Exhibit 10.1
RESEARCH AND DEVELOPMENT AGREEMENT
AGREEMENT made this 30th day of December, 1982, by and between ALZA
CORPORATION, a California corporation (the "Contractor"), and ALZA TTS RESEARCH
PARTNERS, LTD., a California limited partnership (the "Partnership").
R E C I T A L S:
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A. The Partnership is a limited partnership organized for the
purpose of developing and commercializing pharmaceutical products that combine
Transdermal Therapeutic Systems with Drug Candidates.
B. Contractor is engaged in the business of research and development
in connection with Transdermal Therapeutic Systems technology.
C. The Partnership desires to pursue the development and commercial
exploitation of Products utilizing Transdermal Therapeutic Systems technology.
D. The Partnership desires to have Contractor perform, on behalf of
the Partnership, research and development activities in connection with
Products.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS
1.1 "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. "Control" shall mean ownership of at least 50%
of the shares of stock entitled to vote for the election of 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.
1.2 "ALZA Proprietary Rights" shall mean Proprietary Rights
of Contractor to the extent now or hereafter owned and controlled by
Contractor and which ALZA has or will have the right to license.
1.3 "Class B Limited Partner" shall mean Stada Arzneimittel
AG, the sole Class B Limited Partner of the Partnership.
1.4 "Completion" of a Product shall mean the actual reduction
to practice of a Product within the meaning of Section 102(g) of Title 35 of
the United States Code. "Completion of all Products" shall mean such actual
reduction to practice of all Products.
1.5 "Development Cost(s)" shall mean Contractor's Direct
Expenses and Indirect Charges (as defined in Schedule A hereof) and all other
expenses incurred by Contractor in the performance of its duties hereunder,
determined in accordance with Schedule A hereof.
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1.6 "Drug Candidate" shall mean drug compounds selected for a
Feasibility Evaluation or Product Development Program in accordance with this
Agreement. Drug Candidates shall be listed on Schedule B hereof, which
schedule may be modified from time to time by written agreement between the
parties.
1.7 "Feasibility Evaluation" shall mean a project to be
carried out by Contractor on behalf of the Partnership for the evaluation of
the economic and technical feasibility of development of a Drug Candidate
into a Product Candidate, as described in the Prospectus.
1.8 "General Partner" shall mean ALZA Development Corporation.
1.9 "Licensed Technology" shall mean ALZA Proprietary Rights
existing during the term of this Agreement which are necessary or useful for
the development, manufacture, commercialization or sale of Products.
1.10 "Nonproprietary" shall mean not covered by a patent in
the United States on December 31, 1983.
1.11 "Option Agreement" shall mean the Option Agreement
between Contractor and the Partnership of even date herewith.
1.12 "Partnership Technology" shall mean (i) Proprietary
Rights that are generated, developed,
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conceived or first reduced to practice by Contractor for or on behalf of the
Partnership under this Agreement, but solely to the extent such Proprietary
Rights are required for the purposes hereunder or are necessary to make, use,
commercialize and sell Products and (ii) such other rights relating to
Products and Product Candidates as may be acquired by the Partnership from
persons other than Contractor and relating to the subject matter of this
Agreement.
1.13 "Product" shall mean a Product Candidate designated by
the Partnership for Final Product Development under a Product Development
Program in accordance with Section 2.7 hereof.
1.14 "Product Candidate" shall mean a Transdermal Therapeutic
System in combination with a Drug Candidate accepted by the Partnership for
Initial Product Development pursuant to Section 2.3 or 2.4 hereof. Such
accepted Product Candidates shall be listed on Schedule C hereof, which
schedule may be modified from time to time by written agreement between the
parties.
1.15 "Product Development Program" shall mean a program to be
carried out by Contractor on behalf of the Partnership to develop a Drug
Candidate into a Product and shall include the two stages of development,
"Initial Product Development and Final Product Development", each as
described in the Prospectus.
