Document:

Exhibit
10.7

 

DEVELOPMENT,

LICENSE AND SUPPLY AGREEMENT

 

 

Dated as of June 5, 2000

 

Between

 

EURAND AMERICA, INC.

845 Center Drive

Vandalia, Ohio 45377

 

And

 

RELIANT PHARMACEUTICALS

125 West 55th Street, 11th floor

New York, NY 10019

 

For

 

PROPRANOLOL MODIFIED RELEASE

(Inderal® LA bioequivalence)

 

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 SUPPLY
AGREEMENT, dated as of June 5, 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
RELIANT PHARMACEUTICALS, INC., a corporation organized under the laws of the
State of Delaware, with its principal offices at 721 Route 202/206 South,
Bridgewater, New Jersey 08807 (“RELIANT”);

 

WITNESSETH THAT:

 

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

 

WHEREAS, EURAND and RELIANT entered into a
Development, License and Supply Agreement dated January 27, 2000 for Extended
Release Propranolol (the “Earlier Agreement”);

 

WHEREAS, RELIANT desires that EURAND
undertake a development program directed towards producing modified release
Propranolol formulations having the specifications agreed upon between RELIANT
and EURAND;

 

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

 

WHEREAS, RELIANT also desires to receive a
license to market and sell products containing such modified release products
as developed and manufactured by EURAND in the Territory (as hereinafter
defined) 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:

 

1.             DEFINITIONS

 

1.1.          “Active Ingredient”  means Propranolol HC1.

 

1.2.          “Affiliate” shall
mean a Corporation or other business entirely directly or indirectly
controlling, controlled or under common control with a party to this agreement
and “control” means direct or indirect beneficial ownership of fifty percent
(50%) or more of the voting interest in or fifty percent (50%) or greater
interest in the equity of such corporation or other business entity but such
Corporation or other business entity shall be deemed an Affiliate for only so
long as such ownership or control exists.

 

1.3.          “Applicable Laws”
means all laws, treaties, ordinances, judgments, decrees, directives,
injunctions, orders of any court, arbitrator or governmental agency or 

 

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

 

authority, rules, regulations,
interpretations, authorization 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, pricing and sale of the Finished Dosage Form, as may be in effect
from time to time.

 

1.4.          “Applicable Permits”
means any 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, pricing and
sale of the Finished Dosage Form.

 

1.5.          “Approval Date”
means, with respect to a particular country in the Territory, the date on which
all Applicable Permits necessary for sale and pricing of the Finished Dosage
Form in such country have been issued.

 

1.6.          “Contract Year”
means, for the First Contract Year, the period ending twelve (12) months after
the date first above written and for the second and subsequent Contract Years,
the twelve (12) month period commencing on the day following the anniversary of
the end of the first and subsequent Contract Years, respectively.

 

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

 

1.8.          “Finished Dosage
Form” means the composition produced by RELIANT from
the Product, labeled, packaged and ready for sale to wholesalers, hospitals or end-users.

 

1.9.          “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, shortages of labor or materials or
any delays in transportation or detention by customs, health or other
government authorities.

 

1.10.        “Know-How” means
proprietary know-how, trade secrets, patented and unpatented inventions, data,
technology and information, which a 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.

 

1.12.        “Primary Territory”
shall mean the United States and
Canada.

 

1.13.        “Product” means a Modified Release Composition containing the Active Ingredient
and certain excipients, said compositions being bioequivalent to Inderal® LA
and produced by EURAND and meeting the Specifications (as hereinafter defined).

 

1.14.        “Product Formulation”
means the developed formulation required to convert the Active Ingredient into
Product.

 

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

 

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

 

1.16.        “Net Sales” means
the aggregate invoiced sales of the Finished Dosage Form by RELIANT less returns [****], discounts and sales, excise, value added, consumption or similar taxes applicable to the Finished Dosage Form, as well as
duties, customs, or other governmental
charges.

 

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

 

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

 

1.19.        “Territory” means
the World.

 

1.20.        “United States”
means the United States of America, its territories and possessions.

 

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

 

1.22.        “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 of
the Territory.

 

1.23.        “DMF” shall mean
the Drug Master File or modifications to such corresponding files in other
countries of the Territory developed and filed by EURAND which relate to the
Product.

 

1.24.        “CMC” shall mean
current Chemistry and Manufacturing Controls section of the IND (or NDA, as
applicable).

 

1.25.        “IND” shall mean an
Investigational New Drug application under the Act seeking authorization to
commence clinical trials of the Product in humans in such country of the
Territory.

 

1.26.        “NDA” shall mean a
New Drug Application under the Act, a Product License Application or a
corresponding filing required in any country of the Territory seeking approval
to market the Finished Dosage Form.

 

1.27.        “Modified
Release Composition” shall mean the formulation
for the Product with the exception of the Active Ingredient.

