Document:

Exhibit 10.21

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

SUPPLY AGREEMENT

 

THIS SUPPLY AGREEMENT (this “Agreement”) is made as of June 17, 2013 (“Effective Date”), by and between Kadmon Pharmaceuticals, LLC, a Delaware limited liability company (“Company”), and AbbVie Bahamas Ltd., a Bahamas corporation (“AbbVie”).  Company and AbbVie are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

W I T N E S S E T H:

 

WHEREAS, simultaneously with the execution, the Parties (and/or their Affiliates) will be entering into certain ancillary agreements, including (i) an Asset Purchase Agreement (the “Purchase Agreement”) pursuant to which AbbVie will purchase assets from Company related to Product in territories outside the United States, and (ii) a License Agreement (the “License Agreement”) pursuant to which AbbVie will distribute, on a non-exclusive basis, Product in the United States, including its territories and possessions, and will have the right to distribute exclusively Product co-packaged with other Hepatitis C therapeutics in the United States.

 

WHEREAS, AbbVie desires to engage Company to supply Product (as defined below) to AbbVie in accordance with the terms and conditions of this Agreement;

 

WHEREAS, Company desires to supply Product to AbbVie in accordance with the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and mutual promises and conditions set forth herein, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:

 

ARTICLE 1 — DEFINITIONS

 

The following words and phrases, when used herein with initial capital letters, shall have the meanings set forth or referenced below:

 

1.1          “AbbVie” has the meaning set forth in the preamble hereto.

 

1.2          “AbbVie Indemnitees” has the meaning set forth in Section 7.2.

 

1.3          “AbbVie Trademark” has the meaning set forth in Section 9.1.

 

1.4          “Act” shall mean the United States Food, Drug & Cosmetic Act, as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions, and modifications thereto).

 

1.5          “ADR” has the meaning set forth in Exhibit C.

 

1.6          “Affiliate” shall mean, with respect to either Party, a corporation or any other entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

is under common control with, such Party.  As used herein, the term “control” means possession of direct or indirect power to order or cause the direction of the management and policies of a corporation  or other entity whether (a) through the ownership of more than fifty percent (50%) of the voting securities of the other entity; or (b) by contract, statute, regulation or otherwise.

 

1.7          “Agreement” has the meaning set forth in the preamble hereto.

 

1.8          “API” shall mean that certain compound having the formula 1-[(2R,3R,4S,5R)-3,4-dihydroxy-5-(hydroxymethyl)oxolan-2-yl]-1H-1,2,4-triazole-3-carboxamide.  [CAS # [36791-04-5].

 

1.9          “Applicable Law” shall mean all federal, state, local or foreign laws, codes, statutes, ordinances, regulations, rules, guidance, or orders of any kind whatsoever, which are applicable to the Parties, the transactions contemplated under this Agreement or the Product, including all relevant European Union Law, the Act, Public Health Services Act, Generic Drug Enforcement Act of 1992 (21 U.S.C. § 335a et seq.), Anti-Kickback Statute (42 U.S.C. § 1320a-7b et seq.), the Health Insurance Portability and Accountability Act of 1996, data security and confidentiality, patient and information privacy, and tax laws, and any other regulations promulgated by any Regulatory Authority, all as amended from time to time in the Territory.

 

1.10        “Applicable Percentage of AbbVie Product Requirements” shall mean (a) during the Initial Term, at least *** % of AbbVie’s worldwide requirements for ribavirin tablets in twice daily and once daily dosage forms, and (b) after the Initial Term, at least *** % of AbbVie’s worldwide requirements for ribavirin tablets in twice daily and once daily dosage forms, each as determined on a quarterly basis.

 

1.11        “Approved Subcontractor” has the meaning set forth in Section 4.4.

 

1.12        “Bulk Product” shall mean Product as tablets packaged in bulk form (i.e., fiber or HDPE drums).

 

1.13        “Business Day” shall mean any day that is not a Saturday, a Sunday or other day on which commercial banks are required or authorized to be closed in the New York.

 

1.14        “Certificate of Analysis” shall mean the statement with approval stamped and dated by an authorized Company quality representative that provides a summary of the physical inspection of the Product conducted by Company and the Product’s release testing and performance testing results.

 

1.15        “cGMP” shall mean the FDA’s current Good Manufacturing Practice Regulations at 21 C.F.R. Parts 210 and 211, 21 U.S.C. 351(a), and the applicable counterpart requirements for the manufacture, warehousing, packaging, and distribution of drug products for human use promulgated by Regulatory Authorities in the countries in the Territory outside the United States, including any amendments or revisions thereto.

 

1.16        “CMOs” shall mean a Third Party contract manufacturer of Company with respect to Product for the Territory.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.17        “Commercialization” shall mean activities carried out by or on behalf of Company in distributing (including importing, transporting, warehousing, invoicing, handling and delivering  Product to customers), promoting, marketing and selling Product, but does not include the selling of Product for use with clinical trials.

 

1.18        “Company” has the meaning set forth in the preamble hereto.

 

1.19        “Company Indemnitees” has the meaning set forth in Section 7.1.

 

1.20        “Compliance Audit” shall mean a review by AbbVie or its designated representatives of those portions of each of Company’s and its Affiliates’ and Approved Subcontractors’ Facilities at which the Manufacture of Product has been or is then being conducted, for purposes of reviewing Company’s and its Affiliates’ and Approved Subcontractors’ procedures and processes used in Manufacture of Product, including production and quality control files, records, and investigations of quality specifically relating to the Product.

 

1.21        “Confidential Information” shall mean technical, financial, manufacturing or marketing information, ideas, methods, developments, improvements, business plans, know-how, trade secrets or other proprietary information relating thereto, together with analyses, compilations, studies or other documents, records or data prepared by the Parties and their Affiliates which contain or otherwise reflect or are generated from such information.

 

1.22        “Convicted Entity” has the meaning set forth in Section 6.2.

 

1.23        “Convicted Individual” has the meaning set forth in Section 6.2.

 

1.24        “Debarred Entity” has the meaning set forth in Section 6.2.

 

1.25        “Debarred Individual” has the meaning set forth in Section 6.2.

 

1.26        “Drug Master File” or “DMF” shall mean a drug master file document containing detailed information about the manufacturing of the active pharmaceutical ingredient of the Product; packaging; excipients; colorant; flavor; essence; and/or other materials, as well as information describing the manufacturing site, the manufacturing facility, the operating procedures, the personnel, the manufacture, chemistry and control of the drug substance and the drug substance intermediates.

 

1.27        “Effective Date” has the meaning set forth in the preamble hereto.

 

1.28        “EMA” shall mean the European Medicines Agency, or any successor agency(ies) or authority having substantially the same function

 

1.29        “Excess Amount” has the meaning set forth in Section 3.2.

 

1.30        “Excluded Entity” has the meaning set forth in Section 6.2.

 

1.31        “Excluded Individual” has the meaning set forth in Section 6.2.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.32        “Facility” shall mean each facility listed on Schedule 1.32 at which Product is Manufactured.

 

1.33        “FDA” shall mean the United States Food and Drug Administration or any successor agency or authority having substantially the same function.

 

1.34        “FDA’s Disqualified/Restricted List” has the meaning set forth in Section 6.2.

 

1.35        “Finished Product” shall mean the fully finished packaged form of Product that includes Secondary Packaging.

 

1.36        “Firm Forecast” has the meaning set forth in Section 3.1.1.

 

1.37        “Force Majeure Event” has the meaning set forth in Section 11.1.

 

1.38        “Indemnified Party” has the meaning set forth in Section 7.3.

 

1.39        “Indemnifying Party” has the meaning set forth in Section 7.3.

 

1.40        “Initial Term” has the meaning set forth in Section 10.1.

 

1.41        “Intellectual Property Rights” shall mean (a) Patent Rights, (b) trademarks, trademark registrations, trademark applications, service marks, service mark registrations, and service mark applications, (c) copyrights, copyright registrations and copyright applications, (d) know-how, inventions, formulae, processes and trade secrets, and (e) all rights in all of the foregoing provided by Applicable Law.

 

1.42        “License Agreement” has the meaning set forth in the recitals.

 

1.43        “Losses” shall mean any and all losses, liabilities, damages, claims, awards, judgments, Taxes, interest, penalties, costs and expenses (including reasonable attorneys’ fees, experts’ fees and other similar out-of-pocket expenses) actually suffered or incurred.

 

1.44        “Manufacture” shall mean activities related to the production, supply, processing, filling, finishing, packaging, labeling, shipping or any intermediate activity thereof, including process development, process qualification and validation, scale-up, analytic development, testing, storage, quality assurance and quality control. “Manufacturing” shall have a corresponding meaning.

 

1.45        “NDC#” shall mean National Drug Code, which is a unique 3-segment number that identifies the FDA labeler code assigned to each Party, the product, and the trade packaging.

 

1.46        “Party” and “Parties” has the meaning set forth in the preamble hereto.

 

1.47        “Patent Rights” shall mean all rights arising under patents, provisional patent applications, patent applications or invention registrations, as well as any substitutions, continuations, continuations-in-part, divisionals and all reissues, renewals, reexaminations, extensions, supplementary protection certificates, confirmations, revalidations, registrations or

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

patents, and all foreign counterparts thereof, registered or applied for in the United States and all other nations throughout the world, in connection with any of the foregoing.

 

1.48        “Primary Packaging” shall mean the processing of Bulk Product into unlabeled bottles or blisters.  “Primary Packaged” shall have a corresponding meaning.

 

1.49        “Product” shall mean the product supplied by Company to AbbVie under this Agreement as identified in Exhibit A, which may be amended from time to time by the mutual written agreement of the Parties.  The QD Product (as defined in the Purchase Agreement) will only be available for sale under this Agreement upon Company’s receipt of the necessary Regulatory Approvals and upon the completion of all manufacturing and quality requirements, including finalization of the manufacturing specifications, technical specifications and test protocols relating to the Manufacturing and performance characteristics of the QD Product.

 

1.50        “Product Specifications” shall mean the manufacturing specifications, technical specifications and test protocols relating to the Manufacturing and performance characteristics of the Product, as set forth on Exhibit B.

 

1.51        “Purchase Agreement” has the meaning set forth in the recitals.

 

1.52        “Purchase Order” shall mean a written purchase order issued by AbbVie under this Agreement that sets forth, with respect to the period covered thereby (a) the quantities of Product to be delivered by Company to AbbVie or its designee; and (b) the required delivery dates and delivery locations therefor.

 

1.53        “Quality Agreement” has the meaning set forth in Section 5.5.

 

1.54        “Regulatory Approvals” means all licenses, permits, authorizations and approvals of all pricing agreements and price reimbursement agreements with, and all registrations, filings and other notifications to, any governmental agency or department necessary, appropriate or useful for the Manufacture, use or Commercialization of the Product.

 

1.55        “Regulatory Authority” shall mean any federal, state, local, supranational or international regulatory agency, department, bureau, governmental entity or other body, including the FDA, the EMA and foreign equivalents, which is responsible for issuing approvals, licenses, registrations, clearances or authorizations necessary for the manufacture, use, storage, import, transport, offering for sale or sale of Product in the Territory.

 

1.56        “Renewal Term” has the meaning set forth in Section 10.1.

 

1.57        “Rolling Forecast” has the meaning set forth in Section 3.1.

 

1.58        “Secondary Packaging” shall mean the processing of Primary Packaged Product into fully packaged Product ready for distribution to end-users, including labeling of unlabeled bottles and/or blisters and final outer packaging.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.59        “Supply Interruption” shall mean an interruption to the scheduled supply of Product (other than as the result of a Force Majeure Event) pursuant to which Company supplies Product to AbbVie (a) in quantities less than *** % of quantities set forth in the applicable Purchase Order; or (b) more than two (2) weeks later than the delivery date set forth the applicable Purchase Order.

 

1.60        “Tech Transfer Plan” has the meaning set forth in Section 4.5.1.

 

1.61        “Term” has the meaning set forth in Section 10.1.

 

1.62        “Testing Laboratory” has the meaning set forth in Section 5.3.

 

1.63        “Territory” shall mean the world.

 

1.64        “Third Party” shall mean a party other than AbbVie or Company or any of either Party’s Affiliates.

 

1.65        “United States” shall mean the United States of America, its territories, protectorates and possessions.

 

ARTICLE 2 — PURCHASE PRICE; DELIVERY

 

2.1          Purchase and Sale of Product.  During the Term, Company shall sell and deliver to AbbVie, and AbbVie shall purchase and take delivery of such quantities of Product as shall equal the Applicable Percentage of AbbVie Product Requirements.  Except as otherwise expressly provided herein, Company, as the supplier of Product, shall be solely responsible for all costs and expenses incurred in connection with the Manufacture of Product, including costs and expenses of personnel, quality control testing, supply facilities, equipment and materials.

 

2.2          Purchase Price.  The purchase price for the Manufacture and supply of Bulk Product and Finished Product (for Product to be Commercialized by or on behalf of AbbVie in the United States) is set forth in the attached Exhibit A. If AbbVie requires Company to Manufacture and supply Finished Product to be Commercialized by or on behalf of AbbVie outside the United States, Kadmon shall supply such Product and AbbVie shall pay an amount equal to the price for *** the *** by *** to *** , without any *** . Commencing in calendar year 2014, if the costs to Manufacture and supply Product increase for any calendar year, including as a result of increases in the costs and expenses of personnel, quality control testing, supply facilities, equipment and/or materials then the Company shall provide *** day advance written notice to AbbVie, and shall provide to AbbVie documents and invoices evidencing such increased costs and expenses.  In addition, the purchase price for Products paid by AbbVie shall increase to an amount equal to such increased costs; provided, however, that such price increase shall in no event be increased by an amount greater than the increase to the Pharmaceutical Preparation Series Identification PCU325412325412, as issued by the Bureau of Labor Statistics, US Department of Labor for the prior January 1 to December 31 period.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

2.3          Delivery Terms.  Company shall deliver Product ordered by AbbVie, FCA Kadmon (Warrendale PA or other Company distribution center) per 2010 Incoterms, in accordance with the quantities, delivery dates and delivery and shipping instructions specified in Purchase Orders.  Shipment shall be via a carrier designated by AbbVie.  If the carrier noted on the Purchase Order is not available, then Company shall contact AbbVie for instructions regarding the mode of shipment.  Each delivery of Product shall be accompanied by a Certificate of Analysis and other such documents as may be required pursuant to the Quality Agreement or Applicable Law.  Delivery of *** % or more of the Product ordered pursuant to any Purchase Order shall constitute delivery of the Product in accordance with such Purchase Order.

 

2.4          Invoice Terms.  Company shall invoice AbbVie for Product purchased by AbbVie upon delivery, and AbbVie shall pay any such undisputed invoice in full within *** days of receipt by AbbVie of the Product and an invoice from Company. AbbVie shall notify Company of any disputed invoice and the Parties shall promptly and in good faith, discuss, investigate and resolve such dispute within *** days of AbbVie’s receipt of the disputed invoice, or such period agreed to in writing by the Parties.  If a dispute remains unresolved following such period, the dispute shall be resolved in accordance with the ADR procedures set forth in Exhibit C; provided AbbVie shall pay the undisputed portion of any invoice.

 

2.5          No Other Compensation.  Company and AbbVie hereby agree that the terms of this Agreement fully define all consideration, compensation and benefits, monetary or otherwise, to be paid, granted or delivered by Company to AbbVie and by AbbVie to Company in connection with the transactions contemplated herein. Neither AbbVie nor Company previously has paid or entered into any other commitment to pay, whether orally or in writing, any AbbVie or Company employee, directly or indirectly, any consideration, compensation or benefits, monetary or otherwise, in connection with the transaction contemplated herein.

 

2.6          Withholding Taxes.  Any federal, state, county or municipal sales or use tax, value added tax or international sales tax, excise or similar charge, or other assessment (other than that assessed against income), or other charge lawfully assessed or charged on the Manufacture or sale of Product shall be paid by Company. Where any payment payable by one Party to the other Party pursuant to this Agreement is subject to any withholding or similar tax, the Parties shall use their commercially reasonable efforts to perform all acts (including by executing all appropriate documents) so as to enable the Parties to take advantage of any applicable double taxation agreement or treaty.  In the event there is no applicable double taxation agreement or treaty, or if an applicable double taxation agreement or treaty reduces, but does not eliminate such withholding or similar tax, the payor Party shall pay the applicable withholding or similar tax to the appropriate government authority, shall deduct the amount paid from the amount due to the payee Party and shall secure and send to the payee Party evidence in its possession of such payment.

 

2.7          Delivery and Confirmation by AbbVie. Within *** days after the end of each calendar year during the Term, AbbVie shall provide such documentation and support to Company evidencing compliance with its requirement to purchase from Company the Applicable Percentage of AbbVie Product Requirements.  In the event that AbbVie has not purchased the

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Applicable Percentage of AbbVie Product Requirements, AbbVie shall promptly pay to Company an amount equal to the amount by which the aggregate quantity of Product purchased under Purchase Orders during such calendar year was less than the Applicable Percentage of AbbVie Product Requirements for such calendar year, multiplied by the applicable purchase price.

 

2.8          Audit Rights. During the Term, and until the end of three (3) calendar years thereafter, each Party will keep and maintain accurate and complete records relating to (a) in the case of Company, the calculation of Ex-US Secondary Packaging Costs and any increases to purchase price of Product and (b) in the case of AbbVie, the Applicable Percentage of AbbVie Product Requirements, which books and records will be sufficiently detailed such that the  packaging costs and increases to purchase price for the Manufacture and supply of Products to AbbVie or AbbVie’s Product requirements, as applicable, can accurately be determined. Upon *** days’ prior written notice from the other Party, each Party will permit an independent certified public accounting firm of internationally recognized standing, selected by the requesting Party to examine the relevant books and records of the other Party and its Affiliates as may be reasonably necessary to verify the packaging costs and increases to purchase price for Product or AbbVie’s Product requirements, as applicable; provided, that the Party requesting an audit shall treat all information subject to review under this Section 2.8 in accordance with the confidentiality and non-use provisions of this Agreement, and shall cause its accounting firm to enter into an acceptable confidentiality agreement with the audited Party obligating it to retain all such information in confidence pursuant to such confidentiality agreement, unless the accounting firm is already subject to confidentiality obligations by virtue of its professional engagement with the Party being audited in which case a separate confidentiality agreement shall not be required. An examination by a Party under this Section 2.8 will occur not more than once in any calendar year and will be limited to the pertinent books and records for any calendar year ending not more than thirty-six (36) months before the date of the request. The accounting firm will be provided access to such books and records at a Party’s facility where such books and records are normally kept and such examination will be conducted during such Party’s normal business hours. Upon completion of the audit, the accounting firm will provide both Company and AbbVie a written report disclosing whether the packaging costs and Company increases to purchase price of Product Manufactured and supplied to AbbVie or AbbVie’s purchase of the Applicable Percentage of AbbVie Product Requirements, as applicable, under this Agreement are correct or incorrect and the specific details concerning any discrepancies. If the accountant determines that packaging costs and increases to the purchase price for Product are incorrect, or AbbVie’s has purchased less than the Applicable Percentage of AbbVie Product Requirements hereunder, then any additional amount owed by one Party to the other under any invoices issued during the period subject to the audit will be paid within *** days after receipt of the accountant’s report, along with interest at an annual rate set forth below, compounded monthly from the date of the audit report.  Interest due hereunder shall be calculated at an *** of the *** (as published in the “Money Rates” table of the Eastern Edition of The Wall Street Journal during the period such amount is overdue) *** %.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

ARTICLE 3 — FORECASTING; ORDERS

 

3.1          Forecasting.

 

3.1.1                     AbbVie shall provide to Company a written non-binding estimate of its monthly requirements for Product for each of the next succeeding eighteen (18) months which shall include quantities constituting no less than the Applicable Percentage of AbbVie Product Requirements (the “Rolling Forecast”).  AbbVie shall provide the first Rolling Forecast within *** days of the Effective Date, and thereafter, the Rolling Forecast shall be updated monthly on the third Business Day of the month such that the Rolling Forecast shall always cover the next succeeding eighteen (18) months following a monthly update.  The first four (4) months of each Rolling Forecast shall be a “Firm Forecast,” and, subject to the other provisions of this Agreement, shall be binding on the Parties as to the amount of Product to be supplied and purchased.  The remaining fourteen (14) months of each Rolling Forecast shall not be part of the Firm Forecast, shall be for the Parties’ planning purposes only, and shall not constitute a commitment to purchase or supply Product in such quantities.  Each Rolling Forecast shall break down the quantities of Product into Bulk Product and Finished Product.  In the event that AbbVie fails to purchase the quantities set forth in the Firm Forecast, it shall nevertheless be obligated to pay Company for the full amount of Product set out in the Firm Forecast at the prices set forth in Exhibit A.

 

3.1.2                     Without duplication of any previously delivered Purchase Order, each Firm Forecast shall be accompanied by a Purchase Order for Product to be ordered by AbbVie during each of the first four (4) months, respectively, set forth in such Firm Forecast for delivery in accordance with Section 3.2.  The quantity of Product specified in any Purchase Order shall be in multiples of the full production lots of Product, such full production lot sizes to be mutually agreed following determination of the Specifications.

 

3.2          Purchase Orders.  Purchase Orders shall be placed on AbbVie’s Purchase Order form, specifying quantities of Product, which shall be broken down into quantities of Bulk Product and Finished Product, delivery dates and locations.  AbbVie shall be obligated to purchase and Company, subject to the provisions of this Section 3.2, shall be obligated to deliver by the required delivery date set forth therein, such quantities and type of Product as are set forth in each Purchase Order.  Company shall not be obligated to deliver Product on a delivery date set forth in a Purchase Order that is less than *** days from the submission of the Purchase Order by AbbVie to Company.  In the event that AbbVie specifies a delivery date that is within *** days from the submission of the Purchase Order by AbbVie to Company, Company will use commercially reasonable efforts to accommodate such delivery date requirement, but will be under no obligation to do so.  In the event that the terms of a Purchase Order are not consistent with or are in addition to the terms of this Agreement, the terms of this Agreement shall prevail.  In the event that AbbVie submits additional Purchase Order(s) requesting Product which taken together with Product subject to outstanding Purchase Order would amount to greater than *** % of the quantity set forth in the most recent Firm Forecast (such amount, an “Excess Amount”), subject to the provisions

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

of this Section 3.2 regarding delivery dates, Company shall use commercially reasonable efforts to accommodate such Excess Amount Purchase Orders.

 

ARTICLE 4 — SUPPLY TERMS

 

4.1          Product Specifications.  The Product Specifications as of the Effective Date for the Product are set forth on Exhibit B.  AbbVie may request changes to the Product Specifications, subject to Section 5.7, from time to time. Company shall review such changes and if it consents to such changes, which consent shall not be unreasonably withheld, conditioned or delayed, use commercially reasonable efforts to implement such changes or immediately notify AbbVie if a change cannot be implemented.  Subject to Section 5.7, prior to the implementation of any such change, Company shall promptly notify AbbVie of any price change for Product with respect to such change, and shall provide AbbVie with supporting documentation for such proposed price adjustments or costs, and the Parties shall agree in writing upon any price adjustments for Product to be supplied under the proposed amended Product Specifications.

 

4.2          Failure to Supply.

 

4.2.1                     If Company becomes aware that a Supply Interruption is reasonably likely to occur, Company shall promptly notify AbbVie by telephone or by written notification and shall provide AbbVie with the opportunity to meet in person or by teleconference to discuss the details to the extent they are known by Company.

