Document:

exh_102.htm

EXHIBIT 10.2

 

*** Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

 

 

 

SETTLEMENT AND LICENSE AGREEMENT

 

This SETTLEMENT AND LICENSE AGREEMENT (this “Agreement”) is made and effective as of September ___, 2014 (the “Effective Date”), by and between, on the one hand, Sucampo AG and Sucampo Pharmaceuticals, Inc. (collectively, “Sucampo”), R-Tech Ueno, Ltd. (“RTU”), Takeda Pharmaceutical Company Limited and Takeda Pharmaceuticals USA, Inc. and Takeda Pharmaceuticals America, Inc. (collectively, “Takeda”), and on the other hand, Anchen Pharmaceuticals, Inc., Par Pharmaceutical, Inc., Par Pharmaceutical Companies, Inc. (collectively, “Par”).  Sucampo, RTU, Takeda, and Par are collectively referred to as the “Parties,” and each separately as a “Party.”

 

RECITALS

 

WHEREAS, Sucampo, RTU, Takeda, and Par are parties to a good faith patent infringement litigation captioned, Sucampo AG, et al. v. Anchen Pharmaceuticals, Inc., et al., Civil Action No. 13-CV-00202-GMS, pending in the United States District Court for the District of Delaware (the “Court”) before the Honorable Chief Judge Gregory M. Sleet (the “Patent Litigation”);

 

WHEREAS, RTU currently manufactures and Sucampo and Takeda currently market AMITIZA® brand lubiprostone capsules (8 mcg and 24 mcg dosages) under New Drug Application (“NDA”) No. 021908 (the “AMITIZA® Products” or “AMITIZA® Oral Capsule Products”);

 

WHEREAS, Sucampo and/or RTU believe in good faith that they have lawfully obtained valid and enforceable patents issued by the U.S. Patent and Trademark Office containing claims covering the AMITIZA® Products, which products Takeda sells under an exclusive license from Sucampo and RTU in the United States;

 

WHEREAS, the U.S. Patent and Trademark Office has issued the following seven patents which are listed in the FDA publication Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the “Orange Book”) for AMITIZA® and are owned by Sucampo alone and/or jointly with RTU:  U.S. Patent Nos. 6,414,016; 7,795,312; 8,071,613; 8,026,393; 8,097,653; 8,338,639; and 8,389,542 (collectively, the “Sucampo Patents”);

 

WHEREAS, Par filed an Abbreviated New Drug Application No. 201442 (the “Par ANDA”) with the United States Food and Drug Administration (the “FDA”) which contains certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (“Par’s PIV certifications”) regarding the Sucampo Patents and seeking approval to market generic versions of capsules containing 8 mcg and/or 24 mcg of lubiprostone (“Par’s ANDA Products”) before the expiration of the Sucampo Patents;

 

WHEREAS, the expiration dates for the seven Sucampo patents which are in suit for this Patent Litigation are:

 

	
·  

	
U.S. Patent No. 6,414,016 expires on September 5, 2020;

 

	
·  

	
U.S. Patent No. 8,071,613 expires on September 5, 2020;

 

  

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·

	
U.S. Patent No. 8,097,653 expires on November 14, 2022;

 

	
·

	
U.S. Patent No. 8,389,542 expires on November 14, 2022;

 

	
·

	
U.S. Patent No. 7,795,312 expires on September 17, 2024;

 

	
·

	
U.S. Patent No. 8,338,639 expires on January 23, 2027; and

 

	
·

	
U.S. Patent No. 8,026,393 expires on October 25, 2027;

 

WHEREAS, Sucampo has requested the FDA issue a Written Request under 21 U.S.C. § 505(A)(d)(2)(A)(i) for pediatric exclusivity, which request is pending with the FDA and if granted, could have further barred Par’s launch of Par’s ANDA Products, in the absence of this Agreement;

 

WHEREAS, in response to Par’s PIV certifications and attendant notice letters, Sucampo, RTU, and Takeda lawfully commenced the objectively-based Patent Litigation and asserted infringement of the Sucampo Patents in good faith;

 

WHEREAS, the Parties acknowledge the significant future legal expenses and inherent legal risks involved in continuing protracted patent litigation with an uncertain end;

 

WHEREAS, the Parties wish to fully and finally settle the Patent Litigation upon the terms and subject to the conditions set forth below;

 

WHEREAS, the Plaintiffs are making no payment to Par in connection with this Agreement;

 

WHEREAS, this Agreement’s generic entry date for Par’s ANDA Products and other terms of this Agreement are unequivocally understood to be and are intended to be strictly within the scope of the Sucampo Patents at issue in this Patent Litigation and any other intellectual property held by Sucampo or Takeda, as the case may be, that could be asserted against Par at any time in view of acts related to Par’s ANDA and Par’s ANDA Products;

 

WHEREAS, settlement of the Patent Litigation will permit the Parties to avoid the substantial costs, uncertainty and risk involved with prolonged patent-infringement litigation, trial and appeal;

 

WHEREAS, settlement of the Patent Litigation will permit the management of the Parties to refocus on running their respective companies rather than devoting substantial time and resources to the Patent Litigation;

 

WHEREAS, the public will benefit significantly from this procompetitive final settlement of this Patent Litigation as it saves judicial resources and creates certainty for the Parties that will encourage the development, investment, and marketing of lubiprostone products and other pharmaceutical products;

 

  

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WHEREAS, by reducing litigation expenses, this Agreement allows saved money to be spent on procompetitive activities, including marketing and further drug development, allowing the products to reach a larger group of patients and thus improving lives; and

 

WHEREAS, money saved by settling the Patent Litigation and avoiding potential future litigation against Par can now be invested by the Parties into research and development, thereby benefiting consumers by identifying new uses for current drugs, as well as furthering the creation of new proprietary medications;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.1 Certain Defined Terms.  The following terms, when used with initial capital letters, shall have the meanings set forth below:

 

“Affiliate” means, with respect to a Party, any Person that directly or indirectly controls, is controlled by, or is under common control with such Party.  For purposes of the foregoing definition only, the term “control” (including, with correlative meaning, the terms “controlling”, “controlled by”, and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of interests representing equity securities, or partnership interests or by contract, or otherwise.  Ownership of more than fifty percent (50%) of such equity securities or partnership interests in a Person shall, without limitation, be deemed to be control for purposes of this definition.  Any venture capital fund or private equity fund, or any Person that directly or indirectly is controlled thereby, that otherwise would be considered an “Affiliate” shall not, for purposes of this Agreement, be considered an Affiliate, except that in the case of Par, Sky Growth Holdings Corporation and its direct and indirect subsidiaries as well as any successor entity to Sky Growth Holdings Corporation and the successor entity’s direct and indirect subsidiaries, shall be considered an Affiliate of Par.  For the avoidance of doubt Sucampo, Takeda, and RTU are not Affiliates of each other.

 

“Authorized Generic” means 8 mcg and 24 mcg lubiprostone products sold in the Territory pursuant to NDA No. 021908 but not under the AMITIZA® trademark.

 

“Authorized Generic Supply Cost” has the meaning set forth in Section 3.12 of this Agreement.

 

“Commercial[ly] Market[ing]” is defined consistent with 21 C.F.R. 314.107(c)(4) and means the first date of introduction or delivery for introduction into interstate commerce outside the control of the manufacturer of a drug product, but does not include transfer of the drug product for reasons other than a sale within the control of the manufacturer or application holder.

 

“Final Court Decision” means a decision of a United States Court, including any settlement order, consent decree, consent judgment, or similar form of judgment entered by such

 

  

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court, from which no appeal has been or can be taken, other than a petition to the Supreme Court for a review of certiorari.

 

“Fully Loaded Manufacturing Cost” means the Party’s direct out-of-pocket costs actually incurred for the manufacturing, labeling, and packaging of an Authorized Generic or a Licensed Product, including API, excipients, packaging components, labeling components, internal direct labor, and quality control and assurance testing that are a necessary part of manufacturing.  [...***...].

 

“Generic Equivalent” means a pharmaceutical product that has received FDA approval for marketing in the Territory pursuant to an ANDA (or equivalent regulatory mechanism) as a generic equivalent to the AMITIZA® Products.

 

“Gross Profits” means [...***...].

 

“Licensed Products” means Par’s ANDA Products, consisting of an 8 mcg soft gelatin capsule for irritable bowel syndrome with constipation and a 24 mcg soft gelatin capsule ANDA Products for chronic idiopathic constipation and opioid-induced constipation as existing on the Effective Date, as described in the Par ANDA that may be amended or supplemented by Par from time to time in the ordinary course of business, provided that any such amendment or supplement does not change the [...***...] Par’s ANDA Products; provided, however, that any such amendment or supplement for a [...***...] may be sought by Par only if any such amendment or supplement of [...***...] that is approved after the Effective Date of this Agreement [...***...] is stated for such [...***...].

 

“License Effective Date” means the earliest to occur of the following dates:

 

(a) January 1, 2021; or

 

(b) provided that Par has not forfeited its 180-day exclusivity pursuant to 21 U.S.C. § 355(J)(5)(D), the date of a Final Court Decision in an action brought against or by a Third Party that causes the 75-day period of 21 U.S.C. § 355(J)(5)(D)(i)(I)(bb)(AA) to begin; in the event of such forfeiture, the date following the entry of such Final Court Decision on which such Third Party begins to Commercially Market a Generic Equivalent; or

 

(c) in the event that Sucampo or any of its Affiliates enters into an agreement with any Third Party that would permit such Third Party to market or sell in the Territory a Generic Equivalent, the date provided for by Section 3.6 of this Agreement; or

 

(d) in the event that Sucampo or any of its Affiliates, or a Third Party, Commercially Markets or sells an Authorized Generic, the date provided for by Section 3.7 of this Agreement; or

 

(e) the date on which a Market Decline Event occurs

 

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“Losses” means all pending and potential claims, demands, all manner of actions, causes of action, suits, debts, liabilities, losses, damages, reasonable attorneys’ fees, costs, expenses (including expert fees), judgments, settlements, interest, punitive damages and other damages or costs of whatever nature, whether known or unknown, pending or future, certain or contingent.

 

“Market Decline Event” means the first day of the month after which (x) Sucampo or an Affiliate of Sucampo, Commercially Markets in the Territory [...***...] under a marketing approval that is obtained for the first time after the Effective Date of this Agreement and (y) [...***...] of the AMITIZA® Oral Capsule Products decline [...***...] from the average quarterly IMS NPA total prescriptions for such AMITIZA® Oral Capsule Products, as determined on a rolling basis by dividing [...***...].

 

“Net Sales” means the gross sales of the Par ANDA Products by Par or its Affiliate in arm’s-length transactions with third parties in the Territory, less all applicable deductions, to the extent accrued, paid or allowed are in accordance with GAAP and in the ordinary course of business with respect to the sale of the Par ANDA Products, including:

 

	 	
(a) 

	
cash discounts, quantity discounts, promotional discounts, stocking or other promotional allowances;

 

	 	
(b) 

	
sales and excise taxes, customs and any other taxes, all to the extent added to the sale price and paid and not refundable in accordance with applicable law (but not including taxes assessed against the income derived from such sale);

 

	 	
(c) 

	
returns, recalls and returned goods allowances;

 

	 	
(d) 

	
retroactive corrections, including price adjustments (including those on customer inventories following price changes) and corrections for billing errors or shipping errors;

 

	 	
(e) 

	
chargebacks, rebates, administrative fees, any other allowances actually granted or allowed to any person or entity, including group purchasing organizations, managed health care organizations and to governments, including their agencies, or to trade customers, in each case that are not Affiliates of Par, and that are directly attributable to the sale of the Par ANDA Products;

 

	 	
(f) 

	
redistribution center (RDC) fees, information service agreement (ISA) fees, and like fees that are customary in the industry that are passed from wholesalers, retailers, distributors, and other customers back to Par; and

 

	 	
(g) 

	
any failure-to-supply penalties that Par may incur from any third party customer purchasing Par ANDA Product pursuant to a written agreement between Par and such third party.

 

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In no event will any particular amount, identified above, be deducted more than once in calculating Net Sales (i.e., no “double counting” of reductions).  Sales of any Licensed Products between Par and its Affiliates or sublicensees for resale shall be excluded from the computation of Net Sales, but the subsequent resale of such Licensed Products to a Third Party shall be included within the computation of Net Sales.  If any of the Licensed Products are sold or transferred for consideration other than cash, the Net Sales from such sale or transfer shall be deemed the then fair market value of such Licensed Products.

 

For purposes of determining Net Sales with respect to a unit of product that is sold in a Bundled Sale (as defined below), the gross sales deemed to have been invoiced shall be the average gross sales invoiced for a unit of such Licensed Product during the immediately preceding thirty (30)-day period, and the total amount of any deductions made from such gross amount with respect to each such unit pursuant to this definition shall be no greater than the average total amount deducted for a unit of such Licensed Product during the immediately preceding thirty (30)-day period.  For purposes of this definition of Net Sales, the term “Bundled Sale” shall mean the sale of any other product with the Licensed Product, where discounts, credits, allowances, charge backs, rebates, and other deductions are granted wholly or partially by Par in consideration of a Third Party’s agreement to purchase such other product (other than “across the board” discounts, credits, allowances, chargebacks, rebates, and other deductions that would otherwise be applied independently to the sale of the Licensed Product and such other product).

 

“Non-Litigated Patents” refers to each patent listed and that may in the future be listed in the Orange Book for the AMITIZA® Products that has not been asserted against Par in the Patent Litigation.

 

“Person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, governmental authority, or other entity or organization.

 

“Proceeding” means any administrative, judicial or legislative action, audit, litigation, investigation, suit or other proceeding in any tribunal.

 

“Product Liability Claims” means any claim, demand, or lawsuit involving allegations that a manufacturing, design or warning defect, regardless of whether the claim, demand, or lawsuit sounds in negligence or strict liability, injured a patient.

 

“Territory” means the United States of America and its territories and possessions, including the Commonwealth of Puerto Rico and the District of Columbia.

 

“Third Party” means any Person other than Sucampo, RTU, Takeda, Par, their Affiliates, and their subsidiaries.

 

ARTICLE 2

SETTLEMENT AND RELEASE

 

Section 2.1 Mutual Release.  Upon the terms and subject to the conditions of this Agreement and the Consent Judgment and Order of Permanent Injunction, each Party, on behalf of itself and its Affiliates and subsidiaries hereby releases, acquits and forever discharges the other Parties and their Affiliates and subsidiaries, and their respective directors, officers, employees,

 

  

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agents, representatives, heirs, assigns, predecessors and successors (“Related Parties”) from any and all Losses arising out of, derived from, predicated upon or relating to infringement of the Sucampo Patents and Non-Litigated Patents, that Sucampo, RTU, and/or Takeda owns or will own, in whole or in part, that is, or could be alleged to be infringed by the Licensed Products, and the actions underlying the Patent Litigation, or otherwise related to the Par ANDA.  Notwithstanding the foregoing, nothing in this Agreement shall prevent or impair the right of any Party to bring a Proceeding in court or any other forum for breach of this Agreement (including, without limitation, any claim for infringement of any intellectual property based upon activities that are not the subject of the license and rights granted hereunder) or any representation, warranty or covenant herein.  [...***...].

 

Section 2.2 Submission of Consent Judgment and Order of Permanent Injunction and Final Dismissal of Patent Litigation.  The Parties agree to the entry of a Consent Judgment and Order of Permanent Injunction attached hereto as Exhibit A.  To effectuate this final settlement and dismissal of the Patent Litigation, within three (3) business days following the execution of this Agreement, the Parties shall notify the District Court for the District of Delaware of the fact of this settlement and submit the executed settlement Agreement under seal with the District Court for the District of Delaware.  Within five (5) business days following the expiration of the 30-day review period in Section 6.8 (the “Regulatory Review Period”), the Parties shall cause the Consent Judgment and Order of Permanent Injunction attached hereto as Exhibit A (each Party acknowledging that the approval of the Court is required in order to make such Consent Judgment and Order of Permanent Injunction effective) to be filed with the District Court for the District of Delaware and shall take all other necessary actions to obtain the settlement and dismissal of the Patent Litigation and entry of the Consent Judgment and Order of Permanent Injunction, provided that no Party shall be required to agree to any modification of the Consent Judgment and Order of Permanent Injunction or this Agreement that materially affects the economic value of the transactions contemplated hereby.  Each Party shall bear its own costs and expenses in connection with the foregoing.