 

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

 

 

2.             DEVELOPMENT
PROGRAM

 

2.1.          The Development Program.

 

(a)           RELIANT hereby engages
EURAND, and EURAND hereby agrees, to perform the work described in Exhibit A
(the “Development Program”). In connection therewith, EURAND shall make its
best efforts to carry out the Development Program in accordance with the
timetables and budgets therein and shall make available such of its scientific,
engineering, manufacturing and other personnel, necessary to perform its
obligations in accordance with the terms hereof. Any material change in the
Development Program shall be agreed to in writing between Eurand and RELIANT.

 

(b)           EURAND shall receive prior
written authorization to commence each phase of the Development Program.
RELIANT may cancel the Development Program at the conclusion of each phase prior to commencement
of the subsequent
phase.

 

2.2.          Regulatory Filings.
Upon completion of the Development Program, RELIANT shall, to the extent
required to do so by the terms of this agreement, prepare all necessary
applications to obtain Applicable Permits to market the Finished Dosage Form in
the Primary Territory. In such other countries of the
Territory RELIANT shall file applications in its sole
discretion. The Applicable Permits shall be owned by RELIANT. EURAND shall prepare the CMC
section of the NDA and assist RELIANT as necessary in the preparation of
other sections of any other applications required to obtain such Applicable
Permits. Upon completion of the Development Program, EURAND shall promptly open the DMF with the FDA for the
manufacture of the Product (unless
RELIANT proceeds with an IND in which case EURAND will assist RELIANT as
necessary in the preparation of the IND) and provide RELIANT with copies of all documents
filed in connection therewith. Each party shall provide the other party 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 the other party.

 

2.3.          Payments for
Development

 

(a)           In consideration of
EURAND’s performance in accordance with the terms and conditions of this
Agreement, RELIANT shall make the payments (non refundable to RELIANT) to
EURAND in accordance with the payment schedules set forth in Exhibit A hereto.

 

(b)           In addition to the
payments set forth on Exhibit A hereto, RELIANT shall be responsible for the
following additional materials, development costs and/or expenses:

 

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

 

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

 

 

(ii)           A
process fee for each validation batch of Product at a cost of EURAND’s
manufacturing cost (as defined in the Exhibit C) for Product [**];

 

(iii)          The
cost of any bio-studies approved in
advance by RELIANT and performed in conjunction with the Development
Program; and

 

(iv)          The
reasonable out of pocket expenses associated with travel of EURAND personnel
associated with the Development Project, such
expenses having been previously authorized by RELIANT.

 

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 Article 8.1 hereof, EURAND hereby grants to RELIANT a sole and exclusive royalty-bearing
license under the Know-How with the right to sublicense within the Territory to (i) use the
Product in the manufacture of the Finished Dosage Form, and (ii) use, offer for
sale, market and sell the Finished Dosage Form provided, however, that RELIANT shall not
grant sublicenses in the United States without the consent of EURAND, which
consent shall not be unreasonably withheld.

 

3.2.          Sublicenses. RELIANT shall have
the right in its sole discretion
to sublicense the rights granted
pursuant to Section 3.1 in the Territory provided, however, that (i) all
non-monetary obligations
specifically placed upon RELIANT by this Agreement shall be placed upon any sublicensee, (ii)
RELIANT shall remain responsible to
EURAND for performance of its obligations under this Agreement and the performance of any sublicensee,
(iii) RELIANT shall promptly advise EURAND of the identity of any sublicensee and (iv) provide EURAND with a copy of the sublicense
agreement and any agreements which are directly or indirectly related to the
sublicense agreement.

 

3.3.          Sublicenses. In addition to the
conditions to sublicensing set
forth in Paragraph 3.2 above, in the event RELIANT determines to grant any such sublicense, RELIANT
shall be required to pay to EURAND:

 

(i)            [*] of any additional payments (other
than royalties or other payments not made in consideration of the rights granted pursuant to the sublicense) received from such sublicensee, if EURAND initially
solicited such sublicensee (as evidenced by documentation in possession
of EURAND); or

 

(ii)           [*] of any additional
payments (other than royalties
or other payments not made in consideration of the rights granted pursuant to the sublicense) received from such
sublicense if RELIANT initially
solicited each sublicense (as evidenced by documentation in possession
of RELIANT); and

 

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

 

 

(iii)          the first [*] percentage points [*] of any royalties on Net Sales of Finished
Dosage Form received by RELIANT from
such sublicensee.

 

3.3.1        In order to enable EURAND and RELIANT to determine
which of them has initially solicited such sublicensees, EURAND and
RELIANT shall each notify the other in writing within 30 days if it contacts, solicits or
otherwise communicates with any third party regarding granting the third party a
sublicense in the Territory under this Agreement.

 

3.3.2        With regard to sharing additional payments
under subparagraphs (i) and (ii) above, if there is a dispute regarding
whether any
payments which RELIANT receives from or on behalf of any sublicensee are in fact fully or
partially in return for such sublicense and EURAND and RELIANT are unable to resolve
that dispute, the matter shall be submitted to arbitration upon 30 days written
notice by either party and resolved in accordance with the rules of the American Arbitration
Association. If EURAND requests arbitration, the arbitration shall
be conducted in New York, New York and if RELIANT requests arbitration, the
arbitration shall be conducted in Dayton, Ohio.

