LICENSE, DEVELOPMENT, SUPPLY AND DISTRIBUTION AGREEMENT

Exhibit 10.61

EXECUTION COPY

 

LICENSE, DEVELOPMENT, SUPPLY AND DISTRIBUTION AGREEMENT

by and among

 

ALLERGAN SALES, LLC,

ALLERGAN USA, INC.,

ALLERGAN, INC.

and

SPECTRUM PHARMACEUTICALS, INC.

 

dated October 28, 2008

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Table of Contents

 

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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List of Schedules

Schedule 1.1 – Definitions

Exhibit A to Schedule 1.1 – Apaziquone

Exhibit B to Schedule 1.1 –  Example of Closed System Packaging

Exhibit C to Schedule 1.1 – TPP

Schedule 3.1(a) - Joint Development Plan

Schedule 3.1(c) - Key Development Personnel

Schedule 3.2 (f)(i) - List of Subcontractors

Schedule 3.2(f)(ii) - Hospitals and Institutions that are clinical trial sites

Schedule 3.3(b) - Spectrum Manufacturing Agreements

Schedule 3.3(d) - Specifications

Schedule 3.4(a) - Co-Promotion Agreement

Section 3.4(b)(i) - Initial Joint Marketing Plan

Schedule 6.4(a) - Example of Royalties

Schedule 7.1 - Trademark Assignment Agreement, including Exhibit A

Schedule 11.2(e) - Disclosures

Schedule 11.5(c) - Trademark and Domain Name Applications and Registrations for the Acquired Trademarks

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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LICENSE, DEVELOPMENT, SUPPLY AND DISTRIBUTION AGREEMENT

This LICENSE, DEVELOPMENT, SUPPLY AND DISTRIBUTION AGREEMENT (this “ Agreement ”), entered into as of October 28, 2008 (the “ Effective Date ”), is made by and among Allergan Sales, LLC, a Delaware corporation with its principal place of business at 2525 Dupont Drive, Irvine, California 92612 (“ Allergan Sales ”), Allergan USA, Inc., a Delaware corporation with its principal place of business at 2525 Dupont Drive, Irvine, California 92612 (“ Allergan USA ”), Allergan, Inc., a Delaware corporation with its principal place of business at 2525 Dupont Drive, Irvine, California 92612 (“ Allergan, Inc. ” and, collectively with Allergan Sales and Allergan USA, “ Allergan ”) and Spectrum Pharmaceuticals, Inc. (“ Spectrum ”), a Delaware corporation with its principal place of business at 157 Technology Drive, Irvine, CA 92618. Allergan and Spectrum are collectively referred to herein as the “ Parties ” and individually as a “ Party ”.

RECITALS

WHEREAS, Spectrum has developed certain intellectual property relating to the use of Apaziquone for urological treatments and is conducting Phase 3 trials using the immediate intravesical instillation of Apaziquone for the treatment of bladder cancer;

WHEREAS, Allergan has substantial expertise in the research, development, manufacture, distribution, sales and marketing of urologic products, but does not currently market or manufacture a bladder cancer treatment;

WHEREAS, the Parties desire to collaborate in conducting development and related activities, marketing in certain territories, and selling of product(s) containing Apaziquone for certain indications in those territories all on the terms and conditions set forth herein, but it is not the intention of the Parties to undertake an employment, joint venture, partnership or other fiduciary relationship; and

WHEREAS, Allergan USA will be responsible for the Allergan sales and distribution of the products described herein and Allergan Sales will be responsible for the Allergan development and manufacturing obligations described herein.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE 1

DEFINITIONS; INTERPRETATION

1.1      Definitions . For the purposes of this Agreement, the capitalized terms used in this Agreement, and not otherwise defined when used, shall have the meanings specified in Schedule 1.1.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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1.2      Interpretation . This Agreement shall be governed by the following rules of construction, unless otherwise specified by the Agreement: (a) words of one gender shall be deemed to include words of other genders; (b) any reference to an Article, Section, Exhibit, clause, subclause, paragraph, subparagraph, Schedule or Recital is a reference to an Article, Section, Exhibit, clause, subclause, paragraph, subparagraph, Schedule or Recital of this Agreement; (c) any reference to any statute shall be construed as including all statutory provisions consolidating, amending or replacing such statute; (d) the terms “hereof,” “hereby,” “hereto,” “hereunder” and similar terms shall refer to this Agreement as a whole; (e) the word “including” and words of similar import mean “including, without limitation” and “including, but not limited to”; (f) the headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (g) this Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted; (h) all references to “dollars” or “$” refer to United States dollars; and (i) all references to “days” mean calendar days. In the event of any inconsistency between the terms of the Schedules and the terms of the main body of this Agreement, the terms of the main body of this Agreement shall prevail, except that in the event of any inconsistency between the terms of Schedule 1.1 and the terms of the main body of this Agreement, the terms of Schedule 1.1 shall prevail.

ARTICLE 2

LICENSES; DELIVERY

2.1      License to Allergan . Subject to the terms and conditions of this Agreement, Spectrum hereby grants to Allergan and its Affiliates the following rights and licenses:

(a)     an exclusive (even as to Spectrum, but subject to Section 2.2), irrevocable, right and license, under the Licensed Intellectual Property, with the right to grant sublicenses (subject to Section 2.3), to make, have made, use, conduct clinical trials for, sell, offer for sale, have sold, import, export, or otherwise exploit the Licensed Product in the Allergan Territory; provided , however , that Allergan shall not make, have made, use, conduct clinical trials for, sell, offer for sale, have sold, import, export, or otherwise exploit the Licensed Product, under the Licensed Intellectual Property, outside the Field of Use in the Allergan Territory without Spectrum’s consent;

(b)     a non-exclusive, irrevocable, royalty-free right and license, under the Licensed Intellectual Property, with the right to grant sublicenses, to manufacture and have manufactured the Licensed Product in the Spectrum Territory solely for use or sale of such Licensed Product pursuant to Section 2.1(a); and

(c)     a non-exclusive, irrevocable, royalty-free right and license, with the right to grant sublicenses, to use, perform, modify, create derivative works of, copy, display, reproduce and distribute any and all Documents on or relating to the Licensed Product for the purpose of

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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exercising the rights granted in Section 2.1(a).

2.2      Degree of Exclusivity . The license granted in Section 2.1(a) is exclusive. As used herein, “exclusive” shall mean that Spectrum may not:

(a)     grant any other license to any other licensee of the Licensed Intellectual Property within the scope of the license granted to Allergan under Section 2.1(a), in whole or in part;

(b)     itself make, have made, use, conduct clinical trials for, sell, offer for sale, have sold, import, export, or otherwise exploit under the Licensed Intellectual Property within the scope of the license granted to Allergan under Section 2.1(a); and

(c)     assign, transfer or otherwise dispose of the Licensed Intellectual Property except as part of an assignment of the entire Agreement pursuant to Section 14.6.

Notwithstanding the foregoing, Spectrum shall:

(i)     have the right to perform its obligations set forth in this Agreement and the Co-Promotion Agreement;

(ii)    have the rights set forth in Section 2.5(b); and

(iii)   shall have the right, under the Licensed Intellectual Property, to manufacture and have manufactured any formulation including Apaziquone in the Allergan Territory solely for use or sale of such formulation including Apaziquone within the scope of Spectrum’s retained rights under Sections 2.4(a) and (b).

2.3      Allergan Sublicense Right . Allergan shall have the unrestricted right to grant sublicenses under the license in Section 2.1(a) in the Field of Use to its Affiliates without the prior written consent of Spectrum, and in the Field of Use to any other Third Parties: (a) with the prior written consent of Spectrum in the Co-Promotion Region during the term of the Co-Promotion Agreement; and (b) without the prior written consent of Spectrum in any other country or territory in the Allergan Territory. Allergan shall have the unrestricted right to subcontract any of its obligations hereunder which do not require the sublicenses described in Section 2.3(a) above.

2.4      Spectrum’s Retained Rights .

(a)     Spectrum retains the right under the Licensed Intellectual Property to develop and commercialize any formulation including Apaziquone in the Spectrum Territory. Provided that Spectrum is not in material breach of the terms of this Agreement, on written request by Spectrum, Allergan agrees to negotiate in good faith for a reasonable period the terms of a commercially reasonable royalty-bearing license under the Allergan Solely Developed Know How and Allergan’s rights under the Joint Intellectual Property for Spectrum to develop and commercialize any formulation including Apaziquone in the Spectrum Territory.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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(b)     Spectrum retains the right under the Licensed Intellectual Property to develop and commercialize any formulation including Apaziquone that is not a Licensed Product in the Allergan Territory. Provided that Spectrum is not in material breach of the terms of this Agreement, on written request by Spectrum, Allergan agrees to negotiate in good faith for a reasonable period the terms of a commercially reasonable royalty-bearing license under the Allergan Solely Developed Know How and Allergan’s rights under the Joint Intellectual Property for Spectrum to develop and commercialize any formulation including Apaziquone that is not a Licensed Product in the Allergan Territory.

(c)     If the Parties cannot agree on the royalty rate and scope of the license grant terms of such commercially reasonable royalty-bearing licenses (in Section 2.4 (a) or (b), or in Section 2.5(b)(iii)(A) or Section 13.2(c)(i)) within a reasonable period of time, either Party may initiate, and the Parties shall jointly submit to, binding arbitration in California, and the sole issues to be submitted to arbitration shall be the royalty rate and scope of the license grant. Upon conclusion of such arbitration, the Parties agree to effect the arbitrator’s order which shall be binding.

2.5      Spectrum Additional Limitations .

(a)     Spectrum will not conduct clinical trials in the Field of Use with any formulation including Apaziquone in the Allergan Territory, other than for the Licensed Product in the Field of Use under this Agreement.

(b)     If Spectrum desires to develop or commercialize any Licensed Product for use outside the Field of Use in the Allergan Territory the following shall apply:

(i)     prior to Spectrum initiating any clinical trial using a Licensed Product for use outside the Field of Use in the Allergan Territory (such as ****), Spectrum will notify Allergan in writing (the “ Option Notice ”) detailing such proposed use and will provide Allergan with any data (including Spectrum’s then current development plan and budget) then possessed by Spectrum on such Licensed Product for such use in such indication (such Licensed Product for such use in such indication is the “ Option Product ”);

(ii)    Allergan may, at its option, choose to co-develop and co-promote such Option Product with Spectrum by delivering to Spectrum written notice within ninety (90) days after receipt of the Option Notice. If Allergan elects to co-develop and/or co-promote such Option Product with Spectrum, the Parties shall negotiate in good faith a written agreement (the “ Option Product Agreement ”) covering the following:

(A)     the terms for development and/or commercialization of such Option Product;

(B)     a committee structure for the oversight of the development, marketing and commercialization of the Option Product, with similar decision-making rules as those in effect under this Agreement; and

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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(C)     cross licenses under the Allergan Solely Developed Know How, Licensed Intellectual Property and Allergan’s rights in the Joint Intellectual Property to develop and commercialize such Option Product under similar terms to those set forth in this Agreement.

