Exhibit 10.18
STRATEGIC ALLIANCE AGREEMENT
THIS AGREEMENT is entered into as of the 17th day of September, 1997
(the "Effective Date"), by and between PENWEST Pharmaceuticals Group ("PPG"), a
division of PENWEST, LTD., a Washington corporation, with its principal place of
business at 0000 Xxxxx 00, Xxxxxxxxx, Xxx Xxxx 00000, and Endo Pharmaceuticals
Inc., a Delaware corporation with its principal place of business at 000
Xxxxxxxxxx Xxxx Xxxxxxx Xxxx, Xxxxxx Xxxx, XX 00000 ("Endo").
A. PPG has developed a controlled-release agent covered by one or
more patents, patent applications, know-how and other proprietary technology,
which agent PPG markets under the name and xxxx "TIMERx(R)" ("TIMERx").
X. Xxxx manufactures and markets various pharmaceutical products,
including without limitation the product marketed under the name *** and has
developed know-how and other proprietary technology with respect thereto. Endo
is interested in developing one or more products incorporating *** and TIMERx
and to make a solid-dosage controlled-release delivery system for oral
administration in humans in one or more dosage strengths.
C. The parties desire to engage in certain research, development, and
testing activities designed to determine if such drugs can be developed using
TIMERx. If such activities are successful, Endo desires to make and market such
drug(s) as its only line of controlled-release *** products. In that connection,
Endo desires to contract for a supply of TIMERx for use in the manufacture of
such controlled-release forms of ***, and PPG is willing to supply the same
provided that Endo agrees to obtain all of its and its Affiliates' and
sublicensees' requirements of TIMERx from PPG as provided herein.
D. The parties desire to build mutual opportunities for the
expansion of the scope of their efforts and agreements to involve other drugs in
related areas and to cooperate in promoting the marketing of such products,
worldwide.
NOW, THEREFORE, the parties hereby agree as follows:
The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 of the Securities Act of 1933.
REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***.
1. Definitions. Certain terms used herein are defined alphabetically in
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"Section 1," Sections 1.1 through 1.48, as set forth in the
Definitions Exhibit attached hereto and incorporated herein by this
reference. For convenience of reference, italicized type indicates at
least one of the uses in the body of the Agreement of terms defined in
the Definitions Exhibit.
2. Development Period(s).
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2.1 During each Development Period, each of PPG and Endo will exert
its Best Commercial Efforts: (i) to perform the respective
Development Tasks allotted to it; (ii) to do so in accordance
with the applicable Development Budget; and (iii) to assist and
to cooperate as requested with the other party's Best Commercial
Efforts to do the same as to its own Development Tasks.
2.2 Each party will, promptly and throughout each Development Period,
provide to the other party all necessary or useful information in
or coming into its possession or reasonably available to it to
support the achievement of the Development Tasks. Notwithstanding
anything else to the contrary contained herein, nothing shall
require either party to disclose confidential information for
which such party has an obligation of confidentiality to a third
party, but each party will exert its Best Commercial Efforts to
bring to the attention of the Alliance Committee any such third
party restrictions as may be relevant to its role hereunder.
2.3 Each party's Project Contact(s) will provide written reports to
the other party's Project Contact(s) at least quarterly (and more
often upon reasonable request of the other party) throughout each
Development Period, stating in detail all efforts made and in
process, and all significant progress achieved and difficulties
encountered in the reporting party's portion of the development
effort since the last such report. Each of the Project Contacts
will also be available throughout each Development Period to
answer any reasonable questions from the other party's Project
Contacts, as appropriate.
2.4 During the Development Period, Endo shall provide *** and
related materials reasonably required to support the applicable
Development Tasks, although it is understood that the same may be
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required to remain at one or more of Endo's facilities covered by
Facilities Certifications. During the Development Period, PPG
shall provide all TIMERx reasonably required for the applicable
Development Tasks, all as shall be more fully described in the
applicable Development Tasks adopted by Committee Action,
although it is understood that the prototypes of the Formulated
TIMERx will be developed internally by PPG's personnel at its own
research facilities, and that such prototypes may then be tested
with the *** in accordance with the Development Tasks at one or
more of such Endo facilities. The costs of such materials will be
treated as among the parties' respective expenditures pursuant to
the Development Budget, using for this purpose the TIMERx Price
as to the TIMERx and the *** Price as to the ***.
2.5 Subject to Section 5.3, each party will share equally the total
costs of the entire Development Budget for each Development
Period, regardless of which party is allocated one or more of the
relevant Development Tasks. Each party shall submit to the
Alliance Committee at least quarterly (or on such other schedule
as may be determined by Committee Action) a written accounting of
the expenditures, costs, and other resources actually devoted by
it to the Development Tasks in accordance with the applicable
Development Budget since the last such accounting. Each of the
parties' quarterly accountings will be reviewed and approved in
whole or in part (and/or returned in whole or in part to a party
for correction or adjustment prior to resubmission) by Committee
Action. The Alliance Committee will notify each party on a
quarterly basis of the results of such review by it of the
accountings of both parties. Subject to Section 5.3, to the
extent that both parties' accountings for prior expenditures,
costs and other resources for a particular Development Budget
have been so approved, the Alliance Committee will direct by a
quarterly invoice (with copies to both parties), issued against
records for such quarter and payable prior to the 30th day
following the date of invoice, that the party which has, with
respect to such Development Budget, devoted thereto less in the
aggregate than the other party to that time (taking into account
all prior reconciliation invoices with respect to such
Development Budget under this section) shall reconcile such
disparity by paying to the other party one-half of the difference
in such aggregate amounts.
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2.6 The parties hereby agree that the Designated Product(s) described
in Exhibit 2.6 shall be the "Initial Designated Product(s)." The
initial Development Tasks, and the initial Development Budget
with respect to such Initial Designated Product(s) shall be laid
out in a project plan to be developed within 120 days following
the Effective Date by the parties' Project Contacts, subject to
approval by Committee Action. During such 120-day period, the
parties will conduct the Proof of Principle Studies, and during
the first 30 days of such period, Endo shall conduct the Patent
Review (and PPG shall cooperate reasonably therewith). Other than
the costs of the Proof of Principle Studies or the Patent Review,
and the incidental costs of the Project Contacts associated with
the development of such a project plan, neither party will devote
substantial resources or make substantial expenditures in
connection with the Initial Development Period prior to the
approval of such project plan by Committee Action. The parties
understand that such project plan will be preliminary and will
require revisions, clarifications and supplementation by
Committee Action in light of the interim results achieved or
difficulties encountered during the Initial Development Period.
2.7 Except for the Initial Designated Products described in Section
2.6, neither party will be obligated to designate any drug
product or potential drug product as a Designated Product under
this Agreement. However, during the term of this Agreement,
neither party shall, and hereby represents and warrants that none
of its Affiliates shall, develop, attempt to develop, or actively
investigate any version, materials, or system for any controlled-
release or time-release oral tablet or capsule product containing
any *** as its only active ingredient, or as one active
ingredient together with *** (or agree or seek to agree
with others to do so or any part thereof), unless one of the
following applies: (i) such activities are with respect to a
Certification Period (and subsequent Marketing Period(s)) as to
which the other party is not an Eligible Party or as to which it
has elected not to participate, as permitted hereunder, or (ii)
the relevant product has been demonstrated not to be a workable
candidate as a Designated Product, as shown by a termination of a
Development Period therefor pursuant to Section 5.2, or (iii) all
of the conditions in Sections 2.7.1 and 2.7.2 have been
satisfied. In addition, neither party shall, and
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hereby represents and warrants that none of its Affiliates shall,
during the first five years of the term of this Agreement, in a
co-development project or marketing arrangement with a non-
Affiliate third party (i.e., this clause will not apply to
internal projects of either party), develop, attempt to develop,
or actively investigate any version, materials, or system for any
controlled-release or time-release oral tablet or capsule product
for either (a) any controlled multisource opiate analgesic
product (e.g., morphine, oxycodone, hydromorphone) not covered by
the preceding sentence, or (b) any other tablet or capsule
product containing a new chemical entity with opiate analgesic
activity (provided, however, that this clause (b) will not apply
to restrict PPG as to any such products as to which Endo has no
actual or potential competitive product then at a substantially
equivalent or later stage of development) unless one of the
following applies: (i) such activities are with respect to a
Certification Period (and subsequent Marketing Period(s)) as to
which the other party is not an Eligible Party or as to which it
has elected not to participate, as permitted hereunder, or (ii)
the relevant product has been demonstrated not to be a workable
candidate as a Designated Product, as shown by a termination of a
Development Period therefor pursuant to Section 5.2, or (iii) the
other party has informed the party that would otherwise be
restricted by this section that such other party has in process
an internal project for the development of such product or a
substitutable product (it being understood that such other party
shall inform the party that would otherwise be restricted by this
section, and which has a bona fide intent to commence such a
project with a non-Affiliate third party, whether or not such
other party has such an internal project whenever it is requested
in writing to do as to a particular ADS), or (iv) all of the
conditions in Sections 2.7.1 and 2.7.2 have been satisfied. Such
conditions are:
2.7.1 The party desiring to conduct a project or to enter a
third-party agreement covered hereby has first notified
the other party hereto of its desire to do so; and
2.7.2 such notifying party has exerted its Best Commercial
Efforts, through good faith negotiations over a period
of at least 90 days, to reach agreement with the
other party hereto to add such product or investigation
to the coverage of this Agree-
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ment, unless such other party waives this Section 2.7.2 in
writing or fails to negotiate in good faith.
3. Certification Period(s).
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3.1 During each Certification Period, each of PPG and Endo will exert
its Best Commercial Efforts: (i) to perform the respective
Certification Tasks allotted to it; (ii) to do so in accordance
with the applicable Certification Budget; and (iii) to assist and
to cooperate as requested with the other party's Best Commercial
Efforts to do the same as to its own Certification Tasks.
3.2 Each party will, promptly and throughout each Certification
Period, provide to the other party all necessary or useful
information in or coming into its possession or reasonably
available to it to support the achievement of the Certification
Tasks. Notwithstanding anything else to the contrary contained
herein, nothing shall require either party to disclose
confidential information for which such party has an obligation
of confidentiality to a third party, but each party will exert
its Best Commercial Efforts to bring to the attention of the
Alliance Committee any such third party restrictions as may be
relevant to its role hereunder.
3.3 Each party's Project Contact(s) will provide written reports to
the other party's Project Contact(s) at least quarterly (and more
often upon reasonable request of the other party) throughout each
Certification Period, stating in detail all efforts made and in
process, and all significant progress achieved and difficulties
encountered in the reporting party's portion of the certification
effort since the last such report. Each of the Project Contacts
will also be available throughout each Certification Period to
answer any reasonable questions from the other party's Project
Contacts, as appropriate.
3.4 During each Certification Period in which it is participating,
Endo shall provide *** and related materials reasonably required
to support the applicable Certification Tasks, and PPG shall
provide all Formulated TIMERx reasonably required therefor, all
as shall be more fully described in the applicable Certification
Tasks adopted by Committee Action. The costs of such materials
will be treated as
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among the parties' respective expenditures pursuant to the
Certification Budget, using for this purpose the Formulated
TIMERx Price as to the TIMERx and the *** Price as to the ***.
Where, as permitted hereunder, a party is not participating in a
Certification Period, it will sell such materials to the
participating party pursuant to Section 6.9.5 or Section 7, as
applicable, and the price paid therefor shall be treated as part
of the buyer's expenditures pursuant to the Certification Budget.
3.5 The parties hereby agree that, unless the Initial Development
Period is terminated pursuant to Section 5.2 or Section 5.3, a
separate Certification Period will be established directed toward
the filing of one or more NDAs with the FDA for the Initial
Designated Product(s), and securing an Approval with respect
thereto in the United States (the "Initial US Certification
Period"). Each party will share equally the total costs of the
entire Certification Budget for the Initial US Certification
Period regardless of which party is allocated one or more of the
relevant Certification Tasks, subject to Section 5.5. In no event
shall the aggregate of both parties' expenditures, costs, and
other resources to be devoted to the Certification Tasks pursuant
to the Certification Budget during the Initial US Certification
Period, when added to the aggregate of both parties'
expenditures, costs, and other resources devoted to the Initial
Development Budget, exceed Fifteen Million Dollars ($15,000,000),
unless both parties have consented thereto in writing. If the
Certification Tasks for the Initial US Certification Period have
not been completed when such $15,000,000 level of aggregate
expenditures, costs and other resources has been reached, and one
party but not the other desires to spend further sums or to
devote further resources to complete such Certification Tasks,
then the following shall apply:
3.5.1 The party that does not participate further in the Initial
US Certification Period once such point is reached shall
not be required to contribute to the reconciliations for
the costs of such Certification Period under Section 3.7.
Rather, a Certification Excess shall be established with
respect to the Initial Designated Product in the US, which
shall equal the sums such party would have paid under
Section 3.7, had it fully
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participated in such Certification Period, but did not pay
due to its election under this section.
3.5.2 If Endo is the party electing not to participate further
in the Initial US Certification Period, this shall have
the results stated in Section 6.9 as to the Initial
Designated Product in the United States, except that:
3.5.2.1 the relevant Exclusivity Period for the applicable
license to PPG in the US will be coterminous
with the License Term, and Section 6.9.3 will
accordingly not be applicable; and
3.5.2.2 the applicable license to PPG will be royalty-
bearing without the relevant Net Realization being
reduced as specified in clause (ii) of
Section 6.9.4.
3.5.3 If PPG is the party electing not to participate further in
the Initial US Certification Period, this shall be
treated, for all purposes of the licenses and the parties'
rights hereunder, as if PPG had continued to participate
in the Initial US Certification Period, except that the
Certification Excess described in Section 3.5.1 shall have
the results stated in Section 4.5.
3.6 Certification Periods other than the Initial US Certification
Period as described in Section 3.5 may be instituted from time to
time by Committee Action, and shall be so instituted if: (i) an
Eligible Party so requests as to certain Specified Nation(s) and
(ii) Committee Action determines that there is a reasonable
likelihood that Approval(s) for such Designated Product will be
obtained in such Specified Nation(s).
3.6.1 If both parties, as Eligible Parties, elect to participate
fully in such Certification Period, each party will share
equally the total costs of the entire Certification
Budget, regardless of which party is allocated one or more
of the relevant Certification Tasks, unless both parties
have consented in writing to an alternative arrangement.
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3.6.2 If an Eligible Party not requesting such Certification
Period elects not to participate fully therein,
it shall do so by written notice to the other party given
within 90 days of the request by the requesting
party for such Certification Period (whether or not such
Certification Period has been instituted by Committee
Action prior to such election).
