Adamis Pharmaceuticals Corporation 10-Q [admp-10q_063016.htm]

 

Exhibit 10.6

 

Execution copy

 

[*Designates portions of this document have been omitted pursuant to a request
for confidential treatment filed separately with the Commission]

 

DEVELOPMENT, LICENSE AND COMMERCIALIZATION AGREEMENT

 

THIS DEVELOPMENT, LICENSE AND COMMERCIALIZATION AGREEMENT (this “Agreement”) is
made and entered into on May 9, 2016 (the “Effective Date”), by and between
Watson Laboratories, Inc., a Nevada corporation (“Watson”), on the one hand, and
Adamis Pharmaceuticals Corporation, a company incorporated under the laws of
Delaware (“Adamis”), on the other hand. Watson and Adamis shall each sometimes
be referred to herein as a “Party” and collectively as the “Parties.”

 

RECITALS

 

1.          Watson is engaged in the development, manufacture, promotion, sale
and distribution of pharmaceutical products throughout the world.

 

2.          Adamis is engaged in research and development of pharmaceutical
products and had developed a pre-filled single dose syringe for the delivery of
epinephrine solution.

 

3.          Watson desires to obtain, and Adamis is willing to provide Watson,
with the exclusive right to use and sell the Product (as defined below) in the
Territory on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the receipt and sufficiency of which is hereby
acknowledged by the Parties, the Parties hereby agree as follows:

 

ARTICLE 1
DEFINITIONS

 

As used herein, the following terms shall have the following meanings.

 

“[*] Product” means a PFS designed to deliver [*] Epinephrine Injection USP for
subcutaneous or intramuscular injection.

 

“0.3mg Product” means a PFS designed to deliver 0.3mg Epinephrine Injection USP,
which contains approximately [*] epinephrine solution for subcutaneous or
intramuscular injection.

 

“AAA” has the meaning set forth in Section 12.2(a).

 

“Adamis” has the meaning set forth in the Caption.

 

“Adamis Indemnitee” has the meaning set forth in Section 10.1.

 

 

 

 

“Affiliate” means, with respect to a Person, any Person that directly or
indirectly controls, is controlled by or is under common control with such
Person. For the purposes of this definition, the word “control” (including, with
correlative meaning, the terms “controlled by” or “under the common control
with”) means (a) ownership of fifty percent (50%) or more of the voting and
equity rights of such Person, or (b) the power to direct the management of such
Person. Notwithstanding the foregoing, for purposes of this Agreement, a
Wholesaler Affiliate shall not constitute an Affiliate of Watson.

 

“Agreement” has the meaning set forth in the Caption.

 

“Applicable Law” means any and all laws, statutes, ordinances, rules,
regulations, permits, orders, decrees, judgments, directives or guidelines of
any kind whatsoever that may apply to the development, manufacturing, marketing
or sale of a Product or the performance of either Party’s obligations under this
Agreement, including laws, regulations and guidelines governing the import,
export, development, manufacturing, marketing, distribution and sale of a
Product, to the extent applicable and relevant, and including all current Good
Manufacturing Practices or guidelines promulgated by the FDA or other
Governmental Authorities and including trade association guidelines, where
applicable, as well as U.S. import and export control laws and the U.S. Foreign
Corrupt Practices Act.

 

“Approval Deadline” has the meaning set forth in Exhibit A.

 

“Back-up Facility” has the meaning set forth in Section 4.3(a).

 

“Bankruptcy Code” has the meaning set forth in Section 11.3.

 

“Bankruptcy Laws” has the meaning set forth in Section 11.3.

 

“Calendar Quarter” means each consecutive three-month period beginning on
January 1, April 1, July 1 or October 1 of any given year.

 

“Calendar Year” means each consecutive beginning on January 1 and ending on
December 31 of any given year.

 

“Catalent” means Catalent Belgium, S.A. and any successor thereto.

 

“Commercial Supply” has the meaning set forth in Section 4.1(a).

 

“Commercial Supply Price” means, unless otherwise agreed by the Parties in
writing:

 

(i)  to the extent that manufacturing (which for all purposes of this Agreement
includes packaging and/or labelling activities) of the Product for the Territory
is performed by a Contract Manufacturer, the amount owing or made to any
Contract Manufacturer for the acquisition of the Product, including, without
limitation, [*];

 

(ii)  to the extent that a Party or its Affiliate performs all or any part of
the manufacturing or supply of the Product, the Cost of Manufacture of the
Product, plus a margin of [*] percent ([*]%), provided however, this amount
shall not exceed the [*] (i.e., [*]) [*]; and

 

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(iii) notwithstanding (i) and (ii) above, if a Party determines to qualify a
Back-up Facility pursuant to Section 4.2(a) and the Parties do not agree in
writing on their relative payment responsibility for such qualification, such
Party shall bear [*].

 

For the avoidance of doubt, if a Party or its Affiliate performs only a part of
the manufacturing required for the Product, the [*] payable pursuant to (ii) or
(iii) above shall only apply to [*].

 

“Commercially Reasonable Efforts” means, with respect to a Party, such efforts
and resources which are consistent with those efforts and resources that would
be used by a similarly situated company to perform any activity for any product
at a comparable stage of development or commercialization, taking into
consideration such product’s commercial potential, stage of development and life
cycle, medical/scientific viability, technical and regulatory profile,
intellectual property protection and risks, competitiveness in the marketplace,
profitability (but without consideration of the sharing of Net Profits pursuant
to this Agreement) and other relevant factors.

 

“Competing Product” means any other PFS epinephrine solution product.

 

“Confidential Information” means, with respect to a Party, all information of
any kind whatsoever (including, without limitation, data, compilations,
formulae, models, patent disclosures, procedures, processes, projections,
protocols, results of experimentation and testing, specifications, strategies,
techniques and all non-public intellectual property rights, as hereinafter
defined), and all tangible and intangible embodiments thereof of any kind
whatsoever (including, without limitation, apparatus, compositions, documents,
drawings, machinery, patent applications, records and reports), which is
disclosed or made available to the other Party regardless of whether such
information is marked, identified as or otherwise acknowledged to be
confidential at the time of disclosure to the other Party. All information shall
be deemed confidential unless agreed otherwise. Notwithstanding the foregoing,
Confidential Information of a Party shall not include information which the
other Party can establish by written documentation or similar evidence (a) to
have been publicly known prior to disclosure of such information by the
disclosing Party to the other Party, (b) to have become publicly known, without
breach of this Agreement or violation of Applicable Laws on the part of the
other Party or its Affiliates or any employee, contractor or agent acting on
their behalf, subsequent to disclosure of such information by the disclosing
Party to the other Party, (c) to have been received by the other Party at any
time without obligation of confidentiality from a source, other than the
disclosing Party, rightfully having possession of and the right to disclose such
information, (d) to have been otherwise known by the other Party prior to
disclosure of such information by the disclosing Party to the other Party, or
(e) to have been independently developed by employees or agents of the other
Party without the use of or reliance upon any information disclosed by the
disclosing Party to the other Party.

 

“Contract Manufacturer” means Catalent, [*], or any other Third Party that is
engaged by either Party to manufacture and/or package the Product.

 

“Cost of Manufacture” means the [*].

 

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“Development Plan” means the development plan and responsibility matrix attached
hereto as Exhibit B, relating to the development of and regulatory submission
for the [*] Product, as well as the marketing materials for the Product, as
modified by the Parties from time to time upon written agreement.

 

“Development Services” means those services set forth in the Development Plan to
be performed by the Party identified in the Development Plan.

 

“Direct Cost” means the cost of [*].

 

“Dispute” has the meaning set forth in Section 12.1.

 

“Effective Date” has the meaning set forth in the Caption.

 

“[*]” means either or both (i) [*], and (ii) [*].

 

“FDA” means the United States Food and Drug Administration or its successor
agency.

 

“FDCA” means the United States Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §
301 et seq., as amended.

 

“Governmental Authority” means any transnational, domestic or foreign federal,
provincial, state or local governmental, regulatory or administrative authority
(including, without limitation, any Regulatory Authority), department, bureau,
court, agency or official, including, without limitation, any political
subdivision thereof.

 

“Indemnified Party” has the meaning set forth in Section 10.3.

 

“Indemnifying Party” has the meaning set forth in Section 10.3.

 

“Initial Marketing and Regulatory Activities” means all activities customarily
undertaken by a pharmaceutical company to create and implement its marketing
plans and strategies to encourage the FDA approved use of a prescription
pharmaceutical product, including the preparation of training and promotional
materials (materials intended for training purposes and/or for distribution or
dissemination to sales representatives, medical professionals and other Third
Parties, briefing documents, information about Watson, strategy and tactical
plans to promote the Product, as well as advertising), and any regulatory or
legal activities related thereto, including review and approval by a promotional
review committee comprised of medical, legal and/or regulatory personnel
required.

 

“Initial Term” has the meaning set forth in Section 11.1.

 

“Know-How” means any confidential and proprietary ideas, concepts, discoveries,
inventions, developments, improvements, know-how, trade secrets, designs,
devices, process conditions, algorithms, notation systems, works of authorship,
technology, formulas, techniques, methods, procedures, protocols, data,
specifications, conclusions, skill, experience, test data and results
(including, without limitation, pharmacological, toxicological, manufacturing,
and clinical test data and results), analytical and quality control data,
results or descriptions, in each case whether patentable or otherwise. Know-How
does not include patents and patent applications.

