EXHIBIT 10.1
LICENSING, DISTRIBUTION AND SUPPLY AGREEMENT
between
CLOSURE MEDICAL CORPORATION
and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ CONSUMER COMPANIES, INC.
Dated as of
May 23, 2001
Table of Contents
-----------------
Article 1 DEFINITIONS............................................................................. 1
Article 2 LICENSE AND DISTRIBUTION RIGHTS......................................................... 7
2.1 License and Distribution Rights............................................................. 7
2.2 Reservation Of Rights....................................................................... 8
2.3 Market Launch............................................................................... 8
2.4 Delay of Market Launch...................................................................... 8
2.5 Market Launch [**].......................................................................... 8
2.6 Regulatory Compliance....................................................................... 9
2.7 Marketing Updates........................................................................... 9
Article 3 FDA APPROVAL AND [**]................................................................... 9
Article 4 MANUFACTURE AND SUPPLY.................................................................. 11
4.1 Contact Person.............................................................................. 11
4.2 Manufacture And Supply...................................................................... 11
4.3 12-Month Rolling Forecast................................................................... 12
4.4 Firm Orders................................................................................. 12
4.5 Annual Minimum Quantities................................................................... 13
4.6 Labeling, Packaging and Assembly............................................................ 14
4.7 Delivery.................................................................................... 14
4.8 Inspection of Shipment and Notice of Claims................................................. 14
4.9 Manufacturing Facility...................................................................... 15
4.10 Mutual Assistance........................................................................... 18
Article 5 PRODUCT DEVELOPMENT..................................................................... 21
5.1 Collaboration............................................................................... 21
5.2 Steering Committee.......................................................................... 21
5.3 Development Activities...................................................................... 22
5.4 Books and Records........................................................................... 24
Article 6 INTELLECTUAL PROPERTY................................................................... 25
6.1 Intellectual Property Ownership............................................................. 25
6.2 Patent Prosecution and Maintenance for New Products and Improvements........................ 25
6.3 Infringement................................................................................ 26
6.4 Ownership of Improvements and New Products.................................................. 26
i REDACTED VERSION
6.5 Trademarks.................................................................................. 28
Article 7 COMMERCIAL TERMS........................................................................ 29
7.1 Product Supply Price........................................................................ 29
7.2 Product Specifications...................................................................... 29
7.3 Reimbursement by CPC........................................................................ 30
7.4 Payment Terms............................................................................... 30
7.5 Interest.................................................................................... 30
Article 8 TERM AND TERMINATION.................................................................... 31
8.1 Automatic Renewal........................................................................... 31
8.2 Termination for Cause....................................................................... 31
8.3 Termination without Cause................................................................... 31
8.4 General..................................................................................... 31
8.5 Disposal of Product and Device.............................................................. 31
Article 9 DISPUTE RESOLUTION...................................................................... 32
9.1 Negotiation and Escalation.................................................................. 32
9.2 Arbitration................................................................................. 32
Article 10 CONFIDENTIALITY......................................................................... 35
10.1 Confidentiality Obligations................................................................. 35
10.2 Exclusions.................................................................................. 35
10.3 Termination................................................................................. 35
10.4 Publicity................................................................................... 36
Article 11 REPRESENTATIONS AND WARRANTIES.......................................................... 36
11.1 Mutual...................................................................................... 36
11.2 Closure Medical Warranties.................................................................. 36
11.3 CPC Representations and Warranties.......................................................... 37
Article 12 DISCLAIMER OF WARRANTY, LIMITATION OF LIABILITY AND INDEMNIFICATION..................... 37
12.1 Disclaimer of Warranties.................................................................... 37
12.2 Indemnification by CPC...................................................................... 37
12.3 Indemnification by Closure Medical.......................................................... 38
12.4 Indemnitee Obligations...................................................................... 38
12.5 Insurance................................................................................... 38
Article 13 FORCE MAJEURE........................................................................... 39
ii REDACTED VERSION
Article 14 MISCELLANEOUS........................................................................... 40
14.1 Disclosures................................................................................. 40
14.2 Governing Law............................................................................... 40
14.3 No Assignment............................................................................... 40
14.4 Independent Contractors..................................................................... 40
14.5 Notices..................................................................................... 40
14.6 Amendment or Modification................................................................... 41
14.7 Entire Agreement............................................................................ 41
14.8 Severability................................................................................ 41
14.9 No Waiver................................................................................... 41
14.10 Survival.................................................................................... 41
14.11 No Third Party Beneficiaries................................................................ 42
14.12 Titles...................................................................................... 42
14.13 Compliance with Laws........................................................................ 42
14.14 Execution in Counterparts, Facsimiles....................................................... 42
iii REDACTED VERSION
Schedules
---------
Schedule 1.18 Device Specifications
Schedule 1.35 Stability Requirements
Schedule 1.43 Definition of Manufacturing Costs
Schedule 1.55 Product Specifications
Schedule 1.61 Secondary Packaging Specifications
Schedule 2.3 Launch Schedules
Schedule 2.6 Regulatory Roles and Responsibilities
Schedule 3.1 [**]
Schedule 4.6.1 Closure Medical's Design Control Procedure
Schedule 4.7 Form of Certificate of Conformance
Schedule 4.9.5 [**]
Schedule 4.9.6 [**]
Schedule 5.3.1 [**]
Schedule 10.4 Form of Press Release
Schedule 12.5 Insurance Requirements
iv REDACTED VERSION
LICENSING, DISTRIBUTION AND SUPPLY AGREEMENT
--------------------------------------------
This Licensing, Distribution and Supply Agreement by and between Closure Medical
Corporation, a Delaware corporation having a principal place of business at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Closure Medical"), and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Consumer Companies, Inc., a New Jersey corporation having a principal place of
business at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("CPC"), is dated as of
May 23, 2001 (the "Effective Date"). Closure Medical and CPC may be referred to
herein as a "Party" or, collectively, as the "Parties."
WHEREAS, Closure Medical and CPC wish to enter into this exclusive
licensing, distribution and supply agreement;
WHEREAS, under this Agreement, Closure Medical intends to manufacture
certain products for exclusive distribution by CPC and CPC wishes to purchase
the Product from Closure Medical and assemble such Product and its related
Secondary Packaging to produce a Device; and
NOW, THEREFORE, in consideration of the covenants and obligations
expressed herein, and intending to be legally bound, the Parties agree as
follows:
Article 1
DEFINITIONS
1.1 "[**]" shall mean [**].
1.2 "Affiliate" shall mean, when used with reference to a Party, any
individual or entity directly or indirectly controlling, controlled by
or under common control with such Party. For purposes of this
definition, "control" means (a) the direct or indirect ownership of at
least 50% of the outstanding voting securities of an entity, (b) the
right to control the policy decisions of such entity or (c) has the
power to elect or appoint at least 50% of the members of the governing
body of the entity.
1.3 "Agreement" shall mean this Licensing, Distribution and Supply
Agreement, including its Exhibits, Schedules and Attachments hereto as
such may be amended from time to time.
1.4 "Bankruptcy Event" shall mean the person or entity in question becomes
insolvent, or voluntary or involuntary proceedings by or against such
person or entity are instituted in bankruptcy or under any insolvency
law, or a receiver or custodian is appointed for such person or entity,
or proceedings are instituted by or against such person or entity for
corporate reorganization or the dissolution of such person or entity,
which proceedings, if involuntary, shall not have been dismissed within
sixty (60) days after the date of filing, or such person or entity
makes an assignment for the benefit of its creditors, or substantially
all of the assets of such person or entity are seized or attached and
not released within sixty (60) days thereafter.
1.5 "[**]" shall mean [**], including, without limitation, [**] products,
all of the forgoing intended for use in the [**].
1.6 "Business Day" shall mean any day that is not a Saturday, Sunday or
United States federal holiday.
1.7 "Claim" shall have the meaning ascribed thereto in Section 12.5.
1.8 "Closure Records" shall have the meaning ascribed thereto in Section
4.9.2(a).
1.9 "Commencement Date" shall mean the date on which CPC provides written
notice to Closure Medical that it will proceed with commercializing the
Initial Device pursuant to Section 3.2.2.
1.10 "Components" shall mean any component designed in accordance with the
Design Control Procedure for use in conjunction with the Product.
1.11 "Confidential Information" shall mean all proprietary and confidential
information of a Party, including, without limitation, trade secrets,
technical information, business information, sales and forecast and
launch information, customer and potential customer lists and
identities, product sales plans, sublicense agreements, inventions,
product development plans, discoveries, software, know-how, methods,
techniques, formulae, data, processes and other trade secrets and
proprietary ideas, whether or not protectable under patent, trademark,
copyright or other areas of law, that the other Party has access to or
receives and which, if disclosed in writing, is marked as "Confidential
Information," and which if disclosed verbally is indicated as being
confidential prior to disclosure and confirmed in writing as being
confidential within seven (7) Business Days after disclosure; provided,
--------
however, that the term Confidential Information does not include
-------
information that (a) is or becomes publicly available through no fault
of the receiving Party; (b) was already known to the receiving Party at
the time it was disclosed to the receiving Party, as evidenced by
competent records of the receiving Party; (c) is independently
developed by or on behalf of the receiving Party without reference or
access to Confidential Information received hereunder, as evidenced by
competent records of the receiving Party; or (d) is received from a
Third Party who is under no obligation of confidentiality to the
disclosing Party.
1.12 "Contract Year" shall mean any 12-month period beginning on the date of
First Commercial Sale or an anniversary thereof. (The first Contract
Year shall mean the date of First Commercial Sale through the day prior
to the first anniversary of such date; the second Contract Year shall
mean the first anniversary of such date through the day prior to the
second anniversary of such date; the third Contract Year shall mean the
second anniversary of such date through the day prior to the third
anniversary of such date, etc.).
1.13 "[**]" shall mean any [**]. For purposes of example and clarification,
[**] shall not include [**].
1.14 "CPC Records" shall have the meaning ascribed thereto in Section
4.9.3(a).
2 REDACTED VERSION
1.15 "Design Control Procedure" shall have the meaning ascribed thereto in
Section 4.6.1.
1.16 "Development Plan" shall have the meaning ascribed thereto in Section
5.3.1(b).
1.17 "Device" shall mean the Product, Improvement or New Product together
with its respective Secondary Packaging, as described in detail in the
Device Specifications.
1.18 "Device Specifications" shall mean, with respect to the Device, and
with respect to each Improvement or New Product, those specifications
as are required by the applicable marketing approval (and as
supplemented or amended in accordance with this Agreement) for the
applicable Territory as set forth in Schedule 1.18 for the Device and
as supplemented at such later point in time as agreed by the Parties
for New Products and Improvements.
1.19 "[**]" shall mean a product [**].
1.20 "Ethicon Agreement" shall mean that certain Supply and Distribution
Rights Agreement dated as of March 20, 1996, between Ethicon, Inc. and
Closure Medical.
