Document:

exv10w3

 

Exhibit 10.3

ADDENDUM TO EMPLOYMENT AGREEMENT

     This Addendum is made as April 1, 2004 (the “Addendum”) by and between
CoStar Realty Information, Inc. (the “Company”), and David Schaffel (the
“Employee”) and is executed pursuant to and made a part of the Employment
Agreement, dated as of April 24, 1998 (the “Employment Agreement”), between OLD
RIG, a predecessor in interest to the Company, and the Employee.

     Any capitalized term used in this Addendum and not otherwise defined shall
have the meaning set forth in the Employment Agreement.

     NOW THEREFORE, in consideration for the increased compensation and the
other consideration given to Employee in connection with his annual review, the
Company and the Employee agree that the Employment Agreement shall be amended
as follows:

     1. The last sentence of Section 4(b) of the Employment Agreement shall
be amended and replaced in its entirety with the following:

     Beginning in 2004, the Annual Bonus will be up to 75% of the Base
Compensation paid during such calendar year.

     2. Employee and the Company agree that except as expressly provided
above, all of the terms of the Employment Agreement will remain in full
force and effect.

     IN WITNESS WHEREOF, the parties hereto have executed this Addendum on the
day and year set forth below.

	 	 	 	 	 
	Employee:	 	Company:
	 
	 	 	 	 
	/s/

	 	By:
	 	/s/
	
 

	 	 	 	
 
	David Schaffel	 	Andrew C. Florance
	 	 	Chief Executive Officer and Presidentexv10w4

 

Exhibit 10.4

ADDENDUM TO EMPLOYMENT TERMS

     This Addendum is made as April 1, 2004 (the “Addendum”) by and between
CoStar Realty Information, Inc. (the “Company”), and Craig Farrington (the
“Employee”) and is executed pursuant to and made a part of the Offer Letter,
dated as of March 3, 2000 (the “Offer Letter”), between Comps, Inc., a
predecessor in interest to the Company, and the Employee.

     Any capitalized term used in this Addendum and not otherwise defined shall
have the meaning set forth in the Offer Letter.

     NOW THEREFORE, in consideration for the increased compensation and the
other consideration given to Employee in connection with his annual review, the
Company and the Employee agree that the Offer Letter terms shall be amended as
follows:

	 	1.	 	Notwithstanding anything set forth to the contrary in the Offer
Letter, beginning in 2004, the Employee shall have the opportunity to
earn an annual bonus of up to 75% of the annual base salary (pro rated
for partial calendar years during the employment term).
	 
	 	2.	 	Employee and the Company agree that except as expressly provided
above, all of the terms of the Offer Letter will remain in full force
and effect.

     IN WITNESS WHEREOF, the parties hereto have executed this Addendum on the
day and year set forth below.

	 	 	 	 	 
	Employee:	 	Company:
	 
	 	 	 	 
	/s/

	 	By:
	 	/s/
	
 

	 	 	 	
 
	Craig Farrington	 	Andrew C. Florance
	 	 	Chief Executive Officer and Presidentexv10w1

 

Exhibit 10.1

Final Execution Version

DEVELOPMENT AND

COMMERCIALIZATION AGREEMENT

     This Development and Commercialization Agreement (this “Agreement”) is
made and entered into this 28th day of May, 2004 (the “Effective Date”), by and
between Advancis Pharmaceutical Corporation, a Delaware corporation
(“Advancis”), and Par Pharmaceutical, Inc., a Delaware corporation (“Par”).

     WHEREAS, Advancis is the owner of certain patents and know-how relating to
formulations for the administration of antibiotics, including its proprietary
PULSYSTM technology;

     WHEREAS, Advancis has commenced the development of a PULSYSTM-based
amoxicillin product; and

     WHEREAS, Advancis and Par desire to collaborate in the further development
and commercialization of a PULSYSTM-based amoxicillin product.

     NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Advancis and Par
agree as follows:

ARTICLE I

DEFINITIONS

     The following terms shall have the following meanings:

	1.1.	 	“Adult Product” means a pharmaceutical presentation of the
Compound (a) that utilizes or incorporates PULSYSTM, (b) that
contains no active pharmaceutical ingredient (including any active
pharmaceutical ingredient that acts as an [***]) other than the
Compound, and (c) that is used or is being developed for the Adult
Product Indication, other than formulations of Exhibit A.
	 
	1.2.	 	“Adult Product Indication” means [***] in adolescents/adults
[***], and any other indication agreed to by the Parties.
	 
	1.3.	 	“Advancis Indemnified Parties” has meaning set forth in
Section 13.1.
	 
	1.4.	 	“Advancis Know-How” means Know-How owned by or licensed to
Advancis, as of the Effective Date or owned by or licensed to
Advancis after the Effective Date, which Know-How relates to,
underlies or arises out of Advancis’s proprietary technology that is
used in the development, manufacture, use or sale of Product.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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	1.5.	 	“Advancis Patent Rights” means all Patent Rights owned by or
licensed to Advancis as of the Effective Date or owned by or
licensed to Advancis after the Effective Date, which Patent Rights
relate to, underlie or arise out of Advancis’s proprietary
technology and that are required or utilized for manufacture, use,
or sale of Product.
	 
	1.6.	 	“Advancis Slogan” has the meaning set forth in Section 5.4.1.
	 
	1.7.	 	“Affiliate” means any Person that directly or indirectly
Controls, is Controlled by or is under common Control with either
Par or Advancis, as applicable. For purposes of this definition,
“Control” means the power to direct or cause the direction of the
management and policies of a Person, whether pursuant to the
ownership of voting securities, by contract or otherwise.
	 
	1.8.	 	“Alliance Manager” has the meaning set forth in Section 3.1.4.
	 
	1.9.	 	“Baseball Arbitration” has the meaning set forth in Section 17.2.2.
	 
	1.10.	 	“Baseball Arbitration Notice” has the meaning set forth in Section 17.2.2.
	 
	1.11.	 	“cGMP” means the regulatory requirements for current good
manufacturing practices promulgated by the FDA under the U.S. Food,
Drug and Cosmetic Act and the regulations promulgated thereunder,
particularly 21 C.F.R. Section 210 et seq., and 21 C.F.R. Sections
600-610, as the same may be amended from time to time.
	 
	1.12.	 	“Clinical Supplies” means supplies of Products,
manufactured, packaged and labeled in compliance with cGMP, in such
form and dosage as is determined by Advancis pursuant to the
Development Plan, and suitable for use in the conduct of
pre-clinical and/or human clinical trials of the Products in the
United States by the Parties pursuant to the Development Plan.
	 
	1.13.	 	“Collaboration Payments” has the meaning set forth in
Section 6.2.
	 
	1.14.	 	“Commercialization” means the marketing, promotion,
advertising, selling and/or distribution of Products in the United
States after Regulatory Approval has been obtained. The term
“Commercialize” has a corresponding meaning.
	 
	1.15.	 	“Commercialization Plan” has the meaning set forth in
Section 5.2.1.
	 
	1.16.	 	“Commercialization Program” means the Commercialization
program conceived, planned, organized, and performed by the Parties
for the purpose of bringing the Products to market for sale in the
United States, in accordance with the Commercialization Plan.
	 
	1.17.	 	[***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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	1.18.	 	“Commercial Supplies” means supplies of Product,
manufactured, packaged and labeled in compliance with cGMP, in such
form and dosage as is determined by Advancis pursuant to the
Development Plan, and suitable for Commercialization in the United
States by the Parties pursuant to the terms of this Agreement and
the annual Commercialization Plans. As used herein, “Commercial
Supplies” includes Samples.
	 
	1.19.	 	“Commercialization Parameters and Detailing Schedule” means
the schedule, attached to this Agreement as Exhibit C, that
addresses the Detailing and Promotional activities for each Party
during the Term. The objectives of Exhibit C automatically shall be
incorporated in and be part of the initial Commercialization Plan
upon approval of the initial Commercialization Plan, and may be
amended solely in conjunction with the amendment of the initial
Commercialization Plan.
	 
	1.20.	 	“Compound” means the compound amoxicillin, including all
racemates, chelates, complexes, enantiomers, diastereoisomers,
salts, bases, esters, hydrates, solvates, polymorphs, crystal forms,
crystal habits, prodrugs, isotopic or radiolabeled equivalents,
metabolites, or the like, thereof and all mixtures of any of the
foregoing.
	 
	1.21.	 	“Confidential Information” means information of a Party that
is disclosed to or obtained by the other Party (including
information obtained by a Party as a result of access to the
facilities of the other Party) either prior to or during the term of
this Agreement which information (a) is non-public, confidential or
proprietary in nature, including trade secrets, financial data,
product information, manufacturing methods, market research data,
marketing plans, identity of customers, nature and source of raw
materials, product formulation and methods of producing, testing and
packaging, and (b) relates to the disclosing Party’s past, present
or future research, development or Commercialization activities;
provided, however, that Confidential Information shall not include
information that a Party can demonstrate by written evidence: (i)
is in the public domain other than as a result of a breach by such
Party (or any of its Affiliates) of its obligations of
confidentiality contained herein; (ii) was known by the receiving
Party prior to receipt from the disclosing Party; (iii) has been
developed by the receiving Party independent of any Confidential
Information of the other Party; or (iv) was subsequently, lawfully
and in good faith obtained by the receiving Party on a
non-confidential basis from a third party that was not under an
obligation to treat such information in a confidential manner and
had a lawful right to make such disclosure. Without limiting the
foregoing, the terms of this Agreement, including the Development
Plan and each Commercialization Plan, shall constitute “Confidential
Information” hereunder.
	 
	1.22.	 	“Damages” has the meaning set forth in Section 11.2.3.
	 
	1.23.	 	“Defaulting Party” has the meaning set forth in Section 12.2.1.

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	1.24.	 	“Detail” has the meaning set forth in Exhibit C.
	 
	1.25.	 	“Detailing Priorities” has the meaning set forth in Exhibit C.
	 
	1.26.	 	“Detailing Requirements” has the meaning set forth in Exhibit C.
	 
	1.27.	 	“Development and Manufacturing Subcommittee” has the meaning
set forth in Section 3.3.
	 
	1.28.	 	“Development Costs” has the meaning set forth Exhibit B.
	 
	1.29.	 	“Development Funding Gap” means the excess of (a) the
aggregate amount of Development Costs incurred by Advancis from the
Effective Date over (b) the aggregate amount of the installment
payments made by Par after the Effective Date pursuant to Section
B.10 of Exhibit B.
	 
	1.30.	 	“Development Plan” means the plan for the implementation and
funding of the Development Program mutually agreed to by the
Parties, which plan is designed to generate the development,
clinical and regulatory information required for filing NDAs and to
further support the development of Products for the purpose of
obtaining Regulatory Approvals, and any revisions thereto that are
made in accordance with this Agreement.
	 
	1.31.	 	“Development Program” means the research and development
program conceived, planned, organized, controlled and performed by
Advancis to develop the Products for Commercialization, in
accordance with the Development Plan. The Development Program
includes all activities related to Product Studies, toxicology,
formulation, process development, quality assurance/quality control,
and regulatory affairs for a Product in connection with obtaining
Regulatory Approvals of such Product.
	 
	1.32.	 	“Draft Plan” has the meaning set forth in Section 5.2.1.
	 
	1.33.	 	“Effective Date” has the meaning set forth in the preamble.
	 
	1.34.	 	“FDA” means The Food and Drug Administration of the United
States Department of Health and Human Services, or any successor
agency(ies) thereof performing similar functions.
	 
	1.35.	 	“Financial Planning Schedule” means the financial planning,
accounting and reporting schedule of the Parties relating to the
costs, budgeting, funding, and related financial and accounting
matters relevant to this Agreement, a copy of which is attached to
this Agreement as Exhibit B.
	 
	1.36.	 	“FTE” has the meaning set forth in Exhibit B.
	 
	1.37.	 	“FTE Rate” has the meaning set forth in Exhibit B.

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	1.38.	 	“Indemnitor” has the meaning set forth in Section 13.3.
	 
	1.39.	 	“Indemnitee” has the meaning set forth in Section 13.3.
	 
	1.40.	 	“Indications” means the Adult Product Indication and the
Pediatric Product Indications.
	 
	1.41.	 	“Invention” means any invention or discovery, whether
patentable or unpatentable, made or discovered while performing
under this Agreement.
	 
	1.42.	 	“Invoice” has the meaning set forth in Exhibit B.
	 
	1.43.	 	“Finance Subcommittee” has the meaning set forth in Section
3.5.
	 
	1.44.	 	“Know-How” means all data, experience, inventions,
discussions, trade secrets, compositions of matter and methods,
procedures, processes, materials, know-how or other scientific or
technical information of any kind of a Party, whether existing prior
to or during the term of this Agreement, and whether or not
patentable or confidential, including biological, chemical,
biochemical, toxicological, pharmacological, metabolic, formulation,
clinical, analytical, and stability information and data.
	 
	1.45.	 	“Losses” has the meaning set forth in Section 13.1.
	 
	1.46.	 	“Manufacturing Costs” has the meaning set forth in Exhibit
B.
	 
	1.47.	 	“Marketing Distributors” means a Third Party to whom Par or
its Affiliate has granted a right to distribute Products.
	 
	1.48.	 	“NDA” means a New Drug Application as defined in the United
States Federal Food, Drug and Cosmetic Act and applicable
regulations promulgated thereunder as amended from time to time.
	 
	1.49.	 	“Net Sales of Products” has the meaning set forth in Exhibit
B.
	 
	1.50.	 	“Non-Defaulting Party” has the meaning set forth in Section
12.2.1.
	 
	1.51.	 	“Office of New Drugs” means the Office of New Drugs within
the Office of the Center Director of the FDA’s Center for Drug
Evaluation and Research.
	 
	1.52.	 	“Operating Profits” has the meaning set forth in Exhibit B.
	 
	1.53.	 	“Option” has the meaning set forth in Section 2.2.
	 
	1.54.	 	“Option Candidate” has the meaning set forth in Section 2.2.
	 
	1.55.	 	“Par Indemnified Parties” has meaning set forth in Section 13.2.
	 
	1.56.	 	“Party” or “Parties” means Advancis and/or Par, as applicable.

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	1.57.	 	“Patent Rights” means any of the following: (a) United
States patents; (b) United States patent applications (both
provisional and non-provisional), PCT patent applications, and
divisionals, continuations and claims of continuation-in-part
applications which shall be directed to subject matter specifically
described in such United States and/or PCT patent applications, and
the resulting patents (whether such divisionals, continuations or
continuation-in-part applications are based upon a United States
patent, United States patent application or PCT application); (c)
any patents resulting from reissues or reexaminations of the United
States patents described in (a) and (b) above; (d) foreign patents;
(e) foreign patent applications and, to the extent applicable,
divisionals, continuations and claims of continuation-in-part
applications which shall be directed to subject matter specifically
described in such foreign patent applications, and the resulting
patents (whether such divisionals, continuations or
continuation-in-part applications are based upon a foreign patent
application or a foreign patent); and (f) any foreign patents,
resulting from foreign procedures similar to United States reissues
and reexaminations, of the foreign patents and applications
described in (d) and (e) above.
	 
	1.58.	 	“PDMA” means the Prescription Drug Marketing Act of 1987.
	 
	1.59.	 	“Pediatric Product” means the pharmaceutical presentation of
the Compound (a) that utilizes or incorporates PULSYSTM, (b) that
contains no active pharmaceutical ingredient (including any active
pharmaceutical ingredient that acts as a [***]) other than the
Compound, and (c) that is used or is being developed for the
Pediatric Product Indications, other than formulations of Exhibit A.
	 
	1.60.	 	“Pediatric Product Indications” means (i) [***] (proposed
Phase III Studies protocol 231.301); (ii) [***]; and (c) any other
indications agreed to by the Parties.
	 
	1.61.	 	“Person” means an individual, partnership, joint venture,
association, corporation, limited liability company and any other
form of business organization, government, regulatory or
governmental agency, commission, department or instrumentality.
	 
	1.62.	 	“Phase III Study(ies)” means that portion of the Development
Program that provides for large scale, pivotal, clinical studies
that (a) are conducted in a number of patients that is intended to
be sufficient to obtain a definitive evaluation of the therapeutic
efficacy and safety of a Product in patients for a given Indication
and (b) that are needed to evaluate the overall risk-benefit
relationship of the Products and to provide adequate basis for
obtaining requisite Regulatory Approvals.
	 
	1.63.	 	“Preliminary Commercialization Plan” means the
Commercialization Plan presented to Par by Advancis on April 14,
2004.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

6

 

	1.64.	 	“Premarketing Costs” has the meaning set forth in Exhibit B.
	 
	1.65.	 	“Premarketing Program” means the program to be conceived,
planned, organized and performed by the Parties from and after the
Effective Date for the purpose of bringing the Products to market
for sale in the United States after Regulatory Approval for such
sale has been obtained, as set forth in the Commercialization Plan.
	 
	1.66.	 	“Principal Trademark” has the meaning set forth in Section 5.4.1.
	 
	1.67.	 	“Product Infringement” has the meaning set forth in Section 11.2.3.
	 
	1.68.	 	“Products” means the Adult Product and the Pediatric Product.
	 
	1.69.	 	“Product Sales Force” has the meaning set forth in Exhibit C.
	 
	1.70.	 	“Product Sales Force Costs” has the meaning set forth in Exhibit B.
	 
	1.71.	 	“Product Studies” means clinical studies, pre-clinical
studies, safety studies, epidemiological studies, modeling and
pharmacoeconomic studies, in each case including any ancillary or
incidental development, investigation or research schemes pertaining
thereto, that are designed (a) to support Regulatory Approval for
the Products or (b) to support publications, Promotional and
educational activities, future labeling changes or new Indications
for the Products.
	 