(iii)    If Allergan chooses not to co-develop and co-promote such Option Product with Spectrum (as indicated by Allergan’s delivery of written notice to Spectrum rejecting such rights, or failure to make an affirmative election within ninety (90) days after receipt of the Option Notice), or the Parties fail to enter into an Option Product Agreement, then Spectrum will have the right to pursue the development and commercialization of such Option Product for the scope described to Allergan in the Option Notice on its own and at its own expense (by itself or with a Third Party, subject to Section 2.5(b)(iv)), and the following will apply:

(A)     Allergan agrees to negotiate in good faith for a reasonable period the terms of a commercially reasonable royalty-bearing license under the Allergan Solely Developed Know How and Allergan’s rights under the Joint Intellectual Property for Spectrum to develop and commercialize the Option Product for use outside the Field of Use in the Allergan Territory (any disagreement shall be subject to binding arbitration pursuant to the terms of Section 2.4(c));

(B)     Spectrum shall not use any Trademark that is the same as, or similar to (so as to cause confusion in consumers), the Acquired Trademarks or any other Trademark used by Allergan or its Affiliates in Spectrum’s development or commercialization of the Option Product;

(C)     Spectrum will package the Option Product in a manner that will not be confused with the Licensed Product in the Field of Use, and will label such Option Product as “not for bladder cancer treatment”; and

(D)     Spectrum will not promote, market, sell or distribute such Option Product for use in the Field of Use in the Allergan Territory, and will use diligent efforts to prevent and curb any use of such Option Product in the Field of Use in the Allergan Territory, including meeting the requirements set forth in Sections 2.7(a) and (d).

(iv)     If Allergan opts out of developing and/or commercializing an Option Product under subsection (iii) or the Parties fail to enter into an Option Product Agreement, and Spectrum or any of its Affiliates desires to commence development or commercialization of such Option Product with a Third Party (excluding any Affiliate of Spectrum) (“ Proposed Transaction ”), then the following shall apply:

(A)     the terms of the Proposed Transaction under which Spectrum (or its Affiliate) contracts with such Third Party may not be more favorable to such

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Third Party, taken as a whole, than the terms applicable to Allergan last offered to Spectrum by Allergan; and

(B)     if Spectrum (or its Affiliate) does not execute a definitive agreement for the Proposed Transaction with a Third Party within nine (9) months following the date that Allergan opts out under subsection (iii) or the Parties’ terminated negotiation of an Option Product Agreement, then Spectrum (or its Affiliate) shall be obligated to comply with this Section 2.5(b) again prior to entering into a Proposed Transaction with a Third Party (i.e., Spectrum (or its Affiliate) shall deliver a new Option Notice under Section 2.5(b)(i) and update its data delivery, and recommence the option process with Allergan).

For clarity, if Allergan opts out of developing and/or commercializing an Option Product under subsection (iii) or fails to make an affirmative election within ninety (90) days after the receipt of an Option Notice, or the Parties fail to enter into an Option Product Agreement, then Spectrum may then commence a clinical trial of the Option Product for use outside the Field of Use. Spectrum acknowledges and agrees that neither it nor its Affiliates will use this process to circumvent the intent of this Section 2.5(b).

2.6      Additional Restrictions .

(a)     For the period commencing on the Effective Date and ending **** after the First Commercial Sale of a Licensed Product in the Field of Use in the Allergan Territory, Allergan will not develop or commercialize any formulation including Apaziquone, except as a Licensed Product in the Field of Use, without Spectrum’s written consent. It shall not be a breach of this subsection to the extent that: (A) there is a Change in Control of Allergan and the acquirer of Allergan’s stock or other securities or all or substantially all of the assets or any integral part of any Allergan, at the time of acquisition, is developing or commercializing itself or through its Affiliates any formulation that includes Apaziquone outside the Field of Use; or (B) Allergan directly or indirectly, including through an Affiliate, acquires or purchases the stock or other securities or all or substantially all of the assets or any integral part of any Third Party which at the time of acquisition is developing or commercializing itself or through its Affiliates any formulation that includes Apaziquone outside the Field of Use.

(b)     Except for Spectrum’s performance obligations hereunder, for the period commencing on the Effective Date and ending on the earlier of (i) an Allergan Trigger Date (hereinafter defined), or (ii) **** after the First Commercial Sale of a Licensed Product in the Field of Use in the Allergan Territory, Spectrum and its Affiliates shall not, by license or otherwise, research, develop, make, use, market, sell, distribute or otherwise commercialize any Antineoplastic (hereinafter defined) in the Field of Use in the Allergan Territory. It shall not be a breach of this subsection to the extent that: (A) there is a Change in Control of Spectrum and the acquirer of Spectrum’s stock or other securities or all or substantially all of the assets or any integral part of Spectrum, at the time of acquisition, is developing or commercializing itself or through its Affiliates an Antineoplastic in the Field of Use in the Allergan Territory; or (B)

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Spectrum directly or indirectly, including through an Affiliate, acquires or purchases the stock or other securities or all or substantially all of the assets or any integral part of any Third Party which at the time of acquisition is developing or commercializing itself or through its Affiliates any Antineoplastic in the Field of Use in the Allergan Territory.

(c)     Except for the Licensed Product, for the period commencing on the Effective Date and ending on the earlier of (i) a Spectrum Trigger Date (hereinafter defined), or (ii) **** after the First Commercial Sale of a Licensed Product in the Field of Use in the Allergan Territory, Allergan and its Affiliates shall not, by license or otherwise, research, develop, make, use, market, sell, distribute or otherwise commercialize any Antineoplastic in the Field of Use in the Allergan Territory. It shall not be a breach of this subsection to the extent that: (A) there is a Change in Control of Allergan and the acquirer of Allergan’s stock or other securities or all or substantially all of the assets or any integral part of Allergan, at the time of acquisition is developing or commercializing itself or through its Affiliates an Antineoplastic in the Field of Use in the Allergan Territory; or (B) Allergan directly or indirectly, including through an Affiliate, acquires or purchases the stock or other securities or all or substantially all of the assets or any integral part of any Third Party which at the time of acquisition is developing or commercializing itself or through its Affiliates any Antineoplastic in the Field of Use in the Allergan Territory.

(d)     If the foregoing restrictions in subsections (b) and (c) are held by a court of competent jurisdiction to be unenforceable, the restriction shall be automatically converted into a covenant under which the applicable Party shall have the right of first negotiation to license the rights covered by the restrictions in subsection (b) and (c) prior to their use or disposal of such rights by the Party that would otherwise be in breach of subsection (b) or (c), upon commercially reasonable terms.

(e)     The following terms have the meanings set forth next to them when used in this Section 2.6:

(i)     “ Allergan Trigger Date ” means the date on which (A) there is a Change in Control of Allergan and the acquirer of Allergan’s stock or other securities or all or substantially all of the assets or any integral part of any Allergan, at the time of acquisition is developing or commercializing itself or through its Affiliates an Antineoplastic (except for a Licensed Product) in the Field of Use in the Allergan Territory, or (B) Allergan directly or indirectly, including through an Affiliate, acquires or purchases the stock or other securities or all or substantially all of the assets or any integral part of any Third Party which at the time of acquisition is developing or commercializing itself or through its Affiliates any Antineoplastic (except for a Licensed Product) in the Field of Use in the Allergan Territory.

(ii)    “ Antineoplastic ” means a chemotherapeutic agent that causes cell death via redox cycle or alkylation of DNA.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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(iii)    “ Spectrum Trigger Date ” means the date on which (A) there is a Change in Control of Spectrum and the acquirer of Spectrum’s stock or other securities or all or substantially all of the assets or any integral part of Spectrum, at the time of acquisition, is developing or commercializing itself or through its Affiliates an Antineoplastic in the Field of Use in the Allergan Territory, or (B) Spectrum directly or indirectly, including through an Affiliate, acquires or purchases the stock or other securities or all or substantially all of the assets or any integral part of any Third Party which at the time of acquisition is developing or commercializing itself or through its Affiliates any Antineoplastic in the Field of Use in the Allergan Territory.

2.7      Diversion .

(a)     Except pursuant to Section 2.5(b), Spectrum shall not sell the Licensed Product, including via the Internet or mail order, to any Third Party, address or Internet Protocol (“ IP ”) address in the Allergan Territory. If any of Spectrum’s product is diverted for use in the Field of Use in the Allergan Territory, the following shall apply: (i) if such product were diverted by an identifiable customer, distributor, employee, consultant or agent of Spectrum then, upon the request of Allergan, Spectrum shall not sell such category of product to, or allow the sale of such category of product by, any such customer, distributor, employee, consultant or agent for the remaining Term and shall use commercially reasonable efforts to buy back all such product from such customer, distributor, employee, consultant or agent within ten (10) business days of such request from Allergan; or (ii) Spectrum shall use commercially reasonable efforts to investigate the location of such diverted product and buy it back; but, if and to the extent that, Spectrum elects not to, or is unable to, buy back the applicable diverted product, then Allergan may, in its sole discretion, buy back the applicable diverted product and Spectrum shall reimburse Allergan for all reasonable costs incurred by Allergan in connection with the buy-back of any such diverted product.

(b)     Allergan shall not sell Licensed Product, including via the Internet or mail order, to any Third Party, address or IP address in the Spectrum Territory. If any of Allergan’s Licensed Product is diverted for sale in the Spectrum Territory, the following shall apply: (i) if such Licensed Product were diverted by an identifiable customer, distributor, employee, consultant or agent of Allergan then, upon the request of Spectrum, Allergan shall not sell Licensed Product to, or allow the sale of Licensed Product by, any such customer, distributor, employee, consultant or agent for the remaining Term and shall use commercially reasonable efforts to buy back all such Licensed Product from such customer, distributor, employee, consultant or agent within ten (10) business days of such request from Spectrum; or (ii) Allergan shall use commercially reasonable efforts to investigate the location of such diverted Licensed Product and buy it back; but, if and to the extent that, Allergan elects not to, or is unable to, buy back the applicable diverted Licensed Product, then Spectrum may, in its sole discretion, buy back the applicable diverted Licensed Product and Allergan shall reimburse Spectrum for all reasonable costs incurred by Spectrum in connection with the buy-back of any such diverted Licensed Product.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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(c)     The Parties acknowledge that, during the term of the Co-Promotion Agreement, the Parties have different financial arrangements in the Co-Promotion Region than in the Royalty Territory. During the term of the Co-Promotion Agreement, Allergan shall use substantially similar efforts to the efforts Allergan uses with other Allergan prescription products to monitor the sales of the Licensed Product in the Field of Use in the Royalty Territory in order to minimize the quantity of Licensed Product in the Field of Use that is sold in the Royalty Territory with a view to diversion for final sale in the Co-Promotion Region. The failure to stop such diversion shall not be deemed a material breach of this Agreement. During the term of the Co-Promotion Agreement, if there is any change in government policies in the Allergan Territory that materially affects the ability to move Licensed Product in the Field of Use from the Royalty Territory into the Co-Promotion Region, the Parties will meet to discuss in good faith the effect of such changes on diversion.

(d)     If any formulation containing Apaziquone sold by Spectrum, its Affiliates or sublicensees (the “ Spectrum Product ”) is used in the Field of Use in the Allergan Territory, Spectrum shall pay to Allergan royalties on the actual sales of such Spectrum Product resulting in such use at the rate of ****; provided , however , that, if, in any country in the Allergan Territory, the use of such Spectrum Product in the Field of Use accounts for **** or more of the use of any of Allergan’s Licensed Product in the Field of Use in such country, then Spectrum will pay to Allergan royalties on Spectrum’s Royalty-Bearing Net Sales of all such Spectrum Product sold in such country (regardless of the indication in which it is used) at the rate of ****.

2.8      Delivery Obligations of Spectrum . Spectrum shall promptly disclose, in writing, to Allergan all material Licensed Intellectual Property relevant to the license grants set forth herein that is developed, conceived or reduced to practice during the Term of this Agreement by Spectrum and its Affiliates, whether solely or jointly with Allergan, and shall make available to Allergan all Spectrum employees involved in the development of such Licensed Intellectual Property, during normal business hours, as may be reasonably requested by Allergan to assist Allergan in understanding such deliveries.

