x
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
94-3297098
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Page
|
||||
PART I.
|
FINANCIAL INFORMATION
|
|||
Item 1.
|
3
|
|||
For the three and nine months ended September 30, 2002 and
2001 (unaudited)
|
3
|
|||
As of September 30, 2002 (unaudited) and December 31,
2001
|
4
|
|||
For the nine months ended September 30, 2002 and 2001
(unaudited)
|
5
|
|||
6
|
||||
Item 2.
|
10
|
|||
Item 3.
|
30
|
|||
Item 4.
|
31
|
|||
PART II.
|
OTHER INFORMATION
|
|||
Item 1.
|
32
|
|||
Item 2.
|
32
|
|||
Item 3.
|
32
|
|||
Item 4.
|
32
|
|||
Item 5.
|
32
|
|||
Item 6.
|
33
|
|||
33
|
||||
33
|
||||
33
|
||||
34
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
Revenue, net
|
$
|
1,783
|
|
$
|
1,841
|
|
$
|
5,179
|
|
$
|
4,928
|
|
||||
Cost of goods sold(1)
|
|
721
|
|
|
963
|
|
|
2,285
|
|
|
2,548
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit
|
|
1,062
|
|
|
878
|
|
|
2,894
|
|
|
2,380
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses:
|
||||||||||||||||
Research and development
|
|
7,571
|
|
|
7,206
|
|
|
23,744
|
|
|
16,680
|
|
||||
Selling, general and administrative
|
|
2,225
|
|
|
2,305
|
|
|
6,989
|
|
|
6,339
|
|
||||
Amortization of intangible assets
|
|
335
|
|
|
555
|
|
|
1,005
|
|
|
1,290
|
|
||||
Stock-based compensation(1)
|
|
338
|
|
|
750
|
|
|
1,375
|
|
|
2,605
|
|
||||
Acquired in-process research and development
|
|
|
|
|
|
|
|
|
|
|
14,030
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total operating expenses
|
|
10,469
|
|
|
10,816
|
|
|
33,113
|
|
|
40,944
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss from operations
|
|
(9,407
|
)
|
|
(9,938
|
)
|
|
(30,219
|
)
|
|
(38,564
|
)
|
||||
Other income (expense):
|
||||||||||||||||
Interest income
|
|
428
|
|
|
1,096
|
|
|
1,737
|
|
|
3,960
|
|
||||
Interest expense
|
|
(71
|
)
|
|
(92
|
)
|
|
(232
|
)
|
|
(238
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net other income
|
|
357
|
|
|
1,004
|
|
|
1,505
|
|
|
3,722
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net loss
|
$
|
(9,050
|
)
|
$
|
(8,934
|
)
|
$
|
(28,714
|
)
|
$
|
(34,842
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net loss per share, basic and diluted
|
$
|
(0.19
|
)
|
$
|
(0.19
|
)
|
$
|
(0.60
|
)
|
$
|
(0.76
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Shares used in computing basic and diluted net loss per share
|
|
48,161
|
|
|
46,906
|
|
|
48,006
|
|
|
46,120
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
(1) Stock-based compensation related to the following:
|
||||||||||||||||
Cost of goods sold
|
$
|
15
|
|
$
|
31
|
|
$
|
61
|
|
$
|
118
|
|
||||
Research and development
|
|
219
|
|
|
503
|
|
|
943
|
|
|
1,798
|
|
||||
Selling, general and administrative
|
|
119
|
|
|
247
|
|
|
432
|
|
|
807
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
$
|
353
|
|
$
|
781
|
|
$
|
1,436
|
|
$
|
2,723
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2002
|
December 31,
2001
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
18,228
|
|
$
|
12,596
|
|
||
Short-term investments
|
|
27,283
|
|
|
42,608
|
|
||
Accounts receivable, net
|
|
901
|
|
|
818
|
|
||
Inventories
|
|
1,583
|
|
|
1,864
|
|
||
Prepaid expenses and other current assets
|
|
1,430
|
|
|
2,325
|
|
||
|
|
|
|
|
|
|||
Total current assets
|
|
49,425
|
|
|
60,211
|
|
||
Property and equipment, net
|
|
12,242
|
|
|
13,136
|
|
||
Goodwill
|
|
4,716
|
|
|
4,716
|
|
||
Intangible assets, net
|
|
4,456
|
|
|
5,462
|
|
||
Long-term investments
|
|
3,635
|
|
|
18,016
|
|
||
Restricted investments
|
|
2,879
|
|
|
3,402
|
|
||
|
|
|
|
|
|
|||
Total assets
|
$
|
77,353
|
|
$
|
104,943
|
|
||
|
|
|
|
|
|
|||
Liabilities and stockholders equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
691
|
|
$
|
2,003
|
|
||
Accrued liabilities
|
|
3,047
|
|
|
2,140
|
|
||
Accrued construction in progress
|
|
|
|
|
342
|
|
||
Contract research liability
|
|
1,378
|
|
|
580
|
|
||
Equipment financing obligations, current portion
|
|
483
|
|
|
523
|
|
||
Bonds payable, current portion
|
|
160
|
|
|
160
|
|
||
|
|
|
|
|
|
|||
Total current liabilities
|
|
5,759
|
|
|
5,748
|
|
||
Equipment financing obligations, noncurrent portion
|
|
221
|
|
|
581
|
|
||
Bonds payable, noncurrent portion
|
|
1,415
|
|
|
1,415
|
|
||
Other long-term liabilities
|
|
212
|
|
|
151
|
|
||
Commitments and contingencies
|
||||||||
Stockholders equity:
|
||||||||
Common stock
|
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
|
189,689
|
|
|
189,396
|
|
||
Notes receivable from stockholders
|
|
(495
|
)
|
|
(597
|
)
|
||
Deferred compensation
|
|
(1,055
|
)
|
|
(2,551
|
)
|
||
Deferred royalties and commercial rights
|
|
(13,480
|
)
|
|
(13,480
|
)
|
||
Accumulated other comprehensive income
|
|
180
|
|
|
659
|
|
||
Accumulated deficit
|
|
(105,097
|
)
|
|
(76,383
|
)
|
||
|
|
|
|
|
|
|||
Total stockholders equity
|
|
69,746
|
|
|
97,048
|
|
||
|
|
|
|
|
|
|||
Total liabilities and stockholders equity
|
$
|
77,353
|
|
$
|
104,943
|
|
||
|
|
|
|
|
|
Nine months ended
September
30,
|
||||||||
2002
|
2001
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$
|
(28,714
|
)
|
$
|
(34,842
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
|
3,139
|
|
|
2,248
|
|
||
Non-cash charges related to stock-based compensation
|
|
1,436
|
|
|
2,723
|
|
||
Acquired in-process research and development
|
|
|
|
|
14,030
|
|
||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
|
(83
|
)
|
|
881
|
|
||
Inventories
|
|
281
|
|
|
929
|
|
||
Prepaid expenses and other assets
|
|
895
|
|
|
(592
|
)
|
||
Accounts payable
|
|
(1,312
|
)
|
|
598
|
|
||
Accrued liabilities and other long-term liabilities
|
|
626
|
|
|
(208
|
)
|
||
Contract research liability
|
|
798
|
|
|
1,165
|
|
||
|
|
|
|
|
|
|||
Total adjustments
|
|
5,780
|
|
|
21,774
|
|
||
|
|
|
|
|
|
|||
Net cash and cash equivalents used in operating activities
|
|
(22,934
|
)
|
|
(13,068
|
)
|
||
|
|
|
|
|
|
|||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment
|
|
(1,198
|
)
|
|
(5,195
|
)
|
||
Purchases of available-for-sale securities
|
|
(15,231
|
)
|
|
(68,421
|
)
|
||
Proceeds from maturities of available-for-sale securities
|
|
44,981
|
|
|
61,292
|
|
||
Net payment for acquisition of SBS
|
|
|
|
|
(450
|
)
|
||
|
|
|
|
|
|
|||
Net cash and cash equivalents provided by (used in) investing activities
|
|
28,552
|
|
|
(12,774
|
)
|
||
|
|
|
|
|
|
|||
Cash flows from financing activities
|
||||||||
Payments on equipment financing obligations
|
|
(441
|
)
|
|
(319
|
)
|
||
Net proceeds from issuance of common stock
|
|
392
|
|
|
398
|
|
||
Net proceeds from notes receivable from stockholders
|
|
63
|
|
|
31
|
|
||
|
|
|
|
|
|
|||
Net cash and cash equivalents provided by financing activities
|
|
14
|
|
|
110
|
|
||
|
|
|
|
|
|
|||
Net increase/(decrease) in cash and cash equivalents
|
|
5,632
|
|
|
(25,732
|
)
|
||
Cash and cash equivalents, beginning of the period
|
|
12,596
|
|
|
46,702
|
|
||
|
|
|
|
|
|
|||
Cash and cash equivalents, end of the period
|
$
|
18,228
|
|
$
|
20,970
|
|
||
|
|
|
|
|
|
|||
Supplemental disclosure of cash flow information
|
||||||||
Cash paid during the period for interest
|
$
|
155
|
|
$
|
190
|
|
||
|
|
|
|
|
|
|||
Settlement of employee notes receivable in exchange for unvested stock
|
$
|
39
|
|
$
|
|
|
||
|
|
|
|
|
|
|||
Issuance of stock, stock options and warrants for acquisition of SBS
|
$
|
|
|
$
|
22,716
|
|
||
|
|
|
|
|
|
September 30, 2002
|
December 31, 2001
|
|||||
(unaudited)
|
||||||
Raw materials
|
$
|
229
|
$
|
174
|
||
Work in process
|
|
446
|
|
694
|
||
Finished goods
|
|
908
|
|
996
|
||
|
|
|
|
|||
Total inventories
|
$
|
1,583
|
$
|
1,864
|
||
|
|
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
Net loss
|
$
|
(9,050
|
)
|
$
|
(8,934
|
)
|
$
|
(28,714
|
)
|
$
|
(34,842
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic and diluted weighted-average shares:
|
||||||||||||||||
Weighted-average shares of common stock outstanding
|
|
48,803
|
|
|
48,015
|
|
|
48,722
|
|
|
47,369
|
|
||||
Less: weighted-average shares subject to repurchase
|
|
(642
|
)
|
|
(1,109
|
)
|
|
(716
|
)
|
|
(1,249
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted-average shares used in computing basic and diluted net loss per share
|
|
48,161
|
|
|
46,906
|
|
|
48,006
|
|
|
46,120
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic and diluted net loss per share
|
$
|
(0.19
|
)
|
$
|
(0.19
|
)
|
$
|
(0.60
|
)
|
$
|
(0.76
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
Reported net loss
|
$
|
(9,050
|
)
|
$
|
(8,934
|
)
|
$
|
(28,714
|
)
|
$
|
(34,842
|
)
|
||||
Add back SFAS 142 adjustments:
|
||||||||||||||||
Goodwill amortization
|
|
|
|
|
145
|
|
|
|
|
|
348
|
|
||||
Assembled workforce amortization
|
|
|
|
|
74
|
|
|
|
|
|
161
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Adjusted net loss
|
$
|
(9,050
|
)
|
$
|
(8,715
|
)
|
$
|
(28,714
|
)
|
$
|
(34,333
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Adjusted net loss per share
|
$
|
(0.19
|
)
|
$
|
(0.19
|
)
|
$
|
(0.60
|
)
|
$
|
(0.74
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||||
2001
|
2000
|
1999
|
||||||||||
Reported net loss attributable to common stockholders
|
$
|
(44,928
|
)
|
$
|
(20,823
|
)
|
$
|
(9,310
|
)
|
|||
Add back SFAS 142 adjustments:
|
||||||||||||
Goodwill amortization
|
|
493
|
|
|
250
|
|
|
38
|
|
|||
Assembled workforce amortization
|
|
236
|
|
|
91
|
|
|
8
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Adjusted net loss attributable to common stockholders
|
$
|
(44,199
|
)
|
$
|
(20,482
|
)
|
$
|
(9,264
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Adjusted net loss per share
|
$
|
(0.95
|
)
|
$
|
(1.16
|
)
|
$
|
(1.75
|
)
|
|||
|
|
|
|
|
|
|
|
|
1
|
|
CHRONOGESIC
TM
, IntraEAR
®
and ALZET
®
are trademarks of DURECT Corporation. LACTEL
®
is a trademark of Birmingham Polymers, Inc. Saber
TM
, DURIN
TM
and MICRODUR
TM
are trademarks of Southern BioSystems, Inc.,
a wholly owned subsidiary of DURECT Corporation. DUROS
®
is a trademark of ALZA
Corporation. Other trademarks referred to belong to their respective owners.
|
|
|
In March 2002, we announced a collaboration agreement with Cardinal Health to research and develop long acting oral soft gelatin-capsule products using our
SABER delivery system. Under the agreement, we will receive payments for research and development expenditures.
|
|
|
In July 2002, we announced a development and commercialization agreement with Voyager Pharmaceutical Corporation. Under the terms of the agreement, the
companies will develop a product using our DURIN technology to provide a sustained release therapy based on Voyagers patented method of treatment of Alzheimers disease. The agreement also provides Voyager with the right to commercialize
the product on a worldwide basis. We will receive payments upon the achievement of certain development and regulatory milestones, payments for research and development expenditures, as well as royalties based on product sales.
|
|
|
In July 2002, we entered into a License and Option Agreement and Mutual Release with Thorn BioScience LLC under which we licensed to Thorn exclusive rights to
develop and commercialize products including our SABER delivery system in selected animal health and veterinary fields of use. We will receive royalties based on Thorns net sales of products developed under this agreement.
|
|
|
In November 2002, we entered into a development, commercialization and supply license agreement with Endo Pharmaceuticals Inc. (Endo) under which the companies
will collaborate on the development and commercialization of DURECTs CHRONOGESIC
(sufentanil)
Pain Therapy System for the U.S. and Canada. Under the terms of the agreement, we will be responsible for the CHRONOGESIC products design and development. In connection with the execution of the agreement, Endo will purchase 1,533,742 shares
of newly issued common stock at a purchase price of approximately $5.0 million. In addition, we are required to pay $1.5 million to an investment bank for strategic partner advisory services as a result of executing this agreement. Once our clinical
trials for CHRONOGESIC are restarted, Endo will fund 50% of the ongoing development costs and will reimburse us for a portion of prior development costs upon the achievement of certain milestones. Milestone payments made by Endo under this agreement
could total up to $52 million. In addition, under the agreement, Endo has licensed exclusive promotional rights to CHRONOGESIC in the U.S. and Canada. Endo will be responsible for marketing, sales and distribution, including providing specialty
sales representatives dedicated to supplying technical and training support for CHRONOGESIC therapy. We will be responsible for the manufacture of CHRONOGESIC. We will share profits equally with Endo, based on projected financial performance of
CHRONOGESIC.
|
|
|
significant underperformance relative to expected historical or projected future operating results;
|
|
|
significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
|
|
|
significant negative industry or economic trends;
|
|
|
significant decline in our stock price for a sustained period; and
|
|
|
our market capitalization relative to net book value.
|
Year ended December 31,
|
||||||||||||||||||
Contractual Obligations
|
2002
|
2003
|
2004
|
2005
|
Thereafter
|
Total
|
||||||||||||
Long-term debt
|
$
|
160
|
$
|
170
|
$
|
180
|
$
|
190
|
$
|
875
|
$
|
1,575
|
||||||
Capital leases and equipment loans
|
|
697
|
|
601
|
|
139
|
|
|
|
|
|
1,437
|
||||||
Operating lease obligations
|
|
2,568
|
|
2,346
|
|
1,505
|
|
1,416
|
|
599
|
|
8,434
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total contractual cash obligations
|
$
|
3,425
|
$
|
3,117
|
$
|
1,824
|
$
|
1,606
|
$
|
1,474
|
$
|
11,446
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
public or private equity financing;
|
|
|
collaborative arrangements; and
|
|
|
public or private debt.
|
|
|
selecting and developing drug delivery platform technology to deliver the proper dose of drug over the desired period of time;
|
|
|
selecting and developing catheter technology, if appropriate, to deliver the drug to a specific location within the body;
|
|
|
determining the appropriate drug dosage for use in the pharmaceutical system;
|
|
|
developing drug compound formulations that will be tolerated, safe and effective and that will be compatible with the system; and
|
|
|
demonstrating the drug formulation will be stable for commercially reasonable time periods.
|
|
|
failure to obtain or maintain requisite governmental approvals;
|
|
|
failure to obtain approvals for clinically intended uses of our products under development; or
|
|
|
identification of serious and unanticipated adverse side effects in our products under development.
|
|
|
drugs to the central nervous system to treat select nervous system disorders;
|
|
|
drugs to the middle and inner ear;
|
|
|
drugs to the pericardial sac of the heart; and
|
|
|
select drugs into vascular grafts.
|
|
|
sufentanil to treat chronic pain; and
|
|
|
select cancer antigens.
|
|
|
increased costs associated with the acquisition and operation of the new businesses or technologies and the management of geographically dispersed operations;
|
|
|
the risks associated with the assimilation of new technologies, operations, sites and personnel;
|
|
|
the diversion of resources from our existing business and technologies;
|
|
|
the inability to generate revenues to offset associated acquisition costs;
|
|
|
the requirement to maintain uniform standards, controls, and procedures; and
|
|
|
the impairment of relationships with employees and customers as a result of any integration of new management personnel.
|
|
|
the receipt of regulatory clearance of marketing claims for the uses that we are developing;
|
|
|
the establishment and demonstration in the medical community of the safety and clinical efficacy of our products and their potential advantages over existing
therapeutic products, including oral medication, transdermal drug delivery products such as drug patches, or external or implantable drug delivery products; and
|
|
|
pricing and reimbursement policies of government and third-party payors such as insurance companies, health maintenance organizations and other health plan
administrators.
|
|
|
continued progress and cost of our research and development programs;
|
|
|
progress with preclinical studies and clinical trials;
|
|
|
the time and costs involved in obtaining regulatory clearance;
|
|
|
costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
|
|
|
costs of developing sales, marketing and distribution channels and our ability to sell our products;
|
|
|
costs involved in establishing manufacturing capabilities for commercial quantities of our products;
|
|
|
competing technological and market developments;
|
|
|
market acceptance of our products; and
|
|
|
costs for recruiting and retaining employees and consultants.
|
|
|
cease selling, incorporating or using any of our products that incorporate the challenged intellectual property, which would adversely affect our revenue;
|
|
|
obtain a license from the holder of the infringed intellectual property right, which license may be costly or may not be available on reasonable terms, if at
all; or
|
|
|
redesign our products, which would be costly and time-consuming.
|
|
|
delays associated with redesigning a product due to a failure to obtain a single source component;
|
|
|
an inability to obtain an adequate supply of required components; and
|
|
|
reduced control over pricing, quality and time delivery.
|
|
|
fail to satisfy financial or contractual obligations to us;
|
|
|
fail to adequately market our products;
|
|
|
cease operations with little or no notice to us; or
|
|
|
offer, design, manufacture or promote competing product lines.
|
|
|
the election of directors;
|
|
|
the amendment of charter documents;
|
|
|
the approval of certain mergers and other significant corporate transactions, including a sale of substantially all of our assets; or
|
|
|
the defeat of any non-negotiated takeover attempt that might otherwise benefit the public stockholders.
|
|
|
authorizing the issuance of blank check preferred stock without any need for action by stockholders;
|
|
|
providing for a dividend on our common stock, commonly referred to as a poison pill, which can be triggered after a person or group acquires 17.5%
or more of common stock;
|
|
|
providing for a classified board of directors with staggered terms;
|
|
|
requiring supermajority stockholder voting to effect certain amendments to our certificate of incorporation and by-laws;
|
|
|
eliminating the ability of stockholders to call special meetings of stockholders;
|
|
|
prohibiting stockholder action by written consent; and
|
|
|
establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at
stockholder meetings.
|
2002
|
2003
|
2004
|
Total
|
|||||||||||||
Cash equivalents:
|
||||||||||||||||
Fixed rate
|
$
|
15,069
|
|
|
|
|
|
|
|
$
|
15,069
|
|
||||
Average fixed rate
|
|
1.77
|
%
|
|
|
|
|
|
|
|
1.77
|
%
|
||||
Variable rate
|
$
|
2,663
|
|
|
|
|
|
|
|
$
|
2,663
|
|
||||
Average variable rate
|
|
1.50
|
%
|
|
|
|
|
|
|
|
1.50
|
%
|
||||
Short-term investments:
|
||||||||||||||||
Fixed rate
|
$
|
2,802
|
|
$
|
13,481
|
|
$
|
16,283
|
|
|||||||
Average fixed rate
|
|
2.03
|
%
|
|
4.69
|
%
|
|
4.23
|
%
|
|||||||
Variable rate
|
$
|
11,000
|
|
|
|
|
|
|
|
$
|
11,000
|
|
||||
Average variable rate
|
|
1.93
|
%
|
|
|
|
|
|
|
|
1.93
|
%
|
||||
Long-term investments:
|
||||||||||||||||
Fixed rate
|
$
|
3,509
|
|
$
|
3,005
|
|
$
|
6,514
|
|
|||||||
Average fixed rate
|
|
2.21
|
%
|
|
3.06
|
%
|
|
2.60
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total investment securities
|
$
|
31,534
|
|
$
|
16,990
|
|
$
|
3,005
|
|
$
|
51,529
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Average rate
|
|
1.83
|
%
|
|
4.18
|
%
|
|
3.06
|
%
|
|
2.67
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To fund development expenses related to our products, including clinical trial expenses;
|
|
|
To fund the qualification and validation of our newly constructed manufacturing facility;
|
|
|
To fund the commercialization of our products, once approved; and
|
|
|
for working capital and general corporate purposes.
|
10.29**
|
Feasibility, Development and Commercialization Agreement between Southern BioSystems, Inc., an Alabama corporation and wholly-owned subsidiary of the
Company, and Voyager Pharmaceutical Corporation dated as of July 22, 2002.
|
|
10.30**
|
License & Option Agreement and Mutual Release between Southern BioSystems, Inc, an Alabama corporation and wholly-owned subsidiary of the Company, and
Thorn BioScience LLC dated as of July 26, 2002.
|
|
10.31**
|
Third Amended and Restated Development and Commercialization Agreement between the Company and ALZA Corporation dated as of October 1, 2002.
|
|
99.1
|
Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
99.2
|
Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
_________
|
**
|
|
Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.
|
DURECT CORPORATION
|
||
By:
|
/s/ T
HOMAS
A.
S
CHRECK
|
|
Thomas A. Schreck
Chief Financial
Officer
(Principal Financial Officer)
|
By:
|
/s/ J
IAN
L
I
|
|
Jian Li
Controller
|
Date:
|
|
November 14, 2002
|
1.
|
|
I have reviewed this quarterly report on Form 10-Q of DURECT Corporation;
|
2.
|
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|
3.
|
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|
4.
|
|
The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
|
a)
|
|
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
|
b)
|
|
evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
|
c)
|
|
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
|
5.
|
|
The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent function):
|
a)
|
|
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
|
b)
|
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
|
6.
|
|
The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|
/s/ J
AMES
E. B
ROWN
James E. Brown
Chief Executive Officer
|
1.
|
|
I have reviewed this quarterly report on Form 10-Q of DURECT Corporation;
|
2.
|
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|
3.
|
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|
4.
|
|
The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
|
a)
|
|
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
|
b)
|
|
evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
|
c)
|
|
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
|
5.
|
|
The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent function):
|
a)
|
|
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
|
b)
|
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
|
6.
|
|
The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|
/s/ T
HOMAS
A. S
CHRECK
Thomas A. Schreck
Chief Financial Officer
|
Exhibit 10.29
FEASIBILITY, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Feasibility, Development and Commercialization Agreement (this "Agreement") is made as of July 22, 2002, by and between Voyager Pharmaceutical Corporation, a Delaware corporation with its principal place of business at 8540 Colonnade Center Drive, Raleigh, NC 27615 ("Voyager"), and Southern Biosystems, Inc., an Alabama corporation with its principal place of business at 756 Tom Martin Drive, Birmingham, Alabama 35211 ("SBS").
RECITALS
WHEREAS, Voyager is the owner of United States Patent No. 6,242,421, covering the treatment and prevention of Alzheimer's disease;
WHEREAS, SBS is in the business of developing, commercializing and manufacturing biodegradable polymers, biomedical devices and controlled-release products for biomedical and nonbiomedical applications including products based on the DURIN(TM) System;
WHEREAS, Voyager desires to develop and commercialize a pharmaceutical product that implements Voyager's patented Alzheimer's Disease treatment methodology;
WHEREAS, Voyager desires to obtain certain rights to use SBS's proprietary drug delivery technology in connection with the development and commercialization of such a pharmaceutical product, and SBS desires to grant Voyager such rights, all on the terms and conditions set forth herein; and
WHEREAS, Voyager desires that SBS assist it in the development and commercialization of such a pharmaceutical product by performing certain feasibility, development, regulatory and manufacturing activities relating to such a product, and SBS desires to perform such activities, all on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals and the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.1 "Active Agent" shall mean leuprolide acetate.
Section 1.2 "Affiliate" of a Person shall mean any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first Person. "Control" and, with correlative meanings, the terms "controlled by" and "under common control with" shall mean ownership of shares
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
of stock having at least 50% of the voting power entitled to vote for the election of directors in the case of a corporation and at least 50% of the interest in profits in the case of a business entity other than a corporation.
Section 1.3 "Agreement" shall have the meaning set forth in the preamble hereto.
Section 1.4 "Applicable Law" shall mean the applicable laws, rules, regulations, including any rules, regulations, guidelines, or other requirements of the Regulatory Authorities, that may be in effect from time to time in the Territory.
Section 1.5 "Chair" shall have the meaning set forth in Section 6.1.
Section 1.6 "Clinical Milestone Target Date" shall have the meaning set forth in Section 4.2(a).
Section 1.7 "Clinical Trial Plan" shall have the meaning set forth in
Section 4.2(a).
Section 1.8 "Clinical Trials" shall mean Phase I, Phase II, Phase III and such other tests and studies in human subjects or patients that are required by the Regulatory Authorities from time to time in connection with the Product pursuant to Applicable Law or otherwise.
Section 1.9 "CMC Data" shall mean any and all information contained in, as well as data supporting, the Chemistry, Manufacturing and Control section of an IND or NDA for the Product, and any similar information or data required with respect to any other Regulatory Approval.
Section 1.10 "Commercially Reasonable Efforts" shall mean, with respect to
the research, development, Manufacture or commercialization of the Product,
efforts and resources commonly used in the research-based pharmaceutical
industry for a product of similar commercial potential at a similar stage in its
lifecycle, taking into consideration its safety and efficacy, its cost to
develop, the competitiveness of alternative products, its proprietary position,
the likelihood of regulatory approval, its profitability, and all other relevant
factors. Commercially Reasonable Efforts shall be determined on a
market-by-market basis in the Territory. Commercially Reasonable Efforts with
respect to Voyager's diligence in conducting Clinical Trials and pursuing
Marketing Authorization with respect to the Product in the United States will be
evaluated in view of, among other factors, Voyager's timely achievement of
Clinical Milestone Target Dates (as changed from time to time in accordance with
Section 4.2(a)) and Voyager and SBS's timely satisfaction of their respective
obligations hereunder.
Section 1.11 "Confidential Information" shall mean (a) any and all information or material that, at any time before or after the date hereof, has been or is provided or communicated to the Receiving Party by or on behalf of the Disclosing Party pursuant to this Agreement or in connection with the transactions contemplated hereby or any
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
discussions or negotiations with respect thereto; any data, ideas, concepts or techniques contained therein; and any modifications thereof or derivations therefrom and (b) the existence and terms of this Agreement. Confidential Information may be disclosed either orally, visually, in writing, by delivery of materials containing Confidential Information or in any other form now known or hereafter invented.
Section 1.12 "Deposit" shall have the meaning set forth in Section 7.1.
Section 1.13 "Development Activities" shall have the meaning set forth in
Section 3.2.
Section 1.14 "Development Costs" shall have the meaning set forth in
Section 7.1.
Section 1.15 "Development Evaluation Materials" shall have the meaning set forth in Section 3.6.
Section 1.16 "Development Formulations" shall mean the various Product prototypes developed by SBS in connection with performing the Development Activities and provided to Voyager for evaluation in accordance with the Development Plan.
Section 1.17 "Development Plan" shall have the meaning set forth in Section 3.2.
Section 1.18 "Disclosing Party" shall mean the party disclosing Confidential Information.
Section 1.19 "Effective Date" shall mean the date first above written.
Section 1.20 "Exploit" shall mean to make, have made, import, use, sell, offer for sale or otherwise dispose of a product or process, including the research, development, registration, modification, enhancement, improvement, Manufacture, storage, formulation, optimization, export, transport, distribution, promotion or marketing of a product or process.
Section 1.21 "FDA" shall mean the United States Food and Drug Administration and any successor agency thereto.
Section 1.22 "Feasibility Activities" shall mean all tests, studies and other activities that are performed in connection with the Feasibility Program, including the preparation of the Final Report.
Section 1.23 "Feasibility Evaluation Materials" shall have the meaning set forth in Section 2.3.
Section 1.24 "Feasibility Plan" shall mean the detailed program set forth in Exhibit 1.24 for developing a formulation of the Product that meets the Product
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Specifications and evaluating the feasibility of such formulation, as the same shall be amended from time to time in accordance with Section 6.1.
Section 1.25 "Feasibility Program" shall have the meaning set forth in
Section 2.1.
Section 1.26 "FFDCA" shall have the meaning set forth in Section 5.4.
Section 1.27 "Final Report" shall mean the detailed analysis and evaluation of the Feasibility Program which shall (a) describe the methodology employed and the results achieved by SBS in conducting the Feasibility Program, (b) provide recommendations for additional development of the Product, and (c) be in such form and include such other information as set forth in the Feasibility Plan.
Section 1.28 "Firm Order" shall have the meaning set forth in Section 5.2.
Section 1.29 "First Commercial Sale" shall mean the first sale for use or consumption by the general public of the Product in a country in the Territory after Regulatory Approval for the marketing and sale of the Product has been obtained in such country.
Section 1.30 "GAAP" shall mean United States generally accepted accounting principles consistently applied.
Section 1.31 "GLP" shall mean the current good laboratory practices applicable from time to time pursuant to Applicable Law.
Section 1.32 "GMP" shall mean the current good manufacturing practices applicable from time to time to the Manufacturing of the Product or any intermediate thereof pursuant to Applicable Law.
Section 1.33 "IND" shall mean an investigational new drug application filed with the FDA for authorization to commence human clinical trials, and its equivalent in other countries or regulatory jurisdictions in the Territory.
Section 1.34 "Indemnification Claim Notice" shall have the meaning set forth in Section 12.3.
Section 1.35 "Indemnified Party" shall have the meaning set forth in
Section 12.3.
Section 1.36 "Indemnifying Party" shall have the meaning set forth in
Section 12.3.
Section 1.37 "Invention" shall mean any discovery, improvement, process, formula, data, invention, know-how, trade secret, procedure, device, marketing study or other intellectual property, whether or not patentable, including any enhancement in the manufacture, formulation, ingredients, preparation, presentation, means of delivery,
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
dosage or packaging of a product or any discovery or development of a new indication for a product.
Section 1.38 "Joint Development Team" shall have the meaning set forth in
Section 6.1.
Section 1.39 "Joint Inventions" shall have the meaning set forth in Section 8.1.
Section 1.40 "Losses" shall have the meaning set forth in Section 12.1.
Section 1.41 "Major Market" shall mean each of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
Section 1.42 "Manufacture" and "Manufacturing" shall mean, with respect to the Product, the manufacturing, processing, formulating, packaging, labeling, holding and quality control testing of such Product.
Section 1.43 "Manufacturing Cost" shall have the meaning set forth in
Section 5.3.
Section 1.44 "Manufacturing Process" shall mean any process or step thereof that is necessary or useful for Manufacturing the Product or any intermediate thereof.
Section 1.45 "Marketing Authorization" shall mean an approved New Drug Application as defined in the FFDCA and the regulations promulgated thereunder, or any corresponding foreign application, registration or certification, necessary or reasonably useful to market the Product in countries or regulatory jurisdictions in the Territory other than the United States, including applicable pricing and reimbursement approvals.
Section 1.46 "Minimum Royalty" shall have the meaning set forth in Section 7.3.
