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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
Commission file number 0-22332
INSITE VISION INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 94-3015807
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
965 ATLANTIC AVENUE
ALAMEDA, CA 94501
(Address of Principal Executive Offices, including Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (510) 865-8800
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
----- -----
The number of shares of registrant's common stock, $.01 par value,
outstanding as of June 30, 1996: 12,689,792.
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QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 1996
TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at
June 30, 1996 and December 31, 1995................................... 3
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 1996 and 1995............. 4
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 1996 and 1995....................... 5
Notes to Condensed Consolidated Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................... 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Shareholders....................... 16
Item 6. Exhibits and Reports on Form 8-K
Exhibits.............................................................. 16
Reports on Form 8-K................................................... 17
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ITEM 1. FINANCIAL STATEMENTS
INSITE VISION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, December 31,
(in thousands, except share and per share amounts) 1996 1995
- - - -------------------------------------------------------------------------------------------------
(Unaudited)
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ASSETS
Current assets:
Cash and equivalents $ 12,726 $ 871
Short-term investments 2,996
Prepaid expenses and other current assets 113 151
-------- --------
Total current assets 12,839 4,018
Property and equipment, at cost:
Laboratory and other equipment 3,888 4,151
Leasehold improvements 1,671 2,931
Furniture and fixtures 355 355
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5,914 7,437
Accumulated depreciation 4,015 3,812
-------- --------
1,899 3,625
-------- --------
Total assets $ 14,738 $ 7,643
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 152 $ 452
Accrued liabilities 200 145
Accrued compensation and related expense 279 744
Current portion of notes payable 243 301
-------- --------
Total current liabilities 874 1,642
Accrued rent 62
Notes payable 4 92
Commitments
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized;
none issued and outstanding
Common stock, $.01 par value, 30,000,000 shares authorized;
12,689,792 issued and outstanding at June 30, 1996;
9,252,136 issued and outstanding at December 31, 1995 127 93
Paid-in capital 76,081 62,651
Other (3)
Accumulated deficit (62,348) (56,894)
-------- --------
Stockholders' equity 13,860 5,847
-------- --------
Total liabilities and stockholders' equity $ 14,738 $ 7,643
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See accompanying notes to condensed consolidated financial statements.
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INSITE VISION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share amounts) 1996 1995 1996 1995
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Royalty revenues $ 12 $ 26 $ 27 $ 37
Operating expenses:
Research and development 1,436 2,139 2,767 4,614
Loss on vacated facilities 1,412 1,412
General and administrative 812 1,172 1,485 2,382
-------- -------- -------- --------
Total 3,660 3,311 5,664 6,996
-------- -------- -------- --------
Loss from operations (3,648) (3,285) (5,637) (6,959)
Interest and other income 143 140 210 321
Interest expense (11) (33) (27) (108)
-------- -------- -------- --------
Net loss $ (3,516) $ (3,178) $ (5,454) $ (6,746)
======== ======== ======== ========
Net loss per share $ (0.29) $ (0.35) $ (0.48) $ (0.74)
Shares used to calculate net loss per share 12,260 9,140 11,376 9,127
</TABLE>
No dividends were declared or paid during the periods.
See accompanying notes to condensed consolidated financial statements.
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INSITE VISION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Six months ended June 30,
(in thousands) 1996 1995
- - - ---------------------------------------------------------------------------------
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OPERATING ACTIVITIES
Net loss $ (5,454) $ (6,746)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss on vacated facilities 1,412
Depreciation and amortization 314 431
Deferred compensation 126
Changes in:
Prepaid expenses and other current assets 38 396
Accounts payable and accrued liabilities (710) (511)
-------- --------
Net cash used in operating activities (4,400) (6,304)
INVESTING ACTIVITIES
Maturity of short-term cash investments 3,000 1,450
Purchases of property and equipment (63) (1,232)
-------- --------
Net cash provided from investing activities 2,937 218
FINANCING ACTIVITIES
Principal payments of notes payable (146) (237)
Issuance of common stock, net 13,464 88
-------- --------
Net cash provided (used) by financing activities 13,318 (149)
Net increase (decrease) in cash and equivalents 11,855 (6,235)
Cash and equivalents, beginning of period 871 7,314
-------- --------
Cash and equivalents, end of period $ 12,726 $ 1,079
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Supplemental disclosures:
Interest paid in cash $ 29 $ 111
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
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INSITE VISION INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and pursuant to the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments, consisting of normal recurring accrual adjustments, considered
necessary for a fair presentation have been included. Operating results for the
three month and six month periods ended June 30, 1996, are not necessarily
indicative of the results that may be expected for the year ended December 31,
1996.
These financial statements and notes should be read in conjunction
with the Company's audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
NOTE 2 - PROPERTY AND EQUIPMENT
In July 1996, the Company and Bausch & Lomb Incorporated (B&L)
announced a strategic alliance covering the manufacture of potential InSite
products, the worldwide marketing of InSite's PilaSite(R) product candidate for
glaucoma, and a joint development program utilizing InSite's proprietary drug
delivery technology. In connection with the alliance, B&L will make a $2.0
million equity investment in the Company, provide up to $2.0 million in new
product development funding, and pay royalties to InSite on future PilaSite(R)
product sales.
As a result of the B&L alliance, the Company ended its relationship
with its previous contract manufacturer and wrote-off its share of equipment and
leasehold improvements installed at the previous supplier's plant. This resulted
in a non-cash charge to the Company's results of operations of $1.4 million
which is reported as a separate line item in the accompanying financial
statements. InSite's share of leasehold improvements at B&L facilities is
expected to be about $500,000.
NOTE 3 - STOCKHOLDERS' EQUITY
In January 1996 the Company received net proceeds of approximately
$4.8 million from a private placement of 1,469,232 shares of its common stock
and 367,308 warrants. Each warrant entitles its holder to purchase one share of
the Company's common stock for $3.25 until January 2001. In April 1996, the
Company received net proceeds of approximately $7.9 million from a public
offering of 1,750,000 shares of its common stock. The Company also received
$654,000 from the exercise of options for 185,041 shares of its common stock in
January 1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and notes thereto included in this Quarterly Report and in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
Except for the historical information contained herein, the
discussion in this Quarterly Report contains certain forward-looking statements
that involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in this
Quarterly Report should be read as being applicable to all related
forward-looking statements wherever they appear in this Quarterly Report. The
Company's actual results could differ materially from those discussed here.
OVERVIEW
InSite Vision is developing ophthalmic pharmaceutical products based
on its proprietary DuraSite(R) eyedrop-based drug delivery technology, which is
designed to improve the safety, efficacy and medical value of existing
ophthalmic products and potentially permit the novel ophthalmic application of
drugs that are currently used or being developed for non-ophthalmic indications.
The DuraSite delivery system can be customized to deliver a wide variety of
potential drug candidates having a broad range of molecular weights and other
properties.
To date, InSite Vision has not received any revenues from the sale
of products, although it has received an insignificant small amount of royalties
from the sale of products using the Company's licensed technology. The Company
has been unprofitable since its inception and expects to continue to incur
substantial losses for at least the next several years, due to continuing
research and development efforts, including preclinical studies, clinical trials
and manufacturing of its product candidates. The Company has financed its
research and development activities and operations primarily through private and
public placement of its equity securities and, to a lesser extent, from
collaborative agreements.
In November 1995, InSite restructured its operations and reduced its
staff by approximately 50% to enable it to conserve its financial resources.
Self-funded product development was reduced substantially and the Company
discontinued plans to establish its own sales and marketing organization. The
Company is attempting, through corporate partnering and other potential business
opportunities, to recognize the value of its late-stage product candidates and
its drug delivery technology.
In May 1996, InSite entered into an agreement with CIBA Vision
Ophthalmics (CIBA Vision) whereby InSite regained full U.S. marketing rights to
InSite's PilaSite(R), product candidate for glaucoma. In exchange, CIBA Vision
received royalty-bearing, co-exclusive U.S. marketing rights to InSite's
ToPreSiteTM product candidate for ocular inflammation/infection. CIBA Vision
assumed all subsequent product development, clinical and regulatory
responsibility for ToPreSiteTM. In addition, CIBA Vision received
royalty-bearing, co-exclusive U.S. marketing rights to InSite Vision's ISV-205
product candidate for certain non-glaucoma-related indications.
During July 1996, the Company entered into agreements with Bausch &
Lomb Incorporated (B&L) which provide for:
B&L to manufacture InSite product candidates at B&L's facility in
Tampa, Florida using equipment owned by InSite, and for B&L and
InSite to share the cost of certain leasehold improvements in
connection with the installation and operation of the equipment;
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B&L to receive, for a fee of $500,000, an exclusive worldwide
royalty-bearing license to manufacture and market PilaSite(R);
A collaboration between the Company and B&L to develop and sell a
new DuraSite(R) based eyedrop formulation; and
A $2 million equity investment by B&L in the Company.
As a result of these agreements, the Company has elected to vacate
its co-tenancy of a clean room at another supplier's plant and in
June 1996 wrote-off the amounts it had previously capitalized
related to that facility. This write-off resulted in a non-cash
charge to the Company's results of operations of $1.4 million which
is reported as a separate line item in the accompanying financial
statements.
As of June 30, 1996, the Company's accumulated deficit was
approximately $62.3 million. There can be no assurance that InSite Vision will
achieve either significant revenues from product sales or profitable operations.
RESULTS OF OPERATIONS
The Company earned royalty income of $12,000 and $26,000 for the
quarters ended June 30, 1996 and 1995, respectively, from sales of AquaSite(R)
by CIBA Vision. To date, the Company has not relied on royalty revenues for
funding its activities, nor has it received revenues from the sale of products.
The Company does not expect to receive significant product revenue or royalties
for several years, if at all.
Research and development expenses declined 35% in the second quarter
of 1996 to $1.4 million from $2.1 million in the second quarter of 1995 with a
40% decline to $2.8 million from $4.6 million during the six months ended June
30, 1996 and 1995, respectively. The decreases are primarily due to lower
expenditures for human clinical studies of the Company's product candidates. As
part of the restructuring described above, the Company has deferred significant
additional expenditures by delaying the filing of new drug applications with the
U.S. Food and Drug Administration for its BetaSite(R) and PilaSite(R) product
candidates to treat glaucoma. As a result, it is presently anticipated that
research and development expenses will be lower in 1996 than in 1995.
The Company has re-prioritized its earlier stage development
activities, placing emphasis on the ongoing Phase II study of its product
ISV-120 for prevention of pterygium recurrence and on the initiation of clinical
studies using ISV-205 for the prevention of steroid-induced glaucoma. Later
stage product development is expected to be conducted through corporate
partnering arrangements, if available and if with acceptable terms.
General and administrative expenses declined 31% during the quarter
ended June 30, 1996 to $812,000 from $1.2 million during the second quarter of
1995, with a 38% decline to $1.5 million from $2.4 million during the six months
ended June 30, 1996 and 1995, respectively. The Company did not replace the
general and administrative employees who voluntarily left the Company during
1995 and, in November 1995, announced that it would not establish its own sales
and marketing organization and that it had made additional staff reductions in
its administration and manufacturing areas. As a result, general and
administrative expenses are expected to be lower in 1996 than in 1995.
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Interest and other income were $143,000 and $140,000 for the
quarters ended June 30, 1996 and 1995, respectively. Interest earned in the
future will be dependent on the Company's funding cycles and prevailing interest
rates. Interest expense relates primarily to notes payable.
The Company incurred net losses of $3.5 million and $3.2 million for
the three month periods ended June 30, 1996 and 1995, respectively, resulting in
net losses of $5.5 million and $6.7 million for the first six months of 1996 and
1995, respectively. The Company expects to incur substantial additional losses
over the next several years. The losses are expected to fluctuate from period to
period based primarily on the level of clinical activities.
LIQUIDITY AND CAPITAL RESOURCES
InSite Vision has financed its operations primarily through private
placements of preferred stock totaling $32.0 million, an October 1993 public
offering of common stock which resulted in net proceeds of approximately $30.0
million, a January 1996 private placement of common stock and warrants which
raised net $4.8 million and an April 1996 public offering which raised net $7.9
million. At June 30, 1996, the Company had cash and equivalents totaling $12.7
million. It is the Company's policy to invest these funds in highly liquid
securities, such as time deposits, interest bearing money market funds,
commercial paper, Treasury and federal agency notes and corporate debt.
For the six months ended June 30, 1996 and 1995, expenditures for
operating activities and additions to capital equipment were $4.5 million and
$7.5 million, respectively. Of those amounts, $63,000 and $1,232,000 were for
additions to laboratory and other property and equipment in 1996 and 1995,
respectively. The Company expects to expend approximately $500,000 during the
second half of 1996 as its share of leasehold improvements at B&L's facilities
in Tampa, Florida. The timing of future expenditures will correspond to the
timing of clinical trials of potential products and additional product
development.
The Company's future capital uses and requirements will depend on
numerous factors, including the progress of its research and development
programs, the progress of preclinical and clinical testing, the time and costs
involved in obtaining regulatory approvals, the cost of filing, prosecuting,
defending and enforcing patent claims and other intellectual property rights,
competing technological and market developments, changes in the Company's
existing collaborative and licensing relationships, the ability of the Company
to establish additional collaborative arrangements, acquisition of new products
and technologies, the completion of commercialization activities and
arrangements, and the purchase of additional plant and equipment.
The Company anticipates no material capital expenditures to be
incurred for environmental compliance in fiscal year 1996. Based on the
Company's good environmental compliance record to date and its current
compliance with applicable environmental laws and regulations, environmental
compliance is not expected to have a material adverse effect on the Company's
operations.
The Company believes that its cash and equivalents will be
sufficient to meet its operating expenses and cash requirements through 1997.
The Company expects to incur substantial additional development costs prior to
reaching profitability. As a result, InSite Vision will require substantial
additional funds and the Company may seek research funding, private or public
equity investments, and possible future collaborative agreements to meet such
needs. Even if the Company does not have an immediate need for additional cash,
it may seek access to the public equity markets if and when conditions are
favorable. There is no assurance that such additional funds will be available
for the Company to finance its operations on acceptable terms, if at all.
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EARLY STAGE OF DEVELOPMENT; TECHNOLOGICAL UNCERTAINTY
InSite is at an early stage of development. Only one product
utilizing the Company's DuraSite technology, an over-the-counter ("OTC") dry eye
treatment, is currently being marketed. Most of the potential products currently
under development by the Company will require significant additional research
and development, and preclinical and clinical testing, prior to submission to
regulatory authorities for marketing approval. The Company's potential products
are subject to the risks of failure inherent in the development of products
based on new technologies. These risks include the possibilities that the
Company's technology or any or all of its potential products will be found to be
unsafe, ineffective, or otherwise fail to receive necessary marketing clearance;
that the potential products, if safe and effective, will be difficult to
manufacture or market; that proprietary rights of third parties will preclude
the Company from marketing products; or that third parties will market superior,
equivalent or more cost-effective products. As a result, there can be no
assurance that the Company's research and development activities will result in
any commercially viable products.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company will require substantial additional funds to conduct the
development and testing of its potential products and to manufacture and market
any products that may be developed. As described in Management's Discussion and
Analysis, the Company's future capital requirements will depend on numerous
factors, including the progress of its research and development programs, the
progress of preclinical and clinical testing, the time and costs involved in
obtaining regulatory approvals, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, changes in the Company's existing
collaborative and licensing relationships, the ability of the Company to
establish corporate partnerships for the manufacture and marketing of its
potential products, and the purchase of additional capital equipment. The
Company intends to seek additional funding through public or private financings,
collaborative or other arrangements, or from other sources. There can be no
assurance that additional financing will be available from any of these sources
or, if available, that it will be available on acceptable terms. If additional
funds are raised by issuing equity securities, significant dilution to existing
stockholders may result. If adequate funds are not otherwise available, the
Company may be required to delay, scale back or eliminate one or more of its
research, discovery or development programs, or to obtain funds through entering
into arrangements with collaborators or others that may require the Company to
relinquish rights to certain of its technologies, product candidates or
products, or to cease operations.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE FINANCIAL RESULTS
The Company has incurred significant operating losses since its
inception in 1986 and it expects to continue to incur significant operating
losses for at least the next several years. The amount of net losses and the
time required by the Company to reach profitability are uncertain. The Company's
ability to achieve profitability depends upon its ability, alone or with others,
to complete successful development of its potential products, conduct clinical
trials, obtain required regulatory approvals and successfully manufacture and
market its products. There can be no assurance that the Company will ever
achieve significant revenue or achieve profitability on a sustained basis.
DEPENDENCE ON THIRD PARTIES
In connection with its restructuring in November 1995, the Company
elected not to proceed with plans to establish a dedicated sales and marketing
organization. In order to successfully commercialize its product candidates, the
Company will be required to enter into arrangements with
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one or more companies that will: provide for Phase III clinical testing,
commercial scale-up and manufacture of the Company's potential products; obtain
or assist the Company in other activities associated with obtaining regulatory
approvals for its product candidates; and market and sell the Company's
products, if approved.
To date, the Company has entered into agreements with CIBA Vision
for co-exclusive rights with the Company in the United States to manufacture and
market AquaSite, MethaSite(R), ToPreSite and ISV-205 for certain
non-glaucoma-related indications. Of these, only AquaSite, an OTC product for
which regulatory approval is not required, has been marketed. In an agreement
entered into with CIBA Vision in May 1996, the Company regained full U.S.
marketing rights to the Company's PilaSite product candidate for glaucoma. In
exchange, CIBA Vision received royalty-bearing, co-exclusive U.S. marketing
rights to ToPreSite product candidate for ocular inflammation/infection. CIBA
Vision assumed all subsequent product development, clinical and regulatory
responsibility for ToPreSite. In addition, CIBA Vision received royalty-bearing,
co-exclusive U.S. marketing rights to the Company's ISV-205 product candidate
for certain non-glaucoma-related indications. CIBA Vision has no obligation to
fund the further development of MethaSite or ISV-205.
In July 1996 the Company entered into agreements with Bausch & Lomb
Incorporated (B&L) which provide for: B&L to receive an exclusive worldwide
royalty bearing license to manufacture and market PilaSite; a collaboration
between the two parties to develop and sell a new formulation of DuraSite; and
the Company to move its manufacturing equipment to B&L facilities in Tampa,
Florida and to share with B&L the cost of building a new clean room.
There can be no assurance that, even if regulatory approvals are
obtained, products will be successfully marketed, or that the Company will be
able to conclude arrangements with other companies to support the
commercialization of such products on acceptable terms, if at all.
The Company's strategy for research, development and
commercialization of certain of its products requires the Company to enter into
various arrangements with corporate and academic collaborators, licensors,
licensees and others, and is dependent on the subsequent success of these
outside parties in performing their responsibilities. For example, the Company
is dependent upon British Biotechnology plc ("British Biotech") for the supply
of batimastat and lexipafant, the active drugs incorporated into the Company's
ISV-120 and ISV-611 product candidates, respectively. British Biotech is
currently conducting clinical testing of batimastat and lexipafant for
non-ophthalmic indications. Should British Biotech elect not to proceed with the
development of either product candidate, the Company may have no source of
ongoing raw materials for affected product candidates and its business may be
adversely affected. In addition, there can be no assurance that the Company's
collaborators will not take the position that they are free to compete using the
Company's technology without accounting to the Company, or will not pursue
alternative technologies or develop alternative products either on their own or
in collaboration with others, including the Company's competitors, as a means
for developing treatments for the disease or disorders targeted by these
collaborative programs.
UNCERTAINTY OF PATENTS AND PROPRIETARY RIGHTS
The Company's success will depend in large part on its ability to
obtain patents, protect trade secrets and operate without infringing upon the
proprietary rights of others. A substantial number of patents in the field of
ophthalmology have been issued to pharmaceutical, biotechnology and
biopharmaceutical companies. Moreover, competitors may have filed patent
applications, may have been issued patents or may obtain additional patents and
proprietary rights relating to products or processes competitive with those of
the Company. There can be no assurance that the Company's patent applications
will be approved, that the Company will develop additional proprietary products
that
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are patentable, that any issued patents will provide the Company with adequate
protection for its inventions or will not be challenged by others, or that the
patents of others will not impair the ability of the Company to commercialize
its products. The patent position of firms in the pharmaceutical industry
generally is highly uncertain, involves complex legal and factual questions, and
has recently been the subject of much litigation. No consistent policy has
emerged from the U.S. Patent and Trademark Office or the courts regarding the
breadth of claims allowed or the degree of protection afforded under
pharmaceutical patents. There can be no assurance that others will not
independently develop similar products, duplicate any of the Company's products
or design around any patents of the Company.
A number of pharmaceutical companies and research and academic
institutions have developed technologies, filed patent applications or received
patents on various technologies that may be related to the Company's business.
Some of these technologies, applications or patents may conflict with the
Company's technologies or patent applications. Such conflict could limit the
scope of the patents, if any, that the Company may be able to obtain or result
in the denial of the Company's patent applications. In addition, if patents that
cover the Company's activities have been or are issued to other companies, there
can be no assurance that the Company would be able to obtain licenses to these
patents, at all, or at a reasonable cost, or be able to develop or obtain
alternative technology. If the Company does not obtain such licenses, it could
encounter delays or be precluded from introducing products to the market.
Litigation may be necessary to defend against or assert claims of infringement,
to enforce patents issued to the Company or to protect trade secrets or know-how
owned by the Company, and could result in substantial cost to and diversion of
effort by, and may have a material adverse effect on, the Company. In addition,
there can be no assurance that these efforts by the Company will be successful.
The Company's competitive position is also dependent upon unpatented
trade secrets. There can be no assurance that others will not independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to the Company's trade secrets, that such trade secrets
will not be disclosed or that the Company can effectively protect its rights to
unpatented trade secrets. To the extent that the Company or its consultants or
research collaborators use intellectual property owned by others in their work
for the Company, disputes also may arise as to the rights in related or
resulting know-how and inventions.
NO COMMERCIAL MANUFACTURING EXPERIENCE
The Company has no experience in the manufacture of products for
commercial purposes. The Company has a pilot facility licensed by the State of
California to manufacture certain of its products for Phase I and Phase II
clinical trials. Contract manufacturers must adhere to regulations enforced by
the United States Food and Drug Administration ("FDA") on an ongoing basis
through its facilities inspection program. There are a limited number of Good
Manufacturing Processes contract manufacturers which are able to manufacture
products using InSite's technology. In July 1996, the Company entered into an
alliance under which B&L has agreed to manufacture Company products. If the
Company should encounter delays or difficulties in establishing and maintaining
its relationship with B&L or other qualified manufacturers to produce, package
and distribute its finished products, then clinical trials, regulatory filings,
market introduction and subsequent sales of such products would be adversely
affected.
Contract manufacturing facilities must pass a pre-approval plant
inspection before the FDA will approve a new drug application ("NDA"). There can
be no assurance that the FDA or other regulatory agencies will approve the
process or the facilities by which any of the Company's products may be
manufactured. The Company's dependence on third parties for the manufacture of
products may adversely affect the Company's ability to develop and deliver
products on a timely and competitive
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basis. Should the Company be required to manufacture products itself, the
Company will be subject to the regulatory requirements described above, to
similar risks regarding delays or difficulties encountered in manufacturing any
such products and will require substantial additional capital. There can be no
assurance that the Company will be able to manufacture any such products
successfully or in a cost-effective manner. In addition, certain of the raw
materials the Company uses in formulating its DuraSite drug delivery system are
available from only one source. Any significant interruption in the supply of
these raw materials could delay the Company's clinical trials, product
development or product sales and could have a material adverse effect on the
Company's business.
GOVERNMENT REGULATION AND PRODUCT APPROVAL
FDA and comparable agencies in state and local jurisdictions and in
foreign countries impose substantial requirements upon preclinical and clinical
testing, manufacturing and marketing of pharmaceutical products. Lengthy and
detailed preclinical and clinical testing, validation of manufacturing and
quality control processes, and other costly and time-consuming procedures are
required. Satisfaction of these requirements typically takes several years and
the time needed to satisfy them may vary substantially, based on the type,
complexity and novelty of the pharmaceutical product. The effect of government
regulation may be to delay or to prevent marketing of potential products for a
considerable period of time and to impose costly procedures upon the Company's
activities. There can be no assurance that the FDA or any other regulatory
agency will grant approval for any products developed by the Company on a timely
basis, or at all. Success in preclinical or early stage clinical trials does not
assure success in later stage clinical trials. Data obtained from preclinical
and clinical activities are susceptible to varying interpretations which could
delay, limit or prevent regulatory approval. If regulatory approval of a product
is granted, such approval may impose limitations on the indicated uses for which
a product may be marketed. Further, even if regulatory approval is obtained,
later discovery of previously unknown problems with a product may result in
restrictions on the product, including withdrawal of the product from the
market. Delay in obtaining or failure to obtain regulatory approvals would have
a material adverse effect on the Company's business.
The FDA's policies may change and additional government regulations
may be promulgated which could prevent or delay regulatory approval of the
Company's potential products. Moreover, increased attention to the containment
of health care costs in the United States could result in new government
regulations which could have a material adverse effect on the Company's
business. The Company is unable to predict the likelihood of adverse
governmental regulation which might arise from future legislative or
administrative action, either in the United States or abroad. See "- Uncertainty
of Product Pricing, Reimbursement and Related Matters."
COMPETITION
The Company's success depends upon developing and maintaining a
competitive position in the development of products and technologies in its
areas of focus. There are many competitors of the Company in the United States
and abroad, including pharmaceutical, biotechnology and other companies with
varying resources and degrees of concentration on the ophthalmic pharmaceuticals
market. The Company's competitors may have existing products or products under
development which may be technically superior to those of the Company or which
may be less costly or more acceptable to the market. Competition from such
companies is intense and expected to increase as new products enter the market
and new technologies become available. The Company's competitors, many of whom
have substantially greater financial, technical, marketing and human resources
than the Company, may also succeed in developing technologies and products that
are more effective, safer or more commercially acceptable than any which have
been or are being developed by the Company. The Company's competitors may obtain
cost advantages, patent protection or other intellectual property rights that
13 of 17
<PAGE> 14
would block or limit the Company's ability to develop its potential products, or
may obtain regulatory approval for the commercialization of their products more
effectively or rapidly than the Company. To the extent that the Company
determines to manufacture and market its products by itself, it will also
compete with respect to manufacturing efficiency and marketing capabilities,
areas in which it has limited or no experience.
MARKETING AND SALES
The Company plans to market and sell its products through
arrangements with one or more pharmaceutical companies with expertise in the
ophthalmic drug industry. There can be no assurance that the Company will be
able to enter into such arrangements on acceptable terms, if at all. If the
Company is not successful in concluding such arrangements, it may be required to
establish its own sales and marketing organization, although the Company has no
experience in sales, marketing or distribution. There can be no assurance that
the Company will be able to build such a marketing staff or sales force, or that
the Company's sales and marketing efforts will be cost-effective or successful.
To the extent the Company has entered into or enters into co-marketing,
co-promotion or other licensing arrangements for the marketing and sale of its
products, any revenues received by the Company will be dependent on the efforts
of third parties (such as CIBA Vision and B&L), and there can be no assurance
that such efforts will be successful.
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on Dr. Chandrasekaran and other
principal members of its scientific and management staff, the loss of whose
services might significantly delay the achievement of planned development
objectives. Furthermore, recruiting and retaining qualified personnel will be
critical to the Company's success. There can be no assurance that the Company
will be able to continue to attract and retain such personnel necessary for the
development of the Company's business.
PRODUCT LIABILITY EXPOSURE; LIMITED INSURANCE COVERAGE
The Company's business exposes it to potential product liability
risks which are inherent in the testing, manufacturing, marketing and sale of
human therapeutic products. Product liability insurance for the pharmaceutical
industry generally is expensive. There can be no assurance that the Company's
present product liability insurance coverage is adequate. Such existing coverage
will not be adequate as the Company further develops its products, and no
assurance can be given that adequate insurance coverage against potential claims
will be available in sufficient amounts or at a reasonable cost.
UNCERTAINTY OF PRODUCT PRICING, REIMBURSEMENT AND RELATED MATTERS
The Company's business may be materially adversely affected by the
continuing efforts of governmental and third party payers to contain or reduce
the costs of health care through various means. For example, in certain foreign
markets the pricing or profitability of health care products is subject to
government control. In the United States, there have been, and the Company
expects there will continue to be, a number of federal and state proposals to
implement similar government control. While the Company cannot predict whether
any such legislative or regulatory proposals or reforms will be adopted, the
announcement of such proposals or reforms could have a material adverse effect
on the Company's ability to raise capital or form collaborations, and the
adoption of such proposals or reforms could have a material adverse effect on
the Company.
14 of 17
<PAGE> 15
In addition, in both the United States and elsewhere, sales of
health care products are dependent in part on the availability of reimbursement
from third party payers, such as government and private insurance plans.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products, and third party payers are increasingly challenging the
prices charged for medical products and services. If the Company succeeds in
bringing one or more products to the market, there can be no assurance that
reimbursement from third party payers will be available or will be sufficient to
allow the Company to sell its products on a competitive basis.
HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS
The Company's research, development and manufacturing processes
involve the controlled use of small amounts of hazardous and radioactive
materials. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
such materials and certain waste products. Although the Company believes that
its safety procedures for handling and disposing of such materials comply with
the standards prescribed by such laws and regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company could be held liable for any damages
that result, and any such liability could exceed the resources of the Company.
Moreover, the Company may be required to incur significant costs to comply with
environmental laws and regulations, especially to the extent that the Company
determines to manufacture its own products.
CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS
As of June 30, 1996, the Company's management and principal
stockholders in the aggregate owned beneficially approximately 32.2% of the
Company's outstanding shares of Common Stock. As a result, these stockholders,
acting together, would be able to effectively control most matters requiring
approval by the stockholders of the Company, including the election of a
majority of the directors.
VOLATILITY OF STOCK PRICE; NO DIVIDENDS
The market prices for securities of biopharmaceutical and
biotechnology companies (including the Company) have historically been highly
volatile, and the market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. Future announcements concerning the Company, its
competitors or other biopharmaceutical companies including the results of
testing and clinical trials, technological innovations or new therapeutic
products, governmental regulation, developments in patent or other proprietary
rights, litigation or public concern as to the safety of products developed by
the Company or others and general market conditions may have a significant
effect on the market price of the Common Stock. The Company has not paid any
cash dividends on its Common Stock and does not anticipate paying any dividends
in the foreseeable future.
ANTI-TAKEOVER PROVISIONS
The ability of the Board of Directors of the Company to issue shares
of Preferred Stock without stockholder approval may have certain anti-takeover
effects. The Company also is subject to provisions of the Delaware General
Corporation Law which may make certain business combinations more difficult.
15 of 17
<PAGE> 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
On May 29, 1996, the Company held its Annual Meeting of Stockholders at which
the stockholders approved:
(1) The election of S. Kumar Chandrasekaran, Ph.D., Mitchell H. Friedlaender,
M.D., Grant H. Inman, John E. Lucas, Jon S. Saxe and John W. Shell, Ph.D.
to the Board of Directors to serve until the next annual meeting or until
their successors are elected and qualified. The following directors
received the number of votes set opposite their respective names:
<TABLE>
<CAPTION>
For Election Withheld
<S> <C> <C>
S. Kumar Chandrasekaran, Ph.D. 9,011,344 20,000
Mitchell H. Friedlaender, M.D. 9,011,144 20,200
Grant H. Inman 9,011,144 20,200
John E. Lucas 9,011,144 20,200
Jon S. Saxe 9,010,144 21,200
John W. Shell 9,010,069 21,275
</TABLE>
(2) The ratification of the Company's appointment of Ernst & Young LLP as the
Company's independent certified public accountants for the 1996 fiscal
year. Such proposal received 9,009,484 votes for the ratification, 10,350
against the ratification and 11,510 votes abstained.
There were a total of 1,898,922 broker non-votes for each matter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits
<TABLE>
<CAPTION>
Number Exhibit Table
------ -------------
<S> <C>
10.28 ISV-205 License Agreement dated May 28, 1996 by and
between the Company and CIBA Vision Ophthalmics.*
10.29 ToPreSite(TM) License Agreement dated May 28, 1996 by
and between the Company and CIBA Vision Ophthalmics.*
10.30 BetaSite(R) Contract Manufacturing Agreement dated
July 18, 1996 by and between the Company and Bausch
&Lomb Pharmaceuticals, Inc.*
10.31 PilaSite(R)License Agreement dated July 18, 1996 by
and between the Company and Bausch & Lomb
Pharmaceuticals, Inc.*
10.32 Timolol Development Agreement dated July 18, 1996 by
and between the Company and Bausch & Lomb
Pharmaceuticals, Inc.*
10.33 Stock Purchase Agreement dated July 18, 1996 by and
between the Company and Bausch & Lomb Incorporated.*
</TABLE>
* Confidential treatment has been applied for with the
Securities and Exchange Commission with respect to certain
portions of this agreement.
