EXHIBIT 10.38
AMENDMENT NO. 1 TO AMENDED AND
RESTATED PURCHASE AND LICENSE AGREEMENT
This AMENDMENT NO. 1 TO AMENDED AND RESTATED PURCHASE AND LICENSE
AGREEMENT (the "Amendment") is entered into as of December 30, 1999, by and
among Dura Pharmaceuticals, Inc. ("Dura"), DJ Pharma, Inc. ("DJ Pharma") and
Dura (Bermuda) Trading Company LTD. ("Dura Bermuda") (the latter solely with
respect to the Keftab Products), and amends and restates certain provisions of
that certain Amended and Restated Purchase and License Agreement entered into as
of January 25, 1999, and effective as of October 1, 1998 (the "Agreement"),
among Dura, DJ Pharma and Dura Bermuda (the latter solely with respect to the
Keftab Products). Capitalized terms used but not defined herein shall have the
meanings given to them in the Agreement.
RECITALS
A. Pursuant to the Agreement, DJ Pharma received certain rights to
certain products from Dura and Dura Bermuda and assumed certain obligations to
Dura and DJ Pharma in connection therewith.
B. A disagreement between DJ Pharma, on the one hand, and Dura and Dura
Bermuda, on the other hand, regarding certain provisions of the Agreement.
C. DJ Pharma, Dura and Dura Bermuda are entering into this Amendment to
resolve their disagreement and to clarify any asserted ambiguities that may
exist..
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Dura, DJ Pharma and Dura Bermuda hereby agree
as follows:
1. AMENDMENTS TO AGREEMENT. The Agreement is hereby amended and
restated as follows:
1.1 SECTION 2.1. Section 2.1 of the Agreement is hereby
amended and restated in its entirety to read as follows:
"2.1 FOR PURCHASE AND LICENSING RIGHTS WITH RESPECT TO THE
PRODUCTS. In consideration for the purchase and licensing rights as set
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forth in Section 1 hereof, DJ Pharma shall (i) issue to Dura or Dura
Bermuda, as the case may be, the Subordinated Product Acquisition Notes
(as hereinafter defined) and (ii) pay to Dura with respect to the
Rondec Products and CCA Products and to Dura Bermuda with respect to
the Keftab Rights the following licensing fees
during the Licensing Period:
(a) for * (as hereinafter defined) * aggregate Net
Sales (as hereinafter defined) of the Products during such *;
(b) for * (as hereinafter defined) * during such *;
(c) * during *;
(d) * during *; and
(e) * during * and the *.
Notwithstanding the foregoing, in no event shall the aggregate payments
owing by DJ Pharma under Sections 2.1(a)-(e) hereof, after subtracting
therefrom the costs of all Products sold by DJ Pharma during the
respective calendar year as permitted by Section 2.2, exceed the
following maximum aggregate payments during the respective calendar
year: (i) nineteen million five hundred thousand dollars ($19,500,000)
with respect to he 1999 calendar year (the "First Year Maximum
Payment"), (ii) sixteen million dollars ($16,000,000) with respect to
the 2000 calendar year (the "Second Year Maximum Payment"), (iii) nine
million five hundred thousand dollars ($9,500,000) with respect to the
2001 calendar year (the "Third Year Maximum Payment"), and (iv) eight
million dollars ($8,000,000) with respect to the 2002 calendar year
(the "Fourth Year Maximum Payment"). For example, (a) in the event that
aggregate Net Sales of the Products equal $25,000,000 and the costs of
all Products sold by DJ Pharma equal $4,000,000 during the 2002
calendar year, the amount owing by DJ Pharma under Sections 2.1(e) and
2.2 would be $7,250,000 (45% of $25,000,000 minus $4,000,000), but (b)
in the event that aggregate Net Sales of the Products equal $25,000,000
and the costs of all Products sold by DJ Pharma equal $3,000,000 during
the 2002 calendar year, the amount owing by DJ Pharma under Sections
2.1(e) and 2.2 would be $8,000,000 (or the Fourth Year Maximum Payment,
because 45% of $25,000,000 minus $3,000,000 exceeds the Fourth Year
Maximum Payment). Notwithstanding the foregoing, in no event shall the
First Year Maximum Payment, Second Year Maximum Payment, Third
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*Certain confidential portions of this Exhibit were omitted by means of marking
such portions with an asterisk (the "Xxxx"). This Exhibit has been filed with
the Secretary of the Commission without the Xxxx pursuant to the Company's
application requesting confidential treatment under Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Year Maximum Payment, or Fourth Year Maximum Payment (collectively, the
" Maximum Payments ") in any way impact or lessen any other obligations
of DJ Pharma to Dura , including, without limitation, continuing
obligations under the Dura Supply Agreement.
