EXHIBIT 10.55
FACILITIES CONTRIBUTION AGREEMENT
This Facilities Contribution Agreement (the "Agreement") is made with
retroactive effect to November 1st, 2001 by and between Connetics Corporation, a
Delaware corporation, with its principal place of business at 3290 West Bayshore
Road, Palo Alto, California 94303 ("Connetics") and DPT Laboratories, Ltd., a
Texas Limited Partnership with a place of business at 307 East Josephine Street,
San Antonio, Texas 78215 ("DPT"). Connetics and DPT are sometimes referred to in
this Agreement individually as a "Party" and collectively as the "Parties."
BACKGROUND
A. DPT leases certain Premises currently partially improved with a facility
being constructed thereon, legally described on EXHIBIT A to this
Agreement (the "PREMISES"). DPT also owns certain contract rights,
plans, drawings, specifications and reports used in connection with the
pharmaceutical qualification and validation, and improvement of the
Premises and construction of the Project (defined below).
B. Pursuant to this Agreement, DPT has agreed to permit Connetics to
construct certain improvements on the Premises and install certain
equipment on the Premises, as more specifically described herein.
C. Pursuant to this Agreement, Connetics shall contribute the costs for the
construction of the improvements and purchase of the equipment, as more
specifically described herein.
D. Pursuant to this Agreement and the plans, specifications, and other
documents required hereby, DPT has agreed to assist Connetics as an
advisor in connection with the Project on the Premises.
The Parties agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following capitalized terms have the following
meanings:
"APPROVED PLANS" means the Premises Improvement Plans (Plans and specifications
prepared by the Architect and DPT), as approved by DPT and Connetics.
"ARCHITECT" means Middleman + de la Garza + Neugebauer Architects or such other
person or firm as Connetics and DPT may mutually agree.
"ASSETS" shall have the meaning set forth in SECTION 5.1.
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"cGMP" means the current Good Manufacturing Practices of the FDA, as set forth
in Title 21 of the U.S. Code of Federal Regulations.
"CHANGE ORDER" shall have the meaning set forth in SECTION 3.3 of this
Agreement.
"CONNETICS CONTRIBUTION" shall have the meaning set forth in SECTION 2.1 of this
Agreement.
"CONNETICS DELAY" means any of the following types of delay in the completion of
construction of the Project:
(1) Any delay resulting from Connetics' failure to furnish, in a timely
manner, information recommended by DPT or by the Architect or General
Contractor for the Project in connection with the design or construction
of the Project, or from Connetics' failure to approve in a timely manner
any matters requiring approval by Connetics;
(2) Any delay resulting from Change Orders requested by Connetics,
including any delay resulting from the need to revise any drawings or
obtain further governmental approvals as a result of any Change Order;
or
(3) Any material delay of any other kind or nature caused by Connetics
(or Connetics' contractors, agents or employees).
"DPT DELAY" means any of the following types of delay in the completion of
construction of the Improvements:
(1) Any delay resulting from DPT's failure to furnish, in a timely
manner, information requested by the Architect or General Contractor for
the Work in connection with the design or construction of the
Improvements; or
(2) Any material delay of any other kind or nature caused by DPT (or
DPT's contractors, agents or employees).
"EQUIPMENT" means the production scale equipment and laboratory scale equipment
purchased by Connetics and utilized in the Project.
"GENERAL CONTRACTOR" means Capstone Corporation, or any other general contractor
recommended by DPT and selected by Connetics.
"IMPROVEMENTS" means the Project and other improvements shown on the Approved
Plans from time to time and to be constructed on the Premises pursuant to this
Agreement.
"OPERATING EXPENSES" shall have the meaning set forth in SECTION 5.4.
"PROJECT" means the design, construction and management of a cGMP qualified
aerosol filling facility on the Premises in accordance with the Approved Plans,
including (a) any necessary site improvements; and (b) other improvements
necessitated by the construction of the facility.
