[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Exhibit 10.37
 
LICENSE, DEVELOPMENT AND SUPPLY AGREEMENT
BETWEEN
ALEXZA PHARMACEUTICALS, INC.
and
ENDO PHARMACEUTICALS INC.
 

 

--------------------------------------------------------------------------------

 

LICENSE, DEVELOPMENT AND SUPPLY AGREEMENT
     This LICENSE, DEVELOPMENT AND SUPPLY AGREEMENT (this “Agreement”) is made
and effective as of December 27, 2007 (the “Effective Date”) by and among Alexza
Pharmaceuticals, Inc., a Delaware corporation (“Alexza”) and Endo
Pharmaceuticals Inc., a Delaware corporation (“Endo”) (each of Alexza and Endo
being a “Party,” and collectively, the “Parties”).
     WHEREAS, Alexza has developed and owns all right, title and interest in and
to certain patents and know-how relating to its proprietary device, AZ-003
(Staccato® fentanyl), a multiple-dose delivery system for fentanyl that permits
rapid systemic delivery of fentanyl through inhalation, and Alexza has initiated
clinical studies with respect to AZ-003;
     WHEREAS, Endo desires to obtain a license to develop, use, commercialize,
distribute and sell AZ-003 and all improvements, modifications, formulations and
line extensions thereto and to obtain a supply of AZ-003 and all improvements,
modifications, formulations and line extensions thereto from Alexza, and Alexza
is willing to grant such license and provide such supply on the terms and
conditions set forth below;
     NOW THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
     The following terms, whether used in the singular or the plural, shall have
the meanings designated to them under this Article unless otherwise specifically
indicated.
     1.1 “Active Ingredient” means the pharmaceutically active compound or
active pharmaceutical ingredient (API) for use in the Manufacture of a Product,
including any Drug.
     1.2 “Active Ingredient Specifications” means the specifications for the
Active Ingredient to be used in a Product, as such specifications may be amended
from time to time. The Active Ingredient Specifications for the Initial Product
and any subsequent Product shall be attached to this Agreement as Annex I when
such specifications are agreed to by the Parties.
     1.3 “Affiliate” means any company or entity controlled by, controlling, or
under common control with a Party. For purposes of this Section 1.3 only,
“control” and, with corresponding meanings, the terms “controlled by,”
“controlling,” and “under common control with” means (a) the ownership, directly
or indirectly, of more than fifty percent (50%) of the voting securities,
participating profit interest, or other ownership interests of a legal entity,
or (b) the possession, directly or indirectly, of the power to direct the
management or policies of a legal entity, whether through the ownership of
voting securities or by contract relating to voting rights or corporate
governance.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

     1.4 “Alexza Intellectual Property” means the Alexza Patents and Alexza
Know-How.
     1.5 “Alexza Know-How” means any and all Know-How Controlled by Alexza at
any time during the Term that is necessary or useful to practice the Alexza
Patents and develop and manufacture Product, but excluding the Alexza Patents.
     1.6 “Alexza Patent” means any patent or patent application (including,
without limitation, any provisional, continuation, divisional, or
continuation-in-part application, and any substitution, reissue, renewal,
reexamination, protection certificate, extension, registration or confirmation
patent, and further including any patent or patent application in which Alexza
and Endo have undivided equal ownership interests pursuant to Section 9.2) in
the Territory that is Controlled by Alexza at any time during the Term and that
pertains to the Staccato Technology and claims or would otherwise be infringed
by a Product or the manufacture or use of any Product. While not intending to
limit the scope of the Alexza Patents, Schedule 1.6 lists patents Controlled by
Alexza that pertain to the Staccato Technology and claim or would otherwise be
infringed by a Product or the manufacture or use of a Product. Schedule 1.6
shall be promptly updated by Alexza to include any other patents hereafter
Controlled by Alexza that pertain to the Staccato Technology and claim or would
otherwise be infringed by a Product or the manufacture or use of a Product in
the Territory.
     1.7 “Alexza Trademarks” means the Staccato trademark, as well as any other
trademarks and trade names, whether or not registered, that are Controlled by
Alexza at any time during the Term and are applied to or used in connection with
the Staccato Technology generally (as opposed to a particular Device containing
a particular active ingredient) or in connection with Product specifically.
     1.8 “Batch” means batches of a Product for commercial resale or supply or
stability testing purposes in the sizes set forth in Annex II to this Agreement
which shall be attached for the Initial Product and any subsequent Product when
agreed to by the Parties.
     1.9 “Business Day” means any day except (a) Saturday, (b) Sunday or (c) a
day that is a federal legal holiday in the U.S.
     1.10 “Clinical Trial” means any clinical testing of Product in human
subjects.
     1.11 “Clinical Trial Material” means Product for administration to animals
for pre-clinical testing or to humans in Clinical Trials (and any placebo
applicable to such testing or Clinical Trials).
     1.12 “CMC” means Chemistry, Manufacturing, and Controls.
     1.13 “Commercially Reasonable Efforts” means, with respect to a particular
Party, the level of effort and resources required to develop, manufacture and
commercialize a Product in a sustained manner consistent with efforts that such
Party would typically devote to a product of similar market potential, profit
potential and/or strategic value resulting from either its own research efforts
or in-licensed from a Third Party, based on conditions then prevailing.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

     1.14 “Controlled” means, with respect to any item of Know-How or any
intellectual property right, that a Party owns or has a license to such item or
right and has the ability to grant to the other Party a license or sublicense
under such item or right as provided for in this Agreement without violating the
terms of any agreement or other arrangement with any Third Party in existence,
as applicable.
     1.15 “Delivery Date” means the date for the delivery of Product to the
shipping destination as stated in the applicable Purchase Order for such
shipment.
     1.16 “Developed Technology” means Know-How conceived and reduced to
practice or originally authored by or on behalf of one or both Parties pursuant
to this Agreement, including in the course of or as a direct result of, the
conduct of the activities set forth or contemplated by the Development Plan, and
any intellectual property rights appurtenant thereto (including any patents and
patent applications claiming such Know-How).
     1.17 “Development Plan” has the meaning set forth in Section 3.1.
     1.18 “Device” means a hand-held device for multiple-dose delivery that
embodies the Staccato Technology.
     1.19 “Drug” means derivatives of
N-(1-ethyl-piperidin-4-yl)-N-phenylpropanamide, including Fentanyl, sufentanil,
alfentanil, remifentanil, carfentanil, lofentanil, and pharmaceutically
acceptable salts thereof in any dosage strength.
     1.20 “Endo Intellectual Property” means any Developed Technology that is
owned by Endo pursuant to Section 9.2 and Controlled by Endo.
     1.21 “Endo Product Know-How” means any and all Know-How Controlled by Endo
at any time during the Term that is necessary or useful for the research,
development, manufacturing, or commercialization of Product in the Territory,
but excluding the Endo Product Patents.
     1.22 “Endo Product Patent” means any patent or patent application in the
Territory that is Controlled by Endo at any time during the Term and that claims
or would otherwise be infringed by a Product or its manufacture or use.
     1.23 “External PC&R Costs” has the meaning set forth in Section 3.5.
     1.24 “FD&C Act” means the U.S. Federal Food, Drug, and Cosmetics Act (21
U.S.C. Section 301 et seq.), as amended.
     1.25 “FDA” means the U.S. Food and Drug Administration.
     1.26 “Fentanyl” means the molecule having the chemical structure and
characteristics set forth on Exhibit A,
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

     1.27 “First Commercial Sale” means the date on which, following Regulatory
Approval in the Territory, a Product is first sold by Endo, any of its
Affiliates, distributors or sublicensees to a Third Party (other than sales by
Endo to its Affiliates, distributors, Subcontractors, or sublicensees).
     1.28 “GAAP” means U.S. generally accepted accounting principles,
consistently applied.
     1.29 “Generic Product” means a product approved through an abbreviated NDA,
or an application under Section 505(b)(2) of the FD&C Act that references any
NDA for the Product (or future functional equivalent), listed in the Orange
Book, that is rated as a therapeutic equivalent and designated as automatically
substitutable for a Product at the pharmacy level under any applicable state
administrative or formulary designation.
     1.30 “IND” means an Investigational New Drug Application as defined in the
FD&C Act and applicable regulations promulgated thereunder by the FDA, the
filing of which is necessary to commence a Clinical Trial.
     1.31 “Initial Indication” means the treatment of breakthrough pain in
cancer patients and the treatment of breakthrough pain in non-cancer patients.
     1.32 “Initial Product” means the Alexza product designed as “AZ-003”
(Staccato fentanyl) and any improvement or modification thereto, but solely to
the extent such improvement or modification consists of a [ * ] is delivered
using the Staccato Technology.
     1.33 “Know-How” means and includes conceptions, ideas, innovations,
inventions, processes, machines, equipment, compositions of matter, genetic
material, improvements, enhancements, modifications, technological developments,
know-how, methods, techniques, systems, designs, artwork, drawings, plans,
specifications, blueprints, mask works, software, documentation, data and
information (irrespective of whether in human or machine-readable form), works
of authorship, and products, in each case whether or not patentable,
copyrightable, or susceptible to any other form of legal protection.
     1.34 “Long-Term Inability to Supply” shall mean, with respect to a Product,
Alexza’s failure to supply Endo with at least [ * ] of the quantities of Product
ordered by Endo in accordance with the terms of this Agreement for a period that
exceeds [ * ]. For the purpose of this Section 1.34, “Product ordered by Endo”
shall not include any quantity of Product ordered by Endo to the extent that,
pursuant to Section 5.1(b)(v), Alexza is not liable to Endo for any inability to
manufacture and deliver such quantity of Product.
     1.35 “Manufacture” has the meaning given to such term in Section 5.1(a)(i).
     1.36 “Net Sales” means the gross amount invoiced by Endo or its Affiliates
or sublicensees for the sale of a Product to Third Parties, commencing with the
First Commercial Sale, less actual deductions (not otherwise credited) for:
(i) normal and customary trade, cash and quantity discounts actually given,
credits, price adjustments or allowances for damaged Products, returns or
rejections of Products; (ii) chargeback payments and rebates (or the
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

equivalent thereof) granted to group purchasing organizations, managed health
care organizations or to federal, state/provincial, local and other governments,
including their agencies, or to trade customers; (iii) freight, shipping
insurance and other transportation expenses directly related to the sale (if
actually borne by Endo, it Affiliates or sublicensees without reimbursement from
any Third Party); (iv) sales, value-added, excise taxes, tariffs and duties, and
other taxes and government charges directly related to the sale, to the extent
such items are included in the gross invoice price and actually borne by Endo,
its Affiliates or sublicensees without reimbursement from any third party (but
not including taxes assessed against the income derived from such sale);
(v) required distribution commissions/fees payable to any Third Party providing
distribution services to Endo in respect to a Product; and (vi) provisions for
actual uncollectible amounts of the amount invoiced; in each case of (i)-(vi) as
determined in accordance with GAAP consistently applied for products sold by
Endo.
     1.37 “Non-Registrational Trial” means a Clinical Trial for a particular
indication that (a) is initiated or ongoing after completion of the first Phase
III Trial for such indication, and (b) is not conducted to obtain, maintain or
expand Regulatory Approval of the Product being tested.
     1.38 “Packaging Specifications” means the packaging and labeling
specifications for a Product, as such specifications may be amended from time to
time by mutual agreement of the Parties. The Packaging Specifications for the
Initial Product and any subsequent Product shall be attached to this Agreement
as Annex III when agreed to by the Parties.
     1.39 “Phase III Trial” means a pivotal Clinical Trial performed to prove
efficacy of a Product in a target population, and to prove safety for such
Product that is needed to evaluate the overall benefit-risk relationship of such
Product and provide an adequate basis for physician labeling, as described in 21
C.F.R. 312.21(c).
     1.40 “Plant” means the premises of Alexza located at its Mountain View,
California facility that houses its manufacturing operations or such other
FDA-approved facility of Alexza that is also approved by Endo for the purpose of
Manufacture hereunder.
     1.41 “Pre-Clinical Trial” means any pre-clinical testing of Product in
animals.
     1.42 “Product” means a product used or useful in the treatment of pain that
employs or is based upon the Staccato Technology and utilizes the Device for the
delivery of a Drug, including any and all formulations and line extensions of
the Staccato Technology and the Device and any and all improvements or
modifications to the Staccato Technology and the Device. Product shall include
the Initial Product.
     1.43 “Product Specifications” means the specifications for a Product,
including master batch records, process specifications and analytical methods,
as such specifications may be amended from time to time by the mutual agreement
of the Parties, including, without limitation, such amendments as may be
required to obtain Regulatory Approval for the Product. Product Specifications
for the Initial Product and any subsequent Product shall be attached to this
Agreement as Annex IV when agreed to by the Parties.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

     1.44 “Purchase Order” has the meaning given to such term in
Section 5.1(b)(ii).
     1.45 “Quality Agreement” means the agreement between the Parties concerning
quality assurance, quality control, and validation related to the manufacture of
Product.
     1.46 “Raw Materials” means, in relation to a Product, the Active
Ingredients, Device components, excipients and packaging materials used in the
Manufacture thereof.
     1.47 “Raw Material Specifications” means the specifications relating to the
handling, warehousing, and storage of Raw Materials relating to a Product, as
such specifications may be amended from time to time by mutual agreement of the
Parties. Raw Material Specifications for the Initial Product and any subsequent
Product shall be attached to this Agreement as Annex V when agreed to by the
Parties.
     1.48 “Regulatory Approval” means, for any Product, all permissions,
approvals, licenses, registrations, authorizations, or clearances of any
Regulatory Authority that are necessary for the sale of such Product in the
applicable regulatory jurisdiction.
     1.49 “Regulatory Authority” means the applicable government agency or
agencies in a country or jurisdiction whose permission, approval, license,
registration, authorization, or clearance must be obtained for the
manufacturing, clinical testing and/or marketing of any Product, including, but
not limited to, the FDA and any successors thereto.
     1.50 “Regulatory Requirements” means (a) all specifications, methods of
manufacture, and other information in one or more Regulatory Submissions related
in any way to the Product, and (b) all laws, rules, regulations, applicable
regulatory guidance documents, and other requirements of any Regulatory
Authority that govern the Product, including its manufacture, including but not
limited to the requirements set forth in the FD&C Act, the Public Health Service
Act (42 U.S.C. Section 262 et seq.), the quality system regulation (“QSR”) rules
set forth in 21 Code of Federal Regulation (“C.F.R.”) Part 820, and the current
good manufacturing practices regulations set forth in 21 C.F.R. Section 210 et
seq. and 21 C.F.R. Sections 600-610 (collectively, “cGMP”), as any of the
foregoing may be amended from time to time.
     1.51 “Regulatory Submissions” means all applications, filings, dossiers and
the like submitted to a Regulatory Authority for the purpose of obtaining
Regulatory Approval from that Regulatory Authority, including INDs and New Drug
Applications.
     1.52 “Safety Agreement” has the meaning set forth in Section 4.2(d).
     1.53 “Specification” means each of the following as they relate to an
Active Ingredient, Raw Materials and/or a Product, as appropriate:
the Product Specifications,
the Raw Material Specifications,
the Packaging Specifications or
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

the Active Ingredient Specifications,
     each as set forth in annexes to be attached to this Agreement when agreed
to by the Parties and as may be amended, restated or otherwise modified from
time to time by the Parties.
     1.54 “Staccato Technology” means Alexza’s proprietary technology for the
vaporization of a pharmaceutical composition via rapid-heating to form a
condensation aerosol that allows rapid systemic drug delivery to humans through
deep lung inhalation, including all modifications, line extensions and
formulations of such proprietary technology.
     1.55 “Subcontractors” has the meaning set forth in Section 3.4.
     1.56 “Term” has the meaning set forth in Section 14.1.
     1.57 “Territory” means the U.S., Canada and Mexico.
     1.58 “Third Party” means any person or entity other than Alexza, Endo and
their respective Affiliates.
     1.59 “U.S.” means the United States of America.
     1.60 “Validation Activities” means those activities to be performed by
Alexza under the Quality Agreement to validate the Plant and processes for the
Manufacture of a Product for use for sale and supply for administration to
humans.
     1.61 “Validation Batches” means, for any dosage form, those Batches
Manufactured by Alexza during the course of Validation Activities for such
dosage form.
ARTICLE 2
GOVERNANCE
     2.1 Joint Steering Committee. The Parties’ development and
commercialization of Product in the Territory under this Agreement shall be
overseen by a Joint Steering Committee (the “JSC”) with responsibilities as
described in this Section 2.1.
          (a) Membership. The JSC shall be composed of four (4) members, two
(2) members appointed by each Party. The JSC will consist of at least one
(1) senior officer (senior vice president or higher) from each Party authorized
to make decisions with respect to matters including, but not limited to, setting
development goals, making strategic decisions and resolving disputes. Promptly
following the Effective Date, each Party shall appoint its initial
representatives to the JSC. Each Party may replace its JSC representatives at
any time upon written notice to the other Party. Endo will designate one of its
representatives as the Chairperson of the JSC. The Chairperson shall be
responsible for scheduling meetings, preparing and circulating an agenda in
advance of each meeting, preparing and issuing minutes of each meeting within
thirty (30) days thereafter, revising such minutes to reflect timely comments
thereon, and overseeing the ratification of such revised minutes.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