	1.72.	 	“Product Trademarks” has the meaning set forth in Section
5.4.1.
	 
	1.73.	 	“Program Developments” means all Inventions, discoveries,
Patent Rights, Know-How, copyrights and works of authorship that are
made, developed, created, conceived or reduced to practice in
connection with or relating to the Development Program or
Commercialization Program during the term of this Agreement,
regardless of whether the Invention, discovery, Know-How, or work is
patentable and regardless of whether it was made solely by an
employee or agent of Par, solely by an employee or agent of
Advancis, or jointly by Par and Advancis.
	 
	1.74.	 	“Promote” has the meaning set forth Exhibit C. The term
“Promotional” has a corresponding meaning.
	 
	1.75.	 	“Promotion Costs” has the meaning set forth in Exhibit B.
	 
	1.76.	 	“Promotional Materials” has the meaning set forth in Section 5.2.4.1.
	 
	1.77.	 	“Proposal” has the meaning set forth in Section 17.2.2.
	 
	1.78.	 	“Proposed Phase III Protocols” means, collectively,
Advancis’s current proposals for Phase III Studies protocols for the
Products with respect to the Indications.

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	1.79.	 	“PULSYSTM” means drug delivery technology involving
front-loaded, sequential bursts, or pulses, of a pharmaceutical
product.
	 
	1.80.	 	“Recall” has the meaning set forth in Section 16.1.
	 
	1.81.	 	“Regulatory Approval” means approval by the FDA to market
the Products in the United States, including the issuance by the FDA
of an action letter indicating that an NDA is approved, final FDA
approval of Promotional materials for Products sufficient for
launch, and final FDA approval of manufacturing processes and
facilities for Products sufficient that Commercial Supplies of
Products can be manufactured prior to launch.
	 
	1.82.	 	“Representatives” has the meaning set forth in Section 10.1 below.
	 
	1.83.	 	“Sales and Marketing Subcommittee” has the meaning set forth in Section 3.4.
	 
	1.84.	 	“Sales Representatives” has the meaning set forth in Exhibit C.
	 
	1.85.	 	“Sample” means a Product packaged and distributed to a
Target Prescriber as a complementary trial for use with patients in
the United States and in accordance with the PDMA.
	 
	1.86.	 	“Section 4.2.2.2 Period” has the meaning set forth in Section 4.2.2.2.
	 
	1.87.	 	“Section 4.2.2.3 Amount” has the meaning set forth in Section 4.2.2.3.
	 
	1.88.	 	“Subcommittee” has the meaning set forth in Section 3.1.5.
	 
	1.89.	 	“Supply Agreement” has the meaning set forth in Section 8.3.
	 
	1.90.	 	“Targeted Prescribers” has the meaning set forth in Exhibit C.
	 
	1.91.	 	“Term” has the meaning set forth in Section 12.1 below.
	 
	1.92.	 	“Third Party” means any party other than Par, Advancis and
their respective Affiliates.
	 
	1.93.	 	“Territory” means [***], subject to the provisions of
Exhibit D.
	 
	1.94.	 	“Total Details” means the aggregate number of Details and
the Detail Priorities therefor for the applicable calendar year as
set forth in the Commercialization Plan for the applicable calendar
year.
	 
	1.95.	 	“Valid Claim” means either (a) a claim contained in an
issued and unexpired patent which constitutes Advancis Patent Rights
which claim (i) has not been held unenforceable, unpatentable or
invalid by a governmental agency or a court of competent
jurisdiction in a decision which is unappealable or which was not
appealed within the time allowed for appeal, and (ii) has not been
admitted to be unenforceable, unpatentable or invalid through
abandonment, reissue, disclaimer

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

8

 

	 	 	or otherwise, or (b) a claim contained in a pending patent
application which constitutes Advancis Patent Rights which claim
(i) has not been abandoned or finally rejected by Advancis without
the possibility of appeal or re-filing and (ii) has been under
examination for less than four (4) years.

ARTICLE II

SCOPE OF THE COLLABORATION

     2.1 Products. The Parties agree, pursuant and subject to the terms of
this Agreement, that the goals of their collaboration under this Agreement are
to develop the Products to obtain Regulatory Approval for such Products in the
Territory in commercially-significant indications and to Commercialize such
Products in the Territory as soon as reasonably practicable. Except as
otherwise expressly provided herein, each Party shall use Commercially
Reasonable Efforts to perform its tasks and obligations under this Agreement,
including under the Development Plan and each Commercialization Plan, and each
Party shall cooperate with the other Party in the performance of such other
Party’s tasks and obligations hereunder.

     2.2 Option. (a) During the Term, [***]; and Advancis agrees to [***] to
[***]. Advancis shall provide Par with written notice of the Option Candidate
and provide Par information reasonably available to Advancis, including an
estimate of the cost for developing and obtaining regulatory approval therefor
that is reasonably required by Par to make a determination as to whether or not
to enter into an agreement with Advancis with respect to such Option Candidate.
The delivery of such notice shall automatically grant to Par an exclusive
Option to enter into an agreement with Advancis with respect to such Option
Candidate (the “Option”). Within [***] after Par’s receipt of notification of
the Option Candidate from Advancis, Par shall have the right to (a) exercise
the Option by delivering to Advancis a written notice of exercise; or (b)
reject the Option. If Par fails to exercise the Option within [***] after
Par’s receipt of notification of the Option Candidate from Advancis, the Option
shall be deemed rejected and shall expire. If Par exercises the Option,
Advancis shall negotiate exclusively and in good faith with Par the terms of a
development and commercialization agreement for the Option Candidate for a
period of [***] following exercise of the Option (the “Candidate Agreement”).
The Candidate Agreement shall be on terms substantially similar to those of
this Agreement and shall include the following terms: (i) Advancis is the
Selling Party and Par shall co-promote, with each Party having the right to
perform [***] of the details and neither Party shall be required to perform
more than [***] of the details and neither party shall perform less than forty
percent of the details, (ii) the Parties shall [***], (iii) the Parties shall
[***], (iv) each Party shall [***], (v) Par shall [***], and (vi) Par shall
[***].

     If at the end of the [***], the Parties have not reached agreement as to
all of the terms and conditions of the Candidate Agreement, then at any time
thereafter either Party shall have the right to submit to Baseball Arbitration
the terms and conditions as to which agreement has not been reached. It is
expressly understood and agreed that the terms that have been set forth in
Section 2.2(i)-(vi) shall be included in the Candidate Agreement and such terms
may not be varied or changed by the Baseball Arbitration.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

9

 

     (b) If an Option is rejected by Par pursuant to Section 2.2(a) with
respect to an Option Candidate, then Advancis agrees to offer Par one other
Option Candidate pursuant to Section 2.2(a). It is expressly understood that
this Section 2.2(b) applies only once.

     2.3 Non-Competition. During the Term, and except as through the
Collaboration pursuant to this Agreement neither party for the Territory shall
develop, market, sell or distribute any pharmaceutical product that [***],
wherein the sole active pharmaceutical ingredient in such product is the
compound amoxicillin, including chelates, complexes, hydrates, solvates,
polymorphs or other crystal forms or habits, or radiolabled equivalents or any
mixture of the foregoing. Notwithstanding the foregoing, it is expressly
agreed that this Section 2.3 does not apply to any formulations of Exhibit A.

ARTICLE III

MANAGEMENT OF THE COLLABORATION

     3.1 Executive Committee.

        3.1.1. Establishment. The Parties hereby establish an Executive Committee
consisting of six (6) members, three (3) of whom shall be Par designees and
three (3) of whom shall be Advancis designees. Each of the Executive Committee
members shall have appropriate expertise to oversee the Parties’ performance of
this Agreement and at least two (2) designees of each Party must have the rank
of Vice President or higher within such Party; provided, that neither Party
shall designate its chief executive officer to serve on the Executive
Committee. The initial Executive Committee members shall be designated by each
Party within one week of the Effective Date. Each Party shall have the right
at any time and from time to time to designate a replacement, on a permanent or
temporary basis, for any or all of its previously-designated members of the
Executive Committee. At the beginning of each calendar year during the Term,
each Party shall appoint one of its designees to serve as a Co-Chair of the
Executive Committee. The initial Co-Chairs shall be designated by each Party
within one week of the Effective Date.

        3.1.2. Meetings and Procedures.

           3.1.2.1 The Executive Committee shall meet at least once per calendar
quarter, and more frequently at the request of either Party or as required to
resolve disputes, disagreements or deadlocks, on such dates, and at such places
and times, as the Parties shall agree; provided that the Parties shall use
their Commercially Reasonable Efforts to cause the first meeting of the
Executive Committee to occur within thirty (30) days after the Effective Date.
The two Co-Chairs shall cooperate to send a notice and agenda for each meeting
of the Executive Committee to all members of the Executive Committee reasonably
in advance of the meeting. The location of regularly-scheduled Executive
Committee meetings shall alternate between the offices of the Parties, unless
otherwise agreed. The members of the Executive Committee also may convene or
be polled or consulted from time to time by means of telephone conference,
video conference, electronic mail or correspondence and the like, as deemed
necessary or appropriate by the Co-Chairs. The Party hosting any Executive
Committee meeting shall appoint one person (who need not be a member of the
Executive Committee) to attend the meeting and

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

10

 

record the minutes of the meeting in writing. Such minutes shall be
circulated to the members of the Executive Committee promptly following the
meeting for review and comment.

           3.1.2.2 All decisions of the Executive Committee shall be made by
unanimous vote or unanimous written consent of both Parties, with each Party
having, collectively, among its respective designees, one vote in all
decisions. The members of the Executive Committee shall use Commercially
Reasonable Efforts to decide all matters assigned to the Executive Committee
under this Agreement or otherwise referred to it by mutual agreement of the
Parties. Any matter that is not decided shall be subject to resolution by the
chief executive officers of the Parties pursuant to Section 17.1 and,
thereafter, by arbitration in accordance with Section 17.2.2.

        3.1.3. Purposes and Powers. The principal purpose of the Executive
Committee shall be to approve the overall strategy for the Parties’
collaboration hereunder and provide guidance and direction as provided herein.
Subject to the express rights of the Parties as set forth herein, the functions
of the Executive Committee shall include:

           3.1.3.1 Acting as liaison between the Parties to ensure that they are
informed of the ongoing progress of the Development Program and the
Premarketing Program;

           3.1.3.2 Reviewing and approving the division of responsibilities between
the Parties as set forth herein and as expanded from time to time in
furtherance of the goals of the Parties’ collaboration;

           3.1.3.3 Reviewing and approving any proposed amendments to the
Commercialization Plans and, reviewing proposed amendments to the Development
Plan;

           3.1.3.4 Establishing and empowering Subcommittees and overseeing their
work on an ongoing basis;

           3.1.3.5 Reviewing and approving the work of the Finance Subcommittee on
all financial aspects of the Commercialization Plans and with respect to the
Development Plan review only on an ongoing basis, including funding
requirements, budget comparisons, expense levels and financial results;

           3.1.3.6 Reviewing and approving activities related to manufacturing of the
Products and the selection of manufacturer(s) for the Products;

           3.1.3.7 Reviewing and approving annual marketing and sales budgets for the
Products based on the then-current Commercialization Plan, and determining any
Phase IV clinical support to be provided by the Parties (including scope and
strategic direction);

           3.1.3.8 In accordance with the procedures established below, resolving
disputes, disagreements and deadlocks between the Parties;

           3.1.3.9 Performing such other responsibilities as may be assigned to the
Executive Committee pursuant to this Agreement or as may be mutually agreed
upon by the Parties from time to time.

11

 

           3.1.3.10 Reviewing and final approval of each Draft Plan and/or revisions
and/or amendments thereto and any amendments to any Commercialization Plan.

        3.1.4. Alliance Managers. The Co-Chair appointed by each Party will
designate another person representing the same Party who has a general
understanding of clinical, regulatory, commercial and manufacturing issues to
act as the Alliance Manager for such Party (each, an “Alliance Manager”). The
role of the Alliance Managers shall be to serve as a single point of contact
within each Party to facilitate communication, collaboration and dispute
resolution between the Parties. The Alliance Managers shall have access to the
decision-makers within their respective Parties and shall have the right to
attend (but not to vote at) all meetings of the Subcommittees. The Co-Chairs
shall inform the Alliance Managers of potential or pending disagreements and
key decisions. The Alliance Managers shall work together to resolve issues and
potential disputes with a view to enabling the Executive Committee and the
Subcommittees to reach unanimous decisions and to avoiding escalation of such
matters.

        3.1.5. Subcommittees. In addition to the Development and Manufacturing
Subcommittee, the Sales and Marketing Subcommittee and the Finance Subcommittee
(as defined below), the Executive Committee may from time to time, in its sole
discretion, create one or more joint subcommittees (each, a “Subcommittee”),
each to consist of an equal number of designees of each Party, for the purpose
of implementing directives of the Executive Committee and strategies and
programs that support and implement the Development Program, the
Commercialization Program and the Premarketing Program. Such Subcommittees
shall meet at such times and locations and shall otherwise be governed by and
subject to such rules, processes and procedures as shall be approved by the
Executive Committee. Except as expressly provided herein or in a written
delegation of authority by the Executive Committee, no Subcommittee shall have
the right to exercise any decision-making authority of the Executive Committee.

        3.1.6. Expenses. Each Party shall bear the cost of travel and other
expenses relating to the attendance of its designees at all meetings of the
Executive Committee and all Subcommittee(s).

        3.1.7. Nondisclosure Agreement. All designees of each Party serving on
the Executive Committee and any Subcommittee(s) shall as a condition to such
service execute a nondisclosure and assignment of inventions agreement in form
and substance reasonably satisfactory to the Parties.

     3.2 Development and Manufacturing Subcommittee. Within thirty (30) days
after the Effective Date, the Parties shall establish a Subcommittee (the
“Development and Manufacturing Subcommittee”) with responsibility for (a)
overseeing the manufacture of all Products and all Compound used therein, (b)
reviewing proposed additions to the Development Plan for presentation to the
Executive Committee (other than budgetary, expense, and other financial
matters, which shall be presented by the Finance Subcommittee); (c) reviewing
proposed changes to the Development Plan and receiving updates regarding
Advancis’s execution of the Development Program; (d) recommending the priority
and design of clinical trials for new Indications and formulations; (e)
recommending the priority of actions to be taken with respect to seeking
Regulatory Approval for the Products; (f) reviewing third party

12

 

manufacturing and supply agreements with respect to the Products; (g)
assisting to identify responses to potential interruptions in the supply of
Compound or Products; (h) supervising audits of any third party suppliers of
Compound or Products; (i) supervising implementation of improvements in quality
control and assurance, cost reduction initiatives, logistics initiatives,
environmental, health and safety initiatives and similar programs; and (j)
performing such other duties as may be assigned under this Agreement or as may
be delegated to the Development and Manufacturing Subcommittee by the Executive
Committee; provided, that nothing in this Section 3.3 shall limit the rights or
obligations of the Parties under Articles IV and VIII or under the Supply
Agreement. Each Party shall appoint two designees to the Development and
Manufacturing Subcommittee each of whom shall have expertise and experience in
the areas of pharmaceutical development and manufacturing. Either Party may
replace any or all of its designees on the Development and Manufacturing
Subcommittee at any time upon written notice to the other Party, and any member
of the Development and Manufacturing Subcommittee may designate a suitable
proxy to perform the functions of that member at any time. In addition, the
Development and Manufacturing Subcommittee shall seek to act with the unanimous
consent of all members of the Development and Manufacturing Subcommittee. In
the event that the Development and Manufacturing Subcommittee members do not
reach consensus with respect to a matter that is within the purview of the
Development and Manufacturing Subcommittee, the Development and Manufacturing
Subcommittee designees of each Party shall collectively have one vote for
purposes of decision-making hereunder with respect to such matters, with
decisions made by unanimous vote of both Parties. If the votes of the
Development and Manufacturing Subcommittee are split on any matter, such matter
shall be referred to the Executive Committee for decision.

     3.3 Sales and Marketing Subcommittee. Within thirty (30) days after the
Effective Date, the Parties shall establish a Subcommittee (the “Sales and
Marketing Subcommittee”) with responsibility for (a) preparing Draft Plans for
each calendar year and, in conjunction with the Finance Subcommittee, annual
budgets; (b) monitoring compliance with and implementation of the then-current
Commercialization Plan; (c) formulating proposed additions or revisions to the
then-current Commercialization Plan for presentation to the Executive Committee
(other than budgetary, expense, and other financial matters, which shall be
presented by the Finance Subcommittee); (d) developing a life cycle management
plan in conjunction with the Development and Manufacturing Subcommittee, (e)
developing and discussing strategies for the promotion and marketing of
Products in the United States, including allocation of responsibility for
marketing and commercialization activities; (f) identifying publication
strategies and scheduling participation in key scientific and clinical meetings
and similar events for the Products (g) determining the launch dates for the
Products, (h) determining the prices for the Products and any of discounts that
may be offered by the Parties, (i) preparing short- and long-term sales
forecasts, (j) presenting forecasts and results of all Commercialization
efforts in the Territory to the Executive Committee as needed but not less than
once per quarter, (k) overseeing all Recalls, market withdrawals and other
corrective actions related to the Products in the Territory, (l) developing
positioning and marketing strategies consistent with the then-current
Commercialization Plan, including any decision to seek or include any new
Indications for the Products, (m) developing advertising and promotional
materials for use by the Product Sales Force, (n) planning and overseeing
medical education programs, (o) developing and implementing a publication or
data dissemination strategy, (p) creating product presentations and exhibits
for major medical meetings, (q) scheduling joint meetings of the Product Sales
Force,

13

 

(r) overseeing and implementing Phase IV programs, (s) reviewing and adjusting
Targeted Prescriber lists, (t) delegating responsibility for interacting with
advertising agencies and medical education agencies and (u) performing such
other duties as may be assigned under this Agreement or as may be delegated to
the Sales and Marketing Subcommittee by the Executive Committee; provided, that
nothing in this Section 3.3 shall limit the rights or obligations of the
Parties in this Agreement. Each Party shall appoint three designees to the
Sales and Marketing Subcommittee, each of whom shall have expertise and
experience in the areas of marketing, promotion, advertising and sales. Either
Party may replace any or all of its designees on the Sales and Marketing
Subcommittee at any time upon written notice to the other Party, and any member
of the Sales and Marketing Subcommittee may designate a suitable proxy to
perform the functions of that member at any time. In addition, the Sales and
Marketing Subcommittee shall seek to act with the unanimous consent of the
members of the Sales and Marketing Subcommittee. In the event that all of the
Sales and Marketing Subcommittee members do not reach consensus with respect to
a matter that is within the purview of the Sales and Marketing Subcommittee,
the Sales and Marketing Subcommittee designees of each Party shall collectively
have one vote for purposes of decision-making hereunder with respect to such
matters, with decisions made by unanimous vote of both Parties. If the votes
of the Sales and Marketing Subcommittee are split on any matter, such matter
shall be referred (by way of the Alliance Managers) to the Executive Committee
for decision.