 

Section 2.3 Mutual Agreements.  Each Party acknowledges and agrees that:

 

(a) It may have sustained Losses that are presently unknown and unsuspected, and that such Losses might give rise to Losses in the future.  Nevertheless, each Party acknowledges and agrees that this Agreement has been negotiated and agreed upon, notwithstanding the existence of such possible Losses, all of which have been hereby released under Section 2.1 hereof.

 

(b) If any fact relating to this Agreement or the Patent Litigation and now believed to be true is found hereafter to be other than, or different from, that which is now believed, each Party expressly assumes the risk of such difference in fact and agrees that this Agreement shall be, and will remain, effective notwithstanding any such difference in fact, subject to each Party’s right to bring a Proceeding for a breach of any representation, warranty or covenant herein.

 

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(c) This Agreement may be pleaded as a full and complete defense to, and used as a basis for injunction against, any Proceeding that may be instituted, prosecuted or attempted in breach hereof.

 

(d) If Par acquires the right, title, or interest to another ANDA for 8 mcg and/or 24 mcg capsules of lubiprostone products that references NDA No. 021908 and that ANDA contains a PIV certification pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) regarding the Sucampo Patents and seeks approval to market generic versions of 8 mcg and/or 24 mcg capsules of lubiprostone products before the expiration of the Sucampo Patents, the terms of this Agreement shall apply equally to that ANDA and its products as they do to the Par ANDA and its products.

 

ARTICLE 3

LICENSE

 

Section 3.1 License Grant.  Effective upon the License Effective Date, Sucampo and RTU hereby grant to Par a non-exclusive license with respect to the Sucampo Patents with the right to grant sublicenses to Affiliates, (i) to make, have made, use, promote, offer to sell, sell, import, or otherwise dispose of Licensed Products in the Territory, and (ii) to make and have made the Licensed Products outside the Territory only for use, sale and importation in the Territory.

 

Section 3.2 Covenant Not to Sue Licensed Products.  With respect only to the Licensed Products, and effective upon the License Effective Date, each of Sucampo, RTU, and Takeda (and their respective Affiliates) covenants not to sue Par or any of Par’s Affiliates, Related Parties, or any of their importers, suppliers, distributors, or customers, or support or encourage any Third Party to sue, for infringement of (a) any Sucampo Patents and/or any other patents (issued or that may issue in the future) owned by or licensed to Sucampo, RTU, Takeda, or any of their Affiliates purporting to cover the Licensed Products, the AMITIZA® Products, and/or the use or administration thereof, including, but not limited to, any continuations, continuations-in-part, divisionals, reissues or reexaminations of the foregoing patents (collectively referred to herein as the “Covenant Not To Sue Patents”), based on the making, using, selling, or offering for sale in the Territory, or making or having made only for importation, use, sale or offering for sale into or for the Territory, the Licensed Products.

 

Section 3.3 Restrictions Prior to License Effective Date.  Subject to Section 3.4, Par and its Affiliates and Related Parties shall not make, have made, import into, distribute, offer to sell or sell in the Territory any Licensed Products prior to the License Effective Date.  Par agrees that any breach by it, or its Affiliates and/or Related Parties, of this Section 3.3 shall cause irreparable harm to Sucampo, RTU, and Takeda, and Par, its Affiliates and its Related Parties consent irrevocably and unconditionally to specific performance, or immediate entry of a temporary restraining order, preliminary injunction, and permanent injunction, to enforce this Section 3.3.  Notwithstanding anything to the contrary, Par, its Affiliates and its Related Parties consent irrevocably and unconditionally to personal jurisdiction and venue in the United States District Court for the District of Delaware for the purpose of enforcing this provision.  Notwithstanding the foregoing, Par and its Affiliates and Related Parties shall have the right to engage in certain pre-marketing activities, as set forth in Section 3.4, prior to the License Effective Date.

 

Notwithstanding the foregoing, the contractual restrictions and remedies stated in this

 

  

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Section 3.3 shall not apply if a court enters a Final Court Decision holding that each of the unexpired patent claims included in the Sucampo Patents that were asserted against Par in the Patent Litigation is invalid or unenforceable.  Par agrees that any relief from the restrictions and remedies of this Section 3.3 pursuant to the preceding sentence shall not be construed as a license under the Sucampo Patents and shall have no effect on the License Effective Date.

 

Section 3.4 Pre-Marketing Activities.  Par and its Affiliates and Related Parties may, but not earlier than [...***...] ([...***...]) calendar days prior to the License Effective Date, [...***...] and otherwise take such steps necessary to develop inventory of the Par ANDA Products solely for the purpose of preparing for commercial launch as of the License Effective Date.  Par and its Affiliates and Related Parties shall not be allowed to engage in taking orders before the applicable License Effective Date; however, other reasonably associated pre-marketing activities, including but not limited to offers to the trade that communicate information regarding the products offered for sale, may be conducted within [...***...] ([...***...]) calendar days before the License Effective Date.  For the avoidance of doubt, in no event shall Par and its Affiliates and Related Parties offer for sale, sell, launch, Commercially Market, distribute, or ship the Par ANDA Products prior to the License Effective Date.

 

Section 3.5 Covenant Not to Challenge and Assist Challenges to the Sucampo Patents.  Except to the extent required by law or order of a court or administrative agency of competent jurisdiction, Par, its Affiliates, and its Related Parties shall not (1) challenge the validity or enforceability of, or assert the noninfringement of, any of the Sucampo Patents and the Non-Litigated Patents; and/or (2) cause its Affiliates, Related Parties, subsidiaries and their respective counsel (specifically including but not limited to the counsel who have advised or represented Par in connection with the Patent Litigation, or this Agreement), to assist, encourage, finance, or otherwise provide any information to any Third Party attacking or who may attack, the validity or enforceability of, or assert the noninfringement of, any of the Sucampo Patents or Non-Litigated Patents; provided, however, that the foregoing shall not prevent or otherwise prohibit Par, its Affiliates, or its Related Parties from such challenge or assertion solely to the extent that such challenge or assertion involves any subsequent submission by Par of an ANDA or 505(b)(2) application that does not reference NDA No. 021908.

 

Section 3.6 Impact of Granting Certain Licenses to Third Parties.  In the event that Sucampo, RTU, and/or Takeda is a party to or enters into an agreement with any Third Party (i) granting such Third Party a license and/or sublicense, as applicable, to Commercially Market in the Territory a Generic Equivalent on a date effective earlier than the License Effective Date in this Agreement, or (ii) providing [...***...] set forth in Section 3.13, then (x) the License Effective Date shall automatically be amended to be the earliest date such Third Party is permitted to Commercially Market such Generic Equivalent in the Territory and/or (y) [...***...] and to be effective only for the remaining term of this Agreement.

 

(a) In the event that Sucampo, RTU, and/or Takeda is a party to or enter into any agreement with a Third Party granting such Third Party a license and/or sublicense to Commercially Market in the Territory a Generic Equivalent, Sucampo, RTU, and/or Takeda shall

 

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provide written notice thereof to Par no fewer than ten (10) business days after the entry into such agreement.

 

(b) Par may elect, within five (5) business days after Par’s receipt of such notice, to have Sucampo submit [...***...], mutually acceptable to Par and Sucampo, by providing written notice of such election to Sucampo.

 

(c) In the event that [...***...] hereunder shall be automatically amended to become such [...***...] to be effective only for the remaining term of this Agreement.

 

Section 3.7 Impact of Authorized Generic.  In the event that Sucampo, RTU, and/or Takeda enter into an agreement with any Third Party to Commercially Market an Authorized Generic, or if Sucampo, RTU, and/or Takeda elect to Commercially Market an Authorized Generic, earlier than the License Effective Date in this Agreement, then the License Effective Date in this Agreement shall automatically be amended to be the earliest date such Third Party is permitted to Commercially Market an Authorized Generic in the Territory under the license and/or sublicense from Sucampo, RTU, and/or Takeda or the date Sucampo, RTU, and/or Takeda Commercially Markets an Authorized Generic in the Territory.  In either case, Sucampo, RTU, and/or Takeda shall provide notice to Par no fewer than [...***...] ([...***...]) calendar days after the entry into any agreement with any Third Party to Commercially Market an Authorized Generic and in either case, no later than [...***...] ([...***...]) calendar days prior the date on which either the Third Party or Sucampo/RTU/Takeda Commercially Markets the Authorized Generic.

 

Section 3.8 Regulatory Delay.  No provision of this Agreement shall be affected by any delay in the approval of the Par ANDA by the FDA, [...***...], except to the extent that such provision is affected by the delay of Par’s Commercial Marketing.

 

Section 3.9 Limited Use of Agreement Outside Territory.  The Parties agree that they will not use this Agreement or the Consent Judgment and Order of Permanent Injunction outside of the Territory for any purpose except to enforce the Agreement.

 

Section 3.10 Effect of Third Party Launch.  If any Third Party Commercially Markets any Generic Equivalent (i) without authorization, permission, license, or the like from Sucampo, Takeda, and RTU and (ii) without a Final Court Decision (a “Third-Party At-Risk Launch”), Par has the option of Commercially Marketing Par’s ANDA Products without a license at that time (“Par At-Risk Launch”) only under the following conditions:

 

(a) Par may commence a Par At-Risk Launch no earlier than [...***...] ([...***...]) calendar days after the first Third-Party At-Risk Launch, and only after providing Sucampo written notice [...***...] ([...***...]) calendar days before any intended Par At-Risk Launch.

 

(b) Par agrees that during such Par At-Risk Launch, if (i) Sucampo, RTU, and/or Takeda obtains a court order from any court requiring the cessation of sales of the Generic Equivalent that is the subject of the Third Party At-Risk Launch or (ii) the Third Party ceases sales

 

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of the Generic Equivalent that is the subject of the Third Party At-Risk Launch, by agreement or otherwise, Par will cease any shipping, Commercial Marketing, and At-Risk sales of Par’s ANDA Products within its own custody and control and any other infringing activities until the occurrence of the License Effective Date (including any advancement of the License Effective Date under the terms of this Agreement).

 

(c) Notwithstanding Section 2.1 above, in the event of a Final Court Decision that any claim of the Sucampo Patents asserted against Par is not invalid and is not unenforceable, Par agrees to pay Sucampo liquidated damages equal to [...***...] percent ([...***...]%) of [...***...] sold during Par’s At-Risk Launch before the License Effective Date (including any advancement of the License Effective Date under the terms of this Agreement).

 

Section 3.11 Effect of Non-Infringement Judgment.  If any Third Party obtains a decision or judgment from a trial court that its Generic Equivalent does not infringe each of the unexpired claims of the Sucampo Patents that were asserted against that Third Party and that decision or judgment does not also contain a final judgment that each such claim is also invalid or unenforceable, and that Third Party subsequently Commercially Markets its Generic Equivalent, that Commercial Marketing will not qualify as a Third Party At-Risk Launch under Section 3.10.

 

Section 3.12 Par’s Option to Sell Authorized Generic Products.  Par shall have the option to Commercially Market an Authorized Generic, but not earlier than January 1, 2021.  In the event that Par or its Affiliates wishes to Commercially Market an Authorized Generic, Par shall first notify Sucampo of its desire to purchase Authorized Generic products to resell, which Authorized Generic products shall be supplied to Par at [...***...] (the “Authorized Generic Supply Cost”) and pursuant to such other terms and provisions as set forth in the Manufacturing and Supply Agreement set forth on Exhibit B hereto.  Except as stated above in this Section 3.12, all terms in this Agreement that apply to Licensed Products shall apply equally to the Authorized Generic products manufactured for, and supplied to Par, including the payment of royalties pursuant to Section 3.13, as though Par were Commercially Marketing Licensed Products.

 

Section 3.13 Royalty Payments and Reporting.

 

(a) Beginning on the License Effective Date, Par shall pay Sucampo a royalty of [...***...] of the Licensed Products sold during the term of this Agreement, which term continues until each of the Sucampo Patents has expired, or each has been dedicated to the public or disclaimed pursuant to 35 USC § 253, or every claim that was asserted against Par in the Patent Litigation has been held invalid or unenforceable in a Final Court Decision, unless otherwise provided by this Section 3.13.  If within two years prior to the License Effective Date, (x) Sucampo or an Affiliate of Sucampo, Commercially Markets in the Territory for the first time, either alone or in partnership with another Person, a new lubiprostone-containing drug product indicated for the treatment of constipation or irritable bowel syndrome under a marketing approval that is obtained for the first time after the Effective Date of this Agreement and (y) the total prescriptions for the AMITIZA® Oral Capsule Products (in the aggregate) for any quarter during the two year window decline by at least [...***...] ([...***...]%) from the average quarterly IMS NPA total prescriptions for the AMITIZA® Oral Capsule Products (in the aggregate), as determined on a

 

*Confidential Treatment Requested

  

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rolling basis by dividing such total prescriptions for the immediately preceding twelve (12) month period by four (4), Par shall as of the License Effective Date pay Sucampo a royalty of [...***...] of the Licensed Products sold during the term of this Agreement, which term continues until each of the Sucampo Patents has expired, or each has been dedicated to the public or disclaimed pursuant to 35 USC § 253, or every claim that was asserted against Par in the Patent Litigation has been held invalid or unenforceable in a Final Court Decision, unless otherwise provided by this Section 3.13.

 

(b) During any period after the License Effective Date where, in addition to Par Commercially Marketing a Generic Equivalent, one Third Party is Commercially Marketing a Generic Equivalent or Authorized Generic in the Territory (or Sucampo, RTU, and/or Takeda or an Affiliate is Commercially Marketing an Authorized Generic in the Territory) the royalty rate provided for in Section 3.13(a) shall be [...***...] and Sucampo or its Affiliates have the option to supply Par with Authorized Generic products at a negotiated costs plus price.

 

(c) During any period after the License Effective Date where, in addition to Par Commercially Marketing a Generic Equivalent, two or more Third Parties are Commercially Marketing a Generic Equivalent or Authorized Generic in the Territory (or one or more Third Parties is Commercially Marketing a Generic Equivalent and Sucampo, RTU, and/or Takeda or an Affiliate is Commercially Marketing Authorized Generics in the Territory), the royalty rate provided for in Section 3.13(a) shall be [...***...] and Sucampo or its Affiliates have the option to supply Par with Authorized Generic products at a negotiated costs plus price.

 

(d) Within thirty (30) calendar days after the close of each calendar quarter for which royalties are due hereunder, Par shall deliver to Sucampo a report of the amount of Gross Profits and Net Sales of Par’s ANDA Product sold by Par or its Affiliates in the quarter listing the amount of royalties due for the quarter and the details of the calculation performed by Par to arrive at the amount of royalties due, and shall remit to Sucampo payment of said royalties in United States Dollars by wire transfer to such bank account as Sucampo may from time to time designate in writing.

 

(e) Par shall maintain accurate books and records in sufficient detail to enable the payments due hereunder to be determined.  Such records shall be available on request by Sucampo for inspection, during normal business hours, by Sucampo’s independent certified public accountant for up to three (3) years after the calendar year to which they pertain, for purposes of verifying the accuracy of the reports and payments made by Par.  If the audit reveals a deficiency in the calculation of payments resulting from any underpayment to Sucampo, Par shall promptly pay (but in all cases within thirty (30) days of such determination) Sucampo the amount remaining to be paid and, if such underpayment is five percent (5%) or more, Par shall also pay Sucampo the reasonable out-of-pocket expenses paid to a Third Party for such audit.  If the accountant determines that Par has overpaid Sucampo, Sucampo shall pay such amounts to Par within thirty (30) calendar days of the result of the audit.

 

(f) Any amount due hereunder from a Party and not paid timely under the terms of this Agreement shall bear interest from the date due at the then-prevailing prime rate.

 

*Confidential Treatment Requested

  

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(g) Sucampo and Par acknowledge that any expenses or costs deducted from Net Sales under this Agreement may be based upon accruals or estimates, which accruals or estimates will be compliant with Par’s standard practices consistently applied; provided that such accruals or estimates shall be reconciled to actual amounts at least quarterly and when known relative to any accrued or estimated amount, and any difference between the actual results and the accrual or estimate shall be reported and accounted for.  To the extent that the difference between such accruals or estimates and the actual results has led to an underpayment, the amount of such underpayment shall be paid on the next date payment is due hereunder.  To the extent that the difference between such accruals or estimates and the actual results has led to an overpayment to Sucampo, that amount may set-off such overpayments against subsequent payments.  Within one (1) year of the termination or expiration of this Agreement, a “contract-end” reconciliation shall be performed (and a written report of such reconciliation shall be provided) of the deductions made, pursuant to the definition of Net Sales, and of the amounts payable.  The reconciliation shall be based on all actual amounts known through the date that is ten (10) months following the applicable termination or expiration date versus prior accruals or estimates.  No further reconciliations shall be made.  If any reconciliation under this Section 3.13(g) following the termination or expiration of this Agreement shows either an underpayment or an overpayment, the respective party shall pay the amount of the difference to the other within thirty (30) days of the date of delivery of the report of such reconciliation.

