AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 17, 1997
REGISTRATION NO. 333-17991
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- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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KOS PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<TABLE>
<S> <C> <C>
FLORIDA 2834 65-0670898
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C>
DANIEL M. BELL
1001 BRICKELL BAY DRIVE, SUITE 2502, 1001 BRICKELL BAY DRIVE, SUITE 2502,
MIAMI, FL 33131 MIAMI, FL 33131
305-577-3464 305-577-3464
(ADDRESS, INCLUDING ZIP CODE, (ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING AREA CODE, AND TELEPHONE NUMBER, INCLUDING
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
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COPIES TO:
STEVEN SONBERG, ESQ. BRUCE K. DALLAS, ESQ.
HOLLAND & KNIGHT DAVIS POLK & WARDWELL
ONE EAST BROWARD BOULEVARD, SUITE 1300 450 LEXINGTON AVENUE
FORT LAUDERDALE, FL 33301 NEW YORK NY 10017
954-525-1000 212-450-4000
TELECOPIER NO. 954-463-2030 TELECOPIER NO. 212-450-4800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 to the Form S-1 Registration Statement is a Part II
filing solely to file exhibits and make related technical changes. Accordingly,
a preliminary prospectus has been omitted.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1.1** Form of Underwriting Agreement among the Company, Cowen & Company, Dillon, Read & Co. Inc., and
Salomon Brothers Inc, as Representatives of the several Underwriters.
3.1* Articles of Incorporation of the Company
3.2* Bylaws of the Company
4.1* See Exhibits 3.1 and 3.2 for provisions of the Articles of Incorporation and Bylaws of the Company
defining the rights of holders of Common Stock of the Company
4.2** Form of Common Stock certificate of the Company
5** Opinion of Holland & Knight LLP
10.1* Employment Agreement dated as of July 1, 1996, between Daniel M. Bell and the Company
10.2* Nonqualified Stock Option Agreement by and between the Company and Daniel M. Bell dated as of June
20, 1996
10.3* Employment Agreement dated as of June 15, 1996, between David Bova and the Company
10.4* Kos Pharmaceuticals, Inc. 1996 Stock Option Plan
10.5+ Development Agreement by and between the Company and Fuisz Technologies Ltd.
10.6** Promissory Note in favor of Kos Investments
10.7* Registration Rights Agreements dated as of June 30, 1996 by and between the Company and Kos Holdings,
Inc.
10.8* Oakwood Business Center Lease, dated May 2, 1991, between STS Buildings Associates, L.P. and the
Company.
10.9* Oakwood Business Center Lease, dated May 15, 1990, between STS Buildings Associates, L.P. and the
Company.
10.10* Oakwood Business Center Lease, dated January 7, 1993, between STS Buildings Associates, L.P. and
the Company.
10.11* Modification and Extension Agreement, dated June 6, 1996, between STS Buildings Associates, L.P.
and the Company.
10.12* Assignment and Second Modification of Lease Agreement, dated June 30, 1996, by and between Oakwood
Business Center Limited Partnership and the Company.
10.13* Assignment and Second Modification of Loan Agreement, dated June 30, 1996, by and between Oakwood
Business Center Limited Partnership and the Company.
10.14* Assignment and Second Modification of Lease Agreement, dated June 30, 1996, by and between Oakwood
Business Center Limited Partnership and the Company.
10.15* Lease between Center Realty, L.P. and the Company, dated May 1993.
10.16* Third Modification of Lease Agreement, dated November 21, 1996, by and between Oakwood Business
Center Limited Partnership and the Company.
10.17+ Option/Licensing Agreement by and between the Company and Fuisz Technologies Ltd.
10.18+ Development Agreement by and between the Company and Fuisz Technologies Ltd.
10.19+ Option/Licensing Agreement by and between the Company and Fuisz Technologies Ltd.
21* Subsidiaries of the Company
23.1** Consent of Holland & Knight LLP (included in Exhibit 5 above)
23.2* Consent of Arthur Andersen LLP
24* Power of Attorney (included on signature page of this Registration Statement)
27* Financial Data Schedule
99.1* Consent of John Brademas
99.2* Consent of Louis C. Lasagna
99.3* Consent of Mark Novitch
99.4* Consent of Frederick B. Whittemore
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment.
+ Certain confidential material contained in the document has been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 406 of the Securities Act of 1933, as amended.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Amendment to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Miami, Florida on January 17, 1997.
KOS PHARMACEUTICALS, INC.
By: /s/ DANIEL M. BELL
----------------------------------
Daniel M. Bell
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1993, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DANIEL M. BELL President, Chief Executive Officer January 17, 1997
- ----------------------- and Director
Daniel M. Bell (Principal Executive Officer)
/s/ MICHAEL JAHARIS* Chairman of the January 17, 1997
- ----------------------- Board of Directors
Michael Jaharis
/s/ JUAN F. RODRIGUEZ* Controller January 17, 1997
- ----------------------- (Principal Accounting Officer
Juan F. Rodriguez and Principal Financial Officer)
/s/ ROBERT E. BALDINI* Vice Chairman of the January 17, 1997
- ----------------------- Board of Directors
Robert E. Baldini
/s/ STEVEN JAHARIS* Director January 17, 1997
- -----------------------
Steven Jaharis
* By: /s/ DANIEL M. BELL January 17, 1997
--------------------------
Daniel M. Bell
Attorney-in-fact
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1.1** Form of Underwriting Agreement among the Company, Cowen & Company, Dillon, Read & Co. Inc., and
Salomon Brothers Inc, as Representatives of the several Underwriters.
3.1* Articles of Incorporation of the Company
3.2* Bylaws of the Company
4.1* See Exhibits 3.1 and 3.2 for provisions of the Articles of Incorporation and Bylaws of the Company
defining the rights of holders of Common Stock of the Company
4.2** Form of Common Stock certificate of the Company
5** Opinion of Holland & Knight LLP
10.1* Employment Agreement dated as of July 1, 1996, between Daniel M. Bell and the Company
10.2* Nonqualified Stock Option Agreement by and between the Company and Daniel M. Bell dated as of June
20, 1996
10.3* Employment Agreement dated as of June 15, 1996, between David Bova and the Company
10.4* Kos Pharmaceuticals, Inc. 1996 Stock Option Plan
10.5+ Development Agreement by and between the Company and Fuisz Technologies Ltd.
10.6** Promissory Note in favor of Kos Investments
10.7* Registration Rights Agreements dated as of June 30, 1996 by and between the Company and Kos Holdings,
Inc.
10.8* Oakwood Business Center Lease, dated May 2, 1991, between STS Buildings Associates, L.P. and the
Company.
10.9* Oakwood Business Center Lease, dated May 15, 1990, between STS Buildings Associates, L.P. and the
Company.
10.10* Oakwood Business Center Lease, dated January 7, 1993, between STS Buildings Associates, L.P. and
the Company.
10.11* Modification and Extension Agreement, dated June 6, 1996, between STS Buildings Associates, L.P.
and the Company.
10.12* Assignment and Second Modification of Lease Agreement, dated June 30, 1996, by and between Oakwood
Business Center Limited Partnership and the Company.
10.13* Assignment and Second Modification of Loan Agreement, dated June 30, 1996, by and between Oakwood
Business Center Limited Partnership and the Company.
10.14* Assignment and Second Modification of Lease Agreement, dated June 30, 1996, by and between Oakwood
Business Center Limited Partnership and the Company.
10.15* Lease between Center Realty, L.P. and the Company, dated May 1993.
10.16* Third Modification of Lease Agreement, dated November 21, 1996, by and between Oakwood Business
Center Limited Partnership and the Company.
10.17+ Option/Licensing Agreement by and between the Company and Fuisz Technologies Ltd.
10.18+ Development Agreement by and between the Company and Fuisz Technologies Ltd.
10.19+ Option/Licensing Agreement by and between the Company and Fuisz Technologies Ltd.
21* Subsidiaries of the Company
23.1** Consent of Holland & Knight LLP (included in Exhibit 5 above)
23.2* Consent of Arthur Andersen LLP
24* Power of Attorney (included on signature page of this Registration Statement)
27* Financial Data Schedule
99.1* Consent of John Brademas
99.2* Consent of Louis C. Lasagna
99.3* Consent of Mark Novitch
99.4* Consent of Frederick B. Whittemore
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment.
+ Certain confidential material contained in the document has been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 406 of the Securities Act of 1933, as amended.
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
DEVELOPMENT AGREEMENT
THIS AGREEMENT is made by and between Kos Pharmaceuticals, Inc., a
corporation of the State of Florida, with a place of business at 1001 South
Bayshore Drive, Suite 2502, Miami, FL 33131 (hereinafter referred to as "Kos")
and Fuisz Technologies Ltd., a corporation of the State of Delaware with a place
of business at 3810 Concorde Parkway, Suite 100, Chantilly, VA 22021
(hereinafter referred to as "Fuisz").
WHEREAS, Fuisz has over a period of years conducted research and
development work and developed proprietary technology which is useful to make
controlled-release formulations for pharmaceutical compounds; and
WHEREAS Kos has interests in developing, manufacturing and marketing
once-a-day oral solid dosage forms of Captopril (as hereinafter defined), based
on Fuisz proprietary technology; and
WHEREAS, Fuisz and Kos are each willing to undertake a Development
Program (as hereinafter defined) for development of the foregoing products for
commercial marketing and sale.
Now, therefore, the parties agree as follows:
The definitions as used herein are set forth in Article 1 of the
License Agreement and Appendix A attached hereto and incorporated herein by
reference.
ARTICLE 1 - DEVELOPMENT PROGRAM
1.1 Fuisz and Kos shall jointly undertake using reasonable best
efforts a Development Program to develop one or more Products for Commercial
Sale. It is understood that this Development Program is primarily for the
purposes of developing and producing Products and shall be carried out generally
in accordance with Appendix B.
1.2 Each party shall appoint a Program Manager for overall management of
the Development Program and such Program Managers shall by mutual agreement
provide the direction of the program and the scope of work to be undertaken
under the Development Program; provided, however, that Kos shall determine the
focus of work which the Program Managers mutually agree can be carried out
under the
<PAGE>
Development Program, within the guidelines set forth in Appendix B. The initial
Program Manager for Kos shall be designated within thirty (30) days and the
initial Program Manager for Fuisz shall be ***************. Each party may
change the designated Program Manager upon written notice to the other party of
such change.
1.3 During the term of the Development Program Fuisz shall periodically
provide to Kos samples of materials for evaluation by Kos. Kos shall promptly
evaluate such samples and provide guidance to Fuisz for further work based on
the results of such evaluations. During the Development Program term, Program
Managers or representatives of the parties shall meet from time to time to
discuss planning and progress of the Development Program to carry out efficient
and effective activities. Fuisz shall provide project updates to Kos verbally
and/or in written form ******************** during the Development Program, and
shall provide a written report upon completion of the Development Program. All
such discussions and activities shall be considered as carried out under the
Development Program.
1.4 Kos shall supply to Fuisz, at Kos's cost and expense, materials
including Captopril which Kos believes are essential for carrying out the
Development Program. All such materials supplied by Kos shall be materials
approved for human uses unless otherwise specifically designated and Kos shall
supply MSDS sheets where necessary for the processing of such materials. Fuisz
shall advise Kos from time to time of its requirements for such materials for
the Development Program.
1.5 Upon termination of each Phase of the Development Program, Fuisz
shall provide to Kos quantities of prototype Products processed using Technology
which demonstrate the best results obtained under the Development Program. Kos
shall provide to Fuisz all data, information and conclusions generated during
the Development Program relating to the Development Program and/or Technology
including without limitation ******************** and any other mutually agreed
pre-defined data, and Fuisz shall have the ****************** to use all such
data, information and conclusions; provided, however, that Fuisz shall not
utilize such data, information and conclusions to the detriment of the
competitive position of Kos or inappropriately identify Kos in any publicity
concerning same.
1.6 In the event special processing or manufacturing equipment
specifically modified or adapted for use with Technology is requested by Kos to
be used under the Development Program, Kos shall provide such equipment to Fuisz
for the duration of the Development Program.
1.7 All activities in connection with the Development Program shall be
carried out by each party in strict compliance with any applicable federal,
state or local laws, regulations or guidelines governing such activities.
2
<PAGE>
1.8 In addition to the funding under Article 3, Kos shall pay for the
cost of all materials including Captopril used in the Development Program and
approved by Kos (to the extent such materials are not provided and fully paid by
Kos), and Kos shall pay for the costs of all shipping, packing, customs, duties
and customs clearances associated with shipment of materials and/or equipment to
or from Fuisz or for, or resulting from work under, the Development Program. In
addition, Kos shall pay for the reasonable costs of travel of Fuisz personnel at
the prior request and approval of Kos in connection with meetings, activities or
reviews of activities under the Development Program.
1.9 All equipment, supplies and other items purchased by either party
for the conduct of the Development Program, shall be the sole and exclusive
property of the purchasing party. For purposes hereof, all such items purchased
by Fuisz with funds provided by Kos shall be deemed to be items purchased and
owned by *****.
ARTICLE 2 - TERM AND TERMINATION OF THE DEVELOPMENT PROGRAM
2.1 The initial term of Phase I of the Development Program shall be
*********** weeks from the Effective Date. The parties shall use reasonable
efforts to carry out the Development Program during such initial term. However,
if due to unforseen circumstances unavoidable delays attributable solely to
Fuisz are encountered, or force majeure events are encountered in carrying out
activities, the initial term of the Development Program shall be extended for a
time equal to the delay at no additional cost to Kos. The Development Program
shall be automatically extended on a week by week basis after the initial term
provided that Kos may terminate the Development Program anytime after the
initial term or at the end of each successive weekly extension of the
Development Program, and Fuisz may terminate the Development Program at the end
of the *********** weekly extension thereof or at the end of each successive
weekly extension thereafter, respectively upon ********* calendar days advance
notice in writing to the other party.
2.2 If either party shall default, fail to perform, or otherwise commit
a breach of a material obligation or any covenant contained herein with respect
to the Development Program, and shall fail to remedy such default, failure to
perform or breach within ********** days after its receipt of written notice
thereof from the other party, such other party may terminate the Development
Program and incur no further obligation hereunder, it being understood, however,
that if within such ********** days after receipt of such notice, the party in
default shall have rectified its default, then the Development Program and the
terms hereof relating to the Development Program shall be restored as if no
termination of the Development Program had occurred. The term of this Agreement
(or any extension thereof) shall be tolled by the time required by the
defaulting party to cure the default.
3
<PAGE>
2.3 This Agreement shall commence upon the Effective Date and terminate
at the end of the term of the Development Program, including any extensions
thereof.
2.4 Except for Kos and Fuisz jointly owned technology and patents and
Fuisz solely owned technology and patents, Fuisz hereby acknowledges that it
shall not have the right, following expiration of the Development Agreement
term, to use technology to the extent obtained from Kos, patents based thereon
or any materials to the extent obtained from Kos, for any purpose without
obtaining a license from Kos, which license Kos, in its sole discretion, may
grant or deny.
2.5 Except as set forth in the License Agreement and except for Kos and
Fuisz jointly owned technology and patents and Kos solely owned technology and
patents, Kos hereby acknowledges that it shall not have the right, following
expiration of the Development Agreement term, to use Technology to the extent
obtained from Fuisz, patents based thereon or any materials to the extent
obtained from Fuisz, for any purpose without obtaining a license from Fuisz,
which license Fuisz, in its sole discretion, may grant or deny.