16 of 17
<PAGE> 17
b) Reports on Form 8-K
No reports on Form 8-K were filed in the quarter ended June 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INSITE VISION INCORPORATED
Dated: August 9, 1996 by: /s/ S. Kumar Chandrasekaran
-----------------------------------
S. Kumar Chandrasekaran, Ph.D.
Chairman of the Board,
Chief Executive Officer
and Chief Financial Officer
17 of 17
<PAGE> 1
EXHIBIT 10.28
ISV-205 LICENSE AGREEMENT
This Agreement ("Agreement") is made this 28th day of May, 1996 by and
between InSite Vision Incorporated, a Delaware corporation, having offices at
965 Atlantic Avenue, Alameda, California 94501 ("InSite") and CIBA Vision
Ophthalmics, a division of CIBA Vision Corporation, a Delaware corporation,
having offices at 11460 Johns Creek Parkway, Duluth, Georgia 30155 ("CVO").
WHEREAS, InSite owns certain proprietary rights and know-how relating
to the manufacture, use and sale of the Compound and the Products (as defined
herein); and
WHEREAS, CVO desires to acquire and InSite is willing to grant to CVO
certain rights with respect to such proprietary rights and know-how under the
terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, the parties agree as follows:
1. DEFINITIONS
The following terms as used in this Agreement shall have the meaning
set forth in this section.
1.1 "Affiliate" shall mean all corporations or business entities
which directly or indirectly are controlled by, control or are
under common control with CVO or InSite as the case may be.
1.2 "Agreement Period" shall mean the period commencing upon the
Effective Date and extending until the expiration or
termination of this Agreement pursuant to Section 17 hereof.
1.3 "Compound" shall mean the compound known as ISV-205, which is
diclofenac sodium suspended in InSite's DuraSite(R)polymer
vehicle covered by the claims of * * *, including all
continuations in part, divisionals, reissuances and the like
of the foregoing patent application. [* INDICATES THAT
MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
1.4 "CVO Data" shall mean any toxological, pre-clinical, or
clinical data contained in CVO's IND or NDA for Voltaren
Ophthalmic(R) sterile ophthalmic solution which is not in the
public domain and which may not be used or referenced absent a
license from CVO.
<PAGE> 2
1.5 "DuraSite(R) means any polymer suspension drug delivery
vehicle which is covered by the claims of * * *, including all
continuations in part, divisionals, reissuances and the like
of the foregoing patent. [* INDICATES THAT MATERIAL HAS BEEN
OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
1.6 "Effective Date" shall mean the date first above written.
1.7 "FDA" shall mean the United States Food and Drug
Administration or any successor entity thereto.
1.8 "FDCA" shall mean the United States Food, Drug and Cosmetic
Act and the regulations promulgated thereunder.
1.9 "Glaucoma Product" shall mean an ophthalmic formulation
containing the Compound which is indicated for the treatment
of glaucoma, or for lowering intraocular pressure or the
prevention of a rise in intraocular pressure after a steroid
challenge.
1.10 "IND" shall mean an Investigational New Drug Application as
defined in the FDCA.
1.11 "Know-How" shall mean all technology, formula, trade secrets,
technical data, pre-clinical and clinical data, toxicological
and pharmacological data and any other information or
experience owned, controlled or in the possession of or used
by Insite in the development, manufacture, use or sale of the
Compound, the Glaucoma Product, the SAC Product, or Other
Products (all as defined herein) as well as any improvements
or modifications to the know-how developed by, or by any third
party for, InSite during the Agreement Period.
1.12 "NDA" shall mean a New Drug Application as defined in the
FDCA.
1.13 "Net Sales" shall mean the amount invoiced by a party hereto,
its affiliates and sub-licensees to independent third parties
for the sale of the Products (as defined herein) less cash
discounts and/or quantity discounts actually allowed; credit
for customer returns and allowances; charges for freight,
handling and transportation which are separately billed to
such party and sales and use taxes and other similar taxes
incurred by such party. Net Sales shall not include the value
of product samples or clinical trial supplies.
1.14 "1984 Act" shall mean the United States Drug Price Competition
and Patent Term Restoration Ac USC Section 355, 35
2
<PAGE> 3
USC Section 155-156, 35 USC Section 271 and the regulations
promulgated thereunder.
1.15 "Novel Preservative" shall mean a new proprietary preservative
system developed by either party * * * [* INDICATES THAT
MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
1.16 "Other Products" shall mean those products containing the
Compound, the primary indications for which are the treatment
of inflammation, pain, or photophobia (light sensitivity).
1.17 "Patent Rights" shall mean all of InSite's right, title and
interest in and to any patent or patent applications in the
Territory (as herein defined), any claim of which would cover
the Compound, the Products or their manufacture, use, sale,
offer for sale or import including, but not limited, to those
listed in Appendix A attached hereto, and any continuations,
continuations in part, divisions, re-examinations, re-issues
or extensions of any of the above described patents or patent
applications as of the date of this Agreement or arising
during the Agreement Period.
1.18 "Products" shall mean collectively the Glaucoma Product, the
SAC Product, and Other Products.
1.19 "SAC Product" shall mean an ophthalmic formulation containing
the Compound, the primary indication for which is the
treatment of seasonal allergic conjunctivitis, or other forms
of ocular allergies.
1.20 "Territory" shall mean the United States of America, including
its territories and possessions.
2. GRANT
2.1 InSite hereby grants to CVO during the Agreement Period an
exclusive license subject to all the terms and conditions of
this Agreement and to InSite's rights under Section 2.3
hereof, under the Patent Rights and with the right to
sub-license, to develop, make, have made, use and sell the SAC
Product and the Other Products in the Territory and to develop
and manufacture or have manufactured the SAC Product and Other
Products outside the Territory solely for sale and use within
the Territory and for no other purpose.
2.2 In addition to the rights granted in Section 2.1, and without
any limitation
3
<PAGE> 4
thereof, InSite hereby grants to CVO during the Agreement
Period an exclusive license subject to all the terms and
conditions of this Agreement and to Section 2.4 hereof with
the right to sub-license, to practice the Know-How in the
Territory and outside the Territory solely to develop and
manufacture or have manufactured the SAC Product and the Other
Products for use and sale in the Territory.
2.3 InSite hereby reserves for itself (i) all rights under the
Patent Rights or the Know-How to manufacture, have
manufactured, use and sell all products other than the SAC
Product and the Other Products in the Territory; and (ii) the
right, without the right to further license or sub-license,
under the Patent Rights and Know-How to manufacture, have
manufactured, use and sell the SAC Product and the Other
Products in the Territory. The rights of InSite reserved in
clause (ii) above of this Section 2.3 shall not in any way be
assigned or transferred to any third party; provided however
that such rights may be assigned without CVO's consent in a
merger, reorganization or sale of all or substantially all of
InSite's assets or a transaction whereby control of InSite
changes to InSite's successor in interest in such transaction;
provided further that, upon the occurrence of any such
transaction, if InSite is not then marketing such product,
then InSite or its successor in interest shall not have the
right to sell the SAC Product or Other Products in the
Territory until the end of 36 months following the date of the
CVO's first commercial sale of the applicable Product in the
Territory (or, if there has been no commercial sale of the
applicable Product in the Territory during the first year
following the date of any FDA or similar registration for sale
of such Product in such country in the Territory ("Product
Approval"), then 48 months after Product Approval).
2.4 In the event CVO elects not to commercialize the SAC Product
or Other Product, then upon ninety (90) days prior written
notice from InSite, the exclusive right and license granted to
CVO under Sections 2.1 and 2.2 with respect to such SAC
Product and/or Other Product shall terminate and shall revert
to InSite, provided that such rights shall not be assigned or
transferred to any third party, whether by way of license,
merger, reorganization or sale of all or substantially all of
InSite's assets, for a period of 24 months following CVO's
election not to pursue commercialization or to cease marketing
such Product. Following such 24 month period, Insite may
assign or transfer such rights without CVO's consent. In the
event that CVO has not (i) initiated clinical studies of at
least one SAC Product or Other Product within three (3) years
after the Effective Date; or (ii) filed for FDA approval for
such SAC Product or Other Product within four (4) years after
initiation of clinical trials of such product, or (iii)
commercialized such SAC Product or Other Product within one
(1) year after FDA approval therefor whether such approval was
obtained by CVO or by InSite (if InSite thereafter transferred
commercialization to CVO) and CVO is marketing a product
competitive with either the SAC
4
<PAGE> 5
Product or Other Product, then CVO's exclusive right and
license under Sections 2.1 and 2.2 with respect to such SAC
Product and/or Other Product shall immediately terminate and
revert to InSite, unless CVO can in good faith show that its
inability to meet the foregoing timelines was beyond its
reasonable control. CVO shall be deemed to have elected not to
commercialize the SAC Product or Other Product if CVO fails to
use such level of efforts, in accordance with CVO's business,
legal, medical and scientific judgment and CVO's normal
practices and procedures, to continue the development of the
SAC Product or Other Product pursuant to this Agreement
through pre-clinical and clinical studies and other
registration directed activities with the FDA or other
corresponding federal or state government agencies.
2.5 Unless this Agreement is terminated for cause by InSite under
Section 17.2 or by CVO under Section 17.3, at the end of the
Agreement Period, CVO shall have the unrestricted perpetual
right to practice the Know-How free of charge, to manufacture,
have manufactured and use such Agreement Product anywhere in
the world and to sell such Agreement Product in the Territory.
3. DEVELOPMENT
3.1 InSite shall use commercially reasonable efforts to conduct
the development work for the Products. It is understood by the
parties that the formulations of the SAC Product, the Other
Products and the Glaucoma Product may be identical, or there
may be different formulations for the different Products.
3.2 In the event InSite elects not to complete the initial
development of either the SAC Product or any of the Other
Products, CVO shall be entitled to proceed with the
development of such Product(s) as InSite has abandoned and
InSite will make available, subject to the terms of the
license granted in Section 2.2 above, to CVO at the time of
InSite's election, all of its Know-How relating only to the
development of the Product(s) that InSite elects not to
proceed with. CVO shall have the right to reference relevant
data in InSite submissions on the Glaucoma Product in order to
conduct the development of the SAC or Other Products. InSite
shall make such election within one year of the Effective
Date. InSite shall be deemed to have elected not to complete
development of the SAC Product or any of the Other Product if
InSite fails to use such level of efforts, in accordance with
InSite's business, legal, medical and scientific judgment and
InSite's normal practices and procedures, to continue the
development of such SAC Product or such Other Product pursuant
to this Agreement through pre-clinical and clinical studies
and other registration directed activities with the FDA or
other corresponding federal or state government agencies.
3.3 With respect to its submissions to the FDA for any of the
Products, InSite shall
5
<PAGE> 6
be entitled, but not obligated, to reference the CVO Data. In
Data. In the event InSite elects to reference CVO Data, CVO
will cooperate and provide any and all documentation necessary
to permit InSite to reference and include such data in its own
filings.
3.4 Each party will, upon request, make available to the other,
under a secrecy agreement, such know-how relating to such
party's Novel Preservative systems as shall be necessary to
allow the requesting party to incorporate such Novel
Preservative for use in the Products.
4. ROYALTIES
4.1 In consideration of the rights granted in Section 2 hereof,
CVO shall pay InSite the royalties set forth in this Section
4. In consideration of, and in the event InSite exercises, the
right to reference CVO Data set forth in Section 3.3 hereof,
InSite shall pay CVO the royalties set forth in this Section
4.
4.2 In the event InSite completes the development of the SAC
Product or Other Product using a different formulation than
the Glaucoma Product, and obtains approval for the NDA
therefor, CVO shall pay InSite a royalty * * * of CVO Net
Sales of the applicable Product until the later to occur (i)
ten (10) years after the date of first commercial sale of such
Product; or (ii) until the expiration of the last to expire
patent in the Patent Rights ("CVO Royalty Period").
Notwithstanding the foregoing, in the event InSite chooses to
reference the CVO Data in its regulatory filings, and InSite
obtains approval for an NDA for the SAC Product or Other
Product, CVO shall pay InSite a royalty * * * of CVO's Net
Sales of the applicable Product during the CVO Royalty Period.
[* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION
PURSUANT TO RULE 24b-2.]
4.3 On the other hand, in the event InSite completes the
development of the SAC Product or Other Product and the
formulation for any such Product is sufficiently similar to
the formulation for the Glaucoma Product as to legally allow
prescription substitution of one product by the other, CVO
shall pay to InSite a royalty * * * of CVO's Net Sales of such
Product if InSite has referenced the CVO Data in obtaining
approval of the NDA therefor, or * * * of such Net Sales if
InSite has not referenced CVO Data in obtaining approval of
the NDA therefor. [* INDICATES THAT MATERIAL HAS BEEN OMITTED
AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
6
<PAGE> 7
4.4 (a) In the event InSite elects not to complete the development
of the SAC Product or Other Product, and CVO completes
such development and obtains an approval for the NDA
therefor, and such Product has a different formulation
from and cannot be legally substituted for the Glaucoma
Product, CVO shall pay the following royalties depending
on the stage at which InSite has stopped development of
the applicable Product:
Prior to Commencement of Phase II *
Prior to Commencement of Phase III *
After Commencement of Phase III *
[* INDICATES THAT MATERIAL HAS BEEN OMITTED AND
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
For purposes of this Agreement, "Phase II" and "Phase III"
shall have the meaning given them in the United Stated
Food and Drug Act and any rules or regulations promulgated
thereunder.
(b) Nothwithstanding the foregoing, if after InSite has
initiated but not completed Phase III, CVO completes the
development of the SAC Product or Other Product, and such
Product can be legally substituted for the Glaucoma
Product, then the royalty rate payable to CVO for such
Product shall be * * * spent by CVO in development costs
for such Product down to a minimum rate of * * * [*
INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION
PURSUANT TO RULE 24b-2.].
4.5 In the event InSite has referenced CVO Data in obtaining
approval of the NDA for the Glaucoma Product, whether or not
such Product is the same formulation as the SAC or Other
Products, InSite shall pay CVO a royalty of * * * InSite's Net
Sales of the Glaucoma Product until the expiration of the last
to expire of the patents covering Voltaren Ophthalmic. [*
INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION
PURSUANT TO RULE 24b-2.]
4.6 The royalties payable by CVO to InSite in Section 4.2, 4.3 and
4.4 hereof, shall
7
<PAGE> 8
be adjusted by adding an additional * * * of Net Sales to the
otherwise applicable royalty rate if the SAC Product or Other
Product is formulated with an InSite Novel Preservative. Such
royalties shall be reduced by * * * if the applicable Product
is formulated and developed with a CVO Novel Preservative, * *
* and by * * *, if formulated and developed with both a CVO
Novel Preservative and CVO's novel * * * replacement provided
these formulations are not covered by any patent issuing from
* * *. It is agreed and understood that the parties will have
to mutually agree on the best formulation for such product
with respect to preservative, based on the most desirable
product and the ability to expedite development of the
product. InSite shall pay to CVO a royalty of * * * of
InSite's Net Sales of the Glaucoma Product if InSite utilizes
CVO's Novel Preservative in the Glaucoma Product, * * * if the
Glaucoma Product utilizes CVO's novel * * * replacement and *
* * if the Glaucoma Product is formulated and developed with
both a CVO Novel Preservative and CVO's novel * * *
replacement, provided these formulations are not covered by
any patent issuing from * * *. Such additional royalties shall
be paid by InSite until the expiration of the last patent
covering such preservative. [* INDICATES THAT MATERIAL HAS
BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
5. TIMING OF ROYALTY PAYMENTS; RECORDS
5.1 Within forty-five (45) days after the end of each calendar
quarter, CVO shall pay to InSite and InSite shall pay to CVO
the royalty payments due, if any, for that quarter in U.S.
dollars.
5.2 Together with each quarterly royalty payment, the party paying
the royalty shall submit to the other a written accounting
showing its computation of royalties due under this Agreement
for such quarter. Said accounting shall set forth gross sales,
Net Sales, and the total royalties due for the quarter in
question.
5.3 Each party shall keep full and accurate books and records
reflecting its sales of the Products and the data used in
arriving at Net Sales and the amount of royalties payable to
the other party hereunder for no less than one (1) year after
the end of each such quarter. Each party shall permit the
other, at the other party's expense, to have such books and
records examined by independent certified public accountants
retained by the other party and acceptable to such party,
during regular business hours upon reasonable advance notice,
but not later than one (1) year following the rendering of any
such reports, accounting and payments, and no more often than
one (1) time per year. Such independent accountants shall keep
confidential any information obtained
8
<PAGE> 9
during such examination and shall report to the party who
retained each accountant only the amounts of royalties which
the independent accountant believes to be due and payable
hereunder. If errors of ten percent (10%) or more in the
auditing party's favor are discovered as a result of such
examination, the audited party shall reimburse the auditing
party for the expense of such examination and pay the
deficiency immediately.
6. WARRANTIES
6.1 InSite warrants and represents that:
(a) it is the owner or licensee with the right of
sublicense of the Patent Rights and Know-How and has
the right to license said Patent Rights and Know-How
free of any lien or encumbrance in the Territory in
the manner set forth in this Agreement;
(b) it has not assigned or conveyed any interest in the
Patent Rights or Know-How which may be inconsistent
with the rights granted hereunder; and
(c) it is a corporation duly incorporated and in good
standing in its state of incorporation and has all
requisite power to enter into and perform this
Agreement. Upon execution by the parties hereto, this
Agreement shall constitute a valid and legally binding
obligation of InSite, enforceable in accordance with
its terms.
6.2 CVO warrants and represents that:
(a) it is the owner of the CVO Data and has the right to
grant a right of reference to such Data as set forth
herein.
(b) it is a corporation duly incorporated and in good
standing in its state of incorporation and has all
requisite power to enter into and perform this
Agreement. Upon execution by the parties hereto, this
Agreement shall constitute a valid and legally binding
obligation of CVO enforceable in accordance with its
terms.
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<PAGE> 10
7. TRANSFER AND OWNERSHIP OF KNOW-HOW
7.1 As part of the license granted in Section 2.1 and 2.2,
and in order to enable CVO to develop, make, have
made, use and sell the SAC Product and the Other
Products, InSite shall either (i) make available to
CVO all Know-How related to the development of such
SAC Product or Other Products at the time that InSite
elects not to complete the development of such Product
and to turn the development of such Product over to
CVO, or (ii) make available to CVO all Know-How
related to marketing of such SAC Product or Other
Products at the time CVO launches such Product(s). All
Know-How related to the development and/or marketing
of the SAC Product or Other Products generated or
obtained by InSite during the Agreement Period shall
be made available to CVO within thirty (30) days of
its generation or receipt by InSite; provided,
however, InSite shall have no obligation to make
available any Know-How to CVO prior to InSite's
election not to complete development of the SAC
Product or one of the Other Products. All Know-How
provided to CVO shall be deemed confidential
information and shall be subject to the
confidentiality restrictions set forth in this
Agreement.
7.2 In the event CVO takes over the development of the SAC
or Other Products, InSite shall assign to CVO the IND
for such Product and the data contained therein, and
all pre-clinical data and regulatory submissions for
such Product, but InSite shall retain rights to use
any data contained in the IND for such Product and any
pre-clinical data and the right to access the same
subject to the terms of this Agreement. CVO shall own
all subsequent regulatory submissions for such
Product, including the NDA therefor and the data
contained therein, subject to InSite's rights to
access the same. InSite shall be authorized to
reference such submissions with respect to its other
products and in the event it wishes to manufacture or
market such Products pursuant to Section 2.3 hereof.
8. CONFIDENTIALITY
8.1 InSite and CVO shall keep any Know-How or business
information provided or made available by the other
party or its Affiliates hereunder confidential, and
neither InSite nor CVO shall, without the prior
written consent of the other party or its Affiliates,
as the case may be, use (except as expressly permitted
by this Agreement), or disclose to any third party,
any Know-How or business information provided or made
available by the other party or its Affiliates
hereunder; provided, however, that the foregoing shall
not apply to information which the party receiving
such information can establish by written
documentation to (i) have been publicly known at the
time of disclosure by the other party or its
Affiliates, as the case may be, (ii) have become
publicly known, without fault on its part, subsequent
to such disclosure, (iii) have been
10
<PAGE> 11
otherwise known by it from a source (other than the
other party or its agents or Affiliates), lawfully
having possession of and the right to disclose such
information, or (iv) have been developed by it or its
Affiliates independently of the disclosure by the
other party or its Affiliates without use of the other
party's Confidential Information.
The foregoing shall not preclude the disclosure of
information by InSite or CVO:
(a) to its legal representatives, Affiliates,
consultants, outside contractors and (if it
has the right to grant the license or
sublicense) its licensees and sublicensees,
under like written confidentiality obligations
on the part of the recipients, or
(b) to the extent required by law or regulation,
provided that, to the extent reasonably
possible, it shall give prompt written notice
of the proposed disclosure to the other party
or its Affiliates, as the case may be, to
allow the other party or its Affiliates, as
the case may be, an opportunity to object to
such requirement and, if applicable, assure
that confidential treatment will be accorded
to such information, or
(c) to the extent that such information is
reasonably required to be disclosed for the
purpose of securing necessary governmental
authorization for the clinical testing or
marketing of Products, or for the purpose of
conducting clinical testing or marketing of
Products, or of prosecuting or defending
litigation.
8.2 The terms of this Agreement shall not be disclosed by
either party to any third party (other than as
provided in Sub-sections 8.1(a), (b) and (c) or be
published unless both parties expressly agree
otherwise in writing. Furthermore, neither party shall
use the name of the other party or its Affiliates for
commercial purposes without their prior written
consent. However, all of the foregoing restrictions
shall not apply to the disclosure of information set
forth in the form of an agreed upon press release, if
any, which may be prepared in mutually agreeable
format and substance for release when this Agreement
becomes effective, or to disclosures required by law
or regulation including, without limitation, SEC
reporting requirements or FDA documentation relating
to Products.
11
<PAGE> 12
9. PATENTS
9.1 CVO acknowledges and agrees that the Regents of the
University of California (the "Regents") is solely
responsible for the prosecution and maintenance of the
Patent Rights in the Territory at InSite's expense.
InSite agrees that it will continue to meet its
reimbursement obligations to the Regents.
10. INFRINGEMENT OF PATENT RIGHTS
10.1 If either party shall become aware of any infringement
or threatened infringement of any Patent Rights,
including that contained in a notice provided under
the 1984 Act by a party filing an ANDA or Paper NDA
for any of the Products, then the party having such
knowledge shall give notice to the other within ten
(10) days of becoming aware of such infringement or
threatened infringement.
10.2 InSite shall have the right to take such action, as it
deems appropriate, whether by action, suit, proceeding
or otherwise, at its own expense to prevent or
eliminate, the infringement of Patent Rights by others
and to collect damages. CVO agrees to cooperate with
InSite in any reasonable manner including, but not
limited to, being named as a co-plaintiff in an action
brought by InSite. InSite agrees to pay all reasonable
out-of-pocket expenses (other than legal fees)
incurred by CVO at the request of Insite, in the
prosecution of any such action, suit or proceeding for
infringement. Except for an action brought by the
Regents, either alone or jointly with InSite, any
damages recovered by the party bringing the action for
patent infringement shall be used first to compensate
that party for its out-of-pocket expenses in the
prosecution of any such action, suit or proceeding for
infringement and any remaining damages recovered by
that party shall be apportioned between InSite and CVO
in proportion to the damage incurred by each party
determined in such action, suit or proceeding as a
result of the infringement.
10.3 In the event of any substantial and adverse
infringement (defined as having a material effect on
the sales or future sales of any of the Products), if
an action for patent infringement is not initiated by
InSite pursuant to Section 10.2 or by the Regents,
either alone or jointly with InSite, to prevent or
eliminate the infringement of Patent Rights within
ninety (90) days of receipt of notice of the
infringement or threatened infringement thereof (or
within thirty (30) days in the event such infringement
is by notice under the 1984 Act) then within said
ninety (90) days (or thirty (30) days, if applicable),
CVO may, at its option, give notice to InSite that
unless InSite undertakes such action, CVO shall
commence an action to terminate such infringement. If
InSite fails to take such action within said ninety
(90) days then CVO shall have the right to take such
action, at its own expense, as it deems appropriate
against any infringer of
12
<PAGE> 13
same. Such action by CVO may be undertaken in the name
of InSite, if necessary, and InSite agrees to
cooperate with CVO, and execute any necessary
documents relating to such action. In the event the
parties fail to bring such action to prevent or
eliminate the infringement of Patent Rights within one
hundred eighty (180) days of receipt of notice and
unless InSite believes, based upon an opinion of its
counsel, that the activity in question does not
infringe the Patent Rights, CVO's obligation to pay
patent royalties under Section 3 hereof shall be
abated, only with respect to the specific Products
claimed by the Patent Rights being infringed, until
such time as InSite shall obtain discontinuance of
such infringement.
At any time after commencement of any such
infringement action by CVO, InSite shall have the
right to become a party plaintiff in such action, and
InSite shall have the right to assume the prosecution,
conduct and control of such action at InSite's
expense. Any recoveries in an action commenced by CVO
shall be apportioned as specified by Section 10.2
11. THIRD PARTY RIGHTS
11.1 If either party shall become aware of any action, or
suit, or threat of action or suit, by a third party
alleging that the manufacture, use or sale of the SAC
Product or Other Product or the practice of Know-How
infringes a U.S. patent, or violates any other
proprietary rights in the Territory of any third
party, the party aware shall promptly notify the other
party of the same and fully disclose the basis
therefor.
11.2 InSite shall have the sole right at its own expense to
compromise or defend any such action or suit, or
threat of action or suit, on such basis and on such
terms as InSite may determine as appropriate in its
sole discretion, in its own name, or jointly in the
name of CVO and InSite as may be deemed necessary or
appropriate by InSite, and provided that CVO shall
have the right to participate at its own expense.
InSite shall keep CVO reasonably informed as to the
status of, and basis for, any such claim and shall
consult with CVO from time to time as to the defense
of such suit or action. CVO shall cooperate fully with
InSite in the defense of such suit or action,
including, without limitation, by making all relevant
papers and records available to InSite and by making
CVO's employees available for interviews and
depositions and InSite agrees to pay all reasonable
out-of-pocket expenses incurred by CVO at the request
of InSite. Notwithstanding the foregoing, neither
party shall have the right to settle any such claim
without the prior written consent of the other party,
which consent shall not be unreasonably withheld.
11.3 If, by the terms of any settlement approved by InSite,
which approval shall not be unreasonably withheld, or
if by a judgment, decree or decision of a court,
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<PAGE> 14
tribunal or other authority of competent jurisdiction,
CVO is required to obtain a license from a third party
in order to develop, make, have made, use or sell SAC
Product or Other Products (hereinafter "Third Party
License") and to compensate or pay damages to such
third party and/or pay royalties under such license,
then any royalties payable under Section 4 of this
Agreement shall be reduced by (a) any damages paid or
payable by CVO to such other party and (b) the amount
of royalties payable to the third party on future
sales under such Third Party License, provided the
amount of the reduction in the aggregate shall not be
greater than one-half (1/2) of the royalties
previously and hereafter payable to InSite pursuant to
this Agreement.
The reduction of royalties shall not apply to any SAC
Product or Other Products at issue in such action or
suit, or threat of action or suit, to the extent the
infringement is the direct result of such Product's
being (i) made in whole or in part in accordance to
new specifications delivered after the date of this
Agreement; or (b) combined with other products or
processes. CVO will indemnify InSite and its officers,
directors, agents and employees from all damages,
settlements, attorneys' fees and expenses related to a
claim of infringement or misappropriation excluded
from CVO's right to reduce royalties by this sentence
and related to the sale of Products by CVO.
11.4 Nothing in this Section 11, or in Section 10, shall be
construed as a waiver or cure of any breach of any
warranties set forth in Section 6 or any release of
any claim by CVO as may be appropriate relating
thereto.
12. PRODUCT LIABILITY
12.1 CVO shall defend, indemnify and hold InSite harmless
from any product liability claims and from any product
liability damages arising from the manufacture, use,
sale or importation by CVO of the SAC Product or Other
Products in the Territory, provided that InSite
notifies CVO of any such claims within ten (10) days
of receipt thereof and reasonably cooperates with CVO
in defending against such claims. CVO shall have
complete control and over the defense and/or
disposition of any such claim.
12.2 InSite shall defend and hold CVO harmless from any
product liability claims and from any product
liability damages arising from the manufacture, use,
sale or importation by InSite of the Glaucoma Product,
SAC Product or Other Products, provided that CVO
notifies InSite of any such claims within ten (10)
days of receipt thereof and reasonably cooperates with
InSite in defending against such claims. InSite shall
have complete control over the defense and/or
disposition of any such claim.
13. PATENT TERM EXTENSION
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<PAGE> 15
13.1 InSite shall use its reasonable efforts to cooperate
with the Regents in the filing of an application for
an extension of any United States patent falling
within the Patent Rights and to execute all documents
and take any action reasonably necessary in connection
therewith.
14. LIMITATION OF LIABILITY
EXCEPT AS OTHERWISE PROVIDED BELOW, NEITHER PARTY
SHALL BE RESPONSIBLE OR LIABLE WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY:
(A) FOR ANY AMOUNTS IN EXCESS OF THE AGGREGATE
OF ROYALTIES PAID TO IT, OR
(B) FOR ANY MATTER BEYOND ITS REASONABLE
CONTROL.
THE LIMITATIONS IN THIS SECTION 14 SHALL NOT APPLY TO
CLAIMS OF INDEMNIFICATION UNDER SECTION 12 HEREOF OR
TO ACTIONS OF CVO BEYOND THE SCOPE OF THE LICENSE
GRANTED HEREUNDER.
15. TRADEMARKS
CVO shall market the SAC Product and the Other Products under a
trademark owned by CVO which shall be different than the trademark
under which InSite markets the Glaucoma Product.
16. NOTICES
All notices required or permitted hereunder shall be given in
writing and sent by facsimile transmission, or mailed postage
prepaid by first class certified or registered mail, or sent by a
nationally recognized express courier service, or hand delivered at
the following addresses:
CIBA Vision Ophthalmics
11460 Johns Creek Parkway
Duluth, Georgia 30155-1518
Attn: President
InSite Vision Incorporated
965 Atlantic Avenue
Alameda, California 94501
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<PAGE> 16
Attn: Chief Executive Officer
Any notice, if mailed properly addressed, postage prepaid,
shall be deemed made three (3) days after the date of mailing
as indicated on the certified or registered mail receipt, or
on the next business day if sent by express courier service or
on the date of delivery or transmission if hand delivered or
sent by facsimile transmission.
17. TERM AND TERMINATION
17.1 The term of this Agreement shall begin as of the date
hereof and shall remain in effect until the expiration
of the last to expire patent among those patents
referred to in Section 4 hereof unless earlier
terminated as permitted hereunder.
17.2 In the event of a breach or default of this Agreement
by either party which is not cured within ninety (90)
days after the receipt of notice thereof from the
other party, the party not in breach or default shall
be entitled (without prejudice to any of its other
rights) to terminate this Agreement by giving notice
to take effect immediately.
17.3 CVO may terminate this Agreement and the licenses
granted hereunder at any time, without cause, at which
time CVO, and its Affiliates and sublicensees, as
applicable, shall return to InSite all documented or
written Know-How previously provided to CVO by InSite
pursuant to Section 7 of this Agreement.
17.4 The termination of this Agreement shall not release
either party from any obligation (including, without
limitation, payment) which matured prior to the
effective date of the termination.
17.5 The obligations set forth in Sections 8 and 12 shall
survive the termination or expiration of this
Agreement.
18. FORCE MAJEURE
18.1 Neither party shall be responsible or liable to the
other hereunder for failure or delay in performance
(except obligations to pay) of this Agreement due to
any war, fire, accident or other casualty, or any
labor disturbance or act of God or the public enemy,
or any other contingency beyond such party's
reasonable control. In addition, in the event of the
applicability of this Section , the party affected by
such force majeure shall use reasonable efforts,
consistent with good business judgment, to eliminate,
cure and overcome any of such causes and resume
performance of its obligations.
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<PAGE> 17
19. ASSIGNMENT
19.1 This Agreement and all rights and obligations
hereunder are personal to the parties hereto and, may
not be assigned, except pursuant to Sections 2.3 and
2.4 hereof, without the express prior written consent
of the other. Notwithstanding the foregoing, either
party may assign this Agreement to an entity
controlled by, or under common control with or
representing a successor in interest without a change
in control of the original party. Any assignment or
attempt at same in the absence of such prior written
consent shall be void and without effect.
20. GOVERNING LAW
20.1 This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York
without regard to conflicts of laws provisions
thereof.
21. SEVERABILITY
21.1 If any one or more of the provisions of this Agreement
shall be held to be invalid, illegal or unenforceable,
the validity, legality or enforceability of the
remaining provisions hereof shall not in any way be
affected or impaired thereby. In the event any
provision shall be held invalid, illegal or
unenforceable, the parties shall use best efforts to
substitute a valid, legal and enforceable provision
which, insofar as possible, implements the purposes
hereof.
22. NO WAIVER
22.1 The failure of any party hereto at any time or times
to require performance of any provisions hereof shall
in no manner affect its rights to enforce such
provision at a later time.
23. ENTIRE AGREEMENT
23.1 This Agreement constitutes the entire understanding
between the parties relating to the subject matter
thereof, and no amendment or modification to this
Agreement shall be valid or binding upon the parties
unless made in writing and signed by the
representatives of such parties.