 

Section 3.14 Reservation of Rights.  All rights not expressly granted to Par hereunder are expressly reserved to Sucampo, RTU, and/or Takeda including Sucampo, RTU, and Takeda’s right to continue to manufacture and/or Commercially Market AMITIZA® Products to the extent permitted by contract and law, and Sucampo, RTU, and Takeda have no obligation to make available any intellectual property rights or to take any other actions other than as expressly set forth herein.  Except as expressly provided in this Article 3, nothing in this Agreement shall be construed as granting Par or its Affiliates, subsidiaries or Related Parties any rights: (a) with respect to any Licensed Products outside the Territory; (b) with respect to any product other than Licensed Products; or (c) to make, have made, use, offer to sell, sell, import, or otherwise dispose of any generic version of any AMITIZA® Products covered by the Sucampo Patents at any time prior to the License Effective Date.  Nothing in this Agreement shall restrict the ability of Sucampo, from launching, Commercially Marketing and/or selling an Authorized Generic or from licensing a Third Party to launch, Commercially Market and/or sell an Authorized Generic, or from launching, Commercially Marketing, and selling any product for indications or dosages not set forth in Par’s ANDA.

 

Section 3.15 Sucampo, RTU, and Takeda, on behalf of themselves and their Affiliates, will impose the license grants, covenants, waivers and other obligations contained in this Article 3 and elsewhere in this Agreement on any Person to whom Sucampo, RTU, and Takeda or their Affiliates may assign or otherwise transfer title or interest in or to NDA No. 021908 and the Covenant Not To Sue Patents.

 

ARTICLE 4

REPRESENTATIONS, AND WARRANTIES, AND COVENANTS

 

Section 4.1 Mutual Representations.  Each Party hereby represents and warrants to the other Parties as of the Effective Date as follows:

 

  

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(a) Due Authorization.  Such Party is an entity duly organized and in good standing as of the Effective Date, and the execution, delivery and performance of this Agreement by such Party have been duly authorized by all necessary action on the part of such Party.

 

(b) Due Execution.  This Agreement has been duly executed and delivered by such Party and, with due authorization, execution and delivery by the other Parties, constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms.

 

(c) No Conflict.  Such Party’s execution, delivery and performance of this Agreement do not: (i) violate, conflict with or result in the breach of any provision of the charter or by-laws (or similar organizational documents) of the Party; (ii) conflict with or violate any law or governmental order applicable to the Party or any of its assets, properties or businesses; or (iii) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which it is a party.

 

Section 4.2 Sucampo’s Representations, Warranties and Additional Covenants.  Sucampo represents and warrants to Par that, as of the Effective Date, Sucampo (i) is the owner of the full right, title and interest in, to and under the Sucampo Patents alone and/or jointly with RTU, and has the right to grant to Par the licenses granted hereunder with respect to the Sucampo Patents, (ii) has the right to settle the Patent Litigation, and (iii) does not license from a Third Party any patents or pending patent applications that would preclude Par and its Affiliates from making, using, selling, offering for sale, importing or otherwise disposing of the Licensed Products in the Territory.  Sucampo further represents and warrants that, as of the Effective Date, no Third Party has any right (as owner, licensee or otherwise) to enforce or sue for infringement of the Sucampo Patents.

 

Section 4.3 Par Representations and Warranties.  Par represents and warrants to Par that, as of the Effective Date, (i) Par or its Affiliates own all right, title and interest in, to and under the Par ANDA, and Par and its Affiliates have not granted or assigned to any Third Party, directly or indirectly, any rights under or to the Par ANDA or Par’s ANDA Products, (ii) Par and its Affiliates will not transfer ownership, in whole or in part, of said Par ANDA, except to an Affiliate of Par or to a successor to all or substantially all of the business to which this Agreement pertains, until the expiration of the license granted herein, and (iii) Par has the right to settle the Patent Litigation.

 

Section 4.4 Par’s Covenant Not to Sue Sucampo Products.  With respect to the AMITIZA® Products or an Authorized Generic, and effective upon the License Effective Date, Par, its Affiliates, and its Related Parties covenants not to sue Sucampo, RTU, Takeda and its/or their Affiliates, Related Parties, or any of their importers, suppliers, distributors, or customers, or support or encourage any Third Party to sue, for infringement of any patents (issued or that may issue in the future) owned, licensed, or controlled by Par or any of its Affiliates or Related Parties purporting to cover the AMITIZA® Products or an Authorized Generic, and/or the use or administration thereof, including any continuations, continuations-in-part, divisionals, reissues or reexaminations of the foregoing patents, based on the making, using, selling, or offering for sale in the Territory, or making or having made only for importation, use, sale or offering for sale into or for the Territory, the AMITIZA® Products or an Authorized Generic.

 

  

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Section 4.5 Disclaimer.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NO PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF APPLICABLE LAW, AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS SUCH WARRANTIES.

 

ARTICLE 5

INDEMNIFICATION

 

Section 5.1 Sucampo, RTU, and Takeda Indemnification.  Sucampo, RTU, and Takeda shall indemnify and hold harmless Par, their Affiliates, and their Related Parties (“Par Indemnitees”) from and against any liabilities, damages, costs, or expenses, including reasonable attorneys’ fees and expert fees, incurred by any Par Indemnitee that arise from any claims, actions, demands, suits, or other cause of action by a Third Party arising out of or related to any breach of their respective representations, warranties and covenants set forth in this Agreement.

 

Section 5.2 Par Indemnification.  Par shall indemnify and hold harmless Sucampo, RTU, Takeda and their Affiliates, and their Related Parties (“Sucampo, RTU, and Takeda Indemnitees”) from and against any liabilities, damages, costs, or expenses, including reasonable attorneys’ fees and expert fees, incurred by any Sucampo, RTU, and Takeda Indemnitee that arise from any claims, actions, demands, suits or other cause of action by a Third Party arising out of or related to: (i) any breach of Par’s, as applicable, representations, warranties and covenants set forth in this Agreement, (ii) the design, manufacture, marketing, sale or use of any Licensed Products, including any Product Liability Claims, (iii) the failure by Par as applicable, to comply with any FDA or other governmental requirement with respect to any Licensed Products, and/or (iv) the infringement or misappropriation of any Third Party patent, copyright, trademark, service mark, trade secret or other intellectual property based on any Licensed Products, except to the extent Sucampo, RTU, and Takeda are required to indemnify Par Indemnitees pursuant to Section 5.1.

 

Section 5.3 Indemnification Procedures.  The obligations to indemnify, defend, and hold harmless set forth in Section 5.1 and Section 5.2 shall be contingent upon the Party seeking indemnification (the “Indemnitee”): (i) notifying the indemnifying Party of a claim, demand or suit within fifteen (15) days of receipt thereof; provided, however, that the Indemnitee’s failure or delay in providing such notice shall not relieve the indemnifying Party of its indemnification obligation except to the extent the indemnifying Party is prejudiced thereby; (ii) allowing the indemnifying Party and/or its insurers the right to assume direction and control of the defense of any such claim, demand or suit; (iii) cooperating with the indemnifying Party and/or its insurers in the defense of such claim, demand or suit at the indemnifying Party’s expense; and (iv) agreeing not to settle or compromise any claim, demand or suit without prior written authorization of the indemnifying Party.  The Indemnitee shall have the right to participate in the defense of any such claim, demand or suit referred to in this Section utilizing attorneys of its choice, at its own expense, provided, however, that the indemnifying Party shall have full authority and control to handle any such claim, demand or suit.

 

  

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ARTICLE 6

MISCELLANEOUS

 

Section 6.1 Assignment.  No Party hereto may assign any of its rights or obligations under this Agreement, except to an Affiliate or successor to all or substantially all of the business of the Party to which this Agreement pertains, without the prior written consent of the other Parties.  Any Party may assign this Agreement without the prior written consent of the other Parties to an Affiliate or in connection with a merger, reorganization, change of control or sale of all or substantially all of the applicable business of such Party, in each case, on written notice to the other Parties, provided that the successor Person agrees in writing to adhere to all of the terms and conditions of this Agreement.  Any purported assignment in violation of the foregoing shall be null and void and of no force or effect.  No assignment of this Agreement will relieve the assigning Party from any of its obligations hereunder.  In the event of a permitted assignment, this Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns.

 

Section 6.2 Dispute Resolution.  Any dispute, controversy or claim arising out of or relating to this Agreement (a “Dispute”) shall be attempted to be settled by the Parties, in good faith, by submitting each such Dispute to the Chief Executive Officers of each Party by written notice from any Party to the other Parties specifying the terms of such Dispute in reasonable detail.  Within fourteen (14) calendar days of receipt of such notice, the Chief Executive Officers of each Party involved in the Dispute or a member of management designated by the respective Chief Executive Officer, shall meet in person (at a mutually agreed upon time and location) or by telephone for the purpose of resolving such Dispute.  They will discuss the problems and/or negotiate for a period of up to twenty (20) calendar days in an effort to resolve the Dispute or negotiate an acceptable interpretation or revision of the applicable portion of this Agreement mutually agreeable to the Parties, without the necessity of formal procedures relating thereto.  If the problem is not resolved within the period set forth above, the Parties shall be free to pursue all available remedies, at law or in equity, consistent with the terms of this Agreement.  Notwithstanding the foregoing, any Party may apply to a court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other equitable relief, where such relief is necessary to protect its interests.  For avoidance of doubt, this Section 6.2 does not apply to any breach as set forth in Section 3.3 of this Agreement.

 

Section 6.3 Governing Law and Venue.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its conflict of laws principles.  The Parties hereby consent to the exclusive jurisdiction of the federal courts located in Delaware, and expressly waive any objections or defenses based on lack of personal jurisdiction or venue in connection with any dispute arising out of or relating to this Agreement.

 

Section 6.4 Bankruptcy.  All rights and licenses granted under or pursuant to any Section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code (the “Bankruptcy Code”), licenses of “intellectual property” as defined under the Bankruptcy Code.  The Parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code.

 

  

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Section 6.5 Confidentiality.  The Parties and their respective Affiliates and Related Parties shall not use or disclose to Third Parties (other than the Parties’ respective financial advisors, legal advisors, and Affiliates, or by Par in connection with securing FDA approval to market Par’s ANDA Products, or by any Party in connection with a potential or actual assignment pursuant to Section 6.1) either (a) the terms of this Agreement or (b) any information received from the other Parties or otherwise developed or obtained (including prior to the date hereof) by any Party in the performance of activities under this Agreement without first obtaining the written consent of the disclosing Party, except as may be otherwise provided in, or required in order for a Party to exercise its rights or fulfill its obligations under, this Agreement.  This confidentiality obligation shall not apply to information that (i) is or becomes a matter of public knowledge (other than by breach of this Agreement by the receiving Party), (ii) is required by law, regulation or order of a court or administrative agency of competent jurisdiction, to be disclosed, and then only to the extent required by law provided that the disclosing Party shall (a) give the other Parties reasonable prior notice of such required disclosure and (b) provide such other Parties a reasonable opportunity to seek a protective order or other injunctive relief to limit or protect the confidentiality of such disclosures, (iii) the receiving Party can establish was already known to it or was in its possession at the time of disclosure, (iv) the receiving Party can establish was independently developed by Persons in its employ who had no contact with and were not aware of the content of the confidential information, or (v) is disclosed to the receiving Party by a Third Party having no obligation of confidentiality to the disclosing Party with respect to such information.  The Parties shall take reasonable measures to assure that no unauthorized use or disclosure is made by others to whom access to such information is granted.  Notwithstanding the foregoing, Sucampo, RTU, and Takeda have the right to disclose to Third Parties the License Effective Date defined in this Agreement if required in order to comply with the provisions of agreements with those Third Parties analogous to Section 3.6 above.  Nothing in this provision bars the Parties from disclosing this Agreement to the Court, and the Parties have agreed to submit this settlement to the Court.  Disclosure of this Agreement to the FTC and to the DOJ Antitrust Division on a confidential basis is contemplated by this Agreement, as provided in Section 6.8.

 

Section 6.6 Publicity.  Except as consistent with a press release mutually agreed by Sucampo and Par, or other publicly disclosed information, no public announcement or other disclosure to Third Parties concerning the existence of or terms of this Agreement shall be made, except as permitted under Article 3 of the Agreement, either directly or indirectly, by any Party, without first obtaining the written approval of the other Parties and agreement upon the nature, text and timing of such announcement or disclosure, which approval shall not be unreasonably withheld, conditioned, or delayed; provided, however, each Party shall have the right to make any such public announcement or other disclosure required by law after such Party has provided to the other Parties a copy of such announcement or disclosure and an opportunity to comment thereon.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the Securities Exchange Commission, the Federal Trade Commission, and the Food and Drug Administration, and any other governmental or regulatory agencies, including requests for confidential treatment of proprietary information of any Party included in any such disclosure.  No Party shall be required to provide the other Parties with any advance notice of any public announcements or other disclosures related to periodic, routine financial reporting unless such announcement or other disclosure will include non-routine information relating to the Licensed Products or this Agreement.

 

  

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Section 6.7 Cooperation and Compliance with Laws.  Subject to confidentiality restrictions that may be reasonably requested, the Parties shall use their respective commercially reasonable efforts to:

 

(a) Make all required filings with all governmental authorities (e.g., the FTC and DOJ filings described in Section 6.8) and obtain all necessary approvals in connection with this Agreement to the extent required under applicable laws.  Subject to confidentiality restrictions that may be reasonably requested and to the extent permissible by law, the Parties shall coordinate and exchange all filings and documents submitted to all government authorities regarding this Agreement;

 

(b) Cooperate with each other in any review, investigation, inquiry or proceeding regarding the Agreement by any government authority.  Subject to such confidentiality restrictions as may be reasonably requested and to the extent permissible by law, the Parties, will render reasonable assistance as the other may request in connection with this Agreement and coordinate and cooperate with one another in exchanging information, permitting reasonable access to the Parties’ and their respective Affiliates’ documents, officials, and data in connection with any such review, investigation, inquiry or proceeding by any governmental authority;

 

(c) Promptly inform each other of any material communication made to, or received by such Party from any governmental authority regarding this Agreement, including any amendments or supplements of the Par ANDA;

 

(d) Defend, contest and resist any administrative, judicial or legislative action or proceeding that is instituted (or threatened to be instituted) challenging the transactions contemplated by this Agreement as violative of any applicable law, and have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) that is in effect and that challenges this Agreement, including, without limitation, by pursuing all reasonable avenues of administrative and judicial appeal;

 

(e) Without limiting any other provision of this Agreement, take all actions and do all things reasonably necessary or proper (at its own cost and expense), including under applicable law to make effective and further the intent and purposes of the transactions contemplated by this Agreement, including executing any further instruments reasonably requested by the other Parties, and to resist and to contest any proposals or efforts to materially alter the terms of the Agreement so as to permit the Parties to fulfill their obligations under and to obtain the full benefits contemplated by the Agreement; and

 

(f) The Parties agree that the entering into of this Agreement and the performance of their respective obligations hereunder shall be in compliance with all applicable federal, state and local laws, rules, guidelines and regulations.

 

Section 6.8 Government Notifications and Government Proceedings.  Within ten (10) business days following the Effective Date, and pursuant to current statutory law, the Parties shall file or cause to be filed this Agreement with the U.S. Federal Trade Commission Bureau of Competition (“FTC”), the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice (“DOJ”), and any other applicable state or federal governmental agency, and, in each case, shall request that this Agreement be treated as confidential to the fullest extent permitted under the law.  If, within thirty (30) days of receipt of this Agreement by the FTC and DOJ, the FTC and/or DOJ object to, respond to, or otherwise comment on such submission, the Parties shall use best efforts to resolve such objection, response or comment, without making any material change to the rights and obligations of the Parties under this Agreement, except as the Parties may mutually agree.

 

  

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Section 6.9 Notices.  All notices required or permitted under this Agreement must be in writing and must be given by addressing the notice to the address for the recipient set forth below or at such other address as the recipient may specify in writing under this procedure.  Notice shall be delivered by using a recognized express delivery service such as Federal Express/Airborne/United Parcel Service/DHL Worldwide, or United States Express Mail, charges prepaid or charged to the sender’s account, in which case notice is effective on delivery, if delivery is confirmed by the delivery service.  In addition to delivery by express delivery service, notice shall also be sent by e-mail.