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"PUNCH LIST WORK" means minor corrections of construction or decoration details,
and minor mechanical adjustments, that are required in order to cause any
applicable portion of the Improvements as constructed to conform to the Approved
Plans in all material respects and that do not materially interfere with the use
or occupancy of the Premises.
"SUBSTANTIAL COMPLETION OF THE PROJECT" means the completion of the Project
(except for Punch List Work), in good and workmanlike condition, in compliance
with all applicable requirements, and in conformance with the Approved Plans.
"UNAVOIDABLE DELAYS" means delays due to acts of God, acts of public agencies,
labor disputes, strikes, fires, freight embargoes, rainy or stormy weather,
inability to obtain supplies, materials, fuels or permits, delays of contractors
or subcontractors, or other causes or contingencies beyond the reasonable
control of DPT or Connetics, as applicable.
ARTICLE 2
CONTRIBUTION
SECTION 2.1. CONNETICS CONTRIBUTION. Connetics agrees to pay the costs
associated with construction of the Project and the purchase of production scale
equipment (currently estimated at Two Million Six Hundred Twenty-Five Thousand
Five Hundred and Twenty-Five Dollars ($2,625,525) and to contribute an
additional One Hundred Twenty One Thousand Dollars ($121,000) for the purchase
of laboratory scale equipment for use in the Project, subject to all of the
terms, covenants and conditions set forth in this Agreement. Connetics' cash
contribution and the Equipment are collectively referred to as "Connetics'
Contribution." In the event additional capital requirements are required, DPT's
obligations herein shall be conditioned upon Connetics agreement to fund the
additional capital.
SECTION 2.2. PREMISES. The Premises are located at 5303 Distribution
Drive and the laboratory scale equipment is located at 307 E. Josephine St., San
Antonio, Texas 78218.
SECTION 2.3. ACCOUNTING. No less often than monthly, DPT shall provide
Connetics with a written accounting of all amounts spent on the Project to that
date, in a level of detail reasonably satisfactory to Connetics.
ARTICLE 3
PROJECT CONSTRUCTION
DPT and Connetics shall comply with the procedures set forth in this ARTICLE 3
in preparing, delivering and approving matters relating to the Project.
SECTION 3.1. APPROVED PLANS. DPT and Connetics shall cooperate with
Architect in the development of the Premises Improvement Plans and
specifications for the Project (once such plans and specifications are approved
by DPT and Connetics, the "Approved Plans").
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SECTION 3.2. CONSTRUCTION OF PROJECT. The Project will be constructed on
the Premises. Except as otherwise expressly provided in this Agreement or by
mutual written agreement of DPT and Connetics, the cost of construction of the
Project shall be borne by Connetics at its sole cost and expense, including any
costs or cost increases incurred as a result of Unavoidable Delays, governmental
requirements or unanticipated conditions. Upon receipt of necessary permits and
approvals, DPT shall (except as otherwise provided in this Agreement),
diligently manage and oversee the construction and completion of the Project
substantially in accordance with the Approved Work Plans, subject to Unavoidable
Delays and Connetics Delays (if any). It is understood that DPT shall provide
construction and engineering supervision of the Project, but will not act as the
General Contractor for the Project. Such construction shall conform, in all
material respects, to all applicable governmental codes, laws and regulations in
force at the time such work is completed. DPT shall provide formal progress
updates on the Project to Connetics as appropriate during the construction,
validation, and commissioning process.
SECTION 3.3. CHANGES.
(a) By DPT. If DPT recommends at any time that changes in the
Approved Plans relating to any item of the Project are required as a
result of applicable law or governmental requirements, or at the
insistence of any other third party whose approval may be required with
respect to the Project, or as a result of unanticipated conditions
encountered in the course of construction, then DPT shall promptly
advise Connetics of such circumstances in the form of a detailed written
request specifying such changes, alterations or additions. Upon receipt
of any such request, Connetics shall notify DPT as soon as is reasonably
possible whether the recommendations are agreeable (which approval shall
not be unreasonably withheld, delayed or conditioned). Upon Connetics'
approval, Connetics shall enter into a Change Order with the General
Contractor, and DPT shall cause revised Approved Plans reflecting such
changes to be prepared by Architect, and Connetics shall be responsible
for all costs or cost increases, resulting from or attributable to the
Change Order.
