Exhibit 10.42
DEVELOPMENT, COMMERCIALIZATION AND SUPPLY
LICENSE AGREEMENT
BETWEEN
DURECT CORPORATION
AND
ENDO PHARMACEUTICALS INC.
DATED AS OF
NOVEMBER 8, 2002
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 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF
1934, AS AMENDED. REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***.
TABLE OF CONTENTS
Page
1. DEFINITIONS...............................................................................................
2. MANAGEMENT................................................................................................
2.1 Joint Executive Committee........................................................................
2.2 Product Development Committee....................................................................
2.3 Joint Commercialization Committee................................................................
2.4 Joint Manufacturing Committee....................................................................
2.5 Minutes of Committee Meetings....................................................................
2.6 Term.............................................................................................
2.7 Expenses.........................................................................................
2.8 Alliance Managers................................................................................
3. GRANT OF RIGHTS...........................................................................................
3.1 Rights Granted to Endo...........................................................................
3.2 Exclusivity......................................................................................
3.3 Activities Outside the Territory.................................................................
3.4 Trademarks; Logos................................................................................
3.5 Non-Performance..................................................................................
3.6 Restrictions on Competing Products...............................................................
3.7 Right of Endo Regarding New Products.............................................................
3.8 Payment on Sales Outside Territory...............................................................
4. DEVELOPMENT AND REGULATORY MATTERS........................................................................
4.1 Exchange of Data and Know-How....................................................................
4.2 Product Registrations............................................................................
4.3 Scope of Development Plan........................................................................
4.4 Post-Registration Development....................................................................
4.5 Conduct of Development Plan and Post-Registration Plan...........................................
4.6 Funding of DURECT Activities, Development Plan and Post-Registration Plan........................
4.7 Delay of Initial Regulatory Filing...............................................................
4.8 Suspension of Clinical Development Activities....................................................
4.9 DURECT Activities................................................................................
5. DISTRIBUTION AND PROMOTION................................................................................
5.1 Generally........................................................................................
5.2 Marketing Plan...................................................................................
5.3 Endo Responsibilities; Rights....................................................................
5.4 Promotional Materials and Activities.............................................................
5.5 Technical Support Representatives................................................................
5.6 Global Marketing Team............................................................................
5.7 Distribution and Marketing Costs.................................................................
5.8 DURECT Co-Promotion Right; Supplemental Call Plan................................................
5.9 Sales Incentive Compensation Programs............................................................
6. PAYMENTS..................................................................................................
6.1 R&D Reimbursement and Payments to DURECT.........................................................
6.2 Distribution Fee.................................................................................
6.3 Minimum Payments.................................................................................
6.4 Allocation of Sales..............................................................................
6.5 ALZA Payments....................................................................................
6.6 Bankruptcy Rejection of ALZA Agreement...........................................................
6.7 Equity Investment in DURECT......................................................................
7. PAYMENTS AND REPORTS......................................................................................
7.1 Payments.........................................................................................
7.2 Mode of Payment..................................................................................
7.3 Records Retention................................................................................
7.4 Audit Request....................................................................................
7.5 Cost of Audit....................................................................................
7.6 No Non-Monetary Consideration for Sale...........................................................
8. MANUFACTURE AND SUPPLY....................................................................................
8.1 Supply Obligations...............................................................................
8.2 Supply of Finished Product.......................................................................
8.3 Forecasts........................................................................................
8.4 Orders for Finished Product......................................................................
8.5 Delivery.........................................................................................
8.6 Purchase Price...................................................................................
8.7 Conformity; Specifications; Quality Control......................................................
8.8 Acceptance/Rejection; Interim Replacement........................................................
8.9 Inventory Management.............................................................................
8.10 Shortage of Supply...............................................................................
8.11 Inability to Supply..............................................................................
8.12 Additional Commercial Facilities.................................................................
8.13 Implanters.......................................................................................
8.14 Finishing........................................................................................
8.15 Third Party Manufacturers........................................................................
8.16 Limitation on Use of Third Party Manufacturers...................................................
9. OWNERSHIP; PATENTS; TRADEMARKS............................................................................
9.1 Ownership........................................................................................
9.2 Maintenance of the Patents.......................................................................
9.3 Infringement.....................................................................................
10. PUBLICATION; CONFIDENTIALITY..............................................................................
10.1 Notification.....................................................................................
10.2 Review...........................................................................................
10.3 Confidentiality..................................................................................
10.4 Exceptions to Obligation.........................................................................
10.5 Limitations on Use...............................................................................
10.6 Remedies.........................................................................................
11. REPRESENTATIONS AND WARRANTIES............................................................................
11.1 Representations and Warranties of the Parties....................................................
11.2 Representations and Warranties of DURECT.........................................................
11.3 Disclaimer of Other Warranties...................................................................
12. RECALL; INDEMNIFICATION; INSURANCE........................................................................
12.1 Investigation; Recall............................................................................
12.2 Indemnification by DURECT........................................................................
12.3 Indemnification by Endo..........................................................................
12.4 Shared Liability.................................................................................
12.5 Indemnification Procedure........................................................................
12.6 Cost of Enforcement..............................................................................
12.7 Limitation on Damages............................................................................
12.8 Insurance........................................................................................
13. TERM; TERMINATION; ADDITIONAL RIGHTS......................................................................
13.1 Term.............................................................................................
13.2 Termination for Cause............................................................................
13.3 Additional Termination Rights by Endo............................................................
13.4 Termination in Connection With Additional Studies................................................
13.5 Termination in Connection with Bankruptcy........................................................
13.6 Effect of Expiration or Termination..............................................................
13.7 Additional Rights................................................................................
13.8 Nature of Licenses...............................................................................
13.9 Accrued Rights; Surviving Obligations............................................................
14. FORCE MAJEURE.............................................................................................
14.1 Events of Force Majeure..........................................................................
15. ENDO'S RIGHT TO CURE ON BEHALF OF DURECT..................................................................
15.1 Endo's Right to Cure.............................................................................
16. MISCELLANEOUS.............................................................................................
16.1 Relationship of Parties..........................................................................
16.2 Assignment.......................................................................................
16.3 Books and Records................................................................................
16.4 Further Actions..................................................................................
16.5 Notice...........................................................................................
16.6 Use of Name......................................................................................
16.7 Public Announcements.............................................................................
16.8 Waiver...........................................................................................
16.9 Compliance with Law..............................................................................
16.10 Severability.....................................................................................
16.11 Amendment........................................................................................
16.12 Governing Law....................................................................................
16.13 Arbitration......................................................................................
16.14 Entire Agreement.................................................................................
16.15 Parties in Interest..............................................................................
16.16 No Third Party Beneficiaries.....................................................................
16.17 Descriptive Headings; Certain Terms..............................................................
16.18 Fees and Payments................................................................................
16.19 Counterparts.....................................................................................
Exhibit A Fully Burdened Manufacturing Costs
Exhibit B Development Costs
Exhibit C Examples of Development Expenses
Exhibit D DURECT Trademarks
Exhibit E Endo Trademarks
Exhibit F DURECT New Products and Related Products Development Projects as of Effective Date
Exhibit G Patents
Exhibit H Initial Members of JEC
Exhibit I Initial Members of PDC
Exhibit J Initial Members of JCC
Exhibit K Initial Members of JMC
Exhibit L Initial Alliance Managers
Exhibit M Examples of Calculation of Distribution Fee
Exhibit N DURECT Activities
Exhibit O Common Stock Purchase Agreement
DEVELOPMENT, COMMERCIALIZATION AND SUPPLY LICENSE AGREEMENT
THIS DEVELOPMENT, COMMERCIALIZATION AND SUPPLY LICENSE AGREEMENT
(this "Agreement"), effective as of November 8, 2002 ("Effective Date"), is
entered into by and between DURECT Corporation, a corporation organized and
existing under the laws of the State of Delaware, having offices located at
00000 Xxxx Xxxx, Xxxxxxxxx, XX 00000 ("DURECT"), and Endo Pharmaceuticals
Inc., a corporation organized under the laws of the State of Delaware, having
offices located at 000 Xxxxxxxx Xxxxx, Xxxxxx Xxxx, XX 00000 ("Endo").
PRELIMINARY STATEMENTS
A. DURECT owns rights in and to the product known as the
CHRONOGESIC(TM) (sufentanil) Pain Therapy System currently under development by
DURECT.
X. Xxxx desires to obtain a license for commercialization rights to
such product in the Territory, and DURECT desires to grant such license for
commercialization rights in the Territory to Endo.
C. DURECT and Endo wish to enter into this Agreement to specify the
rights and obligations of the parties with respect to the license for
commercialization of the product granted herein, including the rights and
obligations of the parties with respect to the development, manufacture and
commercialization of such product in the Territory.
NOW THEREFORE, in consideration of the mutual covenants and
agreements provided herein, the parties hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
meanings set forth in this Section 1 unless context dictates otherwise:
"Accelerated Arbitration Provisions" shall have the meaning assigned
to such term in Section 16.13(b).
"Acquiring Party" shall have the meaning assigned to such term in
Section 3.6.
"Affiliate" shall mean a corporation or any other entity that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, the designated party, but only
for so long as the relationship exists.
"Agreement" shall have the meaning assigned to such term in the
introductory paragraph.
"Alliance Manager" shall have the meaning assigned to such term in
Section 2.8.
"ALZA" shall mean ALZA Corporation and any successor of ALZA
Corporation to, or assignee of ALZA Corporation of, the ALZA Agreement, in
whole or in part.
"ALZA Agreement" shall mean that certain Third Amended and Restated
Development and Commercialization Agreement entered into by DURECT and ALZA
effective October 1, 2002, as amended and modified from time to time.
"Audited Party" shall have the meaning assigned to such term in
Section 7.4.
"Auditing Party" shall have the meaning assigned to such term in
Section 7.4.
"Bankruptcy Case" shall mean a bankruptcy case (whether for
liquidation or reorganization) under the Bankruptcy Laws with respect to
DURECT (or its successor or assignee) or any of their respective Affiliates.
"Bankruptcy Laws" shall mean Title 11 of the United States Code, 11
U.S.C. Section 101-1330, as it may be amended from time to time, any successor
statute or any applicable state or foreign laws relating to bankruptcy,
dissolution, liquidation, winding up or reorganization.
"Bankruptcy Rejection" shall mean the entry of an order in a
Bankruptcy Case authorizing the rejection of this Agreement, the ALZA
Agreement or a Third Party Manufacturing Agreement, or any material portion of
any such agreement, by DURECT (or its successor or assignee), as
debtor-in-possession or by its bankruptcy trustee or any other Person
authorized to exercise rejection rights under 11 U.S.C. ? 365 or any other
successor statute; provided, however, that nothing in this Agreement shall be
deemed an acknowledgment by either party hereto that this Agreement, the ALZA
Agreement or a Third Party Manufacturing Agreement may be rejected under the
Bankruptcy Laws.
"Breaching Party" shall have the meaning assigned to such term in
Section 13.2.
"Canada" shall have the meaning assigned to such term in Section
3.1(c).
"cGMP" shall mean current Good Manufacturing Practice as defined in
Parts 210 and 211 of Title 21 of the U.S. Code of Federal Regulations, as may
be amended from time to time, or any successor thereto.
"Committee" shall mean any of the JEC, the PDC, the JCC, and the JMC
and, when used in the plural, shall mean all of them or more than one of them,
as the case may be.
"Commercialization" or "Commercialize" shall mean the ongoing process
and activities generally engaged in by a company marketing life-science
products to establish and maintain a nationwide presence for a product,
including offering for sale, selling, marketing, promoting, distributing,
importing and exporting such product.
"Common Stock Purchase Agreement" shall have the meaning assigned to
such term in Section 6.7.
"Complaining Party" shall have the meaning assigned to such term in
Section 3.5.
"Confidential Information" shall have the meaning assigned to such
term in Section 10.3.
"Control" shall mean ownership of shares of stock having at least 50%
of the voting power entitled to vote for the election of the directors in the
case of a corporation, and at least 50% of the interests in profits in the
case of a business entity other than a corporation.
"Co-Owned Trademarks" shall have the meaning assigned to such term in
Section 3.4(f).
"Critical Issue" shall mean any matter that is subject to the
decision-making authority of any Committee that would have a material adverse
consequence to the timing of development, development, manufacture or
Commercialization of the Product, Finished Product or Implanter.
"Current Forecast" shall have the meaning assigned to such term in
Section 8.3.
"Damages" shall have the meaning assigned to such term in Section
12.2.
"Development Budget" shall have the meaning assigned to such term in
Section 4.3(a), as may be amended from time to time.
"Development Costs" shall mean the fully allocated costs of
performing the Development Program as calculated in accordance with Exhibit B,
excluding any DURECT Activities Costs.
"Development Plan" shall mean the definitive development plan
approved by the PDC pursuant to Section 4.3(a) as amended from time to time
pursuant to Section 4.3(a).
"Development Program" shall mean the activities undertaken under this
Agreement for developing and obtaining regulatory approval to Commercialize
the Product in the Territory, excluding any DURECT Activities.
"Dispute" shall have the meaning assigned to such term in Section
16.13(a).
"Distribution Fee" shall mean the fees to be paid by Endo to DURECT
pursuant to Section 6.2 in consideration for the rights granted to Endo by
DURECT with respect to the Product in the Territory.
"DURECT" shall have the meaning assigned to such term in the
introductory paragraph.
"DURECT Activities" shall mean those development activities to be
performed by, and that are the sole responsibility of, DURECT with respect to
the Product (excluding line extensions of the Product) that are outside the
Development Program and that are described in Exhibit N attached hereto.
"DURECT Activities Costs" shall mean DURECT's fully allocated costs
associated with or relating to the performance of the DURECT Activities as
calculated in accordance with Exhibit B.
"DURECT Common Stock" shall have the meaning assigned to such term in
Section 6.7.
"DURECT Trademarks" shall mean the trademarks set forth on Exhibit D
hereto (as such exhibit may be amended or supplemented from time to time).
"Effective Date" shall mean the date set forth in the introductory
paragraph.
"Endo" shall have the meaning assigned to such term in the
introductory paragraph.
"Endo Trademarks" shall mean the trademarks set forth on Exhibit E
hereto (as such exhibit may be amended or supplemented from time to time).
"Estimated Required Capacity" shall have the meaning assigned to such
term in Section 8.12.
"Exercising Party" shall have the meaning assigned to such term is
Section 13.7.
"Expedited Rules" shall have the meaning assigned to such term in
Section 16.13(b).
"FDA" shall mean the United States Food and Drug Administration (and,
as applicable, the Canadian equivalent), or any successor thereto.
"Field" shall mean all pharmaceutical applications for human health.
"Final FDA Approval" shall have the meaning assigned to such term in
Section 6.1.
"Finished Product" shall mean the Product in ready-for-sale form,
including any product labeling or other package inserts or materials required
by the applicable Regulatory Authority and approved by the JCC and the PDC.
"First Commercial Sale" shall mean the first sale of a Product to a
Third Party by Endo or its Affiliates, Sublicensees or designees in the
Territory after all Registrations required to permit such sale have been
granted, or such sale is otherwise permitted, by the Regulatory Authority in
the Territory.
"First Refusal Notice" shall have the meaning assigned to such term
in Section 3.7.
"First Trial" shall have the meaning assigned to such term in Section
4.6(c).
"Force Majeure" shall have the meaning assigned to such term in
Section 14.1.
"Fully Burdened Manufacturing Cost" shall mean DURECT's fully
allocated cost for manufacturing Product for use in the Development Program
and in connection with this Agreement as calculated in accordance with Exhibit
A.
"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied by the Party at issue.
"Governmental Entity" shall mean any United States domestic (federal
or state) or foreign court, commission or governmental, regulatory or
administrative body, board, bureau, agency, instrumentality, authority or
tribunal or any subdivision thereof.
"Implanter" shall mean the Product implanter.
"Implant Kit" shall mean separate implant materials for use in
administering the Product such as syringes, gloves, gauze pads and other
materials that may be either sold separately from the Product or bundled with
the Product in the form of a kit, at the discretion of the JCC should the JCC
decide to Commercialize such kit hereunder pursuant to Section 2.3(b)(xviii).
The Implant Kit shall not include the Product or Implanter.
"Inability to Supply" shall have the meaning assigned to such term in
Section 8.11(b).
"IND" shall mean an Investigational New Drug Application filed with
the FDA (or as applicable, Canadian equivalent) for authorization to commence
clinical trials in a country in the Territory.
"Indemnified Party" shall have the meaning assigned to such term in
Section 12.5.
"Indemnifying Party" shall have the meaning assigned to such term in
Section 12.5.
"Infringement" shall have the meaning assigned to such term in
Section 9.3(a).
"Initial Regulatory Filing" shall mean the completed and submitted
initial Registration Application for the Product with the FDA.
"Intellectual Property Rights" shall mean patents, copyrights, trade
secrets, proprietary know-how and similar rights of any type (excluding
trademarks) under the laws of any Governmental Entity, including all
applications and registrations relating to any of the foregoing.
"Inventions" shall mean any Technical Information relating to the
Product, Finished Product or Implanter (including its components, and all uses
and methods or manufacture thereof) developed or acquired by either Party
and/or its Affiliates or subcontractors (or jointly by any of the foregoing)
thereof arising out of or in connection with the performance of this
Agreement, during the term of this Agreement.
"Joint Commercialization Committee" or "JCC" shall have the meaning
assigned to such term in Section 2.3(a).
"Joint Executive Committee" or "JEC" shall have the meaning assigned
to such term in Section 2.1(a).
"Joint Manufacturing Committee" or "JMC" shall have the meaning
assigned to such term in Section 2.4(a).
"Long-Term Inability to Supply" shall have the meaning assigned to
such term in Section 8.11(d).
"Manufacturing Standards" shall mean, with respect to the Product,
Finished Product and Implanter, cGMP and such additional manufacturing
specifications or standards as may be established by the JMC from time to
time.
"Marketing Budget" shall have the meaning assigned to such term in
Section 5.2, as may be amended from time to time.
"Marketing Plan" shall mean the definitive marketing plan approved by
the JCC pursuant to Section 5.2 as amended from time to time pursuant to
Section 5.2.
"Minimum Payments" shall have the meaning set forth in Section 6.3
hereof.
"Minimum Payment Year" shall mean the period of four consecutive
calendar quarters beginning with the first day of the calendar quarter
following the calendar quarter during which all necessary regulatory approvals
to market the Product in the United States of America have been received.
"NDA" shall mean a "New Drug Application," "Product License
Application," or other application for approval to market a product submitted
to the FDA (and, as applicable, the Canadian equivalent), as amended or
supplemented from time to time.
"NDA Filing Date" shall have the meaning assigned to such term in
Section 4.1(a).
"Net Sales" shall mean the amounts invoiced on sales of a Product or
Finished Product by Endo and its Affiliates, Sublicensees or designees to
Third Parties in bona fide arms-length transactions, less the following
deductions actually allowed by Endo, its Affiliates, Sublicensees or designees
and taken by such Third Parties and not otherwise recovered by or reimbursed
to Endo, its Affiliates, Sublicensees or designees: (i) trade, cash and
quantity discounts and other customary discounts; (ii) taxes or government
charges levied on the sale of Product or Finished Product to the extent added
to the sales price and set forth separately as such in the amount invoiced;
(iii) amounts repaid or credited by reason of rejections, chargebacks, defects
or returns or because of rebates or retroactive price reductions; and (iv)
delivery charges (including transportation and insurance costs) actually
included in the sales invoiced, all as determined in accordance with GAAP. Net
Sales shall not include (i) the prices charged for separate products other
than the Product, such as the Implanter and, if Commercialized hereunder, the
Implant Kit, and (ii) sales or transfer of Product or Finished Product between
Endo and its Affiliates, Sublicensees or designees; provided, however, that
Net Sales shall be deemed to include the amount or fair market value of any
consideration received by Endo or its Affiliates that can be attributable to a
sale of a Product or Finished Product, whether such consideration is in cash
or payments in kind.
"New Product" shall mean any product under development by DURECT or
proposed to be developed by DURECT which comprises ***, excluding the
following: (i) the Product and any Related Product; and (ii) any product (or
component thereof) which manufacture, use or sale is covered by Intellectual
Property Rights owned by a Third Party which but for a license from such Third
Party would preclude DURECT from the manufacture, use or sale thereof and for
which DURECT does not have a right of sublicense to Endo or its Affiliates.
The New Products in existence as of the Effective Date are listed on Exhibit F
hereto.
"Non-Acquiring Party" shall have the meaning assigned to such term in
Section 3.6(a)
"Non-Breaching Party" shall have the meaning assigned to such term in
Section 13.2.
"Non-Performing Party" shall have the meaning assigned to such term
in Section 3.5.
"Party" shall mean DURECT or Endo, as the case may be, and, when used
in the plural, shall mean DURECT and Endo.
"Patents" shall mean the patents and patent applications set forth on
Exhibit G, together with any patents that may issue therefrom in the
Territory, and any other patents or patent applications in the Territory owned
by or licensed by a Third Party to DURECT or its Affiliates (with rights to
sublicense) during the term of this Agreement to the extent relating to,
derived from or useful for the manufacture, use, or sale of the Product,
Finished Product or Implanter in the Field in the Territory, including any and
all extensions, renewals, continuations, continuations-in-part, divisions,
patents-of-additions, reissues, supplementary protection certificates or
foreign counterparts of any of the foregoing.
"Person" shall mean an individual or a corporation, partnership,
association, trust, or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Placebo-Controlled Studies" shall mean DURECT's placebo-controlled
studies of the Product currently known as *** and *** in the Summary
Development Plan.
"Post-Registration Plan" shall have the meaning assigned to such term
in Section 4.4.
"Product" shall mean the pharmaceutical product in which DURECT owns
rights and currently is known as the CHRONOGESIC(TM) (sufentanil) Pain
Therapy System which is intended to deliver sufentanil systemically at the
current doses of 3.3, 6.7, 10 or 13.3 micrograms per hour for a period of 90
days, including all line extensions of the Product (including those that
provide for different dosage strengths or different duration of delivery of
sufentanil). The Product shall not include the Implanter or Implant Kit.
"Product Development Committee" or "PDC" shall have the meaning
assigned to such term in Section 2.2(a).
"Registration" shall mean, with respect to a country in the
Territory, final approval of the Registration Application for the Product
filed in such country in the Territory.
"Registration Application" shall mean an NDA under the United States
Federal Food, Drug and Cosmetic Act (and, as applicable, the Canadian
equivalent) and the regulations promulgated thereunder, as all may be amended
or supplemented from time to time.
"Regulatory Authority" shall mean the FDA (and, as applicable, the
Canadian equivalent), and any health regulatory authorities in the Territory
that hold responsibility for granting regulatory marketing approval for the
Product in the Territory, and any successor(s) thereto.
"Regulatory Data" shall mean the medical, toxicological,
pharmacological and clinical data included within Technical Information to the
extent necessary to, required for, or included in any Governmental Entity
filing to obtain or maintain regulatory approval to market a Product, Finished
Product and Implanter in the Territory.
"Regulatory Documentation" shall mean all submissions to Governmental
Entities, including clinical studies, tests, and biostudies, relating to the
Product, Finished Product and Implanter, including all INDs and NDAs, as well
as all correspondence with Governmental Entities (registration and licenses,
regulatory drug lists, advertising and promotion documents), adverse event
files, complaint files, manufacturing records and inspection reports.
"Rejection Notice" shall have the meaning assigned to such term in
Section 6.6(a).
"Related Product" shall mean any product which comprises ***,
excluding the Product. The Related Products in existence as of the Effective
Date are listed on Exhibit F hereto.
"Responding Party" shall have the meaning assigned to such term in
Section 13.7.
"Sales Projections" shall have the meaning assigned to such term in
Section 6.3.
"Short-Term Inability to Supply" shall have the meaning assigned to
such term in Section 8.11(c).
"Specifications" shall mean the specifications for the Product,
Finished Product, Implanter or, if Commercialized hereunder, the Implant Kit
as agreed upon by DURECT and Endo, considering the regulatory requirements in
each country of the Territory, as may be amended from time to time.
"Sublicense" shall have the meaning assigned to such term in Section
3.1(b).
"Sublicensee" shall have the meaning assigned to such term in Section
3.1(b).
"Summary Development Plan" shall have the meaning assigned to such
term in Section 4.3(a).
"System" shall mean a drug delivery system which includes and is
contained within an implantable (or externally worn) osmotic pump intended to
function by releasing an active agent or agents on a controlled basis. The
term "System" shall include all materials, technology and attributes contained
within, or incorporated in, the osmotic pump (other than the active drug
itself) and shall include the formulation and stabilization of a therapeutic
agent (such as the active drug) in the System.
"Technical Information" shall mean know-how, trade secrets,
formulations, inventions, data (including Regulatory Data and Regulatory
Documentation), technology, processes and information necessary or useful to
the Product, Finished Product, Implanter and/or the Development Program, which
a Party has the lawful and contractual right to disclose to the other Party,
and any and all Intellectual Property Rights therein and thereto. Technical
Information shall include, without limitation, processes and analytical
methodology used in development, testing, analysis and manufacture, and
medical, clinical, toxicological and other scientific data. Notwithstanding
the foregoing, "Technical Information" shall not include (i) marketing
information, know-how, trade secrets or data generated by Endo, in each case
to the extent not relating specifically to the Product, Finished Product or
Implanter, or (ii) trademarks.
"Termination Event" shall have the meaning assigned to such term in
Section 13.2.
"Territory" shall mean, as the case may be, (i) the United States of
America, including its possessions, protectorates and territories and, (ii) if
added to the Territory in accordance with Section 3.1(c), Canada.
"Testing Methods" shall have the meaning assigned to such term in
Section 8.7(c).
"Third Party" shall mean any Person who or which is neither a Party
nor an Affiliate of a Party.
"Third Party Manufacturer" shall have the meaning assigned to such
term in Section 8.15(a).
"Third Party Manufacturing Agreement" shall have the meaning assigned
to such term in Section 8.15(a).
"Third Party Manufacturing Plan" shall have the meaning assigned to
such term in Section 8.15(a).
"Transfer Price" shall have the meaning assigned to such term in
Section 8.6(a).
"Trial Commencement Date" shall have the meaning assigned to such
term in Section 4.6(c).
"Undertaking" shall have the meaning assigned to such term in Section
6.6(c).