 

	
If to Sucampo:

	
If to Par:

	 	 
	
Sucampo Pharmaceuticals, Inc.

4520 East West Highway, 3rd Flr.

Bethesda, MD 20814

Attn: Chief Legal Officer

Fax: 301-961-3440

Email: tknapp@sucampo.com

	
Par Pharmaceutical, Inc.

300 Tice Boulevard

Woodcliff Lake, New Jersey 07677

Attn: General Counsel

Fax: (201) 802-4600

 

	 	 
	With a copy to:	With a copy to:
	
Paul Hastings LLP

75 East 55th Street

New York, NY 10022

Phone (212) 318-6000

Attn:  Joseph M. O’Malley, Jr.

josephomalley@paulhastings.com

Preston K. Ratliff II

prestonratliff@paulhastings.com

 

	
Daniel G. Brown

Terrence J. Connolly

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Telephone: (212) 906-1200

Facsimile:  (212) 751-4864

Email: Daniel.Brown@lw.com

Email: Terrence.Connolly@lw.com

	 	 
	 	 
	If to Takeda:	
If to RTU:

	 	 
	
Takeda Pharmaceutical Company Limited

1-1 Doshomachi 4-chome, Chuo-ku

Osaka 540-8645, Japan,

Attention:  General Manager, Intellectual Property Department

Fax No.:  +81-6-6300-6601

Email: yoichi.okumura@takeda.com

	
R-Tech Ueno, Ltd.

NBF Hibiya Bldg. 10F, 1-1-7, Uchisaiwai-cho, Chiyoda-ku, Tokyo, 100-0011, Japan,

Attention: Director, Office of the President

Fax No. +81-3-3596-8023

Email: naoko.okabe@rtueno.co.jp

 

 

  

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	copy to:	 
	 	 
	
Takeda Pharmaceuticals U.S.A., Inc.

One Takeda Parkway

Deerfield, IL 60015

Attention: General Counsel

Fax No.: 224-554-7831

Email: ken.greisman@takeda.com 

	 
	copy to:	 
	 	 
	
Takeda Pharmaceuticals America, Inc.

One Takeda Parkway

Deerfield, IL 60015

Attention: General Counsel

Fax No.: 224-554-7831

Email: ken.greisman@takeda.com

	 
	 	 
	copy to:	 
	 	 
	
Patterson Belknap Webb & Tyler LLP

1133 Avenue of the Americas

New York, NY 10036

Phone (212) 336-2000

Attn: Chad Peterman

cjpeterman@pbwt.com

	 

 

Section 6.10 Amendment.  This Agreement may not be amended or modified except by an instrument in writing signed by authorized representatives of the Parties.

 

Section 6.11 No Waiver.  The failure of any Party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such Party thereafter to enforce such provisions.

 

Section 6.12 Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.

 

Section 6.13 Headings.  The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of the Agreement.

 

  

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Section 6.14 Counterparts.  This Agreement may be executed in one or more counterparts, and by the respective Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same Agreement.

 

Section 6.15 Entire Agreement.  This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof, and no oral or written statement that is not expressly set forth in this Agreement may be used to interpret or vary the meaning of the terms and conditions hereof.  This Agreement supersedes any prior or contemporaneous agreements and understandings, whether written or oral, between the Parties with respect to the subject matter hereof.

 

Section 6.16 Third Party Beneficiaries.  Except as expressly provided herein, nothing in this Agreement, either express or implied, is intended to or shall confer upon any Third Party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 6.17 Scope of Agreement.  The mutual releases, licenses, and other provisions set forth in this Agreement shall be limited to the Par ANDA and the AMITIZA® Products, and shall be without prejudice to, shall have no preclusive effect as to, and shall not be admissible in any proceedings pertaining to any future or different product(s) or ANDA(s).

 

[Remainder of Page Intentionally Left Blank; Signature Page(s) Follow]

 

  

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IN WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date first written above.

 

	
SUCAMPO AG

	  	
ANCHEN PHARMACEUTICALS, INC.

	 	 	 
	
By:

	  	  	
By:

	  
	
Name:

	  	  	
Name:

	  
	
Title:

	  	  	
Title:

	  
	 	 	 	 	 
	 	 	 	 	 
	
SUCAMPO PHARMACEUTICALS, INC.

	  	
PAR PHARMACEUTICAL, INC.

	 	 	 
	
By:

	  	  	
By:

	  
	
Name:

	  	  	
Name:

	  
	
Title:

	  	  	
Title:

	  
	 	 	 	 	 
	 	 	 	 	 
	
R-TECH UENO, LTD.

	  	
PAR PHARMACEUTICAL COMPANIES, INC.

	 	 	 
	
By:

	  	  	
By:

	  
	
Name:

	Yukihiko Mashima	  	
Name:

	  
	
Title:

	President	  	
Title:

	  
	 	 	 	 	 
	 	 	 	 	 
	
TAKEDA PHARMACEUTICAL COMPANY LIMITED

	 	 	 
	 	 	 	 	 
	
By:

	 	 	 	 
	
Name:

	 	 	 	 
	
Title:

	 	 	 	 

 

  

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TAKEDA PHARMACEUTICALS USA, INC.

	  	  	  
	 	 	 	 
	
By:

	  	  	  	  
	
Name:

	  	  	  	  
	
Title:

	  	  	  	  
	 	 	 	 	 
	 	 	 	 	 
	
TAKEDA PHARMACEUTICALS AMERICA, INC.

	  	  	  
	 	 	 	 
	
By:

	  	  	  	  
	
Name:

	  	  	  	  
	
Title:

	  	  	  	  

 

 

 

  

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EXHIBIT A

 

UNITED STATES DISTRICT COURT

DISTRICT OF DELAWARE

 

	
SUCAMPO AG, SUCAMPO PHARMACEUTICALS, INC., R-TECH UENO, LTD., TAKEDA PHARMACEUTICAL COMPANY LIMITED, TAKEDA PHARMACEUTICALS USA, INC. AND TAKEDA PHARMACEUTICALS AMERICA, INC.,

	 
	Plaintiffs,	
Civil Action No. 13-202 (GMS)

	v.	 
	ANCHEN PHARMACEUTICALS, INC., PAR PHARMACEUTICAL, INC. and PAR PHARMACEUTICAL COMPANIES, INC.,	 
	
Defendants.

	 

 

CONSENT JUDGMENT AND ORDER OF PERMANENT INJUNCTION

 

This action for patent infringement (the “Patent Litigation”) has been brought by Plaintiffs Sucampo AG, Sucampo Pharmaceuticals, Inc., R-Tech Ueno, Ltd., Takeda Pharmaceutical Company Limited, Takeda Pharmaceuticals USA, Inc., and Takeda Pharmaceuticals America, Inc. (collectively, “Plaintiffs”) against Defendants Anchen Pharmaceuticals, Inc., Par Pharmaceutical, Inc., and Par Pharmaceutical Companies, Inc. (collectively, “Par”) for infringement of United States Patent Nos. 6,414,016 (“the ’016 patent”); U.S. Patent No. 7,795,312 (“the ’312 patent”); 8,206,393 (“the ’393 patent”); U.S. Patent No. 8,071,613 (“the ’613 patent”); 8,097,653 (“the ’653 patent”); 8,338,639 (“the ’639 patent”); and 8,389,542 (“the ’542 patent”) (collectively the “Sucampo Patents”).  Plaintiffs’ commencement of the Patent Litigation was based on its receipt of notice from Par that Par filed ANDA No. 201442 with the United States Food and Drug Administration containing a certification pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) directed to the Sucampo Patents and seeking approval to market generic versions of 8 mcg and 24 mcg lubiprostone capsules.

  

  

  

Plaintiffs and Par have agreed to enter into a good-faith final settlement agreement regarding this Patent Litigation on the expectation and belief that this would eliminate the substantial litigation costs that would otherwise be incurred by both Plaintiffs and Par during the Patent Litigation, while also serving the public interest by saving judicial resources and avoiding the risks to each of the parties associated with infringement.  The final settlement between the Plaintiffs and Par has been submitted to this Court under seal, and the Court has reviewed this settlement agreement.  This reasonable final settlement will afford Plaintiffs and Par the procompetitive opportunity to more productively use money and other resources that would have been spent in the continued prosecution and defense of this Patent Litigation, to the benefit of the parties and consumers alike, such as by investing more money in pharmaceutical research and development.

Each of Plaintiffs and Par acknowledge there is significant risk to each of them associated with the continued prosecution of this Patent Litigation and have consented to judgment through a final settlement as reflected in the consent judgment set forth herein.  The Court, upon the consent and request of Plaintiffs and Par, hereby acknowledges the following Consent Judgment and, upon due consideration, issues the following Order.

Plaintiffs and Par now consent to this Consent Judgment and Order of Permanent Injunction and

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that:

  

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This Court has subject matter jurisdiction, over this patent infringement action, and personal jurisdiction over Plaintiffs and Par for purposes of this action.  Venue is proper in this Court as to Plaintiffs and Par as to this action.

In this Patent Litigation, which was filed on February 7, 2013, Plaintiffs have charged Par with infringement of the Sucampo Patents in connection with Par’s submission of Abbreviated New Drug Application (“ANDA”) No. 201442 directed to generic tablets containing 8 mcg and 24 mcg of lubiprostone per capsule (“Par’s ANDA No. 201442 Products”) to the U.S. Food and Drug Administration (“FDA”).

In response to Plaintiffs’ charges of patent infringement, Par has alleged certain defenses, including that Sucampo Patents are invalid and/or not infringed.  No decision has been obtained by the parties from this Court regarding these charges of infringement or these defenses.

Par has not obtained a decision from the Court finding that it has rebutted the statutory presumption that the Sucampo Patents are valid and enforceable in the Patent Litigation.

Par admits that the submission of ANDA No. 201442 containing a certification pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) to the FDA for the purpose of obtaining regulatory approval to engage in the commercial manufacture, use and/or sale of Par’s ANDA No. 201442 Products within the United States before the expiration of the Sucampo Patents was a technical act of infringement of the Sucampo Patents under 35 U.S.C. § 271(e)(2)(A).  This admission is further without prejudice to any claim, defense or counterclaim in any future action between Par and Plaintiffs, or any successor-in-interest to Sucampo, regarding the Sucampo Patents and/or a generic lubiprostone product other than Par’s ANDA No. 201442 Products.

Both parties have agreed that each of the defenses set forth in Par’s Answer, including the allegations and averments contained therein, should be dismissed, without prejudice.

  

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Par, their officers, agents, servants, employees and attorneys, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, are hereby enjoined from manufacturing, using, offering to sell or selling within the United States, or importing into the United States, any generic capsule product containing 8 mcg and/or 24 mcg of lubiprostone per capsule that is the subject of ANDA No. 201442 until January 1, 2021 or at such earlier date as may be permitted by the Settlement and License Agreement that the Parties have entered into.

Plaintiffs and Par each expressly waives any right to appeal or otherwise move for relief from this final Consent Judgment And Order of Permanent Injunction.

This court retains jurisdiction over Plaintiffs and Par for purposes of enforcing this final Consent Judgment And Order of Permanent Injunction.

This Consent Judgment and Order of Permanent Injunction is without prejudice to, and shall have no preclusive effect as to, any claim, defense or counterclaim in any future action between Par or any successor-in-interest to Par, and Plaintiffs, or any successor-in-interest to Plaintiffs, regarding the Sucampo Patents and/or a generic lubiprostone product other than Par’s ANDA No. 201442 Products.  Further, this Consent Judgment and Order of Permanent Injunction shall not be admissible in evidence, as an admission of Par or otherwise, in any such future action.

The Clerk of the Court is directed to enter this final Consent Judgment and Order of Permanent Injunction forthwith.

 

IT IS HEREBY STIPULATED:

 

	
Dated: _________________, 2014

 

  

Morris, Nichols, Arsht & Tunnell LLP

  

 

_________________________________

Jack B. Blumenfeld (# 1014)

Karen Jacobs (# 2881)

	 	
Dated: __________________, 2014

  

 

Richards Layton & Finger, P.A.

  

 

_________________________________

Steven J. Fineman (# 4025)

Katherine C. Lester (# 5629)

 

  

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Regina S.E. Murphy (# 5648)

1201 North Market Street

P.O. Box 1347

Wilmington, DE  19899-1347

(302) 658-9200

jblumenfeld@mnat.com

kjacobs@mnat.com

rmurphy@mnat.com

 

Attorneys for Plaintiffs

 

OF COUNSEL:

 

Joseph M. O’Malley, Jr.

Preston K. Ratliff II

Evan D. Diamond

Paul Hastings LLP

75 E. 55th Street

New York, NY  10022

(212) 318-6000

 

Attorneys for Plaintiffs Sucampo AG, Sucampo Pharmaceuticals, Inc. and R-Tech Ueno, Ltd.

 

William F. Cavanaugh

Chad J. Peterman

Aileen M. McGill

Patterson Belknap Webb & Tyler LLP

1133 Avenue of the Americas

New York, NY 10036

(212) 336-2000

 

Attorneys for Plaintiffs Takeda Pharmaceutical Company Limited, Takeda Pharmaceuticals USA, Inc. and Takeda Pharmaceuticals America, Inc.

	 	
One Rodney Square

920 North King Street

Wilmington, DE  19801

(302) 888-6960

fineman@rlf.com

lester@rlf.com

 

 

 

Attorneys for Defendants

 

OF COUNSEL:

 

Daniel G. Brown

Terrence J. Connolly

Latham & Watkins LLP

885 Third Avenue

New York, NY  10022

(212) 906-1200

 

Roger J. Chin

Latham & Watkins LLP

505 Montgomery Street

Suite 2000

San Francisco, CA 94111

(415) 391-0600

 

Marc N. Zubick

Lauren Sharkey

Matthew C. Darch

Latham & Watkins LLP

233 South Wacker Drive, Suite 5800

Chicago, IL 60606

(312) 876-7700

 

 

SO ORDERED:

 

This _________ day of _____________, 2014.

 

 

___________________________________________

 

THE HONORABLE GREGORY M. SLEET

Chief United States District Judge

 

  

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EXHIBIT B

MANUFACTURING AND SUPPLY AGREEMENT

[ATTACHED]exh_103.htm

EXHIBIT 10.3

 

*** Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

and 240.24b-2

 

 MANUFACTURING AND SUPPLY AGREEMENT

BY AND BETWEEN

SUCAMPO AG

AND

PAR PHARMACEUTICAL, INC.

DATED AS OF SEPTEMBER 30, 2014

 

 

 

  

  

  

MANUFACTURING AND SUPPLY AGREEMENT

 

Manufacturing and Supply Agreement (this “Agreement”) is hereby entered into and effective as of September [  ], 2014 (the “Effective Date”) by and between Sucampo AG (“Sucampo”) and Par Pharmaceutical, Inc. (“Par”).  Each of Sucampo and Par are referred hereto as the “Parties” or, individually, as a “Party”).

 

WHEREAS, Sucampo is a pharmaceutical company engaged in the marketing, sales and distribution of pharmaceutical products;

 

WHEREAS, Par is a pharmaceutical company engaged in the manufacture, marketing, sales and distribution of pharmaceutical products;

 

WHEREAS, Par and Sucampo, among other parties, have entered into that certain Settlement and License Agreement dated September 30, 2014 (the “License Agreement”) related to the Product (as defined below); and

 

WHEREAS, pursuant to the terms and conditions of this Agreement and the License Agreement, Par desires Sucampo to supply to Par commercial quantities of the Product to be marketed and distributed by Par in the Territory.

 

NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises, covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sucampo and Par hereby agree as follows:

 

ARTICLE 1. DEFINITIONS

 

1.1 “Affiliate” means, with respect to either Party, any Person that directly or indirectly controls, is controlled by, or is under common control with such Party.  For purposes of the foregoing definition only, the term “control” (including, with correlative meaning, the terms “controlling”, “controlled by”, and “under common control with”) means the possession, directly or indirectly, of the power to direct of cause the direction of the management and policies of such Person, whether through ownership of interests representing equity securities, or partnership interests or by contract, or otherwise.  Ownership of more than fifty percent (50%) of such equity securities or partnership interests in a Person shall, without limitation, be deemed to be control for purposes of this definition.  Any venture capital fund or private equity fund, or any Person that directly or indirectly is controlled thereby, that otherwise would be considered an “Affiliate” shall not, for purposes of this Agreement, be considered an Affiliate, except that in the case of Par, Sky Growth Holdings Corporation and its direct and indirect subsidiaries as well as any successor entity to Sky Growth Holdings Corporation, shall be considered an Affiliate of Par.