 

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“Launch Deadline” has the meaning set forth in Exhibit A.

 

“Licensed Technology” means all tangible or intangible Know-How including
improvements, patents and patent applications that (a) are owned or controlled
(with the right to license or sublicense) by Adamis and (b) are either (i)
necessary for use by Watson in performance of the Development Services to be
performed by Watson or (ii) are necessary for the manufacture, use or sale of
the Product in the Territory.

 

“Losses” has the meaning set forth in Section 10.1.

 

“Manufacturing Facility” means the manufacturing facility (or facilities) at
which the Product to be supplied to Watson is manufactured.

 

“Marketing Allowance” means, for any period, [*] percent ([*]%) of the [*] of
such Product in such period, for the selling, marketing and other expenses
related to the Product incurred by Watson and its Affiliates.

 

“Milestone Payments” has the meaning set forth in Section 5.2.

 

“Minimum Obligation” means [*].

 

“NDA(s)” means a New Drug Application (as defined in the FDCA) filed with the
FDA, including, without limitation, all amendments and supplements thereto.

 

“Net Profit” means (a) the sum of the following, without duplication: (i) Net
Sales, (ii) [*], less (b) the sum of the following, without duplication: [*].

 

“Net Sales” means the gross amount invoiced by Watson or its Affiliates or any
sub-licensees on all sales or other dispositions for value of Product in the
Territory (excluding any sales among Watson and its Affiliates for resale), less
the following items (to the extent not previously deducted and included in the
gross amount invoiced or otherwise directly paid or incurred by the selling
party):

 

(i)           any and all promotional allowances, rebates, government mandated
rebates (i.e. Medicaid, etc.), charge backs, quantity and cash discounts, and
other usual and customary discounts to customers actually allowed or taken,

 

(ii)          amounts repaid or credited by reason of rejections, returns or
recalls of goods,

 

(iii)         retroactive price reductions and shelf stock adjustments,

 

(iv)         any sales, excise, turnover, inventory, value-added, and similar
taxes and duties assessed on applicable sales of Products, but excluding
national, state or local taxes assessed on income,

 

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(v)          allowances for doubtful accounts accrued in the ordinary course of
business in accordance with Watson’s standard practices for doubtful accounts
consistently applied, and

 

(vi)         transportation charges (including insurance costs) and handling
charges for transportation of Products to Third Parties.

 

Components of Net Sales shall be determined using the accrual method of
accounting in accordance with U.S. generally accepted accounting principles.
There shall be no double-counting in determining the foregoing deductions.

 

In the event Watson or any of its Affiliates or sub-licensees transfers Product
for consideration, in whole or in part, other than cash, the gross sales price
for such Product shall be deemed the standard invoice price then being invoiced
by Watson in arm’s length transactions with similar Third Party customers. In no
event shall a sale be deemed to occur in the case of transfers of professional
samples, product donations, or other samples or clinical research supplies at no
charge.

 

Notwithstanding the foregoing, for any sales by Watson, its Affiliates or its
sub-licensees to a Wholesaler Affiliate, Net Sales shall be deemed to be the [*]
by Watson in [*] to Third Parties of Product during the fiscal quarter in which
the sale to the Wholesaler Affiliate took place.

 

“Other Costs” means other [*] for which Watson or its Affiliates are responsible
to pay in connection with the commercialization of the Product, including
without limitation, (i) [*], (ii) [*], (iii) [*], and (iv) [*]. For the
avoidance of doubt, Other Costs do not include [*].

 

“Out-of-Pocket Expenses” means any fees, costs or other expenses paid by a
Party, as applicable, to Third Parties, excluding in all cases any Overhead
Expenses. Under no circumstances shall Out-of-Pocket Expenses include [*].

 

“Overhead Expenses” means overhead, compensation paid by such Party to its
employees, employee benefits, depreciation, taxes, insurance, rent, repairs and
maintenance, supplies, utilities, administrative expenses and other fixed costs.

 

“Party” and “Parties” have the meanings set forth in the Caption.

 

“Person” means an individual, corporation, partnership, limited liability
company, firm, association, joint venture, estate, trust, governmental or
administrative body or agency, or other entity.

 

“PFS” means a pre-filled single dose syringe, which delivers epinephrine
solution by injection, and is designed to be self-administered by the patient or
by a caregiver.

 

“Pharmacovigilance Agreement” means an agreement between the Parties or their
Affiliates, setting forth their respective responsibilities for adverse event
reporting with respect to the Product.

 

“[*]” means [*].

 

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“Product” means each or both of the [*] Product and the 0.3mg Product.

 

“Quality Agreement” means an agreement between Adamis or Contract Manufacturer
and Watson, setting forth the quality responsibilities with respect to the
manufacture and supply of Product to Watson, which agreement shall be entered
into prior to the delivery of any Product to Watson.

 

“Recall” has the meaning set forth in Section 6.2.

 

“Regulatory Approvals” shall mean any and all approvals, product and/or
establishment licenses, registrations or authorizations, including, without
limitation approvals under NDAs, of any Regulatory Authority or other
Governmental Authority, which are necessary for the commercial manufacture, use,
storage, importation, transport, marketing, promotion, pricing or sale of the
Product in the Territory.

 

“Regulatory Authority” means the FDA and any other applicable Governmental
Authority responsible for or involved in granting or issuing approvals, product
and/or establishment licenses, registrations or authorizations for the
commercial manufacture, use, storage, importation, transport, marketing,
promotion, pricing or sale of the Product in the Territory.

 

“Regulatory Dossier” means all files regarding the Regulatory Approvals,
including but not limited to correspondence, records, applications (including,
without limitation NDAs), supplements, annual reports, adverse event reports,
clinical studies and pre-clinical studies to the extent related to the Product
owned or controlled by Adamis or its Affiliate.

 

“Reimbursable Expense” has the meaning set forth in Section 5.4.

 

“Renewal Term” has the meaning set forth in Section 11.1.

 

“SEC” has the meaning set forth in Section 8.3.

 

“Supplement Approval Deadline” has the meaning set forth in Exhibit A.

 

“Term” has the meaning set forth in Section 11.1.

 

“Territory” means the entirety of the United States of America and its
territories and possessions (including, but not limited to, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana Islands, the United States
Virgin Islands, the Territory of Guam and United States’ military bases) and any
other countries that the Parties agree, in writing, to add to the Territory.

 

“Territory Supply Agreement” means any agreement between Watson or its Affiliate
and Catalent (or any other Contract Manufacturer) for commercial supply of the
Product for the Territory and/or any agreement between Watson or its Affiliate
and [*] (or any other Contract Manufacturer) for packaging of the Product for
the Territory.

 

“Third Party” means any Person that is not a Party, or an Affiliate of a Party.

 

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“Third Party Claim” has the meaning set forth in Section 10.3.

 

“Trademark” means all of Adamis’ rights to the name “[*]”.

 

“Warranties” has the meaning set forth in Section 4.7.

 

“Watson” has the meaning set forth in the Caption.

 

“Watson Indemnitee” has the meaning set forth in Section 10.2.

 

“Wholesaler Affiliate” shall mean a Person that would be an Affiliate of Watson,
but for the exclusion in the last sentence of the definition of Affiliate, whose
primary business is wholesale distribution of pharmaceutical products
(including, without limitation, ANDA, Inc.).

 

ARTICLE 2
DEVELOPMENT AND PROJECT MANAGEMENT

 

2.1          Development. Each Party agrees that it shall be responsible for
performing all Development Services allocated to such Party in accordance with
the Development Plan. Without limiting the generality of the foregoing, and as
set forth in the Development Plan, (i) Adamis shall be responsible for all
activities required for or associated with the development of the [*] Product,
and the preparation, submission and approval of the NDAs for the Products,
including all stability studies and process validations, including all costs
related thereto, and (ii) Watson shall be responsible for [*] as well as the
commercialization of the [*] Product in the Territory, including all costs
related thereto. Each Party shall keep the other Party fully informed of the
status and progress being made towards completion of their respective activities
under the Development Plan and shall exchange all relevant information relating
thereto (as of the Effective Date and from time to time thereafter). Watson
shall be entitled to inspect Adamis’ work in progress related to its Development
Services and any documents relating thereto (including at Adamis’ facilities,
during normal business hours and upon reasonable notice). The Parties shall
maintain records of Development Services in sufficient detail and in good
scientific manner appropriate for patent and regulatory purposes and shall
properly reflect all work done and results achieved in the performance of its
obligations under the Development Plan.

 

2.2          Materials and Facilities. Each Party shall conduct the Development
Services to be performed by such Party in accordance with the requirements of
Applicable Law.

 

2.3          Facility Qualification. Unless and until Watson enters into
Territory Supply Agreements with Catalent and [*], Adamis shall, at its expense,
use Commercially Reasonable Efforts to cause each of the Catalent and [*]
Manufacturing Facility to be qualified and capable of manufacturing the Product
as required under Applicable Law (including FDA requirements), in order to
maintain Regulatory Approvals for the Product.