1.16 "Proprietary Rights" shall mean data, inventions,
information, processes, know-how, patents, patent applications and trade
secrets.
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1.17 "Prospectus" shall mean the prospectus included in
Registration Statement No. ________________ filed with the Securities and
Exchange Commission.
1.18 "Technology License Agreement" shall mean that certain
Technology License Agreement of even date herewith between Contractor and the
Partnership.
1.19 "Therapeutic Categories" shall mean the therapeutic
categories of pharmaceutical products listed in Schedule E hereof.
1.20 "Total Funds" shall mean the sum of (a) net proceeds from
the sale by the Partnership of the Class A limited partnership interests as
described in the Prospectus; (b) the General Partner's and the Class B Limited
Partner's capital contributions to the Partnership as described in the
Prospectus; and (c) interest and other income earned through temporary
investment of Partnership funds pending their application to Partnership
business; less (d) all necessary or appropriate expenses of operating (other
than amounts paid under this Agreement), winding up and liquidating the
Partnership, including reasonable reserves for present and future obligations,
the amount of which may be determined from time to time by the Partnership in
its sole and absolute discretion.
1.21 "Transdermal Therapeutic System" shall mean a system for the
continuous and controlled systemic administration of a drug compound through
intact skin.
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2. FEASIBILITY EVALUATIONS AND PRODUCT DEVELOPMENT PROGRAMS
2.1 Within 30 days after the closing of the offering described
in the Prospectus, Contractor shall provide the Partnership with a list of at
least 20 Nonproprietary drug compounds within the Therapeutic Categories that
Contractor recommends for Feasibility Evaluation by the Partnership. From time
to time during the term of this Agreement, Contractor may recommend to the
Partnership for Feasibility Evaluation additional Nonproprietary drug compounds
within the Therapeutic Categories, in which case such drug compounds will be
treated in the same manner as those on the initial list.
2.2 Upon the written request of the Partnership, Contractor
shall submit to the Partnership, on a Development Cost basis and at the expense
of the Partnership, either of the following:
(a) an estimate of the activities necessary to carry out a
Feasibility Evaluation for any of the listed drug compounds designated by
the Partnership, including an estimated work plan and budget therefor; or
(b) an estimate of the activities necessary to carry out a
Product Development Program for a Product based upon such drug compound,
including an estimated work plan and budget therefor.
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2.3 Within 60 days after submission by Contractor to the
Partnership of a Feasibility Evaluation or Product Development Program in
accordance with Section 2.2 hereof, the Partnership shall notify Contractor in
writing of its acceptance or rejection thereof.
2.4 Upon acceptance of a Feasibility Evaluation as provided in
Section 2.3 hereof, the drug compound shall be listed on Schedule B as a Drug
Candidate, and Contractor shall perform or cause to be performed with due
diligence all activities thereunder. Within 60 days after Contractor notifies
the Partnership of the completion and results of the Feasibility Evaluation for
any Drug Candidate, the Partnership shall notify Contractor of its written
acceptance or rejection of the Drug Candidate for futher development. If the
Drug Candidate is accepted by the Partnership, Contractor shall submit to the
Partnership a Product Development Program therefor.
2.5 Upon acceptance of a Product Development Program by the
Partnership pursuant to either Section 2.3 or Section 2.4 hereof, the Drug
Candidate so accepted will become a Product Candidate and will be listed on
Schedule C hereof, and Contractor or its employees or agents shall perform or
cause to be performed with due diligence all Initial Product Development
activities under the Product Development Program.
2.6 If the Partnership initially rejects any Drug Candidate or
fails to notify Contractor in accordance with
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Section 2.3 or 2.4, the Partnership may, at any time during the term of this
Agreement, request Contractor to perform a Feasibility Evaluation or Product
Development Program for such Drug Candidate, all in accordance with this Section
2.
2.7 Upon the completion of the Initial Product Development for
any Product Candidate, Contractor shall so notify the Partnership. At any time
thereafter during the term of this Agreement, the Partnership may authorize
Contractor to begin Final Product Development for the Product Candidate. Upon
such request by the Partnership, the Product Candidate shall become a Product
and shall be listed on Schedule D hereof.
