Document:

ex109license.htm

 

 

[***] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

LICENSE AGREEMENT

 

 

 

By and between

 

 

Merck Sharp & Dohme BV

 

 

and

 

 

Forest Laboratories Holdings Limited

 

 

 

 

Dated as of January 10, 2014

 

 

  

  

  

TABLE OF CONTENTS

 

 

	
ARTICLE 1

	
DEFINITIONS

	 

 

 

	
ARTICLE 2

	
GRANT OF RIGHTS

	 

 

	
  

	
2.1

	
Grants to Buyer.

	 

	
  

	
2.2

	
Retention of Rights.

	 

	
  

	
2.3

	
Sublicenses.

	 

	
  

	
2.4

	
Grants to Seller.

	 

	
  

	
2.5

	
No Implied Rights.

	 

	
  

	
2.6

	
Covenants Relating to In-License Agreements and Other Agreements.

	 

 

	
ARTICLE 3

	
TERRITORIAL RESTRICTIONS; COMPLIANCE

	 

 

	
  

	
3.1

	
Buyer Restrictions

	 

	
  

	
3.2

	
Seller Restrictions.

	 

	
  

	
3.3

	
Compliance with Legal Requirements.

	 

	
  

	
3.4

	
Compliance

	 

 

	
ARTICLE 4

	
PAYMENTS AND RECORDS

	 

 

	
  

	
4.1

	
Royalty.

	 

	
  

	
4.2

	
Payments and Reports.

	 

	
  

	
4.3

	
Payment Method.

	 

	
  

	
4.4

	
Late Payments.

	 

	
  

	
4.5

	
Withholding Taxes.

	 

	
  

	
4.6

	
Records.

	 

	
  

	
4.7

	
Audit.

	 

 

	
ARTICLE 5

	
LICENSED PATENTS

	 

 

	
  

	
5.1

	
Maintenance and Prosecution of Licensed Patents.

	 

	
  

	
5.2

	
Enforcement of Licensed Patents.

	 

	
  

	
5.3

	
Infringement Claims by Third Parties.

	 

	
  

	
5.4

	
Invalidity or Unenforceability Defenses or Actions.

	 

	
  

	
5.5

	
Third Party Licenses.

	 

 

	
ARTICLE 6

	
LICENSED TRADEMARKS

	 

 

	
  

	
6.1

	
Use of Licensed Trademarks.

	 

	
  

	
6.2

	
Approval Procedures

	 

	
  

	
6.3

	
Clearance; Registration, Prosecution and Maintenance of Licensed Trademarks.

	
  

	
6.4

	
Enforcement of Licensed Trademarks.

	 

	
  

	
6.5

	
No Implied Rights.

	 

 

	
ARTICLE 7

	
LICENSED DOMAIN NAMES

	 

 

	
  

	
7.1

	
Ownership and Goodwill.

	 

	
  

	
7.2

	
Registration and Maintenance.

	 

	
  

	
7.3

	
Country-Specific Traffic.

	 

	
  

	
7.4

	
Enforcement.

	 

 

	
ARTICLE 8

	
CONFIDENTIALITY AND NON-DISCLOSURE

	 

 

 

	
ARTICLE 9

	
DISCLAIMER OF WARRANTIES

	 

 

 

	
ARTICLE 10

	
INDEMNITY

	 

 

	
  

	
10.1

	
Indemnification of Seller.

	 

	
  

	
10.2

	
Indemnification of Buyer.

	 

	
  

	
10.3

	
Indemnification Procedures.

	 

	
  

	
10.4

	
Limitation on Damages and Liability.

	 

	
  

	
10.5

	
Insurance.

	 

 

	
ARTICLE 11

	
TERM

	 

 

	
  

	
11.1

	
Term.

	 

	
  

	
11.4

	
Consequences of Termination.

	 

 

	
ARTICLE 12

	
MISCELLANEOUS

	 

 

	
  

	
12.1

	
Governing Law, Jurisdiction, Venue and Service.

	 

	
  

	
12.2

	
Dispute Resolution.

	 

	
  

	
12.3

	
Equitable Relief

	 

	
  

	
12.4

	
Notices.

	 

	
  

	
12.5

	
No Benefit to Third Parties.

	 

	
  

	
12.6

	
Waiver and Non-Exclusion of Remedies.

	 

	
  

	
12.7

	
Expenses

	 

	
  

	
12.8

	
Assignment.

	 

	
  

	
12.9

	
Use of Affiliates.

	 

	
  

	
12.10

	
Amendment.

	 

	
  

	
12.11

	
Independent Contractors.

	 

	
  

	
12.12

	
Severability.

	 

	
  

	
12.13

	
English Language.

	 

	
  

	
12.14

	
Counterparts.

	 

	
  

	
12.15

	
Entire Agreement.

	 

	
  

	
12.16

	
Construction.

	 

SCHEDULES

Schedule 1                      Seller Marks

Schedule 2                      Trademark Usage Guidelines and Quality Standards

 

  

  

  

LICENSE AGREEMENT

 

                      This License Agreement (this “Agreement”) is made and entered into effective as of January 10, 2014 (the “Effective Date”) by and between Merck Sharp & Dohme BV, a limited liability company (a Besloten Vennootschap) organized and existing under the Laws of the Netherlands (“Seller”), and Forest Laboratories Holdings Limited, an entity organized and existing under the Laws of Ireland (“Buyer”).  Seller and Buyer are sometimes referred herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

                      WHEREAS, Seller and Buyer are parties to that certain Asset Purchase Agreement, dated as of November 29, 2013 (the “Asset Purchase Agreement”), pursuant to which, effective as of the Closing, Buyer is purchasing from Seller certain assets related to the Product in the Buyer Territory and Seller is required to grant a license and right of reference to Buyer, and Buyer is required to take a license and right of reference, under the Licensed IP and Documentation to Exploit the Product and Other Products in the Buyer Territory; and

 

                      WHEREAS, following the Closing, Buyer will Control certain regulatory data and approvals with respect to the Product and is required to grant a right of reference to Seller, and Seller is required to take a right of reference, under such regulatory data and approvals with respect to the Product to Exploit the Product and Other Products in the Seller Territory.

 

                      NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions hereinafter set forth and set forth in the Asset Purchase Agreement, the other Ancillary Agreements, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

        ARTICLE 1                                

 

DEFINITIONS

 

Unless otherwise specifically provided herein, the following capitalized terms shall have the meanings set forth in this Article 1 when used in this Agreement, and capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed thereto in the Asset Purchase Agreement.

 

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

 

1.2 “Asset Purchase Agreement” has the meaning set forth in the recitals hereto.

 

1.3 “Assigned Patents” means those Patent Rights assigned to Buyer pursuant to Section 5.20 of the Asset Purchase Agreement.

 

1.4 “Assigning Party” has the meaning set forth in Section 12.8.

 

1.5 “Buyer” has the meaning set forth in the preamble hereto.

 

1.6 “Buyer Indemnitees” has the meaning set forth in Section 10.2.

 

1.7 “Buyer Regulatory Approvals and Documentation” means any and all Regulatory Approvals and other Regulatory Documentation related to the Product, or any Other Product, in each case, that are Controlled by Buyer or any of its Affiliates effective as of and following the Closing, including the Purchased Regulatory Approvals and any other Regulatory Documentation included in the Purchased Assets.

 

1.8 “Buyer Trademark” has the meaning set forth in Section 6.2.3.

 

1.9 “Consenting Party” has the meaning set forth in Section 12.8.

 

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

 

1.11 “Enforcing Party” has the meaning set forth in Section 5.2.2.

 

1.12 “First Commercial Sale” means, with respect to a product, the first purchase and sale of such product, following receipt of marketing approval, to one or more Third Parties for value for use or consumption by the general public.

 

1.13 “Generic Entry” means the First Commercial Sale in the Buyer Territory of a second Generic Product, other than any Authorized or Owned Generic Product.

 

1.14 “Hatch-Waxman Act” means the United States “Drug Price Competition and Patent Term Restoration Act” of 1984, as set forth at 21 U.S.C. §355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV).

 

1.15 “Infringement” has the meaning set forth in Section 5.2.2.

 

1.16 “Invalidity Claim” has the meaning set forth in Section 5.4.

 

1.17 “Licensed IP and Documentation” has the meaning set forth in Section 2.1.

 

1.18 “Licensed Domain Names” means (a) Licensed Domain Names, as such term is defined in the Asset Purchase Agreement and (b) any other domain names deemed Licensed Domain Names pursuant to Section 7.1.

 

1.19 “Licensed Trademarks” means (a) the Licensed Trademarks, as such term is defined in the Asset Purchase Agreement and (b) any other Trademarks (including, for clarity, any trade dress) that are variations or derivatives of any Trademark in subclause (a) above that Buyer, or the Parties jointly, may develop under this Agreement for use on or in connection with the Exploitation of the Product or any Other Product in the Buyer Territory, but in each case ((a) and (b)), excluding any Seller Marks.

 

1.20 “[***] Product” means any Other Product [***].

 

1.21 “[***] Loss of Exclusivity” means, with respect to a [***], the First Commercial Sale in the Buyer Territory of the second pharmaceutical product that is (a) distributed under a Regulatory Approval approved by FDA expressly in reliance on the prior approval of such [***] pursuant to 21 U.S.C. 355(j) and (b) under applicable Law is substitutable for such [***] as administered to patients without the intervention of a physician or other health care provider with prescribing authority, other than any such pharmaceutical product described in clauses (a) and (b) above that is marketed, distributed or sold in the Buyer Territory by or on behalf of or under a license or sublicense from Buyer or any of its Affiliates.

 

1.22 “Notice” has the meaning set forth in Section 12.4.1.

 

1.23 “Officials” has the meaning set forth in Section 3.4.2.

 

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

 

1.25 “Payment” has the meaning set forth in Section 3.4.2.

 

1.26 “Product Label” means, with respect to the Product or any Other Product in the Buyer Territory, (a) the Regulatory Authority-approved full prescribing information for the Product or any Other Product, as applicable, including any required patient information and (b) all labels and other written, printed or graphic matter upon a container, wrapper or any package insert utilized with or for the Product or any Other Product, as applicable.

 

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

 

1.28 “Seller Indemnitees” has the meaning set forth in Section 10.1.

 

1.29 “Seller Marks” means the trade names, corporate names, trade dress and corporate logos of Seller or Seller’s Affiliates that are used by Seller or any of Seller’s Affiliates in connection with the Product in the Buyer Territory or the Product Business prior to or as of the Execution Date, but which are not used exclusively in connection with the Product in the Buyer Territory or the Product Business, including those Trademarks listed on Schedule 1.

 

1.30 “Seller Other Product” has the meaning ascribed to such term in Section 2.2.

 

1.31 “Seller Territory IP” means (a) counterparts of the Licensed Patents or Assigned Patents in the Seller Territory and (b) the data, information and know-how that is not generally known, that is Controlled by Seller or its Affiliates, and is used by or on behalf of Seller, for the Manufacture of the Product in the Seller Territory; provided, that if such data, information or know-how becomes publicly disclosed (other than as a result of any disclosure by Buyer in breach of its obligations under Section 5.4 of the Asset Purchase Agreement or any other provision of any Ancillary Agreement), such data, information or know-how shall no longer be deemed Seller Territory IP.

 

1.32 “Sublicensee” means a Third Party that is granted a sublicense by Buyer under the grant in Section 2.1, as provided in Section 2.3.

 

1.33 “Supplied Product” has the meaning assigned to such term in the Supply Agreement or the Clinical Supply Agreement, as applicable.

 

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

 

1.35 “Third Party Claims” has the meaning set forth in Section 10.1.

 

           ARTICLE 2                                

 

GRANT OF RIGHTS

 

2.1 Grants to Buyer. Subject to the terms and conditions of this Agreement and in consideration of the amounts due hereunder and under the Asset Purchase Agreement, Seller hereby grants to Buyer and its Affiliates a license and right of reference, with the right to grant sublicenses and further rights of reference in accordance with Section 2.3, to the Licensed Patents, Licensed Know-How, Licensed Regulatory Documentation, the Licensed Copyrights, the Licensed Trademarks and the Licensed Domain Names and, solely in connection with the grant in Section 2.1.3, to the Seller Territory IP (collectively, the “Licensed IP and Documentation”):

 

2.1.1 to use, sell, offer for sale, have sold, promote, market, distribute and otherwise commercialize (including the importation and exportation of compounds (including asenapine), the Product in the Buyer Territory, which license shall be, with respect to the foregoing rights, in each case, to the extent Controlled by Seller or its Affiliates as of the Execution Date or any time thereafter, exclusive (even as to Seller or its Affiliates), fully-paid, perpetual, irrevocable, royalty-free and non-transferable (except as expressly provided in this Agreement);

 

2.1.2 as necessary to obtain, maintain and hold Regulatory Approvals for and to otherwise Exploit the Product in the Buyer Territory, which license shall be exclusive, fully-paid, perpetual, irrevocable, royalty-free and non-transferable (except as expressly provided in this Agreement);

 

2.1.3 subject to the applicable terms of the Supply Agreement and the Clinical Supply Agreement with respect to Manufacture of Product, to Manufacture and have Manufactured (including the importation or exportation of components (including asenapine) for Manufacture) the Product worldwide for Exploitation of the Product in the Buyer Territory, which license shall be, with respect to the foregoing rights, in each case, to the extent Controlled by Seller or its Affiliates as of the Execution Date or any time thereafter, non-exclusive, fully-paid, perpetual, irrevocable, royalty-free and non-transferable (except as expressly provided in this Agreement); and

 

2.1.4 with respect to Manufacture of Other Product, to Manufacture and have Manufactured (including the importation or exportation of components (including asenapine) for Manufacture) any Other Product worldwide for Exploitation of such Other Product in the Buyer Territory, which license shall be, with respect to the foregoing rights, in each case, to the extent Controlled by Seller or its Affiliates as of the Execution Date or any time thereafter, non-exclusive, fully-paid, perpetual, irrevocable, royalty-free and non-transferable (except as expressly provided in this Agreement);

 

2.1.5 to Exploit any Other Product in the Buyer Territory, which license shall be exclusive (subject to Section 2.2), fully-paid, perpetual, irrevocable, royalty-free (except with respect to Combination Products, which shall be royalty-bearing in accordance with this Agreement) and non-transferable (except as expressly provided in this Agreement).

 

2.2 Retention of Rights.  Notwithstanding the rights granted to Buyer in this Agreement, Seller retains, on behalf of itself and its Affiliates, and its and their licensees, Sublicensees, licensors and distributors, such rights in and to the Licensed IP and Documentation, in each case, as may be necessary or useful (a) to perform its obligations under the Asset Purchase Agreement or any Ancillary Agreement, including this Agreement, the In-License Agreements and the Other Agreements, (b) to Manufacture or have Manufactured the Product or any Other Product worldwide, (c) to export or import the Product or any Other Product anywhere in the world in connection with the Manufacture or Exploitation of the Product or any Other Product in the Seller Territory, (d) to Exploit the Product or any Other Product in the Seller Territory and to develop Other Product in the Buyer Territory as necessary for obtaining regulatory approvals in the Seller Territory, (e) to perform research and development activities with respect to asenapine in the Seller Territory and to perform research and development activities with respect to asenapine (but excluding the Product) in the Buyer Territory as necessary to obtain regulatory approvals in the Seller Territory, and (f) to Manufacture, have Manufactured or Exploit products for use in humans on a non-prescription basis and for use in animals worldwide.  Notwithstanding clause (f) of this Section 2.2, Seller shall not, and it shall cause its Affiliates not to, market, sell, distribute or otherwise commercialize in the Buyer Territory a version of the Product that is available for use by humans on a non-prescription basis prior to the later of (x) the last to expire of the Valid Claims covering the Product under the Licensed Patents and Assigned Patents and (y) the Milestone Termination Date.  For clarity, nothing in the foregoing shall be deemed to grant to Seller (or its Affiliates) any rights (express or implied) of Buyer or its Affiliates in any information, data or intellectual property rights developed by Buyer or its Affiliates with respect to Other Products, and Seller’s rights retained by the foregoing provisions, as to Other Products, shall be solely to the extent such Other Products are developed by Seller or its Affiliates independently of Buyer and its Affiliates and Sublicensees (such Other Products, the “Seller Other Products”), and in compliance with all terms of this Agreement, the Asset Purchase Agreement and all other Ancillary Agreements.

 

2.3 Sublicenses.  Buyer shall have the right to grant sublicenses (and further rights of reference) under the licenses and rights granted in Section 2.1 of this Agreement through multiple tiers of Sublicensees; provided that Buyer shall remain jointly and severally liable for the performance or non-performance of any such Sublicensee.  Buyer hereby acknowledges that the grant of any such sublicense shall not relieve Buyer of its obligations under this Agreement, except to the extent such obligations are performed by such Sublicensee.  A copy of any sublicense agreement executed by Buyer pursuant to this Section 2.3 (provided that the financial terms and other highly confidential information of any such sublicense agreement may be redacted to the extent not pertinent to an understanding of either Party’s obligations or benefits under this Agreement) shall be provided to Seller within [***] after its execution by the parties thereto.  Notwithstanding the foregoing, Buyer shall not be required to provide any sublicense agreement entered into by Buyer pursuant to this Section 2.3 that is entered into by Buyer in the ordinary course of its Exploitation of the Product in the Buyer Territory to the extent that any such agreement (x) consists of non-exclusive sublicenses under the Licensed Trademarks or Licensed Copyrights granted for the sole purpose of performing services on behalf of Buyer in connection with its Exploitation of the Product and (y) is otherwise consistent with, and expressly made subject to, the terms and conditions of this Agreement.

 

2.4 Grants to Seller. Subject to the terms and conditions of this Agreement, Buyer (on behalf of itself and its Affiliates, licensees, Sublicensees and distributors) hereby grants to Seller and its Affiliates a fully-paid, royalty-free, non-transferable (except as expressly provided in this Agreement) license and right of reference, with the right to grant sublicenses and further rights of reference through multiple tiers, to all Buyer Regulatory Approvals and Documentation as necessary to Exploit and Manufacture or have Manufactured the Product and Seller Other Products solely for use, sale, offering for sale, having sold, promotion, marketing or other commercialization in the Seller Territory, which license shall be (a) exclusive with respect to such use, sale, offering for sale, having sold, promotion, marketing or other commercialization and (b) non-exclusive with respect to other Exploitation and Manufacturing of the Product and Seller Other Products.  Buyer (on behalf of itself and its Affiliates) hereby grants to Seller and its Affiliates a fully-paid, royalty-free, perpetual license, with the right to grant sublicenses, to the Assigned Patents as necessary to: (i) Exploit and Manufacture or have Manufactured the Product and Seller Other Products solely for use, sale, offering for sale, having sold, promotion, marketing or other commercialization in the Seller Territory, which license shall be (x) exclusive with respect to such use, sale, offering for sale, having sold, promotion, marketing or other commercialization and (y) non-exclusive with respect to other Exploitation and Manufacturing of the Product and Seller Other Products; and (ii) exercise those rights of Seller and its Affiliates in Section 2.1.4 of the Asset Purchase Agreement.

 

2.5 No Implied Rights.  For the avoidance of doubt, (a) Buyer and its Affiliates, licensees, Sublicensees and distributors shall have no right, express or implied, with respect to the Licensed IP and Documentation, except as expressly provided in Section 2.1 and elsewhere in this Agreement, in Section 2.3(b)(ii) of the Supply Agreement and in the Clinical Supply Agreement, and (b) Seller and its Affiliates, licensees, sublicensees and distributors shall have no right, express or implied, with respect to the Buyer Regulatory Approvals and Documentation, except as expressly provided in Section 2.4 and elsewhere in this Agreement.  Except as expressly granted herein, in the Asset Purchase Agreement or in any other Ancillary Agreement, neither Party grants the other Party any right or license to any assets or rights, including intellectual property rights, of such Party or its Affiliates.

