Exhibit 10.15

 

CONFIDENTIAL TREATMENT REQUESTED.  THIS DOCUMENT IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.  PORTIONS OF THIS DOCUMENT FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED HAVE BEEN REDACTED AND ARE MARKED
HEREIN BY “[***]”.  SUCH REDACTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST.

 

DISTRIBUTION AND SUPPLY AGREEMENT

 

Between

 

DR. REDDY’S LABORATORIES, INC.

 

And

 

CERAGENIX PHARMACEUTICALS, INC.

 

And

 

CERAGENIX CORPORATION

 

Dated

 

NOVEMBER 16, 2007

 

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TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

1.

DEFINITIONS

1

 

 

 

2.

APPOINTMENT AND ACCEPTANCE; OTHER RIGHTS

6

 

 

 

3.

PAYMENTS

9

 

 

 

4.

PURCHASE OF PRODUCT

12

 

 

 

5.

PRICE-PAYMENT TERMS

15

 

 

 

6.

OBLIGATIONS OF COMPANY

16

 

 

 

7.

OBLIGATIONS OF DISTRIBUTOR

20

 

 

 

8.

TECHNICAL PROCEDURES

22

 

 

 

9.

MEDICAL INFORMATION, COMPLAINTS ADVERSE EVENTS AND POST-MARKETING SURVEILLANCE

23

 

 

 

10.

REPRESENTATIONS AND WARRANTIES

24

 

 

 

11.

LIABILITY AND INSURANCE

28

 

 

 

12.

INTELLECTUAL PROPERTY

28

 

 

 

13.

TERM AND TERMINATION

29

 

 

 

14.

INDEMNIFICATION

32

 

 

 

15.

CONFIDENTIALITY AND NON-USE

34

 

 

 

16.

FORCE MAJEURE

35

 

 

 

17.

MISCELLANEOUS PROVISIONS

36

 

 

i

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LIST OF SCHEDULES

 

SCHEDULE 1.8

 

Company’s Trade Marks

 

 

 

SCHEDULE 1.36

 

List of Patents

 

 

 

SCHEDULE 1.37

 

Product Information

 

 

 

SCHEDULE 1.45

 

Specifications

 

 

 

SCHEDULE 3.2(a)

 

Product Pricing Structure

 

 

 

SCHEDULE 4.3(a)

 

Form of Purchase Order

 

 

 

SCHEDULE 4.3(b)

 

Batch Size Requirements

 

 

 

SCHEDULE 6.12

 

Quality System and Design Control Agreement

 

 

 

SCHEDULE 8.1

 

Quality Agreement

 

 

 

SCHEDULE 10.2

 

Company Disclosure Schedule

 

ii

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DISTRIBUTION AND SUPPLY AGREEMENT

 

THIS DISTRIBUTION AND SUPPLY AGREEMENT (this “Agreement”), dated as of
November 16, 2007 (the “Effective Date”) is entered into by and among
Dr. Reddy’s Laboratories, Inc., a corporation duly organised and existing under
the laws of the state of New Jersey, having its place of business at 200
Somerset Corporate Boulevard, 7th Floor, Bridgewater, NJ 08807 (hereinafter
referred to as “Distributor”) and Ceragenix Pharmaceuticals, Inc., a corporation
duly organised and existing under the laws of the State of Delaware, having its
place of business at 1444 Wazee Street, Suite 210, Denver, CO 80202, and
Ceragenix Corporation  also  having its place of business at 1444 Wazee Street,
Suite 210, Denver, CO 80202 (hereinafter Ceragenix Pharmaceuticals, Inc. and
Ceragenix Corporation  shall be collectively referred to as “Company”).

 

PRELIMINARY STATEMENTS

 

A.            Company has the exclusive rights to appoint exclusive distributors
for the Product.

 

B.            Distributor wishes to distribute such Product in the Territory as
defined below and is willing and able to provide a competent distribution
organization in such Territory.

 

C.            Company shall supply, either itself or through a contract
manufacturer, Product for Distributor’s requirements as set forth below in the
Territory.

 

Now, therefore, the Parties hereto, in consideration of the premises and mutual
covenants and undertakings herein contained, agree as follows:

 

1.             DEFINITIONS

 

In this Agreement, the following terms shall have the following meanings:

 

1.1.         “510(K)” SHALL HAVE THE MEANING SET FORTH IN SECTION 1.37.

 

1.2.         “AGREEMENT” MEANS THE AGREEMENT BETWEEN THE PARTIES CONSTITUTED BY
THIS DOCUMENT.

 

1.3.         “AFFILIATES” MEANS ANY CORPORATION, FIRM, LIMITED LIABILITY
COMPANY, PARTNERSHIP, OR OTHER ENTITY THAT DIRECTLY OR INDIRECTLY CONTROLS, OR
IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH A PARTY TO THIS AGREEMENT BUT
ONLY FOR SO LONG AS THAT CONTROL REMAINS, WHEREAFTER THAT ENTITY SHALL CEASE TO
BE AN AFFILIATE.  FOR THE PURPOSE OF THIS DEFINITION, CONTROL MEANS OWNERSHIP,
DIRECTLY OR THROUGH ONE OR MORE AFFILIATES, OF FIFTY PERCENT (50%) OR MORE OF
THE SHARES OF STOCK ENTITLED TO VOTE FOR THE ELECTION OF DIRECTORS IN THE CASE
OF A CORPORATION, OR FIFTY PERCENT (50%) OR MORE OF THE EQUITY INTERESTS IN THE
CASE OF ANY OTHER TYPE OF LEGAL ENTITY, OR STATUS AS A GENERAL PARTNER IN ANY
PARTNERSHIP, OR ANY OTHER ARRANGEMENT WHEREBY A PARTY CONTROLS OR HAS THE RIGHT
TO CONTROL THE BOARD OF DIRECTORS OR EQUIVALENT GOVERNING BODY OF A CORPORATION
OR OTHER ENTITY.

 

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1.4.         “APPLICABLE LAWS” MEANS, WITH RESPECT TO THE PRODUCT, ALL LAWS,
STATUTES AND REGULATIONS OF ANY GOVERNMENTAL AUTHORITY, INCLUDING ANY REGULATORY
AUTHORITY, HAVING JURISDICTION OVER THE MANUFACTURE, USE, STORAGE, IMPORT,
TRANSPORT, MARKETING, PROMOTING OR SALE OF THE PRODUCT, AS ARE IN EFFECT DURING
THE TERM OF THIS AGREEMENT.

 

1.5.         “BREACHING PARTY” SHALL HAVE THE MEANING SET FORTH IN
SECTION 13.2(A).

 

1.6.         “CLAIMS” SHALL HAVE THE MEANING SET FORTH IN SECTION 14.1.

 

1.7.         “COMPANY TARGET AUDIENCES” MEANS [***].

 

1.8.         “COMPANY’S TRADE MARKS” MEANS THE TRADE MARKS AS SET OUT IN
SCHEDULE 1.8.

 

1.9.         “COMPETITIVE PRODUCT” MEANS [***].

 

1.10.       “CONFIDENTIAL INFORMATION” SHALL MEAN, FOR EACH PARTY, ANY AND ALL
INFORMATION DISCLOSED BY ONE PARTY TO THE OTHER PARTY, WHETHER IN ORAL, WRITTEN,
GRAPHIC, ELECTRONIC FORM OR OTHERWISE ACQUIRED BY A PARTY THROUGH VISUAL
INSPECTION OF TANGIBLE ITEMS OR OBSERVATION OF THE FACILITIES OF ANOTHER PARTY,
WHERE SUCH INFORMATION IS MARKED “CONFIDENTIAL” OR IS DISCLOSED ORALLY AND,
DURING THE COURSE OF SUCH ORAL DISCLOSURE, IS INDICATED TO CONTAIN CONFIDENTIAL
INFORMATION AND THEREAFTER IS SUMMARIZED IN WRITING AS CONFIDENTIAL WITHIN
THIRTY (30) DAYS; EXCEPT ANY PORTION THEREOF WHICH:

 

(A) IS KNOWN TO THE RECEIVING PARTY AT THE TIME OF DISCLOSURE, AS EVIDENCED BY
ITS WRITTEN RECORDS;

 

(B) IS DISCLOSED TO THE RECEIVING PARTY BY A THIRD PARTY HAVING A LEGAL RIGHT TO
MAKE SUCH DISCLOSURE, WITHOUT RESTRICTION OF DISCLOSURE;

 

(C) BECOMES PATENTED, PUBLISHED OR OTHERWISE PART OF THE PUBLIC DOMAIN THROUGH
NO FAULT OF THE RECEIVING PARTY; OR

 

(D) IS INDEPENDENTLY DEVELOPED BY OR FOR THE RECEIVING PARTY WITHOUT RECOURSE TO
THE OTHER PARTY’S CONFIDENTIAL INFORMATION DISCLOSED HEREUNDER, AS EVIDENCED BY
THE RECEIVING PARTY’S WRITTEN RECORDS.

 

“CONFIDENTIAL INFORMATION” MAY INCLUDE WITHOUT LIMITATION: (I) TECHNICAL AND
PRODUCT INFORMATION; (II) MANUFACTURING INFORMATION AND PROCESSES;
(III) DRAWINGS, DIAGRAMS, SCHEMATICS AND SPECIFICATIONS; (IV) MARKETING,
CUSTOMER, PRICING, FINANCIAL, AND SALES INFORMATION; (V) REGULATORY INFORMATION
AND MATERIALS; (VI) STRATEGIC AND BUSINESS PLANS; (VII) EACH PARTY’S
INTELLECTUAL PROPERTY EMBODIED IN EACH PARTY’S PRODUCTS AND MATERIALS; AND
(VIII) SAMPLE PRODUCTS THAT MAY BE FURNISHED TO EITHER PARTY.  THE INFORMATION
ENUMERATED IN CLAUSES (I) THROUGH (VIII) IN THE PRIOR SENTENCE SHALL BE DEEMED
CONFIDENTIAL INFORMATION OF A PARTY WHEN DISCLOSED TO THE OTHER WHETHER OR NOT
MARKED “CONFIDENTIAL” OR, IF DISCLOSED ORALLY, INDICATED TO CONTAIN CONFIDENTIAL
INFORMATION AND THEREAFTER IS SUMMARIZED IN WRITING AS CONFIDENTIAL.

 

2

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1.11.       “CONTRACT MANUFACTURER” SHALL HAVE THE MEANING AS SET FORTH IN
SECTION 4.1.

 

1.12.       “CONTRACT YEAR” SHALL MEAN A PERIOD OF TWELVE (12) CONSECUTIVE
MONTHS BEGINNING ON APRIL 1 AND CONCLUDING ON MARCH 31; PROVIDED HOWEVER, THAT
THE FIRST CONTRACT YEAR OF THIS AGREEMENT WITH RESPECT TO THE PRODUCT, SHALL
COMMENCE ON THE LAUNCH DATE AND SHALL END ON THE NEXT MARCH 31, AND ANY
OBLIGATIONS FOR SUCH FIRST CONTRACT YEAR WITH RESPECT TO THE PRODUCT SHALL BE
PRO-RATED BASED ON THE NUMBER OF ACTUAL DAYS IN SUCH PARTIAL YEAR.

 

1.13.       “COST(S)” MEANS, IN CONNECTION WITH THE MANUFACTURE, LABELING AND
PACKAGING OF THE PRODUCT: (I) IF SUCH ACTIVITIES ARE CONDUCTED BY COMPANY, THE
COST OF MATERIALS, LABOR, THIRD PARTY FEES AND EXPENSES THAT ARE DIRECTLY
RELATED TO THE MANUFACTURE, ASSAY, QUALITY ASSURANCE RELEASE TESTING AND
SHIPPING OF COMMERCIAL PRODUCT, AND VARIABLE OVERHEAD INCURRED IN MANUFACTURING
PLUS THE FULLY ABSORBED ALLOCATION OF FIXED OVERHEAD, IN EACH CASE WITH RESPECT
TO THE FACILITY AT WHICH SUCH PRODUCT IS MANUFACTURED AND OVERSIGHT, OPERATION
AND MANAGEMENT THEREOF, DETERMINED IN ACCORDANCE WITH GAAP; AS EVIDENCED BY
REASONABLY DETAILED SUPPORTING DOCUMENTATION AND PREPARED CONSISTENTLY FROM
PERIOD TO PERIOD; AND (II) IF SUCH ACTIVITIES ARE CONDUCTED BY A CONTRACT
MANUFACTURER ON BEHALF OF COMPANY, THE PASS-THROUGH COST OF THE PRODUCTS AS PAID
BY COMPANY TO SUCH CONTRACT MANUFACTURER AND THIRD PARTY FEES AND EXPENSES
DIRECTLY RELATED TO THE MANUFACTURE, ASSAY, QUALITY ASSURANCE RELEASE TESTING
AND SHIPPING OF COMMERCIAL PRODUCT.

 

1.14.       “DISCLOSING PARTY” SHALL HAVE THE MEANING SET FORTH IN SECTION 15.1.

 

1.15.       “DISTRIBUTOR BRANDS” MEANS ANY CORPORATE MARKS, SERVICE MARKS,
TRADEMARKS, HOUSEMARKS, TRADENAMES, TRADE DRESS, OWNED OR USED BY DISTRIBUTOR,
WHETHER OR NOT REGISTERED.

 

1.16.       “DISTRIBUTOR COMPETITIVE PRODUCT” MEANS [***].

 

1.17.       “DISTRIBUTOR TRADE MARKS” SHALL HAVE THE MEANING SET FORTH IN
SECTION 12.3.

 

1.18.       “DEFECTIVE PRODUCT” MEANS PRODUCT THAT DOES NOT CONFORM TO THE
SPECIFICATIONS, INCLUDING ANY RELEVANT PACKAGING AND/OR LABELLING
SPECIFICATIONS.

 

1.19.       “EFFECTIVE DATE” SHALL HAVE THE MEANING AS SET FORTH IN THE
INTRODUCTORY PARAGRAPH.

 

1.20.        “FDA” MEANS THE UNITED STATES FOOD AND DRUG ADMINISTRATION.

 

1.21.       “FIELD” MEANS: (I) WITH RESPECT TO THE PRODUCT, ALL CURRENT AND NEW
USES FOR THE PRODUCT WITHIN ALL TARGET THERAPEUTIC AUDIENCES (SUBJECT TO
COMPANY’S CO-PROMOTION RIGHTS SET FORTH IN SECTION 2.6) AND; (II) WITH RESPECT
TO ANY LINE EXTENSIONS IMPLEMENTED PURSUANT TO SECTION 3.4, ALL USES OF THE LINE
EXTENSIONS WITHIN ALL TARGET THERAPEUTIC AUDIENCES.

 

1.22.       “GAAP” MEANS UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
CONSISTENTLY APPLIED.

 

3

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1.23.       “FORCE MAJEURE” MEANS, IN RELATION TO EITHER PARTY, ANY
CIRCUMSTANCES BEYOND THE REASONABLE CONTROL OF THAT PARTY (INCLUDING, WITHOUT
LIMITATION, FIRE, FLOODS, EMBARGOES, SHORTAGES, EPIDEMICS, QUARANTINES, WAR,
ACTS OF GOD, ACTS, OMISSIONS OR DELAYS IN ACTING BY ANY GOVERNMENTAL AUTHORITIES
AND ANY STRIKE, LOCK-OUT OR OTHER FORM OF INDUSTRIAL ACTION).

 

1.24.       “INSOLVENT PARTY” SHALL HAVE THE MEANING SET FORTH IN
SECTION 13.2(B).

 

1.25.       “LAUNCH DATE” WITH RESPECT TO THE PRODUCT (OR ANY LINE EXTENSION)
MEANS THE FIRST DAY ON WHICH DISTRIBUTOR’S FIRST BONA FIDE SALE OF THE PRODUCT
(OR SUCH LINE EXTENSION) TO A NON-AFFILIATE CUSTOMER OCCURS IN THE TERRITORY
(WHICH SHALL BE DEEMED TO BE NO LATER THAN THE DATE OF DISTRIBUTOR’S FIRST
SHIPMENT TO A WHOLESALER).

 

1.26.       “LINE EXTENSION DATA PACKAGE” SHALL HAVE THE MEANING SET FORTH IN
SECTION 3.4(B).

 

1.27.       “LINE EXTENSIONS” MEANS DIFFERENT PACK SIZES, PACK TYPES, OR DOSAGE
FORMS OF THE PRODUCT, INCLUDING REFORMULATIONS OF AND ENHANCEMENTS TO THE
PRODUCT (BUT, FOR THE AVOIDANCE OF DOUBT, EXCLUDING THE OPTION PRODUCT).  AS
USED IN THIS AGREEMENT, THE TERM REFORMULATION(S) SHALL ALSO INCLUDE CHANGES IN
THE QUALITATIVE OR QUANTITATIVE PRODUCT FORMULATION PROVIDED SUCH CHANGED
FORMULATION(S) CONTINUES TO BE CERAMIDE-DOMINANT RATIO OF CERAMIDES, LIPIDS AND
CHOLESTEROL, INCLUDING BUT NOT LIMITED TO ADDITIONS, DELETIONS, INCREASES OR
REDUCTIONS IN PRODUCT COMPONENTS OR INGREDIENTS.

 

1.28.       “LOSSES” SHALL HAVE THE MEANING SET FORTH IN SECTION 14.1.

 

1.29.       “MEDICAL DEVICE REPORT (MDR) REPORTABLE EVENT” MEANS AN EVENT THAT
DISTRIBUTOR OR COMPANY BECOME AWARE OF THAT REASONABLY SUGGESTS THAT ONE OF THE
PRODUCTS MAY HAVE CAUSED OR CONTRIBUTED TO A DEATH OR SERIOUS INJURY.

 

1.30.       “NET SALES” SHALL MEAN, WITH RESPECT TO PRODUCT, GROSS SALES OF THE
PRODUCT BY DISTRIBUTOR, ITS AFFILIATES, SALES AGENTS AND SUB-DISTRIBUTORS FOR
THE PERIOD, LESS THE FOLLOWING DEDUCTIONS: (1) PROMOTIONAL ALLOWANCES, REBATES,
QUANTITY AND CASH DISCOUNTS, AND OTHER USUAL AND CUSTOMARY DISCOUNTS AND
ALLOWANCES; (2) CHARGEBACKS, SALES CONTRACT ADMINISTRATIVE FEES, WHOLESALER FEE
FOR SERVICE CHARGES AND OTHER PAYMENTS TO CUSTOMERS IN CONNECTION WITH THE SALE;
(3) DISCOUNTS OR REBATES OR OTHER PAYMENTS ACTUALLY MADE UNDER MEDICAID,
MEDICARE OR OTHER GOVERNMENTAL SPECIAL MEDICAL ASSISTANCE PROGRAMS; (4) AMOUNTS
REPAID, CREDITED OR LOST BY REASON OF REJECTIONS, DAMAGES, EXPIRED INVENTORY OR
RETURN OF GOODS, OR BECAUSE OF RETROACTIVE PRICE ADJUSTMENTS; (5) AMOUNTS NOT
COLLECTED AFTER REASONABLE COLLECTION EFFORTS; AND (6) AN AMOUNT EQUAL TO [***]
PERCENT ([***]%) OF GROSS SALES AS AN ALLOWANCE FOR FREIGHT AND INSURANCE
EXPENSES IN CONNECTION WITH DELIVERY OF THE PRODUCT TO CUSTOMERS.  ALL SUCH
DEDUCTIONS SHALL BE DETERMINED ON AN ACCRUAL BASIS IN ACCORDANCE WITH GAAP.

 

1.31.       “NEOCERAM” [***].

 

1.32.       “OPTION PRODUCT” SHALL MEAN [***].

 

4

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1.33.       “OSMOTICS” MEANS OSMOTICS CORPORATION.

 

1.34.       “OTHER PARTIES” SHALL HAVE THE MEANING SET FORTH IN SECTION 13.2.

 

1.35.       “PARTIES” MEANS COMPANY AND DISTRIBUTOR AND “PARTY” MEANS ANY OF
THEM AS THE CONTEXT INDICATES.

 

1.36.       “PATENT(S)” MEANS THOSE PATENTS AND/OR PATENT APPLICATIONS OWNED OR
CONTROLLED BY COMPANY WHICH HAVE ANY CLAIMS COVERING THE PRODUCT, A LIST OF
WHICH ARE SET FORTH ON SCHEDULE 1.36.

 

1.37.       “PRODUCT” MEANS THE PRESCRIPTION MEDICAL DEVICE THAT THE COMPANY HAS
NAMED “EPICERAM® SKIN BARRIER EMULSION DEVICE” AS DETAILED IN SCHEDULE 1.37. 
THE PRODUCT IS REGISTERED IN THE US AS A MEDICAL DEVICE UNDER FDA
510(K) APPROVAL NUMBER K052643 (“510(K)”).  THE APPROVED INDICATION FOR THE
PRODUCT IS SET FORTH IN SCHEDULE 1.37.  FOR PURPOSES OF CLARITY, THE “PRODUCT”
SPECIFICALLY EXCLUDES NEOCERAM.

 

1.38.       “QUALITY AGREEMENT” SHALL HAVE THE MEANING SET FORTH IN SECTION 8.1.

 

1.39.       “RECEIVING PARTY” SHALL HAVE THE MEANING SET FORTH IN SECTION 15.1.

 

1.40.       “RECORDS” SHALL HAVE THE MEANING SET FORTH IN SECTION 7.2(E).

 

1.41.       “REGISTRATION” OR “REGULATORY APPROVAL” SHALL MEAN ALL NECESSARY AND
APPROPRIATE REGULATORY APPROVALS, LICENSES, REGISTRATIONS AND AUTHORIZATIONS
FROM THE APPROPRIATE REGULATORY AUTHORITY, INCLUDING PRICING OR REIMBURSEMENT
APPROVAL, TO MANUFACTURE, USE, STORE, IMPORT, TRANSPORT, MARKET, PROMOTE, SELL,
AND PLACE ON THE MARKET THE PRODUCT (OR ANY LINE EXTENSION) IN THE TERRITORY, AS
MAY BE APPLICABLE, AT ANY TIME, DURING THE TERM.

 

1.42.       “REGULATORY AUTHORITY” SHALL MEAN ANY GOVERNMENT OR OTHER AUTHORITY
OR AGENCY HAVING JURISDICTION WITHIN THE TERRITORY CHARGED WITH ISSUING
APPROVALS, LICENSES, REGISTRATIONS OR AUTHORIZATIONS NECESSARY FOR THE
MANUFACTURE, USE, STORAGE, IMPORT, TRANSPORT, MARKETING, PROMOTION, SELLING, AND
PLACING ON THE MARKET OF THE PRODUCT.

 

1.43.       “SALES AGENTS” SHALL HAVE THE MEANING SET FORTH IN SECTION 2.2.

 

1.44.       [***]

 

1.45.       “SPECIFICATIONS” SHALL MEAN THE SPECIFICATIONS FOR THE FINISHED
PRODUCT AS SET OUT IN THE REGULATORY APPROVAL FOR THE PRODUCT, INCLUDING ALL
PACKAGING AND LABELLING SPECIFICATIONS.  THE SPECIFICATIONS FOR THE PRODUCT IS
ATTACHED AS SCHEDULE 1.45, AS MAY BE AMENDED FROM TIME TO TIME AS PROVIDED IN
THIS AGREEMENT.

 

1.46.       “SUB-DISTRIBUTORS” SHALL HAVE THE MEANING SET FORTH IN SECTION 2.2.

 

5

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1.47.       “TERRITORY” MEANS THE UNITED STATES OF AMERICA AND ITS TERRITORIES
AND POSSESSIONS, INCLUDING PUERTO RICO (COLLECTIVELY, THE “UNITED STATES”), AND
ANY OTHER COUNTRIES ADDED TO THE TERRITORY PURSUANT TO SECTION 2.7(A).

 

1.48.       “TERM” SHALL HAVE THE MEANING AS SET FORTH IN 13.1.

 

1.49.       “THIRD PARTY” SHALL MEAN A NATURAL PERSON, CORPORATION,
PROPRIETORSHIP, PARTNERSHIP, TRUST, JOINT VENTURE, GOVERNMENTAL AUTHORITY OR
OTHER LEGAL ENTITY OR ORGANIZATION OTHER THAN THE PARTIES AND THEIR AFFILIATES.

 

2.             APPOINTMENT AND ACCEPTANCE; OTHER RIGHTS

 

2.1.         APPOINTMENT OF DISTRIBUTOR.  SUBJECT TO THE TERMS AND CONDITIONS OF
THIS AGREEMENT, COMPANY HEREBY APPOINTS DISTRIBUTOR (INCLUDING ITS AFFILIATES)
AS THE EXCLUSIVE (EVEN AS TO COMPANY, SUBJECT TO COMPANY’S CO-DETAILING OPTION
AND CO-PROMOTION RIGHTS SET FORTH IN SECTIONS 2.5 AND 2.6) DISTRIBUTOR OF THE
PRODUCT IN THE FIELD IN THE TERRITORY.  SUBJECT TO THE TERMS AND CONDITIONS OF
THIS AGREEMENT, COMPANY HEREBY GRANTS DISTRIBUTOR (INCLUDING ITS AFFILIATES) A
NON-TRANSFERABLE, NON-ASSIGNABLE RIGHT TO REFERENCE AND USE THE REGISTRATIONS
(INCLUDING, WITH RESPECT TO THE PRODUCT, THE 510(K)), IN CONNECTION WITH ITS
RIGHT TO DISTRIBUTE, USE, IMPORT, PROMOTE, MARKET, OFFER FOR SALE, AND/OR SELL
THE PRODUCT IN THE FIELD IN THE TERRITORY.  DISTRIBUTOR HEREBY ACCEPTS SUCH
APPOINTMENT.  COMPANY COVENANTS AND AGREES THAT IT SHALL NOT GRANT RIGHTS TO ANY
THIRD PARTY TO DISTRIBUTE, USE, IMPORT, PROMOTE, MARKET, OFFER FOR SALE, AND/OR
SELL THE PRODUCT OR ANY LINE EXTENSIONS (ABSENT COMPLIANCE WITH THE TERMS OF
SECTION 3.4) IN THE FIELD IN THE TERRITORY.  SUBJECT TO DISTRIBUTOR’S COMPLIANCE
WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT, COMPANY SHALL HAVE NO CONTROL
OR INFLUENCE OVER THE MANNER AND MODE OF DISTRIBUTION, THE MARKETING MATERIALS
OR STRATEGY, PRODUCT ADVERTISING, OR THE SALES OR PRICE OF THE PRODUCT IN THE
TERRITORY.  FOR PURPOSES OF CLARITY, THE APPOINTMENT OF DISTRIBUTOR HEREUNDER
INCLUDES THE RIGHT FOR DISTRIBUTOR TO DISTRIBUTE, USE, PROMOTE, MARKET, OFFER
FOR SALE, AND/OR SELL THE PRODUCT IN THE FIELD IN THE TERRITORY AS EITHER A
PRESCRIPTION AND/OR, SUBJECT TO SECTION 2.8, OTC PRODUCT.