     3.4 Finance Subcommittee. Within thirty (30) days after the Effective
Date, the Parties shall establish a Subcommittee (the “Finance Subcommittee”)
with responsibility for administering all financial, budgetary and accounting
matters that arise in connection with Development Program, the
Commercialization Program and the Premarketing Program and performing such
other duties as may be assigned under this Agreement or as may be delegated to
the Finance Subcommittee by the Executive Committee; provided, that nothing in
this Section 3.4 shall limit the rights or obligations of the Parties in this
Agreement. Each Party shall appoint a senior financial manager and one other
designee to the Finance Subcommittee, each of whom shall have expertise in the
areas of accounting, cost allocation, budgeting and financial reporting.
Either Party may replace any or all of its designees on the Finance
Subcommittee at any time upon written notice to the other Party, and any member
of the Finance Subcommittee may designate a suitable proxy to perform the
functions of that member at any time. In addition, the Finance Subcommittee
shall seek to act with the unanimous consent of all members of the Finance
Subcommittee. In the event that the Finance Subcommittee members do not reach
consensus with respect to a matter that is within the purview of the Finance
Subcommittee, the Finance Subcommittee designees of each Party shall
collectively have one vote for purposes of decision-making hereunder with
respect to such matters, with decisions made by unanimous vote of both Parties.
If the votes of the Finance Subcommittee are split on any matter, such matter
shall be referred (by way of the Alliance Managers) to the Executive Committee
for decision.

     3.5 Specific Provisions Control. Nothing in this Article III shall apply
to or limit in any way the decisions made by a Party with respect to matters
for which any other provision of this Agreement expressly grants such Party
sole decision-making authority.

     3.6 The committees and subcommittees cannot make any decision that amends
the terms and conditions of this Agreement or that changes the rights and
obligations of the Parties under this Agreement.

14

 

ARTICLE IV

DEVELOPMENT PROGRAM

     4.1 Advancis Responsibility and Control. Within one week of the Effective
Date the Parties shall mutually agree in writing upon a Development Plan.
Subject to the Development Plan and the other terms and conditions contained in
this Agreement, Advancis shall have the sole control and responsibility for
executing the Development Program, including planning, strategy, administrative
management, overall fiscal control and execution of the Development Program.
The Development Program shall be conducted at and coordinated from the
facilities of Advancis. Advancis shall keep Par apprised of the status of the
Development Program through the Development and Manufacturing Subcommittee and,
as appropriate, the Executive Committee. Advancis shall comply, and shall
require all of its third party agents and contractors, if any, to comply, with
all applicable laws in the conduct of the Development Program.

     4.2 Development Plan.

        4.2.1 Conduct by Advancis. Advancis shall [***] to conduct the
Development Program in accordance with the Development Plan. Notwithstanding
the foregoing or any other provision of this Agreement, Par acknowledges and
agrees that (a) the Development Program is experimental in nature; (b) Advancis
does not guaranty that the Development Program will be successful or that
Regulatory Approval will be obtained for any Product and (c) except for a
failure of Advancis to [***], Advancis will have no liability to Par as a
result of any failure to achieve or delay in achieving the Development Plan, or
any milestones therein, nor shall Advancis have any liability to Par as a
result of any failure to obtain or delay in obtaining Regulatory Approval.

        4.2.2 Revisions to Development Plan.

           4.2.2.1 During the Term, Advancis may revise the Development Plan at any
time and from time to time in its discretion upon notice to Par in response to
developments during the Term, including with respect to the status of clinical
trials, Regulatory Approval efforts, financial matters, and the like; provided
that Par shall have [***] after receiving any proposed material revisions
(including any revisions reasonably likely to adversely affect the budgets,
timeline, Product profile or development strategy of the Products) from
Advancis in which to request in writing that the revised Development Plan be
submitted for the review of the Development and Manufacturing Subcommittee. If
Par does not provide a written request for review by the Development and
Manufacturing Subcommittee to Advancis within such [***], then the proposed
Development Plan shall be deemed accepted by Par. If Par does request in
writing that the Development and Manufacturing Subcommittee review the proposed
Development Plan within such [***], then Par and Advancis shall promptly
convene a meeting of the Development and Manufacturing Subcommittee to review
and approve such proposed Development Plan in accordance with Section 3.2,
subject to (a) referral of such matter to the Executive Committee, if the
Development and Manufacturing Subcommittee fails to reach a decision and (b)
submission of such matter to the chief executives of the parties in accordance
with Section 17.1 if the Executive Committee fails to reach a decision, if the
chief executives fail

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

15

 

to reach a decision in [***], the then proposed Development Plan shall
become the Development Plan.

           4.2.2.2 Notwithstanding anything to the contrary in this Agreement
(including the provisions of Section 3.1 and Section 4.2.2.1 requiring
submission of disputes to arbitration), (a) if Advancis proposes to revise the
Development Plan in a manner that would (i) [***] and (b) if after following
the procedures in Section 4.2.2.1 the chief executive officers of the Parties
fail to agree as to the advisability of such proposed changes to the
Development Plan within [***] after referral of the matter to them, then Par
shall have the right for a period of [***] following the written notice by the
chief executive officer of either party to the other Party that the Parties
have failed to agree on the proposed changes to the Development Plan (the
“Section 4.2.2.2 Period”), to terminate this Agreement upon 30 days’ prior
written notice to Advancis. If the Section 4.2.2.2 Period expires without Par
delivering a written notice of termination to Advancis, then this Agreement
shall remain in force.

           4.2.2.3 In the event that Par rightfully terminates this Agreement in
accordance with the provisions of Section 4.2.2.2, then (i) no Development
Funding Gap amounts shall be due or payable; and (ii) if such termination
occurs after Par has paid to Advancis in cash at least $20,000,000 in
Development Costs and Advancis successfully commercializes the Products then
Advancis shall reimburse Par for [***] (the “Section 4.2.2.3 Amount”) following
the successful commercialization of the Products by making [***] to Par equal
to [***] on sales of the Products [***] until Advancis has refunded to Par the
Section 4.2.2.3 Amount.

        4.2.3 Any and all additional development costs explicitly included in the
Development Plan revised in accordance with Section 4.2.2 of this agreement
shall constitute Development Costs, subject only to the rights of the Parties
under Section 4.2.2.3 and Section 12.3 if this Agreement is terminated pursuant
to Section 4.2.2.

     4.3 Clinical and Regulatory Approval.

        4.3.1 Conduct by Advancis. Under Advancis’s direction and control,
Advancis agrees [***] (a) to conduct required clinical trials of the Products
and obtain Regulatory Approval in accordance with the Development Plan and (b)
to include Par in such efforts in a consultative capacity; provided, however,
for purposes of clarity, Par shall not have the right to direct or control
Advancis’ conduct of such clinical trials.

        4.3.2 Regulatory Submissions. The Parties acknowledge that the Products
have not been reviewed or approved for sale or use for any purpose by any
governmental or regulatory body. Advancis shall prepare any required
application(s) for Regulatory Approval. Advancis shall own in their entirety
(a) all clinical data and reports related to Product Studies including clinical
trials for the Products and (b) all NDAs and other Regulatory Approvals for
Products. Advancis shall [***] to inform Par of all communications with the
FDA and to provide copies of FDA submissions to the Development and
Manufacturing Subcommittee prior to their submission to FDA. The Parties shall
cooperate in good faith with respect to, and Advancis shall [***] to enable
representatives of Par to attend all formal meetings with the FDA relating to
regulatory approval of the Products. The Parties shall cooperate in good faith
with

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

16

 

respect to the conduct of any inspections by any regulatory authority of a
Party’s site and facilities related to the Products. To the extent either
Party receives written or material oral communication from the FDA or any other
regulatory authority relating to any Regulatory Approval process with respect
to the Products, the Party receiving such communication shall notify the other
Party and provide a copy of any written communication as soon as reasonably
practicable.

     4.4 Development Program Funding. Par shall make the payments for
Development Costs in accordance with Section B.10 of Exhibit B. If in any
calendar year Advancis anticipates a Development Funding Gap or there is a
Development Funding Gap, within its sole discretion, Advancis shall have the
right (a) to continue to incur and self-fund the Development Costs for such
calendar year and/or (b) to procure third party funding of such shortfall
and/or (c) to modify or delay the Development Plan in order to adjust the
amount or timing of funds needed thereunder to match the payments being made by
Par pursuant to Exhibit B. Provided that Advancis shall [***] to notify Par
quarterly of the Development Costs incurred by Advancis in accordance with this
Agreement as they are incurred during Term; nothing herein shall restrict
Advancis’s right to reasonably delay or withhold its invoicing of Development
Costs incurred under this Agreement pursuant to the foregoing items (a), (b)
and (c) of this Section 4.4. Any delay in the Development Plan pursuant to this
Section 4.4 [***] by Advancis. To the extent that there is a Development
Funding Gap, such Development Funding Gap shall be reimbursed to Advancis out
of Par’s share of Operating Profits in accordance with Exhibit B.

     4.5 Development Program Reporting.

        4.5.1. Advancis shall provide Par at regularly scheduled meetings of the
Development and Manufacturing Subcommittee with summary updates regarding the
progress of the Development Program and Regulatory Approval process.

        4.5.2. Advancis shall advise Par of any unforeseen material problems or
delays encountered since the date of its last report in connection with the
Development Program.

        4.5.3. Advancis shall provide Par as soon as reasonably practicable with
such other material information as Par may reasonably request in writing or
through Advancis’s Alliance Manager from time to time with respect to the
status of the Development Program.

ARTICLE V

COMMERCIALIZATION ACTIVITIES

     5.1 Shared Responsibility and Control. The Parties agree and acknowledge
that both Parties shall share responsibility and control for Commercialization
of the Products in the Territory in accordance with the terms of this Agreement
and the Commercialization Plans. The Parties shall keep each other apprised of
and consult with each other regarding their respective Commercialization
activities for the Products on a regular basis through the Sales and Marketing
Subcommittee and, to the extent appropriate, the Executive Committee.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

17

 

     5.2 Commercialization Plans.

        5.2.1 Negotiation and Approval. For each calendar year, the Sales and
Marketing Subcommittee shall be responsible for preparing a detailed plan and
budget for the Premarketing Program and the Commercialization of Products in
the United States for submission to the Executive Committee (each, a “Draft
Plan”). Each Draft Plan shall be reviewed by the Executive Committee, and the
Executive Committee shall have the right to amend or revise each Draft Plan
prior to approval thereof. A Draft Plan with any amendments or revisions as
approved by the Executive Committee shall be a “Commercialization Plan.” The
initial Commercialization Plan shall be consistent with the Preliminary
Commercialization Plan and shall address the matters specified in Exhibit C;
provided, that if (a) [***] or (b) [***], then the initial Commercialization
Plan shall include such departures from the Preliminary Commercialization Plan
and Exhibit C as are approved by the Executive Committee. Additionally, for
purposes of clarity, the parties understand and agree that [***] and shall be
addressed in the initial Commercialization Plan. The Finance Subcommittee
shall assist the Sales and Marketing Subcommittee and the Executive Committee
in the preparation of the budget portion of each Commercialization Plan.

        5.2.2 Beginning with the year 2005, on or before April 1 of each calendar
year during the term, the Sales and Marketing Subcommittee shall commence
preparation of an annual Draft Plan for the next succeeding calendar year.
Each such proposed annual Draft Plan shall be submitted for approval by the
Executive Committee on or before June 1 of such calendar year. The Executive
Committee may adopt any proposed Draft Plan with or without modification. If
the Executive Committee fails to adopt an annual Commercialization Plan prior
to September 30 of a calendar year, then the Commercialization Plan then in
effect shall remain in effect for the following until the adoption of a new
Commercialization Plan. Notwithstanding the foregoing provisions, the first
annual Draft Plan shall be prepared as follows: as soon as practical after the
Effective Date, the Sales and Marketing Subcommittee shall commence preparation
of an annual Draft Plan for calendar year 2005 and shall submit such proposed
annual Draft Plan for approval by the Executive Committee on or before
December 1, 2004. Upon receipt of such proposed Draft Plan, and subject to
Baseball Arbitration, the Executive Committee shall negotiate in good faith and
take such other steps as may be necessary to adopt an initial Commercialization
Plan as promptly as practicable.

        5.2.3 Conduct of Commercialization Efforts. Each of the Parties shall
[***] to conduct its Commercialization efforts in accordance with the
then-current Commercialization Plan. The Parties shall comply, and shall
require all of their third party agents and contractors, if any, to comply,
with all applicable laws in the conduct of their Commercialization activities
hereunder. The Parties agree to Commercialize the Products only under the
Product Trademarks, the names of the Parties and, if applicable, the Advancis
Slogan. The foregoing notwithstanding, the Product Label may include the names
of manufacturers or other parties to the extent required by Applicable Law.

        5.2.4 Co-Promotion.

           5.2.4.1 Both Parties shall have the right to Promote the Products for sale
in the Territory. All materials created or used for the Promotion of the
Products, in any media,

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

18

 

including all written, graphic, electronic, audio and video pieces and
including journal advertisements, direct mail, direct to consumer advertising,
internet postings and web sites, broadcast advertisements and giveaway items
such as pens, cups, note pads and the like, and all Product packaging and
labeling, are referred to as the “Promotional Materials.”

           5.2.4.2 Each Commercialization Plan shall allocate responsibility between
the Parties for the development, creation and distribution of the Promotional
Materials. The final forms of all Promotional Materials shall require the
mutual approval of both Parties prior to their distribution or use. Advancis
shall have responsibility for and sole control over any filings required to be
made with the FDA in connection with the Promotional Materials and the Parties’
Commercialization activities. In their Promotion of the Products, the Parties
shall only utilize the Promotional Materials and shall not use promotional
materials relating to any other product. Promotional Materials shall be
allocated to each Party according to each Party’s Detailing Requirements for
the applicable period or as otherwise provided in the applicable
Commercialization Plan.

           5.2.4.3 All Commercialization activities conducted by the Parties shall be
consistent with the Promotional Materials so approved and the then-current
Commercialization Plan.

           5.2.4.4 Advancis shall own all copyrights in the Promotional Materials.
Par hereby assigns all right, title and interest in and to all copyrights in
the Promotional Materials to Advancis. Par shall execute whatever reasonable
additional documents Advancis deems necessary or appropriate to vest in
Advancis such rights in and to the copyrights in Promotional Materials it
creates or commissions. Par shall cause any third party engaged by Par to
create, in whole or in part, any Promotional Materials to execute whatever
assignments and other documents Advancis deems necessary or appropriate to vest
in Advancis such copyrights in and to the Promotional Materials. Par shall
inform any such third party of the requirements of this Section 5.2.4.4 prior
to engaging its services.

           5.2.4.5 All Promotional Materials shall bear the corporate names and
logos/trademarks of each Party in substantially equal prominence and frequency.
All Promotional Materials also shall bear one or more of the Product
Trademarks and the Advancis Slogan, if applicable.

        5.2.5 Distribution; Pricing.

           5.2.5.1 Advancis hereby appoints Par as Advancis’s sole distributor of the
Products in the Territory. Accordingly, Par shall be solely responsible for
the sale and distribution of the Products in the Territory under the
Commercialization Plans, including (a) booking sales, (b) handling all returns,
(c) handling all aspects of order processing, invoicing and collection of
receivables, (d) collecting data regarding sales to hospitals and other end
users, (e) monitoring inventory levels, and (f) warehousing. Par shall provide
all such sales and distribution activities in accordance with the
Commercialization Plans and shall store and distribute the Products in full
compliance, and otherwise fully comply, with all applicable laws, including the
requirements of the PDMA.

19

 

           5.2.5.2 Notwithstanding the foregoing provisions; (a) the Parties shall be
jointly responsible for all pricing decisions, including decisions relating to
customer allowances and credits, as well as any discounts and rebates; and (b)
if Par, its Affiliates or their Marketing Distributors sell Products to a
customer who also purchases other products or services from any such entity,
Par agrees not to, and to require its Affiliates and their Marketing
Distributors not to, discount, price or otherwise Promote Products in a manner
that disadvantages Products in order to benefit sales or prices of other
products or services offered for sale by Par, its Affiliates or their Marketing
Distributors to such customers.

