Document:

Exhibit 10.5

EXECUTION COPY

 

AMENDMENT
NO. 1 TO THE EXCLUSIVE DEVELOPMENT/LICENSE/SUPPLY AGREEMENT

 

This
Amendment No. 1 to the Exclusive Development/License/Supply Agreement (this “Amendment”)
is entered into as of March 23, 2007 (the “Effective Date”), by and
between Eurand S.p.A. (f/k/a Eurand International S.p.A, a corporation
organized under the laws of Italy, with its principal offices at Via Martin
Luther King, 13-20060 Pessano con Bornago, Milan, Italy (“EURAND”) and
Axcan Scandipharm, Inc., a corporation incorporated in the State of Delaware,
with its principal offices at 22 Inverness Center Parkway, Birmingham, Alabama
35242 USA (“SCANDIPHARM”). Eurand and SCANDIPHARM may be referred to
herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, the Parties entered into an Exclusive
Development/License/Supply Agreement dated May 16, 2000 (“Original Agreement”)
attached hereto as Exhibit IA (together with this Amendment, the “Agreement”);

 

WHEREAS, for a variety of reasons, including changes
in the regulatory landscape, the Parties now wish to revise and amend the
Original Agreement to, among other things, provide a license for and the supply
of formulated products, address certain regulatory requirements that were not
originally contemplated, and provide a license for and the supply of a Low Dose
Product (as hereinafter defined) as well as the supply of a Temporary Product (
as hereinafter defined) as well as other terms and conditions contained herein;
and

 

WHEREAS, EURAND is developing a product line
including a formulation [********], currently known as EUR-1008 (any line
extensions and follow-on products resulting there from, the  “1008 Product Line”), which it intends
to market worldwide, including in the Primary Territory and promote with its
own sales force in the United States;

 

NOW, THEREFORE, in consideration of the mutual
covenants and conditions herein set forth and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto, intending to be legally bound, hereby agree as follows:

 

1.                                       Amendments to Defined Terms. Section 1 of the Original Agreement is
hereby amended as follows:

 

1.1                                 Section 1.10 of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“1.10                     “Finished Dosage Form(s)”
means with respect to a Product, the finished package form of such Product
ready for sale to wholesalers, hospitals or end users.”

 

1.2                                 Section 1.15 of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“1.15                     “Know-How” means
proprietary know-how, trade secrets, patented and unpatented inventions, data,
formulations, methods, technology and information. “Know-How” shall include,
without limitation, ideas, designs, processes, techniques, innovations,
discoveries, improvements, and/or analytical methodology used in development,
testing, analysis, manufacture and/or medical, clinical, and toxicological
testing, as well as other scientific data.”

 

1.3                                 Section 1.21 of the Original Agreement is
hereby amended and restated in its entirety as follows, and every usage of the
term “Product” therein shall be stricken and replaced with the term “Products”,
except as provided below in Paragraph 7.1 of this Amendment:

 

“1.21                     “Products” shall
refer individually or collectively to Low Dose Product or Standard Product.”

 

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

 

 

EXECUTION COPY

 

1.4                                 Section 1.22 of the Original Agreement is
hereby amended by deleting the reference to “Exhibit A” and replacing it with “Appendices
I and II” which are attached hereto. Furthermore, Exhibit A of the Original
Agreement is hereby deleted in its entirety.

 

1.5                                 Section 1.23 of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“1.23                     “Territory”
shall refer collectively to the Primary Territory and the Secondary Territory.”

 

2.                                       Additional Defined Terms. The Original Agreement is hereby further
amended by the addition of the following defined terms:

 

2.1                                 “Formulation”
shall mean the pharmaceutical preparations described in [********] filed with
the FDA.

 

2.2                                 “Standard Product” shall mean up to three dosage strengths
(a) consisting of the Formulation, (b) having [********] per capsule as of the date of the Amendment or [********] falling within the range of
[********] in the corresponding
release Specifications [********]
for the relevant dosage strength, and (c) detailed in the Specifications
appended as Appendix I, as may be amended from time to time pursuant to
this Agreement.

 

2.3                                 “Low Dose Product”
shall mean a low dose version of the Formulation having an expected [********]
per capsule (or such other [********] reasonably agreed to by SCANDIPHARM and
EURAND), the Specifications for which shall be appended as Appendix II.

 

2.4                                 “Primary Territory”
shall mean the United States, Canada, Brazil, Chile, Costa Rica, Argentina and
Mexico and all of their respective territories and possessions.

 

2.5                                 “Secondary Territory”
shall mean the countries listed in Appendix IIIB hereto.

 

2.6                                 “EURAND Technology”
means the Know-How and those intellectual property rights which are owned and
controlled by EURAND or any of its Affiliates, as of the effective date of the
Original Agreement or during the Term, to the extent related to Products.

 

3.                                       License Grant.

 

3.1                                 Section 2.1 of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“2.1                           License Grant.

 

(a) Standard Product.
Subject to the terms and conditions of this Agreement, EURAND hereby grants
SCANDIPHARM an exclusive, royalty-bearing license under the EURAND Technology
solely to the extent required to clinically develop, register, package, market,
sell, have sold, import, have imported Standard Product in the Primary
Territory; and a non-exclusive, royalty-bearing license under the EURAND
Technology solely to the extent required to clinically develop, register,
package, market, sell, have sold, import, have imported, export or have
exported Standard Product in the Secondary Territory.

 

(b) Low Dose Product.
Subject to the terms and conditions of this Agreement and upon payment of the
Licensing Fee, EURAND shall grant SCANDIPHARM an exclusive, 

 

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

 

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royalty-bearing license under the EURAND Technology
solely to the extent required to clinically develop, register, package, market,
sell, have sold, import, have imported Low Dose Product in the Primary
Territory; and a non-exclusive, royalty bearing license under the EURAND
Technology solely to the extent required to clinically develop, register,
market, sell, have sold, import, have imported, export or have exported Low
Dose Product in the Secondary Territory.”

 

3.2                                 Section 2.2 of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“2.2                           Exclusivity. Subject to the terms and conditions of this
Agreement, EURAND shall supply Products exclusively to SCANDIPHARM for
distribution in the Primary Territory. EURAND shall have each of its licensees
or distributors of Products outside of the Primary Territory covenant that they
will not, directly or indirectly, sell or export Products into the Primary
Territory. SCANDIPHARM shall have each of its future  licensees or distributors of Products
(and  upon renewal, its current licensees
and distributors) in the Territory covenant that they will not, directly or
indirectly, sell or export Products outside their respective territory. Each
Party will use commercially reasonable efforts to enforce such covenants and
SCANDIPHARM and EURAND will respectively enforce such covenants in the event
such sales result in a substantive encroachment on the Primary Territory, in
the case of EURAND, and outside the Territory, in the case of SCANDIPHARM. The
exclusivity of the license granted pursuant to Section 2.1 above may convert,
on a country-by-country basis, to non-exclusive by operation of Section 3.2(a),
and upon such conversion, EURAND’s obligations under this Section 2.2 shall
cease with respect to the relevant country. EURAND further agrees that for the
Term, it will not supply any Products to [****] or its affiliates in the
Territory provided that SCANDIPHARM has sold product to [****] or its
affiliates in the immediately preceding eighteen (18) month period.”

 

3.3                                 Section 2.6 of the Original Agreement is
hereby amended and replaced in its entirety by the following:

 

“2.6 
   Non-Competition Clause.  During
the Term, SCANDIPHARM covenants not to, directly or indirectly, market, sell,
promote, or distribute (collectively, to “Commercialize” or “Commercialization”)
in the United States any enteric coated, [********] pancrelipase product in a
minitab formulation other than the Products.  During the Term, EURAND
covenants not to, directly or indirectly, Commercialize in the United States
any enteric coated, [********] pancrelipase product in a minitab
formulation.  Notwithstanding anything to the contrary herein, in no event
are the terms of this Section 2.6 intended to affect or apply to EURAND’s
Commercialization of products in the 1008 Product Line; provided however,
with respect to any product in a [********] which is part of the 1008 Product
Line, in the event
it decides not to Commercialize such product itself, EURAND covenants not to [********]
in the United States; further
provided, however, if, at any time during the Term, EURAND
elects to entertain offers from one or more third parties to Commercialize a product in the 1008 Product Line
for the United States, it shall so notify SCANDIPHARM and offer SCANDIPHARM a [********] such rights, for each instance
where an offer is entertained.”

