Exhibit 10.13

 

EXECUTION COPY

 

Collaboration and license agreement

 

Between

 

Acura pharmaceuticals, inc.

 

Egalet US, Inc.

 

And

 

Egalet Limited

 

Dated

 

January 7, 2015

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

 

 

 

Collaboration And License Agreement

 

This Collaboration And License Agreement (this “Agreement”) is made and entered
into as of January 7, 2015 (the “Effective Date”), by and between Acura
Pharmaceuticals, Inc., a corporation organized and existing under the laws of
the State of New York, having offices located at 616 N. North Court, Suite 120,
Palatine, IL 60067 (“Acura”), Egalet US, Inc., a corporation organized under the
laws of the State of Delaware, having offices at 460 East Swedesford Road,
Suite 19087, Wayne, PA (“Egalet US”), with respect to all rights and obligations
under this Agreement in the United States (subject to Section 17.19), Egalet
Limited, a company organized under the laws of England and Wales with its
principal place of business at 33 St. James’ Square, London SW1Y 4JS, United
Kingdom (“Egalet UK”), with respect to all rights and obligations under this
Agreement outside of the United States (subject to Section 17.19) (Egalet US and
Egalet UK individually, a “Egalet Entity,” and together, “Egalet”), and for
purposes of Section 17.21 Egalet Corporation, a corporation organized under the
laws of the State of Delaware, having offices at 460 East Swedesford Road,
Wayne, PA.

 

Preliminary Statements

 

The Parties wish to collaborate on the commercialization of the Product pursuant
to which Egalet will license the Product from Acura and be responsible for the
manufacture and commercialization of the Product, subject to Acura’s
Co-Promotion Rights. Egalet will make an upfront payment and an additional
payment to Acura and pay Acura a Sales Milestone Payment and royalties, in
accordance with this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing preliminary statements and the
mutual agreements and covenants set forth herein, the Parties hereby agree as
follows:

 

1.           Definitions

 

1.1           “AAA” shall have the meaning assigned to such term in
Section 16.2.

 

1.2           “Acura” shall have the meaning assigned to such term in the
preamble.

 

1.3           “Acura Expense Recovery Amount” has the meaning assigned to such
term in Exhibit 10.8.

 

1.4           “Acura License Agreements” shall have the meaning assigned to such
term in Section 2.2.2.

 

1.5           “Affiliate” means, with respect to a Party, any entity
controlling, controlled by, or under common control with, such Party, for only
so long as such control exists. For these purposes, “control” shall refer to:
(i) the possession, directly or indirectly, of the power to direct the
management or policies of an entity, whether through the ownership of voting
securities, by contract or otherwise, or (ii) the ownership, directly or
indirectly, of more than fifty percent (50%) of the voting securities or other
ownership interest of an entity. Notwithstanding the foregoing, a private equity
or venture capital firm with an ownership interest in an entity shall not be an
Affiliate by reason of such ownership.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

2

 

 

1.6           “Agreement” means this Collaboration and License Agreement
together with all exhibits, schedules and attachments hereto.

 

1.7           “AMP” shall have the meaning assigned to such term in
Section 5.3.5.

 

1.8            “Anti-Kickback Statute” means the Federal Health Care Programs
Anti-Kickback Law, Title 42 of the U.S. Code Section 1320a-7b(b).

 

1.9           “API” means oxycodone (free base) or any pharmaceutically
acceptable salt thereof (e.g., oxycodone hydrochloride), and any solvates,
hydrates, anhydrides, and polymorphs of oxycodone and pharmaceutically
acceptable salts of oxycodone. For avoidance of doubt, API shall not include any
opioid other than oxycodone.

 

1.10         “APT” means Acura Pharmaceutical Technologies, Inc., an Indiana
corporation and wholly-owned subsidiary of Acura.

 

1.11         “Applicable Law” means, with respect to any Person, any domestic or
foreign, federal, state or local statute, treaty, law, ordinance, rule,
regulation, administrative interpretation, order, writ, injunction, judicial
decision, decree or other requirement of any Governmental Authority, including
any rules, regulations or other requirements of the Regulatory Authorities in
the Territory, applicable to such Person or any of such Person’s respective
properties, assets, officers, directors, employees, consultants or agents (in
connection with such officers’, directors’, employees’, consultants’ or agents’
activities on behalf of such Person).

 

1.12         “Audited Party” shall have the meaning assigned to such term in
Section 6.11.

 

1.13         “Auditing Party” shall have the meaning assigned to such term in
Section 6.11.

 

1.14         “Authorized Generic” means a Product commercialized by Egalet, its
Affiliates or a permitted sublicensee as a non-branded generic product under or
pursuant to the Product NDA.

 

1.15         “Aversion Composition” means a composition that includes [*****].

 

1.16         “Aversion Mark” shall have the meaning assigned to such term in
Section 7.3.

 

1.17         “Aversion Patent Rights” means the patents and patent applications
set forth on Exhibit 1.17 and any patents and patent applications disclosing or
claiming the Aversion Composition or the Product owned or Controlled by Acura or
its Affiliates during the Term, including issued patents resulting from such
applications, and all divisions, continuations, continuations-in-part,
substitutions, reissues, reexaminations, extensions, registrations, patent term
extensions and renewals of the foregoing.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

3

 

 

1.18         “Aversion® Technology” means the technology reflected in the
Aversion Patent Rights, and all Know-How developed, owned or Controlled by Acura
or its Affiliates on the Effective Date or any time during the Term relating to
the Aversion Composition and/or the Product.

 

1.19         “Bankruptcy Code” shall have the meaning assigned to such term in
Section 14.3.

 

1.20         “Bioequivalence Study” means an in vivo pharmacokinetic study to
demonstrate Bioequivalence.

 

1.21         “Bioequivalent” or “BE” means a product that meets the FDA’s
requirements for bioequivalence provided in 21 CFR 320.1 and Bioequivalence
shall have a corresponding meaning.

 

1.22         “Calendar Quarter” means a period of three (3) consecutive months
ending on the last day of March, June, September, or December, respectively.

 

1.23         “cGCP” means current Good Clinical Practices (a) as promulgated
under 21 C.F.R. Parts 11, 50, 54, 56, 312, and 314, as the same may be amended
or re-enacted from time to time and (b) required by law in countries other than
the United States where clinical studies are conducted.

 

1.24         “cGLP” means current Good Laboratory Practices (a) as promulgated
under 21 C.F.R. Part 58, as the same may be amended or re-enacted from time to
time and (b) as required by law in countries other than the United States where
non-clinical laboratory studies are conducted.

 

1.25         “cGMP” means current Good Manufacturing Practices (a) as
promulgated under 21 C.F.R. Parts 210 and 211, as the same may be amended or
re-enacted from time to time and (b) as required by law in countries other than
the United States where pharmaceutical product Manufacturing is conducted.

 

1.26         “CMC” means the Chemistry, Manufacturing and Control activities,
data and information necessary to support any regulatory filing with respect to
any Product, including without limitation, the CMC section of a Regulatory
Approval Application or Regulatory Approval in the Territory.

 

1.27         “Change of Control” means (i) a Third Party (or group of Third
Parties acting in concert) acquires, directly or indirectly, beneficial
ownership or a right to acquire beneficial ownership of shares of Acura
representing fifty percent (50%) or more of the voting shares (where voting
includes being entitled to vote for the election directors) then outstanding of
Acura; (ii) a Third Party purchases all or substantially all of Acura’s and
APT’s assets; or (iii) a merger or consolidation of Acura with or into any Third
Party, as a result of which the holders of voting stock of Acura immediately
prior to such merger or consolidation hold less than fifty percent (50%) of the
outstanding voting shares of the surviving entity or parent of the surviving
entity.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

4

 

 

1.28         “Charges” shall have the meaning assigned to such term in Section
6.12.

 

1.29         “Commercialization Condition” shall have the meaning assigned to
such term in Section 5.2.2.

 

1.30          “Commercialization Program” shall have the meaning assigned to
such term in Section 5.1.

 

1.31         “Commercially Reasonable Efforts” means with respect to a Party,
the efforts and resources which would be used (including the promptness in which
such efforts and resources would be applied) by that Party consistent with its
normal business practices, which in no event shall be less than the level of
efforts and resources standard in the pharmaceutical industry for a company
similar in size and scope to such Party, with respect to a product or potential
product at a similar stage in its development or product life cycle taking into
account efficacy, safety, commercial value, the competitiveness of alternative
products of Third Parties that are in the marketplace, and the patent and other
proprietary position of such product.

 

1.32         “Commercial Year” means any period beginning (A) with the First
Commercial Sale of the Product by Egalet or (B) immediately after the end of the
prior Commercial Year; and ending the earlier of (A) twelve months thereafter or
(B) the end of the Term.

 

1.33         “Contract Manufacturer” means [*****] or such other manufacturer
appointed by Egalet after consultation with Acura.

  

1.34         “Confidential Information” means, with respect to either Party, all
confidential or proprietary information and materials, patentable or otherwise,
in any form (written, oral, photographic, electronic, magnetic, or otherwise)
which are disclosed by or on behalf of such Party to the other Party pursuant
to, and in contemplation of, this Agreement, including, without limitation,
information relating to the Aversion Technology or the Product or any
proprietary commercial information developed by Egalet for the Product.

 

1.35         “Control” means, with respect to an item of information, Know-How
or Patent Right, the possession of the ability by ownership, license or
otherwise (other than by operation of the license and other rights pursuant to
this Agreement) to assign or grant a license or sublicense or disclose as
provided for herein under such item or right without violating the terms of any
agreement or other arrangement, express or implied, with any Third Party.

 

1.36         “Controlled Substances Act” or “CSA” means the law enacted by the
United States Congress as Title II of the Comprehensive Drug Abuse Prevention
and Control Act of 1970, as amended and updated.

 

1.37         “Cost of Goods Sold” means the cost of goods sold as determined
under GAAP, consistent with the Egalet’s accounting practices for other Egalet
products.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

5

 

 

1.38         “Co-Promote Notice” shall have the meaning assigned to such term in
Section 5.3.3.

 

1.39         “Co-Promotion Payment” shall have the meaning assigned to such term
in Section 5.3.5.

 

1.40         “Co-Promotion Right” shall have the meaning assigned to such term
in Section 5.3.1.

 

1.41         “CSO” means a contract sales organization.

 

1.42         “DEA” means the United States Drug Enforcement Administration, or
any successor thereto.

 

1.43         “Defend” shall have the meaning assigned to such term in Section
10.5.1.

 

1.44         “Detail” shall mean to engage in a Product Detail.

 

1.45         “Disclosing Party” shall have the meaning assigned to such term in
Section 12.1.

 

1.46         “Dose Proportionality Study” means a pharmacokinetic study to
determine the correlation between increase in doses of a drug and its
bioavailability.

 

1.47          “Effective Date” shall have the meaning assigned to such term in
the preamble of this Agreement.

 

1.48         “Egalet” shall have the meaning assigned to such term in the
preamble of this Agreement.

 

1.49         “Egalet Entity” shall have the meaning assigned to such term in the
preamble to this Agreement.

 

1.50         “Egalet UK” shall have the meaning assigned to such term in the
preamble of this Agreement.

 

1.51         “Egalet US” shall have the meaning assigned to such term in the
preamble of this Agreement.

 

1.52         [*****] has the meaning assigned to such term in Exhibit 10.8.

 

1.53         [*****] has the meaning assigned to such term in Exhibit 10.8.

 

1.54         [*****] has the meaning assigned to such term in Exhibit 10.8.

 

1.55         [*****] shall have the meaning assigned to such term in Exhibit
10.8.

  

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

6

 

 

1.56         [*****] shall have the meaning assigned to such term in Exhibit
10.8.

  

1.57         “Executive Officers” shall have the meaning assigned to such term
in Section 3.4.

 

1.58         “Expense Split Percentage” means [*****].

 

1.59         “Expert” shall have the meaning assigned to such term in
Section 16.3.1.

 

1.60         “FDA” means the United States Food and Drug Administration, or any
successor thereto.

 

1.61         “FD&C Act” means that federal statute entitled the Federal Food,
Drug, and Cosmetic Act and enacted in 1938 as Public Law 75-717, as such may
have been amended, and which is contained in Title 21 of the C.F.R. Section 301
et seq.

 

1.62         “Field” means all present and future indications for the Product as
a human therapeutic.

 

1.63         “First Commercial Sale” means (i) with respect to the United
States, the first sale of the Product by Egalet in an arm’s length sale for use
or consumption by the general public of such Product in the United States and
(ii) with respect to other countries in the Territory, the first sale of such
Product in such country in an arm’s length sale after the application or
submission required to market the Product in such country has received the
relevant Regulatory Approvals, provided however that the following shall not
constitute a First Commercial Sale:

 

(a)          any sale to an Affiliate or sublicensee unless the Affiliate or
sublicensee is the last entity in the distribution chain of the Product;

 

(b)          any use of such Product in clinical trials (including
post-Regulatory Approval clinical trials), non-clinical development activities
or other development activities with respect to such Product, or disposal or
transfer of Products for a bona fide charitable purpose; and

 

(c)          compassionate use.

1.64         “Force Majeure” shall have the meaning assigned to such term in
Section 16.5.

 

1.65         “Forecast” means Egalet’s forecast requirements for the Product
provided to any manufacturer of the Product, including the Contract
Manufacturer.

 

1.66         “GAAP” means generally accepted accounting principles in the United
States, consistently applied by the Party at issue.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

7

 

 

1.67         “Generic Equivalent” means, with respect to the Product, a generic
pharmaceutical product that is therapeutically equivalent to the Product, where
“therapeutically equivalent” means: (i) for purposes of the United States, an AB
rating is assigned to the product’s entry in the list of drug products with
effective approvals published in the then-current edition of FDA’s publication
“Approved Drug Products with Therapeutic Equivalence Evaluations” and any
current supplement to the publication (also known as the “Orange Book”) referred
to in 21 C.F.R. 314.3 and such product is covered by an Abbreviated New Drug
Application (as defined in the FD&C Act) or an application under Section
505(b)(2) of the FD&C Act which primarily relies on the Product’s NDA as the
reference listed drug; and (ii) for purposes of other countries in the
Territory, a rating equivalent to the FDA’s AB rating is assigned to the product
by that country’s Regulatory Authority and such product relies primarily on the
Regulatory Approval of the Product in that country for approval.

 

1.68         “Generic Licenses” shall have the meaning assigned to such term in
Section 9.2.

 

1.69         “Generic Parties” means Par Pharmaceutical Inc., Sandoz, Inc. and
Impax Laboratories, Inc., and their successors in interest and assigns and any,
subject to Section 10.4, Person with whom Egalet or Acura enters into an
agreement with respect to a Generic Equivalent following a Paragraph IV
Certification filed by such Person or its Affiliates.

 

1.70         “Gross Margin” shall have the meaning assigned to such term in
Section 5.3.5.

 

1.71         “Incremental Net Sales” shall have the meaning assigned to such
term in Section 5.3.5.

 

1.72         “IND” means an Investigational New Drug Application and any
amendments thereto submitted to the FDA or the foreign equivalent thereof.

 

1.73         “Infringement Action” shall have the meaning assigned to such term
in Section 10.5.1.

 

1.74         “Joint Steering Committee” or “JSC” shall have the meaning assigned
to such term in Section 3.1.

 

1.75         “Know-How” means all commercial, technical, scientific and other
know-how and information, trade secrets, knowledge, technology, methods,
processes, practices, formulae, instructions, skills, techniques, procedures,
experiences, ideas, technical assistance, designs, drawings, assembly
procedures, computer programs, specifications, data and results (including
biological, chemical, pharmacological, toxicological, pharmaceutical, physical
and analytical, preclinical, clinical, safety, manufacturing and quality control
data and know-how, including Regulatory Data, study designs and protocols), in
all cases, whether or not confidential, proprietary, patented or patentable, in
written, electronic or any other form now known or hereafter developed.

 

1.76         “Knowledge” means, when used with respect to a Party, the actual
knowledge of the representatives of such Party listed on Exhibit 1.74, as of the
Effective Date.

 

1.77         “Launch” means the First Commercial Sale of the Product by Egalet.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

8

 

 

1.78         “Launch Date” with respect to the United States means the date of
Launch of the Product in such country.

 

1.79         “Launch Quantities” means (i) for the United States and the 5mg and
7.5mg dosages, a minimum of [*****] and (ii) for other dosages and
jurisdictions, a sufficient amount of tablets to supply wholesalers and/or
retail chains with [*****].

   

1.80         “Lien” means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature of a security interest,
and any agreement to give any security interest).

 

1.81         “Limitx™ Technology” means an abuse-deterrent technology in
development or discovered by Acura during the Term which is designed to address
oral abuse of immediate-release tablets when an excess number of tablets are
accidently or purposefully ingested, where such product may also impact abuse by
snorting.

 

1.82         “Losses” means any and all damages, fines, fees, settlements,
payments, obligations, penalties, deficiencies, losses, costs and expenses.

 

1.83         “Manufacture” means all activities related to the production,
manufacture, processing, filling, finishing, packaging, labeling, shipping and
holding of the Product or any intermediate thereof, including process
development, process qualification and validation, scale-up, pre-clinical,
clinical and commercial manufacture and analytic development, product
characterization, stability testing, quality assurance and quality control.

 

1.84         “Manufacture and Supply Agreement” means a manufacturing agreement
entered into by Egalet for the Product with a Contract Manufacturer.

 

1.85         “Marketing Plan” shall have the meaning assigned to such term in
Section 5.2.4.

 

1.86         “Medical Affairs” means the provision to hospital consultants, key
opinion leaders, Regulatory Authorities and healthcare professionals of
scientific and medical information relating to the value and correct usage of
the Product.

 

1.87         “NDA” means a New Drug Application filed with the FDA pursuant to
and under 21 U.S.C. Section 355(b) of the FD&C Act or the equivalent in any
jurisdiction which must be approved by the Regulatory Authority in such
jurisdiction prior to marketing the Product in such jurisdiction.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

9

 

 

1.88         “Net Sales” means, with respect to the Product, the gross amount
invoiced for sales of such Product in arm’s length sales by Egalet, its
Affiliates and permitted sublicensees, if any, to non-sublicensee Third Parties,
commencing with the First Commercial Sale of such Product, less the following
deductions from such gross amounts which are actually incurred, allowed, accrued
or specifically allocated: (i) credits, price adjustments or allowances for
damaged products (to the extent not covered by insurance), defective goods,
returns or rejections of Product; (ii) normal and customary trade, cash and
quantity discounts, allowances and credits (other than price discounts granted
at the time of invoicing which have been already been reflected in the gross
amount invoiced); (iii) chargeback payments, rebates and similar allowances (or
the equivalent thereof) granted to group purchasing organizations, managed
health care organizations, distributors or wholesalers or to federal,
state/provincial, local and other governments, including their agencies, or to
trade customers; (iv) any fees paid to any Third Party logistics providers,
wholesalers and distributors; (v) any freight, postage, shipping, insurance and
other transportation charges incurred by the selling Person in connection with
shipping the Product to Third Party logistics providers, wholesalers and
distributors and to customers; (v) adjustments for billing errors or recalls;
(vi) sales, value-added (to the extent not refundable in accordance with
Applicable Law), and excise taxes, tariffs and duties, and other taxes
(including annual fees due under Section 9008 of the United States Patient
Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48) and other
comparable laws), levied on, absorbed, determined and/or imposed with respect to
such sale (but not including taxes assessed against the income derived from such
sale); and (vii) amounts written off by reason of uncollectible debt, provided
that if the debt is thereafter paid, the corresponding amount shall be added to
the Net Sales of the period during which it is paid. Net Sales, as set forth in
this definition, shall be calculated applying, in accordance with GAAP, the
standard accounting practices the selling Person customarily applies to other
branded products sold by it or its Affiliates under similar trade terms and
conditions.

 

1.89         “Offensive Infringement Action” shall have the meaning assigned to
such term in Section 10.4.1.

 

1.90         “Other Countries” means countries or any portion or portions
thereof located in the Territory outside the United States.

 

1.91         “PDUFA” means the Prescription Drug User Fee Act, as amended and
supplemented and as the same may be further amended and supplemented, and rules
and regulations of the FDA promulgated thereunder.

 

1.92         “Paragraph IV Certification” means a certification under and
pursuant to 21 U.S.C. Section 355(j)(2)(A)(vii)(IV) of the FD&C Act or pursuant
to 21 U.S.C. Section 355(b)(2) (A)(iv) of the FD&C Act.

 

1.93         “Paragraph IV Proceeding” means an action brought in response to a
Paragraph IV Certification under 21 U.S.C. § 355(c)(3)(C) or 21 U.S.C.
355(j)(5)(B)(iii).

 

1.94         “Party” means, as applicable, Acura or Egalet and, when used in the
plural, shall mean Acura and Egalet. “Parties” shall not refer to the
relationship among the Egalet Entities but rather to the relationship between
Egalet and Acura or any Egalet Entity and Acura. By way of example, in Section
17.1 where it states that no Party shall make any commitments for the other, it
is referring to Egalet or an Egalet Entity on the one hand and Acura on the
other hand, it being the intention that each Egalet Entity shall bind the other.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

10

 

 

1.95     “Patent Challenge” shall have the meaning assigned to such term given
in Section 14.4.

 

1.96     “Patent Rights” means any patents and patent applications, issued
patents resulting from such applications, and all divisions, continuations,
continuations-in-part, substitutions, reissues, reexaminations, extensions,
registrations, patent term extensions and renewals of the foregoing.

 

1.97     “Payment Default” shall have the meaning set forth in Section 14.2.1.

 

1.98     “PDMA” means the Prescription Drug Marketing Act of 1987, Title 21 of
the U.S. Code of Federal Regulations, Parts 203 and 205, as amended, and any
final regulations or guidances promulgated, from time-to-time, thereunder.

 

1.99     “Person” means an individual, sole proprietorship, partnership, limited
partnership, limited liability partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or other similar entity or organization, including a government or
political subdivision, department or agency of a government.

 

1.100  “Pfizer Termination Agreement” means the letter agreement between Acura
and King Pharmaceuticals Research and Development Inc. (“King Pharma”) dated
April 9, 2014 terminating the License, Development and Commercialization
Agreement dated October 30, 2007 between Acura and King Pharmaceuticals Research
and Development Inc.

 

1.101  “Phase III Clinical Trial” means, with respect to a drug candidate, a
clinical trial of a drug candidate in patients for the purpose of establishing
safety and efficacy of one or more particular doses in patients being studied,
and which will (or is intended to) satisfy the requirements of a pivotal trial
for purposes of obtaining approval of a product in a country by the health
Regulatory Authority in such country to market such product, as more fully
described in 21 C.F.R. § 312.21(c), or its successor regulation, or the
equivalent in any foreign country.

 

1.102  “Phase IV Clinical Trial” or “Post-Marketing Study” means a
post-marketing human clinical trial for the Product commenced after receipt of a
Regulatory Approval in the country for which such trial is being conducted and
that is conducted within the parameters of the Regulatory Approval for the
Product. Phase IV Clinical Trials may include, without limitation,
epidemiological studies, modeling and pharmacoeconomic studies,
investigator-sponsored clinical trials of Product and post-marketing
surveillance studies.

