Pharmos Corp. Contracts
Sample Business Contracts
Marketing Agreement - Bausch & Lomb Pharmaceuticals Inc. and Pharmos Corp.
MARKETING AGREEMENT
___________________
THIS MARKETING AGREEMENT (this "Agreement"), dated as of June
30, 1995, between Bausch & Lomb Pharmaceuticals, Inc., a Delaware
corporation having its principal office at 8500 Hidden River
Parkway, Tampa, Florida 33637 ("BLP") and Pharmos Corporation, a
Nevada corporation having its principal office at 2 Innovation
Drive, Alachua, Florida 32615 ("Pharmos").
In consideration of the respective representations, warranties,
covenants and agreements of the parties set forth below, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in this Agreement, all capitalized
terms used herein shall have the following meanings:
1.1 "Adjusted Sales" means the gross sales price for a Drug
Product invoiced for sale by BLP to third parties, less (i)
discounts, chargebacks, Medicare rebates and rebates to purchasers
actually allowed and taken and in amounts customary in the trade;
(ii) insurance and freight costs separately billed to the purchaser
and actually paid or prepaid by the purchaser; (iii) returns from
purchasers for exchange or credit (provided that Drug Product
delivered to such purchaser in such circumstance shall be deemed a
separate sale subject to this Agreement); and (iv) sales and other
taxes (exclusive of taxes on income) levied by any governmental
authority directly on sales of Drug Products which are collected by
BLP from a purchaser and in turn paid by BLP to the taxing
authority.
1.2 "BLP Month" means each fiscal month of BLP established
during the term of this Agreement and communicated to Pharmos prior
to the beginning of each BLP fiscal year for the succeeding twelve
(12) BLP fiscal months.
1.3 "BLP Technical Documentation" means all written data and
information embodying BLP Technology, including, without limitation,
Master Batch Records, SOPs, Protocols and Studies.
1.4 "CGMP" means the good manufacturing practice regulations
promulgated by the FDA pursuant to the FDC Act currently in effect
and as such regulations may be modified or supplemented from time to
time during the term of this Agreement.
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1.5 "Commercial Sale" means the transfer or sale for value by
BLP of Drug Product to an unaffiliated third party.
1.6 "Competitor" means each of ********** *************** ***
***** ************ ********* ****************** ********************
********* *********** [Confidential Information omitted and filed
separately with the SEC] and any other entity which currently
manufactures and sells ophthalmic pharmaceutical products in the
Territory and has derived gross revenues of more than $************
[Confidential Information omitted and filed separately with the SEC]
from such sales in the fiscal year of such entity immediately prior
to the year in which either party to this Agreement desires to make
any assignment of this Agreement or any of their respective rights
hereunder.
1.7 "Development Product" means either of LEA or LET until
such time as an NDA is submitted to the FDA with respect to LEA or
LET, as the case may be, pursuant to the terms of this Agreement.
1.8 "DMF" means appropriate Drug Master File(s) covering the
manufacture of Drug Product at the Facility.
1.9 "Drug Product" means (i) the Initial Drug Product, and
(ii) any Development Product on which an NDA is submitted to the FDA
by Pharmos during the term of this Agreement.
1.10 "Drug Substance" means Loteprednol Etabonate. The Drug
Substance is specifically covered by claim ** of U.S. Patent
********* [Confidential Information omitted and filed separately
with the SEC].
1.11 "Facility" means BLP's facility located in Tampa, Florida.
1.12 "Field" means the topical ophthalmic use of Drug Product.
1.13 "FDA" means the Food and Drug Administration of the United
States of America and/or any other federal or state governmental or
regulatory agencies as may regulate or control the sale of cosmetics
and/or drugs, including Drug Product, within the Territory.
1.14 "FDA Communications" means any action, request, order,
instruction, communication, complaint, notice, public announcement
or inquiry by the FDA or any submission, filing, letter or other
communication by Pharmos, BLP or any manufacturer of Drug Substance
to the FDA, with respect to Drug Product, Placebo Product,
Development Product or Drug Substance which is sent by or is
received by either party (or, in the case of Pharmos, by any
manufacturer of Drug Substance), or which comes to either party's or
its agent's attention, including, but not limited, to field actions,
investigations or recalls of Drug Product or Placebo Product in the
Territory.
1.15 "FDC Act" means the Federal Food, Drug, and Cosmetic Act,
as amended from time to time, and all regulations promulgated
pursuant thereto.
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1.16 "Initial Drug Product" means the product including the
Drug Substance described in the Initial NDA.
1.17 "Initial Marketing Plan" means a plan for the marketing,
sale and distribution of the Initial Drug Product prepared by BLP
pursuant to the terms of this Agreement.
1.18 "Initial NDA" means the NDA (#******) [Confidential
Information omitted and filed separately with the SEC] submitted by
Pharmos to the FDA on March 30, 1995, including any amendments,
supplements, schedules and exhibits thereto.
1.19 "Intellectual Property" means patents, patent applications
(including international equivalents), trademarks, trade names,
trade dress, trademark registrations and applications therefore, and
copyrights, copyright registrations and applications therefore
pertaining to the Drug Product and Drug Substance.
1.20 "Label" has the meaning ascribed under the FDC Act.
1.21 "LEA" means an ophthalmic suspension or solution of Drug
Substance for treatment of allergies.
1.22 "LET" means one (1) combination of Drug Substance and
Tobramycin (or such other antibiotic mutually agreed to by the
parties).
1.23 "Master Batch Records" means the master batch records
prepared by BLP in accordance with CGMP requirements which now or
hereafter govern the Processing of Drug Substance into Drug Product.
1.24 "NDA" means (i) the Initial NDA, and (ii) any new drug
application covering a Development Product which may be submitted by
Pharmos to the FDA during the term of, and as contemplated by, this
Agreement.
1.25 "NDA Submission Package" means all pre-clinical,
laboratory, clinical, biocompatibility and other testing data;
labeling; processing, material and packaging specifications; and
supplements or amendments to any of the foregoing; and all other
information in the possession of and used by Pharmos for submitting,
obtaining and maintaining approval of an NDA in accordance with the
requirements of the FDC Act.
1.26 "Patent Rights" means those United States patents and
patent applications relating to Drug Substance listed on Schedule
1.26 attached hereto, which shall be supplemented from time to time
hereafter, as necessary to reflect any U.S. Patents owned or
controlled by Pharmos after the date hereof, and which cover the
Processing, use, sale or importation of the Drug Substance.
1.27 "Placebo Product" means a Drug Product excluding the Drug
Substance.
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1.28 "Prior Agreements" means each of the Processing Agreement
and Product Development and Clinical Manufacturing Services
Agreement, each dated as of October 21, 1994, between Pharmos and
BLP.
1.29 "Process" and "Processing" and other forms of such word or
phrase shall refer to the processing, handling, storage and/or
disposal of the Drug Substance and Placebo Product, and other raw
materials included within a Drug Product or used in connection
therewith, and the processing, handling, storage and/or packaging of
a Drug Product.
1.30 "Product Year" means, with respect to each Drug Product,
each twelve (12) BLP Month period during the Term commencing with
the first day of the first full BLP Month in which a Commercial Sale
of such Drug Product shall occur, provided, that the first Product
Year shall include any portion of the BLP Month preceding the first
Product Year.
1.31 "Protocols" means those testing methods and standards
developed and used by BLP in performing the Services, subject to the
approval of Pharmos which shall
not be unreasonably withheld.
1.32 "Sales Forecast" means BLP's forecast of Adjusted Sales
for a Drug Product for each Product Year throughout the term of this
Agreement.
1.33 "Services" means those services described on Schedule 1.33
attached hereto to be performed by BLP with respect to the Initial
Drug Product and any other Drug Product or Development Product
during the term of this Agreement.
1.34 "SOPs" means BLP's methods and procedures for Processing
Drug Substance into Drug Product, including, without limitation,
those SOPs specifically identified by BLP and delivered to Pharmos
as Schedule 1.34 to this Agreement within ten (10) days of the date
hereof.
1.35 "Specifications" as it relates to each Drug Product shall
refer to the Drug Product specifications contained in the NDA
Submission Package (which shall be mutually agreed to by the parties
hereto) for such Drug Product, as such specifications may be amended
from time to time by a supplement to a NDA mutually agreed to by the
parties or as required by FDA. "Specifications" as it relates to a
Development Product shall refer to the specifications for such
Development Product contained in Pharmos' Investigational New Drug
Application for such Development Product until such time as an NDA
is submitted to the FDA with respect to such Development Product.
"Specifications" as it relates to Drug Substance shall refer to the
specifications for bulk Drug Substance contained or referenced in
the NDA for any Drug Product.
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1.36 "Studies" means those studies conducted by BLP in the
course of performing Services necessary to submit and file an NDA
for a Drug Product with the FDA and to obtain FDA approval of such
NDA, and shall further include any "Phase IV" studies with respect
to each such Drug Product.
1.37 "Technology" means the technical knowledge and
confidential information which Pharmos or BLP owns or controls
pertaining to, in the case of Pharmos, the Drug Substance and the
formulation of the Drug Substance, or in the case of BLP, to the
Processing of Drug Product, including technical knowledge pertaining
to the design, assembly, installation, operation and maintenance of
machinery, tooling and equipment required for, and the plant layout
necessary for such Processing.
1.38 "Territory" means the United States, including its
possessions and military bases abroad.