 

4.2.2                     In the event that Company is unable, or notifies AbbVie that it is unable or otherwise receives notice from its CMO that it will be unable to supply, for any reason, except for a Force Majeure Event, to supply Product in accordance with the quantities and/or delivery dates specified by AbbVie for such Product via Purchase Orders, Company shall have a period of *** days or such longer time as necessary so long as Company is using commercially reasonable efforts to cure such interruption to supply, during which time Company will prioritize AbbVie Purchase Orders of Product over Company or other customer orders.  If such interruption to supply continues after such sixty (60) day period, AbbVie may, in its sole discretion: (a) cancel outstanding Purchase Orders with Company; (b) require Company to supply the undelivered Product at a future date agreed upon by the Parties; or (c) at Company’s sole expense, manufacture or have manufactured by a Third Party designated and qualified by AbbVie such quantity of ribavirin as AbbVie may reasonably determine with notice to Company as will meet AbbVie’s worldwide requirements in light of such interruption to supply.  AbbVie shall be entitled to receive from Company *** % of AbbVie’s cover damages, comprising cost differences between the Product’s cost and the replacement product’s cost, and reasonable costs associated with procuring replacements for the Product, until such time as Company is capable of resuming its supply obligations under this Agreement.  Upon Company’s resolution of the interruption to supply to the reasonable satisfaction of AbbVie, AbbVie shall be required to resume purchasing the Applicable Percentage of AbbVie Product Requirements from Company but shall be excused from purchasing that portion attributable to the permitted purchases from the Third Party manufacturer under Section 4.2.2(c).

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

4.3          Minimum Shelf Life.          At the time of delivery, Product shall have a minimum of *** % of approved shelf life remaining, unless such Product shall have a  shorter shelf life as a result of: (a) a Force Majeure Event, (b) the suspension of production activities at the request of AbbVie, and/or (c) an investigation of non-conforming Product.

 

4.4          SubContractors.  Company may use subcontractors, including the current CMOs listed on Schedule 4.4, that are pre-approved in writing by AbbVie, such approval not to be unreasonably withheld, conditioned or delayed (each, an “Approved Subcontractor”) to perform its obligations under this Agreement.  The CMOs listed on Schedule 4.4 shall be deemed Approved Subcontractors.  Prior to the engagement of any proposed subcontractor, Company shall provide the name and relevant details about the subcontractor to AbbVie.  AbbVie shall have the right to request reasonable additional information concerning the proposed subcontractor, including financial information.  Company shall cause its Approved Subcontractors to perform in full compliance with this Agreement, including Applicable Law, cGMPs and Product Specifications.  AbbVie’s approval of a subcontractor shall not create any contractual relationship or liability between AbbVie and such Approved Subcontractor.  No Approved Subcontractor shall be considered a Third Party beneficiary of this Agreement.  Approval of a subcontractor shall not relieve Company of any of its obligations under this Agreement.  Company shall remain liable for any breaches of this Agreement by, and any other acts or omissions of, any Approved Subcontractor.

 

4.5          Tech Transfer.

 

4.5.1                     To facilitate the establishment of AbbVie’s second supply source of ribavirin tablets in twice daily and once daily dosage forms, within *** days of the Effective Date, the Parties shall enter into a tech transfer plan (the “Tech Transfer Plan”). The Tech Transfer Plan will include provisions requiring Company to make available to AbbVie copies of the physical embodiment of those processes, protocols, procedures, methods, tests and other information, relating specifically to the Manufacturing of Product. Company shall provide reasonable assistance in order to facilitate the establishment of a back-up supplier or the transfer of Manufacturing of the Product to AbbVie or such other Third Party that AbbVie designates.  Notwithstanding the foregoing, the Parties acknowledge that Kadmon shall not be able to provide access to the DMF for the Company’s current API CMO.

 

4.5.2                     At AbbVie’s request, and coordinated through the JPMT established under the License Agreement, Company shall cause appropriate employees and representatives of Company and its appropriate Affiliates to meet with the employees of AbbVie or its designee at appropriate locations, from time to time, as reasonably requested by AbbVie, to facilitate the transfer of Manufacturing process.  Company shall also take all actions reasonably necessary to effectuate the royalty free transfer from Company or any of its CMOs (including Approved Subcontractors) to AbbVie or such Third Party supplier selected by AbbVie of Intellectual Property Rights owned or controlled by Company that are reasonably necessary and useful to Manufacture Product so as to enable AbbVie or such Third Party supplier to Manufacture Product.  Company shall also cooperate with AbbVie

 

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to promptly prepare and file all necessary regulatory submissions to accommodate such alternative supply arrangements.

 

4.5.3                     In connection with the activities undertaken by Company under the Tech Transfer Plan, AbbVie shall reimburse Company’s (a) pre-approved travel expenses (undertaken in accordance with applicable AbbVie travel policies);  (b) personnel expenses incurred on-site at AbbVie’s or its designee’s facility(ies) at a fully burdened rate equal to $200/hour; and (c) any actual, reasonable and documented costs and expenses required to be paid to Third Party CMOs.

 

4.5.4                     To the extent agreed upon by the Parties in writing, the Parties will cooperate to identify and qualify an alternative supplier of API for the purposes of the Parties establishing a second source of API.  If the Parties agree to cooperate then the Parties shall agree on the manner of sharing the costs of such identification and qualification.

 

ARTICLE 5 — QUALITY, COMPLIANCE AND REGULATORY MATTERS

 

5.1          Company’s Inspection of Product.  Company shall maintain, or cause to be maintained, an inspection procedure and quality assurance program for the Product and Company’s production processes, which Company shall follow for the Manufacture and supply of Product under this Agreement.  AbbVie shall have the right to review all records pertaining to the Manufacture of the Product, including records of all inspection and quality assurance work performed by or on behalf of Company at Company’s place of business.

 

5.2          Certificate of Analysis.  All deliveries of Product provided hereunder will be delivered with a full Certificate of Analysis verifying their compliance with the current Product Specifications.

 

5.3          AbbVie’s Inspection of Product.  AbbVie shall have the right, but not the obligation, to inspect Product upon receipt.  AbbVie may, within *** days after receipt of each delivery of Product, inspect and test such Product, and may reject any Product that is: (a) not in compliance with the applicable Product Specifications or such Product’s Certificate of Analysis; (b) not in conformance with instructions agreed upon by the Parties regarding packaging or transport; (c) shipped in violation of any Applicable Law; or (d) recalled by any Regulatory Authority or by Company for reasons for which AbbVie is not at fault, in each case by giving Company notice thereof (including a sample of such Product, if applicable).  Any Product not rejected by written notice to Company within *** days of AbbVie’s receipt shall be deemed accepted, except for Product that is found later to have had latent defect(s) that could not reasonably have been discoverable within the *** days after receipt of delivery of such Products.  Company shall undertake appropriate evaluation of such sample and shall notify AbbVie whether it has confirmed such nonconformity within *** days after receipt of such notice from AbbVie.  If Company notifies AbbVie that it has not confirmed such nonconformity, the Parties shall submit the dispute to an independent testing laboratory or other appropriate expert mutually acceptable to the Parties (the “Testing Laboratory”) for evaluation.  Both Parties shall cooperate with the Testing Laboratory’s reasonable requests for assistance in connection with its evaluation hereunder.  The findings of the Testing Laboratory shall be

 

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binding on the Parties, absent manifest error.  The expenses of the Testing Laboratory shall be borne by Company if the testing confirms the nonconformity and otherwise by AbbVie.  If the Testing Laboratory or Company confirms that a lot of Product does not conform to the warranty set forth in Section 6.1, Company, at AbbVie’s option, promptly shall (x) supply AbbVie with a conforming quantity of Product at Company’s expense or (y) reimburse AbbVie for the purchase price paid by AbbVie  with respect to such nonconforming Product if already paid.  In addition, Company shall promptly reimburse AbbVie for all costs incurred by AbbVie with respect to such nonconforming Product.

 

5.4          Returns. Except for timely rejections of Product as set forth in Section 5.3, AbbVie shall not have the right to return to Company any Product delivered by Company pursuant to a Purchase Order.

 

5.5          Product Issues of Which Company Has Knowledge.  Company shall notify AbbVie promptly by telephone, followed by a prompt written notification, of any lot failure or similar issues that could reasonably be expected to impact AbbVie’s ability to manufacture or distribute Product to AbbVie’s customers.  If AbbVie notifies Company that a technical problem has developed with a commercial product incorporating Product that AbbVie reasonably believes may be due to a problem with the Product, Company shall provide to AbbVie a written response that outlines a plan to resolve the problem to the extent such problem relates to Company’s acquiring, testing or Manufacturing of Product.

 

5.6          Quality Agreement. Within ninety (90) of the Effective Date, the respective quality groups of Company and AbbVie shall prepare and enter into a reasonable and customary quality assurance agreement that shall set forth the terms and conditions upon which Company will conduct its quality activities in connection with this Agreement (the “Quality Agreement”). The Quality Agreement shall at a minimum address the following: supply process, regulatory controls, documentation control, calibration, preventive maintenance, validation program, Company quality-related matters, environmental control program, components and commodity procurement, material control, laboratory controls, exception reports, Product release testing, file samples, stability, complaints, Product reviews, management reviews, material safety information, returned goods, and Product preparation for, and handling during, shipping.

 

5.7          Product Changes.

 

5.7.1                     Supply Change Requested by AbbVie.  AbbVie may request in writing that the Company amend the Product Specifications or the supply process for the Product for the purpose of complying with any Applicable Law, including cGMPs.  AbbVie promptly shall provide Company with appropriate documentation relating to any such changes to the Product Specifications or supply process to the extent that such changes affect Company’s supply of Product hereunder. Company shall review such changes and use commercially reasonable efforts to implement such changes in a prompt and efficient manner.

 

5.7.2                     Supply Change Requested by Company.  Company shall not make any revision in the Manufacturing process or Facility which could reasonably be expected to affect quality, appearance, or performance of the Product or which would require approval from, or

 

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notification to, any Regulatory Authority without AbbVie’s prior written consent, not to be unreasonably withheld.

 

5.7.3                     Cost of Supply Changes.  AbbVie shall reimburse Company for reasonable, documented costs that are actually incurred by Company in connection with any amendment of the Product Specifications or the supply process for Product required by AbbVie pursuant to Section 5.7.1, including reasonable costs of capital equipment and process upgrades and of obsolescence of materials, goods-in-process, and finished goods not suitable for use in the business or operations of Company or any of its Affiliates; provided, however, that AbbVie’s liability for such reimbursement shall be limited to levels of inventory that are consistent with the most recent Rolling Forecast.  Company shall be solely responsible for any and all costs and expenses incurred by it or AbbVie as a result of any amendment of the Product Specifications or the supply process for Product (a) requested by Company and consented to by AbbVie pursuant to Section 5.7.2, (b) required by AbbVie as a result of Company’s failure to Manufacture Product in conformity with the warranties set forth herein, or (c) required by the FDA or other applicable Regulatory Authority as a result of the supply of Product in the United States.

 

5.8          Product Safety.  Company represents, warrants and covenants that Product supplied by Company to AbbVie under this Agreement shall comply with (a) all product safety regulations promulgated by any Regulatory Authority regarding hazardous classification and (b) appropriate labeling requirements in any country in which Product may be distributed by AbbVie, including Company providing requisite Material Safety Data Sheets (MSDS) in appropriate languages.

 

5.9          Regulatory Assistance.  Company shall cooperate with AbbVie and any applicable Regulatory Authorities as may be necessary for AbbVie to obtain Regulatory Approvals and/or respond to inquiries from Regulatory Authorities, in each case in connection with Product Manufactured pursuant to this Agreement.

 

5.10        Recalls.  Company and AbbVie agree that any recalls and the cost of implementing such recalls shall be dealt with pursuant to Section 3.7 of the License Agreement.

 

5.11        Records; Audits. During the Term and for a period of three (3) years thereafter, Company shall maintain all records related to the Product. During the Term and for a period of three (3) years following expiration or termination of the Agreement, AbbVie may, either itself or through designated representatives, conduct audits of Company, the Facility(ies) and the Manufacturing process, including Compliance Audits.  AbbVie and its designated representatives shall have the right to inspect the Facility, Product, reference samples, full supply histories and records at reasonable times during Company’s normal business hours.  A Company representative shall accompany AbbVie’s representatives, including AbbVie’s employees, in any inspection of or other visit to the Facility(ies) or other entry into Company’s facilities.  Company shall ensure that its Affiliates or Approved Subcontractors (as applicable) cooperate with and provide reasonable assistance to AbbVie during such audit.  AbbVie may, in its discretion, submit to Company a written report outlining its findings and observations from any audit. Within *** days after receipt of any such AbbVie report, Company shall reply to AbbVie,

 

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which reply shall include a corrective and preventive action plan along with a timetable for responding to any findings made by AbbVie, which corrective and preventive action plan Company shall use commercially reasonable efforts to implement as soon as practicable.

 

5.12        Regulatory Authority Compliance Notification.  Company shall comply with any Applicable Law that requires Company to: (a) allow representatives of any Regulatory Authority with jurisdiction over the Manufacture, marketing and distribution of Product to tour and inspect all facilities utilized by Company in the testing, packaging, storage, and shipment of Product; (b) respond to requests for information from any Regulatory Authority having jurisdiction over the Manufacture, marketing and/or distribution of Product; and (c) cooperate with such representatives in every reasonable manner.  Company shall notify AbbVie promptly (but no later than one Business Day after receipt) whenever Company (or an Approved Subcontractor, as applicable) receives notice of a pending inspection by any Regulatory Authority with jurisdiction over Company’s (or an Approved Subcontractor’s, as applicable) Manufacture and distribution of Product or AbbVie’s marketing and distribution of Product, of any plant or facility which is used in the Manufacture, packaging, storage or shipment of Product.  Company shall provide a reasonable written description of any such governmental inquiries, notifications or inspections within *** days after such visit or inquiry; provided, that the Company shall also furnish to AbbVie (x) any report or correspondence issued by the FDA or other Regulatory Authority in connection with such visit or inquiry, including any FDA Form 483 (List of Inspectional Observations), Establishment Inspection Reports or applicable portions of any FDA Warning Letters which pertain to Product  in the Territory and (y) in accordance with above, copies of proposed responses or explanations relating to items set forth above, in each case redacted of trade secrets or other Confidential Information of Company or its Affiliates (or an Approved Subcontractor, as applicable) that are unrelated to its obligations under this Agreement or are unrelated to Product.  After the filing of a response with the FDA or other Regulatory Authority, Company will promptly notify AbbVie of any further contacts with such agency relating to the subject matter of the response.

 

5.13        Business Continuity.  Company shall have contingency plans in place to minimize the interruption or impact to the supply of Product to AbbVie due to a Force Majeure Event or other disruptive event, whether within or outside the control of Company, including theft, vandalism, pandemic crisis, product contamination or recall, business interruption, action by activists or extremists, terrorism, and information technology interruption.  Throughout the Term, such contingency plans shall be available to AbbVie at any time and shall be updated and revised, as necessary, throughout the Term.

 

ARTICLE 6 — REPRESENTATIONS, WARRANTIES AND COVENANTS

 

6.1          Product Warranty.  In connection with each delivery of Product hereunder, Company hereby represents and warrants to AbbVie as of the date of the delivery of such Product to AbbVie as follows: (a) such Product is in conformity with the Product Specifications, Certificate of Analysis and all Applicable Law; (b) such Product has been Manufactured in accordance with the Applicable Law, this Agreement and the Quality Agreement, and when delivered, shall be free from defects in design, material, manufacture and workmanship; (c) Product shall be of merchantable quality and shall be fit and suitable for the purposes intended by

 

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AbbVie; (d) no Product delivered by Company under this Agreement will be “adulterated” or “misbranded” within the meaning of the Act, or within the meaning of any other Applicable Law in which the definitions of adulteration or misbranding are substantially the same as those contained in the Act, as such laws are constituted and effective at the time of such shipment or delivery; (e) title to such Product will pass to AbbVie free and clear of any security interest, lien or other encumbrance; (f) such Product has been Manufactured in facilities that are in compliance with Applicable Law at the time of such Manufacture (including applicable inspection requirements of the applicable Regulatory Authority); and (g) the Manufacture and supply of Product by Company in accordance with the terms hereof and use by AbbVie and its Affiliates and licensees, will not, in each case, infringe, misappropriate or otherwise violate the Intellectual Property Rights of any Third Party.

 

6.2          Debarment and Exclusion. Each Party represents and warrants that neither such Party, nor any Party employees, agents, subcontractors working on the subject matter hereunder, have ever been, are currently or are the subject of a proceeding that could lead to such Party or such employees, agents or subcontractors becoming, as applicable, a Debarred Entity or Debarred Individual, an Excluded Entity or Excluded Individual or a Convicted Entity or Convicted Individual, nor are they listed on the FDA’s Disqualified/Restricted List. Each Party further covenants, represents and warrants that if, during the Term, Company, or any of Company’s employees, agents or subcontractors working on the subject matter hereunder, becomes or is the subject of a proceeding that could lead to that Party becoming, as applicable, a Debarred Entity or Debarred Individual, an Excluded Entity or Excluded Individual or a Convicted Entity or Convicted Individual, or added to FDA’s Disqualified/Restricted List, such Party will immediately notify the other Party, and such other Party will have the right to immediately terminate this Agreement. This provision will survive termination or expiration of this Agreement. For purposes of this provision, the following definitions will apply: (a) a “Debarred Individual” is an individual who has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from providing services in any capacity to a person that has an approved or pending drug product application; (b) a “Debarred Entity” is a corporation, partnership or association that has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting or assisting in the submission of any abbreviated drug application, or a subsidiary or affiliate of a Debarred Entity; (c) an “Excluded Individual” or “Excluded Entity” is (i) an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal health care programs such as Medicare or Medicaid by the Office of the Inspector General (OIG/HHS) of the U.S. Department of Health and Human Services, or (ii) is an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal procurement and non-procurement programs, including those produced by the U.S. General Services Administration (GSA); (d) a “Convicted Individual” or “Convicted Entity” is an individual or entity, as applicable, who has been convicted of a criminal offense that falls within the ambit of 42 U.S.C. §1320a — 7(a), but has not yet been excluded, debarred, suspended or otherwise declared ineligible; and (e) “FDA’s Disqualified/Restricted List” is the list of clinical investigators restricted from receiving investigational drugs, biologics, or devices if FDA has determined that the investigators have repeatedly or deliberately failed to comply with regulatory requirements for studies or have submitted false information to the study sponsor.

 

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6.3          General Representations and Warranties.  Each Party represents and warrants to the other Party as of the Effective Date, as follows: (a) it is an entity duly incorporated or formed, as applicable, and validly existing under the laws of its state and/or country of incorporation or formation, as applicable; (b) it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder; (c) it has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; (d) this Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered in a proceeding at law or equity; (e) all necessary consents, approvals and authorizations required to be obtained by such Party in connection with the execution and delivery of this Agreement and the performance of its obligations hereunder have been obtained; and (f)  the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (i) do not and will not conflict with or violate any requirement of Applicable Law or any provision of the articles of incorporation, bylaws or any other constitutive document of such Party; and (ii) do not and will not conflict with, violate, breach or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such Party is bound.

 

6.4          Compliance with Applicable Law.  Each Party shall comply with all Applicable Laws related to such Party’s activities to be performed under this Agreement.

 

6.5          Disclaimer of Other Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, INCLUDING WITH RESPECT TO PRODUCT, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY.

 

ARTICLE 7 — INDEMNIFICATION; INSURANCE

 

7.1          Indemnification by AbbVie.  AbbVie shall indemnify, defend and hold harmless Company, its Affiliates and their respective employees, officers, directors and agents (each a “Company Indemnitees”) from and against any and all Losses that the Company Indemnitees directly incur, and all Losses that the Company Indemnitees actually pay to one or more Third Parties, in each instance to the extent resulting from or arising out of (a) any breach by AbbVie of any of its representations, warranties or obligations pursuant to this Agreement, or (b) AbbVie’s or its Affiliates’ negligence (or more culpable act or omission) or violation of Applicable Laws or regulations in performing or failing to perform its rights or obligations in connection with this Agreement; provided, however, that Company will not be obligated to indemnify or hold harmless AbbVie Indemnitees from any such Losses which result from any of the matters for which AbbVie is obligated to indemnify Company for pursuant to Section 7.2.

 

7.2          Indemnification by Company. Company shall indemnify, defend and hold harmless AbbVie, its Affiliates and their respective employees, officers, directors and agents

 

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(each a “AbbVie Indemnitees”) from and against any and all Losses that the AbbVie Indemnitees directly incur, and all Losses that the AbbVie Indemnitees actually pay to one or more Third Parties, in each instance to the extent resulting from or arising out of (a) any breach by Company of any of its representations, warranties or obligations pursuant to this Agreement, (b) Company’s or its Affiliates’ or Approved Subcontractor’s negligence (or more culpable act or omission) or violation of Applicable Laws or regulations in performing or failing to perform its rights or obligations in connection with this Agreement, (c) any Third Party intellectual property claims related to Product (including claims with respect to Company Intellectual Property Rights); provided, however, that Company will not be obligated to indemnify or hold harmless AbbVie Indemnitees from any such Losses which result from any of the matters for which AbbVie is obligated to indemnify Company for pursuant to Section 7.1.

 

7.3          Claims for Indemnification.  A Party entitled to indemnification under this Article 7 (an “Indemnified Party”) shall give prompt written notification, with sufficient detail to allow the receiving Party to make an assessment thereof, to the Party from whom indemnification is sought (the “Indemnifying Party”) of the commencement of any action, suit or proceeding relating to a Third Party claim for which indemnification may be sought or, if earlier, upon the assertion of any such claim by a Third Party (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a Third Party claim as provided in this Section 7.3 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually damaged as a result of such failure to give notice).  Within *** days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such action, suit, proceeding or claim with counsel reasonably satisfactory to the Indemnified Party.  If the Indemnifying Party does not assume control of such defense, the Indemnified Party shall control such defense and, without limiting the Indemnifying Party’s indemnification obligations, the Indemnifying Party shall reimburse the Indemnified Party for all reasonable and documented costs, including attorney fees, incurred by the Indemnified Party in defending itself within *** days after receipt of any invoice therefore from the Indemnified Party.  The Party not controlling such defense may monitor and participate in the controlling Party’s defense at its own expense; provided that, if the Indemnifying Party assumes control of such defense and the Indemnified Party in good faith concludes, based on advice from counsel, that the Indemnifying Party and the Indemnified Party have conflicting interests with respect to such action, suit, proceeding or claim, the Indemnifying Party shall be responsible for the reasonable fees and expenses of separate counsel to the Indemnified Party in connection therewith.  The Party controlling such defense shall keep the other Party advised of the status of such action, suit, proceeding or claim and the defense thereof and shall consider recommendations made by the other Party with respect thereto.  The Party not controlling such defense shall cooperate with the controlling Party and shall make available to the controlling Party all witnesses, information and materials in such Party’s possession or under such Party’s control relating thereto as are reasonably required by the controlling Party, subject to appropriate provisions for the protection of confidentiality.  The Indemnified Party shall not agree to any settlement of such action, suit, proceeding or claim without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned.  The Indemnifying Party shall not agree to any settlement of such action, suit, proceeding or claim or

 

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consent to any judgment in respect thereof that is not solely for monetary damages, that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto, that imposes any liability or obligation on the Indemnified Party, or that acknowledges fault by the Indemnified Party without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld.

 

7.4          Limited Liability.  EXCEPT WITH RESPECT TO THIRD PARTY INDEMNIFICATION CLAIMS PURSUANT TO ARTICLE 7, AND BREACHES OF CONFIDENTIALITY PURSUANT TO ARTICLE 8, IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS AFFILIATES BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE) BREACH OF STATUTORY DUTY OR OTHERWISE, IN CONNECTION WITH OR ARISING IN ANY WAY OUT OF THE TERMS OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

 

7.5          Insurance.  Each of the Parties shall provide, at its own expense, and keep in full force and effect the kinds and amounts of insurance set forth in Section 11.4 of the License Agreement for the Term.

