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EXHIBIT 10.13
COLLABORATION, DEVELOPMENT AND SUPPLY AGREEMENT
BETWEEN
ATRIX LABORATORIES, INC.
AND
GENEVA PHARMACEUTICALS, INC.
DATED: AUGUST 28, 2000
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ARTICLE I DEFINITIONS....................................................................................1
ARTICLE II COLLABORATION.................................................................................6
Section 2.01. Objectives............................................................................6
Section 2.02. Development Program...................................................................6
Section 2.03. Atrix Obligations.....................................................................6
Section 2.04. Geneva Obligations....................................................................6
Section 2.05. Availability of Resources; Cooperation................................................7
Section 2.06. Project Management Committee..........................................................7
ARTICLE III RIGHTS TO MARKET PRODUCTS....................................................................8
Section 3.01. Sale of Product.......................................................................8
Section 3.02. Research and Development Expenses.....................................................9
Section 3.03. Retainer for Research and Development Expenses........................................9
ARTICLE IV ADDITIONAL PRODUCTS..........................................................................10
Section 4.01. Additional Products..................................................................10
ARTICLE V COMMERCIALIZATION.............................................................................11
Section 5.01. Geneva's Obligations.................................................................11
Section 5.02. Net Sales Thresholds.................................................................12
ARTICLE VI MANUFACTURE AND SUPPLY.......................................................................12
Section 6.01. Agreement to Supply Product..........................................................12
Section 6.02. Quality Assurance....................................................................13
Section 6.03. Compliance with Applicable Laws......................................................13
Section 6.04. Failure to Supply....................................................................13
ARTICLE VII PURCHASE AND SALE...........................................................................14
Section 7.01. Purchase of Product..................................................................14
Section 7.02. Terms of Payment.....................................................................14
Section 7.03. Purchase Forms.......................................................................16
Section 7.04. Confirmation.........................................................................16
Section 7.05. Delivery.............................................................................16
Section 7.06. Forecasts............................................................................16
ARTICLE VIII WARRANTY, REJECTION AND INSPECTIONS........................................................17
Section 8.01. Atrix Warranty.......................................................................17
Section 8.02. Rejection of Products for Failure to Conform to Specifications.......................17
Section 8.03. Geneva Inspections...................................................................17
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ARTICLE IX REGULATORY COMPLIANCE........................................................................18
Section 9.01. Holder Of Marketing Authorizations...................................................18
Section 9.02. Maintenance Of Marketing Authorizations..............................................18
Section 9.03. Assistance...........................................................................19
Section 9.04. Compliance...........................................................................19
ARTICLE X CONFIDENTIALITY...............................................................................19
Section 10.01. Confidentiality.....................................................................19
Section 10.02. Disclosure of Agreement.............................................................19
ARTICLE XI REPRESENTATIONS AND WARRANTIES...............................................................20
Section 11.01. Corporate Power.....................................................................20
Section 11.02. Due Authorization...................................................................20
Section 11.03. Binding Obligation..................................................................20
Section 11.04. Limitation on Warranties............................................................20
Section 11.05. Limitation of Liability.............................................................20
ARTICLE XII INDEMNIFICATION AND JOINT LIABILITY.........................................................20
Section 12.01. Geneva Indemnified by Atrix.........................................................20
Section 12.02. Atrix Indemnified by Geneva.........................................................21
Section 12.03. Prompt Notice Required..............................................................21
Section 12.04. Indemnitor May Settle...............................................................21
Section 12.05. Joint Responsibility for Product Liability Claims...................................22
ARTICLE XIII COVENANTS..................................................................................22
Section 13.01. Covenant Not To Launch Competitive Product..........................................22
Section 13.02. Limitation To The Territory.........................................................23
ARTICLE XIV QUALITY ASSURANCE PROVISIONS................................................................23
Section 14.01. Product Conformance.................................................................23
Section 14.02. Starting Materials..................................................................24
Section 14.03. Manufacturing.......................................................................24
Section 14.04. Finished Product Testing............................................................24
Section 14.05. Manufacturing & Packaging Batch Record & Sample Requirements........................24
Section 14.06. Storage and Transport...............................................................24
Section 14.07. Validation..........................................................................25
Section 14.08. Stability...........................................................................25
Section 14.09. Waste Material......................................................................25
Section 14.10. Adverse Drug Event Reporting and Phase IV Surveillance..............................25
Section 14.11. Post - First Commercial Sale Testing and Reporting..................................26
Section 14.12. Returned Goods......................................................................26
Section 14.13. Persons to Whom Communications Should be Addressed..................................26
Section 14.14. Product Recalls or Withdrawal.......................................................27
Section 14.15. Recall Costs........................................................................27
Section 14.16. Notification Of Threatened Action...................................................27
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ARTICLE XV INSURANCE....................................................................................27
Section 15.01. Insurance...........................................................................27
ARTICLE XVI TERM AND TERMINATION........................................................................28
Section 16.01. Term................................................................................28
Section 16.02. Termination by Either Party for Cause...............................................28
Section 16.03. Termination by Atrix................................................................28
Section 16.04. Effect of Termination...............................................................28
ARTICLE XVII DISPUTE RESOLUTION.........................................................................31
Section 17.01. Arbitration.........................................................................31
ARTICLE XVIII MISCELLANEOUS.............................................................................32
Section 18.01. No-Solicitation.....................................................................32
Section 18.02. Commercially Reasonable Efforts.....................................................32
Section 18.03. Assignment; Binding Effect..........................................................32
Section 18.04. Force Majeure.......................................................................32
Section 18.05. Governing Law.......................................................................33
Section 18.06. Waiver..............................................................................33
Section 18.07. Severability........................................................................33
Section 18.08. Notices.............................................................................33
Section 18.09. Independent Contractors.............................................................34
Section 18.10. Rules of Construction...............................................................34
Section 18.11. Entire Agreement; Amendment.........................................................34
Section 18.12. Headings............................................................................34
Section 18.13. Publicity...........................................................................35
Section 18.14. Counterparts........................................................................35
Exhibit A Products.............................................................................A-1
Exhibit B Development Program Outline..........................................................B-1
Exhibit C Quality Assurance List of Contacts ..................................................C-1
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COLLABORATION, DEVELOPMENT AND SUPPLY AGREEMENT
This Collaboration, Development and Supply Agreement (the "Agreement")
is made as of August 28, 2000 (the "Effective Date") by and between Atrix
Laboratories, Inc., a Delaware corporation having its offices at 2579 Midpoint
Drive, Fort Collins, CO, 80525-4417 ("Atrix"), and Geneva Pharmaceuticals, Inc.,
a Colorado corporation having offices at 2655 W. Midway Blvd., P.O. Box 446,
Broomfield, Colorado 80038 ("Geneva"). Atrix and Geneva are sometimes referred
to collectively herein as the "Parties" or singly as a "Party."
RECITALS
WHEREAS, Atrix has substantial experience and expertise in the
discovery, design and development of prescription drug products for medical,
dental and veterinary applications;
WHEREAS, Geneva possesses substantial resources and expertise in the
development, commercialization and marketing of pharmaceutical products;
WHEREAS, Atrix wishes to grant to Geneva, and Geneva wishes to obtain
from Atrix, a right to market, advertise, promote, distribute, offer for sale,
sell and import the Products in the Territory on the terms and subject to the
conditions set forth herein; and
WHEREAS, Geneva wishes Atrix to manufacture all Products to be sold in
the Territory by Geneva, subject to the terms and conditions herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the Parties hereto, intending
to be legally bound, do hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms as used in this Agreement shall, unless the context
clearly indicates to the contrary, have the meaning set forth below:
"ADE" has the meaning set forth in Section 14.10(a).
"Affiliate" means an individual, trust, business trust, joint venture,
partnership, corporation, association or any other entity which owns, is owned
by or is under common ownership with, a Party. For the purposes of this
definition, the term "owns" (including, with correlative meanings, the terms
"owned by" and "under common ownership with") as used with respect to any Party,
shall mean the possession (directly or indirectly) of more than 50% of the
outstanding voting securities of a corporation or comparable equity interest in
any other type of entity.
"ANDA" means an Abbreviated New Drug Application, and all amendments
and supplements thereto, filed or to be filed, with the FDA seeking
authorization and approval to
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manufacture, package, ship and sell a product as more fully defined in Title 21,
Section 355 of the United States Code.
"Applicable Laws" means all applicable laws, rules, regulations and
guidelines within or without the Territory that may apply to the development,
marketing or sale of the Products in the Territory or the performance of either
Party's obligations under this Agreement including laws, regulations and
guidelines governing the import, export, development, marketing, distribution
and sale of the Products in the Territory, to the extent applicable and
relevant, and including all current Good Manufacturing Practices or current Good
Clinical Practices standards or guidelines promulgated by the FDA or Competent
Authorities and including trade association guidelines, where applicable, as
well as U.S. export control laws and the U.S. Foreign Corrupt Practices Act.
"Atrix Manufacturing Cost" means the actual cost of Manufacture by
Atrix of a Product under a Manufacturing Process, which actual cost shall be
comprised of the cost of goods produced as determined in accordance with GAAP,
and shall include direct labor, direct material, including raw materials and
packaging materials, and the allocable portion of the manufacturing overhead of
Atrix directly attributable to the manufacture of a Product, determined by
taking the total output of such Product during the period divided by the total
output of all products manufactured by Atrix during the period, multiplied by
the total amount of manufacturing overhead for the period. Atrix Manufacturing
Cost shall exclude selling, general and administrative, research and
development, and interest expenses and any and all debt service payments of
Atrix. The Atrix Manufacturing Cost shall include, to the extent applicable, the
cost to Atrix of having some portion or all of the Manufacturing Process
performed by a Third Party; but shall exclude any incremental increases in the
Atrix Manufacturing Costs resulting from the use of a toll manufacturer under
Sections 6.01 or 6.04 of this Agreement. Sixty (60) days prior to the First
Commercial Sale of a Product, Atrix shall provide Geneva a written estimate of
the Atrix Manufacturing Cost for such Product for purposes of calculating Net
Profits and Atrix Profit Share for the first calendar year in which the First
Commercial Sale occurs. For each subsequent calendar year, the Atrix
Manufacturing Cost used to calculate the Net Profits and Atrix Profit Share for
that calendar year shall equal the actual Atrix Manufacturing Cost for such
Product for the preceding calendar year (as determined in accordance with
Section 7.02(c)).
"Atrix Profit Share" means the percentage of Net Profits to be paid by
Geneva to Atrix in accordance with Section 7.02(a).
"Bundled Product" means a Product offered or sold in combination with
one or more of Geneva's branded pharmaceutical or generic products, including
the Products, for a single price.
"Collaboration" means the activities of the Parties carried out in
performance of, and the relationship between the Parties established by, this
Agreement.
"Competent Authorities" means collectively the entities in each country
in the Territory responsible for the regulation of medicinal products intended
for human use.
"Competitive Product" means, with respect to any Product, a generic
pharmaceutical product that is "therapeutically equivalent" to the same branded
pharmaceutical product as the Product. "Therapeutically equivalent" means that
an AB rating is assigned to the product's entry
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in the list of drug products with effective approvals published in the current
edition of FDA's publication "Approved Drug Products with Therapeutic
Equivalence Evaluations" and any current supplement to the publication (also
known as the "Orange Book") referred to in 21 CFR 314.3.
"Confidential Information" means any confidential information of a
Party relating to any use, process, method, compound, research project, work in
process, future development, scientific, engineering, manufacturing, marketing,
business plan, financial or personnel matter relating to the disclosing Party,
its present or future products, sales, suppliers, customers, employees,
investors or business, whether in oral, written, graphic or electronic form.