3.6.3 A party that does not fully participate in a Certification
Period (whether due to its election or because it is
not an Eligible Party as to that Certification Period)
shall not be required to contribute to the reconciliations
for the costs of such Certification Period under
Section 3.7. Rather, a Certification Excess shall be
shall be established with respect to the relevant
Designated Product(s) in the relevant Specified
Nation(s), which shall equal the sums such party would
have borne or paid under Sections 3.6.1 and 3.7,
had it participated in such Certification Period, but
did not pay due to its election or such
ineligibility under this section.
3.6.4 If Endo is the party electing not to participate, or is so
ineligible, this shall have the results stated in Section
6.9.
3.6.5 If PPG is the party electing not to participate, or is so
ineligible, this shall have the results stated in Section
6.8.
3.7 Except as otherwise provided in Section 3.6 or Section 5.5, each
party shall submit to the Alliance Committee at least quarterly
(or on such other schedule as may be determined by Committee
Action) a written accounting of the expenditures, costs, and
other resources actually devoted by it to the Certification Tasks
in accordance with the applicable Certification Budget since the
last such accounting. Each of the parties' quarterly accountings
will be reviewed and approved in whole or in part (and/or
returned in whole or in part to a party for correction or
adjustment prior to resubmission) by Committee Action. The
Alliance Committee will notify each party on a quarterly basis of
the results of such review by it of the accountings of both
parties. Except as otherwise provided in Section 3.6 or Section
5.5, to the extent that both parties' accountings for prior
expenditures, costs and other resources for a particular
Certification Budget have been so approved,
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the Alliance Committee will direct by a quarterly invoice (with
copies to both parties), issued against records for each such
quarter and payable prior to the 30th day following the date of
invoice, that the party which has, with respect to such
Certification Budget, devoted thereto less in the aggregate than
the other party to that time (taking into account all prior
reconciliation invoices with respect to such Certification Budget
under this section) shall reconcile such disparity by paying to
the other party one-half of the difference in such aggregate
amounts.
4. Marketing Period(s).
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4.1 Endo hereby agrees, during the Marketing Period for each and
every Designated Product as to which it participated throughout
the Development Period and the relevant Certification Period as
to the United States, to use its Best Commercial Efforts to
manufacture, market, promote and sell the Designated Product
throughout the United States, once Approval has been obtained
therefor in the United States, commencing with any normal and
appropriate pre-Approval preparations and a full product launch
as soon as practical following the applicable Approval, and to do
so in accordance with the applicable Manufacturing and Marketing
Plan(s).
4.2 PPG hereby agrees, during the Marketing Period for each and every
Designated Product as to which it participated throughout the
Development Period and the relevant Certification Period as to
the United States, but as to which Endo did not fully participate
(including without limitation an election by Endo not to continue
to participate in the Initial US Certification Period after the
$15,000,000 level of aggregate expenditures, costs and other
resources referred to in Section 3.5.2 has been reached), and as
to which Section 6.9 applies (entirely or to the extent provided
in Section 3.5.2, where that section is applicable), to use its
Best Commercial Efforts to manufacture, market, promote and sell
the Designated Product throughout the United States or to arrange
therefor with appropriate third parties, once Approval has been
obtained therefor in the United States, commencing with any
normal and appropriate pre-Approval preparations and a full
product launch as soon as practical following the applicable
Approval, and to do so in accordance with the applicable
Manufactur-
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ing and Marketing Plan(s). When considering the establishment of
any relationships whereby PPG would contract for a third party to
manufacture the Designated Product covered by this section, PPG
will give some preference for manufacturing to be conducted by
Endo, where Endo has a demonstrated ability to manufacture such
Designated Product.
4.3 Each of the parties shall, during the Marketing Period for each
and every Designated Product as to which it participated
throughout the Development Period and the relevant Certification
Period as to Specified Nation(s) other than the United States
(whether or not the other party also so participated), to use its
Best Commercial Efforts either (i) to present to the Alliance
Committee a plan (in the form of a Manufacturing and Marketing
Plan) for such party's manufacturing, marketing, promoting and
selling the Designated Product throughout such Specified
Nation(s) and/or other nations to be proposed as Specified
Nation(s) under a Manufacturing and Marketing Plan (other than
the United States) or (ii) to present to the Alliance Committee
an arrangement whereby a third party or third parties will do
some or all of the tasks described under clause (i). The Alliance
Committee will determine, by Committee Action, which of the
approaches (i.e., clause (i) and/or clause (ii), and as to one or
both of the parties' approaches so presented) will be most likely
to maximize the early market entry and ultimate market success of
the applicable Designated Product in the applicable Specified
Nation(s), or any of them, it being understood, however, that the
Alliance Committee will give preference, other factors being
essentially equal, for marketing, promotion and selling to be
conducted by a party hereto or an Affiliate of a party hereto, if
any such approach is presented in a timely manner by such party.
If and to the extent that PPG is determined by Committee Action
to be the party whose approach to clauses (i) and (ii) above will
be pursued, this will (unless otherwise specified by such
Committee Action) have the results stated in Section 6.9 as to
the relevant Specified Nation(s), except that (unless Section 6.9
is fully applicable due to any of the reasons stated therein,
other than as provided in this Section 4.3):
4.3.1 the relevant Exclusivity Period for the applicable license
to PPG in the Specified Nation(s) will be as provided in
Section
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1.24 (mutatis mutandis for application to patents on Endo
Technology existing as of the Effective Date or on
Joint Technology and to Endo's Confidential Technology
provided to PPG), and Section 6.9.3 will accordingly not
be applicable; and
4.3.2 the applicable license to PPG will be royalty-bearing
without the relevant Net Realization being reduced as
specified in clause (ii) of Section 6.9.4.
4.4 Supply of Formulated TIMERx by PPG (or otherwise as provided in
Section 7.4) in accordance with the Specifications is desired by
both parties for the technically satisfactory production,
regulatory approval, and exploitation of the Designated
Product(s). In accordance with Section 7 (and except as provided
in Section 7.4), PPG will supply Endo and its Affiliates and
sublicensees with sufficient quantities of Formulated TIMERx
produced in accordance with the Specifications in compliance with
(GMP and all applicable laws and regulations, to meet their
requirements for the manufacturing of the Designated Product(s)
during the Marketing Period, and Endo shall purchase all of its
and its Affiliates' and sublicensees' requirements thereof from
PPG during such period. The price for all Formulated TIMERx sold
hereunder shall equal the applicable Formulated TIMERx Price, and
shall be payable by Endo to PPG within forty-five (45) days after
the shipping of the Formulated TIMERx to Endo. As provided in
Exhibit 1.35, the price of the Formulated TIMERx used in the
Designated Product will be one of the deductions applied in the
calculation of the Net Realization.
4.5 Endo hereby agrees to pay to PPG Royalties equal to the
Applicable Percentage of the relevant Net Realization from any
and all Designated Products; provided, however, that, if a
Development Excess exists pursuant to Section 5.3.3 (where PPG is
the terminating party) or a Certification Excess exists pursuant
to Sections 3.5.1, 3.6.3, or 5.5.3 (where PPG is the non-
participating or terminating party), Endo shall pay PPG
proportionately less than the Applicable Percentage of the
relevant Net Realization from the relevant Designated Product(s)
from the relevant Specified Nation(s), until Endo has thereby
recouped the amount of such Development Excess plus such
Certifica-
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tion Excess. (That is, for example, if the total resources
devoted by both Endo and PPG to the relevant Development Period
and Certification Period, as approved pursuant to Section 2.5
and/or Section 3.7, is *** in this example, and Endo bore ***
and PPG bore *** of that total prior to PPG's making its
election under Section 5.3 or Section 5.5.3, and if the
Applicable Percentage is ***, then Endo would pay PPG one-
eighth (50/400) of the Net Realization from the relevant
Designated Product(s) from the relevant Specified Nation(s) until
Endo has thereby recouped the *** total Development Excess
and/or Certification Excess, which would occur in this example
when the total of such Net Realization reaches ***. Where a
Development Period is relevant to more than one Certification
Period, the total resources so devoted to that Development Period
will, for the purposes of this section, be apportioned to the
various relevant Certification Periods pro rata by the respective
total resources devoted to those Certification Periods.)
4.6 Endo has agreed to make the payments specified in Section 4.5 in
recognition of PPG's anticipated contributions of know-how,
resources, and money during the Development Period(s) and the
Certification Period(s), and irrespective of whether any patents
cover such Designated Products; provided, however, that if there
are any Net Realizations from Designated Products sold in the
United States to which no license to U.S. PPG Patents or to U.S.
Joint Technology Patents (including patent applications, as if
patents had issued thereon) is applicable to the making, using,
sale, offer for sale, or import thereof, such Net Realizations
shall be reduced by one-third prior to the calculation of the
proportion thereof to be paid to PPG as Royalties hereunder.
4.7 All Royalties and other amounts payable pursuant to this
Agreement shall be due quarterly within 60 days following the end
of each calendar quarter for Net Realization in such calendar
quarter. Each such payment shall be accompanied by a statement of
Net Realization for the quarter and the calculation of the
Royalties payable hereunder. All Royalties and all other amounts
payable under this Agreement will bear interest at the rate of
*** per month or the maximum legal rate, whichever is less, from
the date due through the date of payment. Endo shall keep and
shall cause its Affiliates and its and their
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sublicensees to keep complete, true and accurate records for the
purpose of showing the derivation of all Royalties payable to PPG
under this Agreement. PPG or its representatives shall have the
right to inspect, copy, and audit such records at any time during
reasonable business hours upon notice to Endo or any of its
Affiliates or sublicensees, respectively. Information gathered
during such an audit shall be held in confidence by PPG and its
Affiliates, except to the extent any of the exceptions stated in
Sections 10.1.1 through 10.1.7 apply thereto, and PPG's auditors
will be required to execute an agreement consistent with this
obligation and otherwise reasonably acceptable to Endo. Any such
audit shall be at the expense of PPG, unless the audit reveals
that, with respect to the period under audit, less than 90% (for
the first such audit conducted with respect to a particular
Designated Product) or *** (for any subsequent audits with
respect to such Designated Product) of the Royalties due to PPG
hereunder have been paid, in which event Endo shall pay or
reimburse PPG for the reasonable expenses of such audit, in
addition to PPG's other remedies for such underpayment.
4.8 All monies due hereunder shall be paid in United States Dollars
to PPG in Patterson, New York, U.S.A. The rate of exchange to be
used shall be the average commercial rate of exchange for the 30
days preceding the date of payment for the conversion of local
currency to United States Dollars as published by The Wall Street
Journal (or if it ceases to be published, a comparable
publication to be agreed upon by the parties) or, for those
countries for which such average exchange rate is not published
by The Wall Street Journal, the exchange rate fixed on the fifth
day prior to the date of payment as promulgated by the
appropriate United States governmental agency as mutually agreed
upon by the parties.
5. Term and Termination.
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5.1 The term of this Agreement shall begin on the Effective Date and
shall, unless earlier terminated as provided herein, continue
until the last to occur of: (i) the fifth anniversary of the
later of the Effective Date or the most recent agreement of the
parties to start a Development Period hereunder; or (ii) the end
of the last License Term to expire or be terminated, if any such
License Term(s) are in effect on
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any date determined under clause (i) or clause (iii) below; or
(iii) the end of the term of any license under Section 6.9, if
any such license(s) are in effect on any date determined under
clause (i) or (ii).
5.2 A Development Period for a Designated Product may be terminated
before completion thereof, if it is determined by Committee
Action that due to unfavorable or inconclusive results to that
time, no further efforts are likely to lead to the successful
development of the Designated Product. The Initial Development
Period will terminate pursuant to this section if Committee
Action determines that, due solely to technical reasons of the
pharmaceutical sciences growing from results obtained in the
course of the Proof of Principle Studies, that it will not be
practicable to develop any Initial Designated Product. The
Initial Development Period will also terminate if the Patent
Review results in a determination by Endo, concurred in by
Committee Action, that the PPG Patents are not as contemplated
hereunder. If the Initial Development Period is terminated
pursuant to this section, this Agreement shall thereupon
terminate, and, subject to Section 5.11, neither party will have
any further liabilities or obligations to the other hereunder.
Similarly, Committee Action may determine that no Certification
Period should be undertaken with respect to a Designated Product
in one or more nation(s), but such a determination will not by
itself terminate this Agreement.
5.3 Either party may at its option terminate its participation in a
Development Period (including without limitation the Initial
Development Period) at its election and upon at least 30 days'
prior written notice to the other party (subject, however, to a
continuing duty to contribute as provided herein to the costs of
tasks previously committed prior to such notice), if it
determines that no further efforts are likely to lead to the
successful development of any of the relevant Designated
Products.
5.3.1 If the terminating party is Endo, this shall have the
results stated in Section 6.9.
5.3.2 If the terminating party is PPG, this shall have the
results stated in Section 6.8.
15
5.3.3 The terminating party shall not be required to contribute
further to the annual reconciliations for the costs of
such Development Period under Section 2.5, other than to
the extent that a disparity of the sort described
in Section 2.5 has theretofore accrued that
would call for a reconciliation payment by
such terminating party to the other party,
in which event such reconciliation payment
shall be accounted for and made by such terminating
party within sixty (60) days of the termination of
its participation under this section, or with the next
scheduled annual reconciliation payment under Section 2.5
(whichever is sooner). Rather, a Development Excess shall
be established with respect to the relevant Designated
Product(s), which shall equal the sums such party
would have paid under Section 2.5, had it participated
fully in such Development Period, but did not
pay due to its election under this section.
5.4 A Certification Period for a Designated Product may be terminated
before completion thereof, if it is determined by Committee
Action that due to unfavorable or inconclusive results to that
time, no further efforts are likely to lead to the applicable
Approval for the Designated Product.
5.5 Either party may at its option terminate its participation in any
Certification Period (including without limitation the Initial
U.S. Certification Period) at its election and upon at least 30
days' prior written notice to the other party (subject, however,
to a continuing duty to contribute as provided herein in the
costs of tasks previously committed prior to such notice), if it
determines that no further efforts are likely to lead to the
applicable Approval for any of the relevant Designated Products.
5.5.1 If the terminating party is Endo, this shall have the
results stated in Section 6.9.
5.5.2 If the terminating party is PPG, this shall have the
results stated in Section 6.8.
5.5.3 The terminating party shall not be required to contribute
further to the annual reconciliations for the costs of
such Certifi-
16
cation Period under Section 3.7, other than to the extent
that a disparity of the sort described in Section 3.7 has
theretofore accrued that would call for a reconciliation
payment by such terminating party to the other party, in
which event such reconciliation payment shall be accounted
for and made by such terminating party within sixty (60)
days of the termination of its participation under this
section, or with the next scheduled annual reconciliation
payment under Section 3.7 (whichever is sooner). Rather, a
Certification Excess shall be established with respect to
the relevant Designated Product(s), which shall equal the
sums such party would have paid under Section 3.7, had it
participated fully in such Certification Period, but did not
pay due to its election under this section.