1.39 "Testing Laboratory" means a testing laboratory mutually
agreed to by Pharmos and BLP.
ARTICLE II
MARKETING AND DISTRIBUTION OF DRUG PRODUCT
2.1 Marketing Plans.
_______________
(a) On or before ***************** [Confidential Information
omitted and filed separately with the SEC], BLP shall deliver to
Pharmos a written marketing plan for the Initial Drug Product (the
"Marketing Plan") for the first three (3) Product Years. The
Marketing Plan shall be set forth in reasonable and customary
detail, and shall include in such plans commercially reasonable
descriptions of intended pre-marketing and marketing investments,
tactics and efforts, promotion and distribution efforts and
mechanisms, descriptions and estimated timing of any anticipated
Phase IV studies, compilations of market research and analysis
performed by or for BLP, and other related matters customarily
included by BLP in such plans for the marketing, promotion and sale
of a new ophthalmic drug product. BLP shall further include in the
Marketing Plan a Sales Forecast for each of the first ten (10)
Product Years for the Initial Drug Product.
(b) On or before the date 60 days prior to the anticipated
submission of an NDA with respect to each Development Product which
the parties reasonably anticipate shall become a Drug Product under
the terms of this Agreement, BLP shall deliver to Pharmos a written
marketing plan for such Development Product (the "Additional
Marketing Plans") for the first three (3) Product Years of each such
Development Product. Pharmos agrees to use good faith efforts to
notify BLP at least 180 days before the anticipated submission of an
NDA to the FDA with respect to each Development Product. The
Additional Marketing Plans shall be set forth in substantially the
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same level of detail, and shall include substantially the same
information, plans, budgets and other information, as required with
respect to the Marketing Plan set forth in subsection (a) above.
BLP shall further include in each Additional Marketing Plan a Sales
Forecast for each of the first ten (10) Product Years for each
Development Product.
2.2 Marketing Committee.
___________________
Pharmos and BLP agree to form a Marketing and Commercialization
Committee with respect to the marketing, promotion and sale of Drug
Product under this Agreement. This Committee will consist of two
(2) members appointed by Pharmos and three (3) members appointed by
BLP. The Committee will consider and make recommendations to
Pharmos and BLP regarding all matters related to the marketing,
promotion and sale of Drug Product, including issues with respect to
pricing, promotion and other similar matters. The Committee shall
have further responsibility for the development and presentation of
Additional Marketing Plans described in Section 2.1 above. The
Committee shall also attempt in the first instance to resolve any
matters which may be disputed between Pharmos and BLP with respect
to such marketing, promotion and sales matters which are not
otherwise addressed in this Agreement or any other agreements
between the parties, provided that the failure of the Committee to
resolve any such dispute shall not constitute a default under, or
breach of, this Agreement.
2.3 Grant of Exclusive Distribution Rights.
______________________________________
(a) Except as otherwise provided in this Agreement, BLP shall
have the exclusive right to market, sell and distribute Drug Product
within the Field and within the Territory and within the Field by
any legal means. Subject to the terms of this Agreement, BLP agrees
to use not less than the same effort used by BLP with respect to its
own proprietary ophthalmic products to effect the sale of Drug
Product in a manner designed to achieve or exceed the Sales Forecast
for each Product Year during the term of this Agreement.
(b) BLP agrees that (i) it shall, subject to reduction for any
credits against advances allowed to BLP pursuant to Section 2.4(a)
below, pay to Pharmos in each Product Year, whether by way of
payment of Product Price (as defined in Section 2.4(a) below) or
otherwise, an amount not less than the amount set forth on Schedule
2.3(b) attached to this Agreement with respect to such Product Year
for the Initial Drug Product (the "Exclusivity Amount") (provided
that from and after such time as Pharmos exercises its co-marketing
rights with respect to a Drug Product pursuant to Section 2.6 below,
the Exclusivity Amount with respect to such Drug Product payable for
the Product Year or portion thereof in which Pharmos exercises its
co-marketing rights under this Agreement and for each subsequent
Product Year or portion thereof thereafter shall be reduced by an
amount equal to the Exclusivity Amount multiplied by a fraction
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having (X) a numerator equal to the total number of scripts for such
Drug Product written in the Product Year or portion thereof in
question for Pharmos in the Territory, and (Y) a denominator equal
to the total number of scripts for such Drug Product written in such
Product Year for both Pharmos and BLP in the aggregate in the
Territory, as reported by National Prescription Audit, a program
offered by IMS ("IMS") or such other nationally recognized source as
the parties may mutually agree if IMS is no longer available as a
source of such information), and (ii) if the reduction contemplated
in subpart (i) shall occur, BLP and Pharmos agree to review such
reduction on an annual basis to adjust the reduction to reflect the
difference in the periods covered by the IMS report and any BLP
months occurring in such periods.
(c) BLP agrees that it shall pay to Pharmos in each Product
Year an Exclusivity Amount with respect to all Drug Products other
than the Initial Drug Product determined on the same basis as used
for the Initial Drug Product and subject to reduction and adjustment
as set forth in subparts (i) and (ii) of subsection (b) above. BLP
and Pharmos further agree that the Exclusivity Amounts with respect
to each of LEA and LET shall not be less than or exceed the
respective amounts set forth on Schedule 2.3(c) attached to this
Agreement, the exact amounts of which with respect to each
Development Product shall be determined by mutual, good faith
agreement of the parties on or before the 30th day following
submission of an NDA with respect to such Development Product.
2.4 Product Price.
_____________
(a) As consideration for Drug Substance to be purchased by BLP
for Processing into Drug Product under this Agreement, and subject
to reduction as set forth in subpart (b) below, BLP shall pay
Pharmos an amount equal to ****% [Confidential Information omitted
and filed separately with the SEC] of BLP's Adjusted Sales of each
Drug Product sold by BLP in any BLP Month (the "Product Price") in
accordance with Section 2.5 below. Notwithstanding the foregoing,
and without regard to any adjustments pursuant to subsection (b)
below, and further subject to Section 2.10 below, BLP shall be
entitled to credit ****% [Confidential Information omitted and filed
separately with the SEC] of any Product Price payable to Pharmos
against advances previously made to Pharmos by BLP pursuant to
Section 2.7 below until such advances have been recouped in full by
BLP, provided, however, that if BLP fails to provide any required
advance pursuant to Section 2.7 below or any development funding
with respect to such Drug Product for any reason other than the
reasons set forth in Section 2.9(i), (ii), (iii) or (iv) below, the
rate of recoupment of advances set forth above shall thereafter be
reduced to ****% [Confidential Information omitted and filed
separately with the SEC] of any Product Price payable to Pharmos.
(b) If Pharmos exercises the co-marketing rights reserved to
Pharmos in Section 2.6 below for any reason, the Product Price for
Drug Substance to be processed into a particular Drug Product and
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payable in any BLP Month by BLP to Pharmos will be reduced by an
amount equal to the Product Price for the relevant Drug Product
multiplied by a fraction having (i) a numerator equal to the total
number of scripts for such Drug Product written in such BLP Month
for Pharmos in the Territory, and (ii) a denominator equal to the
total number of scripts for such Drug Product written in such BLP
Month for both Pharmos and BLP in the aggregate in the Territory, as
reported by IMS or such other nationally recognized source as the
parties may mutually agree if IMS is no longer available as a source
of such information, provided that in no event shall the Product
Price for a particular Drug Product payable in any BLP Month be
reduced to less than ****% [Confidential Information omitted and
filed separately with the SEC] of BLP's Adjusted Sales of each such
Drug Product in such BLP Month. If a reduction under this
subsection (b) shall occur, BLP and Pharmos agree to review such
reduction on the same basis and timing as set forth in subpart (ii)
of Section 2.3(b) above.
2.5 Payment.
_______
Within the earlier of thirty (30) days following the end of
each BLP Month during the term of this Agreement and five (5)
business days following publication and distribution of the IMS data
referred to in Section 2.4(b) above related to such BLP Month, if
applicable (each a "Payment Date"), beginning with the end of the
first full BLP Month following the first Commercial Sale of Drug
Product by BLP in the Territory, BLP shall pay Pharmos the Product
Price for Drug Substance Processed into Drug Product sold by BLP in
the preceding BLP Month (and any portion of any preceding BLP
Month), less any recoupment contemplated in Section 2.4(a) above. In
addition, on each Payment Date, BLP shall deliver to Pharmos
information which sets forth the aggregate sales and Adjusted Sales
of each Drug Product in dollars and units of such Drug Product for
the preceding BLP Month and any portion of any preceding BLP Month,
and further sets forth the aggregate of all advances previously made
to Pharmos pursuant to Section 2.7 below and the amount of credits
against such advances taken by BLP with respect to such preceding
BLP Month. If the total payments received by Pharmos (including any
amounts credited against advances) for a Product Year with respect
to a Drug Product pursuant to this Section 2.5 shall not equal or
exceed the Exclusivity Amount for such Drug Product for such Product
Year, then on the last Payment Date of such Product Year BLP shall
have the option to pay Pharmos an additional sum equal to such
Exclusivity Amount less the sum of the total payments (including any
amounts credited against advances) previously paid to Pharmos by BLP
in such Product year pursuant to this Section 2.5 with respect to
such Drug Product.
