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EXHIBIT 10.1
CONFIDENTIAL TREATMENT REQUEST
[ * ] INDICATES INFORMATION THAT HAS BEEN OMITTED PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST AND THIS INFORMATION
HAS BEEN FILED UNDER SEPARATE COVER WITH THE COMMISSION
LICENSE AND SUPPLY AGREEMENT
THIS LICENSE AND SUPPLY AGREEMENT (the "AGREEMENT") is entered into
as
of this 11th day of April, 2007, (the "EFFECTIVE DATE") by FLUID
AIR INC. DOING
BUSINESS AS PHARMPRO. a corporation pursuant to the laws of the
State of
Illinois, with its principal office at 2550 White Oak Circle,
Aurora, Illinois,
60502 (hereinafter referred to as "FAI") and SYNOVICS LABORATORIES
INC., a
corporation pursuant to the laws of the State of Nevada, with its
principal
office at Suite 450, 2575 E. Camelback Rd, Phoenix, Arizona, 85016
(hereinafter
referred to as "SYNOVICS"). FAI and SYNOVICS are referred to herein
individually
as a "PARTY" and collectively as the "PARTIES."
WHEREAS, FAI is in the business of manufacturing and developing
generic
product and owns intellectual property rights related to the
manufacture of this
Product (as defined below);
WHEREAS, SYNOVICS has expertise in the marketing of generic and
over-the-counter pharmaceutical products; and
WHEREAS, SYNOVICS desires to contract with FAI to develop and
manufacture a generic version of Omeprazole with a novel
manufacturing method
developed by FAI for marketing worldwide by SYNOVICS and FAI is
willing to grant
such rights subject to the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the
mutual promises, covenants and conditions set forth below, the
Parties,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
1.1 "ACCEPTABLE COMPOUND" has the meaning set forth in SECTION
7.5(a) hereof.
1.2 "AFFILIATE" means: (a) any entity that owns, directly or
indirectly, a controlling interest in a Party, by stock ownership
or otherwise;
(b) any entity in which a Party owns a controlling interest, by
stock ownership
or otherwise; or (c) any entity, under direct or indirect common
control of a
Party. For purposes of this paragraph, "controlling interest" and
"control" mean
ownership of fifty percent (50%) or more of the voting stock
permitted to vote
for the election of the Board of Directors or any other arrangement
resulting in
control or the right to control the management and the affairs of
the Party.
1.3 "ANDA" means an abbreviated new drug application or any
equivalent of the foregoing, filed with the FDA and necessary for
beginning the
bioequivalence review trials for the use of Products in humans or
any equivalent
or similar application filed with the Regulatory Authorities of a
country other
than the United States prior to beginning
<PAGE>
bioequivalence review trials of the Products in humans in that
country.
1.4 "CALENDAR QUARTER" means the respective periods of three
(3)
consecutive calendar months ending on March 31, June 30, September
30 or
December 31, for so long as this Agreement is in effect.
1.5 "CERTIFICATE OF ANALYSIS" means the certificate for each
batch
of a particular Product delivered hereunder, in the form
contemplated by SECTION
7.4(c).
1.6 "CHANGE OF CONTROL" means a corporate transaction involving
the sale of all or substantially all the assets of FAI, or a merger
or
acquisition involving a Third Party, such that the stockholders of
FAI
immediately prior to the transaction hold less than fifty percent
(50%) of FAI's
or the other surviving entity's outstanding voting securities or
capital stock
immediately following the closing of the transaction.
1.7 "CMC" means that portion of the ANDA application
responsible
for the chemistry, manufacturing and controls review required for
Regulatory
Approval.
1.8 "COMMERCIALLY REASONABLE EFFORTS" means those efforts and
resources that would reasonably be used by a company in the
industry to develop
and/or commercialize a Product having similar market potential
(E.G., market
size) and at a similar stage in its product life (E.G., stage of
development or
number of years post-launch), taking into account the
competitiveness of the
marketplace, the proprietary position of the compound or product,
the regulatory
structure involved, and the profitability of the applicable
products, and other
relevant factors affecting such profitability.