5.6 PPG may at its option terminate the Exclusivity Period for a
particular Designated Product in one or more Specified Nation(s)
if Endo fails to meet the Minimum Net Realization levels in such
Specified Nation(s) under the then-current Manufacturing and
Marketing Plan(s) for such Designated Product during any two
consecutive calendar years.
5.7 If Endo fails to launch full-scale marketing of a Designated
Product in any Specified Nations within the time frames specified
in the then-current Manufacturing and Marketing Plan(s) therefor,
or announces its intention to discontinue active marketing of
such Designated Product in such nation(s), PPG may at its option
elect to terminate the License Term for such Designated Product
in such nation(s) upon the delivery of written notice to Endo.
Any such termination of such License Term will have the effect of
removing the affected Specified Nation(s) from the Territory for
such Designated Product and shall have the results stated in
Section 6.9.
5.8 In the event that either party materially breaches any of the
terms, conditions or agreements contained in this Agreement to be
kept, observed or performed by it, then the other party may
terminate this Agreement, at its option and without prejudice to
any of its other legal or equitable rights or remedies, by giving
the party who committed the breach (i) in the case of breach of
obligations other than the payment of money, 90 days' notice in
writing, unless the notified
17
party within such 90-day period shall have cured the breach, and
(ii) in the case of breach of an obligation for the payment of
money, 30 days' notice in writing, unless the notified party
within such 30-day period shall have cured the breach, including
any required payment of interest on previously unpaid amounts as
set forth herein.
5.8.1 If the defaulting party is Endo, a termination under this
section shall have the results stated in Section 6.9.
5.8.2 If the defaulting party is PPG, a termination under this
section shall have the results stated in Section 6.8.
5.9 This Agreement will automatically terminate if Endo files for
protection under federal or state bankruptcy laws, becomes
insolvent, makes an assignment for the benefit of creditors,
appoints or suffers appointment of a receiver or trustee over its
property, files a petition under any bankruptcy or insolvency act
or has such petition filed against it. A termination under this
section shall have the results stated in Section 6.9.
5.10 This Agreement will automatically terminate if PPG files for
protection under federal or state bankruptcy laws, becomes
insolvent, makes an assignment for the benefit of creditors,
appoints or suffers appointment of a receiver or trustee over its
property, files a petition under any bankruptcy or insolvency act
or has such petition filed against it. A termination under this
section shall have the results stated in Section 6.8.
5.11 Endo's obligations regarding payment of Royalties accrued as of
the date of termination, PPG's rights under Sections 6.10 and
6.11 (except if this Agreement is terminated due to an uncured
breach on the part of PPG), and Endo's rights under Section 6.12
(except if this Agreement is terminated due to an uncured breach
on the part of Endo), and the provisions of Sections 5, 6.6,
6.8 -6.13, 9, 10, 12, 13, and 14, hereof shall survive any
expiration or termination of this Agreement.
18
6. Ownership and Licenses.
----------------------
6.1 Except as otherwise explicitly licensed or transferred as provided
herein, each party will, as between it and the other party hereto,
retain ownership of any and all inventions, copyrights, trade secrets,
patent rights and other technology and rights to the extent made
solely by its personnel, Affiliates, or contractors (other than the
other party hereto), and the parties will jointly own any and all
Joint Technology. Inventorship for these purposes will be determined
under the prevailing U.S. rules and interpretations. Unless otherwise
approved by Committee Action, the party primarily responsible for the
filing of a PLA, including without limitation NDAs in the U.S., shall
own such PLAs. Neither party makes any grant of rights by implication.
6.2 Except as otherwise provided herein, each party shall be responsible,
as it shall determine, for the filing and prosecution of any and all
patent applications with respect, in whole or in part, to its own
intellectual property and for the maintenance of any available patent
protection with respect thereto, and the Alliance Committee will
determine which of PPG or Endo, or both, will be responsible for the
filing and prosecution of any and all patent applications with respect
to the Joint Technology, with due regard to reasonable concerns, if
any, expressed by either party as to the impact such a filing and
prosecution may have on its other rights and technologies; provided
however, that neither party commits that any such patent protection
will be available or continuous hereunder.
6.3
6.3.1 PPG hereby grants to Endo a license under the Joint Technology,
the PPG Patents, and PPG's Confidential Technology disclosed to
Endo hereunder to make, have made, use, sell, offer for sale,
and import the Designated Product(s) in the Territory during
the License Term applicable to such Designated Product. Such
license shall be exclusive as to the applicable nation(s)
during the Exclusivity Period applicable thereto for such
Designated Product, and shall otherwise be nonexclusive. Such
license does not extend to the making of TIMERx or Formulated
TIMERx, but does cover the incorpo-
19
ration of the same into the Designated Product(s). Endo shall
have no right to grant sublicenses hereunder without the prior
written consent of PPG, which consent shall not
be unreasonably withheld. PPG will, throughout the License
Term, promptly notify Endo of all PPG Patents referred to
in Section 1.38.3 and provide Endo with access to all
of the same, solely for use within the
scope of the license stated in this section.
6.3.2 Endo hereby grants to PPG a license, with right to sublicense,
under any and all Endo Technology and Joint Technology to make,
have made, use, sell, offer for sale, and import the Designated
Product(s) in the Territory; provided, however, that during the
term and within the scope of the Exclusivity Period(s) for the
license granted by PPG to Endo under Section 6.3.1, such
license under Section 6.3.1 will take precedence over the
license under this Section 6.3.2, and the rights under this
section will be exercised by Endo. The license under this
Section 6.3.2 shall be exclusive to PPG for an "Exclusivity
Period" (as defined in Section 1.24, mutatis mutandis for
application to patents on Endo Technology and Joint Technology
and to Endo's Confidential Technology provided to PPG);
provided, however, that if and to the extent that the license
granted to Endo under Section 6.3.1 continues after the end of
an applicable Exclusivity Period thereunder (whether pursuant
to Section 5.6, 1.24, or otherwise), this license to PPG under
this Section 6.3.2 shall be nonexclusive.
6.4 Endo acknowledges that PPG, for itself and for others, applies, and
will seek to apply, *** to other products. Other than Section 2.7, no
provision hereof, and no exclusivity hereunder, shall prevent PPG from
so applying *** or ***, so long as the end product is not a Designated
Product for manufacture or sale in the Territory during the
Exclusivity Period applicable thereto.
6.5 [intentionally omitted]
6.6 In recognition of the parties' cooperative efforts with respect to the
Joint Technology, but without the express or implied grant of any
license to any underlying or enabling rights or technology (except as
20
otherwise provided herein), it is agreed that each party and its
Affiliates shall have the nonexclusive, worldwide right and license,
with right to sublicense, under the Joint Technology, to make, have
made, use, sell, offer for sale, and import any products or services
(other than a Designated Product by PPG or its Affiliates in the
relevant Specified Nation(s) during an applicable Exclusivity Period
under the license in Section 6.3.1, or by Endo or its Affiliates in
the relevant Specified Nation(s) during an applicable Exclusivity
Period described in Section 6.9.3). Such license will be royalty-free
except as is otherwise provided herein. Each party will promptly
notify the other of all Joint Technology and provide such other party
with access to all of the same.
6.7 Subject to and conditional upon the failure or continuing
unwillingness of PPG to meet Endo's and its Affiliates' and
sublicensees' requirements as provided in Section 7.4, PPG grants to
Endo a nonexclusive license under the TIMERx Production Technology to
make and have made Formulated TIMERx in the Territory solely for use
in the Designated Product(s) for sale in the Territory during the
License Term. Endo shall have no right to grant sublicenses of its
rights hereunder (whether to Affiliate(s) or otherwise) without the
prior written consent of PPG, which consent shall not be unreasonably
withheld.
6.8 Subject to and conditional upon PPG's termination of its participation
in a Development Period pursuant to Section 5.3 or in a Certification
Period pursuant to Section 5.5, or PPG's election not to participate
in a Certification Period (or its ineligibility to do so) as provided
in Section 3.6, or the termination of this Agreement pursuant to
Section 5.8 due to an uncured breach by PPG, or a termination pursuant
to Section 5.10, PPG's license to Endo under Section 6.3.1 and its
conditional license under Section 6.7, shall continue with respect to
the relevant Specified Nation(s) and the relevant Designated
Product(s) or successors thereto containing *** and designed
as tablets or capsules for substantially the same functions and
indications (as may be determined by Committee Action), but with the
following changes and adjustments as to such license with respect to
such Designated Product(s) or successors in the relevant Specified
Nation(s):
21
6.8.1 Endo's license to PPG under Section 6.3.2 shall terminate
upon the effectiveness of this Section 6.8 with respect to
the relevant Designated Product in the relevant Specified
Nation(s).
6.8.2 The Exclusivity Period for the license under Section 6.3.1, to
the extent applicable to the relevant Designated Product(s) in
the relevant Specified Nation(s), shall, unless earlier ended
pursuant to Section 1.24.1, last until the longer of five (5)
years commencing with the effective date of the applicable
termination (or from the start of a Certification Period
covered by Section 3.6.5) or until there are no more Joint
Technology Patents (if any) applicable to such Designated
Product in the relevant Specified Nation(s) (or, as
to pending patent applications, that would be so applicable,
if they were then issued as patents), and shall
thereafter be nonexclusive in such Specified Nation(s).
6.8.3 The license under Section 6.3.1, to the extent applicable to
the relevant Designated Product(s) in the relevant Specified
Nation(s), will be royalty-bearing and Sections 4.5, 4.7 and
4.8 shall apply thereto; provided, however, that the relevant
Net Realization (without regard to Section 4.6, which it is
agreed shall not be applicable) shall be reduced by one-third
prior to the calculation of the proportion thereof to be
paid to PPG as Royalties hereunder.
6.8.4 The parties' agreements under Section 4.4 and Section 7 will
continue to apply to Endo's and its Affiliates' and
sublicensees' requirements of Formulated TIMERx for use in the
Designated Product(s) produced pursuant to this section for
sale in the relevant Specified Nation(s), throughout the life
of the license under Section 6.3.1, to the extent applicable to
the relevant Designated Product(s) in the relevant Specified
Nation(s).
6.8.5 As used herein, the "relevant Specified Nation(s)" shall
be the entire Territory as to a termination of PPG's
participation in a
22
Development Period, and shall be the Specified Nation(s) for
the applicable Certification Period as to a termination of
PPG's participation in a Certification Period or its election
not to participate therein (or its ineligibility to do so).
6.8.6 The license under Section 6.3.1, to the extent applicable to the
relevant Designated Product(s) in the relevant Specified
Nation(s), will apply only to the PPG Patents, the Joint
Technology, the TIMERx Production Technology, and PPG's
Confidential Technology made or discovered prior to expiration
of two years after the effectiveness of the applicable
termination (or prior to the start of a Certification Period
covered by Section 3.6.5), together with any and all
intellectual property and other rights thereto and therein in
the relevant Specified Nation(s), inclusive of later-issued
patents to the extent disclosing the same. Notwithstanding
Sections 1.38.2 or 1.38.3, any such technology made or
discovered more than two years following such termination shall
not be licensed to Endo for exploitation with respect to the
applicable Designated Product(s) in the relevant Specified
Nation(s). PPG will, throughout the term of the license under
Section 6.3.1, to the extent applicable to the relevant
Designated Product(s) in the relevant Specified Nation(s),
promptly notify Endo of all the licensed PPG technology and
provide Endo with access to all of the same, solely for use
within the scope of the license under Section 6.3.1, to the
extent applicable to the relevant Designated Product(s) in the
relevant Specified Nation(s).
6.8.7 The requirement that Endo obtain PPG's consent to sublicenses
under Section 6.3.1 shall not apply to the extent that such
sublicenses relate only to the relevant Designated Product in
the relevant Specified Nation(s) covered by this section.
6.9 Subject to and conditional upon Endo's termination of its
participation in a Development Period pursuant to Section 5.3 or in a
Certification Period pursuant to Section 5.5, or Endo's election not
to participate in a Certification Period (or its ineligibility to do
so) as provided in Section 3.5 (to the extent specified in Section
3.5.2) or Section 3.6, or
23
the termination of an Exclusivity Period pursuant to Section 5.6 or of
a License Term pursuant to Section 5.7, or (to the extent specified in
Section 4.3) the acceptance by Committee Action under Section 4.3 of
PPG or its designated third party to pursue the activities described
in that section in a Specified Nation(s), or the termination of this
Agreement pursuant to Section 5.8 due to an uncured breach by Endo, or
a termination pursuant to Section 5.9, Endo's license to PPG under
Section 6.3.2 shall continue with respect to the relevant Specified
Nation(s) and the relevant Designated Product(s) or successors thereto
designed as tablets or capsules for substantially the same functions
and indications (as may be determined by Committee Action), but with
the following changes and adjustments as to such license with respect
to Designated Product(s) or successors in the relevant Specified
Nation(s):
6.9.1 Except where the applicable termination is only of an
Exclusivity Period under Section 5.6, the License Term with
respect to the relevant Designated Product(s) in the relevant
Specified Nation(s) affected by such termination shall, for
purposes of the licenses granted by PPG under Sections 6.3.1
and 6.7, terminate upon the applicable termination.
6.9.2 The term of the license under Section 6.3.2, to the extent
applicable to the relevant Designated Product(s) in
the relevant Specified Nation(s), shall last for the duration
of a Marketing Period as specified in Section 1.33.1,
mutatis mutandis for application to patents on
Endo Technology or Joint Technology.
6.9.3 Except where the applicable termination is only of an
Exclusivity Period under Section 5.6, the license under
Section 6.3.2, to the extent applicable to the relevant
Designated Product(s) in the relevant Specified Nation(s),
shall be exclusive within its scope
to PPG for an "Exclusivity Period" (as defined in Section 1.24,
mutatis mutandis for application to patents on Endo Technology
existing as of the Effective Date and to Endo's Confidential
Technology provided to PPG) lasting, unless earlier terminated
pursuant to Section 1.24.1 as made
applicable by this section, until the longer of five (5)
24
years commencing with the effective date of the applicable
termination (or from the start of a Certification Period
covered by Section 3.6.4) or until there are no more Joint
Technology Patents (if any) applicable to such
Designated Product in the relevant Specified Nation(s)
(or, as to pending patent applications, that would
be so applicable, if they were then issued as patents), and
shall thereafter be nonexclusive in such Specified Nation(s).
6.9.4 The license under Section 6.3.2, to the extent applicable to
the relevant Designated Product(s) in the relevant Specified
Nation(s), will be royalty-bearing and Sections 4.5,
4.7 and 4.8 shall apply thereto, mutatis mutandis,
as follows: (i) subject to clause (ii) below, PPG shall
pay Royalties thereunder to Endo with respect to relevant
Net Realization of PPG or its Affiliates or licensees
pursuant to such license under this Section 6.9 and
with due regard (as provided in Section 4.5, but applied in the
other direction) to any Development Excess or Certification
Excess theretofore borne by PPG due to Endo's not making the
payments it would otherwise have made under Section 2.5 and/or
Section 3.7; and (ii) the relevant Net Realization shall be
reduced by one-third prior to the calculation of the proportion
thereof to be paid to Endo as Royalties hereunder; and (iii)
payments of Royalties will be made to Endo in Chaddsford, PA
U.S.A.