 

3.4.          Exclusivity. The exclusivity of the license granted
pursuant to Paragraph 3.1 may be
converted to non-exclusive in certain countries of the Territory by operation
of any of Paragraphs 4.2(b) and 4.3(a).

 

3.5.          Use of EURAND’s
Trademark by RELIANT. RELIANT shall market the Finished Dose Form under its
own trademark. In addition, RELIANT shall refer to EURAND’s technology and a
trademark to be designated no later
than the completion of the
Development Program by EURAND (the “Trademark”) on the pack, internal
leaflet and promotional material of the Finished Dosage Form. For this purpose,
EURAND hereby grants RELIANT a non exclusive license to use and sublicense the right to use the
Trademark (the “Trademark License”) in the sale and marketing of Finished
Dosage Form in the Territory and to print the following wording:  “Produced with EURAND “Trademark” technology”.
Alternatively, RELIANT shall print the
Trademark after the trademark of the Finished Dosage Form. Prior to
printing the packaging, RELIANT shall send EURAND a sample of packaging for
prior approval of the above which
approval shall not be unreasonably withheld. RELIANT covenants that each
such use of EURAND’s Trademarks shall be strictly in accordance with the terms
of this Agreement and that all rights to and ownership of the EURAND Trademarks
shall remain with EURAND. For the
avoidance of doubt, the Trademark License shall not extend to the sale or
marketing of Finished Dosage Form which is manufactured from a Modified Release
Composition which is not manufactured by EURAND.

 

4.             REGISTRATION AND
LAUNCH OBLIGATIONS OF RELIANT

 

4.1.          Registration
Obligations of RELIANT

 

(a)           RELIANT shall exercise
commercially reasonable efforts to apply for Applicable Permits and
secure Approval Dates for the Finished Dosage Form in the Primary Territory as quickly as reasonably
possible following completion of the Development Program. Notwithstanding
any provision in this Agreement to the contrary, RELIANT shall have no 

 

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

 

 

obligation to apply for
or obtain
Applicable Permits in any
country of the Primary Territory
or the other countries of the Territory if such registration or approval is reasonably deemed to be unnecessary
to market the Finished Dosage Form in such country or if RELIANT determines in its reasonable
business judgment that such registration
or approval in countries other than those in the Primary Territory is not
in the commercial interests
of RELIANT. RELIANT hereby
agrees that exertion of “commercially
reasonable efforts” shall mean the same
efforts that RELIANT devotes
to its other major pharmaceutical
products in the Primary
Territory and shall include, without limitation, the submission by RELIANT of any additional documentation on the
Finished Dosage Form required under Applicable Laws. In additional to
its other obligations hereunder, EURAND
shall fully assist RELIANT in
the preparation of documents necessary and required by FDA for RELIANT
to obtain Applicable Permits and
shall otherwise cooperate with RELIANT in connection with RELIANT’s efforts to obtain Applicable Permits. If RELIANT requires additional data, samples or other
information in addition to
that generated within the intended scope of the Development Program in order to obtain Applicable Permits, subject to RELIANT’s agreement to pay
EURAND for such additional
performance, EURAND and RELIANT
shall promptly negotiate in good faith an agreement regarding such
additional performance.

 

(b)           RELIANT and EURAND
shall exchange with each other copies of any “in-vivo” clinical studies performed
on the Finished Dosage Form
during the term of this Agreement. RELIANT and EURAND may
use any of such studies, including in obtaining Applicable Permits and promotion of the Finished Dosage Form provided that
such use is not otherwise inconsistent with the terms of this Agreement.

 

(c)           During the term of this
Agreement, RELIANT shall provide EURAND with a report on the status of progress
of all Applicable Permits in the Territory every three (3) months following completion of the
Development Program until the Approval Date. RELIANT shall notify EURAND
of the submission date of each application for the Applicable Permits and the
Approval Date thereof not later than two (2) weeks after said dates.

 

4.2.          Launch of the
Finished Dosage Form

 

(a)           RELIANT shall launch
the Finished Dosage Form in each
country of the Primary Territory
with a reasonable time after
receipt of the Applicable Permits with respect to the sale of the Finished
Dosage Form in such country. RELIANT or its sublicensees or subdistributors
shall sell the Finished Dosage Form throughout the Primary Territory using the
same efforts that RELIANT, its sublicensees or subdistributors devotes to the sale of other major
pharmaceutical products in the Primary
Territory.

 

(b)           RELIANT shall apply for
Applicable Permits to market and sell the Finished Dosage Form in the Primary Territory within eighteen (18) months from the completion
date of the Development Program or completion
by EURAND of any additional development work contemplated
in Section 4.1(a) to retain the exclusivity granted under Paragraph 3.1 of this Agreement in each
specific country of the Primary
Territory. Should RELIANT fail to do so within the aforementioned eighteen (18) months period or should such filed Applicable Permits fail
to issue within 2-1/2 years of
such filing (the “Approval Deadline”), the license under Paragraph 3.1 hereof
shall automatically convert to a
non-exclusive license in

 

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

 

 

the country of the Primary Territory where either (i) RELIANT has failed to file for the Applicable Permit or (ii) the
Applicable Permit has failed to issue.
However, if RELIANT has filed an application for the Applicable Permits within 18 months and the permits have not
issued in 2-1/2 years, but issuance of the Applicable Permits appears
reasonably to be forthcoming,
EURAND shall agree to a reasonable
extension of the 2-1/2 year term.