2.8 From time to time hereunder Contractor may, in its absolute
discretion, propose that the Partnership consider for a Feasibility Evaluation
or Product Development Program a drug compound that either is (i) not within one
of the Therapeutic Categories or (ii) not a Nonproprietary drug compound;
provided, however, that Contractor shall be under no obligation to do so. If
Contractor makes any such proposal, the Feasibility Evaluation or Product
Development Program therefor will be subject to and undertaken in accordance
with this Section 2, and, if the drug compound is accepted by the Partnership
for a Feasibility Evaluation or Product Development Program, it shall be listed
on the appropriate schedules hereof and shall become a Drug Candidate, Product
Candidate or Product, as the case may be.
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Notwithstanding any other provision of this Agreement, if the Partnership
rejects such drug compound or fails to notify Contractor in accordance with
Section 2.3 or Section 2.4 hereof, the drug compound shall be deemed rejected by
the Partnership and the Partnership shall have no further rights (i) with
respect thereto or to any product of which it is or may become a part or (ii) to
request at a later date a Feasibility Evaluation or Product Development Program
for such drug compound.
2.9 If the Partnership authorizes a Product Development Program
for any Product Candidate and later determines not to complete development
thereof for any reason, the Partnership immediately shall so notify Contractor.
3. RESEARCH AND DEVELOPMENT; SERVICES; BUDGETS
3.1 The Partnership hereby hires Contractor to perform all
research, development and experimentation to develop Products in accordance with
this Agreement and to undertake such other activities as the parties may agree.
The Partnership and Contractor shall cooperate in good faith with respect to
mutually acceptable work plans and budgets for Feasibility Evaluations and
Product Development Programs and for such other activities as the parties may
agree. Each party shall use its best efforts and diligence to execute such work
plans and to report significant deviations therefrom in a timely manner.
Contractor shall use its best efforts to obtain on behalf of and at the expense
of the Partnership any patent or technology
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license necessary to enable the Partnership or any licensee or assignee
commercially to exploit Products.
3.2 The parties recognize that technological and commercial
uncertainties make it extremely difficult to predict the relative priorities
that should be assigned to Feasibility Evaluations and Product Development
Programs. For this reason, Contractor shall have full discretion, subject to
Section 2 hereof, to determine from time to time (i) the priority of Feasibility
Evaluations and Product Development Programs and the order in which they are
selected for commencement and completion; (ii) the allocation of resources of
Contractor (facilities, equipment and personnel) that are available to the
Partnership for each Feasibility Evaluation and Product Development Program; and
(iii) the portion of Total Funds allocated to each Feasibility Evaluation and
Product Development Program.
3.3 The portion of Total Funds agreed upon by the parties as
available under the work plans and budgets for each Feasibility Evaluation and
Product Development Program shall be set forth on Schedule F, which may be
modified by the parties from time to time.
4. PAYMENT FOR SERVICES; TIMING OF PAYMENTS
4.1 In consideration of the work to be carried out by Contractor
hereunder, the Partnership shall reimburse Contractor for all of its Development
Costs, but not in excess of Total Funds.
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4.2 The Partnership shall pay to Contractor quarterly, in
advance, on a calendar-year basis (prorated for partial periods), an amount
equal to Contractor's estimate of the portion of Development Costs expected to
be paid or incurred by Contractor during such next quarter. Such estimate shall
be set forth in an invoice prepared by Contractor in reasonable detail and
submitted to the Partnership at least 15 business days prior to the beginning of
each quarter. Each such invoice shall be paid in full by the Partnership no
later than 15 days thereafter. Each invoice also shall include any anticipated
adjustments for the quarter in which it is delivered to reflect Development
Costs already incurred in the quarter and those anticipated to be incurred in
the remainder of the quarter.