6.9.5 Throughout the life of the license under Section 6.3.2,
to the extent applicable to the relevant Designated
Product(s) in the relevant Specified Nation(s),
Endo will provide to PPG and its Affiliates and
sublicensees reasonable assistance on commercially
reasonable terms for the purposes of developing, testing,
certifying, making, using, selling, offering for sale, or
importing the relevant Designated Product(s) or any services
involving such Designated Product(s) in the relevant Specified
Nation(s), including without limitation making available to PPG
the benefit of any and all Facilities Certifications to the
maximum extent permitted by law. Without limiting the
generality of the foregoing, Endo will specifically either:
25
(i) supply PPG and its Affiliates' and sublicensees' with
sufficient quantities of the *** active drug substance
(ADS) produced in accordance with the Specifications in
compliance with GMP and all applicable laws and
regulations, to meet their reasonable requirements for
the manufacturing of the Designated Product(s). If and
to the extent this clause (i) is effective, PPG shall
purchase all of its and its Affiliates' and
sublicensees' requirements thereof for such uses from
Endo during such period. The price for all *** sold
hereunder shall equal the applicable *** Price, and
shall be payable by PPG to Endo within thirty (30) days
after the shipping of the *** to PPG. As provided in
Exhibit 1.35, the price of the *** ADSs used in the
Designated Product will be one of the deductions
applied in the calculation of the Net Realization. The
*** shall be provided FOB Garden City, New York, and
all other terms of such supply shall be as provided in
Section 7, mutatis mutandis for application to the ***
sold by Endo, inclusive without limitation of the
provisions of Section 7.4, which shall be applicable if
Endo for any reason fails to supply PPG with its and
its Affiliates' and sublicensees' requirements of ***
during the life of the license under Section 6.3.2, to
the extent applicable to the relevant Designated
Product(s) in the relevant Specified Nation(s); or
(ii) manufacture and sell to PPG and its Affiliates and
sublicensees, on commercially reasonable terms, the
finished Designated Product(s) for sale in the relevant
Specified Nation(s) and shall deliver the same to the
relevant Specified
26
Nation(s), or otherwise assist PPG or its Affiliates or
sublicensees to effect such deliveries.
In the absence of any specific election by PPG between clause
(i) and (ii), it will be deemed to have selected clause (ii).
PPG may, on good cause shown and after consultation with Endo,
reasonably elect to switch a single time as to the relevant
Designated Product in any Specified Nation (unless Endo in its
discretion approvals subsequent switches, one way or the other
as to such Designated Product in such Specified Nation) from
the course specified in clause (ii) to that in clause (i), and
Endo agrees to reasonably assist PPG to be able to make such a
switch. PPG will, at the reasonable request of Endo, switch to
clause (i) in those situations in which it is able to do so
without significant harm to its interests and in which this
would be of substantial benefit to Endo.
6.9.6 As used herein, the "relevant Specified Nation(s)" shall mean
the entire Territory as to a termination of Endo's
participation in a Development Period or as to the termination
of this Agreement pursuant to Section 5.8 due to an uncured
breach by Endo or a termination pursuant to Section 5.9. The
"relevant Specified Nation(s)" shall mean the Specified
Nation(s) for the applicable Certification Period as to a
termination of Endo's participation in a Certification Period
or its election not to participate therein (or its
ineligibility to do so); shall mean, as to Marketing Period
licenses to PPG or its designated third parties under Section
4.3, those nation(s) to which the last sentence of Section 4.3
is applicable; and shall mean the applicable Specified
Nation(s) as to the termination of an Exclusivity Period
pursuant to Section 5.6 or of a License Term pursuant to
Section 5.7.
6.9.7 As used herein, the "then-existing Endo Technology and then-
existing Joint Technology" shall mean the Endo Technology and
Joint Technology made or discovered prior to the expiration of
two years following the effectiveness of the applicable
termination (or prior to the start of a Certification Period
covered by Section 3.6.4), together with any and all intellec-
27
-tual property and other rights thereto and therein in the
relevant Specified Nation(s), inclusive of later-issued patents
to the extent disclosing the same. Notwithstanding Section 6.10,
Endo Technology made or discovered following more than two years
such termination shall not be licensed to PPG for exploitation
with respect to the applicable Designated Product(s) in the
relevant Specified Nation(s). Endo will promptly notify PPG of
all existing Endo Technology and provide PPG with access to all
of the same, solely for use within the scope of the license under
Section 6.3.2, to the extent applicable to the relevant
Designated Product(s) in the relevant Specified Nation(s).
6.10 Subject to Section 6.9.7, Endo hereby grants to PPG a worldwide,
nonexclusive license, with right to sublicense, under any and all Endo
Improvement Technology to make, have made, use, sell, offer for sale,
and import any products or services using or based upon TIMERx or
related technology. Such license will be royalty-free except as is
otherwise provided herein. Endo will, throughout the term of this
license, promptly notify PPG of all Endo Improvement Technology and
provide PPG with access to all of the same, solely for use within the
scope of the license stated in this section.
6.11 Endo hereby grants PPG a nonexclusive and royalty-free license, with
right to sublicense, under all rights of Endo and its Affiliates and
sublicensees in and to the Endo Test and Regulatory Data to use the
same for purposes of marketing or complying with governmental
requirements of any country (other than with respect to a Designated
Product or a product directly competitive with a Designated Product
for manufacturing, marketing or use in the Territory during an
applicable Exclusivity Period); provided that PPG will not use any of
the same for purposes of marketing or disclosure to the public, to the
extent the particular Endo Test and Regulatory Data is then Endo's
Confidential Technology, unless Endo has consented thereto, which
consent shall not be unreasonably withheld. Endo hereby consents to
PPG's and its sublicensees' cross-referencing, in any PLAs or other
regulatory filings made by them within the scope of such license, any
PLA filing made or drug master file created by Endo or its Affiliates
relating to or containing any of the Endo Test and Regulatory Data.
28
The license under this section shall survive any termination or
expiration of the term of this Agreement, except a termination under
Section 5.8 due to an uncured breach by PPG. Endo will, throughout the
License Term and solely for use within the scope of the license stated
in this section, provide to PPG on request access to all of the Endo
Test and Regulatory Data in or coming into Endo's possession or
otherwise reasonably available to it.
6.12 PPG hereby grants Endo a nonexclusive, paid-up license, with right to
sublicense, under all rights of PPG and its Affiliates in and to the
PPG Test and Regulatory Data to use the same for purposes of complying
with governmental requirements, but solely with respect to the
Designated Product(s) for marketing or use in the Territory. PPG
hereby consents to Endo's and its sublicensees' cross-referencing, in
any PLAs or other regulatory filings made by them within the scope of
such license, any PLA filing made or drug master file created by PPG
or its Affiliates relating to or containing any of the PPG Test and
Regulatory Data. The license and rights under this section shall
survive any termination or expiration of the term of this Agreement,
except a termination under Section 5.8 due to an uncured breach by
Endo. PPG will, throughout the License Term and solely for use within
the scope of the license stated in this section, provide to Endo on
request access to all of the PPG Test and Regulatory Data in or coming
into PPG's possession or otherwise reasonably available to it.
6.13 Each party agrees to xxxx and to have marked by its sublicensees every
product manufactured, used or sold by it or its sublicensees in
accordance with the laws of the United States or other applicable
Specified Nation relating to the marking of patented articles with
notices of patent.
7. Supply of TIMERx.
----------------
7.1 All sales of Formulated TIMERx shall be F.O.B. Xxxxxxxxx, New York,
and Endo shall bear all transportation, insurance, taxes, duties, and
other costs and risks of loss, spoilage and damage associated with the
shipping and delivery of Formulated TIMERx to Endo or its Affiliates
or sublicensees.
29
7.2 Subject to Sections 2.5 and 3.7, PPG shall perform routine quality
control tests with respect to all Formulated TIMERx as required by the
FDA, or otherwise as PPG deems necessary in accordance with its
applicable policies, and PPG will also bear the expenses and fees for
filing the Drug Master File for TIMERx with the FDA. No other or
special tests by PPG with respect to the raw materials or Formulated
Formulated TIMERx will be required, unless and to the extent that Endo
establishes that the same are required in order to obtain or maintain
a governmental license to market a Designated Product in the
Territory. PPG shall promptly, upon completion of each lot or batch of
Formulated TIMERx, deliver to Endo a copy of the record of such test
performed on said lot or batch. Endo will perform quality control
tests on Formulated TIMERx immediately on receipt at its plant and
advise PPG within thirty (30) days of any deviations from
Specifications.
7.3 If Endo considers any such shipment not to conform to the applicable
Specifications, Endo shall notify PPG as provided in Section 7.2 and
provide PPG with the relevant analysis. PPG's SOLE OBLIGATION AND
Endo's EXCLUSIVE REMEDY FOR ANY SUCH NONCONFORMITY SHALL BE AS
FOLLOWS:
(i) PPG shall at its own expense accept return of any
shipment not accepted, or else reimburse Endo for the
cost of disposal or destruction;
(ii) PPG shall use its Best Commercial Efforts to replace
the non-conforming shipment with conforming Formulated
TIMERx; and
(iii) Section 7.4 shall apply if in any circumstances set out
in that Section PPG shall be unable to supply
replacement conforming Formulated TIMERx.
7.4 If for any reason PPG fails to supply Endo with its and its Affiliates'
and sublicensees' requirements of Formulated TIMERx during a Marketing
Period, PPG shall, AS ENDO'S SOLE AND EXCLUSIVE REMEDY FOR ANY FAILURE
TO SUPPLY
30
Formulated TIMERx, xxxxx Xxxx a nonexclusive license to manufacture
Formulated TIMERx under the *** Production Technology and make
knowledgeable personnel reasonably available, at PPG's expense, to
consult with Endo, all to the extent necessary to enable Endo to
produce TIMERx that would otherwise have been supplied by PPG
hereunder for Endo and its Affiliates and sublicensees in connection
with the production of the relevant Designated Product pursuant to
this Agreement during such Marketing Period.
7.4.1 Such license shall be royalty-free, it being understood that
Endo's actual direct manufacturing costs and allocable indirect
costs relating to the manufacture of the Formulated TIMERx will
be one of the deductions applied in the calculation of the Net
Realization.
7.4.2 Endo shall maintain TIMERx Production Technology delivered to
Endo pursuant to this section, whether orally or in writing, in
strictest confidence and shall use such information and
technology only for the purpose of producing Formulated TIMERx
for its own use and the use of its Affiliates and sublicensees
in connection with this Agreement.
7.4.3 Endo acknowledges that, in doing the foregoing, PPG will not be
providing a turnkey operation. Rather, PPG will only be
required to make reasonably available to Endo the best standard
of knowledge and information then available to PPG and directly
used in its or its Affiliates manufacture of Formulated TIMERx.
7.5 While PPG is supplying Formulated TIMERx hereunder to Endo, PPG shall,
after receipt of reasonable prior notice, give duly accredited
representatives of Endo access at all reasonable times during regular
business hours to PPG's plant in which the Formulated TIMERx is being
produced, to ensure production practices created Formulated TIMERx
conforming to Specifications. PPG will exert its Best Commercial
Efforts to maintain at all times during the Marketing Period at least
two approved sources for the production of Formulated TIMERx (whether
or not inclusive of PPG's own production facili-
31
ties). To the extent necessary to obtain or maintain an Approval, PPG
will exert its Best Commercial Efforts to obtain similar access for
Endo to the production facilities of any of PPG's third-party
suppliers of the Formulated TIMERx.
7.6 Endo shall deliver to PPG firm written orders stating its (and/or its
Affiliates' and sublicensees') requirements for Formulated TIMERx to
be used for production of the Designated Product(s) for commercial use
or sale no less than three (3) months in advance of the requested
delivery date therefor, by giving firm orders at the beginning of each
month that creates firm orders during the third following month (the
order-submission month and the first and second months following
having already been the subject of prior firm orders). All such orders
shall be firm and shall not be cancelled or deferred by Endo.
7.7 At least six months before Endo and/or its Affiliates or sublicensees
begin production of the Designated Product for commercial use or sale
(and in any event not later than concurrently with the submission of
the first order for use in the production of the applicable Designated
Product intended for commercial sale during each Marketing Period),
Endo shall deliver to PPG a written, non-binding estimate of all
requirements of Formulated TIMERx therefor during the following 12
months. Endo will deliver to PPG updates to such estimates on or
before the first day of each January, April, July and October
thereafter, which updates may revise estimates previously submitted,
and will add estimates for additional months so that each such
estimate covers the 8-month period following the end of the firm-order
period (that is, the 4th through the 11th month after the month in
which such estimates are made).
7.8 PPG will exert Best Commercial Efforts to supply Endo with all amounts
of Formulated TIMERx requested by Endo, but PPG shall have no
obligation to supply Endo with quantities of Formulated TIMERx during
any quarter in excess of 125% of the quantity estimated in Endo's
estimate for that quarter which estimate was given to PPG six months
prior to the end of such quarter pursuant to Section 7.7 (the Six-
Month Estimated Quantity), nor shall Endo order quantities for any
quarter less than 75% of the applicable Six-Month Estimated Quantity.
32
7.9 Each party shall promptly notify the other of any fact, circumstance,
condition or knowledge dealing with TIMERx, Formulated TIMERx, or the
Designated Product of which the Party becomes aware that bears upon
the safety or efficacy of TIMERx, Formulated TIMERx, or the Designated
Product. Each party shall immediately notify the other of any
inspection or audit relating to TIMERx, Formulated TIMERx, or the
Designated Product by any governmental regulatory authority in the
Territory. If a representative of the governmental authority takes
samples in connection with such audit or inspection, the parties shall
immediately provide each other, as appropriate, samples from the same
batch. The party in receipt of such notice will provide the other
party within 72 hours, with copies of all relevant documents,
including FDA Forms 482 and 483 (as applicable), warning letters and
other correspondence and notifications as such other party may
reasonably request. PPG and Endo agree to cooperate with each other
during any inspection, investigation or other inquiry by the FDA or
other governmental entity, including providing information and/or
documentation, as requested by the FDA, or other governmental entity.
To the extent permissible, PPG and Endo also agree to discuss any
responses to observations or notifications received and to give the
other party an opportunity to comment on any proposed response before
it is made. In the event of disagreement concerning the content or
form of such response, Endo shall be responsible for deciding the
appropriate form and content of any response with respect to any of
its cited activities and PPG shall be responsible for deciding the
appropriate form and content of any response with respect to any of
its cited activities. Each party shall inform the other of all
comments and conclusions received from the governmental authority.
