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MANUFACTURE, LICENSE AND DISTRIBUTION AGREEMENT

Manufacturing Agreement

MANUFACTURE, LICENSE AND DISTRIBUTION AGREEMENT | Document Parties: SCOLR PHARMA, INC. | PERRIGO COMPANY OF SOUTH CAROLINA, INC. You are currently viewing:
This Manufacturing Agreement involves

SCOLR PHARMA, INC. | PERRIGO COMPANY OF SOUTH CAROLINA, INC.

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Title: MANUFACTURE, LICENSE AND DISTRIBUTION AGREEMENT
Governing Law: Delaware     Date: 3/23/2006
Law Firm: DLA Piper    

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Exhibit 10.33

 


MANUFACTURE, LICENSE AND DISTRIBUTION AGREEMENT

BY AND BETWEEN

PERRIGO COMPANY OF SOUTH CAROLINA, INC.

AND

SCOLR PHARMA, INC.

October 20, 2005

 


Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Page

1.

 

DEFINITIONS.

  

1

 

 

 

2.

 

LICENSE.

  

4

 

 

 

 

 

 

2.1

 

Grant of License.

  

4

 

 

2.2

 

Exclusivity.

  

5

 

 

2.3

 

CDT Improvements.

  

6

 

 

2.4

 

Documentation and Information.

  

7

 

 

2.5

 

Use of Trademark.

  

8

 

 

2.6

 

Sell-Through Period.

  

8

 

 

 

3.

 

ROYALTY.

  

8

 

 

 

 

 

 

3.1

 

Computation and Payment.

  

8

 

 

3.2

 

Inspection of Books and Records.

  

9

 

 

3.3

 

Resolution of Royalty Dispute.

  

9

 

 

3.4

 

Step-Down of Royalty Obligation.

  

9

 

 

 

4.

 

TERM.

  

10

 

 

 

5.

 

ADDITIONAL PRODUCTS.

  

10

 

 

 

 

 

 

5.1

 

Perrigo Right to Add to this Agreement Additional Dietary Supplement Products Using CDT Rights.

  

10

 

 

5.2

 

Initiated by Perrigo.

  

11

 

 

 

6.

 

TECHNICAL ASSISTANCE.

  

11

 

 

 

7.

 

REPRESENTATIONS AND WARRANTIES.

  

11

 

 

 

 

 

 

7.1

 

Representations and Warranties by SCOLR Pharma.

  

11

 

 

7.2

 

Representations and Warranties by Perrigo.

  

13

 

 

7.3

 

Disclaimers.

  

14

 

 

 

8.

 

INFRINGEMENT OF CDT RIGHTS BY THIRD PARTIES.

  

14

 

 

 

9.

 

INDEMNIFICATION; INSURANCE.

  

15

 

 

 

 

 

 

9.1

 

SCOLR Pharma’s Indemnification Obligations.

  

15

 

 

9.2

 

Perrigo’s Indemnification Obligations.

  

15

 

 

9.3

 

Indemnification Procedures.

  

15

 

 

9.4

 

Insurance.

  

16

 

 

 

10.

 

TERMINATION.

  

16

 

 

 

 

 

 

10.1

 

Termination for Material Breach.

  

16

 

 

10.2

 

Termination for Bankruptcy.

  

16

 

 

 

11.

 

CONFIDENTIALITY.

  

17

 

 

 

12.

 

FORCE MAJEURE.

  

17

 

 

 

 

 

 

12.1

 

Effects of Force Majeure.

  

17

 

 

12.2

 

Notice of Force Majeure.

  

17

 

 

 

13.

 

MISCELLANEOUS.

  

18

 

 

 

 

 

 

13.1

 

Publicity.

  

18

 

 

13.2

 

Independent Contractors.

  

18

 

 

13.3

 

Assignment.

  

18

 

 

13.4

 

Governing Law.

  

19

 

 

13.5

 

No Implied Waiver.

  

19

 

 

13.6

 

Notices.

