Exhibit 10(tt)
AGREEMENT BETWEEN
FEMMEPHARMA, INC. AND
K-V PHARMACEUTICAL COMPANY
--------------------------
This Agreement is entered into as of the 18th day of April 2002 by
and between FEMMEPHARMA, INC. ("FemmePharma"), ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and K-V PHARMACEUTICAL COMPANY ("KV"), ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
A. FemmePharma is the owner of certain technology and patent rights
applicable to intravaginal products containing Danazol and vaginal
anti-infective products.
B. In the course of obtaining the regulatory approvals contemplated
in this Agreement, and during the term of this Agreement, FemmePharma may
develop certain inventions and other proprietary rights relating to the
manufacture, use and sale of intravaginal products containing Danazol and
vaginal anti-infective products and FemmePharma is willing to ▇▇▇▇▇ ▇▇ an
exclusive license for the manufacture, use and sale of intravaginal products
containing Danazol and vaginal anti-infective products, and KV desires to
acquire the same from FemmePharma.
Therefore, in consideration of the mutual covenants and agreements
contained herein, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, FemmePharma and KV, intending
to be legally bound, agree as follows:
1. DEFINITIONS.
-----------
As used herein, capitalized terms shall have the respective
meanings set forth below.
"Act" means the United States Federal Food, Drug, and Cosmetic Act,
---
as amended, and rules and regulations thereunder.
"Affiliate" of a Person means a Person that directly, or indirectly
---------
through one or more intermediaries, controls, is controlled by or is under
common control with such Person. For purposes of this definition, "control"
(and, with correlative meanings, the terms "controlled by" and "under common
control with") shall mean the possession of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting stock, by contract or otherwise. In the case of a
corporation or other entity "control" shall be presumed to exist by, among
other things, the direct or indirect ownership of more than fifty percent
(50%) in voting power of its outstanding voting stock, or other voting
rights.
"Anti-infective Product" means any product used for the treatment
----------------------
of candidiasis, bacterial vaginosis or trichomoniasis, whether such
conditions are described by such terms or any other terminology.
"Claim" means any and all liabilities, damages, losses,
-----
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees and expenses).
"Commercially Reasonable" shall mean reasonable efforts and
-----------------------
diligence in developing and commercializing a Product in accordance with a
party's business, legal, medical and scientific judgment, such reasonable
efforts and diligence to be no less than the efforts and resources the party
would use for a product owned by it or to which it has rights, which is of
similar market potential at a similar stage in its product life, taking into
account the competitiveness of the marketplace, the proprietary position of
the compound, the regulatory structure involved, the profitability of the
applicable products, and other relevant factors including, without
limitation, technical, legal, scientific or medical factors.
"Confidential Information" is defined in Section 12.1.
------------------------
"Danazol" has the meaning ascribed thereto in The Merck Index, 12th
-------
Edition (1996, 1997).
"Danazol Product" is defined under the definition of KV Product.
---------------
"DMF" means the Drug Master File, as defined at 21 C.F.R. Section
---
314.420, for any Product or any manufacturing facility of KV at which a
Product is manufactured.
"Existing Patent" means any issued patent which falls within (a) or
---------------
(b) of the definition of Patent Rights.
"Fair Market Value" means the cash consideration which the selling
-----------------
party would realize from an unaffiliated, unrelated buyer in an arm's length
sale of an identical item sold in the same quantity and at the same time and
place of transaction.
"FDA" means the United States Food and Drug Administration.
---
"FemmePharma Improvements" means any Technology discovered,
------------------------
developed or otherwise owned, acquired or controlled by FemmePharma or its
Affilitates before or during the Term (except as covered by the Existing
Patents).
"FemmePharma Indemnitee" means FemmePharma and its Affiliates and
----------------------
their directors, officers, employees, agents, professional consultants,
successors and assigns.
"FemmePharma Product(s)" means all products other than KV Products.
----------------------
"FemmePharma Technology" means all Technology owned or controlled
----------------------
by FemmePharma or its Affiliates before or during the Term.
"FemmePharma Territory" is defined in Section 2.1(b)(i).
---------------------
2
"Gross Profit" means Net Sales minus cost of goods sold (calculated
------------
in accordance with generally accepted accounting principles).
"IND" means an Investigational New Drug submission under the Act or
---
any equivalent submission in other countries within the Territory.
"Initial Product" means the first Danazol Product that meets the
---------------
Initial Product Criteria and on which an NDA is contemplated to be obtained
under this Agreement.
"Initial Product Criteria" means the criteria for the Initial
------------------------
Product set forth in Appendix A.
----------
"Initial Sale" and "Initial Sale Date" are defined in Section 4.2(b).
------------ -----------------
"KV Improvement" means any Technology relating to a Danazol Product
--------------
discovered, developed, owned, acquired or controlled by KV or its Affiliates
during the Term.
"KV Improvement Notice" is defined in Section 2.1(b)(i).
---------------------
"KV Improvement Product" is defined in Section 2.1(b)(i).
----------------------
"KV Indemnitee" means KV and its Affiliates and their directors,
-------------
officers, employees, agents, professional consultants, successors and
assigns.
"KV Product" means any: (i) intravaginally administered product
----------
containing Danazol or any analogue, salt, ester, prodrug, isomer, derivative
or metabolite of Danazol (a "Danazol Product"), and (ii) Anti-infective
-----------------
Product.
"Marketing Year" means the period from the Initial Sale Date
--------------
through the 12 month period commencing on the first day of the calendar
month following the Initial Sale Date and each 12 month period thereafter.
"NDA" means a New Drug Application filed with the FDA seeking
---
permission to market the applicable product in interstate commerce in the
United States which meets the requirements of the Act or any equivalent
application made in any country in the Territory.
"Net Sales" means the gross amount (including the Fair Market Value
---------
of any non-cash consideration) invoiced by KV and its Affiliates for sales
of KV Products to third parties (excluding sales to Affiliates and
sublicensees), less uncollected accounts receivable (charged off in
accordance with KV's normal charge-off policies) and qualifying costs
directly attributable to such sales and actually identified on the invoice
or otherwise contractually borne by KV or its Affiliates. Such qualifying
costs shall be limited to the following:
(i) Discounts, rebates, chargebacks, reimbursements,
allowances, adjustments and third party administrative fees, in
amounts customary in the trade, for quantity
3
purchases and prompt payments, for wholesalers, distributors and
retailers, and for governmental agencies and managed care providers;
(ii) Credits, adjustments, allowances and refunds, not
exceeding the original invoice amount, for claims, rejections,
recalls and returns;
(iii) Prepaid outbound or return transportation,
packaging, handling and warehousing expenses and transportation
insurance premiums;
(iv) Sales, use and excise taxes, tariffs, duties,
surcharges and other fees imposed by a government or governmental
agency; and
(v) Retroactive price reductions and shelf stock
adjustments.
Components of Net Sales shall be determined using the accrual method of
accounting in accordance with generally accepted accounting principles
applied in a manner consistent with a party's customary practices.
"Non-serious adverse event" has the meaning set forth in Section 10.6.
-------------------------
"Patent Assignment" is defined in Section 2.8(a).
-----------------
"Patent Rights" means: (a) U.S. Patent No. 5,993,856, issued
-------------
November 30, 1999, entitled "PHARMACEUTICAL PREPARATIONS AND METHODS FOR
THEIR ADMINISTRATION", (b) U.S. Patent Application No. 09/355,213, filed
7/23/99, entitled "PHARMACEUTICAL PREPARATIONS AND METHODS FOR THEIR
REGIONAL ADMINISTRATION," and (c) all patents and patent applications having
one or more claims covering any KV Product or the preparation or use of any
KV Product owned or controlled by FemmePharma or its Affiliates in the
present or in the future and filed or having legal force in any country in
the Territory. Each of the foregoing shall include any and all patents and
patent applications in the world corresponding to the foregoing patents and
patent applications, including but not limited to any and all equivalents,
provisional applications (including but not limited to U.S. Provisional
Application No. 60/036,727, filed January 24, 1997, and U.S. Provisional
Application No. 60/052,578, filed July 15, 1997), non-provisional
applications, continuations, continuations-in-part, divisionals, reissues,
reexaminations, substitutions, international applications, national phase
applications, regional phase applications, registrations, confirmations,
renewals, ▇▇▇▇▇ patent applications, and utility model applications, that
may be filed in the United States and every foreign country, and the
patents, extensions (including, without limitation, patent term extensions
and supplementary protection certificates), counterparts or derivations
thereof, both foreign and domestic, that may issue thereon having one or
more claims covering any KV Product or the preparation or use of any KV
Product.
"Person" means any individual, partnership, corporation, limited
------
liability company, firm, association, unincorporated organization, joint
venture, trust or other entity.
"Phase II Studies" is defined in Section 2.2.
----------------
4
"Phase III Studies" is defined in Section 2.2.
-----------------
"Serious adverse event" has the meaning set forth in Section 10.6.
---------------------
"Specifications" means all manufacturing and quality control and
--------------
assurance procedures, processes, practices, standards, instructions and
specifications applicable to the manufacture and packaging of any KV
Product, including (but not limited to) the Initial Product Criteria, as the
same shall be amended to meet applicable regulatory requirements, and as
included in an approved NDA for the KV Product, as amended from time to
time.
"Stock Purchase Agreement" means the Stock Purchase Agreement
------------------------
entered into between FemmePharma and KV contemporaneously with this
Agreement.
"Technology" means public and nonpublic technical or other
----------
information, trade secrets, know-how, processes, formulations, concepts,
ideas, preclinical, clinical, pharmacological or other data and testing
results, all experimental or test methods, laboratory notebooks, results,
assays, descriptions, all scientific plans, depictions, inventions,
processes, manufacturing methods, physical and analytical safety, testing
and quality control data and results, customer lists, marketing information,
sales information, and any other written, printed or electronically stored
information and materials and any and all other intellectual property,
including Patent Rights, of any nature whatsoever; in each case as and to
the extent, but only as and to the extent, the same relates to a KV Product.
"Term" is defined in Section 8.1.
----
"Territory" means the countries and other geographic areas set
---------
forth in Appendix B.
----------
"Third Party(ies)" means any Person other than FemmePharma or any
----------------
Affiliate of FemmePharma.
"Time and Events Schedule" is defined in Section 2.2.
------------------------
"Trademark" means the trademark PARDEL(TM).
---------
2. LICENSE; CLINICALS; REGULATORY APPROVAL.
---------------------------------------
2.1. Grant of Licenses; Use of Trademarks.
------------------------------------
(a) FemmePharma Grant of License.
----------------------------
(i) Subject to the terms and conditions of this Agreement,
FemmePharma hereby grants to KV the exclusive right, license, with a right
to sublicense as provided in this Agreement, and privilege to use the Patent
Rights and FemmePharma Technology in the Territory to make, have made,
import, use, offer for sale, sell, market,
5
distribute, reproduce and otherwise exploit the KV Products, but not the
FemmePharma Products.
(ii) FemmePharma expressly retains all rights to the Patent
Rights and FemmePharma Technology, except to the extent explicitly granted to
KV herein.