8. Use of Trademarks. Endo agrees to market the Designated Product(s) in
-----------------
conjunction with the appropriate PPG Trademark(s), and as provided in this
section, including uses on such packaging, labeling and other materials as
the Alliance Committee shall reasonably determine. The provisions of this
Section 8 shall apply, mutatis mutandis, to marketing of Designated
Product(s) by PPG or its designees as contemplated under Sections 4.2, 4.3,
or 6.9, with respect to the use by PPG or such designees of the Endo
Trademarks.
33
8.1 Endo acknowledges that all PPG Trademarks and all rights therein or
registrations thereof, worldwide, shall belong exclusively to PPG.
All use of the PPG Trademarks as contemplated in this Agreement by
Endo shall accrue to the benefit of PPG. Endo shall make no use of
any of the PPG Trademarks except to identify and promote the
Designated Product as contemplated hereunder for sale in the
Territory. Endo shall not continue using the PPG Trademarks after
termination or expiration of this Agreement, nor after the removal or
alteration of any such PPG Trademark from Exhibit 1.20, except to
complete the sale of inventory of the Designated Product on hand at
the time of termination or expiration, or at the time of such removal
or alteration.
8.2 Endo shall cooperate with PPG to protect the interest of PPG in the
PPG Trademarks, and shall neither attempt to register nor authorize
others to register any PPG Trademarks without the prior written
consent of PPG in each instance. Endo shall promptly inform PPG of
any actual or apparent infringement of any PPG Trademarks or other
intellectual properties of PPG which may come to Endo's attention
during the term hereof.
8.3 Endo shall use all appropriate notices of trademark status of the PPG
Trademarks, including the "(TM)" designation (or the (R) symbol for
registered marks, if any), in all labeling and promotional materials
and shall otherwise conform with all policies and notices of PPG's
rights in the marks and for the protection of the PPG Trademarks,
including without limitation the inclusion of an appropriate footnote
acknowledging the use of the PPG Trademark(s) under license. Endo will
impose a spatial separation between any PPG Trademarks and any other
names or marks of Endo or any others, and will not otherwise use any
of PPG's names, marks or symbols in any manner that could, whether
immediately or over time, create any substantial association between
them and the business of Endo.
8.4 Samples of the Designated Product and any advertising, promotional
materials or packaging related thereto that bear the PPG Trademarks
shall be provided by Endo to PPG at least thirty days prior to the
first use or sale thereof, and at other times upon the request of PPG.
Endo shall not put any of such items into initial use without first
obtaining
34
the written approval of PPG, which approval shall not be unreasonably
withheld. PPG shall at all times have the right to enter into Endo's
facilities and/or to take other appropriate methods to check the
quality of the Designated Product manufactured or offered by Endo,
from time to time during the term of this Agreement. If at any time or
times PPG thinks that the quality of the Designated Product
manufactured or offered by Endo, or the packaging or promotional
materials therefor, is not suitable for using the PPG Trademarks or
any of them, PPG, at its option, shall have the right to suspend or
prohibit the use of such PPG Trademark(s), provided that PPG has given
Endo a written notice thereof and a period of 60 days to bring them up
to PPG's standards; provided further, however, that PPG need not give
such opportunity to cure any deficiency that has been the subject of
more than two such notices on prior occasions during the preceding
twelve months.
9. Representations, Warranties and Indemnities.
-------------------------------------------
9.1 Each party represents and warrants to the other that it is duly
organized and validly existing under the laws of the state of its
organization, that it has the requisite corporate or limited liability
company authority to execute and deliver this Agreement and to perform
its obligations hereunder, and that the execution and performance of
its obligations hereunder are not and will not be in violation of or
in conflict with any material obligation it may have to any third
party.
9.2 PPG represents and warrants that any Formulated TIMERx supplied by it
to Endo hereunder for use in the Designated Product, at the point of
delivery:
9.2.1 will conform to the Specifications in effect as of the order
date therefor; and
9.2.2 to PPG's current knowledge, without undertaking any special
investigation, will not infringe upon the intellectual property
rights of any third party.
9.3 Each party represents and warrants to the other that it has obtained,
and will at all times during the term of this Agreement hold and
35
comply with, all licenses, permits and authorizations necessary to
perform this Agreement and to test, manufacture, market, export, and
import the Designated Product(s), ***, or Formulated TIMERx to be so
tested, manufactured, marketed, exported or imported by it as provided
herein, as now or hereafter required under any applicable statutes,
laws, ordinances, rules and regulations of the United States and any
applicable foreign, state, and local governments and governmental
entities, including without limitation all Facilities Certifications
(as to Endo).
9.4 THE FOREGOING WARRANTIES ARE IN LIEU OF, AND THE PARTIES EACH
DISCLAIM, ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR ARISING BY LAW,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-
INFRINGEMENT. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A
REPRESENTATION OR WARRANTY (i) BY PPG AS TO THE PATENTABILITY,
VALIDITY, OR SCOPE OF ANY PPG PATENTS, PPG'S CONFIDENTIAL TECHNOLOGY,
TIMERx PRODUCTION TECHNOLOGY, PPG TEST AND REGULATORY DATA, OR JOINT
TECHNOLOGY, NOR AS TO THE UTILITY, EFFICACY, NONTOXICITY, SAFETY OR
*** OR THE DESIGNATED PRODUCT; OR (ii) BY ENDO AS TO THE
PATENTABILITY, VALIDITY, OR SCOPE OF ANY ENDO TECHNOLOGY, ENDO TEST
AND REGULATORY DATA, OR JOINT TECHNOLOGY, NOR AS TO THE UTILITY,
EFFICACY, NONTOXICITY, SAFETY OR APPROPRIATENESS OF ANY PRODUCTS MADE
THEREFROM.
9.5 PPG shall indemnify, defend and hold Endo and its Affiliates and
sublicensees harmless from any and all third-party claims to the
extent arising from, in connection with, based upon, by reason of, or
relating in any way to:
9.5.1 any claim, action or damages arising out of any alleged
infringement by reason of the manufacture, use or sale by
Endo of the Designated Product(s) to the extent such
infringement
36
would apply as well to the manufacture, sale or distribution of
TIMERx alone;
9.5.2 PPG's contributions to the formulation or
development of the Designated Product(s) and the
Specifications therefor hereunder; provided, however,
that matters of infringement of third party rights or
intellectual properties shall be included under this
clause only to the extent the same are covered by Section 9.5.1
or are within PPG's knowledge, without undertaking any special
investigation, and of which PPG failed to inform Endo within 30
days following the later of the Effective Date or PPG's first
obtaining such knowledge;
9.5.3 any failure of the Formulated TIMERx manufactured by PPG or its
alternate supplier (but not by Endo under Section 7.4), as
delivered to Endo hereunder for use in the Designated
Product(s), to conform to the Specifications; or
9.5.4 any failure of PPG to comply with its obligation under Section
7.9 to notify Endo of any information coming into PPG
possession and bearing on the safety of TIMERx or the
Designated Product(s),
and not arising from any other aspect of the Designated Product(s) or its
formulation, development, supply, production, manufacture, sale, delivery,
distribution or use, nor from any act, omission or contribution of Endo with
respect to the Designated Product, or with respect to the Formulated TIMERx
following its delivery to Endo hereunder.
9.6 Endo shall indemnify, defend and hold PPG harmless from any and all
third-party claims to the extent arising from, in connection with,
based upon, by reason of, or relating in any way to, the formulation,
development, supply, production, manufacture, sale, delivery,
distribution or use of the Designated Product(s) by Endo, its
Affiliates or sublicensees, except for any matters which are covered
by PPG's indemnities under Section 9.5.
9.7 Notwithstanding anything to the contrary set forth elsewhere herein,
neither Endo nor PPG shall be obligated to indemnify the other party
37
for claims or liabilities to the extent arising from such other
party's, or its Affiliates', sublicensees or assigns, negligence,
intentional misconduct, or breach of its duties, obligations,
warranties or representations set forth herein.
9.8 Whenever indemnification is provided for a party under this Agreement,
such right of indemnification shall extend also to the indemnified
party's Affiliates, officers, directors, shareholders, successors,
assigns, agents, employees, and insurers to the extent the same become
subject to such claim in such capacity. The party seeking
indemnification shall provide the indemnifying party with written
notice of any claim or action within ten (10) days of its receipt
thereof, and shall afford the indemnifying party the right to control
the defense and settlement of such claim or action. The party seeking
indemnification shall provide reasonable assistance to the
indemnifying party in the defense of such claim or action. If the
defendants in any such action include both Endo and PPG, and either
party concludes that there may be legal defenses available to it which
are different from, additional to, or inconsistent with, those
available to the other, that party shall have the right to select
separate counsel to participate in the defense of such action on its
behalf, and such party shall bear the cost and expense of such
separate defense, unless and to the extent the parties otherwise
agree, or it is determined through arbitration hereunder that such
costs and expense are or were required to be indemnified by the other
party hereunder and are or were required to be incurred separately due
to such different, additional, or inconsistent defenses. Should the
indemnifying party determine not to defend such claim or action, the
other party shall have the right to maintain the defense of such claim
or action and the indemnifying party agrees to provide reasonable
assistance to it in the defense of such claim or action and to bear
the reasonable cost and expense of such defense (including attorneys'
and experts' fees and expenses). Neither party shall settle any such
claim or action in a way that prejudices or adversely impacts the
other party to this Agreement without the prior approval of such other
party (which approval shall not be unreasonably withheld).
9.9 NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT
(OTHER THAN FOR:
38
BREACHES OF SECTION 9.3; INDEMNITIES UNDER SECTIONS 9.5 AND 9.6 FOR
PATENT INFRINGEMENT OR FOR HARM TO PERSONS OR TANGIBLE PROPERTY; AND
BREACHES OF SECTION 10), NEITHER PARTY SHALL UNDER ANY CIRCUMSTANCES
BE LIABLE FOR ANY THIRD PARTY CLAIMS OR FOR ANY INCIDENTAL,
CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES, INCLUDING ANY LOST PROFITS
OR SAVINGS, ARISING FROM ANY BREACH OF WARRANTY OR THE PERFORMANCE OR
BREACH OF ANY OTHER PROVISION OF THIS AGREEMENT OR THE USE OR
INABILITY TO USE TIMERx, THE DESIGNATED PRODUCT, PPG PATENTS, PPG's
CONFIDENTIAL TECHNOLOGY, TIMERx PRODUCTION TECHNOLOGY, PPG TEST AND
REGULATORY DATA, CONFIDENTIAL ENDO TECHNOLOGY, ENDO TEST AND
REGULATORY DATA, OR JOINT TECHNOLOGY, OR ANY CLAIMS ARISING IN TORT,
PERSONAL INJURY, OR PRODUCT LIABILITY, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10. Confidentiality and Non-Solicitation.
------------------------------------
10.1 In the course of performance under this Agreement or during the
discussions leading thereto, a party may disclose, or may have
disclosed, to the other confidential information belonging to such
party in writing, orally or by demonstration or sample, which
information is marked or stated in writing to be confidential or trade
secret information, or where the circumstances of the disclosure
and/or the nature of the information otherwise reasonably give notice
of the confidential character of the information. All such
confidential information of a party shall be maintained in confidence
by the other and will not be used by the other party for any purpose
except as authorized hereunder. Each party shall exercise, and shall
cause its Affiliates, sublicensees, and consultants to exercise, a
reasonable degree of care and at least the same degree of care as it
uses to protect its own confidential information of similar nature to
preserve the confidentiality of such information of the other party.
Each party shall safeguard such information against disclosure to
third parties, including without limitation employees and persons
working or consulting for such
39
party that do not have an established, current need to know such
information for purposes authorized under this Agreement. This
obligation of confidentiality does not apply to information and
material:
10.1.1 that were properly in the possession of the receiving party,
without any restriction on use or disclosure, prior to receipt
from the other party;
10.1.2 that are at the time of disclosure hereunder in the public
domain by public use, publication, or general knowledge;
10.1.3 that become general or public knowledge through no fault of the
receiving party or its Affiliates following disclosure
hereunder;
10.1.4 that are properly obtained by the receiving party from a third
party not under a confidentiality obligation to the disclosing
party hereto;
10.1.5 that are documented to have been independently developed by
or on behalf of the receiving party without the assistance of
the confidential information of the other party;
10.1.6 that consist merely of an idea or conception for the
combination of one or more active drug ingredients with a
controlled-release agent such as TIMERx; or
10.1.7 to the extent the same are required to be disclosed by order of
any court or governmental authority; provided, however, that
the receiving party shall use its Best Commercial Efforts to
give the disclosing party prior notice of any such disclosure
so as to afford the disclosing party a reasonable opportunity
to seek, at the expense of the disclosing party, such
protective orders or other relief as may be available in the
circumstances.
10.2 Neither party shall make any public announcement or other publication
regarding this Agreement (whether as to the existence or terms hereof)
or the development work or project hereunder or the results
40
thereof without the prior, written consent of the other party, which
consent shall not be unreasonably withheld; provided that the
foregoing shall not prohibit any disclosure which, in the opinion of
counsel to the disclosing party, is required by any applicable law or
by any competent governmental authority. In no event shall either
party make any disclosure of any such results before a patent
application has been filed with respect thereto, except upon the prior
written approval of the other party.
10.3 Each of PPG and Endo agrees that during the License Period, neither of
them will directly or indirectly solicit or encourage any employee or
consultant of the other to leave or terminate such employment or
consultancy for any reason, including without limitation, becoming
employed or otherwise engaged in any capacity by such party (or any
person or entity associated with such party, whether or not an
Affiliate), nor will it assist others in doing so.
11. Infringement.
------------
11.1 PPG shall promptly inform Endo of any suspected infringement of any of
the PPG Patents or Joint Technology Patents or the infringement or
misappropriation of the TIMERx Production Technology or Joint
Technology by a third party, to the extent such infringement or
misappropriation involves the manufacture, use or sale of a Designated
Product or a substitutable or directly competitive product in the
Territory ("Covered Infringement"). Endo shall promptly inform PPG of
any suspected infringement of any of the PPG Patents or Joint
Technology Patents or infringement or misappropriation of the TIMERx
Production Technology or Joint Technology of which Endo is aware,
whether or not the same involves a Covered Infringement.
11.2 If the suspected infringement or misappropriation does not involve a
Covered Infringement, PPG may take, or refrain from taking, any action
it chooses, with or without notice to Endo, and Endo shall have no
right to take any action with respect to such suspected infringement
or misappropriation, nor to any recoveries with respect thereto. If
the suspected infringement or misappropriation involves a Covered
Infringement, PPG shall, within 120 days of the first notice referred
to in Section 11.1, inform Endo whether or not PPG intends to
institute
41
suit against such third party with respect to a Covered Infringement.
Endo will not take any steps toward instituting suit against any third
party involving a Covered Infringement until PPG has informed Endo of
its intention pursuant to the previous sentence.
