steps necessary to Commercialize the Product in Mexico, including adding the Product with the ***** indication to the IPP.

3. Oscient shall review and promptly approve, at its sole discretion, in advance of filing and use, any and all submissions, including amendments and updates, by Pfizer Mexico of IPP for the Product to be filed with Regulatory Authorities.

F. Provision of Data

Pfizer Mexico shall provide Oscient with the data resulting from all clinical trials conducted by Pfizer Mexico in accordance with this Section. Oscient shall be free to use the results of any or

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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all such clinical trials in connection with the marketing, promotion, packaging, handling, distribution, use, storage, sale and offer for sale and product licensing of the Product outside Mexico. The results of any clinical studies shall not be publicized or published in any way without the prior written consent of Oscient. All inventions by or for Pfizer Mexico which are Developed hereunder shall be subject to Oscient’s joint ownership pursuant to the terms of this Agreement.

G. Additional Licenses

In addition to Regulatory Approval, Pfizer Mexico shall be responsible for obtaining and maintaining any other registrations, licenses and authorizations for the Product in Mexico, including those required by health and sanitary laws, regulations and official standards in Mexico, and for otherwise doing all things necessary to permit the Products to be imported, transported, manufactured and Commercialized in Mexico (the “Additional Registrations” ) in accordance with applicable laws, regulations and official standards. The cost of obtaining the Additional Registrations shall be borne by Pfizer Mexico. Immediately upon obtaining a Registration, Pfizer Mexico shall provide copies of the same to Oscient.

SECTION 6. COMMERCIALIZATION

A. Commercializing

Pfizer Mexico shall be solely responsible for Commercializing the Product in Mexico and shall do so at its sole cost and expense using Diligent Efforts. Pfizer Mexico shall diligently obtain such Product pricing approvals as may be required in Mexico. In connection therewith, Oscient agrees to provide, as reasonably necessary, to Pfizer Mexico Ex-Factory price of the Product in the territories in which Oscient has rights under the Head License in order for Pfizer Mexico to comply with Mexican law.

B. Detailing and Promotional Plan

1. The Parties have agreed to an initial detailing and promotional plan, attached hereto as Exhibit “3” (the “Detailing and Promotional Plan” ), for Commercializing the Product in Mexico, which includes, among other things, the annual number of Details to be performed and aggregate amount of Commercializing expenses to be incurred for three (3) years after the First

 

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Commercial Sale. Notwithstanding anything to the contrary herein, Pfizer Mexico at its sole discretion may reasonably and in good faith revise and amend such Detailing and Promotional Plan in the event that (i) there is a Generic Impact entry, or (ii) a black box warning in Mexico or the United States, or (iii) a Product recall in terms of section 12(D) of this Agreement.

2. Oscient agrees that in the event the Mexican Regulatory Authority does not approve any of the three key indications CAP, AECB or ABS, Pfizer Mexico and Oscient shall negotiate in good faith and amend the Detail and Promotional Plan, which shall have less FTEs. Further, subject to the provisions of Section 6(B)(1) herein, if ***** is launched in Mexico within the first three years from date hereof and subject to the terms and conditions provided herein, the Parties hereby agree to negotiate in good faith and amend the Detail and Promotional Plan, which shall have no fewer FTEs.

C. Performance Standards and Sales Activities

Except as provided in the in the Purchase Order, Pfizer Mexico shall, at its sole expense, manufacturing Product (pursuant to the rights granted in Section 4 above), finalize packaging, label, store, maintain, handle, ship, distribute, promote, and sell the Product in accordance with its own commercial practice with respect to regulated pharmaceutical products, current Good Manufacturing Practices and Good Clinical Practices, applicable Mexican laws, regulations and official standards and the requirements of regulatory authorities in Mexico. Pfizer Mexico shall avoid using any practice in the Commercialization of the Product that would prejudice Oscient’s name, the Trademarks, and the quality of the Products. Pfizer Mexico shall not promote or otherwise Commercialize the Product for ***** without Oscient’s prior written consent.