 

1.103  “Product” means each of the 5 mg and 7.5 mg strengths of immediate
release tablets or capsules containing the API as its sole active analgesic
pharmaceutical ingredient incorporating the Aversion Composition, and approved
in the United States pursuant the Product NDA, and as the same may be approved
in Other Countries (using the Aversion Composition), any Product Line Extensions
and any Authorized Generic.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

11

 

 

1.104 “Product Detail(s)” means a face-to-face meeting, between (A) a
professional field sales representative having demonstrated proficiency in (i)
pharmaceutical selling and related regulations and (ii) the Product’s attributes
and (B) a health care professional with prescribing authority, during which a
presentation of at least one of the Product’s attributes is orally presented in
a manner consistent with the quality of, and made in a manner consistent with,
those presentations customarily conducted by professional field sales
representatives in the pharmaceutical industry; it being understood and agreed
that a Product Detail does not include a reminder or sample drop (or other
comparable activity).

 

1.105 “Product Fees” means the product fees assessed by the FDA pursuant to
PDUFA, as codified in Sections 735 and 736 of the FD&C Act, or any successor
thereto, and similar fees imposed by statute, regulation or Regulatory
Authorities in other jurisdictions in the Territory.

 

1.106 “Product Line Extensions” means any dosages of immediate release tablets
or capsules (containing the API as its sole active analgesic pharmaceutical
ingredient) incorporating the Aversion Composition (in whole or in part), in
[*****] for which Regulatory Approval is received during the Term.

  

1.107 “Product Line Extension Studies” means [*****].

 

1.108 “Product NDA” means NDA number N202080, including any supplement or
amendment thereto.

 

1.109 “Product-specific Intellectual Property” means Aversion Patent Rights and
the Aversion Technology that solely relate to the Product or any Product Line
Extension.

 

1.110 “Product-specific Offensive Infringement Action” means an Offensive
Infringement Action relating to a Third Party’s actual, potential or suspected
unauthorized use, misappropriation or infringement of the Aversion Technology or
the Aversion Patent Rights arising from such Third Party’s development,
manufacture and/or commercialization of an immediate release product having the
API as its sole active analgesic pharmaceutical ingredient.

 

1.111 “Product-specific Infringement Action” means an Infringement Action
commenced or threatened by a Third Party against Acura, Egalet on their
Affiliates for infringement of any Patent Rights of a Third Party or for
misappropriation of any Third Party know-how, relating to the development,
manufacture and/or commercialization of the Product.

 

1.112 “Product Mark” shall have the meaning assigned to such term in
Section 7.3.1.

 

1.113 “Prosecute” shall have the meaning assigned to such term in Section
10.4.2.

 

1.114 “Quota” means the manufacturing quota quantity of API for the Product
allotted by the DEA to the Contract Manufacturer.

 

1.115 “Receiving Party” shall have the meaning assigned to such term in
Section 12.1.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

12

 

 

1.116 “Regulatory Approval” means all approvals (including pricing and
reimbursement approval and schedule classifications), product and/or
establishment licenses, registrations or authorizations of any Regulatory
Authority, necessary for the commercialization, use, storage, import, export,
transport, offer for sale, or sale of the Product in a regulatory jurisdiction
within the Territory.

 

1.117 “Regulatory Approval Application” means shall mean any filing(s) made with
the Regulatory Authority in any country in the Territory for Regulatory Approval
of the marketing, Manufacture and sale (and pricing when applicable) of the
Product in such country.

 

1.118 “Regulatory Authority” means the FDA in the U.S., and any health
regulatory authority(ies) in any other country in the Territory that is a
counterpart to the FDA and has responsibility for granting regulatory approval
for the marketing, manufacture, and sale of the Product in such country,
including, but not limited to, pricing and reimbursement approvals, and any
successor(s) thereto, as well as any state or local health regulatory
authorities having jurisdiction over any activities contemplated by the Parties.

 

1.119 “Required Post-Marketing Studies” shall have the meaning assigned to such
term in Section 4.1.1.

 

1.120 “Required Launch Date” shall have the meaning assigned to such term in
Section 5.4.1.

 

1.121 “Royalty Term” shall have the meaning assigned to such term in
Section 14.1.1.

 

1.122 “Royalty True-up” shall have the meaning assigned to such term in
Section 6.4.1.

1.123 “Rx” shall have the meaning assigned to such term in Section 5.3.5.

 

1.124 “Sales Milestone Payment” shall have the meaning assigned to such term in
Section 6.3.

 

1.125 “Second Submission Date” shall have the meaning assigned to such term in
Section 16.3.2.

 

1.126 “Specifications” means the specifications for the Product, including the
Manufacturing, testing, packaging, labeling, storage and quality control
specifications for the Product, as set forth in the Product NDA, plus any
additional specifications mutually agreed upon in writing by the Parties, as the
same may be modified, in writing, from time to time.

 

1.127 “Term” shall have the meaning assigned to such term in Section 14.1.2.

 

1.128 “Terminated Country(ies)” shall have the meaning assigned to such term in
Section 14.7.2.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

13

 

 

1.129 “Territory” means worldwide.

 

1.130 “Third Party” means any Person who or which is neither a Party nor an
Affiliate of a Party.

 

1.131 “Third Party Infringement” shall have the meaning assigned to such term in
Section 10.4.1.

 

1.132 “Trademarks” shall have the meaning assigned to such term in Section 7.3.

 

1.133 “Upfront Payment” shall have the meaning assigned to such term in
Section 6.1.

 

1.134 “United States” or “U.S.” means The United States of America, including
its possessions and territories.

 

1.135 “U.S. Sublicensee” shall have the meaning assigned to such term in Section
7.2.

 

2.           Representations, Warranties and Covenants

 

2.1          By Both Parties. Each Party hereby represents, warrants and
covenants to the other Party, as of the Effective Date, that:

 

2.1.1           such Party: (A) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized; (B) has the corporate power and authority and the legal right to own
and operate its property and assets, to lease the property and assets it
operates under lease, and to carry on its business as it is now being conducted;
and (C) is in compliance with all requirements of Applicable Law, except to the
extent that any noncompliance would not have a material adverse effect on the
properties, business, financial or other condition of such Party and would not
materially adversely affect such Party’s ability to perform its obligations
under this Agreement;

 

2.1.2           such Party: (A) has the corporate power and authority and the
legal right to enter into this Agreement and to perform its obligations
hereunder; and (B) has taken all necessary corporate action on its part to
authorize the execution and delivery of this Agreement and the performance of
its obligations hereunder. The Agreement has been duly executed and delivered on
behalf of such Party, and constitutes a legal, valid, binding obligation,
enforceable against such Party in accordance with its terms except to the extent
that enforceability may be limited by applicable bankruptcy, insolvency or other
laws affecting the enforcement of creditors’ rights generally and subject to the
general principles of equity (regardless of whether enforcement is sought in a
court of law or equity);

 

2.1.3           such Party has obtained all necessary consents, approvals and
authorizations of all governmental authorities and Third Parties required to be
obtained by such Party in connection with this Agreement, other than any
approvals required of applicable Regulatory Authorities as may be required under
this Agreement from time to time;

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

14

 

 

2.1.4           the execution and delivery of this Agreement and the performance
of such Party’s obligations hereunder: (A) do not, to the best of such Party’s
Knowledge, conflict with or violate any requirement of Applicable Law; and (B)
do not conflict with, or constitute a default under, any contractual obligation
of such Party;

 

2.1.5           neither it nor any of its Affiliates has been debarred under
Section 306 of the FD&C Act or any equivalent local law or regulation and, to
its Knowledge, no member of its staff has been charged with or convicted under
federal law or foreign equivalent for conduct relating to the development or
approval of any Regulatory Approval Application or Regulatory Approvals, or
otherwise relating to the regulation of any drug product under any relevant
statute, law, or regulation, and if at any time such Party or any of its
Affiliates or any member of its staff is debarred or charged with or convicted
under federal law or foreign equivalent for conduct relating to the development
or approval of any Regulatory Approval Application or Regulatory Approvals, or
otherwise relating to the regulation of any drug product under any relevant
statute, law, or regulation, it will provide prompt written notice of same to
the other Party; and

 

2.1.6           it follows, and will continue to follow during the Term,
reasonable commercial practices to protect its proprietary and Confidential
Information, including requiring its employees, consultants and agents to be
bound in writing by obligations of confidentiality and non-disclosure, and
requiring its employees and using commercially reasonable efforts to require its
consultants and agents to assign to it any and all inventions and discoveries
discovered by such employees, consultants and/or agents made within the scope of
and during their employment or engagement to the extent relating to the subject
matter of this Agreement, and only disclosing Confidential Information to Third
Parties pursuant to written agreements containing appropriate confidentiality
and non-disclosure obligations.

 

2.2          By Acura. Acura represents, warrants and covenants to Egalet that:

 

2.2.1           As of the Effective Date, (A) except for the rights granted to
Egalet under this Agreement and the Generic Licenses, Acura owns or has
exclusive rights to all of the Aversion Technology and the Aversion Patent
Rights in existence on the Effective Date and the exclusive right to grant
licenses (except for the Generic Licenses) with respect thereto, free of any
Lien; and (B) Acura has the legal right and authority, and has all rights,
authorizations and consents necessary, to grant to Egalet the licenses granted
under this Agreement, including under Section 7.1 and 7.3;

 

2.2.2           Exhibit 2.2.2 sets forth a complete and correct list of all
agreements relating to the licensing, sublicensing or other granting of rights
with respect to the Aversion Technology or Aversion Patent Rights or the Product
to which Acura or any of its Affiliates is a party (the “Acura License
Agreements”), and Acura has provided complete and accurate copies of all such
agreements to Egalet. Acura and its Affiliates are not subject to any payment
obligations to Third Parties as a result of the execution or performance of this
Agreement. Acura and its Affiliates are not in material breach of any Acura
License Agreement pursuant to which Acura and/or its Affiliates receive a
license or sublicense to Acura Technology or Aversion Patent Rights. As between
the Parties, Acura shall be solely responsible for any payment obligations to
Third Parties pursuant to any Acura License Agreement. Except for the Acura
License Agreements, there are no settlement agreements between Acura or its
Affiliates and any Third Party relating to the Product or the Aversion Patent
Rights;

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

15

 

 

2.2.3           Acura has exercised, and continues to exercise Commercially
Reasonable Efforts in the prosecution of the Aversion Patent Rights set forth in
Exhibit 1.17 in all material respects accordance with all Applicable Laws. Such
Aversion Patent Rights have been filed and maintained and all applicable fees
due on or prior to the Effective Date have been paid on or before the due date
for payment. To Acura’s Knowledge, the issued patents included in the Aversion
Patent Rights are valid and enforceable.

 

2.2.4           None of the Aversion Technology in existence on the Effective
Date was obtained by Acura or its Affiliates in violation of any contractual or
fiduciary obligation to which Acura or its Affiliates or any of their respective
employees or staff members are or were bound, or by the misappropriation of the
trade secrets of any Third Party;

 

2.2.5           Except for the Acura License Agreements, Acura and its
Affiliates have not entered into, and will not enter into, any agreement with
any Third Party which is or would be in conflict with the rights granted to
Egalet under this Agreement;

 

2.2.6           Acura has complied and shall continue to comply with in all
material respects with Applicable Laws in the United States in connection with
its performance of any development activities relating to the Product and all
such activities shall be in compliance with cGLP, cGCP and cGMP, and will
conduct such activities in accordance with this Agreement;

 

2.2.7           As of the Effective Date, there are no claims, judgments,
litigations, suits, actions, disputes, arbitration, judicial or legal,
administrative or other proceedings or governmental investigations pending or,
to Acura’s Knowledge, threatened against Acura or any of its Affiliates in
connection with the Product (including that the manufacture, use or sale of the
Product infringes, misappropriates or violates the intellectual property rights
of any third party), the Aversion Patent Rights (including that any of the
issued patents included in the Aversion Patent Rights are invalid or
unenforceable) or Aversion Technology or which would be reasonably expected to
materially affect or restrict the ability of Acura to consummate the
transactions contemplated under this Agreement and to perform its obligations
under this Agreement;

 

2.2.8           Neither Acura nor any of its Affiliates has received any written
notice of any claim that any Patent or trade secret right owned or controlled by
a Third Party has been or would be infringed or misappropriated by the research,
development, manufacture, or commercialization of the Aversion Technology or the
Product;

 

2.2.9           Information provided by Acura in response to any of Egalet’s due
diligence requests prior to the Effective Date was in all material respects
complete, truthful and accurate;

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

16

 

 

2.2.10         Acura has complied and will continue to comply with the terms of
the Pfizer Termination Agreement, and after the transfer of obligations
regarding the Required Post-Marketing Study, pharmacovigilance and Medical
Affairs to Egalet pursuant to this Agreement, will have no material obligations
under such agreement; and

 

2.2.11         Acura shall comply with all Applicable Laws in the United States
in connection with the performance of its Co-Promotion Rights, including,
without limitation, the FD&C Act, the PDMA, the Anti-Kickback Statute and all
U.S. federal and state health care fraud and abuse statutes and regulations.

 

2.2.12         To Acura’s Knowledge, the manufacture, use and commercialization
of the Product does not infringe any valid claim in a granted patent owned by a
Third Party or misappropriate any trade secret owned by a Third Party.

 

2.2.13         The licenses and rights granted to Egalet under this Agreement do
not constitute the sale, license or other disposition of all or substantially
all of Acura’s assets.

 

2.2.14         As of the Effective Date, Acura does not have total assets or
annual net sales (as the terms “assets” and “net sales” are defined and measured
under 15 U.S.C. §18a and the regulations promulgated thereunder) of $151.7
million or more.

 

2.3          By Egalet. Egalet represents, warrants and covenants to Acura that:

 

2.3.1           Egalet shall comply with all Applicable Laws in connection with
the performance of its development activities and the Commercialization Program,
including, without limitation, the FD&C Act, the PDMA, the Anti-Kickback Statute
and all federal, state and foreign health care fraud and abuse statutes and
regulations;

 

2.3.2           Neither Egalet nor its Affiliates has entered into, and will not
enter into, any agreement with any Third Party that is in conflict with its
obligations under this Agreement;

 

2.3.3           As of the Effective Date, there are no claims, judgments,
litigations, suits, actions, disputes, arbitration, judicial or legal,
administrative or other proceedings or governmental investigations pending or,
to Egalet’s Knowledge, threatened against Egalet or any of its Affiliates, and
neither Egalet nor its Affiliates is a party to any settlement agreement, which
would be reasonably expected to materially affect or restrict the ability of
Egalet to consummate the transactions contemplated under this Agreement and to
perform its obligations under this Agreement;

 

2.3.4           Information provided by Egalet in response to any of Acura’s due
diligence requests prior to the Effective Date was in all material respects
complete, truthful and accurate;

 

2.3.5           Egalet shall comply with all Applicable Laws in connection with
its performance of any development activities and all such activities and shall
be in compliance with cGLP, cGCP and cGMP and all Applicable Laws, as
applicable, and will conduct such activities in accordance with this Agreement;

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

17

 

 

2.3.6           Except pursuant to Section 17.2, Egalet shall not transfer,
convey, assign or otherwise dispose of, or create or suffer to exist any Lien
on, the Product NDA, the IND relating to the Product or any other Regulatory
Approval or Regulatory Approval Application during the Term, provided, however,
nothing shall prohibit Egalet and/or its Affiliates from obtaining debt
financing for Egalet or its Affiliates secured by substantially all of their
assets, except as provided in this Section 2.3.6;

 

2.3.7           Egalet shall not request, solicit or cause the FDA to (i) delist
any Aversion Patent Rights from the FDA’s Orange Book, (ii) withdraw or suspend
the Product NDA (or any supplement or amendment thereto), or (iii) omit or
exclude the Product from a list of marketed drugs filed in accordance with 21
U.S.C. §360 (as may be amended or replaced); and

 

2.3.8           Egalet shall provide Acura with not less than [*****] days’
prior written notice of Egalet’s intended launch of an Authorized Generic of the
Product in the United States.

 

2.3.9           As of the Effective Date, Egalet does not have total assets or
annual net sales (as the terms “assets” and “net sales” are defined and measured
under 15 U.S.C. §18a and the regulations promulgated thereunder) of $151.7
million or more.

 

2.4          Disclaimers.

 

2.4.1           Except to the extent provided in Sections 2.2.3 and 2.2.12,
Acura hereby expressly disclaims any representation or warranty as to the
validity or enforceability of any Aversion Patent Rights, the non-infringement
of any Third Party patent or other intellectual property right or the prospects
or likelihood of development or commercial success of the Product.

 

2.4.2           EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2 AND EXPRESSLY AS
SET FORTH ELSEWHERE IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS
OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND EACH PARTY
EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR
A PARTICULAR PURPOSE OR USE, OR NON-INFRINGEMENT.

 

3.           Joint Steering Committee

 

3.1           Members; Officers. Promptly after the Effective Date, the Parties
shall establish a joint steering committee (the “Joint Steering Committee” or
“JSC”) as more fully described in this Section 3. The JSC shall be comprised of
three (3) representatives from each Party. Such representatives shall include
individual representatives with expertise to fulfill each Parties obligations
under this Agreement. Any member of the JSC may designate a substitute to attend
and perform the functions of that member at any meeting of the Joint Steering
Committee. Each Party may, in its discretion, invite non-member representatives
of such Party to attend meetings of the JSC. A chairperson and secretary shall
be selected by Egalet.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

18

 

  

3.2          Responsibilities of the Joint Steering Committee. The JSC shall be
responsible for reviewing and providing input on and, if expressly specified in
this Agreement, approving the overall strategy of the Parties under this
Agreement, including development plans and strategies, and for reviewing the
Commercialization Program. Specifically, the JSC shall perform the following
functions:

 

3.2.1           recommend a date not to be more than three (3) months from the
Effective Date, to transfer to Egalet (i) pharmacovigilance reporting and
related activities, including preparation and submission of 15-day reports and
preparation of periodic adverse drug event reports (PADER); and (ii) Medical
Affairs;

 

3.2.2           review, at least annually, the Commercialization Program, the
Marketing Plan, Manufacturing operations, DEA Quotas, Product development plans
and the Product sales forecast (including projected royalties payable to Acura)
for the collaboration;

 

3.2.3           review all material Product development, marketing,
Manufacturing (including Product inventory levels and requirements) and
regulatory activities, milestones and accomplishments and progress to forecast,
in summary fashion on a Calendar Quarter basis and in a reasonably detailed
manner on a semi-annual basis;

 

3.2.4           review the Launch Date for the Product in the United States;

 

3.2.5           if Acura exercises its Co-Promotion Right, review and approve
target health care provider lists, as applicable, and data and reports relating
to Product Details undertaken during the prior Calendar Quarter, including the
relative priority of such Details;

 

3.2.6           determine and approve the allocation of overlapping target
healthcare providers pursuant to Section 5.3.13;

 

3.2.7           discuss strategies, plans and updates relating to pending or
threatened Infringement Actions and Offensive Infringement Actions;

 

3.2.8           evaluate the progress of development of the Product in Other
Countries and the timing of Launch in such Other Countries following receipt of
Regulatory Approval in such Other Countries;

 

3.2.9           review and provide comment on the protocols and plans for the
Required Post-Marketing Studies;

 

3.2.10         review and approve any Product Line Extension proposed to be
conducted by Acura pursuant to Section 4.4.1;

 

3.2.11         review and approve (by unanimous consent of the JSC members) the
proposed budget relating to each of the Product Line Extension Studies and the
Required Post-Marketing Studies within ten (10) business days after submission
of such proposed budget to the JSC, provided that neither Party shall withhold
approval for a proposed budget for the Product Line Extension Studies
(determined as a group) or a Required Post-Marketing Studies (determined as a
group) that is [*****] or less, and provided further that this Section 3.2.11 is
subject to Section 6.14;

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

19

 

 

3.2.12         identify regular reports and channels of communications for the
provision of periodic updates of progress relating to the Commercialization of
the Product and the development and filing for Regulatory Approval of Product
Line Extensions; and

 

3.2.13         perform such other responsibilities as may be agreed upon by the
Parties in writing from time to time.

 

Egalet will report regularly and no less than semi-annually on any material
changes to or material variances from the Commercialization Program and the
aforementioned plans and budgets, whether such changes have actually occurred or
are expected. Notwithstanding the foregoing, the JSC shall not have the
authority to make any determination that either Party is in breach of this
Agreement or has complied with its obligations under this Agreement, or to
assess any charges or expenses in excess of the amounts allocated to a Party
pursuant to the budgets agreed to by the Parties in accordance with Sections
3.2.11 and 6.14, except as provided in Section 6.14.

 

3.3           Meetings. During the Term, the Joint Steering Committee shall meet
at least once each Calendar Quarter, and more frequently as the Parties deem
appropriate, on such dates, and at such places and times, as provided herein or
as the Parties shall agree. Meetings of the JSC that are held in person shall
alternate between the offices of the Parties, or such other place as the Parties
may agree. Either Party may cause a meeting to be held by teleconference or
videoconference or other similar means. The members of the JSC also may convene
or be polled or consulted from time to time by means of telecommunications,
video conferences, electronic mail or correspondence, as deemed necessary or
appropriate by either Party. Each Party shall provide to the JSC such
information in its possession relating to its activities under the Agreement as
reasonably needed by the JSC to perform its functions and exercise its
responsibilities as above.

 

3.4           Decision-making. Except as otherwise provided in this Agreement,
decisions of the JSC shall be made by consensus, with each Party having
collectively one (1) vote in all decisions. In the event that the JSC is unable
to reach a consensus decision within fifteen (15) days after it has met and
attempted to reach such decision, then either Party may, by written notice to
the other, have such issue referred to the Chief Executive Officer of Acura, or
such other person holding a similar position designated by Acura from time to
time, and the Chief Executive Officer of Egalet, or such other person holding a
similar position designated by Egalet from time to time (collectively, the
“Executive Officers”) for resolution. The Executive Officers shall meet promptly
to discuss the matter submitted and to determine a resolution. If the Executive
Officers are unable to determine a resolution within ten business (10) days
after the matter was referred to them, then, with respect to all development,
commercialization, financial or budgetary matters, Egalet shall, subject to
Sections 3.2.6 and 3.2.11, have final-decision making authority, provided that
Egalet may not unilaterally decide any dispute, or waive any obligation or
covenant, in a manner or result that is contrary to the express terms of this
Agreement. Notwithstanding the foregoing, (i) any dispute relating to Sections
3.2.6, 5.2.4 and/or 5.3.13, and any dispute relating to Section 3.2.11 if a
proposed budget for an activity described in such Section exceeds [*****], shall
be settled in accordance with the Special Arbitration Provisions of Section 16.3
and (ii) no decision by the Joint Steering Committee shall require Acura or
Egalet to undertake additional development obligations or expenses, or incur any
out-of-pocket expense, without such Party's express written consent.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

20

 

 

3.5           Minutes. With the sole exception of specific items of the JSC
meeting minutes to which the chairperson and the secretary cannot agree and
which are escalated as provided in Section 3.4, definitive minutes of all
meetings of the JSC shall be finalized no later than thirty (30) days after the
meeting to which the minutes pertain. If at any time during the preparation and
finalization of JSC meeting minutes, the secretary and the chairperson do not
agree on any issue with respect to the minutes, such issue shall be escalated to
the Executive Officers. The decision resulting from the escalation process shall
be recorded by such secretary in amended finalized minutes for said meeting.

 

3.6           Term. The JSC shall exist throughout the Term.

 

3.7           Expenses. Each Party shall be responsible for all travel and
related costs and expenses for its members and approved invitees to attend
meetings of, and otherwise participate on, the JSC or any subcommittee.

 

4.          Product Line Extensions, Development For Other Countries And
Post-Marketing Studies

 

4.1          Required Post-Marketing Studies.

 

4.1.1           Egalet will conduct all Post-Marketing Studies required by the
FDA with respect to the Product (the “Required Post-Marketing Studies”). Egalet
will bear its own internal expenses and the Parties shall share out-of-pocket
expenses for the Required Post-Marketing Studies based on the Expense Split
Percentage.