 

2.6 Covenants Relating to In-License Agreements and Other Agreements.  Subject to this Section 2.6, Buyer shall be bound by and enjoy the benefit of the terms and conditions applicable to the Exploitation of the Product and any Other Product, as permitted under this Agreement, under the In-License Agreements in the Buyer Territory. Buyer agrees that it shall comply in all material respects with the specific terms and conditions of such In-License Agreements in connection with its receipt and exercise of rights hereunder or under the Supply Agreement, to the extent Buyer has been provided a true and complete copy of such In-License Agreement (provided that any such terms and conditions of each In-License Agreement may be redacted to preserve the confidentiality of financial information and Buyer shall not be obligated to comply with any such redacted terms or conditions) and solely to the extent such compliance would not contravene applicable Law or any provision of this Agreement, the Asset Purchase Agreement or any Ancillary Agreement.  Seller, through its actions or inactions, shall not be in material breach of any In-License Agreement or any Other Agreement to the extent that being in such material breach materially adversely affects Buyer’s rights under this Agreement or the Supply Agreement.  Buyer, through its actions or inactions, shall not knowingly cause Seller to be in material breach of any terms of In-License Agreement or any Other Agreement that have been disclosed in writing to Buyer; provided, however, that in the event of any allegation of such breach by a Third Party that is a party to any such agreement, Buyer shall have the opportunity to cure such alleged breach in accordance with (and for any period of cure provided in) the terms of the applicable In-License Agreement or Other Agreement.

 

                            ARTICLE 3                                

 

TERRITORIAL RESTRICTIONS; COMPLIANCE SALES

 

3.1 Buyer Restrictions. In partial consideration of the rights and licenses granted herein and for amounts due hereunder and under the Asset Purchase Agreement, other than as expressly set forth in this Agreement, Buyer shall not (and Buyer shall ensure that its Affiliates, and shall use commercially reasonable efforts to ensure that its Sublicensees, do not), in all cases outside the Buyer Territory, promote, market, sell or solicit orders for or otherwise commercialize the Product or any Other Product, except pursuant to this Agreement, the Asset Purchase Agreement or any other Ancillary Agreement.  Seller acknowledges that, given the nature of modern communications and advertising media, Buyer’s (and its Affiliates’ or Sublicensees’) marketing and promotion of Product or any Other Product, intended for customers located in the Buyer Territory, may be received or viewed by Persons outside of the Buyer Territory, and such fact shall not be deemed to violate the foregoing covenant so long as Buyer or the Person conducting such marketing or promotion does not intend for such activities to influence buying or prescribing activities outside of the Buyer Territory.

 

            3.2 Seller Restrictions. Seller shall not (and Seller shall ensure that its Affiliates, and shall use commercially reasonable efforts to ensure that its sublicensees hereunder, do not), in all cases outside the Seller Territory, promote, market, sell, solicit orders for or otherwise commercialize the Product or any Other Product, except pursuant to this Agreement, the Asset Purchase Agreement or any other Ancillary Agreement.  Buyer acknowledges that, given the nature of modern communications and advertising media, Seller’s (and its Affiliates’, licensees’ or sublicensees’) marketing and promotion of Product or any Other Product, intended for customers located in the Seller Territory, may be received or viewed by Persons outside of the Seller Territory, and such fact shall not be deemed to violate the foregoing covenant so long as Seller or the Person conducting such marketing or promotion does not intend for such activities to influence buying or prescribing activities outside of the Seller Territory.

 

3.3 Compliance with Legal Requirements. Each of Buyer and Seller shall conduct, and shall use commercially reasonable efforts to ensure that each of their Affiliates, sublicensees, Sublicensees, and Third Party subcontractors and distributors conduct, all its respective activities concerning the Product and the Licensed IP and Documentation hereunder in material compliance with all applicable Laws.  In addition, each Party certifies that it will not knowingly employ or otherwise use in any capacity, the services of any Person debarred under United States Law, including 21 U.S.C. Section 335a or who is the subject of a conviction described in such section, in connection with the Exploitation of the Product or the performance of any portion of its activities hereunder or pursuant hereto, as the case may be.

 

3.4 Compliance. 

 

 

3.4.1 Compliance with Law.  Each Party shall maintain a compliance program consistent with the “Compliance Program Guidance for Pharmaceutical Manufacturers,” published by the Office of Inspector General, U.S. Department of Health and Human Services.  Each Party agrees to conduct, to cause its Affiliates to conduct, and to use commercially reasonable efforts to cause its Sublicensees and Third Party contractors and distributors to conduct, the activities contemplated with respect to this Agreement in a manner that is consistent with applicable Law.

 

3.4.2 Governments and International Public Organizations.  Each Party shall not make any payment, shall ensure that its Affiliates and shall use commercially reasonable efforts to ensure that its Sublicensees and Third Party contractors and distributors do not, make any payment, either directly or indirectly, of money or other assets, including the compensation the Party derives from this Agreement in connection with the subject matter of this Agreement (collectively referred as a “Payment”), to (a) government or political party officials, officials of international public organizations, candidates for public office, or representatives of other businesses or Persons acting on behalf of any of the foregoing (collectively referred as “Officials”) where such Payment would constitute a violation of any Law applicable to Seller, Buyer or any of their respective Affiliates, or (b) Officials if such Payment is for the purpose of influencing decisions or actions with respect to the subject matter of this Agreement.

 

3.4.3 No Authority.  Buyer acknowledges that no employee of Seller or its Affiliates shall have authority to give any direction, either written or oral, relating to the making of any commitment by Buyer or its agents to any Third Party in violation of terms of this or any other provisions of this Agreement.

 

3.4.4 Exclusions List.  Each Party shall not use (and shall cause its Affiliates not to use) any Person (including any employee, officer, director, Sublicensee or Third Party contractor or distributor) who is (or has been) on the Exclusions List of the Office of Inspector General, U.S. Department of Health & Human Services.  Each Party certifies to the other Party that, as of the Effective Date, such Party has screened itself, and its officers and directors against the Exclusions List of the Office of Inspector General, U.S. Department of Health & Human Services.

 

         ARTICLE 4                                

 

PAYMENTS AND RECORDS

 

 

4.1 Royalty.  As further consideration for the rights granted to Buyer hereunder, commencing upon the First Commercial Sale of a Combination Product or a [***] in the Seller Territory, Buyer shall pay to Seller a royalty of as a percentage of Net Sales of Combination Products and [***] by Seller, its Affiliates and Sublicensees in the Buyer Territory, which obligation shall expire as described below in this Section 4.1.  Such royalty rate percentage shall equal:  (a) [***] for Combination Products and [***] that are claimed, or the use or Manufacture of which are claimed, by Patent Rights in the Licensed Patents or Assigned Patents at the time of sale in the Buyer Territory by Buyer or its Affiliate or sublicensee; and (b) [***] for Combination Products and [***] that are not within the criteria in subsection (a) above, but that relied on Licensed Know-How or clinical data or other know-how included in the Purchased Assets to obtain regulatory approval in the Buyer Territory.  Buyer acknowledges that (x) the Licensed Know-How and the information included in the Licensed Regulatory Documentation licensed to Buyer are proprietary and valuable and that without the Licensed Know-How and such information, Buyer would not be able to obtain and maintain Regulatory Approvals with respect to the Combination Products, (y) access to the Licensed Know-How and the rights with respect to the Licensed Regulatory Documentation and the other rights granted hereunder have provided Buyer with a competitive advantage in the marketplace beyond the exclusivity afforded by the Licensed Patents and Assigned Patents and the Buyer Regulatory Approvals and Documentation and (z) the royalties set forth in this Section 4.1 are, in part, intended to compensate Seller for such exclusivity and such competitive advantage.  The Parties agree that the royalty rate set forth in this Section 4.1 reflects an efficient and reasonable blended allocation of the value provided by Seller to Buyer.  For clarity, (1) [***] no royalty will be owed under this Article 4 for any subsequent sales of any Combination Product and (2) [***] no royalty or other payment will be owed under this Article 4 for any subsequent sales of the applicable [***].

 

            4.2 Payments and Reports.  Buyer shall calculate all amounts payable to Seller pursuant to Section 4.1 promptly after the end of each Calendar Quarter and shall pay to Seller the amounts due with respect to a given Calendar Quarter within [***] after the end of such Calendar Quarter.  Each payment of royalties due to Seller shall be accompanied by the applicable Quarterly Net Sales Report delivered pursuant to Section 5.15.1 of the Asset Purchase Agreement and a calculation of the amount of royalty payment due on such Net Sales for such Calendar Quarter.  Without limiting the generality of the foregoing, Buyer shall require its Affiliates and Sublicensees to account for their Net Sales of Combination Products or [***], as applicable, and to provide such reports with respect thereto as if such sales were made by Buyer.

 

4.3 Payment Method.  All payments to be made by a Party under this Agreement shall be paid in U.S. Dollars, by wire transfer, pursuant to the instructions of Seller, as such instructions may be designated from time to time by Seller at least 10 Business Days prior to the date payment is due.  Buyer shall have no right to offset, set off or deduct any amounts from or against the amounts due to Seller hereunder or under the Asset Purchase Agreement or any other Ancillary Agreement.

 

4.4 Late Payments.  In the event that any payment is not paid in accordance with the provisions of this Article 4 or the Supply Agreement, as applicable, the overdue amount shall bear interest, at a rate equal to [***], as of the date such payment is due, or the maximum rate permitted under applicable Law, whichever is less, until the entire unpaid overdue amount shall have been paid in full.

 

4.5 Taxes.

 

4.5.1 Withholding Taxes.  If applicable Laws require withholding of income or other similar Taxes imposed upon any payments made by Buyer to Seller under this Article 4, Buyer shall make such withholding payments to the applicable tax authorities as may be required and shall subtract such withholding payments from such payments.  Buyer shall submit reasonable proof of payment of the withholding Taxes to Seller within a reasonable period of time. Buyer shall promptly provide Seller with copies of the official receipts.  Buyer shall render Seller reasonable assistance in order to allow Seller to obtain the benefit of any present or future treaty against double taxation which may apply to such payments.

 

4.5.2 Value Added Taxes and Similar Taxes.  All amounts due under this Article 4 are exclusive of sales, use, goods and services, value added, excise, and other Taxes, duties or charges of a similar nature imposed by any Governmental Authority, or other taxing authority. If any sales, use, goods and services, value added, excise, or other Taxes, duties or charges of a similar nature will be chargeable with respect to the payments or transactions hereunder, Buyer shall pay, or upon receipt of invoice from Seller shall reimburse Seller for, these amounts at the rate in force at the due time for payment or such other time as is stipulated under the relevant legislation.  Each of Seller and Buyer shall use commercially reasonable efforts to minimize obligations relating to Taxes of the nature described in this Section 4.5.2 as a result of the transactions contemplated by this Agreement.

 

4.6 Records.  Buyer and its Affiliates shall prepare and maintain complete and accurate books and records of account, in accordance with GAAP, of all transactions and other business activities under this Agreement, sufficient to confirm the accuracy of all reports furnished by Buyer under this Agreement and all payments by Buyer to Seller under this Agreement.  Such records shall be maintained by Buyer and its Affiliates for the Calendar Year to which such records pertain and for a period of [***] thereafter.

 

4.7 Audit.  Seller and its Affiliates shall have the audit rights set forth in Section 5.16 of the Asset Purchase Agreement.

 

         ARTICLE 5                                

 

LICENSED PATENTS AND ASSIGNED PATENTS

 

5.1 Maintenance and Prosecution of Licensed Patent and Assigned Patents.  Buyer shall have the sole right, but not the obligation, at its sole expense, to prepare, file, prosecute and maintain (including with respect to related interference, re-issuance, re-examination and opposition proceedings) the Licensed Patents and Assigned Patents in the Buyer Territory.  Buyer shall have the sole right to make decisions regarding patent term extensions, including any extensions that are now or become available in the future with respect to the Licensed Patents and Assigned Patents. Seller shall assist and cooperate with Buyer as Buyer may reasonably request from time to time in connection with its activities set forth in this Section 5.1.  Subject to the other provisions of this Article 5, neither Seller nor Buyer shall, without the other Party’s prior written consent, (a) take any action to abandon or withdraw any application for any Licensed Patents or Assigned Patent, or (b) permit any Licensed Patents or Assigned Patent to lapse or expire.  Notwithstanding the foregoing, Buyer may elect to cease further prosecution or maintenance of particular patent applications or patents in the Licensed Patents or Assigned Patents, and if Buyer so elects it shall notify Seller in writing of any such proposed action not less than [***] prior to the date on which any applicable filing or payment is due.  Upon receipt of such notice, Seller shall have the right, but, notwithstanding the foregoing, not the obligation to immediately assume control of the preparation, filing, prosecution or maintenance of such Licensed Patents and/or Assigned Patent at its sole expense.  All costs and expenses of preparing, filing, prosecuting and maintaining the Licensed Patents and/or Assigned Patents in the Buyer Territory shall be [***].

 

5.2 Enforcement of Licensed Patents and Assigned Patents.

 

5.2.1 Notice. If any Licensed Patent or Assigned Patent is allegedly to be or is actually infringed by a Third Party in a manner relating to the Product or any Other Product, the Party first having knowledge of such infringement shall promptly notify the other in writing, which notice shall set forth the facts known to such Party of that infringement in reasonable detail.

 

5.2.2 Licensed Patents and Assigned Patents.  Subject to Section 5.3.1 and this Section 5.2.2, Buyer shall have the initial right, but not the obligation, through counsel of its choosing, to control the enforcement of the Licensed Patents and Assigned Patents against any activity involving the use, development, formulation, testing, assembly, packaging, transportation, importation, distribution, marketing, sale, offer for sale or other commercialization activity relating to a product containing asenapine (an “Infringement”), including the right to grant any Third Party rights and licenses necessary to conduct activities under the Licensed Patents and/or Assigned Patents.  In the event that Buyer decides not to enforce the Licensed Patents against such Infringement, Buyer shall provide written notice thereof to Seller within [***] after the date on which it provides notice or receives notice in accordance with Section 5.2.1, in which case Seller shall have the right, but not the obligation, to request that Buyer consent to Seller’s enforcing the applicable Licensed Patents against such Infringement, such consent not to be unreasonably withheld.  If Seller makes such request and Buyer so consents, then Seller shall have the ability to control enforcement of the Licensed Patents against such Infringement.  The Party enforcing the Licensed Patents against an Infringement shall be referred to herein as the “Enforcing Party.” [***]  If Seller gives such notice, the Parties shall discuss in good faith the appropriate actions to be taken in response to such infringement; provided, however, that if the Parties are unable to come to a mutually acceptable resolution within [***] of such notice, then the Enforcing Party shall be entitled to undertake such enforcement in its sole discretion, taking Seller’s concerns into good faith consideration.

 

5.2.3 Enforcement Procedure; Costs and Recovery.  In the event that an Enforcing Party asserts a claim or brings an infringement action ("Action") against an Infringement in accordance with Section 5.2.2, the other Party shall cooperate fully with the Enforcing Party in connection therewith, including furnishing powers of attorney, being joined as a party plaintiff in such Action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours.  The Enforcing Party in any Action against such alleged Infringement shall consider in good faith any comments from the other Party and shall keep the other Party reasonably informed of any steps taken to preclude such infringement (provided that neither Party shall not be required to disclose any information subject to the attorney/client privilege, attorney work product or other highly confidential information).  The Enforcing Party shall have the right to settle any such Action in its discretion; provided that the Enforcing Party shall not have any right to settle any such Action, including by the grant of any license rights, in a manner that materially negatively impacts the other Party or any of Affiliates or sublicensees, except (a) subject to Section 10.1(d), Buyer, as the Enforcing Party, without the consent of Seller, shall have the right to settle any such Action based on the Hatch-Waxman Act, and (b) otherwise, with the other Party’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed.  [***].  Any damages or other amounts collected shall be first allocated to reimburse the Parties for their costs and expenses in enforcing the Licensed Patents or Assigned Patents in order to make such recovery, which amounts shall be allocated [***] if insufficient to cover the totality of such expenses.  Any amount of recovery remaining after such reimbursement is made shall be [***].

 

5.3 Infringement Claims by Third Parties.

 

5.3.1 Defense of Third Party Claims.  If a Third Party asserts that a Patent Right owned or controlled by such Third Party is infringed by the Exploitation or Manufacture of the Product or any Other Product, the Party first obtaining knowledge of such a claim shall immediately provide the other Party notice of such claim along with the related facts in reasonable detail (provided that such Party shall not be required to disclose any information subject to the attorney/client privilege, attorney work product or other highly confidential information).

 

5.3.2 Buyer Territory.  Buyer shall have the first right, but not the obligation, to undertake and control such defense to the extent it relates to the Exploitation of the Product or any Other Product in the Buyer Territory, including the right to grant any Third Party rights and licenses necessary to conduct activities under the Licensed Patents or Assigned Patents in the Buyer Territory; provided that Buyer shall not be entitled to assert a claim or counterclaim against such Third Party based on any intellectual property rights of Seller other than the Licensed IP and Documentation without Seller’s prior written consent, such consent not to be unreasonably withheld, delayed or conditioned; and, provided, further, that prior to commencing any such claim or counterclaim hereunder, Buyer shall notify Seller of its intent to commence such claim or counterclaim, and if Seller in good faith believes that the assertion of any such claim or counterclaim by Buyer could have a material adverse effect on the Seller Territory IP or Seller’s rights thereunder, Seller shall promptly notify Buyer after receipt of such notice of intent and the Parties shall discuss in good faith the appropriate actions to be taken in response to such claim.  If Buyer does not accept control of the defense of a claim described in Section 5.3.1 against Seller within [***] after receiving notice thereof from, or giving notice thereof to, Seller pursuant to Section 5.3.1, then Seller shall have the right, but not the obligation, to defend against such claim at its expense, and in connection therewith Seller shall be entitled to assert a claim or counterclaim against such Third Party based on Seller’s Intellectual Property Rights or those of Buyer licensed to Seller hereunder.

 

5.3.3 Seller Territory.  Seller shall have the sole right, but not the obligation, to control that portion of the defense of any such claim that relates exclusively to the Exploitation of the Product or any Other Product in the Seller Territory.

 

5.3.4 Defense Procedure.  The Party that does not control the defense of a claim hereunder shall cooperate with the controlling Party, at the controlling Party’s reasonable request and expense, in any such defense and shall have the right, at its sole cost and expense, to be represented separately by counsel of its own choice in any such proceeding.  In the event a Party is entitled to and brings a claim or counterclaim in accordance with this Section 5.3, the other Party shall cooperate fully with the claiming Party, at the claiming Party’s cost and expense, in connection therewith, including furnishing powers of attorney, being joined as a party plaintiff in such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours.  In connection with any such defense or claim or counterclaim, the controlling Party shall consider in good faith any comments from the other Party and shall keep the other Party reasonably informed of any steps taken in connection with such defense, claim or counterclaim.

 

5.3.5 Allocation of Costs. All costs and expenses relating to any defense, settlement and judgments in Litigation commenced or defended pursuant to this Section 5.3 with respect to [***].  Any damages or other amounts collected shall [***].