 

1.2 “Agreement” has the meaning given in the introductory paragraph hereof.

 

1.3  “API” means the active pharmaceutical ingredient known as Lubiprostone.

 

1.4 “Applicable Laws” means all laws, rules, regulations and guidelines of any Governmental Authority with jurisdiction over the development, manufacturing, exportation,

 

  

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importation, promotion, marketing, sale or distribution of the API and/or the Product, including specifically, but without limitation, all cGMP or similar standards or guidelines of the FDA and compendial guidelines (e.g. United States Pharmacopeia), where applicable, as well as the U.S. export control laws and the U.S. Foreign Corrupt Practices Act, in each case to the extent applicable to the performance of a Party’s obligations under this Agreement.

 

1.5 “Authorized Generic Launch” means the first commercial sale of the Product in the Territory by Par pursuant to the terms of this Agreement and the License Agreement.

 

1.6 “Calendar Quarter” means each three (3) consecutive month period ending on March 31, June 30, September 30 or December 31.

 

1.7 “Certificate of Analysis” means a certificate of analysis provided by Sucampo to Par with each shipment of the Product that sets forth: (a) the results of any quality assurance testing and (b) the manufacturing date.

 

1.8 “Certificate of Product Conformance” means a certificate of product conformance indicating that such Product was manufactured materially in accordance with cGMP requirements, certified by quality assurance personnel of Sucampo or its contractor.

 

1.9 “cGMP” means quality systems and current good manufacturing practices as required by the rules, guidelines and regulations of the FDA as applicable to the manufacture, Labeling, Packaging, handling, storage and transport of the API and Product in the Territory, as set forth in 21 USC § 351(a)(2)(B) and 21 CFR Parts 210 and 211, or any successor provisions and any update thereto.

 

1.10 “Commercially Reasonable Efforts” means, with respect to each Party, efforts and commitment of resources, consistent with Applicable Laws, in accordance with such Party’s reasonable business, legal, medical, and scientific judgment that are consistent with the efforts and resources such Party customarily uses to accomplish a similar objective under similar circumstances for other similar products owned by it or to which it has similar rights, which are of similar market potential and at a similar stage in their life cycle, taking into account the competitiveness of the marketplace, the regulatory structure involved, the profitability of the applicable products and other relevant factors, including any royalties, product sales and other payments required under this Agreement, technical, legal, scientific, medical, sales performance, and/or marketing factors, including the reasonable performance of any associated commitments under this Agreement.

 

1.11  “Confidential Information” means, with respect to a Party (as the “Disclosing Party”), all non-public information of any kind whatsoever (including without limitation, data, materials, compilations, formulae, models, patent disclosures, procedures, processes, projections, protocols, results of experimentation and testing, specifications, strategies, techniques and all non-public Intellectual Property as defined herein), and all tangible and intangible embodiments thereof of any kind whatsoever (including without limitation, materials, samples, apparatus, compositions, documents, drawings, machinery, patent applications, records and reports), which are disclosed by the Disclosing Party to another Party (as the “Receiving Party”) including any and all copies, replication or embodiments thereof.  Notwithstanding the foregoing, Confidential Information of a Disclosing Party shall not include information to the extent that the Receiving Party can establish by competent proof (a) to have been publicly known prior to disclosure of such information by the Disclosing Party to the Receiving Party, (b) to have become publicly known, without fault on the part of the Receiving Party, subsequent to disclosure of such information by the Disclosing Party to the Receiving Party, (c) to have been received by the Receiving Party free of an obligation of confidentiality from a source rightfully having possession of and the right to disclose such information free of an obligation of confidentiality, (d) to have been otherwise rightfully known by the Receiving Party prior to disclosure of such information by the Disclosing Party to the Receiving Party, as substantiated by reasonable documentation in support thereof, or (e) to have been independently developed by employees or agents of the Receiving Party without the use of Confidential Information of the Disclosing Party.  For the avoidance of doubt and without limiting the generality of the foregoing, “Confidential Information” of Sucampo shall include without limitation all non-public Intellectual Property and Technology that is related to or associated with the Product. Each Party agrees to keep the terms and conditions of this Agreement confidential.

 

  

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1.12 “Direct Manufacturing Cost” means the direct out-of­pocket costs actually incurred by Sucampo or its Third Party contract manufacturer for the manufacturing, Labeling and Packaging of the Product, including API, excipients, Packaging and Labeling components, internal direct labor, and quality control and assurance testing that are a necessary part of manufacturing.

 

1.13 “Dollar” means the United States dollar.

 

1.14 “Effective Date” has the meaning given to such term in the introductory paragraph of this Agreement.

 

1.15  “FDA” means the United States Food and Drug Administration and any successor agency thereto.

 

1.16 “Force Majeure Event” has the meaning set forth in Section 13.13.

 

1.17 “Forecast Period” has the meaning set forth in Section 3.2.

 

1.18 “GAAP” means generally accepted accounting principles as in effect in the United States from time to time, consistently applied.

 

1.19 “GDEA” has the meaning set forth in Section 9.1.5.

 

1.20 “Governmental Authority” means any court, tribunal, arbitrator, agency, legislative body, commission, official or other instrumentality of (i) any government of any country, or (ii) a federal, state, province, county, city or other political subdivision thereof.

 

1.21 “Indemnitee” has the meaning set forth in Section 10.3.

 

1.22 “Indemnitor” has the meaning set forth in Section 10.3.

 

  

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1.23 “Intellectual Property” means, without limitation, all of the following: (i) all patent rights and all rights, title and interests in and to all patent applications, continuation applications, continuation-in-part applications, divisional applications, and United States patents corresponding to any of the foregoing that may grant or may have been granted on any of the foregoing, including without limitation reissues, re-examinations and extensions, or the like; (ii) all copyrights and all rights, title and interests in and to all copyrightable works, copyright applications, registrations and renewals; (iii) all rights, title and interests in and to all trade secrets and trade secret rights arising under common law, state law, federal law or laws of foreign countries; (iv) logos, trademarks, service marks, and all rights, title and interest in and to all applications and registrations relating thereto; (v) any other intellectual or proprietary rights anywhere in the world; (vi) any rights, title and interest in and to abbreviated new drug applications or other applications to market (including right of reference thereto); and (vii) any regulatory exclusivities, patent extensions, supplemental protection certificates or the like.

 

1.24 “Label,” “Labeled” or “Labeling” refers to such labels and other written, printed or graphic matter, (i) upon the Product or any container or wrapper utilized with the Product, or (ii) accompanying the Product, including without limitation, package inserts.

 

1.25 “Latent Defect” means a defect in any Product not conforming to Sucampo’s warranty for such Product as set forth in Section 5.1 such that (a) the non-conformance of such Product with the warranty set forth in Section 5.1 is not readily discoverable or not reasonably expected to be readily discoverable based on Par’s or Par’s designee’s normal, incoming-goods inspections and (b) such non-conformance was not caused directly or indirectly by any acts or omissions of Par, its Affiliates or any third parties for whom Par is responsible.

 

1.26 “License Agreement” has the meaning set forth in the fourth recital hereof.

 

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

 

1.28 “Lubiprostone” means the compound described in more detail in Exhibit A.

 

1.29 “Objection Notice” has the meaning set forth in Section 3.6.3.

 

1.30 “Order” means, with respect to commercial supply of Product hereunder, a written communication from Par to Sucampo of Par’s order of Product for a particular supply period, issued in accordance with Article 3.

 

1.31 “Packaged” or “Packaging” means all primary containers, including bottles, cartons, shipping cases or any other like matter used in packaging or accompanying the Product.

 

1.32 “Par Parties” has the meaning set forth in Section 10.2.

 

1.33 “Patent Defect” means a defect in any Product not conforming to Sucampo’s warranty for such Product as set forth in Section 5.1 such that (a) the non-conformance of such Product with the warranty set forth in Section 5.1 may be readily discovered or should be reasonably expected to be readily discoverable based on Par’s or Par’s designee’s normal,

 

  

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incoming-goods inspections and (b) such non-conformance was not caused directly or indirectly by any acts or omissions of Par, its Affiliates or any third parties for whom Par is responsible.

 

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

 

1.35 “Product” means a generically labeled (and not under the AMITIZA® trademark) version of Lubiprostone capsules, which is the subject of the Product NDA, including all dosage strengths and packaging configurations, and which is supplied by Sucampo to Par pursuant to this Agreement and subject to the terms of the License Agreement.

 

1.36 “Product Liability Litigation” has the meaning set forth in Section 10.4.

 

1.37 “Product NDA” means New Drug Application No. 021908, as may be amended or supplemented.

 

1.38 “Product Specifications” means the applicable specifications set forth in the Product NDA, including any statements of pharmaceutical manufacturing, filling, storage and quality control procedures, submission batch specifications, and Labeling and Packaging specifications.

 

1.39 “Product Supply Price” means, in Dollars, the Direct Manufacturing Cost for the supplied Product plus [...***...] percent ([...***...]%) thereof or such other price as the Parties may subsequently agree in a writing signed by both Parties pursuant to Section 3.13 of the License Agreement.

 

1.40 “Quality Agreement” has the meaning set forth in Section 5.3.

 

1.41 “Recall” has the meaning set forth in Section 5.2.

 

1.42 “Regulatory Approval” means any and all approvals, licenses (including product and establishment licenses), registrations, or authorizations of any Governmental Authority necessary to develop, manufacture, commercialize, promote, distribute, transport, store, use, sell or market the Product, and all applicable product and/or establishment licenses, registrations, permits or other authorizations as may be necessary in connection with the Product and API, and which are necessary for the commercial manufacture, commercialization, use, storage, importation, transport, promotion, pricing, distribution or sale of such Product in the Territory.

 

1.43 “Rejection Notice” has the meaning set forth in Section 3.6.2.

 

1.44 “Responsible Party” has the meaning set forth in Section 5.2.

 

1.45 “SKU(s)” means Stock Keeping Unit(s) in different product formats used as the smallest unit of measure to identify manufacturing and distribution of the Product.

 

1.46 “Sucampo Parties” has the meaning set forth in Section 10.1.

 

*Confidential Treatment Requested

  

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1.47  “Technology” means any and all proprietary information, ideas, concepts, compositions, formulas, techniques, procedures, practices, protocols, methods, samples, models, technology, work product, trade secrets, inventions, designs, discoveries, developments, drawings, notes, documents, descriptions, specifications, knowledge, know-how, skill, experience, test data and results (including without limitation pharmacological, toxicological and clinical test data and results), analytical and quality control data and other data, results or descriptions, other copyrightable subject matter and any other information or technology, in each of the foregoing cases, whether in written, electronic, graphic or any other form and whether patentable or not, including without limitation, the following confidential proprietary information to the extent related to the Product (including all embodiments thereof): manufacturing information, protocols and methods, Product formulations, Product and process specifications, processes, Product designs, plans, engineering and other manuals and drawings, standard operating procedures, flow diagrams, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, safety, quality assurance, quality control and clinical data, technical information, data and research records.

 

1.48 “Territory” means the United States of America and its territories, districts and possessions, including the Commonwealth of Puerto Rico and any installation, territory, location or jurisdiction under the purview of the FDA or control of the United States government.

 

1.49  “Third Party” or “Third Parties” means any Person other than a Party or its Affiliates.

 

ARTICLE 2. COMMERCIAL MANUFACTURING & SUPPLY

 

2.1 Supply.  Sucampo shall, or shall cause its Third Party contract manufacturer to, commercially manufacture for, and Sucampo shall supply to, Par on a non-exclusive basis during the Term, with such amounts of Product in material compliance with the Product Specifications and in fully finished, Packaged and Labeled form, as Par may order pursuant to and in accordance with Article 3 below and accepted by Sucampo pursuant to Section 3.6.1 below, and Par shall purchase such amounts of Product pursuant to and in accordance with Article 3 below.  For the avoidance of doubt, nothing in this Agreement or otherwise as between Par and Sucampo shall restrict, limit or prevent Sucampo from manufacturing, supplying, marketing, or selling to or for others, Amitiza® (Lubiprostone capsules) or other Lubiprostone products under the Amitiza® trademark in the Territory, or generic versions thereof to any Person in or outside of the Territory.  For the avoidance of doubt, notwithstanding any other provision of this Agreement, the Authorized Generic Launch shall not occur earlier than [...***...].

 

2.2 Raw Materials.  In connection with commercial supply of Product to Par hereunder, Sucampo or its Third Party contract manufacturer shall procure all raw materials, including API, necessary to produce commercial quantities of Product, including all Packaging and Labeling material, and shall process and test all such materials as required by the Product Specifications.

 

2.3 Labeling and Packaging.  Par shall provide to Sucampo all applicable information for the Labeling and Packaging, including applicable artwork.  The information shall be in accordance and in compliance with the Product Specifications for the Labeling and

 

 

*Confidential Treatment Requested

  

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Packaging, any applicable Regulatory Approval and Applicable Law.

 

2.4 Product Specifications.  Sucampo shall not make any change to the Product Specifications that would adversely affect the Product, or the Packaging or Labeling for the Product, without first obtaining Par’s written consent prior to any such change, which consent shall not be unreasonably withheld or delayed; provided, however, that notwithstanding the foregoing, Par’s consent will not be required if such changes are necessary to comply with any Applicable Law, Regulatory Approval or the requirements, orders, regulations or other instructions of any applicable Governmental Authority, in which case Sucampo shall [use Commercially Reasonable Efforts to] provide Par with as much prior written notice of such change as practicable.

 

ARTICLE 3. COMMERCIAL LOGISTICS

 

3.1 General.

 

3.1.1 Except as otherwise expressly provided for in this Agreement, Par’s commercial purchases of Product shall be made pursuant to Orders issued pursuant to Sections 3.3 and 3.4 below that will specify for each month of the applicable period covered by the Order the quantity (by SKU, Packaging and size of Product), delivery dates and the delivery locations, each in accordance with this Section 3.1.

 

3.1.2 All purchases of the Product shall be pursuant to written Orders consistent with Section 3.4 and the earliest delivery date in any given Order shall not be less than ninety (90) days following the date such Order is received by Sucampo.  Each Order will be consistent in all respects with the Firm Order Period (defined in Section 3.2 below) of the most recent rolling forecast plus or minus the Permitted Variance (as defined Section 3.2 below).

 

3.1.3 The Parties shall cooperate in good faith to prepare for the Authorized Generic Launch, including making any adjustments to Orders, forecasts and associated delivery dates, as and to the extent requested by Par and agreed upon by Sucampo in writing in its sole discretion in accordance with the following procedure:

 

(a) In the event that Par wishes to adjust any Orders, forecast or associated delivery dates, it shall promptly submit a written request with respect to the same to Sucampo, including without limitation a detailed reason for such change.

 

(b) Each change will be considered by Sucampo on a case-by-case basis in its sole discretion, including after taking into account Sucampo’s timing requirements and reasonable manufacturing lead times.  In addition to and without limiting the generality of the foregoing, in no event will Sucampo be obligated to: (i) deliver the Products in less than ninety (90) days; (ii) accept any quantities ordered in any particular month in excess of the amount forecasted for such month plus the Permitted Variance as expressly set forth in Section 3.2 below; and/or (iii) accept any quantities ordered in any particular month that are less than the amounts

 

  

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forecasted for the Firm Order Period of the rolling forecast less the Permitted Variance as expressly set forth in Section 3.2 below.

 

(c) In the event that Sucampo agrees in writing and in its sole discretion to a change, Par shall be responsible for all costs and expenses incurred by Sucampo but only to the extent necessary to implement such change, including any costs for expediting shipping to meet an earlier delivery date and any cancellation fees associated with cancelling all or any portion of an Order after Sucampo has commenced actual manufacturing of the Product.  For the avoidance of doubt, Sucampo shall not be obligated to proceed with any requested change unless and until it agrees to such change in writing and in its sole discretion, Par has agreed to pay all costs and expenses in connection with implementing such change (after having received an accurate estimate thereof, including any documentation in reasonable support thereof) and the Parties have documented agreement to such change pursuant to a written change order.  All executed change orders will be subject to the terms and conditions of this Agreement.

 

The Parties shall communicate with one another, on an ongoing basis, developments that may reasonably affect the timing of the Authorized Generic Launch.