2.6 Co-Marketing Rights.
___________________
(a) Subject to the earlier exercise of co-marketing rights
which may occur pursuant to subpart (c) below, the parties agree
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that Pharmos shall be entitled upon written notice to BLP to co-
market, distribute and sell each Drug Product under labeling
belonging to Pharmos in the Territory commencing on the second (2nd)
anniversary of the earlier to occur of (i) the first Commercial Sale
of such Drug Product by BLP, or (ii) the later of (X) April 1, 1996,
or (Y) the ninetieth day following FDA approval of the NDA for such
Drug Product (unless BLP has been restrained from making commercial
sales of such Drug Product through no fault of BLP within such
ninety (90) day period, in which case such ninety (90) day period
shall be deemed to have commenced on the first day on which such
restraint no longer exists).
(b) Upon the written request of BLP, Pharmos agrees that it
will delay exercise of the rights reserved to Pharmos in subsection
(a) above with respect to any Drug Product for a period of up to 365
days if (i) LET has not entered Phase III clinical studies on or
before the second anniversary of this Agreement based on an R&D Plan
(defined below) previously approved by the parties, or (ii) LEA has
not entered Phase III clinical studies on or before the second
anniversary of this Agreement based on an R&D Plan previously
approved by the parties, or (iii) Phase II clinical studies for
either LET or LEA have not substantially complied with the
protocols, or satisfied safety and efficacy targets, defined in the
relevant R&D Plan for each such substance, provided that no delay
shall occur pursuant to this
subsection (b) if the events described in subparts (i), (ii) or
(iii) shall failed to have occurred solely as a result of the
failure of BLP to provide Pharmos with appropriate clinical trial
materials of LEA or LET, as the case may be, in conformity with
their respective Specifications (other than such failure resulting
from the failure of Pharmos to deliver appropriate Drug Substance
for the production of such clinical Trial materials).
(c) In addition to the co-marketing rights described above,
from and after the last Payment Date for a Product Year in which BLP
fails to pay the Exclusivity Amount for a particular Drug Product,
Pharmos shall be entitled to (i) co-market such Drug Product in the
Territory, and (ii) subject to delivery of a written notice
delivered to BLP no later than sixty (60) days following the last
day of the Product Year in question, at any time thereafter grant to
any third party or parties the right to market such Drug Product in
the Territory on a non-exclusive basis, and the marketing and sale
rights granted to BLP under this Agreement with respect to such Drug
Product shall become and thereafter remain non-exclusive.
2.7 Advances of Product Price.
_________________________
BLP agrees to pay Pharmos the following sums as advances
against payments of Product Price for Drug Substance Processed into
Drug Product which may become due to Pharmos under this Agreement:
(i) $1,000,000 by the close of business on June 30, 1995,
against purchases of Drug Substance to be Processed into Initial
Drug Product;
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(ii) $1,000,000, against purchases of Drug Substance to be
Processed into Initial Drug Product ($277,141 of which has been
previously advanced by BLP to Pharmos), payable in equal
installments of $100,000 (or any portion thereof remaining unpaid)
on the last day of each month commencing with the last day of the
month following the month in which this Agreement is executed and on
each month thereafter until paid in full, with any sums not
previously paid under this subpart (ii) to be paid by BLP to Pharmos
within ten (10) days of the approval of the NDA for the Initial Drug
Product by the FDA;
(iii) $1,000,000 on January 15, 1996, against purchases of
Drug Substance to be Processed into LEA;
(iv) $1,000,000 on March 15, 1996, against purchases of Drug
Substance to be Processed into LET;
(v) $********* [Confidential Information omitted and filed
separately with the SEC] within thirty (30) days of the filing of an
NDA on the earlier of LEA or LET, against purchases of Drug
Substance to be Processed into such Drug Product; and
(vi) $********* [Confidential Information omitted and filed
separately with the SEC] within thirty (30) days of the approval of
an NDA on the later of LEA or LET, against purchases of Drug
Substance to be Processed into such Drug Product.
Unless otherwise specified below, such advances will be credited
against payment of Product Price for Drug Substance to be Processed
into the referenced Drug Product. Notwithstanding the foregoing,
the payments contemplated under subsections (ii), (iii) and (iv)
above will be deferred if Pharmos receives written notification from
the FDA that the NDA for the Initial Drug Product is not approvable
(or Pharmos or BLP otherwise becomes aware of such circumstance),
and will resume immediately upon the revocation of such notice or
the cure of such circumstance to the reasonable satisfaction of BLP.
In addition, if Pharmos has not initiated Phase III studies with
respect to LEA on or before June 15, 1996, or with respect to LET on
or before September 15, 1996, in either case in accordance with
their respective R&D Plans as approved by the Research and
Development Committee pursuant to Section 5.1 below, then BLP shall
have the right to credit the advances made with respect to LEA
and/or LET, as appropriate, against purchases of Drug Substance to
be Processed into Initial Drug Product. If the parties shall not
have agreed on the protocols and/or safety and efficacy targets to
be included in the R&D Plans for LEA or LET by the dates referenced
in (iii) and/or (iv) above, the parties shall submit their
respective positions on such matters to a mutually agreeable
consultant with relevant expertise with ophthalmic drug products for
recommendations on the matter(s) in dispute, and at such time as the
parties shall mutually resolve such disagreement the advances
referred to in such subsections shall be made within thirty (30)
days of the commencement of the respective Phase III clinical trials
based on the respective R&D Plans approved by both parties in their
reasonable discretion.
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2.8 Packaging.
_________
(a) The parties acknowledge that the Initial Drug Product will
be sold under BLP's own label using the brand name "LotemaxTM" (the
"Brand Name"), provided that to the extent permitted by applicable
law, the packaging of the Product shall include a mutually
acceptable reference to Pharmos as follows: "Manufactured by BLP
under Agreement with Pharmos". The parties acknowledge that the
Brand Name shall be owned by Pharmos, and further agree that neither
shall acquire rights in or to any trademarks or trade names of the
other, except that BLP shall have the right to use the Brand Name in
connection with its marketing, sale and distribution of Initial Drug
Product in the Territory and within the Field, pursuant to the
Trademark License attached as Exhibit 2.8 to this Agreement (the
"Trademark License"). BLP shall submit all Drug Product
advertising, promotional and packaging material (excluding Labels
for the Drug Product which comply with the NDA) to Pharmos for prior
approval, which shall not be unreasonably withheld. Failure of
Pharmos to disapprove of any such material within ten (10) days of
receipt shall be deemed to constitute Pharmos' consent. All artwork,
advertising and packaging used by each party is and shall remain the
exclusive property of each party. Such artwork, advertising and
packaging or any reproduction thereof owned by one party may not be
used by the other party following the termination of this Agreement;
provided, however that BLP shall provide Pharmos with its marketing
plans and/or sales training materials pertaining to the Drug Product
for informational purposes only. At Pharmos' request, and subject
to Article X hereof, Pharmos shall have the right to attend and
participate in meetings associated with the development of BLP's
marketing plans and training programs pertaining to marketing and
distribution of Drug Product.
(b) Pharmos and BLP agree to use good faith efforts to review
the advisability of granting to each other mutually satisfactory,
royalty-free trademark license agreements with respect to any
trademarks owned by either party with respect to any Development
Product prior to the first Commercial Sale of the Development
Product marketed using such trademark, provided that in no event
shall either party be entitled to any use of any trademark used or
reserved for use by the other party in connection with any good or
service or which includes all or any part of a party's or its
Affiliate's corporate name or identity.
2.9 Termination of Certain Rights.
_____________________________
The parties agree that if BLP fails to provide any required
advance pursuant to Section 2.7 above with respect to a Drug Product
(or Development Product, as the case may be) or any development
funding with respect to such Drug Product or Development Product, as
the case may be, because BLP has notified Pharmos in writing that
(i) such Drug Product or Development Product is reasonably
determined by BLP not to have achieved the safety or efficacy
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targets mutually agreed to by the parties, (ii) BLP reasonably
determines that further investment in such Drug Product or
Development Product is not financially justifiable, (iii) BLP
reasonably determines that material adverse changes in the market or
potential market for such Drug Product or Development Product have
occurred, or (iv) BLP reasonably determines upon the written advice
of independent counsel that the commercial sale of such Drug Product
would infringe on the patent rights of third parties not otherwise
licensed to or owned by Pharmos or BLP, then (X) BLP shall have no
further rights or obligations with respect to such Drug Product
under this Agreement of any kind, and (Y) the failure of BLP to make
any such payments in the circumstances described above or for any
other reason with respect to such Drug Product or Development
Product shall not be deemed to be a breach of BLP's obligations
under this Agreement. Notwithstanding the foregoing, this Agreement
shall terminate and BLP shall lose any and all rights it may have in
or to the marketing of any Drug Product and any Development Product
if BLP shall determine and notify Pharmos that any of the
circumstances described above apply to the Initial Drug Product.