1.9 "COMMERCIAL MANUFACTURING QUALITY AGREEMENT" means a
checklist
of activities and responsibilities attached as Exhibit "C" and made
part of this
LICENSE AND SUPPLY AGREEMENT.
1.10 "COMPOUND" means a generic version of OTC Omeprazole.
1.11 "COMPOUND IMPROVEMENT" means any analog or derivative of a
Compound or any use of a Compound or any such analog or derivative,
that is
discovered or made by or on behalf of or otherwise comes into the
Control (other
than through the grant of a license by SYNOVICS under this
Agreement) of FAI,
its Affiliates or sublicensees during the Term.
1.12 "CONTROL" means, with respect to any information or
intellectual property right, possession by a Party of the ability
(whether by
ownership, license or otherwise) to grant access, a license or a
sublicense to
such information or intellectual property right without violating
the terms of
any agreement or other arrangement with any Third Party as of the
time such
Party would first be required hereunder to grant the other
2
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
Party such access, license or sublicense.
1.13 "COST OF GOODS SOLD" means the price that SYNOVICS will
purchase from FAI, individual capsules in bulk form of the Product
at a price
based upon the following quantities produced in a batch sizes
of:
(a) [*]
(b) [*]
1.14 "DETAILED FORECAST" has the meaning set forth in SECTION
7.3(b).
1.15 "FAI KNOW-HOW" means all know-how, processes, information
and
data that is: (a) controlled by FAI as of the Effective Date or
during the Term;
and (b) necessary or useful for the development or
commercialization of Products
in the Field.
1.16 "FAI PATENT RIGHTS" mean (a) those United States patents
and
patent applications listed on EXHIBIT "A" attached hereto, and (b)
all
divisionals, continuations, continuations-in-part, reissues,
extensions,
supplementary protection certificates and foreign counterparts of
such patents
and patent applications that are existing as of the Effective Date
or filed or
issued during the Term, in each case (i) that are controlled by
FAI; and (ii)
for which SYNOVICS requires a license from FAI to use, sell, offer
for sale or
import the Compounds or Products in any country of the
Territory.
1.17 "FDA" means the United States Food and Drug
Administration,
and any successor thereto.
1.18 "FD&C ACT" means the United States Federal Food, Drug
and
Cosmetics Act and applicable regulations promulgated thereunder, as
amended from
time to time.
1.19 "FIELD" means the use of the Product as a Proton Pump
Inhibitor for the prevention or treatment of gastrointestinal
diseases.
1.20 "FIRST COMMERCIAL SALE" means, with respect to any
Product,
the first sale of such Product to a Third Party in any country of
the Territory
after such Product has been granted Regulatory Approval by the
competent
Regulatory Authorities in such country.
1.21 "GOOD CLINICAL PRACTICE" or "GCP" means the then-current
standards for clinical trials for pharmaceuticals, as set forth in
the FD&C Act
and such standards of good clinical practice as are required by the
European
Union and other organizations and governmental agencies in
countries in which
the Product is intended to be sold, to the extent such standards
are not in
contravention with United States GCP.
3
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
1.22 "GOOD LABORATORY PRACTICE" or "GLP" means the then-current
standards for laboratory activities for pharmaceuticals, as set
forth in the
FD&C Act and such standards of good laboratory practice as are
required by the
European Union and other organizations and governmental agencies in
countries in
which the Product is intended to be sold, to the extent such
standards are not
in contravention with United States GLP.
1.23 "GOOD MANUFACTURING PRACTICE" or "GMP" means the
then-current
standards for the manufacture of pharmaceuticals, as set forth in
the FD&C Act
and such standards of good manufacturing practice as are required
by the
European Union and other organizations and governmental agencies in
countries in
which the Licensed Product is intended to be sold, to the extent
such standards
are not in contravention with United States GMP.
1.24 "HSR ACT" means the Hart-Scott-Rodino Antitrust
Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
1.25 "OMEPRAZOLE" means the compound having the chemical name
5-
methoxy-2-((4-methoxy-3,5-dimethylpyridin-2yl)methylsulfinyl)-1H-benzimidazole.