          (b) Meetings. The JSC shall meet a minimum of twice per year. The
Parties shall endeavor to schedule meetings of the JSC at least three (3) months
in advance. Meetings for the JSC shall be held on an alternating basis in Palo
Alto, California (or such other location in the continental U.S. as may be
chosen by Alexza) and Chadds Ford, Pennsylvania (or such other location in the
continental U.S. as may be chosen by Endo), or as otherwise agreed by the
Parties. If an in-person meeting of the JSC is required in order to maintain
progress with the Development Plan, an ad hoc JSC meeting may be called by
either Party, to be held within thirty (30) days of such request at a location
specified by the non-requesting Party. In no event shall the JSC be required to
meet more than four (4) times per year.
          (c) Responsibilities. The JSC shall:
               (i) Establish the strategic direction for, and evaluate the
progress of, the Parties’ collaborative development of the Product;
               (ii) Review results of the work performed under the Development
Plan, changes to the Development Plan properly approved by the members of any
committee formed by the JSC since the most recent JSC meeting, and review and
approve any amendments or modifications to the Development Plan as proposed by
any subordinate committee, including the JDC;
               (iii) Review and provide comments with respect to the development
budget for the Development Plan on an annual basis;
               (iv) Review and provide comments with respect to the
Commercialization Plan;
               (v) Have authority to establish one or more other committees (in
addition to the JDC) that report to the JSC and assist the JSC in carrying out
its responsibilities, which other committees (including the JDC) shall be
subordinate to the JSC, shall have such membership and responsibilities as the
JSC shall determine, and may be disbanded by the JSC at any time;
               (vi) Develop and implement a strategy regarding the publication
of materials in connection with this Agreement and the subject matter hereof;
               (vii) Resolve, or attempt to resolve any disputes not resolved by
the JDC or any other subordinate committee created by the JSC or the JDC; and
               (viii) Perform such other functions as appropriate to further the
purposes of this Agreement and as allocated to it in writing by the Parties.
          (d) Decision Making; Authority. The JSC shall make its decisions by
consensus, with each Party’s representatives collectively having one vote. If
the JSC is unable to reach consensus regarding a matter before it, the issue
shall be presented by the JSC, in the case of Endo, to its Chief Executive
Officer (or his or her designee), and, in the case of Alexza, its Chief
Executive Officer (or his or her designee) (each a “CEO” and both the “CEOs”)
for
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

resolution. Once an issue has been presented to the CEOs, the CEOs shall have
fifteen (15) days to make a final determination regarding the issue in dispute.
In the event that the CEOs are unable to reach a final determination within such
fifteen (15) day period, then:
               (i) Endo shall have authority to make the final decision with
respect to all issues relating to pre-clinical, clinical, regulatory,
development (insofar as such matters relate to preclinical and clinical
development of the Product and non-manufacturing regulatory aspects of the
Product, including the pre-clinical and clinical budget for the Development
Plan) and commercialization matters, provided that such decision does not
materially increase or accelerate Alexza’s obligations (including its
monetary/budgetary obligations) under the Development Plan or payment
obligations under Section 3.5; and
               (ii) Alexza shall have authority to make the final decision with
respect to all issues relating to Device design and development (except for
issues described in Section 2.1(d)(i)) and manufacturing of Product, provided
that (A) Device design and manufacture of the Product are in compliance with the
Specifications, and provided further that if the Device design fails to satisfy
Regulatory Requirements, Endo shall have the right to assume final
decision-making authority with respect to design of the Device; and (B) such
decision does not materially increase or accelerate Endo’s obligations
(including its monetary/budgetary obligations) under the Development Plan or the
Commercialization Plan or payment obligations under Section 3.5.
     2.2 Joint Development Committee. As of the Effective Date, subject to
Section 2.1(c)(v), development of Product shall be directly managed by a Joint
Development Committee (the “JDC”) with responsibilities as described in this
Section 2.2.
          (a) Membership. Subject to Section 2.1(c)(v), the JDC shall be
composed of six (6) members, three (3) members appointed by each Party,
including at least one research and development executive of each Party.
Promptly following the Effective Date, each Party shall appoint its initial
representatives to the JDC. Each Party may replace its JDC representatives at
any time upon written notice to the other Party. Endo will designate one of its
representatives as the Chairperson of the JDC. The Chairperson shall be
responsible for scheduling meetings, preparing and circulating an agenda in
advance of each meeting, preparing and issuing minutes of each meeting within
thirty (30) days thereafter, revising such minutes to reflect timely comments
thereon, and overseeing the ratification of such revised minutes.
          (b) Meetings. While the Parties are developing and conducting
Pre-Clinical Trials and Clinical Trials for Product for one or more indications,
the JDC shall meet a minimum of four (4) times per year. The Parties shall
endeavor to schedule meetings of the JDC at least two (2) months in advance.
Meetings for the JDC shall be held on an alternating basis in Palo Alto,
California (or such other location in the continental U.S. as may be chosen by
Alexza) and Chadds Ford, Pennsylvania (or such other location in the continental
U.S. as may be chosen by Endo). At each meeting of the JDC, each Party shall
provide the JDC with an update regarding the work performed by such Party under
the Development Plan since the last meeting.
          (c) Responsibilities. The JDC shall, subject to Section 2.1(c)(v):
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

               (i) Oversee and manage the planning and implementation of the
Development Plan;
               (ii) Review results of the Development Plan and discuss and
prepare proposed amendments or modifications to the Development Plan when such
changes appear to be advisable to achieve the Parties’ Product development
goals;
               (iii) Review and provide comments with respect to the development
budget for the Development Plan on an annual basis;
               (iv) Approve amendments or modifications to the Development Plan
and review revised development budgets;
               (v) Facilitate the exchange of regulatory documents and other
regulatory information between the Parties pursuant to Article 4;
               (vi) Have authority to establish one or more other committees
that report to the JDC and assist the JDC in managing and directing the
Development Plan. Any committees formed beyond the JDC shall be subordinate to
the JDC, shall have such membership and responsibilities as the JDC shall
determine, and may be disbanded by the JDC at any time;
               (vii) Resolve, or attempt to resolve any disputes not resolved by
any subordinate committee created by the JDC; and
               (viii) Perform such other functions as appropriate to further the
purposes of this Agreement and as allocated to it in writing by the Parties.
          (d) Decision Making; Authority. The JDC shall make its decisions by
consensus, with each Party’s representatives collectively having one vote. If
the JDC is unable to reach consensus regarding a matter before it, the issue
shall be presented to the JSC for resolution pursuant to Section 2.1(d).
     2.3 General Principles.
          (a) Each of the JSC and the JDC and their respective subordinate
committees has no authority beyond the specific responsibilities set forth in
this Agreement with respect to such committee. Any subordinate committee created
by the JSC or the JDC, as applicable, shall have such duties and
responsibilities delegated to such committee by the JSC or the JDC, as
applicable, so long as such duties and responsibilities do not exceed the
respective power and authority assigned to the JSC and the JDC hereunder. In
particular, and without limiting the generality of the foregoing, no Committee
may amend or modify the terms or provisions of this Agreement.
          (b) Each Party shall ensure that its representatives to a committee
have appropriate expertise and authority to serve as members of such committee.
With the consent of the representatives of each Party serving on a particular
committee, other representatives of each
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Party may attend meetings of that committee as observers. A meeting of a
committee may be held by audio or video teleconference with the consent of each
Party, provided that at least half of all meetings for that committee in each
calendar year shall be held in person. Meetings of a committee shall be
effective only if at least one representative of each Party is present or
participating. Each Party shall be responsible for all of its own expenses of
participating in committee meetings. Each Party shall use good faith and
cooperative efforts to facilitate and assist the efforts of the committees.
          (c) Each committee shall continue to exist until the first to occur of
(i) the Parties mutually agreeing to dissolve it, (ii) the expiration of all
payment obligations described in Article 7, or (iii) Alexza providing to Endo
written notice of its intention to dissolve and no longer participate in such
committee. In any event, at any time Alexza may terminate its participation on
any committee, on thirty (30) days’ written notice. Unless the Parties agree
otherwise in writing at the time, upon dissolution of such committee, Alexza’s
powers and duties shall automatically be assumed by Endo; provided, however,
Alexza shall have a right to approve (such approval not to be unreasonably
withheld or delayed) any decisions made by Endo after the dissolution of such
committee, to the extent that Alexza would have had the right to make a final
decision on such matter pursuant to Section 2.1(d)(ii) had Alexza not terminated
its participation on the committee.
ARTICLE 3
DEVELOPMENT PROGRAM
     3.1 Overview of Development. The Parties shall undertake the development of
Product in a collaborative and efficient manner in accordance with this
Article 3. The pre-clinical and clinical development of Product in the Territory
under this Agreement shall be governed by a written development plan (the
“Development Plan”), as such Development Plan may be revised from time to time
in accordance with Section 3.2(a).
     3.2 Development Plan.
          (a) Development Plan. Within three (3) months following the Effective
Date, the JDC shall develop an initial Development Plan, which will contain
detailed provisions governing all pre-clinical and clinical development, budgets
and timelines, manufacturing, and regulatory work to be performed to obtain
Regulatory Approval of the Initial Product. The Development Plan shall be
subject to final approval by Endo, except that, subject to Section 2.1(d)(ii),
the Device design, development and manufacturing portion of the Development Plan
shall be subject to final approval by Alexza. As long as the Product is being
developed, the JDC shall review the Development Plan at least annually and may,
from time to time, provide comments to and/or generate a proposed revised
version of the Development Plan that is consistent with the terms of this
Agreement and the goals of the Parties’ collaborative development of the
Product, which revised version shall be submitted to the JSC for approval as set
forth above. The JSC shall give good faith consideration to any comments and/or
revisions provided by the JDC with respect to the Development Plan, but the
final determination as to what changes and/or revisions shall be made to any
Development Plan shall be made by the JSC,
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

subject to the provisions of Section 2.1(d) in the case of any deadlock among
the members of the JSC. Once approved by the JSC, such revised Development Plan
shall replace the prior Development Plan. The Development Plan shall allocate
between the Parties responsibility for each development-related activity
described therein in a manner consistent with Section 3.3. The Development Plan
shall in no event be amended in a manner that would require either Party to
perform any assignment or task in a manner that would violate any applicable law
or regulation. In the event of a change in any applicable law or regulation, the
Parties shall work together to amend the Development Plan to enable each Party
to comply fully with such law or regulation. If such amendment is not approved,
the affected Party would be excused from performing any activity specified in
the Development Plan that would violate or result in a violation of any
applicable law or regulation.
          (b) Performance of Development Plan. The Parties shall use
Commercially Reasonable Efforts to conduct their respective tasks assigned
pursuant to the Development Plan and to attempt to achieve the objectives of the
Development Plan. Each Party shall perform its obligations under the Development
Plan in a professional manner, and in compliance in all material respects with
the Development Plan and the requirements of applicable laws and regulations and
all applicable good clinical and manufacturing practices. Changes in the scope
or direction of the development work under this Agreement that would require a
material deviation from the Development Plan must be approved by the Parties as
set forth in Section 3.2(a).
     3.3 Responsibilities of the Parties.
          (a) Endo shall have primary responsibility for implementing the
clinical and pre-clinical development and non-manufacturing regulatory aspects
of the Development Plan as set forth in greater detail in this Article 3 and
Article 4.
          (b) Alexza shall have primary responsibility for Device design and
development (other than pre-clinical and clinical development), design
implementation, all other Device-related aspects of the Development Plan, and
all manufacturing activities with respect to Product, subject to the provisions
of and as set forth in greater detail in this Article 3 and Articles 4 and 5.
Such responsibilities shall include: (i) the design, development and testing of
the Device for use in a Product, (ii) performance of CMC activities for a
Product, and (iii) manufacture and supply of Clinical Trial Materials for use in
Pre-Clinical Trials and Clinical Trials. Notwithstanding anything to the
contrary in this Agreement, Alexza’s responsibility to conduct development work
and to pay development costs under Section 3.5 shall terminate upon receipt of
Regulatory Approval for the Initial Product for the treatment of breakthrough
pain in cancer patients and the treatment of breakthrough pain in non-cancer
patients (it being understood that Alexza’s responsibility to conduct
development work and pay development costs under Section 3.5 shall continue
prior to receipt of Regulatory Approval for so long as development work for
Regulatory Approval continues for such indications), except that Alexza’a
responsibilities shall continue in respect to all Clinical Trials necessary to
support registration of such Product for such indications.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