        5.2.6 Product Sales Force; Deployment and Control.

Each Party hereby agrees that it will hire, train, and deploy Sales
Representatives comprising its Product Sales Force in such numbers as are
agreed in the then-current Commercialization Plan and at such times with
respect to each Product for the Targeted Prescribers to ensure compliance with
all Detailing Requirements of such Commercialization Plan. Each Party shall
have exclusive control over its own Product Sales Force; provided, however that
each Party shall train its Product Sales Force in accordance with the training
guidelines established by the Sales and Marketing Subcommittee. Each Party
recognizes the importance of establishing its Product Sales Force in advance of
the launch of the Products and agrees to [***] to deploy its Product Sales
Force at least one month prior to the first commercial launch of any Product.
Nothing in this Agreement shall be construed to mean that any Sales
Representatives of one Party are agents or employees of the other Party or
under the direction or control of the other Party. Each Party shall have sole
control over the terms and conditions of its Sales Representatives’ hiring,
employment and termination; provided however, that each Party shall cause its
Product Sales Force to provide sales services in accordance with any guidelines
or standards established by the Sales and Marketing Subcommittee. Each Party
shall be solely responsible for compensating its own Sales Representatives,
including paying salaries and expenses, providing benefits, deducting taxes,
and the like. Notwithstanding anything else to the contrary, [***]. Subject
to the preceding sentence, the Commercialization Plan shall set forth the
percentage of the Total Details to be performed by each Party and to the extent
that a Party is to perform more than [***] of the Total Details, the
Commercialization Plan shall set forth the amount to be paid to such Party by
the other Party to fairly compensate such Party for performing such excess
Details based on Product Sales Force Costs of such Party.

        5.2.7 Detailing Reports. Each Party shall provide the other Party with a
report as soon as practicable but in no event later than forty-five (45) days
following the end of each month setting forth, in such detail and form as the
Parties shall agree, the number of Details made and the amount of Samples
distributed by such Party’s respective Sales Representatives in the United
States during such month, provided, that the report for the final month in each
calendar year shall be cumulative and reflect the number of Details made and
Samples distributed by such Party’s respective Sales Representatives in the
United States during such calendar year.

        5.2.8 Premarketing and Promotion Costs. As set forth in Exhibit B the
parties shall equally share Premarketing Costs and Promotion Costs for all
Products.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

20

 

        5.2.9 Samples. Following the first commercial launch of any Product and
in support of each Party’s Detailing and Promotional activities hereunder,
Advancis shall provide Par with Samples in accordance with Section 8.2 and as
required in the then-current Commercialization Plan. Samples shall be
allocated between the Product Sales Force of each Party in accordance with the
number of Details the respective field forces are required to undertake as set
forth in the then-current Commercialization Plan. Advancis and Par shall use
Samples strictly in accordance with the applicable Commercialization Plan and
shall store and distribute such Samples in full compliance, and otherwise fully
comply, with all applicable laws, including the requirements of the PDMA.
Advancis and Par each will maintain those records required by the PDMA and all
other laws with respect to the Samples allocated to each of them. Each of
Advancis and Par shall be responsible for the filing of any reports required by
the PDMA with respect to the Samples allocated to it. Each Party shall destroy
any Samples not distributed by its Sales Representatives at such Party’s sole
expense.

        5.2.10 Healthcare Professional Inquiries. The Sales and Marketing
Subcommittee, working in conjunction with the other Subcommittees, shall
develop and provide the Parties with written information and materials
appropriate for distribution by the Parties’ Sales Representatives to health
care professionals and consumers relating to each FDA-approved use of the
Products; provided that final forms of all such written information and
materials shall be mutually approved by the Parties. Par shall promptly
forward to Advancis any medical questions or inquiries Par receives from health
care professionals or consumers relating to the Products which questions or
inquiries require a response other than delivery of such pre-approved
information or materials. The Sales and Marketing Subcommittee shall develop
and provide Advancis with such additional written information and materials as
Advancis may request to allow Advancis’ medical professionals to respond to
medical questions or inquiries concerning all other matters relating to the
Products in accordance with Advancis’s policies and procedures for responding
to unsolicited medical inquiry requests on off-label use.

     5.3 Additional Parties to Commercialization Efforts.

        5.3.1 Either Party may contract with third party vendors and contractors,
such as contract sales organizations, in order to meet such Party’s obligations
under the then-current Commercialization Plan; provided that (i) such Party
shall remain fully responsible for its compliance with all such obligations,
and (ii) the contracting Party shall have obtained the prior written consent of
the other Party (such consent not to be unreasonably withheld or delayed) to
the terms and conditions on which any such third party vendors or contractors
will provide their services. Subject to Section 5.2.6, if and to the extent
that either Party notifies the other Party that such Party is unable to meet
such Party’s obligations under the then-current Commercialization Plan, the
other Party shall have the option to increase its Commercialization activities
so that the Parties, together, meet the aggregate targets specified in the
then-current Commercialization Plan.

        5.3.2 The Parties anticipate that, in order to successfully implement the
Commercialization Plans, it may be necessary or advisable to collaborate with
an additional party that can provide material assistance to the Parties with
respect to some or all of the items in the then-current Commercialization Plan
at a level consistent with the efforts contemplated to be provided by the
Parties, including, by way of example, a third party agreement to assume

21

 

responsibility for the marketing and sale of a Product to a particular
prescriber base for a given Indication. Notwithstanding the foregoing, to the
extent the Parties do not enter into a further collaboration with any such
third party, the Parties shall undertake their Commercialization efforts in
accordance with the then-current Commercialization Plan, including all
Detailing Requirements and related matters.

     5.4 Trademarks.

        5.4.1 It is the intent of the Parties that a new primary trademark shall
be developed for use on and in connection with the Commercialization of
Products in the Territory (the “Principal Trademark”). The Principal Trademark
and any other related trademarks, logos, trade names, and similar source
identifiers that are created or selected for use in connection with the
Commercialization of the Products are referred to collectively as the “Product
Trademarks.” In addition, Advancis will develop and, from time to time, modify
in its sole reasonable discretion, a slogan for use on and in connection with
its products, including the Products (the “Advancis Slogan”). The Product
Trademarks shall not include any trademarks, logos, trade names or similar
source identifiers that (i) are owned or licensed by Advancis as of the
Effective Date, including the names and marks ADVANCIS and PULSYS, the Advancis
Slogan, any other marks created, acquired or licensed by Advancis at any time
for use in connection with products other than the Products, and any marks
consisting, in whole or in part, of such marks (the “Advancis Marks”); or (ii)
are owned or licensed by Par as of the Effective Date, including the name and
mark PAR, any marks consisting, in whole or in part, of such mark, and any
other marks created, acquired or licensed by Par at any time for use in
connection with products other than the Products (collectively, the “Par
Marks”).

        5.4.2 The Product Trademarks each shall be selected by Advancis subject to
consent of Par, such consent not to be unreasonably withheld or delayed.
Advancis shall be the sole owner of all worldwide rights in the Product
Trademarks. Advancis shall use Commercially Reasonable Efforts to search and
clear rights to the Principal Trademark and to apply for, register and maintain
a U.S. federal trademark registration for the Principal Trademark; provided
that the costs (excluding legal fees) for such procurement and maintenance of
such trademark registration shall be shared by the Parties as provided in the
applicable Commercialization Plan and Financial Planning Schedule. Advancis
shall have the sole right and responsibility to decide whether to seek or
continue to seek or to maintain trademark rights and/or trademark
applications/registrations for any other Product Trademarks or in any other
country with respect to any Product Trademarks.

        5.4.3 During the Term, in furtherance of the purposes and subject to the
terms and conditions of this Agreement, Advancis hereby grants Par the
non-exclusive, non-transferable, non-sublicensable, limited right and license
to use and display the Product Trademarks solely in connection with the
Commercialization of the Products in the Territory in accordance with the terms
of this Agreement and the Commercialization Plans and for no other purpose.
Advancis represents and Par acknowledges that Advancis is granting Par rights
only to the extent that Advancis has or acquires such rights.

        5.4.4 Except as otherwise specified in this Agreement, the Parties’
Commercialization activities under the Product Trademarks shall be subject to
the oversight and

22

 

control of the Sales and Marketing Subcommittee. The Parties’ respective
representatives comprising the Sales and Marketing Subcommittee shall establish
and maintain a high and uniform standard of quality for such Commercialization
activities. The Parties shall use the Product Trademarks solely in accordance
with the reasonable Trademark Usage Guidelines which shall be established by
Advancis. Advancis may reasonably modify its Trademark Usage Guidelines at any
time and from time to time, and any such modified guidelines shall become
binding hereunder upon notice to Par. Par shall cooperate fully and in good
faith with Advancis to preserve and protect the Product Trademarks.

        5.4.5 Par acknowledges the great value of the goodwill that is or will be
associated with the Product Trademarks. Par agrees that it shall not assert
any claim of ownership to any Product Trademarks or otherwise interfere with
Advancis’s sole and exclusive rights to the Product Trademarks. All goodwill
from use of the Product Trademarks by Par shall inure to the benefit of
Advancis, and Par shall not take any action in derogation of any of the rights
of Advancis in the Product Trademarks. To protect and preserve the goodwill
associated with the Product Trademarks, Par shall avoid deceptive, misleading
or unethical practices that are or might be detrimental to the Products,
Advancis or the public, and will refrain from publishing or employing any
misleading or deceptive advertising. Par shall not, during the Term or after
termination of this Agreement, register or attempt to register with any agency
or in any jurisdiction any Product Trademark or any mark confusingly similar
therewith or register any domain name comprised of a Product Trademark.

        5.4.6 Advancis acknowledges the great value of the goodwill that is or
will be associated with the Par Marks. Advancis agrees that it shall not
assert any claim of ownership to any Par Marks or otherwise interfere with
Par’s sole and exclusive rights to the Par Marks. All goodwill from use of the
Par Marks shall inure to the benefit of Par, Advancis shall not take any action
in derogation of any of the rights of Par in the Par Marks. To protect and
preserve the goodwill associated with the Par Marks, Advancis shall avoid
deceptive, misleading or unethical practices that are or might be detrimental
to Par, or the public, and will refrain from publishing or employing any
misleading or deceptive advertising. Advancis shall not, during the Term or
after termination of this Agreement, use, register or attempt to register with
any agency or in any jurisdiction any trademark or any mark confusingly similar
with the Par Marks or register any domain name comprised of a Par Mark.

        5.4.7 Par acknowledges the great value of the goodwill that is or will be
associated with the Advancis Marks. Par agrees that it shall not assert any
claim of ownership to any Advancis Marks or otherwise interfere with Advancis’
sole and exclusive rights to the Advancis Marks. Par shall not take any action
in derogation of any of the rights of Advancis in the Advancis Marks. To
protect and preserve the goodwill associated with the Advancis Marks, Par shall
avoid deceptive, misleading or unethical practices that are or might be
detrimental to Advancis, or the public, and will refrain from publishing or
employing any misleading or deceptive advertising related to the Advancis
Marks. Par shall not, during the Term or after termination of this Agreement,
use, register or attempt to register with any agency or in any jurisdiction any
trademark or any mark confusingly similar with the Advancis Marks or register
any domain name comprised of an Advancis Mark.

23

 

        5.4.8 Each Party shall notify the Alliance Managers promptly upon learning
of any actual, alleged or threatened infringement of any Product Trademark
applicable to a Product in the Territory, or of any unfair trade practices,
trade dress imitation, passing off of counterfeit goods, or like offenses in
the Territory. Upon learning of such offenses from a Party regarding a Product
Trademark, the Alliance Managers shall confer with the Parties regarding the
defense of the Product Trademark; provided, that the decision whether and how
to defend such Product Trademark shall rest with Advancis, and Advancis shall
have the sole right to respond to and defend any such infringement or offense.
To the extent Advancis elects to defend the Product Trademark, it shall use
Commercially Reasonable Efforts to protect, defend and maintain the Product
Trademark for use by the Parties in the Territory in connection with the
Product. The Parties shall cooperate in good faith with respect to all Product
Trademark enforcement actions hereunder, and each Party shall notify the other
Party promptly of all substantive developments with respect to such Product
Trademark enforcement actions, including all material filings, court papers and
other related documents. Advancis also shall have the right to control
settlement of any such infringement claim. The Parties shall share equally the
cost and expense of any action under this Section 5.4.8.

        5.4.9 Each Party shall notify the Alliance Managers promptly upon learning
of any third-party claim of infringement or similar claim alleged or brought
against either Party relating to any Product Trademark. Upon learning of such
claim, the Alliance Managers shall confer with the Parties regarding the
appropriate response; provided, that the decision whether and how to defend
against such claim shall rest with Advancis, and Advancis shall have the sole
right to respond to and defend against any such claim. To the extent Advancis
elects to defend against such claim, it shall use Commercially Reasonable
Efforts to do so. The Parties shall cooperate in good faith with respect to
all such actions hereunder, and each Party shall notify the other Party
promptly of all substantive developments with respect to such actions,
including all material filings, court papers and other related documents.
Advancis also shall have the right to control settlement of any such claims.
Advancis shall solely bear the cost and expense of any such action or claim
including any damages payable to any Third Party.

ARTICLE VI

PAYMENTS

     6.1 Upfront Payments. In consideration for the execution and delivery of
this Agreement by Advancis, Par shall pay Advancis a fully-earned,
non-refundable, non-creditable license fee in the amount of Five Million U.S.
Dollars (US$5,000,000) by wire transfer of immediately available funds upon
execution and delivery of this Agreement.

     6.2 Collaboration Payments. Par shall pay Advancis collaboration payments
(collectively, “Collaboration Payments”) based on the sale of Products by Par
(or its Affiliates or sublicensees, as applicable) in an amount equal to [***]
of Operating Profits, as set forth in the Financial Planning Schedule.

     6.3 Par shall make payments to Advancis in the amounts and on the dates
set forth in Section B.10 of Exhibit B.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

24

 

ARTICLE VII

INTELLECTUAL PROPERTY RIGHTS AND LICENSES

     7.1 License Grant.

        7.1.1 Subject to the terms and conditions of this Agreement including
Advancis’s rights pursuant to Sections 5.1 and 5.2, Advancis hereby grants to
Par an exclusive, nontransferable right and license, solely during the Term
(except as otherwise provided in Section 12.3) and in the Territory, under all
Advancis Patent Rights, Advancis Know-How and Program Developments, in each
case solely as embodied in the Products, to Promote, Detail, offer to sell,
sell and have sold in the Territory the Products purchased by Par from Advancis
for all approved human therapeutic uses.

        7.1.2 Par shall not sell, distribute or transfer any Product to any Person
that, to Par’s knowledge, is using any Product outside of the Territory or is
selling or transferring any Product to a Person who is using such Product
outside of the Territory.

        7.1.3 Par agrees that during the Term it will use Advancis Patent Rights,
Advancis Know-How and Program Developments owned by Advancis only as explicitly
provided under this Agreement, in each case, in accordance with the terms and
conditions of this Agreement. Moreover, Par expressly acknowledges and agrees
that the only licenses granted under this Agreement are the licenses expressly
granted under this Agreement and that there shall be no implied license or
license by estoppel.

     7.2 Ownership of Intellectual Property. Par hereby acknowledges and
agrees that, as between Par and Advancis, (a) Advancis owns and shall continue
at all times to own all right, title and interest in and to the Advancis Patent
Rights and Advancis Know-How, including all intellectual property rights
appurtenant thereto, and (b) Advancis shall own all right, title and interest
in and to all Program Developments made by Advancis employees or Advancis’s
third party contractors or made jointly with Par, including all intellectual
property rights appurtenant thereto. To the extent that Par employees are the
sole inventors of any Program Developments, Par shall be the sole owner of such
Program Developments, provided that Par gives written notice to Advancis of
Par’s assertion of sole inventorship within a reasonable time frame
following the invention or discovery of such Program Development. Par hereby
grants to Advancis a limited non-exclusive license under all of its right,
title and interest, if any, in and to all such Program Developments to make,
have made, use, import, offer for sale and sell Products during the Term. To
the extent necessary to assign joint inventions, Par shall enter into and
execute all reasonable and appropriate assignments, transfers and other
agreements, and enter into all agreements with its employees, contractors and
Affiliates, that are necessary or appropriate to ensure the assignment of such
Program Developments to Advancis. The Parties shall cooperate fully with each
other with respect to patent filing, prosecution, and enforcement of all such
Program Developments, including cooperating in obtaining the execution of any
necessary documents by its employees and other persons under its control.

     7.3 Non-Use of Trademarks. Except as set forth explicitly in this
Agreement, neither Party shall have the right to use the trademarks, trade
names or logos of the other Party, nor any adaptation thereof, nor the names of
any employees or consultants of the other Party,

25

 

without the prior written consent of the other Party in each instance,
except that either Party may use the other Party’s name in its general list of
collaborators and either party may use the other Party’s name to the extent
required by applicable law, including pursuant to the Securities Act of 1933,
as amended, and the rules and regulations thereunder.

ARTICLE VIII

MANUFACTURE AND SUPPLY

     8.1 Clinical Supplies. Advancis shall manufacture or cause to be
manufactured all Clinical Supplies of Product for the Development Program,
including the completion of pre-clinical work and human clinical trials with
respect to the Indications for the Products in the Territory. As soon as
practicable after the Effective Date Advancis shall negotiate and enter into
one or more manufacturing and supply agreements with one or more third party
contract manufacturers for the manufacture, supply and quality control of such
Clinical Supplies of the Products. Advancis’s choice of such third party
contract manufacturer(s), and the terms and conditions of such manufacturing
and supply agreement(s), shall be subject to reasonable prior review by the
Development and Manufacturing Subcommittee (which includes the reasonable input
of Par). If a vote of the Development and Manufacturing Subcommittee
disapproves of the third party contract manufacturer(s) or the proposed
manufacturing and supply agreement for such Clinical Supplies, such dispute
shall be referred to the Executive Committee for review and discussion,
provided that all decision-making authority with respect thereto shall remain
with Advancis, which may enter into any such manufacturing and supply agreement
over the objections of the Development and Manufacturing Subcommittee and/or
the Executive Committee.

