Exhibit 10.25
DURECT SUPPLY AGREEMENT
This Supply Agreement is made and entered into on and as of October 1st,
2000, by and between the Pharmaceutical Group division of Mallinckrodt Inc.
("Mallinckrodt") and DURECT Corporation ("DURECT").
WHEREAS, DURECT has need of a certain narcotic compound known as Sufentanil
----------
Base (hereinafter "Product") and is desirous of having Product manufactured by
- ----
Mallinckrodt and of purchasing a substantial portion of its needs for Product
from Mallinckrodt, on the conditions set forth herein; and
WHEREAS, Mallinckrodt is capable and desirous of undertaking the supply of
Product for DURECT in accordance with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the promises, covenants and
representations of the parties set forth herein, and other good and sufficient
consideration receipt of which is hereby acknowledged, DURECT and Mallinckrodt
agree as follows:
1. Supply of Product.
-----------------
(a) For the consideration provided herein and in accordance with all
terms, conditions, representations and warranties set forth
herein, and for the term hereof, subject to the terms and
conditions of this Agreement, Mallinckrodt will provide DURECT
with such amounts of Product as DURECT shall request from time
to time. Subject to Sections 5(a) and 7(d), DURECT, for its
part, agrees that it will purchase at least [* * *] of its
requirements for Product from Mallinckrodt hereunder during every
Contract Year during the term hereof. For purposes of the
immediately preceding sentence, "Contract Year" shall mean and
refer to each consecutive twelve (12) month period during the
term hereof beginning with the twelve month period commencing on
October 1st, 2000 and ending on September 30th, 2001. All
-1-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
Product supplied hereunder shall be manufactured by Mallinckrodt
strictly in accordance with current Good Manufacturing Practices
("cGMP") as determined by the Food and Drug Administration
("FDA") using the manufacturing process described in
Mallinckrodt's batch records.
(b) The specifications for Product (including, without limitation,
specifications for all components and raw materials, whether
active or inactive) are described on Exhibit A attached hereto.
2. Raw Materials.
-------------
Subject to the provisions of Section 4 below, all raw materials and
other resources required in connection with the production of Product
to be supplied hereunder shall be provided by Mallinckrodt at its cost
and expense.
3. Quality Control.
---------------
(a) Mallinckrodt will take all steps reasonably necessary to ensure
that it has the facilities, equipment, instrumentation, resources
and trained personnel to provide all raw materials, in-process
and product assays, analysis and other testing as compliance with
cGMP standards may require in connection with Mallinckrodt's
supply of Product hereunder. Mallinckrodt shall provide a
complete Certificate of Analysis and a Material Safety Data Sheet
for each lot of Product supplied hereunder at the time of
shipment.
(b) Mallinckrodt shall maintain complete and accurate documentation
of all validation data, stability testing data, batch records,
quality control and laboratory testing and any other data
required under cGMP or other FDA requirements (including without
limitation regulations of the DEA), the requirements of other
regulatory authorities of European countries listed in Exhibit B
and the procedures set forth in any Drug Master File ("DMF") in
connection with the supply of Product hereunder.
-2-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
(c) Mallinckrodt agrees that it will not engage in any act which
causes any packaged and labeled Product produced by Mallinckrodt
to become adulterated or misbranded within the meaning of the
federal Food, Drug and Cosmetic Act, as amended.
(d) Mallinckrodt shall test or cause to be tested each Lot of Product
before delivery of such Lot to DURECT. Mallinckrodt shall retain
a sample from each Lot of Product shipped to DURECT as required
by FDA regulations.
(e) Prior to commencing the supply of Product under this Agreement,
Mallinckrodt agrees to have and to maintain during the term of
this Agreement a DMF for the Product in accordance with the
requirements of the FDA. Mallinckrodt hereby grants DURECT the
right to reference Mallinckrodt's DMF and equivalent documents
for the Product in DURECT's IND, NDA and any other applicable
regulatory filings for products incorporating the Product.