          (c) Notwithstanding anything to the contrary in this Agreement, unless
Alexza agrees otherwise in writing, Alexza shall have no obligation to perform
any work in connection with, or in support of, (i) any Non-Registrational Trial
of the Initial Product, (ii) the design, development, or manufacturing, of any
Products other than the Initial Product, or (iii) any Clinical Trials for an
indication other than each indication included in the Initial Indication (it
being understood that Alexza’s responsibility for each such indication shall
continue so long as Regulatory Approval for such indication continues to be
sought or has been obtained (where Regulatory Approval has been obtained, to the
extent relating to Clinical Trials to support registration)).
     3.4 Third Party Contractors. Either Party shall be free to subcontract to
Third Parties (“Subcontractors”) any of its obligations under this Agreement;
provided, however that (a) with respect to any such Subcontractor that will be
manufacturing major components for Product or overseeing or conducting
Pre-Clinical Trials and Clinical Trials or toxicology studies for Product, the
applicable Party shall notify the other Party in writing upon retaining such
Subcontractor; (b) each Party shall enter into agreements with its
Subcontractors that contain confidentiality terms at least as strict as those
set forth in Article 10 hereof; and (c) no such subcontracting shall relieve a
Party of its obligations hereunder. In addition, in the event that Alexza
subcontracts with a Third Party to manufacture, test and/or package Product for
use in the Territory, Endo shall be given the opportunity to review and comment
on such manufacturing agreement in advance of its execution, and Alexza shall
give good faith consideration to Endo’s comments. Such Third Party manufacturing
agreement(s) shall provide that Endo shall be an intended third party
beneficiary of such Third Party manufacturer’s obligations to Alexza with
respect to Product thereunder, including with rights of direct enforcement by
Endo. In addition, each Third Party manufacturing agreement for Product for use
in the Territory shall provide, in substance, that, in the event that Alexza, or
any other Person acting on behalf of Alexza or its estate pursuant to any
bankruptcy laws, shall seek or obtain a bankruptcy rejection of such Third Party
manufacturing agreement, then the Third Party manufacturer shall (i) timely
exercise its rights to continue any and all licenses (if any) thereunder
relating to the Product in the Territory, and (ii) to the extent that bankruptcy
rejection effectively terminated the Third Party manufacturing agreement,
immediately enter into an agreement with Endo for Product in the Territory on
substantially the same terms and conditions as those contained in the agreement
with Alexza. The Third Party manufacturing agreements may contain such
additional terms and conditions as Alexza and the Third Party manufacturer shall
agree to, subject to the review (but not the approval) of Endo prior to the
execution of such Third Party manufacturing agreement and provided that such
additional terms and conditions do not prejudice, reduce or limit performance by
such Third Party manufacturer under this Agreement.
     3.5 Development Costs. Each Party shall be responsible for all internal
costs and expenses incurred by or on behalf of such Party or its Affiliates in
connection with development of the Initial Product pursuant to the Development
Plan hereunder. Alexza shall be responsible for all out-of-pocket expenses for
Device design and development (other than pre-clinical and clinical development
after the Effective Date), design implementation, all other Device-related
aspects of the Development Plan with respect to the Initial Product, and all
manufacturing activities with respect to the Initial Product. Except as set
forth in the following sentence, after the Effective Date Endo shall be
responsible for all out-of-pocket expenses payable to Third
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Parties incurred by Endo or its Affiliates in connection with pre-clinical,
clinical, and regulatory development of the Initial Product pursuant to the
Development Plan (“External PC&R Costs”). Endo and Alexza shall be responsible
for [ * ] and [ * ], respectively, of External PC&R Costs in excess of [ * ];
provided, however, that Alexza’s responsibility for External PC&R Costs shall
not exceed a total of twenty million dollars ($20,000,000). Notwithstanding the
foregoing, Alexza shall not be responsible for any costs associated with any
Clinical Trial for an indication other than each indication included in the
Initial Indication (it being understood that Alexza’s responsibility to pay
costs shall continue in respect to each such indication in the Initial
Indication for which Regulatory Approval continues to be sought) or with a
Non-Registrational Trial, and such costs shall not be included in External PC&R
Costs for the purpose of determining whether External PC&R Costs exceed the
foregoing [ * ] threshold. Any request or claim by Endo for reimbursement of
External PC&R Costs shall be invoiced on a quarterly basis and shall be
calculated in accordance with GAAP consistently applied by Endo. Such invoices
shall be in reasonable detail and shall be due forty five (45) days after
Alexza’s receipt thereof. To the extent that Endo desires to undertake the
pre-clinical or clinical development of Products other than the Initial Product,
the Parties shall discuss in good faith the manner in which any costs associated
with such development or regulatory, design, testing, or manufacturing
activities related to such development shall be paid.
     3.6 Development Guidelines.
          (a) General. In all matters related to implementation of the
Agreement, the Parties shall be guided by standards of reasonableness in
economic terms and fairness to each of the Parties, striving to balance the
legitimate interests and concerns of the Parties and further the development of
the Product.
          (b) Independence. Subject to the terms of this Agreement, the
activities and resources of each Party shall be managed by such Party, acting
independently and in its individual capacity. The relationship between Alexza
and Endo is that of independent contractors and neither Party shall have the
power to bind or obligate the other Party in any manner, other than as is
expressly set forth in this Agreement.
     3.7 Generic Product. In no event shall Endo develop or manufacture a
Generic Product intended for sale in the Territory or sell or otherwise
commercialize a Generic Product in the Territory.
ARTICLE 4
REGULATORY MATTERS
     4.1 Non-Manufacturing Regulatory Submissions.
          (a) Except as set forth in Section 4.2, as between the Parties, Endo
shall have sole responsibility, at its own expense, for preparing, filing and
maintaining all Regulatory Submissions for Product in the Territory, including
preparing all reports required in connection with the submission of any
application for Regulatory Approval. Endo shall use Commercially
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Reasonable Efforts to obtain Regulatory Approvals in the U.S. for Product for
one or both indications included in the Initial Indication (as determined by
Endo) and for any other indications that Endo decides to pursue. If and when
Regulatory Approvals are secured in the U.S., Endo shall thereafter make a
determination as to whether to pursue Regulatory Approvals in Canada and Mexico,
which determination shall be left to Endo’s sole discretion. If Endo decides to
pursue Regulatory Approvals in Canada and/or Mexico, Endo shall use Commercially
Reasonable Efforts in furtherance thereof. Subject to Section 4.2, all
Regulatory Submissions for Product shall be filed in the name of Endo or one of
its Affiliates or sublicensees, and, as between the Parties, Endo shall be
responsible for all communications and other dealings with the Regulatory
Authorities relating to Product in the Territory. Endo shall be the legal and
beneficial owner of all Regulatory Submissions and Regulatory Approvals for
Product in the Territory. No later than thirty (30) days following the Effective
Date, Alexza shall transfer to Endo any INDs for AZ-003 that are Controlled by
Alexza as of the Effective Date. For clarity, development outside of the U.S.
within the Territory shall be at the sole discretion of Endo.
          (b) Endo shall develop and implement procedures for drafting and
review of any IND, New Drug Application, or other planned Regulatory Submission
for a Product, which shall provide Alexza, to the extent reasonably practicable,
a period of not less than ten (10) days to provide substantive comments. Endo
shall give good faith consideration to all substantive comments provided by
Alexza and shall revise each such Regulatory Submission to reflect any comments
provided by Alexza that Endo, in its reasonable discretion, shall deem necessary
and/or appropriate to include in such Regulatory Submission.
          (c) Endo shall promptly notify Alexza of all Regulatory Submissions
that it submits, and, at Alexza’s written request, shall promptly provide Alexza
with a copy (which may be wholly or partly in electronic form) of such
Regulatory Submissions. Endo will provide Alexza with reasonable advance notice
of any scheduled meeting between Endo or its Affiliate or sublicensee with any
Regulatory Authority relating to a Product, and Alexza shall have a right to
have up to two (2) Alexza employees or contractors attend, and, at the request
of Endo, participate in, any such meeting. Endo also shall promptly furnish
Alexza with summaries of all material correspondence or material meetings with
any Regulatory Authority in the Territory relating to a Product, and Endo shall,
at Alexza’s written request, promptly furnish Alexza with copies of such
correspondence or copies of minutes of such meetings.
          (d) Following receipt of Regulatory Approval for a Product in the
Territory, Endo shall retain primary responsibility for dealings with the
applicable Regulatory Authority with respect to such Product, including filing
all supplements and other documents with such Regulatory Authority with respect
to such Regulatory Approval in the Territory.
          (e) To the extent permitted by law, Alexza and its Affiliates, and any
licensee of Alexza from which Alexza has obtained a corresponding right for Endo
and its Affiliates (which Alexza shall use Commercially Reasonable efforts to
obtain), shall have a right of reference outside of the Territory to all
Regulatory Submissions filed by, and Regulatory Approvals received by, Endo with
respect to the Initial Product in the Territory upon payment by Alexza or such
licensee to Endo of (i) [ * ] of Endo’s External PC&R Costs allocable to such
Regulatory Submissions in the case such Regulatory Submissions are to be
referenced in any
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

countries in the European Union, and (ii) [ * ] of Endo’s External PC&R Costs
allocable to such Regulatory Submissions in the case such Regulatory Submissions
are to be referenced in any countries outside the Territory and outside the
European Union. To the extent permitted by law, Endo and its Affiliates shall
have a right of reference to all Regulatory Submissions filed by, and Regulatory
Approvals received by, Alexza and any licensee of Alexza from which Alexza has
obtained a corresponding right for Endo and its Affiliates (which Alexza shall
use Commercially Reasonable Efforts to obtain) with respect to any Product
outside the Territory upon payment by Endo to Alexza or such licensee of [ * ]
of the out-of-pocket costs and expenses paid to a Third Party by Alexza or such
licensee for such Regulatory Submissions. Both Alexza and Endo may exercise
their respective rights under this Section 4.1(e) with respect to Regulatory
Submissions on a Clinical Trial-by-Clinical Trial basis (including toxicology
studies), in which case the payments described above shall be calculated based
on the External PC&R Costs (in the case of an exercise by Alexza) or
out-of-pocket costs and expenses paid to a Third Party (in the case of an
exercise by Endo) allocable to the Regulatory Submissions for each such Clinical
Trial.
          (f) Except as set forth in Section 4.2(b), all Regulatory Submissions
in the Territory and all safety and other data related thereto shall be deemed
to constitute Endo Confidential Information and shall be subject to Article 10;
provided, however, that the foregoing shall not limit Alexza’s right to use, for
any product other than a Product, all Product-related pre-clinical and clinical
data generated by, on behalf of, or for Alexza prior to the Effective Date.
     4.2 Manufacturing-Related Regulatory Submissions
          (a) Notwithstanding Endo’s obligation to submit Regulatory Submissions
as set forth in Section 4.1(a), Alexza shall be responsible for compiling CMC
information pertaining to Product for inclusion in Regulatory Submissions. Endo
shall provide to Alexza the CMC portion of the Regulatory Submissions for
completion by Alexza. Alexza shall promptly complete and provide the necessary
information to Endo and Endo will include the CMC information provided by Alexza
in Endo’s Regulatory Submissions.
          (b) All CMC information compiled by Alexza pursuant to Section 4.2(a)
shall be deemed to be Alexza Confidential Information and shall be subject to
Article 10.
          (c) Adverse Event Reporting.
               (i) Endo shall be responsible for complying with all Regulatory
Requirements and other legal requirements governing adverse events that occur in
the Pre-Clinical Trials conducted after the Effective Date and Clinical Trials
or after Regulatory Approval of a Product in the Territory. Endo shall submit
copies of reports of adverse events to Alexza simultaneously with submission to
the applicable Regulatory Authorities. Each Party shall notify the other in a
timely manner and in any event within twenty-four (24) hours of receiving any
adverse event reports, notice from a Regulatory Authority, independent review
committee, data safety monitoring board or another similar clinical trial or
post-marketing monitoring body alleging significant concern regarding a patient
safety issue or other material information relevant to the safety or efficacy of
a Product.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

               (ii) Alexza shall be responsible for establishing and maintaining
a global safety database.
          (d) Promptly following the Effective Date, but in no event later than
sixty (60) days thereafter, Endo and Alexza will develop and agree upon safety
data exchange procedures in a separate and detailed safety agreement (the
“Safety Agreement”). Such agreement will describe the coordination of
collection, investigation, reporting, and exchange of information concerning
adverse events or any other safety problem of any significance, and product
quality and product complaints involving adverse events, sufficient to permit
each Party, its Affiliates, sublicensees or licensees to comply with its legal
obligations. The safety data exchange procedures will be promptly updated if
required by changes in legal requirements.
     4.3 Regulatory Correspondence.
          (a) Notification to Other Parties of Regulatory Correspondence. Each
Party shall promptly (and in any event, within five (5) Business Days of the
date of receipt of notice) notify the other Party in writing of, and shall
provide the other Party with copies of, any correspondence and other
documentation received or prepared by such Party in connection with any of the
following events: (i) receipt of a material regulatory letter, warning letter,
Form 483, or similar item, from any Regulatory Authority directed to the
manufacture, packaging, and/or storage of a Product, or Alexza facility or
contract manufacturing facility associated with Alexza’s supply of Product
hereunder; (ii) any recall or correction of any batch of the Drug; and (3) any
regulatory comments relating to a Product requiring a response or action by a
Party.
          (b) Regulatory Correspondence Requiring an Alexza Response. In the
event that Alexza receives any material regulatory letter or comments from any
Regulatory Authority directed to its manufacture of a Product requiring a
response or action by Alexza, including, but not limited to, receipt of a
Form 483 or a warning letter, Endo (as applicable) will promptly provide Alexza
with any data or information required by Alexza in preparing any response
relating to Alexza’s manufacture of such Product, and will cooperate fully with
Alexza in preparing such response. To the extent reasonably practicable (subject
to the time a response is mandated), Alexza shall provide Endo with a copy of
each such response for Endo’s review and comment at least five (5) Business Days
prior to Alexza’s submission of the response. Alexza shall give good faith
consideration to any Endo comments to each such proposed Alexza response and
shall incorporate such comments to the extent Alexza deems necessary or
appropriate. Endo shall have the final decision with respect to any responses or
actions required by such letter or comments which relate to the pre-clinical and
clinical development, commercialization and regulatory aspects of the Product.
          (c) Regulatory Correspondence Requiring an Endo Response. In the event
that Endo receives any material regulatory letter or comments from any
Regulatory Authority relating to the manufacture of a Product, Alexza (as
applicable) will promptly provide Endo with any data or information required by
Endo in preparing any response relating to Alexza’s manufacture of a Product,
and will cooperate fully with Endo in preparing such response. To the extent
reasonably practicable (subject to the time a response is mandated), Endo shall
provide Alexza with a copy of each such response for Alexza’s review and comment
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

at least five (5) Business Days prior to Endo’s submission of the response. Endo
shall give good faith consideration to any Alexza comments to each such proposed
Endo response and shall incorporate such comments to the extent Endo deems
necessary or appropriate. Alexza shall have the final decision with respect to
any responses or actions required by such letter or comments which relate to
manufacture of the Product.
     4.4 Inspections. In the event that the Alexza facility or contract
manufacturing facility will be inspected by representatives of any Regulatory
Authority directed to Alexza’s manufacture of Product or Clinical Trial
Material, Alexza shall notify Endo promptly after learning of such inspection,
and shall supply Endo with copies of any correspondence or portions of
correspondence which relate to Product. Following any such inspection, Alexza
shall provide Endo with a written summary of that portion of the inspection that
was relevant to Product or Clinical Trial Material within seven (7) Business
Days of such inspection.
     4.5 Product Recalls and Withdrawals. In the event that a Party becomes
aware that a Product may not comply with applicable law, rules or regulations
(either by notification from a Regulatory Authority or otherwise) in the
Territory and/or that a recall or withdrawal of a Product in the Territory is
desirable, such Party shall promptly notify the other Party. Promptly after Endo
receives such notice from Alexza (if Alexza is the Party that first becomes
aware of the necessity/desirability of a Product recall or withdrawal) or
promptly after Endo first becomes aware of the necessity/desirability of a
Product recall or withdrawal (if Endo is the Party that first becomes so aware),
Endo shall undertake an appropriate investigation, give good faith consideration
to all substantive comments provided by Alexza, and make a determination with
respect to the disposition of any such matter, including determining whether the
applicable Product in the Territory shall be recalled or withdrawn. If Endo
determines that a Product in the Territory shall be recalled, Endo shall develop
and implement a plan to conduct such recall. The Party that is predominantly
responsible for the applicable Product’s non-compliance with applicable laws,
rules and regulations shall bear all costs and expenses associated with
conducting such recall in accordance with such recall plan, unless such recall
results predominantly from the other Party’s material breach of its obligations
under this Agreement or unless such recall otherwise predominantly results from
the gross negligence or wrongful intentional acts or omissions of the other
Party, in which case the other Party shall bear all costs and expenses
associated with such recall. In all cases, each Party shall use Commercially
Reasonable Efforts to implement any recall of any Product in the Territory.
     4.6 Regulatory Updates. During the Term, Endo will keep Alexza generally
apprised of the status of any Regulatory Submissions related to a Product in the
Territory. Endo shall immediately notify Alexza in writing upon receipt by Endo
or its sublicensee(s) of any Regulatory Approval to market a Product for any
indication in the Territory. Correspondingly, Alexza shall immediately notify
Endo in writing upon receipt by Alexza or its sublicense(s) of any Regulatory
Approvals to market Product for any indication outside the Territory.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