 

4.1.2           Egalet will prepare and deliver to the JSC a detailed plan and
budget for the Required Post-Marketing Studies.

 

4.1.3           Egalet shall keep complete and accurate scientific records
relating to Post-Marketing Studies and will make such records reasonably
available to Acura for review and/or copying. Such scientific records shall be
maintained in accordance with good scientific practices. Each Party shall also
keep detailed records of costs it incurs in connection with the Required
Post-Marketing Studies, including all supporting documentation for such
expenses, and will keep such records for at least three (3) years after the date
that such expense was incurred.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

21

 

 

4.2           Development for Use in Other Countries. Egalet, in its sole
discretion and at its sole cost and expense, may, at any time during the Term,
develop the Product for use in one or more Other Countries (including Product
Line Extensions). If Egalet elects to develop the Product for use in one or more
Other Countries, Egalet shall prepare and deliver to the JSC for review and
comment, its development plan for the Product for Other Countries in the
Territory, including the estimated timing of commencement and completion of such
development activities. Acura will cooperate with Egalet in such development
activities, provided the Parties shall agree in writing in advance the services
that Acura will provide and the fees and expenses to be paid by Egalet in
connection therewith (including fees for Acura’s internal cost at a full-time
equivalent rate to be mutually agreed), as well as a related payment schedule.
In the event that Egalet conducts development, in and with respect to such Other
Countries, the Parties agree that such development shall be planned in such a
manner as not to impair or otherwise adversely affect the Regulatory Approval of
the Product in the United States.

 

4.3           Regulatory Approval in Other Countries Egalet, in its sole
discretion and at its sole cost and expense, may apply for Regulatory Approval
for the Product (including Product Line Extensions) in one or more Other
Countries. Egalet shall own all such Regulatory Approvals, subject to Acura’s
right to require the transfer of same to Acura as provided in Section 14.7, and
shall pay any and all expenses in connection therewith. Acura shall provide
Egalet access and a right of reference to the protocols, data, documents,
reports and analyses included in regulatory filings for the Product in existence
at the Effective Date for Egalet’s use in obtaining Regulatory Approvals in
Other Countries. At Egalet’s request, Acura shall cooperate and assist Egalet in
connection with the preparation and filing of Regulatory Approvals for the
Product in Other Countries, subject to the Parties written agreement on the fees
and expenses payable by Egalet to Acura for such assistance. In the event Egalet
elects to develop and materially develops the Product in an Other Country and
does not pursue Regulatory Approval in such Other Country within [*****], Acura,
in its sole discretion and upon written notice to Egalet, may terminate this
Agreement solely with respect to such Other Country.

 

4.4          Development and Regulatory Approval of Product Line Extensions.

 

4.4.1           Subject to Section 4.4.2, Egalet, at its sole discretion and at
its sole cost and expense, may undertake the development and seek Regulatory
Approval of Product Line Extensions. Acura shall negotiate in good faith with
Egalet a development agreement if Egalet desires for Acura to develop or assist
in the development of Product Line Extensions. Acura, may, in its sole
discretion, develop Product Line Extensions at its own cost and expense (subject
to Section 4.4.2) by notifying the Joint Steering Committee of its intention and
obtaining the consent of the Joint Steering Committee, not to be unreasonably
withheld or delayed. Any such Product Line Extensions shall be included in the
licenses granted by Acura to Egalet under this Agreement without any additional
cost or charge to Egalet except as provided in Section 4.4.2. Each Party shall
provide to the JSC written Calendar Quarter updates of its development efforts
relating to Product Line Extensions, including the status of filing for
Regulatory Approval. Egalet shall own and maintain all Regulatory Approvals
relating to Product Line Extensions, subject to Acura’s right to require the
transfer of same to Acura as provided in Section 14.7.

 

4.4.2           The Parties shall share any out-of-pocket costs relating to
Product Line Extension Studies in the United States according to the Expense
Split Percentage.

 

4.5          Standards of Conduct. Each Party conducting any development work
(whether relating to Post-Marketing Studies, the development of the Product for
Other Countries or the development of Product Line Extensions) shall:

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

22

 

 

4.5.1           conduct its activities in good scientific manner, and in
compliance in all material respects with all requirements of Applicable Laws,
rules and regulations, and all other requirements of any applicable cGMP, cGLP
and cGCP, to attempt to achieve the objectives of the development program
efficiently and expeditiously;

 

4.5.2           maintain records, in sufficient detail and in good scientific
manner, which shall be complete and accurate and shall fully and properly
reflect all work done and results achieved in the form required under all
Applicable Laws; and

 

4.5.3           allow representatives of the other Party, upon reasonable prior
written notice and during normal business hours, to visit such Party’s
facilities where any development activities with respect to the Product are
being conducted, and consult, during such visits and by telephone, with
personnel performing work on the Product, and so long as such visits and
consultations are not unreasonably disruptive; provided, however, that a
visiting Party shall be required to provide the other Party a list of any
consultants and/or representatives of such visiting Party at least three (3)
business days in advance of such consultant/representatives’ first visit to the
other Party, and the other Party shall not be required to permit visits from any
consultant/representative of the visiting Party also engaged by any Third Party
reasonably determined by the other Party to be a competitor of such Party. Each
Party, its representatives and consultants shall maintain any information
received (whether by observation or otherwise) during such visit in confidence
in accordance with Section 12 and shall not use such information except to the
extent otherwise permitted by this Agreement.

  

5.          Commercialization Program

 

5.1           Generally. The commercialization program shall begin on the
Effective Date, and shall include Egalet’s activities to manufacture, sell,
offer for sale, advertise, market, promote, launch (including pre-launch
marketing) and commercialize the Product in the United States (the
“Commercialization Program”), as the same may be modified, from time to time, as
set forth in this Agreement. Egalet shall exercise Commercially Reasonable
Efforts in implementing and carrying out the Commercialization Program. All
marketing, distribution and other expenses of the Commercialization Program
shall be solely borne by Egalet.

 

5.2           Egalet Responsibilities; Rights. Subject to Section 5.3 and the
Generic Licenses, Egalet, either itself or through its Affiliates or permitted
sublicensees shall be responsible for, and shall have the exclusive right to
engage in, all marketing, advertising, promotion, launch and sales activities in
connection with the marketing of the Products in the Territory. Egalet (and/or
its Affiliates and/or permitted sublicensees, as applicable) shall have the
authority to determine the specific activities and actions taken in all
marketing, advertising, promotion, launch and sales activities in connection
with the marketing of the Products in the Territory, subject to compliance with
the this Agreement. As part of the Commercialization Program, Egalet shall:

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

23

 

 

5.2.1           As of the later to occur of [*****] Egalet shall provide for a
minimum of [*****] full-time field sales representatives within [*****] to
Detail the Product until such sales representative shall have used good faith
efforts to Detail the Product at least once to at least [*****] of the health
care providers on such field sales representative’s list of target health care
providers (comprising a subset of Egalet’s target health care provider list
existing as of such date as described in Section 5.3.13 (such target list to
include a number of health care providers per sales representative consistent
with pharmaceutical industry practice)). For clarity, such sales representatives
shall be permitted to detail any other products (other than a product that would
violate the provisions of Section 9.1) during a Product Detail. Egalet will be
solely responsible for recruiting, hiring and maintaining its sales force of
sales representatives for the promotion of the Product in accordance with its
standard procedures and the requirements of this Agreement, and Egalet may
utilize a contract sales force to fulfill all or any portion of its obligations
under this Section 5.2.1. Egalet agrees any of its sales representatives
involved in the promotion of the Product will not have any legal or regulatory
disqualifications, bars or sanctions. Egalet will be responsible for the
activities of its sales representatives, including compliance by its sales
representatives with training and Detailing requirements. For the avoidance of
doubt, failure to achieve the required number of sales representatives as
required by this Section 5.2.1 shall be deemed to be a material breach of a
material obligation by Egalet, and Acura shall have its rights under
Section 14.2 with respect to such breach;

 

5.2.2           Without limiting Sections 5.4.1 and 5.4.2, use Commercially
Reasonable Efforts to Launch the Product in the United States, and in each Other
Country in the Territory as soon as commercially practical after Regulatory
Approval in such country, and to perform such obligations by using personnel
with sufficient skills and experience, together with sufficient equipment and
facilities. Notwithstanding the foregoing, Egalet shall not be deemed to have
failed to perform the foregoing obligations, if it is using Commercially
Reasonably Efforts, in the event one or more of the following events or
circumstances (the “Commercialization Conditions”) occurs and such event or
circumstance, or the material effect thereof, is continuing: [*****];

 

5.2.3           Egalet shall exercise Commercially Reasonable Efforts to
commercialize the Product following Launch in the U.S. and such Other Countries;

 

5.2.4           not later than [*****] prior to the anticipated Launch of the
Product in the United States, prepare an overview-marketing plan for the
Product, which shall include plans related to the prelaunch, Launch, promotion
and sale of the Product in the United States and which shall include forecasts
for the number of sales representatives, and a reasonably descriptive overview
of the marketing and advertising campaigns, including related budgets, proposed
to be conducted (each, a “Marketing Plan”). Thereafter, each Marketing Plan
shall be updated by Egalet, in accordance with Egalet’s usual marketing
operations planning cycles, but in no case less than once each Commercial Year
during the Term. Egalet shall provide copies of the Marketing Plan to the JSC
for review and comment as soon as practicable following preparation. If Acura
exercises its Co-Promotion Right pursuant to Section 5.3, Egalet promptly shall
update, through the JSC, the Marketing Plan to reflect Acura’s Co-Promotion
Right in a manner that is consistent with Section 5.3 and which does not
materially disadvantage Acura in relation to the exercise of its Co-Promotion
Right. If Acura should dispute whether the Marketing Plan complies with the
requirements of the immediately preceding sentence, such dispute shall be
settled in accordance with the Special Arbitration Provisions of Section 16.3;
and

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

24

 

 

5.2.5           maintain records in accordance with Egalet’s usual business
practices of the work done and results achieved in connection with the
Commercialization Program and as may be required under all Applicable Laws.

 

5.3         Acura’s Co-Promotion Rights.

 

5.3.1           Subject to the terms of this Section 5.3, Acura shall have the
non-sublicensable, non-transferable (except in connection with an assignment of
this Agreement pursuant to Section 17.2) right to co-promote the Product
(including Product Line Extensions) in the United States (the “Co-Promotion
Right”).

 

5.3.2           If Acura wishes, in good faith to evaluate the exercise of the
Co-Promotion Right, Egalet shall provide Acura, at Acura’s reasonable request
(which in any event shall not be made more than once per Calendar Quarter) and
on thirty (30) days’ prior written notice, (a) a list of target heath care
providers to which Egalet (and its Affiliates and sublicensees) is then
Detailing the Product or to which it then intends to Detail the Product, (b)
after the First Commercial Sale of the Product in the Territory, a written
report for the then most recent Calendar Quarter containing, by dosage strength,
the number of units of Product sold, the gross sales, the Net Sales and the AMP
for each dosage strength of the Product, including details of all necessary
calculations of the same, including (i) the calculations which detail the
differences between Net Sales and gross sales; (ii) the total number of
prescriptions filled in such Calendar Quarter for the Product; (iii) a statement
of amount of inventory of the Product held by Egalet as of the last day of such
Calendar Quarter; (iv) the average number of tablets per Rx; and (v) the average
Cost of Goods Sold for each dosage strength of the Product; and (c) such other
information reasonably requested by Acura to evaluate the exercise of its
Co-Promotion Right.

 

5.3.3           Acura may exercise the Co-Promotion Right by providing Egalet
sixty (60) days’ prior written notice thereof at any time after one (1) year
after the Launch of the Product in the United States (the “Co-Promote Notice”).
From and after the sixtieth (60th) day after the Co-Promote Notice, Acura shall
commence co-promotion of the Product in accordance with this Section 5.3.

 

5.3.4           Acura may cease the co-promotion of the Product at any time on
sixty (60) days’ written notice to Egalet, and the Co-Promotion Right shall
terminate on the sixtieth (60th) day after such notice; provided, however, that
if (i) Egalet exercises its right under Section 5.3.13 to add Acura target
health care providers to Egalet’s list of target health care providers, and (ii)
Acura’s notice of cessation of its Co-Promotion Right specifies Egalet’s
exercise of its right under Section 5.3.13 as the cause of Acura’s cessation,
which notice of cessation must be provided within thirty (30) days after the
later of (i) Egalet’s exercise of such right under Section 5.3.13, and (ii) the
resolution of any dispute relating to Egalet’s exercise of such right under
Section 5.3.13 as provided for in such section and Section 16.3, then Acura may,
at any time upon sixty (60) days’ prior written notice to Egalet resume the
co-promotion of the Product, including establishing its list of target health
care providers in accordance with Section 5.3.13. Except as provided in this
Section 5.3.4, after termination of the Co-Promotion Right, Acura shall not have
any further rights to co-promote the Product nor to subsequently exercise the
Co-Promotion Right.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

25

 

 

5.3.5           Following Acura’s exercise of the Co-Promotion Right, Acura will
be entitled to receive, and Egalet shall remit to Acura within forty five (45)
days (or if later, within thirty (30) days following Acura’s provision to Egalet
of Acura’s Detail report described in Section 5.3.9) after each Calendar Quarter
commencing with the Calendar Quarter following the Co-Promote Notice, [*****].
“Incremental Net Sales” shall mean [*****]. “Gross Margin” shall mean [*****].
Acura’s receipt of the Gross Margin payment described above (“Co-Promotion
Payment”) will be in lieu of the royalty payments otherwise payable to Acura
under the Agreement calculated based on Incremental Net Sales resulting from
prescriptions written by the health care providers contained in Acura’s list
provided to Egalet pursuant to Section 5.3.13. Co-Promotion Payments in respect
of a Calendar Quarter shall be paid within forty-five (45) days; (or if later,
within thirty (30) days following Acura’s provision to Egalet of Acura’s Detail
report described in Section 5.3.9) after the end of such Calendar Quarter. For
clarity, Acura will not be entitled to a Co-Promotion Payment in respect of any
prescriptions written by health care providers that are not Acura’s list
provided to Egalet pursuant to Section 5.3.13, even if Acura has Detailed such
providers. Notwithstanding the foregoing, Egalet shall be responsible for all
distribution activities relating to the Product.

 

5.3.6           Acura may perform some or all of its co-promotion through a CSO
reasonably acceptable to Egalet, at Acura’s sole cost and expense. Acura will be
solely responsible for recruiting, hiring and maintaining its sales force of
sales representatives for promotion of the Product in accordance with its
standard procedures and the requirements of this Agreement. Acura agrees that
any of its sales representatives involved in the promotion of the Product will
not have any legal or regulatory disqualifications, bars or sanctions. Acura
will be responsible for the activities of its sales representatives, including
compliance by its sales representatives with training and Detailing
requirements. In particular, Acura will provide its sales representatives
assigned to promote the Product with the level of oversight, management,
direction and sales support with respect to the promotion of Product reasonably
necessary to effectively and efficiently promote the Product in accordance with
the terms of this Agreement and Applicable Law. If Egalet raises any concern
with Acura regarding the performance or fitness of any Acura sales
representative, Acura will consider Egalet’s comments and recommendations in
good faith. For clarity, Acura’s implementation or non-implementation of
Egalet’s comments and recommendations shall not relieve Acura of any
responsibility for breach of any of its obligations hereunder with respect to
the performance or fitness of any Acura sales representative.

 

5.3.7           Acura will train its sales force consistent with Egalet training
requirements and Egalet sales force policies. In connection therewith, within
thirty (30) days after receipt of the Co-Promote Notice, Egalet, upon Acura’s
request shall provide training materials to, and hold in-person meetings or
webcasts for, each member of Acura’s sales force prior to his or her
commencement of promotion of the Product to ensure that he or she is
appropriately trained in proper detailing and sales techniques. On an ongoing
basis [*****], at Acura’s request and upon reasonable prior notice, Egalet shall
provide training materials to, and hold in-person meetings or webcasts for, each
member of Acura’s sales force as necessary to provide training (in the case of
new hires), refresher training and training updates. The Parties shall use good
faith efforts to coordinate the timing of, and attendance at, any such trainings
so that such training is provided to reasonably sized groups consistent with
industry standards. Acura shall bear (i) the costs of training materials, (ii)
Egalet’s out-of-pocket costs relating to such training, and (iii) Egalet’s
internal costs for salaries and benefits for its personnel who provide training,
refresher training and training updates to Acura; provided that Acura shall not
be responsible for Egalet’s costs pursuant to this subsection (iii) where such
training also includes Egalet’s sales representatives.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

26

 

 

5.3.8           Acura will adhere to the Marketing Plan, provided such Marketing
Plan conforms to the requirements of this Agreement.

 

5.3.9           Acura will, at its cost and expense, maintain records and
otherwise establish procedures to ensure compliance with all Applicable Laws and
professional requirements that apply to its promotion and marketing of the
Product, including compliance with the PhRMA Code on Interactions with
Healthcare Professionals. Acura will provide Egalet with copies of any such
records promptly upon Egalet’s request. Further, Acura will prepare and provide
to Egalet, at no cost or expense to Egalet, such reports regarding its
activities under this Section 5.3 as Egalet may reasonably require, including in
order to comply with reporting requirement under the Sunshine Act (5 U.S.C. §
552b). In addition, Acura will provide Egalet with a report, as soon as
practicable and with a target delivery date of [*****] following the end of each
Calendar Quarter, setting forth in reasonable detail the Details made by its
sales representatives of the Product during such Calendar Quarter.

 

5.3.10         Acura will only use promotional materials and detailing scripts
provided and approved by Egalet, and Egalet shall provide copies requested by
Acura of all such sales material and detailing scripts to Acura for promotion of
the Product at Acura’s expense for such copies, provided that all other
production costs (such as developing such marketing materials and detailing
scripts) shall be borne by Egalet. For clarity, Egalet shall not be required to
develop any promotional materials or detailing scripts specifically for Acura.
Acura will instruct its sales representatives to make only those statements and
claims regarding the Product, including as to efficacy and safety, that are
consistent with the Product labeling and accompanying inserts and the approved
promotional materials and detailing scripts.

 

5.3.11         Acura’s sales force must be at least [*****] or full-time
equivalents thereof within [*****], provided that such sales representatives may
also market any other products (other than a product that would violate the
provisions of Section 9.2). Such sales force will provide [*****] co-promotion
of the Product as agreed to by the Parties, provided that in the absence of such
agreement the Acura sales force will co-promote the Product [*****].

 

5.3.12         Egalet will be solely responsible for the execution of Medical
Affairs, after the transfer of such responsibility as set forth in Section 11.5.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

27

 

 

5.3.13         At the time provided in Section 5.3.2, and within [*****]
following each Calendar Quarter during the period Acura is co-promoting the
Product pursuant to Section 5.3, Egalet will provide Acura a list of target
health care providers to which Egalet (and its Affiliates and sublicensees) is
then Detailing the Product or to which it then intends to Detail the Product. In
its Co-Promote Notice, Acura shall provide to Egalet a list of health care
providers to which it intends to Detail the Product, which shall not (i) overlap
with those health care providers on Egalet’s then-current list (including any
health care providers within the same group or department practice at the same
location as a health care provider on Egalet’s then-current list) and (ii)
include any managed care organizations or pharmacies.

 

5.3.13.1         Thereafter, Acura may, from time-to-time, change its list of
target health care providers, provided any such target health care provider is
not (i) on Egalet’s then-current list (including any health care providers
within the same group or department practice at the same location as a health
care provider on Egalet’s then-current list) and (ii) a managed care
organization or pharmacy. Acura shall provide Egalet with [*****] prior written
notice of any addition of health care providers to its then-current list, and in
any event will provide within [*****] days following each Calendar Quarter
during the period Acura is co-promoting the Product pursuant to Section 5.3, a
then-current list of target health care providers to which Acura is then
Detailing the Product or to which it then intends to Detail the Product,
provided any such target health care provider is not (x) on Egalet’s
then-current list (including any health care providers within the same group or
department practice at the same location as a health care provider on Egalet’s
then-current list) and (y) a managed care organization or pharmacy. Acura shall
not Detail the Product to a health care provider not on its then-current list,
without the consent of Egalet.

 

5.3.13.2         Egalet (and its Affiliates and sublicensees) may Detail any
health care providers that are not on Acura’s then-current list (other than
health care providers within the same group practice at the same location as a
health care provider on Acura’s then-current list), even if such health care
providers are not on Egalet’s then-current list.

 

5.3.13.3         Neither Party shall Detail the Product to a health care
provider on the other Party’s list, without the consent of the other Party.
Notwithstanding the foregoing, Egalet may, [*****], request the JSC to approve
territory realignment by submitting to the JSC a new list of Egalet target
health care providers, which list may contain overlapping target health care
providers on Acura’s then-current list, not to exceed an amount equal to [*****]
of those health care providers contained on Acura’s then-current list of
targeted health care providers, provided that if at such time Acura’s sales
force Detailing the Product exceeds [*****] sales representatives, then Egalet’s
new list of target health care providers may contain overlapping target health
care providers on Acura’s then-current list in an amount up to and including
[*****] of those health care providers contained on Acura’s then-current list of
targeted health care providers. For such overlapping target health care
providers, the JSC will determine in good faith whether it reasonably believes
the Egalet field sales representatives can materially improve Product
prescribing from an overlapping target health care provider and, if so, Egalet
shall be entitled to have such target health care provider on its list; provided
however, that if Acura files a notice of dispute with the JSC within ten (10)
days of its determination, Acura will be entitled to receive the Co-Promotion
Payment (as calculated pursuant to Section 5.3.5) derived from such overlapping
health care provider that are contested in Acura’s dispute notice for [*****]
following the date of Acura’s notice of dispute, provided that with respect to
those health care providers that Acura has not detailed within the [*****],
Acura will be entitled to receive the Co-Promotion Payment (as calculated
pursuant to Section 5.3.5) derived from such overlapping health care provider
for only the [*****] following the date of Acura’s notice of dispute, and
provided further that in the case where Acura’s sales force Detailing the
Product exceeds [*****] sales representatives, no such determination from the
JSC will be required in order for Egalet to include such overlapping health care
providers (capped at [*****]) on its list but Acura will automatically be
entitled to receive the Co-Promotion Payment for the [*****] as provided in the
immediately preceding proviso. No Party shall include a health care provider on
its respective list unless it has Detailed the Product to such health care
provider [*****] or in good faith intends to Detail the Product to such heath
care provider [*****] following the provision of the list.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

28

 

 

5.3.14         Acura’s Co-Promotion Right shall terminate thirty (30) days after
the first commercial sale of a Generic Equivalent in the United States.

 

5.3.15         Egalet may terminate Acura’s Co-Promotion Right, without
prejudice to any other remedies available to it at law or in equity, in the
event Acura shall have materially breached or defaulted in the performance of
any of its material obligations under this Section 5.3 and such breach or
default shall have continued for sixty (60) days after written notice thereof
was provided to Acura by Egalet. Any such termination under this Section 5.3.15
shall become effective at the end of such sixty (60) day period unless Acura has
cured any such noticed breach(es) or default(s) prior to the expiration of such
sixty (60) day period.