 

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

 

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3.4                                 Section 2.4 of the Original Agreement is
hereby amended by inserting the words “, at its option and sole discretion,”
after the word “refer” in the second sentence.

 

3.5                                 Section 2.8 is hereby added to the Original
Agreement, as follows:

 

“2.8                           SCANDIPHARM’S Rights in Know-How.
SCANDIPHARM and its Affiliates shall own all Know-How
developed by or for it (by a third party other than Eurand, its Affiliates or
contractors) before and during the course of the performance of this Agreement
which is directed to the medical, clinical, and toxicological testing, as well
as other scientific data related to Products and Finished Dosage Forms. All
such Know-How shall be and remain confidential information of SCANDIPHARM.”

 

4.                                       Section 3.1 is hereby added to the Original
Agreement as follows:

 

“3.1                           Steering Committee. The
Parties hereby agree that promptly after the execution of the Amendment, the
Parties will form a steering committee (“Steering Committee”) including
an equal number of representatives of each of the Parties. The Steering
Committee will oversee all aspects of the collaboration, including, without
limitation, resolving any disputes between subcommittees formed thereunder,
such as any development committee, Supply Committee (as defined herein below)
or other committee formed under the Original Agreement, the Amendment or by the
Steering Committee. Additionally, all disputes (other than those already
reviewed by the Steering Committee) shall be referred to the Steering Committee
for resolution. All decisions of the Steering Committee will require the
unanimous approval of the members of the Steering Committee with each Party
collectively having one (1) vote. In the event of a deadlock with regard to any
proposed decision of the Steering Committee, or where the Committee is unable
to resolve any dispute within thirty (30) days, such dispute shall be referred
to the CEOs of each of the Parties for resolution. In the event that such
dispute is not resolved within thirty (30) days of being forwarded to the CEOs,
either Party shall have the right to submit such dispute for arbitration in
accordance with the dispute resolution procedures outlined in Section 11.16 of
this Agreement.”

 

5.                                       Registration and Launch Obligations. The foregoing Steering Committee section
will be inserted as Section 3.1, so all of the Section numbers reflected here
will be adjusted accordingly. However, for ease of understanding they have not
been changed in this Amendment.

 

5.1                                 Section 3.1 of the Original Agreement is
hereby amended throughout by the replacement of the word “Product” with “Standard
Product” and further any reference to “Finished Dosage Form” therein shall
refer solely to the Finished Dosage Form of Standard Product, provided, that
the formulation development of Low Dose Product shall be conducted by EURAND,
at its sole cost, in the same manner as the formulation development of Standard
Product.

 

5.2                                 Section 3.1(a) and (b) of the Original
Agreement shall be amended to only apply to Low Dose Product.

 

5.3                                 Section 3.1 (c) of the Original Agreement is
hereby amended and restated in its entirety , as follows:

 

“(c) EURAND shall provide SCANDIPHARM with the following documentation
on the Low Dose Product:

 

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

 

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(i)                                     stability
protocols, designed in accordance with cGMP and International Conference on
Harmonization (ICH) guidelines;

(ii)                                  the
results of accelerated and long-term stability studies on the Low Dose Product
conducted according to the protocols; and

(iii)                               any
other reasonably requested documentation to support obtaining Applicable
Permits that the Steering Committee deems appropriate.”

 

5.4                                 Section 3.1 (d) of the Original Agreement is
hereby amended and restated in its entirety, as follows:

 

“(d)
During the Term, EURAND shall use commercially reasonable efforts to maintain
with the FDA the DMF describing the preparation of Standard Product in
accordance with FDA guidelines and shall continue to update the DMF as required
by the Act and cGMP. EURAND shall not file or maintain any additional DMF for
the Formulation in the United States except for the benefit of SCANDIPHARM
under this Agreement. Upon SCANDIPHARM’s request, EURAND shall provide
SCANDIPHARM with a letter of authorization (LOA) to cross-reference the DMF
solely for the purpose of obtaining or maintaining Applicable Permits for
Standard Product in the United States and under no circumstances for purposes
of obtaining third party manufacture or supply of products containing the
Active Ingredient. Subject to Section 3.2 (a), this right of cross-referral
shall be exclusive to SCANDIPHARM. EURAND will allow the review of the DMF by a
designated neutral third party acceptable to EURAND (subject to the execution
of a confidentiality agreement by such third party with EURAND) at SCANDIPHARM’s
request, if such review is deemed necessary in conjunction with regulatory
filings, provided that all costs associated with the review of the DMF by a
designated neutral party shall be borne by SCANDIPHARM and the information
obtaining in such review is used solely for the purpose of obtaining or
maintaining Applicable Permits for Standard Product in the Territory.”

 

5.5                                 Section 3.1(e) of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“(e) For two (2) years from the first commercial
sale of the Low Dose Product or the Temporary Product subsequent to the date of
the Amendment, EURAND agrees to sell SCANDIPHARM [***] of the previous years
total unit purchases of such Low Dose Product or Temporary Product at a [***]
discount from the then current supply price, provided they are used as samples
by SCANDIPHARM. Discounts shall be credited against purchases during the
subsequent year.”

 

5.6                                 Section
3.1(f) of the Original Agreement is hereby amended and restated in its entirety
as follows:

 

“3.1(f)               Specification, Formulation and
Manufacturing Changes.

 

(i)                                     Pre-NDA
Changes. EURAND shall use commercially reasonable efforts to conduct
analytical method development, validation and testing of Products required to
amend or supplement the DMF in support of the issuance of SCANDIPHARM’s NDA for
Products in the United States and costs will be allocated as set forth in
subsection 3.1(g) below. In the event material changes to the Formulation, the
Specifications or manufacturing processes are required to obtain such NDA, the
Parties shall discuss and, to the extent commercially reasonable, agree to such
changes and allocate costs for such additional activities in good faith.

 

(ii)                                  Post-NDA Changes

 

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

 

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Required Changes.
For changes to the Specifications, Formulation or manufacturing processes that
are required under Applicable Laws for FDA approved Standard Products
(collectively “Required Manufacturing Changes”), EURAND and SCANDIPHARM
shall cooperate in making such changes and implement such changes promptly,
using commercially reasonable efforts.

 

Discretionary
Manufacturing Changes. For SUPAC Type I, II and III changes
to the Specifications, Formulation or manufacturing process for FDA approved
Standard Products, that are not Required Manufacturing Changes (collectively “Discretionary
Manufacturing Changes”), EURAND and SCANDIPHARM must each agree to any
Discretionary Manufacturing Changes and shall cooperate in making such changes,
and each agrees that it shall not unreasonably delay or withhold its consent to
such Discretionary Manufacturing Changes.

 

For greater certainty, EURAND shall not withhold its
consent to proposed changes to Lipase activity levels of a Standard Product
required to support a modified label claim for a Lipase activity level that
falls within the range of Lipase activity levels set out in the release
Specifications initially approved by the FDA in the NDA for the relevant
Standard Product, provided that no material changes to the Formulation and
manufacturing process is required. For purposes of this paragraph, changes to
target capsule filling weights and associated changes to the master
manufacturing or packaging records and their related Specifications are not
considered as material by the Parties.