-3-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
4. Pricing.
-------
(a) For each gram of Product supplied hereunder produced in
accordance with the requirements hereof, DURECT shall pay
Mallinckrodt in accordance with the following, in any [* * *]:
(i) [* * *]
(ii) [* * *]
(iii) [* * *]
(iv) [* * *]
(v) [* * *]
-4-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
The Product Price set forth in the immediately preceding sentence
shall be firm through [* * *], the date of [* * *] being
hereinafter referred to as the "Adjustment Date". From and after
the Adjustment Date, the Product Price shall be adjusted upward
(if applicable) [* * *] (all of which costs are hereinafter
referred to as "Product Costs"), in accordance with the following
procedures. Within sixty (60) days prior to the end of each
Contract Year hereunder during the term hereof, Mallinckrodt will
notify DURECT in writing of the amount by which its Product Costs
hereunder have increased during the immediately preceding
Contract Year period and the adjusted Product Price to be charged
for the Contract Year just commenced as a consequence of such
increases ("Annual Adjustment Notice"). The amount of any
increase in the Product Price as set forth in any Annual
Adjustment Notice shall be effective for all Product invoiced by
Mallinckrodt to DURECT in accordance herewith during the Contract
Year for which such Annual Adjustment Notice is issued.
Mallinckrodt agrees that DURECT can hire within sixty (60) days
of any Annual Adjustment Notice, at its own expense, an
independent third party, approved by Mallinckrodt, to audit
Mallinckrodt's books and records to determine whether
Mallinckrodt's increase in the Product Price complies with the
terms of this Agreement.
(b) At the time of shipment by Mallinckrodt to DURECT of any lot of
Product hereunder, Mallinckrodt shall submit to DURECT an invoice
setting forth the total amount of Product being shipped to DURECT
and the amount due to Mallinckrodt under subsection (a) set forth
immediately above with respect to such volume of Product. Each
such invoice shall also contain the required certificates under
Section 3(a) and a certification that the Product for which
DURECT is being billed has been produced fully in conformance
with applicable specifications, cGMP and the requirements hereof.
Any such invoice shall be payable by DURECT within thirty (30)
days after DURECT's receipt of such invoice.
(c) Mallinckrodt agrees that in the event that the price for Product
charged by Mallinckrodt to any other United States pharmaceutical
customer is more
-5-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
favorable for the same quantity of like grade and quality than
the Product Price to DURECT hereunder, and there are no terms or
conditions that would reasonably compensate Mallinckrodt for
offering such more favorable pricing for Product to the other
party, then the Product Price to DURECT shall be adjusted to the
price offered to such third party commencing from the date that
Mallinckrodt offers such price to the other party.
5. Forecasts, Order Placement and Delivery.
---------------------------------------
(a) DURECT agrees to supply Mallinckrodt, on a quarterly basis, and
beginning October 1, 2000, a rolling forecast of its requirements
for Product during the next twenty four (24) months. The
forecast for the next [* * *] is considered to be firm and
binding meaning DURECT must take and pay for Product ordered.
The forecast for the next [* * *] is non-binding and will be
used by Mallinckrodt for production planning. At any time, if
DURECT forecasts Product according to the procedure above and
Mallinckrodt is unable to ship Product that is part of any firm
and binding portion of a forecast within [* * *] of any agreed
upon date or dates of shipment, then DURECT will be permitted to
purchase from another supplier that amount of Product that was
not shipped by Mallinckrodt within [* * *] days of an agreed
upon date for shipment.
(b) Product shall be ordered by DURECT only in writing.
Mallinckrodt will not accept verbal orders of any kind for the
production of Product. Any written work order will contain the
following information: (i) the precise quantity of Product
desired, (ii) dates by which the ordered Product must be ready
for release by DURECT's quality assurance function and shipment,
(iii) the anticipated shipping destination for any Product and
(iv) such other information as DURECT wishes to provide or that
Mallinckrodt might find reasonably necessary or useful in
completing a specific work order. All work or purchase orders
must be submitted by DURECT to Mallinckrodt in writing at least
thirty (30) days in advance of the anticipated date of delivery
by Mallinckrodt.