1.21 "FDA" shall mean the United States Food and Drug Administration of the
United States Department of Health and Human Services and any successor
agency or entity that may be established hereafter. "FDA" shall also be
deemed to include the applicable regulatory authority having
jurisdiction over the Device in any country outside of the U.S.
1.22 "FDCA" shall mean the Federal Food, Drug and Cosmetic Act (21 U.S.C.
301 et seq.), as amended from time to time and any successor acts
thereto and its counterpart in the European Union, together with any
rules and regulations promulgated thereunder.
1.23 "Field" shall mean Topical products which the U.S. FDA regulates as OTC
products for use in humans; provided, however, that the Field shall
-------- -------
specifically exclude Oral Applications, [**]. Notwithstanding the
foregoing, the Field shall include [**].
1.24 "Firm Order" shall mean a firm, non-cancelable, written purchase order
sent by mail, facsimile, telegram, electronic data interchange or other
mutually agreeable means, which purchase order shall, at a minimum, set
forth quantity, delivery dates, shipping instructions and U.S. shipping
addresses.
1.25 "First Commercial Sale" shall mean the first shipment of the Device to
a Third Party by CPC or an Affiliate or sublicensee of CPC in the
United States of America.
1.26 "Force Majeure Event" shall mean any event beyond the reasonable
control of a Party, including, but not limited to, act of God, [**],
fire, flood, earthquake, storm, war, riot, revolt, act of a public
enemy, embargo, explosion, civil commotion, [**], or any law, rule,
regulation, order or other action by any public authority.
3 REDACTED VERSION
1.27 "Governmental Authority" shall mean any federal, state, municipal,
local, territorial or other governmental department, regulatory
authority, judicial or administrative body, whether domestic or
foreign, including, but not limited to, the FDA.
1.28 "Improvement" shall mean a Non-Absorbable Cyanoacrylate Product
encompassed by the Technology that has the same or substantially
similar Indication as the Initial Device.
1.29 "[**]" shall mean the [**].
1.30 "Indemnitee" shall have the meaning ascribed thereto in Section 12.5.
1.31 "Indication" shall mean a recognized disease or condition, an important
manifestation of a disease or condition, or symptoms associated with a
disease or syndrome as would be identified on the Device's label under
applicable U.S. FDA regulations or the foreign equivalent thereof.
1.32 "Initial Device" shall mean the Initial Product together with its
respective Secondary Packaging, as described in detail in the Initial
Device Specifications.
1.33 "Initial Device Specifications" shall mean, with respect to the Initial
Device, those specifications as are required by the applicable
marketing approval (and as supplemented or amended in accordance with
this Agreement) for the applicable Territory as set forth in Schedule
1.18 for the Initial Device.
1.34 "Initial Firm Order" shall have the meaning ascribed thereto in Section
4.4.1.
1.35 "Initial Product" shall mean a Product that meets the stability
requirements set out on Schedule 1.35.
1.36 "Initial Term" shall mean the Effective Date through the day prior to
the [**] of the Effective Date, unless earlier terminated pursuant to
Article 8.
1.37 "Intellectual Property" shall mean (i) any and all trade secrets,
patents, copyrights, trade dress, URLs, know-how and similar rights of
any type under the laws of any applicable governmental authority,
including, without limitation, all applications and registrations
relating to any of the foregoing and (ii) such trade secrets, patents,
know-how and similar rights, whether or not patented or patentable,
that are or come to be at least in part owned or controlled by a Party
during the term of this Agreement and which are based upon any of the
patents or know-how of such Party as of the date of this Agreement
(including, but not limited to, formulas, processes, data, techniques,
methods, technology, materials and compositions). For purposes of this
definition, "control" of Intellectual Property shall mean the
possession, directly or indirectly, of power to direct or cause the
direction of its management or use.
1.38 "Intellectual Property Rights" shall mean all rights in and to
Intellectual Property.
1.39 "Joint Invention" shall have the meaning ascribed thereto in Section
6.4.3.
4 REDACTED VERSION
1.40 "Launch Deadline" shall have the meaning ascribed thereto in Section
2.3.
1.41 "Law" shall mean any applicable declaration, decree, directive,
legislative enactment, order, ordinance, regulation, rule or other
binding restriction of or by any Governmental Authority, as amended
from time to time, including, but not limited to, the FDCA.
1.42 "Manufacturing Facility" shall mean Closure Medical's U.S.
manufacturing facility located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
1.43 "Manufacturing Costs" shall have the meaning set forth in Schedule
1.43.
1.44 "New Product" shall mean a Non-Absorbable Cyanoacrylate Product
encompassed by the Technology which has a different Indication from the
Initial Device.
1.45 "Non-Absorbable Cyanoacrylate Product" shall mean [**].
1.46 "Notice" shall have the meaning ascribed thereto in Section 14.5.
1.47 "Oral Applications" shall mean Topical applications on the lips and
tissues inside the mouth.
1.48 "Over the Counter" or "OTC" shall mean (i) products which may be sold
or distributed in a manner which does not require the prescription or
written direction of a medical professional, health professional,
entity or institution, and (ii) if applicable outside of the U.S.,
products which must be sold or distributed under the supervision or
assistance of a pharmacist but which do not require a prescription
given by an appropriate practitioner.
1.49 "Package Inserts" means labeling for use in the Field that, to the
extent applicable, meets the FDA regulations and/or requirements as set
forth in s 201.56 and 201.57 of the U.S. Code of Federal Regulations
(as such may be amended from time to time) and its EU counterparts in
the European Union.
1.50 "Prescription Product" shall mean a therapeutic product that requires a
prescription or the written direction of a medical professional, entity
or institution for use by the ultimate consumer.
1.51 "Product" shall mean a Non-Absorbable Cyanoacrylate Product packaged in
its primary container and described in detail in the Product
Specifications.
1.52 "Product Development Team" shall have the meaning ascribed thereto in
Section 5.3.1(a).
1.53 "Product Labeling" shall mean labeling of the primary container of the
Product in accordance with applicable FDA regulations.
1.54 "Product Price" shall have the meaning ascribed thereto in Section 7.1.
5 REDACTED VERSION
1.55 "Product Specifications" shall mean, with respect to any product which
becomes covered by this Agreement, at a minimum those specifications as
are required by the applicable marketing approval (and as supplemented
or amended by mutual agreement of the Parties from time to time) for
the applicable Territory, and shall be substantially in the form as set
forth in Schedule 1.55, which specifications shall also include the
stability requirements set out on Schedule 1.35.
1.56 "PTO" shall have the meaning ascribed thereto in Section 6.2.2.
1.57 "Quality Systems Regulations" or "QSR" shall mean all applicable
standards relating to manufacturing practices for the Product
promulgated by the U.S. FDA in the form of laws or regulations.
1.58 "Renewal Term" shall have the meaning ascribed thereto in Section 8.1.
1.59 "Research and Development Costs" shall mean [**].
1.60 "Rolling Forecast" shall have the meaning ascribed thereto in Section
4.3.
1.61 "Secondary Packaging" shall mean all packaging, labeling, Package
Inserts and Components (other than the Product) reasonably necessary
for sale of the Product to the ultimate consumer for use in the Field
(including, without limitation, the CE ▇▇▇▇ designation), as such
Secondary Packaging is described in Schedule 1.61 as such may be
amended from time to time in accordance with this Agreement.
1.62 "[**]" shall have the meaning set forth in Section 3.2.1.
1.63 "[**]" shall have the meaning set forth in Section 3.1.
1.64 "Steering Committee" shall have the meaning set forth in Section 5.2.1.
1.65 "Technology" shall mean Closure Medical's Intellectual Property
directly related to any Non-Absorbable Cyanoacrylate Product.
1.66 "Term" shall mean the Initial Term and any Renewal Terms.
1.67 "Territory" shall mean the entire world.
1.68 "Third Party" shall mean any individual or entity other than a Party or
an Affiliate of a Party.
1.69 "Topical" shall mean involving the external tissue of the human body
such as the skin, but shall not include the external surface of the
eyeball and tissues inside of the mouth.
1.70 "Trademarks" shall have the meaning ascribed thereto in Section 6.5.1.
1.71 "Valuation Analysis" shall have the meaning set forth in Section
5.3.1(c)(i).
6 REDACTED VERSION
Article 2
LICENSE AND DISTRIBUTION RIGHTS
2.1 License and Distribution Rights.
2.1.1 Subject to the terms and conditions of this Agreement, Closure
Medical hereby grants to CPC, during the term of this
Agreement, an exclusive right and license (including the
limited right to sub-license) to the Technology to market,
advertise, promote, distribute and sell goods incorporating the
Non-Absorbable Cyanoacrylate Products in the Field throughout
the Territory. Although CPC shall have the right to grant
sublicenses to any Affiliate or to any Third Party with respect
to any rights conferred upon CPC under this Agreement, any such
sublicense shall be subject in all respects to the same terms,
conditions and provisions contained in this Agreement, and CPC
shall be responsible for ensuring that any sub-licensee
complies with such terms and conditions; provided however, that
-------- -------
CPC shall not be entitled to sublicense its entire rights and
obligations under this Agreement (other than in connection with
a permitted assignment of this Agreement).
2.1.2 During the term of this Agreement and except as specifically
permitted in this Agreement, Closure Medical shall not directly
or indirectly (such as through the grant of a license or
distribution rights or other conveyance of rights in the
Technology for use in the Field) sell or otherwise
commercialize any Non-Absorbable Cyanoacrylate Product intended
to compete with a Product, Improvement or any New Product in
the Field.
2.1.3 The parties initially intend for this Agreement to cover the
supply, distribution and sale of the Initial Device. Additional
Devices may be added to this Agreement as contemplated by
Article 5.
2.2 Reservation Of Rights. CPC acknowledges that its rights to the
Intellectual Property of Closure Medical are only as expressly provided
in this Article 2 and elsewhere in this Agreement. Except to the extent
of the rights and obligations set out in this Agreement, Closure
Medical shall not be restricted from exploiting any of its Intellectual
Property.
2.3 Market Launch. CPC shall use commercially reasonable efforts to
consummate a First Commercial Sale of the Initial Device within the
launch schedules set out on Schedule 2.3 (the "Launch Deadline").
2.4 Delay of Market Launch. CPC shall promptly notify Closure Medical in
writing of any delay past the Launch Deadline in its efforts to
introduce the Initial Device to retailers in the United States. Within
[**] of such notification, [**]. Notwithstanding the foregoing, [**]
if:
2.4.1 the [**];
2.4.2 the [**];
7 REDACTED VERSION
2.4.3 an [**]; or
2.4.4 if [**].