 

(iii)                               Cost allocation. Subject
to Section 3.1(g) of the Agreement, all documented internal and external costs
of each Party, including, without limitation, regulatory filings, packaging and
labeling materials (i) associated with Required Manufacturing Changes relating
solely and exclusively to the Standard Product in the Primary Territory shall
be borne by SCANDIPHARM, (ii) associated with Required Manufacturing Changes
relating solely and exclusively to the Standard Product outside the Territory
shall be borne by EURAND, (iii) associated with Required Manufacturing Changes
relating solely and exclusively to the Standard Product both inside and outside
the Primary Territory shall be shared based upon the percentage of unit sales
of such product affected by such Required Manufacturing Change, and (iv) costs
associated with Discretionary Manufacturing Changes shall be borne by the Party
initiating such changes. In any event, EURAND shall only be required to supply
up to three (3) dosage strengths of Standard Products at any given time and
SCANDIPHARM shall only Commercialize up to three (3) dosage strengths of
Standard Products at any given time, subject to a reasonable period of
transition to give effect to any of the changes to the Standard Product made
pursuant to (i) and (ii).

 

5.7                                 Section 3.1 (g) is hereby added to the
Original Agreement:

 

“(g) EURAND shall bear all reasonable and documented
internal and external costs incurred subsequent to the date of the Amendment,
up to an aggregate amount not to exceed [******] for analytical method
development, validation and testing of Products required to amend or supplement
the DMF in support of SCANDIPHARM’s NDA for Products in the United States. All
internal costs shall be charged at EURAND’s standard rate, which shall
initially be [******] per hour. All costs greater than [******] shall be the
sole responsibility of SCANDIPHARM.”

 

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

 

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5.8                                 Section 3.2(a) of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“(a) SCANDIPHARM shall exercise commercially
reasonable efforts to apply for Applicable Permits required to commercialize
Products in the Primary Territory. Furthermore, SCANDIPHARM will own and be
responsible for seeking, obtaining and maintaining any marketing authorizations
required to market Products in the Primary Territory; provided however, EURAND
will (as between the Parties) own and, be responsible for maintaining, the DMF
for Products in the Primary Territory. EURAND shall exercise commercially
reasonable efforts to maintain Applicable Permits required for manufacture of
Products for sale in the United States and Canada. Additionally, EURAND will
provide commercially reasonable levels of support for all of SCANDIPHARM’s
regulatory filings for Products in the Primary Territory. Subject to the
foregoing, if SCANDIPHARM fails to apply for an Applicable Permit required for
commercialization of Products in a country in the Primary Territory within nine
(9) years of the effective date of the Original Agreement, or should such
application fail to be approved within two (2) years of such filing, provided
that the failure to file Applicable Permits or secure approval for
commercialization is not the result of changes in any rules or regulations by
any regulatory body in the Primary Territory (hereinafter “Regulatory Issues”)
or adverse medical events, changes in reimbursement structure, political
instability or threatened bodily harm (hereinafter “Commercial Issues”) not
within SCANDIPHARM’s control,  and
further provided that SCANDIPHARM is not then actively pursuing the subject
Applicable Permit, the exclusive licenses granted under Section 2.1 hereof
shall automatically convert to non-exclusive licenses for the relevant country.
The provisions of this Section 3.2(a) shall operate independently of and shall
not be subject to the cure period provided for under Section 8.1 herein. Notwithstanding
the foregoing, this Section 3.2 (a) shall not apply to the Low Dose Product .”

 

5.9                                 Section 3.2(b) of the Original Agreement is
hereby amended by the deletion of its first sentence.

 

6.                                       Supply of Products. Section 4 of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“4.1                           Supply, Quality and Safety Agreements. The Parties shall exert commercially reasonable efforts to negotiate
and enter into a Manufacture and Supply Agreement and a Quality Agreement no
later than 180 days after the execution of this Agreement. Until such time as
these agreements are entered into, to the extent applicable, the supply terms
of this Agreement shall govern the supply of Standard Product currently being
supplied to SCANDIPHARM. These agreements shall contain customary terms
covering forecasting, Active Ingredient supply, batch size, delivery schedule,
title (risk of loss), quality and regulatory related issues (e.g., standard of
manufacture, right of review, audit rights, recalls, FDA inspections), and
pricing adjustments over the course of the Term. The Manufacture and Supply
Agreement shall provide for a committee that shall meet regularly to discuss
product supply, quality and related issues (“Supply Committee”). Any disputes
within the Supply Committee shall be referred to the Steering Committee (as
defined herein) for resolution. In the event required by the FDA, the Parties shall enter into a drug safety data
exchange agreement which shall, among other things, allocate responsibility for
maintaining the global safety database.

 

4.2                                 Temporary Product. EURAND will use commercially reasonable
efforts to maintain an uninterrupted supply of a low dose [********] product, [********] under SCANDIPHARM’s [********], and having the formulation
and specifications attached hereto as Appendix IA (“Temporary Product”)
until the earlier of (1) the date the Formulation is [********] for a Low Dose Product and SCANDIPHARM receives any
necessary Applicable Permits to market Low Dose Product in the United States
and (5) five years from the effective date of the Amendment. Current ordering
and pricing practices shall be maintained.

 

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

 

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4.3                                 Active Ingredient Supply. Subject to the terms of the
Manufacture and Supply Agreement to be entered into pursuant to Section 4.1 ,
SCANDIPHARM shall be entitled to transact directly with the Active Ingredient
supplier in order to establish release, testing and validation parameters and
other specifications for the Active Ingredient used in the manufacture of
Product and include these, as required, in its filing for an NDA with the FDA;
provided however, Eurand shall be fully apprised of the details of any such
transaction and the parameters and specifications for the Active Ingredient
shall not be varied in such a way as to materially interfere with Eurand’s
ability to formulate and manufacture Product.”

 

7.                                       Prices for Products.

 

7.1                                 Section 5 of the Original Agreement is hereby
amended throughout by the replacement of the word “Product” with “Standard
Product”

 

7.2                                 Section 5.1(a) is hereby amended by the
addition of the following sentence after the last sentence therein:

 

“A commercially reasonable price for Low Dose
Product shall be negotiated once the final formulation development work is
completed for such Low Dose Product; provided however, in no event shall the
price be higher for the Low Dose Product than for the Standard Product.”

 

8.                                       Royalties and Licensing Fee.

 

8.1                                 Section 6.1(a) of the Original Agreement is
hereby amended and restated by deleting the first sentence in its entirety and
replacing it as follows:

 

“(a) SCANDIPHARM shall pay EURAND a royalty of [******]
for the Territory.”

 

8.2                                 Section 6.4 of the Original Agreement is
hereby amended by the replacement of the words “United States of America” with “Primary
Territory” and further all references therein to “Finished Dosage Forms” refers
solely to Finished Dosage Forms of Standard Product.

 

8.3                                 Section 6 of the Original Agreement is hereby
amended by the addition of the following subsection 6.5:

 

“6.5                           Licensing Fee. Upon the completion of the formulation work
for Low Dose Product, the Parties shall negotiate a commercially reasonable
licensing fee and terms of payment for Low Dose Product (“Licensing Fee”).”

 

9.                                       Term. Section 7.1 of the Original Agreement is hereby amended and restated
in its entirety as follows:

 

“7.1                           Duration. This Agreement shall be effective from the
date the last person to sign executes this Agreement and shall expire on
December 31, 2015 (the “Initial Term”) and shall automatically renew for two
(2) year periods (the Initial Term and all such renewal periods, the “Term”)
unless written notice of nonrenewal is provided by either Party to the other at
least two (2) years prior to the expiration of this Agreement.”

 

10.                                 Representations and Warranties.

 

10.1                           Section 9.2(c) is hereby added to the
Original Agreement as follows:

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
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“(c)  EURAND
shall materially comply with all Applicable Laws as they relate to EURAND’s
activities under this Agreement.”

 

10.2                           Section 9.3(a) of the Original Agreement is
deleted in its entirety and the subsequent sections re-lettered accordingly.

 

10.3                           Section 9.3(c) of the Original Agreement is
hereby amended and restated in its entirety as follows:

 

“(c) 
SCANDIPHARM shall materially comply with all Applicable Laws as they
relate to SCANDIPHARM’s activities under this Agreement.”

