Exhibit 10.18
AMENDED AND RESTATED
STRATEGIC ALLIANCE AGREEMENT
BY AND BETWEEN
PENWEST PHARMACEUTICALS CO.
AND
ENDO PHARMACEUTICALS INC.
DATED AS OF APRIL 2, 2002
------------------------------
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST IN ACCORDANCE WITH RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF
1934, AS AMENDED. REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***.
TABLE OF CONTENTS
1. Definitions............................................................. 1
2. [INTENTIONALLY OMITTED.]................................................ 2
3. Certification Period(s)................................................. 2
3.1 Covenants.......................................................... 2
3.2 Communication & Access............................................. 2
3.3 Reports............................................................ 2
3.4 Supply............................................................. 2
3.5 U.S. Certification Budget; Election Not to Continue Participation.. 2
3.6 Rest of the World.................................................. 4
3.7 Certification Reconciliations...................................... 4
4. Marketing Period........................................................ 5
4.1 Endo Covenants..................................................... 5
4.2 Penwest Covenants.................................................. 5
4.3 Rest of the World.................................................. 6
4.4 TIMERx Supply; Invoices During the Marketing Period................ 6
4.5 Royalties; Recoupment of Certification Excess...................... 7
4.6 Reduction in Royalties............................................. 7
4.7 Timing of Royalty Payments......................................... 8
4.8 Records; Audits.................................................... 9
4.9 Rate of Exchange for Non-U.S. Royalties............................ 9
5. Term and Termination.................................................... 9
5.1 Term............................................................... 10
5.2 Receipt of Non-Approvable Letter................................... 10
5.3 Mutual Agreement................................................... 10
5.4 Unfavorable or Inconclusive Results................................ 10
5.5 Termination of Participation in a Certification Period............. 10
5.6 Termination of an Exclusivity Period for Failure to Meet
Minimum Net Realization Levels..................................... 11
5.7 Failure to Launch or Discontinuation of Active Marketing........... 11
5.8 Material Breaches.................................................. 11
5.9 Endo's Bankruptcy; Insolvency...................................... 12
5.10 Penwest's Bankruptcy; Insolvency................................... 12
5.11 Survival........................................................... 12
6. Ownership and Licenses.................................................. 12
6.1 Retention of Ownership; Inventorship; Assignment.................. 12
6.2 Filing and Prosecution of Patents.................................. 13
6.3 Licenses Granted................................................... 13
6.4 Exclusivity........................................................ 14
6.5 Licenses as to Product Technology.................................. 15
6.6 Endo's License to TIMERx........................................... 15
6.7 Endo's Continuing License.......................................... 15
i
6.8 Penwest's Continuing License....................................... 17
6.9 License to Improvement Technology.................................. 19
6.10 License to Endo Test and Regulatory Data........................... 20
6.11 License to Penwest Test and Regulatory Data........................ 20
6.12 Marking of the Product............................................. 21
7. Supply of TIMERx; Oxymorphone........................................... 21
7.1 Sales of TIMERx.................................................... 21
7.2 Quality Control Testing............................................ 21
7.3 Non-Conforming Shipments........................................... 21
7.4 Failure to Supply TIMERx........................................... 22
7.5 Failure to Supply Oxymorphone ADS or Finished Product.............. 23
7.6 Access............................................................. 24
7.7 TIMERx Ordering Process............................................ 25
7.8 Estimates of TIMERx................................................ 25
7.9 Actual TIMERx Supply............................................... 25
7.10 Notifications; Governmental Inspections............................ 25
7.11 Manufacturing Agreements........................................... 26
8. Use of Trademarks....................................................... 27
8.1 Benefit of Trademarks.............................................. 27
8.2 Protection of Trademarks........................................... 27
8.3 Acknowledgement of Ownership of Trademarks......................... 27
8.4 Prior Approval of Use of Trademarks................................ 28
9. Representations, Warranties and Indemnities............................. 28
9.1 Mutual Authorization Representations............................... 28
9.2 Penwest Representations............................................ 28
9.3 Mutual Licenses, Permits and Authorizations Representations........ 29
9.4 Disclaimer......................................................... 29
9.5 Penwest's Indemnification of Endo.................................. 29
9.6 Endo's Indemnification of Penwest.................................. 30
9.7 Limitation on Indemnification...................................... 30
9.8 Procedure.......................................................... 31
9.9 No Liability....................................................... 31
10. Confidentiality and Non-Solicitation.................................... 32
10.1 Confidentiality; Exceptions........................................ 32
10.2 Public Announcements............................................... 33
10.3 Non-Solicitation................................................... 33
11. Infringement............................................................ 33
11.1 Notice of Infringement............................................. 33
11.2 Non-Covered Infringement........................................... 34
11.3 Penwest's Institution of Suit...................................... 34
11.4 Joint Suits........................................................ 34
11.5 Endo's Institution of Suit......................................... 34
11.6 Abandonment of Suit................................................ 34
11.7 Patent Enforcement Litigation...................................... 35
ii
12. Escalation Procedures................................................... 35
13. Arbitration............................................................. 36
14. Miscellaneous........................................................... 37
Exhibits
Definitions Exhibit......................................................... 40
Exhibit 1.17 - Trademarks................................................... 52
Exhibit 1.28 - Accounting and Attribution Standards and Principals.......... 53
Exhibit 1.32 - Penwest Patents.............................................. 56
Exhibit 6.1 - Certain Jointly Filed Provisional Patent Applications......... 58
iii
AMENDED AND RESTATED
STRATEGIC ALLIANCE AGREEMENT
THIS AGREEMENT is entered into as of the 2nd day of April, 2002 (the
"Restatement Date"), by and between Penwest Pharmaceuticals Co. ("Penwest"), a
Washington corporation with its principal place of business at 2981 Route 22,
Patterson, New York 12563, and Endo Pharmaceuticals Inc., a Delaware corporation
with its principal place of business at 100 Painters Drive, Chadds Ford,
Pennsylvania 19317 ("Endo").
WHEREAS, Penwest and Endo are party to that certain Strategic Alliance
Agreement, dated as of September 17, 1997 (the "Old Agreement");
WHEREAS, in light of changes that have occurred at both Penwest and
Endo since the execution of the Old Agreement, Penwest and Endo now wish to
amend and restate the Old Agreement in its entirety;
WHEREAS, Penwest has developed an extended-release agent covered by one
or more patents, patent applications, know-how and other proprietary technology,
which agent Penwest markets under the name and mark "TIMERx(R)" ("TIMERx");
WHEREAS, Endo manufactures and markets the product marketed under the
name "Numorphan(R)", having as an active drug substance oxymorphone HCl
("Oxymorphone") and has developed know-how and other proprietary technology with
respect thereto;
WHEREAS, the parties, pursuant to the Old Agreement, have co-developed
a product combining Oxymorphone and TIMERx, which product is a solid-dosage
extended-release pharmaceutical for oral administration in humans in one or more
dosage strengths and which product is referred to by the parties as "EN 3202";
WHEREAS, the parties desire to provide for the further development and
commercialization of EN 3202 as provided herein; and
WHEREAS, Endo desires to contract for a supply of TIMERx for use in the
manufacture of EN 3202, and Penwest is willing to supply the same provided that
Endo agrees to obtain all of its and its Affiliates' and sublicensees'
requirements of TIMERx from Penwest as provided herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Definitions. Certain terms used herein are defined in Sections 1.1
through 1.44 of the Definitions Exhibit attached hereto and
incorporated herein by this reference.
1
2. [INTENTIONALLY OMITTED.]
3. Certification Period(s).
3.1 Covenants. Each of Penwest and Endo will exert its Best
Commercial Efforts: (i) to perform the respective
Certification Tasks allotted to it; (ii) to do so in
accordance with the applicable Certification Budget; and (iii)
to assist and to cooperate as requested with the other party's
Best Commercial Efforts to do the same as to its own
Certification Tasks.
3.2 Communication & Access. Each party will, promptly and
throughout the term of this Agreement, provide to the other
party all necessary or useful information in or coming into
its possession or reasonably available to it to support the
achievement of the Certification Tasks. Notwithstanding
anything else to the contrary contained herein, nothing shall
require either party to disclose confidential information for
which such party has an obligation of confidentiality to a
third party, but each party will exert its Best Commercial
Efforts to bring to the attention of the Alliance Committee
any such third party restrictions as may be relevant to its
role hereunder.
3.3 Reports. Each Project Contact will be available throughout
each Certification Period to answer any reasonable questions
from the other party's Project Contact, as appropriate.
3.4 Supply. During each Certification Period in which it is
participating, Endo shall provide Oxymorphone and related
materials reasonably required to support the applicable
Certification Tasks, and Penwest shall provide all Formulated
TIMERx reasonably required therefor, all as shall be more
fully described in the applicable Certification Tasks adopted
by Committee Action. The costs of such materials will be
treated as among the parties' respective expenditures pursuant
to the applicable Certification Budget, using for this purpose
the Formulated TIMERx Price as to the TIMERx and the
Oxymorphone Price as to the Oxymorphone. Where, as permitted
hereunder, a party is not participating in a Certification
Period, it will sell such materials to the participating party
pursuant to Section 6.8.4 hereof or Article 7 hereof, as
applicable, and the price paid therefor shall be treated as
part of the buyer's expenditures pursuant to the applicable
Certification Budget.
3.5 U.S. Certification Budget; Election Not to Continue
Participation. The parties hereby agree that the Alliance
Committee, by Committee Action, shall on an annual basis
approve the U.S. Certification Budget for the next
twelve-month period. The parties hereby further agree that
each party will share equally the total costs of each entire
Certification Budget for the U.S. Certification Period
regardless of which party is allocated one or more of the
relevant Certification Tasks, subject to Section 5.5 hereof.
If at any time, one party but not the other
2
desires to spend sums or devote resources not covered by a
particular U.S. Certification Budget to complete Certification
Tasks, then, upon such party giving notice to the other party
under Section 5.5 hereof, the following shall apply (in
addition to the provisions of Section 5.5 hereof):
3.5.1 The party that does not participate further in such
U.S. Certification Period shall not be required to
contribute to the reconciliations for the costs of
such Certification Period under Section 3.7 hereof.
Rather, a Certification Excess shall be established
with respect to the Product in the U.S., which shall
equal the sums such party would have paid under
Section 3.7 hereof for such costs, had it fully
participated in such Certification Period, but did
not pay due to its election under this Section.
3.5.2 If Endo is the party electing not to participate
further in such U.S. Certification Period, then
Section 6.8 hereof shall apply and the other
provisions of this Agreement shall remain in effect
in accordance with their terms and the terms of
Section 6.8; provided, however, that, if a
Certification Excess exists pursuant to Section 3.5.1
hereof (where Endo is the non-participating party),
Penwest shall pay Endo proportionately less than the
Applicable Percentage of the relevant Net Realization
from the Product in the U.S., until Penwest has
thereby recouped the amount of such Certification
Excess. (That is, for example, if the total resources
devoted by both Endo and Penwest to such
Certification Period is *** in this example, and
Penwest bore *** and Endo bore *** of that total
prior to Endo's making its election not to
participate further, and if the Applicable Percentage
is 50%, then Penwest would pay Endo *** of the Net
Realization from the Product in the U.S. until
Penwest had thereby recouped the *** total
Certification Excess, which would occur in this
example when the total of such Net Realization
reaches ***.)
3.5.3 If Penwest is the party electing not to participate
further in such U.S. Certification Period, then
Section 6.7 shall apply and the other provisions of
this Agreement shall remain in effect in accordance
with their terms and the terms of Section 6.7;
provided, however, that, if a Certification Excess
exists pursuant to Section 3.5.1 hereof (where
Penwest is the non-participating party), Endo shall
pay Penwest proportionately less than the Applicable
Percentage of the relevant Net Realization from the
Product in the U.S., until Endo has thereby recouped
the amount of such Certification Excess. (That is,
for example, if the total resources devoted by both
Endo and Penwest to such Certification Period is ***
in this example, and Endo bore *** and Penwest bore
*** of that total prior to Penwest's making its
3
election not to participate further, and if the
Applicable Percentage is 50%, then Endo would pay
Penwest *** of the Net Realization from the Product
in the U.S. until Endo had thereby recouped the ***
total Certification Excess, which would occur in this
example when the total of such Net Realization
reaches ***.)
3.6 Rest of the World. A Certification Period with respect to any
nation other than the U.S. may be instituted from time to time
by Committee Action, and shall be so instituted if: (i) a
party hereto so requests as to such nation and (ii) Committee
Action determines that there is a reasonable likelihood that
Approval for the Product will be obtained in such nation. The
parties hereby agree that the Alliance Committee, by Committee
Action, shall on an annual basis approve the Certification
Budget with respect to each such Certification Period for the
next twelve-month period following the institution thereof.
3.6.1 If both parties elect to participate fully in such
Certification Period, each party will share equally
the total costs of the entire Certification Budget
relating thereto, regardless of which party is
allocated one or more of the relevant Certification
Tasks, unless both parties have consented in writing
to an alternative arrangement.
3.6.2 If a party hereto not requesting such Certification
Period elects not to participate therein, it shall do
so by written notice to the other party given within
90 days of the request by the requesting party for
such Certification Period (whether or not such
Certification Period has been instituted by Committee
Action prior to such election).
3.6.3 A party that does not fully participate in such
Certification Period shall not be required to
contribute to the reconciliations for the costs of
such Certification Period under Section 3.7 hereof.
Rather, a Certification Excess shall be established
with respect to the Product in the relevant nation,
which shall equal the sums such party would have
borne or paid under Sections 3.6.1 and 3.7 hereof,
had it participated in such Certification Period, but
did not pay due to its election under this section.
In such event, any Certification Excess shall be
treated as described in Section 3.5.2 or 3.5.3
hereof, as applicable.
3.7 Certification Reconciliations. Except as otherwise provided in
this Section 3.7, or Sections 3.5 or 5.5 hereof, in order to
effect a reconciliation of accounts, Endo shall issue to
Penwest a quarterly invoice, issued against records for each
such quarter and payable prior to the 30th day following the
date of invoice; provided that such invoice shall be
accompanied by a written accounting of and copies of
supporting invoices for the expenditures, costs and other
resources actually devoted by both parties to the
Certification Tasks since the last such invoice; provided
further that Penwest shall pay Endo one-half (50%) of the
amount by
4
which the expenditures, costs and other resources actually
devoted by Endo to the Certification Tasks since the last such
invoice exceed such expenditures, costs and other resources
actually devoted by Penwest and set forth in, and
substantiated by, appropriate documentation reasonably
acceptable to Endo (or vice versa if the expenditures, costs
and other resources devoted by Penwest exceed those devoted by
Endo); provided, however, that following the submission of the
NDA with the FDA, all such invoices shall be issued on a
monthly basis. Payments shall be sent to the "Remit to"
address set forth on the invoice. Penwest shall pay to Endo
(or vice versa if Endo is the paying party) a late charge of
one and one-half percent (1.5%) per month (or the maximum
interest allowable by applicable law, whichever is less) for
each invoice past due for more than thirty (30) days from the
date of Penwest's receipt of any correct invoice. Should
Penwest (or vice versa if Endo is the paying party) dispute
any portion of an invoice, it shall not be required to pay any
portion of such invoice until such time as the dispute is
resolved and Penwest receives a fully corrected invoice;
provided that, in such an event, Endo (or vice versa if Endo
is the paying party) shall have the option of issuing a new,
correct invoice for the portion of the original invoice not in
dispute, and Penwest (or vice versa if Endo is the paying
party) shall pay such new invoice within the time limits set
forth in this Section 3.7. In the event that Endo ceases its
participation in a Certification Period as provided herein,
then Penwest shall invoice Endo as above and this Section 3.7
shall continue to apply, substituting Penwest for Endo and
vice versa.
4. Marketing Period.
4.1 Endo Covenants. Endo hereby agrees, subject to Sections 3.5
and 5.5 hereof, to use its Best Commercial Efforts during the
Marketing Period to manufacture, market, promote and sell the
Product throughout the United States, once Approval has been
obtained therefor in the United States, commencing with any
normal and appropriate pre-Approval preparations and a full
product launch as soon as practical following such Approval,
and to do so in accordance with the applicable Manufacturing
and Marketing Plan.