 

5.4 Invalidity or Unenforceability Defenses or Actions. If a Third Party asserts, as a defense or as a counterclaim in any infringement action under Section 5.2 or claim or counterclaim asserted under Section 5.3, or in a declaratory judgment action or similar action or claim filed by such Third Party, in any such case, that any Licensed Patent or Assigned Patent is invalid or unenforceable (an “Invalidity Claim”), then the Party pursuing such infringement action, or the Party first obtaining knowledge of such declaratory judgment action, as the case may be, shall promptly give written notice thereof to the other Party.  With respect to the Licensed Patents or Assigned Patents, Buyer shall have the initial right, but not the obligation, through counsel of its choosing, to defend against such Invalidity Claim, and shall have the right to control settlement of such Invalidity Claim, including the right to grant any Third Party rights and licenses necessary to conduct activities under the Licensed Patents and/or Assigned Patents.  If Buyer defends such Invalidity Claim, all costs and expenses of defending such action or claim shall be [***].  Seller shall assist and cooperate with Buyer as Buyer may reasonably request, [***], from time to time in connection with its activities set forth in this Section 5.4, including by providing reasonable access to relevant documents and other evidence and making its employees available at reasonable business hours.  In connection with any such defense or claim or counterclaim, Buyer shall consider in good faith any comments from Seller and shall keep Seller reasonably informed of any steps taken, and shall provide copies of material documents filed, in connection with such defense, claim or counterclaim, excluding documents that are subject to a protective order.  With respect to the Licensed Patents, if Buyer does not assume the defense of any such Invalidity Claim by the date that is [***] prior to any required answer or response to such Invalidity Claim, then Seller shall have the right, but not the obligation, to undertake such defense, [***], and in such case Buyer shall assist and cooperate with Seller as Seller may reasonably request, [***], from time to time in connection with its activities set forth in this Section 5.4, including by providing reasonable access to relevant documents and other evidence and making its employees available at reasonable business hours.  In connection with any such defense or claim or counterclaim, Seller shall consider in good faith any comments from Buyer and shall keep Buyer reasonably informed of any steps taken, and shall provide copies of material documents filed, in connection with such defense, claim or counterclaim, excluding documents that are subject to a protective order.

 

5.5 Third Party Licenses.  If a Party determines that the Exploitation of the Product or any Other Product by Buyer, its Affiliates, licensees, Sublicensees or distributors in the Buyer Territory may be asserted to infringe or misappropriate any Patent or any other intellectual property right of a Third Party, such that Buyer, its Affiliates, licensees, Sublicensees or distributors may not be able to Manufacture or Exploit the Product or Other Product in the Buyer Territory without material risk of being found to infringe the Patent or intellectual property right of such Third Party, then such Party shall promptly notify the other Party of such determination, and Buyer shall have the first right, but not the obligation, to obtain a license or other rights from the applicable Third Party to avoid any such infringement or misappropriation, and take the lead on negotiating the terms of a license (or other rights) sufficient to permit Buyer, its Affiliates, licensees, Sublicensees, and distributors to Manufacture and Exploit the Product or any Other Product in the Buyer Territory;  provided that, except with Seller’s prior consent to the contrary, any such license shall not include exclusive rights granted to Buyer that would prevent Seller from exercising the rights retained by Seller pursuant to Section 2.2, unless Buyer also would have the unencumbered right, but not the obligation, for Buyer to transfer, by sublicense or otherwise, such rights to Seller and, upon Seller’s request, Buyer promptly transfers such rights to Seller.  [***]

 

            ARTICLE 6                                

 

LICENSED TRADEMARKS

 

6.1 Use of Licensed Trademarks.

 

6.1.1 Buyer hereby acknowledges that, as between Seller and Buyer, and subject to the rights granted to Buyer under this Agreement, Seller retains all right, title and interest in and to the Licensed Trademarks, together with all goodwill associated therewith and all registrations and registration applications therefor, on a worldwide basis and that nothing herein shall be construed to accord to Buyer any rights in the Licensed Trademarks except for the license rights expressly conferred by this Agreement.  Buyer shall not, and shall cause its Affiliates, and shall use commercially reasonable efforts to cause its Third Party licensees, Sublicensees and distributors not to, use in their respective businesses, any Trademark that is confusingly similar to or a colorable imitation of, misleading or deceptive with respect to or that dilutes any (or any part) of the Licensed Trademarks or Seller Marks.

 

6.1.2 Buyer shall, and shall cause its Affiliates Third Party licensees, Sublicensees and distributors to, (a) comply with the trademark usage guidelines attached hereto as Schedule 2, as such Schedule may be updated reasonably from time to time, upon [***]’ written notice to Buyer, (b) promptly make any changes to all future Product Labeling, packaging with respect to any Product or any Other Product, Product (or any Other Product) inserts and advertising, marketing, promotional or other materials, all to the extent bearing any of the Licensed Trademarks, as Seller may reasonably request to achieve compliance with clause (a), and (c) refrain from taking any action that is reasonably likely to endanger, destroy or similarly affect, in any material negative respect, the Licensed Trademarks or the value of the goodwill associated with the Licensed Trademarks or Seller’s rights in the Licensed Trademarks.

 

6.1.3 Buyer shall not, and shall cause its Affiliates, and shall use commercially reasonable efforts to cause its Third Party licensees, Sublicensees and distributors not to, (a) directly or indirectly, at any time challenge Seller’s rights, title or interest in and to the Licensed Trademarks or in any registration or registration application therefor in any jurisdiction, (b) knowingly do or cause to be done any action that would materially impair the rights of Seller in and to the Licensed Trademarks or in any registrations or registration applications therefor in any jurisdiction, (c) represent to any Third Party that it has, in any jurisdiction, any ownership rights in or to the Licensed Trademarks or in any registration or registration application therefor or any other rights in the Licensed Trademarks other than the specific license rights conferred by this Agreement, or (d) register or attempt to register the Licensed Trademarks, Seller Marks or any confusingly similar Trademark (including any translation or transliteration of any of the Licensed Trademarks or any colorable or confusing imitation thereof) as a Trademark with any Governmental Authority in its own name or in the name of any of its Affiliate or any Third Party in any jurisdiction.

 

6.1.4 Buyer acknowledges and agrees that no ownership rights are vested or created in the Licensed Trademarks anywhere in the world by the licenses and other rights granted in this Agreement (including, for clarity, under Section 2.1 of this Agreement, Section 2.3(b)(ii) of the Supply Agreement and the Clinical Supply Agreement) and that, as between the Parties, Seller shall retain and hold all ownership rights in the Licensed Trademarks and the Seller Marks worldwide.

 

6.2 Approval Procedures.

 

6.2.1 Buyer shall, prior to its use in commerce, submit to Seller for review and prior approval, any new, or any revisions to any existing, Product Label, packaging with respect to the Product or any Other Buyer Product, Product or any such Other Buyer Product insert and advertising, marketing, promotional or other materials, in each case, solely to the extent bearing a Licensed Trademark, that Buyer wishes to use on or in connection with the Exploitation of the Product or any Other Product by Buyer in the Buyer Territory; provided that the foregoing review and prior approval by Seller shall (a) not be required to the extent that the applicable use of the Licensed Trademark described above is in compliance with Section 6.1.2 and (b) be deemed completed and approved, if Seller fails to respond to any such request for approval within [***] of Seller’s receipt of such request.

 

6.2.2 At Seller’s request from time to time, Buyer shall, shall cause its Affiliates, and shall use commercially reasonable efforts to cause its Third Party licensees, Sublicensees and distributors to, furnish to Seller representative samples of all Product Labeling, Product packaging, Product inserts and advertising, and Product marketing, promotional or other materials in each case to the extent bearing any of the Licensed Trademarks, for quality control purposes, including web pages, brochures and stationery. 

 

6.2.3 Subject to Section 6.1.4, Buyer (and its Affiliates and Sublicensees) shall have the rights to select and use any new Trademark, including, for clarity, any trade dress, on or in connection with the Exploitation of the Product or any Other Product in the Buyer Territory (each, a “Buyer Trademark”), provided that such Buyer Trademarks are not confusingly similar to or otherwise dilute the Seller Marks or Licensed Trademarks in the Buyer Territory.

 

6.3 Clearance, Registration, Prosecution and Maintenance of Licensed Trademarks.  Seller shall be responsible for the clearance, registration, prosecution and maintenance of the Licensed Trademarks in the Buyer Territory.  All registrations and applications therefor shall be filed, prosecuted, registered and maintained in the name of Seller.  All costs and expenses of clearing, registering, prosecuting and maintaining the Licensed Trademarks in the Buyer Territory shall be borne [***].  Seller shall not, without Buyer’s prior written consent, not to be unreasonably withheld, conditioned or delayed, take any action to abandon or withdraw any application for any Licensed Trademark, or permit any registration for any Licensed Trademark to lapse, expire or be cancelled; provided that upon reasonable notice from Seller following Generic Entry, Seller may choose to assign[***] any Licensed Trademark in the Buyer Territory to Buyer and thereafter, Licensed Trademarks shall be deemed to exclude such assigned Trademark.  Seller shall execute such documents as may be required in the reasonable opinion of Buyer for Buyer to be entered as a “registered user” or recorded licensee of the Licensed Trademarks or to be removed as registered user or licensee thereof.

 

6.4 Enforcement of Licensed Trademarks. Buyer shall have the first right, but not the obligation, to enforce and defend the Licensed Trademarks in the Buyer Territory, including (a) after consultation with Seller, defending against any alleged, threatened or actual claim by a Third Party that the use of the Licensed Trademarks in the Buyer Territory infringes, dilutes, misappropriates or otherwise violates any Trademark or copyright of that Third Party or constitutes unfair trade practices or any other like offense, or any other claims as may be brought by a Third Party against a Party in connection with the use of or relating to the Licensed Trademarks with respect to the Product or any Other Product in the Buyer Territory and (b) taking such action as Buyer, after consultation with Seller and subject to Seller’s prior approval, deems necessary or commercially appropriate against a Third Party based on any alleged, threatened or actual infringement, dilution, misappropriation or other violation of, or unfair trade practices or any other like offense relating to, the Licensed Trademarks by a Third Party in the Buyer Territory.  Seller shall provide Buyer all reasonable assistance in connection with the foregoing activities of Buyer, including executing any reasonably necessary documents or instruments and making its employees available at reasonable business hours to assist in such defense or enforcement.  If Buyer plans to cease, or ceases, any action with respect to the enforcement or defense of any of the Licensed Trademarks in the Buyer Territory, Buyer shall notify Seller in writing at least [***] in advance of the due date of any action that is required with respect thereto and, in such event, Seller may elect (but shall not be obligated), on written notice to Buyer, to assume responsibility for and control over such enforcement or defense or to take any such action in its own name or in the name of Buyer.  [***] Any damages or other amounts recovered in any such proceeding shall be [***].  Each Party shall provide to the other Party all reasonable assistance requested by the other Party in connection with any such action, defense, claim or suit under this Section 6.4[***].  Buyer shall obtain Seller’s written consent before entering into any compromise, settlement or stipulation with respect to any such action, defense, claim or suit, such consent not to be unreasonably withheld, delayed or conditioned.  Buyer shall not knowingly take any position or submit any argument with respect to such action, defense, claim or suit that would be reasonably expected to materially endanger or impair the Licensed Trademarks or Seller’s rights therein or Seller’s corresponding Trademark rights outside the Buyer Territory.  Each Party[***] shall execute such powers of attorney or other instruments and shall take such other actions as the other Party may reasonably request as necessary to permit the other Party to assume responsibility for and control over the enforcement or defense of the Licensed Trademarks as permitted hereunder.

 

6.5 No Implied Rights.  Except as expressly provided in this Article 6, Buyer shall have no right to register, maintain, prosecute, enforce or defend the Licensed Trademarks.

 

       ARTICLE 7                                

 

LICENSED DOMAIN NAMES

 

7.1 Ownership and Goodwill.  Buyer acknowledges that it acquires no right, title or interest in the Licensed Domain Names other than the rights expressly set forth in this Agreement.  Seller shall own and retain all right, title and interest in and to the Licensed Domain Names.  Buyer agrees not to directly or indirectly contest or aid in contesting the ownership of the Licensed Domain Names, or to take any action whatsoever in derogation of Seller’s claimed rights therein.  Buyer or its Affiliates shall be prohibited from, and shall ensure that any agreements with Sublicensees prohibit such Sublicensees from, (a) using or registering any domain name or any social media identifier that consists of or incorporates, in whole or in part, (i) any of the Seller Marks or (ii) any term that is confusingly similar to, a colorable imitation of, or deceptive with respect to, or that dilutes any of the Seller Marks or (b) knowingly doing any act that is likely to materially impair Seller’s proprietary rights in or to the Licensed Domain Names.  Buyer shall submit to Seller for review and prior approval (such approval not to be unreasonably withheld, delayed or conditioned), any proposed use of any domain names or social media identifiers consisting of or incorporating the Licensed Trademarks, to the extent materially different from any previously approved use; provided that the foregoing review and prior approval by Seller shall be deemed completed and approved, if Seller fails to respond to any such request for approval within [***] of Seller’s receipt of such request; and provided, further, that with respect to any such domain names, upon such approval by Seller, whether deemed or granted, as applicable, such domain name shall be deemed a Licensed Domain Name hereunder.

 

7.2 Registration and Maintenance.

 

7.2.1 Subject to the remainder of this Section 7.2.1, (a) Seller, at its sole cost and expense, shall register, as applicable, and maintain the Licensed Domain Names and (b) neither Party shall intentionally take, or fail to take, any action which may reasonably be expected to jeopardize the use, value, validity, or enforceability of the Licensed Domain Names.  Seller shall not allow any registration of the Licensed Domain Names to lapse, without first providing Buyer with timely written notice thereof and offering to transfer to Buyer such Domain Name, at Seller’s sole cost and expense.

 

7.2.2 Seller shall use the technical contact and server information as Buyer may designate for use with each Licensed Domain Name, as Buyer may identify, to give Buyer control over the use of such Licensed Domain Name and over the administration and management of any website and web content associated with such Licensed Domain Name.  Seller shall not change the technical contact or server information for any of the Licensed Domain Names or take any action to direct Internet traffic to any of the Licensed Domain Names to any server or IP address other than those identified by Buyer.  Seller may, from time to time, change the registrar for a Licensed Domain Name and Buyer agrees to assist and cooperate with Seller, the old registrar or the new registrar in any way necessary to effectuate such a change of registrar.

 

7.3 Country-Specific Traffic.  Buyer shall cause traffic to the Licensed Domain Names, which traffic originates within a country outside the Buyer Territory, to be re-directed to such ccTLD as Seller may designate in writing.  Among other techniques that the Parties may mutually agree for re-directing traffic is the placement of a hyperlink on the homepage of the generic “.com” top-level Licensed Domain Names, which hyperlink shall be placed in a manner, form and style mutually agreeable to the Parties, each acting reasonably.  Without limitation of the foregoing, (a) Buyer shall ensure that the principal pages of each Licensed Domain Names display in prominent font that such Licensed Domain Name is “intended only for residents of the United States, its territories, and Puerto Rico.” and (b) none of the websites corresponding to each of the Licensed Domain Names shall include or otherwise use any Seller Mark, except as may be expressly agreed in writing by Seller.

 

7.4 Enforcement. If Buyer becomes aware of any use, trafficking, or registration of a Licensed Domain Name, Buyer shall promptly notify Seller of such use or trafficking or registration.  Seller may take any action and institute legal, administrative or other proceedings relating to the use, trafficking, or registration of such Licensed Domain Names as Seller, in its sole discretion, deems fit.  Buyer shall execute any and all documents and shall take such actions as may be reasonably necessary to carry out such proceeding or Litigation, including becoming a nominal party to any legal action.  If Seller fails to take any action within [***] after notification of such use, trafficking or registration, or notifies Buyer that it will not take any action, then Buyer may take any action and institute legal, administrative or other proceedings relating to such use, trafficking or registration as Buyer, in its sole discretion, deems appropriate.  Seller agrees to execute any and all documents and to do such acts as may be reasonably necessary to carry out such proceeding or Litigation, including becoming a nominal party to any legal action.  [***]

 

       ARTICLE 8                                

 

CONFIDENTIALITY AND NON-DISCLOSURE

 

The rights and obligations of each of the Parties with respect to Confidential Information hereunder shall be governed by the terms of Section 5.4 of the Asset Purchase Agreement.

 

       ARTICLE 9                                

 

DISCLAIMER OF WARRANTIES

 

 

9.1 BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE 3 OF THE ASSET PURCHASE AGREEMENT, SELLER HAS MADE NO REPRESENTATION OR WARRANTY WHATSOEVER TO BUYER, EXPRESS OR IMPLIED, RELATED TO THE LICENSED IP AND DOCUMENTATION OR THE TRANSACTIONS CONTEMPLATED HEREBY.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE 3 OF THE ASSET PURCHASE AGREEMENT, BUYER IS LICENSING THE RIGHTS GRANTED TO IT HEREUNDER WITHOUT ANY OTHER EXPRESS WARRANTIES OR ANY IMPLIED WARRANTIES, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, INCLUDING ANY WARRANTY OF QUALITY, THE FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, CONDITION OF THE ASSETS, AS TO THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF ANY PERSON OR AS TO ANY OTHER MATTER.

 

ARTICLE 10      

                          

                                                              INDEMNITY

 

10.1 Indemnification of Seller. Subject to this Article 10, Buyer shall indemnify, defend and hold harmless Seller and its Affiliates, and their respective licensors, licensees, officers, directors, employees and agents (collectively, “Seller Indemnitees”) from and against any and all Losses incurred by them in connection with any and all Litigation by Third Parties (collectively, “Third Party Claims”) against a Seller Indemnitee solely to the extent arising from or occurring as a result of:  (a) any breach by Buyer of any term of this Agreement (including any breach of Section 3.3 or Section 3.4 hereof); (b) the fraud, gross negligence or willful misconduct on the part of Buyer or any of its Affiliates or Sublicensees in the performance of Buyer’s obligations under this Agreement; (c) the Manufacture and Exploitation of the Product or any Other Product by or on behalf of Buyer, its Affiliates and Sublicensees (excluding, for clarity, the Manufacture of Supplied Product by Seller pursuant to the Supply Agreement); or (d) any settlement by Buyer as the Enforcing Party of an Infringement action pursuant to Section 5.2.3(a), except, in each case ((a),(b), (c) and (d) above), to the extent of those Third Party Claims arising from or occurring as a result of matters covered by subsections (a) or (b) of Section 10.2, subsections (a) or (b) in Section 7.2 of the Supply Agreement or indemnification obligations of Seller or its Affiliates under the Clinical Supply Agreement, as to which Third Party Claims each Party shall indemnify the other Party and the Seller Indemnitees or the Buyer Indemnitees, as applicable, to the extent of its liability for such Third Party Claims.

 

10.2 Indemnification of Buyer. Subject to this Article 10, Seller shall indemnify, defend and hold harmless Buyer and its Affiliates and Sublicensees, and their respective officers, directors, employees and agents (collectively, “Buyer Indemnitees”) from and against any and all Losses incurred by them in connection with any and all Third Party Claims against any such Buyer Indemnitee solely to the extent arising from or occurring as a result of: (a) any breach by Seller of any term of this Agreement or (b) the fraud, gross negligence or willful misconduct on the part of Seller or any of its Affiliates in the performance of Seller’s obligations under this Agreement, except, in each case ((a) and (b) above), to the extent of those Third Party Claims arising from or occurring as a result of matters covered by subsections (a), (b), (c) or (d) of Section 10.1, subsections (a), (b) or (c) of Section 7.1 of the Supply Agreement or indemnification obligations of Buyer or its Affiliates under the Clinical Supply Agreement, as to which Third Party Claims each Party shall indemnify the other Party and the Seller Indemnitees or the Buyer Indemnitees, as applicable, to the extent of its liability for such Third Party Claims.