1.26 "OTC" means the over-the-counter version of the Product
1.27 "NET PRODUCT SALES" means, with respect to the Product,
the
gross amounts invoiced for sales of the Product(s) by SYNOVICS, to
its
Customers, its Affiliates or Sublicensees, less the sum of:
(a) trade, quantity and cash discounts actually allowed
or paid;
(b) credits or allowances given or made for rejection or
return of previously sold products;
(c) to the extent included in the invoiced price, taxes,
duties or other governmental charges levied on or measured by the
billing
amount, as adjusted for rebates and refunds;
(d) to the extent included in the invoiced price, charges
for shipping, freight and insurance directly related to the
distribution of the
Product by SYNOVICS (excluding amounts reimbursed by Third Party
customers); and
(e) discounts, refunds, rebates, charge backs,
retroactive price adjustments and any other allowances granted to
managed health
care organizations or to federal, state and local governments,
their agencies,
purchasers and reimbursers;
PROVIDED, HOWEVER, that during any Calendar Quarter the sum of the
items
described in (a) and (d) above, for any Product shall not exceed
[*] of the
gross sales for such Product during such Calendar Quarter and any
amounts in
excess of such [*] limitation
4
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
shall not be deductible in any other Calendar Quarter.
Sales of a Product for use in conducting clinical trials of such
Product in a
country of the Territory in order to obtain Regulatory Approval of
such Product
in such country shall not be considered as "sales" for purposes of
this SECTION
1.27.
1.28 "PRODUCT(s)" means capsules supplied in bulk form that
contains the Compound manufactured by FAI filled into SYNOVICS
supplied bulk
shipping containers in accordance with the Specifications.
1.29 "REGULATORY APPROVAL" means all approvals, licenses,
registrations or authorizations of any national or international or
local
regulatory agency, department, bureau or other governmental entity,
necessary
for the commercial sale of the Product.
1.30 "REGULATORY AUTHORITY" means any national, supra-national,
regional, state or local regulatory agency, department, bureau,
commission,
council or other governmental entity in the Territory involved in
the granting
of Regulatory Approval for any Product.
1.31 "RESULTS" means all data, information and results obtained
or
developed by or on behalf of FAI or any of its Affiliates in
connection with the
evaluation of the Compound for use in any Product, the development
of any
Product, and/or obtaining Regulatory Approval for any Product,
which data,
information and results relate solely to the Compound and shall
include, without
limitation, results obtained or developed in connection with any
control arm of
any study performed by or on behalf of FAI or any of its
Affiliates.
1.32 "SPECIFICATIONS" means the specifications developed during
the
performance of this LICENSE AND SUPPLY AGREEMENT as approved by the
Joint
Development Committee for the manufacturing and testing of the
Compound and the
Product.
1.33 "SUPPLY TERM" has the meaning set forth SECTION 11.
1.34 "TERM" means the period commencing on the Effective Date
and,
unless this Agreement is terminated sooner as provided in SECTION
11, ending on
the date when no payment obligations under this Agreement are or
will become
due.
1.35 "TERRITORY" means all countries of the world.
1.36 "THIRD PARTY(IES)" means any person(s) or entity(ies)
other
than SYNOVICS, FAI or their respective Affiliates.
1.37 "USA" means the United States of America and its
territories.
1.38 "VALID CLAIM" means an unexpired claim of an issued and
unexpired
5
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
patent forming part of the Patent Rights, which claim has not been
declared
invalid by an unappealed or unappealable order of a court or other
tribunal of
competent jurisdiction.
2. GRANT OF RIGHTS.
2.1 GRANT OF LICENSE. Subject to the terms and conditions of
this
Agreement, FAI hereby grants to SYNOVICS during the Term and
SYNOVICS accepts an
exclusive license under the FAI Patent Rights and to use the FAI
Know-How and
Regulatory Approvals, to use, sell, offer for sale and export the
Product in the
Territory; PROVIDED, HOWEVER, that, except as expressly provided in
SECTION 7.7
or 11.3 below, such license shall not include any right on the part
of SYNOVICS
or its Affiliates or permitted sublicensees to make or have made
the Compound.
2.2 DILIGENCE. SYNOVICS or its sub-licensee, shall be
responsible
for the performance and coordination of stability and
bioequivalence testing,
drafting and submission of the ANDA application to obtain
Regulatory Approval
for the Product for sale in each country within the Territory.