 

2.2.         SALES AGENTS AND SUB-DISTRIBUTORS.  DISTRIBUTOR MAY, AT ANY TIME
AND WITHOUT THE CONSENT OF COMPANY, APPOINT ANY NON-STOCKING SALES AGENTS OR
SALES REPRESENTATIVES (COLLECTIVELY, “SALES AGENTS”) OR STOCKING
SUB-DISTRIBUTORS (“SUB-DISTRIBUTORS”) TO PROMOTE, DISTRIBUTE AND SELL THE
PRODUCT IN THE TERRITORY.  IF DISTRIBUTOR SO APPOINTS ANY SUB-DISTRIBUTORS, THE
SUB-DISTRIBUTORS SHALL BE REQUIRED TO AGREE IN WRITING FOR THE BENEFIT OF
COMPANY TO BE BOUND BY THE APPLICABLE TERMS AND CONDITIONS OF THIS AGREEMENT. 
NO APPOINTMENT OF ANY SALES AGENTS OR SUB-DISTRIBUTORS SHALL RELIEVE DISTRIBUTOR
OF ANY OBLIGATION IT OTHERWISE WOULD HAVE UNDER THIS AGREEMENT.

 

2.3.         DISTRIBUTOR BRANDS.  DISTRIBUTOR HEREBY GRANTS COMPANY A
NON-TRANSFERABLE, NON-ASSIGNABLE, NON-EXCLUSIVE LICENSE TO USE DISTRIBUTOR
BRANDS SOLELY FOR THE PURPOSE OF LABELLING THE PRODUCT IN CONNECTION WITH ITS
SUPPLY OBLIGATIONS UNDER THIS AGREEMENT.  THE FOREGOING LICENSE SHALL BE
SUB-LICENSABLE ONLY TO A CONTRACT MANUFACTURER.

 

6

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2.4.         COMPANY’S TRADE MARKS.  COMPANY HEREBY GRANTS DISTRIBUTOR A
NON-TRANSFERABLE, NON-ASSIGNABLE, NON-EXCLUSIVE LICENSE TO USE COMPANY’S TRADE
MARKS TO DISTRIBUTE, USE, IMPORT, PROMOTE, MARKET, OFFER FOR SALE, AND/OR SELL
THE PRODUCT IN THE FIELD IN THE TERRITORY.  THE FOREGOING LICENSE SHALL BE
SUB-LICENSABLE ONLY TO DISTRIBUTOR’S AFFILIATES, SALES AGENTS AND
SUB-DISTRIBUTORS.

 

2.5.         CO-DETAILING OPTION.  COMPANY WILL HAVE THE OPTION, BEGINNING [***]
AFTER THE LAUNCH DATE OF THE PRODUCT, TO PARTICIPATE IN THE DETAILING OF THE
PRODUCT IN THE UNITED STATES.  IN THE EVENT THAT COMPANY EXERCISES ITS OPTION
UNDER THIS SECTION 2.5, THE PARTIES AGREE TO ENTER INTO A SEPARATE CO-DETAILING
AGREEMENT WHICH SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING TERMS:

 

(A)             COMPANY SHALL HAVE THE RIGHT TO SHARE THE DETAILING EFFORT,
BEGINNING [***] AFTER THE LAUNCH DATE, ONCE DISTRIBUTOR HAS ESTABLISHED A TOTAL
BASELINE FOR THE NUMBER OF DETAILS TO BE PERFORMED FOR THE PRODUCT.  COMPANY
SHALL PERFORM A MINIMUM OF [***] PERCENT ([***]%) TO A MAXIMUM OF [***] PERCENT
([***]%) OF DETAILS, BASED ON AND IN ADDITION TO THE TOTAL NUMBER OF DETAILS
ESTABLISHED BY DISTRIBUTOR AS DESCRIBED ABOVE, FOR THE PRODUCT, SOLELY FOR THE
PEDIATRIC TARGET AUDIENCE.

 

(B)             COMPANY SHALL BE ENTITLED TO MUTUALLY AGREED-UPON DETAILING FEES
CONSISTENT WITH CURRENT MARKET NORMS AT THE TIME OF THE OPTION EXERCISE; AND

 

(C)             DISTRIBUTOR SHALL PROVIDE COMPANY WITH ALL PROMOTIONAL MATERIALS
(INCLUDING SAMPLES, PROMOTIONAL MATERIALS, AND OTHER RELATED MATERIALS) THE
COSTS OF WHICH SHALL BE BORNE BY DISTRIBUTOR.

 

FOR PURPOSES OF CLARITY, DISTRIBUTOR SHALL HAVE THE SOLE RESPONSIBILITY (WHICH
SHALL BE EXERCISED REASONABLY IN THE CONTEXT OF IMPLEMENTING THIS COMPANY
OPTION) FOR DEVELOPING, IMPLEMENTING AND CONTROLLING THE OVERALL DETAILING PLAN
FOR THE PRODUCT, OTHER THAN FOR THE COMPANY TARGET AUDIENCES, EVEN IF COMPANY
EXERCISED ITS OPTION PROVIDED IN THIS SECTION 2.5.

 

2.6.         CO-PROMOTION RIGHT.

 

(A)             GENERALLY:  COMPANY SHALL HAVE THE EXCLUSIVE RIGHT (EVEN AS TO
DISTRIBUTOR, ITS AFFILIATES, SALES AGENTS AND SUB-DISTRIBUTORS), TO CO-PROMOTE
THE PRODUCT TO COMPANY TARGET AUDIENCES UNDER REASONABLE TERMS AND CONDITIONS TO
BE MEMORIALIZED IN A DEFINITIVE CO-PROMOTION AGREEMENT.  THE PARTIES CONTEMPLATE
THAT THE PRODUCT WILL BE PROMOTED IN ITS CURRENT TRADE DRESS AND LABELING AND
PRICING UNLESS OTHERWISE AGREED BETWEEN THE PARTIES.

 

(B)             CLINICAL TRIAL AND MARKETING EXPENSES:  SHOULD COMPANY ELECT TO
PURSUE THE COMMERCIAL POTENTIAL FOR THE PRODUCT IN ANY OF THE COMPANY TARGET
AUDIENCES, COMPANY SHALL PERFORM AND FUND ANY CLINICAL STUDIES THAT ARE REQUIRED
OR DESIRED FOR USE IN SUCH PROMOTION OF THE EPICERAM® BRAND.  COMPANY WILL ALSO
BE RESPONSIBLE FOR DEVELOPING ALL NEW MARKETING AND SALES FORCE RELATED SELLING
MATERIALS, THE COST FOR PRODUCT SAMPLES DISTRIBUTED, AND FOR ALL SALES FORCE
RELATED PLANS AND EXPENSES ASSOCIATED WITH ITS FIELDING EITHER DIRECTLY OR VIA A
CONTRACT SALES FORCE TO PROMOTE THE PRODUCT TO COMPANY TARGET AUDIENCES.  THE
DESIGN AND CONDUCT OF ANY CLINICAL TRIALS, THE COPY FOR ANY NEW SELLING
MATERIALS, AND SELLING PLANS WILL BE SUBJECT TO REVIEW AND REASONABLE APPROVAL
BY DISTRIBUTOR IN ORDER TO NOT BE INCONSISTENT WITH

 

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OTHER EFFORTS IN SUPPORT OF THE PRODUCT AND DETRIMENTAL TO THE PRODUCT’S OVERALL
ACCEPTANCE.  IF NEW SELLING RELATED MATERIALS ARE DEVELOPED IN CONNECTION WITH
PROMOTION TO COMPANY TARGET AUDIENCES, AND DISTRIBUTOR DESIRES TO USE SUCH
MATERIALS IN PROMOTION TO THE PRIMARY TARGET AUDIENCES, DISTRIBUTOR WILL HAVE
FREE ACCESS TO USE OF THESE MATERIALS UPON PAYMENT FOR ANY INCREMENTAL PRINTING
AND DISTRIBUTION COSTS.  SIMILARLY, DISTRIBUTOR SHALL MAKE AVAILABLE TO COMPANY
PRODUCT TRAINING MATERIALS AND PROMOTIONAL MATERIALS DEVELOPED OR USED BY
DISTRIBUTOR, PROVIDED COMPANY PAYS THE INCREMENTAL PRINTING AND DISTRIBUTION
COSTS ASSOCIATED WITH SUCH MATERIALS USED BY COMPANY WITH THE COMPANY TARGET
AUDIENCES.

 

(C)             MONITORING OF CO-PROMOTION TARGET AUDIENCE SALES:  THE COST FOR
ESTABLISHING AN AUDIT SYSTEM DESIGNED TO MEASURE SALES ATTRIBUTABLE TO COMPANY
TARGET AUDIENCES WILL BE BORNE BY COMPANY.  THIS AUDIT SYSTEM WILL BE MUTUALLY
AGREED BETWEEN THE PARTIES, AND A THIRD PARTY CONSULTANT WILL BE UTILIZED TO
DESIGN SUCH A MONITORING SYSTEM WHICH SHALL BE BASED ON OBJECTIVELY VERIFIABLE
SALES MADE BY THE COMPANY FOR THE PRODUCT IN THE COMPANY TARGET AUDIENCES.  WITH
RESPECT TO PRODUCT PRESCRIPTIONS WRITTEN BY COMPANY TARGET AUDIENCES, THE
PARTIES AGREE TO NEGOTIATE IN GOOD FAITH A MUTUALLY AGREEABLE COST SHARING
ARRANGEMENT FOR PRODUCTS SOLD BY COMPANY TO THE COMPANY TARGET AUDIENCES WHICH
SHALL BE INCLUDED IN THE DEFINITIVE CO-PROMOTION AGREEMENT DESCRIBED IN
SECTION 2.6(A).

 

2.7.         RIGHTS OF FIRST NEGOTIATION.

 

(A)             COMPANY HEREBY GRANTS DISTRIBUTOR AN EXCLUSIVE RIGHT OF FIRST
NEGOTIATION TO EXPAND THE TERRITORY TO INCLUDE THE RIGHT TO DISTRIBUTE, MARKET
AND SELL THE PRODUCT IN EACH OF THE COUNTRIES OF [***] FOR A PERIOD OF [***]
MONTHS FROM THE EFFECTIVE DATE.  DURING SUCH [***] MONTH PERIOD, DISTRIBUTOR MAY
EXERCISE SUCH RIGHT AT ANY TIME BY SENDING NOTICE OF ITS INTEREST IN ACQUIRING
SUCH RIGHTS IN ANY OF THE FOREGOING COUNTRIES TO COMPANY; PROVIDED HOWEVER, THAT
THE PERIOD FOR ENTERING INTO A MUTUALLY AGREEABLE AMENDMENT TO THIS AGREEMENT TO
INCLUDE SUCH DISTRIBUTION RIGHTS SHALL EXPIRE AT THE END OF THE [***] PERIOD. 
NOTWITHSTANDING THE FOREGOING, THE PARTIES MAY MUTUALLY AGREE TO EXTEND SAID
PERIOD.  IN THE EVENT THAT THE PARTIES AGREE TO ADD ANY SUCH COUNTRIES TO THE
TERRITORY, THE DEFINITION OF “TERRITORY” SHALL BE DEEMED TO HAVE BEEN EXPANDED
TO INCLUDE SUCH ADDITIONAL COUNTRY(IES), SUBJECT TO ANY AMENDMENT TO THIS
AGREEMENT TO REVISE THE TERMS OF THIS AGREEMENT TO REFLECT SUCH EXPANDED
TERRITORY.

 

(B)             IN THE EVENT THAT COMPANY DESIRES TO SELL, PARTNER, LICENSE OR
GRANT DISTRIBUTION RIGHTS TO THE OPTION PRODUCT, IN THE TERRITORY AS IT IS
COMPRISED AT THE TIME, TO ANY THIRD PARTY, COMPANY HEREBY GRANTS DISTRIBUTOR AN
EXCLUSIVE RIGHT OF FIRST NEGOTIATION TO ACQUIRE SUCH RIGHTS FOR A PERIOD OF
[***] DAYS.  THE [***] DAY FIRST NEGOTIATION PERIOD SHALL COMMENCE UPON DELIVERY
TO DISTRIBUTOR OF COMPANY’S WRITTEN NOTIFICATION OF ITS INTENT TO SELL, PARTNER,
LICENSE OR GRANT DISTRIBUTION RIGHTS TO THE OPTION PRODUCT, TOGETHER WITH ITS
PROPOSED TERMS FOR SUCH RIGHT, AND SHALL EXPIRE [***] DAYS THEREAFTER. 
NOTWITHSTANDING THE FOREGOING, THE PARTIES MAY MUTUALLY AGREE TO EXTEND SAID
PERIOD.

 

2.8.         OTC SWITCH FOR PRODUCT.  TERMS AND CONDITIONS OF A PRESCRIPTION TO
OVER THE COUNTER (OTC) SWITCH STRATEGY FOR PRODUCT IN THE TERRITORY SHALL BE
DISCUSSED FROM TIME TO TIME BY COMPANY AND DISTRIBUTOR AND ANY SUCH OTC SWITCH
SHALL REQUIRE MUTUAL WRITTEN CONSENT OF COMPANY AND DISTRIBUTOR.  ABSENT MUTUAL
WRITTEN CONSENT OF COMPANY AND DISTRIBUTOR, COMPANY SHALL NOT MARKET OR SELL THE
PRODUCT AS AN OTC PRODUCT DURING THE TERM.

 

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2.9.         EXERCISE OF CERTAIN OPTIONS; OTHER COVENANTS.  COMPANY AGREES TO
EXERCISE ITS PURCHASE OPTION UNDER A CERTAIN AGREEMENT, DATED AUGUST 15, 2006,
WITH OSMOTICS FOR TRICERAM (A NON-PRESCRIPTION CERAMIDE DOMINANT SKIN CREAM SOLD
BY OSMOTICS) WITHIN ONE YEAR OF THE EFFECTIVE DATE.  COMPANY FURTHER AGREES
[***].  COMPANY AGREES TO USE ITS BEST EFFORTS TO [***] PRIOR TO THE LAUNCH DATE
OF THE PRODUCT.

 

3.                                      PAYMENTS

 

3.1.         MILESTONES.  IN CONSIDERATION OF THE DISTRIBUTION RIGHTS GRANTED TO
DISTRIBUTOR UNDER SECTION 2 OF THIS AGREEMENT, DISTRIBUTOR SHALL PAY TO COMPANY:

 

(A)           UPFRONT MILESTONE PAYMENTS

 

(I)            THE NON-REFUNDABLE SUM OF ONE MILLION FIVE HUNDRED THOUSAND US
DOLLARS (US $1,500,000), WHICH SHALL BE MADE WITHIN TEN (10) BUSINESS DAYS OF
THE EFFECTIVE DATE; AND

 

(II)           SUBJECT TO SECTION 13.3, THE REFUNDABLE SUM OF ONE MILLION FIVE
HUNDRED THOUSAND US DOLLARS (US $1,500,000), WHICH SHALL BE MADE WITHIN TEN
(10) BUSINESS DAYS AFTER [***]; AND

 

(B)           LAUNCH MILESTONE PAYMENTS

 

(I)            THE NON-REFUNDABLE SUM OF ONE MILLION US DOLLARS (US $1,000,000),
WHICH SHALL BE MADE WITHIN TEN (10) BUSINESS DAYS OF [***]; AND

 

(II)           THE NON-REFUNDABLE SUM OF ONE MILLION US DOLLARS (US $1,000,000),
WHICH SHALL BE MADE WITHIN TEN (10) BUSINESS DAYS OF [***]; AND

 

(C)           CUMULATIVE NET SALES MILESTONE PAYMENTS FOR THE PRODUCT WILL BE
PAID AS FOLLOWS:

 

(I)            SIX HUNDRED AND TWENTY FIVE THOUSAND US DOLLARS (US $625,000),
PAYABLE WITHIN [***] DAYS AFTER THE END OF THE MONTH IN WHICH CUMULATIVE NET
SALES OF THE PRODUCT, MEASURED FROM THE LAUNCH DATE OF THE PRODUCT, REACH [***]
US DOLLARS (US $[***]);

 

(II)           ONE MILLION TWO HUNDRED FIFTY THOUSAND US DOLLARS (US
$1,250,000), PAYABLE WITHIN [***] DAYS AFTER THE END OF THE MONTH IN WHICH
CUMULATIVE NET SALES OF THE PRODUCT, MEASURED FROM THE LAUNCH DATE OF THE
PRODUCT, REACH [***] US DOLLARS (US $[***]);

 

(III)         TWO MILLION FIVE HUNDRED THOUSAND US DOLLARS (US $2,500,000),
PAYABLE WITHIN [***] DAYS AFTER THE END OF THE MONTH IN WHICH CUMULATIVE NET
SALES OF THE

 

9

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PRODUCT, MEASURED FROM THE LAUNCH DATE OF THE PRODUCT, REACH [***] US DOLLARS
(US $[***]); AND

 

(IV)          SIX MILLION TWO HUNDRED FIFTY THOUSAND US DOLLARS (US $6,250,000),
PAYABLE WITHIN [***] DAYS AFTER THE END OF THE MONTH IN WHICH CUMULATIVE NET
SALES OF THE PRODUCT, MEASURED FROM THE LAUNCH DATE OF THE PRODUCT, REACH [***]
US DOLLARS (US $[***]).

 

(D)           ADDITIONAL CUMULATIVE NET SALE MILESTONE PAYMENTS FOR THE PRODUCT.

 

THE FOLLOWING CUMULATIVE NET SALES MILESTONES PAYMENTS WILL BE PAID BY
DISTRIBUTOR TO COMPANY FOR CUMULATIVE NET SALES AFTER [***].  FOR PURPOSES OF
CLARITY, DISTRIBUTOR SHALL NOT BE RESPONSIBLE FOR PAYING (AND COMPANY SHALL
FORFEIT) ANY CUMULATIVE NET SALES MILESTONES PAYABLE UNDER THIS
SECTION 3.1(D) ACCRUING PRIOR TO [***].  FOR EXAMPLE, IF CUMULATIVE NET SALES OF
THE PRODUCT REACH [***] US DOLLARS ($[***]) IN JULY 2009 AND [***] IN
SEPTEMBER 2009, DISTRIBUTOR WILL PAY THE ADDITIONAL CUMULATIVE NET SALES
MILESTONE PAYMENT DESCRIBED IN SECTION 3.1(D)(III), WHILE THE AMOUNTS DESCRIBED
IN SECTIONS 3.1(D)(I) AND 3.1(D)(II) WILL BE FORFEITED, AND THE MILESTONE
PAYMENT DESCRIBED IN SECTION 3.1(D)(IV) WOULD BE PAID ONLY IF CUMULATIVE NET
SALES REACH [***] US DOLLARS ($[***]).

 

(I)            SIX HUNDRED AND TWENTY FIVE THOUSAND US DOLLARS (US $625,000),
PAYABLE WITHIN [***] DAYS AFTER THE LATER TO OCCUR OF (X) THE END OF THE MONTH
IN WHICH CUMULATIVE NET SALES OF THE PRODUCT, MEASURED FROM THE LAUNCH DATE OF
THE PRODUCT, REACH [***] US DOLLARS (US $[***]) OR (Y) THE DATE [***];

 

(II)           ONE MILLION TWO HUNDRED FIFTY THOUSAND US DOLLARS (US
$1,250,000), PAYABLE WITHIN [***] DAYS AFTER THE LATER OF (X) THE END OF THE
MONTH IN WHICH CUMULATIVE NET SALES OF THE PRODUCT, MEASURED FROM THE LAUNCH
DATE OF THE PRODUCT, REACH [***] US DOLLARS (US $[***]) OR (Y) THE DATE [***];

 

(III)         TWO MILLION FIVE HUNDRED THOUSAND US DOLLARS (US $2,500,000),
PAYABLE WITHIN [***] DAYS AFTER THE LATER OF (X) THE END OF THE MONTH IN WHICH
CUMULATIVE NET SALES OF THE PRODUCT, MEASURED FROM THE LAUNCH DATE OF THE
PRODUCT, REACH [***] US DOLLARS (US $[***]) OR (Y) THE DATE [***]; AND

 

(IV)          SIX MILLION TWO HUNDRED FIFTY THOUSAND US DOLLARS (US $6,250,000),
PAYABLE WITHIN [***] DAYS AFTER THE LATER TO OCCUR OF (X) THE END OF THE MONTH
IN WHICH CUMULATIVE NET SALES OF THE PRODUCT, MEASURED FROM THE LAUNCH DATE OF
THE PRODUCT, REACH [***] US DOLLARS (US $[***]) OR (Y) THE DATE [***].

 

(E)           THE AMOUNTS DESCRIBED IN SECTION 3.2.

 

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3.2.         PRICING FOR THE PRODUCT.

 

(A)           THE PURCHASE PRICES PAYABLE BY DISTRIBUTOR TO COMPANY FOR THE
PRODUCT SHALL BE CALCULATED AND PAID TO COMPANY ON A QUARTERLY BASIS IN
ACCORDANCE WITH THE PRICING STRUCTURE SET FORTH IN SCHEDULE 3.2(A).

 

(B)           COST OF THE PRODUCT (INCLUDING SAMPLE SIZE) FOR THE FIRST CONTRACT
YEAR IS SET FORTH IN SCHEDULE 3.2(A).

 

(C)           PRICES PAYABLE BY DISTRIBUTOR TO COMPANY FOR THE [***] SAMPLE TUBE
OF PRODUCT, PROVIDED IT IS NOT SOLD, WILL BE AT [***].

 

3.3.         INCREASES IN PURCHASE PRICE FOR THE PRODUCT.  COMPANY SHALL HAVE
THE RIGHT, AT THE END OF EACH CONTRACT YEAR, TO MAKE REASONABLE INCREASES IN THE
PURCHASE PRICE OF THE PRODUCT BASED ON THE INCREASE, IF ANY, IN THE COSTS OF THE
PRODUCT.  IF THE PURCHASE PRICE OF THE PRODUCT IS INCREASED BY MORE THAN [***]
PERCENT ([***]%) IN ANY CONTRACT YEAR OVER THE PRIOR CONTRACT YEAR PURCHASE
PRICE, THE PARTIES AGREE TO DISCUSS THE REASON(S) FOR THE INCREASE, AND AGREE
UPON MEASURES TO BE TAKEN BY COMPANY TO REDUCE THE COSTS FOR THE PRODUCT.

 

3.4.         FIRST OPTION RIGHTS FOR LINE EXTENSIONS.  DISTRIBUTOR SHALL HAVE
THE FIRST OPTION TO NEGOTIATE TO ACQUIRE (SUBJECT TO SECTION 3.4(D)) THE
DISTRIBUTION RIGHTS FOR ANY LINE EXTENSIONS IN THE FIELD IN THE TERRITORY, AS
FOLLOWS:

 

(A)           COMPANY AND DISTRIBUTOR EACH ACKNOWLEDGE THAT EACH PARTY MAY
DEVELOP CONCEPTS FOR POTENTIAL LINE EXTENSIONS THAT COMPANY AND DISTRIBUTOR
DECIDE TO PURSUE TOGETHER.  IN THE EVENT THAT DISTRIBUTOR DEVELOPS A CONCEPT FOR
A LINE EXTENSION THAT IT WISHES TO DEVELOP WITH COMPANY, DISTRIBUTOR SHALL
NOTIFY COMPANY AND THE PARTIES WILL REVIEW SUCH CONCEPT.  IN THE EVENT THAT
COMPANY AND DISTRIBUTOR DETERMINE TO WORK JOINTLY TO DEVELOP SUCH POTENTIAL LINE
EXTENSION, THE PARTIES SHALL NEGOTIATE IN GOOD FAITH AND AGREE TO A FEASIBILITY
STUDY AGREEMENT THAT WILL ADDRESS THE OBLIGATIONS OF COMPANY AND DISTRIBUTOR
WITH RESPECT TO SUCH DEVELOPMENT, THE CONTRIBUTIONS TO THE COSTS ASSOCIATED
THEREWITH, AND ANY REIMBURSEMENT OF SUCH COSTS UNDER ANY RELEVANT
CIRCUMSTANCES.  FOR PURPOSES OF CLARITY, IN THE EVENT THAT COMPANY DECIDES NOT
TO PURSUE ANY POTENTIAL LINE EXTENSION DEVELOPED OR CONCEIVED BY DISTRIBUTOR,
DISTRIBUTOR SHALL HAVE THE RIGHT TO PURSUE SUCH LINE EXTENSION WITHOUT ANY
LIMITATION AND FURTHER OBLIGATION TO COMPANY; PROVIDED HOWEVER, THAT SUCH LINE
EXTENSION SHALL NOT FALL WITHIN THE CLAIMS OF THE PATENTS.

 

(B)           IN THE EVENT THAT COMPANY, EITHER PURSUANT TO A FEASIBILITY STUDY
AGREEMENT BETWEEN COMPANY AND DISTRIBUTOR PURSUANT TO SECTION 3.4(A), OR
OTHERWISE DEVELOPS A LINE EXTENSION (INCLUDING, FOR THE AVOIDANCE OF DOUBT, ANY
LINE EXTENSION PROPOSED BY DISTRIBUTOR AND INITIALLY REJECTED BY COMPANY
PURSUANT TO SECTION 3.4(A)), COMPANY SHALL SUBMIT A DATA PACKAGE TO DISTRIBUTOR
CONTAINING (I) A DESCRIPTION OF THE LINE EXTENSION PRODUCT COMPARABLE TO THAT
CONTAINED IN SCHEDULE 1.37 FOR THE PRODUCT, (II) THREE (3) MONTHS OF ACCELERATED
AGING STABILITY DATA FOR SUCH LINE EXTENSION, AND (III) SAMPLES OF A PROTOTYPE
FORMULATION FOR SUCH LINE EXTENSION (COLLECTIVELY, A “LINE EXTENSION DATA
PACKAGE”), COMPANY SHALL PROVIDE NOTICE TO DISTRIBUTOR TOGETHER WITH SUCH LINE
EXTENSION DATA PACKAGE.