 

10.3 Indemnification Procedures.  All indemnification claims in respect of Buyer or any Buyer Indemnitee shall be made solely by Buyer, and all indemnification claims in respect of Seller or any Seller Indemnitee shall be made solely by Seller and, in each case, shall be governed by Section 7.2 of the Asset Purchase Agreement.  Notwithstanding anything herein to the contrary, the Parties’ respective indemnification obligations under this Article 10 shall not apply to any Losses or Third Party Claims for which such Party is entitled to indemnification under the Asset Purchase Agreement (excluding for this purpose, application of the limitations in Section 7.3 of the Asset Purchase Agreement).

 

10.4 Limitation on Damages and Liability. OTHER THAN WITH RESPECT TO CLAIMS UNDER SECTIONS 10. AND 10.2, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT WITH RESPECT TO A CLAIM ARISING OUT OF FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, MULTIPLE, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR FOR LOST PROFITS, REVENUE OR INCOME, DIMINUTION IN VALUE OR LOSS OF BUSINESS OPPORTUNITY, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE, ARISING OUT OF OR WITH RESPECT TO THIS AGREEMENT, EVEN IF THAT PARTY HAS BEEN PLACED ON NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.  FOR CLARITY, THE FOREGOING SHALL NOT LIMIT EITHER PARTY’S RIGHTS OR OBLIGATIONS UNDER SECTION 10.1 OR 10.2 WITH RESPECT TO THIRD PARTY CLAIMS AND LOSSES.

 

10.5 Insurance. As of the Effective Date, Buyer shall have and maintain adequate insurance coverage, which policies shall be in effect during the Term, including: (a) products liability coverage and comprehensive general liability insurance of not less than [***]; (b) auto liability insurance of not less than [***]; and (c) any other insurance, including workers’ compensation, cyber liability and professional liability, necessary to cover its obligations under this Agreement and that are consistent with normal business practices of prudent companies similarly situated; provided that if any such policy is held on a claims-made basis, such policy shall be maintained throughout the Term and for a period of [***] thereafter.  Such policies shall be blanket policies and shall insure against Liability on the part of Buyer and any of its Affiliates, as their interests may appear, due to injury, disability or death of any person or persons, or injury to property, arising from the Exploitation and Manufacture of the Product and any Other Product.  Such policies maintained by Buyer shall name Seller and its Affiliates as additional insureds.  All insurers providing such policies shall have an AM Best (A-) or higher rating. Buyer shall provide Seller with certificates of insurance evidencing that the policies required to be maintained by Buyer hereunder are in full force and effect annually and, upon Seller’s request, copies of such policies shall be provided. Should any of the policies be cancelled, terminated or otherwise materially altered before the expiration date thereof, notice will be delivered in accordance with the policy provisions in writing to Seller.  Buyer’s insurers shall waive all rights of subrogation against Seller, its Affiliates and its and their officers, directors and employees.  Buyer’s insurance shall be primary with no contribution by Seller’s insurance.

 

  ARTICLE 11   

                             

                                              TERM 

 

11.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue in full force and effect until terminated upon the mutual written agreement of Buyer and Seller at any time (such period, the “Term”).

 

11.2 Consequences of Termination.

 

11.2.1 Termination of Agreement.  Upon the termination of this Agreement by agreement of the Parties (as provided in Section 11.1), all of the licenses granted by the Parties under this Agreement, and any sublicenses related thereto entered into by either Party as permitted hereunder, shall terminate in their entirety.

 

11.2.2 Accrued Rights.  The termination of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination.  Such termination shall not relieve a Party from obligations that are expressly indicated to survive the termination of this Agreement.

 

11.2.3 Survival.  Without limiting the foregoing, Articles 8, 9, 10, 11 and 12 shall survive the termination of this Agreement for any reason.

 

   ARTICLE 12          

                      

                                                              MISCELLANEOUS

                                  12.1 Governing Law, Jurisdiction, Venue and Service.

 

12.1.1 Governing Law.  This Agreement shall be governed by and construed in accordance with 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.

 

12.1.2 Jurisdiction.  Subject to Sections 12.2, 12.3 and 12.12, the Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of New York and the United States District Court for the Southern District of New York for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement, and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts.  The Parties irrevocably and unconditionally waive their right to a jury trial.

 

12.1.3 Venue. Subject to Sections 12.2 and 12.3, the Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the courts of the State of New York or in the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

12.1.4 Service.  Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 12.4.2 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.

 

12.2 Dispute Resolution.  Except as expressly set forth herein, any Dispute arising hereunder shall be resolved in accordance with Section 9.10 of the Asset Purchase Agreement.  With respect to any Dispute relating to Seller’s rights or Buyer’s obligations under Article 6 of this Agreement, the Parties agree (a) that any such Dispute shall not be an Excluded Dispute and (b) to first attempt to resolve any such Dispute through good faith negotiations between in-house trademark counsel or other appropriate representatives appointed by the Parties (or their delegates) with the authority to settle such Dispute.  If such Dispute cannot be resolved through negotiations between such representatives within [***] thereafter or within such other time period as the Parties may agree, then either Party may elect to resolve such Dispute in accordance with Section 9.10 of the Asset Purchase Agreement.

 

12.3 Equitable Relief.  The Parties agree that irreparable damage would occur in the event that the terms of Article 6 of this Agreement are breached.  It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions, whether preliminary or permanent, to prevent such breaches of Article 6 and to cause by an order of specific performance requiring compliance with the terms and provisions of Article 6, in any court of the United States or any state having jurisdiction, in each case, solely to the extent required to cure the applicable breach.  Such injunctive relief would be in addition to any other remedy to which the applicable Party is entitled at law or in equity.  Each Party hereby waives (a) any requirement that the other Party post a bond or other security as a condition for obtaining any such relief, and (b) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate.  For clarity, the Parties agree that no injunction hereunder shall be sought by or granted to Seller to prevent Buyer from using the Licensed Trademarks in connection with Exploitation of Products in the Buyer Territory to the extent such use is in compliance with Article 6.

 

12.4 Notices.

 

12.4.1 Notice Requirements.  Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement (each, a “Notice”) 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 overnight registered mail, courier or express delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 12.4.2 or to such other address as the Party to whom notice is to be given may have provided to the other Party at least 10 days’ prior to such address taking effect in accordance with this Section 12.  Such Notice shall be deemed to have been received: (a) as of the date delivered by hand or by overnight registered mail, courier or express delivery service; or (b) on the day sent by facsimile provided that the sender had received confirmation of transmission (by facsimile receipt confirmation or confirmation by telephone or email) prior to 6:00 p.m. Eastern Time on such day (and if confirmation is received after 6:00 p.m. Eastern Time, such Notice shall be deemed to have been delivered on the following Business Day).  Any Notice delivered by facsimile shall be confirmed by a hard copy delivered promptly thereafter.

 

12.4.2 Address for Notice.

 

If to Seller, to:

 

Merck Sharp & Dohme BV

Waarderweg 39

2031 BN

Haarlem

Netherlands

Attention: Managing Director

Facsimile: [***]

 

with a copy (which shall not constitute notice) to:

 

Merck Sharp & Dohme Corp.

One Merck Drive

Whitehouse Station, NJ 08889

United States of America

Facsimile:  [***]

Attention:  Office of Secretary

 

and to:

 

Covington & Burling LLP

1201 Pennsylvania Avenue, N.W.

Washington, DC  20004

Facsimile:  (202) 662-6291

Attention:  John Hurvitz

Michael J. Riella

 

If to Buyer, to:

 

Forest Laboratories Holdings Limited

Cumberland House

9th Floor

1 Victoria Street

Hamilton HM 11, Bermuda

Attention: Chief Legal Officer

Facsimile: [***]

 

with a copy (which shall not constitute notice) to:

 

Dentons US LLP

101 JFK Parkway, Suite 400

Short Hills, New Jersey 07078

Attention: John L. Cleary, II

Facsimile: (973) 912-7199

12.5 No Benefit to Third Parties.  The covenants and agreements set forth in this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and, except for the rights of Buyer Indemnitees and Seller Indemnitees under Article 10, they shall not be construed as conferring any rights on any other Persons.

 

12.6 Waiver and Non-Exclusion of Remedies.  Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition.  The waiver by any Party of any right hereunder or of the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.  The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by applicable Law or otherwise available except as expressly set forth herein.

 

12.7 Expenses. Except as otherwise specified herein or in the Asset Purchase Agreement or in any other Ancillary Agreement, each Party shall bear any costs and expenses incurred by it with respect to the transactions contemplated herein.

 

12.8 Assignment.  Except as expressly set forth in this Agreement, neither Party shall have the right or the power to assign, in whole or in part, any of its rights, or delegate or subcontract the performance of any of its obligations under this Agreement without the prior written authorization of the other Party, which authorization shall not be unreasonably withheld, conditioned or delayed; provided, however, that either Party may assign or delegate any or all of its rights or obligations hereunder without such prior written authorization (a) to an Affiliate or (b) to its successor in interest in connection with a merger, consolidation or similar change of control transaction of such Party or any divestiture due to considerations under Section 4.4 of the Asset Purchase Agreement.  Further, Buyer may in any event grant sublicenses as provided in Section 2.3.  Subject to the foregoing, it shall not be unreasonable for a Party (the “Consenting Party”) to refuse to authorize any assignment or subcontract proposed by the other Party (the “Assigning Party”) and that is not otherwise provided for in this Agreement in the event that: [***].  Any permitted assignment or delegation hereunder by a Party shall not relieve such Party of any of its obligations under this Agreement, unless, with respect to an assignment to a Third Party, such assignee agrees in writing to assume such Party’s obligations under this Agreement, in which case such Party shall be relieved of its obligations hereunder from and after the effective date of such assignment and assumption.  Subject to the foregoing, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns.

 

12.9 Use of Affiliates. Seller shall have the right to exercise its rights and perform its obligations under this Agreement either itself or through any of its Affiliates.

 

12.10 Amendment.  This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by both Parties.

 

12.11 Independent Contractors. In the exercise of their respective rights, and the performance of their respective obligations, under this Agreement, the Parties are, and shall remain, independent contractors.  Nothing in this Agreement shall be construed to constitute the Parties as partners, joint venturers, or participants in a joint enterprise or undertaking, or to constitute either of the Parties as the agent of the other Party for any purpose whatsoever.  Neither Party shall bind, or attempt to bind, the other Party hereto to any contract or the performance of any other obligation, or represent to any Third Party that it is authorized to enter into any contract or binding obligation on behalf of the other Party hereto.

 

12.12 Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties.

 

12.13 English Language.  This Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language.  Any translation into any other language shall not be an official version thereof, and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.

 

12.14 Counterparts.  This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed original counterpart of this Agreement.

 

12.15 Entire Agreement.  This Agreement, together with the Schedules and Exhibits expressly contemplated hereby and attached hereto, the Asset Purchase Agreement and the other Ancillary Agreements, contain the entire agreement between the Parties with respect to the transactions contemplated hereby and supersede all prior agreements, understandings, promises and representations, whether written or oral, between the Parties with respect to the subject matter hereof.  In the event of any inconsistency between any such Schedules and Exhibits and this Agreement, the terms of this Agreement shall govern.

 

12.16 Construction.  Except where the context otherwise requires, wherever used, the singular includes 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 does not limit the generality of any description preceding such term, and is deemed to mean “including without limitation”.  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.  Unless otherwise specified or where the context otherwise requires, (a) references in this Agreement to any Article, Section, Schedule or Exhibit are references to such Article, Section, Schedule or Exhibit of this Agreement; (b) references in any Section to any clause are references to such clause of such Section; (c) “hereof,” “hereto,” “hereby,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) references to a Person are also to its permitted successors and assigns; (e) references to a Law include any amendment or modification to such Law and any rules or regulations issued thereunder, in each case, as in effect at the relevant time of reference thereto; (f) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the relevant time of reference thereto; and (g) references to monetary amounts are denominated in United States Dollars.

 

 

 

[Signature page follows]

 

 

  

  

  

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.

 

 

 

MERCK SHARP & DOHME BV                                                                           FOREST LABORATORIES

                                                                           HOLDINGS LIMITED

 

By:/s/ M.L.P.J. Mol-Arts                                                      By: /s/ Francis I. Perier, Jr.                                                      

 

Name: M.L.P.J. Mol-Arts                                                      Name: Francis I. Perier, Jr.                                                                

 

Title: General Manager, MSD Oss                                                                      Title: Secretary                                                      

 

 

 

 

 

 

  

  

  

SCHEDULE 1:

 

SELLER MARKS

 

 

“Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.,

Whitehouse Station, NJ 08889, USA”.

 

 

“MSD Oss B.V., a subsidiary of Merck & Co., Inc.”

 

 

 

[Missing Graphic Reference]

 

 

 

  

  

  

SCHEDULE 2:

 

TRADEMARK USAGE GUIDELINES

 

 

 

In order for the Licensed Trademarks to maintain their value and enforceability, they must be used in the proper way on packaging and labeling, in advertising and promotional materials, and on websites and other Internet uses. The following guidelines and standards must be followed in order to achieve this objective, as well to clarify usage of the Licensed Domain Name.

 

[***]

 

 

  

  

  

[***]ex1010supply.htm

[***] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

SUPPLY AGREEMENT

 

 

 

By and between

 

 

Merck Sharp & Dohme BV

 

 

and

 

 

Forest Laboratories Ireland Limited

 

 

 

 

Dated as of January 10, 2014

 

  

  

  

 

TABLE OF CONTENTS

 

 

1. DEFINITIONS                                                                                                                                                 

 

 

2. SUPPLY OF PRODUCT                                                                                                                                                 

 

2.1 Supply of Supplied Product                                                                                                                                      

 

2.2 Use of Supplied Product                                                                                                                                      

 

2.3 Shortage                                                                                                                                      

 

2.4 Safety Stock                                                                                                                                      

 

2.5 Coordination                                                                                                                                      

 

2.6 Specifications                                                                                                                                      

 

2.7 2.5 mg Dosage Strength                                                                                                                                      

 

 

3. FORECASTS AND ORDERS                                                                                                                                                 

 

3.1 Long Term Annual Non-binding Forecast                                                                                                                                      

 

3.2 Rolling Forecasts                                                                                                                                      

 

3.3 Firm Orders                                                                                                                                      

 

3.4 Terms of Sale                                                                                                                                      

 

3.5 Expiry Dating                                                                                                                                      

 

 

4. PRICE; PAYMENT AND TERMS OF SALE                                                                                                                                                 

 

4.1 Supply Price                                                                                                                                      

 

4.2 Reports                                                                                                                                      

 

4.3 Payments                                                                                                                                      

 

4.4 Delivery                                                                                                                                      

 

4.5 Title and Risk of Loss                                                                                                                                      

 

4.6 Terms of Sale                                                                                                                                      

 

 

5. PACKAGING TRANSFER                                                                                                                                                 

 

5.1 Packaging Transfer                                                                                                                                      

 

5.2 Reimbursement for Packaging Transfer                                                                                                                                      

 

5.3 Buyer Responsibility Following Packaging Transfer                                                                                                                                      

 

 

6. WARRANTY AND LIMITATIONS                                                                                                                                                 

 

6.1 Warranties                                                                                                                                      

 

6.2 Claims                                                                                                                                      

 

 

7. INDEMNIFICATION, LIMITATION OF LIABILITY AND INSURANCE                                                                                                                                                 

 

7.1 Indemnification by Buyer                                                                                                                                      

 

7.2 Indemnification by Seller                                                                                                                                      

 

7.3 Procedures for Indemnification                                                                                                                                      

 

7.4 Limitation of Liability                                                                                                                                      

 

7.5 Insurance                                                                                                                                      

 

 

8. AUDIT AND REGULATORY ACTIONS; QUALITY                                                                                                                                                 

 

8.1 Governmental Authority Visits and Inspections                                                                                                                                      

 

8.2 Audit                                                                                                                                      

 

8.3 Quality Agreement                                                                                                                                      

 

8.4 Changes                                                                                                                                      

 

8.5 Subcontracting                                                                                                                                      

 

8.6 Compliance with Law                                                                                                                                      

 

 

9. WITHDRAWALS AND RECALLS                                                                                                                                                 

 

9.1 Withdrawal                                                                                                                                      

 

9.2 Administration of Recalls                                                                                                                                      

 

9.3 Disputes Related to Direct Expenses                                                                                                                                      

 

 

10. CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS                                                                                                                                                 

 

10.1 Confidentiality and Non-Use                                                                                                                                      

 

10.2 Publicity/Use of Names                                                                                                                                      

 

 

11. TERM AND TERMINATION                                                                                                                                                 

 

11.1 Term                                                                                                                                      

 

11.2 Termination by Either Party                                                                                                                                      

 

11.3 Effect of Expiration and Termination                                                                                                                                      

 

11.4 Survival                                                                                                                                      

 

 

12. GENERAL PROVISIONS                                                                                                                                                 

 

12.1 Force Majeure                                                                                                                                      

 

12.2 Governing Law                                                                                                                                      

 

12.3 Dispute Resolution                                                                                                                                      

 

12.4 Assignment                                                                                                                                      

 

12.5 Amendment                                                                                                                                      

 

12.6 Entire Agreement                                                                                                                                      

 

12.7 Severability                                                                                                                                      

 

12.8 Headings                                                                                                                                      

 

12.9 Further Assurances                                                                                                                                      

 

12.10 Counterparts                                                                                                                                      

 

12.11 Notices                                                                                                                                      

 

12.12 No Benefit to Third Parties                                                                                                                                      

 

12.13 Expenses                                                                                                                                      

 

12.14 Waiver and Non-Exclusion of Remedies                                                                                                                                      

 

12.15 Equitable Relief                                                                                                                                      

 

12.16 Independent Contractors                                                                                                                                      

 

12.17 English Language                                                                                                                                      

 

12.18 Construction                                                                                                                                      

 

 

SCHEDULES

Schedule 1                      Seller Supply Agreements

Schedule 2                      Technology Transfer

Schedule 3                      Packaging Transfer

Schedule 4                      Minimum Batch Sizes

 

 

 

 

 

  

  

  

SUPPLY AGREEMENT

 

This SUPPLY AGREEMENT (this “Agreement”), effective as of the 10th day of January, 2014 (the “Effective Date”), is made and entered into by and between Merck Sharp & Dohme BV, a limited liability company (a Besloten Vennootschap) organized and existing under the Laws of the Netherlands (“Seller”), and Forest Laboratories Ireland Limited, a corporation organized and existing under the Laws of Ireland (“Buyer”).  Seller and Buyer are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

WITNESSETH:

 

WHEREAS, Seller and Buyer are parties to that certain Asset Purchase Agreement, dated as of November 29, 2013 (the “Asset Purchase Agreement”), and that certain License Agreement, dated as of the date hereof (the “License Agreement”), pursuant to which, effective as of the Closing (as defined in the Asset Purchase Agreement), Buyer is purchasing from Seller certain assets and licensing certain rights related to the Product and the Product Business in the Buyer Territory (each as defined in the Asset Purchase Agreement); and

 

WHEREAS, Seller has agreed to supply or arrange for the supply of, and Buyer has agreed to purchase, all of Buyer’s (and its Affiliates’ and Sublicensee’s) Requirements (as defined herein) of Supplied Product in the Buyer Territory, subject to and on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions hereinafter set forth and set forth in the Asset Purchase Agreement, the other Ancillary Agreements (as defined in the Asset Purchase Agreement), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

	
1.  

	
DEFINITIONS.