Section 1.47 "Net Sales" shall mean, with respect to any Person for any
period, the gross amount invoiced by such Person and its Affiliates and
sublicensees for the sale of the Product to unrelated third Persons in bona fide
arms' length transactions, less deductions, in their normal and customary
amounts for: (a) normal and customary trade, quantity and cash discounts and
sales returns and allowances, including (i) those granted on account of price
adjustments, billing errors, rejected goods, damaged goods, returns and rebates,
(ii) administrative and other fees and reimbursements and similar payments to
wholesalers and other distributors, buying groups, pharmacy benefit management
organizations, health care insurance carriers and other institutions, (iii)
allowances, rebates and fees paid to distributors and (iv) chargebacks; (b)
freight, postage, shipping and insurance expenses to the extent that such items
are included in the gross amount invoiced; (c) customs and excise duties and
other duties related to the sales to the extent that such items are included in
the gross amount invoiced; (d) rebates and similar payments made with respect to
sales paid for by any governmental or regulatory authority such as, by way of
illustration and not in limitation of the parties' rights hereunder,
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
federal or state Medicaid, Medicare or similar state programs or any equivalent programs of a country other than the United States; (e) sales and other taxes and duties directly related to the sale or delivery of the Product (but not including taxes assessed against the income derived from such sale); (f) distribution expenses to the extent that such items are included in the gross amount invoiced; and (g) any such invoiced amounts that are not collected by such Person or its Affiliates or sublicensees. Any of the deductions listed above that involves a payment by such Person or its Affiliates or its sublicensees shall be taken as a deduction in the calendar quarter in which the payment is accrued by such entity. Deductions pursuant to subsection (g) above shall be taken in the calendar quarter in which such sales are no longer recorded as a receivable. For purposes of determining Net Sales, (x) the Product shall be deemed to be sold when invoiced and a "sale" shall not include transfers or dispositions for charitable, promotional, pre-clinical, clinical, regulatory or governmental purposes, (y) sales between or among such Person, its Affiliates and sublicensees shall be excluded from the computation of Net Sales and (z) Net Sales shall include the portion of the price charged for separate products sold along with or for use in connection with the Product which is in excess of the fair market value of such products if they were not sold along with or in connection with the Product as reasonably determined by such Person. Net Sales shall include any amounts received by such Person, its Affiliates or sublicensees in connection with the transfer of Product to an unrelated third Person to the extent any such amounts are prepayments of, or can be offset or credited against, Product sales to such unrelated third Person. If the Product is transferred or delivered by or for such Person to a third Person but no invoice is delivered, Net Sales shall be determined based on the average gross selling price invoiced by such Person for the Product during the three (3) month period immediately preceding such transfer or delivery.
Section 1.48 "Person" shall mean an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.
Section 1.49 "Phase I" shall mean all tests and studies in subjects that are required by the Regulatory Authorities from time to time pursuant to Applicable Law or otherwise to obtain sufficient data of safety, metabolism and pharmacokinetic properties and clinical pharmacology to permit initiation of Phase II for the Product, including the trials referred to in 21 C.F.R. ss. 312.21(a), as amended.
Section 1.50 "Phase II" shall mean all tests and studies in subjects that are required by the Regulatory Authorities from time to time pursuant to Applicable Law or otherwise, in addition to Phase I, to obtain sufficient data as to efficacy and dosing to permit initiation of Phase III for the Product, including the trials referred to in 21 C.F.R. ss. 312.21(b), as amended.
Section 1.51 "Phase III" shall mean all tests and studies using an extensive patient base (other than Phase I and Phase II) that are intended to provide substantial evidence of efficacy and safety in support of Marketing Authorization for the Product,
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
including all tests and studies that are required by the FDA from time to time, pursuant to Applicable Law or otherwise, as Phase III tests and studies for the Product.
Section 1.52 "Product" shall mean a biodegradable polymeric implant [* * *] for the treatment of Alzheimer's Disease in humans that utilizes the SBS Technology or the SBS Improvements and contains the Active Agent.
Section 1.53 "Product Specifications" shall mean the written specifications and quality control testing procedures for the Product determined by Voyager and amended, modified or supplemented from time to time in accordance with Section 5.8.
Section 1.54 "Project Information and Inventions" shall have the meaning set forth in Section 8.1.
Section 1.55 "Receiving Party" shall mean the party receiving Confidential Information.
Section 1.56 "Recipients" shall have the meaning set forth in Section 10.1.
Section 1.57 "Regulatory Approval" shall mean any and all approvals (including pricing and reimbursement approvals), licenses, registrations or authorizations of any Regulatory Authority, necessary for the Exploitation of the Product in a country in the Territory, including any (a) approval of the Product, including any IND, Marketing Authorization and supplements and amendments thereto; (b) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto); (c) labeling approval; and (d) technical, medical and scientific licenses.
Section 1.58 "Regulatory Authority" shall mean any applicable supra-national, federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus, commissions, councils or other government entities regulating or otherwise exercising authority with respect to the Exploitation of the Product in the Territory.
Section 1.59 "SBS" shall have the meaning set forth in the preamble hereto.
Section 1.60 "SBS Improvements" shall mean any and all Inventions created, developed or acquired as a result of or in connection with the Agreement, including the Feasibility Activities, the Development Activities or SBS's Manufacturing of the Product hereunder that relate (i) solely to the SBS Technology including implant and accessory devices used in connection therewith or (ii) the application of the SBS Technology to or the combination of the SBS Technology with agents, features or processes.
Section 1.61 "SBS Indemnified Parties" shall have the meaning set forth in
Section 12.2.
Section 1.62 "SBS Technology" shall mean any and all proprietary technical information, formulations, processes, know-how, data, specifications, methods of manufacture or use, characterization methods, characterization results, and other
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
proprietary information to the extent not generally known, whether or not patentable, owned by SBS relating to its proprietary bioerodable polymeric implant technology (DURIN(TM) Biodegradable Implants) for imparting controlled release or other performance-enhancing qualities to products, including any patents (issued, pending, or subsequently filed and including all divisionals, continuations, continuations-in-part or other related United States and foreign applications).
Section 1.63 "Terminated Country" shall have the meaning set forth in
Section 4.2.
Section 1.64 "Territory" shall mean all countries of the entire world except any Terminated Countries.
Section 1.65 "Test Formulations" shall mean the various Product prototypes developed by SBS in connection with performing the Feasibility Activities and provided to Voyager for evaluation in accordance with the Feasibility Plan.
Section 1.66 "Testing Laboratory" shall have the meaning set forth in
Section 5.6.
Section 1.67 "Third Party Claim" shall have the meaning set forth in
Section 12.3.
Section 1.68 "Unique Dose Product" shall mean a controlled release
pharmaceutical product that delivers the Active Agent and with respect to which
[***].
Section 1.69 "Voyager" shall have the meaning set forth in the preamble hereto.
Section 1.70 "Voyager Patents" shall mean any and all patents, patent applications, and other intellectual property owned or controlled by Voyager related to the treatment and prevention of Alzheimer's disease, including United States Patent No. 6,242,421.
Section 1.71 "Voyager Development Recommendations" shall have the meaning set forth in Section 3.6.
Section 1.72 "Voyager Feasibility Recommendations" shall have the meaning set forth in Section 2.3.
Section 1.73 "Voyager Indemnified Parties" shall have the meaning set forth in Section 12.1.
ARTICLE II. FEASIBILITY PROGRAM
Section 2.1 Conduct of Feasibility Program. SBS shall conduct and complete all tests, studies and other activities set forth in, or required in order to obtain the information set forth in, the Feasibility Plan (the "Feasibility Program"); provided that SBS may, at its sole discretion, elect to have selected Feasibility Activities be performed
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
by its Affiliates and further may subcontract standard tasks and services to third Person providers of such services; provided that SBS shall be responsible for ensuring that the performance of all Feasibility Activities by its Affiliates or third Persons complies with the terms of this Agreement and in no event shall any such delegation or subcontract release SBS from any of its obligations under this Agreement. SBS shall use Commercially Reasonable Efforts to complete the Feasibility Program in accordance with the timeline set forth in the Feasibility Plan. SBS represents, warrants and covenants that it shall perform the Feasibility Program in good scientific manner and in compliance in all material respects with all Applicable Laws and good, professional clinical and laboratory practices (but not under GLP), and shall endeavor to achieve the objectives of the Feasibility Program efficiently and expeditiously. Moreover, SBS shall proceed diligently with the Feasibility Program by allocating sufficient time, effort, equipment, and skilled personnel to complete the Feasibility Program successfully and promptly. Notwithstanding the foregoing, the parties acknowledge and agree that there can be no assurances that the objectives of the Feasibility Program can be achieved, or that they can be achieved in the time set forth in the Feasibility Plan.
Section 2.2 Costs and Expenses.
(a) Subject to Section 7.1 and except as provided in Section 2.2(b), SBS shall be solely responsible for all costs and expenses incurred in connection with the performance of the Feasibility Activities, including costs and expenses of personnel, laboratory facilities and equipment, chemicals (other than the Active Agent) and other supplies.
(b) SBS shall obtain, from a vendor approved by Voyager and at Voyager's expense, all Active Agent necessary to complete the Feasibility Activities. SBS estimates that approximately [***] of Active Agent will be required for the completion of the Feasibility Activities.
Section 2.3 Test Formulations. SBS shall from time to time provide Voyager with (a) sufficient quantities of the various Test Formulations of the Product as the same are developed during the performance of the Feasibility Program and (b) such technical and other information regarding such Test Formulations as Voyager may reasonably require, in each case to enable Voyager to evaluate the scientific and commercial viability of such Test Formulations (collectively, the "Feasibility Evaluation Materials"). Voyager may evaluate the Test Formulations received from SBS and provide recommendations to the Joint Development Team for changes to the Feasibility Program (the "Voyager Feasibility Recommendations"), including the development of the Product. Any Test Formulations provided by SBS will be used by Voyager for research purposes only and shall not be used in humans.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 2.4 Reporting Requirements.
(a) At approximately the midpoint of the completion of the Feasibility Program, SBS shall provide Voyager with a written progress report which shall describe the Feasibility Activities that SBS has performed to date and evaluate the work performed in relation to the goals of the Feasibility Plan
(b) Within forty-five (45) days after completion of the Feasibility Program, SBS shall provide Voyager with the Final Report. Within thirty (30) days of Voyager's receipt of the Final Report, the parties shall meet, at such time and place as the parties may agree, to review the Final Report, including the results of the Feasibility Program contained therein.
(c) In addition to the written reports specified in clauses (a) and
(b) above, SBS shall provide such other information as may be reasonably
requested by Voyager relating to the Feasibility Program from time to time.
Section 2.5 Rights and Remedies. If SBS defaults in the performance of any of its material obligations under this Article II, which default has not been cured by SBS within sixty (60) days after receiving written notice thereof from Voyager, then Voyager may, in its sole discretion, terminate (a) the rights and obligations of the parties under Article II, Article III, Article V or Article VI on an Article-by-Article basis, or under all such Articles (in which event the license granted pursuant to Section 8.2(a) shall also terminate) or (b) the rights and obligations of the parties under Section 4.2(c) (in which event the license granted pursuant to Section 8.2(c) shall also terminate), in each case by providing immediate written notice to SBS, in which event Voyager shall have the right to perform or have performed by a third Person all feasibility, development, regulatory or Manufacturing activities related to the Product previously allocated to SBS under the terminated provisions. The rights and remedies provided in this Section 2.5 shall be cumulative and in addition to any other rights or remedies that may be available to Voyager.
Section 2.6 [***] Technology. The parties acknowledge and agree that Voyager is currently in discussions with [***] regarding the use or acquisition of certain data and technology that may be relevant to the Product and that may accelerate, or eliminate the necessity for, the performance of certain Feasibility Activities and Development Activities. In the event that Voyager acquires the right to use such data and technology, the parties shall negotiate in good faith amendments to the terms of this Agreement that provide for the acceleration or elimination of such Feasibility Activities and Development Activities; provided that in no event shall the method for calculating Development Costs or Manufacturing Costs, the royalties payable by Voyager pursuant to Section 7.3, or, except as expressly set forth in the succeeding proviso, the milestone payments payable by Voyager pursuant to Section 7.2 be amended or changed as a result of the use of such data and technology; provided further, however, that in the event that the use of such data and technology obviates the need for performance of Phase I trials for the Product, Voyager shall pay the $[***] milestone otherwise payable pursuant to
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 7.2(a) within [***] days after receipt by Voyager of written notification from FDA that Phase I trials for the Product are not required.
ARTICLE III. DEVELOPMENT ACTIVITIES
Section 3.1 Election to Proceed. Voyager shall notify SBS in writing, within [ * * * ] days after SBS's submission to Voyager of the Final Report, whether Voyager elects to proceed with further development of the Product. If Voyager notifies SBS that it does not wish to proceed with further development, or if Voyager does not deliver notice within such [ * * * ] day period, then this Agreement shall be deemed to have been terminated pursuant to Section 11.2(a) as of the time of delivery of such notice or the end of such [ * * * ] day period, as the case may be.
Section 3.2 Development Plan.
(a) Upon the election by Voyager to proceed with development of the
Product pursuant to Section 3.1, the parties shall consult to develop as soon as
reasonably practicable a written plan (the "Development Plan") that sets forth
(i) further development activities with respect to the Product that are
necessary or desirable to enable Voyager to commence Clinical Trials for the
Product (including Manufacturing Process development as required and the
production by SBS of Product formulations for preclinical, toxicology and other
studies) (the "Development Activities"), (ii) the party responsible for
performing each Development Activity, and (iii) an estimated timeline for
completion of critical development milestones in accordance with Section 3.3(b).
In the event of any dispute between the parties with respect to the contents of
the Development Plan, such dispute will be submitted to the Joint Development
Team and resolved by the Joint Development Team in accordance with Section 6.1.
The Development Plan may be amended from time to time by the Joint Development
Team in accordance with Section 6.1.
(b) Prior to commencing any Development Activities, SBS shall provide Voyager with a good faith, non-binding estimate of the total amount of Development Costs required to complete the Development Activities.
Section 3.3 Conduct of Development Activities.
(a) Each of SBS and Voyager shall provide funding, conduct and complete all tests, studies and other activities set forth in, or required in order to obtain the information set forth in, the Development Plan for which it is assigned responsibility; provided that SBS may, at its sole discretion, elect to have selected Development Activities allocated to it under the Development Plan be performed by its Affiliates and further may subcontract standard tasks and services to third Person providers of such services; provided that SBS shall be responsible for ensuring that the performance of all Development Activities by its Affiliates or third Persons complies with the terms of this Agreement and in no event shall any such delegation or subcontract release SBS from any of its obligations under this Agreement. Each of SBS and Voyager represents, warrants and covenants that it shall perform the Development Activities for which it is
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
assigned responsibility in good scientific manner and in compliance in all material respects with all requirements of Applicable Laws and good clinical and laboratory practices and under such regulatory standards (for example GLP or GMP) as shall be specified in the Development Plan, and shall endeavor to achieve the objectives of the Development Plan efficiently and expeditiously. Moreover, each of SBS and Voyager shall proceed diligently with the Development Plan by allocating sufficient time, effort, equipment, and skilled personnel to complete the Development Activities for which it is assigned responsibility successfully and promptly.
(b) The Development Plan will include good faith estimates for critical development milestones, such as completion of a GLP toxicity study, package development, trocar development, manufacturing of an initial batch of clinical materials under GMP, and preparation of documentation for submission of an IND (toxicity, CMC, and initial stability).
Section 3.4 Costs and Expenses.
(a) Subject to Section 7.1 and except as provided in Section 3.4(b), SBS shall be solely responsible for all costs and expenses incurred in connection with the performance of the Development Activities for which it is assigned responsibility, including costs and expenses of personnel, laboratory facilities and equipment, chemicals (other than the Active Agent) and other supplies.
(b) SBS shall obtain, from a vendor approved by Voyager and at Voyager's expense all Active Agent necessary to complete the Development Activities for which SBS is assigned responsibility.
Section 3.5 Reporting Requirements.
(a) Within thirty (30) days after the end of each calendar quarter in which Development Activities are performed, SBS shall provide to Voyager a written progress report, which shall describe the Development Activities it has performed during such calendar quarter, evaluate the work performed in relation to the goals of the Development Plan, and provide such other information as may be reasonably requested by Voyager with respect to the Development Activities.
(b) In addition to the written reports specified in subsection (a) above, SBS shall provide such other information as may be reasonably requested by Voyager relating to the Development Activities from time to time.
Section 3.6 Development Formulations. SBS shall from time to time provide Voyager with (a) sufficient quantities of the various Development Formulations as the same are developed during the performance of the Development Activities and (b) such technical and other information regarding such Development Formulations as Voyager may reasonably require, in each case to enable Voyager to evaluate the scientific and commercial viability of such Development Formulations (collectively, the "Development Evaluation Materials"). Voyager may evaluate the Development Formulations received
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
from SBS and provide recommendations to the Joint Development Team for changes to the Development Plan (the "Voyager Development Recommendations").
Section 3.7 Regulatory Records. SBS shall maintain records of all Feasibility Activities and Development Activities conducted by it in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall be substantially complete and materially accurate and shall reflect all work done and results achieved in the performance of the Feasibility Activities and Development Activities, and which shall be retained by SBS for at least five (5) years after the termination of this Agreement, or for such longer period as may be required by Applicable Law. Voyager shall have the right, during normal business hours and upon reasonable notice, to inspect and copy any such records.
Section 3.8 Rights and Remedies. If SBS defaults in the performance of any of its material obligations under this Article III, which default has not been cured by SBS within sixty (60) days after receiving written notice thereof from Voyager, then Voyager may, in its sole discretion, terminate (a) the rights and obligations of the parties under Article III, Article V or Article VI on an Article-by-Article basis or under all such Articles (in which event the license granted pursuant to Section 8.2 (a) shall also terminate) or (b) Section 4.2(c) (in which event the license granted pursuant to Section 8.2(c) shall also terminate), in each case by providing immediate written notice to SBS, in which event Voyager shall have the right to perform or have performed by a third Person all development, regulatory and Manufacturing activities related to the Product previously allocated to SBS under the terminated provisions. The rights and remedies provided in this Section 3.8 shall be cumulative and in addition to any other rights or remedies that may be available to Voyager.
ARTICLE IV. REGULATORY APPROVALS
Section 4.1 Regulatory Approvals. Within ninety (90) days following the
completion of the Development Activities, Voyager shall notify SBS in writing in
the event that Voyager elects to commence Clinical Trials with respect to the
Product. If Voyager notifies SBS that it does not wish to proceed with Clinical
Trials, or if Voyager does not deliver notice within such ninety (90) day
period, then this Agreement shall be deemed to have been terminated pursuant to
Section 11.2(a) as of the time of delivery of such notice or the end of such
ninety (90) day period, as the case may be. Voyager shall have the sole right to
develop the appropriate strategy for obtaining and maintaining Regulatory
Approvals in the Territory. All INDs, Marketing Authorizations and other
filings, applications or requests pursuant to or in connection with the
Regulatory Approvals shall be made in the name of, and shall be owned solely by,
Voyager or its designee. Voyager shall have the sole right to conduct all
communications with the Regulatory Authorities with regard to the Product.
Section 4.2 Voyager Diligence.
(a) If Voyager elects to proceed with Clinical Trials for the Product, Voyager shall use Commercially Reasonable Efforts to conduct all required Clinical
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Trials and obtain the Regulatory Approvals necessary to Exploit the Product in
the United States as soon as reasonably practicable. Voyager shall use
Commercially Reasonable Efforts to commercialize the Product in the United
States during the term of this Agreement commencing as soon as reasonably
practicable after receipt of required Regulatory Approvals. At the same time as
Voyager provides SBS with written notice of its intent to conduct Clinical
Trials pursuant to Section 4.1, Voyager shall provide SBS with a written outline
of its Clinical Trial strategy and timeline to support Regulatory Approval in
the United States (the "Clinical Trial Plan"). The Clinical Trial Plan will
include Voyager's good faith estimate as to the target dates for (i) IND filing,
(ii) start of Phase III and (iii) NDA filing to support Regulatory Approval in
the United States (each, a "Clinical Milestone Target Date"). Voyager shall
review the Clinical Trial Plan at least on a quarterly basis and may in its
reasonable discretion change such plan and any Clinical Milestone Target Date
therein at any time. Voyager promptly shall notify SBS in writing in the event
of any material change to the Clinical Trial Plan or in the event that any
Clinical Milestone Target Date is delayed by one calendar quarter or more. At
SBS's request, Voyager shall provide SBS the reasons for such change. If Voyager
defaults in the performance of any of its material obligations under this
Section 4.2(a), which default has not been cured by Voyager within sixty (60)
days after receiving written notice thereof from SBS, then SBS may, in its sole
discretion, terminate this Agreement by providing immediate written notice to
Voyager.
(b) If Voyager has not applied for Regulatory Approval in (i) each
other Major Market within [***] after obtaining Regulatory Approval for the
Product in the United States or (ii) in each country in the Territory other than
a Major Market within [***] after obtaining Regulatory Approval for the Product
in the United States, or has not made the First Commercial Sale in any country
[***] after receipt of Regulatory Approval in such country, then SBS may, upon
[***] days prior written notice to Voyager (unless Voyager applies for such
Regulatory Approval or makes such First Commercial Sale within such [***] day
period), terminate the rights granted to Voyager under Section 8.2 with respect
to such country (each, a "Terminated Country").
(c) SBS may elect, at its sole discretion, to Exploit the Product in any Terminated Country by providing [***] days prior written notice to Voyager.
(d) The remedies set forth in this Section 4.2 shall be exclusive and in lieu of any other remedies that may be available to SBS pursuant to any statutory or common law or equity with respect to any Losses of any kind or nature suffered by SBS directly or indirectly resulting from or arising out of any failure by Voyager to perform its obligations under this Section 4.2 .
Section 4.3 Cooperation of SBS. SBS shall cooperate with any and all reasonable requests for assistance from Voyager with respect to the development and commercialization of the Product and obtaining and maintaining Regulatory Approvals for the Product, including by:
(a) making its employees, consultants and other scientific staff available upon reasonable notice during normal business hours at their respective places of
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
employment to consult with Voyager on issues arising during such development and commercialization;
(b) making its employees, consultants and other scientific staff available upon reasonable notice during normal business hours to attend meetings with Regulatory Authorities concerning the Product;
(c) disclosing and making available to Voyager, in whatever form Voyager may reasonably request, all biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical, safety, Manufacturing and quality control data and other information related to the Product, the Manufacturing Process and the SBS Technology owned or controlled by SBS as is necessary or desirable to prepare, file, obtain and maintain any Regulatory Approval; and
(d) SBS shall prepare and provide to Voyager all CMC Data with respect to the Product necessary to obtain and maintain Regulatory Approvals and in a form suitable for filing by Voyager with Regulatory Authorities.
Section 4.4 Review of Filings. Voyager shall provide SBS with the opportunity for a timely review and comment on all regulatory filings proposed to be made with respect to the Product prior to their submission to a Regulatory Authority and will promptly provide SBS with copies of all communications to or from any Regulatory Authority with respect to the Product. SBS shall perform such review promptly after such filings are provided by Voyager.
Section 4.5 Rights and Remedies. If SBS defaults in the performance of any
of its material obligations under this Article IV, which default has not been
cured by SBS within [***] days after receiving written notice thereof from
Voyager, then Voyager may, in its sole discretion, terminate (a) the rights and
obligations of the parties under Section 4.3, 4.4 or Article V on a case-by-case
basis or under all such provisions (in which event the license granted pursuant
to Section 8.2(a) shall also terminate) or (b) the rights and obligations of the
parties under Section 4.2(c) (in which event the license granted pursuant to
Section 8.2(c) shall also terminate), in each case by providing immediate
written notice to SBS, in which event Voyager shall have the right to perform or
have performed by a third Person all regulatory and Manufacturing activities
related to the Product previously allocated to SBS under the terminated
provisions. The rights and remedies provided in this Section 4.5 shall be
cumulative and in addition to any other rights or remedies that may be available
to Voyager.
ARTICLE V. MANUFACTURING
Section 5.1 Supply Obligations. SBS shall supply Voyager with, and Voyager shall purchase from SBS, (a) all of Voyager's clinical requirements of the Product and placebos necessary in connection with Clinical Trials and (b) all of Voyager's commercial requirements of the Product; provided that SBS shall not be required to supply a number of units of Product in any calendar quarter that exceeds the reasonable maximum quarterly manufacturing capacity of SBS's manufacturing facility in
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Birmingham, Alabama on the date of this Agreement unless SBS otherwise agrees. These supply and purchase obligations shall continue until the earlier to occur of (i) the effective date of SBS's election to discontinue supply of Voyager's commercial requirements of Product, which effective date shall be specified in a written notice delivered by SBS to Voyager not less than [ * * * ] prior to such effective date; provided that in no event may SBS elect to terminate its supply obligations prior to [ * * * ] the First Commercial Sale of the Product in the Territory, (ii) the termination of this Agreement and (iii) the termination of these supply and purchase obligations with respect to the Product in accordance with Sections 2.5, 3.8, 4.5 and 5.6. SBS may, in its sole discretion, subcontract with a qualified contract manufacturer in order to fulfill SBS's supply obligations to Voyager hereunder; provided that in no event shall any such subcontract release SBS from any of its obligations under this Agreement, including its obligation to deliver Product that complies with the warranty set forth in Section 5.4.
Section 5.2 Forecasting, Order and Delivery of Products.
(a) Forecasting. Within ninety (90) days of Voyager's election to commence Clinical Trials with respect to the Product, Voyager shall submit an estimate of the quantities of the Product (and placebos, if any) that Voyager expects to purchase from SBS during the succeeding [***] calendar quarters. Thereafter, on or before the thirtieth (30th) day of each following calendar quarter, Voyager shall submit an updated forecast of its requirements of the Product from SBS for the succeeding [***] calendar quarters. These forecasts shall be non-binding and shall be used by SBS for planning purposes only.
(b) Firm Orders. Not later than ninety (90) days prior to commencement
of each calendar quarter, Voyager shall submit to SBS a purchase order for such
quantities of the Product (and placebos, if any) as Voyager commits to purchase
from SBS during such calendar quarter, with a statement of the dates on which
delivery shall be required and shipping instructions therefore (a "Firm Order").
SBS shall confirm to Voyager in writing, within five (5) days after receipt
thereof, the receipt by SBS of each Firm Order submitted in accordance with this
Section 5.2, and shall be obligated to deliver the specified quantity of the
Product (and placebos) in accordance with the delivery schedule set forth in
such Firm Order. SBS shall exercise its best efforts to comply with changes to a
Firm Order that Voyager may request after receipt by SBS of such Firm Order but
shall not be liable for its inability to do so. Firm Orders may be amended by
mutual agreement of the parties. In the event that the terms of any Firm Order
are not consistent with this Agreement, the terms of this Agreement shall
prevail.
(c) Delivery and Risk of Loss. SBS shall deliver the quantities of the Product (and placebos) set forth in each Firm Order on the delivery date specified therein, to a location designated in writing by Voyager, FOB (as defined in the UCC) SBS's facility in Birmingham, Alabama. Title to the Products shall pass to Voyager at the time of delivery.
(d) Invoice and Payment. SBS shall promptly invoice Voyager for all quantities of the Product delivered in accordance herewith. Invoices shall be
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
accompanied by a certificate of analysis and a certificate of compliance with the warranty set forth in Section 5.4 for each invoiced batch of the Product, in such form as is reasonably acceptable to Voyager. Subject to Section 5.6, payment with respect to a shipment shall be due thirty (30) days after receipt by Voyager of such shipment of the Product and the invoice and certificates with respect thereto; provided, however, that if Voyager rejects such shipment pursuant to Section 5.6, then payment shall be due within sixty (60) days after receipt by Voyager of notice from the Testing Laboratory that the invoiced Product is conforming or, subject to Section 5.6, receipt by Voyager of replacement Product, as the case may be. In the event of any inconsistency between an invoice and this Agreement, the terms of this Agreement shall control. All payments shall be made in accordance with Section 7.4.
Section 5.3 Price. The parties hereby agree that the price (the "Manufacturing Cost") for Voyager's requirements of:
(a) clinical supplies of the Product (and placebos) shall be equal to
[***] in accordance with all Applicable Laws calculated in accordance with
Exhibit 5.3.
(b) commercial supplies of the Product shall be equal to [***].
SBS shall notify Voyager in advance of any material increase in Manufacturing Cost.
Section 5.4 Warranty. SBS warrants that, at the time of delivery of the Product to Voyager: (a) such Product will have been Manufactured, held and shipped in accordance with the Regulatory Approvals for the Product, applicable GMP and all other Applicable Law; (b) such Product will have been Manufactured in accordance, and be in conformity, with the Product Specifications and will conform with the certificate of analysis provided pursuant to Section 5.2; (c) such Product will not be adulterated or misbranded under the Federal Food, Drug, and Cosmetic Act, as amended (the "FFDCA"), and similar provisions of the laws of other countries as to which Regulatory Approvals have been granted with respect to the Product; (d) title to such Product will pass to Voyager as provided herein free and clear of any security interest, lien or other encumbrance; (e) such Product will have been Manufactured in facilities that are in material compliance all Applicable Laws at the time of such Manufacture (including applicable inspection requirements of FDA and other Regulatory Authorities); and (f) such Product may be introduced into interstate commerce pursuant to the FFDCA.
Section 5.5 Non-Conforming Product. SBS shall not deliver to Voyager any
Product that fails to conform in any respect to the warranty set forth in
Section 5.4. In the event that any Product shall fail to pass the quality
control testing conducted by SBS, (i) SBS shall notify Voyager thereof within
one (1) business day, (ii) SBS shall not release the batch from which such
Product was taken, and (iii) the parties shall agree upon appropriate corrective
steps to be taken. Voyager, at its option, may investigate the cause of such
failure, or require SBS to do so, in which case SBS shall provide Voyager with a
written report summarizing the results of the SBS's investigation, all at the
expense of SBS.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 5.6 Failure or Inability to Supply Product.
(a) Notification of Inability to Supply. In the event that SBS, at any time during the term of this Agreement, shall have reason to believe that it will be unable to supply Voyager with the full quantity of the Product forecasted to be ordered or actually ordered by Voyager in a timely manner and in conformity with the warranty set forth in Section 5.4 (whether by reason of force majeure or otherwise), SBS shall promptly notify Voyager thereof. Promptly thereafter, the parties shall meet to discuss how Voyager shall obtain such full quantity of conforming Product. Compliance by SBS with this Section 5.6 shall not relieve SBS of any other obligation or liability under this Agreement, including any obligation or liability under clause (b) or (c) below.
(b) Failure to Supply Conforming Product. In the event that Voyager
reasonably determines, within thirty (30) days after delivery thereof by SBS,
that any Product supplied by SBS does not conform to the warranty set forth in
Section 5.4, Voyager shall give SBS notice thereof (including a sample of such
Product). SBS shall undertake appropriate testing of such sample and shall
notify Voyager whether it has confirmed such non-conformity within thirty (30)
days after receipt of such notice from Voyager. If SBS notifies Voyager that it
has not confirmed such non-conformity, the parties shall submit the disputed
batch to an independent testing laboratory mutually acceptable to the parties
(the "Testing Laboratory") for testing. The findings of the Testing Laboratory
shall be binding on the parties, absent manifest error. The expenses of the
Testing Laboratory shall be borne by SBS if the testing confirms the
non-conformity and otherwise by Voyager. If the Testing Laboratory or SBS
confirms that a batch of Product does not conform to the warranty set forth in
Section 5.4, SBS shall promptly (i) supply Voyager with a conforming quantity of
the Product at SBS's expense or (ii) reimburse Voyager for all reasonable costs
Voyager may have directly incurred with respect to such non-conforming Product,
including any Manufacturing Cost paid by Voyager with respect to such Product,
which costs Voyager shall have the right to offset against any payments owed by
Voyager to SBS under this Agreement. The rights and remedies provided in this
clause shall be cumulative and in addition to any other rights or remedies that
may be available to Voyager.
(c) Rights and Remedies.