 

(C)           AT ANY TIME FROM RECEIPT OF A LINE EXTENSION DATA PACKAGE AS
DESCRIBED IN SECTION 3.4(B) AND UP TO THIRTY (30) DAYS THEREAFTER, DISTRIBUTOR
MAY EXERCISE ITS RIGHT BY

 

11

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SENDING NOTICE TO COMPANY OF ITS INTEREST IN ACQUIRING SUCH RIGHTS TO SUCH LINE
EXTENSION.  AFTER RECEIPT OF SUCH NOTICE, COMPANY AND DISTRIBUTOR SHALL
NEGOTIATE EXCLUSIVELY AND IN GOOD FAITH FOR A PERIOD OF NINETY (90) DAYS
THEREAFTER TO MUTUALLY AGREE ON THE TERMS AND CONDITIONS FOR THE DISTRIBUTION OF
SUCH LINE EXTENSION.  THE TERMS FOR LINE EXTENSIONS SHALL INCLUDE BUT NOT BE
LIMITED TO THE FOLLOWING:

 

(I)            UPFRONT MILESTONE PAYMENTS:  THERE WILL BE NO UPFRONT PAYMENTS
FOR LINE EXTENSIONS;

 

(II)           LAUNCH MILESTONE PAYMENTS:  FOR LINE EXTENSIONS, LAUNCH MILESTONE
PAYMENTS, IF ANY, WILL BE DISCUSSED AND DETERMINED PRIOR TO SIGNING OF THE
DEFINITIVE AGREEMENT;

 

(III)         CUMULATIVE NET SALES MILESTONES PAYMENTS:  FOR LINE EXTENSIONS,
CUMULATIVE NET SALES MILESTONES, IF ANY, WILL BE DISCUSSED AND DETERMINED PRIOR
TO SIGNING OF THE DEFINITIVE AGREEMENT; AND

 

(IV)          LINE EXTENSION SUPPLY PRICING:  PRICES PAYABLE BY DISTRIBUTOR TO
COMPANY FOR LINE EXTENSIONS SHALL BE FURTHER DISCUSSED AND MUTUALLY AGREED UPON
BY THE PARTIES PRIOR TO THE LAUNCH DATE FOR SUCH LINE EXTENSION.  PROMPTLY
FOLLOWING THE FILING FOR REGULATORY APPROVAL FOR ANY LINE EXTENSION, THE COMPANY
AND DISTRIBUTOR SHALL ENTER INTO GOOD FAITH DISCUSSIONS TO AGREE ON THE SUPPLY
PRICING FOR ANY SUCH LINE EXTENSION.

 

(D)           IN THE EVENT THAT THE PARTIES ARE NOT ABLE TO REACH AGREEMENT FOR
THE DISTRIBUTION RIGHTS FOR ANY LINE EXTENSION PURSUANT TO SECTION 3.4(C) WITHIN
SUCH NINETY (90) DAY PERIOD, COMPANY MAY GRANT DISTRIBUTION RIGHTS TO SUCH LINE
EXTENSION TO A THIRD PARTY; PROVIDED HOWEVER, THAT PRIOR TO GRANTING SUCH
DISTRIBUTION RIGHTS TO A THIRD PARTY, DISTRIBUTOR HAS BEEN GIVEN A FINAL OPTION
TO ACQUIRE SUCH DISTRIBUTION RIGHTS ON THE SAME TERMS OFFERED TO THE THIRD
PARTY.

 

(E)           FOR THE SAKE OF CLARITY, DISTRIBUTOR’S OPTION OF FIRST NEGOTIATION
FOR ANY DEFINITIVE AGREEMENTS FOR THE AFOREMENTIONED LINE EXTENSIONS SHALL
EXPIRE, ON A LINE EXTENSION-BY-LINE EXTENSION BASIS, IF SUCH AGREEMENTS ARE NOT
EXECUTED WITHIN ONE HUNDRED TWENTY (120) DAYS AFTER RECEIPT OF REGISTRATION FOR
SUCH LINE EXTENSION.

 

4.                                      PURCHASE OF PRODUCT

 

4.1.         MANUFACTURING OBLIGATIONS.  COMPANY SHALL MANUFACTURE, OR HAVE
MANUFACTURED (BY SUCH THIRD PARTY MANUFACTURER AS MAY BE MUTUALLY AGREED UPON
FROM TIME TO TIME BY THE PARTIES; ANY SUCH THIRD PARTY MANUFACTURER, A “CONTRACT
MANUFACTURER”), AND SELL TO DISTRIBUTOR, AND DISTRIBUTOR SHALL PURCHASE FROM
COMPANY, THOSE QUANTITIES OF PRODUCT ORDERED BY DISTRIBUTOR PURSUANT TO PURCHASE
ORDERS SUBMITTED FROM TIME TO TIME IN ACCORDANCE WITH THIS AGREEMENT.  IF
COMPANY USES A CONTRACT MANUFACTURER TO SUPPLY PRODUCT TO DISTRIBUTOR UNDER THIS
AGREEMENT, SUCH CONTRACT MANUFACTURER SHALL BE REQUIRED TO AGREE IN WRITING FOR
THE BENEFIT OF DISTRIBUTOR AS A THIRD PARTY BENEFICIARY TO BE BOUND BY THE
APPLICABLE TERMS AND CONDITIONS OF THIS AGREEMENT RELATING TO THE MANUFACTURE
AND SUPPLY OF PRODUCT, INCLUDING WITHOUT LIMITATION SECTIONS 2.3, 4, 6 AND 8. 
NO ARRANGEMENT WITH ANY CONTRACT MANUFACTURER SHALL RELIEVE COMPANY

 

12

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OF ANY OBLIGATION IT OTHERWISE WOULD HAVE UNDER THIS AGREEMENT, INCLUDING
COMPANY’S OBLIGATION TO SUPPLY PRODUCT TO DISTRIBUTOR, AND COMPANY SHALL BE
RESPONSIBLE AND LIABLE TO DISTRIBUTOR FOR ANY BREACH OF ANY SUCH OBLIGATIONS BY
COMPANY OR ANY CONTRACT MANUFACTURER.

 

4.2.         HOW SUPPLIED.  PRODUCT SUPPLIED UNDER THIS AGREEMENT SHALL BE
FINISHED, PACKAGED AND LABELLED FOR COMMERCIAL SALE AND SAMPLE SUPPLY IN THE
TERRITORY.  DISTRIBUTOR WILL PLACE PURCHASE ORDERS FOR PRODUCT WITH COMPANY AT
COMPANY’S ADDRESS ABOVE OR AT SUCH OTHER ADDRESS OR SUBSIDIARY AS COMPANY MAY
INDICATE IN WRITING.

 

4.3.         PURCHASE ORDERS.

 

(A)           ORDERS FOR PURCHASES OF PRODUCT SHALL BE SUBMITTED TO COMPANY IN
WRITING ON THE FORM OF PURCHASE ORDER ATTACHED AS SCHEDULE 4.3(A), AND SHALL NOT
BIND COMPANY UNLESS AND UNTIL CONFIRMED BY COMPANY IN WRITING, WHICH SHALL BE
DEEMED TO BE GIVEN BY COMPANY  [***] BUSINESS DAYS AFTER RECEIPT, UNLESS COMPANY
NOTIFIES DISTRIBUTOR OTHERWISE.

 

(B)           THE MINIMUM BATCH SIZE REQUIREMENTS FOR THE PRODUCT ARE AS SET OUT
IN SCHEDULE 4.3(B). DISTRIBUTOR SHALL NOT PLACE MORE THAN ONE ORDER IN ANY ONE
CALENDAR MONTH, EXCEPT WITH THE CONSENT OF COMPANY.

 

4.4.         PACKAGING OF PRODUCT.  ALL SHIPMENTS OF PRODUCT TO DISTRIBUTOR WILL
BE PACKAGED IN ACCORDANCE WITH COMPANY’S STANDARD PACKAGING PROCEDURES AND ANY
OTHER ARRANGEMENTS AGREED BETWEEN DISTRIBUTOR AND COMPANY AND SHIPPED ON
STANDARD UNITED STATES SHIPPING PALLETS.  DISTRIBUTOR WILL BE CHARGED FOR ANY
SPECIAL PRINTING, PACKAGING AND/OR SHIPPING REQUIREMENTS, PROVIDED THAT COMPANY
SHALL ADVISE DISTRIBUTOR IN ADVANCE OF INCURRING SUCH COSTS OF THE AMOUNT OF
SUCH CHARGES.

 

4.5.         TITLE AND RISK OF LOSS.  THE TITLE, RISK OF LOSS OR DAMAGE TO ANY
CONSIGNMENT OF PRODUCT SHALL PASS TO DISTRIBUTOR AT THE TIME THE PRODUCT IS
DELIVERED TO DISTRIBUTOR’S WAREHOUSE IN THE TERRITORY.

 

4.6.         CERTIFICATE OF ANALYSIS/CERTIFICATE OF COMPLIANCE.

 

(A)           COMPANY SHALL PROVIDE DISTRIBUTOR WITH A CERTIFICATE OF ANALYSIS
FOR EACH SHIPMENT OF PRODUCT DELIVERED TO DISTRIBUTOR (A COPY OF WHICH IS TO BE
FAXED THREE (3) DAYS IN ADVANCE OF SUCH SHIPMENT TO WHICH IT RELATES) CONFIRMING
THAT THE PRODUCT COMPLIES WITH THE SPECIFICATIONS TOGETHER WITH SUCH EXPLANATORY
MATERIAL AND USER INSTRUCTIONS AS ARE REQUIRED BY ANY APPLICABLE LAW OR GOOD
INDUSTRY PRACTICE.

 

(B)           COMPANY SHALL PROVIDE DISTRIBUTOR WITH A CERTIFICATE OF COMPLIANCE
FOR EACH SHIPMENT OF PRODUCT DELIVERED TO DISTRIBUTOR (A COPY OF WHICH IS TO BE
FAXED THREE (3) DAYS IN ADVANCE OF SUCH SHIPMENT TO WHICH IT RELATES) STATING
FROM A RESPONSIBLE REPRESENTATIVE OF COMPANY THAT THE PRODUCT COMPLIES WITH
APPLICABLE LAWS AND GOOD INDUSTRY PRACTICE.

 

4.7.         INSPECTION OF PRODUCT.  DISTRIBUTOR SHALL INSPECT EACH LOT OF
PRODUCT DELIVERED TO IT BY COMPANY AT DISTRIBUTOR’S FACILITY AND MAY REJECT ANY
PRODUCT WHICH IS DEFECTIVE PRODUCT.  DISTRIBUTOR SHALL ACCEPT OR REJECT EACH LOT
OF PRODUCT WITHIN [***] BUSINESS DAYS OF RECEIPT AT

 

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DISTRIBUTOR’S FACILITY.  IN THE EVENT OF REJECTION, DISTRIBUTOR SHALL INFORM
COMPANY OF ITS REASONS IN WRITING OF THE SPECIFIC BASIS WHICH THE DEFECTIVE
PRODUCT FAILS TO MEET THE ACCEPTANCE CRITERIA, AND, IF REQUESTED BY COMPANY,
DISTRIBUTOR WILL DISCUSS IN GOOD FAITH HOW TO BEST RESOLVE ANY DIFFERENCE OF
OPINION BETWEEN THEM AS TO WHETHER OR NOT SUCH PRODUCT IS IN FACT DEFECTIVE
PRODUCT.  IN THE EVENT THAT THERE IS NO DIFFERENCE OF OPINION, COMPANY WILL
REPLACE SUCH DEFECTIVE PRODUCT FREE OF COSTS AND DELIVERY CHARGES AS PROMPTLY AS
POSSIBLE.  AS COMPANY MAY DIRECT, DISTRIBUTOR WILL RETURN THE DEFECTIVE PRODUCT
TO COMPANY (OR SUCH DESIGNEE AS COMPANY MAY INSTRUCT) WITH THE FREIGHT COSTS TO
BE AT COMPANY’S EXPENSE OR HOLD OR OTHERWISE DISPOSE OF SUCH DEFECTIVE PRODUCT
IN ACCORDANCE WITH COMPANY’S INSTRUCTIONS AT COMPANY’S EXPENSE.  ANY
DISAGREEMENT REGARDING WHETHER PRODUCT IS DEEMED DEFECTIVE PRODUCT SHALL BE
RESOLVED IN ACCORDANCE WITH SECTION 6.7.

 

4.8.         COMPANY’S INABILITY TO SUPPLY PRODUCT.  COMPANY SHALL NOTIFY
DISTRIBUTOR:  (I) AS PROMPTLY AS POSSIBLE, BUT IN NO EVENT MORE THAN [***]
BUSINESS DAYS AFTER COMPANY’S RECEIPT OF AN ORDER FROM DISTRIBUTOR, OR
(II) PROMPTLY UPON BECOMING AWARE OF AN EVENT OF FORCE MAJEURE OR ANY OTHER
EVENT THAT WOULD RENDER COMPANY (EITHER ITSELF OR THROUGH A CONTRACT
MANUFACTURER) UNABLE TO SUPPLY THE QUANTITY OF PRODUCT TO DISTRIBUTOR THAT
COMPANY IS REQUIRED TO SUPPLY HEREUNDER.  IN SUCH LATTER EVENT, COMPANY SHALL
IMPLEMENT ALL REASONABLE MEASURES TO PROMPTLY REMEDY SUCH SHORTAGE.

 

(A)           IN THE EVENT: (I) COMPANY FAILS TO SHIP THE QUANTITIES OF PRODUCT
ORDERED BY DISTRIBUTOR UNDER THIS AGREEMENT; (II) PRODUCT SHIPPED DOES NOT MEET
THE RELEVANT SPECIFICATIONS; OR (III) OF ANY OTHER INABILITY TO SUPPLY; COMPANY
AND DISTRIBUTOR SHALL MEET WITHIN [***] DAYS OF THE FIRST SUCH OCCURRENCE SO
THAT THE PARTIES MAY ESTABLISH A REASONABLE RECOVERY PLAN DESIGNED TO RESOLVE
THE SITUATION AS QUICKLY AS REASONABLY POSSIBLE.

 

(B)           IN THE EVENT OF ANY INABILITY TO SUPPLY, DISTRIBUTOR MAY, IN
ADDITION TO ANY OTHER REMEDIES IT MAY HAVE AT LAW OR IN EQUITY, CANCEL, WITHOUT
CHARGE OR PENALTY, ALL OR ANY PORTION OF ANY ORDER(S) RELATING TO THE PRODUCT
DURING THE PERIOD IN WHICH SUCH INABILITY TO SUPPLY OCCURS AND CONTINUES TO
OCCUR AND OBTAIN ITS REQUIREMENTS FOR THE PRODUCT FROM A QUALIFIED BACK-UP
MANUFACTURER.  COMPANY SHALL ALLOW DISTRIBUTOR ACCESS TO THE PRODUCT
REGISTRATION FOR THE PURPOSE OF  QUALIFYING A BACK-UP MANUFACTURER.

 

4.9.         INVOICES.  COMPANY WILL INVOICE DISTRIBUTOR FOR THE COST UPON
DELIVERY OF PRODUCT TO DISTRIBUTOR OR UPON CANCELLATION OF A PURCHASE ORDER.

 

4.10.       SHIPMENT DATES.  A PURCHASE ORDER FROM DISTRIBUTOR SHALL BE
NECESSARY TO INITIATE ANY SHIPMENT.  DISTRIBUTOR WILL SPECIFY DESIRED PRODUCT
SHIPMENT DATES IN THE PURCHASE ORDER.  THESE SHIPMENT DATES MAY NOT BE SCHEDULED
PRIOR TO [***] DAYS AFTER THE DATE THE PURCHASE ORDER IS RECEIVED AND
ACKNOWLEDGED IN WRITING BY COMPANY, UNLESS BY MUTUAL CONSENT OF THE PARTIES.  IN
THE CASE OF THE FIRST ORDER OR IF THERE IS ANY CHANGE IN THE ART-WORK, SHIPMENT
DATES MAY NOT BE SCHEDULED PRIOR TO ONE HUNDRED AND [***] DAYS AFTER THE
COMPLETE, OFFICIALLY SIGNED AND APPROVED RELEVANT ART-WORK IS RECEIVED AND
ACCEPTED IN WRITING BY COMPANY (AND, IF APPLICABLE, PROVIDED TO CONTRACT
MANUFACTURER).  PURCHASE ORDERS FROM DISTRIBUTOR WILL BE NON-CANCELLABLE, EXCEPT
WITH THE CONSENT OF COMPANY, WHICH THE COMPANY WILL NOT UNREASONABLY WITHHOLD,
OR EXCEPT AS PROVIDED IN SECTIONS 4.8 OR 4.11.

 

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4.11.       CANCELLATION OF PURCHASE ORDERS.  DISTRIBUTOR MAY CANCEL ANY
PURCHASE ORDER (IN WHOLE OR IN PART) AT ANY TIME PRIOR TO [***] DAYS BEFORE THE
SCHEDULED DELIVERY DATE FOR ANY QUANTITY OF PRODUCT THAT HAS BEGUN THE
MANUFACTURING PURSUANT TO SUCH PURCHASE ORDER, PROVIDED DISTRIBUTOR PAYS ALL
COSTS INCURRED IN CONNECTION WITH THE PRODUCT SUBJECT TO SUCH CANCELLED PURCHASE
ORDER.  SHOULD DISTRIBUTOR WISH TO CANCEL A PURCHASE ORDER AS DESCRIBED IN THE
PRECEDING SENTENCE, COMPANY AGREES TO PRESENT DISTRIBUTOR WITH ALL COSTS
ASSOCIATED WITH SUCH PURCHASE ORDER BEFORE DISTRIBUTOR DECIDES WHETHER OR NOT TO
CANCEL THE PURCHASE ORDER.  IF THE MANUFACTURING OF A PRODUCT PURSUANT TO A
PURCHASE ORDER HAS NOT COMMENCED, DISTRIBUTOR MAY CANCEL THE PURCHASE ORDER
PROVIDED THAT DISTRIBUTOR SHALL REIMBURSE COMPANY FOR THE COST OF ALL MATERIAL
PURCHASED BY COMPANY TO FILL A CANCELLED PURCHASE ORDER (OR PART THEREOF) AND
WHICH CANNOT (IN COMPANY’S REASONABLE OPINION) WITHIN A REASONABLE PERIOD OF
TIME OTHERWISE BE USED IN COMPANY’S OPERATIONS, TOGETHER WITH ANY EXPENSES
(INCLUDING CONTRACTUAL OBLIGATIONS TO THIRD PARTIES) TO WHICH COMPANY HAS
SPECIFICALLY COMMITTED FOR THE MANUFACTURE OF THE PRODUCT AND WHICH CANNOT BE
REASONABLY TRANSFERRED TO ANY OF COMPANY’S OTHER MANUFACTURING OPERATIONS,
INCLUDING BUT NOT LIMITED TO, STORAGE AND/OR DISPOSAL OF MATERIALS, FOR THE
PURPOSE OF FULFILLING THE ORDER.

 

4.12.       FORECASTS.  DISTRIBUTOR WILL ISSUE TO COMPANY [***] DAYS IN ADVANCE
OF THE LAUNCH DATE WITH RESPECT TO THE PRODUCT, AND THEREAFTER ON A QUARTERLY
BASIS BY THE FIRST DAY OF EACH QUARTER, A [***] ROLLING FORECAST OF ITS MONTHLY
REQUIREMENTS OF THE PRODUCT WHICH IT EXPECTS TO ORDER, SO THAT COMPANY MAY
INCORPORATE SAID FORECASTS INTO ITS PLANNING SYSTEM BUT THE DOCUMENT WHICH
INITIATES PRODUCTION ACTIVITIES IS THE PURCHASE ORDER.  COMPANY WILL GUARANTEE
DELIVERY DATES FOR PRODUCT QUANTITIES THAT VARY BY UP TO [***] PERCENT ([***]%)
ABOVE OR BELOW THE LAST QUARTER’S ROLLING FORECAST FOR THAT MONTH ISSUED PRIOR
TO THE PURCHASE ORDER PLACED BY DISTRIBUTOR.  VARIATION ABOVE OR BELOW [***]
PERCENT ([***]%) SHALL BE DISCUSSED BETWEEN COMPANY AND DISTRIBUTOR AND COMPANY
WILL USE ALL REASONABLE EFFORTS TO MAINTAIN THE DELIVERY DATES REQUESTED BY
DISTRIBUTOR.  DISTRIBUTOR SHALL KEEP THROUGHOUT THE TERM OF THIS AGREEMENT A
STOCK OF PRODUCT ADEQUATE TO MEET MARKET DEMAND AND TO COVER POSSIBLE SHORTAGES
IN THE SUPPLIES OF PRODUCT, SUCH STOCK TO CORRESPOND TO APPROXIMATELY [***]
MONTHS’ AVERAGE SALES.

 

4.13.       SHIPPING TERMS.  PRODUCT SUPPLIED UNDER THIS AGREEMENT IS SOLD [***]
DISTRIBUTOR’S WAREHOUSE, UNITED STATES, AS DEFINED IN THE INTERNATIONAL CHAMBER
OF COMMERCE’S INCOTERMS 2000.  COMPANY SHALL BE RESPONSIBLE FOR ALL SHIPPING,
FREIGHT AND INSURANCE COSTS ASSOCIATED WITH SHIPPING THE PRODUCT FROM THE
COMPANY (OR ANY CONTRACT MANUFACTURER) TO THE DISTRIBUTOR’S DESIGNATED
WAREHOUSE, WHICH COSTS SHALL BE INCLUDED WITH COSTS.

 

5.                                      PRICE-PAYMENT TERMS

 

5.1.         PRICES, TAXES AND DUTIES.  SALES BY COMPANY TO DISTRIBUTOR SHALL BE
MADE AT THE PURCHASE PRICES SHOWN IN SCHEDULE 3.2(A), SUBJECT TO SECTION 3.3. 
COMPANY SHALL BE SOLELY RESPONSIBLE FOR ALL CUSTOMS CLEARANCE OF, AND
IMPORT/EXPORT REGULATIONS FOR THE PRODUCT AND IT SHALL BEAR AND PAY ALL TAXES,
DUTIES, LEVIES AND OTHER CHARGES IMPOSED BY REASON OF THE PURCHASE, IMPORT AND
RESALE OF PRODUCT, AND ALL COSTS AND EXPENSES OF COMPANY IN CONNECTION WITH THE
FOREGOING SHALL BE INCLUDED WITHIN COSTS.

 

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5.2.         PAYMENT FOR PRODUCT.

 

(A)           DISTRIBUTOR SHALL PAY COMPANY FOR INVOICES SUBMITTED PURSUANT TO
SECTION 4.9 WITHIN [***] DAYS OF THE DATE OF INVOICE, AND PAYMENT SHALL BE MADE
BY MEANS OF ELECTRONIC TRANSFER TO SUCH ACCOUNT AS COMPANY MAY DIRECT.

 

(B)           BEGINNING WITH THE CALENDAR QUARTER IN WHICH THE LAUNCH DATE FOR
THE PRODUCT OCCURS, AND FOR EACH CALENDAR QUARTER THEREAFTER, DISTRIBUTOR SHALL
PAY COMPANY THE SUPPLY PRICE FOR THE PRODUCT, AS DETERMINED PURSUANT TO SCHEDULE
3.2(A), LESS THE AMOUNT PREVIOUSLY PAID DURING SUCH CALENDAR QUARTER PURSUANT TO
SECTION 5.2(A), WITHIN [***] DAYS FOLLOWING THE END OF EACH SUCH CALENDAR
QUARTER.  EACH SUCH PAYMENT SHALL BE ACCOMPANIED BY A REPORT, SUMMARIZING THE
TOTAL GROSS SALES OF THE PRODUCT, ON A PRODUCT-BY-PRODUCT AND COUNTRY-BY-COUNTRY
BASIS, NET SALES FOR EACH (INCLUDING AN ITEMIZATION OF THE DEDUCTIONS APPLIED TO
SUCH GROSS SALES TO DERIVE SUCH NET SALES) DURING THE RELEVANT CALENDAR QUARTER,
THE CALCULATION OF THE TOTAL SUPPLY PRICE DUE THEREON AND ALL CREDITS APPLIED TO
SUCH AMOUNTS, INCLUDING THE COST OF THE PRODUCT BEING APPLIED AS A CREDIT
AGAINST ROYALTIES.

 

5.3.         LATE PAYMENTS.  IF DISTRIBUTOR FAILS TO PAY ON THE DUE DATE ANY
AMOUNT WHICH IS PAYABLE TO COMPANY UNDER THIS AGREEMENT THEN, WITHOUT PREJUDICE
TO SECTION 10 OF THIS AGREEMENT:

 

(A)           THAT AMOUNT SHALL BEAR INTEREST FROM THE DUE DATE UNTIL PAYMENT IS
MADE IN FULL AT THE PRIME RATE, AS PUBLISHED IN THE WALL STREET JOURNAL, EASTERN
EDITION, PLUS [***] PERCENT ([***]%), ON THE DUE DATE OF SUCH PAYMENT, OR, IF
LESS, AT THE MAXIMUM INTEREST RATE PERMITTED BY LAW; AND

 

(B)           IF PAYMENT IS MORE THAN THIRTY (30) DAYS PAST DUE, COMPANY SHALL
BE ENTITLED TO SUSPEND DELIVERIES OF PRODUCT TO DISTRIBUTOR UNTIL THE
OUTSTANDING AMOUNT HAS BEEN RECEIVED BY COMPANY.