(b) By Connetics. If Connetics at any time desires any changes,
alterations or additions to the Approved Plans with respect to any of
the Project, Connetics shall submit a Change Order to DPT. Upon receipt
of any such request, DPT shall notify Connetics as soon as is reasonably
possible as to:
(i) whether the matters proposed in the Change Order are
approved by DPT (which approval shall not be unreasonably
withheld, delayed or conditioned,
(ii) DPT's estimate of the number of days of delay, if
any, which shall be caused by such Change Order if implemented
(including, without limitation, delays due to the need to obtain
any revised plans or drawings and any governmental approvals),
and
(iii) DPT's estimate of the increase or decrease, if any,
which shall occur
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for the items or components affected by such Change Order if such
Change Order is implemented (including, but not limited to, any
costs of compliance with laws or governmental regulations that
become applicable because of the requested Change Order).
If Connetics notifies DPT in writing, within five (5) business days
after receiving DPT's estimate of the impact of the Change Order, that
Connetics approves the Change Order (including the estimated delays and
cost increases or decreases, if any, described in the notice), then
Connetics shall enter into such Change Order with the General Contractor
and Connetics shall be responsible for all costs or cost increases,
resulting from or attributable to the Change Order. If Connetics fails
to notify DPT in writing that it approves such Change Order within five
(5) business days after receiving DPT's estimate of the impact of the
Change Order, then such Change Order shall be deemed to be withdrawn and
shall be of no further effect.
SECTION 3.4. COMPLETION.
(a) When DPT believes the Project is complete subject only to
completion of Punch List Work, it shall notify Connetics of the
Substantial Completion of the Project.
(b) At any time within thirty (30) days after notice of
Substantial Completion, Connetics shall be entitled to submit one or
more lists to the General Contractor specifying Punch List Work to be
performed on the Project, which shall be completed at the expense of
either Connetics or the General Contractor, as specified pursuant to the
Construction Contract.
SECTION 3.5. TIMING OF COMPLETION. Connetics shall use its commercially
reasonable efforts to complete such construction promptly, diligently and within
the applicable time periods set forth in the Estimated Construction Schedule
attached as EXHIBIT B and incorporated into this Agreement by this reference, as
such schedule may be modified from time to time, subject to the effects of any
delays beyond the parties' reasonable control.
SECTION 3.6. CONSENT OF OWNER. DPT shall be solely responsible for
securing the consent and approval of the owner of the Premises for the
construction of the Project.
SECTION 3.7. DESIGNATED REPRESENTATIVES.
(a) Connetics' Representative. Connetics designates [*]
(collectively and individually, Connetics' Authorized Representative) as
the persons authorized to approve all plans, drawings, change orders and
approvals pursuant to this Agreement.
(b) DPT's Representative. DPT designates [*] (collectively and
individually, DPT's Authorized Representative) as the persons authorized
to approve all plans, drawings, change orders and approvals pursuant to
this Agreement.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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ARTICLE 4
COVENANTS, WARRANTIES AND REPRESENTATIONS
SECTION 4.1. DPT'S WARRANTIES AND REPRESENTATIONS. DPT hereby makes the
following representations and warranties to Connetics as of the date of this
Agreement:
(a) DPT has full power and lawful authority to enter into and
carry out the terms and provisions of this Agreement and to execute and
deliver all documents which are contemplated by this Agreement, and all
actions of DPT necessary to confer such power and authority upon the
persons executing this Agreement (and all documents which are
contemplated by this Agreement) on behalf of DPT have been taken;
(b) The Project shall not violate any applicable law, building
code, regulation or ordinance in effect at the time such improvements
are placed in service.
