Document:

Exhibit 10.9

 

DEVELOPMENT,

LICENSE AMD CONTRACT MANUFACTURING AGREEMENT

 

Dated as of July 3, 2000

 

between

 

EURAND AMERICA, INC.

84 Center Drive

Vandalia, Ohio 45377

 

and

 

E. Claiborne Robins Company, Inc.

d/b/a

 

ECR Pharmaceuticals

3969 Deep Rock Road

Richmond, VA 23233

 

for

 

EXTENDED RELEASE CYCLOBENZAPRINE

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

THIS DEVELOPMENT, LICENSE AND CONTRACT MANUFACTURING
AGREEMENT, dated as of July 3, 2000, between EURAND AMERICA, INC., a corporation
organized under the laws of Nevada, with its principal offices at 845 Center
Drive, Vandalia, Ohio 45377 (“EURAND”), and E. Claiborne Robins Company, Inc.
d/b/a ECR Pharmaceuticals, a corporation organized under the laws of the
Commonwealth of Virginia, with its principal offices at 3969 Deep Rock Road,
Richmond, Virginia 23233 (“ECR”);

 

WITNESSETH THAT:

 

WHEREAS, EURAND is the owner of original processes and know-how for the
development and manufacture of extended release pharmaceutical products;

 

WHEREAS, EURAND and ECR entered into a Confidentiality Agreement, (the “Confidentiality
Agreement”) dated April 15, 1999, pursuant to which the parties exchanged
confidential information relating to this proposed cooperative effort;

 

WHEREAS, ECR desires that EURAND undertake a development program
directed towards producing an extended-release cyclobenzaprine formulation
having the specifications agreed upon between ECR and EURAND.

 

WHEREAS, EURAND is willing to undertake such a development program on
the terms and conditions set forth hereinafter;

 

WHEREAS, ECR also desires to receive a license to market and sell
products developed utilizing EURAND’s know-how and EURAND is willing to grant
such a license on the terms and conditions set forth hereinafter;

 

NOW, THEREFORE, in consideration of the agreements and covenants
hereinafter set forth and intending to be legally bound hereby, the parties
hereto covenant and agree as follows:

 

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1.                                      DEFINITIONS

 

1.1.                              “Active Ingredient(s)”
means cyclobenzaprine.

 

1.2.                              “Affiliate” means,
with reference to any Person, any other Person directly or indirectly
controlling, controlled by/or under common control with such Person, and “control”
means the power to direct the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

1.3.                              “Applicable Laws”
means all laws, treaties, ordinances, judgments, decrees, directives,
injunctions, orders of any court, arbitrator or governmental agency or
authority, rules, regulations, interpretations, authorizations and Applicable
Permits of any international, national, regional, local or other governmental
body, agency, authority, court or Person having jurisdiction over or related to
the development, registration, manufacture and sale of the Finished Goods, as
may be in effect from time to time.

 

1.4.                              “Applicable Permits”
means any notification, waiver, exemption, variance, permit license or similar
approval, including, without limitation, product registrations by health or
other government entities, required to be obtained or maintained under
Applicable Laws in connection with the development, registration, manufacture
and sale of the Finished Goods.

 

1.5.                              “Approval Date”
means, with respect to a particular country in the Territory, the date on which
all Applicable Permits necessary for sale of the Finished Goods in such country
have been issued or otherwise become effective.

 

1.6.                              “FDA” shall mean
the Food and Drug Administration in the United States and corresponding
governmental regulatory agencies in other countries within the Territory.

 

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THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

1.7.                              “Finished Goods”
means the Product in its final commercial package.

 

1.8.                              “Force Majeure”
means any cause or causes which wholly or partially prevent or delay the
performance of obligations arising under this Agreement and which are not
reasonably within the control of the non-performing party, including acts of
God, government regulations, labor disputes, floods, fires, civil commotion,
embargoes, quotas, shortage of labor or materials or any delays in
transportation or detention by customs, health or other government authorities.

 

1.9.                              “Know-How” means
proprietary know-how, trade secrets, inventions, formulations, data, technology
and information relating to Product, which either party hereto has the lawful
right to disclose to the other party. “Know-How” shall include, without
limitation, processes and analytical methodology used in development, testing,
analysis and manufacture and medical, clinical, toxicological testing as well
as other scientific data relating to Product. With respect to EURAND, “Know-How”
shall also include, without limitation, proprietary know-how, trade secrets,
data, technology and information relating to the manufacture of extended
-release compositions.

 

1.10.                        “Knowledge” means for
the purposes of this Agreement, that a party shall be deemed to have “Knowledge”
or a particular fact or matter if (i) any officer or director of such party has
actual knowledge of such fact or matter; or (ii) a prudent person could be
expected to discover or otherwise become aware of such fact or matter in the
course of conducting a reasonable investigation concerning the existence of
such fact or matter.

 

1.11.                        “Product” means a
commercially suitable capsule or tablet containing Active ingredients and
certain excipients in a controlled release formulation, said 

 

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composition being, or being produced using,
EURAND Know-How and meeting the Specifications (as hereinafter defined).

 

1.12.                        “Net Royalties” means
royalties, net of any withholding taxes, due on Net Sales.

 

1.13.                        “Net Sales” means the
aggregate invoiced sales of the Finished Goods by ECR less returns, samples,
allowances, discounts and applicable taxes, samples; allowances, and discounts
subject to the limitation that returns shall not exceed [***] and discounts and
allowances shall not exceed [***].

 

1.14.                        “Person” means any
individual, partnership, association, joint venture or corporation.

 

1.15.                        “Specifications” means
the specifications for Product agreed upon in writing by the parties and set
forth in Exhibit B.

 

1.16.                        “Territory” means the
United States of America, including its territories and possessions, Canada and
Mexico.

 

1.17.                        “Act” shall mean the
United States Food, Drug and Cosmetic Act, as amended from time to time and
corresponding legislation in other countries of the Territory.

 

1.18.                        “cGMP” shall mean
current Good Manufacturing Practices as defined in regulations promulgated by
the FDA under the Act and corresponding regulations in the other countries
included in the Territory.

 

2.                                      DEVELOPMENT
PROGRAM

 

2.1.                              The Development
Program.

 

(a)                                  ECR hereby engages
EURAND, and EURAND hereby agrees, to perform the work described in Exhibit A
(the “Development Program”). In connection therewith, EURAND shall make
available such of its 

 

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scientific, engineering, manufacturing and
other personnel, which, in its discretion, are necessary to perform its
obligations in accordance with the terms hereof.