 

4.3.          Competing Dosage
Forms.

 

(a)           The license granted
under Paragraph 3.1 hereof shall automatically
convert to non-exclusive in those
countries of the Territory
should RELIANT market another product
containing the Active Ingredient in a dosage form similar or identical
to the Finished Dosage Form in such
country. This restriction
shall not apply to the marketing and distribution by RELIANT of a modified release formulation of
Propranolol HC1 currently on the market
under the brand name of Inderal® LA, Inderide® LA and Propranolol LA or the extended release Propranolol
developed under the Earlier Agreement.

 

(b)           During the term of this
Agreement (the “Non-compete Period”),
EURAND shall not enter into any development, license or supply
agreement with any third party
in the Territory for Product. EURAND can terminate the Non-Compete Period on forty-five
(45) days written notice (i) if RELIANT
has not applied for the Applicable Permits in the United States as provided by Section 4.1 or (ii) launched the Finished Dosage in the United
States as provided by Section
4.2 or (iii) RELIANT fails
to maintain the Minimum Annual Royalty set forth in Section
12.13.

 

(c)           In the event EURAND presents documentation (including but not
limited to the identity
of the third party, the chemical entity and the deal terms) which establishes to the reasonable satisfaction of an independent third party, selected by
mutual agreement of EURAND and RELIANT, that EURAND has received a bona fide offer or a bona fide
opportunity to develop and manufacture
an existing beta-blocker (other
than the Active Ingredient) from
a third party, RELIANT at
its option either shall release
EURAND from the Non-Compete Period
or pay EURAND the increased royalty rate on Net Sales set forth
in Section 8.1(b). In order to assist
RELIANT in deciding whether
to release EURAND or pay the increased royalty, EURAND shall provide RELIANT with the third
party sales forecast for the existing
beta-blocker and such other non confidential
information reasonably requested by RELIANT which EURAND determines in good faith the third party would permit EURAND to share with RELIANT. EURAND shall not have to disclose to RELIANT the chemical identity of the beta-blocker or the identity of EURAND’s customer. In the
event that RELIANT releases
EURAND from its obligations under this
section and EURAND develops
or manufactures a modified release composition containing an
existing beta-blocker for a third
party, RELIANT shall be relieved of the Minimum Annual Royalty obligations
under Section 12.13.

 

5.             OWNERSHIP AND USE
OF KNOW-HOW

 

5.1.          Ownership. Except
as specifically provided in Paragraph 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 to the extent it is related solely to the development
and production
of the Modified Release 

 

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

 

 

Composition (including
modifications or improvements thereto), or (ii) the property of RELIANT to the extent that
it is related solely to the use of the Product and to the manufacture
or use of the Finished Dosage Form. Each party shall be free to use and
practice such Know-How owned by it in any application (not inconsistent with
the terms of this Agreement) 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; provided, however
that RELIANT shall not be free to use and practice Know How that is developed by
EURAND unless RELIANT has authorized EURAND to complete the Development Program,
made all payments in accordance with Section 2.3(a), and has commercially
launched the Finished Dosage Form in the United States. Know-How owned
prior to the date hereof by either party shall continue to be owned exclusively
by such party.

 

5.2.          Additional Use. In
addition to EURAND’s rights described in Section 5.1, and subject to Section
4.3(b) hereof, EURAND
and its Affiliates shall have the right to use all Know-How developed by EURAND
during the course of the performance of this Agreement which is directed solely
to the Modified Release Composition or the Product, provided such use,
disclosure or license does not conflict with the rights granted to RELIANT under
this Agreement.

 

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 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
joint inventions shall be owned by the parties jointly, and the parties
shall share
equally in the expenses of filing for and maintaining such patents.

 

5.4.          Infringement. Each party warrants
to the other that to the best of its knowledge, the Modified Release Composition and Product in the case of EURAND and the Active Ingredient, Product,
and Finished Dosage Form in the
case of RELIANT do not infringe any
third party patent or other intellectual property rights. Each party
shall reasonably cooperate with the other in any investigations undertaken to
determine any potential infringement. In the event that a claim of infringement of a third party’s intellectual property rights
is brought against either party, the party served shall promptly inform the other party and the party served (the “Alleged
Infringing Party”) may at its own option, take any one or
more of the following actions, simultaneously
or sequentially:

 

(a)           Defend the claim at its own cost and expense and indemnify the other party from and against any loss,
costs or damage in connection therewith.

 

(b)           Attempt to redesign the allegedly infringing product or process so
as to make
it non-infringing.

 

(c)           Obtain for itself and the benefit of
the other
party a license
to utilize
the technology
upon which the claim of
infringement was based.