 

6.                                      OBLIGATIONS OF COMPANY

 

6.1.         DISTRIBUTOR’S AUDIT RIGHTS.  COMPANY AGREES TO PERMIT UP TO THREE
(3) OF DISTRIBUTOR’S REPRESENTATIVES, UPON REASONABLE NOTICE, TO INSPECT THOSE
AREAS OF THE COMPANY’S FACILITIES WHERE THE PRODUCT IS MANUFACTURED AND TESTED,
FOR THE PURPOSE OF VERIFYING COMPLIANCE WITH APPLICABLE LAWS AS WELL AS WITH
THIS AGREEMENT.

 

6.2.         RAW MATERIALS.  COMPANY SHALL SOURCE FOR ITSELF ALL MATERIALS
NECESSARY IN CONNECTION WITH THE MANUFACTURING OF THE PRODUCT.  COMPANY SHALL BE
SOLELY RESPONSIBLE FOR ENSURING THAT ALL SUCH MATERIALS ARE OF SUFFICIENT
QUALITY AND MEET OTHER RELEVANT STANDARDS IN ORDER FOR IT TO BE UTILIZED BY
COMPANY IN THE MANUFACTURE OF THE PRODUCT.  THE COST OF ALL SUCH ANALYSES AND
EVALUATIONS SHALL BE BORNE BY COMPANY AND SHALL BE INCLUDED WITHIN COSTS. 
COMPANY AGREES TO MAINTAIN AND, IF NECESSARY, MAKE AVAILABLE RECORDS OF ALL SUCH
ANALYSES AND EVALUATIONS.

 

6.3.         PROCESSING AND TESTING.  COMPANY SHALL BE RESPONSIBLE FOR ALL
PROCESS, ANALYTICAL METHOD, EQUIPMENT AND CLEANING VALIDATION AND SHALL TAKE ALL
STEPS NECESSARY TO PASS ANY

 

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APPLICABLE GOVERNMENT INSPECTION BY THE FDA.  ALL MANUFACTURING, PACKAGING,
CLEANING AND ANALYTICAL METHODS AND PROCESSES MUST BE VALIDATED BY COMPANY. 
VALIDATION PROTOCOL AND REPORTS ARE TO BE PROVIDED TO THE DISTRIBUTOR UPON
REQUEST.  FOLLOWING VALIDATION OF A PROCESS AND OR PROCESS CHANGE, COMPANY SHALL
PROMPTLY NOTIFY DISTRIBUTOR OF SUCH VALIDATION AND, UPON REQUEST, DELIVER A COPY
OF THE VALIDATION REPORT TO THE DISTRIBUTOR AND THE ASSOCIATED STABILITY DATA,
IF APPLICABLE.

 

6.4.         COMPLIANCE WITH PRODUCT SPECIFICATIONS.  COMPANY SHALL BE
RESPONSIBLE FOR ASSURING THAT ALL PRODUCT MANUFACTURED, SHIPPED AND DELIVERED BY
COMPANY TO DISTRIBUTOR UNDER THIS AGREEMENT CONFORMS TO THE RELEVANT
SPECIFICATIONS FOR THE PRODUCT, SHALL BE PACKAGED AND LABELLED IN ACCORDANCE
WITH THIS AGREEMENT AND THE THEN-CURRENT PACKAGING AND LABELLING SPECIFICATIONS
AND IS IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL REQUIREMENTS OF
APPLICABLE LAWS, RULES AND REGULATIONS, ALL OTHER REQUIREMENTS OF ANY APPLICABLE
CGMP OR THE PRODUCT REGISTRATION.  DISTRIBUTOR SHALL SUPPLY COMPANY WITH
DISTRIBUTOR’S LABELLING STANDARDS FOR THE PRODUCT (INCLUDING THE NDC
NUMBER(S) AND BAR CODES) BEARING DISTRIBUTOR’S CORPORATE NAME AND TRADE DRESS. 
COMPANY SHALL PRINT LABELS, TUBES AND OTHER PRINTED MATERIAL TO BE INCLUDED AS
PART OF THE PRODUCT AND THE COST OF DOING SO SHALL BE REFLECTED IN THE PRICE
CHARGED BY COMPANY FOR THE PRODUCT PURSUANT TO SECTION 3.2.  PRODUCT PACKAGING
SHALL INCLUDE, TO THE EXTENT PERMITTED BY APPLICABLE LAWS, A SMALL GRAPIC/TEXT
MARK FOR “CERAGENIX PHARMACEUTICALS” WHICH SHALL BE REASONABLY ACCEPTABLE TO
COMPANY.

 

6.5.         MANUFACTURING FACILITY GMP COMPLIANCE.  COMPANY SHALL (AND SHALL
CAUSE ANY CONTRACT MANUFACTURER TO) MAINTAIN ALL EQUIPMENT AND MANUFACTURING
FACILITIES USED TO MANUFACTURE PRODUCT IN GOOD WORKING CONDITION AND IN
COMPLIANCE WITH CGMP.

 

6.6.         PRODUCT RELEASE TESTING.  COMPANY SHALL OBTAIN REPRESENTATIVE
SAMPLES FROM EACH BATCH OF PRODUCT PRODUCED AND SHALL ASSAY AND ANALYZE SUCH
SAMPLES IN STRICT ACCORDANCE WITH THE RELEVANT SPECIFICATIONS AND STANDARD
OPERATING PROCEDURES FOR THE PRODUCT.   COMPANY SHALL NOT SHIP ANY PRODUCT
HEREUNDER WHICH, AS INDICATED BY A SAMPLE ASSAY OR ANALYSIS, AS SET FORTH ABOVE,
DOES NOT CONFORM TO THE RELEVANT SPECIFICATIONS FOR THE PRODUCT.  ANY PRODUCT OR
THE MANUFACTURE THEREOF THAT DOES NOT CONFORM TO THE RELEVANT SPECIFICATIONS FOR
THE PRODUCT SHALL BE DISPOSED OF BY COMPANY, AT COMPANY’S COST, IN ACCORDANCE
WITH APPLICABLE LAWS.

 

6.7.         STABILITY TESTING.  COMPANY SHALL, AT ITS OWN COST, PROVIDE ALL
ONGOING STABILITY SUPPORT RELATING TO THE PRODUCT IN ACCORDANCE WITH FDA
REQUIREMENTS, INCLUDING, WITHOUT LIMITATION, PREPARATION AND KEEPING OF
DOCUMENTATION, RECORDS AND REPORTS RELATING THERETO.

 

(A)           IF COMPANY AND DISTRIBUTOR DISAGREE AS TO WHETHER ANY SAMPLE OF
PRODUCT MEETS THE RELEVANT SPECIFICATIONS FOR THE PRODUCT, THE MATTER WILL BE
SUBMITTED TO AN INDEPENDENT TESTING LABORATORY, ACCEPTABLE TO BOTH PARTIES, FOR
ANALYSIS, WHICH ANALYSIS SHALL BE PERFORMED IN COMPLIANCE WITH APPLICABLE LAWS
AND THE SPECIFICATIONS AND METHODOLOGIES SET FORTH IN OR IDENTIFIED BY THE
REGISTRATION FOR THE PRODUCT, TO DETERMINE WHETHER THE PRODUCT CONFORMED OR DID
NOT CONFORM TO THE SPECIFICATIONS AND THE TEST RESULTS OBTAINED FROM SUCH
LABORATORY SHALL BE FINAL AND BINDING UPON BOTH PARTIES.  THE FEES AND EXPENSES
OF SUCH TESTING SHALL BE BORNE BY THE PARTY ULTIMATELY DETERMINED TO HAVE
INCORRECTLY JUDGED WHETHER THE PRODUCT MET THE RELEVANT SPECIFICATIONS.

 

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(B)           DISTRIBUTOR MAY RETURN ANY PRODUCT TO COMPANY FOR FULL CREDIT IN
ACCORDANCE WITH SECTION 4.7 IF SUCH PRODUCT IS NOT MANUFACTURED IN ACCORDANCE
WITH CGMP OR FAILS TO MEET THE RELEVANT SPECIFICATIONS FOR THE PRODUCT DUE TO
THE FAULT OF COMPANY OR ITS CONTRACT MANUFACTURER AND COMPANY SHALL PAY ALL
DELIVERY AND SHIPPING AND INSURANCE COSTS IN SUCH CIRCUMSTANCES.  CREDIT SHALL
BE LIMITED TO PRICE PAID BY DISTRIBUTOR PURSUANT TO SECTIONS 3.2 AND DELIVERY
AND SHIPPING AND INSURANCE COSTS; IN EACH CASE, WITH RESPECT TO THE UNITS OF THE
PRODUCT IN QUESTION.  SUCH CREDIT SHALL BE APPLIED BY THE PARTIES AT THE
EARLIEST POSSIBLE OPPORTUNITY TO SET OFF AGAINST ANY AMOUNT THAT OTHERWISE IS
DUE OR WOULD HAVE BEEN DUE FROM DISTRIBUTOR TO COMPANY.  IN THE EVENT THE FULL
AMOUNT OF SUCH CREDIT IS NOT APPLIED AND SET OFF IN SUCH MANNER WITHIN THREE
(3) MONTHS OF THE DISCOVERY OF THE PRODUCT FAILURE GIVING RISE TO SUCH CREDIT,
COMPANY SHALL REMIT THE REMAINING AMOUNT OF SUCH CREDIT TO DISTRIBUTOR IN
IMMEDIATELY PAYABLE FUNDS.

 

6.8.         INSPECTION BY REGULATORY AUTHORITIES.  IN THE EVENT COMPANY
RECEIVES ANY NOTIFICATION OF ANY INSPECTION OF ANY MANUFACTURING FACILITY WHERE
THE PRODUCT IS MANUFACTURED, TESTED OR STORED BY ANY GOVERNMENTAL AUTHORITY
(INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY FDA FORM 483
OBSERVATIONS, WARNING LETTERS OR SIMILAR CORRESPONDENCES TO AND RECEIVED FROM
THE FDA OR ANY GOVERNMENTAL AUTHORITY HAVING JURISDICTION OVER THE PRODUCT OR
ANY MANUFACTURING FACILITY), COMPANY SHALL:

 

(A)           GIVE DISTRIBUTOR PROMPT NOTICE OF SUCH INSPECTIONS;

 

(B)           PROMPTLY PROVIDE DISTRIBUTOR WITH COPIES OF ALL SUCH NOTICES AND
ALL RELATED DOCUMENTS AND CORRESPONDENCE;

 

(C)           PROMPTLY FURNISH DISTRIBUTOR WITH COPIES OF ALL PRODUCT RELATED
RESPONSES RELATING TO SUCH INSPECTIONS.

 

(D)           COMPANY SHALL ADVISE DISTRIBUTOR WITHIN THREE (3) DAYS IF AN
AUTHORIZED AGENT OF THE FDA OR OTHER GOVERNMENTAL AGENCY VISITS MANUFACTURING
FACILITY UTILIZED FOR THE MANUFACTURE OF THE PRODUCT AND REQUESTS OR REQUIRES
INFORMATION OR CHANGES WHICH DIRECTLY PERTAIN TO THE PRODUCT.  DISTRIBUTOR SHALL
HAVE THE RIGHT TO HAVE A REPRESENTATIVE PRESENT ONLY DURING THE TIME OF ANY SUCH
INSPECTION OF THE PRODUCT AND SHALL BE PROVIDED WITH COPIES OF ALL
CORRESPONDENCE WITH THE FDA OR OTHER GOVERNMENTAL AGENCY RELATING SPECIFICALLY
TO THE PRODUCT.

 

6.9.         PRODUCT COMPLAINTS.  COMPANY SHALL BE RESPONSIBLE FOR PERFORMING
ALL PRODUCT COMPLAINT INVESTIGATIONS AND SHALL PREPARE AND MAINTAIN A DATABASE
CONTAINING INVESTIGATIONAL FINDINGS OF INQUIRIES FROM CONSUMERS, PHYSICIANS AND
CUSTOMERS RELATED TO THE PRODUCT.  COMPANY SHALL BE RESPONSIBLE FOR TESTING AND
INVESTIGATION OF COMPLAINTS ON THE PRODUCT PER THE DISTRIBUTOR’S REQUEST WITHIN
[***] DAYS.  FOR PURPOSES OF CLARITY, COMPANY SHALL BE RESPONSIBLE FOR
INVESTIGATING ANY COMPLAINT OF PHYSICAL DAMAGE TO THE PRODUCT ARISING PRIOR TO
DISTRIBUTOR’S ACCEPTANCE OF THE PRODUCT, INCLUDING THOSE RECOGNIZED ONLY UPON
SALE TO A THIRD PARTY.  COMPANY SHALL NOT BE RESPONSIBLE FOR PERFORMING PRODUCT
COMPLAINT INVESTIGATIONS FOR COMPLAINTS ASSOCIATED WITH PHYSICAL DAMAGE TO THE
PRODUCT WHICH IS CLEARLY ATTRIBUTABLE TO DISTRIBUTOR’S SHIPPING AND HANDLING OF
THE PRODUCT.

 

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6.10.      Product Changes.

 

(A)             THE COMPANY SHALL NOTIFY DISTRIBUTOR OF ANY PROPOSED CHANGES IN
MANUFACTURING, PACKAGING, TESTING, STORAGE OR SHIPPING OF THE PRODUCT AND SHALL
NOT IMPLEMENT ANY SUCH CHANGES WITHOUT DISTRIBUTOR’S PRIOR WRITTEN APPROVAL,
WHICH APPROVAL MAY BE WITHHELD IN DISTRIBUTOR’S SOLE AND ABSOLUTE DISCRETION IF
ANY SUCH CHANGE WOULD RESULT IN A MATERIAL CHANGE TO THE REGISTRATION OR PRODUCT
PERFORMANCE AND/OR CHARACTERISTICS, AS DEFINED IN THE SPECIFICATIONS FOR THE
PRODUCT. THE COMPANY SHALL ALSO INFORM THE DISTRIBUTOR IN ADVANCE OF ANY PLANNED
CHANGES IN PROCESSES, FACILITIES OR EQUIPMENT THAT MAY IMPACT THE PRODUCT AND
SHALL NOT IMPLEMENT FORMULATION CHANGES WITHOUT DISTRIBUTOR’S PRIOR WRITTEN
APPROVAL (WHICH APPROVAL MAY BE WITHHELD IN DISTRIBUTOR’S REASONABLE
DISCRETION).

 

(B)             THE DISTRIBUTOR SHALL FROM TIME TO TIME HAVE THE RIGHT TO
PROPOSE CHANGES TO THE PRODUCTS.  IF DISTRIBUTOR AT ANY TIME REQUESTS A CHANGE
TO THE PRODUCT AND COMPANY AGREES SUCH CHANGE IS FEASIBLE WITH REGARD TO THE
PRODUCT’S MANUFACTURING PROCESS, SUCH CHANGE SHALL BE INCORPORATED WITHIN THE
MASTER BATCH RECORD AND/OR SPECIFICATIONS FOR THE PRODUCT IN THE FORM OF A
WRITTEN REQUEST REVIEWED AND AGREED UPON BY BOTH COMPANY  AND DISTRIBUTOR.

 

(C)             IN THE EVENT A CHANGE TO THE PRODUCT IS REQUIRED BY A REGULATORY
AUTHORITY WITH JURISDICTION OF THE PRODUCT, THE DISTRIBUTOR AND COMPANY AGREE
THAT ANY CHANGES REQUIRED BY SUCH REGULATORY AUTHORITY, SHALL BE INCORPORATED
INTO THE PRODUCT SPECIFICATIONS AS EVIDENCED BY THE WRITTEN APPROVAL OF
DISTRIBUTOR PRIOR TO SUCH INCORPORATION.  AT THE TIME OF SUCH INCORPORATION,
SUCH CHANGES SHALL BECOME PART OF THE SPECIFICATIONS.

 

6.11.      Registrations.  Company shall, at its sole cost and expense (which
shall not be included in the Cost):

 

(A)             BE RESPONSIBLE FOR MAINTAINING THE 510(K) TECHNICAL DOSSIER FOR
THE PRODUCT AND FOR FILING, REGISTRATION AND MAINTENANCE OF ALL OTHER REGULATORY
AUTHORIZATIONS IN THE TERRITORY IN RESPECT OF ITS ACTIVITIES RELATING TO THE
PRODUCT;

 

(B)             BE RESPONSIBLE FOR DETERMINING WHETHER OR NOT TO INITIATE
REGISTRATION VARIATION PROCEDURES AND FOR MAINTAINING ADEQUATE CONTROL OVER THE
QUALITY COMMITMENTS FOR THE MARKETING AUTHORIZATION MADE TO THE REGULATORY
AUTHORITIES FOR PRODUCT; AND

 

(C)             BE RESPONSIBLE FOR THE TEXT AND REGULATORY COMPLIANCE OF ALL
IMMEDIATE AND SECONDARY PRODUCT LABELING (INCLUDING PACKAGE INSERTS) AND SHALL
PROVIDE DISTRIBUTOR COPIES OF ALL REGULATORY APPROVALS RELATED TO THE PRODUCT. 
FOR PURPOSES OF CLARITY, IMMEDIATE AND SECONDARY PRODUCT LABELING SHALL NOT
INCLUDE ANY PROMOTIONAL LABELING FOR THE PRODUCT DEVELOPED BY DISTRIBUTOR.

 

6.12.      Quality System and Design Control Requirements.  The Parties agree to
enter into a Quality System and Design Control Agreement at least sixty days
(60) before the Launch Date of the Product which sets forth (a) the roles and
responsibilities of Company and Distributor with respect to quality system
regulations for the Product as required under Applicable Laws, and (b) how the
Parties’ shall interact with each other in connection with same (“Quality System
and Design Control Agreement”).  The Parties have agreed to basic terms

 

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FOR THE QUALITY SYSTEM AND DESIGN CONTROL AGREEMENT WHICH SHALL INCLUDE, BUT NOT
BE LIMITED TO, THE OUTLINE PROVIDED IN SCHEDULE 6.12.  IN THE EVENT A CONFLICT
ARISES BETWEEN ANY TERM IN THIS AGREEMENT AND A TERM IN THE QUALITY SYSTEM AND
DESIGN CONTROL AGREEMENT, THE TERM CONTAINED IN THIS AGREEMENT SHALL PREVAIL.

 

6.13.       NON-COMPETE.  DURING THE TERM, COMPANY SHALL NOT DEVELOP, LICENSE,
MANUFACTURE, REGISTER, SELL, PROMOTE OR DISTRIBUTE IN THE TERRITORY, OR CAUSE OR
PERMIT TO BE DEVELOPED, LICENSED, MANUFACTURED, REGISTERED, SOLD, PROMOTED OR
DISTRIBUTED IN THE TERRITORY, WHETHER DIRECTLY OR INDIRECTLY, ANY COMPETITIVE
PRODUCT; PROVIDED HOWEVER, THAT, SUBJECT TO DISTRIBUTOR’S RIGHTS WITH RESPECT TO
THE OPTION PRODUCT SET FORTH IN SECTION 2.7(B), COMPANY SHALL HAVE THE RIGHT TO
MANUFACTURE, REGISTER, SELL, PROMOTE AND DISTRIBUTE THE OPTION PRODUCT IN THE
TERRITORY DURING THE TERM.

 

6.14.       PROOF OF CONCEPT STUDY.  COMPANY AGREES TO DILIGENTLY CONTINUE
CONDUCTING ITS ONGOING PROOF OF CONCEPT STUDY THAT COMPARES THE PRODUCT TO
ELIDEL® UNTIL COMPLETION, AT COMPANY’S SOLE COST AND EXPENSE AND SHALL PROVIDE
DISTRIBUTOR WITH THE RESULTS OF SUCH STUDY WITHIN A REASONABLE TIME AFTER THE
STUDY’S COMPLETION, BUT NO LATER THAN SIXTY (60) DAYS AFTER THE LAST PATIENT’S
VISIT, WITH A FINAL STUDY REPORT TO BE PROVIDED WITHIN ONE HUNDRED AND TWENTY
(120) DAYS OF THE LAST PATIENT’S VISIT.

 

6.15.       ADDITIONAL STUDIES.  AS MAY BE AGREED UPON BY THE PARTIES FROM TIME
TO TIME, THE COMPANY SHALL CONDUCT ADDITIONAL STUDIES DESIGNED TO SUPPORT THE
PRODUCT WITH FUNDING FOR SUCH ADDITIONAL STUDIES TO BE AGREED UPON BY THE
PARTIES.

 

6.16.       OTHER OBLIGATIONS OF COMPANY.

 

(A)             WITHIN [***] DAYS OF THE EFFECTIVE DATE, COMPANY AGREES TO
DEVELOP VALIDATED ANALYTICAL METHOD(S) TO CHARACTERIZE THE PRODUCT, FOR ITS
CHEMICAL COMPOSITION, AT ROOM AND ACCELERATED TEMPERATURE CONDITIONS

 

(B)             ONLY AT DISTRIBUTOR’S SPECIFIC REQUEST, AND IN THAT CASE WITHIN
[***] DAYS OR SUCH OTHER TIME FRAME AGREED UPON BY THE PARTIES, COMPANY AGREES
TO CONDUCT APPROPRIATE STUDIES COMPARING THE SAFETY AND EFFICACY OF THE CURRENT
PRODUCT FORMULATION AGAINST THE PRODUCT FORMULATION USED IN THE CLINICAL STUDY
COMPARING THE PRODUCT TO [***].

 

7.                                      OBLIGATIONS OF DISTRIBUTOR

 

7.1.         COMMERCIALIZATION OF THE PRODUCT.  DISTRIBUTOR SHALL USE
COMMERCIALLY REASONABLE EFFORTS, COMPARABLE TO THOSE A SIMILARLY SITUATED
COMPANY WOULD USE FOR A PRODUCT OF COMPARABLE COMMERCIAL OPPORTUNITY (WITHOUT
REFERENCE TO ANY COMPETITIVE PRODUCTS OF DISTRIBUTOR), TO (1) CAUSE THE LAUNCH
DATE OF THE PRODUCT TO OCCUR WITHIN [***] OF THE EFFECTIVE DATE; PROVIDED THAT
THE COMPANY CAN DELIVER LAUNCH QUANTITIES OF COMMERCIALLY VIABLE PRODUCT TO
DISTRIBUTOR WITHIN SUCH TIME PERIOD PURSUANT TO ORDERS PLACED BY DISTRIBUTOR;
AND (2) SELL AND DISTRIBUTE THE PRODUCT IN THE TERRITORY.  DISTRIBUTOR AGREES TO
[***] COMMENCING ON THE LAUNCH DATE FOR THE PRODUCT AND SHALL USE COMMERCIALLY
REASONABLE EFFORTS TO [***] DURING THE FIRST CONTRACT YEAR.

 

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7.2.         OTHER OBLIGATIONS OF THE DISTRIBUTOR.

 

DISTRIBUTOR AGREES:

 

(A)              TO ENSURE THAT THE TERRITORY IS COVERED BY ADEQUATE AND
REASONABLE SALES ACTIVITIES, COMPARABLE TO THOSE DISTRIBUTOR WOULD USE FOR A
PRODUCT OF COMPARABLE COMMERCIAL OPPORTUNITY, INCLUDING SAMPLING, ADVERTISING,
DISTRIBUTION OF TECHNICAL AND SALES MATTER, PRODUCT PERFORMANCE DEMONSTRATIONS
AND OTHER MEASURES FOR PROMOTING THE SALE OF PRODUCT, AND TO USE ITS
COMMERCIALLY REASONABLE EFFORTS, COMPARABLE TO THOSE DISTRIBUTOR WOULD USE FOR A
PRODUCT OF COMPARABLE COMMERCIAL OPPORTUNITY;

 

(B)              TO ENSURE THAT ANY PRODUCT IS SOLD WITH THE NAME OF THE COMPANY
ON THE PRODUCT’S PACKAGING AS THE ENTITY FOR WHICH THE PRODUCT IS MANUFACTURED,
AS REQUIRED BY LAW;

 

(C)              TO MAKE CLEAR, IN ALL DEALINGS WITH TRADE CUSTOMERS AND
PROSPECTIVE TRADE CUSTOMERS THAT IT IS ACTING AS DISTRIBUTOR OF THE PRODUCT IN
THE TERRITORY AND NOT AS AGENT OF COMPANY;

 

(D)              THAT ITS STORAGE, DISTRIBUTION, PROMOTION, MARKETING AND SALE
OF PRODUCT IN THE TERRITORY SHALL FULLY COMPLY WITH ALL APPLICABLE LAWS AT ANY
TIME BEING IN FORCE AND BE FULLY CONSISTENT WITH THE CONDITIONS AND REQUIREMENTS
OF THE RELEVANT REGISTRATION FOR SUCH PRODUCT AND DISTRIBUTOR SHALL HOLD COMPANY
HARMLESS FROM ANY VIOLATION THEREOF;

 

(E)              TO KEEP COMPANY FULLY AND TIMELY INFORMED OF THE PRICE AND
PRICE STRUCTURE OF PRODUCT IN THE TERRITORY AND SHALL PROMPTLY NOTIFY COMPANY OF
ANY CHANGE THEREOF (PROVIDED ALWAYS THAT DISTRIBUTOR SHALL BE ENTITLED TO SELL
PRODUCTS AT SUCH PRICES AS IT SEES FIT) AND SHALL KEEP TRUE ACCOUNTS AND RECORDS
AS DESCRIBED IN SECTION 5.2(B) (“RECORDS”) WHICH ENABLE VERIFICATION OF THE
AMOUNT OF THE PAYMENTS DUE TO COMPANY UNDER SECTIONS 3.1(C) AND 3.2.  UPON
REASONABLE, WRITTEN NOTICE, DISTRIBUTOR WILL ALLOW COMPANY’S INDEPENDENT THIRD
PARTY AUDITING FIRM, UNDER APPROPRIATE TERMS OF CONFIDENTIALITY, ONE TIME EACH
CONTRACT YEAR, TO HAVE ACCESS TO ITS RECORDS DURING NORMAL BUSINESS HOURS, TO
CONDUCT AN AUDIT TO VERIFY THE ACCURACY OF PAYMENTS MADE UNDER SECTIONS
3.1(C) AND 3.2.  IF THE AUDIT INDICATES AN UNDERPAYMENT TO COMPANY OF MORE THAN
[***] PERCENT ([***]%) IN SUCH CONTRACT YEAR, THE COSTS OF THE AUDIT SHALL BE
REIMBURSED TO COMPANY BY DISTRIBUTOR.  THE COMPANY AND DISTRIBUTOR SHALL
PROMPTLY MAKE SUCH BALANCING PAYMENTS AS ARE REVEALED TO BE APPROPRIATE BY THE
AUDIT TOGETHER (IN THE EVENT OF UNDERPAYMENT BY DISTRIBUTOR) WITH INTEREST
CALCULATED PURSUANT TO SECTION 5.3(A);

 

(F)               AT ITS OWN COST AND AT ITS SOLE DISCRETION, TO CREATE AND
SELECT THE ART-WORK, PROPOSED TEXT AND ADVERTISING AND PROMOTIONAL MATERIALS TO
BE USED IN CONNECTION WITH THE PRODUCT.  ALL SUCH ART-WORK, TEXT AND ADVERTISING
AND PROMOTIONAL MATERIALS SHALL BE SOLE PROPERTY OF DISTRIBUTOR.