 

ARTICLE 8 — CONFIDENTIAL INFORMATION

 

8.1          Confidential Information.  All Confidential Information disclosed by one Party to the other Party hereunder shall, during the Term and for a period of five (5) years after expiration or termination of this Agreement, be maintained in confidence by the receiving Party and shall not be disclosed to Third Parties nor used for any purpose except to perform the receiving Party’s obligations or exercise the receiving Party’s rights pursuant to and in accordance with this Agreement, without the prior written consent of the disclosing Party.  Both Parties shall require employees to whom Confidential Information is disclosed to undertake confidentiality and non-use obligations consistent with the terms of this provision.  The foregoing obligations of confidentiality shall not apply to the extent that the subject Confidential Information:

 

(a)           is known by receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by the receiving Party’s business records;

 

(b)           is properly in the public domain;

 

(c)           is subsequently disclosed to the receiving Party by a Third Party who may lawfully do so and is not, to the knowledge of the receiving Party, under an obligation of confidentiality to the disclosing Party;

 

(d)           is developed by the receiving Party independently of Confidential Information received from the disclosing Party, as documented by the receiving Party’s business records;

 

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(e)           is disclosed to governmental or other regulatory agencies in order to obtain patents or to gain or maintain approval to conduct clinical studies or to market Product, but such disclosure may be only to the extent reasonably necessary to obtain patents or authorizations and all reasonable steps shall be taken in order to protect the confidentiality of such Confidential Information;

 

(f)            is necessary to be disclosed to Affiliates, agents, consultants, and/or other Third Parties for the research and development, manufacturing and/or marketing of Product (or for such entities to determine their interest in performing such activities) for sale or use in the Territory in accordance with this Agreement on the condition that such Affiliates and/or Third Parties agree to be bound by the confidentiality and non-use obligations contained in this Agreement; or

 

(g)           to the extent required by Applicable Law (including in connection with any securities reporting obligations of the United States Securities and Exchange Commission (SEC) or stock market on which the receiving Party is listed) or court order; provided, however, that the recipient promptly provides to the disclosing Party prior written notice of such disclosure and provides reasonable assistance in obtaining an order or other remedy protecting the Confidential Information from public disclosure.

 

8.2          Injunctive Relief.  In the event of any unauthorized use or disclosure by either Party of any of the other Party’s Confidential Information, the other Party shall be entitled to seek preliminary and permanent injunctive relief, as provided under Applicable Law, to prevent or enjoin any such unauthorized use or disclosure of any of the other Party’s Confidential Information.

 

8.3          Public Disclosures.  No disclosure of the existence, or the terms, of this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party, its Affiliates or their respective employee(s) in any publicity, promotion, press release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by Applicable Law.

 

ARTICLE 9 — INTELLECTUAL PROPERTY RIGHTS

 

9.1            Marking; Trademarks.  The Company acknowledges the validity of the title of AbbVie to any trademark, service mark, logo, design mark, trade name, or other trade dress of AbbVie (or licensed for use by AbbVie, except for such trademarks as are licensed to AbbVie by Company under the License Agreement) (“AbbVie Trademark”) that may be used in conjunction with the Product to be Manufactured by the Company hereunder.  Except as set forth in this Article 9, no right, title or interest in and to any AbbVie Trademark is granted by this Agreement.  In the event that the Product Specifications or any Regulatory Approval require Company to use an AbbVie Trademark or mark Product with one or more AbbVie patent number, then AbbVie shall grant, and hereby grants, Company the right to so use such AbbVie Trademark and AbbVie patent number only with respect to Product Manufactured for delivery to AbbVie hereunder.  Any goodwill associated with the use of such AbbVie Trademark shall be the exclusive property, 

 

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and inure to the benefit, of AbbVie or its licensors.  Company shall not use any AbbVie Trademark in any publicity, advertising or announcement or for any other commercial purpose without the prior written approval of AbbVie, for each such use. Company agrees that it shall not at any time, either during the Term or thereafter, do anything that would adversely affect AbbVie or its Affiliates’ rights in and to any AbbVie Trademark in any country or territory worldwide, nor assist anyone else in doing so, including the following: (a) apply for registration of any AbbVie Trademark, or any mark confusingly similar thereto; (b) apply for registration of any domain name that incorporates any AbbVie Trademark or any mark confusingly similar thereto; (c) subject to the limited rights granted to it in this Section 9.1, use or authorize the use of any trademark, trade name or other designation confusingly similar to any AbbVie Trademark; or (d) contest the validity, strength, or fame of any AbbVie Trademark.

 

9.2          AbbVie’s  Proprietary Rights. AbbVie has granted no license, express or implied, to Company to use AbbVie Intellectual Property Rights other than for the purposes contemplated in this Agreement.

 

ARTICLE 10 - TERM AND TERMINATION

 

10.1        Term.  This Agreement shall become effective on the Effective Date, and unless sooner terminated in accordance with the terms herein, this Agreement shall remain in effect until December 31, 2014 (the “Initial Term,” and together with any Renewal Terms (as such term is defined below), the “Term”).  Thereafter, this Agreement shall be automatically renewed and shall continue in effect for *** successive renewal terms of *** year (each a “Renewal Term”), unless at least *** months prior to the termination of the Initial Term or the then-current Renewal Term, as applicable, AbbVie provides written notification to Company that AbbVie is terminating this Agreement at the end of the Initial Term or the then-current Renewal Term, as applicable.

 

10.2        Termination for Breach.  In the event that either Party (the “breaching Party”) commits a material breach or default of any of its obligations hereunder, the other Party (the “non-breaching Party”) may give the breaching Party written notice of such breach or default.  In the event that the breaching Party fails to cure such breach or default within *** days (or *** days with respect to payment defaults) after the date of the non-breaching Party’s notice thereof, then the non-breaching Party may terminate this Agreement immediately.

 

10.3        Termination by Insolvency.  Either Party may terminate this Agreement immediately upon notice to the other Party if the other Party shall (a) file in any court or agency pursuant to any statute or regulation of any state, country or jurisdiction a petition in bankruptcy or insolvency or for reorganization or for arrangement or for the appointment of a receiver or trustee of that Party or its assets; (b) be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within *** days after the filing thereof; (c) propose or be a party to any dissolution or liquidation; or (d) make an assignment for the benefit of its creditors.

 

10.4        Debarred Individual.  AbbVie may terminate this Agreement immediately upon providing notice in the event any employee or agent of Company becomes or is the subject of a 

 

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proceeding that could lead to such person becoming a Debarred Individual in accordance with Section 6.2.

 

10.5        Effect of Termination.

 

10.5.1              Upon termination of this Agreement by AbbVie pursuant to Sections 10.2, 10.3 or 10.4, Company shall at its sole cost: (a) incur no further obligations, including placement of orders or subcontracts for material, services or facilities; (b) promptly use commercially reasonable efforts to terminate or assign to AbbVie or AbbVie’s designee, upon terms and conditions reasonably satisfactory to AbbVie, all obligations, including orders or subcontracts; (c) mitigate costs associated with this Agreement; and (d) promptly use commercially reasonable efforts to provide AbbVie assistance in maintaining performance of Company’s obligations hereunder by AbbVie or its designee and to facilitate the orderly transfer of such obligations.

 

10.5.2              Upon termination of this Agreement by Company pursuant to Sections 10.2 or 10.3, AbbVie shall purchase from Company the amount of Product that is subject to Purchase Orders outstanding at the time of such termination.  AbbVie shall in addition reimburse Company for work in process and materials that Company has purchased for the purpose of supplying Product under open Purchase Orders to AbbVie.

 

10.5.3              Except as and to the extent contemplated by Section 10.5.2, upon expiration of this Agreement or any earlier termination of this Agreement, Company immediately shall cease all Manufacturing of Product pursuant to this Agreement.

 

10.6        Survival.  The following Articles and Sections shall survive termination or expiration of the Agreement: Articles 1, 7, 8, 9 and 11 and Sections 4.5, 5.10, 6.2, 10.5, 10.6, and 10.7.  In addition, all provisions that survive termination, that are irrevocable or that arise due to termination shall survive in accordance with their terms.  Any other provisions of this Agreement contemplated by their terms to pertain to a period of time following termination or expiration of this Agreement shall survive only for the specified period of time.

 

10.7        Accrued Obligations.  Termination, expiration, cancellation or abandonment of this Agreement through any means and for any reason shall not relieve the Parties of any obligation accruing prior thereto and shall be without prejudice to the rights and remedies of either Party with respect to any antecedent breach of any of the provisions of this Agreement.

 

ARTICLE 11 — MISCELLANEOUS

 

11.1        Force Majeure. Neither Party shall be liable for any failure to perform, or any delay in the performance of, any of its obligations under this Agreement (other than a failure to pay any amount due hereunder) to the extent, but only to the extent, that such Party’s performance is prevented by the occurrence a Force Majeure Event.  A “Force Majeure Event” shall mean and include, war, civil war, insurrection, rebellion, civil unrest, fire, flood, earthquake, adverse weather conditions, strike, lockout, labor unrest, acts of the public enemy, acts of government authorities, and, in general, any other cause or condition beyond the 

 

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reasonable control of the Party whose performance is affected thereby.  In the event that a Party’s performance is affected by the occurrence of any Force Majeure Event, that Party shall furnish prompt written notice thereof to the other Party hereto.  Promptly thereafter, the Parties shall meet to discuss how AbbVie shall obtain such full quantity of conforming Product.

 

11.2        Assignment.   Neither Party may assign or transfer its rights or delegate its obligations under this Agreement, in whole or in part, without the prior written consent of the other Party, except that a Party may make such an assignment or delegation without the other Party’s consent to (a) Affiliates, provided that such assignment or delegation does not relieve such assigning Party from its obligations hereunder or (b) a successor to substantially all of the business of such Party to which this Agreement pertains, whether in a merger, sale of stock, sale of assets, spin-off or other transaction.  Any permitted successor or assignee of rights and/or obligations hereunder shall, in writing to the other Party, expressly assume such rights and/or obligations.  Any attempted assignment or delegation by either Party in violation of the terms of this Section 11.2 shall be null, void and of no legal effect.

 

11.3        Binding Effect.  This Agreement shall be binding upon and inure to the benefit of each of the Parties and its successors and permitted assigns.

 

11.4        Waiver.  No waiver will be implied from conduct or failure to enforce rights.  No provisions of this Agreement shall be deemed waived unless such waiver is in writing and signed by the authorized representative of the Party against whom it is sought to be enforced.  Waiver by either Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default.

 

11.5        Severability.  If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby or thereby, as the case may be, is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties.

 

11.6        Relationship of the Parties.  The relationship of the Parties under this Agreement is that of independent contractors.  Nothing contained in this Agreement is intended or is to be construed so as to constitute the Parties as partners, joint venturers, or one Party as an agent or employee of the other Party.  Neither Party has any express or implied right under this Agreement to assume or create any obligation on behalf of or in the name of the other Party, or to bind the other Party to any contract, agreement or undertaking with any Third Party, and no conduct of a Party shall be deemed to imply such right.

 

11.7        Entire Agreement.  This Agreement and schedules and the Exhibits hereto, together with the Purchase Agreement, the License Agreement and the other Ancillary Agreements (as such term is defined in the Purchase Agreement) contain the entire agreement 

 

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between the Parties with respect to the subject matter hereof, and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter.

 

11.8        Amendments.  No provisions of this Agreement shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of each Party.

 

11.9        Further Assurances.   Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

 

11.10      Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same agreement.  Each Party acknowledges that an original signature or a copy thereof transmitted by facsimile or by PDF shall constitute an original signature for purposes of this Agreement.

 

11.11      No Third Party Beneficiaries.  This Agreement has been entered into for the sole benefit of Company and AbbVie and in no event will any Third Party benefits or obligations be created thereby.

 

11.12      Dispute Resolution. If a dispute arises between the Parties, the Parties shall follow the alternative dispute resolution provisions provided for in Exhibit C.

 

11.13      Notice.  Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in this Section 11.13 or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 11.13.  Such Notice shall be deemed to have been given as of the date delivered by hand or on the second Business Day (at the place of delivery) after deposit with an internationally recognized overnight delivery service.

 

	
To:          Kadmon
    	
 
    	
Kadmon Pharmaceuticals, LLC
   450 East 29th Street, 5th Floor
   New York, NY 10016
   Attn: Steven N. Gordon, Executive Vice President and General Counsel
   Facsimile: (212) 355-7855
    

 

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with a copy to:
    	
 
    	
DLA Piper LLP (US)
   1251 Avenue of the Americas
   New York, New York 10020-1104
   Attn: Howard S. Schwartz, Esq.
   Facsimile: (410) 580-3251
    
	
 
    	
 
    	
 
    
	
To: AbbVie
    	
 
    	
AbbVie Inc.
   1 North Waukegan Road
   North Chicago, Illinois 60064
   Attn:  Executive Vice President, Global Commercial Operations
   Facsimile:  (847) 935-3294
    
	
 
    	
 
    	
 
    
	
with a copy to:
    	
 
    	
AbbVie Inc.
   1 North Waukegan Road
   North Chicago, Illinois 60064
   Attn:  Executive Vice President, Business Development, External Affairs   and General Counsel
   Facsimile:  (847) 935-3294
    

 

11.14      Expenses.  Unless otherwise specifically provided for herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party that shall have incurred the same, and the other Party shall have no liability therefor.

 

11.15      Governing Law.  This Agreement shall be governed by, and interpreted in accordance with the laws of the State of New York, without reference to conflicts of laws principles; provided, however, that the validity or enforcement of Intellectual Property Rights hereunder shall be determined under the laws of that jurisdiction in which those Intellectual Property Rights are registered or for which an application for registration has been filed.  The United Nations Conventions on Contracts for the International Sale of Goods shall not be applicable to this Agreement.

 

11.16      Export Control.  This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time.  Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other Regulatory Authority in accordance with Applicable Law.

 

11.17      Interpretation. The headings of the Sections of this Agreement have been added for the convenience of the Parties and shall not be deemed a part hereof. Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to 

 

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include the other genders as the context requires.  The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto and thereto) and not to any particular provision of this Agreement.  Article, Section, Exhibit and Schedule references are to the Articles, Sections, Exhibits, and Schedules to this Agreement unless otherwise specified.  Unless otherwise stated, all references to any agreement shall be deemed to include the Exhibits, Schedules and Annexes, if applicable, to such agreement.  The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified.  The word “or” shall not be exclusive.  Unless otherwise specified in a particular case, the word “days” refers to calendar days.  References herein to this Agreement shall be deemed to refer to this Agreement as of its Effective Date and as it may be amended thereafter, unless otherwise specified.  References to the performance, discharge or fulfillment of any liability or obligation in accordance with its terms shall have meaning only to the extent such liability or obligation has terms.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the Effective Date.

 

	
ABBVIE BAHAMAS LTD.
    	
KADMON PHARMACEUTICALS, LLC
    
	
 
    	
 
    
	
By:
    	
/s/ William Chase
    	
 
    	
By:
    	
 /s/   Steven N. Gordon
    
	
 
    	
 
    
	
Name:
    	
 William Chase
    	
 
    	
Name:
    	
 Steven N. Gordon
    
	
 
    	
 
    
	
Title:
    	
 Authorized Officer
    	
 
    	
Title:
    	
 Executive Vice President and General Counsel
    
									

 

 

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***

 

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A-1

 

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***

 

***

 

B-1

 

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***

 

B-2

 

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***

 

B-3

 

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***

 

C-1

 

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***

 

C-2

 

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C-3Exhibit 10.22

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

EXECUTION COPY

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into on this 17th day of June, 2013 (the “Effective Date”) by and between Kadmon Pharmaceuticals, LLC, a Pennsylvania limited liability company (“Kadmon”), AbbVie Bahamas Ltd., a Bahamas corporation (“AbbVie”), and solely for purposes of Section 8.12, AbbVie Inc., a Delaware corporation (“Parent”).  Kadmon and AbbVie may each be referred to herein individually as a “Party” and collectively as the “Parties.”  Capitalized terms used in this Agreement shall have the meanings ascribed to them in Section 1 herein.

 

BACKGROUND

 

WHEREAS, Kadmon owns or controls certain proprietary rights, regulatory approvals, know-how and technology related to the Product in the Territory;

 

WHEREAS, Kadmon desires to sell, assign, transfer, convey and deliver to AbbVie, and AbbVie desires to purchase, acquire and accept from Kadmon, the Purchased Assets, upon the terms and subject to the conditions hereinafter set forth; and

 

WHEREAS, simultaneously with the execution and delivery of this Agreement, the Parties will be entering into certain Ancillary Agreements, including a License Agreement pursuant to which AbbVie and its Affiliates shall acquire a license from Kadmon to develop and commercialize the Product in the territory described in the License Agreement on an exclusive or non-exclusive basis, as applicable.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.             DEFINITIONS.

 

1.1          “AbbVie Party(ies)” means AbbVie and its Affiliates.

 

1.2          “Affiliate(s)” means, with respect to a Party, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party.  For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means (i) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities or by contract relating to voting rights or corporate governance; or (ii) the ownership, directly or indirectly, of more than *** % of the voting securities or other ownership interest of a Person (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity).  The Parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than *** %, and that in such case such lower percentage shall be substituted in the

 

 

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preceding sentence, provided that such foreign investor has the power to direct the management or policies of such entity.

 

1.3          “Ancillary Agreements” means, collectively, the Bill of Sale, Assignment and Assumption Agreement, the Patent Assignment Agreement, the License Agreement, the Supply Agreement and the Escrow Agreement.

 

1.4          “ANDA” means the abbreviated new drug application number 077-456.

 

1.5          “Applicable Laws” means all federal, state, local or foreign laws, codes, statutes, ordinances, regulations, rules, guidance, or orders of any kind whatsoever pertaining to either Party, the Purchased Assets or any of the activities contemplated by this Agreement, including, without limitation, all relevant European Union Law, the FDCA, Public Health Services Act, Generic Drug Enforcement Act of 1992 (21 U.S.C. § 335a et seq.), Anti-Kickback Statute (42 U.S.C. § 1320a-7b et seq.), the Health Insurance Portability and Accountability Act of 1996, data security and confidentiality, patient and information privacy, and tax laws, and any other regulations promulgated by any Governmental Authority, all as amended from time to time in the relevant territory.

 

1.6          “Assigned Contracts” means the Contracts between Kadmon or its Affiliates and Third Parties pursuant to which Kadmon has rights and/or obligations with respect to any Purchased Asset or the Product related to the Territory, all of which Assigned Contracts are listed on Schedule 1.6 hereto.

 

1.7          “Assumed Liabilities” has the meaning set forth in Section 2.8.

 

1.8          “BID Product” means the 200mg, 400mg or 600mg standalone tablets (and specifically excluding capsules) that contain the Compound as the active ingredient and are to be taken twice daily.

 

1.9          “Bill of Sale, Assignment and Assumption Agreement” means a bill of sale, assignment and assumption agreement in substantially the form and substance attached hereto as Exhibit A.

 

1.10        “Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States, or any day on which banking institutions in New York City are authorized or required by law or other governmental action to close.

 

1.11        “cGCP” means the then-current applicable current Good Clinical Practice requirements under Applicable Laws for clinical trials that support or are intended to support Registrations, including as set forth in International Conference on Harmonization E6: Good Clinical Practices Consolidated Guideline and in 21 C.F.R. Parts 50, 54, 56, and 312, and as otherwise required by the applicable Governmental Authority in any jurisdiction in the world.

 

1.12        “cGLP” means the then-current Good Laboratory Practice requirements under Applicable Laws for nonclinical laboratory studies that support or are intended to support applications to conduct research in humans or to obtain Registrations, including as set forth in 21

 

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C.F.R. part 58 and EC Directives 2004/10/EC and 2004/9/EC, and as otherwise required by the applicable Governmental Authority in any jurisdiction in the world.

 

1.13        “cGMP” means the FDA’s current Good Manufacturing Practice Regulations at 21 C.F.R. Parts 210 and 211, 21 U.S.C. 351(a), and the applicable counterpart requirements for the manufacture, warehousing, packaging, and distribution of drug products for human use promulgated by Governmental Authorities in countries outside the United States where the Compound or Product (or any component thereof) is or was previously manufactured, produced, distributed, marketed, sold or developed by Kadmon or any of its Affiliates, including any amendments or revisions thereto.

 

1.14        “Clinical Data” means all data collected or otherwise generated under or in connection with all clinical studies, including all bioequivalence studies, including: (a) raw data, reports listing or summarizing such data, and results with respect thereto, including all case report forms; (b) the tables, figures and graphs based upon the rules and instructions described in the statistical analysis plan for all studies in the SAS datasets compiled from the clinical data management database; (c) a detailed summary of all data generated or compiled in connection with the bioequivalence studies (including electronic or other reasonable access to all raw data, including case report forms); and (d) all results and analyses of the bioequivalence studies, including all analyses conducted by Kadmon or its Affiliates in connection with the bioequivalence studies.

 

1.15        “Commercially Reasonable Efforts” means with respect to the efforts to be expended by a Party with respect to any objective, reasonable, good faith efforts to accomplish such objective as a Person in the life sciences industry would normally use to accomplish a similar objective under similar circumstances, taking into consideration the stage of development or product life, market potential, efficacy, safety, approved labeling, competitiveness of alternative products sold by Third Parties in the marketplace, patent and other proprietary positions, and profitability (including royalties payable to licensors of patent or other intellectual property rights other than any royalty, milestone or other payment to be made under this Agreement), and, with respect to the efforts to be expended by an AbbVie Party, taking into consideration the impact of such activities on AbbVie’s products for the treatment of Hepatitis C virus.

 

1.16        “Commercialization” and “Commercialize” means the activities carried out by or on behalf of a Party in distributing (including importing, transporting, warehousing, invoicing, handling and delivering Product to customers), promoting, marketing and selling Product, but does not include selling the Product for clinical trial purposes.

 

1.17        “Co-Packaged Product” means any product containing a Product and any other approved drug, in separate final dosage forms, packaged together with appropriate labeling, intended for use together, for the ease of the patient.

 

1.18        “Competing Product” means any product containing the Compound, including the Product; provided that this definition shall not include (a) capsule formulations with a

 

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Compound dose equal to or less than 200mg; or (b) products (other than Co-Packaged Product) sold for clinical trial purposes anywhere in the world.

 

1.19        “Compound” means that certain compound having the formula 1-[(2R,3R,4S,5R)-3,4-dihydroxy-5-(hydroxymethyl)oxolan-2-yl]-1H-1,2,4-triazole-3-carboxamide.  [CAS # 36791-04-5].

 

1.20        “Confidential Information” means technical, financial, manufacturing or marketing information, ideas, methods, developments, improvements, business plans, know-how, trade secrets or other proprietary information relating thereto, together with analyses, compilations, studies or other documents, records or data prepared by the Parties and their Affiliates which contain or otherwise reflect or are generated from such information.

 

1.21        “Contracts” means any and all binding commitments, contracts, purchase orders, licenses, permits, instruments, commitments, arrangements, undertakings, practices or other agreements.

 

1.22        “Control” means, with respect to any item of Kadmon Intellectual Property Rights or Confidential Information, ownership of or possession of the right, whether directly or through an Affiliate, by ownership or license, to use, assign or practice such item of Kadmon Intellectual Property Rights or Confidential Information.

 

1.23        “Drug Laws” means the Food, Drug and Cosmetic Act, the Public Health Service Act, any Applicable Law promulgated by the EMA or similar laws of any foreign jurisdiction.

 

1.24        “Drug Master File” or “DMF” means a drug master file document containing detailed information about the manufacturing of the Product the active pharmaceutical ingredient of the Product packaging, and/or excipient, colorant, flavour, essence, or material including information describing the manufacturing site, the manufacturing facility, the operating procedures, the personnel, the manufacture, chemistry and control of the drug substance and the drug substance intermediates.