  

19

 

 

13.7

 

Amendments.

  

20

 

 

13.8

 

Counterparts.

  

20

 

 

13.9

 

Entire Agreement.

  

20

 

 

13.10

 

Benefit; Binding Effect.

  

20

 

 

13.11

 

Further Assurances.

  

21

 

 

13.12

 

Severability.

  

21

 

 

13.13

 

Headings.

  

21

 

 

13.14

 

Remedies.

  

21

 

 

13.15

 

Construction.

  

21

 

 

13.16

 

Attorneys’ Fees.

  

22

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendices:

  

 

 

 

 

 

 

Appendix A – List of Trademarks

  

 

 

 

Appendix B – List of Patents and Patent Applications

  

 

 

 

Appendix C – List of Products

  

 

 

 

Appendix D – Exceptions to Exclusivity

  

 

 

- ii -


MANUFACTURE, LICENSE AND DISTRIBUTION AGREEMENT

THIS LICENSE AGREEMENT (this “ Agreement ”), is entered into as of October 20, 2005, by and between Perrigo Company of South Carolina, Inc., a Michigan corporation, with offices at 515 Eastern Avenue, Allegan, Michigan 49010 (“ Perrigo ”), and SCOLR Pharma, Inc. , a Delaware corporation, with offices at 3625 132nd Avenue SE, Suite 300, Bellevue, Washington 98006 (together with its Affiliates, collectively, “ SCOLR Pharma ”).

Background

A. SCOLR Pharma is a specialty pharmaceutical company that uses its proprietary drug delivery technology to develop and formulate pharmaceutical and nutritional products. SCOLR Pharma has developed dietary supplement products that use its patented controlled delivery technology with certain of those products presently being manufactured and distributed in the United States by third parties.

B. Perrigo develops, manufactures, markets, distributes and sells nutritional and dietary supplement products.

C. This Agreement sets forth the terms and conditions by which SCOLR Pharma will license its patented controlled delivery technology and associated CDT trademark to Perrigo for the manufacture, marketing, distribution, sale, and use of specific dietary supplement products in the United States, SCOLR Pharma will transition to Perrigo the manufacture, marketing, distribution and sale of certain existing dietary supplement products that use SCOLR Pharma’s controlled delivery technology, and SCOLR Pharma will develop for Perrigo additional dietary supplement products that use SCOLR Pharma’s controlled delivery technology.

Agreement

In consideration of the premises and of the mutual covenants and agreements set forth in this Agreement, the Parties agree as follows:

1. DEFINITIONS . In addition to any other definitions appearing in this Agreement, the following words and phrases will, for purposes of this Agreement, have the following meanings (with any word or phrase referred to in the singular to include the plural and vice versa as the context requires):

“Affiliate” means, with respect to any Person, any other Person controlled by, controlling or under common control with such Person, where control means more than fifty percent (50%) ownership or voting rights or the power to direct management or policy.

 

- 1 -


“CDT Know-HoDDw” means all confidential, technical, or proprietary information and knowledge not generally known to the public (including information and knowledge regarding inventions, discoveries, techniques, systems, methods and processes of any type, technical data, drawings, designs, manufacturing and other information), whether or not patentable and whether or not in written form, that SCOLR Pharma owns or possesses and that relates directly or indirectly to (a) any Patent Right or any product, process or other matter covered by any Patent Right, or (b) the design, development, manufacture, testing, use or sale of any Product, but not including the Patent Rights.

“CDT Improvements” means all inventions, discoveries, techniques, systems, methods, processes, improvements, developments, enhancements and modifications (whether or not patentable, commercially useful, or reducible to writing or practice) that SCOLR Pharma, solely or jointly with others, acquires, discovers, invents, originates, makes, develops, conceives or has rights to, in whole or in party, after the Effective Date, to the extent applicable to the Products, including (a) any such invention or other item the practice of which would fall within the scope of a claim of any Patent Right, any CDT Know-How, any of the Other Rights, or any Product; and (b) any such invention or other item which may be competitive with operations or applications within the scope of any claim any Patent Rights, any CDT Know-How, any of the Other Rights, or any Product.