 

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ARTICLE 3
REGULATORY APPROVAL

 

3.1          NDA and Other Regulatory Dossiers. Adamis shall prepare and file,
at its own expense, the NDA and any other Regulatory Dossier required to be made
in connection with obtaining and maintaining the Regulatory Approval of the
0.3mg Product from the FDA and any other applicable Regulatory Authority in the
Territory. Subject to completion of development of the [*] Product in accordance
with Article 3, Adamis shall prepare and file, at its own expense, the NDA and
any other Regulatory Dossier required to be made in connection with obtaining
and maintaining the Regulatory Approval of the [*] Product from the FDA and any
other applicable Regulatory Authority in the Territory. Adamis shall use
Commercially Reasonable Efforts to (i) file the NDA and any other applicable
Regulatory Dossier for the 0.30 mg Product and, subject to completion of
development of the [*] Product in accordance with Article 3, the [*] Product
with the FDA and any other applicable Regulatory Authority in the Territory as
soon as reasonably practicable, and (ii) maintain each such NDA and other
applicable Regulatory Dossiers after the FDA’s and/or other applicable
Regulatory Authority’s approval thereof. The NDA and all other Regulatory
Approvals for the Product in the Territory shall be filed in the name of, and
will be owned exclusively by, Adamis. Watson shall, at its own expense, promptly
provide Adamis with such assistance as may be reasonably requested by Adamis in
connection with preparing the NDA or any other Regulatory Dossier and responding
to any questions posed by the FDA or any other Regulatory Authority. Adamis
shall provide Watson with a copy of any regulatory submissions (including the
NDA and any other Regulatory Dossier) regarding the Product filed with, and
correspondence received from, the FDA and any other Regulatory Authority, and
Adamis shall keep Watson informed of all material regulatory developments
related thereto, including the status of any such submissions filed by Adamis.
Adamis shall not make any material modification of the NDA or any other
Regulatory Dossier without the prior written consent of Watson, not to be
unreasonably withheld or delayed, unless required by Applicable Law. Adamis and
its Affiliates and licensees shall have the right to use all data and
information contained or referenced in the NDA and any other Regulatory Dossier,
and to cross-reference the NDA and any other Regulatory Dossier, in connection
with developing, filing for, obtaining and maintaining regulatory approval of,
and/or commercializing the Product outside the Territory.

 

3.2          Compliance. Each Party shall provide the other Party with all
information necessary for the other Party to comply with Applicable Law with
respect to activities contemplated by Section 3.1. Each Party shall promptly
notify the other Party of any comments, responses or notices received from, or
inspections by, the FDA or any other Regulatory Authority, which relate to the
Product, and shall promptly inform the other Party of any responses to such
comments, responses, notices or inspections and the resolution of any issue
raised by the FDA or such other Regulatory Authority.

 

ARTICLE 4
SUPPLY

 

4.1          Supply. Adamis shall cooperate with Watson and use Commercially
Reasonable Efforts to enable Watson or its Affiliate to enter into Territory
Supply Agreements with Catalent and [*] (or other Contract Manufacturer) so
that, if and when Regulatory Approval is obtained, the Contract Manufacturer
shall supply the Product directly to Watson and its Affiliates and sub-licensees
for the Territory and, until Watson or its Affiliate enters into Territory
Supply Agreements with Catalent and [*] (or other Contract Manufacturer), Adamis
shall supply or cause to be supplied by a Contract Manufacturer the Product to
Watson and its Affiliates and sub-licensees for the Territory (any such
commercial supply of the Product for the Territory, “Commercial Supply”). Watson
shall pay the [*] for Commercial Supply supplied by or on behalf of Adamis.
Adamis shall not supply Product to itself or any Third Party for use in the
Territory during the Term, and until the Minimum Obligation has been met (to the
extent that the Minimum Obligation remains an obligation of Adamis), Watson and
its Affiliates and sub-licensees shall purchase sufficient Product from Adamis
or its Contract Manufacturer to satisfy the Minimum Obligation. For so long as
Watson or its Affiliates purchase Commercial Supply from Adamis that is
manufactured by Catalent or packaged by [*], (i) the Parties shall use
Commercially Reasonable Efforts to coordinate and plan their respective
activities to timely make forecasts, place purchase orders, take deliveries and
effect payments in accordance with the terms of the [*], and (ii) Adamis shall
not amend any [*] to the extent it applies to the Territory without prior
written consent of Watson, not to be unreasonably withheld; provided, however,
that no consent of Watson shall be required for any amendment the sole purpose
of which is to allow Catalent or [*] to enter into a Territory Supply Agreement
with Watson or its Affiliate. After the Minimum Obligation has been met, Watson
shall be able to obtain the Product that Watson and its Affiliates and
sub-licensees require for the Territory from a supplier of its choosing,
including any Contract Manufacturer.

 

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4.2          Back-Up Facility.

 

(a)          If either Party determines that a Contract Manufacturer for the
Territory is or will be unable to meet the supply needs of the Parties for
Product or that a better manufacturing alternative is available, the Parties
shall in good faith discuss the situation and make a determination as to (i)
whether an additional manufacturing facility (whether on its own or through any
of its Affiliates or a Third Party manufacturer other than Catalent and [*])
should be qualified as a backup source of manufacturing for the Commercial
Supply (a “Back-up Facility”) for the Territory or for Product needs of Adamis
or its Affiliates or licensees outside of the Territory, and (ii) the Parties’
relative payment responsibility for such qualification.

 

(b)          Subject to the Parties’ obligations under Sections 4.1 and 4.2(a),
either Party shall have the right (but not the obligation) to secure and qualify
(and thereafter to maintain the qualification of) a Back-up Facility at any time
during the Term.

 

(c)          If Watson chooses to qualify a Back-up Facility, Adamis shall use
Commercially Reasonable Efforts to (i) provide Watson, its Affiliate or Contract
Manufacturer with copies of any requested documentation in Adamis’ possession or
control (including Licensed Technology) that is necessary or useful for the
manufacture and release of the Product in the Territory, subject to execution of
any such third party of confidentiality, nondisclosure and nonuse agreements or
covenants in form and substance reasonably satisfactory to Adamis, (ii) assist
Watson, its Affiliate or Contract Manufacturer with the transfer of all
analytical methods, manufacturing procedures and Know-How in Adamis’ possession
or control that is used in the manufacture and release of Product in the
Territory, and (iii) make all required regulatory filings needed to qualify and
maintain the Back-up Facility as a manufacturer of the Product under the
Regulatory Approval, provided however, Watson shall be responsible for all
Out-of-Pocket Expenses incurred by Adamis in connection with making any such
filings.

 

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(d)          In the event that Watson or any of its Affiliates or sub-licensees
qualifies a Back-up Facility for the Territory at its own initial expense (i.e.,
the Parties were unable to agree upon their respective payment responsibility
for such qualification), Watson shall in good faith discuss with Adamis or any
of its Affiliates or licensees the terms upon which Watson, its Affiliate or its
Contract Manufacturer shall supply the Product to Adamis or its Affiliate for
use outside the Territory.

 

(e)          In the event that Adamis or any of its Affiliates or sub-licensees
qualifies a Back-up Facility for outside the Territory at its own initial
expense, Adamis shall in good faith discuss with Watson or its Affiliates the
terms upon which Adamis, its Affiliate or Contract Manufacturer will supply the
Product to Watson for use in the Territory.

 

ARTICLE 5
COMMERCIALIZATION; MILESTONE & PROFIT SHARE PAYMENTS

 

5.1        Commercialization. Watson shall have the exclusive right, to the
exclusion of Adamis and its Affiliates, to commercialize the Product in the
Territory, at its sole cost and expense, subject to the terms and conditions of
this Agreement. Watson shall have sole discretion and control as to the manner
and extent of such commercialization of the Product in the Territory (including
issues concerning labeling, market launch (including the timing thereof), terms
of sale and pricing and customer contracts), subject to the terms and conditions
of this Agreement.

 

5.2        Commercially Reasonable Efforts.

 

(a)          Watson shall use Commercially Reasonable Efforts to (x) commence
the marketing and sale of the Product in the Territory within [*] ([*]) days
from receipt of (i) the applicable Regulatory Approval, (ii) availability of
sufficient Commercial Supply for initial launch of the Product in the Territory
as ordered by Watson and (iii) the Initial Marketing and Regulatory Activities
required to launch, and (y) following such commencement, continue the marketing
and sale of the Product in the Territory during the Term. If Watson believes
that, in the exercise of Commercially Reasonable Efforts, it is necessary to
postpone or delay the launch of the Product as a result of then-prevailing
market or economic conditions or pending, threatened or anticipated litigation
with respect to the Product in the Territory, Watson shall provide Adamis with a
detailed explanation of the reasons for such suggested postponement or delay and
the Parties shall then discuss such reasons in good faith.