 

Unless otherwise specifically provided herein, the following terms shall have the meanings set forth in this Section 1 and capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed thereto in the Asset Purchase Agreement or the License Agreement, as applicable.

 

	
1.1  

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

 

	
1.2  

	
“Assigning Party” has the meaning set forth in Section 12.4.

 

	
1.3  

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

 

	
1.4  

	
“Back-up Manufacturing License” has the meaning set forth in Section 2.3(b)(ii).

 

	
1.5  

	
“Breaching Party” has the meaning set forth in Section 11.2(b).

 

	
1.6  

	
“Buyer” has the meaning set forth in the preamble hereto.

 

	
1.7  

	
“[***]” has the meaning set forth in Section 2.3(b)(ii).

 

	
1.8  

	
“Change” has the meaning set forth in Section 8.4(a).

 

	
1.9  

	
“Consenting Party” has the meaning set forth in Section 12.4.

 

	
1.10  

	
“Constrained Forecast” has the meaning set forth in Section 3.2(b).

 

	
1.11  

	
“Control” means, with respect to any know-how, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise (other than by operation of the licenses and other grants set forth in the License Agreement), to assign or grant a license, sublicense or other right to or under such know-how as provided for herein without violating the terms of any Contract with any Third Party.

 

	
1.12  

	
“Cost Price Increase” has the meaning set forth in Section 4.1(c).

 

	
1.13  

	
“Deductible” has the meaning set forth in Section 7.4(b).

 

	
1.14  

	
“Defective Product” has the meaning set forth in Section 6.2(a).

 

	
1.15  

	
“Delivery” has the meaning set forth in Section 4.4(a), and the term “Delivered” shall have a corresponding definition.

 

	
1.16  

	
“Direct Expenses” means actual, documented out-of-pocket costs and expenses incurred by a Party or its Affiliates as the direct result of a Recall or Withdrawal, as applicable, such as costs of goods (including Supplied Product), notification, packing, shipping, distribution and destruction costs and required reimbursement to Third Parties, but shall not include any indirect costs or expenses such as administrative costs, overhead, loss of reputation or goodwill, or lost profits or any other costs or expenses not associated directly with the Supplied Product that is the subject of the Recall or Withdrawal.

 

	
1.17  

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

 

	
1.18  

	
“Firm Orders” has the meaning set forth in Section 3.3(a).

 

	
1.19  

	
“Floor Price” means, subject to Section 4.1(c), an amount equal to [***]; provided, however, that, upon Packaging Transfer, the then-current Floor Price shall be decreased by [***], to reflect the reduction of [***], unless the Parties otherwise mutually agree in writing.

 

	
1.20  

	
“Force Majeure” has the meaning set forth in Section 12.1(a).

 

	
1.21  

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

 

	
1.22  

	
“Manufacturing Changes” has the meaning set forth in Section 8.4(b).

 

	
1.23  

	
“Manufacturing Price Increase” has the meaning set forth in Section 4.1(c).

 

	
1.24  

	
“Manufacturing Price Reduction” has the meaning set forth in Section 4.1(c).

 

	
1.25  

	
“Notice” has the meaning set forth in Section 12.11(a).

 

	
1.26  

	
“Packaging Transfer” means the technology transfer of all know-how and specifications needed to conduct packaging of Supplied Product, as in the categories set forth on Schedule 3 and contemplated in Section 5.1.

 

	
1.27  

	
“Packaging Transfer Date” means the completion of Packaging Transfer; provided that in no event shall the Packaging Transfer Date occur after [***].

 

	
1.28  

	
“Party(ies)” has the meaning set forth in the preamble hereto.

 

	
1.29  

	
“Quality Executives” means (a) for Seller, Senior Vice President of Quality and (b) for Buyer, [***], VP, FRI Corporate Quality & Compliance.

 

	
1.30  

	
“Recall” has the meaning set forth in Section 9.2.

 

	
1.31  

	
“Requirements” means all quantities of the Supplied Product required or reasonably needed by Buyer (or its Affiliate or Sublicensee) for development, use, marketing, distribution, sale, commercialization and other Exploitation of the Product during the Supply Term; provided, that Requirements shall not include any Product required by Buyer for carrying out the Phase IV Commitments.

 

	
1.32  

	
“Seller” has the meaning set forth in the preamble hereto.

 

	
1.33  

	
“Seller Supply Agreements” means the agreements set forth in Schedule 1 hereto, as such schedule may be updated from time to time upon written notice by Seller.

 

	
1.34  

	
“Source of Supply” means a Seller Affiliate, a Supplier or, upon Buyer’s consent, such consent not to be unreasonably withheld, delayed or conditioned, a Third Party designated by Seller to act on Seller’s behalf as supplier of Supplied Product to Buyer under this Agreement.

 

	
1.35  

	
“Specifications” means the specifications for (a) the Product as set forth in the NDA #022-117; and (b) the 2.5 mg Dosage Strength, as set forth in IND #70329 and IND #51641, approved by the FDA, as applicable, in each case, as such specifications may be modified in accordance with the terms and conditions of this Agreement.

 

	
1.36  

	
“Supplied Product” means the Product or (if applicable) the 2.5 mg Dosage Strength, each:  (a) prior to the end of the Calendar Quarter in which Packaging Transfer is completed, in finished, packaged form; and (b) thereafter, in pre-printed, bulk blister packs.  For clarity, all Closing Inventory shall be included within Supplied Product, and subject to all provisions relating to Supplied Product, except as otherwise provided in Section 3.3(a).

 

	
1.37  

	
“Supplier” means, with respect to a Seller Supply Agreement, a Third Party signatory to such Seller Supply Agreement.

 

	
1.38  

	
“Supply Deficiency” has the meaning set forth in Section 2.3(b)(i).

 

	
1.39  

	
“Supply Failure” has the meaning set forth in Section 2.3(b)(ii).

 

	
1.40  

	
“Supply Price” with respect to Supplied Product means [***]; provided that, upon Packaging Transfer, the Supply Price as a percentage of Net Sales shall be decreased by an amount equal to the [***] decrease in then-current Floor Price.  Supply Price with respect to Owned Generic Product means [***].  Supply Price with respect to Authorized Generic Product (authorized pursuant to Section 5.2.3 of the License Agreement) is [***].

 

	
1.41  

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

 

	
1.42  

	
“Technology Transfer” has the meaning set forth in Section 2.3(b)(ii).

 

	
1.43  

	
“Third Party Claims” has the meaning set forth in Section 7.1.

 

	
1.44  

	
“Visual Inspection” has the meaning set forth in Section 6.2(a).

 

	
1.45  

	
“Withdrawal” has the meaning set forth in Section 9.1.

 

	
1.46  

	
“Year Price Adjustment” has the meaning set forth in Section 4.1(c).

 

	
2.     

	
SUPPLY OF PRODUCT.

 

	
2.1  

	
Supply of Supplied Product.  Subject to the other terms and conditions hereof, (a) Seller shall supply (which may include arranging for a Source of Supply to supply to Buyer, with Delivery terms in accordance with this Agreement or otherwise acceptable to Buyer), and Buyer shall purchase from Seller, the amount of Supplied Product equal to all of Buyer’s (and its Affiliates’ and Sublicensees’) Requirements other than Requirements of Buyer for a sub-licensee pursuant to Section 5.2.3(a) of the License Agreement and (b) Buyer shall not purchase, or permit any Affiliate to purchase, any Supplied Product or any other product containing asenapine for (re)sale from any supplier other than Seller, except as otherwise provided in, and subject to the terms and conditions of, Section 2.3(b)(ii).  All Supplied Product supplied to Buyer hereunder shall be packaged and labeled in accordance with the Specifications, Regulatory Approvals and applicable Laws and as otherwise may be agreed by the Parties in writing.  It is understood that the Clinical Supply Agreement provides for supply to Buyer of Product clinical materials for use by Buyer in certain clinical trials as contemplated in that agreement.  Seller shall, [***], initiate, provide and manage all stability, testing, retain and other similar programs required by applicable Law and performed by Seller as of the Effective Date.

 

	
2.2  

	
Use of Supplied Product.  Buyer agrees that all Supplied Product supplied hereunder shall be used solely for development, marketing, distribution, sale, Exploitation and other commercialization in the Buyer Territory pursuant to the terms and conditions of the Asset Purchase Agreement, License Agreement and Transition Services Agreement.

 

	
2.3  

	
Shortage.

 

	
(a)  

	
Shortage of Supplied Product.  In the event that Seller fails to supply, or expects that it will not be able to supply, to Buyer any amounts of Supplied Product ordered by Buyer under a Firm Order by the specified delivery date in such Firm Order, due to a shortage of raw materials, resources or existing capacity, or for any other reason (including due to a Force Majeure) (a “Supply Shortage”), then Seller shall notify Buyer in writing of such circumstances as soon as reasonably practicable, including the underlying reasons for such shortage, proposed remedial measures and, to the extent it can be reasonably determined, the date such inability to supply Supplied Product is expected to end.  As to any such Supply Shortage, or expected Supply Shortage, Seller shall use good faith, diligent efforts to resolve such problem and deliver the shortfall of ordered Products as soon as reasonably practicable.  Further, in such event, the Parties shall negotiate in good faith and seek to agree on a reasonable delivery schedule (in light of the circumstances) for such Supplied Product, provided that any such negotiation or agreement shall not relieve Seller of its supply obligations hereunder.

 

	
(b)  

	
Consequences of Shortage of Supplied Product for any reason (including Force Majeure).

 

	
(i)  

	
Supply Deficiency of Supplied Product.  In the event that Seller fails to supply to Buyer, in accordance with the terms of this Agreement, at least [***] of the aggregate quantity of Supplied Product ordered in Firm Orders submitted over [***] (a “Supply Deficiency”), then the Parties shall meet as soon as reasonably practicable following the first occurrence of any Supply Deficiency in order to discuss the source and causes of such Supply Deficiency and suggested remedies therefor.  Seller shall use commercially reasonable efforts to cure the Supply Deficiency as soon as practicable, by Delivery to Buyer of the amounts of Product needed to satisfy the shortage resulting from such failure(s) to supply.  If the Supply Deficiency was caused by a Source of Supply, Seller shall, subject to the terms and conditions of the applicable Seller Supply Agreement, use its reasonable best efforts to allow Buyer to participate in all applicable discussions concerning Product supply to Buyer with the applicable Source of Supply, subject to Buyer’s execution of customary confidentiality or similar agreements, and Seller shall in any event use commercially reasonable efforts to cause such Source of Supply to cure the Supply Deficiency, which efforts shall include Seller exercising the remedies available to Seller under the applicable Seller Supply Agreement to cause the Source of Supply to cure such Supply Deficiency, including the use of the additional Manufacturing capacity at [***]’s facility in the United States, as contemplated by Section 2.3(c), if applicable.  In the event of a Supply Deficiency, Seller shall allocate all available raw materials, production capacity and other resources necessary to cure the Supply Shortage [***].

 

	
(ii)  

	
Supply Failure of Supplied Product.  In the event that Seller fails to supply to Buyer, in accordance with the terms of this Agreement, at least [***] of the aggregate quantity of Supplied Product specified in Firm Orders over a period of [***] (a “Supply Failure”) then the Parties shall meet as soon as reasonably practicable following the first occurrence of any Supply Failure to discuss the source of the Supply Failure and the suggested remedies therefor.  If a Supply Failure is not cured by Seller within [***] after the first occurrence of such Supply Failure, then at Buyer’s written request, Buyer shall have the right to exercise the manufacturing license rights and rights of reference granted under Section 2.1.3 of the License Agreement to Manufacture or have Manufactured Supplied Product (the “Back-up Manufacturing License”), subject to the terms and conditions of the Seller Supply Agreements, this Agreement and the License Agreement, for the purpose of curing such Supply Failure and Manufacturing such amounts of Buyer’s (and its Affiliates’ and Sublicensee’s) Requirements of Supplied Product as Seller is not able to supply or to demonstrate, to Buyer’s reasonable satisfaction, that Seller can supply going forward on a consistent basis; provided that, other than as provided in Section 11, Buyer shall not exercise the Back-up Manufacturing License with respect to the Manufacturing activities conducted on behalf of Seller by [***] (“[***]”), unless and until a Supply Failure caused by [***] remains uncured despite Seller’s reasonable and good faith efforts to exercise the remedies available to Seller under the Seller Supply Agreement with [***] to cure such Supply Failure, including the use of the additional Manufacturing capacity at [***]’s facility in the United States, as contemplated by Section 2.3(c).  If Buyer exercises the Back-up Manufacturing License and to the extent that the Supply Failure was caused by Seller or a Source of Supply and relates to packaging of Supplied Product or the Manufacture of API used in the Manufacture of Supplied Product, Seller shall diligently and reasonably cooperate with Buyer, in good faith, to:  (A) disclose to Buyer the know-how Controlled by Seller  and used in the Manufacture of Supplied Product and API as of the date of such Supply Failure, which is in the categories set forth on Schedules 2 and 3 hereto; and (B) have its representatives meet with representatives of Buyer, in each case, to the extent not previously conducted pursuant to Packaging Transfer, (the “Technology Transfer”); provided that, subject to Section 11.3(a), [***]; provided, further, that in no event shall Seller’s obligations to conduct such Technology Transfer exceed [***] or extend beyond [***] after the commencement thereof (except that such technology transfer obligation of Seller shall be extended to the extent such technology transfer is delayed by reasons within Seller’s or its Affiliate’s control).  For clarity, Buyer shall not be entitled to exercise the Back-up Manufacturing License prior to the expiration or termination of this Agreement, except to the extent provided in this Section 2.3(b)(ii).

 

	
(iii)  

	
If Buyer exercises the Back-up Manufacturing License, to Manufacture or have Manufactured Products or 2.5 mg Dosage Strength, as applicable, then for sales of such Products or 2.5 mg Dosage Strength, as applicable, that are Manufactured under the Back-up Manufacturing License, Buyer shall pay Seller a royalty in the amount of [***] (subject to the following) of the Net Sales of such Products or 2.5 mg Dosage Strength, as applicable; provided, however, that in the event of a Supply Failure, Buyer shall be entitled to retain [***]. In the event that, following a Supply Failure, Seller fails to supply at least [***] of the aggregate quantity of Supplied Product specified in Firm Orders over a period of [***], then thereafter the above royalty rate for sale of Product Manufactured by or on behalf of Buyer shall be [***] of Net Sales of the Product or 2.5 mg Dosage Strength, as applicable.  The provisions of Article 4 shall apply to the reporting and payment of such royalties on the applicable Products or 2.5 mg Dosage Strength, as applicable.  Subject to Section 11.3(a), such royalty obligation shall expire upon [***].

 

	
(c)  

	
[***]

 

	
2.4  

	
Safety Stock.

 

	
(a)  

	
Seller shall maintain an inventory of at least [***]’ supply of pre-printed, bulk blister strips of Product and 2.5 mg Dosage Strength, based on Buyer’s then-current Constrained Forecast, on a first-expiry first-out basis; provided that, during a reasonable period surrounding launch of the 2.5 mg Dosage Strength, Seller shall only be required to use commercially reasonable efforts to maintain the foregoing inventory levels of 2.5 mg Dosage Strength.  Seller shall provide written notice to Buyer where the above inventory of at least [***]’ supply is decreased in whole or in part to meet a Firm Order.  Upon request of a Party on reasonable cause shown, the Parties shall discuss reasonably and in good faith whether such inventory requirement may be reduced or eliminated.  Any such change shall be made only upon agreement between the Parties, including agreement on the timing of such reduction or elimination.  Buyer agrees to purchase from Seller at [***] any remaining amounts of such inventory held pursuant to this Section 2.4(a) (i) that fails to meet the expiry dating requirements of Section 3.5 upon invoice from Seller and (ii) upon termination or expiration of this Agreement.

 

	
(b)  

	
Buyer shall maintain an inventory of at least [***]’ supply of Supplied Product, based on Buyer’s then-current Constrained Forecast, on a first-expiry first-out basis.  Buyer shall provide written notice to Seller where the above inventory of at least [***]’ supply is decreased in whole or in part to meet market demand for Supplied Product.  Upon request of a Party on reasonable cause shown, the Parties shall discuss reasonably and in good faith whether such inventory requirement may be reduced or eliminated.  Any such change shall be made only upon agreement between the Parties, including agreement on the timing of such reduction or elimination.

 

	
2.5  

	
Coordination.  Each Party shall appoint one or more supply and operations employee(s) of such Party to meet with the appointed employees of the other Party to review and discuss in good faith forecast and demand of Supplied Product, supply chain, safety stock maintained pursuant to Section 2.4 and other topics as may be agreed by the Parties related to supply of Supplied Product and performance hereunder.  Such meetings shall occur [***] during the Supply Term, or as otherwise agreed by the Parties, and by telephone, other similar means, or in-person at locations, as agreed by the Parties.

 

	
2.6  

	
Specifications.  Seller shall Manufacture and supply Supplied Product in accordance with the Specifications, and in accordance with the current approved Regulatory Approval for the Supplied Product, cGMPs and all applicable Laws of the United States and the country of Manufacture.  No production batch of Supplied Product shall be Delivered unless approved and released by Seller’s quality control department in accordance with the Quality Agreement.

 

	
2.7  

	
2.5 mg Dosage Strength.  In a manner and on such timelines to be agreed by the Parties in good faith, Seller shall undertake validation (including development of protocols and reporting of results) and qualification activities to the extent required to Manufacture the 2.5 mg Dosage Strength pursuant to this Agreement; provided that [***]; and, provided, further, that Seller shall reimburse Buyer [***], should any data generated in connection with such validation activities be used to obtain Regulatory Approval of the 2.5 mg Dosage Strength in Seller Territory and the validated line be used to supply such product for sale in the Seller Territory.  For clarity, Buyer shall pay to Seller (x) the Floor Price for validation batches of 2.5 mg Dosage Strength Manufactured in connection with the activities described in this Section 2.7, and (y) the Supply Price for 2.5 mg Dosage Strength validation batch product supply that is sold commercially in the Buyer Territory.  Commercial stability for said validation batches shall be performed in accordance with the provisions of Section 2.1.

 

	
3.     

	
FORECASTS AND ORDERS.

 

	
3.1  

	
Long Term Annual Non-binding Forecast.  Within [***] after the Effective Date and no later than [***] of each Calendar Year thereafter, Buyer shall advise Seller in writing of its estimated annual non-binding requirements of Supplied Product by SKU for [***].  Buyer shall use commercially reasonable efforts to make its estimated long-range forecast a reasonable basis for Seller’s production planning and capacity investment.  If at any time Buyer’s long-range forecast reasonably suggests any problems in relation to production capacity, the Parties shall discuss how to address the potential shortage.

 

	
3.2  

	
Rolling Forecasts.

 

	
(a)  

	
Within [***] after the Effective Date and thereafter, prior to the [***] of each month, Buyer shall submit to Seller, a [***] rolling forecast by SKU of Buyer’s expected orders of each Supplied Product SKU, during each month of such period, the first [***] of which will be binding commitments to submit Firm Orders, as further described in this Section 3.2 (but subject to the batch size order restrictions set forth in Section 3.3(a)), and the rest of which shall represent a non-binding estimate, but, for clarity, subject to the restrictions described in Section 3.2(b), for the following [***] period (each such forecast, a “Constrained Forecast”).