(c) To DPT's knowledge, DPT has received, no written notice from
any governmental authorities that eminent domain proceedings for the
condemnation of the Premises are pending;
(d) To DPT's knowledge, DPT has received no written notice of any
threatened or pending litigation, arbitration, unsatisfied orders or
judgments, governmental investigations or proceedings against DPT or
affecting the Premises which would materially affect the Premises or
DPT's capacity to perform under its Agreement;
(e) To DPT's knowledge, DPT has received no written notice from
any governmental authority that the Premises or any of the improvements
located on the Premises are presently in violation of any applicable
building codes, zoning or land use laws, or other law, order, ordinance,
rule or regulation affecting the Premises.
(f) To DPT's knowledge (i) there has not been any release of any
Hazardous Substance on or beneath the Premises in violation of any
applicable law, and (ii) DPT has received no written notice of any
violation of claimed violation of any law, rule, or regulation relating
to Hazardous Substances;
(g) To DPT's knowledge, there are no conditions which would
materially and adversely affect the Premises or any part thereof or the
intended use and development thereof.
(h) DPT has received all necessary consents and approvals from
the owner of the Premises.
SECTION 4.2. DPT'S COVENANTS. DPT hereby covenants and agrees as
follows:
(a) During the time the Project is under construction, DPT shall comply
with its obligations under any applicable contracts or permits, and shall
maintain reasonable
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levels and coverages of insurance in accordance with customary business
practice and SECTION 6.1 of this Agreement. DPT shall not create or
acquiesce in the creation of liens or exceptions to title or voluntarily
take any action to render any of the representations or warranties of
DPT set forth in SECTION 4.1 materially incorrect.
(b) DPT shall promptly notify Connetics of any event or
circumstance of which DPT becomes aware subsequent to the date of this
Agreement which (a) materially and adversely affects the Premises or the
use or operation of the Premises, or (b) makes any representation or
warranty of DPT to Connetics under this Agreement untrue or misleading.
SECTION 4.3. CONNETICS' WARRANTIES AND REPRESENTATIONS. Connetics hereby
represents and warrants to DPT that (a) Connetics has full power and lawful
authority to enter into and carry out the terms and conditions of this Agreement
and to execute and deliver all documents which are contemplated by this
Agreement, (b) Connetics shall comply with its obligations under any applicable
contracts or permits and (c) all actions necessary to confer such power and
authority upon the persons executing this Agreement and all documents which are
contemplated by this Agreement to be executed on behalf of Connetics or its
assignee have been taken.
SECTION 4.4. DPT INDEMNIFICATION. DPT shall indemnify and defend
Connetics against and hold Connetics harmless from any and all third party
claims, liabilities, losses, damages, costs and expenses, including, without
limitation, all reasonable attorneys' fees, asserted against or suffered by
Connetics resulting from (a) any breach by DPT of this Agreement, and (b) any
liability or obligation arising in connection with DPT's use of the Premises on
or before the date of this Agreement.
SECTION 4.5. CONNETICS INDEMNIFICATION. Connetics shall indemnify and
defend DPT against and hold DPT harmless from any and all third party claims,
liabilities, losses, damages, costs and expenses, including, without limitation,
all reasonable attorneys' fees, asserted against or suffered by DPT resulting
from (a) any breach by Connetics of this Agreement, or (b) any liability or
obligation arising in connection with Connetics' ownership or use of the Assets.