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<PAGE> 18
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
CIBA VISION OPHTHALMICS
a Division of CIBA Vision Corporation
By: /s/ STEPHEN M. MARTIN
--------------------------------------
Name: Stephen M. Martin
Title: President
INSITE VISION INCORPORATED
By: /s/ S.K. CHANDRASEKARAN
-------------------------------------
Name: S. Kumar Chandrasekaran
Title: CEO
18
<PAGE> 19
APPENDIX A
<TABLE>
<CAPTION>
Filed/Issued/
INSITE LICENSED PATENTS Patent/Application Date Allowed
<S> <C> <C> <C>
J. ROBINSON, BIOADHESIVE 4,615,697 P 10/07/86 I
COMPOSITIONS
AND TREATMENT THEREWITH 4,983,392 P 01/08/91 I
5,225,196 P 07/06/93 I
INSITE PATENTS
OPHTHALMIC SUSPENSIONS 5,192,535 P 03/09/93 I
* * * * *
* * * * *
</TABLE>
19
<PAGE> 1
EXHIBIT 10.29
TOPRESITE(TM) LICENSE AGREEMENT
This License Agreement ("Agreement") is made as of this 28th day of
May, 1996 (the "Effective Date") by and between InSite Vision Incorporated, a
Delaware corporation, having offices at 965 Atlantic Drive, Alameda, California
94501 ("InSite") and CIBA Vision Ophthalmics, a division of CIBA Vision
Corporation, a Delaware corporation, having offices at 11460 Johns Creek
Parkway, Duluth, Georgia 30155 ("CVO").
WHEREAS, InSite owns certain proprietary rights and know-how relating
to the manufacture, use and sale of the Agreement Product (as defined herein);
WHEREAS, CVO desires to acquire, and InSite is willing to grant to CVO,
a license under such proprietary rights and know-how under the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, the parties agree as follows:
1. DEFINITIONS
The following terms as used in this Agreement shall have the meanings
set forth in this Section:
1.1 "Affiliate" shall mean all corporations or business entities which
directly or indirectly are controlled by, control or are under common control
with CVO or InSite as the case may be.
1.2 "Agreement Period" shall mean the period commencing upon the
effective date and extending until the termination of this Agreement pursuant to
Section 15 hereof.
1.3 "Agreement Product" shall mean any ophthalmic formulation which
contains (i) tobramycin and prednisolone acetate as active ingredients and (ii)
is formulated in DuraSite(R).
1.4 "DuraSite(R)" means any polymer suspension drug delivery vehicle
which is covered by the claims of United States Patent NO. 5,192,535, including
all continuations in part, divisionals, reissuances and the like of the
foregoing patent.
1.5 "FDA" shall mean the United States Food and Drug Administration or
any successor entity thereto.
1.6 "IND" shall mean an Investigational New Drug Application as defined
by the United States Food, Drug and Cosmetic Act and applicable regulations
promulgated thereunder ("FDCA").
1.
<PAGE> 2
1.7 "Know-How" shall mean all technology, formula, trade secrets,
technical data, pre-clinical and clinical data, toxicological and
pharmacological data and any other information or experience owned, controlled
or in the possession of InSite, with the right to license or sublicense same,
relating to or useful in connection with the development, manufacture, use or
sale of Agreement Product as well as any improvements or modifications to the
Know-How developed by, or by any third party for, InSite during the Agreement
Period.
1.8 "NDA" shall mean a New Drug Application as defined in the FDCA and
applicable regulations promulgated thereunder.
1.9 "Net Sales" shall mean the amount invoiced by CVO, its affiliates
and sublicensees to independent third parties for the sale of Agreement Product
less cash discounts and/or quantity discounts allowed; credit for customer
returns and allowances; charges for freight handling and transportation which
are separately billed to CVO, and sales and use taxes and other similar taxes
incurred by CVO all as determined in accordance with CVO's standard accounting
practices. Net Sales shall not include the value of product samples or clinical
trial supplies.
1.10 "1984 Act" shall mean the United States Drug Price Competition and
Patent Term Restoration Act of 1984 as amended, including 21 USC Section 355, 35
USC Section 155-156, 35 USC Section 271 and applicable regulations promulgated
thereunder.
1.11 "Patent Rights" shall mean all of InSite's right, title and
interest in and to any patents or patent applications in the Territory (as
herein defined), any claim of which would cover the Agreement Product or its
manufacture or use including but not limited to those listed in Appendix A
attached hereto, and any continuations, continuations in part, divisions,
re-examinations, re-issues or extensions of any of the above described patents
or patent applications as of the date of this Agreement or arising during the
Agreement Period.
1.12 "Royalty Period" shall mean that period beginning on the date of
the first commercial sale of the Agreement Product by CVO and ending upon the
later of the expiration of the patent rights or 10 years from the first
commercial sale of the Agreement Product by CVO.
1.13 "Territory" shall mean the United States of America, including its
territories and possessions.
2. GRANT
2.1 (a) InSite hereby grants to CVO during the Agreement Period a
co-exclusive license or sublicense in the Territory and a non-exclusive license
or sublicense outside the Territory, in each case with the right to sublicense,
under the Patent Rights and unpatented Know-How referred to in the following
sentence, to develop, manufacture, have manufactured, use and sell the Agreement
Product for eye care.
(b) Under the foregoing license and sublicense, CVO shall have the
co-
2.
<PAGE> 3
exclusive right to manufacture, have manufactured and use the Agreement Product
anywhere in the world, but CVO's right to sell the Agreement Product shall be
limited to the Territory, and CVO shall not seek directly or indirectly to sell
the Agreement Product outside the Territory. (It is understood, however, that
CVO's contract manufacturer(s) for the Agreement Product may sell the same to
CVO anywhere in the world for sale by CVO in the Territory only.)
(c) Under the foregoing co-exclusive license and sublicense,
CVO (and CVO's sublicensees) shall share with InSite the exclusive right under
the Patent Rights and Know-How referred to above to manufacture, have
manufactured, use and sell the Agreement Product in the Territory. Such sale of
the Agreement Product in the Territory by InSite may be made using InSite's own
sales force or by InSite's engaging in marketing activities with other companies
or entities that do not (and whose Affiliates do not) at the time of the
initiation of such engagement participate in the prescription and/or
over-the-counter ophthalmic pharmaceutical markets in the Territory, it being
understood, however, that the foregoing does not prohibit InSite's own sales
force or such other companies or entities from marketing the Agreement Product
to normal distribution channels such as wholesalers, drugstore chains,
independent manufacturers or independent sales representatives or agents,
retailers and health care providers (e.g., health maintenance organizations,
physicians, and preferred provider organizations) that sell prescription and/or
over-the-counter ophthalmic pharmaceuticals. InSite shall use good business
judgment, taking into consideration the overall sales of the Agreement Product,
in selecting any such independent manufacturers or independent sales
representatives or agents.
Under the foregoing license and sublicense, CVO's right to manufacture,
have manufactured and use the Agreement Product outside the Territory shall be
non-exclusive. Under this Agreement InSite reserves the right to manufacture,
have manufactured, use and sell the Agreement Product outside of the Territory,
and to sublicense such rights outside of the Territory.
2.2 The right of InSite to manufacture, have manufactured, use and sell
Agreement Product in the Territory which are reserved in the foregoing paragraph
shall not in any way be assigned or transferred to any third party; provided,
however, that such right may be assigned or transferred in a merger,
reorganization, sale of all or substantially all of InSite's assets, or
transaction whereby control of InSite changes, to InSite's successor in interest
in such transaction; provided, further, that upon the occurrence of any such
transaction InSite (or its successor in interest) shall not have the right to
sell any Agreement Product in any country in the respective Territory for such
Agreement Product except after the end of the fourth year following the date of
CVO's or CVO's Affiliates' first commercial sale in such country of such
Agreement Product (provided that such first commercial sale shall be deemed to
have occurred not later than one (1) year following the registration for sale of
such Agreement Product by the FDA or corresponding foreign agency for such
country with respect to either CVO or InSite), at which time InSite's right for
such Agreement Product may be assigned, transferred or sublicensed without
restriction hereunder.
2.3 With respect to any Agreement Product and any country in the
Territory, until the end of the fourth year following the date of CVO's or CVO's
Affiliates' first commercial sale of such Agreement Product in such country
(provided that such first commercial sale shall be deemed to
3.
<PAGE> 4
have occurred not later than one (1) year following the registration for sale of
such Agreement Product by the FDA or corresponding foreign agency for such
country with respect to either CVO or InSite), CVO's right to grant any
sublicense under the Patent Rights and Know-How licensed or sublicensed by
InSite to CVO under this Article 2 shall be limited to sublicensing CVO's
Affiliates; and after such four (4) year period, CVO shall have the right to
grant such a sublicense to any third party to manufacture, have manufactured,
use and sell such Agreement Product in such country, provided, however, that if
CVO grants any such sublicense to any third party (other than CVO's Affiliates)
to sell such Agreement Product in such country, then the royalties payable by
such sublicensee to CVO shall not be less than * * * of such sublicensee's Net
Sales for such Agreement Product in such country, and with respect to such
Agreement Product CVO shall pay to InSite one-half of the excess of royalties
received by CVO from such sublicensee for such sublicensee's Net Sales in such
country, over the royalties payable by CVO to InSite resulting from such
sublicensee's Net Sales in such country under Article 5 below. CVO shall provide
InSite with a copy of the contractual provisions for any such sublicense to any
third party (other than CVO's Affiliates) which deal with royalty rates and
compensation, which copy shall be maintained in confidence by InSite pursuant to
Article 7 hereof. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
2.4 Unless this Agreement is terminated for cause by InSite under
Sections 15.2 or 15.3, at the end of the Agreement Period for any Agreement
Product in any country in the Territory, CVO shall have the unrestricted
perpetual right to use the Patent Rights and Know-How that are licensed or
sublicensed by InSite above, free of charge, to manufacture, have manufactured,
and use such Agreement Product anywhere in the world and to sell such Agreement
Product in such country.
2.5 CVO shall use commercially reasonable efforts consistent with good
business judgment to commercialize and sell the Agreement Product in the
Territory.
2.6 CVO shall hereby be granted the limited right and license during
the Agreement Period and thereafter, unless CVO's rights are terminated pursuant
to Sections 15.2 or 15.3, to use InSite's DuraSite trademark solely in
connection with the marketing and sale of the Agreement Product.
3. ROYALTIES
3.1 In consideration of the rights granted in Section 2, during the
Royalty Period, CVO shall pay InSite royalties * * * of Net Sales of the
Agreement Product in the Territory so long as there is an enforceable, issued,
valid and unexpired patent identified in Patent Rights in the Territory covering
the Agreement Product. In the event there are no enforceable and valid patents
identified in the Patent Rights in the Territory, on a country-by-country basis,
the royalty rate hereunder shall be * * * of Net Sales. [* INDICATES THAT
MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
4.
<PAGE> 5
3.2 Sales of the Agreement Product between or among CVO, its Affiliates
and sublicensees shall not be subject to any royalty hereunder, and in such
cases royalties shall be calculated upon CVO or its Affiliates' or sublicensees'
Net Sales to an independent third party. CVO shall be responsible for payment of
any royalty accrued on Net Sales of the Agreement Product to such independent
third party through CVO's Affiliates or sublicensees. Royalties shall accrue
hereunder only once in respect of the same unit of the Agreement Product.
4. TIMING OF ROYALTY PAYMENTS; RECORDS
4.1 Within 45 days after the end of each calendar quarter during the
Royalty Period, CVO shall pay to InSite the royalty payment due for that quarter
in U.S. dollars.
4.2 Together with each quarterly royalty payment, CVO shall submit to
InSite a written accounting showing its computation of royalties due under this
Agreement for such quarter. Said accounting shall set forth gross sales, Net
Sales, and the total royalties due for the quarter in question.
4.3 CVO shall keep full and accurate books and records reflecting the
sales of Agreement Product and the data used in arriving at Net Sales and the
amount of royalties payable to InSite hereunder for no less than one year after
the end of each such quarter. CVO shall permit InSite, at InSite's expense, to
have such books and records examined by independent certified public accountants
retained by InSite and acceptable to CVO, during regular business hours upon
reasonable advance notice, but not later than one year following the rendering
of any such reports, accounting and payments, and no more often than one time
per year. Such independent accountants shall keep confidential any information
obtained during such examination and shall report to InSite only the amounts of
royalties which the independent accountant believes to be due and payable
hereunder.
5. WARRANTIES
5.1 InSite warrants and represents that:
(a) it is the owner of the Patent Rights and Know-How and has the
right to license, in the manner set forth in this Agreement, said Patent Rights
and Know-How free of any lien or encumbrance in the Territory;
(b) it has not assigned or conveyed any interest in the Patent
Rights or Know-How which may be inconsistent with the rights granted hereunder;
(c) to the best of its knowledge and after a diligent search, the
practice of the Patent Rights and Know-How in the Territory does not infringe
any rights of third parties;
(d) it is not aware that any third party is infringing the Patent
Rights;
(e) it is a corporation duly incorporated and in good standing in
its state of
5.
<PAGE> 6
incorporation and has all requisite power to enter into and perform this
Agreement. Upon execution by the parties hereto, this Agreement shall constitute
a valid and legally binding obligation of InSite, enforceable in accordance with
its terms; and
(f) it has prosecuted all patent applications within the Patent
Rights in good faith and has no reason to believe that any patent included
within the Patent Rights would be invalid or would be held to be unenforceable
by the court of competent jurisdiction.
6. TRANSFER AND OWNERSHIP OF KNOW-HOW; TRANSFER OF ADVERSE DRUG
REACTION INFORMATION
6.1 As part of the license granted in Section 2 hereof, and in order to
enable CVO to develop, make, have made, use and sell the Agreement Product,
InSite shall provide CVO with access to all Know-How within thirty days after
signing this Agreement. All Know-How generated or obtained by InSite during the
Agreement Period shall be made available to CVO within thirty days of its
generation or receipt by InSite. All such Know-How shall be provided to CVO as
confidential information subject to the confidentiality restrictions set forth
in this Agreement.
6.2 InSite shall also assign to CVO the IND for the Agreement Product
and the data contained therein, and all pre-clinical data and regulatory
submissions for the Agreement Product, provided that InSite shall retain the
right to reference and use any of the foregoing for its own purposes consistent
with the terms of this Agreement. CVO shall own all subsequent regulatory
submissions for the Agreement Product, including the NDA therefor, and the data
contained therein. InSite understands and agrees that it shall not have any
ownership, or license rights in, or to, such submissions or other regulatory
filings of CVO for the Agreement Product, except that InSite shall be authorized
to reference such submissions in the event it wishes to manufacture or market
the Agreement Product pursuant to Section 2.4 hereof. CVO shall also have access
and a right of reference to any regulatory submissions made by InSite with
respect to the Agreement Product.
6.3 All research and other information developed by CVO and its
Affiliates shall remain the property of CVO or its Affiliates, but InSite shall
have the right to access and reference such research and other information if it
decides to manufacture the Agreement Product pursuant to Section 2.4 hereof.
6.4 During the Agreement Period, InSite shall report to CVO as soon as
practicable, and no later than five days following InSite's own notification,
any findings associated with the use of Agreement Product that may suggest
significant hazards, significant contraindications, significant side effects or
significant precautions pertinent to the safety of Agreement Product. In
addition, InSite shall provide CVO with notice of all adverse reaction
information in sufficient time to enable CVO to meet all requirements for
reporting such adverse reactions in the Territory.
7. CONFIDENTIALITY
7.1 InSite and CVO shall keep any Know-How or business information
provided
6.
<PAGE> 7
or made available by the other party or its Affiliates hereunder confidential,
and neither InSite nor CVO shall, without the prior written consent of the other
party or its Affiliates, as the case may be, use (except as expressly permitted
by this Agreement or for the purposes of this Agreement), or disclose to any
third party, any Know-How or business information provided or made available by
the other party or its Affiliates hereunder, provided, however, that the
foregoing shall not apply to information which the party receiving such
information can establish by written documentation to (i) have been publicly
known at the time of disclosure by the other party or its Affiliates, as the
case may be, (ii) have become publicly known, without fault on its part,
subsequent to such disclosure, (iii) have been otherwise known by it from a
source (other than the other party or its agents or Affiliates), lawfully having
possession of such information, or (v) have been developed by it or its
Affiliates independently of the disclosure by the other party or its Affiliates.
The foregoing shall not preclude the disclosure of information by
InSite or CVO
(a) to its legal representatives, Affiliates, consultants, outside
contractors and (if it has the right to grant the license or sublicense) its
licensees and sublicensees, under like confidentiality obligations on the part
of the recipients, or
(b) to the extent required by law or regulation, provided that, to
the extent reasonably possible, it shall give prompt written notice of the
proposed disclosure to the other party or its Affiliates, as the case may be, so
as to allow the other party or its Affiliates, as the case may be, an
opportunity to object to such requirement and, if applicable, assure that
confidential treatment will be accorded to such information, or
(c) to the extent that such information is reasonably required to
be disclosed for the purpose of securing necessary governmental authorization
for the clinical testing or marketing of products or for the purpose of
conducting clinical testing or marketing of products, or of prosecuting or
defending litigation.
7.2 The terms of this Agreement shall not be disclosed by either party
to any third party (other than as provided in Sub-sections 7.1(a), (b) and (c)
above) or be published unless both parties expressly agree otherwise in writing.
Furthermore, neither party shall use the name of the other party or its
Affiliates without their prior written consent. However, all of the foregoing
restrictions shall not apply to the disclosure of information set forth in the
form of an agreed press release, if any, which may be prepared in mutually
agreeable format and substance for release when this Agreement becomes
effective, or to disclosures required by law or regulation.
8. PATENTS
8.1 InSite shall undertake and shall bear all costs of the prosecution
and maintenance of the Patent Rights in the Territory. InSite shall employ
reasonable efforts to keep CVO fully and timely informed in respect to the
course and conduct of patent application prosecution matters within the scope of
Patent Rights.
7.
<PAGE> 8
8.2 If InSite elects to terminate either the prosecution or maintenance
of the Patent Rights prior to the completion of normal prosecution before the
patent examiner or prior to the end of the term for maintenance, as the case may
be, it will give CVO 60 days prior written notice of such election prior to any
time limit on any action due. CVO, upon receipt of such notice, shall have the
option to undertake the continuation of such prosecution or maintenance and
InSite will transfer title to CVO for such patent application or patent.
9. INFRINGEMENT OF PATENT RIGHTS
9.1 If either party shall become aware of any infringement or
threatened infringement of any Patent Rights, including that contained in a
notice provided under the 1984 Act by a party filing an ANDA or Paper NDA for
Agreement Product, then the party having such knowledge shall give notice to the
other within 10 days of becoming aware of such infringement or threatened
infringement.
9.2 CVO shall have the right to take such action, as it deems
appropriate, whether by action, suit, proceeding or otherwise, at its own
expense to prevent or eliminate, the infringement of Patent Rights by others and
to collect damages. InSite agrees to cooperate with CVO in any reasonable manner
including, but not limited to, being named as a co-plaintiff in an action
brought by CVO. CVO agrees to pay all reasonable out-of-pocket expense incurred
by InSite, in the prosecution of any such action, suit or proceeding for
infringement. Any damages recovered by the party bringing the action for patent
infringement shall be used to compensate that party for its out-of-pocket
expenses in the prosecution of any such action, suit or proceeding for
infringement. Any remaining damages recovered by that party shall be apportioned
between InSite and CVO in proportion to the damage incurred by each party as a
result of the infringement. To the extent that CVO cannot compensate its
out-of-pocket expenses in prosecuting said action by the recovered damages, CVO
may set off up to fifty percent (50%) of its reasonable out-of-pocket expenses
against royalties otherwise owed to InSite under this Agreement until CVO
reaches such 50% recovery point.
9.3 In the event that CVO does not take action for patent infringement
pursuant to Section 9.2 to prevent or eliminate the infringement of Patent
Rights within 90 days of receipt of notice of the infringement or threatened
infringement thereof (or within 30 days in the event such infringement is by
Notice Under the 1984 Act), then within said 90 days (or within said 30 days if
such infringement is under the 1984 Act), InSite may, at its option, give notice
to CVO that unless CVO undertakes such action, InSite shall commence an action
to terminate such infringement. If CVO fails to take such action within said 90
days (or said 30 days in the event such infringement is by Notice Under the 1984
Act) then InSite shall have the right to take such action as it deems
appropriate against any infringer of same. Such action by InSite may be
undertaken in the name of CVO, if necessary, and CVO agrees to cooperate with
InSite, and execute any necessary documents relating to such action. In the
event the parties fail to bring such action to prevent or eliminate the
infringement of Patent Rights within 90 days of receipt of notice, CVO shall be
relieved of any obligation to pay patent royalties under Section 3 hereof until
such time as InSite shall obtain discontinuance of such infringement.
At any time after commencement of any such infringement action by
InSite, CVO shall
8.
<PAGE> 9
have the right to become a party plaintiff in such action, and CVO shall have
the right to assume the prosecution, conduct and control of such action at CVO's
expense. Any recoveries in an action commenced by InSite shall be apportioned as
specified by Section 9.2.
9.4 * * * [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
10. THIRD PARTY RIGHTS
10.1 If either party shall become aware of any action, or suit, or
threat of action or suit, by a third party alleging that the manufacture, use or
sale of the Agreement Product or the practice of Know-How infringes a patent, or
violates any other proprietary rights of any third party, the party aware shall
promptly notify the other party of the same and fully disclose the basis
therefor.
10.2 CVO shall have the right at its own expense to compromise or
defend any such action or suit, or threat of action or suit, on such basis and
on such terms as CVO may determine as appropriate in its sole discretion, in its
own name, or jointly in the name of CVO and InSite or in the name of InSite, as
may be deemed necessary or appropriate by CVO. CVO shall keep InSite reasonably
informed as to the status of, and basis for, any such claim and shall consult
with InSite from time to time as to the defense of such suit or action. InSite
shall cooperate fully with CVO in the defense of such suit or action, including,
without limitation, by making all relevant papers and records available to CVO
and by making InSite's employees available for interviews and depositions and
CVO agrees to pay all reasonable out-of-pocket expenses incurred by InSite at
the request of CVO.
10.3 If, by the terms of any settlement or if by a judgment, decree or
decision of a court, tribunal or other authority of competent jurisdiction, CVO
is required to obtain a license from a third party in order to make, have made,
use, sell or import Agreement Product (hereinafter "Third Party License") and to
compensate or pay damages to such third party and/or pay royalties under such
license, then any royalties payable under Section 3 of this Agreement shall be
reduced by (a) any damages paid or payable by CVO to such other party and (b)
the amount of royalties payable to InSite on future sales under such Third Party
License, provided such reduction shall not be greater than one-half (1/2) of the
royalties previously and hereafter payable to InSite pursuant to this Agreement.
10.4 Nothing in this Section 10, or in Section 9, shall be construed as
a waiver or cure of any breach of any warranties set forth in Section 5 or any
release of any claim by CVO as may be appropriate relating thereto.
11. PRODUCT LIABILITY
11.1 CVO shall defend and hold InSite harmless from any product
liability claims and from any product liability damages arising from the
manufacture, use, sale or importation by CVO of the Agreement Product in the
Territory, provided that InSite notifies CVO of any such claims within 10 days
of receipt thereof and cooperates with CVO in defending against such claims. CVO
shall have complete control over the defense and/or disposition of any such
claim.
9.
<PAGE> 10
11.2 InSite shall defend and hold CVO harmless from any product
liability claims and from any product liability damages arising from the
manufacture, use, sale or importation by InSite of the Agreement Product in the
Territory, provided that CVO notifies InSite of any such claims within 10 days
of receipt thereof and cooperates with InSite in defending against such claims.
InSite shall have complete control over the defense and/or disposition of any
such claim.
12. PATENT TERM EXTENSION
12.1 Within 60 days after approval of an NDA for the Agreement Product,
and at CVO's option, CVO shall have the right to file at its own cost and
expense an application for an extension of any United States patent falling
within the Patent Rights, and, where applicable, for extension of Patent Rights
in any other country of the Territory under similar laws permitting patent term
extension. InSite designates CVO as its agent with respect to such filing and
prosecution for patent term extension, and agrees to cooperate with CVO in
providing any information required under the relevant United States laws or
similar laws outside the United States. Such action by CVO may be undertaken in
the name of InSite, if deemed necessary or appropriate by CVO, and InSite agrees
to cooperate with CVO, and execute any reasonably necessary documents relating
to such action.
13. TRADEMARK
13.1 InSite shall grant CVO a royalty-free exclusive license to use the
trademark ToPreSite(TM) solely in connection with its sales and marketing of the
Agreement Product pursuant to a Trademark License Agreement to be agreed upon by
the parties.
14. NOTICES
All notices required or permitted hereunder shall by given in writing
and sent by facsimile transmission, or mailed postage prepaid by first class
certified or registered mail, or sent by a nationally recognized express courier
service, or hand delivered at the following addresses:
CIBA Vision Ophthalmics
11460 Johns Creek Parkway
Duluth, Georgia 30155-1518
Attn: President
InSite Vision Incorporated
965 Atlantic Drive
Alameda, California 94501
Attn: S. Kumar Chandrasekaran
Any notice, if mailed properly addressed, postage prepaid, shall be deemed made
three days after the date of mailing as indicated on the certified or registered
mail receipt, or on the next business day if sent by express courier service or
on the date of delivery or transmission if hand delivered or sent by facsimile
transmission.
10.
<PAGE> 11
15. TERM AND TERMINATION
15.1 The term of this Agreement shall begin as of the date hereof and
shall remain in effect until the expiration of the last to expire Patent Rights,
unless earlier terminated as permitted hereunder.
15.2 In the event of a breach or default of this Agreement by either
party which is not cured within 90 days after the receipt of notice thereof from
the other party, the party not in breach or default shall be entitled (without
prejudice to any of its other rights) to terminate this Agreement by giving
notice to take effect immediately.
15.3 CVO may terminate this Agreement and the licenses granted
hereunder at any time, without cause, at which time CVO, and its Affiliates and
sublicensees, as applicable, shall return to InSite all documented or written
Know-How previously provided to CVO by InSite pursuant to Section 6 of this
Agreement.
15.4 The termination of this Agreement shall not release either party
from any obligation which matured prior to the effective date of the
termination.
15.5 The confidentiality obligations set forth in Section 7 shall
survive the termination or expiration of this Agreement.
16. FORCE MAJEURE
16.1 Neither party shall be responsible or liable to the other
hereunder for failure or delay in performance of this Agreement due to any war,
fire, accident or other casualty, or any labor disturbance or act of God or the
public enemy, or any other contingency beyond such party's reasonable control.
In addition, in the event of the applicability of this Section , the party
affected by such force majeure shall use reasonable efforts, consistent with
good business judgment, to eliminate, cure and overcome any of such causes and
resume performance of its obligations.
17. ASSIGNMENT
17.1 This Agreement and all rights and obligation hereunder are
personal to the parties hereto, and may not be assigned, except pursuant to
Section 2.4 hereof, without the express prior written consent of the other.
Notwithstanding the foregoing, either party may assign this Agreement to an
entity controlled by, or under common control with or representing a successor
in interest without a change in control of the original party. Any assignment or
attempt at same in the absence of such prior written consent shall be void and
without effect.
11.
<PAGE> 12
18. GOVERNING LAW
18.1 This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York as though made and to be fully performed
in said State.
19. SEVERABILITY
19.1 If any one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby. In the event any provision shall be held invalid,
illegal or unenforceable, the parties shall use best efforts to substitute a
valid, legal and enforceable provision which, insofar as possible, implements
the purposes hereof.
20. NO WAIVER
20.1 The failure of any party hereto at any time or times to require
performance of any provisions hereof shall in no manner affect its rights to
enforce such provision at a later time.
21. ENTIRE AGREEMENT
21.1 This Agreement constitutes the entire understanding between the
parties relating to the subject matter thereof, and no amendment or modification
to this Agreement shall be valid or binding upon the parties unless made in
writing and signed by the representatives of such parties.
12.
<PAGE> 13
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
CIBA VISION OPHTHALMICS
A Division of CIBA Vision Corporation
By: /s/ STEPHEN M. MARTIN
--------------------------------
Name: Stephen M. Martin
Title: President
INSITE VISION INCORPORATED
By: /s/ S.K. CHANDRASEKARAN
--------------------------------
Name: S. Kumar Chandrasekaran
Title: Chairman, CEO
13.
<PAGE> 14
APPENDIX A
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Filed/
Issued/
INSITE LICENSED PATENTS Patent/Application Date Allowed
- - - ----------------------- ------------------ ---- -------
* J. ROBINSON, BIOADHESIVE COMPOSITIONS 4,615,697 P 10/07/86 1
AND TREATMENT THEREWITH 4,983,392 P 01/08/91 1
5,225,196 P 07/06/93 1
INSITE PATENTS
- - - --------------
* ALKALINE OPHTHALMIC SUSPENSIONS 5,340,572 P 08/23/94 1
* ALKALINE OPHTHALMIC SUSPENSIONS 5,474,764 P 12/12/95 1
</TABLE>
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the Commission pursuant to Rule 24b-2.
<PAGE> 15
APPENDIX B
TRADEMARK PRODUCT
- - - --------- -------
ToPreSite(TM) TOBRAMYCIN/PRESNISOLONE
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the Commission pursuant to Rule 24b-2.
<PAGE> 1
EXHIBIT 10.30
BETASITE(R) CONTRACT MANUFACTURING AGREEMENT
THIS CONTRACT MANUFACTURING AGREEMENT is entered into this 18th day of
July, 1996, by and between INSITE VISION INCORPORATED, with offices at 965
Atlantic Avenue, Alameda, California 94501 ("InSite"), and BAUSCH & LOMB
PHARMACEUTICALS, INC., with offices at 8500 Hidden River Parkway, Tampa, Florida
33637 ("B&L").
WITNESSETH:
WHEREAS, InSite desires that B&L manufacture and supply to InSite the
Product and Clinical Trial Material (both as hereinafter defined); and
WHEREAS, in order to perform B&L's manufacturing obligations under this
Agreement, B&L has agreed to construct a Manufacturing Space (as hereinafter
defined) at the Facility (as hereinafter defined), and InSite has agreed to
reimburse B&L for certain expenses incurred in connection therewith; and
WHEREAS, InSite owns certain Equipment (as hereinafter defined) and has
agreed to provide B&L with the use thereof in the Manufacturing Space in
connection with the manufacture of the Product and Clinical Trial Material, and
other purposes described below.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements set forth in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
The following words and phrases shall, for purposes of this Agreement,
have the following meanings (with any term or phrase referred to below, or
defined elsewhere in this Agreement, in the singular to include the plural and
vice versa as the context requires):
"Action" shall mean any suit, action, investigation (governmental or
otherwise), claim or proceeding initiated or filed against a party to this
Agreement, which results in or could result in a Loss or Losses for which
indemnification is required by the other party under Article XV or XVI below.
"Additional Products" shall mean any product developed and/or improved
by InSite for the treatment of glaucoma.
<PAGE> 2
"Affiliate" of any party shall mean any Person that is controlled by,
controls, or is under common control with such party. Control as used in this
definition shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management of a Person, whether through
ownership of voting securities, by contract, or otherwise.
"Agreement" shall mean this Agreement as it is amended from time to
time in the manner provided herein.
"DMF" shall mean B&L's drug master file covering the manufacture of the
Product at the Facility.
"Equipment" shall mean the blow, fill and seal machine and ancillary
support equipment more particularly described in APPENDIX A attached hereto.
"Facility" shall mean B&L's facility located in Tampa, Florida.
"FDA" shall mean the United States Food and Drug Administration and all
agencies under its direct control or any successor organization.
"FFDCA" shall mean the Federal Food, Drug and Cosmetic Act of 1934, as
amended from time to time, and the regulations promulgated pursuant thereto, or
any successor statute adopted to replace such act.
"GMPs" shall mean the current Good Manufacturing Practice regulations
in effect, and from time to time promulgated by the FDA, governing the
manufacture of the Product.
"Indemnified Party" shall mean the party to this Agreement entitled to
be indemnified by the Indemnifying Party against a Loss or Losses pursuant to
Article XVI below.
"Indemnifying Party" shall mean the party to this Agreement required to
indemnify the Indemnified Party against a Loss or Losses pursuant to Article XVI
below.
"InSite Volume Forecast" shall mean InSite's forecast of the quantity
of Product that InSite will request B&L to manufacture for purchase by InSite
each calendar year, or portion thereof, throughout the Term.
"Loss" or "Losses" shall mean any liability, loss, cost, damage or
expense, including reasonable attorneys' fees and expenses, incurred or suffered
by a party to this Agreement for which indemnification is required under Article
XVI below, but shall in no event include consequential or special damages such
as lost profits or loss of business opportunity.
2.
<PAGE> 3
"Manufacture" and "Manufacturing" and other forms of such word or
phrase shall refer to the manufacturing, handling, storage and/or disposal of
the Product and the raw materials and components used in connection therewith.