(iii) FemmePharma hereby grants to KV the right to license
or sublicense the Patent Rights and FemmePharma Technology relating to the
KV Products, but not the FemmePharma Products, to any Affiliates of KV and
any third party in connection with the performance of KV's rights, license,
privileges and obligations under this Agreement, provided that:
(A) No license or sublicense shall in any way diminish,
reduce or eliminate any of KV's obligations to FemmePharma under this
Agreement and KV shall remain primarily liable for such obligations;
(B) KV shall obtain FemmePharma's prior written
approval of the license, sublicense or assignment of KV's rights and
obligations hereunder to TAP Pharmaceutical Products Inc., AstraZeneca PLC,
Pharmacia Corporation or Sanofi-Synthelabo Inc., or any Affiliate of any
such entity, which approval shall not be unreasonably withheld; and
(C) All obligations of KV to FemmePharma under this
Agreement shall be binding upon the licensee or sub-licensee as if the
licensee or sub-licensee was a party to this Agreement, and the licensee or
sub-licensee shall undertake in writing to perform all obligations to
FemmePharma under this Agreement relevant to the rights and obligations
assigned to and to be performed by such licensee or sub-licensee.
(b) ▇▇ ▇▇▇▇▇ of License to KV Improvements.
--------------------------------------
(i) KV shall notify FemmePharma promptly in writing (a
"KV Improvement Notice") of any KV Improvement which KV plans to
commercialize (or which KV plans to incorporate in a Danazol Product to be
commercialized) in the Territory (a "KV Improvement Product"). Upon the
reasonable request of FemmePharma, KV shall also disclose such additional
detailed data and information as may be relevant to the evaluation and
understanding by FemmePharma of such KV Improvement Product; provided,
however, that KV shall not be obligated to disclose its confidential
proprietary technology or information until such time as FemmePharma
determines that it wishes to market the KV Improvement Product. Further, any
such disclosures by KV shall be subject to Section 12 of this Agreement.
Subject to the terms and conditions of this Section 2.1(b), KV hereby grants
to FemmePharma an exclusive license (even as to KV) to import, use, offer
for sale and sell any KV Improvement Product in each country outside the
Territory in which FemmePharma is selling a Danazol Product or has
substantive plans to sell a Danazol Product as of the date of the KV
Improvement Notice and, in the case of such FemmePharma plans, thereafter
commences the sale of a Danazol Product within 12 months of the later of:
(A) the Initial Sale Date, or (B) the date of the KV Improvement Notice, or
such later date as is not more than six months after the commencement of the
sale of the Danazol Product in any country which has required the completion
of
6
additional clinical studies to obtain regulatory approval of and sell the
Danazol Product therein, provided FemmePharma or its licensee is continuing
to use Commercially Reasonable efforts to obtain regulatory approval and
commence the sale of the Danazol Product therein (the "FemmePharma
Territory"). Notwithstanding the foregoing, any usage by FemmePharma of a KV
Improvement Product in the FemmePharma Territory shall be solely at the
election of FemmePharma. If FemmePharma proposes to sell any KV Improvement
Product in the FemmePharma Territory, directly or through its licensee(s) in
any country in the FemmePharma Territory, the parties shall use their mutual
reasonable good faith efforts to negotiate and execute a license agreement
which contains commercially reasonable terms and conditions for the
marketing, sale and distribution of the KV Improvement Product by
FemmePharma and/or its licensees in the FemmePharma Territory; provided,
however, that it is recognized and agreed that KV cannot represent or
warrant that a KV Improvement Product will be approvable by regulatory
authorities in any other country or otherwise saleable outside the
Territory, notwithstanding that it can be sold by KV in the Territory, and
it shall be FemmePharma's responsibility to assure compliance with
applicable regulatory and other requirements with respect to any such sales
or proposed sales.
(ii) It is expressly understood and agreed to by
the parties that upon the incorporation of a KV Improvement into a Danazol
Product sold in the Territory by KV or any Affiliate, licensee or
sublicensee of KV (pursuant to a license or sublicense from KV or its
Affiliate), such KV Improvement will be considered part of the Danazol
Product for purposes of the calculation of the royalties payable by KV to
FemmePharma on Net Sales of the Danazol Product under Section 4.2(d)(i).
(iii) KV shall have the right to market and sell
any KV Improvement Product in any country outside both the Territory and the
FemmePharma Territory. In the event KV markets and sells a KV Improvement
Product outside the Territory itself or through its Affiliate, KV will pay
FemmePharma a royalty equal to 5% of its Net Sales thereof outside the
Territory. If KV or its Affiliate markets and sells a KV Improvement Product
outside the Territory through a licensee or sublicensee, then KV shall pay
FemmePharma a percentage of amounts received by KV with respect to the KV
Improvement Product, calculated in the same manner as provided in the last
sentence of Section 4.2(g)(i) with respect to Anti-Infective Products.
(c) License of Trademark.
--------------------
(i) Subject to the terms and conditions of this
Agreement, FemmePharma hereby grants to KV the perpetual fully-paid
exclusive right and license to use and sublicense the Trademark and goodwill
associated therewith in connection with the manufacture, use or sale of any
KV Product in the Territory. Subject to the limited right of use granted in
this Section, all title to and ownership of the Trademark shall remain with
FemmePharma.
(ii) Notwithstanding the provisions of Section (i) above
or any other provision of this Agreement, KV shall have no obligation to use
or display the Trademark in connection with the manufacture, use, offer for
sale, import or sale of any KV Product and
7
FemmePharma shall have no interest or rights in any trademarks or other
marks used by KV in connection with the sale of any KV Product.
(iii) Any use or display of the Trademark by KV shall be
in or consistent with the form, if any, provided by FemmePharma, and KV
shall fully comply with all reasonable guidelines, if any, communicated by
FemmePharma concerning the use of the Trademark.
(iv) KV shall not utilize the Trademark in any manner that
could reasonably be expected to have a material adverse effect upon the
goodwill of FemmePharma associated with the Trademark.
2.2. Initial Product Completion and Approval. Upon the execution of
---------------------------------------
this Agreement FemmePharma agrees, according to the Time and Events Schedule
set forth in Appendix C (the "Time and Events Schedule"), but subject to
----------
such delays as are caused by changes in the requirements of the FDA
applicable to the clinical studies or other requirements for obtaining FDA
approval of the Initial Product, but in any event in each case not later
than 90 days following the respective dates for each event set forth in the
Time and Events Schedule:
(a) Phase II Studies. That FemmePharma has obtained an
approved IND and shall promptly commence and obtain completed Phase II
Studies of the Initial Product according to the protocol, clinical plan and
clinicians set forth in Appendix D, as the same may be amended upon mutual
----------
agreement of the parties as and to the extent necessary to obtain regulatory
approval of the Initial Product. During the period during which such studies
are being conducted, KV shall have the right to visit, upon one business
day's notice to FemmePharma, the clinical study sites which are
participating therein and to review and discuss the work records and the
progress and results of the studies with the clinicians involved in the
studies. FemmePharma also agrees to provide KV with copies of any reports or
correspondence with such clinical study sites and clinicians relating to the
conduct of the studies or results thereof. FemmePharma shall obtain and
provide KV with a full written report of the Phase II Studies, including the
results and conclusions thereof, and three original copies of the full and
final written clinical report and statistical analysis of the Phase II
Studies, addressed to KV. If the results of the Phase II Studies do not meet
the parameters set forth in Appendix A and Appendix D, KV shall have the
---------- ----------
right to terminate this Agreement with respect to the Danazol Product and
thereupon KV shall have no further rights or obligations under this
Agreement with respect to the Danazol Product (which termination shall not
affect the remaining rights and obligations of the parties hereunder with
respect to the anti-infective products) upon written notice of such
termination to FemmePharma at any time within the 30 day period immediately
succeeding the delivery to KV of the final Phase II clinical report. For
these purposes, "Phase II Studies" shall mean a clinical study comprising
patients with endometriosis to whom the Initial Product is administered in
order to preliminarily assess the effectiveness of the Initial Product for
endometriosis, the optimal dose thereof and regimen therefor, and the side
effects associated with the Initial Product, all as further described in the
meeting minutes delivered from the FDA to FemmePharma and in related
regulatory documents, as the same shall be attached as part of Appendix D to
----------
this Agreement.
8
(b) Phase III Studies. If KV has not given notice of its
intention to terminate this Agreement within the 30 day period contemplated
in Section 2.2(a), that FemmePharma will commence and obtain Phase III
Studies of the Initial Product (subject to the receipt of an adequate supply
of Initial Product from KV to conduct the Phase III Studies, in accordance
with the second sentence of Section 3.1) according to the protocol, clinical
plan and clinicians set forth in Appendix E, as the same may be amended upon
----------
mutual agreement of the parties as and to the extent necessary to obtain
regulatory approval of the Initial Product, which Phase III Studies shall be
sufficient to obtain FDA approval of an NDA for the Initial Product.
During the period during which such studies are being
conducted, KV shall have the right to visit, upon one business day's notice
to FemmePharma and only to the extent permitted under applicable FDA
regulations, the clinical study sites which are participating therein and to
review and discuss the work records and the progress and results of the
studies with the clinicians involved in the studies.
FemmePharma also agrees to provide KV with copies of any
reports or correspondence with such clinical study sites and clinicians
relating to the conduct of the studies or results thereof. FemmePharma shall
obtain and provide KV with a full and final written clinical report and
statistical analysis of the Phase III Studies, including the results and
conclusions thereof, and three original copies of the final Phase III
clinical report, addressed to KV. For these purposes, "Phase III Studies"
shall mean a series of expanded controlled and uncontrolled, pivotal,
multi-center (generally) clinical studies after adequate completion of Phase
II Studies, comprising patients with endometriosis, to whom the Initial
Product is administered in order to obtain sufficient efficacy and safety
data to support regulatory submissions and labeling of the Initial Product.
If the results of the Phase III Studies do not meet the
parameters set forth in Appendix A and Appendix E, KV shall have the right
---------- ----------
to terminate this Agreement with respect to the Danazol Product and
thereupon KV shall have no further rights or obligations under this
Agreement with respect to the Danazol Product (which termination shall not
affect the remaining rights and obligations of the parties hereunder with
respect to the anti-infective products) upon written notice of such
termination to FemmePharma at any time within the 30 day period immediately
succeeding the delivery to KV of the final Phase III clinical report.
(c) NDA. If KV has not given notice of its intention to terminate
this Agreement with respect to the Danazol Product within the 30 day period
contemplated in Section 2.2(b), that FemmePharma will use its commercially
reasonable efforts to prepare and file an NDA for the Initial Product with
the FDA within 150 days following the completion of the Phase III Studies,
plus such additional time as is approved by KV as a result of unforeseen
delays, which approval shall not be unreasonably withheld, and thereafter
will use its reasonable commercial efforts to obtain FDA approval thereof;
provided, however, that FemmePharma shall not be in breach of this Section
2.2(c) by reason of, and for the period of, any delay by FemmePharma in
filing or obtaining approval of an NDA arising from: (i) a delay by KV in
providing information for or otherwise taking any action required to be
taken by KV in connection with KV or its Affiliate or their designee being
named as the manufacturer and/or distributor of the Initial Product therein,
or (ii) the inability of KV or its designee to qualify to be
9
named as the manufacturer of the Initial Product in the NDA or a failure of
KV to pay any amounts payable under Sections 2.4 or 2.5 hereof.