ARTICLE 5
ONGOING OBLIGATIONS
SECTION 5.1. OWNERSHIP. It is understood and agreed that Connetics shall
be the owner of the Equipment and the aerosol filling facility built on the
Premises (collectively, the "Assets"), to the extent the Assets can be removed
upon expiration of the Lease Agreement. Connetics acknowledges that its
ownership may be subject to certain rights of the landlord of the Premises to
fixtures installed on the Premises. Connetics shall be responsible for removal
and disposal of the Assets upon expiration of the Manufacturing and Supply
Agreement and restoration of the Leased Premises to the same condition as in
existence prior to the effective date hereof. DPT shall cooperate with Connetics
in filing any UCC-1 or equivalent financing statement to secure Connetics'
investment in the Assets. Connetics shall have the full right to depreciate the
Assets, and to control the use and disposition of the Assets.
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SECTION 5.2. USE OF THE PREMISES.
(a) It is the intent of both Parties to use the Assets as a
source of income for both Parties. The Parties therefore contemplate
that DPT will not use the facilities or the Equipment comprising the
Project in connection with other customers' products without
compensating Connetics for such use. Unless otherwise stated below, the
specific terms of any such sharing of income shall be mutually agreed by
the Parties, in the course of good faith negotiations conducted at a
later time.
(b) DPT shall be entitled to use the Assets for its affiliates or
third parties for cosmetic and over-the-counter drug products without
obtaining the prior written consent of Connetics, provided that the use
does not interfere with Connetics's capacity requirements and DPT pays
to Connetics [*]
(c) DPT shall be required to secure Connetics' prior written
consent to use the Assets for any prescription dermatological product,
which consent shall not be unreasonably withheld.
(d) In all events, in case of a shortage of capacity, Connetics
shall have first priority regarding use of the facilities and Equipment
comprising the Project, and will not be deemed to be acting in bad faith
if it withholds consent in order to secure such priority rights.
(e) If in the future the need for increased capacity arises,
Connetics shall be responsible for all capital expenditures needed to
increase the capacity unless the Parties otherwise agree.
SECTION 5.3. RENTAL FEE. During the term of this Agreement or for as
long as Connetics owns the Assets, whichever is longer, Connetics shall pay DPT
rental for Connetics' pro rata portion of the Premises, to offset expenses of
operating the facility. Rent is currently $4.63 per square foot per year, and
is subject to adjustment in the event DPT's rent is increased in the future. The
total square footage allocable to Connetics for purposes of calculating the
rental fee under this SECTION 5.3 is set forth in EXHIBIT C.
SECTION 5.4. PERSONAL PROPERTY TAX. Connetics shall be responsible for
and shall pay prior to delinquency all taxes and assessments levied against or
by reason of
(a) any and all alterations, additions and items installed or
placed on or in the Premises and taxed as personal property rather than
as Premises, and/or
(b) all personal property, trade fixtures and other property
owned by Connetics and utilized on or about the Premises, including the
Equipment. Connetics shall submit an annual rendition for personal
property taxes associated with the Assets in accordance with local laws
and regulations.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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SECTION 5.5. REAL PROPERTY TAX. DPT shall be responsible for the payment
of all Premises taxes levied and assessed for any calendar or tax year upon the
Premises, provided that any increase due to the improvements added pursuant to
this Agreement shall be the responsibility of Connetics.
SECTION 5.6. PAYMENT OF OPERATING EXPENSES.
(a) DPT shall be responsible for the payment of the following
described Operating Expenses in connection with the Facility.