 

5.3.16         Acura’s Co-Promotion Rights under this Section 5 shall remain in
full force and effect regardless of a Change of Control of Acura or any
assignment or transfer of this Agreement to a Third Party, provided, however,
they shall be suspended [*****] following a Change of Control transaction or any
assignment or transfer of this Agreement to a Third Party, if the acquiror in
such Change of Control transaction, or the assignee or transferee of this
Agreement, as applicable, is marketing a pharmaceutical product in, or is
conducting or has conducted [*****], the United States which is or would be in
direct competition with a pharmaceutical product being marketed by Egalet in the
United States at the time of such Change of Control transaction or assignment or
transfer of this Agreement, as applicable, until such acquiror or assignee or
transferee, as applicable, divests such competing product. If such acquiror,
assignee or transferee does not divest such competing product within [*****] of
the closing of such Change of Control transaction or assignment or transfer of
this Agreement, as applicable, Acura’s Co-Promotion Right shall terminate. For
purposes of this Section 5.3.16, a pharmaceutical product shall be deemed in
direct competition with a pharmaceutical product being marketed by Egalet or its
Affiliates in the United States if it is [*****].

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

29

 

  

5.4         Product Launch Diligence.

 

5.4.1           Egalet shall use Commercially Reasonable Efforts to Launch the
Product in the United States as soon as commercially practical following the
Effective Date and with respect to Other Countries, as provided in
Section 5.4.2. Notwithstanding the foregoing, Egalet shall not be deemed to have
failed to perform the foregoing obligations, if it is using its Commercially
Reasonably Efforts, in the event one or more Commercialization Conditions have
occurred and is continuing or the material effect of such Commercialization
Condition is continuing. In any event, Egalet must Launch the Product in the
United States by [*****], provided that if one or more Commercialization
Conditions has occurred and the material effect of such Commercialization
Condition(s) is continuing and has an adverse effect on Egalet’s ability to
Launch by such date, Egalet may delay the Launch beyond such date; and if the
Launch does not occur by [*****] due to any Commercialization Condition, then
Egalet shall Launch the Product not later than [*****] following the date such
Commercialization Condition or material effect shall have been substantially
remedied or abated (the “Required Launch Date”). Egalet shall order Launch
Quantities from the Contract Manufacturer with sufficient lead time (giving
effect to any intervening Commercialization Condition and Egalet’s reasonable
assessment of the timing of remedy or abatement of such Commercialization
Condition) so that such quantities are received in advance of the Required
Launch Date.

 

5.4.2           Egalet shall use Commercially Reasonable Efforts to Launch the
Product in any Other Country in the Territory as soon as commercially practical
after receipt of Regulatory Approval for the Product in such country, provided
that no Commercialization Condition has occurred and is continuing or the
material effect of such Commercialization Condition is continuing; and if a
Commercialization Condition or the material effect thereof delays such Launch,
then Egalet shall Launch the Product as soon as reasonably practical following
the date such Commercialization Condition or material effect shall have been
remedied or abated.

 

5.4.3           For the avoidance of doubt, failure to satisfy its obligations
pursuant to Sections 5.4.1 shall be deemed to be a material breach of a material
obligation by Egalet, and Acura shall have its rights under Section 14.2 to
terminate this Agreement with respect to such country with respect to such
breach.

 

5.5         Parties’ Responsibilities in Support of Commercialization.

 

5.5.1           Regulatory Filings. Each Party shall provide or otherwise make
available to the other Party upon reasonable request complete copies of any
material regulatory filings relating to the Product (including any Product Line
Extensions) in the Territory, including Regulatory Approval Applications,
material filings with the FDA, including, without limitation, material
supplements or amendments thereto, all written material correspondence with the
FDA regarding such regulatory filings, and all existing written minutes of
material meetings and memoranda of material conversations between it (including,
to the extent practicable, its investigators) and the FDA in its possession (or
in the possession of any of its agents and subcontractors, such as contract
research organizations used by it). The requesting Party shall reimburse the
providing Party for its out-of-pocket expenses in connection with the provision
of materials pursuant to this Section 5.5.1.

 

5.6         Non-Solicitation.

 

5.6.1           During the Term and for [*****] period thereafter, Acura and its
Affiliates shall not hire, solicit for hire, or otherwise engage for employment
(or the provisions of services under contract) any sales representative employed
(whether as an employee or third party contractor) by Egalet or any of its
Affiliates or any sales force representative that was employed by Egalet or any
of its Affiliates at any time during the [*****] period preceding such hiring,
solicitation, or recruitment.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

30

 

 

5.6.2           During the Term and for [*****] period thereafter, Egalet and
its Affiliates shall not hire, solicit for hire, or otherwise engage for
employment (or the provisions of services under contract) any sales
representative employed by Acura or any of its Affiliates or any sales force
representative that was employed (whether as an employee or third party
contractor) by Acura or any of its Affiliates at any time during the [*****]
period preceding such hiring, solicitation, or recruitment.

  

6.          Milestone and Royalty Payments

 

As partial consideration for the rights granted to Egalet hereunder, Egalet
shall make the following payments to Acura:

 

6.1           Upfront Payment. Within ten (10) days after the Effective Date,
Egalet shall make a non-refundable, non-creditable payment to Acura of Five
Million Dollars ($5,000,000), in immediately available funds by wire transfer
(the “Upfront Payment”), with [*****].

 

6.2           Additional Payment. Within ten (10) days after the later of (a)
the First Commercial Sale of the Product by Egalet and (b) June 30, 2015, but in
the case of each of subsections (a) and (b), in any event not later than January
1, 2016, Egalet shall make a non-refundable, non-creditable payment to Acura of
Two and One-Half Million Dollars ($2,500,000), in immediately available funds by
wire transfer, with [*****].

 

6.3           Sales Milestone Payment. Within thirty (30) days after the end of
the first calendar year in which worldwide Net Sales of the Product (including
any Product Line Extensions and including any Incremental Net Sales generated by
Acura’s Co-Promotion activities (but excluding Net Sales generated in a country
where the Royalty Term has expired or been terminated, after the later of (i)
such expiration or termination and (ii) any inventory sell-off by Egalet under
Section 14.9)) reach $150 million during such calendar year, Egalet shall make a
non-refundable, non-creditable payment to Acura of twelve and one-half million
dollars ($12,500,000), in immediately available funds by wire transfer (the
“Sales Milestone Payment”), with [*****].

 

6.4         Royalties.

 

6.4.1           As partial consideration to Acura for the license rights, and
other rights granted to Egalet under this Agreement, during the Term, Egalet
shall pay to Acura a royalty based on calendar year Net Sales of the Product in
the Territory by Egalet, its Affiliates and permitted sublicensees during each
calendar year according to the following table:

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

31

 

 

Royalty Rate:   Portion of Worldwide
Calendar Year Net Sales of
the Product Greater Than:   Portion of Worldwide
Calendar Year Net Sales of
the Product Up to But Not
Exceeding: [*****]   [*****]   [*****] [*****]   [*****]   [*****] [*****]  
[*****]   [*****] [*****]   [*****]   [*****]

 

In calculating worldwide calendar year Net Sales, the Net Sales in a country
whose Royalty Term has expired or terminated shall be excluded, but only for the
period following the later of (i) such expiration or termination and (ii) any
inventory sell-off by Egalet under Section 14.9. Royalties for Net Sales of the
Product in a country in the Territory shall be payable only during the Royalty
Term in such country.

 

Notwithstanding the foregoing, in a calendar year in which aggregate Net Sales
of the Product in the Territory achieves or exceeds [*****], the royalty rate
will be [*****] on all Net Sales in that calendar year. Egalet shall undertake a
royalty true-up during the Calendar Quarter in which calendar year Net Sales
first exceed [*****]. Royalties shall be recalculated for all Net Sales for all
prior Calendar Quarters during such calendar year, as if the [*****] royalty
rate had been applicable from the first dollar of Net Sales for such calendar
year. The difference between such recalculated royalties and those actually paid
to Acura for prior Calendar Quarters is referred to as the “Royalty True-Up.”

 

For purposes of this Section 6.4, Net Sales shall exclude the Incremental Net
Sales used in the calculation of Acura’s Co-Promotion Payments under
Section 5.3.5.

 

6.4.2           If, with respect to the Product being sold in a country in the
Territory in a particular Calendar Quarter, there are sales of a single Generic
Equivalent of the Product (considering all strengths of such Generic Equivalent
as one Generic Equivalent) in such country during such Calendar Quarter, then
the Net Sales of the Product for such country in such Calendar Quarter, used for
calculating the royalties owed to Acura for such Net Sales, shall be reduced by
[*****].

 

6.4.3           If, with respect to the Product being sold in a country in the
Territory in a particular Calendar Quarter, there are sales of two or more
Generic Equivalents of the Product (counting all strengths of a particular
Generic Equivalent as one Generic Equivalent) in such country during such
Calendar Quarter, then the Net Sales of the Product for such country in such
Calendar Quarter, used for calculating the royalties owed to Acura for such Net
Sales, shall be reduced by [*****].

 

6.5           Co-Promotion Payments. Egalet shall remit to Acura the
Co-Promotion Payments provided in Section 5.3.5 at the times specified in such
section.

 

6.6           Reduction of Payments for Royalty Stacking. Royalties and
Co-Promotion Payments payable to Acura shall be subject to reduction as set
forth in Section 10.7.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

32

 

 

6.7           Royalty Payments. Within forty five (45) days following the end of
each Calendar Quarter (or if later, with respect to Co-Promotion Payments,
within thirty (30) days following Acura’s provision to Egalet of Acura’s Detail
report described in Section 5.3.9), beginning with the Calendar Quarter in which
the First Commercial Sale of the Product is made in the Territory, and for each
Calendar Quarter thereafter, Egalet will pay to Acura the royalty payments
calculated pursuant to Sections 6.4, 6.5 and 6.6 and the applicable Royalty
True-Up, if any. Each royalty payment and Co-Promotion Payment shall be
accompanied by a report, substantially in the form as attached hereto in Exhibit
6.7, summarizing (a) (i) the total gross sales of the Product(s), on a
dosage-by-dosage, country-by-country basis, (ii) total Net Sales for each
Product (including an itemization of the deductions applied to such gross sales
to derive such Net Sales) during the relevant Calendar Quarter, (iii) the
calculation of royalties due thereon, and (iv) the Royalty True-up, if any, and
(b) if the Co-Promotion Right has been exercised by Acura, (i) the calculation
of the Co-Promotion Payment (including the AMP and an itemization of all items
used to calculate the Co-Promotion Payment), (ii) the total number of
prescriptions for the Product filled in such Calendar Quarter, (iii) the average
number of tablets per Rx, and (iv) the average Cost of Goods Sold for each
dosage strength of the Product. In the event that no royalty payments or
Co-Promotion Payments are payable in respect of a given Calendar Quarter, Egalet
shall submit a report so indicating.

 

6.8           Mode of Payment; Currency Conversion. All payments required under
this Agreement shall be made in U.S. dollars, regardless of the country(ies) in
which sales are made or expenses are incurred, via wire transfer of immediately
available funds as directed by the Party entitled to such payment from time to
time. Whenever, for the purpose of calculating any sums due under this
Agreement, conversion from any foreign currency shall be required, such
conversion shall be made as follows: the amounts shall be converted into United
States dollars using the average rate of exchange for such currencies for the
relevant period, such exchange rate shall be the mid-price exchange rate taken
from The Wall Street Journal as published on the last day of the relevant period
for which payments are due, or such other publication as may be agreed between
the Parties from time to time. All amounts payable under this Agreement and not
paid when due in accordance with the provisions hereof shall bear interest from
the due date until paid at the rate equal to the lesser of [*****], and (ii) the
maximum interest rate permitted by Applicable Law.

 

6.9           Inventory Purchase. Acura shall test the items listed on Exhibit
6.9 at Acura’s cost in accordance with Egalet’s standard operating procedures
for its viability for use in manufacturing the Product and shall provide Egalet
with the results of such testing in writing. If such testing confirms that such
items meet the specifications for such materials, Egalet shall purchase such API
and packaging inventory, as listed on Exhibit 6.9, from Acura at Acura’s cost
(as specified in such Exhibit). [*****] Prior to use of the API comprising a
portion of the purchased inventory, Egalet shall conduct such testing as it
shall determine reasonably necessary to confirm such API meets applicable
specifications. If the API fails to meet applicable specifications, Egalet shall
return such non-conforming API to Acura and Acura shall refund to Egalet all
amounts paid therefor, including shipping costs. To the extent Egalet, its
Affiliates or its Contract Manufacturer, have been unable to use the purchased
inventory in the Manufacture of the Product within [*****] following the Launch
of the Product, Egalet may return such remaining purchased inventory to Acura
for a refund (determined based on the unit costs provided in Exhibit 6.9).

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

33

 

 

6.10         Records Retention. Commencing with the Launch of the Product, (i)
Egalet shall keep complete and accurate records pertaining to the sale of
Product for a period of [*****] after the year in which such sales occurred, and
in sufficient detail to permit Acura to confirm the accuracy of the royalties,
Co-Promotion Payments and other amounts paid by Egalet hereunder, and any
amounts for which Egalet has invoiced Acura and (ii) Acura shall keep complete
and accurate records relating to its co-promotion of the Product (including
Details performed) in sufficient detail to permit Egalet to confirm the
Co-Promotion Payments paid or payable to Acura, and relating to any amounts for
which it has invoiced Egalet.

 

6.11         Audits. At the request and expense of either Party (“Auditing
Party”), the other Party (“Audited Party”) shall permit an independent,
certified public accountant appointed by the Auditing Party and reasonably
acceptable to the Audited Party, at reasonable times and upon reasonable written
notice, but not more than once per calendar year, to examine such records as may
be necessary for the sole purpose of verifying the calculation and reporting of
Net Sales and Co-Promotion Payments and the correctness of any royalty or other
payment made under this Agreement (including, without limitation, with respect
to Infringement Actions, the Required Post-Marketing Study, and any expense
sharing) or compliance with its commercialization requirements or co-promotion
requirements for any period within the preceding [*****]. All results of any
such examination shall be made available to the Audited Party. In the event that
any audit reveals an under-payment in the amount of royalties, Co-Promotion
Payments or other payment obligation that should have been paid by the Audited
Party to the other, then the underpayment amount shall be paid within thirty
(30) days after Auditing Party makes a demand therefore, plus interest thereon
if such amount is in excess of [*****] of the amount that actually should have
been paid. Such interest shall be calculated from the date such amount was due
until the date such amount is actually paid, at the rate of [*****] for the date
such amount was due. In addition, if the underpayment is in excess of [*****] of
the amount that actually should have been paid [*****], then the Audited Party
shall reimburse the Auditing Party for the reasonable cost of such audit.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

34

 

 

6.12         Taxes. In the event that a Party is mandated under the laws of a
country to withhold any tax to the tax or revenue authorities in such country in
connection with any payment to the other Party, such amount shall be deducted
from the payment to be made by such withholding Party, provided, however, that
the withholding Party shall take reasonable and lawful actions, at the other
Party’s sole cost, to avoid and minimize such withholding and promptly notify
the other Party so that the other Party may take lawful actions to avoid and
minimize such withholding. The withholding Party shall promptly furnish the
other Party with copies of any tax certificate or other documentation evidencing
such withholding as necessary to satisfy the requirements of the United States
Internal Revenue Service related to any application by such other Party for
foreign tax credit for such payment. Each Party agrees to cooperate with the
other Party in claiming exemptions from such deductions or withholdings under
any agreement or treaty from time to time in effect. Notwithstanding the
foregoing, if Egalet is required to withhold or deduct any taxes by any
government outside the United States, any subdivision thereof, or any other
governmental unit within the territory of such government (such taxes
collectively referred to as “Charges”), or Acura is required to pay any Charge
imposed by any government outside the United States solely as a result of being
a party to this Agreement, with respect to any amount payable to Acura under
this Agreement, (in each case other than amounts with respect to Net Sales
outside the United States) Egalet shall pay such additional amounts so that
payments received by Acura net of all Charges, shall equal the amount to which
Acura would have been entitled had there been no such Charges, provided, however
that Egalet shall have no obligation to pay any additional amount to the extent
that the Charges are imposed by reason of Acura (A) not being a resident of the
United States for tax purposes or (B) failing to provide a form or similar other
evidence reasonably requested by Egalet that would allow for a reduction or
exemption of such Charges that Acura is legally able to provide (including, for
the avoidance of doubt, Acura’s qualification for the benefit of an applicable
income tax convention). In addition, if Acura or its Affiliates is required to,
or deems it advisable to file tax returns or make other filings with respect to
Charges in any jurisdiction outside the United States by virtue of Egalet UK or
another non-US Affiliate of Egalet making payments to Acura hereunder (other
than with respect to royalties for Net Sales arising outside the United States),
Egalet will reimburse Acura for the reasonable out-of-pocket cost of preparation
and filing such tax returns or other filings. Egalet represents and warrants
that no withholdings for taxes are required to be made on payments to Acura for
milestones or royalties (for sales in the United States) described in this
Agreement, Co-Promotion Payments or payments under Section 6.1 and 6.2 under
currently applicable law so long as Acura is a resident of the United States for
tax purposes.

 

6.13        Bundling Prohibited. The Product may not be sold in any bundled
transaction with any other products or any service by Egalet or its Affiliates
or permitted sublicensees (or by Acura or its Affiliates and sublicensees in
exercising its Co-Promotion Rights) unless a reasonable pro-rated allocation of
the payments received in such bundled transaction is attributable to the
Products contained in the bundle.

 

6.14        Invoicing and Payment of Shared Expenses

 

              (a)          For all expenses that are to be shared by Parties
pursuant to the express terms of this Agreement, the Party incurring such
expense shall invoice the other Party for its Expense Split Percentage of such
expense, and shall provide such other supporting details as the other Party
shall reasonably request. All such invoices shall be payable within thirty (30)
days from the date of receipt of such invoice and supporting materials. For the
avoidance of doubt, expenses not explicitly designated as subject to the Expense
Split Percentage in this Agreement shall be borne in their entirety by the
responsible Party.

 

              (b)          In the event that the proposed budget for Product
Line Extension Studies (determined as a group) or the proposed budget for
Required Post-Marketing Studies (determined as a group) exceeds [*****] and
Acura withholds its consent under Section 3.2.11, or does not provide its
agreement within the ten (10) business day period specified in Section 3.2.11,
Egalet may elect in its sole discretion to approve such budget, provided that
(i) Acura shall be responsible for paying its Expense Split Percentage of such
expenses only up to such [*****], (ii) Egalet shall be responsible for one
hundred percent (100%) of such expenses exceeding [*****], and (iii) Egalet
shall be entitled to apply as a credit against any royalty payments,
Co-Promotion Payments and milestone payments owed to Acura an amount equal to
[*****] percent [*****] of Acura’s Expense Split Percentage of such expenses
exceeding [*****].

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

35

 

 

7.          Grant Of Rights

 

7.1          License Grants to Egalet.

 

7.1.1          Subject to the terms and conditions of this Agreement, Acura
hereby grants to Egalet the exclusive (even as to Acura and its Affiliates,
except subject to Acura’s Co-Promotion Right and the Generic Licenses)
royalty-bearing, license in the Field throughout the Territory, with the right
to grant sublicenses, under the Aversion Patent Rights and the Aversion
Technology, including the Product-specific Intellectual Property to make,
develop, Manufacture, have Manufactured, import, use, sell, offer to sell and
otherwise commercialize (including without limitation, marketing, advertising,
promoting, detailing, and distributing) the Product in the Territory.

 

7.1.2           Except as expressly set forth in this Agreement, no license is
granted by Acura under its rights in any intellectual property, including any
Patent Rights, whatsoever for any activities by Egalet that are outside the
scope of the license grant in this Section 7.1 and Section 7.3.

 

7.2          Sublicensing. Egalet may grant sublicenses of the licenses granted
to Egalet under Section 7.1, subject to Acura’s prior written consent for a
sublicense in the United States to a Third Party to market or sell the Product
(other than sublicenses granted to Third Parties acting as distributors or
wholesalers or to Third Parties providing products or non-marketing/selling
services to or on behalf of Egalet or its Affiliates), such consent not to be
unreasonably withheld, delayed or conditioned, except in the case of [*****]
which consent Acura may withhold in its sole discretion (a “U.S. Sublicensee”);
provided, however, that (i) Egalet shall submit a copy of the draft of each such
sublicense agreement with a U.S. Sublicensee to Acura at least [*****] before
execution, which copy may be redacted as to financial information and Third
Party confidential information not directly related to Products; (ii) Egalet
shall submit a copy of each such executed sublicense agreement (other than
sublicenses granted to Third Parties acting as distributors or wholesalers or to
Third Parties providing products or non-marketing/selling services to or on
behalf of Egalet or its Affiliates) to Acura, which copy may be redacted as to
financial information and Third Party confidential information not directly
related to Product; (iii) Egalet shall guarantee and be responsible for the
making of all payments due, and the making of any reports under this Agreement,
with respect to sales of the Product by its Affiliates or sublicensees and their
compliance with all applicable terms of this Agreement; (iv) each Affiliate or
sublicensee agrees in writing to maintain appropriate books and records relating
to the Product and to permit Acura to review such books and records and visit
such facilities for such review, pursuant to the provisions of Sections 5.2.5
and 6.11; (v) such sublicense agreement requires it to continue in full force
and effect in accordance with the terms and conditions of the respective
sublicense agreement upon the termination of this Agreement, and permits Egalet
to assign to Acura such sublicense agreements; and (vi) such sublicense
agreement requires such sublicensee to observe all other applicable terms of
this Agreement. No sublicense granted by Egalet shall be valid unless it has
complied with this Section 7.2.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

36

 

 

7.3           Trademarks; Logos. Egalet shall have the right to market the
Products throughout the Territory under a trademark or trademarks (collectively,
the “Trademarks”, such term excludes the Aversion Mark, Product Mark and the
Corporate Trademarks) selected by Egalet at its sole discretion. Except as
otherwise expressly provided in this Agreement, Egalet shall own all right,
title and interest in and to such Trademarks, subject to transfer to Acura under
Section 14.7. Subject to Applicable Law, all labeling and packaging for Product
to be marketed and sold in the Territory shall contain a reference to Aversion®
(the “Aversion Mark”). Except as otherwise expressly provided in this Agreement,
Acura shall own all right, title and interest in and to the Aversion Mark.
Egalet shall assume full responsibility, at its sole cost and expense, for
prosecuting or litigating any infringement of a Trademark, the Product Mark or a
Corporate Trademark by a Third Party, and shall be entitled to retain all
recoveries in connection therewith and Acura shall assume full responsibility,
at its sole cost and expense, for prosecuting or litigating any infringement of
the Aversion Mark. In connection with this Section 7.3:

 

7.3.1           Acura hereby grants to Egalet a royalty-free license to use the
Aversion Mark and the Oxaydo trademark (the “Product Mark”), in each country of
the Territory, for the Term and, if the Term has expired pursuant to Section
14.1, after the Term, in connection with the marketing, promotion and sale of
the Product as contemplated in this Agreement, and if this Agreement has been
terminated, after the Term for the sole purpose of selling of inventory under
Section 14.9. The license grant in this Section 7.3.1 shall be royalty free and
shall be exclusive with respect to the Oxaydo trademark and non-exclusive with
respect to the Aversion Mark. The ownership and all goodwill from the use of the
Aversion Mark shall vest in and inure to the benefit of Acura. Acura reserves
all rights not expressly granted herein. Acura shall maintain the Aversion Mark
in all countries in which the Aversion Mark are registered as of the Effective
Date, shall exercise Commercially Reasonable Efforts to file for and seek to
obtain registrations of, and shall maintain once such registrations are
obtained, the Aversion Mark in all countries in which Egalet commercializes the
Product or, upon reasonable advance written notice, intends to commercialize the
Product. If selected by Egalet as the Trademark for the Product, Acura shall use
Commercially Reasonable Efforts to file for trademark protection for the Oxaydo
trademark in each country in the Territory in which the Aversion Mark is
registered as of the Effective Date, shall use Commercially Reasonable Efforts
to obtain such trademark protection, and upon issuance, shall maintain the
Oxaydo trademark in such jurisdictions, and shall exercise Commercially
Reasonably Efforts to file for and seek to obtain registrations of, and shall
maintain once such registrations are obtained, the Oxaydo trademark in all
countries in which Egalet commercializes the Product or, upon reasonable advance
written notice, intends to commercialize the Product. Acura shall not abandon or
permit to lapse any of the Aversion Mark or the Oxaydo trademark without
Egalet’s prior written consent, not to be unreasonably withheld, delayed or
conditioned.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

37

 

 

7.3.2           In the event that a Party exercises its rights to terminate this
Agreement with respect to the Product in any or all country(ies) pursuant to
Section 14.2 or in all countries pursuant to Sections 14.3, 14.4, 14.5, 14.6, or
15 without limiting Acura’s rights under such sections, Egalet shall, and hereby
does, grant to Acura a royalty-free, non-transferable, non-sublicensable license
to use the applicable Trademark(s) consisting of the corporate name and logo of
Egalet and its Affiliates (collectively, the “Corporate Trademarks”) used with
respect to the Product in such country(ies) solely in connection with the
marketing, sale, distribution and promotion of the in the applicable country of
the inventory purchased by Acura under Section 14.9; provided, however, that,
Acura shall diligently proceed to select, obtain regulatory approval for, and
complete the revision of all packaging and labeling to include a corporate name,
and corporate logo chosen by Acura, none of which shall be confusingly similar
to the Corporate Trademarks, and in no case more than the later of [*****].
Egalet agrees to cooperate with Acura in all reasonable respects to enable Acura
to maintain the Corporate Trademarks in such country(ies) for the permitted
period, including, but not limited to, providing all required information and
documentation regarding the Trademarks in such country(ies) on a timely basis
and providing such other assistance as may be reasonably necessary. For the
avoidance of doubt, at the end of the later of [*****], Acura shall have no
further rights to use the Corporate Trademarks in the Territory in connection
with the marketing and promotion of the Products. The ownership and all goodwill
from the use of the Corporate Trademarks shall vest in and inure to the benefit
of Egalet. Egalet reserves all rights not expressly granted herein.