2. MANAGEMENT.
2.1 Joint Executive Committee.
(a) Members; Officers. The Parties hereby establish a joint executive
committee (the "Joint Executive Committee" or "JEC"), which shall consist of
up to eight members with an equal number of members from each of DURECT and
Endo. The initial members of the JEC are set forth on Exhibit H, as may be
amended by the designating Party from time to time. Representatives of the JEC
shall be employees of the respective Party. Each of DURECT and Endo may
replace any or all of its representatives on the JEC at any time upon written
notice to the other in accordance with Section 16.5 of this Agreement. Any
member of the JEC may designate a substitute with due authority to temporarily
attend and perform the functions of that member at any meeting of the JEC.
DURECT and Endo each may, in its discretion, invite non-member representatives
that are employees (unless otherwise agreed to in writing by the Parties) of
such Party to attend meetings of the JEC. The JEC shall be co-chaired by a
representative of each of DURECT and Endo, as such representative may be
changed by the designating Party at any time. The co-chairpersons shall
appoint a secretary of the JEC, and such secretary shall serve for such term
as designated by the co-chairpersons. The initial co-chairpersons and the
initial secretary are designated on Exhibit H.
(b) Responsibilities. The JEC shall perform the following functions:
(i) manage and oversee the performance of the Parties pursuant to
the terms of this Agreement;
(ii) at least twice annually, review the Development Budget;
(iii) at each meeting of the JEC, review a comparison of actual
expenses to the budgeted expenses for the year-to-date, as current as
practicable to a date immediately prior to the date of the meeting, including
manufacturing, research and development, and marketing expenses;
(iv) at each meeting, as applicable, review a comparison of the
Product, Finished Product and Implanter development status with the timelines
set forth in the Development Plan, or, if appropriate, review a comparison of
Product, Finished Product and Implanter sales in the Territory with the Sales
Projections;
(v) review and evaluate the progress of the other Committees;
(vi) review and approve "go/no-go" decisions and other matters
referred to the JEC by any other Committee;
(vii) in accordance with the procedures established in Section
2.1(d), resolve disputes, disagreements and deadlocks unresolved by the other
Committees;
(viii) determine, in response to the PDC's findings regarding a
material delay of an Initial Regulatory Filing, whether or not it is in the
best interest of the Parties to go forward with the conduct of any additional
clinical studies required by the FDA;
(ix) review and adopt procedures, pursuant to Section 8.13 and
based on recommendations from the JCC and JMC, regarding the manufacture and
sale of Implanters;
(x) determine, pursuant to Section 12.8, whether insurance amounts
for the Parties should be increased, or whether, and to what extent, the
Parties may self-insure;
(xi) determine, in accordance with Section 3.1(c) whether Canada
shall be included in the Territory;
(xii) establish, at the time deemed appropriate by the JEC, the
JCC and the JMC;
(xiii) determine when the PDC should meet to discuss and approve
the definitive Development Plan for the Product in accordance with Section
4.3(a);
(xiv) determine when Endo should develop, finalize and review at
the JCC a Marketing Plan as contemplated by Section 5.2; and
(xv) have such other responsibilities as may be assigned to the
JEC pursuant to this Agreement or as may be mutually agreed upon by the
Parties from time to time.
(c) Meetings. The JEC shall meet in person, by video teleconference
or by telephone at least once every six months during every calendar year, and
more frequently as DURECT and Endo deem appropriate or as required to resolve
disputes, disagreements or deadlocks in the other Committees, on such dates,
and at such places and times, as the Parties shall agree. Meetings of the JEC
that are held in person shall alternate between the offices of DURECT and
Endo, or such other place as the Parties may agree. The members of the JEC
also may convene or be polled or consulted from time to time by means of
telecommunications, video conferences, electronic mail or correspondence, as
deemed necessary or appropriate.
(d) Decision-making.
(i) The JEC may make decisions with respect to any subject matter
that is subject to the JEC's decision-making authority and functions as set
forth in Section 2.1(b). Except as specified in Section 2.1(d)(ii) or (iii),
all decisions of the JEC shall be made by unanimous vote or written consent,
with DURECT and Endo each having, collectively, one vote in all decisions. The
JEC shall use reasonable best efforts to resolve the matters within its roles
and functions or otherwise referred to it.
(ii) With respect to all matters that are subject to the JEC's
decision-making authority and are not the subject of Section 3.5, 8.11(a),
8.11(e), 8.11(f) or 13.3(a), if the JEC cannot reach consensus within 10
business days after it has met and attempted to reach such consensus, the
matter shall be referred on the eleventh business day:
(A) if the matter is the subject of a deadlock arising in the
PDC and is not the subject of Section 4.7 or 4.8, to the
co-chairperson of the JEC designated by DURECT for resolution,
provided that any decision made by the DURECT-designated
co-chairperson may not, when taken together with all other such
decisions, increase or decrease the Development Budget in the
aggregate by more than ***; provided, further, that Endo shall have a
right, upon written notice to DURECT, to challenge any JEC decision
with respect to Critical Issues pursuant to Section 2.1(d)(iii);
(B) if the matter is the subject of a deadlock arising in the
JCC, to the co-chairperson of the JEC designated by Endo for
resolution, provided that any decision made by the Endo-designated
co-chairperson may not, when taken together with all other such
decisions, decrease the Marketing Budget for any *** by more than
$*** from the previously approved JEC budget for such year; provided,
further, that DURECT shall have a right, upon written notice to Endo,
to challenge any JEC decision with respect to Critical Issues
pursuant to Section 2.1(d)(iii);
(C) except as provided in Sections 8.11(a), (e) and (f), if the
matter is the subject of a deadlock arising in the JMC, to the
co-chairperson of the JEC designated by DURECT for resolution,
provided that any decision made by the DURECT-designated
co-chairperson may not, when taken together with all other such
decisions, increase the Fully Burdened Manufacturing Costs for any
consecutive four-quarter period more than *** of the prior
four-quarter period; provided, further, that Endo shall have a right,
upon written notice to DURECT, to challenge any JEC decision with
respect to Critical Issues pursuant to Section 2.1(d)(iii).
In the event that the co-chairperson designated to resolve a dispute under
this Section 2.1(d)(ii) is not immediately available, then such matter shall
be referred to the senior executive officer of such Party in the area to which
the matter relates and who has been designated by such Party for such
resolution.
(iii) In the event the JEC does not resolve, or DURECT or Endo
challenge, a Critical Issue pursuant to Section 2.1(d)(ii), then such matters
shall be resolved pursuant to the Accelerated Arbitration Provisions of
Section 16.13(b). In the event the JEC does not resolve any other matters
pursuant to Section 2.1(d)(ii) and such matters fall into the class of
disputes that may be arbitrated by the Parties in accordance with Section
16.13, then such matters shall be resolved pursuant to Section 16.13(a).
(iv) For all purposes under this Agreement, any decision made
pursuant to Section 2.1(d)(i) and (ii) shall be deemed to be the decision of
the JEC.
2.2 Product Development Committee.
(a) Members; Officers. The Parties hereby establish a product
development committee (the "Product Development Committee" or "PDC"), which
shall consist of representatives from each of DURECT and Endo, up to four
members from each Party on such Committee unless otherwise agreed to by the
Parties in writing. The initial representatives on the PDC are set forth on
Exhibit I, as may be amended by the designating Party from time to time. Each
of DURECT and Endo may replace any or all of its representatives on the PDC at
any time upon written notice to the other in accordance with Section 16.5 of
this Agreement. Such representatives shall be employees of each such Party,
and those representatives of each such Party shall, individually or
collectively, have expertise in pharmaceutical drug development, regulatory
matters, marketing, clinical studies, and/or other expertise to the extent
relevant. Any member of the PDC may designate a substitute with due authority
to temporarily attend and perform the functions of that member at any meeting
of the PDC. DURECT and Endo each may, in its discretion, invite non-member
representatives that are employees (unless otherwise agreed to in writing by
the Parties) of such Party to attend meetings of the PDC. The PDC shall be
chaired by a representative of DURECT. The secretary of the PDC shall be a
representative of DURECT.
(b) Responsibilities. The PDC shall not oversee, review, approve or
evaluate any of the DURECT Activities. The PDC shall perform the following
functions:
(i) approve and oversee the implementation of the Development
Plan;
(ii) at least once each calendar year by a date not later than
***, review and approve any amendments or modifications of the Development
Plan;
(iii) at least twice annually, review the Development Budget;
(iv) at each meeting of the PDC, review a comparison of actual
development and regulatory expenses to the budgeted expenses in the
Development Budget for the year-to-date, as current as practicable to a date
immediately prior to the date of the meeting;
(v) review and evaluate progress of the development activities;
provided that the PDC shall not have authority to make any determination that
any Party is in breach of this Agreement;
(vi) review and approve all compassionate use of the Product,
Finished Product and Implanter;
(vii) review the publication strategy together with the JCC;
(viii) review and recommend to the JEC "go/no-go" decisions;
(ix) in connection with clinical trials, approve protocols, trial
budget and trial design;
(x) review Regulatory Data and Regulatory Documentation to be
provided by DURECT regarding all Product and Implanter development activities
outside the Territory (to the extent DURECT is permitted by Third Parties, if
applicable, to do so);
(xi) review and, if appropriate, approve development plans,
utilizing an approach similar to the Development Plan, with respect to line
extensions of the Product or Related Products; provided that the PDC shall not
approve plans to develop at any one time more than *** such products without
the written authorization of DURECT and Endo;
(xii) in good faith consider potential additional line extensions
of the Product and Related Products in addition to those considered pursuant
to the foregoing clause (x);
(xiii) coordinate the allocation of responsibilities among the
Parties with respect to development of the Product, Finished Product and
Implanter based on the Development Plan;
(xiv) consult with the JMC regarding adoption of a Third Party
Manufacturing Plan pursuant to Section 8.15;
(xv) determine which portions of protocols, regulatory filings,
correspondence to or from regulatory authorities etc., should be redacted
before being shared with ALZA; and
(xvi) have such other responsibilities as may be assigned to the
PDC pursuant to this Agreement or as may be mutually agreed upon by the
Parties from time to time.
(c) Meetings. The PDC shall meet in person, by video teleconference
or by telephone at least once every month, and more or less frequently as
DURECT and Endo deem appropriate or as reasonably requested by either such
Party, on such dates, and at such places and times, as such Parties shall
agree. Meetings of the PDC that are held in person shall alternate between the
offices of DURECT and Endo, or such other place as such Parties may agree. The
members of the PDC also may convene or be polled or consulted from time to
time by means of telecommunications, video conferences, electronic mail or
correspondence, as deemed necessary or appropriate.
(d) Decision-making. Endo and DURECT have chartered the PDC with a
belief that vigorous interaction and cooperation between the Parties are
essential for the success of the Product. Each Party shall use all reasonable
efforts to reach consensus decisions at the Committee level. The PDC may make
decisions with respect to any subject matter that is subject to the PDC's
decision-making authority and functions as set forth in Section 2.2(b). All
decisions of the PDC shall be made by unanimous vote or written consent, with
DURECT and Endo each having, collectively, one vote in all decisions. If, with
respect to any matter that is subject to the PDC's decision-making authority,
after all reasonable efforts to reach consensus have been exhausted, the PDC
cannot reach consensus within 10 business days after it has first met and
attempted to reach such consensus, the matter shall be referred on the
eleventh business day to the JEC for resolution. For all purposes under this
Agreement, any decision made pursuant to this Section 2.2(d) shall be deemed
to be the decision of the PDC.
2.3 Joint Commercialization Committee.
(a) Members; Officers. Pursuant to Section 2.1(b)(xii), the JEC shall
establish a joint commercialization committee (the "Joint Commercialization
Committee" or "JCC"), which shall consist of representatives from each of
DURECT and Endo, up to six members from Endo and up to two members from DURECT
unless otherwise agreed to by the Parties in writing. The initial members of
the JCC are set forth on Exhibit J, as may be amended by the Designating Party
from time to time. Each of DURECT and Endo may replace any or all of its
representatives on the JCC at any time upon written notice to the other in
accordance with Section 16.5 of this Agreement. Such representatives shall be
employees of each such Party, and those representatives of each such Party
shall, individually or collectively, have expertise in marketing and sales of
pain products. Any member of the JCC may designate a substitute with due
authority to temporarily attend and perform the functions of that member at
any meeting of the JCC. DURECT and Endo each may, in its discretion, invite
non-member representatives that are employees (unless otherwise agreed to in
writing by the Parties) of such Party to attend meetings of the JCC. The JCC
shall be chaired by a representative of Endo. The secretary of the JCC shall
be a representative of Endo.
(b) Responsibilities. The JCC shall perform the following functions:
(i) review and approve the annual Marketing Plan developed by
Endo;
(ii) oversee the implementation of the Marketing Plans and approve
modifications to the Marketing Plan throughout the year;
(iii) discuss the state of the markets for the Product in the
Territory and opportunities and issues concerning the Commercialization of the
Product, including consideration of marketing and promotional strategy,
marketing research plans, labeling, Product positioning and Product profile
issues;
(iv) if applicable under Sections 5.5 and 5.8, oversee and
coordinate the sales efforts of Endo and DURECT;
(v) review and approve the Post-Registration Plan, taking into
consideration the appropriateness of any development activities including line
extensions, clinical trials for purposes of new indications and Phase IV
clinical trials in the context of the overall marketing and promotional
strategy for the Product;
(vi) review and direct all indigent care use of the Product;
(vii) review and approve Sales Projections in accordance with
Section 6.3;
(viii) review, in consultation with the JMC, the efficacy of the
forecasting procedure set forth in Section 8.3, including whether any
modifications thereto are necessary following the second anniversary of the
First Commercial Sale;
(ix) review data and reports arising from and generated in
connection with the Commercialization of the Product, Finished Product and
Implanter, including the Marketing Plan, Marketing Budgets, market research
studies, and Product, Finished Product and Implanter sales and prescription
trends and sales forecasts;
(x) at each meeting of the JCC, review a comparison of actual
sales and marketing expenses to the budgeted expenses in the relevant
Marketing Budget for the year-to-date, as current as practicable to a date
immediately prior to the date of the meeting;
(xi) at least once each calendar year by a date no later than ***,
review and approve the Marketing Plan as updated by Endo;
(xii) review and approve the general guidelines applicable to the
Product to be followed by Endo in its development of promotional materials and
promotional activities to be used by Endo in the promotion of the Product,
Finished Product and Implanter (such guidelines to be consistent with the then
current Marketing Plan applicable to the Product);
(xiii) evaluate and approve use of any technical support
representatives;
(xiv) review and direct the publication strategy, in consultation
with the PDC;
(xv) in consultation with the PDC, review and approve the
Specifications for the Finished Product, including the packaging and related
materials, prior to Commercial use;
(xvi) develop appropriate procedures, pursuant to Section 8.13 and
in consultation with the JMC, regarding the manufacture and sale of
Implanters;
(xvii) review and, if appropriate, approve the supplemental call
plan, if any, submitted by DURECT pursuant to Section 5.8;
(xviii) evaluate and determine whether to market and sell an
Implant Kit; and
(xix) have such other responsibilities as may be assigned to the
JCC pursuant to this Agreement or as may be mutually agreed upon by the
Parties from time to time.
(c) Meetings. The JCC shall meet in person, by video teleconference
or by telephone at least once during every calendar quarter, and more
frequently as DURECT and Endo deem appropriate or as reasonably requested by
either such Party, on such dates, and at such places and times, as such
Parties shall agree. Meetings of the JCC that are held in person shall
alternate between the offices of DURECT and Endo, or such other place as the
Parties may agree. The members of the JCC also may convene or be polled or
consulted from time to time by means of telecommunications, video conferences,
electronic mail or correspondence, as deemed necessary or appropriate.
(d) Decision-making. Endo and DURECT have chartered the JCC with a
belief that vigorous interaction and cooperation between the Parties are
essential for the success of the project. Each Party shall use all reasonable
efforts to reach consensus decisions at the Committee level. The JCC may make
decisions with respect to any subject matter that is subject to the JCC's
decision-making authority and functions as set forth in Section 2.3(b). All
decisions of the JCC shall be made by unanimous vote or written consent, with
DURECT and Endo each having, collectively, one vote in all decisions. If, with
respect to any matter that is subject to the JCC's decision-making authority,
after all reasonable efforts to reach consensus have been exhausted, the JCC
cannot reach consensus within 10 business days after it has first met and
attempted to reach such consensus, the matter shall be referred on the
eleventh business day to the JEC for resolution. For all purposes under this
Agreement, any decision made pursuant to this Section 2.3(d) shall be deemed
to be the decision of the JCC.
2.4 Joint Manufacturing Committee.
(a) Members; Officers. Pursuant to Section 2.1(b)(xii), the JEC shall
establish a joint manufacturing committee (the "Joint Manufacturing Committee"
or "JMC"), which shall consist of representatives from each of DURECT and
Endo, up to four members from each Party, unless otherwise agreed to by the
Parties in writing. The initial members of the JMC are set forth on Exhibit K,
as may be amended by the designating Party from time to time. Each of DURECT
and Endo may replace any or all of its representatives on the JMC at any time
upon written notice to the other in accordance with Section 16.5 of this
Agreement. Such representatives shall be employees of each such Party with
expertise in manufacturing. Any member of the JMC may designate a substitute
with due authority to temporarily attend and perform the functions of that
member at any meeting of the JMC. DURECT and Endo each may, in its discretion,
invite non-member representatives that are employees (unless otherwise agreed
to in writing by the Parties) of such Party to attend meetings of the JMC.
Except as provided in Section 8.11(f), the JMC shall be chaired by a
representative of DURECT. The secretary of the JMC shall be a representative
of DURECT.
(b) Responsibilities. The JMC shall perform the following functions:
(i) oversee and coordinate the manufacturing and supply of
Product, Finished Product and Implanters;
(ii) oversee the formulation of the manufacturing strategy for the
Product, Finished Product and Implanters, including bulk drug procurement,
formulation, filling and finishing of the Product, Finished Product and
Implanters and approve facilities to be used for such manufacture and
production;
(iii) approve Manufacturing Standards for the Product, Finished
Product and Implanter;
(iv) review, in consultation with the JCC, the efficacy of the
forecasting procedure set forth in Section 8.3, including whether any
modifications thereto are necessary following the second anniversary of the
First Commercial Sale;
(v) evaluate and determine the existence of a Long-Term Inability
to Supply referred to the JMC in accordance with Section 8.11(e);
(vi) reconcile the quality systems of Endo and DURECT, as needed;
(vii) develop appropriate procedures, pursuant to Section 8.13 and
in consultation with the JCC, regarding the manufacture and sale of
Implanters;
(viii) in consultation with the PDC, adopt and, as appropriate,
amend a Third Party Manufacturing Plan with respect to identifying and
qualifying Third Party Manufacturers pursuant to Section 8.15;
(ix) formulate additional strategies for additional supply of
Product, Finished Product and Implanters during the term of this Agreement
including establishing additional Third Party Manufacturers pursuant to
Section 8.15 and additional production facilities pursuant to Section 8.12;
and
(x) have such other responsibilities as may be assigned to the JMC
pursuant to this Agreement or as may be mutually agreed upon by the Parties
from time to time.
(c) Meetings. The JMC shall meet in person, by video teleconference
or by telephone at least once during every month, and more or less frequently
as DURECT and Endo deem appropriate or as reasonably requested by either such
Party, on such dates, and at such places and times, as such Parties shall
agree. Meetings of the JMC that are held in person shall alternate between the
offices of DURECT and Endo, or such other place as such Parties may agree. The
members of the JMC also may convene or be polled or consulted from time to
time by means of telecommunications, video conferences, electronic mail or
correspondence, as deemed necessary or appropriate.
(d) Decision-making. Endo and DURECT have chartered the JMC with a
belief that vigorous interaction and cooperation between the Parties are
essential for the success of the Product. Each Party shall use all reasonable
efforts to reach consensus decisions at the Committee level. The JMC may make
decisions with respect to any subject matter that is subject to the JMC's
decision-making authority and functions as set forth in Section 2.4(b). All
decisions of the JMC shall be made by unanimous vote or written consent, with
DURECT and Endo each having, collectively, one vote in all decisions. If, with
respect to any matter that is subject to the JMC's decision-making authority,
after all reasonable efforts to reach consensus have been exhausted, the JMC
cannot reach consensus within 10 business days after it has first met and
attempted to reach such consensus, the matter shall be referred on the
eleventh business day to the Joint Executive Committee for resolution. For all
purposes under this Agreement, any decision made pursuant to this Section
2.4(d) shall be deemed to be the decision of the JMC.
2.5 Minutes of Committee Meetings.
(a) Subject to Section 2.5(b), definitive minutes of all Committee
meetings shall be finalized no later than 20 days after the meeting to which
the minutes pertain, as follows:
(i) Within 5 days after a Committee meeting, the secretary of such
Committee shall prepare and distribute to all members of such Committee and
each Alliance Manager draft minutes of the meeting. Such minutes shall provide
a list of any actions, decisions or determinations approved by such Committee
and a list of any issues yet to be resolved, either within such Committee or
through the relevant escalation process.
(ii) The Alliance Managers shall then have 5 days after receiving
such draft minutes to collect comments thereon from the members of its Party
and provide them to the secretary of such Committee.
(iii) Upon the expiration of such second 5-day period, the
Alliance Managers and the secretary of such Committee shall have an additional
10 days to discuss each other's comments and finalize the minutes. The
Alliance Managers, secretary and chairperson(s) of such Committee shall each
sign and date the final minutes. The signature of such chairperson(s),
secretary and Alliance Managers upon the final minutes shall indicate each
Party's assent to the minutes.
(b) If at any time during the preparation and finalization of
Committee meeting minutes, the secretary of such Committee and the Alliance
Managers do not agree on any issue with respect to the minutes, such issue
shall be resolved as provided in Section 2.2(d), 2.3(d) or 2.4(d), as the case
may be. The decision resulting from the foregoing process shall be recorded by
the secretary in amended finalized minutes for said meeting. All other issues
in the minutes that are not subject to the foregoing process shall be
finalized within the 20-day period as provided in Section 2.5(a).
2.6 Term. Each Committee shall exist until the termination or
expiration of this Agreement, unless otherwise agreed to by the Parties.
2.7 Expenses. Each Party shall be responsible for all travel and
related costs and expenses for its members and other representatives to attend
meetings of, and otherwise participate on, a Committee.
2.8 Alliance Managers. Each of DURECT and Endo shall appoint one
employee representative who possesses a general understanding of clinical,
regulatory, manufacturing and marketing issues to act as its respective
alliance manager for this relationship (each, an "Alliance Manager"). The
initial Alliance Managers are set forth on Exhibit L, as amended by the
designating Party from time to time. Each of DURECT and Endo may replace its
respective Alliance Manager at any time upon written notice to the other in
accordance with Section 16.5 of this Agreement. Any Alliance Manager may
designate a substitute with due authority to temporarily perform the functions
of that Alliance Manager. Each Alliance Manager shall be charged with creating
and maintaining a collaborative work environment within and among the
Committees. Each Alliance Manager will also be responsible for:
(a) coordinating the relevant functional representatives of the
Parties, in developing and executing strategies and plans for the Product,
Finished Product and Implanter in an effort to ensure consistency and
efficiency within the Territory;
(b) providing a single point of communication for seeking consensus
both internally within the respective Party's organizations and together
regarding key strategy and plan issues;
(c) identifying and raising cross-Party and/or cross-functions
disputes to the appropriate Committee in a timely manner; and
(d) planning and coordinating: (i) cooperative efforts in the
Territory; and (ii) internal and external communications.
The Alliance Managers shall be entitled to attend meetings of any of
the Committees, but shall not have, or be deemed to have, any rights or
responsibilities of a member of any Committee. Each Alliance Manager may bring
any matter to the attention of any Committee where such Alliance Manager
reasonably believes that such matter requires such attention.
3. GRANT OF RIGHTS.
3.1 Rights Granted to Endo.
(a) On the terms and subject to the conditions of this Agreement,
DURECT hereby grants to Endo the sole and exclusive right and license to
Commercialize the Product and Finished Product (and corresponding Implanters
for use therewith) in the Field in the Territory, including the right to
record sales for its own account. Subject to the terms and conditions of this
Agreement, DURECT hereby grants to Endo and its Affiliates a sole and
exclusive license (with rights to sublicense subject to Section 3.1(b) below)
under: (i) the Patents and (ii) the Technical Information and Inventions
including any and all Intellectual Property Rights therein owned by or
licensed to DURECT (including any and all of the foregoing licensed to DURECT
pursuant to the ALZA Agreement subject to the terms and conditions therein),
whether any of the foregoing are in existence as of the Effective Date or
comes into existence during the term of this Agreement solely for use in
connection with Endo's Commercialization of the Product and Finished Product
(and corresponding Implanters for use therewith) in the Field in the Territory
and to otherwise exercise Endo's rights and perform its obligations under this
Agreement.
(b) Endo shall have the right to appoint any Third Party designee(s)
to Commercialize the Product in the Territory alone or in combination with
Endo or its Affiliates and sublicense the rights granted to it under Section
3.1(a); provided that in the event that Endo sublicenses Commercialization
rights to the Product to any Third Party in the Territory such that the Third
Party has the right to record sales for its own account (such grant of rights
shall be deemed a "Sublicense" and such Third Party grantee shall be deemed a
"Sublicensee"), then (i) such Sublicense shall be subject to the prior written
approval of DURECT, which approval shall not be unreasonably withheld or
delayed, (ii) such sublicense shall be subject to the terms and conditions of
this Agreement, and (iii) the rights of DURECT under this Agreement shall not
be prejudiced, reduced or limited in any way as a result of such Sublicense.
(c) No later than*** after the Effective Date, the PDC shall approve
a development plan, utilizing an approach similar to the Development Plan
(taking into account the different nature of the Canadian market), to support
Registration of the Product in Canada, its possessions, protectorates and
territories ("Canada") in accordance with Section 4.3. If within *** of the
projected filing date of the Registration Application for Canada contained in
such Development Plan for Canada, Endo demonstrates to the reasonable
satisfaction of the JEC that it has the capability in place at such time to
Commercialize the Product in Canada on a nationwide basis consistent with the
level that an established pharmaceutical company would normally devote to its
own product of comparable potential in Canada, then Canada shall, upon
approval by the JEC, be included in the Territory. In the event the JEC makes
the determination that Endo does not have such required capability in Canada,
then upon such determination, Endo shall have no further rights with respect
to the Commercialization of the Product in Canada, and DURECT shall thereafter
be free to Commercialize the Product in Canada itself or grant rights to a
Third Party to Commercialize the Product in Canada.