 

1.25        “Effective Transfer” means, on a Regulatory Approval by Regulatory Approval basis, the various filings required to be made by Kadmon and described on Schedule 3.7, and following such filings, the transfer of legal ownership of the Regulatory Approvals to an AbbVie Party and the acknowledgement of such transfer by the applicable Pharmaceutical Product Regulatory Authority.

 

1.26        “EMA” means the European Medicines Agency, and any successor agency(ies) or authority having substantially the same function.

 

1.27        “Encumbrance” means any lien, mortgage, security interest, pledge, restriction on transferability or use, right of first refusal, defect of title, restriction on receipt of income or other attribute of ownership, or other claim, charge or encumbrance of any nature whatsoever on any asset, property or property interest.

 

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1.28        “Escrow Agent” means the escrow agent that is a signatory to the Escrow Agreement.

 

1.29        “Escrow Agreement” means the escrow agreement in substantially the form and substance attached hereto as Exhibit D.

 

1.30        “EU Biostudies” means the bioequivalence studies conducted for the European Union in respect of the BID Product with reference numbers P1ER07003, P1ER07004, M1ER07005 and M1ER07006.

 

1.31        “Excluded Tax Liabilities” means any liability for (i) Taxes that relate, or are attributable, to the Purchased Assets or the Assumed Liabilities, in each case for any Pre-Closing Tax Period (including the Taxes apportioned to a Pre-Closing Tax Period pursuant to Section 3.3.3), (ii) Taxes of Kadmon, (iii) payments by Kadmon under any Tax allocation, sharing or similar agreement or arrangement, other than pursuant to this Agreement or the Ancillary Agreements, and (iv) any Transfer Taxes payable by Kadmon (as determined under Section 3.3.2).

 

1.32        “Ex-US Clinical Data” means all Clinical Data related to the Product in the Territory as set forth Schedule 1.32 — Part A, but excluding any Clinical Data (a) contained in the ANDA, and (b) set forth on Schedule 1.32 — Part B.

 

1.33        “Ex-US Marketing Authorizations” means the Registrations for the Product set forth on Schedule 1.33.

 

1.34        “Ex-US Regulatory Documentation” means all Regulatory Documentation related to the Ex-US Marketing Authorizations and to Obtained EU Marketing Authorizations, but excluding any Clinical Data that AbbVie has a right of reference to under Section 2.4.

 

1.35        “FDA” means the United States Food and Drug Administration, and any successor agency(ies) or authority having substantially the same function.

 

1.36        “FDCA” means the U.S. Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C. § 321, et seq.

 

1.37        “Governmental Authority” means any nation or government, any provincial, state, regional, local or other political subdivision thereof, any supranational organization of sovereign states, and any entity, department, commission, bureau, agency, authority, board, court, official or officer, domestic or foreign, exercising executive, judicial, regulatory or administrative functions of or pertaining to government, including the FDA and the EMA.

 

1.38        “IND” means Investigational New Drug Application filed with the FDA pursuant to 21 C.F.R. §312, or the equivalent application or filing filed with any equivalent agency or Governmental Authority in the Territory.

 

1.39        “Infringement” has the meaning set forth in Section 8.15.3(a).

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.40        “Infringement Claim” has the meaning set forth in Section 8.15.4(a).

 

1.41        “Institutional Review Board” means any domestic or foreign institutional review board or ethics committee overseeing any clinical trial involving the Product.

 

1.42        “Intellectual Property Rights” means (i) Patent Rights, (ii) trademarks, trademark registrations, trademark applications, service marks, service mark registrations, service mark applications and domain names, (iii) copyrights, copyright registrations and copyright applications, (iv) know-how, inventions, formulae, processes and trade secrets, and (v) all rights in all of the foregoing provided by Applicable Law.

 

1.43        “JPMT” means the Joint Project Management Team, to be established in accordance with the terms set forth Exhibit H.

 

1.44        “Kadmon Credit Agreement” means the Amended and Restated Credit Agreement, dated October 31, 2011, as amended, by and among Kadmon, Cortland Capital Market Services, LLC, as administrative agent thereunder, and the lenders party thereto.

 

1.45        “Kadmon Patent Rights” means all Patent Rights Controlled by Kadmon that claim or otherwise cover the Product, the manufacture of the Product or the use of the Product, in each case in the Territory, which Patent Rights are listed on Exhibit C, and including the Patent Application.

 

1.46        “Knowledge” means all facts actually known, or which should have been reasonably known, by the relevant personnel with primary responsibility for the matter in question on a day to day basis, following reasonable investigation and inquiry by such personnel.

 

1.47        “Liability” means, collectively, any indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, choate or inchoate, liquidated or unliquidated, secured or unsecured, direct or indirect, matured or unmatured, due or to become due, absolute or contingent, accrued or not accrued, and whether or not required to be reflected in the financial statements in accordance with International Financial Reporting Standards.

 

1.48        “License Agreement” means the license agreement in substantially the form and substance attached hereto as Exhibit E.

 

1.49        “Losses” means any and all losses, liabilities, damages, claims, awards, judgments, Taxes, interest, penalties, costs and expenses (including, without limitation, reasonable attorneys’ fees, experts’ fees and other similar out-of-pocket expenses) actually suffered or incurred, but excluding punitive, special, exemplary or consequential damages unless (a) in connection with a breach of Sections 3.10 or 3.11, or (b) such punitive, special, exemplary or consequential damages are awarded to a Third Party in connection with a Third Party Claim.

 

1.50        “Major Countries” means the collective reference to the United Kingdom, France, Germany, Italy and Spain and “Major Country” means any one of such countries.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.51        “Manufacturing Documentation” means any and all documentation that is under the possession or control of Kadmon (or any of its Affiliates or Third Party contractors) for the manufacture of the Product (or any component thereof) for sale in the Territory, including the following: manufacturing and packaging instructions; batch record templates; analytical test methods and specifications for the Product, raw materials, manufacturing, packaging, cleaning and stability; development reports supporting manufacturing and Product formulation;  validation reports (manufacturing process, analytical, packaging and cleaning); standard operating procedures; master formula; stability data; purification; formulation; filling; finishing; labeling; shipping and holding of the Product, or any intermediate thereof, including process development, process qualification and validation, scale-up, pre-clinical, clinical and commercial manufacture and analytic development, product characterization, stability testing, quality assurance, and quality control and interacting with regulatory authorities regarding any of the foregoing; reference standard information; approved supplier lists; and notebooks whether paper or electronic, including the Manufacturing Documentation owned by Kadmon that is listed on Schedule 1.51 — Part A (“Owned Manufacturing Documentation”) and the Manufacturing Documentation owned by any of Kadmon’s Third Party suppliers (“Third Party Supplier Manufacturing Documentation”) that is comprised of those documents listed on Schedule 1.51 — Part B plus other Manufacturing Documentation. Notwithstanding the foregoing, Manufacturing Documentation shall not include any Drug Master File held by a Third Party manufacturer of the Compound.

 

1.52        “Material Adverse Effect” means any change, circumstance or event that, individually or in the aggregate, has a material adverse effect on the Product or Purchased Assets, taken as a whole; provided, however, that Material Adverse Effect shall exclude any adverse changes or conditions as and to the extent such changes or conditions relate to or result from: (a) the announcement of this Agreement or the pendency of the transactions contemplated hereby; (b) the execution, delivery or performance of this Agreement and the Ancillary Agreements; (c) general economic conditions or other conditions generally affecting the pharmaceutical industry which do not have a disproportionate impact on the Compound, Product or Purchased Assets; (d) any change in Applicable Laws or the interpretation thereof by any Governmental Authority; (e) any natural disaster, force majeure events or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof; or (f) any action required to be taken under any regulation, order, decree or ruling by which Kadmon (or any of its assets or properties) are bound, except, in the case of the foregoing clauses (c) through (f), to the extent such event, change, development, circumstance, occurrence, effect or state of facts has had (or would reasonably be expected to have) a materially disproportionate adverse impact on Kadmon, taken as a whole, compared to other Persons in the industry in which Kadmon conduct its business.

 

1.53        “Net Sales” means, with respect to a Product for any period, the total amount billed or invoiced on sales of such Product during such period by AbbVie Parties or their respective sublicensees in the Territory to Third Parties (including wholesalers or distributors) in bona fide arm’s length transactions, less the following deductions, in each case related specifically to the Product and actually allowed and taken by such Third Parties:

 

(a)           *** and *** ;

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

(b)           *** or *** or otherwise, *** by, *** with or otherwise *** to *** or other *** ;

 

(c)           *** on *** (such as *** , or *** ) to the *** to the *** and *** separately as such in the *** ;

 

(d)           *** or *** by *** of *** , *** % of *** with *** during such *** or *** , or because of *** , including *** or *** ;

 

(e)           the *** of *** by AbbVie (in accordance with its *** ) as being *** during the *** to *** and/or *** relating to such *** ;

 

(f)            any *** or *** for any *** to a *** or *** of such *** , where, for purposes of this *** , a “ *** ” means any *** one or more *** , or other *** to *** in the *** of such *** ;

 

(g)           any *** from a *** which are not *** and are *** by *** or its *** , including *** ;

 

(h)           that *** of the *** on *** by the *** and *** to *** of the *** ;

 

(i)            *** , and other *** to the extent added to the *** and set forth separately as such in the *** , as well as any *** for *** provided by *** and *** related to the *** of such *** ; and

 

(j)            any other similar and *** .

 

Net Sales shall not include transfers or dispositions for charitable, promotional, pre-clinical, clinical, regulatory, or governmental purposes.  Net Sales shall not include sales between or among AbbVie Parties or their sublicensees.  Subject to the above, Net Sales shall be calculated in accordance with the standard internal policies and procedures of AbbVie and its Affiliates or sublicensees.

 

In the event a Product is sold as a Co-Packaged Product, the Net Sales for such Co-Packaged Product shall be calculated as follows:  Net Sales of a Co-Packaged Product for the purpose of determining the royalties payable to in respect of such Co-Packaged Product will be calculated by multiplying actual Net Sales of such Co-Packaged Product by the fraction A/(A+B) where A is the invoice price of the Product containing the Compound in such Co-Packaged Product, and B is the total invoice price of the other active ingredient(s) in the Co-Packaged Product if sold

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

separately.  If, on a country-by-country basis, such other active ingredient or ingredients in the Co-Packaged Product are not sold separately in such country, Net Sales for the purpose of determining royalties payable pursuant to this Section for the Co-Packaged Product shall be calculated by multiplying actual Net Sales of such Co-Packaged Product by the fraction A/C where A is the invoice price of the Product containing the Compound component, and C is the invoice price of the Co-Packaged Product.  If, on a country-by-country basis, such other active ingredient or ingredients in the Co-Packaged Product are sold separately in such country, but the Compound component of the Co-Packaged Product is not sold as a monotherapy Product in such country, Net Sales for the purpose of determining royalties payable pursuant to this Section for the Co-Packaged Product shall be calculated by multiplying actual Net Sales of such Co-Packaged Product by the fraction (C-B)/C where B is the total invoice price of the other active ingredient(s) in the Co-Packaged Product, if sold separately, and C is the invoice price of the Co-Packaged Product.  If, on a country-by-country basis, neither the Compound nor such other active ingredient component(s) are sold separately in such country, Net Sales for the purposes of determining royalties payable pursuant to this Section for the Co-Packaged Product shall be D/(D+E) where D is the fair market value of the Compound component of the Co-Packaged Product and E is the fair market value of the other active ingredient component(s) of such Co-Packaged Product, as such fair market values are determined by AbbVie, based upon commercially reasonable standards and available market information.

 

1.54        “Obtained EU Marketing Authorizations” means the Registrations for Spain and the United Kingdom in relation to the BID Product, including all pricing reimbursement approvals.

 

1.55        “Owned Manufacturing Documentation” has the meaning set forth in Section 1.51.

 

1.56        “Patent Application” means (a) that certain PCT filing titled “Once Daily Treatment of Hepatitis C with Ribavirin and Taribavirin”, with PCT number PCT/US13/24263, including patent applications claiming priority to said application, including non-provisionals, national stage applications, divisions, continuations, continuations-in-part, utility models, and designs, any priority documents of said application, any applications which claim priority to a priority document of said application, and any other related applications and equivalents thereof, along with both the right to claim priority to said application and the right to claim priority to any priority documents of said application, and (b) all Patent Rights issuing under any patent application covered by the foregoing clause (a).

 

1.57        “Patent Assignment Agreement” means a patent assignment in substantially the form and substance attached hereto as Exhibit B.

 

1.58        “Patent Files” mean copies (or originals, where available to Kadmon or its agents or Affiliates) of the following to the extent comprising or relating to Kadmon Patent Rights: (a) all patents, patent applications, assignments and correspondence to and from any country in the Territory (whether or not to or from Kadmon); and (b) to the extent that the same are in existence and related to the items in clause (a), all files, records, workbooks (including, without limitation,

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

laboratory notebooks), correspondence, data, notes and information in the possession or Control of Kadmon or its agents.

 

1.59        “Patent Rights” means all rights arising under patents, provisional patent applications, patent applications or invention registrations, as well as any substitutions, continuations, continuations-in-part, divisionals and all reissues, renewals, reexaminations, extensions, supplementary protection certificates, confirmations, revalidations, registrations or patents, and all foreign counterparts thereof, registered or applied for in the United States and all other nations throughout the world, in connection with any of the foregoing.

 

1.60        “Person” means any individual, corporation, partnership, joint venture, limited liability company, joint stock company, trust or unincorporated organization or Governmental Authority.

 

1.61        “Pharmaceutical Product Regulatory Authority” means any Governmental Authority that is concerned with the safety, efficacy, reliability, manufacture, investigation, sale or marketing of pharmaceuticals or medical products, including the FDA, EMA, Health Canada, TGA and PMDA.

 

1.62        “Pharmacovigilance Documentation” means the pharmacovigilance data extract from the global safety database, copies of adverse event case files, copies of PSURs, copies of any other pharmacovigilance documents that may be necessary to meet the ongoing global pharmacovigilance obligations related to the Products.

 

1.63        “PharmUnion” means PharmUnion, LLC, a company with offices in Kiev Ukraine.

 

1.64        “PharmUnion Agreement” means that certain License and Distribution Agreement dated September 17, 2008, as amended, by and between PharmUnion and an Affiliate of Kadmon.

 

1.65        “Preclinical Stud(y/ies)” means all studies and other testing, including any animal or other non-clinical studies and testing, not conducted on humans.

 

1.66        “Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date; and, with respect to a Straddle Period, the portion of such Tax period ending at the end of the Closing Date.

 

1.67        “Product” means a pharmaceutical product (a) containing Compound and sold in the Territory under Ex-US Marketing Authorizations, (b) containing Compound and to be sold in the Territory under Obtained EU Marketing Authorizations or under any Regulatory Approvals obtained under Section 2.3.1, (c) that is a standalone product, contains Compound and is to be sold in the Territory under a new Registration, whether or not such Registration was obtained by referencing or including data contained in the ANDA, (d) that is a standalone product, contains Compound and is to be sold in the Territory under a new Registration, whether or not such Registration was obtained by referencing or including data contained in a new drug application obtained by Kadmon in the United States covering the QD Formulation (“QD NDA”), provided

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

that, this clause (d) shall only be included in the definition of “Product” for the purposes of this Agreement, upon a Registration being obtained in any country in the Territory of the QD Formulation, or (e) to be sold in the Territory under a new Registration and includes a compound described in any of clauses (a) through (d), inclusive, that is co-packaged with any other pharmaceutical product.  “Product” shall not include any pharmaceutical product containing Compound that has been reformulated or otherwise sold under a new Registration not otherwise described in clauses (a), (b), (c), (d) or (e) above.

 

1.68        “Product Confidential Information” means all Confidential Information Controlled by Kadmon to the extent related to the development, manufacturing or commercialization, as applicable, of the Product solely in the Territory and the Purchased Assets, including, without limitation, the Manufacturing Documentation, Regulatory Documentation and the Technical Information, in each case, Controlled by Kadmon, as they relate to sale, use and importation of Product solely in the Territory, and/or the manufacture of the Product anywhere in the world in connection with the sale, use and importation of Product in the Territory.

 

1.69        “Purchased Assets” means the assets which relate to Products in the Territory and which are enumerated on Schedule 1.69 hereto, including Ex-US Marketing Authorizations, Ex-US Clinical Data, Ex-US Regulatory Documentation, Owned Manufacturing Documentation, the Kadmon Patent Rights and Patent Files, the Pharmacovigilance Documentation and all of Kadmon’s rights (subject to any obligations) under the Assigned Contracts, together with all rights to sue or recover and retain damages and costs and attorneys’ fees for past, present and future infringement of any of the foregoing or for any other claims for breach of contract or otherwise related to the Purchased Assets, and all goodwill related to the foregoing.

 

1.70        “QD Formulation” means a single immediate release standalone tablet (and specifically excluding capsules) formulated by or on behalf of Kadmon using Kadmon Technical Information to contain the entire daily Compound dose of 600mg, 800mg, 1000mg, or 1200mg for patients.

 

1.71        “QD NDA” has the meaning set forth in Section 1.67.

 

1.72        “Records” means all materials whether in electronic or paper format related to the Purchased Assets currently in the possession of Kadmon or its Affiliates or their respective Third Party agents.

 

1.73        “Registrations” means, with respect to any jurisdiction, any and all of the regulatory approvals, licenses, registrations, agreements, permits, exemptions, clearances, certificates, consents, authorizations, other permissions, and requests for approval for, and supplements or amendments to, the foregoing Controlled by Kadmon or its Affiliates relating to the Product issued by any Governmental Authority, necessary or useful to study, manufacture, market, sell or distribute a Product in a country in the Territory, including where applicable, applications for pricing and reimbursement approval.

 

1.74        “Regulatory Approvals” means an approval by the EMA or the applicable Pharmaceutical Product Regulatory Authority of Product for countries both inside and outside the European Union of the Registrations which are set forth on Schedule 1.74.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.75        “Regulatory Documentation” means any and all applications to or from the EMA or FDA or any other Governmental Authority for approvals (including all drug approval applications, INDs, IND amendments, CTAs and CTA amendments), registrations, licenses, authorizations and approvals (including all Registrations), submissions, notifications, and Preclinical Study and clinical study authorization applications or notifications (including all supporting files, writings, data, studies and reports) prepared for submission to a Governmental Authority or research Institutional Review Board with a view to the granting of any Registration (investigational new drug application or clinical trial application), approvals granted by or received from the EMA or FDA or any other Governmental Authority (including marketing approvals, variations and pricing applications) or other marketing authorization or approval, and any correspondence to or with the EMA or FDA or any other Governmental Authority with respect to Product as it relates to the Territory (including minutes, tracking logs, internal meeting minutes and contact reports, and official contact reports relating to any communications, written or verbal, with any Governmental Authority), and all data contained in any of the foregoing, including all regulatory drug lists, advertising and promotion documents, adverse event files and complaint files relating to the Product.

 

1.76        “Representatives” means, with respect to any Party, such Party’s counsel, accountants, financial advisors, lenders and other agents and representatives.

 

1.77        “Settlement Agreements” means the settlement agreements set forth on Schedule 1.77.

 

1.78        “Straddle Period” means any Tax period beginning on or before, and ending after, the Closing Date.

 

1.79        “Supply Agreement” means the finished product supply agreement in substantially the form and substance attached hereto as Exhibit F.

 

1.80        “Tax” or “Taxes” means (a) any and all federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, gross margins, personal property, sales, use, transfer, registration, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, fine, penalty, or addition thereto, (b) any liability for the payment of any amounts of the type described in clause (a) as a result of being a member of an affiliated, consolidated, combined, unitary, or aggregate group for any taxable period, and (c) any liability for the payment of any amounts of the type described in clause (a) or (b) as a result of being a transferee of or successor to any Person or as a result of an obligation to indemnify any Person.

 

1.81        “Tax Return” means any report, return, declaration or other information or filing, including any amendments thereto, supplied or required to be supplied to any Taxing Authority with respect to Taxes, including information returns, claims for refund and any documents with respect to or accompanying payments of estimated Taxes.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.82        “Taxing Authority” means any federal, state, or local Governmental Authority responsible for the assessment, collection, imposition or administration of any Tax.

 

1.83        “Technical Information” means any and all technical and/or scientific data and information, including any chemical, formulation, structural, functional biological, chemical, pharmacological, toxicological, pharmaceutical, physical, analytical, process, pre-clinical, clinical, assay, control, safety, manufacturing and quality control data and information, and all copyrights, trade secret rights and other Intellectual Property Rights relating to any of the foregoing.

 

1.84        “Territory” means all countries in the world, other than (i) the United States and (ii) the Republic of Turkey.

 

1.85        “Third Part(y/ies)” means any Person(s) other than Kadmon and its Affiliates and AbbVie Parties.

 

1.86        “Third Party Supplier Manufacturing Documentation” has the meaning set forth in Section 1.51.

 

1.87        “Transfer” means (i) the assignment of rights relating to such Registration for such Product in such country or (ii) termination of such Registration and issuance of a new Registration for such Product in such country.

 

1.88        “Transfer Date” means, with respect to a Product in a country in the Territory, and on a country-by-country basis, the effective date of the Transfer of the Registration, as approved by the applicable Governmental Authority in such country for the Product from Kadmon or its Affiliate to AbbVie or its Affiliate or, if applicable, the issuance of a New Registration with respect thereto to AbbVie or its Affiliate

 

1.89        “United States” means the United States of America, its territories, protectorates and possessions.

 

1.90        “Valeant” means Valeant Pharmaceuticals International, a Delaware corporation.

 

1.91        “Valeant Agreement” means that certain License and Supply Agreement dated October 30, 2010, as amended, by and between Valeant and Kadmon.

 

2.             PURCHASE AND SALE.

 

2.1          Purchase and Sale of Assets.  At the Closing (as defined below), and subject to the terms and conditions of this Agreement.  Kadmon shall sell, assign, transfer and convey to AbbVie, and AbbVie shall purchase, acquire and accept from Kadmon, all right, title and interest in, to and under the Purchased Assets free and clear of any and all Encumbrances by execution and delivery of the Bill of Sale, Assignment and Assumption Agreement and the Patent Assignment Agreement.  Kadmon shall deliver to AbbVie all (a) Purchased Assets of a tangible nature at the Closing, including copies of all Ex-Us Clinical Data, Ex-US Regulatory Documentation, Owned Manufacturing Documentation and Patent Files and (b) Third Party

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Supplier Manufacturing Documentation listed on Schedule 1.51 — Part B.  Kadmon shall use commercially reasonable efforts to ensure that tangible copies of Third Party Supplier Manufacturing Documentation not listed on Schedule 1.51 — Part B and the raw clinical data held by PRACS Institute Canada B.C. Ltd. and PRACS Institute, LLC related to the bioequivalence studies for the Product will be delivered by Kadmon to AbbVie within *** days of the Closing Date (and, in any event, as soon as practicable).  The Pharmacovigilance Documentation shall be transferred in accordance with the time line established by the JPMT at AbbVie’s cost and expense, but in no event shall such transfer take place later than September 1, 2013. Other than the Purchased Assets, AbbVie expressly understands and agrees that it is not purchasing or acquiring, and Kadmon is not selling or assigning, any other assets or properties of Kadmon or any DMF and all such other assets and properties shall be excluded from the Purchased Assets.  Notwithstanding the foregoing, the Parties acknowledge and agree that Owned Manufacturing Documentation shall be jointly owned and each Party shall, subject to any restrictions contained in the Ancillary Agreements, be free to use such Owned Manufacturing Documentation without financial accounting to the other Party.