Upon receipt of FDA approval of an NDA for the Initial
Product and payment of the amounts payable by KV to FemmePharma under
Sections 4.2(a) and (b), FemmePharma will transfer the ownership of the NDA
to KV. Notwithstanding the foregoing, however, from and after the
termination of this Agreement by reason of the breach of this Agreement by
KV, all right, title and interest in the NDA will be transferred to and
vested solely in FemmePharma, and KV hereby assigns to FemmePharma all
right, title and interest in the NDA effective as of such termination.
(d) Costs. That, except as set forth in Sections 2.4 and
2.5 or otherwise expressly agreed to by KV, FemmePharma will pay the cost of
obtaining the Phase II Studies and the Phase III Studies for the Initial
Product and filing and obtaining approval of an NDA for the Initial Product,
including (but not limited to) the cost of any required clinical batches of
the Initial Product required for the conduct of the Phase II Studies.
(e) KV Completion, Termination. If FemmePharma does not
proceed according to the "Time and Events Schedule" set forth in Appendix C,
----------
other than by reason of:
(i) such delays as are caused by changes in the
requirements of the FDA applicable to the clinical studies or other
requirements for obtaining FDA approval of the Initial Product, but in any
event in each case not later than 90 days following the respective dates for
each event set forth in the Time and Events Schedule with respect to the
Initial Product; or
(ii) any delay or failure by KV to pay any amount payable
to FemmePharma under this Agreement or the Stock Purchase Agreement, to
provide adequate supplies of the Initial Product for completion of Phase III
Studies, to provide such information and otherwise take such steps as are
necessary to qualify itself or its Affiliate or designee as the manufacturer
of the Initial Product under the NDA therefor, or to otherwise perform in
accordance with this Agreement,
then, in addition to any other remedies available to KV therefor, KV shall
have the right, in its sole discretion upon written notice to FemmePharma,
to proceed therewith on behalf of FemmePharma. If KV does so, each of the
royalties payable by KV under Section 4.2(d)(i) shall be reduced by 2% (e.g.
from 8% to 6%), and any commercially reasonable out-of-pocket funds paid by
KV therefor shall be repaid to KV by FemmePharma with interest thereon,
calculated monthly at the representative prime rate of interest published
from time to time in the Wall Street Journal, plus 3%, from: (A) amounts
otherwise payable to FemmePharma by KV under this Agreement (with any
deduction being applied first to the payment of accrued interest) and (B) if
necessary, under the Stock Purchase Agreement; provided, however, that if
any funds otherwise to be invested by KV in FemmePharma under the Stock
Purchase Agreement are used for this purpose, the same shall be credited
against the payment otherwise due under the Stock Purchase Agreement and
shall not reduce the number of shares of FemmePharma Preferred Stock
otherwise receivable by KV therefor under the Stock Purchase Agreement.
10
2.3. Reporting. No later than the 15th day after the end of each
---------
month (or the next business day if the 15th day is not a business day) prior
to the completion of the clinical studies contemplated to be obtained by
Section 2.2 and approval of an NDA for the Initial Product, FemmePharma
agrees to submit to KV a written progress report detailing the work done by
FemmePharma and progress and results of any clinical studies and regulatory
applications during the prior month, including a review of compliance with
the Time and Events Schedule. In addition, FemmePharma shall be available to
consult with KV via telephone at any time during normal business hours
during the clinical studies and regulatory approval period regarding the
progress thereof.
2.4. Validation. KV shall be responsible, at its expense, for all
----------
process validation and analytical method development and validation
necessary for the manufacture and sale of any KV Product by KV and/or its
Affiliate(s), licensees, sublicensee(s) or subcontractor(s).
2.5. Other Regulatory Approvals.
--------------------------
(a) KV will be responsible for making all applications and
obtaining all regulatory approvals necessary to the manufacture,
importation, use and sale of any KV Product in any country in the Territory
outside the United States in which KV or its Affiliates or their
sublicensees expects to manufacture, import, use or sell any KV Product.
FemmePharma will assist KV and its Affiliates and their sublicensees to the
extent reasonably necessary in making such applications or obtaining such
approvals, including the filing (where applicable) of separate applications
or other filings, including patent applications, if reasonably necessary to
obtain available patent protection and/or approval and to implement the
manufacture, importation, use and sale of any KV Product in the Territory.
(b) KV shall be responsible for filing and maintaining all
documentation and other information required by any state, territory or
possession (including Puerto Rico) of the United States for the purpose of
listing any KV Product on each such state's or territory's or possession's
formulary, and obtaining such other approvals as may be necessary to market
any KV Product in each state, territory or possession.
2.6. Commercialization.
-----------------
(a) KV agrees to cause the initial commercial introduction
and sale of the Initial Product to occur in the United States, directly or
through its Affiliate(s), promptly upon FDA approval of an NDA for the
Initial Product, and thereafter to use its Commercially Reasonable efforts
to market the Initial Product in the Territory and otherwise to continue or
cause the continuation of the active marketing, promotion and sale of the
Initial Product during the term of this Agreement. KV agrees to position and
promote the Initial Product, through a minimum sales force of 150
representatives, with the same or greater level of diligence, marketing,
sales effort and promotion as it would apply to other similar new products
marketed by KV, both upon initial market introduction and thereafter. In
addition, KV agrees to use its Commercially Reasonable efforts, subsequent
to the Initial Sale, to market, sell and promote the Initial Product,
directly or through sublicensees, in all other countries in the Territory,
it being understood that KV's commitment to do so is a material element of
this Agreement.
11
(b) (i) KV hereby grants FemmePharma a non-exclusive right
to co-promote the Initial Product to reproductive endocrinologists in the
United States and its territories and possessions (including Puerto Rico).
FemmePharma agrees to position and promote the Initial Product to
reproductive endocrinologists through a minimum sales force of 10
representatives. FemmePharma shall have the right to determine whether or
not to market and sell the Initial Product to reproductive endocrinologists
hereunder; provided, however, that FemmePharma shall give KV notice of its
determination to co-promote or not to co-promote the Initial Product to
reproductive endocrinologists within 180 days after the filing of an NDA for
the Initial Product. If FemmePharma gives KV such notice that it will not
co-promote the Initial Product or fails to give KV notice that it will
co-promote the Initial Product to reproductive endocrinologists hereunder,
FemmePharma's right to co-promote the Initial Product to reproductive
endocrinologists under this Agreement shall terminate and be of no further
force or effect. If FemmePharma co-promotes the Initial Product to
reproductive endocrinologists hereunder, FemmePharma shall use Commercially
Reasonable efforts to market, sell and promote the Initial Product to
reproductive endocrinologists with not less than the above number of
FemmePharma's own representatives, who shall be provided product information
and trained on the attributes of and sale of the Initial Product by
FemmePharma, as necessary to achieve full coverage of the reproductive
endocrinologist specialty in the United States.
(ii) If FemmePharma gives KV notice of its election to
co-promote the Initial Product to reproductive endocrinologists hereunder,
then prior to the Initial Sale Date of the Initial Product, KV and
FemmePharma will negotiate and execute a co-promotion agreement, upon
commercially reasonable terms, which includes the provisions of this Section
2.6(b) and otherwise sets forth in further detail the parties' respective
rights and obligations regarding such co-promotion activities, including,
without limitation, the terms upon which prescriptions written by
reproductive endocrinologists will be detailed and determined for the
purpose of this Section 2.6(b).
(iii) All promotional materials and messages utilized by
FemmePharma in connection with the marketing, promotion, sale or
distribution of the Initial Product shall be consistent with any such
materials used by KV and with applicable legal requirements and otherwise
shall be subject to the prior written approval of KV. In addition,
FemmePharma shall provide reasonable advance notice to KV of all
communications provided to FemmePharma's sales representatives for the
positioning, promotion or selling messages for the Products for KV's review
and approval. FemmePharma shall also distribute, and shall purchase from KV
its requirements of, samples of the Initial Product.
(iv) If and when FemmePharma co-promotes the
Initial Product, KV will pay FemmePharma 50% of KV's Gross Profit on
prescriptions written for the Initial Product by reproductive
endocrinologists. For such purposes, the amount due and payable to
FemmePharma shall be calculated by dividing the number of prescriptions
written by reproductive endocrinologists during each calendar quarter by the
total number of prescriptions written for the Initial Product during the
quarter (as such information is reported by IMS, NDC, ▇▇▇▇▇ ▇▇▇▇▇ or a
similar reporting service selected by KV and agreed to by FemmePharma, which
agreement shall not be unreasonably withheld) and multiplying the percentage
so obtained by
12
KV's total Gross Profit on Net Sales of the Initial Product for the quarter.
Payment of the amount so determined shall be made to FemmePharma not later
than 30 days after the date that the data becomes available from IMS, NDC,
▇▇▇▇▇ ▇▇▇▇▇ or such other service with respect to each calendar quarter,
accompanied by a report showing the calculation thereof.
(c) During the Term, except for the sale of any Danazol
Product hereunder, neither KV nor any of its Affiliates, licensees or
sublicensees shall, without the prior written consent of FemmePharma, make,
have made, import, use, offer for sale or sell any product delivered via
intravaginal administration for the treatment of endometriosis. Further,
during the Term, neither KV nor any of its Affiliates, licensees or
sublicensees shall, without the prior written consent of FemmePharma,
knowingly participate as a material investor or equity owner in any other
entity that makes, has made, imports, uses, offers for sale or sells any
product delivered via intravaginal administration for the treatment of
endometriosis; provided, however, that the foregoing shall be inapplicable
where a product is acquired as a result of a merger or similar
reorganization or the purchase of all or substantially all of the assets of
a business and the product accounts for less than 10% of the total revenues
of the business. It is expressly understood and agreed to by the parties
that any Danazol Product into which a KV Improvement is incorporated will
continue to constitute a Danazol Product for purposes of Section 4.2(d)(i)
and to bear a royalty payable to FemmePharma thereunder, subject to the
terms and conditions of this Agreement.
2.7. Anti-infective Products Completion and Approval. KV shall be
-----------------------------------------------
responsible, in its sole discretion, for developing, obtaining FDA approval
of, and for the marketing and sale of any Anti-infective Product(s)
hereunder. Notwithstanding the foregoing, however, if KV fails to either
commence, or to file for regulatory approval of, the commercial sale in the
United States of an Anti-infective Product covered by the license granted to
KV by FemmePharma under Section 2.1(a)(i) within five years from the date of
this Agreement, all rights of KV to manufacture, use and sell Anti-infective
Products under the Patent Rights and the FemmePharma Technology shall cease
and be of no further force or effect under this Agreement and shall
thereupon automatically and fully revert to and be owned by FemmePharma.
2.8. Assignment and License of Patent Rights Subsequent to Initial
-------------------------------------------------------------
Sale Date.
---------
(a) Within five (5) days of receipt of written notice of
the Initial Sale Date, FemmePharma shall assign, transfer and convey to KV
joint and undivided right, title and interest in all Patent Rights, as set
forth in the Assignment in Exhibit 1 (the "Patent Assignment"). KV shall
---------
record the Patent Assignment within thirty (30) days after receipt thereof.