 

11.                                 Miscellaneous.

 

11.1                           Section 10.2 of the Original Agreement is hereby
amended by the addition of the following subsection (d) “(d) anything related
to the Temporary Product”.

 

11.2                           Section 11.2 of the Original Agreement is
hereby amended by the replacement of the words “for the duration of this
Agreement” at the end of the first sentence therein by the following “for a
period of five (5) years from the expiration or termination of this Agreement”
and the addition of the words “of EURAND” after the word “documentation” at the
beginning of the second sentence.

 

11.3                           Section 11.16 of the Original Agreement is
hereby amended by the addition of the following “If a dispute of the parties is
not resolved by referral to the CEOs of each of the parties as provided in this
Agreement, then such dispute shall be submitted to arbitration as follows:”.

 

11.4                           Exhibit B of the Original Agreement (entitled
“Proposed Stability Protocol”) is hereby deleted as every usage of the term “Exhibit
B” in the Original Agreement shall be stricken.

 

11.5                           Exhibit C of the Original Agreement (entitled
“Development Fees”) is hereby amended by its renaming as “Appendix III”, and
every usage of the term “Exhibit C” in the Original Agreement shall be stricken
and replaced with “Appendix III”. The Parties hereby confirm that all amounts
therein have been paid in full.

 

11.6                           Exhibit D of the Original Agreement (entitled
“Manufacturing Costs”) is hereby amended by its renaming as “Appendix IV”, and
every usage of the term “Exhibit D” in the Original Agreement shall be stricken
and replaced with “Appendix IV”.

 

11.7                           The Parties agree that they shall prepare and
execute an amended and restated agreement incorporating the terms and
conditions of the Agreement as it exists as of the execution of this Amendment.

 

11.8                           The captions to the paragraphs/sections in
this Amendment are not a part of this Amendment or the Agreement, and are
included merely for convenience of reference only and shall not affect its
meaning or interpretation.

 

11.9                           This Amendment may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.

 

11.10                     This Amendment was drafted by both Parties
and thus any rule of contract interpretation calling for documents to be
construed against the drafter shall not apply to the construction of this
Amendment.

 

11.11                     EURAND and SCANDIPHARM confirm and
acknowledge that neither Party will bring an action or claim in arbitration
against the other based on actions or omissions that it has knowledge of and
which occurred prior to the Effective Date and that would constitute material
breach of a provision of the Original Agreement other than the provisions of
Section 6.2 (taxes), Article 10 (Indemnification, other than Section 10.2 (b)
to the 

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
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9

 

EXECUTION
COPY

 

extent it references
9.3(a)), or Section 11.2 (Confidentiality). Notwithstanding the foregoing,
nothing herein shall operate to waive any claim either party may have arising
from the negligence or misconduct of the other. Except for the changes made by
this Amendment to the Agreement, the Original Agreement remains in full force
and effect without modification. All references to “Agreement” in the Original
Agreement shall mean the Agreement as amended hereby.

 

11.12                     The Parties shall exert commercially
reasonable efforts to enter into an Amended and Restated Original Agreement
which reflects the changes made by this Amendment to the Original Agreement and
such other changes the Parties may hereafter reasonably agree to, no later than
30 days after the execution of this Amendment. In the event of any
inconsistency between this Amendment and the Original Agreement, the Parties
shall refer to the Original Agreement to resolve such inconsistency.

 

Signature Page Follows

 

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EXECUTION COPY

 

IN WITNESS WHEREOF, the Parties hereto have caused this
instrument to be executed by their duly authorized officers with effect as of
the 23th day of March, 2007.

 

 

	
  AXCAN SCANDIPHARM, INC.

  	
   

  	
  EURAND S.p.A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ FRANK VERWEIL

  	
   

  	
  By:

  	
  /s/ Gearoid M. Faherty

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Frank
  Verweil

  	
   

  	
  Name:

  	
  Gearoid M. Faherty

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  March 23rd, 2007

  	
   

  	
  Date:

  	
  March 28th, 2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ RICHARD TARTE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Richard Tarte

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  General Counsel

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  March 23rd, 2007

  	
   

  	
   

  	
   

  

 

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EXHIBIT
IA

 

EXCLUSIVE
DEVELOPMENT/LICENSE/SUPPLY AGREEMENT DATED MAY 16, 2000

 

[PREVIOUSLY
DISTRIBUTED]

 

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EXECUTION COPY

 

APPENDIX
I

 

FORMULATION
AND SPECIFICATIONS FOR STANDARD PRODUCT (REV. MARCH 22, 2007)

 

[******]

 

 

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APPENDIX
IA

 

FORMULATION
AND SPECIFICATIONS FOR TEMPORARY PRODUCT (rev. MARCH 15, 2007)

 

[*****]

 

 

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EXECUTION COPY

 

APPENDIX II

 

SPECIFICATIONS
FOR LOW DOSE PRODUCT

 

[NOTE:
TO BE APPENDED UPON FINALIZATION OF FORMULATION FOR LOW DOSE PRODUCT.]

 

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EXECUTION COPY

 

APPENDIX III

 

COUNTRIES IN THE SECONDARY TERRITORY

 

Belize

Guatemala

Honduras

Nicaragua

Panama

Salvador

 

Bolivia

Colombia

Ecuador

Guiana

Paraguay

Peru

Surinam

Uruguay

Venezuela

 

Anguilla

Antigua

Bahamas

Barbados

British
Guyana

British
Virgin Islands

Cuba

Dominica

Dominican
Republic

Grenada

Grenadienes

Haiti

Jamaica

Montserat

Netherland
Antilles

Nevis

St.
Kitts

St.
Lucia

St.
Vincent

Suriname

Tortola

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.Exhibit 10.6

 

 

MASTER DEVELOPMENT AGREEMENT

 

This Master Development Agreement (the “Agreement”)
is made as of December 09, 2005 (the “Effective Date”) by and between WARNER-LAMBERT COMPANY LLC, a Delaware limited liability
company with its principal offices located at 201 Tabor Road, Morris Plains,
New Jersey 07950 (“Warner”), and EURAND, INC., a
Nevada corporation with its principal offices located at 845 Center Drive,
Vandalia, OH 45377 (“Eurand”).

 

WITNESSETH:

 

WHEREAS, Eurand
possesses certain specialized knowledge and/or expertise in the development and
manufacture of certain fast-dissolve ingredients, orally disintegrating
tablets, and in certain technologies for microencapsulation and taste-masking
(the “Eurand Intellectual Property” as hereinafter defined in Section
7(a)); and

 

WHEREAS, Eurand is
willing and able to perform the Services (as hereinafter defined) using the
Eurand Intellectual Property and other relevant knowledge and skills that it
has to develop products (each a “Product”) for Warner in accordance with
the terms of this Agreement; and

 

WHEREAS, Warner
desires to engage Eurand to provide the Services and develop the Product(s) as
set forth and described in greater detail in the Statement(s) of Work (each, an
“SOW”) for each Product each of which shall be prepared in a form
similar to Exhibit A attached to this Agreement; and

 

WHEREAS, in
furtherance of the anticipated Services, the parties desire to enter into this
Agreement, subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in view of the foregoing premises hereby
incorporated into this Agreement and in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.             Scope of Services.

 

(a)           Warner hereby
engages Eurand, and Eurand hereby accepts Warner’s engagement, to provide to
Warner the Services (as hereinafter defined). For purposes of this Agreement,
the term “Services” shall mean formulation development and optimization,
manufacturing of clinical trial materials, analytical methods development,
process scale-up and validation, and other services required by Warner, if any,
as more fully set forth in one or more SOWs issued under this Agreement. Each
SOW hereunder must be in writing and must be signed by both Warner and Eurand. Each
SOW shall be governed by the terms and conditions of this Agreement. Any
material change in an SOW shall be agreed to in writing in advance by Eurand and
Warner, and Warner shall be responsible for the agreed-upon cost of any
additional development work performed by Eurand as a result of such change(s). Unless
otherwise set forth in an SOW, for the avoidance of doubt, the costs of any
third party packaging services incurred by Eurand as required in an SOW will be
reimbursed by Warner following written approval by 

 

CONFIDENTIAL

 

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Warner, and
Warner may elect to conduct such packaging itself or with a third party
packager of Warner’s selection.