(i) If SBS fails [***] or more times within any [***] consecutive month period to supply the full quantity of Product specified in a Firm Order by the delivery date specified therein and in conformity with the warranty set forth in Section 5.4, Voyager may, in its sole discretion, terminate (A) the rights and obligations of the parties under Article V (in which event the license granted Section 8.2(a) shall also terminate) or (B) the rights and obligations of the parties under Section 4.2(c) (in which event the license granted pursuant to Section 8.2(c) shall also terminate), in each case by providing immediate written notice to SBS, and thereafter Voyager may Manufacture Product itself or purchase its requirements for Product from a third Person. The rights and remedies provided in this Section 5.6 shall be cumulative and in addition to any other rights or remedies that may be available to Voyager.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 5.7 Costs and Expenses. SBS shall be solely responsible for all costs and expenses incurred in connection with the Manufacture of supplies of the Product pursuant to this Article V, including costs and expenses of personnel, testing, including quality control and stability, Manufacturing facilities and equipment, the Active Agent, raw materials, excipients, labeling, packaging materials and all other supplies of any kind used in connection with Manufacturing the Product (and placebos), which costs shall be included in the calculation of Manufacturing Costs in accordance with Section 5.3; provided, however, that Voyager (i) shall reimburse to SBS, within 30 days after receipt of an invoice and reasonable supporting documentation therefor, the cost of any piece of Manufacturing equipment or other fixed asset procured by SBS after the date hereof and required to Manufacture the Product hereunder; provided that the cost of such equipment or asset is [ * * * ] or less, and (ii) may, if it so determines in its sole and absolute discretion, purchase (and retain title to) and make available for use by SBS any other piece of Manufacturing equipment or other fixed asset that SBS requests for use in connection with the Manufacture of the Product; provided further, that Voyager, in its sole discretion but upon reasonable advance notice to SBS, may from time to time, at its cost, supply to SBS materials (including the Active Agent) to be used in the Manufacture of the Product, in which event the cost of such materials shall not be included in calculating Manufacturing Cost for the Products for which they were used.
Section 5.8 Amendment of Product Specifications and Manufacturing Process.
(a) Rights and Limitations. Voyager reserves the right to amend, modify or supplement the Product Specifications or the Manufacturing Process unilaterally and in its sole discretion for the purpose of complying with the Regulatory Approvals, GMP, other Applicable Law, or, upon ninety (90) days prior notice, for any other reasonable business purpose. Voyager shall promptly supply SBS with appropriate documentation relating to any such changes to the Product Specifications or Manufacturing Process to the extent that such changes affect SBS's Manufacturing of the Product hereunder. In the event that SBS cannot reasonably implement or comply with such changes to Product Specifications (it being acknowledged and agreed by SBS that increase in Manufacturing Cost shall not constitute a valid justification for failure to implement or comply with such changes), then SBS shall not be required to implement or comply with such changes. SBS may not amend, modify or supplement the Product Specifications or the Manufacturing Process for the Product in any respect without the prior written consent of Voyager, which consent shall not be unreasonably withheld or delayed.
(b) Amendment to Regulatory Approvals; Costs and Expenses. In the event that Voyager amends, modifies or supplements the Product Specifications or the Manufacturing Process for the Product, or consents to any such amendment, modification or supplement by SBS, SBS shall provide to Voyager any such documentation or other information with respect thereto as Voyager may reasonably request in order to obtain or maintain any Regulatory Approval or comply with GMP or Applicable Law. Voyager shall reimburse SBS for reasonable costs that are actually incurred by SBS in connection with any such change requested by Voyager, including reasonable costs of capital equipment and process upgrades, obsolescence of raw materials, goods-in-process,
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
packaging materials and supplies and finished goods not suitable for use in the business or operations of SBS or any of its Affiliates; provided, however, that Voyager's liability for such reimbursement shall be limited to levels of inventory that are customary in pharmaceutical manufacturing operations. SBS shall be solely responsible for any and all costs and expenses incurred by it or Voyager and its Affiliates and sublicensees as a result of any amendment, modification or supplementation of the Product Specifications or the Manufacturing Processes by SBS not requested by Voyager, or requested by Voyager as a result of SBS's failure to Manufacture Product in conformity with the warranty set forth in Section 5.4, which costs shall not be included in the Manufacturing Costs.
Section 5.9 Testing, Assays, Stability and Quality Assurance.
(a) Testing Requirements. With respect to the Product or any intermediate thereof Manufactured or supplied by SBS, SBS shall be responsible for the performance of and compliance with all Product testing required by the Product Specifications, the Manufacturing Processes and Regulatory Approvals for the Product and all Applicable Law. SBS agrees to implement and maintain such processing control procedures as Voyager may reasonably request, including the assignment of identification numbers to each lot of Product and the maintenance of production records, quality control records, batch records and related information.
(b) Retention of Samples. SBS shall take and retain, for such period as may be required by Applicable Law or such longer period as otherwise reasonably required by Voyager, samples of Product (i) sufficient to satisfy SBS's obligations under this Agreement, GMP and Applicable Law with respect to its Manufacturing of the Product, (ii) sufficient to perform quality control testing and stability testing in accordance with this Agreement, the Regulatory Approvals for the Product, GMP and all other Applicable Law, and (iii) as otherwise reasonably required by Voyager, and in each case shall specify the control number and the date of Manufacture thereof. Further, SBS shall submit to Voyager, upon Voyager's written request, such samples, materials and quality control records as Voyager may reasonably request.
(c) Stability Testing. SBS shall perform stability testing of the Product in accordance with the Product Specifications, the Manufacturing Process, the Regulatory Approvals, GMP and other Applicable Law, and such other requirements and processes as Voyager shall reasonably determine from time to time. If SBS confirms a stability failure with respect to the Product, SBS shall notify Voyager thereof within twenty-four (24) hours and the parties shall discuss in good faith appropriate corrective action. SBS shall promptly implement any such corrective action.
(d) Maintenance of Facilities. SBS shall ensure, that any and all necessary licenses, registrations, and Regulatory Authority approvals have been obtained in connection with any facilities and equipment used in connection with the Manufacture of the Product by SBS. SBS shall maintain such facilities and equipment in a state of repair and operating efficiency consistent with the requirements of the Product Specifications, the Regulatory Approvals, the Manufacturing Processes, GMP and all
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
other Applicable Law. Prior to each use of any equipment in Manufacturing the Product, SBS shall implement a cleaning validation protocol with respect to such equipment, including the cleaning and maintenance thereof, in accordance with any procedures reasonably established by Voyager and notified to SBS, the Product Specifications, the Regulatory Approvals and the Manufacturing Processes, GMP and all other Applicable Law. SBS shall maintain in such facilities adequate and segregated (if required) holding accommodations for the Product, the Active Agent, and the excipients, packaging components, and other items used in Manufacturing the Product in accordance with the Product Specifications, the Regulatory Approvals and the Manufacturing Process, GMP and all other Applicable Law. If required under Applicable Law, all Product shall be held by SBS in a separate segregated area until delivery to Voyager.
(e) Quality Assurance Procedures. Without limitation of the foregoing, SBS agrees to implement, in connection with the Manufacture of the Product, quality assurance and quality control procedures, including validation protocols, process change procedures and methods of statistical analysis for cleaning validation that are reasonably satisfactory to Voyager.
Section 5.10 Inspection by Voyager. SBS agrees that Voyager and its agents shall have the right, upon reasonable prior notice to SBS, to inspect any facility at which the Product or any intermediate thereof is Manufactured as well as the Manufacturing of the Product and any intermediates thereof, as applicable, including inspection of (a) the materials used in the Manufacture of the Product, (b) the holding facilities for such materials, (c) the equipment used in the Manufacture of the Product, and (d) all records relating to such Manufacturing and each such manufacturing facility. Following such audit, Voyager shall discuss its observations and conclusions with SBS and corrective actions shall be agreed upon by Voyager and SBS within thirty (30) days thereafter. SBS shall implement such corrective action within sixty (60) days after the parties reach such agreement, unless otherwise agreed in writing by the parties.
Section 5.11 Notification of Inspections; Communications. SBS shall notify Voyager by telephone within one (1) business day, and in writing within five (5) business days, after learning thereof, of any proposed or unannounced visit or inspection of any facility at which the Product, or any intermediate thereof, is Manufactured, or of any Manufacturing Process used in connection with the Manufacture of the Product, by any Regulatory Authority, and shall permit Voyager or its agents to be present and participate in such visit or inspection. SBS shall provide to Voyager a copy of any report and other written communications received from such Regulatory Authority in connection with such visit or inspection, and any written communications received from such Regulatory Authority relating to the Product or any facility or Manufacturing Process used in connection with the Manufacture of the Product, within three (3) business days after receipt thereof, and shall consult with Voyager concerning the response of SBS to each such communication. SBS shall provide Voyager with a copy of all draft responses for comment as soon as possible and all final responses for review and approval, which shall not be unreasonably withheld or delayed, within five (5) business days prior to submission thereof.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 5.12 Manufacturing Records. SBS shall maintain, or cause to be maintained, (i) all records necessary to comply with GMP and all other Applicable Law relating to the Manufacture of the Product, (ii) all Manufacturing records, standard operating procedures, equipment log books, batch records, laboratory notebooks and all raw data relating to the Manufacturing of the Product, and (iii) such other records as Voyager may reasonably require in order to ensure compliance by SBS with the terms of this Agreement. All such material shall be retained for such period as may be required by GMP and all other Applicable Law or for such longer period as Voyager may reasonably require; provided, however, that all records relating to the Manufacturing, stability and quality control of each batch of the Product shall be retained at least until the first anniversary of the end of the approved shelf life for all Product from such batch.
Section 5.13 Labeling. Voyager shall specify all labeling to be used on the
Product and the packaging thereof. SBS agrees to use such labeling (and only
such labeling) on the Product, and not to use such labeling on any other
product. To the extent permissible under Applicable Law, at SBS's request (and
expense if compliance with such request increases any costs related to the
Product), Voyager shall cause the packaging of the Product to display, in a
manner reasonably acceptable to SBS and Voyager, the name and logo of SBS (or an
Affiliate) and to identify SBS as a developer or such Product. SBS shall grant
Voyager appropriate licenses in order to fulfill its obligations under this
Section 5.13.
ARTICLE VI. JOINT DEVELOPMENT TEAM
Section 6.1 Joint Development Team. Upon initiation of the Feasibility Program, the parties shall establish a joint development team (the "Joint Development Team") which shall consist of two (2) representatives appointed by each party. The chairperson of the Joint Development Team shall be a representative of Voyager (the "Chair"). Each party may, from time to time, change one or more of its representatives by written notice to the other party. The Joint Development Team shall be responsible for and establish procedures for the management of the Feasibility and Development Programs in accordance with the Feasibility and Development Plans and shall serve as points of contact between the parties to coordinate activities and ensure that the parties perform their respective obligations (if any) diligently in accordance with the Feasibility Plan and the Development Plan. The Joint Development Team shall meet at least once per month (either by telephone or in person, as agreed to by SBS and Voyager) to review the planning and the progress of the Feasibility and Development Programs and to consider recommendations regarding, and to make changes to, the Feasibility and Development Plans and performance of the Feasibility and Development Programs. In performing its functions, the Joint Development Team shall attempt to reach all decisions by consensus. However, if the members cannot reach consensus with respect to any decision within a reasonable time period (which shall not be more than thirty (30) days) after careful consideration, the matter shall be referred to the chief executive officers of Voyager and SBS for review and discussion. In the event the CEOs of Voyager and SBS cannot reach agreement within a reasonable time period (which shall not be more than thirty (30) days), then the Chair shall make the final decision, which shall be final and
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
binding on the parties. Notwithstanding the foregoing, nothing herein, and no decision made under this Section, shall be deemed to modify or supersede the express terms or conditions of this Agreement, or any decision or decision-making authority otherwise expressly provided for in this Agreement.
ARTICLE VII. PAYMENTS
Section 7.1 Development Costs.
(a) Voyager shall pay SBS's fully allocated development cost calculated in accordance with Exhibit 7.1 (the "Development Costs") for all Feasibility Activities, Development Activities and activities under and pursuant to Article IV, in each case performed by SBS.
(b) The estimated total Development Costs necessary to complete all Feasibility Activities is set forth in the Feasibility Plan, although the actual Development Costs therefor may differ. Completion of the Feasibility Plan with less effort than estimated may result in lower charges; however, additional effort from unexpected results or changes requested by Voyager may result in higher charges. SBS will not exceed the estimated costs without prior written approval from Voyager.
(c) Voyager shall pay to SBS [***] upon execution of this Agreement (the "Deposit").
(d) SBS shall submit to Voyager, not later than twenty (20) business days after the end of each month during the term of this Agreement in which Development Costs are incurred, an invoice which shall set forth the actual amount of Development Costs incurred during the prior month. Voyager, within thirty (30) days of receipt of each such invoice, (i) shall pay the amount specified in such invoice, less twenty (20) percent of such invoiced amount until such time as the Deposit has been fully credited, and (ii) thereafter shall pay the full amount of each such invoice. Charges for reimbursement of purchases of Active Agent by SBS in connection with the performance of the Feasibility Activities and the Development Activities shall be invoiced separately from time to time and shall be paid by Voyager within thirty (30) days of receipt thereof. All invoices shall be sent to Voyager at the address specified in Section 13.1 unless Voyager designates otherwise in writing to SBS.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 7.2 Milestone Payments. Voyager shall make the milestone payments specified below to SBS within thirty (30) days following achievement of the corresponding milestone event, except that in the case of the Approval of first NDA (or equivalent) milestone event, payment shall be paid by Voyager within sixty (60) days following achievement of such milestone event:
Section 7.3 Voyager Royalties.
(a) Subject to the terms and conditions of this Section 7.3, Voyager shall pay to SBS the following royalties based on aggregate Net Sales of the Product by Voyager, its Affiliates and sublicensees in the Territory during each calendar year (or part thereof):
[***] of Net Sales for that portion of aggregate Net Sales in such calendar year that is less than or equal to [***];
[***] of Net Sales for that portion of aggregate Net Sales in such calendar year that exceeds [***] but is less than or equal to [***]; and
[***] of Net Sales for that portion of aggregate
Net Sales in such calendar year that exceeds
[***];
provided that Voyager shall pay SBS at least [***] in royalties annually (the "Minimum Royalty") commencing with the year in which the First Commercial Sale in any country in the Territory is made. In the event that the First Commercial Sale is made at some time other than the beginning of a calendar year, the Minimum Royalty for such first year shall be prorated.
(b) Voyager's royalty payment obligations under this Section 7.3 shall commence with the First Commercial Sale of the Product and shall terminate on the termination of this Agreement. To the extent that royalties may not be collected in a certain country in the Territory under Applicable Law for the full royalty term hereunder, then the royalty due on sales in such country shall terminate after the maximum period under which royalties may be collected under Applicable Law without effect on the royalties due hereunder with respect to sales made in other countries in the Territory.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
(c) Royalties shall be payable on a quarterly basis, within sixty (60) days after the end of each calendar quarter, based upon the Net Sales during such calendar quarter (or a ratable portion of the Minimum Royalty, if greater), commencing with the calendar quarter in which the First Commercial Sale of the Product is made by Voyager. Royalties shall be calculated in accordance with GAAP and with the terms of this Section 7.3. Only one royalty payment will be due on Net Sales even though the Manufacture, sale or use of a Product may be covered by more than one SBS Technology or SBS Improvement in a country. The amount paid by Voyager as a Minimum Royalty with respect to any quarter shall be fully creditable against royalties due based on Net Sales of Product for any other quarter during the same calendar year.
(d) Each royalty payment hereunder shall be accompanied by a statement showing (a) Net Sales during the applicable calendar quarter, (b) the number of units of the Product sold by Voyager on a country-by-country basis during the applicable calendar quarter, and (c) the amount of royalties due hereunder.
(e) In the event that a court or a governmental agency of competent jurisdiction requires Voyager or a Voyager Affiliate or sublicensee to grant a compulsory license to a third Person permitting such third Person to make and sell the Product in a jurisdiction in the Territory despite Voyager having exerted all reasonable efforts to oppose the granting of such compulsory license, then all Net Sales by such compulsory sublicensee shall be excluded from the royalty calculations set forth in Section 7.3(a) and the royalty rate to be paid by Voyager on such Net Sales by such compulsory sublicensee shall be the lesser of (i) the applicable royalty rate provided in Section 7.3(a) with respect to such Net Sales, and (ii) [***] of the royalty rate under such compulsory license, during the time period when such compulsory license is in effect and being exercised.
Section 7.4 Method of Payment. All payments to SBS under this Agreement shall be made by deposit of United States Dollars in the requisite amount to such bank account as SBS may from time to time designate by notice to Voyager. With respect to sales outside the United States, payments shall be calculated based on currency exchange rates for the calendar quarter for which remittance is made for royalties. For each currency, such exchange rate shall equal the arithmetic average of the daily exchange rates (obtained as described below) during the calendar quarter; each daily exchange rate shall be obtained from the The Wall Street Journal, Eastern United States Edition, or, if not so available, as otherwise agreed by the parties.
Section 7.5 SBS Royalties.
(a) If SBS elects to Exploit the Product in any Terminated Countries pursuant to Section 4.2(c), subject to the terms and conditions of this Section 7.5, SBS shall pay to Voyager the following royalties based on aggregate Net Sales of the Product by SBS, its Affiliates and licensees in all Terminated Countries during each calendar year (or part thereof):
[***] of Net Sales for that portion of aggregate Net Sales in such calendar year that is less than or equal to [***];
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
[***] of Net Sales for that portion of aggregate Net Sales in such calendar year that exceeds [***] but is less than or equal to [***]; and
[***] of Net Sales for that portion of aggregate Net Sales in such calendar year that exceeds [***].
(b) SBS's royalty payment obligations under this Section 7.5 shall commence with the first commercial sale of the Product in any Terminated Country and shall terminate on the termination of this Agreement. To the extent that royalties may not be collected in a certain Terminated Country under Applicable Law for the full royalty term hereunder, then the royalty due on sales in such country shall terminate after the maximum period under which royalties may be collected under Applicable Law without effect on the royalties due hereunder with respect to sales made in other Terminated Countries.
(c) Royalties shall be payable on a quarterly basis, within sixty (60) days after the end of each calendar quarter, based upon the Net Sales during such calendar quarter, commencing with the calendar quarter in which the first commercial sale of the Product is made by SBS, its Affiliates or sublicensees in any Terminated Country. Royalties shall be calculated in accordance with GAAP and with the terms of this Section 7.5.
(d) Each royalty payment hereunder shall be accompanied by a statement showing (a) Net Sales during the applicable calendar quarter, (b) the number of units of the Product sold by SBS, its Affiliates and sublicensees in the Terminated Countries on a country-by-country basis during the applicable calendar quarter, and (c) the amount of royalties due hereunder.
(e) All payments to Voyager under this Agreement shall be made by deposit of United States Dollars in the requisite amount to such bank account as Voyager may from time to time designate by notice to SBS. With respect to sales outside the United States, payments shall be calculated based on currency exchange rates for the calendar quarter for which remittance is made for royalties. For each currency, such exchange rate shall equal the arithmetic average of the daily exchange rates (obtained as described below) during the calendar quarter; each daily exchange rate shall be obtained from The Wall Street Journal, Eastern United States Edition, or, if not so available, as otherwise agreed by the parties.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 7.6 Recordkeeping and Audit.
(a) SBS shall keep, or shall cause to be kept, complete and accurate books and records of all information necessary, and in sufficient detail, to determine all Development Costs, Active Agent costs, and Manufacturing Costs payable by Voyager to SBS pursuant to this Agreement and Net Sales in the Terminated Countries (if any) and the royalties payable by SBS to Voyager pursuant to this Agreement for the previous seven (7) calendar years.
(b) Voyager shall keep, or shall cause to be kept, complete and accurate books and records of all information necessary, and in sufficient detail, to determine Net Sales in the Territory and the royalties payable by Voyager to SBS pursuant to this Agreement for the previous seven (7) calendar years.
(c) Voyager shall have the right, no more than once during any twelve
(12) consecutive month period during the term of this Agreement and the twelve
(12) months following the termination hereof, to have the books and records kept
by SBS pursuant to Section 7.6(a) (and all related work papers and other
information and documents) examined by an independent accounting firm of
national standing reasonably acceptable to SBS to verify SBS's calculations of
the amounts of Development Costs, Active Agent costs, and Manufacturing Costs
invoiced by SBS to Voyager hereunder and the accuracy of the information
contained in the reports delivered by SBS pursuant to Section 7.5(d) and SBS's
calculation of the royalties payable hereunder. If Voyager shall dispute any
such calculation, Voyager promptly shall notify SBS and Voyager and SBS shall
use good faith efforts to resolve such dispute. If Voyager and SBS are unable to
resolve such dispute within [ * * * ] days after Voyager notifies SBS of such
dispute, then an independent accounting firm mutually agreed to by Voyager and
SBS shall resolve such dispute and such accountant's resolution shall be final
and binding on the parties. Each party shall cooperate with such accountant's
investigation. If, and only if, it shall be determined pursuant to the
procedures set forth in this clause (c) that (i) SBS invoiced Voyager an amount
greater than [ * * * ] of the total amount actually owed by Voyager or (ii) SBS
paid Voyager an amount less than [ * * * ] of the total royalty amount actually
owed by SBS, then in each case SBS shall reimburse Voyager for all of its costs
related to such examination and shall pay all costs and expenses of the mutually
agreed accountant, if any; otherwise Voyager shall bear all of its costs related
to such examination and shall pay all costs and expenses of the mutually agreed
accountant, if any.
(d) SBS shall have the right, no more than once during any twelve (12) consecutive month period during the term of this Agreement and the twelve (12) months following the termination hereof, to have the books and records kept by Voyager pursuant to Section 7.6(b) (and all related work papers and other information and documents) examined by an independent accounting firm of national standing reasonably acceptable to Voyager to verify the accuracy of the information contained in the reports delivered by Voyager pursuant to Section 7.3(d) and Voyager's calculation of the royalties payable hereunder. If SBS shall dispute any such information or calculation, SBS promptly shall notify Voyager and SBS and Voyager shall use good faith efforts to
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
resolve such dispute. If SBS and Voyager are unable to resolve such dispute within [***] days after SBS notifies Voyager of such dispute, then an independent accounting firm mutually agreed to by SBS and Voyager shall resolve such dispute and such accountant's resolution shall be final and binding on the parties. Each party shall cooperate with such accountant's investigation. If, and only if, it shall be determined pursuant to the procedures set forth in this clause (d) that Voyager paid SBS an amount less than [***] of the total royalty amount actually owed by Voyager, then Voyager shall reimburse SBS for all of its costs related to such examination and shall pay all costs and expenses of the mutually agreed accountant, if any; otherwise SBS shall bear all of its costs related to such examination and shall pay all costs and expenses of the mutually agreed accountant, if any.
(e) If, as a result of the procedures set forth in clause (c) or (d) above, any amount paid by a party pursuant to the terms hereof shall be found to have been incorrectly calculated, the appropriate party promptly shall pay to the other party the amount necessary to correct such payment error.
(f) All financial books and records maintained by the parties pursuant hereto shall be maintained in accordance with GAAP.
ARTICLE VIII. INTELLECTUAL PROPERTY
Section 8.1 Ownership
(a) SBS shall own all right, title and interest in and to the SBS Technology and the SBS Improvements. Voyager shall, and shall cause its Affiliates, sublicensees and subcontractors hereunder to, promptly disclose in writing to SBS the development, making, conception or reduction to practice of any SBS Technology and the SBS Improvements and shall and does hereby, and shall cause its Affiliates, sublicensees and subcontractors to, assign to SBS any and all right, title or interest Voyager or its Affiliates, sublicensees or subcontractors may have in or to the SBS Technology and the SBS Improvements. Voyager hereby appoints, and shall cause its Affiliates, sublicensees and subcontractors to appoint, SBS as their attorney-in-fact for the purpose of executing such documents in their respective names as may be necessary or desirable to carry out the purposes of this subsection.
(b) Voyager shall own all right, title and interest in and to (i) the Voyager Patents and (ii) any and all Inventions and other intellectual property created, developed or acquired as a result of or in connection with the Agreement including the Feasibility Activities, the Development Activities or SBS's Manufacturing of the Product hereunder, relating to clinical uses of the Active Agent (whether for treatment of Alzheimer's Disease or otherwise) (the "Project Information and Inventions"); provided, however, that the Project Information and Inventions shall not include any right, title or interest, express or implied, in or to the SBS Technology or the SBS Improvements. SBS shall, and shall cause its Affiliates, sublicensees and subcontractors to, promptly disclose in writing to Voyager the development, making, conception or reduction to practice of any Project Information and Inventions and shall and does hereby, and shall cause its
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Affiliates, sublicensees and subcontractors to, assign to Voyager any and all right, title or interest SBS or its Affiliates, sublicensees and subcontractors may have in or to the Project Information and Inventions. SBS hereby appoints, and shall cause its Affiliates, sublicensees and subcontractors to appoint, Voyager as their attorney-in-fact for the purpose of executing such documents in their respective names as may be necessary or desirable to carry out the purposes of this subsection.
(c) Any Inventions and other intellectual property created, developed or acquired as a result of or in connection with the Feasibility Activities, the Development Activities or SBS's Manufacturing of the Product hereunder (including any data or information generated as a result of or in connection with the Feasibility Activities and Development Activities, regardless of whether such data or information is included in any report or information delivered by SBS to Voyager hereunder), other than the Inventions owned by either SBS or Voyager exclusively as set forth in Section 8.1(a) and (b), shall be jointly owned by the parties ("Joint Inventions"). Except as otherwise set forth herein or agreed upon in writing by the parties, each party shall have all the rights and privileges of a joint owner under the patent laws of the United States with respect to the Joint Inventions, including the right to exploit and grant licenses and sublicenses to patents covering Joint Inventions, without accounting to the other party. Each party shall, and shall cause its Affiliates to, promptly disclose in writing to the other party the development, making, conception or reduction to practice of any Joint Invention. Additionally, each party agrees to cooperate with and provide reasonable assistance to the other party in filing, prosecuting and perfecting patent and other intellectual property rights covering Inventions related to the subject matter of this Agreement owned by the other party at the other party's expense.
(d) It is understood and agreed that, except as expressly provided in
Section 8.2 hereof, nothing contained in this Agreement or otherwise shall be
construed to mean that one party will obtain any rights, by implication or
otherwise, in or to any proprietary right of the other party. In particular, SBS
will not obtain any right, title or interest in or to the Voyager Patents and
Project Information and Inventions and Voyager will not obtain any right, title
or interest in or to the SBS Technology and SBS Improvements, except as provided
in Section 8.2 hereof.
(e) Any and all information or material related to an Invention assigned to a party pursuant to the terms of this Agreement shall constitute Confidential Information of such party which shall be deemed the Disclosing Party with respect to such Confidential Information.
Section 8.2 License Grants.
(a) Voyager hereby grants to SBS a limited, royalty-free, nonexclusive license, without right to sublicense (except to the extent, and only to the extent, necessary to permit a qualified contract manufacturer to Manufacture Product in accordance with Section 5.1), under the Voyager Patents and Project Information and Inventions solely to perform its obligations under Article II, Article III and Article V, which grant shall expire
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
on the termination of this Agreement for any reason or otherwise in accordance with Sections 2.5, 3.8, 4.5 or 5.6.
(b) SBS hereby grants to Voyager a worldwide, royalty-bearing, exclusive (including with regard to SBS and its Affiliates) license, with right to sublicense (subject to Section 8.2(d)), under the SBS Technology and the SBS Improvements, to Manufacture, have Manufactured, import, use, sell, offer for sale and otherwise Exploit the Product in the Territory, which grant shall expire on the termination of this Agreement for any reason.
(c) In the event that SBS has the right and elects to Exploit the Product in any Terminated Country pursuant to Section 4.2(c), Voyager hereby grants to SBS in such Terminated Country a royalty bearing, exclusive license, with the right to sublicense (subject to Section 8.2(e)) under the Voyager Patents and Project Information and Inventions, and the right to use all regulatory filings, Clinical Trial data and CMC data and all other intellectual property owned by Voyager, in each case to the extent solely related to the Product, and the right to cross-reference any and all regulatory filings with respect to the Product, solely for purposes of Exploiting the Product in such Terminated Country, which grant shall expire on the termination of this Agreement for any reason or otherwise in accordance with Section 2.5, 3.8, 4.5 or 5.6.
(d) Voyager may sublicense its rights under Section 8.2(b), subject to the following conditions: (i) such sublicense shall be subject to the terms and conditions of this Agreement; and (ii) the rights of SBS under this Agreement shall not be prejudiced, reduced or limited in any way as a result of such sublicense of rights. Additionally, if Voyager sublicenses its rights to develop or commercialize the Product (other than ordinary distributor arrangements), it shall: (1) provide SBS with a copy of the proposed sublicense agreement in a time frame that reasonably permits SBS to review and comment on the sublicense agreement and a final copy of the sublicense agreement; and (2) the sublicense agreement shall be subject to the approval of SBS which shall not be unreasonably withheld or delayed.
(e) SBS may sublicense its rights under Section 8.2(c), subject to the following conditions: (i) such sublicense shall be subject to the terms and conditions of this Agreement; and (ii) the rights of Voyager under this Agreement shall not be prejudiced, reduced or limited in any way as a result of such sublicense of rights. Additionally, if SBS sublicenses its rights to develop or commercialize the Product (other than ordinary distributor arrangements), it shall: (1) provide Voyager with a copy of the proposed sublicense agreement in a time frame that reasonably permits Voyager to review and comment on the sublicense agreement and a final copy of the sublicense agreement; and (2) the sublicense agreement shall be subject to the approval of Voyager which shall not be unreasonably withheld or delayed.
Section 8.3 Prosecution and Maintenance of Intellectual Property Rights. The responsibility for preparing, filing and prosecuting patent applications and for maintaining patents and other intellectual property rights (and for managing any interference proceedings relating to the foregoing) covering any Invention owned by a
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
party, and all costs related thereto, shall be the responsibility of such party. The parties shall by mutual agreement prepare, file and prosecute patent applications and maintain patents and other intellectual property rights (and manage any interference proceedings relating to the foregoing) covering any Joint Invention, and all costs related thereto, shall be shared equally between the parties.
Section 8.4 Third Person Litigation.
(a) Regarding SBS Technology and Improvements. In the event that during the term of this Agreement any Person institutes against SBS or Voyager any action that alleges that the use of the SBS Technology or the SBS Improvements in connection with the Exploitation of the Product in the Territory in accordance with the terms hereof infringes the intellectual property rights held by such Person, then, as between SBS and Voyager, SBS, at its sole expense, shall have the sole obligation to contest, and assume direction and control of the defense of, such action, including the right to settle such action on terms determined by SBS; provided that in no event shall SBS enter into any settlement that adversely affects the interests of Voyager or its Affiliates, whether under this Agreement or otherwise, without Voyager's prior written consent, which shall not be unreasonably withheld or delayed. Voyager, at SBS's expense, shall use all reasonable efforts to assist and cooperate with SBS as reasonably requested by SBS in such action. If, as a result of any such action, a judgment is entered by a court of competent jurisdiction from which no appeal can be taken or from which no appeal is taken within the time permitted for appeal, or a settlement is entered into by SBS, such that any SBS Technology or the SBS Improvements cannot be used in connection with the Exploitation of the Product in the Territory without infringing the intellectual property rights of such Person, then Voyager shall have the right either to (i) terminate this Agreement immediately or (ii) take such actions as it deems necessary to protect its interests, including the right to obtain a license from such Person and to offset the cost of such license against any amounts owed to SBS hereunder; provided that the amount offset by Voyager shall not exceed [***] of the royalty rate then payable by Voyager pursuant to Section 7.3.
(b) Regarding the Voyager Patents. In the event that during the term of this Agreement any Person institutes against SBS any action that alleges that the use of the Voyager Patents in connection with the Exploitation of the Product in the Territory in accordance with the terms hereof infringes the intellectual property rights held by such Person, then, as between SBS and Voyager, Voyager, at its sole expense, shall have the sole obligation to contest, and assume direction and control of the defense of, such action, including the right to settle such action on terms determined by Voyager; provided that in no event shall Voyager enter into any settlement that adversely affects the interests of SBS or its Affiliates, whether under this Agreement or otherwise, without SBS's prior written consent, which shall not be unreasonably withheld or delayed. SBS, at Voyager's expense, shall use all reasonable efforts to assist and cooperate with Voyager as reasonably requested by Voyager in such action. If, as a result of any such action, a judgment is entered by a court of competent jurisdiction from which no appeal can be taken or from which no appeal is taken within the time permitted for appeal, or a
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
settlement is entered into by Voyager, such that Voyager cannot develop or commercialize the Product in a country in the Territory, then SBS shall have the right to terminate the rights granted to Voyager under Section 8.2 with respect to such country.
Section 8.5 Exclusivity.
(a) During the term of this Agreement and, in the event of termination
of this Agreement by Voyager pursuant to Section 11.2(b) or (c), for a period of
[***] after termination hereof, SBS shall not, and shall cause its Affiliates
not to, (a) conduct any activity, either on its own or through its Affiliates,
or with, for the benefit of, or sponsored by any Person, that has as its goal or
intent discovering, identifying, Exploiting or otherwise commercializing any
Unique Dose Product, or (b) grant any license or other rights to any Person to
utilize any intellectual property owned or controlled by SBS or its Affiliates
(including the SBS Technology, SBS Improvements or Joint Inventions) for the
purpose of discovering, identifying, Exploiting or otherwise commercializing any
Unique Dose Product, in each case other than as expressly provided in this
Agreement.