For purposes of this Agreement: (A) a "Contract Quarter" shall mean
each quarter in the Contract Year commencing October 1, 1998 and ending
September 30, 1999; (B) the first "Contract Year" shall mean the period
of twelve (12) consecutive months commencing on October 1, 1998, and
each subsequent Contract Year shall begin on the respective anniversary
thereof; and (C) "Net Sales" shall mean (i) the gross amount of sales
invoiced to third parties by DJ Pharma less the reasonable and
customary accrual-basis deductions from such gross amounts including:
(a) normal and customary trade and quantity discounts, allowances and
credits actually allowed or paid; (b) credits or allowances given or
made for return of previously sold products; (c) sales or excise taxes,
as adjusted for rebates and refunds; and (d) chargeback payments and
rebates granted to managed health care organizations, employer groups
or to federal, state and local governments, their agencies, purchasers
and reimbursers or to trade customers, including, but not limited to,
wholesalers and chain and pharmacy buying groups, which are
specifically identified to the sale of the Products by DJ Pharma. All
amounts under this Section shall be determined from the books and
records of DJ Pharma which shall be maintained in accordance with
GAAP."
1.2 SECTION 2.8. A new Section 2.8 is hereby added to the
Agreement as follows:
"2.8 PRODUCT RETURNS. DJ Pharma shall process, and hereby
assumes and agrees to be responsible for and to perform and satisfy all
obligations associated with the processing of, all Products that were
sold by Dura prior to October 1, 1998, and that are returned in
compliance with Dura's returned goods policy for credit after the
Closing. Dura shall reimburse DJ Pharma for certain of the costs it
incurs in performing the foregoing obligations as follows:
(a) CREDITS. Dura shall reimburse DJ Pharma for * of
the credits DJ Pharma issues with respect to all of the Products that
were sold by Dura prior to October 1, 1998, and that are returned in
compliance with Dura's returned goods policy for credit after the
Closing.
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*Certain confidential portions of this Exhibit were omitted by means of marking
such portions with an asterisk (the "Xxxx"). This Exhibit has been filed with
the Secretary of the Commission without the Xxxx pursuant to the Company's
application requesting confidential treatment under Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
(b) EXCHANGES. Dura shall reimburse DJ Pharma for *
of the purchase price paid by DJ Pharma to Dura or Dura Bermuda, as
applicable, pursuant to the Dura Supply Agreement for all of the
Products that are delivered by DJ Pharma in exchange for Products that
were sold by Dura prior to October 1, 1998, and that are returned in
compliance with Dura's returned goods policy for exchange after the
Closing plus (i) for the first * of such Products (calculated based on
the wholesale list price for such Products at the time DJ Pharma ships
the replacement Products), * at the time DJ Pharma ships the
replacement Products, and (ii) for all of such Products in excess of *
(calculated based on the wholesale list price for such Products at the
time DJ Pharma ships the replacement Products), * at the time DJ Pharma
ships the replacement Products.
(c) CERTAIN OTHER COSTS. Dura shall reimburse DJ
Pharma for * of the amount paid by DJ Pharma to Pharmacy Solutions and
DDN for the services rendered in connection with all of the Products
that were sold by Dura prior to October 1, 1998, and that are returned
in compliance with Dura's returned goods policy for credit or exchange
after the Closing and (ii) * of the wholesale list price at the time DJ
Pharma ships the replacement Products for all of the Products that were
sold by Dura prior to October 1, 1998, and that are returned in
compliance with Dura's returned goods policy for exchange after the
Closing.
(d) NO OTHER OBLIGATIONS. Neither Dura nor Dura
Bermuda shall have any obligation or liability to DJ Pharma in
connection with DJ Pharma's performance of its obligations under this
Section except as expressly set forth in subsections (a) - (c) above,
including, without limitation, any obligation to reimburse DJ Pharma
for any of the internal or indirect costs it may incur in performing
its obligations under this Section.
(e) DJ PHARMA COOPERATION. In addition to maintaining
accurate books and accounts of record in sufficient detail to permit
Dura and Dura Bermuda to verify all payments that they may be required
to make pursuant to this Section as required by Section 2.4 above, DJ
Pharma shall also cooperate with Dura and Dura Bermuda as reasonably
requested in evaluating and attempting to discover the cause of any
Product returns after the Closing that are materially more significant
in volume than the volume of Product returns that occurred prior to the
Closing."