“CDT Rights” means the Patent Rights, the CDT Know-How, the Other Rights, and the CDT Improvements.

“Contract Year” of a particular Product means the twelve (12) month period beginning on the date of the First Commercial Sale of that Product to its customers and each twelve (12) month period thereafter beginning on the anniversary of such date.

“Dietary Supplements” means “dietary supplements” as defined in the Dietary Supplement Health and Education Act of 1994.

“Effective Date” means the date of this Agreement.

“First Commercial Sale” means the first date on which Perrigo or a sublicensee transfers title, rights to use or other rights in or to a Product to a third party for monetary or other consideration or in a manner which otherwise results in Net Profits.

“including” or any word or phrase of similar meaning means “including, without limitation,” unless the context requires otherwise or unless otherwise specified.

“Net Profits” [***]

[***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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[***]

“Net Sales ” for a particular Product, means, for any period of calculation, the total amount invoiced by Perrigo during that period to its customers for that Product (or received by Perrigo in the absence of an applicable invoice) less the sum of all overbills, excise, sales and other taxes imposed upon the sale of that Product (to the extent invoiced by Perrigo, but not taxes imposed on the income generated from such sales), price protections, rebates, charge backs, cash discounts, promotional allowances, off-invoice and bill back allowances, volume rebates and allowances, freight, shipping and insurance costs (to the extent such freight, shipping or insurance costs are invoiced by Perrigo), and all other deductions, discounts, refunds, credits and allowances paid or accrued during the period, including cash discounts, refunds and credits for pricing errors, and Product returns, rejections and recalls, all to the extent attributable to that Product and all as determined in accordance with generally accepted accounting principles (in the U.S.) consistently applied.

“Other Rights” means (a) the trademarks identified in Appendix A attached to this Agreement; (b) any other trademark or service mark that is owned by SCOLR Pharma as of the Effective Date and that relates directly or indirectly to any Patent Right, any CDT Know-How or any Product; (c) any other Proprietary Right that is owned by SCOLR Pharma as of the Effective Date (other than the Patent Rights and the CDT Know-How) and that relates directly or indirectly to any Patent Rights, any CDT Know-How, or any Product, (d) any Proprietary Right that is developed or acquired by SCOLR Pharma on or after the Effective Date (other than any such right that becomes part of the Patent Rights, CDT Know-How, or the CDT Improvements) and that relates directly or indirectly to any Patent Right, any CDT Know-How, any CDT Improvement or any Product; and (e) all goodwill of SCOLR Pharma associated with the foregoing.

“Party” when referring to the parties to this Agreement means SCOLR Pharma or Perrigo or both of them, as appropriate.

“Patent Rights” means all rights to (a) the patents and patent applications identified in Appendix B attached to this Agreement, (b) any other United States patent or patent application that is owned by SCOLR Pharma as of the Effective Date and that relates directly or indirectly to any CDT Know-How, any Product, or the design, development, manufacture, testing or use of any Product; and (c) any United States patent or patent application that is filed or acquired by SCOLR Pharma on or after the Effective Date and that relates directly or indirectly to any CDT Know-How, any CDT Improvements, any Product, or the design, development, manufacture, testing or use of any Product.

[***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

- 3 -


“Perrigo Fiscal Year” means a 52 or 53 week fiscal year of Perrigo ending on the Saturday closest to June 30.

“Person” means any individual, corporation, partnership or other entity.

“Product” means any of the Dietary Supplement products listed on Appendix C attached to this Agreement that use the CDT Rights or any additional Dietary Supplement product using CDT Rights that is added to this Agreement in accordance with the provisions of this Agreement. Products shall not include any product which is not a Dietary Supplement.