(b) SBS acknowledges and agrees that the restrictions set forth in
clause (a) above are reasonable and necessary to protect the legitimate
interests of Voyager and that Voyager would not have entered into this Agreement
in the absence of such restrictions, and that any violation or threatened
violation of any provision of clause (a) above will result in irreparable injury
to Voyager. SBS also acknowledges and agrees that in the event of a violation or
threatened violation of any provision of clause (a) above, Voyager shall be
entitled to preliminary and permanent injunctive relief, without the necessity
of proving irreparable injury or actual damages and without the necessity of
having to post a bond, as well as to an equitable accounting of all earnings,
profits and other benefits arising from any such violation. The rights provided
in the immediately preceding sentence shall be cumulative and in addition to any
other rights or remedies that may be available to Voyager. Nothing in this
Section 8.5 is intended, or should be construed, to limit Voyager's right to
preliminary and permanent injunctive relief or any other remedy for a breach of
any other provision of this Agreement.
(c) Voyager acknowledges and agrees that SBS may develop and
commercialize, either for itself, its Affiliates, or for third parties,
products, other than Unique Dose Products during the period specified in clause
(a) above, which contain the Active Agent intended for uses other than for
treatment of Alzheimer's Disease but which may be used or prescribed in a manner
similar to the Product without authorization from SBS, and that SBS may have no
control over such use or prescription.
Section 8.6 Technology Transfer. If (a) necessary to permit Voyager to exercise its rights pursuant to Sections 2.5, 3.8, 4.5, or 5.6(c), or (b) SBS is unable or unwilling to supply Voyager with all of its commercial requirements for Product, or (c) SBS elects not to continue supply of Voyager's commercial requirements pursuant to Section 5.1(i), then in any such case SBS shall (i) promptly disclose to Voyager or its designee such SBS Technology and SBS Improvements and any know-how related thereto as is necessary or useful for Voyager or such designee to develop, Manufacture and commercialize the Product, and (ii) from time to time thereafter, as reasonably requested by Voyager, have
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
its representatives meet with representatives of Voyager or its designee to enable Voyager or such designee to develop, Manufacture and sell the Product; provided that SBS may require any designee of Voyager to enter into a reasonable and customary confidentiality agreement with SBS that requires that Confidential Information communicated to such designee by SBS pursuant to this Section 8.6 shall be kept confidential and used only in performance of such designee's obligations to Voyager, and provided further that Voyager shall be responsible for the compliance by any designee that is not approved in advance by SBS (which approval shall not be unreasonably withheld or delayed) with the terms and conditions of such confidentiality agreement. Voyager shall reimburse SBS for any reasonable expenses incurred by SBS in connection with any transfer pursuant to clause (b) or (c) above.
ARTICLE IX. REPRESENTATIONS AND WARRANTIES
Section 9.1 Representations and Warranties of Each Party. Each party hereby represents, warrants and covenants to the other party as follows:
(a) Such party (i) is duly incorporated and in good standing under the laws of the jurisdiction of its incorporation, (ii) has full power and authority to own its property and assets and to carry on its business as it is now being conducted and as it is contemplated to be conducted by this Agreement, (iii) has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and (iv) has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such party and constitutes a legal, valid and binding obligation of such party and is enforceable against it in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered a proceeding at law or equity.
(b) Such party is not aware of any pending or threatened litigation (and has not received any communication) that alleges that such party's activities related to this Agreement have violated, or that by conducting the activities contemplated herein such party would violate, any of the intellectual property rights of any other Person.
(c) All necessary consents, approvals and authorizations of all regulatory and governmental authorities and other Persons required to be obtained by such party in connection with the execution and delivery of this Agreement and the performance of its obligations hereunder have been obtained.
(d) The execution and delivery of this Agreement and the performance of such party's obligations hereunder (i) do not and will not conflict with or violate any requirement of applicable law or regulation or any provision of the articles of incorporation or bylaws of such party and (ii) do not and will not conflict with, violate, or breach, or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such party is bound.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 9.2 Additional Representations of SBS. SBS represents, warrants and covenants to Voyager as follows:
(a) SBS owns all right, title and interest in and to the SBS Technology and the SBS Technology is not subject to any lien, encumbrance or claim of ownership by any third Person.
(b) To SBS's knowledge and belief, the SBS Technology has not and does not infringe upon, misappropriate or otherwise violate the patent or intellectual property rights of any other Person.
(c) There is no claim, litigation, judgment or settlement pending or existing, or to SBS's knowledge and belief threatened, with or against SBS relating to the SBS Technology.
(d) To SBS's knowledge and belief, there is no pre-clinical or clinical data or information concerning the SBS Technology that suggests that there may exist quality, toxicity, safety or efficacy concerns that could reasonably be expected to impair the utility or safety of the Product.
(e) Neither SBS nor any of its Affiliates has been debarred or is subject to debarment and neither SBS nor any of its Affiliates will use in any capacity, in connection with the services to be performed under this Agreement, any Person who has been debarred pursuant to Section 306 of the FFDCA, or who is the subject of a conviction described in such section. SBS agrees to inform Voyager in writing immediately if it or any Person who is performing services hereunder is debarred or is the subject of a conviction described in Section 306, or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best of SBS's knowledge, is threatened, relating to the debarment or conviction of SBS or any Person performing services hereunder.
Section 9.3 Additional Representations of Voyager. Voyager represents, warrants and covenants to SBS as follows:
(a) Voyager owns all right, title and interest in and to the Voyager Patents and the Voyager Patents are not subject to any lien, encumbrance or claim of ownership by any third Person.
(b) To Voyager's knowledge and belief, the Voyager Patents have not and do not infringe upon, misappropriate or otherwise violate the patent or intellectual property rights of any other Person.
(c) There is no claim, litigation, judgment or settlement pending or existing, or to the best of Voyager's knowledge and belief threatened, with or against Voyager relating to the Voyager Patents.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
(d) To Voyager's knowledge and belief, there is no pre-clinical or clinical data or information concerning the Active Agent that suggests that there may exist quality, toxicity, safety or efficacy concerns that could reasonably be expected to impair the utility or safety of the Product.
Section 9.4 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 BUT NOT LIMITED TO WARRANTIES OF
QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT
ARTICLE X. CONFIDENTIALITY
Section 10.1 Confidential Information. Except to the extent expressly permitted by this Agreement and subject to the provisions of Sections 10.2 and 10.3, at all times during the term of this Agreement and for ten (10) years following the termination hereof, the Receiving Party (a) shall keep completely confidential and shall not publish or otherwise disclose any Confidential Information furnished to it by the Disclosing Party, except to those of the Receiving Party's employees, Affiliates, sublicensees, subcontractors or consultants who have a need to know such information (collectively, "Recipients") to perform such Party's obligations hereunder (and who shall be advised of the Receiving Party's obligations hereunder and who are bound by confidentiality obligations with respect to such Confidential Information no less onerous than those set forth in this Agreement) and (b) shall not use Confidential Information of the Disclosing Party directly or indirectly for any purpose other than performing its obligations or exercising its rights hereunder. The Receiving Party shall be jointly and severally liable for any breach by any of its Recipients of the restrictions set forth in this Agreement.
Section 10.2 Exceptions to Confidentiality. The Receiving Party's obligations set forth in this Agreement shall not extend to any Confidential Information of the Disclosing Party:
(a) that is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no wrongful act, fault or negligence on the part of a Receiving Party or its Recipients;
(b) that is received from a third party without restriction and without breach of any agreement between such third party and the Disclosing Party;
(c) that the Receiving Party can demonstrate by competent evidence was already in its possession without any limitation on use or disclosure prior to its receipt from the Disclosing Party;
(d) that is generally made available to third parties by the Disclosing Party without restriction on disclosure; or
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
(e) that the Receiving Party can demonstrate by competent evidence was independently developed by the Receiving Party.
Section 10.3 Disclosure
(a) Each party may disclose Confidential Information to the extent that such disclosure is:
(i) made in response to a valid order of a court of competent jurisdiction or other governmental body of a country or any political subdivision thereof of competent jurisdiction; provided, however, that the Receiving Party shall first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to quash such order and to obtain a protective order requiring that the Confidential Information and/or documents that are the subject of such order be held in confidence by such court or governmental body or, if disclosed, be used only for the purposes for which the order was issued; and provided further that if a disclosure order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental order shall be limited to that information which is legally required to be disclosed in such response to such court or governmental order; or
(ii) otherwise required by law or regulation, in the opinion of outside legal counsel to the Receiving Party, which shall be provided to the Disclosing Party at least 24 hours prior to the Receiving Party's disclosure of the Confidential Information pursuant to this Section 10.3;
(b) Voyager may disclose Confidential Information to the extent that such disclosure is:
(i) made to the Regulatory Authorities as required in connection with any filing, application or request for Regulatory Approval; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information;
(ii) made to third Persons as may be necessary or useful in connection with the Exploitation of the SBS Technology and SBS Improvements licensed to Voyager hereunder, including subcontracting and sublicensing transactions in connection therewith, provided that Voyager shall in each case obtain from the proposed third Person recipient a written confidentiality undertaking containing confidentiality obligations no less onerous than those set forth in this Article X; or
(iii) a disclosure of the existence and terms of this Agreement to existing or potential securityholders of Voyager; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information.
Section 10.4 Notification. The Receiving Party shall notify the Disclosing Party immediately, and cooperate with the Disclosing Party as the Disclosing Party may
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
reasonably request, upon the Receiving Party's discovery of any loss or compromise of the Disclosing Party's Confidential Information.
Section 10.5 Remedies. Each party agrees that the unauthorized use or disclosure of any information by the Receiving Party in violation of this Agreement will cause severe and irreparable damage to the Disclosing Party. In the event of any violation of this Article X, the Receiving Party agrees that the Disclosing Party shall be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, without the necessity of proving irreparable harm or monetary damages, as well as any other relief permitted by applicable law. The Receiving Party agrees to waive any requirement that the Disclosing Party post bond as a condition for obtaining any such relief.
Section 10.6 Use of Names. Neither party shall mention or otherwise use the
name, insignia, symbol, trademark, trade name or logotype of the other party (or
any abbreviation or adaptation thereof) in any publication, press release,
promotional material or other form of publicity without the prior written
approval of such other party in each instance. The restrictions imposed by this
Section 10.6 shall not prohibit either party from making any disclosure
identifying the other party that is required by Applicable Law. Further, Voyager
and its Affiliates and sublicensees shall have the right to use the name of SBS
and its Affiliates to the extent necessary in connection with the Exploitation
of the SBS Technology and SBS Improvements as contemplated by this Agreement,
including subcontracting and sublicensing transactions in connection therewith.
Section 10.7 Press Releases. Except as expressly provided in Section 10.3, neither party shall make a press release or other public announcement regarding this Agreement, the terms hereof or the transactions contemplated hereby without the prior written approval of the other party. Each party shall provide the other with the proposed text of any such press release or public announcement for review and approval, which approval shall not be unreasonably withheld, as early as possible, but in no event less than five (5) business days in advance of the publication, communication or dissemination thereof; provided, however, that the receiving party shall be deemed to have approved any such press release or public announcement if it fails to notify the proposing party in writing of any objections to such press release or public announcement within four (4) business days of receipt by the receiving party of the text of such public announcement.
ARTICLE XI. TERM AND TERMINATION
Section 11.1 Term. This Agreement shall commence as of the Effective Date and shall remain in force until the terminated in accordance with this Article XI.
Section 11.2 Termination. In addition to any other provision of this Agreement expressly providing for termination of this Agreement, this Agreement may be terminated as follows:
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
(a) Voyager may terminate this Agreement at any time for any reason by giving SBS [***] days' prior written notice.
(b) Voyager may terminate this Agreement pursuant to Section 8.4 in accordance with the terms thereof.
(c) This Agreement may be terminated at any time by either party:
(i) to the extent permissible under Applicable Law, immediately upon written notice if the other party shall file in any court or agency, pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of that party or of its assets, or if the other party proposes a written agreement of composition or extension of its debts, or if the other party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within [***] days after the filing thereof, or if the other party shall propose or be a party to any dissolution or liquidation, or if the other party shall make an assignment for the benefit of its creditors,
(ii) in the event of any default by the other party in the performance of any of its material obligations herein contained, including a party's failure to pay the other amounts when due, which default has not been cured by the defaulting party within [***] days after receiving written notice thereof from the nondefaulting party, or
(iii) pursuant to Section 13.2.
Section 11.3 Effect of Termination.
(a) The termination of this Agreement shall be without prejudice to any rights or obligations of the parties that may have accrued prior to such termination, and the provisions of Sections 3.7, 5.5, 5.12, 7.6, 8.1, 8.3, 8.5, Articles I, IX, X, XII and XIII, and this Section 11.3 shall survive the termination of this Agreement. Except as otherwise expressly provided herein, termination of this Agreement in accordance with the provisions hereof shall not limit remedies that may otherwise be available in law or equity.
(b) Upon termination of this Agreement, (i) each party, at the request of the other, shall return all data, files, records and other materials in its possession or control containing or comprising the other party's Inventions or other Confidential Information except one copy of which may be retained for archival purposes and (ii) all licenses and other rights granted by each party to the other under Section 8.2 shall terminate.
(c) Upon termination of this Agreement by Voyager pursuant to Section 11.2(a), Voyager shall pay SBS in accordance with the terms hereof, to the extent such amount exceeds any uncredited amount of the Deposit at the time of such termination, for
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
all activities performed by SBS under this Agreement through the date of termination and for all costs not refundable to SBS or otherwise useable by SBS or its Affiliates in respect of which SBS reasonably made commitments in connection with the performance of its obligations hereunder before the date of delivery of such notice of termination, and Voyager shall have no other liability or obligation to SBS in respect of such termination.
(d) SBS shall have the right to retain any portion of the Deposit uncredited at the time of termination of this Agreement unless this Agreement is terminated by Voyager pursuant to Section 11.2(b) or (c), or upon termination of the parties' rights and obligations under Article II pursuant to Section 2.5, in which event SBS promptly shall refund to Voyager the balance of the Deposit, if any, uncredited at the time of such termination.
Section 11.4 Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by SBS are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code, licenses of right to "intellectual property" as defined under Section 101 of the United States Bankruptcy Code. The parties agree that Voyager, as licensee, and SBS, as licensor, of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the United States Bankruptcy Code. The parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against SBS under the United States Bankruptcy Code, Voyager shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, which, if not already in Voyager's possession, shall be promptly delivered to it (a) upon any such commencement of a bankruptcy proceeding upon Voyager's written request therefor, unless the party subject to such proceeding elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under (a) above, following the rejection of this Agreement by or on behalf of SBS upon written request therefor by Voyager. The parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against Voyager under the United States Bankruptcy Code, and an assignment of this Agreement is made for the benefit of creditors of Voyager, then the rights and obligations of Voyager under this Agreement may be transferred and assigned only to another Person engaged in the business of developing and commercializing pharmaceutical products that would reasonably be capable of performing the obligations set forth in this Agreement.
ARTICLE XII. INDEMNIFICATION
Section 12.1 SBS Indemnification. SBS shall indemnify Voyager, its Affiliates and their respective directors, officers, employees and agents (the "Voyager Indemnified Parties"), and defend and save each of them harmless, from and against any and all claims, lawsuits, losses, damages, liabilities, penalties, costs and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Losses") incurred by any of them in connection with, arising from or occurring as a result of (i) the breach by SBS of any of its obligations under this Agreement, (ii) the breach or inaccuracy of any representation or warranty made by SBS in this Agreement, (iii) any Third Party Claim made by any Person relating to the use of the SBS Technology or the SBS Improvements
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
by Voyager, its Affiliates or sublicencees, including any claim of infringement or misappropriation of the patent, trademark or other intellectual property rights of such Person; or (iv) the enforcement by Voyager of its rights under this Section 12.1, except, in each case, for those Losses for which Voyager has an obligation to indemnify SBS Indemnified Parties pursuant to Section 12.2, as to which Losses each party shall indemnify the other to the extent of their respective liability for the Losses.
Section 12.2 Voyager Indemnification. Voyager shall indemnify SBS, its
Affiliates and their respective directors, officers, employees and agents (the
"SBS Indemnified Parties"), and defend and save each of them harmless, from and
against any and all Losses incurred by any of them in connection with, arising
from or occurring as a result of (i) the breach by Voyager of any of its
obligations under this Agreement, (ii) the breach or inaccuracy of any
representation or warranty made by Voyager in this Agreement, (iii) any Third
Party Claim made by any Person relating to the use of the Voyager Patents by
SBS, including any claim of infringement or misappropriation of the patent,
trademark or other intellectual property rights of such Person, (iv) any Third
Party Claim made by any Person relating to death, personal injury or property
damage arising out of or resulting from the Exploitation of the Product (unless
such Third Party Claim arises or results from the breach or inaccuracy of any
representation or warranty made by SBS herein or any breach by SBS of any of its
obligations hereunder), or (v) the enforcement by SBS of its rights under this
Section 12.2, except, in each case, for those Losses for which SBS has an
obligation to indemnify Voyager Indemnified Parties pursuant to Section 12.1, as
to which Losses each party shall indemnify the other to the extent of their
respective liability for the Losses.
Section 12.3 Indemnification Procedure.
(a) Notice of Claim. The indemnified party (the "Indemnified Party") shall give the indemnifying party (the "Indemnifying Party") prompt written notice (an "Indemnification Claim Notice") of any Losses or discovery of facts upon which such Indemnified Party intends to base a request for indemnification under Section 12.1 or 12.2, but in no event shall the Indemnifying Party be liable for any Losses that result from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss are known at such time). The Indemnified Party shall furnish promptly to the Indemnifying Party copies of all papers and official documents received in respect of any Losses.
(b) Third Party Claims. The obligations of an Indemnifying Party under this Article XII with respect to Losses arising from claims of any third Person that are subject to indemnification as provided for in Section 12.1 or 12.2 (a "Third Party Claim") shall be governed by and be contingent upon the following additional terms and conditions:
(i) Control of Defense. At its option, the Indemnifying Party may assume the defense of any Third Party Claim by giving written notice to the Indemnified Party within thirty (30) days after the Indemnifying Party's receipt of an Indemnification
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Claim Notice. The assumption of the defense of a Third Party Claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying Party is liable to indemnify any Indemnified Party in respect of the Third Party Claim, nor shall it constitute a waiver by the Indemnifying Party of any defenses it may assert against any Indemnified Party's claim for indemnification. Upon assuming the defense of a Third Party Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by the Indemnifying Party which shall be reasonably acceptable to the Indemnified Party. In the event the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall immediately deliver to the Indemnifying Party all original notices and documents (including court papers) received by any Indemnified Party in connection with the Third Party Claim. Subject to clause (ii) below, if the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Third Party Claim. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold harmless an Indemnified Party from and against the Third Party Claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all costs and expenses (including attorneys' fees and costs of suit) and any Losses incurred by the Indemnifying Party in its defense of the Third Party Claim with respect to such Indemnified Party.
(ii) Right to Participate in Defense. Without limiting Section 12.3(b)(i), any Indemnified Party shall be entitled to participate in, but not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party's own expense unless (A) the employment thereof has been specifically authorized by the Indemnifying Party in writing, (B) the Indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 12.3(b)(i) (in which case the Indemnified Party shall control the defense), or (C) the interests of the Indemnified Party and the Indemnifying Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of both parties under applicable law, ethical rules or equitable principles
(iii) Settlement. With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that will not result in the Indemnified Party's becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnified Party in any manner, and as to which the Indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the Indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Losses in connection with Third Party Claims, where the Indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 12.3(b)(i), the Indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
such Loss provided that it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed). The Indemnifying Party shall not be liable for any settlement or other disposition of a Loss by an Indemnified Party that is reached without the written consent of the Indemnifying Party. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnified Party shall admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).
(iv) Cooperation. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith.
(v) Expenses. Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Third Party Claim shall be reimbursed on a calendar quarter basis in arrears by the Indemnifying Party, without prejudice to the Indemnifying Party's right to contest the Indemnified Party's right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.
Section 12.4 Insurance. Commencing not later than thirty (30) days prior to the first use in humans of the Product and thereafter for at least five (5) years after the expiration or termination of this Agreement, each party shall obtain from a licensed and reputable insurer, and maintain on an on-going basis, products liability insurance with at least [***] in coverage for each occurrence. Coverage shall be on a per occurrence rather than a claims made basis. The policy shall name the other party to this Agreement and its Affiliates as an additional insured. The policy shall provide that each of the parties will be notified of the cancellation or any restrictive amendment of the policy at least thirty (30) days prior to the effective date of such cancellation or amendment. None of the parties shall violate, or permit to be violated, any conditions of such insurance policy, and each of the parties shall at all times satisfy the requirements of the insurance company writing said policy. At either party's request, the other party shall provide the requesting party with a certificate of such policy within 15 days of the request.
Section 12.5 Limitation on Damages. EXCEPT WITH RESPECT TO THE GROSS
NEGLIGENCE OR INTENTIONAL MISCONDUCT OF A PARTY, SUCH PARTY SHALL NOT BE LIABLE
TO THE OTHER, WHETHER
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
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.
ARTICLE XIII.MISCELLANEOUS
Section 13.1 Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally against written receipt or by facsimile transmission with answer back confirmation or mailed (postage prepaid by certified or registered mail, return receipt requested) or by overnight courier to the parties at the following addresses or facsimile numbers:
If to Voyager to: Voyager Pharmaceutical Corporation 8540 Colonnade Center Drive Suite 409 Raleigh, NC 27615 Attention: David Corcoran, Esq. Facsimile: (919) 846-4881 With a copy to: Covington & Burling 1201 Pennsylvania Avenue, NW Washington, DC 20004 Attention: Elizabeth Stotland Weiswasser, Esq. Facsimile: (202) 778-5111 If to SBS to: Dr. Wallace B. Smith President Southern BioSystems, Inc. 756 Tom Martin Drive Birmingham, AL 35211-4467 Facsimile: (205) 917-2240 With a copy to: Jean Liu Vice President & General Counsel DURECT Corporation 10240 Bubb Road Cupertino, CA 95014 Facsimile: (408) 777-3577 |
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
All such notices, requests and other communications will (a) if delivered personally to the address as provided in this Section, be deemed given upon receipt, (b) if delivered by facsimile to the facsimile number as provided in this Section, be deemed given upon receipt by sender of the answer back confirmation and (c) if delivered by mail in the manner described above or by overnight courier to the address as provided in this Section, be deemed given three (3) business days after deposit with the postal service or one (1) business day after acceptance by the overnight courier service (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other parties hereto.
Section 13.2 Force Majeure. Neither party shall be liable for delay in delivery or nonperformance in whole or in part, nor shall the other party have the right to terminate this Agreement except as otherwise specifically provided in this Section 13.2, where delivery or performance has been affected by a condition beyond a party's reasonable control, including fires, floods, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorism, insurrections, riots, civil commotion, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority; provided that the party affected by such a condition shall, within ten days of its occurrence, give notice to the other Party stating the nature of the condition, its anticipated duration and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is reasonably required and the nonperforming party shall use its best efforts to remedy its inability to perform; provided, however, that in the event the suspension of performance continues for sixty (60) days after the date of the occurrence, and such failure to perform would constitute a material breach of this Agreement in the absence of such force majeure event, the nonaffected Party may terminate this Agreement immediately by written notice to the other party.
Section 13.3 Entire Agreement; Amendment. This Agreement, including the Exhibits hereto, embodies all the terms and conditions and obligations of the contract between the parties hereto and supersedes and cancels all previous agreements and understandings, whether oral or in writing, in respect of the subject matter hereof and may not be amended or modified except by an express declaration in writing signed on behalf of Voyager and SBS by duly authorized officers and referring specifically to this Agreement.
Section 13.4 Further Assurances. Each party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other party its rights and remedies under this Agreement.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 13.5 Successors and Assigns. The terms and provisions hereof shall inure to the benefit of, and be binding upon, Voyager, SBS and their respective successors and permitted assigns.
Section 13.6 Governing Law. This Agreement shall be governed and interpreted in accordance with the law of the State of Delaware excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
Section 13.7 Assignment. Except as expressly provided herein, neither party may, without the prior written consent of the other party, sell, transfer, assign, delegate, pledge, or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise, this Agreement or any of its rights or duties hereunder; provided, however, that either may, without such consent, assign this Agreement and its rights and obligations hereunder to an Affiliate, to the purchaser of all or substantially all of its assets related to a Product or its business, or to its successor entity or acquiror in the event of a merger, consolidation or change in control of such. Any attempt to assign, transfer, subcontract or delegate any portion of this Agreement in violation of this Section shall be null and void. All validly assigned and delegated rights and obligations of the parties hereunder shall be binding upon and inure to the benefit of and be enforceable by and against the successors and permitted assigns of Voyager or SBS, as the case may be. In the event either party assigns or delegates its rights or obligations to another party in accordance with the terms hereof, the assignee or transferee shall assume all obligations of its assignor or transferor under this Agreement and the performance of such obligations shall be guaranteed in writing by the assignor or transferor.
Section 13.8 Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party hereto of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.
Section 13.9 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party under this Agreement will not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never compromised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the parties herein.
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Section 13.10 Independent Contractors. The status of the parties under this Agreement shall be that of independent contractors. Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer, employee, or joint venture relationship between the parties. Neither party shall have the right to enter into any agreements on behalf of the other party, nor shall it represent to any Person that it has any such right or authority.
Section 13.11 Construction. Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms "hereof," "herein," "hereby" and derivative or similar words refer to this entire Agreement; (d) the terms "Article," "Section," "Exhibit" or "clause" refer to the specified Article, Section, Exhibit or clause of this Agreement; (e) the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or"; and (f) the term "including" or "includes" means "including without limitation" or "includes without limitation." Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless business days are specified. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend, or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The language of this Agreement shall be deemed to be the language mutually chosen by the parties and no rule of strict construction shall be applied against either party hereto.
Section 13.12 Remedies. The remedies provided hereunder and under the governing law are cumulative and not exclusive.
Section 13.13 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall constitute one and the same instrument.
(The remainder of this page is left blank intentionally.)
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
VOYAGER PHARMACEUTICAL CORPORATION SOUTHERN BIOSYSTEMS, INC. By:___________________________ By:___________________________ Name:_________________________ Name: ________________________ Title:__________________________ Title:__________________________ |
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
EXHIBIT 5.3
MANUFACTURING COSTS
"Manufacturing Costs" shall mean [ * * * ]
Examples of Manufacturing Costs
A. [ * * * ]
B. [ * * * ]
C. [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
- [ * * * ]
[ * * * ]
[ * * * ]
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
EXHIBIT 7.1
DEVELOPMENT COSTS
"Development Costs" are the sum of: [ * * * ]
Examples of Development Costs
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Exhibit 10.30
LICENSE & OPTION AGREEMENT AND MUTUAL RELEASE
This AGREEMENT, effective as of July 26, 2002 ("EFFECTIVE DATE"), is between Thorn BioScience LLC (hereinafter referred as "TBS") having its registered offices at 1509 Bull Lea Road, Suite 400, Lexington, KY 40511, and Southern BioSystems, Inc., a wholly owned subsidiary of DURECT Corporation (hereinafter referred to as "SBS") an Alabama corporation having its principal offices at 756 Tom Martin Drive, Birmingham, AL 35211-4467 and DURECT Corporation (hereinafter referred to as "DURECT") having its principal office at 10240 Bubb Road, Cupertino, CA 95014.
Article 1 - Background
1.1 SBS is a company engaged in the development and commercialization of biodegradable polymers, biomedical devices, and controlled-release products and technology for biomedical and non-biomedical applications, including products based on the SBS TECHNOLOGY defined below.
1.2 TBS is a company engaged in the development and the commercialization of animal health and veterinary products and is interested in licensing the SBS TECHNOLOGY for the purposes of developing and marketing veterinary products employing such technology.
1.3 SBS, a wholly owned subsidiary of DURECT, and TBS have previously entered into the PRIOR LICENSE AGREEMENTS permitting TBS' use of the SBS TECHNOLOGY and SBS' [ * * * ] technology for use in animal husbandry and farm management indications in certain species. Under the provisions of the PRIOR LICENSE AGREEMENTS, certain inventions made by TBS were identified and patented including, US patent application serial number [ * * * ] entitled "[ * * * ]."
1.4 The PARTIES hereby desire to enter into this AGREEMENT for the purpose of superseding and replacing all the PRIOR LICENSE AGREEMENTS, further extending a non-exclusive option to TBS to license the SBS TECHNOLOGY for additional specified veterinary applications that may, upon exercise of the option, become part of this AGREEMENT and finally resolving and releasing each other from any and all conflicts, claims and liabilities between the PARTIES arising from their prior relationships and in existence at anytime prior to and up to the EFFECTIVE DATE.
Article 2 - Definitions
The following capitalized terms shall have the meanings indicated for purposes of this AGREEMENT:
2.1 "AFFILIATE" means any corporation, association or other entity, which directly or indirectly controls, is controlled by, or is under common control with the PARTY in question. As used in this definition, the term "control" means direct or indirect beneficial ownership of more than 50% of the voting or income interest in such corporation or other business entity.
2.2 "AGREEMENT" means this agreement.
2.3 "CONFIDENTIAL INFORMATION" of SBS and TBS is defined in Paragraph 9.1, respectively.
2.4 "DEVELOPMENT DILIGENCE REQUIREMENTS" are defined in Paragraph 4.1.
2.5 "DISCLOSER" is defined in Paragraph 9.1.
2.6 "DISPUTE" is defined in Paragraph 12.1.
2.7 "EARLY TERMINATION" means termination of the AGREEMENT pursuant to Paragraphs 8.2, 8.3, and 8.4.
2.8 "EFFECTIVE DATE" is defined in the opening paragraph of this AGREEMENT.
2.9 "EXPIRATION" means termination of the AGREEMENT by expiration of the TERM pursuant to Paragraph 8.1.
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
2.10 "FIELD" means the field of use consisting of animal health and veterinary products for non-human animals and for their use in the treatment and/or prevention of disorders as set forth in Appendix B and any OPTION FIELD as added from time to time by TBS' exercise of the option granted to TBS hereunder pursuant to the terms of this AGREEMENT.
2.11 "FIELD TRIAL" means an animal study conducted as part of a program intended for the collection of data as part of the government registration of a LICENSED PRODUCT for commercial sale such as under an open INAD as such term is defined in Title 21 of the U.S. Code of Federal Regulations section 511, or under similar registration authorization, by the USDA, for example.
2.12 "INTELLECTUAL PROPERTY RIGHTS" means trade secrets, patents, trademarks, copyrights, know-how and similar rights of any type under the laws of any governmental authority, domestic or foreign, including all patent applications and trademark registrations relating to any of the foregoing.
2.13 "LICENSED PRODUCT" means any product which TBS develops or commercializes
[ * * * ] intended for use in the FIELD, the making, using, selling, offering
for sale or importing of which would otherwise infringe an existing VALID CLAIM
within SBS PATENT RIGHTS, but for the license granted by SBS to TBS hereunder.
Products which [ * * * ], but are intended for different animal species shall
each be deemed separate LICENSED PRODUCTs.
2.14 "MAJOR MARKET" means any one or more of the following countries:
Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, Japan,
Mexico, Russia, Spain, United Kingdom, and United States.
2.15 "MARKET LAUNCH" means the first marketing in a country of a LICENSED PRODUCT in that country. A product marketing effort covering less than 5% of the country and intended primarily for the purpose of learning, such as test markets, does not constitute a Market Launch.
2.16 "MATERIAL BREACH" means a breach or default in the performance or observation of a material obligation under this AGREEMENT, including without limitation, failure to pay the amounts under this AGREEMENT or to diligently pursue development and commercialization of LICENSED PRODUCTS in accordance with Paragraph 3.5 or Article 4; or to maintain, enforce and defend patents associated with SBS TECHNOLOGY; or the deliberate use of SBS TECHNOLOGY outside the scope of the licenses granted; or the deliberate use of the SBS TECHNOLOGY by SBS or DURECT in conflict with the terms of the licenses granted to TBS hereunder. Further, any breach of any of the representations and warranties set forth in Article 10.
2.17 "NET OUTSIDE SALES" or "NOS" means, as invoiced, THIRD PARTY sales of LICENSED PRODUCT(s) in bona fide arms-length transactions less the total of the following in their normal and customary amounts: (a) trade and cash discounts and allowances; (b) all other allowances, adjustments, reimbursements, discounts, charge backs and rebates granted to THIRD PARTIES; (c) value added tax and other taxes or duties to the extent included in invoiced sales of products; (d) consumer price reductions; (e) any damaged and returned merchandise payments and allowances; and (f) merchandising and pricing funds provided to THIRD PARTIES including, but not limited to, introductory merchandising funds to list new products.
