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Patent Laboratories's retained rights in the Territory include, for example, the
right to make, have made, and use the Product for marketing, sale and
distribution outside the Territory, as well as the right to conduct any research
and development activity.
2.3. Pharmaceutical will not directly or indirectly market, promote, encourage,
exploit, offer for sale or sell, or otherwise dispose of the Product: (a)
outside the Territory; (b) for use outside the Territory; or (c) inside the
Territory for use other than the Licensed Use, without prior written consent
from Patent Laboratories.
2.4. If, during the term of this Agreement, Patent Laboratories, Pharmaceutical,
or jointly Patent Laboratories and Pharmaceutical, develop or otherwise acquire
any modifications to the formulation of the Product that are able to be
licensed, such modifications shall be the sole and exclusive property of Patent
Laboratories; provided, that Pharmaceutical shall have the right of first offer
as to royalty rates or license fees, including as to possible up-front payments,
to become Patent Laboratories's exclusive licensee in the Territory with respect
to those modifications, under substantially the same terms as those herein
(other than royalty rate or license fee terms), except to the extent such terms
are inconsistent with the modification.
3. Technology, Regulation, and the Market
3.1. Pharmaceutical shall promote, market, and sell the Product for the Licensed
Use in the Territory. Patent Laboratories shall from time to time furnish
Pharmaceutical with Technology as and to the extent Patent Laboratories
reasonably determines to assist Pharmaceutical's efforts to promote, market, and
sell the Product for the Licensed Use in the Territory.
3.2. Patent Laboratories shall also furnish such additional Technology as
Pharmaceutical may reasonably request in connection with any regulatory
compliance regarding the promotion, marketing, or sale of the Product for the
Licensed Use in the Territory.
3.3. Patent Laboratories shall be responsible for all decisions and actions
regarding regulatory matters relating to or involving the Product. Patent
Laboratories shall, with respect to any such regulatory matters, (a) act as
liaison with the FDA or other governmental authority; (b) prepare and make all
submissions regarding the regulatory matter; (c) monitor all studies pertinent
to the regulatory matter; and (d) obtain regulatory approvals, as reasonably
deemed necessary by Patent Laboratories. Pharmaceutical shall promptly cooperate
with Patent Laboratories with respect to such regulatory matters by providing
data and information at Patent Laboratories's reasonable request. Nevertheless,
Pharmaceutical shall maintain its own counsel for FDA or other regulatory
matters, for the sole purpose of advising Pharmaceutical with regard to such
regulatory matters and to any data, information, or suggestions that
Pharmaceutical may provide to Patent Laboratories, either at Patent
Laboratories's request or at Pharmaceutical's discretion.
3.4. Each of the parties shall promptly notify the other party in writing of any
technical or clinical advances, useful modifications, side effects, or new
government regulations relating to the Product that shall come to its knowledge.
Pharmaceutical must promptly inform Patent Laboratories of all actions and
communications (even if believed by Pharmaceutical to be without foundation) by
or threatened by a regulatory or other governmental authority in the Territory
relating to the Product.
3.5. Pharmaceutical shall notify Patent Laboratories promptly in writing of any
new market trends in relation to the Product that shall come to its knowledge
and of any new product which might be competitive with the Product together with
full details thereof including prices and copies of any known promotional
material.
4.3.1.
The price of the Product-per-tablet bought in any given Year, at the
date of this Agreement, is:
Quantity of Tablets
_______ - ________
_______ - ________
5. Maintenance of Quality
5.1. Manufacturing Standards
Patent Laboratories shall be responsible for maintaining commercially acceptable
quality control standards in all manufacturing relating to the Product it
delivers to Pharmaceutical. Unless Pharmaceutical is at fault, including but not
limited to, because of a failure to take reasonably prudent steps, or other
steps reasonably suggested by Patent Laboratories, to protect the delivered
Product, Patent Laboratories shall be responsible for and compensate
Pharmaceutical for expenses incurred for any recall, and when necessary for
replacement of Product failing to meet commercially acceptable standards.