2.10 Additional Obligations.
______________________
(a) The parties acknowledge that the obligations of BLP to pay
the Exclusivity Amounts set forth above with respect to the Initial
Drug Product and any subsequent Drug Product are dependent on the
ability of Pharmos to provide BLP with sufficient quantities of Drug
Substance to be Processed into Drug Product to substantially meet
the Sales Forecast for Drug Product. Pharmos acknowledges and
agrees that until such time as BLP shall have made sufficient
Adjusted Sales of Drug Product in order to recoup in full the
advances made by BLP to Pharmos under Section 2.7 above, the failure
of Pharmos to supply BLP with substantially all of its requirements
of Drug Substance as required under this Agreement shall constitute
a material breach of this Agreement, and that as a result of such
breach BLP may suffer damage at least in the amount of any
outstanding and unrecouped advances paid to Pharmos under Section
2.7 above. Notwithstanding the foregoing or any other provision of
this Agreement to the contrary, BLP agrees to forebear and not
exercise any of its remedies hereunder as a result of Pharmos'
breach of its supply obligations under this Agreement, and will
allow Pharmos to cure such breach, subject to the following:
(i) from and after any such breach, and for so long as
(X) Pharmos is unable for any reason to supply BLP with Drug
Substance sufficient to enable BLP to meet its Sales Forecast
for Drug Product in any BLP Month, and (Y) BLP has not recouped
in full any advances made by BLP to Pharmos under Section 2.7
above, then notwithstanding Section 2.4(b) above BLP shall be
entitled to credit **% [Confidential Information omitted and
filed separately with the SEC] of any Product Price payable to
Pharmos against advances previously paid to Pharmos by BLP
pursuant to Section 2.7 until such advances have been recouped
in full by BLP; and
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<PAGE>
(ii) BLP shall be permitted to immediately take out of
consignment for Processing into Drug Product quantities of Drug
Substance sufficient to generate Drug Product that, when sold,
will generate Adjusted Sales of Drug Product in an amount
sufficient to allow BLP to recoup any remaining advances paid
to Pharmos under Section 2.7.
If such inventory of Drug Substance is insufficient to permit BLP to
Process the quantities of Drug Product as stated above, and Pharmos
has not otherwise provided BLP, within ten (10) days following the
date of the breach by Pharmos described above in this subsection (a)
with quantities of Drug Substance sufficient to generate Drug
Product that, when sold, will generate Adjusted Sales sufficient to
allow BLP to recoup any remaining advances made to Pharmos under
Section 2.7, Pharmos shall pay to BLP the difference between the sum
of (X) any outstanding advances that have been recouped by BLP under
Section 2.4, plus the amount of advances that would be recouped upon
the sale of any Drug Product (including Drug Product work in
process) remaining in the possession of BLP at the time of the
breach described above in this subsection (a), and (Y) the total
amount of outstanding and unrecouped advances on the date of
Pharmos' default hereunder. If Pharmos fails to satisfy the
foregoing payment obligation within ninety (90) days following the
expiration of the ten (10) day period set forth above, BLP will be
relieved of its forbearance commitment, and in such event may
exercise any remedies available to it under this Agreement, and
further provided that (1) BLP may defer any prospective obligations
to make advances under Section 2.7 and make payments of Exclusivity
Amounts until Pharmos resumes performance of its supply obligations
hereunder, and BLP is reasonably satisfied that there will be no
substantial future interruption; and (2) the period of time which
must elapse under this Agreement until Pharmos obtains co-exclusive
rights with respect to each Drug Product will be tolled and extended
by the number of days starting with the day on which the payment
obligation of Pharmos hereunder shall arise until the date on which
Pharmos shall perform such payment obligation or shall have
otherwise cured the breach of its obligations under this Section
2.10 to the reasonable satisfaction of BLP.
(b) Pharmos acknowledges that, following BLP's recoupment in
full of all advances paid by BLP to Pharmos under Section 2.7, the
failure of Pharmos to supply BLP with substantially all of its
requirements of Drug Substance as required under this Agreement
shall constitute a material breach of this Agreement, and that as a
result of such breach BLP may suffer damage. Notwithstanding the
foregoing or any other provision of this Agreement to the contrary,
BLP agrees to forebear and not exercise any of its remedies
hereunder with respect to such breach until such time as Pharmos is
unable to provide BLP with sufficient Drug Substance to ensure that
BLP has on hand at least enough Drug Substance to satisfy
substantially all of BLP's rolling six (6) month requirements for
Drug Substance (or if such amount of Drug Substance on hand at BLP
goes below BLP's rolling six (6) month requirement and the parties
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<PAGE>
cannot mutually agree after good faith consultation that a
resumption of supply is reasonably imminent), unless Pharmos has
concluded a supply contract with a second manufacturer of Drug
Substance under Section 2.11 within ninety (90) days following the
day on which the inventory of Drug Substance on hand at BLP falls
below six (6) months and the parties cannot mutually agree after
good faith consultation that a resumption of supply is reasonably
imminent, it being understood that in such event Pharmos shall be
deemed to have cured the breach described above in this subsection
(b). If Pharmos has failed to cure such breach as set forth above
the Product Price for each Drug Product payable in each BLP Month in
which such breach occurred or is continuing shall be reduced to
****% [Confidential Information omitted and filed separately with
the SEC] of BLP's Adjusted Sales of Drug Product in such BLP Month.
Notwithstanding anything in this subsection (b) to the contrary, BLP
agrees that it will not terminate this Agreement as a result of
Pharmos' breach hereunder.
2.11 Second Source.
_____________
Pharmos agrees that, in consultation with BLP, Pharmos shall
use good faith efforts in order to identify, qualify and conclude a
supply contract with a second manufacturer for the Drug Substance on
terms acceptable to Pharmos in its reasonable discretion. BLP
agrees that it shall bear ******* percent (**%) [Confidential
Information omitted and filed separately with the SEC] of Pharmos'
verifiable out of pocket fees and expenses reasonably incurred in
such efforts ("Second Source Costs"), payable within thirty (30)
days of receipt by BLP of appropriate invoices for, and reasonable
documentation of, such expenses from Pharmos. BLP may credit
against its obligation to contribute **% [Confidential Information
omitted and filed separately with the SEC] of the Second Source
Costs BLP's direct and verifiable labor cost of research and
development and other technical services ("R&D") requested by
Pharmos and/or reasonably and actually rendered by BLP's R&D
personnel in connection with Pharmos' efforts under this Section
2.11 based upon the proportion of R&D hours actually expended with
respect to such matters relative to total R&D hours reasonably
available at BLP computed on the basis of a 5-day, 40 hour work
week. Pharmos may also count in the calculation of Second Source
Costs incurred by Pharmos under this Section 2.11 Pharmos' direct
and verifiable labor costs of R&D reasonably and actually incurred
by Pharmos' R&D personnel under this Section 2.11 on the same basis
as set forth above.
2.12 Generic Versions of Drug Product.
________________________________
(a) Notwithstanding anything in this Agreement to the
contrary, if the Patent Rights are held to be invalid or
unenforceable in a final decision (which has not been appealed) by a
court of competent jurisdiction as a result of any action or
proceeding brought by a third party (an "Invalidity Event"), or upon
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<PAGE>
the last to expire of the Patent Rights with respect to a particular
Drug Product (an "Expiration Event"), BLP shall have the right in
each instance to manufacture, use, sell, promote and distribute a
generic equivalent to any such Drug Product (each a "Generic"). If
BLP submits an Abbreviated New Drug Application for a Generic with
respect to any Drug Product (an "ANDA"), it shall notify Pharmos in
writing at least ninety (90) days prior to the anticipated date of
submission. If at the time of the actual submission of such ANDA
Pharmos has not granted to BLP any specific rights in or to the NDA
describing the Drug Product which is the branded form of the
Generic, or to any Patent Rights that may remain in effect at the
time of such submission, then at the option of Pharmos exercised in
its discretion, Pharmos may by written notice to BLP delivered
within sixty (60) days of such submission either (i) in the case of
an Invalidity Event or Expiration Event, cause the marketing rights
granted to BLP under Section 2.3 above to become and thereafter
remain non-exclusive, or (ii) in the case of an Invalidity Event,
terminate BLP's rights under this Agreement with respect to the Drug
Product which is the equivalent to the Generic, such exercise to be
effective in the case of this subpart (ii) no earlier than the date
of approval of the Generic.
(b) If prior to submission of an ANDA with respect to a
Generic for a Drug Product BLP has requested the grant of the rights
set forth in the third sentence of subsection (a) above with respect
to such Generic, then such Generic shall be deemed to be a "Drug
Product" for all purposes of this Agreement and any other agreement
between Pharmos and BLP which may then be in full force and effect.
Pharmos agrees that if BLP requests the grant of rights contemplated
in this Section 2.11, it shall grant such rights under the terms and
conditions of this Agreement without the payment of any additional
compensation by BLP to Pharmos other than the payment of the Product
Price to which Pharmos is entitled with respect to any sale of a
Drug Product by BLP under this Agreement. Notwithstanding anything
in this Agreement to the contrary, BLP agrees that it shall have no
right, except as permitted hereunder, to market, distribute or sell
any Generic under any NDA.
ARTICLE III
PROCESSING OF DRUG PRODUCT
3.1 Processing.
__________
Except as otherwise provided herein, and in consideration of
the rights granted to BLP hereunder, during the term of this
Agreement BLP shall Process Drug Substance into Drug Product in
accordance with the applicable Specifications, CGMP requirements,
the applicable NDA, the FDC Act and otherwise in accordance with
this Agreement. BLP further agrees to Process Drug Product and
Placebo Product for sale by Pharmos and third parties pursuant to
the terms of the Processing Agreement if and to the extent Pharmos
shall exercise the co-marketing rights set forth in Section 2.6
above in accordance with Section 2.6 above.
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<PAGE>
3.2 Drug Substance Consignment.
__________________________
(a) During the term of this Agreement, Pharmos shall deliver
on consignment to BLP (at Pharmos' sole cost and expense) for
Processing into Drug Product and subsequent distribution of Drug
Product by BLP, a supply of Drug Substance as and when ordered by
BLP in accordance with the procedures set forth in this Section 3.2.