"Manufacturing Costs" shall mean B&L's standard cost of manufacturing
the Product (and Clinical Trial Material, as defined under Section 5.2 below),
which shall include direct labor, direct and variable materials (including
scrap) freight, variable overhead and an allocation of fixed overhead, yield
losses which do not exceed a mutually agreed to percentage of the quantity of
Product manufactured by B&L; all determined in accordance with generally
accepted accounting principles applied consistently and in accordance with
existing and demonstrable B&L practices; but provided that, in determining such
allocation, B&L shall use the lowest and most favorable method of allocation
used by B&L for any product manufactured by B&L at its facility in Tampa,
Florida (in volumes similar to the quantity of Product manufactured by B&L for
InSite) exclusively for sale to, and distribution by, an unrelated third party.
"Manufacturing Space" shall mean the space within the Facility where
the Equipment shall be installed and the Product shall be manufactured
hereunder.
"NDA" shall mean the New Drug Application for the Product, supplements
or other filings relating thereto that are filed with the FDA pursuant to its
rules and regulations.
"Other Costs" shall mean in each case set forth in a reasonably
detailed statement delivered to InSite by B&L with each invoice for Product: (i)
a reasonable and customary allocation as between B&L and InSite of the
reasonable out-of-pocket costs incurred by B&L in connection with or as a result
of FDA inspections or compliance with FDA regulations, orders, directives or
suggestions (collectively, "FDA Compliance Costs") following or in connection
with FDA approval of the NDA and pertaining to the Product; (ii) a normal,
customary and reasonable allocation of FDA Compliance Costs related to the
Facility, generally; and (iii) capital expenditures and/or leasing costs made or
incurred to acquire or use equipment exclusively and solely related to the
manufacturing of the Product under this Agreement ("Capital Equipment"), subject
to the prior approval of InSite which shall not be unreasonably withheld;
provided that if such approval is given by InSite, InSite may, at its option,
elect to acquire or lease such Capital Equipment and provide the same to B&L for
the duration of this Agreement.
"Party" or "Parties", when referring to the parties to this Agreement,
shall mean and include InSite and B&L, or each of them individually.
"Person" shall mean any individual, partnership, association,
corporation, trust or legal person or entity.
3.
<PAGE> 4
"PilaSite(R) License Agreement" shall mean that certain agreement of
event date herewith by and between the Parties relating to the commercialization
of PilaSite(R), as defined therein.
"Product" shall mean an ophthalmic formulation containing levobunolol
hydrochloride as the sole active ingredient in the DuraSite(R) polymer
suspension vehicle.
"Specifications" shall mean (i) for Product prior to FDA approval of
the NDA, those specifications contained in InSite's Investigational New Drug
Application for the Product, and (ii) for Product after NDA approval, those
specifications incorporated into the NDA, as such specifications may be amended
from time to time by a supplement to the NDA mutually agreed to by the Parties
or as required by FDA.
"Timolol Development Agreement" shall mean that certain agreement of
even date herewith by and between the Parties relating to the development and
commercialization of Timolol Product, as defined therein.
"Venture" shall mean the manufacture of the Product by B&L and/or
InSite pursuant to this Agreement.
"Warehousing Costs" shall mean B&L's direct warehousing costs of
Product manufactured by B&L and raw materials held by B&L under this Agreement,
plus normal and customarily allocable warehousing overhead costs; all determined
in accordance with generally accepted accounting principles applied consistently
and in accordance with existing and demonstrable practices of B&L, but provided
that in determining such allocable warehousing overhead costs B&L shall use the
lowest and most favorable method of allocation used by B&L for any B&L
proprietary product stored by B&L at the Facility.
ARTICLE II
TERM
2.1 Term. The initial term of this Agreement shall commence on the date
hereof and shall continue until the date which is five (5) years after the date
of B&L's first shipment of commercial quantities of Product to InSite, except as
otherwise extended or terminated in accordance with the terms of this Agreement
(the "Term").
2.2 Renewal Periods. InSite shall have the right to extend this
Agreement for two (2) additional periods of five (5) years each (the "Renewal
Periods") by delivery of written notice to B&L at least 120 days prior to the
end of the initial Term or any Renewal Period. For purposes of this Agreement,
"Term" shall refer
4.
<PAGE> 5
collectively to the Term under Section 2.1 hereof and the Renewal Periods under
Section 2.2 hereof.
ARTICLE III
MANUFACTURING SPACE
3.1 Manufacturing Space. B&L agrees to construct, or cause to be
constructed, the Manufacturing Space, as promptly as possible, in accordance
with specifications and drawings mutually agreed to by the parties; it being
understood and acknowledged that the Manufacturing Space will be of adequate
design and size to permit the normal and customary operation of the Equipment.
Furthermore, B&L agrees that it will obtain, prior to the commencement of any
commercial manufacturing hereunder, all approvals required by the FDA for the
Facility and the Manufacturing Space, and that the Manufacturing Space will
conform during the Term to GMPs. Without the prior written consent of InSite,
which shall not be unreasonably withheld, B&L shall not manufacture the Product
at any location other than the Manufacturing Space, or package the Product at
any location other than the Facility.
3.2 Construction Expenses. InSite agrees to reimburse B&L, within 10
days of invoicing, for B&L's "Construction Costs", as hereinafter defined, which
invoicing shall commence with the first day of the first calendar month
following the date on which construction of the Manufacturing Space commences.
For purposes of this Agreement, B&L's "Construction Costs" shall include any and
all verifiable out-of-pocket costs directly incurred by B&L in connection with
the construction of the Manufacturing Space. Notwithstanding the foregoing,
InSite shall have no obligation to reimburse B&L for Construction Costs in
excess of * * *. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
3.3 Delivery and Installation of Equipment. InSite shall deliver the
Equipment to B&L F.O.B. the Facility promptly after the date hereof, but by no
later than the completion date of the Manufacturing Space. InSite shall assume
all risk of loss to the Equipment prior to its delivery to B&L. Furthermore,
InSite shall provide B&L with such assistance and cooperation as may be
reasonably necessary for B&L to install the Equipment with the effect that it is
fully operational in accordance with applicable specifications. InSite
represents to B&L that when installed, the Equipment shall be in good working
order and condition except for reasonable wear and tear attributable to InSite's
prior use and excluding any damage caused by B&L. InSite shall provide, at its
cost, any parts, support, technical assistance or labor necessary to bring the
Equipment within the applicable specifications and to cure any breach of the
above-referenced warranty.
5.
<PAGE> 6
3.4 Title. Except as otherwise provided herein, title to the Equipment
shall remain with InSite subject to B&L's duties as a bailee for hire.
3.5 Warranty. InSite agrees to transfer to B&L any warranties made by
the original manufacturer of the Equipment to the extent assignable by InSite.
If any such warranties are not assignable then InSite shall offer B&L, as agent,
its reasonable assistance in pursuing remedies under the applicable warranties.
EXCEPT AS OTHERWISE PROVIDED HEREIN, INSITE SHALL DELIVER THE EQUIPMENT TO B&L
WITH NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR NONINFRINGEMENT.
ARTICLE IV
USE OF EQUIPMENT
4.1 Standard of Care. B&L shall exercise at least the same standard of
care in using the Equipment that B&L exercises with its own comparable
equipment, but in no event will such standard of care be lower than the standard
of care commonly practiced by pharmaceutical manufacturers in the United States
with respect to comparable equipment. Without limiting the foregoing, B&L shall,
at its own expense, subject to InSite's obligations with respect to the
Equipment herein contained, be responsible for repairing, servicing and
maintaining the Equipment in good working order, excluding reasonable wear and
tear.
4.2 Use of Equipment. Use of the Equipment by B&L shall be dedicated,
on a first priority basis, to manufacturing InSite's requirements for Product in
accordance with the terms of this Agreement. Subject to the foregoing, B&L shall
have the right to use the Equipment to manufacture any other products other than
the Product ("B&L Products"); provided, however, that in consideration of B&L's
use of the Equipment to manufacture B&L Products, B&L shall pay InSite a * * *
per unit royalty for all B&L Products manufactured using the Equipment and which
are sold or transferred by B&L. Royalties on B&L Products manufactured using the
Equipment shall be paid to InSite on a quarterly basis within 30 days following
the end of each quarter. Remittance of royalty payments to InSite hereunder
shall be accompanied by a report which states the aggregate units of B&L
Products manufactured using the Equipment and sold or transferred by B&L during
the preceding royalty period. Notwithstanding anything contained herein to the
contrary, in the event that FDA does not approve the NDA for PilaSite (as
defined in the PilaSite License Agreement), B&L shall receive a credit against
royalties payable to InSite hereunder equal to * * *. [* INDICATES THAT MATERIAL
HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL
SUCH OMITTED
6.
<PAGE> 7
MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
4.3 Transfer of Title. InSite agrees that, after it has received
aggregate royalty payments from B&L in connection with B&L's use of the
Equipment to manufacture B&L Products under Section 4.2 (including any credited
amounts thereunder) equal to * * *, InSite shall deliver to B&L a bill of sale
transferring good and marketable title to the Equipment to B&L. [* INDICATES
THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
4.4 Survival. The obligations of the parties under this Article IV
shall survive any termination of this Agreement.
ARTICLE V
PRODUCT DEVELOPMENT
5.1 Drug Master File. B&L shall exercise its reasonable efforts to
develop a DMF covering the manufacture of the Product at the Facility promptly
following the date hereof. Such efforts shall be consistent with those employed
by B&L for other customers of B&L for contract manufactured product. B&L shall
allow InSite to reference the DMF in the course of seeking and obtaining FDA
approval of the NDA, and shall provide InSite with a DMF reference letter;
provided, however, that B&L's obligation to disclose to InSite the contents of
the DMF shall be limited to those sections which pertain to B&L's manufacture of
the Product. B&L shall be responsible for preparing and providing to InSite the
CMC section of the NDA.
5.2 Clinical Trial Material. B&L agrees to exercise reasonable efforts
to supply InSite with its requirements of clinical trial batches of Product and
PilaSite (as defined in the PilaSite License Agreement) ("Clinical Trial
Material") when and as ordered; provided that B&L shall not be required to make
delivery of such Clinical Trial Material any earlier than 60 days following
receipt of an order from InSite.
5.3 Validation Services. Following the execution of this Agreement, B&L
shall manufacture and validate stability batches of the Product in accordance
with GMP requirements and as necessary for InSite to file and obtain FDA
approval of the NDA; provided, that, in the event that B&L, after five good
faith attempts is unable to successfully manufacture, stability test and
validate three QA/QC-release lots of Product for NDA registration purposes, B&L
and InSite shall equally share all costs incurred in connection with the
manufacture, stability testing and validation of three additional QA/QC-release
lots for NDA registration purposes (the "Additional Stability Studies");
7.
<PAGE> 8
and further provided, that in the event that the parties are unable to
successfully complete the Additional Stability Studies, B&L's president and
InSite's chief executive officer shall, within 10 days, meet to jointly
determine the appropriate action.
5.4 Price. The price to be paid for Clinical Trial Material supplied to
InSite by B&L under Section 5.2 above shall be equal to * * *. Payment for the
Clinical Trial Material will be made in accordance with the payment provisions
set forth in Article VII hereof. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
5.5 Delivery. B&L shall deliver the Clinical Trial Material to InSite
in the same manner as required for Product under Article VIII hereof.
ARTICLE VI
SUPPLY OF PRODUCT
6.1 Quantities. Throughout the Term, InSite agrees to order exclusively
from B&L all of its requirements of Product, and B&L agrees to manufacture and
supply InSite with such Product, as and where ordered by InSite in accordance
with the Specifications, GMPs, the NDA and the FFDCA; provided that if B&L fails
to satisfy InSite's requirements, it may purchase substitute Product from
sources other than B&L.
6.2 Ordering Through Submittal of Rolling Forecast. During the Term,
InSite will provide B&L with a twelve (12) month rolling forecast of its
requirements by month for Product. Such rolling forecasts shall be delivered to
B&L by or on the tenth day of each month during the Term of this Agreement. The
first three months of each twelve month rolling forecast shall be binding on
InSite and shall constitute a firm purchase order ("Firm Purchase Order") for
the Product indicated for such months. B&L shall accept each Firm Purchase Order
by delivering a written order acknowledgment form to InSite within 30 days of
B&L's receipt of each Firm Purchase Order.
6.3 InSite's Initial Rolling Forecast. InSite's initial twelve (12)
month rolling forecast by month shall be provided to B&L within thirty (30) days
of the date of FDA approval of the NDA.
6.4 Orders Other Than Through Rolling Forecasts. Subject to the
provisions of Paragraph 6.2, InSite may submit additional purchase orders for
Product in excess of the quantities specified in the rolling forecasts. B&L
shall use its commercially reasonable efforts to accept and fill such orders
consistent with efforts used by B&L to
8.
<PAGE> 9
fill excess orders for other customers of contract manufactured product.
Acceptance of such additional purchase orders shall be by written order
acknowledgment given to InSite.
ARTICLE VII
PRICE; PAYMENT
7.1 Product Price. The price for Product manufactured and supplied by
B&L hereunder (the "Product Price") shall equal * * * of B&L's Manufacturing
Costs, plus * * * of Other Costs and Warehousing Costs. On a monthly basis, B&L
shall invoice InSite in an amount equal to the Product Price for that quantity
of Product delivered to InSite hereunder. InSite shall pay B&L's invoices by
check or wire transfer, as designated by B&L, within 30 days of receipt of B&L's
invoice. InSite agrees not to make any deductions of any kind from any payment
becoming due to B&L unless InSite has received an official credit memorandum
from B&L authorizing such deduction in accordance with its policies. [*
INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
7.2 Reconciliation. By December 15 of each calendar year throughout the
Term (and following the effective date of termination of this Agreement), B&L
shall prepare and deliver to InSite a detailed statement (the "Statement") which
provides a reconciliation of B&L's Manufacturing Costs for Product based upon
the actual quantity of Product delivered to InSite, as compared to B&L's
standard costs based upon the estimated quantities contained in the InSite
Volume Forecast. Based upon the Statement, B&L may make a positive or negative
adjustment to the Product Prices paid or payable to B&L based upon the actual
increase or decrease in Manufacturing Costs, which shall be satisfied by B&L or
InSite, as the case may be, within 60 days of InSite's receipt of the Statement.
Such adjustment shall be deemed accepted if not protested by InSite within 30
days of receipt of the Statement unless subsequently protested by InSite
pursuant to Section 22.7 below. If InSite protests B&L's calculation of an
adjustment to the Product Prices pursuant to this Section or Section 22.7 below,
and the parties are unable to mutually resolve the matter in protest, either
party may request to have the controversy settled by binding arbitration in
accordance with the then existing rules of the American Arbitration Association.
ARTICLE VIII
DELIVERY; RISK OF LOSS
9.
<PAGE> 10
Unless otherwise agreed in writing by the parties, one (1) month's
requirement of each Firm Purchase Order shall be delivered to InSite F.O.B.
B&L's loading dock at its facility in Tampa, Florida (the "F.O.B. Point"),
commencing within sixty (60) days of the date a Firm Purchase Order is received
by B&L, and continuing each month thereafter. At the request and expense of
InSite, B&L shall ship the Product ordered by InSite by such carrier or carriers
as InSite may designate. Such shipping instructions shall be submitted by InSite
to B&L. Unless otherwise agreed by the parties hereto, all risk of loss or
damage to the Product from any cause whatsoever shall be borne by InSite after
delivery to InSite or InSite's carrier at the F.O.B. Point.
ARTICLE IX
PACKAGING AND LABELING
InSite shall develop all packaging, labeling and artwork for the
Product and shall select the InSite trademark ("InSite Trademark") to be used
for the Product. Thereafter, upon reasonable written notice, B&L will make, at
InSite's expense (which shall include reimbursement in an amount equal to B&L's
actual cost of any packaging components which are not used by B&L as a result of
a packaging change requested by InSite), any improvements or alterations to
packaging or labeling as requested by InSite and shall implement such
alterations or improvements at the earliest opportunity and otherwise as may be
necessary to allow InSite to comply with applicable law.
ARTICLE X
WARRANTIES; ACCEPTANCE AND CLAIMS
10.1 Limited Product Warranty. B&L represents and warrants to InSite
that at the time of delivery, the Product manufactured and supplied hereunder
will conform to the NDA, GMPs and the FFDC Act, and other applicable laws and
regulations. THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. EXCEPT WHERE
B&L COMMITS A WILLFUL, INTENTIONAL BREACH OF ANY MATERIAL PROVISION UNDER THIS
AGREEMENT, B&L SHALL NOT BE RESPONSIBLE OR LIABLE UNDER ANY PROVISION OF THIS
AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR ANY RESULTANT INDIRECT, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES INCLUDING, BUT NOT LIMITED TO LOSS OF REVENUES AND LOSS OF PROFITS FROM
B&L'S FAILURE TO PROVIDE THE PRODUCT TO INSITE OR OTHERWISE.
10.
<PAGE> 11
10.2 Notification of Defects. All Product shall be received subject to
InSite's inspection and may be rejected if any such Product fails to be in the
condition warranted hereunder. InSite shall be deemed to have accepted each
order of Product if B&L does not receive written notice to the contrary as set
forth in this Paragraph 10.2. InSite shall notify B&L in writing within 15 days
after delivery to InSite or its customers of any non-conforming Product
containing obvious defects discoverable without affecting the integrity of the
Product's packaging and within 30 days of its discovery of any latent defects,
or InSite's rights as to such obvious or latent non-conformance shall be waived
by InSite. At B&L's request, InSite shall promptly supply either some of the
Products which are allegedly defective or some other evidence of deficiency
which B&L shall specify. In the event of any dispute between B&L and InSite as
to whether any of the Products conform to the warranties hereunder, a sample of
the units in dispute shall be sent by InSite and B&L to a testing laboratory
mutually agreed to by B&L and InSite whose findings will be binding on the
parties except in cases of gross and manifest error. The cost of such testing
and Product shall be borne by the losing party.
10.3 Returns. B&L shall accept for return and replacement any Product
manufactured and supplied to InSite under this Agreement which does not conform
with the warranty set forth above and for which proper notice has been given,
provided InSite obtains prior shipping authorization from B&L. All returns of
Product with obvious defects shall be in the original manufactured condition.
B&L will pay reasonable return freight and shipping charges, but InSite shall
assume the risk of loss in transit associated with such returns.
ARTICLE XI
FDA INSPECTIONS AND COMMUNICATIONS
InSite and B&L shall promptly notify the other party of any FDA
inspections or communications relating to the Product. Each party shall promptly
deliver to the other party all reports, data, information and correspondence
received by it from the FDA or any state or local authority with respect to the
Product and any GMP issues relating thereto and any written response,
information, data or correspondence delivered by such party to the FDA or any
state or local authority with respect to the Product and shall cooperate to the
extent reasonably requested by such other party in its response to the FDA or
such other state or local authority.
ARTICLE XII
COMPLAINT HANDLING;
ADVERSE DRUG REACTION REPORTS
11.
<PAGE> 12
12.1 Complaint Handling. In the event that InSite or B&L receives any
complaint, claims or adverse reaction reports regarding the Product, including
notices from the FDA regarding any alleged regulatory non-compliance of the
Product, each party shall, within five (5) business days, provide the other with
all information contained in the complaint, report, or notice and such
additional information regarding the Product as may be reasonably requested.
InSite shall comply, at a minimum, with FDA and GMP requirements for complaint
handling.
12.2 Adverse Drug Reaction Reports. InSite shall establish a system for
monitoring, investigating and following-up on adverse reaction reports involving
the Product. If either party becomes aware that the Product contains a defect
which could or did cause death or injury, each party shall immediately by FAX
and telephone provide the other with a complete written description of all
relevant details known to such party concerning any such incident, including but
not limited to, a description of any defect and such other information which may
be necessary to report the incident to the FDA. InSite will be responsible for
preparing adverse drug reaction reports, administering adverse drug reaction
files relating to the Product and filing all such reports with FDA, at its sole
expense.
12.3 Recordkeeping. B&L agrees to maintain internal records that will
permit the tracing of Product by lot number, so as to facilitate the tracing of
such Product in the event such tracing becomes necessary.
ARTICLE XIII
ACCESS TO FACILITIES AND RECORDS
Upon reasonable notice, each party shall have access during normal
business hours to inspect those areas of the facilities of the other party where
and at such times as Product is manufactured, packaged, tested or stored and to
review the records of the other party relating to the manufacturing, packaging
and quality control of the Product.
ARTICLE XIV
RIGHTS OF FIRST DISCUSSION AND OFFER
For a period of one (1) year following the date of the First Closing
(as defined under that certain Stock Purchase Agreement between InSite and B&L
of even date herewith) in the event InSite desires to negotiate, or is solicited
to enter into, a corporate partnering, licensing or other transaction with a
third party with respect to the development, marketing or sale of the technology
and know-how related to the Product,
12.
<PAGE> 13
or any Additional Products (a "Third Party Corporate Transaction"), InSite shall
deliver written notice (the "Notice") to B&L which shall set forth its intention
to negotiate such Third Party Corporate Transaction and the terms thereof. For a
period of 60 days after the Notice is deemed to have been made in accordance
with this Agreement, InSite and B&L shall in good faith negotiate the terms of a
corporate partnering, licensing or other transaction substantially similar to
the Third Party Corporate Transaction (a "B&L Corporate Transaction"); provided,
however, that if B&L does not in good faith intend to pursue a B&L Corporate
Transaction, B&L shall notify InSite of such fact within 10 days of the date
that such decision is made. With respect to the Product and any other products
within the beta blocker category (excluding proprietary beta blockers of third
parties) only, B&L and InSite in good faith cannot agree on the terms of a B&L
Corporate Transaction within the 60 day period set forth above, or B&L earlier
notifies InSite that it does not intend to pursue such a transaction, InSite
shall be entitled to negotiate and enter into a Third Party Corporate
Transaction with any third party; provided that the terms and conditions thereof
are no more favorable to such third party than the terms set forth in the
Notice, if any; provided further, however, that if B&L made a definitive offer
to InSite with respect to the terms of a B&L Corporate Transaction which was not
accepted by InSite (the "B&L Offer"), then InSite shall not enter into any Third
Party Corporate Transaction with any third party pursuant to terms and
conditions which are on balance more favorable than the terms set forth in the
B&L Offer.
ARTICLE XV
PRODUCT RECALL
To the extent permitted or required by law, any decision to recall,
withdraw or cease distribution of the Product as a result of a violation of the
NDA or of any law, rule or regulation, or because the Product presents a
possible safety risk may be made by either party after consulting with the other
party, and taking such reasonable action as InSite, as the owner of the NDA
under which the Product is manufactured may deem to be appropriate under the
circumstances to minimize the risk to both parties. Any such recall shall be
controlled by InSite; provided, however, that the parties shall use their best
efforts to work together to repossess the affected Product.
ARTICLE XVI
INDEMNIFICATION
16.1 Indemnification of B&L. InSite shall indemnify, defend, save and
hold B&L and each of its Affiliates, officers, directors, employees and agents
harmless from and against Loss or Losses resulting from, or arising out of (a)
any material breach
13.
<PAGE> 14
of any warranty hereunder or material non-fulfillment or non-performance by
InSite of any agreement, covenant or obligation of InSite under this Agreement;
(b) any bodily injury arising as a result of a negligent act or omission of
InSite; (c) FDA enforcement action, inspections or Product recalls or market
withdrawals except where arising out of or resulting from B&L's failure to
manufacture Product in accordance with the terms of this Agreement; (d) InSite's
acts relating to the promotion, marketing and/or distribution of Product, except
where arising out of or resulting from B&L's failure to manufacture Product in
accordance with the terms of this Agreement; and (e) any actual or alleged
infringement or violation of any patent, trade secret or proprietary right
governing the Product.
16.2 Indemnification of InSite. B&L shall indemnify, defend, save and
hold InSite and each of its Affiliates, officers, directors, employees and
agents harmless from and against Loss or Losses resulting from, or arising out
of (a) any material breach of any warranty hereunder or material non-fulfillment
or non-performance by B&L of any agreement, covenant or obligation of B&L under
this Agreement; (b) any actual or alleged defect in any Product manufactured and
delivered to InSite hereunder arising out of B&L's failure to manufacture
Product in accordance with the terms of this Agreement; (c) any actual or
alleged infringement or violation of any patent, trade secret or proprietary
rights used by B&L in manufacturing Product; and (d) FDA enforcement action,
inspection or Product recalls or market withdrawals resulting from B&L's failure
to manufacture the Product in accordance with the terms of this Agreement.
16.3 Survival. The indemnification contained herein shall survive any
termination of this Agreement.
ARTICLE XVII
INDEMNIFICATION PROCEDURES
Upon the occurrence of an event which requires indemnification under
this Agreement, the Indemnified Party shall give prompt written notice to the
Indemnifying Party providing reasonable details of the nature of the event and
basis of the indemnity claim. The Indemnifying Party shall then have the right,
at its expense and with counsel of its choice, to defend, contest, or otherwise
protect against any such Action. The Indemnified Party shall also have the
right, but not the obligation, to participate at its own expense in the defense
thereof with counsel of its choice. The Indemnified Party shall cooperate to the
extent reasonably necessary to assist the Indemnifying Party in defending,
contesting or otherwise protesting against any such Action provided that the
reasonable cost in doing so shall be paid by the Indemnifying Party. If the
Indemnifying Party fails within thirty (30) days after receipt of such notice
(a) to notify the Indemnified Party of its intent to defend, or (b) to defend,
contest, or otherwise protect against such suit, action, investigation, claim or
proceeding, or fails to diligently continue
14.
<PAGE> 15
to provide such defense after undertaking to do so, the Indemnified Party shall
have the right, upon ten (10) days' prior written notice to the Indemnifying
party, to defend, settle and satisfy any such suit, action, claim, investigation
or proceeding and recover the costs of the same from the Indemnifying Party.
ARTICLE XVIII
CONFIDENTIALITY
18.1 Confidentiality. Each party agrees that during the Term, and,
notwithstanding any other provision herein, for a period of five (5) years
thereafter (whatever the reason for termination), it will hold in confidence,
will not disclose to others and will not use for any purpose not contemplated by
this Agreement any technical or business information it obtains from the other
party in connection with this Agreement (collectively, the "Proprietary
Information"). These obligations shall not extend to any portion of the
Proprietary Information which:
(i) is known to the receiving party as documented by its
written records at the time of disclosure; or
(ii) is or becomes public or generally available to the public
through publication or otherwise but through no fault of the receiving party; or
(iii) corresponds in substance to information furnished to the
receiving party on a nonconfidential basis by a third party having a bona fide
right to do so and not having any confidential obligation, direct or indirect,
to the disclosing party with respect to same; or
(iv) corresponds to information furnished by the disclosing
party to any third party on a nonconfidential basis except in limited consumer
testing; or
(v) the receiving party can demonstrate was developed by the
receiving party independently of the disclosure of the Proprietary Information
by the disclosing party; or
(vi) is disclosed by the receiving party pursuant to a legal
requirement provided the receiving party has complied with the provisions set
forth in section (b) below.
18.2 External Disclosure. If a party becomes legally required to
disclose any of the Proprietary Information, it will give the other party prompt
notice of such requirement so that the other party may seek a protective order
or other appropriate
15.
<PAGE> 16
remedy concerning such disclosure and will consult with the other party, if
requested to do so, regarding the nature and extent of such disclosure.
18.3 Internal Disclosure. The parties agree that they will make the
Proprietary Information received available to persons within their organizations
only on a "need to know" basis and that all persons to whom such Proprietary
Information is made available will be made aware of the confidential nature of
the Proprietary Information and the restrictions comprised hereunder.
ARTICLE XIX
TERMINATION
19.1 Termination. This Agreement shall terminate upon the occurrence of
any of the following events or conditions, which termination shall automatically
occur where termination by a specified party is not indicated and shall occur by
action of the specified party where so indicated:
(i) The expiration of the Term;
(ii) The breach by either party of any provision of this
Agreement which is not cured within thirty (30) days from the date of written
notice delivered to the defaulting party in the case of a payment default, and
within ninety (90) days from the date of such notice in all other cases;
provided, however, that only the aggrieved party can terminate this Agreement
pursuant to this subsection (ii);
(iii) The mutual written agreement of the parties to this
Agreement;
(iv) The occurrence of any of the following:
(A) the purchase by a Person of all or substantially
all of the assets of B&L or InSite; or
(B) the purchase by a Person of that number of shares
of the voting capital stock and/or securities convertible into
voting capital stock of B&L or InSite that after such purchase
will give such Person more than fifty percent (50%) of the
voting capital stock of B&L or InSite, determined on a fully
diluted basis; or
(C) a merger or consolidation of B&L or InSite with or
into another Person other than an Affiliate of B&L or InSite
in which such party is not the survivor or in control thereof;
16.
<PAGE> 17
provided, however, that only the party who is not directly involved in such
transaction may terminate this Agreement and then only if it does so by written
notice delivered to the other party or parties within thirty (30) days from the
date of its receipt of written notice from the other party or parties advising
it of the anticipated closing date for the closing of such transaction and the
name of the Person acquiring such assets or stock or involved in such merger or
consolidation, which notice from the other party shall be delivered not later
than thirty (30) days prior to the actual closing of the transaction; or
(v) The filing of a bankruptcy petition by or against a party
or the appointment of a receiver for the assets or business of a party that is
not dismissed within sixty (60) days from the date of such filing or
appointment.
19.2 Effect of Termination. Within 30 days following the effective date
of termination of this Agreement, B&L will provide InSite with a detailed
accounting of (i) the amount of raw materials, components and printed materials
held by B&L for manufacturing into Product under this Agreement, (ii) the amount
of Product in the process of being manufactured by B&L for InSite under this
Agreement and (iii) the amount of finished Product then held in inventory by B&L
(including Product which has not be subjected to B&L's quality assurance testing
procedures) under this Agreement. Unless otherwise mutually agreed by the
parties prior to the effective date of termination or as otherwise set forth in
this Agreement, B&L shall deliver to InSite or to such other person or place as
InSite shall direct in writing, at InSite's sole cost and expense (except at
B&L's sole cost and expense, if InSite terminated the Agreement for cause), all
raw materials and Product described above and InSite shall pay B&L, within 30
days of such delivery, the Product Price owing to B&L for finished Product,
Manufacturing Costs for work in process, and B&L's verifiable out-of-pocket
costs incurred in connection with unused inventories of packaging components and
raw materials. No termination of this Agreement shall have any effect on, or
relieve either party from, the obligation to make any payment or perform any act
arising prior to the effective date of termination.
ARTICLE XX
RESOLUTION OF DISPUTES
Except as otherwise specifically provided herein, in the event of any
dispute or difference arising out of or relating to this Agreement or the
performance or failure of performance hereunder, such dispute or difference
shall, at the written request of either party be submitted to the Chief
Executive Officers of each party or another executive officer of a party
designated by the Chief Executive Officer as his or her representative for such
purpose. The Chief Executive Officer or designated representatives, as the case
may be, shall meet within thirty (30) days from the date of such written request
to attempt to resolve the dispute. If the Chief Executive Officers or designated
representatives, as the case may be, are able to resolve the dispute, the
17.
<PAGE> 18
resolution shall be set forth in a written instrument signed by each of them. If
the Chief Executive Officers or designated representatives, as the case may be,
are not able to resolve the dispute within such thirty (30) day time period or
within such extended period as mutually agreed to by them, such dispute or
difference shall be submitted upon the mutual agreement of each of them, to
binding arbitration pursuant to the expedited procedures of and in accordance
with the rules of the American Arbitration Association.
The arbitrator shall be mutually selected by the parties or, if they
cannot agree on such selection, each party shall designate one arbitrator to
represent it in the selection process and the two arbitrators shall appoint a
third arbitrator who shall arbitrate such dispute or difference. Such selection
process shall be completed within sixty (60) days from the end of the period or
extended period during which the Chief Executive Officers have responsibility
for attempting to resolve such dispute. The disputed matter shall be arbitrated
at such location as the parties shall mutually designate or, if they are not
able to agree on such location, at a location selected by the arbitrator or the
third arbitrator, as the case may be. The arbitrator or third arbitrator
selected, as the case may be, shall, if reasonably possible, be one who is
familiar with the commercial and manufacturing practices of the pharmaceutical
industry.
The arbitrator's award shall be final and binding on the parties hereto
and enforceable by either party in any court of competent jurisdiction. The fees
and expenses of the arbitrator shall be shared equally by the parties hereto.
The right to enforce arbitration under this Article shall take precedent over
the right to terminate this Agreement and any exercise of the right of
termination pursuant thereto shall itself by subject to arbitration under this
Article upon mutual agreement of the parties.
ARTICLE XXI
FORCE MAJEURE
Except for the obligation of each party hereunder to make payments to
the other party (which shall not be deferred or extended for any reason),
neither party to this Agreement shall be responsible to the other party for any
failure to perform or delay in performing if such failure or delay is due to any
strike, riot, civil commotion, sabotage, embargo, war or act of God or other
cause beyond its reasonable control. Likewise, neither party shall be
responsible for any failure to perform or delay in performing due to inability
to obtain deliveries where such inability is caused by the supplier of such
party.
ARTICLE XXII
GENERAL PROVISIONS
18.