For purposes of determining NOS, product shall be deemed to be sold when shipped.
Sales between or among a PARTY, its SUBLICENSEEs and/or AFFILIATEs shall be excluded from the computation of NOS, but sales by such PARTY, its SUBLICENSEEs and its AFFILIATEs to their THIRD PARTY customers shall be included in the computation of NOS. All sales made in foreign currency shall be converted into US dollars on a quarterly basis using the average of the exchange rates on the first and last working days of each quarter as published in the Wall Street Journal.
2.18 "NOTICE OF THIRD PARTY OFFER" is defined in Paragraph 5.2.
2.19 "OPTION FIELD" means each of the fields of use consisting of animal health and veterinary products for non-human animals and for their use in the treatment and/or prevention of the disorders as set forth in Appendix C (collectively "OPTION FIELDS").
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
2.20 "PARTY" means either SBS, DURECT or TBS, and "PARTIES" means the three collectively.
2.21 "PERSONNEL" means, as applied to either DURECT, SBS or TBS, employees, consultants, agents, or others hired by or retained by the respective PARTY.
2.22 "PRIOR LICENSE AGREEMENTS" means those agreements listed in Appendix D attached hereto.
2.23 [Intentionally omitted] 2.24 "PRIOR SABER INVENTIONS" are defined in Paragraph 7.6. 2.25 "RECEIVER" is defined in Paragraph 9.1. 2.26 "SABER INVENTIONS" are defined in Paragraph 7.1 2.27 "SBS INDEMNITEE" is defined in Paragraph 11.1 2.28 "SBS INVENTIONS" are defined in Paragraph 7.1. 2.29 "SBS PATENT RIGHTS" means any United States or foreign patent application |
and any patents issuing thereon arising from or related to SBS TECHNOLOGY and either owned by SBS or licensed to SBS, to the extent that SBS has the right and ability to grant sublicenses under such license, together with any division, reissue, continuation, continuation in part, extension or additions thereof, including without limitation those patents and patent applications listed in Appendix A. SBS PATENT RIGHTS shall include such patents and patent applications in existence as of the EFFECTIVE DATE as well as those which come into existence during the TERM.
2.30 SBS TECHNOLOGY" means any and all technical information, formulations, processes, know-how, data, specifications, methods of manufacture or use, characterization methods, characterization results, and other proprietary information, whether or not patented or patentable, relating to the SABER(TM) Delivery System (and improvements thereto including without limitation SABER INVENTIONS) for imparting controlled release or other performance-enhancing qualities to products, together with any and all INTELLECTUAL PROPERTY RIGHTS therein and thereto, including but not limited to the SBS PATENT RIGHTS, all to the extent either owned by SBS or licensed to SBS, to the extent that SBS has the right and ability to grant sublicenses under such license. SBS TECHNOLOGY shall include all such matter in existence as of the EFFECTIVE DATE as well as any such matter which comes into existence during the TERM.
2.31 "STAGES" including "STAGE 1," "STAGE 2" and "STAGE 3" are defined in Paragraph 4.1
2.32 "SUBLICENSE" means the transfer of rights by TBS to a third party sublicensee as defined below.
2.33 "SUBLICENSEE" means a THIRD PARTY to which TBS sublicenses its rights to make, use or sell in a specific geography LICENSED PRODUCTs under this AGREEMENT. As such, wholesalers, distributors and contract manufacturers shall not be considered SUBLICENSEEs.
2.34 "TBS INDEMNITEE" is defined in Paragraph 11.2. 2.35 "TBS INVENTIONS" are defined in Paragraph 7.2. 2.36 "TERM" is defined in Paragraph 8.1. 2.37 "THIRD PARTY" means any party other than SBS or TBS or an AFFILIATE of SBS |
or TBS.
2.38 "VALID CLAIM" means a claim in an issued and unexpired patent within the SBS PATENT RIGHTS that (a) has not been revoked, held invalid, declared unpatentable or unenforceable in a decision of a court or other body of competent jurisdiction, and that is unappealable or unappealed within the time allowed for appeal and (b) has not been rendered unenforceable through disclaimers, patent misuse, fraud on the Patent Office, breach of the duty of good faith and candor owed to the Patent Office, or any other act or omission by SBS or its PERSONNEL.
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
3.1. Exclusive License. During the TERM of this AGREEMENT, DURECT hereby grants to TBS an exclusive (as defined in Paragraph 3.2 below) worldwide license to the SBS TECHNOLOGY to make, use, offer to sell, sell and import LICENSED PRODUCTS in the FIELD.
3.2. Exclusivity. Subject to Paragraph 4.5, during the TERM of this AGREEMENT, SBS shall not develop for its own account a product using the SBS TECHNOLOGY that is designed for use in the FIELD nor grant to a THIRD PARTY any rights to develop or commercialize products using the SBS TECHNOLOGY that SBS knows or has reason to know, would be a product designed for use in the FIELD; provided that nothing herein shall preclude or restrict SBS or its AFFILIATES from developing or commercializing or granting rights to THIRD PARTIES to develop or commercialize products incorporating SBS TECHNOLOGY intended for use outside the FIELD. Nothing in this Paragraph 3.2 shall restrict SBS, its AFFILIATEs and licensees from conducting experiments or studies that involve animals for the purpose of developing human [ * * * ] products. Except as expressly provided in this AGREEMENT, no rights or licenses to any INTELLECTUAL PROPERTY RIGHTS are granted by SBS to TBS, by implication, estoppel or otherwise, and SBS specifically reserves all its rights with respect to any INTELLECTUAL PROPERTY RIGHTS not granted hereunder.
3.3. Sublicenses. The exclusive license granted pursuant to Paragraph 3.1 shall include the rights to SUBLICENSE, including, the transfer of rights to AFFILIATES and SUBLICENSEE's to make, use or sell TBS LICENSED PRODUCTS; provided, however, the right to perform [ * * * ] may not be SUBLICENSED and shall reside solely with TBS. Prior to entering a sublicense agreement with a SUBLICENSEE, TBS shall notify DURECT of its intention to SUBLICENSE the exclusive license of Paragraph 3.1 and disclose to DURECT the identity of the SUBLICENSEE and the scope of rights transferred pursuant to the SUBLICENSE. TBS shall include in the terms of any sublicense that SUBLICENSEE agree to be bound by all the terms and conditions of this AGREEMENT to the extent applicable to such SUBLICENSEE including but not limited to Confidentiality Obligations of Article 9. No SUBLICENSE shall grant more extensive rights to SBS TECHNOLOGY than are granted to TBS in Paragraph 3.1. Notwithstanding such sublicense, TBS shall remain responsible for compliance and performance of all of the obligations under this AGREEMENT including royalty payments hereunder for sales made by SUBLICENSEEs.
3.4. Subcontracts. Subject to the limitations set forth in Paragraph 3.3 above, TBS shall have the right to subcontract elements of development and commercialization activities including, but not limited to, contract manufacturing to THIRD PARTIES, but retains responsibility for such efforts.
3.5. TBS Performance. TBS agrees to use good faith, commercially reasonable efforts to launch and market LICENSED PRODUCTs. Commercially reasonable efforts will be determined by comparison to the efforts exerted by similar companies in the veterinary industry to develop, market and promote those products of similar viability, comparable profile, and comparable market potential.
3.6 Ownership of Regulatory Filings. TBS shall own all regulatory submissions and/or approvals for LICENSED PRODUCTs which it obtains, throughout the TERM of this AGREEMENT and after termination; provided that TBS shall notify DURECT of regulatory approval of LICENSED PRODUCTS. Promptly after receipt of written request, TBS shall provide to DURECT a copy of portions of [ * * * ] for LICENSED PRODUCTS subsequent to submission to such regulatory authorities, and DURECT shall reimburse TBS for all reasonable costs incurred in connection with responding to such request. Promptly after receipt of written request, DURECT shall provide to TBS a copy of portions [ * * * ] of its products using the SBS TECHNOLOGY subsequent to submission to such regulatory authorities, and TBS shall reimburse DURECT for all reasonable costs incurred in connection with responding to such request. These confidential materials are provided for information purposes only, and a PARTY may not use, reference or incorporate any such information provided by the other PARTY into its regulatory submissions (or permit such information to be included into the regulatory submissions of its THIRD party licensees) without the prior written approval of the PARTY providing the information. Any and all such information provided by one PARTY to the other PARTY hereunder shall fall under the confidentiality provisions of Article 9. TBS shall also own all right, title and interest in and to all regulatory submissions related to LICENSED PRODUCTs.
3.7 Control of Product. TBS shall have sole responsibility for and sole discretion to make all decisions regarding LICENSED PRODUCT formulation, packaging, manufacturing, marketing, sales and distribution within the FIELD.
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
4.1 Diligence. TBS shall diligently develop and commercialize LICENSED PRODUCTS in accordance with the following minimum development diligence requirements set forth in this Paragraph 4.1 ("DEVELOPMENT DILIGENCE REQUIREMENTS"). Commencing on Year One and for each year thereafter during the TERM, TBS shall have the minimum required number of different LICENSED PRODUCTS as set forth in the chart below in any of the following stages (each a "STAGE"):
(i) STAGE 1- [ * * * ] have commenced and are on-going, or
(ii) STAGE 2 - a regulatory submission composed of [ * * * ] submitted to U.S. or international regulatory authorities for regulatory review, or
(iii) STAGE 3- marketing approval has been received and LICENSED PRODUCT is currently being diligently commercialized by TBS or its SUBLICENSEE.
provided, however, the minimum required number of LICENSED PRODUCTS in all STAGES for each year shall be subject to adjustment in accordance with Paragraph 4.2 below. For clarification, STAGE 1 ([ * * * ]) or STAGE 2 ([ * * * ]) may be submitted to regulatory authorities in a phased review and a specific product shall be deemed to have met the requirements of STAGE 1 or STAGE 2 respectively if it is in at least one of the phases of such STAGE. For purposes of this agreement, Year One shall be calendar year 2003.
MINIMUM REQUIRED NUMBER OF LICENSED PRODUCTS
(subject to adjustment pursuant to Paragraph 4.2)
------------------------------------------------------------------------------------------------------------------------------- Year 1 (2003) Year 2 (2004) Year 3 (2005) Year 4 (2006) Year 5 (2006) and onwards ------------------------------------------------------------------------------------------------------------------------------- Minimum number of [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] different LICENSED PRODUCTS in all STAGES ------------------------------------------------------------------------------------------------------------------------------- |
4.2 OPTION FIELD. For each OPTION FIELD that becomes included in the FIELD through TBS' exercise of its option pursuant to Article 5, the minimum number of LICENSED PRODUCTS required to be in all STAGES shall be increased by one LICENSED PRODUCT, starting in the year that such OPTION FIELD becomes included in the FIELD.
4.3 Reporting. On [ * * * ] of each year, TBS shall submit a report to DURECT naming LICENSED PRODUCTS that it is diligently developing and further describing TBS' efforts, progress and outcomes regarding DEVELOPMENT DILIGENCE REQUIREMENTS for the previous year.
4.4 Amendment of Diligence Requirements. In the event that TBS is not able to meet its DEVELOPMENT DILIGENCE REQUIREMENTS in a given year despite having made reasonable commercial efforts to achieve such DEVELOPMENT DILIGENCE REQUIREMENTS, then TBS may request that DURECT review the TBS's activities and progress for such year and agree to amend such DEVELOPMENT DILIGENCE REQUIREMENTS for such year at DURECT's reasonable discretion.
4.5 Consequences. If the above DEVELOPMENT DILIGENCE REQUIREMENTS are not met by TBS in any calendar year during the TERM, then the license granted to TBS in Paragraph 3.1 shall be converted to non-exclusive and the restrictions on SBS set forth in Paragraph 3.2 shall terminate with respect to the FIELD, except that TBS shall retain an exclusive license to the SBS TECHNOLOGY solely to make, use, sell, offer for sale and import all LICENSED PRODUCTS TBS has named and continues to diligently develop and commercialize under this AGREEMENT.
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
5.1 Limited License. SBS hereby grants to TBS a non-exclusive license, without the right to sublicense, to the SBS TECHNOLOGY solely for TBS to conduct limited testing as reasonably necessary for evaluating the suitability of the SBS TECHNOLOGY for use in the OPTION FIELDs.
5.2 Non-Exclusive Option and Right of First Refusal. Subject to terms of this Paragraph 5.2 and Paragraph 5.3, SBS hereby grants to TBS an option to have any OPTION FIELD added to and included in the FIELD, provided that SBS has not already granted to a THIRD PARTY a license to SBS TECHNOLOGY for use in such OPTION FIELD before TBS' notice to SBS of its exercise of its option to such OPTION FIELD (the "NOTICE OF OPTION EXERCISE"). Notwithstanding the foregoing option granted to TBS, nothing contained herein shall restrict or limit SBS' ability to discuss with and disclose relevant information to THIRD PARTIES regarding applications of the SBS TECHNOLOGY outside the FIELD including without limitation applications in the OPTION FIELDS; provided, however, that upon receipt by SBS of a bone fide statement of interest from a THIRD PARTY to obtain a license to the SBS TECHNOLOGY for use in any OPTION FIELD, DURECT shall provide TBS written notice that SBS has received a bona fide statement of interest from a THIRD PARTY to obtain a license to such OPTION FIELD ("NOTICE OF THIRD PARTY OFFER"). TBS will have [ * * * ] after receipt of the NOTICE OF THIRD PARTY OFFER to exercise TBS' option to include the OPTION FIELD that is the subject of the NOTICE OF THIRD PARTY OFFER as part of the FIELD. If TBS exercises its option within such [ * * * ] period, then the OPTION FIELD that is the subject of the NOTICE OF OPTION EXERCISE will be included in the definition of the FIELD. If TBS fails to exercise its option within such [ * * * ] period, then SBS shall have the right to enter into an agreement with such THIRD PARTY to grant to such THIRD PARTY a license to the SBS TECHNOLOGY in the OPTION FIELD that is the subject of the NOTICE OF THIRD PARTY OFFER.
5.3 Exercise of Option. TBS may, at its discretion, exercise its option to include any OPTION FIELD as part of the FIELD at any time, by providing written notice to DURECT, provided, that TBS is in compliance with existing diligence obligations set forth in Paragraphs 3.5 and 4.1.
5.4 Addition of Rights. In the event TBS desires to license rights to the SBS TECHNOLOGY for a field of use not covered under this AGREEMENT, TBS may tender to DURECT a proposal to license such field of use, and provided that DURECT or its AFFILIATES are not engaged in a development program and do not have commitments to a THIRD PARTY in such field of use, DURECT shall discuss with TBS the possibility of granting TBS rights to such field of use on terms mutually agreeable to the PARTIES provided that DURECT shall have no obligation to enter into any agreement relating to nor reserve for TBS any rights to fields of use not expressly covered under this AGREEMENT.
6.1 Running Royalties. In consideration of the rights granted by SBS to TBS hereunder, TBS shall pay to DURECT as running royalty the applicable percent of the NOS based on TBS's, or TBS's AFFILIATE's or SUBLICENSEEs', sale of LICENSED PRODUCTS throughout the world as set forth in the chart below:
---------------------------------------------------------------------------------------------------------- Annual Net Outside Sales (NOS) Worldwide Royalty to DURECT (Percent) ---------------------------------------------------------------------------------------------------------- For the first $ [ * * * ]MM of NOS [ * * * ]% ---------------------------------------------------------------------------------------------------------- For NOS above $[ * * * ]MM and up to $[ * * * ]MM [ * * * ]% ---------------------------------------------------------------------------------------------------------- For NOS above $[ * * * ]MM [ * * * ]% ---------------------------------------------------------------------------------------------------------- |
Royalties on NOS based on the sale of LICENSED PRODUCTs in a country where no SBS PATENT RIGHTS exist will be paid to DURECT; provided, however, TBS's obligation to pay royalties on LICENSED PRODUCTS in such country shall terminate upon the first sale in such country by a THIRD PARTY of a product for the same indication as the LICENSED PRODUCT which would infringe a VALID CLAIM if such sale were to have taken place in the United States.
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
Only one royalty shall be payable on LICENSED PRODUCTs despite the existence of one or more claims within SBS PATENT RIGHTS.
6.2 Other Fees. In addition to royalty payments pursuant to Paragraph 6.1 above, TBS shall make payments to DURECT equal to [ * * * ]% of any upfront, milestone or any special fees, payments or other consideration (in whatever form) received by TBS or its AFFILIATES with respect to the sublicense of LICENSED PRODUCTS after deducting from such consideration: (i) any tax or other government charge (other than income tax) levied on such consideration to the extent borne by TBS or its AFFILIATES and (ii) any payments (or portions thereof) that constitute reimbursement of (and are determined based upon) genuine research, development and/or manufacturing costs incurred by TBS or its AFFILIATES.
6.3 TBS Payments. Royalties and other fees shall be paid by TBS to DURECT on a quarterly basis in U.S. Dollars, to be wired to an account designated in writing by DURECT. Within [ * * * ] of the end of each calendar quarter, TBS shall provide a written report to DURECT showing NOS by country and calculations of the royalty and other fees due to DURECT. Any payment due will be made at the same time as delivery of the report.
6.4 Taxes. Any income, withholding, or other tax that TBS is required by applicable law or regulation to withhold and pay with respect to the amounts payable by TBS under the AGREEMENT, shall be deducted from the amount prior to remittance to DURECT. With respect to any tax so deducted, TBS shall provide to DURECT such documentation as shall be required by revenue authorities, as may be reasonably necessary to enable DURECT to claim exemption therefrom or obtain a repayment thereof and shall, upon request, provide SBS with proper evidence of the taxes paid.
6.5 Audits. At the request of DURECT, TBS shall permit a mutually agreed
certified public accountant, at reasonable times and upon reasonable notice, to
audit TBS's books and records that support the calculations as noted in this
Paragraph 6.5. TBS will retain three (3) years of such books and records should
DURECT choose to review them. DURECT will not conduct an audit more than once a
calendar year, nor audit the same data more than once. Should DURECT choose to
audit TBS's records, DURECT will bear the cost of the audit unless such audit
reveals an underpayment of amounts due. If the auditor's report shows that a [ *
* * ]% underpayment has taken place, TBS shall pay to DURECT an amount
sufficient to remedy the amount of any under reporting or underpayment found by
the auditor in the next payment to DURECT, together with an interest payment of
[ * * * ] per month for the period of such underpayment and TBS shall bear the
costs of the audit fees. If the auditor's report shows that an overpayment of
royalties has taken place, such overpayment shall be creditable against future
royalties payable in subsequent royalty periods and DURECT shall bear the costs
of the audit fees.
7.1 SBS INVENTIONS. All inventions made during the TERM of the AGREEMENT relating to the SBS TECHNOLOGY or to any combination of the SBS TECHNOLOGY with other components, active agents, features or processes without regard to whether such inventions are made by SBS, TBS or their, AFFILIATES, agents or subcontractors ("SABER INVENTIONS") and all inventions made during the TERM of the AGREEMENT solely by DURECT PERSONNEL shall be owned solely by DURECT (together with SABER INVENTIONS, collectively referred to as "SBS INVENTIONS"). TBS agrees to promptly disclose to DURECT all SABER INVENTIONS, and TBS shall provide reasonable assistance to DURECT (at DURECT's sole cost) with respect to the filing and prosecution of patents covering SABER INVENTIONS and shall further execute and deliver promptly to DURECT such assignments, confirmations of assignments or other written instruments as are necessary to vest in SBS clear and marketable title to the SABER INVENTIONS. SBS will be responsible, at its sole expense, for filing, prosecuting, and maintaining any patents/applications covering SBS INVENTIONS.
7.2 TBS INVENTIONS. Except for SABER INVENTIONS, all inventions made during the TERM of the AGREEMENT solely by TBS PERSONNEL shall be owned by TBS ("TBS INVENTIONS"). TBS will be responsible, at its sole expense, for filing, prosecuting, and maintaining any patents/applications covering such TBS INVENTIONS
7.3 Defense and Enforcement of Intellectual Property Rights. In the event of any infringement or question of validity by a THIRD PARTY of any INTELLECTUAL PROPERTY RIGHTS relating to SBS TECHNOLOGY, SBS shall have right, but not the obligation, to defend or initiate an action to protect the Intellectual Property Rights relating to SBS TECHNOLOGY at its own expense in the name of SBS, or jointly with TBS if required by law, for any patent or other claims which potentially cover(s) LICENSED PRODUCTS. In the event that SBS elects not to initiate a suit against a
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
THIRD PARTY which is allegedly infringing the SBS PATENT RIGHTS by use of SBS TECHNOLOGY in the FIELD, it shall promptly and timely notify TBS in writing and TBS shall have the right, but not the obligation, to assume direction and control of the initiation of such claims at TBS's own expense; provided, however, notwithstanding the foregoing, if DURECT disputes in good faith whether such THIRD PARTY is infringing the SBS PATENT RIGHTS in the FIELD, then TBS may not initiate any action against such THIRD PARTY until such dispute between TBS and DURECT has been resolved by arbitration pursuant to Article 12. If TBS elects to initiate any such claim, it shall notify DURECT thereof in writing at least [ * * * ] prior to initiation of any action and the PARTIES will mutually agree upon the distribution of any recovery resulting from TBS' efforts to prosecute any claim prior to TBS's assumption of such prosecution, but in no event shall the distribution to TBS be less than its expenses in the prosecution of the claim should there be adequate amounts recovered to reimburse such expenses incurred by TBS. In the event there is not a sufficient amount recovered to reimburse TBS its expenses incurred, TBS may deduct from any future royalties to be paid to DURECT the amount necessary to makeup any difference between the actual amount recovered and paid to TBS as partial reimbursement and the amount of expenses incurred by TBS to which it is entitled to be reimbursed. SBS agrees to join any action initiated by TBS if required by law and submits to the personal jurisdiction of any court or other tribunal hearing such action.
7.4 Discontinuance of Patenting Process/Notice. If the owner or assignee of an invention made under this AGREEMENT chooses to discontinue the patenting or maintenance of any patent or application covering the invention, the owner or assignee shall notify the other PARTY promptly in writing and in such a time frame such that the other PARTY may, if it so chooses and at its own expense, continue the prosecution or maintenance of such patent or patent application. The owner or assignee shall execute all documents necessary for the other PARTY to take over such prosecution or maintenance, including, if so requested, the assignment of the patent or patent application
7.5 Copyrights, Trademarks, Proprietary Names. TBS shall own all right and title to trademarks and copyrights specifically relating to LICENSED PRODUCTS (and not SBS TECHNOLOGY generally).
7.6 Assignment of Inventions From Prior Agreements. TBS hereby assigns and conveys to SBS all its right, title and interest to any prior inventions, including any and all INTELLECTUAL PROPERTY RIGHTS therein and thereto, made by TBS relating to the SBS TECHNOLOGY under the PRIOR LICENSE AGREEMENTS and in existence prior to the EFFECTIVE DATE, including without limitation US patent application serial number [ * * * ] filed [ * * * ] entitled "[ * * * ]" ("PRIOR SABER INVENTIONS") to the extent such prior inventions have not already been assigned to SBS. TBS shall further execute and deliver promptly to SBS such assignments, confirmations of assignments or other written instruments as are necessary to vest in SBS clear and marketable title to these PRIOR SABER INVENTIONS.
8.1 TERM. The TERM of the AGREEMENT shall commence upon the EFFECTIVE DATE and shall expire upon the termination of the last, VALID CLAIM in the SBS PATENT RIGHT as they relate to LICENSED PRODUCTs, unless terminated earlier according to the provisions of Paragraph 8.2, 8.3 or 8.4.
8.2 TBS Termination. TBS may terminate this AGREEMENT at any time for reasons
other than MATERIAL BREACH by providing written notice to DURECT at least [ * *
* ] days prior to termination.
8.3 DURECT Termination. DURECT may terminate this AGREEMENT after written notice to TBS if TBS is in MATERIAL BREACH of this AGREEMENT providing that TBS shall have [ * * * ] days after receipt of such written notice to take prudent and reasonable steps to cure the MATERIAL BREACH; provided, however, in the event that the PARTIES dispute in good faith whether TBS is in MATERIAL BREACH of this AGREEMENT, then termination of the AGREEMENT shall be temporarily stayed pending resolution of whether a MATERIAL BREACH has occurred provided a request for arbitration pursuant to Article 12 is made by TBS within such [ * * * ] day period.
8.4 Termination for Liquidation or Dissolution. To the extent permitted under applicable law, either PARTY may terminate this AGREEMENT and the rights granted hereunder, effective upon giving written notice of such termination to the other PARTY, if such other PARTY is liquidated or dissolved, and if such termination is not permitted under applicable law, then the rights and obligations of such other PARTY under this AGREEMENT may be transferred and assigned only to a THIRD PARTY engaged in a business of that would reasonably be capable of performing the obligations set forth in this AGREEMENT.
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
8.5 Effect of Termination. Upon EXPIRATION or TERMINATION of the AGREEMENT for any reason, all rights and obligations of the PARTIES under this AGREEMENT, including the licenses granted herein by SBS to TBS pursuant to Paragraphs 3.1 and 5.1 shall immediately terminate, except for the provisions set forth in Paragraphs 6.5, 8.5 and 10.6 and Articles 7, 9 (for stated period), 11, 12, 13 and 14 which shall survive the EXPIRATION or TERMINATION of this AGREEMENT. The EXPIRATION or TERMINATION of this AGREEMENT shall not affect the obligations of either PARTY to perform any obligations arising prior the EXPIRATION or TERMINATION of this AGREEMENT, including TBS' obligations to pay to SBS all amounts due for sales of LICENSED PRODUCTS made prior to the prior the EXPIRATION or TERMINATION of this AGREEMENT.
9.1 Disclosure of CONFIDENTIAL INFORMATION. During the TERM, it may be necessary for a PARTY ("DISCLOSER") to disclose to another PARTY ("RECEIVER") technical and business information ("CONFIDENTIAL INFORMATION") which the DISCLOSER considers highly confidential. CONFIDENTIAL INFORMATION disclosed by the PARTIES may include, without limitation, information relating to the SBS TECHNOLOGY and other ideas, know-how, test methods, data, data gathering practices, [ * * * ] business plans and other technical and business information including TBS' interest in SBS TECHNOLOGY as well as the terms of this AGREEMENT.
9.2 Obligation of Confidentiality. Unless prior written consent is otherwise obtained from DISCLOSER, the RECEIVER shall maintain the CONFIDENTIAL INFORMATION in confidence, shall take all reasonable precautions to prevent disclosure of CONFIDENTIAL INFORMATION to THIRD PARTIES, and shall use CONFIDENTIAL INFORMATION only for the purposes provided for in the AGREEMENT. However, the RECEIVER shall have no obligation under this Article with respect to any specific portion of CONFIDENTIAL INFORMATION which:
a. is already in the RECEIVER's possession at the time of disclosure thereof which the receiver can demonstrate by documented and competent evidence; or
b. is or later becomes available to the public, other than by the RECEIVER's default of this Article; or
c. is received from a THIRD PARTY having no obligation of confidentiality to the DISCLOSER; or
d. is required to be disclosed by law or government regulation.
9.3 Termination of Confidentiality Obligations. The obligations of confidentiality of the RECEIVER under this Article shall, terminate in their entirety five (5) years after termination of the AGREEMENT.
9.4 Publication: In the event a PARTY chooses to publish any data arising from this AGREEMENT not otherwise subject to the confidentiality obligations set forth above in this Article, the publishing PARTY shall submit to the other PARTY for review the text of any such proposed oral or written disclosure, including any abstract at least [ * * * ] in advance of any such disclosure, including the submission of such proposed disclosure to a journal, editor, selection or review committee or person for a meeting, or other THIRD PARTY. The other PARTY may request in writing further delay of the proposed publication for up to an additional [ * * * ] for purposes of allowing either PARTY to complete development necessary for filing a patent application and to file such a patent application.
9.5 Press Release: Neither PARTY shall issue any press release or public announcement, written or oral regarding any aspect of this AGREEMENT, including its existence, the subject matter to which it relates, the performance under it or any of its specific terms and conditions, including any general statements as to the existence of a relationship between the PARTIES, without the prior written consent of the other PARTY, unless otherwise required by law, in which case, the disclosing PARTY shall provide the other PARTY reasonable written notice of such required disclosure.
9.6 Consent for Patent Disclosure. Each PARTY shall obtain the consent of the other PARTY prior to the incorporation of portions of the other PARTY'S CONFIDENTIAL INFORMATION in a patent application. Such consent of the other PARTY shall not be unreasonably withheld or delayed.
9.7 Consent for Regulatory Disclosure. The PARTIES hereby consent to the incorporation of any portion of CONFIDENTIAL INFORMATION in any regulatory submission or communication, on notice by either PARTY to the
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
other, which is reasonably believed to be required for the process of obtaining regulatory approval for a LICENSED PRODUCT, and the requesting PARTY undertakes to the extent permissible by law to secure confidential treatment thereof.
10.1 Affiliation between SBS and Durect Corporation. SBS and DURECT represent and warrant that SBS is a validly existing and wholly owned subsidiary of DURECT.
10.2 Ownership of IP rights. SBS and DURECT represent and warrant that SBS is the sole holder of all rights, title and interest in the SBS TECHNOLOGY free and clear of any claims, liens, and demands of any other person or entity.
10.3 Status of SBS TECHNOLOGY and PATENT RIGHTS. SBS and DURECT represent and warrant that as of the EFFECTIVE DATE, except as disclosed in Appendix E, no patent application within the SBS PATENT RIGHTS is the subject of any pending interference, opposition, cancellation, protest, or other challenge or adversarial proceeding. SBS has neither assigned nor granted any license or other rights to the SBS TECHNOLOGY in the FIELD or OPTION FIELD, and it is under no obligation to grant any such license or rights in the FIELD or OPTION FIELD (as of the EFFECTIVE DATE) to any THIRD PARTY. SBS and DURECT represent and warrant that there are no outstanding liens, encumbrances, THIRD PARTY rights, agreements or understandings of any kind, either written, oral or implied, regarding the SBS TECHNOLOGY which are inconsistent or in conflict with any provision of this AGREEMENT.
10.4 Right to Grant. SBS and DURECT represent and warrant to TBS that SBS and DURECT have, and at all times during the TERM of this AGREEMENT will have, all necessary rights and interests in the SBS TECHNOLOGY including all rights under copyrights, trade secrets, tradenames, patents, patent applications, trademarks and other intellectual property and proprietary rights as required to grant TBS the rights and licenses granted to TBS hereunder. SBS, DURECT and TBS represent and warrant that the execution and delivery of this AGREEMENT, and the performance by SBS,DURECT and TBS of their respective obligations hereunder, including the grant of the licenses herein, have been duly authorized by all necessary corporate and other action on the part of SBS, DURECT and TBS, and no consents, waivers or permissions that have not already been granted are required for such actions.
10.5 Ability to Perform Services. TBS represents and warrants to DURECT that at present it has the ability (including access to the resources, personnel and infrastructure) to perform its obligations under this AGREEMENT.
10.6 Disclosure of PRIOR INVENTIONS. TBS represents and warrants to DURECT that it has disclosed to DURECT all PRIOR INVENTIONS as of the EFFECTIVE DATE.
10.7 Other Representation. Each of DURECT and SBS hereby represent to TBS that as of the date hereof, it knows of no reason why the SBS TECHNOLOGY would not be acceptable for use in veterinary products.
10.8 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 BUT NOT LIMITED TO WARRANTIES OF QUALITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.
11.1 TBS Indemnity. TBS shall defend, indemnify and hold harmless SBS, DURECT and their AFFILIATES, and their officers, directors, employees and agents (collectively, "SBS INDEMNITEES") from any THIRD PARTY claims alleged or brought against any of them and against any and all losses, liabilities, claims, obligations, costs and expenses (collectively, "LOSSES") arising out of any MATERIAL BREACH of this AGREEMENT by TBS, its AFFILIATES or SUBLICENSEES and the use, design, labeling, manufacture, processing, packaging, sale or commercialization of any LICENSED PRODUCTS by TBS, its AFFILIATES and SUBLICENSEES, including without limitation product liability claims; provided that such SBS INDEMNITEE: (i) provides reasonable notice to TBS of such LOSS and permits TBS to control, in a manner not adverse to such SBS INDEMNITEE, the
CONFIDENTIAL **Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
defense, settlement, adjustment or compromise of any such claim using counsel reasonably acceptable to such SBS INDEMNITEE; and (ii) reasonably cooperates with TBS in the defense of any such claim, subject to TBS's payment of all reasonable costs and expenses associated with such cooperation, and further provided that TBS shall not be liable for any such costs or expenses incurred without its prior written authorization. TBS shall not enter into any settlement that adversely affects a SBS INDEMNITEE's rights or interest without prior written approval by the SBS INDEMNITEE. The SBS INDEMNITEE shall have no authority to settle any claim for LOSSES on behalf of TBS. The SBS INDEMNITEE shall have the right to participate, at its own expense, in the defense of any such claim or demand to the extent it so desires.