(b) Definition of Operating Expenses. Subject to the exclusions
and provisions contained in this Section, the term "Operating Expenses"
shall mean the following costs and expenses incurred by DPT for
operation and maintenance of the Premises:
(i) insurance premiums for insurance carried by DPT
pursuant to SECTION 6.1 (which may include, at DPT's option,
flood, earthquake or environmental remediation insurance),
insurance deductibles;
(ii) the routine operation, repair and maintenance (but
excluding major breakdowns and material capital expenditures
relating to the Assets) of the Premises, including the aerosol
filling facility, in a cGMP compliant condition including but not
limited to lighting standards, landscaping, sewers, water, gas
and electrical distribution systems and facilities, drainage
facilities, and all signs, both illuminated and non-illuminated,
that are on the Premises;
(iii) commissioning and general facility and equipment
qualification costs;
(iv) except as set forth in Sections 5.4 and 5.5 above,
real and personal property taxes and assessments levied or
assessed against the Premises or any part of the Premises,
including (but not limited to) any possessory interest, use,
business, license or other taxes or fees, any taxes imposed
directly on rents or services, any assessments or charges for
police or fire protection, housing, transit, open space, street
or sidewalk construction or maintenance or other similar services
from time to time by any governmental or quasi-governmental
entity, and any other new taxes on DPT in addition to taxes now
in effect;
(v) supplies, equipment, utilities and tools used in the
operation and maintenance of the Premises;
(vi) property management fees;
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SECTION 5.7. UTILITIES/PERMITS. DPT shall be responsible for the payment
to the supplier of all charges for water, trash collection, hazardous waste
disposal, gas, heat, light, electricity, power, sewer, telephone, alarm system,
janitorial and other services or utilities supplied to or consumed in or with
respect to the Premises, including any taxes on such services and utilities.
Connetics shall be responsible for the payment of any necessary Building Permits
or Fees associated with the Project.
SECTION 5.8. MAINTENANCE AND REPAIRS.
(a) Except as set forth in Section 5.6(b)(ii) above, DPT shall,
at its sole cost and expense, keep and maintain the Premises (and every
part of the Premises) and the Equipment in good working order.
(b) DPT shall not use the Premises or the Equipment, or permit
the Premises or the Equipment to be used, in whole or in part for any
purpose or use that violates any applicable laws, ordinances,
regulations or rules of any governmental agency or public authority now
in force or which may hereafter be in force pertaining to the use of the
Premises, including, without limitation, regulations applicable because
of the construction of improvements in or other particular use of the
Premises.
SECTION 5.9. FDA CERTIFICATION. It shall be DPT's obligation to ensure
that the Project, when completed, complies with all laws and regulations
promulgated by the FDA relating to the manufacture of pharmaceuticals, including
cGMP regulations.
SECTION 5.10. TRANSFER OF ASSETS. DPT shall not permit any change of
control or assignment of the Assets without Connetics prior written consent,
such consent not to be unreasonably withheld.
ARTICLE 6
INSURANCE AND INDEMNITY
SECTION 6.1. INSURANCE AND INDEMNITY.
(a) DPT's Insurance. DPT shall keep and maintain, or cause to be
kept and maintained a policy or policies of insurance on the Premises
insuring the same against loss or damage by the following risks: fire
and extended coverage, vandalism, malicious mischief, and sprinkler
damage, in amounts not less than ninety percent (90%) of full
replacement value of the Premises. The term "full replacement value"
shall mean actual replacement cost, including changes required by new
building codes or ordinances (exclusive of the cost of excavation,
foundations and footings). Such insurance shall show, as a loss payee in
respect of the Premises, DPT, Connetics, and the owner of the Premises.
DPT shall provide proof of insurance to Connetics annually.
(b) Connetics' Risk. Connetics at its cost may carry such
insurance as Connetics desires for Connetics' protection with respect to
the Equipment and the
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construction of the Project, and with respect to the Assets following
completion of the Project.
(c) Other Insurance. During the period of construction of the
Premises, Builder's All Risk Insurance with Completed Operations
Coverage, in such amounts and with such deductibles and other terms as
DPT may reasonably require; and
SECTION 6.2. ADJUSTMENT IN THE EVENT OF LOSS. Except as otherwise
provided in this Agreement, all insurance proceeds payable with respect to any
damage or destruction to the Premises (but not with respect to the Equipment, it
being understood that insurance proceeds allocable to the Equipment shall be
payable directly to Connetics) shall be payable to DPT. Each Party agrees to
execute and deliver to the other Party such releases, endorsements and other
instruments as the other Party reasonably may require in order to compromise,
adjust or settle any insurance claim which such other Party shall be entitled to
compromise, adjust or settle pursuant to this paragraph and to enable the other
Party or its designee to collect such insurance proceeds as are payable in
respect of such claim.