<PAGE> 19
22.1 Assignment. Neither party may assign any of its rights or
obligations under this Agreement to other than an Affiliate without the prior
written consent of the other. Any such attempt to assign this Agreement without
such consent shall be deemed a default by the assigning party under this
Agreement.
22.2 Notices. Any notice, request, instruction or other communication
required or permitted to be given under this Agreement shall be in writing and
shall be given by sending such notice properly addressed to the other party's
address shown below (or any other address as either party may indicate by notice
in writing to the other from time to time) (i) by hand or by prepaid registered
or certified mail, return receipt requested, in either of such cases which
notice shall be deemed delivered upon receipt, (ii) via telecopy or telegram, in
either of such cases which notice shall be deemed delivered upon receipt, or
(iii) via nationally recognized overnight courier, in which case such notice
shall be deemed delivered upon receipt. All such notices shall be deemed given
when received.
If to InSite: InSite Vision Incorporated
965 Atlantic Avenue
Alameda, California 94501
Attention: Chief Executive Officer
with a copy to: Brobeck, Phleger & Harrison LLP
2200 Geng Road
Two Embarcadero Place
Palo Alto, California 94303
Attention: J. Stephan Dolezalek, Esq.
If to B&L: Bausch & Lomb Pharmaceuticals, Inc.
8500 Hidden River Parkway
Tampa, Florida 33637
Attention: President
with a copy to: Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attention: General Counsel
22.3 Publicity. Except to the extent required by law or deemed
appropriate by legal counsel to comply with securities laws, including the
furnishing of a press release and the filing of such documents and information
with the Securities and Exchange Commission as may be required by federal
securities laws and the filing of any report, statement or document required by
any other federal or state regulatory body, neither party to this Agreement
shall publish, disclose or otherwise announce the
19.
<PAGE> 20
existence of this Agreement or the terms hereof without the consent of the other
party, which consent shall not be unreasonably withheld.
22.4 Waiver. The failure of either party to terminate or seek redress
for a breach of, or to insist upon strict performance of any term, covenant,
condition or provision contained in, this Agreement shall not prevent a similar
subsequent act from constituting a breach of this Agreement.
22.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
22.6 Independence of Parties. B&L and InSite shall at all times act as
independent parties without the right or authority to bind the other with
respect to any agreement, representation or warranty made with or to any third
party. Except as otherwise stated herein, B&L and InSite each shall be
responsible for all costs, expenses, taxes and liabilities arising from the
conduct of its own business, as well as from the activities of its officers,
directors, agents or employees, and each shall hold harmless and indemnify the
other from any such obligations.
22.7 Audit. B&L shall keep accurate books and records (for a period of
two (2) years from creation) reflecting fully and adequately Manufacturing
Costs, Warehousing Costs and Other Costs under this Agreement, in sufficient
detail to permit verification thereof. During the Term of this Agreement and for
a period of two (2) years thereafter, B&L will permit these books and records to
be examined and copied from time to time upon reasonable prior written notice,
during normal working hours by InSite or any representative of InSite. Such
examination shall be made at InSite's expense, except that if such examination
discloses a discrepancy of 5% or more in any amount due InSite under this
Agreement, B&L shall reimburse InSite for the out-of-pocket cost of such
examination, including any reasonable professional fees and expenses incurred by
InSite. In connection with any examination or copying of books and records in
accordance with this Section , InSite or such representative of InSite shall
examine only such information as is required to verify B&L's compliance under
this Agreement. InSite agrees to cause each representative to hold all such
information in confidence and not use such information for any purpose other
than for purposes of assisting InSite in the enforcement of its rights under
this Agreement.
22.8 Entire Agreement. This Agreement contains the entire and only
agreement between the parties with respect to the manufacture and sale of the
Product and no oral statements or representations or written matter not
contained in this Agreement shall have any force or effect. This Agreement shall
not be amended or modified in any way except by a writing executed by authorized
representatives of both parties.
20.
<PAGE> 21
22.9 Partial Invalidity. If any portion of this Agreement is determined
to be illegal or otherwise unenforceable by agreement of the parties, by an
arbitrator, by a court of competent jurisdiction or by an administrative agency
of competent jurisdiction, such section, to the extent permitted by law, shall
be treated as deleted from this Agreement and the remaining portions of this
Agreement shall continue to be in full force and effect according to the terms
hereof.
22.10 Headings. The headings and captions used in this Agreement are
for the convenience of reference only and shall not be construed as part of this
Agreement or as a limitation on the scope of any provisions of this Agreement.
22.11 Other Products. The parties may, from time to time, agree to add
one or more additional products for manufacture and supply pursuant to this
Agreement. Such additional products shall be added to this Agreement upon
completion and execution of an annex which describes the particular product, the
specifications therefor, the materials (including active drug substance and
other materials) to be supplied by InSite and B&L, respectively, and the
purchase price of such additional products. Except as set forth in the annex
described above, the rights, duties and obligations of the parties relating to
such additional products shall be governed by the terms of this Agreement.
21.
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
on the date written at the beginning hereof.
INSITE VISION INCORPORATED BAUSCH & LOMB
PHARMACEUTICALS, INC.
By: /s/ S.K. CHANDRASEKARAN By: /s/ ALAN P. DOZIER
------------------------------- --------------------------------
Its: Chief Executive Officer Its: President
22.
<PAGE> 23
APPENDIX A
DESCRIPTION OF EQUIPMENT
Automatic Liquid Packaging (ALP) 624 filling machine and related spare parts
Lee Industries 500-Liter 316L stainless steel pressure/vacuum kettle
Heavy Duty Lightnin mixer (mdl UND-2A)
Twenty Four Cavity Mold 1 ML Vial
Sanitary rupture disc; Viton gasket, burst pressure
Sanitary Pressure Transmitter
Mark 62 Pressure Regulator
<PAGE> 1
EXHIBIT 10.31
PILASITE LICENSE AGREEMENT
This LICENSE AGREEMENT ("Agreement") is made as of the 18th day of
July, 1996 (the "Effective Date") by and between InSite Vision Incorporated, a
Delaware corporation, having offices at 965 Atlantic Avenue, Alameda, California
94501 ("InSite") and Bausch & Lomb Pharmaceuticals, Inc., a Delaware
corporation, having offices at 8500 Hidden River Parkway, Tampa, Florida 33637
("B&L").
WHEREAS, InSite owns certain proprietary rights and know-how relating
to the manufacture, use and sale of PilaSite(R) (as defined herein);
WHEREAS, B&L desires to acquire, and InSite is willing to grant to B&L,
a license under such proprietary rights and know-how under the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, the parties agree as follows:
1. DEFINITIONS
The following terms as used in this Agreement shall have the
meanings set forth in this Section :
1.1 "Affiliate" shall mean all corporations or business entities
which directly or indirectly are controlled by, control or are under common
control with B&L or InSite as the case may be.
1.2 "Agreement Period" shall mean the period commencing upon the
Effective Date and extending until the termination of this Agreement pursuant to
Section 14 hereof.
1.3 "FDA" shall mean the United States Food and Drug Administration
or any successor entity thereto.
1.4 "Know-How" shall mean all technology, formula, trade secrets,
technical data, pre-clinical and clinical data, toxicological and
pharmacological data and any other information or experience owned, controlled
or in the possession of InSite as of the Effective Date relating to or useful in
connection with the development, manufacture, use or sale of PilaSite as well as
any improvements or modifications to such Know-How developed by, or by any third
party for, InSite during the Agreement Period.
1.5 "Major Markets" shall mean those countries listed on Exhibit C.
<PAGE> 2
1.6 "NDA" shall mean a New Drug Application as defined in the United
States Federal Food, Drug and Cosmetic Act ("FFDCA") and applicable regulations
promulgated thereunder.
1.7 "Net Sales" shall mean the amount invoiced by B&L, its
Affiliates or sublicensees to independent third parties for the sale of
PilaSite, less cash discounts and/or quantity discounts allowed; credit for
customer returns and allowances; charges for freight handling and transportation
as well as freight insurance which are separately billed to B&L; chargebacks;
Medicaid rebates and rebates made or taken in amounts customary in the industry;
and sales and use taxes and other similar taxes incurred by B&L all as
determined in accordance with B&L's standard accounting practices. Net Sales
shall not include product samples or clinical trial supplies.
1.8 "1984 Act" shall mean the United States Drug Price Competition
and Patent Term Restoration Act of 1984 as amended, including 21 USC Section
355, 35 USC Section 155-156, 35 USC Section 271 and applicable regulations
promulgated thereunder.
1.9 "Patent Rights" shall mean all of InSite's right, title and
interest in and to any worldwide patents or patent applications, any claim of
which would cover PilaSite or its manufacture or use which are owned by or
licensed to InSite as of the Effective Date, as set forth on Exhibit D hereto,
and any continuations, continuations in part, divisions, re-examinations,
re-issues or extensions of any of the above described patents or patent
applications.
1.10 "PilaSite" shall mean an ophthalmic formulation containing
pilocarpine as the sole active ingredient in the DuraSite(R) polymer suspension
vehicle.
1.11 "Royalty Period" shall be determined on a country-by-country
basis and shall mean that period beginning on the date of the first commercial
sale of PilaSite by B&L in any country and ending upon the later of the
expiration of all Patent Rights in such country or * * * from the first
commercial sale of PilaSite by B&L in such country. [* INDICATES THAT MATERIAL
HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO
RULE 24b-2.]
1.12 "Secondary Royalty Period" shall be determined on a country-by
country basis and shall mean that period beginning on the date the Royalty
Period for such country expires and ending upon the expiration of this
Agreement, including any extension thereof.
1.13 "Territory" shall mean anywhere in the world.
2. GRANT
2.
<PAGE> 3
2.1 (a) InSite hereby grants to B&L during the Agreement Period a
license or sublicense, with the right to sublicense, under the Patent Rights and
unpatented Know-How referred to in the following sentence, to manufacture, have
manufactured, use, import and sell PilaSite for eye care. The Patent Rights and
Know-How licensed or sublicensed under this Section 2 shall consist of all of
the Patent Rights and unpatented Know-How already invented, developed or owned
by InSite or licensed to InSite on the Effective Date which may relate to the
manufacture, use, import or sale of PilaSite and any improvements or
modifications thereto developed or obtained by InSite during the Agreement
Period.
(b) In consideration for the license granted in Section 2.1(a)
above, B&L shall pay InSite a license fee in the amount of * * * (the "License
Fee"). The License Fee shall be paid by B&L as follows: (i) * * * within five
(5) days after the Effective Date; and (ii) the remaining * * *, in one or more
installments equal to, and paid on the same day as, any facility expense
payments in excess of * * * due from InSite to B&L (the "Additional Expense
Payments") in accordance with Section 3.2 of that certain BetaSite Supply
Agreement between InSite and B&L of even date herewith (the "Supply Agreement").
In the event that, pursuant to the Supply Agreement, InSite's Additional Expense
Payments are less than * * *, B&L shall pay InSite an amount equal to * * * less
all Additional Expense Payments made by InSite upon the earlier to occur of (x)
January 15, 1997, (y) as determined in the reasonable judgment of B&L, the
successful completion of the Phase III clinical study report for the PilaSite
NDA. All payments provided for in this paragraph shall be made by wire transfer
in immediately available United States dollars to such account as InSite shall
specify in writing to B&L not less than two (2) days prior to the date such
payment is due. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
(c) Under the foregoing license and sublicense, B&L (and B&L's
sublicensees) shall have the exclusive right under the Patent Rights and
Know-How referred to above to manufacture, import, have manufactured, use and
sell PilaSite anywhere in the world.
2.2 (a) InSite shall take all steps necessary, and shall bear all
costs, to complete and submit an NDA for PilaSite with the FDA and shall use its
reasonable efforts (consistent with similarly situated companies) to cause such
NDA to be approved by FDA. Provided, however, that B&L shall be responsible for
performing and shall bear the costs of, except as otherwise provided herein, the
Services (as more fully described on Schedule 2.2(a) attached hereto).
Notwithstanding anything contained herein to the contrary, in the event that
B&L, after five (5) good faith attempts, is unable to successfully manufacture,
stability test and validate three (3) QA/QC-release lots of Product for NDA
registration purposes, B&L and InSite shall equally share all costs incurred in
connection with the manufacture, stability testing and validation of three (3)
additional QA/QC-release lots for
3.
<PAGE> 4
NDA registration purposes (the "Additional Stability Studies"); and provided,
further, that in the event that the parties are unable to successfully complete
the Additional Stability Studies, B&L's president and InSite's chief executive
officer shall, within ten (10) days, meet to jointly determine the appropriate
action. B&L shall provide InSite with all data and reports from the
aforementioned developmental activities for purposes of InSite's submission of
the NDA.
(b) B&L may develop a drug master file ("DMF") covering its
manufacture of PilaSite. In the event that B&L undertakes to develop a DMF, it
shall not be required to exercise efforts beyond those employed by B&L for other
customers of B&L for contract manufactured product. B&L shall allow InSite to
reference the DMF in the course of seeking and obtaining FDA approval of the
NDA, and shall provide InSite with the DMF reference letter; provided, however,
that B&L's obligations to disclose to InSite the contents of the DMF shall be
limited to those sections which pertain to B&L's manufacture of PilaSite. B&L
shall be responsible for providing InSite with the CMC Section for inclusion in
the NDA.
(c) B&L shall use its best commercial efforts consistent with good
business judgment, and shall bear all costs incurred therefor, to file
applications for regulatory approval of PilaSite in the Major Markets and shall
use reasonable efforts to cause such applications to be approved by all
necessary regulatory authorities in each Major Market. In the event that B&L
elects not to file applications for regulatory approval of PilaSite in any Major
Market within six (6) months of the date the PilaSite NDA is approved, or fails
to use reasonable efforts to cause any such applications to be approved by the
necessary regulatory authorities, or fails to maintain such regulatory
approvals, upon thirty (30) days advanced written notice by InSite, the license
granted by InSite to B&L in Section 2.1(a) above shall no longer be exclusive in
such Major Market. In such event, the royalty paid by B&L on sales of PilaSite
in such Major Market for which the license is no longer exclusive shall continue
to be calculated in accordance with Section 3 below; provided, however, that in
no event shall the royalty paid by B&L exceed the royalties paid by any other
nonexclusive licensee in such Major Market.
2.3 B&L shall use commercially reasonable efforts consistent with good
business judgment, relevant to the country involved, to commercialize and sell
PilaSite in the Territory.
2.4 In the event that, in the course of performing its obligations
hereunder prior to the approval for sale of PilaSite, either party is required
to expend sums or efforts that would render commercially impracticable its
activities to complete such approval, then the parties shall meet and discuss in
good faith, how and whether to proceed toward PilaSite approval.
3. ROYALTIES
4.
<PAGE> 5
3.1 (a) In consideration of the rights granted in Section 2 above,
during the Royalty Period in any country, B&L shall pay InSite royalties
consisting of * * * of Net Sales of PilaSite in such country. In the event that
during the Royalty Period for any country, any of InSite's Patent Rights expire
or are invalidated, or InSite is unable or elects not to obtain a patent in such
country, and generic versions of PilaSite are being sold in such country (and
such generic sales are not in contravention of any governmental, judicial or
private regulatory rules, regulations, laws, orders or judgments in effect in
such country), the royalty rate paid by B&L for sales in such country shall be
reduced to * * * of Net Sales in such country. During the Secondary Royalty
Period in any country, B&L shall pay InSite the following royalties on Net Sales
of PilaSite: (i) * * * of Net Sales of PilaSite during the first year of the
Secondary Royalty Period; (ii) * * * of Net Sales of PilaSite for the second
year of the Secondary Royalty Period; and (iii) * * * of Net Sales of PilaSite
during the third year of the Secondary Period and during any subsequent year in
which this Agreement or any extension thereof is in effect. In addition, during
the Secondary Royalty Period in any country, B&L shall pay InSite royalties of *
* * of Net Sales of the Generic (as defined below) unless B&L's sale of the
Generic was pursuant to the filing of an ANDA (as hereinafter defined) and
without any cooperation from InSite whatsoever, in which event B&L's obligation
to pay a royalty to InSite in connection with its sales of the Generic shall
exist for * * * years of the Secondary Royalty Period. Notwithstanding anything
contained herein to the contrary, B&L shall not be required to pay InSite any
royalty on Net Sales of the Generic after the end of the * * * of the Secondary
Royalty Period. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
(b) Notwithstanding anything in this Agreement to the contrary, if any
of the Patent Rights expire or are invalidated, or if InSite is unable or elects
not to obtain a patent in such country, and generic versions of PilaSite are
being sold in such country (and such generic sales are not in contravention of
any governmental, judicial or private regulatory rules, regulations, laws,
orders or judgments in effect in such country), B&L shall have the right to
manufacture, use, import, sell and distribute a generic equivalent to PilaSite
by either submitting and receiving approval of an abbreviated new drug
application, and, in countries other than the United States, an equivalent
abbreviated application ("ANDA") or obtaining from InSite the right to
supplement or amend the NDA, or foreign equivalent, to introduce a generic form
of PilaSite (the "Generic"). If B&L submits an ANDA for the Generic, it shall
notify InSite in writing at least ninety (90) days prior to the date of
submission and InSite shall cooperate with B&L in the preparation of such
submission. Alternatively, if B&L elects to submit a supplement to the NDA, or
foreign equivalent, with respect to the Generic, B&L may request from InSite,
and InSite shall grant B&L, such specific rights to the NDA, or foreign
equivalent, as are necessary to enable B&L to submit such supplement to
introduce and sell the Generic. If B&L elects to launch the Generic in any
country prior to the end of the Royalty Period in such country, in anticipation
of the entry of a third party generic competitor, the royalty due on sales of
such Generic by B&L shall be * * * of Net Sales until the end of the
5.
<PAGE> 6
Royalty Period. InSite hereby covenants not to sue B&L for patent infringement
relating to sales of the Generic which are in accordance with this Section
3.1(b) during the Royalty Period in such country. [* INDICATES THAT MATERIAL
HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO
RULE 24b-2.]
3.2 Sales of PilaSite between or among B&L, its Affiliates and
sublicensees shall not be subject to any royalty hereunder, and in such cases
royalties shall be calculated upon B&L or its Affiliates' or sublicensees' Net
Sales to an independent third party. B&L shall be responsible for payment of any
royalty accrued on Net Sales of PilaSite to such independent third party through
B&L's Affiliates or sublicenses. Royalties shall accrue hereunder only once in
respect of the same unit of the PilaSite.
4. TIMING OF ROYALTY PAYMENTS; RECORDS
4.1 Within 45 days after the end of each calendar quarter, B&L shall
pay to InSite the royalty payment due for such quarter in U.S. dollars. Such
royalty shall be converted, where applicable, from the currency of the country
in which the sale was made into U.S. dollars at the average month-end exchange
rates for such quarter as calculated based on the daily exchange rate published
in the Wall Street Journal.
4.2 Together with each quarterly royalty payment, B&L shall submit
to InSite a written accounting showing its computation of royalties due under
this Agreement for such quarter. Said accounting shall set forth gross sales,
Net Sales, the exchange rate applied, if any, and the total royalties due for
the quarter in question.
4.3 B&L shall keep full and accurate books and records reflecting
the sales of PilaSite and the data used in arriving at Net Sales and the amount
of royalties payable to InSite hereunder for no less than one year after the end
of each such quarter. B&L shall permit InSite, at InSite's expense, to have such
books and records examined by independent certified public accountants retained
by InSite and reasonably acceptable to B&L, during regular business hours upon
reasonable advance notice, but not later than one year following the rendering
of any such reports, accounting and payments, and no more often than one time
per year. Such independent accountants shall keep confidential (under a written
confidentiality agreement reasonably acceptable to B&L) any information obtained
during such examination and shall report to InSite only the amounts of royalties
which the independent accountant believes to be due and payable hereunder. If
such examination discloses a discrepancy of 5% or more in any amount due InSite
under this Agreement, B&L shall reimburse InSite for the out-of-pocket cost of
such examination, including any reasonable professional fees and expenses
incurred by InSite.
5. WARRANTIES
5.1 InSite warrants and represents that:
(a) it is the owner of the Patent Rights and Know-How and has
the right to license or sublicense, in the manner set forth in this Agreement,
said Patent Rights and Know-How free of any lien or encumbrance in the
Territory;
6.
<PAGE> 7
(b) it has not assigned or conveyed any interest in the Patent
Rights or Know-How which may be inconsistent with the rights granted hereunder;
(c) to the best of its knowledge and after a diligent search,
the practice of the Patent Rights and Know-How in the Territory does not
infringe any rights of third parties;
(d) it is not aware that any third party is infringing the
Patent Rights;
(e) it is a corporation duly incorporated and in good standing
in its state of incorporation and has all requisite power to enter into and
perform this Agreement. Upon execution by the parties hereto, this Agreement
shall constitute a valid and legally binding obligation of InSite, enforceable
in accordance with its terms; and
(f) it has prosecuted all patent applications within the
Patent Rights in good faith and has no reason to believe that any patent
included within the Patent Rights would be invalid or would be held to be
unenforceable by a court of competent jurisdiction.
6. TRANSFER AND OWNERSHIP OF KNOW-HOW; MAINTENANCE OF NDA
6.1 As part of the license granted in Section 2, and in order to
enable B&L to develop, make, have made, use and sell PilaSite, InSite shall
provide B&L with all Know-How within thirty (30) days after signing this
Agreement. In addition, all improvements or modifications to such Know-How
generated or obtained by InSite during the Agreement Period shall be transferred
to B&L within thirty (30) days of its generation or receipt by InSite. Such
Know-How is provided to B&L subject to the confidentiality restrictions set
forth in this Agreement.
6.2 (a) Following FDA approval of the NDA, B&L agrees to take any
and all action necessary to ensure that the NDA is maintained and all statutory
obligations associated therewith are fulfilled. To facilitate B&L's ability to
assume responsibility for maintaining the NDA, contemporaneously with the
execution of this Agreement, InSite shall execute and deliver a letter
substantially in the form of Exhibit A to this Agreement, authorizing B&L to act
on InSite's behalf as the responsible agent. Such letter shall be updated and
modified as necessary, but no less frequently than annually at the reasonable
request of B&L.
(b) InSite hereby grants to B&L a right of reference with
respect to all information contained in the NDA, and any supplements or
amendments to such NDA. This right of reference shall include a right of
reference for purposes of Section 505(b)(2) of the FFDCA and its implementing
regulations. Contemporaneously with the execution of this Agreement, InSite
shall execute a letter substantially in the form of Exhibit B to this Agreement
(a "Right of Reference Letter").
7.
<PAGE> 8
(c) InSite hereby grants B&L the right to receive, upon written
request and at the expense of InSite, complete copies of the NDA, including any
supplements or amendments thereto, all correspondence with the FDA regarding the
NDA or PilaSite in general, all minutes of meetings held between the FDA and
InSite to discuss the NDA or PilaSite in general, all memoranda of conversations
between InSite and the FDA that relate to the NDA or PilaSite in general, and
all of InSite's Know-How. From and after the date hereof, InSite agrees that it
shall not transfer ownership of the NDA or any Know-How to any person or entity
other than B&L without the prior written consent of B&L, which consent shall not
be unreasonably withheld; provided, however, that B&L's prior written consent
shall not be required for InSite to transfer nonexclusive rights to the NDA or
Know-How to any third party for the purpose of manufacturing, marketing and
distributing PilaSite in any Major Market in which B&L no longer has an
exclusive license pursuant to the operation of Section 2.2(b) above.
(d) B&L agrees to provide InSite with (i) fifteen (15) days'
notice prior to submission to the FDA of any routine submissions or
insignificant amendments such as minor labeling changes or minor manufacturing
changes and (ii) forty-five (45) days' notice prior to submission to the FDA of
any submission, supplement or amendment not referred to in Section 6.2(d)(i)
hereof. B&L shall provide complete copies of all proposed supplements,
submissions and amendments to InSite upon giving notice to InSite of such
proposed submission. From and after the date hereof, B&L agrees that it shall
not submit to the FDA any NDA supplement or amendment with respect to PilaSite
without the consent of InSite, which consent shall not be unreasonably withheld
and B&L may assume that InSite consents to any proposed submission that InSite
does not object to by the end of the relevant notice period. B&L further agrees
to promptly provide InSite with copies of all correspondence with and reports to
the FDA or any other agency regarding PilaSite or the NDA, all minutes of
meetings held between the FDA and B&L to discuss PilaSite or the NDA, and all
memoranda of any conversations between B&L and the FDA that relate to PilaSite
or the NDA.
7. CONFIDENTIALITY
7.1 InSite and B&L shall keep any Know-How or business information
provided or made available by the other party or its Affiliates hereunder
confidential, and neither InSite nor B&L shall, without the prior written
consent of the other party or its Affiliates, as the case may be, use (except as
expressly permitted by this Agreement or for the purposes of this Agreement), or
disclose to any third party, any Know-How or business information provided or
made available by the other party or its Affiliates hereunder; provided,
however, that the foregoing shall not apply to information which the party
receiving such information can establish by written documentation to (i) have
been publicly known at the time of disclosure by the other party or its
Affiliates, as the case may be, (ii) have become publicly known, without fault
on its part, subsequent to such disclosure, (iii) have been otherwise known by
it from a source (other than the other party or its agents or
8.
<PAGE> 9
Affiliates), lawfully having possession of such information, or (v) have been
developed by it or its Affiliates independently of the disclosure by the other
party or its Affiliates.
The foregoing shall not preclude the disclosure of information by
InSite or B&L:
(a) to its legal representatives, Affiliates, consultants, outside
contractors and (if it has the right to grant the license or sublicense) its
licensees and sublicensees, under like confidentiality obligations on the part
of the recipients, or
(b) to the extent required by law or regulation, provided that, to
the extent reasonably possible, it shall give prompt written notice of the
proposed disclosure to the other party or its Affiliates, as the case may be, so
as to allow the other party or its Affiliates, as the case may be, an
opportunity to object to such requirement and, if applicable, assure that
confidential treatment will be accorded to such information, or
(c) to the extent that such information is reasonably required to be
disclosed for the purpose of securing necessary governmental authorization for
the clinical testing or marketing of products or for the purpose of conducting
clinical testing or marketing of products, or of prosecuting or defending
litigation.
7.2 The terms of this Agreement shall not be disclosed by either
party to any third party (other than as provided in Subsections 7.1(a), (b) and
(c) above) or be published unless both parties expressly agree otherwise in
writing. Furthermore, neither party shall use the name of the other party or its
Affiliates without their prior written consent. However, the foregoing
restrictions shall not apply to the disclosure of information set forth in the
form of an agreed-upon press release, if any, which may be prepared in mutually
agreeable format and substance for release when this Agreement becomes
effective, or to disclosures required by law or regulation.
8. PATENTS
8.1 InSite shall undertake and shall bear all costs of the
prosecution and maintenance of the Patent Rights in the Territory. InSite shall
employ reasonable efforts to keep B&L fully and timely informed with respect to
the course and conduct of patent application prosecution matters within the
scope of Patent Rights.
8.2 If InSite elects to terminate either the prosecution or
maintenance of the Patent Rights prior to the completion of normal prosecution
before the patent examiner or prior to the end of the term for maintenance, as
the case may be, it will give B&L sixty (60) days prior written notice of such
election prior to any time limit on any action due. B&L, upon receipt of such
notice, shall have the option to undertake the continuation of such prosecution
or maintenance and InSite will transfer title to B&L for such patent application
or patent.
9.
<PAGE> 10
9. ENFORCEMENT OF PATENT RIGHTS
9.1 If either party shall become aware of any infringement or
threatened infringement of any Patent Rights, including that contained in a
notice provided under the 1984 Act by a party filing an NDA for PilaSite, then
the party having such knowledge shall give notice to the other within ten (10)
days of becoming aware of such infringement or threatened infringement.
9.2 InSite shall have the first right but not an obligation to bring
an enforcement action or to take any other reasonable steps to defend the Patent
Rights against infringement and B&L shall in such event give all reasonable
assistance to InSite with respect to patent and legal questions. The costs of
such patent enforcement shall be borne by InSite. If InSite does not commence a
particular infringement action within ninety (90) days after it has received
notice of such infringement, B&L, after notifying InSite in writing, shall be
entitled to bring such infringement action or other appropriate action or claim
at its own expense but shall request in writing that InSite fund 50% of such
expenses. If InSite declines to pursue such action or fails to respond to B&L
within sixty (60) days after receipt of B&L's notice that it will do so, B&L
shall have the right to undertake such action and if InSite fails to fund 50% of
B&L's expenses in pursuing such action, then B&L shall be entitled to 100% of
all recoveries and B&L shall no longer be required to pay royalties to InSite
for PilaSite in the country in which such action was prosecuted. Recovery from
any settlement or judgment from any such action in the Territory either pursued
by InSite or co-funded by InSite shall go first to reimburse the expenses of the
parties and the remainder shall be shared by the parties on a 50%/50% basis.
Notwithstanding the foregoing, if the monetary recovery is less than the
out-of-pocket expenses of InSite and B&L, reimbursement shall be on a pro rata
basis, based upon cost incurred. In any event, InSite and B&L shall assist one
another and reasonably cooperate in any such litigation at the other's request
without expense to the requesting party.
9.3 If InSite and B&L, after consultation with each other, elect not
to bring individually or jointly, or if InSite and B&L, as the case may be,
are/is not able to stop such infringing activities in any country, the
applicable royalty for such country shall be adjusted as set forth in Section
3.1, if applicable.
10. INDEMNIFICATION
10.1 Indemnification of B&L. InSite shall indemnify, defend, save
and hold B&L and each of its Affiliates, officers, directors, employees and
agents harmless from and against any liability, loss, damage, cost or expense
including reasonable attorneys' fees and expenses, excluding consequential or
special damages ("Loss" or "Losses") resulting from or arising out of (a) any
material breach of any warranty hereunder or material non-fulfillment or
non-performance by InSite of any agreement, covenant or obligation of InSite
under this Agreement; (b) any actual or alleged defect in PilaSite manufactured
by B&L, other than any actual or alleged defect arising out of B&L's failure to
manufacture PilaSite in accordance with the terms of this Agreement and except
as otherwise provided in Sections 10.2 and 10.3 below; (c) FDA enforcement
action, inspection or product recalls or market withdrawals relating to
PilaSite, except where arising out of or resulting from B&L's failure to
manufacture PilaSite in
10.
<PAGE> 11
accordance with the terms of this Agreement or B&L's labeling, packaging,
promotion, distribution, or marketing of finished units of PilaSite and except
as provided in Sections 10.2 and 10.3 below; and (d) any actual or alleged
infringement or violation by the Patent Rights or Know-How of any patent, trade
secret or other proprietary right of any third party.
10.2 Indemnification of InSite. B&L shall indemnify, defend, save
and hold InSite and each of its Affiliates, officers, directors, employees and
agents harmless from and against Loss or Losses resulting from, or arising out
of (a) a material breach of any warranty hereunder or material non-fulfillment
or non-performance by B&L of any agreement, covenant or obligation of B&L under
this Agreement; (b) any actual or alleged defect in PilaSite manufactured
hereunder arising out of B&L's failure to manufacture PilaSite in accordance
with the terms of this Agreement, including without limitation, defects due to
tampering with PilaSite during the manufacturing process; (c) B&L's acts
relating to the promotion, marketing, labeling, packaging and/or distribution of
PilaSite; and (d) FDA enforcement action, inspection, product recalls or market
withdrawals relating to PilaSite resulting from B&L's failure to manufacture
PilaSite in accordance with the terms of this Agreement or arising out of the
labeling or packaging of finished units of PilaSite.
10.3 Joint Obligations. InSite and B&L shall equally share any
Losses, and shall jointly defend any actions related thereto, resulting from or
arising out of acts, actions, defects, product recalls or market withdrawals for
which responsibility is not specifically apportioned by Sections 10.1 and 10.2
above. Such joint obligations shall include, without limitation, product recalls
or market withdrawals due to any tampering with PilaSite after manufacture and
distribution by B&L. Any such product recalls or market withdrawals shall be
controlled and conducted by B&L.
10.4 Survival. The provisions of this Section 10 shall survive any
termination of this Agreement.
10.5 Indemnification Procedures. Upon the occurrence of an event
which requires indemnification under this Agreement (an "Indemnification
Event"), the indemnified party shall give prompt written notice to the
indemnifying party providing reasonable details of the nature of the event and
the basis of the indemnity claim. The indemnifying party shall then have the
right, at its expense and with counsel of its choice, to defend, contest or
otherwise protect against any such action. The indemnified party shall also have
the right, but not the obligation, to participate at its own expense in the
defense thereof with counsel of its choice. The indemnified party shall
cooperate to the extent reasonably necessary to assist the indemnifying party in
defending, contesting or otherwise protesting against any such action provided
that the reasonable out-of-pocket cost in doing so shall be paid by the
indemnifying party. If the indemnified party fails to promptly notify
11.
<PAGE> 12
the indemnifying party of the occurrence of an Indemnification Event and such
failure has a material adverse effect on the indemnifying party, the indemnified
party shall not be entitled to indemnification with respect to such
Indemnification Event. If the indemnifying party fails within thirty (30) days
after receipt of such notice (a) to notify the indemnified party of its intent
to defend, or (b) to defend, contest or otherwise protect against such suit,
action, investigation, claim or proceeding, or fails to diligently continue to
provide such defense after undertaking to do so, the indemnified party shall
have the right, upon ten (10) days' prior written notice to the indemnifying
party, to defend, settle and satisfy any such suit, action, claim, investigation
or proceeding and recover the reasonable costs of the same from the indemnifying
party.