 

	
(b)  

	
For the first through [***] in any particular Constrained Forecast, the Firm Orders for Product (including 2.5 mg Dosage Strength, if applicable) that are ultimately placed by Buyer for each such month shall not vary (up or down) from the amount of Product forecasted to be ordered in such month in such Constrained Forecast, by more than the following percentages:  (i) for the first through [***] of the applicable Constrained Forecast: +/- [***]%; (ii) for the [***] through [***] of the applicable Constrained Forecast: +/- [***]%; and (iii) for the [***] through [***] of the applicable Constrained Forecast: +/- [***]%.  The foregoing percentage deviation allowances, for each of the applicable months in a particular Constrained Forecast, set out the ultimate limit for changes in subsequent Constrained Forecasts, with respect to the Firm Orders that ultimately are placed by Buyer in each of such months.  For example, if the forecast in a particular Constrained Forecast for the amount of Product to be ordered in the [***] of such Constrained Forecast is [***] tablets, then the ultimate Firm Order that is placed by Buyer during such month cannot be more than [***] tablets or less than [***] tablets.  Similarly, if the forecast in a particular Constrained Forecast for the amount of Product to be ordered in the [***] of such Constrained Forecast is [***] tablets, then the ultimate Firm Order that is placed by Buyer during such month cannot be more than [***] tablets or less than [***] tablets.  For the 2.5 mg Dosage Strength, Seller will manufacture [***] validation batches as described above.  For any future orders of the 2.5 mg Dosage Strength, purchase orders will be placed with at least [***] lead time for initial orders.  Parties shall negotiate in good faith and agree on a reasonable forecasting process for 2.5 mg Dosage Strength Product a reasonable time prior to approval of such Product.

 

	
3.3  

	
Firm Orders.

 

	
(a)  

	
As provided in Section 3.2(a) above, the first [***] of each Constrained Forecast submitted by Buyer shall constitute binding commitments by Buyer to submit firm orders (each, a “Firm Order”) to purchase the amount of Product or 2.5 mg Dosage Strength, as applicable, forecasted to be ordered in each such month (subject to the following).  Buyer, on a monthly basis, shall deliver orders to Seller for Supplied Product in the amounts consistent with the applicable Firm Order in the form of a written purchase order, stating (i) the quantity of Supplied Product ordered; and (ii) the requested delivery date thereof; provided, however, that, in no event shall the requested delivery date be less than [***] from the date of Buyer’s order thereof.  Each Firm Order submitted by Buyer shall be binding on Seller.  All quantities of each Supplied Product ordered by Buyer shall be [***].  In the event of any inconsistency between the terms and conditions of any purchase order delivered under this Agreement and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail.

 

	
(b)  

	
Notwithstanding the order size limitations of Sections 3.2(b) and 3.3(a) above, Buyer may, in any particular month, submit orders for amounts of Supplied Product in excess of the Firm Order amount for such month (as provided in the applicable constraints set forth in Section 3.2(b) or 3.3(a)). Seller shall use all commercially reasonable efforts to supply such excess quantity of Supplied Product ordered.  If unable to supply the entire amount of such excess order, Seller shall supply such lesser quantity of Supplied Product as it is able to using such efforts, but Seller shall have no liability hereunder to Buyer to the extent Seller is unable to supply such excess orders notwithstanding its using such efforts.

 

	
(c)  

	
On the Effective Date, Buyer is delivering an order to Seller for the Closing Inventory in the form of a written purchase order.  Notwithstanding anything in Section 4.4(a) to the contrary, the Closing Inventory shall be delivered to Buyer (or its designee) pursuant to the Transition Services Agreement.

 

	
3.4  

	
Terms of Sale.  All Firm Orders for Supplied Product placed by Buyer in accordance with Sections 3.1, 3.2 and 3.3 above shall be accepted by Seller within [***].  In addition, any orders for excess amounts of Product or 2.5 mg Dosage Strength, as applicable, submitted under Section 3.3(b) shall, subject to Section 3.3(b), be binding on Seller to the extent Seller accepts such orders.

 

	
3.5  

	
Expiry Dating.  Subject to Section 4.4(d), no Supplied Product shall be Delivered to Buyer that has less than [***]’ expiry dating remaining on the date Delivered, unless the Parties agree otherwise.

 

	
4.    

	
PRICE; PAYMENT AND TERMS OF SALE.

 

	
4.1  

	
Supply Price.  Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Supplied Product, at the Supply Price, payable in two installments, as set forth in this Section 4.1.

 

	
(a)  

	
Initial Payments.  Upon Delivery of each shipment of Supplied Product (other than the Closing Inventory), Seller shall invoice Buyer for payment in an amount equal to the number of tablets of Supplied Product included in such shipment multiplied by the Floor Price.  Payment of each such invoice shall be due and payable by Buyer within [***] after the receipt thereof by Buyer.  Buyer shall pay the aggregate Floor Price for the Closing Inventory at the Closing.

 

	
(b)  

	
Quarterly Payments based on Net Sales.  Within [***] after the end of each Calendar Quarter, Buyer shall pay to Seller, with respect to each tablet of Supplied Product (which shall include Closing Inventory) sold by Buyer during such Calendar Quarter, the Supply Price applicable to the sale of such tablet, less the amount paid by Buyer pursuant to Section 4.1(a) with respect to such tablet.

 

	
(c)  

	
Increased Manufacturing Costs.  In the event that Seller’s actual and verifiable cost to Manufacture Supplied Product increases by amounts not accounted for in the adjustments to the Floor Price, such that such manufacturing cost is more than [***] greater than the then-current Floor Price, for any reason that (i) applies to all purchasers of Supplied Product from Seller or its Affiliates, (ii) relates to any Change or volume decrease under this Agreement or (iii) relates solely to the Buyer Territory (each, a “Manufacturing Price Increase”), the Floor Price shall be increased by [***].  Such increase to the Floor Price shall become effective for the first order of Supplied Product filled by Seller following the occurrence of the Manufacturing Price Increase, and Seller shall give Buyer written notice of any such increase.  If following any increase to the Floor Price pursuant to this Section 4.1(c), Seller’s actual cost to Manufacture Supplied Product is reduced by at least [***] of the amount of the Cost Price Increase, the Floor Price shall be adjusted downward to reflect such cost reductions.  Such decrease in the Floor Price shall become effective for the first order of Supplied Product filled by Seller following the occurrence of the Manufacturing Price Reduction, and Seller shall give Buyer written notice of any such decrease.  All calculations of Seller’s cost to Manufacture Supplied Product pursuant to this Section 4.1(c) shall be made using currency exchange rate calculations based on the spot rate published by OANDA Corporation at www.oanda.com, on the date of the applicable adjustment.

 

	
(d)  

	
Samples.  Notwithstanding Section 4.1(b), the price payable hereunder for any Supplied Product that constitutes a sample shall be [***].

 

	
4.2  

	
Reports.

 

	
(a)  

	
Monthly Statements.  Subject to Section 4.2(b), within [***] after the end of each Calendar Month, Buyer shall deliver a report to Seller specifying, on an SKU-by-SKU basis, an estimate (based on the third party sources available to Buyer) of the tablets of Supplied Product sold in such Calendar Month and of the gross amounts billed Third Parties for such Supplied Product in such Calendar Month.

 

	
(b)  

	
Quarterly Reports.  Within [***] after the end of each Calendar Quarter, Buyer shall deliver a report to Seller specifying, on an SKU-by-SKU basis, the tablets of Supplied Product sold, gross amounts billed Third Parties for such Supplied Product, deductions taken to arrive at Net Sales attributable to such Supplied Product and the Net Sales attributable to such Supplied Product, in each case, on a cumulative basis for such Calendar Quarter.

 

	
4.3  

	
Payments.

 

	
(a)  

	
Payment Method.  All payments to be made by Buyer under this Agreement shall be paid in U.S. Dollars, by wire transfer, pursuant to the instructions of Seller, as such instructions may be designated from time to time by Seller at least 10 Business Days prior to the date payment is due.  [***]

 

	
(b)  

	
Late Payments.  In the event that any payment is not paid by the date due in accordance with the provisions of this Article 4, the overdue amount shall bear interest, at a rate equal to [***], as of the date such payment is due, or the maximum rate permitted under applicable Law, whichever is less, from the date due until payment is made.  Seller shall, in its sole discretion, and without prejudice to any other of its accrued rights, be entitled to suspend the provision of Supplied Product if any material payment default is not cured within [***] after Buyer’s receipt of written notice from Seller of such default, such suspension to terminate (and Seller’s Delivery of ordered Supplied Product to recommence) automatically upon cure of such payment default.

 

	
(c)  

	
Withholding Taxes. If applicable Laws require withholding of income or other similar Taxes imposed upon any payments made by Buyer to Seller under this Article 4, Buyer shall make such withholding payments as may be required and shall subtract such withholding payments from such payments.  Buyer shall submit appropriate proof of payment of the withholding Taxes to Seller within a reasonable period of time. Buyer shall promptly provide Seller with the official receipts.  Buyer shall render Seller reasonable assistance in order to allow Seller to obtain the benefit of any present or future treaty against double taxation which may apply to such payments.

 

	
(d)  

	
Value Added Taxes and Similar Taxes.  All amounts due under this Article 4 are exclusive of sales, use, goods and services, value added, excise, and other Taxes, duties or charges of a similar nature imposed by any Governmental Authority, or other taxing authority. If any sales, use, goods and services, value added, excise, and other Taxes, duties or charges of a similar nature will be chargeable with respect to payments or transactions hereunder, Buyer shall pay, or upon receipt of invoice from Seller shall reimburse, these amounts at the rate in force at the due time for payment or such other time as is stipulated under the relevant legislation.  Each of Seller and Buyer shall use commercially reasonable efforts to minimize obligations relating to Taxes of the nature described in this Section 4.3(d) as a result of the transactions contemplated by this Agreement.

 

	
(e)  

	
Records.  Buyer and its Affiliates shall prepare and maintain complete and accurate books and records of account, in accordance with GAAP, of all applicable transactions and other business activities under this Agreement, sufficient to confirm the accuracy of all reports furnished by Buyer under this Agreement, Section 5.16 of the Asset Purchase Agreement, and all payments by Buyer to Seller under this Agreement.  Such records shall be maintained by Buyer and its Affiliates for a period of [***] after the Calendar Quarter to which such records pertain.

 

	
(f)  

	
Audit.  Upon Seller’s request, Buyer shall, and shall cause each of its Affiliates, licensees and Sublicensees to permit an independent accounting firm of national standing appointed by Seller and reasonably acceptable to Buyer (or the applicable other party), to inspect and audit the applicable books and records of account of Buyer and its Affiliates, licensees and Sublicensees that relate directly to any reports provided pursuant to Section 5.16 of the Asset Purchase Agreement, Section 4.2 and records maintained pursuant to Section 4.3(e), in order to confirm the accuracy and completeness of the such reports and all payments hereunder; provided, that such accounting firm enters into a typical confidentiality agreement with the party audited.  Seller shall be entitled hereunder to (x) cause the inspection and audit of such books and records relating to a particular time period only one time, and (y) exercise its inspection and audit rights under this Section 4.3(f) once per Calendar Year; provided, however, that if any audit conducted pursuant to this Section 4.3(f) reveals that any previously delivered report was materially inaccurate or that any prior inspection or audit resulted in a material adjustment to amounts due hereunder for any Calendar Quarter, then Seller shall be entitled, for a period of [***] following its receipt of notice of such material deviation, to initiate one other audit pursuant to this Section 4.3(f) for the applicable time period in order to determine whether the applicable material deviation has been cured.  Seller shall bear all out of pocket costs and expenses incurred in connection with any inspection or audit performed pursuant to this Section 4.3(f); provided, however, that if any such inspection or audit correctly identifies any underpayments by Buyer hereunder in excess of the greater of [***] of the amounts actually payable for the period audited and [***], then, in addition to paying the full amount of such underpayment, plus accrued interest at a rate set forth in Section 4.3(b), Buyer shall reimburse Seller for all reasonable out-of-pocket costs and expenses incurred by Seller in connection with such inspection or audit.  All information disclosed pursuant to this Section 4.3(f) shall be subject to the confidentiality and non-use provisions set forth in Article 10.

 

	
4.4  

	
Delivery.

 

	
(a)  

	
Except as otherwise agreed upon by the Parties, Seller shall deliver the quantities of Supplied Product (excluding, for clarity, the Closing Inventory) set forth in each Firm Order EXW (INCOTERMS 2010), by the delivery date specified in such Firm Order, for pick up at Seller's facility in Swords, Ireland (“Delivery”).  For clarity, Closing Inventory shall be deemed Delivered hereunder at the Closing.

 

	
(b)  

	
Buyer shall be responsible for final release of each lot of Supplied Product supplied hereunder for sale within the Buyer Territory in accordance with Buyer’s standard practices.  Seller shall provide Buyer with certificates of analysis for each batch of Supplied Product released for Delivery hereunder, which certificates shall document that each batch received by Buyer conforms to the current Regulatory Approvals for the Supplied Product, the Specifications, cGMPs and all applicable U.S. Laws and include the date of Supplied Product Manufacture, Seller batch number, expiry date for Supplied Product, quantitative results of release testing performed and the signature of an authorized person within the Seller quality organization.  In the event of any major or critical deviations associated with the Supplied Product, Seller will provide Buyer a detailed description of the nature and scope of such deviations, subject to Buyer’s execution of a confidentiality or similar agreement in customary form covering such disclosure.  A copy of each certificate shall be included with each batch of Supplied Product Delivered to Buyer, and one copy shall be transmitted (via e-mail, or as otherwise agreed by the Parties) at the same time to the Buyer representative specified in the applicable Firm Order.  Seller shall provide such information as reasonably requested by Buyer and required by applicable Law, including cGMP, to enable Buyer to qualify Seller as a manufacturer of the Supplied Product in accordance with Buyer’s standard practices.

 

	
(c)  

	
Seller shall effect Delivery of the amounts of Supplied Products ordered in each of Buyer’s Firm Orders submitted by Buyer in compliance with Article 2, on or before the specified delivery dates.  However, Seller shall only be required to exert reasonable commercial efforts to fill Buyer’s purchase orders to the extent in excess of the Firm Orders, and Seller shall not be in breach if it is unable to supply in any particular Calendar Quarter any quantities of the Supplied Product ordered by Buyer in a particular month that are in excess of [***] of the quantity of Supplied Product that was ordered by Buyer in the Firm Order for such month.

 

	
(d)  

	
If Buyer fails to take Delivery of any Supplied Product on the applicable scheduled delivery date, Seller shall store such Product as Buyer’s agent and Buyer bear Seller’s reasonable administration and storage costs incurred in connection therewith. With respect to any such stored Supplied Product, Buyer agrees that:  (i) Buyer has made a fixed commitment to purchase such Supplied Product; (ii) title and risk of loss for such Supplied Product will have passed to Buyer; (iii) such Supplied Product shall be on a bill and hold basis for legitimate business purposes; (iv) if no delivery date is determined at the time of billing, Seller shall have the right to ship such Supplied Product to Buyer within [***] after billing, at Buyer’s sole cost and expense; and (v) Buyer shall be responsible for any decrease in market value of such Supplied Product relating to factors and circumstances outside of Seller’s reasonable control, including any resulting loss in expiry dating.

 

	
4.5  

	
Title and Risk of Loss.  Except as provided in Section 4.4(d), title to and risk of loss of any Supplied Product sold hereunder shall pass to Buyer, and Seller’s liability as to delivery thereof shall cease, upon Delivery of such Supplied Product, whereupon Buyer shall assume all risk of loss or damage.  Except as provided in Section 6.2, under no circumstance shall Buyer have the right to return Supplied Product for which Delivery has been effected.

 

	
4.6  

	
Terms of Sale.  The terms and conditions of this Agreement shall be controlling over any inconsistent terms or conditions included in any purchase order or any other sales acknowledgment or document.  No provision of Buyer’s purchase order forms that may impose conditions different from those herein referenced upon Seller or any Source of Supply, or upon Buyer shall be of any force or effect unless expressly agreed to in writing by Seller.

 

	
5.    

	
PACKAGING TRANSFER.

 

	
5.1  

	
Packaging Transfer.  To the extent not previously provided pursuant to any Technology Transfer, in accordance with a timeline to be agreed by the Parties in good faith, but commencing no later than [***], Seller shall (a) disclose to Buyer any packaging know-how (including documentation constituting specifications as to materials to be used) in the categories set forth on Schedule 3 hereto and owned or controlled by Seller as of the Effective Date, (b) have its representatives meet with representatives of Buyer and (c) provide such other assistance to Buyer as may be reasonably requested; provided, however, that in no event shall Seller’s obligations in this Section 5.1 to conduct such packaging technology transfer without additional charge exceed [***] or extend beyond [***] after the commencement thereof (except that such technology transfer obligation of Seller shall be extended to the extent such technology transfer is delayed by reasons within Seller’s or its Affiliate’s control).  If additional Seller assistance is needed to complete the Packaging Transfer, then Seller shall provide reasonable amounts of additional assistance, as requested by Buyer, provided that Buyer shall pay Seller a reasonable per-person hourly rate for such additional packaging technology transfer services, which shall be payable pursuant to Section 5.2.  Each of Seller and Buyer shall use good faith, diligent efforts to effect completion of the Packaging Transfer as soon as practicable after commencement of the above technology transfer.

 

	
5.2  

	
Reimbursement for Packaging Transfer.  Buyer shall reimburse Seller for (a) all reasonable and verifiable out-of-pocket costs and expenses and (b) the amounts due, if any, pursuant to the payment commitment set forth in Section 5.1 for additional Seller assistance, in each case ((a) and (b)), incurred by Seller in performing the packaging know-how transfer services and activities specified in Section 5.1, within [***] after receipt of an invoice therefor and reasonable documentation evidencing such costs and expenses from Seller.  Notwithstanding the foregoing, Seller shall continue, at its sole cost and expense, such on-going stability studies as may be required by applicable Law.

 

	
5.3  

	
Buyer Responsibility Following Packaging Transfer.  Buyer shall be responsible for all subsequent packaging and labeling of Supplied Product from and after the Packaging Transfer Date.

 

	
6.    

	
WARRANTY AND LIMITATIONS.

 

	
6.1  

	
Warranties.

 

	
(a)  

	
Seller hereby warrants to Buyer that all Supplied Product, at the time of Delivery:  (i) meets the Specifications, (ii) assuming the accuracy of Buyer’s warranty set forth in Section 6.1(d), was Manufactured (A) in accordance with all applicable Laws in effect on the day of Delivery as well as all Laws applicable for the Buyer Territory in the country of Manufacture,  (B) in accordance with cGMPs and the current Regulatory Approval for the Supplied Product and (C) is not adulterated or misbranded; provided that for Supplied Product that is Delivered after the Packaging Transfer Date Seller makes no representation or warranty hereunder with respect to any packaging or labeling of Supplied Product after Delivery of such Supplied Product ordered.

 

	
(b)  

	
Seller hereby warrants to Buyer that, as of immediately prior to Delivery to Buyer, Seller has good and marketable title to the Supplied Product sold, free of any and all Encumbrances.  Seller hereby warrants to Buyer that, as of the Execution Date, no Taxes are due to the country where Product is currently formulated or packaged on account of manufacture and supply of Product purchased or supplied for distribution in the Buyer Territory.

 

	
(c)  

	
Each Party hereby agrees that it shall not at any time, from and after the Effective Date, retain or use in any capacity in connection with the Manufacture, in the case of Seller and Buyer, or Exploitation, in the case of Buyer, of the Supplied Product any Person who has been debarred pursuant to Section 306 of the Act or who is the subject of a conviction described in such section.  From and after the Effective Date, each Party will inform the other Party in writing promptly if such Party, any of its Affiliates or any other Person connected with the Exploitation of the Supplied Product in the Buyer Territory is debarred or is the subject of a conviction described in such Section 306, or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to such Party’s knowledge, is threatened, relating to the debarment or conviction of such Party or any such Person.