 

(b)                                 EURAND shall receive
prior written authorization to commence each phase of the Development Program. ECR
may cancel the Development Program at the conclusion of each phase prior to
commencement of the subsequent phase without liability to EURAND or ECR. In the
event that ECR fails to authorize the next succeeding phase within 90 days
after EURAND concludes a phase, this shall constitute cancellation by ECR.

 

2.2.                              Regulatory Filings.
ECR shall diligently prepare any applications or notifications which are
necessary to obtain any Applicable Permits or which are otherwise necessary to
market the Finished Goods in the Territory in accord with section 4.1 below. All
such permits shall be owned by ECR. EURAND shall assist ECR as necessary in the
preparation of the current Chemistry and Manufacturing Controls section of any
applications required to obtain any such permits. ECR shall provide EURAND with
sufficient opportunity to review and comment upon all regulatory filings prior
to their submission and shall include such changes as they relate to the
Development Program as are reasonably requested by EURAND.

 

2.3.                              Payments for
Development

 

(a)                                  In consideration of
EURAND’s performance in accordance with the terms and conditions of this
Agreement, ECR shall make the payments (non-refundable to ECR) to EURAND as
shown in Exhibit D hereto.

 

(b)                                 In addition to the
payments referenced in paragraph (a) above, ECR shall be responsible for the
following additional materials, development costs 

 

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and/or expenses to the extent they are not
covered in the Development Plan:

 

(i)                                     The cost of any
development or registration work performed by EURAND at the request of ECR,
above and beyond the defined work of the Development Program;

 

(ii)                                  The cost of any
bio-studies performed in conjunction with the Development Program;

 

(iii)                               The reasonable, ordinary
and necessary expenses associated with travel of EURAND personnel in connection
with the Development Project; provided, however, that such travel has been
authorized by ECR in advance and in writing; and

 

(iv)                              Active Ingredient costs.

 

3.                                      GRANT
OF LICENSE

 

3.1.                              Grant of License. Subject
to the terms set forth herein and in consideration for the payments set forth
in Section 8.1 hereof, EURAND hereby grants to ECR an exclusive royalty-bearing
license within the Territory to utilize the Product to make the Finished Goods
and to use, offer for sale and sell the Finished Goods.

 

3.2.                              Exclusivity. The
license granted under Section 3.1 may be converted to a non-exclusive license
on a country by country basis by operation of Section 4.1(e).

 

3.3.                              Use of EURAND’s
Trademark by ECR. ECR shall own and market the Finished Goods under its own
Trademark. In addition, ECR shall refer to EURAND’s technology and trademark on
the package, internal leaflet and promotional material of the Finished Goods
using a trademark to be designated by EURAND. For this purpose, EURAND hereby
grants ECR a non-exclusive license to print 

 

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the following wording: “Produced with EURAND
[Trademark to be designated]® technology”. Alternatively, ECR shall print the
trademark to be designated on the label and labeling for the Finished Goods, at
a location to be designated by ECR. Prior to printing the packaging, ECR shall
send EURAND a sample of packaging for prior approval of the above, which
approval shall not be unreasonably withheld or delayed. ECR covenants that such
use of EURAND’s trademark shall be strictly in accordance with the terms of
this Agreement and that all rights to and ownership of the trademark remain
with EURAND.

 

4.                                      REGISTRATION
AND LAUNCH OBLIGATIONS; NONCOMPETITION

 

4.1.                              Registration Obligations
of ECR

 

(a)                                  ECR shall exercise
commercially reasonable efforts to file and/or apply for any Applicable Permits
and otherwise prepare to market the Finished Goods in the Territory as quickly
as possible. ECR hereby agrees that exercise of “commercially reasonable
efforts” shall mean ECR’s best efforts but not less effort than ECR devotes to
its other major pharmaceutical products in the Territory and shall include,
without limitation, the submission by ECR of any additional documentation on
the Product or Finished Goods required under any applicable laws.

 

(b)                                 ECR and EURAND shall
exchange with each other copies of any and all studies performed on the Product
or the Finished Goods during the term of this Agreement. Each party may use any
of such studies for any reasonable purpose consistent with the terms of this
Agreement.

 

(c)                                  During the term of
this agreement, ECR shall provide EURAND with a report on the status of
progress of any Applicable Permits required in the 

 

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Territory every (3) months until the Approval
Date in each country. ECR shall notify EURAND of the submission date of each
filing or application for Applicable Permits and the Approval Date thereof not
later than two (2) weeks after said date.

 

(d)                                 Upon completion of the
Development Program ECR shall diligently prepare and submit a New Drug
Application under the Act and begin distributing and selling the Finished Goods
in the United States within six months of receiving FDA approval.

 

(e)                                  ECR shall file and/or
apply to obtain any Applicable Permits in [***] and [***] within [***] months
of completing the Development Program and ECR shall launch the Finished Goods
in [***] and [***] promptly after gaining approval. In the event ECR fails to
fulfill this obligation, on a country-by-country basis ECR’s rights to use the
Product to market and sell the Finished Goods in [***] and/or [***], as the
case may be, shall become non-exclusive, and EURAND shall have the right to
market the Product in such country.

 

(f)                                    ECR shall continue
to sell the Finished Goods throughout the Territory using its best efforts and
in no event less effort than ECR devotes to its other pharmaceutical products
in each country in the Territory.

 

4.2.                              Competing Dosage Forms.
During the term of this Agreement (with the exception of Eurand’s right to
compete in any country in which the license has converted to a non-exclusive
license under Section 3.2), neither party shall [***] the Product or the
Finished Goods in the Territory without the written consent of the other party.
In the event this Agreement is terminated 

 

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[***], the party [***] shall not develop,
produce, market or sell the Product to any third party in the Territory without
the prior written consent of the other party for an additional period of [***]
following termination. For the avoidance of doubt, in the event that Eurand
elects not to manufacture the Product for ECR under section Section 6.7, if ECR
is using the Product ECR shall be obligated to continue to pay royalties to
EURAND pursuant to Section 8.1(b), this Agreement shall not terminate, and the
non-competition provisions of this Section 4.2 shall remain in effect. After
the date on which EURAND is no longer obligated to manufacture the Product for
ECR under Section 6.7, if ECR [***] to manufacture Finished Goods, EURAND may,
at its option, manufacture the Product for any third party.