-6-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
(c) Product shall be delivered F.O.B. destination as specified by
DURECT in its purchase order on the delivery date specified in
the purchase order. Title to Product and risk of loss shall
remain with Mallinckrodt until delivery to the specified
destination. Mallinckrodt shall be responsible for selection of
carrier. Product shall be shipped via overnight delivery unless
destination location makes this not feasible. Mallinckrodt is
responsible for all transportation and insurance charges.
6. Acceptance and Rejection and Recalls.
------------------------------------
(a) If DURECT reasonably determines that any Product is defective in
material or workmanship, not in conformance with applicable
specifications, is adulterated or misbranded, or is otherwise not
in conformity with this Supply Agreement (Product meeting any or
all of such circumstances hereinafter referred to as a "Defective
Product"), then DURECT, in addition to any other rights it may
have under this Supply Agreement, may reject and return any such
Products to Mallinckrodt. At the time of any such rejection,
DURECT shall provide Mallinckrodt with a written notice
describing in detail the circumstances surrounding the rejection
and DURECT's reasons therefor. If DURECT rejects any such
Products it will, at Mallinckrodt's option, either return them to
Mallinckrodt or destroy or dispose of them in the least expensive
and most environmentally sound manner. In any event,
Mallinckrodt shall be responsible for the costs of any such
return, destruction or disposal. It is understood that DURECT's
sole remedies hereunder in the event of a Defective Product it
has rejected will either be (i) the replacement by Mallinckrodt
of rejected Products that have either been returned or destroyed
with Products that are not Defective Products, provided that such
replacement is made as soon as practicable or (ii) a full refund
of any amount paid hereunder by DURECT for such Defective
Products.
(b) Any Product received by DURECT from Mallinckrodt that has not
been rejected by DURECT within sixty (60) days after receipt
shall be deemed to have been accepted.
-7-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
(c) If DURECT reasonably decides to or is required to initiate a
product recall, withdrawal or field correction with respect to,
or if there is any governmental seizure of, its products
containing any Product supplied hereunder which action is due, in
whole or in part, to (i) a failure of any of the Product
manufactured by Mallinckrodt hereunder to conform to applicable
specifications (including, without limitation, it being
adulterated or misbranded), or any warranty or other requirement
set forth in this Supply Agreement, (ii) the failure by
Mallinckrodt to comply in all material respects with any
applicable law, rule, regulation, standard, court order or decree
or (iii) the negligent or intentional wrongful act or omission of
Mallinckrodt in connection with the production of Product
hereunder, DURECT will notify Mallinckrodt promptly of the
details regarding such action, including providing copies of all
relevant documentation concerning such action. Mallinckrodt will
assist DURECT in investigating any such situation and all
regulatory contacts that are made and all activities concerning
seizure, recall, withdrawal or field correction will be jointly
coordinated by DURECT and Mallinckrodt.
(d) If any such recall, withdrawal, field correction or seizure
occurs due solely to (i) a failure of any Product sold by
Mallinckrodt hereunder to conform to applicable specifications
(including, without limitation, it being adulterated or
misbranded) or any warranty or other requirement set forth in
this Supply Agreement, (ii) the failure by Mallinckrodt to comply
in all material respects with any applicable law, rule,
regulation, standard, court order or decree or (iii) the
negligent or intentional wrongful act or omission of Mallinckrodt
in connection with the production of Product hereunder, then
Mallinckrodt shall bear the full cost and expense of any such
seizure, recall, withdrawal or field correction. If any such
recall, withdrawal, field correction or seizure occurs due solely
to (i) any pharmaceutical product manufactured, sold or
distributed by DURECT that contains Product failing to conform to
its applicable specifications (including, without limitation, it
being adulterated or misbranded) or otherwise being defective,
(ii) the failure of DURECT to comply in all material respects
with any applicable law, rule,
-8-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
regulation, standard, court order or decree or (iii) the
negligent or intentional wrongful act or omission of DURECT, then
DURECT shall bear the full cost and expense of any such seizure,
recall, withdrawal or field correction. If both Mallinckrodt and
DURECT contribute to the cause of a seizure, recall, withdrawal
or field correction, the cost and expenses thereof will be shared
in proportion to each party's contribution to the problem.