11.2 DURECT and SBS Indemnity. DURECT and SBS shall defend, indemnify and hold harmless TBS and its AFFILIATES, and their officers, directors, employees and agents (collectively, "TBS INDEMNITEES") from any THIRD PARTY claims alleged or brought against any of them and against any and all LOSSES arising out of any MATERIAL BREACH of this AGREEMENT by SBS and DURECT and their AFFILIATES except for LOSSES for which TBS is obligated to provide indemnity pursuant to Paragraph 11.1 above; provided that such TBS INDEMNITEE: (i) provides reasonable notice to DURECT of such LOSS and permits DURECT to control, in a manner not adverse to such TBS INDEMNITEE, the defense, settlement, adjustment or compromise of any such claim using counsel reasonably acceptable to such TBS INDEMNITEE; and (ii) reasonably cooperates with DURECT in the defense of any such claim, subject to DURECT's payment of all reasonable costs and expenses associated with such cooperation, and further provided that SBS and DURECT shall not be liable for any such costs or expenses incurred without its prior written authorization. SBS and DURECT shall not enter into any settlement that adversely affects a TBS INDEMNITEE's rights or interest without prior written approval by the TBS INDEMNITEE. The TBS INDEMNITEE shall have no authority to settle any claim for LOSSES on behalf of SBS and DURECT. The TBS INDEMNITEE shall have the right to participate, at its own expense, in the defense of any such claim or demand to the extent it so desires.
11.3 Disclaimer of Consequential Damages. IN NO EVENT WILL EITHER SBS AND
DURECT OR TBS BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL,
OR PUNITIVE DAMAGES INCURRED BY A PARTY ARISING UNDER OR AS A RESULT OF THIS
AGREEMENT (OR THE TERMINATION HEREOF) INCLUDING, BUT NOT LIMITED TO, THE LOSS OF
PROSPECTIVE PROFITS OR ANTICIPATED SALES, OR ON ACCOUNT OF EXPENSES,
INVESTMENTS, OR COMMITMENTS IN CONNECTION WITH THE BUSINESS OR GOODWILL OF SBS
and DURECT OR TBS OR OTHERWISE.
12.1 Arbitration of Disputes. At the election of a party, any controversy or
dispute arising out of or in connection with this AGREEMENT, its interpretation,
performance, or termination, but not including validity or enforceability of
patents licensed under Article 3, ("DISPUTE"), that the PARTIES are unable to
resolve within ninety (90) days after written notice by one PARTY to the other
of the existence of such DISPUTE, shall be submitted to arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then in effect. The arbitration shall be conducted in
Lexington, Kentucky, U.S.A. if arbitration is demanded by DURECT or SBS, and San
Francisco, California if arbitration is demanded by TBS except as may otherwise
be agreed by the PARTIES. Each DISPUTE shall be submitted to a panel of three
(3) impartial arbitrators with each PARTY selecting one (1) arbitrator within
fifteen (15) days after the commencement of the arbitration period and the two
(2) selected arbitrators selecting a third arbitrator within thirty (30) days
after the commencement of the arbitration period. In the event of failure of the
two arbitrators to agree within 30 days after commencement of the arbitration
proceeding upon the appointment of the third arbitrator, the third arbitrator
shall be appointed by the AAA in accordance with its then existing rules. In the
event that any PARTY shall fail to appoint an arbitrator it is required to
appoint within the specified time period, such arbitrator and the third
arbitrator shall be appointed by the AAA in accordance with its then existing
rules. Any arbitration hereunder shall commence within thirty (30) days after
appointment of the third arbitrator. The arbitrators shall make final
determinations as to any discovery disputes and all other procedural matters. If
any PARTY fails to comply with the procedures in any arbitration in a manner
deemed material by the arbitrators, then the arbitrators shall fix a reasonable
time for compliance, and if the PARTY does not comply within such period, then a
remedy deemed just by the arbitrators, including an award of default, may be
imposed. The decision of the arbitrators shall be rendered no later than one
hundred and twenty (120) days after commencement of the arbitration period. The
costs of arbitration shall be borne by the PARTY against whom the arbitral
decision is made. Any judgment or decision rendered by the panel shall be
binding upon the PARTIES and shall be enforceable by any court of competent
jurisdiction. For purposes of this Article 12, the "commencement of the
arbitration period" shall be deemed to be the date upon which a written demand
for arbitration is received by the American Arbitration Association from one of
the PARTIES.
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13.1 Termination of Prior License Agreements. The PRIOR LICENSE AGREEMENTS are hereby terminated effective as of the EFFECTIVE DATE.
13.2 Termination of [ * * * ] Agreement. The [ * * * ] Agreement dated
[ * * * ] by and between DURECT Corporation, SBS and TBS is hereby terminated
effective as of the EFFECTIVE DATE.
13.3 Release of DURECT and SBS by TBS. TBS, together with its AFFILIATES and their respective officers, directors, heirs, executors, assigns, agents and employees, do hereby fully release, forever discharge and hold harmless, SBS, DURECT Corporation, and their AFFILIATES and their respective officers, directors, heirs, executors, assigns, agents and employees, from and against all claims, actions, causes of action, demands and damages, under any theory of liability, known or unknown, fixed or contingent, arising out of or in any way related to proposed or actual business or other legal relationships or dealings between or among the above-named or described persons and entities from the beginning of time to the EFFECTIVE DATE, including, but expressly not limited to the PRIOR LICENSE AGREEMENTS (except for obligations of confidentiality in the PRIOR LICENSE AGREEMENTS which shall survive for the periods stated therein). Notwithstanding the foregoing, the PARTIES expressly acknowledge that this release does not extend or apply to obligations of the PARTIES under the terms of this AGREEMENT itself.
13.4 Release of TBS by DURECT and SBS. SBS and DURECT, together with their AFFILIATES and their respective officers, directors, heirs, executors, assigns, agents and employees, do hereby fully release, forever discharge and hold harmless, TBS and its AFFILIATES and their respective officers, directors, heirs, executors, assigns, agents and employees, from and against all claims, actions, causes of action, demands and damages, under any theory of liability, known or unknown, fixed or contingent, arising out of or in any way related to proposed or actual business or other legal relationships or dealings between or among the above-named or described persons and entities from the beginning of time to the EFFECTIVE DATE, including, but expressly not limited to the PRIOR LICENSE AGREEMENTS (except for obligations of confidentiality in the PRIOR LICENSE AGREEMENTS which shall survive for the periods stated therein). Notwithstanding the foregoing, the PARTIES expressly acknowledge that this release does not extend or apply to obligations of the PARTIES under the terms of this AGREEMENT itself.
14.1 Non-Waiver. The waiver by either PARTY of any breach of any provision hereof by the other PARTY shall not be construed to be a waiver of any succeeding breach of such provision or a waiver of the provision itself.
14.2 Partial Invalidity. If and to the extent that any court or tribunal of competent jurisdiction holds any of the terms or provisions of this AGREEMENT, or the application thereof to any circumstances, to be invalid or unenforceable in a final nonappealable order, the PARTIES shall use their best efforts to reform the portions of this AGREEMENT declared invalid to realize the intent of the PARTIES as fully as practicable, and the remainder of this AGREEMENT and the application of such invalid term or provision to circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each of the remaining terms and provisions of this AGREEMENT shall remain valid and enforceable to the fullest extent of the law.
14.3 Limitation on Use of Names. SBS and DURECT shall not use the names of TBS, nor any adaptation thereof, and TBS shall not use the name of DURECT or SBS in any advertising, promotional or sales literature without prior written consent obtained from TBS or DURECT in each case.
14.4 Force Majeure. No failure or omission by the PARTIES hereto in the performance of any obligation of this AGREEMENT shall be deemed a breach of this AGREEMENT nor shall it create any liability if the same shall arise from any cause or causes beyond the reasonable control of the affected PARTY, including, but not limited to, the following, which for purposes of this AGREEMENT shall be regarded as beyond the control of the PARTY in question: acts of nature; acts or omissions of any government; any rules, regulations, or orders issued by any government authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; invasion; strikes and labor lockouts; provided that the PARTY so affected shall use its best efforts to avoid or remove such causes of nonperformance and shall continue performance hereunder with the utmost dispatch whenever such causes are removed.
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14.5 Entire AGREEMENT. This AGREEMENT constitutes the entire understanding between the PARTIES with respect to the subject matter contained herein and supersedes any and all prior agreements, understandings and arrangements whether oral or written between the PARTIES relating to the subject matter hereof, except as set forth expressly herein. Notwithstanding this clause, this AGREEMENT may, from time to time, be adjusted on foot of mutual agreements duly authorized and appropriately documented between the PARTIES.
14.6 Assignment. This AGREEMENT may not be assigned, in whole or in part, by one PARTY without the prior written consent of the other PARTY, except that either PARTY may assign this Agreement, in whole or in part, to an AFFILIATE of such PARTY or to the successor (including the surviving company in any consolidation, reorganization or merger) or assignee of all or substantially all of its business upon 30 days' prior written notice to the other PARTY. No assignment shall have the effect of relieving any party to this AGREEMENT of any of its obligations hereunder.
14.7 Survivorship Rights. Subject to Paragraph 14.6, the licenses and intent to use option granted to TBS and other obligations of DURECT and SBS herein shall inure to the benefit of TBS, its successors and assigns, regardless of any changes in the ownership of technology licensed under Article 3, whether by acquisition or merger of part or all of SBS's assets, dissolution of SBS, bankruptcy proceedings, or other causes. The payments and other obligations of TBS herein shall inure to the benefit of DURECT, its successors and assigns, regardless of any changes in the ownership of TBS, whether by acquisition or merger of part or all of TBS's assets, dissolution of TBS, bankruptcy proceedings, or other causes.
14.8 Governing Law. This AGREEMENT shall be interpreted according to the laws of Delaware, without regard to any applicable statutes or law relating to conflicts of law.
14.9 Notice. Any notice to be given to a PARTY under or in connection with this AGREEMENT shall be in writing and shall be (i) personally delivered, (ii) delivered by an internationally recognized overnight courier, (iii) delivered by certified mail, postage prepaid, return receipt requested, or (iv) delivered via facsimile, with the receipt confirmed, to the PARTY at the address set forth below for such party:
To TBS: To SBS: 1509 Bull Lea Road, 756 Tom Martin Drive Suite 400, Birmingham, AL 35211-4467 Lexington, KY 40511 Attn: Dr. Barry Simon Attn: President Fax: 1-859-225-4003 Fax: 1-205-917-2240 Telephone: 1-859-225-3002 Telephone: 1-205-917-2000 To DURECT: DURECT Corporation 10240 Bubb Road Cupertino, CA 95014 Attn: General Counsel Fax: 1-408-777-3577 Telephone: 1-408-777-1417 |
or to such other address as to which the PARTY has given written notice thereof. Such notices shall be deemed given upon receipt.
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IN WITNESS WHEREOF, the PARTIES hereto have caused this AGREEMENT to be executed by their duly authorized officers.
SOUTHERN BIOSYSTEMS, INC. THORN BIOSCIENCE LLC By: By: ---------------------------- ------------------------------ Name: Name: -------------------------- ---------------------------- Title: Title: ------------------------- --------------------------- Date: Date: -------------------------- ---------------------------- |
DURECT CORPORATION
CONSENT BY LAURA THORN LIMITED:
Laura Thorn Limited, as holder of a security interest in the Prior License Agreements and TBS Intellectual Property Rights, hereby consents to the entry into this Agreement by TBS:
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Appendix A
SBS PATENT RIGHTS
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
AND ANY U.S. CONTINUATION(S), CONTINUATION(S) IN PART, DIVISIONALS OR APPLICATIONS OR PATENTS WHICH CLAIM PRIORITY FROM ANY OF ANY OF THE ABOVE AND FOREIGN COUNTERPARTS THEREOF.
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Appendix B
FIELD
The FIELD shall consist of [ * * * ]
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Appendix C
OPTION FIELDS
------------------------------------------------------------------------------------- OPTION FIELDS Use of the following agents in the [ * * * ] Species ------------------------------------------------------------------------------------- 1 [ * * * ] ------------------------------------------------------------------------------------- 2 [ * * * ] ------------------------------------------------------------------------------------- 3 [ * * * ] ------------------------------------------------------------------------------------- 4 [ * * * ] ------------------------------------------------------------------------------------- 5 [ * * * ] ------------------------------------------------------------------------------------- 6 [ * * * ] ------------------------------------------------------------------------------------- 7 [ * * * ] ------------------------------------------------------------------------------------- |
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Appendix D
PRIOR LICENSE AGREEMENTS
1. [ * * * ]
2. [ * * * ]
3. [ * * * ]
4. [ * * * ]
5. [ * * * ]
6. [ * * * ]
7. [ * * * ]
8. [ * * * ]
9. [ * * * ]
10. [ * * * ]
11. [ * * * ]
12. [ * * * ]
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Appendix E
[ * * * ]
[ * * * ]
[ * * * ]
[ * * * ]
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Exhibit 10.31
THIRD AMENDED AND RESTATED
DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
between
ALZA CORPORATION
and
DURECT CORPORATION
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
THIRD AMENDED AND RESTATED
DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Third Amended and Restated Development and Commercialization Agreement (the "Agreement") is effective as of October 1, 2002 between ALZA Corporation, a Delaware corporation ("ALZA"), and Durect Corporation, a Delaware corporation ("Durect").
RECITALS
A. ALZA and Durect have previously entered into that certain Development and Commercialization Agreement with an effective date of April 21, 1998 and subsequently entered into an Amended and Restated Development and Commercialization Agreement and a Second Amended and Restated Development and Commercialization Agreement, each with an effective date of April 28, 1999 (collectively, the "Previous Agreement") for the development, manufacture and marketing of pharmaceutical products utilizing proprietary technology of ALZA relating to the DUROS(R) System for the controlled delivery of drugs in certain fields, as set forth herein.
B. The parties wish to amend such Previous Agreement and restate their understandings herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements provided herein, the parties hereby agree as follows:
SECTION 1 - DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective meanings set forth below:
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, but only for so long as the relationship exists. "Control" shall mean ownership of shares of stock having at least 50% of the voting power 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 Compound" shall mean any active pharmaceutical agent for which ALZA or an ALZA Affiliate holds exclusive rights (by ownership or license) to a United States patent which claims the composition of such pharmaceutical agent, or its manufacture or use, which but for a license from ALZA or an ALZA Affiliate would preclude Durect from Commercialization of a Product incorporating such pharmaceutical agent.
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1.3 "Catheter" shall mean a device for transporting Drug from the System to a specific anatomical site for delivery, which device is selected, identified or developed by Durect (and not by ALZA) for use in a Product.
1.4 "Commercialization" 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, but not limited to offering for sale, selling, marketing, promoting, distributing and importing such product.
1.5 "Confidential Information" shall mean all non-public Technical Information, whether in oral, written or other tangible form that one party discloses to the other under this Agreement and designates as confidential at the time of disclosure or within 30 days thereafter.
1.6 "Development Costs" shall mean a party's fully-allocated costs of performing development activities included in approved Work Plans, as calculated in accordance with Exhibit E.
1.7 "Drug" shall mean an active pharmaceutical agent, in its pure form or in a formulation, that is incorporated in a System to create a Product under the terms and conditions of this Agreement.
1.8 "Drug Class" shall mean the general therapeutic and pharmacological classification scheme for drug products reported to FDA under the provisions of the Drug Listing Act, available at www.fda.gov/cder/ndc/tbldclas.txt.
1.9 "Durect Field" shall mean, subject to modification under the terms of this Agreement, one of the following fields of use, and no others:
(a) "CNS Field" shall mean delivery of drugs for the treatment of pain, [ * * * ] directly into a component of the central nervous system from an implantable pump via a catheter; provided, however, solely with respect to a Product using Sufentanil as the Drug, there shall be no requirement that the Drug be delivered via a catheter.
(b) "Middle/Inner Ear Field" shall mean delivery of drugs directly into the middle and/or inner ear from an implantable or external pump via a catheter.
(c) "Pericardium Field" shall mean delivery of drugs directly into the pericardial sac from an implantable pump via a catheter.
(d) "Vascular Graft Field" shall mean delivery of drugs consisting of and limited to [ * * * ] directly into vascular grafts from an implantable pump via a catheter.
(e) "Cancer Antigen Field" shall mean delivery from an implantable pump of an anti-cancer antigen from the list of anti-cancer antigens attached hereto as Exhibit A or a combination of such anti-cancer antigens, solely for treatment by immunization therapy. Such list of anti-cancer antigens may be reviewed for additions or deletions from time to time by representatives of ALZA and Durect, such determination to be made by mutual written agreement at the discretion of each party.
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To provide further clarification, the Durect Fields shall not include applications of any ALZA drug delivery technology other than applications of DUROS(R) Technology as set forth in this Agreement.
1.10 "DUROS(R) Technology" shall mean all Technical Information relating to the System.
1.11 "FDA" shall mean the United States Food and Drug Administration or any successor United States governmental agency performing similar functions with respect to pharmaceutical products.
1.12 "IND" shall mean the application for Investigation of a New Drug submitted to the FDA.
1.13 "Intellectual Property Rights" shall mean trade secrets, patents, copyrights, know-how and similar rights of any type under the laws of any governmental authority, domestic or foreign, including all applications and registrations relating to any of the foregoing.
1.14 "Major Market Country" shall mean each one of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
1.15 "Minimum Payments" shall have the meaning set forth in
Section 6.2 hereof.
1.16 "Minimum Payment Year" shall mean a period of four consecutive Payment Computation Periods beginning with the first day of the Payment Computation Period following the Payment Computation Period during which all necessary regulatory approvals to market the Product in the first Major Market Country have been received, and each successive four Payment Computation Periods thereafter. The first four Payment Computation Periods shall be the First Minimum Payment Year; the next four Payment Computation Periods shall be the Second Minimum Payment Year; etc.
1.17 "NDA" shall mean a "New Drug Application," "Product License Application," or other application for approval to market a product submitted to the FDA, as amended or supplemented from time to time.
1.18 "Net Sales" shall mean the amounts invoiced on sales of a Product by Durect and its Affiliates and Subcontractors to independent, unrelated third parties in bona fide arms-length transactions, less the following deductions actually allowed by Durect, its Affiliates and Subcontractors and taken by such third parties and not otherwise recovered by or reimbursed to Durect, or its Affiliates or Subcontractors: (i) trade, cash and quantity discounts; (ii) taxes or government charges levied on the sale of 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, defects or returns or because of rebates or retroactive price reductions; and (iv) delivery charges (including transportation and insurance costs) actually included in the Net Sales invoiced. Net sales shall not include the prices charged (at fair market value) for separate products such as catheter access devices, syringes, gloves, and gauze pads, that may be either sold separately from the Product or bundled with the Product in the form of a kit; provided, however, that any Net Sales shall be deemed to include the amount or fair market value of any
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consideration (other than consideration described in Section 6.1(b)) received by Durect or its Affiliates or Subcontractors that can be attributable to a Product, whether such consideration is in cash or payments in kind. Net Sales shall not include sales of a Product between or among Durect and its Affiliates and Subcontractors.
1.19 "Payment Computation Period" shall mean each three month period, or any portion thereof, ending March 31, June 30, September 30, or December 31 of each year during the term of this Agreement.
1.20 "Primary Field" shall mean the [ * * * ].
1.21 "Product" shall mean at any time: (i) any human pharmaceutical product consisting of a Drug incorporated in or combined with a System and (except in cases where the Durect Field definition does not require a catheter) a Catheter, which product is: (A) designed for use in a Durect Field; and (B) selected as a Product under Section 2.1; or (ii) another product that is substantially similar to the Product described in clause (i), for example, a different strength (i.e., a different amount of active ingredient delivered in the same pattern and by the same route of administration), or having only cosmetic changes such as size, color, shape, etc., or similar nontherapeutic changes.
1.22 "Product Candidate" shall mean any human pharmaceutical
product consisting of a Drug incorporated in or combined with a System and
(except in cases where the Durect Field definition does not require a catheter)
a Catheter, which product is designed for use in a Durect Field and which enters
the Screening Stage of development (as described in Exhibit C). Product
Candidates shall be listed on Schedule 1, which Schedule shall be amended from
time to time as required by adding those Product Candidates in accordance with
Section 2.1 and deleting those Product Candidates that have become Products or
are no longer being developed as provided hereunder. A Product Candidate shall
become a Product when it enters the Feasibility Stage of development (as
described in Exhibit C).
1.23 "Product Payments" shall mean the payments described in Section 6.1.
1.24 "Program" shall mean all activities for developing and obtaining regulatory approval to Commercialize Product(s) developed under this Agreement in the Durect Fields in the Territory.
1.25 "Program Information" shall mean any Technical Information developed or acquired by either party and/or a Subcontractor under or in connection with the Program, and any Technical Information developed by one party using any other Program Information or any of the other party's Confidential Information.
1.26 "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 regulatory filing to obtain or maintain regulatory approval to market a Product.
1.27 "Secondary Fields" shall mean the [ * * * ].
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1.28 "Subcontractors" shall mean any third party persons or entities (other than wholesalers) to which Durect or any Durect Affiliate directly or indirectly grants any right to Commercialize a Product as provided for hereunder.
1.29 "Supply Agreement" shall mean an agreement for the supply of Durect's, its Affiliates' and Subcontractors' total requirements of each Product by ALZA, referenced in Section 5.6.
1.30 "Subterritory" shall mean each one of the following:
Subterritory A - The United States, Canada and Mexico
Subterritory B - European Community (as described in
Exhibit D)
Subterritory C - Japan and the Far East(as described in
Exhibit D)
Subterritory D - All other countries of the Territory
1.31 "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 the 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 Drug itself) and shall include the formulation and stabilization of a therapeutic agent (such as the Drug) in the System. The System shall not include a Catheter as defined in Section 1.2, or (except to the extent agreed upon in writing by the parties) any docking mechanism or other components used to connect a Catheter to the osmotic pump, and shall not include by way of example, any delivery system that is ingested in the gastrointestinal tract or that delivers drug through substantially intact skin.
1.32 "Technical Information" shall mean know-how, trade
secrets, formulations, inventions, data (including Regulatory Data), technology,
processes and information necessary or useful to the Products and/or the
Program, which a party hereto 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
trademarks. Subject to the foregoing, ALZA Technical Information shall include:
(A) DUROS Technology (including but not limited to all information relating to
manufacture of Systems) and any other Technical Information owned by or licensed
to ALZA prior to April 21, 1998; (B) ALZA's Program Information (as set forth in
Section 8.1); and (C) Technical Information developed by ALZA outside the
Program after April 21, 1998 ("ALZA Technical Information"); and Durect
Technical Information shall include: (a) Technical Information owned by or
licensed to Durect prior to April 21, 1998; (b) Durect's Program Information (as
set forth in Section 8.1); and (c) Technical Information developed by Durect
outside the Program after April 21, 1998 ("Durect Technical Information").
1.33 "Territory" shall mean all of the countries of the world, but shall exclude, for any Product: (i) countries or Subterritorities which may be eliminated from the Territory from time to time in accordance with this Agreement, and (ii) any countries for which Durect does not have rights to
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commercialize the Drug incorporated in such Product. The Territory shall be divided into Subterritories A, B, C and D as set forth in Section 1.29.
1.34 "Work Plan" and "Cost Estimate" shall have the meanings set forth in Section 2.3.
SECTION 2 - DEVELOPMENT PROGRAM
2.1 Product Development. Subject to the terms and conditions herein, Durect shall diligently develop Products under the Program in accordance with this Agreement, including making available such of its personnel, and taking such steps as are reasonably necessary, in order to carry out its obligations. In the event Durect desires to initiate development work on a new product, it shall send to ALZA a written notice setting forth a description of the proposed new product and projected target dates for the filing of an IND, start of Phase III clinical trials and filing of an NDA (each a "Milestone"), which target dates shall be reasonable by industry standards and shall be consistent with the timeline used by Durect for internal planning and presentation to investors. Upon ALZA's written approval of the target dates for the Milestones, which approval shall not be unreasonably withheld, the proposed new product shall be added as a Product Candidate to Schedule 1. From time to time, the parties will review the target dates for the Milestones in good faith and, by mutual written agreement, revise and update the target dates if necessary. Durect shall notify ALZA in writing when a Product Candidate is ready to pass into the clinical development stage as outlined in Exhibit C, in which event it shall be added as a Product to Schedule 2. Subject to the terms and conditions of this Agreement, the addition or deletion of a Product Candidate or Product to Schedule 1 or Schedule 2 shall be determined based on the reasonable, good faith judgment of Durect, provided that any proposed Product Candidate or proposed Product will not be added in the event that: (i) such proposed Product Candidate or Product incorporates the same Drug or analog thereof that is incorporated in a Product or Product Candidate that ALZA has notified Durect that ALZA is developing pursuant to Section 2.5, or (ii) the proposed Product Candidate or proposed Product incorporates an ALZA Compound and ALZA notifies Durect that it does not want such proposed Product Candidate or proposed Product added or (iii) ALZA determines, reasonably and in good faith, based on medical or technical reasons, that the proposed Product Candidate or proposed Product is not suitable for development because development or Commercialization of such proposed Product or Product Candidate would be likely to be harmful to the reputation of ALZA and/or DUROS Technology, provided, however, that: (a) ALZA's determination pursuant to this clause (iii) shall be subject to review by a mutually acceptable third party expert in the event of disagreement by the parties as to such determination, and (b) ALZA shall not initiate development of such proposed Product Candidate (or proposed Product), pursuant to Section 5.3 or otherwise, for its own account or with a third party for a period of [* * *] years from the date of ALZA's determination without first proposing such proposed Product Candidate (or proposed Product) to Durect for development and providing Durect with a period of [ * * * ] days in which to accept or reject such proposed Product Candidate (or Proposed Product) in writing and diligently initiate development under the terms of this Agreement. Durect will
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provide to ALZA updated versions of Schedule 1 and Schedule 2 within [ * * * ] days after the end of each calendar quarter in which there are any changes to such Schedules.
2.2 Sharing of Information.
During the term of this Agreement, representatives of ALZA and
Durect shall meet within 30 days after the end of each calendar quarter, unless
mutually agreed to by the parties, to discuss and provide information regarding
the status of development, clinical programs, regulatory applications and
development costs and expenses incurred for the Products and Product Candidates
listed on Schedules 1 and 2 including without limitation progress against
diligence obligations. Upon request by ALZA or Durect, the parties shall also
meet from time to time to discuss improvements made to the System by each party.
In addition, each party shall promptly provide any information as reasonably
requested by the other party from time to time regarding its activities and
progress with respect to the Program. The information exchanged by the parties
pursuant to this Section 2.2 shall be in confidence subject to the terms of
Section 4.1.
2.3 Work Plans and System Development.
(a) In the event that Durect desires that ALZA provide certain development services relating to any Product or Product Candidate being developed by Durect under this Agreement, and ALZA agrees to provide such services to Durect, Durect and ALZA shall develop a mutually acceptable development plan ("Work Plan") for each Product Candidate (or Product) which shall set forth: (i) the development activities to be performed by ALZA and estimated time schedule therefor; (ii) and the estimated Development Costs therefor ("Cost Estimates"); which Work Plans and Cost Estimates shall be signed by an authorized officer of each party. ALZA shall diligently perform those development activities assigned to it under the Work Plan and shall use diligent efforts to complete tasks in the Work Plan in an expeditious and cost-effective manner.
(b) Development work for the System may be performed by Durect or ALZA (to the extent agreed upon in the Work Plans). Durect shall have the right to subcontract to third parties development of System components (but not System design). The subcontracting of all other System development work will be subject to the prior written consent of ALZA. If Durect desires to subcontract out the development of System components as permitted herein to any third party, prior to providing any information relating to Systems to such third party, Durect shall notify ALZA of the identity of such third party, and Durect shall enter into a confidentiality and invention assignment agreement with such third party in a form previously approved by ALZA which expressly makes ALZA a third-party beneficiary of such agreement and permits ALZA to directly enforce its terms. Unless agreed to in writing by ALZA, the rights granted to Durect to perform development work for the System pursuant to this Section 2.3 shall terminate after a change in control of Durect in which Durect becomes controlled by a third party company, in which event ALZA shall have the right to elect to perform all development work relating to the System and ALZA and Durect shall enter into a Work Plan for such System development work which shall
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provide for the continued diligent performance of such System development work so as to minimize disruption of Product timelines. If ALZA elects not to perform development work relating to the System after such change in control, then Durect shall continue to have the right to perform development work relating to the System as set forth in this Section 2.3. For the purposes of this Section 2.3, "control" shall have the same meaning as set forth in Section 1.1. All other Product development activities may be performed by Durect, ALZA (to the extent agreed upon in Work Plans) or subcontracted to third parties.
2.4 Development Payments. In consideration for ALZA's work on the Program, Durect shall pay to ALZA its Development Costs, provided that Durect shall not be obligated to pay Development Costs in excess of those provided for in approved Work Plans and Cost Estimates, and ALZA shall not be obligated to perform work which would result in Development Costs exceeding such approved Cost Estimates.
2.5 ALZA's Right to Develop Products.
(a) Notwithstanding Section 5.3 below, from time to time during the term of this Agreement, ALZA may propose to Durect in writing that it wishes to commence development of a Product in a Durect Field for its own account or for an Affiliate. Such proposal shall set forth a description of the proposed new product and projected target dates for the filing of an IND, start of Phase III clinical trials and filing of an NDA. Provided that such Product proposed by ALZA: (A) does not incorporate a Drug that could reasonably be classified in the same Drug Class and (B) is not intended for the same therapeutic indication as a Product or Product Candidate for which Durect at that time: (i) has commitments to a third party ([ * * * ]) or (ii) is developing or Commercializing itself (i.e., is included on Schedule 1 or Schedule 2), Durect shall exclusively grant to ALZA, or to an ALZA Affiliate as directed by ALZA, the right to develop and Commercialize such Product, including a license, with the right to sublicense, to all Intellectual Property Rights and Technical Information owned by or licensed to Durect, and to which Durect has the right to disclose, license or sublicense to ALZA, solely to the extent necessary for ALZA to develop or Commercialize such Product.
(b) In the event that ALZA requests that Durect provide certain
development services relating to any Product being developed by ALZA as
described in this Section 2.5, and Durect agrees to provide such development
services, Durect and ALZA shall develop a mutually acceptable Work Plan and Cost
Estimate for Durect's work which shall be signed by an authorized officer of
each party. Durect shall diligently perform those development activities
assigned to it under any such Work Plan and shall use diligent efforts to
complete the tasks in the Work Plan in an expeditious and cost-effective manner.
ALZA will pay to Durect [ * * * ]. Such payments shall be made [ * * * ] within
[ * * * ] days after the date of receipt by ALZA of Durect's invoice.
(c) If ALZA or its Affiliate Commercializes any Product under this Section 2.5 in a Durect Field, ALZA or its Affiliate shall make payments to Durect on each such Product on the
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financial terms described in Exhibit F attached hereto and on other terms as may be agreed to in good faith by the parties in writing.
2.6 Regulatory Activities for Durect Products.
(a) Durect shall diligently take all steps necessary to obtain regulatory approval to market each Product developed by Durect hereunder in each Major Market Country of the Territory, so long as Durect retains Commercialization rights for such Product under this Agreement, including promptly preparing and filing necessary applications for regulatory approval to market the Product in each such country (including the IND and NDA and corresponding regulatory filings outside the United States) and shall work diligently to obtain such approvals as expeditiously as possible. Durect shall use reasonable commercial diligence to obtain such regulatory approvals in other countries of the Territory. ALZA may be delegated certain duties relating to clinical and regulatory activities under the Program on a Product-by-Product basis by mutual agreement as set forth in Work Plans. The CMC Section of any regulatory filing, to the extent it relates to the System, may be maintained by ALZA, in one or more of ALZA's Drug Master Files to the extent permissible under applicable laws and regulations, for which Durect shall have the right of reference for each Product hereunder. Durect shall prepare the CMC Section subject to ALZA's review and decision-making authority under Section 2.6(b).