2.9      Delivery Obligations of Allergan . Upon agreement to the royalty-bearing licenses described in Sections 2.4, 2.5 and/or Section 13.2(c)(i), Allergan shall promptly disclose, in writing, to Spectrum all applicable material Allergan Solely Developed Know How and material Joint Intellectual Property licensed to Spectrum, and shall make available to Spectrum all Allergan employees involved in the development of such material Allergan Solely Developed Know How and material Joint Intellectual Property, during normal business hours, as may be reasonably requested by Spectrum to assist Spectrum in understanding such deliveries.

ARTICLE 3

DEVELOPMENT; SUPPLY; MARKETING

3.1      Development Obligations .

(a)     The Parties shall jointly develop the Licensed Product (which in final form will be

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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in Closed-System Packaging) for use in the Field of Use in accordance with Articles 3, 4 and 5. The Parties shall develop the Licensed Product (which in final form will be in Closed-System Packaging) for use in the Field of Use in the Co-Promotion Region and EU (and elsewhere in the Allergan Territory where the Parties mutually agree to co-fund the development) pursuant to the joint development plan that is attached as Schedule 3.1(a) (which is comprised of two documents, the work plan and budget) (the “ JDP ”) as may be modified by the Parties from time to time as set forth herein.

(b)     Obtaining the US Marketing Clearance and EU Marketing Clearance for the Licensed Product (which in final form will be in Closed-System Packaging) for use in the Field of Use is of the essence of this Agreement, and Spectrum shall develop the Licensed Product (which in final form will be in Closed System Packaging) for use in the Field of Use and seek US Marketing Clearance and EU Marketing Clearance for such Licensed Product pursuant to the terms of the JDP; provided , however , that Allergan shall cooperate with Spectrum and perform its obligations pursuant to the terms of the JDP.

(c)     Without limiting Allergan’s rights and remedies hereunder, Spectrum shall devote the resources necessary to conduct and complete the 611 Study, 612 Study, BCG Refractory Study and, as applicable, all other clinical trials described in Sections 3.2(b) and (c) using diligent efforts to meet the timetables set forth in the JDP. Without limiting the foregoing obligation, Spectrum agrees that, for as long as it has the responsibility to carry out the 611 Study, 612 Study and/or the BCG Refractory Study under the JDP: (i) it will use commercially reasonable efforts to retain each of the individuals specified in Schedule 3.1(c) to continue to perform services for Spectrum for the applicable term set forth in Schedule 3.1(c) , as either an employee or independent contractor (collectively the “ Key Development Personnel ”); and (ii) it will use commercially reasonable efforts to replace any Key Development Personnel who leave Spectrum during the applicable term set forth in Schedule 3.1(c) for any reason, with a person or persons of comparable skill and experience in the industry for such term. For purposes of clarity, Spectrum shall be able to cure any material breach of (i) above by complying with (ii) above. All Key Development Personnel shall allocate their time to performing development services under this Agreement in accordance with the JDP until the US Marketing Clearance and EU Marketing Clearance for Licensed Product in the Field of Use is received.

(d)     Spectrum shall, at its sole cost and expense (except as otherwise specified in Section 6.6), reasonably expand its development and clinical trial staff for performance of the services set forth in this Article 3 as set forth in the JDP.

3.2      Joint Development Plans .

(a)          Currently Contemplated Clinical Trials .

(i)     As of the Effective Date, the Parties have agreed upon the activities to be performed by each Party to carry out the 611 Study and 612 Study, and a budget for Development Costs relating thereto, as set forth in the JDP. The portions of the JDP

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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(including the work plan and budget) relating to the 611 Study and 612 Study are final and are hereinafter referred to as the “ 611 Study and 612 Study JDP ”. Spectrum shall perform the services necessary to continue to successfully conduct and complete the 611 Study and the 612 Study in compliance with the terms and conditions set forth in the 611 Study and 612 Study JDP using diligent efforts to meet the timetables set forth in the JDP. Spectrum shall continue to be named as the sponsor of the 611 Study and 612 Study.

(ii)    As of the Effective Date, the Parties have reached preliminary agreement upon the activities to be performed by each Party to carry out the BCG Refractory Study, and a budget for Development Costs relating thereto, as set forth in the JDP. The portions of the JDP relating to the BCG Refractory Study (including the work plan and budget) are in draft form and are hereinafter the “ BCG Refractory Study JDP ”. Such BCG Refractory Study JDP is subject to finalization pursuant to this Section. The Parties agree that the draft BCG Refractory Study JDP is subject to regulatory feedback from both the FDA and EMEA and feedback from Key Opinion Leaders selected by mutual agreement of the Parties. “ Key Opinion Leaders ” are specialists in the field recognized as leaders by their peers. The JDC shall consider the feedback from Key Opinion Leaders when determining whether the protocol for the BCG Refractory Study JDP requires modification. The Members (hereinafter defined) of the JDC for both Allergan and Spectrum will participate in all meetings with the Key Opinion Leaders relating to the BCG Refractory Study. The Parties may invite additional observers to such meetings, as set forth in Section 4.2(d). Spectrum shall promptly modify the study protocol (as agreed to by the Parties) for the BCG Refractory Study based on regulatory feedback from the FDA and EMEA and shall design and finalize a final protocol and study parameters for the BCG Refractory Study which meet the needs of the FDA and EMEA and are designed to achieve the TPP for the Licensed Product in the Field of Use. The Parties acknowledge that they may need to modify the TPP for the Licensed Product in the Field of Use as is reasonably required to meet FDA and EMEA approvals. Spectrum shall perform the services necessary to successfully conduct and complete the BCG Refractory Study in compliance with the terms and conditions set forth in the BCG Refractory Study JDP using diligent efforts to meet the timetables set forth in the JDP. Spectrum shall be named as the sponsor of the BCG Refractory Study.

(b)          Additional Clinical Trials for BCG Refractory Indication . If the EMEA requires additional clinical trials for the Licensed Product for the BCG Refractory Indication (other than modifications to the protocol for the BCG Refractory Study as described above), the Party who receives notice from the EMEA shall promptly provide such notice to the other Party. The Parties acknowledge that the conducting and completion of any such clinical trial(s) is of the essence of this Agreement. The Parties shall coordinate the clinical trial(s) pursuant to one of the following subsections:

(i)     if the Parties agree to work on such clinical trial together, the following shall apply: (A) within thirty (30) days of receipt of such notice, Spectrum shall submit to

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Allergan a proposed development plan (including protocol, timeline and budget); (B) Allergan and Spectrum shall work together in good faith in a timely manner to modify the development plan to reflect the Parties’ agreement on the clinical trial (including protocol, timeline and budget) consistent with the feedback from the EMEA; (C) once approved by the Parties, the JDP shall be modified to include such development plan, whereupon Spectrum shall be responsible for conducting the clinical trial, subject to Allergan’s right, in its sole discretion, to take control of and to conduct the clinical trial by providing written notice to Spectrum, and each Party shall perform their respective obligations for the clinical trial under the JDP; (D) Spectrum shall be the sponsor of the clinical trial unless Allergan exerts its right to take control of and conduct such clinical trial; and (E) the Development Costs incurred in such clinical trial shall be paid as set forth in Section 6.6, or, at Spectrum’s request, Allergan shall pay all of the Development Costs for such performance and shall receive a credit for such payments for Spectrum’s share (of 35%) of such costs from royalties and milestone payments due hereunder; or

(ii)    if the Parties cannot agree on the development plan as set forth in Section 3.2(b)(i)(B) above, then: (A) Allergan may unilaterally create the development plan for the clinical trial (including protocol, timeline and budget), consistent with the feedback from the EMEA; (B) on completion, the JDP shall be modified to include such development plan, whereupon Spectrum shall be responsible for conducting the clinical trial, subject to Allergan’s right, in its sole discretion, to take over the control of and to conduct the clinical trial by providing written notice to Spectrum, and each Party shall perform their respective obligations for the clinical trial under such JDP; (C) Allergan shall be the sponsor of the clinical trial; and (D) the Development Costs incurred in such clinical trial shall be paid as set forth in Section 6.6, or, at Spectrum’s request, Allergan shall pay all of the Development Costs for such performance and shall receive a credit for such payments for Spectrum’s share (of 35%) of such costs from royalties and milestone payments due hereunder.

(c)      Other Clinical Trials . As long as the Co-Promotion Agreement has not been terminated, any additional clinical trial for the Licensed Product in the Field of Use in the Co-Promotion Region (including Phase 3b trials and Phase 4 trials that the JMC (defined below) desires to conduct), other than those set forth above, shall, upon the mutual agreement by the Parties, be documented in a joint development plan (including protocol, timeline and budget) as a modification to the JDP, and shall be conducted by the Parties in accordance with the JDP. If Spectrum elects not to conduct such clinical trials or not to fund such clinical trials upfront, Allergan may still conduct such clinical trials, and the Development Costs incurred in such clinical trials shall be split evenly. At Spectrum’s request, Allergan shall pay all of the Development Costs for such performance and shall receive a credit for such payments for Spectrum’s share of such costs from royalties and milestone payments due hereunder. Allergan shall be the sponsor of all such clinical trials that Spectrum elects not to conduct. Any additional clinical trials outside the Co-Promotion Region shall be conducted and paid for by Allergan.

(d)      Additional Development Activities . Except for the 611 Study, 612 Study and

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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BCG Refractory Study, nothing in this Agreement shall prevent Allergan from developing and performing any clinical trials with respect to the Licensed Product in the Field of Use in the Allergan Territory unilaterally and at its own expense. If Allergan requests that Spectrum assist in such trials, and Spectrum agrees to do so and agrees to assist in funding such trials, the Parties shall amend the JDP to govern such trials and the Development Costs incurred in such clinical trials shall be paid as set forth in Section 6.6. Spectrum shall not conduct any development activities with respect to the Licensed Product in the Allergan Territory other than pursuant to this Article 3 or as permitted in Section 2.5(b).

(e)      Modifications to the JDP . The JDC (defined below) shall have the right to amend the JDP, except that the following modifications to the JDP must be agreed upon mutually by the Parties (any modified JDP shall be deemed incorporated herein by reference):

(i)     any change in the JDP that would result in an increase of the total development budget set forth in the JDP by more than ten percent (10%) as compared to the total development budget set forth in the JDP as of the Effective Date; provided , however , that if another BCG Refractory clinical trial is required under Section 3.2(b) or other clinical trials under Section 3.2(c), then the expenditure in connection therewith shall not be subject to the limitation of this Section 3.2(e) or applied against the ten percent (10%) allowance under this Section 3.2(e)(i);

(ii)    except for the clinical trials set forth in Section 3.2(a), (b) and (c), any new clinical trials for the Licensed Product in the Field of Use in the Allergan Territory for which Allergan wants Spectrum to conduct the clinical trials;

(iii)   any adjustment of the clinical trials specified above that have an adverse impact on the TPP relating to the Indications;

(iv)   any adjustment of the TPP (except in response to the FDA or EMEA) that would have a material impact on the clinical trials set forth above. Except as set forth in the preceding sentence, Spectrum acknowledges that Allergan has final approval rights on the TPP for the Licensed Product in the Field of Use, including over changes made in response to the FDA and EMEA;

(v)    any material changes to the percentage of Key Development Personnel time spent on development hereunder; and

(vi)   any changes to completion dates specified in the JDP.