11. PATENT TERM EXTENSION
Within sixty (60) days after approval of an NDA for PilaSite, and
at B&L's option, B&L shall have the right to file at its own cost and expense an
application for an extension of any United States patent falling within the
Patent Rights, and, where applicable, for extension of Patent Rights in any
other country of the Territory under similar laws permitting patent term
extension. InSite designates B&L as its agent with respect to such filing and
prosecution for patent term extension, and agrees to cooperate with B&L in
providing any information required under the relevant United States laws or
similar laws outside the United States. Such action by B&L may be undertaken in
the name of InSite, if deemed necessary or appropriate by B&L, and InSite agrees
to cooperate with B&L, and execute any documents reasonably necessary relating
to such action.
12. TRADEMARK
InSite shall grant B&L an exclusive license to the trademark
PilaSite; provided, however, that such license shall be nonexclusive in any
Major Market for which the general technology license granted hereunder becomes
nonexclusive pursuant to Section 2.2(b).
13. NOTICES
All notices required or permitted hereunder shall by given in
writing and sent by facsimile transmission, or mailed postage prepaid by first
class certified or registered mail, or sent by a nationally recognized express
courier service, or hand delivered at the following addresses:
Bausch & Lomb Pharmaceuticals, Inc.
8500 Hidden River Parkway
Tampa, Florida 33637
Attn: President
12.
<PAGE> 13
With a copy to:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attn: General Counsel
InSite Vision Incorporated
965 Atlantic Avenue
Alameda, California 94501
Attn: Chief Executive Officer
With a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303
Attn: J. Stephan Dolezalek, Esq.
Any notice, if mailed properly addressed, postage prepaid, shall be deemed made
three days after the date of mailing as indicated on the certified or registered
mail receipt, or on the next business day if sent by express courier service or
on the date of delivery or transmission if hand delivered or sent by facsimile
transmission.
14. TERM AND TERMINATION
14.1 The term of this Agreement shall begin as of the date hereof
and shall remain in effect until the later of the expiration of the last to
expire Patent Rights, or ten (10) years from the first commercial sale of
PilaSite in the last country in which it is commercially exploited, unless
earlier terminated as permitted hereunder. B&L shall have the right, upon 180
days written notice to InSite, to renew this Agreement for an unlimited number
of five (5) year terms (each a "Renewal Term"). B&L shall have the right to
terminate any Renewal Term only upon 180 days prior written notice to InSite.
Upon the termination of this Agreement for any reason, B&L shall have the right,
consistent with past practice, to market, distribute, and sell any finished
units of PilaSite in B&L's possession at the time of such termination.
14.2 In the event of a breach or default of this Agreement by
either party which is not cured within ninety (90) days after the receipt of
notice thereof from the other party, the party not in breach or default shall be
entitled (without prejudice to any of its other rights) to terminate this
Agreement by giving notice to take effect immediately.
14.3 B&L may terminate this Agreement and the licenses granted
hereunder at any time, without cause, upon 180 days written notice to InSite, at
which time B&L, and
13.
<PAGE> 14
its Affiliates and sublicensees, as applicable, shall return to InSite all
documented or written Know-How previously provided to B&L by InSite pursuant to
Section 6 of this Agreement.
14.4 The termination of this Agreement shall not release either
party from any obligation which matured prior to the effective date of the
termination.
14.5 The confidentiality obligations set forth in Section 7 shall
survive the termination or expiration of this Agreement.
15. FORCE MAJEURE
Neither party shall be responsible or liable to the other
hereunder for failure or delay in performance of this Agreement due to any war,
fire, accident or other casualty, or any labor disturbance or act of God or the
public enemy, or any other contingency beyond such party's reasonable control.
In addition, in the event of the applicability of this Section , the party
affected by such force majeure shall use reasonable efforts, consistent with
good business judgment, to eliminate, cure and overcome any of such causes and
resume performance of its obligations.
16. ASSIGNMENT
This Agreement and all rights and obligation hereunder are personal
to the parties hereto, and may not be assigned without the express prior written
consent of the other, which consent shall not be unreasonably withheld. Any
assignment or attempt at same in the absence of such prior written consent shall
be void and without effect.
17. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California as though made and to be fully
performed in said State.
18. SEVERABILITY
If any one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby. In the event any provision shall be held invalid,
illegal or unenforceable, the parties shall use best efforts to substitute a
valid, legal and enforceable provision which, insofar as possible, implements
the purposes hereof.
14.
<PAGE> 15
19. NO WAIVER
The failure of any party hereto at any time or times to require
performance of any provisions hereof shall in no manner affect its rights to
enforce such provision at a later time.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between the
parties relating to the subject matter thereof, and no amendment or modification
to this Agreement shall be valid or binding upon the parties unless made in
writing and signed by the representatives of such parties.
21. DISPUTE RESOLUTION
Except that either party may seek equitable relief from a court, if
any dispute arises between InSite and B&L with respect to the interpretation or
breach of this Agreement, either party shall notify the other of the dispute in
writing and shall attempt to resolve the dispute through discussions between
INSITE'S Chief Executive Officer and B&L's President. If such officers are
unable to resolve the dispute within thirty (30) days after the date written
notice of the dispute is delivered, the parties shall seek to resolve the
dispute by initiating an Alternative Dispute Resolution ("ADR") in which the
Judicial Arbitration and Mediation Services ("JAMS"), Oakland, California shall
select the mediator. Such mediator shall hold a hearing to resolve the dispute
within sixty (60) days of his or her selection. The location of the hearing
shall be Oakland, California. Each party may be represented by counsel and shall
have the right to make a presentation of evidence at such hearing. The mediator
shall render a disposition on the proposed rulings as expeditiously as possible
but not later than fifteen (15) days after the conclusion of the hearing. If the
parties are unable to resolve the dispute, the dispute may, upon the agreement
of the parties, be settled by arbitration. If the parties agree to arbitrate the
dispute, such arbitration shall take place in Alameda County, California in
accordance with the then current commercial arbitration rules of the American
Arbitration Association and judgment upon the award rendered by the
Arbitrator(s) shall be binding on the parties and may be entered by either party
in the court or forum, state or federal, having jurisdiction. Notwithstanding
anything to the contrary, nothing in this Agreement shall be deemed as
preventing either party from seeking injunctive relief (or any other provisional
remedy) from any court having jurisdiction over the parties and the subject
matter of the dispute as necessary to protect either party's name, proprietary
information, trade secrets, know-how or any other proprietary rights. Further,
in the event the parties do not agree to arbitrate any dispute hereunder, either
party may seek such other remedy, at law or in equity, as it may deem necessary
or appropriate.
15.
<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
BAUSCH & LOMB PHARMACEUTICALS, INSITE VISION INCORPORATED
INC.
By: /s/ ALAN P. DOZIER By: /s/ S.K. CHANDRASEKARAN
-------------------------------- ------------------------------
Title: President Title: Chief Executive Officer
16.
<PAGE> 17
EXHIBIT A
TRANSFER OF RESPONSIBILITY FROM
INSITE AND BLP
Center for Drug Evaluation
and Research
Food and Drug Administration
To Whom It May Concern:
InSite Vision Incorporated ("InSite") hereby appoints Bausch & Lomb
Pharmaceuticals, Inc. ("BLP") as the agent of InSite to perform all duties and
obligations with respect to maintaining regulatory compliance for
________________ [name of product and NDA number] to BLP as Responsible Agent.
These duties may include, but not be limited to, the submission of annual
reports, the submission of supplements and amendments, the submission of adverse
event reports, the submission of annual drug lists, and the payment of any fees
due under the Prescription Drug User Fee Act.
<PAGE> 18
EXHIBIT B
RIGHT OF REFERENCE
Center for Drug Evaluation
and Research
Food and Drug Administration
To Whom It May Concern:
InSite Vision International hereby confers upon Bausch & Lomb Pharmaceuticals,
Inc. a right of reference for all statutory purposes under the Federal Food,
Drug and Cosmetic Act, including 21 U.S.C. Section 355(b)(2), and implementing
regulations with respect to all information contained in [name of new drug
application and NDA number].
<PAGE> 19
EXHIBIT C
MAJOR MARKETS
France
Germany
Italy
Spain
United Kingdom
China
India
Japan
South Korea
Taiwan
Canada
Mexico
<PAGE> 20
EXHIBIT D
PilaSite Patents
<TABLE>
<CAPTION>
INSITE LICENSED PATENTS Patent/Application Date Filed/Issued/Allowed
<S> <C> <C> <C>
* J. ROBINSON, BIOADHESIVE COMPOSITION 4,615,697 P 10/07/86 1
AND TREATMENT THEREWITH 4,983,392 P 01/08/91 1
5,225,196 P 07/06/93 1
INSITE PATENTS
* OPHTHALMIC SUSPENSIONS 5,192,535 P 03/09/93 1
</TABLE>
<PAGE> 21
STATUS OF USSN 07/544,518 AND FOREIGN COUNTERPARTS
<TABLE>
<CAPTION>
COUNTRY SERIAL NO. FILING DATE PATENT NO. ISSUE DATE STATUS
<S> <C> <C> <C> <C> <C>
United States 07/544,518 June 27, 1990 5,192,535 March 9, 1993 Issued
* * * * * *
* * * * * *
New Zealand 238757 June 27, 1991 238,756 March 16, 1993 Issued
South Africa 914971 June 27, 1991 914971 September 30, 1992 Issued
* * * *
* * * *
* * * *
* * * *
</TABLE>
[* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
<PAGE> 22
SUMMARY
Columbia Patents 1
<TABLE>
<CAPTION>
<S> <C> <C> <C>
USA: USSN 551,295 filed 11/14/83 Abandoned
USA: USSN 690,483 filed 12/20/84 US 4,615,697 issued 10/07/86 Priority: WO 84US1827; USSN 551,295
USA: USSN 909,960 filed 09/22/86 US 4,795,436 issued 01/03/89 Priority: USSNs 551,295; 690,483
USA: USSN 287,464 filed 12/20/88 US 4,983,392 issued 01/08/91 Priority: USSNs 551,295; 690,483; 909,960
USA: USSN 638,184 filed 01/07/91 US 5,225,196 issued 07/06/93 Priority: USSNs 551,295; 690,483; 909,960;
287,464
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Canada: CA 495209 filed 11/13/85 CA 1260832 issued 09/26/89 Priority: USSN 690,483
PCT: WO 84US1827 filed 11/09/84 WO 8502092 issued 09/26/89 Priority: USSN 551,195
Designated States (national): AU, JP, US
Designated States (regional): AT, BE, CH, DE, FR, GB, LU, NL,
SE
Australia: AU 8436184 filed 11/09/84 AU 565354 issued 06/03/85 Priority: WO 84US1827; USSN 551,295
Japan: JP 84504250 filed 11/09/84 JP 61500612 issued 04/03/86 Priority: WO 84US1827; USSN 551,295
Europe: EP 84904286 A filed 11/09/84 EP 163696 A1 issued 11/25/92 Priority: WO 84US1827; USSN 551,295
Designated States: AT, BE,
CH, DE, FR, GB, LI, LU, NL, SE
Germany: EP 84904286 A filed 11/09/84 DE 3485995 issued 01/07/93 Priority: WO 84US1827; USSN 551,295
Austria: EP 84904286 A filed 11/09/84 AT 82667 issued 12/15/92 Priority: Wo 84US1827; USSN 551,295
Europe: EP 92105052 A filed 11/09/84 EP 501523 A1 issued 09/02/92 Priority: USSN 551,295
Unknown-divisional of EP 84904286
probably
</TABLE>
<PAGE> 23
Columbia Patents 2
<TABLE>
<CAPTION>
<S> <C> <C> <C>
* * *
* * *
* * *
* * *
Europe: EP 90300327 filed 01/11/90 EP 429156 issued 05/29/91 Priority: USSN 429,770
Europe: EP 90300340 filed 01/11/90 EP 431719 issued 06/12/91 Priority: USSN 429,755
Europe: EP 91901558 filed 10/24/90 EP 500807 issued 09/02/92 Priority: USSNs 429,770; 429,755
Designated States (same for all three): AT, BE, CH, DE, DK ES, FR, GB, GR,
IT, LI, LU, NL,SE
PCT: WO 90US6087 filed 10/24/90 WO 9106283 issued 05/16/91 Priority USSNs 429,770; 429,755
Designated States (national): AT, AU, BB, BG, BR, CA, CH, DE, DK,
ES, FI, GB, HU, JP, KP, KR, LK, LU,
MC, MG, MW, NL, NO, RO, SD, SE,
SU, US
Designated States (regional): AT, BE, CH, DE, DK, ES, FR, GB, GR,
IT, LU, NL, SE
Australia: AU 9170331 filed 10/24/90 AU 639,069 issued 07/15/93 Priority: 90US6087; USSNs 429,770;
429,755
Brazil: BR 907807 filed 10/24/90 BR 9007807 issued 09/29/92 Priority: 90US6087; USSNs 429,770;
429,755
Canada: CA 2072148 filed 10/24/90 CA 2072148 issued 05/01/91 Priority: USSNs 429,770; 429,755
Spain: EP 90300340 filed 01/11/90 ES 2050096 issued 05/16/94 Priority: USSN 429,755
Finland: FL 921932 filed 04/29/92 FI 9201932 issued 04/29/92 Priority: US6087; USSNs 429,770;
429,755
Hungary: HU 921465 filed 10/24/90 HU 9201465 issued 07/28/92 Priority: USSNs 429,770; 429,755
Israel: IL 96148 filed 10/29/90 IL 964148 issued 07/18/91 Priority: USSNs 429,770; 429,755
Japan: JP 91501917 filed 10/24/90 JP 5504338 issued 07/08/93 Priority: 90US6087; USSNs 429,770;
429,755
Monaco: MC 6087 filed 10/24/90 MC 2204 issued 11/26/94 Priority: USSNs 429,770; 429,755
Norway: NO 921686 filed 04/29/92 NO 9201686 issued 04/29/92 Priority: 90US6087; USSNs 429,770;
429,755
Portugal: PT 95729 filed 10/29/90 PT 95729 issued 09/13/91 Priority: USSNs 429,770; 429,755
S. Africa: ZA 908603 filed 10/26/90 ZA 9008603 issued 08/28/91 Priority: USSN 429,770
</TABLE>
[* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
<PAGE> 24
CONTAINER PATENT SUMMARY
<TABLE>
<CAPTION>
INSITE PATENTS Patent/Application Date Filed/Issued/Allowed
<C> <C> <C> <C>
1. LIQUID DROPLET DISPENSING APPARATUS 5,040,706 P 08/20/91 1
(UTILITY)
2. LIQUID DROPLET DISPENSING APPARATUS D322,313 P 12/10/91 1
(DESIGN)
</TABLE>
<PAGE> 25
STATUS OF LIQUID DROPLET DISPENSER FOR THE EYE (Design)
INVENTORS: Nicholas F. Talesfore
<TABLE>
<CAPTION>
COUNTRY SERIAL NO. FILING DATE PATENT NO. ISSUE DATE STATUS
<S> <C> <C> <C> <C> <C>
United States 07/366,029 June 14, 1989 D322,313 December 10, 1991 Issued
Australia 196490 June 21, 1990 111102 May 23, 1991 Issued
Benelux 6528600 February 28, 1990 1995800 February 28, 1990 Issued
Canada 0504902 April 5, 1990 67311 October 25, 1990 Issued
Switzerland 118158 March 1, 1990 118158 March 1, 1990 Issued
Germany M90016076 March 1, 1990 M90016076 December 20, 1990 Issued
Spain 122487 June 28, 1990 122487 February 22, 1991 Issued
France 901578 March 8, 1990 901578 March 8, 1990 Issued
United Kingdom 2005079 March 1, 1990 2005079 July 24, 1990 Issued
Ireland 29690 March 8, 1990 D8969 June 20, 1990 Issued
Israel 16630 June 20, 1990 16630 January 7, 1991 Issued
Italy 20837B90 March 16, 1990 58334 February 24, 1993 Issued
Japan 0086691990 March 14, 1990 849012 June 26, 1992 Issued
New Zealand 23332 June 16, 1990 23332 November 28, 1990 Issued
Phillipines D7713 October 2, 1990 D5176 November 5, 1991 Issued
Sweden 900452 March 1, 1990 49069 January 23, 1991 Issued
</TABLE>
<PAGE> 26
STATUS OF LIQUID DROPLET DISPENSER FOR THE EYE (Utility)
INVENTORS: Jeffrey P. Davis, Roy D. Archibald, Christa D. Nicholas,
S.K. Chandrasekaran
<TABLE>
<CAPTION>
COUNTRY SERIAL NO. FILING DATE PATENT NO. ISSUE DATE STATUS
<S> <C> <C> <C> <C> <C>
United States 07/324,793 March 17, 1989 5,040,706 August 20, 1991 Issued
Austria 90958158 March 2, 1990 E85761 February 17, 1993 Issued
Australia 5773390 June 21, 1990 619989 June 9, 1992 Issued
Belgium 90958158 March 2, 1990 0447496 February 17, 1993 Issued
Canada 2011734 March 8, 1990 2011734 May 24, 1994 Issued
Switzerland 909058158 March 2, 1990 0447496 February 17, 1993 Issued
Germany 90858158 March 2, 1990 69000356 February 17, 1993 Issued
Denmark 909058158 March 2, 1990 0447496 February 17, 1993 Issued
European Patent Convent 909058158 March 2, 1990 0447496 February 17, 1993 Issued
Spain 909058158 March 2, 1990 0447496 February 17, 1993 Issued
Spain 9002045 June 29, 1990 9002045 January 23, 1992 Issued
France 909058158 March 2, 1990 0447496 February 17, 1993 Issued
United Kingdom 90958158 March 2, 1990 0447496 February 17, 1993 Issued
Italy 909058158 March 2, 1990 0447496 February 17, 1993 Issued
Japan 2505442 March 2, 1990 1922786 April 7, 1995 Issued
Luxembourg 909058158 March 2, 1990 0447496 February 17, 1993 Issued
Netherlands 90958158 March 2, 1990 0447496 February 17, 1993 Issued
New Zealand 234140 June 19, 1990 234140 May 24, 1993 Issued
Phillipines 41324 October 5, 1990 26430 July 15, 1992 Issued
Sweden 909058158 March 2, 1990 0447496 February 17, 1993 Issued
</TABLE>
<PAGE> 27
SCHEDULE 2.2(a)
SERVICES
* Preparation of protocols governing stability testing of product and drug
substance.
* Develop specifications for drug substance and drug product (and components
thereof) and analytical assays methods validation.
* Stability testing of drug substance and product, and validation thereof.
* Response to FDA questions/comments on NDA filed by InSite relating to data
and information provided by B&P.
* Supervision of pre-approval inspection by FDA and provision of such other
regulatory support and assistance as is reasonably requested by InSite and
necessary to obtain FDA approval of the NDA.
* Validation of product manufacturing process before submission of NDA by
InSite.
* Manufacture of three (3) QA/QC-released lots for NDA registration purposes
and stability studies to support NDA submission and approval.
* Validation of sterilization of drug product.
<PAGE> 1
Exhibit 10.32
TIMOLOL DEVELOPMENT AGREEMENT
This Timolol Development Agreement (this "Agreement") is entered into
as of July 18, 1996 (the "Effective Date") by and between InSite Vision
Incorporated ("InSite"), a Delaware corporation, with its principal place of
business at 965 Atlantic Avenue, Alameda, California, and Bausch & Lomb
Pharmaceuticals, Inc. ("B&L"), a Delaware corporation, having offices at 8500
Hidden River Parkway, Tampa, Florida 33637.
WHEREAS, B&L and InSite desire to develop, produce and commercialize a
DuraSite formulation of Timolol (as such terms are defined below);
NOW THEREFORE, the parties agree as follows:
A. Definitions.
1. "Affiliate" shall mean all corporations or business entities
which directly or indirectly are controlled by, control or are under common
control with B&L or InSite, as the case may be.
2. "Allowable Development Costs" shall mean the following (as
determined in accordance with generally accepted accounting principles): (i) all
verifiable out-of-pocket costs directly incurred by InSite or B&L in connection
with the Collaborative Project and budgeted prior to being incurred by the Joint
Development Committee or, if not budgeted, agreed to by the Joint Development
Committee or the party that did not incur the cost (which agreement shall not be
unreasonably withheld); (ii) fixed and variable overhead costs, including costs
incurred for personnel, facilities, supplies and materials ("Labor Costs"),
which shall be reimbursed at the hourly rates set forth on Schedule A.2 hereto;
(iii) Manufacturing Costs, as hereinafter defined; and (iv) Regulatory Costs, as
hereinafter defined. Allowable Development Costs shall not include expenses
relating to corporate management and administration, sales, marketing, and
business development.
3. "Clinical Candidate" shall mean the prototypes developed by
InSite for the Timolol Product following acceptance of the Preclinical Models
for such product in accordance with Section B.6 below.
4. "Collaborative Project" means the joint research and development
collaboration of the parties described in Section B below and in the annual
workplans prepared by the Joint Development Committee.
5. "Commercially Launched" shall mean the initiation of sales of a
Timolol Product in a given country.
<PAGE> 2
6. The "Effective Date" shall mean the date this Agreement is
executed by the parties as set forth above.
7. "FDA" shall mean the United States Food and Drug Administration
or such other agency or instrumentality of the United States to which the
responsibilities and authority of the FDA are given or delegated from time to
time.
8. "IND" shall mean an Investigational New Drug Application filed
with the FDA, or an equivalent application filed with any foreign regulatory
authority.
9. "Joint Development Committee" means the committee comprised of
three (3) InSite representatives and three (3) B&L representatives appointed by
such respective party to design, direct, monitor and coordinate the research and
development activities with respect to the Timolol Product under the
Collaborative Project, and carry out such other duties as the parties shall
agree in writing from time to time.
10. "Know-How" shall mean all technology, formula, trade secrets,
practices, processes, chemicals, inventions, methods, data, skill, experience,
technology, test data, including but not limited to clinical and non-clinical
data, biological data, chemical data, pharmacological data, toxicological data,
assay data, control and manufacturing data, special ability and information,
including but not limited to improvements thereof, in each case relating to the
Timolol Product (and no other products or research and development).
11. "Major Markets" shall mean France, Germany, Italy, Spain, United
Kingdom, China India, Japan, South Korea, Taiwan, Canada and Mexico.
12. "Market Research" shall mean market research to determine, among
other things, market size, Timolol Product requirements and other appropriate
market data.
13. "Manufacturing Costs" shall mean B&L's standard cost of
manufacturing the Timolol Product, which shall include direct labor, direct and
variable materials (including scrap), freight, variable overhead and an
allocation of fixed overhead, yield losses which do not exceed a mutually agreed
to percentage of the quantity of Timolol Product manufactured by B&L; all
determined in accordance with generally accepted accounting principles applied
consistently and in accordance with existing and demonstrable B&L practices; but
provided that, in determining such allocation, B&L shall use the lowest and most
favorable method of allocation used by B&L for any product manufactured by B&L
at its facility in Tampa, Florida (in volumes similar to the quantity of Timolol
Product manufactured by B&L for InSite) exclusively for sale to, and
distribution by, an unrelated third party.
14. "NDA" shall mean a New Drug Application with the FDA or
equivalent foreign regulatory filing, as applicable.
2.
<PAGE> 3
15. "Net Sales" shall mean the amount invoiced by B&L, its
Affiliates and sublicensees to independent third parties for the sale of the
Timolol Product, less cash discounts and/or quantity discounts allowed;
chargebacks, Medicaid rebates and rebates made or taken in amounts customary in
the industry; credit for customer returns and allowances; charges for freight
handling and transportation as well as freight insurance which are separately
billed to B&L, and sales and use taxes and other similar taxes incurred by B&L
all as determined in accordance with B&L's standard accounting practices. Net
Sales shall not include product samples or clinical trial supplies.
16. "Patents" shall mean all of InSite's right, title and interest
in and to any worldwide patents or patent applications, any claim of which would
cover DuraSite(R) or its manufacture or use which are owned by or licensed to
InSite as of the Effective Date, as set forth on Exhibit A hereto, and any
continuations, continuations in part, divisions, re-examinations, re-issues or
extensions of any of the above described patents or patent applications.
17. A "Preclinical Model" shall mean the initial prototype developed
by InSite for the Timolol Product to determine the feasibility of the Product
Specifications as more particularly described in Section B.4.
18. "Pricing Approval" shall mean the determination of an allowable
resale price for the Timolol Product by the applicable governmental authority in
any country or situation in which commercial sales of such product are not
permitted until such Pricing Approval has been obtained.
19. "Product Specifications" shall mean the specifications developed
by the Joint Development Committee and agreed to by B&L and InSite for the
Timolol Product (which agreement shall not be unreasonably withheld) including,
but not limited to, a Target Performance and Characteristics Profile specifying
(i) the designated active ingredient, (ii) release characteristics, (iii)
duration of action, (iv) an expiration date for each batch, and (v) such other
or replacement specifications as the parties shall mutually agree from time to
time.
20. "Proprietary Information" shall mean all Know-How and all
technical and financial information (including forecasts) disclosed by one party
hereunder to the other. Such Proprietary Information shall be deemed the
confidential property of the disclosing party.
21. "Regulatory Approval" shall mean the receipt of all governmental
or regulatory approvals required, if any, for the sale of the Timolol Product in
a given country or jurisdiction in the Territory.
22. "Regulatory Costs" shall mean (i) reasonable out-of-pocket costs
incurred in connection with obtaining Regulatory Approval of the Timolol
Product, or as a result of inspections by regulatory agencies or compliance with
applicable regulations prior to obtaining approvals (collectively, "Regulatory
Compliance Costs"), and shall include the cost of any Phase
3.
<PAGE> 4
IV clinical studies required as a condition to approval or, in the reasonable
judgment of the Joint Development Committee necessary in order to commercially
exploit the Timolol Product, and (ii) an allocation of direct regulatory labor
costs (based on actual hours spent in connection with obtaining Regulatory
Approvals), all using a labor rate as set forth on Schedule A.2 attached hereto.
23. "Royalty Period" shall be determined on a country-by-country
basis and shall mean that period beginning on the date of first commercial sale
of the Timolol Product by B&L in any country and ending upon the later of the
expiration of all Patents in such country or * * * from the first commercial
sale of the Timolol Product in such country. [* INDICATES THAT MATERIAL HAS BEEN
OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
24. "Secondary Royalty Period" shall be determined on a country-by
country basis and shall mean that period beginning on the date the Royalty
Period for such country expires and ending upon the expiration of this
Agreement, including any extension thereof.
25. "Territory" shall mean anywhere in the world.
26. "Timolol" shall mean an ophthalmic formulation containing
timolol maleate as the active ingredient, along with such other active
ingredients, if any, as shall be developed by the parties during the term of the
Collaborative Project.
27. "Timolol Product" shall mean an ophthalmic formulation
containing Timolol in the DuraSite polymer suspension vehicle.
B. Product Development.
1. Joint Development Committee.
a. Appointment; Duties. InSite and B&L shall each promptly
appoint its representatives to the Joint Development Committee. Each of InSite
and B&L shall delegate the powers and authority to the Joint Development
Committee that each party deems desirable to allow the Joint Development
Committee to effectively coordinate and communicate the research and the
preclinical, clinical development efforts through Phase IV clinical trials and
the precommercialization pursuit of Regulatory Approvals under the Collaborative
Project; provided, that such Committee shall not have the power to enter into
contracts or otherwise bind either of the parties. Without limitation, the Joint
Development Committee shall be responsible for (i) establishing the Product
Specifications; (ii) coordinating the research and development activities with
respect to the Collaborative Project; (iii) preparing annual workplans for the
implementation of the Collaborative Project; (iv) preparing annual budgets for
the Collaborative Project in accordance with such workplans; (v) establishing,
at least quarterly, a budget for the
4.
<PAGE> 5
Collaborative Project; (vi) monitoring performance under the Collaborative
Project in relation to the annual workplans and expenditures in relation to the
corresponding budgets; (vii) determining the appropriate course of action if so
requested by either party pursuant to Section B.4 or 5; (viii) appointing the
party or parties to conduct the clinical development and testing of the Timolol
Product and the filing any IND therefor in the Territory; (ix) the determination
of which party or parties shall perform any task required under the
Collaborative Project not otherwise assigned hereunder; and (x) reviewing and
approving all Reconciliation Payments and other payments made pursuant to
Section C(1) below. Notwithstanding the fact that either B&L or InSite has been
specifically directed hereby to perform any act or control any activity in
connection with the Collaborative Project, the Joint Development Committee shall
have the right to review and comment on all acts and activities. Each party may
change any of its representatives at any time and from time to time by written
notice to the other party prior to appointing a new representative to the Joint
Development Committee. Any vacancy on the Joint Development Committee caused by
death, resignation, disability or otherwise shall be filled within thirty (30)
days following the occurrence of such vacancy.
b. Meetings of the Joint Development Committee. The Joint
Development Committee shall meet, during the term of this Agreement, at least
every three (3) months beginning as soon as possible after the Effective Date of
this Agreement, and thereafter upon request by either party, at sites which
shall be designated by each party's committee members in alternating sequence.
Meetings are expected to be held either at the offices of InSite or B&L or at
some other mutually agreeable site. Each party shall pay its own costs in
attending meetings of the Joint Development Committee. Executive officers from
InSite or B&L may attend such meetings at their discretion.
Once each year during the term of this Agreement, the Joint
Development Committee will conduct an annual review of the progress of the
Collaborative Project, will review and approve the projected, estimated
development plans, workplans and budgets for the next four (4) quarters and
objectives for the Collaborative Project for the following year, and will take
such mutually agreeable actions as may be reasonable to facilitate the
commercial success of the Collaborative Project.
c. Procedure. A hosting party shall designate a member to act as
Chairman of each Joint Development Committee meeting. Each such Chairman shall
be responsible for developing an agenda for the meeting to be chaired by him or
her and shall distribute such agenda no later than fourteen (14) days prior to
the scheduled meeting. The Chairman shall promptly, after each meeting, prepare
and distribute to the members minutes reflecting the discussions of the Joint
Development Committee.
d. Dispute Resolution. In the event that the Joint Development
Committee is unable to resolve any disagreement, either party shall use its best
efforts to resolve the dispute amicably based upon the efficient achievement of
the objectives of the Collaborative Project, and shall, prior to proceeding with
any dispute resolution mechanisms, conduct a
5.
<PAGE> 6
meeting of the President of B&L and the Chief Executive Officer of InSite to
attempt in good faith to resolve such dispute.
2. Joint Obligations.
a. Prioritization of Efforts; All Work Performed Through
Collaborative Project. InSite and B&L mutually agree that during the term of
this Agreement, each (i) shall use its commercially reasonable efforts to carry
out its responsibilities under the Collaborative Project; (ii) shall accord the
Collaborative Project at least as high a priority as its other past and present
research programs at similar stages with similar technical and commercial
potential; and (iii) shall cooperate with each other in the Collaborative
Project for the development of the Timolol Product. All work performed by either
party to formulate, develop and test (preclinically and clinically), obtain
Regulatory Approval and Pricing Approval, market and sell the Timolol Product
shall be performed through and shall be deemed to have been performed through
the Collaborative Project.
b. Exchange of Technical Information During Research Period. During
the term of this Agreement, InSite and B&L shall each (i) inform the Joint
Development Committee, to the extent they have not already done so, of such
information as is necessary or useful for the Joint Development Committee to
carry out its obligations under this Agreement ("Technical Information"); to
monitor the other party's progress; and to permit access at reasonable times and
with reasonable frequency to the relevant scientific, manufacturing,
preclinical, clinical, regulatory and other appropriate personnel of the other
party to accomplish such information exchange. Each party shall, at least at
each meeting of the Development Committee, (i) provide the other party with a
progress report on its efforts and results on the Collaborative Project and (ii)
inform the other party of any Technical Information obtained by them to the
extent and at the time required by this Section C.1.b.
3. Development of Timolol Product. InSite shall be responsible for,
subject to the oversight and ultimate control of the Joint Development
Committee, all activities regarding the preclinical development of the Timolol
Product, including without limitation, all formulation work, preclinical testing
and the manufacture of preclinical lots. B&L shall be responsible for, subject
to the oversight and ultimate control of the Joint Development Committee, all
activities regarding the application for Regulatory Approval and Pricing
Approval, the manufacture of clinical lots and commercial quantities and
commercialization of, the Timolol Product, including all process/validation
activities (e.g., the manufacture and validation of stability batches) required
in order to manufacture the Timolol Product pursuant to the approved NDA. The
clinical development and testing of the Timolol Product, including without
limitation, the preparation and submission of any IND in the Territory, shall be
controlled by the party or parties designated by the Joint Development
Committee. If the parties mutually agree, InSite and B&L shall, in mutual
cooperation with one another, establish a development plan for the Timolol
Product with respect to the development and regulatory approval of such product
on a worldwide basis (the "Development Plan"). In the event that both parties
are unable to agree on the Development Plan, B&L's President and InSite's Chief
Executive Officer shall meet within
6.