All Drug Substance delivered to BLP by Pharmos (i) shall continue to
be the sole and exclusive property of Pharmos and full and complete
title therein shall remain with Pharmos until such time as BLP shall
remove Drug Substance from its warehouse and commences Processing of
such Drug Substance, and (ii) shall be kept reasonably segregated
and separate from all other products and materials stored or
warehoused at the Facility. BLP agrees that Pharmos may file, and
BLP shall execute, Uniform Commercial Code financing statements
evidencing the ownership by Pharmos of Drug Substance on consignment
in the possession of BLP from time to time. BLP shall keep complete
and accurate records detailing the receipt of each shipment of Drug
Substance received by BLP and each unit of Drug Product Processed by
BLP under this Agreement. To the extent practicable and at no
additional premium cost to BLP, BLP agrees to cause Pharmos to be
named as an additional insured with respect to any policies of
insurance carried by BLP and covering the loss of any Drug Substance
held on consignment by BLP from Pharmos for Processing under this
Agreement due to fire or other casualty of the type customarily
insured at the Facility.
(b) By the twentieth day of every other calendar month after
the initial forecast described below, BLP shall submit to Pharmos a
written forecast listing BLP's reasonably estimated requirements of
Drug Substance for the subsequent twelve (12) month period,
presented in six two (2) month intervals, on a rolling basis. BLP's
initial twelve (12) month rolling forecast for the Initial Drug
Product shall be provided to Pharmos no later than thirty (30) days
following FDA approval of the Initial NDA. Unless otherwise agreed
in writing by the parties, BLP's estimated bi-monthly requirements
of Drug Substance set forth in each rolling forecast shall be
delivered or caused to be delivered by Pharmos to BLP F.O.B. the
Facility, commencing within thirty (30) days of the date each
written forecast is forwarded to Pharmos, and continuing thereafter
on a timely basis. Each shipment of Drug Substance delivered to BLP
hereunder shall be accompanied by a certificate of analysis which
evidences testing of the Drug Substance for conformity to
Specifications (except for bioburden, the testing for which shall be
the responsibility of BLP). The parties agree that consigned Drug
Substance will be delivered to BLP in such batch sizes as the
parties shall mutually agree from time to time in order to minimize
waste and loss in the Processing of Drug Substance into Drug Product
by BLP.
(c) Drug Substance shall be received by BLP subject to BLP's
inspection and may be rejected if found not to conform to the
Specifications or otherwise fail to be as warranted hereunder.
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<PAGE>
Within two (2) business day of delivery of Drug Substance, BLP shall
inspect such shipment of Drug Substance for visually obvious defects
and report such defects immediately to Pharmos. Within thirty (30)
days of delivery to BLP, BLP may undertake its own quality control
tests to ensure that the Drug Substance delivered is in accordance
with the terms of this Agreement. Pharmos' representatives may be
present at the Facility during the conduct of such quality control
tests by BLP. BLP shall be deemed to have accepted each shipment of
Drug Substance delivered by Pharmos if Pharmos does not receive
written notice to the contrary within thirty (30) days of delivery.
(d) All claims for shortages or other damage not visually
obvious shall be reported in writing to Pharmos within thirty (30)
days after the date of arrival of each shipment of Drug Substance at
the Facility. At Pharmos' request, BLP shall promptly supply either
some of the Drug Substance which is allegedly defective or some
other evidence of deficiency which Pharmos shall reasonably specify.
If Drug Substance does not meet Specifications, or is subject to any
claim, defect or shortage, the rejected Drug Substance shall not be
used by BLP and shall be returned promptly by BLP to Pharmos at
Pharmos' expense, or such other mutually agreed upon response shall
be undertaken. Pharmos shall replace such rejected Drug Substance
with such quantity of Drug Substance which conforms to the
Specifications as soon as practicable. In the event of any dispute
between BLP and Pharmos as to whether any of the Drug Substance
delivered to BLP conforms with the Specifications, samples of the
Drug Substance in dispute shall be sent to the Testing Laboratory,
whose findings shall be binding on the parties except in cases of
gross and manifest error on the part of the Testing Laboratory;
provided, however that if the Testing Laboratory determines that the
Drug Substance is not defective, the parties agree that BLP's sole
obligation shall be to use reasonable, good faith efforts to
reconcile its quality assurance testing results with the findings of
the Testing Laboratory. If BLP is unable to reconcile such results,
BLP shall have no obligation to use the rejected Drug Substance. The
cost of such testing with the Testing Laboratory shall be borne by
the losing party.
(e) BLP shall store the inventory of consigned Drug Substance
and Drug Product Processed pursuant to this Agreement in compliance
with all applicable FDA and FDC Act requirements, with sound
commercial practices common to the industry, and with the same
degree of care which BLP applies to its own raw materials and
finished products; and such inventories shall be reserved
exclusively for the Processing of Drug Substance into Drug Product
under this Agreement. BLP shall be entitled from time to time to
withdraw from the consigned inventory of Drug Substance in its
possession, in appropriate batch sizes, a sufficient quantity of
Drug Substance necessary for BLP to meet its Processing needs, or to
make such other use of the Drug Substance necessary to comply with
CGMP requirements and/or the FDC Act.
(f) Notwithstanding anything in this Article III to the
contrary, Pharmos warrants to BLP that the Drug Substance, when
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<PAGE>
shipped to BLP, will conform to the Specifications, will not be
adulterated or misbranded within the meaning of the FDC Act, and
will have a remaining shelf life of no less than *************
months [Confidential Information omitted and filed separately with
the SEC].
ARTICLE IV
DRUG PRODUCT DEVELOPMENT AND R&D
4.1 Services.
________
BLP shall exercise its commercial and scientific good faith
efforts to continue to perform the Services with respect to the
Initial Drug Product, and will perform such Services with respect to
any subsequent Drug Product, and to develop a DMF covering the
Processing of the Drug Substance into the Initial Drug Product and
any subsequent Drug Product, provided that BLP shall not be
obligated to perform such Services or develop a DMF with respect to
any Drug Product or Development Product with respect to which BLP
shall have lost all marketing rights under this Agreement. Such
efforts shall be consistent with those employed by BLP for its own
proprietary drug products. BLP shall allow Pharmos to continue to
reference any DMF in the course of seeking and obtaining FDA
approval of the Initial NDA and any subsequent NDA, and shall
provide Pharmos with a DMF reference letter in each case; provided,
however, that BLP shall have no obligation to disclose to Pharmos
the contents of any DMF. BLP further agrees to continue to provide
Pharmos with BLP Technical Documentation as Pharmos may reasonably
deem necessary or appropriate solely in order for Pharmos to obtain
and thereafter maintain FDA approval of the Initial NDA and any
subsequent NDA as Pharmos may from time to time reasonably request
during the Term.
4.2 Performance of Services.
_______________________
BLP agrees to perform the Services with respect to Drug
Products and Drug Substance in accordance with CGMP requirements.
Except for the foregoing, and as otherwise specifically stated in
this Agreement, BLP makes no other agreement with respect to the
performance of the Services, and BLP shall have no liability
whatsoever for Pharmos' failure to obtain FDA approval of any NDA.
Pharmos shall be solely responsible for obtaining approval of the
NDA by FDA at its sole expense and cost, and, subject to Section 4.1
above, BLP shall be solely responsible for providing the Services at
its sole expense and cost.
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<PAGE>
ARTICLE V
RESEARCH AND DEVELOPMENT
5.1 Development Products.
____________________
As soon as is mutually convenient for the parties, Pharmos and
BLP agree to use good faith efforts to prepare a mutually agreeable
research and development plan for each Development Product (each an
"R&D Plan"). Each R&D Plan shall be of scope customary in the trade
for the development of new drug compounds, and shall include without
limitation proposed formulations, safety and efficacy targets and
anticipated budgets. If the parties shall not have agreed on the
R&D Plan for a particular Development Product after good faith
efforts, the parties shall submit their respective positions on such
R&D Plan to a mutually agreeable consultant with relevant expertise
with ophthalmic drug products for recommendations on the matter(s)
in dispute, which recommendations shall be approved by both parties
in their reasonable discretion.
5.2 Pharmos' Development Obligations.
________________________________
If mutually agreed to by the parties, Pharmos shall use good
faith, scientifically reasonable efforts to execute
each R&D Plan substantially in accordance with its terms and in
consultation with BLP. In connection therewith, Pharmos shall be
responsible for the preparation and conduct of all Phase I, II and
III studies and other clinical trials as may be included in the
subject R&D Plan, the preparation, submission and maintenance of any
NDA's in connection therewith in the name of Pharmos, the provision
to BLP of Drug Substance necessary for use in the generation of
suitable materials for the conduct of related clinical trials, and
generally otherwise do all such things with respect to a Development
Product as previously done by Pharmos in connection with the Initial
Drug Product. Except as specifically set forth in this Agreement or
as otherwise agreed in writing by Pharmos and BLP, all actions taken
by Pharmos in connection with its obligations under this Section
shall be at the sole cost and expense of Pharmos.