(f)      Spectrum Subcontract Rights . Except for Clinical Trial Institutions (as defined below), Spectrum shall not subcontract any of its obligations under Sections 3.1 and 3.2 without the prior written consent of Allergan, such consent not to be unreasonably withheld, delayed or conditioned. In negotiating such subcontractor agreements, Spectrum will obtain the right to assign such subcontractor agreements to Allergan in the event Allergan assumes the responsibility for the development of the Licensed Product, and such agreements will provide

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Allergan with the same audit and inspection rights as those provided in Section 5.9. The Parties acknowledge that, as of the Effective Date, Spectrum has engaged for development purposes the subcontractors listed on Schedule 3.2(f)(i) , and Allergan hereby consents to Spectrum’s right to continue to use such subcontractors. If not already provided in the agreements with such subcontractors, Spectrum will use commercially reasonable efforts to amend such agreements so that Spectrum will have the right to assign such agreements to Allergan in the event Allergan assumes the responsibility for the development of the Licensed Product, and to provide Allergan with the same audit and inspection rights as those provided in Section 5.9. The subcontractors and their contracts as of the Effective Date are identified on Schedule 3.2(f)(i) , except for the hospitals or similar institutions operating as a site for clinical trials if they are not providing broader services such as collecting or managing data from other sites (the “ Clinical Trial Institutions ”). All Clinical Trial Institutions, as of the Effective Date, are identified on Schedule 3.2(f)(ii) . Spectrum shall update Schedules 3.2(f)(i) and 3.2(f)(ii) each Fiscal Quarter with the then-current development subcontractors.

3.3      Manufacturing Obligations .

(a)      Obligations . The Parties shall perform their respective obligations pertaining to manufacturing and supply set forth in the joint supply plan (“ JSP ”); provided , however , that Allergan shall have the right to take over Spectrum’s role under the JSP at any time with written notice to Spectrum. The initial JSP (for clinical trials supply and validation batches) forms part of the JDP attached as Schedule 3.1(a) . The Parties acknowledge that all modifications to the JSP must be agreed upon by the Parties, and that neither Party may unilaterally modify the JSP. Any modified JSP shall be deemed incorporated herein by reference. Subject to the terms and conditions of this Agreement, including the JSP, Spectrum agrees to have manufactured and supplied to Allergan all of Allergan’s requirements for the Licensed Product for clinical development under the terms of this Agreement. Spectrum agrees to have manufactured and supplied to Allergan all of Allergan’s requirements for the Licensed Product for commercial use pursuant to an amended JSP reflecting commercial supply and a mutually agreed upon supply agreement as contemplated by Section 3.3(d).

(b)      Subcontracting . Spectrum may meet its obligations to supply the Licensed Product to Allergan hereunder through subcontracts with Third Parties, subject to the following requirements:

(i)     Spectrum may not subcontract the performance of any services or sublicense any rights set forth in this Section 3.3 to any sublicensee/subcontractor without Allergan’s prior written permission. Allergan may, in its sole discretion, disapprove of any sublicensee/subcontractor; provided , however , that, Allergan hereby gives its written consent to the use of the following manufacturers as subcontractors pursuant to the terms of the contracts set forth on Schedule 3.3(b) (such contracts, the “ Spectrum Manufacturing Agreements ”). Within a reasonable time after the Effective Date, Spectrum will use commercially reasonable efforts to amend the Spectrum Manufacturing Agreements so that such agreements are assignable to Allergan (without

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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further consent of a Third Party), provide Allergan with the same audit and inspection rights as those set forth herein, ensure that the quality standards of such agreements are no less stringent than those determined by the JSC pursuant to Section 3.3(d) below, and ensure that such sublicensee/subcontractor complies with all applicable regulatory obligations and applicable Law;

(ii)    Spectrum will supervise each sublicensee/subcontractor’s performance of the services and compliance with the terms of this Agreement;

(iii)   All fees, costs, and other expenses relating to each sublicensee/subcontractor shall be deemed Development Costs as set forth in the JDP prior to the First Commercial Sale of the Licensed Product in the Field of Use, and after the First Commercial Sale of the Licensed Product in the Field of Use shall be set forth in the supply agreement, and both shall be calculated without any surcharge for any sublicensee/subcontractor fees;

(iv)   Spectrum must enter into a written agreement with each sublicensee/subcontractor engaged by Spectrum after the Effective Date obligating such sublicensee/subcontractor to comply with Spectrum’s obligations under the applicable terms of this Agreement, including the quality standards determined by the JSC pursuant to Section 3.3(d), and that the sublicensee/subcontractor will comply with all applicable regulatory obligations. Each such agreement shall be at least as protective of Allergan’s rights as the terms and conditions of this Agreement, and subordinate thereto. Spectrum shall require that Allergan be a third party beneficiary to each such agreement, and that all such agreements be assignable to Allergan. Spectrum shall provide Allergan with a copy of each executed agreement with each sublicensee/subcontractor permitted hereunder;

(v)    Spectrum will not retain (even if approved by Allergan) any sublicensee/subcontractor in any country where doing so would violate any applicable Laws, including due to embargoes or other restrictions;

(vi)   Spectrum acknowledges and agrees that, except and to the extent that Allergan assumes Spectrum’s manufacture obligations under Section 3.3(f), Allergan has no obligations under this Agreement to any such sublicensee/subcontractor and no sublicensee/subcontractor has any rights or remedies against Allergan hereunder (except where such agreements are assigned to Allergan hereunder); and

(vii)  Allergan has the right but not the obligation to directly pay the sublicensee/subcontractor for any manufacturing and supply services it performs on Spectrum’s behalf and to include the amount of such payment in the calculation of Development Costs under this Agreement prior to the First Commercial Sale of the Licensed Product in the Field of Use or as covered in the supply agreement after the First Commercial Sale of the Licensed Product in the Field of Use.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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(c)      Allergan Cooperation. Allergan acknowledges that Spectrum does not possess manufacturing facilities and that Spectrum’s ability to perform its obligations under this Section 3.3 depends on the timely engagement of manufacturing subcontractors which Spectrum is obligated to engage hereunder. Allergan agrees to cooperate with Spectrum in the establishment of a commercial supply chain for the Licensed Product in the Field of Use in the Allergan Territory and agrees not to unreasonably withhold, condition or delay its consent to the selection of subcontractors or the approval of contracts.

(d)      Specifications; Additional Terms . The current specifications for the drug substance, drug product and diluent of the Licensed Product (“ Specifications ”) are attached hereto as Schedule 3.3(d) . Subject to Section 4.6(b), Schedule 3.3(d) can only be amended by written agreement of the Parties. The Parties acknowledge that the Specifications will be updated and finalized by the Parties as part of the Regulatory Approval in the Co-Promotion Region and the EU. If and to the extent that Spectrum ships any Licensed Product to Allergan, each shipment shall be in accordance with Allergan’s written instructions and applicable Laws governing the shipment, labeling and packaging of such Licensed Product. Prior to the production of Licensed Product under this Agreement, the Joint Supply Committee shall determine the quality standards applicable to the manufacture of the Licensed Product. At least two (2) years prior to the Anticipated Approval Date, the Parties shall negotiate in good faith, and enter into, a separate written supply agreement which will provide for the manufacture and supply of the Licensed Product in the Field of Use on terms mutually acceptable to the Parties. The supply agreement between the Parties shall contain:

(i)     terms consistent with provisions customarily found in agreements for the manufacture and supply of commercial quantities of products of a similar nature, including provisions relating to timing and size of production orders, shipping, certificates on delivery, risk of loss, inspection and acceptance, timing of invoices and payments, failure to supply, remedies for breach of representations and warranties;

(ii)    the transfer price for all such Licensed Product, which shall be the actual cost of manufacturing, which shall include the actual charges from Third Parties for testing, packaging, freight, insurance and exporting the Licensed Product, but excluding any of Spectrum’s overhead or general and administrative costs;

(iii)   the representations and warranties set forth in Section 11.11 for the commercial supply of Licensed Product in the Field of Use (unless the Parties mutually agree to modify such provisions); and

(iv)   the indemnification and disclaimers and limitations on liability as set forth in Article 12 for the commercial supply of Licensed Product in the Field of Use (unless the Parties mutually agree to modify such provisions).

(e)      Supply Agreement Mediation. The Parties acknowledge that timely negotiation of a mutually-agreeable supply agreement will be critical to the ability to launch the Licensed

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Product. If at any time more than ninety (90) days after the commencement of negotiation of such agreement, either Party believes such negotiations have reached an impasse, such Party may by written notice to the other Party cause a meeting of the Vice President of Global Technical Operations of Allergan and the Chief Executive Officer of Spectrum to seek to resolve such impasse. Such meeting shall be held within twenty (20) days following such written notice. If, following such meeting of senior executives, either Party believes an impasse still exists, then such Party may by written notice cause the Parties to engage in a non-binding mediation of their differences over the proposed agreement. Unless the Parties otherwise agree at the time, such mediation, including the selection of the mediator, shall be conducted in accordance with the rules of the American Arbitration Association. The fees and costs of the mediator shall be borne equally by the Parties, regardless of the outcome of the mediation. If the Parties cannot agree through mediation to the terms of the supply agreement, then Spectrum will enable Allergan by assigning the Spectrum Manufacturing Agreements to Allergan in addition to transferring to Allergan the validated process for manufacturing and the other items set forth in subsection (f) below.

(f)      Right to Terminate . Allergan may terminate Spectrum’s responsibility to have manufactured and supplied Licensed Product to Allergan for sale in the Allergan Territory under this Agreement at any time with prior written notice. Such termination shall be effective thirty (30) days after delivery of the notice, or such later date, at Allergan’s sole discretion, as necessary to complete transition to another manufacturer or to Allergan. Termination of Spectrum’s manufacture and supply obligation shall not relieve the Parties of any amounts owing between them. On termination of Spectrum’s manufacture and supply obligation, Spectrum shall provide to Allergan a copy of all of the then-current Know How Controlled by Spectrum necessary or useful for the manufacture of the Licensed Product in the Field of Use, shall make its manufacturing personnel available for reasonable consultation with Allergan regarding the processes for Licensed Product manufacture, and shall provide all other technical transfers of all parts of the validated process for the Licensed Product in the Field of Use, including Documents and other regulatory items. Subject to the terms of the Spectrum Manufacturing Agreements, Spectrum shall assign to Allergan, and Allergan shall assume responsibility under, all of Spectrum’s supply subcontracts for the Licensed Product applicable to the Field of Use. The Parties shall negotiate in good faith the transition of Spectrum’s sourcing of Licensed Product from such Third Party (for example, bifurcating the supply agreement). After termination of Spectrum’s manufacturing and supply obligations as set forth herein, Allergan shall be responsible for all supply and manufacture of Licensed Product in the Field of Use in the Allergan Territory, including fulfilling such subcontract agreements from the applicable date of assignment. After Allergan terminates Spectrum’s manufacturing rights and responsibilities under this Section 3.3(f), to the extent that such rights and responsibilities are transferred to Allergan, Spectrum shall have no further performance obligation under this Section 3.3, and Allergan shall thereafter be responsible for compliance with the product quality representations set forth in Section 11.11 for Licensed Product manufactured for sale in the Co-Promotion Region, with any costs of non-compliance with such representations to be borne by Allergan and not included within allowable expenses.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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3.4      Commercialization Rights and Obligations .

(a)      Rights . Allergan shall have the sole right to commercialize the Licensed Product in the Field of Use in the Allergan Territory, except as set forth herein and in the co-promotion agreement (“ Co-Promotion Agreement ”) identical to the form attached as Schedule 3.4(a) and entered into by the Parties on the Effective Date. During the term of the Co-Promotion Agreement, the commercialization of the Licensed Product in the Field of Use in the Co-Promotion Region shall be the Parties’ joint right and responsibility and shall be subject to the oversight of the Joint Marketing Committee (“ JMC ”) and pursuant to the JMP as described in Section 3.4(b) below.