 

(b)           Eurand shall
promptly after the effective date of each SOW undertake a program to perform
the Services specified in such SOW. Eurand shall use commercially reasonable
efforts for the performance of the Services as per each SOW.

 

(c)           Eurand shall use
commercially reasonable efforts to adhere to the timetables and schedules set
forth in an SOW.

 

(d)           Eurand shall supply
usage instructions for the handling and storage of the Prototypes and Samples
by Warner and all commercially reasonable documentation necessary or required
by Warner certifying that the Samples can be released for testing in accordance
with Good Laboratory Practices, current Good Manufacturing Practices (“cGMP,”
as defined in Section 1(e) below) and current industry standards.

 

(e)           As used herein, “Prototype”
means the Product produced by Eurand in accordance with an SOW for Warner’s
evaluation but not for consumer and/or clinical testing; as used herein, “Sample”
means the Product produced by Eurand in accordance with an SOW and cGMPs such
that it is appropriate for consumer and/or clinical testing, and as used herein
“Specifications” means the qualitative and quantitative criteria for the
Product set forth in an SOW. “GMPs” as used herein means the current
state of good manufacturing practices of the FDA as set forth in 21 C.F.R.
parts 210 and 211. “Formulations” as used herein means the combinations
of ingredients and methods developed by Eurand in the performance of the
Services by applying the Eurand Intellectual Property to one or a combination
of active ingredients. For all terms defined in this Agreement, the singular
includes the plural, and the plural includes the singular.

 

(f)            Unless otherwise
set forth in an SOW, Eurand shall be responsible for acquiring all materials
for the Product and Warner shall reimburse Eurand for its actual documented
costs for materials, including the active ingredients if applicable, used in
performing the Services as set forth in an SOW.

 

(g)           Prototypes and
Samples shall be shipped to Warner by Eurand CIF (cost, insurance and freight)
in accordance with Incoterms 2000 (as published by the International Chamber of
Commerce). Upon completion of Services under an SOW, Eurand shall, at Warner’s
election, ship to Warner, freight collect, or destroy, any materials supplied
by Warner that have not been utilized in completing Services.

 

2.             Consideration. Eurand shall invoice Warner for
Services and for previously approved expenses, as set forth in an SOW. Warner
shall pay Eurand for its performance of the Services as set forth in an SOW and
for documented and previously approved expenses incurred by Eurand directly
related to the Services hereunder within thirty (30) days of receipt of an
invoice from Eurand about which there is no dispute. In the event Warner fails
to pay the amounts due as set out above within the time agreed, Eurand shall at
its discretion impose a late payment penalty on Warner equivalent to an amount [*****]

 

CONFIDENTIAL

 

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

 

 

of the
outstanding amount due per month, unless such payment is subject to a good
faith dispute between the parties.

 

3.             Term; Termination.

 

(a)           This Agreement shall
be effective as of the Effective Date and shall continue in effect until
terminated upon ninety (90) days prior notice of termination given by either
party at anytime, unless sooner terminated in accordance with the terms of this
Agreement (the “Term”). Unless otherwise set forth in an SOW, each SOW
shall be effective as of the effective date set forth in the SOW and shall
continue in effect until thirty (30) days after completion of the Services
described in such SOW unless terminated by Warner upon thirty (30) days prior
notice or otherwise terminated in accordance with the terms of this Agreement. If
this Agreement is terminated, its terms and conditions shall continue to be
applicable to any SOW issued hereunder and still in effect as of the date of
termination.

 

(b)           In the event of
termination of an SOW by Warner, Eurand shall be paid for Services performed
pursuant to such SOW to the date of termination, costs associated with
concluding any testing and revision of final reports as required in the SOW to
the extent requested by Warner at the time notice of termination is delivered,
and any non-cancelable costs incurred by Eurand prior to the date of notice of
termination, so long as such Services were not performed in whole or in part in
furtherance of a breach of this Agreement or the SOW.

 

(c)           Either party may
terminate this Agreement or any SOW upon thirty (30) business days’ prior
written notice to the other in the event of a breach of a material term and/or
condition hereunder, provided that the
breaching party shall have the opportunity to cure the breach within the notice
period. If the breach is cured to the aggrieved party’s reasonable
satisfaction, this Agreement or the SOW, as applicable, shall continue in full
force and effect unless otherwise terminated as provided herein.

 

(d)           Either party may
terminate this Agreement or any SOW if the other party hereto becomes
insolvent, files a petition under any bankruptcy or insolvency act or has any
such petition filed against it, provided that
in the event of any involuntary petition filed against a party, the affected
party shall have thirty (30) days from the date of filing thereof to discharge
the same.

 

4.             Review of Project
Progress; Maintenance of Records.

 

(a)           Eurand shall
periodically review with authorized representatives of Warner the progress of
work under any SOW and the meeting of SOW timetables and other milestones.

 

(b)           During the term of
an SOW, any extensions thereof, and for a period of five (5) years thereafter,
Eurand shall keep proper and complete records documenting and detailing the
progress and results of the Services performed for Warner pursuant to such SOW.
Upon reasonable notice during normal business hours, Warner’s authorized
representatives, including but not limited to its external auditors, may
inspect, but not copy, such records related to the performance of the Services,
except as otherwise outlined in the SOW.

 

 

CONFIDENTIAL

 

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

 

 

(c)           Upon the termination
or expiration of an SOW, Eurand shall turn over promptly at Warner’s written
request, in a manner and form satisfactory to Warner, all Warner property in
Eurand’s possession given to Eurand in connection with the SOW.

 

5.             Representations,
Warranties and Covenants of Eurand. Eurand represents, warrants and
covenants to Warner that, as of the date hereof and throughout the Term of this
Agreement and the terms of each SOW:

 

(a)           it is a corporation duly authorized
and in good standing under the laws of its jurisdiction of incorporation;

 

(b)           it has full corporate power and
authority to enter into and perform this Agreement and the applicable SOW; its
execution, delivery and performance of this Agreement and the applicable SOW
have been duly authorized by all requisite corporate action; and it has duly
executed and delivered this Agreement and the applicable SOW;

 

(c)           it has, and shall have, good,
complete and valid rights to utilize or develop the Eurand Intellectual
Property utilized or developed in connection with the Services, and to perform
the Services hereunder; it is free to enter into this Agreement, the applicable
SOW and any other future agreement contemplated by the parties in connection
with a SOW;

 

(d)           it is not subject to any legal,
arbitral, regulatory proceedings pending, and there are no contractual or other
restrictions which might have a material adverse effect on Eurand’s ability to
carry out the Services to Warner hereunder, or that might enable another person
or entity to claim any rights in or to the Eurand Intellectual Property
utilized or developed by Eurand in connection with the performance of the
Services hereunder, and to Eurand’s knowledge no such actions, proceedings or
prohibitions are threatened against Eurand or its Affiliates (as hereinafter
defined);

 

(e)           it owns or has all legal rights, by
assignment, written authorization, or otherwise, necessary or required to
perform the Services hereunder with respect to all patents, trade secrets,
know-how, other intellectual property, and the equipment needed to perform the
Services;

 

(f)            to the best of its knowledge, it has
not infringed or misused, and will not infringe or misuse, any information of a
third party relating in any way to the Prototypes, Samples or Services,
including but not limited to any third party’s patents and/or patent
applications, trade secrets, know-how, or any other intellectual property, nor
has such infringement or misuse been alleged against Eurand by means of a filed
lawsuit or otherwise; to the best of its knowledge, no such property rights
would be infringed by Warner’s use of any Prototype or Sample developed
hereunder (including, without limitation, the Product);

 