 

3.1.4 Any terms and conditions of an invoice, Order, acknowledgement or similar document provided by Sucampo or Par to another Party for the Product that are inconsistent with the terms of this Agreement shall be null and void.

 

3.2 Rolling Forecasts.  Beginning no less than [...***...] ([...***...]) days before the scheduled Authorized Generic Launch of the Product and within [...***...] ([...***...]) business days prior to the last day of each Calendar Quarter thereafter during the Term, Par shall deliver to Sucampo a written rolling [...***...] ([...***...]) month forecast (or, if shorter, a forecast for the remainder of the Term) of its anticipated requirements for the Product for the [...***...] ([...***...]) month period beginning on the first day of the following month or, in the case of each forecast prior to an Authorized Generic Launch, the [...***...] ([...***...]) months following such Authorized Generic Launch (the “Forecast Period”). The Product supply requirements specified for the first [...***...] ([...***...]) months of the Forecast Period of any rolling forecast provided to Sucampo (such three months, the “Firm Order Period”) shall be a firm order from Par for such quantity of Product and Par will be obligated to submit an Order for, and purchase and take delivery of such quantity of Product.  If Par does not timely submit an Order for the Product supply requirements for any Firm Order Period pursuant to the terms of this Agreement, the most recent forecast covering such Firm Order Period shall be deemed to be, and shall be, an Order for such amount. All months of the Forecast Period of any rolling forecast provided to Sucampo, other than the Firm Order Period therein, will set forth Par’s good faith estimate of its Product supply requirements, and the Product supply requirements for months [...***...] ([...***...]) through [...***...] ([...***...]) of each Forecast Period will not be binding. The rolling forecast  for months [...***...] ([...***...]) through [...***...] ([...***...]) of each Forecast Period shall not

 

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increase or decrease in the following forecast in the aggregate by more than [...***...] percent ([...***...]%) on a month-to-month basis or more than [...***...] percent [...***...]% on a year-to-year basis (“Permitted Variance”); provided that any increases or decreases greater than [...***...] percent ([...***...]%) or [...***...]%, as applicable may, in each case, be accepted by Sucampo on a case-by-case basis in its sole discretion.  For example, a rolling forecast delivered [...***...] ([...***...]) business days prior to [...***...] would be for Par’s Product supply requirements for [...***...] through [...***...], and the Product supply requirements specified for the Firm Order Period of such forecast (i.e. [...***...] to [...***...]) shall be binding.  Par shall use Commercially Reasonable Efforts to ensure that the Product supply requirements for months [...***...] ([...***...]) through [...***...] ([...***...]) of the Forecast Period under each of its forecasts are accurate.  Each forecast shall also specify, for each month of the Forecast Period and consistent with the quantity limitations set forth in this Section 3.3, Par’s anticipated delivery requirements for such month, including the quantity (by SKU, Packaging and size of Product), the corresponding delivery date, and the delivery location.  For purposes of clarity, for each forecast delivered before the Authorized Generic Launch, it is anticipated that the only amounts expected to be forecast for delivery before Authorized Generic Launch shall be the initial order (or the expected initial order) to be made pursuant to Section 3.3.

 

3.3 Initial Order.  Par shall place an Order for the first month to be used for the Authorized Generic Launch, including the quantity (by SKU, Packaging and size of Product), contemporaneously with an initial forecast provided under Section 3.2 approximately one-hundred twenty (120) days before the scheduled Authorized Generic Launch of the Product.

 

3.4 Future Orders.  On or about the first business day of each month, Par shall submit to Sucampo an Order that (a) specifies those quantities that Par is obligated to purchase for that month pursuant to the Rolling Forecast, subject to the Permitted Variances as set forth in Section 3.2 above, (b) identifies the ordered Product by SKU, Packaging and size of Product, and (c) specifies the delivery date(s) and delivery location(s) for Product, in each case consistent with terms and conditions of this Agreement and, subject to the Permitted Variances, the applicable quantities in the Firm Order Period.  The Product supply requirements for the Firm Order Period of any Forecast Period shall not exceed one hundred percent (100%) of the aggregate amounts set forth in the most recent previous forecast for the same six (6) calendar months; provided, however, that notwithstanding the foregoing, (i) Sucampo shall have no firm obligation to supply any amounts in any particular month in excess of the amount forecasted for such month in any Firm Order Period plus the Permitted Variance but shall use Commercially Reasonable Efforts to supply such additional amounts above such Permitted Variance, and (ii) Sucampo shall use Commercially Reasonable Efforts to notify Par within fifteen (15) business days of receipt of any Order where the total quantity of Product ordered for a particular month exceeds the amounts forecasted plus the Permitted Variance, whether and/or to what extent it accepts and is able to deliver such additional amounts to Par.

 

3.5 Shipment and Delivery.  Sucampo shall deliver all amounts ordered by Par pursuant to Orders in conformance with the forecast provisions set forth in Sections 3.2 and 3.4 and other terms and conditions  of this Agreement  to Par within fifteen (15) days of the delivery date specified in the applicable Order.  Sucampo shall notify Par if Sucampo believes that it will not be able to deliver the ordered amounts in accordance with the terms set forth in Sections 3.1 and 3.2, and the Parties will thereafter confer in good faith to resolve any delivery issues.  Delivery of Product shall be FCA (Incoterms 2012) Sucampo or its contractor’s facility.  The quantity of Product actually delivered with respect to each accepted Order shall not exceed a range of minus two percent (2%) up to plus five percent (5%) of the quantity of the Product specified in the Order, unless otherwise agreed to in writing by Par.  Delivery documents shall include the applicable Order, quantity, copy of the Certificate of Analysis, Certificate of Product Conformance, items codes and description, lot number, expiry date of Products, number of shippers, weight, and number of pallets.  Title and risk of loss shall pass to Par at the time the goods are delivered to Par or its designee at Sucampo or its contractor’s facility, and Par shall assume all responsibility for all costs associated with the goods upon such delivery. 

 

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3.6 Acceptance and Rejection of Product.

 

3.6.1 Sucampo shall have fifteen (15) business days from receipt of an Order from Par to reject or propose to modify an Order.  Sucampo may only reject an Order that (a) lists products that are not covered by this Agreement, or (b) that is in excess of, or less than, the amount forecasted for a particular month in any Firm Order Period plus or minus the Permitted Variance permitted by Sections 3.1.2 and 3.2.

 

3.6.2 Par may reject any shipment, or portion of a shipment, of Product as defective if the applicable Product contains a Patent Defect or Latent Defect.  Par shall deliver written notice of any such rejection (a “Rejection Notice”) to Sucampo (i) in the case of Patent Defects that are readily apparent upon Par’s or Par’s designee’s incoming-goods inspections promptly and in any event within thirty (30) days after actual receipt of the Product by Par or Par’s designee, and (ii) in the case of Latent defects, promptly and in any event within thirty (30) days after the date that Par discovers such Latent Defect; provided however that in no event shall Par be entitled to deliver a Rejection Notice in respect of a Latent Defect in respect of any Product more than one hundred twenty (120) days following delivery of such Product to Par or Par’s designee in accordance with Section 3.5  Any such Rejection Notice shall state in reasonable detail the reason why Par believes such Product contains a Patent Defect or Latent Defect and shall include a sample of the Product being rejected and copies of written reports relating to tests, studies or investigations performed to date by or on behalf of Par on the Product being rejected.

 

3.6.3 Par’s test results or basis for rejection shall be conclusive, unless Sucampo notifies Par in writing, within thirty (30) days of receipt by Sucampo of the Rejection Notice that Sucampo disagrees with such test results or basis for rejection (an “Objection Notice”). If Sucampo and Par fail, within ten (10) business days after delivery of the Objection Notice to Par, to agree as to whether the Product identified in the Rejection Notice is defective, representative samples of the batch of Product in question shall be submitted to a mutually acceptable qualified and reputable independent laboratory or consultant for analysis or review and a determination shall be made by such independent laboratory or consultant within thirty (30) days of such submission unless otherwise agreed by both Parties in writing.  The results of such evaluation shall be binding upon the Parties. The Parties shall share equally the out-of-pocket cost of such evaluation, except that (a) if such independent laboratory or consultant determines that the Product shipment in question did not contain a Patent Defect or a Latent Defect, Par will: (i) be responsible for and pay any out-of-pocket costs and expenses of: (x) shipping the Product samples to Sucampo and shipping the Product to and from the independent laboratory or consultant and (y) any such analysis or review and (ii) promptly reimburse Sucampo for any out-of-pocket amounts previously paid for shipping or to the independent laboratory or consultant in connection with that determination and (b) if such independent laboratory or consultant confirms that such Product shipment did contain a Patent Defect or a Latent Defect, Sucampo will: (i) be responsible for and pay the out-of-pocket costs and expenses of: (x) Par’s shipping the Product Samples to Sucampo and shipping the Product to and from the independent laboratory and consultant and (y) any analysis and review of such independent laboratory or consultant and (ii) promptly reimburse Par for any out-of-pocket amounts previously paid for shipping or to the independent laboratory or consultant in connection with that determination.

 

  

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3.6.4 If any shipment of Product is rejected by Par in accordance with Section 3.6.2, Par’s duty to pay any and all amounts payable to Sucampo in respect of such shipment shall be suspended, unless and until there is a determination by the independent laboratory or consultant in support of Sucampo’s Objection Notice in accordance with Section 3.6.3.  If only a portion of a shipment is rejected, Par’s duty to pay shall be suspended only as to the rejected portion thereof.

 

3.6.5 If Sucampo or the independent laboratory or consultant confirms that a shipment or partial shipment of a Product contained a Patent Defect or a Latent Defect pursuant to the provisions of this Section 3.6, Par shall return to Sucampo, at Sucampo’s request and expense (or, at the election and expense of Sucampo, destroy and provide evidence of such destruction to Sucampo), any such available rejected Product.  Sucampo will bear all of Par’s reasonable direct and documented out-of-pocket expenses of such return or destruction.  In the event that the Product contained a Patent Defect or Latent Defect, Sucampo shall also (i) credit the original invoice or, upon any expiration or termination of this Agreement, refund Par in respect of the amounts actually paid and received by Sucampo for such defective Product, and (ii) adjust the invoice to Par to reflect the amount of the Product that was not rejected, payment of which is due in accordance with the terms of this Agreement. The remedies available to Par under Section 3.6.3 and this 3.6.5 (and any deductions permitted in connection with any royalties payable under the License Agreement) shall be Par’s sole and exclusive remedy, and Sucampo’s sole liability, under this Agreement in respect of any Patent Defect or Latent Defect of the Product.

 

3.6.6 During the pendency of any rejection discussions, upon Par’s request, Sucampo shall use Commercially Reasonable Efforts to promptly, but in no event sooner than ninety (90) days from the date of the Rejection Notice and subject to the Permitted Variance set forth in Section 3.2 above, supply Par with additional Product in an amount equal to the quantity of Product that is the subject of the rejection discussions.

 

3.7 Continuity of Supply.  In the event there is a short supply of the Product, including if Sucampo’s Third Party contract manufacturer is unable to supply the Product, Sucampo shall use Commercially Reasonable Efforts to allocate available Product to Par in each month that such short supply exists (and in each month thereafter during the period of any short supply) in an amount of the Product equal to the factor obtained by multiplying (a) the amount of available Product for that month by (b) a fraction, the numerator of which is (i) the aggregate of firm Orders made by Par over the subsequent twelve (12) month period (or such shorter period if Par has purchased Product for less than twelve (12) months) and the denominator of which is (ii)

 

  

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the sum of (x) the aggregate quantity of firm Orders made by Par over the subsequent twelve (12) month period (or such shorter period) and (y) the aggregate quantity of any product comprising the API (whether as a sole active ingredient or in combination with one or more other active ingredients) over the same twelve (12) month period (or such shorter period) required by other of Sucampo’s internal and external customers over the same twelve (12) month period (or such shorter period); provided, however, that any failure of Sucampo to supply Par during the period of any supply constraint shall not be, and shall not be deemed to be, a breach of this Agreement.

 

ARTICLE 4. COMMERCIAL FINANCIAL PROVISIONS

 

4.1 Product Supply Price.  Sucampo shall provide to Par an invoice for the Product Supply Price for such units of Product supplied hereunder upon delivery thereof in accordance with Section 3.5.  Par shall pay such invoiced amounts within forty-five (45) days after the date that Sucampo delivers such invoice.

 

4.2 Direct Manufacturing Costs and Product Supply Price.  The Parties shall confer every year on the anniversary of the Authorized Generic Launch to review and discuss the Product Supply Price in light of changes in material, direct costs and competitive market conditions; provided, however, that (a) in the event the Parties do not agree to any adjustments in the Product Supply Price, [...***...] and (b) notwithstanding the foregoing, Sucampo shall have the right, in its sole discretion, to adjust its Direct Manufacturing Costs to the extent affected by (i) changes in material costs, including, but not limited to, API, excipients and other raw materials, Packaging and Labeling materials; and (ii) other substantial changes in manufacturing and testing costs, each of which types of changes (clause (i) and/or (ii)) is substantiated through written records provided to Par prior to reflecting such changes in the Product Supply Price.

 

4.3 Taxes.  Par shall be solely responsible for, and shall pay, all taxes (including but not limited to sales, use, value-added and withholding taxes), customs and excise duties, and import or export tariffs with respect to the sale, disposition, importation or use of the Product (including with respect to the delivery of Product to Par hereunder and the sale by Par of such Products to third parties).  All amounts payable hereunder by Par to Sucampo shall be paid without deduction or withholding for or on account of any present or future tax, levy, impost, fee, assessment, deduction or charge by any taxing authority, unless otherwise required by Applicable Law.  If Par is required by Applicable Law to deduct or withhold any taxes, levies, imposts, fees, assessments, deductions or charges from or in respect of any amount payable hereunder to Sucampo, (a) Par shall pay the relevant taxation authority the minimum amount necessary to comply with the Applicable Law, and (b) Par shall make such payment prior to the date on which interest or penalty is attached thereto.

 

4.4 Sucampo Records and Audit.  Sucampo, and its Affiliates, shall keep and maintain or cause to be maintained books and records pertaining to the Product Supply Price and the calculation of Direct Manufacturing Costs for the period of time required by Applicable Laws, or if there is no period of time specified by such Applicable Laws, for three (3) years following the respective dates of records. Such books and records shall be maintained in accordance with GAAP and with all records and details reasonably necessary to enable Par to

 

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verify the foregoing.  All factors included in the determination of the Product Supply Price shall be specific to the Product, fully documented, and available for independent audit purposes.  Par shall have the right once per calendar year, at its own expense, during the Term and for a period of six (6) months thereafter, to have an independent public accountant, acceptable to Sucampo acting reasonably, audit the relevant financial books and records of account of Sucampo only pertaining to the provision of this Agreement during normal business hours, upon reasonable advance notice, solely to determine or verify the Product Supply Price; provided that in no event will Par or the independent public accountant be entitled to review or have access to any information subject to a confidentiality obligation by Sucampo to a Third Party (including any confidential documentation or pricing related to the third party contract manufacturer).  All results of such review and audit shall be the Confidential Information of Sucampo.  If errors or discrepancies in the Product Supply Price are found, any deficiency shall be paid immediately, and if errors or discrepancies exceeding the greater of [...***...] percent ([...***...]%) of the total amount payable under the applicable Order and [...***...] Dollars ($[...***...]) for the period audited in Par’s favor are discovered as a result of such audit, Sucampo shall reimburse Par for the reasonable out-of-pocket expense of such audit.

 

ARTICLE 5. OTHER AGREEMENTS

 

5.1 Product Warranties.  Sucampo hereby represents, warrants, covenants and agrees that:

 

5.1.1 all Product that is delivered to Par by Sucampo hereunder, as and in the form delivered to Par, but excluding ay Labelling or Packaging texts or other Labelling or Packaging information specified or provided by or for Par for the Product, shall: (a) materially comply with the Product Specifications, and (b) materially conform with the information shown on the Certificate of Analysis and Certificate of Product Conformance provided with any particular shipment of Product;

 

5.1.2 no Product that is delivered to Par by Sucampo hereunder, as and in the form delivered to Par, shall be adulterated or misbranded within the meaning of Applicable Law, as amended and in effect at the time of shipment; provided, however, that this paragraph shall not apply to, and Sucampo shall have no responsibility for, misbranding caused by Par as a result of Labelling or Packaging texts or other Labelling or Packaging information specified or provided by or for Par for the Product; and Sucampo shall have no responsibility for issues of regulatory and legal compliance that are the responsibility of Par, including but not limited to ensuring that the Product is stored and distributed in the Territory in a manner that does not result in its becoming adulterated, misbranded, or otherwise in violation of Applicable Laws; and

 

5.1.3 at the time of delivery to Par, the Product shall have a minimum shelf life of at least either [...***...] percent ([...***...]%) of its original shelf life at the time of delivery to Par.