2.5 Market Launch [**]. After the Commencement Date, CPC shall use its
commercially reasonable efforts to obtain regulatory approval of the
Device [**]. Closure Medical shall provide such information and
reasonable assistance as shall be necessary in order for CPC to obtain
such approval. Such information and assistance shall be provided
without charge; provided, however, that Closure Medical shall not be
-------- -------
obligated to incur costs for things like travel [**], clinicals
required for [**] market, translation of materials [**], etc. Upon
obtaining of the regulatory approval for the Device [**], CPC shall use
its commercially reasonable efforts to introduce the Device to
retailers [**] within six (6) months of obtaining such regulatory
approval.
2.6 Regulatory Compliance. All marketing efforts shall be conducted in a
manner consistent with applicable Laws. CPC shall not promote or market
the Device for any use outside the Field. Any labeling for the Device
shall comply with the FDA's approval for the Device. The general roles
and responsibilities of the parties with respect to obtaining and
maintaining regulatory approvals are as set out on Schedule 2.6.
2.7 Marketing Updates. On no less than an annual basis or upon the
reasonable request of Closure Medical, CPC shall brief Closure Medical
about the current marketplace conditions for the Devices. Such updates
shall be done at such locations and through such means as the parties
shall mutually determine (i.e., either by phone, videoconference,
in-person or similar means). Closure Medical shall provide such
information and assistance with respect to the Product and Technology
as CPC shall reasonably require at such meetings in order for CPC to
understand as fully as possible the Product and the Technology. At no
time shall CPC be required to disclose any Confidential Information of
CPC as a result of such updates.
Article 3
FDA APPROVAL AND [**]
3.1 Closure Medical shall use commercially reasonable efforts to complete
[**]. CPC shall cooperate with Closure Medical as may be reasonable
necessary in order for Closure Medical to [**].
3.2 During the course of [**], Closure Medical shall [**] that is the
subject of the [**]. Such [**] shall [**], unless the parties mutually
determine to [**] and shall be held in such manner as the parties shall
reasonably agree. Closure Medical shall [**] identified in Schedule
3.1.
3.2.1 Schedule 3.1 shall identify [**].
3.2.2 After completion of [**] shall determine, [**]:
(a) If, [**] in order to [**], then [**] shall be made [**].
8 REDACTED VERSION
(b) If the [**], then [**] shall be made [**].
(c) If the [**], then [**] shall be made [**].
If [**] that it [**], then [**], and further, [**] shall not have [**].
3.3 If, [**] the Initial Product will have to be re-submitted to the FDA
for regulatory approval, the Agreement shall remain in effect and
Closure Medical shall take such steps and undertake such commercially
reasonable efforts as shall be required in order to obtain FDA approval
of such Initial Product which also meets the [**]. Upon receipt of
regulatory approval from the FDA for such Initial Product, Closure
Medical shall provide CPC with written documentation thereof, whereupon
such Initial Product shall be supplied to CPC to be incorporated into
the Initial Device as contemplated under this Agreement.
3.4 If FDA approval for the Initial Product does not occur [**] of the
Effective Date, CPC may terminate this Agreement upon [**] prior
written notice; provided, however, that CPC shall not retain, and
-------- -------
Closure Medical shall not have any obligations to provide, [**], and
further, CPC shall not have any rights or owe Closure Medical any
obligations under this Agreement.
Article 4
MANUFACTURE AND SUPPLY
4.1 Contact Person. As soon as reasonably practicable after the Effective
Date, each Party shall identify a contact person to serve as the
primary liaison between the Parties with regard to manufacture and
supply issues. Each Party may replace its contact person, at any time,
upon written notice identifying the new contact person to the other
Party.
4.2 Manufacture And Supply. CPC shall accept Product exclusively from
Closure Medical, and Closure Medical shall exclusively supply to CPC
the Product for packaging and distribution as the Device in the
Territory. The Parties acknowledge and agree that, subject to the
provisions of Section 4.9, Closure Medical may use Third Parties to
perform any of its obligations under this Agreement. Any Third Parties
performing on behalf of Closure Medical shall be subject to the
compliance and quality assurance requirements of this Agreement.
4.2.1 Closure Medical shall be responsible for the [**]. CPC shall
provide [**]. If CPC makes any change to its Product Labeling
specifications (unless such changes are required as a result of
FDA or other government action or requirements), [**].
4.2.2 Regulatory Filings.
(a) CPC shall be responsible for complying with the
applicable Laws and Device Specifications provided by
Closure Medical with respect to the
9 REDACTED VERSION
assembly, distribution, storage, warehousing and delivery
of the Product and the Device and labeling, marketing,
promotion, advertising and sale of the Device. The
Parties acknowledge and agree that under no circumstances
shall CPC label, market, promote, advertise or sell the
Product except as incorporated a Device.
(b) Closure Medical shall be responsible for all quality
control and quality assurance matters related to the
manufacture of the Product. Closure Medical shall advise
CPC of any FDA compliance issues, including but not
limited to any quality assurance problems with Closure
Medical's manufacturing facilities used in the
manufacture of the Product. Closure Medical shall have
sole authority to interact with the FDA, but shall take
into account CPC's views and concerns when dealing with
any issues with the FDA that relate to this Agreement.
(c) Closure Medical shall obtain and maintain any regulatory
approval for the Device required to market and sell the
Device in the United States and European Union. Technical
documentation shall be maintained by CPC and promptly
supplied at Closure Medical's reasonable request, in
order to maintain such regulatory approvals for the
Device, including, but not limited to, requirements of
the Medical Devices Directive (MDD 93/42/EEC) for Class I
devices (Annex VII).
(d) In obtaining such regulatory approvals, Closure Medical
shall regularly advise CPC about the strategies and
issues involved in obtaining such regulatory approvals,
and shall give due consideration to CPC's views and
concerns with respect to such regulatory approvals.
Closure Medical shall provide CPC with access to its
regulatory filings as may be needed by CPC in order for
CPC to perform its obligations under this Agreement. CPC
shall be responsible for assembling the Device.
(e) Closure Medical shall take all reasonable steps necessary
to correct any deficiencies, if any, found by the FDA
relating to the manufacture of the Product.
4.2.3 Secondary Packaging. CPC shall promptly advise Closure Medical
of any FDA inspections and the findings thereof and shall take
all reasonable steps necessary to correct deficiencies, if any,
found by the FDA relating to packaging of the Device. CPC shall
advise Closure Medical of any FDA compliance issues or any
quality assurance problems with CPC's packaging facilities used
for the packaging of the Device.
4.3 12-Month Rolling Forecast. As soon as reasonably practicable, but in no
event later than 90 days after the Commencement Date, and on the first
Business Day of each month during the Term, CPC shall send to Closure
Medical a good faith, non-binding 12-month rolling forecast (each, a
"Rolling Forecast") identifying CPC's anticipated requirements of the
Product by SKU. Each new Rolling Forecast after the initial Rolling
Forecast may
10 REDACTED VERSION
adjust the anticipated requirements of the Product for the fourth month
of such Rolling Forecast by an amount in the range of (a) [**] of units
of the Product contained for such month in the previous Rolling
Forecast for the first three Contract Years and (b) [**] of units of
the Product contained for such month in the previous Rolling Forecast
for each Contract Year after the first three Contract Years. There
shall be no limitations on adjustments in months five through twelve of
each such Rolling Forecast.
4.4 Firm Orders.
4.4.1 Initial Firm Order. With the initial Rolling Forecast, CPC
shall provide Closure Medical with a Firm Order that shall not
exceed [**] of the Initial Product, representing the [**] of
the first Rolling Forecast (the "Initial Firm Order"), such
ordered units of the Initial Product to be delivered by Closure
Medical in no less than four (4) equal installments over the
period covered by the Initial Firm Order.
4.4.2 Ongoing Firm Orders. With each Rolling Forecast, CPC shall
provide a Firm Order for the Product by SKU for the [**] of
such Rolling Forecast. Each Firm Order shall be for the Product
in an amount in the range of [**] of units of the Product
contained in the [**] of the previous Rolling Forecast.
4.4.3 Formation of Contract. If a Firm Order is outside the [**]
range required by Section 4.4.2, Closure Medical may either
accept or reject, in whole or in part, the amount of such Firm
Order which is outside such [**] range by written notification
to CPC within [**] after receipt thereof. Notwithstanding the
foregoing, Closure Medical shall use its reasonable commercial
efforts to satisfy the requirements of such Firm Order that are
outside such parameters.
4.5 Annual Minimum Quantities.
4.5.1 During each Contract Year, CPC shall place Firm Orders for a
minimum quantity of the Product as follows:
(a) During the first Contract Year, CPC shall purchase [**]
of the Products from Closure Medical.
(b) During each subsequent Contract Year, CPC shall purchase
[**] of the Products from Closure Medical
4.5.2 If CPC fails to purchase from Closure Medical the minimum
quantity of the Products set forth in Section 4.5.1 during any
Contract Year, CPC, at its sole discretion, shall either (i)
[**] or (ii) [**].
4.5.3 If CPC [**], then notwithstanding the provisions of Section
4.5.2, Closure Medical may [**].
4.5.4 CPC shall not be considered [**].
11 REDACTED VERSION
4.5.5 It is expressly understood that any such failure to meet the
annual purchase minimums [**].
4.6 Labeling, Packaging and Assembly.
4.6.1 CPC shall be responsible for providing all Secondary Packaging and
assembling the Product and the Secondary Packaging into the Device.
Any changes to Secondary Packaging must conform to the requirements
of the Design Control Procedure as attached hereto as Schedule
4.6.1 as the same may be amended by Closure Medical from time to
time at its sole discretion (the "Design Control Procedure"). CPC
shall be solely responsible for any and all costs associated with
the Secondary Packaging and any changes made to the Secondary
Packaging including, without limitation, the costs associated with
the proper disposal or reworking of Product rendered obsolete by
such change to Secondary Packaging.
4.6.2 Except to the extent prohibited by Law, CPC shall (a) reasonably
identify Closure Medical as the manufacturer and licensor of the
Product on all packaging materials and (b) ▇▇▇▇ each Device in
accordance with the requirements of 35 U.S.C. 287(a), with at least
two (2) U.S. patent numbers selected by Closure Medical whose
claim(s) encompass the Product.
4.7 Delivery. All Product shall be delivered to CPC [**]. Each batch of the
Product shall be accompanied by a packing slip that identifies the batch
and purchase order numbers, and a certificate of conformance, such
certificate of conformance shall be substantially in the form of Schedule
4.7. Closure Medical shall retain a sample of each batch of the Product
delivered to CPC.
4.8 Inspection of Shipment and Notice of Claims.
4.8.1 Inspection. Delivery of any Product by Closure Medical to CPC shall
constitute a certification by Closure Medical that the Product
conforms with the Product Specifications. After delivery of a
shipment of any Product to CPC, CPC shall have forty-five (45) days
to examine the Product to determine if they conform to the Product
Specifications and, on the basis of such examination, to accept or
reject such shipment. Any claims for failure to so conform
("Claims") shall be made by CPC in writing to Closure Medical,
indicating the nonconforming characteristics of the Product. If CPC
does not provide such notice to Closure Medical, CPC shall be
deemed to have accepted the shipment of the Product as complete and
conforming to the Product Specifications (except for latent defects
or deficiencies which were not reasonably discoverable by CPC). For
those latent defects or deficiencies which were not reasonably
discoverable by CPC (such as stability problems), CPC shall provide
written notice of such Claims promptly after discovery thereof, and
such Claims shall be handled in accordance with the provisions set
out in this Section 4.8.
