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[***] - CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 10.10
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of this Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The Securities And Exchange Commission.
EXCLUSIVE PATENT LICENSE AGREEMENT
THIS AGREEMENT made and effective this 1st day of January, 2000, by
and between Xxxx Fine Chemicals, Inc., having a place of business at 000 Xxxx
Xxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as
"Licensor").
and
Horizon Pharmaceutical, Corporation., having a place of business at
000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (collectively
hereinafter referred to as "Licensee").
WHEREAS, Licensor is the owner of the entire right, title and interest
in, to and under Letters Patent of the United States [****], directed to
phenylephrine tannate compositions and Letters of Patent of the United States
No. 5,663,415 granted September 2, 1997, directed to processes for producing
tannate products (said patents collectively referred to as the Licensed
Patents); and
WHEREAS, Licensee is desirous of securing and Licensor is willing to
grant a semi-exclusive license under the Licensed Patents to use, sell and
distribute Finished Dosage Products (defined below) containing to
Chlorpheniramine Tannate;
NOW, THEREFORE, in consideration of the covenants and obligations
hereinafter set forth to be well and truly performed, the parties hereto hereby
agree as follows:
SECTION ONE
The following definitions will apply to the respective terms as used
throughout this Agreement.
(a) "Net Sales" shall mean Licensee's gross invoice price of sales of
Finished Dosage Products covered by the claims of the Licensed Patents in the
Territory to third party customers after deduction of (i) cash, trade and/or
quantity discounts actually allowed; (ii) amounts repaid or credited by reason
of rejection or returns of goods, rebates (including government mandated
rebates) or because of retroactive price reductions unrelated to the sale or
pricing of another product of Licensee; and (iii) freight, postage, and duties
paid for and separately identified on invoices. A sale of a product is deemed
to have occurred upon the earliest of invoicing, shipment or transfer of title
in the product to a party other than Licensee or its affiliates or
sublicensees.
(b) "Baseline Net Sales" shall mean Licensee's actual Net Sales for the
period January 1, 1999 through December 31, 1999.
(c) "Annual Net Sales" shall mean Licensee's actual Net Sales for a
twelve month period January 1 to December 31 of a given year.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(d) "Territory" means the United States of America, including its
territories and possessions and Puerto Rico.
(e) "Contract Year" shall mean the twelve (12) month period commencing
on January 1, 2000 and ending December 31, 2000 for the first Contract Year and
subsequent twelve (12) month periods commencing on the anniversary of the day
immediately following the end of the first Contract Year.
(f) "Finished Dosage Products" means products that contain active
pharmaceutical ingredients and are in a form ready for sale to a final consumer
(including, without limitation, a liquid suspension or tablet).
SECTION TWO
(a) Licensor agrees to grant and does hereby grant to Licensee under
the Licensed Patents the exclusive right and license to use, sell and distribute
Finished Dosage Products containing Chlorpheniramine Tannate covered by the
Licensed Patents in the Territory, except only as to the license rights of
Unisource, Inc., a Colorado corporation (Unisource) and or Xxxxxx Xxxxxxx Inc.
pertaining to products that contain Chlorpheniramine Tannate and are covered by
the Licensed Patents.
(b) Licensee agrees that it will purchase or otherwise obtain Finished
Dosage Products containing Chlorpheniramine Tannate from Unisource, Inc. and
its successors or assigns.
SECTION THREE
(a) Upon execution of this Agreement, Licensee agrees to pay to
Licensor a license fee of [***] less the [***] advance paid by Licensee to
Licensor.
(b) Effective at the beginning of the first Contract Year, Licensee
further agrees to pay to Licensor, as royalty, [***] of its Annual Net Sales
derived by Licensee from all sales of Finished Dosage Products covered by the
Licensed Patents and made in accordance with the inventions covered thereby;
"sales" as herein employed shall mean sales of the Finished Dosage Products
covered by the Licensed Patents which are made in the United States, its
territories, possessions and Puerto Rico.
(c) Suspension of royalties:
(i) Generic. For purposes of this Section THREE (c),
"Generic" shall mean a generic to Rynatan or Tanafed but shall not include (A)
products that infringe upon the Licensed Patents or (B) products made from raw
material supplied by Licensor prior to the effective date of this Agreement.
(ii) Suspension. If a Generic enters the market, then, per a
determination made as of December 31 of such year of entry and December 31 of
each subsequent year of this Agreement (all of which calendar years, including
the year of entry, shall collectively be referred to as the "Calendar Years
Potentially Suspended"), Licensee's obligation for the royalty may be suspended
for one or more Calendar Years Potentially Suspended as determined as follows.