ARTICLE 7
LIMITATIONS
SECTION 7.1 NO IMPLIED REPRESENTATIONS; WARRANTIES OR CONDITIONS. EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER DPT NOR Connetics
MAKES ANY REPRESENTATIONS OR WARRANTIES AND THERE ARE NO CONDITIONS, EXPRESS OR
IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO PRODUCT SUPPLIED UNDER THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATIONS, WARRANTIES OR
CONDITIONS WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OF SUCH PRODUCT, OR ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE PRACTICE.
SECTION 7.2 LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY HAVE
ANY LIABILITY TO THE OTHER PARTY OR ANY OTHER THIRD PARTY FOR ANY LOST
OPPORTUNITY, COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY
SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF
THIS AGREEMENT, UNDER ANY CAUSE OF ACTION OR THEORY OF LIABILITY (INCLUDING
NEGLIGENCE), AND WHETHER OR NOT SUCH PARTY TO THIS AGREEMENT HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. NOTICES. Any notices permitted or required by this
Agreement shall be sent by certified or registered mail with a copy by fax and
shall be effective the earlier of the date
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received or three (3) days after deposit in the U.S. mail, if sent and addressed
as follows or to such other address as either Party may designate in writing:
If to DPT: DPT Laboratories, Ltd.
Attention: President
P.O. Box 1659
San Antonio, Texas 78296
Fax: (210) 227-6132
with a copy to the General Counsel's Office
If to Connetics: Connetics Corporation
Attention: President
3290 West Bayshore Road
Palo Alto, California 94303
SECTION 8.2. NO AGENCY. Nothing contained in this Agreement shall make
or constitute either DPT or Connetics as the agent of the other.
SECTION 8.3. MERGER. All understanding and agreements, oral and written,
previously made between the Parties and relating to the matters covered in this
Agreement are merged in this Agreement. This Agreement, along with its exhibits
and the documents referenced in and contemplated by the exhibits, and the
Manufacturing and Supply Agreement of even date herewith, fully and completely
expresses the agreement between DPT and Connetics with regard to the matters set
forth in this Agreement. No modification of any of the terms of this Agreement,
or any amendments to this Agreement, shall be deemed to be valid unless in
writing and signed by the Party against which enforcement is sought. No course
of dealing or usage of trade shall be used to modify the terms and conditions in
this Agreement. Nothing in this Agreement is intended to alter the status of any
of (a) the Research & Development Services Agreement, or (b) the Confidentiality
and Material Transfer Agreement already in effect between the Parties, or (c)
the Supply and Manufacturing Agreement to be entered into by the Parties in
connection with commercial manufacture of Connetics' products.
SECTION 8.4. GOVERNING LAW AND DISPUTE RESOLUTION
(a) Governing Law
The validity, interpretation and effect of this Agreement shall
be governed by and construed under the laws of the State of
Texas, U.S.A.
(b) Mediation
The Parties agree to attempt to settle any disputes that arise in
connection with this Agreement through good faith non-binding
mediation efforts. The Parties agree that any dispute that arises
in connection with this Agreement which is not settled through
good faith mediation efforts and which does not involve a claim
for equitable relief shall be settled by arbitration according to
the provisions of SECTION 8.4(c) below.
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(c) Arbitration
(i) Any dispute, claim or controversy arising from or related
in any way to this Agreement or the interpretation,
application, breach, termination or validity of this
Agreement, including any claim of inducement of this
Agreement by fraud or otherwise, which is not resolved by
good faith mediation efforts, will be submitted for
resolution to arbitration pursuant to the commercial
arbitration rules then pertaining of the Center for Public
Resources ("CPR"), except where those rules conflict with
these provisions, in which case these provisions control.
Such arbitration shall be held in (A) Santa Clara County,
California, if the demand for arbitration is initiated by
DPT or (B) Bexar County, Texas, if the demand for
arbitration is initiated by Connetics.