ARTICLE 3 - FUNDING OF THE DEVELOPMENT PROGRAM
3.1 Kos shall provide total funding for the Development Program as set
forth in Appendix B, in the amount of **************************************8
*****************************************************************************
************************* of which shall be paid to Fuisz within ********* days
of the Effective Date, and ******************************** of which shall be
paid within *********** days following the end of Phase 1 and
******************************** of which shall be paid within ********* days
following completion of the ********************* of Appendix B. This amount of
funding may be increased by mutual agreement. This funding shall not include the
cost of the ********************* which shall be funded and paid for
*************. In the event Kos chooses to proceed to Phase 2 and/or Phase 3 as
set forth in Appendix B, unless Fuisz determines further development is not
feasible, Kos shall pay to Fuisz additional amounts commensurate with the
activity involved and as mutually agreed, consistent with the cost of Phase 1
and with the level of activity, for Phase 2 and for Phase 3, payable within
*********** days of commencement of the phases.
3.2 In the event the Development Program is extended by mutual written
agreement of the parties, each successive one (1) week extension after the
initial term shall be funded and paid to Fuisz in advance at a rate of
********************************** per week with respect to extension of Phase
I, and with respect to Phases 2 and 3, such weekly amounts as are consistent
with the additional funding set forth in Section 3.1; provided, however, that if
the man-day charges for work carried out at Fuisz during the initial term are
less than the funding actually paid
4
<PAGE>
under the initial term (exclusive of charges under Section 1.8) then additional
funding for such extensions under this Section 3.2 shall not be invoiced or due
until such time as the man-day charges equal such funding provided for the
initial term. Other costs as set forth in Section 1.8 associated with successive
weekly extensions incurred under the Development Program, shall be invoiced once
each month and will be due *************** days from date of mailing of the
invoice.
3.3 All work done at Fuisz shall be at *************** rates of Fuisz
for pharmaceutical development work. Verification of the man-days charges for
work under the Development Program and the schedule of applicable existing
charge rates shall be made available to Kos at reasonable intervals upon written
request. In the event Kos requests work be done in excess of the current funding
during the initial term of the Development Agreement or any extensions thereof,
Fuisz shall invoice Kos for such excess work on a monthly basis. In the event
either party terminates the Development Program, Kos shall be obligated to pay
Fuisz for all work done by Fuisz under the Development Program up to the date of
termination, and if terminated by Kos for breach by Fuisz, Fuisz shall refund
any advanced funding payments made by Kos in excess of payments for work done.
ARTICLE 4 - MERCHANTABILITY, FITNESS FOR PURPOSE AND
LIMITATIONS OF LIABILITY
4.1 The parties recognize that this is an agreement for services and not
for the sale of goods. Therefore, except as provided in this Article 4, Fuisz
makes no warranties, express or implied, regarding the quality or quantity of
any Product produced under this Agreement or materials purchased to support work
performed under this Agreement which are not specifically identified in writing
as to source or quality by Kos prior to purchase, provided that Fuisz represents
and warrants that as of the time of delivery, all Products supplied to Kos which
are labeled cGMP Sample shall conform to the specifications mutually agreed to
in writing by the parties, shall be manufactured using Current Good
Manufacturing Practices as defined in regulations promulgated by the FDA under
the Federal Food, Drug and Cosmetic Act (the "Act"), shall contain only
materials that are GRAS, and shall not be adulterated or misbranded within the
meaning of the Act. FUISZ EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
4.2 In the performance of the duties contemplated hereunder, the status
of the parties including employees and agents of each, shall be that of
independent contractors and not as employees, agents or fiduciaries of the other
party, and neither party shall have the right to make commitments for or on
behalf of the other party.
4.3 Each party shall be responsible for the safety of its employees and
agents with respect to activities relating to the Development Program under this
Agreement and for liability for damages or personal injuries, including death,
resulting from such
5
<PAGE>
activities without any warranty, liability or indemnification on the part of the
other party.
ARTICLE 5 - FORCE MAJEURE
5.1 Neither Fuisz nor Kos shall be liable for delay or failure in the
performance of the obligations contained in this Agreement arising solely from
any one or more of the following matters: (a) acts of God, or public enemy or
war (declared or undeclared); (b) acts of governmental authorities, of
quasi-governmental authorities, or the United States, or any political
subdivision thereof, or of any department or agency thereof, or regulations or
restrictions imposed by law or by court action, except as they may result from
the unreasonable failure of Fuisz or Kos to perform as required hereunder; (c)
acts of persons, other than employees or agents of the parties, engaged in
subversive activities or sabotage; (d) fires, floods, explosions or other
catastrophes; (e) epidemics or quarantine restrictions; (f) strikes, or similar
labor disruptions; (g) freight embargoes, or interruption of transportation; (h)
unusually severe weather; (i) delays of a supplier of Fuisz or Kos due to any of
the above causes or events; or (j) any other extraordinary causes, similar or
dissimilar, beyond the control of the party concerned; and provided that due
diligence is exercised to cure such cause and resume performance, and the time
for performance by such party shall be extended by a period of any such delay.
ARTICLE 6 - CONFIDENTIALITY
6.1 CONFIDENTIALITY; EXCEPTIONS - Except to the extent expressly
authorized by this Agreement, and except as provided in Section 6.2, or
otherwise agreed in writing, the parties shall, for the term of this Agreement
and for ************* thereafter, keep confidential and shall not publish or
otherwise disclose, or use for any purpose, any Confidential Information
furnished to one party by the other party pursuant to this Agreement, except to
the extent that it can be established by competent evidence that such
Confidential Information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or became
otherwise part of the public domain after its disclosure and other than through
any act or omission of the receiving party in breach of this Agreement;
6
<PAGE>
(d) was disclosed to the receiving party, other than under an
obligation of confidentiality, by a third party who had no obligation to the
disclosing party not to disclose such Confidential Information to others; or
(e) is independently developed by or on behalf of the
receiving party by individuals not having access to such Confidential
Information.
Each party may disclose the other's Confidential Information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, or is necessary to be
disclosed in connection with the marketing or sale of a Product or is necessary
to be disclosed to comply with applicable governmental regulations; provided,
however, that if a party is required to make any such disclosure of the other
party's Confidential Information it shall, except where impracticable for
necessary disclosures, for example to health authorities, give reasonable
advance notice to the other party of such disclosure requirement and, except to
the extent inappropriate in the case of patent applications, shall use
reasonable efforts to secure confidential treatment of such Confidential
Information required to be disclosed.
6.2 All trade secrets provided to a party under this Agreement by the
other party, as defined under the Uniform Trade Secrets Act of the United
States, or the trade secret laws of applicable national countries, which are
provided by one party to the other party hereunder and identified in writing as
trade secrets, shall be maintained in confidence, without limitation of time,
and will be used only for purposes of work under this Agreement or
commercialization of Products under the provisions of this Agreement.
6.3 Each party may also disclose the other's Confidential Information
and trade secrets to an Affiliate, agent or consultant on a need-to-know basis,
who is under an obligation of confidentiality and non-use at least substantially
equivalent to the obligations of this Article 6, a party disclosing the other
party's Confidential Information or trade secrets to such Affiliate, agent or
consultant shall notify the other party of the identity of such Affiliate, agent
or consultant.
ARTICLE 7 - INVENTIONS AND PATENTS
7.1 Inventions and any patent applications and patents based on
Inventions made under or as a result of work done under the Development Program
or as a result of evaluations or analysis of samples under the Development
Program shall be owned as follows:
(a) if invented solely by the staff of Fuisz or their
consultants or jointly by employees of Fuisz and their consultants, ownership
shall rest in Fuisz;
7
<PAGE>
(b) if invented solely by the staff of Kos or their
consultants or jointly by employees of Kos and their consultants and such
Inventions are based upon or directly related to Technology, ownership shall
rest in Fuisz; otherwise, ownership shall rest in Kos and Fuisz shall have
irrevocable, paid up, non-exclusive rights thereunder;
(c) if invented jointly by employees of Kos and/or Kos
consultants and employees of Fuisz and/or Fuisz' consultants ("Joint
Invention"), ownership shall rest jointly in Fuisz and Kos.
7.2 Patent and copyright procurement activity in regard to Inventions
shall be pursued at the discretion and expense of the owner or designee set
forth in Section 7.1 except that procurement activities with respect to Joint
Inventions shall be pursued at the discretion and equally shared expense of
Fuisz and Kos. Each party, however, shall notify the other upon the preparation
of any written invention report and/or the filing of any patent or copyright
application based on an Invention, provide the other with a copy of any such
Invention report, or patent or copyright application based on an Invention, and
any issued patent or statutory copyright granted thereon, and on request update
the other as to the status of any such patent or copyright application. Neither
party shall be liable with respect to any claims or damages arising from any
act, or failure to act, in regard to the preparation, prosecution or maintenance
of any such patent applications or patents. Each party shall sign documents to
vest or maintain title to patents and/or copyrights in the owner designated in
Section 7.1, and provide all reasonable assistance to the other with respect to
preparation and prosecution of such patents and copyrights as may be necessary.
7.3 As to Inventions owned by Kos and/or Fuisz in accordance with
Section 7.1, each party shall furnish to the other all information and data in
its possession reasonably necessary to obtain patents and copyrights on such
Inventions and, upon request, shall review applications for such patents and
copyrights. In the event the Program Manager or the owner or designee decides
that additional examples are necessary to obtain patents on Inventions, the
other party shall cooperate by providing any such examples relating to use of
the Invention as may reasonably be requested by the owner or designee, provided
that the owner or designee shall reimburse the other party for the reasonable
costs of generating such examples for individually owned Inventions where the
Program Managers do not agree to fund generation of such additional examples.
ARTICLE 8 - GENERAL PROVISIONS
8.1 INDEPENDENT CONTRACTORS. Nothing in this Agreement shall be deemed
to create an agency, employer-employee, partnership or joint venture
relationship between the parties. The status of the parties shall be, for all
purposes, independent
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contractors. Neither party shall have the right to control the work of the
other's employees and/or agents.
8.2 NO OTHER IMPLIED LICENSES. Except as provided in the License
Agreement each party understands that this Agreement does not include any
assurance that the other party has granted or will grant any license, option or
right to it, and the other party reserves the right to enter into exclusive
licenses or business arrangements with other parties for any or all of its
technology.
8.3 AMENDMENTS. No addition to, deletion from or modification of any of
the provisions of this Agreement shall be binding upon the parties unless made
in writing and signed by a duly authorized representative of each party. Any
such additions, deletions or modifications shall refer specifically to this
Agreement.
8.4 ASSIGNMENT. This Agreement is unassignable by either Kos or Fuisz
except with the prior written consent of the other; provided, however, that it
may be assigned without consent to a corporate successor of Kos or Fuisz or to a
person or corporation acquiring all or substantially all of the business and
assets of Kos or Fuisz to which this Agreement relates. All or any portion of
Technology shall be assignable by Fuisz; provided, however, that in the event of
any such assignment, any such assignee shall accept and agree in writing to be
bound by all of the terms and conditions of this Agreement relating to such
assigned rights.
8.5 APPLICABLE LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of ********, United States of
America, without reference to its conflict of laws provisions.
8.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed duly given when personally delivered or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
cable confirmed by letter as aforesaid, as follows:
Notice to Fuisz: Notice to Kos:
Fuisz Technologies Ltd. Kos Pharmaceuticals, Inc.
3810 Concorde Parkway 1001 South Bayshore Drive
Suite 100 Suite 2502
Chantilly, VA 22021 Miami, FL 33131
ATTN: Richard C. Fuisz ATTN: President
President and CEO
With a copy to:
James L. Wilcox
Vice President & General Counsel
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or to such other address as either party may hereafter designate in writing by
like notice.
8.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties with regard to the subject matter hereof and
supersedes all prior discussions, representations and understandings with
respect thereto, whether written or oral.
8.8 SURVIVAL. The rights and obligations of either party under Articles
6 and 7 shall survive the termination of this Agreement.
8.9 PUBLIC ANNOUNCEMENTS. Except as required by law or in connection
with private or public offerings to raise capital or as required for documents
to be filed with the Securities and Exchange Commission (a "Permitted Public
Announcement"), neither party shall make any public announcement concerning this
Agreement or the subject matter hereof without the prior written consent of the
other; provided, however, that in any event, each party shall have the right to
refer, in such announcement required by law or in any private or public offering
documents, to the status of this Agreement or of the Development Agreement and
to state that the license hereunder has been granted, together with a
generalized description of the nature and extent of such license. All such
announcements shall be made available by the announcing party to the other party
at least ***************** days in advance of the announcement for review and
comment by the other party
8.10 This Agreement shall be executed in one or more counterparts, each
of which shall for all purposes be deemed to be an original and all of which
shall constitute the same instrument subject to the time limitations imposed in
those sections.
8.11 ALTERNATIVE DISPUTE RESOLUTION.
(a) In the event of any dispute, controversy or claim arising
out of or relating to this Agreement (unless such dispute, controversy or claim
involves an issue of patent validity), Kos or Fuisz shall employ alternative
dispute resolution procedures in an effort to avoid litigation over any such
dispute, controversy or claim. Any such dispute, controversy or claim hereunder
shall, prior to submission to such alternative dispute resolution proceedings,
be referred to representatives of management (hereinafter "Management
Representatives") of the respective parties for resolution.
(b) Any such dispute that shall not have been resolved
pursuant to paragraph 8.11(a) *********** days after reference to such
Management Representatives, or otherwise by agreement between the parties, shall
be referred to arbitration in accordance with the rules of the American
Arbitration Association. The arbitration tribunal shall consist of three (3)
arbitrators. The party initiating arbitration
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shall nominate one (1) arbitrator (who shall not be affiliated with such party)
in the request for arbitration and the other party shall nominate a second
arbitrator (who shall not be affiliated with such party) in the answer thereto.
The two (2) arbitrators so named will then jointly appoint the third (3rd)
arbitrator as chairman of the arbitration tribunal. If a party fails to nominate
its arbitrator as chairman of the arbitration tribunal or if the arbitrators
named by the parties fail to agree on the person to be named as chairman within
sixty (60) days, the Office of the American Arbitration Association in
Washington, DC, USA shall make the necessary appointments of an arbitrator or
the chairman of the tribunal. The award of the arbitration tribunal shall be
final and judgment upon such an award may be entered in any competent court or
application may be made to any competent court for judicial acceptance of such
an award and an order of enforcement. In the event of any procedural matter not
covered by the aforesaid Rules, the procedural law of the State of ********,
United States of America, shall govern.
8.12 For so long as he is employed by Fuisz, Fuisz shall provide the
services of *****************, or an appropriate substitute designated by Fuisz
and acceptable to Kos, who shall be primarily responsible for carrying out the
responsibilities of Fuisz under the Development Program.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized officer as of the Effective Date.
KOS PHARMACEUTICALS, INC. FUISZ TECHNOLOGIES LTD.
- ------------------------------------ -------------------------------------
Daniel M. Bell Richard C. Fuisz, M.D.
President President and CEO
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APPENDIX A
"CONFIDENTIAL INFORMATION" shall mean all business or technical information,
including, without limitation, all photographs, records, methods, processes,
techniques, equipment, and all know how and trade secrets, provided by one party
to the other party under the provisions of this Agreement.
"EFFECTIVE DATE" shall mean the Effective Date of the License Agreement.
"INVENTION" shall mean any discovery or invention conceived, made or reduced to
practice in the performance of work under the Development Program or resulting
from the IN VITRO evaluation or analysis of samples produced under the
Development Program.
"LICENSE AGREEMENT" shall mean the Option and License Agreement between Kos and
Fuisz relating to Captopril and having the same Effective Date as this
Agreement.
<PAGE>
APPENDIX B
DEVELOPMENT PROGRAM SCHEDULE
PHASE 1 - **********
(a) Preformulation - *******
- Drug Physicochemical Characterization
- Excipient compatibility Studies
- Qualitative Formulation Selection
(b) Formulation Assessment - *******
- Quantitative Formulation Development
- *********************
- *******************
- Finished Product
- Manufacture and Testing of a Range of Batches at each stage
- Informal Stability Assessment
- Analytical Methodology Validation
(c) Process Initiation - *******
- Initial Processing Parameter Characterization Studies
- Formulation Reproducibility Studies
(d) Product Characterization - *******
- Manufacture under GMP condition of Product(s) for pilot
pharmacokinetic study
- Release of Product(s) for the pilot pharmacokinetic study
- Pilot stability evaluation
PHASE 2 - **********
(a) Formulation Optimization - ********
- Optimization of Formulations Through Batch Reproducibility
Studies at Initial Scale-up Level for:
- *********************
- *******************
- Finished Product
(b) Process Development - ********
- Evaluation of Pilot Scale-up Manufacturing Process and
Definition of Operating Parameters
<PAGE>
APPENDIX B (CONT.)
(c) Product Characterization - *******
- Manufacture of Pilot Scale Product(s) for Confirmatory
Pharmacokinetic Study and Clinical Studies
- Formal Stability Testing
PHASE 3
(a) Commercialization -
- Scale-up to Commercial Scale Manufacturing
- Process Validation
- Manufacture of Pivotal Pharmacokinetic and Clinical batches
(as Appropriate)
- Pivotal Stability in Finish Packaging Configuration
Status: Duration and Costing to be defined.