“Profit Margin” of a particular Product means, for any particular period of calculation, the quotient resulting from the division of the Net Profits of that Product for that period by the Net Sales of that Product for that period, multiplied by 100 and expressed as a percentage.

“Project Plan” means the plan described in Section 2.2(b) below.

“Proprietary Right” means any patent application, patent, trademark, trade name, service mark, trade secret, copyright or other intellectual property right.

“Quarter” means a Perrigo Fiscal year quarter consisting of thirteen (13) weeks ending on a Saturday.

“Sales and Marketing Costs” for a particular Product means, for any applicable period of calculation, the amount equal to [***] of the Net Sales of that Product during that period.

“Term” has the meaning set forth in Section 4 .

“U.S.” means the United States of America and all its territories, dependencies and possessions.

2. LICENSE.

2.1 Grant of License. SCOLR Pharma grants to Perrigo during the Term of this Agreement as to each particular Product the right and license to practice and use the CDT Rights in the manufacture, marketing, distribution, sale and use of the Products in the U.S., including the right to manufacture or have manufactured, market, distribute and sell to third parties. Perrigo shall have the right to sublicense the foregoing rights to third parties, in a single tier only, to the extent reasonably necessary to supplement the manufacturing and distribution capabilities of Perrigo, subject to the prior approval of SCOLR Pharma, which shall not be unreasonably withheld.

[***] Certain information on this page has been omitted and files separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

- 4 -


2.2 Exclusivity .

(a) Except as set forth in this Section 2.2 , the rights and license granted to Perrigo in Section 2.1 are exclusive to Perrigo, and SCOLR Pharma accordingly shall have no right (i) to practice or use or license others to practice or use any of the CDT Rights for the purpose of manufacturing, marketing, distributing, selling or using any Product in the U.S., or (ii) to manufacture, have manufactured, market, distribute, sell or use any Product in the U.S. Such exclusivity shall not, however, apply with respect to: (i) the exceptions set forth on Appendix D , or (ii) use of Products by consumers.

(b) Such right and license granted to Perrigo will, at the option of SCOLR Pharma exercisable by written notice to Perrigo, become nonexclusive on a prospective basis for a particular Product (but remain exclusive for all other Products) if either

[***]

(ii) the Profit Margin of that Product for any Contract Year for that Product, beginning with the second Contract Year for that Product, is less than [***].

For purposes of this Agreement, and subject to any additional or conflicting provisions in the Project Plan, (x) separate classes of trade include [***]. SCOLR Pharma shall not, however, have the right to convert Perrigo’s license with respect to a particular Product from exclusive to nonexclusive if any of the events described in subparts (i) or (ii) above occurs as a result of SCOLR Pharma’s breach or default in performing or complying with any covenant or obligation required to be

[***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

- 5 -


performed or observed by SCOLR Pharma in this Agreement or a Force Majeure Event. If Perrigo encounters any difficulties in the development or manufacture of a Product that Perrigo believes will prevent it from commencing distribution of a Product in at least two (2) classes of trade within six (6) months after Perrigo distribution is scheduled to commence pursuant to the written Project Plan developed by the Parties for that Product, Perrigo will notify SCOLR Pharma and keep SCOLR Pharma reasonably informed of Perrigo’s efforts to resolve such difficulties. Each Project Plan will require Perrigo to use reasonable commercial efforts to market and distribute the Product consistent with its business practice for similar products. The Parties acknowledge acceptance and agreement of a Project Plan for Glucosamine/Chondroitin. If the Parties have failed to agree upon a Project Plan for any other Product within sixty (60) days following the Effective Date (or, for Products added to this Agreement following the Effective Date, within thirty (30) days following the date of such addition), either Party may thereafter terminate this Agreement with respect to such Product upon written notice to the other Party provided that the Parties have not agreed upon a Project Plan for such Product before such written notice of termination is given.