 

5.                                      OWNERSHIP
AND USE OF KNOW-HOW AND PRODUCT

 

5.1.                              Ownership. Except
as specifically provided in Section 5.2 below, Know-How developed by either
party or jointly by the parties during the course of the performance of this
Agreement, including patents therefor, shall be (i) the property of EURAND if [***]
the Product and/or its [***], or to the production of [***] thereto), or (ii)
the property of ECR if related to the [***] the Product or the Finished Goods. Except
as otherwise provided in this Agreement, each party shall be free to use such
Know-How owned by it without the consent of the other and without an obligation
to notify the other party of such intended use or to pay royalties or other
compensation to the other by reason of such use. Know-How owned prior to the
date hereof by either party shall continue to be owned exclusively by such 

 

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party. The effect of this paragraph 5.1 shall
survive the termination of this agreement.

 

5.2.                              Additional Use. (a)
In addition to EURAND’s rights described in Section 5.1, and notwithstanding
any other provision of this Agreement, EURAND and its Affiliates shall have the
right to use all Know-How developed during the course of the performance of
this Agreement which is related to the manufacture, processing or production of
the Product, provided such use, disclosure or license does not conflict with
the rights granted to ECR under this Agreement.

 

(a)                                  Any license which
Eurand concludes with any third party regarding the Product shall include
express provisions prohibiting such third party from selling Product or
Finished Goods directly or indirectly within the Territory and prohibiting such
third party from selling to others who sell Product or Finished Goods directly
or indirectly within the Territory and shall also include express provisions
entitling Eurand to enjoin such actions and to terminate such Agreement in the
event of unauthorized sales of the Product or the Finished Goods within the
Territory. Eurand shall promptly enforce such provisions against such third
party in the event of unauthorized sales of the Product or the Finished Goods
within the Territory.

 

(b)                                 If EURAND licenses a
third party to manufacture and use the Product outside the Territory, EURAND
shall pay ECR [****] collected by EURAND.

 

5.3.                              Patents. Each
party shall be responsible, at its own expense, for filing and prosecuting
patent applications, as it deems appropriate, and for paying 

 

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maintenance fees on any patents issuing
therefrom, for the term of this Agreement, with respect to inventions owned by
it. Each party shall promptly render all necessary assistance reasonably
requested by the other party in applying for and prosecuting patent
applications based on inventions owned by such other party under this Agreement.
Patents covering jointly owned Know-How shall be owned jointly, and the parties
shall share equally in the expenses of filing for and maintaining such patents.

 

6.                                      SALE
OF THE PRODUCT

 

6.1.                              Standard of
Manufacture. EURAND shall supply ECR with Product meeting the
Specifications. EURAND with the prior written consent of ECR, which consent
shall not be unreasonably withheld, may subcontract the manufacture of the
Product to others. All Product supplied to ECR hereunder shall he produced in
accordance with cGMP and shall not be adulterated or misbranded within the
meaning of the Act. Each shipment of Product to ECR shall he sampled and
analyzed by EURAND to determine if the shipment meets the Specifications. EURAND
shall deliver to ECR with each shipment of the Product a Certificate of
Analysis stating that the Product meets the Specifications.

 

6.2.                              Right of Review. ECR
may, but shall not be required to, conduct its own analyses on each shipment of
Product received pursuant to this Agreement. ECR shall notify EURAND within
sixty (60) days after each delivery of Product if the same does not meet the
Specifications or is adulterated or misbranded within the meaning of the Act. Any
dispute arising between EURAND and ECR concerning the conformity of any
shipment of Product which cannot be settled between the two parties, shall be
submitted to an independent expert. Said independent expert 

 

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shall be selected by EURAND and ECR. In the
event the parties cannot agree on an expert, they will each select an expert
and those experts will select a third expert to review the shipment in question.
The decision of the expert or experts so selected shall be binding on EURAND
and ECR. The charges, including the fees and expenses of the expert or experts,
relating to any dispute described in this paragraph shall be paid by EURAND if
the expert or experts declare the delivery not to be in conformity with the
Specifications or by ECR if the expert or experts declare the delivery to be in
conformity.

 

6.3.                              Representations and
Warranties.

 

(a)                                  Each party represents
and warrants to the other that it is authorized to enter into and to perform
its obligations under this Agreement.

 

(b)                                 Each party represents
and warrants to the other that its obligations created under this Agreement do
not conflict in any manner with any of its pre-existing obligations.

 

(c)                                  Each party represents
and warrants to the other that it is the owner of any Know-How to be used or
relied upon by such party in performing its obligations under this Agreement.

 

(d)                                 ECR represents and
warrants that to ECR’s Knowledge, the sale and use of the Finished Goods will
not infringe any extant patent or intellectual property rights of any third
party in the Territory; and

 

(e)                                  EURAND represents and
warrants that:

 

(i)                                     the Product
delivered pursuant to this Agreement shall meet the Specifications and shall
not be adulterated or misbranded within the meaning of the Act;

 

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(ii)                                  the Product will be
manufactured in accordance cGMP and;

 

(iii)                               it will comply with all
applicable laws in the United States (or any other country in which Product is
manufactured) in the production of the Product; and

 

(iv)                              to EURAND’s Knowledge the
use, manufacture, distribution, or sale of the Product in any country in the
Territory will not infringe any extant patents, trade secrets, trademarks, or
other extant industrial or intellectual property rights of any third party.

 

(v)                                 Except as
otherwise provided herein. EURAND expressly disclaims all other warranties
whether express or implied with respect to the Product, whether as to
merchantability, fitness for a particular purpose, or any other matter.

 

6.4.                              Purchase and Sale.
Subject to the provisions of Section 3.2, EURAND shall sell and deliver to ECR,
and ECR shall purchase and accept, ECR’s total requirements of Product for the
Territory as ordered pursuant to Section 6.5 below.

 

6.5.                              Delivery Schedule.
Commencing on the date on which ECR first commercially distributes or sells the
Finished Goods in any country within the Territory, ECR shall establish a four
(4) calendar quarter forecast covering its estimated requirements, based on
manufacturing batch sizes and multiples thereof, and the desired delivery dates
of the Product. No later than September 30 and March 31 of each calendar year
during the term of this Agreement, ECR shall provide EURAND with a good faith
estimate of the amount and timing of the Product to be delivered to ECR during
the four (4) quarters commencing the following January 1 and July 1,
respectively. ECR shall place its firm orders at least sixteen 

 

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(16) weeks prior to the desired date of
shipment. EURAND shall not be obligated to fill orders exceeding the
immediately preceding forecast by more than [*****], but shall make
commercially reasonable efforts to do so.

 

6.6.                              Title and Risk of Loss.
Title and risk of loss with respect to the Product shall pass from EURAND to
ECR upon delivery to ECR’s carrier at EURAND’s manufacturing plant, currently
in Vandalia, Ohio.