ARTICLE 5
MANUFACTURE AND SUPPLY OF PRODUCT
     5.1 Supply of Clinical Trial Materials and Product.
          (a) Manufacture and Purchase of Clinical Trial Materials and Product.
               (i) Alexza shall be responsible for the production, manufacture,
testing, packaging and all related activities, including, without limitation,
acquisition of Raw Materials and warehousing, storage and supplying final
packaged materials (collectively, the “Manufacture”), of and with respect to
Clinical Trial Materials and Product (upon applicable Regulatory Approval), and
carrying out quality assurance in accordance with the Quality Agreement. The
Parties shall enter into the Quality Agreement within ninety (90) days of the
Effective Date. Except as otherwise set forth herein, Endo shall purchase all of
its requirements of Clinical Trial Materials in respect to the Initial Product
and the Initial Product from Alexza and Alexza shall supply all of Endo’s
requirements for such Clinical Trial Materials (as set forth in the Development
Plan) and Product. Clinical Trial Materials in respect to the Initial Product
and the Initial Product (if not otherwise specified in this Article 5, where
applicable, Product shall refer to the Initial Product and to Clinical Trial
Materials in respect to the Initial Product) shall be supplied in accordance
with the following provisions. Subject to Section 5.1(c)(vi), Alexza shall
supply Product at its sole cost and expense.
                    (1) Subject to the provisions of this Article 5, Alexza
shall Manufacture at the Plant (and/or have Manufactured by Subcontractor(s))
Clinical Trial Materials and Product for the benefit of Endo, its Affiliates and
sublicensees for use in the Territory in accordance with the Product
Specifications, cGMP and the Quality Agreement using Alexza Intellectual
Property and, where appropriate, in accordance with and using Endo Intellectual
Property licensed under this Agreement.
                    (2) Alexza shall have sole responsibility for disposing of
all Clinical Trial Materials and Product and wastes arising from Manufacture in
accordance with all applicable laws, rules and Regulatory Requirements.
               (ii) Alexza shall, at its cost, perform all Validation Activities
relating to manufacturing, equipment, packaging and cleaning process and shall
produce necessary Validation Batches with respect to the Clinical Trial
Materials and Product.
               (iii) Endo acknowledges and agrees that Alexza may manufacture
Clinical Trial Materials and Product for use outside of the Territory. Without
limiting Alexza’s obligations under this Agreement to supply Product and Endo’s
right to enforce such obligation, in the event of a prospective shortage of
capacity, Alexza shall reasonably allocate, based on historical and forecasted
needs, available quantities of Clinical Trial Materials and Product to Endo and
any Third Party with rights to the Clinical Trial Materials and Product outside
of the Territory in priority to any allocation to Alexza and any of its
Affiliates, provided, however, that in the event of any such prospective
shortage of capacity Alexza covenants to allocate at least
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

[ * ] of its manufacturing capacity to Endo’s Purchase Orders in priority to any
other Person’s orders. In no event shall Alexza manufacture a Generic Product
for sale in the Territory.
               (iv) Clinical Trial Materials shall be supplied to Endo as
specified in the Development Plan.
          (b) Forecasts; Orders of Product.
               (i) No later than [ * ] prior to January 1 of each year following
the First Commercial Sale of a Product in the Territory, Endo shall deliver to
Alexza a non-binding [ * ] forecast of Endo’s unit requirements for Product for
each year during that period. Such long-term forecast shall thereafter be
updated at least once every [ * ] during the Term.
               (ii) No later than [ * ] prior to the expected First Commercial
Sale, Endo and Alexza shall discuss in good faith the quantities of Product
forecasted to be necessary to support commercial launch. No later than [ * ]
prior to the First Commercial Sale, Endo shall submit to Alexza a written
forecast of its monthly requirements for Product for each of the next succeeding
[ * ]. The forecast shall be updated [ * ].
               (iii) The forecast of the most current [ * ] period shall always
constitute a firm order by Endo for the [ * ] forecasted requirements. Endo
shall submit a Purchase Order to Alexza with respect to such firm order (a
“Purchase Order”) with not less than sixty (60) days lead time prior to a
requested Delivery Date for the first nine months following First Commercial
Sale, and ninety (90) days lead time thereafter, which Purchase Order shall
state in detail the required amounts and related Delivery Dates, and shall be
binding on the Parties regarding Products to be purchased. Alexza shall have ten
(10) days to accept or reject such order for failure to conform to the firm
order quantity or failure to comply with the lead time requirements, with
failure to respond being deemed acceptance. The forecast for the remaining [ * ]
period of each rolling forecast is for planning purposes only and shall not
constitute a commitment to purchase or supply Product. In the event that Endo
does not ultimately purchase the forecast quantities for the binding [ * ]
period representing a firm order, then as of the last day of the end of the
month in such [ * ] period in which a firm order is not completed with Purchase
Orders during such period Endo shall be deemed to have provided a Purchase Order
for the amount of Product equal to (A) the applicable firm order amount less
(B) the previously ordered amounts represented by Purchase Orders for the
applicable [ * ] (the “Final Firm Order Commitment”). The Final Firm Order
Commitment shall have a Delivery Date that is sixty (60) days from end of the
month in which the Final Firm Order Commitment is deemed to occur.
Notwithstanding the foregoing, Endo may cancel without penalty any and all
Purchase Orders in the event Alexza is unable to fulfill any outstanding
Purchase Order within ninety (90) days of its scheduled Delivery Date due to a
force majeure event.
               (iv) Endo shall have the right to reasonably approve suppliers
selected by Alexza for the provision of Raw Materials for use in the Clinical
Trial Materials and Product. Alexza shall be permitted to purchase Raw Materials
for the Manufacture of Product using the forecast of the most current [ * ]
period in the [ * ] Product forecast. Should any Raw Materials purchased based
on this [ * ] forecast become obsolete or unusable as a result of subsequent
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

changes to Endo’s forecast quantities or to Product Specifications, then Endo
shall, at Endo’s option, purchase from Alexza at Alexza’s acquisition cost, the
amount of inventory of Raw Materials so rendered obsolete (including related
costs for destruction), or, if possible, have Alexza return such materials and
reimburse Alexza any restocking fees incurred.
               (v) Should any Purchase Order include volume of Product in
amounts that exceed [ * ] of amounts set forth in the most recent forecast
provided by Endo to Alexza pursuant to Section 5.1(b)(ii) hereof, or should Endo
desire to increase the amount of Product to be purchased pursuant to any already
submitted Purchase Order, then Alexza shall use Commercially Reasonable Efforts
to meet such excess Product request. Notwithstanding the foregoing, Alexza shall
not be liable to Endo for any inability, despite its Commercially Reasonable
Efforts, to manufacture and deliver such excess Product.
          (c) Purchase of Product; Deliveries.
               (i) Endo shall place Purchase Orders only in whole Batch
quantities. Alexza shall furnish to Endo with each shipment of Product ordered
by Endo hereunder, (A) a certificate of analysis reflecting that such Product
conforms to the relevant Specifications and (B) all documentation required by
law, Regulatory Requirements or any Regulatory Authority having jurisdiction
over such shipment.
               (ii) Endo shall not be required to take receipt of a Batch of
Product with less than [ * ] expiry or [ * ] of the original shelf life,
whichever is greater, except that in the event that the Product receives an
original shelf life of [ * ] or less, the qualification as to [ * ] of the
original shelf life shall not apply to Product delivered in respect to a
Purchase Order that has a Delivery Date within [ * ]. Endo and Alexza may
nonetheless negotiate in good faith for Endo to purchase such Batches.
               (iii) Property in, title to and risk of loss of or damage to
Product shall remain with Alexza and pass to Endo only upon delivery EXW
(Incoterms) Alexza’s Plant shipping dock in the U.S. to a carrier designated by
Endo. Product shall be prepared by Alexza for shipment in accordance with
mutually agreed shipping and packing specifications and all shipments shall be
accompanied by appropriate transportation and other agreed upon documentation.
               (iv) In the event that any Product shall fail to conform in all
material respects with any Purchase Order, any warranty, the Quality Agreement
and/or the Specifications, Endo shall have the right to reject such Product by
giving written notice to Alexza within thirty (30) days after receipt by Endo in
the case of patent defects in such Product and thirty (30) days from the date
when Endo learned of such defects in the case of latent defects in such Product.
Any notice given hereunder shall specify in writing the manner in which the
Product fails to conform to the Purchase Order or fails to meet such warranty or
the Specifications.
                    (1) If it is determined by agreement of the Parties (or in
the absence of agreement of the Parties, by a mutually acceptable independent
laboratory or
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

consultant whose fees shall be paid by the non-prevailing Party) that the
non-conformity is due to damage to the Product (i) caused by Endo or its agents
or customers or (ii) which occurs subsequent to delivery of such Product to
Endo’s carrier at the Plant in the U.S., Alexza shall have no liability to Endo
with respect thereto. In all other instances following the determination by
agreement of the Parties (or in the absence of agreement of the Parties, by a
mutually acceptable independent laboratory or consultant whose fees shall be
paid by the non-prevailing Party) that Alexza is responsible for the
non-conformity, Endo shall be entitled, in addition to any other remedies it may
have, to prompt replacement by Alexza of such non-conforming Product with
conforming Product at no additional cost to Endo. In the case of non-conforming
Product for which Alexza is responsible as provided above at a time when Endo
has no additional quantities of Product on order with Alexza, Alexza shall pay
to Endo a credit in an amount equal to the amount paid by Endo to Alexza for
such Product, plus associated shipping and insurance charges.
                    (2) In any case where Endo rejects non-conforming Product,
Endo shall await written instructions from Alexza as to further disposition of
the non-conforming Product. If Alexza does not provide such instructions within
ninety (90) days of receipt of Endo’s rejection notice, Endo shall dispose of
the Product and invoice Alexza for the costs of destruction. In any event, Endo
may retain samples of non-conforming Product for the purpose of determining any
dispute.
               (v) In the event Endo elects to accept Product that is delivered
after the Delivery Date specified in the applicable Purchase Order, Endo may, in
addition to any other remedies available to it, commencing on the eleventh
(11th) day after the specified Delivery Date, charge Alexza for each seven day
period thereafter that the delivery is late a late delivery charge equal to [ *
] of royalties payable by Endo in respect to such Product for the first seven
day period, [ * ] of royalties payable by Endo in respect to such Product for
the second seven day period, and [ * ] percent of royalties payable by Endo in
respect to such Product for each subsequent seven day period, up to a maximum
late delivery charge of [ * ] of royalties in respect to such Product. However,
no late fee shall accrue on any Product delivered (i) pursuant to a Purchase
Order accepted by Alexza pursuant to Section 5.1(b)(v) or (ii) within thirty
(30) days after the Delivery Date specified in the applicable Purchase Order if
the Purchase Order has a Delivery Date within ninety (90) days after [ * ] and
includes a volume of Product that is in excess of the amounts set forth in the
forecast provided by Endo to Alexza [ * ].
               (vi) Endo shall pay Alexza a transfer price of [ * ] per
controller included in the Initial Product and [ * ] per cartridge of Drug
included in the Initial Product in respect to Initial Product acquired by Endo
to be sold in the First Commercial Sale [ * ]. In no event shall Endo be
required to pay Alexza for the supply of any Raw Materials, Clinical Trial
Materials or other Product hereunder unless otherwise agreed by Endo. Payments
due by Endo to Alexza under this paragraph are due forty five (45) days from the
date of Alexza’s invoice, which invoice shall be sent out concurrently with
shipment of Product.
          (d) Capacity. Alexza covenants that it will have the capacity to
Manufacture up to [ * ] controllers and [ * ] cartridges of Drug for the Initial
Product per year for Endo (the
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

“Volume Commitment”) in the event that Endo forecasts such quantities. Alexza
shall use its Commercially Reasonable Efforts to ensure that all of Endo’s
Product requirements in excess of the Volume Commitment are met. In the event
that Alexza in its reasonable judgment based on the forecast provided pursuant
to Section 5.1(b)(i) approaches full capacity for Manufacturing Product at its
Plant which would be reasonably expected to fail to fulfill Endo’s requirements
of Product within the next [ * ] based on Endo’s most recent forecast, Alexza
shall give written notice to Endo. Within sixty (60) days of receipt of such
notice, Endo and Alexza shall meet to determine courses of action to address
such capacity issues. If Endo determines that an appropriate course of action is
establishing an alternative source of supply and Alexza is unwilling or unable
to establish such alternative source of supply, Alexza shall transfer to a Third
Party manufacturer designated by Endo such rights in Alexza Intellectual
Property and manufacturing technology and shall otherwise provide Endo, its
Affiliates and such Third Party manufacturer with such support as may be
reasonably necessary to allow for such Third Party to Manufacture in a timely
manner in order to avoid any loss of, or interruption in, supply of Product.
Anything herein to the contrary notwithstanding, in such event (i) Endo may send
to such Third Party manufacturer the greater of the shortage in Alexza’s supply
capacity or [ * ] of Endo’s requirements for Product, and (ii) no royalties
shall be payable by Endo to Alexza in respect to Product supplied by such Third
Party manufacturer. For the avoidance of doubt, if Alexza establishes an
alternative source of supply by retaining a Third Party manufacturer as a
Subcontractor (at Alexza’s expense), Endo shall owe Alexza the royalties
specified in Section 7.3 in respect to Product supplied by such Third Party
manufacturer.
          (e) Continuing Supply.
               (i) Upon expiration of the Term, at Endo’s request, Alexza shall
continue the Manufacture of Product in accordance with the terms of this
Agreement for such period as may be reasonably necessary for Endo to transfer
production to an alternative manufacturer (not to exceed [ * ]), including,
without limitation, time to negotiate terms and qualify and validate any such
alternative manufacturer, and otherwise Manufacture all outstanding orders.
Royalties under Section 7.3 shall be paid by Endo in respect to Product supplied
by Alexza during such period, except that if a Generic Product is then being
sold and Alexza provides evidence to Endo that the royalty does not cover its
costs of manufacturing Product (as computed consistent with industry standards
to be direct costs plus a reasonable allocation of indirect labor and facilities
costs attributable to manufacture of Product (but not corporate overhead)) plus
[ * ], supply shall be at such cost of manufacturing plus [ * ].
               (ii) Without limiting the obligations of Alexza set forth
elsewhere in this Agreement regarding Manufacture and technology transfer,
commencing at the request of Endo made not earlier than thirty (30) months prior
to the expiration of the Term, Alexza shall transfer rights in Alexza
Intellectual Property and technology to any Third Party manufacturer, and
otherwise provide Endo, its Affiliates and/or any Third Party manufacturer, with
such support and technical assistance as may be reasonably necessary to
Manufacture in a timely manner in order to avoid any loss of, or interruption
in, supply of Product. Prior to the expiration of the Term, Endo shall owe
Alexza the royalties specified in Section 7.3 in respect to Product supplied by
such Third Party manufacturer under this Section 5.1(e).
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