D. Training

Pfizer Mexico shall ensure that its sales force and employees are fully trained with respect to the Product and its own policies and procedures regarding the sale, distribution and use of the Product and reporting of Adverse Event information. Pfizer Mexico shall provide, in advance of use, all training materials and documentation relating to the Product to be used by Pfizer Mexico to Oscient.

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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E. Sales Outside Mexico

Pfizer Mexico shall not: (i) adopt a policy of selling the Product which is supplied to it by Oscient outside of Mexico nor undertake the sale or promotion of sales of the Product which is supplied to Pfizer Mexico by Oscient outside of Mexico, (ii) seek customers or solicit orders from any prospective customer of Product which is supplied by Oscient whose principal address or place of business is located outside of Mexico, and/or (iii) provide any price quotations for the Product which is supplied to Pfizer Mexico by Oscient to any prospective customer whose principal address or place of business is located outside of Mexico. If Pfizer Mexico receives an order from a prospective customer located on any territories covered under the Head License, Pfizer Mexico shall immediately refer that order to Oscient. Without Oscient’s prior consent, Pfizer Mexico may not deliver or tender, or cause to be delivered or tendered, outside of Mexico, the Product (or any sample of the Product) which is supplied to Pfizer Mexico by Oscient. Pfizer Mexico shall not sell any Product which is supplied to Pfizer Mexico by Oscient to any person if it knows, or has reason to believe, that such purchaser intends to remove such Product from Mexico.

F. Product Inventory and Maintenance

Following the date of the First Commercial Sale of the Product, Pfizer Mexico shall maintain at all times an inventory of the Product in quantities sufficient to meet the reasonably anticipated demands of customers.

G. Advertising and Promotional Materials

1. Marketing and promotional materials related to the Product and prepared for use in Mexico by Pfizer Mexico or its Subdistributors (as defined in Section 14 below) (the “ Mexico Promotional Materials ”) shall be prepared in a manner consistent with Mexican law, regulations, and official standards. Oscient shall be presented and described as the party that developed the Product in all Mexico Promotional Materials. All Mexico Promotional Materials shall be provided to Oscient in advance of use by Pfizer Mexico, display the Trademarks, logos and trade dress of the Product and shall do so in a manner that promotes the Product and each of the Parties in a manner consistent with good commercial practice in dealing with regulated pharmaceutical products in Mexico. Oscient shall have the right, at its own expense and always complying with copyright laws and third party rights disclosed to it by Pfizer Mexico, to

 

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reproduce, distribute and otherwise use outside Mexico all Mexico Promotional Materials. Pfizer Mexico shall provide and distribute to customers and prospective customers advertising and promotional materials reasonably necessary to promote the Product in Mexico, as well as any warranties, instruction materials or other Product literature. Pfizer Mexico shall be responsible for all expenses relating to the advertising, promotion or sales of the Product in the Territory. Oscient will be responsible for any fees and expenses generated in connection with the reproduction, distribution and other use outside Mexico of any and all of the Mexico Promotional Materials.

2. With prior written authorization from Oscient, which authorization shall not be unreasonably withheld, Pfizer Mexico may exploit Oscient Promotional Materials, at Pfizer Mexico’s expense. Oscient hereby grants Pfizer Mexico non-exclusive, fully paid-up, license to use Oscient’s Promotional Materials pursuant to the provisions of the preceding sentence.

3. At the first meeting of the Steering Committee, Oscient shall provide Pfizer Mexico with all Product-related marketing, promotional and training materials prepared or owned by Oscient, including, but not limited to, related logos and graphics, for use by Pfizer Mexico in connection with the development of Mexico Promotional Materials. Oscient shall update the Steering Committee with respect to changes to such Product-related marketing, promotional and training materials, when applicable, and shall provided such changes to Pfizer Mexico in the next Steering Committee meeting held after such changes were made.

 

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SECTION 7. FINANCIAL PROVISIONS

A. Initial License Fee

In consideration of the license described in Section 1 hereof, Pfizer Mexico agrees to pay to Oscient a non-refundable license fee of $***** (USD) within the next three business days from the date hereof.