 

6.7.                              Eurand’s Option Not to
Supply ECR. If for the year beginning on the third anniversary of the date
ECR begins selling the Finished Goods in the United States, or for any year
thereafter, ECR’s Annual Net Sales of Finished Dosage Form are less than [*****],
EURAND, at its sole discretion may, on written notice, elect to terminate its
obligation to supply Product to ECR under this Article 6. In the event EURAND
elects to terminate its obligation to supply Product, EURAND shall transfer to
ECR all Know-How used by EURAND to manufacture the Product, and grant ECR the
right under the Know-How to manufacture the Product or to have the Product
manufactured for it. After notifying ECR of its election not to supply ECR,
EURAND agrees that for a period of two years following such notice, EURAND will
manufacture and supply the Product to ECR on the same terms and conditions of
this Agreement in order to assure ECR of a continuous supply of Product during
the transition to an alternative manufacturing source.

 

7.                                      PRICES

 

7.1.                              Prices and Price
Changes.

 

(a)                                  EURAND shall sell,
and ECR shall buy, the Product for a price equal to EURAND’s manufacturing
costs, [*****], at EURAND’s plant in 

 

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Vandalia, Ohio. EURAND’s manufacturing costs
shall be determined in accordance with Exhibit C attached hereto. EURAND shall
sell samples to ECR at a price equal to EURAND’s manufacturing cost [****];
provided, however, that during the first year following the commercial launch
of the Finished Goods, ECR’s total purchases of samples shall not exceed [****]
of total tablets or capsules purchased in the first year, and in the second and
third years shall not exceed [****] of total tablets or capsules purchased, and
thereafter shall not exceed [****] of total tablets or capsules purchased; and
further provided that in each case the samples are in fact disposed of as
samples and are not sold by ECR.

 

(b)                                 EURAND shall be
entitled to adjust the price set forth in Section 7.1(a) above to reflect
changes in its manufacturing costs; provided, however, such adjustments may be
made no more than once per calendar year. EURAND shall notify ECR of the
revised price of the Product during the last quarter of each calendar year
during the term of the Agreement. The revised price shall be applied to any
delivery of Product made during the following calendar year. In addition, the
price applicable during any calendar year may be adjusted by EURAND as soon as
is practicable after thirty (30) days written notice to ECR, to cover one
hundred percent (100%) of any additional cost or expense of manufacturing
Product, to the extent that a change in manufacturing technique is requested by
ECR or required by a change in Applicable Laws (including a change in cGMP), or
caused by an increase in cost of raw materials.

 

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7.2.                              Payment Terms. EURAND
shall send to ECR an invoice showing the amount due under Section 7.1 with each
shipment. ECR shall pay EURAND the amount due by wire transfer to a bank
designated by EURAND within thirty (30) days of the date of invoice.

 

7.3.                              Audit Rights. Upon
ten days written notice, ECR shall have the right to designate an independent
certified public accountant reasonably acceptable to EURAND to inspect EURAND’s
books of account, records, documents and instruments pertaining to EURAND’s
manufacturing costs of the Product and to make copies thereof, at any time
during EURAND’s regular business hours during the term of this Agreement and
for a period of one (1) year immediately after termination of this Agreement,
to ascertain the accuracy of such records. The expense of such audit shall be
ECR’s unless the audit shall demonstrate a discrepancy greater than [*****]
between costs reported and reimbursed and those which were actually incurred,
in which event the expenses of such audit shall be borne by EURAND.

 

8.                                      ROYALTIES

 

8.1.                              Royalties.

 

(a)                                  As set forth in the
royalty percentage schedule below, ECR shall pay to EURAND an annual escalating
royalty payment beginning at [*****] of total Net Sales and increasing on
incremental sales up to [*****] of total Net Sales. Net Sales shall be
calculated for the annual periods (hereafter “Annual Net Sales”) starting on
the first date on which ECR commercially sells or distributes Finished Goods in
any portion of the Territory and for each subsequent annual period starting on
the 

 

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anniversary of such effective date. The
royalty percentage schedule shall be as follows:

 

[*****]

[*****]

[*****]

 

(b)                                 In the event that
EURAND elects to terminate its obligation to supply Product to ECR in
accordance with Section 6.7 and ECR manufactures Product or ECR has Product
manufactured for ECR, ECR shall continue to pay the royalties set forth in
Section 8.1(a) for so long as ECR sells the Finished Goods.

 

(c)                                  ECR shall make
quarterly reports of all sales and transfer of any Finished Goods sold or
transferred, including, without limitation, any sales or transfers of its
affiliates or other related parties (“ Quarterly Reports”). All Quarterly
Reports shall be on a quarter calendar schedule starting with the end of the
next calendar quarter immediately following the date ECR first commercially
sells or distributes the Finished Goods. In the event there are no sales or
transfers to report in any particular quarter, the Quarterly Report shall so
state. Each Quarterly Report shall be in a form agreed upon by EURAND and ECR
and shall be certified as accurate by an officer of ECR reciting the stock
number, item, units sold, description, quantity shipped, gross invoice, amount
billed customers less discounts, allowances, returns, and incentives. Sales in
Canada or Mexico shall be

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

stated in equivalent U.S. dollars on the date
of the Quarterly Report using the exchange rate defined in Section 8.4.

 

(d)                                 No royalty shall be
paid for Finished Goods provided as samples or for clinical studies.

 

(e)                                  All payments
hereunder shall be made within thirty (30) days after the end of each calendar
quarter.

 

8.2.                              Audit Rights. Upon
ten days written notice, EURAND shall have the right to designate an
independent certified public accountant reasonably acceptable to ECR to inspect
ECR’s books of account, records, documents and instruments pertaining to sales
of Finished Goods, and distribution of samples and clinical studies of the
product and Finished Goods, and to make copies thereof, at any time during ECR’s
regular business hours during the term of this Agreement and for a period of
one (1) year immediately after termination of this Agreement, to ascertain the
accuracy of such records. The expense of such audit shall be EURAND’s unless
the audit shall demonstrate a discrepancy greater than [*****] between
royalties reported and paid and those which were actually incurred, in which
event the expenses of such audit shall be borne by ECR.