(ii) A single arbitrator shall be chosen from the CPR Panels of
Distinguished Neutrals and shall be a lawyer specializing
in business litigation with at least 15 years experience
with a law firm of over 25 lawyers or who was a judge of a
court of general jurisdiction.
(iii) The parties agree to cooperate (A) to obtain selection of
the arbitrator within 30 days of initiation of the
arbitration, (B) to meet with the arbitrator within 30
days of selection and (C) to agree at that meeting or
before upon procedures for discovery and as to the conduct
of the hearing which will result in the hearing being
concluded within no more than 9 months after selection of
the arbitrator and in the award being rendered within 60
days of the conclusion of the hearings, or of any
post-hearing briefing, which briefing will be completed by
both sides within 20 days after the conclusion of the
hearings. In the event no such agreement is reached, the
CPR will select the arbitrator, allowing appropriate
strikes for reasons of conflict or other cause and three
peremptory challenges for each side. The arbitrator shall
set a date for the hearing, commit to the rendering of the
award within 60 days of the conclusion of the evidence at
the hearing, or of any post-hearing briefing (which
briefing will be completed by both sides in no more than
20 days after the conclusion of the hearings), and provide
for discovery according to these time limits, giving
recognition to the understanding of the Parties that they
contemplate reasonable discovery, including document
demands and depositions, but that such discovery be
limited so that the time limits specified in this
Agreement may be met without undue difficulty. In no event
will the arbitrator allow either side to obtain more than
a total of 40 hours of deposition testimony from all
witnesses, including both fact and expert witnesses. In
the event multiple hearing days are required, they will be
scheduled consecutively to the greatest extent possible.
Page 13
(iv) The arbitrator shall render an opinion setting forth
findings of fact and conclusions of law with the reasons
therefor stated. A transcript of the evidence adduced at
the hearing shall be made and shall, upon request, be made
available to either Party.
(v) To the extent possible, the arbitration hearings and award
will be maintained in confidence.
(vi) Any court of competent jurisdiction may enter judgment
upon any award.
(vii) Each party has the right before or during the arbitration
to seek and obtain from the appropriate court provisional
remedies such as attachment, preliminary injunction,
replevin, etc. to avoid irreparable harm, maintain the
status quo, or preserve the subject matter of the
arbitration.
(viii) EACH PARTY TO THIS AGREEMENT WAIVES ITS RIGHT TO TRIAL OF
ANY ISSUE BY JURY.
(ix) The decision of the arbitrator shall be final and binding
upon all Parties and their respective successors and
assigns.
(d) Costs
The costs of mediation and/or arbitration, including reasonable
attorneys' fees, shall be borne by the losing Party, as allocated
by the arbitration award.
SECTION 8.5. NO WAIVER. No waiver by either Party of any default on its
obligations under this Agreement shall be effective unless in writing, nor shall
any such waiver operate as a waiver of any other default or of the same default
on a future occasion.
SECTION 8.6. HEADINGS. The headings used in this Agreement are for
convenience only and are not a part of this Agreement.
SECTION 8.7. DAYS. All references in this Agreement to a number of days
shall be construed to refer to calendar days, unless otherwise specified in this
Agreement.
SECTION 8.8. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Page 14
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CONNETICS CORPORATION DPT LABORATORIES, LTD.
A Delaware Corporation
By: DFB PHARMACEUTICALS, INC.
Sole General Partner
By: /s/
----------------------------
Name: By: /s/
--------------------------- -----------------------------
Title: Name:
---------------------------- ---------------------------
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Page 15
EXHIBIT A
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
EXHIBIT B
DEFINITION OF IMPROVEMENTS
The Project referred to in the Agreement to which this Exhibit is attached shall
consist of work described in the following plans:
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
EXHIBIT C
EQUIPMENT AND FACILITIES
[*]
[TO BE COMPLETED]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.