(b)      Co-Promotion Region; Joint Marketing Plan . The strategy for the commercialization of the Licensed Product in the Field of Use in the Co-Promotion Region during the term of the Co-Promotion Agreement shall be described in a comprehensive plan that describes the pre-launch, launch and subsequent commercialization activities (including advertising, education, planning, marketing, sales force training and allocation) (the “ Joint Marketing Plan ” or “ JMP ”), as follows:

(i)     An initial JMP setting forth the Parties’ agreement on the pre-launch commercial planning activities and the budgeting relating thereto for the Licensed Product in the Field of Use in the Co-Promotion Region, is attached to this Agreement as Schedule 3.4(b)(i) . At least twelve (12) months prior to the Anticipated Approval Date, the Parties shall finalize the portion of the initial JMP setting forth the launch activities for the Licensed Product in the Field of Use in the Co-Promotion Region and the budget relating thereto, and develop and finalize a follow-on JMP that governs the post-launch activities for the Licensed Product in the Field of Use in the Co-Promotion Region, as well as the budget relating thereto, and such JMP shall be subject to the approval of the JMC.

(ii)    Following the launch of the Licensed Product, on or before November 1 of each Fiscal Year during the Term of this Agreement, the Parties shall create an updated JMP detailing activities for the following Fiscal Year. The initial JMP and follow-on JMPs shall generally conform to the level of detail utilized by Allergan in preparation of its own product commercialization plans, with the overall objectives of maximizing the economic value of the Licensed Product in the Field of Use in the Co-Promotion Region and of providing Spectrum a meaningful role in the commercialization of the Licensed Product in the Field of Use in the Co-Promotion Region. The JMP shall be deemed Confidential Information of both Parties, and each Party shall use the JMP for the sole purpose of performing or monitoring commercialization activities for the Licensed Product in the Field of Use in the Co-Promotion Region. From time to time as reasonably necessary during the term of commercialization of the Licensed Product in the Field of Use in the Co-Promotion Region, the JMC may update the JMP.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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(iii)   During the term of the Co-Promotion Agreement, except as set forth in Section 6.14, all costs and expenses incurred by the Parties and specifically set forth in the JMP shall be deemed allowable expenses and included in the calculation of product profits and losses under the Co-Promotion Agreement.

(iv)   Notwithstanding anything to the contrary in this Agreement, or any provision granting final decision making authority to any Party on a particular matter under this Agreement, during the pre-launch phase any change in the initial JMP that would result in an increase of the total pre-launch budget for the Licensed Product in the Field of Use in the Co-Promotion Region by more than ten percent (10%) as compared to the total pre-launch budget for the Licensed Product in the Field of Use in the Co-Promotion Region set forth in the JMP as of the Effective Date, shall in each case be subject to the Parties’ mutual written agreement.

(c)      Performance Obligation .

(i)     Allergan shall file for Regulatory Approval for the Licensed Product for the Initial Indication in the Field of Use in the EU within **** of the date on which filings for Regulatory Approval for the Licensed Product for the Initial Indication in the Field of Use have been made in the Co-Promotion Region, provided , however , that the applicable clinical data is timely delivered to Allergan by Spectrum. No such failure is a material breach of this Agreement. If Allergan fails to do so, then, upon Spectrum’s written request, Allergan and Spectrum shall meet to discuss future activities relating to the Licensed Product for the Initial Indication in the Field of Use in the EU.

(ii)    Allergan shall use efforts consistent with the efforts used by Allergan to launch other Allergan prescription products to launch the Licensed Product in the Field of Use (A) in the Co-Promotion Region within **** after the date on which Regulatory Approval for the Licensed Product in the Field of Use has been obtained in the Co-Promotion Region; and (B) in the EU (an EU launch being defined as a launch in at least two (2) of the major countries which are members of the EU) within **** after the date on which Regulatory Approval for the Licensed Product in the Field of Use has been obtained in such countries, provided , however , that such **** periods of time shall be tolled by any periods of time in which the Regulatory Approval in the respective territory has been revoked or such launches are delayed for reasons beyond the reasonable control of Allergan.

(iii)   If Allergan materially breaches Section 3.4(c)(ii), Spectrum may terminate Allergan’s license to Licensed Product in the affected territory (either the Co-Promotion Region and/or the EU, as the case may be) with written notice to Allergan within thirty (30) days of the applicable failure, and in such cases Allergan shall cooperate in the transfer to Spectrum of the Licensed Product rights in such territory(ies). Such transfer of product rights shall be effected by means of removing the U.S. and/or the EU (as the case may be) from the Allergan Territory and adding it to the Spectrum Territory, and

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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otherwise proceeding with respect to such transferred territory as if there had been a termination by will by Allergan under Section 13.2.

(d)      Additional Performance Obligations .

(i)     Each Party shall conduct its activities under the JMP and this Agreement in compliance in all material respects with all applicable Laws (including the Foreign Corrupt Practices Act of 1977, as amended, and laws applicable to the sale and promotion of pharmaceutical products) and in accordance with the following provisions:

(A)     as between the Parties, Allergan shall be responsible for receiving and filling orders, controlling invoicing, collecting payments, returns, charge-backs and rebates on sales of the Licensed Product in the Field of Use in the Allergan Territory, and shall have sole control over distribution of the Licensed Product in the Field of Use in the Allergan Territory, in each case including the Licensed Product under co-promotion by the Parties in the Field of Use in the Co-Promotion Region. If Spectrum receives any order for the Licensed Product for the Field of Use in the Allergan Territory, it shall promptly refer such orders to Allergan. If Allergan receives any order for the Licensed Product for sale in the Spectrum Territory, it shall promptly refer such orders to Spectrum; and

(B)     each Party shall regularly update the JMC regarding the progress and results of all commercialization activities for the Licensed Product in the Field of Use. Once each Fiscal Year, during the term of the Co-Promotion Agreement, the Parties shall meet by phone or in person to discuss the commercialization plans and strategies of both Parties relating to the Licensed Product in the Field of Use in the Allergan Territory; provided , however , that the Parties shall not share competitively sensitive information (such as pricing or business plans) for their own products that are not the Licensed Product in the Field of Use.

ARTICLE 4

COMMITTEES

4.1      Generally . The Parties shall form three (3) committees, as described in this Article 4, to assist in the overseeing of, and making recommendations and decisions for, the development, regulatory approvals, supply, marketing and commercialization of the Licensed Product in the Field of Use in the Allergan Territory. The committees may exist simultaneously, and may be dissolved over time, as their functions are completed. None of the committees shall have any power to amend this Agreement or bind or incur liability on behalf of either Party without both Parties’ express prior written authorization. Each Party shall comply with the decisions of the applicable committee, to the extent such decisions fall within the applicable committee’s role and their delineated powers and responsibilities, except in areas where such Party has sole responsibility for performance as set forth herein.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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4.2      Governance of Each Committee . Each committee described in this Article 4 shall be comprised of four (4) voting members (each a “ Member ”). Each Party shall have the right to appoint two (2) Members to each committee (each a “ Member Designee ”). The following shall apply to each committee and their Members:

(a)     each Party may remove any of its Member Designees for any reason at any time upon written notice to the other Party, and a replacement may be appointed by such Party to fill such vacancy;

(b)     each committee shall meet at least once each Fiscal Quarter and as otherwise agreed upon by the Parties;

(c)     the presence of at least one (1) Spectrum Member Designee and one (1) Allergan Member Designee for that committee shall be required to constitute a quorum at any meeting of such committee. No business shall be transacted at any meeting of a committee unless a quorum of such committee’s Members is present at the time when the meeting proceeds to business;

(d)     in addition to Member Designees, each Party shall have the right to invite observers to each meeting by providing the other Party with advance written notice of such observer(s); provided , however , that such observer(s) may not attend such meeting if the other Party reasonably objects to the requesting Party’s observer(s) prior to such meeting. Such observers shall not have any voting rights and shall be bound by written obligations of confidentiality and non-use, either by virtue of his/her employment by such Party or by a separate written agreement;

(e)     meetings of each committee shall alternate between the offices of Spectrum and Allergan in Irvine, California. At their election, the Parties may conduct any meeting of the committees by telephone;

(f)      action items and resolutions of the committee meetings shall be kept, reviewed and approved by the applicable committee Member Designees;

(g)     decisions of each committee shall be made by unanimous agreement of the applicable committee’s Members, with each Party’s Member Designees having collectively one (1) vote, subject to Section 4.6; and

(h)     each committee shall continue to exist until the first to occur of: (i) the Parties mutually agreeing to disband the committee; or (ii) a Party providing to the other Party written notice of its intention to disband and no longer participate in such committee. Once a Party has provided the other Party written notice as referred to in subsection (ii) above, such committee shall have no further obligations under this Agreement and the receiving Party shall have the right to solely decide, without consultation, any matters previously before such committee, without affecting either Party’s obligations hereunder.

4.3      Joint Development Committee . Within ten (10) days of the Effective Date, the

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Parties shall establish a Joint Development Committee (“ JDC ”). The JDC’s sole role shall be to assist in the overseeing of and in the making decisions for the development of, clinical trials for, and preparation and submission of regulatory documentation for obtaining Regulatory Approval for the Licensed Product in the Field of Use for the Co-Promotion Region, EU and any other country in the Allergan Territory where each Party contributes to the funding of development/regulatory matters (“ JDC Role ”). In performing the JDC Role, the powers and responsibilities of the JDC are limited to the matters set forth in this Section 4.3. The JDC shall coordinate with the respective Party to meet its responsibilities hereunder. The JDC shall be responsible for overseeing and making decisions regarding:

(a)        clinical activities and clinical and registration strategy including clinical trial designs and registration plans to support the TPP for the Licensed Product in the Field of Use;

(b)        clinical data go/no-go decisions through the development and registration process;

(c)        pre-clinical and clinical development of Licensed Product in the Field of Use; and

(d)        other development of the Licensed Product in the Field of Use.

4.4         Joint Supply Committee .  Within ten (10) days of the Effective Date, the Parties shall establish a Joint Supply Committee (“ JSC ”). The JSC’s sole role shall be to assist in the overseeing of and in the making decisions for the manufacture and supply of Licensed Product in the Field of Use, and monitoring continuing compliance with all regulatory requirements for the manufacturing of the Licensed Product after receipt of the Regulatory Approval for the Licensed Product in the EU and Co-Promotion Region (“ JSC Role ”). In performing the JSC Role, the powers and responsibilities of the JSC are limited to the matters set forth in this Section 4.4. The JSC shall coordinate with the respective Party to meet its responsibilities hereunder. The JSC shall be responsible for overseeing and making decisions regarding:

(a)        the Chemistry, Manufacturing, and Control (“ CMC ”) processes required in developing the Licensed Product in the Field of Use;

(b)        the clinical drug supply to meet requirements of the JDP;

(c)        developing a robust and validated supply process for both drug substance and Licensed Product in the Field of Use;

(d)        ensuring final drug substance and Licensed Product in the Field of Use meet FDA and EMEA standards;

(e)        ensuring the required reports, data, and other CMC information included in the US Marketing Clearances filings and EU Marketing Clearances filings meet standards expected for final regulatory approval and the timelines set forth in the JSP and the JDP;

(f)        ensuring a validated process for drug substance and drug manufacturing with

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Allergan or Spectrum’s Third Party commercial supplier(s) and the supply forecast meets the anticipated demand. The JMP sets forth the pre-launch and pre-market marketing activities, as may be amended pursuant to the Co-Promotion Agreement; and

(g)        ensuring the final packaging configurations for Licensed Product in the Field of Use for commercial launch in the Co-Promotion Region and the EU is the Closed-System Packaging configuration.