 

8.3.                              Taxes. All taxes,
assessments, fees and other charges, if any, levied under the laws or
regulations with respect to payments due to EURAND hereunder shall be for the
account of EURAND, and if required to be withheld from payments to EURAND,
shall be deducted by ECR from such payments to EURAND. Receipts, if available,
for all such withholdings shall be provided to EURAND. ECR shall be responsible
for establishing its right to claim any exemption to such charges or to its
withholding, shall keep EURAND advised in writing or the basis 

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

and status of all such exemption claims, and
shall be liable for any penalty, interest or other assessment against EURAND
for failing to pay or withhold such charges in reliance on any such exemption claim.

 

8.4.                              Currency. All
payments to be paid to EURAND hereunder shall be computed and made in United
States Dollars. For the purpose of computing payments for Product sold in a
currency other than United States Dollars, such currency shall be converted into
United States Dollars using the rate of exchange prevailing at the Chase
Manhattan Bank, New York, NY (or such other bank as the parties may agree upon
from time to time) for the last day of the applicable period. In each country
where the local currency is blocked from removal from the country, at the
election of EURAND, payments accrued in that country shall be paid to EURAND by
ECR in local currency by deposit in a local bank designated by EURAND.

 

9.                                     TERM.               This
Agreement shall be effective from the date first above written and shall
continue for a period of 12 years following the date ECR begins selling the
Finished Goods in the U.S., whereafter it shall be automatically renewed for
additional two year terms unless either party gives six months written notice
of its intent not to renew.

 

10.                               EVENTS
OF DEFAULT, REMEDIES AND EFFECTS OF DEFAULT

 

10.1.                        Events of Default. An
event of default under this Agreement shall be deemed to exist upon the
occurrence of any one or more of the following events:

 

(a)                                  failure by either
party hereto to perform fully, or comply fully with, any material provision of
this Agreement and such failure continues (i) for a period of sixty (60) days
after receipt of notice of such nonperformance or 

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

noncompliance, or (ii) if the non-performing
or non-complying party shall commence within such sixty (60) days and shall
thereafter proceed with all due diligence to cure such failure, such failure is
not cured within such longer period (not to exceed sixty (60) days) as shall be
reasonably necessary for such party to cure the same with all due diligence; or

 

(b)                                 failure of ECR to pay
any amount due to EURAND, which failure continues for a period of sixty (60)
days after written notice of such non-payment; unless, however, such
non-payment is due to a good faith dispute concerning the amount owed.

 

10.2.                        Remedies. Upon the
occurrence and during the continuation of any event of default hereunder, the
party not in default may terminate this Agreement in whole or only with regard
to the provision which has given rise to the event of default, and pursue any
other remedies provided under this Agreement or available at law.

 

11.                               INDEMNIFICATION

 

11.1.                        Indemnification of ECR. EURAND
shall indemnify and hold harmless ECR and its officers, directors and employees
against and from any losses, damages, injuries, liabilities, claims, demands,
settlement, judgments, awards, fines, penalties, taxes, fees, charges or
expenses (including attorneys’ fees) that are directly or indirectly suffered
or incurred at any time by ECR or such persons, and that become payable or
arise directly or indirectly out of or by virtue of, or relate directly or
indirectly to:

 

(a)                                  Any breach by EURAND
or default by EURAND in the performance of, or any failure on the part of
EURAND to observe, perform or abide by, 

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

any restriction, covenant, obligation,
representation, warranty or other provision contained in this Agreement;

 

(b)                                 The inaccuracy of any
representation or warranty contained in Section 6.3 of this Agreement; or

 

(c)                                  Any injury or alleged
injury to any person (including death) or to the property of any person not a
party hereto arising out of the negligence or intentional act or omission of
EURAND or its employees or agents.

 

11.2.                        Indemnification of EURAND.
ECR shall indemnify and hold harmless EURAND and its officers, directors or
employees against and from any losses, damages, injuries, liabilities, claims,
demands, settlement, judgments, awards, fines, penalties, taxes, fees, charges,
or expenses (including attorneys’ fees) that are directly or indirectly
suffered or incurred at any time by EURAND or such persons, and that become
payable or arise directly or indirectly out of or by virtue of, or relate directly
or indirectly to:

 

(a)                                  Any breach by ECR or
default by ECR in the performance of, or any failure on the part of ECR to
observe, perform or abide by, any restriction, covenant, obligation,
representation, warranty or other provision contained in this Agreement;

 

(b)                                 The inaccuracy of any
representation or warranty contained in Article 6.3 of this Agreement; or

 

(c)                                  Any injury’ or
alleged injury to any person (including death) or to the property of any person
not a party hereto arising out of the negligence or intentional act or omission
of ECR or its employees or agents.

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

11.3.                        Notice and Legal Defense.
Promptly after receipt by a party hereunder of any claim or notice of the
commencement of any action, administrative or legal proceeding, or
investigation as to which the indemnity provided for in Section 11.1 and 1 1.2
hereof may apply, the party seeking indemnification shall notify the
indemnifying party of such fact. The indemnifying party shall assume the
defense thereof; provided, however, that if the defendants in any such action
include both the party seeking indemnification and the indemnifying party and
the party seeking indemnification shall reasonably conclude that there may be
legal defenses available to it which are different from or additional to, or
inconsistent with, those available to the indemnifying party, the party seeking
indemnification shall have the right to select separate counsel to participate
in the defense of such action on behalf of such party seeking indemnification,
at the indemnifying party’s expense.

 

12.                               CLAIMS
AND LEGAL PROCEEDINGS

 

12.1.                        Claims Involving ECR Know-How.
In the event of a claim against ECR or EURAND, alleging that the use of ECR’s
Know-How has infringed upon a third party’s intellectual property rights, ECR
shall promptly inform EURAND, and ECR shall, at its own option, take any one or
more of the following actions, simultaneously or sequentially;

 

(a)                                  diligently defend the
claim at its own cost and expense and fully indemnify EURAND from and against
any loss, costs or damages in connection therewith;

 

(b)                                 with cooperation of
EURAND, attempt to redesign the allegedly infringing product or process so as
to make it non-infringing;

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

(c)                                  obtain at its cost,
for itself, and the benefit of EURAND, a license to utilize the technology upon
which the claim of infringement was based.

 

In the event ECR is unable to effectuate
either 12.1(a), (b) or (c) above within one hundred twenty (120) days of
service of notice of such claim upon the other party, then EURAND may terminate
this Agreement and shall have the right to pursue any remedy at law or in
equity resulting therefrom including any claim for indemnification pursuant to
Section 11.2 hereof.