(d) On the terms and subject to the conditions of this Agreement, the
rights granted under Section 3.1(a) shall continue until the later of: (A) the
fifteenth anniversary of the First Commercial Sale by Endo of the Product or
(B) 200th day following the completion of the useful lives of all the Patents
(i.e., all such Patents have expired or been invalidated, for which DURECT
shall provide Endo written notice within five days of such occurrence).
(e) On the terms and subject to the conditions of this Agreement,
Endo shall have an option, in its sole discretion, to extend *** the period of
the rights granted under Section 3.1(a) by written notice to DURECT given at
least *** prior to the expiration of Endo's rights under Section 3.1(d) on the
same terms as contained in this Agreement.
3.2 Exclusivity. During the term of this Agreement, DURECT and its
Affiliates shall not Commercialize, and shall not grant any rights or licenses
to any Third Party to develop or Commercialize the Product in the Territory in
the Field.
3.3 Activities Outside the Territory. Endo acknowledges that DURECT
retains all rights in and to the Product outside the Territory. Endo and its
Affiliates shall not intentionally or knowingly, directly or indirectly, cause
Product to be imported or transferred to countries outside the Territory for
Commercialization outside the Territory. To the extent that Endo becomes aware
that any Product is being exported or transferred from the Territory for
Commercialization outside the Territory, Endo shall use reasonable commercial
efforts to promptly xxxxx such activity.
3.4 Trademarks; Logos.
(a) DURECT hereby grants Endo with respect to the DURECT Trademarks,
and Endo hereby grants DURECT with respect to the Endo Trademarks, the
exclusive license to use such trademarks in the Territory, subject to the
provisions of this Agreement and for the term hereof, solely in connection
with the manufacture and development (with respect to DURECT) and the
marketing, distribution and sale (with respect to Endo) of Product, Finished
Product, Implanters and, if Commercialized hereunder, Implant Kits in the
Territory. DURECT shall manufacture and Endo shall market and sell the
Finished Product, Implanter and, if Commercialized hereunder, Implant Kit
throughout the Territory under the applicable DURECT Trademarks and Endo
Trademarks in the Territory. The use of the DURECT Trademarks by Endo, and the
Endo Trademarks by DURECT, shall be subject to the prior review and approval
of the JCC as set forth in this Section 3.4.
(b) At least *** prior to a Party's first use of the other Party's
trademarks in connection with the Product, Implanter or Implant Kit, such
Party shall provide the JCC with samples of such trademark use for review of
the depiction of such trademark (i.e., font, positioning and presentation of
such trademark) by the JCC. If no objection is received from the JCC within
five business days of receipt by the JCC of such samples, such Party may use
such trademarks in the manner used in the samples submitted to the JCC for
review. In the event a Party subsequently decides to make a use of the other
Party's trademarks that materially alters the depiction of any such trademarks
previously provided to and approved by the JCC, such Party shall provide to
the JCC new samples of such use for review and approval in accordance with the
foregoing approval process. When using the trademarks of the other Party under
this Agreement, each Party undertakes to comply with all laws pertaining to
trademark notice requirements in force at any time in the Territory. Each
Party agrees that it shall use the other Party's trademarks in connection with
the Product, Implanter or, if Commercialized hereunder, Implant Kit, as
applicable, strictly in accordance with the guidelines, instructions and
quality standards issued by the JCC from time to time. In formulating such
guidelines, instructions and quality standards, the JCC shall give reasonable
consideration to the applicable trademark usage guidelines and similar
requirements of each Party in respect of such Party's trademarks.
(c) Endo acknowledges that DURECT is the owner of the DURECT
Trademarks, and DURECT acknowledges that Endo is the owner of the Endo
Trademarks. Endo agrees that all use of the DURECT Trademarks by Endo shall
inure to the benefit of and be on behalf of DURECT, and DURECT agrees that all
use of the Endo Trademarks shall inure to the benefit of and be on behalf of
Endo. Endo and DURECT each acknowledge that nothing in this Agreement shall
give either Party any right, title or interest in the other Party's trademarks
other than the right to use such trademarks in accordance with this Agreement.
Endo agrees with respect to the DURECT Trademarks, and DURECT agrees with
respect to the Endo Trademarks, that it will not challenge the title or
ownership of the other Party in, or attack or contest the validity of, such
trademarks.
(d) DURECT shall use all commercially reasonable efforts to register
and maintain, or cause to be registered and maintained, the DURECT Trademarks
(and the trademark CHRONOGESIC(TM) should it become a Co-Owned Trademark
pursuant to Section 3.4(f)) in the Territory during the term of this Agreement
at DURECT's sole expense. Endo shall use all commercially reasonable efforts
to register and maintain, or cause to be registered and maintained, the Endo
Trademarks and all Co-Owned Trademarks (other than the trademark
CHRONOGESIC(TM) should it become a Co-Owned Trademark pursuant to Section
3.4(f)) in the Territory during the term of this Agreement at Endo's sole
expense.
(e) To the extent permitted by law, all labeling, packaging,
literature, promotional material and advertising for any Product, Finished
Product, Implanter or Implant Kit to be marketed, distributed or sold in any
country in the Territory shall contain DURECT's name and logo with comparable
prominence as Endo's name and logo. To the extent practicable, or as required
by applicable law to protect the DURECT Trademarks and Endo Trademarks, DURECT
and Endo shall include on any material bearing any such trademarks an
acknowledgement that the DURECT Trademarks are the property of DURECT and the
Endo Trademarks are the property of Endo. Additionally, at the request of
ALZA, the Parties shall cause each Product and Finished Product and its
packaging to display prominently, in a manner reasonably acceptable to ALZA,
an ALZA name and logo, and to identify ALZA as a developer of the technology
in such Product. All uses of the ALZA name and marks on the Product and
Finished Product and its packaging shall be subject to ALZA having *** to
review and approve such uses. Except as approved by the JCC hereunder, neither
Party shall modify, alter, remove, cover or add to, in any manner whatsoever,
any trademark or trademark notice of the other Party that may be affixed or
attached to any Product, Finished Product, Implanter or, if Commercialized
hereunder, Implant Kit, or used in any labeling, packaging, literature,
promotional material or advertising therefor.
(f) All trademarks selected by the JCC for use in the Territory
solely in connection with the Product, Finished Product, Implanter and, if
Commercialized hereunder, Implant Kit including the Product name
CHRONOGESIC(TM) (if so selected), Product logo, and special promotional or
advertising taglines for the Product and Implanter shall be jointly owned by
both DURECT and Endo in the Territory, and shall be deemed for all purposes
hereunder "Co-Owned Trademarks". To the extent that one Party may be deemed to
solely own a Co-Owned Trademark prior to such adoption by the JCC, such Party
hereby assigns to the other Party an undivided half-interest in such trademark
(including all goodwill associated therewith) effective upon its adoption by
the JCC as a Co-Owned Trademark. Co-Owned Trademarks shall be used by the
Parties solely in connection with the Product, Finished Product, Implanter and
Implant Kit, and their use by the Parties shall inure to the benefit of and be
on behalf of both Parties as joint owners. The Co-Owned Trademarks shall be
owned, as between the Parties, by DURECT outside the Territory.
3.5 Non-Performance. In the event that a Party ("Complaining Party")
believes that the other Party ("Non-Performing Party") is not adequately
performing the obligations and responsibilities assigned to the other Party
under or in connection with this Agreement, including under the Development
Plan, Post-Registration Plan and/or Marketing Plan (other than any
non-performance by Endo in connection with sales details, which shall be
governed solely by Section 5.8) as relevant, then the Complaining Party shall
provide the Non-Performing Party with written notice of such claim including
specification of the respects in which the Complaining Party believes the
Non-Performing Party is not meeting such obligations and responsibilities with
reasonable particularity. The PDC, JCC, or JMC, as the case may be, shall
promptly meet to discuss such claims. If the PDC, JCC, or JMC, as the case may
be, does not reach a consensus decision within *** of such referral, then the
matter shall be referred to the JEC for resolution, provided that Sections
2.1(d)(ii) and (iii) shall not apply to such matters. If the JEC does not
reach consensus decision with respect to any such matter within *** of such
referral, then DURECT and/or Endo may submit the matter to arbitration
pursuant to the Accelerated Arbitration Provisions set forth in Section
16.13(b). If a determination is made pursuant to this Section 3.5, by the PDC,
JCC, JMC, JEC or the arbitrators, as the case may be, that the Non-Performing
Party has failed to adequately perform such obligations and responsibilities,
then the Complaining Party may perform such obligations and responsibilities
in lieu of the Non-Performing Party to the extent it reasonably deems
appropriate. The Complaining Party's performance of such obligations and
responsibilities pursuant to this Section 3.5 shall be reasonably consistent
with the scope of performance of such obligations and responsibilities
contemplated to be performed by the Non-Performing Party in the Development
Plan, Post-Registration Plan and/or Marketing Plan as relevant; provided,
however, nothing herein shall be deemed to alter the allocation of costs
between the Parties provided in Sections 4.6 and 5.7, provided further that,
at the option of the Complaining Party, the Non-Performing Party shall
reimburse the Complaining Party, or have deducted from payments otherwise due
the Non-Performing Party hereunder, *** of all (i) costs that would otherwise
be paid by or reimbursed to the Non-Performing Party under this Agreement had
the Complaining Party not performed such obligations and responsibilities on
behalf of the Non-Performing Party, and (ii) costs, in addition to those costs
set forth in the foregoing clause (i), associated with the development,
manufacture and/or Commercialization incurred by the Complaining Party to
perform such obligations and responsibilities on behalf of the Non-Performing
Party. The Non-Performing Party shall fully cooperate with the Complaining
Party in connection with the Complaining Party's exercise of its rights
hereunder. Any rights provided to the Complaining Party pursuant to this
Section 3.5 shall be in addition to any other rights or remedies available to
the Complaining Party under this Agreement (except for Section 5.8, the
provisions of which shall be DURECT's sole remedy thereunder), at law or in
equity.
3.6 Restrictions on Competing Products.
(a) Except as permitted by this Section 3.6 or in conjunction with
the other Party under this Agreement pursuant to Sections 2.2(b)(xi) and
(xii), during the term of this Agreement, each Party agrees not to, and to
cause its Affiliates not to, directly or indirectly, develop, attempt to
develop, actively investigate or Commercialize for its own account or grant to
a Third Party any right to develop or Commercialize a Related Product in the
Field in the Territory. In the event that a Party or one of its Affiliates (an
"Acquiring Party") obtains Control of a Third Party which has developed or
Commercialized (and is continuing to produce or sell), or is developing or
Commercializing, a Related Product (directly or indirectly), in any such case
within the Field within the Territory, the Acquiring Party shall, at its
option, either:
(i) cease, or cause its applicable Affiliate to cease such
development or Commercialization within *** after obtaining such Control and
during the term of this Agreement;
(ii) divest, or cause its applicable Affiliate to divest, the
Related Product within *** after obtaining such Control; or
(iii) promptly offer in writing to DURECT (in the case of Endo) or
Endo (in the case of DURECT) (the "Non-Acquiring Party"), the right to either,
at the Acquiring Party's option: (x) participate in *** of the Acquiring
Party's rights and obligations in connection with the development and
Commercialization of the Related Product or (y) acquire *** of the Acquiring
Party's interest in the Related Product at a valuation which is equal to the
price paid by the Acquiring Party for the Related Product. In either such
event, the Parties shall conduct good faith discussions regarding the terms of
any such arrangement, and the Acquiring Party shall not develop or
Commercialize such Related Product until the Parties reach an agreement
regarding the terms of such arrangement; provided that the Acquiring Party
shall be free to divest or cease development of such Related Product. In the
event that the Non-Acquiring Party declines to participate or acquire such an
interest in the Related Product, then the Acquiring Party shall divest or
cease development, or shall cause its applicable Affiliate to divest or cease
development of, such Related Product.
(b) In the event of a change of Control of a Party in which such
Party becomes Controlled by a Third Party, the restrictions contained in
Section 3.6(a) shall ***.
3.7 Right of Endo Regarding New Products. In the event that DURECT or
one of its Affiliates creates or adopts a development plan in connection with
the development or Commercialization of a New Product during the term of this
Agreement, it shall promptly provide written notice of such event ("First
Refusal Notice") to Endo and provide information reasonably requested by Endo
in connection therewith. Upon receipt of a First Refusal Notice, Endo shall
have *** to (i) notify DURECT in writing if it desires to participate with
DURECT in the development or Commercialization of the New Product or (ii)
decline to bid. If Endo does not respond in writing to the First Refusal
Notice within such *** period, then it shall no longer have any rights with
respect to the New Product. If Endo provides DURECT with timely notice of its
interest in participating in the development and Commercialization of the New
Product, then the Parties shall attempt in good faith to negotiate the terms
of an agreement for Endo to participate with DURECT in the development or
Commercialization of the New Product for a period not to exceed ***
("Negotiation Period"); provided that the terms of such agreement shall
require that Endo provide to DURECT development funding for the New Product.
If, despite such good faith negotiations, DURECT and Endo are unable to enter
into a definitive agreement during such Negotiation Period, then Endo shall no
longer have any rights with respect to the New Product and DURECT will
thereafter be free to enter into agreement(s) with Third Parties for the
Commercialization of such New Product.
3.8 Payment on Sales Outside Territory. In the event that DURECT or
any of its Affiliates sells or licenses for sale Product in any of Canada (if
not included within the Territory pursuant to Section 3.1(c)), ***, DURECT
shall make a cash payment to Endo in the amount of *** for each such country
within *** of the first commercial sale of Product in each such country;
provided that if in connection with a termination of this Agreement (other
than a termination under Section 13.4), Endo fails to spend the full amount
that it is projected to spend under the Summary Development Plan or
Development Plan, as applicable, DURECT may reduce such cash payment by the
percentage of such shortfall.
4. DEVELOPMENT AND REGULATORY MATTERS.
4.1 Exchange of Data and Know-How.
(a) The Parties acknowledge that DURECT is in the process of
conducting clinical studies and other development activities on the Product
necessary to make the Initial Regulatory Filing. Therefore, until the Initial
Regulatory Filing is made (the "NDA Filing Date"), DURECT shall be primarily
responsible for conducting the clinical studies and all other regulatory
matters, manufacturing matters and/or pre-clinical studies necessary to
support, prepare and file the Initial Regulatory Filing, and DURECT shall use
all commercially reasonable efforts necessary to make the Initial Regulatory
Filing. During such period, DURECT shall (i) keep Endo informed as to the
status of such efforts, (ii) permit Endo to review and comment on the Initial
Regulatory Filing and all subsequent Regulatory Applications during their
preparation, (iii) consult with Endo regarding the preparation of the Initial
Regulatory Filing and all subsequent Regulatory Applications, (iv) inform Endo
of all communications to and from any Regulatory Authority (including
providing Endo with copies of all such written communications) and any
documents related thereto requested by Endo, (v) provide Endo with no less
than *** to review and comment on any such communication (and related
documents) prior to its submission to a Regulatory Authority and (vi) provide
reasonable advance notice to Endo with respect to, and permit an Endo
representative to participate in all meetings with the FDA in connection with
the Product.
(b) During the term of this Agreement, to the extent that it is able
to do so under applicable confidentiality agreements binding on such Party,
each Party shall promptly provide to the other Party copies of all (i)
Technical Information that is in existence as of the Effective Date and other
such Technical Information that is developed or acquired by such Party from
time to time during the term, including all Regulatory Data and Regulatory
Documentation, (ii) to the extent material to the Product in the Field in the
Territory, written materials or correspondence relating to any comments,
requests and inquiries of the health care profession or any other Third
Parties (other than ALZA, which shall be subject to Section 4.1(c)) and all
information relating to the Product and (iii) all safety information
concerning the Product of which it becomes aware.
(c) During the term of this Agreement, DURECT shall promptly notify
Endo of and enable Endo to attend meetings or conferences with ALZA, and
provide to Endo copies of all written materials or correspondence to and from
ALZA, which, in any event,: (i) affect or reasonably may affect Endo's rights
under this Agreement, or (ii) to the extent not precluded by confidentiality
obligations to ALZA contained in the ALZA Agreement, relate to the Product.
(d) Each Party agrees to notify the other Party, within one business
day of the date such Party first learns of any "serious" adverse experience,
side effect, injury, toxicity or sensitivity reaction or any unexpected
incidents, and the severity thereof, associated with the clinical uses,
studies, investigations, tests and marketing of any of the Products, whether
or not determined to be attributable to such Product(s). "Serious", as used in
this Section, refers to an adverse experience from the Product which is fatal
or life-threatening, results in permanent or substantial disability,
in-patient hospitalization or prolongation of hospitalization, or is a
congenital anomaly, a cancer, or a result of an overdose. Except as otherwise
set forth herein to the contrary, with respect to all other adverse
experiences (i.e., non-serious), each Party shall notify the other Party and
furnish such other Party with any copies of such non-serious adverse
experiences reported in connection with any of the Products within *** of
receipt.
(e) All such data and information exchanged or required to be
exchanged by the Parties pursuant to this Section 4.1 shall be owned by DURECT
(or ALZA to the extent it relates to the System in accordance with the terms
of the ALZA Agreement), whether in DURECT's possession or control as of the
Effective Date or developed by any Party during the term of this Agreement.
DURECT hereby grants Endo the right and license to use all such data and
information for all purposes necessary to allow Endo to exercise its rights
and perform its obligations under this Agreement.
4.2 Product Registrations. Except as otherwise mutually agreed by
DURECT and Endo, DURECT shall own all Registrations for the Product in the
Territory.
4.3 Scope of Development Plan.
(a) The Parties acknowledge that a Summary Development Plan
(including a summary development budget) dated as of the Effective Date for
calendar years 2002 through NDA Approval has been approved by both Parties
("Summary Development Plan"). Pursuant to the JEC's direction under Section
2.1(b)(xiii), the PDC shall meet to approve the definitive Development Plan
for the Product based on the Summary Development Plan, which shall be approved
no later than the earlier of *** or the *** anniversary of the Trial
Commencement Date. Such Development Plan shall include, on a calendar
year-by-calendar year basis: (i) the research and development activities
including clinical studies, non-clinical studies, manufacturing process
validation, CMC, ICH registration batches, pre-approval inspection
preparation, pharmaceutical development including quality control and
stability, manufacturing qualification and regulatory tasks under this
Agreement for the development of the Product through Final FDA Approval (or
similar Registration elsewhere in the Territory) (in any event, excluding any
and all DURECT Activities); (ii) the estimated budget for each development
activity, and estimated over-all budget for performance of all development
activities under the Development Plan ("Development Budget"); (iii) "go/no go"
decision criteria for each stage of development of the Product; (iv) target
Product profiles, which shall be created by the PDC and JCC, jointly; (v) the
allocation of the respective responsibilities of DURECT and Endo regarding
development activities; and (vi) timelines for scientific, medical, regulatory
and other activities to be undertaken by the Parties for the purpose of
obtaining Registration for the Product in the Territory. The Development Plan
shall exclude any and all DURECT Activities. Once approved, the Development
Plan shall be updated by and reviewed by the PDC at least once each calendar
year by a date no later than *** of each year so as to cover any other
amendments in accordance with the decision-making authority provided in
Section 2.2(d).
(b) Prior to Registration in the Territory, the Parties intend that
DURECT will be primarily responsible for implementing the regulatory strategy
developed by the PDC for the Product in the Territory. The Parties intend that
DURECT will be primarily responsible for regulatory activities in the
Territory after Registration, comprising regulatory compliance, worldwide
safety surveillance, adverse event reporting and all other necessary support
services. Following Registration in the Territory, Endo shall cooperate with
DURECT and provide prompt reasonable assistance including collecting and
supplying all required information to DURECT so that DURECT can maintain
regulatory compliance in the Territory with respect to the Product. Endo shall
permit duly authorized representatives of DURECT to inspect, on the premises
of Endo, its Affiliates, Sublicensees and other designees, as applicable, upon
*** advance written notice, during normal business hours, supplies of the
Product, Finished Product and Implanter, Endo's quality control records and
facilities used in the distribution and sale of the Product, Finished Product
and Implanter to ensure compliance with the quality control standards set
forth in the NDA for the Product; provided that such inspections shall take
place no more often than *** per any calendar year.
(c) As of the Effective Date, each of the Parties believes that the
summary development budget in the Summary Development Plan provides for
sufficient funds to complete the execution of the Development Plan
contemplated by the Parties in accordance with this Section 4.3. Each Party
shall provide sufficient funds to complete the execution of the Development
Plan provided that the Product is developed in accordance with this Section
4.3.
4.4 Post-Registration Development. After Registration of the Product
in the Territory, and consistent with the Marketing Plan adopted by the JCC,
Endo shall develop a plan (to be reviewed and approved by the JCC) for
post-Registration development activities, if applicable, to be performed for
the purpose of providing marketing support for the Product ("Post-Registration
Plan") which shall include the allocation (and transition to the extent
applicable) of development responsibility (including the responsibility for
conduct of Phase IV clinical trials) for the Product as between the Parties.
Thereafter, Endo shall be responsible for performing such development
activities allocated to it in the Post-Registration Plan through completion,
and DURECT shall be responsible for performing such development activities
allocated to it in the Post-Registration Plan through completion, provided
that development activities involving labeling revisions shall be DURECT's
responsibility. The Parties shall work together in order to assure an orderly
transfer of responsibilities in accordance with the Post-Registration Plan.
4.5 Conduct of Development Plan and Post-Registration Plan. Under the
auspices of, and subject to review and approval by, the PDC in the case of the
Development Plan and the JCC in the case of the Post-Registration Plan, the
Parties shall have the following responsibilities relating to the conduct of
the Development Plan and the Post-Registration Plan:
(a) Each of Endo and DURECT shall be responsible for the preparation
of all protocols and the conduct of Product development activities for which
such Party is designated as the Party responsible for such activity in the
Development Plan and Post-Registration Plan.
(b) DURECT shall be responsible for preparing all Regulatory
Applications necessary or desirable to register the Product in the Territory.
DURECT shall be responsible for filing all Regulatory Applications and,
thereafter, to conduct all communications with the Regulatory Authorities
during the registration process. DURECT shall submit all proposed filings to
the PDC for its approval. DURECT shall keep the PDC informed as to the status
of such efforts, permit the PDC to review any revisions to any filings or
communications with Regulatory Authorities during their preparation, and shall
confer with the PDC regarding the preparation of such filings and
communications and the registration process. During such process, the Parties
shall collaborate and cooperate in the preparation and filing of all documents
necessary therefor and all regulatory interactions and compliance with
Regulatory Authorities in the Territory.
(c) DURECT shall supply all Product and Implanters as necessary
and/or desirable for all studies to be conducted pursuant to the Development
Plan and Post-Registration Plan. Such Product and Implanters shall be supplied
in accordance with, in all material respects, the Specifications, in
accordance with cGMP, and in accordance with supply forecasts therefor
provided by the PDC or JCC respectively at least *** (with respect to the
Development Plan) and *** (with respect to the Post-Registration Plan) prior
to the anticipated delivery date for each shipment thereof. Such Product shall
be supplied at DURECT's Fully Burdened Manufacturing Cost which shall be
included in Development Costs under Section 4.6, and such Implanters shall be
supplied pursuant to Section 8.13. DURECT's obligation to supply Product and
Implanters for any Post-Registration development shall be subject, first, to
fulfilling all requirements for the supply of Product, Finished Product and
Implanters for commercial sales pursuant to Section 8. DURECT shall use all
commercially reasonable efforts to reduce the Fully Burdened Manufacturing
Cost of manufacturing Product and Finished Product. If, in order to achieve
the reduction in cost, DURECT reasonably determines that it must change the
manufacturing process for the Product or Finished Product, the PDC shall
approve and include such work in the Development Plan as an amendment;
provided that in such event Endo shall not be responsible for any costs
incurred in connection with implementing such reduction in costs.
(d) In connection with performing its obligations pursuant to the
Development Plan and Post-Registration Plan, each of Endo and DURECT shall use
all commercially reasonable efforts to perform such responsibilities
diligently using the same efforts that an established pharmaceutical company
normally devotes to its own comparable products, taking into account the
maximum sales and profitability potential of the Product while promoting the
therapeutic profile and benefits of the Product in the most commercially,
reasonable beneficial and responsible manner. Without limiting the generality
of the foregoing, each such Party shall:
(i) cooperate with the other Party to implement the Development
Plan and Post-Registration Plan, and such other activities that, from time to
time, the PDC or JCC decides are necessary for the commercial success of the
Product;
(ii) use all commercially reasonable efforts to perform the work
set out for such Party to perform in the Development Plan and
Post-Registration Plan;
(iii) conduct all work pursuant to the Development Plan and
Post-Registration Plan in good scientific manner, and in compliance with all
requirements of applicable laws, rules and regulations, and all other
requirements of any applicable cGMP, good laboratory practice and current good
clinical practice to attempt to achieve the objectives of such plans
efficiently and expeditiously; and
(iv) completely and accurately reflect all work done and results
achieved in connection with the Development Plan and Post-Registration Plan in
the form required under all applicable laws and regulations. The other Party
shall have the right, during normal business hours and upon reasonable prior
written notice, to inspect and copy all such records at its own expense in a
manner that is not unreasonably disruptive. The inspecting Party shall
maintain such records and information contained therein in confidence in
accordance with Section 10 and shall not use such records or information
except to the extent otherwise permitted by this Agreement.
4.6 Funding of DURECT Activities, Development Plan and
Post-Registration Plan.