 

(b)          In the event that Adamis reasonably determines that Watson has
failed to use Commercially Reasonable Efforts as required by Section 5.2(a),
Adamis shall provide written notice thereof to Watson, and the Parties shall
promptly discuss the matter in good faith for a period not to exceed [*] ([*])
days (or such longer period as may be agreed by the Parties) following the date
of such notice. Such notice shall specify in reasonable detail the facts and
circumstances constituting Adamis’ reasons for reaching such a determination.
Following such [*] ([*]) day period (or such longer period as may be agreed by
the Parties), unless otherwise agreed by the Parties, if Watson (i) has not
cured such failure, or (ii) in the event that such failure is not capable of
being cured in [*] ([*]) days or Watson is not using best efforts to cure such
failure, Adamis shall have the right, exercisable in its sole discretion and
effective [*] ([*]) days after written notice thereof by Adamis to Watson, to
terminate this Agreement; provided that, any such determination shall be stayed
if Watson challenges Adamis’ determination that Watson has failed to use
Commercially Reasonable Efforts as required by Section 5.2(a) in accordance with
the dispute resolution procedure in Article 12.

 

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5.3          Milestone Payments. Watson shall make each of the one-time
milestone payments set forth in Exhibit A (the “Milestone Payments”) to Adamis
after the achievement of the corresponding milestone event set forth in Exhibit
A.

 

5.4          Reimbursement. Adamis shall invoice Watson for [*] (the
“Reimbursable Expense”) as follows:

 

(a)          Following the first commercial sale by Watson of the Product,
Adamis shall invoice Watson for its [*];

 

(b)          Following the Effective Date, Watson shall (i) [*], and (ii) [*];
and

 

(c)          Watson shall pay Adamis the invoiced Reimbursable Expense within
[*] ([*]) days after the date of invoice.

 

5.5          Profit Share Payments. In each Calendar Year during the Term,
Watson shall pay Adamis [*] percent ([*]%) of the first [*] ($[*]) of Net
Profit, and [*] percent ([*]%) of any Net Profit in excess of [*] ($[*]). [*].
Each payment due hereunder shall be made within [*] ([*]) days of the end of
each Calendar Quarter and shall be accompanied by a written report setting forth
in reasonable detail the quantity of Product sold in the Territory (as measured
in saleable units of Product) and Watson’s calculations of Net Sales and Net
Profit for such period. In addition, the Parties shall in good faith discuss
what additional reports, if any, that Watson may be able to provide with respect
to the Net Sales and Net Profit earned during the preceding Calendar Quarter.
Any adjustments to be made in respect of payments previously made to Adamis due
to rebates, returns and the like, shall be factored into the calculation of
subsequent payments.

 

5.6          Records and Audits. For a period of [*] ([*]) years after each
payment made to Adamis, Watson shall keep complete and accurate records in
sufficient detail to permit Adamis to confirm the accuracy of the calculation of
such payment. Adamis shall have the right to audit or have its independent,
certified public accountant (reasonably acceptable to Watson) audit Watson’s
records solely to confirm the accuracy of the calculation of the payment of
consideration for the preceding [*] ([*]) years. Such audits may be exercised
during normal business hours no more than once in any [*] ([*]) month period
upon at least [*] ([*]) days prior written notice. If an audit finds an
underpayment to Adamis, Watson shall promptly pay Adamis the full amount of such
underpayment. If an audit finds an underpayment by Watson of greater than [*]
percent ([*]%) of what was due under this Agreement, Watson shall promptly pay
the full amount of such underpayment and shall pay or reimburse Adamis for the
cost of the audit.

 

5.7          Currency of Payments. All payments under this Agreement shall be
made in U.S. Dollars by wire transfer to such bank account as Adamis may
designate from time to time.

 

5.8          Taxes. Each Party is responsible for its own taxes, duties, levies,
imposts, assessments, deductions, fees, withholdings or similar charges imposed
on or measured by net income or overall gross income (including branch profits),
gross receipts, capital, ability or right to do business and franchise or
similar taxes imposed on it under Applicable Law.

 

12 

 

 

5.9          Late Payments. In the event that any payment due under this
Agreement is not made within [*] ([*]) days of the date it was due, the payment
shall accrue interest from the date due at a rate per annum equal to [*] percent
([*]%) above the U.S. Prime Rate (as set forth in the Wall Street Journal,
Eastern U.S. Edition) for the date on which payment was due, calculated daily on
the basis of a 365-day year, or similar reputable data source; provided that, in
no event shall such rate exceed the maximum legal annual interest rate. The
payment of such interest shall not limit the Party entitled to receive such
payment from exercising any other rights it may have as a consequence of the
lateness of any payment.

 

ARTICLE 6
PHARMACOVIGILANCE; RECALLS

 

6.1          Pharmacovigilance. Prior to the commercialization of the Product,
the Parties shall enter into a Pharmacovigilance Agreement setting forth their
respective pharmacovigilance responsibilities.

 

6.2          Product Recalls. In the event either Party is ordered by a
Regulatory Authority or believes it is necessary to conduct a recall, field
correction, market withdrawal, stock recovery or other similar action with
respect to the Product in the Territory (each, a “Recall”), Watson shall
determine the best manner in which to proceed in its sole discretion and shall
be solely responsible for conducting such Recall. If a Recall is due to a
Party’s willful or negligent act or omission or a breach of its obligations
under this Agreement or Applicable Law, including, without limitation, the
warranties or covenants made by Adamis or Watson, then that Party shall bear the
cost of that Recall and shall reimburse the other Party for all Out-of-Pocket
Expenses incurred by such other Party in connection with such Recall, in each
case including the cost of any Product returned to Watson as a result of the
Recall or destroyed as a result of the Recall.

 

ARTICLE 7
INTELLECTUAL PROPERTY

 

7.1          License.

 

  (a)          Subject to the terms and conditions of this Agreement, Adamis, on
behalf of itself and its Affiliates, hereby grants to Watson and its Affiliates
an exclusive (even as to Adamis and its Affiliates), sub-licensable license
under the Licensed Technology to make or have made (subject to the obligations
in Article 4), sell, offer for sale, distribute, promote, market, or otherwise
commercially exploit the Product in the Territory during the Term. For the
avoidance of doubt, Adamis retains the right under the Licensed Technology to
have Contract Manufacturers manufacture and/or package the Product for Watson
pursuant to this Agreement and to make and have made and/or package the Product
for Adamis and its Affiliates and licensees for use outside the Territory.

 

  (b)          Subject to the license granted to Watson in Section 7.1(a),
Adamis shall maintain all rights in and to the Licensed Technology. As part of
the license granted under Section 7.1(a), during the Term, Watson and its
Affiliates shall have the exclusive right, limited to the Territory, to
reference any and all data owned by Adamis or its Affiliates that is submitted
in the Regulatory Dossiers. Adamis shall not, and shall cause its Affiliates not
to, sell, offer for sale, distribute or otherwise make available (nor contract
with a Third Party to do any of the foregoing) the Product or any Competing
Product to any Person other than Watson and its Affiliates in the Territory
during the Term.

 

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  (c)          Subject to the terms and conditions of this Agreement, Adamis, on
behalf of itself and its Affiliates, hereby grants to Watson and its Affiliates
an exclusive (even as to Adamis and its Affiliates), sub-licensable license
under the Trademark, to use and display the Trademark solely in connection with
the sale, offer for sale, distribution, promotion, marketing, or other
commercial exploitation of the Product in the Territory. All uses by Watson and
its Affiliates and sub-licensees of the Trademark shall be in compliance with
all Applicable Laws and shall be in accordance with such commercially reasonable
quality standards as used by Watson for comparable products. In all packaging,
labeling, advertising, promotional and other material of Watson and its
Affiliates and sub-licensees referencing the Trademark, Watson and its
Affiliates and sub-licensees shall not, without Adamis’s written consent: (i)
vary the spelling, add or delete hyphens, abbreviate, make one word two, or use
a possessive or plural form of the Trademark; (ii) modify the design, add or
delete any elements or words, change any colors or proportion of the Trademark;
(iii) use the Trademark in a manner that disparages Adamis or any of its
products or services; or (iv) use the Trademark in a manner that interferes with
or adversely affects Adamis’ use of the Trademark; in each case except to the
extent required by Applicable Laws, provided that Watson will review and discuss
with Adamis any such exceptions required by Applicable Laws before using the
Trademark pursuant to such exception. At the request of Adamis, Watson will
provide from time to time copies of packaging, labeling, advertising,
promotional and other material of Watson or its Affiliates or sub-licensees
referencing the Trademark to allow Adamis to confirm compliance with the
foregoing.

 

  (d)          Any and all sublicenses to non-Affiliates granted under any
license set forth in this Section 7.1 shall require the prior written consent of
Adamis, which consent shall not be unreasonably withheld, conditioned or
delayed. Any and all sublicenses granted under any license set forth in this
Section 7.1 and distribution agreements or subcontracts for commercialization of
the Product in the Territory shall be in writing and shall be subject to, and
consistent with, the terms and conditions of this Agreement. Watson shall be
responsible for the compliance of its Affiliates, sub-licensees, distributors
and subcontractors with the terms and conditions of this Agreement. Within
thirty (30) days after execution, Watson shall provide Adamis with a full and
complete copy of each agreement granting a sub-license under any license set
forth in this Section 7.1 to any Third Party or appointing any Third Party as a
distributor or subcontractor for commercialization of the Product in the
Territory (provided that Watson may redact any confidential information
contained therein that is not necessary to confirm compliance with this
Agreement). For the avoidance of doubt, the foregoing obligations do not apply
to direct and indirect purchase and sale agreements between Watson and its
customers.