4.2 Penwest Covenants. If Endo has elected not to participate
further in the Certification Period pursuant to Section 3.5 or
5.5 hereof, Penwest hereby agrees, subject to Sections 3.5 and
5.5 hereof, to use its Best Commercial Efforts during the
Marketing Period to manufacture, market, promote and sell the
Product throughout the United States or to arrange therefor
with appropriate third parties, once Approval has been
obtained therefor in the United States, commencing with any
normal and appropriate pre-Approval preparations and a full
product launch as soon as practical following such Approval,
and to do so in accordance with the applicable Manufacturing
and Marketing Plan. When considering the establishment of any
relationships whereby Penwest would contract for a third party
to manufacture, market, promote or sell the Product, Penwest
will in good
5
faith consider using Endo, or a designee of Endo, to conduct
such activities where Endo (or such designee) has a
demonstrated ability to manufacture, market, promote or sell
the Product, as applicable.
4.3 Rest of the World. With respect to any nation other than the
U.S., each of the parties shall, subject to Sections 3.6 and
5.5 hereof, use its Best Commercial Efforts either (i) to
present to the Alliance Committee a plan (in the form of a
Manufacturing and Marketing Plan) for such party's
manufacturing, marketing, promoting and selling the Product
throughout such nation or (ii) to present to the Alliance
Committee an arrangement whereby a third party or third
parties will do some or all of the tasks described under
clause (i). The Alliance Committee will determine, by
Committee Action, which of the approaches (i.e., clause (i)
and/or clause (ii), and as to one or both of the parties'
approaches so presented) will be most likely to maximize the
early market entry and ultimate market success of the Product
in the applicable nation; it being understood, however, that
the Alliance Committee will give preference, other factors
being essentially equal, for marketing, promotion and selling
to be conducted by a party hereto or an Affiliate of a party
hereto, if any such approach is presented in a timely manner
by such party; provided that, in the event that Alliance
Committee determines that an approach described by clause (ii)
above shall be pursued in the applicable nation, Endo shall
take the lead with respect to the negotiations and discussions
with the third party or third parties in such nation, with the
terms of any agreement so negotiated remaining subject to
Alliance Committee approval.
4.4 TIMERx Supply; Invoices During the Marketing Period.
(a) Supply of Formulated TIMERx by Penwest (or otherwise
as provided in Section 7.4 hereof) in accordance with
the Specifications is desired by both parties for the
technically satisfactory production, regulatory
approval, and exploitation of the Product. In
accordance with Article 7 hereof (and except as
provided in Section 7.4 hereof), Penwest will supply
Endo and its Affiliates and sublicensees with
sufficient quantities of Formulated TIMERx produced
in accordance with the Specifications in compliance
with cGMP and all applicable laws and regulations, to
meet their requirements for the manufacturing of the
Product during the Marketing Period, and Endo shall
purchase all of its and its Affiliates' and
sublicensees' requirements thereof from Penwest
during such period. The price for all Formulated
TIMERx sold hereunder shall equal the Formulated
TIMERx Price. As provided in Section 1.28 of the
Definitions Exhibit, the price of the Formulated
TIMERx used in the Product will be one of the
deductions applied in the calculation of the Net
Realization.
(b) Penwest shall issue to Endo an invoice, issued
against records at the same time as, or immediately
following, each shipment of Formulated TIMERx
6
to Endo and payable, subject to this Section 4.4(b),
within thirty (30) days after Endo's receipt of such
invoice. Payments shall be sent to the "Remit to"
address set forth on the invoice. Endo shall pay to
Penwest a late charge of one and one-half percent
(1.5%) per month (or the maximum interest allowable
by applicable law, whichever is less) for each
invoice past due for more than thirty (30) days from
the date Endo's receipt of any correct invoice.
Should Endo dispute any portion of an invoice, it
shall not be required to pay any portion of such
invoice until such time as the dispute is resolved
and Endo receives a fully corrected invoice; provided
that, in such an event, Penwest shall have the option
of issuing a new, correct invoice for the portion of
the original invoice not in dispute, and Endo shall
pay such new invoice within the time limits set forth
in this Section 4.4.
4.5 Royalties; Recoupment of Certification Excess. Endo hereby
agrees to pay to Penwest Royalties equal to the Applicable
Percentage of the relevant Net Realization from all units of
the Product sold by Endo and its distributors and licensees in
the Territory; provided that any Certification Excess shall be
recouped in the manner set forth in Section 3.5 hereof. In the
event that Endo ceases its participation (or elects not to
participate) in a Certification Period in accordance with this
Agreement, Penwest shall then pay to Endo Royalties equal to
the Applicable Percentage of Net Realization from all units of
the Product sold by Penwest and its distributors and licensees
in the Territory; provided that any Certification Excess shall
be recouped in the manner set forth in Section 3.5 hereof.
4.6 Reduction in Royalties.
4.6.1 Endo has agreed to make the payments specified in
Section 4.5 hereof, which payments shall be deemed
allocable one-third for Penwest's anticipated
contributions of know-how, resources, time and money,
and two-thirds to the licenses contained in Sections
6.3.1, 6.5, 6.6, 6.9.2 and 6.11 hereof. Royalties
shall be paid in accordance with Section 4.5 hereof,
irrespective of whether any Penwest Patents or
patents on Penwest Product Technology cover the
Product; provided, however, that in the event of an
occurrence of a condition set forth in Section 6.7
(b) or (c) hereof, but subject (in the case of
Section 6.7(c) hereof) to the provisions of Section
5.10 hereof, Endo shall be obligated to pay to
Penwest only that portion of the Royalties that are
allocated to the licenses in Section 6.3.1, 6.5, 6.6,
6.9.2 and 6.11 hereof as described above (i.e., the
Net Realization in the applicable nation shall be
reduced by one-third prior to the calculation of the
proportion thereof to be paid to Penwest as Royalties
hereunder); and provided further that if there are
any Net Realizations from the Product
7
sold in the United States to which no license to U.S.
Penwest Patents or to U.S. Penwest Product Technology
Patents (including patent applications, as if patents
had issued thereon) is applicable to the making,
using, sale, offer for sale, or import thereof, such
Net Realizations shall be reduced by one-third prior
to the calculation of the proportion thereof to be
paid to Penwest as Royalties hereunder. For clarity
and without limiting the provisions of Section 5.10,
no royalty reduction shall apply as a result of the
occurrence of a condition set forth in Section 6.7(a)
and, in any case, the maximum royalty reduction under
this Section 4.6.1 shall be a one-third reduction,
regardless of whether multiple bases for a royalty
reduction hereunder occur.
4.6.2 In the event that any Royalties are payable by
Penwest to Endo hereunder, Penwest has agreed to make
the payments specified in Section 4.5 hereof, which
payments shall be deemed allocable one-third for
Endo's anticipated contributions of know-how,
resources, time and money, and two-thirds to the
licenses contained in Sections 6.3.2, 6.5, 6.9.1,
6.10 and 7.5.1 hereof. Royalties shall be paid in
accordance with Section 4.5 hereof, irrespective of
whether any Endo Patents or patents on Endo Product
Technology cover the Product; provided, however, that
in the event of an occurrence of a condition set
forth in Section 6.8 (b), (c), (d) or (e) hereof, but
subject (in the case of Section 6.8(e) hereof) to the
provisions of Section 5.9 hereof, Penwest shall be
obligated to pay to Endo only that portion of the
Royalties that are allocated to the licenses in
Section 6.3.2, 6.5, 6.9.1, 6.10 and 7.5.1 hereof as
described above (i.e., the Net Realization in the
applicable nation shall be reduced by one-third prior
to the calculation of the proportion thereof to be
paid to Endo as Royalties hereunder). For clarity and
without limiting the provisions of Section 5.9, no
royalty reduction shall apply as a result of the
occurrence of a condition set forth in Section 6.8(a)
and, in any case, the maximum royalty reduction under
this Section 4.6.2 shall be a one-third reduction,
regardless of whether multiple bases for a royalty
reduction hereunder occur.
4.7 Timing of Royalty Payments. All Royalties shall be due
quarterly within 60 days following the end of each calendar
quarter for Net Realization in such calendar quarter. Each
payment shall be accompanied by a statement of Net Realization
for the quarter and the calculation of the Royalties payable
hereunder. In addition, within twenty (20) days following the
end of each calendar quarter, an estimated statement of Net
Realization for the quarter and the calculation of estimated
Royalties for such completed quarter payable hereunder shall
be provided by the party paying Royalties. All Royalties and
all other amounts
8
payable under this Agreement will bear interest at the rate of
one and one-half percent (1.5%) per month (or the maximum
interest allowable by applicable law, whichever is less), from
the thirty-first (31st) day after the date due through the
date of payment. Notwithstanding the foregoing, if any
adjustments or inaccuracies in the amounts paid or payable are
determined by the auditors of either Penwest or Endo in their
review of financial results as provided in Section 4.8 hereof,
and the other party agrees to such adjustment, such
adjustments for the immediately preceding quarter may be
reconciled and described in the next due written report and
the Royalty payment then next due shall be adjusted to reflect
the determination of such auditors and such agreement.
4.8 Records; Audits. Endo or Penwest, as the case may be, shall
keep and shall cause its respective Affiliates and its and
their respective sublicensees to keep complete, true and
accurate records for the purpose of showing the derivation of
all Royalties payable to Penwest or Endo, as the case may be,
under this Agreement. Penwest or Endo, as the case may be, or
their respective representatives shall have the right to
inspect, copy and audit such records at any time during
reasonable business hours upon reasonable advance written
notice to Endo or Penwest, as the case may be, or any of their
respective Affiliates or sublicensees. Information gathered
during such an audit shall be held in confidence by the
requesting party and its Affiliates, except to the extent any
of the exceptions stated in Sections 10.1.1 through 10.1.7
hereof apply thereto, and the requesting party's auditors will
be required to execute an agreement consistent with this
obligation and otherwise reasonably acceptable to the other
party hereto. Any such audit shall be at the expense of the
requesting party, unless the audit reveals that, with respect
to the period under audit, less than 90% (for the first such
audit conducted with respect to the Product) or 97% (for any
subsequent audits with respect to the Product) of the
Royalties due to the requesting party hereunder have been
paid, in which event the other party shall pay or reimburse
the requesting party for the reasonable expenses of such
audit, in addition to the requesting party's other remedies
that may be available for such underpayment.
4.9 Rate of Exchange for Non-U.S. Royalties. All monies due
Penwest hereunder shall be paid in United States Dollars to
Penwest in Patterson, New York, U.S.A. All monies due Endo
hereunder shall be paid in United States Dollars to Endo in
Chadds Ford, Pennsylvania, U.S.A. With respect to any
Royalties that may become payable hereunder based on Net
Realization in nations in the Territory other than the U.S.,
the rate of exchange to be used shall be the average
commercial rate of exchange for the 30 days preceding the date
of payment for the conversion of local currency to United
States Dollars as published by The Wall Street Journal (or if
it ceases to be published, a comparable publication to be
agreed upon by the parties).
5. Term and Termination.
9
5.1 Term. The term of this Agreement shall begin on the Effective
Date and shall, unless earlier terminated as provided herein,
continue until the last to occur of: (i) the end of the last
License Term to expire or be terminated, if any such License
Term(s) are in effect on any date determined under clause (ii)
below; and (ii) the end of the term of any license under
Section 6.7 or 6.8 hereof, if any such license is in effect on
any date determined under clause (i) above.
5.2 Receipt of Non-Approvable Letter. This Agreement may be
terminated by mutual agreement of the parties if the FDA
issues a non-approvable letter with respect to the Product.
5.3 Mutual Agreement. This Agreement may be terminated by the
mutual agreement of the parties at any time.
5.4 Unfavorable or Inconclusive Results. This Agreement may be
terminated if it is determined by Committee Action that due to
unfavorable or inconclusive results to that time, no further
efforts are likely to lead to the Approval for the Product in
the U.S.
5.5 Termination of Participation in a Certification Period. Either
party may at its option terminate its participation in any
Certification Period (including without limitation the U.S.
Certification Period) at its election and upon at least 30
days' prior written notice to the other party (subject,
however, to a continuing duty to contribute as provided herein
to the costs of Certification Tasks previously committed prior
to such notice), if (x) it determines in good faith that no
further efforts are likely to lead to the applicable Approval
for the Product or (y) it does not desire to spend further
sums or devote further resources to complete the applicable
Certification Tasks. In addition, either party may elect not
to participate in a Certification Period with respect to a
nation other than the U.S. as provided in Section 3.6.2
hereof. In any such event, all other terms and conditions of
this Agreement shall remain in full force and effect.
5.5.1 If the terminating party is Endo, this shall, as to
such nation, have the results stated in Section 6.8
hereof.
5.5.2 If the terminating party is Penwest, this shall, as
to such nation, have the results stated in Section
6.7 hereof.
5.5.3 Any termination pursuant to this Section 5.5 shall
have the results set forth in Section 3.5.1 hereof
and, in the case of Endo, Section 3.5.2 hereof and,
in the case Penwest, Section 3.5.3 hereof; provided
that any amounts that are then due and payable shall
be paid within sixty (60) days of any termination
under this section, or with the next scheduled
payment under Section 3.7 hereof (whichever is
sooner).
10
5.6 Termination of an Exclusivity Period for Failure to Meet
Minimum Net Realization Levels. Penwest or Endo, as the case
may be, may at its option terminate the Exclusivity Period for
the Product in one or more nations in the Territory if Endo or
Penwest, as the case may be, fails to meet the Minimum Net
Realization levels in such nation under the then-current
applicable Manufacturing and Marketing Plan for the Product
during any two consecutive calendar years. In such event, all
other terms and conditions of this Agreement shall remain in
full force and effect.
5.7 Failure to Launch or Discontinuation of Active Marketing. If
Endo or Penwest, as the case may be, fails to launch
full-scale marketing of the Product in any nation in the
Territory within the time frames specified in the then-current
Manufacturing and Marketing Plan therefor, or announces its
intention to discontinue active marketing of the Product in
such nation, Penwest or Endo, as the case may be, may at its
option elect to terminate the License Term for the Product in
such nation upon the delivery of written notice to Endo or
Penwest, as the case may be. Any such termination of such
License Term will have the effect of removing the affected
nation(s) from the Territory for the Product and shall have
the results stated in Sections 6.8 or 6.7 hereof (as the case
may be) with respect to such nation. In such event, all other
terms and conditions of this Agreement shall remain in full
force and effect.
5.8 Material Breaches. In the event that either party materially
breaches any of the terms, conditions or agreements contained
in this Agreement to be kept, observed or performed by it,
then the other party may terminate this Agreement, at its
option and without prejudice to any of its other legal or
equitable rights or remedies, by giving the party that
committed the breach (i) in the case of breach of obligations
other than the payment of money, 90 days' notice in writing,
unless the notified party within such 90-day period shall have
cured the breach, and (ii) in the case of breach of an
obligation for the payment of money, 30 days' notice in
writing, unless the notified party within such 30-day period
shall have cured the breach, including any required payment of
interest on previously unpaid amounts as set forth herein.
5.8.1 If the defaulting party is Endo, a termination under
this section shall have the results stated in Section
6.8 hereof.
5.8.2 If the defaulting party is Penwest, a termination
under this section shall have the results stated in
Section 6.7 hereof.
5.8.3 Any termination pursuant to this Section 5.8 shall
have the results set forth in Section 3.5.1 hereof
and, in the case of Endo, Section 3.5.2 hereof and,
in the case of Penwest, Section 3.5.3 hereof;
provided that any amounts that are then due and
payable shall be paid within sixty
11
(60) days of any termination under this section, or
with the next scheduled payment under Section 3.7
hereof (whichever is sooner).
5.9 Endo's Bankruptcy; Insolvency. If Endo files for protection
under federal or state bankruptcy laws, becomes insolvent,
makes an assignment for the benefit of creditors, appoints or
suffers appointment of a receiver or trustee over its
property, files a petition under any bankruptcy or insolvency
act or has such petition filed against it, then Sections 6.8,
3.5.1 and 3.5.2 hereof shall apply; provided that if any of
the foregoing conditions arises as a consequence of actions
taken by third parties to which Endo has not acquiesced, then
such Sections shall not apply as a consequence of such
condition unless such condition persists for more than
forty-five (45) days; provided further that if any of the
foregoing conditions arises after the end of all Certification
Periods or more than one hundred eighty (180) days after Endo
has ceased participation in any Certification Period, then
Section 6.8.3 shall not apply as a consequence of such
condition.