(a) From and after the Effective Date, each of DURECT and Endo shall
be responsible for the Development Costs and DURECT Activities Costs listed
below its name in the following table:
---------------------------------------------------- -------------------------------------------------
DURECT Endo
---------------------------------------------------- -------------------------------------------------
100% of the DURECT Activities Costs, if any, prior 0% of the DURECT Activities Costs, if any,
to June 30, 2004 prior to June 30, 2004
---------------------------------------------------- -------------------------------------------------
50% of the DURECT Activities Costs, if any, after 50% of the DURECT Activities Costs, if any,
June 30, 2004 after June 30, 2004
---------------------------------------------------- -------------------------------------------------
50% of the Development Costs under the Development 50% of the Development Costs under the
Plan for the Product (and any development plan for Development Plan for the Product (and any
any line extensions of the Product and Related development plan for any line extensions of the
Products pursuant to Section 2.2(b)(xi) and (xii)) Product and Related Products pursuant to
Section 2.2(b)(xi) and (xii))
---------------------------------------------------- -------------------------------------------------
***% of the Development Costs under the ***% of the Development Costs under the
Post-Registration Plan for the Product that are Post-Registration Plan for the Product that are
NOT intended for supplemental NDA submissions, as NOT intended for supplemental NDA submissions,
determined by the JCC as determined by the JCC
---------------------------------------------------- -------------------------------------------------
***% of the Development Costs for the development ***% of the Development Costs for the
activities that ARE intended for supplemental NDA development activities that ARE intended for
submissions, as determined by the PDC supplemental NDA submissions, as determined by
the PDC
---------------------------------------------------- -------------------------------------------------
(b) With respect to those Development Costs and DURECT Activities
Costs to be shared on a 50/50 basis between DURECT and Endo pursuant to the
above table, within *** after the end of each calendar quarter, DURECT and/or
Endo, as the case may be, shall provide to the other Party an invoice in an
amount equal to 50% of such Development Costs or DURECT Activities Costs
incurred by such Party in such quarter. Payment terms shall be *** days from
the date of each Party's receipt of any correct invoice. Payments shall be
sent to the "Remit to" address set forth on the invoice. Each Party shall pay
the other a late charge of *** per month (or the maximum interest allowable by
applicable law, whichever is less) for each invoice past due for more than 30
days from the date of such Party's receipt of any correct invoice. Should a
Party dispute any portion of an invoice, it shall not be required to pay any
portion of such invoice until such time as the dispute is resolved and such
disputing Party receives a fully corrected invoice; provided that, in such an
event, the other Party shall have the option of issuing a new, correct invoice
for the portion of the original invoice not in dispute, and the disputing
Party shall pay such new invoice within the time limits set forth in this
Section 4.6(b).
(c) Notwithstanding anything to the contrary in Sections 4.6(a) and
(b) and except as set forth in this Section 4.6(c), Endo shall have no
obligations under Sections 4.6(a) and (b) to make any payments to DURECT for
any Developments Costs incurred up to and including the date on which the
first patient is dosed with the Product in the first clinical trial of at
least that number of patients necessary to satisfy the FDA which occurs after
the Effective Date (such date, the "Trial Commencement Date" and such trial,
the "First Trial"). Notwithstanding the foregoing: (i) in the event the Trial
Commencement Date has not occurred by December 31, 2003, then during the
period commencing on January 1, 2004 until the earlier of the Trial
Commencement Date or June 30, 2004, Endo shall be responsible for 25% of the
Development Costs incurred in each such calendar month, up to an aggregate
payment by Endo to DURECT of $3 million of Development Costs for such period;
and (ii) in the event the Trial Commencement Date has not occurred on or
before June 30, 2004, then Endo shall be responsible for such portion of the
Development Costs incurred after June 30, 2004 in accordance with Section
4.6(a).
4.7 Delay of Initial Regulatory Filing. In the event that
Registration of the Initial Regulatory Filing is denied or is materially
delayed by the FDA, or if the FDA imposes additional material requirements at
any time, then the PDC shall (a) immediately meet to discuss in good faith a
reassessment of the relevant Development Plan to address the FDA's objections
and questions, (b) immediately give the JEC notice of such developments, (c)
from time to time as additional such developments arise, promptly give the JEC
notice of such additional developments, and (d) keep the JEC reasonably
informed of the PDC's deliberations regarding all such developments. As used
in this Section 4.7, a material delay is a delay arising from a requirement
set forth by the FDA that DURECT conduct additional studies (clinical and
non-clinical) not conducted in connection with the submission of the Initial
Regulatory Filing. In the event of a material delay, the PDC shall apply its
sound scientific, commercial and regulatory judgment with all deliberate speed
to determine whether or not it is in the best interest of both of Endo and
DURECT to go forward with the conduct of any additional studies required by
the FDA. Upon reaching such determination, the PDC shall make a formal
recommendation of its conclusions to the JEC and shall await direction from
the JEC regarding what, if any, further action is to be taken with respect to
such matters. Upon receiving the approval of the JEC to undertake the
additional studies required by the FDA, the PDC shall be authorized, and is
hereby directed, to amend the existing overall Development Budget as necessary
to undertake such studies and to cause such studies to be undertaken.
4.8 Suspension of Clinical Development Activities. Any Party shall
have the right to immediately suspend the relevant clinical development
activities with respect to the Product for a particular indication or dosage
strength in the event that such Party, reasonably and in good faith,
determines that there exists significant and urgent concerns relating to
patient safety with respect to such clinical studies, after first conferring
with the other Party with respect thereto. The Party making the determination
to suspend such clinical activities shall notify the other Party in writing
immediately of any such suspension and the reasons therefor. The PDC shall
then promptly determine what actions should be taken with respect to such
clinical activities. Once a determination is made by the PDC with respect to
the appropriate actions to be taken, if such action requires amendment of the
relevant Development Plan or (in consultation with the JCC) Marketing Plan and
the Development Budget or (in consultation with the JCC) Marketing Budget, the
PDC shall make a formal recommendation of its conclusions to the JEC,
including the results of its conclusions. Upon receiving approval of the JEC
to make any recommended changes, the PDC shall be authorized, and is hereby
directed, to implement such actions.
4.9 DURECT Activities. From and after the Effective Date until and
including June 30, 2004, DURECT shall be responsible for 100% of the DURECT
Activities Costs. After June 30, 2004, the Parties shall share in the DURECT
Activities Costs on a 50/50 basis in accordance with Sections 4.6(a) and
4.6(b).
5. DISTRIBUTION AND PROMOTION.
5.1 Generally. As promptly as it is reasonably able after obtaining
Registration of the Product in each country of the Territory (and in any event
within *** months after Registration), Endo (or its Affiliates or designees)
shall use all reasonable commercial efforts to launch the Product in each
country of the Territory and shall thereafter continue diligently to
Commercialize the Product in each country of the Territory in accordance with
the Marketing Plan using the same efforts that an established pharmaceutical
company normally devotes to its own comparable products, taking into account
the maximum sales and profitability potential of the Product while promoting
the therapeutic profile and benefits of the Product in the most commercially,
reasonably beneficial and responsible manner and with at least the level of
diligence and resources as are applied to Endo's other comparable products.
5.2 Marketing Plan. Pursuant to the JEC's direction under Section
2.1(b)(xiv), Endo shall develop, finalize and review at the JCC a Marketing
Plan for the Product, Finished Product and Implanters on a calendar
year-by-calendar year basis, covering the *** calendar years commencing with
***. The Marketing Plan shall include, at such time as appropriate, (i)
preliminary plans related to the prelaunch, launch, promotion, reimbursement
and sales of the Product, Finished Product and Implanters and which shall, at
such time as appropriate, include pricing strategy, public relations and
promotional communications, forecasts for the number of sales representatives,
sales detailing plans, sales incentive compensation programs related to the
Product, Finished Product and Implanters and a summary of Phase IV clinical
studies and a reasonably descriptive overview of the marketing and advertising
campaigns proposed to be conducted; and (ii) an estimated budget for the
performance of the activities under the Marketing Plan ("Marketing Budget").
The Marketing Plan shall be commensurate with the commitment normally devoted
by an established pharmaceutical company to launch its own products of
comparable potential for each such calendar year. The Marketing Plan shall be
updated by Endo and reviewed by the JCC at least once each calendar year by a
date no later than *** of each year so as to cover the next *** full calendar
years and to include any other amendments in accordance with the
decision-making authority provided in Section 2.3(d).
5.3 Endo Responsibilities; Rights. In connection with its
responsibilities for distribution, marketing and sales of the Product,
Finished Product and Implanters in the Territory, Endo shall provide for all
sales force personnel (including sales administration and training), order
entry, customer service, reimbursement management, medical affairs, medical
information, marketing (including all advertising and promotional
expenditures), warehousing, physical distribution, invoicing, credit and
collections, production forecasting and other related facilities and services
necessary or desirable for such distribution, marketing and sales. Endo agrees
that it will retain a sufficient number of detailing representatives necessary
to adequately cover the designated physician call points for the Product,
Finished Product and Implanters in order to perform its obligations hereunder.
5.4 Promotional Materials and Activities. DURECT shall be entitled to
participate (through the JCC meetings) in the review of future promotional
materials and promotional activities with respect to the Product, Finished
Product and Implanters in the Territory. All promotional materials and
promotional activities shall be developed by Endo, with input from DURECT
through the JCC process, following the general guidelines established by the
JCC and consistent with the then current Marketing Plan.
5.5 Technical Support Representatives. The Product, Finished Product
and Implanters will be further supported by a technical field force to support
the pharmaceutical detailing representatives of a size and scope to be
determined by Endo and approved by the JCC, the goal of which shall be to
provide detailed training to the physician's office on the implant procedure,
patient management, reimbursement process and to attend first implants, where
feasible. Should Endo choose to contract this technical force from a Third
Party rather than use its own personnel, then Endo shall provide written
notice thereof to DURECT. Within *** of receipt of such notice from Endo,
DURECT shall have the right to elect to provide such technical force by
providing written notice to Endo of such election; provided that if DURECT
elects to provide the technical support field force, DURECT shall be
responsible for *** of such costs pursuant to a procedure to be adopted by the
JCC, and DURECT shall cooperate, and coordinate such technical support
efforts, with Endo.
5.6 Global Marketing Team. To the extent reasonably feasible, DURECT
shall permit Endo to participate in any global marketing strategy team formed
by DURECT that includes members from Third Parties licensed to market the
Product or Finished Product outside the Territory.
5.7 Distribution and Marketing Costs. From and after the Effective
Date, Endo shall be responsible for costs relating to the marketing, sale and
distribution of the Product and Finished Product in the Territory.
5.8 DURECT Co-Promotion Right; Supplemental Call Plan. Following the
first full calendar year after the First Commercial Sale of the Finished
Product, in the event that (i) Endo's sales details for the Finished Product
are below the target for such details as set forth in the applicable Marketing
Plan by more than (a) *** with respect to any calendar year or (b) *** with
respect to any *** consecutive calendar years, and (ii) the foregoing
deficiency is not due to Regulatory Authority action, shortage of supply
pursuant to Section 8.10 or an Inability to Supply, then DURECT shall have the
right to present to the JCC a supplemental call plan for DURECT to provide for
the shortfall in sales details. If such supplemental call plan is approved by
the JCC, which approval shall not be unreasonably withheld or delayed, DURECT
shall be entitled to conduct sales details in the amount of such shortfall,
and DURECT and Endo shall share *** of the actual costs thereof for a minimum
of *** until such time as Endo reasonably demonstrates its ability and
readiness to conduct sales calls in order to meet the forecasted sales detail
target. If the JCC does not so approve such supplemental call plan, then
DURECT at its option shall be entitled to conduct sales details in the amount
of such shortfall for a minimum of ***, and the costs thereof shall be borne
by DURECT alone; provided that under any condition DURECT shall cooperate, and
coordinate such efforts, with Endo. Notwithstanding the foregoing, in the
event that Endo's sales force has not reasonably demonstrated its ability and
readiness to conduct sales calls in order to meet the applicable sales details
target set forth in the Marketing Plan submitted by Endo to the JCC for the
year following DURECT's commencement of sales details hereunder, then DURECT
shall, following the *** anniversary of DURECT's commencement of sales details
hereunder, be entitled to continue its supplemental sales detail activities
under this Section 5.8 in the amount of such shortfall, and Endo shall
reimburse DURECT its expenses therefor after such *** at the rate established
for a Complaining Party under Section 3.5 until such time as the Endo sales
force reasonably demonstrates its ability and readiness to conduct sales calls
in order to meet the forecasted sales detail target in the then-current
Marketing Plan; provided that if the Parties at any time do not agree to such
ability and readiness of Endo to meet the applicable forecasted sales detail
target, then either Party may resolve such disagreement pursuant to the
Accelerated Arbitration Provisions set forth in Section 16.13(b). At DURECT's
reasonable request, Endo shall provide to DURECT documents and other
information necessary for DURECT to determine whether Endo has conducted the
number of sales details provided for in this Section 5.8. In addition, so long
as DURECT is conducting such supplemental sales details in accordance with
this Section 5.8, DURECT will be included in, and be allowed to participate
in, all promotional activities being conducted by Endo pursuant to the then
current Marketing Plan, including participation in symposia, key opinion
leader events, and the like, and Endo shall provide DURECT's supplemental
detailing force with all promotional materials and support services to the
same extent available to Endo's sales force; provided that any additional
costs incurred by Endo in connection therewith shall be borne by the Parties
in accordance with the cost allocations set forth in this Section 5.8.
5.9 Sales Incentive Compensation Programs. During the first ***
following the First Commercial Launch, Endo shall provide to its sales
representatives that are promoting the Product, Finished Product and Implanter
sales incentive compensation programs for the Product, Finished Product and
Implanter that are no less favorable than those which Endo provides to such
sales representatives with respect to their sale of any pharmaceutical
products other than the Product, Finished Product or Implanter.
6. PAYMENTS.
6.1 R&D Reimbursement and Payments to DURECT . Endo shall pay to
DURECT non-refundable and non-creditable payments to reimburse DURECT for
Development Costs borne by DURECT to develop the Product consistent with the
timing set forth below:
------------------------------------------------------- -----------------------------------------------------
Timing Reimbursement
------------------------------------------------------- -----------------------------------------------------
Within *** days after the date DURECT provides Endo a Reimbursement of Development Costs borne by DURECT
copy of the FDA's notification that it has accepted prior to the Effective Date in connection with the
the first of the protocols relating to any one of the Product, up to a total of ***
Placebo-Controlled Studies; provided that Endo has
not exercised its termination right set forth in
Section 13.3(c)
------------------------------------------------------- -----------------------------------------------------
Within *** days after the date the FDA notifies Reimbursement of Development Costs borne by DURECT
DURECT of Acceptance of the Product's NDA for Filing prior to the Effective Date in connection with the
Product, up to a total of ***
------------------------------------------------------- -----------------------------------------------------
Within *** days after the date that Canada becomes Reimbursement of Development Costs borne by DURECT
part of the Territory in accordance with Section prior to the Effective Date in connection with the
3.1(c) Product up to a total of ***
------------------------------------------------------- -----------------------------------------------------
Within *** days after the date DURECT provides to Reimbursement of Development Costs borne by DURECT
Endo a copy of the FDA's final approval of the after the Effective Date up to a total of ***
Product's NDA which approval will allow for the
immediate marketing and sale of Product in the United
States ("Final FDA Approval")
------------------------------------------------------- -----------------------------------------------------
Within *** days after the date DURECT provides to Reimbursement of Development Costs borne by DURECT
Endo a copy of the Product Registration in Canada after the Effective Date in connection with the
which approval will allow for the immediate marketing Product, up to a total of ***
and sale of Product in Canada in the event that
Canada has become part of the Territory in accordance
with Section 3.1(c)
------------------------------------------------------- -----------------------------------------------------
On the date that is *** days after the First Reimbursement of Development Costs borne by DURECT
Commercial Sale of the Product after the Effective Date until the date of
notification of the Final FDA Approval in
connection with the Product over and above those
amounts addressed immediately above, up to a total
of ***
------------------------------------------------------- -----------------------------------------------------
The Party who receives the written acceptance, or the Registration, as the
case may be, from the FDA shall be responsible for promptly informing the
other Party in writing when such event has occurred.
6.2 Distribution Fee. Endo shall pay to DURECT a Distribution Fee
based on Net Sales of Finished Product in the Territory as calculated in
accordance with this Section 6.2. The applicable percentage of Net Sales used
for the purpose of calculating the Distribution Fee payable to DURECT in a
calendar year shall be the applicable percentage based on the prior year's
total Net Sales of Finished Product in the Territory, as set forth below:
------------------------------------------------------- -----------------------------------------------------
Prior Annual Sales Distribution Fee to DURECT
------------------------------------------------------- -----------------------------------------------------
When calendar year net commercial units recorded by DURECT receives *** of Net Sales for such year
Endo as commercial sales of Product are up to and minus the aggregate Transfer Price paid by Endo for
including *** units all units of Product
------------------------------------------------------- -----------------------------------------------------
When calendar year net commercial units recorded by DURECT receives *** of Net Sales for such year
Endo as commercial sales of Product are greater than minus the aggregate Transfer Price paid by Endo for
*** units but less than or equal to *** units all units of Product
------------------------------------------------------- -----------------------------------------------------
When calendar year net commercial units recorded by DURECT receives *** of Net Sales for such year
Endo as commercial sales of Product are greater than minus the aggregate Transfer Price paid by Endo for
*** units but less than or equal to *** units all units of Product
------------------------------------------------------- -----------------------------------------------------
When calendar year net commercial units recorded by DURECT receives *** of Net Sales for such year
Endo as commercial sales of Product are greater than minus the aggregate Transfer Price paid by Endo for
*** units but less than or equal to *** units all units of Product
------------------------------------------------------- -----------------------------------------------------
When calendar year net commercial units recorded by DURECT receives *** of Net Sales for such year
Endo as commercial sales of Product are greater than minus the aggregate Transfer Price paid by Endo for
*** units all units of Product
------------------------------------------------------- -----------------------------------------------------
An example of the calculation of Distribution Fee payments is set forth on
Exhibit M.
6.3 Minimum Payments. Within *** after the Effective Date, Endo shall
prepare and deliver to DURECT a good faith projection of the Net Sales for the
first *** of marketing the Finished Product in the Territory ("Sales
Projection"). At least *** in each calendar year, until Final FDA Approval,
Endo shall update such Sales Projection, with one update to be delivered no
later than *** after NDA filing and a final update to be delivered within ***
after Final FDA Approval. The Sales Projection and each subsequent update
shall be reviewed and approved by the JCC and shall be consistent with the
Marketing Plans and the Current Forecast for supply of Finished Product
provided under Section 8.3, provided that the quantities of Finished Product
in such Sales Projection shall not be binding on Endo. In the Minimum Payment
Year, Endo shall pay to DURECT on a quarterly basis minimum payments equal to
*** of the projected quarterly Net Sales of Finished Product (*** of projected
Net Sales of Product on an annual basis) based on the Sales Projection update
delivered *** after Final FDA Approval for the *** of marketing of the Product
in the Territory ("Minimum Payments"). Minimum Payments paid to DURECT by Endo
shall be fully creditable against Distribution Fees under Section 6.2 for the
Minimum Payment Year for which the Minimum Payments are made.
6.4 Allocation of Sales. Endo shall allocate or reallocate sales of
Product to Net Sales received in a specific calendar month or calendar year in
accordance with Endo's usual and customary sales allocation practices that
Endo applies to its other products.
6.5 ALZA Payments.
(a) DURECT shall be solely responsible and obligated, and Endo shall
have no responsibility or obligation at any time, for any and all payments due
to ALZA under or in connection with the ALZA Agreement, including any
increased costs under or in connection with Sections 2.3(b) or 5.6(a) of the
ALZA Agreement.
(b) Notwithstanding Section 6.5(a), during the term of this
Agreement, DURECT (i) shall not breach, or default under, the ALZA Agreement
which breach or default could give rise, whether immediately or with the
passage of time, to termination of such agreement or restriction of DURECT's
rights thereunder in a manner that would adversely affect the rights granted
by DURECT to Endo under this Agreement (and, pursuant to Sections 4.1(c) and
15.1, shall provide Endo with prompt written notice of any such alleged breach
or default), (ii) shall maintain its exclusive rights to the Product pursuant
to the ALZA Agreement, including Sections 5.1(b) and 5.3(a)(A) of the ALZA
Agreement, and (iii) shall not amend the ALZA Agreement in any manner that
will alter DURECT's rights thereunder in a manner that would adversely affect
the rights granted by DURECT to Endo under this Agreement.
6.6 Bankruptcy Rejection of ALZA Agreement. (a) Prior to filing any
motion, pleading or otherwise seeking a Bankruptcy Rejection of the ALZA
Agreement under 11 U.S.C. 365 or other comparable provision of any Bankruptcy
Laws (including by way of response to any motion or other pleading filed by
ALZA seeking Bankruptcy Rejection or assumption, affirmance or other similar
relief with respect to the ALZA Agreement), DURECT or any other Person acting
on behalf of DURECT or its estate pursuant to any Bankruptcy Laws, shall give
*** notice to Endo of the intent to seek such Bankruptcy Rejection ("Rejection
Notice").
(b) The Rejection Notice must include the following: (i) the factors
considered by the moving party underlying the business judgment justifying the
Bankruptcy Rejection of the ALZA Agreement, (ii) any monetary defaults by
DURECT under the ALZA Agreement through the date of the notice, (iii) any
monetary obligations under the ALZA Agreement for the *** subsequent to the
date of the notice that DURECT has no intention of meeting, (iv) any
non-monetary defaults by DURECT under the ALZA Agreement to the date of the
notice and (v) any anticipatory non-monetary defaults by DURECT under the ALZA
Agreement.
(c) No later than *** after actual receipt of the Rejection Notice,
Endo may, at its option, in its sole discretion and without prejudice to any
other rights or remedies available to Endo under this Agreement, notify DURECT
of its undertaking to do any of the following: (i) provide DURECT with the
funds necessary to cure all pre-existing monetary defaults under the ALZA
Agreement, (ii) provide DURECT, on an ongoing basis, with funds necessary to
meet all of DURECT's monetary obligations under the ALZA Agreement, if and as
they arise in the ordinary course of business between ALZA and DURECT, (iii)
provide DURECT with all services and support necessary and appropriate to cure
all non-monetary defaults and to prevent any anticipatory non-monetary
defaults by DURECT under the ALZA Agreement and (iv) acknowledge that should
this Agreement be rejected and Endo choose to retain its rights under 11
U.S.C. ?365(n)(1)(B) or other similar provision of any Bankruptcy Laws, all of
Endo's claims under such undertaking shall be subject to 11 U.S.C.
?365(n)(2)(C) ("Undertaking").
(d) Should DURECT or any other Person acting on behalf of DURECT or
its estate pursuant to any Bankruptcy Laws, decide to seek Bankruptcy
Rejection of the ALZA Agreement notwithstanding the Undertaking, any motion or
pleading seeking Bankruptcy Rejection of the ALZA Agreement shall attach
copies of the Rejection Notice and the Undertaking and shall be served on Endo
as a party in interest to such proceeding in accordance with the Bankruptcy
Laws, the Federal Rules of Bankruptcy Procedures and Local Rules of the
bankruptcy court administering the Bankruptcy Case.
6.7 Equity Investment in DURECT
On Tuesday, November 12, 2002, Endo shall purchase from DURECT, and
DURECT shall issue to Endo, 1,533,742 shares of validly issued, fully paid,
nonassessable shares of DURECT common stock, par value $.0001 per share
("DURECT Common Stock"), for an aggregate purchase price of $4,999,998.92
pursuant to the Common Stock Purchase Agreement attached as Exhibit O hereto
(the "Common Stock Purchase Agreement").
7. PAYMENTS AND REPORTS.
7.1 Payments. Beginning *** after the end of the calendar quarter in
which the First Commercial Sale is made in the Territory and for each calendar
quarter thereafter (no later than *** after the end of such calendar quarter),
Endo shall submit a statement to DURECT, which shall set forth the amount of
Net Sales in the Territory, during such quarter, and the calculation of
Distribution Fees due on such Net Sales for such quarter. Additionally,
beginning *** after the calendar quarter in which Minimum Payments first
become payable and for the three calendar quarters thereafter (no later than
*** after the end of such calendar quarter), Endo shall submit a statement to
DURECT, which shall set forth the amount due to DURECT as Minimum Payments
during such quarter, and the calculation of such payment. Each such statement
shall be accompanied by the payment, if any, due to DURECT.
7.2 Mode of Payment. Endo shall make all payments required under this
Agreement by wire transfer (at DURECT's expense for such wire transfer fees)
to any account specified by DURECT or as otherwise directed by DURECT from
time to time in U.S. Dollars, provided that, with respect to Canada, such
payments shall be payable in U.S. Dollars, calculated using the rate of
exchange which is the average commercial rate of exchange for the ***
preceding the date of payment for the conversion of local currency to U.S.
Dollars as published by The Wall Street Journal (or if such journal shall
cease to publish currency exchange rates, then another leading U.S. financial
publication or bank as mutually agreed to in writing by the Parties).
7.3 Records Retention. Endo, its Sublicensees, DURECT, its Third
Party Manufacturers, and each such Party's respective Affiliates shall keep
complete and accurate records pertaining to the development, sale and
manufacture of Product, Finished Product and Implanters and the calculation of
Net Sales in the Territory to permit the determination of Fully Burdened
Manufacturing Cost of Product and Finished Product (and actual, direct costs
of Implanters), Development Costs, Distribution Fees and distribution, sales
and marketing costs relating to the Product, Finished Product and Implanters
for a period of *** after the year in which such sales or costs occurred, and
in sufficient detail to permit the Parties to confirm the accuracy of each of
the foregoing.
7.4 Audit Request. During the term of this Agreement and for a period
of two years thereafter, at the request and expense of any Party (the
"Auditing Party"), DURECT and its Affiliates and Third Party Manufacturers (in
the case of a request by Endo) or Endo and its Affiliates and Sublicensees (in
the case of a request by DURECT) (the "Audited Party") shall permit an
independent, certified public accountant appointed by the Auditing Party and
reasonably acceptable to the Audited Party, at reasonable times and upon
reasonable notice but not more often than two times each calendar year, to
examine such records as may be necessary to determine the correctness of any
report or payment made under this Agreement, to determine the consistency of
actual expenditures versus the budgeted expenditures set forth in the
Development Budget and/or Marketing Budget, as the case may be, or obtain
information as to the determination of Fully Burdened Manufacturing Cost of
Product and Finished Product (and actual, direct costs of Implanters)
(including the records of when during production batches failed, the cost and
nature of such failures), and the aggregate Net Sales and Distribution Fees
payable for any calendar quarter. Results of any such examination shall be
made available to all Parties except that said independent, certified public
accountant shall verify to the Auditing Party such amounts and shall disclose
no other information revealed in such audit.