Licensee is not obligated for the royalty for any given Calendar Year
Potentially Suspended if i) the gross sales in ounces in the entirety of such
Calendar Year Potentially Suspended do not exceed the Threshold Sales
(hereinafter defined) applicable to that Calendar Year Potentially Suspended
AND ii) the Generic is available in the Territory at any time during such
Calendar Year Potentially Suspended.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(iii) Refund of Royalties. Accordingly, if Licensee is not
obligated for the royalty in a given Calendar Year Potentially Suspended, then,
within 30 days after the end of that calendar year, Licensor shall (A) refund
royalties to Licensee so that the net effect of such refund will be that
Licensee did not pay any royalties for such calendar year and (B) pay Licensee
interest on the royalties refunded at the prime rate as of December 31 of the
calendar year for which royalties are being refunded. In the event Licensee is
not obligated for the royalties in a given calendar year, Licensee may still be
obligated for the royalty in future year(s).
(iv) THRESHOLDS. The Threshold Sales are as follows:
Potential Threshold Sales applicable to the
corresponding Calendar Year
Suspension Potentially Suspended
Calendar Year
2000 Gross sales of [***] ounces (which is [***]
of Licensee's gross sales in ounces in 1999
which was [***] ounces)
2001 [***] of the gross sales (in ounces) in
calendar years 1999 or 2000, whichever is
higher
2002 [***] of the gross sales (in ounces) in
calendar years 1999, 2000 or 2001,
whichever is highest
2003 and thereafter [***] of the gross sales (in ounces) in
calendar years 1999, 2001, 2002 or any
other subsequent Calendar Year Potentially
Suspended, whichever is highest
(v) Partial Refund of Licensing Fee: If in the year 2000,
there is a Generic available AND Licensee's Gross Sales do not exceed [***]
ounces, then Licensor will refund one half of the up-front fees paid upon
execution of this agreement.
(v) Example:
2000
Based on a calculation made as of December 31, 2000, i) if Licensee's gross
sales (in ounces) for calendar 2000 (including gross sales in calendar 2000
prior to the entry of the generic) do not exceed [***] ounces, AND ii) the
Generic is available in the Territory at any time during such Calendar Year
Potentially Suspended then Licensee would not be obligated for royalties for
the entirety of calendar 2000 and would be refunded calendar 2000 royalties
accordingly; and
2001
Based on a calculation made as of December 31, 2001, i) if Licensee's gross
sales in ounces for calendar 2001 do not exceed [***] of the gross sales (in
ounces) in calendar years 1999 or 2000, whichever is highest, AND ii) the
Generic is available in the Territory at any time during such Calendar Year
Potentially Suspended then Licensee would not be obligated for royalties for
the entirety of calendar 2001 and would be refunded calendar 2001 royalties
accordingly; and
2002
Based on a calculation made as of December 31, 2002, i)
if Licensee's gross sales (in ounces) for calendar 2002 do not exceed [***] of
the gross sales (in ounces) of calendar years 1999, 2000 or 2001, whichever is
highest, AND ii) the Generic is available in the Territory at any time during
such Calendar Year Potentially Suspended then Licensee would not be obligated
for royalties for the entirety of calendar 2002 and would be refunded calendar
2002 royalties accordingly; and 2003 and thereafter
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Based on a calculation made as of December 31 of 2003 and of each year
thereafter, if i) Licensee's gross sales (in ounces) for any such calendar year
do not exceed [***] of the gross sales (in ounces) of the previous calendar
year of this Agreement in which Gross sales (in ounces) were the highest, AND
ii) the Generic is available in the Territory at any time during such Calendar
Year Potentially Suspended, then Licensee would not be obligated for royalties
for the entirety of the calendar year ending on the December 31 on which such
calculation was made, and would be refunded royalties for such calendar year
accordingly.
(d) The term of this Agreement shall be from the date hereof to the
later of the expiration of either of the Licensed Patents or any reissue,
continuation or extension of the Licensed Patents. In the event that Licensor
becomes the owner of or has rights to patents in addition to the Licensed
Patents which additional patents pertain to the products covered by the
Licensed Patents, the term of this Agreement shall automatically extend to the
expiration of such additional patents. In any event, Licensee may continue to
renew this Agreement for five (5) year renewal periods beyond the
above-referenced patent expiration dates by providing Licensor written notice
of its intent to so renew prior to such patent expiration dates.
SECTION FOUR
It is mutually understood and agreed that the sale of compositions
covered by the Licensed Patents may be subject to approval and/or regulation by
the Food and Drug Administration or other applicable government agency and in
the event that such approval is refused or such regulation prohibits the sale
of products covered by the Licensed Patents, Licensee shall have the right to
cancel this Agreement and the license herein granted to it; in the event of
such cancellation, Licensee shall not be liable to Licensor for the payment of
any royalties hereunder or any additional license fees, as the case may be.