Confidential Information shall not include any information which the receiving
Party can prove by competent evidence:
(a) is now, or hereafter becomes, through no act or failure to
act on the part of the receiving Party, generally known or available;
(b) is known by the receiving Party at the time of receiving
such information, as evidenced by its written records maintained in the
ordinary course of business;
(c) is hereafter furnished to the receiving Party by a Third
Party, as a matter of right and without restriction on disclosure;
(d) is independently developed by the receiving Party, as
evidenced by its written records maintained in the ordinary course of
business, without knowledge of, and without the aid, application or use
of, the disclosing Party's Confidential Information; or
(e) is the subject of a written permission to disclose
provided by the disclosing Party.
"Development Program" has the meaning set forth in Section 2.02.
"FDA" means the United States Food and Drug Administration.
"First Commercial Sale" means (i) with respect to a country in the
Territory, the first sale for use, consumption or resale of a Product by Geneva
in such country (excluding any sales for clinical trials) and (ii) with respect
to the Territory, the First Commercial Sale in any country within the Territory.
A sale to an Affiliate shall not constitute a First Commercial Sale unless the
Affiliate is the end user of the Product.
"GAAP" means United States generally accepted accounting principles
applied in a manner consistent with past practice.
"Governmental Approval" means all permits, licenses and authorizations,
including but not limited to, Marketing Authorization and Pricing and
Reimbursement Approvals required by the FDA or any Competent Authority as a
prerequisite to the manufacturing, packaging, marketing and selling of a Product
or the Units; excluding however import permits.
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"Gross Sales" means the gross amounts invoiced for sales of a Product
by Geneva or its Affiliates. Sales or transfers of Products to Affiliates for
ultimate use or resale by such person shall be at prices (or deemed prices) that
are consistent with sales made to non-Affiliates of the same or a similar
business type that make purchases in similar quantities. In the event Geneva
transfers Product for consideration, in whole or in part, other than cash, the
Gross Sales price for such Product shall be deemed to be the standard invoice
price then being invoiced by the seller in arms length transaction with similar
customers.
"Manufacture" or "Manufacturing Process" means the storage, handling,
production, processing and packaging of a Product, in accordance with this
Agreement.
"Marketing Authorization" means all necessary and appropriate
regulatory approvals, excluding Pricing and Reimbursement Approvals, where
applicable, to put a Product on the market in a particular country in the
Territory.
"Marketing Year" means the first day of the calendar month following
the First Commercial Sale of a Product and extending for twelve (12) months, and
each twelve month period thereafter during the Term of this Agreement.
"Net Profits" means Net Sales minus Selling Expense minus the Atrix
Manufacturing Cost; [**].
"Net Sales" means Gross Sales, less customary discounts, returns,
promotional allowances, volume and incentive rebates, shelf stock adjustments,
other similar customary adjustments or allowances actually given to such
customers in the normal course of business by Geneva, taxes the legal incidence
of which is on the purchaser and separately shown on Geneva's or its Affiliates'
invoices, and transportation, insurance and postage charges, if prepaid by
Geneva or its Affiliates and billed on Geneva's or its Affiliates' invoices as a
separate item. Components of Net Sales shall be determined in the ordinary
course of business in accordance with historical practice and using the accrual
method of accounting in accordance with GAAP.
In no event shall Geneva sell the Product as a Bundled Product unless
there is a Competitive Product on the market. Net Sales of such Bundled Product
shall be calculated by multiplying the standard invoice price for the Bundled
Product by a fraction, the numerator of which shall be the number of units of
the Product sold in the Bundled Product multiplied by the list price per unit of
the Product, and denominator of which shall be the sum, for all items (including
Products) included in the Bundled Product, of the number of units sold for each
item in the Bundled Product multiplied by the price per unit for each such
items.
"Packaging Specifications" means the packaging and labeling
specifications for the Unit, as may be determined by Geneva, in consultation
with Atrix, from time to time.
"PMC" has the meaning set forth in Section 2.06.
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** CONFIDENTIAL TREATMENT REQUESTED.
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"Pricing and Reimbursement Approvals" means any pricing and
reimbursement approvals which must be obtained before placing the Product on the
market in any country in the Territory in which such approval is required.
"Product" or "Products" means those generic products for the product
families set forth on Exhibit A.
"R&D Start Date" has the meaning set forth in Section 3.03(b).
"Selling Expense" means Geneva's expenditures to sell and market a
product, which expenditures shall include all reasonable costs, fees and
out-of-pocket or other expenses incurred, paid or accrued by Geneva in
connection with the sale of a Product by, but not limited to, its sales force,
including but not limited to (i) all costs directly allocable to the sale of a
Product, such as customary commissions attributable to the sale of a Product by
its sales force, and (ii) the allocable portion of the sales and marketing
overhead of Geneva directly attributable to the sale and marketing of a Product,
determined by taking an apportioned share (based on the proportion of a Product
to all of the products sold by Geneva, in terms of unit volume) of the costs and
expenses which may not be directly allocated to the sale of a Product, such as
costs of operating Geneva's sales and marketing office(s) through which the
Products are sold, all as determined in accordance with GAAP. Selling Expense
shall exclude general and administrative and interest expenses and any and all
debt service payments of Geneva. Sixty (60) days prior to the First Commercial
Sale of a Product, Geneva shall provide to Atrix a written estimate of the
Selling Expense, as a percentage of Net Sales, for that Product for purposes of
calculating Net Profits and Atrix Profit Share for that calendar year. For each
subsequent calendar year, the Selling Expense used to calculate Net Profits and
Atrix Profit Share for that calendar year shall equal the actual Selling Expense
for such Product for the preceding calendar year (as determined in accordance
with Section 7.02(c)).
"Shipment" means each individual group of Products received by Geneva
from Atrix.
"Specifications" means the specifications for a Product as set forth in
the ANDA for that Product.
"Term" has the meaning set forth in Section 16.01.
"Territory" means the United States, and such other countries as may be
added to this Agreement by the PMC.
"Third Party" means any entity other than Atrix or Geneva or an
Affiliate of Atrix or Geneva.
"Unit" means a Product packaged in such sizes reasonably designated by
Geneva.
"U.S." or the "United States" means the United States of America.
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ARTICLE II
COLLABORATION
Section 2.01. OBJECTIVES. Pursuant to the Development Program, Atrix
and Geneva shall conduct research and development activities on a collaborative
basis to develop the Products. During the Term, Atrix will have primary
responsibility for the activities described in Section 2.03 and Geneva will have
primary responsibility for the activities described in Section 2.04, as further
described in the Development Program.
Section 2.02. DEVELOPMENT PROGRAM. Atrix and Geneva shall conduct
research and development of the Products pursuant to a development program (the
"Development Program"), an outline of which is attached hereto as Exhibit B. The
Parties will develop a detailed program for the development of each of the
Products within ninety (90) days of the Effective Date. The detailed program for
development of each of the Products shall become the "Development Program" and
may be modified during the Term only by the mutual agreement of the Parties,
except as provided in Section 2.06.
Section 2.03. ATRIX OBLIGATIONS. Atrix will use commercially reasonably
efforts to timely complete (a) validation, formulation, development, and
required clinical studies of the Products, (b) scale-up and initial stability
studies in primary closure package system(s), (c) other tasks supporting
commercialization of the final formulation of the Product, all in accordance
with the Development Program and (d) preparation and submission of regulatory
filings including the filing of all ANDAs. Except as otherwise provided in
Article III of this Agreement, Atrix shall be solely responsible for the costs
of obtaining Governmental Approvals in such countries in the Territory,
including, but not limited to, filing fees paid to Competent Authorities and all
of the costs and expenses incurred in performing additional testing or studies
required by the Competent Authorities. Except as otherwise provided in Sections
3.01 and 9.01, Atrix shall own and maintain all Governmental Approvals and
related information. Atrix shall maintain records in sufficient detail and in
good scientific manner appropriate for patent and regulatory purposes and shall
properly reflect all work done and results achieved in the performance of the
Development Program (including all data in the form required to be maintained
under any applicable governmental regulations), and any subsequent preclinical
or clinical studies. Such records shall include books, records, reports,
research notes, charts, graphs, comments, computations, analyses, recordings,
photographs, computer programs and documentation thereof, computer information
storage means, samples of materials and other graphic or written data generated
in connection with the research and development activities (the "Development
Records"). The Development Records, Governmental Approvals and related
information shall be considered Confidential Information of Atrix.
Section 2.04. GENEVA OBLIGATIONS. Geneva will use commercially
reasonable efforts to timely complete, at its own expense, (a) all market
research related to the Products; and (b) commercialization of the Products
(including all sales and marketing activities related to the Products). Such
commercially reasonable efforts shall be consistent with the efforts used by
Geneva in preparing commercialization plans and budgets and commercializing its
own pharmaceutical products. Atrix has the right to inspect such records, and
Geneva shall provide copies of all requested records, to the extent reasonably
required for the exercise of Atrix's rights
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under this Agreement. Geneva will obtain import permits and pay all duties,
fees, tariffs and similar obligations required to market a Product in such
countries in the Territory.
Section 2.05. AVAILABILITY OF RESOURCES; COOPERATION. Each Party shall
maintain laboratories, offices and/or other facilities reasonably necessary to
carry out the activities to be performed by such Party pursuant to the
Development Program. Upon reasonable advance notice, each Party agrees to make
its employees and non-employee consultants reasonably available at their
respective places of employment to consult with the other Party on issues
arising during the Collaboration and in connection with any request from any
regulatory agency, including, without limitation, regulatory, scientific,
technical and clinical testing issues.
Section 2.06. PROJECT MANAGEMENT COMMITTEE. Promptly after the
Effective Date, the Parties will form a Project Management Committee ("PMC")
comprised of three (3) representatives of each of Atrix and Geneva, including
representation from each Parties' quality assurance organization. Geneva shall
designate one member of the PMC to act as the chairperson of the PMC. A
reasonable number of additional representatives of a Party may attend meetings
of the PMC in a non-voting capacity. The PMC shall meet on a quarterly basis or
at such other frequency as the PMC agrees. The Parties shall agree upon the time
and place of meetings. All decisions of the PMC shall be unanimous. Within
thirty (30) days after each meeting, the PMC chairperson will provide the
Parties with a written report describing, in reasonable detail, the status of
the Development Program and the commercialization of a Product, a summary of the
results and progress to date, the issues requiring resolution, and the agreed
resolution of previously reported issues. If the PMC is unable to decide or
resolve an issue unanimously, the issue shall be referred to the Chairman of
Atrix and the President of Geneva, or their designees. Such officers of the
Parties will meet promptly thereafter and shall negotiate in good faith to
resolve such issue. If they cannot resolve the issue within thirty (30) days of
commencing such negotiations then the issue shall be resolved pursuant to
Article XVII, except for those matters not subject to arbitration as set forth
in this Section 2.06.
The PMC shall:
(a) determine the specific goals for the development of the
Products (but may not amend the Development Program other than pursuant
to Section 2.02 if such amendment would increase the cost or expenses
of the Development Program or be to the detriment of a Party), shall
manage the ongoing research conducted under the Development Program,
and shall monitor the progress and results of such work;
(b) monitor the progress and results of the marketing, sale
and distribution of the Products;
(c) review and recommend Product pricing and market
positioning for particular Products, which recommendations shall not be
binding upon Geneva;
(d) determine the Net Sale Thresholds in accordance with
Section 5.02;
(e) consider additional product opportunities for potential
addition to this Agreement;
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(f) determine the financial viability of an individual Product
prior to the commencement of the Development Program and determine
whether to commercialize such Product and file an ANDA for such
Product;
(g) determine whether to seek additional Governmental
Approvals for a Product outside the United States;
(h) determine whether to continue or discontinue the
marketing, sale and distribution of a Product at any time after the
First Commercial Sale.