     8.2 Commercial Supplies. Advancis shall be responsible for establishing a
commercial manufacturing process and for manufacturing or causing to be
manufactured Commercial Supplies of the Products, at the scale and in the
amounts required to carry out the then-current Commercialization Plan.
Advancis shall negotiate and enter into one or more manufacturing and supply
agreements with one or more third party contract manufacturers for the
manufacture, supply and quality control of such Commercial Supplies of the
Products as soon as practicable after execution and delivery of this Agreement.
Advancis’s choice of such third party contract manufacturer(s), and the terms
and conditions of such manufacturing and supply agreement(s) shall be subject
to reasonable prior review by the Development and Manufacturing Subcommittee
(which includes the the reasonable input of Par). If a vote of the Development
and Manufacturing Subcommittee disapproves of the third party contract
manufacturer(s) or the proposed manufacturing and supply agreement for such
Commercial Supplies, such dispute shall be referred to the Executive Committee
for review and discussion; provided that all decision-making authority with
respect thereto shall remain with Advancis, which may enter into any such
manufacturing and supply agreement over the objections of the Development and
Manufacturing Subcommittee and/or the Executive Committee.

     8.3 Supply and Distribution Terms. The detailed terms of Advancis’s
supply to Par of the Commercial Supplies shall be governed by a supply and
distribution agreement between the Parties (the “Supply Agreement”), which the
Parties agree to negotiate in good faith and use their Commercially Reasonable
Efforts to enter into as soon as practicable after the

26

 

Effective Date on terms substantially the same as those received from the
third-party Product manufacturer, except that the parties understand and agree
that any allocations of product liability as between the parties has not been
agreed upon. The Supply Agreement shall include a provision that the price for
Product to be paid by Par to Advancis shall be equal to the aggregate of (i)
price paid for Product by Advancis to the Third Party manufacturer, and (ii)
other amounts which Advancis is obligated to pay in relationship to the Product
(including, e.g. shipping of the Product) under a supply agreement for Product
with a Third Party manufacturer. In the event Advancis is unable to supply
adequate Commercial Supplies, Par shall have the right, subject and pursuant to
the Supply Agreement, to obtain such Commercial Supplies in any reasonable
fashion as more fully described in the Supply Agreement. Notwithstanding
anything to the contrary herein, if the Parties fail to agree on the terms of
the Supply Agreement within 180 days after the date hereof, either party may by
written notice cause the disputed provisions to be subject to resolution by
arbitration in accordance with Section 17.2.2.

ARTICLE IX

REPORTS AND RECORDS

     9.1 Each of the Parties shall keep and maintain, and shall require its
Affiliates to keep and maintain, complete and accurate books in respect of its
respective obligations and activities under this Agreement, including such
activities for which payment may be required, in accordance with applicable
accounting principles consistently applied (including generally accepted
accounting principles) and in accordance with applicable law. Each Party and
its Affiliates shall maintain records in sufficient detail and in good
scientific manner appropriate for patent and FDA purposes and so as to properly
reflect all work done and results achieved in the performance of the
Development Program, the Premarketing Program, and Commercialization of the
Products. Such records may include, as applicable, books, records, reports,
formulae, research notes, charts, graphs, comments, computations, analyses,
recordings, photographs, computer programs and documentation thereof, samples
of materials and graphic or written data generated in connection with the
Development Program and the Premarketing Program, and Commercialization of the
Products, including any data required to be maintained pursuant to applicable
governmental regulations. The Parties and their Affiliates shall retain such
records for five years after the period to which such records relate, or for
such longer or shorter period as the Parties shall mutually determine.

ARTICLE X

CONFIDENTIAL AND TECHNICAL INFORMATION

     10.1 Treatment of Confidential Information. Each Party agrees to retain
in strict confidence and not to disclose, divulge or otherwise communicate to
any other person or entity any Confidential Information of the other Party,
whether received prior to or after the date hereof, and further agrees not to
use any such Confidential Information for any purpose, except pursuant to, and
in order to carry out, the terms and objectives of this Agreement, except that
each Party may disclose Confidential Information of the other Party to the
officers, directors, employees, agents, accountants, attorneys, consultants,
subcontractors or other representatives of the receiving Party or its
Affiliates (the “Representatives”), who, in each case, (a) need to know

27

 

such Confidential Information for purposes of the implementation and
performance by the receiving Party of this Agreement and (b) will use the
Confidential Information only for such limited purposes. Each Party hereby
agrees to use at least the same standard of care in complying with its
confidentiality obligations hereunder as it uses to protect its own
Confidential Information of comparable sensitivity and to exercise reasonable
precautions to prevent and restrain the unauthorized disclosure of such
Confidential Information by any of its Representatives. Each Party warrants
that each of its Representatives to whom any Confidential Information is
revealed shall previously have been informed of the confidential nature of the
Confidential Information and shall have agreed to maintain its confidentiality
under terms no less restrictive than those set forth in this Article X.
Without limiting the generality of any of the foregoing, the parties agree not
to make any disclosure of Confidential Information that would be reasonably
likely to impair the Parties’ ability to obtain U.S. or foreign patents on any
patentable invention or discovery described or otherwise embodied in such
Confidential Information. The Confidential Information of each Party includes
information from Third Parties disclosed by one Party to this Agreement to the
other Party to this Agreement.

     10.2 Release from Restrictions.

        10.2.1 The provisions of Section 10.1 shall not apply to any Confidential
Information disclosed hereunder to the extent that such Confidential
Information is required to be disclosed by the receiving Party to defend or
prosecute litigation or to comply with applicable laws or regulations,
including filing an Information Disclosure Statement with the U.S. Patent and
Trademark Office or any other patent office, or pursuant to an order of a court
or regulatory agency, provided that the receiving Party shall provide prior
written notice of such disclosure to the other Party and shall take actions as
are reasonable and lawful to avoid and/or minimize the degree of such
disclosure. To the extent, if any, that a Party concludes in good faith that
it is required by applicable laws or regulations to file or register this
Agreement or a notification thereof with any governmental authority, including
the U.S. Securities and Exchange Commission, such Party may do so, and the
other Party shall cooperate in such filing or notification and shall execute
all documents reasonably required in connection therewith. In such situation,
the filing Party shall request confidential treatment of sensitive provisions
of the Agreement, to the extent permitted by law. The Parties shall promptly
inform each other as to the activities or inquiries of any such governmental
authority relating to this Agreement, and shall cooperate to respond to any
request for further information therefrom.

        10.2.2 A Party may disclose this Agreement to a Third Party in connection
with or in conjunction with a proposed merger, consolidation, sale of assets
that include those related to this Agreement, an assignment of this Agreement
or loan financing, raising of capital, or sale of securities, provided that the
disclosing Party obtains an agreement for confidential treatment thereof,
except in the case where after reasonable efforts such Party is unable to
obtain such confidential treatment.

     10.3 No Implied Rights. Except as otherwise set forth in this Agreement,
nothing herein shall be construed as giving either Party any right, title,
interest in or ownership of the Confidential Information of the other Party.
For the purposes of this Agreement, specific information disclosed as part of
Confidential Information shall not be deemed to be in the public domain or in
the prior possession of the receiving Party merely because it is embraced by
more

28

 

general information in the public domain or by more general information in
the prior possession of the receiving Party.

     10.4 Survival of Confidentiality Obligations. The confidentiality
obligations of the Parties contained in this Article X shall remain binding on
both Parties during the Term and for a period of five (5) years after the
termination of this Agreement, regardless of the cause of such termination.
The Parties acknowledge that any breach of this Article X will constitute
irreparable harm, and that the non-breaching Party shall be entitled to
specific performance or injunctive relief to enforce this Article X in addition
to whatever remedies such Party may otherwise be entitled to at law or in
equity.

     10.5 Superseding Prior Confidentiality Agreement. The provisions of this
Article X shall supersede the Confidentiality Agreement between the Parties
dated July 8, 2003 with respect to the subject matter hereof, and shall
establish the sole obligations of confidentiality and nonuse of Confidential
Information received by a Party prior to or after the Effective Date.

     10.6 Tax Treatment. If a Party, or any Affiliate or Representative of a
Party, receives a statement made by or on behalf of the other Party, or any
Affiliate or Representative of the other Party, as to the tax consequences to
the other Party or its Affiliate of any of the arrangements, agreements, or
transactions provided for in this Agreement, then the receiving Party may
disclose as it wishes the tax treatment and tax structure of such arrangement,
agreement, or transaction, including any tax opinions or tax analyses related
thereto.

ARTICLE XI

PATENT PROSECUTION AND INFRINGEMENT

     11.1 Patent Prosecution and Maintenance.

        11.1.1 Par shall inform Advancis promptly in reasonable detail of any
Program Developments by Par or any of its Affiliates or agents.

        11.1.2 As between Advancis and Par, Advancis shall have the sole right and
responsibility to decide whether to seek or continue to seek or to maintain
patent protection in any country with respect to any Advancis Patent Rights,
Advancis Know-How and Program Developments owned by or licensed to Advancis,
and whether to file for, procure, maintain and enforce Patent Rights in the
Territory with respect to any Advancis Patent Rights and Program Developments
owned by or licensed to Advancis.

     11.2 Infringement.

        11.2.1 Par and Advancis shall inform each other promptly in writing of any
alleged or suspected infringement by a Third Party of any of Advancis Patent
Rights, Advancis Know-How or Program Developments, and of any available
evidence thereof.

        11.2.2 Subject to Sections 11.2.3 and 11.2.4, Advancis may, at its sole
option and expense, prosecute the infringement of any Advancis Patent Rights,
Advancis Know-How or Program Developments.

29

 

        11.2.3 In the event that a Third Party infringes Advancis Patent Rights,
Advancis Know-How or Program Developments owned by Advancis by manufacture,
sale or use of a Product in the Territory (a “Product Infringement”), then the
Parties shall discuss whether or not to institute an infringement action with
respect to such Product Infringement. If the Parties agree to institute such a
suit, then Advancis shall institute and control such suit including the
settlement or compromise thereof. Par shall, at the request of Advancis,
provide reasonable cooperation and, to the extent possible, have its employees
testify when requested and make available relevant records, papers,
information, Samples, specimens and the like. Advancis may join Par as a
party, and Par shall execute all papers and perform such acts as may be
reasonably required. The cost and expense of such suit shall be shared by the
Parties equally. Any royalties, payments, damages, expense, fees or other
awards (collectively, “Damages”), received by Advancis and/or Par as a result
of such suit, whether through judgment or settlement, shall first be used to
reimburse each Party for its expenses associated with such infringement suit
and then any remainder shall be shared by the Parties equally, with such share
of the Damages to be paid to the other party, as applicable, as soon as
practicable upon receipt of the Damages.

        11.2.4 In the event that only Advancis does not agree to institute a suit
against a Product Infringement pursuant to Section 11.2.3 within [***] of being
notified of such alleged or suspected infringement, Par may, at its option and
expense prosecute such infringement of any Advancis Patent Rights, Advancis
Know-How or Program Developments owned by Advancis, provided that Par can
demonstrate through any industry recognized survey that such sales of Product
by the alleged or suspected infringer in the Territory exceeds [***] of the
sales in the Territory of the Product by Par during the most recently completed
[***] and [***]. However, Par shall not prosecute such infringement if
Advancis [***]. Such negotiation shall be conducted between the Advancis and
Par designees of the Executive Committee, and if agreement cannot be reached,
such [***] will be determined in accordance with the dispute resolution process
set forth in Section 17.2.2 herein. In any such infringement suit Par may
institute to enforce Advancis Patent Rights, Advancis Know-How or Program
Developments owned by Advancis, Advancis shall, at the request and expense of
Par, provide reasonable cooperation and, to the extent possible, have its
employees testify when requested and make available relevant records, papers,
information, Samples, specimens and the like. Par may join Advancis as a
party, and Advancis shall execute all papers and perform such acts as may be
reasonably required, at the expense of Par. Par shall bear all the cost and
expense of such suit and Par shall retain all payment, costs and damages
received as a result thereof, whether by judgment, settlement compromise or
otherwise Par shall not have the right to settle or compromise such action or
take any steps that adversely affect the scope, validity, enforceability or
ownership of Advancis Patent Rights or Advancis Know-How without the written
consent of Advancis.

        11.2.5 In the event that only Par does not agree to institute suit against
a Product Infringement pursuant to Section 11.2.3 within [***] of being
notified of such alleged or suspected infringement, then Advancis shall have
the right to institute such an infringement suit at its cost and expense and to
retain all payment, costs and damages received as a result thereof, whether by
judgment, settlement compromise or otherwise.

        11.2.6 In the event that a declaratory judgment action alleging invalidity
or non-infringement of any Advancis Patent Rights, Advancis Know-How or Program
Developments

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

30

 

shall be brought against Advancis and/or Par, Advancis, at its option,
shall have the right, within [***] after commencement of such action, to take
over the sole defense of the action at its own expense. In the event that
Advancis does not so elect to take over the sole defense of the action at its
own expense, Par shall be free to proceed and solely control such defense. To
the extent that any Damages become payable to any Third Party as a result of
such action, whether through judgment or settlement, the Parties shall bear
such Damages equally, and shall contribute such share as promptly as
practicable. Any Damages received by Advancis and/or Par as a result of such
action, whether through judgment or settlement, shall first be used to
reimburse each Party for its expenses associated with such infringement suit
not otherwise reimbursed and then any remainder shall be shared by the Parties
equally, with such share of the Damages to be paid to the other party, as
applicable, as soon as practicable upon receipt of the Damages.

        11.2.7 In the event that a third party institutes any suit against Par
and/or Advancis for patent infringement involving the Products, the Party sued
shall promptly notify the other Party in writing. Advancis shall assume the
defense of such suit, provided, however, that if Par is also a defendant in
such action and Par shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to Advancis, Par shall have the right to select separate counsel to
participate in such legal defenses on Par’s behalf. The Parties shall share
the cost and expense of such defense equally. Each Party shall, at the other’s
request, provide to it reasonable assistance and cooperation with respect to
any such suit. To the extent that any Damages become payable to any third
party as a result of such action, whether through judgment or settlement, the
Parties shall bear such Damages equally, and shall contribute such share as
promptly as practicable. Any Damages received by Advancis and/or Par as a
result of such action, whether through judgment or settlement, shall first be
used to reimburse each Party for its expenses associated with such infringement
suit not otherwise reimbursed and then any remainder shall be shared by the
Parties equally, with such share of the Damages to be paid to the other party,
as applicable, as soon as practicable upon receipt of the Damages.

        11.2.8 If either Party becomes aware of a patent or patent application
that, when issued, might provide a basis for a Third Party argument that its
valid rights are being infringed by the manufacture, use or sale of the
Products hereunder, then such Party shall promptly inform the other Party of
such patent or patent application, and the Parties shall cooperate with each
other so that each Party can determine whether valid rights of a third party
are likely to be infringed by the manufacture, use or sale of the Products
hereunder.

        11.2.9 If either Party believes that a license from a third party is
necessary to avoid infringement of patents of the third party, the Executive
Committee shall: 1) determine whether or not to seek such a license, 2) appoint
a negotiator to negotiate the terms of such a license, 3) determine whether or
not to enter into such a license as negotiated by the negotiator, and 4)
determine how the expenses of such a license shall be borne by the Parties. If
the Executive Committee cannot agree with regard to any responsibility set
forth in the preceding sentence, such issue shall be determined by arbitration
in accordance with Section 17.2.2.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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ARTICLE XII

TERMINATION

     12.1 Term. The term of this Agreement shall commence upon the Effective
Date and shall end on the later of (a) the date upon which there is no Valid
Claim infringed by a Product in the Territory or (ii) the date which is [***]
from the date of first commercial sale of any Product, unless earlier
terminated in accordance with Section 12.2, provided, however, that either
Party may elect to extend the term for an additional period of [***] by giving
written notice of such extension to the other Party no later than [***] prior
to such [***], unless the Party receiving such notice of extension objects to
such extension by written notice to the Party seeking such extension within
[***] after receiving such notice of extension (such [***], to the extent so
extended (if any) and subject in all cases to earlier termination (if any),
being referred to herein as the “Term”).

     12.2 Termination Events. In the event of (a) a material breach under this
Agreement by a Party, whether or not such material breach is specifically
described as such in this Agreement; (b) a Party becoming insolvent, or the
commencement against a Party, of any case or proceeding under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law or laws for the
relief of debtors, or the appointment of any receiver, trustee or assignee to
take possession of the properties of such Party, unless such appointment is set
aside or withdraws or ceases to be in effect, within [***] after its
commencement or appointment; (c) the liquidation or dissolution of a Party; or
(d) the cessation of all or substantially all of a Party’s business operations
(in each case, such Party being referred to as the “Defaulting Party”), then
the other Party (the “Non-Defaulting Party”) shall have the right to terminate
this Agreement (including all licenses granted hereunder) upon [***] written
notice to the Defaulting Party, with such termination to become effective
automatically upon expiration of said [***], unless within said [***] the
Defaulting Party shall have cured such breach, if such breach is reasonably
susceptible to cure in such [***]; provided that, if such breach is not
reasonably susceptible to cure in such [***], then the Non-Defaulting Party
shall not have the right to terminate hereunder in the event that the
Defaulting Party shall have commenced to cure such breach and shall diligently
be pursuing such cure; further provided, that the notice and cure period for
breaches arising out of the failure to pay any obligations hereunder shall be
limited to [***].