(g)           its laboratory, research,
development, manufacturing and other facilities, equipment and operations
utilized or anticipated in connection herewith are and shall remain in material
compliance with all applicable laws, rules and regulations; it holds all 

 

 

CONFIDENTIAL

 

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licenses, permits and other similar
authorizations necessary or required for it to conduct its operations and
business in the manner currently conducted and in the manner contemplated by
this Agreement, and it will require the same level of compliance of all
subcontractors engaged by Eurand hereunder;

 

(h)           it shall ensure that Samples or other
developments created by Eurand and submitted to Warner in connection with this
Agreement are and shall be original creations of Eurand, and Eurand is aware of
no adverse claims in or to any of the foregoing;

 

(i)            it shall ensure that all Prototypes
and Samples provided to Warner hereunder shall conform to the Specifications
and be manufactured in accordance with cGMPs unless otherwise indicated on an
SOW, and shall comply with all applicable federal, state and local laws, rules
and regulations governing the manufacture, use, distribution and sale thereof;
and

 

(j)            Eurand does not warrant that the
performance of the Services will result in a commercially viable Prototype or
Sample, notwithstanding the exercise of commercially reasonable efforts, and
the parties acknowledge that the Services are experimental in nature. Eurand
may delegate all or any portion of its responsibilities under a SOW to one or
more of Eurand’s Affiliates, provided that any such Affiliate will be bound by
the terms and conditions of this Agreement.

 

As used in this Agreement, “Affiliate”
means, with respect to a party, any person, corporation or other business
entity which, either directly or indirectly, controls such party, is controlled
by such party, or is under common control with such party. As used herein, the
term “control” means possession of the power to direct, or cause the
direction of the management and policies of a corporation or other entity,
whether through the ownership of voting securities, by contract or otherwise.

 

6.             Representations,
Warranties and Covenants of Warner. Warner represents, warrants and
covenants to Eurand that, as of the date hereof and throughout the Term of this
Agreement and the term of each SOW:

 

(a)           it is a limited liability company
duly authorized and in good standing under the laws of its jurisdiction of
formation;

 

(b)           it has full organizational power and
authority to enter into and perform this Agreement and the applicable SOW; its
execution, delivery and performance of this Agreement and the applicable SOW
have been duly authorized by all requisite action of its governing body; and it
has duly executed and delivered this Agreement and the applicable SOW;

 

(c)           it is free to enter into this
Agreement, the applicable SOW, and any other future agreement contemplated by
the parties in connection with the Services; and, to its knowledge, it has, and
will continue to have, the legal power, authority and right to perform its
obligations hereunder; and

 

CONFIDENTIAL

 

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(d)           to the best of its knowledge, the use
by Eurand of any active ingredient that is the subject of an SOW or the use of
any intellectual property of Warner by Eurand in the performance of Services
will not infringe any third party’s patents and/or patent applications, trade
secrets, know-how, or any other intellectual property, nor has such
infringement been alleged against Warner by means of a filed lawsuit or
otherwise; to the best of its knowledge, no such property rights would be
infringed by the use by Warner of any Prototype or Sample developed hereunder.

 

7.             Ownership of Intellectual
Property/Improvements.

 

(a)           It is recognized and
understood that the know-how, technology, trade secrets, formulations,
specifications, processes, patents and other intellectual property
(collectively, the “Intellectual Property”) of each of Warner and Eurand
that (i) existed before and was owned by, or to which rights were held by, that
party prior to the Effective Date of this Agreement or the effective date of an
applicable SOW or (ii) is developed by either party at any time outside the
scope of the Services hereunder shall remain the exclusive proprietary
information of such party, and such ownership shall not be affected by this
Agreement. Neither party shall have any claims to, or rights in, such existing
Intellectual Property of the other party.

 

(b)           Eurand shall
disclose to Warner promptly, and Warner shall own, any and all data, work
product, results, reports, ideas, designs, concepts, technology, know-how, inventions
or improvements (collectively, “Improvements”) developed solely by Eurand or in
collaboration with Warner pursuant to this Agreement and inextricably linked to
the Warner Intellectual Property relating to the compound(s) that are the
subject of a particular SOW (the “Warner Improvements”). Eurand shall
own any and all other Improvements developed solely by Eurand pursuant to this
Agreement, including but not limited to the Formulations, Prototypes or Samples
(the “Eurand Improvements”). Any Improvements other than those
identified in the previous two sentences, shall be owned solely by the party or
jointly by the parties that invented the Improvement as determined by US law,
provided that any improvements generated by Warner in breach of Section 13(k)
shall be solely owned by Eurand. However, for the avoidance of doubt, joint
ownership of any such Improvement shall not entitle either party to any rights
under the other party’s Intellectual Property underlying such Improvement. Accordingly,
by way of example and not limitation, in the event that a Formulation
constitutes a joint invention of Eurand and Warner under US law, neither party
would be entitled to exploit the jointly invented Formulation independently
without a license under the other party’s underlying Intellectual Property. All
Warner Improvements shall be the exclusive proprietary information of Warner
and shall be treated as Confidential Information of Warner. All Eurand
Improvements shall be the exclusive proprietary information of Eurand and shall
be treated as Confidential Information of Eurand.

 

(c)           If Warner elects to
file a patent or seek other statutory protection with respect to the Warner
Improvements, Eurand shall execute any and all documents including, without
limitation, assignment of its rights in such Warner Improvements, and Eurand
shall do any and all such other things at Warner’s expense as may be reasonably
necessary to enable Warner to prepare, file, prosecute and maintain
applications for such patent or other statutory protection. If Eurand elects to
file a patent or seek other statutory protection with respect to the Eurand
Improvements, Warner shall execute any and all documents including, without 

 

CONFIDENTIAL

 

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limitation,
assignment of its rights in such Eurand Improvements, and Warner shall do any
and all such other things at Eurand’s expense as may be reasonably necessary to
enable Eurand to prepare, file, prosecute and maintain applications for such
patent or other statutory protection. Each party hereto will cooperate with the
other party hereto and will cause its Affiliates, officers and employees to
also cooperate, in completing the filing of any patent applications for Joint
Improvements.

 

(d)           Each party hereby
recognizes and agrees that no right or license under any patents, patent
applications or other intellectual property (including without limitation
Warner Improvements and Eurand Improvements) is granted under this Agreement,
except to the extent necessary to perform their respective obligations under
this Agreement.

 

8.             Confidential Information.

 

(a)           As used herein, “Confidential
Information” shall mean oral and written information of either party
disclosed in connection herewith or otherwise in connection with the Services,
including but not limited to the Intellectual Property of a party, which shall
be marked or otherwise characterized as confidential by the disclosing party,
as well as component materials, Formulations, Prototypes and Samples disclosed
or provided in connection herewith, Warner’s desire to have Eurand develop the
Products and perform the Services, future negotiations between Warner and
Eurand and/or any other future agreement. Confidential Information that is
disclosed orally shall be declared to be confidential at the time of disclosure
and confirmed in writing by the disclosing party within thirty (30) days of
such disclosure.

 

(b)           Each of Eurand and
Warner agree that, with regard to any Confidential Information of either party
disclosed to the other pursuant to this Agreement, the receiving party (i)
shall not use such information for any purpose other than performing the Services
hereunder or carrying out the arrangements contemplated in this Agreement; (ii)
has no obligations or commitments inconsistent with these representations;
(iii) shall not permit disclosure of the Confidential Information of the other
without the prior written consent of the disclosing party to anyone except
employees, consultants (including legal advisors) or Affiliates who are
directly and necessarily concerned therewith; and (iv) shall use all reasonable
safeguards to prevent the unauthorized disclosure of such Confidential
Information by its employees, consultants and Affiliates, and shall require
such employees, consultants and/or Affiliates to comply with the
confidentiality provisions set forth herein. In appropriate cases, the
receiving party’s consultants shall be required to sign confidentiality
agreements specific to matters concerned herewith.