However, the Patent Assignment and KV's ownership interest in the Patent
Rights shall terminate and KV shall transfer and assign its ownership
interest in the Patent Rights back to FemmePharma (the "Reversionary Patent
Assignment") in accordance with the Assignment in Exhibit 2 if the Patent
---------
Assignment has occurred and this Agreement thereafter terminates with
respect to the Danazol Product for reasons other than termination by KV
under Section 8.4 or 8.5. For purposes of clarity, this Agreement, to the
extent it pertains to Anti-infective Products, shall thereafter continue in
effect.
13
(b) Subsequent to the Patent Assignment contemplated by
subsection (a), KV agrees not to amend or modify the Patent Rights without
the prior written approval of FemmePharma, which approval shall not be
unreasonably withheld with respect to any amendment or modification which
relates to the KV Products.
(c) ▇▇ ▇▇▇▇▇ of Patent License. Subject to the terms and
--------------------------
conditions of this Agreement, upon execution of the Patent Assignment, KV
hereby grants to FemmePharma the exclusive right, license, with the right to
sublicense, and privilege under the Patent Rights to make, have made,
import, use, offer for sale, sell, market, distribute, reproduce and
otherwise exploit any product inside or outside the Territory, except for
the KV Products in the Territory; provided that: (i) any rights granted with
respect to KV Improvements are subject to Section 2.1(b), and (ii) no
license or sublicense by FemmePharma shall in any way diminish, reduce or
eliminate any of KV's rights under this Agreement.
3. INITIAL PRODUCT MANUFACTURE; TECHNICAL ASSISTANCE.
-------------------------------------------------
3.1. (a) FemmePharma shall, at its cost and expense except as otherwise
provided in this Agreement, manufacture or cause the manufacture of (i) the
Initial Product for the Phase II Studies, and (ii) any product containing
Danazol for marketing and sale by FemmePharma outside the Territory.
(b) KV shall, at its cost and expense except as otherwise
provided in this Agreement, manufacture or cause the manufacture of (i) the
Initial Product for the Phase III Studies in accordance with the
Specifications therefor provided to KV by FemmePharma and (ii) any KV
Product for marketing and sale in the Territory under the licenses granted
to KV hereunder and the NDA.
(c) KV or its designee (for whose performance in
accordance with the terms and conditions of this Agreement KV shall be
responsible) shall be named as the manufacturer of the Initial Product (or
any other Danazol Product) in the NDA filed therefor, and upon approval of
the NDA, upon the written request of FemmePharma, the NDA will be amended so
as to add FemmePharma or its mutually agreed designee (for whose performance
in accordance with the terms and conditions of this Agreement FemmePharma
shall be responsible) as an additional manufacturer of the Initial Product
(or other Danazol Product) under the NDA.
(d) In connection with the manufacture of the Initial
Product (or any other KV Product) by KV, as provided hereunder, FemmePharma
agrees to provide such technical and other assistance as is required by KV
to commence the manufacture and validation and testing thereof and to
provide KV with the specifications for and source of the applicator for the
Initial Product (or any other KV Product) for use by KV.
(e) If the parties agree at any time after the date hereof
to have KV manufacture any or all of the requirements of FemmePharma or its
licensees or sublicensees of any Danazol Product for marketing and sale
outside the Territory (which requirements may be general or on a
product-by-product and/or country-by-country basis), then the parties will
use their mutual good faith efforts to execute a supply agreement on
commercially reasonable terms,
14
which supply agreement will provide for the purchase of such manufactured
products by FemmePharma and/or its licensees or sublicensees from KV and
shall set forth in detail the parties' respective rights and obligations
regarding such product manufacturing.
(f) KV agrees to pay FemmePharma 5% of the Gross Profit of
KV on such sales of Danazol Product by KV to FemmePharma or its licensees or
sublicensees which is resold outside the Territory.
(g) Any manufacture of KV Products by KV shall be conducted
in accordance with applicable regulatory requirements (cGMP) and the
Specifications.
(h) In connection with the manufacture of the Initial
Product (or any other Danazol Product) by FemmePharma or its other licensees
or sublicensees for marketing, use, sale or distribution outside the
Territory, KV agrees to provide such technical and other assistance as is
reasonably required by FemmePharma or its other licensees or sublicensees to
commence the manufacture, validation and testing thereof in connection with
the manufacture, use and sale of the Danazol Product by FemmePharma and its
other licensees or sublicensees outside the Territory (which shall be
subject to the provisions of Section 12 or comparable confidentiality
provisions and shall include the right of FemmePharma to have up to two of
its employees visit KV's manufacturing facilities used for the manufacture
of the Initial Product for up to five working days once a year during the
three year period following the approval of an NDA for the Initial Product,
without charge), provided FemmePharma otherwise agrees, or such licensees or
sublicensees agree, to pay KV's standard hourly charges and related
out-of-pocket expenses in connection with its providing such assistance.
Such assistance by KV shall include providing such access to data and
documents as is provided under Appendix F.
----------
3.2. (a) FemmePharma agrees to deliver the FemmePharma Technology to
KV pursuant to the licenses granted in Section 2.1 above and subject to the
terms and conditions of this Agreement. Such information will include,
without limitation, any specific information on the machinery and equipment
necessary to manufacture any KV Product.
(b) FemmePharma also agrees to deliver to KV pursuant to
such license, as it is developed or otherwise becomes known, all other
FemmePharma Technology relating to the formulation, manufacture, testing,
packaging, storage, shipment, use, sale or distribution of any KV Product or
other products which use the FemmePharma Technology that becomes known or is
developed by FemmePharma during the term of this Agreement that could
improve the process of, or reduce the cost of, the formulation, manufacture,
testing, packaging, storage, shipment, use, sale or distribution of any KV
Product.
(c) In addition, FemmePharma will provide KV with complete
original copies of any studies performed or obtained by FemmePharma with
respect to any KV Product or the FemmePharma Technology for KV's use.
(d) FemmePharma also agrees to make its executive,
scientific and other appropriate personnel available to KV from time to time
during the term of this Agreement to review, explain and discuss any of the
foregoing with KV personnel.
15
(e) The parties also agree to make available to each other
any medical, toxicological, pharmacological, pre-clinical, clinical, adverse
reaction reports and processes for manufacture, that are developed by the
respective parties relating to KV Products during the Term.
(f) Such information shall be treated as the Confidential
Information of the disclosing party for purposes of Article 12 of this
Agreement.
(g) In addition, each of KV and FemmePharma agree to use
reasonable efforts to cause any license or sublicense agreement entered into
with a third party regarding the development, manufacture or
commercialization of any Danazol Product to contain a provision providing
for, upon KV's request in the case of a license or sublicense by FemmePharma
and upon FemmePharma's request in the case of a license or sublicense by KV,
any medical, toxicological, pharmacological, pre-clinical, clinical, adverse
reaction reports and processes for manufacture (which shall not require KV
to disclose its proprietary technologies which are applicable to any KV
Improvement), that are developed by the licensee or sublicensee relating to
Danazol Products during the term of this Agreement.
4. PAYMENTS TO FEMMEPHARMA BY KV.
-----------------------------
4.1. Payment for Trademark License. In consideration for the
-----------------------------
exclusive right and license to use and sublicense the Trademark under
Section 2.1(c), KV agrees to pay FemmePharma $2,000,000. Payment therefor
shall be made and shall be subject to and payable only upon the prior
satisfaction of the following conditions: (a) $1,000,000 shall be payable
upon the execution of this Agreement; and (b) $1,000,000 shall be payable at
and subject to the completion of the Second Closing under the Stock Purchase
Agreement and the prior commencement of the Phase III Studies.
4.2. Other Payments. In consideration of all other licenses and
--------------
rights granted by FemmePharma to KV and related obligations to be performed
by FemmePharma hereunder and transfer of the ownership of the NDA by
FemmePharma to KV, as contemplated under Section 2.2(c), KV agrees to pay
FemmePharma:
(a) $2,000,000 upon submission of an NDA for the Initial
Product to the FDA and the acceptance thereof for filing under FDA
procedures.
(b) $2,000,000 within 90 days after approval of the NDA
and initial market introduction and sale of the Initial Product in the U.S.
by KV (the "Initial Sale"). KV agrees to give FemmePharma written notice of
the date of the Initial Sale (the "Initial Sale Date") promptly after the
date thereof.
(c) One year following the Initial Sale, $2,000,000 plus
$500,000 if Net Sales of the Initial Product in the first Marketing Year
exceed $25,000,000, an additional $500,000 if Net Sales of the Initial
Product in the first Marketing Year exceed $50,000,000, and an additional
16
$500,000 if Net Sales of the Initial Product in the first Marketing Year
exceed $75,000,000, provided KV continues to market the Initial Product in
the Territory hereunder.
(d) (i) With respect to each Marketing Year during the
term of any of the Existing Patents with claims that cover the use,
manufacture or sale of a Danazol Product hereunder:
8% on all Net Sales of the Danazol Product up to and
including $50,000,000,
9% of Net Sales of the Danazol Product above $50,000,000 to
and including $100,000,000, and
10% of Net Sales of the Danazol Product which exceed
$100,000,000.
Amounts payable by KV under subsections (c) and (d) shall
be calculated at the point of last sale by KV or its Affiliate and shall be
payable in U.S. dollars, with the rate of exchange to be used in computing
the amount due in satisfaction of the royalty payment obligations with
respect to sales in countries other than the United States to be calculated
by converting such other countries' currencies to U.S. dollars based on the
mean exchange rate for the purchase of U.S. dollars with such currency, as
published in The Wall Street Journal on the last business day of each
-----------------------
calendar quarter for which any royalty payment is to be made by KV under
this Agreement.
In the event KV or its Affiliate sublicenses to an
unaffiliated third party the right to sell any Danazol Product in the U.S.
(or its territories or possessions (including Puerto Rico)), then for
purposes of determining amounts payable to FemmePharma under this Agreement,
sales by such sublicensee shall be treated as if they were sales by KV or an
Affiliate of KV.
In the event that KV or its Affiliate sublicenses to an
unaffiliated third party the right to sell any Danazol Product in any
country in the Territory other than the U.S. (or its territories or
possessions (including Puerto Rico)), then in lieu of any other payments to
FemmePharma hereunder with respect to sales by such sublicensee, KV shall
pay FemmePharma:
(A) (x) 25% of any milestone and/or other non-royalty
payments (excluding Danazol Product sales to such sublicensees) received from
any such sublicensee in Canada or Mexico and
(y) 40% of any such milestone and/or other
non-royalty payments (excluding Danazol Product sales to such sublicensees)
received from any such sublicensees in other countries in the Territory
outside the United States, and
(B) 20% of any royalties received on Danazol Product
sales by such sublicensees.
(ii) Amounts payable to FemmePharma by KV under
subparagraph (i) shall be due and payable to FemmePharma within 30 days with
respect to Net Sales of the Products in the U.S. and 45 days with respect to
payments relating to portions of the Territory which are outside the U.S.
after the end of each calendar quarter in which KV or any Affiliate of
17
KV has any sales of any Danazol Product, based on all sales of any Danazol
Product during such quarter, or in which KV receives any such payments from
a sublicensee. Each such payment shall be accompanied by an accounting of
KV's and its Affiliates' sales and such other payments received for the
quarter for which payment is to be made hereunder, and showing: (A) the
gross sales of Danazol Product in each country in the Territory; (B) Net
Sales of Danazol Product in each country in the Territory, (C) the royalties
payable in United States Dollars in respect of such sales and the basis of
calculating those royalties, (D) the exchange rates used in converting into
United States Dollars from currencies in which sales were made, and payments
due which are based on Net Sales, and (E) dispositions of Danazol Product
other than pursuant to sale for cash.