7. Regulatory Compliance.
---------------------
(a) Mallinckrodt will comply in all material respects with all
federal, state and local laws, regulations and standards
applicable to production by Mallinckrodt and its performance of
its obligations hereunder.
(b) Mallinckrodt will promptly furnish DURECT with pertinent portions
of all FDA inspection reports and related correspondence directly
related to and affecting its performance hereunder as and when
such reports and correspondence become available to Mallinckrodt.
(c) Mallinckrodt will notify DURECT immediately of any warning
(including any FDA Form 483), citation, indictment, claim,
lawsuit or proceeding issued or instituted by any federal, state
or local governmental entity or agency against Mallinckrodt or
any of its affiliates or of any revocation of any license or
permit issued to Mallinckrodt or any of its affiliates, to the
extent that any such occurrence relates directly to
Mallinckrodt's performance hereunder.
(d) Both party's obligations hereunder are subject to obtaining and
maintaining the necessary DEA quota. Mallinckrodt shall promptly
apply for, and use best efforts to obtain, an increase in its DEA
quota for the manufacture of the Product sufficient to process
any order for Product hereunder and DURECT shall cooperate with
Mallinckrodt in its efforts to obtain such an increase.
8. Certain Representations and Warranties of Mallinckrodt.
------------------------------------------------------
-9-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
(a) Mallinckrodt represents and warrants that all Product sold
hereunder will (i) be produced in compliance with cGMPs
applicable to the Product, and (ii) will meet all specifications.
(b) Mallinckrodt represents and warrants that there is no claim,
suit, proceeding or investigation pending or, to the knowledge of
Mallinckrodt, threatened against Mallinckrodt or any of its
affiliates which might prevent or interfere with Mallinckrodt's
performance under this Supply Agreement.
(c) Mallinckrodt represents and warrants to DURECT that Product sold
hereunder by Mallinckrodt will not be:
(i) in violation of Sections 5 or 12 of the Federal Trade
Commission Act or improperly labeled under applicable
Federal Trade Commission Trade Practice Rules, as and to
the extent applicable hereunder,
(ii) adulterated or misbranded within the meaning of the federal
Food, Drug and Cosmetic Act, as amended, or within the
meaning of any applicable state or municipal law in which
the definitions of adulteration and misbranding are
substantially identical with those contained in the federal
Food, Drug and Cosmetic Act, or articles which may not
under the provisions of Sections 404 or 505 of said Act be
introduced into interstate commerce or which may not under
substantially similar provisions of any state or municipal
law be introduced into commerce,
(iii) manufactured or sold in violation of the federal Controlled
Substances Act, as amended, or any applicable state law,
(iv) manufactured or sold in violation of any of the provisions
of the Fair Labor Standards Act of 1938, as amended,
-10-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
(v) manufactured in violation of any applicable federal, state
or local environmental law or regulation, or
(vi) manufactured in violation of any agreement (commercial or
otherwise), judgment, order or decree to which Mallinckrodt
is a party.
(d) Mallinckrodt certifies that neither it nor any of its affiliates
nor any member of their staff has been disqualified or debarred
by the FDA for any purpose.
(e) Mallinckrodt warrants and represents that neither it nor any of
its affiliates nor any member of their staff have been charged
with or convicted under federal law for conduct relating to the
development or approval, or otherwise relating to the regulation
of any drug product under the Generic Drug Enforcement Act of
1992 or any other relevant statute, law or regulation.