The matters set forth in Sections 2.06(c), (e), (f), (g) and (h) shall
not be subject to arbitration if the PMC cannot reach agreement; rather (i)
those matters set forth in Sections 2.06(f), (g) and (h) shall be subject to the
terms and provisions of Section 3.01 below, and (ii) no action shall be taken
with the respect to Section 2.06(c)and (e) if the PMC cannot reach a decision.
ARTICLE III
RIGHTS TO MARKET PRODUCTS
Section 3.01. SALE OF PRODUCT.
(a) Commercialization. So long as this Agreement remains in
effect, Geneva shall have the sole and exclusive right to market and
sell the Products in the Territory, provided such Products are approved
for commercialization by the PMC. If the PMC does not approve a Product
for continued development or commercialization under Section 2.06(f),
and either Party wishes to continue development or commercialization of
such Product outside of the terms of this Agreement (the "Proceeding
Party"), then, after providing the non-Proceeding Party with written
notice of its election to go forward (the "Decision Date"), the
Proceeding Party shall have the right to complete development and
market and sell such Product in accordance with the terms of this
Section 3.01(a). If the Proceeding Party is Geneva, Geneva shall
reimburse Atrix for Geneva's proportionate share of the research and
development expenses incurred or accrued by Atrix up to the Decision
Date and Atrix, after receiving such payment, shall (i) transfer to
Geneva all rights in, and title to, the Product including the ANDA; and
(ii) shall provide to Geneva copies of all Development Records. If the
Proceeding Party is Atrix, Geneva shall remain liable for paying its
proportionate share of the research and development expenses incurred
or accrued by Atrix up to the Decision Date. Except as set forth in
this Section 3.01 the terms and provisions of this Agreement shall no
longer apply to such Product.
(b) Additional Countries. The Parties acknowledge that the
Products will be initially targeted for commercialization in the United
States, and that the PMC will examine the financial feasibility of
seeking Government Approval and commercialization outside of the United
States on a case-by-case basis. If the PMC determines under Section
2.06(g) to commercialize a Product and seek Governmental Approval in a
specified country, such country shall be part of the Territory. If the
PMC cannot reach agreement on whether to commercialize and seek
Governmental Approval of a Product in
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a specified country, and either Party wishes to seek Governmental
Approval in such country, the following terms shall govern the rights
of the Proceeding Party and non-Proceeding Party, with respect to such
country. If the Proceeding Party is Geneva, Geneva shall reimburse
Atrix for Geneva's proportionate share of the research and development
expenses incurred or accrued by Atrix up to the Decision Date and
Atrix, after receiving such payment, shall transfer to Geneva copies of
all Development Records for such Product. If the Proceeding Party is
Atrix, Geneva shall remain liable for paying its proportionate share of
the research and development expenses incurred or accrued by Atrix up
to the Decision Date. Except as set forth in this Section 3.01 the
terms and provisions of this Agreement shall no longer apply to such
Product.
(c) Discontinuance of Product After First Commercial Sale. If
the PMC determines under Section 2.06(h) to stop the marketing, sale or
distribution of a Product, the rights of the Parties with respect to
such Product shall be as set forth in Section 16.04(c). If the PMC
cannot reach agreement under Section 2.06(h) because the Geneva
representatives of the PMC vote to discontinue the marketing, sale and
distribution of a Product, then Atrix, after providing the Geneva with
written notice of its election to go forward, shall have the right to
continue the marketing, sale and distribution of such Product. After
the Decision Date, the rights of the Parties with respect to such
Product shall be as set forth in Section 16.04(c). If the PMC cannot
reach agreement under Section 2.06(h) because the Atrix representatives
of the PMC vote to discontinue the marketing, sale and distribution of
a Product, then Geneva, after providing Atrix with written notice of
its election to go forward, shall have the right to continue the
marketing, sale and distribution such Product. After the Decision Date,
Atrix shall (i) continue to Manufacture and supply the Product until
such time as Geneva can qualify another Third Party manufacturer, but
in no event longer than six (6) months after the Decision Date, (ii)
transfer to Geneva all rights in, and title to, the Product including
the ANDA, and (iii) provide to Geneva copies of all Development
Records. In addition, so long as Atrix is Manufacturing such Product
for Geneva and with respect to all of such Product Manufactured by
Atrix, the obligations of Geneva to Atrix under this Agreement,
including the payment of the Atrix Profit Share, shall continue in full
force and effect. Except as set forth in this Section 3.01(c) the terms
and provisions of this Agreement shall no longer apply to such Product.
Section 3.02. RESEARCH AND DEVELOPMENT EXPENSES. In partial
consideration for the right to market and sell the Products, Geneva shall be
responsible for [**] of all research and development expenses incurred by Atrix,
whether internal or external, in accordance with the Development Program in
connection with the Products. Such research and development expenses shall
include any expenses directly related to registration with, or approval by, any
Competent Authority in any country in the Territory approved by the PMC, or
testing or studies performed in connection therewith for any country in the
Territory approved by the PMC, including the United States. Atrix shall provide
Geneva with detailed, monthly invoices for all expenses incurred by it in
connection with such research and development expenses.
Section 3.03. RETAINER FOR RESEARCH AND DEVELOPMENT EXPENSES.
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(a) Retainer. Geneva shall pay Atrix the sum of [**] per
Product as a retainer to be applied against Geneva's share of research
and development costs (each a "Retainer" and collectively the
"Retainers"). A Retainer shall be due and payable for each Product on
which Atrix has commenced or will commence research and development in
accordance with the Development Program. For purposes of this Section
3.03 only, a "Product" shall mean the Products listed in Column 1 of
Exhibit A. Retainer payments for a Product shall terminate effective
upon the filing of an ANDA for such Product.
(b) Payment of Retainer. Atrix will provide written notice to
Geneva of the date on which the research and development will commence
on each Product (the "R&D Start Date"). Geneva will pay to Atrix the
Retainer for each Product within fifteen (15) days of the R&D Start
Date. On a monthly basis, Atrix shall offset against the Retainer for
each Product, Geneva's proportionate share of the research and
development expenses incurred by Atrix in that month for each such
Product. Upon notice by Atrix to Geneva that Atrix has exhausted a
Retainer, Geneva shall promptly remit to Atrix the sum of [**] to be
applied against the on-going research and development expenses incurred
or to be incurred by Atrix with respect to each such Product. Such
additional payment(s) shall be paid by Geneva to Atrix within ten (10)
calendar days after notice by Atrix to Geneva.
(c) Reconciliation of Retainer. Within fifteen (15) days after
the month end in which an ANDA is filed for a Product, Atrix shall
prepare a reconciliation report setting forth the aggregate Retainer
payments received by Atrix for such Product, the aggregate amount of
Geneva's proportionate share of the research and development expenses
offset against the Retainer payments for each such Product, and the
remaining balance, if any, owed by Geneva to Atrix or by Atrix to
Geneva for each such Product. Any remaining balance shall be paid to
Geneva in accordance with Section 7.02(a).
ARTICLE IV
ADDITIONAL PRODUCTS
Section 4.01. ADDITIONAL PRODUCTS. The Parties agree to provide to the
PMC reasonable advance notice of any product opportunity that either Party
identifies and which it wishes to make available to a Third Party; provided the
opportunity relates to a generic prescription dermatology product that is not
the subject of a right of negotiation with a Third Party. The Parties further
agree that such notice is for the sole purpose of providing an opportunity for
discussion of the possibility of expanding the alliance created hereby to
include such additional product and does not create any rights in the
opportunity or obligations with respect thereto. Neither Party shall have a
right of first refusal or right of first negotiation with respect to additional
product opportunities.
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ARTICLE V
COMMERCIALIZATION
Section 5.01. GENEVA'S OBLIGATIONS.
(a) Marketing Efforts. Geneva agrees to use its commercially
reasonable best efforts to timely promote the sale, marketing and
distribution of each Product in each country in the Territory. In this
regard, Geneva shall follow substantially the same procedures, commit
substantially the same financial and personnel resources and otherwise
treat each Product as it would a product distributed by Geneva of
comparable sales. Without limiting the foregoing, Geneva's activities
shall include but not be limited to the use of the following services
or capabilities in support of each Product:
(i) National field sales force
(ii) Telemarketing staff
(iii) Full-Service distribution centers
(iv) Fully-integrated professional advertising and
marketing support materials
(v) Direct order entry capability and invoicing
(vi) Maintenance of inventory level adequate to serve
the market for Product available in Geneva's warehouses at all
times including product launch.
Geneva shall promptly advise Atrix of any issues that materially and
adversely affect Geneva's ability to market a Product in the Territory. In such
event, the PMC shall meet and in good faith discuss what actions should be taken
in light of such issues and if they cannot agree any dispute shall be resolved
pursuant to Article XVII.
(b) Packaging. Packaging and labeling of a Product shall
comply with the Packaging Specifications and Applicable Laws. Geneva,
in consultation with Atrix, shall be responsible for determining
commercial packaging configurations and trade dress. Atrix and Geneva
shall be jointly responsible for assuring that such packaging and
labeling conform with all Applicable Laws, if any, of the FDA or other
Competent Authorities for export of a Product in the Territory. Prior
to the marketing and sale of a Product in the Territory, Atrix and
Geneva shall execute a written agreement which sets forth the packaging
and labeling standards agreed to; and Atrix shall thereafter be
responsible for assuring that the Units comply with the Packaging
Specifications and Applicable Laws where such Product is to be
distributed for sale.
(c) Consultation. Commencing sixty (60) days prior to the
expected date of the First Commercial Sale of a Product in any country
in the Territory, Geneva shall provide to Atrix an outline of its
marketing plans for the Product which shall provide in reasonable
detail: (i) Product positioning in the marketplace; (ii) quantity of
direct selling
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efforts, including the number of sales calls to be made; (iii) extent
and degree of non-personal selling and promotional efforts and (iv)
development and implementation of the pricing strategy. The Parties
acknowledge that marketing the Products as generics in the United
States will generally not justify the use of a direct sales force.
Geneva shall update such outline of the marketing plan at least
annually or more often as such marketing plans may be modified with
each selling cycle.
Section 5.02. NET SALES THRESHOLDS. Beginning on the first day of the
fifth calendar quarter following the First Commercial Sale of a Product in the
United States (and continuing for the Term of this Agreement, each such year
thereafter being a "Measurement Year"), Geneva will be subject to performance
obligations. Such performance obligations will be Geneva's achievement of at
least [**] of Net Sales forecasts ("Net Sales Threshold") for each country in
the Territory for each Product. Not later than six (6) months prior to the
expected date of First Commercial Sale for a Product, Geneva shall provide to
Atrix with Net Sales Threshold for each country in the Territory for such
Product. Atrix will have thirty (30) days to provide Geneva with written
approval of the Net Sales Threshold. If Atrix and Geneva cannot reach agreement
on the Net Sales Threshold, the Net Sales Threshold shall be determined by the
PMC. Geneva shall provide to Atrix the Net Sales Threshold for each country in
the Territory for each Product for the succeeding calendar year by October 31 of
the preceding year. In setting the Net Sales Threshold for each country in the
Territory, Geneva or the PMC, as applicable, shall set forth the basic
assumptions underlying the Net Sales Thresholds specified. In the event Geneva
fails to achieve the Net Sales Thresholds for a country for any Measurement Year
after the First Commercial Sale of that Product due to Geneva's failure to
perform or other conditions within Geneva's reasonable control and such failure
was not the result of the assumptions used to determine the Net Sales Thresholds
proving inaccurate (through no fault of Geneva), then Atrix may, at its sole
option: (a) terminate Geneva's right to market and sell such Product in that
country, or (b) require Geneva to pay Atrix an amount equal to the Net Profits
that would have otherwise been due Atrix on the difference between the aggregate
Net Sales Thresholds and Geneva actual aggregate Net Sales for such period.