 

7.3.        NON-COMPETE.  DURING THE TERM, DISTRIBUTOR SHALL NOT MANUFACTURE,
REGISTER, SELL, PROMOTE OR DISTRIBUTE IN THE TERRITORY, OR CAUSE OR PERMIT TO BE
MANUFACTURED, REGISTERED, SOLD,

 

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PROMOTED OR DISTRIBUTED IN THE TERRITORY, WHETHER DIRECTLY OR INDIRECTLY, ANY
DISTRIBUTOR COMPETITIVE PRODUCT.

 

8.                                      TECHNICAL PROCEDURES

 

8.1.         QUALITY AGREEMENT.  THE PARTIES AGREE TO ENTER INTO A QUALITY
AGREEMENT AT LEAST SIXTY DAYS (60) BEFORE THE LAUNCH DATE OF THE PRODUCT WHICH
SETS FORTH (A) THE ROLES AND RESPONSIBILITIES OF COMPANY AND DISTRIBUTOR WITH
RESPECT TO THE QUALITY, TECHNICAL, OPERATIONAL AND CERTAIN REGULATORY FUNCTIONS
FOR THE PRODUCTS, AND (B) HOW THE PARTIES SHALL INTERACT WITH EACH OTHER IN
CONNECTION WITH SAME (“QUALITY AGREEMENT”).  THE PARTIES HAVE AGREED TO BASIC
TERMS FOR THE QUALITY AGREEMENT  WHICH SHALL INCLUDE, BUT NOT BE LIMITED TO, THE
OUTLINE PROVIDED IN SCHEDULE 8.1.  IN THE EVENT A CONFLICT ARISES BETWEEN ANY
TERM IN THIS AGREEMENT AND A TERM IN THE QUALITY AGREEMENT, THE TERM CONTAINED
IN THIS AGREEMENT SHALL PREVAIL.

 

8.2.         BATCH RELEASE.

 

(A)             BATCH REVIEW AND RELEASE OF PRODUCT SHALL BE THE RESPONSIBILITY
OF THE COMPANY.

 

(B)             FOR EACH BATCH OF PRODUCT RELEASED FOR SALE BY THE DISTRIBUTOR,
THE COMPANY SHALL DELIVER TO THE DISTRIBUTOR: (1) A CERTIFICATE OF ANALYSIS AS
DESCRIBED IN SECTION 4.6(A); (2) A CERTIFICATE OF COMPLIANCE AS DESCRIBED IN
SECTION 4.6(B); AND (3) A PACKING LIST FOR EACH BATCH OF PRODUCT.

 

(C)             THE COMPANY SHALL NOTIFY THE DISTRIBUTOR WITHIN THREE
(3) BUSINESS DAYS OF BECOMING AWARE OF THE SAME IN THE EVENT OF ANY MATERIAL
DEVIATION DURING MANUFACTURE OR WHEN ANY TEST REVEALS CONTAMINATION OR
DEGRADATION IN ANY BATCH OF PRODUCT.

 

8.3.         BATCH DOCUMENTATION; RETENTION SAMPLES.

 

(A)             ORIGINALS OF ALL BATCH DOCUMENTATION SHALL BE RETAINED BY THE
COMPANY FOR A PERIOD OF AT LEAST TWELVE (12) MONTHS PAST THE EXPIRY DATE OF THE
PRODUCT, OR SUCH LONGER PERIOD AS MAY BE REQUIRED BY APPLICABLE LAWS.

 

(B)             AT THE REQUEST OF THE DISTRIBUTOR, THE COMPANY SHALL PROVIDE A
COPY OF ANY OF THE EXECUTED BATCH DOCUMENTS RELATING TO PRODUCT TO THE
DISTRIBUTOR BY FACSIMILE OR COURIER WITHIN THREE (3) BUSINESS DAYS OF
DISTRIBUTOR’S REQUEST.

 

(C)             RETENTION SAMPLES SHALL ONLY BE DESTROYED AFTER THE REQUIRED
REGULATORY HOLDING PERIOD.

 

8.4.         STABILITY.

 

(A)             COMPANY SHALL ENSURE THAT STABILITY TESTING FOR THE PRODUCT AS
REQUIRED BY REGULATORY AUTHORITIES IN THE TERRITORY IS PERFORMED IN COMPLIANCE
THE REGISTRATION AND APPLICABLE LAWS.  COMPANY SHALL PERFORM STANDARD STABILITY
TESTING AS DEFINED IN COMPANY’S STANDARD OPERATING PROCEDURES OR AS SEPARATELY
AGREED TO IN ACCORDANCE WITH A DESIGN HISTORY

 

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FILE (DHF) FOR THE PRODUCT.  DISTRIBUTOR SHALL RECEIVE A COPY OF COMPANY’S
ANNUAL REPORT FOR THE PRODUCT AS LONG AS COMPANY IS CONTINUING TO PRODUCE THE
PRODUCT FOR DISTRIBUTOR.

 

(B)             IF A CONFIRMED RESULT INDICATES THAT A PRODUCT HAS FAILED TO
REMAIN WITHIN STABILITY SPECIFICATIONS, THE COMPANY SHALL NOTIFY THE DISTRIBUTOR
WITHIN TWO (2) BUSINESS DAYS AFTER SUCH RESULT BECOMES AVAILABLE.

 

(C)             THE COMPANY SHALL PROVIDE STABILITY DATA RELATING TO THE PRODUCT
TO THE DISTRIBUTOR ON AN ONGOING BASIS AS REQUESTED.

 

(D)             IN THE EVENT THIS AGREEMENT IS TERMINATED, THE COMPANY SHALL, AS
REQUESTED, CONTINUE TO PROVIDE THE DISTRIBUTOR WITH STABILITY DATA SUPPORTING
THE ACCEPTABILITY OF THE PRODUCT UNTIL SUCH PRODUCT DISTRIBUTED BY THE
DISTRIBUTOR HAS REACHED THE END OF ITS SHELF LIFE.

 

9.                                      MEDICAL INFORMATION, COMPLAINTS ADVERSE
EVENTS AND POST-MARKETING SURVEILLANCE

 

9.1.         MEDICAL INFORMATION.  DISTRIBUTOR WILL PROVIDE A MEDICAL
INFORMATION SERVICE CONCERNING THE PRODUCT TO THE HEALTH PROFESSIONALS AND
PATIENTS IN THE TERRITORY.

 

9.2.         CUSTOMER COMPLAINTS; TECHNICAL/QUALITY RELATED ISSUES.  EACH PARTY
WILL REPORT TO THE OTHER ALL CUSTOMER COMPLAINTS, TECHNICAL OR QUALITY-RELATED
INCIDENTS AND/OR ISSUES, OF WHICH IT BECOMES AWARE.  DISTRIBUTOR SHALL BE
RESPONSIBLE FOR COMMUNICATING WITH THE CUSTOMER TO SUPPORT THE COMPLAINT
HANDLING PROCESS.  COMPANY SHALL PROVIDE ALL NECESSARY SUPPORT TO DISTRIBUTOR
INVESTIGATING AND ADDRESSING ALL SUCH CUSTOMER COMPLAINTS, TECHNICAL OR
QUALITY-RELATED INCIDENTS.  THE PARTIES AGREE TO REPORT ALL PRODUCT QUALITY
CUSTOMER COMPLAINTS, TECHNICAL OR QUALITY RELATED INCIDENTS AND/OR ISSUES TO
EACH OTHER WITHIN [***] WORKING DAYS OF RECEIPT.

 

9.3.         MEDICAL DEVICE REPORTING.  THE PARTIES AGREE TO COMPLY WITH AND BE
RESPONSIBLE FOR REPORTING ALL MDR REPORTABLE EVENTS TO EACH OTHER WITHIN [***]
BUSINESS DAYS OF BECOMING AWARE OF SAME AND AGREE TO COMPLY WITH ALL PROCEDURES
ESTABLISHED BY DISTRIBUTOR, IN ACCORDANCE WITH ALL APPLICABLE LAWS IN CONNECTION
WITH THE TRACKING AND REPORTING OF MDR REPORTABLE EVENTS.  DISTRIBUTOR ALONE IS
RESPONSIBLE FOR INVESTIGATING AND REPORTING TO THE FDA ALL MDR REPORTABLE
EVENTS.

 

9.4.         RECALLS.

 

(A)             COMPANY WILL MAINTAIN SUCH RECORDS AND PROCEDURES TO ENSURE THAT
ANY BATCH OF PRODUCT CAN BE EFFECTIVELY AND COMPLETELY RECALLED BY DISTRIBUTOR
FROM THE MARKET IN THE EVENT THAT SUCH ACTION IS REQUIRED.  BOTH DISTRIBUTOR AND
COMPANY SHALL INFORM EACH OTHER WITHOUT DELAY, IF ANY MEASURES ARE NECESSARY TO
REMOVE OR TO MINIMISE ANY RISK WITH RESPECT TO A SPECIFIC PRODUCTION LOT OR
PREPARATION OF PRODUCT.

 

(B)             DISTRIBUTOR SHALL BE RESPONSIBLE FOR DECIDING WHETHER TO
INITIATE ANY PRODUCT RECALL, CUSTOMER NOTICE, RESTRICTION, CORRECTIVE ACTION OR
MARKET ACTION OR ANY PRODUCT CHANGE.  COMPANY SHALL BEAR THE COSTS AND EXPENSES
OF SUCH RECALL OR CORRECTIVE ACTION AND SHALL REIMBURSE DISTRIBUTOR FOR THE
REASONABLE, OUT-OF-POCKET COSTS INCURRED BY DISTRIBUTOR AS A RESULT

 

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OF SUCH RECALL OR CORRECTIVE ACTION, INCLUDING THE REPLACEMENT COST OF ANY
PRODUCT AFFECTED THEREBY, UNLESS THE CAUSE OR BASIS OF SUCH RECALL OR CORRECTIVE
ACTION IS ATTRIBUTABLE TO A CONDITION, FACT OR ACTION THAT CONSTITUTES A BREACH
BY DISTRIBUTOR OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT, OR IS OTHERWISE
ATTRIBUTABLE TO AN ACT OR OMISSION OF DISTRIBUTOR IN WHICH CASE, DISTRIBUTOR
SHALL BEAR THE COSTS AND EXPENSES OF SUCH RECALL OR CORRECTIVE ACTION, AND SHALL
REIMBURSE COMPANY FOR THE REASONABLE OUT-OF-POCKET COSTS INCURRED BY COMPANY AS
A RESULT OF SUCH ACTION, INCLUDING THE REPLACEMENT COST OF ANY PRODUCT AFFECTED
THEREBY.  THE PARTIES SHALL COOPERATE FULLY WITH EACH OTHER IN EFFECTING ANY
RECALL OF THE PRODUCT PURSUANT TO THIS SECTION 9.4, INCLUDING COMMUNICATIONS
WITH ANY CUSTOMERS OR TO THE PUBLIC.

 

(C)             DISTRIBUTOR’S PROCEDURES FOR A POSSIBLE RECALL OF PRODUCT WILL
BE INCLUDED AS PART OF THE QUALITY AGREEMENT PURSUANT TO SECTION 8.1.

 

9.5.         NOTIFICATION BY REGULATORY AUTHORITIES.  THE PARTIES SHALL NOTIFY
EACH OTHER IMMEDIATELY OF ANY INFORMATION OR NOTIFICATION IT RECEIVES REGARDING
ANY THREATENED OR PENDING ACTION BY ANY COMPETENT AUTHORITY WHICH MAY AFFECT THE
SAFETY OR EFFICACY CLAIMS OF ANY PRODUCT OR THE CONTINUED MARKETING OF SAME. 
UPON RECEIPT OF ANY SUCH INFORMATION RECEIVED PURSUANT TO THIS SECTION 9.5, THE
PARTY RECEIVING SUCH NOTIFICATION SHALL CONSULT WITH THE OTHER PARTY TO ARRIVE
AT A MUTUALLY ACCEPTABLE PROCEDURE FOR TAKING APPROPRIATE ACTION; PROVIDED,
HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL BE CONSTRUED AS RESTRICTING
DISTRIBUTOR’S RIGHT TO MAKE A TIMELY REPORT OF SUCH MATTER TO ANY COMPETENT
AUTHORITY OR TO TAKE ANY FURTHER ACTION THAT DISTRIBUTOR DEEMS APPROPRIATE, IN
ITS SOLE DISCRETION, OR IS REQUIRED BY APPLICABLE LAW.

 

10.                               REPRESENTATIONS AND WARRANTIES

 

10.1.       BY EACH PARTY.  EACH PARTY REPRESENTS, WARRANTS AND COVENANTS TO THE
OTHER PARTY THAT:

 

(A)             IT SHALL MAINTAIN IN FULL FORCE AND EFFECT ALL NECESSARY
LICENSES, PERMITS AND OTHER AUTHORIZATIONS REQUIRED BY APPLICABLE LAW TO CARRY
OUT ITS DUTIES AND OBLIGATIONS UNDER THIS AGREEMENT;

 

(B)             IT SHALL COMPLY WITH ALL APPLICABLE LAWS APPLICABLE TO ITS
ACTIVITIES UNDER THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, ANY REQUIREMENTS
OF ANY PRODUCT LICENSE APPLICABLE TO THE PRODUCT IN THE TERRITORY;

 

(C)             IT SHALL REASONABLY COOPERATE WITH THE OTHER PARTY WITH THE GOAL
OF ENSURING FULL COMPLIANCE WITH APPLICABLE LAWS;

 

(D)             IT SHALL REASONABLY COOPERATE WITH THE OTHER PARTY TO PROVIDE
SUCH LETTERS, DOCUMENTATION AND OTHER INFORMATION ON A TIMELY BASIS AS THE OTHER
PARTY MAY REASONABLY REQUIRE TO FULFIL ITS REPORTING AND OTHER OBLIGATIONS UNDER
APPLICABLE LAWS TO APPLICABLE REGULATORY AUTHORITIES;

 

(E)             IT IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF ITS STATE OF INCORPORATION, AND HAS THE REQUISITE
CORPORATE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT;

 

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(F)                                          THIS AGREEMENT HAS BEEN VALIDLY
EXECUTED AND DELIVERED, AND, ASSUMING THAT SUCH DOCUMENTS HAVE BEEN DULY
AUTHORIZED, EXECUTED AND DELIVERED BY SUCH PARTY, CONSTITUTES A VALID AND
BINDING OBLIGATION OF SUCH PARTY, ENFORCEABLE AGAINST SUCH PARTY IN ACCORDANCE
WITH ITS TERMS;

 

(G)                                       PERFORMANCE OF ANY OF THE TERMS AND
CONDITIONS OF THIS AGREEMENT ON ITS PART TO BE PERFORMED WILL NOT CONSTITUTE ANY
BREACH OR VIOLATION OF ANY OTHER AGREEMENT OR UNDERSTANDING, WRITTEN OR ORAL,
GOVERNMENT OR COURT DECREE OR ORDER TO WHICH IT IS A PARTY OR BY WHICH IT IS
BOUND; AND

 

(H)                                       IT IS NOT INSOLVENT OR OTHERWISE
SUBJECT TO A VOLUNTARY OR INVOLUNTARY BANKRUPTCY PETITION AND NO ADMINISTRATOR,
ADMINISTRATIVE RECEIVER OR RECEIVER HAS BEEN APPOINTED WITH RESPECT OF THE WHOLE
OR ANY PART OF ITS ASSETS OR BUSINESS OR IF THE INSOLVENT PARTY MAKES ANY
COMPOSITION WITH ITS CREDITORS OR TAKES OR SUFFERS ANY SIMILAR OR ANALOGOUS
ACTION IN CONSEQUENCE OF DEBT.

 

10.2.       BY COMPANY.  COMPANY ALSO REPRESENTS, WARRANTS AND COVENANTS TO
DISTRIBUTOR THAT:

 

(A)             COMPANY HAS NOT GRANTED DISTRIBUTION OR MARKETING RIGHTS OF ANY
KIND, FOR THE PRODUCT IN THE FIELD IN THE TERRITORY TO ANY THIRD PARTY, AND TO
THE BEST OF ITS KNOWLEDGE, THERE ARE NO THIRD PARTIES WITH ANY DISTRIBUTION OR
MARKETING RIGHTS OF ANY KIND FOR THE PRODUCT IN THE FIELD, AND COMPANY HAS NOT
GRANTED DISTRIBUTION OR MARKETING RIGHTS OF ANY KIND TO ANY LINE EXTENSIONS IN
THE FIELD IN THE TERRITORY TO ANY THIRD PARTY;

 

(B)             COMPANY HAS OBTAINED ALL APPROVALS REQUIRED BY THE APPLICABLE
GOVERNMENTAL AUTHORITIES FOR THE TERRITORY FOR MANUFACTURE OF THE PRODUCT AT THE
AGREED UPON MANUFACTURING FACILITY WHERE SUCH PRODUCT WILL BE MANUFACTURED;

 

(C)             COMPANY HAS NOT RECEIVED ANY WRITTEN NOTICE OF ANY CLAIMED
INFRINGEMENT (INCLUDING WITHOUT LIMITATION PATENT INFRINGEMENT), OR ANY CLAIM
THAT THE PATENTS, OR ANY CLAIM CONTAINED IN THE PATENTS, ARE INVALID OR
UNENFORCEABLE, WITH RESPECT TO THE MANUFACTURE OF THE PRODUCT IN THE COUNTRY IN
WHICH THE PRODUCT IS MANUFACTURED OR WITH RESPECT TO THE USE OR SALE OF THE
PRODUCT IN THE TERRITORY;

 

(D)             EXCEPT AS DISCLOSED TO DISTRIBUTOR IN SCHEDULE 10.2, COMPANY HAS
ALL RIGHT, TITLE AND INTEREST TO THE PATENTS, AND HAS NOT ASSIGNED OR CONVEYED
ANY RIGHT, TITLE OR INTEREST IN AND TO THE PATENTS INSOFAR AS THE PATENTS RELATE
TO THE USE OR SALE OF THE PRODUCT IN THE TERRITORY;

 

(E)             TO THE BEST OF COMPANY’S KNOWLEDGE, STORAGE, DISTRIBUTION,
PROMOTION, MARKETING AND SALE OF THE PRODUCT IN THE TERRITORY DOES NOT INFRINGE
ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHT OF ANY THIRD
PARTIES;

 

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(F)              IT HAS NOT RECEIVED ANY WRITTEN NOTIFICATION THAT THERE ARE ANY
SUITS, CLAIMS, OR PROCEEDINGS PENDING, OR TO COMPANY’S BEST KNOWLEDGE AND
BELIEF, THREATENED AGAINST COMPANY OR ANY OF ITS AFFILIATES IN ANY COURT OR BY
OR BEFORE ANY GOVERNMENTAL BODY OR AGENCY WITH RESPECT TO THE PRODUCT WHICH
WOULD AFFECT EITHER THE COMPANY OR THE DISTRIBUTORS’ ABILITY TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT;

 

(G)             EXCEPT AS DISCLOSED TO DISTRIBUTOR IN SCHEDULE 10.2, COMPANY HAS
THE RIGHT TO GRANT THE EXCLUSIVE RIGHTS FOR THE PRODUCT IN THE FIELD IN THE
TERRITORY TO DISTRIBUTOR, AND IT HAS NOT ENTERED INTO ANY AGREEMENT WITH ANY
THIRD PARTY THAT CONTRAVENES OR DIMINISHES SUCH RIGHTS;

 

(H)            COMPANY HAS NOT, AND DURING THE TERM OF THIS AGREEMENT, WILL NOT,
EITHER ITSELF OR THROUGH ANY THIRD PARTY, PROMOTE AND/OR SELL IN THE TERRITORY
ANY COMPETITIVE PRODUCTS OR ANY OTHER PRODUCTS OF THE COMPANY IN VIOLATION OF
SECTION 6.13;

 

(I)              UPON THE EXERCISE OF THE PURCHASE OPTION WITH OSMOTICS AS
PROVIDED IN SECTION 2.9, PURSUANT TO AND IN ACCORDANCE WITH THE AGREEMENT NOT TO
COMPETE AND THE EXERCISE OF THE PURCHASE OPTION, OSMOTICS WILL BE PROHIBITED
FROM MARKETING ANY PRODUCT USING ANY CERAMIDE DOMINANT BARRIER REPAIR
TECHNOLOGY, INCLUDING ANY COMPETITIVE PRODUCT USING ANY CERAMIDE DOMINANT
BARRIER REPAIR TECHNOLOGY;

 

(J)              IN ACCORDANCE WITH SECTION 2.9, COMPANY SHALL USE ITS BEST
EFFORTS TO [***];

 

(K)             TO THE BEST OF COMPANY’S KNOWLEDGE, THERE IS NO OTHER MATERIAL
INFORMATION, OTHER THAN THE INFORMATION AND DISCLOSURES COMPANY HAS MADE TO
DISTRIBUTOR IN SCHEDULE 10.2 AND INFORMATION RELATING TO ECONOMIC CONDITIONS AND
THE MARKET FOR THE PRODUCT  GENERALLY, WHICH COULD HAVE A MATERIAL ADVERSE
EFFECT ON THE PRODUCT IN THE FIELD IN THE TERRITORY OR DISTRIBUTOR’S ABILITY TO
MARKET AND SELL THE PRODUCT IN THE FIELD IN THE TERRITORY;

 

(L)              EACH PRODUCT SOLD AND DELIVERED BY COMPANY TO DISTRIBUTOR
HEREUNDER SHALL MEET APPLICABLE SPECIFICATIONS AND SHALL NOT BE ADULTERATED OR
MISBRANDED WITHIN THE MEANING OF THE U.S. FEDERAL FOOD DRUG AND COSMETIC ACT AND
IS FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES;

 

(M)            EACH PRODUCT SHALL BE MANUFACTURED, PACKAGED, LABELLED, STORED
AND LOADED FOR SHIPMENT TO DISTRIBUTOR IN ACCORDANCE WITH THE SPECIFICATIONS,
CGMP, ALL APPLICABLE LAWS, INCLUDING, WITHOUT LIMITATION, THOSE RELATING TO
ENVIRONMENTAL LAW AND SAFETY AND SHALL BE  PROPERLY VALIDATED AND SHELF STABLE
BOTH BEFORE AND AFTER THE LAUNCH DATE; AND

 

(N)             COMPANY (OR, IN THE EVENT A CONTRACT MANUFACTURER IS USED, THE
CONTRACT MANUFACTURER) HAS NEVER BEEN AND IS NOT CURRENTLY (I) AN INDIVIDUAL WHO
HAS BEEN DEBARRED BY THE FDA PURSUANT TO 21 U.S.C. 33A(A) OR (B) FROM PROVIDING
SERVICES IN ANY CAPACITY TO A PERSON THAT HAS AN APPROVED OR PENDING DRUG
PRODUCT APPLICATION, OR AN EMPLOYER, EMPLOYEE OR PARTNER OF SUCH A DEBARRED
INDIVIDUAL; OR (II) A CORPORATION, PARTNERSHIP OR ASSOCIATION THAT HAS BEEN
DEBARRED BY FDA PURSUANT TO 21 U.S.C. 335A(A) OR (B) FROM SUBMITTING OR
ASSISTING IN THE

 

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SUBMISSION OF A DRUG APPLICATION, OR A PARTNER , SHAREHOLDER, MEMBER,
SUBSIDIARY, OR AFFILIATE OF A DEBARRED ENTITY.  COMPANY HAS NO KNOWLEDGE OF ANY
CIRCUMSTANCES WHICH MAY AFFECT THE ACCURACY OF THE FOREGOING REPRESENTATION,
INCLUDING WITHOUT LIMITATION ANY FDA INVESTIGATIONS OF, OR DEBARMENT PROCEEDINGS
AGAINST, THE COMPANY OR ANY PERSON OR ENTITY PERFORMING SERVICES OR RENDERING
ASSISTANCE, WHICH IS IN ANY WAY RELATED TO ACTIVITIES UNDERTAKEN PURSUANT TO
THIS AGREEMENT.  COMPANY SHALL IMMEDIATELY NOTIFY DISTRIBUTOR IN WRITING IF IT
(OR, IN THE EVENT A CONTRACT MANUFACTURER IS USED, THE CONTRACT MANUFACTURER),
AT ANY TIME DURING THE TERM OF THIS AGREEMENT, BECOMES AWARE OF ANY SUCH
CIRCUMSTANCES.