-11-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
(f) EXCEPT AS SET FORTH HEREIN ABOVE, MALLINCKRODT MAKES NO OTHER
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, CONCERNING ITS
PERFORMANCE OR THE PRODUCT SUPPLIED HEREUNDER, INCLUDING ANY
WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO "PRODUCT". EXCEPT FOR THE OBLIGATIONS OF THE
PARTIES UNDER SECTION 6(d) HEREOF, UNDER NO CIRCUMSTANCES WILL
EITHER MALLINCKRODT OR DURECT BE LIABLE HEREUNDER FOR
CONSEQUENTIAL, INDIRECT, EXEMPLARY OR SPECIAL DAMAGES OR ANY KIND
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS), WHETHER OR NOT IN
ANY PARTICULAR CIRCUMSTANCE SUCH DAMAGES ARE FORESEEABLE AND
WHETHER OR NOT THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
9. Manufacturing Changes.
---------------------
Mallinckrodt shall report to DURECT any significant changes related to
the Product DMF that would required an NDA supplement from DURECT.
Mallinckrodt will supply DURECT unmodified Product for a maximum of
eighteen (18) months after DURECT is informed in writing of a
significant DMF change requiring prior approval.
10. Facility Access.
---------------
DURECT, through its employees, consultants or other representatives,
will have the right during normal business hours and upon advance
arrangement with Mallinckrodt to inspect Mallinckrodt's manufacturing
operations to determine whether or not Mallinckrodt is complying in
all respects with its obligations hereunder. Without limiting the
foregoing, Mallinckrodt shall permit representatives of DURECT (i) to
inspect Mallinckrodt's manufacturing and other facilities applicable
to the performance of this agreement and (ii) to review
-12-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
Mallinckrodt's standard operating procedures for the manufacture of
the Product, and (iii) Mallinckrodt's testing procedures and testing
records relative to the manufacture of Product. DURECT warrants that
all such inspections and audits shall be carried out in a manner
calculated not to unreasonably interfere with Mallinckrodt's conduct
of business and to insure the continued confidentiality of
Mallinckrodt's business and technical information. Further, DURECT
agrees to comply with all of Mallinckrodt's safety and security
requirements and audit policies during any visits to the Mallinckrodt
facilities.
Mallinckrodt shall notify DURECT as soon as possible in writing in the
event any action is taken or threatened by the FDA, the DEA or any
other regulatory agency relating to the manufacture of the Product,
including any inspection report, or any review resulting in the
issuance of a Form 483, or a warning letter.
11. Force Majeure.
-------------
Neither party to this Supply Agreement shall be liable for or be in
breach of any provision hereof for any failure or delay on its part to
perform any obligation (other than the obligation to make payments
when due) under any provision of this Supply Agreement because of an
event of "force majeure", including, but not limited to, any act of
God, fire, flood, explosion, unusually severe weather, war,
insurrection, riot, sabotage, labor unrest, strikes or work stoppages
or any other cause whatsoever, whether similar or dissimilar to those
enumerated herein, beyond any reasonable possibility of control of
such party, if and only if the party affected shall have used all
reasonable efforts under the circumstances to avoid such occurrence
and to remedy it promptly if it shall have occurred. If an event of
force majeure causes a failure or delay in performance hereunder by
Mallinckrodt for more than one hundred eighty (180) continuous days,
DURECT, at its option, may (i) terminate this Supply Agreement
effective upon written notice to Mallinckrodt or (ii) may extend the
delivery or performance period by the amount of time during which such
delivery or performance was omitted or delayed.