ARTICLE VI
MANUFACTURE AND SUPPLY
Section 6.01. AGREEMENT TO SUPPLY PRODUCT. Subject to the terms of this
Agreement, Geneva agrees to purchase exclusively from Atrix, and Atrix agrees to
Manufacture for, and sell exclusively to Geneva, during the Term of this
Agreement, Geneva's total requirements for the Products in the Territory on the
terms and conditions set forth herein. Subject to notice to and prior written
approval of Geneva which approval shall not be unreasonably withheld,
conditioned or delayed, Atrix may subcontract any part of the Manufacturing
Process for a Product to Third Parties provided the Product and the facilities
continue to meet the requirements as defined in this Agreement. If
subcontracting is initiated by Atrix, Atrix will bear the costs of qualifying
the Third Party as a qualified site for the Manufacture of the Product,
including validation and necessary stability work.
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Section 6.02. QUALITY ASSURANCE. Atrix shall supply the Product in
accordance with the quality control provisions as set forth in Article XIV.
Atrix shall notify Geneva of any changes required by a Competent Authority in
the Specifications or Atrix's quality assurance procedures that shall render
Atrix unable to supply the Products in accordance with the terms of this
Agreement. The Parties agree to develop and execute an appropriate action plan
in such situation.
Section 6.03. COMPLIANCE WITH APPLICABLE LAWS. Geneva shall be
responsible for compliance with Applicable Laws and the Government Approvals
relating to the promotion, marketing and sale of the Products, including
obtaining all necessary permits, licenses and any other requirements relating to
the import, sale and distribution of the Products. Atrix shall be responsible
for compliance with Applicable Laws and Government Approvals relating to the
design and production of the Products, as applicable, and with current Good
Manufacturing Practices, as promulgated by the FDA, relating to the Manufacture
and testing of the Product, as applicable.
Section 6.04. FAILURE TO SUPPLY. Atrix shall immediately notify Geneva
if Atrix is unable or unwilling to fill any order placed by Geneva pursuant to
Section 7.06 and advise Geneva of the revised delivery date. Geneva shall then
have the option of terminating the purchase order without obligation of payment
or of accepting the revised delivery date. If (i) Atrix fails to supply for any
reason Geneva's requirements of such Product as ordered by Geneva hereunder for
any three (3) consecutive calendar months, then Atrix shall, upon such failure,
make arrangements with a toll manufacturer, the incremental costs of which shall
be borne by Atrix, to Manufacture such Product on behalf of Atrix until such
time as Atrix is again able to Manufacture that Product.
Notwithstanding the foregoing, Atrix shall not be deemed to be unable
or unwilling to fill any order placed by Geneva as follows:
(a) if Atrix's inability to fill any order arises as a result
of a fifty percent (50%) increase in Geneva's order over Geneva's
immediately prior forecast; or
(b) in the event that Atrix must purchase additional equipment
or construct a new facility in order to expand its capacity in order to
meet purchase orders hereunder, Atrix will be deemed to have satisfied
this paragraph by placing a purchase order for such equipment or
signing a contract for such construction within sixty (60) days of
Atrix's receipt of Geneva's purchase order showing firm quantities in
excess of Atrix's capacity; provided that Atrix diligently pursues and
completes within a reasonable time thereafter such purchase or
construction. To reduce the possibility of unanticipated capacity
shortfalls, and the adverse impact that would have on sales, the
Parties agree to discuss, prior to the commercialization of any Product
and at the same time that the forecasts are delivered pursuant to
Section 7.06, Atrix's available capacity for the Manufacture of the
Products. In connection therewith, Atrix agrees that the Products will
be treated the same as its other products when it plans its
manufacturing schedule and allocates its available capacity.
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ARTICLE VII
PURCHASE AND SALE
Section 7.01. PURCHASE OF PRODUCT. Atrix shall sell, and Geneva shall
purchase, each Product at a price equal to the [**] of each Product.
Section 7.02. TERMS OF PAYMENT.
(a) Allocation of Profits/Profit-Share Adjustment for
Development Delay. Net Profits for each Product shall be allocated [**]
(b) Reports and Payment. Geneva shall pay to Atrix its share
of research and development expenses under Section 3.02 (which expenses
are in excess of the Retainer payments received by Atrix for such
Product as determined in accordance with Section 3.03) and the Atrix
Manufacturing Cost under Section 7.01, within thirty (30) days
following receipt of the applicable monthly invoice. Atrix shall send
all invoices to the attention of Geneva's accounting department and to
Geneva's Vice President, Business Development. Net Profits shall be
calculated and reported for each calendar quarter. All Atrix Profit
Share payments shall be paid within forty-five (45) days of the end of
each calendar quarter, unless otherwise specifically provided herein.
Each payment shall be accompanied by a report in sufficient detail to
permit confirmation of the accuracy of the payment made, including,
without limitation, Gross Sales and Net Sales detailed country by
country in the Territory, Selling Expenses, the Atrix Manufacturing
Cost, the method used to calculate the payment and the exchange rates
used, if any.
(c) End of Year Reconciliation. Within thirty (30) days after
the end of each calendar year, (i) Geneva shall provide to Atrix a
report setting forth in reasonable detail the actual Selling Expense
for each Product during the preceding calendar year and the actual
amount of any underpayment or overpayment of the Selling Expense during
the preceding calendar year, and (ii) Atrix shall provide to Geneva a
report setting forth in reasonable detail the actual Atrix
Manufacturing Cost for each Product during the preceding calendar year
and the actual amount of any underpayment or overpayment of the Atrix
Manufacturing Cost during the preceding calendar year. Within
forty-five (45) days of each calendar year, Geneva shall provide Atrix
with a statement setting forth in reasonable detail, any underpayment
or overpayment of the Atrix Profit Share based on the actual Selling
Expense and actual Atrix Manufacturing Costs for the preceding calendar
year, which statement shall accompany the report for the fourth quarter
of the preceding calendar year. In the event of an underpayment to
Atrix, Geneva shall include such underpayment with the fourth quarter
payment of the Atrix Profit Share. In the event of an overpayment to
Atrix, Geneva shall reduce such overpayment from the fourth quarter
payment of the Atrix Profit Share. If the Parties are unable to resolve
any dispute under this Section 7.02(c), the matter shall be referred to
an independent firm of certified public accountants chosen by agreement
of Geneva and Atrix for resolution of such
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dispute. Any decision by the said firm of independent certified public
accountants shall be binding on the Parties.
(d) Exchange Rate; Manner and Place of Payment. All payments
hereunder shall be payable in United States dollars. With respect to
each quarter, for countries other than the United States, whenever
conversion of payments from any foreign currency shall be required,
such conversion shall be made at the rate of exchange reported in The
Wall Street Journal on the last business day of such quarter. All
payments owed under this Agreement shall be made by wire transfer to a
bank account designated by Atrix, unless otherwise specified in writing
by Atrix.
(e) Late Payments. In the event that any payment due hereunder
is not made when due, the payment shall accrue interest from that date
due at the rate of one and one-half percent (1.5%) per month; provided,
however, that in no event shall such rate exceed the maximum legal
annual interest rate. The payment of such interest shall not limit
Atrix from exercising any other rights it may have as a consequence of
the lateness of any payment.
(f) Records and Audits. During the Term and for a period of
three (3) years thereafter, Geneva and Atrix shall keep complete and
accurate records in sufficient detail to permit Atrix or Geneva, as the
case may be, to confirm the accuracy of all payments due hereunder
(including the calculation of Atrix Manufacturing Cost, Gross Sales,
Net Sales and Selling Expenses). Each Party shall have the right to
have the other Party's records audited by an independent firm of
certified public accountants chosen by mutual agreement of Geneva and
Atrix to confirm payments made and costs incurred for the preceding
calendar year. Any decision by the said firm of independent certified
public accountants shall be binding on the Parties. If the Parties are
unable to agree on the firm of certified public accountants, such
dispute shall be resolved in accordance with Article XVII. Such audits
may be exercised during normal business hours no more than once in any
twelve (12) month period upon at least thirty (30) days prior written
notice to the other Party. The auditing Party shall bear the full cost
of such audit unless such audit discloses an underpayment or
overpayment, as the case may be, by more than five percent (5%) of the
amount due under this Agreement. In such case, the Party being audited
shall bear the full cost of such audit. In all events, the applicable
Party shall pay any underpayment or refund any overpayment with
interest in accordance with Section 7.02(e).
(g) Taxes. The Parties agree that, in the absence of any law
or regulation to the contrary, all taxes levied on any payments
accruing to Atrix under this Agreement, including, without limitation,
any taxes levied upon net income, shall be paid by Atrix for its own
account. If any applicable law or regulation requires Geneva to
withhold or deduct taxes from payments made to Atrix, Geneva promptly
shall deliver to Atrix documentation sufficient to indicate the amounts
so withheld or deducted, including, if available, a receipt from the
appropriate taxing authority evidencing receipt of such withheld or
deducted amounts. Each Party agrees to assist the other Party by all
means reasonably available in claiming exemption from any withholding
or deduction requirements.
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(h) Prohibited Payments. Notwithstanding any other provision
of this Agreement, if Geneva is prevented from paying any payments by
virtue of the statutes, laws, codes or governmental regulations of the
country from which the payment is to be made, then such payment may be
paid by depositing funds in the currency in which accrued to Atrix's
account in a bank acceptable to Atrix in the country whose currency is
involved.
Section 7.03. PURCHASE FORMS. To the extent of any conflict or
inconsistency between this Agreement and any purchase orders, purchase order
releases, confirmations, acceptances and similar documents submitted by a Party
in conducting the activities contemplated under this Agreement, the terms of
this Agreement shall govern.
Section 7.04. CONFIRMATION. Atrix shall confirm each purchase order
within ten (10) days from the date of receipt of a purchase order and shall
supply a Product within a maximum of sixty (60) days from the date of acceptance
of a purchase order, or later if so specified in the purchase order. Failure of
Atrix to confirm any purchase order shall not relieve Atrix of its obligation to
supply the Product ordered by Geneva in conformity with this Agreement.
Section 7.05. DELIVERY. Delivery terms for the Products shall be FOB
Atrix's manufacturing facility at Fort Collins, Colorado or such other
manufacturing facility designated by Atrix. Atrix shall ship the Products in
accordance with Geneva's purchase order form or as otherwise directed by Geneva
in writing. Title to any Products purchased by Geneva shall pass to Geneva upon
the earlier of (i) a common carrier accepting possession or control of such
Product, as applicable, for shipment to Geneva or its agents, or (ii) passage of
such Product from the loading dock of Atrix's facilities or the manufacturing
facility designated by Atrix to Geneva or its agents.