 

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

 

 

5.5.          Termination Due to Infringement.
In the event the Alleged Infringing Party is unable to effectuate either 5.4(a), 5.4(b) or
5.4(c) above within one hundred twenty (120) days of service of notice
of such claim upon the other party, then the other party may terminate
this Agreement
and shall have
the right
to pursue
any remedy at law or in equity resulting therefrom.

 

5.6.          Third Party
Infringement of Patents

 

(a)           Each party shall
promptly report in writing to the other party during the term of this Agreement
any (i) known infringement or suspected infringement of any of the patented
inventions in the Know-How, or (ii) unauthorized use or misappropriation of
Know-How or Confidential Information by a third party (“Third Party
Infringement”) of which it becomes aware, and shall provide the other party
with all available evidence supporting said infringement, suspected
infringement or unauthorized use or misappropriation.

 

(b)           In the event of a
report of a Third Party Infringement under Section 5.6(a), EURAND and RELIANT
shall consult with each other in
order to develop a strategy for
addressing the Third Party Infringement. In the event that the parties agree to take legal action
to stop the Third Party Infringement, they
shall agree upon legal counsel
and unless they agree upon a different
formula for sharing the expenses
(including attorney and expert fees) of such action and for sharing any award or settlement, they
shall share them equally. In the
event that one of the parties does not desire to participate in the action (the “nonparticipating party”), the other party shall be free to bring the action in its
own name, at its own expense
and retain any award or settlement in its entirety. If necessary,  the nonparticipating party
shall join as a party to the suit but shall be under no obligation to participate except to the extent that such participation is required as the result of being a named party to the
suit. The nonparticipating party
shall also offer reasonable assistance
in connection therewith at no charge to the other party except for reimbursement of reasonable out-of-pocket expenses. If either party desires to retain counsel
independently, at its own expense, the party may do so, but it shall not
relieve the party of its obligations
under this section.

 

5.7.          Change of Ownership.
If RELIANT,
in its sole discretion, determines that the market for the Finished Dosage
Form is commercially
insignificant in any country in the Territory following receipt of the Applicable Permits,
RELIANT may cease marketing and selling the Finished Dosage Form in such
country and transfer any rights RELIANT continues to hold under this Agreement
related to the country to EURAND for a nominal sum not to exceed One Thousand
Dollars.

 

6.             SALE OF THE
PRODUCT

 

6.1.          Standard of
Manufacture. EURAND shall supply RELIANT with Product meeting the
Specifications. All Product supplied by EURAND to RELIANT hereunder shall be consistent with
the DMF and produced in a facility and in a manner compliant with cGMP and all other
Applicable Laws and shall not be adulterated or misbranded within the meaning of the Act.
Each
shipment of Product from EURAND to RELIANT shall be sampled and analyzed by EURAND to
determine if the shipment meets the Specifications. EURAND shall deliver
to 

 

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

 

 

RELIANT with each shipment of the Product a
certificate of analysis stating that the Product meets the Specifications. EURAND
agrees that it shall make no changes in the production of Product without the
specific written prior approval of a duly authorized representative of RELIANT
unless expressly required either by cGMP or the Act.

 

6.2.          Right of Review. RELIANT
may conduct its own analyses on each shipment of the Product received pursuant
to this Agreement. RELIANT shall notify EURAND within sixty (60) days after delivery of the
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 RELIANT concerning the conformity of any shipment of Product which cannot be
settled between the two parties, shall be submitted to an independent expert jointly
agreed to by the parties in good faith. The decision of said expert
shall be
binding on EURAND and RELIANT. The charges, including the fees and expenses of the
expert, relating to any dispute described in this paragraph shall be paid by EURAND if
the expert declares the delivery not to be in conformity or by RELIANT
if the expert
declares the delivery to be in conformity.

 

6.3.          Notice of Audit. EURAND
shall give RELIANT immediate notice of any impending governmental or third party
audit of EURAND as it relates to the manufacture, production or testing of
Product supplied to RELIANT pursuant to this Agreement and shall provide RELIANT
with any
documentation provided to it relating to such audit. EURAND shall also provide RELIANT
the opportunity
to review, prior to submission, any documentation prepared in response to such governmental on other third party audit
and shall
immediately provide RELIANT with the results of such audit following its
conclusion. EURAND agrees that RELIANT shall have the right from time to
time during the term to carry out an audit of EURAND for conformance with
cGMPs, but not more than once per calendar year.

 

6.4.          Notice of Regulatory
Action. EURAND shall provide RELIANT with immediate notification of its
receipt of any of the following related to the manufacture, production or
testing of Product: a copy of any list of observations (Form FD 483), Warning
Letter, Information Letter, Regulatory Letter or the like issued by the FDA as
well as provide RELIANT an opportunity to review any written response prior to
submission to the issuing agency. However, EURAND maintains sole responsibility for any
matter pertaining to such inspections.

 

6.5.          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 previous obligations.

 

(c)           EURAND represents 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;

 

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

 

 

(ii)           it
will comply with all Applicable Laws in the United States (or any other country
of Product manufacture) in the production of the Product;

 

(iii)          it
has not knowledge of any pending or threatened claim or legal action asserting
that the Modified Release Composition or
Product in any country in the Territory constitutes an infringement of extant
patents, trade secrets, trademarks, or other extant industrial or intellectual
property rights.