 

2.2          Purchase Price; Escrow.  Subject to the terms and conditions set forth herein, in consideration for the sale, transfer, assignment, conveyance, license and delivery of the Purchased Assets, AbbVie will pay to Kadmon, by wire transfer of immediately available funds to a bank account designated by Kadmon:

 

2.2.1       on the Closing Date, *** (US$ *** ) (the “Guaranteed Purchase Price”); provided that *** (US$ *** ) of the Guaranteed Purchase Price (the “Escrow Amount”) shall be delivered by or on behalf of AbbVie by wire transfer in immediately available funds to the Escrow Agent for deposit in accordance with the terms of the Escrow Agreement in order to secure the indemnification obligations hereunder.  All funds deposited with the Escrow Agent shall be applied by the Escrow Agent in accordance with the Escrow Agreement;

 

2.2.2       within *** ( *** ) Business Days upon Kadmon obtaining receipt of the Obtained EU Marketing Authorization for *** and the Effective Transfer of such Obtained EU Marketing Authorization to an AbbVie Party, *** (the “ *** Deferred Purchase Price”); and

 

2.2.3       within *** ( *** ) Business Days upon Kadmon obtaining receipt of the Obtained EU Marketing Authorization for the *** and the Effective Transfer of such Obtained EU Marketing Authorization to an AbbVie Party, *** (US$ *** ) (the “ *** Deferred Purchase Price” and, together with the *** Deferred Purchase Price, the “Deferred Purchase Price”).

 

2.3          Additional Purchase Price.  In addition to the Guaranteed Purchase Price and the Deferred Purchase Price, AbbVie shall make to Kadmon (or its designees) the payments described in this Section 2.3:

 

2.3.1       Milestone Payments.  A cash payment (each, a “Milestone Payment”), by wire transfer of immediately available funds within *** ( *** ) Business Days of the later of (i)

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

receipt by Kadmon (or its Affiliates) or AbbVie (or its Affiliates), as applicable, of the following Regulatory Approvals (each in respect of the BID Product, other than Section 2.3.1(i) which relates to the QD Formulation), consents, evidence of termination of certain agreements and transfer of certain assets, as applicable, and (ii) delivery to or receipt by AbbVie, as applicable, of written notice of obtaining such Regulatory Approval, obtaining such consents, evidence of such terminations, and transfer of certain assets, as applicable, together with an invoice reflecting the appropriate amounts due hereunder in connection with obtaining such consent or achievement of such milestone:

 

(a)           *** upon Kadmon obtaining receipt of the Regulatory Approval in *** and the Effective Transfer of such Regulatory Approval to an AbbVie Party;

 

(b)           *** upon Kadmon obtaining receipt of the Regulatory Approval in *** and the Effective Transfer of such Regulatory Approval to an AbbVie Party;

 

(c)           *** upon Kadmon obtaining receipt of the Regulatory Approval in *** and the Effective Transfer of such Regulatory Approval to an AbbVie Party;

 

(d)           *** upon either (i) amending the PharmUnion Agreement, in a form satisfactory to AbbVie, and obtaining written consent from PharmUnion to the assignment of the PharmUnion Agreement upon terms and conditions resulting in the effective assignment of all material rights and benefits under such agreement, as amended, to AbbVie or (ii) in Kadmon’s sole discretion, the termination of the PharmUnion Agreement; provided, however, no such payment shall be made under this Section 2.3.1(d)(ii) until the Effective Transfer of the Registrations and other related assets held by PharmUnion and related to the Product to AbbVie;

 

(e)           *** upon either (i) amending the Valeant Agreement, in a form satisfactory to AbbVie, and obtaining written consent from Valeant to the assignment of the Valeant Agreement upon terms and conditions resulting in the effective assignment of all material rights and benefits under such agreement, as amended, to AbbVie or (ii) in Kadmon’s sole discretion, the termination of the Valeant Agreement; provided, however, no such payment shall be made under this Section 2.3.1(e)(ii) until the Effective Transfer of the Registrations and other related assets held by Valeant and related to the Product to AbbVie;

 

(f)            *** upon an AbbVie Party obtaining receipt of Regulatory Approval in *** ;

 

(g)           *** upon an AbbVie Party obtaining receipt of Regulatory Approval in *** ;

 

(h)           *** upon an AbbVie Party obtaining receipt of Regulatory Approval in *** ; and

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

(i)            if a centralized procedure is granted for purposes of submission of a Regulatory Approval for the QD Formulation, then *** upon AbbVie obtaining receipt of Regulatory Approval (which Regulatory Approval will include the 1000 and 1200 mg dosage strength) in four of the five Major Countries for the QD Formulation; and if a centralized procedure is not granted for purposes of submission of Regulatory Approval for the QD Formulation, then *** upon obtaining Regulatory Approval for each Major Country but only up to a maximum of *** (US$ *** ). Notwithstanding the foregoing, no such payment shall be made under this subsection until all Intellectual Property Rights Controlled by, or otherwise in the possession of Kadmon or any of its Affiliates that are related to the QD Formulation, if any, are transferred to AbbVie without additional payment in accordance with Section 3.14.2 and AbbVie has received all Manufacturing Documentation and related know-how as necessary or useful for AbbVie to manufacture or have manufactured the QD Formulation without any additional payment.

 

2.3.2       AbbVie Obligations to Obtain Regulatory Approvals.  AbbVie shall use Commercially Reasonable Efforts to (a) make filings necessary to obtain Regulatory Approval in *** *** and *** for the BID Product, (b) launch the BID Products with a Compound dose of 400mg or 600mg in *** , *** and *** , on a country-by-country basis, within *** ( *** ) months following the date Regulatory Approval, including pricing and reimbursement approval, is obtained in such country and (c) launch the BID Products with a Compound dose of 400mg or 600mg in each Major Country, on a country-by-country basis, within (i) *** ( *** ) months following the Closing in those countries included in the Major Countries where Registrations for BID Product have been obtained on or prior to the Closing, or (ii) *** ( *** ) months following the date the Registrations have been obtained in such Major Country where Registrations have not been obtained for BID Product on or prior to Closing.  All costs and expenses related to AbbVie’s obligations under this Section 2.3.2 shall be borne by AbbVie.

 

2.3.3       Royalty Payments.

 

(a)           For a period of *** ( *** ) years commencing on the day immediately following the Closing Date (the “Royalty Period”), an annual royalty payment (the “Royalty Payment”, and together with the Milestone Payments and the Guaranteed Purchase Price, the “Purchase Price”) equal to *** ( *** %) of annual Net Sales of Products in the Territory.  Within *** ( *** ) days after the end of each calendar quarter, AbbVie shall deliver a report to Kadmon specifying the Net Sales of Product in the Territory during the just completed calendar quarter, and the actual aggregate amount payable to Kadmon on account of sales of Product during such calendar quarter, which report will provide Kadmon with calculations of the amount of the Royalty Payment in sufficient detail to enable Kadmon to review Net Sales of the Product for the period and the amount of the Royalty Payment paid.  Any amounts payable by AbbVie under this Section 2.3.3 shall be due and payable within *** ( *** ) days after the end of each calendar quarter.  Following the Royalty Period, no additional Royalty Payment shall be due and owing except for any Royalty Payment that was accrued but unpaid during the Royalty Period. Notwithstanding the foregoing or anything to the contrary herein, (a) no Royalty Payment will be due and owing for the BID Product or Co-Packaged Product (but only with respect to product co-

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

packaged with the BID Product) if AbbVie no longer has the right to reference or use the ANDA, including if the ANDA is revoked, and (b) no Royalty Payment will be due and owing for the QD Formulation or Co-Packaged Product (but only with respect to product co-packaged with the QD Formulation) if AbbVie no longer has the right to reference or use the QD NDA, including if the QD NDA is revoked.

 

(b)           AbbVie shall use its Commercially Reasonable Efforts to launch the QD Formulation in each Major Country, *** *** and *** , on a country-by-country basis, within *** ( *** ) months following the date Regulatory Approval is obtained in such country for the QD Formulation, including pricing and reimbursement approval.  AbbVie shall have no obligation thereafter to Commercialize the Products in the Territory.  With respect to each Major Country, *** , *** and *** , on a country-by-country basis, in the event that AbbVie fails to use Commercially Reasonable Efforts to launch the QD Formulation after obtaining Regulatory Approval in such country in accordance with this subsection (b), AbbVie shall grant Kadmon and its Affiliates a non-exclusive, royalty-free, irrevocable, transferable and sublicensable right and license under the Kadmon Patent Rights that constitute Purchased Assets to market, distribute, offer for sale and sell the QD Formulation in such country.

 

2.4          Right of Reference.  Kadmon hereby grants to AbbVie and AbbVie hereby accepts (a) an exclusive (even as to Kadmon and its Affiliates, and any successor or assign), perpetual and irrevocable royalty-free license (other than royalties owed in connection with the purchase and sale of the Purchased Assets under Section 2.3), with a right to grant sub-licenses, to cross-reference Kadmon’s Registrations, including the ANDA and any other regulatory filings and materials (including Registrations applicable to the QD Formulation) for purposes of AbbVie obtaining and maintaining Registrations for Products in the Territory, and for Co-Packaged Products both in the Territory and in the United States, and (b) a non-exclusive (except with respect to the Co-Packaged Products, which license is exclusive), perpetual and irrevocable royalty-free license, with a right to grant sub-licenses to Affiliates, to cross-reference Kadmon’s Registrations, including the ANDA and any other regulatory filings and materials (including Registrations applicable to the QD Formulation) for purposes of AbbVie obtaining and maintaining Registrations for Products in the United States.  In furtherance of the foregoing, Kadmon shall, promptly upon the written request of AbbVie specifying the Governmental Authority, deliver a letter to the applicable Governmental Authority authorizing AbbVie to use and reference, solely in connection with the Product in the Territory and the United States, the applicable Registrations.  AbbVie shall provide Kadmon with prior written notice of any sublicense pursuant to this Section 2.4.  In addition to the foregoing, Kadmon shall provide AbbVie electronic copies of all the results of the Clinical Data set forth on Schedule 1.32 — Part B promptly upon such data becoming available to Kadmon, and hereby grants AbbVie the right to use any of such Clinical Data for the sole purpose of undertaking development activities necessary to obtain Registration in the United States and in the Territory for the Product.

 

2.5          Clinical Trial Supply.  Following the Closing Date, no AbbVie Party shall sell the Product, directly or indirectly, to Third Parties for clinical trial purposes; provided that nothing herein shall prohibit any AbbVie Party from manufacturing or using Product for the purpose of performing its own clinical trials and development activities.  At Kadmon’s request

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

and to the extent required by Kadmon to provide clinical trial supplies of Product, Abbvie shall supply Kadmon necessary product approval reference, product release information including Certificates of Analysis (CofA), and Certificates of Pharmaceutical Product (CPP) where available, to support Kadmon’s ability to provide Product for clinical trials.  Kadmon shall promptly reimburse AbbVie its reasonable costs and expenses in providing any such information.

 

2.6          Audits.

 

2.6.1       Audits Generally.  Each Party and its Affiliates shall maintain complete and accurate books and records of account, in accordance with generally accepted accounting principles in the United States, of all transactions and other business activities under this Agreement, sufficient to confirm the accuracy of all reports furnished by a Party to the other Party under this Agreement, and all payments by a Party to the other Party under this Agreement. Upon reasonable written notice to a Party, but no more often than once per calendar year, such Party shall permit, and shall cause its Affiliates to permit, an independent certified public accountant of national standing designated by the other Party to audit such books and records of account of such Party and its Affiliates, in order to confirm the accuracy and completeness of all such reports and all such payments. The accounting firm shall disclose to the Party requesting the audit only whether the audited reports are correct or incorrect and the specific details concerning any discrepancies.  No other information shall be provided to the Party requesting the audit.

 

2.6.2       Audit Costs.  The Party requesting an audit shall bear all costs and expenses incurred in connection with any such audit; provided, however, that if any such audit correctly identifies any underpayments by the audited Party hereunder or overpayments by the auditing Party that are the fault of the audited Party hereunder in excess of *** % of the amount actually payable by such Party to the Party requesting the audit hereunder, or two hundred fifty thousand USD *** , whichever is greater, then, in addition to paying the full amount of such underpayment or overpayment, the audited Party shall reimburse the other Party for all reasonable costs and expenses incurred by such Party in connection with that audit.  In the event that such audit reveals an overpayment by the audited party, or an underpayment by the auditing Party, the auditing Party shall promptly refund any such overpayment or pay to the audited Party the amount of such underpayment, as applicable.

 

2.6.3       Records Maintenance Period.  The audited Party shall not be required to maintain books and records for more than two (2) years following the end of any calendar year.

 

2.6.4       Audit Confidentiality.  The Party requesting an audit shall treat all financial information subject to review under Section 2.6 in accordance with the confidentiality and non-use provisions of this Agreement, and shall cause its accounting firm to enter into an acceptable confidentiality agreement with the audited Party and/or its Affiliates obligating it to retain all such information in confidence pursuant to such confidentiality agreement, unless the accounting firm is already subject to confidentiality obligations by virtue of its professional engagement with the Party in which case a separate confidentiality agreement shall not be required.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

2.7          Closing.  The closing of the purchase and sale of the Purchased Assets hereunder shall take place at the offices of DLA Piper in New York City or at such other place as AbbVie and Kadmon may mutually agree (the “Closing”) as soon as possible, but in no event later than *** Business Days after satisfaction of the conditions set forth in Section 5 herein, unless otherwise agreed to in writing by both AbbVie and Kadmon (the date of Closing, the “Closing Date”).  At the Closing, the Parties will exchange (or cause to be exchanged) the funds, certificates and/or other documents, or do, or cause to be done, all of the things respectively required of each Party as specified in Section 5 herein.

 

2.8          Assumption of Liabilities.  At the Closing, on the terms and subject to the conditions set forth in this Agreement, AbbVie shall assume, effective as of the Closing Date, all Liabilities under the Assigned Contracts relating to acts, omissions or events first occurring or arising from and after the Closing Date (collectively, the “Assumed Liabilities”).

 

2.9          Retained Liabilities.  It is expressly agreed and understood that other than the Assumed Liabilities, AbbVie shall not assume, nor shall it be liable for, or otherwise be obligated to pay, perform or discharge, any Liabilities of Kadmon or its Affiliates or Representatives, including, without limitation, any Liabilities arising from any litigation, claim, lawsuit, proceeding, investigation, judgment, decree or order related to the Product or the Purchased Assets and the use thereof, arising from any acts, omissions or other state of events occurring or arising prior to the Closing Date, including, without limitation, Liabilities arising under the Settlement Agreements and the Liabilities set forth on Schedule 4.2.13, and the Excluded Tax Liabilities (collectively, the “Retained Liabilities”).  Kadmon shall be solely responsible for, and shall pay, perform and discharge, when due, all of the Retained Liabilities.

 

2.10        Withholding.  Notwithstanding any other provision of this Agreement, AbbVie shall be entitled to withhold, or cause to be withheld, any and all amounts paid or deemed paid by it to any Person as a result of the transactions contemplated by this Agreement, that it reasonably believes are required to be withheld under Applicable Law.  To the extent such amounts are so deducted and withheld and paid over to the applicable Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid and the payor Party shall secure and send to the payee Party evidence in its possession of such payment.

 

2.11        Flow of Funds.  Payment of the Guaranteed Purchase Price shall be payable at the Closing to the Persons identified on and in accordance with a funds flow schedule set forth on Schedule 2.11.

 

3.             COVENANTS.

 

3.1          Confidentiality.

 

3.1.1       Confidential Disclosure Agreement.  Each Party hereby agrees that it and each of its Affiliates shall be bound by the terms and provisions of the Confidential Disclosure Agreement, dated December 10th, 2012 between the Parties (as amended, the “CDA”) which is hereby incorporated by reference herein and shall continue in full force and effect until the Closing, at which time such CDA and the obligations of the parties under this Section 3.1.1 shall

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

terminate.  If this Agreement is, for any reason, terminated prior to the Closing, the CDA shall continue in full force and effect in respect of any Confidential Information (as defined in the CDA), which shall include the existence of this Agreement and the terms and conditions hereof, in accordance with its terms.  The restrictions imposed on each Party under this Section 3.1.1 are not intended, and shall not be construed, to prohibit a Party from identifying the other Party in its internal business communications, provided that any Confidential Information in such communications remains subject to this Section 3.1.1 and the CDA.

 

3.1.2       Product Confidential Information.  From and after the Closing, (a) Kadmon acknowledges and agrees that any and all Product Confidential Information shall be deemed a Purchased Asset and the sole property of AbbVie and (b) Kadmon shall, and shall cause its Affiliates and its and their respective Representatives to: (i) protect the Product Confidential Information with at least the same degree of care, but no less than reasonable care, with which it protects its own most sensitive Confidential Information and not disclose or reveal any such Product Confidential Information to any Person; and (ii) not use Product Confidential Information for any purpose other than to the extent necessary in connection with any filing requirements under Applicable Laws or to obtain any consents or approvals from any Governmental Authority to the transactions contemplated by this Agreement, or as required to be disclosed under Applicable Laws (provided, that prompt notice of such disclosure will be given as far in advance as possible to AbbVie and AbbVie shall be given reasonable opportunity to determine whether disclosure is required and to assess the extent of Product Confidential Information required to be disclosed); provided, however, that Kadmon shall have the right to use any or all of the Owned Manufacturing Documentation to the extent that it is useful to its activities outside the Territory.

 

3.1.3       Continuing Obligations.  To the extent any of the Non-Assignable Contracts (as defined below) and Contracts between Kadmon and Third Parties which do not constitute Assigned Contracts are ongoing and contain confidentiality obligations, Kadmon shall continue to enforce and maintain the obligations of confidentiality with respect to information related to Product Confidential Information in accordance with the terms of such Contracts.

 

3.1.4       Public Disclosures.  No disclosure of the existence, or the terms, of this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party, its Affiliates or their respective employee(s) in any publicity, promotion, press release or disclosure relating to this Agreement or its subject matter, or the Ancillary Agreement without the prior express written permission of the other Party, except as may be required by Applicable Law.  Notwithstanding the foregoing, the Parties have agreed to (a) permit public disclosure of the transactions contemplated by this Agreement strictly in accordance with the agreed upon language set forth on Schedule 3.1.4 (provided, that in no event shall Kadmon issue any press release or similar public statement or disclosure except as provided in Section 3.1.4(b) and (c)), (b) allow disclosure of this Agreement and the Ancillary Agreements to each Party’s insurers and to existing or potential equity investors and debt providers, provided that such Third Parties are bound by confidentiality restrictions at least as stringent as those contained in this Section 3.1, and (c) allow disclosure of the existence of this Agreement to its field employees and vendors and for internal communications.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

3.2          Further Assurances; Further Documents.

 

3.2.1       Diligence.  Each of the Parties shall use its Commercially Reasonable Efforts, in the most expeditious manner practicable, to cause the sale and purchase transactions contemplated hereunder to be consummated and for AbbVie to be able to utilize the Purchased Assets following the Closing Date, and, without limiting the generality of the foregoing, to obtain all consents and authorizations of Third Parties and to make all filings with, and give all notices to, Third Parties that may be necessary or reasonably required to effect the foregoing.

 

3.2.2       Continuing Obligations.  Each of Kadmon and AbbVie shall, at the request of the other Party, and without any additional consideration, execute and deliver to such other Party such further instruments, assignments, assurances and other documents as such other Party may reasonably request in connection with the carrying out of this Agreement and the purchase and sale of the Purchased Assets contemplated hereunder.  If, after the Closing Date, Kadmon determines that any assets relating to the Purchased Assets that is owned by Kadmon as of the Closing Date were not included in the Purchased Assets, then Kadmon, at its sole cost and expense, shall promptly notify AbbVie of such determination and promptly deliver such Assets to AbbVie (in a manner consistent with the assignment and delivery at the Closing) without requiring any additional consideration.

 

3.2.3       Non-Assignable Contracts.  Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Assigned Contracts if an attempted assignment thereof, without consent of a Third Party thereto that has not been received, would constitute a breach or other contravention thereof or in any way adversely affect the rights of Kadmon or AbbVie thereunder (each, a “Non-Assignable Contract”).  Kadmon shall use its Commercially Reasonable Efforts, at Kadmon’s sole cost and expense, to obtain the consent of the other parties to any such Non-Assignable Contract for the assignment thereof to AbbVie.  Unless and until such consent is obtained, or if an attempted assignment thereof would be ineffective or would materially adversely affect the rights of Kadmon thereunder so that AbbVie would not in fact receive all rights under such Non-Assignable Contract, then, notwithstanding anything to the contrary in this Agreement, (a) this Agreement and the related instruments of transfer shall not constitute an assignment or transfer of the Non-Assignable Contract, and (i) Kadmon shall use its Commercially Reasonable Efforts to obtain such consent as soon as possible after the Closing Date and (ii) AbbVie shall cooperate, to the extent commercially reasonable, with Kadmon in its efforts to obtain such consent; and (b) at AbbVie’s election prior to Closing, (i) the Non-Assignable Contract shall not constitute a Purchased Asset and AbbVie shall have no obligation with respect to any such Non-Assignable Contract or any liability with respect thereto or (ii) Kadmon shall use its Commercially Reasonable Efforts to obtain for AbbVie substantially all of the practical benefit of such Non-Assignable Contract, including by (A) entering into appropriate and reasonable alternative arrangements on terms mutually and reasonably agreeable to Kadmon and AbbVie and (B) subject to the consent and control of AbbVie, enforcement of any and all rights of Kadmon against the Third Party thereto arising out of the breach or cancellation thereof by such Third Party or otherwise.  Nothing contained in this Section 3.2.3 shall be deemed to limit or modify the representations and warranties of Kadmon contained in Section 4 of this Agreement or limit

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

AbbVie’s rights to make claims for breaches of or inaccuracies in such representations or warranties pursuant to Section 6 of this Agreement.

 

3.2.4       Failure of Closing Conditions.  Each Party shall promptly notify the other Party after learning of the occurrence of any event or circumstance which would reasonably be expected to cause any condition to Closing not to be satisfied.

 

3.3          Tax Matters.

 

3.3.1       Allocation of Purchase Price.  Within *** days after the Closing Date, AbbVie shall deliver to Kadmon a schedule setting forth the allocation of the Purchase Price among the Purchased Assets (the “Proposed Allocation Schedule”).  Within *** days after the Proposed Allocation Schedule has been delivered to Kadmon, Kadmon shall deliver its comments thereon, if any, to AbbVie and AbbVie shall consider such comments in good faith and reflect such comments as it deems appropriate into a final allocation schedule (the “Allocation Schedule”).  AbbVie and Kadmon and each of their respective Affiliates each shall report the federal, state, local, and non-U.S. income and other Tax consequences of the transactions contemplated by this Agreement in a manner consistent with the Allocation Schedule.  Except as otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any comparable provision of state, local, or non-U.S. Law), neither AbbVie nor Kadmon, nor any of their respective Affiliates shall take a position inconsistent with such allocations on any Tax Return (including any forms required to be filed with pursuant to Section 1060 of the Code) or in any proceeding before any Taxing Authority.  Within a reasonable period before the due date of such statements, Kadmon and AbbVie shall cooperate with each other in preparing IRS Form 8594 or any equivalent statements required by any Taxing Authority.  If the Allocation Schedule is disputed by any Taxing Authority, the Party receiving notice of the dispute shall promptly notify the other Party, and Kadmon shall, and shall cause its Affiliates to, cooperate with AbbVie in AbbVie’s defense of such Allocation Schedule in any audit or similar proceeding.