(b) Notwithstanding the allocation of regulatory responsibilities in this Section 2.6, the representatives of each party shall have the right to review and comment upon all regulatory filings proposed to be made with respect to any Product for each country of the Territory as to which Durect maintains rights hereunder, provided that for any such comments to be considered, the comments shall be provided within [ * * * ] business days after the receipt of any draft filings for review. To the extent ALZA performs review of regulatory filings or attends meetings with regulatory agencies as to matters beyond the requirements of its activities under the Program (and not at Durect's request), it shall do so at its cost and expense. Durect shall have the right to make final decisions with regard to any regulatory filings relating to any Product developed by Durect under this Agreement, provided that notwithstanding anything to the contrary herein, due to ALZA's continuing interest in development and production of Systems for multiple applications, ALZA shall have the right to approve regulatory matters relating to the System or its function, manufacture or safety, including manufacturing specifications and the relevant portions of the CMC Section of an NDA or its equivalent. Each party shall with reasonable promptness provide the other party with copies of all correspondence from or to such regulatory authorities concerning each such Product. ALZA shall have the right to participate in any conference or meeting with regulatory authorities with respect to each Product. Durect shall notify ALZA in writing of its receipt of regulatory approval to market each Product developed by Durect in any country of the Territory within [ * * * ] days after receipt of any such approval.
(c) Representatives of each party shall have the right to review and comment on all proposed protocols for any clinical studies to be conducted by either party with respect to
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any Product being developed by Durect, and each party shall make such changes in
such protocols as may be reasonably requested by the other in writing within
[ * * * ] business days after receiving the proposed protocols, provided that
Durect shall make final decisions on the protocols and their implementation. To
the extent ALZA conducts review of protocols as to matters beyond the
requirements of its activities in the Program (and not at Durect's request),
ALZA shall do so at its cost and expense.
(d) From time to time during the term of this Agreement, ALZA may wish to include certain patent information in the patent certification of an NDA filed or which may be filed by or on behalf of Durect under this Agreement relating to a Product. If ALZA advises Durect in writing of the patent number and expiration date, or such other information as the FDA may from time to time require, of patents to be included in the NDA patent certification or any amendment thereof, Durect shall include such information in the NDA, or amend the NDA, within the applicable time limits required by law.
(e) Nothing contained in this Section 2.6 or elsewhere in this Agreement is intended to conflict with any applicable regulations and laws relating to procuring and maintaining regulatory approval for the Products in all countries of the Territory where the Products will be developed and Commercialized, and in the event of any conflict with the terms of this Agreement and applicable laws, the applicable laws will control.
SECTION 3 - DISCLOSURE OF INFORMATION
3.1 Disclosure. Upon execution of this Agreement, and thereafter
during the term hereof, at such times as the parties shall mutually agree, each
party shall disclose to the other, in confidence subject to Section 4.1 hereof,
relevant Confidential Information and Program Information necessary or useful to
the Program. Each party may use such Confidential Information and Program
Information disclosed by the other party for the purposes permitted by this
Agreement, but for no other purpose. Each party shall, at the request of the
other and on a confidential basis subject to Section 4.1, allow personnel of the
other party to consult with its staff at mutually agreeable times, to discuss
and review such Confidential Information and Program Information. All
Confidential Information and Program Information heretofore or hereafter
disclosed by either party to the other relating to the subject matter hereof
shall be deemed to have been disclosed pursuant to this Agreement and shall be
subject to the provisions of this Agreement including, but not limited to,
Section 4.1.
SECTION 4 - CONFIDENTIALITY OF INFORMATION
4.1 Confidentiality. Except as specifically authorized by this Agreement, each party shall, for the term of this Agreement and for [ * * * ] years after its expiration or termination for any reason, keep confidential, not disclose to others and use only for the purposes authorized herein, all of the other party's Confidential Information and Program Information, except as permitted by this Agreement; provided, however that the foregoing obligation shall not apply to the extent that any such information is
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(i) already known to the recipient at the time of disclosure, as evidenced by its prior written records (but not including information known to Durect personnel as a result of prior association with ALZA), (ii) publicly known prior to or after disclosure other than through unauthorized acts or omissions of the recipient, or (iii) disclosed in good faith to the recipient by a third party lawfully entitled to make such disclosure, or (iv) independently developed by the recipient without use of the disclosing party's Confidential Information as evidenced by written records of the recipient; provided, however, that the exception in clause (iv) shall not apply with respect to any alleged independent development by Durect of information relating to Systems or DUROS Technology (including the manufacture thereof), and provided further that ALZA shall have no obligations of confidentiality or non-use respecting any information provided by Durect relating to Systems or DUROS Technology. Notwithstanding the foregoing, any Confidential Information may be (A) disclosed to governmental agencies and to others where such information may be required to be included in patent applications or regulatory filings permitted under the terms of this Agreement; (B) provided to third parties under appropriate terms and conditions including confidentiality provisions substantially equivalent to those in this Agreement for consulting, manufacturing, development, external testing and marketing trials with respect to the Product; (C) published, if and to the extent such publication has been approved in writing by ALZA, to the extent it relates to ALZA Confidential Information, or Durect, to the extent it relates to Durect Confidential Information; or (D) disclosed to the extent required by applicable laws or regulations or as ordered by a court or other regulatory body having competent jurisdiction. In each of the foregoing cases, the recipient will use its reasonable efforts to limit the disclosure and maintain confidentiality to the extent possible. In addition, ALZA may disclose Confidential Information and Program Information of Durect to any Affiliate solely for the purposes set forth in this Agreement, and any such Affiliate shall comply with the obligations of confidentiality and non-use set forth herein.
SECTION 5 - COMMERCIALIZATION RIGHTS
5.1 Grant of Rights.
(a) On the terms and conditions of this Agreement and subject to
ALZA's rights set forth in Sections 2.5, 5.3(c), 5.4 and 5.5: (i) Durect shall
have the exclusive right to Commercialize each of the Products in the Territory,
with the right to record sales for its own account; (ii) on a Product-by-Product
basis, Durect shall have the right to appoint an Affiliate or Affiliates of
Durect to Commercialize Products in any country or countries of the Territory;
(iii) Durect shall also have the right, on a Product-by-Product basis, to
appoint and/or enter into agreements with Subcontractor(s) to Commercialize,
sell and distribute such Product in any country or countries of the Territory;
and (iv) Durect shall have the exclusive right (subject to the rights and
obligations under this Agreement respecting the development of the Systems
including the provisions of Section 2.3) to develop the Products and to appoint
and/or enter into agreements with Subcontractors to perform such development
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pursuant to this Agreement. In the case of such appointment in any country by
Durect of a non-Affiliate: (i) such Subcontractor shall be subject to the terms
and conditions of this Agreement; (ii) if the Subcontractor will not be
restricted from developing or commercializing products (other than the Products
for which the Subcontractor is appointed under this Agreement) in the same
Durect Field as the Product(s) for which the Subcontractor is appointed,
[* * *]; and (iii) the rights of ALZA under this Agreement shall not be
prejudiced or in any other way reduced or limited by such subcontracting
arrangement. Subject to the terms and conditions of this Agreement, ALZA hereby
grants to Durect and its Affiliates a license under Intellectual Property
Rights covering ALZA Confidential Information (including information owned by
ALZA as of April 21, 1998 relating to catheters and mechanisms for docking
catheters to the Systems) ALZA Program Information, and the Systems solely to
the extent necessary for Durect to Commercialize and Manufacture (subject to
Section 5.6 hereof) Products, to perform development activities as contemplated
herein, and to otherwise perform its obligations in accordance with this
Agreement.
(b) Subject to the terms and conditions of this Agreement, including but not limited to Section 5.3, Durect shall have the exclusive right to Commercialize each Product on Schedule 2: (A) in Subterritories A, B and C for a period of 20 years from the date of first commercial sale of such Product to an independent third party in a Major Market Country in such Subterritory; (B) in Subterritory D for a period of 20 years from the date of first commercial sale of such Product in any Major Market Country.
(c) Subject to the terms and conditions of this Agreement, Durect shall have an option to extend year-by-year the period of Commercialization rights granted under Section 5.1(a) on a Product-by-Product, Subterritory-by-Subterritory (or if applicable, country-by-country) basis (with respect to the Products, Subterritories and countries for which Durect has retained rights), by written notice to ALZA given at least [ * * * ] prior to the expiration of Durect's rights under Section 5.1(b) for such Product in such Subterritory or country.
(d) If the option to extend Commercialization rights is exercised in accordance with Section 5.1(c) for any Product in any Subterritory or country, Durect shall commence making payments automatically under the provisions of Section 6.3 for such Product with respect to such Subterritory or country as the obligations to make Product Payments for such Product in such Subterritory or country under Section 6.1 expire. In the event that Durect exercises its option to extend its rights described in Section 5.1(c), the Commercialization rights granted under Section 5.1(a) for such Product in such Subterritory or country shall continue for the extension term(s) and under the conditions set forth in Section 6.3.
(e) From time to time during the term of this Agreement, Durect may propose to ALZA in writing additional components to be added to the CNS Field, consisting of a specific drug, drug class or clinical indication. Such proposal shall include Durect's summary development plan
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and budget for developing Products in such additional component for each of the five years following such proposal. Provided that such additional component is not in an area in which ALZA or any ALZA Affiliate at that time has commitments to a third party or has an active development program of its own, and Durect and ALZA agree upon reasonable diligence provisions for such additional component (which agreement the parties shall in good faith attempt to reach within [ * * * ] days after ALZA's receipt of Durect's summary development plan), the parties shall add such component to the CNS Field definition.
5.2 Commercial Diligence. Within 30 days after the filing for regulatory approval in the first Major Market Country for each Product, Durect shall notify ALZA in writing as to its plans for Commercializing such Product in the Territory. Durect shall diligently pursue regulatory approval and Commercialization of the Products in the Territory. Promptly after obtaining the necessary regulatory approvals (and pricing approval where applicable) in any country of the Territory (and in any event within [ * * * ] months after such approvals) Durect (or its Affiliates or Subcontractors) shall commence and shall continue diligently to Commercialize the Product on a nationwide basis in such country using the same efforts that an established pharmaceutical company normally devotes to its own comparable products, so long as Durect retains Commercialization rights under this Agreement. Without limiting the foregoing, to maintain Commercialization rights to a Product in each Subterritory, Durect must diligently Commercialize such Product in such Subterritory in accordance with the Commercialization requirements applicable to such Subterritory as set forth in the chart below; provided, however, that Durect shall retain Commercialization rights in the entire Territory and it shall be deemed to have met the Commercialization requirements in all Subterritories if it has introduced such Product and has met the Commercialization requirements in each Major Market Country (including the obligation to make Product Payments pursuant to Section 6).
Subterritory Commercialization Requirements A Durect must Commercialize the Product in [ * * * ] B Durect must Commercialize the Product in [ * * * ] C Durect must Commercialize the Product in [ * * * ] D Durect must Commercialize the Product in [ * * * ] |
If any time after the [ * * * ], Durect has not met the Commercialization requirements for any Subterritory as set forth above, ALZA may, upon [ * * * ] days prior written notice to Durect, identify any Major Market
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Country in such Subterritory listed in the chart above in which a Product is not
being commercially sold by Durect, its Affiliates or Subcontractors and for
which neither Durect or its Affiliates or Subcontractors are, nor have been for
at least the preceding [ * * * ], diligently seeking regulatory approval to
Commercialize the Product in such Major Market Country (the "Identified
Country"). ALZA and Durect shall attempt in good faith, for up to [ * * * ] from
the date of such notice, to seek a mutually acceptable means of Commercializing
the Product in such Identified Country, which may include both ALZA and Durect
negotiating an agreement with a third party. If after such [ * * * ] period no
such means has been agreed upon, then ALZA may, by written notice to Durect,
terminate the rights of Durect hereunder to Commercialize such Product in such
Subterritory. Notwithstanding the foregoing, Durect shall maintain its sole
commercialization rights in any country in such terminated Subterritory where
the Product has been introduced for so long as Durect continues diligently to
commercialize the Product in such country and to make Product Payments under
Section 6 as applicable. For each Product with respect to which Durect does not
retain Commercialization rights in the particular countries of the Subterritory
("Terminated Countries"), ALZA shall have the rights to such Product in such
Terminated Countries in accordance with Section 11.6.
5.3 Durect Field Exclusivity.
(a) Subject to the terms and conditions of this Agreement and except as provided in Section 5.3(c), Section 5.4 and Section 2.5, ALZA shall not: (i) develop for its own account a product using the System that is designed for use in any Durect Field, or (ii) grant to a third party any rights to develop, manufacture or Commercialize products using the System (or license Intellectual Property Rights covering ALZA Technical Information) that ALZA knows or has reason to know, at the time such third party arrangement is entered into, would be a product designed for use in a Durect Field. Nothing herein shall be deemed to restrict ALZA from developing or granting rights with respect to any products that are not designed and developed for use in a Durect Field, subject to the following:
(A) ALZA may not itself develop or Commercialize, nor grant rights to a third party to develop or Commercialize any product using the System which incorporates Sufentanil so long as Durect and/or a Subcontractor (including ALZA) is diligently developing or Commercializing the non-catheterized Product using Sufentanil as the Drug ("Sufentanil Product") in accordance with the terms of this Agreement.
(B) In the event ALZA (or a third party to whom ALZA has granted rights) Commercializes a product using the System which incorporates an opioid compound (other than Sufentanil) as the active ingredient, then starting upon the FDA approval for such other product and during such period as Durect and/or a Subcontractor is diligently developing or Commercializing the Sufentanil Product in accordance with the terms of this Agreement, the payments due to ALZA under Section 6 for the Sufentanil Product shall be reduced by [ * * * ].
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If Durect can reasonably show that a third party contractor of ALZA is
manufacturing or Commercializing products using the System, which products are
being used in the Durect Fields (other than products to which ALZA has rights
under this Agreement, including but not limited to pursuant to Section 2.5),
Section 5.3(c) and Section 5.4), then ALZA agrees to notify such third party
contractor of Durect's rights in the Durect Fields and, to the extent it has the
legal right to do so, to use its reasonable commercial efforts to stop such
third party from manufacturing or Commercializing such products in the Durect
Fields. However, Durect acknowledges that ALZA may not have the right to limit
uses of products that are not designed for use in a Durect Field. The
obligations of ALZA under Section 5.3 shall continue for the term of this
Agreement.
(b) From time to time during the term of this Agreement, Durect
and ALZA may, at their discretion, discuss opportunities to add either
additional products or additional fields of products to the definition of Durect
Fields under this Agreement, by written agreement of the parties; provided that
neither party shall be obligated to enter into negotiations or into such an
agreement, or to reserve for the other party rights to any additional products
or fields until such time as an agreement is made to that effect. In addition,
if any such additional Products, or Products in such additional fields, involves
clinical applications in the areas of [ * * * ], or delivery of drugs to the [ *
* * ] and subject to the exception provided in the next sentence below, then
ALZA shall have an option to obtain exclusive Commercialization rights to such
Products as set forth in Section 5.5(a). The foregoing option to ALZA shall not
apply to any Product which Durect Commercializes through a Subcontractor who
holds exclusive rights (by ownership or exclusive license) to a United States
patent which: (i) covers the Drug incorporated into such Product, or the Drug's
manufacture or use which but for a license from the Subcontractor would preclude
Durect from the development, Commercialization or manufacture of such Product
incorporating such Drug, and (ii) will provide at least [ * * * ] years of
market exclusivity from the time Durect and the Subcontractor enter into an
agreement for the development and/or Commercialization of such Product (any such
Product shall herein be referred to as "Proprietary Product").
(c) Notwithstanding Section 5.3(a), if ALZA is requested by a
third party to develop a product using the System without a catheter, which
product is designed for use in the Cancer Antigen Field, then ALZA shall notify
Durect in writing of such opportunity. Durect shall notify ALZA within [ * * * ]
days after the receipt of such notice from ALZA as to whether or not Durect
wishes to pursue such opportunity as a Product under this Agreement with such
third party. If Durect and such third party enter into a written agreement
providing for the development and Commercialization of the product within [ * *
* ] days after Durect's receipt of the notice from ALZA described in the first
sentence of this Section 5.3(c), then such product shall be developed as a
Product under this Agreement, and if such condition has not been met, then ALZA
shall be free to pursue such opportunity using the System without a catheter
with such third party; provided, however, that ALZA may not develop or grant
rights to a third party to develop
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or Commercialize any such product using the System in the Cancer Antigen Field which product incorporates the same Drug as a Product which is then being developed or Commercialized diligently by Durect or a Subcontractor under this Agreement in the Cancer Antigen Field. Subject to the foregoing, if ALZA develops or Commercializes with a third party a product using the System without a catheter designed for use in the Cancer Antigen Field pursuant to the terms of this Section 5.3(c), and such product is designed for the same clinical use as a product for which development of a Durect Product (the "Prior Durect Product") has commenced under this Agreement prior to ALZA's entering into the agreement with the third party, then if the basis on which ALZA is licensing, developing or supplying such third party's product is more favorable to the third party than the basis on which ALZA is licensing, developing or supplying the Prior Durect Product hereunder, and there are no other terms or factors in the third party arrangement that compensate for such more favorable terms, then ALZA will offer the more favorable terms to Durect solely with respect to the Prior Durect Product.
5.4 Other Technologies; Conversion of Rights. The parties acknowledge
that ALZA is relying on Durect's commitment to utilizing DUROS Technology in
development of its products. Accordingly, the Commercialization rights for
Products granted to Durect under this Agreement shall become non-exclusive
rights, and the restrictions on ALZA provided for in Section 5.3 will terminate
upon written notice from ALZA, if at any time during the term of this Agreement
Durect develops or Commercializes any drug delivery technology for use in any of
the Durect Fields and that would be used in a manner similar to the DUROS
Technology. In such event, no additional Product Candidates or Products shall be
added to Schedules 1 or 2 (but Durect shall retain exclusive rights only to
those Products already included in Schedule 2 and only for so long as Durect
continues to meet its obligations for such Products and does not develop any
product using such other drug delivery technology that contains the same Drug
for use in the same Durect Field as any of such Products). Nothing in this
Section 5.4 shall be deemed to restrict Durect from developing and
Commercializing any type of drug delivery technology in any fields of use
outside of the Durect Fields. During the term of this Agreement, Durect shall
have the right to delete any Durect Field(s) from the "Durect Fields" definition
by written notice to ALZA effective [ * * * ] days after such notice is received
by ALZA, in which event, all rights of Durect in such Durect Field shall
terminate; provided, however, such deletion of any Durect Field by Durect shall
not affect the rights and obligations of the parties with respect to any: (i)
Products in such deleted Durect Fields already included in Schedule 2 as of the
date such field is deleted so long as Durect continues to meet its obligations
hereunder for such Products and (ii) other Durect Fields not deleted in
accordance with this Section 5.4.
5.5 ALZA Commercialization Rights.
(a) Durect hereby grants to ALZA options to obtain exclusive worldwide Commercialization rights to each Product in the Cancer Antigen Field which is not a Proprietary Product (as defined in Section 5.3(b) above) and each additional Product for which ALZA has option rights under
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Section 5.3(b) (each an "Option Product") . At the time that Durect has received data from [ * * * ], Durect may deliver written notice thereof to ALZA, along with the data and a report summarizing such data regarding such Product, provided that Durect must deliver such notice to ALZA by [ * * * ]unless mutually agreed to in writing by the parties. No later than [ * * * ] days after such notice from Durect ("Option Period"), ALZA shall notify Durect in writing whether it elects to:
(i) enter into an agreement with Durect to develop and Commercialize such Product, in which case the parties shall negotiate in good faith an agreement for the development and Commercialization of such Product, which agreement shall require ALZA to Commercialize such Product with the same degree of diligence as required of Durect under Section 5.2; or
(ii) not obtain Commercialization rights to such Product, in which event Durect shall be entitled to enter into an agreement with a third party to develop and Commercialize such Product; or
(iii) solely with respect to an Option Product, extend the Option Period by increments of [ * * * ] months until such time as [ * * * ] and thereafter by increments of [ * * * ] year until such time [ * * * ] (each increment an "Extension Period"), provided that ALZA shall be required to fund development work for such Product during each such Extension Period, but provided further that ALZA shall not be required to fund development work on more than [ * * * ] at a time in the Cancer Antigen Field or any additional field under Section 5.3(b) in order to extend its options for all Products in such Durect Field. ALZA may not extend the Option Period past [ * * * ] for such Product unless mutually agreed to in writing by the parties.
If ALZA elects to exercise its option to any Option Product subject
to this Section 5.5(a) at any time during the Option Period or any Extension
Period, and the parties are unable to agree on terms for such Commercialization
rights within [ * * * ] days after such exercise, either party may elect to
submit the determination of such terms to special arbitration in accordance with
Section 15, provided that judgment must be rendered no later than [ * * * ] days
after the commencement of arbitration (as defined in Section 15). In such
arbitration, the arbitrators shall be instructed to make a determination as to
the fair market value of the rights granted to the Product in question as
between two independent companies negotiating at arms' length and shall
determine appropriate terms, including reasonable diligence provisions, taking
into account, among other things, evidence presented concerning the terms agreed
upon by other parties in arms' length negotiations for products at a similar
stage of development and with similar market potential. Upon such decision by
the arbitrators, the decision shall become a binding agreement of the parties.
(b) In addition, with respect to any Products in all Durect Fields not subject to the application of Section 5.5(a), except for those Products for which Durect either obtains funding or access to a proprietary Drug from a third party and has granted Commercialization rights to the third party providing such funding or Drug prior to the commencement of human clinical trials for such Product, if
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Durect seeks a third party to Commercialize a Product other than such excepted Products (including by Subterritory), Durect shall deliver written notice thereof to ALZA. Upon receipt of such notice by ALZA, if ALZA is interested in such opportunity, the parties shall attempt to negotiate in good faith the terms of an agreement for ALZA to Commercialize such Product for a period of [ * * * ] days ("Negotiation Period"). If, despite such good faith negotiations, ALZA and Durect are unable to agree upon binding written terms for such an arrangement within the Negotiation Period, then Durect will thereafter be free to enter into agreement(s) with other parties for the Commercialization of such Product.
5.6 Manufacture of Product.
(a) Subject to the terms and conditions of this Agreement,
including those set forth in this Section 5.6: (i) Durect shall have the
exclusive right, in the Territory, to manufacture, assemble and finish
commercial and clinical supplies of Products, including the right to make
Systems and fill Systems solely and specifically for incorporation into Products
and not for any other purpose (collectively "Manufacture"); (ii) on a
Product-by-Product basis, Durect shall have the right to appoint such Affiliates
for which Durect possesses, directly or indirectly, the power to direct or cause
the direction of the management or policies of such Affiliates to Manufacture
Products in [ * * * ] and such other countries as shall be agreed upon by the
parties from time to time; and (iii) on a Product-by-Product basis, Durect shall
also have the right to subcontract out to third parties who normally engage in
such subcontract assembly work for others the manufacture of production and
process equipment, System components, the filling of Systems, and sterilization
and final assembly of Product for commercial and clinical supplies of Products,
provided that System subassembly may not be subcontracted to any third party
other than [ * * * ] without ALZA's written approval. Other than subcontracting
as specifically set forth in Section 5.6(a)(ii)-(iii) above, the Manufacture of
Product shall be performed only by Durect and may not be subcontracted to any
parties other than ALZA without the prior written consent of ALZA. Unless agreed
to in writing by ALZA, the rights granted to Durect pursuant to this Section 5.6
or manufacturing rights granted elsewhere in this Agreement shall terminate upon
a change in control of Durect in which Durect becomes controlled by a third
party company, in which event, ALZA shall have the right to elect to supply all
of Durect's and its Affiliates and Subcontractor's clinical and commercial
requirements for Product (excluding any Catheter or other components as agreed
upon by the parties which are external to the System), at [ * * * ]; provided
however, that the price charged by ALZA shall not exceed [ * * * ]. ALZA and
Durect shall enter into a written supply agreement for such manufacture and
supply to Durect, its Affiliates and Subcontractors which shall include such
provisions for interim supply to ensure uninterrupted supply of Products
[ * * * ] provided that the price charged by ALZA shall not exceed [ * * * ]
until ALZA is able to fully meet Durect and its Affiliates and Subcontractor's
requirements after such a change in control. If ALZA elects not to supply
Durect and its Affiliates and Subcontractor's requirements after such a change
in control, then Durect shall continue to have the right to Manufacture Product
as set forth in this Section 5.6. For the purposes of this Section 5.6(a),
"control" shall have the same meaning as set forth in Section 1.1.
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(b) The parties acknowledge that ALZA has provided Durect with reasonable assistance (including making available scientific, engineering and manufacturing and other personnel) and transferred to Durect appropriate documentation relating to Systems manufacture in accordance with a work plan agreed upon by the Parties. All such materials and information shall remain the sole property of ALZA. At the request of ALZA, Durect shall promptly transfer back to ALZA any and all improvements, documentation or other Technical Information that may be developed by Durect or its subcontractors relating to Manufacture of Systems. To the extent such transfer requires technical assistance from Durect, ALZA shall reimburse Durect for the cost of such assistance as determined in accordance with Exhibit E.
(c) All Manufacture of Product by Durect hereunder shall be in strict accordance with all applicable laws and regulations, including the "current good manufacturing practices" regulations of the U.S. Food and Drug Administration. If Durect desires to subcontract any part of manufacturing of Systems as permitted herein to any third party, prior to providing any manufacturing information relating to Systems to such third party, Durect shall notify ALZA of the identity of such third party, and Durect shall enter into a confidentiality and invention assignment agreement in a form previously approved by ALZA with such third party which expressly makes ALZA a third-party beneficiary of such agreement and permits ALZA to directly enforce its terms.
5.7 Identification of ALZA. At ALZA's request, Durect shall cause each 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 such Product. All uses of the ALZA name and marks shall be subject to prior review and approval by ALZA within 30 days.
SECTION 6 - PAYMENTS
6.1 Product Payments. In consideration of the rights granted to
Durect hereunder, the performance of the Program by ALZA and ALZA's other
obligations under this Agreement, Durect shall make Product Payments to ALZA on
Net Sales of the Product for the term of the Commercialization rights set forth
in Section 5.1. The payments to be made under this Section 6.1 are in
recognition of the unusual nature of the arrangements between the parties,
pursuant to which ALZA will provide access to technology over several years,
without profit, in anticipation of possible future payments under this section
6.1. By the payments under this Section 6.1, it is the intent of the parties
that ALZA's efforts and expenditures in creating DUROS Technology to be utilized
in the Program be recognized by a long-term financial sharing in Durect's
Product revenues.
(a) Product Payments on Net Sales of Product due under this Section 6.1 for any calendar year shall be based on the prior calendar year's total Net Sales of Product in the Territory, with payment rates for such calendar year to be the applicable percentages set forth herein. The
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applicable payment rate shall be calculated by [ * * * ], but shall not be less than 2.5% nor more than 5%. During the first calendar year of Product sales, the payment rate will be 2.5%.
Examples: Sales in Year X-1* Payment Rate ($ Million) For Year X** $[ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] |
* Net Sales in the Territory by Durect, its Affiliates and Subcontractors for the prior calendar year. **The applicable payment rate for the current calendar year.
(b) In addition to Product Payments under Section 6.1(a), Durect
shall make payments to ALZA equal to 5% of any upfront, milestone or any special
fees, payments or other consideration received by Durect, its Affiliates or
Subcontractors with respect to Products after deducting from such consideration:
(i) any tax or other government charge (other than income tax) levied on such
consideration to the extent borne by Durect, its Affiliates and Subcontractors
and (ii) any payments (or portions thereof) that constitute reimbursement of
(and are determined based upon) genuine research, development and/or
manufacturing costs incurred by Durect, its Affiliates and Subcontractors
including but not limited to reimbursement of expenses for reagents, materials,
equipment, salaries, testing, clinical trials, insurance and any overhead
reasonably attributable to such research, development or manufacture.
6.2 Minimum Payments. Durect shall make Minimum Payments to ALZA, of
a Subterritory by Subterritory basis for Subterritories A, B and C, as follows:
With respect to each Product, periodically during the Program, commencing in the
calendar quarter when a Product first becomes a Product, Durect shall provide
ALZA with good faith projections of Net Sales for each of the first [ * * * ]
years of marketing such Product in each Subterritory. At least [ * * * ] in each
calendar year, Durect shall update such projections, with one update to be
delivered no later than [ * * * ] days after NDA filing (or if earlier, the
first filing for regulatory clearance to market the Product in a Major Market
Country), and a final update to be delivered within [ * * * ] days after the
first regulatory clearance to market the Product in a Major Market Country. Such
projections shall be consistent with those provided for purposes of forecasting
amounts to be manufactured by Durect or supplied by ALZA pursuant to the Supply
Agreement. Minimum Payments shall commence and shall be paid as follows:
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Subterritory Minimum Payment Commences With A or B* First Minimum Payment Year A or B** Second Minimum Payment Year C Third Minimum Payment Year |
* Whichever of Subterritory A or B in which the Product is first approved in a Major Market Country. ** The other of Subterritory A or B.
Once commenced in accordance with the above table, quarterly Minimum Payments
for each of Subterritories A, B and C shall be 0.375% of the total final
projection for each of the first [ * * * ] years of marketing of the Product for
such Subterritory (1.5% of projected Net Sales of Product on an annual basis),
and Minimum Payments for each such Subterritory shall continue thereafter at the
[ * * * ] year level. Minimum Payments paid to ALZA by Durect shall be fully
creditable against Product Payments on Net Sales under Section 6.1 for the
Minimum Payment Year for which the Minimum Payments are made. No Minimum
Payments will be payable in Subterritory D.
6.3 Optional Payments to Extend Commercialization Rights; Payment
Adjustments. If Durect exercises its option to extend its sole Commercialization
rights under Section 5.1 in accordance with Section 5.1(c) hereof for any
Subterritory or country, Durect shall pay to ALZA, for each such country ,
beginning on the date when the obligation to make Product Payments under Section
6.1 has terminated for such Subterritory or country and for as long as Durect
elects to continue its sole Commercialization rights under Section 5.1(c) hereof
for such Subterritory or country the same Product Payments as set forth in
Section 6.1(a) and (b) for the initial Commercialization term of Net Sales of
Product in such Subterritory or country. Payments by Durect under this Section
6.3 for each Subterritory or country shall continue until such time as Durect
provides written notice to ALZA, not less than [ * * * ] days before the
beginning of any calendar year, that payments under this Section 6.3 will cease
as to such Subterritory or country at the beginning of the calendar year set
forth in such notice, at which time the rights under Section 5.1 shall terminate
for such Product for such Subterritory or country.
6.4 Compulsory License. During the period that Durect retains the sole Commercialization rights to a Product in any country, if in such country any third party tries to obtain from ALZA or Durect or any Affiliate or Subcontractor thereof a compulsory license or rights pursuant to governmental authority to market the Product in such country, ALZA and Durect will use all reasonable efforts to oppose the grant of such license or rights and to obtain the highest royalty or payment rate possible if such compulsory license cannot be avoided. In the event that a third party obtains such compulsory license in such country, Durect shall have the benefit of any more favorable payment terms with respect to such Product in such country as is granted under such compulsory license or right, from the date of first commercial sale by the third party of the Product in such country.
6.5 Payment Estimates. Within [ * * * ] days after the end of each Payment Computation Period, beginning with the Payment Computation Period as to which payments are first due
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to ALZA under this Section 6, Durect shall provide ALZA with a written estimate of Product sales as to which payments will be due in respect of the Payment Computation Period in question.
SECTION 7 - PAYMENT PROCEDURES
7.1 Development Cost Payments. Payments due under Sections 2.4 and 2.6 hereof shall be made quarterly within 30 days after the date of receipt by Durect of ALZA's invoice.
7.2 Product-Based Payments. Payments to ALZA from Durect due under Sections 6.1 and 6.3 hereof shall be made within 60 days after the end of each Payment Computation Period with respect to Net Sales of the applicable Products during such Payment Computation Period. Payments to ALZA from Durect due under Section 6.2 shall be made within 60 days after the end of each Payment Computation Period as to which payments are due. Each payment under this Section 7.2 shall be accompanied by a report setting forth the calculations of the amounts payable to ALZA on a Product-by-Product and Subterritory-by-Subterritory basis.
7.3 Manner of Payment. All payments due hereunder shall be made in United States dollars and, unless otherwise agreed in writing, shall be made by wire transfer to such bank as ALZA may designate in writing without set-off and free and clear of, and without any deduction or withholding for or on account of, any taxes, duties, levies, fees or charges except those taxes or duties levied against ALZA which are legally required to be withheld by Durect. Payments due on Net Sales made in currency other than United States dollars shall first be calculated in the foreign currency and then converted to United States dollars on the basis of the exchange rate in effect for the purchase of United States dollars with such foreign currency as quoted in the Wall Street Journal (or comparable publication if not quoted in the Wall Street Journal) with respect to the currency of the country of origin of such payment on the last business day of the Payment Computation Period for which the payment is being made. If restrictions on the transfer of currency exist in any country such as to prevent Durect from making payments in the United States, Durect shall take all reasonable steps to obtain a waiver of such restrictions or otherwise to enable Durect to make such payments, failing which Durect shall, or shall cause a United States Affiliate to, pay the amounts due upon sales in such country in United States dollars.