4.5         Joint Marketing Committee .  Within ten (10) days of the Effective Date, the Parties shall form a JMC to assist in recommendations and decision-making for the pre-marketing and commercialization planning of the Licensed Product in the Field of Use in the Co-Promotion Region. The JMC’s sole role shall be to assist in the overseeing of and in the making decisions for the marketing, promotion, calling and detailing of Licensed Product in the Field of Use within the Co-Promotion Region (“ JMC Role ”). In performing the JMC Role, the powers and responsibilities of the JMC are limited to the matters set forth in this Section 4.5. The JMC shall coordinate with the respective Party to meet its responsibilities hereunder. The JMC shall be dissolved automatically on termination of the Co-Promotion Agreement. The JMC shall be responsible for overseeing and making decisions regarding:

(a)        assisting the JDC in the prioritization of Phase IV trials of the Licensed Product in the Field of Use;

(b)        overseeing marketing activities for the Licensed Product in the Field of Use in the Co-Promotion Region and making decisions regarding the promotion plan for pre-launch, launch and post-launch activities in the Co-Promotion Region;

(c)        developing a calling plan, including an allocation of sales force efforts by Spectrum and Allergan in the Co-Promotion Region and also including the development of primary detail equivalent targets for each Party;

(d)        reviewing the overall performance and effectiveness of the marketing groups and sales force and the actual results of the promotion of the Licensed Product in the Field of Use in the Co-Promotion Region;

(e)        reviewing and making other decisions related to pre-launch, launch and post-launch marketing activities of the Licensed Product in the Field of Use in the Co-Promotion Region as they may arise; and

(f)        updating the JMP on a quarterly basis, including updating the JMP with the timeline and forecast for the Licensed Product in the Field of Use when the primary market information for the Co-Promotion Region is complete and upon filing for the Initial Indication.

4.6         Escalation Procedure .  In the event that a committee cannot agree on matters falling within the scope of its JDC Role, JSC Role, or JMC Role, as applicable, and its powers and responsibilities as set forth in Sections 4.3, 4.4 and 4.5, respectively, (whether due to failure

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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to agree or failure to have a quorum present at a designated meeting time), then the Chief Executive Officer of Spectrum (or a designee thereof) shall meet with the Executive Vice President, Research & Development of Allergan (or a designee thereof for research and development matters) or the Corporate Vice President for Global Strategic Marketing (or a designee thereof for commercial matters) at an agreed location or by telephone to resolve the disagreement within twenty (20) days of the meeting at which such disagreement occurred. If such officers of the Parties (or their designees) are unable to resolve the disagreement within an additional thirty (30) day period then:

(a)        in the case of a dispute of the JDC, Spectrum shall have final approval rights over the matter at dispute and shall promptly provide written notice to Allergan of its reasonable final position regarding the matter at issue; provided , however , that Allergan shall have final approval rights over the clinical trials, and the portions of the JDP related thereto, covered by Sections 3.2(b), (c) and (d), and the regulatory filings and negotiations as described in Sections 5.1(a)(iii) and (v), and the Parties shall mutually agree on the JDP amendments described in Section 3.2(e). The Parties shall comply with the position taken by the Party with final approval rights on such issue. Notwithstanding the foregoing, if (i) ****, (ii) the Co-Promotion Agreement is terminated (other than by Spectrum opting out of it as permitted therein), or (iii) the Co-Promotion Agreement terminates by reason of Spectrum’s decision to opt out under such agreement and the 611 Study, 612 Study and BCG Refractory Study have been concluded, then the Parties shall comply with the position taken by Allergan on such issue (including over the items in Section 3.2(e)(iii),(iv), and (vi));

(b)        In the case of a dispute of the JSC, Spectrum shall have final approval rights over the matter at dispute and shall promptly provide written notice to Allergan of its reasonable final position regarding the matter at issue. The Parties shall comply with the position taken by Spectrum on such issue. Notwithstanding the foregoing, if ****, or if Allergan terminates its supply agreement with Spectrum pursuant to Section 3.3(f), the Parties shall comply with the position taken by Allergan on such issue (including over the items in Section 3.2(e) (iii), (iv), and (vi)). Notwithstanding Allergan’s final approval rights set forth in the preceding sentence, Spectrum shall have the final decision making authority as to the manufacturing process for the Final Licensed Product, the CMC section for the Final Licensed Product, the formulation of the Final Licensed Product, and the design of the Closed-System Packaging (as long as all such items are in compliance with the JSP, Specifications, Closed-System Packaging and the TPP for the Licensed Product in the Field of Use as of the Effective Date);

(c)        in the case of a dispute of the JMC, Allergan shall have final approval rights over the matter at dispute and shall promptly provide written notice to Spectrum of its reasonable final position regarding the matter at issue. The Parties shall comply with the position taken by Allergan on such issue; and

(d)        in the event the provisions of this Article 4 do not provide, and the Parties cannot agree on, which of the JDC, JSC and JMC has control over an item for resolution, Allergan shall have final approval over which committee controls or whether such item falls within the scope of

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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any committee; provided , however , such authorization does not alter the approval rights set forth in subsections (a), (b) and (c) or allow Allergan to modify the responsibilities of each committee as set forth in Sections 4.3, 4.4 and 4.5.

ARTICLE 5

REGULATORY MATTERS

5.1      Obligations of the Parties Relating to Regulatory Submissions .

(a)      Co-Promotion Region .  The following terms shall apply for the period commencing on the Effective Date and ending on the earlier of (i) the occurrence of a Development Trigger or Change in Control Trigger that results in Allergan delivering notice under Section 10.1(c) or 10.2(a), and (ii) termination of this Agreement:

(i)     Spectrum shall own all regulatory filings relating to the Licensed Product in the Field of Use in the Co-Promotion Region;

(ii)    Spectrum hereby appoints Allergan as its exclusive (even as to Spectrum) authorized agent for all regulatory activities relating to the Licensed Product in the Field of Use in the Co-Promotion Region, including filing, obtaining and maintaining Regulatory Approvals and authorizations, except for Spectrum’s role in preparing regulatory submissions expressly set forth in this Section 5.1(a). In order to perfect the foregoing appointment, Spectrum irrevocably appoints Allergan as Spectrum’s attorney in fact for the purpose of acting as authorized agent, including executing documents. Allergan shall be the sole point of contact with regulatory agencies in the Co-Promotion Region in all matters relating to the Licensed Product in the Field of Use both before and after any Licensed Product in the Field of Use receives Regulatory Approval for sales;

(iii)   Spectrum shall prepare all regulatory submissions relating to the Licensed Product in the Field of Use in the Co-Promotion Region in the eCTD format. Spectrum shall provide Allergan with draft copies of all submissions to regulatory agencies for Allergan’s feedback, including a draft copy of each module of the eCTD form as each module is being created and the completed modules. In addition, Spectrum shall provide to Allergan copies of all final submissions to regulatory agencies which relate to the Licensed Product in the Field of Use in the Co-Promotion Region reasonably in advance of the applicable filing deadline. If Allergan has not filed such filings with the applicable regulatory agencies by the applicable filing deadline, then Spectrum may send such final submissions to the relevant regulatory agency with prior written notice to Allergan;

(iv)   Each Party shall provide the other Party with copies of any correspondence received from regulatory agencies relating to the Licensed Product in the Field of Use in the Co-Promotion Region within ten (10) days of receipt, and shall provide the other Party with written notice of any other contact by regulatory agencies

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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relating to the Licensed Product in the Field of Use in the Co-Promotion Region within ten (10) days of such contact;

(v)   Allergan shall conduct all negotiations with regulatory agencies in the Co-Promotion Region relating to the Licensed Product in the Field of Use, and shall determine and have final decision making on all regulatory negotiations in the Co-Promotion Region relating to the Licensed Product in the Field of Use, provided that Allergan shall use commercially reasonable efforts to schedule such negotiations or any other meetings or teleconferences with regulatory agencies to allow Spectrum to participate. Allergan shall provide copies of all materials relating thereto to Spectrum and shall advise Spectrum of, and Spectrum may provide input relating to, all planned regulatory activities and exchanges with regulatory authorities for Licensed Product in the Field of Use within the Co-Promotion Region. Both Parties shall participate in all planned meetings and conference calls with regulatory agencies relating to the Licensed Product in the Field of Use in the Co-Promotion Region. If either Party is unable to participate in such a meeting or conference call, then the other Party shall provide a written summary of the discussion within thirty (30) days;

(vi)   The regulatory filing fees in the Co-Promotion Region shall be deemed Development Costs and shared by the Parties pursuant to Section 6.6; and

(vii)  Allergan shall not be responsible or liable for any Spectrum taxes assessed by a Government Authority as a result of Allergan’s appointment and actions under Section 5.1.

(b)      Royalty Territory .

(i)     Allergan shall own all regulatory filings relating to the Licensed Product in the Field of Use in the Royalty Territory;

(ii)    Except to the extent set forth in Section 3.4(c), Allergan shall have the responsibility but not the obligation, at its sole expense and with the reasonable assistance of Spectrum, for all regulatory activities relating to the Licensed Product in the Field of Use within the Royalty Territory, including preparing, obtaining and maintaining Regulatory Approvals and authorizations. Allergan shall determine, in its sole discretion, the content of all such submissions and of all correspondence with regulatory agencies relating to such Licensed Product in the Field of Use; and

(iii)   The regulatory filing fees for the Licensed Product in the Field of Use for the Royalty Territory shall be borne solely by Allergan.

(c)      NCE Exclusivity . Each Party shall deliver written notice to the other Party of any ANDA or other foreign equivalent filings it receives for generic equivalents or competitors to the Licensed Product in the Field of Use in the Allergan Territory within ten (10) days of receipt or notice of such filings. The Parties shall have the rights to respond to each such ANDA or other

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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foreign equivalent filings pursuant to the procedures set forth in Section 8.3(c).

5.2      Information Sharing .  This Section 5.2 shall not apply to any pharmacovigilance data (which is addressed in Section 5.5). Each Party shall provide the other Party with copies of all final submissions and correspondence to and from all regulatory agencies relating to the Licensed Product in the Field of Use within ten (10) days of submission or receipt, as applicable. Each Party shall permit the other Party to access, and shall provide the other Party with rights to reference and use in association with the Licensed Product in the Field of Use, all of its, its Affiliates’, and its or their sublicensees’ regulatory, preclinical and clinical data documentation, regulatory filings, and Regulatory Approvals with respect to the Licensed Product in the Field of Use. A Party shall be entitled to provide such data to its Affiliates and sublicensees pursuant to Section 9.1.

5.3      Remedial Actions .  Each Party will notify the other Party immediately, and promptly confirm such notice in writing, if it obtains information indicating that any Licensed Product in the Field of Use may be subject to a Remedial Action. A “ Remedial Action ” is any recall, corrective action or other regulatory action taken by virtue of applicable Law. The Parties will assist each other in gathering and evaluating such information as is required to determine the necessity of conducting a Remedial Action with respect to a Licensed Product in the Field of Use; provided, however, that Allergan shall have sole responsibility for collecting information from its customers in the Allergan Territory, including customer complaints. Each Party will maintain adequate records to permit the Parties to trace the manufacture of the Licensed Product in the Field of Use and the distribution and use of the Licensed Product in the Field of Use. In the event Allergan determines that any Remedial Action with respect to the Licensed Product in the Field of Use in the Allergan Territory should be commenced or Remedial Action is required by any Governmental Authority having jurisdiction over the matter, Allergan will control and coordinate all efforts necessary to conduct such Remedial Action. In the event that (a) Spectrum determines that any Remedial Action with respect to the Licensed Product outside the Field of Use in the Allergan Territory or Licensed Product in the Spectrum Territory should be commenced, or (b) Remedial Action is required by any Governmental Authority having jurisdiction over the matter, Spectrum will control and coordinate all efforts necessary to conduct such Remedial Action.