          (f) Long-Term Inability to Supply or Other Inability to Supply. In the
event that a Long-Term Inability to Supply has occurred, Endo shall have the
right, at its sole discretion, to (i) use a Third Party manufacturer and take
such other related actions as may be necessary to fill the Product supply
shortfall and not pay Alexza any royalties in respect of Product manufactured by
such Third Party manufacturer; or (ii) exercise any right that Endo may have
under Section 14.2(c) to terminate this Agreement (and all licenses granted to
Endo) as a result of such Long-Term Inability to Supply. In the event that a
Long-Term Inability to Supply has occurred, Alexza shall have the obligation,
upon request by Endo, to transfer to the Third Party manufacturer rights in such
Alexza Intellectual Property and technology and otherwise provide Endo, its
Affiliates and such Third Party manufacturer with such support and technical
assistance as may be reasonably necessary to allow the Third Party manufacturer
to Manufacture in a timely manner so as to minimize the loss of, and
interruption in, the supply of Product.
          In the event that at any time Alexza is in continuing or repeated
breach of its obligations to supply Product under Section 5, but such breach
does not constitute Long-Term Inability to Supply, in addition to any other
remedies Endo may have, Endo may give written notice to Alexza and thereupon the
Parties shall promptly meet to determine courses of action to address such
breach. The Parties shall attempt to agree upon a corrective plan with respect
to such breach; provided that if the Parties are unable to agree upon a
corrective plan within ninety (90) days of Endo’s written notice and if Endo
determines that an appropriate course of action is establishing an alternative
source of supply and Alexza is unwilling or unable to promptly establish such
alternative source of supply, then Endo shall notify Alexza of such
determination in writing. Promptly thereafter, Alexza shall transfer to a
qualified Third Party manufacturer designated by Endo such rights in Alexza
Intellectual Property and manufacturing technology and shall otherwise provide
Endo, its Affiliates and such Third Party manufacturer with such support as may
be reasonably necessary to allow for such Third Party to Manufacture in a timely
manner in order to avoid any loss of, or interruption in, supply of Product.
Anything herein to the contrary notwithstanding, in such event (i) Endo may send
to such Third Party manufacturer the greater of the shortage in Alexza’s supply
capacity or [ * ] of Endo’s requirements for Product, and (ii) no royalties
shall be payable by Endo to Alexza in respect to Product supplied by such Third
Party manufacturer. For the avoidance of doubt, if Alexza establishes an
alternative source of supply by retaining a Third Party manufacturer as a
Subcontractor (at Alexza’s expense), Endo shall owe Alexza the royalties
specified in Section 7.3 in respect to Product supplied by such Third Party
manufacturer.
          (g) Commercial Supply. Not less than [ * ] prior to the initiation of
the first Phase III clinical study of a Product, the Parties shall agree upon
Specifications for the Product and amend the Quality Agreement consistent with
Alexza’s obligations to Manufacture Product for commercial sale.
ARTICLE 6
COMMERCIALIZATION
     6.1 Commercialization. Endo shall have sole responsibility and
decision-making authority for commercialization of Product in the U.S. (and if
Regulatory Approval for a Product
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

is pursued by Endo as provided in Section 4.1(a) and obtained, elsewhere in the
Territory where such Regulatory Approval is obtained), which shall be carried
out in accordance with the Commercialization Plan. Endo shall be solely
responsible for all costs and expenses associated with its commercialization of
Product in the Territory. Endo may, in its sole discretion, choose whether to
market and sell a particular Product itself or to collaborate with Affiliates,
sublicensees or distributors to market and sell such Product, subject to
Section 8.6.
     6.2 Commercialization Plan.
          (a) No later than [ * ] prior to the anticipated filing of an
application for Regulatory Approval for a Product in the U.S., Endo shall
deliver to the JSC a draft written commercialization plan setting forth
anticipated material commercialization activities to be performed with respect
to such Product in the U.S. by Endo or on its behalf, as well as projected
timelines for such activities (the “Commercialization Plan”). The JSC shall
promptly review such draft initial Commercialization Plan and may provide
commercially reasonable comments to Endo for its consideration. Endo shall give
good faith consideration to such comments and may revise such draft
Commercialization Plan to implement such of the JSC’s comments that it shall
deem necessary or advisable to include in the draft. Endo shall, thereafter,
submit the Commercialization Plan with such changes, revisions and modifications
that it shall deem advisable to the JSC, and the Commercialization Plan,
together with such changes, revisions and modifications, as applicable, shall be
deemed final.
           (b) No later than [ * ] prior to the anticipated launch of a Product
in the U.S., Endo shall update the Commercialization Plan, and shall thereafter
update the Commercialization Plan on an annual basis as follows: Endo shall
provide the JSC with a draft update to the Commercialization Plan no later than
December 1 of each year. Endo shall give good faith consideration to any
comments provided by the JSC and may revise such Commercialization Plan to
implement such of the JSC’s comments that it shall deem necessary or advisable
to include in the Commercialization Plan, after which the update to the
Commercialization Plan shall be deemed to be finalized. Endo shall deliver a
final version of the updated Commercialization Plan no later than January 31 of
the following year.
          (c) The Commercialization Plan shall include a marketing plan for the
Product for which Regulatory Approval is being sought or obtained in the U.S.
that includes plans related to the anticipated promotion and sale of such
Product in the U.S., competitive analysis, including information regarding
actions intended to mitigate competitive threats, a non-binding sales forecast
for the following year and the marketing, promotion and advertising campaigns
proposed to be conducted, including the number of detailing representatives,
level of promotion and Endo’s medical education activities.
     6.3 Efforts. Endo shall use Commercially Reasonable Efforts to
commercialize each Product in such part of the Territory for which Regulatory
Approval is obtained. If Alexza in its reasonable opinion believes that Endo has
not satisfied any of its material obligations under this Section, Alexza may
convene a special meeting of the JSC to discuss the matter by written notice to
Endo. Such notice shall state with particularity the obligations that Alexza
believes that Endo has not satisfied and the basis for such belief, including
any supporting evidence that it wishes to
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

provide in connection therewith. The meeting shall be convened at Endo’s office
in Chadds Ford, Pennsylvania, within ten (10) Business Days of Endo’s receipt of
such notice. At such meeting, the members of the JSC shall discuss the concerns
of Alexza, Endo’s efforts in such areas of concern and any additional actions
that Alexza requests that Endo take to remedy the cause for Alexza’s concern. If
after such meeting Alexza continues to have reasonable belief that Endo is not
meeting its obligations under this Section, Alexza may within one hundred eighty
(180) days after such meeting so notify Endo in writing. Within thirty (30) days
after the date of any such notice, Endo shall respond in writing in good faith
to Alexza with its explanation and supporting evidence. The foregoing procedure
is not intended to limit Alexza’s right to terminate this Agreement under
Section 14.2(c) with respect to any failure by Endo to comply with the first
sentence of this Section 6.3 that is a material breach of this Agreement.
ARTICLE 7
PAYMENTS
     7.1 Upfront Payment. Endo shall pay Alexza a nonrefundable, non-creditable
payment of Ten Million Dollars ($10,000,000) within five (5) Business Days after
the Effective Date.
     7.2 Milestone Payments. Endo shall make the following nonrefundable,
non-creditable payments to Alexza within thirty (30) days after the first
achievement of the corresponding event set forth below:
          (a) [ * ];
          (b) [ * ];
          (c) [ * ]; and
          (d) [ * ].
     As a matter of clarification, the payments referred to in subsections (a),
(b), and (c) above shall be made one time with respect to the first Product
which meets the requirements for the payment and not for any subsequent Product
and the payment referred to in subsection (d) shall be made the first time the
corresponding event is achieved and not for any subsequent achievement of such
event.
     7.3 Royalty Payments. Commencing with the First Commercial Sale of the
Initial Product, Endo shall make royalty payments to Alexza equal to [ * ] of [
* ] of such Product, except that if a Generic Product is sold by a Third Party
within a country in the Territory during the Term, the royalties to which Alexza
is entitled hereunder with respect to sales in such country shall be reduced by
[ * ]. All royalties due under this Section 7.3 shall be paid quarterly within
sixty (60) days of the end of the relevant calendar quarter. Endo shall be
permitted to credit against such royalty payment the transfer price specified in
Section 5.1(c)(vi) that is paid by Endo for the units of Product whose sale gave
rise to such royalties, it being understood that a transfer price shall only be
payable for Product during the [ * ].
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Any transfer price payments not credited against royalties for any period shall
be carried forward and applied to subsequent royalty payments.
     7.4 Term of Royalties. Alexza’s right to receive royalties under
Section 7.3 shall expire on a Product-by-Product basis upon the later of (a) [ *
] years from the First Commercial Sale of such Product in the Territory, or
(b) the expiration of the last to expire Alexza Patent in the Territory.
     7.5 Royalty Reports. Commencing with the First Commercial Sale of a Product
in the Territory, Endo shall provide Alexza with a written report together with
the royalty payment within forty five (45) days after the last day of each
calendar quarter. Each such report shall include a calculation of the Net Sales
of Product, on a Product-by-Product basis made during the calendar quarter in
question, the royalties payable thereon and the total annual Net Sales for the
year to date. In addition, Endo shall provide Alexza within thirty (30) days
after the last day of each calendar quarter with its then-current estimate of
the royalties payable by Alexza for the prior quarter.
     7.6 Payment Method. All payments due under this Agreement to Alexza shall
be made by bank wire transfer in immediately available funds to an account
designated by Alexza. All payments hereunder shall be made in U.S. dollars.
     7.7 Taxes. Alexza shall pay any and all taxes levied on account of all
payments it receives under this Agreement. If laws or regulations require that
taxes be withheld, Endo will (a) deduct those taxes from the remittable payment,
(b) pay the taxes to the proper taxing authority, and (c) send evidence of the
obligation together with proof of tax payment to Alexza within thirty (30) days
following that tax payment.
     7.8 Interest. If either Party fails to make any payment due under this
Agreement within ten (10) Business Days after the date upon which such payment
is due, then interest shall accrue on such payment on a daily basis from the
date such payment was originally due at a rate equal to [ * ] above the
then-applicable prime commercial lending rate of Citibank, N.A., or at the
maximum rate permitted by applicable law, whichever is the lower, and such
interest shall be paid when such payment is made.
     7.9 Records.
          (a) Retention. Endo shall keep for at least three (3) years following
the end of the calendar year to which they pertain complete records of External
PC&R Costs and of the Net Sales of Product in the Territory. Such record keeping
obligation shall survive any expiration or termination of this Agreement for the
time provided herein.
          (b) Access to Records. Subject to the other terms of this Section 7.9,
Alexza may audit the records of Endo regarding External PC&R Costs and Net
Sales. Such audit shall be conducted (i) after at least thirty (30) days prior
written notice from Alexza, (ii) at the facility(ies) where the applicable
records are maintained, (iii) with the minimal reasonable
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

disruption to operations of Endo (to the extent reasonably practicable, such
examination shall be completed within ten (10) Business Days), (iv) no more
frequently than once in any calendar year, and (v) with respect to calendar
years ended not more than two (2) years prior to the date of the audit. The
audit shall be conducted by a nationally recognized independent certified public
accountant selected by Alexza (but not the accountant that conducts or has
within the past three (3) years conducted the audit of Alexza’s financial
statements). The auditor will execute a written confidentiality agreement with
Endo that is substantially similar to the confidentiality provisions of
Article 10 and limiting the disclosure and use of information obtained from such
audit to authorized representatives of the Parties and the purposes germane to
this Section 7.9. The auditor will disclose to Alexza only the amount and
accuracy of costs or payments, as applicable, reported and actually paid or
otherwise payable under this Agreement. The auditor will send a copy of the
report to both Parties at the same time. Alexza shall be responsible for
expenses for the independent certified public accountant, except that Endo shall
reimburse Alexza up to [ * ] for such independent accountant documented services
if the independent accountant determines that the costs reported or payments
made by Endo are less than [ * ] of the amount actually owed in the case of
payments, or more than [ * ] in excess of actual costs in the case of cost
reporting, in each case for the period of the audit and such determination is
finally resolved in favor of Alexza pursuant to Section 7.9(d) below if
contested by Endo.
          (c) Underpayment or Overpayment. If, as a result of any audit pursuant
to Section 7.9(b), it is shown that Endo’s charges to Alexza for External PC&R
Costs with respect to the time period audited were higher than the amount that
should have been charged or that Endo’s payments to Alexza under this Agreement
with respect to the period of time audited were less than the amount that should
have been paid pursuant to this Agreement, then Endo shall, within thirty
(30) days after Alexza’s demand therefor, either pay Alexza the amount of such
excess charge or shortfall in payment, plus interest thereon as provided in
Section 7.8, or proceed to the dispute resolution mechanism set forth in
Section 7.9(d) below. If, as a result of any audit pursuant to Section 7.9(b),
it is shown that Endo’s charges to Alexza for External PC&R Costs with respect
to the time period audited were less than the amount that should have been
charged or that Endo’s payments to Alexza under this Agreement with respect to
the period of time audited exceeded the amount that should have been paid
pursuant to this Agreement, then Alexza shall, within thirty (30) days after
Endo’s demand therefor, either pay Endo the amount of such under charge or
excess, plus interest thereon as provided in Section 7.8, or proceed to the
dispute resolution mechanism set forth in Section 7.9(d) below.
          (d) Resolution of Dispute as to Audit. In the event that the Parties
do not agree on the amount of overpayment or underpayment, within thirty
(30) days, each Party shall select an independent public accounting firm (and
each Party shall pay the costs of its own accounting firm), which shall meet and
discuss the amount in dispute and other related matters within thirty (30) days
thereafter. If such independent public accounting firms cannot agree on a
resolution mutually agreeable to the Parties, such independent public accounting
firms shall, within thirty (30) days after such selection, appoint a third
independent public accounting firm which shall resolve the issue within thirty
(30) days after its selection, and the Parties shall equally share the costs of
such accounting firm. The recommendation of the third independent public
accounting firm shall be final and binding upon the Parties. A judgment on such
firm’s disposition may be entered in any court having jurisdiction over the
Parties. Notwithstanding
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

anything to the contrary herein, the resolution of any dispute under this
Section 7.9 shall be made under this subsection 7.9(d) instead and in lieu of
Section 15.11. The preceding sentence shall not preclude the application of
Section 15.11 to any contract interpretation issue (as compared to an accounting
issue which would be precluded from determination under Section 15.11).
ARTICLE 8
LICENSE RIGHTS AND LIMITATIONS
     8.1 Licenses to Endo.
          (a) Subject to the terms and conditions of this Agreement, Alexza
hereby grants to Endo a royalty-bearing (such royalties that are payable being
specified in Section in Section 7.3 for the period specified in Section 7.4),
exclusive (including with respect to Alexza except as necessary for Alexza to
carry out its obligations under this Agreement) license (with the right to
sublicense solely in accordance with Section 8.6) in the Territory, under the
Alexza Intellectual Property, to develop, make or have made, use, offer for
sale, sell, import, market and promote Product.
          (b) Endo acknowledges and agrees that the licenses set forth in this
Section 8.1 do not include any rights (i) to commercialize the Product outside
the Territory or to engage in development in support of such commercialization;
or (ii) to research, develop, manufacture, or commercialize any product other
than a Product.
          (c) Endo covenants that (i) it will not exercise or sublicense its
right under Section 8.1(a) to make or have made the Product prior to the
occurrence of an event requiring or permitting a transfer of manufacturing
responsibility pursuant to Section 5.1(d), (e), or (f) and (ii) it will not
exercise any rights granted in Section 8.1(a) with respect to Products other
than the Initial Product unless and until the Parties agree in writing on the
terms of development of such Products, including without limitation any
compensation to Alexza.
     8.2 Licenses to Alexza.
          (a) Subject to the terms and conditions of this Agreement, Endo hereby
grants to Alexza a worldwide, royalty-free, non-exclusive license (with the
right to sublicense solely to Alexza’s Subcontractors), under any Endo Product
Patents and any Endo Product Know-How Controlled by Endo, solely to conduct its
obligations under this Agreement, including without limitation under the
Development Plan or under Article 5.
          (b) Subject to the terms and conditions of this Agreement, including
Section 8.3(a), Endo hereby grants to Alexza a non-exclusive license (with the
right to sublicense), under Endo Intellectual Property to use and practice the
Endo Intellectual Property in connection with the development, design and
manufacture of Devices and/or the Staccato Technology (other than Product).
          (c) Subject to the terms and conditions of this Agreement, including
Section 8.3(b), Endo hereby grants to Alexza, a non-exclusive license (with the
right to sublicense),
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

under Endo Intellectual Property, to use and practice Endo Intellectual Property
in connection with the manufacture, development and commercialization of Product
outside the Territory so long as any licensee of Alexza outside the Territory
grants to Alexza (with right to sublicense to Endo) intellectual property
developed by such licensee in connection with development and commercialization
of Product outside the Territory for use and practice of such licensee’s
intellectual property in connection with the manufacture, development and
commercialization of Product in the Territory.