 

(c)           The obligations and
representations set forth in this Section 8 shall not apply to Confidential
Information of either party that (i) is or becomes generally available to the
public through no fault of the receiving party; (ii) can be demonstrated in
writing to have been known by the receiving party or its Affiliates at the time
of its disclosure by the other party; (iii) is independently developed
after the date of disclosure by the receiving party or its Affiliates, without
the aid, application or use of the Confidential Information; or (iv) becomes
known to the other party from a third party without breach of this Agreement or
breach of any obligations of confidentiality by the third party.

 

CONFIDENTIAL

 

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

 

 

 

(d)           If the receiving
party is requested to disclose the Confidential Information of the disclosing
party or the substance of this Agreement in connection with a legal or
administrative proceeding or otherwise to comply with a requirement under the
law, the receiving party will give the disclosing party prompt notice of such
request so that the disclosing party may seek an appropriate protective order
or other remedy, or waive compliance with the relevant provisions of this
Agreement. If the disclosing party seeks a protective order or other remedy,
the receiving party, at the disclosing party’s expense, will cooperate with and
assist the disclosing party in such efforts. If the disclosing party fails to
obtain a protective order or waives compliance with the relevant provisions of
this Agreement, the receiving party will disclose only that portion of the
Confidential Information which its legal counsel determines it is required to
disclose.

 

(e)           The obligations of
confidentiality and nondisclosure contained herein shall remain in effect for
three (3) years following the later of (i) the expiration of the Term of this
Agreement or (ii) the expiration of the last SOW entered into pursuant to the
terms of this Agreement.

 

(f)            Upon the later of
(i) the expiration of the Term of this Agreement or (ii) the expiration of the
last SOW entered into pursuant to the terms of this Agreement, upon written
request each party shall destroy any Confidential Information of the other
party disclosed hereunder, except for one (1) copy which may be kept in the
files of such party’s legal advisors for archival purposes or for the purpose
of complying with governmental requirements.

 

9.             Independent
Contractor. 

 

Each party’s status shall be that of an independent contractor without
capacity to bind the other. Nothing contained in this Agreement shall be deemed
to create any joint venture or principal-agency relationship between Eurand and
Warner, or any Affiliates of either party, and neither party shall hold itself
out in any manner which would indicate any such relationship with the other. Eurand
acknowledges for itself, its employees, agents and subcontractors, that none of
its employees, agents and subcontractors are entitled to participate in any
benefit plans of Warner or its Affiliates. Eurand further acknowledges that
none of its employees, agents and subcontractors are eligible to participate in
any such benefit plans, even if it is later determined that the status of any
of them was that of an employee of Warner or its Affiliates during the period
of this engagement of Eurand by Warner. Eurand, on behalf of itself, its
employees, agents and subcontractors hereby expressly waives any claim for
benefits coverage attributable to the Services provided under this Agreement.

 

10.           Indemnification;
Insurance.

 

(a)           Eurand shall
indemnify, defend and hold Warner, its directors, officers, employees,
Affiliates and agents (the “Warner Indemnified Parties”) harmless from
and against all claims, damages, losses, costs and expenses (including
reasonable attorneys’ fees and court costs) (collectively, “Losses”)
incurred, assessed against or sustained by the Warner Indemnified Parties with
respect to, or arising out of, any injury, claim or damage resulting from or
caused by (i) any material falsity in or breach by Eurand, its employees,
agents or subcontractors of its or their representations, warranties,
covenants, agreements, or obligations under this Agreement; (ii) any negligence
or willful misconduct by Eurand in the performance of the activities hereunder;
(iii) any Prototypes or Samples that are not made in accordance with the
requirements 

 

CONFIDENTIAL

 

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

 

 

 

of this
Agreement; and (iv) any third party patent infringement claims relating to
Eurand’s use of Eurand Intellectual Property in connection with a Product
pursuant to this Agreement.

 

(b)           Warner shall
indemnify, defend and hold Eurand, its directors, officers, employees,
Affiliates, and agents (the “Eurand Indemnified Parties”) harmless from
and against all Losses incurred, assessed or sustained by the Eurand
Indemnified Parties with respect to or arising out of an injury, claim or
damage to a third party resulting from or caused by (i) material falsity in or
any breach by Warner of its representations, warranties, covenants or
agreements hereunder, or (ii) any negligence or willful misconduct by Warner in
the performance of the activities hereunder, or (iii) any use of the results of
the Services, or human studies conducted on the Samples or the use or labeling
of the Prototypes or Samples or the handling or storage of the Prototypes or
Samples other than in accordance with the instructions provided by Eurand, in
each case while in Warner’s custody or under its sole control.

 

(c)           During (i) the Term
of this Agreement and any extensions hereof and (ii) the term of all SOWs
and any extensions thereof, Eurand shall acquire and maintain at its sole cost
and expense no less than the following types and coverage minimums of insurance
underwritten by one or more insurers maintaining at least an A-, A.M. Best
rating:  (i) Statutory Workers’
Compensation Insurance and Employer’s Liability Insurance; (ii) all risk
coverage for physical loss or damage to materials including the Prototypes and
Samples while in or under its control; and (iii) General Liability Insurance,
including Products Liability, Bodily Injury and Property Damage Insurance with
a combined single limit of not less than $5 million per incident. Eurand shall
require its subcontractors, to the extent approved hereunder, to provide the
aforementioned coverages and any other coverages that Eurand deems advisable. Upon
request, Eurand shall provide Certificate(s) of Insurance to Warner evidencing
the aforementioned coverages on behalf of itself and its authorized
subcontractors, if any.

 

11.           Survival. The
confidentiality, indemnification, representations, warranties and ownership
provisions of this Agreement shall survive the termination or expiration of
this Agreement.

 

12.           Force Majeure.
Each of the parties hereto shall be excused from the performance of its
obligations hereunder in the event performance of this Agreement is prevented
by force majeure and such excuse shall continue as long as the condition
constituting such force majeure continues, plus thirty (30) days after the
termination of such condition. For purposes of this Agreement, force majeure
shall mean causes beyond the control of the affected party which are not
attributable to any legal violation, breach or default by either party,
including acts of God; acts, regulations, or laws of any government; civil
commotion; substantial damage to or destruction of production facilities or
materials by fire, explosion, earthquake or storm; epidemics; and failure of
public utilities. For the avoidance of doubt, public means and modes of
transportation including, but not limited to, trucks and trains do not
constitute public utilities.

 

13.           Miscellaneous.

 

(a)           Assignability;
Subcontracting. Neither party may at any time assign this Agreement or any
rights and obligations hereunder, without the prior written consent of the
other party, such consent not to be unreasonably withheld, provided that either
party shall have the 

 

CONFIDENTIAL

 

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

 

 

 

right to
assign all of its rights, interest and obligations to an Affiliate, or to a
successor to a controlling or majority share of such party, or to a successor
to substantially all the business to which this Agreement relates. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective authorized successors, legal representatives and
assigns. In no event shall Eurand delegate or subcontract any of its
obligations or performance hereunder without the prior written consent of
Warner.

 

(b)           Notices. Any
notice, request or other document to be given hereunder shall be in writing and
delivered personally or by nationally-recognized overnight courier (prepaid),
or sent by facsimile, confirmation received, or sent by registered or certified
mail, postage prepaid and addressed as follows:

 

	
   

  	
  if to
  Warner:

  	
   

  
	
   

  	
   

  	
  Warner-Lambert Company LLC

  	
   

  
	
   

  	
   

  	
  201 Tabor Road

  	
   

  
	
   

  	
   

  	
  Morris Plains, New Jersey 07950

  	
   

  
	
   

  	
   

  	
  Attention: Director, R&D - Oral Dosage
  Formulations

  	
   

  
	
   

  	
   

  	
  Facsimile No.: (973) 385-5919

  	
   

  
	
   

  	
   

  	
  with a copy to: Assistant General Counsel

                          Facsimile
  No.: (973) 385-3927

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  if to
  Eurand:

  	
   

  
	
   

  	
   

  	
  Eurand, Inc.