SYNOVICS shall be
the owner and shall register such ANDA application in its own name.
FAI shall
assist SYNOVICS in the preparation of the ANDA application. FAI
shall prepare
and be financially responsible for its contribution to the CMC
portion of the
ANDA application.
2.3 SUBLICENSING. SYNOVICS may sublicense the rights granted to
it
by FAI under this Agreement to any of SYNOVICS's Affiliates or to
one or more
Third Parties, PROVIDED, HOWEVER, that: (a) SYNOVICS shall remain
responsible
for the performance of all of its obligations under this Agreement,
whether such
obligations are performed by SYNOVICS, its Affiliates or any of
its
sublicensees; (b) SYNOVICS shall be responsible for all payment
obligations
resulting from the commercialization of any Product, whether
such
commercialization activities are performed by or on behalf of
SYNOVICS, its
Affiliates or any of its sublicensees; and (c) SYNOVICS shall
provide FAI with a
true, accurate and complete copy of each sublicense agreement
within ten (10)
business days after entering into such sublicense agreement.
2.4 RETAINED RIGHTS; NO IMPLIED LICENSES. FAI retains all
rights
in and to the FAI Patent Rights and the FAI Know-How that are not
otherwise
expressly granted to or conferred upon SYNOVICS under this
Agreement.
2.5 GOVERNMENT APPROVALS.
(a) GOVERNMENT APPROVALS. Each of SYNOVICS and FAI shall
use its good faith efforts to eliminate any concern on the part of
any court or
government authority regarding the legality of the proposed
transaction,
including, if required by federal or state antitrust authorities,
promptly
taking all steps to secure government antitrust clearance,
including, without
limitation, cooperating in good faith with any government
investigation
including the prompt production of documents and information
6
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
demanded by a second request for documents and of witnesses if
requested.
SYNOVICS shall be responsible for paying any fees required to be
paid to any
governmental agency in connection with making any such filings that
may be made
to secure government antitrust clearance or any filings that may be
made
pursuant to SECTION 2.5(b) below, and each Party shall bear its own
expenses,
including, without limitation, legal fees, incurred in connection
with preparing
such filings.
(b) COOPERATION. SYNOVICS and FAI will cooperate and use
respectively all reasonable efforts to make all other
registrations, filings and
applications, to give all notices and to obtain as soon as
practicable all
governmental or other consents, transfers, approvals, orders,
qualification
authorizations, permits and waivers, if any, and to do all other
things
necessary or desirable for the consummation of the transactions as
contemplated
hereby. Neither Party shall be required, however, to divest
products or assets
or materially change its business if doing so is a condition of
obtaining
approval under any governmental approvals of the transactions
contemplated by
this Agreement.
(c) VALUATION OF TRANSACTION. SYNOVICS represents to FAI
that it (a) has valued the transactions contemplated hereby in
accordance with
and pursuant to the requirements of the HSR Act and the rules
promulgated
thereunder (16 CFR 801.1 et seq.), and (b) has determined that,
based on such
valuation, no filing, including, without limitation, the filing of
a notice and
report, is required under the HSR Act or the rules promulgated
thereunder.
3. PRODUCT DEVELOPMENT.
3.1 PRODUCT DEVELOPMENT PLAN. FAI has provided to SYNOVICS a
Product Development Plan, which is attached hereto as EXHIBIT "B".
FAI shall
notify SYNOVICS in writing within ten (10) days of making any
material
modification to the Product Development Plan, which notification
shall specify
the modification made and the reason for making such modification.
The Product
Development Plan will serve as the basis of communication between
FAI and
SYNOVICS concerning the development of the ANDA and CMC
application. FAI will
provide updates to SYNOVICS with monthly updates with regards to
the progress
executing the Product Development Plan.
3.2 APPROVAL DATE. FAI shall use Commercially Reasonable
Efforts
to complete the Product Development Plan by no later than July 30,
2007. In
addition, upon SYNOVICS's request, FAI shall use its Commercially
Reasonable
Efforts to provide SYNOVICS with advice and assistance in
SYNOVICS's efforts to
develop and register the Products in other countries in the
Territory outside of
the USA in the name of SYNOVICS. The assistance to be provided by
FAI hereunder
shall include, without limitation, providing SYNOVICS reasonable
access via
telephone and/or in-person contact during normal business hours
with FAI's
technical personnel having knowledge about the Compounds as well as
providing
any and all documentation necessary for submission.