5.4      Costs Of Remedial Action .  The cost and expense of a Remedial Action (including the Parties’ reasonable costs and expenses in conducting such Remedial Action, but excluding Third Party Claims, which are addressed in Article 12) shall be allocated as follows:

(a)     if and to the extent that such Remedial Action is due to (i) Allergan’s gross negligence or willful misconduct, (ii) Allergan’s material breach of this Agreement, or (iii) Allergan’s material breach of or substantial noncompliance with any Law, but only to the extent such Remedial Action is due to the foregoing (i) – (iii), such costs and expenses shall be borne and paid by Allergan;

(b)     if and to the extent that such Remedial Action is due to (i) Spectrum’s gross

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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negligence or willful misconduct, (ii) Spectrum’s material breach of this Agreement, or (iii) Spectrum’s material breach of or substantial noncompliance with any Law, but only to the extent such Remedial Action is due to the foregoing (i) – (iii), such costs and expenses shall be borne and paid by Spectrum; and

(c)         if and to the extent that such Remedial Action is due to reasons other than as set forth in Sections 5.4(a) and (b), then:

    (i)        during any period when Spectrum is responsible for the manufacture and supply of the Licensed Product in the Field of Use for Allergan and for all lots of Licensed Products manufactured by Spectrum or its subcontractors for sale by Allergan in the Field of Use in the Allergan Territory, the costs and expenses incurred by the Parties in connection with a Remedial Action with respect to the Licensed Product in the Field of Use in the Allergan Territory shall be borne and paid as follows: Allergan shall pay **** of such costs and expenses, and Spectrum shall pay **** of such costs and expenses; and

    (ii)        except for all lots of Licensed Products manufactured by Spectrum or its subcontractors, commencing on the date on which Allergan assumes the responsibility for the manufacture and supply of the Licensed Product for sale in the Field of Use in the Allergan Territory: (A) during the term of the Co-Promotion Agreement in the Co-Promotion Region, the costs and expenses incurred by the Parties in connection with a Remedial Action with respect to Licensed Products in the Field of Use shall be borne and paid as follows: Allergan shall pay **** of such costs and expenses, and Spectrum shall pay **** of such costs and expenses; and (B) in the Royalty Territory, and the Co-Promotion Region after termination of the Co-Promotion Agreement, the costs and expenses incurred by the Parties in connection with a Remedial Action with respect to the Licensed Product in the Field of Use shall be borne and paid as follows: Allergan shall pay **** of such costs and expenses, and Spectrum shall pay **** of such costs and expenses.

5.5         Pharmacovigilance or Adverse Event Reporting . Within sixty (60) days of the Effective Date, the Parties shall enter into a pharmacovigilance or adverse event reporting agreement.

5.6         Notification of Complaints . Each Party shall (a) notify the other Party immediately of any information concerning any complaint involving the possible failure of Licensed Product in the Field of Use to meet any requirement of applicable Law, and any serious or unexpected side effect, injury, toxicity or sensitivity reaction or any unexpected incidents associated with the distribution of the Licensed Product in the Field of Use, whether or not determined to be attributable to the Licensed Product in the Field of Use, and (b) with respect to adverse events, comply with the provisions of Section 5.5 and the applicable agreements described therein.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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5.7         Notification of Threatened Action . Each Party shall immediately notify the other Party of any information it receives regarding any threatened or pending action, inspection or communication by or from any Party, including, without limitation, a Governmental Authority which may affect the safety or efficacy claims of the Licensed Product in the Field of Use or the continued marketing of the Licensed Product relating to the Field of Use. Upon receipt of such information, the Parties shall consult with each other in an effort to arrive at a mutually acceptable procedure for taking appropriate action. The Parties shall allocate all costs and expenses associated with taking such action as is described with regard to Remedial Actions in Section 5.4.

5.8         Regulatory Inspections . Each Party shall use good faith efforts to obtain and reveal to the other Party, all inspection reports for itself, its Affiliates, or for any of its vendors, suppliers or other Third Parties by any Government Authority arising from an inspection of the facilities where a Licensed Product for the Field of Use is manufactured, packaged or stored (a “ Facility Inspection ”), and the progress and outcome of any Facility Inspection as it may relate to the Licensed Product in the Field of Use. Upon receipt of notice of any Facility Inspection, the receiving Party will promptly notify the other Party thereof and the receiving Party will provide the other Party with the inspection report and any other relevant information available about the progress and outcome of such inspection available to the receiving Party.

5.9         Audits . Each Party and its duly authorized representatives shall have the right to inspect all facilities utilized by the other Party or its subcontractors (including to the extent provided in, and subject to, the Spectrum Manufacturing Agreements) in connection with the development, manufacture, sale, storage or distribution of the Licensed Product for the Field of Use, upon reasonable prior written notice during normal business hours to ensure compliance with the terms and conditions of this Agreement, and compliance by both Parties, as applicable, with industry standards and applicable Law with respect to Licensed Product for the Field of Use it manufactures for itself. In the event of a disagreement between the Parties as to (a) whether a material adverse defect exists with respect to a Licensed Product or (b) the outcome of a particular audit, an independent, mutually agreed upon arbiter shall be selected by the Parties to resolve the dispute. The cost of such arbiter shall be shared equally by the Parties. All audits shall be conducted without any undue disruption to the business and operations of the audited Party. Any Third Parties conducting such audits shall enter into confidentiality agreements with the audited Party in a form reasonably suitable to the audited Party. Both Parties shall correct, or cause the correction of, any deficiencies which are discovered by any such audit.

ARTICLE 6

PAYMENTS AND ROYALTIES

6.1         Upfront Payment . Allergan shall pay to Spectrum the sum of Forty-One Million Five Hundred Thousand Dollars ($41,500,000) within ten (10) days after the Effective Date (the “ Upfront Payment ”), and such payment shall be non-refundable, non-creditable and non-returnable under any circumstances; provided that the foregoing statement shall not be construed as a limitation to any remedies available to Allergan for the breach by Spectrum of this

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Agreement or the Co-Promotion Agreement.

6.2         Development Milestone Payments .

(a)        Subject to Section 6.2(b), Allergan shall pay to Spectrum additional amounts within thirty (30) calendar days of the completion of certain development milestones, as set forth below:

    (i)       a one time payment of **** upon Allergan’s receipt of written notice from Spectrum of the completion of enrollment for the 611 Study and 612 Study, but only if such enrollment is completed on or before ****;

    (ii)      a one time payment of **** upon Allergan’s receipt of written notice from Spectrum of the completion of enrollment for the BCG Refractory Study, but only if such enrollment is completed on or before ****;

    (iii)     a one time payment of **** upon Allergan’s receipt of written notice of acceptance by the FDA of the first filing of an NDA in the Co-Promotion Region for Licensed Product for use for the Initial Indication;

    (iv)     a one time payment of **** upon Allergan’s receipt of written notice of acceptance by the EMEA of the first filing of an MAA in the EU for Licensed Product for use for the Initial Indication;

    (v)      a one time payment of **** upon Allergan’s receipt of written notice of the first approval by the FDA of an NDA in the Co-Promotion Region for Licensed Product for use for the Initial Indication;

    (vi)     a one time payment of **** upon Allergan’s receipt of written notice of the first approval by the FDA of an sNDA in the Co-Promotion Region for Licensed Product for use for the BCG Refractory Indication;

    (vii)    a one time payment of **** upon Allergan’s receipt of written notice of the first approval by the EMEA of an MAA for Licensed Product for use for the Initial Indication; and

    (viii)   a one time payment of **** upon Allergan’s receipt of written notice of first approval by the EMEA of an MAA or an equivalent of an sNDA for Licensed Product for use for the BCG Refractory Indication.

(b)        In the event of a Development Trigger after which Allergan delivers notice to Spectrum under Section 10.1, the development milestone payments not yet due at the date of delivery of Allergan’s notice, shall be reduced by ****, provided , however that if such notice is delivered under Sections 10.1(b) and (c), the development milestone payments not yet due at the date of delivery of Allergan’s notice, shall instead be reduced by **** (each a “ Standard

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Development Trigger Reduction ”). Further, in the case of a Development Trigger that also constitutes an uncured material breach hereunder, Allergan shall have the right to seek all available rights and remedies to it, under law or equity (including injunctive relief against such breach or to enforce the right granted to Allergan hereunder, except the Standard Development Trigger Reduction), for such material breach by Spectrum that is not cured as set forth in Section 13.3(a) hereof and the amount of milestone payments not yet paid to Spectrum as of such time under Section 6.2(a) shall be reduced by **** (the “ Material Breach Development Trigger Reduction ”). The Material Breach Development Trigger Reduction shall be a remedy in lieu of, but not in addition to, the Standard Development Trigger Reduction remedy to Allergan. For clarity, the occurrence of a Development Trigger alone shall not automatically invoke the Material Breach Development Trigger Reduction, unless the event giving rise to such Development Trigger itself constitutes an uncured material breach of Spectrum’s obligation hereunder that is not cured as set forth in Section 13.3(a) hereof. In addition, the express options set forth in this Agreement available to Allergan in the event of a Development Trigger shall not be construed to limit Allergan’s other rights and remedies in the event such occurrence of a Development Trigger also constitutes an uncured material breach under this Agreement by Spectrum.

6.3         Sales Milestone Payments .

(a)         Milestones . Subject to Sections 6.3(c) and 6.4(e), Allergan shall pay to Spectrum sales milestone payments within sixty (60) days of the end of the Fiscal Quarter in which the following milestones have been met:

    (i)        a one time payment of **** for the first time in which Royalty-Bearing Net Sales of all Royalty-Bearing Product sold in the Royalty Territory exceed **** in a given Fiscal Year;

    (ii)        a one time payment of **** for the first time in which Royalty-Bearing Net Sales of all Royalty-Bearing Product sold in the Royalty Territory exceed **** in a given Fiscal Year;

    (iii)       a one time payment of **** for the first time in which Royalty-Bearing Net Sales of all Royalty-Bearing Product sold in the Royalty Territory exceed **** in a given Fiscal Year; and

    (iv)       a one time payment of **** for the first time in which Royalty-Bearing Net Sales of all Royalty-Bearing Product sold in the Royalty Territory exceed **** in a given Fiscal Year.

(b)         Co-Promotion Region . Subject to Sections 6.3(c), 6.4(e) and 10.2(c), if the Co-Promotion Agreement is terminated, then for sales of Royalty-Bearing Product sold in the Co-Promotion Region following such termination of the Co-Promotion Agreement, Allergan shall pay to Spectrum additional sales milestone payments within sixty (60) days of the end of the

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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Fiscal Quarter in which the following milestones have been met:

    (i)        a one time payment of **** for the first time in which Royalty-Bearing Net Sales of all Royalty-Bearing Product sold in the Co-Promotion Region exceed **** in a given Fiscal Year;

    (ii)        a one time payment of **** for the first time in which Royalty-Bearing Net Sales of all Royalty-Bearing Product sold in the Co-Promotion Region exceed **** in a given Fiscal Year;

    (iii)       a one time payment of **** for the first time in which Royalty-Bearing Net Sales of all Royalty-Bearing Product sold in the Co-Promotion Region exceed **** in a given Fiscal Year; and

    (iv)       a one time payment of **** for the first time in which Royalty-Bearing Net Sales of all Royalty-Bearing Product sold in the Co-Promotion Region exceed **** in a given Fiscal Year.