Section 7.06. FORECASTS. Not later than six (6) months following
submission of the ANDA or other applicable regulatory filing on a country by
country basis for a particular Product, Geneva will provide Atrix with a twelve
(12) month forecast of Geneva's requirement of that Product on a country by
country basis. On an ongoing basis, twelve (12) month forecasts shall be
provided quarterly, no less than forty-five (45) days prior to the beginning of
each quarter. Said requirements will be based on standard production planning
parameters including but not limited to sales forecasts, sales demand forecasts,
promotional forecasts, inventory requirements, and the like. The first two (2)
quarters of the twelve (12) month forecast will be stated in monthly
requirements. The second two (2) quarters of the twelve (12) month forecast will
be total requirement by stock keeping unit and will be stated as quarterly
requirements. The first three (3) months of the twelve (12) month forecast will
be firm orders. The second three (3) months will be allowed to be flexed from
the previous forecast by plus or minus twenty-five percent (25%) per month until
fixed by the subsequent forecast; provided that the aggregate adjustment from
the quantity set forth in the previous forecast for such three (3) month period
shall not exceed fifty percent (50%) in aggregate during that three (3) month
period. The last two (2) quarters' total quantities will be an estimate and not
binding. All orders will be for full batch quantities. It is understood that
Atrix will not maintain a Product inventory in excess of the forecast, but will
produce a Product upon receipt of that portion of Geneva's forecasts that
constitute firm orders. The above periods whether fixed or flexible will be
adjusted based upon existing lead times at time of start up. Geneva agrees to
use commercially reasonable best
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efforts to purchase a sufficient amount of a Product to enable Geneva to carry
sufficient inventory to allow for fluctuations in sales demand so as to allow
Atrix reasonable lead time to meet increased demand. Atrix will use commercially
reasonable efforts to meet any increase in demand in excess of the allowed
adjustment, but will not be obligated to do so.
ARTICLE VIII
WARRANTY, REJECTION AND INSPECTIONS
Section 8.01. ATRIX WARRANTY. Atrix represents and warrants to Geneva
that (i) each Product delivered pursuant to this Agreement shall comply with the
Specifications for that Product; and (ii) at the time of Manufacture and
delivery to Geneva, the Products will be and are free from any failure or
defects and will not be and are not adulterated within the meaning of the U.S.
Federal Food, Drug, and Cosmetic Act (the "FD&C Act").
EXCEPT AS OTHERWISE SET FORTH HEREIN, ATRIX MAKES NO OTHER WARRANTIES
OF ANY OTHER KIND, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY
OR FITNESS OF THE PRODUCTS FOR ANY PURPOSE, AND ATRIX EXPRESSLY DISCLAIMS ANY
SUCH OTHER WARRANTIES WITH RESPECT TO THE PRODUCTS, EITHER EXPRESSED OR IMPLIED.
Section 8.02. REJECTION OF PRODUCTS FOR FAILURE TO CONFORM TO
SPECIFICATIONS. Geneva shall have thirty (30) days after the receipt of any
Shipment to subject a Product, on a sample basis, to quality control testing to
determine conformity of the Product to the Specifications. If testing of such
samples shows a failure to meet Specifications, Geneva may return the entire
Shipment, or any portion thereof, to Atrix at Atrix's expense within a
reasonable period of time following the above described testing; provided that
notice of non-conformity is received by Atrix from Geneva within forty (40) days
of receipt of said Shipment. Atrix shall have the option to replace within
thirty (30) days such returned Product with Product that meets the
Specifications or to promptly refund to Geneva, all amounts paid for such
returned Product. In either case the cost of freight and handling to return or
replace the goods shall be at the expense of Atrix. If Geneva does not give
Atrix notice of the non-conformity of a Product within forty (40) days of
receipt of said Shipment, the Product shall be deemed to meet the Specifications
for purposes of Geneva's right to reject and return the Shipment.
Notwithstanding anything in this Agreement to the contrary, the Parties may
agree to a return of a Product or an adjustment in the purchase price in the
event of any failure or defect in a Product. Should there be a discrepancy
between Geneva's test results and the results of testing performed by Atrix,
such discrepancies shall be finally resolved by testing performed by an
independent Third Party selected by Geneva and approved by Atrix (which approval
shall not be unreasonably withheld and shall be presumed given if not
disapproved in writing by Atrix within ten (10) days after receipt of Geneva's
notice of such selection to Atrix). The costs of such testing shall be borne by
the Party against whom the discrepancy is resolved. In addition, in the event a
Product has been previously returned to Atrix and an independent Third Party
determines that a Product meets the Specifications, Geneva shall be responsible
for all costs associated with the return.
Section 8.03. GENEVA INSPECTIONS. Atrix shall upon reasonable (but not
less than ten (10) days) prior written notice by Geneva and during normal
business hours, allow Geneva to
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inspect Atrix's facilities used to Manufacture the Products, no more than twice
annually, to confirm that the Atrix's facilities and the equipment, personnel
and operating and testing procedures used by Atrix in the Manufacture, testing,
storage and distribution of the Products are in compliance with Applicable Laws
and the Governmental Approvals. Notwithstanding the foregoing, upon a material
breach of this Agreement by Atrix, if such breach has not been cured, Geneva
shall have the right to inspect Atrix's facilities on an "as-needed" basis;
provided, that such inspections shall not interfere with Atrix's performance of
its duties under this Agreement or its normal operations or cause Atrix to
violate or breach any confidentiality agreements with Third Parties. In the
event that Atrix shall receive notice of a pending inspection of such facilities
by a Competent Authority, and such inspection shall be specifically related to a
Product, Atrix shall immediately notify Geneva of such inspection and inform
such Competent Authority that Geneva may desire to be present at such
inspection; provided that Geneva's right to be present is subject to approval by
such Competent Authority and subject to Geneva being available at the time and
date established by such Competent Authority, and further provided that Geneva's
presence does not cause Atrix to violate or be in breach of any confidentiality
agreements with Third Parties.
ARTICLE IX
REGULATORY COMPLIANCE
Section 9.01. HOLDER OF MARKETING AUTHORIZATIONS. Unless otherwise
required by Applicable Laws and subject to Section 3.01, Atrix shall be the
holder of all Marketing Authorizations and Geneva shall be named as Atrix's
distributor in each country in the Territory in which Geneva has elected to
market a Product with respect to the Marketing Authorizations. In the event that
Atrix, in its sole discretion, determines that it is desirable, for legal or
administrative reasons, for Geneva to hold some or all of the Marketing
Authorizations, Geneva understands and agrees that Geneva will hold the
Marketing Authorizations in trust for the benefit of Atrix and that, therefore,
Geneva will not transfer, assign, mortgage, charge or sub-contract any of the
Marketing Authorizations other than to Atrix or to a Third Party distributor
appointed by Geneva to distribute a Product, and that Geneva will not do
anything to adversely affect a Marketing Authorization. Geneva agrees that Atrix
shall be free from time to time to inform the Competent Authorities that the
Marketing Authorizations are held in trust for Atrix. Any transfer of the
Marketing Authorization by Geneva to a Third Party distributor shall be
contingent upon: (i) Atrix's prior approval, which approval Atrix may withhold
in its sole discretion; and (ii) the execution by the Third Party distributor of
a written agreement pursuant to which the Third Party distributor agrees to hold
the Marketing Authorization on the same terms and conditions as set forth in
this Section 9.01. Geneva agrees to provide Atrix with copies of any agreements
with third parties entered into by Geneva and such Third Party in order to
comply with this Section 9.01 simultaneously upon execution, along with
appropriate evidence from the Competent Authorities documenting the transfer of
the Marketing Authorization. Any transfers of any Marketing Authorizations made
in violation of this Section 9.01 shall be null, void and unenforceable.
Section 9.02. MAINTENANCE OF MARKETING AUTHORIZATIONS. Atrix agrees to
maintain the Marketing Authorizations including obtaining any variations or
renewals thereof, and Geneva
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agrees to reimburse Atrix for [**] of Atrix's out-of-pocket expenses in
connection therewith on an as invoiced basis.
Section 9.03. ASSISTANCE. Each Party shall provide reasonable
assistance to the other at the other's request, in connection with their
obligations pursuant to this Article IX, subject to reimbursement of all of its
out-of-pocket costs by the requesting Party.
Section 9.04. COMPLIANCE. Geneva and Atrix shall comply with all
Applicable Laws within the Territory including the provision of information by
Geneva and Atrix to each other necessary for Atrix and Geneva to comply with any
applicable reporting requirements. Each Party shall promptly notify the other
Party of any comments, responses or notices received from, or inspections by,
the FDA, or other applicable Competent Authorities, which relate to or may
impact a Product or the Manufacture of a Product or the sales and marketing of a
Product, and shall promptly inform the other Party of any responses to such
comments, responses, notices or inspections and the resolution of any issue
raised by the FDA or other Competent Authorities.
ARTICLE X
CONFIDENTIALITY
Section 10.01. CONFIDENTIALITY. During the Term and for a period of
[**] years thereafter, each Party shall maintain all Confidential Information of
the other Party as confidential and shall not disclose any such Confidential
Information to any Third Party or use any such Confidential Information for any
purpose, except (a) as expressly authorized by this Agreement, (b) as required
by law, rule, regulation or court order (provided that the disclosing Party
shall first notify the other Party and shall use commercially reasonable efforts
to obtain confidential treatment of any such information required to be
disclosed), or (c) to its Affiliates and its employees, agents, consultants and
other representatives ("Representatives") to accomplish the purposes of this
Agreement, so long as such persons are under an obligation of confidentiality no
less stringent than as set forth herein. Each Party may use such Confidential
Information only to the extent required to accomplish the purposes of this
Agreement. Each Party shall use at least the same standard of care as it uses to
protect its own Confidential Information to ensure that it and its Affiliates
and Representatives do not disclose or make any unauthorized use of the other
Party's Confidential Information. Each Party shall be responsible for any breach
of this Agreement by its Representatives. Each Party shall promptly notify the
other Party upon discovery of any unauthorized use or disclosure of the other
Party's Confidential Information.
Section 10.02. DISCLOSURE OF AGREEMENT. Neither Party shall release to
any Third Party or publish in any way any non-public information with respect to
the terms of this Agreement without the prior written consent of the other
Party, which consent shall not be unreasonably withheld, conditioned or delayed,
except for the disclosure by a Party of the terms of this Agreement to lenders,
investment bankers and other financial institutions of its choice solely for
purposes of financing the business operations of such Party; provided such Party
uses reasonable efforts to obtain a signed confidentiality agreement with any
such financial institution with
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respect to such information on terms substantially similar to those contained in
this Article X and except as provided in Section 18.13. Nothing contained in
this paragraph shall prohibit either Party from filing this Agreement as
required by the rules and regulations of the Securities and Exchange Commission,
national securities exchanges or the Nasdaq Stock Market; provided the
disclosing Party discloses only the minimum information required to be disclosed
in order to comply with such requirements, including requesting confidential
treatment of this Agreement (after consultation with the other Party) and filing
this Agreement in redacted form.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
Section 11.01. CORPORATE POWER. Each Party hereby represents and
warrants that such Party is duly organized and validly existing under the laws
of the state of its incorporation and has full corporate power and authority to
enter into this Agreement and to carry out the provisions hereof.
Section 11.02. DUE AUTHORIZATION. Each Party hereby represents and
warrants that such Party is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder.
Section 11.03. BINDING OBLIGATION. Each Party hereby represents and
warrants that this Agreement is a legal and valid obligation binding upon it and
is enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by such Party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having authority over it.
Section 11.04. LIMITATION ON WARRANTIES. Neither Party makes any
warranties, express or implied, concerning the commercial utility of a Product.
Section 11.05. LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE ENTITLED
TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT EXCEPT TO THE EXTENT THAT A
PARTY IS MERELY SEEKING REIMBURSEMENT FOR SUCH DAMAGES PAID TO A THIRD PARTY AND
SUCH REIMBURSEMENT IS COVERED BY THE INDEMNIFICATION PROVISIONS OF ARTICLE XII.
ARTICLE XII
INDEMNIFICATION AND JOINT LIABILITY
Section 12.01. GENEVA INDEMNIFIED BY ATRIX. Atrix shall indemnify and
hold Geneva harmless from and against any liabilities or obligations, damages,
losses, claims, encumbrances, costs or expenses (including attorneys' fees) (any
or all of the foregoing herein collectively referred to as "Loss") insofar as a
Loss or actions in respect thereof, whether existing or occurring prior to, on
or subsequent to the Effective Date, arises out of or is based upon (a) any
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misrepresentation (or alleged misrepresentation) or breach (or alleged breach)
of any of the warranties, covenants or agreements made by Atrix in this
Agreement; or (b) the Manufacture of a Product by Atrix.