5.10 Penwest's Bankruptcy; Insolvency. If Penwest files for
protection under federal or state bankruptcy laws, becomes
insolvent, makes an assignment for the benefit of creditors,
appoints or suffers appointment of a receiver or trustee over
its property, files a petition under any bankruptcy or
insolvency act or has such petition filed against it, then
Sections 6.7, 3.5.1 and 3.5.3 hereof shall apply; provided
that if any of the foregoing conditions arises as a
consequence of actions taken by third parties to which Penwest
has not acquiesced, then such Sections shall not apply as a
consequence of such condition unless such condition persists
for more than forty-five (45) days; provided further that if
any of the foregoing conditions arises after the end of all
Certification Periods or more than one hundred eighty (180)
days after Penwest has ceased participation in any
Certification Period, then Section 6.7.3 shall not apply as a
consequence of such condition.
5.11 Survival. Endo's or Penwest's, as the case may be, obligations
regarding payment of Royalties accrued as of the date of
termination, Penwest's rights under Sections 6.9.1 and 6.10
hereof (except if this Agreement is terminated due to an
uncured breach on the part of Penwest), and Endo's rights
under Sections 6.9.2 and 6.11 (except if this Agreement is
terminated due to an uncured breach on the part of Endo), and
the provisions of Sections 5, 6.1, 6.5-6.12, 9, 10, 12.2, 13,
and 14, hereof shall survive any expiration or termination of
this Agreement.
6. Ownership and Licenses.
6.1 Retention of Ownership; Inventorship; Assignment. Except as
otherwise explicitly transferred as provided herein, each
party will, as between it and the other party hereto, retain
ownership of any and all inventions, copyrights, trade
secrets, patent rights and other technology and rights to the
extent conceived or developed solely by its personnel,
Affiliates, or contractors (other than the other
12
party hereto). Inventorship for the purposes of this Agreement
will be determined under the prevailing U.S. rules and
interpretations. Unless otherwise approved by Committee
Action, the party primarily responsible for the filing of a
PLA shall own such PLA(s). Neither party makes any grant of
rights by implication. Notwithstanding the foregoing, Endo
hereby assigns to Penwest, its entire, right, title, and
interest, if any, in the United States and throughout the
world, in any inventions that constitute Penwest Product
Technology. Notwithstanding the foregoing, Penwest hereby
assigns to Endo, its entire right title and interest, if any,
in the United States and throughout the world, in any
inventions that constitute Endo Product Technology. Endo and
Penwest hereby agree to execute any documents and to perform
such other proper acts as the other party may deem reasonably
necessary to perfect and/or record the rights transferred in
this Section 6.1. For purposes of clarity and notwithstanding
anything in this Section 6.1 to the contrary, (i) the parties
acknowledge that they have jointly filed the five (5)
provisional patent applications set forth in Exhibit 6.1 and
(ii) Penwest hereby acknowledges that the inventions claimed
in the first three (3) of such provisional patent applications
constitute Endo Product Technology and (iii) Endo hereby
acknowledges that the inventions claimed in the last two (2)
of such provisional patent applications constitute Penwest
Product Technology and (iv) the parties hereby acknowledge
that the assignments contained in this Section 6.1 pertain to
this Endo Product Technology and this Penwest Product
Technology, respectively.
6.2 Filing and Prosecution of Patents. Except as otherwise
provided herein, each party shall be responsible, as it shall
determine, for the filing and prosecution of any and all
patent applications with respect, in whole or in part, to its
own intellectual property and for the maintenance of any
available patent protection with respect thereto, and Penwest
or Endo, as the case may be, will be responsible for the
filing and prosecution of any and all Penwest or Endo patent
applications with respect to the Penwest Product Technology or
the Endo Product Technology, as the case may be, subject to
reasonable consultation with the other party and with due
regard to reasonable concerns, if any, expressed by either
party as to the impact such a filing and prosecution may have
on its other rights and technologies; provided, however, that
neither party commits that any such patent protection will be
available or continuous hereunder but each party shall exert
Best Commercial Efforts to secure and to maintain in force the
patent protection under the Product Technology Patents.
6.3 Licenses Granted.
6.3.1 Penwest hereby grants to Endo a license under the
Penwest Product Technology, the Penwest Patents and
Penwest's Confidential Technology disclosed to Endo
hereunder to make, have made, use, sell, offer for
sale, and import the Product in the Territory. Such
13
license shall be exclusive as to the applicable
nation(s) during the Exclusivity Period applicable
thereto, and shall otherwise be nonexclusive. Such
license does not extend to the making of TIMERx or
Formulated TIMERx (which is covered by Section 6.6
hereof), but does cover the incorporation of the same
into the Product. Except as provided for herein, Endo
shall have no right to grant sublicenses under this
Section 6.3 without the prior written consent of
Penwest, which consent shall not be unreasonably
withheld. Penwest will, throughout the License Term,
promptly notify Endo of all Penwest Patents referred
to in Section 1.32 of the Definitions Exhibit and
provide Endo with access to all of the same, solely
for use within the scope of the license stated in
this section.
6.3.2 Endo hereby grants to Penwest a license, with right
to sublicense, under any and all Endo Technology and
Endo Product Technology to make, have made, use,
sell, offer for sale, and import the Product in the
Territory; provided, however, that during the
Exclusivity Period for the license granted by Penwest
to Endo under Section 6.3.1 hereof, such license
under Section 6.3.1 will take precedence over the
license under this Section 6.3.2. The license under
this Section 6.3.2 shall be exclusive to Penwest for
an "Exclusivity Period" (as defined in Section 1.20
of the Definitions Exhibit, mutatis mutandis for
application to patents on Endo Technology and Endo
Product Technology and to Endo's Confidential
Technology provided to Penwest); provided, however,
that if and to the extent that the license granted to
Endo under Section 6.3.1 hereof continues after the
end of an applicable Exclusivity Period thereunder
(whether pursuant to Section 5.6 or otherwise), this
license to Penwest under this Section 6.3.2 shall be
nonexclusive.
6.4 Exclusivity. During the term of this Agreement, neither party
shall, and hereby represents and warrants that none of its
Affiliates shall, develop, attempt to develop, or actively
investigate any version, materials, or system for any
extended-release oral tablet, oral capsule or other oral solid
dosage form product containing Oxymorphone, Oxymorphone
metabolites, Oxymorphone derivatives and/or Oxymorphone salts
as its only active therapeutic drug substance(s) (or agree or
seek to agree with others to do so or any part thereof),
unless such activities are with respect to the Certification
Period (and subsequent Marketing Period) as to which the other
party has elected not to participate, as permitted hereunder.
Endo acknowledges that Penwest, for itself and for others,
applies, and will seek to apply, TIMERx to other products.
Other than as set forth in this Section 6.4, no provision
hereof, and no exclusivity hereunder, shall prevent Penwest
from so applying TIMERx or Formulated TIMERx, so long as the
end product is not the Product for manufacture or sale in the
Territory during the
14
Exclusivity Period and is not a solid dosage form product for
oral administration containing Oxymorphone (or Oxymorphone
metabolites, Oxymorphone derivatives and/or Oxymorphone salts)
as its only active therapeutic drug substance(s).
6.5 Licenses as to Product Technology. In recognition of the
parties' cooperative efforts with respect to the Penwest
Product Technology and the Endo Product Technology, but
without the express or implied grant of any license to any
underlying or enabling rights or technology (except as
otherwise provided herein), it is agreed that each party and
its Affiliates shall have the nonexclusive, worldwide right
and license, without the right to sublicense except as
otherwise agreed by the parties, such agreement not to be
unreasonably withheld, under the Penwest Product Technology
and the Endo Product Technology, as the case may be, to make,
have made, use, sell, offer for sale, and import the Product
in accordance with this Agreement. Each party will promptly
notify the other of all relevant Penwest Product Technology or
Endo Product Technology, as the case may be, and provide such
other party with access to all of the same.
6.6 Endo's License to TIMERx. Penwest hereby grants to Endo a
nonexclusive license under the TIMERx Production Technology to
make and have made Formulated TIMERx solely for use in the
Product for sale in the Territory with rights of sublicense
for purposes of having Formulated TIMERx made in the Territory
for use in the Product for sale in the Territory; provided,
however, that Endo agrees that it shall not exercise its
rights under such license (or grant any sublicenses) except to
make and have made Formulated TIMERx for use in the Product
during the periods set forth in Section 7.4.4 hereof and the
provisions set forth in Sections 7.4.1 through 7.4.3 hereof
shall apply.
6.7 Endo's Continuing License. In the event that (a) Penwest
terminates its participation, or elects not to participate, in
a Certification Period pursuant to Section 3.5, Section 3.6 or
Section 5.5 hereof, (b) Endo terminates this Agreement
pursuant to Section 5.8 hereof due to an uncured breach by
Penwest, or (c) Section 5.10 hereof becomes applicable, then
Penwest's licenses to Endo under Sections 6.3.1, 6.5, 6.6,
6.9.2 and 6.11 hereof shall continue with respect to the
Product in the relevant nation(s) in the Territory, but with
the following changes and adjustments as to such license with
respect to the Product in such nation(s):
6.7.1 Termination of Endo's License to Penwest. Endo's
license to Penwest under Sections 6.3.2 and 7.5.1
shall terminate upon the effectiveness of this
Section 6.7.
6.7.2 Effect on Exclusivity Period. The Exclusivity Period
for the license under Section 6.3.1 hereof shall last
until the longer of five (5) years commencing with
the effective date of the application of this Section
6.7 and the date on which there are no more Penwest
Product
15
Technology Patents (if any) applicable to the Product
in such relevant nation(s) in the Territory (or, as
to pending patent applications, that would be so
applicable, if they were then issued as patents), and
shall thereafter be nonexclusive in such relevant
nation(s).
6.7.3 Reduction in Royalty Payable to Penwest. Commencing
with the effective date of the application of this
Section 6.7, the Royalties payable by Endo to Penwest
with respect to the licenses under Sections 6.3.1,
6.5, 6.6, 6.9.2 and 6.11 hereof shall be reduced
solely to the extent contemplated under Section 4.6.1
hereof.
6.7.4 Supply of TIMERx. Except in the event Endo exercises
its license in Section 6.6 hereof, the parties'
agreements under Section 4.4 and Article 7 hereof
will continue to apply to Endo's and its Affiliates'
and sublicensees' requirements of Formulated TIMERx
for use in the Product produced pursuant to this
Section 6.7 for sale in the relevant nation(s) in the
Territory, throughout the life of the license under
Section 6.3.1 hereof, as modified pursuant to Section
6.7.2 above.
6.7.5 As used in this Section 6.7, the "relevant nation(s)
in the Territory" shall mean the entire Territory
except in cases where the relevant termination
referred to above in clauses (a) - (c) relates to one
or more, but not all, of the nations in the
Territory, in which cases "relevant nation(s) in the
Territory" shall mean the nation(s) to which such
termination relates.
6.7.6 Penwest Intellectual Property Subject to License. The
licenses under Sections 6.3.1, 6.5, 6.6, 6.9.2 and
6.11 hereof, to the extent applicable pursuant to
this Section 6.7, will apply only to the Penwest
Patents, the Penwest Product Technology, the Penwest
Improvement Technology, the TIMERx Production
Technology, the Penwest Test and Regulatory Data and
Penwest's Confidential Technology made or discovered
prior to expiration of two years following such
termination, together with any and all intellectual
property and other rights thereto and therein in the
relevant nation(s) in the Territory, inclusive of
later-issued patents to the extent disclosing the
same. Notwithstanding Section 6.9.2 and Sections
1.32.2 or 1.32.3 of the Definitions Exhibit, any such
technology made or discovered more than two years
following such application shall not be licensed to
Endo for exploitation with respect to the Product in
the relevant nation(s) in the Territory. Penwest
will, throughout the term of the license under
Section 6.3.1 hereof, to the extent applicable to the
Product in the relevant nation(s) in the Territory,
promptly notify Endo of all Penwest Patents, Penwest
Product Technology, Penwest Improvement Technology,
TIMERx
16
Production Technology, and Penwest Test and
Regulatory Data and provide Endo with access to all
of the same, solely for use within the scope of the
licenses under Section 6.3.1, 6.5, 6.6, 6.9.2, and
6.11 hereof, to the extent applicable pursuant to
this Section 6.7.
6.7.7 Consent to Sublicense Not Necessary. The requirement
that Endo obtain Penwest's consent to sublicenses
under Sections 6.3.1, 6.5 and 6.6 hereof shall not
apply.
6.8 Penwest's Continuing License. In the event that (a) Endo
terminates its participation, or elects not to participate, in
a Certification Period pursuant to Section 3.5, Section 3.6 or
Section 5.5 hereof, (b) Penwest terminates an Exclusivity
Period pursuant to Section 5.6 hereof or a License Term
pursuant to Section 5.7 hereof, (c) (to the extent specified
in Section 4.3 hereof) the acceptance by Committee Action
under Section 4.3 hereof of Penwest or its designated third
party to pursue the activities described in that section in a
specified nation(s) in the Territory, (d) Penwest terminates
this Agreement pursuant to Section 5.8 hereof due to an
uncured breach by Endo, or (e) Section 5.9 hereof becomes
applicable, then Endo's licenses to Penwest under Sections
6.3.2, 6.5, 6.9.1, 6.10 and 7.5.1 hereof shall continue with
respect to the Product in the relevant nation(s) in the
Territory, but with the following changes and adjustments as
to such license with respect to the Product in such nation(s):
6.8.1 Termination of Penwest's Licenses to Endo. Except
where the applicable termination is only of an
Exclusivity Period under Section 5.6 hereof, the
License Term with respect to the Product in the
relevant nation(s) in the Territory affected by such
termination shall, for purposes of the licenses
granted by Penwest to Endo under Sections 6.3.1
hereof and 6.6 hereof, terminate upon the
effectiveness of this Section 6.8.
6.8.2 Effect on Exclusivity Period. Except where the
applicable termination is only of an Exclusivity
Period under Section 5.6 hereof, the license under
Section 6.3.2 hereof, to the extent applicable to the
Product in the relevant nation(s) in the Territory,
shall be exclusive within its scope to Penwest for an
"Exclusivity Period" (as defined in Section 1.20 of
the Definition Exhibit, mutatis mutandis for
application to patents on Endo Technology existing as
of the Effective Date and to Endo's Confidential
Technology provided to Penwest) lasting until the
longer of five (5) years commencing with the
effective date of the application of this Section 6.8
and the date on which there are no more Endo Product
Technology Patents (if any) applicable to the Product
in such relevant nation(s) in the Territory (or, as
to pending patent applications, that would be so
applicable, if they were then issued as
17
patents), and shall thereafter be nonexclusive in
such relevant nation(s).
6.8.3 Reduction in Royalty Payable to Endo. Commencing with
the effective date of the application of this Section
6.8, the Royalties payable by Penwest to Endo with
respect to the licenses under Sections 6.3.2, 6.5,
6.9.1, 6.10 and 7.5.1 hereof shall be reduced solely
to the extent contemplated under Section 4.6.2
hereof.