4.8.2 If Closure Medical agrees with such Claim, then as promptly as
possible after the submission of a Claim by CPC, Closure Medical
shall, [**].
12
4.8.3 If Closure Medical does not agree with such Claim, then the parties
agree to submit the Products in question to an independent party
which has the capability of testing the Products to determine
whether or not it complies with the Product Specifications. In the
event the parties cannot agree upon such independent party, or in
the event it is not possible to acquire the services of such an
independent party, then such dispute shall be resolved pursuant to
Article 9.
4.8.4 Notwithstanding the foregoing, Closure Medical shall have no
liability to the extent that: (a) the replacement of any Product
shall have been necessitated by the fault or negligence of CPC; (b)
the contamination or defect complained of is caused by the handling
of the Product by CPC or a Third Party outside of Closure Medical's
control; or (c) the Product has not been stored or used in
accordance with Closure Medical's then applicable Product
Specifications.
4.9 Manufacturing Facility.
4.9.1 Location. Closure Medical shall initially manufacture the Product
at its Manufacturing Facility. If Closure Medical determines to
change the site of manufacture of the Product, it shall provide to
CPC as much prior notice as reasonably possible, but in any event,
other than as a result of a Force Majeure Event, [**]. CPC shall be
provided the opportunity to review and audit such site prior to
commencement of manufacture, such audit (and the remedy of any
deficiencies noted as a result thereof) to be conducted generally
following the procedures set out in Section 4.9.2. Closure Medical
shall, to the extent reasonably required for manufacture of Product
pursuant to this Agreement, remedy any material deficiencies
identified by CPC in such audit prior to commencement of
manufacture. If CPC does not conduct its audit within such [**]
(assuming it was given the reasonable opportunity to do so), then
Closure Medical shall be free to commence manufacture at such new
manufacturing site.
4.9.2 Inspections by CPC.
(a) CPC shall have the right on an annual basis, upon reasonable
advance notice and during regular business hours, to inspect
and audit the Manufacturing Facility and the records
(including batch records) being maintained by Closure Medical
in connection with the manufacture of the Product at the
Manufacturing Facility (the "Closure Records") to assure
compliance with all Laws. To the extent practicable, CPC
shall also have the same rights as Closure Medical to inspect
and audit Closure Medical's subcontractors, accompanied by an
authorized Closure Medical employee. Such inspections and
audits shall be conducted at CPC's sole cost and expense and
in a manner so as to minimize disruption of Closure Medical's
business operations. Except as required by any Law or as
otherwise provided in this Agreement, CPC shall not be
entitled to conduct more than [**] and audit during each
Contract Year of the Manufacturing Facility and of the
Closure Records, without the prior written approval of
Closure Medical, such approval not to be unreasonably
13
withheld. CPC shall be responsible for ensuring that each
designee or representative of CPC that conducts an inspection
and audit of the packaging facility or the Closure Medical
Records or the subcontractor's records shall comply with the
confidentiality obligations set out in Article 10 of this
Agreement.
(b) To the extent CPC reasonably determines during any such
inspection and audit that Closure Medical or any of its
subcontractors is not in material compliance with all Laws,
CPC shall provide Closure Medical with written notice
detailing such material non-compliance. Upon receipt of such
notice from CPC, Closure Medical shall use [**] to promptly
remedy, or cause its subcontractors to promptly remedy, such
material non-compliance [**] of such notice. Thereupon, CPC
shall have the right to re-inspect and re-audit the
applicable facility or the Closure Records or the
subcontractor's records, as applicable, upon reasonable
notice and during regular business hours to determine whether
Closure Medical or its subcontractor has remedied such non-
compliance.
(c) In the event such deficiency is material and is not remedied
within such [**], then CPC shall have the right to terminate
this Agreement upon written notice to Closure Medical without
any penalty or cost of any nature whatsoever; provided,
however, that if a plan to remedy such deficiency (which plan
has been accepted by CPC) has been implemented by Closure
Medical and such plan cannot be completed within [**], then
CPC shall not have the right to terminate this Agreement so
long as Closure Medical is implementing such plan in a good
faith fashion.
4.9.3 Inspections by Closure Medical.
(a) Closure Medical shall have the right on an annual basis, upon
reasonable advance notice and during regular business hours,
to inspect and audit the packaging facility and the records
being maintained by CPC in connection with the packaging of
the Device at the packaging facility (the "CPC Records") to
assure compliance with all Laws. To the extent practicable,
Closure Medical shall also have the same rights as CPC to
inspect and audit CPC's subcontractors involved with the
packaging of the Device, accompanied by an authorized CPC
employee. Such inspections and audits shall be conducted at
Closure Medical's sole cost and expense and in a manner so as
to minimize disruption of CPC's business operations. Except
as required by any Law or as otherwise provided in this
Agreement, Closure Medical shall not be entitled to conduct
more than [**] and audit during each Contract Year of the
packaging facility and of the CPC Records, without the prior
written approval of CPC, such approval not to be unreasonably
withheld.
(b) To the extent Closure Medical reasonably determines during
such inspection and audit that CPC or any of its
subcontractors is not in
14
material compliance with all Laws, Closure Medical shall
provide CPC with written notice detailing such material non-
compliance. Upon receipt of such notice from Closure Medical,
CPC shall use [**] to promptly remedy, or cause its
subcontractors to promptly remedy, such material non-
compliance within [**] of such notice. Thereupon, Closure
Medical shall have the right to re-inspect and re-audit the
applicable facility or the CPC Records or the subcontractor's
records, as applicable, upon reasonable notice and during
regular business hours to determine whether CPC or its
subcontractor has remedied such material non-compliance.
Closure Medical shall be responsible for ensuring that each
designee or representative of Closure Medical that conducts
an inspection and audit of the packaging facility or the CPC
Records or the subcontractor's records shall comply with the
confidentiality obligations set out in Article 10 of this
Agreement.
4.9.4 Compliance with Certain Laws. Closure Medical agrees to comply with
the applicable provisions of any Federal or state law and all
executive orders, rules and regulations issued thereunder, whether
now or hereafter in force, including Executive Order 11246, as
amended, Chapter 60 of Title 41 of the Code of Federal Regulations,
as amended, prohibiting discrimination against any employee or
applicant for employment because of race, color, religion, sex or
national origin; 60-741.1 of Chapter 60 of 41 Code of Federal
Regulations, as amended, prohibiting discrimination against any
employee or applicant for employment because of physical or mental
handicap; 60.250.4 of Chapter 60 of 41 Code of Federal Regulations,
as amended, providing for the employment of disabled veterans and
veterans of the Vietnam era; Chapter 1 of Title 48 of the Code of
Federal Regulations, as Amended, Federal Acquisition Regulations;
Sections 6, 7 and 12 of the Fair Labor Standards Act, as amended,
and the regulations and orders of the United States Department of
Labor promulgated in connection therewith; and any provisions,
representations or agreements required thereby to be included in
this Agreement are hereby incorporated by reference.
4.9.5 [**] Closure Medical has [**] attached as Schedule 4.9.5. [**]
Closure Medical shall [**] and shall provide to [**] the term of
this agreement. [**]
4.9.6 [**] agrees that the [**] under this Agreement shall be in
compliance with [**] set out as Schedule 4.9.6 to this Agreement
[**] shall review with [**].
4.9.7 Protection of [**]. The parties acknowledge and agree that [**].
4.10 Mutual Assistance.
4.10.1 General. Each Party shall cooperate with the other Party to provide
all reasonable assistance and take all actions reasonably requested
by the other Party that are necessary or desirable to enable the
other Party to comply with any Law
15
applicable to the Product and the Device, including, but not
limited to, submitting or filing U.S. promotional materials with
the FDA.
4.10.2 Duties to Inform.
(a) The Parties shall cooperate to, among other things, keep each
Party informed, commencing [**] of notification of any action
by, or notification or other information which it receives
(directly or indirectly) from a regulatory authority or any
other Governmental Authority, which (a) raises any material
concerns regarding the safety of any Product or Device, (b)
which indicates or suggests a potential material liability
for either Party to Third Parties arising in connection with
any Device, or (c) which is reasonably likely to lead to a
recall or market withdrawal of any Device; provided that
neither Party shall be obliged to disclose such information
in breach of any contractual restriction which it could not
reasonably have avoided.
(b) Each Party shall promptly notify the other Party of any of
the following, including any corrective actions initiated by
such Party and copies of all relevant documentation relating
thereto, to the extent controlled by such Party:
(i) governmental or regulatory inspections of
manufacturing, distribution or other related facilities
used for the Product or Device;
(ii) inquiries by governmental or regulatory authorities
concerning clinical investigation activities (including
inquiries of investigators, clinical monitoring
organizations and other related Parties) relating to
the Product or Device;
(iii) any communication from governmental or regulatory
authorities pertaining to the manufacture, sale,
promotion or distribution of the Product or Device;
(iv) any other governmental or regulatory authority reviews
or inquiries relating to the Product or Device;
(v) receipt of a warning letter relating to the Product or
Device; and
(vi) an initiation of any governmental or regulatory
authority investigation, detention, seizure or
injunction concerning any Product or Device.
4.10.3 Device Recall.
(a) In the event any governmental agency having applicable
jurisdiction shall order any corrective action with respect
to any Product or Device supplied
16
hereunder, customer notice, restriction, change, corrective
action or market action or the Product or Device change, [**]
particular Product or Device shall be established to be [**]
hereunder.
(b) In the event that [**] recall of the Product or Device
supplied hereunder [**], customer notice, restriction,
change, corrective action or market action or any Product
change, [**] particular Product or Device shall be
established to be [**] hereunder.
(c) Any such recalls shall be implemented and administered by CPC
and Closure Medical in a manner which is appropriate and
reasonable under the circumstances and in conformity with any
requests or orders of the FDA as well as accepted trade
practices. Each Party shall give immediate notice by
telephone (to be confirmed in writing) to the other Party
upon discovery that any Product or Device should be recalled,
corrected or withdrawn from the market, or may be required to
be recalled, corrected or withdrawn from the market. The
obligations under this section shall survive the complete or
partial termination of this Agreement.
(d) If both Parties share responsibility with respect to a
recall, the costs shall [**].
(e) CPC undertakes to use reasonable efforts to establish a batch
tracing and recall system which will enable CPC, to the
extent reasonably possible, to identify, as quickly as
possible, customers within the Territory who have been
supplied with Devices of any particular batch, and to recall
such Devices from such customers.