 

5.2 Recall.

 

5.2.1 In the event that any Party believes reasonably and in good faith that it may be necessary to conduct a recall, field correction, market withdrawal, stock recovery, or

 

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other similar action with respect to the Product (a “Recall”), such Party shall promptly notify the other and Sucampo and Par shall promptly consult with each other as to how best to proceed, it being understood and agreed that no Party shall be prohibited hereunder from taking any action that it is required to take by Applicable Law.  In addition to and not in lieu or limitation of the foregoing, in the event that Sucampo and Par are unable to agree whether or not to voluntarily implement a Recall of the Product in the Territory, notwithstanding anything herein to the contrary, Sucampo shall make the final determination.

 

5.2.2 In the event of any Recall of the Product in the Territory, each Party shall provide, and cause its Affiliates to provide, any and all information, assistance and support required by Applicable Law in the Territory, or reasonably requested by the other Party; provided that for clarification, Par shall be responsible for initiating such Recall after the final determination is made that a Recall should be implemented in accordance with Section 5.2.1 above.

 

5.2.3 The cost of any Recall of Product manufactured under this Agreement, including expenses and other costs or obligations of third parties, the cost and expense of notifying customers, the costs and expenses associated with the Recall of the Product in the Territory and the cost and expenses of destroying the Product recalled from such Territory, if necessary, shall be borne solely by Par except to the extent that the Recall was caused by (a) Sucampo’s failure to comply with the warranties in Section 5.1 to the extent that the defect that resulted in the Recall existed prior to delivery to Par, or (b) Sucampo’s sole determination to implement a voluntary Recall after the Parties are unable to agree on a Recall and it is later determined that the Recall was unnecessary, or (c) in the event that a Recall is required by any Governmental Authority, in which case Sucampo shall be responsible for any direct, documented out-of-pocket costs and expenses for such Recall to the extent that such Recall was conducted pursuant to clause (a), (b) or (c) of this Section 5.2.3.  To the extent that one Party incurs out-of-pocket expenses in connection with a Recall that is required to be at the sole expense of the other Party under this Section 5.2 (the “Responsible Party”), the Responsible Party shall pay that Party’s documented reasonable out-of-pocket expenses within thirty (30) days of receiving an invoice therefor.

 

5.3 Quality Agreement.  Within ninety (90) days from the Effective Date, the Parties shall enter into an agreement that details the quality assurance obligations of each Party (the “Quality Agreement”).  Notwithstanding the foregoing, the Quality Agreement, nor the absence of a Quality Agreement, shall affect the rights and obligations of the Parties in this Agreement, and this Agreement shall govern in the event of any inconsistencies between the Quality Agreement and this Agreement (unless expressly provided otherwise in the Quality Agreement).  The Parties shall amend the Quality Agreement from time to time as the Parties deem necessary.  If the Parties enter into a Quality Agreement, all Product supplied to Par shall be supplied in accordance with the Quality Agreement (as well as this Agreement).

 

ARTICLE 6. AUDITS AND INSPECTION RIGHTS

 

6.1 Inspections by Governmental Authorities.  During the Term, each Party shall promptly notify the other Party in writing of (i) any Governmental Authority visits to facilities that manufacture, store, transport or handle the Product, or (ii) written inquiries about any procedures for the manufacture, storage, transportation, or handling of the Product , in either case of which it becomes aware.  The Party subject to the visits or inquiries shall furnish written notice thereof and a summary of the interaction with such Governmental Authority to the other Party within a reasonable time period after receipt of any report or correspondence issued by or provided to the Governmental Authority in connection with such visit or inquiry.  Each Party shall, if applicable, permit the relevant Governmental Authorities to inspect their facilities and records in connection with the activities contemplated by this Agreement.

 

  

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6.2 Inspections by Par.  Sucampo shall us Commercially Reasonable Efforts to cause Par to be permitted, to inspect the applicable manufacturing facility for the Product for regulatory or quality control purposes only at reasonable times during normal business hours, provided that Par gives Sucampo as much advance written notice as possible and, in any event, not less than thirty (30) days’ prior written notice and the inspection by Par shall be within the scope of inspection that is allowed under Applicable Law.  During any such inspection, and subject to all Applicable Laws, Sucampo shall permit, or cause to be permitted, Par or its authorized representatives to (i) inspect the manufacturing facilities, (ii) inspect the quality control procedures and/or (iii) review any records and reports pertinent to the manufacture, disposition or transport of the Product, as may be necessary to evidence material compliance with all applicable regulations in connection with activities associated with the Product, including without limitation, material compliance with cGMP; provided that in no event will Par be entitled to review or have access to any information subject to a confidentiality obligation to a third party.  All results of such inspection shall, as and between the Parties, be the Confidential Information of Sucampo.

 

ARTICLE 7. INTELLECTUAL PROPERTY AND TECHNOLOGY

 

7.1 General Ownership.  Sucampo shall retain sole ownership of any and all Intellectual Property and Technology developed or conceived by or for Sucampo, whether solely and independently or jointly with others, that is related to or associated with the Product, including any and all improvements or modifications to any of the foregoing.

 

7.2 Cooperation.   Each Party shall promptly notify the other Party of any potential infringement of Intellectual Property rights of a Third Party by the making, using or selling of the Product in the Territory, as it may become aware of such potential infringement, and to cooperate in addressing such potential infringement issues upon the reasonable request of the other Party.  Each Party shall also promptly notify the other of any potential infringement of Third Party’s Intellectual Property rights related to or associated with the Product, including any notice, suit, or threatened suit, by a Third Party as it may become aware of such infringement, and to cooperate in addressing such infringement issues upon the reasonable request of the other Party.  In the event of any such infringement, Sucampo and its Affiliates and licensees of “AMITIZA® Products” shall have the right and option to initiate or defend legal proceedings, through counsel of its choosing, or take other reasonable steps in good faith regarding such infringement and, to the extent reasonably practicable and subject to Applicable Law, in reasonable consultation with Par. To the extent reasonably practical and subject to Applicable Law, Sucampo shall use Commercially Reasonable Efforts to inform and reasonably consult with Par in advance of any due dates; provided, however, Sucampo and its Affiliates shall make the final decision as to the enforcement or defense strategy.

 

  

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ARTICLE 8. CONFIDENTIALITY AND PUBLIC DISCLOSURE

 

8.1 Confidential Information.

 

8.1.1 No Receiving Party shall disclose to any Third Party (other than its outside counsel and applicable Affiliates or, in the case of Sucampo, its applicable Third Party contractor, in each of the foregoing cases, who have a need to know and who are bound by written obligations of confidentiality and non-use at least as protective of the Confidential Information of the Disclosing Party as those contained herein) any Confidential Information of any Disclosing Party received hereunder or use any such Confidential Information for its own benefit or otherwise, except as necessary to fulfil its obligations hereunder, without the written consent of the Disclosing Party.  Each Receiving Party shall protect Confidential Information received from a Disclosing Party with at least the same degree of care that it uses to protect its own proprietary and confidential information, but no less than reasonable care under the circumstances.

 

8.1.2 Without limitation to Section 8.1.1, each Receiving Party shall bind all persons having access through it to any Confidential Information of the Disclosing Party to written obligations of confidentiality and non-use at least as protective of the Confidential Information of the Disclosing Party as those contained herein.  Each Receiving Party will be responsible for the acts and omissions of any officer or employee of such Receiving Party, Affiliate of such Receiving Party or other third party receiving the Confidential Information from such Receiving Party with respect to such confidentiality and non-use obligations.

 

8.1.3 Each Receiving Party, at the request of the Disclosing Party, shall return or destroy all Confidential Information of the Disclosing Party disclosed to it hereunder, in whatever form contained, including all notes or memoranda made by its employees, agents, or representatives obtained or derived from any such Confidential Information, except that one copy of the Confidential Information may be retained by each Receiving Party’s general counsel to maintain a record of the same solely to the extent required to comply with any Applicable Laws pertaining to its activities under this Agreement; provided that such copy shall continue to be subject to the confidentiality and non-use obligations set forth in this Article 8.

 

8.2 Required Disclosures.  Notwithstanding anything to the contrary in this Agreement, the Parties understand and agree that any Party, as the Receiving Party of Confidential Information from the Disclosing Party, may, if so required, disclose some or all of the information included in this Agreement or other Confidential Information of the Disclosing Party (i) in order to comply with its obligations under law, including the United States Securities Act of 1933, the United States Securities Exchange Act of 1934, and the listing standards or agreements of any national or international securities exchange or The NASDAQ Stock Market or other similar laws of a Governmental Authority, (ii) to respond to an inquiry of a Governmental Authority, or (iii) in connection with a judicial, administrative or arbitration proceeding.  In any such event the Receiving Party making such disclosure shall (A) provide the Disclosing Party with as much advance notice as reasonably practicable of the required disclosure, (B) cooperate with the Disclosing Party in any attempt to prevent or limit the disclosure, and (C) limit any disclosure to the specific purpose at issue.

 

  

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8.3 Press Release.  Each Party shall have the right to issue press releases related to this Agreement, provided that the issuing Party provides the other Parties with a written draft of the proposed press release not less than three (3) business days prior to the issuance and considers in good faith and incorporates, to the extent reasonable, any revisions requested and comments made by the non-issuing Parties; provided, however, that nothing herein shall interfere with a Party’s disclosure obligations under applicable laws, including the United States Securities Act of 1933, the United States Securities Exchange Act of 1934, and the listing standards or agreements of any national or international securities exchange or The NASDAQ Stock Market or other similar laws of a Governmental Authority.  Nothing herein shall limit a Party’s ability to make comments on a press release or announcement that are consistent with such press release or announcement.

 

ARTICLE 9. REPRESENTATIONS AND WARRANTIES

 

9.1 Par Representations.  Par hereby represents, warrants and covenants that:

 

9.1.1 Par is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation;

 

9.1.2 Par has the corporate power and authority to enter into and be bound by the terms and conditions of this Agreement and to perform its obligations hereunder and to execute this Agreement on behalf of itself and its Affiliates and to so bind itself and its Affiliates to the terms and conditions of this Agreement;

 

9.1.3 Par has taken all necessary action on its part to authorize the execution and delivery of this Agreement and this Agreement has been duly executed and delivered on behalf of Par and its Affiliates and constitutes a legal, valid, binding obligation, enforceable against Par and its Affiliates in accordance with its terms;

 

9.1.4 Par is subject to no legal, contractual or other restrictions, limitations or conditions which conflict with its rights and obligations under this Agreement or which would reasonably be expected to affect adversely its ability to perform hereunder; and

 

9.1.5 Par is not prohibited by any Applicable Law from selling the Product or other pharmaceutical products within the Territory, and Par and Par’s employees have never been (i) debarred or (ii) convicted of a crime for which a person can be debarred, under Section 306(a) or (b) of the Generic Drug Enforcement Act (the “GDEA”) or (iii) threatened to be debarred or (iv) indicted for a crime or otherwise engaged in conduct for which a person can be debarred under Section 306(a) or (b) of the GDEA; and Par shall promptly notify Sucampo upon learning of any such debarment, conviction, threat or indictment and shall take all appropriate action.

 

9.2 Sucampo Representations.  Sucampo hereby represents, warrants and covenants that:

 

9.2.1 Sucampo is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation;

 

  

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9.2.2 Sucampo has the corporate power and authority to enter into and be bound by the terms and conditions of this Agreement and to perform its obligations hereunder;

 

9.2.3 Sucampo has taken all necessary action on its part to authorize the execution and delivery of this Agreement and this Agreement has been duly executed and delivered on behalf of Sucampo and constitutes a legal, valid, binding obligation, enforceable against Sucampo in accordance with its terms;

 

9.2.4 Sucampo is subject to no legal, contractual or other restrictions, limitations or conditions which conflict with its rights and obligations under this Agreement or which would reasonably be expected to affect adversely its ability to perform hereunder; and

 

9.2.5 Sucampo is not prohibited by any Applicable Law from selling the Product or other pharmaceutical products within the Territory, and Sucampo and Sucampo’s employees have never been (i) debarred or (ii) convicted of a crime for which a person can be debarred, under Section 306(a) or (b) of the GDEA or (iii) threatened to be debarred or (iv) indicted for a crime or otherwise engaged in conduct for which a person can be debarred under Section 306(a) or (b) of the GDEA; and Sucampo shall promptly notify Par upon learning of any such debarment, conviction, threat or indictment and shall take all appropriate action.

 

9.3 Warranty Disclaimer.  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE LICENSE AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE PRODUCT, ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND EACH PARTY HEREBY EXPRESSLY AND SPECIFICALLY DISCLAIMS ALL WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

 

9.4 Limited Liability.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, EXCEPT WITH RESPECT TO EACH PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN ARTICLE 10, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, (I) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR ANY SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, LOST PROFITS OR LOST REVENUES, OR COST AND EXPENSE OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES, WHETHER UNDER ANY CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY AND (II) EACH PARTY’S MAXIMUM AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED THE AGGREGATE AMOUNTS PAID AND PAYABLE OR DUE UNDER OR IN CONNECTION WITH THIS AGREEMENT IN THE TWELVE (12) MONTHS PRIOR TO THE INCIDENT GIVING RISE TO SUCH LIABILITY AND RELATED CAUSE OF ACTION.

 

  

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ARTICLE 10. INDEMNIFICATION

 

10.1 Par Indemnification.  Par shall at all times during the Term and thereafter indemnify, defend and hold Sucampo, and its Affiliates and its licensees of “AMITIZA® Products” as defined in the License Agreement and its Third Party contract manufacturer of the Product and their respective officers, directors, employees and agents, and the successors and permitted assigns of the foregoing (collectively, “Sucampo 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, Third Party suit, or Third Party cause of action (collectively, “Losses”) to the extent resulting from or arising out of (i) a material breach by Par of any representation, warranty, covenant, obligation or agreement of Par under this Agreement, (ii) a failure of Par, or its Affiliates, to comply with all Applicable Laws during the Term, (iii) the negligence or willful misconduct of Par, or (iv) the administration, use, Labeling, Packaging, sale, marketing, promotion, advertising, storage, handling, distribution and commercialization of the Product by Par, except, in each case (clause (i), (ii), (iii) or (iv)), for those Losses for which Sucampo has an obligation to indemnify the Par Parties pursuant to Section 10.2, as to which Losses Sucampo shall indemnify the Par Parties to the extent of its respective liabilities for such Losses.

 

10.2 Sucampo Indemnification.  Sucampo shall at all times during the Term and thereafter indemnify, defend and hold Par and its officers, directors, employees and agents, and the successors and permitted assigns of the foregoing (collectively, “Par Parties”), harmless from and against any and all Losses to the extent resulting from or arising out of (i) a material breach by Sucampo of any representation, warranty, covenant, obligation or agreement of Sucampo under this Agreement, (ii) a failure of Sucampo, or its Affiliates, to comply with all Applicable Laws during the Term, or (iii) Product that does not meet the Product Specifications or (iv) the negligence or willful misconduct of Sucampo, except, in each case (clause (i), (ii), (iii) or (iv)), for those Losses for which Par has an obligation to indemnify the Sucampo Parties pursuant to Section 10.1, as to which Losses Par shall indemnify the Sucampo Parties to the extent of its respective liabilities for such Losses.

 

10.3 Notice and Procedures.  If a Par Party or Sucampo Parties (the “Indemnitee”) intend to claim indemnification under this Article 10, it shall promptly notify the other Party (the “Indemnitor”) in writing of any such Losses.  In the event that the Indemnitor does not assume and pursue in a timely and diligent manner the defense of any Third Party claim (but in no event later than thirty (30) days, or such shorter period as required under Applicable Laws), then the Indemnitor shall be deemed to have ceded control of such claim and the Indemnitee shall be entitled to appoint counsel of its own choice for such defense, at the cost and expense of the Indemnitor.  In the event that the Indemnitor assumes such defense, the Indemnitor shall have the right to control the defense of such claim with counsel of its choice; and provided further that any Indemnitee shall have the right to retain its own counsel at its own expense, for any reason, including if representation of any Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other Party reasonably represented by such counsel in such proceeding.  The Indemnitee, and its employees and agents, shall reasonably cooperate with the Indemnitor and its legal representatives in the investigation of any Losses covered by this Article 10.  The obligations of this Section 10.3 shall not apply to amounts paid in settlement of any claim, demand, action or other proceeding if such settlement is effected without the written consent of the Indemnitor (unless the Indemnitor is deemed to have ceded control of the applicable third Party claim under this Section 10.3).  The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any such claim, demand or action shall not relieve the Indemnitor of any obligation to the Indemnitee under this Section 10.3, unless and to the extent that the Indemnitor is materially prejudiced by such delay.  Indemnitor shall not settle any claim without the prior written approval of the Indemnitee.  No Persons other than Par or Sucampo may claim indemnity hereunder.