Section 12.02. ATRIX INDEMNIFIED BY GENEVA. Geneva shall indemnify and
hold harmless Atrix from and against any Loss insofar as such Loss or actions in
respect thereof, whether existing or occurring prior to, on or subsequent to the
Effective Date, arises out of or is based upon (a) any misrepresentation (or
alleged misrepresentation) or breach (or alleged breach) of any of the
warranties, covenants or agreements made by Geneva in this Agreement; or (b)
Geneva's marketing, sale, distribution or promotion of the Products.
Section 12.03. PROMPT NOTICE REQUIRED. No claim for indemnification
hereunder shall be valid unless notice of the matter which may give rise to such
claim is given in writing by the indemnitee (the "Indemnitee") to the persons
against whom indemnification may be sought (the "Indemnitor") as soon as
reasonably practicable after such Indemnitee becomes aware of such claim;
provided that the failure to notify the Indemnitor shall not relieve it from any
liability which it may have to the Indemnitee otherwise than under this Article
XII. Such notice shall state that the Indemnitor is required to indemnify the
Indemnitee for a Loss and shall specify the amount of Loss and relevant details
thereof. The Indemnitor shall notify Indemnitee no later than sixty (60) days
from such notice of its intention to assume the defense of any such claim. In
the event the Indemnitor fails to give such notice within that time the
Indemnitor shall no longer be entitled to assume such defense.
Section 12.04. INDEMNITOR MAY SETTLE. The Indemnitor shall at its
expense, have the right to settle and defend, through counsel reasonably
satisfactory to the Indemnitee, any action which may be brought in connection
with all matters for which indemnification is available. In such event the
Indemnitee of the Loss in question and any successor thereto shall permit
Indemnitor's counsel and independent auditors, to the extent relevant, full and
free access to its books and records and otherwise fully cooperate with the
Indemnitor in connection with such action; provided that (i) the Indemnitee
shall have the right fully to participate in such defense at its own expense;
(ii) the Indemnitor's counsel and independent auditors shall not disclose any
Confidential Information of the Indemnitee to the Indemnitor without the
Indemnitee's consent; (iii) access shall only be given to the books and records
that are relevant to the action at issue. The defense by the Indemnitor of any
such actions shall not be deemed a waiver by the Indemnitor of its right to
assert a claim with respect to the responsibility of the Indemnitor with respect
to the Loss in question. The Indemnitor shall have the right to settle or
compromise any claim against the Indemnitee without the consent of the
Indemnitee provided that the terms thereof: (a) provide for the unconditional
release of the Indemnitee; (b) require the payment of compensatory monetary
damages by Indemnitor only; and (c) expressly state that neither the fact of
settlement nor the settlement agreement shall constitute, or be construed or
interpreted as, an admission by the Indemnitee of any issue, fact, allegation or
any other aspect of the claim being settled. No Indemnitee shall pay or
voluntarily permit the determination of any liability which is subject to any
such action while the Indemnitor is negotiating the settlement thereof or
contesting the matter, except with the prior written consent of the Indemnitor,
which consent shall not be unreasonably withheld or delayed. If the Indemnitor
fails to give Indemnitee notice of its intention to defend any such action as
provided herein, the Indemnitee involved shall have the right to assume the
defense thereof with counsel of its choice, at the Indemnitor's expense, and
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defend, settle or otherwise dispose of such action. With respect to any such
action which the Indemnitor shall fail to promptly defend, the Indemnitor shall
not thereafter question the liability of the Indemnitor hereunder to the
Indemnitee for any Loss (including counsel fees and other expenses of defense).
Section 12.05. JOINT RESPONSIBILITY FOR PRODUCT LIABILITY CLAIMS. In
the event that a claim or action is brought, or threatened, by a Third Party
against either Atrix or Geneva based on a product liability theory which, such
as a failure to warn allegation, is not related to the wrongful conduct of any
Party and which arises out of the commercialization of any Product, Geneva and
Atrix will have joint responsibility. Specifically, in any such action, Atrix
and Geneva will share [**] all costs and damages, including legal expenses,
costs of settlement, or judgments. Atrix and Geneva will jointly select legal
counsel and will agree on all significant strategy decisions. If Atrix and
Geneva cannot reach agreement on any issue, the arbitration provisions of
Article XVII shall apply.
ARTICLE XIII
COVENANTS
Section 13.01. COVENANT NOT TO LAUNCH COMPETITIVE PRODUCT.
(a) Geneva and Atrix hereby covenant and shall cause its
sublicensees of the Products to agree not to develop, in-license,
market, sell, distribute or have marketed, have sold or have
distributed any Competitive Product in the Territory during the Term.
Notwithstanding the foregoing, if either Party acquires an entity or
all or substantially all of the assets of an entity and such entity
distributes or such assets include a Competitive Product, or either
Party's sublicensee distributes a Competitive Product, such Party or
such sublicensee shall use its commercially reasonable best efforts to
divest itself of such Competitive Product or to otherwise cease
distribution of such Competitive Product within one-hundred and twenty
(120) days (subject to any binding commitments to customers), and such
Party shall not be in breach of this Section 13.01 if it or the
sublicensee, as the case may be, so divests or ceases distribution
within such one-hundred and twenty (120) day period;
(b) All of the covenants in this Section 13.01 shall be
construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of either
Party, its designee or its Affiliates or its sublicensees against the
other Party, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement of such covenants;
(c) Geneva and Atrix hereby agree that the covenants set forth
in this Section 13.01 are a material and substantial part of the
transactions contemplated by this Agreement; and
(d) Because of the difficulty of measuring economic losses as
a result of a breach of the restrictive covenants set forth in this
Section 13.01, and because of the immediate
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and irreparable damage that would be caused for which monetary damages
would not be a sufficient remedy, the Parties agree that either Party
will be entitled to seek specific performance, temporary and permanent
injunctive relief, and other equitable remedies against the other Party
without the necessity of posting a bond or other security. This Section
13.01 shall not limit any other legal or equitable remedies for
violation of the restrictions herein. The Parties agree that either
Party shall have the right to seek relief for any violation or
threatened violation of this Section 13.01 from any court of competent
jurisdiction in any jurisdiction authorized to grant the relief
necessary to prohibit the violation or threatened violation of this
Section 13.01. This Section 13.01 shall apply with equal force to any
sublicensees used to distribute the Product, if any of them is the
holder of the Marketing Authorization at the time the violation or
threatened violation of this Section 13.01 takes place.
Section 13.02. LIMITATION TO THE TERRITORY. Geneva hereby covenants
that it will not, without the prior written authorization of Atrix: (i) promote
or actively solicit sale of a Product or advertise a Product, outside of the
Territory; (ii) purchase or cause to be purchased a Product which Geneva has
represented, directly or indirectly, as being for the purpose of sale in a
specific country in the Territory for sale in any other country in the
Territory; (iii) contact any of Atrix's suppliers or vendors of a Product or
components relating to a Product; (iv) contact the Competent Authorities or
other entity about a Product, except as required by Applicable Laws or as may be
necessary or appropriate to carry out its obligations hereunder; and (v)
knowingly sell or distribute for resale a Product purchased hereunder to a Third
Party who intends to sell outside of the Territory.
ARTICLE XIV
QUALITY ASSURANCE PROVISIONS
Section 14.01. PRODUCT CONFORMANCE.
(a) All of Atrix's obligations herein shall be performed in
accordance with the following regulations and guidance documents:
(i) the FD&C Act and any applicable implementing
regulations;
(ii) current Good Manufacturing Practices ("cGMP"),
U.S. 21 C.F.R. parts 210 and 211;
(iii) applicable foreign regulations; and
(iv) applicable FDA guidelines.
(b) Atrix covenants that, subject to its agreement to file an
ANDA in accordance with the terms of this Agreement: (a) Atrix will be
named as the responsible party in each ANDA; (b) Atrix will have either
drafted or received and reviewed each ANDA; and (c) Atrix shall have
sole responsibility for and shall ensure that a Product meets all
standards established by the ANDA.
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Section 14.02. STARTING MATERIALS. Atrix will order and may select to
sample and test all active ingredients and excipients necessary for the
Manufacture of a Product, and all packaging components, including primary and
printed packaging materials (hereinafter collectively referred to as, the
"Starting Materials") according to the standards set forth in the ANDA for such
Product. Reduced testing/sampling may be applied as determined by Atrix. Atrix
shall release the Starting Materials for processing only after the
results/review of testing results, in accordance with the control procedures set
forth in the ANDA are satisfactory. Atrix shall store the Starting Materials
under such conditions that when used they comply in all material respects with
the Specifications.
Section 14.03. MANUFACTURING
(a) Atrix will Manufacture, package and test the finished
Product in accordance with the Specifications, and Atrix's internal
process controls, which controls shall be developed by Atrix from the
validation of the first three qualification batches. Atrix may elect to
contract out to a Third Party all or part of product manufacturing or
packaging. Atrix will utilize qualified contractors approved by its
quality assurance organization.
(b) Atrix shall refrain from any activities, which may
adversely affect the quality of a Product. Deviations shall be
investigated and documented.
Section 14.04. FINISHED PRODUCT TESTING.
(a) Prior to packaging and shipment, Atrix will ensure that
all bulk finished Product satisfies all required Specifications.
(b) For each lot of product shipped to Geneva a certificate of
analysis will be supplied as and if requested by Geneva.
Section 14.05. MANUFACTURING & PACKAGING BATCH RECORD & SAMPLE
REQUIREMENTS.
(a) Atrix will maintain comprehensive and complete batch
records on the manufacturing and packaging processes for a period
described by each Party's internal requirements. Copies of such records
will be provided by Atrix to Geneva upon request.
(b) Retain samples shall be taken which are representative of
each batch of Product manufactured and packaged. Retain samples shall
be held for a period of at least 1 year past finished product
expiration date. Sample quantities should be at least two times the
amount needed to conduct full analytical and microbiological testing in
the event such action is required.
Section 14.06. STORAGE AND TRANSPORT. Atrix shall store and transport
Starting Materials, bulk finished materials and packaged Products according to
label claim and under appropriate conditions of temperature, humidity, light,
and cleanliness so that the identity, strength, quality, and purity of the drug
products are not affected.
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Section 14.07. VALIDATION. Manufacturing and control procedures,
including cleaning procedures, shall be validated by Atrix, in accordance with
the Specifications and cGMP practices.
Section 14.08. STABILITY. Stability testing will be performed by the
primary packager (or the responsible party at Atrix coordinating these efforts).
Stability testing shall be in accordance with the stability protocol set forth
in the ANDA. Atrix (or the primary packager) shall perform follow-up stability
testing in accordance with the stability protocol set forth in the ANDA.
Section 14.09. WASTE MATERIAL.
(a) Atrix will destroy waste material in a secure and legal
manner that is environmentally friendly and will prevent unauthorized
use or diversion of such waste material. Complete records of the
destruction of material must be maintained by Atrix.
(b) Atrix represents and warrants that it shall obtain and
maintain all necessary permits, registrations and licenses required to
Manufacture and supply the Products and it shall produce the Products
and dispose of all waste material in compliance with all applicable
environmental laws, regulations, and standards.
Section 14.10. ADVERSE DRUG EVENT REPORTING AND PHASE IV SURVEILLANCE.