(c) If the rights and license granted to Perrigo becomes nonexclusive with respect to a Product as provided in this Section 2.2 , then SCOLR Pharma shall promptly notify Perrigo of and extend to Perrigo the benefit of any terms that SCOLR Pharma may include in a subsequent license entered into during the one year period following the date upon which the rights became nonexclusive, of any CDT Rights with respect to that Product with any other Person that are more favorable to the licensee than the terms of this Agreement. SCOLR Pharma shall permit an independent certified public accounting firm selected by Perrigo and reasonably acceptable to SCOLR Pharma to review, at Perrigo’s expense, the relevant books and records of SCOLR Pharma to verify SCOLR Pharma’s compliance with this Section 2.2(c) , provided that such firm shall execute a confidentiality agreement in a form reasonably acceptable to SCOLR Pharma.

2.3 CDT Improvements .

(a) SCOLR Pharma shall disclose and communicate to Perrigo in writing, as soon as reasonably practical, any material CDT Improvement acquired, discovered, invented, originated, made or conceived on or after the Effective Date, and, at Perrigo’s request, shall provide Perrigo with all documentation and other information in whatever form stored (written, electronic or otherwise) that is necessary or desirable to enable Perrigo to practice and use such CDT Improvement in connection with the manufacture, marketing, sale, distribution or use of any Product. All CDT Improvements shall automatically be included, on a royalty-free basis and without additional consideration, within the scope of the license granted pursuant to this Agreement.

(b) Notwithstanding Section 2.3(a) , SCOLR shall have no obligation to develop CDT Improvements or apply such CDT Improvements to the Products. If, however, during the Term of this Agreement as to a particular Product, SCOLR Pharma desires to apply a material CDT Improvement to any Dietary Supplement that is or would be

 

- 6 -


competitive with such Product (a “Competitive Dietary Supplement” ), then before SCOLR Pharma enters into any arrangement with any Person that involves the application of that CDT Improvement to a Competitive Dietary Supplement, or engages in any discussions with any Person concerning any such arrangement, or SCOLR Pharma itself undertakes to apply that CDT Improvement to a Competitive Dietary Supplement, SCOLR Pharma (i) shall promptly notify Perrigo in writing of such CDT Improvement, the Competitive Dietary Supplement, and the particular Product or Products with which the Competitive Dietary Supplement would compete and provide Perrigo with any information concerning such CDT Improvement that Perrigo may reasonably request, and (b) shall give Perrigo a period of thirty (30) days (or such longer period mutually agreed upon by the Parties in writing) after Perrigo’s receipt of such notice and requested information to determine whether Perrigo is interested in discussing entering into an arrangement with SCOLR Pharma for the application of that CDT Improvement to one or more such Products. If Perrigo notifies SCOLR Pharma in writing before the expiration of such thirty (30) day period that Perrigo is interested in discussing that opportunity with SCOLR Pharma, then a new period of thirty (30) days (or such longer period as the Parties may mutually agree in writing) will start on the date of Perrigo’s notice to SCOLR Pharma to allow Perrigo and SCOLR Pharma to discuss the possibility of a mutually acceptable agreement between them for the application of that CDT Improvement to one or more such Products and during that additional thirty (30) day (or agreed upon longer) period, SCOLR Pharma will continue to refrain from entering into any arrangement with any Person that involves the application of that CDT Improvement to a Competitive Dietary Supplement, and from engaging in any discussions with any Person concerning any such arrangement, and from itself undertaking to apply that CDT Improvement to a Competitive Dietary Supplement. If Perrigo does not notify SCOLR Pharma in writing before the expiration of the first thirty (30) day (or agreed upon longer) period described above that Perrigo is interested in discussing with SCOLR Pharma the possibility of entering into an agreement for the application of that CDT Improvement to one or more such Products or if Perrigo provides such notice to SCOLR Pharma but at the end of the second thirty (30) day (or agreed upon longer) period described above Perrigo and SCOLR Pharma are not able to successfully conclude negotiations of such an agreement, then SCOLR Pharma shall be free to enter into an arrangement with any other Person that involves the application of such CDT Improvement to such Competitive Dietary Supplements.