6.8.4 Continuing Assistance of Endo. Throughout the life of
the license under Section 6.3.2 hereof, as modified
by this Section 6.8, Endo will provide to Penwest and
its Affiliates and sublicensees reasonable assistance
on commercially reasonable terms for the purposes of
developing, testing, certifying, making, using,
selling, offering for sale, or importing the Product
or any services involving the Product in the relevant
nation(s) in the Territory, including without
limitation making available to Penwest the benefit of
any and all Facilities Certifications to the maximum
extent permitted by law. Without limiting the
generality of the foregoing, at Penwest's option,
Endo will specifically either:
(i) supply Penwest and its Affiliates' and
sublicensees' with sufficient quantities of
the Oxymorphone active drug substance (ADS)
produced in accordance with the
Specifications in compliance with cGMP and
all applicable laws and regulations, to meet
their reasonable requirements for the
manufacturing of the Product. If and to the
extent this clause (i) is effective, Penwest
shall purchase all of its and its
Affiliates' and sublicensees' requirements
thereof for such uses from Endo during such
period. The price for all Oxymorphone ADS
sold hereunder shall equal the applicable
Oxymorphone Price, and shall be payable by
Penwest to Endo within thirty (30) days
after the shipping of the Oxymorphone ADS to
Penwest. As provided in Exhibit 1.28, the
price of the Oxymorphone ADS used in the
Product will be one of the deductions
applied in the calculation of the Net
Realization. The Oxymorphone ADS shall be
provided F.O.B. Garden City, New York, and
all other terms of such supply shall be as
provided in Article 7 hereof, mutatis
mutandis for application to the Oxymorphone
ADS sold by Endo; or
(ii) manufacture and sell, or cause to be
manufactured and sold, to Penwest and its
Affiliates and sublicensees, on commercially
reasonable terms, the finished Product for
sale in the relevant nation(s) in the
Territory and shall deliver the same to the
relevant
18
nation(s) in the Territory, or otherwise
assist Penwest or its Affiliates or
sublicensees to effect such deliveries.
In the absence of any specific election by
Penwest between clause (i) and (ii), it will
be deemed to have selected clause (ii).
Penwest may, on good cause shown and after
consultation with Endo, reasonably elect to
switch a single time as to the Product in
any relevant nation in the Territory (unless
Endo in its discretion approves subsequent
switches, one way or the other as to the
Product in such relevant nation) from the
course specified in clause (ii) to that in
clause (i), and Endo agrees to reasonably
assist Penwest to be able to make such a
switch. Penwest will, at the reasonable
request of Endo, switch to clause (i) in
those situations in which it is able to do
so without significant harm to its interests
and in which this would be of substantial
benefit to Endo.
6.8.5 As used in this Section 6.8, the "relevant nation(s)
in the Territory" shall mean the entire Territory
except in cases where the relevant termination
referred to above in clauses (a) - (e) relates to one
or more, but not all, of the nations in the
Territory, in which cases "relevant nation(s) in the
Territory" shall mean the nation(s) to which such
termination relates.
6.8.6 Notwithstanding Section 6.9.1 hereof, Endo Technology
and Endo Product Technology made or discovered more
than two years following such termination shall not
be licensed to Penwest for exploitation with respect
to the Product in the relevant nation(s) in the
Territory. Endo will, throughout the term of the
license under Section 6.3.2 hereof, to the extent
applicable to the Product in the relevant nation(s)
in the Territory, promptly notify Penwest of all
existing Endo Technology and Endo Test and Regulatory
Data and provide Penwest with access to all of the
same, solely for use within the scope of the license
under Section 6.3.2 hereof, to the extent applicable
pursuant to this Section 6.8.
6.9 License to Improvement Technology.
6.9.1 Subject to Section 6.8.6 hereof, Endo hereby grants
to Penwest a worldwide, nonexclusive license, with
right to sublicense, under any and all Endo
Improvement Technology to make, have made, use, sell,
offer for sale, and import any products containing or
based upon TIMERx. Such license will be royalty-free
except as is otherwise provided herein. Endo will,
throughout the term of this Agreement, promptly
notify Penwest of all Endo Improvement Technology and
19
provide Penwest with access to all of the same,
solely for use within the scope of the license stated
in this section.
6.9.2 Subject to Section 6.7.6 hereof, Penwest hereby
grants to Endo a worldwide, nonexclusive license,
with right to sublicense, under any and all Penwest
Improvement Technology to make, have made, use, sell,
offer for sale, and import any product containing
Oxymorphone as an active ingredient. Such license
will be royalty-free except as is otherwise provided
herein. Penwest will, throughout the term of this
Agreement, promptly notify Endo of all Penwest
Improvement Technology and provide Endo with access
to all of the same, solely for use within the scope
of the license stated in this section.
6.10 License to Endo Test and Regulatory Data. Endo hereby grants
Penwest a nonexclusive and royalty-free license, with right to
sublicense, under all rights of Endo and its Affiliates and
sublicensees in and to the Endo Test and Regulatory Data to
use the same for purposes of marketing or complying with
governmental requirements of any country (other than with
respect to the Product or a product directly competitive with
the Product for manufacturing, marketing or use in the
Territory during the applicable Exclusivity Period); provided
that Penwest will not use any of the same for purposes of
marketing or disclosure to the public, to the extent the
particular Endo Test and Regulatory Data is then Endo's
Confidential Technology, unless Endo has consented thereto,
which consent shall not be unreasonably withheld. Endo hereby
consents to Penwest's and its sublicensees' cross-referencing,
in any PLAs or other regulatory filings made by them within
the scope of such license, any PLA filing made or drug master
file created by Endo or its Affiliates relating to or
containing any of the Endo Test and Regulatory Data. The
license under this section shall survive any termination or
expiration of the term of this Agreement, except a termination
under Section 5.8 hereof due to an uncured breach by Penwest.
Endo will, throughout the License Term and solely for use
within the scope of the license stated in this section,
provide to Penwest on request access to all of the Endo Test
and Regulatory Data in or coming into Endo's possession or
otherwise reasonably available to it. Notwithstanding anything
to the contrary in Section 6.1, Endo will retain ownership in
(but Penwest shall have the right to use within the scope of,
and as limited by, its licenses thereto under this Section
6.10) Endo Test and Regulatory Data and any IND or NDA related
to the Product, as well as the foreign equivalents thereof, if
applicable.
6.11 License to Penwest Test and Regulatory Data. Penwest hereby
grants Endo a nonexclusive, royalty-free license, with right
to sublicense, under all rights of Penwest and its Affiliates
in and to the Penwest Test and Regulatory Data to use the same
for purposes of complying with governmental requirements, but
solely with respect to the Product for marketing or use in the
Territory. Penwest hereby
20
consents to Endo's and its sublicensees' cross-referencing, in
any PLAs or other regulatory filings made by them within the
scope of such license, any PLA filing made or drug master file
created by Penwest or its Affiliates relating to or containing
any of the Penwest Test and Regulatory Data. The license and
rights under this section shall survive any termination or
expiration of the term of this Agreement, except a termination
under Section 5.8 hereof due to an uncured breach by Endo.
Penwest will, throughout the License Term and solely for use
within the scope of the license stated in this section,
provide to Endo on request access to all of the Penwest Test
and Regulatory Data in or coming into Penwest's possession or
otherwise reasonably available to it. Notwithstanding anything
to the contrary in Section 6.1, Penwest will retain ownership
in (but Endo shall have the right to use within the scope of,
and as limited by, its licenses thereto under this Section
6.11) Penwest Test and Regulatory Data.
6.12 Marking of the Product. Each party agrees to mark and to have
marked by its sublicensees all Product manufactured, used or
sold by it or its sublicensees in accordance with the laws of
the United States or other applicable nation(s) in the
Territory relating to the marking of patented articles with
notices of patent.
7. Supply of TIMERx; Oxymorphone.
7.1 Sales of TIMERx. All sales of Formulated TIMERx shall be
F.O.B. Patterson, New York, and Endo shall bear all
transportation, insurance, taxes, duties, and other costs and
risks of loss, spoilage and damage associated with the
shipping and delivery of Formulated TIMERx to Endo or its
Affiliates or sublicensees.
7.2 Quality Control Testing. Penwest shall perform routine quality
control tests with respect to all Formulated TIMERx as
required by the FDA, or otherwise as Penwest deems necessary
in accordance with its applicable policies, and Penwest will
also bear the expenses and fees for filing the Drug Master
File for TIMERx with the FDA. No other or special tests by
Penwest with respect to the raw materials or Formulated TIMERx
will be required, unless and to the extent that Endo
establishes that the same are required in order to obtain or
maintain a governmental license to market the Product in the
Territory. Penwest shall promptly, upon completion of each lot
or batch of Formulated TIMERx, deliver to Endo a copy of the
record of such test performed on said lot or batch. Endo will
perform quality control tests on Formulated TIMERx immediately
on receipt at its, or its designee's, facility and advise
Penwest within thirty (30) days of any deviations from
Specifications.
7.3 Non-Conforming Shipments. If Endo considers any such shipment
not to conform to the applicable Specifications, Endo shall
notify Penwest as provided in Section 7.2 hereof and provide
Penwest with the relevant analysis. PENWEST'S SOLE OBLIGATION
AND ENDO'S EXCLUSIVE REMEDY FOR ANY SUCH NONCONFORMITY SHALL
BE AS FOLLOWS:
21
(i) Penwest shall at its own expense accept
return of any shipment not accepted, or else
reimburse Endo for the cost of disposal or
destruction;
(ii) Penwest shall use its Best Commercial
Efforts to replace the non-conforming
shipment with conforming Formulated TIMERx;
and
(iii) Section 7.4 hereof shall apply if in any
circumstances set out in that Section
Penwest shall be unable to supply
replacement conforming Formulated TIMERx.
7.4 Failure to Supply TIMERx. If for any reason Penwest fails to
supply Endo with its and its Affiliates' and sublicensees'
requirements of Formulated TIMERx during the term of this
Agreement, Endo shall, AS ENDO'S SOLE AND EXCLUSIVE REMEDY FOR
ANY FAILURE TO SUPPLY Formulated TIMERx, be entitled to
exercise the rights granted by Penwest in Section 6.6 hereof,
and Penwest shall make knowledgeable personnel reasonably
available, at Penwest's expense, to consult with Endo, all to
the extent necessary to enable Endo, or its designee, to
produce TIMERx that would otherwise have been supplied,
directly or indirectly, by Penwest hereunder for Endo and its
Affiliates and sublicensees in connection with the production
of the Product pursuant to this Agreement.
7.4.1 The license granted in Section 6.6 hereof shall be
royalty-free, it being understood that Endo's actual
direct manufacturing costs and allocable indirect
costs relating to the manufacture of the Formulated
TIMERx will be one of the deductions applied in the
calculation of the Net Realization.
7.4.2 Endo shall maintain TIMERx Production Technology
delivered to Endo pursuant to this section, whether
orally or in writing, as Penwest Confidential
Technology in accordance with Section 10 hereof and
shall use such information and technology only for
the purpose of producing Formulated TIMERx for its
own use and the use of its Affiliates and
sublicensees in connection with this Agreement.
7.4.3 Endo acknowledges that, in doing the foregoing,
Penwest will not be providing a turnkey operation.
Rather, Penwest will only be required to make
reasonably available to Endo the best standard of
knowledge and information then available to Penwest
and directly used in its or its Affiliates
manufacture of Formulated TIMERx.
7.4.4 A failure to supply giving rise to Endo's rights to
use the TIMERx Production Technology to manufacture
or have manufactured Formulated TIMERx in accordance
with this Section 7.4 shall only be
22
deemed to have occurred if (i) Penwest's failure to
supply is a material failure that continues for a
period in excess of 90 days from the due date of
delivery (regardless of Endo's safety stock of
TIMERx), (ii) Endo gives Penwest notice of such
material and continuing failure, and (iii) Penwest
fails to cure such failure within thirty (30) days
after receipt of such notice. Furthermore, Endo shall
only be entitled to manufacture or have manufactured
Formulated TIMERx in accordance with this Section 7.4
under the license granted in Section 6.6 hereof until
Penwest has both (1) notified Endo that it is ready,
willing and able to supply TIMERx in accordance with
this Agreement and (2) successfully supplied TIMERx
to meet Endo's orders therefor, up to Endo's
forecasted demands, over the next consecutive
six-month period.
7.5 Failure to Supply Oxymorphone ADS or Finished Product. If for
any reason Endo fails to supply Penwest with its and its
Affiliates' and sublicensees' requirements of Oxymorphone ADS
or finished Product as required under Section 6.8.4 hereof,
Penwest shall, AS PENWEST'S SOLE AND EXCLUSIVE REMEDY FOR ANY
SUCH FAILURE, be entitled to exercise the rights granted by
Endo in Section 7.5.1 hereof, and Endo shall make
knowledgeable personnel reasonably available, at Endo's
expense, to consult with Penwest, all to the extent necessary
to enable Penwest, or its designee, to produce Oxymorphone ADS
or finished Product that would otherwise have been supplied,
directly or indirectly, by Endo hereunder for Penwest and its
Affiliates and sublicensees pursuant to Section 6.8.4 hereof.
7.5.1 Endo hereby grants to Penwest a nonexclusive license
under all of Endo's rights under patents and other
technology belonging to Endo or which Endo has a
right to practice and sublicense from time to time
during the term of this Agreement that directly
relate to, are desirable for, or are necessary or
useful for the production of, finished Product or
Oxymorphone ADS, to make and have made finished
Product and Oxymorphone ADS, solely for use in the
Product for sale in the Territory, with rights of
sublicense for purposes of having finished Product
and Oxymorphone ADS made in the Territory for use in
the Product for sale in the Territory; provided,
however, that Penwest agrees that it shall not
exercise its rights under such license (or grant any
sublicenses) except to make and have made finished
Product and Oxymorphone ADS for use in the Product
during the periods set forth in Section 7.5.5.
7.5.2 The license granted in Section 7.5.1 shall be
royalty-free, it being understood that Penwest's
actual direct manufacturing costs and allocable
indirect costs relating to the manufacture of the
finished
23
Product and Oxymorphone ADS will be one of the
deductions applied in the calculation of the Net
Realization.
7.5.3 Penwest shall maintain the technology delivered to
Penwest pursuant to this section, whether orally or
in writing, as Endo Confidential Technology in
accordance with Section 10 hereof and shall use such
information and technology only for the purpose of
producing finished Product and Oxymorphone ADS for
its own use and the use of its Affiliates and
sublicensees in connection with this Agreement.
7.5.4 Penwest acknowledges that, in doing the foregoing,
Endo will not be providing a turnkey operation.
Rather, Endo will only be required to make reasonably
available to Penwest the best standard of knowledge
and information then available to Endo and directly
used in its or its Affiliates' manufacture of the
finished Product and Oxymorphone ADS.
7.5.5 A failure to supply giving rise to Penwest's rights
to manufacture or have manufactured finished Product
and Oxymorphone ADS in accordance with this Section
7.5 shall only be deemed to have occurred if (i)
Endo's failure to supply is a material failure that
continues for a period in excess of 90 days from the
due date of delivery (regardless of Penwest's safety
stock thereof), (ii) Penwest gives Endo notice of
such material and continuing failure, and (iii) Endo
fails to cure such failure within thirty (30) days
after receipt of such notice. Furthermore, Penwest
shall only be entitled to manufacture or have
manufactured finished Product and Oxymorphone ADS in
accordance with this Section 7.5 under the license
granted in Section 7.5.1 hereof until Endo has both
(1) notified Penwest that it is ready, willing and
able to supply Oxymorphone ADS in accordance with
this Agreement and (2) successfully supplied
Oxymorphone ADS to meet Penwest's orders therefor, up
to Penwest's forecasted demands, over the next
consecutive six-month period.
7.6 Access. While Penwest is supplying Formulated TIMERx hereunder
to Endo, Penwest shall, after receipt of reasonable prior
notice, give duly accredited representatives of Endo access at
all reasonable times during regular business hours to the
plant in which the Formulated TIMERx is being produced, to
ensure production practices creating Formulated TIMERx conform
to Specifications. Penwest will exert its Best Commercial
Efforts to maintain at all times during the Marketing Period
at least two FDA-approved sources for the production of
Formulated TIMERx (whether or not inclusive of Penwest's own
production facilities). Penwest will exert its Best Commercial
Efforts to obtain similar access
24
for Endo to the production facilities of any of Penwest's
third-party suppliers of the Formulated TIMERx.
7.7 TIMERx Ordering Process. Endo shall deliver to Penwest firm
written orders stating its (and/or its Affiliates' and
sublicensees') requirements for Formulated TIMERx to be used
for production of the Product for commercial use or sale no
less than three (3) months in advance of the requested
delivery date therefor, by giving firm orders at the beginning
of each month that creates firm orders during the third
following month (the order-submission month and the first and
second months following having already been the subject of
prior firm orders). All such orders shall be firm and shall
not be cancelled or deferred by Endo.