 

3.3.2       Transfer Taxes.  All applicable transfer Taxes (including sales, property, use, value added taxes (“VAT”), excise, stamp, documentary, filing, recording, permit, license, authorization and similar Taxes, filing fees and other similar charges) payable in connection with the transactions contemplated by this Agreement or the documents giving effect to such transactions (including the Ancillary Agreements) (“Transfer Taxes”) shall be borne by AbbVie.  The Parties shall cooperate with each other in connection with the filing of any Tax Returns relating to Transfer Taxes.  Kadmon and AbbVie (and their respective Affiliates) shall, upon request of the other Party, use their Commercially Reasonable Efforts to obtain any certificate or other document from any person as may be necessary to mitigate, reduce or eliminate any Transfer Tax.  Unless otherwise required by applicable law, AbbVie shall be responsible for preparing and timely filing any Tax Return relating to Transfer Taxes and timely remitting to the appropriate Taxing Authority any Transfer Tax shown to be due on such Transfer Tax Returns.  AbbVie shall provide Kadmon copies of all such filed Transfer Tax Returns and other documentation related to Transfer Taxes, if any.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

3.3.3       Prorations and Tax Returns.  For purposes of this Agreement, any Taxes imposed with respect to the Purchased Assets for any Straddle Period shall be apportioned to the Pre-Closing Tax Period as follows:

 

(a)           the real, personal and intangible property Taxes (“Property Taxes”) allocable to the Pre-Closing Tax Period shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the number of days in the Straddle Period;

 

(b)           any Taxes other than Property Taxes allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended at the end of the Closing Date, provided that exemptions, allowances, or deductions that are calculated on an annual basis (including depreciation and amortization deductions), other than with respect to property placed in service after the Closing, shall be allocated between the period ending on the Closing Date and the period after the Closing Date in proportion to the number of days in each period; and

 

(c)           Property Taxes shall not include any Transfer Taxes.

 

Kadmon shall prepare and timely file all Tax Returns due on or before the Closing Date with respect to the Purchased Assets, and AbbVie shall prepare and timely file all Tax Returns due after the Closing Date with respect to the Purchased Assets, including such Tax Returns for a Straddle Period.  The Party responsible for the filing of such Tax Returns described in this Section 3.3.3 shall be responsible for timely paying any Tax set forth on such Tax Return.  If one Party remits to the appropriate Taxing Authority payment for Taxes and such payment includes the other Party’s share of such Taxes, to the extent not paid at or before the Closing, such other Party shall promptly reimburse the remitting Party for its share of such Taxes after the remitting Party has provided reasonable written evidence to the other Party that such Taxes have been timely paid.

 

3.3.4       Cooperation.  Kadmon and AbbVie shall cooperate reasonably in (a) preparing and filing all Tax Returns, certificates and VAT registrations with respect to the Purchased Assets, including the furnishing or making available during normal business hours of records, personnel (as reasonably required), books of account, powers of attorney and other materials reasonably necessary or helpful for the preparation of such Tax Returns, certificates and VAT registrations (b) giving the other Party timely written notice of and responding to any inquiries, audits or similar proceedings by any Taxing Authority relating to Taxes with respect to the Purchased Assets, and (c) resolving all disputes and audits with any Taxing Authority relating to Taxes with respect to the Purchased Assets.

 

3.3.5       Books and Records.  Notwithstanding any other provision of this Agreement, Kadmon or its designee shall (a) retain all books and records with respect to Tax matters pertinent to the Purchased Assets relating to any Pre-Closing Tax Period until *** after the expiration of the applicable statute of limitations for the respective taxable periods (taking into account applicable extensions), and abide by all record retention agreements entered into with any Taxing Authority, and (b) give AbbVie reasonable written notice prior to

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

transferring, destroying or discarding any such books and records following *** days after the expiration of the applicable statute of limitations (taking into account applicable extensions) and shall allow AbbVie (at its expense) to take possession of such books and records.

 

3.4          Conduct of the Business of Kadmon.  During the period from the Effective Date and continuing until the earlier of the termination of this Agreement or the Closing Date, Kadmon will carry on its business with respect to the Compound, the Product and the Purchased Assets in the usual and ordinary course in substantially the same manner as heretofore conducted.  During the period from the Effective Date and continuing until the earlier of the termination of this Agreement or the Closing Date, except as otherwise contemplated by this Agreement, in the usual and ordinary course of business or with AbbVie’s prior written consent, with respect to the Compound, the Product and the Purchased Assets, Kadmon shall not:

 

(a)           sell, lease, license, transfer or dispose of any Purchased Assets or mortgage, pledge or impose any Encumbrance on any of the Purchased Assets;

 

(b)           terminate or extend or modify any Assigned Contract, or enter into any Contract with a Third Party to any Assigned Contract;

 

(c)           dispose of or permit to lapse any rights in, to or for the use of any Purchased Assets or Kadmon Intellectual Property Rights, or disclose to any Person not an employee of Kadmon any Product Confidential Information not heretofore a matter of public knowledge, except pursuant to judicial or administrative process;

 

(d)           settle any claim, lawsuit, legal proceeding, litigation, arbitration, inquiry, audit, investigation or action brought, conducted or heard by or before any Governmental Authority, in each case, relating to the Compound, Product or Purchased Assets;

 

(e)           cancel or compromise any material debt or claim or waive any rights of material value relating to the Compound, the Product or any Purchased Assets;

 

(f)            except in the ordinary course of business, communicate, orally or in writing, with any Governmental Authority with regards to the transactions contemplated by this Agreement, the Compound, the Product or any Purchased Asset;

 

(g)           correspond with, orally or in writing, or otherwise agree to any meeting with any Pharmaceutical Product Regulatory Authority;

 

(h)           (i) make, change or rescind any material election relating to Taxes, (ii) notwithstanding anything set forth in Section 3.4(d), settle or compromise any claim, lawsuit, legal proceeding, litigation, arbitration, inquiry, audit, investigation, or controversy relating to Taxes, or consent to any extension or waiver of the statute of limitations thereof, or (iii) obtain any Tax ruling or enter into any closing agreement, in each of clauses (i) — (iii) of this Section (h), if such action could have an adverse impact on AbbVie in respect of its acquisition of the Purchased Assets; or

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

(i)            authorize or enter into any agreement or commitment with respect to any of the foregoing.

 

3.5          Assignment of Registrations.

 

3.5.1       Registration Transfer .  With regard to the Transfer of the Registrations in the countries in the Territory where required, AbbVie and Kadmon shall execute, and cause their respective Affiliates to execute any and all documents necessary or reasonably desirable to ensure the orderly Transfer of such Registration in the applicable country.  If AbbVie determines that the issuance of a new Registration with respect to any Product in any country in the Territory (each, a “New Registration”) will be more expeditious (or if the assignment of such a Registration is impermissible under Applicable Law and AbbVie is required to obtain a New Registration), Kadmon shall, and shall cause its Affiliates to, cooperate with AbbVie, and AbbVie shall execute and submit the necessary application materials to the applicable Governmental Authority to effect the issuance of such New Registration in the name of AbbVie or its Affiliate or its permitted designee.  Any costs associated with any studies carried out in connection with a New Registration shall be borne by AbbVie.

 

3.5.2       Assistance.  Kadmon shall exercise its Commercially Reasonable Efforts to assist AbbVie to accomplish in an expeditious manner the Transfer of Registrations for Product in each country in the Territory where Kadmon holds such Registrations in accordance with this Section 3.5.  Promptly following the Closing, the Parties shall establish the JPMT in accordance with the terms set forth on Exhibit H to oversee interactions between the Parties in order to facilitate the Transfer of the Registrations and for all other matters set forth in Exhibit H.

 

3.6          Application for Assignment of Health Registrations.  In accordance with Applicable Laws, AbbVie shall prepare and file, and Kadmon shall provide AbbVie with all assistance required in preparing and filing all documents necessary to Transfer the Registrations to an AbbVie Party or their designee in each country in the Territory in which Kadmon currently holds a Registration.  To the extent that Kadmon is required to file documents with a Governmental Authority as the holder of a Registration to effectuate the Transfer of such Registration in accordance with Applicable Laws, Kadmon shall file all necessary documents with the applicable Governmental Authority as promptly as practical following request by AbbVie.  Prior to Kadmon’s filing any such documents with the appropriate Governmental Authority, AbbVie shall have the right to review and approve any such documents.

 

3.7          Expenses Associated with Transfer.  Kadmon shall, at its own cost and expense, undertake and cause its Affiliates to undertake all reasonable and necessary steps to maintain such Registrations in full force and effect up to the Transfer Date or such other date as the Parties may subsequently agree, including each step set forth on Schedule 3.7.  Except as explicitly set forth in this Agreement, each of the Parties shall bear its own costs and expenses in connection with any such Transfer of the Registrations in the Territory to AbbVie or its Affiliates (or, if applicable, the issuance of new Registrations with respect to the Products in the Territory in the name of AbbVie or its Affiliates); provided, however, that AbbVie shall be responsible for the payment of any filing or similar fees payable to the applicable Governmental Authority in the Territory with respect to the Transfer of (or issuance of new) Registrations with respect to the 

 

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Product in the Territory and with respect to the transfer of the Regulatory Approvals for which AbbVie is responsible under Section 2.3.  Transfer of title to each of the Registrations will take place on the respective Transfer Date for each Product for each country.

 

3.8          Promotion and Marketing.

 

3.8.1       Products Selling Price.  Effective as of the Transfer Date for Product in each country in the Territory, AbbVie shall independently determine and set prices for such Product in the applicable country in the Territory, including the selling price, volume discounts, rebates and similar matters.

 

3.8.2       Advertising and Promotional Materials.  Starting on the Transfer Date for each Product in each country in the Territory, AbbVie shall be responsible for all marketing, advertising and promotional materials and shall obtain or develop new product labeling, package inserts, imprinting and packaging, as appropriate, in the applicable country in the Territory related to such Product.  Commencing on the Transfer Date for Product in each country in the Territory, AbbVie shall be the contact for review and discussion of all promotional materials for such Product with the applicable Governmental Authority in such country in the Territory for such Product.

 

3.9          No Shop.  From and after the Effective Date until the earlier of the termination of this Agreement or the Closing Date (the “No Shop Period”), Kadmon shall not, and shall cause its Affiliates and its and their respective officers, directors, employees and Representatives not to, initiate, solicit or encourage any inquiry, proposal or offer from, or engage in any negotiations or discussions regarding any such inquiry, proposal or offer with, any Third Party regarding any direct or indirect acquisition, transfer, license or other grant of rights with respect to the Product or the Purchased Assets (any such transaction being a “Third Party Transaction”).  Kadmon agrees that if, during the No Shop Period, it or its Affiliates and their respective Representatives receives any proposal for any Third Party Transaction or any request for nonpublic information in connection with such a proposal, or for access to Kadmon’s books or records, or its properties by any Third Party that has made such a proposal, Kadmon shall promptly advise AbbVie in writing of the receipt, directly or indirectly, of any inquiry, proposal or other materials, and of any discussions, negotiations or proposals relating to, any Third Party Transaction and the general terms thereof.  Kadmon shall promptly advise AbbVie of all subsequent communications relating to proposal.

 

3.10        Kadmon Non-Compete; AbbVie Undertaking.

 

3.10.1     Duration and Scope.  For a period from the Closing Date until the fifth anniversary of the Closing Date, Kadmon and its Affiliates, and any successors thereto, shall not engage anywhere in the Territory in the manufacture, use, distribution, promotion, importation or sale of a Competing Product, provided that nothing in this Section 3.10 shall operate to prevent the manufacture, use, importation or Commercialization of Products under any license granted to Kadmon pursuant to Section 2.3.3(b).

 

3.10.2     Reasonableness.  Kadmon agrees that the duration and geographic scope of the non-competition provision set forth in this Section 3.10 are reasonable.  In the event that

 

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any court determines that the duration or the geographic scope, or both, are unreasonable and that such provision is to that extent unenforceable, the Parties agree that the provision shall remain in full force and effect for the greatest time period and in the greatest area that would not render it unenforceable.  The Parties intend that this non-competition provision shall be deemed to be a series of separate covenants, one for each and every country in the Territory.

 

3.10.3     AbbVie Undertaking.  If AbbVie or an Affiliate of AbbVie becomes aware that any Third Party to which AbbVie or its Affiliates has sold or otherwise distributed Product has promoted, resold or distributed such Product in Turkey or for clinical trial purposes, AbbVie shall cease any further sale or distribution of Product to such Third Party.

 

3.11        Non-Solicitation.  For a period from the Closing Date until the second anniversary of the Closing Date, no AbbVie Party shall actively recruit or solicit any of Kadmon’s (or its Affiliates’) sales force personnel (including representatives and managers), field based employees, managers, directors, medical liaison personnel or other employees who are involved in the marketing and sale of the Products without the prior written consent of Kadmon; provided, that notwithstanding the foregoing, each AbbVie Party shall be permitted to engage in general recruitment through advertisements or recruiting through head-hunters so long as employees and personnel of Kadmon are not specifically targeted.  If the time period specified in this Section 3.11 should be adjudged unreasonable in any court or dispute resolution proceeding, then the time period restriction shall be reformed to the maximum time limitation permitted by Applicable Law.

 

3.12        Insurance.  Prior to the Closing, Kadmon shall cause each insurance policy maintained by Kadmon or its Affiliates covering any Purchased Asset or Assumed Liability to be amended prior to the Closing, to name AbbVie as an additional insured. Effective upon the Closing, Kadmon shall appoint AbbVie as its true and lawful attorney-in-fact, in the name of Kadmon and any of its Affiliates, but on behalf of AbbVie, to pursue and enforce any and all rights of Kadmon or its Affiliates with respect to any occurrence, claim or loss with respect to any Purchased Asset or Assumed Liability.  Kadmon agrees that the foregoing appointment shall be coupled with an interest and shall be irrevocable.  Subject to Section 6.4.3, no such insurance shall affect any indemnification obligation hereunder.

 

3.13        Adverse Events and Safety Information.  Within *** days after the date of this Agreement, the Parties shall enter into an agreement to initiate a process for the exchange of adverse event safety data in a mutually agreed format, including but not limited to, postmarketing spontaneous reports received by the Party or its Affiliates in order to monitor the safety of the product and to meet reporting requirements with any applicable regulatory authority.

 

3.14        QD Formulation Approval.

 

3.14.1     With respect to the QD Formulation, subject to the terms and conditions of the License Agreement, Kadmon shall be solely responsible, at its own cost, either by itself of via subcontractors, for undertaking the development activities necessary to obtain Registration in the United States and in the Territory for the QD Formulation.  AbbVie shall have no financial or

 

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other obligations with respect to the Registration for the QD Formulation, other than the Milestone Payment related to the QD Formulation.  Prior to any submission to the FDA or any other Pharmaceutical Product Regulatory Authority, Kadmon shall provide AbbVie reasonable opportunity to review and comment on such Registration efforts regarding the QD Formulation (and Kadmon shall consider all such comments in good faith).  Kadmon shall submit to AbbVie copies of all inquiries or other material correspondence received from, or submitted to, the FDA related to the QD Formulation promptly after receipt or submission thereof, as applicable.  Kadmon shall promptly notify AbbVie upon obtaining Registration for the QD Formulation in any country in the United States and the Territory.  AbbVie hereby grants to Kadmon and Kadmon hereby accepts a royalty-free license, with a right to grant sublicenses, to cross-reference the EU Biostudies for the sole purpose of undertaking the development activities necessary to obtain Registration in the United States and in the Territory for the QD Formulation.

 

3.14.2     Upon obtaining a Registration in any country in the Territory of the QD Formulation, ownership, right, title and interest in and to any and all Intellectual Property Rights Controlled by Kadmon or any of its Affiliates that are related to the QD Formulation in the applicable country shall be transferred to AbbVie free and clear of any Encumbrance.  The Parties agree that transfer of title and ownership with respect to such Intellectual Property Rights will take place immediately following receipt of the Registration in any country in the Territory for the QD Formulation and no payment shall be made by AbbVie pursuant to Section 2.3.1(i) until (a) such transfer has been completed in form and substance reasonably acceptable to AbbVie, (b) Kadmon shall have transferred to AbbVie all Manufacturing Documentation owned by Kadmon and generated from and after the Effective Date that is necessary or useful for AbbVie to manufacture the QD Formulation in the applicable country in the Territory, which Manufacturing Documentation shall be jointly owned by the parties in accordance with Section 2.1, and (c) to the extent any Third Party owns or controls any Manufacturing Documentation generated from and after the Effective Date that is necessary or useful for AbbVie to manufacture the QD Formulation in the applicable country in the Territory, Kadmon shall have provided copies of any such Manufacturing Documentation to AbbVie.

 

3.14.3     The Parties each agree and acknowledge that there is no guarantee or assurance that the Registration of the QD Formulation will be obtained and, as such, failure to obtain any such Registration shall not constitute a breach of this Agreement by either Party.

 

3.15        AbbVie Supply.  If AbbVie secures supply of the Product at a price lower than that at which Kadmon supplies the Product to AbbVie pursuant to the Supply Agreement, then the Parties shall negotiate in good faith with a view to entering into an agreement pursuant to which AbbVie shall supply and have manufactured or manufacture the Product for sale to Kadmon on terms mutually acceptable to the Parties.

 

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4.             REPRESENTATIONS AND WARRANTIES.

 

4.1          Representations and Warranties of AbbVie. AbbVie hereby represents and warrants to Kadmon that as of the Effective Date and as of the Closing Date:

 

4.1.1       Authorization.  The execution, delivery and performance of this Agreement and the Ancillary Agreements have been duly authorized by the Board of Directors of AbbVie.  No stockholder action or approval or other corporate action or approval on the part of AbbVie or its Affiliates is required for the execution, delivery and performance of this Agreement and the Ancillary Agreements by AbbVie.

 

4.1.2       Organization.  AbbVie is a corporation duly organized and validly existing under the laws of the state or other jurisdiction of its incorporation;

 

4.1.3       Power and Authority.  AbbVie has the power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder; and

 

4.1.4       Non-Contravention.  The execution, delivery and performance by AbbVie of this Agreement and the Ancillary Agreements and its compliance with the terms and provisions hereof and thereof does not and shall not conflict with or result in a breach of any of the terms and provisions of or constitute a default under:  (a) a loan agreement, guaranty, financing agreement, agreement affecting a product or other agreement or instrument binding or affecting it or its property that would adversely affect AbbVie’s ability to consummate the transactions contemplated by this Agreement and the Ancillary Agreements; (b) the provisions of its charter or operative documents or bylaws; or (c) any order, writ, injunction or decree of any Governmental Authority entered against it or by which any of its property is bound that would adversely affect AbbVie’s ability to consummate the transactions contemplated by this Agreement and the Ancillary Agreements.

 

4.2          Representations and Warranties of Kadmon.  Except as otherwise set forth in a disclosure schedule (the “Kadmon Disclosure Schedule”), Kadmon hereby represents and warrants to AbbVie that as of the Effective Date and as of the Closing Date:

 

4.2.1       Authorization.  The execution, delivery and performance of this Agreement and the Ancillary Agreements (a) have been duly authorized by the Board of Managers of Kadmon and (b) shall be approved and ratified by the members of Kadmon, the requisite approvals of which are set forth on Schedule 4.2.1, on or prior to the Closing Date.  Except as set forth on Schedule 4.2.1, no other member action or approval or other corporate action or approval on the part of Kadmon or its Affiliates is required for the execution, delivery and performance of this Agreement by Kadmon.

 

4.2.2       Organization; Power and Authority.  Kadmon is a limited liability entity organized, validly existing and in good standing under the laws of the state or other jurisdiction of its incorporation or formation.  Kadmon has the power and authority to own the Purchased Assets and to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder.  This Agreement and the Ancillary Agreements have

 

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been duly executed and delivered by Kadmon, and constitute the legal, valid and binding obligations of Kadmon, enforceable against it in accordance with their terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity.

 

4.2.3       Non-Contravention.  The execution, delivery and performance of this Agreement and the Ancillary Agreements by Kadmon and the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements will not:  (a) except as set forth on Schedule 4.2.3, violate, conflict with, result in any material breach of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under any material Contract of Kadmon, including any Assigned Contracts; (b) result in the creation of any Encumbrance on any of the Purchased Assets; (c) violate any Applicable Laws; or (d) except as set forth on Schedule 4.2.3, give any party to any Assigned Contract the right to terminate, modify or accelerate any rights, obligations or performance under such agreement.

 

4.2.4       Title to Purchased Assets.  Except as set forth on Schedule 4.2.4, Kadmon has the sole and exclusive right, title and interest in and to the Purchased Assets, free and clear of all Encumbrances.  Except as set forth on Schedule 4.2.4, no portion of the Purchased Assets has been licensed from or to any Third Party.  At the Closing, AbbVie shall own exclusively all Purchased Assets.  There is no consent, approval, order and authorization of or from, and registration, notification, declaration or filing to or with, any Person, including any Governmental Authority that is required by Kadmon in connection with the execution, delivery or performance by Kadmon of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby.  The Purchased Assets, the license grants under the License Agreement, the rights conferred by the Assigned Contracts and the supply of Product by certain Third Party suppliers (as contemplated in the Supply Agreement) comprise all of the assets and rights that are used or held for use by Kadmon and/or its Affiliates related to the Compound and/or Product in the Territory prior to the Effective Date.

 

4.2.5       Intellectual Property.

 

(a)           Kadmon owns exclusively all right, title and interest in and to, or has valid and enforceable exclusive license rights to, all of the Intellectual Property Rights as set forth on Schedule 4.2.5(a) which includes all Intellectual Property Rights Controlled by Kadmon or any of its Affiliates that are related to the Compound, Product or the exploitation thereof in the Territory (“Kadmon Intellectual Property Rights”).  None of the rights of Kadmon or its Affiliates under the Kadmon Intellectual Property Rights were developed with federal funding from the U.S. government or any other Governmental Authority.

 

(b)           Schedule 4.2.5(b) sets forth a true, accurate and complete list of all registered and applications for registration of Kadmon Intellectual Property Rights and similar filings with any Governmental Authority relating to the Purchased Assets Controlled by Kadmon or any of its Affiliates (which Schedule identifies the applicable serial or other identifying number, country, filing, expiration date and title, if applicable in the Territory).  Kadmon has made available true and complete copies of all such registrations, applications and similar filings to AbbVie.  Except as set forth on Schedule 4.2.5(b) Neither Kadmon nor any of its Affiliates

 

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Controls or otherwise uses any trademarks, trademark registrations, trademark applications, service marks, service mark registrations or service mark applications in connection with the use, sale or intended sale of Product in the Territory.  Other than the Purchased Assets and the Kadmon Technical Information, there is no know-how, techniques, processes, methods, formulations, specifications, chemical materials, biologic materials, assays, marketing plans and strategies, software (including source code and related documentation) or other data and information (and all copyrights, trademarks, trade secret rights and other Intellectual Property Rights relating to any of the foregoing) Controlled by Kadmon which relates to the Product for use in the Territory, in written, electronic or any other form.

 

(c)           Schedule 4.2.5(c) lists all license agreements in respect of any of Kadmon Intellectual Property Rights relating to the Purchased Assets and the Territory either licensed by Kadmon or any of its Affiliates as licensor to Third Parties or licensed from Third Parties to Kadmon or any of its Affiliates as licensee.

 

(d)           (i) The Kadmon Intellectual Property Rights are, to Kadmon’s Knowledge, enforceable and valid, (ii) to Kadmon’s Knowledge, no actions or omissions have occurred in connection with the pending patent applications set forth on Schedule 4.2.5(b) which would reasonably be likely to render any Kadmon Patent Rights maturing from the patent applications unenforceable, and (iii) none of such Kadmon Intellectual Property Rights has been or is the subject of (A) any pending proceeding (including, with respect to the Kadmon Patent Rights, inventorship challenges, interferences, reissues, reexaminations and oppositions or similar proceedings) or any order or other agreement restricting or any order or other agreement restricting (1) the use of any such Kadmon Intellectual Property Rights in connection with the exploitation of the Compound or Product in the Territory or (2) the assignment or license thereof by Kadmon (or any of its Affiliates, as applicable), or (B) to Kadmon’s Knowledge, any threatened proceeding or claim of infringement or misappropriation threatened or made in writing or any pending claim or proceeding to which Kadmon (or any of its Affiliates, as applicable) is a party.