7
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
3.3 PROGRESS REPORTS. Within ten (10) days after each calendar
month, FAI shall provide SYNOVICS with a written report setting
forth in
reasonable detail the progress made by or on behalf of FAI in the
development,
registration and Regulatory Approval of Products within the USA.
Each such
report shall include, without limitation, a detailed description of
all studies
conducted during the period covered by the report, a summary of all
data
generated as part of FAI's Product development efforts during the
period covered
by the report and other content as may be requested by
SYNOVICS.
3.4 DILIGENCE OF SYNOVICS. SYNOVICS shall be solely responsible
for and shall use its Commercially Reasonable Efforts, at its sole
expense, to
conduct all research and development activities required to obtain
Regulatory
Approval of the Product in the USA, provide timely laboratory
analysis for
assay, Product uniformity and dissolution for samples generated
during the
development, scale-up, tech transfer and submittal/testing batch
production and
to perform all studies and activities set forth in the Product
Development Plan.
3.5 DILIGENCE OF FAI. FAI shall be solely responsible for and
shall use its Commercially Reasonable Efforts, at its sole expense,
to conduct
all research and development activities required to prepare for
submission, the
CMC portion of the ANDA application in the Territory and to perform
all studies
and activities set forth in the Product Development Plan. FAI
further agrees to
comply with all applicable GLP, GCP and GMP in its design,
development and
manufacture of Products hereunder.
3.6 COMMUNICATIONS. To ensure orderly communications between
the
Parties with respect to the development and registration of
Products, each Party
shall address all communications and inquiries pertaining to such
matters only
to the other Party's representative designated in accordance with
SECTION
14.6(a) hereof.
4. REGULATORY MATTERS.
4.1 REGULATORY FILINGS. SYNOVICS shall be responsible for the
preparation and filing, in SYNOVICS name, with the appropriate
Regulatory
Authorities all documents, including, without limitation, all ANDAs
(but
including any drug master files for the Compound) that are
necessary to conduct
clinical studies of the Products and submit applications for
Regulatory Approval
that are necessary to market and sell Products in all countries
within the
Territory. In conjunction with such filings and at SYNOVICS's
reasonable
request, FAI shall furnish to SYNOVICS all information that is (a)
already in
the possession and control of FAI or its Affiliates and (b)
necessary to obtain
such Regulatory Approval for such Product. Such information may
include
information on the manufacturing and toxicity of the Product.
4.2 EVENT REPORTING. SYNOVICS shall be responsible for
reporting
all Events (as defined below) associated with the Product to the
appropriate
Regulatory
8
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
Authorities in accordance with applicable laws, rules and
regulations.
Additionally, if either Party receives information regarding Events
related to
the use of a Product, such Party shall promptly provide the other
Party with
such information. For purposes of this SECTION 4.2, "EVENT" shall
mean any
adverse event, adverse drug reaction, including, without
limitation,
malfunctions, product failure, improper or inadequate design,
manufacturer
labeling or user error reported during the use or sale of any
Product or any
Products by or on behalf of SYNOVICS, its Affiliates, sublicensees
and customers
(including, without limitation, end users purchasing any Product or
using any
Product purchased from any of the foregoing
4.3 MUTUAL COVENANTS. Each Party covenants that during the
Term:
(a) it shall comply with all federal, state, provincial,
territorial,
governmental and local laws, rules and regulations applicable to
the
development, manufacture and commercialization of Product and
Products by such
Party; and (b) it shall disclose to the other Party all information
in its
possession or control concerning side effects, injury, toxicity or
sensitivity
reaction and incidents or severity thereof with respect to the
Product.