SECTION FIVE
All royalties provided for by this License Agreement shall be due and
payable quarterly and Licensee agrees to pay to Licensor on or before the last
day of each of the months of February, May, August and November of each
Contract Year during which this Agreement is in force, the total amount of
royalties due and payable on account of its operations under this Agreement
during the calendar quarter immediately preceding said dates.
SECTION SIX
Licensee agrees that it will render to Licensor with each such royalty
payment a written statement setting forth the total Annual Net Sales from its
royalty-bearing sales during the period covered by such statement and Licensee
agrees to keep a separate record in a suitable book or set of books provided
for the purpose, in sufficient detail to enable the royalties payable hereunder
to be determined, and further agrees that it will permit such book or set of
books to be examined by an auditor or accountant, authorized by Licensor, at
any reasonable time during business hours to the extent necessary to verify the
records and payments here provided for, it being agreed that such auditor or
accountant shall make his report to Licensor in such manner that names of
customers or other information deemed confidential by Licensee will not be
disclosed to Licensor.
SECTION SEVEN
In the event that Licensor makes or acquires any improvements or
additional patents in or relating to the inventions covered by the Licensed
Patents, such improvements and patents shall be and are hereby included as part
of the Licensed Patents upon the same terms and conditions as the said Licensed
Patents; Licensee shall not be obligated to pay to Licensor any further or
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[***] CONFIDENTIAL TREATMENT REQUESTED
additional royalty or other consideration for the license to any such
additional improvements or patents. Licensee's only obligation to Licensor
shall be to continue to pay the royalty stipulated in Section Three until the
expiration of the last such patent or any reissue or extension thereof unless
otherwise provided herein.
SECTION EIGHT
Licensee shall, at its option, with the prior written consent of
Licensor, have power to institute and prosecute, at its own expense, suits for
infringement of the Licensed Patents, and, Licensor will cooperate in such
suits by furnishing such evidence, documents, and testimony as may reasonably
be required, and if required by law, Licensor will join as a party plaintiff in
such suits. All expenses in such suits will be borne entirely by Licensee and
Licensee will pay to Licensor [***] of any excess of recoveries over expenses
(including without limitation attorney fees) in such suits.
SECTION NINE
(a) Licensor warrants, that effective as of the date hereof, Licensor
and Unisource have established a business relationship (the Relationship)
whereby Unisource Inc. may purchase Chlorpheniramine Tannate and Pseudophedrine
Tannate from Xxxx Fine Chemicals and the Relationship shall continue for a
duration at least as long as the duration of this Agreement. Licensor further
warrants that pursuant to the Relationship, for a period of 12 months, and
thereafter it will not increase the prices for such Active Pharmaceutical
Ingredients by an amount exceeding the percentage increase in the PPI (except
that Licensor may increase such price to reflect documented increases in direct
costs which include labor, raw materials, utilities and direct overhead costs
to maintain its existing profit margin which increases will not be subject to
the PPI cap, but which increases shall have been documented to the satisfaction
of Licensee and Unisource). Licensor will decrease the prices of the Active
Pharmaceutical Ingredients to reflect decreases in the cost of such
manufacturing components. Under the terms of the Relationship, Licensor will
notify Unisource and Licensee of the change in dollars per Kg and the effective
date of any price change of each Active Pharmaceutical Ingredient utilized by
Unisource for Finished Dosage Product supplied to Licensee.
(b) Licensor warrants that, if for any reason Licensor is unable to
supply product to meet all of the needs of Unisource, Unisource shall have the
exclusive right, along with Xxxxxxx, to receive Licensor's production of the
products covered by the Licensed Patents based on the respective amounts of
such products ordered during the preceding twelve (12) month period.
SECTION TEN
(a) Licensor represents and warrants that, as of the date hereof, it
has entered into a license agreement with Xxxxxx-Xxxxxxx, a corporation having
a place of business in Cranbury, New Jersey, in a form similar to this
Agreement and whereby Xxxxxx-Xxxxxxx has a semi-exclusive license to the
Licensed Patents as they pertain to Chlorpheniramine Tannate. (b) Licensor
warrants that in its Relationship and Licensing Agreement with Unisource, (i)
Unisource is prohibited from selling or distributing Finished Dosage Products
containing Chlorpheniramine Tannate to any person or entity other than Licensee
and (ii) Unisource does not have the right to sell Chlorpheniramine Tannate as
a stand alone active ingredient.
(b) Licensor warrants that (a) it owns the Licensed Patents; (b) it
has the right to license the Licensed Patents to Licensee; (c) no third party
has filed any civil action against Licensor in connection with the Licensed
Patents or notified Licensor that the Licensed Patents violate such third
party's patent, trademark, copyright, or trade secret rights; (d) to the best
of Licensor's knowledge, the Licensed Patents do not infringe any third party's
copyright or patent;
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(e) it has not granted to any third party any rights in or to the Licensed
Patents that are inconsistent with any right granted to Licensee under this
License Agreement or that will adversely affect any exercise by the Licensee of
its rights granted under this License Agreement.