 

(e)           Kadmon has the unrestricted right to assign, transfer or grant to AbbVie all its rights in and to the Kadmon Intellectual Property Rights that are being assigned, transferred or granted to AbbVie under this Agreement, in each case free of any Encumbrances, and without payment by either party of any royalties, license fees or other amounts to any other Person.

 

(f)            Schedule 4.2.5(f) sets forth a true, accurate and complete list of all Assigned Contracts that include royalty, license fee and other similar payment obligations of Kadmon (or any of its Affiliates) with respect to the Kadmon Patent Rights or otherwise in connection with the exploitation of the Compound or Product in the Territory.  Other than as set forth on Schedule 4.2.5(f), (i) none of the Assigned Contracts include royalties, license fees or other similar payment obligations owed to any Third Party after Closing in connection with the Kadmon Patent Rights or otherwise in connection with the exploitation of the Compound or Product in the Territory, and (ii) neither Kadmon nor any of its Affiliates is a party to, or otherwise bound by, any other Contract which include royalties, license fees or other similar payment obligations owed to any Third Party after Closing in connection with the Kadmon 

 

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Patent Rights or otherwise in connection with the exploitation of the Compound or Product in the Territory.

 

(g)           Except as set forth on Schedule 4.2.5(g), to Kadmon’s Knowledge, there is no unauthorized use, infringement, misappropriation or violation of any of the Kadmon Intellectual Property Rights relating to the Purchased Assets by any Person.  To Kadmon’s Knowledge, the exploitation (including the manufacture, use, sale, offer for sale or importation thereof) of the Compound or Product in the Territory does not infringe or misappropriate or otherwise violate, as applicable, the Intellectual Property Rights of any Person.  Kadmon has not received any written notice from any Person regarding, and has no Knowledge of, any claim or assertion of, any infringement, misappropriation or violation with respect to Intellectual Property Rights of any Person in connection with the exploitation of the Compound or Product in the Territory.

 

(h)           All issuance, renewal, maintenance and other payments that are or have become finally due with respect to the Kadmon Intellectual Property Rights have been paid by or on behalf of Kadmon as of the Effective Date.  All documents, certificates and other material in connection with the Kadmon Intellectual Property Rights have, for the purposes of maintaining such Kadmon Intellectual Property Rights, been filed in a timely manner with the relevant Governmental Authorities.  Kadmon and to Kadmon’s Knowledge, its Affiliates or its licensors, as applicable, have filed, prosecuted and maintained all Kadmon Patent Rights and have filed and maintained all other Kadmon Intellectual Property Rights.

 

(i)            Kadmon has taken reasonable measures to maintain in confidence all Kadmon trade secrets and Kadmon Confidential Information.

 

4.2.6       Inventory.  Except as set forth on Schedule 4.2.6, neither Kadmon or its Affiliates, nor any Third Party on behalf of Kadmon or its Affiliates, owns, possesses and/or is control of any inventory of finished Product for sale or use in the Territory.

 

4.2.7       Compliance with Legal Requirements; Regulatory Matters.

 

(a)           Kadmon is not in violation in any material respect of any Applicable Laws, including, without limitation, the rules, regulations, guidelines, guidance, or requirements of any Governmental Authority with respect to research, development, manufacture, sale, labeling, storing, testing, distribution, record-keeping, reporting, import, export, advertising and promotion of or for the Product or otherwise relating to the Product, the Compound or the Purchased Assets.  Kadmon has not received any written notice of any asserted violation of Applicable Laws relating to the Purchased Assets, the Compound or the Product.  Kadmon is not aware of any pending investigation of any Governmental Authority with respect to the Purchased Assets, the Compound or the Product.

 

(b)           All of the activities of Kadmon and its Affiliates relating to the Product, the Compound or the Purchased Assets that are subject to the jurisdiction of the EMA or comparable Governmental Authority, or subject to the Drug Laws, have been conducted in compliance in all material respects with all applicable requirements under all such Drug Laws, including those relating to cGLP, cGCP, adverse event reporting, cGMP, recordkeeping, and

 

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filing of reports.  Neither Kadmon nor its Affiliates has received any written notice or other communication from the EMA or any other Governmental Authority alleging any material violation of any Drug Law relating to the Purchased Assets, the Compound or the Product, including any failure to maintain systems and programs adequate to ensure compliance with any Applicable Laws related to product quality, including cGMP, cGLP, and cGCP, as those terms are defined by FDA and in all applicable Drug Laws, by Kadmon relating to any activity that is subject to Drugs Laws.  Neither Kadmon nor its Affiliates has received with respect to the Purchased Assets, the Compound or the Product any (i) notices of inspectional observations (including those recorded on form FDA 483), establishment inspection reports, warning letters, untitled letters, (ii) notice of any intention to conduct an investigation or review, or (iii) other documents issued by the EMA or any other Governmental Authority that indicate material lack of compliance with any Drug Law by the Kadmon, or by Persons who are otherwise performing services for the benefit of Kadmon.

 

(c)           Kadmon and its Affiliates possess all Registrations from Governmental Authorities, or required by Governmental Authorities to be obtained, in each case, necessary for the lawful conduct of their respective businesses as now conducted relating to the Compound or Product.  All such Registrations are in full force and effect in all material respects and Kadmon and its Affiliates have filed all reports, notifications and filings with, and have paid all regulatory fees to, the applicable Governmental Authority necessary to maintain all of such Registrations in full force and effect.  Kadmon and its Affiliates are in compliance in all material respects with the terms of all such Registrations.  Neither Kadmon nor its Affiliates have received written notice to the effect that a Governmental Authority was considering the amendment, termination, revocation or cancellation of any Registration.  The consummation of the transactions contemplated under this Agreement, in and of itself, will not cause the revocation or cancellation of any Registration.

 

(d)           All Preclinical Studies performed by or on behalf of Kadmon or any of its Affiliates with respect to the Compound or Product in either (i) have been conducted in accordance, in all material respects, with applicable cGLP requirements, including those contained in 21 C.F.R. Part 58 or (ii) involved experimental research techniques that were not required to be performed by a registered cGLP testing laboratory (with appropriate notice being given to FDA or the applicable Governmental Authority), but (in the case of this clause (ii)) employed the applicable procedures and controls generally used by qualified experts in the conduct of Preclinical Studies of products comparable to those being developed by Kadmon.  Neither Kadmon nor its Affiliates have received any written notice from a Governmental Authority requiring the termination or suspension or material modification of any Preclinical Study with respect to the Compound or Product.

 

(e)           All human clinical trials to the extent conducted by or on behalf of Kadmon or its Affiliates with respect to the Compound or Product have been and are being conducted, to the Knowledge of Kadmon, in material compliance with all applicable regulatory requirements relating to cGCP, “Informed Consent” and “Institutional Review Boards”, as those terms are defined by FDA and in all applicable Drug Laws relating to clinical trials or the protection of human subjects, including those contained in the International Conference on Harmonization (“ICH”) E6: Good Clinical Practices Consolidated Guideline, and in 21 C.F.R.

 

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Parts 50, 54, 56, and 312, and the provisions governing the privacy of patient medical records under the Health Insurance Portability and Accountability Act of 1996 and the implementing regulations of the United States Department of Health and Human Services, and all comparable foreign Drug Laws.  Neither Kadmon, nor to the Knowledge of Kadmon, anyone acting on behalf of Kadmon, has received any written notice that the EMA or any other Governmental Authority or Institutional Review Board has initiated, required, or threatened to initiate or require, the termination or suspension, including clinical holds, or material modification of any clinical trials or non-clinical research with respect to the Compound or Product sponsored by Kadmon or its Affiliate.

 

(f)            All manufacturing operations with respect to the Compound or Product conducted by or, to the Knowledge of Kadmon, for the benefit of, Kadmon have been and are being conducted in accordance, in all material respects, with applicable cGMPs as that term is defined by FDA and in all applicable Drug Laws.

 

(g)           The Compound or Product (or any component thereof) manufactured, tested, distributed or held by Kadmon or its Affiliates has not been recalled, withdrawn, suspended or discontinued (whether voluntarily or otherwise).  No Proceedings (whether completed or pending) seeking the recall, withdrawal, suspension or seizure of any such product candidate are pending or, to the Knowledge of the Kadmon, threatened, against Kadmon, nor have any such Proceedings been pending at any time.  No study conducted by or for Kadmon on any Compound or Product has been placed on clinical hold by the EMA or any other Governmental Authority. Kadmon and its Affiliates have filed all annual and periodic reports and amendments required for the Compound required to be made to the EMA or any other Governmental Authority.

 

(h)           Kadmon is not a party to any corporate integrity agreements, monitoring agreements, consent decrees, settlement orders or similar agreements with or imposed by any Governmental Authority.  Kadmon has not been placed under or otherwise made subject to the FDA’s Application Integrity Policy pursuant to FDA’s Compliance Policy Guide (CPG) 7150.09, 56 FR 46191 (September 10, 1991).

 

(i)            Neither Kadmon nor any of its current officers, employees or agents, nor, to the Knowledge of Kadmon, any of its Affiliates, have ever been, are currently, or are the subject of a proceeding that could lead to it or such employees or agents becoming, as applicable, a Debarred Entity or Debarred Individual, an Excluded Entity or Excluded Individual or a Convicted Entity or Convicted Individual.  For purposes of this provision, the following definitions shall apply: (i) a “Debarred Individual” is an individual who has been debarred by the FDA pursuant to 21 U.S.C. §335a(a) or barred from providing services in any capacity to a person that has an approved or pending drug or injectable product application; (ii) a “Debarred Entity” is a corporation, partnership or association that has been debarred by the FDA pursuant to 21 U.S.C. §335a(a) or barred from submitting or assisting in the submission of any abbreviated drug application, or a subsidiary or affiliate of a Debarred Entity; (iii) an “Excluded Individual” or “Excluded Entity” is (A) an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal health care programs such as Medicare or Medicaid by the Office of the Inspector General (OIG/HHS) of

 

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the U.S. Department of Health and Human Services, or (B) is an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal procurement and non-procurement programs, including those produced by the U.S. General Services Administration (GSA); and (iv) a “Convicted Individual” or “Convicted Entity” is an individual or entity, as applicable, who has been convicted of a criminal offense that falls within the ambit of 21 U.S.C. §335a(a) or 42 U.S.C. §1320a - 7(a), but has not yet been excluded, debarred, suspended or otherwise declared ineligible, and in each case any foreign equivalents thereof, as applicable.

 

(j)            Neither Kadmon nor any of its current officers, employees or agents, nor, to the Knowledge of Kadmon, any of its Affiliates, has made an untrue statement of a material fact or fraudulent statement to the EMA or any other Pharmaceutical Product Regulatory Authority, failed to disclose a material fact required to be disclosed to the EMA or any other Pharmaceutical Product Regulatory Authority, or committed any act, made any statement, or failed to make any statement, that would reasonably be expected to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Fact, Bribery, and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar Applicable Law in any other country in the Territory.

 

(k)           Kadmon has no Knowledge of (i) any adverse event reportable to the FDA or EMA with respect to the safety or efficacy of the Compound or Product or (ii) any scientific or technical fact or circumstance that would reasonably be expected to materially and adversely affect the scientific, therapeutic or commercial viability of the Compound or Product.

 

(l)            With respect to the Purchased Assets, Kadmon has not been notified in writing by any Third Party or any Governmental Authority of any material failure (or any material investigation with respect thereto) by them or any licensor, licensee, partner or distributor to comply with, or maintain systems and programs to ensure compliance with, any Applicable Laws.

 

(m)          To Kadmon’s Knowledge, the Third Party contractors manufacturing Product have all of the material registrations necessary for the manufacture of such Product and are not in material breach of or default in any material respect under any such material registrations and are conducting manufacturing in accordance with all Applicable Laws.

 

(n)           All personal data collected, processed and disclosed by Kadmon or any of its Affiliates, including any information or data collected during any clinical trials conducted during the development, Preclinical Studies and clinical testing, manufacture, storage, distribution, supply and administration of the Product or Compound, have been, and are being, collected, processed, transferred, stored, used and disclosed in material compliance with (A) all Applicable Laws and industry standards, including the Health Insurance Portability and Accountability Act of 1996 and the implementing regulations of the U.S. Department of Health and Human Services, Directive 95/46/EC of 24 October 1995 and the implementing laws of the individual European Union countries and (B) Kadmon’s privacy, data protection and information security policies and practices (collectively “Privacy Practices”).  Neither Kadmon nor any of its Affiliates have received any:  (i) written notice or complaint alleging non-compliance with any

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Applicable Laws or the Privacy Practices relating to the collection, processing and disclosure of information or data; (ii) written claim for compensation for loss or unauthorized collection, processing or disclosure of data; or (iii) written notification of an application for rectification, erasure or destruction of information or data that is still outstanding.

 

(o)           No claims have been asserted nor, to Kadmon’s Knowledge, are threatened against Kadmon or its Affiliates by any person, regulator, law enforcement agency or entity alleging a violation of any privacy, personal or confidentiality rights under any of the Privacy Practices or Applicable Laws.  With respect to all personal or user information collected by Kadmon or its Affiliates in connection with the Purchased Assets, Kadmon has at all times taken all commercially reasonable steps necessary (including, without limitation, implementing and monitoring compliance with reasonable measures with respect to administrative safeguards and technical and physical security) to (i) protect such information against loss and against unauthorized access, use, modification, disclosure or other misuse and (ii) comply with Applicable Law and the Privacy Practices in its collection, processing, storage, use, disclosure and transfer of such information.  To the Knowledge of Kadmon, there has been no unauthorized access to, theft, breach or disclosure of or other misuse of that information.  To the Knowledge of Kadmon, there has been no unauthorized disclosure, whether pursuant to Applicable Law or the Privacy Practices, of electronic communications, patient data, clinical data or protected health information to any Third Party, including any Governmental Authority.

 

(p)           Kadmon has made available to AbbVie (i) complete and correct copies of the Registrations for the Compound or Product, including all supplements and amendments thereto, (ii) all correspondence sent to and received from any Governmental Authority or any Institutional Review Board that concerns or would reasonably be expected to impact the Compound or Product, and (iii) all existing written records relating to all discussions and meetings between or involving Kadmon and any Governmental Authority or Institutional Review Board relating to the Compound or Product.

 

(q)           Kadmon has made available, or has caused its Affiliates to make available, to AbbVie all Technical Information, Regulatory Documentation, Manufacturing Documentation, and any other data, clinical studies and Preclinical Studies in Kadmon’s or Kadmon’s Affiliates’ Control regarding or related to the Compound or Product, and all such Technical Information, Regulatory Documentation and Manufacturing Documentation were and are true, complete and correct at such time and as of the date hereof.  Kadmon has prepared, maintained and retained all Manufacturing Documentation and Regulatory Documentation that is required to be maintained or reported pursuant to and, to the extent applicable, in accordance with Applicable Laws and, to the Knowledge of Kadmon, all such information is true, complete and correct in what it purports to be.  Schedule 1.51-Part A is a true and correct list of all Manufacturing Documentation owned by Kadmon as of the Effective Date; Schedule 1.51-Part B is a true and correct list of all Manufacturing Documentation owned by a Third Party supplier of Kadmon that is in Kadmon’s possession as of the Effective Date; Schedule 1.32-Part A is a true and correct list of all Clinical Data owned and/or controlled by Kadmon in the Territory as of the Effective Date; and Schedule 1.33 is a true and correct list of all Registrations for the Product owned by Kadmon in Territory as of the Effective Date.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

(r)            Immediately before giving effect to the transactions contemplated hereunder, except as set forth on Schedule 4.2.7(r), originals or copies of all Ex-US Clinical Data, Ex-US Regulatory Documentation, Manufacturing Documentation and Technical Information are in Kadmon’s possession or control.

 

4.2.8       Litigation.  There is no litigation or proceeding (including, but not limited to arbitration), in law or in equity, and there are no proceedings or governmental investigations before any commission or other administrative authority or Governmental Authority, pending, or, to Kadmon’s Knowledge, threatened, against Kadmon or with respect to the consummation of the transactions contemplated hereby, the Product, the Compound or the use of the Purchased Assets.

 

4.2.9       Contracts.  Schedule 4.2.9 sets forth a true and correct list of all of the Contracts between Kadmon or its Affiliates and Third Parties pursuant to which Kadmon has rights and/or obligations with respect to any Purchased Asset or the Product related to the Territory.  Kadmon has made available to AbbVie a true and correct copy of all Assigned Contracts.  The Assigned Contracts are in full force and effect and constitute valid and binding obligations of Kadmon and, to the Knowledge of Kadmon, the other parties thereto.  Neither Kadmon nor, to the Knowledge of Kadmon, the other parties to the Assigned Contracts are in default thereunder, and  Kadmon has not received or given notice of any default thereunder from or to any of the other parties thereto, and, to the Knowledge of Kadmon, there exists no event which upon notice or the passage of time, or both, would reasonably be expected to give rise to any default by Kadmon or the other parties thereto.  Kadmon has not received any written notice, nor does Kadmon have any Knowledge that any party to any Assigned Contract intends to cancel or terminate any Assigned Contract.

 

4.2.10     Brokers.  No broker, investment banker, agent, finder or other intermediary acting on behalf of Kadmon or under the authority thereof, is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee directly or indirectly in connection with the transactions contemplated under this Agreement.

 

4.2.11     Insolvency.  Kadmon has not (a) made a general assignment for the benefit of creditors, (b) filed, or had filed against it, any bankruptcy petition or similar filing, (c) suffered the attachment or other judicial seizure of all or a substantial portion of its assets, or (d) admitted in writing its inability to pay its debts as they become due.

 

4.2.12     Taxes.

 

(a)           All U.S. federal, state, local, and non-U.S. Tax Returns relating to any and all Taxes concerning or attributable to Kadmon or any of its Affiliates, to the extent related to the Purchased Assets, have been timely filed, and such Tax Returns are true and correct in all material respects and have been completed in accordance with applicable law in all material respects.

 

(b)           All Taxes (whether or not shown on any Tax Return) required to be paid by or on behalf of Kadmon and each of its Affiliates, to the extent related to the Purchased Assets, have been timely paid.  There are no liens for Taxes upon the Purchased

 

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Assets.  There is no reasonable basis for the assertion of any claim relating or attributable to Taxes which, if adversely determined, would result in any lien for Taxes on the Purchased Assets.

 

(c)           There is no Tax deficiency outstanding, assessed, or proposed against or with respect to Kadmon or any of its Affiliates that is related to the Purchased Assets, nor has there been executed or requested any outstanding waiver of any statute of limitations on or extension of the period for the assessment or collection of any Tax of or with respect to Kadmon or any of its Affiliates that is related to the Purchased Assets.

 

(d)           Neither Kadmon nor any of its Affiliates has been notified of any request for an audit, examination, or proceeding with respect to any Tax Return that relates to or concerns the Purchased Assets, nor is any such audit, examination, or proceeding presently in progress.  No adjustment relating to any Tax Return filed by or with respect to Kadmon or any of its Affiliates that relates to the Purchased Assets has been proposed by any Taxing Authority.  No claim that relates to the Purchased Assets has ever been made that Kadmon or any of its Affiliates is or may be subject to taxation in a jurisdiction in which it does not file Tax Returns.

 

(e)           None of the Purchased Assets is a “United States real property interest” within the meaning of Section 897(c)(1) of the Code.

 

4.2.13     Undisclosed Liabilities.  Kadmon does not have any Liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due) related to Purchased Assets, except for contractual liabilities incurred in the ordinary course of business under the Assigned Contracts.

 

4.2.14     Product Sales.  Except pursuant to distribution agreements set forth on Schedule 4.2.14, Kadmon has not Commercialized any Products in the Territory.

 

4.2.15     Full Disclosure.  None of the representations or warranties made by Kadmon in this Agreement or any Ancillary Agreement, nor statements made in the Kadmon Disclosure Schedule or any certificate furnished by Kadmon pursuant to this Agreement or any Ancillary Agreement, when taken together, contain any untrue statement of a material fact, or omits to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which they were made, not misleading.

 

5.             CONDITIONS TO CLOSING

 

5.1          Condition to Obligations of AbbVie.  The obligation of AbbVie to consummate this Agreement and the transactions contemplated hereby are subject to the fulfillment, prior to or at the Closing, of the following conditions precedent:

 

5.1.1       Representations and Warranties.  Each of the representations and warranties of Kadmon contained in Section 4.2 shall be true and correct in all material respects as of the date of this Agreement, and shall be so true and correct in all material respects as of the Closing Date (in each case, except those representations and warranties that are made as of a

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

specific date, which representations and warranties need only be so true and correct in all material respects as of such date).

 

5.1.2       Covenants.  Kadmon shall have performed or complied in all material respects with all covenants and obligations of this Agreement required to be performed or complied with by Kadmon on or prior to the Closing Date.

 

5.1.3       Closing Certificate.  Kadmon shall have delivered to AbbVie a certificate of Kadmon, executed by an officer of Kadmon, certifying on behalf of Kadmon that the statements set forth in Subsections 5.1.1 and 5.1.2 have been satisfied.

 

5.1.4       Ancillary Agreements.  Kadmon shall have delivered to AbbVie each Ancillary Agreement to which it is a party, each of which shall have been validly executed by a duly authorized representative of Kadmon.

 

5.1.5       Corporate Certificate.  Kadmon shall have delivered to AbbVie a certificate dated as of the Closing Date and signed on Kadmon’s behalf by an officer of Kadmon certifying as follows: (a) Kadmon’s Certification of Incorporation, or equivalent organizational document, attached to such certificate is true, correct and complete, in full force and effect in the form attached to such certificate from and after the date of the adoption of the resolutions referred to in clause (b) below, and no amendment to such Certificate of Incorporation has occurred from and after the date of the last amendment annexed thereto; and (b) the resolutions of the members, if applicable, and the Board of Directors of Kadmon attached to such certificate authorizing this Agreement, the Ancillary Agreements and the transactions contemplated by this Agreement and the Ancillary Agreements were duly adopted at a duly convened meeting thereof or by written consent, remain in full force and effect, and have not been amended, rescinded or modified.

 

5.1.6       No Material Adverse Effect.  No Material Adverse Effect shall have occurred and be continuing.

 

5.1.7       Non-Foreign Status Certification.  Kadmon shall have delivered to AbbVie a certificate of non-foreign status that meets the requirements of Treasury Regulations section 1.1445-2(b)(2), in the form specified by Treasury Regulations section 1.1445-2(b)(2)(iv).

 

5.1.8       Bank Consent.  Cortland Capital Market Services, LLC, as administrative agent under the Kadmon Credit Agreement, shall have released the Encumbrances on the Purchased Assets and shall have consented to the transactions contemplated under this Agreement and the Ancillary Agreements, in a form satisfactory to AbbVie.

 

5.1.9       Amendment to Supply Agreements.  Each of the supply agreements listed on Schedule 5.1.9 shall be amended in form and substance satisfactory to AbbVie, using the letter agreement substantially in the form set forth in Schedule 5.1.9, to remove the exclusivity provisions thereunder in order to permit an AbbVie Party to enter into supply arrangements for Product (or any ingredient or intermediary thereof) or packaging or other services related thereto with such suppliers.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

5.2          Condition to Obligations of Kadmon.  The obligation of Kadmon to consummate this Agreement and the transactions contemplated hereby are subject to the fulfillment, prior to or at the Closing, of the following conditions precedent:

 

5.2.1       Representations and Warranties.  Each of the representations and warranties of AbbVie contained in Section 4.1 shall be true and correct in all material respects as of the date of this Agreement, and shall be so true and correct in all material respects as of the Closing Date (in each case, except those representations and warranties that are made as of a specific date, which representations and warranties need only be so true and correct in all material respects as of such date).