5.3 BLP's Development Obligations.
_____________________________
(a) If and when mutually agreed to by the parties, BLP shall
use good faith, scientifically reasonable efforts to support the
activities of Pharmos under Section 5.2 above in connection with the
development of each Development Product. In connection therewith,
BLP shall prepare and provide Pharmos with copies of any validation
and stability studies (including related documentation) and related
DMF's as may be contemplated by the relevant R&D Plan, and shall be
responsible for performing any Phase IV studies which may be
necessary to comply with FDA rules or regulation or which BLP
reasonably determines to be advisable to support the marketing and
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<PAGE>
sales of Drug Product. In addition, and subject to the provision of
suitable Drug Substance by Pharmos as contemplated in Section 6.2
above, BLP shall supply Pharmos with suitable clinical materials in
accordance with CGMP requirements for use in Phase I, II and III
clinical studies of a Development Product, and such materials shall
meet all other applicable legal and regulatory requirements for use
in the Territory. Except as specifically set forth in this
Agreement or as otherwise agreed in writing by Pharmos and BLP, all
actions taken by BLP in connection with its obligations under this
Section 5.3 shall be at the sole cost and expense of BLP, provided
that BLP shall not be obligated to incur more than $150,000 of
direct out-of-pocket expenses in connection with its obligations to
provide Pharmos with clinical trial materials of each Development
Product under this Section.
(b) Notwithstanding the foregoing, if BLP loses any rights
which it may have to market and sell a Development Product under
this Agreement for any reason, BLP shall not be obligated to provide
the support activities described in subsection (a) above with
respect to such Development Product, provided that if BLP so elects
not to provide such support activities with respect to such
Development Product, Pharmos may by written request to BLP purchase
all or any part such support activities from BLP at a commercially
reasonable cost and on commercially reasonable terms mutually agreed
to by the parties.
5.4 Research Funding.
________________
Notwithstanding anything in this Article V to the contrary, the
parties agree that BLP shall contribute to Pharmos fifty percent
(50%) of Pharmos' out-of-pocket costs of the Phase III clinical
studies for each Development Product conducted pursuant to R&D Plans
approved by the parties net of any third party funding, provided
that in no event shall BLP be responsible for more than $*********
[Confidential Information omitted and filed separately with the SEC]
in such cost contribution for each Development Product, and provided
further that in no event shall BLP be obligated to contribute to
Pharmos for each Development Product in calendar year 1996 in excess
of $********* [Confidential Information omitted and filed separately
with the SEC], with the balance, if any, to be paid in calendar year
1997. Pharmos agrees to provide BLP with reasonably detailed,
customary statements for all sums to be contributed by BLP under
this Section 5.4 no more often than monthly, and BLP agrees to pay
such sums within thirty (30) days of each such request for
contribution.
5.5 Third Party Funding.
___________________
Pharmos agrees that it will use good faith efforts to make an
application or applications for a Bird F Foundation grant to support
the research and development of either or both of the Development
Products in accordance with their respective R&D Plans.
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5.6 R&D Committee.
_____________
Pharmos and BLP agree to form a Research and Development
Committee with respect to the performance of the R&D Plans. The
Committee will consist of three (3) members appointed by Pharmos and
two (2) members appointed by BLP. The Committee will monitor and
evaluate the performance of the R&D Plans by both parties. The
Committee shall also attempt in the first instance to resolve any
matters which may be disputed between Pharmos and BLP with respect
to research and development matters which are not otherwise
addressed in this Agreement or any other agreements between the
parties, provided that the failure of the Committee to resolve any
such dispute shall not constitute a default under, or breach of,
this Agreement.
5.7 Good Faith Efforts.
__________________
The parties acknowledge that the outcome of research and
development activities, grant applications and other matters which
may affect such outcomes are not predictable and that either party
may encounter scientific, legal or commercial obstacles to the
development of LET and/or LEA. In such event, the party
encountering the obstacle shall exercise good faith best efforts to
remove such obstacle; provided, however, that the failure of either
party to remove such obstacle following the exercise of such efforts
shall not constitute a breach of, or a default under this Agreement
in the event that such obstacle is beyond the reasonable control of
either party and/or the remedy of such obstacle would be
commercially impractical or require a commercially unreasonable
expenditure of financial resources. Notwithstanding the foregoing,
BLP and Pharmos acknowledge and agree that BLP shall not have any
rights or obligations with respect to a Development Product under
this Agreement (including without limitation any rights or
obligations under Articles II or IV, or Sections 5.3 or 5.4, of this
Agreement) if either (i) BLP and Pharmos fail to agree on a mutually
acceptable R&D Plan with respect to such Development Product, or
(ii) BLP shall fail in any instance to meet its obligations with
respect to advances and/or development contributions with respect to
such Development Product as set forth in Sections 2.7, 5.3 and 5.4
above (provided that in the case of subpart (i) above if the parties
are unable to agree on the protocols and/or safety and efficacy
targets to be included in an R&D Plan, the parties shall first
submit their respective positions on such matters to a mutually
agreeable consultant with relevant ophthalmic drug product expertise
for recommendations on the matter(s) in dispute).
5.8 Inventions.
__________
Any inventions which result from the efforts of either party
taken in accordance with this Article V shall be owned as follows:
(i) by Pharmos if such invention pertains solely to the Drug
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Substance or Drug Product; (ii) by BLP if such invention pertains
solely to Processing Drug Substance into Drug Product; and (iii)
jointly by both parties if such invention pertains to any other use
other than as set forth in subparts (i) and (ii) above. The parties
agree to execute such instruments and assignments as either party
may reasonably request of the other in order to carry out the
intention of the preceding sentence. Each party shall be
responsible for all costs and expenses with respect to patent
prosecution for any invention owned solely by such party. Neither
party shall file a patent application for, or grant to any third
party any rights in or to, any invention described in subpart (iii)
above except upon the mutual agreement of the parties not
unreasonably withheld.
ARTICLE VI
ADDITIONAL OBLIGATIONS
6.1 Notice of FDA Communication.
___________________________
Each party shall promptly, but in no event more than three (3)
business days after receipt thereof, advise the other, and provide
copies or transcriptions, if available, of any FDA Communication
regarding the Drug Product and/or the Drug Substance, any NDA, BLP's
DMF relating to the Drug Product, or any other related matters.
6.2 Adverse Drug Reaction Reports.
_____________________________
BLP shall establish a system for monitoring, investigating and
following-up on adverse reaction reports involving the Drug Product
Processed by BLP under this Agreement. If either party becomes aware
that the Drug Product Processed by BLP contains a defect which could
or did cause death or injury, each party shall immediately by FAX
and telephone provide the other with a complete written description
of all relevant details known to such party concerning any such
incident, including but not limited to, a description of any defect
and such other information which may be necessary to report the
incident to the FDA. BLP will be responsible for preparing adverse
drug reaction reports, administering adverse drug reaction files
relating to the Drug Product and filing all such reports with FDA,
at its sole expense, with respect to Drug Product Processed by BLP
under this Agreement. The obligations of BLP under this Section 6.2
with respect to a particular Drug Product shall terminate at such
time as BLP is no longer entitled to market and sell such Drug
Product unless and to the extent otherwise required by applicable
laws, rules or regulations.
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<PAGE>
6.3 Complaint Handling.
__________________
If Pharmos or BLP receives any complaint, claims or adverse
reaction reports regarding Drug Product, including notices from the
FDA regarding any alleged regulatory non-compliance of the Drug
Product, each party shall, within five (5) business days of receipt
with respect to medical reports and ten (10) business days of
receipt with respect to any other product reports (or in either case
such shorter periods as may be required by applicable laws, rules,
or regulations), provide the other with all information contained in
the complaint, report, or notice and such additional information
regarding the specific Drug Product as may be reasonably requested,
except knowledge of Drug Product incidents described in Section 6.2
above, which shall be communicated by FAX and telephone report.
Pharmos shall comply, at a minimum, with FDA and CGMP requirements
for complaint handling. Pharmos will decide which complaints are to
be submitted to the FDA according to applicable law, and shall
provide a copy of any such submission to BLP.
6.4 New Territories.
_______________
BLP and Pharmos shall enter into discussions regarding
additional territories for distribution of Drug Product by BLP, on
terms mutually agreed to by the parties, including Mexico, Canada
and/or Europe (the "New Territories"). If Pharmos requests BLP to
incur out-of-pocket costs with respect to activities that do not
otherwise constitute Services relating to the Territory before BLP
and Pharmos mutually agree on the terms governing the distribution
of Drug Product by BLP in the New Territories, Pharmos shall
reimburse BLP for such costs on a monthly basis, within thirty (30)
days of the end of each month. If BLP and Pharmos are unable to
mutually agree on terms governing distribution of Drug Product by
BLP in the New Territories, BLP agrees to Process and supply Drug
Product to Pharmos on the terms set forth in the Processing
Agreement.
ARTICLE VII
INTELLECTUAL PROPERTY RIGHTS
7.1 Representations of Pharmos.
__________________________
Pharmos represents and warrants to BLP that (i) Pharmos has the
right to provide Drug Substance to BLP for the Processing of Drug
Substance into Drug Product under this Agreement and (ii) to the
best of Pharmos' knowledge after diligent investigation under the
circumstances, the manufacture, use or sale of Drug Product
incorporating the Drug Substance does not infringe or violate any
intellectual property rights of others. Pharmos represents and
warrants to BLP that, to the best of Pharmos' knowledge after
diligent investigation under the circumstances, the Patent Rights
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<PAGE>
covering the Drug Substance are valid and enforceable, and there are
no other U.S. Patents with claims that cover the Drug Substance or
Drug Product. No right or license is granted to Pharmos, expressly
or by implication, under any patent, proprietary right, tradename,
trademark, service mark or copyright of BLP or Bausch & Lomb
Incorporated. Under no circumstance shall Pharmos use BLP's or
Bausch & Lomb Incorporated's name, tradenames, trademarks, service
marks or copyrights, in connection with the Drug Product or Placebo
Product, unless BLP specifically has given prior written approval
for any such particular use.