14
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
OPTION/LICENSE AGREEMENT
THIS AGREEMENT is made by and between Kos Pharmaceuticals, Inc., a
corporation of the State of Florida, with a place of business at 1001 South
Bayshore Drive, Suite 2502, Miami, FL 33131, and Fuisz Technologies Ltd., a
corporation of the State of Delaware with a place of business at 3810 Concorde
Parkway, Suite 100, Chantilly, VA 22021.
WHEREAS, Fuisz has over a period of years conducted research and
development work and developed proprietary technology which is useful to make
controlled-release formulations for pharmaceutical compounds and;
WHEREAS Kos has interests in developing, manufacturing and marketing
once-a-day oral solid dosage forms of Captopril (as hereinafter defined), based
on such proprietary technology of Fuisz.
NOW, THEREFORE the parties agree as follows:
ARTICLE 1- DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth in this Article:
1.1 "AFFILIATE" shall mean any company, partnership, joint venture or
other entity of which at least fifty percent (50%) of the voting rights
attaching to ordinary share capital is exercisable directly or indirectly by a
party to this Agreement alone or jointly, and any company, partnership, joint
venture or other entity over which a party to this Agreement directly or
indirectly exercises effective management control.
1.2 "COMMERCIAL SALE" shall mean any sale, trade or barter which
transfers title, to an independent third party purchaser, to any Licensed
Product by or on behalf of Kos or by or on behalf of a Sublicensee of Kos
including, but not limited to, a third party under a supply arrangement or
similar arrangement.
1.3 "LICENSED PRODUCT" shall mean any Product, the process of using or
the manufacture, use or sale of which, but for a license granted hereunder,
would infringe any Valid Claim, or which is based upon, derived from or uses any
Technology; provided, however, that Licensed Product shall not include
*********** Technology except as set forth in Article 5.
<PAGE>
1.4 "PRODUCT(S)" shall mean once-a-day oral solid dosage forms
containing Captopril for human consumption, made in whole or in part by
**************, ******************************************** or other
Technologies of Fuisz under the Development Program. Products shall not include
immediate release or other non-prolonged release oral solid dosage forms of
Captopril.
1.5 "******* TECHNOLOGY" shall mean Fuisz technology and processes where
********* materials are converted to *********** materials, materials made by
such processes and applications of materials made by such processes and
apparatus used to carry out such processes.
1.6 "********* TECHNOLOGY" shall mean technology relating to *********
processes including *********** and ********** processes, materials made by such
processes, applications of materials made by such processes and apparatus used
to carry out such processes.
1.7 "TECHNOLOGY" shall mean any and all inventions, improvements,
discoveries, claims, formulae, processes, trade secrets, technologies, know-how,
patents and patent applications conceived or reduced to practice during the
Development Agreement, and which are owned by Fuisz and I) incorporated in or
necessary for the manufacture, use or sale of Licensed Products or II) disclosed
and claimed in any patent or patent application included in Licensed Patents.
1.8 "LICENSED PATENTS" shall mean: I) the patents and patent
applications set forth in Appendix A; and II) any and all extensions, renewals,
continuations, continuations-in-part, divisions, patents-of-additions, reissues,
reexaminations, supplementary protection certificates or foreign counterparts of
any of the foregoing; and III) any and all patents which are granted on any I)
and II); and IV) any and all patents and patent applications owned or controlled
or licensable by Fuisz with the right to sublicense without payment of any kind
to a third party which contain claims, the practice of which would infringe the
claims of a patent or patent application included in I), II) or III), or which
are based upon or derived from Technology.
1.9 "TERRITORY" shall mean Worldwide.
1.10 "NET SALES" shall mean the gross invoice price of Commercial Sales
by Kos and Sublicensees of all Licensed Products, less deductions for
transportation and insurance charges, rebates, returns and allowances (actually
paid or allowed by Kos and Sublicensees), customary discounts (whether in cash
or trade), and sales or other taxes when included in the gross invoice price,
but not including taxes assessed on income derived from such Commercial Sales.
1.11 "VALID CLAIM" shall mean a claim of an issued and unexpired
Licensed Patent which has not been held invalid or unenforceable by decision of
a court or
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other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which is not admitted to be invalid
through disclaimer or dedication to the public.
1.12 "SUBLICENSEE" shall mean third parties to whom Kos has granted a
sublicense to make, use or sell any Licensed Product.
1.13 "DEVELOPMENT AGREEMENT" shall mean the Development Agreement
(having the same Effective Date as this Agreement) between the parties and all
extensions, amendments and renewals thereof.
1.14 "DEVELOPMENT PROGRAM" shall mean research and development and other
activities performed by Fuisz and Kos pursuant to the terms of Article 1 and
Appendix B of the Development Agreement.
1.15 "CAPTOPRIL" shall mean the compound Captopril in dosages to be
mutually agreed by Fuisz and Kos.
1.16 "FDA" shall mean the Food and Drug Administration of the United
States.
1.17 "KOS" shall mean Kos Pharmaceuticals, Inc. and its Affiliates.
1.18 "FUISZ" shall mean Fuisz Technologies Ltd. and its Affiliates.
1.19 "EFFECTIVE DATE" shall mean *************.
1.20 "GRANT BACK TECHNOLOGY" shall mean any and all inventions,
improvements, discoveries, claims, formulae, processes, trade secrets,
technologies, know-how, patents and patent applications based upon or directly
related to Technology, which are: a) conceived or first reduced to practice by
Kos during the period beginning with Effective Date and ending upon termination
of this Agreement; and b) owned or controlled by Kos or licensed to Kos with the
right to sublicense.
1.21. "********* TECHNOLOGY" shall mean technology relating to ********
processes including ********* and ********* processes for making ********** of
materials such as *********** and *****, including such ********** and coatings
and processes for coating such ************.
ARTICLE 2 -OPTION/LICENSE GRANT
2.1 OPTION GRANT TO KOS. Subject to the terms and conditions of this
Agreement, Fuisz grants to Kos an option to obtain an exclusive, royalty bearing
license under Technology and Licensed Patents to make, have made, use, sell and
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<PAGE>
have sold Licensed Products throughout the Territory, including the right to
grant sublicenses; provided, however that no licenses or rights are granted or
implied for ********** Technology, except as set forth in Article 5 hereof. Such
option shall be exercisable by Kos, provided all payments have been made in full
to Fuisz as provided in paragraphs 3.1(a) and 3.1(b) of this Agreement, by Kos
giving written notice to Fuisz of exercise ************************************
*******. In the event Kos does not exercise its option as provided herein, this
Agreement and all rights granted to Kos hereunder shall terminate.
2.2 LICENSE GRANT TO KOS. Upon exercise of the option as set forth in
Section 2.1, the terms and conditions of this Agreement pertaining to the
license grant hereunder shall automatically come into full force and effect.
2.3 PAYMENT OF FEES. The option and licenses granted hereunder shall be
subject to the timely payment of the applicable fees and royalties as provided
under Articles 3, 4 and 6 of this Agreement.
2.4 LICENSE GRANT TO FUISZ. Kos hereby grants to Fuisz a non-exclusive,
fully paid, irrevocable worldwide license (including the right to grant
sublicenses) under Grant Back Technology to make, have made, use, sell and have
sold products and to practice processes; provided, however, that in the exercise
of such license right Fuisz shall not do so to the detriment of the competitive
position of Kos or inappropriately identify Kos in any publicity concerning
same.
2.5 MANUFACTURING TECHNOLOGY ACCESS AND SUPPORT. Following payment of
the Manufacturing Technology Access and Support Fee under Section 3.2, Fuisz
shall make available to Kos the essential aspects of Technology necessary to
produce Licensed Products commercially. The Manufacturing Technology Access and
Support Fee shall include up to *************** days of a senior professional or
the equivalent thereof retained by Fuisz to assist in technical support related
to manufacturing of Licensed Products. In the event additional technical
manufacturing support is desired by Kos, at the request of Kos, and upon mutual
agreement on the prices at which such consultants and equipment shall be
provided to Kos, Fuisz shall make available to Kos consultants and equipment
useful for the manufacture of Licensed Products. The cost of such consultants
and equipment shall be in addition to any other fees due or payable under the
provisions of this Agreement.
2.6 For a period beginning upon the Effective Date and ending **********
following termination of the Development Program, Fuisz shall grant to Kos the
first right of negotiation of a license under Technology or Licensed Patents for
additional modification of Captopril ,and Captopril in combination with other
compounds. Kos shall notify Fuisz within such period of its desire to negotiate
such a license, and thereafter the parties shall negotiate in good faith toward
execution of a definitive agreement embodying such license.
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<PAGE>
ARTICLE 3 - FEES
3.1 OPTION/LICENSE FEES. In addition to the payments under Section 4.1,
Kos shall make the following lump sum payments to Fuisz in consideration of the
option and licenses granted hereunder, such lump sum payments not being
creditable except as otherwise expressly provided herein toward royalty or other
payments due hereunder:
(a) *************************************** as an option fee,
due and payable within **************** of the Effective Date;
(b) *********************************************, due and
payable following the end of Phase II of the Development Program
***************** after the end of Phase I of the Development Program, whichever
first occurs; and
(c) *************************************************** as a
license fee, ********* of which shall be due and payable within ***********
following the acceptance by the FDA of the first application submitted for
approval to sell a Licensed Product, and ************************** of which
shall be due and payable upon approval by the FDA of an application to sell a
Licensed Product.
3.2 MANUFACTURING TECHNOLOGY ACCESS AND SUPPORT FEE. In consideration of
the disclosure of Technology to Kos by Fuisz relating to manufacturing of
Licensed Products under Section 2.5, Kos shall pay to Fuisz such amounts as are
negotiated and agreed by the parties in good faith.
ARTICLE 4 - ROYALTIES & MINIMUM ROYALTIES
4.1 RUNNING ROYALTY
(a) As additional consideration for the grant of the licenses
provided hereunder, Kos shall pay Fuisz a running royalty of *****************
of Net Sales of Licensed Product commencing on the first Commercial Sale of
Licensed Product by Kos or its Sublicensees.
(b) Although the parties intend to secure patents covering
Licensed Products, except as otherwise provided hereunder, the royalty required
under this Article 4 shall be payable with respect to each Licensed Product
until this Agreement expires as to such Licensed Product pursuant to Section
10.1, notwithstanding the existence or non-existence of Licensed Patents
covering any Licensed Product.
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4.2 OBLIGATION TO PAY RUNNING ROYALTY. The obligation to pay running
royalty to Fuisz under this Article 4 shall be imposed only once with respect to
the same unit of Licensed Product regardless of the number of Licensed Patents
or aspects of Technology pertaining thereto. There shall be no obligation to pay
running royalties to Fuisz under this Article 4 on sales of Licensed Products
between Kos and its Affiliates and its Sublicensees but in such instances the
obligation to pay running royalty shall arise based on Net Sales by Kos or its
Affiliates or its Sublicensees. Payments due under this Article 4 shall be
deemed to accrue when Licensed Products are shipped or billed, whichever event
shall first occur.
4.3 MINIMUM ROYALTIES
(a) The licenses granted to Kos under this Agreement shall be
subject, on a calendar year basis, to payment of annual minimum royalties to
Fuisz by Kos as follows, ************************* of which shall be due and
payable within *************** following the end of each calendar quarter
commencing one (1) year following approval by the FDA to sell a Licensed
Product:
Year 1 - ********************************
Year 2 - ********************************
Year 3 - ********************************
Year 4 - ********************************
Years 5 through 9 - *********************
(b) In the event Kos or its Sublicensees shall fail to make
significant Commercial Sales or fail to use reasonable commercial efforts to
sell a Licensed Product in a country within ************** following the date of
first Commercial Sale anywhere in the Territory, Fuisz shall be entitled to
terminate in their entirety all licenses and rights granted hereunder to Kos in
such country upon written notice to Kos.
ARTICLE 5 - FUISZ SUPPLY OF ************
In the event Kos requests in writing that Fuisz supply to Kos Captopril
produced utilizing *********** Technology for use in Licensed Product, Fuisz
shall, for a period of **************** following such request negotiate in good
faith with Kos toward execution of a definitive commercial supply and/or
manufacture agreement under reasonable commercial terms for the supply of such
form of Captopril at a transfer price to Kos not to exceed the standard cost of
manufacture in accordance with the usual accounting procedures of Fuisz
**************** **************************. In the event Kos and Fuisz execute
such a definitive agreement, such agreement shall include a limited license to
Kos to utilize such form of Captopril in the manufacture of Licensed Products
and to sell and have
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sold such Licensed Products, which incorporate such form of Technology, and
provisions for the supply of such form of Captopril in the event Fuisz fails to
or cannot supply them. In the event Kos and Fuisz fail to execute such a
definitive agreement within such **********************, the provisions of this
Article 5 shall cease to be in effect thereafter. No further license or rights
shall be granted or implied to Kos with respect to *********** Technology.
ARTICLE 6 - PAYMENTS AND REPORTS
6.1 PAYMENT - All running royalty payments due under Section 4.1 shall
be paid ******** within ************* of the end ************* each calendar
year during the term of this Agreement. Each such payment shall be accompanied
by a statement of the type of each Licensed Product sold and the total Net Sales
of each such Licensed Product during such quarter, and the amount of royalty due
on such Net Sales.
6.2 MODE OF PAYMENT - Kos shall pay all royalty payments required under
this Agreement in the United States in United States Dollars. The royalty
payments due shall be translated at the rate of exchange at which United States
Dollars are listed in THE WALL STREET JOURNAL for the currency of the country in
which the royalty is accrued on the last business day of the quarter of each
calendar year in which Net Sales are made. If the transfer or the conversion
into United States Dollar equivalents in any such instance is not lawful or
possible, the payment of such part of the royalty as is necessary shall be made
by the deposit thereof, in the currency of the country where the sales were made
on which the royalty was based, to the credit and account of Fuisz or its
nominee in any commercial bank or trust company of its choice located in that
country, prompt notice of which shall be given by Kos to Fuisz.
6.3 TAXES - All taxes, assessments, fees and charges, if any, levied on
Kos, its Affiliates, or its Sublicensees under income tax laws or regulations
with respect to payments due to Fuisz hereunder shall be for the account of
Fuisz and if required to be withheld by the payer will be deducted by Kos, its
Affiliates, and/or its Sublicensees from such payments due to Fuisz. Receipts,
if available, for all such taxes, assessments, fees and charges advanced by Kos,
its Affiliates, and/or its Sublicensees to the taxing authorities shall be
secured by Kos, its Affiliates, and/or its Sublicensees and sent to Fuisz.
6.4 RECORDS RETENTION - Kos shall keep for *************** following the
royalty payment period to which they relate, complete and accurate records
pertaining to the manufacture, use and sale of Licensed Products in sufficient
detail to permit Fuisz to confirm the accuracy of Net Sales, royalty
calculations and payments under this Agreement.
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6.5 AUDIT REQUEST - At the request of Fuisz, Kos shall permit an
independent, certified public accountant appointed by Fuisz and acceptable to
Kos, at reasonable times and not more than **** each calendar year to: I)
determine, with respect to any calendar year ending not more than
*************** prior to such request, the correctness of any report or payment
made under this Agreement; or II) obtain information as to the royalty payable
for any calendar year in the case of failure of Kos to report or pay pursuant to
this Agreement. Results of any such examination shall be made available to both
parties. Fuisz shall bear the full cost of any such audit unless such audit
shall result in a determination that royalties have been underpaid by more than
*****************, in which case Kos shall bear the full cost of such audit.
6.6 FAILURE TO MAKE PAYMENTS - In the event that any payments due under
this Agreement are not made in accordance with the dates set forth hereunder,
Fuisz shall provide Kos written notice of such non-payment. Except as otherwise
specified in this Agreement, if such payments are not made within ************
after receipt by Kos of such written notice from Fuisz, Fuisz shall have the
right to terminate this Agreement by sending written notice thereof to Kos,
which notice shall be effective ***********. Any licenses or rights granted
under this Agreement shall thereafter revert to Fuisz.