 

12.2.                        Claims Involving EURAND
Know-How. In the event of a claim against EURAND or ECR, alleging that the
use of EURAND’s Know-How has infringed upon a third party’s intellectual
property rights, EURAND shall promptly inform ECR, and EURAND shall, at its own
option, take any one or more of the following actions, simultaneously or
sequentially:

 

(a)                                  diligently defend the
claim at its own cost and expense and fully indemnify ECR from and against any
loss, costs or damages in connection therewith;

 

(b)                                 with cooperation of
ECR, attempt to redesign the allegedly infringing product or process so as to
make it non-infringing;

 

(c)                                  obtain at its cost,
for itself and the benefit of ECR, a license to utilize the technology upon
which the claim of infringement was based.

 

In the event EURAND is unable to effectuate
either 12.2 (a), (b) or (c) above within one hundred twenty (120) days of
service of notice of such claim upon the other party, then ECR may terminate
this Agreement and shall have the right to pursue any remedy at law or in
equity resulting 

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

therefrom including any claim for indemnification pursuant to Section
11.1 hereof.

 

12.3.                        Infringement by Third
Parties. If either party becomes aware of any actual or possible
infringement of any aspect of either party’s Know-How, including any patent or
part thereof, arising from the manufacture, use, or sale of Product or the Finished
Goods by any person or entity (hereafter “Infringement Claim”), then such party
shall immediately provide the other party with written notice of such
Infringement Claim and shall immediately furnish to the other party any
available evidence of such actual or possible infringement. Regardless of which
party first becomes aware of the Infringement Claim, the party who is the owner
of such Know-How shall have the exclusive right, in its discretion, to assert
such Infringement Claim against such third party, and to commence and control
any related proceedings, and neither party shall assert any Infringement Claim
or commence any proceeding without the prior written consent of the party who
owns the Know-How in question. In the event that the owner of such Know-How
elects not to assert such Infringement Claim, the other party may assert the
Infringement Claim at its own expense. If either party elects to assert an
Infringement Claim, the other party shall make available such information and
assistance as the prosecuting party may request for the purposes of enabling
such party to pursue the infringement Claim at the expense of the prosecuting
party.

 

13.                               Governmental
Recall or Resection By Customer

 

13.1.                        Governmental Recall.

 

(a)                                  If any governmental
authority having jurisdiction requires or reasonably requests ECR to recall any
Product of Finished Goods that have been 

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

distributed due to a defect in the design of
the package or manufacture, processing, packaging or labeling of the Product or
for any other reason whatsoever, ECR shall immediately notify EURAND.

 

(b)                                 Prior to commencing
any recall, ECR shall review with EURAND the proposed manner in which the
recall is to be carried out. EURAND hereby agrees to follow any reasonable
direction of ECR as to the manner of completing the recall, provided the
responsible governmental authority does not disagree with any such action. EURAND
shall assist ECR in the recall in the manner agreed upon in as expeditious a
manner as possible and in such a way as to cause the least disruption to
business, and to preserve the goodwill and reputation of their respective customers.

 

(c)                                  With respect to any
recall caused by the negligence, mistake, fault, error or omission of EURAND,
EURAND shall

 

(i)                                     reimburse ECR for
any and all losses, costs and expenses reasonably incurred by ECR in connection
with the recall; and

 

(ii)                                  indemnify and save
ECR harmless from and against any and all damages to or claims by third parties
associated with or resulting from any such recall.

 

(d)                                 With respect to any
recall caused by the negligence, mistake, fault, error or omission of ECR, ECR
shall:

 

(i)                                     reimburse EURAND
for any and all losses, costs and expenses reasonably incurred by EURAND in
connection with the recall; and

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

(ii)                                  indemnify and save
EURAND harmless from and against any and all damages to or claims by third
parties associated with or resulting from any such recall.

 

13.2.                        Customer Rejection. If
any customer of ECR shall reject any Product or Finished Goods due to the
negligence, mistake, fault, error or omission of either ECR or EURAND, then the
party responsible for the rejection shall take all steps necessary to correct
the problem, at its sole cost and expense, and shall indemnify and save the
other party harmless from and against any and all reasonable losses, costs and
expenses incurred by such party in connection therewith.

 

14.                               MISCELLANEOUS

 

14.1.                        Assignment. Neither this
Agreement nor any interest herein may be assigned, in whole or in part, by
either party hereto without the prior written consent of the other party
hereto, provided, that either party shall have the right to assign all
or part of its rights, interest and obligations to an Affiliate of such party,
a successor to a controlling or majority shareholder of such party, or to a
successor to substantially all the business to which this Agreement relates. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective permitted successors and assigns.

 

14.2.                        Confidentiality.

 

(a)                                  Any and all
information provided by one party to the other pursuant to this Agreement or
the Confidentiality Agreement shall be deemed to be confidential information (“Confidential
Information”). The obligations of confidentiality present in this Agreement
supersede those contained in the Confidentiality Agreement. Each party will
hold Confidential Information 

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

of the other party in complete confidence and
will not, without the prior written consent of the other, use or disclose it in
whole or in part to any person other than for the purposes set forth in this
Agreement for a period ending five (5) years following expiration of this
Agreement. Each party will be entitled to disclose any such Confidential
Information to such of its professional advisers, directors, officers and
senior employees who are directly concerned with this Agreement and its
implementation and whose knowledge of such information is necessary for these
purposes. Each party will use its reasonable efforts to ensure that each
individual to whom such a disclosure is made adheres to the terms of this
undertaking as if he or she were a party hereto, including without limitation,
having such individuals execute similar agreements.

 

(b)                                 As used herein, the
term Confidential Information shall not include information:

 

(i)                                     which at the time
of disclosure to the other party is in the public domain;

 

(ii)                                  which, after
disclosure, becomes generally available to third parties from a source other
than the discloser; provided that such source is not bound by a confidentiality
or other similar agreement with the discloser or by any other legal,
contractual or fiduciary obligation which prohibits the disclosure of such
Confidential Information;

 

(iii)                               which was lawfully in
possession of the recipient prior to disclosure, as evidenced by written
records and which was not acquired directly or indirectly from the discloser;
or

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.

 

 

(iv)                              which the recipient is
required to disclose to the extent required under the laws or regulations of
any governmental agency lawfully requesting the same, or to any court of
competent jurisdiction acting pursuant to its powers; provided, that in such
event the recipient shall provide the discloser with advance notice of any such
required disclosure.

 

14.3.                        Exchange of Information.
ECR will periodically inform EURAND about any useful marketing information
concerning the sales of the Finished Goods in the Territory. Each party will
timely report to the other any information concerning any side effect, injury,
toxicity or sensitivity reaction associated with clinical uses, studies,
investigations or tests of the Finished Goods. In reporting such incidents, the
reporting party will use reasonable efforts to indicate whether, in its
judgment, any of them are unexpected or unusual in type, incidence or severity.