-13-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
12. Relationship of Parties.
-----------------------
For all purposes hereof, Mallinckrodt shall be deemed to be an
independent contractor and this Supply Agreement shall not create an
agency, partnership, joint venture, or employer/employee relationship
between DURECT and Mallinckrodt, and nothing hereunder shall be deemed
to authorize either party hereto to act for, represent or bind the
other or any of its affiliates except as expressly provided in this
Supply Agreement.
13. Confidentiality.
---------------
(a) DURECT and Mallinckrodt shall maintain in confidence and not use
or disclose to any third party, except as is specifically
contemplated herein or is otherwise necessary to perform their
respective obligations under this Supply Agreement, and then only
on a confidential basis satisfactory to both parties, any
information, including without limitation the terms of this
Agreement, business and technical information, experience or data
regarding any facility, programs, laboratories, processes,
products, costs, equipment operation or customers, in any case
relating to the manufacture or sale of Product hereunder. The
foregoing obligations of confidentiality and non-use shall
survive the termination or expiration of this Supply Agreement
for a period of five (5) years. Nothing herein shall prevent
either party from disclosing any information required by statute
or governmental regulations to be disclosed publicly pursuant to
security regulations or in a judicial or administrative
proceeding after all reasonable legal remedies for limiting
disclosure and/or maintaining such information in confidence have
been practically exhausted or from using information which (i)
has been published or has become part of the public domain other
than by acts, omissions or fault of such party, (ii) was lawfully
received by such party from a third party free of any obligation
of confidence to such third party, (iii) or a party can
demonstrate from its records was already in its possession prior
to receipt thereof, directly or indirectly, from the other party.
The party asserting the applicability of one of the exclusions
from the obligation of
-14-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
confidentiality set forth in the immediately preceding sentence
shall have the burden of proving the applicability of any such
exclusion in any particular circumstance.
(b) Each party acknowledges that any breach by it of the
confidentiality obligations set forth in this Section 13 would
cause the other party irreparable harm for which compensation by
monetary damages would be inadequate and, therefore, the party
that has been harmed by any such breach shall have the right to
an injunction or decree for specific performance, in addition to
any other rights and remedies such party may have at law or in
equity.
14. Indemnification.
---------------
(a) Subject to the provisions of Section 8(f) hereof, Mallinckrodt
(on behalf of itself and its affiliates) hereby agrees to
indemnify, defend and hold harmless DURECT and its affiliates
from and against any and all demands, claims, actions, causes of
action, assessments, losses, damages, injuries, liabilities,
costs and expenses, including without limitation, interest,
penalties and reasonable attorneys' fees and expenses
(collectively "Damages") asserted against, resulting to, imposed
upon or incurred by DURECT or its affiliates, directly or
indirectly related to, arising out of or resulting from:
(i) any breach or failure of any of the representations,
warranties and covenants of Mallinckrodt contained herein,
including (without limitation) any breach or failure by
Mallinckrodt to perform any obligations contained herein,
and
(ii) any failure of Mallinckrodt to observe or comply in all
material respects with any laws, rules or regulations
directly related to Mallinckrodt's performance hereunder.
(b) Subject to the provisions of Section 8(f) hereof, DURECT hereby
agrees to indemnify, defend and hold harmless Mallinckrodt and
any of its affiliates
-15-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
from and against any and all Damages asserted against, resulting
to, imposed upon or incurred by Mallinckrodt, directly or
indirectly related to, arising out of or resulting from:
(i) any breach or failure of any of the representations,
warranties and covenants of DURECT contained herein,
(ii) any failure of DURECT to observe or comply in all material
respects with any laws, rules or regulations directly
related to DURECT's performance hereunder, and
(iii) DURECT's or DURECT's agents', distributors' or customers'
use, processing, transportation, possession, disposal or
sale of any dosage product manufactured by DURECT, whether
containing Product or not, and whether used alone or in
combination with any other material.