 

10.3.       BY DISTRIBUTOR.  DISTRIBUTOR ALSO REPRESENTS, WARRANTS AND COVENANTS
TO COMPANY THAT:

 

(A)                                        DISTRIBUTOR SHALL BE RESPONSIBLE FOR
ALL PRICE REPORTING FOR THE PRODUCT TO ANY AND ALL GOVERNMENTAL AGENCIES, AS
WELL AS ANY THIRD PARTY PRICING PUBLICATIONS;

 

(B)                                        DISTRIBUTOR SHALL BE RESPONSIBLE FOR
ALL REBATES FOR THE PRODUCT WHETHER REQUIRED BY CONTRACT OR STATE OR FEDERAL
LAW;

 

(C)                                        DISTRIBUTOR SHALL TAKE ALL REASONABLE
ACTIONS TO ENSURE THAT ALL DISCOUNTS AND PRICE REDUCTIONS OFFERED TO ITS
CUSTOMERS FOR THE PRODUCT FALL WITHIN THE DISCOUNT SAFE-HARBOR TO THE FEDERAL
ANTI-KICKBACK STATUTE, AS DESCRIBED IN 42 U.S.C. 1320A-7B(B)(3)(A) AND 42 C.F.R.
1001.952(H);

 

(D)             DISTRIBUTOR’S TRADE MARKS WILL NOT, TO DISTRIBUTOR’S KNOWLEDGE,
VIOLATE ANY COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHT OF ANY THIRD
PARTIES; AND

 

(E)                                        SUBJECT TO COMPANY’S OBLIGATIONS
HEREUNDER, EACH PRODUCT SOLD AND DELIVERED BY DISTRIBUTOR SHALL MEET APPLICABLE
SPECIFICATIONS AND SHALL NOT BE ADULTERATED OR MISBRANDED WITHIN THE MEANING OF
THE U.S. FEDERAL FOOD DRUG AND COSMETIC ACT AND IS FREE AND CLEAR OF ALL LIENS
AND ENCUMBRANCES;

 

(F)                                          EACH PRODUCT SHALL BE PACKAGED,
LABELLED, STORED AND LOADED FOR SHIPMENT FROM DISTRIBUTOR IN ACCORDANCE WITH THE
SPECIFICATIONS, CGMP, ALL APPLICABLE LAWS, INCLUDING, WITHOUT LIMITATION, THOSE
RELATING TO ENVIRONMENTAL LAW AND SAFETY; AND

 

(G)                                       NONE OF DISTRIBUTOR, ITS AFFILIATES,
SALES AGENTS AND SUB-DISTRIBUTORS HAS EVER BEEN NOR IS CURRENTLY (I) AN
INDIVIDUAL WHO HAS BEEN DEBARRED BY THE FDA PURSUANT TO 21 U.S.C. 33A(A) OR
(B) FROM PROVIDING SERVICES IN ANY CAPACITY TO A PERSON THAT HAS AN APPROVED OR
PENDING DRUG PRODUCT APPLICATION, OR AN EMPLOYER, EMPLOYEE OR PARTNER OF SUCH A
DEBARRED INDIVIDUAL; OR (II) A CORPORATION, PARTNERSHIP OR ASSOCIATION THAT HAS
BEEN DEBARRED BY FDA PURSUANT TO 21 U.S.C. 335A(A) OR (B) FROM SUBMITTING OR
ASSISTING IN THE SUBMISSION OF A DRUG APPLICATION, OR A PARTNER , SHAREHOLDER,
MEMBER, SUBSIDIARY, OR AFFILIATE OF A DEBARRED ENTITY.  DISTRIBUTOR HAS NO
KNOWLEDGE OF ANY CIRCUMSTANCES WHICH MAY AFFECT THE ACCURACY OF THE FOREGOING
REPRESENTATION, INCLUDING WITHOUT LIMITATION ANY FDA INVESTIGATIONS OF, OR
DEBARMENT PROCEEDINGS AGAINST, DISTRIBUTOR OR ANY PERSON OR ENTITY PERFORMING
SERVICES OR RENDERING ASSISTANCE, WHICH IS IN ANY WAY RELATED TO ACTIVITIES
UNDERTAKEN PURSUANT TO THIS AGREEMENT. 

 

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DISTRIBUTOR SHALL IMMEDIATELY NOTIFY COMPANY IN WRITING IF IT, ITS AFFILIATES,
SALES AGENTS OR SUB-DISTRIBUTORS, AT ANY TIME DURING THE TERM OF THIS AGREEMENT,
BECOMES AWARE OF ANY SUCH CIRCUMSTANCES.

 

11.                               LIABILITY AND INSURANCE

 

11.1.       LIMITATION OF WARRANTIES.  EXCEPT AS MAY BE EXPRESSLY STATED BY
COMPANY ON ANY PRODUCT OR ON COMPANY’S PACKAGING, OR IN COMPANY’S INFORMATION
ACCOMPANYING ANY PRODUCT, COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND WITH RESPECT TO SUCH PRODUCT OR THAT INFORMATION, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.  COMPANY NEITHER ASSUMES NOR AUTHORISES ANYONE, INCLUDING ITS EMPLOYEES
OR REPRESENTATIVES, TO ASSUME FOR IT ANY OBLIGATION OR LIABILITY IN CONNECTION
WITH PRODUCT.

 

11.2.       PRODUCT CLAIMS.  DISTRIBUTOR AGREES NOT TO MAKE ANY CLAIMS FOR ANY
PRODUCT WHICH ARE NOT INCLUDED IN THE INDICATIONS OR ARE OUTSIDE THE SCOPE OF
THOSE PERMITTED FOR MEDICAL DEVICES OR WOULD PREJUDICE THE MEDICAL DEVICE
CLASSIFICATION OF THE PRODUCT AND DISTRIBUTOR SHALL NOT MAKE ANY REPRESENTATION
OR WARRANTY WITH RESPECT TO THE PRODUCT THAT IS MORE EXTENSIVE THAN, OR
INCONSISTENT WITH ANY REGISTRATION OR PUBLICATIONS OF COMPANY OR THIRD PARTIES
RELATING TO THE PRODUCT.

 

11.3.       INSURANCE.  THE PARTIES SHALL (AND SHALL CAUSE THEIR RESPECTIVE
AFFILIATES TO), DURING THE TERM, AND FOR A PERIOD OF NOT LESS [***] YEARS
FOLLOWING TERMINATION OR EXPIRATION OF THIS AGREEMENT, MAINTAIN PRODUCT AND
GENERAL LIABILITY INSURANCE (INCLUDING BLANKET CONTRACTUAL LIABILITY) IN A
MINIMUM AMOUNT OF [***] US DOLLARS (US $[***]) FOR EACH CLAIM, AND [***] US
DOLLARS (US $[***]) IN THE AGGREGATE, TO COVER CLAIMS RELATING TO THE PRODUCT.
ALL PARTIES AT THE REQUEST OF ANOTHER SHALL PROVIDE EVIDENCE TO SUCH REQUESTING
PARTY OF COMPLIANCE WITH ITS INSURANCE OBLIGATION (AND THOSE OF ITS AFFILIATES)
UNDER THIS SECTION 11.3 AND EVIDENCE OF RENEWALS OF ANY SUCH POLICY FROM TIME TO
TIME.  THE PARTIES AGREE THAT THE INSURANCE COVERAGE PROVISIONS OF THIS
SECTION 11.3 SHALL BE IN EFFECT NO LATER THAN SIXTY (60) DAYS BEFORE THE LAUNCH
DATE OF THE PRODUCT.

 

12.                               INTELLECTUAL PROPERTY

 

12.1.       PATENTS.  THE PATENTS ARE OWNED BY THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA (“UCSF”), AND LICENSED TO COMPANY.  COMPANY SHALL HAVE THE SOLE
OBLIGATION TO UCSF FOR ANY AN ALL AMOUNTS DUE IN CONNECTION WITH SUCH LICENSE OF
THE PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY ASSOCIATED
WITH, COVERING OR CLAIMING THE PRODUCT, OR THE MANUFACTURE, USE OR SALE OF THE
PRODUCT, IN THE TERRITORY.  THE PARTIES RECOGNIZE THAT UCSF HAS CERTAIN AUDIT,
PATENT PROSECUTION, DEFENSE OF INFRINGEMENT, NOTICE AND OTHER RIGHTS IN
CONNECTION WITH COMPANY’S LICENSE OF THE PATENTS FROM UCSF.  DISTRIBUTOR SHALL
USE DILIGENT EFFORTS TO PROVIDE, UNDER APPROPRIATE TERMS OF CONFIDENTIALITY,
INFORMATION IT MAY POSSESS WHICH COMPANY REASONABLY REQUESTS IN ORDER TO COMPLY
WITH COMPANY’S OBLIGATIONS TO UCSF UNDER SUCH LICENSE AGREEMENT.

 

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12.2.       COMPANY TRADE MARKS.  COMPANY’S TRADE MARKS ARE THE EXCLUSIVE
PROPERTY OF COMPANY AND DISTRIBUTOR SHALL NOT SEEK TO REGISTER OR HAVE
REGISTERED COMPANY’S TRADE MARKS.

 

12.3.       DISTRIBUTOR TRADE MARKS AND COPYRIGHTS.  DISTRIBUTOR SHALL OWN
DISTRIBUTOR TRADE MARKS AND ANY NEW COPYRIGHT CREATED BY DISTRIBUTOR FOR THE
PRODUCT.  FOR PURPOSES OF THIS AGREEMENT, DISTRIBUTOR TRADE MARKS SHALL MEAN
THOSE NEW TRADEMARKS DEVELOPED BY THE DISTRIBUTOR FOR USE WITH THE PRODUCT
(“DISTRIBUTOR TRADE MARKS”).

 

12.4.       USE OF DISTRIBUTOR BRANDS.  EXCEPT FOR ADDING DISTRIBUTOR TRADE
MARKS, DISTRIBUTOR SHALL SELL PRODUCT IN THE SAME CONDITION AS IT IS RECEIVED BY
IT AND SHALL NOT DEFACE OR ALTER ANY PRODUCT OR ITS PACKAGING, REMOVE OR MODIFY
ANY LABELS, INSTRUCTIONS OR IDENTIFYING INSIGNIA APPLIED TO OR FURNISHED IN
CONNECTION WITH ANY PRODUCT OR AFFIX TO ANY PRODUCT OR ITS PACKAGING ANY LABELS
OR SIGNS NOT PREVIOUSLY APPROVED IN WRITING BY COMPANY.  NOTHING IN THIS
SECTION IS INTENDED TO MODIFY OR DIMINISH ANY OF DISTRIBUTOR’S RIGHTS UNDER
SECTIONS 6.11(C) AND 12.6.

 

12.5.       NOTIFICATION OF INFRINGEMENT.  DISTRIBUTOR SHALL INFORM COMPANY OF
ANY INFRINGEMENT OF COMPANY’S RIGHTS IN THE TERRITORY OF WHICH IT BECOMES
AWARE.  COMPANY WILL DECIDE ON THE BEST STEPS TO BE TAKEN AFTER HAVING DISCUSSED
THE CASE WITH DISTRIBUTOR WHO SHALL GIVE ITS FULL CO-OPERATION THEREFORE.

 

12.6.       EFFECT OF TERMINATION.  UPON ANY TERMINATION OF THIS AGREEMENT BY
COMPANY PURSUANT TO SECTION 13.2(A) FOR DISTRIBUTOR’S BREACH, DISTRIBUTOR SHALL
AT DISTRIBUTOR’S SOLE DISCRETION EITHER (I) TRANSFER OWNERSHIP OF THE
DISTRIBUTOR’S TRADE MARKS USED SOLELY WITH RESPECT TO SUCH PRODUCT, AND DIRECTLY
ASSOCIATED GOODWILL, TO COMPANY OR (II) PROVIDE AN EXCLUSIVE, PERPETUAL,
ROYALTY-FREE LICENSE (WITH THE RIGHT FREELY TO SUBLICENSE) TO THE DISTRIBUTOR’S
TRADE MARKS USED SOLELY WITH RESPECT TO SUCH PRODUCT TO COMPANY, IN EACH CASE AT
NO COST TO COMPANY, AND IN EACH CASE SOLELY FOR COMPANY’S USE IN THE PROMOTION
AND SALES OF SUCH PRODUCT IN THE TERRITORY.  FOR THE AVOIDANCE OF DOUBT,
DISTRIBUTOR’S TRADE MARKS SHALL INCLUDE ONLY THE SPECIFIC TRADE MARKS THAT
DISTRIBUTOR CREATES TO BRAND SUCH PRODUCT AND SHALL NOT INCLUDE ANY OTHER TRADE
MARKS OF DISTRIBUTOR OR ANY OF ITS AFFILIATES.  WHERE DISTRIBUTOR LICENSES THE
DISTRIBUTOR’S TRADE MARKS PURSUANT TO CLAUSE (II) OF THIS SECTION 12.6, IT SHALL
NOT ALLOW ANY SUCH DISTRIBUTOR’S TRADE MARKS TO LAPSE WITHOUT OFFERING TO ALLOW
COMPANY TO MAINTAIN THE SAME AND TO ASSIGN THE SAME (BEFORE ANY SUCH LAPSE TAKES
EFFECT) TO COMPANY FOR NIL CONSIDERATION AND AT NO COST TO COMPANY.  DURING THE
TERM OF ANY SUCH LICENSE PURSUANT TO CLAUSE (II) OF THIS SECTION 12.6,
DISTRIBUTOR SHALL ALLOW COMPANY TO ENFORCE ANY SUCH DISTRIBUTOR’S TRADE MARK
AGAINST INFRINGEMENT AND DEFEND ANY SUCH DISTRIBUTOR’S TRADE MARK AGAINST ANY
ATTACK (AND SHALL LEND SUCH REASONABLE ASSISTANCE TO COMPANY FOR SUCH PURPOSES
AS COMPANY MAY REQUEST, AT COMPANY’S EXPENSE).  ALL COSTS ASSOCIATED WITH
COMPANY’S ENFORCEMENT OF SUCH DISTRIBUTOR’S TRADE MARKS PURSUANT TO CLAUSE
(II) OF THIS SECTION 12.6, SHALL BE THE COMPANY’S SOLE RESPONSIBILITY.

 

13.                               TERM AND TERMINATION

 

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13.1.       TERM.  THIS AGREEMENT SHALL BECOME EFFECTIVE UPON THE EFFECTIVE
DATE, AND, SUBJECT TO THE PROVISIONS OF THIS SECTION 13, SHALL REMAIN IN EFFECT
WITH RESPECT TO THE PRODUCT IN EACH COUNTRY IN THE TERRITORY, UNTIL THE
EXPIRATION OF THE LAST VALID CLAIM COVERING THE PRODUCT CONTAINED IN A PATENT IN
SUCH COUNTRY, OR TWENTY (20) YEARS AFTER THE FIRST COMMERCIAL SALE OF THE
PRODUCT IN SUCH COUNTRY, WHICHEVER IS LONGER (“TERM”).

 

13.2.       BREACH OR INSOLVENCY.  WITHOUT PREJUDICE TO ANY OTHER RIGHTS OR
REMEDY IT MAY HAVE, EACH PARTY MAY TERMINATE THIS AGREEMENT BY PRIOR NOTICE IN
WRITING TO THE OTHER PARTY (“OTHER PARTIES”):

 

(A)           EITHER PARTY (THE “NON-BREACHING PARTY”) MAY, WITHOUT PREJUDICE TO
ANY OTHER REMEDIES AVAILABLE TO IT AT LAW OR IN EQUITY, TERMINATE THIS AGREEMENT
IN ITS ENTIRETY, IN THE EVENT THE OTHER PARTY (THE “BREACHING PARTY”) SHALL HAVE
MATERIALLY BREACHED OR DEFAULTED IN THE PERFORMANCE OF ANY OF ITS MATERIAL
OBLIGATIONS HEREUNDER OR ANY REPRESENTATION OR WARRANTY PROVIDED HEREIN, AND
SUCH DEFAULT SHALL HAVE CONTINUED FOR [***] DAYS AFTER WRITTEN NOTICE THEREOF
WAS PROVIDED TO THE BREACHING PARTY BY THE NON-BREACHING PARTY (OR, IF SUCH
DEFAULT CANNOT BE CURED WITHIN SUCH [***]-DAY PERIOD, IF THE BREACHING PARTY
DOES NOT COMMENCE AND DILIGENTLY CONTINUE ACTIONS TO CURE SUCH DEFAULT DURING
SUCH [***]-DAY PERIOD).  ANY SUCH TERMINATION SHALL BECOME EFFECTIVE AT THE END
OF SUCH [***]-DAY PERIOD UNLESS THE BREACHING PARTY HAS CURED ANY SUCH BREACH OR
DEFAULT PRIOR TO THE EXPIRATION OF SUCH [***]-DAY PERIOD (OR, IF SUCH DEFAULT
CANNOT BE CURED WITHIN SUCH [***]-DAY PERIOD, IF THE BREACHING PARTY HAS
COMMENCED AND DILIGENTLY CONTINUED ACTIONS TO CURE SUCH DEFAULT; PROVIDED
HOWEVER, THAT IN NO EVENT SHALL THE CURE PERIOD EXCEED [***] DAYS BEYOND THE
INITIAL [***]-DAY PERIOD).  THE RIGHT OF EITHER PARTY TO TERMINATE THIS
AGREEMENT AS PROVIDED IN THIS SECTION SHALL NOT BE AFFECTED IN ANY WAY BY ITS
WAIVER OR FAILURE TO TAKE ACTION WITH RESPECT TO ANY PREVIOUS DEFAULT; OR

 

(B)           IF ONE OF THE PARTIES BECOMES INSOLVENT (DEFINED AS SUCH PARTY
BEING SUBJECT TO A VOLUNTARY OR INVOLUNTARY BANKRUPTCY PETITION WHICH IS NOT
DISMISSED WITHIN [***] DAYS AFTER FILING) (THE “INSOLVENT PARTY”), OR IF AN
ORDER IS MADE OR A RESOLUTION IS PASSED FOR THE WINDING UP OF THE INSOLVENT
PARTY (OTHER THAN VOLUNTARILY FOR THE PURPOSE OF SOLVENT AMALGAMATION OR
RECONSTRUCTION) OR IF AN ADMINISTRATOR, ADMINISTRATIVE RECEIVER OR RECEIVER IS
APPOINTED IN RESPECT OF THE WHOLE OR ANY PART OF THE INSOLVENT PARTY’S ASSETS OR
BUSINESS OR IF THE INSOLVENT PARTY MAKES ANY COMPOSITION WITH ITS CREDITORS OR
TAKES OR SUFFERS ANY SIMILAR OR ANALOGOUS ACTION IN CONSEQUENCE OF DEBT.

 

13.3.       COMPANY’S INABILITY TO DELIVER SHELF STABLE PRODUCT.  IN THE EVENT
THAT COMPANY IS UNABLE TO DELIVER TO DISTRIBUTOR LAUNCH QUANTITIES OF PRODUCT
WHICH IS PROPERLY VALIDATED AND SHELF STABLE PURSUANT TO VALID PURCHASE ORDERS
ACCEPTED BY COMPANY UNDER SECTION 4.3 PRIOR TO THE LAUNCH DATE, DISTRIBUTOR
SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AND COLLECT FROM COMPANY ALL
MILESTONE PAYMENTS MADE TO COMPANY PURSUANT TO SECTION 3.1(A)(II) OF THIS
AGREEMENT.

 

13.4.       EFFECT OF CERTAIN TERMINATIONS BY COMPANY.  IF THIS AGREEMENT IS
TERMINATED BY COMPANY PURSUANT SECTIONS 13.2(A) OR 13.2(B), IN ADDITION TO ANY
OTHER REMEDIES AVAILABLE AT LAW OR IN EQUITY, AND SUBJECT TO DISTRIBUTOR’S RIGHT
TO SELL INVENTORY AS PROVIDED IN SECTION 13.6, AND COMPANY’S RIGHTS TO
DISTRIBUTOR’S TRADE MARKS PURSUANT TO SECTION 12.6, AS APPLICABLE:

 

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(A)           ALL RIGHTS AND LICENSES GRANTED TO DISTRIBUTOR SHALL TERMINATE
IMMEDIATELY; AND

 

(B)           DISTRIBUTOR SHALL, AT ITS SOLE COST AND EXPENSE, PROMPTLY RETURN
TO COMPANY ALL APPLICABLE DATA AND MATERIALS TRANSFERRED BY COMPANY TO
DISTRIBUTOR UNDER THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION ALL RECORDS AND
MATERIALS IN DISTRIBUTOR’S POSSESSION OR CONTROL CONTAINING CONFIDENTIAL
INFORMATION OF COMPANY (PROVIDED THAT DISTRIBUTOR MAY KEEP ONE (1) COPY OF SUCH
CONFIDENTIAL INFORMATION FOR ARCHIVAL PURPOSES ONLY).

 

13.5.       EFFECT OF CERTAIN TERMINATIONS BY DISTRIBUTOR.  IF THIS AGREEMENT IS
TERMINATED BY DISTRIBUTOR PURSUANT TO ANY OF SECTIONS 13.2(A) OR 13.2(B), OR BY
DISTRIBUTOR PURSUANT TO SECTION 13.3, IN ADDITION TO ANY OTHER REMEDIES
AVAILABLE AT LAW OR IN EQUITY, AND SUBJECT TO DISTRIBUTOR’S RIGHT TO SELL
INVENTORY AS PROVIDED IN SECTION 13.6:

 

(A)           ANY LICENSES GRANTED BY DISTRIBUTOR TO COMPANY WITH RESPECT TO
DISTRIBUTOR BRANDS SHALL IMMEDIATELY TERMINATE;

 

(B)           COMPANY SHALL, AT ITS SOLE COST AND EXPENSE: (I) PROMPTLY RETURN
TO DISTRIBUTOR ALL APPLICABLE DATA AND MATERIALS TRANSFERRED BY DISTRIBUTOR TO
COMPANY UNDER THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ALL RECORDS AND
MATERIALS IN COMPANY’S POSSESSION OR CONTROL CONTAINING CONFIDENTIAL INFORMATION
OF DISTRIBUTOR (PROVIDED THAT COMPANY MAY KEEP ONE (1) COPY OF SUCH CONFIDENTIAL
INFORMATION FOR ARCHIVAL PURPOSES ONLY); AND (II) PROVIDE DISTRIBUTOR WITH ALL
INFORMATION NECESSARY OR DESIRABLE TO CROSS-REFERENCE THE 510(K) AND ANY OTHER
REGULATORY FILINGS IN COMPANY’S NAME WITH RESPECT TO THE PRODUCT; AND

 

(C)           ALL OF DISTRIBUTOR’S OBLIGATIONS UNDER THIS AGREEMENT SHALL
TERMINATE EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 13.5 OR IN
SECTION 13.7 AND 13.9; THE RIGHTS AND APPOINTMENTS GRANTED UNDER SECTION 2.1
SHALL CONTINUE IN FULL FORCE AND EFFECT AND DISTRIBUTOR SHALL ALSO HAVE A
NON-EXCLUSIVE, ROYALTY-FREE, PERPETUAL, IRREVOCABLE AND SUBLICENSABLE RIGHT AND
LICENSE TO HAVE THE PRODUCT MANUFACTURED AT THE CONTRACT MANUFACTURER OR ANOTHER
QUALIFIED BACK UP MANUFACTURER, EXCEPT THAT, AFTER THE EFFECTIVE DATE OF SUCH
TERMINATION, ALL OF DISTRIBUTOR’S PAYMENT OBLIGATIONS TO COMPANY WITH RESPECT TO
SUCH PRODUCT(S) SHALL BE [***] PERCENT ([***]%) OF THE AMOUNT THAT WOULD
OTHERWISE BE DUE AND OWING UNDER THIS AGREEMENT AND ALL TERMS RELATING TO
PAYMENTS SHALL CONTINUE TO APPLY TO THE FOREGOING PAYMENTS.

 

13.6.       SALE OF INVENTORY.  UPON TERMINATION OF THIS AGREEMENT FOR ANY
REASON, IN ADDITION TO THE PROVISIONS OF SECTIONS 13.4 AND 13.5, DISTRIBUTOR
SHALL HAVE THE RIGHT, FOR A PERIOD OF [***] DAYS, OR SUCH OTHER PERIOD AS THE
PARTIES MAY MUTUALLY AGREE, TO CONTINUE TO SELL ANY INVENTORY OF PRODUCT IN
DISTRIBUTOR’S POSSESSION OR UNDER DISTRIBUTOR CONTROL IN THE TERRITORY
CONSISTENT WITH THE TERMS OF THIS AGREEMENT, EXISTING COMMERCIAL PRACTICES, AND
SUBJECT ALWAYS TO CONTINUED COMPLIANCE WITH ITS PAYMENT OBLIGATIONS TO COMPANY
PURSUANT TO SECTIONS 3.1 AND 3.2 IN RESPECT OF SUCH SALES.

 

13.7.       EXPIRATION.  FOLLOWING THE EXPIRATION OF THIS AGREEMENT IN ANY
COUNTRY IN THE TERRITORY PURSUANT TO SECTION 13.1, DISTRIBUTOR SHALL HAVE A
NON-EXCLUSIVE, ROYALTY-FREE, PERPETUAL,

 

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IRREVOCABLE AND SUBLICENSABLE RIGHT AND LICENSE TO MANUFACTURE, HAVE
MANUFACTURED, MARKET, SELL, HAVE SOLD, DISTRIBUTE AND OTHERWISE EXPLOIT THE
PRODUCT IN SUCH COUNTRY.

 

13.8.       ACCRUED RIGHTS.  TERMINATION OR EXPIRATION OF THIS AGREEMENT WITH
RESPECT TO A COUNTRY OR IN ITS ENTIRETY FOR ANY REASON SHALL BE WITHOUT
PREJUDICE TO COMPANY’S RIGHT TO RECEIVE ALL PAYMENTS ACCRUED AND UNPAID ON THE
EFFECTIVE DATE OF TERMINATION AND SHALL NOT RELEASE ANY PARTY HERETO FROM ANY
LIABILITY WHICH AT SUCH TIME HAS ALREADY ACCRUED OR WHICH THEREAFTER ACCRUES
FROM A BREACH OR DEFAULT PRIOR TO SUCH EXPIRATION OR TERMINATION.  EXCEPT AS
EXPRESSLY PROVIDED HEREIN, ALL OF THE PARTIES’ RIGHTS AND REMEDIES HEREUNDER ARE
CUMULATIVE AND NON-EXCLUSIVE.

 

13.9.       SURVIVING OBLIGATIONS.  NO TERMINATION OR EXPIRATION OF THIS
AGREEMENT WITH RESPECT TO A COUNTRY OR IN ITS ENTIRETY SHALL AFFECT OR DISCHARGE
ANY OBLIGATIONS, RIGHTS, DISCLAIMERS, CONDITIONS OR LIMITATIONS OF ANY PARTY
WHICH AROSE PRIOR TO THE EFFECTIVE DATE OF SUCH TERMINATION.  IN ADDITION,
SECTIONS 1, 4.7, 6.9, 8.3, 8.4, 9, 11.3, 13.4, 13.5, 13.6, 13.7, 13.8, 13.9, 14,
15 AND 17 SHALL SURVIVE ANY TERMINATION OR EXPIRATION OF THIS AGREEMENT WITH
RESPECT TO A PRODUCT OR IN ITS ENTIRETY.