 

7.2          Patent Filings. Upon agreement by the Parties, Adamis shall prepare
and file any and all patent applications relating to, underlying or arising out
of the Licensed Technology and shall take any other similar actions to secure,
maintain, enhance, protect or perfect the intellectual property rights related
to the Licensed Technology. Each Party shall cooperate, as reasonably requested
by the other Party, in connection with such preparation, filing, prosecution and
maintenance. Any such patent application and any patent that issues from such
application(s) will be solely owned by Adamis.

 

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7.3          Infringement of Intellectual Property. Upon a Party learning of any
infringement or threatened infringement of any Licensed Technology in the
Territory, such Party shall promptly inform the other Party in writing of any
such infringement and shall supply such other Party with all evidence pertaining
to such infringement in such Party’s possession. In the event of any
infringement or threatened infringement of the Licensed Technology by a Third
Party in the Territory, Watson shall have the first right to file an action
against any such infringing Third Party or seek abatement of the infringement by
such Third Party at Watson’ sole cost and expense and by counsel of its own
choice, and Adamis shall have the right, at its own expense, to be represented
in any such action by counsel of its own choice. Adamis shall fully cooperate
with Watson in any action brought by Watson, including by being joined as a
party. In the event Watson does not file an action or seek abatement within (a)
seventy-five (75) days following the notice of alleged infringement or (b) ten
(10) days before the time limit, if any, set forth in the Applicable Laws,
whichever comes first, then Adamis shall have the right, but not the obligation,
to file an action against any such infringing Third Party or seek abatement of
the infringement by such Third Party at Adamis’ sole cost and expense and by
counsel of its own choice, and Watson shall have the right, at its own expense,
to be represented in any such action by counsel of its own choice. Watson shall
make reasonable efforts to promptly notify Adamis in writing if Watson decides
not to file an action or seek abatement. Watson shall fully cooperate with
Adamis in such action, including by being joined as a party. Except as otherwise
agreed to by the Parties as part of a cost-sharing arrangement, any recovery or
damages realized as a result of such action or proceeding with respect to
Licensed Technology shall be used first to reimburse the documented
Out-of-Pocket Expenses relating to the action or proceeding that were incurred
by the Party that brought and controlled the action or proceeding, any remaining
compensatory damages relating to the Product (including lost sales or lost
profits with respect to the Product) shall be retained by the Party that brought
and controlled such action or proceeding, , and any punitive damages shall be
equally shared by the Parties. Notwithstanding the foregoing, (i) the Party
bringing such action shall indemnify and reimburse the other Party for all
reasonable Out-of-Pocket Expenses incurred by the other Party in connection with
the action initiated pursuant to this Section 7.3, and (ii) if Watson brought
and controlled the proceeding, the remaining compensatory damages (i.e., after
reimbursement of its documented Out-of-Pocket Expenses) shall be included in Net
Profits and subject to the provisions of Section 5.5.

 

7.4 Infringement of Third Parties’ Rights; Certain Generic Drug Filings.

 

(a)          In the event of any claim by a Third Party, or if either Party
determines, that the manufacture, sale, offer for sale, distribution, promotion,
marketing, other commercial exploitation or use of the Product by Watson or its
Affiliate or sub-licensee infringes the intellectual property rights of a Third
Party, Watson shall have the sole right and obligation, so long as rights to
such Product are licensed to Watson hereunder, to defend and indemnify Adamis
Indemnitees from and against such claim at Watson’s expense, including any
judicial or administrative proceedings relating to such claim. If Adamis is put
on notice of any such claim or makes any such determination of infringement,
Adamis shall provide prompt notice to Watson of any such claim or determination.
Adamis agrees to assist and cooperate with Watson in resolving any such claim.
The procedures for indemnification under this Section 7.4 shall be the same as
those set forth in Section 10.3. Watson shall reimburse Adamis for all
reasonable Out-of-Pocket Expenses incurred by Adamis in the course of providing
requested assistance and cooperation in accordance with this Section 7.4(a).

 

15 

 

 

(b)          Without limiting the foregoing, Watson and its attorneys, in
consultation with Adamis and its attorneys, shall prepare any certifications or
notices required to be filed or delivered to the FDA, other applicable
Regulatory Authority or Third Party in connection with obtaining Regulatory
Approval for the Product that requires an assessment as to whether the
manufacture, use and sale of the Product would infringe any valid Third Party
patent listed with the FDA or such other applicable Regulatory Authority,
including, without limitation, such certifications and notices required pursuant
to Sections 505(j)(2)(A) and (B) of the U.S. Food Drug and Cosmetic Act, as
amended. Adamis agrees to assist and cooperate with Watson in preparation of
such certifications and notices. As requested by Watson, Adamis shall
incorporate, as applicable, such certifications and notices as prepared by
Watson in the NDA and other Regulatory Dossiers to be filed by Adamis or in
notices to be filed with Third Parties as required by Applicable Law. Watson
shall have the sole right and authority to determine whether any patent held by
a Third Party in the Territory shall be challenged in connection with the
pursuit of any Regulatory Approval and shall have the sole right with prior
notice to and consultation with Adamis to control all decisions that relate to
or could impact such patent challenge (including, without limitation,
appointment of counsel, strategies related to the prosecution of the Regulatory
Approval or any related litigation and defense of any litigation or claim of
infringement). Watson shall reimburse Adamis for all reasonable Out-of-Pocket
Expenses incurred by Adamis in the course of providing its assistance and
cooperation in accordance with this Section 7.4(b).

 

7.5           Improvements to the Licensed Technology. The Parties hereby agree
that any improvements to the Licensed Technology made by either Party or jointly
by the Parties shall be owned solely by Adamis, with such improvements becoming
part of the Licensed Technology, so that Watson and its Affiliates shall have
the sole and exclusive right to use such improvements in the Territory with
respect to the Product during the Term. Watson shall and hereby does assign to
Adamis any and all right title and interest of Watson or its Affiliates in any
such improvements to the Licensed Technology, and Watson and its Affiliates
shall, at Adamis’ request and expense, execute such documents and perform such
acts as Adamis may deem reasonably necessary to confirm Adamis’ right, title and
interest in and to any improvements to the Licensed Technology, and to enable
and assist Adamis in procuring, maintaining, enforcing and defending patents,
copyrights and other statutory protections with respect to such improvements to
the Licensed Technology.

 

7.6           Trademark.

 

(a)          Adamis shall own and shall retain the ownership of the entire
right, title and interest in and to the Trademark and goodwill related thereto.
Watson acknowledges, as between the parties, the exclusive right, title and
interest of Adamis in and to the Trademark and goodwill related thereto and will
not do or cause to be done any act or thing contesting or, in any way, impairing
any part of said right, title and interest for the Term and after its
expiration. Watson will not, and will require that its Affiliates and
sub-licensees not, make any representations or take any actions, which may be
taken to indicate that it has any right title or interest in or to the ownership
or use of the Trademark except under the terms of this Agreement, and
acknowledges that nothing contained in this Agreement shall give Watson or any
of its Affiliates or sub-licensees any right, title or interest in or to the
Trademark and goodwill related thereto except the license rights granted under
Section 7.1(c).

 

16

 

 

(b)          Upon request by Adamis, Watson shall, and shall require its
Affiliates and sub-licensees to, provide information to Adamis or its authorized
representative as to its use of the Trademark and to render any assistance
reasonably required by Adamis or its authorized representative to secure and/or
maintain the registration(s) of the Trademark in the Territory.

 

(c)          Watson shall notify Adamis of any adverse use by a Third Party of
the Trademark or of a mark or name confusingly similar to the Trademark. Watson
agrees, and will require its Affiliates and sub-licensees to agree, to take no
action with respect thereto except with the prior written authorization of
Adamis. Adamis may thereupon take such action as it in its sole discretion deems
advisable for the protection of its rights in and to the Trademark, including,
without limitation, allowing Watson to bring and prosecute a claim against such
Third Party at Watson’s expense, if Watson chooses to do so. Watson further
agrees to provide full cooperation with any legal or equitable action by Adamis
to protect Adamis’ right, title and interest in the Trademark. The Party
responsible for bringing and prosecuting any infringement proceedings with
respect to the Trademark and for the expenses associated with such proceedings
shall have the sole right to retain any damages recovered in such proceedings.
Notwithstanding the foregoing, (i) the Party bringing such action shall
indemnify and reimburse the other Party for all reasonable Out-of-Pocket
Expenses incurred by the other Party in connection with the action initiated
pursuant to this Section 7.6, and (ii) if Watson brought and controlled the
proceeding, the remaining damages received (i.e., after reimbursement of its
documented Out-of-Pocket Expenses) shall be included in Net Profits and subject
to the provisions of Section 5.5.