7.5 Cost of Audit. The Auditing Party shall bear the full cost of the
performance of any audit requested by the Auditing Party except as hereinafter
set forth. If, as a result of any inspection of the books and records of the
Audited Party, it is shown that payments made by Endo to DURECT under this
Agreement were less than the amount which should have been paid, then Endo
shall make all payments required to be made to eliminate any discrepancy
revealed by said inspection within *** after DURECT's demand therefor.
Furthermore, if the payments made were less than *** of the amount that should
have been paid during any calendar year, Endo shall also reimburse DURECT for
the reasonable costs of such audit. In the event that the audit shows that an
overpayment has been made by Endo, such amounts shall be deducted from
Distribution Fees owed to DURECT. If such overpayment amounts have not been
settled by such deductions from Distribution Fees within one year from the
date originally overpaid, then DURECT shall make all payments required to be
made to Endo to eliminate any such overpayment. Furthermore, if (i) the
overpayment made was more than *** of the amount that should have been paid in
any calendar year or (ii) the costs invoiced by DURECT were more than *** of
the audited costs in any calendar year, then DURECT shall also reimburse Endo
for the reasonable costs of such audit.
7.6 No Non-Monetary Consideration for Sale. Without the prior written
consent of DURECT, Endo and its Sublicensees and Affiliates shall not accept
or solicit any non-monetary consideration of the sale of the Finished Product,
Finished Product and the Implanter. Subject to the applicable oversight and
approval responsibilities of the PDC and the JCC set forth in Sections 2.2(b)
and 2.3(b), the use by Endo and its Affiliates of a commercially reasonable
amount of the Product and Implanters for promotional sampling, compassionate
use and indigent care shall not violate this Section 7.6, provided that DURECT
shall be paid in accordance with Section 4.5(c), 8.6(a) or 8.13 for Product,
Finished Product and Implanters for such uses as applicable.
8. MANUFACTURE AND SUPPLY.
8.1 Supply Obligations. Under the auspices of, and subject to review
and approval by, the JMC, and except as mutually agreed by Endo and DURECT,
commencing on the Effective Date, and thereafter during the term of this
Agreement, DURECT (or its Affiliates) shall be responsible for the manufacture
or supply of all requirements of Product, Finished Product and Implanters for
clinical and commercial use in the Territory pursuant to this Agreement.
8.2 Supply of Finished Product.
(a) Commencing on the commercial launch of the Finished Product and
thereafter during the term of this Agreement, subject to the terms and
conditions of this Section 8, DURECT shall supply Endo with all of Endo's and
Endo's Affiliates, Sublicensees' and designees' requirements for Finished
Product and Implanters in the Territory pursuant to this Agreement, and Endo,
its Affiliates, Sublicensee and designees shall purchase from DURECT all of
such requirements for Finished Product and Implanters. Endo shall place orders
for the requirements of its Affiliates, Sublicensees and designees, and DURECT
shall ship directly to such Affiliates, Sublicensees or designees or to Endo
for its reshipment to such Affiliates, Sublicensees or designees, as requested
by Endo.
(b) DURECT shall ensure that all services, facilities and goods used
in connection with such manufacture comply with the applicable Manufacturing
Standards in effect from time to time.
(c) Endo and DURECT, in consultation with the JMC, shall cooperate in
good faith and shall establish the Specifications for Product, Finished
Product and Implanter for this Agreement.
(d) DURECT may, after consultation with the JMC, subcontract with a
qualified Third Party Manufacturer in order to fulfill DURECT's supply
obligations to Endo hereunder; provided that in no event shall any such
subcontract release DURECT from any of its obligations to supply Product,
Finished Product or Implanters under this Agreement.
8.3 Forecasts. Commencing *** prior to the anticipated commercial
launch of the Finished Product in the Territory, no later than *** prior to
the first business day of each calendar quarter ("Q1"), Endo shall provide
DURECT with a non-binding (except with respect to Q1), good faith rolling
forecast of estimated quantities of Finished Product and anticipated delivery
schedules for Finished Product for the following *** period (i.e., Q1 and the
next *** ("***," respectively)), by quarters ("Current Forecast"). The
quantity indicated for Q1 in the Current Forecast shall be binding on Endo,
and Endo shall be required to place firm orders for Q1 pursuant to Section 8.4
based on the quantity of Finished Product for Q1 contained in the Current
Forecast. The quantity indicated for *** through *** in the Current Forecast
shall not be binding on Endo, provided that Endo shall be required to place a
firm order for *** for a quantity which is (i) no more than ***; and (ii) no
less than *** of the quantity indicated for *** in the Current Forecast. The
Current Forecast shall be revised and updated quarterly to include forecasted
quantities for the next succeeding ***. *** prior to the *** anniversary of
the First Commercial Sale, the Parties, through the JCC and JMC, shall review
the efficacy of the forecasting procedure set forth in this Section 8.3 to
determine (i) if the procedure for firm orders for *** should be extended to
apply to *** and, in a modified format (i.e. a wider range of permissible
discrepancy), ***, or (ii) if the procedure for firm orders should not be
extended to apply to *** or *** and should be modified (i.e. implementing a
wider range of permissible discrepancy) for ***.
8.4 Orders for Finished Product.
(a) No later than *** before the calendar quarter in which delivery
is sought, Endo shall place its firm order with DURECT, setting forth the
number of units of Finished Product by dosage, delivery dates and shipping
instructions with respect to each shipment of Finished Product. DURECT shall
accept such orders from Endo, subject to the other terms and conditions of
this Agreement, to the extent such quantity of Finished Product specified in
the firm order is consistent with the requirement regarding firm orders in
Section 8.3. Endo's orders shall be made pursuant to purchase orders which are
in a form mutually acceptable to Endo and DURECT, to the extent that such form
is not inconsistent with the terms of this Agreement.
(b) DURECT shall not be obligated to accept orders to the extent the
quantity of Finished Product ordered exceeds the limitation set forth in
Section 8.3, but shall use good faith efforts to fill such orders for such
excess quantities from available supplies. In the event that DURECT, despite
the use of good faith efforts, is unable to supply such excess quantities to
Endo, such inability to supply shall not constitute a breach of DURECT's
obligations under this Section 8 or a Short-Term Inability to Supply or
Long-Term Inability to Supply. DURECT shall use all reasonable efforts to
notify Endo within *** after receipt of an order of DURECT's ability to fill
any amounts of such orders in excess of the quantities that DURECT is
obligated to supply. Endo shall notify DURECT as soon as possible of an
increase in Endo's requirements for Finished Product materially in excess of
the limits set forth in Section 8.3.
(c) In the event that Endo submits orders for Finished Product with
respect to any Q1 for less than the minimum quantity of Finished Product that
Endo is required to purchase under this Section 8, DURECT nevertheless shall
supply and ship to Endo (in accordance with the shipping instructions most
recently supplied by Endo), and Endo shall have the obligation to purchase and
accept from DURECT, such minimum quantity of Finished Product. Endo shall
notify DURECT as soon as possible of a decrease in Endo's requirements for
Finished Product materially below the limits set forth in Section 8.3. In the
event of such a decrease, DURECT shall use all commercially reasonable
efforts, but shall not be required if contractually prohibited from doing so,
to reduce accordingly the orders for Finished Product and parts that DURECT
has placed with its Third Party Manufacturers and suppliers that DURECT would
have purchased but for such decrease in purchase of the Finished Product by
Endo.
8.5 Delivery. With respect to exact shipping dates, DURECT shall use
all reasonable commercial efforts to ship or cause to be shipped quantities of
Finished Product and Implanters that DURECT is obligated to supply pursuant to
Section 8.3 on the dates specified in Endo's purchase orders submitted and
accepted in accordance with Section 8.4. Notwithstanding any term that may be
specified on Endo's Product purchase order, all Product, Finished Product and
Implanters to be delivered pursuant to this Agreement shall be delivered in
accordance with this Section 8.5, FOB (as such term is defined in the UCC)
DURECT's facility, suitably packed in bulk containers for shipment, and marked
for shipment to the final destination point indicated in Endo's purchase
order. The shipping packaging used in connection with such deliveries shall be
in accordance with cGMP with respect to protection of the Product, Finished
Product and Implanters during transportation, taking into consideration the
mode(s) of transport Endo has elected to use for each such shipment, the final
destination point of each such shipment and reasonable expectations regarding
shipment time duration and possible delays associated therewith.
Transportation of Product, Finished Product and Implanters may be made by
rail, road, air, sea, and inland waterway or by a combination of such modes of
transport. DURECT will deliver or cause to be delivered all Product, Finished
Product and Implanters to the carrier nominated by Endo at a point selected by
DURECT. If such delivery occurs at DURECT's or a Third Party's premises,
DURECT or such Third Party shall be responsible for loading. If delivery
occurs at any other place, DURECT or such Third Party shall not be responsible
for unloading. If Endo nominates a Person other than a carrier to receive the
Product, DURECT shall be deemed to have fulfilled its obligation to deliver
the Product when the Product is delivered to that Person. Title and risk of
loss shall transfer to Endo, and Endo shall be responsible for all shipping,
storage, handling and insurance costs upon delivery to the carrier or Person
designated by Endo.
8.6 Purchase Price.
(a) The purchase price for all Finished Product supplied by DURECT to
Endo pursuant to this Section 8 for commercial use in the Territory ("Transfer
Price") shall be as set forth in the chart below. The applicable Transfer
Price for Finished Product supplied by DURECT in a calendar year shall be the
applicable Transfer Price based on the net commercial sale of Finished Product
in the prior calendar year as follows:
------------------------------------ ------------------ ------------------- --------------------- --------------------
Prior Year Net Commercial Sale 3.3 ug/hr 6.7 ug/hr 10 ug/hr 13.3 ug/hr
------------------------------------ ------------------ ------------------- --------------------- --------------------
------------------------------------ ------------------ ------------------- --------------------- --------------------
0 - *** units *** *** *** ***
------------------------------------ ------------------ ------------------- --------------------- --------------------
*** - *** units *** *** *** ***
------------------------------------ ------------------ ------------------- --------------------- --------------------
*** - *** units *** *** *** ***
------------------------------------ ------------------ ------------------- --------------------- --------------------
*** - *** units *** *** *** ***
------------------------------------ ------------------ ------------------- --------------------- --------------------
*** - *** units *** *** *** ***
------------------------------------ ------------------ ------------------- --------------------- --------------------
*** units *** *** *** ***
------------------------------------ ------------------ ------------------- --------------------- --------------------
In ***, and each year thereafter, the above Transfer Prices shall be
readjusted up or down effective as of each January 1 by the percentage change
in the United States Consumer Price Index (Urban Wage Earners and Clerical
Workers, U.S. City Average, All Items, 1982-1984 = 100) from the prior January
1. Endo shall have no obligation to pay the Transfer Price to DURECT for
Product that has been paid for under the Development Budget, including Product
from validation batches that are shipped to Endo for commercial sale. The
Parties shall agree in good faith on applicable Transfer Prices for Product
line extensions and Related Products, if any, Commercialized under this
Agreement.
(b) DURECT shall submit invoices to Endo for Product and Finished
Product promptly after shipment. Payment terms shall be *** days from the date
of Endo's receipt of any correct invoice. Payments shall be sent to the "Remit
to" address set forth on the invoice. Endo shall pay DURECT a late charge of
*** per month (or the maximum interest allowable by applicable law, whichever
is less) for each invoice past due for more than 30 days from the date of
Endo's receipt of any correct invoice. Should Endo dispute any portion of an
invoice, it shall not be required to pay any portion of such invoice until
such time as the dispute is resolved and Endo receives a fully corrected
invoice; provided that, in such an event, DURECT shall have the option of
issuing a new, correct invoice for the portion of the original invoice not in
dispute, and the disputing Party shall pay such new invoice within the time
limits set forth in this Section 8.6(b). Notwithstanding the foregoing, Endo
has no obligation to pay for any shipment of Product and Finished Product that
(i) Endo and DURECT agree does not meet the Specifications and/or
Manufacturing Standards, (ii) in accordance with Section 8.8(b), Endo has
found does not meet the Specifications and/or Manufacturing Standards and such
findings have not been disproved by independent laboratory testing or (iii) is
under quarantine (provided that in such event, Endo shall pay for such Product
*** days from the date of release of such quarantine). Upon DURECT's receipt
of a notice from Endo claiming that a shipment of Product does not meet the
Specifications and/or applicable Manufacturing Standards, the time period for
payment of such shipment or such batch shall toll until such time as such
non-conformity questions regarding such shipment or such batch are resolved in
accordance with Section 8.8. All relevant terms of Section 7 with respect to
payments of Distribution Fees shall apply to the payment of invoices for the
supply of Product or Finished Product.
8.7 Conformity; Specifications; Quality Control.
(a) All Product, Finished Product and Implanters supplied by DURECT
pursuant to this Agreement shall comply in all material respects with the
Specifications and applicable Manufacturing Standards and shall adhere to all
applicable laws and regulations relating to the manufacture, sale and shipment
of each shipment of Product, Finished Product and Implanters at the time it is
shipped by DURECT hereunder.
(b) Changes to the Specifications shall be made only by the JMC,
subject to the Parties' right to challenge such changes pursuant to this
Agreement. DURECT shall ensure that all such changes shall be reflected in all
Regulatory Authority filings.
(c) DURECT shall conduct, or cause to be conducted, quality control
testing of Product, Finished Product and Implanters prior to shipment, in
accordance with the Specifications and applicable Manufacturing Standards as
are in effect from time to time and such other quality control testing
procedures adopted by the JMC from time to time (collectively, the "Testing
Methods"). Initially and until decided otherwise by the JMC, the Testing
Methods shall include all FDA required release testing and DURECT shall
undertake all such tests. DURECT shall retain records pertaining to such
testing. Each shipment of Product, Finished Product and Implanters hereunder
shall be accompanied by a certified quality control protocol and certificate
of analysis for each lot of Product, Finished Product and Implanters therein
as well as such customs and other documentation as is necessary or
appropriate.
(d) Endo shall have the right, at reasonable times and upon
reasonable notice, to inspect and audit all DURECT facilities at which
Product, Finished Product or Implanters are manufactured pursuant to this
Section 8 for purposes of determining compliance with the terms of this
Agreement, including cGMP. DURECT shall use all reasonable commercial efforts
to gain access to the facilities of Third Party Manufacturers at which
Product, Finished Product or Implanters are manufactured for Endo to so audit
such facilities for purposes of determining compliance with the terms of this
Agreement, including cGMP.
(e) DURECT shall ensure that each Product, Finished Product and
Implanters, when delivered to Endo, meets the Specifications and Manufacturing
Standards, and the standards of Product and Finished Product identity,
strength, quality and purity set forth in the NDA. In addition, DURECT shall
ensure that all Product, Finished Product, Implanters and, if Commercialized
hereunder, Implant Kits supplied to Endo or its Affiliates, Sublicensees or
designees shall (i) meet all applicable requirements of any relevant
Regulatory Authority in the Territory and any other applicable laws or
regulations, (ii) be manufactured, packaged, tested, stored and shipped in
accordance with applicable cGMPs, and applicable law or regulation, and (iii)
be produced, packaged, tested and stored in facilities that have been approved
by the applicable Regulatory Authority, to the extent required by applicable
law or regulation.
8.8 Acceptance/Rejection; Interim Replacement.
(a) Endo and its designees shall have the right to reject any
shipment of Product, Finished Product or Implanters made to it under this
Agreement that does not meet the Specifications or applicable Manufacturing
Standards in any material respects when inspected by Endo to verify its
conformity to the Specifications, applicable Manufacturing Standards and
applicable purchase order; provided that such claims by Endo of non-conforming
Product, Finished Product or Implanters shall be deemed waived unless made by
Endo in writing and received by DURECT within a *** period of Endo discovering
same.
(b) Any notice delivered pursuant to Section 8.8(a) shall specify the
reasons for the rejection. After notice of rejection is received by DURECT,
Endo shall cooperate with DURECT in determining whether rejection is
justified. DURECT shall notify Endo as soon as reasonably possible, but not
later than *** after receipt of the notice from Endo, whether it accepts
Endo's basis for rejection. If DURECT accepts Endo's determination that the
Products, Finished Product or Implanters are non-conforming, then DURECT shall
replace such shipment or batch with conforming Product, Finished Product or
Implanters and pay for all reasonable out-of-pocket expenses incurred by Endo
and DURECT in connection with shipping and/or storing such replacement
Product, Finished Product or Implanters and storing the non-conforming
Product, Finished Product or Implanters. If DURECT does not accept Endo's
determination that the Products, Finished Products or Implanters are
non-conforming, and Endo does not accept DURECT's conclusion, then DURECT and
Endo shall jointly select an independent Third Party expert to test the
Product, Finished Product and/or Implanter and determine whether they conform
to the Specifications, applicable Manufacturing Standards and applicable
purchase order. The Parties agree that such Third Party's determination shall
be final and binding. The Party against whom the Third Party expert rules
shall bear the costs of the Third Party testing. If the Third Party expert
rules that the Product, Finished Product or Implanter conform to the
Specifications, the applicable Manufacturing Standard and applicable purchase
order, then Endo shall purchase the Product, Finished Product or Implanter at
the agreed upon price. If the Third Party rules that the Product, Finished
Product or Implanters do not conform to the Specifications, the applicable
Manufacturing Standard or applicable purchase order, then DURECT agrees to
replace such shipment or batch with conforming Product, Finished Product or
Implanters (unless it has already done so pursuant to Section 8.8(c)) and pay
for all reasonable out-of-pocket expenses incurred by Endo and DURECT in
connection with shipping and/or storing such replacement Product, Finished
Product or Implanters and storing the non-conforming Product, Finished Product
or Implanters. Such replacement shipment of Product, Finished Product or
Implanters shall be treated as a new, additional shipment of Product, Finished
Product or Implanters (that will be separately invoiced by DURECT if the
Product, Finished Product or Implanters being replaced has not been paid for
by Endo) for all purposes, including measuring its conformity to the
Specifications, applicable Manufacturing Standards and applicable purchase
order, and Endo's payment for such additional shipment. Endo shall return any
such rejected shipment to DURECT if so instructed by DURECT, at DURECT's
expense. In the event that any Product, Finished Product or Implanters
shipment or batch thereof is ultimately agreed or found to meet the
Specifications, applicable Manufacturing Standards and applicable purchase
order, Endo shall accept and pay for such shipment or batch in accordance with
Section 8.6(b).
(c) Upon DURECT's receipt of a claim that a shipment or batch thereof
of Product, Finished Product or Implanters does not meet the Specifications
and/or applicable Manufacturing Standards, DURECT shall replace such shipment
or batch thereof with an additional shipment of Product that does conform to
such standards, as soon as reasonably practicable; provided that such
replacement shall not constitute an acceptance by DURECT that such Product,
Finished Product or Implanter are non-conforming.
(d) DURECT shall maintain in inventory as safety stock Product,
Finished Product and Implanters, and all components thereof, and Endo shall
maintain in inventory as safety stock Product, Finished Product and
Implanters, as is reasonable and customary in the pharmaceutical industry for
product manufacturers and marketers, respectively.
8.9 Inventory Management. Endo shall maintain inventory of Product,
Finished Product and Implanters in accordance with Endo's usual and customary
inventory management practices that Endo applies to its other products.
8.10 Shortage of Supply. DURECT shall notify Endo as promptly as
possible upon becoming aware that DURECT is unable to supply the quantity of
Product, Finished Product or Implanters to Endo that DURECT is required to
supply hereunder, but in no event more than *** after DURECT's receipt of a
firm order from Endo as provided in Section 8.4 if DURECT is unable to supply
such quantities of Product, Finished Product or Implanters. In such event,
DURECT shall implement all commercially reasonable efforts to remedy such
shortage, including through the use of Third Party Manufacturers for all or a
portion of such quantities of Product, Finished Product or Implanters as
determined are necessary by the JMC.
8.11 Inability to Supply.
(a) In the event of any Short-Term Inability to Supply or Long-Term
Inability to Supply, Endo shall be entitled in proportion to the supply
shortfall to (i) delay the incurrence of the Development Costs and/or the
Distribution Fee, sales costs and/or marketing costs for the relevant period,
until such Short-Term Inability to Supply or Long-Term Inability to Supply
ends, and (ii) reduce its Product and Finished Product (and corresponding
Implanter) forecasts pursuant to Section 8.3, in which case the Development
Budget and/or the relevant Marketing Budget shall be adjusted accordingly. Any
issues relating to the application of this provision shall be subject to
review by the relevant Committee, and any resolution of such matters shall
require a consensus decision by such Committee (or be resolved pursuant to the
Accelerated Arbitration Provisions set forth in Section 16.13(b)), provided
that Sections 2.1(d)(ii) and (iii) shall not apply with respect to such
matter.
(b) An "Inability to Supply" shall mean: (i) with respect to the
supply of Product and Implanters for development activities, DURECT's failure
for any reason, including Force Majeure, to supply Endo with quantities of
Product (or corresponding Implanters) meeting the Specifications and
Manufacturing Standards equal to at least *** of the quantity of Product (or
corresponding Implanters) reasonably required to perform the development
activities under the Development Plan and Post-Registration Plan over any
calendar quarter; and (ii) with respect to the supply of Finished Product and
Implanters for commercial sales, DURECT's failure for any reason, including
Force Majeure, to supply Endo with quantities of Finished Product (or
corresponding Implanters) meeting the Specifications and Manufacturing
Standards equal to at least *** of the quantity of Finished Product (or
corresponding Implanters) set forth in the Current Forecast and binding on
Endo pursuant to Section 8.3; provided that (i) an Inability to Supply that
occurs (A) during the *** immediately following the First Commercial Sale or
(B) due to a Force Majeure after the *** year immediately following the First
Commercial Sale shall not be deemed a breach (including a Termination Event)
by DURECT of this Agreement if (a) DURECT has used all reasonable commercial
efforts to supply such quantities of Product and Finished Product (and
corresponding Implanters) that are binding on Endo pursuant to Section 8.3,
and (b) such Inability to Supply has not resulted from the willful wrongdoing,
recklessness or gross negligence of DURECT, and (ii) in the event that the
foregoing clause (i) applies, quantities of Finished Product (and
corresponding Implanters) that are binding on Endo pursuant to Section 8.3
shall, at Endo's option in its sole discretion, be reduced in proportion to
any such Inability to Supply.
(c) A "Short-Term Inability to Supply" is any Inability to Supply
that is reasonably expected to continue for no more than a *** period of time.
(d) A "Long-Term Inability to Supply" shall mean any Inability to
Supply that is reasonably expected to exceed or actually exceeds a *** period
of time.
(e) In the event that either Party believes or has reason to believe
that any Long-Term Inability to Supply exists, such Party shall provide the
other Party with prompt written notice of such claim and the JMC shall
promptly meet to discuss such claim and to determine whether the alleged
Long-Term Inability to Supply exists. If the JMC does not reach a consensus
decision in its deliberations regarding such claims, then the matter shall be
referred to the JEC for resolution, provided that Sections 2.1(d)(ii) and
(iii) shall not apply with respect to such matter. If the JEC does not reach
consensus decision on the matter, then Endo may submit the matter to
arbitration pursuant to the Accelerated Arbitration Provisions set forth in
Section 16.13(b). The Parties shall reasonably and promptly cooperate with the
JMC, JEC, and arbitrators, as the case may be, during their proceedings
regarding such claims.
(f) If a determination is made pursuant to Section 8.11(e), by the
JMC, the JEC, or the arbitrators, as the case may be, that a Long-Term
Inability to Supply exists, the JEC shall re-evaluate the Development Plan,
Marketing Plans, Development Budget and/or the Marketing Budgets in view of
such Long-Term Inability to Supply. If a determination is made pursuant to
Section 8.11(e), by the JMC, the JEC, or the arbitrators, as the case may be,
that a Long-Term Inability to Supply exists, then: (i) for so long as such
Long-Term Inability to Supply continues, the JMC shall be co-chaired by
representatives of Endo and DURECT and matters that are the subject of a
deadlock arising in the JMC shall be resolved in accordance with the
Accelerated Arbitration Provisions of Section 16.13(b); (ii) DURECT shall
cooperate with Endo in using an alternative supply, including in connection
with the use of qualified Third Party Manufacturers and sourcing of materials;
and (iii) Endo shall (with the understanding that the goal of the Parties
shall be to transition the manufacture and supply of Product and Finished
Product back to DURECT as soon as practicable, to the extent that such
Long-Term Inability to Supply ceases to exist) have the right to, or direct
that DURECT, take one or more of the following actions in connection with the
Product, Finished Product or Implanter supply shortfall:
(i) use a Third Party Manufacturer to fill the Product, Finished
Product or Implanter supply shortfall;
(ii) take such other actions as may be necessary for purposes of
filling the Product, Finished Product and Implanter supply shortfall.
(g) In the event that a Third Party Manufacturer is to supply
Product, Finished Product or Implanters in accordance with Section 8.11(f),
8.13 or 8.15, DURECT shall fully cooperate with such Third Party Manufacturer,
and take all actions necessary to qualify them as a manufacturer of Product,
Finished Product or Implanters, including: (i) providing them with copies of
all documentation within DURECT's possession and control that is reasonably
necessary for them to manufacture Product, Finished Product or Implanters;
(ii) providing such technical assistance as is reasonably necessary to enable
them to manufacture Product, Finished Product or Implanters in accordance with
the Specifications and the applicable Manufacturing Standards; and (iii) to
the extent that a Third Party Manufacturer supplies Product, Finished Product
or Implanters pursuant to Section 8.11(f), 8.13 or 8.15, Endo shall be
relieved of its obligation to purchase from DURECT such quantities of Product,
Finished Product or Implanters.
8.12 Additional Commercial Facilities. No later than *** prior to the
date when Endo reasonably believes that the quantity of Finished Product
required by Endo for commercial sale will exceed the maximum capacity of
DURECT's then existing manufacturing facility(ies), Endo will provide written
notice to DURECT setting forth the maximum quantity of Finished Product that
it reasonably believes will be required per year to support commercial sales
for the subsequent *** calendar years ("Estimated Required Capacity"). Upon
receipt of such notice, the JMC and JCC shall discuss and decide what course
of action to pursue in order to accommodate such anticipated increased demand,
including the use of Third Party Manufacturers. In the event the JEC in
consultation with the JMC and JCC decides that a new commercial manufacturing
facility should be built in order to provide the Estimated Required Capacity,
then DURECT and Endo shall agree in good faith to a plan to equitably share
the costs of building and maintaining a new commercial manufacturing facility
with capacity to supply Finished Product up to the Estimated Required Capacity
in a manner intended to ensure continuous supply of Product and Finished
Product hereunder; it being understood that the Parties will agree to the
ownership of such facility(ies) at such time.