15. Term and Termination.
--------------------
(a) Unless sooner terminated in accordance herewith , the initial
term of this Supply Agreement shall be for a period of four (4)
years commencing on October 1st , 2000 and ending on September
30th, 2004, and shall automatically be renewed for additional one
(1) year terms thereafter unless either party shall give written
notice to the other, at least one (1) year prior to the end of
the initial term or any renewal term, that it does not wish the
Supply Agreement to be renewed for an additional one (1) year
period.
(b) In addition to any other right of termination specifically
provided for hereunder, this Supply Agreement may be terminated
by either party for cause upon thirty (30) days written notice to
the other. For purposes of the preceding sentence, "cause" shall
mean (without limitation):
(i) any material breach of this Agreement by a party which shall
go uncorrected for a period of thirty (30) days after
written notice of such
-16-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
breach has been given to the defaulting party, including
Sections 3a, 3b, and 7c,
(ii) the institution by a party of voluntary proceedings in
bankruptcy or under any insolvency law or law for the
relief of debtors,
(iii) the making by a party of an assignment for the benefit of
creditors or any dissolution or liquidation,
(iv) the filing of an involuntary petition under any bankruptcy
or insolvency law against a party, unless such petition is
dismissed or set aside within sixty (60) days from the date
of its filing, or
(v) the appointment of a receiver or trustee for the assets or
business of a party, unless such appointment is dismissed
or set aside within sixty (60) days from the date of such
appointment.
(c) This Agreement may be terminated by DURECT upon 60 days' written
notice at any time upon DURECT's reasonable determination that
the price charged by Mallinckrodt for Product hereunder is higher
than the prevailing price for Product from Mallinckrodt to other
United States Pharmaceutical customers for similar quantities of
like grade and quality Product or in the event that DURECT, at
its sole discretion, ceases to develop or commercialize any
products incorporating the Product.
(d) The representations and warranties of the parties hereunder,
covenants which by their terms have effect after the termination
or expiration hereof, and the parties' indemnification and
confidentiality obligations shall survive termination or
expiration of this Supply Agreement.
-17-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
(e) In the event of any termination of this Supply Agreement, for
whatever reason, and notwithstanding the effective date of any
termination, Mallinckrodt shall complete any orders for Product
that were made by DURECT and accepted by Mallinckrodt prior to
such date, and DURECT shall pay Mallinckrodt for any Product
produced in accordance with such orders at the then applicable
Product Price in effect on the effective date of termination
hereunder. In addition, provided that a firm order is delivered by
DURECT no later than thirty (30) days after the effective date of
any termination, Mallinckrodt shall supply to DURECT at the
Product Price in effect on the effective date of termination the
quantity of Product as specified by DURECT in said firm order to
be delivered no later than twelve (12) months after Mallinckrodt's
receipt of the order from DURECT.
16. Remedies Cumulative.
-------------------
Except as and when expressly stated, the remedies provided in this Supply
Agreement shall be cumulative and shall not preclude assertion by any
party hereto of any other rights (whether legal or equitable in nature)
or the seeking of any other remedies against any other party hereto.
-18-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
17. Binding Effect and Assignment.
-----------------------------
This Supply Agreement shall inure to the benefit of and be binding upon
the parties hereto, their successors and assigns; provided, however, that
neither party shall, without the prior written consent of the other
party, assign or transfer any of its rights, benefits, obligations, or
other interest under this Supply Agreement to any other party, except
that, without seeking the consent of the other party, either Mallinckrodt
or DURECT may assign this Supply Agreement to any entity or person it
controls, it is controlled by or is under common control with, and that,
without seeking the consent of the party, either party may transfer this
Agreement to an acquirer of all or substantially all of the assets and
business to which this Agreement relates, except that no such assignment
without consent shall be permitted if a DURECT acquirer is a direct
competitor of Mallinckrodt in the supply of bulk material to which
Mallinckrodt reasonably objects in writing within thirty (30) days after
written notice from DURECT of the intended acquisition.