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES; INFRINGEMENT AND ENFORCEMENT
7.1 REPRESENTATIONS AND WARRANTIES - Fuisz hereby represents and
warrants that:
(a) To the best of its knowledge: (I) it has the full power
and right to grant the rights and licenses set forth herein; and (II) that there
are no encumbrances on Technology or Licensed Patents which could have a
material adverse effect on the right of Kos to manufacture, use or sell Licensed
Products; and
(b) It has no existing agreements with any third party which
are in conflict with the rights granted to Kos pursuant to this Agreement.
7.2 PATENT ENFORCEMENT. Each party shall notify the other of any
infringement of Licensed Patents of which it becomes aware during the term of
this Agreement. Fuisz shall have the first right, but not the duty, to institute
patent infringement actions against third parties based on any Licensed Patent
under this Agreement, provided that Kos may join in any such actions at the
expense of Kos insofar as Kos may have a claim for lost profits. Fuisz shall
promptly notify Kos of its intention to prosecute any substantial and clear acts
of infringement of Licensed Patents. If Fuisz does not institute an infringement
proceeding against such an infringer, Kos shall have the right, but not the
duty, to institute such an action. The
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costs and expenses of any such action (including fees of attorneys and other
professionals) shall be borne by the party instituting the action, or, if the
parties elect to cooperate in instituting and maintaining such action, such
costs and expenses shall be borne by the parties in such proportions as they may
agree in writing. Each party shall execute all necessary and proper documents
and take such actions as shall be appropriate to allow the other party to
institute and prosecute such infringement actions and render such assistance as
reasonably required by the party enforcing such patents. Any award paid by a
third party as a result of such an infringement action (whether by way of
settlement or otherwise) shall be paid to the Party who instituted and
maintained such action, or if both Parties instituted and maintained such
action, such award shall be allocated among the Parties in proportion to their
respective contributions to the costs and expenses incurred in such action.
7.3 INFRINGEMENT ACTION BY THIRD PARTIES
(a) In the event of the institution of any suit by a third
party against Kos for patent infringement involving the manufacture, use, sale,
distribution or marketing of any Licensed Product, provided the basis of such
suit is the practice by Kos of a Licensed Patent or Technology licensed
hereunder, Kos shall promptly notify Fuisz in writing of such suit. Kos shall
have the right to defend such suit at its own expense, and Fuisz shall assist
and cooperate with Kos, at Kos's expense, to the extent necessary in the defense
of such suit. During the pendency of such action, Kos shall continue to make all
payments due under this Agreement.
(b) If Kos finally prevails in any such suit because it is
held not to be infringing any patents belonging to such third party or because
such third party's patent is held invalid, Kos shall continue to pay royalty as
set forth in Article 4, ***
**************************************************************
**************************************************************
**************************************************************
*******************************************************.
(c) If Kos finally loses in any such infringement action,
whether by judgment, award, decree or settlement, and is required to pay a
royalty (including lump sum fees) to a third party, Kos shall continue to pay
royalty as set forth in Article 4 with respect to such Licensed Product in the
country which is the subject of such action,
**************************************************************
**************************************************************
**************************************************************
**************************************************************
************************************************.
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(d) Any ********************************************
***************************************************************************
**********************.
7.4 Fuisz does not represent or warrant that the Licensed Patents are
valid or that the use of Licensed Patents and Technology by Kos will not
infringe any patent or other rights of any third party, and Fuisz shall not be
obligated to defend or hold harmless Kos or its Affiliates or Sublicensees or
any other entity or person against any suit, damage, claim or demand based on
actual or alleged invalidity or infringement of any patent or other rights owned
by a third party, or any unfair trade practice, resulting from the exercise or
use of any right granted hereunder.
ARTICLE 8 - CONFIDENTIALITY
8.1 CONFIDENTIALITY; EXCEPTIONS - Except to the extent expressly
authorized by this Agreement, and except as provided in Section 8.2, or
otherwise agreed in writing, the parties shall, for the term of this Agreement
and ****************** thereafter, keep confidential and shall not publish or
otherwise disclose, or use for any purpose, any information furnished to one
party by the other party pursuant to this Agreement, except to the extent that
it can be established by competent evidence that such information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement;
(d) was disclosed to the receiving party, other than under an
obligation of confidentiality, by a third party who had no obligation to the
disclosing party not to disclose such information to others; or
(e) is independently developed by or on behalf of its
receiving party by individuals not having access to such information.
Each party may disclose the other's information to the extent such
disclosure is reasonably necessary in filing or prosecuting patent applications,
prosecuting or defending litigation, or is necessary to be disclosed in
connection with the marketing
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or sale of a Licensed Product or is necessary to be disclosed to comply with
applicable governmental regulations, provided that if a party is required to
make any such disclosure of the other party's secret or confidential information
it shall, except where impracticable for necessary disclosures, for example to
health authorities, give reasonable advance notice to the other party of such
disclosure requirement and, except to the extent inappropriate in the case of
patent applications, shall use reasonable efforts to secure confidential
treatment of such information required to be disclosed.
8.2 It is understood that trade secrets provided to a party under this
Agreement and under the Development Agreement may have a significant factor in
producing Licensed Products and in the lead time for Licensed Products to be
introduced into the market-place. All such trade secrets, as defined under the
Uniform Trade Secrets Act of the United States, or the trade secret laws of
applicable national countries as applicable, which are provided by one party to
the other party hereunder and identified in writing as trade secrets, shall be
maintained in confidence, without limitation of time, and will be used only for
purposes of work under the Development Agreement or commercialization of
products under the provisions of this Agreement.
8.3 With respect to confidential information, know how and trade secrets
disclosed on or after the Effective Date by one party to the other party under
the provisions of this Agreement, the provisions of this Agreement shall govern
and prevail. In the event of any conflict between this Agreement and any other
agreement between the parties, with respect to confidential information relating
to the Field disclosed on or after the Effective Date, the terms of this
Agreement shall govern and prevail.
8.4 Each party may also disclose the other's confidential information
and trade secrets to an Affiliate, agent or consultant who has a need to know
such confidential information or trade secrets, and who is under a written
obligation of confidentiality and non-use at least substantially equivalent to
the obligations of this Article 8. A party disclosing the other party's
information or trade secrets to such Affiliate, agent or consultant shall notify
the other party of the identity of such Affiliate, agent or consultant, and
provide the other party with a draft of the proposed confidentiality agreement
with such Affiliate, agent or consultant and allow the other party to make
whatever changes it deems necessary to such agreement in order to protect its
confidential information and trade secrets.
ARTICLE 9 - INDEMNIFICATION
9.1 (a) *** shall defend, indemnify and hold *****, its directors,
officers and employees, harmless from and against any and all claims, suits or
demands for
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liability, damages, losses, costs and expenses (including the costs and expenses
of attorneys and other professionals) arising out of third party claims or suits
or demands resulting from the manufacture, use or sale of Licensed Products by
************************************* pursuant to this Agreement.
(b) Each party (the "Indemnifying Party") shall defend,
indemnify and hold the other party and its directors, officers and employees,
harmless from and against any and all claims, suits, and demands for liability,
damages, losses, costs and expenses (including the costs and expenses of
attorneys and other professionals) arising out of or resulting from the
inaccuracy of any representation or the breach by the Indemnifying Party of any
warranty, covenant or agreement contained in this Agreement.
9.2 NOTICE - In the event that either party seeks indemnification under
this Article 9, such party shall: I) promptly inform the indemnifying party of
any claim, suit or demand threatened or filed, II) permit the indemnifying party
to assume direction and control of the defense of such claims, suit or demand
resulting therefrom (including the right to obtain a settlement thereof at the
sole discretion of the indemnifying party), and III) cooperate as requested (at
the expense of the indemnifying party) in the defense of such claims, suit or
demand.
9.3 LIMITATIONS. An indemnifying party's (including sublicensees)
obligations under this Article 9 shall not extend to any claims, suits or
demands for liability, damages, losses, costs or expenses arising from the
indemnified party's failure to comply with the terms and conditions of this
Agreement, or of the Development Agreement, to the extent arising from the
negligence or willful misconduct of the indemnified party, its agents or
employees.
ARTICLE 10 - TERM; TERMINATION
10.1 TERM. This Agreement shall commence as of the Effective Date of
this Agreement and, unless sooner terminated as provided hereunder, shall expire
******************** thereafter or upon the expiration of the last to expire
Valid Claim of a Licensed Patent, whichever period is longer.
10.2 BREACH. Failure by either party to comply with any material
obligation contained in this Agreement shall entitle the other party to give to
the party in default notice specifying the nature of the default and requiring
it to cure such default. If such default is not cured within ***************
after the receipt of such notice (or, if such default cannot be cured within
such ************** period, if the party in default does not commence and
diligently continue actions to cure such default), the notifying party shall be
entitled, without prejudice to any of its other rights conferred by this
Agreement, and in addition to any other remedies available to it by
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law or in equity, to terminate this Agreement by giving written notice to take
effect within thirty (30) days after such notice unless the defaulting party
cures such default within said thirty (30) days. The right of either party to
terminate this Agreement, as hereinabove provided, shall not be affected in any
way by its waiver or failure to take action with respect to any previous
default.
10.3 TERMINATION BY KOS. Kos shall have the right to terminate this
Agreement by giving notice in writing to Fuisz of such termination. Such
termination shall be effective **************** from the date such notice is
given, and all Kos's rights hereunder associated therewith shall cease as of
that date, subject to Section 10.4.
10.4 RIGHT TO SELL STOCK ON HAND. Upon the termination of this Agreement
for any reason other than a failure to cure a material breach of this Agreement
by Kos, Kos and its Affiliates shall have the right for ************, or such
longer period as the parties may agree in writing, to dispose of all Licensed
Products or substantially completed Licensed Products then on hand, and running
royalty shall be paid to Fuisz with respect to such Licensed Products as though
such termination had not occurred.
10.5 TERMINATION OF SUBLICENSES. Upon termination of this Agreement, all
sublicenses granted by Kos under the provisions of this Agreement shall
terminate simultaneously, subject, nevertheless, to Section 10.4.
10.6 INSOLVENCY OR BANKRUPTCY. a) Either party may, in addition to any
other remedies available to it by law or in equity, terminate this Agreement by
written notice to the other party in the event the other party shall have become
insolvent or bankrupt, or shall have made an assignment for the benefit of its
creditors, or there shall have been appointed a trustee or receiver of the other
party or for all or a substantial part of its property, or any case or
proceeding shall have been commenced or other action taken by or against the
other party in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up arrangement, composition or readjustment of its debts or any other
relief under any bankruptcy, insolvency, reorganization or other similar act or
law of any jurisdiction now or hereafter in effect, or there shall have been
issued a warrant of attachment, execution, distraint or similar process against
any substantial part of the property of the other party, and any such event
shall have continued for sixty (60) days undismissed, unbonded and undischarged;
or b) all rights and licenses granted under or pursuant to this Agreement by
Fuisz to Kos are, and shall otherwise be deemed to be, for the purposes of
Article 365(n) of title 11, U.S. Code ("Bankruptcy Code") license rights to
"intellectual property" as defined under Article 101(60) of the Bankruptcy Code.
Kos, as a licensee of such right under this Agreement, shall retain and may
fully exercise all of its rights and election under the Bankruptcy Code.
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10.7 EFFECT OF TERMINATION.
(a) Following the expiration of any license granted under this
Agreement, Kos, and its Sublicensees shall have the royalty-free non-exclusive
right to continue to use the Licensed Patents and Technology for the
manufacture, use and sale of Licensed Products as heretofore licensed.
(b) Upon the termination of this Agreement by Fuisz other than
as provided in paragraph 10.7(a), Kos and its Sublicensees shall promptly: I)
return to Fuisz all relevant records, materials or confidential information
concerning the Licensed Patents and Technology relating to Licensed Product in
any country in the possession or control of Kos or any of its Sublicensees
provided, however, that a copy of such confidential information shall be
retained by Kos's legal department solely for reference as to its obligations
hereunder.
10.8 SURVIVING RIGHTS. Termination of this Agreement shall not terminate
Kos's obligation to pay all royalties which shall have accrued hereunder. The
parties' obligations under Articles 7, 8 and 9 and Sections 2.4, 4.1, 4.2, 6.4
and 10.4 shall survive termination.
10.9 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Termination, relinquishment
or expiration of this Agreement for any reason shall be without prejudice to any
rights which shall have accrued to the benefit of either party prior to such
termination, relinquishment or expiration. Such termination, relinquishment or
expiration shall not relieve either party from obligations which are expressly
indicated to survive termination or expiration of this Agreement.
ARTICLE 11 - MISCELLANEOUS PROVISIONS
11.1 STATUS OF PARTIES. The parties are independent contractors and
nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee or joint venture relationship between the
parties. Neither party shall incur any debts or make any commitments for the
other, except to the extent, if at all, specifically provided herein.
11.2 ASSIGNMENT. This Agreement is unassignable by either Kos or Fuisz
except with the prior written consent of the other, except that it may be
assigned without consent to a corporate successor of Kos or Fuisz or to a person
or corporation acquiring all or substantially all of the business and assets of
Kos or Fuisz to which this Agreement relates. All or any portion of Licensed
Patents and Technology shall be assignable by Fuisz; provided, however, that in
the event of any such assignment, any such assignee shall accept and agree in
writing to be bound by all of the terms and conditions of this Agreement
relating to such assigned rights.
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11.3 FURTHER ACTIONS. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
11.4 FORCE MAJEURE. Neither party shall be liable to the other for any
loss or damages or shall have any right to terminate this Agreement for any
default or delay attributable to any act of God, flood, fire, explosion, strike,
lockout, labor dispute, shortage of raw materials, casualty or accident, war
(declared or undeclared), revolution, civil commotion, act of public enemies,
blockage or embargo, injunction, law, order, proclamation, regulation,
ordinance, demand or requirement of any government or subdivision, authority or
representative of any such government, or any other cause beyond the reasonable
control of such party, if the party affected shall give prompt notice thereof to
the other party. The party giving such notice shall thereupon be excused from
such of its obligations hereunder as it is thereby disabled from performing for
so long as it is so disabled and for thirty (30) days thereafter.
11.5 TRADEMARKS. Except as otherwise provided herein, neither party
shall have any right, express or implied, to use in any manner the name or other
designation of the other party or any other trade name or trademark of the other
party in connection with this Agreement. Kos shall place an appropriate legend
on all packaging material associated with Licensed Product indicating that such
Licensed Product was produced under license granted by Fuisz Technologies Ltd.
11.6 PUBLIC ANNOUNCEMENTS. Except as required by law or in connection
with private or public offerings to raise capital or as required for documents
to be filed with the Securities and Exchange Commission (a "Permitted Public
Announcement"), neither party shall make any public announcement concerning this
Agreement or the subject matter hereof without the prior written consent of the
other; provided, however, that in any event, each party shall have the right to
refer, in such announcement required by law or in any private or public offering
documents, to the status of this Agreement or of the Development Agreement and
to state that the license hereunder has been granted, together with a
generalized description of the nature and extent of such license. All such
announcements shall be made available by the announcing party to the other party
at least five (5) business days in advance of the announcement for review and
comment by the other party.
11.7 NOTICES. All notices and other communications required or permitted
to be given under or in connection with this Agreement shall be in writing, and
shall be deemed given if delivered personally or by facsimile transmission
(receipt verified), express courier service (signature required), telexed, or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice; provided, that notices of a change
or address shall be effective only upon receipt thereof):
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NOTICE TO FUISZ: NOTICE TO KOS:
Fuisz Technologies Ltd. Kos Pharmaceuticals, Inc.
ATTN: Richard C. Fuisz, M.D. ATTN: President
President and CEO 1001 South Bayshore Drive
3810 Concorde Parkway Suite 2502
Suite 100 Miami, FL 33131
Chantilly, VA 22021
With a copy to:
Fuisz Technologies Ltd.
ATTN: James L. Wilcox
Vice President and
General Counsel
3810 Concorde Parkway
Suite 100
Chantilly, VA 22021
11.8 AMENDMENT. No amendment, modification or supplement of any
provision of this Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each party.
11.9 WAIVER. No provision of this Agreement shall be waived by any act,
omission or knowledge of a party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by the waiving
party.
11.10 COUNTERPARTS. This Agreement shall be executed simultaneously in
two counterparts, either one of which need not contain the signature of more
than one party, but both such counterparts taken together shall constitute one
and the same agreement.