 

	
(d)  

	
Buyer hereby warrants to Seller that, following the Effective Date, the Specifications for the Supplied Product do and will comply with the Regulatory Approval for the Supplied Product and all applicable Laws.

 

	
(e)  

	
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY IN RESPECT OF ANY PRODUCT OR SERVICES PROVIDED HEREUNDER AND ALL OTHER WARRANTIES OF ANY KIND ARE EXPRESSLY DISCLAIMED, WHETHER EXPRESS OR IMPLIED, BY STATUTE, CUSTOM OF THE TRADE OR OTHERWISE INCLUDING, ANY WARRANTY RELATING TO THE DESCRIPTION OR QUALITY OF PRODUCT, ITS MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE UNDER ANY CONDITIONS, AS TO THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF ANY PERSON OR AS TO ANY OTHER MATTER AND ANY SUCH WARRANTY IS HEREBY EXCLUDED.

 

	
6.2  

	
Inspection; Defects and Claims.

 

	
(a)  

	
Buyer shall perform visual inspection of each Delivery of Supplied Product prior to use or distribution in the Buyer Territory in accordance with its standard procedures (the “Visual Inspection”).  Any claim relating to Supplied Product that fails to conform to the warranty set forth in Section 6.1(a) or (b) or to loss of or damage to Supplied Product (any such defective Supplied Product, “Defective Product”), shall be made in writing to Seller, as soon as reasonably practical, but no later than [***] after Delivery of the applicable shipment (or within [***] after discovery of a defect or nonconformity that could not reasonably have been detected by performing the Visual Inspection).  If Buyer does not notify Seller of any particular Defective Product within the foregoing time periods after discovery of the applicable non-conformity or defect, such failure shall be deemed a waiver of the remedies available to Buyer under this Section 6.2 solely with to the applicable Defective Product.

 

	
(b)  

	
Upon Seller’s request, Buyer shall forward for inspection a representative sampling of the Supplied Product or any part thereof that are the subject of Buyer’s claim that such Supplied Product is Defective Product.  If Seller disagrees with Buyer’s claim, representatives of the Parties shall attempt to resolve such dispute in good faith.  If the Parties are unable to resolve their differences within [***] after Buyer’s notice to Seller under Section 6.2(a) (or, if Seller elects to inspect a representative sampling of the Supplied Product or any part thereof that are the subject of Buyer’s claim, within [***] after Seller notifies Buyer of the results of such inspection), then either Party may refer the matter to an independent specialized and qualified laboratory reasonably agreeable to each of the Parties (acting in good faith) for final analysis, which shall be a final resolution of such issue, binding on both Parties hereto and not subject to Section 12.2(a) or Section 12.3 of this Agreement.  The fees and expenses of such laboratory testing shall be borne by [***].

 

	
(c)  

	
If Seller agrees with Buyer’s claim, or if such Supplied Product is determined in accordance with Section 6.2(b) to be Defective Product, then Seller shall, at Buyer’s election, either replace the Defective Product as soon as reasonably practicable, without any cost to Buyer, or credit (or refund) Buyer for the total amount paid by Buyer with respect to the Defective Product (at Buyer’s election).  If such Supplied Product is determined in accordance with Section 6.2(b) not to be Defective Product, then Buyer shall pay within [***] after such determination the Supply Price with respect thereto, as provided under Section 4.1, together with any interest applicable thereto in accordance with Section 4.3.  Any Supplied Product that is determined to be Defective Product that is in Buyer’s control shall, at Seller’s option, either be returned to Seller at Seller’s expense, or shall be destroyed by Buyer at Seller’s expense pursuant to Seller’s written instructions and with Seller’s written approval.  Buyer, at Seller’s request, shall provide evidence of such destruction.

 

	
(d)  

	
EXCEPT WITH RESPECT TO (I) THOSE RIGHTS AND REMEDIES SET FORTH IN SECTIONS 2.3, 9.1 AND 9.2, (II) SELLER’S OBLIGATION TO INDEMNIFY BUYER FOR THIRD PARTY CLAIMS PURSUANT TO SECTION 7.2, AND (III) BUYER’S ABILITY TO TERMINATE THIS AGREEMENT PURSUANT TO SECTION 11.2, BUYER ACKNOWLEDGES THAT REPLACEMENT OF SUPPLIED PRODUCT OR CREDIT OF THE FLOOR PRICE SHALL BE BUYER’S SOLE AND EXCLUSIVE REMEDY FOR BREACH OF WARRANTY CLAIMS UNDER SECTION 6.1(a) HEREOF BY SELLER OR ITS SOURCES OF SUPPLY HEREUNDER.

 

	
7.    

	
INDEMNIFICATION, LIMITATION OF LIABILITY AND INSURANCE.

 

	
7.1  

	
Indemnification by Buyer.  Subject to this Article 7, Buyer shall indemnify, defend and hold harmless Seller, its Affiliates and their respective directors, officers, employees, licensors and agents (the “Seller Indemnitees”) from and against any and all Losses incurred by them in connection with any and all Litigation by Third Parties (collectively, “Third Party Claims”) against any such Seller Indemnitee arising from or occurring as a result of:  (a) any breach of this Agreement by Buyer, including any breach by Buyer of its representations or warranties hereunder or a failure by Buyer to comply with or perform any covenants hereunder, (b) the fraud, gross negligence or willful misconduct by Buyer in the performance of Buyer’s obligations under this Agreement and (c) the storage, marketing, promotion, sale, distribution, use or other Exploitation, or, during any period in which Buyer Manufactures (or has Manufactured by an Affiliate of Buyer or a Third Party) the Supplied Product pursuant to Section 2.3(b)(ii), the Manufacture, of any Supplied Product by or on behalf of Buyer, in each case ((a) through (c)), except to the extent of those Third Party Claims arising from or occurring as a result of matters covered by subsections (a) or (b) of Section 7.2, subsections (a) or (b) in Section 10.2 of the License Agreement or indemnification obligations of Seller or its Affiliates under the Clinical Supply Agreement, as to which Third Party Claims each Party shall indemnify the other to the extent of its liability for such Third Party Claims.

 

	
7.2  

	
Indemnification by Seller.  Subject to this Article 7, Seller shall indemnify, defend and hold harmless Buyer, its Affiliates and their respective directors, officers, employees and agents (the “Buyer Indemnitees”) from and against any and all Losses incurred by them in connection with any and all Third Party Claims against any such Buyer Indemnitee arising from or occurring as a result of:  (a) any breach of this Agreement by Seller, including any breach by Seller of its representations or warranties hereunder or a failure by Seller to comply with or perform any covenants hereunder and (b) the fraud, gross negligence or willful misconduct by Seller in the performance of Seller’s obligations under this Agreement,  in each case ((a) and (b)), except to the extent of those Third Party Claims arising from or occurring as a result of matters covered by subsections (a), (b) or (c) of Section 7.1, subsections (a), (b), (c) or (d) of Section 10.1 of the License Agreement or indemnification obligations of Buyer or its Affiliates under the Clinical Supply Agreement, as to which Third Party Claims each Party shall indemnify the other to the extent of its liability for such Third Party Claims.

 

	
7.3  

	
Procedures for Indemnification.  All indemnification claims under Section 7.1 or Section 7.2 shall be made solely by a Party to this Agreement and shall be governed by Section 7.2 of the Asset Purchase Agreement.  Notwithstanding anything herein to the contrary, the Parties’ respective indemnification obligations under this Article 7 shall not apply to any Losses for which such Party is entitled to indemnification under the Asset Purchase Agreement (excluding for this purpose, application of the limitations in Section 7.3 of the Asset Purchase Agreement).

 

	
7.4  

	
Limitation of Liability.

 

	
(a)  

	
General Limitation of Liability.  EXCEPT (i) IN CIRCUMSTANCES OF FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT BY A PARTY OR ITS AFFILIATES, AND (ii) FOR EACH PARTY’S OBLIGATIONS (1) WITH RESPECT TO THE OTHER PARTY’S CONFIDENTIAL INFORMATION, AS PROVIDED IN ARTICLE 10 HEREOF, OR (2) TO PROVIDE INDEMNIFICATION UNDER SECTION 7.1 OR 7.2, AS APPLICABLE, WITH RESPECT TO THIRD PARTY CLAIMS, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY UNDER OR WITH RESPECT TO THIS AGREEMENT FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, MULTIPLE, PUNITIVE OR INCIDENTAL DAMAGES OF ANY KIND, INCLUDING LOST PROFITS, REVENUE OR INCOME, TORT, BREACH OR REPUDIATION OF ANY TERM OR CONDITION OF THIS AGREEMENT, LOST SALES DIMINUTION IN VALUE, LOSS OF BUSINESS OPPORTUNITY OR LOSS OF GOOD WILL, EVEN IF THAT PARTY HAS BEEN PLACED ON NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.

 

	
(b)  

	
EXCEPT IN CIRCUMSTANCES OF FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT BY SELLER OR ITS AFFILIATES, AND EXCLUDING SELLER’S OBLIGATIONS UNDER ARTICLE 9, SELLER SHALL NOT BE LIABLE TO BUYER FOR ANY CLAIM FOR LOSSES (WHETHER GROUNDED IN CONTRACT, TORT OR OTHERWISE) UNDER THIS AGREEMENT (OR THE ASSET PURCHASE AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT TO THE EXTENT SUCH LIABILITY ARISES AS A RESULT OF SELLER’S ACTIVITIES UNDER THIS AGREEMENT) UNTIL THE AGGREGATE AMOUNT OF SUCH LOSSES EXCEEDS [***] (the “DEDUCTIBLE”), AFTER WHICH SELLER SHALL BE LIABLE FOR LOSSES IN EXCESS OF THE DEDUCTIBLE UP TO A MAXIMUM AGGREGATE AMOUNT (INCLUDING ANY ROYALTY AMOUNTS RETAINED BY BUYER PURSUANT TO SECTION 2.3(b)(iii)) OF [***]; PROVIDED, THAT (i) THE DEDUCTIBLE SHALL NOT APPLY AND (ii) SUCH MAXIMUM AGGREGATE AMOUNT (INCLUDING ANY ROYALTY AMOUNTS RETAINED BY BUYER PURSUANT TO SECTION 2.3(b)(iii)) SHALL BE [***] WITH RESPECT TO ANY CLAIM FOR LOSSES ARISING OUT OF A SUPPLY FAILURE OCCURRING BEFORE THE [***].

 

	
7.5  

	
Insurance.  Seller shall, at its sole cost and expense, obtain and maintain in full force and effect during the Supply Term, commercial general liability insurance, which shall provide product liability coverage that provides for minimum loss coverage at least equal to the insurance coverage maintained by Seller with respect to Seller’s proprietary pharmaceutical products.  Seller may satisfy its obligations hereunder through self-insurance to the same extent.

 

	
8.    

	
AUDIT AND REGULATORY ACTIONS; QUALITY.

 

	
8.1  

	
Governmental Authority Visits and Inspections.  Upon either Party learning that one or more representatives of a Governmental Authority of competent jurisdiction shall visit or inspect its facilities or, subject to the applicable Seller Supply Agreements, the facilities of a Source of Supply, to conduct an audit or for any other reason related to the Supplied Product, such Party shall (to the extent feasible and permitted by applicable Law) notify the other Party at least [***] in advance to allow such other Party an opportunity to be present during such visit in an observer capacity, to the extent practicable, at such other Party’s expense and subject to the inspected Party’s right to maintain confidentiality of the information related to its facilities.  When a Party does not have advance notice of such a visit or inspection or when the other Party is otherwise unable to attend, the audited Party shall promptly (to the extent permitted by applicable Law) provide the other Party with an accurate written report of the visit in English.

 

	
8.2  

	
Manufacturing Audit.  Seller shall permit not more frequently than [***], one or more qualified technical specialists from Buyer (or its sublicensee), upon reasonable prior notice and during normal business hours, to conduct audits (including quality, safety and environmental) of the portion of any its facilities or other facilities (to the extent Seller has audit or observation rights over other facilities) used to Manufacture, store, handle or distribute Supplied Product; provided, however, that Seller may refuse access to portions of such facilities where products other than the Supplied Product are Manufactured, stored, handled or distributed and; provided, further, that Seller shall allow and support such additional audits as reasonably requested by Buyer to address specific quality problems relating to the Supplied Product or in response to any applicable Governmental Authority requirements.  Subject to compliance with the terms and conditions of the Seller Supply Agreements, one or more qualified technical specialists of Buyer shall be permitted to accompany Seller on Seller’s audits or observation visits of its Sources of Supply to the extent any such audit or observation relates to the Supplied Product; provided that, if Seller has the right to conduct such an audit but decides not to conduct such audit, Seller shall notify Buyer of its decision not to exercise such right and Buyer may then request Seller to exercise such right accompanied by one or more qualified technical specialists of Buyer, and Seller shall reasonably cooperate with such request including with respect to scheduling, scope and duration of the audit.  Observations and conclusions of any such audits will be issued to Seller and Seller shall provide a written response within [***] of receipt of such observations and conclusions.  The Parties shall discuss such response and agree on corrective action to be implemented.  Seller shall ensure that agreed corrective action shall be implemented by the audited party, at the audited party’s expense.

 

	
8.3  

	
Quality Agreement.  In connection herewith and on the Effective Date, the Parties are entering into the Quality Agreement.   Each Party shall perform all of its obligations under the Quality Agreement in accordance with the terms thereof.

 

	
8.4  

	
Changes.

 

	
(a)  

	
Upon [***]’ advance written notice (except where such changes are required by applicable Law, in which case such notice shall be given within [***] of Seller becoming aware of such requirement), Seller shall have the right to request to Buyer that it consent to changes to the Specifications or the Manufacturing process for the Supplied Product (each, a “Change”) as Seller may deem appropriate in consultation with Buyer, and Buyer shall not unreasonably withhold, condition or delay its granting such consent; and provided that any such modification or improvement must be in accordance with the Regulatory Approval for the Supplied Product and applicable Law; provided, further, that in all such cases no Changes shall be made unless and until all Regulatory Approvals for the Supplied Product have been received that are necessary for such Change.  In the event that Buyer disagrees with any such Changes requested by Seller, the Parties shall meet in good faith to attempt to come to a mutually acceptable resolution; provided, however, that if the Parties are unable to come to a mutually acceptable resolution then Seller shall be entitled to make such Change if such Change does not adversely impact Buyer’s ability to Exploit the Supplied Product and would be in compliance with applicable Laws or other requirements of the FDA.  [***]  For clarity, Seller shall not need to obtain Buyer’s prior consent for minor Changes to the Manufacturing process for the Supplied Product; provided that in each case no such Change (or combination of Changes) negatively impacts Buyer, the Exploitation of Product or any Regulatory Approvals of Product, and consistent with the terms of the Quality Agreement.

 

	
(b)  

	
Subject to the provisions of this Section 8.4, Buyer may make Changes to the Specifications or the Manufacturing process for the Supplied Product (i) that are required by applicable Law or (ii) otherwise upon Seller’s written agreement (including with respect to pricing terms, to the extent such changes cause actual changes in cost of goods) with respect thereto, such agreement not to be unreasonably withheld, delayed or conditioned (collectively, “Manufacturing Changes”), and Seller shall use its commercially reasonable efforts to implement such Manufacturing Changes as soon as reasonably practicable after notification thereof by Buyer.  In the event that any Manufacturing Change increases or is reasonably likely to increase the actual costs incurred by Seller in connection with the Manufacture of any Supplied Product, such costs shall [***].  [***]  If a Change is made to the Specifications, then prior to the implementation of such Change Buyer shall (x) submit all supplemental applications or reports to Governmental Authorities with respect to such Supplied Product, if required, to reflect such Change, and (y) obtain all approvals required by Governmental Authorities (including required Regulatory Approvals) with respect to such Change.

 

	
8.5  

	
Subcontracting.  Seller may subcontract any of its Manufacturing obligations hereunder to any Source of Supply; provided that, notwithstanding such subcontracting, Seller remains and shall remain fully responsible for the supply and Delivery of Product ordered by Buyer hereunder and for all related obligations, including the product warranty set forth in Section 6.1(a).  During the Supply Term, without the consent of Buyer (which consent shall not be unreasonably conditioned, withheld or delayed), Seller shall not (and shall cause its Affiliates not to):  (a) assign to a Third Party (other than to a wholly-owned subsidiary of Seller); (b) amend in a manner that would adversely impact Buyer’s rights hereunder; or (c) terminate (other than for cause), in each case ((a), (b) and (c)), any Seller Supply Agreement to the extent relating to the supply of Supplied Product hereunder.

 

	
8.6  

	
Compliance with Law.  Buyer shall (a) store, handle and distribute, and after the Packaging Transfer Date, package and label, Supplied Product in accordance with cGMP and applicable Law and (b) not alter the Supplied Product in any manner, including the labeling and packaging thereof (except after Packaging Transfer).

 

	
9.    

	
WITHDRAWALS AND RECALLS.

 

	
9.1  

	
Withdrawal.  Buyer shall have the right to withdraw Supplied Product Delivered hereunder or Purchased Inventory from the Buyer Territory (“Withdrawal”) that in Buyer’s reasonable opinion has a minor violation that would not be subject to a FDA legal action, or is potentially unsafe for administration in humans or potentially may cause adverse health consequences, in each case after providing [***] written notice to Seller and an opportunity to discuss such withdrawal; provided that Buyer may conduct such Withdrawal immediately if Buyer believes it is reasonably necessary to prevent injury and/or to comply with applicable Laws.  If Buyer conducts such Withdrawal immediately, Buyer shall provide notice thereof to Seller within [***] of initiating such Withdrawal.  In addition, Seller shall have the right to request that Buyer conduct a Withdrawal if the Supplied Product or Purchased Inventory that is subject to such requested Withdrawal is in Seller’s reasonable opinion unsafe for administration in humans.  If after such request the Parties cannot agree on whether or not to conduct the requested Withdrawal, the matter will be escalated to the Quality Executives for resolution; provided that if the Parties continue to fail to reach agreement within [***] of such meeting/discussion, then Buyer shall have the final decision as to whether or not to conduct such Withdrawal.  Seller shall cooperate with Buyer’s reasonable requests and instructions for carrying out any Withdrawal.  Nothing herein shall prevent either Party from taking such action that is required by applicable Law or regulation, taking into account the reasonable concerns of the other Party as it relates to Supplied Product or Purchased Inventory inside or outside the Buyer Territory.  All Direct Expenses incurred by either Party in connection with any Withdrawal shall be [***].

 

	
9.2  

	
Administration of Recalls.  In the event of a mandatory or voluntarily recall of any Purchased Inventory or any Supplied Product that is or is to be Delivered hereunder (“Recall”), Seller shall cooperate with Buyer in carrying out such Recall.  It is acknowledged and agreed by Seller that any decision to initiate a Recall, and the scope and implementation of such Recall, shall rest solely with Buyer; provided, however, that Seller may, subject to Section 9.2(a), request that Buyer conduct a Recall of Purchased Inventory or Supplied Product if it has a reasonable basis to conclude that such Purchased Inventory or Supplied Product is unsafe for administration in humans.

 

	
(a)  

	
In the event Seller determines such Recall may be necessary, Seller shall advise Buyer thereof by telephone within [***] of such determination and provide written confirmation of such determination, including all details on which such determination is based, to Buyer as soon as possible, but not later than within [***] of such determination.  The Parties shall then meet and discuss the matter as soon as possible and use good faith efforts to reach agreement on such Recall; provided that the final decision shall rest with Buyer.  Notwithstanding the preceding sentence, in the event that applicable Law or a Governmental Authority of competent jurisdiction requires Buyer to conduct a Recall, Buyer may proceed with such Recall upon [***] written notice to Seller.  Nothing herein shall prevent either Party from taking such action that is required by applicable Law, taking into account the reasonable concerns of the other Party as it relates to Supplied Product or Purchased Inventory inside or outside the Buyer Territory.