(c)         Calculation . More than one sales milestone can be earned in any given Fiscal Year, but each sales milestone can only be earned once.

6.4         Running Royalties .

(a)         Base Rate for the Royalty Territory . During the Royalty Term, Allergan shall also pay to Spectrum as earned royalties on sales of Royalty-Bearing Product in the Royalty Territory the following royalty payments:

    (i)        for the first **** of Royalty-Bearing Net Sales earned for Royalty-Bearing Product sold in the Royalty Territory in a Fiscal Year, Allergan shall pay Spectrum a royalty at the rate of **** of such Royalty-Bearing Net Sales;

    (ii)        for the next **** of Royalty-Bearing Net Sales earned for Royalty-Bearing Product sold in the Royalty Territory in the same Fiscal Year, Allergan shall pay Spectrum a royalty at the rate of **** of such Royalty-Bearing Net Sales;

    (iii)       for the next **** of Royalty-Bearing Net Sales earned for Royalty-Bearing Product sold in the Royalty Territory in the same Fiscal Year, Allergan shall pay Spectrum a royalty at the rate of **** of such Royalty-Bearing Net Sales; and

    (iv)       for any additional Royalty-Bearing Net Sales earned for Royalty-Bearing Product sold in the Royalty Territory in the same Fiscal Year, Allergan shall pay Spectrum a royalty at the rate of **** of such Royalty-Bearing Net Sales.

By way of example only, Schedule 6.4(a) provides an example of how the royalties will be calculated.

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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(b)         Base Rate for the Co-Promotion Region . If the Co-Promotion Agreement is terminated (subject to Section 10.2(c)), then for sales of Royalty-Bearing Product sold in the Co-Promotion Region following such termination of the Co-Promotion Agreement, during the Royalty Term, Allergan shall also pay to Spectrum as earned royalties on sales of Royalty-Bearing Product in the Co-Promotion Region at the following royalty payments:

    (i)        for the first **** of Royalty-Bearing Net Sales earned for the Royalty-Bearing Product sold in the Co-Promotion Region in a Fiscal Year, Allergan shall pay Spectrum a royalty at the rate of **** of such Royalty-Bearing Net Sales;

    (ii)        for the next **** of Royalty-Bearing Net Sales earned for the Royalty-Bearing Product sold in the Co-Promotion Region in the same Fiscal Year, Allergan shall pay Spectrum a royalty at the rate of **** of such Royalty-Bearing Net Sales;

    (iii)       for the next **** of Royalty-Bearing Net Sales earned for the Royalty-Bearing Product sold in the Co-Promotion Region in the same Fiscal Year, Allergan shall pay Spectrum a royalty at the rate of **** of such Royalty-Bearing Net Sales; and

    (iv)       for any additional Royalty-Bearing Net Sales earned for Royalty-Bearing Product sold in the Co-Promotion Region in the same Fiscal Year, Allergan shall pay Spectrum a royalty at the rate of **** of such Royalty-Bearing Net Sales.

(c)         Calculations . Notwithstanding the terms of subsections (a) and (b) above:

    (i)        no royalty payments shall be due for Royalty-Bearing Product which are sold and returned as defective, unusable, rejected by a purchaser or for which neither Allergan nor any of its Affiliates or its or their Sublicensees receives payment, and to the extent royalties have already been paid prior to such circumstances being made apparent, Allergan may credit such amounts previously paid against future royalties due;

    (ii)        there shall only be a single payment of royalties at the amounts set forth in this Section 6.4 to Spectrum payable on any sale of Royalty-Bearing Product, regardless of the number of patent applications or patents which are involved; and

    (iii)       no royalty payments shall be due for Royalty-Bearing Product which are used or provided to others by Allergan, its Affiliates or its or their Sublicensees solely for promotion (without consideration), research, conducting clinical trials, demonstration, evaluation, testing or training purposes.

(d)         No Patent Protection . If any Royalty-Bearing Product is sold in a country in the Allergan Territory in which (i) there is no Patent Protection, (ii) there is no Regulatory Exclusivity, and (iii) a Generic Product exists, then the royalty rates set forth in Sections 6.4(a) and (b) for such Royalty-Bearing Product shall be ****. “ Generic Product ” means, with respect to a Royalty-Bearing Product in the Field of Use in a particular country in the Allergan Territory, another pharmaceutical product that: (x) contains as an active ingredient Apaziquone;

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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and (y) is approved for use in such country (pursuant to 21 U.S.C. 355(b)(2), an ANDA, a separate NDA, compendia listing, other drug approval application or otherwise, including foreign equivalents of the foregoing, as applicable). “ Patent Protection ” means, in the country of sale in the Allergan Territory, that at least one of the claims of an issued and unexpired patent included within the Licensed Intellectual Property which would be infringed by the sale of the Royalty-Bearing Product in that country is in effect, and has not been revoked or held unenforceable or invalid by a final decision of a court or other governmental agency of competent jurisdiction having authority over said patent and that final decision is not appealed or unappealable (all claims are considered valid until so adjudicated and during prosecution of a patent application containing such claims) and is sufficient to prevent a Generic Product from being sold in such country. “ Regulatory Exclusivity ” means market exclusivity granted by a Governmental Authority designed to prevent the entry of Generic Product(s) onto the market in the Field of Use, including new chemical entity exclusivity, new use or indication exclusivity, new formulation exclusivity, orphan drug exclusivity, pediatric exclusivity and 180-day generic product exclusivity. The foregoing shall not apply for sales in the Co-Promotion Region as long as the Co-Promotion Agreement is in effect.

(e)         Royalty Term . Allergan’s royalty obligations under Sections 6.4(a) and (b) shall commence on the First Commercial Sale of a Royalty-Bearing Product and expire, on a country-by-country basis, on the date which falls on the later of the following conditions (the “ Royalty Term ”):

    (i)        the expiration or earlier invalidation of all of the: (A) patents in the Licensed Intellectual Property issued as of the Effective Date claiming the composition of matter of, the formulation of, or the method of making or using, Royalty-Bearing Product in the Field of Use in such country; and (B) other patents in the Licensed Intellectual Property issued after the Effective Date but prior to the **** anniversary of the First Commercial Sale of a Royalty-Bearing Product in the Field of Use in the Co-Promotion Region which are: (I) issued prior to entry of a Generic Product in the country; (II) of sufficient breadth to block the entry of Generic Products in the country; and (III) claim the composition of matter of, the formulation of, or the method of making or using, Licensed Product in the Field of Use in such country (except for the Original Patent Rights, such patents covered by this subsection are “ Extension Patents ”);

    (ii)        the **** anniversary of the First Commercial Sale of such Royalty-Bearing Product in the Field of Use in the Co-Promotion Region; or

    (iii)       the expiration of all Regulatory Exclusivity covering such Royalty-Bearing Product in the Field of Use in such country.

After the expiration of the Royalty Term in a particular country, but only if Allergan has fulfilled its payment obligations under this Article 6 in such country: (x) the licenses set forth in Section 2.1 in such country shall be deemed fully-paid up, perpetual and royalty-free; (y) Allergan may use such licenses in such country perpetually without additional royalties and

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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milestone payments due; and (z) such licenses in such country shall survive expiration or termination of this Agreement regardless of cause.

6.5         Royalty Payment Schedule . Within five (5) business days after the end of each Fiscal Quarter during which a Royalty-Bearing Product in the Field of Use is sold by Allergan, its Affiliates or its or their Sublicensees in the Royalty Territory, Allergan shall provide to Spectrum the estimated royalty payment calculation for Spectrum to complete its quarterly accounting close. Within forty-five (45) days after the end of each Fiscal Quarter during which a Royalty-Bearing Product in the Field of Use is sold by Allergan, its Affiliates or its or their Sublicensees in the Royalty Territory, Allergan shall deliver to Spectrum a detailed report, which shall include at least: (a) the net quantity sold, total sales, total to net deducts, and Royalty-Bearing Net Sales of Royalty-Bearing Product in the Field of Use for which royalties are due hereunder that it has sold in the prior Fiscal Quarter; (b) the calculation in U.S. dollars of royalty payments due hereunder with respect to such sales; and (c) the total due hereunder for such Fiscal Quarter, including deduction for any offsets. Simultaneously with the delivery of each such report, Allergan shall pay to Spectrum the amount specified in Section 6.5(c). Notwithstanding the foregoing, to the extent that Royalty-Bearing Net Sales also include Sublicensee Net Sales of Royalty-Bearing Product (including under Sections 6.3 and 6.4), Allergan shall have additional time as reasonably necessary to provide Spectrum with the information relating to such Sublicensee Net Sales of Royalty-Bearing Product in the foregoing report and payment or to determine whether the sales milestones have been met and subsequently make payments therefor.

6.6         Development Costs . Except as set forth in the Co-Promotion Agreement, commencing with the Fiscal Quarter beginning January 1, 2009, and occurring each Fiscal Quarter thereafter, the Parties agree to pay the Development Costs for the development and Regulatory Approval of the Licensed Product in the Field of Use as follows: Allergan shall be responsible for sixty-five percent (65%) of Development Costs incurred by Spectrum and Allergan in performing their obligations hereunder, and Spectrum is responsible for thirty-five percent (35%) of the Development Costs incurred by Spectrum and Allergan in performing their obligations hereunder. Within the first five (5) business days of each Fiscal Quarter commencing on January 1, 2009, Allergan shall pay Spectrum quarterly in advance Allergan’s share of the estimated Development Costs which Spectrum is estimated to incur for such Fiscal Quarter (as set forth in the JDP). On a monthly basis the Parties agree to discuss the Development Costs incurred in the previous month and review tracking of actual Development Costs to estimated Development Costs. The Parties shall reconcile their respective applicable Development Costs, and will deliver to the other Party, by the third business day after the new Fiscal Quarter, the backup requested by such other Party to complete such other Party’s quarterly accounting close. The estimate provided by each Party on the third business day shall be materially correct as regards actual Development Costs incurred. Within thirty (30) days after the end of each Fiscal Quarter, Allergan will provide Spectrum with an invoice representing thirty-five percent (35%) of the Development Costs incurred by Allegan during the previous Fiscal Quarter and Spectrum will process a payment to Allergan within thirty (30) days following receipt of this invoice. Within thirty (30) days after the end of each Fiscal Quarter, Spectrum shall perform a true-up to determine its

 

****	Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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actual Development Costs incurred during the previous Fiscal Quarter. If the true-up reflects actual Development Costs incurred in excess of advances previously made by Allergan, Spectrum will provide Allergan with an invoice representing the excess and Allergan will process a payment to Spectrum within thirty (30) days following receipt of this invoice. If the true-up reflects actual Development Costs incurred less than advances previously made by Allergan, Spectrum will reduce their next quarterly advance from Allergan by the amount of the shortfall. Spectrum shall bear all Development Costs for development of the Licensed Product incurred prior to January 1, 2009. In the event of a Development Trigger after which Allergan delivers notice to Spectrum under Section 10.1 for Allergan to take over development, all of the Development Costs incurred by Allergan in performing the development and Regulatory Approval services itself shall also be borne by the Parties in the ratio(s) set forth in this Section 6.6.

6.7         Currency of Payments . All payments under this Agreement will be made in