B. Approval Milestone Payments

In further consideration of the grant of the license by Oscient hereunder, after the achievement by Pfizer Mexico of each of the following milestones with respect to the Product, Pfizer Mexico shall pay the following non-refundable milestone payments:

 

Notwithstanding anything to the contrary set forth above, any Additional Indication Milestone payment may be reduced by ***** percent (*****%) of the reasonable out-of-pocket expenses incurred by Pfizer Mexico in conducting clinical trials related to such Additional Indication Milestone; provided that, an Additional Indication Milestone payment shall not be reduced by more than ***** dollars ($*****). Such clinical trial expenses incurred by Pfizer Mexico shall be subject to audit by Oscient pursuant to the terms of Section 8(A) herein. The Steering Committee may agree to expand the list of indications set forth in Exhibit “4” for the purposes of expansion of Additional Indication Milestones.

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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C. Sales Milestone Payments

In further consideration of the grant of the license by Oscient hereunder, after the achievement by Pfizer Mexico or its Subdistributors of each of the following milestones with respect to the Product, Pfizer Mexico shall pay the following one-time non-refundable milestone payments:

 

D. Royalties Prior to Patent Expiration or Invalidation

In further consideration of the grant of the license by Oscient hereunder, commencing on the date of the First Commercial Sale of each Product, Pfizer Mexico shall make the following non-refundable, quarterly royalty payments to Oscient for Net Sales of Product by Pfizer Mexico or its Subdistributors at the applicable rates set forth below (the “Patent Royalties ”).

 

For purposes of this Section 7, Annual Net Sales shall be calculated based on the twelve (12) month period commencing on the first day of the first full calendar quarter following the First Commercial Sale of Product (the “ First Sales Year ”) and each twelve (12) month period thereafter; provided that, Annual Net Sales in the First Sales Year shall also include any Net Sales completed in the calendar quarter in which the First Commercial Sale occurred.

Patent Royalties shall be payable as set out above until the later to occur of: (i) the expiration, termination, cancellation or invalidation of the last to expire of the patent granted in Mexico set forth in Exhibit “5” , or (ii) introduction of a Generic Product by an independent third party in oral form; provided that, the Patent Royalties shall not be payable after the expiration, termination, cancellation or invalidation of the last to expire of all of the Patents.

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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E. Royalties After Patent Expiration

Upon expiration of the Patent Royalties, Pfizer Mexico shall make quarterly royalty payments to Oscient for Net Sales of Product by Pfizer Mexico or its Subdistributors equal to: (i) ***** percent (*****%) of Net Sales, if Pfizer Mexico commits at least ***** percent (*****%) of the Details (calculated on an FTE basis) which were completed during the twelve (12) months immediately prior to the expiration of the Patent Royalties, and (ii) ***** percent (*****%) of Net Sales, if Pfizer Mexico commits less than ***** percent (*****%) of the Details (calculated on an FTE basis) which were completed during the twelve (12) months immediately prior to the expiration of the Patent Royalties (the “Trademark and Know-How Royalties” ).

F. Generic Entry

1. If, as of the end of a calendar quarter at the end of or following the Post-Generic Year, Generic Product sales in Mexico during the 12-month period through the end of such calendar quarter result in a Generic Impact, then (i) Pfizer Mexico shall receive a dollar for dollar credit against future Patent Royalties equal to ***** percent (*****%) of the Patent Royalties payable with respect to either of the second or third calendar quarters during such 12-month period following the calendar quarter in which a Generic Impact occurred, and (ii) with respect to the fourth calendar quarter of such 12-month period, Pfizer Mexico shall be entitled to reduce the Patent Royalties otherwise payable with respect to such calendar quarter by ***** percent (*****%). Following such 12-month period, if as of the end of any calendar quarter a Generic Impact exists, Pfizer Mexico shall be entitled to reduce the Patent Royalties otherwise payable with respect to such calendar quarter by ***** percent (*****%).