(e) If development costs reasonably incurred by
FemmePharma in completing the Phase II Studies and Phase III Studies exceed
$7,000,000 in the aggregate, then KV agrees that, upon the request of
FemmePharma, KV will advance FemmePharma up to $500,000 to cover such
increased costs, which amount shall be repaid to KV from future amounts
thereafter payable by KV to FemmePharma under this Agreement, with each such
future payment being reduced by 50% until the entire balance of such
advanced amount has been so credited. If any additional development costs
are reasonably incurred by FemmePharma, they will be shared equally by
FemmePharma and KV, with any amount so contributed by KV being similarly
treated as an advance and subject to similar repayment.
(f) Upon the initial commercial introduction and sale of
each separate Anti-infective Product (not, however, different strengths or
put-ups of the same Anti-infective Product) by KV hereunder during the term
of any of the Existing Patents with claims that cover the manufacture, use
and sale of such Anti-infective Product hereunder, KV will pay FemmePharma
the sum of $250,000; provided, however, that if the Danazol Product has
previously been terminated from this Agreement, the amount to be paid by KV
to FemmePharma shall be $250,000 as of the time of such initial commercial
introduction and sale of an Anti-infective Product and $250,000 one year
thereafter, provided KV is continuing to market the Anti-infective Product
as of the time of such second payment.
(g) (i) During the term of any of the Existing Patents
with claims that cover the manufacture, use and sale of an Anti-infective
Products hereunder, 2% on all Net Sales of the Anti-infective Product,
calculated at the point of last sale by KV or its Affiliate and payable in
U.S. dollars, with the rate of exchange to be used in computing the amount
due in satisfaction of the royalty payment obligations with respect to sales
in countries other than the United States to be calculated by converting
such other countries' currencies to U.S. dollars based on the mean exchange
rate for the purchase of U.S. dollars with such currency, as published in
The Wall Street Journal on the last business day of each calendar quarter
-----------------------
for which any royalty payment is to be made by KV under this Agreement. In
the event KV or its Affiliate sublicenses to an unaffiliated third party the
right to sell any Anti-infective Product in the U.S. (or its territories or
possessions (including Puerto Rico)), then for purposes of determining
amounts payable to FemmePharma under this Agreement, sales by such
sublicensee shall be treated as if they were sales by KV or an Affiliate of
KV. In the event that KV or its Affiliate sublicenses to an unaffiliated
third party the right to sell any Additional Product in any country other
than the U.S. (or its territories or possessions (including Puerto Rico)),
then in lieu of any other payments to FemmePharma hereunder with respect to
sales of Anti-infective Products by
18
such sublicensee, KV shall pay FemmePharma: 20% of any milestone and/or
other non-royalty payments (excluding Anti-infective Product sales to such
sublicensees) and such sublicensee of any royalties, received on sales of
Anti-infective Products by such sublicensees.
(ii) Amounts payable to FemmePharma by KV under
subparagraph (g)(i) shall be due and payable to FemmePharma within 30 days
with respect to Net Sales of the Products in the U.S. and 45 days with
respect to payments relating to portions of the Territory which are outside
the U.S. after the end of each calendar quarter in which KV or any Affiliate
of KV has any sales of any Anti-infective Product, based on all sales of any
Anti-infective Products during such quarter, or in which KV receives any
such payments from a licensee or sublicensee. Each such payment shall be
accompanied by an accounting of KV's and its Affiliates' sales of
Anti-infective Products and such other payments received for the quarter for
which payment is to be made hereunder, and showing: (A) the gross sales of
each Anti-infective Product in each country in the Territory; (B) Net Sales
of each Anti-infective Product in each country in the Territory, (C) the
royalties payable in United States Dollars in respect of such sales and the
basis of calculating those royalties, (D) the exchange rates used in
converting into United States Dollars from currencies in which sales were
made, and payments due which are based on Net Sales of Anti-infective
Products, and (E) dispositions of Anti-infective Products other than
pursuant to sale for cash.
4.3. Books and Records. During the Term and for a period of three
-----------------
years thereafter, KV and its Affiliates sublicensees shall keep complete and
accurate records pertaining to the sale or other disposition of the KV
Products in sufficient detail to permit FemmePharma to confirm the accuracy
of all payments due from KV and its Affiliates, licensees and sublicensees
hereunder. FemmePharma shall have the right to cause an independent,
certified public accountant to audit such records to confirm Net Sales
figures (of either Danazol Products and/or Anti-Infective Products) and
royalty and milestone payments and other payments payable to FemmePharma;
provided, however, that such auditor shall not disclose to FemmePharma any
Confidential Information of KV, its Affiliates or sublicensees, except to
the extent such disclosure is necessary to verify the amount of royalties
and milestone payments and other payments due under this Agreement. Such
audit right may be exercised once per year, within three years after the
Marketing Year to which such records relate, upon reasonable advance notice
to KV and during normal business hours. FemmePharma shall bear the full cost
of such audit unless such audit discloses an underpayment of more than 5% in
the total amount of royalties or milestones previously paid for such
Marketing Year. In such case, KV shall bear the full cost of such audit. KV
shall promptly remit to FemmePharma the amount of any underpayment disclosed
in such audit. In addition, upon the written request of FemmePharma not more
than once annually in connection with the audit of KV's financial statements
for its March 31 fiscal year, KV shall cause its independent certified
public accountants to confirm in writing to FemmePharma the accuracy of the
calculations and payments of amounts owed and paid by KV to FemmePharma
under this Agreement. The terms of this Section 4.3 shall survive any
termination or expiration of this Agreement for a period of three years.
19
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF FEMMEPHARMA.
---------------------------------------------------------
FemmePharma hereby represents and warrants to and agrees with KV as
follows:
5.1. FemmePharma is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania.
FemmePharma has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary action on the part of FemmePharma, and this Agreement has been
duly executed and delivered and is a legal, valid and binding obligation of
FemmePharma, enforceable against FemmePharma in accordance with its terms,
except as such enforcement may be limited by applicable laws relating to
creditors' rights or principles of equity affecting the availability of
remedies.
5.2. The execution, delivery and performance of this Agreement do
not and will not conflict with or contravene any provision of the charter
documents or by-laws of FemmePharma or any agreement, document, instrument,
indenture or other obligation of FemmePharma or to which it or its assets
are subject.
5.3. FemmePharma owns, and, subject to the terms and conditions of
this Agreement, during the term of this Agreement will continue to own, the
Patent Rights, the Trademark and the FemmePharma Technology, free and clear
of all liens, charges, encumbrances and rights of third parties; provided,
however, that the foregoing shall not prevent or restrict FemmePharma from
licensing Patent Rights to Third Parties in arms length transactions in the
ordinary course of its business. In the event the provisions of this Section
5.3 are violated by FemmePharma during the term of this Agreement, the
Patent Assignment provided for under Section 2.8(a) shall automatically
accelerate and become immediately effective as of the date of such violation
by FemmePharma, and FemmePharma shall immediately take such steps as are
necessary to complete the Patent Assignment.
5.4. FemmePharma has the full right, power and authority to license
all of the Patent Rights that are being licensed to KV under this Agreement.
5.5. The FemmePharma Technology: (a) includes all Technology owned
or controlled by FemmePharma that, to the knowledge of FemmePharma, is
necessary for the completion, manufacture, use or sale of any KV Product,
(b) is the property of FemmePharma and (c) to the knowledge of FemmePharma,
does not infringe upon the intellectual property rights of any other Person
and no Person has alleged any such infringement.
5.6. To the knowledge of FemmePharma, no other Person or product
infringes upon any of the Patent Rights or the Trademark.
5.7. To the knowledge of FemmePharma, the Patent Rights are
enforceable and are not invalid.
20
5.8. FemmePharma is not in default (nor has there transpired an
event which with notice or the lapse of time or both would become a default)
under any agreement, document, instrument, indenture or other obligation of
FemmePharma which affects or could affect the KV Products, the FemmePharma
Technology, the Trademark or the performance of this Agreement by
FemmePharma.
5.9. FemmePharma hereby grants KV and its sublicensees,
subcontractors and assignees immunity from suit by FemmePharma and its
Affiliates and licensors and other licensees for infringement by KV or any
such sublicensee, subcontractor or assignee of any patents now or
hereafter owned or licensed by FemmePharma relating to the use by KV or
any such sublicensee, subcontractor or assignee, in accordance with the
terms and subject to the conditions of this Agreement, of the FemmePharma
Technology or Trademark for the purpose of, or otherwise for, the making,
use, sale, offer for sale or importation of any KV Product.
5.10. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") is the principal owner and
officer of FemmePharma. FemmePharma has entered into an employment agreement
with ▇▇▇▇▇▇▇, pursuant to which ▇▇▇▇▇▇▇ has agreed that all present and
future Patent Rights, FemmePharma Technology and the Trademark are owned,
and all FemmePharma Improvements hereafter developed by ▇▇▇▇▇▇▇ while
▇▇▇▇▇▇▇ is an employee, officer, director or shareholder of FemmePharma will
be owned, by FemmePharma during the Term.
5.11. THE LIMITED WARRANTIES CONTAINED IN THIS SECTION 5 ARE THE
SOLE WARRANTIES GIVEN BY FEMMEPHARMA AND ARE MADE EXPRESSLY IN LIEU OF AND
EXCLUDE ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND ALL OTHER EXPRESS AND IMPLIED REPRESENTATIONS AND WARRANTIES
PROVIDED BY COMMON LAW, STATUTE OR OTHERWISE ARE HEREBY DISCLAIMED BY
FEMMEPHARMA. FEMMEPHARMA, ITS DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
SHALL NOT BE LIABLE TO KV OR ITS AFFILIATES, SUBLICENSEES, SUCCESSORS OR
ASSIGNS, OR ANY THIRD PARTY (IF SUCH THIRD PARTY'S CLAIM RESULTS FROM KV'S
OR ITS AFFILIATES' OR SUBLICENSEES' OR ITS AGENTS' ACTIVITIES) WITH RESPECT
TO ANY CLAIM FOR LOSS OF PROFITS, LOSS OR INTERRUPTION OF BUSINESS, OR FOR
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND,
INCLUDING, WITHOUT LIMITATION, ECONOMIC DAMAGE OR INJURY TO PROPERTY AND
LOST PROFITS, REGARDLESS OF WHETHER FEMMEPHARMA SHALL BE ADVISED, SHALL HAVE
REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF SUCH DAMAGES OR
INJURY.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF KV.
------------------------------------------------
KV hereby represents and warrants to and agrees with FemmePharma as
follows:
6.1. KV is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. KV has the corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on the part of
21
KV, and this Agreement has been duly executed and delivered and is a legal,
valid and binding obligation of KV, enforceable against KV in accordance
with its terms, except as such enforcement may be limited by applicable laws
relating to creditors' rights or principles of equity affecting the
availability of remedies.
6.2. The execution, delivery and performance of this Agreement do
not and will not conflict with or contravene any provision of the charter
documents or by-laws of KV or any agreement, document, instrument, indenture
or other obligation of KV or to which it or its assets are subject.