18. Notice.
------
All notices, consents, approvals or other notifications required to be
sent by one party to the other party hereunder shall be in writing and
shall be deemed served upon the other party if delivered by hand or sent
by United States registered or certified mail, postage prepaid, with
return receipt requested, or by facsimile, air courier or telex,
addressed to such other party at the address set out below, or the last
address of such party as shall have been communicated to the other party.
If a party changes its address, written notice shall be given promptly to
the other party of the new address. Notice shall be deemed given on the
day it is sent (in the case of delivery by method other than hand
delivery) or the date of delivery (in the case of delivery by hand) in
accordance with the provisions of this paragraph. The addresses for
notices are as follows:
-19-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
If to Mallinckrodt:
Mallinckrodt Inc.
c/o Pharmaceuticals Group
675 McDonnell Boulevard
Hazelwood, Missouri 63042
Attn: Michael J. Collins
President
Pharmaceuticals
with a copy to:
Mallinckrodt Inc.
675 McDonnell Boulevard
Hazelwood, Missouri 63042
Attn: C. Stephen Kriegh
Staff Vice President
If to DURECT:
DURECT Corp.
10240 Bubb Road
Cupertino, CA 95014
Attn: General Counsel
-20-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
19. Governing Law and Jurisdiction.
-------------------------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without reference to its conflict
of laws provisions that might apply to the law of another
jurisdiction.
20. Waiver.
------
The failure by any party to exercise any of its rights hereunder or to
enforce any of the terms or conditions of this Supply Agreement on any
occasion shall not constitute or be deemed a waiver of that party's
rights thereafter to exercise any rights hereunder or to enforce each
and every term and condition of this Supply Agreement.
21. Modifications.
-------------
This Supply Agreement may not be amended or modified except by a
writing specifically referring to this Supply Agreement and executed
by duly authorized representatives of both parties. The obligations
of the parties are governed by the terms and conditions of this Supply
Agreement and none of the general terms and conditions of any DURECT
purchase order or any Mallinckrodt acknowledgment or any substantially
similar documents of either party will in any case be controlling or
supersede the provisions hereof.
22. Severability.
------------
A determination that any portion of this Supply Agreement is
unenforceable or invalid shall not affect the enforceability or
validity of any of the remaining portions hereof or of this Supply
Agreement as a whole. In the event that any part of any of the
covenants, sections or provisions herein may be determined by a court
of law or equity to be overly broad or against applicable precedent or
public policy, thereby making such covenants, sections or provisions
invalid or unenforceable, the parties shall attempt to reach agreement
with respect to a valid and enforceable substitute
-21-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
for the deleted provisions, which shall be as close in its intent and
effect as possible to the deleted portions.
23. Headings.
--------
The parties agree that the section and article headings are inserted
only for ease of reference, shall not be construed as part of this
Supply Agreement, and shall have no effect upon the construction or
interpretation of any part hereof.
24. Counterparts.
------------
This Supply Agreement may be executed in several counterparts, and
each executed counterpart shall be considered an original of this
Supply Agreement.
25. Entire Agreement.
----------------
This Supply Agreement represents the entire agreement and
understanding of the parties hereto with respect to its subject matter
and supersedes any and all prior agreements, understanding or
discussions, whether written or oral, between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Supply Agreement to
be executed as of the day and year first above written.
MALLINCKRODT INC.
DURECT CORPORATION Pharmaceuticals Group
By: /s/ James B. Brown By: /s/ Michael J. Collins
------------------ -----------------------
James E. Brown Michael J. Collins, Senior Vice President
President and CEO & President, Pharmaceuticals Group
-22-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
EXHIBIT A
PRODUCT SPECIFICATIONS
Appearance [* * *]
Identification [* * *]
Water [* * *]
Assay by Titration [* * *]
Assay by HPLC [* * *]
OVI [* * *]
Ethanol [* * *]
Sulphated Ash [* * *]
Heavy Metals (Pb) [* * *]
-1-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
EXHIBIT B
[* * *]
------------------
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
-2-
* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.