7.8 Estimates of TIMERx. At least six months before Endo and/or
its Affiliates or sublicensees begin production of the Product
for commercial use or sale (and in any event not later than
concurrently with the submission of the first order for use in
the production of the Product intended for commercial sale
during the Marketing Period), Endo shall deliver to Penwest a
written, non-binding estimate of all requirements of
Formulated TIMERx therefor during the following 12 months.
Endo will deliver to Penwest updates to such estimates on or
before the first day of each January, April, July and October
thereafter, which updates may revise estimates previously
submitted, and will add estimates for additional months so
that each such estimate covers the 8-month period following
the end of the firm-order period (that is, the 4th through the
11th month after the month in which such estimates are made).
7.9 Actual TIMERx Supply. Penwest will exert Best Commercial
Efforts to supply Endo with all amounts of Formulated TIMERx
requested by Endo, but Penwest shall have no obligation to
supply Endo with quantities of Formulated TIMERx during any
quarter in excess of 125% of the quantity estimated in Endo's
estimate for that quarter which estimate was given to Penwest
six months prior to the end of such quarter pursuant to
Section 7.8 hereof (the Six-Month Estimated Quantity), nor
shall Endo order quantities for any quarter less than 75% of
the applicable Six-Month Estimated Quantity.
7.10 Notifications; Governmental Inspections. Each party shall
promptly notify the other of any fact, circumstance, condition
or knowledge dealing with TIMERx, Formulated TIMERx, or the
Product of which the party becomes aware that bears upon the
safety or efficacy of TIMERx, Formulated TIMERx, or the
Product. Each party shall immediately notify the other of any
inspection or audit relating to TIMERx, Formulated TIMERx, or
the Product by any governmental regulatory authority in the
Territory. If a representative of the governmental authority
takes samples in connection with such audit or inspection, the
parties shall immediately provide each other, as appropriate,
samples from the same batch. The party in receipt of such
notice will provide the other party within 72 hours, with
copies of
25
all relevant documents, including FDA Forms 482 and 483 (as
applicable), warning letters and other correspondence and
notifications as such other party may reasonably request.
Penwest and Endo agree to cooperate with each other during any
inspection, investigation or other inquiry by the FDA or other
governmental entity, including providing information and/or
documentation, as requested by the FDA, or other governmental
entity. To the extent permissible, Penwest and Endo also agree
to discuss any responses to observations or notifications
received and to give the other party an opportunity to comment
on any proposed response before it is made. In the event of
disagreement concerning the content or form of such response,
Endo shall be responsible for deciding the appropriate form
and content of any response with respect to any of its cited
activities and Penwest shall be responsible for deciding the
appropriate form and content of any response with respect to
any of its cited activities. Each party shall inform the other
of all comments and conclusions received from the governmental
authority.
7.11 Manufacturing Agreements. In the event that Endo exercises its
license rights under Section 6.6, Penwest shall use its Best
Commercial Efforts to cause *** to promptly enter into an
agreement with Endo to supply Formulated TIMERx to Endo on
substantially the same terms and conditions (including those
relating to the price of TIMERx) as are contained in the
Custom Manufacturing Agreement dated *** between *** and
Penwest, as amended through the date of such exercise by Endo
(the "*** Manufacturing Agreement"), or any subsequent
supplier of Penwest to promptly enter into an agreement with
Endo to supply Formulated TIMERx to Endo on substantially the
same terms and conditions (including those relating to the
price of TIMERx) as those on which such subsequent supplier
supplies to Penwest, but only for such duration as Endo is
entitled to exercise such license rights. Penwest hereby
represents and warrants that a true, correct and complete copy
of the current *** Manufacturing Agreement has been provided
to Endo and covenants to provide Endo with an updated copy of
such agreement promptly in the event the *** Manufacturing
Agreement is amended or modified and with a copy of the
subsequent supply agreement promptly in the event that Penwest
engages any additional or new supplier of TIMERx. In the event
that Penwest exercises its license rights under Section 7.5.1,
Endo shall use its Best Commercial Efforts to cause *** to
promptly enter into an agreement with Penwest to supply
Oxymorphone ADS to Penwest on substantially the same terms and
conditions (including those relating to the price of the
Oxymorphone ADS) as are contained in the Supply Agreement
dated as of ***,between *** and Endo, as amended through the
date of such exercise by Penwest (the "*** Supply Agreement")
and to cause *** to promptly enter into an agreement with
Penwest to supply finished Product to Penwest on substantially
the same terms and conditions (including those relating to the
price of the Product) as are contained in the Master
Development and Toll Manufacturing Agreement, dated as of ***
between *** and Endo, as amended
26
through the date of such exercise by Penwest (the "***
Manufacturing Agreement"), or any subsequent supplier of Endo
to promptly enter into an agreement with Penwest to supply
finished Product to Penwest on substantially the same terms
and conditions (including those relating to the price of the
Product) as those on which such subsequent supplier supplies
to Endo, but only for such duration as Penwest is entitled to
exercise such license rights. Endo hereby represents and
warrants that true, correct and complete copies of the ***
Supply Agreement and the *** Manufacturing Agreement have been
provided to Penwest and covenants to provide Penwest with
updated copies of such agreements promptly in the event the
*** Supply Agreement or the *** Manufacturing Agreement is
amended or modified and with a copy of the subsequent supply
agreement promptly in the event that Endo engages any
additional or new supplier of the finished Product or
Oxymorphone ADS.
8. Use of Trademarks. Unless prohibited by law, Endo agrees to market the
Product in conjunction with the appropriate Penwest Trademark(s), and
as provided in this section, including uses on such packaging, labeling
and other materials as the Alliance Committee shall reasonably
determine. The provisions of this Section 8 shall apply, mutatis
mutandis, to marketing of the Product by Penwest or its designees as
contemplated under Sections 4.2, 4.3, or 6.8 hereof, with respect to
the use by Penwest or such designees of the Endo Trademarks.
8.1 Benefit of Trademarks. Endo acknowledges that all Penwest
Trademarks and all rights therein or registrations thereof,
worldwide, shall belong exclusively to Penwest. All use of the
Penwest Trademarks as contemplated in this Agreement by Endo
shall accrue to the benefit of Penwest. Endo shall make no use
of any of the Penwest Trademarks except to identify and
promote the Product as contemplated hereunder for sale in the
Territory. Endo shall not continue using the Penwest
Trademarks after termination or expiration of this Agreement,
nor after the removal or alteration of any such Penwest
Trademark from Exhibit 1.17 hereto, except to complete the
sale of inventory of the Product on hand at the time of
termination or expiration, or at the time of such removal or
alteration.
8.2 Protection of Trademarks. Endo shall cooperate with Penwest to
protect the interest of Penwest in the Penwest Trademarks, and
shall neither attempt to register nor authorize others to
register any Penwest Trademarks without the prior written
consent of Penwest in each instance. Endo shall promptly
inform Penwest of any actual or apparent infringement of any
Penwest Trademarks or other intellectual properties of Penwest
which may come to Endo's attention during the term hereof.
8.3 Acknowledgement of Ownership of Trademarks. Endo shall use all
appropriate notices of trademark status of the Penwest
Trademarks, including the "(TM)" designation (or the (R)
symbol for registered marks, if any), in all labeling and
27
promotional materials and shall otherwise conform with all
policies and notices of Penwest's rights in the marks and for
the protection of the Penwest Trademarks, including without
limitation the inclusion of an appropriate footnote
acknowledging the use of the Penwest Trademark(s) under
license. Endo will impose a spatial separation between any
Penwest Trademarks and any other names or marks of Endo or any
others, and will not otherwise use any of Penwest's names,
marks or symbols in any manner that could, whether immediately
or over time, create any substantial association between them
and the business of Endo.
8.4 Prior Approval of Use of Trademarks. Samples of the Product
and any advertising, promotional materials or packaging
related thereto that bear the Penwest Trademarks shall be
provided by Endo to Penwest at least thirty (30) days prior to
the first use or sale thereof, and at other times upon the
request of Penwest. Endo shall not put any of such items into
initial use without first obtaining the written approval of
Penwest, which approval shall not be unreasonably withheld.
Penwest shall at all times have the right to enter into Endo's
facilities and/or to take other appropriate methods to check
the quality of the Product manufactured or offered by Endo,
from time to time during the term of this Agreement. If at any
time or times Penwest reasonably determines that the quality
of the Product manufactured or offered by Endo, or the
packaging or promotional materials therefor, is not suitable
for using the Penwest Trademarks or any of them, Penwest, at
its option, shall have the right to suspend or prohibit the
use of such Penwest Trademark(s); provided that Penwest has
given Endo a written notice thereof and a period of 60 days to
bring them up to Penwest's standards; provided further,
however, that Penwest need not give such opportunity to cure
any deficiency that has been the subject of more than two such
notices on prior occasions during the preceding twelve months.
9. Representations, Warranties and Indemnities.
9.1 Mutual Authorization Representations. Each party represents
and warrants to the other that it is duly organized and
validly existing under the laws of the state of its
organization, that it has the requisite corporate authority to
execute and deliver this Agreement and to perform its
obligations hereunder, and that the execution and performance
of its obligations hereunder are not and will not be in
violation of or in conflict with any material obligation it
may have to any third party.
9.2 Penwest Representations.
9.2.1 Penwest represents and warrants that any Formulated
TIMERx supplied by it to Endo hereunder for use in
the Product, at the point of delivery:
28
(i) will conform to the Specifications in effect
as of the order date therefor; and
(ii) to Penwest's current knowledge, without
undertaking any special investigation, will
not infringe upon the intellectual property
rights of any third party.
9.2.2 Penwest represents and warrants that it has all
right, title and interest in the Penwest Patents and
is authorized to grant the licenses granted herein.
9.3 Mutual Licenses, Permits and Authorizations Representations.
Each party represents and warrants to the other that it has
obtained, and will at all times during the term of this
Agreement hold and comply with, all licenses, permits and
authorizations necessary to perform this Agreement and to
test, manufacture, market, export, and import the Product,
Oxymorphone, or Formulated TIMERx to be so tested,
manufactured, marketed, exported or imported by it as provided
herein, as now or hereafter required under any applicable
statutes, laws, ordinances, rules and regulations of the
United States and any applicable foreign, state, and local
governments and governmental entities, including without
limitation all Facilities Certifications (as to Endo).
9.4 Disclaimer. THE FOREGOING WARRANTIES ARE IN LIEU OF, AND THE
PARTIES EACH DISCLAIM, ALL OTHER WARRANTIES, EXPRESS, IMPLIED
OR ARISING BY LAW, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NON- INFRINGEMENT. NOTHING IN THIS AGREEMENT
SHALL BE CONSTRUED AS A REPRESENTATION OR WARRANTY (i) BY
PENWEST AS TO THE PATENTABILITY, VALIDITY, OR SCOPE OF ANY
PENWEST PATENTS, PENWEST'S CONFIDENTIAL TECHNOLOGY, TIMERx
PRODUCTION TECHNOLOGY, PENWEST TEST AND REGULATORY DATA, OR
PENWEST PRODUCT TECHNOLOGY, NOR AS TO THE UTILITY, EFFICACY,
NONTOXICITY, SAFETY OF TIMERx OR THE PRODUCT; OR (ii) BY ENDO
AS TO THE PATENTABILITY, VALIDITY, OR SCOPE OF ANY ENDO
TECHNOLOGY, ENDO TEST AND REGULATORY DATA, OR ENDO PRODUCT
TECHNOLOGY, NOR AS TO THE UTILITY, EFFICACY, NONTOXICITY,
SAFETY OR APPROPRIATENESS OF ANY PRODUCTS MADE THEREFROM.
9.5 Penwest's Indemnification of Endo. Penwest shall indemnify,
defend and hold Endo and its Affiliates and sublicensees
harmless from any and all third-party claims to the extent
arising from, in connection with, based upon, by reason of, or
relating in any way to:
29
9.5.1 any claim, action or damages arising out of any
alleged infringement by reason of the manufacture,
use or sale by Endo of the Product to the extent such
infringement would apply as well to the manufacture,
sale or distribution of TIMERx alone;
9.5.2 Penwest's contributions to the formulation or
development of the Product and the Specifications
therefor hereunder; provided, however, that matters
of infringement of third party rights or intellectual
properties shall be included under this clause only
to the extent the same are covered by Section 9.5.1
hereof or are within Penwest's knowledge, without
undertaking any special investigation, and of which
Penwest failed to inform Endo within 30 days
following the later of the Effective Date or
Penwest's first obtaining such knowledge;
9.5.3 any failure of the Formulated TIMERx manufactured by
Penwest or its alternate supplier (but not by Endo
under Section 7.4 hereof), as delivered to Endo
hereunder for use in the Product, to conform to the
Specifications;
9.5.4 any failure of Penwest to comply with its obligation
under Section 7.10 hereof to notify Endo of any
information coming into Penwest's possession and
bearing on the safety of TIMERx or the Product, and
not arising from any other aspect of the Product or
its formulation, development, supply, production,
manufacture, sale, delivery, distribution or use, nor
from any act, omission or contribution of Endo with
respect to the Product, or with respect to the
Formulated TIMERx following its delivery to Endo
hereunder; or
9.5.5 the supply, production, manufacture, sale, use,
delivery or distribution of the Product by Penwest,
its Affiliates or sublicensees, in the event that
Penwest supplies, produces, manufactures, sells,
uses, delivers or distributes the Product hereunder.
9.6 Endo's Indemnification of Penwest. Endo shall indemnify,
defend and hold Penwest harmless from any and all third-party
claims to the extent arising from, in connection with, based
upon, by reason of, or relating in any way to, the
formulation, development, supply, production, manufacture,
sale, delivery, distribution or use of the Product by Endo,
its Affiliates or sublicensees, except for any matters which
are covered by Penwest's indemnities under Section 9.5 hereof.
9.7 Limitation on Indemnification. Notwithstanding anything to the
contrary set forth elsewhere herein, neither Endo nor Penwest
shall be obligated to indemnify the other party for claims or
liabilities to the extent arising from such other party's, or
30
its Affiliates', sublicensees' or assigns', negligence,
intentional misconduct, or breach of its duties, obligations,
warranties or representations set forth herein.
9.8 Procedure. Whenever indemnification is provided for a party
under this Agreement, such right of indemnification shall
extend also to the indemnified party's Affiliates, officers,
directors, shareholders, successors, assigns, agents,
employees, and insurers to the extent the same become subject
to such claim in such capacity. The party seeking
indemnification shall provide the indemnifying party with
written notice of any claim or action within ten (10) days of
its receipt thereof, and shall afford the indemnifying party
the right to control the defense and settlement of such claim
or action. The party seeking indemnification shall provide
reasonable assistance to the indemnifying party in the defense
of such claim or action. If the defendants in any such action
include both Endo and Penwest, and either party concludes that
there may be legal defenses available to it which are
different from, additional to, or inconsistent with, those
available to the other, that party shall have the right to
select separate counsel to participate in the defense of such
action on its behalf, and such party shall bear the cost and
expense of such separate defense, unless and to the extent the
parties otherwise agree, or it is determined through
arbitration hereunder that such costs and expense are or were
required to be indemnified by the other party hereunder and
are or were required to be incurred separately due to such
different, additional, or inconsistent defenses. Should the
indemnifying party determine not to defend such claim or
action, the other party shall have the right to maintain the
defense of such claim or action and the indemnifying party
agrees to provide reasonable assistance to it in the defense
of such claim or action and to bear the reasonable cost and
expense of such defense (including attorneys' and experts'
fees and expenses). Neither party shall settle any such claim
or action in a way that prejudices or adversely impacts the
other party to this Agreement without the prior approval of
such other party (which approval shall not be unreasonably
withheld).