 

  

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10.4 Other Product Liability Claims.  To the extent that any Third Party asserts a claim or institutes a lawsuit based on a product liability claim with respect to the Product for which no Party has an indemnity obligation under Section 10.1 or 10.2 and subject to Section 10.3.2 below, Par shall have sole responsibility and control in addressing, defending, managing and conducting such claims or lawsuits, any related litigation and any settlement or settlement negotiations thereof (collectively, “Product Liability Litigation”), using counsel of their choice; provided, however, that (a) Par shall not settle any Product Liability Litigation without Sucampo’s prior written consent, which consent shall not be unreasonably withheld or delayed and (b) if Sucampo is a named party in any Product Liability Litigation, Sucampo shall have sole responsibility and control in addressing, defending, managing and conducting such Product Liability Litigation using counsel of its choice.  Each Party shall keep the other Party informed about all product liability claims and the controlling Party’s plans to mitigate such claims.

 

10.4.1 At Sucampo’s request, the Parties shall enter into a Joint Defense Agreement, including a waiver with such legal counsel (signed by Par) reflecting Sucampo’s responsibility and right to control such Product Liability Litigation; provided that Sucampo shall not settle any such Product Liability Litigation without Par’s prior written consent, which consent shall not be unreasonably withheld or delayed.

 

10.4.2 Each Party shall be solely liable for any settlement amounts that it agrees to pay or any damages that it is ordered to pay in order to resolve any Product Liability Litigation.   

 

10.5 Exclusive Remedy.  The rights of the Par Parties and the Sucampo Parties under this Article 10 shall be the sole and exclusive remedy of the Par Parties and the Sucampo Parties, as the case may be, with respect to matters covered hereunder.

 

ARTICLE 11. TERM AND TERMINATION

 

11.1 Term.  Unless earlier terminated pursuant to the terms hereof, the term of this Agreement (the “Term”) shall continue from the Effective Date until the date that is seven (7) years following the Authorized Generic Launch.  The Term of this Agreement may be renewed upon mutual written agreement on an annual basis thereafter.  If it is not so renewed, it shall be deemed to have been expired without fault at the end of the applicable term, and the termination provisions relating thereto shall apply.

 

11.2 Termination for Breach.  Any Party may terminate this Agreement, or suspend performance under this Agreement upon written notice to the other Parties at any time during the Term, if another Party is in material breach of the terms and provisions of this Agreement and such other Party has not cured such material breach within thirty (30) days after notice requesting cure of the breach; provided, however, that if such breach is not capable of cure within thirty (30) days, but is capable of cure, and the breaching Party has promptly commenced during such thirty (30) day period, and is and continues diligently pursuing in good faith the remedy of any such breach, then such cure period shall be extended for such period as may be reasonably required to effectuate such cure; provided further, however, that if such breach is not capable of cure, a non-breaching Party may terminate this Agreement, or suspend performance under this Agreement immediately by delivery of written notice thereof to such breaching Party.

 

  

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11.3 Termination Costs.  In the event of termination by Sucampo under Section 11.2, Par shall pay the following cancellation charges:

 

11.3.1 for Product ordered by Par that has already been completely manufactured by Sucampo, one hundred percent (100%) of the Product Supply Price of the Product being cancelled and Par shall take delivery of all such Product in accordance with Section 3.5; and

 

11.3.2 for Product ordered by Par that has been cancelled prior to complete manufacture, (i) the cost of non­reusable raw materials on order which cannot be cancelled, despite Sucampo’s Commercially Reasonable Efforts, that are unique to the ordered Product being cancelled, or not usable for orders of other customers of Sucampo, despite Sucampo’s Commercially Reasonable Efforts, (ii) the cost of non-reusable raw material inventory ordered by Sucampo with regard to Par’s issued Orders, including any work-in-progress, that are unique to the Product being cancelled, not returnable to the vendor, or not usable for orders of other customers of Sucampo, in each case, despite Sucampo’s Commercially Reasonable Efforts, (iii) reasonable vendor cancellation charges incurred with respect to raw materials cancelled or returned to the vendor in respect of Product ordered by Par, and (iv) reasonable charges for non­recurring services associated with work stoppage on Product ordered by Par.

 

11.4 Accrued Rights and Surviving Obligations.  The termination of this Agreement for any reason or expiration of the Term shall be without prejudice to any rights that shall have accrued to the benefit of either Party prior to such termination or expiration, including any damages arising from any breach hereunder.  Such termination or expiration shall not relieve any Party from obligations that are expressly indicated to survive such termination or expiration.  Articles 1, 5, 6, 7, 8, 10, 12 and 13, and Sections 2.4, 3.6 and 4.1, 11.3 and this Section 11.4, and any other provisions necessary and proper to give effect to the intention of the Parties as to theeffect of the Agreement after termination shall survive such termination or expiration.

 

ARTICLE 12. INSURANCE

 

12.1 Insurance.

 

12.1.1 Each Party shall, at its own cost and expense, obtain and maintain in full force and effect at all times during the Term, and for a period of three (3) years thereafter:

 

  

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(i) commercial general liability insurance covering bodily injury and property damage with limits of [...***...] Dollars ($[...***...]) per occurrence and [...***...] Dollars ($[...***...]) in the aggregate;

 

(ii) products and completed operations liability insurance (including coverage for Product used in clinical trials) with limits of (i) [...***...] Dollars ($[...***...]) per occurrence and [...***...] Dollars ($[...***...]) in the aggregate prior to the Authorized Generic Launch and (ii) [...***...] Dollars ($[...***...]) per occurrence and [...***...] Dollars ($[...***...]) in the aggregate upon the Authorized Generic Launch;

 

(iii) workers compensation with statutory limits as required by law and employers liability insurance with a limit of [...**...] Dollars ($[...**...]) per accident; and

 

(iv) commercial automobile liability insurance covering owned, hired and non-owned vehicles, and covering uninsured and underinsured motorists, with limits of [...***...] Dollars ($[...***...]) combined single limit (bodily injury and property damage).

 

12.1.2 All of the foregoing insurance policies shall be obtained from an insurance carrier or carriers having a current A.M. Best rating of at least A- Class VIII.

 

12.1.3 Upon execution of this Agreement and annually thereafter, each Party shall provide the other Parties with a certificate of insurance evidencing such coverage and including such other Parties and its Affiliates as additional insureds.  Each Party shall provide the other Parties with written notice within thirty (30) days’ of any material change in the terms or coverage of such insurance policies or their lapse, cancellation or termination.

 

12.1.4 All insurance policies obtained by any Party pursuant to this Agreement shall be primary and not contributing to any other insurance, self-insurance or captive insurance maintained by another party to the extent of such Party’s indemnification obligations hereunder; provided, however, that notwithstanding the foregoing, the insurance policies required under Section 12.1.1 shall not be construed to limit either Party’s liability with respect to its indemnification obligations under this Agreement.

 

ARTICLE 13. MISCELLANEOUS

 

13.1 Interpretation and Construction.  Unless the context of this Agreement otherwise requires, (i) the terms “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation” unless otherwise indicated; (ii) the terms “hereof,” “herein,” “hereby,” and derivative or similar words refer to this entire Agreement; and (iii) the terms “Article” and “Section” and refer to the specified Article and Section of this Agreement.  Whenever this Agreement refers to a number of days, unless otherwise specified, such number shall refer to calendar days.  The headings and paragraph captions in this Agreement are for reference and convenience purposes only and shall not affect the meaning or interpretation of this Agreement.  This Agreement shall not be interpreted or constructed in favor of or against either Party because of its effort in preparing it.

 

*Confidential Treatment Requested

  

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13.2 Independent Contractor Status.  It is understood and agreed that nothing in this Agreement nor any agreements related hereto is intended to nor shall create a partnership between the Parties.  The Parties are independent contractors and are engaged in the operation of their own respective businesses, and no Party is to be considered the agent, partner, joint venturer or employee of another Party for any purpose whatsoever and no Party shall have any authority to enter into any contracts or assume any obligations for another Party nor make any warranties or representations on behalf of that other Party.

 

13.3 Performance by Affiliates.  The Parties recognize that each Party may perform some or all of its obligations under this Agreement through one (1) or more of its Affiliates; provided, however, that each Party shall remain responsible for and shall guarantee such performance by its Affiliates and shall cause its Affiliates to comply with the provisions of this Agreement in connection with such performance.  Each Party hereby expressly waives any requirement that another Party exhaust any right, power or remedy, or proceed against an Affiliate for any obligation or performance hereunder prior to proceeding directly against such Party.

 

13.4 Waiver.  The waiver by any Party of a breach of any provision contained herein shall be in writing and shall in no way be construed as a waiver of any succeeding breach of such provision or the waiver of the provision itself.

 

13.5 Assignment.  This Agreement shall be binding upon and inure to the benefit of each of the Parties hereto and their respective successors and approved assigns; provided,  however, that no Party may assign or transfer this Agreement whether  by operation of law or otherwise without the prior written consent of the other Parties, except that no consent shall be required if such assignment or transfer is (i) to an Affiliate or (ii) in connection with a merger or acquisition or sale of all or substantially all of the assets of the assigning Party.  Any assignment or transfer in contravention of this Agreement shall be null and void ab initio.

 

13.6 Modification.  This Agreement may not be changed, modified, amended or supplemented except by an express written instrument signed by all Parties.

 

13.7 Severability.  If any provision of this Agreement shall be held illegal or unenforceable, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable.

 

13.8 Further Assurances.  Each Party hereto agrees to execute, acknowledge and deliver such further instruments and documents, and to do all such other acts, as may be reasonably necessary or appropriate in order to carry out the purposes and intent of this Agreement.

 

13.9 Use of Party’s Name.  Except as required by Applicable Laws or as to Labeling activities, no right, express or implied, is granted by this Agreement to any Party to use in any manner the name of the other or any other trade name or trademark of the other in connection with the performance of this Agreement.  For clarity, it is understood that nothing herein shall prohibit either Party from using the name of another Party (i) in certain of such Party’s disclosure documents, including those filed or disclosed in order to comply with its obligations under Applicable Laws or the listing standards or agreements of any national or international securities exchange or The NASDAQ Stock Market or other similar laws of a governmental authority, (ii) to respond to an inquiry of a Governmental Authority, or (iii) in a judicial, administrative or arbitration proceeding, or from disclosing the fact that it has granted or obtained a license to any Intellectual Property of the other Party so long as such use of the other’s name is limited to statements of fact and is not done in a manner to suggest or imply endorsement by the other Party.

 

  

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13.10 Notices.  Any notice or other communication to be given under this Agreement by any Party to any other Party shall be in writing and shall be either (a) personally delivered, (b) mailed by registered or certified mail, postage prepaid with return receipt requested, (c) delivered by overnight express delivery service or same-day local courier service, or (d) delivered by telex or facsimile transmission (followed by a copy by the preceding (a), (b) or (c)), to the address of the applicable Party as set forth below, or to such other address as may be designated by the Parties from time to time in accordance with this Section 13.10.  Notices delivered personally, by overnight express delivery service or by local courier service shall be deemed given as of actual receipt.  Mailed notices shall be deemed given five (5) business days after mailing.  Notices delivered by telex or facsimile transmission shall be deemed given upon receipt by the sender of the answerback (in the case of a telex) or transmission confirmation (in the case of a facsimile transmission) if transmitted before 5:00 p.m. (recipient’s local time) on a business day, and otherwise on the following business day.

 

	
  

	
If to Sucampo:

	
  

	
Sucampo Pharmaceuticals, Inc.

	
  

	
4520 East West Highway, 3rd Flr.

	
  

	
Bethesda, MD 20814

	
  

	
Attn: Chief Legal Officer

	
  

	
Facsimile Number: (301) 961-3440

 

	
  

	
If to Par:

	
Par Pharmaceutical, Inc.

300 Tice Boulevard

Woodcliff Lake, NJ 07677

Attention: General Counsel

Facsimile Number: (201) 802-4600

 

13.11 Governing Law and Jurisdiction.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.  The Parties irrevocably agree that the State and Federal Courts located in New York shall have exclusive jurisdiction to deal with any disputes arising out of or in connection with this Agreement and that venue is proper in such Courts.  Each Party hereby expressly consents and submits to the personal jurisdiction of Federal and State Courts in New York.

 

13.12 Equitable Relief. Par recognizes that the covenants contained in Articles 7 and 8 hereof are reasonable and necessary to protect the legitimate interests of Sucampo, that Sucampo would not have entered into this Agreement in the absence of such covenants, and that Par’s breach or threatened breach of such covenants shall cause Sucampo irreparable harm and significant injury, the amount of which shall be extremely difficult to estimate and ascertain, thus, making any remedy at law or in damages inadequate.  Therefore, Par agrees that Sucampo shall be entitled, without the necessity of posting of any bond or security, to the issuance of injunctive relief by any court of competent jurisdiction enjoining any breach or threatened breach of such covenants and for any other relief such court deems appropriate.  This right shall be in addition to any other remedy available to Sucampo at law or in equity.

 

  

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13.13 Force Majeure.  A Party shall not be liable for nonperformance or delay in performance, except for defaulted obligations of payment, to the extent that and solely for so long as such nonperformance or delay in performance is caused by any event reasonably beyond the control of such Party, including wars, hostilities, revolutions, riots, civil commotion, national emergency, strikes, lockouts, unavailability of supplies, epidemics, fire, flood, earthquake, force of nature, explosion, terrorist act, embargo, or any other Act of God, or any law, proclamation, regulation, ordinance, or other act or order of any court, Governmental Authority (each, a “Force Majeure Event”).  In the event of any such delay, the delayed Party may defer its performance for a period equal to the time of such delay, provided that the delayed Party gives the other Party written notice thereof promptly and, in any event, within thirty (30) calendar days of discovery thereof, and uses its good faith efforts to cure the excused breach.  If either Party is unable to perform its obligations hereunder as a result of a Force Majeure Event for a period of three (3) months or greater, then the other Party shall have the right, upon its issuance of notice to the other Parties, to terminate this Agreement.

 

13.14 Entire Agreement.  This Agreement and the License Agreement constitute the entire agreement between Par, on the one hand, and Sucampo, on the other hand, with respect to the subject matter hereof and supersedes all prior representations, understandings and agreements with respect thereto.  In the event of any conflict between the terms of the License Agreement and this Agreement, the terms of the License Agreement will control.

 

13.15 Counterparts.  This Agreement may be executed in one or more counterparts, including by transmission of facsimile or PDF copies of signature pages, each of which shall for all purposes are deemed to be an original and all of which shall constitute on instrument.

 

13.16 Third Party Beneficiaries.  Except as provided in Section 10.1 and 10.2, (i) no term or provision of this Agreement is intended to be, or shall be, for the benefit of any Person (including any sub-contractor, or any individual member of the control group utilized for the bioequivalence studies) that is not a party hereto, and (ii) no such other Person shall have any right or cause of action hereunder.

 

13.17 Cumulative Rights.  The rights and remedies of each of the Parties under or pursuant to this Agreement are cumulative, may be exercised as often as such Party considers appropriate and are in addition to its rights and remedies under general law.

 

 

 

 

 

  

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IN WITNESS WHEREOF, the Parties hereto have executed this Manufacturing and Supply Agreement to be effective as of the Effective Date.

 

	SUCAMPO AG	 
	 	 
	 	 	 	 
	
By:

	 	 	 
	 	Name:	 	 
	 	
Title:

	 	 
	 	 	  	 
	 	 	  	 
	PAR PHARMACEUTICAL, INC.	 
	 	 
	 	 
	
By:

	 	 	 
	 	Name:	 	 
	 	
Title:

	 	 

  

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EXHIBIT A

Description of Compound

 

	
Generic Name:

	

lubiprostone

	  	  
	
Chemical names:

	

[...***...]

	  	  
	
Code Name:

	

SPI-0211

	  	  
	
CASNo:

	

136790-76-6

 

 

 

 

*Confidential Treatment Requested

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