6.3. KV will manufacture or cause the manufacture of each KV
Product in the United States in accordance with the requirements of the Act.
6.4. KV is not in default (nor has there transpired an event which
with notice or the lapse of time or both would become a default) under any
agreement, document, instrument, indenture or other obligation of KV which
affects or could affect the Product or the performance of this Agreement by KV.
7. INTELLECTUAL PROPERTY; PATENT PROSECUTION.
-----------------------------------------
7.1. Technology Delivery. Upon the execution of this Agreement and
-------------------
as and when hereafter available to FemmePharma, FemmePharma shall make
available to KV, for its use in accordance with the terms and conditions of
this Agreement, the FemmePharma Technology, including the Patent Rights, and
the Trademark, including, but not limited to, providing KV with copies of
all test results and all relevant portions of laboratory notebooks, designs,
Specifications, formulas, procedures, clinical and preclinical data, and
other relevant information.
7.2. Patent Rights; Trademark. FemmePharma shall direct and cause
------------------------
appropriate patent applications to be prepared, prosecuted and maintained in
the United States and the world, in a timely fashion, to protect and cover
the KV Products, the FemmePharma Products and the FemmePharma Technology.
The expenses of preparing, prosecuting and maintaining such patent
applications and patents shall be paid by FemmePharma. Notwithstanding the
foregoing, however, the expenses of preparing, prosecuting and maintaining
patent applications and patents designated by KV outside the United States
shall be paid by KV.
Not less than 10 business days prior to the filing or
other use thereof with a Third Party or the taking of any other action which
may jeopardize the same, FemmePharma will provide KV with a copy of any such
filing or other documents (and any supporting documentation) and with any
amendment thereto or other modification thereof, all correspondence with the
filing authority or other Person, and such other information as is
applicable thereto and shall give KV the opportunity to review and comment
thereon and to discuss the same with the appropriate persons within
FemmePharma who are responsible therefor and with its counsel. FemmePharma
agrees to cause the Patent Rights to be maintained and enforced and in full
force and effect, without encumbrance (subject, however, to FemmePharma's
rights under Section 2.1(b)), at all times, in each case including such
foreign
22
jurisdictions in the Territory as are designated and paid for by KV
in connection with the sale or anticipated sale of any KV Product, unless in
FemmePharma's reasonable judgment and with the prior informed written
consent of KV, KV's best interests would be served by not obtaining,
maintaining or enforcing such patents. All patent applications and patents
relating to FemmePharma Improvements shall be automatically incorporated in
and become part of and covered by this Agreement.
In the event that FemmePharma elects not to prepare,
prosecute or maintain any patent applications or patents constituting the
Patent Rights, including the Patent Rights covering the KV Products,
FemmePharma Products or the FemmePharma Technology, FemmePharma shall
promptly notify KV in sufficient time in advance to enable KV to do so
without the loss of any rights thereunder, and KV shall have the right to
prepare, prosecute and maintain any such applications or patents on behalf
of and in the name of KV and FemmePharma, and may deduct the cost thereof
from any amounts otherwise payable by KV to FemmePharma hereunder. KV's
obligations under Section 2.8(b) of this Agreement shall not apply with
respect to such applications or patents.
All patent applications and patents relating to
FemmePharma Improvements shall be automatically incorporated in and become
part of and covered by this Agreement.
FemmePharma has taken or promptly after the execution of
this Agreement will take all steps necessary to register (to the extent
registrable) or file applications for registration of the Trademark and
during the Term will take all steps necessary to maintain all registrations
for or comprising the Trademark in the Territory.
7.3. Cooperation. Each party agrees to cause each of its officers,
-----------
employees and agents to take all actions and to execute, acknowledge and
deliver all instruments or agreements reasonably requested by the other and
necessary or desirable for the preparation, filing and prosecution of any
Patent Rights under this Agreement and otherwise contemplated by Sections
7.1 and 7.2.
8. TERM AND TERMINATION.
--------------------
8.1. Term. This Agreement shall be effective as of the date hereof
----
and shall continue in full force and effect for the life of the Patent
Rights unless and to the extent earlier terminated in accordance with or as
contemplated by this Article 8 (the "Term").
8.2. Termination of License to Danazol Product. In the event KV
-----------------------------------------
terminates this Agreement with respect to the Danazol Product under Section
2.2(a) or 2.2(b), the exclusive right, license and privilege to use the
Patent Rights and FemmePharma Technology in the Territory to make, have
made, import, use, offer for sale, sell, market, distribute, reproduce and
otherwise exploit the Danazol Product under Section 2.1(a)(i) shall
automatically terminate and be of no further force or effect under this
Agreement and shall thereupon automatically and fully revert to and be owned
by FemmePharma. Notwithstanding the foregoing, this Agreement shall
thereafter remain in effect with respect to the Anti-infective Products.
23
8.3. Effect of Termination of Agreement. The expiration or
----------------------------------
termination of this Agreement shall not relieve the parties of any
obligation accruing prior to or in connection with such expiration or
termination or which, from the context of this Agreement, are intended to
survive expiration or termination of this Agreement.
8.4. Material Breach. Either party may terminate this Agreement
---------------
upon 15 days prior written notice to the other party upon the material
breach by the other party of any of its obligations under this Agreement
preceding the Initial Sale Date; provided, however, that such termination
shall become effective only if the other party shall fail to remedy or cure
the breach within such 15 day period. Either party may terminate this
Agreement upon 120 days prior written notice to the other party upon the
material breach by the other party of any of its obligations under this
Agreement from or after the Initial Sale Date; provided, however, that such
termination shall become effective only if the other party shall fail to
remedy or cure the breach within such 120 day period. Notwithstanding the
preceding sentence, if at any time from or after the Initial Sale Date KV
has failed to pay FemmePharma any amount due hereunder on the date due and
FemmePharma has reason to believe that insolvency, receivership or
bankruptcy proceedings or other proceedings for the settlement of KV's debts
are pending or imminent, then FemmePharma shall have the right to terminate
this Agreement upon 10 days prior written notice to KV; provided, however,
that such termination shall become effective only if KV shall fail to pay
the amounts due within such 10 day period.
8.5. Bankruptcy of FemmePharma.
-------------------------
(a) KV shall have the right to terminate this Agreement
immediately upon the occurrence of any of the following: (i) FemmePharma
shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator, or other similar official for it or for all
or any substantial part of its assets, or FemmePharma shall make a general
assignment for the benefit of its creditors; (ii) there shall be commenced
against FemmePharma any case, proceeding or other action of a nature
referred to in clause (i) above that (1) results in the entry of an order
for relief of any such adjudication or appointment or (2) remains
undismissed, undischarged or unbonded for a period of 60 days; (iii) there
shall be commenced against FemmePharma any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets that results in
the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; (iv) FemmePharma shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii) or (iii) above; or (v) FemmePharma shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due.
(b) In the event that FemmePharma as a debtor in possession,
or a trustee in bankruptcy under the U.S. Bankruptcy Code, 11 U.S.C.
Sections 101 et seq. (the "Bankruptcy
24
Code"), rejects this Agreement or KV's right to continue the licenses under
this Agreement, KV may elect to retain its license rights under this
Agreement in accordance with Section 365(n) of the Bankruptcy Code, provided
KV continues to meet its obligations under this Agreement and pays
FemmePharma (or as otherwise directed by the Bankruptcy Court or provided
under the Bankruptcy Code) the amounts payable by KV hereunder, minus any
costs incurred by KV in connection with its performance of obligations
required to be performed under this Agreement by FemmePharma and not
performed by it. Thereafter, neither FemmePharma as debtor in possession,
nor a trustee in bankruptcy, shall interfere with the license rights of KV
to use the FemmePharma Technology under this Agreement.
9. PATENT OR TRADEMARK INFRINGEMENT.
--------------------------------
9.1. Notification of Infringement. FemmePharma and KV shall each
----------------------------
notify the other of any infringement known to it by any Person of any Patent
Rights or the Trademark and shall provide the other with the available
evidence, if any, of such infringement.
9.2. Enforcement of Patent Rights and Trademark. FemmePharma agrees
------------------------------------------
to enforce and defend the Patent Rights and the Trademark, as appropriate,
against third parties, at its own expense. All amounts recovered in any
action to enforce Patent Rights or the Trademark undertaken by FemmePharma,
whether by judgment or settlement, shall be applied first to the repayment
to FemmePharma of its expenses incurred in connection with prosecuting such
action and thereafter shared by FemmePharma and KV as apportioned by the
court or other body rendering judgment, or if no such allocation is made, in
accordance with the interests of the parties; provided, however, that if the
parties cannot agree on the allocation thereof, the allocation will be
determined in accordance with the provisions of Section 13.2.
However, if, within ninety (90) days after notice of
infringement or thirty (30) days after notice of filing of a product
approval application containing a certification under Section
505(j)(2)(A)(vii)(IV) or Section 505(b)(2)(A)(iv) of the Act, whichever is
earlier, FemmePharma has not commenced action to enforce the Patent Rights
or the Trademark or thereafter ceases to diligently pursue any such action,
KV shall have the right, at its expense, to take appropriate action to
enforce the Patent Rights or the Trademark. All amounts recovered in any
action to enforce Patent Rights or the Trademark solely undertaken by KV at
its expense, whether by judgment or settlement, shall be retained by KV.
FemmePharma and KV shall fully cooperate with each other
in any action to enforce any Patent Rights or the Trademark at their own
expense. The parties shall keep each other informed of the status of any
litigation or settlement thereof concerning Patent Rights; provided,
however, that no settlement or consent judgment or other voluntary final
disposition of a suit under this Section 9.2 may be undertaken without the
consent of the other party if such disposition would require the other party
to be subject to an injunction or to make a monetary payment or would
otherwise adversely affect the other party's rights.
In the event that neither FemmePharma nor KV takes action
in respect to any such material infringement, the royalties payable by KV to
FemmePharma under Section 4.2(d)(i) and 4.2(g) shall be reduced by one-half
during any period that such infringement continues.
25
10. ADVERSE DRUG EVENTS; REPORTING.
------------------------------
10.1. (a) Each party shall promptly notify the other party of any
significant event(s) that affects the marketing of the Product, including,
but not limited to, adverse drug experiences and governmental inquiries,
whether within or outside the Territory.
(b) Serious adverse events for the Product (as defined in
section 10.6) learned by FemmePharma shall be submitted to KV within two (2)
working days but no more than four (4) calendar days from the receipt date
of notice of any such event(s) by FemmePharma.
(c) Non-serious adverse events for the Product (as defined
in section 10.6) that are reported to FemmePharma shall be submitted to KV
not more than 10 days from the date notice of any such event is received by
FemmePharma; provided, however, that reasonable medical and scientific
judgment shall be exercised by FemmePharma in deciding whether expedited
reporting is appropriate in other situations, such as important medical
events that may not be immediately life-threatening or result in death or
hospitalization but may jeopardize the patient or may require intervention
to prevent a serious adverse event outcome.
(d) KV shall have the reporting responsibility for such
events to applicable regulatory health authorities anywhere in the
Territory.
FemmePharma shall report all such adverse events involving the
Product learned by it to:
Vice President, Regulatory & Clinical Affairs
KV Pharmaceutical Company
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
An FDA Form 3500A form or a form that contains the data elements of an FDA
Form 3500A is recommended.