11.11 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
11.12 GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of ******** without regard to its
choice of law principles.
11.13 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable regulations or law, such provision will be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of this Agreement.
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In the event of such prohibition or invalidity, the parties hereto shall
negotiate in good faith to modify this Agreement, but only to the extent
necessary to render the terms and conditions of this Agreement valid and
enforceable, giving full regard to all applicable regulations or laws and the
intent and purposes of the parties in entering into this Agreement.
11.14 COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit a party to export, reexport or otherwise transfer any Technology
transferred hereunder or Licensed Products manufactured therefrom without
compliance with applicable laws.
11.15 ENTIRE AGREEMENT OF THE PARTIES. This Agreement and the
Development Agreement constitutes and contains the entire understanding and
agreement of the parties and cancels and supersedes any and all prior
negotiations, correspondence, understandings and agreements, whether oral or
written, between the parties, respecting the subject matter hereof.
11.16 ALTERNATIVE DISPUTE RESOLUTION.
(a) In the event of any dispute, controversy or claim arising
out of or relating to this agreement (unless such dispute, controversy or claim
involves an issue of the validity of Licensed Patents), Kos or Fuisz shall
employ alternative dispute resolution procedures in an effort to avoid
litigation over any such dispute, controversy or claim. Any such dispute,
controversy or claim hereunder shall, prior to submission to such alternative
dispute resolution proceedings, be referred to representatives of management
(hereinafter "management representatives") of the respective parties for
resolution.
(b) Any such dispute that shall not have been resolved
pursuant to Section 11.16(a) **************** after reference to such management
representatives, or otherwise by agreement between the parties, shall be
referred to arbitration in accordance with the rules of the American Arbitration
Association. The arbitration tribunal shall consist of three (3) arbitrators.
The party initiating arbitration shall nominate one (1) arbitrator (who shall
not be affiliated with such party) in the request for arbitration and the other
party shall nominate a second arbitrator (who shall not be affiliated with such
party) in the answer thereto. The two (2) arbitrators so named will then jointly
appoint the third (3rd) arbitrator as chairman of the arbitration tribunal. If a
party fails to nominate its arbitrator as chairman of the arbitration tribunal
or if the arbitrators named by the parties fail to agree on the person to be
named as chairman within sixty (60) days, the Office of the American Arbitration
Association in Washington, DC, USA shall make the necessary appointments of an
arbitrator or the chairman of the tribunal. The award of the arbitration
tribunal shall be final and judgment upon such an award may be entered in any
competent court or application may be made to any competent court for judicial
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acceptance of such an award and an order of enforcement. In the event of any
procedural matter not covered by the aforesaid Rules, the procedural law of the
State of Delaware, United States of America, shall govern.
11.17 PRODUCT LIABILITY. In addition to the indemnification provided
under Article 9, *** accepts full responsibility for and assumes all risk of
damage or injury to persons and to property arising out of the manufacture,
having manufactured, use or sale of Licensed Products by *******************.
*** shall maintain product liability insurance in an amount of at least
***************************** to cover any and all such potential claims with
the exception of those claims arising directly from the use of *******
Technology ***************************, and
***************************************** from and against any and all personal
injury, property damage, product liability or similar claims, costs, damages,
losses, liabilities, attorneys fees and all judgments of any kind arising out of
the manufacture, having manufactured, use or sale of Licensed Products by
**********.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized officer as of the Effective Date.
KOS PHARMACEUTICALS, INC. FUISZ TECHNOLOGIES LTD.
_________________________ ________________________
Daniel M. Bell Richard C. Fuisz, M.D.
President President and CEO
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APPENDIX A
PATENTS
- - Rapidly Dissoluble Medicinal Dosage Unit and Method of Manufacture
U.S. Patent No. 4,855,326 issued 08/08/89 (F-005)
- - Method of Producing Compacted Dispersable Systems
U.S. Patent No. 4,997,856 issued 04/05/91 (F-030)
- - Moderated Spun Fibrous System and Method of Manufacture
U.S. Patent No. 5,034,421 issued 07/23/91 (F-019)
- - Method & Apparatus for Flash Flow Processing having Feed Rate Control
U.S. Patent No. 5,346,377 issued 09/13/94 (F-115)
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APPENDIX A (CONT.)
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
DEVELOPMENT AGREEMENT
THIS AGREEMENT is made by and between Kos Pharmaceuticals, Inc., a
corporation of the State of Florida, with a place of business at 1001 South
Bayshore Drive, Suite 2502, Miami, FL 33131 (hereinafter referred to as "Kos")
and Fuisz Technologies Ltd., a corporation of the State of Delaware with a place
of business at 3810 Concorde Parkway, Suite 100, Chantilly, VA 22021
(hereinafter referred to as "Fuisz").
WHEREAS, Fuisz has over a period of years conducted research and
development work and developed proprietary technology which is useful to make
controlled-release formulations for pharmaceutical compounds; and
WHEREAS Kos has interests in developing, manufacturing and marketing
once-a-day oral solid dosage forms of IS-5-MN (as hereinafter defined), based on
Fuisz proprietary technology; and
WHEREAS, Fuisz and Kos are each willing to undertake a Development
Program (as hereinafter defined) for development of the foregoing products for
commercial marketing and sale.
Now, therefore, the parties agree as follows:
The definitions as used herein are set forth in Article 1 of the
License Agreement and Appendix A attached hereto and incorporated herein by
reference.
ARTICLE 1 - DEVELOPMENT PROGRAM
1.1 Fuisz and Kos shall jointly undertake using reasonable best efforts
a Development Program to develop one or more Products for Commercial Sale. It is
understood that this Development Program is primarily for the purposes of
developing and producing Products and shall be carried out generally in
accordance with Appendix B.
1.2 Each party shall appoint a Program Manager for overall management of
the Development Program and such Program Managers shall by mutual agreement
provide the direction of the program and the scope of work to be undertaken
under the Development Program; provided, however, that Kos shall determine the
focus of work which the Program Managers mutually agree can be carried out under
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Development Program, within the guidelines set forth in Appendix B. The initial
Program Manager for Kos shall be designated within thirty (30) days and the
initial Program Manager for Fuisz shall be ***************. Each party may
change the designated Program Manager upon written notice to the other party of
such change.
1.3 During the term of the Development Program Fuisz shall periodically
provide to Kos samples of materials for evaluation by Kos. Kos shall promptly
evaluate such samples and provide guidance to Fuisz for further work based on
the results of such evaluations. During the Development Program term, Program
Managers or representatives of the parties shall meet from time to time to
discuss planning and progress of the Development Program to carry out efficient
and effective activities. Fuisz shall provide project updates to Kos verbally
and/or in written form ******************** during the Development Program, and
shall provide a written report upon completion of the Development Program. All
such discussions and activities shall be considered as carried out under the
Development Program.
1.4 Kos shall supply to Fuisz, at Kos's cost and expense, materials
including IS-5-MN which Kos believes are essential for carrying out the
Development Program. All such materials supplied by Kos shall be materials
approved for human uses unless otherwise specifically designated and Kos shall
supply MSDS sheets where necessary for the processing of such materials. Fuisz
shall advise Kos from time to time of its requirements for such materials for
the Development Program.
1.5 Upon termination of each Phase of the Development Program, Fuisz
shall provide to Kos quantities of prototype Products processed using Technology
which demonstrate the best results obtained under the Development Program. Kos
shall provide to Fuisz all data, information and conclusions generated during
the Development Program relating to the Development Program and/or Technology
including without limitation ******************** and any other mutually agreed
pre-defined data, and Fuisz shall have the ****************** to use all such
data, information and conclusions; provided, however, that Fuisz shall not
utilize such data, information and conclusions to the detriment of the
competitive position of Kos or inappropriately identify Kos in any publicity
concerning same.
1.6 In the event special processing or manufacturing equipment
specifically modified or adapted for use with Technology is requested by Kos to
be used under the Development Program, Kos shall provide such equipment to Fuisz
for the duration of the Development Program.
1.7 All activities in connection with the Development Program shall be
carried out by each party in strict compliance with any applicable federal,
state or local laws, regulations or guidelines governing such activities.
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1.8 In addition to the funding under Article 3, Kos shall pay for the
cost of all materials including IS-5-MN used in the Development Program and
approved by Kos (to the extent such materials are not provided and fully paid by
Kos), and Kos shall pay for the costs of all shipping, packing, customs, duties
and customs clearances associated with shipment of materials and/or equipment to
or from Fuisz or for, or resulting from work under, the Development Program. In
addition, Kos shall pay for the reasonable costs of travel of Fuisz personnel at
the prior request and approval of Kos in connection with meetings, activities or
reviews of activities under the Development Program.
1.9 All equipment, supplies and other items purchased by either party
for the conduct of the Development Program, shall be the sole and exclusive
property of the purchasing party. For purposes hereof, all such items purchased
by Fuisz with funds provided by Kos shall be deemed to be items purchased and
owned by *****.
ARTICLE 2 - TERM AND TERMINATION OF THE DEVELOPMENT PROGRAM
2.1 The initial term of Phase I of the Development Program shall be
***************** from the Effective Date. The parties shall use reasonable
efforts to carry out the Development Program during such initial term. However,
if due to unforseen circumstances unavoidable delays attributable solely to
Fuisz are encountered, or force majeure events are encountered in carrying out
activities, the initial term of the Development Program shall be extended for a
time equal to the delay at no additional cost to Kos. The Development Program
shall be automatically extended on a week by week basis after the initial term
provided that Kos may terminate the Development Program anytime after the
initial term or at the end of each successive weekly extension of the
Development Program, and Fuisz may terminate the Development Program at the end
of the ************** weekly extension thereof or at the end of each successive
weekly extension thereafter, respectively upon ********* calendar days advance
notice in writing to the other party.
2.2 If either party shall default, fail to perform, or otherwise commit
a breach of a material obligation or any covenant contained herein with respect
to the Development Program, and shall fail to remedy such default, failure to
perform or breach within ********** days after its receipt of written notice
thereof from the other party, such other party may terminate the Development
Program and incur no further obligation hereunder, it being understood, however,
that if within such ********** days after receipt of such notice, the party in
default shall have rectified its default, then the Development Program and the
terms hereof relating to the Development Program shall be restored as if no
termination of the Development Program had occurred. The term of this Agreement
(or any extension thereof) shall be tolled by the time required by the
defaulting party to cure the default.
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2.3 This Agreement shall commence upon the Effective Date and terminate
at the end of the term of the Development Program, including any extensions
thereof.
2.4 Except for Kos and Fuisz jointly owned technology and patents and
Fuisz solely owned technology and patents, Fuisz hereby acknowledges that it
shall not have the right, following expiration of the Development Agreement
term, to use technology to the extent obtained from Kos, patents based thereon
or any materials to the extent obtained from Kos, for any purpose without
obtaining a license from Kos, which license Kos, in its sole discretion, may
grant or deny.
2.5 Except as set forth in the License Agreement and except for Kos and
Fuisz jointly owned technology and patents and Kos solely owned technology and
patents, Kos hereby acknowledges that it shall not have the right, following
expiration of the Development Agreement term, to use Technology to the extent
obtained from Fuisz, patents based thereon or any materials to the extent
obtained from Fuisz, for any purpose without obtaining a license from Fuisz,
which license Fuisz, in its sole discretion, may grant or deny.
ARTICLE 3 - FUNDING OF THE DEVELOPMENT PROGRAM
3.1 Kos shall provide total funding for Phase 1 of the Development
Program as set forth in Appendix B, in the amount of
****************************
******************************************************************************
******************* of which shall be paid to Fuisz within *********** days of
the Effective Date, and ******************************** of which shall be paid
within ************************ following the end of Phase 1 and
****************************************** of which shall be paid within
**************** following completion of the Phase 1 ******************* of
Appendix B. This amount of funding may be increased by mutual agreement. This
funding shall not include the cost of the ******************* which shall be
funded and paid for ************. In the event Kos chooses to proceed to Phase 2
and/or Phase 3 as set forth in Appendix B, unless Fuisz determines further
development is not feasible, Kos shall pay to Fuisz additional amounts
commensurate with the activity involved and as mutually agreed, consistent with
the cost of Phase 1 and with the level of activity, for Phase 2 and for Phase 3
payable within **************** of commencement of the phases.
3.2 In the event the Development Program is extended by mutual written
agreement of the parties, each successive one (1) week extension after the
initial term shall be funded and paid to Fuisz in advance at a rate of
************************************ per week with respect to extension of Phase
I, and with respect to Phases 2 and 3, such weekly amounts as are consistent
with the additional funding set forth in Section 3.1; provided, however, that if
the man-day charges for
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work carried out at Fuisz during the initial term are less than the funding
actually paid under the initial term (exclusive of charges under Section 1.8)
then additional funding for such extensions under this Section 3.2 shall not be
invoiced or due until such time as the man-day charges equal such funding
provided for the initial term. Other costs as set forth in Section 1.8
associated with successive weekly extensions incurred under the Development
Program, shall be invoiced once each month and will be due *************** days
from date of mailing of the invoice.
3.3 All work done at Fuisz shall be at ************** rates of Fuisz for
pharmaceutical development work. Verification of the man-days charges for work
under the Development Program and the schedule of applicable existing charge
rates shall be made available to Kos at reasonable intervals upon written
request. In the event Kos requests work be done in excess of the current funding
during the initial term of the Development Agreement or any extensions thereof,
Fuisz shall invoice Kos for such excess work on a monthly basis. In the event
either party terminates the Development Program, Kos shall be obligated to pay
Fuisz for all work done by Fuisz under the Development Program up to the date of
termination, and if terminated by Kos for breach by Fuisz, Fuisz shall refund
any advanced funding payments made by Kos in excess of payments for work done.
ARTICLE 4 - MERCHANTABILITY, FITNESS FOR PURPOSE AND
LIMITATIONS OF LIABILITY
4.1 The parties recognize that this is an agreement for services and not
for the sale of goods. Therefore, except as provided in this Article 4, Fuisz
makes no warranties, express or implied, regarding the quality or quantity of
any Product produced under this Agreement or materials purchased to support work
performed under this Agreement which are not specifically identified in writing
as to source or quality by Kos prior to purchase, provided that Fuisz represents
and warrants that as of the time of delivery, all Products supplied to Kos which
are labeled cGMP Sample shall conform to the specifications mutually agreed to
in writing by the parties, shall be manufactured using Current Good
Manufacturing Practices as defined in regulations promulgated by the FDA under
the Federal Food, Drug and Cosmetic Act (the "Act"), shall contain only
materials that are GRAS, and shall not be adulterated or misbranded within the
meaning of the Act. FUISZ EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
4.2 In the performance of the duties contemplated hereunder, the status
of the parties including employees and agents of each, shall be that of
independent contractors and not as employees, agents or fiduciaries of the other
party, and neither party shall have the right to make commitments for or on
behalf of the other party.
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4.3 Each party shall be responsible for the safety of its employees and
agents with respect to activities relating to the Development Program under this
Agreement and for liability for damages or personal injuries, including death,
resulting from such activities without any warranty, liability or
indemnification on the part of the other party.
ARTICLE 5 - FORCE MAJEURE
5.1 Neither Fuisz nor Kos shall be liable for delay or failure in the
performance of the obligations contained in this Agreement arising solely from
any one or more of the following matters: (a) acts of God, or public enemy or
war (declared or undeclared); (b) acts of governmental authorities, of
quasi-governmental authorities, or the United States, or any political
subdivision thereof, or of any department or agency thereof, or regulations or
restrictions imposed by law or by court action, except as they may result from
the unreasonable failure of Fuisz or Kos to perform as required hereunder; (c)
acts of persons, other than employees or agents of the parties, engaged in
subversive activities or sabotage; (d) fires, floods, explosions or other
catastrophes; (e) epidemics or quarantine restrictions; (f) strikes, or similar
labor disruptions; (g) freight embargoes, or interruption of transportation; (h)
unusually severe weather; (i) delays of a supplier of Fuisz or Kos due to any of
the above causes or events; or (j) any other extraordinary causes, similar or
dissimilar, beyond the control of the party concerned; and provided that due
diligence is exercised to cure such cause and resume performance, and the time
for performance by such party shall be extended by a period of any such delay.