 

(d)           Except as otherwise set forth in this Agreement 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.

 

6.6.          Purchase and Sale.
During the term of this Agreement, EURAND shall sell and deliver to RELIANT,
and RELIANT shall purchase and accept, RELIANT’s total requirements of Product
for the Territory as ordered pursuant to Paragraph 6.7 below. During the Term,
EURAND shall also supply RELIANT with sufficient and reasonable quantities of Product so
as to enable
RELIANT to satisfy any requirements necessary to obtain Applicable Permits in
the Territory at a cost set forth in Section 2.3(ii) as well as such
quantities of Product for use by RELIANT and its sublicensees or subdistributor’s sales
representatives in sales promotional efforts at a cost set forth in Section
7.1(a).

 

6.7.          Delivery Schedule.
Commencing on the
Approval Date, RELIANT 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,  RELIANT shall provide EURAND with a good faith
estimate of the amount and timing of the Product to be delivered to
RELIANT during the four (4) quarters commencing the following January 1 and July 1,
respectively. RELIANT shall place its firm orders at least twenty (20) weeks prior
to the desired date of shipment. EURAND shall not be obligated to fill orders
exceeding the immediately preceding forecast by more than thirty percent
(30%) but shall make commercially reasonable efforts to do so.

 

6.8.          Title and Risk of
Loss. Risk of loss and title to the Product shall pass from EURAND to
RELIANT upon
delivery to RELAINT’s carrier at EURAND’s manufacturing plant, currently in
Vandalia, Ohio.

 

7.             PRICES

 

7.1.          Prices and Price
Change

 

(a)           EURAND shall sell, and
RELIANT shall buy, the Product at the price of EURAND’s manufacturing costs plus [*], ex-works plant in Vandalia,
Ohio. Manufacturing costs are
to be determined in accordance with Exhibit C. For promotional 

 

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

 

 

sampling purposes, EURAND shall sell RELIANT with samples of Product and RELIANT shall
buy all samples of the Product
at the price of EURAND’s manufacturing
costs plus [*] ex-works plant in Vandalia, Ohio. RELIANT shall indicate
on any order that portion of the Product that is being purchased for promotional sampling. On a quarterly basis, RELIANT shall file a
report with EURAND reconciling its promotional
use of the Product with its total sales and accompany that report with a payment of any balance due to
EURAND. The total annual volume of Product purchased for promotional sampling shall not be greater than [*] of the volume
of Product delivered to RELIANT during each
calendar year. Furthermore, the samples
of Product shall not be subject
to the Net Royalty payment set forth in Section 8.1.

 

(b)           EURAND shall be
entitled to increase or decrease the price set forth in
Article 7.1(a) to reflect changes in its manufacturing costs. Such price
adjustments may be made no more than
once per calendar year. EURAND shall notify RELIANT 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 RELIANT, 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
RELIANT or required by a change in Applicable Laws (including a change in cGMP)
or caused by increases in cost of raw material.

 

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

 

8.             ROYALTIES

 

8.1.          Royalties.

 

(a)           RELIANT shall pay
EURAND a Net Royalty of [***] of the [***] of the Finished Dosage Form sold by
RELIANT in the Territory during the term of this Agreement.

 

(b)           In the event that RELIANT does not release EURAND from the Non-compete Period as set forth in
Section 4.3(c), RELIANT shall pay EURAND a Net Royalty of [***] of
the [***] of the Finished Dosage Form sold by RELIANT in the Territory during the remainder of the term of this Agreement.

 

(c)           No later than forty-five (45) days after the end of each calendar quarter, RELIANT shall report to EURAND
the Net Sales of the Finished Dosage Form and the Net Royalties due during each calendar quarter in each country
of the Territory in the previous calendar quarter. The payment by
RELIANT to EURAND shall be in U.S. Dollars and shall be made within forty-five (45) days after the end of each
calendar quarter. Payment shall be made via wire transfer to a bank
designated by EURAND. RELIANT shall keep true and accurate 

 

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

 

 

books of account and shall keep and maintain
all records and documents necessary for EURAND to ascertain the Net Royalties
due under this Agreement.

 

(d)           After the first anniversary of the date of first commercial sale of
the Finished Dosage Form and upon the
provision of reasonable notice, EURAND shall have the right to designate
a firm of certified public accountants to inspect RELIANT’s books of account,
records, documents and instruments and to make copies thereof, at any time
during RELIANT’s regular business hours during the term of this Agreement but no more than once per year and for
a period of two (2) years immediately after termination of this Agreement, to
ascertain the accuracy of such report. The expense of such audit shall be
EURAND’s unless the audit shall demonstrate a discrepancy greater than [**] between Net Royalties reported
and paid and those which were actually due, in which event the expenses of
audit shall be borne by RELIANT.

 

8.2.          Taxes. All taxes,
assessments, fees and other changes, 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 RELIANT from such payments to EURAND.
Receipts,
if available,
for all such
withholdings shall be provided to EURAND. RELIANT 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 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.