 

7.3.3           Egalet hereby acknowledges the exclusive ownership of Acura of
the Aversion Mark furnished by Acura (or its Affiliates) for use in connection
with the Product. Egalet shall not, during the Term or thereafter, register,
use, or attempt to obtain any right in and to the Aversion Mark or in and to any
name, logo or trademark confusingly similar thereto. Acura hereby acknowledges
Egalet’s exclusive ownership rights in the Trademarks, and accordingly agrees
that at no time during or after the Term to challenge or assist others to
challenge the Trademarks or the registration thereof or attempt to register any
trademarks, trade names or logos confusingly similar to such Trademarks.

 

7.3.4           All representations of the Aversion Mark that Egalet intends to
use shall first be submitted to Acura for approval (which shall not be
unreasonably withheld or delayed) of design, color, and other details or shall
be exact copies of those used by Acura and shall in any event comply with all
usage guidelines as established by Acura from time to time. Egalet shall submit
representative promotional materials using the Aversion Mark to Acura for
Acura’s review and comment prior to their first use and prior to any subsequent
change or addition to such promotional materials.

 

7.3.5           Quality Control.

 

       7.3.5.1           For the sake of clarity and with respect to this
Section 7.3.5, Acura is the licensor as it pertains to the Aversion Mark and
Product Marks and licensee as it pertains to the Corporate Trademarks. Egalet is
the licensee as it pertains to the Aversion Mark and Product Marks and is the
licensor as it pertains to the Corporate Trademarks. Each of Egalet and Acura
are therefore “Licensor” and “Licensee,” as applicable. For the purposes of this
Section 7.3.5, “Licensed Trademarks” shall mean the Aversion Mark, Product Marks
and the Corporate Trademarks, collectively.

 

       7.3.5.2           Licensor shall have the right to exercise quality
control over the Licensee’s use of the Licensed Trademarks, as applicable, to a
degree reasonably necessary to maintain the validity of the Licensed Trademarks,
as applicable, and to protect the goodwill associated therewith.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

38

 

 

  7.3.5.3           Licensee shall, in its packaging, sale, marketing,
advertising, disposition and distribution of the Product and product packaging
adhere to a level of quality regarding the maintenance of the validity of the
Licensed Trademarks, as applicable, and the protection of the goodwill
associated therewith consistent with the reasonable standards of quality
otherwise set by Licensee.

 

  7.3.5.4           Licensee shall comply with all Applicable Laws in the
packaging, sale, distribution, advertising, disposition and marketing of the
Product and product packaging, and Licensee shall use all legends, notices, and
markings as required by Law.

 

  7.3.5.5           Licensee shall, upon reasonable request by Licensor, submit
to Licensor samples of Product packaging and representative samples of all
publicly distributed materials bearing the Licensed Trademarks or product
packaging which are then currently sold or distributed, or pending sale or
distribution by Licensee.

 

8.          Manufacturing And Supply

 

8.1           Manufacture. To the extent that Acura has executed any agreements
with [*****] with respect to the Product prior to the Effective Date, Acura
shall assign such agreements to Egalet within ten (10) days after the Effective
Date, and the Parties shall reasonably cooperate, including by executing any
assignment documentation, to effect such assignment. Within five (5) days of
such assignment, Egalet shall remit to Acura the out-of-pocket costs and
expenses incurred by Acura in connection with such agreements as set forth in
Exhibit 8.1. During the Term, Egalet shall have the sole obligation and
responsibility, and at its sole cost and expense, for all aspects of
Manufacturing, including without limitation, testing packaging and labeling the
Product, and any costs associated with storage, release and Third Party
logistics. Egalet may engage a Contract Manufacturer to Manufacture (including,
labeling, packaging and testing) the Product. As part of such responsibilities,
Egalet shall have the sole responsibility to coordinate with and provide to its
Contract Manufacturer such information and materials as shall be reasonably
necessary for such Contract Manufacturer to obtain sufficient Quota for the API
from the DEA. Egalet covenants and agrees to use Commercially Reasonable Efforts
to obtain the right under any agreement with a Third Party providing for the
Manufacture or distribution of the Product (if such agreement does not also
provide for the manufacture or distribution of other products of Egalet or its
Affiliates) to assign such agreement to Acura upon termination of this Agreement
pursuant to Sections 14.2, 14.3, 14.4, 14.5, 14.6 or 15.

 

8.2           Manufacturing Technology Transfer. Upon Egalet’s request, Acura
shall make available to Egalet or its designated Contract Manufacturer(s) all
Aversion Technology reasonably necessary to assist with the transfer of the
Aversion Technology relating to the manufacture of the Product to Egalet or
Egalet’s Contract Manufacturer(s) of the Product, at no charge. All reasonable
out-of-pocket expenses incurred by Acura personnel in connection with activities
associated with any such technology transfer will be promptly reimbursed by
Egalet (other than with respect to a transfer to [*****]), provided that in
order to be reimbursed, Acura shall have first obtained Egalet’s prior written
approval for (i) any individual expense exceeding [*****] and (ii) any and all
expenses when total expenses to be reimbursed under this Section 8.2 exceed
[*****]. Acura shall exercise Commercially Reasonable Efforts in connection with
the technology transfer contemplated in this Section 8.2.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

39

 

 

8.3           Regulatory Changes. Any costs and expenses associated with
regulatory changes requested by a Regulatory Authority relating to the Product,
the Product NDA or a foreign equivalent, including the costs of implementing CMC
changes or additional testing not included in the Product NDA, will be borne by
Egalet.

 

9.          Non-Competes

 

9.1           Egalet Restrictive Covenant. During the Term, except as provided
in this Agreement, Egalet shall not, and shall cause its Affiliates to not,
develop, have developed, commercialize (including market, distribute and sell),
have commercialized, manufacture or have manufactured, or collaborate with or
license another person or entity to develop, have developed, commercialize, have
commercialized, manufacture or have manufactured in the Territory an
immediate-release product containing [*****] The restriction in this Section 9.1
shall terminate with respect to a particular country as provided in Article 14.

 

9.2           Acura Restrictive Covenant. During the Term, except as provided in
this Agreement, Acura shall not, and shall cause its Affiliates to not, develop,
have developed, commercialize (including market, distribute and sell), have
commercialized, Manufacture or have manufactured, or collaborate with or license
another Person or entity to develop, have developed, commercialize, have
commercialized, manufacture or have manufactured in the Territory an
immediate-release product containing [*****]. The restriction in this
Section 9.2 shall terminate with respect to a particular country as provided in
Article 14.

 

9.3           Limitx Oxycodone Single Ingredient Product. If Acura determines to
license, transfer or convey to a Third Party [*****] it will send Egalet written
notice of same, before offering such product to any Third Party. Acura’s notice
shall contain such information as Egalet shall reasonably require to evaluate
such product (which shall be subject to the protections of Article 12 hereof).
Egalet shall send Acura a written notice within thirty (30) days of receipt of
Acura’s notice and supporting information indicating whether or not it is elects
to pursue licensing discussions with Acura for such product. If Egalet’s written
notice indicates that it is not interested in acquiring rights to such product
or if Egalet does not respond in writing to Acura within such thirty (30) day
period, then Acura and its Affiliates shall be free to negotiate with any Third
Party and enter into an agreement relating to such product and Egalet shall have
no rights thereto. If Egalet’s written notice indicates it is interested in
acquiring rights to such product from Acura, then, from the date of Egalet’s
notice and for a period of ninety (90) days thereafter, Acura shall negotiate in
good faith with Egalet the terms and provisions of a definitive agreement
providing for Acura’s license to Egalet of such product and during such period
neither Acura nor its Affiliates shall discuss or negotiate with any Third Party
terms relating to development or commercialization of such product, or enter
into an agreement with a Third Party providing for the sale, license or other
conveyance of such Product. In the absence of the Parties’ execution of a
definitive agreement during such ninety (90) day period for development and/or
commercialization for such product, Acura and its Affiliates shall be free to
negotiate after the end of such ninety (90) day period with any Third Party and
enter into an agreement relating to such product and Egalet shall have no rights
thereto. For the avoidance of doubt, Acura shall not be required to provide any
notice to Egalet under this Section 9.3 in connection with its undergoing or
completing a Change of Control transaction, or sale of all or substantially all
of its line of business which includes the Limitx Technology. This Section 9.3
shall not survive termination or expiration of this Agreement.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

40

 

 

10.         Intellectual Property Ownership; Patents

 

10.1        Ownership. Acura shall retain all right, title and interest in and
to Aversion Technology, subject to the licenses granted to Egalet pursuant to
Section 7.1.

 

10.2        Inventions. Title to all inventions and discoveries made by Acura’s
and its Affiliates’ and their respective employees, consultants and agents
resulting from development activities shall reside with Acura. Title to all
inventions and discoveries made by Egalet’s and its Affiliates and their
respective employees, consultants and agents resulting from development
activities shall reside with Egalet and title to all inventions and discoveries
made by both Acura and Egalet (or Affiliates thereof) employees, consultants and
agents resulting from development activities shall be jointly owned.
Inventorship shall be determined in accordance with United States patent law.
Notwithstanding the foregoing, if during the Term, Egalet, any employee or agent
of Egalet, or any Affiliate of Egalet makes an improvement, invention,
refinement, discovery, or development primarily related to the Aversion
Technology or the Product as it relates to the Aversion Technology, Egalet
shall, assign and cause such improvement, invention, refinement, discovery, or
development to Acura and Acura shall be deemed hereby to, without further action
required, grant a royalty free, perpetual, irrevocable, non-terminable,
worldwide license to Egalet (including the right to sublicense through multiple
tiers) to such improvement, invention, refinement, discovery or development for
(i) use in developing, Manufacturing, selling, distributing, marketing and
commercializing the Product and (ii) use in developing, manufacturing, selling,
distributing, marketing and commercializing any other products that do not
incorporate the Aversion Composition.

 

10.3        Patent Prosecution and Maintenance.

 

10.3.1         Acura shall have full responsibility for, and shall control the
preparation and prosecution of, and the maintenance of, and subject to Section
10.3.2 shall maintain during the Term, all Aversion Patent Rights and the
inventions relating to the Aversion Technology, other than Product-specific
Intellectual Property. The expense of such prosecution and maintenance will be
at Acura’s expense with respect to Aversion Patent Rights (i) for the United
States and (ii) for Other Countries if such Aversion Patent Rights have been
filed as of the Effective Date. The costs and expenses of the prosecution and
maintenance of Aversion Patent Rights and inventions relating to the Aversion
Technology not included in 10.3.1(i) or 10.3.1(ii) will, if requested by Egalet
to be filed, prosecuted and/or maintained, be solely borne by Egalet, and Egalet
will remit to Acura Acura’s out-of-product costs for such amounts within thirty
(30) days of receipt of Acura’s invoice. Egalet shall have full responsibility
for, and shall control the preparation and prosecution of, and the maintenance
of all Product-specific Intellectual Property and the inventions relating to the
Product-specific Intellectual Property, and subject to Section 10.3.3 shall
maintain all Product-specific Intellectual Property during the Term. The expense
of such prosecution and maintenance of Product-specific Intellectual Property by
Egalet will be at Egalet’s expense. Notwithstanding which Party satisfies the
prosecution and maintenance expenses relating to the Aversion Patent Rights,
Acura will own all such Patent Rights.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

41

 

 

10.3.2         Acura shall have the sole right to determine whether any
invention relating to Aversion Technology, other than Product-specific
Intellectual Property, is patentable, and if so, shall, in its sole discretion,
determine whether or not to proceed with the preparation and prosecution of a
patent application covering any such invention. In the event Acura determines
not to proceed with the preparation and prosecution of a patent application
covering any such invention, or payment of maintenance fees related to a granted
patent covering any such invention for which it has the right to do so pursuant
to 10.3.1 above, where such invention covers the Product or such pending patent
application or granted patent claims the Product, prior to discontinuing such
preparation, prosecution and/or payment of maintenance fees (to the extent it is
not already required to pay such fees), Acura shall offer Egalet the opportunity
to maintain such preparation and prosecution, and to pay such maintenance fees
(to the extent it is not already required to pay such fees), at Egalet’s sole
cost and expense. Egalet shall have ninety (90) days to decide whether or not to
assume these costs, during which time Acura shall make Commercially Reasonable
Efforts to prepare, prosecute, and maintain any such Patent Rights. In the event
Egalet chooses to maintain such preparation and prosecution or pay such
maintenance fees (to the extent it is not already required to pay such fees),
Acura agrees to cooperate with Egalet to execute all lawful papers and
instruments reasonably necessary to transfer and assign such Patent Rights to
Egalet.

 

10.3.3         Egalet shall have the sole right to determine whether any
invention within Product-specific Intellectual Property is patentable, and if
so, shall, in its sole discretion, determine whether or not to proceed with the
preparation and prosecution of a patent application covering any such invention.
In the event Egalet determines not to proceed with the preparation and
prosecution of a patent application covering any such invention, or payment of
maintenance fees related to a granted patent covering any such invention, for
which it has responsibility pursuant to 10.3.1 above, prior to discontinuing
such preparation, prosecution and/or payment of maintenance fees, Egalet shall
offer Acura the opportunity to maintain such preparation and prosecution, and to
pay such maintenance fees (to the extent it is not already required to pay such
fees), at Acura’s sole cost and expense. Acura shall have ninety (90) days to
decide whether or not to assume these costs, during which time Egalet shall make
Commercially Reasonable Efforts to prepare, prosecute, and maintain any such
Patent Rights.

 

10.3.4         Each Party having responsibility for preparation, filing,
prosecution and maintenance of Patent Rights pursuant to Sections 10.3.1, 10.3.2
and 10.3.3 shall keep the other Party advised on the status of preparation,
filing and prosecution of all patent applications included within such Patent
Rights and the maintenance and extension of any issued patents within such
Patent Rights, and shall allow the other Party a reasonable opportunity and
reasonable time, but not less than 10 working days, to review and comment
regarding relevant material communications and drafts of any material responses
or proposed filings by the responsible Party before any applicable filings are
submitted to any relevant patent office or government authority, and consider in
good faith any reasonable comments offered by the other Party for inclusion in
any final filings submitted by the responsible Party to any relevant patent
office or government authority in the Territory.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

42

 

 

10.3.5       Each Party agrees with the other Party to cooperate with the other
Party to execute all lawful papers and instruments, to make all rightful oaths
and declarations, and to provide consultation and assistance as may be necessary
in the preparation, prosecution, maintenance and enforcement of all such Patent
Rights.

 

10.4        Intellectual Property Enforcement.

 

10.4.1       If either Party learns of an actual, potential or suspected,
unauthorized use, misappropriation or infringement of the Aversion Patent Rights
or Aversion Technology by a Third Party, including the receipt of a Paragraph IV
Certification with respect to the Product (a “Third Party Infringement”), such
Party shall promptly notify the other Party in writing and shall promptly
provide such other Party with available evidence of such Third Party
Infringement. Subject to Section 10.4.5, Section 10.4.2 sets forth the rights of
the Parties to commence and prosecute an action relating to such Third Party
Infringement (an “Offensive Infringement Action”).

 

10.4.2       During the Term and thereafter with respect to events arising
during the Term,

 

(i)          Acura shall have the first right, but not the obligation, to
undertake control of, and manage and prosecute, including selection of counsel
(collectively, “Prosecute”), such Offensive Infringement Action, except as
otherwise provided in subsection (ii) below;

 

(ii)         Egalet shall have the first right, but not the obligation, to
Prosecute such Offensive Infringement Action if it is a Product-specific
Offensive Infringement Action, or is in response to a Paragraph IV Certification
relating to the Product;

 

(iii)        Acura, shall have the right, but not the obligation, to Prosecute
any such Offensive Infringement Action for which Egalet is not undertaking the
Prosecution as provided in subsection (ii) above; and

 

(iv)        Egalet shall have the right, but not the obligation, to Prosecute
any Offensive Infringement Action for which Acura is not undertaking the
Prosecution as provided in subsection (i) above.

 

10.4.3           A Party having the first right to prosecute an Offensive
Infringement Action shall request a meeting to discuss whether it intends to
Prosecute such action within (i) fifteen (15) days in the case of an Offensive
Infringement Action relating to a Paragraph IV Certification for the Product,
and (ii) within ninety (90) days after receiving such written request for other
Offensive Infringement Actions. If the Party having the first right of
Prosecution declines to Prosecute the action, the other Party may, by written
notice to the declining Party, Prosecute such action.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

43

 

 

10.4.4         The Prosecuting Party shall control and manage such action
(including without limitation, control over the settlement of such action,
provided the other Party consents to such settlement, such consent not to be
unreasonably withheld, delayed or conditioned) and the other Party shall
cooperate with the Prosecuting Party and join the action as required by law for
subject matter jurisdiction or as reasonably requested. If the other Party joins
the action it may do so at its sole cost and expense, and the Prosecuting Party
shall not oppose any attempt by the other Party to join, or otherwise intervene
in such action. The Parties’ shall share out-of-pocket expenses (including
attorneys’ fees) solely with respect to Product-specific Offensive Infringement
Actions as follows: [*****]. Any and all amounts recovered with respect to a
Product-specific Offensive Infringement Action shall be applied first to
reimburse the Parties for their reasonable out-of-pocket expenses (including
reasonable attorneys’ fees and expenses already paid under Section 6.14(a)) in
Prosecuting such Product-specific Offensive Infringement Action. If such
proceeds are insufficient with respect to Product-specific Offensive
Infringement Actions, then the Parties shall share such remaining out-of pocket
expenses according to the sharing of such expenses for Product-specific
Offensive Infringement Actions as provided above in this Section 10.4.4. Any
recovery in excess of the Parties’ out-of-pocket expenses with respect to a
Product-specific Offensive Infringement Action will be shared as follows:
[*****]. Notwithstanding the foregoing, Acura’s consent (which shall not be
unreasonably withheld, delayed or conditioned) shall be required for any
settlement that entails any license, covenant not to sue relating to, dedication
to the public, admission of non-infringement, invalidity or unenforceability or
abandonment of any of Acura’s intellectual property, including, without
limitation, the Aversion Technology, and Egalet’s consent (which shall not be
unreasonably withheld, delayed or conditioned) shall be required for any
settlement that entails any license or covenant not to sue with respect to any
Third Party Infringement related to a Paragraph IV Certification with respect to
the Product or other Product-specific Offensive Infringement Action, or that
would otherwise grant any rights to manufacture, use, sell or otherwise
commercialize [*****] or admission of non-infringement, invalidity or
unenforceability or abandonment of any Product-specific Intellectual Property.

 

10.4.5         [*****]

 

10.5        Infringement Action Brought by Third Parties.

 

10.5.1         If Acura, Egalet or any of their respective Affiliates is sued or
threatened with suit during the Term by a Third Party for infringement of any
patent of a Third Party or for misappropriation of any Third Party know-how,
proprietary, technical or confidential information in the development,
Manufacture and/or commercialization of the Product in the Territory during the
Term (other than infringement or misappropriation of any Trademark or trade
dress arising out of the marketing and/or sale of the Product in the Territory
during the Term), (each, an “Infringement Action”), such Party shall promptly
notify the other Party in writing (whether such action was brought against
Egalet or Acura). During the Term and thereafter with respect to events arising
during the Term,

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

44

 

 

(i)          Acura shall have the first right, but not the obligation, to
undertake control of, and manage, and defend, including selection of counsel
(collectively, “Defend”), such Infringement Action, except as otherwise provided
in subsection (ii) below;

 

(ii)         Egalet shall have the first right, but not the obligation, to
Defend such Infringement Action if it is a Product-specific Infringement Action;

 

(iii)         Acura, shall have the right, but not the obligation, to Defend any
such Infringement Action for which Egalet has the first right but is not
undertaking the defense as provided in subsection (ii) above; and

 

(iv)         Egalet shall have the right, but not the obligation, to Defend any
Infringement Action for which Acura has the first right but is not undertaking
the defense as provided in subsection (i) above.

 

10.5.2           A Party having the first right to Defend an action shall notify
the other Party in writing whether it intends to defend such action within the
earlier of (A) twenty (20) days prior to the date of any required court filing
(as the same may have been extended) and (B) forty (40) days after receiving
written notice of such action. If the Party with the first right to Defend
chooses not to Defend the action then the other Party, may by written notice to
the Party with the first right, undertake the defense.

 

10.5.3           The Defending Party shall have the right to control and manage
such action (including without limitation, control over the settlement of such
action), provided, however, that any such settlement shall also release the
non-Defending Party from the claims relating to the Infringement Action
(provided that the non-Defending party executes a mutual release in favor of the
party releasing the non-Defending Party), and further provided it obtains the
written consent of the non-Defending Party not to be unreasonably withheld,
delayed or conditioned. Without limiting the foregoing, Acura’s consent (which
shall not be unreasonably withheld, delayed or conditioned) shall be required
for any settlement that entails any license, covenant not so sue relating to,
dedication to the public, admission of non-infringement, invalidity or
unenforceability or abandonment of Acura’s intellectual property, including
without limitation, the Aversion Technology, and Egalet’s consent (which shall
not be unreasonably withheld, delayed or conditioned) shall be required for any
settlement that entails any license or covenant not to sue with respect to any
Third Party Infringement related to a Paragraph IV Certification with respect to
the Product or that would otherwise grant any rights to manufacture, use, sell
or otherwise commercialize an immediate release product containing [*****] or
admission of invalidity or unenforceability or abandonment of any
Product-specific Intellectual Property. Each Party shall, promptly upon the
other Party’s request, provide reasonable assistance in conducting the
litigation. The non-Defending Party shall cooperate with the Defending Party and
join the action as reasonably requested. If the non-Defending Party so desires,
it may join such action, at its sole cost and expense, and the Defending Party
shall not oppose any attempt by the other Party to join, or otherwise intervene,
in such action.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

45

 

 

10.5.4           In any Infringement Action, each Party shall bear its own
internal costs. Out-of-pocket costs (including attorneys’ fees and costs), and
any damages and settlement payments in any Infringement Action [*****].