 

5.2.2       Covenants.  AbbVie shall have performed or complied in all material respects with all covenants and obligations of this Agreement and the Ancillary Agreements required to be performed or complied with by AbbVie on or prior to the Closing Date.

 

5.2.3       Ancillary Agreements.  AbbVie shall have delivered to Kadmon each Ancillary Agreement to which it is a party, each of which shall have been validly executed by a duly authorized representative of AbbVie.

 

6.             INDEMNIFICATION.

 

6.1          Survival.  The representations and warranties of the Parties contained in this Agreement, or in any certificate or other writing delivered pursuant hereto or thereto or in connection herewith or therewith shall survive until *** months from the Closing Date (the “Expiration Date”), except that the representations and warranties in Sections 4.1.1, 4.1.2, 4.1.3, 4.2.1, 4.2.2, 4.2.4 and 4.2.12, (the “Special Representations”) shall survive until *** days following expiration of all statutes of limitation applicable to the matters referred to therein.  Notwithstanding the preceding sentence, any representation or warranty in respect of which indemnity may be sought under Sections 6.2 or 6.3 herein shall survive the time at which it would otherwise terminate pursuant to the preceding sentence if notice of the inaccuracy or breach or potential liability thereof giving rise to such right to indemnity, with reasonable detail to allow the receiving Party to make an assessment thereof, shall have been given to the Party against whom such indemnity may be sought prior to the Expiration Date.  Except for the Special Representations, no claim for indemnity for breaches of representations and warranties under this Agreement may be made on or after the Expiration Date.  The representations and warranties contained in this Agreement (and any right to indemnification for breach thereof) shall not be affected by any investigation conducted by or on behalf of an Indemnified Party or any knowledge acquired (or capable of being acquired) by an Indemnified Party, whether before or after the Closing Date, with respect to the inaccuracy of any such representation or warranty.

 

6.2          Indemnification by AbbVie.  AbbVie shall indemnify, defend and hold harmless Kadmon, its Affiliates, and their respective employees, officers, directors and agents (each, an “Kadmon Indemnified Party”) from and against any and all Losses that the Kadmon Indemnified Party directly incurs, and all Losses that the Kadmon Indemnified Party actually pays to one or more Third Parties, in each instance to the extent resulting from or arising out of (a) any misrepresentation or breach of warranty made by AbbVie pursuant to the provisions of

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

this Agreement, the Ancillary Agreements or any certificate or other writing delivered pursuant hereto or thereto, (b) any failure by AbbVie to fully perform, fulfill or comply with any covenant or agreement set forth herein, in the Ancillary Agreements or any certificate or other writing delivered pursuant hereto or thereto, and (c) any Assumed Liabilities; provided, however, that AbbVie will not be obligated to indemnify or hold harmless any Kadmon Indemnified Party from any such Losses to the extent resulting from (1) any breach by Kadmon of any of its representations, warranties or obligations pursuant to this Agreement, (2) Kadmon’s or its Affiliates’ negligence (or more culpable act or omission) or violation of Applicable Laws or regulations in performing or failing to perform its rights or obligations in connection with this Agreement.

 

6.3          Indemnification by Kadmon.  Kadmon shall indemnify, defend and hold harmless each AbbVie Party and their respective employees, officers, directors and agents (each, an “AbbVie Indemnified Party”) from and against any and all Losses that the AbbVie Indemnified Party directly incurs, and all Losses that the AbbVie Indemnified Party actually pays to one or more Third Parties, in each instance to the extent resulting from or arising out of (a) (i) any misrepresentation or breach of warranty made by Kadmon pursuant to the provisions of this Agreement (other than Special Representations), the Ancillary Agreements or any certificate or other writing delivered pursuant hereto or thereto and (ii) any misrepresentation or breach of any Special Representation, (b) any failure by Kadmon to fully perform, fulfill or comply with any covenant or agreement set forth herein, in the Ancillary Agreements or any certificate or other writing delivered pursuant hereto or thereto, and (c) any Retained Liabilities; provided, however, that Kadmon will not be obligated to indemnify or hold harmless any AbbVie Indemnified Party from any such Losses to the extent resulting from (1) any breach by AbbVie of any of its representations, warranties or obligations pursuant to this Agreement or (2) AbbVie’s or its Affiliates’ negligence (or more culpable act or omission) or violation of Applicable Laws or regulations in performing or failing to perform its rights or obligations in connection with this Agreement.

 

6.4          Limitation of Indemnification.  The term “Indemnified Party” as used in this Section 6.4 shall refer to Kadmon Indemnified Party or AbbVie Indemnified Party as applicable.

 

6.4.1       Threshold Amount; Limitations.  No claim may be made by any Indemnified Party for indemnification pursuant to Section 6.2(a) or Section 6.3(a)(i) herein unless and until the aggregate amount of Losses for which the Indemnified Party seeks to be indemnified exceeds *** , in which case the Indemnifying Party shall be liable for the full amount of the aggregate Losses.  Further, an Indemnified Party shall not be entitled to receive indemnification more than once with respect to the same Loss even if the state of facts giving rise to such Loss constitutes a breach of more than one representation, warrant, covenant or agreement.

 

6.4.2       Cap.  Kadmon’s maximum liability for all claims made pursuant to Section 6.3(a)(i) shall not exceed *** .

 

6.4.3       Insurance.  Any Losses as to which indemnification provided for in Sections 6.2 and 6.3 may apply shall be determined net of any cash recovery actually received by

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

an Indemnified Party with respect to insurance specifically with respect to the specific matter for which indemnification is sought, less any costs actually incurred in obtaining such recovery (including premium adjustments and similar charges).

 

6.4.4       Exclusive Remedy.  Except for actions or claims for fraud and the Special Representations, after the Closing, this Article 6 shall provide the sole and exclusive remedy for any misrepresentation or breach of any warranty pursuant to the provisions of this Agreement or any certificate or other writing delivered pursuant hereto.

 

6.5          Third Party Claims.

 

6.5.1       Procedure.  Promptly after the discovery by the Party seeking indemnification under Section 6.2 or 6.3 herein (the “Indemnified Party”) of any Loss, claim or breach, including any claim by a Third Party (a “Third Party Claim”) that would reasonably be expected to give rise to a claim for indemnification hereunder, the Indemnified Party shall give written notice to the Party against whom indemnity is sought (the “Indemnifying Party”); provided that, no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party of any liability or obligation hereunder, except to the extent that the Indemnifying Party has been prejudiced thereby, and then only to such extent.  The Indemnifying Party, upon request of the Indemnified Party, shall assume the defense of the Third Party Claim and retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnifying Party and the Indemnifying Party shall pay the fees and expenses of such counsel related to such proceeding.  In any such proceeding, the Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (a) the Parties shall have mutually agreed to the retention of such counsel, (b) the named parties to any such proceeding (including any impleaded parties) include the Parties and representation of both Parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (c) the Indemnified Party assumes the defense of a Third Party Claim after the Indemnifying Party has failed to diligently defend a Third Party Claim it has assumed per the Indemnified Party’s request.  All such fees and expenses incurred pursuant to this Section 6.5 shall be reimbursed as they are incurred.  In the event that the Indemnified Party assumes the defense of any Third Party Claim, the Indemnified Party’s right to indemnification for a Third Party Claim shall not be adversely affected by assuming the defense of such Third Party Claim.  The Indemnifying Party shall not be liable for any settlement of any proceeding unless affected with its written consent (which shall not be unreasonably withheld, conditioned or delayed).  The Indemnifying Party shall not, without the written consent of the Indemnified Party (which shall not be unreasonably withheld, conditioned or delayed), effect any settlement of any Third Party Claim unless (a) such settlement includes an unconditional release of the Indemnified Party from all liability on claims to which the indemnity relates that are the subject matter of such proceeding and (b) it would not result in (i) the imposition of a consent order, injunction or decree that would restrict the future activity or conduct of the Indemnified Party or any of its Affiliates with respect to the Compound, Product, or any of the Purchased Assets, (ii) a finding or admission of a violation of Applicable Law or violation of the rights of any Person by the Indemnified Party or any of its Affiliates or (iii) any monetary liability of the Indemnified Party arising from such Third Party Claim that shall not be promptly paid or reimbursed by the Indemnifying Party.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

6.5.2       Confidential Information.  The Indemnified Party and the Indemnifying Party shall use Commercially Reasonable Efforts to avoid production of Confidential Information (consistent with Applicable Law), and to cause all communications among employees, counsel and others representing any party to a Third Party Claim to be made so as to preserve any applicable attorney-client or work-product privileges.

 

6.6          Direct Claims.  If an Indemnified Party wishes to make a claim for indemnification hereunder for a Loss that does not result from a Third Party Claim (a “Direct Claim”), the Indemnified Party shall notify the Indemnifying Party in writing of such Direct Claim promptly after first learning of such Direct Claim, the amount or the estimated amount of damages sought thereunder to the extent then ascertainable (which estimate shall not be conclusive of the final amount of such Direct Claim), any other remedy sought thereunder, any relevant time constraints relating thereto and, to the extent practicable, any other material details pertaining thereto.  The Indemnifying Party shall have a period of *** business days within which to respond to such Direct Claim.  If the Indemnifying Party does not respond within such *** business day period or rejects all or any part of the Direct Claim, the Indemnified Person shall be free to seek enforcement of its rights to indemnification under this Agreement and the Escrow Agreement with respect to such Direct Claim.

 

6.7          Treatment of Indemnity Payments.  Any payment made pursuant to this Section 6 shall be treated as an adjustment to the Purchase Price to the extent permitted by Applicable Law.

 

6.8          Escrow Instructions.  In the event that any claim for indemnification under this Agreement is made against the Escrow Amount that is subject to an alternative dispute resolution proceeding pursuant to Exhibit G, then in the event a final order is rendered pursuant to such dispute procedure relating to the liability of either Party, the Parties shall deliver to the Escrow Agent a joint written instruction authorizing the release of the applicable portion of the Escrow Amount in accordance with such final order

 

7.             TERMINATION

 

7.1          Grounds for Termination.  This Agreement may be terminated at any time prior to the Closing: (a) by written agreement of AbbVie and Kadmon; (b) by either AbbVie or Kadmon if the Closing shall not have been consummated on or before the date that is *** days after the Effective Date; provided that, such termination right shall not be available to a Party that has failed to fulfill its obligations under this Agreement or whose acts or omissions have been a significant cause of the Closing not occurring on or before such date; and (c) by AbbVie, so long as AbbVie is not then in material breach of any provision of this Agreement, if Kadmon has breached in any material respect any representation, warranty, covenant or agreement contained in this Agreement (it being understood that any materiality qualification in any representation and warranty shall be disregarded in determining whether any such breach has occurred for purposes of this clause (c)); provided, however, AbbVie must first provide written notice to Kadmon in accordance with Section 8.3 herein, specifying in reasonable detail the nature of such breach, and such breach must not have been cured by Kadmon during the *** days following the date that such written notice is deemed to have 

 

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been given by AbbVie in accordance with Section 8.3 herein; (d) by Kadmon, so long as Kadmon is not then in material breach of any provision of this Agreement, if AbbVie has breached in any material respect any representation, warranty, covenant or agreement contained in this Agreement (it being understood that any materiality qualification in any representation and warranty shall be disregarded in determining whether any such breach has occurred for purposes of this clause (d)); provided, however, Kadmon must first provide written notice to AbbVie in accordance with Section 8.3 herein, specifying in reasonable detail the nature of such breach, and such breach must not have been cured by AbbVie during the *** days following the date that such written notice is deemed to have been given by AbbVie in accordance with Section 8.3 herein.  The Party desiring to terminate this Agreement pursuant to the foregoing clause (a), (b) or (c) shall give notice of such termination to the other Party in accordance with Section 8.3 herein.

 

7.2          Effect of Termination.  If this Agreement is terminated as permitted by Section 7.1 herein, such termination shall be without liability of either Party (or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to the other Party to this Agreement; provided that, if such termination shall result from the willful failure of any Party to fulfill a condition to the performance of the obligations of another Party or to perform a covenant of this Agreement, or from a breach of any representation or warranty by any Party to this Agreement, such Party shall be fully liable for any and all Losses incurred by the other Party as a result of such failure or breach.  The provisions of Section 3.1 (Confidentiality), this Section 7.2 (Effect of Termination) and Section 8 (Miscellaneous) shall survive any termination pursuant to Section 7.1 herein.

 

8.             MISCELLANEOUS.

 

8.1          Governing Law, Jurisdiction.

 

8.1.1       Governing Law.  The interpretation and construction of this Agreement shall be governed by the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

 

8.1.2       Dispute Resolution.  If a dispute arises between the Parties, the Parties shall follow the alternative dispute resolution provisions provided for in Exhibit G.

 

8.2          Waiver.  A Party’s failure to enforce, at any time or for any period of time, any provision of this Agreement, or to exercise any right or remedy shall not constitute a waiver of that provision, right or remedy or prevent such Party from enforcing any or all provisions of this Agreement and exercising any rights or remedies.  To be effective any waiver must be in writing.

 

8.3          Notices.

 

8.3.1       Notice Requirements. Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized 

 

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overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 8.3 or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 8.3.  Such Notice shall be deemed to have been given as of the date delivered by hand or on the second Business Day (at the place of delivery) after deposit with an internationally recognized overnight delivery service.

 

8.3.2       Address for Notice.

 

For Kadmon

 

Kadmon Pharmaceuticals, LLC
 450 East 29th Street, 5th Floor
 New York, New York 10016
 Attn: Steven N. Gordon, Executive Vice President and General Counsel
 Fax: (212) 355-7855

 

with a copy to:

 

DLA Piper LLP (US)

1251 Avenue of the Americas

27th Floor

New York, New York 10020

Attn: Howard S. Schwartz, Esq.

Fax: (410) 580-3251

 

For: AbbVie Inc.

 

AbbVie Inc.

1 North Waukegan Road

North Chicago, Illinois 60064

Attn:  Executive Vice President, Global Commercial Operations

Facsimile:  (847) 937-3966

 

with a copy to:

 

AbbVie Inc.

1 North Waukegan Road

North Chicago, Illinois 60064

Attn:  Executive Vice President, Business Development, External Affairs and General Counsel

Facsimile:  (847) 937-3966

 

8.4          Entire Agreement.  This Agreement and the Ancillary Agreements constitute the entire agreement between the Parties with respect to the subject matter of this Agreement and the Ancillary Agreements.  This Agreement and the Ancillary Agreements supersede all prior agreements, whether written or oral, with respect to the subject matter hereof and thereof.  Each 

 

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Party confirms that it is not relying on any representations, warranties or covenants of the other Party except as specifically set out in this Agreement and the Ancillary Agreements.  All Schedules or Exhibits referred to in this Agreement are intended to be and are hereby specifically incorporated into and made a part of this Agreement.  In the event of any inconsistency between any such Schedules or Exhibits and this Agreement, the terms of this Agreement shall govern.

 

8.5          Amendment.  Any amendment or modification of this Agreement must be in writing and signed by authorized representatives of both Parties.

 

8.6          Assignment.  Neither Party may assign its rights or delegate its obligations under this Agreement, in whole or in part without the prior written consent of the other Party, except that a Party may make such an assignment or delegation without the other Party’s consent (i) to Affiliates, provided that such assignment or delegation shall not relieve such assigning Party from its obligations hereunder or (ii) to a successor to substantially all of the business to which this Agreement pertains, whether in a merger, sale of stock, sale of assets, spin-off or other transaction.  Any permitted successor or assignee of rights and/or obligations hereunder shall, in writing to the other Party, expressly assume performance of such rights and/or obligations.  Any attempted assignment or delegation in violation of this Section 8.6 shall be void.

 

8.7          No Benefit to Others.  The provisions of this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and they shall not be construed as conferring any rights in any other Persons, except as otherwise expressly provided in this Agreement.

 

8.8          Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same instrument.  An executed signature page of this Agreement delivered by facsimile or PDF transmission shall be as effective as an original executed signature page.

 

8.9          Construction.  Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders and the word “or” is used in the inclusive sense (and/or).  The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement.  The term “including” as used herein shall mean including, without limiting the generality of any description preceding such term.  The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party hereto.

 

8.10        Severability.  To the fullest extent permitted by Applicable Law, the Parties waive any provision of law that would render any provision in this Agreement invalid, illegal or unenforceable in any respect.  If any provision of this Agreement is held to be invalid, illegal or unenforceable, in any respect, then such provision will be given no effect by the Parties and shall not form part of this Agreement.  To the fullest extent permitted by Applicable Law and if the rights or obligations of any Party will not be materially and adversely affected, all other provisions of this Agreement shall remain in full force and effect and the Parties will use their 

 

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best efforts to negotiate a provision in replacement of the provision held invalid, illegal or unenforceable that is consistent with Applicable Law and achieves, as nearly as possible, the original intention of the Parties.

 

8.11        Expenses.  Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense, provided that any costs or expenses incurred in connection with perfecting and/or recording the transfer of ownership of the Kadmon Patent Rights shall be borne by AbbVie.

 

8.12        Parent Guarantee.  Parent guarantees the payment of all amounts due by AbbVie to Kadmon under this Agreement.

 

8.13        Bankruptcy Limitation.  The Parties further agree that in the event Kadmon, its Affiliates, or any successor, assign or trustee seeks to sell, transfer or otherwise convey the ANDA pursuant to Section 363 of the Code, such sale, transfer or conveyance must be made subject to this Agreement and all licenses and rights to licenses granted under and pursuant to this Agreement, and that no other consideration would be sufficient to adequately protect AbbVie’s rights and interests under this Agreement so as to permit such sale, transfer or conveyance free and clear of AbbVie’s rights and interests under Section 363(f) of the Code.

 

8.14        Exclusion of Damages.  EXCEPT FOR EACH PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 6.2 AND 6.3, AND FOR ANY BREACH OF SECTION 3.10, NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR  ANY CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL, OR PUNITIVE DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF GOODWILL OR LOST PROFITS, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR CLAIMS.

 

8.15        Patent Application.

 

8.15.1     License Grant.  AbbVie hereby grants to Kadmon, and Kadmon hereby accepts, a royalty-free, exclusive (even as to AbbVie, its Affiliates and any successor and assign), perpetual and irrevocable license, with a right to grant sub-licenses, under the Patent Application, to make or have made, promote, market, distribute and sell the QD Formulation, except QD Formulation in or for Co-Packaged Product, in the United States.  Notwithstanding the foregoing, upon termination of the License Agreement, the license grant set forth herein shall include QD Formulation in or for Co-Packaged Product in the United States.  Kadmon acknowledges and agrees that except as set forth herein, it has no rights under the Patent Application with respect to the Co-Packaged Product in or for the United States.

 

8.15.2     Prosecution and Maintenance.

 

(a)           Kadmon shall, at its sole discretion, secure and protect the Patent Application in the United States, at its own cost, including, filing and prosecuting any patent applications and maintaining any patents within the Patent Application in the United States.  Kadmon may at any time decline to undertake or continue such prosecution or maintenance of the Patent Application in the United States. If Kadmon elects not to file, prosecute or maintain 

 

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the Patent Application in the United States, Kadmon shall provide written notice, within a reasonable period of time (which in any event will not be less than *** days prior to the next action or payment due date required to keep such Patent Application in the United States in full force and effect), of such election to AbbVie and Kadmon shall be deemed to have no further rights or obligations hereunder with respect to such Patent Application in the United States.

 

(b)           Kadmon shall have the first right to control any interference, opposition, post-grant review, reexamination and similar proceedings relating to the Patent Application in the United States. AbbVie shall be provided prompt notice of the institution of such proceedings, or the intent to institute such proceedings, within a reasonable period of time, and shall be provided advance copies of any documents related thereto for review and comment; provided, however, that the final decision with respect thereto shall rest with Kadmon.

 

(c)           AbbVie shall, at its sole discretion, secure and protect the Patent Application in the Territory, at its own cost, including, filing and prosecuting any patent applications and maintaining any patents within the Patent Application in the Territory.

 

(d)           Without limiting the foregoing, AbbVie shall be copied on all filings and correspondence to, and Kadmon shall promptly provide to AbbVie copies of all correspondence received from, the USPTO regarding the Patent Application.

 

8.15.3     Third Party Infringement.

 

(a)           Each Party shall promptly report in writing to the other Party during the Term any known or suspected infringement of the Patent Application (“Infringement”).  The reporting Party shall provide the other Party with all available evidence supporting such infringement, suspected infringement, unauthorized use or suspected unauthorized use. Promptly after receipt of a notice of Infringement, the Parties shall discuss in good faith the infringement and appropriate actions that could be taken to cause such infringement to cease.

 

(b)           Kadmon shall have the first right to initiate a suit or take other appropriate action that it believes is reasonably required to protect the Patent Application in the United States against any Infringement. If Kadmon decides not to initiate a suit or take other appropriate action with respect to any such Infringement in the United States, then AbbVie may undertake such actions, in which case Kadmon shall, and shall cause its Affiliates to, cooperate with AbbVie in its efforts to initiate a suit or take other appropriate action with respect to any Infringement in the United States, and shall agree to be parties in any suit, if requested.

 

(c)           Without regard to which Party initiates a suit or takes other appropriate action with respect to any Infringement in the Territory under Section 8.15.3(b), all costs (including all reasonable costs and expenses associated with any defense of a claim hereunder) associated with any such action in the United States, and any costs and expenses incurred by any Party or its Affiliates with respect to any Infringement shall be the sole responsibility of the Party initiating the action.  Any proceeds from such actions shall be allocated between the Parties first to compensate each Party on a pro rata basis for amounts it incurred in pursuing such actions and second to the Party instituting the action.

 

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(d)           The enforcing Party under Section 8.15.3(b) shall have the sole and exclusive right to select counsel for any suit initiated by it.  If required under Applicable Law in order for such enforcing Party to initiate and/or maintain such suit or action, the other Party shall join as a party to the suit or action.  Such other Party shall offer reasonable assistance to such enforcing Party in connection therewith at such enforcing Party’s cost and expense.

 

8.15.4     Patent Infringement Claims Against Kadmon and/or AbbVie.

 

(a)           In the event of the institution of any infringement claim against Kadmon as a result of the activities conducted by Kadmon under the license granted under Section 8.15.1 (“Infringement Claim”), Kadmon shall as soon as reasonably practicable notify AbbVie.

 

(b)           Kadmon shall have the sole right to defend the Infringement Claim at its sole cost and expense.  Kadmon shall notify and keep AbbVie apprised in writing of such action.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, duly authorized representatives of the Parties have duly executed this Agreement to be effective as of the Effective Date.

 

	
Kadmon Pharmaceuticals, LLC
    	
AbbVie Bahamas Ltd.
    
	
 
    	
 
    
	
By
    	
  /s/ Steven N. Gordon
    	
 
    	
By
    	
  /s/   William Chase
    
	
Name:  Steven N. Gordon
    	
Name:  William Chase
    
	
Title:    Executive Vice President and General Counsel
    	
Title:  Authorized Officer
    
	
 
    	
 
    
	
Solely for purposes of Section 8.12
    	
 
    
	
 
    	
 
    
	
AbbVie Inc.
    	
 
    
	
 
    	
 
    
	
By
    	
  /s/   William Chase
    	
 
    	
 
    
	
Name:    William Chase
    	
 
    
	
Title:  Authorized Officer
    	
 
    

 

[Signature Page to Asset Purchase Agreement]

 

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

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G-2

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

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G-3

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

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