ARTICLE 6 - CONFIDENTIALITY
6.1 CONFIDENTIALITY; EXCEPTIONS - Except to the extent expressly
authorized by this Agreement, and except as provided in Section 6.2, or
otherwise agreed in writing, the parties shall, for the term of this Agreement
and for ************** thereafter, keep confidential and shall not publish or
otherwise disclose, or use for any purpose, any Confidential Information
furnished to one party by the other party pursuant to this Agreement, except to
the extent that it can be established by competent evidence that such
Confidential Information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
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(c) became generally available to the public or became
otherwise part of the public domain after its disclosure and other than through
any act or omission of the receiving party in breach of this Agreement;
(d) was disclosed to the receiving party, other than under an
obligation of confidentiality, by a third party who had no obligation to the
disclosing party not to disclose such Confidential Information to others; or
(e) is independently developed by or on behalf of the
receiving party by individuals not having access to such Confidential
Information.
Each party may disclose the other's Confidential Information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, or is necessary to be
disclosed in connection with the marketing or sale of a Product or is necessary
to be disclosed to comply with applicable governmental regulations; provided,
however, that if a party is required to make any such disclosure of the other
party's Confidential Information it shall, except where impracticable for
necessary disclosures, for example to health authorities, give reasonable
advance notice to the other party of such disclosure requirement and, except to
the extent inappropriate in the case of patent applications, shall use
reasonable efforts to secure confidential treatment of such Confidential
Information required to be disclosed.
6.2 All trade secrets provided to a party under this Agreement by the
other party, as defined under the Uniform Trade Secrets Act of the United
States, or the trade secret laws of applicable national countries, which are
provided by one party to the other party hereunder and identified in writing as
trade secrets, shall be maintained in confidence, without limitation of time,
and will be used only for purposes of work under this Agreement or
commercialization of Products under the provisions of this Agreement.
6.3 Each party may also disclose the other's Confidential Information
and trade secrets to an Affiliate, agent or consultant on a need-to-know basis,
who is under an obligation of confidentiality and non-use at least substantially
equivalent to the obligations of this Article 6, a party disclosing the other
party's Confidential Information or trade secrets to such Affiliate, agent or
consultant shall notify the other party of the identity of such Affiliate, agent
or consultant.
ARTICLE 7 - INVENTIONS AND PATENTS
7.1 Inventions and any patent applications and patents based on
Inventions made under or as a result of work done under the Development Program
or as a result
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of evaluations or analysis of samples under the Development Program shall be
owned as follows:
(a) if invented solely by the staff of Fuisz or their
consultants or jointly by employees of Fuisz and their consultants, ownership
shall rest in Fuisz;
(b) if invented solely by the staff of Kos or their
consultants or jointly by employees of Kos and their consultants and such
Inventions are based upon or directly related to Technology, ownership shall
rest in Fuisz; otherwise, ownership shall rest in Kos and Fuisz shall have
irrevocable, paid up, non-exclusive rights thereunder;
(c) if invented jointly by employees of Kos and/or Kos
consultants and employees of Fuisz and/or Fuisz' consultants ("Joint
Invention"), ownership shall rest jointly in Fuisz and Kos.
7.2 Patent and copyright procurement activity in regard to Inventions
shall be pursued at the discretion and expense of the owner or designee set
forth in Section 7.1 except that procurement activities with respect to Joint
Inventions shall be pursued at the discretion and equally shared expense of
Fuisz and Kos. Each party, however, shall notify the other upon the preparation
of any written invention report and/or the filing of any patent or copyright
application based on an Invention, provide the other with a copy of any such
Invention report, or patent or copyright application based on an Invention, and
any issued patent or statutory copyright granted thereon, and on request update
the other as to the status of any such patent or copyright application. Neither
party shall be liable with respect to any claims or damages arising from any
act, or failure to act, in regard to the preparation, prosecution or maintenance
of any such patent applications or patents. Each party shall sign documents to
vest or maintain title to patents and/or copyrights in the owner designated in
Section 7.1, and provide all reasonable assistance to the other with respect to
preparation and prosecution of such patents and copyrights as may be necessary.
7.3 As to Inventions owned by Kos and/or Fuisz in accordance with
Section 7.1, each party shall furnish to the other all information and data in
its possession reasonably necessary to obtain patents and copyrights on such
Inventions and, upon request, shall review applications for such patents and
copyrights. In the event the Program Manager or the owner or designee decides
that additional examples are necessary to obtain patents on Inventions, the
other party shall cooperate by providing any such examples relating to use of
the Invention as may reasonably be requested by the owner or designee, provided
that the owner or designee shall reimburse the other party for the reasonable
costs of generating such examples for individually owned Inventions where the
Program Managers do not agree to fund generation of such additional examples.
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ARTICLE 8 - GENERAL PROVISIONS
8.1 INDEPENDENT CONTRACTORS. Nothing in this Agreement shall be deemed
to create an agency, employer-employee, partnership or joint venture
relationship between the parties. The status of the parties shall be, for all
purposes, independent contractors. Neither party shall have the right to control
the work of the other's employees and/or agents.
8.2 NO OTHER IMPLIED LICENSES. Except as provided in the License
Agreement each party understands that this Agreement does not include any
assurance that the other party has granted or will grant any license, option or
right to it, and the other party reserves the right to enter into exclusive
licenses or business arrangements with other parties for any or all of its
technology.
8.3 AMENDMENTS. No addition to, deletion from or modification of any of
the provisions of this Agreement shall be binding upon the parties unless made
in writing and signed by a duly authorized representative of each party. Any
such additions, deletions or modifications shall refer specifically to this
Agreement.
8.4 ASSIGNMENT. This Agreement is unassignable by either Kos or Fuisz
except with the prior written consent of the other; provided, however, that it
may be assigned without consent to a corporate successor of Kos or Fuisz or to a
person or corporation acquiring all or substantially all of the business and
assets of Kos or Fuisz to which this Agreement relates. All or any portion of
Technology shall be assignable by Fuisz; provided, however, that in the event of
any such assignment, any such assignee shall accept and agree in writing to be
bound by all of the terms and conditions of this Agreement relating to such
assigned rights.
8.5 APPLICABLE LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of ********, United States of
America, without reference to its conflict of laws provisions.
8.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed duly given when personally delivered or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
cable confirmed by letter as aforesaid, as follows:
Notice to Fuisz: Notice to Kos:
Fuisz Technologies Ltd. Kos Pharmaceuticals, Inc.
3810 Concorde Parkway 1001 South Bayshore Drive
Suite 100 Suite 2502
Chantilly, VA 22021 Miami, FL 33131
ATTN: Richard C. Fuisz ATTN: President
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President and CEO
With a copy to:
James L. Wilcox
Vice President & General Counsel
or to such other address as either party may hereafter designate in writing by
like notice.
8.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties with regard to the subject matter hereof and
supersedes all prior discussions, representations and understandings with
respect thereto, whether written or oral.
8.8 SURVIVAL. The rights and obligations of either party under Articles
6 and 7 shall survive the termination of this Agreement.
8.9 PUBLIC ANNOUNCEMENTS. Except as required by law or in connection
with private or public offerings to raise capital or as required for documents
to be filed with the Securities and Exchange Commission (a "Permitted Public
Announcement"), neither party shall make any public announcement concerning this
Agreement or the subject matter hereof without the prior written consent of the
other; provided, however, that in any event, each party shall have the right to
refer, in such announcement required by law or in any private or public offering
documents, to the status of this Agreement or of the Development Agreement and
to state that the license hereunder has been granted, together with a
generalized description of the nature and extent of such license. All such
announcements shall be made available by the announcing party to the other party
at least ***************** days in advance of the announcement for review and
comment by the other party
8.10 This Agreement shall be executed in one or more counterparts, each
of which shall for all purposes be deemed to be an original and all of which
shall constitute the same instrument subject to the time limitations imposed in
those sections.
8.11 ALTERNATIVE DISPUTE RESOLUTION.
(a) In the event of any dispute, controversy or claim arising
out of or relating to this Agreement (unless such dispute, controversy or claim
involves an issue of patent validity), Kos or Fuisz shall employ alternative
dispute resolution procedures in an effort to avoid litigation over any such
dispute, controversy or claim. Any such dispute, controversy or claim hereunder
shall, prior to submission to such alternative dispute resolution proceedings,
be referred to representatives of management (hereinafter "Management
Representatives") of the respective parties for resolution.
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(b) Any such dispute that shall not have been resolved
pursuant to paragraph 8.11(a) *********** days after reference to such
Management Representatives, or otherwise by agreement between the parties, shall
be referred to arbitration in accordance with the rules of the American
Arbitration Association. The arbitration tribunal shall consist of three (3)
arbitrators. The party initiating arbitration shall nominate one (1) arbitrator
(who shall not be affiliated with such party) in the request for arbitration and
the other party shall nominate a second arbitrator (who shall not be affiliated
with such party) in the answer thereto. The two (2) arbitrators so named will
then jointly appoint the third (3rd) arbitrator as chairman of the arbitration
tribunal. If a party fails to nominate its arbitrator as chairman of the
arbitration tribunal or if the arbitrators named by the parties fail to agree on
the person to be named as chairman within sixty (60) days, the Office of the
American Arbitration Association in Washington, DC, USA shall make the necessary
appointments of an arbitrator or the chairman of the tribunal. The award of the
arbitration tribunal shall be final and judgment upon such an award may be
entered in any competent court or application may be made to any competent court
for judicial acceptance of such an award and an order of enforcement. In the
event of any procedural matter not covered by the aforesaid Rules, the
procedural law of the State of ********, United States of America, shall govern.
8.12 For so long as he is employed by Fuisz, Fuisz shall provide the
services of *****************, or an appropriate substitute designated by Fuisz
and acceptable to Kos, who shall be primarily responsible for carrying out the
responsibilities of Fuisz under the Development Program.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized officer as of the Effective Date.
KOS PHARMACEUTICALS, INC. FUISZ TECHNOLOGIES LTD.
- -------------------------------- ---------------------------------
Daniel M. Bell Richard C. Fuisz, M.D.
President President and CEO
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APPENDIX A
"CONFIDENTIAL INFORMATION" shall mean all business or technical information,
including, without limitation, all photographs, records, methods, processes,
techniques, equipment, and all know how and trade secrets, provided by one party
to the other party under the provisions of this Agreement.
"EFFECTIVE DATE" shall mean the Effective Date of the License Agreement.
"INVENTION" shall mean any discovery or invention conceived, made or reduced to
practice in the performance of work under the Development Program or resulting
from the IN VITRO evaluation or analysis of samples produced under the
Development Program.
"LICENSE AGREEMENT" shall mean the Option and License Agreement between Kos and
Fuisz relating to IS-5-MN and having the same Effective Date as this Agreement.
<PAGE>
APPENDIX B
DEVELOPMENT PROGRAM SCHEDULE
PHASE 1 - **********
(a) Preformulation - *******
- Drug Physicochemical Characterization
- Excipient compatibility Studies
- Qualitative Formulation Selection
(b) Formulation Assessment - *******
- Quantitative Formulation Development
- *********************
- *******************
- Finished Product
- Manufacture and Testing of a Range of Batches at each stage
- Informal Stability Assessment
- Analytical Methodology Validation
(c) Process Initiation - *******
- Initial Processing Parameter Characterization Studies
- Formulation Reproducibility Studies
(d) Product Characterization - *******
- Manufacture under GMP condition of Product(s) for pilot
pharmacokinetic study
- Release of Product(s) for the pilot pharmacokinetic study
- Pilot stability evaluation
PHASE 2 - **********
(a) Formulation Optimization - ********
- Optimization of Formulations Through Batch Reproducibility
Studies at Initial Scale-up Level for:
- *********************
- *******************
- Finished Product
(b) Process Development - ********
- Evaluation of Pilot Scale-up Manufacturing Process and
Definition of Operating Parameters
<PAGE>
APPENDIX B (CONT.)
(c) Product Characterization - *******
- Manufacture of Pilot Scale Product(s) for Confirmatory
Pharmacokinetic Study and Clinical Studies
- Formal Stability Testing
PHASE 3
(a) Commercialization -
- Scale-up to Commercial Scale Manufacturing
- Process Validation
- Manufacture of Pivotal Pharmacokinetic and Clinical batches
(as Appropriate)
- Pivotal Stability in Finish Packaging Configuration
Status: Duration and Costing to be defined.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
OPTION/LICENSE AGREEMENT
THIS AGREEMENT is made by and between Kos Pharmaceuticals, Inc., a
corporation of the State of Florida, with a place of business at 1001 South
Bayshore Drive, Suite 2502, Miami, FL 33131, and Fuisz Technologies Ltd., a
corporation of the State of Delaware with a place of business at 3810 Concorde
Parkway, Suite 100, Chantilly, VA 22021.
WHEREAS, Fuisz has over a period of years conducted research and
development work and developed proprietary technology which is useful to make
controlled-release formulations for pharmaceutical compounds and;
WHEREAS Kos has interests in developing, manufacturing and marketing
once-a-day oral solid dosage forms of IS-5-MN (as hereinafter defined), based on
such proprietary technology of Fuisz.
NOW, THEREFORE the parties agree as follows:
ARTICLE 1- DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth in this Article:
1.1 "AFFILIATE" shall mean any company, partnership, joint venture or
other entity of which at least fifty percent (50%) of the voting rights
attaching to ordinary share capital is exercisable directly or indirectly by a
party to this Agreement alone or jointly, and any company, partnership, joint
venture or other entity over which a party to this Agreement directly or
indirectly exercises effective management control.
1.2 "COMMERCIAL SALE" shall mean any sale, trade or barter which
transfers title, to an independent third party purchaser, to any Licensed
Product by or on behalf of Kos or by or on behalf of a Sublicensee of Kos
including, but not limited to, a third party under a supply arrangement or
similar arrangement.
1.3 "LICENSED PRODUCT" shall mean any Product, the process of using or
the manufacture, use or sale of which, but for a license granted hereunder,
would infringe any Valid Claim, or which is based upon, derived from or uses any
Technology; provided, however, that Licensed Product shall not include
*********** Technology except as set forth in Article 5.
<PAGE>
1.4 "PRODUCT(S)" shall mean once-a-day oral solid dosage forms
containing IS-5-MN for human consumption, made in whole or in part by
*****************, **************************************** or other
Technologies of Fuisz under the Development Program. Products shall not include
immediate release or other non-prolonged release oral solid dosage forms of
IS-5-MN.
1.5 "******** TECHNOLOGY" shall mean Fuisz technology and processes
where ********* materials are converted to *********** materials, materials made
by such processes and applications of materials made by such processes and
apparatus used to carry out such processes.
1.6 "********** TECHNOLOGY" shall mean technology relating to ********
processes including *********** and ********** processes, materials made by such
processes, applications of materials made by such processes and apparatus used
to carry out such processes.
1.7 "TECHNOLOGY" shall mean any and all inventions, improvements,
discoveries, claims, formulae, processes, trade secrets, technologies, know-how,
patents and patent applications conceived or reduced to practice during the
Development Agreement, and which are owned by Fuisz and I) incorporated in or
necessary for the manufacture, use or sale of Licensed Products or II) disclosed
and claimed in any patent or patent application included in Licensed Patents.
1.8 "LICENSED PATENTS" shall mean: I) the patents and patent
applications set forth in Appendix A; and II) any and all extensions, renewals,
continuations, continuations-in-part, divisions, patents-of-additions, reissues,
reexaminations, supplementary protection certificates or foreign counterparts of
any of the foregoing; and III) any and all patents which are granted on any I)
and II); and IV) any and all patents and patent applications owned or controlled
or licensable by Fuisz with the right to sublicense without payment of any kind
to a third party which contain claims, the practice of which would infringe the
claims of a patent or patent application included in I), II) or III), or which
are based upon or derived from Technology.
1.9 "TERRITORY" shall mean Worldwide.
1.10 "NET SALES" shall mean the gross invoice price of Commercial Sales
by Kos and Sublicensees of all Licensed Products, less deductions for
transportation and insurance charges, rebates, returns and allowances (actually
paid or allowed by Kos and Sublicensees), customary discounts (whether in cash
or trade), and sales or other taxes when included in the gross invoice price,
but not including taxes assessed on income derived from such Commercial Sales.
1.11 "VALID CLAIM" shall mean a claim of an issued and unexpired
Licensed Patent which has not been held invalid or unenforceable by decision of
a court or
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other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which is not admitted to be invalid
through disclaimer or dedication to the public.