5.2. Use of Trademark
5.2.1.
Pharmaceutical agrees to use the Trademark in accordance with good
customary trademark practice, and to avoid taking any action that would in any
manner impair or detract from the value of the Trademark or the goodwill and
reputation of Patent Laboratories. Pharmaceutical acknowledges Patent
Laboratories's ownership of the Trademark and related goodwill, both in the
Territory and outside the Territory.
5.2.2.
Quality and Maintenance of Standards. Pharmaceutical agrees that the
nature and quality of all of Pharmaceutical's advertising, promotional, and
other related uses of the Trademark pursuant to this Agreement shall conform to
standards set by Patent Laboratories. Pharmaceutical agrees to cooperate with
Patent Laboratories in facilitating Patent Laboratories's control of such nature
and quality, and to supply Patent Laboratories in advance with specimens of all
uses of the Trademark. Pharmaceutical also agrees to obtain Patent
Laboratories's written permission regarding the nature and quality of each use
of the Trademark, prior to such use, provided, however, that such permission
shall be granted unless Patent Laboratories reasonably objects on the basis that
the proposed use will impair the value of the Trademark or will otherwise fail
to conform to the standards set by Patent Laboratories. If such permission or
objection is not transmitted by Patent Laboratories within three (3) business
days of Patent Laboratories's receipt of the request for permission along with
the subject specimens, then Patent Laboratories shall be deemed to have granted
permission in satisfaction of this section 5.2.2.
5.2.3.
Form of Use. Pharmaceutical agrees to use the Trademark only in the
form and manner and with appropriate legends as approved from time to time by
Patent Laboratories, and not to use any other trademark or service mark, in
combination with the Trademark without prior written approval of Patent
Laboratories.
6. Confidentiality
During the term of this Agreement and for a period of five (5) years after its
expiration or termination, Pharmaceutical shall keep confidential and not
disclose to others or use for any purpose other than as expressly authorized
herein, any confidential information supplied by Patent Laboratories or its
employees or representatives and identified as confidential ("Confidential
Information"). Pharmaceutical shall ensure that its employees and agents shall
likewise maintain the secrecy of Confidential Information, and shall comply with
the confidentiality and non-use provisions of this Section. The obligation of
confidentiality shall not apply to the extent that Pharmaceutical can establish
that the Confidential Information at issue: (i) entered the public domain
without Pharmaceutical's breach of any obligation owed to the disclosing party;
(ii) was permitted to be disclosed by Patent Laboratories's prior written
consent; (iii) had become known to Pharmaceutical from a source other than
Patent Laboratories, other than by breach of a confidentiality obligation owed
to Patent Laboratories; (iv) was disclosed by Patent Laboratories to a third
party without restrictions on its disclosure; or (v) was independently developed
by Pharmaceutical without breach of this Agreement. Further, disclosure may be
made pursuant to a requirement of law, or of judicial or administrative process,
provided that Pharmaceutical shall promptly inform Patent Laboratories in
advance of such disclosure so that Patent Laboratories may seek a protective
order regarding the disclosed Confidential Information.
7. Representations, Warranties, and Covenants
7.1. Patent Laboratories' Representations, Warranties,
and Covenants
Patent Laboratories hereby represents, warrants, and covenants the following:
7.1.1.
Patent Laboratories is a corporation duly organized, existing and in
good standing under the laws of New York, with full right, power and authority
to enter into and perform this Agreement and to grant all of the rights, powers,
and authorities herein granted.
7.1.2.
The execution, delivery and performance of this Agreement do not
conflict with, violate, or breach any agreement to which Patent Laboratories is
a party, or Patent Laboratories' articles of incorporation or bylaws.
7.1.3.
This Agreement has been duly executed and delivered by Patent
Laboratories and is a legal, valid and binding obligation enforceable against
Patent Laboratories in accordance with its terms.