     12.3 Effect of Termination of Agreement. Upon the expiration or
termination of the Term in accordance with Section 4.2.2, Section 4.2.4,
Section 12.1 or Section 12.2 for any reason: (a) (except to the extent
required pursuant to clause (b) of this Section 12.3) all rights and licenses
granted to Par pursuant to this Agreement shall automatically and immediately
terminate and Par immediately shall discontinue Commercialization of Product
and all use of the Product Trademarks (and any word or design confusingly
similar thereto) the Advancis Know-How, Advancis Patent Rights and Program
Developments owned by Advancis; all worldwide rights in the Product Trademarks
and the goodwill related thereto shall remain the sole and exclusive property
of Advancis; (b) solely for a termination pursuant to Section 12.2 with respect
to which Par is the Non-Defaulting Party, and solely to the extent permitted by
applicable law, Par shall have the right to sell any Products on hand at the
date of termination, provided that all Collaboration Payments shall be paid and
reports made to Advancis with respect to such Products in accordance with this
Agreement; (c) except as provided in connection with the foregoing provision
12.3(b), Par promptly shall deliver to Advancis all Promotional Materials

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

32

 

and any other materials bearing the Product Trademarks and instruments
used for the purposes of affixing or displaying the Product Trademarks (to the
extent that such Promotional Materials or other Materials were paid for by Par
and were for use by Par, to the extent that they are thereafter used by
Advancis, Advancis shall reimburse Par for the cost of such Promotional
Materials or Materials); (d) Subject to Section 4.2.2.3 Par shall pay within
thirty (30) days after such termination: (i) all accrued and unpaid amounts due
to Advancis in accordance with the terms of this Agreement, including any
unpaid Development Costs due under Section B.10 of Exhibit B and any unpaid
Collaboration Payments with respect to all Products sold; and (ii) any other
amounts that will become due to Advancis through or after the effective date of
such termination; and (d) each Party shall return to the other Party, or
destroy, at the other Party’s request, all Confidential Information of the
other Party. Except with respect to any termination of this Agreement pursuant
to Section 4.2.1 (for which Section 4.2.2.2 shall apply) or pursuant to Section
12.2 with respect to which Par is the Non-Defaulting Party, on the date of
termination, if there is a Development Funding Gap, within [***] thereafter Par
shall pay to Advancis the lesser of the Development Funding Gap or an amount
such that the aggregate of such amount and the amounts previously paid under
Section B.10 of Exhibit B equals twenty eight million dollars ($28,000,000.00).

     12.4 Survival. In addition to all rights that have accrued as of the date
of termination, the following provisions shall survive the termination of this
Agreement for whatever reason: Articles X, XIII, XV, XVII, and XVIII, and
Sections 4.2.2.3, 5.4.2, 5.4.5, 12.3, 12.4, and 12.5. In addition, any other
provision required to interpret and enforce the Parties’ rights and obligations
under this Agreement shall also survive, but only to the extent required for
the observation and performance of the aforementioned surviving rights or
portions of this Agreement.

     12.5 Remedies. Upon the occurrence of any event set forth in Section 12.2
or any other breach of any provision of this Agreement, in addition to the
termination rights or other rights set forth herein, each Party shall have all
other rights and remedies at law or in equity to enforce this Agreement.

ARTICLE XIII

INDEMNIFICATION

     13.1 Indemnification by Par. Par shall at all times during the term of
this Agreement and thereafter, indemnify, defend and hold Advancis, its
officers, directors, employees and agents and Affiliates, and the successors
and assigns of the foregoing (“Advancis Indemnified Parties”), harmless from
and against all expenses, damages, costs and liabilities of any kind
whatsoever, including legal expenses and reasonable attorneys’ fees as a result
of a Third Party claim, suit, or cause of action (collectively, “Losses”),
arising out of the material breach by Par of any representation, warranty or
obligation of Par hereunder, or by a failure of Par to comply with all
applicable laws, or the negligence or willful misconduct of Par, except for
Losses that arise solely out of the gross negligence or intentional misconduct
or illegal act of Advancis Indemnified Partiesor to the extent Advancis is
obligated to indemnify Par under Section 13.2.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

33

 

     13.2 Indemnification by Advancis. Advancis shall at all times during the
term of this Agreement and thereafter, indemnify, defend and hold Par, its
officers, directors, employees and agents and Affiliates, and the successors
and assigns of the foregoing (“Par Indemnified Parties”), harmless against all
Losses arising out of the material breach by Advancis of any representation,
warranty or obligation of Advancis hereunder, or by a failure of Advancis to
comply with all applicable laws, or the negligence or willful misconduct of
Advancis, except for Losses that arise solely out of the gross negligence or
intentional misconduct or illegal act of Par Indemnified Parties or to the
extent Par is obligated to indemnify Advancis under Section 13.1.

     13.3 Conditions to Indemnification for Third Party Claims. A Party that
intends to claim indemnification under this Article XIII (the “Indemnitee”)
shall promptly notify the Indemnifying Party (the “Indemnitor”) of any Losses
in respect of which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall assume the defense thereof with counsel mutually
satisfactory to the Parties, whether or not the underlying third party claim is
rightfully brought. In addition to counsel provided by the Indemnitor, an
Indemnitee shall have the right to retain its own counsel at its own cost in
such proceedings. The indemnity agreement in this Article shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action if
such settlement is effected without the consent of the Indemnitor, which
consent shall not be withheld or delayed unreasonably. The failure to deliver
notice to the Indemnitor within a reasonable time after the Indemnitee has
knowledge of any Losses, if prejudicial to the Indemnitor’s ability to defend
such action, shall relieve the Indemnitor of any liability to the Indemnitee
under this Article. At the Indemnitor’s request, the Indemnitee, and its
employees and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigation and defense of any third-party action,
claim or liability covered by this indemnification and provide full information
with respect thereto. The Indemnitor shall not settle or compromise any such
third party claim without the written consent of the Indemnitee, which consent
shall not be unreasonably withheld, but such consent shall not be required if
the settlement or compromise involves only the payment of monies and the
Indemnitee obtains a complete release thereunder.

     13.4 Indemnification for Infringement Claims. The provisions of this
Article XIII shall supplement the terms of Section 11.2 with respect to
third-party patent infringement claims. In the event of a conflict between
this Article XIII and Section 11.2, the terms of Section 11.2 shall control.

ARTICLE XIV

REPRESENTATIONS AND WARRANTIES

     14.1 Legal Authority. Each Party represents and warrants to the other as
follows: (a) Such Party it has the legal power, authority and right to enter
into this Agreement and to perform its respective obligations set forth herein;
and (b) this Agreement has been duly executed and delivered by such Party and
constitutes the valid and binding obligation of such Party, enforceable against
such Party in accordance with its terms, except as enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors’ rights generally
and by general equitable principles.

34

 

     14.2 No Conflicts. Each Party represents or warrants that as of the date
of this Agreement it is not a party to any agreement or arrangement with any
third party or under any obligation or restriction, including pursuant to its
corporate charter, bylaws or comparable governing documents, which in any way
limits or conflicts with its entering into this Agreement or its ability to
fulfill any of its obligations under this Agreement. Additionally, Advancis
represents and warrants that the Products that are the subject of the
development efforts under the Development plan do not and shall not meet the
test described in Exhibit A.

ARTICLE XV

LIMITATION OF LIABILITY

     15.1 Limitation of Damages. EXCEPT TO THE EXTENT BREACHES OF ARTICLE VII
(INTELLECTUAL PROPERTY RIGHTS AND LICENSES) OR ARTICLE X (CONFIDENTIAL
INFORMATION) REQUIRE PAYMENT OF SUCH DAMAGES TO A THIRD PARTY OR THAT AMOUNTS
ARE PAYABLE TO A THIRD PARTY UNDER ARTICLE XIII, NEITHER PARTY NOR ANY OF ITS
REPRESENTATIVES OR AFFILIATES SHALL BE LIABLE TO THE OTHER PARTY FOR INCIDENTAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO
PROPERTY AND LOST PROFITS (EXCEPT TO THE EXTENT OF ACCRUED COLLABORATION
PAYMENTS), REGARDLESS OF WHETHER SUCH PARTY SHALL BE ADVISED, SHALL HAVE OTHER
REASON TO KNOW OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

     15.2 No Implied Warranties by Advancis. EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN THIS AGREEMENT, ADVANCIS AND ITS REPRESENTATIVES AND AFFILIATES MAKE
NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING (A) REPRESENTATIONS AND WARRANTIES REGARDING THE PRODUCTS,
THE ADVANCIS PATENTS, THE ADVANCIS KNOW-HOW OR ANY TECHNOLOGY RELATED THERETO,
THE ADVANCIS MARKS OR THE PRODUCT TRADEMARKS AND (B) ALL WARRANTIES OF
MERCHANTABILITY, NON-INFRINGEMENT, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY
OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING, ALL OF WHICH ARE HEREBY DISCLAIMED.

     15.3 No Implied Warranties by Par. EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN THIS AGREEMENT, PAR AND ITS REPRESENTATIVES AND AFFILIATES MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING WARRANTIES REGARDING THE PRODUCTS, ANY INTELLECTUAL PROPERTY
OR TECHNOLOGY RELATED THERETO, OR WARRANTIES OF MERCHANTABILITY,
NON-INFRINGEMENTAND FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY
DISCLAIMED.

35

 

ARTICLE XVI

ADVERSE EVENTS; INSURANCE

     16.1 Adverse Events and Recall. Each Party shall give the other immediate
notice, which shall be promptly confirmed in writing, of any occurrence that
involves (i) any material complaint about the safety or effectiveness of any
Product, including a claim of death or injury; and (ii) any other matter
arising out of this Agreement that must be reported to a governmental
authority. If either Party believes it may be necessary or desirable to
conduct a recall, field correction, market withdrawal, stock recovery or other
similar action with respect to any Product sold under this Agreement (a
“Recall”), the Parties shall promptly consult with each other as to how best to
proceed, it being understood and agreed that the final decision as to any
Recall of any Product shall be made by the Parties jointly; provided, however,
that neither Party shall be prohibited hereunder from taking any action that it
is required to take under applicable law. The cost of any Recall shall be
shared equally by the Parties, except that any Recall required because of a
negligent or illegal act or omission in the handling, storage or distribution
of Product by Par shall be at Par’s sole expense.

     16.2 Insurance by Par. Prior to the first sale or use in humans,
whichever is earlier, of a Product (excluding any such sale or use by
Advancis), Par shall obtain and carry in full force and effect commercial,
general liability insurance, including product liability and errors and
omissions insurance, which shall protect Par and Advancis with respect to
events covered by Section 13.1 above. Such insurance (a) shall be written by
a reputable insurance company authorized to do business in the State of
Maryland; (b) shall list Advancis as an additional named insured thereunder;
(c) shall be endorsed to include product liability coverage; and (d) shall
require not less than thirty (30) days written notice to be given to Advancis
prior to any cancellation or materials change thereof. The limits of such
insurance shall not be less than the amounts reasonably agreed to by the
parties, which shall be consistent with industry norms and customs. Par shall
promptly provide Advancis with Certificates of Insurance evidencing the same
and shall not during the Term materially decrease such coverage or cancel such
insurance without written approval from Advancis.

     16.3 Insurance by Advancis. Prior to the first sale or use in humans,
whichever is earlier, of a Product (excluding any such sale or use by Par),
Advancis shall obtain and carry in full force and effect commercial, general
liability insurance, including product liability and errors and omissions
insurance, which shall protect Par and Advancis with respect to events covered
by Sections 13.2 above. Such insurance (a) shall be written by a reputable
insurance company authorized to do business in the State of New Jersey; (b)
shall list Par as an additional named insured thereunder, (c) shall be endorsed
to include product liability coverage; and (d) shall require not less than
thirty (30) days written notice to be given to Par prior to any cancellation or
material change thereof. The limits of such insurance shall not be less than
the amounts reasonably agreed to by the parties, which shall be consistent with
industry norms and customs. Advancis shall promptly provide Par with
Certificates of Insurance evidencing the same and shall not during the Term
materially decrease such coverage or cancel such insurance without written
approval from Par.

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ARTICLE XVII

DISPUTE RESOLUTION

     17.1 Good Faith Negotiations. In the event of any dispute or disagreement
between the Parties as to the interpretation of any provision of this Agreement
or the performance of obligations hereunder, the matter, upon written request
of either Party, shall first be referred to the chief executive officers of the
Parties for decision. Such chief executive officers shall promptly meet in a
good faith effort to resolve the dispute.

     17.2 Arbitration.

        17.2.1 Generally. Except as provided in Section 17.2.2, if any dispute
described in Section 17.1 other than a dispute that arises under the patent
laws of a country cannot be resolved by the chief executive officers of the
Parties within [***] after its submission, then such dispute shall be settled
by binding arbitration held in Wilmington, Delaware in accordance with the
Commercial Arbitration Rules of the American Arbitration Association except
that (a) there shall be three U.S.-licensed attorneys acting as arbitrators,
(b) the arbitration proceedings shall be kept confidential and shall not be
disclosed to the public and (c) payment of the expenses of the arbitration,
including legal fees for both Parties and the fee of the arbitrators, shall be
assessed by the arbitrators based on the extent to which each party prevails.
Each Party shall select one arbitrator. The two arbitrators selected by the
Parties shall select the third arbitrator. At least one of the arbitrators
shall be a licensed attorney who has represented pharmaceutical companies for
at least ten years and is knowledgeable concerning the type of subject matter
at issue in the dispute. The award of the arbitrators shall be in writing and
shall be binding on the Parties, and judgment upon the award rendered by the
arbitrators may be entered in any federal court having jurisdiction. Any
decision or award made by the arbitrators shall be in accordance with the terms
and conditions of this Agreement and shall not be inconsistent with the rights
and obligations of the Parties as set forth in this Agreement. Nothing in this
Agreement bars the right of either Party to obtain preliminary or permanent
injunctive relief against threatened conduct that will cause it loss or damage,
in accordance with the rules for obtaining injunctive relief in any
jurisdiction, including the applicable rules for obtaining restraining orders
and preliminary injunctions.

        17.2.2 Baseball Arbitration. Notwithstanding anything to the contrary in
Section 17.2.1, if the Parties or a committee or subcommittee established under
this Agreement are unable to agree on any matter that is subject to arbitration
under Section 17.2.2 of this Agreement, then either Party may give the other a
written notice requesting arbitration to determine such matter (a “Baseball
Arbitration Notice”), in which case the matter shall be determined by binding
arbitration as follows (“Baseball Arbitration”):

           (a) The Parties to the Baseball Arbitration shall be Advancis
and Par;

           (b) The Parties shall jointly select a single arbitrator within 15
days after the giving of the Baseball Arbitration Notice.

           (c) Within 30 days after the appointment of the arbitrator, each
Party shall submit a written report to the arbitrator and to the other
party, which report shall set

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

37

 

forth the party’s determination of the matter in dispute (each, a
“Proposal”). Such report may include such supporting documentation and
related calculations as the Party submitting the Proposal deems
appropriate.

           (d) Except as otherwise specified in this Section 17.2.2, the
Baseball Arbitration shall be conducted in accordance with Section 17.2.1
hereof.

           (e) The arbitrator in any Baseball Arbitration shall have only the
authority to select the Proposal proposed by one of the parties to the
arbitration, based on which Proposal the arbitrator believes constitutes
the better estimate of the Parties’ intentions under this Agreement. The
arbitrator shall not have the authority to impose additional terms or a
compromise of the two Parties’ Proposals.

           (f) The parties agree that the decision of the arbitral tribunal
rendered in accordance with this Section 17.2.2 will be final and
binding. The Parties shall sign all papers and take all actions that are
required to obligate the Parties with respect to and effectuate such
decision and specific performance may be ordered by any court of
competent jurisdiction.

ARTICLE XVIII

MISCELLANEOUS

     18.1 Publicity. Neither Party shall originate any publicity, news release
or other public announcement, written or oral, relating to this Agreement or
the existence of a collaboration between the Parties, without the prior written
approval of the other Party except as otherwise permitted by this Agreement or
required, in the reasonable judgment of the disclosing party’s attorneys, by
applicable law, including the Securities Act of 1933, as amended, and the rules
and regulations thereunder or as promulgated by an applicable securities
exchange governing body.

     18.2 Assignment. During the Term, neither this Agreement, nor any of the
Patent Rights licensed hereunder, nor any of the other rights or obligations
hereunder may be assigned by either Party without the prior written consent of
the other Party, which consent shall not be unreasonably withheld, except that
either Party may assign this Agreement and/or any or all of its Patent Rights
and/or other rights or obligations hereunder without such consent to an
Affiliate or to a party who acquires all or substantially all of the assets of
the assigning Party, whether through merger, acquisition, consolidation or
otherwise, provided in each instance that such acquiring Party agrees to be
subject to and bound by all of the terms and conditions of this Agreement. Any
purported assignment in contravention of this Section 18.2 shall be null and
void and of no effect.

     18.3 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware, without
reference to the conflicts of laws provisions thereof. Subject to Section
17.2: (a) each Party irrevocably submits to the jurisdiction of any state or
federal trial court of competent subject matter jurisdiction in the State of
Delaware for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated by this Agreement (and agrees
not to commence any

38

 

action, suit or proceeding relating to this Agreement or any such
transaction, except in those courts), except for any patent infringement suit
brought against any third party by a Party hereto; (b) each Party further
agrees that service of any process, summons, notice or document in accordance
with Section 18.6 shall be effective service of process for any action, suit or
proceeding with respect to any matters to which it has submitted to
jurisdiction as set forth in the immediately preceding sentence; and (c) each
Party irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated by this Agreement in any state or federal trial court
of competent jurisdiction in the State of Delaware, and further irrevocably and
unconditionally waives and agrees not to plead or claim in any such action,
suit or proceeding brought in any such court that such action, suit or
proceeding has been brought in an inconvenient forum. The rights and
obligations of the Parties under this Agreement shall not be governed by the
provisions of the U.N. Convention on Contracts for the International Sale of
Goods.