  8.3   [ * ]

  (a)   [ * ]     (b)   [ * ]

     8.4 Alexza Trademarks.
          (a) Grant of License. Subject to the terms and conditions of this
Agreement, Alexza hereby grants to Endo an exclusive, royalty-bearing (such
royalties that are payable being specified in Section 7.3 for the period
specified in Section 7.4) license (with the right to sublicense in accordance
with Section 8.6) to use the Alexza Trademarks specified on Exhibit C solely in
connection with Pre-Clinical Trials and Clinical Trials and upon, or in relation
to, Product. Endo agrees that it shall use Commercially Reasonable Efforts to
use the Alexza Trademarks on Product and identify Alexza as the manufacturer of
Product on the packaging therefor, subject, in all respects, to all applicable
laws and Regulatory Requirements. Nothing in this Agreement shall obligate Endo
to identify a Product, or to use Alexza’s Trademarks with respect to a Product,
in any manner that Endo, in its reasonable discretion, determines may have an
adverse effect upon the development or marketability of, or potential sales with
respect to, such Product.
          (b) Use of Trademarks. Endo agrees to comply with all applicable laws
and regulations pertaining to the proper use and designation of the Alexza
Trademarks. Additionally, Endo shall use Commercially Reasonable Efforts to:
               (i) use the Alexza Trademarks upon or in relation to Product only
in such manner that the distinctiveness, reputation, and validity of the Alexza
Trademarks shall not be impaired, and without limiting the generality of the
foregoing, ensure that the Alexza Trademarks are accompanied by words accurately
describing the nature of the goods or services to which it relates and that the
Alexza Trademarks are displayed as set forth in Exhibit C;
               (ii) comply with the reasonable requirements of Alexza, to the
extent provided by Alexza to Endo in writing, as to the form, manner, scale and
context of use of the Alexza Trademarks;
               (iii) display the proper form of trademark and service mark
notice associated with each Alexza Trademark in accordance with instructions
received from Alexza, subject to Endo being responsible in this regard to use
only the same degree of care as Endo uses with its own marks;
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

               (iv) include, on any item which bears a Alexza Trademark, a
statement identifying Alexza as the owner of such Alexza Trademark and stating
that Endo is an authorized user of such Alexza Trademark;
               (v) not conduct, without the written consent of Alexza, the whole
or any part of its business under a business name or trading style which
incorporates any of the Alexza Trademarks; and
               (vi) neither use nor display any of the Alexza Trademarks in such
relation to any other mark or marks owned by any Third Party, Endo or an
Affiliate of Endo as to suggest that the multiple marks constitute a single or
composite trademark, service mark, or are under the same proprietorship.
          (c) Additional Trademark Terms. Endo shall not take any action
inconsistent with Alexza’s ownership of the Alexza Trademarks. Any benefits
(including good will) accruing from Endo’s use of the Alexza Trademarks shall
automatically vest in Alexza. Endo shall not form any combination trademarks or
trade names with the Alexza Trademarks. Endo shall grant Alexza reasonable
access to Endo’s packaging and promotional materials for the purpose of
inspecting Endo’s use of the Alexza Trademarks.
     8.5 Negative Covenants.
          (a) Endo hereby covenants that it shall not use or practice, nor shall
it cause or permit any of its Affiliates or sublicensees to use or practice,
directly or indirectly, any Alexza Intellectual Property or Alexza Trademarks
for any other purposes other than those expressly permitted by this Agreement.
          (b) Alexza hereby covenants that it shall not use or practice, nor
shall it cause or permit any of its Affiliates or sublicensees to use or
practice, directly or indirectly, any Endo Intellectual Property, Endo Product
Patents or Endo Know-How for any other purposes other than those expressly
permitted by this Agreement.
     8.6 Rights to Sublicense. Subject to Section 8.1(c)(i), Endo shall have the
right to sublicense the rights granted under Sections 8.1 and 8.4 to any
Affiliate of Endo and to any Third Party in Mexico and Canada without the prior
written consent of Alexza, and to any Third Party in the U.S. only with the
prior written consent of Alexza, such consent not to be unreasonably withheld.
In the event that Endo sublicenses the rights granted under Sections 8.1 and
8.4, Endo shall provide Alexza with an accurate and complete copy of the
applicable sublicense agreement no later than thirty (30) days after execution
of such sublicense agreement.
     8.7 No Implied Licenses. Neither Party grants (or agrees to grant) to the
other Party any right or license to use any of its intellectual property,
know-how or other proprietary information, materials or technology, or to
practice any of its patent, trademark, or trade dress rights, except as
expressly set forth in this Agreement.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

ARTICLE 9
INTELLECTUAL PROPERTY
     9.1 Background Intellectual Property. Except as expressly set forth herein,
as between the Parties, each Party is and shall remain the owner of all
intellectual property and Confidential Information that it owns or controls as
of the Effective Date or that it develops or acquires thereafter pursuant to
activities independent of this Agreement.
     9.2 Ownership of Developed Technology. Each Party shall own and retain the
entire right, title and interest in and to all Developed Technology made solely
by the employee(s) or agent(s) of such Party or any of its Affiliates, subject
only to the rights expressly granted to the other Party under this Agreement.
Each Party shall own and retain an undivided equal ownership interest in all
Developed Technology made jointly by the employee(s) or agent(s) of one Party or
any of its Affiliates and the employee(s) or agent(s) of the other Party or any
of its Affiliates, subject only to the rights expressly granted by the Parties
under this Agreement. Inventorship of Developed Technology will be determined in
accordance with U.S. laws of inventorship. Each Party hereby assigns and agrees
to assign to the other Party such rights in the Developed Technology, and to
take all other actions, in each case that are reasonably necessary to give
effect to the ownership interests set forth in this Section 9.2.
     9.3 Patent Prosecution and Maintenance. Except as provided below and in
Section 9.4, Alexza shall have the sole right to prosecute and maintain the
Alexza Patents in the Territory, to the extent it has the rights to do so.
Alexza shall provide Endo with a reasonable opportunity to comment on all draft
filings for the Alexza Patents in the Territory listed on Schedule 1.6
(including, without limitation, any foreign counterparts in the Territory,
continuations, divisions, or continuations-in-part, and any substitution,
reissue, renewal, reexamination, protection certificate, extension, registration
or confirmation patent), prior to their submission to the relevant patent
authority. On the reasonable request of Alexza, Endo shall cooperate, in all
reasonable ways, in connection with the prosecution of the Alexza Patents.
Should Alexza decide that it is no longer interested in maintaining or
prosecuting a particular Alexza Patent in the Territory, it shall promptly
advise Endo, and Endo may assume such prosecution and maintenance in the
Territory at its sole expense.
     9.4 Infringement by Third Parties.
          (a) Notice. Each of Endo and Alexza shall promptly notify the other
Party in writing of any alleged or threatened infringement of any Alexza Patent
by a Third Party product that delivers the Drug through inhalation (a “Field
Infringement”), of which the Party becomes aware.
          (b) Right to Bring Suit. Endo shall have the first right to bring and
control any action or proceeding with respect to any Field Infringement. If Endo
does not bring and continue pursuing an action or proceeding against, or
otherwise cause the cessation of Field Infringement by or after (i) one hundred
twenty (120) days following the notice of alleged infringement or (ii) ten (10)
days before the time limit, if any, set forth in the appropriate laws and
regulations for the filing of such an action, whichever comes first, then Alexza
shall have the
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

right to bring and control an infringement action under the applicable Alexza
Patents with respect to such Field Infringement at its own expense and by
counsel of its own choice.
          (c) Cooperation; Settlement. For any action or proceeding brought by a
Party under this Section 9.4 (the “Initiating Party”), regardless of which Party
brings such action or proceeding, the other Party (the “Non-Initiating Party”)
hereby agrees to cooperate reasonably in any such effort, all at the Initiating
Party’s expense, and the Parties shall reasonably cooperate to address new facts
or circumstances that come to light during the course of any such action or
proceeding that may affect the need for one Party or the other to participate in
such action. The Non-Initiating Party agrees to be joined as a party plaintiff,
at the Initiating Party’s expense, in any such action if needed for the
Initiating Party to bring or continue an infringement action hereunder. The
Non-Initiating Party shall, at its own expense and with its own counsel, have
the right to advise and provide comments with respect to any action against a
Field Infringement brought by the Initiating Party under this Section 9.4.
Neither Party may settle any action or proceeding brought against a Field
Infringement under this Section 9.4 in a manner that, or take any other action
in the course thereof that, to the knowledge of the Party taking the action,
materially adversely affects the other Party’s interest in the Alexza Patents,
without the written consent of such other Party, such consent not to be
unreasonably withheld.
          (d) Recoveries. Except as otherwise agreed to by the Parties as part
of a cost-sharing arrangement, any recovery realized as a result of any
litigation under this Section 9.4, after reimbursement of any litigation
expenses of Endo and Alexza, as applicable, shall be retained by the Party that
brought and controlled such litigation for purposes of this Agreement; provided,
however, that, the other Party shall be entitled to receive twenty-five percent
(25%) of any recovery realized by the Party that brought and controlled such
litigation under this Section 9.4, after reimbursement of each of the Parties’
related litigation expenses.
          (e) Other Infringements. Notwithstanding anything to the contrary in
this Agreement, Alexza shall have the sole right to bring and control any action
or proceeding with respect to any alleged or threatened infringement of any
Alexza Patent other than a Field Infringement, and Alexza shall retain any
recovery realized by Alexza in connection therewith.
     9.5 Third Party Claims for Infringement or Misappropriation. Each Party
shall promptly notify the other in writing of any potential or actual
allegation, claim or suit that the manufacture, use or sale of a Product, the
Drug, the Device contained in a Product or any component thereof, or any other
activities that are undertaken pursuant to this Agreement, infringes or
misappropriates a Third Party’s patent or other proprietary rights. To the
extent such potential or actual allegation, claim or suit relates to the Device
contained in the Product (and does not relate to the use or combination of such
Device with goods, materials, or services not supplied by Alexza, or any
modification or alteration of such Device by anyone other than Alexza, where the
alleged infringement or misappropriation would not have arisen except for such
use, combination, modification or alteration), Alexza shall have the sole right
to obtain a license from such Third Party and shall bear all costs associated
therewith and shall use Commercially Reasonable Efforts to obtain such a
license. If such potential or actual allegation, claim or suit is not addressed
in the preceding sentence, then the Parties shall determine as soon as
practicable thereafter whether it is reasonably necessary or appropriate to
obtain a license
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

from such Third Party, which Party shall seek to so obtain such license and how
the costs associated with such license shall be allocated between the Parties.
ARTICLE 10
CONFIDENTIALITY
     10.1 Definition of Confidential Information. During the Term, either Party
(the “Disclosing Party”) may from time to time furnish the other Party (the
“Receiving Party”) with scientific, technical, trade or business information or
materials which are treated by the Disclosing Party as confidential or
proprietary, including, without limitation, information and materials related to
the Drug, the Device, Product, processes, methods for pulmonary delivery of
drugs, assay systems, formulae, procedures, tests, equipment, data, batch
records, reports, know-how, sources of supply, patent positioning, relationships
with consultants and employees, business plans and business developments, and
information concerning the existence, scope or activities of any research,
design, development, manufacturing, marketing or other projects. All such
disclosed information shall be referred to herein as “Confidential Information”
if it is provided in writing and is designated or otherwise identified as
“Confidential” at the time of disclosure, or if is first provided orally,
visually, or by inspection and is identified as “Confidential” at the time of
disclosure. Notwithstanding the foregoing, Confidential Information shall also
include such information or materials that would reasonably be identified or
understood by the Receiving Party to be the confidential or proprietary
information of the Disclosing Party, even if they are not so identified as
described in the previous sentence. The “Alexza Confidential Information” means
any and all Confidential Information for which Alexza is the Disclosing Party
and Endo the Receiving Party hereunder. The “Endo Confidential Information”
means any and all Confidential Information for which Endo is the Disclosing
Party and Alexza the Receiving Party hereunder.
     10.2 Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, the Parties agree that
for the Term and for seven (7) years thereafter, the Receiving Party shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose any Confidential Information furnished to it by the Disclosing Party
pursuant to this Agreement.
     10.3 Exclusions. Notwithstanding anything herein to the contrary, the
obligations of confidentiality and nonuse under this Article 10 applicable to
Confidential Information hereunder shall not apply to information that:
          (a) at the time of disclosure, is known publicly or thereafter becomes
known publicly through no fault of the Receiving Party, its Affiliates or
agents;
          (b) is disclosed to the Receiving Party on a non-confidential basis by
a Third Party that is not legally prohibited from disclosing such information;
          (c) was developed by the Receiving Party independently of information
obtained from the Disclosing Party, as shown by the Receiving Party’s prior
written records;
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

          (d) was already known to the Receiving Party before receipt from the
Disclosing Party, as shown by the Receiving Party’s prior written records; or
          (e) is released with the prior written consent of the Disclosing
Party.
     10.4 Permitted Disclosures. Notwithstanding the foregoing, each Receiving
Party may disclose the Disclosing Party’s Confidential Information (a) to the
Receiving Party’s employees, consultants, Affiliates, agents, contractors, or
sublicensees who are bound by obligations relating to confidentiality at least
as restrictive of those contained herein and who have a need to know such
information in connection with the Receiving Party’s performance of its
obligations or practice of its rights under this Agreement, (b) to Regulatory
Authorities in connection with any Regulatory Submissions required for
development of Product pursuant to the Development Plan or in compliance with
Regulatory Requirements, including, without limitation, any requirements under
or pursuant to the Food and Drug Administration Amendments Act of 2007, (c) if
Alexza is the Receiving Party, to Regulatory Authorities in connection with any
Regulatory Submissions in connection with Alexza’s exercise of its rights under
Section 4.1(e) and Section 8.2, or (d) pursuant to Section 10.6.
     10.5 Terms of Agreement. Subject to Section 10.6 below, no Party shall,
without the prior written consent of the other Party, disclose in any manner to
any Third Party the material terms and conditions of this Agreement, except for
terms or subject matter which has been the subject of prior public disclosure or
has been mutually approved for such disclosure. Notwithstanding the foregoing,
each Party shall have the right to disclose the material terms of this Agreement
in confidence to any bona fide potential or actual investor, investment banker,
counsel, acquirer, merger or acquisition target or sublicensee that is otherwise
bound by obligations of confidentiality at least as restrictive as those
contained in this Agreement.
     10.6 Mandatory Disclosure.
          (a) Notification and Consultation. In the event that the Receiving
Party is required by applicable statute, regulation, or stock exchange rules or
by court order or judicial or administrative process to disclose any part of the
Disclosing Party’s Confidential Information or any material terms or conditions
of this Agreement, the Receiving Party shall (i) promptly notify the Disclosing
Party of each such requirement and identify the documents so required thereby,
so that the Disclosing Party may seek or request the Receiving Party to seek an
appropriate protective order, confidential treatment or other remedy and/or
waive compliance by the Receiving Party with the provisions of this Agreement
and (ii) consult with the Disclosing Party on the advisability of taking legally
available steps to resist or narrow the scope of such requirement. Each Party
acknowledges that the other Party may be legally required to file this Agreement
as an exhibit to its filings with the U.S. Securities and Exchange Commission.
          (b) Limited Disclosure. If, in the absence of such a protective order,
confidential treatment request, other remedy or waiver by the Disclosing Party,
the Receiving Party is nonetheless required to disclose any part of the
Disclosing Party’s Confidential Information or any material terms or conditions
of this Agreement, the Receiving Party may disclose such Confidential
Information or material terms or conditions without liability under this
Agreement, except that the Receiving Party shall furnish only that portion of
the Confidential Information or material terms or conditions that is legally
required.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