<PAGE> 7
ten (10) days to jointly determine the appropriate action. The parties shall use
their diligent efforts, through the Joint Development Committee, to coordinate
their respective development plans and to create and maintain a single worldwide
safety database and shall share the results of each party's respective clinical
trials in order to facilitate such development by both parties, including, when
feasible, elimination of duplicative development efforts. Each party shall
immediately inform the other at such time as it receives notice of any
governmental or regulatory approvals and disapprovals for the Timolol Product.
4. Development of Preclinical Model. If the Joint Development
Committee determines that a Preclinical Model is required, InSite shall use its
reasonable efforts consistent with the effort that would be expended by a
similarly situated company in light of the existing business opportunity, to
design and develop a Preclinical Model for the Timolol Product in conformance
with the Product Specifications therefor and the Joint Development Committee's
annual workplans submitted hereunder. If required, the parties will work closely
together in the development of the Preclinical Model and InSite shall use its
reasonable efforts, consistent with the effort that would be expended by a
similarly situated company in light of the existing business opportunity, to
complete such Preclinical Model. In the event that InSite is unable to complete
the Preclinical Model within * * * of the Effective Date, the Joint Development
Committee shall meet within ten (10) days of such date and in good faith discuss
the most appropriate means of proceeding. In the event the Joint Development
Committee cannot agree upon the appropriate means of proceeding within ten (10)
days of commencing such discussions, either party may request that InSite's
Chief Executive Officer and B&L's President determine the appropriate action by
mutual agreement. If such officers are unable come to an agreement within ten
(10) days, InSite may terminate this Agreement upon ten (10) days written
notice. Upon such termination, all rights to the Timolol Product and DuraSite,
including without limitation, all rights to the Patents and Know-How, shall
revert to Insite * * *. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
5. Acceptance of Preclinical Model. Upon completion of the
Preclinical Model, InSite will submit the Preclinical Model to B&L for its
evaluation. B&L shall have up to three (3) months from the date of submission of
the Preclinical Model to determine whether (a) to approve the Preclinical Model
as a Clinical Candidate; or (b) it desires InSite to further develop and
resubmit the Preclinical Model. In the event that B&L indicates that it desires
InSite to further develop and resubmit the Preclinical Model, the Joint
Development Committee shall meet within ten (10) days of such date and in good
faith discuss the most appropriate means of proceeding. In the event the Joint
Development Committee cannot agree upon the appropriate means of proceeding
within ten (10) days of commencing such discussions, either party may request
that InSite's Chief Executive Officer and B&L's President resolve the matter by
mutual agreement. If such officers are unable to resolve the matter within ten
(10) days, either party may terminate this Agreement upon ten (10) days written
notice. Upon such termination, all rights to Timolol, the Timolol Product and
DuraSite, including without limitation, all rights to the Patents and Know-How,
shall revert to Insite, * * * . B&L will periodically, and in no
7.
<PAGE> 8
event less than monthly, provide InSite with a summary of all of the test data
and other information collected during such evaluation process. [* INDICATES
THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
6. Commercial Development. Upon B&L's acceptance of the
Preclinical Model as the Clinical Candidate, B&L will use its reasonable efforts
consistent with the effort that would be expended by a similarly situated
company in light of the existing business opportunity, to proceed with (i)
completing, or arranging for the conduct and completion of, any clinical trials
required to be conducted in order to obtain approval of the NDA, including, but
not limited to, conducting all statistical analysis and preparation of any
registration summary documents required by any regulatory authority in each
country of the Territory requiring such an application as directed by the Joint
Development Committee, (ii) obtaining all Regulatory Approvals and Pricing
Approvals in the Territory as directed by the Joint Development Committee, and
(iii) following FDA approval of the NDA, manufacturing, commercialization,
marketing and sale of the Timolol Product in the Territory, and (iv) subject to
the terms and conditions of this Agreement, B&L shall use reasonable efforts to
from time to time perform Market Research deemed by B&L in its reasonable
discretion to be necessary or appropriate relating to the Timolol Product, or as
otherwise agreed and directed by the Joint Development Committee. To the extent
B&L undertakes Market Research, B&L will periodically, and in no event more than
sixty (60) days after receipt of Market Research, provide InSite with a summary
of all of the data and information collected through the Market Research, until
filings for Regulatory Approvals in the country subject to the Market Research
is made.
B&L shall promptly submit copies of all documentation related
to each application and registration (including regulatory approvals) for review
by InSite. The clinical development and testing of the Timolol Product,
including without limitation, the preparation and submission of any IND in the
Territory, shall be performed by the party or parties, and in the manner,
designated by the Joint Development Committee. B&L and InSite shall each
exercise reasonable efforts and diligence in conducting all activities with
respect to the Timolol Product in accordance with each party's business, legal,
medical and scientific judgment and normal practices and procedures for products
with similar technical and commercial potential.
7. Loss of Exclusive License in Major Markets. In the event
that B&L elects not to file applications for Regulatory Approval or Pricing
Approval for the Timolol Product in any Major Market within six (6) months of
the date the Timolol Product NDA is approved by the FDA, or fails to use
reasonable efforts to cause any such applications to be approved by the
necessary regulatory authorities, or fails to maintain such approvals, upon
thirty (30) days advanced written notice by InSite, the license granted by
InSite to B&L in Section D below shall no longer be exclusive in any country in
such Major Market. In such event, the royalty paid by B&L on sales of the
Timolol Product in countries within the Major Market for which the license is no
longer exclusive shall continue to be calculated in accordance with Section D
below; provided, however, * * *. [* INDICATES THAT MATERIAL HAS BEEN
8.
<PAGE> 9
OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
8. Use of and Access to Clinicals. Notwithstanding anything
else in this Agreement, InSite, may, at its option, at any time, obtain full
rights to use all documentation, approvals, information and data (including, but
not limited to, Market Research Summaries which shall be provided solely to the
Joint Development Committee until such time as the filing for Regulatory
Approval in the relevant country has been made) developed by B&L relating to the
Timolol Product and InSite shall have the right to fully use and cross reference
all submissions, approvals, information and data (collectively, the "Clinical
Materials").
9. Marketing Obligations. B&L, for itself and its Affiliates,
agrees:
a. unless otherwise requested by InSite and to the extent
practicable, to place on the outside of the Timolol Product packaging and on
promotional materials (in readable, non-obscured type that is of reasonable size
in light of the other names and notices thereon) the DuraSite mark or logo
designated by InSite, and any patent numbers or notices of InSite Patents which
cover the Timolol Product sold by B&L.
b. to use its reasonable efforts to diligently market,
sell, distribute and support the Timolol Product and to comply with good
business practices and all laws and regulations relevant to the regulatory
authorities in each country where the Timolol Product is sold, and to conduct
its business in a manner which favorably reflects upon the Timolol Product, B&L
and InSite.
c. to keep InSite informed as to any material problems
encountered with the Timolol Product and any resolutions arrived at for those
problems, and to communicate promptly to InSite any and all significant (in the
reasonable, good faith judgment of B&L) modifications, design changes or
improvements of the Timolol Product suggested by any customer, employee or
agent.
d. to maintain and provide InSite with such sales and other
information customarily maintained by B&L for purposes of monitoring sales
progress on a country-by-country basis.
e. to comply with all export laws and restrictions and
regulations of the Department of Commerce or other United States or foreign
agency or authority, including any laws or regulations relating to the export or
reexport of any Proprietary Information or Timolol Product or any direct product
thereof in violation of any such restrictions, laws or regulations, or, without
obtaining all necessary approvals and authorizations, to Afghanistan, the
People's Republic of China or any Group Q, S, W, Y or Z country specified in the
then current Supplement No. 1 to Section 770 of the U.S. Export Administration
Regulations (or any successor supplement or regulations).
9.
<PAGE> 10
f. to immediately notify InSite of any adverse or
unexpected reaction or results or any actual or potential government action
relevant to the Timolol Product.
g. to keep for the greater of thirty-six (36) months after
termination of this Agreement or the maximum period required by applicable law,
records of all Timolol Product sales and customers sufficient to adequately
administer a recall of the Timolol Product and to fully cooperate in any
decision to recall, retrieve and/or replace such Timolol Product.
C. Payment of Allowable Development Costs.
1. Responsibilities and Procedures. Except as otherwise provided
elsewhere in this Agreement, B&L and InSite shall bear equally all Allowable
Development Costs. Not later than the beginning of each quarter, the Joint
Development Committee shall establish a workplan and budget which shall allocate
the tasks to be performed and the projected costs to be incurred by each of the
parties during the next quarter. Each budget shall be prepared, and the
expenditures necessary to carry out the tasks to be performed shall be
estimated; provided that a budget and the estimated expenditures shall in no
event include any costs other than Allowable Development Costs. Each party shall
keep complete and accurate records (in accordance with generally accepted
accounting principles) reflecting all information necessary or useful in
determining its Allowable Development Costs incurred in each month and shall
submit a report detailing such expenses to the other party within twenty (20)
days of the end of each month (the "Report"). Within ten (10) days of the date
each Report is submitted, the party with the lower actual Allowable Development
Costs for the preceding month shall make a payment to the other in an amount
equal to * * *, InSite's Chief Executive Officer and B&L's President shall meet
to determine whether to continue the Collaborative Project, and if so, to
negotiate the terms of such continuation. Within twenty (20) days of the
termination of this Agreement for any reason, the parties shall each submit to
the other a Report setting forth such party's Allowable Development Costs
incurred since the end of the period to which the last Reconciliation Payment
pertained. Notwithstanding anything contained herein to the contrary, neither
party shall be required to reimburse the other for in excess of * * *. Neither
party shall incur costs under Section A.2(i) other than pursuant to its
customary and past practices throughout the term of this Agreement. Within ten
(10) days of the date such final Reports are submitted, * * * for such period
shall make a Reconciliation Payment to the other. [* INDICATES THAT MATERIAL HAS
BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE
24b-2.]
2. Payment Terms. All payments required under this Section C shall
be made in United States dollars via wire transfer of same day funds to such
account as shall be designated by the receiving party not later than five (5)
days prior to the date such payment is due.
10.
<PAGE> 11
3. Records and Audit Rights. Each party shall have the right to hire
an independent certified public accountant to inspect all the above required
records (who shall agree in writing to keep all information confidential except
as needed to disclose any discovered discrepancies); provided, such audit: (i)
is conducted during normal business hours, (ii) is conducted no more often than
twice per year (unless a discrepancy is discovered in favor of the auditing
party), and (iii) is conducted only after the audited party has been given
thirty (30) days prior notice. The auditing party shall bear the full cost and
expense of such audit, unless a discrepancy in excess of ten percent (10%) in
favor of the auditing party is discovered, in which event the audited party
shall bear the full cost and expense of such audit. Regardless of the amount of
discrepancy discovered, all discrepancies (and interest thereon) shall be
immediately due and payable.
D. License and Marketing Obligations.
1. Exclusive License. Subject to the terms and conditions of this
Agreement and during the term hereof, InSite hereby grants B&L an exclusive
product license or sublicense under the Patents and unpatented Know-How to
manufacture, have manufactured, use, import, sell and sublicense the Timolol
Product in the Territory.
2. Right to Sublicense. B&L shall make all payments to InSite on
behalf of its Affiliates and sublicensees. In addition, B&L will cause such
Affiliates or sublicensees to satisfy and honor all the obligations, limitations
and restrictions of or on B&L under this Agreement.
3. Royalties.
a. In consideration of the rights granted above, during the
Royalty Period in any country, B&L shall pay InSite royalties consisting of * *
* of Net Sales of the Timolol Product in such country. In the event that during
the Royalty Period for any country, any of InSite's Patents expire or are
invalidated and generic versions of the Timolol Product are being sold in such
country (and such generic sales are not in contravention of any governmental,
judicial or private regulatory rules, regulations, laws, orders or judgments in
effect in such country), the royalty rate paid by B&L shall be reduced to * * *
of Net Sales in such country. During the Secondary Royalty Period in any
country, B&L shall pay InSite the following royalties on Net Sales of the
Timolol Product: (i) * * * of Net Sales of the Timolol Product during the first
year of the Secondary Royalty Period; (ii) * * * of Net Sales of the Timolol
Product for the second year of the Secondary Royalty Period; and (iii) * * * of
Net Sales of the Timolol Product during the third year of the Secondary Period
and during any subsequent year in which this Agreement or any extension thereof
is in effect. In addition, during the Secondary Royalty Period in any country,
B&L shall pay InSite royalties of * * * of Net Sales of the Generic (as defined
below) unless B&L's sale of the Generic was pursuant to the filing of an ANDA
(as hereinafter defined) and without any cooperation from InSite whatsoever, in
which event B&L's obligation to pay a royalty of * * * shall terminate after the
passage of * * * years after the commencement of the Secondary Royalty Period.
Notwithstanding anything contained
11.
<PAGE> 12
herein to the contrary, B&L shall not be required to pay InSite any royalty on
Net Sales of the Generic after the end of the * * * year of the Secondary
Royalty Period. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
b. Notwithstanding anything in this Agreement to the contrary,
if any of the Patents expire or are invalidated, or if InSite is unable or
elects not to obtain a patent in such country, and generic versions of the
Timolol Product are being sold in such country (and such generic sales are not
in contravention of any governmental, judicial or private regulatory rules,
regulations, laws, orders or judgments in effect in such country), B&L shall
have the right to manufacture, use, sell and distribute a generic equivalent of
the Timolol Product by either submitting and receiving approval of an
abbreviated new drug application, and, with respect to countries other than the
United States, the equivalent abbreviated application ("ANDA") or obtaining from
InSite, if necessary, the right to supplement or amend any Regulatory Approval
to introduce a generic form of the Timolol Product (the "Generic"). If B&L
submits an ANDA for the Generic, it shall notify InSite in writing at least
ninety (90) days prior to the date of submission and InSite shall cooperate with
B&L in the preparation of such submission. Alternatively, if B&L elects to
submit a supplement to the NDA with respect to the Generic, B&L may request from
InSite, and InSite shall grant B&L, such specific rights to the Regulatory
Approval as are necessary to enable B&L to submit such supplement to introduce
and sell the Generic. If B&L elects to launch the Generic in any country prior
to the end of the Royalty Period in such country, in anticipation of the entry
of a third party generic competitor, the royalty due on sales of such Generic by
B&L shall be * * * of Net Sales until the end of the Royalty Period. InSite
hereby covenants not to sue B&L for patent infringement relating to sales of the
Generic which are in accordance with this Section D.3.1(b) during the Royalty
Period in such country. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
c. Sales of the Timolol Product between or among B&L, its
Affiliates and sublicensees shall not be subject to any royalty hereunder, and
in such cases royalties shall be calculated upon B&L or its Affiliates' or
sublicensees' Net Sales to an independent third party. B&L shall be responsible
for payment of any royalty accrued on Net Sales of the Timolol Product to such
independent third party through B&L's Affiliates or sublicenses. Royalties shall
accrue hereunder only once in respect of the same unit of the Timolol Product.
4. Timing of Royalty Payments; Records.
a. Within 45 days after the end of each calendar quarter, B&L shall
pay InSite the royalty payment due for such quarter in U.S. dollars. All royalty
payments shall be made via wire transfer of same day funds to such account as
shall be designated by InSite not
12.
<PAGE> 13
later than five (5) days prior to the date such payment is due. Such royalty
shall be converted, where applicable, from the currency of the country in which
the sale was made into U.S. dollars at the average month-end exchange rate for
such quarter as calculated based on the daily exchange rates published in The
Wall Street Journal.
b. Together with each quarterly royalty payment, B&L shall submit to
InSite a written accounting showing its computation of royalties due under this
Agreement for such quarter. Said accounting shall set forth gross sales, Net
Sales, the exchange rate applied, if any, and the total royalties due for the
quarter in question.
c. B&L shall keep full and accurate books and records reflecting the
sales of the Timolol Product and the data used in arriving at Net Sales and the
amount of royalties payable to InSite hereunder for no less than one year after
the end of each such quarter. B&L shall permit InSite, at InSite's expense, to
have such books and records examined by independent certified public accountants
retained by InSite and reasonably acceptable to B&L, during regular business
hours upon reasonable advance notice, but not later than one year following the
rendering of any such reports, accounting and payments, and no more often than
one time per year. Such independent accountants shall keep confidential any
information obtained during such examination and shall report to InSite only the
amounts of royalties which the independent accountant believes to be due and
payable hereunder.
E. Ownership.
1. Ownership. As between the parties, the parties shall have the
ownership rights set forth below:
a. (i) Subject to the rights of B&L set forth in Section E.1.c.,
InSite shall have all right, title and interest (including all patent rights
throughout the world) in any inventions, ideas or information made or conceived
or reduced to practice by either InSite or B&L in the course of development of
the Timolol Product hereunder which relate to the DuraSite delivery system (an
"Improvement"); and (ii) subject to the rights of InSite set forth in Section
E.1.d., B&L shall have all right, title and interest (including all patent
rights throughout the world) in any inventions, ideas or information made or
conceived or reduced to practice by either InSite or B&L in the course of
development of the Timolol Product hereunder which relate to Timolol. B&L shall
have the right to acquire a nonexclusive license to any such Improvement on
terms reasonably agreed to by the parties.
b. Provided, as to any inventions, ideas or proprietary
information made or conceived or reduced to practice by either party prior to
the Effective Date of this Agreement that relates directly or indirectly to the
Timolol Product ("Precollaborative Inventions"), InSite (if such
Precollaborative Invention is made, conceived or reduced to practice by B&L) or
B&L (if such Precollaborative Invention is made, conceived or reduced to
practice by InSite) shall have a paid-up, non-exclusive license to exploit such
invention, idea or information as it relates to and solely for use with the
Timolol Product and the Collaborative
13.
<PAGE> 14
Project. Provided, however, that neither party, as the case may be, shall use
such idea, invention or proprietary information for the development or
manufacture of products for any entity other than the other party or an assignee
permitted under this Agreement. Such non- exclusive license shall terminate upon
termination of this Agreement. Provided, that either party, as the case may be,
shall be free to use for any purpose, without any accounting to the other party,
any information of the types described below in Section F(i)-(iv).
c. Provided, as to any inventions, ideas or information conceived
or reduced to practice by InSite or the parties jointly in the course of
development of the Timolol Product in connection with this Agreement which
relates to Timolol and which may be exploited in a delivery system other than
DuraSite (which are provided for in Sections E.1.d. and E.1.e., below), B&L
shall have a perpetual, paid-up, exclusive right to exploit (by itself or with a
third party) such invention, idea or information as it relates to Timolol for
all purposes other than delivery through the DuraSite system.
Provided further, consistent with patent law and sound patent
practice, B&L in good faith will seek to separate from other patent applications
any applications for any invention claiming Timolol exclusive of DuraSite.
Provided, however, B&L shall not be required to take any action which would in
any way detract from, jeopardize or limit any patent application resulting from
the development of the Timolol Product under this Agreement. Provided, further,
in the event that a patent is issued the claims of which include Timolol but do
not include the DuraSite delivery system in any respect, B&L may obtain the
rights to an assignment of such patent and InSite shall facilitate such
assignment; in such case, B&L shall reimburse InSite for all costs and expenses
associated with the preparation and prosecution of such patent application.
d. Provided, as to any inventions, ideas or information conceived
or reduced to practice by B&L or the parties jointly in the course of
development of the Timolol Product in connection with this Agreement which
relates to the DuraSite delivery system, InSite shall have a perpetual, paid up
exclusive right to exploit (by itself or with a third party) such invention,
idea or information as it relates to the DuraSite delivery system.
Provided further, consistent with patent law and sound patent
practice, InSite in good faith will seek to separate from other patent
applications any applications for any invention relating to the DuraSite
delivery system. Provided, however, InSite shall not be required to take any
action which would in any way detract from, jeopardize or limit any patent
application resulting from the development of the Timolol Product under this
Agreement. Provided, further, in the event that a patent is issued the claims of
which include the DuraSite delivery system, but do not include other delivery
systems in any respect, InSite may obtain the rights to an assignment of such
patent and B&L shall facilitate such assignment; in such case, InSite shall
reimburse B&L for all costs and expenses associated with the preparation and
prosecution of such patent application.
14.
<PAGE> 15
e. Provided, as to any Joint Invention relating in whole or
in part to the DuraSite delivery system (with or without Timolol), InSite shall
have a perpetual, paid up exclusive right to exploit (by itself or with a third
party) such Joint Invention, idea or information as it relates to the DuraSite
delivery system (with or without Timolol).
2. Assignments. B&L and InSite hereby agree to make any
assignments necessary to accomplish the foregoing ownership provisions. In
addition, each party will have the exclusive right to, and, at its expense, the
other party agrees to assist in every proper way (including, without limitation,
becoming a nominal party) to evidence, record and perfect any such assignments
and to apply for and obtain recordation of and from time to time enforce,
maintain, and defend such proprietary right.
F. Confidentiality. InSite and B&L shall keep any Proprietary
Information or other business information provided or made available by the
other party or its Affiliates hereunder confidential, and neither InSite nor B&L
shall, without the prior written consent of the other party or its Affiliates,
as the case may be, use (except as expressly permitted by this Agreement or for
the purposes of this Agreement), or disclose to any third party, any Proprietary
Information or other business information provided or made available by the
other party or its Affiliates hereunder; provided, however, that the foregoing
shall not apply to information which the party receiving such information can
establish by written documentation to (i) have been publicly known at the time
of disclosure by the other party or its Affiliates, as the case may be, (ii)
have become publicly known, without fault on its part, subsequent to such
disclosure, (iii) have been otherwise known by it from a source (other than the
other party or its agents or Affiliates), lawfully having possession of such
information, or (iv) have been developed by it or its Affiliates independently
of the disclosure by the other party or its Affiliates.
The foregoing shall not preclude the disclosure of Proprietary
Information or other business information by InSite or B&L:
a. to its legal representatives, Affiliates, consultants,
outside contractors and (if it has the right to grant the license or sublicense)
its licensees and sublicensees, under like confidentiality obligations on the
part of the recipients, or
b. to the extent required by law or regulation, provided
that, to the extent reasonably possible, it shall give prompt written notice of
the proposed disclosure to the other party or its Affiliates, as the case may
be, so as to allow the other party or its Affiliates, as the case may be, an
opportunity to object to such requirement and, if applicable, assure that
confidential treatment will be accorded to such information, or
c. to the extent that such information is reasonably
required to be disclosed for the purpose of securing Regulatory Approval or
Payment Approval or other necessary governmental authorization for the clinical
testing or marketing of the Timolol Product or of prosecuting or defending
litigation.
15.
<PAGE> 16
Notwithstanding the foregoing, all Proprietary Information
related to a matter assigned to a party hereunder pursuant to Section E shall be
deemed Proprietary Information of the assignee and exceptions (i) through (iv)
set forth above will not be applicable thereto.
G. Limited Liability.
1. Incidental and Consequential Damages. NEITHER PARTY WILL BE
LIABLE UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT.
2. Limited Liability. NEITHER PARTY WILL BE LIABLE WITH RESPECT TO
ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER THEORY FOR COST OF PROCUREMENT OF SUBSTITUTE GOODS, SERVICES,
TECHNOLOGY OR RIGHTS OR FOR ANY AMOUNTS AGGREGATING IN EXCESS OF AMOUNTS PAID TO
IT HEREUNDER.
H. Term and Termination.
1. Term. Unless terminated earlier as provided below or elsewhere in
this Agreement, this Agreement shall have a term extending from the Effective
Date to the later of: (i) the expiration of the last Patent, or (ii) ten (10)
years from the date the Timolol Product was first commercially sold in the last
country in which it is commercially exploited. Provided, that B&L shall have the
right upon 180 days written notice to InSite, to renew the provisions of this
Agreement relating to the license granted hereunder, and the payment of
royalties therefor, for an unlimited number of five (5) year terms (each a
"Renewal Term"). B&L shall have the right to terminate any Renewal Term upon 180
days prior written notice to InSite.
2. Termination by Either Party for Cause. This Agreement may be
terminated by either party for cause immediately upon the occurrence of any of
the following events:
a. If the other ceases to do business, or otherwise terminates
its business operations;
b. If the other shall fail to promptly secure or renew any
license, registration, permit, authorization or approval which materially
affects the conduct of its business in the manner contemplated by this Agreement
in any Major Market Country or if any such license, registration, permit,
authorization or approval is revoked or suspended and not reinstated within
sixty (60) days (or if the applicable authority revoking or suspending such
license, registration, permit, authorization or approval does not, in its
ordinary course, reinstate such license, registration, permit, authorization or
approval within sixty (60) days, then the party shall exercise its diligent
efforts to have such license, registration, permit, authorization or approval
16.
<PAGE> 17
reinstated, and so long as such party is diligently pursuing reinstatement of
such license, registration, permit, authorization or approval, and it can
reasonably be assumed that such license, registration, permit, authorization or
approval will be reinstated in due course, then such failure to obtain
reinstatement will not be grounds for termination of this Agreement (this clause
applies solely on a country-by-country basis);
c. If the other materially breaches any material provision of
this Agreement and fails to cure such breach within sixty (60) days (twenty (20)
days in the case of a failure to pay any amounts due hereunder) of notice
describing the breach, provided, however, that if such a cure can be achieved
and the breaching party is diligently pursuing a cure, then such a breach shall
not be grounds for termination of this Agreement; or
d. If the other shall seek protection under any bankruptcy,
receivership, trust deed, creditors arrangement, or comparable proceeding, or if
any such proceeding is instituted against the other (and not dismissed within
one hundred and twenty (120) days).
3. Termination by Either Party for Other Reasons.
a. In the event that either party hereto assigns any part of this
Agreement, by operation of law or otherwise, except as specifically permitted
under this Agreement, it shall notify the other party hereto at least thirty
(30) days prior to such assignment, and the other party shall have thirty (30)
days from the date of such notice to terminate this Agreement, effective
immediately upon receipt of such notice. Failure to give such notice within such
thirty (30) day period shall be deemed to be a waiver of such party's
termination right under this Section H.3. with respect to such assignment.
b. B&L shall have the right to terminate this Agreement if, in the
reasonable discretion of B&L, the results of Phase II clinical testing of the
Timolol Product indicate that the FDA is unlikely to eventually approve the
Timolol Product for marketing and sale in the United States. In the event B&L
terminates this Agreement pursuant to this Section H.3.b., all rights to the
Timolol Product shall revert to InSite and Insite shall be free to fully
exploit, without approval or accounting, all of the information developed
hereunder with respect to the Timolol Product.
4. Effect of Termination. The following provisions shall survive the
termination of this Agreement, and any extensions thereof: Sections D.3 (to the
extent inventories of the Timolol Product in existence upon the date of
termination are sold in any country after termination of this Agreement), E, F,
H.4., I, and K.4, K.6, K.7, K.8, K.9 and K.13. Remedies for breaches will also
survive. Each party will promptly return all Proprietary Information of the
other (and all copies and abstracts thereof) that it is not entitled to use
under the surviving terms of this Agreement. Termination of this Agreement with
respect to the Timolol Product in a particular country shall have the same
effect as termination of this entire Agreement, but with respect to such country
only.
17.
<PAGE> 18
5. Termination Not Sole Remedy. Termination is not the sole
remedy under this Agreement and, whether or not termination is effected, all
other remedies will remain available.
I. Indemnity.
1. Joint Indemnification Obligations. Each party shall defend,
indemnify and hold the other party, any Affiliate of the other party, any
officer, director or employee of such other party or of any of its Affiliates
(individually, an "Exculpated Party") harmless from and against any claim,
action, damage, loss, liability or expense (including, without limitation,
reasonable attorneys' fees, settlement costs, litigation costs and costs on
appeal regardless of outcome) ("Claims") incurred or suffered by any Exculpated
Party due to: (a) the material breach of any covenant or agreement by such
party; (b) any material misrepresentation or breach of warranty made by such
party pursuant to this Agreement; (c) any claim arising from the gross
negligence or intentional misconduct of such party; or (d) the operations or
activities of such party's Affiliates, licensees or sublicensees in material
contravention of the requirements of this Agreement (and such party shall
terminate immediately any such sublicense where a breach of its obligations by a
sublicensee cannot be readily compensated through monetary damages). In
addition, B&L and InSite each specifically acknowledge and shall comply with
their respective indemnification obligations set forth in that certain
Manufacturing and Supply Agreement between B&L and InSite of even date herewith,
which indemnification obligations are hereby incorporated by reference herein.
2. Patent Indemnity. InSite shall defend and hold B&L and its
officers, directors, agents and employees harmless from any claim or liability
resulting from infringement by DuraSite of any United States patent issued as of
the date of approval of the Timolol Product by the FDA for sale in the United
States or, if no FDA approval is required, upon Commercial Launch in the United
States, provided InSite is promptly notified in writing of any and all threats,
claims and proceedings related thereto. InSite and B&L shall confer promptly (in
no event more than five (5) days after receipt by either party of such threat,
claim or proceeding) to discuss any such threats, claims or proceedings. InSite
shall have the exclusive authority to evaluate, defend and settle such patent
claim or litigation. After such discussions, InSite at its own expense and
option may then (i) settle or defend such claim, (ii) procure for B&L the right
to sell the Timolol Product, (iii) modify the Timolol Product to avoid
infringement, (iv) request B&L to cease further sale of the Timolol Product, or
(v) do any combination of the above. B&L shall provide InSite with assistance
and all relevant information necessary to pursue any such action.
3. Notice of Claim for Indemnification. The indemnities of Sections
I.1 and I.2 above shall not apply (i) if the indemnified party fails to give the
indemnifying party prompt notice of any Claim it receives and such failure
materially prejudices the indemnifying party, or (ii) unless the indemnifying
party is given the opportunity to approve any settlement, which approval shall
not be unreasonably withheld. Furthermore, the indemnifying party shall not be
liable for attorneys' fees or expenses of litigation of the indemnified party
unless the indemnified
18.
<PAGE> 19
party gives the indemnifying party the opportunity to assume control of the
defense or settlement. In addition, if the indemnifying party assumes such
control, it shall only be responsible for the legal fees and litigation expenses
of the attorneys it designates to assume control of the litigation. However, in
no event shall the indemnifying party assume control of the defense of the
indemnified party without the consent of the indemnified party (which consent
shall be given or not at its sole discretion).
J. Maintenance and Enforcement of Patents.
1. Maintenance and Enforcement. InSite shall undertake and shall
bear all costs of the prosecution and maintenance of the Patents in the
Territory. InSite shall employ reasonable efforts to keep B&L fully and timely
informed with respect to the course and conduct of patent application
prosecution matters within the scope of the Patents.
2. Termination of Prosecution or Maintenance. If InSite elects to
terminate either the prosecution or maintenance of any of the Patents prior to
the completion of normal prosecution before the patent examiner or prior to the
end of the term for maintenance, as the case may be, it will give B&L sixty (60)
days prior written notice of such election prior to any time limit on any action
due. B&L, upon receipt of such notice, shall have the option to undertake the
continuation of such prosecution or maintenance and InSite will transfer title
to B&L for such patent application or patent.
3. Infringement of Patents.
a. If either party shall become aware of any infringement or
threatened infringement of any Patents, including that contained in a notice
provided under the 1984 Act, then the party having such knowledge shall give
notice to the other within ten (10) days of becoming aware of such infringement
or threatened infringement.
b. InSite shall have the first right but not an obligation to
bring an enforcement action or to take any other reasonable steps to defend the
Patents against infringement and B&L shall in such event give all reasonable
assistance to InSite with respect to patent and legal questions. The costs of
such patent enforcement shall be borne by InSite. If InSite does not commence a
particular infringement action within ninety (90) days after it has received
notice of such infringement, B&L, after notifying InSite in writing, shall be
entitled to bring such infringement action or other appropriate action or claim
at its own expense but shall request in writing that InSite fund 50% of such
expenses. If InSite declines to pursue such action or fails to respond to B&L
within sixty (60) days after receipt of B&L's notice that it will do so, B&L
shall have the right to undertake such action and if InSite fails to fund 50% of
B&L's expenses in pursuing such action, then B&L shall be entitled to 100% of
all recoveries and B&L shall no longer be required to pay royalties to InSite
for the Timolol Product in the country in which such action was prosecuted.
Recovery from any settlement or judgement from any such action in the Territory
either pursued by InSite or co-funded by InSite shall go first to reimburse the
expenses of the parties and the remainder shall be shared by the parties on a
19.
<PAGE> 20
50%/50% basis. Notwithstanding the foregoing, if the monetary recovery is less
than the out-of-pocket expenses of InSite and B&L, reimbursement shall be on a
pro rata basis, based upon cost incurred. In any event, InSite and B&L shall
assist one another and reasonably cooperate in any such litigation at the
other's request without expense to the requesting party.
c. If InSite and B&L, after consultation with each other, elect
not to bring suit, individually or jointly, or if InSite and B&L, as the case
may be, are/is not able to stop such infringing activities in any country, the
applicable royalty for such country shall be adjusted as set forth in Section
B.4.a, if at all.