7.1.4.
Patent Laboratories shall comply with all applicable laws, consent
decrees, and regulations of any federal, state, or other governmental authority.
7.1.5.
To the best of Patent Laboratories' knowledge and belief as of the
date of this Agreement, there are no issued or pending patent or trademark
applications relating to the Product that would prevent Pharmaceutical from
using or selling the Product in the Territory for its Licensed Use.
7.2. Pharmaceutical's Representations, Warranties,
and Covenants
Pharmaceutical hereby represents, warrants, and covenants the following:
7.2.1.
Pharmaceutical is a corporation duly organized, existing and in good
standing under the laws of the State of New Jersey, with full right, power, and
authority to enter into and perform this Agreement and to grant all of the
rights, powers, and authorities herein granted.
7.2.2.
The execution, delivery, and performance of this Agreement do not
conflict with, violate, or breach any agreement to which Pharmaceutical is a
party, or Pharmaceutical's articles of incorporation or bylaws.
7.2.3.
This Agreement has been duly executed and delivered by
Pharmaceutical and is a legal, valid, and binding obligation enforceable against
Pharmaceutical in accordance with its terms.
7.2.4.
Pharmaceutical shall comply with all applicable laws, consent
decrees, and regulations of any federal, state, or other governmental authority.
7.2.5.
Pharmaceutical shall in good faith make its best efforts and make
reasonable expenditures to market and promote sales of the Product for its
Licensed Use in the Territory. Pharmaceutical's good faith efforts and
expenditures will be at least comparable to Pharmaceutical's efforts and
expenditures for other Pharmaceutical products.
7.2.6.
Pharmaceutical will maintain a qualified national sales
organization, and Pharmaceutical shall ensure that it gives proper coverage to
the Product throughout the Territory on a regular basis. Pharmaceutical shall
sell the Product through at least 40,000 outlets.
7.2.7.
During the term of this Agreement and for one (1) year after any
termination or expiration of this Agreement, Pharmaceutical shall not, without
Patent Laboratories's prior written consent, directly or indirectly promote or
sell any other weight loss product for use in the Territory, other than the
Product. However, (1) Pharmaceutical may continue to market and sell
Pharmaceutical's own weight loss gel that is currently being marketed by
Pharmaceutical, as listed in Schedule A hereto, and (2) if Patent Laboratories
withdraws the Product from the Territory without providing a reasonable
substitute for purposes of this Agreement, Pharmaceutical shall be permitted to
promote or sell other weight loss products for use in the Territory immediately
after the termination or expiration of this Agreement.
8. Indemnification
8.1. Patent Laboratories shall at all times during and after the term of this
Agreement be responsible for, and shall defend, indemnify, and hold
Pharmaceutical harmless from and against any and all losses, claims, suits,
proceedings, expenses, recoveries, and damages, including reasonable legal
expenses and costs including attorneys' fees, arising out of any claim by a
third party relating to the Product, or any aspect of the performance of this
Agreement, to the extent such liability results from the negligence or willful
misconduct of Patent Laboratories, or any breach of a representation or warranty
given herein by Patent Laboratories; provided, however, that Pharmaceutical
shall give Patent Laboratories prompt notice of any such claim or lawsuit and,
provided further, that Patent Laboratories shall have the right to compromise,
settle, or defend such claim or lawsuit.
8.2. Pharmaceutical shall at all times during and after the term of this
Agreement be responsible for, and shall defend, indemnify, and hold Patent
Laboratories harmless from and against any and all losses, claims, suits,
proceedings, expenses, recoveries, and damages, including reasonable legal
expenses and costs including attorneys' fees, arising out of any claim by a
third party relating to any aspect of the performance of this Agreement, to the
extent such liability results from the negligence or willful misconduct of
Pharmaceutical, or any breach of a representation or warranty given herein by
Pharmaceutical; provided, however, that Patent Laboratories shall give
Pharmaceutical prompt notice of any such claim or lawsuit and, provided further,
that Pharmaceutical shall have the right to compromise, settle, or defend such
claim or lawsuit.