8.13 Implanters. DURECT, in coordination with the JMC and JCC, shall
be responsible for identifying appropriate Third Party Manufacturers of, and
delivering to Endo, its Affiliates or designees for distribution to Third
Parties, all Implanters and, if Commercialized hereunder, Implant Kits
pursuant to the forecast, order, invoicing and delivery procedures set forth
in Sections 8.2 through 8.6. DURECT's actual, direct cost of Implanters shall
be paid for, and the net sales derived from the sale of such Implanters, shall
be shared by DURECT and Endo equally (i.e., 50% for each Party) pursuant to
appropriate procedures to be submitted by the JMC in consultation with the JCC
and subject to approval of the JEC.
8.14 Finishing. Unless requested by Endo in writing to the contrary,
DURECT shall supply to Endo for commercial distribution all (i) Product as
Finished Product, and (ii) Implanters and, if Commercialized hereunder,
Implant Kits in ready-for-sale form, including any labeling and other
packaging materials approved by the JCC.
8.15 Third Party Manufacturers.
(a) No later than *** following the JCC's first adoption of the
Marketing Plan, the JMC, in consultation with the PDC, shall adopt a plan (a
"Third Party Manufacturing Plan") identifying potential Third Parties to be
engaged by DURECT, and that are approved in writing by Endo (such approval not
to be unreasonably withheld or delayed), to perform services or supply
facilities or goods in connection with the manufacture, testing and/or
packaging of the Product or Implanter (including all components, sub-assembly,
assembly, finish and fill and packaging thereof) by or on behalf of DURECT to
ensure continuous supply of Product, Finished Product and Implanters hereunder
("Third Party Manufacturers"). Such Third Party Manufacturing Plan shall be
subject to written approval by Endo (such approval not to be unreasonably
withheld or delayed), following which DURECT shall use all commercially
reasonable efforts to enter into definitive manufacturing license agreements
with such Third Party Manufacturers (each, a "Third Party Manufacturing
Agreement") and use all commercially reasonable efforts to obtain any
necessary or appropriate Regulatory Approval for such Third Party Manufacturer
to perform in connection with this Agreement. The Third Party Manufacturers
shall be required to provide any and all services, facilities and goods
necessary for the manufacture of Product, Finished Product and Implanters in
the event that DURECT ceases to fulfill its obligations to do so under this
Agreement, including as a result of an Inability to Supply, a Bankruptcy Case
or Bankruptcy Rejection, Force Majeure, or being a Non-Performing Party or
other breach of DURECT's obligations hereunder.
(b) DURECT shall use all commercially reasonable efforts to enter
into definitive Third Party Manufacturing Agreements within *** following the
adoption by the JMC of the Third Party Manufacturing Plan. If (i) a Third
Party Manufacturing Agreement is not entered into within such *** period, (ii)
there are, at any time following such *** period, any types of services,
facilities, components or goods that are required to be provided by DURECT
under this Agreement that are not then covered by any Third Party
Manufacturing Agreement, or (iii) a Third Party Manufacturing Agreement shall
terminate, then the JMC shall promptly amend the Third Party Manufacturing
Plan to identify additional or alternative potential Third Party Manufacturers
to perform such function, and, following Endo's approval (not to be
unreasonably withheld or delayed) of such amended plan, DURECT shall promptly
enter into negotiations with such Third Parties to obtain appropriate Third
Party Manufacturing Agreements.
(c) The Third Party Manufacturing Agreements shall contain the
obligations set forth in Section 8.15(a), and shall provide that Endo shall be
an intended third party beneficiary of such Third Party Manufacturer's
obligations to DURECT thereunder, including with rights of direct enforcement
by Endo. In addition, each Third Party Manufacturing Agreement shall provide
that, in the event that DURECT, or any other Person acting on behalf of DURECT
or its estate pursuant to any Bankruptcy Laws, shall seek or obtain a
Bankruptcy Rejection of such Third Party Manufacturing Agreement, then the
Third Party Manufacturer shall (i) timely exercise its rights to continue any
and all licenses thereunder, pursuant to 11 U.S.C. 365(n) of the Bankruptcy
Laws, and (ii) to the extent that Bankruptcy Rejection effectively terminated
the Third Party Manufacturing Agreement, immediately enter into an agreement
with Endo, on substantially the same terms and conditions. The Third Party
Manufacturing Agreements may contain such additional terms and conditions as
DURECT and the Third Party Manufacturer shall agree to, subject to the
approval of the JMC prior to the execution of such Third Party Manufacturing
Agreement and provided that such additional terms and conditions do not
prejudice, reduce or limit Endo's rights under this Agreement (including this
Section 8.15).
(d) With respect to Third Party Manufacturers identified and approved
hereunder, all activities relating thereto shall be included in the
Development Plan and the costs shared by the Parties in accordance with
Section 4.6.
(e) The provisions of Sections 6.5 and 6.6 of this Agreement
regarding the ALZA Agreement shall apply mutatis mutandis to the Third Party
Manufacturing Agreements.
8.16 Limitation on Use of Third Party Manufacturers. Notwithstanding
anything to the contrary in this Section 8 or in this Agreement, DURECT's use
of Third Party Manufacturers shall be at all times subject to the limitations
and conditions set forth in the ALZA Agreement, and DURECT shall not be
required to contract any manufacturing activity relating to the Product which
would be a violation of its obligations under the ALZA Agreement; provided
that DURECT shall use all reasonable commercial efforts to obtain any
necessary consents from ALZA regarding such Third Party Manufacturers.
9. OWNERSHIP; PATENTS; TRADEMARKS.
9.1 Ownership. As between the Parties, all Inventions shall be owned
by DURECT (or its nominee); provided the Parties hereby acknowledge that ALZA
shall own specified Inventions related to Systems in accordance with the terms
of the ALZA Agreement. To the extent necessary to effectuate the foregoing,
Endo shall take any action reasonably necessary to effectuate DURECT or its
nominee's ownership pursuant to the foregoing (subject to DURECT reimbursing
all reasonable out-of-pocket expenses incurred by Endo in connection
therewith). DURECT shall at all times have all right, title and interest in
and to the Patents, Technical Information and Intellectual Property Rights
relating to the Product, Finished Product and Implanter (subject to the rights
of ALZA), whether in existence on the Effective Date or developed during the
term of this Agreement, subject to the rights granted to Endo pursuant to this
Agreement.
9.2 Maintenance of the Patents.
(a) Subject to Section 9.2(b), DURECT shall have full responsibility
for, and shall control the preparation and prosecution of, and shall pay all
application and maintenance fees for, all Patents owned or filed by DURECT.
DURECT shall use all commercially reasonable efforts to prosecute and maintain
all Patents owned by DURECT. In connection therewith, DURECT shall generally
consult with Endo on all future filings to be made by DURECT with respect to
the Patents and the prosecution and maintenance of such Patents, including
where appropriate or reasonably requested by Endo, providing copies to Endo of
any such filings made to, and written communications received from, any patent
office relating, in whole or in part, to the Patents, and notifying Endo
promptly of (and, where possible, prior to), and consulting with and
considering in good faith suggestions by Endo to avoid, any abandonment or
invalidation of any such Patent.
(b) Upon Endo's written request, DURECT shall consider in good faith
applying for patents, in all jurisdictions in the Territory, at DURECT's sole
expense, on any potentially patentable Invention which is not already the
subject of a Patent.
(c) Each Party shall cooperate with the other Party (or its designee)
to execute all lawful papers and instruments, to make all rightful oaths and
declarations and to provide consultation and assistance as may be necessary in
the preparation, prosecution, maintenance and enforcement of all such Patents
pursuant to this Agreement.
9.3 Infringement.
(a) If any Party learns of any actual or alleged unauthorized use,
infringement or threatened infringement or other violation by a Third Party
within the Territory (any of the foregoing, an "Infringement") by a Third
Party with respect to any Patent, Technical Information, or any DURECT
Trademark, Endo Trademark or Co-Owned Trademark, such Party shall promptly
notify the other Party and shall provide such other Parties with available
evidence of such infringement.
(b) DURECT shall have the first right, but not the duty, to institute
Infringement actions against Third Parties based on any Patent, Technical
Information, Invention or other Intellectual Property Rights owned by DURECT
in the Territory. If DURECT does not institute an Infringement proceeding
against such an offending Third Party within *** of learning of such
Infringement or, in the event that a Third Party files a paragraph IV
certification relating to any Patent pursuant to 21 U.S.C. Section
355(j)(2)(A)(vii)(IV) of the Hatch/Waxman Act (or any successor statute), if
DURECT does not institute an Infringement proceeding against such Third Party
within *** of receipt of notice of such paragraph IV certification, or DURECT
at any time ceases to actively prosecute any such ongoing Infringement, Endo
shall have the right, but not the duty, to institute such an action with
respect to any such Infringement; provided that Endo may not enter into any
settlement, consent judgment or other voluntary final disposition of such
action which adversely affects the validity, enforceability, scope or
ownership of any Patent, Trademark, Technical Information, Invention or other
Intellectual Property Rights owned by DURECT without the prior written consent
of DURECT, which will not be unreasonably withheld or delayed. The costs and
expenses of any such action (including reasonable fees of attorneys and other
professionals) shall be borne by the Party instituting the action, or, if the
Parties elect to cooperate in instituting and maintaining such action, such
costs and expenses shall be borne by the Parties in such proportions as they
may agree in writing. Each Party shall execute all necessary and proper
documents, take such actions as shall be appropriate to allow the other Party
to institute and prosecute such infringement actions and shall otherwise
cooperate in the institution and prosecution of such actions (including
consenting to being named as a nominal party thereto). Each Party prosecuting
any such Infringement action shall keep the other Party reasonably informed as
to the status of such action. Any award paid by Third Parties as a result of
such an Infringement action (whether by way of settlement or otherwise) shall
be applied first to reimburse the Parties for all costs and expenses incurred
by the Parties with respect to such action on a pro rata basis and, if after
such reimbursement any funds shall remain from such award, they shall be
allocated as follows: (i) if DURECT has instituted and maintained such action
alone, DURECT shall be entitled to retain such remaining funds; (ii) if Endo
has instituted and maintained such action alone, Endo shall be entitled to
retain such remaining funds; or (iii) if the Parties have cooperated in
instituting and maintaining such action, the Parties shall allocate such
remaining funds between themselves in the same proportion as they have agreed
to bear the expenses of instituting and maintaining such action.
Notwithstanding anything herein to the contrary, the Parties hereby
acknowledge that ALZA shall have the right to enforce any patents covering the
System as set forth in Section 9.2 of the ALZA Agreement.
(c) The provisions set forth in Section 9.3(b) shall apply with equal
force mutatis mutandis to the DURECT Trademarks and, if selected by the JCC,
the Co-Owned Trademark CHRONOGESIC(TM) (wherein DURECT shall have the first
right to institute Infringement proceedings) and the Endo Trademarks and other
Co-Owned Trademarks (wherein Endo shall have the first right to institute
Infringement proceedings). Notwithstanding the foregoing, the commencement and
maintenance of proceedings with respect to the trademark ENDO and Endo's logo
(and variations on the foregoing) shall be in the sole discretion of Endo,
with no right granted to DURECT to commence, prosecute or settle any action
with respect thereto, and the commencement and maintenance of Infringement
proceedings with respect to the trademark DURECT and DURECT's logo (and
variations on the foregoing) shall be in the sole discretion of DURECT, with
no rights granted to Endo to commence, prosecute or settle any action with
respect thereto.
10. PUBLICATION; CONFIDENTIALITY.
10.1 Notification. The Parties recognize that each may wish to
publish the results of their work relating to the subject matter of this
Agreement. However, the Parties also recognize the importance of acquiring
patent protection and other considerations. Consequently, subject to any
applicable laws or regulations obligating any Party to do otherwise, any
proposed publication by any Party concerning the subject matter of this
Agreement shall comply with this Section 10. All such publications, whether
written or oral, shall be prepared in accordance with the publication strategy
established and approved by the JCC and PDC. At least *** before a manuscript
is to be submitted to a publisher, the publishing Party will provide the JCC
with a copy of the manuscript. If the publishing Party wishes to make an oral
presentation, it will provide the JCC with a summary of such presentation at
least *** before such oral presentation and, if an abstract is to be
published, *** before such abstract is to be submitted. Any oral presentation,
including any question period, shall not include any Confidential Information
belonging to a Party unless such Party agrees in writing to such inclusion in
advance of such oral presentation.
10.2 Review. The JCC will review the manuscript, abstract, text or
any other material provided to it under Section 10.1 to determine the
advisability of such publication from the marketing perspective, to determine
whether patentable subject matter is disclosed and to assess the accuracy of
the technical content therein. The JCC will notify the publishing Party within
*** of receipt of the proposed publication if the JCC, in good faith,
determines that patentable subject matter is or may be disclosed, or if the
JCC, in good faith, believes Confidential Information is or may be disclosed.
If it is determined by the JCC that patent applications should be filed, the
publishing Party shall delay its publication or presentation for a period not
to exceed *** from the JCC's receipt of the proposed publication or
presentation to allow time for the filing of patent applications covering
patentable subject matter. In the event that the delay needed to complete the
filing of any necessary patent application will exceed the *** period, the JCC
will discuss the need for obtaining an extension of the publication delay
beyond the *** period. If it is determined in good faith by a Party that
Confidential Information or proprietary information of such Party is being
disclosed, the Parties shall consult in good faith to arrive at an agreement
on mutually acceptable modifications to the proposed publication or
presentation to avoid such disclosure.
10.3 Confidentiality. Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing, the Parties agree that, during
the term of this Agreement and for 10 years thereafter, the receiving Party,
its Affiliates and its designees shall, and shall ensure that their respective
employees, officers, directors and other representatives shall, keep
completely confidential and not publish or otherwise disclose and not use for
any purpose any information furnished to it or them by the disclosing Party,
its Affiliates or its designees, except to the extent that it can be
established by the receiving Party by competent proof that such information:
(i) was already known to the receiving Party, other than under an obligation
of confidentiality, at the time of disclosure by the disclosing Party; (ii)
was generally available to the public or otherwise part of the public domain
at the time of its disclosure to the receiving Party; (iii) became generally
available to the public or was otherwise part of the public domain after its
disclosure and other than through any act or omission of the receiving Party
in breach of this Agreement; or (iv) was disclosed to the receiving Party,
other than under an obligation of confidentiality, by a Third Party who had,
to the receiving Party's knowledge, no obligation to the disclosing Party not
to disclose such information to others (all such information to which none of
the foregoing exceptions applies, and the terms of this Agreement (subject to
DURECT's obligation, if any, to share this Agreement and other required
information with ALZA, but only to the extent required pursuant to the ALZA
Agreement and under appropriate confidentiality conditions), shall be deemed
"Confidential Information"). Any and all information and materials, including
any and all Intellectual Property Rights therein and thereto, owned by a Party
shall constitute Confidential Information of such Party which shall be deemed
the disclosing Party with respect to such Confidential Information.
10.4 Exceptions to Obligation. The restrictions contained in Sections
10.3 or 16.7 shall not apply to Confidential Information that: (i) is
submitted by the recipient to Governmental Entities to facilitate the issuance
of Registrations for the Product, provided that reasonable measures shall be
taken to assure confidential treatment of such information; (ii) is provided
by the recipient to Third Parties under confidentiality provisions at least as
stringent as those in this Agreement, in connection with consulting,
development, manufacturing, external testing, or marketing trials under this
Agreement; or (iii) is otherwise required to be disclosed in compliance with
applicable laws or regulations or order by a court or other regulatory body
having competent jurisdiction; provided that if a Party is required to make
any such disclosure of disclosing Party's Confidential Information such Party
will, except where impracticable for necessary disclosures (for example, to
physicians conducting studies or to health authorities), give reasonable
advance notice to the disclosing Party of such disclosure requirement, and
will use all reasonable efforts to secure confidential treatment of such
Confidential Information required to be disclosed.
10.5 Limitations on Use. Each Party shall use, and cause each of its
Affiliates and its licensees to use, any Confidential Information obtained by
such Party from the disclosing Party, its Affiliates or its licensees,
pursuant to this Agreement or otherwise, solely in connection with the
activities or transactions contemplated hereby.
10.6 Remedies. Each Party shall be entitled, in addition to any other
right or remedy it may have, at law or in equity, to an injunction, without
the posting of any bond or other security, enjoining or restraining the
disclosing Party, its Affiliates and/or its licensees from any violation or
threatened violation of this Section 10.
11. REPRESENTATIONS AND WARRANTIES.
11.1 Representations and Warranties of the Parties. Each Party
represents and warrants to the other Party that:
(a) Such Party is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has full
corporate power and authority to enter into this Agreement and to carry out
the provisions hereof;
(b) Such Party has taken all corporate action necessary to authorize
the execution and delivery of this Agreement and the performance of its
obligations under this Agreement and has full power and authority to enter
into this Agreement and perform its obligations under this Agreement;
(c) This Agreement has been duly executed by such Party and
constitutes a valid and legally binding obligation of such Party, enforceable
in accordance with its terms, subject to and limited by: (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws generally
applicable to creditors' rights; and (ii) judicial discretion in the
availability of equitable relief;
(d) With the exception of approval by Regulatory Authorities, such
Party has obtained, or is not required to obtain, the consent, approval,
order, or authorization of any Third Party, or has completed, or is not
required to complete, any registration, qualification, designation,
declaration or filing with, any Governmental Entity, in connection with the
execution and delivery of this Agreement and the performance by such Party of
its obligations under this Agreement, including any grant of rights to the
other Party pursuant to this Agreement; and
(e) The execution and delivery of this Agreement, and the performance
by such Party of its obligations under this Agreement, including the grant of
rights to the other Party pursuant to this Agreement, does not and will not:
(i) conflict with, nor result in any violation of or default under any
instrument, judgment, order, writ, decree, contract or provision to which such
Party is otherwise bound; (ii) give rise to any lien, charge or encumbrance
upon any assets of such Party or the suspension, revocation, impairment,
forfeiture or non-renewal of any material permit, license, authorization or
approval that applies to such Party, its business or operations or any of its
assets or properties; or (iii) conflict with any rights granted by such Party
to any Third Party or breach any obligation that such Party has to any Third
Party.
11.2 Representations and Warranties of DURECT. DURECT represents and
warrants to Endo that:
(a) DURECT is the owner of, or has sufficient rights to, all of the
Patents, Technical Information and DURECT Trademarks in existence on the
Effective Date to manufacture the Product and Finished Product and to grant to
Endo the rights granted under this Agreement (including the right to
Commercialize the Product, Finished Product and Implanter). To the knowledge
of DURECT, as of the Effective Date all of the Patents and DURECT Trademarks
are valid, in full force and effect and have been maintained to date, and,
except as indicated on Exhibit D with respect to DURECT Trademarks, are not
the subject of any interference or opposition proceedings;
(b) To the knowledge of DURECT, the Parties' manufacture, use or
Commercialization of the Product, Finished Product or Implanter or use of the
DURECT Trademarks as contemplated by this Agreement will not infringe or
otherwise violate any Intellectual Property Right or trademark of any Third
Party, and, as of the Effective Date, DURECT is not aware of any asserted or
unasserted claims, interferences, oppositions or demands of any Third Party
against the Patents or Technical Information or (except as set forth on
Exhibit D) the DURECT Trademarks in existence as of the Effective Date;
(c) The manufacturing facility(ies) owned by DURECT (i) shall be
capable of supplying up to *** units of Product and Finished Product during
the calendar year in which the First Commercial Sale occurs, including supply
for all requirements for Product under this Agreement for clinical trials,
(ii) shall be capable of supplying up to *** units of Product and Finished
Product during the *** year following the First Commercial Sale and (iii) the
Transfer Fee set forth in this Agreement is DURECT's current best estimate of
the commercial terms on which DURECT can sell Finished Product to Endo;
(d) As of the Effective Date, DURECT has provided Endo, or given Endo
access to, true, complete and unredacted copies of all (i) Regulatory
Documentation, (ii) agreements (including any letter agreements) between
DURECT and ALZA, including all effective amendments to any such agreements
(excluding the Product Acquisition Agreement, dated April 14, 2000, concerning
ALZET(R) an osmotic, implantable pump for research use in laboratory animals)
and (iii) correspondence between ALZA and DURECT which have been retained in
DURECT's records as part of its normal course of business, which, in any
event: (A) affects or may affect Endo's rights under this Agreement, or (B) to
the extent not precluded by confidentiality obligations to ALZA, relates to
the Product;
(e) ALZA has declined any rights it may have to Commercialize the
Product under the ALZA Agreement and accordingly has no such rights; and
(f) As of the Effective Date, DURECT is not developing any New
Product or Related Product other than those set forth on Exhibit F.
11.3 Disclaimer of Other Warranties. EXCEPT AS SET FORTH IN THIS
AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY
KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF QUALITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.
12. RECALL; INDEMNIFICATION; INSURANCE.
12.1 Investigation; Recall. In the event that the Regulatory
Authority in the Territory shall allege or prove that a Product, Finished
Product, Implanter or, if Commercialized hereunder, Implant Kit does not
comply with applicable rules and regulations in the Territory, Endo shall
notify DURECT immediately. The JEC upon the recommendation of the JMC, in
consultation with the JCC, shall conduct any appropriate investigation and
shall make a determination as to the disposition of any such matter. If Endo
is required or if the JEC upon the recommendation of the JMC should deem it
appropriate to conduct any recall DURECT and Endo shall bear the costs and
expenses associated with such recall, in the proportion of ***% for DURECT and
***% for Endo, unless: (i) the predominant cause of such recall results from
DURECT's failure to provide Product, Finished Product, Implanters or, if
Commercialized hereunder, Implant Kits in accordance with this Agreement, or
unless the predominant cause of such recall results from DURECT's breach of
this Agreement or willful wrongdoing, recklessness or gross negligence, in
each such case DURECT shall bear all costs and expenses associated with such
recall; or (ii) the predominant cause of such recall results from Endo's
breach of this Agreement or willful wrongdoing, recklessness or gross
negligence, in which case Endo shall bear all costs and expenses associated
with such recall.
12.2 Indemnification by DURECT. DURECT shall indemnify, defend and
hold Endo and its Affiliates, and their respective directors, officers,
employees and agents (each an "Endo Related Party") harmless from and against
any and all damages, losses, judgments, penalties, fines, settlements, and
costs and expenses (including reasonable fees of attorneys and other
professionals) ("Damages") arising out of Third Party claims relating to the
Product, Finished Product or Implanter that result from (i) any failure or
alleged failure of any Product, Finished Product or Implanter to satisfy any
of the provisions in Section 8.7, (ii) the malfunction or defect in the design
or manufacture of the Product, Finished Product or Implanter, (iii) the
infringement or other violation of any Third Party Intellectual Property
Rights arising out of the manufacture, use or Commercialization of the
Product, Finished Product or Implanter under the terms of this Agreement, (iv)
the infringement or other violation of any Third Party trademarks with respect
to the use by the Parties of the DURECT Trademarks in connection with the
Product, Finished Product or Implanter under the terms of this Agreement, (v)
any payments due to ALZA under or in connection with the ALZA Agreement or any
breach or alleged breach thereof, (vi) any action (or inaction) by DURECT
prior to the earlier of the Trial Commencement Date and June 30, 2004, (vii)
subject to any surviving obligations of Endo under Section 12.3, any action
(or inaction) by DURECT after the date of termination or expiration of this
Agreement, or (viii) any other breach by DURECT of this Agreement including
breach by DURECT of its representations and warranties hereunder.
12.3 Indemnification by Endo. Endo shall indemnify, defend and hold
DURECT and its Affiliates and their respective directors, officers, employees
and agents (each a "DURECT Related Party") harmless from and against any and
all Damages arising out of Third Party claims relating to the Product,
Finished Product or Implanter that result from: (i) the infringement or other
violation of any Third Party trademarks with respect to the use by the Parties
of the Endo Trademarks in connection with the Product, Finished Product or
Implanter under the terms of this Agreement, (ii) any breach by Endo of this
Agreement, including breach by Endo of its representations and warranties
hereunder; or (iii) the wrongful promotion or marketing of the Finished
Product or Implanter by Endo, its Sublicensees, Affiliates and designees
(other than as covered by the indemnity from DURECT to Endo for infringement
or violation of Third Party Intellectual Property Rights pursuant to Sections
12.2(iii) and (iv)).
12.4 Shared Liability. In the event Damages arise out of Third Party
claims which are subject to indemnification by Endo under Section 12.3 and
also subject to indemnification by DURECT under Section 12.2, then the Parties
shall indemnify each other to the extent of their respective liability for the
Damages. Any Damages which arise out of Third Party claims which are not
subject to indemnification by Endo under Section 12.3 or by DURECT under
Section 12.2 shall be shared *** by the Parties, and the Parties shall jointly
and by mutual agreement defend or settle such claims. In the event that the
Parties cannot agree to their respective indemnity obligations hereunder, a
Party shall be free at any time to resolve the respective indemnity
obligations of the Parties under this Section 12 pursuant to the arbitration
provisions set forth in Section 16.13.
12.5 Indemnification Procedure. Upon receipt by the Party or Related
Party seeking indemnification hereunder (an "Indemnified Party") of notice of
any action, suit, proceeding, claim, demand or assessment against such
Indemnified Party which might give rise to Damages, the Indemnified Party
shall give prompt written notice thereof to the Party from which
indemnification is sought (the "Indemnifying Party") indicating the nature of
claim and the basis therefor, provided that the failure to give such prompt
notice shall not relieve the Indemnifying Party of its obligations hereunder
except to the extent the Indemnifying Party or the defense of any such claim
is materially prejudiced thereby. The Indemnifying Party shall have the right,
at its option, to assume the defense of, at its own expense and by its own
counsel, any such claim involving the asserted liability of the Indemnified
Party. If any Indemnifying Party shall undertake to compromise or defend any
such asserted liability, it shall promptly notify the Indemnified Party of its
intention to do so, and the Indemnified Party shall agree to cooperate fully
with the Indemnifying Party and its counsel in the compromise of, or defense
against, any such asserted liability; provided, however, that the Indemnifying
Party shall not, as part of any settlement or other compromise, admit to
liability or agree to an injunction without the written consent of the
Indemnified Party. Notwithstanding an election by the Indemnifying Party to
assume the defense of any claim as set forth above, such Indemnified Party
shall have the right (at its own expense if the Indemnifying Party has elected
to assume such defense) to employ separate counsel and to participate in the
defense of any claim.