5. JOINT DEVELOPMENT COMMITTEE
5.1 FORMATION; COMPOSITION. Within thirty (30) days after the
Closing Date, the Parties shall establish a committee (the "JOINT
DEVELOPMENT
COMMITTEE" or "JDC") to coordinate the development and Regulatory
Approval of
the Product. Each Party shall initially appoint one (1)
representative to the
JDC. The JDC may change its number of representatives from time to
time by
mutual consent of its members, provided that the JDC shall consist
at all times
of an equal number of representatives of each Party. Each Party may
replace its
JDC representatives at any time upon written notice to the other
Party. The JDC
may invite non-members to participate in the discussions and
meetings of the
JDC, provided that such participants shall have no vote. The
Parties shall
alternate designating a representative to act as the Chairperson of
the JDC,
with each Party having its designated representative Chairperson
for a period of
twelve (12) months (or such other term as the JDC establishes).
SYNOVICS shall
designate the first Chairperson. The Chairperson shall be
responsible for
administering JDC meetings and circulating the agenda prior to each
meeting, but
shall have no additional powers or rights beyond those held by the
other
representatives of the JDC.
5.2 SPECIFIC RESPONSIBILITIES OF THE JDC. In addition to its
general responsibilities, the JDC shall in particular:
(i) review the overall strategy for and design of all clinical
trials and other studies conducted under the Product Development
Plan;
9
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
(ii) discuss the requirements for Regulatory Approval for the
Territory and oversee and coordinate regulatory matters;
(iii) arrange for and coordinate initial commercial supply of
the
Product;
(iv) facilitate the flow of information between the Parties
with
respect to the development of, and obtaining Regulatory Approval
for the
Products for use worldwide;
(v) perform such other functions as may be appropriate to
further
the purposes of this Agreement, as directed by the JDC; and
(vi) create the Specifications based upon Phase 1 and 2 of the
Product Development Plan.
5.3 MEETINGS. During the period in which Licensed Products are
being developed, the JDC shall meet at least once per [calendar
quarter], or
such other frequency as the Parties mutually agree in writing. The
JDC shall
typically meet in person, but may meet by videoconference or
teleconference if
requested by a Party. In-person JDC meetings will be held at
locations
alternately selected by SYNOVICS and FAI. Each Party will bear the
expense of
its respective JDC members' participation in JDC meetings. The
chairperson of
the JDC shall be responsible for keeping reasonably detailed
written minutes of
all JDC meetings that reflect, without limitation, material
decisions made at
such meetings. The chairperson shall use reasonable efforts to
distribute the
meeting minutes to each member of the JDC for review and approval
within ten
(10) business days after a meeting. Minutes will be deemed approved
unless a
member of the JDC objects to the accuracy of such minutes within
ten (10)
business days of receipt.
5.4 DECISION-MAKING. The JDC shall act by unanimous vote at
meetings. Should the JDC become deadlocked on or otherwise not be
able to agree
upon any issue before it, and such issue remains unresolved after a
period of
thirty (30) days, then it shall be resolved by means of the dispute
resolution
provision of SECTION 14.8.
6. COMMERCIALIZATION.
6.1 MARKETING AND SALE. SYNOVICS shall at its own expense be
solely responsible for and shall use its Commercially Reasonable
Efforts to
promote, market, distribute and sell the Product. SYNOVICS shall be
solely
responsible for establishing the price of the Products sold by or
on behalf of
it pursuant to this Agreement.
6.2 USE OF TRADEMARK/TRADENAME. SYNOVICS shall promote, market,
distribute and sell each Product under tradenames and trademarks of
its choice.
SYNOVICS further agrees to include on the packaging, label and
advertising or
promotional materials for each Product a statement indicating that
such Product
is being made, distributed and sold by SYNOVICS pursuant to a
license from FAI,
which
10
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
statement shall be in both form and substance acceptable to
FAI.
6.3 PERIODIC REVIEW. SYNOVICS and FAI shall periodically meet,
at
such times and places as are mutually agreed upon by the Parties,
for SYNOVICS
to provide FAI with a status of the progress of SYNOVICS's
commercialization of
the Product. Such meetings shall occur at least once per calendar
year. SYNOVICS
and FAI shall each be responsible for its own expenses incurred in
connection
with attending such meetings.