(a) Each Party shall advise the other Party, by telephone or
facsimile, within such time as is required to comply with Applicable
Laws after it becomes aware of any potentially serious or unexpected
adverse event (including adverse drug experiences, as defined in 21
C.F.R. Section 314.80 or other applicable regulations) (an "ADE")
involving a Product. Such advising Party shall provide the other Party
with a written report delivered by confirmed facsimile of any adverse
reaction, stating the full facts known to such Party, including but not
limited to customer name, address, telephone number, batch, lot and
serial numbers, and other information as required by Applicable Laws.
To the extent permitted by Applicable Laws, Geneva shall have full
responsibility for (i) monitoring such adverse reactions; and (ii) data
collection activities that occur between Geneva and the patient or
medical professional, as appropriate, including any follow-up inquiries
which Geneva deems necessary or appropriate; and Atrix shall have full
responsibility for making any reports to the Competent Authorities,
with a complete copy provided to Geneva at the same time the report is
made to the Competent Authorities.
(b) Within thirty (30) days of receipt of all Governmental
Approvals for a Product in a given country in the Territory, the
Parties shall jointly develop a standard operating procedure for
reporting and identifying adverse drug reactions (the "SOP") that
conforms to Applicable Laws, and which, at the option of Atrix, may be
Geneva's current SOP. In the event the SOP is modified or amended
during the Term of this Agreement, Geneva shall provide Atrix with
copies of any such modification or amendment to the SOP for approval at
least five (5) days prior to such amendment taking effect. The Parties
agree to follow the SOP. Geneva shall designate a qualified person
under Applicable Laws to be responsible for ADE reporting in each
country in the Territory. In the event either Party requires
information regarding adverse drug events with respect to reports
required
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to be filed by it in order to comply with Applicable Laws, including
obligations to report ADEs to the Competent Authorities, each Party
agrees to provide such information to the other on a timely basis.
(c) If the report of an ADE causes a Competent Authority to
request that a phase IV surveillance program be conducted, then the PMC
shall determine the material terms and conditions of such phase IV
surveillance program; provided, however the costs of such phase IV
surveillance program shall be borne [**] by Geneva and [**] by Atrix.
Geneva agrees that should Applicable Laws require that any such interim
data and results from such programs be prepared in written form, Geneva
shall comply with such requirements and provide all such information in
writing to Atrix and Atrix shall then submit such information to the
Competent Authorities in accordance with Applicable Laws. Geneva
further agrees that Atrix shall have the right to incorporate, refer to
and cross-reference such results and underlying data in any regulatory
filing with respect to the Products.
Section 14.11. POST - FIRST COMMERCIAL SALE TESTING AND REPORTING. If,
after the date of First Commercial Sale in any country in the Territory, adverse
events or other issues arise with respect to the safety or efficacy of a Product
which jeopardize the Product's performance or are deemed by the Parties to
potentially limit its approved indications, the Parties shall consult with each
other with respect to such events or other issues. If the Parties determine that
the situation requires clinical testing after First Commercial Sale in any
country in the Territory, modifications to any Marketing Authorization or other
communication with any Competent Authority or entity, Atrix shall design and
implement any such testing, modifications or communication and the costs of such
additional clinical testing shall be borne [**] by Geneva and [**] by Atrix. If
the Parties cannot agree on whether such situation requires clinical testing,
such dispute shall be resolved in accordance with Article XVII.
Section 14.12. RETURNED GOODS. No returned Product shall be re-used or
re-issued without the prior written approval of Geneva's Head of Quality
Assurance or other authorized Geneva representative or as described in each
Party's internal procedures. Upon request, Atrix shall cooperate with, and
provide, Geneva with copies or access to all documentation related to a return
batch, including manufacturing and purchasing records. Detailed records of all
associated activities must be kept by Atrix for a period of three (3) years
after the date such records are created.
Section 14.13. PERSONS TO WHOM COMMUNICATIONS SHOULD BE ADDRESSED. The
primary representatives of the Parties to this Agreement who should be contacted
in matters related to this Article XIV and a detailed contact list of each
Party's quality assurance working group is set forth in Exhibit C.
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CONFIDENTIAL TREATMENT REQUESTED.
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Section 14.14. PRODUCT RECALLS OR WITHDRAWAL. If at any time or from
time to time any Competent Authority of any country in the Territory requests
either Party to recall a Product, or if a voluntary recall is contemplated (a
"Recall"), the Party to whom such request is made or the Party contemplating
such Recall, as the case may be, shall immediately notify the other Party.
Geneva shall be responsible for conducting any Recalls, market withdrawals or
corrections with the respect to a Product and shall make the final decision as
to any voluntary Recalls after consultation with Atrix; provided that Atrix
shall not be prohibited hereunder from taking any action that is required by
law. Any Recall shall be carried out by Geneva in as expeditious a manner as
reasonably possible to preserve the goodwill and reputation of a Product and the
goodwill and reputation of the Parties. Geneva shall maintain records of all
sales and distribution of a Product and customers sufficient to adequately
administer a Recall, market withdrawal or correction for a period of five (5)
years after the date the record is created.
Section 14.15. RECALL COSTS. The cost and expense of a Recall shall be
allocated as follows:
(a) if such Recall is a voluntary Recall or shall be due to
tampering or other cause, other than a manufacturer's defect, but not
due to the negligence or misconduct of the Parties, then Geneva and
Atrix shall [**] of the costs and expenses incurred by Geneva in
connection with such Recall, including, without limitation, all product
credits and returns, freight and shipping costs and product disposal
expenses;
(b) if such Recall shall be due to manufacturer's defect or
the negligence or misconduct of Atrix, all such costs and expenses
shall be borne and paid solely by Atrix; and
(c) if such Recall shall be due to the negligence or
misconduct of Geneva, all such costs and expenses shall be borne and
paid solely by Geneva.
Section 14.16. NOTIFICATION OF THREATENED ACTION. Throughout the
duration of this Agreement and with respect to all Products supplied and
purchased under this Agreement, after the termination of this Agreement, each
Party shall immediately notify the other Party of any information it receives
regarding any threatened or pending action, inspection or communication by or
from a concerned Competent Authority which may affect the safety or efficacy
claims of a Product or the continued marketing of a Product. Upon receipt of
such information, the Parties shall consult with each other in an effort to
arrive at a mutually acceptable procedure for taking appropriate action and, if
they cannot agree on such action, such dispute shall be resolved pursuant to
Article XVII.
ARTICLE XV
INSURANCE
Section 15.01. INSURANCE. Each Party shall, at its sole cost and
expense, obtain and keep in force comprehensive general liability insurance,
including any applicable self-insurance coverage, with bodily injury, death and
property damage limits of Five Million and 00/100 Dollars ($5,000,000.00) per
occurrence and Five Million and 00/100
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** CONFIDENTIAL TREATMENT REQUESTED.
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Dollars ($5,000,000.00) in the aggregate, including contractual liability and
product liability coverage.
ARTICLE XVI
TERM AND TERMINATION
Section 16.01. TERM. This Agreement shall commence as of the Effective
Date and shall continue on a Product-by-Product basis in each country in the
Territory so long as each Product is generating Net Profits equal to or greater
than [**] of Net Sales, or unless and until the PMC decides to terminate
development or commercial sales of the Product (the "Term").
Section 16.02. TERMINATION BY EITHER PARTY FOR CAUSE. Either Party may
terminate this Agreement prior to the expiration of the Term upon the occurrence
of any of the following:
(a) Upon or after the cessation of operations of the other
Party or the bankruptcy, insolvency, dissolution or winding up of the
other Party (other than dissolution or winding up for the purposes or
reconstruction or amalgamation); or
(b) Upon or after the breach of any material provision of this
Agreement by the other Party if the breaching Party has not cured such
breach within sixty (60) calendar days after written notice thereof by
the non-breaching Party.
Section 16.03. TERMINATION BY ATRIX. Atrix may terminate this Agreement
prior to the expiration of the Term with respect to any country in the Territory
upon the occurrence of any of the following:
(a) Upon the failure by Geneva to pay for fifteen (15)
calendar days after written notice thereof payment due to Atrix
pursuant to Section 7.02; provided, however, that this subsection (a)
shall not apply to any payment which is the subject of a good faith
dispute between Geneva and Atrix; and
(b) Upon the failure by Geneva to deliver to Atrix any report
required by Section 7.02(b) for such country for fifteen (15) calendar
days after written notice thereof on more than two (2) occasions during
any two (2) consecutive calendar years.
Section 16.04. EFFECT OF TERMINATION.
(a) Subject to Section 16.04(c), upon termination of this
Agreement by Atrix pursuant to Sections 16.02 or 16.03, Geneva shall
reimburse Atrix for [**] of the out-of-pocket costs and expenses
reasonably incurred or committed to by Atrix in connection with the
activities performed by Atrix in accordance with the Development
Program prior to the effective date of such termination.
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(b) Upon termination of this Agreement by Geneva pursuant to
Section 16.02, Geneva shall reimburse Atrix for [**] of the
out-of-pocket costs and expenses reasonably incurred or committed to by
Atrix in connection with the activities performed by Atrix in
accordance with the Development Program prior to the effective date of
such termination and the rights granted under Section 3.01 shall remain
in effect so long as Geneva has not breached its obligations to Atrix
under this Agreement.
(c) Upon termination by Atrix under Sections 16.02 or 16.03,
the following shall occur:
(i) All rights granted to Geneva shall terminate
immediately, including the rights granted to Geneva pursuant to Section
3.01, and Geneva shall have no further rights in the Products subject
to Geneva's option to sell off existing inventory of Products for six
(6) months after the termination date under subsection (iii) hereof,
and Geneva shall not, either directly or indirectly, use or permit the
use of the same or of the documentation relating to the Products,
except to sell off existing inventory under subsection (iii) hereof;
(ii) At Atrix's election, Geneva shall immediately
transfer to Atrix, to the extent permitted by Applicable Laws, without
further consideration, any Marketing Authorizations held by Geneva or
its Affiliates or sublicensee, if any, and will fully cooperate with
Atrix and all Competent Authorities and do all things and acts
necessary to cause both the legal and equitable ownership of the
Marketing Authorizations to vest in Atrix or its designee as soon as
possible after termination of the Agreement;
(iii) Geneva, at its option, may sell off any
existing inventory of the Products during a period not to exceed six
(6) months following such termination. If Geneva chooses this option,
Geneva shall:
(A) within five (5) days (in the case of a
termination under Section 16.02(a)) and within sixty (60) days
(in the case of a termination under Section 16.02(b)) after
the issuance of a notice of termination by Atrix, notify Atrix
that it intends to sell off existing inventory of the
Products;
(B) continue to comply with its payment
obligations under this Agreement;
(C) continue to sell off existing inventory of
the Products for six (6) months after the notice of
termination but at the expiration of the six (6) months, at
Geneva's election, either (1) sell all useable existing
inventory of Product to Atrix or (2) destroy all remaining
inventory of Product in accordance with Applicable Law,
providing Atrix with proof of destruction in writing
sufficient to comply with Applicable Laws; provided that in
the case of useable Product, Atrix shall pay to Geneva the
actual cost paid by Geneva for such remaining useable
inventory of Product. If Geneva sells any inventory of Product
to Atrix pursuant to this subsection, it shall warrant that
such inventory of Product
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** CONFIDENTIAL TREATMENT REQUESTED.