11.3 If PPG notifies Endo that it intends to institute suit against a third
party with respect to a Covered Infringement, and Endo does not agree
to join in such suit as provided in Section 11.4, PPG may bring such
suit on its own and shall in such event bear all costs of, and shall
exercise all control over, such suit. PPG may, at its expense, bring
such action in the name of Endo and/or cause Endo to be joined in the
suit as a plaintiff. Recoveries, if any, whether by judgment, award,
decree or settlement, shall belong solely to PPG.
11.4 If PPG notifies Endo that it desires to institute suit against such
third party with respect to a Covered Infringement, and Endo notifies
PPG within 30 days after receipt of such notice that Endo desires to
institute suit jointly, the suit shall be brought jointly in the names
of both parties and all costs thereof shall be borne equally to the
extent applicable to the Covered Infringement. Recoveries, if any,
whether by judgment, award, decree or settlement, shall (to the extent
attributable to the Covered Infringement), after the reimbursement of
each of PPG and Endo for its share of the joint costs in such action,
be shared equally between PPG and Endo.
11.5 If PPG notifies Endo that it does not intend to institute suit against
such third party with respect to a Covered Infringement, Endo may
institute suit on its own. Endo shall bear all costs of, and shall
exercise all control over, such suit. Recoveries, if any, whether by
judgment, award, decree or settlement, shall belong solely to Endo;
provided however that, after reimbursement of Endo for its costs in
such action, any portion of such net recoveries which constitutes the
equivalent of, or damages or payments in lieu of, a royalty measured
by the defendants sales, shall be shared equally between PPG and Endo.
11.6 Should either PPG or Endo commence a suit under the provisions of this
Section 11 and thereafter elect to abandon the same, it shall give
timely notice to the other party, who may, if it so desires, be joined
as a plaintiff in the suit (or continue as such if it is already one)
and
42
continue prosecution of such suit, provided, however, that the sharing
of expenses and any recovery of such suit shall be as may be
determined for that situation by Committee Action.
12. Escalation Procedures.
---------------------
12.1 The parties intend that, to the maximum extent practicable, they shall
reach decisions hereunder cooperatively through the deliberations of
the Alliance Committee and by consent of its members as described in
Section 1.10.1. In cases in which that does not occur (other than as
to a question of patent validity or as to a matter left to the
discretion of a party hereunder), either party may institute an
Escalation Procedure in which a proposed Committee Action approved by
at least two members of the Alliance Committee, is provided in writing
to each party's Escalation Officer. Such Escalation Officers shall
discuss the proposed Committee Action, and shall meet with respect
thereto if either of them believes a meeting or meetings to be useful.
If the Escalation Officers do not resolve the matter by either
approving the proposed Committee Action (whether or not in a revised
form) or agreeing to reject it, within thirty (30) days (or such
lesser or longer period as they may agree is a useful period for their
discussions), then either of them may institute a formal mediation of
such matter pursuant to Section 12.2.
12.2 Any dispute or difference (other than as to a question relating to
patent validity or as to a matter left to the discretion of a party
hereunder), between the parties arising out of or in connection with
this Agreement, including without limitation a disagreement over a
proposed Committee Action, that cannot be resolved by the consent of
the Escalation Officer of each party shall be referred to mediation
before any party resorts to arbitration, litigation, or other dispute
resolution procedure. Unless the parties agree otherwise, the
mediation will be conducted in accordance with The CPR Mediation
Procedure for Business Disputes (Revised 1994) of the CPR Institute
for Dispute Resolution by a mediator who has had both training and
experience as a mediator of general corporate and commercial matters.
If the parties cannot agree on a mediator, then the mediator will be
selected by the President of the CPR Institute for Dispute Resolution
in accordance with the criteria set forth in the preceding sentence.
43
Within thirty days after the selection of the mediator, the parties
and their respective attorney's will meet with the mediator for one
mediation session of at least four hours. If the dispute cannot be
settled during such mediation session or during any mutually agreed
continuation of such session, any party to this Agreement may give to
the mediator and the other party to this Agreement written notice
declaring the mediation process at an end, and such dispute will be
resolved by arbitration pursuant to Section 13. All discussions
pursuant to this section will be confidential and will be treated as
compromise and settlement discussions. Nothing said or disclosed, and
no document produced, in the course of such discussions which is not
independently discoverable may be offered or received as evidence or
used for impeachment or for any other purpose in any arbitration or
litigation. The costs of any mediation pursuant to this section will
be shared equally by the parties to this Agreement. Each party to
this Agreement acknowledges receipt of a copy of The CPR Model
Mediation Procedure for Business Disputes (Revised 1994) of the CPR
Institute for Dispute Resolution. The use of mediation will not be
construed under the doctrines of laches, waiver or estoppel to affect
adversely the rights of either party, and in particular either party
may seek a preliminary injunction or other interim judicial relief at
any time if in its judgment such action is necessary to avoid
irreparable damage.
13. Arbitration. Should the parties fail to reach agreement with respect to a
-----------
dispute or difference (other than as to a question relating to patent
validity or as to a matter left to the discretion of a party hereunder),
between the parties arising out of or in connection with this Agreement,
including without limitation a disagreement over a proposed Committee
Action, through the aforesaid mediation or otherwise, then the dispute or
difference will be determined by arbitration in New York City in
accordance with the Non-Administered Arbitration Rules & Commentary
(Amended 1993) of the CPR Institute for Dispute Resolution by a tribunal
of three independent and impartial arbitrators, one of which will be
appointed by each of Endo and PPG, and the third of which shall have had
both training and experience as an arbitrator of general corporate and
commercial matters and who shall be, and for at least ten years shall
have been, a partner, shareholder or member in a highly respected law
firm headquartered in the United States. If the parties to this Agreement
cannot agree on the third arbitrator, then the third arbitrator will be
selected by the President of the CPR Institute for Dispute Resolution
44
in accordance with the criteria set forth in the preceding sentence;
provided that no person who served as a mediator pursuant to Section 12.2
with respect to such dispute may be selected by the President of the CPR
Institute for Dispute Resolution as an arbitrator pursuant to this section.
The tribunal may decide any issue as to whether, or as to the extent to
which, any dispute is subject to the arbitration and other dispute
resolution provisions in this Agreement. The tribunal must base its award
on the provisions of this Agreement and must render its award in a writing
which must include an explanation of the reasons for such award. Any
arbitration pursuant to this section will be governed by the substantive
laws of the State of New York applicable to contracts made and to be
performed in that state, without regard to conflicts of law rules, and by
the arbitration law of the Federal Arbitration Act (9 U.S.C. (S) 1 et
seq.), and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The statute of
limitations of the state of New York applicable to the commencement of a
lawsuit will apply to the commencement of an arbitration under this
section, except that no defenses will be available based upon the passage
of time during any negotiation or mediation required pursuant to Section
12. All fees, costs and expenses of the arbitrators, and all other costs
and expenses of the arbitration, will be shared equally by the parties to
this Agreement unless such parties agree otherwise or unless the tribunal
in the award assesses such costs and expenses against one of such parties
or allocates such costs and expenses other than equally between such
parties. Each party to this Agreement acknowledges receipt of a copy of the
Non-Administered Arbitration Rules & Commentary (Amended 1993) of the CPR
Institute for Dispute Resolution. Notwithstanding the foregoing, either
party may, on good cause shown, seek a temporary restraining order and/or a
preliminary injunction from a court of competent jurisdiction, to be
effective pending the institution of the arbitration process and the
deliberation and award of the arbitration tribunal.
14. Miscellaneous.
-------------
14.1 This Agreement incorporates the Definitions Exhibit and the numbered
Exhibits referenced herein. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties hereto with respect to the
subject matter hereof.
45
14.2 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns; provided,
however, that except as part of the transfer of all or substantially
all assets to a single buyer or pursuant to a merger or other
corporate reorganization, neither party shall assign or delegate any
of its rights or obligations hereunder at any time without the prior
written consent of the other party hereto, which consent shall not be
unreasonably withheld.
14.3 All notices, requests or other communication provided for or permitted
hereunder shall be given in writing and shall be hand delivered or
sent by facsimile, reputable courier or by registered or certified
mail, postage prepaid, return receipt requested, to the address set
forth on the signature page of this Agreement, or to such other
address as either party may inform the other of in writing. Notices
will be deemed delivered on the earliest of transmission by facsimile,
actual receipt or three days after mailing as set forth herein.
14.4 Any terms of this Agreement may be amended, modified or waived only in
a writing signed by both parties.
14.5 If any provision of this Agreement shall be held invalid, illegal or
unenforceable, such provision shall be enforced to the maximum extent
permitted by law and the parties fundamental intentions hereunder, and
the remaining provisions shall not be affected or impaired.
14.6 Nothing herein contained shall constitute this a joint venture
agreement or constitute either party as the partner, principal or
agent of the other, this being an Agreement between independent
contracting entities. Neither party shall have the authority to bind
the other in any respect whatsoever.
14.7 In the event that either party hereto is prevented from carrying out
its obligations under this Agreement by events beyond its reasonable
control, including without limitation acts or omissions of the other
party, acts of God or government, natural disasters or storms, fire,
political strife, labor disputes, failure or delay of transportation,
default by suppliers or unavailability of parts, then such party's
performance of its obligations hereunder shall be excused during the
period
46
of such event and for a reasonable period of recovery thereafter, and
the time for performance of such obligations shall be automatically
extended for a period of time equal to the duration of such event or
events; provided, however, that the other party may, at its election,
terminate this Agreement upon 120 days' prior notice to the party
affected by such events, unless such events cease to prevent such
affected party's performance hereunder during such 120-day period.
14.8 This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without regard to
its conflict of laws rules.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and acknowledge this Agreement as of the date
first written above.
ENDO PHARMACEUTICALS INC. PPG
By: /s/ Xxxxx Xxxxx By: /s/ Xxxx X. Xxxxxx
------------------------------- -------------------------------
Its: President & CEO Its: President
------------------------------- -------------------------------
Address: Address:
000 Xxxxxxxxxx Xxxx Xxxxxxx Xxxx 0000 Xxxxx 00
Xxxxxx Xxxx, XX 00000 Xxxxxxxxx, X.X. 00000
FAX:_____________________________ FAX: (000) 000-0000
Attn: Xxxxx X. Xxxxx Attn.: Xxxx X. Xxxxxx
CC: Xxxxxx Xxxxxxxx CC: Xxxxxxx Xxxxxx
47
Definitions Exhibit
1. Definitions.
-----------
1.1 "Affiliate" of PPG shall mean and include the entities listed as such in
---------
Exhibit 1.1, and "Affiliate" of Endo shall mean and include the entities listed
as such in Exhibit 1.1, which, in each case are the entities that, directly or
indirectly, own and control the voting of more than 50% of the voting capital
interests of such party ("Parent"), or more than 50% of the voting capital
interests (or equivalent control) of which is, directly or indirectly, owned,
and the voting of which is controlled, by such party or its Parent, as of the
Effective Date. Subject to Section 14.2, for purposes of this definition and
this Agreement:
1.1.1 no entity shall remain an "Affiliate" unless it continues to meet the
foregoing criteria; and
1.1.2 no entity shall become an "Affiliate" (even if it meets such criteria)
without the consent of the other party hereto, which consent shall not be
unreasonably withheld.
1.2 "Alliance Committee" shall mean a committee of six members, three of whom
------------------
will be designated in writing by each of PPG and Endo. The initial Alliance
Committee shall have six members, as follows: Xxxx X. Xxxxxx, Xx., Dr. Xxxx
Xxxxxx, and Xx. Xxxxx Xxxxxxxx, designated by PPG, and Xx. X. Xxx, Xxxxx
Xxxxxxx, and Xxxxxx Xxxxxxxx designated by Endo. If at any time a vacancy
occurs (whether due to death, disability, resignation, removal by a party of its
designee by written notice to the other party, or otherwise), the vacancy will
be filled as soon as is reasonably practicable by designation by the party that
originally designated the prior incumbent. In the meantime, the Alliance
Committee shall continue to function with its remaining members, provided that
any Committee Action described in Section 1.2 will continue to require the
consent of at least four members.
1.3 "Applicable Percentage" shall mean the following percentages of the
---------------------
following portions of Net Realization:
1.3.1 *** of all Net Realization from all units of each respective Designated
Product sold outside of the United States;
48
1.3.2 *** of all Net Realization from all units of each respective Designated
Product sold by Endo or its distributors or licensees in any tier in the
United States, until the aggregate of all such Net Realization from such
Designated Product described in this clause 1.3.2 during the term of this
Agreement equals ***;
1.3.3 *** of all Net Realization from all units of each respective Designated
Product sold by Endo or its distributors or licensees in any tier in the
United States, after the aggregate of all such Net Realization from such
Designated Product described in clause 1.3.2 and this clause 1.3.3 during
the term of this Agreement equals ***, but before such aggregate
equals ***;
1.3.4 *** of all Net Realization from all units of each respective Designated
Product sold by Endo or its distributors or licensees in any tier in the
United States, after the aggregate of all such Net Realization from such
Designated Product described in clause 1.3.2, clause 1.3.3, and this
clause 1.3.4 equals ***;
1.3.5 *** of all Net Realization from all units of each respective Designated
Product sold by PPG or its distributors or licensees in any tier in the
United States, until the aggregate of all such Net Realization from such
Designated Product described in this clause 1.3.5 during the term of this
Agreement equals ***;
1.3.6 *** of all Net Realization from all units of each respective Designated
Product sold by PPG or its distributors or licensees in any tier in the
United States, after the aggregate of all such Net Realization from such
Designated Product described in clause 1.3.5 and this clause 1.3.6 during
the term of this Agreement equals ***, but before such aggregate equals
***; and
1.3.7 *** of all Net Realization from all units of each respective Designated
Product sold by PPG or its distributors or licensees in any tier in the
United States, after the aggregate of all such Net Realization from such
Designated Product described in clause 1.3.5, clause 1.3.6, and this
clause 1.3.7 equals ***.
49
1.4 "Approval" shall mean, with respect to each Designated Product and as to
--------
each nation in the Territory, the approval by the Regulatory Authority in such
nation of a Designated Product for commercial sale in oral solid-dosage form for
administration in humans, pursuant to a Product License Application ("PLA")
submitted by or for Endo, or if a license to PPG under Section 6.9 is
applicable, pursuant to a PLA submitted by or for PPG. In the United States,
the "Approval" for a Designated Product shall be the approval of the U.S. Food
and Drug Administration (herein "FDA") of such Designated Product for sale in
oral solid-dosage form for administration in humans, pursuant to a New Drug
Application ("NDA").