2. If, as of the end of a calendar quarter at the end of or following the Post-Generic Year, Generic Product sales in Mexico during the 12-month period through the end of such calendar quarter result in a Significant Generic Impact, then (i) Pfizer Mexico shall receive a dollar for dollar credit against future Patent Royalties equal to ***** percent (*****%) of the Patent Royalties payable with respect to either of the second or third calendar quarters during such 12-month period following the calendar quarter in which a Significant Generic Impact occurred, and

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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(ii) with respect to the fourth calendar quarter of such 12-month period, Pfizer Mexico shall be entitled to reduce the Patent Royalties otherwise payable with respect to such calendar quarter by ***** percent (*****%). Following such 12-month period, if as of the end of any calendar quarter a Significant Generic Impact exists, Pfizer Mexico shall be entitled to reduce the Patent Royalties otherwise payable with respect to such calendar quarter by ***** percent (*****%).

G. Tax Withholding

1. All payments hereunder shall be made free and clear of any taxes, duties, levies, fees or charges; provided that, any income or other tax that one Party (the “Withholding Party” ) is required by applicable laws to withhold and pay on behalf of the other Party under this Agreement (the “Withheld Party” ) with respect to payments to be made to the Withheld Party under this Agreement, shall be withheld from such payments; provided however, that in regard to any tax so withheld, the Withholding Party shall give or cause to be given to the Withheld Party such assistance as may be reasonably necessary to enable the Withheld Party to claim any available exemption therefrom or credit therefor, and in each case shall furnish the Withheld Party with proper evidence of the taxes paid on its behalf.

2. Pfizer Mexico will withhold taxes at the lowest tax rate allowed in applicable tax treaties (currently 10% in accordance with Article 12 of the Treaty to Avoid Double Taxation Between the United States and Mexico) if Oscient provides the required documentation to Pfizer Mexico to enable Pfizer Mexico to withhold taxes at such lower tax rate. Such documentation, at the date hereof, and in accordance with the Mexican Income Tax Law and its Regulations, consists of a certificate of residence for tax purposes issued by the tax authorities of the United States or a certification issued by US tax authorities that Oscient filed an income tax return for the year previous to the year in question. Oscient represents that it is a U.S. resident for tax purposes and will provide such documentation within thirty (30) days from the date hereof; if a withholding obligation accrues before such delivery, Pfizer Mexico shall escrow the funds to be withheld pending receipt of such documentation.

3. Notwithstanding the foregoing, the Parties agree that any applicable value added tax or other similar taxes will be payable by Pfizer Mexico without reduction of payments to Oscient.

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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H. Payment Terms

1. Within five (5) days of the end of each calendar quarter, Pfizer Mexico shall deliver to Oscient a report with respect to the immediately preceding calendar quarter, specifying: (i) the gross sales (if available) and Net Sales, including an accounting of deductions taken in the calculation of Net Sales; (ii) the applicable royalty rate under this Agreement; (iii) the royalties payable in Mexican pesos; (iv) the applicable exchange rate to convert from Mexican pesos to United States Dollars as provided below; (v) the total royalties payable in United States Dollars, and (vi) any reduction pursuant to Section 7(F) in Patent Royalties otherwise payable and relevant Pfizer Mexico unit sales data supporting such reduction. Unless otherwise expressly provided herein, Pfizer Mexico shall make any milestone, license or royalty owed to Oscient hereunder in arrears, within thirty (30) days of receipt of an invoice from Oscient to Pfizer Mexico for amounts owed pursuant to this Agreement; provided that such invoice comply with the applicable Mexican tax requirements as disclosed in advance by Pfizer Mexico from time to time. For purposes of determining when a sale of any Product occurs under this Agreement, the sale shall be deemed to occur on the earlier of (a) the date the Product is shipped, or (b) on the date of the invoice to the purchaser of the Product.