 

14.                               INDEMNIFICATION

 

14.1.       COMPANY GENERAL INDEMNIFICATION.  EXCEPT TO THE EXTENT THAT ANY
SUITS, CLAIMS, LIABILITIES, COSTS, DAMAGES, JUDGMENTS OR OTHER EXPENSES
(“CLAIMS”) ARISE OUT OF OR RESULT FROM THE NEGLIGENCE OR WILFUL MISCONDUCT OF
DISTRIBUTOR, DISTRIBUTOR’S BREACH OF THIS AGREEMENT, ACTS OR OMISSIONS OF SALES
AGENTS OR SUB-DISTRIBUTORS, OR AS OTHERWISE PROVIDED IN THIS AGREEMENT WITH
RESPECT TO INFRINGEMENT CLAIMS, COMPANY SHALL DEFEND, INDEMNIFY AND HOLD
DISTRIBUTOR AND ANY OF ITS RESPECTIVE AFFILIATES AND SUB-DISTRIBUTORS, AND ALL
OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND REPRESENTATIVES
HARMLESS FROM AND AGAINST ALL LIABILITIES, DAMAGES, LOSSES, COSTS AND EXPENSES
(INCLUDING THE REASONABLE FEES OF ATTORNEYS AND OTHER PROFESSIONALS) (“LOSSES”)
INCURRED IN CONNECTION WITH ANY CLAIM MADE BY A THIRD PARTY AGAINST DISTRIBUTOR,
AND ANY OF THEIR RESPECTIVE AFFILIATES, SUB-DISTRIBUTORS, AND ALL OF THEIR
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, ARISING OUT OF OR
ATTRIBUTABLE TO:

 

(A)           THE SAFETY OR EFFICACY OF ANY PRODUCT, INCLUDING, BUT NOT LIMITED
TO, ANY CLAIM FOR PRODUCT LIABILITY, PROPERTY DAMAGE, PERSONAL INJURY, OR DEATH,
OR RELATING TO THE NEGLIGENCE, RECKLESSNESS OR WILFUL MISCONDUCT OF COMPANY OR
ITS AFFILIATES ARISING DIRECTLY FROM MANUFACTURE OR LABELLING OF THE PRODUCT;

 

(B)           BREACH BY COMPANY OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR
COVENANTS CONTAINED IN SECTION 10.1 OR 10.2; AND

 

(C)           STRICT LIABILITY FOR REGULATORY ACTIVITIES CONDUCTED BY COMPANY
RELATING TO THE PRODUCT AND/OR THE REGISTRATIONS PRIOR TO THE EFFECTIVE DATE.

 

14.2.       COMPANY INDEMNIFICATION AGAINST INFRINGEMENT.  COMPANY SHALL, AT ITS
EXPENSE, DEFEND ANY CLAIM BROUGHT AGAINST DISTRIBUTOR, ITS AFFILIATES, SALES
AGENTS AND SUB-DISTRIBUTORS, AND ALL OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND REPRESENTATIVES,

 

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AND PAY THE AMOUNT OF ANY ADVERSE FINAL JUDGMENT, TO THE EXTENT THAT IT IS BASED
UPON A CLAIM THAT ANY PRODUCT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, TRADE
SECRET OR OTHER PROPRIETARY RIGHT OF A THIRD PARTY.  DISTRIBUTOR SHALL PROVIDE
COMPANY PROMPT NOTICE IN WRITING OF ANY SUCH ACTION AND PERMIT COMPANY TO ANSWER
AND DEFEND SUCH CLAIM OR ACTION WITH COUNSEL OF COMPANY’S CHOOSING.  DISTRIBUTOR
SHALL PROVIDE COMPANY WITH SUCH INFORMATION AND ASSISTANCE AND COOPERATION AS
COMPANY REASONABLY REQUESTS, AT COMPANY’S EXPENSE, TO HELP COMPANY DEFEND SUCH
ACTION.  COMPANY SHALL HAVE THE RIGHT TO ENTER INTO A BONA FIDE SETTLEMENT OR
COMPROMISE OF ANY ACTION, PROVIDED THAT IT IS REASONABLE TO ASSUME THAT A
SETTLEMENT OR COMPROMISE OF THE ACTION WOULD NOT ADVERSELY AFFECT DISTRIBUTOR. 
COMPANY SHALL NOT SETTLE OR COMPROMISE THE ACTION WITHOUT THE WRITTEN CONSENT OF
DISTRIBUTOR, WHICH CONSENT SHALL NOT BE WITHHELD UNREASONABLY; AND IN THE EVENT
AN ACTION IS BROUGHT PURSUANT TO THIS SECTION 14.2, COMPANY MAY, AT ITS EXPENSE,
EITHER: (I) PROCURE FOR DISTRIBUTOR THE RIGHT TO CONTINUE TO OFFER TO SELL AND
SELL THE ALLEGEDLY INFRINGING PRODUCT; OR (II) REPLACE OR MODIFY THE PRODUCT
WITH A PRODUCT THAT IS NOT SUBJECT TO A CLAIM OF ALLEGED INFRINGEMENT, BUT WHICH
PRODUCT IS EQUIVALENT TO THE PRODUCT.

 

14.3.       DISTRIBUTOR GENERAL INDEMNIFICATION.  EXCEPT TO THE EXTENT THAT ANY
CLAIMS ARISE OUT OF OR RESULT FROM THE NEGLIGENCE OR WILFUL MISCONDUCT OF
COMPANY OR ANY CONTRACT MANUFACTURER, THEIR AFFILIATES AND ALL OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND REPRESENTATIVES, OR THE
MATERIAL BREACH OF COMPANY’S OBLIGATIONS HEREUNDER, DISTRIBUTOR SHALL DEFEND,
INDEMNIFY AND HOLD COMPANY, AND THEIR RESPECTIVE AFFILIATES AND ALL OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND REPRESENTATIVES, HARMLESS
FROM AND AGAINST ALL LOSSES INCURRED IN CONNECTION WITH ANY CLAIM MADE BY A
THIRD PARTY AGAINST COMPANY, AND ANY OF THEIR RESPECTIVE AFFILIATES,
SUB-DISTRIBUTORS, AND ALL OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES, ARISING OUT OF OR ATTRIBUTABLE TO:

 

(A)           PRODUCT LIABILITY, PROPERTY DAMAGE, PERSONAL INJURY, OR DEATH
RELATING TO THE NEGLIGENCE, RECKLESSNESS OR WILFUL MISCONDUCT OF DISTRIBUTOR OR
ITS AFFILIATES OR ANY THIRD PARTIES USED OR ENGAGED BY DISTRIBUTOR;

 

(B)           ANY BREACH BY DISTRIBUTOR OF ANY OF ITS REPRESENTATIONS,
WARRANTIES OR COVENANTS CONTAINED IN SECTIONS 10.1 AND 10.3;

 

(C)           INFRINGEMENT BY DISTRIBUTOR’S TRADE MARKS; AND

 

(D)           STRICT LIABILITY RELATING TO REGULATORY ACTIVITIES CONDUCTED BY
DISTRIBUTOR RELATING TO THE PRODUCT AND/OR THE REGISTRATIONS AFTER THE EFFECTIVE
DATE.

 

14.4.       PROCEDURE.  THE INDEMNIFIED PARTY SHALL PROVIDE THE INDEMNIFYING
PARTY PROMPT NOTICE IN WRITING OF ANY SUCH ACTION AND PERMIT THE INDEMNIFYING
PARTY TO ANSWER AND DEFEND SUCH CLAIM OR ACTION WITH COUNSEL OF THE INDEMNIFYING
PARTY’S CHOOSING.  THE INDEMNIFIED PARTY SHALL PROVIDE THE INDEMNIFYING PARTY
WITH SUCH INFORMATION AND ASSISTANCE AND COOPERATION AS THE INDEMNIFYING PARTY
REASONABLY REQUESTS, AT THE INDEMNIFYING PARTY’S EXPENSE, TO HELP THE
INDEMNIFYING PARTY DEFEND SUCH ACTION.  THE INDEMNIFYING PARTY SHALL HAVE THE
RIGHT TO ENTER INTO A BONA FIDE SETTLEMENT OR COMPROMISE OF ANY ACTION PROVIDED,
THAT IF IT IS REASONABLE TO ASSUME THAT A SETTLEMENT OR COMPROMISE OF THE ACTION
WOULD ADVERSELY AFFECT THE INDEMNIFIED PARTY, THE INDEMNIFYING PARTY SHALL NOT
SETTLE OR COMPROMISE THE ACTION WITHOUT THE WRITTEN CONSENT OF THE

 

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INDEMNIFIED PARTY, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD. 
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY, THE INDEMNIFIED PARTY SHALL HAVE
THE RIGHT TO PARTICIPATE IN ANY SUCH ACTION WITH THE INDEMNIFYING PARTY WITH
COUNSEL OF THE INDEMNIFIED PARTY’S CHOOSING, AT THE INDEMNIFIED PARTY’S OWN
COST.  NOTWITHSTANDING THE FOREGOING, DISTRIBUTOR SHALL NOT ENTER INTO ANY
SETTLEMENT OR CONSENT TO THE MAKING OF ANY ORDER WHICH WOULD BE PREJUDICIAL TO
THE VALIDITY OR ENFORCEABILITY OF ANY PATENT OR ANY OTHER INTELLECTUAL PROPERTY
RIGHT OF COMPANY WITHOUT OBTAINING THE PRIOR, WRITTEN CONSENT OF COMPANY.

 

14.5.       COVENANT TO CO-OPERATE.  IN THE EVENT THAT EITHER COMPANY OR
DISTRIBUTOR BECOMES AWARE OF ANY THIRD PARTY MARKETING AND/OR SELLING ANY
PRODUCT IN THE FIELD IN THE TERRITORY AND SUCH ACTIVITY IS INFRINGES ON ANY
PATENTS OR VIOLATES ANY AGREEMENT BETWEEN THE COMPANY AND SUCH THIRD PARTY, THE
PARTY WITH SUCH INFORMATION SHALL NOTIFY THE OTHER PARTY, AND COMPANY AGREES TO
CONSULT WITH DISTRIBUTOR TO DEVELOP A JOINT STRATEGY FOR COMPANY TO TAKE ALL
LEGAL ACTIONS, AT COMPANY’S EXPENSE, NECESSARY TO ENFORCE DISTRIBUTOR’S
EXCLUSIVE RIGHTS WITH RESPECT TO THE PRODUCT IN THE FIELD IN THE TERRITORY. 
DISTRIBUTOR SHALL PROVIDE COMPANY WITH SUCH INFORMATION, ASSISTANCE AND
COOPERATION, AS COMPANY REASONABLY REQUESTS TO HELP COMPANY ENFORCE
DISTRIBUTOR’S RIGHTS HEREUNDER.  COMPANY SHALL NOT SETTLE OR COMPROMISE THE
ACTION WITHOUT THE WRITTEN CONSENT OF DISTRIBUTOR, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD.

 

14.6.       LIMITATION ON LIABILITY.  EXCEPT FOR DAMAGE PROVISIONS OF
SECTION 4.8, AND THE PARTIES’ INDEMNIFICATION OBLIGATIONS IN THIS AGREEMENT, NO
PARTY SHALL BE LIABLE TO THE OTHER FOR ANY AMOUNTS REPRESENTING LOSS OF DATA,
REPROCUREMENT COSTS, LOST REVENUES OR PROFITS, PUNITIVE DAMAGES, OR FOR ANY
OTHER INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES.

 

15.                               CONFIDENTIALITY AND NON-USE

 

15.1.       OBLIGATION.  DURING THE TERM OF THIS AGREEMENT, A PARTY (“DISCLOSING
PARTY”) MAY DISCLOSE TO THE OTHER PARTY, ITS AFFILIATE’S DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS (“RECEIVING PARTY”) CERTAIN CONFIDENTIAL INFORMATION.  THE
RECEIVING PARTY SHALL KEEP CONFIDENTIAL INFORMATION CONFIDENTIAL AND SUCH
CONFIDENTIAL INFORMATION SHALL NOT, WITHOUT THE DISCLOSING PARTY’S PRIOR WRITTEN
CONSENT, BE DISCLOSED BY THE RECEIVING PARTY TO ANY PERSON OR ENTITY NOT A PARTY
TO THIS AGREEMENT IN ANY MANNER WHATSOEVER IN WHOLE OR IN PART, AND SHALL NOT BE
USED BY A RECEIVING PARTY OTHER THAN IN CONNECTION WITH THE PURPOSES
CONTEMPLATED BY THIS AGREEMENT.  CONFIDENTIAL INFORMATION SHALL BE DISCLOSED
ONLY TO THE AFFILIATES DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF THE
RECEIVING PARTY WHO NEED TO KNOW SUCH CONFIDENTIAL INFORMATION FOR THE PURPOSES
OF THIS AGREEMENT.  THE RECEIVING PARTY HERETO AGREES THAT, UNLESS REQUIRED BY
APPLICABLE LAW OR LEGAL PROCESS, IT WILL NOT DISCLOSE TO ANY THIRD PARTY
CONFIDENTIAL INFORMATION, NOR USE SUCH CONFIDENTIAL INFORMATION IT RECEIVES FROM
THE DISCLOSING PARTY, FOR ANY PURPOSE OTHER THAN THAT CONTEMPLATED UNDER THIS
AGREEMENT.

 

15.2.       SURVIVAL.  THE OBLIGATIONS SET FORTH IN THIS ARTICLE SHALL SURVIVE
EXPIRATION OR TERMINATION OF THIS AGREEMENT FOR A PERIOD OF FIVE (5) YEARS.

 

15.3.       PERMITTED DISCLOSURES.

 

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(A)           NOTWITHSTANDING THE ABOVE, NOTHING CONTAINED IN THIS AGREEMENT
SHALL PRECLUDE A PARTY FROM UTILIZING OR DISCLOSING TO OTHERS ITS CONFIDENTIAL
INFORMATION OR UTILIZING CONFIDENTIAL INFORMATION RECEIVED FROM ANOTHER PARTY AS
MAY BE REQUIRED:  (A) FOR REGULATORY PURPOSES, INCLUDING SUBMISSION OF
REGULATORY FILINGS REQUIRED TO OBTAIN GOVERNMENTAL APPROVALS SUBJECT TO
REQUESTING CONFIDENTIAL TREATMENT; (B) FOR AUDIT, TAX OR CUSTOMS PURPOSES
SUBJECT TO REQUESTING CONFIDENTIAL TREATMENT; (C) BY LAW, ADMINISTRATIVE OR
JUDICIAL ORDER OF ANY BODY HAVING JURISDICTION OVER THE PARTY SO REQUIRED TO
MAKE SUCH DISCLOSURE (AND WHETHER OR NOT SUCH REQUIREMENT HAS THE FORCE OF LAW),
WITH THE CONSENT OF THE OTHER PARTY, WHICH CONSENT SHALL NOT BE WITHHELD
UNREASONABLY, IN EACH CASE SUBJECT TO SECTION 15.5.

 

(B)           NOTWITHSTANDING THE ABOVE, EITHER PARTY MAY DISCLOSE THE OTHER
PARTY’S CONFIDENTIAL INFORMATION TO THE RECEIVING PARTY’S AFFILIATES AND ITS AND
THEIR OFFICERS AND EMPLOYEES, AND ACTUAL AND POTENTIAL SALES AGENTS AND
SUB-DISTRIBUTORS, ACTUAL AND POTENTIAL INVESTORS, LEGAL AND FINANCIAL ADVISORS,
CONSULTANTS, AND THE LIKE; PROVIDED, HOWEVER, THAT THE PARTY DISCLOSING THE
CONFIDENTIAL INFORMATION OF THE OTHER PARTY SHALL IMPOSE UPON SUCH DISCLOSEES
OBLIGATIONS OF CONFIDENTIALITY AND NON-USE AT LEAST EQUIVALENT IN SCOPE (AND
DURATION) TO THOSE SET FORTH IN SECTIONS 15.1 AND 15.2.

 

15.4.       PUBLIC ANNOUNCEMENTS.  NO PARTY SHALL MAKE ANY PUBLIC ANNOUNCEMENTS
CONCERNING THIS AGREEMENT, EXCEPT:  (A) AS MAY BE REQUIRED LEGALLY BY LAW,
ADMINISTRATIVE OR JUDICIAL ORDER OF ANY BODY HAVING JURISDICTION OVER THE PARTY
SO REQUIRED TO MAKE SUCH ANNOUNCEMENT (AND WHETHER NOT SUCH REQUIREMENT HAS THE
FORCE OF LAW); OR (B) NO PARTY MAY INCLUDE IN A SUBSEQUENT PUBLIC STATEMENT OR
DOCUMENT, INFORMATION REGARDING THE AGREEMENT WHICH HAS NOT ALREADY BEEN
APPROVED FOR PUBLIC DISCLOSURE OR PUBLICLY DISCLOSED BY THE OTHER PARTY.

 

15.5.       CONFIDENTIAL TREATMENT.  IF ANY PARTY IS REQUIRED TO MAKE ANY
DISCLOSURE PERMITTED TO BE MADE UNDER SECTION 15.4 OR ANY OTHER GOVERNMENT
FILING RELATING TO THIS AGREEMENT, SUCH PARTY SHALL, WHERE PRACTICABLE, SEEK
CONFIDENTIAL TREATMENT FOR THE TERMS AND CONDITIONS OF THIS AGREEMENT TO THE
FULLEST EXTENT PERMITTED BY ANY GOVERNMENTAL AGENCY OR SELF-REGULATORY
ORGANIZATION TO WHICH SUCH PARTY PROVIDES A COPY OF THIS AGREEMENT.  PRIOR TO
SEEKING CONFIDENTIAL TREATMENT FROM ANY GOVERNMENTAL AGENCY OR SELF-REGULATORY
ORGANIZATION FOR ANY SUCH DOCUMENT, SUCH PARTY SHALL PROVIDE THE OTHER PARTY AND
THE OTHER PARTY’S COUNSEL WITH A COPY OF THE DOCUMENT REDACTED AS THE FILING
PARTY WISHES TO FILE SUCH DOCUMENT, SHALL CONSULT WITH THE OTHER PARTY AND THE
OTHER PARTY’S COUNSEL AND SHALL PROVIDE THEM WITH A REASONABLE OPPORTUNITY TO
REQUEST THE INCLUSION OF SPECIFIED PROVISIONS IN ANY REQUEST BY SUCH PARTY FOR
CONFIDENTIAL TREATMENT AND THE PLACEMENT OF A RESTRICTIVE LEGEND ON EACH
DISCLOSURE MADE.  NOTHING IN THIS SECTION 15.5 SHALL REQUIRE ANY PARTY TO BREACH
ANY APPLICABLE LAW.

 

16.                               FORCE MAJEURE

 

16.1.       NOTIFICATION OF FORCE MAJEURE EVENT.  IF ANY PARTY IS AFFECTED BY
FORCE MAJEURE IT SHALL FORTHWITH NOTIFY THE OTHER PARTY OF ITS NATURE AND
EXTENT.

 

16.2.       EFFECT OF FORCE MAJEURE EVENT.  NO PARTY SHALL BE DEEMED TO BE IN
BREACH OF THIS AGREEMENT, OR OTHERWISE BE LIABLE TO THE OTHER, BY REASON OF ANY
DELAY IN PERFORMANCE OR THE NON-

 

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PERFORMANCE OF ANY OF ITS OBLIGATIONS HEREUNDER, TO THE EXTENT THAT SUCH DELAY
OR NON-PERFORMANCE IS DUE TO ANY FORCE MAJEURE OF WHICH IT HAS NOTIFIED THE
OTHER PARTY, AND THE TIME FOR PERFORMANCE OF THAT OBLIGATION SHALL BE EXTENDED
ACCORDINGLY.

 

16.3.       CONTINUING FORCE MAJEURE EVENT.  IF THE FORCE MAJEURE IN QUESTION
PREVAILS FOR A CONTINUOUS PERIOD IN EXCESS OF THREE (3) MONTHS, THE PARTIES
SHALL ENTER INTO BONA FIDE DISCUSSIONS WITH A VIEW TO ALLEVIATING ITS EFFECTS,
OR TO AGREEING UPON SUCH ALTERNATIVE ARRANGEMENTS AS MAY BE FAIR AND REASONABLE.

 

17.                               MISCELLANEOUS PROVISIONS

 

17.1.       RELATIONSHIP OF THE PARTIES.  THE RELATIONSHIP BETWEEN COMPANY AND
DISTRIBUTOR HEREUNDER IS SOLELY THAT OF MANUFACTURER AND DISTRIBUTOR, AND
BETWEEN COMPANY AND DISTRIBUTOR HEREUNDER IS SOLELY THAT OF LICENSOR AND
LICENSEE, AND DISTRIBUTOR IS NOT AN AGENT OF COMPANY FOR ANY PURPOSE. 
DISTRIBUTOR SHALL HAVE NO POWER OR AUTHORITY TO BIND COMPANY IN ANY MANNER AND
SHALL NOT HOLD ITSELF OUT AS THE AGENT OF COMPANY FOR ANY PURPOSE.

 

17.2.       ASSIGNMENT; BINDING EFFECT.  THIS AGREEMENT SHALL BE BINDING UPON
THE SUCCESSORS AND ASSIGNS OF THE PARTIES PERMITTED HEREUNDER, BUT ARE OTHERWISE
PERSONAL AS BETWEEN THE PARTIES.  NO PARTY MAY ASSIGN ANY INTEREST UNDER THIS
AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER, WHICH CONSENT SHALL
NOT BE UNREASONABLY WITHHELD, EXCEPT THAT NO SUCH CONSENT SHALL BE REQUIRED TO
ASSIGN THIS AGREEMENT TO (I) AN AFFILIATE; OR (II) A THIRD PARTY SUCCESSOR BY
MERGER OR ACQUISITION OR BY DIVESTITURE OR SPIN-OFF OF ALL OR SUBSTANTIALLY ALL
OF THE BUSINESS OR ASSETS TO WHICH THIS AGREEMENT RELATES.  ANY PURPORTED
ASSIGNMENT WITHOUT A REQUIRED CONSENT SHALL BE VOID.  NO ASSIGNMENT SHALL
RELIEVE ANY PARTY OF RESPONSIBILITY FOR THE PERFORMANCE OF ANY OBLIGATION WHICH
ACCRUED PRIOR TO THE EFFECTIVE DATE OF SUCH ASSIGNMENT.

 

17.3.       EXPENSES.  EACH PARTY SHALL BEAR ITS OWN EXPENSES WITH RESPECT TO
THE NEGOTIATIONS, PREPARATION AND EXECUTION OF THIS AGREEMENT.

 

17.4.       NO THIRD PARTY BENEFICIARIES.  THIS AGREEMENT IS SOLELY FOR THE
BENEFIT OF THE PARTIES AND THEIR RESPECTIVE AFFILIATES AND NO PROVISION OF THIS
AGREEMENT SHALL BE DEEMED TO CONFER UPON ANY THIRD PARTIES ANY REMEDY, CLAIM,
LIABILITY, REIMBURSEMENT, CLAIM OF ACTION OR OTHER RIGHT IN EXCESS OF THOSE
EXISTING WITHOUT REFERENCE TO THIS AGREEMENT.

 

17.5.       NOTICES.  ALL NOTICES, REQUESTS, CLAIMS, DEMANDS AND OTHER
COMMUNICATIONS UNDER THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE DEEMED TO
HAVE BEEN DULY GIVEN (A) WHEN RECEIVED, IF DELIVERED PERSONALLY, (B) WHEN
TRANSMITTED, IF TELECOPIED (WHICH IS CONFIRMED), (C) UPON RECEIPT, IF SENT BY
REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID, RETURN RECEIPT REQUESTED) AND
(D) THE BUSINESS DAY AFTER IT IS SENT, IF SENT FOR NEXT-DAY DELIVERY TO A
DOMESTIC ADDRESS BY OVERNIGHT MAIL OR COURIER, TO THE PARTIES AT THE FOLLOWING
ADDRESSES:

 

If to Distributor, to:

 

Dr. Reddy’s Laboratories

 

36

--------------------------------------------------------------------------------

 

200 Somerset Corporate Boulevard, 7th Floor

Bridgewater, NJ 08807

Attn: Head, Specialties Business

Facsimile: 908-203-4970

 

with copies sent concurrently to:

 

Dr. Reddy’s Laboratories

200 Somerset Corporate Boulevard, 7th Floor

Bridgewater, NJ 08807

Attn: Vice President, Legal Affairs

Facsimile: 908-203-6509

 

If to Company, to:

 

Ceragenix Pharmaceuticals, Inc.

1444 Wazee Street, Suite 210

Denver, CO 80202

Attn: Chief Executive Officer

Facsimile: 303-534-1860

 

with copies sent concurrently to:

 

Ceragenix Pharmaceuticals, Inc.

1444 Wazee Street, Suite 210

Denver, CO 80202

Attn: Chief Financial Officer

Facsimile: 303-534-1860

 

PROVIDED HOWEVER, THAT IF ANY PARTY SHALL HAVE DESIGNATED A DIFFERENT ADDRESS BY
NOTICE TO THE OTHERS, THEN TO THE LAST ADDRESS SO DESIGNATED.

 

17.6.       GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPALS.

 

17.7.       DISPUTE RESOLUTION.

 

(A)           THE PARTIES SHALL NEGOTIATE IN GOOD FAITH AND USE REASONABLE
EFFORTS TO SETTLE ANY DISPUTE, CONTROVERSY OR CLAIM ARISING FROM OR RELATED TO
THIS AGREEMENT OR THE BREACH OF THIS AGREEMENT BY PROVIDING WRITTEN NOTICE OF A
DISPUTE TO THE OTHER PARTY, AND HAVE ANY SUCH DISPUTE CONTROVERSY OR CLAIM
REFERRED TO THE EXECUTIVE OFFICERS OF THE PARTIES, OR THEIR RESPECTIVE
DESIGNEES, FOR ATTEMPTED RESOLUTION WITHIN TWENTY (20) DAYS THEREAFTER.  IF THE
PARTIES DO NOT FULLY SETTLE, AND A PARTY WISHES TO PURSUE THE MATTER, EACH SUCH
DISPUTE, CONTROVERSY OR CLAIM SHALL BE FINALLY RESOLVED BY BINDING ARBITRATION
IN ACCORDANCE WITH THE PROVISIONS SET FORTH IN THIS SECTION 17.7.