9.9 No Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT (OTHER THAN FOR: BREACHES OF
SECTION 9.3 HEREOF; INDEMNITIES UNDER SECTIONS 9.5 AND 9.6
HEREOF FOR PATENT INFRINGEMENT OR FOR HARM TO PERSONS OR
TANGIBLE PROPERTY; AND BREACHES OF SECTION 10 HEREOF), NEITHER
PARTY SHALL UNDER ANY CIRCUMSTANCES BE LIABLE FOR ANY THIRD
PARTY CLAIMS OR FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT OR
SPECIAL DAMAGES, INCLUDING ANY LOST PROFITS OR SAVINGS,
ARISING FROM ANY BREACH OF WARRANTY OR THE PERFORMANCE OR
BREACH OF ANY OTHER PROVISION OF THIS AGREEMENT OR THE USE OR
INABILITY TO USE TIMERx, THE PRODUCT, PENWEST PATENTS,
PENWEST'S CONFIDENTIAL TECHNOLOGY, TIMERx PRODUCTION
TECHNOLOGY,
31
PENWEST TEST AND REGULATORY DATA, PENWEST PRODUCT TECHNOLOGY,
CONFIDENTIAL ENDO TECHNOLOGY, ENDO TEST AND REGULATORY DATA,
OR ENDO PRODUCT TECHNOLOGY, OR ANY CLAIMS ARISING IN TORT,
PERSONAL INJURY, OR PRODUCT LIABILITY, EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10. Confidentiality and Non-Solicitation.
10.1 Confidentiality; Exceptions. In the course of performance
under this Agreement or during the discussions leading
thereto, a party may disclose, or may have disclosed, to the
other confidential information belonging to such party in
writing, orally, by demonstration or sample or otherwise,
which information is marked or stated in writing to be
confidential or trade secret information, or where the
circumstances of the disclosure and/or the nature of the
information otherwise reasonably give notice of the
confidential character of the information. All such
confidential information of a party shall be maintained in
confidence by the other and will not be used by the other
party for any purpose except as authorized hereunder. Each
party shall exercise, and shall cause its Affiliates,
sublicensees, and consultants to exercise, a reasonable degree
of care and at least the same degree of care as it uses to
protect its own confidential information of similar nature to
preserve the confidentiality of such information of the other
party. Each party shall safeguard such information against
disclosure to third parties, including without limitation
employees and persons working or consulting for such party
that do not have an established, current need to know such
information for purposes authorized under this Agreement. This
obligation of confidentiality does not apply to information
and material:
10.1.1 that were properly in the possession of the receiving
party, without any restriction on use or disclosure,
prior to receipt from the other party;
10.1.2 that are at the time of disclosure hereunder in the
public domain by public use, publication, or general
knowledge;
10.1.3 that become general or public knowledge through no
fault of the receiving party or its Affiliates
following disclosure hereunder;
10.1.4 that are properly obtained by the receiving party
from a third party not under a confidentiality
obligation to the disclosing party hereto;
10.1.5 that are documented to have been independently
developed by or on behalf of the receiving party
without the assistance of the confidential
information of the other party;
32
10.1.6 that consist merely of an idea for the combination of
one or more active drug ingredients with an extended
release agent such as TIMERx; or
10.1.7 to the extent the same are required to be disclosed
by order of any court or governmental authority;
provided, however, that the receiving party shall use
its Best Commercial Efforts to give the disclosing
party prior notice of any such disclosure so as to
afford the disclosing party a reasonable opportunity
to seek, at the expense of the disclosing party, such
protective orders or other relief as may be available
in the circumstances.
10.2 Public Announcements. Neither party shall make any public
announcement or other publication regarding this Agreement
(whether as to the existence or terms hereof) or the
development work or project hereunder or the results thereof
without the prior, written consent of the other party, which
consent shall not be unreasonably withheld; provided that the
foregoing shall not prohibit any disclosure which, in the
opinion of counsel to the disclosing party, is required by any
applicable law or by any competent governmental authority. In
no event shall either party make any disclosure of any such
results before a patent application has been filed with
respect thereto, except upon the prior written approval of the
other party.
10.3 Non-Solicitation. Each of Penwest and Endo agrees that during
the License Term, neither of them will directly or indirectly
solicit or encourage any employee or consultant of the other
to leave or terminate such employment or consultancy for any
reason, including without limitation, becoming employed or
otherwise engaged in any capacity by such party (or any person
or entity associated with such party, whether or not an
Affiliate), nor will it assist others in doing so.
11. Infringement. The provisions of this Section 11 shall apply, mutatis
mutandis, to the Endo Product Technology Patents, with Endo being
substituted for Penwest and vice versa.
11.1 Notice of Infringement. Penwest shall promptly inform Endo of
any suspected infringement of any of the Penwest Patents or
Penwest Product Technology Patents or the infringement or
misappropriation of the TIMERx Production Technology or
Penwest Product Technology by a third party, to the extent
such infringement or misappropriation involves the
manufacture, use or sale of the Product or a substitutable or
directly competitive product in the Territory ("Covered
Infringement"). Endo shall promptly inform Penwest of any
suspected infringement of any of the Penwest Patents or
Penwest Product Technology Patents or infringement or
misappropriation of the TIMERx Production Technology or
Penwest Product Technology of which Endo is aware, whether or
not the same involves a Covered Infringement.
33
11.2 Non-Covered Infringement. If the suspected infringement or
misappropriation does not involve a Covered Infringement,
Penwest may take, or refrain from taking, any action it
chooses, with or without notice to Endo, and Endo shall have
no right to take any action with respect to such suspected
infringement or misappropriation, nor to any recoveries with
respect thereto. If the suspected infringement or
misappropriation involves a Covered Infringement, Penwest
shall, as soon as possible and in no event more than twenty
(20) days of the first notice referred to in Section 11.1
hereof, inform Endo whether or not Penwest intends to
institute suit against such third party with respect to a
Covered Infringement. Endo will not take any steps toward
instituting suit against any third party involving a Covered
Infringement until Penwest has informed Endo of its intention
pursuant to the previous sentence.
11.3 Penwest's Institution of Suit. If Penwest notifies Endo that
it intends to institute suit against a third party with
respect to a Covered Infringement, and Endo does not agree to
join in such suit as provided in Section 11.4 hereof, Penwest
may bring such suit on its own and shall in such event bear
all costs of, and shall exercise all control over, such suit.
Penwest may, at its expense, bring such action in the name of
Endo and/or cause Endo to be joined in the suit as a
plaintiff. In such suit, recoveries, if any, whether by
judgment, award, decree or settlement, shall belong solely to
Penwest.
11.4 Joint Suits. If Penwest notifies Endo that it desires to
institute suit against such third party with respect to a
Covered Infringement, and Endo notifies Penwest within 30 days
after receipt of such notice that Endo desires to institute
suit jointly, the suit shall be brought jointly in the names
of both parties and all costs thereof shall be borne equally
to the extent applicable to the Covered Infringement.
Recoveries, if any, whether by judgment, award, decree or
settlement, shall (to the extent attributable to the Covered
Infringement), after the reimbursement of each of Penwest and
Endo for its share of the joint costs in such action, be
shared equally between Penwest and Endo.
11.5 Endo's Institution of Suit. If Penwest notifies Endo that it
does not intend to institute suit against such third party
with respect to a Covered Infringement, Endo may institute
suit on its own. Endo shall bear all costs of, and shall
exercise all control over, such suit. Recoveries, if any,
whether by judgment, award, decree or settlement, shall belong
solely to Endo; provided however that, after reimbursement of
Endo for its costs in such action, any portion of such net
recoveries that constitutes the equivalent of, or damages or
payments in lieu of, a royalty measured by the defendants
sales, shall belong solely to Endo.
11.6 Abandonment of Suit. Should either Penwest or Endo commence a
suit under the provisions of this Section 11 and thereafter
elect to abandon the same, it shall give timely notice to the
other party hereto, who may, if it so desires, be joined as a
34
plaintiff in the suit (or continue as such if it is already
one) and continue prosecution of such suit; provided, however,
that the sharing of expenses and any recovery of such suit
shall be as may be determined for that situation by Committee
Action.
11.7 Patent Enforcement Litigation. Notwithstanding the foregoing,
in the event that the parties are notified of (1) the filing
by a third party of an abbreviated new drug application
("ANDA") with the FDA (or the FDA's acceptance of an ANDA)
relating to the Product or (2) a third party certifying
against a the patents covering the Product that are listed in
the FDA's "Orange Book", then the parties shall cooperate
fully with respect to any ensuing patent enforcement
litigation. The costs incurred relating to such suit(s) shall
be addressed in the definitions of Formulated TIMERx Price and
Oxymorphone Price.
12. Escalation Procedures.
12.1 The parties intend that, to the maximum extent practicable,
they shall reach decisions hereunder cooperatively through the
deliberations of the Alliance Committee and by consent of its
members as described in Section 1.10.1 of the Definition
Exhibit. In cases in which that does not occur (other than as
to a question of patent validity or as to a matter left to the
discretion of a party hereunder), either party may institute
an Escalation Procedure in which a proposed Committee Action
approved by at least two members of the Alliance Committee, is
provided in writing to each party's Escalation Officer. Such
Escalation Officers shall discuss the proposed Committee
Action, and shall meet with respect thereto if either of them
believes a meeting or meetings to be useful. If the Escalation
Officers do not resolve the matter by either approving the
proposed Committee Action (whether or not in a revised form)
or agreeing to reject it, within thirty (30) days (or such
lesser or longer period as they may agree is a useful period
for their discussions), then either of them may institute a
formal mediation of such matter pursuant to Section 12.2
hereof.
12.2 Any dispute or difference (other than as to a question
relating to patent validity or as to a matter left to the
discretion of a party hereunder), between the parties arising
out of or in connection with this Agreement, including without
limitation a disagreement over a proposed Committee Action,
that cannot be resolved by the consent of the Escalation
Officer of each party shall be referred to mediation before
any party resorts to arbitration, litigation, or other dispute
resolution procedure. Unless the parties agree otherwise, the
mediation will be conducted in accordance with The CPR
Mediation Procedure for Business Disputes (Revised 1998) of
the CPR Institute for Dispute Resolution by a mediator who has
had both training and experience as a mediator of general
corporate and commercial matters. If the parties cannot agree
on a mediator, then the mediator will be selected by the
President of the CPR Institute for Dispute Resolution in
35
accordance with the criteria set forth in the preceding
sentence. Within thirty days after the selection of the
mediator, the parties and their respective attorneys will meet
with the mediator for one mediation session of at least four
hours. If the dispute cannot be settled during such mediation
session or during any mutually agreed continuation of such
session, any party to this Agreement may give to the mediator
and the other party to this Agreement written notice declaring
the mediation process at an end, and such dispute will be
resolved by arbitration pursuant to Section 13 hereof. All
discussions pursuant to this section will be confidential and
will be treated as compromise and settlement discussions.
Nothing said or disclosed, and no document produced, in the
course of such discussions which is not independently
discoverable may be offered or received as evidence or used
for impeachment or for any other purpose in any arbitration or
litigation. The costs of any mediation pursuant to this
section will be shared equally by the parties to this
Agreement. Each party to this Agreement acknowledges receipt
of a copy of The CPR Model Mediation Procedure for Business
Disputes (Revised 1998) of the CPR Institute for Dispute
Resolution. The use of mediation will not be construed under
the doctrines of laches, waiver or estoppel to affect
adversely the rights of either party, and in particular either
party may seek a preliminary injunction or other interim
judicial relief at any time if in its judgment such action is
necessary to avoid irreparable damage.
13. Arbitration. Should the parties fail to reach agreement with respect to
a dispute or difference (other than as to a question relating to patent
validity or as to a matter left to the discretion of a party
hereunder), between the parties arising out of or in connection with
this Agreement, including without limitation a disagreement over a
proposed Committee Action, through the aforesaid mediation or
otherwise, then the dispute or difference will be determined by
arbitration in New York City in accordance with the Non-Administered
Arbitration Rules & Commentary (Amended 1993) of the CPR Institute for
Dispute Resolution by a tribunal of three independent and impartial
arbitrators, one of which will be appointed by each of Endo and
Penwest, and the third of which shall have had both training and
experience as an arbitrator of general corporate and commercial matters
and who shall be, and for at least ten years shall have been, a
partner, shareholder or member in a highly respected law firm
headquartered in the United States. If the parties to this Agreement
cannot agree on the third arbitrator, then the third arbitrator will be
selected by the President of the CPR Institute for Dispute Resolution
in accordance with the criteria set forth in the preceding sentence;
provided that no person who served as a mediator pursuant to Section
12.2 hereof with respect to such dispute may be selected by the
President of the CPR Institute for Dispute Resolution as an arbitrator
pursuant to this section. The tribunal may decide any issue as to
whether, or as to the extent to which, any dispute is subject to the
arbitration and other dispute resolution provisions in this Agreement.
The tribunal must base its award on the provisions of this Agreement
and must render its award in a writing, which must include an
explanation of the reasons for such award. Any arbitration pursuant to
this section will be governed by the substantive laws of the State of
New York applicable to contracts
36
made and to be performed in that state, without regard to conflicts of
law rules, and by the arbitration law of the Federal Arbitration Act (9
U.S.C. Sec. 1 et seq.), and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. The
statute of limitations of the state of New York applicable to the
commencement of a lawsuit will apply to the commencement of an
arbitration under this section, except that no defenses will be
available based upon the passage of time during any negotiation or
mediation required pursuant to Section 12 hereof. All fees, costs and
expenses of the arbitrators, and all other costs and expenses of the
arbitration, will be shared equally by the parties to this Agreement
unless such parties agree otherwise or unless the tribunal in the award
assesses such costs and expenses against one of such parties or
allocates such costs and expenses other than equally between such
parties. Each party to this Agreement acknowledges receipt of a copy of
the Non-Administered Arbitration Rules & Commentary (Amended 1993) of
the CPR Institute for Dispute Resolution. Notwithstanding the
foregoing, either party may, on good cause shown, seek a temporary
restraining order and/or a preliminary injunction from a court of
competent jurisdiction, to be effective pending the institution of the
arbitration process and the deliberation and award of the arbitration
tribunal.
14. Miscellaneous.
14.1 This Agreement incorporates the Definitions Exhibit and the
numbered Exhibits referenced herein. This Agreement
constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral
(including the Old Agreement), between the parties hereto with
respect to the subject matter hereof.
14.2 This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their successors and permitted
assigns; provided, however, that except as part of the
transfer of all or substantially all assets to a single buyer
or pursuant to a merger or other corporate reorganization,
neither party shall assign or delegate any of its rights or
obligations hereunder at any time without the prior written
consent of the other party hereto, which consent shall not be
unreasonably withheld.
14.3 All notices, requests or other communication provided for or
permitted hereunder shall be given in writing and shall be
hand delivered or sent by facsimile, reputable courier or by
registered or certified mail, postage prepaid, return receipt
requested, to the address set forth on the signature page of
this Agreement, or to such other address as either party may
inform the other of in writing. Notices will be deemed
delivered on the earliest of transmission by facsimile, actual
receipt or three days after mailing as set forth herein.
14.4 Any terms of this Agreement may be amended, modified or waived
only in a writing signed by both parties.
37
14.5 If any provision of this Agreement shall be held invalid,
illegal or unenforceable, such provision shall be enforced to
the maximum extent permitted by law and the parties'
fundamental intentions hereunder, and the remaining provisions
shall not be affected or impaired.
14.6 Nothing herein contained shall constitute this a joint venture
agreement or constitute either party as the partner, principal
or agent of the other, this being an Agreement between
independent contracting entities. Neither party shall have the
authority to bind the other in any respect whatsoever.
14.7 In the event that either party hereto is prevented from
carrying out its obligations under this Agreement by events
beyond its reasonable control, including without limitation
acts or omissions of the other party, acts of God or
government, natural disasters or storms, fire, political
strife, labor disputes, failure or delay of transportation,
default by suppliers or unavailability of parts, then such
party's performance of its obligations hereunder shall be
excused during the period of such event and for a reasonable
period of recovery thereafter, and the time for performance of
such obligations shall be automatically extended for a period
of time equal to the duration of such event or events;
provided, however, that the other party may, at its election,
terminate this Agreement upon 120 days' prior notice to the
party affected by such events, unless such events cease to
prevent such affected party's performance hereunder during
such 120-day period.
14.8 This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York
without regard to its conflict of laws rules.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
38
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and acknowledge this Agreement as of the date
first written above.
ENDO PHARMACEUTICALS INC. PENWEST PHARMACEUTICALS CO.