4.10.4 Inquiries and Complaints.
(a) United States. For Devices sold in the United States, Closure
Medical is recognized as the Product manufacturer and CPC is
recognized as the Device distributor, as defined in Part 803
of Title 21 of the Code of Federal Regulations ("21 CFR Part
803"). In accordance with the requirements of this
regulation, the responsibilities for complaint handling are
agreed as follows:
(i) CPC will: (A) receive and log all complaints from Third
Parties; (B) report all Device complaints to Closure
Medical; (C) evaluate complaints and conduct
investigations related to the Secondary Packaging or
distribution of the Device, as appropriate; (D) respond
to the complainant regarding complaint status; and (E)
implement corrective action as required to ensure
Device quality under a plan jointly agreed to by the
parties.
(ii) Closure Medical will: (A) receive and log all
complaints from CPC; (B) report all Device complaints
received directly from Third Parties to CPC; (C)
provide Medical Device Reports to the FDA as
17
defined in 21 CFR (S).803.50, with copies to CPC; (D)
evaluate complaints and conduct investigations related
to the manufacture of the Product or the Component
design; (E) respond to CPC regarding complaint and
investigation status; and (F) implement corrective
action as required to ensure Device quality under a
plan jointly agreed to by the parties.
(b) CE ▇▇▇▇ Countries. For Devices sold in countries recognizing
the CE ▇▇▇▇, CPC is recognized as the Device manufacturer as
defined in MDD 93/42/EEC. In accordance with the requirements
of this regulation, CPC will (i) provide reports of serious
injuries to the competent authority (vigilance) as defined in
MDD 93/42/EEC, Annex VII, with copies to Closure Medical and
(ii) provide manufacturing, labeling and distribution records
regarding the Device upon request by the applicable
Governmental Authority as appropriate, with copies to Closure
Medical.
(c) Remainder of Territory. In order to facilitate compliance
with the Parties' regulatory obligations and commitments in
the remainder of the Territory, the Parties agree jointly to
develop written procedures for the surveillance, receipt,
evaluation and reporting of inquiries and complaints relating
to the Device, in accordance with applicable Law. Each Party
will ensure that adequate records are kept of medical
inquiries and reports received concerning the Device.
ARTICLE 5
PRODUCT DEVELOPMENT
5.1 Collaboration. The Parties shall collaborate to explore the development of
Improvements and New Products for use in the Field.
5.2 Steering Committee.
5.2.1 Governance. As soon as reasonably practicable, and in any event no
more than thirty (30) days after the Commencement Date, the Parties
shall establish a joint steering committee (the "Steering
Committee"). Each Party shall designate two (2) members to form the
Steering Committee. The chairperson of the Steering Committee shall
be designated annually on an alternating basis between the Parties
commencing with Closure Medical. The Party not designating the
chairperson shall designate one of its representative members as
secretary to the Steering Committee for such year. Each Party may
replace its representatives at any time, upon notice to the other
Party identifying the new representative. Any member of the
Steering Committee may designate a substitute to attend and perform
the functions of that member at any meeting of the Steering
Committee.
5.2.2 Responsibilities. The Steering Committee shall be responsible for
overseeing strategic direction, project prioritization, and
Improvement and New Product
18
development and commercialization. The Steering Committee shall
review and approve development plans and budgets for any
Improvement or New Product.
5.2.3 Meetings; Minutes. The Steering Committee shall meet in person or
by teleconference on a calendar quarter basis (provided that at
least two meetings per year shall be in person) or more frequently
as necessary and as may be agreed upon, with each Party bearing all
travel and related costs for its representatives. Within two weeks
after each such meeting, the secretary of the Steering Committee
shall prepare and distribute minutes of the meeting, which shall
provide a description in reasonable detail of the discussions had
at the meeting and a list of any actions, decisions or
determinations approved by the Steering Committee. Minutes shall be
approved or disapproved, and revised as necessary, at the next
meeting. Each Party may, in its discretion, invite non-member
representatives of such Party to attend meetings of the Steering
Committee.
5.2.4 Voting. Each Party shall have one vote in all matters decided by
the Steering Committee. The Parties shall attempt to resolve any
disagreement among members of the Steering Committee within the
Steering Committee based on the efficient achievement of the
objectives of this Agreement. If the parties cannot reach such
agreement, then the dispute resolution procedures set out in
Section 5.3 shall apply.
5.3 Development Activities.
5.3.1 Inclusion of Improvements and New Products under Agreement.
(a) The Steering Committee shall designate a product development
team (the "Product Development Team").
(b) The Product Development Team shall evaluate the proposed
Improvement or New Product and propose a development plan
(the "Development Plan"), in accordance with Section 5.3.4,
to the Steering Committee.
(c) Upon receipt of the Development Plan the Steering Committee
shall promptly (i) review and evaluate the proposed
Improvement or New Product in light of the Development Plan;
and (ii) [**] accommodate such proposed Improvement or New
Product, in accordance with the following standards:
(i) In the case of a New Product, the Steering Committee
shall [**].
(ii) In the case of an Improvement, the Steering Committee
shall [**]
(d) If the Steering Committee agrees to develop the proposed
Improvement or New Product, then such Improvement or New
Product shall be included under this Agreement and shall be
subject to the same licenses, rights and obligations as the
Product in the Field. Neither Party shall unreasonably
19
withhold or delay the decision to include an Improvement or
New Product in the Agreement.
5.3.2 Disputes Regarding the Development of Improvements. If the Steering
Committee disagrees whether or not to pursue development of an
Improvement, the following general principals will apply:
(a) If CPC voted to pursue development of such Improvement and
Closure Medical voted against pursuing such development, then
(i) if [**] of the Product, [**] under this Agreement or (ii)
if [**] of the Product [**].
(b) If CPC voted against pursuing development of such
Improvement, then [**] pursuant to this Agreement and [**].
For clarification purposes, [**] for such Improvement.
5.3.3 Disputes Regarding the Development of New Products. If the Parties
disagree whether or not to pursue development of the New Product,
the following general principals will apply:
(a) If Closure Medical voted to pursue development of such New
Product and CPC voted against pursuing such development, then
[**] (i) [**] to the New Product and [**] such New Product
and (ii) [**] the New Product [**]. In the event [**] in the
New Product, then [**] such New Product [**].
(b) If CPC voted to pursue development of the New Product and
Closure Medical voted against pursuing such development,
then, [**].
5.3.4 Development Plan. The Development Plan, as amended from time to
time, shall set forth in reasonably sufficient detail (i) [**];
(ii) the development [**], (iii) a [**] concerned, (iv) the [**],
(v) the [**] and (vi) all such [**].
5.3.5 Research and Development Costs. [**] the Research and Development
Costs. [**]
5.3.6 Development Efforts. Upon the Steering Committee's approval of the
Development Plan for an Improvement or New Product, the Product
Development Team shall conduct all product development and design
of Improvements and New Products in accordance with the then-
current Design Control Procedure. [**] to develop such Improvement
or New Product in accordance with the Development Plan and obtain
regulatory approvals therefor. Furthermore, each Party agrees to
conduct such development activities in compliance with all
applicable laws and regulations that are applicable to the
particular stage of development of such New Product or Improvement,
including, without limitation, QSRs. Development activities will
commence once a written budget is approved and signed by both of
Closure Medical and CPC.
20
5.4 Books and Records. The Parties shall keep comprehensive books and
records relating to its obligations under this Agreement on either a
cash or accrual basis of accounting in accordance with generally
accepted accounting principles. All such records shall be maintained
for [**] following the relevant Contract Year during the term of this
Agreement or, upon termination of this Agreement, [**] following such
termination date, or such longer period as is required by Law. During
each Contract Year, and for [**] thereafter, CPC and Closure Medical,
shall have the right, at its own expense, to have an independent
accounting firm audit such books and records in order to verify the
amount of the payments owed and/or paid pursuant to this Agreement.
Each Party may perform such an audit not more than once in any 12-
month period, unless a prior audit within the past two (2) years
revealed that the amount owed by the other Party to such Party was
underpaid in [**] amount owed, in which case an audit may be performed
no more frequently than twice in any 12-month period. If the amount
owed by one Party to the other Party was underpaid, the underpaying
Party shall pay the additional amount owed and all accrued interest
thereon to the other Party within [**] after its receipt of notice of
such underpayment. If the amount underpaid was in [**] amount owed,
the fees of such audit shall also be paid by such underpaying Party
within [**] after its receipt of notice of same. Each audit shall be
conducted during normal business hours, upon reasonable advance notice
and in a manner that does not cause unreasonable disruption to the
conduct of business by the audited Party.
ARTICLE 6
INTELLECTUAL PROPERTY
6.1 Intellectual Property Ownership.
6.1.1 Except for the express rights granted to CPC under this
Agreement, CPC acknowledges and agrees that the Intellectual
Property of Closure Medical (including all Intellectual
Property Rights associated therewith) is and shall remain the
sole property of Closure Medical and nothing in this Agreement
shall confer in CPC any right of ownership in Closure
Medical's Intellectual Property.
6.1.2 Closure Medical acknowledges and agrees that the Intellectual
Property of CPC (including all Intellectual Property Rights
associated therewith) is and shall remain the sole property of
CPC and nothing in this Agreement shall confer in Closure
Medical any right of ownership in CPC's Intellectual Property.
6.2 Patent Prosecution and Maintenance for New Products and Improvements.
6.2.1 Cooperation. After development of each New Product or
Improvement, the Parties shall consult and cooperate with each
other on all aspects of patent filings, prosecution or
maintenance of patents and know-how (as the case may be)
covering such New Product or Improvements.
6.2.2 Patent Filing. Such filings and prosecution before the United
States Patent and Trademark Office ("PTO") and its foreign
counterparts shall be in the name of
21
[**]. Subject to Closure Medical's approval as hereinafter
described, such filings shall be prosecuted by [**].
6.2.3 Responsibilities. Closure Medical's counsel shall handle all
patent prosecution with the PTO and its foreign counterparts.
All expenses of Closure Medical in connection with such patent
prosecution shall be borne by Closure Medical. CPC shall
reasonably cooperate with the reasonable requests of Closure
Medical in connection with any such patent prosecution.
6.2.4 Discretion. Closure Medical shall, in its sole discretion, have
the right to abandon or not to pursue or maintain a patent or
patent application in a country in the Territory so long as, in
Closure Medical's sole good faith opinion, pursuit or
maintenance of such patent or patent application in such
country is not technically feasible or reasonably commercially
justifiable.
6.3 Infringement.
6.3.1 If, as a result of the manufacture, use or sale of any Device
in any country of the Territory, Closure Medical or CPC and/or
its Affiliate is sued for patent infringement or threatened
with such a lawsuit or other action by a Third Party, Closure
Medical and CPC shall meet to analyze the infringement claim
and avoidance of same. If it is necessary to obtain a license
from such Third Party, Closure Medical and CPC in negotiating
such a license shall make every effort to minimize the license
fees and/or royalty payable to such Third Party. Closure
Medical shall [**]. CPC shall [**].