 

14.4.                        Force Majeure. Each of
the parties shall be excused from the performance or delay in performance of
its obligations under this Agreement in the event such performance is prevented
by Force Majeure and such performance shall be excused as long as the condition
constituting such Force Majeure continues plus an additional thirty (30) days after
termination of such condition; provided, that the non-performing party shall
provide prompt notice to the other party of the particulars of the occurrence
constituting Force Majeure and of its cessation and shall make diligent efforts
to mitigate the adverse consequences of such non-performance of delays in
performance.

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

14.5.                        Amendments. No amendment
or modification of the terms of this Agreement shall be binding on either party
unless reduced to writing and signed by both parties.

 

14.6.                        No Implied Waiver. Failure
by either party hereto on one or more occasions to avail itself of a right
conferred by this Agreement shall in no event be construed as a waiver of such
party’s right to enforce said right in the future.

 

14.7.                        Choice of Law. This
Agreement and all rights and obligations hereunder, including matters of
construction, validity and performance, shall be governed by and construed in
accordance with Virginia law without giving effect to its conflict of laws
principles.

 

14.8.                        Notices. Any notice and
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed given when delivered personally, telecopied or
received by registered mail, return receipt requested, to the parties at the
following addresses:

 

	
  If to EURAND, to:

  
	
   

  
	
  EURAND AMERICA, INC.

  
	
  845 Center Drive

  
	
  Vandalia, Ohio 45377

  
	
  Attn:

  	
   

  	
   

  
	
  Fax: 937/898-9529

  
	
   

  
	
  If to ECR to:

  
	
   

  
	
  ECR

  
	
  3969 Deep Rock Road

  
	
  Richmond, Virginia 23233

  
	
  Attn: Davis S. Caskey

  
	
  Fax: 804/527-1959

  

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

14.9.                        Execution of Additional
Documents. Each party hereto agrees to execute such further papers or
agreements as may be reasonably necessary or desirable to effect the purpose of
this Agreement and carry out its provisions.

 

14.10.                  Severability. In the event
that any provision of this Agreement shall be held invalid or unenforceable by
any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof.

 

14.11.                  Captions. The article and
section captions in this Agreement have been inserted as a matter of
convenience and are not part of this Agreement.

 

14.12.                  Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be deemed an
original of this Agreement and all of which together shall constitute one and
the same instrument.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.

 

	
  EURAND AMERICA, INC.

  	
   

  	
  E. CLAIBORNE ROBINS COMPANY, 

  INC.

  D/B/A ECR PHARMACEUTICALS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John Fraher

  	
   

  	
  /s/ E.C. Robins Jr.

  
	
  Name: John Fraher

  	
   

  	
  Name:

  	
  E.C. Robins Jr.

  
	
  Title: President

  	
   

  	
  Title:

  	
  President

  
	
  6 July 2000

  	
   

  	
  7/3/2000

  

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

EXHIBIT A: DEVELOPMENT
PROGRAM

 

[*****]

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

APPENDIX

 

[*****]

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

EXHIBIT B: PRODUCT SPECIFICATIONS

 

The Product shall be an extended release formulation of the active
ingredient cyclobenzaprine HCI, or other cyclobenzaprine salt, suitable for
once daily dosing. The Product’s release profile should be consistent with the
therapeutic coverage provided by immediate release cyclobenzaprine HC1, dosed
10 mg., three times daily.

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

EXHIBIT C: MANUTFACTURING COSTS

 

“Manufacturing cost” means for the Product the fully allocated
manufacturing cost determined in accordance with U.S. generally accepted
accounting principles (GAAP) which includes and is limited to:

 

1.                                       direct labor
(salaries, wages and employee benefits);

 

2.                                       direct materials
(documented);

 

3.                                       actual and
direct operating costs of building and equipment used only in connection with
the manufacture of the Product;

 

4.                                       allocated
depreciation and repairs and maintenance;

 

5.                                       in-process and
product testing;

 

6.                                       an allocation of
overhead costs incurred in connection with the manufacturing of Product
including: raw material supply and manufacturing administration and management;
supply and material management, storage and handling; and manufacturing and
employee training;

 

7.                                       royalties paid
to third parties, and

 

8.                                       no charges for
idle capacity or underutilized facilities or personnel shall be included in the
manufacturing cost.

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

EXHIBIT D: PAYMENTS FOR THE DEVELOPMENT

 

[*****]

 

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.

 

 

ADDENDUM
REGARDING [*****] PRODUCT

 

This is an Addendum to the DEVELOPMENT, LICENSE and CONTRACT MANUFACTURING AGREEMENT,
dated as of July 3, 2000, between Eurand America, Inc. (“Eurand”) and E. Claiborne
Robins Company, Inc. (“ECR”).

 

At ECR’s request, Eurand has developed a [*****]
cyclobenzaprine product, that is analogous to the 30 mg product developed under
the aforesaid Agreement. ECR is evaluating the [*****] product for registration
and commercialization. This Addendum confirms the agreement of the Parties that
their rights, obligations, and remedies with respect to any manufacture, use
sale and commercialization of the [*****] product will be governed by the
conditions provided in their existing Agreement. Further, in addition to the
existing Agreement, it is agreed between both parties that ECR shall pay Eurand
a sum of [*****] for development work related to the [*****] product.

 

IN WITNESS WHEREOF, the parties have caused
this Addendum to be executed by their duly authorized representatives as of the
day and year indicated below.

 

	
  EURAND
  AMERICA, INC.

  	
   

  	
  E.
  CLAIBORNE ROBINS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d.b.a.
  ECR PHARMACEUTICALS)

  
	
   

  	
   

  	
   

  
	
  /s/ John Fraher

  	
   

  	
  /s/ Davis S. Caskey

  
	
  John Fraher, President

  	
   

  	
  Davis S. Caskey,

  
	
   

  	
   

  	
  Vice President,
  Pharmaceutical Operations

  
	
   

  	
   

  	
   

  
	
  Date: 

  	
  6 August 2003

  	
   

  	
  Date:

  	
  30 July, 2003

  
					

 

DSC/jj

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.Exhibit 10.10

 

PROMISSORY
NOTE DUE DECEMBER 31, 2010

 

EURAND
B.V.