2. All amounts set out in this Agreement are expressed, and all payments under this Agreement shall be payable in dollars, legal tender of the United States of America. Pfizer Mexico shall convert Net Sales received in Mexican pesos or other foreign currencies into United States dollars, using the market rate as published by The Wall Street Journal , Eastern Edition, on the last business day of the accounting period for which payment is to be made. If The Wall Street Journal ceases to be published, then the rate of exchange to be used shall be that reported in such other business publication of national circulation in the United States as the Parties reasonably agree. All sums shall be payable in United States dollars by bank wire transfer in immediately available funds to the following account unless Pfizer Mexico is otherwise notified in writing by Oscient:

 

 

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3. Subject to the other terms of this Agreement, any payments not paid within the time period set forth in this Section 7(H) shall bear interest at a rate of ***** percent for the applicable month, from the due date until paid in full, provided that in no event shall said annual rate exceed the maximum interest rate permitted by law in regard to such payments. Such royalty payment when made shall be accompanied by all interest so accrued. Said interest and the payment and acceptance thereof shall not negate or waive the right of Oscient to any other remedy, legal or equitable, to which it may be entitled because of the delinquency of the payment.

4. No part of any amount payable to Oscient under this Agreement may be withheld or reduced due to any counterclaim, set-off, adjustment or other right which Pfizer Mexico might have against Oscient or any other person.

SECTION 8. RECORDS AND REPORTS

A. Records

1. Pfizer Mexico shall maintain complete and accurate records of all inventories, Product in storage, movements, shipments, sales and potential problems involving the Product by unit, by batch number and by customer. Upon request, Pfizer Mexico shall provide copies of such records to Oscient, and shall provide Oscient, or its representatives, with access to the place where the Product is stored and/or shipped and other facilities used by Pfizer Mexico in carrying out this Agreement, during normal business hours and upon reasonable notice, for the purpose of inspecting such facilities for compliance with the terms of this Agreement. Pfizer Mexico shall maintain all such records for at least five (5) years.

 

* Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

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2. Pfizer Mexico shall permit an independent certified accounting firm selected by Oscient to inspect and audit Pfizer Mexico’s records that relate to the Product to verify the accuracy of Pfizer Mexico’s royalty reports, shall permit such accounting firm and its employees access to all documents, whether in paper or electronic form, in its possession and control that relate to the Product, and shall allow the same to be copied. A copy of such auditing firm’s conclusions of its audit shall be furnished to Pfizer Mexico at least ten (10) days prior to disclosure to Oscient to allow Pfizer Mexico an opportunity to review the accuracy of the auditing firm’s conclusions. If any review reveals a deficiency in the calculation and/or payment of royalties by Pfizer Mexico, then (a) Pfizer Mexico shall promptly pay Oscient the amount remaining to be paid, and (b) if such underpayment is by ten percent (10%) or more, Pfizer Mexico shall pay the reasonable out-of-pocket costs and expenses incurred by Oscient in connection with such inspection and audit.

3. Pfizer Mexico shall permit Oscient or its representatives, upon prior reasonable notice, to perform an audit of its records, at reasonable times, relating to the Development and Commercialization of Product. The audit shall include, but is not limited to, examination of any investigator site used in the performance of the Development of Product, and the copying of data, analyses or other documentation relating to Development activities performed by Pfizer Mexico.

4. Upon request, Pfizer Mexico shall promptly provide to Oscient copies of any and all Pfizer Information.

B. Reports

1. Prior to the First Commercial Sale of the Product, Pfizer Mexico shall provide Oscient with written reports no less frequently than quarterly during the Term summarizing Pfizer Mexico’s efforts to Develop and Commercialize the Products hereunder, including clinical trial summaries, status on regulatory filings and submissions, communications to and from Regulatory Authorities and updates on future development plans. In addition, Pfizer Mexico shall provide Oscient with prompt written notice of the occurrence of the First Commercial Sale of any Product in Mexico.

2. On or before the First Commercial Sale and not later than November of each year during the Term of this Agreement, Pfizer Mexico shall submit to Oscient a business and marketing

 

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plan for the following year in connection with the Product (the “Annual Plan” ). The Annual Plan shall be in a form reasonably required by Oscient, and shall include: (i) a description of the market and marketing, promotional and customer service programs anticipated for the following year and budgets for each, (ii) an outline of training and regulatory activities expected for the following year, (iii) until the Technology Transfer takes place a one-year forecast of purchases of the Product from Oscient and sales of the Product to customers, (iv) an inventory status report, and (v) such other information concerning the market, the status of customers and competitors, or such other matters related to the Product as Oscient may reasonably request.