6.3.2 In the event that there is infringement of a patent involving
the Device by a Third Party, Closure Medical and CPC (or its
Affiliate or sublicensee) shall notify each other in writing to
that effect, including with said written notice evidence
establishing a case of infringement by such Third Party.
Closure Medical shall bear all the expenses of any suit brought
by it and shall retain all damages or other monies awarded or
received in settlement of such suit. CPC and/or its Affiliates
will cooperate with Closure Medical in any such suit or shall
have the right to consult with Closure Medical and be
represented by its own counsel at its own expense. If after the
expiration of [**] from the date of receipt of said notice,
Closure Medical has not overcome the case of infringement,
obtained a discontinuance of such infringement, or brought suit
against the Third Party infringer, then CPC shall have the
right, in its sole discretion, but not the obligation to bring
such suit at its own expense and in its own name, if possible.
CPC shall bear all the expenses of any suit brought by it and
shall retain all damages or other monies awarded or received in
settlement of such suit. Closure Medical will cooperate with
CPC in any such suit and take such actions and provide such
assistance as CPC shall request in connection with the
prosecution of such suit including, but not limited to, being
joined as a plaintiff in any such suits. Closure Medical shall
have the right to consult with CPC and be represented by its
counsel at its own expense.
22
6.4 Ownership of Improvements and New Products.
6.4.1 Inventions. Ownership and use of any and all inventions,
discoveries, developments, know-how, methods, techniques,
formulae, processes and compositions of matter, whether or not
patentable, derived from or directly resulting from any
development work ("Development Work") undertaken pursuant to
Article 5 (each, an "Invention") shall be handled as set out in
this Article 6.4. Inventorship for patentable inventions [**]
during the course of the performance of activities pursuant to
this Agreement shall be determined in accordance with U.S.
patent laws for determining inventorship. Ownership shall be
initially determined based on inventorship, but may be modified
based upon the following provisions:
(a) In the event a Party is deemed an owner or joint owner of
a patentable Invention [**] in the conduct of the
Development Work and that Invention either (i) [**] or
(ii) is [**], then in either case [**].
(b) In the event a Party is deemed an owner or joint owner of
a patentable Invention [**] in the conduct of the
Development Work that either (i) does [**] or (ii) does
[**], then in either case [**].
6.4.2 Closure Medical shall have primary responsibility for filing,
prosecuting and maintaining any U.S. patent application(s) or
patent(s) and foreign counterpart thereof for Inventions
described in Section 6.4.1(a), but shall give full
consideration to CPC's recommendations including selection of
attorney(s). CPC shall have primary responsibility for filing,
prosecuting and maintaining any U.S. patent application(s) or
patent(s) and foreign counterpart thereof for Inventions
described in Section 6.4.1(b), but shall give full
consideration to Closure Medical's recommendations including
selection of attorney(s). The patent expenses for such
Inventions shall be borne equally by CPC and Closure Medical,
but either may, by giving timely notice to the other, withdraw
from further participation in the filing, prosecution and/or
maintenance of any such patent application(s) or patent(s) and
shall not be liable for any expenses incurred after written
notice is given. If either party does not elect to file,
prosecute or maintain any such patent application(s) or
patent(s) in a country or countries and is not seeking another
form of proprietary protection, or after electing to
participate in the filing, prosecution and/or maintenance on
such Inventions in a country or countries, does not pay its
share of the expenses within [**] of written notification of
expenses being due, the other party, in its sole discretion,
shall have the right to file, prosecute or maintain at its
expense on a country by country basis each such patent
application(s) and patent(s). In that event, the party ceasing
to pay its share of the costs and expenses shall not be
entitled to practice such Invention unless and until it has
paid its share of such costs and expenses.
6.4.3 Each party shall require its employees or agents responsible
for conducting research in performance of this Agreement to
keep contemporaneous records of
23
their results and findings in sufficient detail to document any
inventions of discoveries made by such employees and agents
under this Agreement in bound notebooks (which notebooks shall
be reviewed and signed by a witness on a regular basis).
6.4.4 Closure Medical and CPC will cooperate in a timely manner to
prepare, review and execute patent applications and all such
further papers, as may be necessary to enable the parties to
protect Inventions by patent in any and all countries and to
vest title to said patent application(s) and patent(s) and
assist in any patent office or agency proceedings.
6.4.5 Either party may practice any Invention outside the grant
provided to CPC under Article 2, and CPC may practice any such
Invention within such grant as well. If either party wishes to
practice a patented Invention outside the grant provided to CPC
under Article 2, the party practicing the patented Invention
will not be obligated to pay any royalty or other compensation
to the other for such practice.
6.5 Trademarks.
6.5.1 Selection and Ownership of Trademarks for Products. Selection
of trademarks for any and all Products, Improvements and New
Products (the "Trademarks") shall be [**] and [**] all right,
title and interest in and to any and all such Trademarks. [**]
shall not use, and shall not permit any Third Party to use,
such Trademarks without the express written consent of [**].
6.5.2 Registration and Maintenance of Trademarks. [**] shall be
responsible for maintaining and registering any Trademarks.
[**] shall be responsible for all costs relating to the filing
and renewal of trademark applications for the Trademarks.
6.5.3 Defense of Trademark Infringements.
(a) Duty to Inform the Other Party of Trademark
Infringements. [**] agrees to notify [**] promptly in
writing if it becomes aware of any conflicting use of or
application for registration of the Trademarks, or of any
trademark confusingly similar thereto, or of any known or
alleged infringements as well as of unfair competition
involving the trademarks of the other Party which shall
come to its attention.
(b) Defense of [**] Trademarks. [**] shall be responsible for
the defense of the Trademarks and shall determine in its
sole discretion as to whether it will bring any actions
in connection therewith. If [**] decides to do so, [**]
shall cooperate with [**] and render [**] its
commercially reasonable assistance in the defense of the
Trademarks at [**] expense. Any damages and costs
recovered shall be for [**] sole benefit.
24
ARTICLE 7
COMMERCIAL TERMS
7.1 Product Supply Price. During the Initial Term, the price per unit of
the Initial Product (the "Product Price") shall be [**]. The Product
Price for each shipment of the Product shall be paid to Closure Medical
within [**] after CPC's receipt of Closure Medical's invoice for such
shipment (such invoice to be issued the date of shipment).
7.1.1 If, [**] either (i) [**] or (ii) [**], then the Parties [**].
For purposes of this paragraph, [**].
7.1.2 [**] shall have the right [**] but shall be limited to [**] by
the Parties.
7.2 Product Specifications. Upon achieving the Initial Product, the
specifications for such Product shall be deemed to be the Product
Specifications.
7.2.1 Product Specifications for each Improvement (to the extent
applicable) shall be agreed by the Parties no less than [**]
prior to the placement of the first order for each such
Improvement. Such Product Specifications shall become part of
this Agreement and be attached as part of Schedule 1.52 hereof.
7.2.2 Closure Medical shall not make any material changes to the
Product Specifications or to the Products without the prior
written approval of CPC, such approval not to be unreasonably
withheld or delayed.
7.2.3 With respect to non-material changes to the Product
Specifications or to the Products, Closure Medical shall notify
CPC of such changes in writing, and CPC shall have [**] to
respond in writing as to whether it considers such changes as
material or non-material. If CPC does not respond within such
[**] period, or if CPC agrees that such change is non-material,
then Closure Medical may proceed with such change. If CPC
responds to Closure Medical and advises Closure Medical that
such change is material, then such change shall not be made
without the prior written approval of CPC, such approval not to
be unreasonably withheld or delayed.
7.2.4 In addition, any changes to the Product, the Product
Specifications or the manufacturing process which may require
the submission of any amendment, filing or other documentation
with any regulatory authority shall be identified and reviewed
in accordance with the Design Control Procedure. To the extent
reasonably practicable, CPC shall provide a response to any
such proposed changes within [**] after receipt.
7.3 Reimbursement by CPC.
7.3.1 In recognition of Closure Medical's research expenditures in
the Field to date, CPC will make the following payments
25
(a) [**] on [**];
(b) [**] after [**].
(c) [**] upon [**].
7.3.2 In recognition of Closure Medical development expenditures in
the Field to date, CPC will make the following payments:
(a) [**] within [**].
(b) [**] upon [**].
7.3.3 Each reimbursement is due [**] after notification of CPC
(including any related documentation) of satisfaction of each
incremental requirement.
7.4 Payment Terms. All payments due to either Party hereunder shall be made
in immediately available U.S. funds, without set-off or counterclaim
(unless being contested in good faith).
7.5 Interest. All payments not paid by the date such payments are due shall
bear interest from the due date to the date payments are actually paid
at the annual rate of the Prime Rate of Interest (as then specified in
THE WALL STREET JOURNAL) [**].
-----------------------
ARTICLE 8
TERM AND TERMINATION
8.1 Automatic Renewal. This Agreement will automatically renew at the end
of the Initial Term or a subsequent renewal term for [**] (each, a
"Renewal Term"), unless either Party notifies the other at least [**]
prior to the end of the Initial Term or then current Renewal Term, as
applicable, of its intention not to renew this Agreement.
8.2 Termination for Cause.
8.2.1 Either Party may terminate this Agreement immediately upon
written notice to the other Party that any material breach of a
material provision of this Agreement by such other Party
remains uncured [**] after notice of such breach was received
by such other Party.
8.2.2 Either Party may terminate this Agreement immediately upon
written notice to the other Party where the other Party becomes
subject to a Bankruptcy Event.
8.3 Termination without Cause. CPC may terminate this Agreement without
cause by providing [**]; provided, however, that if CPC terminates this
Agreement at any time (i) prior to the [**], then CPC shall [**]; (ii)
during the [**], then CPC shall [**]; and (iii) after the [**], then
CPC shall [**]. For purposes of clarification, if this Agreement either
is terminated [**], or if it is terminated by CPC for cause under
Section 8.2, then [**].
26
8.4 General. Upon termination of this Agreement, each Party's liability for
any charges, payments or expenses due to the other Party that accrued
prior to the date of termination shall not be extinguished by
termination.
8.5 Disposal of Product and Device. Upon termination or expiration of this
Agreement, CPC shall have [**] to dispose in the Field any Devices
remaining in its inventory on the effective date of such termination or
expiration in such manner as CPC shall reasonably determine.
Notwithstanding the foregoing, CPC or its authorized representative
shall not market or sell any such Device [**]. Any Device or Product
remaining in CPC's inventory after the [**] period shall be properly
destroyed at CPC's expense.
ARTICLE 9
DISPUTE RESOLUTION
9.1 Negotiation and Escalation. If any controversy or claim arises relating
to this Agreement, the Parties will attempt in good faith to negotiate
a solution to their differences, including progressively escalating any
controversy or claim through senior levels of management. If
negotiation does not result in a resolution within [**] of when one
Party first notifies the other of the controversy or claim, either
Party may resort to arbitration under Section 9.2. For purposes of this
Section 9.1, senior levels of management shall mean, with respect to
CPC, the management of CPC and its direct supervisory management in the
consumer business area.