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*Certain confidential portions of this Exhibit were omitted by means of marking
such portions with an asterisk (the "Xxxx"). This Exhibit has been filed with
the Secretary of the Commission without the Xxxx pursuant to the Company's
application requesting confidential treatment under Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
2. ACKNOWLEDGMENTS.
2.1 ACKNOWLEDGMENT BY DJ PHARMA. DJ Pharma hereby acknowledges
and agrees that as of the date of this Amendment it does not know of, nor does
it have any intent to assert now or at any time in the future, any claims or
causes of action against Dura, Dura Bermuda or any of their directors, officers,
employees, agents, stockholders, partners, attorneys, assignees, parents or
subsidiaries, individually or collectively, for any breach or other failure to
perform any obligation owing to DJ Pharma, whether legal, equitable, statutory
or otherwise, including without limitation any and all obligations owing under
the Agreement and all related agreements.
2.2 ACKNOWLEDGMENT BY DURA AND DURA BERMUDA. Dura and Dura
Bermuda each hereby acknowledges and agrees that as of the date of this
Amendment it does not know of, nor does it have any intent to assert now or at
any time in the future, any claims or causes of action against DJ Pharma or any
of its directors, officers, employees, agents, stockholders, partners,
attorneys, assignees, parents or subsidiaries, individually or collectively, for
any breach or other failure to perform any obligation owing to Dura or Dura
Bermuda, whether legal, equitable, statutory or otherwise, including without
limitation any and all obligations owing under the Agreement and all related
agreements.
3. MISCELLANEOUS.
3.1 ENTIRE AGREEMENT; CONFLICTS. This Amendment constitutes
the entire agreement among Dura, DJ Pharma and Dura Bermuda with respect to the
amendment to the Agreement set forth herein. This Amendment supersedes all prior
or contemporaneous understanding or agreements, whether written or oral, between
Dura, DJ Pharma and Dura Bermuda with respect to such amendment. In the event of
any conflict between the terms of this Amendment and the terms of the Agreement,
the terms of this Amendment shall govern and control.
3.2 GOVERNING LAW. This Amendment shall be governed and
construed in accordance with the laws of the State of California excluding any
choice of law rules which may direct the application of the law of another
state.
3.3 CAPTIONS. All section titles or captions contained in this
Amendment are for convenience only, shall not be deemed a part of this Amendment
and shall not affect the meaning or interpretation of this Amendment.
3.4 NO THIRD PARTY RIGHTS. No provision of this Amendment
shall be deemed or construed in any way to result in the creation of any rights
or obligation in any other individual, group, entity or organization not a party
to this Amendment.
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3.5 NO IMPLIED WAIVERS. No failure on the party of any party
to exercise and no delay in exercising any right, power, remedy or privilege
under this Amendment shall impair, prejudice or constitute a waiver of any such
right, power, remedy or privilege, nor shall any such waiver or any single or
partial exercise of any such right, power, remedy or privilege preclude any
other or further exercise thereof or the exercise of any other right, power,
remedy or privilege. No waiver by any party of any default, right, power, remedy
or privilege shall be effective unless in writing, nor shall any such waiver
operate as a waiver of any other or the same default, right, power, remedy or
privilege respectively on a future occasion.
3.6 AMENDMENTS AND MODIFICATIONS. No amendment, modification,
termination or discharge of any provision of this Amendment, nor consent by
Dura, DJ Pharma or Dura Bermuda to any departure therefrom, shall in any event
be effective unless the same shall be in writing specifically identifying this
Amendment and the provision intended to be amended, modified, terminated or
discharged and signed by Dura, DJ Pharma and Dura Bermuda, and each amendment,
modification, termination or discharge shall be effective only in the specific
instance and for the specific purpose for which given. No provision of this
Amendment shall be varied, contradicted or explained by any other agreement,
course of dealing or performance or usage of trade or any other matter not set
forth in an agreement in writing and signed by Dura, DJ Pharma and Dura Bermuda.
3.7 SEVERABILITY. If any provision of this Amendment should be
held to be invalid, illegal or unenforceable in any respect in any jurisdiction,
then, to the fullest extent permitted by law, (a) all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the parties hereto
as nearly as may be possible and (b) such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
such provision in any other jurisdiction.
3.8 COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, Dura, DJ Pharma and Dura Bermuda have each caused
this Amendment to be executed by their duly authorized representatives as of the
date first written above.
DURA PHARMACEUTICALS, INC.
By: /s/ Xxxx Xxxx
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Its: Vice President Finance
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DURA (BERMUDA) TRADING
COMPANY LTD.
By: /s/ Xxxxx Xxxxxx
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Its: President
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DJ PHARMA, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Its: Vice President, Finance
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[SIGNATURE PAGE TO AMENDMENT NO. 1 TO AMENDED
AND RESTATED PURCHASE AND LICENSE AGREEMENT]
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