 

	
(b)  

	
To the extent a Recall is initiated because the Supplied Product does not comply with the Seller’s warranties in Section 6.1(a), the Purchased Inventory does not comply with Seller’s representations and warranties in Section 3.1.13(a) of the Asset Purchase Agreement or as a result of gross negligence, fraud or willful misconduct by Seller or any of its subcontractors, Seller shall be responsible for all Direct Expenses incurred by Buyer as a result of such Recall.  To the extent a Recall is initiated because of a defect in, or any adulteration or misbranding of, the Supplied Product resulting from Buyer’s or any of Buyer’s Affiliates, distributors, licensees, subcontractor’s or other agents’ failure to package, label, warehouse, transport, handle or sell Supplied Product strictly in accordance with the terms of this Agreement, the Asset Purchase Agreement or the License Agreement and applicable Law, or having repacked or relabeled such Product in a manner that violates applicable Law, or any gross negligence, fraud or willful misconduct by Buyer or any of Buyer’s Affiliates, distributors, licensees, subcontractor’s or other agents, Buyer shall reimburse Seller for all Direct Expenses incurred by Seller or its Affiliates as a result of such Recall.  All other Direct Expenses of the Parties incurred in connection with any Recall shall be borne by the Party incurring such Direct Expenses.

 

	
9.3  

	
Disputes Related to Direct Expenses.  If there is any dispute concerning which Party’s acts or omissions gave rise to any Recall or Withdrawal, such dispute, at either Party’s option, shall be first referred for good faith discussions between the Quality Executives for a period of [***] and, if such dispute remains unresolved after such period, at either Party’s option, shall be then referred for decision to an independent expert, acting as an expert and not as an arbitrator, to be appointed by agreement between Buyer and Seller, such agreement not to be unreasonably withheld, delayed or conditioned by either Party.  The decision of such independent expert shall be in writing and, except for manifest error on the face of the decision, shall be binding on both Buyer and Seller and not subject to Section 12.2(a) or Section 12.3 of this Agreement.  The costs of such independent expert shall be borne by the Party found to be responsible for the Recall or Withdrawal by the independent expert.  After such determination, costs shall be paid by the responsible Party in accordance with Section 9.1 or 9.2, as applicable.

 

	
10.    

	
CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS.

 

	
10.1  

	
Confidentiality and Non-Use.  Each of the Parties hereto agrees to preserve the confidentiality of Confidential Information of the other Party delivered hereunder pursuant to the terms and conditions of Section 5.4 of the Asset Purchase Agreement.

 

	
10.2  

	
Publicity/Use of Names.  Any press releases or public announcements concerning this Agreement or use of the other Party’s name, trademark, trade name or logo shall be made subject to and only in accordance with the terms of the Asset Purchase Agreement.

 

	
11.    

	
TERM AND TERMINATION.

 

	
11.1  

	
Term.  This Agreement shall be effective as of the Effective Date and, unless terminated earlier pursuant to Section 11.2 below, shall expire on the last day of the Calendar Quarter immediately following the Calendar Quarter in which Generic Entry first occurs; provided, however, that if Buyer provides written notice to Seller within [***] following Generic Entry, the term of the Agreement shall be extended and shall expire on the first anniversary of Generic Entry, unless otherwise agreed by the Parties in writing; and provided, further, that notwithstanding anything to the contrary in this Section 11.1, this Agreement shall expire no later than [***] (such period, the “Supply Term”).

 

	
11.2  

	
Termination by Either Party.

 

This Agreement may be terminated prior to expiration as described below:

 

	
(a)  

	
this Agreement shall terminate automatically upon any termination of the License Agreement;

 

	
(b)  

	
in the event that either Party to this Agreement (the “Breaching Party”) breaches any of its material obligations hereunder, the other Party may give the Breaching Party written notice of such breach and shall require that such breach or default be cured immediately.  In the event that the Breaching Party fails to cure such breach or default within [***] after the date of the other Party’s notice thereof, this Agreement shall terminate immediately; provided that if such breach or default cannot be cured within [***] and the Breaching Party commences and diligently pursues actions to cure such breach within such [***] period, the Breaching Party shall have an additional [***] period to cure such breach before such termination becomes effective; provided, further, that a [***](rather than a [***]) cure period shall apply to any breach of a payment obligation hereunder and such cure period shall not be subject to extension in accordance with the preceding proviso;

 

	
(c)  

	
Seller or Buyer, as the case may be, shall have the right to terminate this Agreement, immediately upon giving written notice of termination to the other Party in the event that the other Party suffers an Insolvency Event;

 

	
(d)  

	
Seller or Buyer, as the case may be, shall have the right to terminate this Agreement, immediately upon giving written notice of termination to the other Party, as provided for in Section 12.1; and

 

	
(e)  

	
the Parties shall have the right to terminate this Agreement upon the Parties’ mutual written agreement at any time.

 

	
11.3  

	
Effect of Expiration and Termination.

 

	
(a)  

	
Upon any expiration or earlier termination of this Agreement:  (i) Buyer shall have the right, subject to Section 9.1 and 9.2, to continue selling and complete the sale of all inventory of Supplied Products (itself or through Affiliates and/or sublicensees) remaining in its possession at the time of such expiration or termination, as the case may be, in accordance with the terms of the License Agreement, (ii) Buyer shall have the right to exercise the Back-Up Manufacturing License under Section 2.3(b)(ii) for the sole purpose of Manufacturing the Requirements of Supplied Product for Exploitation in the Buyer Territory, in accordance with the terms of the License Agreement (provided that in the event of a termination of this Agreement by Seller pursuant to Section 11.2(b), notwithstanding Section 11.4 to the contrary, Section 2.3(b)(iii) shall be deemed to survive such termination) and (iii) upon Buyer’s request and to the extent not previously conducted in connection with any Supply Failure, Seller shall conduct the Technology Transfer (provided that in the event of a termination of this Agreement by Seller pursuant to Section 11.2(b), [***] costs and expenses incurred in connection with the Technology Transfer.  Except as set forth in Section 11.3(b)(i), upon expiration or earlier termination of this Agreement, all Firm Orders automatically shall be deemed canceled, and Seller shall have no further obligation with respect thereto.

 

	
(b)  

	
Upon expiration or termination of this Agreement (other than by Seller pursuant to Section 11.2(b)):  (i) Seller shall have the right and obligation (but subject to Section 4.4(c)) to complete any Firm Orders for Supplied Product accepted prior to the date of receipt of notice of such termination and Buyer shall be required to accept delivery and make payment for such Product in accordance with the terms and conditions of this Agreement, (ii) Seller shall use its commercially reasonable efforts to assign to Buyer the Seller Supply Agreements, unless, with respect to any Seller Supply Agreement, such agreement (A) expressly prohibits such assignment, in which case, Seller shall reasonably cooperate with Buyer to secure the consent of the applicable Third Party to such assignment (provided, that Seller shall in no event be required to pay any amounts to effect secure such consent), or (B) covers Manufacturing or other services other than the Manufacture of the Supplied Product for resale in the Buyer Territory (and Seller determines in good faith that it would not be commercially feasible or otherwise practicable to partially assign the rights and obligations relating to the Supplied Product in the Buyer Territory under such agreement to Buyer), in which case ((A) or (B)), Seller shall[***] reasonably cooperate with Buyer in connection with Buyer obtaining similar Manufacturing services with respect to the Supplied Product in the Buyer Territory, including facilitating the execution of a new agreement between Buyer and the applicable Third Party with respect thereto, (iii) unless and until assumed pursuant to clause (ii) above or otherwise to the extent reasonably requested by Seller, Buyer shall perform Seller’s obligations under the Seller Supply Agreements to the extent resulting from Buyer’s continued Exploitation of the Product in the Buyer Territory (and Seller shall pass through to Buyer the benefits resulting from such performance) and (iv) Buyer shall, in the event it seeks to establish its own supply of Supplied Product, include the Suppliers in any requests for bids or proposals in connection therewith and consider any bids or proposals received from any Supplier in good faith.

 

	
(c)  

	
Upon expiration or termination of this Agreement for any reason, subject to Section 11.3(a), Buyer shall pay to Seller (i) all amounts payable hereunder to Seller that have accrued but that remain outstanding as of the date of expiration or termination, as applicable, or that accrue thereafter, (ii) [***] and (iii) [***], in each case within [***] following such expiration or termination or, if later, of the accrual thereof.

 

	
(d)  

	
Within [***] following the expiration or termination of this Agreement, each Party shall either, at the other Party’s option (i) return to the other Party all Confidential Information received from the other Party under this Agreement to which such Party does not otherwise retain rights under this Agreement, the Asset Purchase Agreement or the License Agreement or (ii) destroy, and certify in writing to the destruction of, such Confidential Information, except in either case, one copy of such Confidential Information, which may be retained for archival purposes.

 

	
11.4  

	
Survival.  Termination or expiration of this Agreement shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement and shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration.  Without limiting the foregoing, clause (ii) of Section 2.4(a), Section 11.3, this Section 11.4, Article 4, Article 7, Article 9, Article 10 and Article 12 shall survive the termination or expiration of this Agreement for any reason.

 

	
12.    

	
GENERAL PROVISIONS.

 

	
12.1  

	
Force Majeure. 

 

	
(a)  

	
Neither Party shall be liable for any failure to perform, or any delay in the performance of, any of its obligations under this Agreement to the extent, but only to the extent, that such Party’s performance is prevented or delayed by the occurrence of an event of Force Majeure.  For purposes of this Agreement, “Force Majeure” shall mean (i) war, civil war, insurrection, rebellion, civil unrest, fire, flood, earthquake, or adverse weather conditions, (ii) strike, lockout or labor unrest, (iii) unavailability of supplies, materials or transportation, acts of the public enemy, acts of government authorities (including the refusal of the competent Governmental Authorities to issue required Regulatory Approvals), and (iv) any other cause or condition beyond the 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 event of Force Majeure, that Party shall furnish immediate written notice thereof to the other Party hereto and shall use diligent good faith efforts to perform such obligation.

 

	
(b)  

	
If an event of Force Majeure occurs that prevents or substantially interferes with either Party’s ability to perform a material obligation under this Agreement for a period greater than [***], then either Party may terminate this Agreement upon written notice to the other Party.  This Section 12.1 will not excuse the payment of any amount due and owing to a Party through any available lawful means reasonably available to the other Party.

 

	
12.2  

	
Governing Law.  This Agreement shall be governed by and construed in accordance with 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.

 

	
(a)  

	
Jurisdiction.  Subject to Section 12.3 and Section 12.15, the Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of New York and the United States District Court for the Southern District of New York for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement, and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts.  The Parties irrevocably and unconditionally waive their right to a jury trial.

 

	
(b)  

	
Venue.  Subject to Section 12.3, the Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the courts of the State of New York or in the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding  brought in any such court has been brought in an inconvenient forum.

 

	
(c)  

	
Service.  Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 12.11 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.

 

	
12.3  

	
Dispute Resolution.  The Parties recognize that a bona fide Dispute as to certain matters may from time to time arise during the term of this Agreement that relates to either Party’s rights or obligations hereunder.  Except as expressly set forth herein and subject to Section 12.15, any Dispute arising hereunder shall be resolved in accordance with Section 9.10 of the Asset Purchase Agreement.

 

	
12.4  

	
Assignment.  Except as expressly set forth in this Agreement, neither Party shall have the right or the power to assign or sublicense (except as permitted in the License Agreement), in whole or in part, any of its rights, or delegate or subcontract the performance of any of its obligations under this Agreement without the prior written authorization of the other Party, which authorization shall not be unreasonably withheld, conditioned or delayed; provided, however, that either Party may assign or delegate any or all of its rights or obligations hereunder without such prior written authorization (a) to an Affiliate or (b) to its successor in interest in connection with a merger, consolidation or similar change of control transaction of such Party.  Further, Buyer may in any event grant sublicenses as provided in Section 2.3 of the License Agreement.  Subject to the foregoing, it shall not be unreasonable for a Party (the “Consenting Party”) to refuse to authorize any assignment, sublicense or subcontract proposed by the other Party (the “Assigning Party”) that is not otherwise provided for in this Agreement in the event that: [***].  Any permitted assignment or delegation hereunder by a Party shall not relieve such Party of any of its obligations under this Agreement, unless, with respect an assignment to a Third Party, such assignee agrees in writing to assume such Party’s obligations under this Agreement, in which case such Party shall be relieved of its obligations hereunder from and after the effective date of such assignment and assumption.  Nothing in this Section 12.4 shall relieve or release either Party from its obligations relating to a change to the situs of Manufacture, which shall be governed by the Quality Agreement. Subject to the foregoing, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns.

 

	
12.5  

	
Amendment.  This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by both Parties

 

	
12.6  

	
Entire Agreement.  This Agreement, together with the Schedules and Exhibits expressly contemplated hereby and attached hereto, the Asset Purchase Agreement and the other Ancillary Agreements, contain the entire agreement between the Parties with respect to the transactions contemplated hereby and supersede all prior agreements, understandings, promises and representations, whether written or oral, between the Parties with respect to the subject matter hereof.  In the event of any inconsistency between any such Schedules and Exhibits and this Agreement, the terms of this Agreement shall govern.  

 

	
12.7  

	
Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties.

 

	
12.8  

	
Headings.  The subject headings of this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any provision of this Agreement.

 

	
12.9  

	
Further Assurances.  Each Party agrees to execute such further papers, agreements, documents, instruments and the like as may be necessary or desirable to effect the purpose of this Agreement and to carry out its provisions.

 

	
12.10  

	
Counterparts.  This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed original counterpart of this Agreement.

 

	
12.11  

	
Notices.

 

	
(a)  

	
Notice Requirements.  Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement (each, a “Notice”) 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 overnight registered mail, courier or express delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 12.11(b) or to such other address as the Party to whom notice is to be given may have provided to the other Party at least 10 days’ prior to such address taking effect in accordance with this Section 12.11.  Such Notice shall be deemed to have been received: (a) as of the date delivered by hand or by overnight registered mail, courier or express delivery service; or (b) on the day sent by facsimile provided that the sender had received confirmation of transmission (by facsimile receipt confirmation or confirmation by telephone or email) prior to 6:00 p.m. Eastern Time on such day (and if confirmation is received after 6:00 p.m. Eastern Time, such Notice shall be deemed to have been delivered on the following Business Day).  Any Notice delivered by facsimile shall be confirmed by a hard copy delivered promptly thereafter.

 

	
(b)  

	
Address for Notice. 

 

If to Seller, to:

Merck Sharp & Dohme BV

Waarderweg 39

2031 BN

Haarlem

Netherlands

Attention: Managing Director

Facsimile: [***]

 

with a copy (which shall not constitute notice) to:

 

Merck Sharp & Dohme Corp.

One Merck Drive

Whitehouse Station, NJ 08889

United States of America

Facsimile:  [***]

Attention:  Office of Secretary

 

and to:

Covington & Burling LLP

1201 Pennsylvania Avenue, N.W.

Washington, DC  20004

Facsimile:  (202) 662-6291

Attention:  John Hurvitz

Michael J. Riella

If to Buyer, to:

Forest Laboratories Holdings Limited

Cumberland House

9th Floor

1 Victoria Street

Hamilton HM 11, Bermuda

Attention: Chief Legal Officer

Facsimile: [***]

with a copy (which shall not constitute notice) to:

Dentons US LLP

101 JFK Parkway, Suite 400

Short Hills, New Jersey 07078

Attention: John L. Cleary, II

Facsimile: (973) 912-7199

	
12.12  

	
No Benefit to Third Parties.  The covenants and agreements set forth in this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and, except for the rights of Buyer Indemnitees and Seller Indemnitees under Article 7, they shall not be construed as conferring any rights on any other Persons.

 

	
12.13  

	
Expenses.  Except as otherwise specified herein or in the Asset Purchase Agreement or in any other Ancillary Agreement, each Party shall bear any costs and expenses incurred by it with respect to the transactions contemplated herein.

 

	
12.14  

	
Waiver and Non-Exclusion of Remedies.  Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition.  The waiver by any Party of any right hereunder or of the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.  The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by applicable Law or otherwise available except as expressly set forth herein.

 

	
12.15  

	
Equitable Relief.  The Parties agree that irreparable damage may occur in the event that a Party does not perform its obligations hereunder in accordance with its specific terms or otherwise materially breaches such obligations.  It is accordingly agreed that each Party shall be entitled to seek an injunction or injunctions to prevent material breaches of terms and provisions of this Agreement by the other Party that will or may cause irreparable harm to such Party, in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which the aggrieved Party may be entitled at law or in equity.  Each Party hereby waives any defenses in any action for specific performance, including the defense that a remedy at law would be adequate.

 

	
12.16  

	
Independent Contractors.  In the exercise of their respective rights, and the performance of their respective obligations, under this Agreement, the Parties are, and shall remain, independent contractors.  Nothing in this Agreement shall be construed to constitute the Parties as partners, joint venturers, or participants in a joint enterprise or undertaking, or to constitute either of the Parties as the agent of the other Party for any purpose whatsoever.  Neither Party shall bind, or attempt to bind, the other Party hereto to any contract or the performance of any other obligation, or represent to any Third Party that it is authorized to enter into any contract or binding obligation on behalf of the other Party hereto.

 

	
12.17  

	
English Language.  This Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language.  Any translation into any other language shall not be an official version thereof, and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.

 

	
12.18  

	
Construction.  Except where the context otherwise requires, wherever used, the singular includes 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 does not limit the generality of any description preceding such term, and is deemed to mean “including without limitation”.  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.  Unless otherwise specified or where the context otherwise requires, (a) references in this Agreement to any Article, Section, Schedule or Exhibit are references to such Article, Section, Schedule or Exhibit of this Agreement; (b) references in any Section to any clause are references to such clause of such Section; (c) “hereof,” “hereto,” “hereby,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) references to a Person are also to its permitted successors and assigns; (e) references to a Law include any amendment or modification to such Law and any rules or regulations issued thereunder, in each case, as in effect at the relevant time of reference thereto; (f) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the relevant time of reference thereto; and (g) references to monetary amounts are denominated in United States Dollars.

 

[Signature Page Follows]

 

  

  

  

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.

 

MERCK SHARP & DOHME BV                                                                           FOREST LABORATORIES

                                                                           IRELAND LIMITED

 

By:/s/ M.L.P.J. Mol-Arts                                                      By: /s/ Diarmuid Burke                                                      

 

Name: M.L.P.J. Mol-Arts                                                      Name: Diarmuid Burke                                                      

 

Title: General Manager, MSD Oss                                                                      Title: Director 

 

 

 

  

  

  

 

SCHEDULE 1:

 

 

SELLER SUPPLY AGREEMENTS

 

[***]

[***]

 

  

  

  

 

SCHEDULE 2:

 

 

TECHNOLOGY TRANSFER

 

 

 

API Technical Transfer Information

[***]

 

  

  

  

 

SCHEDULE 3:

 

 

PACKAGING TRANSFER

 

 

 

 

 

1)           Secondary packaging bill of materials

[***]

2)           Packaging process overview

[***]

3)           Pallet configuration

4)           Shipping conditions

 

  

  

  

 

SCHEDULE 4:

 

 

MINIMUM BATCH SIZES

 

[***]

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