(e) Serious adverse events concerning the Product learned
by KV shall be reported by KV to FemmePharma at the time that KV reports
such events to the FDA, but in no event more than four (4) calendar days
from the receipt date of notice of any such event by KV. FemmePharma shall
have the reporting responsibility for such events to applicable regulatory
health authorities anywhere outside the Territory.
KV shall report all such adverse events involving the Product
learned by it to:
Chief Executive Officer
FemmePharma, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
26
(f) Non-serious adverse events concerning the Product
learned by KV shall be submitted to FemmePharma not more than 10 days from
the date notice of any such event is received by KV; provided, however, that
reasonable medical and scientific judgment shall be exercised by KV in
deciding whether expedited reporting is appropriate in other situations,
such as important medical events that may not be immediately
life-threatening or result in death or hospitalization but may jeopardize
the patient or may require intervention to prevent a serious adverse event
outcome.
10.2. Each Party shall promptly notify the other Party in writing
of any order, request or directive of a court or other governmental
authority to recall or withdraw the Product in any jurisdiction. KV shall be
responsible for any recall or withdrawal of the Product in the Territory and
shall pay the cost of any recall or withdrawal of any Product required as a
result of the manufacture of the Product by KV, serious or non-serious
adverse events not caused by improper manufacture or handling by FemmePharma
or for which KV is otherwise responsible. The cost of any other recall or
withdrawal shall be borne by the responsible party or by both parties in
accordance with its or their relative responsibility therefor.
10.3. Upon being contacted by the FDA or any other governmental
authority inside or outside the Territory for any regulatory purpose
pertaining to this Agreement or to the Product, FemmePharma shall, if not
prohibited by applicable law, immediately notify KV and will not respond to
the agency until consulting with KV, to the maximum feasible extent;
provided, however, that the foregoing shall not be construed to prevent
FemmePharma in any way from complying with applicable law, and FemmePharma
may permit unannounced FDA or similar inspections authorized by law and
respond to any agency request to the extent necessary to comply with its
obligations under applicable law. FemmePharma, or its designee, may, at its
own expense, with prior reasonable notice and during regular business hours,
visit and inspect the facilities used by KV to manufacture the Product to
review the Product related records and the facilities.
10.4. FemmePharma shall inform KV's Vice President, Quality
Assurance/Quality Control, of any Product Quality Complaint received within
two (2) working days but no more than four (4) calendar days from the
receipt date by FemmePharma. A Product Quality Complaint is defined as any
complaint that questions the purity, identity, potency or quality of the
Product, its packaging, or labeling, or any complaint that concerns any
incident that causes the Product or its labeling to be mistaken for, or
applied to, another article or any bacteriological contamination, or any
significant chemical, physical or other change or deterioration in the
distributed drug product, or any failure of one or more distributed batches
of the drug product to meet the Specifications therefor. Such information
shall be sent to the same address as set forth in Section 10.1(d) above.
10.5. KV shall handle all medical inquiries concerning the Product.
FemmePharma shall refer all routine medical information requests in writing
to:
27
KV Pharmaceutical Company
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President, Scientific Affairs
Urgent medical information requests shall be referred by telephone to:
Vice President, Scientific Affairs
KV Pharmaceutical Company
▇▇▇-▇▇▇-▇▇▇▇
10.6. A "serious adverse event" for the Product is defined as any
untoward medical occurrence that at any dose of the Product: (i) results in
death; (ii) is life-threatening; (iii) requires inpatient hospitalization or
prolongation of existing hospitalization; (iv) results in persistent or
significant disability/incapacity; (v) is a congenital anomaly/birth defect;
(vi) results in drug dependency or drug abuse; (vii) is cancer, (viii) is an
overdose, or (ix) is otherwise considered a serious adverse drug experience
under the definition in FDA regulations at 21 CFR section 314.80(a). A
"nonserious adverse event" is defined as any adverse event for the Product
which is not a "serious adverse event", as defined in the preceding
sentence.
11. INDEMNIFICATION.
---------------
11.1. KV Right to Indemnification. FemmePharma shall indemnify the
---------------------------
KV Indemnitees, pay on demand and protect, defend, save and hold harmless
each KV Indemnitee from and against any and all Claims incurred by or
asserted against any KV Indemnitee of whatever kind or nature, including,
without limitation, any claim or liability based upon negligence, warranty,
strict liability, product liability, violation of government regulation or
infringement of patent, trademark or other proprietary rights and unfair
competition claims, arising from or occurring as a result of: (a) the use of
the FemmePharma Technology, the Trademark or any KV Improvement by
FemmePharma or any Affiliate, licensee (other than KV and its Affiliates,
sublicensees and assignees), sublicensee or agent thereof, or (b) any breach
of or misrepresentation under this Agreement by FemmePharma, except in any
case to the extent such Claims are based upon the breach of this Agreement,
illegal acts, willful misconduct or gross negligence of KV. KV shall
promptly notify FemmePharma of any Claim with respect to which KV is seeking
indemnification hereunder, upon becoming aware thereof, and permit
FemmePharma at FemmePharma's cost to defend against such Claim and shall
cooperate in the defense thereof. Neither FemmePharma nor KV shall enter
into, or permit, any settlement of any such Claim without the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed. KV may, at its option and expense, have its own counsel participate
in any proceeding which is under the direction of FemmePharma and will
cooperate with FemmePharma in the disposition of any such matter. If
FemmePharma shall not defend any such Claim, KV shall have the right to
defend the Claim itself and recover from FemmePharma all reasonable
attorneys' fees and costs incurred by it during the course of such defense.
11.2. FemmePharma Right to Indemnification. KV shall indemnify the
------------------------------------
FemmePharma Indemnitees, pay on demand and protect, defend, save and hold
harmless each FemmePharma
28
Indemnitee from and against any and all Claims incurred by or asserted
against any FemmePharma Indemnitee of whatever kind or nature, including,
without limitation, any claim or liability based upon negligence, warranty,
strict liability, product liability, violation of government regulation or
infringement of patent, trademark or other proprietary rights and unfair
competition claims, arising from or occurring as a result of: (a) the use of
the FemmePharma Technology, the Trademark or any KV Improvement by KV or any
Affiliate, licensee, sublicensee or agent thereof, or (b) any breach of or
misrepresentation under this Agreement by KV, except in any case to the
extent such Claims are based upon the breach of this Agreement, illegal
acts, willful misconduct or gross negligence of FemmePharma. FemmePharma
shall promptly notify KV of any Claim with respect to which FemmePharma is
seeking indemnification hereunder upon becoming aware thereof, and permit KV
at KV's cost to defend against such Claim and shall cooperate in the defense
thereof. Neither FemmePharma nor KV shall enter into, or permit, any
settlement of any such Claim without the prior written consent of the other,
which consent shall not be unreasonably withheld or delayed. FemmePharma
may, at its option and expense, have its own counsel participate in any
proceeding which is under the direction of KV and will cooperate with KV in
the disposition of any such matter. If KV shall not defend such Claim,
FemmePharma shall have the right to defend any such Claim itself and recover
from KV all reasonable attorneys' fees and costs incurred by it during the
course of such defense.
12. CONFIDENTIALITY.
---------------
12.1. Both KV and FemmePharma recognize that information heretofore
or hereafter disclosed orally or in writing or in tangible or intangible
form and information developed under this Agreement will be of proprietary
value to each party, and thus is to be considered confidential
("Confidential Information"). Each party agrees not to disclose the
Confidential Information of the other party to others, except to its
officers, employees, agents, representatives and consultants for the
specific purpose of fulfilling such party's obligations hereunder who
reasonably require the same for the purpose hereof and who are bound to
treat such information as confidential by a like obligation of
confidentiality which extends to the benefit of the other party hereto, and
otherwise as necessary or desirable to the performance of this Agreement,
without the express written permission of the other party, except that
neither party shall be prevented from disclosing that portion of the
Confidential Information received from the other which is at the time of
receipt or later becomes publicly known without breach of its obligations
hereunder by the receiving party.
12.2. Anything to the contrary in this section notwithstanding,
FemmePharma or KV shall be permitted to disclose, on a confidential basis to
the extent possible, Confidential Information of the other party received
hereunder to regulatory agencies in support of applications to manufacture,
use, sell or import any KV Product or FemmePharma Product or (pursuant to
obligations of confidentiality comparable to those contained herein) to
clinicians or others in connection with the completion of clinical studies
or the filing of such applications, or otherwise as reasonably necessary for
purposes of the manufacture, import, use and sale of any KV Product or
FemmePharma Product under this Agreement or as required by law.
29
12.3. Notwithstanding anything to the contrary herein, KV shall be
permitted to disclose, on a confidential basis, Confidential Information
received hereunder to Affiliates, licensees, sublicensees, suppliers and
subcontractors who become assignees of some or all of KV's manufacturing
and/or marketing rights or obligations under this Agreement and to
regulatory authorities.
12.4. FemmePharma and KV shall cooperate in good faith with one
another with respect to the preparation and issuance of any press release
with regard to the execution of this Agreement at such time and in such form
and substance as is agreed upon by the parties, which shall not require the
parties to issue a press release, except as may be required by law.
Notwithstanding the foregoing, the existence, nature and content of this
Agreement and the transactions contemplated hereby shall be considered the
Confidential Information of each party and shall be disclosed only as
contemplated in this Article 12.
12.5. In furtherance of this Agreement, it is expected that KV and
FemmePharma may, from time to time, disclose to one another privileged
communications with counsel, including opinions, memoranda, letters and
other written, electronic and verbal communications. Such disclosures are
made with the understanding that they shall remain confidential and that
they are made in connection with the shared community of legal interests
existing between FemmePharma and KV, including the community of legal
interests in avoiding any infringement of any valid, enforceable patents.
12.6. Each of the parties to this Agreement acknowledges and agrees
that any breach by either of them of this Article 12 shall cause the other
party irreparable harm which may not be adequately compensable by money
damages. Accordingly, in the event of a breach or threatened breach of a
provision of this Article 12 by either party, the other party shall be
entitled to the remedies of specific performance, injunction or other
preliminary or equitable relief, in addition to such other rights and
remedies as may be available to the party for any such breach or threatened
breach, including but not limited to, the recovery of money damages.
12.7. The provisions of this Article 12 will survive the expiration
or termination of this Agreement for a period of five years.
13. APPLICABLE LAW AND DISPUTE RESOLUTION.
-------------------------------------
13.1. Applicable Law. This Agreement shall be governed by and
--------------
construed under the laws of the State of Delaware (regardless of the choice
of law principles of Delaware or any other jurisdiction).
13.2. Dispute Resolution.
------------------
(a) FemmePharma and KV recognize that disputes as to
certain matters may from time to time arise which relate to either party's
rights or obligations hereunder. It is the objective of the parties to
establish procedures to facilitate the resolution of such disputes in an
expedient manner by mutual cooperation and without resort to litigation. To
accomplish this
30
objective, the parties agree to follow the procedures set forth in this
Section 13.2 if and when such a dispute arises between them.