 

ARTICLE 8
CONFIDENTIALITY AND PUBLIC DISCLOSURE

 

8.1           Confidentiality. Each Party shall treat as confidential the
Confidential Information of the other Party, and shall take all necessary
precautions to assure the confidentiality of such Confidential Information. Each
Party agrees to return to the other Party upon the expiration or termination of
this Agreement all Confidential Information of such other Party, except as to
such information it may be required to retain under Applicable Law, except for
(a) one (1) copy of such Confidential Information to be retained by such Party’s
legal department and (b) copies of laboratory books which Adamis shall require
to keep for audits and inspections (in each case, which information which shall
remain subject to ongoing obligations of confidentiality). During the Term and
for a period of [*] ([*]) years following the expiration or termination of this
Agreement, neither Party shall, without the other Party’s express prior written
consent, use or disclose any such Confidential Information of the other Party
for any purpose other than to carry out its obligations hereunder and under any
other written agreement between the Parties. Each Party may disclose
Confidential Information of the other Party to any Affiliates, actual and
potential sub-licensees, employees, consultants, contractors or agents of such
Party who have a need to know such information in order for such Party to
exercise its rights or fulfill its obligations under this Agreement, provided
that prior to disclosure of such Confidential Information of the other Party to
any Affiliate, actual or potential sub-licensee, employee, consultant,
contractor or agent, the Party making such disclosure shall ensure that such
Person is bound in writing to observe obligations of confidentiality and non-use
consistent with the provisions of this Article 8. Notwithstanding the
obligations of confidentiality set forth in this Section 8.1, the receiving
Party may disclose Confidential Information of the disclosing Party to the
extent that such disclosure is required by Applicable Law or a court of
competent jurisdiction; provided, however, that the receiving Party shall so
notify the disclosing Party of its intent (so as to provide the disclosing Party
a reasonable opportunity to seek relief from such required disclosure) and
cooperate with the disclosing Party on reasonable measures to protect the
confidentiality of the Confidential Information. Any such information disclosed
as permitted by this Section 8.1 shall still be deemed Confidential Information
and subject to the restrictions set forth in this Agreement.

 

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8.2           Public Disclosure. Except for such disclosure that is deemed
necessary in the reasonable judgment of either Party to comply with Applicable
Law, no public announcement, news release, statement, publication or
presentation relating to the existence of this Agreement, the subject matter
hereof or either Party’s performance hereunder shall be made without the other
Party’s prior written approval, which approval shall not be unreasonably
withheld, conditioned or delayed. In the event that the Parties mutually agree
in writing to issue a public announcement, news release, statement, publication
or presentation, the Parties agree that they shall use reasonable efforts to
coordinate the initial public announcement, news release, statement, publication
or presentation relating to the existence of this Agreement so that such public
announcement, news release, statement, publication or presentation by each is
made contemporaneously. Notwithstanding the foregoing, neither Party shall be
obligated to issue any public announcement, news release, statement, publication
or presentation in connection herewith. Each Party may make any public statement
in response to questions by the press, analysts, investors or those attending
industry conferences or financial analyst calls, or issue press releases, so
long as any such public statement or press release is not inconsistent with
prior public disclosures or public statements made in accordance with this
Section 8.2 and which do not reveal non-public information about the other
Party.

 

8.3           Filing of this Agreement. The Parties will coordinate in advance
with each other in connection with the filing of this Agreement (including
redaction of certain provisions of this Agreement) with the U.S. Securities and
Exchange Commission (“SEC”) or any stock exchange or governmental agency on
which securities issued by a Party or its Affiliate are traded, and each Party
will use reasonable efforts to seek confidential treatment for the terms
proposed to be redacted; provided that each Party will ultimately retain control
over what information to disclose to the SEC or any stock exchange or other
governmental agency, as the case may be, and provided further that the Parties
will use their reasonable efforts to file redacted versions with any governing
bodies which are consistent with redacted versions previously filed with any
other governing bodies. Other than such obligation, neither Party (nor its
Affiliates) will be obligated to consult with or obtain approval from the other
Party with respect to any filings to the SEC or any stock exchange or other
Governmental Authority.

 

8.4           Prior Nondisclosure Agreement. As of the Effective Date, the terms
of this Article 8 shall supersede any prior non-disclosure, secrecy or
confidentiality agreement between the Parties (or their Affiliates) dealing with
the subject of this Agreement. Any information disclosed pursuant to any such
prior agreement shall be deemed Confidential Information for purposes of this
Agreement.

 

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8.5           Equitable Relief. Given the nature of the Confidential Information
and the competitive damage that a Party would suffer upon unauthorized
disclosure, use or transfer of its Confidential Information to any Third Party,
the parties agree that monetary damages would not be a sufficient remedy for any
breach of this Article 8. In addition to all other remedies, a Party shall be
entitled to specific performance and injunctive and other equitable relief as a
remedy for any breach or threatened breach of this Article 8.

 

ARTICLE 9
REPRESENTATIONS, WARRANTIES AND COVENANTS; DISCLAIMER

 

9.1           Representations and Warranties by Each Party. Each Party hereby
represents and warrants to the other Party as follows as of the Effective Date:

 

(a)          Existence. Such Party is a corporation or limited liability company
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or formed (as applicable).

 

(b)          Authorization and Enforcement of Obligations. Such Party (i) has
the power and authority and the legal right to enter into this Agreement and to
perform its obligations hereunder, and (ii) has taken all necessary action on
its part to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been duly executed
and delivered on behalf of such Party, and constitutes a legal, valid, binding
obligation, enforceable against such Party in accordance with its terms, subject
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting generally the enforcement of creditors’
rights and subject to a court’s discretionary authority with respect to the
granting of a decree ordering specific performance or other equitable remedies.

 

(c)          Consents. All necessary consents, approvals and authorizations of
all Governmental Authorities and other Persons required to be obtained by such
Party in connection with its execution and delivery of this Agreement have been
obtained.

 

(d)          No Conflict. The execution and delivery of this Agreement and the
performance of such Party’s obligations hereunder (i) do not conflict with or
violate any Applicable Laws and (b) do not conflict with, or constitute a
default under, any material contractual obligation of such Party.

 

(e)          No Debarment. Neither such Party nor any of its employees has ever
been: (a) debarred, (b) convicted of a crime for which a person can be disbarred
under Section 306 (a) or (b) of the Generic Drug Enforcement Act of 1992
(Article 306(a) or (b)), (c) threatened to be debarred or (d) indicted for a
crime or otherwise engaged in conduct for which a person can be debarred under
Section 306 (a) or (b).

 

19

 

 

9.2           Covenants by Each Party. Each Party hereby covenants to the other
Party as follows:

 

(a)          Debarment. In the event that either Party, or any of its officers,
directors, or employees or other Person engaged by such Party performing
services under this Agreement, (a) become debarred or receives notice of action
or threat of action with respect to its debarment or (b) becomes the object of
any investigation or subject of any report regarding such Party, or any of its
officers, directors, or employees or other Person engaged by such Party
performing services under this Agreement, in connection with any activity that
could result in debarment or suspension or refusal of approval, including
without limitation any inspection report, warning letter, notice of opportunity
for hearing in a case of debarment, or any other Justice Department, FDA or
other federal or state government inquiry or action bearing on potentially
illegal activities, such Party shall notify the other Party immediately and such
Party shall cease employing, contracting with, or retaining any such Person to
perform any such services.

 

(b)          Compliance with Applicable Laws. In the performance of its
obligations under this Agreement, such Party shall comply and shall cause its
and its Affiliates’ employees and contractors to comply with all Applicable
Laws.

 

9.3           Additional Representations, Warranties and Covenants by Adamis.
Adamis also hereby represents, warrants and covenants to Watson that (a) as of
the Effective Date it has sufficient legal or beneficial title, ownership or
license rights in or to the Licensed Technology and the Trademark to grant the
license as purported to be granted in Section 7.1 pursuant to this Agreement;
(b) as of the Effective Date, it has not received any notice from a Third Party
alleging that (i) the practice of the Licensed Technology infringes or may
infringe such Third Party’s intellectual property right, or (ii) any research,
development or manufacture of the Product by Adamis prior to the Effective Date
infringed or misappropriated the intellectual property rights of such Third
Party; (c) it has not as of the Effective Date, and will not during the Term,
grant any right to any Third Party under the Licensed Technology or the
Trademark that would conflict with the licenses granted to Watson in this
Agreement; and (d) to Adamis’ knowledge as of the Effective Date, there are no
threatened or pending actions, claims or governmental investigations by or
against Adamis that challenge the ownership of the Licensed Technology or the
Product. If Watson or its Affiliates purchase Commercial Supply from Adamis,
Adamis also provides the same representations and warranties regarding all such
Product supplied to Watson that the Contract Manufacturer that manufactures such
Product provides to Adamis under the [*].

 

9.4           Disclaimer. Except as expressly set forth in this Agreement, THE
LICENSED TECHNOLOGY AND THE DEVELOPMENT SERVICES TO BE PROVIDED HEREUNDER ARE
PROVIDED “AS IS,” AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OBTAINING SUCCESSFUL RESULTS,
OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR
ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.

 

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ARTICLE 10
INDEMNIFICATION; INSURANCE; LIMITATION OF LIABILITY

 

10.1         By Watson. Watson agrees to defend, indemnify and hold Adamis and
its Affiliates and their respective directors, officers, employees, consultants,
agents and successors and assigns of any of the foregoing (the “Adamis
Indemnitees”) harmless from and against any and all costs, losses, liability and
expenses (including reasonable attorney’s fees) (“Losses”) incurred by any
Adamis Indemnitee resulting from claims made by any Third Party to the extent
relating to or arising out of (a) the manufacture, marketing, distribution,
sale, offer for sale, promotion or other commercial exploitation of the Product
by Watson, including, without limitation, the infringement of any Third Party’s
intellectual property matters, as set forth under Section 7.4, (b) a breach of
any obligation, covenant, representation or warranty by Watson contained in this
Agreement or (c) any negligent, grossly negligent or intentionally wrongful act
or omission of Watson or its directors, officers or employees, in each case,
except to the extent to, or for matters for, which Adamis would be required to
indemnify Watson Indemnitees under Section 10.2.