7. SUPPLY OF PRODUCTS.
7.1 EXCLUSIVE SUPPLY. In accordance with and subject to the
terms
of this Agreement, SYNOVICS agrees to purchase its and its
Affiliates' and
sublicensees' entire requirements of the Product from FAI during
the Supply Term
and FAI shall supply SYNOVICS with all amounts of the Product
ordered by
SYNOVICS in accordance with the forecasting and ordering provisions
of this
SECTION 7 until the latter of: (i) the expiration of the last to
expire of the
FAI Patent Rights containing a Valid Claim in such country; and
(ii) ten (10)
years from the First Commercial Sale of such Product in such
country after which
point SYNOVICS shall not be obligated to purchase any further
Product from FAI.
All quantities of Products supplied to SYNOVICS hereunder are to be
supplied as
capsules in bulk form filled in SYNOVICS supplied bulk shipping
containers in
compliance with the specifications provided by SYNOVICS. SYNOVICS
acknowledges
that FAI currently obtains the Omeprazole, excipients and coating
solutions from
Third Party manufacturers.
7.2 MANUFACTURE OF PRODUCTS.
(a) COMPLIANCE. All quantities of the Compound and the
Product supplied by FAI to SYNOVICS hereunder shall be manufactured
in
accordance with GMP, the Specifications and the Commercial
Manufacturing Quality
Agreement, Exhibit "C", attached hereto. The Specifications may
only be revised
as provided in SECTION 7.2(B). While any quantity of the Products
is in its
possession, FAI shall comply with all applicable federal, state and
local
statutory and regulatory requirements regarding the manufacture,
handling and
storage of the Product.
(b) CHANGE CONTROL.
(i) FAI INITIATED CHANGES. If FAI or any of its
Affiliates or subcontractors desires or is required pursuant to a
change in the
applicable Regulatory Approval for a Products to make a change in
the
Specifications, configuration, packaging or manufacturing processes
for such
Products to be supplied to SYNOVICS hereunder, FAI shall notify
SYNOVICS, in
writing, of the proposed change and SYNOVICS shall have thirty (30)
days in
which to submit to FAI its comments regarding the proposed change.
FAI shall
implement any comments received from SYNOVICS
11
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
during such thirty (30) day period prior to completing the proposed
change(s).
(ii) SYNOVICS INITIATED CHANGES. If SYNOVICS
requests that FAI make a change in the Specifications,
configuration, packaging
or manufacturing processes for any Products to be supplied to
SYNOVICS
hereunder, FAI shall complete such change within thirty (30) days
of receipt of
such change.
(iii) REGULATORY APPROVAL. SYNOVICS will be
responsible for applying for and obtaining any Regulatory Approval
that may be
necessary as a result of the proposed change(s) described in
SECTIONS 7.2(b)(i)
or 7.2(b)(ii) above for its manufacture and supply of the Products
to SYNOVICS.
(iv) COSTS. FAI shall be solely responsible for
the costs incurred by FAI or its subcontractors in connection with
activities
undertaken by FAI or its subcontractors in implementing the
proposed change(s)
described in SECTION 7.2(a)(i) AND (ii) above. SYNOVICS shall be
solely
responsible for the reimbursement of costs to FAI or its
subcontractors in
connection with activities undertaken by FAI or its subcontractors
in
implementing the proposed change(s) described in Section 7.2
(b)(ii) above.
(c) SAFETY STOCK. SYNOVICS will include in its forecasts
made pursuant to SECTION 7.3 below and, to the extent available
from FAI, will
purchase a sufficient quantity of the Product from FAI to maintain
in SYNOVICS's
inventory a minimum of that amount of Product that is equal to the
lesser of (i)
[*] of the quarterly average amount of Products ordered by SYNOVICS
during the
preceding four (4) Calendar Quarters or (ii) [*].
7.3 FORECASTS.
(a) LONG TERM FORECASTS. During the Supply Term, SYNOVICS
shall provide FAI with a rolling, good faith, non-binding forecast
(by Calendar
Quarter) of the quantity of each Products expected to be purchased,
in the next
year following the date of such forecast (with the first calendar
year being the
date on which such forecast is due), by SYNOVICS for the use in the
development
and manufacture of the Products. The first such forecast shall be
submitted in
writing to FAI no later than June 30, 2008 and thereafter updated
forecasts
shall be submitted to FAI no later than January 1 of each year.