K. General.
1. Amendment and Waiver. Except as otherwise expressly provided
herein, any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived (either generally or in any particular
instance and either retroactively or prospectively) only with the written
consent of the parties. However, it is the intention of the parties that this
Agreement be controlling over additional or different terms of any purchase
order, confirmation, invoice or similar document, even if accepted in writing by
both parties, and that waivers and amendments shall be effective only if made by
non-pre-printed agreements clearly understood by both parties to be an amendment
or waiver. The failure of either party to enforce its rights under this
Agreement at any time for any period shall not be construed as a waiver of such
rights.
2. Dispute Resolution. Except that either party may seek equitable
relief from a court, if any dispute arises between InSite and B&L with respect
to the interpretation or breach of this Agreement, either party shall notify the
other of the dispute in writing and shall attempt to resolve the dispute through
discussions between InSite's Chief Executive Officer and B&L's President. If
such officers are unable to resolve the dispute within thirty (30) days after
the date written notice of the dispute is delivered, the parties shall seek to
resolve the dispute by initiating an Alternative Dispute Resolution ("ADR") in
which the Judicial Arbitration and Mediation Services ("JAMS"), Oakland,
California shall select the mediator. Such mediator shall hold a hearing to
resolve the dispute within sixty (60) days of his or her selection. The location
of the hearing shall be Oakland, California. Each party may be represented by
counsel and shall have the right to make a presentation of evidence at such
hearing. The mediator shall render a disposition on the proposed rulings as
expeditiously as possible but not later than fifteen (15) days after the
conclusion of the hearing. If the parties are unable to resolve the dispute, the
dispute may, upon the agreement of the parties, be settled by arbitration. If
the parties agree to arbitrate the dispute, such arbitration shall take place in
Alameda County, California in accordance with the then current commercial
arbitration rules of the American Arbitration Association and judgment upon the
award rendered by the Arbitrator(s) shall be binding on the parties and may be
entered by either party in the court or forum, state or federal, having
jurisdiction. Notwithstanding anything to the contrary nothing in this Agreement
shall be deemed as preventing either party from seeking injunctive relief (or
any other provisional remedy) from any court having jurisdiction over the
parties and the subject matter of the dispute
20.
<PAGE> 21
as necessary to protect either party's name, proprietary information, trade
secrets, know-how or any other proprietary rights. Further, in the event the
parties do not agree to arbitrate any dispute hereunder, either party may seek
such other remedy, at law or in equity, as it may deem necessary or appropriate.
3. Governing Law; Attorneys' Fees; Legal Actions. This Agreement shall
be governed by and construed under the laws of the State of California without
regard to conflicts of laws provisions thereof. In any action or proceeding to
enforce rights under this Agreement, including without limitation, any
arbitration, the prevailing party shall be entitled to recover costs and
attorneys' fees.
4. Headings. Headings and captions are for convenience only and are not
to be used in the interpretation of this Agreement.
5. Notices. Any and all notices or other communications required or
permitted under this Agreement must be in written form by facsimile
transmission, or mailed postage prepaid by first class certified or registered
mail, or sent by a nationally recognized express courier service or hand
delivered, and shall be deemed to have been made three (3) days after the date
of mailing, or on the next business day if sent by express courier service or on
the date of delivery or transmission if hand delivered or sent by facsimile to
the address set forth below or to such other address as either party may from
time to time specify in a notice to the other in the manner herein provided.
Bausch & Lomb Pharmaceuticals, Inc.
8500 Hidden River Parkway
Tampa, Florida 33637
Attn: President
with a copy to:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attn: General Counsel
InSite Vision Incorporated
965 Atlantic Avenue
Alameda, CA 94501
Attn: Chief Executive Officer
21.
<PAGE> 22
with a copy to:
Brobeck, Phleger & Harrison LLP
2200 Geng Road
Two Embarcadero Place
Palo Alto, CA 94303
Attn: J. Stephan Dolezalek, Esq.
6. Entire Agreement. This Agreement supersedes all proposals, oral or
written, all negotiations, conversations, or discussions between or among
parties relating to the subject matter of this Agreement and all past dealing or
industry custom.
7. Severability. If any provision of this Agreement is held to be
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
8. Relationship of Parties. The parties hereto expressly understand and
agree that the other is an independent contractor in the performance of each and
every part of this Agreement, and is solely responsible for all of its employees
and agents and its labor costs and expenses arising in connection therewith.
Nothing in this Agreement shall be construed to give either party the power or
authority to act for, bind or commit the other party.
9. Assignment. This Agreement and the rights hereunder are not
transferable or assignable, except as specifically permitted in this Agreement,
without the prior written consent of the parties hereto, except for rights to
payment and except to a person or entity who acquires all or substantially all
of the assets, capital stock or business of a party, whether by sale, merger or
otherwise.
10. Publicity, Press Releases and Terms of Agreement. Except to the
extent necessary under applicable laws or for ordinary marketing purposes, the
parties agree that (i) no press releases or other publicity relating to the
substance of the matters contained herein will be made without joint approval,
and (ii) the terms of this Agreement shall be treated by each party as
Proprietary Information. A press release announcing this Agreement will be
jointly developed and released by the parties.
11. Force Majeure. No liability or loss of rights hereunder shall
result to either party from delay or failure in performance (other than payment)
caused by force majeure, that is, circumstances beyond the reasonable control of
the party affected thereby, including, without limitation, acts of God, fire,
flood, war, government action, compliance with laws or regulations, strikes,
lockouts or other serious labor disputes, or shortage of or inability to obtain
material or equipment.
12. Remedies. Except as otherwise expressly stated in this Agreement,
the rights and remedies of a party set forth herein with respect to failure of
the other to comply with
22.
<PAGE> 23
the terms of this Agreement (including, without limitation, rights of full
termination of this Agreement) are not exclusive, the exercise thereof shall not
constitute an election of remedies and the aggrieved party shall in all events
be entitled to seek whatever additional remedies may be available in law or in
equity.
23.
<PAGE> 24
INSITE VISION INCORPORATED
By: /s/ S.K. CHANDRASEKARAN
----------------------------------
Name: S. Kumar Chandrasekaran
Title: Chief Executive Officer
BAUSCH & LOMB PHARMACEUTICALS, INC.
By: /s/ ALAN P. DOZIER
----------------------------------
Name: Alan P. Dozier
Title: President
24
<PAGE> 25
SCHEDULE A.2
HOURLY RATES
Development and Operations Personnel:
Systems Development/Formulations/Documentation *
Pharmacology/Toxicology *
Analytical Chemistry *
Regulatory, Clinical and QA/QC Personnel:
Quality Assurance *
Quality Control/Engineering/Validation *
Microbiology *
Clinical/Regulatory Affairs *
[* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
<PAGE> 26
EXHIBIT A
PilaSite Patents
<TABLE>
<CAPTION>
INSITE LICENSED PATENTS Patent/Application Date Filed/Issued/Allowed
<S> <C> <C> <C>
* J. ROBINSON, BIOADHESIVE COMPOSITION 4,615,697 P 10/07/86 1
AND TREATMENT THEREWITH 4,983,392 P 01/08/91 1
5,225,196 P 07/06/93 1
INSITE PATENTS
* OPHTHALMIC SUSPENSIONS 5,192,535 P 03/09/93 1
</TABLE>
26
<PAGE> 27
STATUS OF USSN 07/544,518 AND FOREIGN COUNTERPARTS
<TABLE>
<CAPTION>
COUNTRY SERIAL NO. FILING DATE PATENT NO. ISSUE DATE STATUS
<S> <C> <C> <C> <C> <C>
United States 07/544,518 June 27, 1990 5,192,535 March 9, 1993 Issued
* * * * * *
* * * * * *
New Zealand 238757 June 27, 1991 238,756 March 16, 1993 Issued
South Africa 914971 June 27, 1991 914971 September 30, 1992 Issued
* * * *
* * * *
* * * *
* * * *
</TABLE>
[* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
27
<PAGE> 28
SUMMARY
Columbia Patents 1
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
USA: USSN 551,295 filed 11/14/83 Abandoned
USA: USSN 690,483 filed 12/20/84 US 4,615,697 issued 10/07/86 Priority: WO 84US1827; USSN 551,295
USA: USSN 909,960 filed 09/22/86 US 4,795,436 issued 01/03/89 Priority: USSNs 551,295; 690,483
USA: USSN 287,464 filed 12/20/88 US 4,983,392 issued 01/08/91 Priority: USSNs 551,295; 690,483; 909,960
USA: USSN 638,184 filed 01/07/91 US 5,225,196 issued 07/06/93 Priority: USSNs 551,295; 690,483; 909,960;
287,464
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Canada: CA 495209 filed 11/13/85 CA 1260832 issued 09/26/89 Priority: USSN 690,483
PCT: WO 84US1827 filed 11/09/84 WO 8502092 issued 09/26/89 Priority: USSN 551,195
Designated States (national): AU, JP, US
Designated States (regional): AT, BE, CH, DE, FR, GB, LU,
NL, SE
Australia: AU 8436184 filed 11/09/84 AU 565354 issued 06/03/85 Priority: WO 84US1827; USSN 551,295
Japan: JP 84504250 filed 11/09/84 JP 61500612 issued 04/03/86 Priority: WO 84US1827; USSN 551,295
Europe: EP 84904286 A filed 11/09/84 EP 163696 A1 issued 11/25/92 Priority: WO 84US1827; USSN 551,295
Designated States: AT, BE, CH,
DE, FR, GB, LI, LU, NL, SE
Germany: EP 84904286 A filed 11/09/84 DE 3485995 issued 01/07/93 Priority: WO 84US1827; USSN 551,295
Austria: EP 84904286 A filed 11/09/84 AT 82667 issued 12/15/92 Priority: Wo 84US1827; USSN 551,295
Europe: EP 92105052 A filed 11/09/84 EP 501523 A1 issued 09/02/92 Priority: USSN 551,295
Unknown-divisional of EP 84904286
probably
</TABLE>
28
<PAGE> 29
Columbia Patents 2
<TABLE>
<CAPTION>
<S> <C> <C> <C>
* * *
* * *
* * *
* * *
Europe: EP 90300327 filed 01/11/90 EP 429156 issued 05/29/91 Priority: USSN 429,770
Europe: EP 90300340 filed 01/11/90 EP 431719 issued 06/12/91 Priority: USSN 429,755
Europe: EP 91901558 filed 10/24/90 EP 500807 issued 09/02/92 Priority: USSNs 429,770; 429,755
Designated States (same for all three): AT, BE, CH, DE, DK ES, FR, GB, GR,
IT, LI, LU, NL,SE
PCT: WO 90US6087 filed 10/24/90 WO 9106283 issued 05/16/91 Priority USSNs 429,770; 429,755
Designated States (national): AT, AU, BB, BG, BR, CA, CH, DE, DK,
ES, FI, GB, HU, JP, KP, KR, LK, LU,
MC, MG, MW, NL, NO, RO, SD, SE,
SU, US
Designated States (regional): AT, BE, CH, DE, DK, ES, FR, GB, GR,
IT, LU, NL, SE
Australia: AU 9170331 filed 10/24/90 AU 639,069 issued 07/15/93 Priority: 90US6087; USSNs 429,770;
429,755
Brazil: BR 907807 filed 10/24/90 BR 9007807 issued 09/29/92 Priority: 90US6087; USSNs 429,770;
429,755
Canada: CA 2072148 filed 10/24/90 CA 2072148 issued 05/01/91 Priority: USSNs 429,770; 429,755
Spain: EP 90300340 filed 01/11/90 ES 2050096 issued 05/16/94 Priority: USSN 429,755
Finland: FL 921932 filed 04/29/92 FI 9201932 issued 04/29/92 Priority: US6087; USSNs 429,770;
429,755
Hungary: HU 921465 filed 10/24/90 HU 9201465 issued 07/28/92 Priority: USSNs 429,770; 429,755
Israel: IL 96148 filed 10/29/90 IL 964148 issued 07/18/91 Priority: USSNs 429,770; 429,755
</TABLE>
29
<PAGE> 30
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Japan: JP 91501917 filed 10/24/90 JP 5504338 issued 07/08/93 Priority: 90US6087; USSNs 429,770;
429,755
Monaco: MC 6087 filed 10/24/90 MC 2204 issued 11/26/94 Priority: USSNs 429,770; 429,755
Norway: NO 921686 filed 04/29/92 NO 9201686 issued 04/29/92 Priority: 90US6087; USSNs 429,770;
429,755
Portugal: PT 95729 filed 10/29/90 PT 95729 issued 09/13/91 Priority: USSNs 429,770; 429,755
S. Africa: ZA 908603 filed 10/26/90 ZA 9008603 issued 08/28/91 Priority: USSN 429,770
</TABLE>
[* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
30
<PAGE> 1
EXHIBIT 10.33
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of July 18, 1996 (the
"Effective Date"), by and between InSite Vision Incorporated, a Delaware
corporation (the "Company"), and Bausch & Lomb Pharmaceuticals, Inc., a Delaware
corporation (the "Investor").
A. The Company and Investor have entered into the following agreements
of even date herewith: (i) Timolol Development Agreement, (ii) PilaSite License
Agreement, and (iii) Contract Manufacturing Agreement (collectively the
"Ancillary Agreements"), pursuant to which the Company and Investor have
provided for the development and manufacture of products for the treatment of
various ophthalmic conditions;
B. In connection with the execution and delivery of the Ancillary
Agreements, the Investor desires to purchase, and the Company desires to sell,
shares of the Company's Common Stock (the "Common Stock") upon the terms and
conditions hereinafter described.
In consideration of the mutual covenants and conditions contained
herein, the parties agree as follows:
1. Purchase and Sale of Shares.
1.1 Sale and Issuance of Shares.
(a) First Closing. The First Closing shall take place on the
date designated in writing by Investor to the Company not later than 3:00 P.M.
E.S.T. on the business day immediately preceding the First Closing Date, which
date shall not be sooner than the sixth business day following the Effective
Date nor later than the Twenty-fifth business day following the Effective Date.
Subject to the terms and conditions of this Agreement, Investor agrees to
purchase at the First Closing and the Company agrees to sell and issue to the
Investor at the First Closing, for a purchase price of $1,000,000 (the "First
Purchase Price"), that number of shares of Common Stock (the "First Closing
Shares" and together with the Second Closing Shares as defined below, the
"Shares") as is determined by dividing $1,000,000 by the closing price (or in
the event there is no such closing price, the average of the bid and ask price)
per share for the Common Stock as quoted on the Nasdaq National Market System,
or such national securities exchange or over-the-counter trading system on which
the Common Stock is traded at such time, on the business day immediately
preceding the First Closing Date.
(b) Second Closing. The Second Closing shall take place on the
first anniversary of the First Closing Date. Subject to the terms and conditions
of this Agreement, Investor agrees to purchase at the Second Closing and the
Company agrees to sell and issue to the Investor at the Second Closing, for a
purchase price of $1,000,000 (the
<PAGE> 2
"Second Purchase Price"), that number of shares of Common Stock (the "Second
Closing Shares") as is determined by dividing $1,000,000 by the closing price
(or in the event there is no such closing price, the average of the bid and ask
price) per share for the Common Stock as quoted on the Nasdaq National Market
System, or such national securities exchange or over-the-counter trading system
on which the Common Stock is traded at such time, for the business day
immediately preceding the date of the second closing (the "Second Closing
Date").
1.2 Closing. The consummation of the purchase and sale of the
Shares shall take place at the offices of Brobeck, Phleger & Harrison LLP, 2200
Geng Road, Palo Alto, CA 94303 at 10:00 a.m. (Pacific Time), on the First and
Second Closing Dates respectively, or at such other time and place as the
Company and the Investor mutually agree upon orally or in writing. At each
Closing, Investor will make payment for the First Closing Shares or Second
Closing Shares, respectively, by wire transfer payable to the Company in the
amount of the First Purchase Price and the Second Purchase Price, respectively.
The Company shall deliver to the Investor a certificate representing the First
Closing Shares or the Second Closing Shares, respectively, within three (3)
business days of the date of each respective closing; provided, however, that
until delivery of such certificates, Investor shall have all the rights and
incidence of ownership of the First Closing Shares or Second Closing Shares, as
the case may be, as if such certificates were issued on each respective closing
date.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that, except as set forth on a Schedule
of Exceptions attached hereto as Exhibit A, specifically identifying the
relevant subparagraph hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder:
2.1 Organization; Good Standing; Qualification. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own and operate its properties and assets and to carry on its business as now
conducted and as proposed to be conducted, to execute and deliver this
Agreement, to issue and sell the Shares, and to carry out the provisions of this
Agreement.
2.2 Authorization. All corporate action on the part of the Company,
its officers, directors, and stockholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all obligations of
the Company hereunder and the authorization, issuance (or reservation for
issuance), sale, and delivery of the Shares has been taken or will be taken
prior to the Closing, and this Agreement constitutes the valid and legally
binding obligation of the Company, enforceable in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
2.
<PAGE> 3
2.3 Valid Issuance of Common Stock. The Shares that are being
purchased by the Investor hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and,
based in part upon the representations of the Investor in this Agreement, will
be issued in compliance with all applicable federal and state securities laws
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and under applicable state and federal securities laws.
2.4 Governmental Consents. No consent, approval, qualification,
order or authorization of, or filing with, any local, state or federal
governmental authority is required on the part of the Company in connection with
the Company's valid execution, delivery, or performance of this Agreement, the
offer, sale or issuance of the Shares by the Company, except such filings as
have been or will be made prior to any closing provided for hereunder, except
that any notices of sale required to be filed with the Securities and Exchange
Commission ("SEC") under Regulation D of the Securities Act of 1933, as amended
(the "Act"), or such post-closing filings as may be required under applicable
state securities laws, which will be timely filed within the applicable periods
therefor.
2.5 Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company which questions the validity of this Agreement, or the right
of the Company to enter into it, or to consummate the transactions contemplated
hereby, or which might result, either individually or in the aggregate, in any
material adverse changes in the assets, condition, affairs or prospects of the
Company, financially or otherwise, or any change in the current equity ownership
of the Company, nor is the Company aware that there is any basis for the
foregoing. The foregoing includes, without limitation, actions pending or
threatened involving the prior employment of any of the Company's employees,
their use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers. The Company is not a
party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or which the
Company currently intends to initiate.
2.6 Compliance with Other Instruments. The Company is not in
violation or default of any provisions of its Restated Certificate of
Incorporation or Bylaws or of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound or, to its knowledge, of
any provision of federal or state statute, rule or regulation applicable to the
Company. The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation,
3.
<PAGE> 4
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company, its business or operations
or any of its assets or properties, except that the foregoing may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and other
laws of general application affecting enforcement of creditors' rights
generally, and (ii) laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
2.7 Filings. The Company has timely filed all reports, registration
statements and other documents required to be filed by it with the SEC under the
Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including, without limitation, the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1996, Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 and Annual Report to Stockholders for the
fiscal year ended December 31, 1995. As of its filing date and as of the date
hereof, no such report or statement contained or contains any untrue statement
of a material fact or omitted or omits to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
2.8 Disclosure. This Agreement and the Schedules and Exhibits
hereto do not contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements mad herein or therein not
misleading in light of the circumstances under which they were made.
3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company that:
3.1 Authorization. This Agreement constitutes its valid and legally
binding obligation, enforceable in accordance with its terms and that Investor
has full power and authority to enter into this Agreement.
3.2 Organization. The Investor is a corporation duly organized and
validly existing and in good standing under the laws of Delaware, with all
requisite power and authority to own its properties and conduct its business as
now being conducted.
3.3 Purchase Entirely for Own Account. This Agreement is made with
the Investor in reliance upon Investor's representations to the Company, which
by Investor's execution of this Agreement it hereby confirms, that the Shares to
be received by Investor will be acquired for investment for Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same.
Investor does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Shares.
4.
<PAGE> 5
3.4 Disclosure of Information. Investor acknowledges that it has
received all the information it has requested or, based upon the Company's
representations herein contained, considers necessary or appropriate for
deciding whether to purchase the Shares. Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the Company and the terms and conditions of the offering of the Shares
and to obtain any additional information necessary to verify the accuracy of the
information given to Investor.
3.5 Restricted Securities. Investor understands that the Shares are
"restricted securities" under the Act as they are being acquired from the
Company in a transaction not involving a public offering and that under the Act
and the rules and regulations thereunder such securities may be resold without
registration under the Act, only in certain limited circumstances. In this
connection, the Investor represents that it is familiar with Rule 144
promulgated under the Act, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
3.6 Accredited Investor. Investor is an "accredited investor" within
the meaning of paragraph (a) of Rule 501 of Regulation D promulgated under the
Act and was not organized for the specific purpose of acquiring the Shares.
Investor has sufficient knowledge and experience to analyze the Company so as to
be able to evaluate the risks and merits of its investment in the Company and is
financially able to bear the risks thereof.
3.7 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Shares unless:
(a) the disposition is made as part of a firmly underwritten
public offering of the Company's Common Stock; or
(b) Except where the disposition is made pursuant to Rule 144
under the Act, until the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 3 and Section 7 hereof, and the (i) Investor
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a detailed statement of the circumstances surrounding
the proposed disposition, and (ii) if reasonably requested by the Company, the
Investor shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will be exempt from the
registration requirements of Section 5 of the Act. It is agreed that the
Company's own legal counsel will provide any opinions of counsel necessary to
consummate any transactions made pursuant to Rule 144 or any state securities
laws.
3.8 Legends. It is understood that the certificates evidencing the
Shares may bear one or all of the following legends:
5.
<PAGE> 6
(a) "These securities have not been registered under the
Securities Act of 1933, as amended, or any State Securities law and such
securities may not be sold, offered for sale, pledged or hypothecated in the
absence of a registration statement in effect with respect to the securities
under such Act or an opinion of counsel satisfactory to the Company that such
registration is not required or unless sold pursuant to Rule 144 of such Act."
(b) Any legend required by the laws of the State of Florida or
Delaware or any other applicable state securities law.
3.9 Compliance with Law. Investor is not a party to any agreement
or instrument, or subject to any charter or other corporate restriction or, to
its actual knowledge, any judgment, order, decree, law, ordinance, regulation or
other governmental restriction which would prevent or impede, or be breached or
violated by, the transactions contemplated in this Agreement.
4. Florida Commissioner of Corporations. The Shares have not been
registered under the Securities Act of 1933, as amended, or the securities or
blue sky laws of any state, including the State of Florida, and may not be
transferred or resold without (a) registration under the Securities Act and
applicable state registration or qualifications, unless in the opinion of
counsel to the Company an exemption from registration under applicable federal
and state securities laws is then available and (b) compliance with all other
restrictions on transfer contained in this Agreement and applicable laws.
5. Conditions of Investor's Obligations at First Closing and Second
Closing. The obligation of the Investor to purchase and pay for the Shares to be
purchased at each of the First Closing and Second Closing, as the case may be,
is subject to the fulfillment, or Investor's waiver, on or before each such
Closing, of each of the following conditions:
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of such
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
5.2 Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement and the
Ancillary Agreements that are required to be performed or complied with by it on
or before such Closing.
5.3 Compliance Certificate. The President of the Company shall have
delivered to the Investor a certificate certifying that the conditions specified
in Sections 5.1, 5.2 and 5.4 have been fulfilled and stating that there shall
have been no adverse change in the business, affairs, properties, assets or
conditions of the Company since the Effective Date, except as otherwise
disclosed in any report or other document filed by the Company
6.
<PAGE> 7
with the SEC under the Act or the Exchange Act from the date hereof through the
date of such Closing.
5.4 Qualifications. There shall not be in effect any law, rule or
regulation prohibiting or restricting the sale and issuance of the Shares or
requiring any consent or approval of any person or governmental entity which
shall not have been obtained prior to the issuance of the Shares in such
Closing.
5.5 Collaborative and License Agreements. With respect to the First
Closing only, the Company and the Investor shall have executed and delivered
each of the Ancillary Agreements.
5.6 Proceedings and Documents. All corporate or other proceedings
in connection with the transactions contemplated at such Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investor and Investor's counsel and the Investor shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
5.7 Issuance of Shares. The Company shall have taken all steps
necessary to instruct its transfer agent to issue a share certificate or
certificates representing the Shares issued in such Closing.
6. Conditions of the Company's Obligations at the First Closing and
Second Closing. The obligations of the Company to sell and issue the Shares to
the Investor at each of the First Closing and the Second Closing, as the case
may be, is subject to the fulfillment, or the Company's waiver, on or before
each such Closing, of each of the following conditions:
6.1 Representations and Warranties. The representations and
warranties of Investor contained in Section 3 shall be true on and as of such
Closing with the same effect as though such representations and warranties had
been made on and as of such Closing.
6.2 Payment of Purchase Price. The Investor shall have delivered
the First Purchase Price (with respect to the First Closing), and the Second
Purchase Price (with respect to the Second Closing).
6.3 Compliance Certificate. The President, or other authorized
officer, of the Investor shall have delivered to Company a certificate
certifying that the conditions set forth in Sections 6.1, 6.4 and 6.5 have been
fulfilled.
6.4 Performance. Buyer shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement and the
Ancillary
7.
<PAGE> 8
Agreements that are required to be performed or complied with by it on or before
such Closing.
6.5 Qualifications. There shall not be in effect any law, rule or
regulation prohibiting or restricting the sale and issuance of the Shares or
requiring any consent or approval of any person or governmental entity which
shall not have been obtained prior to the issuance of the Shares in such
Closing.
6.6 Collaborative and License Agreements. With respect to the First
Closing only, the Company and the Investor shall have executed and delivered the
Ancillary Agreements.
7. Covenants of the Investor.
7.1 Standstill Provisions. Commencing as of the First Closing and
for a period of five (5) years thereafter, Investor (including all Affiliates or
agents of Investor) shall not acquire beneficial ownership of any shares of
Common Stock, any securities convertible into or exchangeable for Common Stock,
or any other right to acquire Common Stock, except by way of stock dividends or
other distributions or offerings made available to holders of Common Stock
generally, from the Company or any other person or entity, without the prior
written consent of the Company, which consent may be withheld in the Company's
sole discretion, if such acquisition should cause Investor (including all
Affiliates of Investor) to beneficially own more than 9.99% of the Company's
outstanding voting stock (assuming the full conversion and exercise of all
convertible or exercisable securities of the Company); provided, however, that
in no event shall any reduction in the outstanding shares of the Company's
capital stock (or rights or options), cause a violation of this Section 7.1; and
provided further that the foregoing prohibition and requirement for consent will
not apply in the event a third party acquires more than 9.99% of the Company's
outstanding voting stock (assuming the full conversion and exercise of all
convertible or exercisable securities of the Company) either (i) in a
transaction or series of transactions to which the Company's Board of Directors
does not consent, or (ii) such third party, upon such acquisition, indicates in
a filing with the Securities and Exchange Commission ("SEC") an intent to
acquire control of the Company.
7.2 Transfer Restriction. Investor hereby agrees that during the
time periods (i) commencing as of the First Closing and ending six (6) months
following the Second Closing; and (ii) commencing again as of such date or dates
that any registration statement registering shares of the Company in an
underwritten public offering is filed with the SEC under the Act and ending
ninety (90) days after such registration statement is declared effective by the
SEC, if the underwriter or underwriters in such offering request that all the
Company's stockholders holding at least the number of shares held by the
Investor execute a "lock-up agreement" as a condition precedent to such
offering, neither it nor any Affiliate shall, directly or indirectly, sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or
8.
<PAGE> 9
dispose of (other than to donees who agree to be similarly bound) any of the
Shares, except any of the Shares which are included in any such registration
statement; provided, however, that the above transfer restrictions shall not
preclude Investor or its Affiliates from selling the Shares in any tender offer
commenced after the First Closing. In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to the Shares
held by the Investor or any Affiliate (and the Shares of every other person
subject to the foregoing restriction) until such time as Investor and any donee
bound by the terms of this Agreement have disposed of all Shares or all Shares
have been registered under the Act. For purposes of Sections 7.1 and 7.2, the
term "Affiliate" shall mean all corporations or business entities which directly
or indirectly are controlled by, control, or are under common control with
Investor.
7.3 Voting Agreement. Investor agrees that it shall, so long as it
holds shares of Common Stock, vote such shares with respect to any proposed
merger or combination or sale of all or substantially all of the assets of the
Company, with or to any other entity in the same proportion as the shares voted
in favor of such transaction by other parties who are not themselves a party to
any such merger, combination or asset sale; provided, however, that the
foregoing voting requirement shall not apply to Investor in any transaction
which is not approved by the Company's Board of Directors or in the event of a
proposed merger or combination or sale of substantially all of the assets of the
Company to a competitor of Investor.
8. Covenants of the Company.
8.1 Trading Market; Reports. The Company shall ensure that its
Common Stock is listed and eligible for trading on the Nasdaq Stock Market or a
national securities exchange until such time as the Investor has resold all of
the Shares purchased hereunder. In the event the Company breaches the terms of
this Section 8.1 and, but for such breach, the Investor would be able to sell
the Shares pursuant to Rule 144 under the Securities Act of 1933, as amended
(the "Act") and the terms of Section 7.2 hereof, * * * [* INDICATES THAT
MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
8.2 Registration Rights.
(a) In the event that upon the later to occur of (i) the first
commercial sale of PilaSite in the United States; or (ii) the second anniversary
of the First Closing, the Investor cannot sell, or otherwise transfer the
Shares, after exercising diligent efforts for six (6) months, pursuant to Rule
144 promulgated under the Act and a similar exemption under applicable state
securities laws, the Investor shall have the right (y) to require the Company,
at the Company's expense (with the exception of any legal or advisory
fees or expenses incurred by the Investor in connection with such registration),
to register
9.
<PAGE> 10
the Shares and any securities issued to the Investor by way of a stock split,
dividend or any other distribution with respect to or in exchange for, or in
replacement of, the Shares (collectively, the "Registrable Securities") under
the Act and (z) to piggyback the registration of the Registrable Securities on a
registration statement otherwise filed by the Company, as provided herein.
(b) If the Investor exercises its registration rights set forth in
Section 8.2(a)(y), the Company shall prepare and file with the Securities and
Exchange Commission ("SEC") not later than sixty (60) days following notice of
such exercise a registration statement on an appropriate form (the "Registration
Statement") for registration under the Act of the resale of the Registrable
Securities and shall take all reasonable steps necessary to have such
Registration Statement declared effective. The Investor shall furnish the
Company with all information reasonably requested by the Company (including, for
example, information regarding the Investor's intended method of disposition of
the Registrable Securities) for inclusion in the Registration Statement and
response to SEC comments thereon. The Company shall use its best efforts to
qualify the Registrable Securities under the state securities or "Blue Sky" laws
of such jurisdictions as the Investor shall reasonably request. The Company
shall use its best efforts to have the Registration Statement declared
effective, and, upon such effectiveness, shall maintain the effectiveness of the
Registration Statement, until the earlier of (i) date on which all Registrable
Securities have been resold pursuant to the Registration Statement; or (ii) such
time as the Registrable Securities may be resold without restriction pursuant to
Rule 144 under the Act.
(c) If (but without any obligation to do so) the Company proposes
to register any of its stock or other securities under the Act in connection
with the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
company stock plan, a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities or
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities which are also being registered),
the Company shall, at such time, promptly give Investor notice of such
registration. Upon the written request of Investor given within ten (10) days of
the mailing of such notice and the entering into by the Investor of an
Underwriting Agreement with the underwriter for such offering covering all
Registrable Securities, the Company shall include in the Company's registration
statement under the Act all of the Registrable Securities that Investor has
requested to be registered; provided, however, that nothing in this Section 8.2
shall prevent the Company from at any time abandoning or delaying any such
registration without any obligation to Investor and provided, further, however,
that if the underwriter advises the Company that marketing factors require a
limitation on the number of shares to be underwritten, the underwriter may
exclude all Registrable Securities from, or limit the number of Registrable
Securities to be included in, the registration and underwriting.
10.
<PAGE> 11
8.3 * * * [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
9. Miscellaneous.
9.1 Survival of Warranties. The warranties, representations and
covenants of the Company and the Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement, the First
Closing and the Second Closing and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the Investor
or the Company.
9.2 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any of the Shares sold hereunder). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
9.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the following
addresses or at such other address as such party may designate by ten (10) days'
advance written notice to the other parties:
11.
<PAGE> 12
If to the Company:
InSite Vision Incorporated
965 Atlantic Avenue
Alameda, California 94501
Attn: President
With a copy to:
J. Stephan Dolezalek, Esq.
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303
If to the Investor:
Bausch & Lomb Pharmaceuticals, Inc.
8500 Hidden River Parkway
Tampa, Florida 33637
Attn: President
With a copy to:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attn: General Counsel
9.7 Expenses. Irrespective of whether either the First Closing or
the Second Closing is effected, the Company shall pay its own and Investor shall
pay its own costs and expenses with respect to the negotiation, execution,
delivery and performance of this Agreement and the Ancillary Agreements. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
9.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investor.
9.9 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this
12.
<PAGE> 13
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: INVESTOR:
INSITE VISION INCORPORATED, BAUSCH & LOMB
a Delaware corporation PHARMACEUTICALS, INC.,
a Delaware corporation
By: /s/ S.K. CHANDRASEKARAN By: /s/ ALAN P. DOZIER
----------------------------- --------------------------------
Title: Chief Executive Officer Title: President
13.