4.3 Within 45 days after the end of each calendar quarter, the
Partnership shall pay to Contractor all amounts shown to be due to Contractor on
the report for such quarter described in Section 5.1.
4.4 Neither the Partnership nor Contractor makes any warranty,
express or implied, that Total Funds will be sufficient for Completion of all
Products; however, the parties acknowledge that the objective of this Agreement
is to use Total Funds for the Completion of an estimated four to six Products if
Total Funds are in excess of $16,000,000, and proportionately fewer Products if
Total Funds are less than $16,000,000.
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5. REPORT AND RECORDS
5.1 Within 30 days after the end of each calendar quarter,
Contractor shall provide to the Partnership a reasonably detailed report setting
forth (a) all Development Costs incurred and paid during such quarter, and all
such amounts owed by or credited to the Partnership; (b) the work performed by
Contractor and its employees and agents during such quarter; and (c) the status
of all Feasibility Evaluations and the Product Development Programs at the end
of the quarter.
5.2 Within 60 days after the end of each calendar year,
Contractor shall provide to the Partnership a reasonably detailed report setting
forth and reconciling all Development Costs during the year.
5.3 Within 90 days after the termination of this Agreement,
Contractor shall provide to the Partnership a reasonably detailed final report
setting forth a reconciliation of all Development Costs paid by the Partnership
through the termination of this Agreement.
5.4 Contractor shall keep and maintain, in accordance with
generally accepted accounting principles, proper and complete records and books
of account documenting all Development Costs. The Partnership shall have the
right, at all reasonable times and at its own expense, to examine or to have
examined by a certified public accountant or similar person reasonably
acceptable to Contractor, pertinent books and records of Contractor, for the
sole purpose of determining the
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correctness of Development Costs invoiced hereunder. Such examination with
respect to any quarterly accounting period hereunder shall take place not later
than two years following the expiration of such period.
6. LICENSE OF TECHNOLOGY
6.1 The Partnership hereby grants to Contractor a sublicense to
practice Licensed Technology and a license to practice Partnership Technology
solely for purposes of performing its duties hereunder.
6.2 Termination of the license granted under the Technology
License Agreement automatically shall terminate the license and sublicense
granted to Contractor under this Agreement.
7. OWNERSHIP AND PATENTS
7.1 Subject to the Option Agreement, the Partnership shall have
the full and exclusive right, title and interest in and to all Partnership
Technology and all physical manifestations or embodiments thereof including,
without limitation, all documents, records, notebooks, writings, engineering and
manufacturing information, schematics, product samples and specifications which
result under either a Feasibility Evaluation or a Product Development Program
carried out for or by the Partnership. There shall, however, be excluded from
the foregoing and specifically retained by Contractor all of the right, title
and interest in and to all Proprietary Rights generated, developed, conceived or
first reduced to practice during the term of this Agreement and not included
within Partnership Technology;
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provided, however, that Contractor shall have no right to sublicense any of the
foregoing to Ciba-Geigy Limited, a corporation of Switzerland, or any of its
Affiliates. Contractor hereby assigns to the Partnership, and waives any right,
title and interest in and to, any Partnership Technology. To the extent
necessary to perfect the rights granted or retained hereunder, each party under
whose name any patent is issued shall grant to the other party an appropriate
license to such patent.
7.2 Contractor agrees to cause appropriate patent applications
to be prepared and prosecuted on behalf of the Partnership with respect to
inventions included in Partnership Technology which are commercially and
technically significant, and to cause such patents to be maintained, as the
Partnership shall request in writing, all at the Partnership's expense.
Contractor further agrees to use its best efforts to cause each of its employees
and agents to do all such acts and to execute, acknowledge and deliver all
instruments or writings reasonably requested and necessary for the Partnership
to perfect its beneficial ownership of all right, title and interest to
Partnership Technology and to secure Letters Patent and all reissues, renewals
and extensions thereof, as contemplated above.