7.2 Representations of BLP.
______________________
BLP represents and warrants to Pharmos that (i) BLP has the
right to Process Drug Substance into Drug Product and otherwise
perform its obligations under this Agreement, and (ii) to the best
of BLP's knowledge after diligent investigation under the
circumstances, BLP has all intellectual property rights (or can
acquire such rights under commercially reasonable terms) to perform
the Processing of Drug Substance into Drug Product. No right or
license is granted to BLP, expressly or by implication, under any
patent, proprietary right, tradename, trademarks, service mark or
copyright of Pharmos. Under no circumstance shall BLP use Pharmos'
name, tradenames, trademarks, service marks or copyrights in
connection with the Drug Product or Placebo Product unless Pharmos
specifically has given prior written approval for any such
particular use.
ARTICLE VIII
CONFIDENTIALITY
8.1 Confidential Information.
________________________
Pharmos and BLP agree that all Technology and other proprietary
or confidential information owned by each other, including any
Technology and proprietary or confidential information previously
described in or by the Prior Agreements (collectively, the
"Confidential Information"), and provided to or possessed by the
other party, shall be kept strictly confidential and each party
agrees further that:
(a) all such information so possessed or accessed shall
remain the exclusive property of the other party;
(b) it shall maintain, and shall use reasonable and
prudent efforts to cause its employees and agents to maintain, all
such information as confidential;
(c) it shall not, and shall use reasonable and prudent
efforts to ensure that its employees and agents do not copy,
publish, disclose to others, or preempt and use for any purposes
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<PAGE>
(other than for purposes of fulfilling its obligations pursuant to
this Agreement) any such information;
(d) it shall return such information to the other party
upon termination of this Agreement; and
(e) it shall maintain, and shall use reasonable and
prudent efforts to cause its employees and agents to maintain, all
such information in a clean, orderly, and businesslike fashion and
in accordance with any applicable governmental regulations.
8.2 Exception.
_________
Provided that BLP and Pharmos provides the other party with
written notice in advance of the need to disclose any of the
Confidential Information obtained from the other party in connection
with this Agreement, Section 10.1 shall not apply to information
disclosed by either party:
(a) to any governmental or other regulatory authority in
response to a subpoena; or
(b) to ensure compliance with local state or federal
laws; or
(c) as may be required to ensure compliance with law or
in connection with a litigation or legal process; or
(d) to the extent that any of the information is in or
enters the public domain or is received from a third party without
breach of any obligation of confidentiality to BLP or Pharmos or is
independently developed by BLP or Pharmos.
ARTICLE IX
INDEPENDENCE OF THE PARTIES
BLP and Pharmos shall at all times act as independent parties
without the right or authority to bind the other with respect to any
agreement, representation or warranty made with or to any third
party. Except as other-wise stated herein, BLP and Pharmos each
shall be responsible for all costs, expenses, taxes and liabilities
arising from the conduct of its own business, as well as for the
activities of its officers, directors, agents or employees, and each
shall hold harmless and indemnify the other from any such
obligations.
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<PAGE>
ARTICLE X
TERM AND TERMINATION
10.1 Term.
____
The initial term of this Agreement shall commence on the date
hereof and shall continue until the last to expire of the Patent
Rights.
10.2 Termination.
___________
Except as otherwise stated herein, this Agreement may be
terminated upon the happening of one or more of the following
events:
(i) By either party in the case of a material or persistent
breach by the other party of any one or more of the material terms
of this Agreement which is not remedied within thirty (30) days
after written notice of the breach by the terminating party, or if
such breach cannot reasonably be cured with such thirty (30) day
period, the breaching party has failed to commence such cure within
such period and diligently prosecute such cure to completion within
a reasonable time thereafter;
(ii) Immediately by either party in the event that the other
party attempts to assign this Agreement in any manner or
circumstance other than those expressly permitted in Article XIV
below;
(iii) Immediately by Pharmos if BLP files a petition in
bankruptcy or a petition in bankruptcy is filed against BLP which is
not vacated within sixty (60) days, or BLP becomes insolvent or
makes an assignment for the benefit of creditors generally or any
arrangement pursuant to any bankruptcy or insolvency law;
(iv) Immediately by BLP if a Competitor directly or indirectly
(X) becomes the beneficial owner of more than *********** percent
(**%) [Confidential Information omitted and filed separately with
the SEC] of Pharmos' total voting securities, (Y) purchases all or
substantially all of the assets of Pharmos related to the Drug
Substance, or (Z) otherwise acquires Control (as defined in Section
14.1(b) below) over the business and affairs of Pharmos; and
(v) Immediately by Pharmos if a Competitor directly or
indirectly (X) becomes the beneficial owner of more than ***********
percent (**%) [Confidential Information omitted and filed separately
with the SEC] of BLP's total equity securities, (Y) purchases all or
substantially all of the assets of BLP with respect to the
Processing of Drug Product, or (Z) otherwise acquires Control over
the business and affairs of BLP.
- 26 -
<PAGE>
10.3 Effect of Termination.
_____________________
Within thirty (30) days following the effective date of
termination of this Agreement, BLP will provide Pharmos with a
detailed accounting of (i) the amount of consigned Drug Substance
held by or for BLP in the form in which it was delivered to BLP by
Pharmos, (ii) the amount of Drug Product being Processed by BLP for
sale by BLP, and (iii) the amount of Drug Product then held in
inventory by BLP (including Drug Product which has not been
subjected to BLP's quality assurance testing procedures). Unless
otherwise mutually agreed by the parties prior to the effective date
of termination and subject to any other rights granted to BLP by
Pharmos, (X) BLP will return to Pharmos all Drug Substance held on
consignment by BLP for Pharmos, and (Y) BLP shall be entitled to
finish the Processing of all Drug Substance in BLP's possession for
use by BLP, and to market and sell all finished goods inventory of
Drug Product in its possession, for a period of six (6) months
following termination at a price and on terms no less favorable to
BLP as the price and terms generally offered to purchasers of Drug
Product by BLP prior to termination.
10.4 Effect on Other Obligations.
___________________________
No termination of this Agreement shall have any effect on, or
relieve either party from, (i) the obligation to make any payment or
perform any act arising prior to the effective date of termination,
and (ii) the performance of their respective obligations under the
Processing Agreement in accordance with the terms and conditions of
the Processing Agreement.
ARTICLE XI
FORCE MAJEURE
Notwithstanding anything in this Agreement to the contrary
(except with respect to Section 2.10 above until such time as BLP
shall have recouped an aggregate of $********* [Confidential
Information omitted and filed separately with the SEC] of advances
paid to Pharmos pursuant to Section 2.7 above), neither party shall
be liable for delay or failure in the performance of any of its
obligations under this Agreement if and to the extent such delay or
failure is due to circumstances beyond the reasonable control of
such party, including but not limited to fires, floods, explosions,
accidents, acts of God, war, riot, strike, lockout or other
concerted acts of workers, acts of government and shortages of
materials; provided, however, that the party claiming that "force
majeure" has affected its performance shall give notice to the other
party within ten (10) days of becoming aware of the occurrence of
force majeure, giving full particulars of the cause or event and the
date of first occurrence thereof, and provided further that until
such time as BLP shall have recouped all advances paid to Pharmos
- 27 -
<PAGE>
pursuant to Section 2.7 above, any FDA enforcement action other than
with respect to Processing by BLP shall not constitute "force
majeure." The party claiming force majeure shall use its best
efforts to eliminate or prevent the cause so as to continue
performing its obligations under this Agreement.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification of BLP.
______________________
Pharmos shall indemnify, defend, save and hold BLP and each of
its Affiliates, officers, directors, employees and agents harmless
from and against all claims, liabilities, costs and expenses,
resulting from third party claims, including without limitation
reasonable attorneys' fees and disbursements, arising as a result of
(a) any material breach of any warranty hereunder or material non-
fulfillment or non-performance by Pharmos of any agreement, covenant
or obligation of Pharmos under this Agreement; (b) any actual or
alleged defect in any Drug Product Processed by BLP and delivered to
Pharmos hereunder other than arising out of BLP's failure to Process
Drug Product in accordance with the terms of this Agreement; (c) any
actual or alleged infringement or violation of any patent, trade
secret or proprietary right governing the Drug Substance or a Drug
Product (exclusive of any actual or alleged infringement or
violation of any patent, trade secret or proprietary rights used by
BLP in Processing Drug Product); (d) FDA enforcement action,
inspections or Drug Product recalls or market withdrawals except
where arising out of or resulting from BLP's failure to Process Drug
Product in accordance with the terms of this Agreement; (e) Pharmos'
acts relating to the promotion, marketing and/or distribution of
Drug Product, except where arising out of or resulting from BLP's
failure to Process Drug Product in accordance with the terms of this
Agreement or, if applicable, the Processing Agreement; and (f)
breach by Pharmos of the terms of any agreement pursuant to which
Pharmos has obtained any rights in connection with or related to the
Drug Substance and Drug Product.