 

9.             TERM

 

9.1.          Basic Term. Unless
sooner terminated pursuant to Articles 10.2 or 9.3 hereof, this Agreement shall
be effective from the date first above written and shall continue for an
initial period of ten (10) years after the date of the first commercial sale of the Finished
Dosage Form (the “Initial Term”). Thereafter, this Agreement shall
automatically renew itself and thereby continue in force for consecutive periods
of two (2) years, provided that this Agreement may be terminated by
either party upon provision of one (1) year’s prior written notice delivered to
the other
party in year nine (9) of the Initial Term or one year’s written notice prior to expiration of any
of the subsequent two (2) year terms.

 

9.2.          Sale of the Finished
Dosage Form Following Termination. Upon termination of this Agreement,
RELIANT shall be obligated to purchase its firm orders in existence as of the
date of such termination and shall continue to comply with Section 6.7 of this
Agreement following termination with respect to that Product supplied by EURAND
under Section
9.5. Such termination shall not relieve RELIANT of its royalty
obligations on Net Sales of Finished Dosage Form produced from Product sold or ordered
from EURAND prior to the date of termination as well as royalties payable by
RELIANT in accordance with Section 10.3.

 

9.3.          Termination by RELIANT During Development
Program. Notwithstanding anything herein to the contrary, RELIANT may terminate this Agreement at the
completion of any stage of the Development Program without further liability to
EURAND hereunder.

 

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

 

 

9.4.          Obligation of RELIANT to Find New
Manufacturer. Upon notice of
termination of the Agreement, RELIANT shall use all reasonable endeavors to
identify and obtain FDA approval for the Product with all due diligence.

 

9.5.          Obligations of EURAND
Upon Termination. Subject to the provisions of Sections 9.4, 10.2 and 10.3 hereof and provided
that RELIANT shall have filed an
application to change the manufacturer of the Product
with FDA not later than the date of termination of this Agreement in the case
of termination under Section 9.1
and not later than one year from
the date of termination in
the case of termination under
Section 10.2, upon termination of
this Agreement for any reason other
than pursuant to Sections 9.3 and
10.1(c), EURAND shall continue to
manufacture and supply Product to RELIANT until such time as RELIANT has established a
new source of supply for the Product and has obtained
all Applicable Permits in connection
therewith. Subject to EURAND
receiving appropriate undertakings as to confidentiality in respect of any EURAND proprietary information or technology that is so
transferred, the parties shall
confer and determine in good faith the anticipated cost of transferring the technology and Know-How and EURAND shall
use all reasonable endeavors to effect a transfer of the technology and
Know How for the Modified Release Composition and Product to RELIANT, an Affiliate of RELIANT or
such third party manufacturer to enable
RELIANT, an Affiliate of RELIANT or such third party to manufacture the Modified Release Composition and
Product including granting such
licenses as may be necessary and
allowing such third party access to
cross-reference the DMF. Upon
completion of the transfer,
EURAND shall provide RELIANT with
a detailed accounting of all costs associated therewith, which costs shall not exceed the anticipated
cost determined by the parties
in accordance with the terms set
forth in this paragraph.

 

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 any material provision of this Agreement and such failure
continues (i) for a period of sixty (60) days after notice of such nonperformance or
(ii) if the non-performing 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 RELIANT to
pay any amount due to EURAND, which failure continues for a period of thirty (30) days after
written
notice of such non-payment; unless, however, such non-payment is due to a good faith dispute
concerning the amount owed;

 

(c)           failure of RELIANT to
complete the Development Program or to launch the Finished Dosage Form in accordance
with Section 4.2(a);

 

(d)           a court of competent
jurisdiction enters a decree or order of relief with respect to a party (1) in
any voluntary or involuntary case or proceeding under any bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee or 

 

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

 

 

similar official of that party and such
decree or order is consented to by the party or continues unstayed and in
effect for a period of sixty (60) days;

 

(e)           a party files a
voluntary petition or acquiesces in or fails to contest an involuntary petition
or an involuntary petition is filed against such party and is not dismissed
within sixty
(60) days, in any case or proceeding under any bankruptcy, insolvency or
similar law;

 

(f)            a party makes an
assignment for the benefit of creditors;

 

(g)           a party is dissolved or
liquidated;

 

(h)           a party is prevented
from performing its obligations hereunder by any law, governmental or other
action and has not resumed such performance in compliance with all applicable
laws within sixty
(60) days following the date which performance was prevented.

 

10.2.        Remedies for Breach;
Termination. Upon the occurrence of an event of default, the party not in
default shall give the party in default sixty
(60) days written notice thereof. If the event of default remains
uncured at the end of that sixty (60)
day period, 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 or equity.

 

10.3.        Royalty Obligations
Following Termination. The royalty obligations under Section 10.3(a)
through 10.3(d) hereof shall be subject
to EURAND’s compliance with its
obligations under Section 9.5 hereof and shall run for a period of seven years from the date of
termination.