 

10.5.5           If there is any recovery or award to a Party in any
Infringement Action that is a Product-specific Infringement Action, the Parties
shall share any in the recovery or award (after payment of, and/or
reimbursements for previously paid, out-of-pocket-expenses) according to the
Expense Split Percentage, and if there is any recovery or award to a Party in
any Infringement Action that is not a Product-specific Infringement Action, the
Defending Party shall retain any recovery or award (after payment of, and/or
reimbursements for previously paid, out-of-pocket-expenses).

 

10.5.6           Each Party’s obligations under this Section 10.5 shall be
limited solely to Infringement Actions in the Territory relating to actions
taken during the Term.

 

10.5.7           During the pendency of any action (including appeals) under
this Section 10.5, and thereafter, Egalet shall continue to make all payments
due to Acura under this Agreement.

 

10.5.8           [*****]

 

10.6        Cooperation. Each Party shall execute all necessary and proper
documents, take such actions as shall be appropriate to allow the Party with the
right to bring such actions, as set forth in this Article 10, to institute and
Prosecute Offensive Infringement Actions, [*****], and Defend Infringement
Actions and [*****] and shall otherwise cooperate with respect to such actions,
including (a) by joining as a party to any Offensive Infringement Action,
[*****], Infringement Action or [*****] if requested by the Prosecuting Party or
Defending Party, as applicable, at the Prosecuting Party’s or Defending Party’s
expense, and (b) making its and its Affiliates and licensees and sublicensees
and all of their respective employees, subcontractors, consultants and agents
available at reasonable business hours and for reasonable periods of time, but
only to the extent relevant to such action. If a Prosecuting Party or Defending
Party desires to withdraw from or cease pursuing an Offensive Infringement
Action, [*****], Infringement Action or [*****], as applicable, it will promptly
notify the other Party (in good time to enable the other Party to meet any
deadlines by which any action must be taken to preserve any rights in such
action) and such other Party may continue or may substitute itself for the
withdrawing Party and proceed under the terms and conditions of this Article 10.
If only one Party is controlling any Offensive Infringement Action, [*****],
Infringement Action or [*****], the Party controlling any such action will, to
the extent not prohibited by court order or applicable law, keep the
non-controlling Party updated with respect to any such action, including
providing copies of all material documents received or filed in connection with
any such action.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

46

 

 

10.7        License Fees to Third Parties. In the event either Acura or Egalet
learns of any Third Party Patent Rights which may cover the abuse deterrent
features of the Product in the Territory, such Party will promptly notify the
other Party. The Parties agree to confer in good faith regarding such potential
infringement risk and to explore reasonable alternatives for avoiding such risk
and to provide such information to each other as either Party may reasonably
request. If Egalet or any of its Affiliates or sublicensees enters into an
agreement with a Third Party to obtain a license under a Patent Right or other
right that is determined by its patent counsel to be reasonably required to
avoid the infringement of such Third Party Patent Rights in order to
manufacture, use or sell the Product in the Territory or to practice the rights
under the Aversion Patent Rights or Aversion Technology granted to Egalet
hereunder (including in connection with the settlement of an Infringement
Action), or shall be subject to a final court or other binding order or ruling
or settlement agreement requiring any payments, including the payment of a
royalty to a Third Party patent holder in respect of manufacture, use or sales
of the Product or to practice of the Aversion Patent Rights or Aversion
Technology granted to Egalet hereunder, then Egalet may deduct from the
royalties due to Acura pursuant to Section 6.7, and Co-Promotion Payments due to
Acura pursuant to Section 5.3.5 (without duplication), [*****] for any such
license to such Patent Right or other right or payment made pursuant to such
agreement or such final court or other binding order or ruling or settlement
agreement, provided that in no event shall the royalties or the Co-Promote
Payments due to Acura be reduced by more than [*****]. [*****].

 

10.8        [*****]

 

10.9        Exclusivity of Sections 10.4, 10.5, 10.7 and 10.8. [*****]

 

11.          Regulatory Matters.

 

11.1        Ownership and Maintenance of Regulatory Approvals.

 

11.1.1           Promptly upon receipt from Egalet of the Upfront Payment, Acura
will send the FDA any required properly executed forms (i.e., FDA Forms 356h and
1571, if applicable) and a letter transferring the Product NDA and associated
IND to Egalet, and take any other actions reasonably necessary to provide for
and effect the transfer of the Product NDA and IND to Egalet. Following such
transfer of ownership of the Product NDA and IND, and for foreign equivalents of
the NDAs for the Product in all Other Countries, Egalet shall during the Term,
at its sole expense (subject to Section 11.1.2), maintain and continue in force
and effect the Product NDA and IND, including the filing of all annual and other
reports or filings required by the FDA or any other Regulatory Authority, the
performance and completion of the Required Post-Marketing Study, the preparation
and submission of stability studies on batches of the Product as may be required
under Applicable Law, and the preparation and filing of any notices, amendments
or supplements as may be required to change or add another source of supply of
the API for such Product, if Egalet elects to change or add such other source of
supply. Egalet shall not be deemed to have breached its obligations under this
Section 11.1.1 if the maintenance and continuance in full force and effect of
the Product NDA and IND is precluded or materially impaired by any requirement
of the FDA or other Regulatory Authority or any Applicable Law.

 

11.1.2           During the Term, [*****].

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

47

 

 

11.1.3           In connection with the transfer of the Product NDA to Egalet,
Acura shall provide or make available to Egalet a copy of the Product NDA, and
other information and documents required to be transferred by Applicable Law in
connection with the transfer of the Product NDA and the responsibilities
associated with the ownership thereof. Notwithstanding the transfer of the
Product NDA to Egalet, Egalet acknowledges that Acura is retaining copies of the
Product NDA and all documents relating thereto for its use as provided in
Section 11.2.1.

 

11.2         Acura’s Right of Reference. 

 

11.2.1           Egalet shall permit Acura access to, and hereby grants Acura,
at no cost or fee, the perpetual right to reference and use, all development and
regulatory data and reports associated with the Product (including Product Line
Extensions) for Acura’s, its Affiliates’ and its licensee’s use in the
development and/or Regulatory Approval of any product of Acura or its Affiliates
inside and outside the Territory (other than a product that would violate the
provisions of Section 9.2). Such development and regulatory data and reports
shall include, without limitation, preclinical and clinical data and reports,
regulatory submissions and filings, Regulatory Approvals and any adverse event
reports. In furtherance of the foregoing, Egalet shall, promptly upon the
request of Acura, deliver a letter to the FDA (or the relevant Regulatory
Authority) authorizing Acura, its Affiliates or sublicensees to reference and
use the applicable regulatory submissions and filings related to the Product
(including, without limitation, the Product NDA) in the Territory, at no cost or
fee, for Acura’s, its Affiliates’ and its licensee’s use in the development
and/or regulatory approval of any product of Acura or its Affiliates inside or
outside the Territory (other than a product that would violate the provisions of
Section 9.2). Such right of reference attaches to the rights to the Product, and
Egalet shall ensure that any transferee or assignee of rights in the Product
shall also grant such rights of reference to Acura and its Affiliates and
sublicensees.

 

11.2.2           All Regulatory Approval Applications and Regulatory Approvals
for the Product for the United States and in other Countries shall be owned by
Egalet, subject to transfer to Acura pursuant to Article 14.

 

11.3          Adverse Reaction Reporting.

 

11.3.1           Acura and Egalet shall report to the other any information of
which they have knowledge concerning any Product complaints or adverse drug
experience in connection with the use of the Product. Upon receipt of any such
information concerning any adverse drug experience or unexpected adverse drug
experience by either Acura or Egalet, the Parties shall promptly consult each
other and use Commercially Reasonable Efforts to arrive at a mutually acceptable
procedure for taking such possible actions as appropriate or required under the
circumstances (with Egalet having primary responsibility for the taking of such
action if specific to the Product, at its expense, and Acura having primary
responsibility for the taking of such action if not specific to the Product, at
its expense, including, without limitation, in each case with respect to the
Party having primary responsibility providing information gathering and related
services with respect to any such event); provided, however, that nothing
contained herein shall be construed as restricting the right or duty of either
Party to make a required report or submission to the FDA or take any other
action that it deems to be required by Applicable Law.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

48

 

 

11.3.2           Egalet shall be responsible for investigating any Product
complaints and adverse drug experiences, and for preparing reports to the FDA
and foreign equivalents to be filed by Egalet for the reporting of any adverse
drug experiences. Acura shall cooperate with any investigations made by Egalet
relating to Product complaints or adverse drug experiences, and shall provide
such information reasonably requested by Egalet to assist in Egalet’s
investigation of and preparation of reports relating to, such Product complaint
or adverse drug experiences. Egalet shall prepare all adverse drug experience
reports to be filed with the FDA pursuant to 21 C.F.R. §§ 314.80(b) and (c) and
equivalent foreign reports with respect to the Product and provide copies to
Acura for review prior to filing, provided that Acura shall prepare such reports
for Egalet (to be included in Egalet’s reports) for adverse events relating to
Product distributed in the pre-Effective Date period until Egalet takes over
such responsibility as provided in this Agreement. Egalet shall file such
reports with the FDA or other applicable Regulatory Authority.

 

11.3.3           Acura shall keep the Joint Steering Committee reasonably
advised of any serious safety issues or serious adverse events relating to its
other products using Aversion Technology. At Egalet’s request, Acura shall
provide Egalet a copy of adverse drug experience reports filed with the FDA
pursuant to 21 C.F.R. §314.80(b) and (c) and equivalent foreign reports relating
to serious safety issues with respect to products using the Aversion Technology.
[*****].

 

11.4         Recall; Withdrawal.

 

Without limiting Section 13.1, Egalet shall be fully responsible and pay for any
recalls or Product withdrawals. If Egalet, in its discretion, recalls, detains
or retains the Products (voluntarily or by order of a Regulatory Authority),
Acura agrees to reasonably cooperate in such actions, at Egalet’s sole expense.

 

11.5         Medical Affairs.

 

Acura will be responsible for Medical Affairs for no more than three months
after the Effective Date, according to a timeline established by the JSC.
Thereafter, such responsibility will be assumed by Egalet.

 

12.          Confidential Information

 

12.1         Confidentiality. A receiving Party (the “Receiving Party”) shall
keep confidential and shall not publish or otherwise disclose or use for any
purpose other than as provided for in this Agreement any Confidential
Information which is disclosed to it by the other Party (the “Disclosing Party”)
or otherwise received, accessed or developed by a Receiving Party in connection
with the execution, delivery and performance of this Agreement. Each Party
agrees that all such Confidential Information: (i) shall not be used by the
Receiving Party except in connection with the activities contemplated by this
Agreement or in order to further the purposes of this Agreement; (ii) shall be
maintained in confidence by the Receiving Party; and (iii) shall not be
disclosed by the Receiving Party to any Third Party who is not a consultant of,
or an advisor to, the Receiving Party or an Affiliate or sublicensee of the
Receiving Party, and who in each case has signed a confidentiality agreement
containing provisions substantially comparable to those set forth in this
Agreement, without the prior written consent of the Disclosing Party.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

49

 

 

12.2         Exceptions to Obligation. The obligations of confidentiality and
non-use set forth in Section 12.1 shall not apply to any such Confidential
Information which:

 

12.2.1           either before or after the date of the disclosure to the
Receiving Party becomes published or otherwise part of the public domain through
no fault or omission on the part of the Receiving Party or its Affiliates;

 

12.2.2           either before or after the date of the disclosure to the
Receiving Party is lawfully disclosed to the Receiving Party or its Affiliates
by sources other than the Disclosing Party rightfully in possession of the
Confidential Information and without restriction as to confidentiality or use;

 

12.2.3           is independently developed by or for the Receiving Party or its
Affiliates without reference to or in reliance upon the Disclosing Party’s
Confidential Information as demonstrated by competent written records; or

 

12.2.4           is required to be disclosed under Applicable Laws or
regulations or an order by a court or other regulatory body having competent
jurisdiction; provided, however, that except where impracticable, the Receiving
Party shall give the Disclosing Party reasonable advance notice of such
disclosure requirement (which shall include a copy of any applicable subpoena or
order) and shall cooperate with the Disclosing Party to oppose, limit or secure
confidential treatment for such required disclosure. In the event of any such
required disclosure, the Receiving Party shall disclose only that portion of the
Confidential Information of the Disclosing Party that the Receiving Party is
legally required to disclose.

 

12.3         Exclusions. The restrictions set forth in this Article 12 shall not
prevent either Party from (i) disclosing Confidential Information in connection
with preparing, filing, prosecuting or maintaining the Aversion Patent Rights or
Product-specific Aversion Intellectual Property covering the Product in
accordance with Article 10, (ii) disclosing Confidential Information to
governmental agencies to the extent required or desirable to obtain and maintain
a Regulatory Approval, (iii) disclosing Confidential Information to potential
private investors (under a confidentiality agreement at least as restrictive as
the provisions of this Article 12) in connection with fundraising activities,
(iv) disclosing Confidential Information to underwriters and financial advisors
(under an obligation of confidentiality) in connection with the public offering
of securities, or (v) disclosing Confidential Information that is reasonably
determined is required to be disclosed by the Receiving Party (to comply with
applicable securities or other laws) to public investors or governmental
agencies in connection with the public offering of securities, provided that in
all of the above cases, the Party disclosing Confidential Information of the
Disclosing Party shall use all reasonable efforts to provide prior written
notice of such disclosure to the Disclosing Party and to take reasonable and
lawful actions to avoid or limit such disclosure or to assist the Disclosing
Party in avoiding or limiting such disclosure. Further, either Party may also
disclose the existence and terms of this Agreement to its attorneys and
advisors, to potential acquirors in connection with a potential change of
control or sale of assets and to existing and potential investors or lenders of
such Party, as a part of their due diligence investigations, or to potential
permitted assignees or sublicensees, in each case under an agreement to keep the
terms of this Agreement confidential under terms of confidentiality and non-use
substantially similar to the terms contained in this Agreement. Acura recognizes
that by reason of Egalet’s exclusive rights under this Agreement, Egalet has an
interest in Acura’s retention in confidence of certain information of Acura.
Accordingly, until the end of the Term, and for a period of [*****] thereafter,
Acura shall keep confidential, and not publish or otherwise disclose, and not
use for any purpose other than to fulfill Acura’s obligations, Aversion
Technology, to the extent that the information pertains specifically to the
Product, except to the extent: (a) the Product Information is in the public
domain or generally available through no fault of Acura, or (b) such disclosure
or use is expressly permitted by the terms and conditions of this Agreement. In
addition, the restrictions contained in Section 12.1 shall not apply to Acura to
the extent the Confidential Information of Acura relates to any application of
Acura’s intellectual property or the Aversion Technology or inventions owned by
Acura to any compounds or products, other than the Product or as such Acura
intellectual property, Aversion Technology or inventions relate to the Product.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

50

 

 

12.4         Limitations on Use. Each Party shall limit the use, and cause each
of its Affiliates and its sublicensees to limit the use, of any Confidential
Information obtained by such Party from the other Party, its Affiliates or its
sublicensees, pursuant to this Agreement or otherwise, so that such use is
solely in connection with the activities or transactions contemplated hereby.

 

12.5         Remedies. Each Party shall be entitled, in addition to any other
right or remedy it may have, at law or in equity, to an injunction, without the
posting of any bond or other security, enjoining or restraining the other Party
from any violation or threatened violation of this Section 12.

 

12.6         Previous Confidentiality Agreement. Nothing herein shall relieve
any party of any breach of that certain Confidentiality Agreement, dated as of
August 28, 2014, by and between the Parties with respect to the information
disclosed between the Parties prior to the date hereof, provided any information
disclosed under such agreement shall also be deemed disclosed under this
Agreement and such agreement shall not apply to any information disclosed after
the date hereof, which disclosure shall be governed by this Agreement.

 

12.7         Publicity. 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 12.7-1 with respect to Acura, and in the form of the
press release attached as Exhibit 12.7-2 with respect to Egalet (the “Press
Releases”). Neither Party may issue any other news release or make any other
public announcement, written or oral, relating to the terms of this Agreement,
without the prior approval of the other Party, and Acura may not issue any news
release or make any public announcement, written or oral, relating to the
Product (including Egalet’s development, manufacturing or commercialization of
the Product) without the prior approval of Egalet, except solely to the extent a
Party is advised by its legal counsel that the same is required by law or as
otherwise permitted pursuant to Section 12.3; provided, however, the consent of
a Party shall not be unreasonably withheld, delayed or conditioned. The contents
of any announcement or similar publicity relating to this Agreement or the
Product shall be provided by the Party issuing such announcement or publicity to
the other Party reasonably in advance thereof, and if previously reviewed and
approved by the reviewing Party, can be re-released by either Party without a
requirement for re-approval. Each Party shall limit public disclosure of the
terms set forth in this Agreement to the minimum extent required by law (by, for
example, requesting confidential treatment of such terms in documents required
to be filed with the U.S. Securities and Exchange Commission); provided,
however, the Parties may, after any required public disclosure for compliance
with any Applicable Law, including securities laws, reference such terms in news
releases or oral statements without seeking approval from the other Party.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

51

 

  

12.8         Survival. The Confidentiality provisions of this Agreement shall
survive termination or expiration of this Agreement for [*****], except that
with respect to trade secrets they shall survive indefinitely.

 

13.         Indemnification; Insurance; Liability

 

13.1         By Acura. Acura shall indemnify, defend and hold harmless Egalet
and its Affiliates, and their respective directors, officers, employees and
agents, from and against any and all Losses (including the reasonable fees of
attorneys and other professionals) for claims of any Third Party to the extent
arising out of or resulting from:

 

13.1.1           negligence or wrongful intentional acts or omissions of Acura
or its Affiliates, and their respective directors, officers, employees and
agents, in connection with the activities contemplated under this Agreement;

 

13.1.2           any breach of any representation, warranty or covenant made by
Acura pursuant to this Agreement; or

 

13.1.3           any claims arising out of the manufacturing and/or
commercialization of the Product or Aversion Technology by or on behalf of Acura
or its Affiliates prior to the date of this Agreement;

 

13.1.4           any claims of personal injury (including death) or property
damage relating to or arising out of the use of the Product prior to the date of
this Agreement;

 

13.1.5           any claims arising out of or relating to the Pfizer Termination
Agreement;

 

13.1.6           any claims arising out of Egalet’s or its Contract
Manufacturer’s use of the API purchased by Egalet from Acura pursuant to Section
6.9 due to the failure of such API to meet the specifications for the Product
(set forth in the Product NDA) in connection with the manufacture of such API,
provided that Egalet shall have satisfied the requirement to test such API as
provided in Section 6.9 prior to use in the Manufacture of the Product;

 

13.1.7           any claims for infringement relating to the Acura Trademarks;
or

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

52

 

 

13.1.8           any claims relating to the marketing of Product by Acura
pursuant to its Co-Promotion Right, except as the same relates to sales and
marketing materials provided by Egalet or actions directed by Egalet related to
such marketing;

 

except in each case to the extent of Losses attributable to: (i) Egalet’s or its
Affiliates breach of this Agreement or negligence or wrongful intentional acts
or omissions, or (ii) matters that are subject to Section 13.2.

 

13.2         By Egalet. Egalet shall indemnify, defend and hold harmless Acura,
and its Affiliates, and their respective directors, officers, employees and
agents, from and against any and Losses (including the reasonable fees of
attorneys and other professionals) for claims of any Third Party to the extent
arising out of or resulting from:

 

13.2.1           negligence or wrongful intentional acts or omissions of Egalet
or its Affiliates or sublicensees, and their respective directors, officers,
employees and agents, in connection with the activities contemplated under this
Agreement;

 

13.2.2           any warranty claims, Product recalls or any claims of personal
injury (including death) or property damage relating to or arising out of the
use of the Product, or any sale or offer for sale of the Product by Egalet, its
Affiliates or permitted sublicensees;

 

13.2.3           any claims arising out of the development, Manufacturing and/or
commercialization of the Product by Egalet, its Affiliates, its sublicensees or
its Contract Manufacturer;

 

13.2.4           any claims for infringement relating to the Trademarks or the
Product Mark; or

 

13.2.5           any breach of any representation, warranty or covenant made by
Egalet pursuant to this Agreement;

 

except in each case to the extent of Losses attributable to: (i) Acura’s or its
Affiliates breach of this Agreement or negligence or wrongful intentional acts
or omissions, or (ii) matters that are subject to Section 13.1.

 

13.3         Complete Indemnification. Indemnification hereunder shall include
the reasonable costs and expenses of the Parties, relating to legal fees and
expenses, actually incurred by an Indemnitee in connection with enforcement of
Sections 13.1 and 13.2.