(b) If any dispute arises between the parties relating to
the interpretation, breach or performance of this Agreement or the grounds
for the termination thereof, and the parties cannot resolve the dispute
within thirty (30) days of a written request by either party to the other
party, the parties agree to hold a meeting, attended by the Chief Executive
Officer or President of each party (or other senior executive appointed by
either of them), to attempt in good faith to negotiate a resolution of the
dispute prior to pursuing other available remedies. If, within sixty (60)
days after such written request, the parties have not succeeded in
negotiating a resolution of the dispute, the dispute shall be submitted to
final and binding arbitration under the then current Commercial Arbitration
Rules (the "Rules") of the American Arbitration Association ("AAA") relating
to voluntary major commercial arbitrations. Each party consents to the
jurisdiction and administration of the AAA for purposes of the arbitration
proceedings contemplated hereby. The arbitration proceedings shall be held
in Philadelphia, Pennsylvania, if initiated by KV, and in St. Louis,
Missouri, if initiated by FemmePharma. Each party hereby expressly waives
any right to object to such jurisdiction on the basis of venue or forum non
conveniens. One arbitrator shall be selected by FemmePharma, one arbitrator
shall be selected by KV, and the third arbitrator shall be chosen by the
first two arbitrators chosen or, if they fail to do so within ten (10)
business days of their appointment, shall be appointed by the AAA at the
request of either party. The arbitrators shall be independent and
disinterested third parties, knowledgeable in the subject matter at issue in
the dispute. The arbitration shall be conducted in accordance with the
following time schedule unless otherwise mutually agreed to in writing by
the parties: (i) the parties to the arbitration proceeding shall each
appoint their respective arbitrator within fifteen (15) business days after
the date the dispute is submitted to arbitration; (ii) within ten (10)
business days thereafter, such arbitrators shall appoint the third
arbitrator (who shall chair the arbitration panel) or, if they fail to do
so, the third arbitrator shall be appointed by the AAA upon the request of
either party; (iii) within fifteen (15) business days after the appointment
of the third arbitrator (the "Document Production Period"), each party to
the arbitration proceeding shall provide all documents, records and
supporting information it believes to be necessary to resolve the dispute;
(iv) if requested by either party during the Document Production Period, a
hearing (the "Hearing") will be held by the arbitrators as promptly as
practicable at such dates and times as shall be established by the
arbitrators, in accordance with the Hearing Procedures provided below.
(c) The "Hearing Procedures" to be followed in the event a
Hearing is held shall be as follows:
(i) Briefs may be submitted by the parties prior
to the Hearing, setting forth their position in regard to the matters to be
considered by the arbitrators.
(ii) Interrogatories and requests for admissions
or production of documents may be submitted by either party to the other
and, subject to the jurisdiction of the arbitrators, shall be responded to
by the other party. Each party shall have the right to request the
arbitrators to issue subpoenas for documents in accordance with the Rules.
31
(iii) A list of proposed witnesses to be presented by
each party shall be delivered by it to the other party not less than twenty
(20) business days prior to the commencement date set for the hearing by the
arbitrators, and depositions of any such proposed witnesses of a party may
be taken by the other party during the twenty (20) business day period, and
the party proposing any witness shall assure the reasonable availability of
each of its witnesses to the other party for deposition during such twenty
(20) business day period.
(iv) Each party shall be entitled, but not required, to
make an opening statement at the Hearing, to present regular and rebuttal
testimony, documents or other evidence, to cross-examine witnesses, and to
make a closing argument.
(v) The party requesting the Hearing shall begin
the Hearing and, if it chooses to make an opening statement, shall address
not only issues it raised but also any issues raised by the other party. The
responding party, if it chooses to make an opening statement, also shall
address issues raised by the parties. Thereafter, the presentation of
regular and rebuttal testimony and documents, other evidence, and closing
arguments shall proceed in the same sequence. Except for one representative
of each party who shall be entitled to be present at all proceedings or when
testifying, witnesses shall be excluded from the Hearing until closing
arguments.
(d) Within ten (10) business days following the completion
of the Hearing, each party may submit to the arbitrators and the other party
a post-hearing brief in support of its proposed rulings and remedies;
provided, however, that such briefs shall not contain any new evidence.
(e) The arbitrators shall rule on each of the disputed
issues within fifteen (15) business days after the end of the Document
Production Period or, if a Hearing is held, the date the Hearing is
concluded. The decision of a majority of the arbitrators shall be final and
binding on the parties. The arbitrators shall prepare and deliver to the
parties a written, reasoned opinion conferring their decision. Except as
provided in Section 16.3, the arbitrators shall not be entitled to modify
this Agreement or the transactions contemplated hereby.
(f) Each of the parties shall initially pay its own
expenses. The fees of arbitrators, expenses of a court reporter and hearing
room, and the reasonable legal fees and expenses of the prevailing party
(including expert witness fees and expenses) shall be paid as follows:
(i) If the arbitrators rule in favor of one party
on all disputed issues, the losing party shall pay all of such fees and
expenses.
(ii) If the arbitrators rule in favor of one
party on some issues and the other party on other issues, the arbitrators
shall issue with their rulings a written determination as to how the fees
and expenses shall be allocated between the parties. The arbitrators shall
allocate fees and expenses in a way that bears a reasonable relationship to
the outcome of the proceedings, with the party prevailing on more issues, or
on issues of greater value or gravity, recovering a relatively larger share
of its legal fees and expenses.
32
(g) The rulings of the arbitrators and allocation of fees
and expenses shall be binding, non-reviewable and non-appealable, and may be
entered as a final judgment in any court having jurisdiction and shall be
enforceable under the Federal Arbitration Act. Except as provided in this
Section 13.2 or as required by law, the existence of the dispute, any
settlement negotiations, the Hearing or other proceedings, any submissions
(including exhibits, testimony, proposed rulings and briefs), and the
rulings of the arbitrators shall be deemed Confidential Information of each
party and shall not be disclosed by the other party or other participants
therein, except as required or permitted under the provisions of Article 12.
(h) Notwithstanding the provisions of this Section 13.2,
any party may apply to a court of competent jurisdiction for an order in the
nature of a temporary restraining order or preliminary injunction for
purposes of maintaining the status quo pending the final resolution of any
dispute pursuant to the dispute resolution procedures provided herein.
14. NOTICE.
------
14.1. All notices, requests, consents, and other communications
required or permitted hereunder shall be in writing and shall be delivered,
or mailed first class postage prepaid, Express, registered or certified
mail, or sent by prepaid next business day courier:
(a) If to FemmePharma at the address set forth for
FemmePharma at the beginning of this Agreement;
(b) If to KV at the address set forth for KV at the
beginning of this Agreement;
or such other address as to which FemmePharma or KV shall have specified by
written notice to the other in accordance with this Section 14.1; and such
notices and other communications shall for all purposes of this Agreement be
treated as being effective or having been given when delivered, if delivered
personally, or, if sent by mail, at the earlier of their receipt or 72 hours
after the same have been deposited in the United States Mail, addressed and
postage prepaid as aforesaid, or if sent by prepaid next business day
courier on the business day following delivery thereof to the courier.
15. FORCE MAJEURE.
-------------
15.1. Neither party shall be responsible for delay or failure in
performance of any of the obligations imposed upon it by this Agreement
occasioned by fire, flood, explosion, lightning, windstorm, earthquake,
failure of machinery or equipment or supply of materials or utilities, court
order or governmental interference, civil commotion, riot, war, labor
disturbances, transportation difficulties, labor shortage or by any cause of
like or unlike nature beyond the control of such party, whether or not
foreseeable; provided, however, that the provisions of this Section shall
not affect the obligation to pay money which is due and payable under this
Agreement.
33
16. MISCELLANEOUS PROVISIONS.
------------------------
16.1. Non-Competition. FemmePharma agrees that during the term of
---------------
this Agreement and for three (3) years after the termination of this
Agreement, neither FemmePharma nor its Affiliates shall: (i) manufacture,
offer for sale, sell or distribute or assist or enable any Third Party to
manufacture, offer for sale, sell of distribute any KV Product in the
Territory, or (ii) license, directly or indirectly, any KV Product in the
Territory; provided, however, that the provisions of this Section 16.1 shall
be inapplicable with respect to the Danazol Product if the Danazol Product
is terminated from this Agreement under Section 2.2(a) or 2.2(b) or this
Agreement is terminated by FemmePharma under Section 8.4.
16.2. Further Assurances. Each of FemmePharma and KV agrees to duly
------------------
execute and deliver, or cause to be duly executed and delivered, such
further instruments and do and cause to be done such further acts and
things, including, without limitation, the filing of such additional
assignments, agreements, documents and instruments, that may be necessary or
as the other party hereto may at any time and from time to time reasonably
request in connection with this Agreement or to carry out more effectively
the provisions and purposes of, or to better assure and confirm unto such
other party its rights and remedies under, this Agreement.
16.3. Entire Agreement; Amendment. Together with the CDA, this
---------------------------
Agreement, including the Appendices hereto, which are incorporated herein as
if set forth in their entirety at the point of reference thereto,
constitutes the entire understanding between the parties with respect to any
Product or Additional Product and the FemmePharma Technology and the
Trademark and supersedes all prior contracts, agreements and understandings
(with the exception of the CDA) related to the same subject matter between
the parties. No change or modification of any of the provisions hereof shall
be effective unless in writing and signed by a duly authorized officer of
each of the parties.
16.4. No Strict Construction; Legality; Severability. This
----------------------------------------------
Agreement has been prepared jointly and shall not be strictly construed
against either party. Should any one or more of the provisions of this
Agreement be determined by a judicial or administrative authority having
jurisdiction thereof to be illegal or unenforceable, such illegal or
unenforceable provisions shall be so modified by the authority making such
determination, if and to the extent possible, so as to give effect to the
intentions of the parties expressed herein, and all other provisions of this
Agreement shall be given effect separately from the provision or provisions
determined to be illegal or unenforceable and shall not be affected thereby.
16.5. No Waiver. No failure or delay of any party hereto in
---------
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.
16.6. Cumulative Effect. The rights and remedies herein provided
-----------------
shall be cumulative and not exclusive of any other rights or remedies
provided by law or otherwise.
34
16.7. No Agency. Nothing herein contained shall be deemed to create
---------
an agency, joint venture, amalgamation, partnership or similar relationship
between FemmePharma and KV. Notwithstanding any of the provisions of this
Agreement, neither party shall at any time enter into, incur, or hold itself
out to third parties as having authority to enter into or incur, on behalf
of the other party, any commitment, expense, or liability whatsoever, and
all contracts, expenses and liabilities undertaken or incurred by one party
in connection with or relating to the development, manufacture or sale of
Products shall be undertaken, incurred or paid exclusively by that party,
and not as an agent or representative of the other party.
16.8. Headings. The Section headings are for convenience only and
--------
will not be deemed to affect in any way the language of the provisions to
which they refer.
16.9. Counterparts/Facsimile Signatures. This Agreement may be
---------------------------------
executed in any number of counterparts, each of which, when so executed and
delivered, shall be deemed to be an original, and all of which, taken
together, shall constitute one and the same instrument. Facsimile signatures
shall be as effective as original signatures.
16.10. Copies. Copies of this Agreement which are true copies of
------
the original and are manually signed by the parties shall be deemed
duplicate originals.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first set forth herein.
FEMMEPHARMA, INC. KV PHARMACEUTICAL COMPANY
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- ----------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Senior Vice President
36