7.3 Upon the Completion of any Product, Contractor shall so
notify the Partnership. Subject to the Option Agreement, if requested by the
Partnership after the Completion of a Product, Contractor shall deliver to the
Partnership or its designee all Partnership Technology and other property
related to the completed
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Product to which the Partnership has ownership rights pursuant to Section 7.1 or
7.2 held by or under the control of Contractor.
7.4 Within 60 days after the termination of this Agreement for
any reason, Contractor shall deliver to the Partnership all Partnership
Technology and other property in which the Partnership has ownership rights
pursuant to Section 7.1 and 7.2 held by or under the control of Contractor.
8. CONFIDENTIALITY
8.1 Subject to the other provisions of this Agreement, during
the term of this Agreement and for a period of five years following its
termination, Contractor shall maintain in confidence all Partnership Technology,
shall not disclose it to any third party (except as otherwise provided herein or
in any other agreement between the parties), and shall use it only to perform
its obligations under this Agreement, unless such technology:
(a) is known to or used by Contractor prior to the time of
disclosure hereunder;
(b) lawfully is disclosed to Contractor by a third party
having the right to disclose it; or
(c) either before or after the time of disclosure to
Contractor becomes known to the public other than by an unauthorized act or
omission of Contractor or its employees or agents.
8.2 Nothing contained in Section 8.1 shall prevent Contractor
from disclosing any Partnership Technology
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to the extent that such Partnership Technology (i) is required to be disclosed
in connection with the securing of necessary governmental authorization for the
marketing of Products or (ii) is required to be disclosed by law for the purpose
of complying with governmental regulations.
8.3 The obligations of Contractor pursuant to this Section 8
shall survive the termination of this Agreement for any reason.
9. ACCESS TO INFORMATION
9.1 Subject to the terms of this Agreement, the General Partner
or its duly authorized representatives reasonably acceptable to Contractor shall
be permitted access to the premises of Contractor during normal business hours,
for the purpose of monitoring the progress of the Feasibility Projects and
Development Programs.
9.2 Contractor shall keep full and complete records and
notebooks containing all experiments performed during all phases of each
Feasibility Evaluation and Product Development Program and the results thereof.
Such items and copies of all documentation shall be available during normal
business hours for inspection by the General Partner or its duly authorized
representatives reasonably acceptable to Contractor. In addition, Contractor
shall provide to the Partnership such other information as the General Partner
reasonably may request.
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10. DISCLAIMERS
10.1 CONTRACTOR DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY (i)
THAT PARTNERSHIP TECHNOLOGY OR LICENSED TECHNOLOGY, OR THE USE THEREOF, OR THE
PRODUCT CANDIDATES AND PRODUCTS INCORPORATING OR MANUFACTURED BY THE USE
THEREOF, WILL BE FREE FROM CLAIMS OF PATENT INFRINGEMENT, INTERFERENCE OR
UNLAWFUL USE OF PROPRIETARY INFORMATION OF ANY THIRD PARTY AND (ii) OF THE
ACCURACY, RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS OR
MERCHANTABILITY OF THE PARTNERSHIP TECHNOLOGY AND LICENSED TECHNOLOGY OR THEIR
SUITABILITY OR FITNESS FOR ANY PURPOSE WHATSOEVER INCLUDING, WITHOUT LIMITATION,
THE DESIGN, DEVELOPMENT, MANUFACTURE, USE OR SALE OF PRODUCT CANDIDATES OR
PRODUCTS.
10.2 CONTRACTOR DISCLAIMS ALL OTHER WARRANTIES OF WHATEVER
NATURE, EXPRESS OR IMPLIED.
11. EFFECTIVE DATE; TERM AND TERMINATION
11.1 This Agreement automatically shall become effective on the
closing of the sale of the Class A Limited Partnership interests described in
the Prospectus.
11.2 This Agreement shall terminate upon the earliest of:
(a) Completion of all Products and payment in full of all
Development Costs and other expenses, if any, otherwise provided for under
this Agreement;
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(b) the expenditure of Total Funds; and
(c) the dissolution and liquidation of the Partnership.