ARTICLE 11
PRESS RELEASES; USE OF NAMES; PUBLICATIONS
     11.1 Press Releases. The Parties agree that the public announcement of the
execution of this Agreement shall be substantially in the form of the press
release attached as Exhibit D, and the Parties will cooperate in the release
thereof as soon as practicable after the signature of this Agreement by the
Parties. No Party shall publish or otherwise disclose any other press release,
publicity or other form of public written disclosure announcing, describing, or
referring to this Agreement unless the other Party has provided its written
consent, which consent shall not be unreasonably withheld. Each Party shall
review any such press release, publicity, or other form of public disclosure
within three (3) Business Days of having received it or within such other time
as may be agreed by the Parties. Notwithstanding the foregoing, if a Party is
making such a press release, publicity or other form of public disclosure to
fulfill its applicable regulatory reporting or legal disclosure obligations,
this Section 11.1 shall not apply, but the provisions of Section 10.6 shall
apply instead.
     11.2 Use of Names. Alexza shall not make use of the name of Endo or any of
its Affiliates in any advertising or promotional material, or otherwise, without
the prior written consent of Endo except pursuant to Section 11.1. Except as
provided in Section 8.4 or 11.1, Endo shall not make use of the name of Alexza
or any of its Affiliates in any advertising or promotional material, or
otherwise, without the prior written consent of Alexza. Notwithstanding the
foregoing, either Party may use the name of the other Party or its Affiliates in
the context of mentioning the existence of this Agreement in advertising or
promotional materials.
     11.3 Publication.
          (a) Prior to public disclosure or submission for publication of a
proposed publication describing the results of any scientific or clinical
activity relating to Product, each Party shall send the JSC by expedited
delivery a copy of the proposed publication to be submitted and the JSC shall
have a reasonable time period (but no less than thirty (30) days from the date
of confirmed receipt) in which to determine whether the proposed publication
contains subject matter for which patent protection should be sought (prior to
publication of such proposed publication) for the purpose of protecting an
invention, or whether the proposed publication contains Confidential Information
of the other Party, or whether the proposed publication contains information
that is reasonably likely to have a material adverse impact on the development
or commercialization of the Device or the Staccato Technology or Product.
Following the expiration of the applicable time period for review, the
applicable Party shall be free to submit such proposed publication for
publication and publish or otherwise disclose to the public such scientific or
clinical results, subject to the procedures set forth in Section 11.3(b), except
that any publication in the Territory by or on behalf of Alexza, its Affiliates,
sublicensees or Subcontractors requires the prior written consent of Endo, not
to be unreasonably withheld.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

          (b) If the JSC believes that the subject matter of the proposed
publication contains Confidential Information of the non-publishing Party or a
patentable invention owned by such Party or in which such Party otherwise has
rights, then prior to the expiration of the applicable time period for review,
the JSC shall notify the other Party in writing of such belief. On receipt of
written notice from the JSC that such proposed publication contains Confidential
Information of the non-publishing Party, the publishing Party shall remove such
Confidential Information from such proposed publication prior to any publication
thereof, unless the non-publishing Party agrees otherwise in writing. On receipt
of written notice from the JSC that such proposed publication contains a
patentable invention owned by the non-publishing Party or in which the
non-publishing Party otherwise has rights, the publishing Party shall delay
public disclosure of such information or submission of the proposed publication
for an additional period of thirty (30) days to permit preparation and filing of
a patent application on such invention. The publishing Party shall thereafter be
free to publish or disclose such information, subject to Article 10 and the last
sentence in Section 11.3(a).
ARTICLE 12
REPRESENTATIONS AND WARRANTIES
     12.1 Mutual Representations and Warranties of Alexza and Endo. Each of
Alexza and Endo hereby represents and warrants to the other Party as of the
Effective Date as follows:
          (a) It is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. It has the requisite
corporate power and authority to conduct its business as presently being
conducted and as proposed to be conducted by it.
          (b) It has the requisite corporate power and authority to enter into
this Agreement and to perform the services contemplated hereunder. All corporate
actions on its part, necessary for (i) the authorization, execution, delivery
and performance by it of this Agreement, and (ii) the consummation of the
transactions contemplated hereby, have been duly taken.
          (c) Assuming the due authorization, execution and delivery by the
other Party, this Agreement is its legally valid and binding obligation,
enforceable against it in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors’ rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court or other tribunal before which any proceeding may be brought).
          (d) There is no contractual restriction or obligation binding on
either Party which would be materially contravened by execution and delivery of
this Agreement or by the performance or observance of its terms.
          (e) Each Party has and will continue to have written contracts with
all Third Parties (including employees and subcontractors) performing services
on its behalf under this
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Agreement where such services are intended to create inventions that assign or
license to such Party all inventions and rights therein.
          (f) To each Party’s knowledge, no representation or warranty made by
it in this Agreement, nor any statement contained in any schedule or exhibit
hereto furnished by it, contains any untrue statement of a material fact or
omits any material fact necessary to make the statements contained herein or
therein not misleading.
     12.2 Additional Representations and Warranties of Alexza. Alexza hereby
further represents and warrants to Endo as of the Effective Date:
          (a) Alexza is the owner of, or has exclusive rights to, all of the
Alexza Patents in existence on the Effective Date and is the owner of all of the
Alexza Know-How in existence on the Effective Date and has not granted rights in
any of the Alexza Know-How to any Third Party (other than licenses granted to
Symphony Allegro and its affiliated entities (collectively, “Symphony”) with
respect to certain products that are not Products). The Alexza Patents are in
full force and effect. Alexza has the exclusive right to grant the rights
granted under this Agreement. To the knowledge of Alexza, all of the issued
Alexza Patents in existence on the Effective Date are valid and enforceable.
          (b) All of the information requested by Endo for due diligence
purposes in connection with entering into this Agreement has been provided by
Alexza and all of such information is in all material respects true, complete
and unredacted (except as expressly noted). Without limiting the generality of
the foregoing, Alexza has provided Endo, or given Endo access to true, complete
and unredacted (except as expressly noted) copies of all (i) submissions to, and
correspondence with, Regulatory Authorities relating to the Device, Drug or
Product, including adverse event files, complaint files, manufacturing records
and inspection reports; and (ii) material agreements (including any letter
agreements) between Alexza and any licensor, licensee, production or financing
partner or other Third Party, including all effective amendments to any such
agreements, which in any event (A) would reasonably be expected to materially
affect Endo’s rights under the Agreement; or (B) relates to the Device, Drug or
Product. Alexza is in material compliance with all applicable federal, state and
local laws, rules and regulations, including, without limitation, all Regulatory
Requirements, with respect to each facility and site to be used in the
Manufacture of Product and, to Alexza’s knowledge, there are no circumstances or
conditions which would reasonably be expected to prevent compliance from
continuing during the duration of this Agreement or to interfere with Alexza’s
ability to Manufacture Product as required by this Agreement.
          (c) There is no pending or, to the knowledge of Alexza, threatened
claim, interference, opposition or demand of any Third Party challenging the
ownership, validity or scope of any Alexza Intellectual Property or Alexza
Trademarks in existence as of the Effective Date. To the knowledge of Alexza,
(i) the manufacture or sale of the Initial Product (as formulated as of the
Effective Date) or its use in each indication included in the Initial Indication
will not infringe any existing issued patent in the Territory and (ii) in
developing or acquiring the Alexza Intellectual Property or Alexza Trademarks,
Alexza has not misappropriated any trade secret of any Third Party.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

          (d) Alexza has disclosed to Endo its current financing arrangement
with Symphony (as defined in Section 12.2(a)), pursuant to which certain of the
Alexza Intellectual Property is exclusively licensed to Symphony with respect to
certain products that are not Products and certain of such Alexza Intellectual
Property is exclusively sublicensed by Symphony to Alexza. To the knowledge of
Alexza, except as set forth in the Alexza’s agreements with Symphony in
connection with such financing arrangement, there are no liens or claims
currently existing on or to the Alexza Intellectual Property or Alexza
Trademarks or on any proceeds thereof (including any liens or claims on or to
(i) rights to sue for past, present and future infringements thereof, (ii) any
licenses, claims, damages and proceeds of suit arising therefor, or (iii) any
payments or rights to payments arising out of the sale, lease, license,
assignment, or other disposition thereof). No liens or claims currently exist on
or to Alexza Intellectual Property or Alexza Trademarks or proceeds thereof, and
Alexza will not create, incur, or permit to exist on or to any Alexza
Intellectual Property or Alexza Trademarks or proceeds thereof any lien or
claim, in each case that could adversely affect in any material respect any
rights of Endo under this Agreement, including any right of set-off or credit.
          (e) Product supplied to Endo will be of satisfactory quality, free of
any defects and will be Manufactured in compliance with the Specifications, cGMP
and all other provisions of this Agreement, the Quality Agreement and all
applicable federal, state and local laws, rules and regulations, including,
without limitation, all Regulatory Requirements and environmental laws, in force
at the time of Manufacture.
     12.3 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 12, EACH
PARTY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES. THE PARTIES FURTHER ACKNOWLEDGE THAT ALL CLINICAL TRIAL
MATERIAL IS PROVIDED ON AN “AS IS” BASIS WITHOUT WARRANTY OF ANY KIND.
ARTICLE 13
INDEMNIFICATION AND LIMITATION OF LIABILITY
     13.1 Indemnification by Endo. Subject to Section 13.3, Endo shall
indemnify, defend and hold Alexza, its Affiliates, and their respective
directors, officers, employees consultants, contractors, sublicensees and agents
(collectively, the “Alexza Indemnitees”) harmless from and against any and all
claims, suits, proceedings or causes of action (“Claims”) brought by a Third
Party against such Alexza Indemnitee, including any damages or other amounts
payable to such Third Party, as well as any reasonable attorneys’ fees and costs
of litigation incurred as to any such Claim until the indemnifying Party has
acknowledged that it will provide indemnification hereunder with respect to such
Claim as provided below (collectively, “Damages”), in each case resulting from
or based on: (a) clinical development, use, importation, offer for sale or sale
of any Product in the Territory, (b) Endo’s breach of this Agreement; (c) the
negligence or willful misconduct of, or violation of applicable law by, Endo,
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

its Affiliates or (sub)licensees, or their respective employees, contractors or
agents in the performance of this Agreement; and/or (d) breach of a contractual
or fiduciary obligation owed by Endo to a Third Party (including without
limitation misappropriation of trade secrets). The foregoing indemnity
obligation shall not apply to the extent Alexza has an obligation to indemnify
Endo in respect to such matter under Section 13.2.
     13.2 Indemnification by Alexza. Subject to Section 13.3, Alexza shall
indemnify, defend and hold Endo, its Affiliates, and their respective directors,
officers, employees consultants, contractors, sublicensees and agents
(collectively, the “Endo Indemnitees”) harmless from and against any and all
Claims brought by a Third Party against such Endo Indemnitee, including any
Damages resulting therefrom, in each case resulting from or based on:
(a) Alexza’s breach of this Agreement; (b) the negligence or willful misconduct
of, or violation of applicable law by, Alexza, its Affiliates or (sub)licensees,
or their respective employees, contractors or agents in the performance of this
Agreement; (c) breach of a contractual or fiduciary obligation owed by Alexza to
a Third Party (including without limitation misappropriation of trade secrets);
(d) an allegation that the Device comprising part of the Initial Product
infringes the patents of a Third Party (except to the extent such infringement
arises from the use or combination of such Device with goods, materials, or
services not supplied by Alexza, or any modification or alteration of such
Device by anyone other than Alexza, where such infringement would not have
arisen except for such use, combination, modification or alteration) and/or
(e) any Alexza Design Defect. “Alexza Design Defect” shall be a defect in the
design of the Device included in a Product or the Staccato Technology used to
develop a Product. The foregoing indemnity obligation shall not apply to the
extent such Third Party Claims result from (i) Endo’s breach of this Agreement;
(ii) the negligence or willful misconduct of, or violation of applicable law by,
such Endo Indemnitee; and/or (iii) Endo’s or such Endo Indemnitee’s breach of a
contractual or fiduciary obligation owed by it to a Third Party (including
without limitation misappropriation of trade secrets).
     13.3 Indemnification Procedures. A Party seeking indemnification under
Sections 13.1 or 13.2 hereof (the “Indemnitee”) shall promptly notify the other
Party (the “Indemnitor”) in writing of any claim, lawsuit or other action in
respect of which the Indemnitee, its Affiliates, or any of their respective
directors, officers, employees and agents intend to claim such indemnification.
The Indemnitee shall permit, and shall cause its Affiliates and their respective
directors, officers, employees and agents to permit, (i) the Indemnitor to have
complete control of such defense (except as set forth below) so long as it
promptly assumes the defense and prosecutes the defense with appropriate
diligence and care and (ii) the Indemnitor, at its discretion, to settle any
such claim, lawsuit or other action with the prior written consent of the
Indemnitee, provided, however, that such consent shall not be unreasonably
withheld or delayed so long as such settlement does not adversely affect the
Indemnitee’s rights hereunder or impose any obligations on the Indemnitee in
addition to those set forth herein. No such claim, lawsuit or other action shall
be settled by the Indemnitee without the prior written consent of the Indemnitor
and the Indemnitor shall not be responsible for any legal fees or other costs
incurred other than as provided herein. The Indemnitee, its Affiliates and their
respective directors, officers, employees and agents shall cooperate fully with
the Indemnitor and its legal representatives in the investigation and defense of
any claim, lawsuit or other action covered by this indemnification. The
Indemnitor, if it is directing the defense as set forth above, shall keep
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

the Indemnitee reasonably informed of the progress of the action and shall
consider the comments and observations of the Indemnitee timely given in the
course of the proceedings. The Indemnitee shall have the right, but not the
obligation, to be represented by counsel of its own selection and expense.
Notwithstanding the foregoing, the Indemnitee may be represented by separate
counsel at the expense of the Indemnitor if a conflict of interest exists
between the interests of the Indemnitor and Indemnitee so that a single counsel
representing Indemnitor cannot adequately defend the rights of the Indemnitee
     13.4 Survival of Indemnification Obligations. The provisions of this
Article 13 shall survive the termination or expiration of this Agreement.
     13.5 Insurance. The Parties shall maintain insurance or self-insurance
against such risks and in such amounts as are usually maintained or insured
against by other companies of established repute engaged in the same or a
similar business. Each Party shall submit to the other Party evidence of the
insurance or self-insurance that is carried by such Party upon written request
of the other Party.
ARTICLE 14
TERM AND TERMINATION
     14.1 Term. The term of this Agreement shall commence on the Effective Date
and shall expire upon the later to occur of: (i) [ * ] from the First Commercial
Sale of a Product, and (ii) the date on which the last of the Alexza Patents
related to a Product have expired, unless earlier terminated in accordance with
Section 14.2 (the “Term”).
     14.2 Termination.
          (a) Termination by Endo. This Agreement may be terminated at any time
by Endo upon ninety (90) days prior written notice to Alexza.
          (b) Mutual Agreement. This Agreement may be terminated in its entirety
at any time upon mutual written agreement between the Parties.
          (c) Material Breach. Either Party may terminate this Agreement at any
time upon written notice to the other Party if the other Party is in material
default or breach of this Agreement and such material default or breach is not
cured within sixty (60) days (twenty (20) Business Days in the case of Endo’s
failure to pay any amounts due hereunder) after written notice thereof is
delivered to the defaulting or breaching Party.
          (d) Patent Challenge. Alexza shall have the right to terminate this
Agreement at any time upon written notice to Endo if Endo or its Affiliate
(i) files suit or initiates an administrative or other governmental proceeding
to challenge the validity or enforceability of any Alexza Patent or
(ii) voluntarily assists any Third Party with respect to any suit or proceeding
described in subsection (i).
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