12.2 Indemnification of Pharmos.
__________________________
BLP shall indemnify, defend, save and hold Pharmos and each of
its Affiliates, officers, directors, employees and agents harmless
from and against all claims, liabilities, costs and expenses
resulting from third party claims, including without limitation
reasonable attorneys' fees and disbursements, arising as a result of
(a) any material breach of any warranty hereunder or material non-
fulfillment or non-performance by BLP of any agreement, covenant or
obligation of BLP under this Agreement; (b) any actual or alleged
defect in any Drug Product Processed and delivered to Pharmos
hereunder arising out of BLP's failure to Process Drug Product in
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<PAGE>
accordance with the terms of this Agreement; (c) any actual or
alleged infringement or violation of any patent, trade secret or
proprietary rights used by BLP in Processing Drug Product; and (d)
FDA enforcement action, inspection or Drug Product recalls or market
withdrawals resulting from BLP's failure to Process the Drug Product
in accordance with the terms of this Agreement.
12.3 Notice.
______
As a prerequisite for indemnification hereunder as soon as the
party claiming indemnification has actual notice of the matter for
which indemnification is sought, it shall give prompt notice of such
matter to the party claimed to be responsible for indemnification
with the right to conduct any investigation reasonably necessary and
to control the defense, appeal and settlement of the matter with the
cooperation of the indemnitee, its employees and agents as may be
reasonably requested by the indemnitor.
12.4 Survival.
________
The indemnification contained herein shall survive any
termination of this Agreement.
ARTICLE XIII
NOTICES
Any notice, request, instruction or other communication
required or permitted to be given under this agreement shall be in
writing and shall be given by sending such notice properly addressed
to the other party's address shown below (or any other address as
either party may indicate by notice in writing to the other from
time to time) (i) by hand or by prepaid registered or certified
mail, return receipt requested, in either of such cases which notice
shall be deemed delivered upon receipt, (ii) via telecopy or
telegram, in either of such cases which notice shall be deemed
delivered upon receipt, or (iii) via nationally recognized overnight
courier, in which case such notice shall be deemed delivered upon
receipt. All such notices shall be deemed given when received:
If to Pharmos, at: Pharmos Corporation
2 Innovation Drive
Alachua, Florida 32615
Attn: President
With a copy to: Fitzpatrick Eilenberg & Zivian
666 Third Avenue, 30th Floor
New York, New York 10017
Attn: Adam D. Eilenberg, Esq.
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<PAGE>
If to BLP, at: Bausch & Lomb Pharmaceuticals, Inc.
8500 Hidden River Parkway
Tampa, Florida 33637
Attn: President
With a copy to: Bausch & Lomb Incorporated
One Chase Square
Rochester, NY 14601
Attn: General Counsel
ARTICLE XIV
ASSIGNMENT
14.1 No Assignment.
_____________
(a) Except as otherwise specifically set forth in this
Agreement above, neither party may assign any of their rights or
obligations under this Agreement without the prior written consent
of the other party hereto, which consent shall not be unreasonably
withheld, provided that subject to other applicable conditions
stated in this Agreement, (i) either party may assign this
Agreement, in whole or in part, to an Affiliate (as defined below)
of such party upon prior written notice to the other party, (ii) in
the case of an assignment or attempted assignment by BLP to an
Affiliate, Pharmos has been given the right to inspect and
reasonably approve or disapprove of the facility operated by such
BLP affiliate, (iii) Pharmos may assign this Agreement to a
purchaser of all or substantially all of the business of Pharmos if
such purchaser is not a Competitor, and (iv) neither party shall be
deemed to have unreasonably withheld its consent to a request from
the other party to assign any of such other party's rights or
obligations under this Agreement to a Competitor.
(b) Neither party shall be deemed to have unreasonably
withheld its consent with respect to any assignment which such party
reasonably believes may adversely affect the status, validity or
maintenance of any NDA. No assignment, whether approved or
otherwise, shall relieve the assigning party of its responsibility
for the performance of its obligations hereunder by its assignee.
"Affiliate" means any entity controlling, controlled by or under
common control with a referenced entity. "Control" means the direct
or indirect right to control the business or affairs of the
referenced entity, whether by the exercise of voting rights, by
control of board of directors or other body with management or
similar authority, by contract, by law or otherwise.
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<PAGE>
ARTICLE XV
MISCELLANEOUS
15.1 Enforceability.
______________
The parties hereto agree that this Agreement shall be legally
binding upon, and shall inure to the benefit of, each of them and
their respective legal representatives, successors and permitted
assigns.
15.2 Entire Agreement.
________________
This Agreement including Schedules and Exhibits, contains the
entire understanding of the parties relating to the subject matter
hereof, and supersedes all prior discussions and agreements between
them with respect to the specific subject matter herein contained,
and, except as set forth herein, neither party shall be bound by any
definition, condition, warranty, or representation other than as
expressly stated in this Agreement or as subsequently set forth in
any instrument in writing signed by an authorized officer of the
party to be charged.
15.3 Governing Law.
_____________
This Agreement shall be governed by and interpreted in
accordance with the laws of the United States and the State of New
York as applied by the courts therein.
15.4 Waiver.
______
No waiver by either party of any breach or default in
performance by the other party, and no failure, refusal or neglect
of either party to exercise any right, power or option given to it
hereunder or to insist upon strict compliance with or performance of
the other party's obligations under this Agreement, shall constitute
a waiver of the provisions of this Agreement with respect to any
subsequent breach thereof or a waiver by that party of its right at
any time thereafter to require strict compliance with the provisions
thereof.
15.5 Counterparts.
____________
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together
shall constitute one and the same agreement.
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<PAGE>
15.6 Audit.
_____
BLP shall keep accurate books and records (for a period of two
(2) years from creation) reflecting fully and adequately BLP
Adjusted Sales under this Agreement, in sufficient detail to permit
verification thereof. During the term of this Agreement and for a
period of two (2) years thereafter, BLP will permit these books and
records to be examined and copied from time to time upon reasonable
prior written notice, during normal working hours by Pharmos or any
representative of Pharmos. Such examination shall be made at
Pharmos' expense, except that if such examination discloses a
discrepancy of *% [Confidential Information omitted and filed
separately with the SEC] or more in any amount due Pharmos under
this Agreement, BLP shall reimburse Pharmos for the out-of-pocket
cost of such examination, including any reasonable professional fees
and expenses incurred by Pharmos. In connection with any
examination or copying of books and records in accordance with this
Section, Pharmos or such representative of Pharmos shall examine
only such information as is required to verify BLP's compliance
under this Agreement. Pharmos agrees to cause each representative
to hold all such information in confidence and not use such
information for any purpose other than for purposes of assisting
Pharmos in the enforcement of its rights under this Agreement.
15.7 Public Announcement.
___________________
Unless otherwise required by applicable laws, rules or
regulations or by the FDA, neither party shall issue a press release
or make any public announcement concerning this Agreement without
the prior approval of the other party, which approval shall not be
unreasonably withheld.
15.8 Prior Agreements.
________________
The parties agree that the Prior Agreements are hereby
terminated and of no further force or effect upon the execution and
delivery of this Agreement and the Processing Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have read and executed
this Marketing Agreement and have set their hands and seals hereto
as of the day and year first above written.
BAUSCH & LOMB PHARMACEUTICALS, INC
By: s/ Alan P. Dozier
________________________________
Title: President
PHARMOS CORPORATION
By: s/ G. Riesenfeld
________________________________
Title: Executive Vice President\C.O.O.
<PAGE>
Schedule 1.26
Patent Rights
1. U.S. Patent *********, expiration date *****************.
2. U.S. Patent Application ******** dated ****************.
[Confidential Information omitted and filed separately with the SEC]
<PAGE>
Schedule 1.33
Services
- Preparation of Protocols governing (i) stability testing
of Drug Product, Development Product and Drug Substance, (ii) Drug
Substance particle size reduction, (iii) sterilization of Drug
Substance, and (iv) validation of the foregoing.
- Manufacture and supply of clinical trial material of Drug
Product for use in clinical trials.
- Stability testing of Drug Substance and Drug Product, and
validation thereof.
- Validation of Drug Substance particle size reduction
unless otherwise arranged by Pharmos.
- Validation of sterilization of Drug Substance.
- Response to FDA questions/comments on and IND or NDA filed
by Pharmos relating to data and information provided by BLP to
Pharmos.
- Validate the manufacturing process for LEA and LET.
<PAGE>
Schedule 2.3(b)
Initial Drug Product Exclusivity Amounts
Product Year Amount
____________ ___________
1 $ **********
2 **********
3 **********
4 **********
5 **********
6 **********
7, 8, 9 and 10 **********
11 and thereafter **********
[Confidential Information omitted and filed separately with the SEC]
<PAGE>
Schedule 2.3(c)
LEA Exclusivity Amounts
Product Year Min Amount Max Amount
____________ __________ __________
1 $********* $*********
2 ********* *********
3 ********* *********
4 ********* *********
5 ********* *********
6, 7, 8, 9 and 10 ********* *********
11 and thereafter ********* *********
LET Exclusivity Amounts
Product Year Min Amount Max Amount
____________ __________ __________
1 $********* $*********
2 ********* *********
3 ********* *********
4 ********* *********
5 ********* *********
6 ********* *********
7, 8, 9 and 10 ********* *********
11 and thereafter ********* *********
[Confidential Information omitted and filed separately with the SEC]