2.4 Documentation and Information . As soon as practical after the execution of this Agreement, but in any event within ten (10) days thereafter, or, in the case of any Product added to this Agreement pursuant to Section 5.1 or Section 5.2 , when such Product is added to this Agreement, SCOLR Pharma shall provide Perrigo with copies of all documentation containing the CDT Know-How and Other Rights and all patent applications included in the Patent Rights and all other information reasonably requested by Perrigo regarding the practice and use of the CDT Rights in connection with the manufacture, marketing, sale, distribution or use of any Product, including documentation and information sufficient to enable Perrigo to manufacture the Products and to practice and use the CDT Rights in connection with the manufacture, marketing, sale, distribution, or use of any Product.

 

- 7 -


2.5 Use of Trademark . To the extent allowed by law, Perrigo agrees to prominently display the CDT Controlled Delivery Technology trademark on the principal display panel of Perrigo’s packaging of the Product that it markets and sells where appropriate and permitted by Perrigo’s particular customer. Perrigo shall comply at all times with SCOLR Pharma’s applicable trademark usage guidelines.

2.6 Sell-Through Period . The rights and license granted to Perrigo in Section 2.1 shall continue on a non-exclusive basis for a period of twelve (12) months after any expiration or termination of this Agreement with respect to a Product other than a termination by SCOLR Pharma pursuant to Section 10.1 by reason of a material breach or default by Perrigo, in order for Perrigo to sell through its existing inventory and related packaging materials of such Product or Products and to provide for an orderly transition for its customers.

3. ROYALTY .

3.1 Computation and Payment . Commencing on the date of Perrigo’s First Commercial Sale of a Product and continuing thereafter during the Term of this Agreement as to that Product, Perrigo will pay SCOLR Pharma in the manner described below a royalty on Perrigo’s sales of that Product in the amount equal to [***] of Perrigo’s Net Profits of the Product. Within thirty (30) days after the end of each Quarter (or an initial partial Quarter) during this period, (a) Perrigo will furnish SCOLR Pharma with a report stating for each Product the amount of Perrigo’s Net Sales for such Quarter (including the number of tablets sold for each Product and the customers to whom the tablets were sold), the Net Profits for such Quarter, and the royalty for such Quarter, together with such other information as SCOLR Pharma may reasonably request, and (b) except as set forth below in this Section 3.1 , Perrigo will pay SCOLR Pharma the royalty for that Quarter as reflected in the report. If the date of the First Commercial Sale of a Product by Perrigo is later than the first day of a Quarter, then the period covered by the first report and the first royalty payment for that Product will begin on the date of the First Commercial Sale of that Product by Perrigo and will end on the last day of the first complete Quarter following the date of the First Commercial Sale of that Product by Perrigo. The Parties shall share equally in the manner described below the risk of and the loss resulting from any amount that Perrigo invoices to its customers for any Product becoming uncollectible and being written off by Perrigo. Perrigo will notify SCOLR Pharma when Perrigo has any such write-offs, and Perrigo will recover SCOLR Pharma’s share of such write-offs by setting such amount off against and reducing the amount of royalty otherwise payable to SCOLR Pharma for that Quarter for that Product or any other Product, and if SCOLR Pharma’s share of such write-offs is not paid in full to Perrigo in this way during that Quarter, then such excess amount shall be carried forward to succeeding Quarters and set off against the amount of royalty otherwise payable to SCOLR Pharma for such Quarters. SCOLR Pharma shall not, however, have any obligation to repay Perrigo for any royalty previously paid as a result of such write-offs.

[***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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3.2 Inspection of Books and Records . During the one (1) year period following the close of each Perrigo Fiscal Year, but not more frequently than once per Perrigo Fiscal Year, Perrigo shall permit an independent certified public accounting firm selected by SCOLR Pharma, and reasonably acceptable to Perrigo, to have access, during normal business hours and upon reasonable prior notic


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