     18.4 Force Majeure. In the event that either Party fails to perform any
of its obligations under this Agreement (other than an obligation to pay money)
due to any act of God, fire, casualty, flood, war, strike, lockout, failure of
public utilities, injunction, act of a governmental authority (including
enactment of any governmental law, order or regulation permanently or
temporarily prohibiting or reducing the level of research, development or
production work hereunder or the manufacture, use or sale of the Products),
epidemic, destruction of production facilities, riot, insurrection, inability
to procure or use materials, labor, equipment, transportation or energy in
quantities sufficient to meet experimentation or manufacturing needs, or any
other cause beyond the reasonable control of the Party invoking this Section
18.4, provided, in each case, that such Party shall have used Commercially
Reasonable Efforts to avoid such failure, then such Party shall promptly give
written notice of such occurrence to the other Party, and thereupon the
affected Party’s performance shall be excused and the time for performance
shall be extended for the period of delay or inability to perform due to such
occurrence.

     18.5 Waiver. The waiver by either Party of a breach or a default of any
provision of this Agreement by the other Party shall not be construed as a
waiver of any succeeding breach of the same or any other provision, nor shall
any delay or omission on the part of either Party to exercise or avail itself
of any right, power or privilege that it has or may have hereunder operate as a
waiver of any right, power or privilege by such Party.

     18.6 Notices. Any and all notices or other communications made or given
pursuant to this Agreement shall be in writing and shall be delivered (i) by
express overnight [or two-day international] courier service, (ii) by certified
or registered mail, return receipt requested, or (iii) by confirmed facsimile
or other electronic transmission (with confirming copy to follow by express
overnight courier service):

     (a) if to Advancis, at 20425 Seneca Meadows Parkway,
Germantown, Maryland 20876, or at such other address or addresses
as may be furnished in writing by Advancis to Par, Attention:
Kevin S. Sly, Senior Vice President and Chief Business Officer,
with copies to: Piper Rudnick LLP, 6225 Smith Avenue, Baltimore,
Maryland 21209 (Fax 202-580-3001) Attn: Howard S. Schwartz, Esq.

39

 

     (b) if to Par, at 300 Tice Boulevard, Woodcliff, New Jersey
07677, Attention: Paul V. Campanelli, Vice President, Business
Development, or at such other address or addresses as may be
furnished in writing by Par to Advancis, with copies to: Par’s
General Counsel at the same address and to Frommer Lawrence &
Haug, 745 Fifth Avenue, New York, New York 10151 (Fax
212-588-0800) Attn: Arthur Hoag, Esq.

     Notices provided in accordance with this Section 18.6 shall be deemed
delivered upon receipt of the notice by the Party being sent the notice.

     18.7 No Agency. Nothing herein shall be deemed to constitute either Party
as the agent or representative of the other Party, or both Parties as joint
venturers or partners for any purpose. Advancis shall be an independent
contractor, not an employee or partner of Par, and the manner in which Advancis
performs its obligations under this Agreement shall be within Advancis’s sole
discretion. Par shall be an independent contractor, not an employee or partner
of Advancis, and the manner in which Par performs its obligations under this
Agreement shall be within Par’s sole discretion (subject to Par’s compliance
with its obligations under this Agreement). Neither Party shall be responsible
for the acts or omissions of the other Party, and neither Party shall have
authority to speak for, represent or bind the other Party in any way without
prior written authority from the other Party.

     18.8 Entire Agreement. This Agreement and the Exhibits and Schedules
attached hereto (which Exhibits and Schedules are deemed to be a part of this
Agreement for all purposes) contain the full understanding of the Parties with
respect to the subject matter hereof and supersede all prior understandings and
writings relating thereto. No waiver, alteration or modification of any of the
provisions hereof shall be binding unless made in writing and signed on behalf
of the Parties by their respective officers thereunto duly authorized.

     18.9 Headings; Interpretation. The section headings contained in this
Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “but
not limited to.” All references herein to Articles, Sections and Exhibits
shall be deemed references to Articles and Sections of, and Exhibits to, this
Agreement unless the context shall otherwise require. All Exhibits and
Schedules attached to this Agreement shall be deemed incorporated herein by
reference as if fully set forth herein. Words such as “herein,” “hereof,”
“hereto,” “hereby” and “hereunder” refer to this Agreement and to the Exhibits,
taken as a whole. Except as otherwise expressly provided herein: (a) any
reference in this Agreement to any agreement shall mean such agreement as
amended, restated, supplemented or otherwise modified from time to time; and
(b) any reference in this Agreement to any law shall include corresponding
provisions of any successor law and any regulations and rules promulgated
pursuant to such law or such successor law.

     18.10 Severability. In the event that any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable because it is
invalid or in conflict with any law of any relevant jurisdiction, the validity
of the remaining provisions shall not be affected, and the

40

 

rights and obligations of the Parties shall be construed and enforced as
if the Agreement did not contain the particular provisions held to be
unenforceable.

     18.11 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their permitted successors and
assigns.

     18.12 Counterparts. This Agreement may be executed in any number of
counterparts (including signature by facsimile), each of which shall be deemed
an original but all of which together shall constitute one and the same
instrument.

     18.13 Export Controls. Each Party acknowledges that it is subject to
United States laws and regulations controlling the export of technical data,
computer software, laboratory prototypes and other commodities (including the
Arms Export Control Act, as amended and the United States Department of
Commerce Export Administrations Regulations). The transfer of such items may
require a license from the cognizant agency of the United States Government
and/or written assurances by Par or Advancis that it shall not export data or
commodities to certain foreign countries without prior approval of such agency.
Neither Party makes any representation as to whether any such license will be
required or, if required, whether it will be issued.

     18.14 Further Assurances. Each Party hereby agrees, without further
consideration, to execute and deliver such documents and take such other
actions as the other Party may reasonably request to carry out the provisions
hereof and further the Collaboration.

41

 

Execution

     IN WITNESS WHEREOF, the Parties hereto have caused this Development and
Commercialization Agreement to be executed as a sealed instrument in their
names by their properly and duly authorized officers or representatives as of
the date first above written.

	 	 	 	 	 
	 	 	ADVANCIS PHARMACEUTICAL CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ Edward M. Rudnic
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	Print Name:
	 	Edward M. Rudnic
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	Title:
	 	Chairman & CEO
	

	 	 	 	
 
	 
	 	 	 	 
	 	 	PAR PHARMACEUTICAL, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Scott Tarriff
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	Print Name:
	 	Scott Tarriff
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	Title:
	 	President & CEO
	

	 	 	 	
 

42

 

EXHIBIT A

EXCLUSION FROM PRODUCTS

Any formulation comprising a Compound with a pharmacokinetic profile that (i)
[***].

As used herein, [***].

The contents of this Exhibit A are hereby incorporated into the Agreement and
are governed by the terms and conditions of the Agreement.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

43

 

EXHIBIT B

FINANCIAL PLANNING SCHEDULE

This Exhibit B covers financial planning, accounting policies and procedures to
be followed in determining Development Costs and Operating Profits and related
issues regarding sharing and allocation of revenue and expenses pursuant to the
Agreement.

For purposes of this Exhibit B only, the consolidated accounting of operations
for the collaboration of the Parties under the Agreement shall be referred to
as the “Collaboration.” The Collaboration is not a legal entity, pass through
or otherwise, for financial accounting or income tax reporting purposes, and
has been defined for identification purposes only.

This Exhibit B also provides agreed upon definitions of financial, accounting
and related terms applicable to the Parties for purposes of the Agreement. All
capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Agreement, unless otherwise expressly provided herein.

B.1 DEFINITIONS.

     B.1.1 “Development Costs” means all direct and indirect costs and expenses
incurred by Advancis pursuant to the budget set forth in the Development
Program, which may include (a) costs associated with designing, planning and
conducting Phase III Studies for the Products and all subsequent clinical
testing and trials, including in vitro and in vivo models, and (b) costs in
connection with seeking and obtaining Regulatory Approval, including all FDA
filing fees, (c) internal costs of Advancis personnel for salaries and other
compensation that are related to the fulfillment of the Development Program
paid by Advancis to its FTE’s working on the Development Program, calculated by
multiplying the number of FTE’s utilized for such purpose by the FTE Rate, (d)
payments made to Third Parties that are authorized by the Development Plan, (e)
materials and supplies, and (f) license or acquisition fees and other costs
and expenses associated with Advancis’s obtaining from a third party any
trademarks, tradenames, logos, trade dress or similar intellectual property
rights licensed or acquired by Advancis after the Effective Date for use in
connection with the Commercialization of the Product.

     B.1.2 “FTE” means a full time equivalent employee (i.e., one
fully-committed or multiple partially-committed employees aggregating to one
full-time employee) employed by a Party and assigned to perform specified work,
with such commitment of time and effort to constitute one employee performing
such work on a full-time basis, which for purposes hereof shall be [***] per
year.

     B.1.3 “FTE Rate” means [***] per hour worked per FTE, which is the
equivalent of [***] per year per full-time FTE. The FTE Rate will change each
year in accordance with the annual percentage change in the Consumer Price
Index (U.S. Bureau of Labor Statistics for all urban consumers, U.S. city
average-all items).

     B.1.4 “Manufacturing Costs” means, with respect to any sale of Products,
the actual, out-of-pocket expense for obtaining such Products from the
manufacturer thereof, including

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

44

 

costs of raw materials, equipment, packaging, labeling, packing, shipping,
storage, and other fixed costs, in each case whether such amounts are payable
directly to the manufacturer or to a third party or to Advancis. Manufacturing
Costs do not include Collaboration Payments, if any, included in the price for
Product.

     B.1.5 “Net Sales of Products” means the actual invoiced gross sales of
Products to Third Parties by Par, its Affiliates and their Marketing
Distributors, as recorded by Par in accordance with generally accepted
accounting principals, less the following: (i) usual and customary allowances
or credits to such third parties for spoiled, damaged, rejected, recalled,
outdated and returned Products; (ii) freight, transportation, warehousing,
storage, postage and insurance charges to the extent separately identified on
an invoice; (iii) the amounts of trade, quantity and cash discounts actually
allowed, to the extent such trade, quantity and cash discounts are specifically
allowed on account of the purchase of such Products; (iv) sales taxes, excise
taxes, use taxes, value added taxes and import/export duties actually due or
incurred or allowed in connection with the sales of Products to any third party
to the extent separately identified on an invoice; (v) usual and customary
allowances, adjustments, reimbursements, discounts, chargebacks and rebates
granted to third parties, including rebates given to health care organizations
or other third parties, whether during the actual period or not; and (vi) usual
and customary allowances for doubtful accounts and actual chargeoffs for bad
debt. “Net Sales of Products” excludes any amounts invoiced or received in
connection with any transfers of a Product between Par and its Affiliates prior
to final disposition to third party customers but only where Products are to be
resold to a third party. “Net Sales of Products” also excludes transfers of
Products made or used for tests or development purposes, or distributed as
donations or Samples and for which no payment is received by Par or its
Affiliates or sublicensees. In the event that Par or its Affiliate or
sublicensee, as the case may be, sells, transfers or disposes of any Product
for consideration, in whole or in part, other than cash, the gross amount used
for calculating Net Sales of Products for such Product shall be deemed to be
the standard invoice price then being invoiced in arm’s length transactions
with similar customers. In the event that Par sells a Product as part of a
bundle or group sale with other products not covered by the Agreement, and
provides a discount, allowance or rebate to the purchaser of such products
based on the invoiced prices for all products sold, such discount must be
allocated pro rata based on average wholesale prices across all such products
and may not be applied disproportionately to the Product sold as part of such
bundle.

     B.1.6 “Operating Profits” means, with respect to the sale of any Product,
the difference between Net Sales of Products and Manufacturing Costs for such
Product.

     B.1.7 “Premarketing Costs” means all direct and indirect costs and
expenses incurred by the Parties in connection with planning and implementing
the Premarketing Program but only to the extent authorized by the then-current
Commercialization Plan or otherwise agreed by written agreement of both
Parties. Premarketing Costs do not include Development Costs and/or Product
Sales Force Costs.

     B.1.9 “Product Sales Force Costs” means, with respect to each Party, all
costs associated with the Sales Representatives of such Party who are
conducting Details, including costs associated with salaries, bonus and similar
compensation payable to such Sales Representatives, employee benefits,
out-of-pocket expenses payable by the Party in connection

45

 

with such Details, and the like. Product Sales Force Costs shall not
constitute Premarketing Costs or Promotion Costs.

     B.1.10 “Promotion Costs” means, with respect to each Party, direct and
indirect costs and expenses (excluding Product Sales Force Costs) incurred by a
Party in connection with the Promotion of Products in the Territory pursuant to
and as authorized by the Commercialization Plans. Specific categories of
expenses constituting Promotion Costs shall be determined from time to time by
the Finance Subcommittee upon consultation with the Sales and Marketing
Subcommittee.

B.2 PRINCIPLES OF REPORTING.

The presentation of results of operations of the Parties in the Territory will
be based on each Party’s respective financial information presented separately
and on a consolidated basis in a reporting format determined by the Finance
Subcommittee.

It is the intention of the Parties that the interpretation of these definitions
will be consistent with generally accepted accounting principles (“GAAP”) in
the U.S.

If necessary, a Party will make the appropriate adjustments to the financial
information it supplies under the Agreement to conform to the format of
reporting results of operations determined by the Finance Subcommittee.
Without limiting the foregoing, prior to the time that Gross Sales are
obtained, the Parties may omit any line items related to sales and the support
of sales, and the costs thereof, from their respective financial reporting and
report only those items relevant to the payment of Development Costs.

B.3 FREQUENCY OF REPORTING.

Reporting by each Party for Collaboration revenues and expenses will be
performed as determined by the Finance Subcommittee.

Reports of actual results compared to budget will be made to the Finance
Subcommittee on a quarterly basis. After approval by the Finance Subcommittee
as to amounts, the Finance Subcommittee will forward the report to the
Executive Committee for its approval.

The Finance Subcommittee will be responsible for the preparation of
consolidated reporting of the Collaboration (including Development Costs and
any Operating Profit). Par will provide the Finance Subcommittee within thirty
(30) days of quarter end a statement showing the consolidated results and
calculations of the Operating Profit sharing (or calculation of expenses to be
shared) in a format determined by the Finance Subcommittee.

Par shall record sales in the U.S.

The Finance Subcommittee will meet as appropriate but at least quarterly to
review and approve the following: Development Costs (review only); actual
results; forecasts; budgets; inventory levels; Sales Returns and Allowances;
and other financial matters, including each Party’s methodologies for charging
costs to the Collaboration, for determination of actuals, forecasts, budgets
and long range plans and the results of applying such methodologies.

46

 

B.4 COMMERCIALIZATION PLAN BUDGETS.

Budgets will be prepared annually with respect to each Draft Plan and
Commercialization Plan. Responsibility for such budgets will rest with the
Sales and Marketing Subcommittee, which will develop such budgets, with the
assistance of the Finance Subcommittee, subject to final approval by the
Executive Committee.

Commercialization Plan budgets will be supplemented with detailed business
plans for Product introductions, sales and Promotion efforts as determined by
the Finance Subcommittee. Budgets, once approved by the Executive Committee,
can only be changed with the approval of the Executive Committee.

The Finance Subcommittee, with the assistance of the Sales and Marketing
Subcommittee, will be responsible for identifying, analyzing and reporting all
significant line item budget variances and all overall, total budget variances
to the Executive Committee. Only the Executive Committee may approve materially
unfavorable line item budget variations, as defined by the Finance
Subcommittee, and all overall, total budget variations, chargeable to the
Collaboration during the course of the year.

Each Party shall be responsible for its own Product Sales Force Costs.

B.5 AUDITS AND REPORTS.

     B.5.1 Audit. Par shall keep full, true and accurate books of account
containing all particulars as shall be pertinent for the purpose of showing any
Collaboration Payments and any other amounts due to Advancis from Par under the
Agreement. Such books of account shall be kept at Par’s principal place of
business. Such books and the supporting data shall be open, at all reasonable
times and upon reasonable notice during the term of the Agreement, but no more
than four times per calendar year, and for three (3) years after the
termination of the Agreement or five (5) years following the end of the
calendar year to which they pertain, whichever is shorter, to the inspection of
Advancis and its authorized agents (including a certified public accounting
firm selected by Advancis), for the purpose of verifying Collaboration Payment
reports provided below and compliance in other respects with the Agreement. In
the event that any such inspection reveals a deficiency in excess of five
percent (5%) of the reported Collaboration Payments for the period covered by
the inspection, Par shall promptly pay Advancis (i) the deficiency, plus
interest (at the rate payable for overdue payment items pursuant to Section
B.5.3) and (ii) the full costs of such inspection. Otherwise, Advancis shall
pay the full cost of such inspection.

     B.5.2 Quarterly Reports of Collaboration Payments. Within thirty (30)
days after the end of the calendar quarters ending March 31, June 30 and
September 30 of each year and within forty-five (45) days after the end of the
calendar quarter ending December 31 of each year, Par shall deliver to
Advancis, at its principal place of business specified in the Agreement or at
such other address as Advancis shall, from time to time, specify to Par in
writing, true and accurate reports, certified by an authorized executive
officer of Par, giving such particulars of the business conducted by Par during
the preceding three-month period under the Agreement as shall

47

 

be pertinent to a Collaboration Payment accounting hereunder, regardless
of whether any Collaboration Payments are then due and owing to Advancis by
Par.

     B.5.3 Overdue Payments. Except to the extent provided otherwise in the
Agreement, the payment of Development Costs and Collaboration Payments shall,
if overdue, bear interest until payment at a per annum rate equal to one and a
half percent (1-1/2%) above the prime rate published in The Wall Street Journal
on the due date, not to exceed the maximum permitted by law, provided, however
that the payment of such interest shall not preclude Advancis from exercising
any other rights or remedies it may have as a consequence of the lateness of
any Collaboration Payment or other payment due hereunder.