(c) Licensor agrees to indemnify, defend, and hold harmless Licensee
against any losses, liabilities, claims, damages, costs, and expenses
(including reasonable attorney's fees) (the "Claims") that result from
Licensor's material breach of any of the above warranties. Licensor shall
assume all expenses with respect to the defense, settlement, adjustment, or
compromise of any Claims as to which this section requires Licensor to
indemnify, defend, or hold harmless Licensee and, upon such assumption, shall
have sole control over the defense, settlement, adjustment, or compromise of
such Claims; provided, however, that (i) Licensor shall obtain prior written
approval of Licensee, which Licensee shall not unreasonably withhold, before
entering into any settlement, adjustment, or compromise of such Claims; and
(ii) Licensee may, if it so desires, employ counsel at its own expense to
assist in the handling of such claim or undertake sole control of the defense,
settlement, adjustment, or compromise of such Claims.
SECTION ELEVEN
In the event that Licensee defaults or breaches any of the provisions
of this License Agreement or fails to account for or pay to Licensor any of the
royalties due and payable to Licensor hereunder, Licensor reserves the right to
cancel the license here granted upon sixty (60) days' written notice to
Licensee; provided, however, that if Licensee, within the sixty (60) day period
referred to, cures the said default or breach, the license herein granted shall
continue in full force and effect until the expiration of the Licensed Patents
or any reissue, continuation or extension thereof. In the event of the
termination of the license herein granted by Licensor to Licensee, Licensee
shall not be relieved of the duty and obligation to pay in full royalties
accrued and due and payable at the effective date of such termination.
SECTION TWELVE
In the event of any adjudication of bankruptcy, appointment of a
Receiver by a court of competent jurisdiction, assignment for the benefit of
creditors or levy of execution directly involving Licensee, this Agreement
shall thereupon forthwith terminate and no longer be of any further force and
effect.
SECTION THIRTEEN
This Agreement shall be governed by, interpreted in accordance with,
and enforced under the laws of the State of New Jersey, U.S.A. (regardless of
its or any other jurisdiction's choice of law principles), or, as necessary,
the laws of the United States of America.
SECTION FOURTEEN
This Agreement constitutes the entire agreement between the parties
hereto respecting the subject matter hereof, and supersedes and terminates all
prior agreements respecting the subject matter hereof, whether written or oral,
and may be amended only by an instrument in writing executed by both parties
hereto.
SECTION FIFTEEN
(a) Indemnification by Licensee - Licensee shall indemnify and hold
Licensor harmless against all liability, damage, cost or expense (including
reasonable attorneys' fees) arising out of the promotion, distribution, sale or
use of products made using the products supplied by Licensor or its designee to
Licensee hereunder, including those resulting from any personal injury
(including death) to any person including employees, servants, or agents of
Licensee, except to the extent such liability, damage, cost or expense is
caused by the negligence, omission, failure to act, intentional malfeasance,
willful misconduct, and/or breach
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of the warranties or other obligations of Licensor under this agreement. In the
event of any claim arising under this indemnity, prompt notice of such claim
shall be given by Licensor to Licensee which shall have the right to conduct
the defense in respect thereto, but Licensor may have counsel present at its
own expense and shall be entitled to participate in the defense of any such
claim. Licensor shall cooperate with Licensee in such defense at the expense of
Licensee. No settlement of any such matter shall be made without the written
approval of Licensee and Licensor, which will not be unreasonably withheld.
(b) Indemnification by Licensor - Licensor shall indemnify and hold
Licensee harmless against all liability, damage, cost or expense (including
reasonable attorneys' fees) arising out of any breach of this Agreement by
Licensor and/or the manufacturing, packaging and storing of products supplied
by Licensor.
SECTION SIXTEEN
This Agreement and the license herein granted shall be binding upon
and inure to the benefit of each of the parties hereto, their successors and
the assigns of the entire business relating thereto of each of the parties.
SECTION SEVENTEEN
If any term or provision of this Agreement is found held to be
excessive, or invalid, void or unenforceable, the offending term or revision
shall be deleted or revised to the extent necessary to be enforceable, and, if
possible, replaced by a term or provision which, so far as practicable,
achieves the legitimate aims of the parties.
SECTION EIGHTEEN
Any notice or other communication given by either party hereto to the
other party relating to this Agreement shall be sent by registered or certified
mail, return receipt requested, addressed to such other party at the address
set forth above. Changes of address shall be given in the same manner as any
other notice.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized representatives as of the day and year
first above written.
XXXX FINE CHEMICALS, IN.
Attest: By:
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Title:
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HORIZON PHARMACEUTICALS, INC.
Attest: By:
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Title:
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