11.3 The Partnership may, in its discretion, terminate this
Agreement in the event that Contractor:
(a) breaches any material obligation hereunder or under the
Technology License Agreement, Option Agreement or any license thereunder
and such breach continues for a period of 60 days after written notice
thereof by the Partnership to Contractor; or
(b) enters into any proceeding, whether voluntary or
otherwise, in bankruptcy, reorganization or arrangement for the appointment
of a receiver or trustee to take possession of Contractor's assets or any
other proceeding under any law for the relief of creditors, or makes an
assignment for the benefit of its creditors.
12. FORCE MAJEURE
Neither party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay is due to causes
beyond its reasonable control including, without limitation, acts of God, fires,
strikes, acts of war, or intervention of any governmental authority, but any
such delay or failure shall be remedied by such party as soon as possible.
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13. RELATIONSHIP OF THE PARTIES
Nothing contained in this Agreement is intended or is to be construed
to constitute the Partnership and Contractor as partners or joint venturers or
Contractor as an employee of the Partnership. Neither party hereto shall have
any express or implied right or authority to assume or create any obligations on
behalf of or in the name of the other party or to bind the other party to any
contract, agreement or undertaking with any third party.
14. LIMITATION ON CONTRACTOR'S ACTIVITIES
During the term of this Agreement, Contractor and its Affiliates shall
not (i) engage in research with respect to or (ii) license or sublicense, except
pursuant to any subcontract under Section 22, the Licensed Technology to others
for the development, manufacture or marketing of any products which both (a)
combine a Transdermal Therapeutic System with a Nonproprietary drug compound and
(b) have their primary pharmaceutical indication within any of the Therapeutic
Categories listed on Schedule E. However, Contractor reserves the right to use,
license and sublicense the Licensed Technology for any other purposes
whatsoever,including, without limitation, the development, manufacture and sale
of (i) any products combining Transdermal Therapeutic Systems with drug
compounds within the Therapeutic Categories that are not Nonproprietary and (ii)
any products in therapeutic categories not listed on Schedule E.
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15. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute this Agreement.
16. NOTICES
Any notice or other communication required or permitted to be given to
either party under this Agreement shall be given in writing and shall be
delivered by hand or by registered or certified mail, postage prepaid and return
receipt requested, addressed to each party at the following addresses or such
other address as may be designated by notice pursuant to this Section 16:
If to the Partnership: ALZA TTS RESEARCH PARTNERS, LTD.
c/o ALZA Development Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
If to Contractor: ALZA Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
Any notice or communication given in conformity with this Section 16 shall be
deemed to be effective when received by the addressee, if delivered by hand, and
five days after mailing, if mailed.
17. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of California as
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applied to residents of that state entering into contracts wholly to be
performed in that state.
18. SEVERABILITY
If any provision in this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
shall continue in full force without being impaired or invalidated in any way.
19. AMENDMENTS
No amendment, modification or addition hereto shall be effective or
binding on either party unless set forth in writing and executed by a duly
authorized representative of the party to be charged.
20. WAIVER
No waiver of any right under this Agreement shall be deemed effective
unless contained in a writing signed by the party charged with such waiver, and
no waiver of any breach or failure to perform shall be deemed to be a waiver of
any future breach or failure to perform or of any other right arising under this
Agreement.
21. HEADINGS
The section headings contained in this Agreement are included for
convenience only and form no part of the agreement between the parties.
22. ASSIGNMENT
Contractor may not assign its rights and obligations hereunder without
the prior written consent of Partnership,
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which consent may not be unreasonably withheld; provided, however, that ALZA
Corporation may assign such rights and obligations hereunder to any person or
entity with which ALZA Corporation is merged or consolidated or which purchases
all or substantially all of the assets of ALZA Corporation. Contractor may
subcontract a portion of its duties hereunder to third parties, in its sole
discretion; provided, however, that any such subcontractor shall be bound by the
terms of this Agreement.