 

13.4         Notice. Each Party will notify promptly the other if it becomes
aware of a claim (actual or potential) by any Third Party (a “Third Party
Claim”) for which indemnification may be sought by that Party and will give such
information with respect thereto as the other Party shall reasonably request. If
any proceeding (including any governmental investigation) is instituted
involving any Party for which such Party may seek an indemnity under
Section 13.1 or Section 13.2 (the “Indemnified Party”), the Indemnified Party
shall not make any admission or statement concerning such Third Party Claim, but
shall promptly notify the other Party (the “Indemnifying Party”) orally and in
writing and the Indemnifying Party and Indemnified Party shall meet to discuss
how to respond to any Third Party Claims that are the subject matter of such
proceeding. The Indemnifying Party shall not be obligated to indemnify the
Indemnified Party to the extent any admission or statement made by the
Indemnified Party or any failure by such Party to notify the Indemnifying Party
of the claim materially prejudices the defense of such claim.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

53

 

 

13.5         Defense of Claim. The following provisions shall apply to any claim
to which a Party is entitled to indemnification from the other Party under this
Article 13. If the Indemnifying Party elects to defend or, if local procedural
rules or laws do not permit the same, elects to control the defense of a Third
Party Claim, it shall be entitled to do so provided it gives notice to the
Indemnified Party of its intention to do so within forty-five (45) days after
the receipt of the written notice from the Indemnified Party of the potentially
indemnifiable Third Party Claim (the “Litigation Condition”). Subject to
compliance with the Litigation Condition, the Indemnifying Party shall retain
counsel reasonably acceptable to the Indemnified Party (such acceptance not to
be unreasonably withheld or delayed) to represent the Indemnified Party and
shall pay the fees and expenses of such counsel related to such proceeding. In
any such proceeding, the Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of the Indemnified Party. The Indemnified Party shall not settle any claim for
which it is seeking indemnification without the prior consent of the
Indemnifying Party which consent shall not be unreasonably withheld, conditioned
or delayed. The Indemnified Party shall, if requested by the Indemnifying Party,
cooperate in all reasonable respects in the defense of such claim that is being
managed and/or controlled by the Indemnifying Party, at the Indemnifying Party’s
cost and expense. The Indemnifying Party shall not, without the written consent
of the Indemnified Party (which consent shall not be unreasonably withheld,
conditioned or delayed), effect any settlement of any pending or threatened
proceeding in which the Indemnified Party is, or based on the same set of facts
could have been, a party and indemnity could have been sought hereunder by the
Indemnified Party, unless such settlement includes an unconditional release of
the Indemnified Party from all liability on claims that are the subject matter
of such proceeding and will not result in the Indemnified Party’s becoming
subject to injunctive or other relief or otherwise adversely affect the business
of the Indemnified Party in any manner. Notwithstanding the foregoing, Acura’s
consent (which shall not be unreasonably withheld, delayed or conditioned) shall
be required for any settlement that entails any license, covenant not to sue
relating to, admission of invalidity or unenforceability or abandonment of any
of Acura’s intellectual property, including the Aversion Technology, and
Egalet’s consent (which shall not be unreasonably withheld, delayed or
conditioned) shall be required for any settlement that entails any license or
covenant not to sue with respect to any Third Party Infringement related to a
Paragraph IV Certification with respect to the Product or that would otherwise
grant any rights to manufacture, use, sell or otherwise commercialize [*****] or
admission of invalidity or unenforceability or abandonment of any
Product-specific Intellectual Property. If the Litigation Condition is not met,
then the Indemnified Party shall have the right to control the defense of such
Third Party Claim, for which the Indemnifying Party shall pay the reasonable
fees and costs incurred by the Indemnified Party, and the Parties shall
cooperate in and be consulted on the material aspects of such defense at the
Indemnifying Party’s expense; provided that if the Indemnifying Party does not
satisfy the Litigation Condition, the Indemnifying Party may at any subsequent
time during the pendency of the relevant Third Party Claim irrevocably elect, if
permitted by local procedural rules or laws, to defend and/or to control the
defense of the relevant Third Party Claim at its sole cost and expense and so
long as the Indemnifying Party also agrees to pay the reasonable fees and costs
incurred by the Indemnified Party in relation to the defense of such Third Party
Claim from the inception of the Third Party Claim until the date the
Indemnifying Party assumes the defense or control thereof.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

54

 

 

13.6         Assumption of Defense. Notwithstanding anything to the contrary
contained herein, an Indemnified Party shall be entitled to assume the defense
of any Third Party Claim with respect to the Indemnified Party, upon written
notice to the Indemnifying Party pursuant to this Section 13.7, in which case
the Indemnifying Party shall be relieved of liability under Section 13.1 or
Section 13.2, as applicable, solely for such Third Party Claim and related
Losses.

 

13.7         Insurance. During the Term and for [*****] thereafter, each Party
shall maintain insurance with reputable and credit worthy insurance companies,
in such amounts and against such risks as are usually maintained by comparable
U.S. publicly registered companies engaged in the pharmaceutical business. Each
Party shall, at the request of the other Party, provide the other Party with a
certificate of insurance evidencing its insurance coverage. In the event a Party
desire to self insure, in whole or in part, it shall obtain the prior written
consent of the other Party, not unreasonably withheld or delayed.

 

13.8         No Set-off. Except as expressly set forth in this Agreement,
neither Party may set-off or recoup against a payment owed to the other Party,
without the consent of the other Party, other than any amounts payable to the
first Party by such other Party as determined in a final judgment.

 

14.         Term; Termination

 

14.1         Term. This Agreement is made as of the Effective Date and, unless
earlier terminated pursuant to the other provisions of this Section 14, shall
expire:

 

14.1.1           As to each country in the Territory upon [*****] (the “Royalty
Term”); and

 

14.1.2           in its entirety, upon the expiration of this Agreement with
respect the last Product in all countries in the Territory (the “Term”).

 

14.2         Termination for Cause.

 

14.2.1           Either Party may terminate this Agreement in its entirety, in
the event the other Party shall have breached or defaulted in its payment
obligation hereunder (“Payment Default”) and such breach or default shall have
continued for thirty (30) days after written notice thereof was provided to the
breaching Party by the other Party. Any such termination under this
Section 14.2.1 shall become effective at the end of such thirty (30) day period
unless the breaching Party has cured any such noticed breach(es) or default(s)
prior to the expiration of such thirty (30) day period.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

55

 

 

14.2.2           Acura may terminate this Agreement, without prejudice to any
other remedies available to it at law or in equity with respect to any
particular country, and in its entirety if such particular country is the United
States, if Egalet has materially breached its obligations to use Commercially
Reasonable Efforts to commercialize the Product in such country as required by
Section 5.1, 5.2 and 5.4 (“Commercialization Default”), and such material breach
shall have continued for sixty (60) days after written notice thereof was
provided to Egalet by Acura. Any such termination under this Section 14.2.2
shall become effective at the end of such sixty (60) day period unless Egalet
has cured any such noticed breach(es) prior to the expiration of such sixty (60)
day period.

 

14.2.3           Either Party may terminate this Agreement, without prejudice to
any other remedies available to it at law or in equity with respect to any
particular country, and in its entirety if such particular country is the United
States, in the event the other Party shall have materially breached or defaulted
in the performance of any of its material obligations hereunder (other than
Payment Defaults and Commercialization Defaults which are governed by Sections
14.2.1 and 14.2.2 above) with respect to such country and, such breach or
default shall have continued for sixty (60) days after written notice thereof
was provided to the breaching Party by the other Party. Any such termination
under this Section 14.2.3 shall become effective at the end of such sixty (60)
day period unless the breaching Party has cured any such noticed breach(es) or
default(s) prior to the expiration of such sixty (60) day period.

 

14.2.4           Acura may terminate this Agreement in its entirety by written
notice to Egalet, effective upon receipt, without prejudice to any other
remedies available to it at law or in equity, if Egalet fails to Launch the
Product in the United States by the Required Launch Date.

 

14.2.5           Acura may terminate this Agreement in its entirety by written
notice to Egalet, effective upon receipt, without prejudice to any other
remedies available to it at law or in equity if Egalet fails to achieve the
required number of sales representatives as provided in Section 5.2.1 at the
time specified in such Section.

 

14.2.6           Acura may terminate this Agreement in an Other County as
provided in Section 4.3.

 

14.2.7           The right of either Party to terminate this Agreement as
provided in this Section 14.2 shall not be affected in any way by its waiver or
failure to take action with respect to any previous breach or default.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

56

 

  

14.3         Termination for Insolvency. Subject to Applicable Law, either Party
(i.e., the non-insolvent Party) may terminate this Agreement, if, at any time,
the other Party shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver or
trustee of the Party or of substantially all of its assets, or if the other
Party proposes a written agreement of composition or extension of substantially
all of its debts, or if the other Party shall be served with an involuntary
petition against it, filed in any insolvency proceeding, and such petition shall
not be dismissed within sixty (60) days after the filing thereof, or if the
other Party shall propose or be a party to any dissolution or liquidation, or if
the other Party shall make an assignment of substantially all of its assets for
the benefit of creditors. All rights and licenses granted under or pursuant to
any section of this Agreement are and shall otherwise be deemed to be for
purposes of Section 365(n) of Title 11, United States Code (the “Bankruptcy
Code”) licenses of rights to “intellectual property” as defined in
Section 101(56) of the Bankruptcy Code. The Parties shall retain and may fully
exercise all of their respective rights and elections under the Bankruptcy Code.
Upon the bankruptcy of any Party, the non-bankrupt Party shall further be
entitled to a complete duplicate of, or complete access to all documents
embodying, any such intellectual property or relating to obtaining protection of
or maintaining same, and such, if not already in its possession, shall be
promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects
to continue, and continues, to perform all of its obligations under this
Agreement.

 

14.4         Termination for Patent Challenge. Acura will be permitted to
terminate this Agreement by written notice effective upon receipt if Egalet or
its Affiliates, directly or indirectly through assistance granted to a Third
Party, commence any interference or opposition proceeding, challenge in a legal
or administrative proceeding the validity or enforceability of, or oppose in a
legal or administrative proceeding any extension of or the grant of a
supplementary protection certificate with respect to, any Aversion Patent Rights
(except as a defense against a patent infringement action initiated by Acura or
its Affiliates or licensees against Egalet or its Affiliates) (each such action,
a “Patent Challenge”). Egalet will include provisions in all agreements granting
sublicenses of Egalet’s rights hereunder (other than agreements with
manufacturers, services providers, distributors and other agents) providing that
if the sublicensee or its Affiliates undertake a Patent Challenge with respect
to any Aversion Patent Rights under which the sublicensee is sublicensed, Egalet
will be permitted to terminate such sublicense agreement. If a sublicensee of
Egalet (or an Affiliate of such sublicensee) undertakes a Patent Challenge of
any such Aversion Patent Right under which such sublicensee is sublicensed
(other than sublicensees that are manufacturers, services providers,
distributors and other agents), then Egalet upon receipt of notice from Acura of
such Patent Challenge will terminate the applicable sublicense agreement. If
Egalet fails to so terminate such sublicense agreement, Acura may terminate
Egalet’s right to sublicense in the country(ies) covered by such sublicense
agreement and any sublicenses previously granted in such country(ies) shall
automatically terminate. In connection with such sublicense termination, Egalet
shall cooperate with Acura’s reasonable requests to cause such a terminated
sublicensee to discontinue activities with respect to the Product in such
country(ies).

 

14.5         Termination by Egalet for Convenience. Egalet may terminate this
Agreement in its entirety upon 120 days prior written notice, provided that
[*****].

 

14.6         Termination by Egalet for Commercialization Conditions. If a
Commercialization Condition specified in subsections (i), (ii) or (v) of Section
5.2.2 has occurred prior to the Launch of the Product and continues for at least
ninety (90) days and Egalet determines in good faith that further development,
manufacturing or commercialization of the Product is not Commercially
Reasonable, then Egalet may terminate this Agreement upon thirty (30) days
written notice to Acura.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

57

 

 

14.7         Effect of Expiration or Termination.

 

14.7.1           Following the expiration of the Term with respect to a country
in the Territory pursuant to Section 14.1.1, Egalet’s license to Manufacture,
market, sell, have sold, distribute and otherwise exploit the Product in such
country in the Territory shall become royalty-free, perpetual, irrevocable,
non-exclusive and non-terminable.

 

14.7.2           If this Agreement is terminated by a Party pursuant to
Section 14.2 in all or any countries of the Territory (the “Terminated
Country(ies)”), or in its entirety pursuant to Section 14.3, 14.4, 14.5, 14.6 or
15, in addition to any other remedies available to a Party at law or in equity:

 

(a)          Any and all licenses granted by Acura to Egalet under this
Agreement (other than the license granted under Section 10.2(ii)), shall
terminate in their entirety or with respect to the Terminated Country(ies), as
the case may be, on the effective date of such termination, and the licenses
granted by Egalet to Acura under this Agreement shall continue;

 

(b)          Egalet shall promptly transfer to Acura, at Egalet’s expense,
copies of all data, reports, records and documentation that relate to Product in
such Terminated Country(ies);

 

(c)          Egalet shall assign and transfer to Acura all of its and its
Affiliates’ right, title and interest in and to all Regulatory Approvals and
Regulatory Approval Applications prepared (whether completed or partially
completed), filed and/or granted for the Product (including any Product Line
Extensions) in such Terminated Country(ies), and Egalet shall promptly file with
any applicable Regulatory Authority notice of such transfer and assignment;

 

(d)          Egalet shall return to Acura all relevant records and materials in
Egalet’s possession or control containing Confidential Information relating to
Product in such Terminated Country(ies), provided, however, that Egalet may keep
one copy of such Confidential Information for archival purposes only;

 

(e)          to the extent Egalet owns or holds any right, title and interest in
any Trademarks, trade names, and/or logos under which only the Product has been
or is being marketed or sold in the Terminated Country(ies) (excluding for
avoidance of doubt the Corporate Trademarks), or internet domain registrations
for any such Trademarks or tradenames (excluding for avoidance of doubt domain
name registrations incorporating the Corporate Trademarks (in whole or in
part)), Egalet shall assign the same to Acura;

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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(f)          Egalet shall assign to Acura any clinical trial agreements (to the
extent assignable and not cancelled and requested by Acura) in such Terminated
Country(ies), and all data, including clinical data, materials and information
of any kind or nature whatsoever, in Egalet’s possession or in the possession of
its Affiliates or its or their respective agents, that are solely related to the
Product in such Terminated Country(ies) developed or being developed under this
Agreement (including any Product Line Extensions). All such filings, approvals
and data transferred to Acura pursuant to this Section 14.7 shall be deemed to
be Acura Confidential Information;

 

(g)          Egalet shall assign to Acura, at Acura’s request, to the extent
assignable and not cancelled) all sublicense agreements granted by Egalet under
this Agreement with respect to such Product in the Terminated Country(ies);

 

(h)          Each Party’s restrictive covenant in Section 9.2 shall terminate
with respect to the Terminated Countries;

 

(i)          if the Agreement is not terminated in its entirety, Egalet shall
supply, or cause to be supplied, to Acura, upon Acura’s written request, Acura’s
or its licensee’s commercial requirements of Product, pursuant to a supply
agreement to be negotiated in good faith by the Parties on commercially
reasonable terms, provided that (i) any Product shall be supplied at [*****];
(ii) Egalet’s supply obligation shall continue after termination of the
Agreement, as provided in clause (j), (iii) Egalet shall maintain the same
quality and specifications for Manufacturing the Product as immediately prior to
notice of termination; and (iv) Egalet shall not be liable for any acts or
omissions of any such Contract Manufacturer (including with respect to the
Manufacture of the Product);

 

(j)          if the Agreement is terminated in its entirety, (i) if Egalet is
having the Product Manufactured by a Contract Manufacturer, then at Acura’s
request the applicable Manufacture and Supply Agreement shall be assigned to
Acura to the extent assignable and provided that no other products of Egalet are
being manufactured by such Contract Manufacturer; and (ii) if Egalet or its
Affiliates is Manufacturing the Product, or if a Contract Manufacturer is
Manufacturing the Product but the applicable Manufacture and Supply Agreement is
not assigned to Acura, then Egalet shall supply, or cause to be supplied, to
Acura, upon Acura’s written request, Acura’s or its licensee’s commercial
requirements of Product, (A) pursuant to a supply agreement to be negotiated in
good faith by the Parties on commercially reasonable terms, if Egalet or its
Affiliates is Manufacturing the Product, or (B) [*****]; (2) Egalet’s supply
obligation (including through a Contract Manufacturer) shall not continue for
more than [*****] after the termination of this Agreement, (3) Egalet shall
maintain the same quality and specifications for Manufacturing the Product as
immediately prior to notice of termination; (4) Egalet shall not be liable for
any acts or omissions of any such Contract Manufacturer (including with respect
to the Manufacture of the Product); (5) Acura shall effect a transfer as soon as
commercially practicable of the Product Manufacturing activities from Egalet to
another supplier; and (6) Egalet shall also provide Acura or its designated
supplier, at Acura’s cost, reasonable assistance and cooperation in providing a
Manufacturing transfer package with the goal of enabling Acura or such
designated supplier to Manufacture the Product as soon as commercially
practical; and

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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(k)          Any transfers under this Section 14.7.2 shall be free of any Liens
and all documents and information transferred to Acura, to the extent solely
related to the Product, shall be Acura’s Confidential Information and not
Egalet’s Confidential Information.

 

14.7.3           If this Agreement is terminated by Egalet, either in its
entirety or with respect to a particular country in the Territory, pursuant to
Sections 14.2, 14.3 or 14.6, Acura shall reimburse Egalet for its reasonable
costs and expenses incurred in connection with its obligations under Section
14.7.2.

 

14.8         Accrued Rights; Surviving Obligations.

 

14.8.1           Termination, relinquishment or expiration of this Agreement for
any reason shall be without prejudice to any rights that shall have accrued to
the benefit of either Party prior to such termination, relinquishment or
expiration. Such termination, relinquishment or expiration shall not relieve
either Party from obligations that are expressly indicated to survive
termination or expiration of this Agreement.

 

14.8.2           All of the Parties’ rights and obligations under Sections
4.1.3, 5.6, 6.10, 6.11, for the post-termination/expiration licenses – 7.3.1 and
7.3.2, 7.3.3, 7.3.5, 10.1, 10.2, 10.3.5, 11.2.1, 11.3 (to the extent needed to
accomplish post-termination/expiration reporting solely with respect to
commercialization of the Product prior to termination/expiration) 12, 13, 14.7,
14.8, 14.9, 16 and 17 and, with respect to payments, Net Sales, Co-Promotion
Payments and milestones accrued or achieved prior to termination (or pursuant to
Product inventory sell off), Sections 5.3.5, 5.3.13.3, 6.3, 6.4, 6.5, 6.7, 6.8
and 6.12, shall survive termination, relinquishment or expiration of this
Agreement, and all other provisions reasonable construed to survive shall also
survive termination or expiration. Where a provision specifies a survival
period, such provision shall survive only during such survival period.

 

14.9         Acura’s Repurchase Right and Inventory Sell-Off Right. Upon the
termination of this Agreement in its entirety pursuant to Sections 14.2, 14.3,
14.4, 14.5, 14.6 or 15, Acura may, but shall not be required to, purchase all of
the Product in Egalet’s possession or control. Pending Acura’s exercise or
waiver of its right to purchase Egalet’s Product inventory, or in the event
Acura waives or does not exercise such right, Egalet shall continue to exercise
Commercially Reasonable Efforts to commercialize the Product (except in the case
of termination pursuant to Section 14.6). If Acura does not exercise such right
within sixty (60) days of termination then notwithstanding termination of
Egalet’s licenses and other rights under this Agreement, Egalet, its
sub-licensees under this Agreement and their respective Affiliates shall
exercise Commercially Reasonable Efforts to sell all Product inventory then in
its possession or control (or such additional quantities as Acura may approve in
writing) (except in the case of termination pursuant to Section 14.6), as though
this Agreement had not terminated, including, without limitation, paying the
royalty payments, pursuant to Section 6.4, to Acura on such Net Sales.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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15.         Force Majeure.

 

15.1         Force Majeure. Any delay in the performance of any of the duties or
obligations of either Party hereto (except the payment of money due hereunder)
shall not be considered a breach of this Agreement, and the time required for
performance shall be extended for a period equal to the period of such delay, if
such delay has been caused by or is the result of acts of God; acts of public
enemy; insurrections; terrorism, riots; injunctions; embargoes; fires;
explosions; earthquakes; floods; shortages of energy; governmental prohibition
or restriction; or other unforeseeable causes beyond the reasonable control and
without the fault or negligence of the Party so affected (“Force Majeure”). The
Party so affected shall immediately notify the other Party of such inability and
of the period for which such inability is expected to continue. The Party giving
such notice shall be excused from the performance, or the punctual performance,
of such obligations, as the case may be, from the date of such notice, up to a
maximum of one hundred eighty (180) days, after which time the Party not
affected, may terminate this Agreement upon written notice to the affected Party
if the failure in performance constitutes a material breach of this Agreement.
To the extent possible, each Party shall use reasonable diligent efforts to
avoid or minimize the duration of any Force Majeure.

 

16.         Dispute Resolution

 

16.1         Referral to Executive Officers. The Parties recognize that disputes
as to certain matters may from time to time arise during the Term which relate
to a Party’s rights and/or obligations hereunder. If the Parties cannot resolve
any such dispute within fifteen (15) calendar days after notice of a dispute
from one Party to another, any Party may, by notice to the other Party, have
such dispute referred to the Executive Officers. The Executive Officers shall
meet promptly to negotiate in good faith the matter referred and to determine a
resolution. During such period of negotiations, any applicable time periods
under this Agreement shall be tolled. If the Executive Officers are unable to
determine a resolution in a timely manner, which shall in no case be more than
thirty (30) days after the matter was referred to them (or ten (10) days after
referral if regarding a dispute arising out of or relating to Sections 3.2.6,
3.2.11, 5.2.4 or 5.3.13), the matter may be resolved through arbitration in
accordance with the arbitration provisions set forth in Section 16.2 or Section
16.3, as applicable, upon notice by a Party on the other Party specifically
requesting such arbitration.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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16.2         Arbitration. Where a Party has served a written notice upon another
requesting arbitration of a dispute pursuant to this Section 16.2, any such
arbitration shall be submitted to final and binding arbitration under the then
current commercial arbitration rules of the American Arbitration Association
(the “AAA”) in accordance with this Section 16.2. The place of arbitration of
any dispute shall be New York, New York. Such arbitration shall be conducted by
one (1) arbitrator mutually agreed by the Parties but if such agreement cannot
be reached within ten (10) days of the commencement of the arbitration, then an
arbitrator appointed by the AAA. The arbitrator shall be a person with relevant
experience in the pharmaceutical industry. The arbitration proceeding shall be
held as soon as practicable but in any event within ninety (90) days of
appointment of the arbitrator. Any award rendered by the arbitrators shall be
final and binding upon the Parties. Judgment upon any award rendered may be
entered in any court having jurisdiction, or application may be made to such
court for a judicial acceptance of the award and an order of enforcement, as the
case may be. The arbitrator shall render a formal, binding, non-appealable
resolution and award as expeditiously as possible, but not more than thirty (30)
days after the hearing. Each Party shall pay its own expenses of arbitration,
and the expenses of the arbitrator shall be equally shared between the Parties
unless the arbitrators assess as part of their award all or any part of the
arbitration expenses of a Party (including reasonable attorneys’ fees) against
the other Party. A Party may make application to the Arbitrator for the award
and recovery of its fees and expenses (including reasonable attorneys’ fees).
This Section 16.2, shall not prohibit a Party from seeking injunctive relief
from a court of competent jurisdiction in the event of a breach or prospective
breach of this Agreement by any other Party which would cause irreparable harm
to the first Party.

 

16.3         Special Arbitration Provisions. In the event of a dispute arising
out of or relating to Sections 3.2.6, 3.2.11, 5.2.4, or 5.3.13, which dispute
remains unresolved after referral to the Executive Officers, then such dispute
shall be finally settled by arbitration under the then current expedited
procedures applicable to the then current commercial arbitration rules of the
AAA in accordance with the following terms:

 

16.3.1           Upon written request by either Party to the other Party, the
Parties shall promptly negotiate in good faith to appoint a mutually acceptable
independent person, with scientific, technical and regulatory experience with
respect to the development or commercialization of the Product necessary to
resolve such dispute (an “Expert”). If the Parties are not able to agree within
five (5) business days after the receipt by a Party of the written request in
the immediately preceding sentence, the AAA shall be responsible for selecting
an Expert within ten (10) business days of being approached by a Party. The fees
and costs of the Expert and the American Arbitration Association, if applicable,
shall be shared equally by the Parties. The place of arbitration of any dispute
shall be New York, New York, unless the Parties agree otherwise or the selection
of the Expert requires otherwise.

 

16.3.2           Within five (5) business days after the designation of the
Expert, the Parties shall each simultaneously submit to the Expert and the other
Party a written statement of their respective positions on such disagreement.
Each Party shall have fifteen (15) business days from receipt of the other
Party’s submission to submit to the Expert and the other Party a written
response thereto, which shall include any scientific, technical or
commercialization information in support thereof (the “Second Submission Date”).
The Expert shall have the right to meet with the Parties, either alone or
together, as necessary to make a determination.

 

16.3.3           No later than ten (10) business days after the Second
Submission Date, the Expert shall make a determination by selecting the
resolution proposed by one (1) of the Parties that the Expert deems as a whole
to be the most fair and reasonable to the Parties in light of the totality of
the circumstances. The Expert shall provide the Parties with a written statement
setting forth the basis of his/her determination in connection therewith. The
decision of the Expert shall be final and conclusive.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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16.3.4           This Section 16.3 shall not prohibit a Party from seeking
injunctive relief from a court of competent jurisdiction in the event of a
breach or prospective breach of this Agreement by the other Party which would
cause irreparable harm to the first Party.