 

10.2         By Adamis. Adamis agrees to defend, indemnify and hold Watson and
its Affiliates and their respective directors, officers, employees, consultants,
agents and successors and assigns of any of the foregoing (the “Watson
Indemnitees”) harmless from and against any and all Losses incurred by any
Watson Indemnitee resulting from claims made by any Third Party to the extent
relating to or arising out of (a) performance of Development Services by Adamis,
(b) a breach of any obligation, covenant, representation or warranty by Adamis
contained in this Agreement or (c) any negligent, grossly negligent or
intentionally wrongful act or omission of Adamis or its directors, officers,
employees or agents, in each case, except to the extent to, or for matters for,
which Watson would be required to indemnify Adamis Indemnitees under Section
10.1.

 

10.3         Procedures for Control of Third Party Claims. The Adamis Indemnitee
or Watson Indemnitee, as applicable, entitled to make a claim for
indemnification under this Article 10 shall be referred to as the “Indemnified
Party” and the Party required to indemnify such claim shall be referred to as
the “Indemnifying Party.” In order for an Indemnified Party to be entitled to
any indemnification provided for under this Agreement in respect of, arising out
of or involving a claim or demand, made by any Third Party against the
Indemnified Party (a “Third Party Claim”), such Indemnified Party must notify
the Indemnifying Party in writing of the Third Party Claim within thirty (30)
business days after receipt by such Indemnified Party of written notice of the
Third Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually materially prejudiced as a result of
such failure. If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
upon notice to the Indemnified Party, to assume the defense thereof; provided,
that (i) the Indemnifying Party’s counsel is reasonably satisfactory to the
Indemnified Party and (ii) the Indemnifying Party shall thereafter consult with
the Indemnified Party upon the Indemnified Party’s reasonable request for such
consultation from time to time with respect to such suit, action or proceeding.
If the Indemnifying Party assumes such defense, the Indemnified Party shall have
the right (but not the duty) to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party. The Indemnifying Party shall be liable for the fees and
expenses of counsel employed by the Indemnified Party for any period during
which the Indemnifying Party has not assumed the defense thereof, but the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. Whether or not the Indemnifying Party defends or prosecutes any
Third Party Claim, the Parties shall cooperate in the defense or prosecution
thereof. Such cooperation shall include the retention and (upon the Indemnifying
Party’s request) the provision to the Indemnifying Party of records and
information which are reasonably relevant to such Third Party Claim, and making
employees or any other Indemnified Party available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. Whether or not the Indemnifying Party shall have assumed the defense
of a Third Party Claim, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party’s prior written consent, which shall not be unreasonably
withheld, conditioned or delayed. The Indemnifying Party shall be entitled to
settle a Third Party Claim so long as such settlement does not impose any
obligation or burden (including loss of goodwill) on the Indemnified Party. In
no event shall the Indemnifying Party settle any Third Party Claim if such
settlement would impose any obligation or burden on the Indemnified Party
without the prior written consent of the Indemnified Party.

 

21

 

 

10.4         Insurance. For the Term and for a period of two (2) years after the
expiration or termination of this Agreement, Watson agrees to obtain and
maintain (including through a self-insurance program) comprehensive general
liability insurance, including Products Liability, Bodily Injury and Property
Damage Insurance with a combined single limit of not less than $[*] per
occurrence and $[*] in the aggregate annually.

 

10.5         LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT, EXCEPT WITH RESPECT TO (i) A BREACH OF ARTICLE 8, (ii) A
PARTY’S INFRINGEMENT OF THE OTHER PARTY’S INTELLECTUAL PROPERTY AND/OR
PROPRIETARY RIGHTS, AND (iii) THIRD PARTY CLAIMS PURSUANT TO THE INDEMNIFICATION
OBLIGATIONS SET FORTH IN THIS ARTICLE 10, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, INCLUDING FOR
LOST PROFITS OR LOSS OF OPPORTUNITY OR USE OF ANY KIND SUFFERED BY THE OTHER
PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE.

 

ARTICLE 11
TERM AND TERMINATION

 

11.1         Term. This Agreement shall become effective on the Effective Date.
Unless earlier terminated in accordance with this Agreement, this Agreement
shall expire [*] ([*]) years from the first sale of the 0.3mg Product by Watson
or its Affiliate or sub-licensee in the Territory (the “Initial Term”). The term
of this Agreement shall be automatically extended for additional [*] ([*]) year
terms (each a “Renewal Term” and together with the Initial Term, collectively
referred to herein as the “Term”), unless either Party notifies the other, in
writing, that it will not extend the applicable Term and such notice is
delivered no later than one (1) year prior to the expiration of the Initial Term
or the then-current Renewal Term (as applicable).

 

22

 

 

11.2        Termination for Breach. A Party may terminate this Agreement with
written notice to the other Party at any time during the Term if the other Party
is in breach of any material term of this Agreement, and has not cured such
breach within [*] ([*]) days ([*] ([*]) days with respect to any payment breach)
after written notice from the terminating Party requesting cure of such breach.
In the event of a good faith dispute between the Parties as to whether a
material breach (other than a payment breach) has occurred, the [*] ([*]) day
cure period referenced in the preceding sentence shall be tolled during any
action or proceeding concerning such good faith dispute.

 

11.3        Termination for Insolvency or Bankruptcy. This Agreement may be
terminated prior to the expiration of its Term upon written notice by a Party:
(a) in the event that the other Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (or foreign equivalent),
as now or hereafter in effect (the “Bankruptcy Code”), (iv) file a petition
seeking to take advantage of any law (the “Bankruptcy Laws”) relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in any
involuntary case under the Bankruptcy Code or (vi) take any corporate action for
the purpose of effecting any of the foregoing; or (b) if a proceeding or case
shall be commenced against the other Party in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of the
party or of all or any substantial part of its assets or (iii) similar relief
under any Bankruptcy Laws, or an order, judgment or decree approving any of the
foregoing shall be entered and continue unstayed for a period of sixty (60)
days; or (c) in the event that an order for relief against the other Party shall
be entered in an involuntary case under the Bankruptcy Code.

 

11.4        Termination for Convenience.

 

(a)        [*]

 

(b)        [*]

 

(c)        [*]

 

11.5        Effect of Expiration or Termination.

 

(a)          If Watson or its Affiliate has entered into a Territory Supply
Agreement with any Third Party Contract Manufacturer, then, effective on the
date of any termination of this Agreement, at Adamis’ written election (to be
made prior to such termination), Watson or its Affiliate shall either (i) assign
that Territory Supply Agreement to Adamis (but only to the extent applicable to
the terminated Product), and Adamis shall accept such assignment or (ii)
terminate that Territory Supply Agreement so that Adamis may enter into an
agreement directly with such Contract Manufacturer for supply of the Product for
the Territory, provided however, under either scenario, as between the Parties,
Adamis shall be solely responsible for any Minimum Obligations thereafter owing
to the Contract Manufacturer with respect to the supply of the Product.

 

23 

 

 

(b)          Unless otherwise expressly set forth herein, the expiration or
termination of this Agreement shall not relieve either Party of any obligation
(including, without limitation, any payment obligation with respect to Net Sales
of Product manufactured before the date of termination, but sold after the date
of termination) or liability accruing prior to such expiration or termination,
nor shall the expiration or termination of this Agreement preclude either Party
from pursuing all rights and remedies it may have under this Agreement, at law
or in equity, with respect to breach of this Agreement.

 

(c)          Articles 1, 8, 10, 12 and 13, Sections 5.6 (for the period
specified therein), 6.1 (only with respect to a Recall with respect to Product
commercialized in the Territory prior to expiration or termination), 9.4 and
this Section 11.5 shall survive expiration or termination of this Agreement.

 

ARTICLE 12

DISPUTE RESOLUTION

 

12.1        Disputes. Subject to Section 12.3, upon the written request of
either Party to the other Party, any claim, dispute, or controversy as to the
breach, enforcement, interpretation or validity of this Agreement (a “Dispute”)
shall be referred to a senior executive of Adamis and a senior executive of
Watson. In the event that such senior executives are unable to resolve such
Dispute within sixty (60) days after referral to them, the Dispute shall be
referred to the Chief Executive Officer of Adamis and the Chief Executive
Officer of Watson (or such executive’s designee with decision-making authority)
for attempted resolution. In the event such Chief Executive Officers (or
designees) are unable to resolve such Dispute within sixty (60) days after
referral to them, then, upon the written demand of either Party, the Dispute
shall be subject to arbitration, as provided in Section 11.2, except as
expressly set forth in Section 11.3.