  	
   

  
	
   

  	
   

  	
  845 Center Drive

  	
   

  
	
   

  	
   

  	
  Vandalia, OH 45377

  	
   

  
	
   

  	
   

  	
  Facsimile No.: (937) 898-1093

  	
   

  
	
   

  	
   

  	
  Attention: Office of Business Development

  	
   

  
					

 

(c)           Entire Agreement;
Amendments; Waiver.

 

(i)            The terms and
provisions contained in this Agreement, and all Exhibits or Schedules hereto,
and all SOWs issued hereunder constitute the entire agreement between the
parties and shall supersede all previous communications, representations,
agreements or understandings, whether oral or written, between the parties
hereto with respect to the subject matter hereof. In the event of a conflict
between the terms of the Agreement and an SOW, the terms of this Agreement
shall control.

 

(ii)           No agreement or
understanding varying, modifying, amending, waiving or extending either this
Agreement or any SOW, in whole or in part, shall be binding upon either party
hereto unless set forth in a writing which specifically refers to this
Agreement and is signed by duly authorized officers or representatives of the
parties hereto. A waiver of any breach or failure to enforce any of the terms
or conditions of this Agreement shall in no way affect, limit or waive a party’s
rights at any time to enforce strict compliance thereafter with every term or
condition of this Agreement.

 

CONFIDENTIAL

 

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

 

 

 

(d)           Governing Law.
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York, other than the provisions relating to conflicts of
law.

 

(e)           Severability.
If a court of competent jurisdiction determines that any portion of this
Agreement is unenforceable, then that portion shall be considered to be removed
from this Agreement, and such deletion shall not affect the enforceability of
the remainder of this Agreement.

 

(f)            Headings. Headings
are for convenience only and shall not be used for substantive interpretation
of any provision.

 

(g)           Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed
to be an original and both of which together shall constitute one and the same
Agreement.

 

(h)           Consequential
Damages. NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT WHICH MIGHT
OTHERWISE BE TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
LOST PROFITS OR OTHER CONSEQUENTIAL DAMAGES OF ANY KIND, EXCEPT FOR THE
OBLIGATION OF EACH PARTY FOR THE INDEMNIFICATION OF THIRD PARTY CLAIMS UNDER
SECTION 10.

 

(i)            Limitation of
Warranties. EXCEPT TO THE EXTENT PROVIDED IN SECTION 5(I) THE PROTOTYPES
AND SAMPLES ARE SUPPLIED TO WARNER WITH NO WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, TITLE OR FITNESS FOR A PARTICULAR
PURPOSE.

 

(j)            Commitments.
In no event shall the performance of the Services by Eurand hereunder or any
discussions between the parties concerning the subject matter hereof create any
commitment or obligation on the part of either party to enter into a license
agreement or any other future agreement that is not set forth in a written
agreement signed by the parties hereto.

 

(k)           Research License.
Eurand hereby grants Warner an exclusive research license for the right to use
the Prototypes and Samples to perform various in vitro and in vivo consumer
tests in furtherance of its development activities for a period from the
Effective Date through ninety (90) days after the term of any SOW; however,
Warner will not reverse engineer or have reverse engineered the Prototypes or
Samples to determine their composition or structure or file any patents arising
from Warner activities conducted in conjunction with the research license                     .

 

CONFIDENTIAL

 

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

 

 

 

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

 

 

	
  EURAND,
  INC.

  	
   

  	
  WARNER-LAMBERT
  COMPANY LLC

  
	
   

  	
   

  	
   

  
	
  By: 

  	
    /s/

  	
  John Fraher

  	
   

  	
  By: 

  	
    /s/

  	
  Richard D’Souza

  	
   

  
	
  Name: 

  	
  John Fraher

  	
   

  	
  Name: 

  	
  Richard
  D’Souza

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
  12th December 2005

  	
   

  	
   

  	
  PCH R&D
  (DS 446)

  

 

CONFIDENTIAL

 

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

 

 

 

EXHIBIT A

(Form of SOW)

This Statement
of Work is made and entered into pursuant to the Master Development Agreement
dated as of December 09, 2005 (the “Agreement”) between Warner-Lambert Company
LLC (“Warner”) and Eurand, Inc. (“Eurand”)

Effective Date

Product

Specifications

Description of Services

[Please enter description as well as reference to any attachments.]

Schedule

	
  Activity

  	
   

  	
  Finish Date

  	
   

  	
  Responsible Party

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Compensation/Payment Schedule

Supply

{To the extent Eurand may supply Product, include the estimated price
and any other contemplated terms}

Option/Exclusivity

 

Other Terms and Conditions

The parties
agree that this SOW is incorporated by reference into the Agreement and shall
be subject to the terms and conditions of this Agreement. The parties represent
that this SOW is executed by their duly authorized representatives.

	
  EURAND,
  INC.

  	
   

  	
  WARNER-LAMBERT
  COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  	
   

  
					

 

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

 

Statement
of Work - [* * * * * *]

 

This Statement of Work is made and entered
into pursuant to the Master Development Agreement dated as of December [* *],
2005 (the “Agreement”) between Warner-Lambert Company LLC (“Warner”) and
Eurand, Inc. (“Eurand”).

 

[* * * * * *]

 

[* * * * * *]

 

Products

 

Eurand will develop the following two orally
disintegrating tablet (“ODT”) products (the “Products”):

 

[* * * * * *]

 

Description
of Services

 

Eurand will provide to Warner the following
three phases of activities (the “Services”) for the Products:

 

[* * * * * *]

 

Phase A - Prototype development

This phase covers [* * * * * * * * * * * *]. The
goals of this phase are to initiate [* * * ** * * * * * * *] establish a
preliminary [* * * * * * * * * * * * ]. [* * * * * * * * * * * * ] but will
evaluate the [* * * * * * * * * * * * ] for this product line. Eurand will [* *
* * * * * * * * * * ]. Eurand will develop the [* * * * * * * * * * * * ]
testing, and [* * * * * * * * * * * * ] studies. Eurand will provide [* * * * *
* * * * * * * ] to Warner.

 

Phase B - Process development

[* * * * * * * * * * * * ] is the focus of
this phase. The [* * * * * * * * * * * * ]. The goal for this phase is to [* *
* * * * * * * * * * ]. [* * * * *] will be packaged in [* * * * * * * * * * * *
]. Eurand will generate [* * * * * * * * * * * * ] on the [* * * * * * * * * *
* * ]. Eurand will provide [* * * * * * * * * * * * ] to Warner.

 

The proposed preliminary stability protocol
is:

 

[* * * * * *]

[* * * * * *]

[* * * * * *]

 

Phase C - Manufacturing and testing of
primary stability batches

Eurand will [* * * * * * * * * * * * ]. The
batch size of the [* * * * * * * * * * * * ]. Based on [* * * * * * * * * * * *
] establishing desired [* * * * * * * * * * * * ].

 

 

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

The proposed stability protocol is:

 

[* * * * * * * * * * * * ]

 

[Note: following successful execution of
Phase C and subject to [* * * * * * * * * * * * ], Phase D - [* * * * * * * * *
* * * ] will be pursued]

 

Eurand will provide [* * * * * * * * * * * *
] to Warner.

 

[* * * * * *]

 

 

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

 

 

Other
Terms and Conditions

The parties agree that this SOW
is incorporated into the Agreement and shall be subject to the terms and
conditions of the Agreement. The parties represent that this SOW is executed by
their duly authorized representatives.

	
  EURAND,
  INC.

  	
   

  	
  WARNER-LAMBERT
  COMPANY LLC

  
	
   

  	
   

  	
   

  
	
  By: 

  	
    /s/

  	
  John Fraher

  	
   

  	
  By: 

  	
    /s/

  	
   R.
  W. D’Souza

  	
   

  
	
  Name: 

  	
  John Fraher

  	
   

  	
  Name: 

  	
  Richard
  D’Souza

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
   

  	
  12th
  December 2005

  	
   

  	
   

  	
  PCH R&D
  (DS 446)

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