3. Calculated from the First Commercial Sale, Pfizer Mexico shall deliver to Oscient quarterly reports (the “Quarterly Report” ) relating to the calculation of amounts owed to Oscient as set out in Section 7. The Quarterly Report shall be in a form reasonably required by Oscient and shall include: (i) the volume of the Product purchased from Oscient and sales to customers during the preceding calendar quarter, (ii) an inventory status report, (iii) such other information concerning the market, the status of customers, or such other matters related to the Product as Oscient may reasonably request, (iv) a report of the total number of Sales Representatives promoting the Product, number of Details and Calls provided by Pfizer Mexico’s Sales Representatives for Product, including the promotional position of the Product in such Sales Representative’s Call plan (as calculated through a field call reporting system), including the position of the Product in such Sales Representatives product portfolio; and (v) until the Technology Transfer takes place and Pfizer Mexico begins manufacturing the Product in Mexico, a rolling one-year forecast broken down by calendar quarter of projected purchases of the Product from Oscient,. At any time during the Term of the Agreement, Pfizer Mexico agrees to make available to Oscient or its representatives, such books and records necessary to verify the accuracy of the Quarterly Report.

4. Pfizer Mexico shall promptly (and in any event within fifteen (15) business days) provide Oscient with written notice upon its achievement of each of the milestones set forth in Sections 7(B) and 7(C). In the event that Oscient believes any milestone payment is due pursuant to Sections 7(B) or 7(C) in spite of not having received notice from Pfizer Mexico, it shall so notify Pfizer Mexico and shall provide to Pfizer Mexico the data and information supporting its belief that the conditions for payment have been achieved. If Pfizer Mexico does not provide adequate

 

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evidence that such milestone has not been achieved within thirty (30) days of receipt of the data and information from Oscient, the conditions for payment shall be deemed to have been achieved.

5. Within ninety (90) days after the expiration of the Term or termination of this Agreement, Pfizer Mexico shall deliver to Oscient a final report containing the information set forth in Section 8(B)(3) covering the period from the date of the immediately preceding Quarterly Report to the expiration or termination date.

SECTION 9. EXPORT AND IMPORT

A. United States Export Prohibitions

1. Pfizer Mexico acknowledges and agrees that the Products, or technical data with respect thereto (including information, data and materials related to the Technology Transfer), that are sold or otherwise provided hereunder (including samples) may be subject to export and other foreign trade controls restricting the sale, re-export and/or transfer of such Products or technical data to certain countries or parties, including, but not limited to, licensing requirements under applicable laws and regulations of the United States and other jurisdictions. Any other provision of this Agreement to the contrary notwithstanding, Pfizer Mexico agrees that it will not sell or transfer the Product or technical information supplied under this Agreement except in full compliance with this Agreement and all applicable United States government requirements, including, but not limited to, the economic sanctions constraints administered by the United States Treasury Department and export control measures administered by the United States Department of Commerce. Any violation by Pfizer Mexico of this Section shall be deemed a material breach by Pfizer Mexico of this Agreement under Section 19(A).

2. The obligation of Oscient to supply the Product or technical data under this Agreement is subject to the ability of Oscient to supply such items consistent with the laws and regulations of the United States and other governments. Oscient reserves the right to not comply with any binding Product order, and to cancel any binding Product order under this Agreement if Oscient, in its sole discretion, determines that filling such an order or the performance of the transaction to which such order relates would violate this Agreement, any applicable law or regulation of the United States or any other government. Pfizer Mexico agrees that any such refusal or

 

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cancellation by Oscient shall not constitute a breach of any obligation under this Agreement and hereby waives any and all claims against Oscient for any loss, cost or expense, including consequential damages, that Pfizer Mexico may incur by virtue of such refusal or cancellation.

B. Mexican Import Requirements

Pfizer Mexico shall be responsible for the importation of the Product into Mexico, in its name as importer of record, and shall obtain at its expense, all permits and authorizations, and shall comply with all Mexican customs laws, regulations and official standards applicable to such importation. Oscient agrees to provide a certificate of origin for the Product and all reasonably necessary documentation, as requested by Pfizer Mexico for purposes of importing the Product into Mexico.