 

12.2        Arbitration.

 

(a)          Subject to Section 12.3 below, any Dispute that is not resolved
under Section 12.1 within thirty (30) days after a Party’s initial written
request for resolution, shall be resolved by final and binding arbitration
before a panel of three neutral experts with relevant industry experience. The
arbitration proceeding shall be administered in accordance with the Commercial
Arbitration Rules and Supplementary Procedures for Large Complex Disputes of the
American Arbitration Association (“AAA”), and the panel of arbitrators shall be
selected in accordance with such rules. The arbitration and all associated
discovery proceedings and communications shall be conducted in English, and the
arbitration shall be held in San Diego, California. Except to the extent
necessary to confirm an award or as may be required by law, neither a Party nor
an arbitrator may disclose the existence, content, or results of arbitration
without the prior written consent of both Parties.

 

(b)          The arbitrators shall, within fifteen (15) days after the
conclusion of the arbitration hearing, issue a written award and statement of
decision describing the essential findings and conclusions on which the award is
based, including the calculation of any damages awarded. The decision or award
rendered by the arbitrators shall be final and non-appealable, and judgment may
be entered upon it in any court of competent jurisdiction. Either Party may
apply for interim injunctive relief with the arbitrators until the arbitration
award is rendered or the controversy is otherwise resolved. The arbitrators
shall be authorized to award compensatory damages, but shall not be authorized
(i) to award non-economic damages, (ii) to award punitive damages or any other
damages expressly excluded under this Agreement, or (iii) to reform, modify or
materially change this Agreement or any other agreements contemplated hereunder;
provided, however, that the damage limitations described in subsections (i) and
(ii) of this sentence will not apply if such damages are statutorily imposed.

 

24 

 

 

(c)          Each Party shall bear its own attorneys’ fees, costs, and
disbursements arising out of the arbitration, and shall pay an equal share of
the fees and costs of the arbitrators; provided, however, the arbitrators shall
be authorized to determine whether a Party is the prevailing Party, and at their
discretion, to award to that prevailing Party reimbursement for its reasonable
attorneys’ fees, costs and disbursements (including, for example, expert witness
fees and expenses, photocopy charges, travel expenses, etc.), and/or the fees
and costs of the AAA and the arbitrators.

 

12.3        Court Actions. Nothing contained in this Agreement shall deny either
Party the right to seek, upon good cause, injunctive or other equitable relief
from a court of competent jurisdiction in the context of an emergency or
prospective irreparable harm, and such an action may be filed and maintained
notwithstanding any ongoing dispute resolution discussions or arbitration
proceedings. In addition, either Party may bring an action in any court of
competent jurisdiction to resolve disputes pertaining to the validity,
construction, scope, enforceability, infringement or other violations of
intellectual property rights, and no such claim shall be subject to arbitration
pursuant to Section 12.2.

 

ARTICLE 13

MISCELLANEOUS

 

13.1        Independent Contractor Status. The Parties’ relationship as
established by this Agreement is solely that of independent contractors. This
Agreement does not create any partnership, joint venture or similar business
relationship between the Parties. Neither Party is a legal representative of the
other Party, and neither Party can assume or create any obligation,
representation, warranty or guarantee, express or implied, on behalf of the
other Party for any purpose whatsoever. It is expressly agreed and understood
that neither Adamis nor any of its employees or subcontractors is an employee or
agent of Watson.

 

13.2        Expenses. Except as otherwise expressly provided herein, each Party
shall pay its own expenses in connection with the negotiation of this Agreement,
the performance of its obligations hereunder and the consummation of the
transactions contemplated hereby.

 

13.3        Amendment; Modification. No amendment, modification or supplement of
any provision of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each Party.

 

25 

 

 

13.4        Waiver. No provision of this Agreement shall be waived by any act,
omission, course of dealing or knowledge of a Party or its agents except by an
instrument in writing expressly waiving such provision and signed by a duly
authorized officer of the waiving Party.

 

13.5        Notices. All notices to be given hereunder shall be in writing,
shall be effective when received, and shall be delivered personally, by
facsimile or other electronic transmission (receipt verified), mailed by
registered or certified mail (return receipt requested), postage prepaid, or
sent by express courier service, to the Parties at the following addresses (or
at such other address for a Party as shall be specified by like notice, also
effective only upon receipt thereof):

 

Notices to Watson: with a copy to:     Watson Laboratories, Inc. Watson, Inc.
Morris Corporate Center III Morris Corporate Center III 400 Interpace Parkway,
Bldg. A 400 Interpace Parkway, Bldg. A Parsippany, New Jersey 07054 Parsippany,
New Jersey 07054 Attention:  Sr. VP, Business Development Attention:  Legal
Department Facsimile: Facsimile: 862-261-7911 E-mail: Daniel.Motto@Watson.com
E-mail: USLegal@actavis.com     Notices to Adamis: with a copy to:     Adamis
Pharmaceuticals, Inc.   11682 El Camino Real, Suite 300   San Diego, California
92130   Attention: Sr. VP, Corporate Development   Facsimile: 858-461-0842  
E-mail: dmarguglio@adamispharma.com  

 

13.6        Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. Neither Party may assign any of its rights,
liabilities or obligations hereunder without the prior written consent of the
other Party and any assignment without such consent shall be void.
Notwithstanding anything to the contrary in this Section 13.6, either Party may
assign this Agreement and its rights, liabilities and obligations hereunder
without the other Party’s consent:

 

(a)          in the case of either Party, in connection with the transfer or
sale of all or substantially all of the business of such Party to which this
Agreement relates to a Third Party, whether by merger, sale of stock, sale of
assets or otherwise; provided, however, that in the event of such a transaction
(whether this Agreement is actually assigned or is assumed by the acquiring
party by operation of law (e.g., in the context of a reverse triangular
merger)), intellectual property rights of the acquiring party to such
transaction (if other than one of the Parties to this Agreement) shall not be
included in the technology licensed hereunder or otherwise subject to this
Agreement; or

 

26 

 

 

(b)          to an Affiliate, provided that the assigning Party shall remain
liable and responsible to the non-assigning Party hereto for the performance and
observance of all such duties and obligations by such Affiliate.

 

13.7        No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against either Party.

 

13.8        Complete Agreement. This Agreement, together with all exhibits and
schedules attached hereto, contains the complete agreement between the Parties
with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations by or between the Parties, written
or oral, which may have related to the subject matter hereof in any way.

 

13.9        Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
application of principles of conflicts of law.

 

13.10      Force Majeure. Each of the Parties hereto shall be excused from the
performance of its obligations hereunder (except for payment obligations) in the
event such performance is prevented by force majeure, provided that each of the
Parties shall use reasonable commercial efforts to complete such performance by
other means. Causes beyond the control of Adamis or Watson include but are not
limited to acts of God, acts or laws of any government, war, civil commotion,
destruction of production facilities or materials by fire, earthquake or storm,
labor disturbances, epidemic and failure of public utilities or common carriers.

 

13.11      Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
shall be considered one and the same instrument.

 

13.12      Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or unenforceability of
the other provisions of this Agreement shall not be affected thereby, and there
shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.

 

[Signature page follows]

 

27 

 

 

IN WITNESS WHEREOF, this Agreement is effective as of the Effective Date. 

          Watson Laboratories, Inc.   Adamis Pharmaceuticals Corporation      
By:   /s/ Daniel N. Motto   By:   /s/ Dennis J. Carlo Name: Daniel N. Motto  
Name: Dennis J. Carlo Title: SVP, Global Business Development   Title: Chief
Executive Officer

 

28 

 

 

EXHIBIT A

 

MILESTONE PAYMENTS

 

Watson will make the following Milestone Payments to Adamis within 30 days of
each of the following events:

 

a)$[*] upon execution of this Agreement (“Execution Milestone Payment”);

 

b)$[*] upon the [*] of the 0.3mg Product in the Territory (“[*]”);

 

c)$[*];

 

d)$[*] upon the [*] of the [*] Product in the Territory (“[*]”);

 

e)$[*];

 

f)$[*]; and

 

g)$[*].

 

Notwithstanding the foregoing,

 

(A)If the NDA for the 0.3mg Product has not received final marketing approval by
[*](the “Approval Deadline”), Watson shall have the right to terminate this
Agreement by providing written notice to Adamis no later than [*] ([*]) days
after the Approval Deadline and receive a full refund from Adamis of the
Execution Milestone Payment. If the NDA has not received FDA approval by the
Approval Deadline and Watson has not provided notice of termination pursuant to
the immediately preceding sentence, then Adamis will not be required to refund
the Execution Milestone Payment.

 

(B)If the first commercial sale of the 0.3mg Product in the Territory has not
occurred by [*] (the “Launch Deadline”), and the Launch Deadline is not missed
as a result of matters within the reasonable control of Watson, then the [*]
shall not become payable by Watson upon the achievement of the specified event.
For the avoidance of doubt, a decision to delay the launch of the Product as a
result of threatened or pending intellectual property litigation or other legal
concerns that could be reasonably expected to impede marketing efforts, shall
not be a matter within the reasonable control of Watson.

 

(C)If the NDA for the [*] Product has not received final marketing approval by
[*], or such later date as agreed in writing by the Parties (the “Supplement
Approval Deadline”) then the [*] shall not become payable by Watson upon the
achievement of the specified event.

 

 

 

 

EXHIBIT B

 

DEVELOPMENT PLAN AND RESPONSIBILITY MATRIX

 

[*]