1.12 "SUBLICENSEE" shall mean third parties to whom Kos has granted a
sublicense to make, use or sell any Licensed Product.
1.13 "DEVELOPMENT AGREEMENT" shall mean the Development Agreement
(having the same Effective Date as this Agreement) between the parties and all
extensions, amendments and renewals thereof.
1.14 "DEVELOPMENT PROGRAM" shall mean research and development and other
activities performed by Fuisz and Kos pursuant to the terms of Article 1 and
Appendix B of the Development Agreement.
1.15 "IS-5-MN" shall mean the compound isosorbide-5-mononitrate in
dosages to be mutually agreed by Fuisz and Kos.
1.16 "FDA" shall mean the Food and Drug Administration of the United
States.
1.17 "KOS" shall mean Kos Pharmaceuticals, Inc. and its Affiliates.
1.18 "FUISZ" shall mean Fuisz Technologies Ltd. and its Affiliates.
1.19 "EFFECTIVE DATE" shall mean **************.
1.20 "GRANT BACK TECHNOLOGY" shall mean any and all inventions,
improvements, discoveries, claims, formulae, processes, trade secrets,
technologies, know-how, patents and patent applications based upon or directly
related to Technology, which are: a) conceived or first reduced to practice by
Kos during the period beginning with Effective Date and ending upon termination
of this Agreement; and b) owned or controlled by Kos or licensed to Kos with the
right to sublicense.
1.21. "*********** TECHNOLOGY" shall mean technology relating to
******** processes including *********** and ********** processes for making
************ of materials such as ********** and *****, including such
************ and coatings and processes for coating such ************.
ARTICLE 2 -OPTION/LICENSE GRANT
2.1 OPTION GRANT TO KOS. Subject to the terms and conditions of this
Agreement, Fuisz grants to Kos an option to obtain an exclusive, royalty bearing
license under Technology and Licensed Patents to make, have made, use, sell and
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have sold Licensed Products throughout the Territory, including the right to
grant sublicenses; provided, however that no licenses or rights are granted or
implied for *********** Technology, except as set forth in Article 5 hereof.
Such option shall be exercisable by Kos, provided all payments have been made in
full to Fuisz as provided in paragraphs 3.1(a) and 3.1(b) of this Agreement, by
Kos giving written notice to Fuisz of exercise
************************************. In the event Kos does not exercise its
option as provided herein, this Agreement and all rights granted to Kos
hereunder shall terminate.
2.2 LICENSE GRANT TO KOS. Upon exercise of the option as set forth in
Section 2.1, the terms and conditions of this Agreement pertaining to the
license grant hereunder shall automatically come into full force and effect.
2.3 PAYMENT OF FEES. The option and licenses granted hereunder shall be
subject to the timely payment of the applicable fees and royalties as provided
under Articles 3, 4 and 6 of this Agreement.
2.4 LICENSE GRANT TO FUISZ. Kos hereby grants to Fuisz a non-exclusive,
fully paid, irrevocable worldwide license (including the right to grant
sublicenses) under Grant Back Technology to make, have made, use, sell and have
sold products and to practice processes; provided, however, that in the exercise
of such license right Fuisz shall not do so to the detriment of the competitive
position of Kos or inappropriately identify Kos in any publicity concerning
same.
2.5 MANUFACTURING TECHNOLOGY ACCESS AND SUPPORT. Following payment of
the Manufacturing Technology Access and Support Fee under Section 3.2, Fuisz
shall make available to Kos the essential aspects of Technology necessary to
produce Licensed Products commercially. The Manufacturing Technology Access and
Support Fee shall include up to *************** days of a senior professional or
the equivalent thereof retained by Fuisz to assist in technical support related
to manufacturing of Licensed Products. In the event additional technical
manufacturing support is desired by Kos, at the request of Kos, and upon mutual
agreement on the prices at which such consultants and equipment shall be
provided to Kos, Fuisz shall make available to Kos consultants and equipment
useful for the manufacture of Licensed Products. The cost of such consultants
and equipment shall be in addition to any other fees due or payable under the
provisions of this Agreement.
2.6 For a period beginning upon the Effective Date and ending **********
following termination of the Development Program, Fuisz shall grant to Kos the
first right of negotiation of a license under Technology or Licensed Patents for
additional modification of IS-5-MN ,and IS-5-MN in combination with other
compounds. Kos shall notify Fuisz within such period of its desire to negotiate
such a license, and thereafter the parties shall negotiate in good faith toward
execution of a definitive agreement embodying such license.
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ARTICLE 3 - FEES
3.1 OPTION/LICENSE FEES. In addition to the payments under Section 4.1,
Kos shall make the following lump sum payments to Fuisz in consideration of the
option and licenses granted hereunder, such lump sum payments not being
creditable except as otherwise expressly provided herein toward royalty or other
payments due hereunder:
(a) *************************************** as an option fee,
due and payable within **************** of the Effective Date;
(b) *********************************************, due and
payable following the end of Phase II of the Development Program or ***** ******
after the end of Phase I of the Development Program, whichever first occurs; and
(c) **************************************** as a license fee,
************ of which shall be due and payable within ************* following
the acceptance by the FDA of the first application submitted for approval to
sell a Licensed Product, and the ********************** of which shall be due
and payable upon approval by the FDA of an application to sell a Licensed
Product; ******************* of which shall be creditable toward running royalty
due hereunder.
3.2 MANUFACTURING TECHNOLOGY ACCESS AND SUPPORT FEE. In consideration of
the disclosure of Technology to Kos by Fuisz relating to manufacturing of
Licensed Products under Section 2.5, Kos shall pay to Fuisz such amounts as are
negotiated and agreed by the parties in good faith.
ARTICLE 4 - ROYALTIES & MINIMUM ROYALTIES
4.1 RUNNING ROYALTY
(a) As additional consideration for the grant of the licenses
provided hereunder, Kos shall pay Fuisz a running royalty of ******************
of Net Sales of Licensed Product commencing on the first Commercial Sale of
Licensed Product by Kos or its Sublicensees.
(b) Although the parties intend to secure patents covering
Licensed Products, except as otherwise provided hereunder, the royalty required
under this Article 4 shall be payable with respect to each Licensed Product
until this Agreement expires as to such Licensed Product pursuant to Section
10.1, notwithstanding the existence or non-existence of Licensed Patents
covering any Licensed Product.
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4.2 OBLIGATION TO PAY RUNNING ROYALTY. The obligation to pay running
royalty to Fuisz under this Article 4 shall be imposed only once with respect to
the same unit of Licensed Product regardless of the number of Licensed Patents
or aspects of Technology pertaining thereto. There shall be no obligation to pay
running royalties to Fuisz under this Article 4 on sales of Licensed Products
between Kos and its Affiliates and its Sublicensees but in such instances the
obligation to pay running royalty shall arise based on Net Sales by Kos or its
Affiliates or its Sublicensees. Payments due under this Article 4 shall be
deemed to accrue when Licensed Products are shipped or billed, whichever event
shall first occur.
4.3 MINIMUM ROYALTIES
(a) The licenses granted to Kos under this Agreement shall be
subject, on a calendar year basis, to payment of annual minimum royalties to
Fuisz by Kos as follows, ************************* of which shall be due and
payable within *************** following the end of each calendar quarter
commencing one (1) year following approval by the FDA to sell a Licensed
Product:
Year 1 - ************************************
Year 2 - ************************************
Year 3 - ************************************
Year 4 - ************************************
Year 5 - ************************************
(b) In the event Kos or its Sublicensees shall fail to make
significant Commercial Sales or fail to use reasonable commercial efforts to
sell a Licensed Product in a country within ************** following the date of
first Commercial Sale anywhere in the Territory, Fuisz shall be entitled to
terminate in their entirety all licenses and rights granted hereunder to Kos in
such country upon written notice to Kos.
ARTICLE 5 - FUISZ SUPPLY OF **************
In the event Kos requests in writing that Fuisz supply to Kos IS-5-MN
produced utilizing ********** Technology for use in Licensed Product, Fuisz
shall, for a period of **************** following such request negotiate in good
faith with Kos toward execution of a definitive commercial supply and/or
manufacture agreement under reasonable commercial terms for the supply of such
form of IS-5-MN at a transfer price to Kos not to exceed the standard cost of
manufacture in accordance with the usual accounting procedures of Fuisz
************************* ******************. In the event Kos and Fuisz execute
such a definitive agreement, such agreement shall include a limited license to
Kos to utilize such form of IS-5-MN in the manufacture of Licensed Products and
to sell and have sold such
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Licensed Products, which incorporate such form of Technology, and provisions for
the supply of such form of IS-5-MN in the event Fuisz fails to or cannot supply
them. In the event Kos and Fuisz fail to execute such a definitive agreement
within such *******************, the provisions of this Article 5 shall cease to
be in effect thereafter. No further license or rights shall be granted or
implied to Kos with respect to *********** Technology.
ARTICLE 6 - PAYMENTS AND REPORTS
6.1 PAYMENT - All running royalty payments due under Section 4.1 shall
be paid ********* within *************** of the end of ************ of each
calendar year during the term of this Agreement. Each such payment shall be
accompanied by a statement of the type of each Licensed Product sold and the
total Net Sales of each such Licensed Product during such quarter, and the
amount of royalty due on such Net Sales.
6.2 MODE OF PAYMENT - Kos shall pay all royalty payments required under
this Agreement in the United States in United States Dollars. The royalty
payments due shall be translated at the rate of exchange at which United States
Dollars are listed in THE WALL STREET JOURNAL for the currency of the country in
which the royalty is accrued on the last business day of the quarter of each
calendar year in which Net Sales are made. If the transfer or the conversion
into United States Dollar equivalents in any such instance is not lawful or
possible, the payment of such part of the royalty as is necessary shall be made
by the deposit thereof, in the currency of the country where the sales were made
on which the royalty was based, to the credit and account of Fuisz or its
nominee in any commercial bank or trust company of its choice located in that
country, prompt notice of which shall be given by Kos to Fuisz.
6.3 TAXES - All taxes, assessments, fees and charges, if any, levied on
Kos, its Affiliates, or its Sublicensees under income tax laws or regulations
with respect to payments due to Fuisz hereunder shall be for the account of
Fuisz and if required to be withheld by the payer will be deducted by Kos, its
Affiliates, and/or its Sublicensees from such payments due to Fuisz. Receipts,
if available, for all such taxes, assessments, fees and charges advanced by Kos,
its Affiliates, and/or its Sublicensees to the taxing authorities shall be
secured by Kos, its Affiliates, and/or its Sublicensees and sent to Fuisz.
6.4 RECORDS RETENTION - Kos shall keep for *************** following the
royalty payment period to which they relate, complete and accurate records
pertaining to the manufacture, use and sale of Licensed Products in sufficient
detail to permit Fuisz to confirm the accuracy of Net Sales, royalty
calculations and payments under this Agreement.
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6.5 AUDIT REQUEST - At the request of Fuisz, Kos shall permit an
independent, certified public accountant appointed by Fuisz and acceptable to
Kos, at reasonable times and not more ************** calendar year to: I)
determine, with respect to any calendar year ending not more than
*************** prior to such request, the correctness of any report or payment
made under this Agreement; or II) obtain information as to the royalty payable
for any calendar year in the case of failure of Kos to report or pay pursuant to
this Agreement. Results of any such examination shall be made available to both
parties. Fuisz shall bear the full cost of any such audit unless such audit
shall result in a determination that royalties have been underpaid by more than
*****************, in which case Kos shall bear the full cost of such audit.
6.6 FAILURE TO MAKE PAYMENTS - In the event that any payments due under
this Agreement are not made in accordance with the dates set forth hereunder,
Fuisz shall provide Kos written notice of such non-payment. Except as otherwise
specified in this Agreement, if such payments are not made within
*************** after receipt by Kos of such written notice from Fuisz, Fuisz
shall have the right to terminate this Agreement by sending written notice
thereof to Kos, which notice shall be effective ***********. Any licenses or
rights granted under this Agreement shall thereafter revert to Fuisz.
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES; INFRINGEMENT AND ENFORCEMENT
7.1 REPRESENTATIONS AND WARRANTIES - Fuisz hereby represents and
warrants that:
(a) To the best of its knowledge: (I) it has the full power
and right to grant the rights and licenses set forth herein; and (II) that there
are no encumbrances on Technology or Licensed Patents which could have a
material adverse effect on the right of Kos to manufacture, use or sell Licensed
Products; and
(b) It has no existing agreements with any third party which
are in conflict with the rights granted to Kos pursuant to this Agreement.
7.2 PATENT ENFORCEMENT. Each party shall notify the other of any
infringement of Licensed Patents of which it becomes aware during the term of
this Agreement. Fuisz shall have the first right, but not the duty, to institute
patent infringement actions against third parties based on any Licensed Patent
under this Agreement, provided that Kos may join in any such actions at the
expense of Kos insofar as Kos may have a claim for lost profits. Fuisz shall
promptly notify Kos of its intention to prosecute any substantial and clear acts
of infringement of Licensed Patents. If Fuisz does not institute an infringement
proceeding against such an infringer, Kos shall have the right, but not the
duty, to institute such an action. The
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costs and expenses of any such action (including fees of attorneys and other
professionals) shall be borne by the party instituting the action, or, if the
parties elect to cooperate in instituting and maintaining such action, such
costs and expenses shall be borne by the parties in such proportions as they may
agree in writing. Each party shall execute all necessary and proper documents
and take such actions as shall be appropriate to allow the other party to
institute and prosecute such infringement actions and render such assistance as
reasonably required by the party enforcing such patents. Any award paid by a
third party as a result of such an infringement action (whether by way of
settlement or otherwise) shall be paid to the Party who instituted and
maintained such action, or if both Parties instituted and maintained such
action, such award shall be allocated among the Parties in proportion to their
respective contributions to the costs and expenses incurred in such action.
7.3 INFRINGEMENT ACTION BY THIRD PARTIES
(a) In the event of the institution of any suit by a third
party against Kos for patent infringement involving the manufacture, use, sale,
distribution or marketing of any Licensed Product, provided the basis of such
suit is the practice by Kos of a Licensed Patent or Technology licensed
hereunder, Kos shall promptly notify Fuisz in writing of such suit. Kos shall
have the right to defend such suit at its own expense, and Fuisz shall assist
and cooperate with Kos, at Kos's expense, to the extent necessary in the defense
of such suit. During the pendency of such action, Kos shall continue to make all
payments due under this Agreement.
(b) If Kos finally prevails in any such suit because it is
held not to be infringing any patents belonging to such third party or because
such third party's patent is held invalid, Kos shall continue to pay royalty as
set forth in Article 4, ***
******************************************************************************
******************************************************************************
******************************************************************************
***************************************************************.
(c) If Kos finally loses in any such infringement action,
whether by judgment, award, decree or settlement, and is required to pay a
royalty (including lump sum fees) to a third party, Kos shall continue to pay
royalty as set forth in Article 4 with respect to such Licensed Product in the
country which is the subject of such action,
***************************************************************
***************************************************************
***************************************************************
*****************************************.
(d) Any ********************************************
***************************************************************
*****************************************.
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7.4 Fuisz does not represent or warrant that the Licensed Patents are
valid or that the use of Licensed Patents and Technology by Kos will not
infringe any patent or other rights of any third party, and Fuisz shall not be
obligated to defend or hold harmless Kos or its Affiliates or Sublicensees or
any other entity or person against any suit, damage, claim or demand based on
actual or alleged invalidity or infringement of any patent or other rights owned
by a third party, or any unfair trade practice, resulting from the exercise or
use of any right granted hereunder.
ARTICLE 8 - CONFIDENTIALITY
8.1 CONFIDENTIALITY; EXCEPTIONS - Except to the extent expressly
authorized by this Agreement, and except as provided in Section 8.2, or
otherwise agreed in writing, the parties shall, for the term of this Agreement
and for ************* thereafter, keep confidential and shall not publish or
otherwise disclose, or use for any purpose, any information furnished to one
party by the other party pursuant to this Agreement, except to the extent that
it can be established by competent evidence that such information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement;
(d) was disclosed to the receiving party, other than under an
obligation of confidentiality, by a third party who had no obligation to the
disclosing party not to disclose such information to others; or
(e) is independently developed by or on behalf of its
receiving party by individuals not having access to such information.