     B.5.4 Additional Information. Par shall furnish Advancis, and Advancis
shall furnish Par, such additional information as the other Party may
reasonably request from time to time, to the extent that such information is
reasonably available, to ascertain the amount of Collaboration Payments and any
other amounts due Advancis under the Agreement.

B.6 SHARING PREMARKETING COSTS AND PROMOTION COSTS.

The Parties shall share equally in the Premarketing Costs and Promotion Costs
under the Commercialization Plans and the Agreement. Balancing payments
between the Parties for purposes of the sharing of Premarketing Costs and
Promotion Costs under the Agreement will be approved by the Finance
Subcommittee. Within thirty (30) days after the end of each calendar quarter,
there shall be reconciliation of the Premarketing Costs and Promotion Costs
which are to be shared and which are incurred during that quarter by the
Parties, with a payment by one Party to the other to the extent necessary so
that each Party bears one-half of Premarketing Costs and Promotion Costs. In
the event any payment is made after thirty (30)days after the end of a calendar
quarter, the paying Party shall increase the amount otherwise due and payable
by adding interest thereon, computed at the rate specified in Section B.5.3.

B.7 RESPONSIBILITY FOR REPORTING.

The responsibility for the consolidated reporting of the Collaboration to the
Finance Subcommittee shall be with Par in close cooperation with Advancis.
Such consolidated reports shall, after adjustments, if any, approved by the
Finance Subcommittee and the Executive Committee, be the basis for
Collaboration accounting and determining of payments to the Parties. Par shall
provide the Finance Subcommittee with a Collaboration consolidated reporting
and its proposed calculation of payments to the Parties no later than 45 days
after the end of each Quarter. Advancis shall provide Par with financial
statements for their Commercialization activities in the Territory, prepared in
accordance with the terms contained in this Exhibit B, within thirty (30) days
after the end of each Quarter in order for Par to prepare the consolidated
reports.

B.8 ACCOUNTING FOR DEVELOPMENT COSTS, MANUFACTURING COSTS AND PROMOTION
COSTS.

The Finance Subcommittee shall establish policies and procedures pursuant to
which the Premarketing Costs, Development Costs, Manufacturing Costs and
Promotion Costs incurred by the Parties shall be determined. Each Party shall
report its costs in accordance with the

48

 

accounting policies and procedures established by the Finance Subcommittee and
shall not seek reimbursement from the Collaboration for any costs in excess of
such amounts.

B.9 PAYMENTS TO ADVANCIS OUT OF OPERATING PROFITS.

     B.9.1 Payments. Par shall pay to Advancis the Collaboration Payments
derived from the sale of Products in the Territory, in an amount equal to [***]
of Operating Profits allocable to such sales.

     B.9.2 Payment Terms. Operating Profits shall be determined on a calendar
quarter by calendar quarter basis. Par shall pay Collaboration Payments, if
any, to Advancis for each calendar quarter within thirty (30) days after the
end of such calendar quarter in which Net Sales of Products by Par occur, such
payment to be made by wire transfer of immediately available funds, in United
States dollars, to an account designated in advance by Advancis. Each payment
of Collaboration Payments by Par shall be accompanied by a copy of a
calculation of the amount due and payable, including a statement as to all
material information relevant to such calculation, including a statement as to
Net Sales of Products and Manufacturing Costs, including all components
thereof, and shall be final, non-refundable and not subject to adjustment.

     B.9.3 Taxes. Par shall be responsible for paying all taxes (including any
related interest or penalties), however designated, imposed as a result of the
payment of any Royalties, including any sales and value added taxes and any tax
which Par is required to withhold or deduct from payments to Advancis, and the
Collaboration Payments paid to Advancis shall not be reduced as a result of the
payment by Par of any such taxes.

     B.9.4 Repayment of Development Costs to Advancis. Notwithstanding
anything to the contrary set forth above in this Section B.9 or elsewhere in
the Agreement, prior to the retention by Par of any of its [***] share of the
Operating Profits generated from the sale of Products, Advancis shall first be
paid out of such Par share of Operating Profits an amount equal to any
Development Funding Gap then outstanding, or, if less, the total amount of such
Par share of Operating Profits. Such payment shall be made at the same time as
corresponding Collaboration Payments are made to Advancis.

B.10 PAYMENT OF DEVELOPMENT COSTS.

Development Costs shall be paid by Par as follows:

     B.10.1 Par shall pay the Development Costs to Advancis in periodic
payments as follows:

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

49

 

	 	 	 	 	 
	Payable on or before
	 	Installment Amount

	[***]

	 	 	[***]	 
	 
	 	 	 	 
	[***]

	 	 	[***]	 
	 
	 	 	 	 
	[***]

	 	 	[***]	 
	 
	 	 	 	 
	[***]

	 	 	[***]	 
	 
	 	 	 	 
	[***]

	 	 	[***]	 
	 
	 	 	 	 
	[***]

	 	 	[***]	 
	 
	 	 	 	 
	Total:

	 	$	28,000,000	 

B.11 START OF OPERATIONS AND EFFECTIVE ACCOUNTING DATE TERMINATION.

Operation of the Collaboration will be deemed to have commenced as of the
Effective Date.

For reporting and accounting purposes with respect to the Collaboration, the
effective termination date of the Agreement with regard to the last Detailing
year in the Territory will be the nearest month end to which such termination
takes place.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

50

 

EXHIBIT C

COMMERCIALIZATION PARAMETERS AND DETAILING SCHEDULE

This Exhibit C covers Detailing and Promotional activities to be undertaken by
the Parties in connection with the Commercialization of the Products pursuant
to the Agreement.

This Exhibit C provides agreed upon definitions of terms applicable to the
Parties’ Detailing, Promotional, and related Commercialization efforts under
the Agreement. All capitalized terms used herein without definition shall have
the meanings ascribed thereto in the Agreement, unless otherwise expressly
provided herein.

DEFINITIONS

     C.1.1 “Detail” means a face-to-face meeting of a Sales Representative with
a medical professional having prescribing authority, during which meeting
scientific and/or medical information about the Products is discussed for the
purpose of encouraging sale of the Products. A Detail does not include a
reminder or Sample drop. Details shall be measured by each Party’s internal
recording of such activity; provided that, such measurement shall be on the
same basis as the recording Party’s measurement for its representatives that
are comparable to Sales Representatives with respect to detailing of such
recording Party’s other products, consistently applied throughout the Term.
When used as a verb, the term “Detailing” means to engage in the activity of a
Detail.

     C.1.2 “Detailing Priorities” means, with respect to each Party, the
priority position in which the Parties’ Sales Representatives are required to
Detail the respective Products to a particular Targeted Prescriber, as compared
with other products being detailed by such Party. The Products shall be
Detailed only in the first Detail position, with at least [***] of the Detail
time devoted to the Products.

     C.1.3 “Detailing Requirements” means the number of Details, Detailing
Priorities, and other aspects of Detailing directed to Targeted Prescribers
required of each Party in a given measurement period during the Term, as set
forth in the Commercialization Plan.

     C.1.4 “Product Sales Force” means, with respect to each Party, a sales and
marketing force consisting of an appropriate number of trained and experienced
Sales Representatives capable of fulfilling all requirements of such Party
under the then-current Commercialization Plan, including compliance with all
Detailing Requirements during the respective measurement periods thereof.

     C.1.5 “Promote” means those activities other than Detailing that are
undertaken by a Party in order to encourage sales of Products, including
journal advertising, direct mail programs, direct-to-consumer advertising,
convention exhibits and other forms of advertising and promotion.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

51

 

     C.1.6 “Sales Representative” means an individual who engages in Detailing
and similar sales efforts in the United States with respect to the Products on
a full-time basis.

     C.1.7 “Targeted Prescribers” means the set of physicians or other
authorized prescribers that the Parties expect to include in the
Commercialization Plans as the principal focus of their Commercialization
efforts.

The Parties hereby agree to the following commercial objectives, which shall be
reflected in the Commercialization Plans:

     C.2.1 Secure [***] share of prescriptions in the amoxicillin market
segment

     C2.2 Deliver not less than [***] Details to Targeted Prescribers of
amoxicillin, in the first twelve-month period following approval.

     C2.3 Establish category leadership in journal advertising and medical
education programs as measured by generally-accepted industry audits that track
Promotional spending

     C.2.4 Deliver [***] Sample units to Targeted Prescribers

     C.2.5 Achieve [***] brand awareness at launch among Targeted Prescribers

     C.2.6 Gain preferred formulary status at [***] of major managed care organizations

     C.2.7 Achieve [***] stocking levels at high volume retail pharmacies

     C.2.8 Establish [***] Product citations in the medical literature prior to launch

The Parties agree that the following strategies shall be incorporated into the
Commercialization Plans:

     C.3.1 Data Dissemination Strategy. Leverage relationships developed with
experts in the field of anti-infectives to generate scientific hypothesis,
data, and publications that support the strategic goals of amoxicillin PULSYS.

     C.3.2 Advocacy Strategy. Leveraging scientific evidence supporting
amoxicillin PULSYS, build external advocates for the product within the
scientific and medical community for the purpose of influencing prescribing
behavior, medical guideline development, and general perception of amoxicillin
PULSYS in the market place.

     C.3.3 Managed Care Strategy. Secure broad formulary coverage by building
a sound clinical and economic case supporting access and coverage while
maximizing profitability.

     C.3.4 Targeted Prescriber Detailing Strategy. Focused detailing effort
directed at high volume prescribers responsible for generating majority of
prescriptions generated in the aminopenicillin market.

     C.3.5 Medical Education Strategy. Utilize scientific and clinical data
supporting amoxicillin PULSYS to create medical education programs and
opportunities for medical, scientific, and health care professionals.

     C.3.6 Pharmacy Stocking Strategy. Build and leverage relationships with
the trade and specifically major chains and distributors to ensure forced
distribution of amoxicillin PULSYS product presentations to retail outlets at
launch. To the extent possible, create stocking incentive programs that secure
desired reach while maintaining profitability goals. Augment

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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national accounts efforts with mail and telemarketing initiatives designed
to drive demand among retail outlets.

     C.3.7 Accelerated Adoption Strategy. Identify and target early adopters
and key opinion leaders for involvement in “early access” or “real world”
experience studies to accelerate their adoption of amoxicillin PULSYS.

     C.3.8 Phase IIIB/IV Clinical Evidence Strategy. Engage leading
investigators in the anti-infective field in the design and execution of
additional phase IIIB/IV studies to support the commercial objectives of
amoxicillin PULSYS.

The Parties agree that matters relating to pre-Commercialization activities and
expenses on which the Parties do not agree shall be submitted to the Sales and
Marketing Subcommittee for review in accordance with Section 3.3.

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EXHIBIT D

DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES FOR COUNTRIES

OUTSIDE OF THE UNITED STATES

Subject to the provisions of this Agreement, Advancis has appointed Par as its
sole distributor of the Products in the Territory. This Exhibit D covers
development and Commercialization activities and related issues with respect to
the parties’ goals and efforts to Commercialize the Products outside of the
United States.

This Exhibit D also provides agreed upon definitions of financial, accounting
and related terms applicable to the Parties for purposes of the Agreement. All
capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Agreement, unless otherwise expressly provided herein.
References in this Exhibit D to a “Party” or “Parties” shall be construed to
mean Advancis or Par.

D.1 DEFINITIONS.

     D.1.1 “Ex-U.S. Country” means a country in the Ex-U.S. Territory.

     D.1.2 “Ex-U.S Territory” means the countries in the Territory that are not
the United States and its possessions as of the Effective Date, as the same may
be changed in accordance with the provisions of this Exhibit D.

     D.1.3 “Ex-U.S. Regulatory Authority” means any court, tribunal,
arbitrator, agency, commission, official or other instrumentality of any
federal, state, county, city or other political subdivision, that performs a
function for such political subdivision similar to the function performed by
the FDA for the United States with regard to the approval, licensing,
registration or authorization to test, manufacture, promote, market,
distribute, use, store, import, transport or sell a product in the applicable
territory or political subdivisions, or with respect to the approval of pricing
or reimbursement for such product.

     D.1.4 “MAA” or “Marketing Approval Application” means a marketing
authorization application (including or comparable to an NDA), including all
supporting documentation and data submitted for such application to be accepted
for review or approval, filed with the requisite Ex-U.S. Regulatory Authority
of any Ex-U.S. country, and requesting approval for Commercialization of
Products for a particular indication in such country.

     D.1.5 “MAA Approval” means, with respect to any Ex-U.S. country, approval
by the applicable Ex-U.S. Regulatory Authority in such country of an MAA filed
in such country, permitting Products to be marketed in that country for the
indication(s) for which approval is sought, including, if applicable, approval
of pricing or reimbursement.

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D.2 EX-U.S. PLANNING SUBCOMMITTEE.

     D.2.1 Within [***] after the Effective Date, the Parties shall establish a
Subcommittee (the “Ex-U.S. Planning Subcommittee”) with responsibility for
identifying priorities relating to the development, product selection,
regulatory approval and Commercialization of Products in the Ex-U.S. Countries,
on a country by country basis and performing such other duties as may be
assigned under this Agreement or as may be delegated to the Ex-U.S. Planning
Subcommittee by the Executive Committee; provided that nothing in this Section
F.2.1 shall limit the rights or obligations of the Parties in this Agreement.

     D.2.2 Each Party shall appoint two designees to the Ex-U.S. Planning
Subcommittee, each of whom shall have expertise and experience in the areas of
development, regulatory approval, marketing, Promotion, advertising and sales.
Either Party may replace any or all of its designees on the Ex-U.S. Planning
Subcommittee at any time upon written notice to the other Party, and any member
of the Ex-U.S. Planning Subcommittee may designate a suitable proxy to perform
the functions of that member at any time. In addition, the Ex-U.S. Planning
Subcommittee shall seek to act with the unanimous consent of the members of the
Ex-U.S. Planning Subcommittee. In the event that the Ex-U.S. Planning
Subcommittee members do not reach consensus with respect to a matter that is
within the purview of the Ex-U.S. Planning Subcommittee, the Ex-U.S. Planning
Subcommittee designees of each Party shall collectively have one vote for
purposes of decision-making hereunder with respect to such matters, with
decisions made by unanimous vote. If the votes of the Ex-U.S. Planning
Subcommittee are split on any matter, such matter shall be referred (by way of
the Alliance Managers) to the Executive Committee for decision. Any matter that
is not decided by the unanimous consent of all members of the Executive
Committee shall be subject to resolution by the chief executive officers of the
Parties pursuant to Section 17.1 and, thereafter, by arbitration in accordance
with Section 17.2.2.

D.3 DEVELOPMENT AND COMMERCIALIZATION PLANS.

     D.3.1 The Ex-U.S. Planning Subcommittee shall work together in good faith
after the [***] of the Effective Date to commence the negotiation and
formulation of a detailed plan and budget for the development and
Commercialization of the Products in each country in the Ex-U.S. Territory
(with respect to each such country, the “D&C Plan”). Any country for which the
Ex-U.S. Planning Subcommittee does not prepare a preliminary D&C Plan in
accordance with the provisions of this Exhibit D shall, as of the [***] of the
Effective Date, no longer be part of the Ex-U.S. Territory; provided that such
period shall be tolled in the event of a bona fide dispute between the Parties
with respect to a proposed D&C Plan for any Ex-U.S. Country that has been
submitted to the Executive Committee (or thereafter to arbitration pursuant to
Section 17.2.2) for resolution.

     D.3.2 The Ex-U.S. Planning Subcommittee shall submit a preliminary D&C
Plan to the Executive Committee for approval no later than the third
anniversary of the Effective Date. Upon receipt of such preliminary D&C Plan,
the Executive Committee shall negotiate in good faith and take such other steps
as may be necessary to adopt a final approved D&C Plan not later than [***]
thereafter. Changes to the approved D&C Plan may be made at any time and from
time to time upon prior written agreement of both Parties or prior approval of
the Executive Committee. Any country for which the Executive Committee does not
approve a D&C Plan in

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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accordance with the provisions of this Exhibit D shall, as of the date
that is [***] after the [***] of the Effective Date, no longer be part of the
Ex-U.S. Territory; provided that such period shall be tolled in the event of a
bona fide dispute between the Parties with respect to a proposed D&C Plan for
any Ex-U.S. Country and such dispute is being resolved by the chief executive
officers of the Parties pursuant to Section 17.1 and, thereafter, by
arbitration in accordance with Section 17.2.2.

     D.3.3 Each D&C Plan shall provide that: (a) Par shall be solely
responsible for all costs of development, including obtaining MAA Regulatory
Approval in the subject country; (b) Par shall have the sole right to book
sales of the Products in the subject country; (c) Advancis will own all MAA
Approvals in the subject country; (d) Advancis will be solely responsible for
the manufacturing of Products relating to the development and Commercialization
of the Products in the subject country; (e) the Parties will have co-marketing
rights in the subject country; and (f) the Parties shall be equally responsible
for costs of Commercialization of the Products in the subject country. By
mutual agreement of the Parties, any of the foregoing obligations may be
assumed, in whole or in part, by one or more third parties.

     D.3.5 Advancis shall own in their entirety (a) all clinical data and
reports related to clinical trials for the Products, and (b) all MAAs and MAA
Approvals for Products.

D.4 EX-U.S. DEVELOPMENT AND SALES AND MARKETING.

     D.4.1 Promptly after the approval by the Executive Committee of each D&C
Plan, each of the Development and Manufacturing Subcommittee and the Sales and
Marketing Subcommittee shall assume its respective role with regard to the such
functions in the subject Ex-U.S. Country.

     D.4.2 The provisions of this Agreement shall apply to all Ex-U.S. Country
development, manufacturing, sales and marketing efforts, as adjusted by the
Parties through one or more appropriate written amendments to this Agreement,
which may be on a country-by-country basis.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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