1.5 "Best Commercial Efforts" shall mean the exertion on a substantially
-----------------------
continuous basis of efforts as would normally be devoted to the applicable task
by commercial parties with similar resources to those of the applicable party,
where such parties are highly motivated to accomplish such task to the maximum
extent practicable, and consider and treat such task as having a priority at
least as high as that for any similar task with respect to such party's other
drug development or marketing efforts (as the case may be). Best Commercial
Efforts will not mean that a party commits that it will actually accomplish the
applicable task, nor that it will devote thereto efforts or resources beyond
those that a prudent commercial enterprise would devote, even though remaining
motivated to do so as described above.
1.6 "Certification Budget(s)" shall mean the set of expenditures, costs, and
-----------------------
other resources anticipated to be devoted by the respective parties to the
Certification Tasks during a Certification Period, with respect to the
applicable Designated Product.
1.7 "Certification Excess" shall mean the amount which a party would have borne
--------------------
or paid under Sections 3.6.1 and 3.7, had it participated fully in a
Certification Period, but did not pay due to its ineligibility to participate in
such Certification Period or due to its election, duly made as provided herein,
not to participate fully in such Certification Period.
1.8 "Certification Period" shall mean, with respect to each Designated Product
--------------------
and as to each Specified Nation or group of Specified Nations as may be
specified herein or by Committee Action, the period beginning at the later of
the end of the Development Period for such Designated Product or the institution
of such Certification Period by Committee Action, and ending on the earliest of:
1.8.1 the completion of all of the Certification Tasks applicable thereto;
50
1.8.2 the termination of the Certification Period for such Designated Product
pursuant to Section 5.4; or
1.8.3 the termination of this Agreement as provided herein.
1.9 "Certification Task(s)" shall mean, with respect to each Designated Product
---------------------
and as to each Specified Nation or group of Specified Nations as may be
specified herein or by Committee Action for the relevant Certification Period:
1.9.1 those tasks or milestones as shall be designated from time to time by
Committee Action as being, within industry norms and standards,
sufficient (together with the Development Tasks for such Designated
Product) to support the filing of an NDA with the FDA for such
Designated Product, or, as to other nations than the U.S., to support
the filing of an analogous PLA in the applicable Regulatory Authority;
1.9.2 the filing of one or more NDAs and other PLAs with respect to the
Designated Product with the FDA and/or the other Regulatory Authorities
designated by Committee Action;
1.9.3 obtaining Approval of such NDAs and PLAs (on a nation-by-nation basis, as
to the approval by the Regulatory Authority having jurisdiction in that
nation); and
1.9.4 the preparation by Endo, or if and to the extent that Sections 4.2 or
4.3, or a license to PPG under Section 6.9 are applicable, the
preparation by PPG, and the approval by Committee Action, of an initial
Manufacturing and Marketing Plan for such Designated Product.
In most cases, the Certification Tasks will include (without limitation) large-
scale trials of safety and efficacy, of the sort called "Phase III Clinical
Trials" in the FDA context, and all other testing and studies including as to
efficacy, bioequivalence, and safety and toxicology, in connection with the
development, licensing, manufacture and marketing of the Designated Product, and
for compliance with all requirements imposed by the government of the United
States (inclusive without limitation of the FDA and the DEA) and by any other
government(s) as may be designated by Committee Action. However, the applicable
Certification Tasks may be defined and altered in specific cases by Committee
Action, whether or not in conformity with the above described usual case as now
anticipated. Committee Action to designate
51
Certification Tasks may occur contemporaneously with the designation of the
Designated Product, but this (and/or alterations and amendments) may be deferred
for later Committee Action.
1.10 "Committee Action" shall mean an official act, decision, or ruling of the
--------- ------
Alliance Committee, which shall require in each case that at least one of the
following applies:
1.10.1 all members of the Alliance Committee present and acting (but in any
event a minimum of four such members) have consented thereto, where
such consent is given either in writing (signed either collectively or
in multiple identical counterparts, the signers being considered
"present and acting" for this purpose) or by vote at a duly convened
meeting of the Alliance Committee subsequently entered into the minutes
of such meeting; or
1.10.2 at least two members of the Alliance Committee have consented thereto (in
the manner described above), and have further instituted an Escalation
Procedure in which the act, decision, or ruling has received the written
approval of the Escalation Officer of each party; or
1.10.3 arbitration pursuant to Section 13 results in the adoption of the act,
decision, or ruling as constituting Committee Action.
A Committee Action may include the rescinding or amendment of any prior
Committee Action.
1.11 "Confidential Technology" shall mean all technology that is, at the
-----------------------
relevant time hereunder, protected or required to be protected as confidential
information pursuant to Section 10 hereof.
1.12 "Designated Product(s)" shall mean ***. The parties anticipate that there
---------------------
will be multiple Designated Products developed and marketed under this Agreement
and the relationship established hereby, as the same shall be designated
pursuant to Section 2.6 or otherwise from time to time by written consent of
both parties.
52
1.13 "Development Budget(s)" shall mean the set of expenditures, costs, and
---------------------
other resources anticipated to be devoted by the respective parties to the
Development Tasks during a Development Period.
1.14 "Development Excess" shall mean the amount which a party would have borne
------------------
or paid under Section 2.5, had it participated fully in a Development Period,
but did not pay due to its election, duly made as provided herein, not to
participate fully in such Development Period.
1.15 "Development Period" shall mean, with respect to each Designated Product,
------------------
the period from the designation of such Designated Product as such by the
parties (or as stated in Section 2.6), through the earliest of
1.15.1 the successful completion of the Development Tasks therefor;
1.15.2 the termination of the Development Period for such Designated Product
pursuant to Section 5.2; or
1.15.3 the termination of this Agreement as provided herein.
1.16 "Development Task(s)" shall mean, with respect to each Designated Product:
-------------------
1.16.1 those tasks or milestones, together with estimated completion dates or
durations therefor, as shall be designated from time to time by Committee
Action as being, within industry norms and standards, sufficient evidence
of a potentially useful and marketable product that the next steps in the
development of such product would be Certification Tasks, or (where no
Certification Tasks have then been designated by Committee Action) large-
scale clinical trials to determine the safety and efficacy of such
Designated Product; and
1.16.2 the designation by Committee Action of an initial set of Certification
Tasks and an initial Certification Budget for such Designated Product.
In most instances, the Development Tasks will include (without limitation)
formulation development, in vitro dissolution studies and/or animal studies and
bioavailability studies, as well as small-scale clinical trials conducted under
an Investigational New Drug Application ("IND") filed with the FDA, of the sort
called "Phase I Clinical Trials" and "Phase II Clinical Trials" in order to
demonstrate that, within the scope of such studies, the Designated Product is
shown, when adminis-
53
tered BID, to be a stable formulation having substantially equigesic effect in
blood level studies to the targeted dosage strength of the relevant immediate
release Oxymorphone product. In most cases, the large-scale trials to follow
during the Certification Period would be of the sort called "Phase III Clinical
Trials" in the FDA context. However, the applicable Development Tasks may be
defined and altered in specific cases by Committee Action, whether or not in
conformity with the above described usual case as now anticipated.
1.17 "Eligible Party" shall mean:
--------------
1.17.1 with respect to the first proposed Certification Period for a particular
Designated Product (or group of Designated Products that were developed
in the same Development Period), a party to this Agreement that
participated in the Development Period for the relevant Designated
Product(s) and that did not, as to such Development Period, exercise
its rights to cease its participation hereunder; and
1.17.2 with respect to any other proposed Certification Period, a party to this
Agreement that participated in the Development Period and the first
Certification Period for the relevant Designated Product (or group of
Designated Products developed in such Development Period), and that did
not, as to either of such Development Period or such first Certification
Period, exercise its rights to cease its participation hereunder.
1.18 "Endo Improvement Technology" shall mean any and all technology and rights
---------------------------
of Endo, or in which Endo or any of its Affiliates or sublicensees otherwise has
any rights or interests during the term of this Agreement, to the extent the
same are improvements, modifications, alterations, or enhancements to any of the
inventions covered by the PPG Patents, PPG's Confidential Technology, or the
TIMERx, and to the extent made or discovered, or disclosing inventions made or
discovered, prior to the end of the applicable Certification Period, together
with all United States and foreign intellectual property and other rights and
interests of Endo and its Affiliates and sublicensees thereto and therein,
including without limitation patents, trade secrets, copyright, periods of
market exclusivity, and other related rights or interests.
1.19 "Endo Technology" shall mean any and all technology and rights of Endo, or
---------------
in which Endo or any of its Affiliates or sublicensees otherwise has any rights
or interests during the term of this Agreement, which are used or contemplated
to be
54
used in connection with the activities contemplated under this Agreement,
including without limitation all *** rights and technology (and other
technology, rights and properties) to the extent the same directly relate to,
are desirable for, or are necessary or useful for, the production, storage
and/or marketing of one or more Designated Product(s) and any and all Endo
Improvement Technology, together with all United States and foreign intellectual
property and other rights and interests of Endo and its Affiliates and
sublicensees thereto and therein, including without limitation patents, trade
secrets, copyright, periods of market exclusivity, and other related rights or
interests.
1.20 "Endo Trademark(s)" shall mean those names, symbols and or characters
-----------------
described in Exhibit 1.20 hereto, as the same may be amended from time to time
during the term of this Agreement by Endo on at least six (6) months' prior
written notice to PPG, that are owned by Endo and that have been designated by
it for use in conjunction with PPG's packaging and promotion of a Designated
Product hereunder, pursuant to Section 8.
1.21 "Endo Test and Regulatory Data" shall mean any and all test data, test
-----------------------------
designs and protocols, clinical studies and results thereof, government licenses
and applications therefor, government certifications and findings, and related
materials, information and rights (including without limitation information
regarding bioavailability and bioequivalence, and any adverse drug reactions),
developed, commissioned or otherwise obtained by Endo or any of its Affiliates
or sublicensees during the term of this Agreement for the uses intended by this
Agreement relating to TIMERx, Endo Technology, Joint Technology, the Designated
Product, PPG Patents, Joint Technology, TIMERx Production Technology and/or
PPG's Confidential Technology.
1.22 "Escalation Officer" shall mean the President and Chief Executive Officer
------------------
of PENWEST, LTD. (currently Xxx Xxxxxxxx), and the President and Chief Executive
Officer of Endo (currently Xxxxx Xxxxx) , and the persons holding such positions
from time to time.
1.23 "Escalation Procedure" shall mean the decision making procedure described
--------------------
in Section 12, whereby the parties intend to avoid deadlocks between them and
undue delay's reaching mutually acceptable Committee Action(s).
1.24 "Exclusivity Period" shall mean, with respect to each Designated Product:
------------------
55
1.24.1 with respect to any member nation of the European Union (and any other
nation in the Territory in which applicable law would restrict the
permissible duration of a period of exclusivity to the life of applicable
patents), the Exclusivity Period is the period during the License Term
for such Designated Product in such nation, until there are no longer
any PPG Patents (exclusive of those described in Section 1.38.3) or Joint
Technology Patents in that nation applicable to the Designated Product
or, if later, until all of PPG's Confidential Technology provided to Endo
hereunder has been disclosed without restriction to the public (but in
this case, where there are no longer any such PPG Patents and there are
no Joint Technology Patents in that nation applicable to the Designated
Product, the Exclusivity Period will not last longer in such nation
than ten years from the first Approval for such Designated Product in
any nation in the European Union); and
1.24.2 with respect to any other nation, the Exclusivity Period is coterminous
with the License Term,
except where the Exclusivity Period is shortened as otherwise provided in this
Agreement.
1.25 "Facilities Certifications" shall mean those governmental certifications,
-------------------------
licenses and other approvals however designated held or obtained at any time by
or for Endo or its Affiliates or sublicensees, and for the facilities of any of
them, that are required for the legal production, transportation, storage,
testing and or packaging of *** products, whether for commercial or
research use or sale, or otherwise.
1.26 "Formulated TIMERx" shall mean TIMERx TIMERx and certain additives in a
formulation to be developed hereunder specifically for use in a Designed
Product.
1.27 "Formulated TIMERx Price" shall mean PPG's contract manufacturing cost
-----------------------
or, if made internally, its variable costs plus directly allocable fixed costs
relating to the manufacture or acquisition of the Formulated TIMERx to be
provided to Endo or its Affiliates or sublicensees hereunder, as shall be
determined and adjusted no more often than annually; provided, however, that any
amounts paid or payable by PPG for third-party royalties (or for materials
acquisition costs to the extent attributable to third-party intellectual
properties and essentially equivalent to royalties) which are the responsibility
of PPG under Sections 9.5.1 or 9.5.2 shall not be counted as part of the
Formulated TIMERx Price. If any patent applications are filed or prosecuted by
56
PPG on Joint Technology, as provided in Section 6.2, the reasonable costs
thereof, and of the maintenance of any patents that issue therefrom, shall (to
the extent not reflected in a Development Budget or a Certification Budget and
the reconciliations under Sections 2.5 or 3.7) be part of the allocable indirect
costs of the manufacture or acquisition of any Formulated TIMERx provided for
use in a Designated Product that would be disclosed in whole or in part in such
patent or patent application.
1.28 "Initial Development Period" shall mean the Development Period for the
--------------------------
Initial Designated Product(s), to be planned and conducted as described in
Section 2.6.
1.29 "Joint Technology" shall mean any and all inventions, improvements,
----------------
modifications, alterations, or enhancements that are made jointly by Endo or any
of its Affiliates, on the one hand, and PPG or any of its Affiliates, on the
other hand, during and in the course of the parties cooperative development
activities under or in support of this Agreement, together with all United
States and foreign intellectual property and other rights and interests of the
parties and their respective Affiliates thereto and therein, including without
limitation patents, trade secrets, copyright, periods of market exclusivity, and
other related rights or interests, to the extent the same remain protected by
any such rights and interests from being used freely by others.
1.30 "Joint Technology Patent(s)" shall mean any United States patents and
--------------------------
foreign equivalents and United States and foreign patent applications and all
divisions, continuations, continuations-in-part, reissues, or extensions
thereof, any periods of marketing exclusivity relating thereto, and any letters
patent that issue thereon, to the extent the same claim any Joint Technology.
1.31 "License Term" shall mean, with respect to each Designated Product in each
------------
nation in the Territory, the cumulative period covered by the Development
Period, the Certification Period, and the Marketing Period.
1.32 "Manufacturing and Marketing Plan(s)" shall mean, with respect to each
-----------------------------------
Designated Product and as to those Specified Nation(s) specified in such
Manufacturing and Marketing Plan, a detailed business, manufacturing, and
marketing plan of the sort prepared internally and used by Endo and/or its
Affiliates (or, if a license to PPG under Section 6.9 is applicable, and/or in
the circumstances described in Section 4.2 or 4.3, such a plan of the sort
prepared and used internally by PPG and/or its designated third-party marketer)
with respect to their drug products generally,
57
including without limitation quantifiable and verifiable plans, goals and
milestones for the levels and types of resources, personnel, promotion,
advertising, detailing, and other efforts to be devoted to the manufacturing,
packaging, quality control, and marketing of such Designated Product, and with
respect to the measures of the degree of success achieved in doing so, including
without limitation target dates for the full-scale market launch of the
Designated Product in each of the Specified Nation(s), and Minimum Net
Realization(s) for each of the Specified Nation(s) in such Manufacturing and
Marketing Plan (and related goals and projections for pretax profitability).