8.3. Each party shall maintain a comprehensive product liability insurance
policy with respect to the Product, in an amount of not less than Five Million
Dollars ($5,000,000) per occurrence with a deductible of not more than One
Hundred Thousand Dollars ($100,000). Each party shall name the other party as an
additional insured under such policy, the terms of which shall be reasonably
acceptable to the other party. Each party shall promptly provide the other party
with a certificate from the applicable insurance company verifying the above and
undertaking to notify the other party directly at least thirty (30) days prior
to the expiration or termination of such coverage.
9. Term and Termination
9.1. Term
This Agreement shall commence as of the date first written above (the "Effective
Date"), and, unless sooner terminated as provided herein, this Agreement shall
continue in force for five (5) years from the Effective Date. This Agreement
shall then automatically be renewed for a single period of five (5) years,
provided that Pharmaceutical will have met all of its minimum purchasing
requirements under Sections 4.2.24.2.4 for the initial five-year period.
Thereafter, this Agreement shall automatically be renewed for further periods of
five (5) years, unless either party gives notice of non-renewal to the other
party at least ninety (90) days prior to the expiration of the then-current
term.
9.2. Termination
9.2.1.
Termination by Mutual Consent. This Agreement shall terminate upon
the mutual written agreement of the parties.
9.2.2.
Termination for Material Breach. If either party breaches or
defaults in the performance or observance of any of the material provisions of
this Agreement, and such breach or default is not cured within thirty (30) days
after the giving of notice by the other party specifying such breach or default,
the non-defaulting party shall have the right to terminate this Agreement,
effective with ten (10) days further notice to the defaulting party.
9.2.3.
Termination for Bankruptcy. Either party shall have the right to
terminate this Agreement upon thirty (30) days notice to the other party, if
that other party becomes involved in financial difficulties as evidenced:
(a) by that other party's commencement of a voluntary case under any
applicable bankruptcy code or statute, or by its authorizing, by appropriate
proceedings, the commencement of such a voluntary case; or
(b) by its failing to receive dismissal of any involuntary case under any
applicable bankruptcy code or statute within sixty (60) days after initiation of
such action or petition; or
(c) by its seeking relief as a debtor under any applicable law of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors, or by consenting to or
acquiescing in such relief; or
(d) by the entry of an order by a court of competent jurisdiction finding
it to be bankrupt or insolvent, or ordering or approving its liquidation,
reorganization, or any modification or alteration of the rights of its creditors
or assuming custody of, or appointing a receiver or other custodian for, all or
a substantial part of its property or assets; or
(e) by its making as assignment for the benefit of, or entering into a
composition with, its creditors, or appointing or consenting to the appointment
of a receiver or other custodian for all or a substantial part of its property.
The failure by a party to exercise its right to terminate this Agreement
pursuant to this Section 9.2.3 in the event of any occurrence giving rise
thereto shall not constitute waiver of the rights in the event of any subsequent
occurrence.
9.3. Surviving Provisions
9.3.1.
The provisions of Sections 1, 3.3, 4.3, 6, 7, 8, 9.3, 10, and 11
hereof shall survive any expiration or termination of this Agreement, except as
otherwise provided herein.
9.3.2.
Except as otherwise provided in this Agreement, upon any expiration
or termination of this Agreement:
(a) All rights, privileges and licenses shall immediately terminate and
revert to Patent Laboratories, and Pharmaceutical shall not thereafter make any
use whatsoever of any Technology or the Trademark, and shall not further market,
sell, or distribute the Product;
(b) Pharmaceutical shall promptly return or provide to Patent Laboratories
all Technology and other similar information regarding the Product;
(c) Pharmaceutical shall promptly destroy or transfer to Patent
Laboratories, at Patent Laboratories's election, all marketing, labeling, or
advertising materials relating to the Product or Trademark; and