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has been stored in compliance with all Applicable Laws, has
not been adulterated and has otherwise been maintained
according to the requirements of Applicable Laws and Marketing
Authorizations;
(D) if Geneva notifies Atrix that Geneva does
not intend to sell off any existing inventory of Product,
Geneva shall, at Geneva's election, either (1) sell all
existing useable inventory of Product to Atrix or (2) destroy
all remaining inventory of Product in accordance with
Applicable Law, providing Atrix with proof of destruction in
writing sufficient to comply with Applicable Laws; provided
that in the case of useable Product, Atrix shall pay to Geneva
the actual cost paid by Geneva for such remaining useable
inventory of Product. If Geneva sells any inventory of Product
to Atrix pursuant to this subsection, it shall warrant that
such inventory of Product has been stored in compliance with
all Applicable Laws, has not been adulterated and has
otherwise been maintained according to requirements of
Applicable Laws and Competent Authorities; and
(E) any sales of Product made by Geneva to
Atrix pursuant to this Section 16.04 shall be made by Geneva
within thirty (30) days after (i) the end of the time period
specified by Section 16.04(c)(iii) or (ii) the date Geneva
informs Atrix that it does not intend to sell off any existing
inventory of a Product, as applicable, and shall be shipped to
Atrix appropriately packaged and stored. All transportation
costs in connection with such sale, including without
limitation, insurance, freight and duties, shall be paid by
Atrix. Amounts owed by Atrix to Geneva pursuant to this
Section 16.04(c) for the Product shall be paid by Atrix within
thirty (30) days after receipt of an appropriately detailed
invoice.
(d) Upon expiration of this Agreement with respect to a
specific Product under Section 16.01 or Section 5.02, the provisions of
Section 16.04(c) shall govern the rights of the Parties with respect to
that Product.
(e) Expiration or termination of this Agreement shall not
relieve the Parties of any obligation accruing prior to such expiration
or termination. Except as set forth below or elsewhere in this
Agreement, the obligations and rights of the Parties under Sections
7.02(e), 11.05, 14.14, 14.15, 14.16, Articles X, XII, XVII, XVIII and
this Article XVI shall survive expiration or termination of this
Agreement.
(f) Within thirty (30) days following the expiration or
termination of this Agreement, each Party shall return to the other
Party, or destroy, upon the written request of the other Party, any and
all Confidential Information of the other Party in its possession and
upon a Party's request, such destruction (or delivery) shall be
confirmed in writing to such Party by a responsible officer of the
other Party.
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ARTICLE XVII
DISPUTE RESOLUTION
Section 17.01. ARBITRATION. The Parties recognize that disputes as to
certain matters may from time to time arise which relate to either Party's
rights and/or obligations hereunder. It is the objective of the Parties to
establish procedures to facilitate the resolution of such disputes in an
expedient manner by mutual cooperation and without resort to litigation. To
accomplish this objective, the Parties agree to follow the procedures set forth
in this Section 17.01 if and when such a dispute arises between the Parties.
If any dispute arises between the Parties relating to the
interpretation, breach or performance of this Agreement or the grounds for the
termination thereof, and the Parties cannot resolve the dispute within thirty
(30) days of a written request by either Party to the other Party, the Parties
agree to hold a meeting, attended by the Chief Executive Officer or President of
each Party, or their executive level designees, to attempt in good faith to
negotiate a resolution of the dispute prior to pursuing other available
remedies. If, within sixty (60) days after such written request, the Parties
have not succeeded in negotiating a resolution of the dispute, such dispute
shall be submitted to final and binding arbitration under the then current
commercial rules and regulations of the American Arbitration Association ("AAA")
relating to voluntary arbitrations. The arbitration proceedings shall be held in
Denver, Colorado. One arbitrator shall be selected by Atrix, one arbitrator
shall be selected by Geneva, and the third arbitrator shall be chosen by the
first two arbitrators chosen from a panel of arbitrators provided by the
Judicial Arbiter Group of Denver, of if such group no longer exists, by the AAA.
The arbitrators selected by Atrix and Geneva shall have substantial experience
in the pharmaceutical industry and be familiar with agreements of this type. The
arbitration shall be conducted in accordance with the following time schedule
unless otherwise mutually agreed to in writing by the Parties: (i) Parties to
the arbitration proceeding shall each appoint their respective arbitrator within
fifteen (15) business days after the date the dispute is submitted to
arbitration; (ii) within ten (10) business days thereafter, such arbitrators
shall appoint the third arbitrator; (iii) within ten (10) business days after
the appointment of the third arbitrator, the Parties to the arbitration
proceeding shall provide all documents, records and supporting information
reasonably necessary to resolve the dispute; and (iv) within fifteen (15)
business days after the date the above records are due, the arbitrators shall
hold a hearing, and (v) within fifteen (15) days thereafter render their
decision. Each Party shall initially bear its own costs and legal fees
associated with such arbitration. The prevailing Party in any such arbitration
shall be entitled to recover from the other Party the reasonable attorney's
fees, costs and expenses incurred by such prevailing Party in connection with
such arbitration. The decision of the arbitrator shall be final and binding on
the Parties. The arbitrator shall prepare and deliver to the Parties a written,
reasoned opinion conferring its decision. Judgment on the award so rendered may
be entered in any court having competent jurisdiction thereof and shall be
enforceable under the Federal Arbitration Act.
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ARTICLE XVIII
MISCELLANEOUS
Section 18.01. NO-SOLICITATION. Neither Party nor its Affiliates
(collectively, the "Initiating Group") shall, directly or through its
representatives, solicit for employment or consultation any officer, director or
employee of the other Party or its subsidiaries or controlled affiliates
(collectively, the "Other Group") with whom the Initiating Group has contact in
connection with, or who otherwise is known by the Initiating Group to
participate in, the transactions contemplated by this Agreement, without the
prior written consent of the other Party. The Initiating Group shall not be
precluded from hiring any such person who has been terminated by the Other Group
prior to commencement of employment or consultation discussions between such
person and the Initiating Group or its representatives. "Solicitation" shall not
include any generalized public advertisement or any other solicitation by the
Initiating Group or its representatives that is not specifically directed toward
any such employee of the Other Group or toward any group of such employees of
the Other Group.
Section 18.02. COMMERCIALLY REASONABLE EFFORTS. Except as otherwise set
forth in this Agreement, each Party shall use commercially reasonable and
diligent efforts to perform its responsibilities under this Agreement. As used
herein, the term "commercially reasonable and diligent efforts" means, unless
the Parties agree otherwise, those efforts consistent with the exercise of
prudent scientific and business judgment, as applied to other products of
similar scientific and commercial potential within the relevant product lines of
the Parties.
Section 18.03. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the Parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld, conditioned or delayed. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the Parties hereto and their respective permitted successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the Parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
Section 18.04. FORCE MAJEURE. Neither Party shall be held liable or
responsible to the other Party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any term of this
Agreement (other than non-payment) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party,
including, but not limited to, fire, floods, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other Party; provided that
the Party whose performance is delayed or prevented shall continue to use good
faith diligent efforts to mitigate, avoid or end such delay or failure in
performance as soon as practicable.
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Section 18.05. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
except that no conflict of laws provision shall be applied to make the laws of
any other jurisdiction applicable to this Agreement.
Section 18.06. WAIVER. Except as specifically provided for herein, the
waiver from time to time by either of the Parties of any of their rights or
their failure to exercise any remedy shall not operate or be construed as a
continuing waiver of same or of any other of such Party's rights or remedies
provided in this Agreement.
Section 18.07. SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby so long as the reasonable objectives and expectations of each
of the Parties can still be met.
Section 18.08. NOTICES. All notices and other communications provided
for hereunder shall be in writing and shall be mailed by first-class, registered
or certified mail, postage paid, or delivered personally, by overnight delivery
service or by facsimile, computer mail or other electronic means, with
confirmation of receipt, addressed as follows:
IF TO ATRIX: Atrix Laboratories, Inc.
2579 Midpoint Drive
Fort Collins, CO 80525
Attn: Charles P. Cox, Ph.D., MBA
Vice President, New Business Development
Telephone: (970) 482-5868
Facsimile: (970) 482-9735
COPIES TO: Morrison & Foerster LLP
5200 Republic Plaza
370 17th Street
Denver, Colorado 80202-5638
Attn: Warren L. Troupe, Esq.
Telephone: (303) 592-2255
Facsimile: (303) 592-1510
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IF TO GENEVA: Geneva Pharmaceuticals, Inc.
2655 W. Midway Blvd.
P.O. Box 446
Broomfield, Colorado 80038
Attn: President
Telephone: (303) 438-4550
Facsimile: (303) 438-4300
COPIES TO: Geneva Pharmaceuticals, Inc.
2655 W. Midway Blvd.
P.O. Box 446
Broomfield, Colorado 80038
Attn: General Counsel
Telephone: (303) 438-4154
Facsimile: (303) 438-2756
e-mail: [email protected]
Either Party may by like notice specify or change an address to which
notices and communications shall thereafter be sent. Any such notice or
communication shall be deemed to have been effectively given (i) in the case of
personal or hand delivery, on the date of such delivery, (ii) in the case of
overnight delivery service, on the second business day after the date when sent,
(iii) in the case of mailing, on the third business day following that day on
which the piece of mail containing such communication is posted and (iv) in the
case of facsimile and computer mail or other electronic means, upon confirmation
of receipt.
Section 18.09. INDEPENDENT CONTRACTORS. It is expressly agreed that
Atrix and Geneva shall be independent contractors and that the relationship
between the two Parties shall not constitute a partnership or agency of any
kind. Neither Atrix nor Geneva shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other Party, without the prior written consent of the other
Party.
Section 18.10. RULES OF CONSTRUCTION. The Parties hereto agree that
they have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the Party drafting such agreement or
document.
Section 18.11. ENTIRE AGREEMENT; AMENDMENT. This Agreement (including
the Exhibits attached hereto) sets forth all of the covenants, promises,
agreements, warranties, representations, conditions and understandings between
the Parties hereto with respect to the subject matter hereof and supersedes and
terminates all prior agreements and understandings between the Parties. There
are no covenants, promises, agreements, warranties, representations conditions
or understandings, either oral or written, between the Parties other than as set
forth herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties.
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Section 18.12. HEADINGS. The captions contained in this Agreement are
not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several articles hereof.
Section 18.13. PUBLICITY. Geneva and Atrix shall consult with each
other before issuing any press release with respect to this Agreement or the
transactions contemplated hereby and neither shall issue any such press release
or make any such public statement without the prior consent of the other, which
consent shall not be unreasonably withheld, conditioned or delayed; provided,
however, (i) that a Party may, without the prior consent of the other Party,
issue such press release or make such public statement as may upon the advice of
counsel be required by law or the rules and regulations of the NASDAQ or any
stock exchange, if it has used reasonable efforts to consult with the other
Party prior thereto, and (ii) such consent shall be deemed to have been given if
the recipient of the press release or public statement fails to respond to the
other Party within forty-eight (48) hours after the recipient's receipt of such
proposed press release or public statement. No such consent of the other Party
shall be required to release information which has previously been made public.
Section 18.14. 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. Each of the transaction
documents may be signed and delivered to the other Party by facsimile
transmission; such transmission shall be deemed a valid signature.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized officers as of the Effective
Date.
ATRIX LABORATORIES, INC. GENEVA PHARMACEUTICALS, INC.
By:/s/ David R. Bethune By:/s/ Hubert Hirzinger
-------------------------------- --------------------------------
David R. Bethune Hubert Hirzinger
Chairman and Chief Executive President and Chief Executive
Officer Officer
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EXHIBIT A
PRODUCTS
[**]
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**CONFIDENTIAL TREATMENT REQUESTED.
A-1
<PAGE> 42
EXHIBIT B
DEVELOPMENT PROGRAM
OUTLINE
[**]
----------
**CONFIDENTIAL TREATMENT REQUESTED.
B-1
<PAGE> 43
EXHIBIT C
GENEVA PHARMACEUTICALS, INC. AND ATRIX LABORATORIES, INC.
QUALITY ASSURANCE LIST OF CONTACTS
[**]
----------
**CONFIDENTIAL TREATMENT REQUESTED.
C-1