7.4 Books of Account. Each party shall maintain true and complete books of account containing an accurate record of all data necessary for the proper computation of payments due from it or charges made by it under this Agreement. Each party shall have the right, through the independent certified public accountant employed by the other party to conduct its regular annual audit, or through a firm of independent public accountants selected by mutual agreement of the parties, to examine the books of account of the other party at any time within two years after the date of the payment or charges to which they relate (but not more than once in each calendar year) for the purpose of verifying the amount of such payments or charges and the accuracy of such books of account. Such examination
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shall be made during normal business hours at the place of business of the party being audited. The parties agree that information furnished as a result of any such examination shall be limited to a written statement by such certified public accountants to the effect that they have reviewed the books of account of the party being audited and either (i) the amounts of the payments due or charges made under this Agreement are in conformity with such books of account and the applicable provisions of this Agreement or (ii) setting forth any required adjustments. The fees and expenses of the accountants performing such verification shall be borne by the party requesting the audit. If any such audit shows any underpayment or overcharge, a correcting payment or refund shall be made within 30 days after receipt of the written statement described above. Notwithstanding the foregoing, if any such audit results in any underpayment or overcharge with respect to any Payment Computation Period of more than the greater of (i) $10,000 or (ii) 5% of the payment or charge actually due, then the party being audited shall bear all costs of the audit.
7.5 Late Payments. All payments not made when due hereunder shall bear interest at the maximum rate permitted - by applicable law.
SECTION 8 - OWNERSHIP AND USE OF PROGRAM INFORMATION
8.1 Ownership. All Program Information, including but not limited to Program Information relating to the site specific administration of drugs (e.g. pharmaco-kinetics and pharmaco-distribution) and/or relating to any Drug as such, or any Catheter as such, except for any Program Information that is the property of ALZA as set forth herein, shall be the sole property of Durect (and shall be included in Durect Technical Information for purposes of this Agreement). ALZA shall promptly disclose to Durect any such Program Information, and ALZA and its personnel and subcontractors working on the Program shall execute and deliver such assignments, confirmations of assignments, or other written instruments as are necessary to vest in Durect clear and marketable title to Program Information assigned to Durect hereunder. Notwithstanding the foregoing, all Program Information relating to any ALZA Compound or any Drug incorporated in a Product developed by ALZA pursuant to Section 2.5 or the System or its manufacture or to any combination of Systems with other components, active agents, features or processes and any Technical Information developed by Durect (whether or not pursuant to the Program) that relates to DUROS Technology shall be the sole property of ALZA (and shall be included in ALZA Technical Information for purposes of this Agreement). Durect shall promptly disclose to ALZA any such Program Information and Technical Information, and Durect and its personnel and Subcontractors working on the Program shall execute and deliver such assignments, confirmations of assignments, or other written instruments as are necessary to vest in ALZA clear and marketable title to Program Information assigned to ALZA hereunder. In addition to the foregoing, to the extent Durect develops any Technical Information relating to a means of connecting or "docking" a catheter to a System and subject to ALZA abiding by the terms and conditions of the Amended and Restated Market Stand-Off
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Agreement entered into between Durect and ALZA dated June 19, 1998 and attached hereto as Exhibit H, Durect grants to ALZA a worldwide, royalty free, nonexclusive license, with the right to grant sublicenses, to any such Technical Information.
8.2 Use. Each party shall have the right to use, disclose and
license to any third party all Program Information owned by such party under
Section 8.1, provided such use, disclosure or license does not conflict with the
rights granted to the other party under this Agreement.
8.3 Patents. Each party shall be responsible, at its own expense, for filing and prosecuting patent applications as it deems appropriate and for paying maintenance fees on patents issued therefrom, for the term of this Agreement, with respect to Technical Information owned by it. Each party shall promptly render all necessary assistance reasonably requested by the other party in applying for and prosecuting patent applications based on Technical Information owned by the other party under this Agreement.
SECTION 9 - INTELLECTUAL PROPERTY INDEMNITY AND ENFORCEMENT
9.1 Claims by Third Parties. If a claim, suit or proceeding ("Claim") is brought by a third party against Durect and/or ALZA alleging that the making, using, selling, offering for sale or importing of Product developed by Durect infringes an Intellectual Property Right of such third party (except for any patent which covers a manufacturing process used by Durect and not by ALZA), then each party will give prompt written notice to the other of such Claim. If such alleged infringement of such third party's Intellectual Property Right arises from or relates to DUROS Technology, the System or ALZA Technical Information, then ALZA shall have the right to conduct the defense of any suit resulting from such Claim. ALZA shall advise Durect in writing, within 30 days after Durect's notice, whether it intends to defend at its own expense such Claim. If ALZA elects not to so defend or to otherwise dispose of such Claim, Durect may, subject to Section 9.2 below, defend at its own expense such Claim. Except as specifically provided above, Durect shall indemnify and hold harmless ALZA from and against any claims of infringement by a third party with respect to Products developed by Durect.
9.2 Infringement by Third Parties. If, at any time during the term of this Agreement, either party shall become aware of any third party who is infringing or suspected to be infringing any patent owned by ALZA by the manufacture, use or sale of any product that is substantially similar to a Product developed by Durect and contains the same Drug as such Product (an "Infringing Product"), the following provisions shall apply:
(a) The party becoming so aware shall forthwith give written notice to the other ("Notice"). If there is disagreement as to whether the act complained of is in fact an infringement of an ALZA patent, the parties shall refer such issue to a mutually acceptable independent patent counsel. The costs incurred in this regard shall be shared equally.
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(b) If, with or without the advice of independent counsel, ALZA desires to litigate such alleged third party infringement, ALZA shall bear all costs thereof and shall be entitled to all recoveries. ALZA shall have the right to join Durect in such suit at ALZA's cost and expense. ALZA shall notify Durect within 90 days after the delivery of Notice by one party to the other above whether it intends to so litigate.
(c) If ALZA determines not to litigate in accordance with paragraph (b) above, the parties will promptly confer, and if both parties jointly desire to litigate such third party infringement, they shall share any costs thereof and any recovery therein equally, unless otherwise agreed by the parties.
(d) With respect to alleged infringement of such patents, the claims of which are limited to applications of DUROS Technology in the Durect Fields, and which do not include claims for other applications, if no action is taken or agreed to be taken under paragraph (b) or (c) above within 90 days after the Notice and (i) the unit sales volume of the Infringing Product in any country is equal to or exceeds [ * * * ] of the unit sales volume by Durect and its Affiliates and Subcontractors of the Product that is substantially similar to the Infringing Product in such country, and (ii) the patent counsel described in paragraph (a) above has opined that the act complained of is, or most likely is, an infringement in such country, then Durect may, in its sole discretion, and at its sole cost and expense, bring suit in its name (or, if ALZA is an indispensable party, in the name of and on behalf of ALZA) to restrain such third party infringement in such country, and in such instance, Durect shall be entitled to receive and retain, for its own use and benefit, any recovery awarded in such suit.
9.3 Cooperation. Each party shall cooperate with the other party, to the extent reasonably requested, in any legal action brought by or against the other party or both of them and relating to the subject matter of this Agreement, provided that such cooperation shall be at the expense of the party bringing the action, and each party shall have the right to participate at its own expense in any defense, compromise or settlement of any such legal action, to the extent that in its judgment it may be prejudiced thereby. Neither party shall settle any claim or suit in any manner that may adversely affect any patent of the other party or that would require any payment or grant of license or other rights by the other party, without the prior written consent of the other party, to be given or withheld in the other party's sole discretion.
SECTION 10 - REPORTS OF ADVERSE REACTION
10.1 Reports. During the term of this Agreement, each party shall promptly inform the other party of any information that it obtains or develops regarding the efficacy or safety of any Product and shall promptly report to the other party any information or notice of adverse or unexpected reactions or side effects related to the utilization or medical administration of any Product (and, in the case of ALZA, the System, and in case of Durect, the Drug, Catheter or other part of the Product, but in each case, only
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if such adverse reaction appears to be potentially relevant to the Product). Each party shall comply, and shall cooperate with the other party in complying, with the adverse reaction reporting requirements of the Food, Drug and Cosmetic Act, 21 USC 321 et seq., and regulations thereunder with respect to the Product. Each party shall provide the other party with copies of Adverse Drug Experience Reports filed with the FDA as to the Product. Each party's obligations under this Section 10.1 shall be subject to its legal and contractual obligations prohibiting the disclosure of such information. Durect agrees and acknowledges that ALZA may provide information it obtains under this Section 10.1 to ALZA's other clients developing and/or marketing products incorporating the System.
SECTION 11 - TERM AND TERMINATION; MODIFICATION OF RIGHTS
11.1 Term. This Agreement shall remain in effect for as long as Durect is obligated to make payments to ALZA under this Agreement, unless earlier terminated pursuant to this Section 11.
11.2 Termination for Breach; Insolvency.
(a) In addition to the rights and remedies provided elsewhere in this Agreement, if either party breaches or defaults in the performance or observance of any of its material obligations under this Agreement, and such breach or default is not cured within [ * * * ] days after receipt by such party of a written notice from the nonbreaching party specifying the breach or default (or such longer period as is reasonably necessary if the breach is of such a nature that it cannot reasonably be cured within [ * * * ] days), the nonbreaching party shall have the right to terminate this Agreement upon an additional 30 days' written notice to the breaching or defaulting party. Failure to pay any amounts due under this Agreement within [ * * * ] days after notice that such amounts are overdue shall be deemed a material breach of this Agreement.
(b) Either party may terminate this Agreement and the rights granted hereunder, effective upon giving written notice of such termination to the other party, if such other party is liquidated or dissolved, or 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 such other party's assets or any other proceeding under any law for the relief of creditors, or makes an assignment for the benefit of creditors.
11.3 Termination by Durect. Durect may terminate this Agreement at any time upon not less than [ * * * ] days' prior written notice to ALZA. In such event, this Agreement shall terminate as of the effective date of such notice.
11.4 Effect of Termination. Except as provided in Section 16.8, all rights and obligations of the Parties shall cease upon expiration or termination of this Agreement. The expiration or termination of this Agreement for whatever reason shall not affect: (i) Durect's obligation to pay ALZA, within [ * * * ] days after the receipt of ALZA's invoice, for all Development Costs incurred up to the effective date of the termination and for all uncancellable obligations of ALZA incurred in connection with
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the Program prior to the date of termination pursuant to approved Work Plans; and (ii) the parties' obligations to pay to each other all other amounts due under this Agreement accruing prior to and up to the effective date of such expiration or termination.
11.5 ALZA Termination. If, at any time prior to July 1, 2006,
Durect or any of its Affiliates solicits for employment or hires, without ALZA's
prior written consent, a person who is an ALZA employee in the DUROS Technology
group or has been an ALZA employee in the DUROS Technology group within 180 days
prior to such hiring, then ALZA shall have the right to terminate this Agreement
on 60 days written notice, unless during such 60 days Durect ceases such
solicitation and such person remains employed by ALZA and confirms his or her
intent to remain an employee of ALZA. The provisions of this Section 11.5 shall
be of no further force or effect if, as a result of a change in control of ALZA,
the employees working in the DUROS Technology group are not generally retained
as employees. The parties agree and acknowledge that the provisions of this
Section 11.5 are necessary to induce ALZA to participate in the formation of
Durect and to agree with the terms and conditions hereof, and form an essential
part of this Agreement.
11.6 Certain Program Information and Other Rights. Solely with respect to (i) any country or Subterritory for which the Commercialization rights granted to Durect under Section 5.1 have expired, or have been terminated pursuant to this Agreement with respect to any Product or (ii) upon the expiration or termination of this Agreement (except for termination by Durect due to a breach by ALZA under Section 11.2); and in each case solely to the extent required by ALZA to develop, make, have made, use and sell the Product to which such termination or elimination relates in the relevant Subterritory or country, Durect hereby grants to ALZA the exclusive right and license, with the right to sublicense, solely to use any and all data, rights and information necessary for such purpose, including but not limited to regulatory filings and Program Information to which ALZA does not already have rights hereunder, and the right to cross-reference any and all regulatory filings with respect to the Product. (To the extent possible, regulatory filings for those countries for which ALZA obtains commercialization rights shall be transferred to ALZA.) If and when ALZA Commercializes a Product pursuant to this Section, in order to compensate Durect for its investment in developing such filings and information, ALZA shall make payments to Durect at a rate as set forth in Section 6.1 (but determined based on ALZA's net sales of Product), but only until the aggregate of such payments is equal [ * * * ] with respect to the applicable Product (or with respect to the Product in such applicable country if ALZA obtains rights only as to a specified country or countries). Notwithstanding the foregoing, in the event of the elimination of a Product under this Agreement, if Durect has developed and successfully filed an NDA covering such Product prior to such elimination, then in consideration of the rights granted ALZA respecting such Product, ALZA shall pay Durect continuing royalties of [ * * * ] percent of its Net Sales after the obligation to make payments under the preceding sentence has expired, provided that the obligations to pay royalties shall expire for the Territory [ * * * ]. In each case, such
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payments by ALZA will be subject to adjustments under the same terms as are applicable to Durect's Product Payment obligations under this Agreement.
SECTION 12 - FORCE MAJEURE
12.1 Force Majeure. Neither party to this Agreement shall be liable for failure or delay in the performance of any of its obligations hereunder, if such failure or delay is due to causes beyond its reasonable control, including, without limitation, acts of God, earthquakes, 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 after the removal of the cause of such failure or delay.
SECTION 13 - ASSIGNMENT
13.1 Assignment. This Agreement shall not be assigned by either party without the prior written consent of the other party, except that either party may assign this Agreement, in whole or in part, to an Affiliate of such party or to the successor (including the surviving company in any consolidation, reorganization or merger) or assignee of all or substantially all of its business. This Agreement will be binding upon any permitted assignee of either party. No assignment shall have the effect of relieving any party to this Agreement of any of its obligations hereunder.
SECTION 14 - INDEMNIFICATION
14.1 Durect Indemnity. Durect shall defend, indemnify and hold harmless ALZA and its Affiliates, and their officers, directors, employees and agents (collectively, "ALZA Indemnitees") from and against any and all losses, liabilities, claims, obligations, costs and expenses (including without limitation reasonable attorneys' fees) (collectively, "Losses") arising out of the Program relating to the Products developed by Durect (including the use, storage and handling of the Drug hereunder) or the use, design, labeling or manufacture, processing or packaging (subject to the terms of the Supply Agreement) or sale or Commercialization of Products by Durect, its Affiliates and Subcontractors, including without limitation any product liability claims with respect to any such Products, except for Losses arising from the gross negligence or willful misconduct of ALZA, material breach of this Agreement by ALZA, or breach by ALZA of any product warranty in the Supply Agreement; provided that such ALZA Indemnitee: (i) provides reasonable notice to Durect of such Loss and permits Durect to control, in a manner not adverse to such ALZA Indemnitee, the defense, settlement, adjustment or compromise of any such Claim using counsel reasonably acceptable to such ALZA Indemnitee; and (ii) reasonably cooperates with Durect in the defense of any such Claim, subject to Durect's payment of all reasonable costs and expenses associated with such cooperation, and further provided that Durect shall not be liable for any such costs or expenses incurred without its prior written authorization. Durect shall not enter into any settlement that affects an ALZA Indemnitee's rights or interest without prior written
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approval by the ALZA Indemnitee. The ALZA Indemnitee shall have no authority to settle any claim for Losses on behalf of Durect. The ALZA Indemnitee shall have the right to participate, at its own expense, in the defense of any such claim or demand to the extent it so desires.
14.2 ALZA Indemnity. ALZA shall defend, indemnify and hold
harmless Durect and its Affiliates, and their officers, directors, employees and
agents (collectively, "Durect Indemnitees") from and against any Losses arising
from the gross negligence or willful misconduct of ALZA, material breach of this
Agreement by ALZA, or breach by ALZA of any product warranty in the Supply
Agreement; provided that such Durect Indemnitee: (i) provides reasonable notice
to ALZA of such Loss and permits ALZA to control, in a manner not adverse to
such Durect Indemnitee, the defense, settlement, adjustment or compromise of any
such Claim using counsel reasonably acceptable to such Durect Indemnitee; and
(ii) reasonably cooperates with ALZA in the defense of any such Claim, subject
to ALZA's payment of all reasonable costs and expenses associated with such
cooperation, and further provided that ALZA shall not be liable for any such
costs or expenses incurred without its prior written authorization. ALZA shall
not enter into any settlement that affects a Durect Indemnitee's rights or
interest without prior written approval by the Durect Indemnitee. The Durect
Indemnitee shall have no authority to settle any claim for Losses on behalf of
ALZA. The Durect Indemnitee shall have the right to participate, at its own
expense, in the defense of any such claim or demand to the extent it so desires.
14.3 Disclaimer of Consequential Damages. IN NO EVENT WILL
EITHER DURECT OR ALZA BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL, OR PUNITIVE DAMAGES INCURRED BY A PARTY ARISING UNDER OR AS A RESULT
OF THIS AGREEMENT (OR THE TERMINATION HEREOF) INCLUDING, BUT NOT LIMITED TO, THE
LOSS OF PROSPECTIVE PROFITS OR ANTICIPATED SALES, OR ON ACCOUNT OF EXPENSES,
INVESTMENTS, OR COMMITMENTS IN CONNECTION WITH THE BUSINESS OR GOODWILL OF ALZA
OR DURECT OR OTHERWISE.
14.4 Insurance. Durect shall obtain and maintain in full force and effect during the term of this Agreement a policy of products liability insurance covering liabilities that may arise from the Products developed by Durect and naming ALZA as an additional named insured, in such amounts as are reasonable in view of the development and Commercialization status of the Products. Durect shall provide ALZA a certificate of such insurance within 15 days after request by ALZA.
SECTION 15 - ARBITRATION
15.1 Arbitration. All disputes which may arise under, out of, in connection with, or relating to this Agreement shall be settled by arbitration conducted in Santa Clara County, California, in accordance with the then existing rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The parties
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hereby agree that service of any notices in the course of such arbitration at their respective addresses as provided for in Section 16.4 of this Agreement shall be valid and sufficient.
15.2 Arbitrators. In any arbitration pursuant to this Section 15, the award shall be rendered by a majority of the members of a board of arbitration consisting of three members who shall be appointed by the parties jointly, or if the parties cannot agree as to three arbitrators within 30 days after the commencement of the arbitration proceeding, then one arbitrator shall be appointed by ALZA and one arbitrator shall be appointed by Durect within 60 days after the commencement of the arbitration proceeding. The third arbitrator shall be appointed by mutual agreement of such two arbitrators. In the event of failure of the two arbitrators to agree within 75 days after commencement of the arbitration proceeding upon the appointment of the third arbitrator, the third arbitrator shall be appointed by the American Arbitration Association in accordance with its then existing rules. Notwithstanding the foregoing, in the event that any party shall fail to appoint an arbitrator it is required to appoint within the specified time period, such arbitrator and the third arbitrator shall be appointed by the American Arbitration Association in accordance with its then existing rules. For purposes of this Section 15, the "commencement of the arbitration proceeding" shall be deemed to be the date upon which a written demand for arbitration is received by the American Arbitration Association from one of the parties.
SECTION 16 - MISCELLANEOUS
16.1 Amendment. Any waiver by any party hereto of a breach of any provisions of this Agreement shall not be implied and shall not be valid unless such waiver is recited in writing and signed by such party. Failure of any party to require, in one or more instances, performance by the other party in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of the future performance of any such terms or conditions or of any other terms and conditions of this Agreement. A waiver by either party of any term or condition of this Agreement shall not be deemed or construed to be a waiver of such term or condition for any other term. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be a limitation of any other remedy, right, undertaking, obligation or agreement of either party. This Agreement may not be amended except in a writing signed by both parties.
16.2 Relationship of the Parties. For all purposes of this Agreement, Durect and ALZA shall be deemed to be independent entities and anything in this Agreement to the contrary notwithstanding, nothing herein shall be deemed to constitute Durect and ALZA as partners, joint venturers, co-owners, an association or any entity separate and apart from each party itself, nor shall this Agreement constitute any party hereto an employee or agent, legal or otherwise, of the other party for any purposes whatsoever. Neither party hereto is authorized to make any statements or representations on behalf of the other party or in any way obligate the other party, except as expressly authorized in writing by the other party. Anything in this Agreement to the contrary notwithstanding, no party hereto shall
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assume nor shall be liable for any liabilities or obligations of the other party, whether past, present or future.
16.3 Governing Law. This Agreement shall be governed by the laws of the State of California, excluding any - choice of law rules which may direct the application of the laws of another jurisdiction.
16.4 Notices. Notices required under this Agreement shall be in writing and sent by registered or certified mail, postage prepaid, or by telex or facsimile and confirmed by registered or certified mail and addressed as follows:
If to ALZA: ALZA Corporation 1900 Charleston Rd. Mountain View, CA 94309 Attention: Law Department If to Durect: Durect Corporation 10240 Bubb Road Cupertino, CA 95014 Attention: Chief Executive Officer |
All notices shall be deemed to be effective five days after the date of mailing or upon receipt if sent by facsimile (but only if followed by certified or registered confirmation). Either party may change the address at which notice is to be received by written notice pursuant to this Section 16.4.
16.5 Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, it shall be modified, if possible, to the minimum extent necessary to make it valid and enforceable or, if such modification is not possible, it shall be stricken and the remaining provisions shall remain in full force and effect; provided, however, that if a provision is stricken so as to significantly alter the economic arrangements of this Agreement, the party adversely affected may terminate this Agreement upon 60 days' prior written notice to the other party.
16.6 Headings. The headings set forth at the beginning of the various sections of this Agreement are for reference and convenience and shall not affect the meanings of the provisions of this Agreement.
16.7 Public Disclosure.
(a) Neither party shall, without the prior written consent of the other party, disclose to third parties, nor originate any publicity, news release or public announcement, written or oral, whether to the public, the press, stockholders or otherwise, referring to the existence or terms of this Agreement, including its existence, the subject matter to which it relates, the performance under it or any of its specific terms and conditions, except such announcements or disclosures as, in the opinion of the counsel for the party making such announcement, are required by law, including United States securities laws, and each party may disclose the existence of this Agreement and the material terms and conditions hereof under circumstances that reasonably ensure the confidentiality thereof to: (i) any government or
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regulatory authorities, including without limitation the United States
Securities and Exchange Commission to the extent required by applicable law,
(ii) its legal representatives, advisors and prospective investors, and (iii) to
prospective Subcontractors to the extent required for entering into agreements
with such Subcontractors. If a party decides to make an announcement it believes
to be required by law with respect to this Agreement, it will give the other
party such notice as is reasonably practicable and an opportunity to comment
upon the announcement.
(b) Durect shall submit for review to ALZA, and obtain ALZA's prior written consent for any reference to or description of ALZA or its technology, proprietary rights or products that is to be disseminated to third parties.
16.8 Survival. The provisions of Sections 1, 4, 8, 11, 15, 16.3, 16.4, 16.5, 16.6, 16.7 and this Section 16.8, (and Sections 2.5, 6.1, 6.2, 6.3, 6.6, 7, 9, 10, and 14 with respect to events occurring prior to termination), shall survive the termination for any reason of this Agreement. Neither party shall be liable to the other due to the termination of this Agreement as provided herein, whether in loss of goodwill, anticipated profits or otherwise.
16.9 No Conflict. Each party represents that neither this Agreement nor any of its obligations hereunder will conflict or result in a breach of any arrangement or agreement between such party and any third party. Each party represents that it has not been debarred and has not been the subject of debarment proceedings by the FDA.
16.10 Entire Agreement. This Agreement, including the exhibits hereto set forth the entire understanding between the parties hereto as to the subject matter hereof and, as of October 1, 2002, supersedes the Previous Agreement. Prior to the execution of this Agreement, the parties have had numerous discussions, conversations and negotiations, and have generated correspondence, writings and other memoranda with respect to the subject matter hereof. Notwithstanding all of such activities, this Agreement (including the exhibits hereto) is intended to define the full extent of the parties' respective agreements, arrangements and obligations with respect to the subject matter hereof, and each party represents that it is not relying on any such other discussions, conversations, negotiations, correspondence, writings and memoranda in executing and delivering this Agreement or performing its respective obligations hereunder. With the exception of the Previous Agreement, all written agreements between the parties remain in full force and effect according to their terms.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their duly authorized representatives.
DURECT
CORPORATION ALZA CORPORATION
By: __________________________ By: __________________________ Title: __________________________ Title: __________________________ CONFIDENTIAL 34 |
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
EXHIBIT A - Specified Anticancer Antigens for
Immunization Therapy NAME AND/OR ABBREVIATION REFERENCE =============================================================================== -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - -- - [ * * * ] [ * * * ] -- - |
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EXHIBIT B - intentionally left blank
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EXHIBIT C - Development Stages
Screening of Proposed Product Candidates
The Screening Stage may consist of the following:
[ * * * ]
[ * * * ]
[ * * * ]
Feasibility and Prototype Development
[ * * * ]
[ * * * ]
PRODUCT DEVELOPMENT
[ * * * ]
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EXHIBIT D - Countries of Sub-Territories B and C
Subterritory B: European Community Austria* Italy* Slovakia Belgium* Latvia Slovenia Bulgaria Lithuania Spain* Croatia Luxembourg* Sweden* Cyprus Malta Switzerland Czech Republic Netherlands* Turkey Denmark* Norway United Kingdom* Estonia Poland Yugoslavia Finland* Portugal* Ireland* Romania |
* = Current members of the European Community
Subterritory C: Japan and the Far East Australia Malaysia Bangladesh New Zealand Brunei North Korea Burma Pakistan Cambodia Philippines China, People's Republic Singapore India South Korea Indonesia Sri Lanka Japan Taiwan Laos Thailand Macao Vietnam |
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EXHIBIT E - Development Costs
Development Costs are equal to the sum of (i) research expenses, (ii) general and administrative expenses and (iii) capital asset expenditures.
(i) Research expenses include both direct expenses and indirect expenses.
(a) Direct expenses include direct research salaries (including project management and temporary labor), clinical expenses, supplies and other expenses incurred specifically in connection with the Program.
(b) Indirect expenses include general research management and support costs of the research and product development organization. Indirect expenses are allocated to all projects and billed to clients at a fixed rate* of 160% of direct research salaries.
Examples of items included in direct and indirect expenses are listed on Exhibit E-1
(ii) General and administrative expenses are allocated among the research and product development, manufacturing and marketing organizations. The portion allocated to the research and product development organization is then allocated to all research and development projects and billed to clients at a fixed rate* of 80% of direct research salaries.)
Examples of items included in general and administrative expenses are listed on Exhibit E-1.
(iii) Capital asset expenditures are the actual costs of new capital assets acquired specifically for the project.
* This fixed billing rate will not be changed prior to January 1, 1999 and, if changed on or after January 1, 1999, such changes will be limited to not more than one change per calendar year and shall be a maximum of 10% of the rate in effect at the time of the increase.
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EXHIBIT E-1 - Examples of Research Expenses
Direct Expenses
Direct research salaries*
Project clinical expenses and outside services
Project specific supplies
Project travel and related expenses
Miscellaneous project expenses
Regulatory and filing fees and maintenance payments
Indirect Expenses
Research management and indirect salaries*
General research supplies and materials
General research consulting and outside services
Facilities expenses
Telephone and communications
Equipment depreciation, rent, maintenance and services
Research travel and related expenses
Patent and trademark expenses
Miscellaneous indirect research expenses
Examples of General and Administrative Expense
Corporate management, administrative, and indirect salaries*
Telephone and communications
Equipment depreciation, rent, maintenance and services
Board of directors and corporate consulting
Annual audit, accounting and legal expenses
Facilities expenses
Information services (data processing) expenses
Interest expense
Miscellaneous general and administrative expenses
*Salaries include fringe benefits at a fixed rate of 52% of salaries. This fixed rate will not be changed prior to January 1, 1999 and, if changed on or after January 1, 1999, such changes will be limited to not more than one change per calendar year and shall be a maximum of 10% of the rate in effect at the time of the increase.
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Exhibit F - Payments to Durect
For purposes of this Exhibit F, "ALZA Net Sales" shall mean the amounts invoiced on sales of any Product in a Durect Field by ALZA and its Affiliates and subcontractors to independent, unrelated third parties in bona fide arms-length transactions, less the following deductions actually allowed by ALZA, its Affiliates and subcontractors and taken by such third parties and not otherwise recovered by or reimbursed to ALZA, or its Affiliates or subcontractors: (i) trade, cash and quantity discounts; (ii) taxes or government charges levied on the sale of such 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, defects or returns or because of rebates or retroactive price reductions; and (iv) delivery charges (including transportation and insurance costs) actually included in the net sales invoiced. ALZA Net Sales shall not include the prices charged (at fair market value) for separate products such as catheter access devices, syringes, gloves, and gauze pads, that may be either sold separately from such product or bundled with such product in the form of a kit; provided, however, that any ALZA Net Sales shall be deemed to include the amount or fair market value of any consideration (other than consideration described in Section F.1(b)) received by ALZA or its Affiliates or subcontractors that can be attributable to such product, whether such consideration is in cash or payments in kind. ALZA Net Sales shall not include sales of any product between or among ALZA and its Affiliates and subcontractors.
All other capitalized terms used in this Exhibit F have the meanings set forth in Article 1 of this Agreement.
F.1 Product Payments. In consideration of the rights granted to ALZA under Section 2.5 of this Agreement, ALZA shall make product payments to Durect on ALZA Net Sales of each Product described in Section 2.5(c) for a period of [ * * * ] follows:
(a) Product payments on ALZA Net Sales due under this Section F.1 for any calendar year shall be based on [ * * * ]. The applicable payment rate shall be calculated by dividing by [ * * * ], but shall not be less than [ * * * ]% nor more than [ * * * ]%. During the first calendar year of ALZA Net Sales of any Product, the payment rate will be [ * * * ]%.
Examples: Sales in Year X-1* Payment Rate ($ Million) For Year X** $[ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] |
* ALZA Net Sales in the Territory for the prior calendar year.
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** The applicable payment rate for the current calendar year.
(b) In addition to product payments under Section F.1(a), ALZA shall make payments to Durect equal to [ * * * ] of any upfront, milestone or any special fees, payments or other consideration received by ALZA, its Affiliates or subcontractors with respect to any applicable Product for which there are ALZA Net Sales after deducting from such consideration: (i) any tax or other government charge (other than income tax) levied on such consideration to the extent borne by ALZA, its Affiliates and subcontractors and (ii) any payments (or portions thereof) that constitute reimbursement of [ * * * ] costs incurred by ALZA, its Affiliates and subcontractors including but not limited to reimbursement of expenses for reagents, materials, equipment, salaries, testing, clinical trials, insurance and any overhead reasonably attributable to such research, development or manufacture.
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EXHIBIT G - Manufacturing Costs
"Cost of Manufacturing" shall mean ALZA's or Durect's, as the case may be, standard cost of manufacturing Product, including packaging thereof, determined in accordance with generally accepted accounting procedures and consistent with the company's accounting practices on its other products, and including the cost of materials, direct labor and benefits, and allocated overhead, the total expressed as Manufacturing Cost per Unit of Product manufactured.
A. Materials. Includes those items which form an integral and direct part of the Product, or are necessary for its production, as well as cartons, labels, package inserts, shippers, etc.
B. Direct Labor and Benefits. Includes labor and related payroll taxes and employment benefits spent in the actual production of the Product. It is that portion of basic wages, taxes and benefits which can be identified with or charged to a specific product.
C. Overhead. Overhead includes all operating expenses incurred by and in support of all manufacturing cost centers and quality operations. Cost elements included are:
- Direct labor, related payroll taxes and employee benefits
- Depreciation
- Taxes
- Insurance
- Rent
- Repairs and maintenance
- Supplies, scrap and inventory expenses
- Utilities
- Factory administration expenses
- Other similar cost elements of factory overhead
- Allocation of general and administrative overhead allocated to Product manufacturing centers and quality operations.
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EXHIBIT H - Amended and Restated Market Stand-Off Agreement
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SCHEDULE 1 - Product Candidates
Milestone Target Date Removed from Schedule ------------ Date Added to ----------------------- Start File Project Field Schedule 1 Date Reason Status File IND Phase III NDA -------- -------- ---------- --------- -------- -------- -------- ---------- --------- [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] |
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SCHEDULE 2 - Products
Date Removed from Schedule Added to ----------------------------- Project Field Schedule 2 Date Reason --------- --------- ---------- ---------- ---------- [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] [ * * * ] |
**Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC
(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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/s/ J
AMES
E. B
ROWN
James E. Brown
Chief Executive Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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/s/ T
HOMAS
A. S
CHRECK
Thomas A. Schreck
Chief Financial Officer
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