     14.3 Consequences of Termination.
          (a) Termination of Licenses. Upon the termination of this Agreement
for any reason, the licenses granted to Endo under Sections 8.1 and 8.4 shall
terminate, except that upon expiration of the Term such licenses shall remain in
full force and effect in accordance with their terms without any additional
payment required by Endo under Article 7 or otherwise except for such additional
payments as Endo and Alexza may agree to in consideration of Alexza continuing
to supply Product to Endo.
          (b) Return of Confidential Information. Upon expiration or termination
of this Agreement in its entirety, unless otherwise directed by Endo, Alexza
shall promptly return all Endo Confidential Information to Endo, except for a
single copy and/or sample for documentation purposes only. Upon expiration or
termination of this Agreement in its entirety, unless otherwise directed by
Alexza, Endo shall promptly return all Alexza Confidential Information to
Alexza, except for a single copy and/or sample to be retained for documentation
purposes only and except that Endo, its Affiliates and any Third Party
manufacturer shall be entitled to retain such Confidential Information relating
to the Manufacture of Product as may be necessary to continue such Manufacture
after expiration of the Term.
          (c) Licenses to Alexza. Upon the termination of this Agreement for any
reason (other than by Endo pursuant to Section 14.2(c)), the licenses granted by
Endo to Alexza under Sections 8.2(b) and (c) shall continue. Upon termination of
this Agreement by Endo under Section 14.2(a) or by Alexza under Section 14.2(c),
Endo shall grant to Alexza an irrevocable, perpetual, royalty-free, fully paid,
non-exclusive license (with full rights to sublicense) under the Endo Product
Know-How and the Endo Product Patents, to make, have made, import, use, offer
for sale and sell Products in the Territory.
          (d) Regulatory Filings. Upon the termination of this Agreement by Endo
pursuant to Section 14.2(a) or by Alexza under Section 14.2(c) for any reason,
Endo shall assign to Alexza, and will provide full copies of, all Regulatory
Approvals and Regulatory Submissions that are owned or Controlled by Endo or its
Affiliates. Endo shall also take such actions and execute such other
instruments, assignments and documents as may be necessary to effect the
transfer of rights thereunder to Alexza.
          (e) Data Disclosure. Upon the termination of this Agreement by Endo
pursuant to Section 14.2(a) or by Alexza under Section 14.2(c), Endo will
provide to Alexza copies of the relevant portions of all material reports and
data, including clinical and non-clinical data and reports, obtained or
generated by or on behalf of Endo or its Affiliates pursuant to this Agreement
to the extent that they relate to Products, within sixty (60) days of such
termination unless otherwise agreed, and Alexza shall have the right to use any
such information in developing and commercializing Products, and to license any
Third Parties to do so.
          (f) Payment of Certain Costs. Upon the termination of this Agreement
by Endo pursuant to Section 14.2(a) or by Alexza under Section 14.2(c), Endo
shall reimburse Alexza for [ * ] of (i) any non-cancellable capital expenses
incurred by Alexza as of the date of termination in order to increase Alexza’s
capacity for Manufacturing Product (whether at its Plant or in connection with
establishing a new plant) or (ii) any upfront and non-cancellable costs incurred
by Alexza as of the date of termination in connection with establishing and
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

validating a Third Party manufacturer as an alternative source of supply of the
Product, in each case to the extent such activities were consistent with a
mutually agreed written plan and budget for expanding Manufacturing capacity or
such activities were, at the time such activities were initiated, reasonably
determined by Endo to be an appropriate course of action in accordance with
Section 5.1(d) to ensure that Alexza would be able to fulfill Endo’s
requirements of Product in excess of the Volume Commitment within the [ * ]
based on Endo’s most recent forecast. Such payment shall be due no later than
(60) days following receipt of a written invoice from Alexza.
          (g) Accrued Obligations. Except as set forth herein, any termination
or expiration of this Agreement shall not relieve either Party of any obligation
which has accrued prior to the effective date of such termination or expiration,
which obligations shall remain in full force and effect for the period provided
therein.
          (h) Cumulative Remedies. Except as expressly stated otherwise in this
Agreement, remedies under this Agreement are cumulative, and termination of this
Agreement in accordance with and fulfillment of all obligations set forth in
this Article 14 shall not affect any other rights or remedies that may be
available to a Party in law or equity. In addition, nothing in this Agreement
shall prevent either Party, in the case of a breach, from not terminating this
Agreement and seeking to enforce its rights hereunder.
          (i) Survival. The terms of Sections 3.4, 4.1(e), 4.2(c), 4.3, 4.4,
4.5, 5.1(e), 7.9, 9.2, 14.3 and Articles 1, 10, 11, 13 and 15 shall survive any
termination or expiration of this Agreement.
ARTICLE 15
MISCELLANEOUS
     15.1 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted to be given to any Party
shall be in writing and shall be deemed given (i) when delivered to the Party
personally, (ii) five (5) days after sent to the Party by registered mail,
return receipt requested, postage prepaid, (iii) on the second Business Day
after sent by a nationally recognized courier service guaranteeing next-day or
second-day delivery, charges prepaid, in each case addressed to the Party at its
address set forth below, or (iv) on the first Business Day after sent by
facsimile transmission to the number set forth below, or at such other address
or fax number as such Party may from time to time specify by notice given in the
manner provided herein to the Party entitled to receive notice hereunder:

                 
 
  For Alexza:   Alexza Pharmaceuticals, Inc.
 
          1020 East Meadow Circle
 
          Palo Alto, CA 94303
 
          Attention: Chief Executive Officer
 
          FAX: (650) 687-3999

 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

         
 
  With a copy to: Cooley Godward Kronish LLP
 
      Five Palo Alto Square
 
      3000 El Camino Real
 
      Palo Alto, CA 94306
 
      Attention: Glen Sato, Esq.
 
      FAX: (650) 849-7400
 
       
 
  For Endo:   Endo Pharmaceuticals Inc.
 
      100 Endo Boulevard
 
      Chadds Ford, PA 19317
 
      Attention: Chief Legal Officer
 
      FAX (610) 558-9684

     15.2 Entire Agreement. This Agreement (including any Exhibits or other
attachments hereto) constitutes the entire agreement between the Parties with
respect to the subject matter hereof, and no oral or written statement may be
used to interpret or vary the meaning of the terms and conditions hereof. This
Agreement supersedes any prior or contemporaneous agreements and understandings,
whether written or oral, between the Parties with respect to the subject matter
hereof, including the Confidentiality Agreement between Alexza and Endo dated
February 9, 2007 (the “Existing CDA”). All information disclosed by Alexza
pursuant to the Existing CDA shall be deemed Alexza Confidential Information for
the purposes of this Agreement.
     15.3 Assignment. Neither Party may assign or otherwise transfer this
Agreement without the prior written consent of the other Party; provided,
however, that either Party may assign this Agreement without the consent of the
other Party to any Affiliate or in connection with the acquisition of such Party
or the sale of all or substantially all of the assets of such Party. Any
assignment of this Agreement in violation of this Section 15.3 shall be null and
void. Assignment of this Agreement by either Party shall not relieve the
assignor of its obligations hereunder. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns.
     15.4 Force Majeure. Both Parties shall be excused from the performance of
their obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to minimize the effect of and overcome or remove the
cause or condition causing such force majeure. For purposes of this Agreement,
force majeure shall include conditions beyond the control of the Parties,
including, without limitation, an act of God, war, civil commotion, terrorist
act, labor strike or lock-out, epidemic, failure or default of public utilities
or common carriers, destruction of production facilities or materials by fire,
earthquake, storm or like catastrophe, and failure of plant or machinery
(provided that such failure could not have been prevented by the exercise of
skill, diligence, and prudence that would be reasonably and ordinarily expected
from a skilled and experienced person engaged in the same type of undertaking
under the same or similar
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

circumstances). Notwithstanding the foregoing, a Party shall not be excused from
making payments owed hereunder because of a force majeure affecting such Party.
In the event that either Party is prevented or delayed in performing any of its
obligations under this Agreement due to force majeure for an aggregate period in
excess of ninety (90) days in any twelve month period, the Parties shall meet as
soon as practicable to discuss in good faith how best to alleviate the
circumstances in question.
     15.5 Headings. The descriptive headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of the Agreement.
     15.6 Independent Contractor. Each Party shall be acting as an independent
contractor in performing under this Agreement and shall not be considered or
deemed to be an agent, employee, joint venturer or partner of the other Party.
     15.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party.
     15.8 No Third-Party Beneficiaries. Nothing in this Agreement, either
express or implied, is intended to or shall confer upon any third party any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
     15.9 Amendment. This Agreement may not be amended or modified except by an
instrument in writing signed by authorized representatives of Endo and Alexza.
     15.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without reference to choice
of law rules.
     15.11 Dispute Resolution. In the event of any dispute under this Agreement
(other than disputes excluded in subsection (a) below), the Parties shall refer
such dispute to the CEOs for attempted resolution by good faith negotiations
within thirty (30) days after such referral is made. If the CEOs are unable to
resolve the dispute within the time allotted, either Party may proceed as set
forth below.
          (a) Alternative Dispute Resolution. Any dispute, controversy or claim
arising out of or relating to the validity, construction, enforceability or
performance of this Agreement, including disputes relating to an alleged breach
or to termination of this Agreement and including any claim of inducement by
fraud or otherwise, but excluding any dispute, controversy or claim arising out
of or relating to the validity, enforceability, or infringement of any Alexza
Patent or any suit for injunctive relief under Section 15.12 (which shall be
submitted to a court of competent jurisdiction), shall be settled by mediation
and arbitration in the manner described below:
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

          (b) Mediation. The CEOs shall select a mediator with appropriate
expertise in the subject matter to which the dispute relates, who will be
engaged to resolve the dispute. If the CEOs cannot agree on a mediator within
fifteen (15) days, each Party may seek appropriate resolution through
arbitration as described below. If the Parties are unable to resolve their
dispute through mediation within ninety (90) days after selection of the
mediator(s), either Party may seek appropriate resolution through arbitration as
described below.
          (c) Arbitration. Any dispute, controversy or claim arising out of or
relating to the validity, construction, enforceability or performance of this
Agreement which is not resolved by mediation, including disputes relating to
alleged breach or to termination of this Agreement (other than disputes referred
to in Section 15.11(a) that are to be submitted to a court of competent
jurisdiction), shall be settled by binding arbitration (“Arbitration”) in the
manner described below:
               (i) If a Party intends to begin an Arbitration to resolve a
dispute, such Party shall provide written notice (the “Arbitration Request”) to
the other Party informing such other Party of such intention and the issues to
be resolved. From the date of the Arbitration Request and until such time as any
matter has been finally settled by Arbitration, the running of the time periods
contained in Article 14 as to which Party must cure a breach of this Agreement
shall be suspended as to the subject matter of the dispute. Within ten
(10) Business Days after the receipt of the Arbitration Request, the other Party
may, by written notice to the Party initiating Arbitration, add additional
issues to be resolved.
          (d) Procedure. The Arbitration shall be conducted pursuant to the
then-current JAMS/ENDISPUTE Rules (streamlined for disputes involving [ * ] or
less and comprehensive for disputes involving more than [ * ] or involving a
right to terminate this Agreement under Section 14.2(c) or (d)). Notwithstanding
those rules, the following provisions shall apply to the ADR hereunder:
               (i) Arbitrator. In the event that the dispute at issue involves
an amount less than [ * ], the Arbitration shall be conducted by one
(1) arbitrator (the “Threshold 1 Arbitrator”). In the event, however, that the
dispute at issue involves an amount greater than [ * ] or the termination of
this Agreement under Section 14(c) or (d), the Arbitration shall be conducted by
a panel of three (3) arbitrators (collectively, with the Threshold 1 Arbitrator,
the “Arbitrators”). The Arbitrators shall be selected from a pool of retired
independent federal judges to be presented to the Parties by JAMS/ENDISPUTE.
Neither Party shall engage in ex parte contact with the arbitrators.
               (ii) Proceedings. The Arbitrators shall render a written opinion
setting forth findings of fact and conclusions of law with the reason therefor
stated. A transcript of the evidence adduced at the hearing shall be made and,
upon request, shall be made available to each Party. The Arbitrators shall, in
rendering their decision, apply the substantive law set forth in Section 15.10,
except that the interpretation of and enforcement of this Section 15.11 shall be
governed by the Federal Arbitration Act. The Arbitrator shall apply the Federal
Rules of Evidence to the hearing. The proceeding shall take place in Chicago,
Illinois and shall be conducted in such a manner so that the written opinion of
the Arbitrators is given with 180 days
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

after the Arbitrators are selected. The fees of the Arbitrators and
JAMS/ENDISPUTE shall be paid by the losing Party, which shall be designated by
the Arbitrator(s). If the Arbitrator(s) is unable to designate a losing Party,
it shall so state and the fees shall be split equally between the Parties.
               (iii) Award. Subject to Section 15.12, the Arbitrator(s) is
empowered to award any remedy allowed by law, including money damages,
prejudgment interest and attorneys’ fees, and to grant final, complete, interim,
or interlocutory relief, including injunctive relief.
               (iv) Costs. Except as set forth in Sections 15.11(d)(ii) and
(iii) above, each Party shall bear its own legal fees and costs.
               (v) Confidentiality. The ADR proceeding shall be confidential and
the Arbitrators shall issue appropriate protective orders to safeguard each
Party’s Confidential Information. Except as required by law, no Party shall make
(or instruct the Arbitrators to make) any public announcement with respect to
the proceedings or decision of the Arbitrators without prior written consent of
each other Party. The existence of any dispute submitted to ADR, and the award,
shall be kept in confidence by the Parties and the Arbitrators, except as
required in connection with the enforcement of such award or as otherwise
required by applicable law.
               (vi) Judgment; Provisional Remedies. Any court having
jurisdiction of this matter may enter judgment upon any award granted under this
Section 15.11. Each Party has the right before or during the arbitration to seek
and obtain from the appropriate court provisional remedies such as attachment,
preliminary injunction, replevin, etc. to avoid irreparable harm, maintain the
status quo, or preserve the subject matter of the arbitration.
               (vii) Language. All pleadings, complaints and other documents
filed or presented in connection with, and all proceedings in, any dispute
resolution proceeding described in this Section 15.11 must be in the English
language.
     15.12 Injunctive Relief. Each Party shall be entitled to seek injunctive
relief to enforce the respective covenants and agreements of the Parties in this
Agreement, including, without limitation, the respective rights and obligations
of the Parties under Articles 5, 8 and 10.
     15.13 Waiver of Jury Trial. EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF
ANY ISSUE BY JURY.
     15.14 Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR LOST PROFITS OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY
AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, ARISING UNDER ANY CAUSE OF ACTION AND ARISING IN ANY WAY OUT OF THIS
AGREEMENT. THE FOREGOING LIMITATION WILL NOT LIMIT EITHER PARTY’S LIABILITY FOR
BREACH OF ARTICLE 10 OR EITHER PARTY’S INDEMNIFICATION OBLIGATIONS TO THE OTHER
PARTY UNDER ARTICLE 13.
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

     15.15 No Waiver. The failure of either Party to enforce at any time for any
period the provisions of or any rights deriving from this Agreement shall not be
construed to be a waiver of such provisions or rights or the right of such Party
thereafter to enforce such provisions.
     15.16 Counterparts. This Agreement may be executed in one or more
counterparts, and by the respective Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same Agreement.
[SIGNATURES FOLLOW ON NEXT PAGE]
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date first written above by their respective duly authorized
officers.

          ALEXZA PHARMACEUTICALS, INC.    
 
       
By:
  /s/ Thomas B. King
 
   
 
  Name: Thomas B. King    
 
  Title: President and Chief Executive Officer    
 
        ENDO PHARMACEUTICALS INC.    
 
       
By:
  /s/ Peter A. Lankau
 
   
 
  Name: Peter A. Lankau    
 
  Title: President and Chief Executive Officer    

 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

ANNEX I
Active Ingredient Specifications
[ * ]
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

ANNEX II
Batch Sizes
[ * ]
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

ANNEX III
Packaging Specifications
[ * ]
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

ANNEX IV
Product Specifications
[ * ]
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

ANNEX V
Raw Material Specifications
[ * ]
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Schedule 1.6

                          Application   Application   Patent         Country  
Number   Date   Number   Grant Date   Title
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]

 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Exhibit A
Fentanyl

         
International Nonproprietary Name
  Fentanyl alkaloid
 
       
Chemical Name
  N-Phenyl-N-[1-(2-phenylethyl)-4-piperdinyl]propanamide
 
       
Physical Form
  White crystalline powder
 
       
Solubility
  Soluble in aqueous acids, organic solvents such as methanol and ethanol;
insoluble in water
 
       
Molecular Formula
  C22H28N2O
 
       
Formula Weight
  336.46  
 
       
Melting Point
  83-86 oC
 
       
CAS Number
  437-38-7  
 
       
Commercial Names (of base)
  Duragesic (Janssen-Ortho)
 
       
Commercial and Trade Names (of Citrate Salt)
  Actiq (Cephalon); Sublimaze (Akorn); fentanyl (generic);
Hospira (Baxter Healthcare)
 
       

 
Chemical Structure
  (Chemical structure) [f39029f3902901.gif]

 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Exhibit B
Target product profile
[ * ]
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Exhibit C
Alexza Trademarks

                      Trademark   Country   Filing Date   Appln. No.   Reg. Date
  Reg. No.
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]

 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

--------------------------------------------------------------------------------

 

Exhibit D
Press Release
{ Intentionally Omitted }
 

[ * ] =   Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.