SECTION 10. REGISTRATIONS

1. Both Parties hereby authorize Jose Hinojosa C., Martin Michaus, Eduardo Kleinberg, and Adolfo Athie Cervantes, individually, or any other designee(s) as may be later agreed upon, at any time, (i) to review the file of the Patents and Trademarks held by the Mexican Institute of Intellectual Property (the “IMPI,” to use its Mexican initials), and (ii) to review, record or cancel the Summary Agreement (as defined below) with the IMPI for all legal effects.

2. The Parties agree to execute condensed versions of this Agreement (the “Summary Agreements” ), in the Spanish language, and agree the Summary Agreements shall accurately reflect the main terms and conditions of this Agreement.

3. Within one hundred twenty (120) days of the date hereof, Oscient shall file all necessary documentation, including the Summary Agreements, in order to accurately reflect the license of rights granted under this Agreement to Pfizer Mexico.

SECTION 11. WARRANTY

1. Oscient warrants exclusively to Pfizer Mexico to manufacture the Product in accordance with applicable good manufacturing requirements and applicable laws, regulations and standards of the United States and of the United States Food and Drug Administration and as may be included in any regulatory approvals granted in the United States and/or Mexico. Oscient warrants exclusively to Pfizer Mexico that all of the Products shipped in accordance with this

 

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Agreement: (i) shall conform to and will have been manufactured in accordance with the Specifications, (ii) shall be manufactured in accordance with all applicable United States laws and regulations in effect at the time of manufacture, and (iii) shall not be adulterated or misbranded as a result of acts or omissions by Oscient. Oscient further warrants that all work and/or services supplied hereunder will be performed in a workmanlike manner. Except for what is provided in Section 21 (B), Oscient’s sole obligation and Pfizer Mexico’s sole remedy under this warranty is replacement of any Product or a refund of the purchase price that Oscient reasonably determines to be covered by this warranty.

2. Nothing in this Agreement is or shall be construed as:

(a) a warranty or representation by Oscient as to the patentability, validity or scope of any Patents licensed hereunder;

(b) a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted pursuant to this Agreement or otherwise is or will be free from infringement of patents, copyrights and other rights of third parties.

3. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, OSCIENT DOES NOT MAKE ANY REPRESENTATION OR EXTEND ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, OR OF VALIDITY OR NON-INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OF THIRD PARTIES, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.

SECTION 12. ADVERSE EVENTS

A. Collection of Information

Pfizer Mexico shall be responsible for the receipt of all information relating to Adverse Events, Product complaints and medical inquiries in Mexico.

 

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B. Notice of Adverse Event Information

The Parties agree to comply with the Pharmacovigilance Joint Operating Policy attached hereto as Exhibit “10” with respect to post-marketing Adverse Event information; provided that, the Parties agree to negotiate a superseding Pharmacovigilance Joint Operating Policy upon termination of the Fill-Finish Supply Period to regulate post-marketing Adverse Event information for Product manufactured by Pfizer Mexico pursuant to the Active Pharmaceutical Ingredient Supply Agreement. Within a reasonable time frame after notice by Pfizer Mexico of its intent to conduct certain clinical activities pursuant to the terms of this Agreement, the Parties shall prepare and draft guidelines and procedures to govern pre-marketing and clinical Adverse Event information, such policies to parallel in material and applicable effects the policies and procedures set forth in Exhibit “10” hereto.

C. Product Complaints and Inquiries as to Quality

1. From the date when Regulatory Approval is granted and throughout the Term, Pfizer Mexico shall maintain a procedure, subject to review and approval by Oscient, to deal with Product complaints occurring in Mexico only, including inquiries related to the safety, identity, strength, quality or purity of the Product and any other matter related to the quality of the Product, whether or not such Product is manufactured by Oscient or its third party manufacturer. Oscient or its partners have the sole responsibility for maintaining a procedure to deal with Product complaints outside of Mexico. Pfizer Mexico shall inv