23. NO AFFECT ON OTHER AGREEMENTS
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement between the
parties unless specifically referred to and solely to the extent provided, in
any such other agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first set forth above.
ALZA TTS RESEARCH PARTNERS, LTD.
By ALZA Development Corporation,
its General Partner
By /s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx, President
ALZA Corporation
By /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx, President
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Schedule A
ALZA CORPORATION
Invoicing for
RESEARCH AND DEVELOPMENT COSTS
RESEARCH AND DEVELOPMENT COSTS ARE EQUAL TO THE SUM OF RESEARCH
EXPENSES PLUS GENERAL AND ADMINISTRATIVE OVERHEAD EXPENSES PLUS
CAPITAL ASSET COSTS
RESEARCH EXPENSES include all Direct and Indirect Research Expenses of product
development, including clinical testing, with cost elements as outlined on
Exhibit I. Direct Expenses are Direct Research Salaries and Supplies acquired
and Other Expenses incurred specifically for purposes of carrying out the
Agreement. Indirect Research Expenses include General Research Management and
Support Costs of the Product Development and Research Organization. Indirect
Research Expenses are allocated to all projects and are billed to the
Partnership at a fixed rate of 160%(1) of Direct Research Salary Expense.
GENERAL AND ADMINISTRATIVE OVERHEAD EXPENSE includes cost elements outlined
on Exhibit II. Total General and Administrative Overhead is allocated to the
two operating divisions of the Contractor: the Product Development and
Research Division and the Commercial Operations Division. The portion of
General and Administrative Overhead Expense which is allocated to the Product
Development and Research Division is then allocated to all projects and
billed to clients at a fixed rate of 80%(1) of Direct Research Salary
Expense.
CAPITAL ASSET COSTS are the amounts of depreciation deductions actually taken
by Contractor for federal income tax purposes in respect of new Capital
Assets acquired specifically for purposes of the Agreement.
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(1) These fixed billing rates will not be changed prior to January 1,
1985, and if changed on or after January 1, 1985, such changes (a)
will be limited to not more than one per calendar year and (b)
shall be a maximum of 10% of the rate in effect at the time of the
increase and (c) will be increased only if increased in other
recently executed or modified agreements between Contractor and
other third party clients.
Exhibit I
RESEARCH EXPENSES
DIRECT RESEARCH EXPENSES
Direct Research Salaries*
Project Clinical Expenses and Outside Services
Project Specific Supplies
Project Travel Expense
Miscellaneous Project Expenses, if any
INDIRECT RESEARCH EXPENSES
Research Management and Indirect Salaries*
Research Supplies and Materials
Research Consulting and Outside Services
Facilities Expenses
Telephone and Communications
Equipment Depreciation, Rent, Maintenance and Services
Research Travel Expenses
Patent and Trademark Expenses
Miscellaneous Indirect Research Expenses
*Salaries include Fringe Benefits
Exhibit II
GENERAL AND ADMINISTRATIVE OVERHEAD EXPENSES
Corporate Management, Administrative, and Indirect Salaries*
Telephone and Communications
Equipment Depreciation, Rent, Maintenance and Services
Board of Directors and Corporate Consulting
Annual Audit and Independent Accounting
General Corporate Legal Expense
Shareholder Reports
Facilities Expenses
Interest Expense
Miscellaneous General and Administrative Overhead Expenses
*Salaries include Fringe Benefits
Schedule B
DRUG CANDIDATES
Schedule C
PRODUCT CANDIDATES
Schedule D
PRODUCTS
Schedule E
THERAPEUTIC CATEGORIES
Drugs to Treat Congestive Heart Failure
Drugs to Lower Blood Pressure
Narcotic Drugs to Relieve Pain
Drugs to Relieve Various Gastrointestinal Tract Disorders
Drugs to Treat Xxxxxxxxx'x Disease and Related Disorders
Sedatives and Mild Tranquilizers
Schedule F
ALLOCATION OF TOTAL FUNDS