9.2 Arbitration.
9.2.1 Any dispute, claim or controversy arising from or related in
any way to this agreement or the interpretation, application,
breach, termination or validity thereof, including any claim of
inducement of this agreement by fraud or otherwise, will be
submitted for resolution to arbitration pursuant to the rules
then pertaining of the CPR Institute for Dispute Resolution, or
successor ("CPR"), except where those rules conflict with these
provisions, in which case these provisions control. The
arbitration will be held in the Borough of Manhattan, City of
New York, State of New York.
9.2.2 The panel shall consist of three arbitrators chosen from the
CPR Panels of Distinguished Neutrals (or, by agreement, from
another provider of arbitrators) each of whom is a lawyer with
at least fifteen (15) years experience with a law firm or
corporate law department of over 25 lawyers or was a judge of a
court of general jurisdiction. Each such arbitrator shall also
have had substantive experience or exposure to intellectual
property matters. In the event the aggregate damages sought by
the claimant are stated to be less than [**], and the aggregate
damages sought by the counterclaimant are stated to be less
than [**], and neither side seeks equitable relief, then a
single arbitrator shall be chosen, having the same
qualifications and experience specified above. Each arbitrator
shall be
27
neutral, independent, disinterested, impartial and shall abide
by The Code of Ethics for Arbitrators in Commercial Disputes
approved by the American Arbitration Association. There shall
be no ex parte communications with an arbitrator either before
-- -----
or during the arbitration, relating to the dispute or the
issues involved in the dispute or the arbitrator's views on any
such issues.
9.2.3 The parties agree to cooperate (1) to attempt to select the
arbitrator(s) by agreement within forty-five (45) days of
initiation of the arbitration, including jointly interviewing
the final candidates, (2) to meet with the arbitrator(s) within
forty-five (45) days of selection and (3) to agree at that
meeting or before upon procedures for discovery and as to the
conduct of the hearing which will result in the hearing being
concluded within no more than nine (9) months after selection
of the arbitrator(s) and in the award being rendered within
sixty (60) days of the conclusion of the hearings, or of any
post-hearing briefing, which briefing will be completed by both
sides within forty-five (45) days after the conclusion of the
hearings.
9.2.4 In the event the parties cannot agree upon selection of the
arbitrator(s), the CPR will select arbitrator(s) as follows:
CPR shall provide the parties with a list of no less than 25
proposed arbitrators (15 if a single arbitrator is to be
selected) having the credentials referenced above. Within
twenty-five (25) days of receiving such list, the parties shall
rank at least 65% of the proposed arbitrators on the initial
CPR list, after exercising cause challenges. The parties may
then interview the five candidates (three if a single
arbitrator is to be selected) with the highest combined
rankings for no more than one hour each and, following the
interviews, may exercise one peremptory challenge each. The
panel will consist of the remaining three candidates (or one,
if one arbitrator is to be selected) with the highest combined
rankings.
9.2.5 In the event these procedures fail to result in selection of
the required number of arbitrators, CPR shall select the
appropriate number of arbitrators from among the members of the
various CPR Panels of Distinguished Neutrals, allowing each
side challenges for cause and three peremptory challenges each.
9.2.6 In the event the parties cannot agree upon procedures for
discovery and conduct of the hearing that meet the schedule set
forth in Section 9.2.3 above, then the arbitrator(s) shall set
dates for the hearing, any post-hearing briefing, and the
issuance of the award in accord with the schedule set forth in
Section 9.2.3. The arbitrator(s) shall provide for discovery
according to those time limits, giving recognition to the
understanding of the parties that they contemplate reasonable
discovery, including document demands and depositions, but that
such discovery be limited so that the schedule set forth in
Section 9.2.3 may be met without difficulty. In no event will
the arbitrator(s), absent agreement of the parties, allow more
than a total of ten (10) days for the hearing or permit either
side to obtain more than a total of forty (40) hours of
deposition testimony from all witnesses, including both fact
and expert witnesses, or serve more than twenty (20) individual
requests for documents, including subparts, or twenty (20)
individual
28
requests for admission or interrogatories, including subparts.
Multiple hearing days will be scheduled consecutively to the
greatest extent possible.
9.2.7 The arbitrator(s) must render their award by application of the
substantive law of New York and are not free to apply "amiable
compositeur" or "natural justice and equity." The arbitrator(s)
shall render a written opinion setting forth findings of fact
and conclusions of law with the reasons therefor stated. A
transcript of the evidence adduced at the hearing shall be made
and shall, upon request, be made available to either party. The
arbitrator(s) shall have power to exclude evidence on grounds
of hearsay, prejudice beyond its probative value, redundancy,
or irrelevance and no award shall be overturned by reason of
such ruling on evidence. To the extent possible, the
arbitration hearings and award will be maintained in
confidence.
9.2.8 The United States District Court for the District in which the
arbitration is held may enter judgment upon any award. In the
event the panel's award exceeds [**] in monetary damages or
includes or consists of equitable relief, or rejects a claim in
excess of that amount or for that relief, then the court shall
vacate, modify or correct any award (including remanding to the
arbitrators for further proceedings) where the arbitrators'
findings of fact are clearly erroneous, and/or where the
arbitrators' conclusions of law are erroneous; in other words,
the court will undertake the same review as if it were a
federal appellate court reviewing a district court's findings
of fact and conclusions of law rendered after a bench trial. An
award for less than [**] in damages and not including equitable
relief, or which neither rejects a claim in excess of that
amount or for that relief, may be vacated, modified or
corrected only pursuant to the Federal Arbitration Act. The
parties consent to the jurisdiction of the above-specified
court for the enforcement of these provisions, the review
specified herein, and the entry of judgment on any award. In
the event such court lacks jurisdiction, then any court having
jurisdiction of this matter may enter judgment upon any award
and provide the same relief, and undertake the same review, as
specified herein.
9.2.9 In the event the expanded judicial review provided for under
Section 9.2.8 above is not available from the court as a matter
of law, the party unable to obtain such review may instead
obtain review of the arbitrators' award or decision by a single
appellate arbitrator (the "Appeal Arbitrator") selected from
the CPR list of distinguished neutrals and pursuant to
selection procedures specified in paragraph d above. If CPR
cannot provide such services, the parties will together select
another provided of arbitration services that can. No Appeal
Arbitrator shall be selected unless he or she can commit to
rendering a decision within forty-five (45) days following oral
argument as provided in this paragraph. Any such review must be
initiated within thirty (30) days following the date the court
declines the expanded review specified in Section 9.2.8 above.
In the event timely review is sought, the Appeal Arbitrator
will make the same review of the arbitration panel's ruling and
its bases that the U.S. Court of Appeals of the Circuit where
the arbitration hearings are held would make of findings of
fact and conclusions of law rendered by a district court after
a bench trial and then modify,
29
vacate or affirm the arbitration panel's award or decision
accordingly, or remand to the panel for further proceedings.
The Appeal Arbitrator will consider only the arbitration
panel's findings of fact and conclusions of law, pertinent
portions of the hearing transcript and evidentiary record as
submitted by the parties, opening and reply briefs of the party
pursuing the review, and the answering brief of the opposing
party, plus a total of no more than four (4) hours of oral
argument evenly divided between the parties. The party seeking
review must submit its opening brief and any reply brief within
seventy-five (75) and one hundred thirty (130) days,
respectively, following the date the court declines the
expanded review specified in Section 9.2.8; whereas, the
opposing party must submit its responsive brief within one
hundred ten (110) days of that date. Oral argument shall take
place within five (5) months after the court declines the
expanded review specified in Section 9.2.8 and the Appeal
Arbitrator shall render a decision within forty-five (45) days
following oral argument. That decision will be final and not
subject to further review, except pursuant to the Federal
Arbitration Act.
9.2.10 Each party has the right before or, if the arbitrator(s) cannot
hear the matter within an acceptable period, during the
arbitration to seek and obtain from the appropriate court
provisional remedies such as attachment, preliminary
injunction, replevin, etc. to avoid irreparable harm, maintain
the status quo, or preserve the subject matter of the
------ ---
arbitration.
9.2.11 EACH PARTY HERETO [**].
9.2.12 EACH PARTY HERETO [**].
9.2.13 EACH PARTY HERETO [**].
9.2.14 EACH PARTY HERETO [**].
ARTICLE 10
CONFIDENTIALITY
10.1 Confidentiality Obligations. Except as permitted elsewhere under this
Agreement, each Party shall (a) receive and maintain the Confidential
Information of the other Party in strict confidence, (b) not disclose
such Confidential Information to any Third Parties and (c) promptly
notify the disclosing Party upon learning of any law, rule, regulation
or court order that purports to compel disclosure of any Confidential
Information of the disclosing Party and to reasonably cooperate with
the disclosing Party in the exercise of the disclosing Party's right to
protect the confidentiality of such Confidential Information. Neither
Party hereto shall use all or any part of the Confidential Information
of the other Party for any purpose other than to perform its
obligations under this Agreement. Each Party shall ensure that its
employees, representatives and agents comply with this provision. The
obligations of confidentiality shall remain in effect for the duration
of this Agreement and for a period of [**] thereafter.
30
10.2 Exclusions. Nothing contained herein shall prevent a Party from
disclosing Confidential Information pursuant to any applicable law,
rule, regulation or court order; provided, however, that such Party
shall provide notice to the other Party in such event as set out in
Section 10.1(c). Such disclosure shall not alter the status of such
information hereunder for all other purposes as Confidential
Information.
10.3 Termination. Upon termination of this Agreement, all Confidential
Information shall be returned to the disclosing Party or destroyed
unless otherwise specified or permitted elsewhere under this Agreement.
The confidentiality obligations contained in this Article 10 shall
survive termination of this Agreement.
10.4 Publicity. Except as may be required by applicable laws, rules or
regulations (including those arising under any securities laws),
neither Party will originate any publicity, news release or other
public announcement, written or oral, whether to the public press or
otherwise, concerning the relationship between the Parties or the
transactions described in this Agreement without the prior written
consent of the other Party, which consent shall not be unreasonably
withheld or delayed. In the event disclosure is required by applicable
law, rules or regulations, then the Party required to so disclose such
information shall, to the extent possible, provide to the other Party
for its approval (such approval not to be unreasonably withheld) a
written copy of such public announcement at least five (5) Business
Days prior to disclosure. Notwithstanding the foregoing, either Party
shall have the right to make a press release with respect to its
entering into this Agreement in the form attached as Schedule 10.4.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
11.1 Mutual. Each Party hereby represents, covenants and warrants to the
other Party that: (a) it has the corporate power to enter into this
Agreement and to grant the rights and licenses granted herein and
otherwise perform this Agreement; (b) it is not a Party to any
agreement or understanding and knows of no law or regulation that would
prohibit it from entering into and performing this Agreement or that
would conflict with this Agreement; (c) when executed and delivered by
it, this Agreement will constitute a legal, valid and binding
obligation of it, enforceable against it in accordance with the
provisions of this Agreement; and (d) it shall perform its obligations
under this Agreement in compliance with all applicable Laws.