By: /s/ CAROL A. AMMON By: /s/ TOD R. HAMACHEK
- --------------------------------- --------------------------------------
Its: Chairman & CEO Its: Chairman & CEO
- --------------------------------- --------------------------------------
Address: Address:
100 Painters Drive 2981 Route 22
Chadds Ford, PA 19317 Patterson, N.Y. 12563
FAX: (610) 558-9682 FAX: (845) 878-3498
Attn: Carol A. Ammon Attn: Tod R. Hamachek
cc: Steven D. Singer, Esq.
cc: Caroline B. Manogue Hale and Dorr LLP
FAX: (610) 558-9684 60 State Street
Boston, Massachusetts 02109
FAX: (617) 526-5000
39
DEFINITIONS EXHIBIT
1. Definitions.
1.1 "Affiliate" shall mean any corporation, company, partnership,
joint venture or other entity which controls, is controlled
by, or is under common control with a person or entity. For
purposes of this Section 1.1, "control" shall mean (a) in the
case of corporate entities, direct or indirect ownership of at
least fifty percent (50%) of the stock or shares having the
right to vote for the election of directors, and (b) in the
case of non-corporate entities, direct or indirect ownership
of at least fifty percent (50%) of the equity interest with
the power to direct the management and policies of such
non-corporate entities.
1.2 "Alliance Committee" shall mean a committee of six members,
three of whom will be designated in writing by each of Penwest
and Endo. The Alliance Committee as of the date of this
Agreement shall have six members, as follows: Dr. Deborah Fox,
Ms. Jennifer Good and Dr. Anand Baichwal, designated by
Penwest, and Dr. David Lee, Mr. Peter Lankau and Ms. Caroline
Manogue designated by Endo. If at any time a vacancy occurs
(whether due to death, disability, resignation, removal by a
party of its designee by written notice to the other party, or
otherwise), the vacancy will be filled as soon as is
reasonably practicable by designation by the party that
originally designated the prior incumbent. In the meantime,
the Alliance Committee shall continue to function with its
remaining members, provided that any Committee Action
described in Section 1.10 hereof will continue to require the
consent of at least four members.
1.3 "Applicable Percentage" shall mean the following percentages
of the following portions of Net Realization:
1.3.1 *** of all Net Realization from all units of the
Product sold outside of the United States;
1.3.2 *** of all Net Realization from all units of the
Product sold by Endo or its distributors or licensees
in any tier in the United States, until the aggregate
of all such Net Realization from the Product
described in this clause 1.3.2 during the term of
this Agreement ***;
1.3.3 *** of all Net Realization from all units of the
Product sold by Endo or its distributors or licensees
in any tier in the United States, after the aggregate
of all such Net Realization from the Product
described in clause 1.3.2 and this clause 1.3.3
during the term of this Agreement equals ***, but
before such aggregate equals ***;
1.3.4 *** of all Net Realization from all units of the
Product sold by Endo or its distributors or licensees
in any tier in the United States, after the
40
aggregate of all such Net Realization from the
Product described in clause 1.3.2, clause 1.3.3, and
this clause 1.3.4 equals ***;
1.3.5 *** of all Net Realization from all units of the
Product sold by Penwest or its distributors or
licensees in any tier in the United States, until the
aggregate of all such Net Realization from the
Product described in this clause 1.3.5 during the
term of this Agreement equals ***;
1.3.6 *** of all Net Realization from all units of the
Product sold by Penwest or its distributors or
licensees in any tier in the United States, after the
aggregate of all such Net Realization from the
Product described in clause 1.3.5 and this clause
1.3.6 during the term of this Agreement equals ***,
but before such aggregate equals ***; and
1.3.7 *** of all Net Realization from all units of the
Product sold by Penwest or its distributors or
licensees in any tier in the United States, after the
aggregate of all such Net Realization from the
Product described in clause 1.3.5, clause 1.3.6, and
this clause 1.3.7 equals ***.
1.4 "Approval" shall mean, with respect to the Product and as to
each nation in the Territory, the approval by the Regulatory
Authority in such nation of the Product for commercial sale in
oral solid-dosage form for administration in humans, pursuant
to a Product License Application ("PLA") submitted by or for
Endo, or if a license to Penwest under Section 6.8 hereof is
applicable, pursuant to a PLA submitted by or for Penwest. In
the United States, the "Approval" for the Product shall be the
approval of the U.S. Food and Drug Administration (herein
"FDA") of the Product for sale in oral solid-dosage form for
administration in humans, pursuant to a New Drug Application
("NDA").
1.5 "Best Commercial Efforts" shall mean the exertion on a
substantially continuous basis of efforts as would normally be
devoted to the applicable task by commercial parties with
similar resources to those of the applicable party, where such
parties are highly motivated to accomplish such task to the
maximum extent practicable, and consider and treat such task
as having a priority at least as high as that for any similar
task with respect to such party's other drug development or
marketing efforts (as the case may be). Best Commercial
Efforts will not mean that a party commits that it will
actually accomplish the applicable task, nor that it will
devote thereto efforts or resources beyond those that a
prudent commercial enterprise would devote, even though
remaining motivated to do so as described above.
41
1.6 "Certification Budget" shall mean the set of expenditures,
costs, and other resources anticipated to be devoted by the
respective parties to the Certification Tasks during the
Certification Period, with respect to the Product.
1.7 "Certification Excess" shall mean the amount which a party
would have borne or paid had it participated fully in the
Certification Period, but did not pay due to its election
under Section 3.5 or Section 5.5, duly made as provided
herein, not to participate fully in the Certification Period.
1.8 "Certification Period" shall mean with respect to the Product
(a) in the United States, the period beginning on the date
hereof and (b) in another nation in the Territory, the period
beginning on the date a Certification Period therefor is
instituted by Committee Action, and, in each case, ending on
the earliest of:
1.8.1 the completion of all of the Certification Tasks
applicable thereto;
1.8.2 the termination of the Certification Period pursuant
to Section 3.5 or Section 5.5 hereof; or
1.8.3 the termination of this Agreement as provided herein.
1.9 "Certification Task(s)" shall mean, with respect to the
Product and as to each nation in the Territory for the
Certification Period:
1.9.1 those tasks or milestones as shall be designated from
time to time by Committee Action as being, within
industry norms and standards, sufficient (together
with the tasks undertaken to date for the Product) to
support the filing of an NDA with the FDA for the
Product, or, as to nations other than the U.S., to
support the filing of an analogous PLA in the
applicable Regulatory Authority;
1.9.2 the filing of one or more NDAs and other PLAs with
respect to the Product with the FDA and/or the other
Regulatory Authorities designated by Committee
Action;
1.9.3 obtaining Approval of such NDAs and PLAs (on a
nation-by-nation basis, as to the approval by the
Regulatory Authority having jurisdiction in that
nation); and
1.9.4 the preparation by Endo, or if and to the extent that
Sections 4.2 or 4.3 hereof, or a license to Penwest
under Section 6.8 hereof, are applicable, the
preparation by Penwest, and the approval in any event
by Committee Action, of an initial Manufacturing and
Marketing Plan for the Product. In most cases, the
Certification Tasks will include all testing and
studies including as to efficacy, bioequivalence, and
safety
42
and toxicology, in connection with the development,
licensing, manufacture and marketing of the Product,
and for compliance with all requirements imposed by
the government of the United States (inclusive
without limitation of the FDA and the DEA) and by any
other government(s) in the Territory as may be
designated by Committee Action, including without
limitation large-scale trials of safety and efficacy
of the sort called "Phase III Clinical Trials" in the
FDA context, post-marketing surveillance and other
studies of the sort called "Phase IV" studies in the
FDA context. However, the applicable Certification
Tasks may be defined and altered in specific cases by
Committee Action, whether or not in conformity with
the above-described usual case as now anticipated.
1.10 "Committee Action" shall mean an official act, decision, or
ruling of the Alliance Committee, which shall require in each
case that at least one of the following applies:
1.10.1 all members of the Alliance Committee present and
acting (but in any event a minimum of four such
members) have consented thereto, where such consent
is given either in writing (signed either
collectively or in multiple identical counterparts,
the signers being considered "present and acting" for
this purpose) or by vote at a duly convened meeting
of the Alliance Committee subsequently entered into
the minutes of such meeting; or
1.10.2 at least two members of the Alliance Committee have
consented thereto (in the manner described above),
and have further instituted an Escalation Procedure
in which the act, decision, or ruling has received
the written approval of the Escalation Officer of
each party; or
1.10.3 arbitration pursuant to Section 13 hereof results in
the adoption of the act, decision, or ruling as
constituting Committee Action. A Committee Action may
include the rescinding or amendment of any prior
Committee Action.
1.11 "Confidential Technology" shall mean all technology that is,
at the relevant time hereunder, protected or required to be
protected as confidential information pursuant to Section 10
hereof.
1.12 "Effective Date" shall mean September 17, 1997.
1.13 "Endo Improvement Technology" shall mean any and all
technology and rights of Endo, or in which Endo or any of its
Affiliates, licensees or sublicensees otherwise has any rights
or interests during the term of this Agreement (to the extent
that Endo has the right to license the same to Penwest), to
the extent the
43
same are improvements, modifications, alterations, or
enhancements to any of the inventions covered by the Penwest
Patents, Penwest Product Technology, or TIMERx, and to the
extent made or discovered, or disclosing inventions made or
discovered, prior to the end of the applicable Certification
Period, together with all United States and foreign
intellectual property and other rights and interests of Endo
and its Affiliates, licensees and sublicensees thereto and
therein (to the extent that Endo has the right to license the
same to Penwest), including without limitation patents, trade
secrets, copyright, periods of market exclusivity, and other
related rights or interests.
1.14 "Endo Product Technology" shall mean any and all inventions,
improvements, modifications, alterations or enhancements that
concern Oxymorphone, including its release profile and
metabolites, and that are made by Endo, by Penwest or jointly
by Endo or any of its Affiliates, on the one hand, and Penwest
or any of its Affiliates, on the other hand, during and in the
course of the parties cooperative development activities under
or in support of this Agreement, together with all United
States and foreign intellectual property and other rights and
interests of the parties and their respective Affiliates
thereto and therein, including without limitation patents,
trade secrets, copyright, periods of market exclusivity, and
other related rights or interests.
1.15 "Endo Technology" shall mean any and all technology and rights
of Endo, or in which Endo or any of its Affiliates, licensees
or sublicensees otherwise has any rights or interests during
the term of this Agreement (to the extent that Endo has the
right to license the same to Penwest), which are used or
contemplated to be used in connection with the activities
contemplated under this Agreement, including without
limitation all Oxymorphone rights and technology (and other
technology, rights and properties) to the extent the same
directly relate to, are desirable for, or are necessary or
useful for, the production, storage and/or marketing of the
Product and any and all Endo Improvement Technology, together
with all United States and foreign intellectual property and
other rights and interests of Endo and its Affiliates,
licensees and sublicensees thereto and therein (to the extent
that Endo has the right to license the same to Penwest),
including without limitation patents, trade secrets,
copyright, periods of market exclusivity, and other related
rights or interests.
1.16 "Endo Test and Regulatory Data" shall mean any and all test
data, test designs and protocols, clinical studies and results
thereof, government licenses and applications therefor,
government certifications and findings, and related materials,
information and rights (including without limitation
information regarding bioavailability and bioequivalence, and
any adverse drug reactions), developed, commissioned or
otherwise obtained by Endo or any of its Affiliates or
sublicensees during the term of this Agreement for the uses
intended by this Agreement relating to TIMERx, Endo
Technology, Endo Product Technology, the
44
Product, Penwest Patents, Penwest Product Technology, TIMERx
Production Technology and/or Penwest's Confidential
Technology, including, without limitation, all patents, trade
secrets, copyrights, periods of market exclusivity and other
related rights and interests therein.
1.17 "Endo Trademark(s)" shall mean those names, symbols and or
characters described in Exhibit 1.17 hereto, as the same may
be amended from time to time during the term of this Agreement
by Endo on at least six (6) months' prior written notice to
Penwest (or such shorter notice as reasonably agreed to by the
parties), that are owned by Endo and that have been designated
by it for use in conjunction with Penwest's packaging and
promotion of the Product hereunder, pursuant to Section 8
hereof.
1.18 "Escalation Officer" shall mean the Chairman and Chief
Executive Officer of Penwest Pharmaceuticals Co. (currently
Tod Hamachek), and the Chief Executive Officer of Endo
(currently Carol Ammon), and the persons holding such
positions from time to time.
1.19 "Escalation Procedure" shall mean the decision-making
procedure described in Section 12 hereof, whereby the parties
intend to avoid deadlocks between them and undue delays in
reaching mutually acceptable Committee Action(s).
1.20 "Exclusivity Period" shall mean, with respect to the Product,
a period coterminous with the License Term, except where the
Exclusivity Period is shortened as otherwise provided in this
Agreement.
1.21 "Facilities Certifications" shall mean those governmental
certifications, licenses and other approvals however
designated held or obtained at any time by or for Endo or its
Affiliates, subcontractors or sublicensees, and for the
facilities of any of them, that are required for the legal
production, transportation, storage, testing and or packaging
of Oxymorphone products, whether for commercial or research
use or sale, or otherwise.
1.22 "Formulated TIMERx" shall mean TIMERx and certain additives in
a formulation developed hereunder specifically for use in the
Product.
1.23 "Formulated TIMERx Price" shall mean Penwest's contract
manufacturing cost (or, if made internally, its variable costs
plus directly allocable (a) fixed and (b) manufacturing
overhead costs relating to the manufacture or acquisition) of
the Formulated TIMERx to be provided to Endo or its Affiliates
or sublicensees hereunder, as shall be determined and adjusted
no more often than annually plus the costs directly relating
to the quality control testing referred to in Section 7.2
hereof plus the allocable indirect costs and fees referred to
in the last two sentences of this Section 1.23; provided,
however, that any amounts paid or payable by Penwest for
third-party royalties (or for materials acquisition costs to
45
the extent attributable to third-party intellectual properties
and essentially equivalent to royalties) which are the
responsibility of Penwest under Sections 9.5.1 or 9.5.2 hereof
shall not be counted as part of the Formulated TIMERx Price.
Costs and fees related to and arising out of patent
enforcement litigation ensuing from a third party certifying
against a Penwest Patent or a patent covering Penwest Product
Technology held by Penwest and listed in the FDA's "Orange
Book" shall (to the extent not reflected in the Certification
Budget and the reconciliations under Section 3.7 hereof) be
part of the allocable indirect costs of the manufacture or
acquisition of any Formulated TIMERx provided for use in the
Product. If any patent applications are filed or prosecuted by
Penwest on Penwest Product Technology, as provided in Section
6.2 hereof, the reasonable costs thereof, and of the
maintenance of any patents that issue therefrom, shall (to the
extent not reflected in the Certification Budget and the
reconciliations under Section 3.7 hereof) be part of the
allocable indirect costs of the manufacture or acquisition of
any Formulated TIMERx provided for use in the Product that
would be disclosed in whole or in part in such patent or
patent application.
1.24 "License Term" shall mean, with respect to the Product in each
nation in the Territory, the cumulative period covered by the
Certification Period and the Marketing Period.
1.25 "Manufacturing and Marketing Plan(s)" shall mean, with respect
to the Product and as to those specific nation(s) specified in
such Manufacturing and Marketing Plan, a detailed business,
manufacturing, and marketing plan of the sort prepared
internally and used by Endo and/or its Affiliates (or, if a
license to Penwest under Section 6.8 hereof is applicable,
and/or in the circumstances described in Section 4.2 or 4.3
hereof, such a plan of the sort prepared and used internally
by Penwest and/or its designated third-party marketer) with
respect to their drug products generally, including without
limitation quantifiable and verifiable plans, goals and
milestones for the levels and types of resources, personnel,
promotion, advertising, detailing, and other efforts to be
devoted to the manufacturing, packaging, quality control, and
marketing of the Product, and with respect to the measures of
the degree of success achieved in doing so, including without
limitation target dates for the full-scale market launch of
the Product in each specific nation(s), and Minimum Net
Realization(s) for each specific nation(s) in such
Manufacturing and Marketing Plan (and related goals and
projections for pretax profitability). Each Manufacturing and
Marketing Plan shall also describe the schedule and methods to
be used to effect the revision thereof and the adoption of
substituted Manufacturing and Marketing Plans no less often
than annually, through Committee Action.