(b) DETAILED BINDING FORECASTS. During the Supply Term,
SYNOVICS shall deliver to FAI a detailed rolling forecast setting
forth
SYNOVICS's requirements and anticipated delivery schedules for the
Product for
each Calendar Quarter during the succeeding twelve (12) month
period (the
"DETAILED FORECAST"). The Detailed Forecast shall thereafter be
updated by
SYNOVICS quarterly, no later than the first day of each Calendar
Quarter, so
that each Calendar Quarter FAI shall have been provided with a
rolling Detailed
Forecast for each Calendar Quarter during the twelve (12) month
period
12
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
commencing on the first day of the next Calendar Quarter following
the date on
which such Detailed Forecast is submitted. The Detailed Forecast
shall be firm
and binding on SYNOVICS, subject to the permissible variances set
forth in
SECTION 7.3(c) below. If SYNOVICS fails to provide any updated
Detailed Forecast
in accordance with this SECTION 7.3(b), the Detailed Forecast last
provided by
SYNOVICS shall be deemed to be SYNOVICS's binding Detailed Forecast
for the next
succeeding twelve (12) month period.
(c) DETAILED FORECAST VARIANCES. Each updated Detailed
Forecast may modify the amount of the quantity of a Products
estimated in the
previous Detailed Forecast in accordance with the following
limitations:
(i) for the first Calendar Quarter covered by
such updated Detailed Forecast, [*];
(ii) for the second Calendar Quarter covered by
such updated Detailed Forecast, [*];
(iii) for the third Calendar Quarter covered by
such updated Detailed Forecast, [*]; and
(iv) for the fourth Calendar Quarter covered by
such updated Detailed Forecast, [*].
7.4 ORDERS AND DELIVERY.
(a) PURCHASE ORDERS. From time to time, SYNOVICS shall
place purchase orders with FAI, in a format agreed upon by the
Parties,
specifying the quantities (which shall be consistent with the terms
of SECTION
7.3) of each Product desired, and the place(s) to which and the
manner and dates
by which delivery is to be made; such delivery dates to be no
earlier than
ninety (90) calendar days (or such shorter period of time as the
Parties may
mutually agree upon in writing) after the date on which FAI
receives such
purchase order from SYNOVICS. Without prior written approval of
FAI, SYNOVICS
shall not submit more than one purchase order for delivery of any
Products
during any one (1) calendar month and shall specify no more than a
single
delivery date during any one (1) calendar month. All purchase
orders shall be
sent by SYNOVICS to the attention of the following employee of FAI
or as
otherwise instructed by FAI:
Thomas E. Tappen, Vice President
Fluid Air, Inc. doing business as PharmPro
2550 White Oak Circle
Aurora, IL 60502
Facsimile No.: 630-851-1244
Email: tet@fluidairinc.com
13
* Portions of this exhibit have been omitted and filed separately
pursuant to an
application for confidential treatment filed with the Securities
and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as
amended.
<PAGE>
To the extent the terms of any purchase order or acknowledgment
thereof are
inconsistent with the terms of this Agreement, the terms of this
Agreement shall
control. FAI will provide an acknowledgment of any purchase order
within five
(5) business days. If at any time FAI has reason to expect it will
be unable to
comply with any purchase order, it shall immediately inform
SYNOVICS of such
expectation and reasons. If any ordered shipment of a Product has
not arrived
more than thirty (30) days later than the scheduled delivery date,
SYNOVICS may,
as its sole and exclusive remedy, at its option cancel that
particular
corresponding purchase order, or adjust future Detailed Forecasts
(only to the
extent necessary to account for the quantity not delivered).
(b) DELIVERY. FAI shall deliver to SYNOVICS or SYNOVICS's
designee each order of the Product, packed in SYNOVICS supplied
bulk shipping
containers in accordance with FAI's or its subcontractor's
customary practices
and the Specifications, EXW (Incoterms 2000) FAI's or its
subcontractor's
production point or storage facilities. SYNOVICS shall be solely
responsible for
all shipping and transportation costs and duties incurred in and
arranging for
any customs clearances that may be neces
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