11.2 Closure Medical Warranties. Closure Medical represents and warrants to
CPC that:
11.2.1 the Products supplied by Closure Medical will be [**];
11.2.2 the Products shall [**];
11.2.3 Closure Medical has not [**] and, to the best of Closure
Medical's knowledge, are [**];
31
11.2.4 the Products, and their manufacture, use or sale, do not, to
Closure Medical's best knowledge, [**]; and
11.2.5 there are [**].
11.3 CPC Representations and Warranties. CPC represents and warrants that it
shall not sell the Product in a form other than as a Device.
ARTICLE 12
DISCLAIMER OF WARRANTY, LIMITATION OF LIABILITY AND INDEMNIFICATION
12.1 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, CLOSURE MEDICAL HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, WITH RESPECT TO THE PRODUCT AND THE DEVICE,
INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
12.2 Indemnification by CPC. CPC shall indemnify and hold harmless Closure
Medical and its officers, directors, employees and agents from and
against any and all losses, damages, liabilities, obligations,
penalties, judgments, awards, costs, expenses and disbursements
(including, without limitation, the costs, expenses and disbursements,
as and when incurred, of investigating, preparing or defending any
claim, action, suit, proceeding or investigation asserted by a Third
Party) (collectively, the "Losses"), caused by, relating to, based
upon, arising out of or in connection with:
12.2.1 [**] by CPC or its Affiliates [**] of any of the Devices;
12.2.2 the [**] by CPC or its Affiliates;
12.2.3 the [**] in this Agreement;
12.2.4 any [**] (i) for the [**] and (ii) for [**] of such Product; or
12.2.5 [**] on the part of CPC or its Affiliates or its officers,
directors, employees, agents or consultants, in each case [**].
12.3 Indemnification by Closure Medical. Closure Medical shall indemnify and
hold harmless CPC and its officers, directors, employees and agents
from and against any and all Losses, caused by, relating to, based
upon, arising out of or in connection with:
12.3.1 the [**] in this Agreement;
12.3.2 the [**] on the Device;
12.3.3 any [**] (a) arising from [**] or (b) as a [**] for such
Product; or
32
12.3.4 [**] on the part of Closure Medical or its Affiliates or its
officers, directors, employees, agents or consultants, in each
case [**].
12.4 Indemnitee Obligations. Each person seeking to be reimbursed,
indemnified, defended and/or held harmless under Section 12.2 or 12.3
(each, an "Indemnitee") shall (a) provide the Party obliged to
indemnify such Indemnitee with prompt written notice of any claim,
suit, demand or other action for which such Indemnitee seeks to be
reimbursed, indemnified, defended or held harmless (each, a "Claim"),
which notice shall include a reasonable identification of the alleged
facts giving rise to such Claim, (b) grant such Party reasonable
authority and control over the defense and settlement of any such Claim
and (c) reasonably cooperate with such Party and its agents in defense
of any such Claim. Each Indemnitee shall have the right to participate
in the defense of any Claim for which such Indemnitee seeks to be
reimbursed, indemnified, defended or held harmless, by using attorneys
of such Indemnitee's choice, at such Indemnitee's expense. Any
settlement of a Claim for which any Indemnitee seeks to be reimbursed,
indemnified, defended or held harmless under this Article 12 shall be
subject to the prior written approval of such Indemnitee, such approval
not to be unreasonably withheld, conditioned or delayed.
12.5 Insurance. During the term of this Agreement and for a period of [**]
after its expiration or termination, the Parties shall obtain and/or
maintain at their sole cost and expense, product liability insurance
that meets the levels of insurance as set out on Schedule 12.5.
ARTICLE 13
FORCE MAJEURE
13.1 The obligations of Closure Medical and CPC hereunder shall be subject
to any delays or non-performance caused by a Force Majeure Event, and
each party shall be under no liability to the other for anything which
would constitute a breach of this Agreement arising by reason of such
matters. The party which is not performing its obligations under this
Agreement as a result of a Force Majeure Event shall use diligent
efforts to resume compliance with this Agreement as soon as possible.
Should the Force Majeure Event continue unabated for a period of [**]
or more, the parties shall enter into good faith discussions with a
view to alleviating its affects or to agreeing upon such alternative
arrangements as may be fair and reasonable having regard to the
circumstances prevailing at that time.
13.2 In the event that such alternative arrangements cannot be agreed upon
within [**] period, and in the event that such Force Majeure Event
results in [**] manufacture of the Products as soon as reasonably
practicable.
13.3 In the event that such alternative arrangements cannot be agreed upon
with [**] after occurrence of the Force Majeure Event, and in the event
that such Force Majeure Event does not result in [**] of the Products
in accordance with the terms of this Agreement, then the non-performing
party shall continue to diligently attempt to alleviate such Force
33
Majeure Event until it is removed or eliminated. Each party has full
management discretion in dealing with its own labor issues.
13.4 Closure Medical shall [**] include such [**] to allow for Closure
Medical to [**] if a Force Majeure Event [**] in supply. In any event,
[**] the [**] (including such equipment and supplies as are reasonably
appropriate) [**] facilities where the Products are being produced.
34
ARTICLE 14
MISCELLANEOUS
14.1 Disclosures. Closure Medical recognizes and acknowledges that CPC and
its Affiliates have been, and will continue to be, [**]. Closure
Medical acknowledges that [**] the term of this Agreement.
14.2 Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of New York, without regard to its
conflicts of law provisions.
14.3 No Assignment. Except as otherwise set forth herein, neither Party
shall transfer, assign or cede any rights or delegate any obligations
hereunder, in whole or in part, whether voluntarily or by operation of
law, without the prior written consent of the other Party, which
consent may be withheld at the other Party's reasonable business
discretion; provided, however, that either Party may transfer this
Agreement without prior written consent of the other Party to an
Affiliate or in connection with a merger or sale of all or
substantially all of the stock or assets of such Party, or with respect
to CPC, in connection with the sale of all or substantially all of the
business which relates to this Agreement.
14.4 Independent Contractors. In connection with this Agreement, each Party
is an independent contractor. This Agreement does not, and shall not be
construed to, create an employer-employee, agency, joint venture or
partnership relationship between the Parties. Neither Party shall have
any authority to act for or to bind the other Party in any way, to
alter any of the terms or conditions of any of the other Party's
standard forms of invoices, sales agreements, warranties or otherwise,
or to warrant or to execute agreements on behalf of the other or to
represent that it is in any way responsible for the acts, debts,
liabilities or omissions of the other Party.
14.5 Notices. All notices, reports, payments and other communications
required or permitted to be given under this Agreement (each, a
"Notice") shall be in writing and shall be given either by personal
delivery against a signed receipt, by express delivery using a
nationally recognized overnight courier or by facsimile. All Notices
shall be properly addressed as follows, or to such other addresses as
may be specified in a Notice given hereunder:
If to Closure Medical: with a copy to:
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Closure Medical Corporation ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Philadelphia, Pennsylvania
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
35
If to CPC: with a copy to:
President-Wound Care Office of General Counsel
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Consumer Companies, Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Grandview Road ▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
A Notice shall be deemed to be effective upon personal delivery or, if sent via
overnight delivery, upon receipt thereof. A Notice sent via facsimile is deemed
effective on the same day (or if such day is not a Business Day, then on the
next succeeding Business Day) if such facsimile is sent before 5:00 p.m. Eastern
Standard/Daylight Time and on the next day (or if such day is not a Business
Day, then on the next succeeding Business Day) if such Notice is sent after 5:00
p.m. Eastern Standard/Daylight Time.
14.6 Amendment or Modification. No subsequent amendment, modification or
waiver of any of the provisions of this Agreement shall be effective
unless in writing and signed by the Parties.
14.7 Entire Agreement. This Agreement sets out the entire agreement between
the Parties with respect to the subject matter of this Agreement and
supersedes all prior agreements, proposals, arrangements and
communications, whether oral or written, with respect to the subject
matter hereof.
14.8 Severability. If any provision of this Agreement is held by a tribunal of
competent jurisdiction to be illegal, invalid or otherwise unenforceable
in any jurisdiction, then to the fullest extent permitted by law (a) the
same shall not effect the other provisions of this Agreement, (b) such
provision shall be deemed modified to the extent necessary in the
tribunal's opinion to render such provision enforceable, and the rights
and obligations of the Parties shall be construed and enforced
accordingly, preserving to the fullest extent the intent and agreements
of the Parties set forth herein and (c) such finding of invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of such provision in any other jurisdiction.
14.9 Waiver. Failure to enforce any term of this Agreement is not a waiver of
future enforcement of that or any other term. No term or provision of
this Agreement will be deemed waived and no breach excused unless such
waiver or excuse is in writing and signed by the Party against whom
enforcement of such waiver or excuse is sought.
14.10 Survival. Articles 6, 8.4, 8.5, 9, 10, 11, 12 and 14; any payment
obligations of the Parties hereunder accruing prior to the date of
termination; and any other provision herein expressly surviving
termination or necessary to interpret the rights and obligations of the
Parties in connection with the termination of the term of this Agreement
will survive the termination or expiration of this Agreement.
36
14.11 No Third Party Beneficiaries. Nothing in this Agreement is intended to
confer benefits, rights or remedies unto any person or entity other
than the Parties and their permitted successors and assigns.
14.12 Titles. The headings appearing at the beginning of the sections
contained in this Agreement have been inserted for identification and
reference purposes only and shall not be used to determine the
construction or interpretation of this Agreement. The nomenclature of
the defined terms in this Agreement shall only be used for the
construction of this Agreement and are not to be used for any other
purpose, including, but not limited to, interpretation for accounting
purposes.
14.13 Compliance with Laws. Each Party shall comply with all prevailing laws,
rules and regulations and obtain all necessary approvals, consents and
permits required by the applicable agencies of the government of the
jurisdictions that apply to its activities or obligations under this
Agreement.
14.14 Execution in Counterparts, Facsimiles. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same instrument.
This Agreement shall become binding when any one or more counterparts
hereof, individually or taken together, bear the signatures of both
Parties hereto. For the purposes hereof, a facsimile copy of this
Agreement, including the signature pages hereto, shall be deemed an
original.
[The remainder of this page is intentionally left blank.]
37
IN WITNESS WHEREOF, the Parties to the Agreement by their duly
authorized representatives have executed this Agreement as of the date first
written above.
CLOSURE MEDICAL CORPORATION
By:_______________________________
Name:
Title:
38
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ CONSUMER COMPANIES, INC.
By:______________________________
Name:
Title:
39