12.6 Cost of Enforcement. All costs and expenses incurred by an
Indemnified Party in connection with enforcement of its rights under Sections
12.2 and 12.3, as applicable, shall also be reimbursed by the Indemnifying
Party promptly after final determination that such Indemnified Party is
entitled to such indemnification by the Indemnifying Party.
12.7 Limitation on Damages. EXCEPT WITH RESPECT TO THE WILLFUL
WRONGDOING, RECKLESSNESS OR GROSS NEGLIGENCE OF A PARTY, A PARTY SHALL NOT BE
LIABLE TO THE OTHER, WHETHER PURSUANT TO THE FOREGOING INDEMNIFICATION
OBLIGATIONS OR OTHERWISE, FOR SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES,
INCLUDING BUSINESS INTERRUPTION OR LOST PROFITS, OR PUNITIVE DAMAGES;
PROVIDED, HOWEVER, THIS EXCLUSION IS NOT INTENDED TO, NOR SHALL, EXCLUDE
ACTUAL OR COMPENSATORY DAMAGES OF THE AFFECTED PARTY, INCLUDING SPECIAL,
EXEMPLARY OR CONSEQUENTIAL DAMAGES OWED TO THIRD PARTIES AS A RESULT OF A
THIRD PARTY CLAIM.
12.8 Insurance. Each Party shall carry and maintain in full force and
effect while this Agreement is in effect the following insurance in amounts no
less than that specified for each type (as may be increased at any time as
specified by the JEC, or as the Parties may be permitted by the JEC to
self-insure based on presentations to the JEC of the capability to so
self-insure):
(a) Comprehensive general liability insurance with combined limits of
not less than *** per occurrence and *** per accident for bodily injury,
including death, and property damage;
(b) Workers' compensation insurance in the amounts required by the
law of the state(s) in which such Party's workers are located;
(c) Products liability insurance with a policy limit of at least ***
per occurrence and in the aggregate until First Commercial Sale of the
Product, and thereafter with a policy limit of at least *** per occurrence and
in the aggregate.
Each Party hereto shall name the other Party hereto as an "additional
insured" on all policies relating to the insurance described in this Section
12.8. Each Party upon request shall provide the other with evidence of such
insurance. Each Party shall provide to the other *** prior written notice of
any proposed cancellation, termination, reduction or change in its coverage.
13. TERM; TERMINATION; ADDITIONAL RIGHTS.
13.1 Term. This Agreement shall become effective as of the Effective
Date and, unless earlier terminated pursuant to the other provisions of this
Section 13, shall remain in effect for so long as Endo is exercising its
rights pursuant to Section 3.1(d) or (e).
13.2 Termination for Cause. Either Party ("Non-Breaching Party") may,
without prejudice to any other remedies available to it at law or in equity,
terminate this Agreement, effective upon written notice of termination, in the
event that the other Party (as used in this Section 13.2, the "Breaching
Party") shall have breached or defaulted in the performance of any of its
material obligations hereunder (a "Termination Event"), and such Termination
Event shall have continued for *** after written notice of such Termination
Event was provided to the Breaching Party by the Non-Breaching Party (or, if
such Termination Event cannot reasonably be cured within such *** period, then
one additional *** period if the Breaching Party has commenced and diligently
continued actions to cure such Termination Event during such initial ***
period); provided, however, that notwithstanding anything to the contrary in
this Section 13.2 or in this Agreement, DURECT may not terminate this
Agreement unless (i) Endo in the performance of its material obligations
hereunder has committed a bad faith, intentional breach or default, (ii) Endo
fails to comply with a final arbitration decision within *** of such decision
being entered pursuant to Section 16.13, or (iii) ALZA terminates the ALZA
Agreement in accordance with the terms thereof as a result of Endo's breach or
default in the performance of a material obligation under this Agreement;
provided that DURECT provides Endo with immediate written notice upon becoming
aware of any such breach or default hereunder and uses all commercially
reasonable efforts to assist Endo, at Endo's expense, to cure such breach or
default. Failure to pay any amounts due under this Agreement within *** after
written notice that such amounts are overdue (and subject to the dispute
procedures in Section 4.6(b) and 8.6(b)) shall be deemed a material breach of
this Agreement.
13.3 Additional Termination Rights by Endo.
(a) Endo shall have the right, upon 10 days' prior written notice to
DURECT setting forth the reasons therefor, to have the JEC determine whether
or not there exists a significant concern regarding a regulatory or patient
safety issue that would seriously impact the long term viability of the
Product; provided that Sections 2.1(d)(ii) and (iii) shall not apply with
respect to such matter. If the JEC cannot reach agreement regarding such a
question, then the matter shall be resolved in accordance with the Accelerated
Arbitration Provisions of Section 16.13(b). This Agreement shall immediately
terminate upon a finding by the JEC or arbitrators, as the case may be, that
there exists a significant concern regarding a regulatory or patient safety
issue that would seriously impact the long term viability of the Product. In
such event, Endo shall pay to DURECT before or on the effective date of
termination a termination fee equal to ***% of any then-outstanding payment
obligations of DURECT's contractual obligations to Third Parties as set forth
under the Product Development Plan and to Third Party Manufacturers.
Notwithstanding the foregoing, in the event such a significant concern arises
during or immediately following the First Trial, Endo shall have the right to
terminate this Agreement pursuant to this Section 13.3(a) without having to
obtain the JEC's or the arbitrator's determination and without being obligated
to pay any then-outstanding payment obligations as set forth in the
immediately preceding sentence.
(b) Following the one-year anniversary of the Effective Date, Endo
shall have the right in its sole discretion to terminate this Agreement, if
not terminated by Endo under any other provision of this Agreement, effective
immediately upon giving DURECT notice of such termination, provided that (i)
if Endo provides such termination notice prior to the second anniversary of
the Effective Date , then Endo shall pay to DURECT an amount equal to 35% of
the remaining Development Costs (if, and to the extent, Endo is obligated to
make such payments under Section 4.6(c)) set forth in the Summary Development
Plan for the 12-month period following such termination, or, (ii) if Endo
provides such termination notice after the second anniversary of the Effective
Date, then Endo shall pay to DURECT an amount equal to 25% of the remaining
Development Costs (if, and to the extent, Endo is obligated to make such
payments under Section 4.6(c)) set forth in the Summary Development Plan for
the 12-month period following such termination; provided that in the case of
either of the foregoing clauses (i) and (ii), (A) Endo shall only be obligated
to pay DURECT amounts under this Section 13.3(b) when such Development Costs
are actually due and owing during the twelve-month period following such
termination and (B) in any event, Endo shall not be obligated to pay more than
$10,000,000 in the aggregate in the event of a termination under this 13.3(b).
Such termination shall be effective 30 days following written notice of
termination by Endo under this Section 13.3(b).
(c) In the event that, in connection with the protocol for the first
Placebo-Controlled Study, DURECT receives a final Special Protocol Assessment
Letter, or the like, from the FDA that requires *** in connection with the
administration of the Product and/or any one or more of the following ***
measures following administration of the Product, such as: (i) ***, (ii) ***,
(iii) *** or (iv) ***, then Endo shall have the right to terminate this
Agreement effective upon *** days' written notice with no further rights or
obligations hereunder (other than those rights or obligations which are
expressly indicated herein to survive termination or expiration of this
Agreement).
(d) In the event that the Trial Commencement Date shall not have
occurred on or before December 31, 2003, Endo shall have the right to
terminate this Agreement effective upon *** days' written notice with no
further rights or obligations hereunder (other than those rights or
obligations which are expressly indicated herein to survive termination or
expiration of this Agreement); provided that such written notice is delivered
to DURECT no later than January 31, 2004.
(e) In the event that the Trial Commencement Date shall not have
occurred on or before June 30, 2004, Endo shall have the right to terminate
this Agreement effective upon *** days' written notice with no further rights
or obligations hereunder (other than those rights or obligations which are
expressly indicated herein to survive termination or expiration of this
Agreement); provided that such written notice is delivered to DURECT no later
than July 31, 2004.
(f) In the event that DURECT has not complied in all material
respects with its obligations under the Common Stock Purchase Agreement
(including registration of the shares of DURECT Common Stock pursuant to
Section 8(a) thereof), Endo shall have the right to terminate this Agreement
effective upon *** days' written notice with no further rights or obligations
hereunder (other than those rights or obligations which are expressly
indicated herein to survive termination or expiration of this Agreement).
13.4 Termination in Connection With Additional Studies. If, pursuant
to Section 4.7, the PDC does not receive the approval of the JEC to undertake
the additional clinical studies required by the FDA within *** days of making
its formal recommendation of its conclusions to the JEC, then Endo may
terminate this Agreement effective immediately upon giving DURECT notice of
such termination. In the event of such a termination by Endo, DURECT shall pay
to Endo *** of all proceeds and other consideration received by DURECT and its
Affiliates in the subsequent *** years in connection with sales of (or
permitting Third Parties to sell) Product or Finished Product in the
Territory, pursuant to the payments and reports procedures set forth in
Section 7 (substituting DURECT for Endo and Endo for DURECT, and the proceeds
under this Section 13.4 for Distribution Fees, therein). In the event that
Endo does not elect to terminate this Agreement under this Section 13.4, then
(i) Endo may elect to pay for such additional clinical studies required by the
FDA, and shall be entitled to reduce (A) by ***% any payments otherwise due
and owing to DURECT hereunder until Endo has recovered through such reductions
an amount equal to *** % of all costs incurred by Endo in connection with such
additional clinical studies and (B) the Distribution Fee by *** for a period
of *** years from such election, or (ii) if Endo does not so elect to pay for
such additional clinical studies required by the FDA, then DURECT may elect to
pay for such additional clinical studies and shall be entitled to receive from
Endo an increase of (A) ***% of any payments otherwise due and owing to DURECT
hereunder until DURECT has recovered through such increases an amount equal to
***% of all costs incurred by DURECT in connection with such additional
clinical studies and (B) *** of the Distribution Fee for a period of *** years
from such election. The other Party shall fully cooperate with the Party
paying for such additional clinical studies under this Section 13.4. If
neither Party elects to pay for any such additional clinical studies, then
this Agreement shall terminate.
13.5 Termination in Connection with Bankruptcy. Any Party may
terminate this Agreement (or, at its option, Sections 3.6 or 3.7) effective
immediately in the event that the other Party (i) has become insolvent or has
been dissolved or liquidated, filed or has filed against it, a petition, case
or other proceeding under any Bankruptcy Laws, and such petition, case or
proceeding is not dismissed within 60 days of the filing; (ii) makes a general
assignment for the benefit of creditors; or (iii) has a receiver, custodian,
trustee or other Person exercising similar functions appointed for all or
substantially all of its assets.
13.6 Effect of Expiration or Termination. If this Agreement expires
or is terminated by any Party pursuant to this Section 13, all rights and
obligations of the Parties hereunder shall terminate except as specified in
Section 13.9, and in addition to any other remedies available to the Parties
at law or in equity: (i) Endo shall promptly transfer to DURECT copies of all
data, reports, records and materials in its possession or control that relate
solely to the Product, Finished Product and Implanter, and return to DURECT
all relevant records and materials in its possession or control containing
Confidential Information of DURECT (provided that Endo may keep one copy of
such Confidential Information of DURECT for archival purposes only); (ii) Endo
shall transfer to DURECT, or shall cause its designees to transfer to DURECT,
ownership of all INDs, Registration Applications, Registrations and other
regulatory filings made or filed for the Product (to the extent that any are
held in Endo's name), if permitted by applicable laws and regulations; (iii)
Endo shall assign to DURECT, and hereby does assign, conditioned upon and
effective only upon the termination or expiration of this Agreement, with no
additional consideration all of Endo's right, title and interest in the
Co-Owned Trademarks (which shall thereafter be deemed DURECT Trademarks)
including all goodwill associated therewith, (iv) Endo shall execute,
acknowledge and deliver such further instruments, and do all such other acts,
as may be necessary or appropriate in order to carry out the purposes and
intent of this Section 13.6 (subject to DURECT reimbursing all reasonable
out-of-pocket expenses incurred by Endo in connection therewith), and (v)
DURECT shall promptly return to Endo all relevant records and materials in
DURECT's possession or control containing Confidential Information of Endo
(provided that DURECT may keep one copy of such Confidential Information of
Endo for archival purposes only).
13.7 Additional Rights. In the event that a Party ("Exercising
Party") exercises its rights pursuant to Sections 3.5, 8.11, 8.15 or 13.8, and
without limiting any other rights or remedies available to the Exercising
Party, the other Party ("Responding Party") shall, at the election of the
Exercising Party or its designees exercised within *** of the Exercising Party
or its designees' notice to the Responding Party, promptly and free of charge:
(a) deliver to the Exercising Party or its designees all Technical
Information in the Responding Party's possession or under its control
necessary for such Exercising Party to exercise its rights; and
(b) cooperate with and provide promptly to the Exercising Party all
reasonable assistance to enable the Exercising Party to exercise its rights as
effectively and expeditiously as possible.
13.8 Nature of Licenses. All rights and licenses granted pursuant to
this Agreement are, and shall otherwise be deemed to be, for purposes of 11
U.S.C. 365(n) of the Bankruptcy Laws, licenses of rights to "intellectual
property" as defined under 11 U.S.C. 101(35A) of the Bankruptcy Laws. The
Parties agree that Endo, as a licensee of such rights under this Agreement,
shall retain and may fully exercise all of its rights, including any right to
enforce any exclusivity provision of this Agreement, remedies, and elections
under the Bankruptcy Laws. To the fullest extent permitted by law, the Parties
further agree that, in the event of the commencement of a bankruptcy
proceeding by or against DURECT under the Bankruptcy Laws, Endo shall be
entitled to all applicable rights under 11 U.S.C. 365(n) of the Bankruptcy
Laws, including copies and access to, as appropriate, any such intellectual
property and all embodiments of such intellectual property upon written
request therefor by Endo, and such, if not already in its possession, shall be
promptly delivered to Endo.
13.9 Accrued Rights; Surviving Obligations.
(a) Termination or expiration of this Agreement for any reason shall
be without prejudice to any rights that shall have accrued to the benefit of
any Party prior to such termination or expiration, including any remedies
available to a Party with respect to a breach or default by the other Party
hereunder. Such termination or expiration shall not relieve any Party from
obligations which are expressly indicated herein to survive termination or
expiration of this Agreement.
(b) All of the Parties' rights and obligations under, and/or the
provisions contained in, Sections 1, 3.4(c), 3.8, 4.1(e), 4.2, 6.5(a),
7.3-7.5, 9.1, 10, 12, 13.4, 13.6, 13.9 and 16 shall survive termination or
expiration of this Agreement.
14. FORCE MAJEURE.
14.1 Events of Force Majeure. Except where expressly provided for
herein, neither Party shall be held liable or responsible to the other Party
nor be deemed to be in default under, or in breach of any provision of, this
Agreement for failure or delay in fulfilling or performing any obligation of
this Agreement to the extent that such failure or delay is due to Force
Majeure, and without the willful wrongdoing, recklessness or gross negligence
of the Party so failing or delaying. For purposes of this Agreement, "Force
Majeure" is defined as causes beyond the reasonable control of the Party,
including acts of God; changes in regulations or laws of any government; war;
civil commotion; destruction of production facilities or materials by fire,
flood, earthquake, explosion or storm; labor disturbances; epidemic; and
failure of public utilities or common carriers. In such event that the ability
of DURECT or Endo to perform its obligations under this Agreement, as the case
may be, shall be so affected, the affected Party shall immediately notify the
other Party of such inability and of the period for which such inability is
expected to continue. The Party giving such notice shall thereupon be excused
from such of its obligations under this Agreement as it is thereby disabled
from performing for so long as it is so disabled and the 30 days thereafter.
To the extent possible, each Party shall use all commercially reasonable
efforts to minimize the duration of any Force Majeure.
15. ENDO'S RIGHT TO CURE ON BEHALF OF DURECT.
15.1 Endo's Right to Cure. If DURECT at any time during the term of
this Agreement, defaults in its monetary obligations (or any non-monetary
default) with respect to any Third Party contractual obligation (including
under the ALZA Agreement or a Third Party Manufacturing Agreement), which
default could give rise, whether immediately or with the passage of time, to
termination of such agreement or restriction of DURECT's rights thereunder in
a manner that adversely affects the rights granted by DURECT to Endo under
this Agreement, then Endo shall, at its option, in its sole discretion, be
entitled to cure any and all such defaults on DURECT's behalf. Any payments or
other financial accommodations or consideration made by Endo in order to cure
such defaults shall be offset against any fees and payments due to DURECT
under this Agreement, with annual interest for any amount paid by Endo at a
rate of prime plus *** (or the maximum rate permitted by applicable law,
whichever is less). DURECT shall give prompt written notice to Endo of any
actual or alleged breaches or defaults which are or potentially are within the
scope of this Section 15.1. Any rights provided to Endo under this Section
15.1 shall be in addition to any other rights or remedies available to Endo
under this Agreement, at law or equity.
16. MISCELLANEOUS.
16.1 Relationship of Parties. Nothing in this Agreement is intended
or shall be deemed to constitute a partnership, agency, employer-employee or
joint venture relationship between the Parties. No Party shall incur any debts
or make any commitments for the other, except to the extent, if at all,
specifically provided herein.
16.2 Assignment. Neither Party shall assign this Agreement or its
rights or obligations hereunder without the express written consent of the
other Party hereto, except that either Party may assign or transfer this
Agreement and its rights and obligations hereunder without the consent of the
other Party to (i) an Affiliate, (ii) any assignee of all or substantially all
of its business, or (iii) its successor in the event of its merger,
consolidation or involvement in a similar transaction. An assignment or
transfer by a Party pursuant to this Section 16.2 shall be binding on its
successors or assigns. No such assignment or transfer shall be valid or
effective unless done in accordance with this Section 16.2.
16.3 Books and Records. Any books and records to be maintained under
this Agreement by a Party or its Affiliates shall be maintained in accordance
with GAAP.
16.4 Further Actions. Each Party shall execute, acknowledge and
deliver such further instruments, and do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
16.5 Notice. Any notice, request or other communication required or
permitted to be given under or in connection with this Agreement shall be
deemed to have been sufficiently given if in writing and personally delivered
or sent by certified mail (return receipt requested), facsimile transmission
(receipt verified), or overnight express courier service (signature required),
prepaid, to the Party for which such notice is intended, at the address set
forth for such Party below:
In the case of DURECT, to:
DURECT Corporation
00000 Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No: (000) 000-0000
Telephone No.: (000) 000-0000
In the case of Endo, to:
Endo Pharmaceuticals Inc.
000 Xxxxxxxx Xx.
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No: (000) 000-0000
Telephone No.: (000) 000-0000
or to such other address for such Party as it shall have specified by like
notice to the other Party, provided that notices of a change of address shall
be effective only upon receipt thereof. If delivered personally or by
facsimile transmission, the date of delivery shall be deemed to be the date on
which such notice or request was given. If sent by overnight express courier
service, the date of delivery shall be deemed to be the next business day
after such notice or request was deposited with such service. If sent by
certified mail, the date of delivery shall be deemed to be the third business
day after such notice or request was deposited with the U.S. Postal Service.
16.6 Use of Name. Except as otherwise provided herein, DURECT, on the
one hand, and Endo on the other hand, shall not have any right, express or
implied, to use in any manner the name or other designation of the other or
any other trade name, trademark or logos of the other (including the DURECT
Trademarks and Endo Trademarks, respectively) for any purpose.
16.7 Public Announcements; Disclosures. Except as permitted by
Section 10.4 or as required by law, none of the Parties shall make any public
announcement or non-confidential disclosure concerning this Agreement, or the
Product, Finished Product or Implanter in the Field in the Territory, without
the prior written approval of the other Party.
16.8 Waiver. A waiver by any Party of any of the terms and conditions
of this Agreement in any instance shall not be deemed or construed to be a
waiver of such term or condition for the future, or of any subsequent breach
hereof. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement shall be cumulative and none of them shall be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either Party.
16.9 Compliance with Law. Nothing in this Agreement shall be deemed
to permit a Party to export, reexport or otherwise transfer any Product sold
under this Agreement without compliance with applicable laws.
16.10 Severability. When possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
16.11 Amendment. No amendment, modification or supplement of any
provisions of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each Party. DURECT shall
not, without the prior written consent of Endo, amend, terminate or otherwise
modify the ALZA Agreement, in each case in any way that would, individually or
in the aggregate, adversely affect (a) Endo's rights under this Agreement or
(b) the ability of DURECT to perform its obligations under this Agreement.
16.12 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware without
regard to conflicts of law principles.
16.13 Arbitration.
(a) Except as expressly otherwise provided in this Agreement, any
dispute arising out of or relating to the interpretation of any provisions of
this Agreement or the failure of either Party to perform or comply with any
obligation of such Party pursuant to this Agreement or the breach, termination
or validity thereof ("Dispute"), shall be exclusively and finally settled by
arbitration under the Commercial Arbitration rules of the American Arbitration
Association ("AAA") then in effect (the "Rules"), as modified by the terms set
forth in this Section 16.13(a):
(i) The place of arbitration of any Dispute shall be in
Wilmington, Delaware. Such arbitration shall be conducted by three
arbitrators, one appointed by each of Endo and DURECT and the third selected
by the party-appointed arbitrators. Each arbitrator shall be neutral and
impartial and shall have relevant experience in the pharmaceutical industry.
Endo and DURECT shall make their respective appointments within 20 business
days of receipt by the respondent of a copy of the demand for arbitration.
Such party-appointed arbitrators shall select the third arbitrator within 20
business days of the appointment of the second arbitrator. If any arbitrator
is not timely appointed, on the request of any Party such arbitrator shall be
appointed by the AAA in accordance the listing, striking and ranking
provisions in the Rules. The arbitrators shall render an award as
expeditiously as possible; if practicable, within six months after the
appointment of the third arbitrator.
(ii) Any award rendered by the arbitrators shall be final and
binding upon the Parties. Judgment upon any award rendered may be entered in
any court having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be. Except as provided in Section 12.6, each Party shall pay its own expenses
of arbitration, and the fees and expenses of the arbitrators shall be equally
shared between Endo and DURECT. Any costs or fees (including attorney's fees
and expenses) incident to enforcing the award shall be charged against the
Party resisting such enforcement.
(iii) This Section 16.13(a) shall not prohibit a Party from
seeking preliminary injunctive relief in aid of arbitration from a court of
competent jurisdiction in the event of a breach or prospective breach of this
Agreement by any other Party which would cause irreparable harm to the Party
seeking such relief. Without prejudice to such provisional remedies as may be
available under the jurisdiction of a court, the arbitrators shall have full
authority to grant provisional remedies and to direct the Parties to request
that any court modify or vacate any temporary or preliminary relief issued by
such court, and to award damages for the failure of any Party to respect the
arbitrators' orders to that effect.
(b) Whenever a Dispute is expressly designated in this Agreement as
one to be resolved through the Accelerated Arbitration Provisions, then such
Dispute shall be finally settled by arbitration under the then current AAA
Expedited Procedures applicable to the Rules ("Expedited Rules") and in
accordance with the terms set forth in this Section 16.13(b) (the "Accelerated
Arbitration Provisions"):
(i) The place of arbitration shall be Wilmington, Delaware. Such
arbitration shall be conducted by a single neutral and impartial arbitrator
agreed upon by the Parties within five days of receipt by respondent of a copy
of the demand for arbitration. If the Parties fail to timely agree, on the
request of any Party, such arbitrator shall be appointed by the AAA in
accordance with the Expedited Rules. The Dispute shall be resolved by
submission of documents unless the arbitrator determines (or the Parties
agree) that an oral hearing is necessary. The award shall be rendered, if
practicable, within 45 days of the appointment of the arbitrator.
(ii) Any award rendered by the arbitrator shall be final and
binding upon the Parties. Judgment upon any award rendered may be entered in
any court having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be. Each Party shall pay its own expenses of arbitration, and the fees and
expenses of the arbitrator shall be equally shared between Endo and DURECT.
Any costs or fees (including attorney's fees and expenses) incident to
enforcing the award shall be charged against the party resisting such
enforcement.
(iii) This Section 16.13(b) shall not prohibit a Party from
seeking preliminary injunctive relief in aid of arbitration from a court of
competent jurisdiction in the event of a breach or prospective breach of this
Agreement by any other Party which would cause irreparable harm to the Party
seeking such relief. Without prejudice to such provisional remedies as may be
available under the jurisdiction of a court, the arbitrator shall have full
authority to grant provisional remedies and to direct the Parties to request
that any court modify or vacate any temporary or preliminary relief issued by
such court, and to award damages for the failure of any Party to respect the
arbitrator's orders to that effect.
16.14 Entire Agreement. This Agreement (together with the Common
Stock Purchase Agreement) constitutes the entire agreement among the Parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements and understandings, both oral and written, among the Parties with
respect to the subject matter of this Agreement.
16.15 Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties hereto and their respective permitted successors and assigns.
16.16 No Third Party Beneficiaries. Nothing in this Agreement is
intended to confer on any Person other than DURECT or Endo any rights or
obligations under this Agreement, and there are no intended Third Party
beneficiaries to this Agreement.
16.17 Descriptive Headings; Certain Terms. The descriptive headings
of this Agreement are for convenience only, and shall be of no force or effect
in construing or interpreting any of the provisions of this Agreement. The
term "including" when used herein shall be interpreted to mean "including but
not limited to", except in Exhibits A and B for Fully Burdened Manufacturing
Costs and Development Costs.
16.18 Fees and Payments. All fees and payments made by one Party to
the other under this Agreement shall be deemed non-refundable unless expressly
provided to the contrary herein.
16.19 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, any one of which need not contain the signature of
more than one Party but all such counterparts taken together shall constitute
one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed by its duly authorized representative as of the day and year first
above written.
DURECT Corporation
By: /S/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx
Title: President and
Chief Executive Officer
Endo Pharmaceuticals Inc.