 

37

--------------------------------------------------------------------------------

 

(B)          ALL DISPUTES BETWEEN THE PARTIES ARISING FROM OR RELATING TO THIS
AGREEMENT OR THE BREACH OF THIS AGREEMENT THAT CANNOT OTHERWISE BE RESOLVED
INFORMALLY, SHALL BE FINALLY RESOLVED BY ARBITRATION IN ACCORDANCE WITH THE THEN
EXISTING RULES OF THE AMERICAN ARBITRATION ASSOCIATION (THE “AAA”), AS
SUPPLEMENTED BY THE FURTHER REQUIREMENTS OF THIS SECTION 17.7.  SUCH ARBITRATION
SHALL BE CONDUCTED BY THREE (3) ARBITRATORS, ONE APPOINTED BY EACH OF COMPANY
AND DISTRIBUTOR AND THE THIRD SELECTED BY THE FIRST TWO APPOINTED ARBITRATORS.

 

(C)          WITHIN TWENTY (20) DAYS AFTER FILING ITS REQUEST FOR ARBITRATION
WITH THE AAA, THE PARTY REQUESTING ARBITRATION OF A DISPUTE (THE “CLAIMANT”)
SHALL PROVIDE THE OTHER PARTY (THE “RESPONDENT”) WITH A STATEMENT EXPLAINING THE
BASIS OF ITS REQUEST FOR ARBITRATION, INCLUDING A LISTING ALL OF THE SPECIFIC
FACTS THE CLAIMANT CONTENDS SUPPORT ITS CLAIMS, ALL ACTS OR OMISSIONS BY THE
RESPONDENT THAT THE CLAIMANT BELIEVES CONSTITUTE A BREACH OF THIS AGREEMENT, ALL
OF THE TERMS AND PROVISIONS OF THIS AGREEMENT THAT THE CLAIMANT BELIEVES HAVE
BEEN BREACHED, THE NAMES AND ADDRESSES OF EACH PERSON THE CLAIMANT BELIEVES HAS
KNOWLEDGE SUPPORTING ITS CLAIM, AND A CONCISE STATEMENT OF DAMAGES, INCLUDING
THE MEANS BY WHICH THE CLAIMED DAMAGES WERE CALCULATED AND THE FACTS UPON WHICH
THE CALCULATION(S) WERE BASED.  THE CLAIMANT ALSO SHALL PROVIDE THE OTHER PARTY
WITH SUCH STATEMENT A COPY OF ALL DOCUMENTS IN ITS POSSESSION OR CONTROL THAT IT
CONTENDS SUPPORT ITS CLAIM.

 

(D)          WITHIN SIXTY (60) DAYS OF RECEIPT OF THE ABOVE STATEMENT, THE
RESPONDENT SHALL PROVIDE A WRITTEN REPLY STATEMENT TO THE CLAIMANT, SETTING
FORTH A BRIEF DESCRIPTION OF EACH OF THE DEFENSES KNOWN TO IT AT THAT TIME AND
THE FACTS UPON WHICH THE DEFENSES ARE BASED, AND THE NAMES AND LAST KNOWN
ADDRESSES OF EACH WITNESS SUPPORTING ANY SUCH DEFENSES.  THE RESPONDENT ALSO
SHALL PROVIDE WITH SUCH REPLY STATEMENT A COPY OF ALL DOCUMENTS IN ITS
POSSESSION OR CONTROL THAT IT CONTENDS SUPPORT ITS DEFENSES.

 

(E)          THE REQUIREMENTS OF SECTIONS 17.7(C) AND 17.7(D) ARE INTENDED TO
SUPPLEMENT, AND THEREFORE ARE IN ADDITION TO, THE RULES AND PROCEDURAL
REQUIREMENTS OF THE AAA.  IN PARTICULAR, THE EXCHANGES OF DOCUMENTS AND
INFORMATION REQUIRED BY SUCH PARAGRAPHS SHALL BE IN ADDITION TO ANY DISCOVERY
THAT IS PERMITTED UNDER THE RULES OF THE AAA OR THAT THE ARBITRATORS MAY
OTHERWISE AUTHORIZE IN THE ARBITRATION.

 

(F)           THE ARBITRATORS SHALL BE REQUIRED TO RENDER A REASONED WRITTEN
OPINION IN SUPPORT OF THEIR FINAL DECISION, SETTING FORTH FINDINGS OF FACT,
LEGAL ANALYSIS AND AWARD.  THE DECISION RENDERED BY THE ARBITRATORS SHALL BE
FINAL AND BINDING UPON THE PARTIES.  JUDGMENT UPON THE DECISION AND ANY AWARD
MADE BY THE ARBITRATORS MAY BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION. 
EACH PARTY SHALL PAY ITS OWN EXPENSES OF ARBITRATION AND SHALL SHARE EQUALLY IN
THE FEES AND EXPENSES OF THE ARBITRATORS, UNLESS THE ARBITRATORS ASSESS AGAINST
ONE PARTY THE EXPENSES OF THE OTHER PARTY (INCLUDING THE OTHER PARTY’S
REASONABLE ATTORNEYS’ FEES AND EXPENSES) IN THEIR AWARD.

 

(G)          TO THE EXTENT PERMITTED BY LAW, THE ARBITRATION PROCEEDING SHALL BE
CONFIDENTIAL AND THE ARBITRATION PANEL SHALL ISSUE APPROPRIATE PROTECTIVE ORDERS
TO SAFEGUARD SUCH CONFIDENTIALITY.  THE PARTIES AGREE TO KEEP CONFIDENTIAL ANY
DOCUMENTS EXCHANGED BETWEEN THEM PURSUANT TO THE ARBITRATION AND, THE CONTENT OF
ANY TESTIMONY OR WRITTEN DOCUMENTS SUBMITTED PURSUANT TO THE ARBITRATION.  NO
PARTY SHALL MAKE (OR INSTRUCT THE ARBITRATION PANEL TO MAKE) ANY PUBLIC
ANNOUNCEMENT WITH RESPECT TO THE PROCEEDINGS OR DECISION OF THE ARBITRATION
PANEL WITHOUT

 

38

--------------------------------------------------------------------------------

 

PRIOR WRITTEN CONSENT OF EACH OTHER PARTY.  THE EXISTENCE OF ANY DISPUTE
SUBMITTED TO ARBITRATION, AND THE AWARD, SHALL BE KEPT IN CONFIDENCE BY THE
PARTIES AND THE ARBITRATION PANEL, EXCEPT AS REQUIRED IN CONNECTION WITH THE
ENFORCEMENT OF SUCH AWARD OR AS OTHERWISE REQUIRED BY APPLICABLE LAW.

 

(H)          THE ARBITRATION PROCEEDINGS SHALL TAKE PLACE IN NEW YORK CITY, NEW
YORK.

 

17.8.       AMENDMENTS; ENTIRE AGREEMENT.  THIS AGREEMENT CONTAINS THE ENTIRE
AGREEMENT BETWEEN DISTRIBUTOR AND COMPANY WITH RESPECT TO ITS SUBJECT MATTER,
SUPERSEDES ALL PREVIOUS AGREEMENTS OR UNDERSTANDINGS WITH RESPECT THERETO AND
MAY NOT BE MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE DULY
AUTHORISED REPRESENTATIVES OF THE PARTIES.

 

17.9.       WAIVER.  THE FAILURE OF ANY PARTY TO ENFORCE ANY CONDITION OR PART
OF THIS AGREEMENT AT ANY TIME SHALL NOT BE CONSTRUED AS A WAIVER OF THAT
CONDITION OR PART, NOR SHALL IT FORFEIT ANY RIGHTS TO FUTURE ENFORCEMENT
THEREOF.

 

17.10.     SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT IS HELD BY ANY
COURT OR OTHER COMPETENT AUTHORITY TO BE INVALID OR UNENFORCEABLE IN WHOLE OR IN
PART, THE OTHER PROVISIONS OF THIS AGREEMENT AND THE REMAINDER OF THE AFFECTED
PROVISION SHALL CONTINUE TO BE VALID.

 

17.11.     CONSTRUCTION.  THE LANGUAGE IN ALL PARTS OF THIS AGREEMENT SHALL BE
CONSTRUED, IN ALL CASES, ACCORDING TO ITS FAIR MEANING.  THE PARTIES ACKNOWLEDGE
THAT EACH PARTY AND ITS COUNSEL HAVE REVIEWED AND REVISED THIS AGREEMENT AND
THAT ANY RULE OF CONSTRUCTION TO THE EFFECT THAT ANY AMBIGUITIES ARE TO BE
RESOLVED AGAINST THE DRAFTING PARTY SHALL NOT BE EMPLOYED IN THE INTERPRETATION
OF THIS AGREEMENT.  THE LANGUAGE OF ANY DISPUTE RESOLUTION PROCEEDING IN
CONNECTION WITH THIS AGREEMENT SHALL BE ENGLISH.

 

17.12.     HEADINGS.  THE HEADINGS OF THIS AGREEMENT HAVE BEEN PROVIDED FOR
CONVENIENCE ONLY AND SHALL HAVE NO LEGAL EFFECT IN CONNECTION WITH ANY
INTERPRETATION OF ANY OF THE PROVISIONS OF THIS AGREEMENT.

 

17.13.     COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED MANUALLY OR BY
FACSIMILE BY THE PARTIES, IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE
CONSIDERED ONE AND THE SAME AGREEMENT AND SHALL BECOME EFFECTIVE WHEN A
COUNTERPART OF THIS AGREEMENT SHALL HAVE BEEN SIGNED BY EACH OF THE PARTIES AND
DELIVERED TO THE OTHER PARTY.

 

*  *  *  *  *  *  *  *  *  *  *

 

39

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties have executed this Distribution and Supply
Agreement in duplicate as of the Effective Date.

 

 

Ceragenix Pharmaceuticals , Inc.

 

Dr. Reddy’s Laboratories, Inc.

Signed by:

 

Signed by:

 

 

 

Signature:

/s/ Steven Porter

 

Signature:

/s/ Jeffrey Wasserstein

 

 

 

Position:

Chief Executive Officer

 

Position:

EVP North America

 

 

Ceragenix Corporation

Signed by:

 

Signature:

/s/ Steven Porter

 

 

Position:

Chief Executive Officer

 

 

40

--------------------------------------------------------------------------------

 

SCHEDULE 1.8

 

Company’s Trade Marks

 

EpiCeram®                             Registration No. 3,240,549

CeragenixTM                       Notice of allowance Serial No. 78/619974;
awaiting documentation of commercial use.

 

41

--------------------------------------------------------------------------------

 

SCHEDULE 1.36

 

List of Patents

 

UCSF barrier repair patent

 

US Patent No. 5,643,899

 

42

--------------------------------------------------------------------------------

 

SCHEDULE 1.37

 

Product Information

 

[***]:

 

Ingredient

 

[***]

 

[***]

Capric Acid

 

[***]

 

[***]

Cholesterol

 

[***]

 

[***]

Dimethicone

 

[***]

 

[***]

Disodium EDTA

 

[***]

 

[***]

Glycerin

 

[***]

 

[***]

Glyceryl Stearate

 

[***]

 

[***]

Hydroxypropyl Bispalmitamide MEA

 

[***]

 

[***]

Linoleic Acid

 

[***]

 

[***]

Palmitic Acid

 

[***]

 

[***]

PEG-100 Stearate

 

[***]

 

[***]

Petrolatum

 

[***]

 

[***]

Phenoxyethanol

 

[***]

 

[***]

Phosphoric Acid

 

[***]

 

[***]

Potassium Hydroxide

 

[***]

 

[***]

Squalane

 

[***]

 

[***]

Water

 

[***]

 

[***]

Corn Syrup Solids

 

[***]

 

[***]

E. Cerifera (Candelilla) Wax

 

[***]

 

[***]

 

--------------------------------------------------------------------------------

[***]

 

Indications:

 

THE INDICATIONS FOR USE STATEMENT FROM THE FDA IS AS FOLLOWS:

 

FOR TOPICAL DERMATOLOGICAL USE ONLY

 

43

--------------------------------------------------------------------------------

 

EPICERAM® IS A SKIN BARRIER EMULSION TO BE USED TO TREAT DRY SKIN CONDITIONS AND
TO MANAGE AND RELIEVE THE BURNING AND ITCHING ASSOCIATED WITH VARIOUS TYPES OF
DERMATOSES, INCLUDING ATOPIC DERMATITIS, IRRITANT CONTACT DERMATITIS, RADIATION
DERMATITIS.  EPICERAM® HELPS TO RELIEVE DRY WAXY SKIN BY MAINTAINING A MOIST
WOUND & SKIN ENVIRONMENT, WHICH IS BENEFICIAL TO THE HEALING PROCESS.

 

Apply EPICERAM® in a thin layer to the affected skin areas 2 times per day (or
as needed) and massage gently into the skin.   If the skin is broken, cover
EPICERAM® with a dressing of choice.

 

44

--------------------------------------------------------------------------------

 

SCHEDULE 1.45

 

Specifications

 

[g29421kc09i001.jpg]

 

45

--------------------------------------------------------------------------------

 

 

[g29421kc09i002.jpg]

 

46

--------------------------------------------------------------------------------

[g29421kc09i003.jpg]

 

For Topical Dermatological Use Only

Rx only

 

PRODUCT DESCRIPTION

 

EPICERAM® is a skin barrier emulsion.

 

INDICATIONS FOR USE

 

EPICERAM® is used to treat dry skin conditions and to manage and relieve the
burning and itching associated with various types of dermatoses, including
atopic dermatitis, irritant contact dermatitis, radiation dermatitis and helps
to relieve dry waxy skin by maintaining a moist wound & skin environment, which
is beneficial to the healing process.

 

CONTRAINDICATIONS

 

When an allergy to one of the ingredients is known.

 

WARNINGS

 

EPICERAM® does not contain a sunscreen and should always be used in conjunction
with a sunscreen in sun exposed areas. In radiation dermatitis and/or in
conjunction with ongoing radiation therapy apply following radiation therapy. 
Do not apply within 4 hours prior to radiation therapy.  Apply twice daily or as
indicated by the radiation therapist. After application, a temporary tingling
sensation may occur (10 to 15 minutes).  Keep this and similar products out of
the reach of children.  Follow directions for use.  If condition does not
improve within 10 to 14 days, consult a physician.

 

PRECAUTIONS AND OBSERVATIONS

 

For the treatment of any dermal wound, consult a physician.

· Use EPICERAM® Skin Barrier Emulsion only as directed.

· EPICERAM® Skin Barrier Emulsion is non-toxic, however it is for external use
only and should not be ingested or taken internally.

· If clinical signs of infection are present, appropriate treatment should be
initiated.  If clinically indicated, use of EPICERAM® Skin Barrier Emulsion may
be continued during the anti-infective therapy.

· If condition does not improve within 10 to 14 days, consult a physician.

· EPICERAM® Skin Barrier Emulsion does not contain a sunscreen and should always
be used in conjunction with a sunscreen in sun exposed areas.

· In radiation dermatitis and/or in conjunction with ongoing radiation therapy,
apply following radiation therapy.

· Do not apply within 4 hours prior to radiation therapy.

· Apply twice daily or as indicated by the radiation therapist.

· Following the application of EPICERAM® Skin Barrier Emulsion a temporary
tingling sensation may occur (10 to 15 minutes).

· Keep this and other similar products out of the reach of children.

 

INSTRUCTIONS FOR USE

 

Wash affected area with a suitable cleanser.  Apply EPICERAM® in a thin layer to
the affected skin areas 2 times per day (or as needed) and massage gently into
the skin.  If the skin is broken, cover EPICERAM® with a dressing of choice.  If
a gauze dressing is used, the gauze should be moist. In the case of radiation
dermatitis, apply following radiation therapy (do not apply within 4 hours prior
to therapy) and at least twice daily or as indicated by the radiation therapist.

 

INGREDIENTS

 

Capric Acid, Ceramide, Cetyl Alcohol, Cholesterol, Conjugated Linoleic Acid,
Euphorbia Cerifera Wax, Decanoic Acid, Disodium EDTA, Food Starch Modified Corn
Syrup Solids, Fragrance, Glycerin, Glyceril Stearate, Hydroxypropyl
Bispalmitamide MEA, Palmitic Acid, PEG-100 Stearate, Petrolatum, Phenoxyethanol,
Phosphoric Acid, Potassium Hydroxide, Squalane, Water.

 

HOW SUPPLIED

 

EPICERAM® Skin Barrier Emulsion is available in a 50 g tube. NDC XXXX-XXXX-XX

 

Store at 15°C to 30°C (59°F to 86°F), Do not freeze.

 

Distributed by: Ceragenix Corp., Denver, CO. 80202     Manufactured by: Topiderm
inc., Amityville, NY.11701

 

Rx ONLY - Prescription Medical Device; Federal law restricts this device to sale
by or on the order of a physician.

 

Note:  all packaging specifications provided under this Schedule 1.45 are
intended to serve only as a guideline for the final Product packaging.

 

47

--------------------------------------------------------------------------------

 

EpiCeram® Finished Product Release Tests & Specifications

 

Test

 

Specifications

Description (visual assessment)

 

[***]

Color

 

[***]

Odor

 

[***]

pH

 

[***]

Total Aerobic Microbial Count USP <61>

 

[***]

 

Note:  the finished product release tests and specifications presented in the
table above are preliminary finished product release tests and specifications. 
Final finished product release tests and specifications will be included in the
Quality Agreement.

 

48

--------------------------------------------------------------------------------

 

SCHEDULE 3.2(a)

 

Product Pricing Structure

 

Annual Net Sales Levels

 

Purchase Price as Percent of Net Sales

Up to [***] ($[***])

 

[***]

Above [***] ($[***]) and below [***] ($[***])

 

[***]

Above [***] ($[***]) and below [***] ($[***])

 

[***]

Above [***] ($[***]) and below [***] ($[***])

 

[***]

Above [***] ($[***]) and below [***] ($[***])

 

[***]

Above [***] ($[***])

 

[***]

 

Purchase Price percentages will be applied in increments based on Annual Net
Sales Levels.  For example, on annual Net Sales of $[***], [***] percent will be
paid on Net Sales up to $[***], [***] percent will be paid on Net Sales above
$[***] and below $[***], and, [***] percent will be paid on Net Sales above
$[***] and below $[***].  Therefore, that aggregate payment of due on such
annual Net Sales is Cost + ($[***]) + ($[***]) + ($[***]), or Cost + $[***].

 

Costs shall be projected annually for each Contract Year and a “true-up” payment
shall be made by one Party to the other within ninety (90) days after the end of
a Contract Year to reflect actual Costs incurred for that Contract Year.

 

For purposes of clarity, Distributor shall deduct from amounts due to Company
under this Schedule 3.2(a) all amounts Distributor paid to Company to purchase
the Products during the course of a Contract Year.

 

The Product Pricing Structure contained in this Schedule 3.2(a) shall apply
during the life of any patent covering the Product in any country in the
Territory.  Thereafter, for the remainder of the Term of this Agreement and for
any period thereafter where Company continues to supply Distributor with
Product, the Supply Price shall be negotiated and mutually agreed to by the
Parties.

 

For purposes of clarity, Distributor shall not be responsible, in whole or in
part, for any costs associated whatsoever with Company’s efforts to develop a
commercially viable Product prior to the Launch Date.

 

49

--------------------------------------------------------------------------------

 

Costs for first Contract Year is as follows:

 

Tube Size (g)

 

Fully allocated cost
per tube

[***]

 

$

[***]

[***]

 

$

[***]

 

--------------------------------------------------------------------------------

*Fully burdened cost/tube that is based on [***] bulk batch production, final
device filling/packaging at [***] and [***] batches per year.

 

50

--------------------------------------------------------------------------------

 

SCHEDULE 4.3(a)

 

Form of Purchase Order

 

PURCHASE ORDER

 

PO #

 

 

 

Date:      

 

 

 

From:

To:

 

 

Dr.Reddy’s Laboratories, Inc.

Ceragenix Pharmaceuticals, Inc.

1444 Wazee Street, Ste 210

1444 Wazee Street, Ste 210

200 Somerset Corporate Blvd, 7th Floor

Denver, CO 80202

Bridgewater, NJ 08807

Tel: [720] 848-8440

Tel:

Fax: [303] 634-1880

Fax:

Attn: CFO

 

Description

 

Tube Size

 

Date Required

 

Quantity

 

USD
Amount

 

Epiceram

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOB:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terms:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

—

 

 

Ship to:

 

Bill To:

 

 

 

 

 

Authorized Signature

 

51

--------------------------------------------------------------------------------

 

SCHEDULE 4.3(b)

 

Batch Size Requirements

 

Product

 

Batch Size

Bulk EpiCeram Product

 

[***]

 

 

 

Finished Device

 

Minimum # of Tubes per
[***] batch*

[***]

 

[***]

[***]

 

[***]

 

--------------------------------------------------------------------------------

*This number indicates that minimum number of each tube type that can be filled
to complete a [***] bulk order.

 

52

--------------------------------------------------------------------------------

 

SCHEDULE 6.12

 

Outline of Quality System and Design Control Agreement

 

[***]

 

53

--------------------------------------------------------------------------------

 

SCHEDULE 8.1

 

Outline for Quality Agreement

 

[***]

 

54

--------------------------------------------------------------------------------

 

SCHEDULE 10.2

 

Company Disclosure Schedule

 

THE COMPANY’S RIGHTS TO THE PATENTS ARE DERIVED FROM ITS EXCLUSIVE LICENSE FROM
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA (UCSF).  CERTAIN OTHER PARTIES
POSSESS LIMITED RIGHTS TO THE TECHNOLOGY EMBODIED IN THE PATENT WHICH RIGHTS ARE
SUMMARIZED BELOW AND ARE ADDRESSED THROUGH TERMS OF THIS AGREEMENT ABOVE.

 

UCSF EXCLUSIVE LICENSE

 

THE COMPANY HOLDS ITS RIGHTS TO THE PATENTS PURSUANT TO AN EXCLUSIVE LICENSE
AGREEMENT WITH THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, DATED JUNE 28,
2000.  PURSUANT TO SUCH EXCLUSIVE LICENSE, THE REGENTS GRANTED TO OSMOTICS
(PREDECESSOR TO THE COMPANY) AN EXCLUSIVE WORLDWIDE LICENSE, WITH A RIGHT TO
SUBLICENSE, UNDER THE 5,643,899 PATENT TO MAKE, HAVE MADE, USE, SELL, OFFER TO
SELL AND IMPORT LICENSED PRODUCT AND TO PRACTICE LICENSED METHOD IN THE FIELD OF
USE.  LICENSED PRODUCT IS DEFINED AS ANY MATERIAL THAT IS EITHER COVERED BY THE
5,643,899 PATENT, OR THE USE OF WHICH WOULD CONSTITUTE AN INFRINGEMENT OF THE
5,643,899 PATENT.  LICENSED METHOD IS DEFINED AS ANY METHOD THAT IS COVERED BY
THE 5,643,899 PATENT, OR THE USE OF WHICH WOULD CONSTITUTE AN INFRINGEMENT OF
THE 5,643,899 PATENT.  THE FIELD OF USE IS DEFINED AS THERAPEUTIC AND COSMETIC
APPLICATIONS IN MAMMALS, INCLUDING HUMANS.

 

PURSUANT TO SUCH EXCLUSIVE LICENSE, THE REGENTS RESERVES THE RIGHT TO USE THE
PATENT AND ASSOCIATED TECHNOLOGY FOR CLINICAL, EDUCATIONAL AND RESEARCH PURPOSES
INCLUDING PUBLICATION OF RESEARCH RESULTS AND SHARING SUCH RESULTS WITH OTHER
NON-PROFIT INSTITUTIONS FOR THEIR SIMILAR SCOPE.

 

THE REGENTS RETAINS THE RIGHT TO MAINTAIN THE PATENT AT ITS OWN EXPENSE IN ANY
COUNTRY WHERE THE COMPANY HAS NOT ELECTED TO FILE, PROSECUTE OR MAINTAIN PATENT
APPLICATIONS, AND THOSE PATENT APPLICATIONS WILL NOT BE SUBJECT TO THE EXCLUSIVE
LICENSE AGREEMENT.

 

THE REGENTS RETAINS CERTAIN RIGHTS CONCERNING INFRINGEMENT OF THE PATENT AS SET
FORTH IN THE EXCLUSIVE LICENSE AGREEMENT, AND THE REGENTS HAS THE RIGHT TO SHARE
IN ANY DAMAGES RECEIVED RELATING TO INFRINGEMENT.

 

[***]

Osmotics Sublicense

 

Pursuant to a Patent Sublicense Agreement between the Company and Osmotics dated
as of August 15, 2006, the Company granted Osmotics a worldwide sublicense under
the Licensed Patents to make, have made, use, import, offer to sell, sell, and
have sold Licensed Products and the right to the Licensed Methods in the
Licensed Field.  [***].  The Company may purchase from Osmotics the rights under
the agreement for the non-prescription formulation of the Barrier Repair
Technology.  Licensed Field means cosmetic, non-prescription used of the Barrier
Repair Technology, and defines any product not for sale in pharmacies, doctor’s
offices, hospitals.

 

55

--------------------------------------------------------------------------------

 

Licensed Method is defined as any method in the Licensed Field which is covered
by any claim of an issued, unexpired Licensed Patent or is covered by any claim
being prosecuted in a Licensed Patent that is in the form of a pending patent
application.  License Patent is the 5,643,899 patent.  Licensed Products is
defined as any product application, treatment or part thereof in the Licensed
Field, the manufacture, use or sale of which is covered by any claim of an
issued, unexpired Licensed Patent or is covered by any claim being prosecuted in
a Licensed Patent that is in the form of a pending patent application.

 

56

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