  

17.         Miscellaneous

 

17.1         Relationship of Parties. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, employer-employee or joint
venture relationship between the Parties. No Party shall incur any debts or make
any commitments for the other, except to the extent, if at all, specifically
provided herein.

 

17.2         Assignment . Except pursuant to a sublicense permitted under this
Agreement, neither Party shall be entitled to assign its rights or delegate its
obligations hereunder without the express written consent of the other Party
hereto, except that either Party may assign its rights and transfer its duties
hereunder to an Affiliate or in connection with the merger of the Party into a
Third Party or in connection with the sale of all or substantially all of the
Party’s assets or stock, provided that in the case of any assignment by Acura,
all Aversion Patent Rights and Aversion Technology licensed to Egalet under this
Agreement shall be transferred to such assignee effective as of such assignment.
Notwithstanding the foregoing, each Party shall remain responsible for any
failure to perform on the part of any Affiliates. No assignment and transfer
shall be valid or effective unless done in accordance with this Section 17.2 and
unless and until the assignee/transferee shall agree in writing to be bound by
the provisions of this Agreement.

 

17.3         Limitation of Damages. EXCEPT IN RESPECT OF A BREACH OF SECTIONS
9.1 OR 9.2 OR ARTICLE 12, NO PARTY AND NONE OF THEIR RESPECTIVE AFFILIATES SHALL
BE LIABLE TO THE OTHER FOR ANY SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT
LIABILITY OR OTHERWISE, ARISING IN ANY WAY OUT OF OR BASED UPON THIS AGREEMENT,
INCLUDING (a) THE DEVELOPMENT, MANUFACTURE, USE OR SALE OF PRODUCT UNDER THIS
AGREEMENT, (b) THE PRACTICE OF THE PATENTS OR OTHER RIGHTS LICENSED HEREUNDER,
OR (c) REFERENCE TO OR USE OF THE REGULATORY APPROVALS OR DOCUMENTATION.
HOWEVER, THE FOREGOING LIMITATION SHALL NOT APPLY IN ANY WAY TO LIMIT EITHER
PARTY’S OBLIGATIONS WITH RESPECT TO (1) THIRD PARTY CLAIMS UNDER SECTION 13.1 OR
SECTION 13.2; OR (2) CLAIMS ARISING FROM WILLFUL MISCONDUCT.

 

17.4         Books and Records. Any books and records to be maintained under
this Agreement by a Party shall be maintained in accordance with GAAP, and/or
cGMP, as applicable.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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17.5         Further Actions. Each Party shall execute, acknowledge and deliver
such further instruments, and do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.

 

17.6         Notice. Any notice or request required or permitted to be given
under or in connection with this Agreement shall be deemed to have been
sufficiently given if in writing and personally delivered or sent by certified
mail (return receipt requested), or overnight express courier service (signature
required), prepaid, to the Party for which such notice is intended, at the
address set forth for such Party below:

 

In the case of Acura, to: Acura Pharmaceuticals, Inc.   616 N. North Court,
Suite 120   Palatine, IL 60067   Attention:  Robert B. Jones   Facsimile No.:
847-705- 5399   Telephone No.: 847-705-7709     with a copy to: LeClairRyan  
One Riverfront Plaza   1037 Raymond Boulevard   Sixteenth Floor   Newark, NJ
07102   Attention:  John P. Reilly, Esq.   Facsimile No.:  973-491-3492  
Telephone No.:  973-491-3354     in the case of Egalet, to: Egalet US, Inc.  
460 East Swedesford Road   Wayne, Pennsylvania   Attention: Robert Radie  
Telephone No.:  610-833-4200     with a copy to: Dechert LLP   1095 Avenue of
the Americas   New York, New York 10036   Attention:  Thomas A. Rayski, Esq.  
Facsimile No.: 212-698-3599   Telephone No.:  212-698-3859

 

or to such other address for such Party as it shall have specified by like
notice to the other Party, provided, however, that notices of a change of
address shall be effective only upon receipt thereof. With respect to notices
given pursuant to this Section 17.6: (i) if delivered personally or by facsimile
transmission, the date of delivery shall be deemed to be the date on which such
notice or request was given; (ii) if sent by overnight express courier service,
the date of delivery shall be deemed to be the next business day after such
notice or request was deposited with such service; and (iii) if sent by
certified mail, the date of delivery shall be deemed to be the fifth business
day after such notice or request was deposited with the applicable national
postal service.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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17.7         Use of Name. Except as otherwise provided herein, neither Party
shall have any right, express or implied, to use in any manner the name or other
designation of the other Party or any other trade name, trademark or logo of the
other Party for any purpose in connection with the performance of this
Agreement.

 

17.8         Waiver. A waiver by either Party of any of the terms and conditions
of this Agreement in any instance shall not be deemed or construed to be a
waiver of such term or condition for the future, or of any subsequent breach
hereof. All rights, remedies, undertakings, obligations and agreements contained
in this Agreement shall be cumulative and none of them shall be in limitation of
any other remedy, right, undertaking, obligation or agreement of either Party.

 

17.9         Compliance with Law. Nothing in this Agreement shall be deemed to
permit a Party to export, re-export or otherwise transfer any Products sold
under this Agreement without compliance with Applicable Laws.

 

17.10         Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the Parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the Parties and all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the Parties hereto
as nearly as may be possible. Such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of such provision in
any other jurisdiction.

 

17.11         Amendment. No amendment, modification or supplement of any
provisions of this Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each Party.

 

17.12         Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York without regard to conflict
of law principles and the Parties hereby submit and consent to the exclusive
jurisdiction of the federal or state courts in New York for the resolution of
disputes under this Agreement that require the involvement of a court.

 

17.13         Entire Agreement. This Agreement, together with all exhibits and
schedules hereto, sets forth the entire agreement and understanding between the
Parties as to the subject matter hereof and merges all prior discussions and
negotiations between them, and neither of the Parties shall be bound by any
conditions, definitions, warranties, understandings or representations with
respect to such subject matter other than as expressly provided herein or as
duly set forth on or subsequent to the date hereof in writing and signed by a
proper and duly authorized officer or representative of the Party to be bound
thereby.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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17.14         Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties hereto and their respective permitted successors and assigns.

 

17.15         Descriptive Headings. The descriptive headings of this Agreement
are for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

 

17.16         Construction of Agreement. The terms and provisions of this
Agreement represent the results of negotiations between the Parties and their
representatives, each of which has been represented by counsel of its own
choosing, and neither of which has acted under duress or compulsion, whether
legal, economic or otherwise. Accordingly, the terms and provisions of this
Agreement shall be interpreted and construed in accordance with their usual and
customary meanings, and each of the Parties hereto hereby waives the application
in connection with the interpretation and construction of this Agreement of any
rule of law to the effect that ambiguous or conflicting terms or provisions
contained in this Agreement shall be interpreted or construed against the Party
whose attorney prepared the executed draft or any earlier draft of this
Agreement

 

17.17         Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (i) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THAT FOREGOING WAIVER, AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND ANY RELATED
INSTRUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 17.17.

 

17.18         Counterparts. This Agreement may be signed in counterparts, each
and every one of which shall be deemed an original, notwithstanding variations
in format or file designation which may result from the electronic transmission,
storage and printing of copies of this Agreement from separate computers or
printers. Facsimile signatures, scanned signatures, and signatures in PDFs shall
be treated as original signatures.

 

17.19         Relationship of Egalet Parties.

 

17.19.1      [*****]

 

17.20         Service of Process. [*****]

 

17.21         Guaranty of Egalet Corporation. [***** - one and one-half pages
redacted]

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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Remainder of Page Intentionally Left Blank

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

67

 

 

EXECUTION COPY

 

In Witness Whereof, each of the Parties has caused this Agreement to be executed
by its duly authorized representative as of the date first above written.

 

  ACURA PHARMACEUTICALS, INC.       By: /s/Robert B. Jones 1/7/2015    
Name:  Robert B. Jones     Title:    President and Chief Executive Officer      
EGALET US, INC.       By: /s/ Robert Radie     Name:     Title:       EGALET
LIMITED       By: /s/ Robert Radie     Name:       Title:         Solely as to
Section 17.21       EGALET CORPORATION       By: /s/ Robert Radie     Name:    
Title:

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

 

 

 

EXECUTION COPY

 

Exhibit 1.17
Aversion Patent Rights

 

Table 1: US Aversion Patents and Applications

 

MLB Ref. No. US
Patent/
Application
No. Status Filing Date Title Representative Independent Claim

  

 

[***** - three pages redacted]

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

 

 

 

EXECUTION COPY

 

Table 2: Non-US Aversion Patents and Applications

 

MLB Ref. No. Country Patent/
Application No. Status Filing Date Title Representative Independent Claim

  

[***** - Five Pages Redacted]

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

 

 

 

EXECUTION COPY

 

Exhibit 1.74
Knowledge Groups

 

Acura Knowledge Group:

[*****]

     

Egalet Knowledge Group:

 

[*****]

 

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

 

 

 

Exhibit 2.2.2

Acura License Agreements

 

[*****]

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

3

 

 

EXECUTION COPY

 

Exhibit 6.7

 

FORM OF ROYALTY AND CO-PROMOTION REPORT

 

PROVIDE SEPARATE REPORT FOR EACH STRENGTH AND EACH COUNTRY

 

[***** - Three Pages Redacted]

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

 

 

 

Examples With Respect to Co-Promotion Payments

 

[***** - Slightly over one page redacted]

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

5

 

 

Exhibit 6.9
Inventory to be purchased by Egalet

 

Acura Pharmaceuticals, Inc.

Aversion® Oxycodone HCl Raw Materials

 

Description  Quantity   UOM   Unit Cost   Cost  [*****]                    
Total                  [*****] 

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

6

 

 

Exhibit 8.1

reimbursed manufacture and supply expenses

 

The following out-of-pocket costs will be 100% reimbursed by Egalet to Acura to
the extent actually incurred by Acura:

 

1.Validation Services: [*****]

 

2.Validation Inventory: [*****]

 

3.Launch Inventory: [*****]

  

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

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Exhibit 10.8
[*****] Patent Matters

 

10.8         [***** - Six Pages Redacted]

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

8

 

 

Exhibit 12.7-1
Acura Press Release

 

(See attached)

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

9

 

 

[tlogo.jpg]

 

Acura Pharmaceuticals Partners with Egalet Corporation to Commercialize
Immediate Release Oxycodone Product Utilizing Acura’s Aversion®
(Abuse-Deterrent) Technology

 

Palatine, IL (January __, 2015) - Acura Pharmaceuticals, Inc. (NASDAQ: ACUR),
today announced that the Company has entered into a Collaboration and License
Agreement (the “Agreement”) with Egalet US, Inc. and Egalet Ltd. (together
“Egalet”, subsidiaries of Egalet Corporation (NASDAQ: EGLT), which is also a
party to the Agreement with obligations thereunder) granting Egalet exclusive
worldwide rights to commercialize Acura’s immediate release oxycodone
hydrochloride tablets product which incorporates Acura’s patented Aversion®
(abuse-deterrent) Technology platform. The licensed product, formerly known as
Oxecta, will be marketed by Egalet under the name OXAYDO™. OXAYDO is FDA
approved in 5mg and 7.5mg strengths for the treatment of acute and chronic
moderate to severe pain.

 

Acura and Egalet will form a joint steering committee to coordinate
commercialization strategies and the development of product line extensions.
Egalet will be responsible for all commercial, regulatory and manufacturing
activities. The parties are working to transition the product to Egalet for
commercial launch in the U.S. as soon as commercially practical.

 

The Agreement provides for an upfront cash payment of $5.0 million to Acura upon
execution, with an additional $2.5 million due upon the later of (i) June 30,
2015 and (ii) the first commercial sale of the Product in the U.S.; but in no
event later than January 1, 2016. Acura is to receive an additional one-time
payment of $12.5 million when annual world-wide net sales of OXAYDO first reach
$150 million in a calendar year. Acura is also to receive a stepped royalty at
percentage rates from mid-single digits to double digits based on the level of
OXAYDO world-wide net sales in a calendar year (including any product line
extensions). Royalties will be payable on the first commercial sale of OXAYDO
and expire, on a country-by-country basis, upon the expiration of Acura’s patent
in such country.

 

Bob Jones, President and CEO said, “We are excited to partner with Egalet who,
like us, is committed to address the problem of prescription opioid abuse. We
believe Egalet shares our objective of aggressively bringing OXAYDO to the
market and introducing the product to the healthcare community. Egalet is
developing complementary extended-release abuse-deterrent technologies that
could create, long term, an exciting portfolio of products to treat pain”.

 

The Company will host a conference to discuss the Agreement with Egalet on
[*****] January __, 2015 at 8:30 a.m. ET. To participate in the live conference
call, please dial xxx-xxx-xxxx (U.S. and Canada) five to ten minutes prior to
the start of the call. The participant passcode is yyyyy.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

10

 

 

About Acura Pharmaceuticals

Acura Pharmaceuticals is a specialty pharmaceutical company engaged in the
research, development and commercialization of product candidates intended to
address medication abuse and misuse, utilizing its proprietary LIMITX™,
AVERSION® and IMPEDE® Technologies. LIMITX contains ingredients that are
intended to reduce or limit the rate or extent of opioid release when multiple
tablets are ingested. AVERSION contains polymers that cause the drug to gel when
dissolved; it also contains compounds that irritate the nasal passages if the
product is snorted. IMPEDE is designed to disrupt the processing of
pseudoephedrine from tablets into methamphetamine.

 

In June 2011, the U.S. Food and Drug Administration approved our oxycodone HCl
immediate-release tablets which incorporate the AVERSION Technology. The Company
has a development pipeline of additional AVERSION Technology products containing
other opioids.

 

In December 2012, the Company commenced commercialization of NEXAFED®
(pseudoephedrine HCl), a 30 mg immediate-release abuse-deterrent decongestant.
This next generation pseudoephedrine tablet combines effective nasal congestion
relief with IMPEDE Technology, a unique polymer matrix that disrupts the
conversion of pseudoephedrine into the dangerous drug, methamphetamine.

 

Forward-Looking Statements

This release contains forwarding-looking statements which reflect management’s
current view of future events and operations, including, but not limitation to;
statements pertaining to the potential of OXAYDO™ to reduce prescription opioid
abuse; statements pertaining to the expected timetable for launch of OXAYDO™;
and statements pertaining to the potential success of the Company’s
collaboration with Egalet, including the payments to be received under the
Agreement. These forward-looking statements involve certain significant risks
and uncertainties and constitute “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. Some important factors
that may cause actual results to differ materially from the forward-looking
statements include dependence on the successful launch and commercialization of
OXAYDO™; dependence on Egalet’s ability to successfully manufacture or have
manufactured OXAYDO™ for commercial sale; dependence on Acura’s and Egalet’s
compliance with FDA and other government regulations that relate to their
respective businesses; dependence on the successful development and
commercialization of product line extensions to OXAYDO™; and dependence on
unexpected changes in technologies and technological advances. Other important
factors that may cause actual results to differ materially from the
forward-looking statements are discussed in the “Risk Factors” section and other
sections of Acura’s Form 10-K for the year end December 31, 2013 and Acura’s
Form 10-Q for the quarter ended September 30, 2014, each of which are on file
with the U.S. Securities and Exchange Commission. Acura does not undertake to
publicly update or revise any of its forward-looking statements even if
experience or future changes show that the indicated results or events will not
be realized.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

11

 

  

Contact:

 

for Acura Investor Relations

investors@acurapharm.com

847-705-7709

 

for Acura Media Relations

pr@acurapharm.com

847-705-7709

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

12

 

 

Exhibit 12.7-2
Egalet Press Release

 

Egalet Announces Agreement to License Marketed Pain Treatment

 

Wayne, PA (January __, 2015) - Egalet Corporation (Nasdaq: EGLT) (“Egalet”)
today announced that it has agreed to license from Acura Pharmaceuticals, Inc.
(Nasdaq: ACUR) worldwide rights to OXAYDO™ (oxycodone HCI, USP) tablets for oral
use only -CII, the first and only approved immediate-release oxycodone product
formulated to deter abuse via snorting. OXAYDO is indicated in the United States
for the management of acute and chronic moderate to severe pain where the use of
an opioid analgesic is appropriate.

 

“With OXAYDO, physicians now have an immediate-release opioid product designed
to discourage abuse via snorting,” said Jeffrey Dayno, MD, chief medical officer
of Egalet. “This is an important addition to extended-release opioids with
abuse-deterrent properties to help address the broader public health challenge
of opioid misuse and abuse. In addition, marketing of OXAYDO will help us build
relationships with future prescribers of our Guardian™ Technology products.”

 

Under the terms of the agreement with Acura Pharmaceuticals, Egalet has licensed
worldwide rights to OXAYDO for an upfront payment of $5 million, a milestone
payment of $2.5 million upon first commercial sale, a payment of $12.5 million
when the product has achieved $150 million in net sales in a calendar year and a
tiered royalty of single-digit to double-digit percent based on sales
thresholds.

 

OXAYDO™ (previously known as OXECTA™) is the first immediate-release opioid
analgesic formulated with Aversion Technology® intended to discourage abuse
associated with snorting. This single-agent product has no acetaminophen and
therefore does not carry the liver toxicity associated with APAP products. The
most common adverse reactions with OXAYDO are nausea, constipation, vomiting,
headache, pruritus, insomnia, dizziness, asthenia and somnolence.

 

Egalet plans to launch OXAYDO in the third quarter of 2015. Egalet will provide
updates on commercial activities in the first quarter of 2015.

 

About Acute Pain

Acute pain is pain that comes on quickly, can be severe, but lasts a relatively
short time.i Acute pain has many different causes including surgery, broken
bones and dental work, among others. Acute pain can be mild and last for just
seconds or it might be severe and come and go over weeks or months. In most
cases, acute pain does not last longer than six months, and it resolves when the
underlying cause of pain has been treated or has healed. Unrelieved acute pain,
however, might lead to chronic pain.ii

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

13

 

 

About Chronic Pain

There are approximately 100 million Americans—more than those affected by heart
disease, cancer, and diabetes combined—who suffer from chronic pain that is
often undertreated according to the Institute of Medicine. It is also the most
common reason patients seek medical care, resulting in $635 billion annually in
both medical costs and decreased work productivity. Chronic pain is typically
defined as pain that lasts beyond the healing of an injury or that persists
beyond three months. Common types of chronic pain include low back pain,
arthritis, headache and face and jaw pain. Severe pain typically stops an
individual from participating in activities and causes patients to change their
behavior to avoid such activities. According to an article in the New England
Journal of Medicine, chronic pain is associated with functional loss and
disability, reduced quality of life, high health care costs, and premature
death. Chronic pain also can result in isolation, depression, sleep disorders
and other issues that have a negative impact not only on patients but family
members as well.

 

It is important that these patients whose chronic pain often interrupts their
daily lives gain and maintain access to adequate pain relief. Opioids analgesics
play an important role in the management of moderate to severe pain and are the
most widely prescribed products for pain, with prescriptions exceeding 200
million in 2013.

 

Important Safety Information for OXAYDO™ (oxycodone HCl, USP) Tablets for oral
use only - CII

OXAYDO is an immediate-release oral formulation of oxycodone HCl indicated for
the management of acute and chronic moderate to severe pain where the use of an
opioid analgesic is appropriate.

 

OXAYDO is contraindicated in patients with respiratory depression, paralytic
ileus, acute or severe bronchial asthma or hypercarbia, or known
hypersensitivity to oxycodone or any components of the product.

 

Respiratory depression is the primary risk of OXAYDO and it must be used with
extreme caution in patients with chronic obstructive pulmonary disease or cor
pulmonale, in patients with decreased respiratory reserve, hypoxia, hypercapnia
or pre-existing respiratory depression.

 

OXAYDO contains oxycodone HCl, an opioid agonist and a Schedule II controlled
substance. Such drugs are sought by drug abusers and people with addiction
disorders. OXAYDO can be abused in a manner similar to other opioid agonists,
legal or illicit. This should be considered when prescribing or dispensing in
situations where there is concern about an increased risk of misuse or abuse.
OXAYDO may be abused by crushing, chewing, snorting or injecting the product and
these practices pose a significant risk to the abuser that could result in
overdose and death.

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

14

 

 

Patients receiving central nervous system depressants concomitantly with OXAYDO
may exhibit an additive central nervous system depression. When such combined
therapy is contemplated, the dose of one or both agents should be reduced.
Patients should not consume alcoholic beverages, or any medications containing
alcohol while taking OXAYDO.

 

OXAYDO may cause severe hypotension in patients whose ability to maintain blood
pressure has been compromised. OXAYDO may produce orthostatic hypotension in
ambulatory patients. OXAYDO must be administered with caution in patients in
circulatory shock.

 

Serious adverse reactions that may be associated with OXAYDO include:
respiratory depression, respiratory arrest, circulatory depression, cardiac
arrest, hypotension and/or shock. The most common adverse reactions are nausea,
constipation, vomiting, headache, pruritus, insomnia, dizziness, asthenia and
somnolence.

 

In opioid naïve patients, start dosing OXAYDO with five to 15 mg every four to
six hours as needed for pain. OXAYDO should not be given to anyone other than
the individual for whom it was prescribed. Keep OXAYDO in a locked cabinet,
drawer or medicine safe so that it will not be stolen.

 

Please see full prescribing information for OXAYDO at www.oxaydo.com.

 

Conference Call Information

 

Egalet’s management will host a conference call to discuss the commercial
update:

 

Date: Monday, January __, 2015 Time: 8:00 a.m. EDT Webcast (live and archive):
http://egalet.investorroom.com/eventsandwebcasts Dial-in numbers: 1-877-870-4263
(domestic) Replay dial-in numbers: 1-412-317-0790 (international)  
1-877-344-7529 (domestic)   1-412-317-0088 (international)   Conference Number:
10050459

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

15

 

 

About Egalet

Egalet, a fully integrated commercial pharmaceutical company, is focused on
developing, manufacturing and marketing innovative pain treatments. The Company
is marketing OXAYDO®, an abuse-deterrent immediate-release oxycodone product for
the management of acute and chronic moderate to severe pain where an opioid is
appropriate. In addition, using Egalet’s proprietary Guardian™ Technology, the
Company is developing a pipeline of clinical-stage, opioid-based product
candidates that are specifically designed to deter abuse by physical and
chemical manipulation. The lead programs, Egalet-001, an abuse-deterrent,
extended-release, oral morphine formulation, and Eglaet-002, an abuse-deterrent,
extended-release, oral oxycodone formulation, are in late-stage clinical
development for the management of pain severe enough to require daily,
around-the-clock opioid treatment and for which alternative treatments are
inadequate.  Egalet’s Guardian Technology can be applied broadly across
different classes of pharmaceutical products and can be used to develop
combination products that include multiple active pharmaceutical ingredients
with similar or different release profiles. For more information please visit
www.egalet.com.

 

Investor and Media Contact:

BiotechComm

E. Blair Clark-Schoeb

Tel: 917-432-9275

Email: blair@biotechcomm.com

 

 

i http://www.theacpa.org/search.aspx?term=acute%20pain

ii
http://my.clevelandclinic.org/services/anesthesiology/pain-management/diseases-conditions/hic-acute-vs-chronic-pain

 

***** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission; omitted portions
have been separately filed with the Commission.

 

16