By: /S/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx
Title: Chairman and
Chief Executive Officer
EXHIBIT A- Fully Burdened Manufacturing Costs
"Fully Burdened Manufacturing Costs" shall mean *** .
EXHIBIT B- Development Costs
Development Costs are equal to ***.
EXHIBIT C- Examples of Development Expenses
***
EXHIBIT D- DURECT Trademarks
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
Xxxx Country Appln. No. Goods Status
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
CHRONOGESIC(TM) Canada 1117897 Pharmaceuticals for the treatment Pending
of pain; analgesics; and drug
(Class 5) delivery devices containing
medications for the treatment of
pain, namely implantable devices
for the delivery of pain medication
by implantation and release in the
human body
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
CHRONOGESIC(TM)1 U.S. 75/658,684 Pharmaceuticals, namely analgesics Allowed for
registration.
(Class 5) Statement of Use
accepted July 31,
2002
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
CHRONOGESIC(TM) U.S. 76/270,055 Pharmaceuticals for the treatment *** - see endnote 1
of pain; analgesics; and drug
(Class 5) delivery devices containing
medications for the treatment of
pain, namely implantable devices
for the delivery of pain medication
by implantation and release in the
human body.
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
DURECT Canada 1019851 Prescription pharmaceuticals, ***
namely, pharmaceuticals prescribed
(Class 5) by physicians and delivered by
means of implantable drug delivery
methods for the treatment of
chronic diseases of the central
nervous systems, cardio-vascular
disease, occlusions of blood
vessels and grafts, ear disorders,
cancer, spasticity, failed back
pain, spinal cord injuries,
neuro-degenerative diseases, and
chronic pain; and drug delivery
devices containing medications,
namely implantable devices for
delivery of drugs by implantation
and release of medications in the
human body.
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
DURECT Canada 1071762 Miniature fluid dispensers for ***
experimental use in laboratory
(Class 10) animals and in vitro; implantable
and non-implantable pumps for use
in dispensing fluids and
medications into animals for
scientific use; surgical, medical,
dental and veterinary instruments
and apparatus, namely speculum,
measuring devices, sizing devices
and surgical insertion instruments;
products and instruments for
delivery of fluids to the ear and
for the treatment of ear disorders,
namely ear catheters; implantable
and non-implantable pumps sold
without medication for use in
dispensing fluids and medications
into humans and animals.
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
DURECT U.S. 75/625,710 Prescription pharmaceuticals, ***
namely, pharmaceuticals prescribed
(Class 5) by physicians and delivered by
means of implantable drug delivery
methods for the treatment of
chronic diseases of the central
nervous systems, cardio-vascular
disease, occlusions of blood
vessels and grafts, ear disorders,
cancer, spasticity, failed back
pain, spinal cord injuries,
neuro-degenerative diseases, and
chronic pain; and drug delivery
devices containing medications,
namely implantable devices for
delivery of drugs by implantation
and release of medications in the
human body.
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
DURECT U.S. 76/137,001 Surgical, medical, dental, and Approved for
veterinary instruments and Publication August
(Class 10) apparatus, namely, speculum; 5, 2002.
products and instruments for the
delivery of fluids to the ear and
for the treatment of ear disorders,
namely, ear catheters; implantable
and non-implantable pumps sold
without medication for use in
dispensing fluids and medications
into humans and animals; measuring
devices, diagnostic devices, sizing
devices and surgical insertion
instruments used in connection with
products and instruments for the
delivery of fluids to the ear and
for the treatment of ear disorders.
--------------------------- ------------- ------------------- ------------------------------------- ----------------------
EXHIBIT E - Endo Trademarks
----------------------------- -------------- ----------------------- ---------------------------- -----------------------------
Xxxx Country Appln./Reg. No. Goods Status
----------------------------- -------------- ----------------------- ---------------------------- -----------------------------
ENDO X.X. 0000000 House xxxx for a full line Registered
of pharmaceutical
preparations. October 1, 1996.
----------------------------- -------------- ----------------------- ---------------------------- -----------------------------
ENDO (Stylized) U.S. 2189503 House xxxx for a full line Registered
of pharmaceutical
preparations. September 15, 1998.
----------------------------- -------------- ----------------------- ---------------------------- -----------------------------
ENDO LABORATORIES X.X. 0000000 House xxxx for a full line Registered
of pharmaceutical
preparations. February 8, 2000.
----------------------------- -------------- ----------------------- ---------------------------- -----------------------------
Endo Logo U.S. Newly Filed House xxxx for a full line Pending
of pharmaceutical
preparations. Filed September 25, 2002.
----------------------------- -------------- ----------------------- ---------------------------- -----------------------------
EXHIBIT F - DURECT New Products and Related Products
Development Projects as of Effective Date
New Products
***
Related Products
***
EXHIBIT G - Patents
I. PATENTS OWNED BY DURECT
***
II. PATENTS OWNED BY ALZA
Those patents owned by ALZA in the Territory under which DURECT has a license
pursuant to Section 5.1(a) of the ALZA Agreement.
EXHIBIT H -
Initial Members (including co-chairpersons and secretary) of JEC
DURECT MEMBERS
***
ENDO MEMBERS
***
SECRETARY
***
EXHIBIT I -
Initial Members (including chairperson and secretary) of PDC
DURECT MEMBERS
***
ENDO MEMBERS
***
SECRETARY
***
EXHIBIT J -
Initial Members (including chairperson and secretary) of JCC
ENDO MEMBERS
***
DURECT MEMBERS
***
SECRETARY
***
EXHIBIT K -
Initial Members (including chairperson and secretary) of JMC
DURECT MEMBERS
***
ENDO MEMBERS
***
SECRETARY
***
EXHIBIT L - Initial Alliance Managers
DURECT
***
ENDO
***
EXHIBIT M - Examples of Calculation of Distribution Fee
***
EXHIBIT N - DURECT Activities
***
EXHIBIT O - Common Stock Purchase Agreement
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of November 8, 2002, by and between Durect Corporation, a
Delaware corporation (the "Company") and Endo Pharmaceuticals Inc., a Delaware
corporation (the "Purchaser").
1. Authorization and Sale of the Shares. Upon the terms and subject
to the conditions of this Agreement, the Company has authorized the issuance
and sale of 1,533,742 shares (the "Shares") of its common stock, par value
$0.0001 per share (the "Common Stock").
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to the
conditions set forth in this Agreement, the Company agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Company 1,533,742
Shares, for an aggregate purchase price of $4,999,998.92 (the "Purchase
Price").
3. Closing; Payment and Delivery. The purchase and sale of the Shares
(the "Closing") shall take place at the offices of Venture Law Group, 0000
Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx, at 2:00 p.m. on Tuesday, November 12,
2002, or at such other time and place as the Company and the Purchaser shall
mutually agree. Certificates for the Shares shall be registered in the name of
the Purchaser. The certificates evidencing the Shares shall be delivered to
the Purchaser at the Closing, with any transfer taxes to be paid by the
Company.
4. Conditions to the Company's Obligations. The Company's obligation
to issue and sell the Shares to the Purchaser is subject to the following
conditions:
(a) Receipt by the Company of the Purchase Price in immediately
available funds, by wire transfer to an account designated by the Company to
the Purchaser in writing five days prior to the Closing Date.
(b) Accuracy of the representations and warranties made by the
Purchaser and the fulfillment in all material respects of those undertakings
of the Purchaser to be fulfilled prior to the Closing.
(c) The Development, Commercialization, Supply and License
Agreement, dated as of November 8, 2002 (the "Development Agreement") shall
have been executed and delivered by the parties hereto.
5. Conditions to the Purchaser's Obligations. The obligations of the
Purchaser to purchase and pay for the Shares on the Closing Date are subject
to the following conditions:
(a) The Purchaser shall have received on the Closing Date stock
certificates evidencing the Shares duly endorsed in blank, or accompanied by
stock powers duly executed in blank in proper form for transfer (affixed with
all required stamps evidencing payment of transfer taxes).
(b) The Purchaser shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date and
that the Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the best of
his or her knowledge as to proceedings threatened.
(c) The Purchaser shall have received on the Closing Date an
opinion of Venture Law Group, A Professional Corporation, counsel for the
Company, dated the Closing Date, in the form set forth as Exhibit A. Such
opinion shall be rendered to the Purchaser at the request of the Company and
shall so state therein.
(d) The Purchaser shall have received on the Closing Date a
receipt for the Purchase Price.
(e) The Development Agreement shall have been executed and
delivered by the parties hereto.
6. Representations, Warranties and Covenants of the Company. The
Company represents and warrants to, and covenants with, the Purchaser that, as
of the date hereof and as of the Closing Date (or as of such other date as may
be expressly set forth below):
(a) The forms, reports and documents (collectively, the "Exchange
Act Documents") filed with the Securities and Exchange Commission (the
"Commission") since September 27, 2000 constitute all forms, reports and
documents required to be filed by the Company under the Securities Act of 1933
(the "Securities Act") and the Securities Exchange Act of 1934, as amended
(the "Exchange Act" and, together with the Securities Act, the "Securities
Laws") since that date. As of their respective dates, the Exchange Act
Documents complied as to form in all material respects with the applicable
requirements of the Securities Laws, and did not contain any untrue statements
of material facts or omit material facts required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. No subsidiary of the
Company is required to file any form, report or other document with the
Commission. The financial statements included in the Exchange Act Documents
(together with accompanying notes, the "Financial Statements") (a) have been
prepared from, and are in accordance with, the books and records of the
Company and its subsidiaries, (b) complied in all material respects with
applicable accounting requirements and with the published rules and
regulations of the Commission with respect thereto, (c) have been prepared in
accordance with the generally accepted accounting principles of the United
States applied on a basis consistent with the past practices of the Company
(except as may be indicated in the notes thereto) and (d) fairly present the
consolidated financial position and the consolidated results of operations and
cash flows (and changes in financial position, if any) of the Company and its
subsidiaries as of the times and for the periods referred to therein.
(b) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own or lease its
properties and to conduct its business as currently conducted and as described
in the Exchange Act Documents and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would
not reasonably be expected to have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as currently conducted and
described in the Exchange Act Documents and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be
in good standing would not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole; all of the
issued shares of capital stock of each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable and
are owned directly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(d) The execution and delivery of this Agreement by the Company,
the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all requisite action on the part of the Company or its
stockholders. This Agreement has been duly executed and delivered by the
Company and (assuming due authorization, execution and delivery by the
Purchaser) constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity and except as rights to
indemnification and contribution in Section 12 hereof may be limited under
applicable law.
(e) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Exchange Act
Documents.
(f) As of the date hereof, the company's authorized capital stock
consists of 120,000,000 shares of common stock, 48,899,451 shares of which are
issued and outstanding. All shares of the Company's capital stock outstanding
are duly authorized, validly issued, fully paid and non-assessable. As of the
date hereof, other than as set forth in the Investors' Rights Agreement, there
are no (y) antidilution rights or preemptive rights with respect to capital
stock of the Company or (z) agreements restricting the transfer of, relating
to the voting of, requiring registration of, or granting any preemptive or
antidilutive rights with respect to, any securities of the Company.
(g) The Shares, when issued, sold and delivered by the Company
pursuant to this Agreement, will be duly authorized, validly issued, fully
paid, non-assessable delivered by the Company free and clear of any liens. The
sale and purchase of the Shares pursuant to this Agreement conveys to the
Purchaser good and valid title to such securities, free and clear of any liens
and will entitle the Purchaser to all the rights of a holder of such
securities.
(h) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not
contravene any provision of applicable law or the certificate of incorporation
or by-laws of the Company or any registration rights or similar agreement or
any other agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its
obligations under this Agreement, except such as may be required by the
securities or Blue Sky laws of the various states or foreign jurisdictions in
connection with the offer and sale of the Shares and by Federal and state
securities laws with respect to the Company's obligations under Sections 8 and
11 of this Agreement.
(i) The Company is not, and after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof will not
be, required to register as, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
(j) Subject to the accuracy of the Purchaser's representations
herein, it is not necessary in connection with the offer, sale and delivery of
the Shares to the Purchaser in the manner contemplated by this Agreement to
register the Shares under the Securities Act.
(k) The Company shall comply with all requirements of the National
Association of Securities Dealers, Inc. with respect to the issuance of the
Shares and the listing thereof on The Nasdaq National Market.
7. Representations, Warranties and Covenants of the Purchaser.
The Purchaser represents and warrants to, and covenants with, the
Company that:
(a) The Purchaser is an "accredited investor" as defined by Rule
501(a) of the Securities Act of 1933, as amended, and has requested, received,
reviewed and considered all information it deems relevant in making an
informed decision to purchase the Shares. The Purchaser is acquiring the
number of Shares set forth on the first page of this Agreement for its own
account for investment only and with no present intention of distributing any
of such Shares or any arrangement or understanding with any other persons
regarding the distribution of such Shares, other than as contemplated in
Section 8 of this Agreement.
(b) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares, except in
compliance with the Securities Act and the applicable rules and regulations of
the Commission or any exemption thereunder.
(c) The Purchaser agrees to provide to the Company all information
reasonably requested by the Company, in a timely manner, for use in
preparation of the Registration Statement (as defined in Section 8 of this
Agreement) and all of the information contained therein will be true and
correct as of the date such information is provided. The Purchaser will notify
the Company immediately of any change in any such information until such time
as the Purchaser has sold all of its Shares or until the Company is no longer
required to keep the Registration Statement effective.
(d) The Company may in its discretion imprint any or all
certificates representing Shares purchased hereunder by the Purchaser with the
following legend, such imprinting to be without prejudice, however, to the
rights of the Purchaser at all times to sell or otherwise dispose of all or
any part of such Shares, subject to the terms of this Agreement, under an
effective registration statement or under an exemption from the registration
requirement available under the Securities Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
SAID ACT, UNLESS THE SECURITIES ARE OTHERWISE SOLD, TRANSFERRED OR
ASSIGNED IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS, AND
THE COMPANY RECEIVES AN OPINION OF COUNSEL AS TO THE EXEMPTION
FROM REGISTRATION OF SUCH SALE, TRANSFER OR ASSIGNMENT."
Notwithstanding anything to the contrary contained herein, the Company shall
be obligated to remove the preceding legend from the certificates representing
the Shares upon the filing of a registration statement with respect to the
Shares or if the Shares are otherwise sold in compliance with the Securities
Act.
(e) The Purchaser will notify the Company promptly of the sale of
any of its Shares, other than (i) sales pursuant to a Registration Statement
as contemplated in Section 8 of this Agreement and (ii) sales following
termination of the transfer restrictions pursuant to Section 11 of this
Agreement, and the Purchaser will furnish any information reasonably requested
by the Company, including an opinion of counsel reasonably satisfactory to the
Company, to evidence the exemption from the registration requirements of the
Securities Act, the applicable rules and regulations of the Commission
thereunder, and state securities laws, in reliance upon which such sales have
been made.
(f) The execution and delivery of this Agreement by the Purchaser,
the performance by the Purchaser of its obligations hereunder and the
consummation by the Purchaser of the transactions contemplated hereby have
been duly authorized by all requisite action on the part of the Purchaser.
This Agreement has been duly executed and delivered by the Purchaser and
(assuming due authorization, execution and delivery by the Company)
constitutes a legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and general principles of equity and except as rights to indemnification and
contribution in Section 12 hereof may be limited under applicable law.
8. Registration. The Company shall:
(a) Prepare and file or cause to be prepared and filed with the
Commission in accordance herewith, a shelf registration statement under Rule
415 of the Securities Act or any successor provision (the "Registration
Statement") registering the resale from time to time by Purchaser of all of
the Shares. The Registration Statement shall be on Form S-3 or another
appropriate form permitting registration of such Shares for resale by the
Purchaser from time to time through the automated quotation system of The
Nasdaq National Market or the facilities of a national security exchange on
which the Shares are then traded, or in privately negotiated transactions. The
Company shall use its best efforts, subject to receipt of necessary
information from the Purchaser, to cause the Registration Statement to be
declared effective under the Securities Act as promptly as is practicable
after the date the Registration Statement is filed and in any event no later
than November 8, 2003 (the "Registration Statement Effective Date") and to
keep such Registration Statement effective for the period set forth in Section
8(b) of this Agreement.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep such Registration Statement continuously effective for a period which
shall not be less than 180 days following the date that the Registration
Statement is declared effective by the Commission (such period, the
"Effectiveness Period"); cause the related prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and use its best efforts to comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement during the Effectiveness
Period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or such
Prospectus as so supplemented.
(c ) As promptly as practicable give notice to the Purchaser (i)
when any Prospectus, Prospectus supplement, or the Registration Statement or a
post-effective amendment to the Registration Statement has been filed with the
Commission and, with respect to a Registration Statement or any post-effective
amendment, when the same has been declared effective.
(d) Use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement or the lifting of
any suspension of the qualification (or exemption from qualification) of any
of the Shares for sale in any jurisdiction in which they have been qualified
for sale, in either case at the earliest possible moment, and to provide
prompt notice to the Purchaser of the withdrawal of any such order.
(e) During the Effectiveness Period, deliver to the Purchaser in
connection with any sale by the Purchaser of Shares pursuant to the
Registration Statement, without charge, as many copies of the Prospectus or
Prospectuses relating to such Shares (including each preliminary prospectus)
and any amendment or supplement thereto as such the Purchaser may reasonably
request.
(f) File documents required of the Company for customary Blue Sky
clearance in states specified in writing by the Purchaser; provided that the
Company will not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Agreement or (ii) take any action that would
subject it to general service of process in suits or to taxation in any such
jurisdiction where it is not then so subject.
(g) Bear all fees and expenses incurred in connection with the
performance by the Company of its obligations under paragraphs (a) through (f)
of this Section whether or not the Registration Statement is declared
effective, other than fees and expenses, if any, of counsel or other advisors
to the Purchaser or underwriting discounts, brokerage fees and commissions
incurred by the Purchaser.
9. Delay in Registration Statement Effective Date.
If the Registration Statement is not declared effective by the
Commission by the Registration Statement Effective Date, then for each day
following the Registration Statement Effective Date, until but excluding the
date the Commission declares the Registration Statement effective, the Company
shall, for each such day, pay to the Purchaser, as liquidated damages and not
as a penalty, an amount equal to a daily rate of 2.0% of the Purchase Price;
and for any such day, such payment shall be made no later than the first
business day of the calendar week next succeeding the week in which such day
occurs.
The parties hereto agree that the sole damages payable for a
violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be the liquidated damages. The parties
hereto agree that the liquidated damages provided for in this Section 9
constitute a reasonable estimate of the damages that may be incurred by the
Purchaser by reason of the failure of the Registration Statement to be filed
or declared effective in accordance with the provisions hereof.
10. Piggyback Registrations.
If the Company proposes to register for the account of Alza
Corporation and/or Brookside Capital Partners Fund, L.P. any of their
respective shares of Common Stock or other equity interests in the Company in
connection with the public offering for cash of such securities as a result of
Alza Corporation and/or Brookside Capital Partners Fund, L.P.'s exercise of
their registration rights under the Second Amended and Restated Investors'
Rights Agreement dated March 28, 2000, or any amendment thereto ("Investors'
Rights Agreement"), the Company shall, at such time, promptly give the
Purchaser written notice of such registration. Upon the written request of the
Purchaser given in writing to the Company within fifteen (15) days after
receipt of such notice by the Company, the Company shall, subject to the
provisions of this Section 10, include in such registration statement all of
the Shares that the Purchaser has requested to be registered. The Purchaser's
rights under this Section 10 shall terminate upon the termination of Alza
Corporation's and Brookside Capital Partners, L.P.'s registration rights under
the Investors' Rights Agreement.
11. Transfer of Shares After Registration; Suspension.
(a) The Purchaser agrees that it will not effect any disposition
of the Shares or its right to purchase the Shares that would constitute a sale
within the meaning of the Securities Act except as (i) contemplated in the
Registration Statement, (ii) pursuant to a piggyback registration as set forth
in Section 10 of this Agreement or (iii) as otherwise permitted by this
Agreement or applicable law, and that it will promptly notify the Company of
any changes in the information set forth in the Registration Statement
regarding the Purchaser or its plan of distribution.
(b) The Company shall, as promptly as practicable, give notice to
the Purchaser (i) of any request, following the effectiveness of the
Registration Statement under the Securities Act, by the Commission or any
other federal or state governmental authority for amendments or supplements to
any Registration Statement or related prospectus or for additional
information, (ii) of the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation or threatening of any proceedings
for that purpose and (iii) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(c) The Purchaser agrees that, upon receipt of any notice (a
"Suspension Notice") from the Company of the happening of any event of the
kind which, in the opinion of the Company, requires the amendment or
supplement of any prospectus, the Purchaser will forthwith discontinue
disposition of Shares until the Purchaser's receipt of the copies of the
supplemented or amended prospectus, or until it is advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and
has received copies of any additional or supplemental filings that are
incorporated by reference in the prospectus, and, if so directed by the
Company, the Purchaser will deliver to the Company all copies, other than
permanent file copies then in the Purchaser's possession, of the prospectus
covering the Shares current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time period regarding the
effectiveness of the Registration Statement set forth in Section 8(b) hereof
shall be extended by the number of days during the period from and including
the date of the giving of the Suspension Notice to and including the date when
the Purchaser shall have received the copies of the supplemented or amended
prospectus or the Advice.
The Company shall use all commercially reasonable efforts to limit
the duration and number of any trading suspensions pursuant to this Section
11(c). The Purchaser hereby agrees that upon receipt of any Suspension Notice
from the Company, the Purchaser shall, and shall cause each of its officers,
directors, employees, affiliates, advisors, agents and representatives to,
keep confidential all nonpublic information set forth in such notice including
the existence and terms of such Suspension Notice.
12. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Purchaser and its directors, officers, employees, affiliates, controlling
persons, agents, representatives and their successors and assigns and each
person, if any, who controls the Purchaser within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) arising
out of any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the prospectus included in the
Registration Statement, as amended or supplemented by any amendment or
prospectus supplement, including post-effective amendments, and all material
incorporated by reference in such prospectus (the "Prospectus") or in any
amendment or supplement thereto or in any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by
(i) any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Purchaser furnished to the
Company in writing by such Purchaser expressly for use therein, or (ii) the
failure of such Purchaser to comply with the covenants and agreements
contained in Sections 7 and 11 hereof respecting resale of the Shares.
(b) The Purchaser agrees to indemnify and hold harmless the
Company, its directors, officers, employees, affiliates, controlling persons,
agents, representatives and their successors and assigns and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim), insofar as such losses, claims,
damages or liabilities arise out of the failure of the Purchaser to comply
with the covenants and agreements contained in Sections 7 and 11 hereof
respecting resale of the Shares, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with information
relating to the Purchaser furnished in writing by the Purchaser to the Company
expressly for use in the Registration Statement or Prospectus.
(c ) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 12(a) or 12(b) of this Agreement,
such person (the "Indemnified Party") shall promptly notify the person against
whom such indemnity may be sought (the "Indemnifying Party") in writing and
the Indemnifying Party, upon request of the Indemnified Party, shall retain
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder, except to the
extent such failure shall have adversely prejudiced the Indemnifying Party. In
any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood that
the Indemnifying Party shall not, in respect of the legal expenses of any
Indemnified Party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Indemnified Parties,
and that all such fees and expenses shall be reimbursed as they are incurred.
The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final non-appealable judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the non-appealable Indemnified Party
from and against any loss or liability by reason of such settlement or
judgment. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such proceeding.
(d) To the extent that the indemnification provided for under
Section 12(a) or 12(b) of this Agreement is unavailable to an Indemnified
Party or is insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Party under such
paragraph, in lieu of indemnifying such Indemnified Party thereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party or parties
on the one hand and of the Indemnified Party or parties on the other hand in
connection with the statements or omissions or other matters that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Purchaser on the one hand
and the Company on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact, or the
inaccurate or the alleged inaccurate representation or warranty relates to
information supplied by the Purchaser or by the Company and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 12(d) were determined by pro rata
allocation or by any other method or allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding this Section 12(d), the Purchaser shall not
be required to contribute any amount in excess of the amount by which the net
amount received by the Purchaser from the sale of the Shares to which such
loss relates exceeds the amount of any damages that such Indemnifying Party
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity and contribution provisions contained in this
Section 12 shall survive the completion of any offering or sale of Shares
pursuant to the Registration Statement.
13. Termination of Conditions and Obligations. The conditions
precedent imposed by Sections 7, 8 and 11 of this Agreement upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares (and any legend on the Shares will be removed by the
Company) at such time as such Shares have been effectively registered under
the Securities Act and sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement
covering such Shares, or at such time as an opinion of counsel satisfactory to
the Company shall have been rendered to the effect that such conditions are
not necessary in order to comply with the Securities Act.
14. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier,
by courier guaranteeing overnight delivery or by first-class mail, return
receipt requested, and shall be deemed given (i) when made, if made by hand
delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1)
business day after being deposited with such courier, if made by overnight
courier or (iv) on the date indicated on the notice of receipt, if made by
first-class mail, to the parties as follows:
(a) if to the Purchaser, at its address on the signature page
hereto;
(b) if to the Company, to:
Durect Corporation
00000 Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxx,
Vice President and General Counsel
Facsimile: (000) 000-0000
with a copy to:
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
or to such other address as such person may have furnished to the other
persons identified in this Section 13 in writing in accordance herewith.
15. Severability. If any term provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated thereby, and the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.
16. Modification; Amendment. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented unless pursuant to an instrument in writing signed by the Company
and the Purchaser.
17. Entire Agreement. This Agreement, together with the Development
Agreement, is intended by the parties as a final expression of their agreement
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto with respect to the subject matter
contained herein. Except as provided in this Agreement, there are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to such matters. This Agreement supersedes
all prior agreements and undertakings among the parties with respect to such
matters. No party hereto shall have any rights, duties or obligations other
than those specifically set forth in this Agreement.
18. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
19. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without giving
effect to principles of conflicts of laws.
20. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
ENDO PHARMACEUTICALS INC.
By: /S/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx
Title: Chairman & Chief Executive Officer
Address: 000 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
Contact Name: Xxxxxxxx X. Xxxxxxx
Senior Vice President,
General Counsel & Secretary
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Agreed to and Accepted by:
DURECT Corporation
By: /S/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx
Title: President and
Chief Executive Officer