EUR
22,716,435.21

 

Eurand B.V., a private company with limited liability,
incorporated and existing under the laws of the Netherlands, with registered
seat at Amsterdam the Netherlands and whose business address is at Prof J.H.
Bavincklaan 7, 1183 AT Amstelveen, the Netherlands (the “Company”)
hereby unconditionally promises to pay to Warburg, Pincus & Co, a general
partnership organized and existing under the laws of the State of New York having
its registered office at 466 Lexington Avenue, New York, N.Y. 10017, acting as
a nominee on behalf of Warburg Pincus Equity Partners L.P., Warburg Pincus
Netherlands Equity Partners I.C.V., Warburg, Pincus Netherlands Equity Partners
II C. V. and Warburg, Pincus Netherlands Equity Partners III C.V. (“Warburg & Co”) EUR 22,716,435.21 (Twenty-Two Million
Seven Hundred Sixteen Thousand Four Hundred Thirty-Five and 21/100 Euro) by way
of wire transfer of immediately available funds to the bank accounts of Warburg
International.

 

Each payment becomes effective upon bank order for
such transfer being given by the Company.

 

The Company also promises to pay interest (computed on
the basis of a 360-day year) on such principal amount from the date hereto and
including the date this Note is paid in full at a rate per annum equal to 8.0%.
Interest shall accrue on the unpaid principal amount of this Note, compounded
semi-annually. The unpaid principal amount of this Note shall be payable on
December 31, 2010. Accrued but unpaid interest due under this Note shall be
payable at the time of repayment of this Note.

 

The holder of this Note may at its option declare the
entire principal balance of this Note, together with all accrued but unpaid
interest thereon to be immediately due and payable without presentment, demand,
notice, or protest (each of which is hereby waived) upon the occurrence of any
are one or more of the following events:

 

(a)           the filing of a petition by the
Company for relief under any applicable insolvency law;

 

(b)           the filing of a petition against the
Company, which remains unstayed for a period of at least sixty (60) days, for
adjudication of the Company as a bankrupt under any applicable insolvency law;

 

(c)           the appointment of a receiver for all
or any of the assets of the Company, and such receiver shall not have been
dismissed within sixty (60) days;

 

1

 

(d)           the making by the Company of a
general assignment or similar arrangement for the benefit of its creditors;

 

(e)           the Company admitting in writing its
inability to pay its debts as they mature; and

 

(f)            the liquidation, dissolution, or
winding up of the Company or the taking by the Company of any action in
furtherance of liquidation, dissolution or winding up.

 

This Note may be prepaid, in whole or in part, at any
time at the option of the Company at a price equal to 100% of the principal
amount being so prepaid plus accrued and unpaid interest on the principal
amount outstanding through the date of prepayment.

 

Payments of principal of and interest on this Note
shall be made by wire transfer in immediately available funds to the account
specified in writing by the holder hereof to the Company for such purpose or in
such manner and at such other place as the holder hereof shall designate in
writing to the Company, in Euro.

 

Failure by the holder to enforce any of its rights and
comedies with respect to this Note shall not constitute a waiver of these
rights and remedies. A waiver of one default, right or remedy shall not
constitute a waiver of any subsequent occurrence of the same or any other
default, right or remedy.

 

The provisions of this Note shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of any
holder of this Note. If any provision of this Note is found invalid or in
violation of any law or ordinance, that provision shall be severed from this
Note, and shall not invalidate the remainder hereof.

 

This Note shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Company.

 

Each of the Company and the holder hereof intends to
comply at all times with applicable usury laws. If at any time such laws would
render usurious any amounts due under this Note under applicable law, then it
is each of the Company’s and such holder’s express intention that the Company
not be required to pay interest on this Note at a rate in excess of the maximum
lawful rate, that the provisions of this section shall control over all other
provisions of this Note which may be in apparent conflict hereunder, that such
excess amount shall be immediately credited to the principal balance of this
Note, and the provisions hereof shall immediately be reformed and the amounts
thereafter decreased, so as to comply with the then applicable usury law, but
so as to permit the recovery of the fullest amount otherwise due under this
Note.

 

This note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Delaware, without
reference to the law of such State regarding conflicts of laws.

 

 

IN WITNESS THEREOF, the Company has caused
this note to be executed and delivered by its duly authorised directors, as of
the day and year and place first hereunder written.

 

 

Signed on August 6, 2003

 

EURAND B.V.

 

 

	
  /s/ Gearoid Faherty

  	
   

  	
   

  

 

 

NOTE
MODIFICATION ADDENDUM No. 1

 

This NOTE MODIFICATION
ADDENDUM (this “Addendum”), dated as of December
20, 2003, is made between Eurand B.V., a private company with limited
liability, incorporated and existing under the laws of the Netherlands, with
registered seat at Amsterdam, the Netherlands and whose business address is at
Prof. J.H. Bavincklaan, 7, 1183 AT Amstelveen, the Netherlands (the “Company”) and Warburg, Pincus & Co, a general partnership
organized and existing under the laws of the State of New York having its
registered office at 466 Lexington Avenue, New York, N.Y. 10017, acting as a
nominee on behalf of Warburg, Pincus Equity Partners L.P., Warburg, Pincus
Netherlands Equity Partners I C.V., Warburg, Pincus Netherlands Equity Partners
II C.V. and Warburg, Pincus Netherlands Equity Partners III C.V. (“Warburg & Co”).

 

WHEREAS the Company
entered into a Promissory Note (the “Note”) to
Warburg & Co on August 6, 2003, where the Company promised to pay the
amount of EUR 22,716,435.21 (Twenty-Two Million Seven Hundred Sixteen Thousand
Four Hundred Thirty-Five and 21/100 Euro) on December 31, 2010 at the terms and
conditions defined in the Note.

 

WHEREAS the Company
pre-paid EUR 2,716,435.21 (Two Million Seven Hundred Sixteen Thousand Four
Hundred Thirty-Five and 21/100 Euro) on December 19, 2003 pursuant to the Note;

 

NOW THEREFORE, IN
CONSIDERATION OF THE FOREGOING, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1.                                       Reduction
of the Note Principal. The Loan as defined in the Note shall amount to EUR
20,000,000 (Twenty Million Euro)

 

2.                                       Reaffirmation.
Except as expressly modified and amended hereby, the Note shall remain
unmodified and in full force and effect, the parties hereby ratifying and
confirming the terms and conditions of the Note as modified and amended hereby.

 

IN WITNESS THEREOF, the
undersigned have caused this Addendum to be executed on their behalf by duly
authorised officers, on December 26, 2003.

 

 

	
  EURAND B.V.

  	
   

  	
  WARBURG, PINCUS & Co

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Gearoid Faherty

  	
   

  	
   

  	
  /s/

  	
   

  
	
  Gearoid Faherty

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