1.26 "Marketing Period" shall mean, with respect to the Product and
as to each nation in the Territory, the period beginning at
the end of the Certification Period for the Product in such
nation and ending on the earliest of:
46
1.26.1 the twentieth (20th) anniversary of the end of such
Certification Period or, if later, the time at which
there are no longer any Penwest Patents, Penwest
Product Technology Patents or Endo Product Technology
Patents applicable to the Product in such nation, to
the extent such patents disclose inventions made
prior to the end of such Certification Period; or
1.26.2 the termination of the License Term for the Product
in such nation pursuant to Section 5.7 hereof or of
the License Term for the Product in such nation
pursuant to Section 6.8.1 hereof; or
1.26.3 the termination of this Agreement as provided herein.
1.27 "Minimum Net Realization" shall mean, with respect to the
Product and each specific nation in the Territory under the
then-current Manufacturing and Marketing Plan therefor, a
minimum amount of Net Realization generated from sales of the
Product in such nation(s) (as will be stated in such
Manufacturing and Marketing Plan). The Minimum Net
Realization(s) shall be based upon the then current market
conditions, taking into account the level and nature of
competitive products, the method of promotion and marketing,
FDA promotional guidelines, the FDA-approved indications of
the Product, the Net Realizations specified and obtained for
the Product in other nations, and other factors as shall be
determined by Committee Action and (a) for Endo, shall be set
at levels at least as high as those that Endo and its
Affiliates would reasonably expect to obtain from the
marketing of their most prominently marketed drug products
that have similar market potential (provided that the
determination of similar market potential shall be reasonable
and take into account, among other things, each product's
indications, allowable claims, side effect profile,
profitability, patent estate and labeling) or (b) for Penwest,
shall be set at levels at least as high as those that Penwest
and its Affiliates would reasonably expect to obtain from the
marketing of their most prominently marketed drug products
that have similar market potential (provided that the
determination of similar market potential shall be reasonable
and take into account, among other things, each product's
indications, allowable claims, side effect profile,
profitability, patent estate and labeling); provided that
Minimum Net Realization shall in all cases be determined
prospectively and shall not be adjusted after a party fails to
achieve such predetermined Minimum Net Realization unless such
failure was the result, directly or indirectly, of
governmental action or unless such Minimum Net Realization is
initially determined by arbitration pursuant to Section 1.10.3
of this Definitions Exhibit. Notwithstanding anything to the
contrary herein, the Alliance Committee may agree to adjust
the Minimum Net Realization at any time, and from time to
time, should the market conditions and/or assumptions upon
which the Minimum Net Realization was previously established
change.
47
1.28 "Net Realization" shall mean that portion of the amounts paid
or payable (whether in cash, cash equivalents, current or
deferred consideration, barter, or other monetary or in-kind
compensations or considerations of any nature) attributable to
the sale or other distribution of the Product, or to the grant
of any rights to make, market, or otherwise exploit the
Product, which is to be treated hereunder as a net amount
realized by the actual or intended recipient of the same,
after the deduction of those direct and indirect costs
incurred as provided under a Manufacturing and Marketing Plan
approved by Committee Action and appropriately attributable
thereto (including without limitation the Formulated TIMERx
Price paid to Penwest for the TIMERx incorporated therein, or
if Section 6.8.3 hereof becomes applicable, the amounts paid
to Endo thereunder), all to be determined in accordance with
the accounting and attribution standards and principles
described in Exhibit 1.28 hereto, as the same may be amended
from time to time by Committee Action.
1.29 [INTENTIONALLY OMITTED.]
1.30 "Oxymorphone Price" shall mean Endo's contract manufacturing
cost (or, if made internally, its variable costs plus directly
allocable (a) fixed and (b) manufacturing overhead costs
relating to the manufacture or acquisition) of Oxymorphone to
be provided to Penwest or its Affiliates or sublicensees
hereunder, as shall be determined and adjusted no more often
than annually plus the costs directly relating to the quality
control testing referred to in Section 6.8.4(i) hereof plus
the allocable indirect costs and fees referred to in the last
two sentences of this Section 1.30; provided, however, that
any amounts paid or payable by Endo for third-party royalties
(or for materials acquisition costs to the extent attributable
to third-party intellectual properties and essentially
equivalent to royalties) which are the responsibility of Endo
under Section 9.6 hereof shall not be counted as part of the
Oxymorphone Price. Costs and fees related to and arising out
of patent enforcement litigation ensuing from a third party
certifying against a patent covering Endo Product Technology
held by Endo and listed in the FDA's "Orange Book" shall (to
the extent not reflected in the Certification Budget and the
reconciliations under Section 3.7 hereof) be part of the
allocable indirect costs of the manufacture or acquisition of
any Oxymorphone ADS provided for use in the Product. If any
patent applications are filed or prosecuted by Endo on Endo
Product Technology, as provided in Section 6.2 hereof, the
reasonable costs thereof, and of the maintenance of any
patents that issue therefrom, shall (to the extent not
reflected in the Certification Budget and the reconciliations
under Section 3.7 hereof) be part of the allocable indirect
costs of the manufacture or acquisition of any Oxymorphone
provided for use in the Product that would be disclosed in
whole or in part in such patent or patent application.
1.31 "Penwest Improvement Technology" shall mean any and all
technology and rights of Penwest, or in which Penwest or any
of its Affiliates, licensees or sublicensees
48
otherwise has any rights or interests during the term of this
Agreement (to the extent that Penwest has the right to license
the same to Endo), to the extent the same are improvements,
modifications, alterations, or enhancements to any of the
inventions covered by the Endo Technology, Endo Product
Technology, or Oxymorphone and to the extent made or
discovered, or disclosing inventions made or discovered, prior
to the end of the Certification Period, together with all
United States and foreign intellectual property and other
rights and interests of Penwest and its Affiliates, licensees
and sublicensees thereto and therein (to the extent that
Penwest has the right to license the same to Endo),including
without limitation patents, trade secrets, copyright, periods
of market exclusivity, and other related rights or interests.
1.32 "Penwest Patents" shall mean:
1.32.1 those United States patents and foreign equivalents
listed in Exhibit 1.32 hereto and all divisions,
continuations, continuations-in-part, reissues, or
extensions thereof, any periods of marketing
exclusivity relating thereto;
1.32.2 (i) those United States and foreign patent
applications pending as of the Effective Date that
are owned by Penwest, to the extent the same would,
if issued as patent(s), in the absence of the
licenses granted hereunder be infringed by Endo's
production, use, sale, offer for sale, or import of
the Product as contemplated under this Agreement; and
(ii) subject to Section 6.7.5 hereof, any other
patent rights owned or controlled and sublicenseable
by Penwest, to the extent the same would in the
absence of the licenses granted hereunder be
infringed by Endo's production, use, sale, offer for
sale, or import of the Product as contemplated under
this Agreement and to the extent disclosing
inventions made or discovered prior to the end of the
applicable Certification Period; and
1.32.3 Subject to Section 6.7.5 hereof, Penwest's rights
under United States and foreign patents in the
Territory, if any, to the extent disclosing any of
Penwest's improvements, modifications, alterations,
or enhancements to any of the inventions covered by
the Penwest Patents that are made for or are
otherwise related to or useful with the Product prior
to the end of the applicable Certification Period.
1.33 "Penwest Product Technology" shall mean any and all
inventions, improvements, modifications, alterations or
enhancements that concern TIMERx, including the formulation
thereof, and that are made by Endo, by Penwest or jointly by
Endo or any of its Affiliates, on the one hand, and Penwest or
any of its Affiliates, on the other hand, during and in the
course of the parties cooperative development activities under
or in support of this Agreement, together with all United
States
49
and foreign intellectual property and other rights and
interests of the parties and their respective Affiliates
thereto and therein, including without limitation patents,
trade secrets, copyright, periods of market exclusivity, and
other related rights or interests.
1.34 "Penwest Test and Regulatory Data" shall mean any and all test
data, test designs and protocols, clinical studies and results
thereof, government licenses and applications therefor,
government certifications and findings, and related materials,
information and rights (including without limitation
information regarding bioavailability and bioequivalence, and
any adverse drug reactions), developed, commissioned or
otherwise obtained by Penwest or any of its Affiliates during
the term of this Agreement relating to TIMERx, Penwest
Patents, and/or TIMERx Production Technology and that are
developed for or are otherwise related to or useful with the
Product, including, without limitation, all patents, trade
secrets, copyrights, periods of market exclusivity and other
related rights and interests therein.
1.35 "Penwest Trademark(s)" shall mean those names, symbols and or
characters described in Exhibit 1.17 hereto, as the same may
be amended from time to time during the term of this Agreement
by Penwest on at least six (6) months' prior written notice to
Endo (or such shorter notice as reasonably agreed to by the
parties), that are owned by Penwest and that have been
designated by it for use in conjunction with Endo's packaging
and promotion of the Product hereunder, pursuant to Section 8
hereof.
1.36 "Product" shall mean ***.
1.37 "Product Technology Patent(s)" shall mean any United States
patents and foreign equivalents and United States and foreign
patent applications and all divisions, continuations,
continuations-in-part, reissues, or extensions thereof, any
periods of marketing exclusivity relating thereto, and any
letters patent that issue thereon, to the extent the same
claim any Penwest Product Technology (including the Penwest
Patents) or Endo Product Technology.
1.38 "Project Contact(s)" shall mean the persons appointed by each
party to serve as contact persons between the parties from
time to time in relation to this Agreement (in addition to
those representatives of the parties on the Alliance Committee
who may or may not also contemporaneously be Project
Contact(s)). As of the execution of this Agreement, the
Project Contact for Penwest is Dr. Tom Sciascia. The initial
Project Contact for Endo is Ken Utecht. Each party shall
promptly notify the other party of any substitution of other
personnel as its Project Contact. Each party may select and
supervise its other project staff as needed in its sole
discretion.
50
1.39 "Regulatory Authority" shall mean the competent authority for
each nation of the Territory or legally responsible for
authorizing the sale or supply of drug products in that
nation.
1.40 "Restatement Date" shall mean April 2, 2002.
1.41 "Royalties" shall mean the royalties payable by the parties to
one another pursuant to Section 4.5 hereof.
1.42 "Specifications" shall mean such standards and analytical
methods established by Committee Action from time to time with
respect to the Product and the components thereof (including
without limitation the Formulated TIMERx).
1.43 "Territory" shall initially mean all nations of the world, but
may be reduced as to particular nations, pursuant to Section
5.7 or 6.8.1 hereof.
1.44 "TIMERx Production Technology" shall mean Penwest's rights
under the Penwest Patents and any and all other patents,
patent applications, and other technology belonging to Penwest
or which Penwest has the right to practice and to sublicense
from time to time during the term of this Agreement that
directly relate to, are desirable for, or are necessary or
useful for the production of, Formulated TIMERx for use in the
Product.
51
Exhibit 1.17
Trademarks
Endo Trademarks:
Endo(R)
Numorphan(R)
Penwest Trademarks:
Penwest(R)
TIMERx(R)
TIMERx Oral Delivery System
52
Exhibit 1.28
Accounting and Attribution Standards and Principles
Net Sales Invoiced amount less trade, quantity, promotional
and/or other customary discounts, returns and
allowances, rebates, chargebacks, retroactive price
adjustments, and a 2% accrual of invoiced amount to
cover bad debt, sales, use & excise taxes which is to
be reconciled to actual and adjusted as appropriate
on a semi-annual basis. In the case of sales to
distributors or licensees for further distribution,
Net Sales shall be computed on the basis of such
distributors' and licensees' sales to unrelated third
parties.
Grants of Rights Amount realized from grant of rights to make, market
or otherwise exploit the Product.
MANUFACTURING COSTS
Bulk ADS Cost The Oxymorphone Price for the Oxymorphone ADS used.
TIMERx Excipient The Formulated TIMERx Price for the Formulated TIMERx
used.
Dose Form Finishing
& Packaging Variable standard costs plus cost variances to be
reconciled quarterly, plus allocated fixed
manufacturing costs and manufacturing overhead costs
supporting only the manufacturing of the Product
based on activity based costing concepts that are
approved by Committee Action.
DEVELOPMENT COSTS
Dosage Form A benefit and OH percentage approved by Committee
Action that is applied to labor dollars and is
adjusted annually.
MARKETING EXPENSES
53
Premarketing Expenses incurred prior to launch for grants, agency
fees, symposia, opinion leader development, plus
pre-launch Marketing Managers & clinical liaisons
based on FTE percentage of time spent on the Product.
Expenses are subject to Alliance Committee review and
approval by Committee Action on a quarterly basis.
Sales & Product
Management As mutually agreed, but not to be duplicative with
Field Selling costs defined below, subject to
Alliance Committee review and approval by Committee
Action on a quarterly basis.
Field Selling Common Standard Selling Cost per detail multiplied by
number of details subject to Alliance on a quarterly
basis.
Advertising & Promotion Out-of-pocket costs plus Product Management costs (to
the extent not already included in Sales & Product
Management costs defined above) based on FTE and
actual time subject to Alliance Committee review and
approval by Committee Action on a quarterly basis
Commissioned Sales Rep. Actual reasonable commissions, if applicable.
FINISHED PRODUCT
DISTRIBUTION
EXPENSE (FPDE)
Variable and Fixed A *** accrual of Net Sales to be reconciled and
adjusted to actual on an annual basis.
Post Registration
Studies Studies required by the FDA or other applicable
Regulatory Authority. Direct costs will be charged.
Studies are subject to Alliance Committee review and
approval by Committee Action.
General & Admin.
Expenses (G&A) Legal, management, forecasting, accounting, financial
analysis & reporting, information technology,
quality, customer service, medical affairs and
regulatory affairs, and other administrative
services, all as and to the extent directly required
for the foregoing activities,
54
and as reviewed and approved by Committee Action on a
quarterly basis.
Total Cost of Sales Sum of Manufacturing Costs, Development Costs,
Marketing Expenses, FPDE, Post Registration Studies,
and G&A. Note, however, that the Total Costs of Sales
will not include as appropriately attributable
expenses or costs any amounts paid or payable by a
party for third-party royalties to the extent the
same would be the responsibility of the paying party
under Section 9.5.1, 9.5.2, or 9.6 of the Agreement.
Net Realization Net Sales plus Grant of Rights less Total Cost of
Sales.
55
Exhibit 1.32
Penwest Patents
1. U.S. 4,994,276 2/19/91 Directly Compressible Sustained A. Baichwal
Released Excipient J. Staniforth
2. U.S. 5,128,143 7/7/92 Sustained Release Excipient and A. Baichwal
Tablet Formulation J. Staniforth
3. U.S. 5,135,757 8/4/92 Compressible Sustained Release A. Baichwal
Solid Dosage Forms J. Staniforth
4. U.S. 5,455,046 10/3/95 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems for Insoluble
Drugs
5. U.S. 5,512,297 4/30/96 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems and Insoluble
Drugs
6. U.S. 5,554,387 9/10/96 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems and Insoluble
Drugs
7. U.S. 5,667,801 9/16/97 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems for Insoluble
Drugs
8. U.S. 5,846,563 12/8/98 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems for Insoluble
Drugs
9. U.S. 6,136,343 10/24/00 Sustained Release Heterodisperse A. Baichwal
Hydrogel Systems for Insoluble
Drugs
10. EP 0360562 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
11. 0360562 AUSTRIA 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
12. 0360562 BELGIUM 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
13. 0360562 FRANCE 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
56
14. 0360562 GREAT BRITAIN 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
15. P68907835.8-08 GERMANY 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
16. 3009204 GREECE 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
17. 0360562 ITALY 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
18. 0360562 LUXEMBOURG 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
19. 0360562 NETHERLANDS 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
20. 0360562 SPAIN 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
21. 0360562 SWEDEN 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
22. 0360562 SWITZERLAND 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
23. 623,182 AUSTRALIA 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
24. 1,903,060 JAPAN 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
25. 1,339,082 CANADA 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
26. 65170 IRELAND 9/19/89 Directly Compressible Sustained A. Baichwal
Release Excipient J. Staniforth
27. *** *** *** ***
57
Exhibit 6.1
Certain Jointly Filed Provisional Patent Applications
***
58