Each party may disclose the other's information to the extent such
disclosure is reasonably necessary in filing or prosecuting patent applications,
prosecuting or defending litigation, or is necessary to be disclosed in
connection with the marketing or sale of a Licensed Product or is necessary to
be disclosed to comply with applicable governmental regulations, provided that
if a party is required to make any such disclosure of the other party's secret
or confidential information it shall, except where
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impracticable for necessary disclosures, for example to health authorities, give
reasonable advance notice to the other party of such disclosure requirement and,
except to the extent inappropriate in the case of patent applications, shall use
reasonable efforts to secure confidential treatment of such information required
to be disclosed.
8.2 It is understood that trade secrets provided to a party under this
Agreement and under the Development Agreement may have a significant factor in
producing Licensed Products and in the lead time for Licensed Products to be
introduced into the market-place. All such trade secrets, as defined under the
Uniform Trade Secrets Act of the United States, or the trade secret laws of
applicable national countries as applicable, which are provided by one party to
the other party hereunder and identified in writing as trade secrets, shall be
maintained in confidence, without limitation of time, and will be used only for
purposes of work under the Development Agreement or commercialization of
products under the provisions of this Agreement.
8.3 With respect to confidential information, know how and trade secrets
disclosed on or after the Effective Date by one party to the other party under
the provisions of this Agreement, the provisions of this Agreement shall govern
and prevail. In the event of any conflict between this Agreement and any other
agreement between the parties, with respect to confidential information relating
to the Field disclosed on or after the Effective Date, the terms of this
Agreement shall govern and prevail.
8.4 Each party may also disclose the other's confidential information
and trade secrets to an Affiliate, agent or consultant who has a need to know
such confidential information or trade secrets, and who is under a written
obligation of confidentiality and non-use at least substantially equivalent to
the obligations of this Article 8. A party disclosing the other party's
information or trade secrets to such Affiliate, agent or consultant shall notify
the other party of the identity of such Affiliate, agent or consultant, and
provide the other party with a draft of the proposed confidentiality agreement
with such Affiliate, agent or consultant and allow the other party to make
whatever changes it deems necessary to such agreement in order to protect its
confidential information and trade secrets.
ARTICLE 9 - INDEMNIFICATION
9.1 (a) *** shall defend, indemnify and hold *****, its directors,
officers and employees, harmless from and against any and all claims, suits or
demands for liability, damages, losses, costs and expenses (including the costs
and expenses of attorneys and other professionals) arising out of third party
claims or suits or demands
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resulting from the manufacture, use or sale of Licensed Products by
*********************************** pursuant to this Agreement.
(b) Each party (the "Indemnifying Party") shall defend,
indemnify and hold the other party and its directors, officers and employees,
harmless from and against any and all claims, suits, and demands for liability,
damages, losses, costs and expenses (including the costs and expenses of
attorneys and other professionals) arising out of or resulting from the
inaccuracy of any representation or the breach by the Indemnifying Party of any
warranty, covenant or agreement contained in this Agreement.
9.2 NOTICE - In the event that either party seeks indemnification under
this Article 9, such party shall: I) promptly inform the indemnifying party of
any claim, suit or demand threatened or filed, II) permit the indemnifying party
to assume direction and control of the defense of such claims, suit or demand
resulting therefrom (including the right to obtain a settlement thereof at the
sole discretion of the indemnifying party), and III) cooperate as requested (at
the expense of the indemnifying party) in the defense of such claims, suit or
demand.
9.3 LIMITATIONS. An indemnifying party's (including sublicensees)
obligations under this Article 9 shall not extend to any claims, suits or
demands for liability, damages, losses, costs or expenses arising from the
indemnified party's failure to comply with the terms and conditions of this
Agreement, or of the Development Agreement, to the extent arising from the
negligence or willful misconduct of the indemnified party, its agents or
employees.
ARTICLE 10 - TERM; TERMINATION
10.1 TERM. This Agreement shall commence as of the Effective Date of
this Agreement and, unless sooner terminated as provided hereunder, shall expire
******************** thereafter or upon the expiration of the last to expire
Valid Claim of a Licensed Patent, whichever period is longer.
10.2 BREACH. Failure by either party to comply with any material
obligation contained in this Agreement shall entitle the other party to give to
the party in default notice specifying the nature of the default and requiring
it to cure such default. If such default is not cured **********************
after the receipt of such notice (or, if such default cannot be cured within
such ************** period, if the party in default does not commence and
diligently continue actions to cure such default), the notifying party shall be
entitled, without prejudice to any of its other rights conferred by this
Agreement, and in addition to any other remedies available to it by law or in
equity, to terminate this Agreement by giving written notice to take effect
within thirty (30) days after such notice unless the defaulting party cures such
default
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within said thirty (30) days. The right of either party to terminate this
Agreement, as hereinabove provided, shall not be affected in any way by its
waiver or failure to take action with respect to any previous default.
10.3 TERMINATION BY KOS. Kos shall have the right to terminate this
Agreement by giving notice in writing to Fuisz of such termination. Such
termination shall be effective **************** from the date such notice is
given, and all Kos's rights hereunder associated therewith shall cease as of
that date, subject to Section 10.4.
10.4 RIGHT TO SELL STOCK ON HAND. Upon the termination of this Agreement
for any reason other than a failure to cure a material breach of this Agreement
by Kos, Kos and its Affiliates shall have the right for ************, or such
longer period as the parties may agree in writing, to dispose of all Licensed
Products or substantially completed Licensed Products then on hand, and running
royalty shall be paid to Fuisz with respect to such Licensed Products as though
such termination had not occurred.
10.5 TERMINATION OF SUBLICENSES. Upon termination of this Agreement, all
sublicenses granted by Kos under the provisions of this Agreement shall
terminate simultaneously, subject, nevertheless, to Section 10.4.
10.6 INSOLVENCY OR BANKRUPTCY. a) Either party may, in addition to any
other remedies available to it by law or in equity, terminate this Agreement by
written notice to the other party in the event the other party shall have become
insolvent or bankrupt, or shall have made an assignment for the benefit of its
creditors, or there shall have been appointed a trustee or receiver of the other
party or for all or a substantial part of its property, or any case or
proceeding shall have been commenced or other action taken by or against the
other party in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up arrangement, composition or readjustment of its debts or any other
relief under any bankruptcy, insolvency, reorganization or other similar act or
law of any jurisdiction now or hereafter in effect, or there shall have been
issued a warrant of attachment, execution, distraint or similar process against
any substantial part of the property of the other party, and any such event
shall have continued for sixty (60) days undismissed, unbonded and undischarged;
or b) all rights and licenses granted under or pursuant to this Agreement by
Fuisz to Kos are, and shall otherwise be deemed to be, for the purposes of
Article 365(n) of title 11, U.S. Code ("Bankruptcy Code") license rights to
"intellectual property" as defined under Article 101(60) of the Bankruptcy Code.
Kos, as a licensee of such right under this Agreement, shall retain and may
fully exercise all of its rights and election under the Bankruptcy Code.
10.7 EFFECT OF TERMINATION.
(a) Following the expiration of any license granted under this
Agreement, Kos, and its Sublicensees shall have the royalty-free non-exclusive
right to continue
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to use the Licensed Patents and Technology for the manufacture, use and sale of
Licensed Products as heretofore licensed.
(b) Upon the termination of this Agreement by Fuisz other than
as provided in paragraph 10.7(a), Kos and its Sublicensees shall promptly: I)
return to Fuisz all relevant records, materials or confidential information
concerning the Licensed Patents and Technology relating to Licensed Product in
any country in the possession or control of Kos or any of its Sublicensees
provided, however, that a copy of such confidential information shall be
retained by Kos's legal department solely for reference as to its obligations
hereunder.
10.8 SURVIVING RIGHTS. Termination of this Agreement shall not terminate
Kos's obligation to pay all royalties which shall have accrued hereunder. The
parties' obligations under Articles 7, 8 and 9 and Sections 2.4, 4.1, 4.2, 6.4
and 10.4 shall survive termination.
10.9 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Termination, relinquishment
or expiration of this Agreement for any reason shall be without prejudice to any
rights which shall have accrued to the benefit of either party prior to such
termination, relinquishment or expiration. Such termination, relinquishment or
expiration shall not relieve either party from obligations which are expressly
indicated to survive termination or expiration of this Agreement.
ARTICLE 11 - MISCELLANEOUS PROVISIONS
11.1 STATUS OF PARTIES. The parties are independent contractors and
nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee or joint venture relationship between the
parties. Neither party shall incur any debts or make any commitments for the
other, except to the extent, if at all, specifically provided herein.
11.2 ASSIGNMENT. This Agreement is unassignable by either Kos or Fuisz
except with the prior written consent of the other, except that it may be
assigned without consent to a corporate successor of Kos or Fuisz or to a person
or corporation acquiring all or substantially all of the business and assets of
Kos or Fuisz to which this Agreement relates. All or any portion of Licensed
Patents and Technology shall be assignable by Fuisz; provided, however, that in
the event of any such assignment, any such assignee shall accept and agree in
writing to be bound by all of the terms and conditions of this Agreement
relating to such assigned rights.
11.3 FURTHER ACTIONS. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
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11.4 FORCE MAJEURE. Neither party shall be liable to the other for any
loss or damages or shall have any right to terminate this Agreement for any
default or delay attributable to any act of God, flood, fire, explosion, strike,
lockout, labor dispute, shortage of raw materials, casualty or accident, war
(declared or undeclared), revolution, civil commotion, act of public enemies,
blockage or embargo, injunction, law, order, proclamation, regulation,
ordinance, demand or requirement of any government or subdivision, authority or
representative of any such government, or any other cause beyond the reasonable
control of such party, if the party affected shall give prompt notice thereof to
the other party. The party giving such notice shall thereupon be excused from
such of its obligations hereunder as it is thereby disabled from performing for
so long as it is so disabled and for thirty (30) days thereafter.
11.5 TRADEMARKS. Except as otherwise provided herein, neither party
shall have any right, express or implied, to use in any manner the name or other
designation of the other party or any other trade name or trademark of the other
party in connection with this Agreement. Kos shall place an appropriate legend
on all packaging material associated with Licensed Product indicating that such
Licensed Product was produced under license granted by Fuisz Technologies Ltd.
11.6 PUBLIC ANNOUNCEMENTS. Except as required by law or in connection
with private or public offerings to raise capital or as required for documents
to be filed with the Securities and Exchange Commission (a "Permitted Public
Announcement"), neither party shall make any public announcement concerning this
Agreement or the subject matter hereof without the prior written consent of the
other; provided, however, that in any event, each party shall have the right to
refer, in such announcement required by law or in any private or public offering
documents, to the status of this Agreement or of the Development Agreement and
to state that the license hereunder has been granted, together with a
generalized description of the nature and extent of such license. All such
announcements shall be made available by the announcing party to the other party
at least five (5) business days in advance of the announcement for review and
comment by the other party.
11.7 NOTICES. All notices and other communications required or permitted
to be given under or in connection with this Agreement shall be in writing, and
shall be deemed given if delivered personally or by facsimile transmission
(receipt verified), express courier service (signature required), telexed, or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice; provided, that notices of a change
or address shall be effective only upon receipt thereof):
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NOTICE TO FUISZ: NOTICE TO KOS:
Fuisz Technologies Ltd. Kos Pharmaceuticals, Inc.
ATTN: Richard C. Fuisz, M.D. ATTN: President
President and CEO 1001 South Bayshore Drive
3810 Concorde Parkway Suite 2502
Suite 100 Miami, FL 33131
Chantilly, VA 22021
With a copy to:
Fuisz Technologies Ltd.
ATTN: James L. Wilcox
Vice President and
General Counsel
3810 Concorde Parkway
Suite 100
Chantilly, VA 22021
11.8 AMENDMENT. No amendment, modification or supplement of any
provision of this Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each party.
11.9 WAIVER. No provision of this Agreement shall be waived by any act,
omission or knowledge of a party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by the waiving
party.
11.10 COUNTERPARTS. This Agreement shall be executed simultaneously in
two counterparts, either one of which need not contain the signature of more
than one party, but both such counterparts taken together shall constitute one
and the same agreement.
11.11 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
11.12 GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of ******** without regard to its
choice of law principles.
11.13 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable regulations or law, such provision will be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of this Agreement.
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In the event of such prohibition or invalidity, the parties hereto shall
negotiate in good faith to modify this Agreement, but only to the extent
necessary to render the terms and conditions of this Agreement valid and
enforceable, giving full regard to all applicable regulations or laws and the
intent and purposes of the parties in entering into this Agreement.
11.14 COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit a party to export, reexport or otherwise transfer any Technology
transferred hereunder or Licensed Products manufactured therefrom without
compliance with applicable laws.
11.15 ENTIRE AGREEMENT OF THE PARTIES. This Agreement and the
Development Agreement constitutes and contains the entire understanding and
agreement of the parties and cancels and supersedes any and all prior
negotiations, correspondence, understandings and agreements, whether oral or
written, between the parties, respecting the subject matter hereof.
11.16 ALTERNATIVE DISPUTE RESOLUTION.
(a) In the event of any dispute, controversy or claim arising
out of or relating to this agreement (unless such dispute, controversy or claim
involves an issue of the validity of Licensed Patents), Kos or Fuisz shall
employ alternative dispute resolution procedures in an effort to avoid
litigation over any such dispute, controversy or claim. Any such dispute,
controversy or claim hereunder shall, prior to submission to such alternative
dispute resolution proceedings, be referred to representatives of management
(hereinafter "management representatives") of the respective parties for
resolution.
(b) Any such dispute that shall not have been resolved
pursuant to Section 11.16(a) **************** after reference to such management
representatives, or otherwise by agreement between the parties, shall be
referred to arbitration in accordance with the rules of the American Arbitration
Association. The arbitration tribunal shall consist of three (3) arbitrators.
The party initiating arbitration shall nominate one (1) arbitrator (who shall
not be affiliated with such party) in the request for arbitration and the other
party shall nominate a second arbitrator (who shall not be affiliated with such
party) in the answer thereto. The two (2) arbitrators so named will then jointly
appoint the third (3rd) arbitrator as chairman of the arbitration tribunal. If a
party fails to nominate its arbitrator as chairman of the arbitration tribunal
or if the arbitrators named by the parties fail to agree on the person to be
named as chairman within sixty (60) days, the Office of the American Arbitration
Association in Washington, DC, USA shall make the necessary appointments of an
arbitrator or the chairman of the tribunal. The award of the arbitration
tribunal shall be final and judgment upon such an award may be entered in any
competent court or application may be made to any competent court for judicial
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acceptance of such an award and an order of enforcement. In the event of any
procedural matter not covered by the aforesaid Rules, the procedural law of the
State of ********, United States of America, shall govern.
11.17 PRODUCT LIABILITY. In addition to the indemnification provided
under Article 9, *** accepts full responsibility for and assumes all risk of
damage or injury to persons and to property arising out of the manufacture,
having manufactured, use or sale of Licensed Products by **********************.
*** shall maintain product liability insurance in an amount of at least
************************** to cover any and all such potential claims with the
exception of those claims arising directly from the use of ***********
Technology ************************* *********, and
********************************************* from and against any and all
personal injury, property damage, product liability or similar claims, costs,
damages, losses, liabilities, attorneys fees and all judgments of any kind
arising out of the manufacture, having manufactured, use or sale of Licensed
Products by **********************.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized officer as of the Effective Date.
KOS PHARMACEUTICALS, INC. FUISZ TECHNOLOGIES LTD.
- --------------------------------- ----------------------------------
Daniel M. Bell Richard C. Fuisz, M.D.
President President and CEO
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APPENDIX A
PATENTS
- - Rapidly Dissoluble Medicinal Dosage Unit and Method of Manufacture
U.S. Patent No. 4,855,326 issued 08/08/89 (F-005)
- - Method of Producing Compacted Dispersable Systems
U.S. Patent No. 4,997,856 issued 04/05/91 (F-030)
- - Moderated Spun Fibrous System and Method of Manufacture
U.S. Patent No. 5,034,421 issued 07/23/91 (F-019)
- - Method & Apparatus for Flash Flow Processing having Feed Rate Control
U.S. Patent No. 5,346,377 issued 09/13/94 (F-115)
******************
19