Each Manufacturing and Marketing Plan shall also describe the schedule and
methods to be used to effect the revision thereof and the adoption of
substituted Manufacturing and Marketing Plans no less often than annually,
through Committee Action.
1.33 "Marketing Period" shall mean, with respect to each Designated Product and
----------------
as to each nation in the Territory, the period beginning at the end of the
Certification Period for such Designated Product in such nation and ending on
the earliest of:
1.33.1 the twentieth (20th) anniversary of the end of such Certification Period
or, if later, the time at which there are no longer any PPG Patents or
Joint Technology Patents applicable to such Designated Product in such
nation, to the extent such patents disclose inventions made prior to the
end of such Certification Period; or
1.33.2 the termination of the Marketing Period for such Designated Product in
such nation pursuant to Section 5.7 or of the License Term for such
Designated Product in such nation pursuant to Section 6.9.1; or
1.33.3 the termination of this Agreement as provided herein.
1.34 "Minimum Net Realization" shall mean, with respect to each Designated
-----------------------
Product and each Specified Nation or group of Specified Nations under the then-
current Manufacturing and Marketing Plan therefor, a minimum amount of Net
Realization generated from sales of such Designated Product in such Specified
Nation(s) (as will be stated in such Manufacturing and Marketing Plan). The
Minimum Net Realization(s) shall be set at levels at least as high as those that
Endo and its Affiliates would expect to obtain from the marketing of their most
prominently marketed drug products, taking into account the level and nature of
competitive products, the method of promotion and marketing, the Net
Realizations specified
58
and obtained for such Designated Product in other nations, and other factors as
shall be determined by Committee Action.
1.35 "Net Realization" shall mean that portion of the amounts paid or payable
---------------
(whether in cash, cash equivalents, current or deferred consideration, barter,
or other monetary or in-kind compensations or considerations of any nature)
attributable to the sale or other distribution of a Designated Product, or to
the grant of any rights to make, market, or otherwise exploit a Designated
Product, which is to be treated hereunder as a net amount realized by the actual
or intended recipient of the same, after the deduction of those direct and
indirect costs incurred as provided under a Manufacturing and Marketing Plan
approved by Committee Action and appropriately attributable thereto (including
without limitation the Formulated TIMERx Price paid to PPG for the TIMERx
incorporated therein, or if Section 6.9.5 becomes applicable, the amounts paid
to Endo thereunder), all to be determined in accordance with the accounting and
attribution standards and principles described in Exhibit 1.35, as the same may
be amended from time to time by Committee Action.
1.36 "*** Price" shall mean Endo's contract manufacturing cost or, if
-----------------
made internally, its variable costs plus directly allocable fixed costs relating
to the manufacture or acquisition of *** to be provided to PPG or its Affiliates
or sublicensees hereunder, as shall be determined and adjusted no more often
than annually; provided, however, that any amounts paid or payable by Endo for
third-party royalties (or for materials acquisition costs to the extent
attributable to third-party intellectual properties and essentially equivalent
to royalties) which are the responsibility of Endo under Section 9.6 shall not
be counted as part of the *** Price.
1.37 "Patent Review" shall mean Endo's and its counsel's review, during the
-------------
first 30 days after the Effective Date, of the PPG Patents listed in Exhibit
1.38, to confirm to Endo's reasonable satisfaction that the same are as
contemplated to the extent relevant to this Agreement.
1.38 "PPG Patents" shall mean:
-----------
1.38.1 those United States patents and foreign equivalents listed in Exhibit
1.38 and all divisions, continuations, continuations-in-part, reissues,
or extensions thereof, any periods of marketing exclusivity relating
thereto;
59
1.38.2 (i) those United States and foreign patent applications pending as of the
Effective Date that are owned by PPG, to the extent the same would, if
issued as patent(s), in the absence of the licenses granted hereunder be
infringed by Endo's production, use, sale, offer for sale, or import of a
Designated Product as contemplated under this Agreement; and (ii) subject
to Section 6.8.6, any other patent rights owned or controlled and
sublicenseable by PPG, to the extent the same would in the absence of the
licenses granted hereunder be infringed by Endo's production, use, sale,
offer for sale, or import of a Designated Product as contemplated under
this Agreement and to the extent disclosing inventions made or discovered
prior to the end of the applicable Certification Period; and
1.38.3 subject to Section 6.8.6, PPG's rights under United States and foreign
patents in the Territory, if any, to the extent disclosing any of PPG's
improvements, modifications, alterations, or enhancements to any of the
inventions covered by the PPG Patents that are made for or are otherwise
related to or useful with one or more of the Designated Product(s)
prior to the end of the applicable Certification Period.
1.39 "PPG Test and Regulatory Data" shall mean any and all test data, test
----------------------------
designs and protocols, clinical studies and results thereof, government licenses
and applications therefor, government certifications and findings, and related
materials, information and rights (including without limitation information
regarding bioavailability and bioequivalence, and any adverse drug reactions),
developed, commissioned or otherwise obtained by PPG or any of its Affiliates
during the term of this Agreement relating to TIMERx, PPG Patents, and/or TIMERx
Production Technology and that are developed for or are otherwise related to or
useful with a Designated Product.
1.40 "Proof of Principle Studies" shall mean those early-stage in vitro studies
--------------------------
to be mutually agreed upon by the parties and conducted by them within the first
120 days of the Initial Development Period as part of the Initial Development
Tasks, and directed at a determination of whether there is physical
compatibility between *** and TIMERx and whether it is likely, as a technical
matter of the pharmaceutical sciences, that at least one Initial Designated
Product can be developed.
1.41 "PPG Trademark(s)" shall mean those names, symbols and or characters
-------------
described in Exhibit 1.20 hereto, as the same may be amended from time to time
during the term of this Agreement by PPG on at least six (6) months' prior
written
60
notice to Endo, that are owned by PPG and that have been designated by it for
use in conjunction with Endo's packaging and promotion of a Designated Product
hereunder, pursuant to Section 8.
1.42 "Project Contact(s)" shall mean the persons appointed by each party to
------------------
serve as contact persons between the parties from time to time in relation to
this Agreement (in addition to those representatives of the parties on the
Alliance Committee, who may or may not also contemporaneously be Project
Contact(s)). The initial Project Contact for PPG for business matters is Xxxxxxx
Xxxxxx, and the initial Project Contact for PPG for technical and scientific
matters is Xx. Xxxxxx Xxxxxxx. The initial Project Contact for Endo for
business matters is Xxxxxx Xxxxxxxx, and the initial Project Contact for Endo
for technical and scientific matters is Xx. X. Xxx. Each party shall promptly
notify the other party of any substitution of other personnel as its Project
Contact(s). Each party may select and supervise its other project staff as
needed.
1.43 "Regulatory Authority" shall mean the competent authority for each nation
--------------------
of the Territory or for any relevant grouping of nations legally responsible for
authorizing the sale or supply of drug products in that nation or group.
1.44 "Royalties" shall mean the royalties payable to PPG pursuant to Section
---------
4.5 hereof, or the royalties payable to Endo pursuant to Section 6.9, if that
section becomes applicable.
1.45 "Specifications" shall mean such standards and analytical methods
--------------
established by Committee Action from time to time with respect to particular
Designated Products and the components thereof (including without limitation the
Formulated TIMERx).
1.46 "Specified Nation(s)" shall mean, as applicable, those nations specified
-------------------
herein or by Committee Action as the nation(s) in which or as to which the
Certification Tasks under the respective Certification Period will be conducted,
and/or those nations specified in a Manufacturing and Marketing Plan as
nation(s) in which the manufacturing, marketing, and promotional activities for
a Designated Product will be conducted.
1.47 "Territory" shall initially mean all nations of the world, but may be
---------
reduced as to particular nations and particular Designated Products, pursuant to
Section 5.7 or Section 6.9.1.
61
1.48 "TIMERx Production Technology" shall mean PPG's rights under the PPG
----------------------------
Patents and any and all other patents, patent applications, and other technology
belonging to PPG or which PPG has the right to practice and to sublicense
from time to time during the term of this Agreement that directly relate to, are
desirable for, or are necessary or useful for the production of, Formulated
TIMERx for use in a Designated Product.
62
Exhibit 1.1
-----------
Affiliates
PPG Affiliates:
PENWEST, LTD.
Xxxxxx Xxxxxxx Co., Inc.
Penford Products Co.
Xxxxxx Xxxxxxx GmBH
Xxxxxx Xxxxxxx Finland OY
PEN WEST Foreign Sales Corporation
Endo Affiliates: None
63
Exhibit 1.20
------------
Trademarks
Endo Trademarks:
Endo
***
PPG Trademarks:
TIMERx Oral Delivery System
64
Exhibit 1.35
------------
Accounting and Attribution Standards and Principles
Net Sales Invoiced amount less trade and quantity discounts, returns
and allowances, rebates, chargebacks, retroactive price
adjustments, and a 2% accrual of invoiced amount to cover bad
debt, sales & excise taxes which is to be reconciled and
adjusted to actual on a semi-annual basis.
Grants of Rights Amount realized from grant of rights to make, market or
otherwise exploit a Designated Product.
Manufacturing
Costs
Bulk ADS Cost The *** Price for the *** used.
TIMERx The Formulated TIMERx Price for the Formulated TIMERx used.
Excipient
Dose Form Variable standard costs plus cost variances to be reconciled
Finishing & quarterly, plus allocated fixed costs supporting only the
Packaging manufacturing of Designated Products based on activity based
costing concepts that are approved by Committee Action.
Development Costs
Dosage Form A benefit and OH percentage approved by Committee Action
that is applied to labor dollars and is adjusted annually.
Marketing
Expenses
Premarketing Expenses incurred prior to launch for grants, agency fees,
symposia, opinion leader development, plus pre-launch
Marketing Managers & clinical liaisons based on FTE
percentage of time spent on the Designated Products. Expenses
are subject to Alliance Committee review and approval by
Committee Action on a quarterly basis.
Sales & Product As mutually agreed, but not to be duplicative with Field
Management Selling costs defined below, subject to Alliance Committee
review and approval by Committee Action on a quarterly basis.
00
Xxxxx Xxxxxxx Xxxxxx Standard Selling Cost per detail multiplied by number
of details subject to Alliance on a quarterly basis.
Advertising & Out-of-pocket costs plus Product Management costs (to the
Promotion extent not already included in Sales & Product Management
costs defined above) based on FTE and actual time subject to
Alliance Committee review and approval by Committee Action on
a quarterly basis.
Commissioned Actual reasonable commissions, if applicable
Sales Rep.
Finished Product
Distribution
Expense (FPDE)
Variable and A 2% accrual of Net Sales to be reconciled and adjusted to
Fixed actual on an annual basis.
Post Registration Studies required by the FDA or other applicable Regulatory
Studies Authority. Direct costs will be charged. Studies are
subject to Alliance Committee review and approval by
Committee Action.
General & Admin. Legal, management, forecasting, accounting, financial
Expenses (G&A) analysis & reporting, MIS, and administrative services, all
as and to the extent directly required for the foregoing
activities, and as reviewed and approved by Committee Action
on a quarterly basis.
Total Cost of Sum of Manufacturing Costs, Development Costs, Marketing
Sales Expenses, FPDE, Post Registration Studies, and G&A. Note,
however, that the Total Costs of Sales will not include as
appropriately attributable expenses or costs any amounts paid
or payable by a party for third-party royalties to the extent
the same would be the responsibility of the paying party
under Section 9.5.1, 9.5.2, or 9.6 of the Agreement.
Net Realization Net Sales plus Grant of Rights less Total Cost of Sales.
66
Exhibit 1.38
------------
PPG Patents
Patent Number Date Title Inventor
--------------------------------------------------------------------------------
U.S. Patents
------------
1. 4,994,276 2/19/91 Directly Compressible Sustained A. Baichwal
Release Excipient X. Xxxxxxxxxx
2. 5,128,143 7/7/92 Sustained Release Excipient and Baichwal
Tablet Formulation X. Xxxxxxxxxx
3. 5,135,757 8/4/92 Compressible Sustained Release A. Baichwal
Solid Dosage Forms X. Xxxxxxxxxx
4. 5,169,639 12/8/92 Controlled Release Verapamil A. Baichwal
Tablets X. Xxxxxxxxxx
5. 5,330,761 7/19/94 Bioadhesive Tablet for Non-Systemic A. Baichwal
Use Products
6. 5,399,358 3/21/95 Sustained Release Formulations for A. Baichwal
24-hour Release of Metoprolol X. Xxxxxxxxxx
7. 5,399,359 3/21/95 Controlled Release Oxybutynin A. Baichwal
Formulations
8. 5,399,362 3/21/95 Once-A-Day Metroprolol Oral Dosage A. Baichwal
Form X. XxXxxx
9. 5,455,046 10/3/95 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems for Insoluble Drugs
10. 5,472,711 12/5/95 Agglomerated Hydrophilic Complexes A. Baichwal
with Multi-Phasic Release X. Xxxxxxxxxx
Characteristics
11. 5,478,574 12/26/95 Agglomerated Hydrophilic Complexes A. Baichwal
with Multi-Phasic Release X. Xxxxxxxxxx
Characteristics
12. 5,512,297 4/30/96 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems and Insoluble Drugs
13. 5,554,387 9/10/96 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems for Insoluble Drugs
14. 5,612,053 3/18/97 Controlled Release Insufflation A. Baichwal
Carrier for Medicaments X. Xxxxxxxxxx
67
Patent Number Date Title Inventor
--------------------------------------------------------------------------------
Japanese
Patents
------------
1. 1903060 2/8/95 Directly Compressible Sustained A. Baichwal
Release Recipient X. Xxxxxxxxxx
2. 2014960 4/12/95 Controlled Release Verapamil Tablet A. Baichwal
X. Xxxxxxxxxx
Australian
Patents
------------
1. 649163 8/1/92 Controlled Release Verapamil Tablet A. Baichwal
X. Xxxxxxxxxx
2. 623182 10/12/92 Directly Compressible Sustained A. Baichwal
Excipient X. Xxxxxxxxxx
3. 669531 10/1/96 Agglomerated Hydrophilic Complexes A. Baichwal
with Multi-Phasic Characteristics X. Xxxxxxxxxx
Europe (EPO)
Patents
------------
1. EPO360562* 7/28/93 Directly Compressible Sustained A. Baichwal
Release Excipient X. Xxxxxxxxxx
(*subject to opposition proceeding; patent upheld by EPO Opposition Division;
now under appeal)
2. EPO550737 1/22/97 Controlled Release Verapamil Tablet A. Baichwal
X. Xxxxxxxxxx
68