 

(a)           Termination by RELIANT for Breach. In the event
this Agreement is terminated by RELIANT
based upon a breach by EURAND which
remains uncured or based upon a Force Majeure under Section 12.4 hereof,
RELIANT shall continue to pay to
EURAND royalties on Net Sales of Finished Dosage Form. On Finished Dosage Form produced from Product manufactured by the new
source of supply, the royalty shall be [***] of [***] until
EURAND has recovered its costs of transferring the technology and Know-How in accordance
with Section 9.5 hereof and the royalty
shall be [***] on [***] thereafter. On Finished Dosage Form produced from Product manufactured by EURAND, the royalty on Net Sales shall
be the royalty that would otherwise be
in effect but for the termination.

 

(b)           Termination by RELIANT without Cause. In the
event this Agreement is terminated by RELIANT
upon the end of Initial Term or any subsequent term RELIANT shall continue to pay the royalty on
Net Sales currently in effect as of the date of termination
plus [***] and shall reimburse
EURAND for costs associated with
the transfer of technology and Know How to the new
source of supply by paying EURAND an [***] of [***] (i.e., in addition
to the aforesaid [***]) until
such technology transfer costs are reimbursed
and, in the event Eurand has
not been fully reimbursed 

 

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

 

 

by the additional [**] within one year of the date of termination, paying EURAND the balance of its unreimbursed costs on the anniversary of the termination date.

 

(c)           Termination by EURAND for Breach. In the event
this Agreement is terminated by EURAND based
upon a breach by RELIANT which
remains uncured, RELIANT shall continue
to pay the royalty on Net Sales currently
in effect as of the date of termination plus [**] and shall reimburse EURAND for costs associated with the transfer of technology and Know-How
to the new source of supply by paying EURAND an additional royalty of [**] of [**]
until such technology transfer costs are reimbursed and, in the event Eurand has not been fully
reimbursed by the [**] within one year of the date of termination, paying
EURAND the balance of its unreimbursed costs on the anniversary of the termination
date.

 

(d)           Termination by
EURAND without Cause. In the event this Agreement is terminated by EURAND
without cause RELIANT shall continue to pay royalties on Net Sales of Finished
dosage Form produced from Product manufactured by EURAND at the rate in effect
as of the date of termination. The royalty payable to EURAND on Net Sales of
Finished Dosage Form containing Product not
manufactured by EURAND shall
equal the difference between RELIANT’s cost (inclusive of the royalty paid to EURAND) of having the Product manufactured by EURAND as calculated for the last
shipment of Product sold to
RELIANT by EURAND under Section 9.5, and RELIANT’s cost of having the Product
manufactured by the new supplier.
Additionally, RELIANT shall reimburse EURAND for costs associated with its transfer of technology and Know-How to the new
source of supply by paying
EURAND an additional royalty of [**]
of [**] (i.e., in addition to
the aforesaid difference) until such technology transfer costs are reimbursed and, in the event Eurand has not been fully reimbursed by the
additional [**] within one year of the date of termination, paying EURAND the balance of its unreimbursed
costs on the anniversary of
the termination date.

 

11.          INDEMNIFICATION AND
INSURANCE

 

11.1.        Indemnification of
RELIANT. EURAND shall indemnify and hold RELIANT harmless from and against
all damages, losses, expenses, claims, demands, suits, penalties, judgments or
administrative and judicial orders and liabilities (including reasonable
counsel fees and expenses) incurred, assessed or sustained by RELIANT, its
officers, directors, and employees with respect to or involving or arising out
of (i) a breach of the warranties in Section 6.5 hereof by EURAND or (ii) any
negligent act or omission or willful misconduct of EURAND in the development or
manufacture of Modified
Release Composition or Product.

 

11.2.        Indemnification of
EURAND. RELIANT shall indemnify and hold EURAND harmless from and against
all damages, losses, expenses, claims, demands, suits, penalties, judgments or
administrative and judicial orders and liabilities (including reasonable
counsel fees and expenses) incurred, assessed or sustained by EURAND, its
officers, directors, employees, and agents with respect to or involving or
arising out of (i) a breach of warranties in Section 6.5 hereof by RELIANT, or
(ii) the sale, packaging, advertising, distribution or use of the Finished
Dosage Form, which is the proximate cause of injury, death or property damage
to a 

 

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

 

 

third party to the extent it does not arise
from an event for which EURAND has indemnified RELIANT under section 11.1.

 

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 Sections 11.1 and 11.2
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 (reasonably
acceptable to the Indemnifying Party) to participate in the defense of such
action on behalf of such party seeking indemnification, at the indemnifying
party’s expense.

 

11.4.        Insurance. Each
party at its own cost shall cause the other party and their respective agents, employees,
officers, shareholders and contractors to be added as additional insureds on all
policies of general commercial liability insurance and product liability
insurance covering such party, which coverage shall have limits of liability which are commercially
reasonable but shall not be less than $5,000,000
per loss occurrence. Each policy
shall contain an endorsement which provides that any amendments or cancellation
of any such policy shall not be effective unless the other party shall have been given thirty (30) days prior
written notice of any such intended amendment or cancellations. Within five (5) days of the beginning of each
policy period, each party shall
apply to the other with a certificate
evidencing the coverage required hereby and the amount thereof. Such coverage shall be maintained for not less than five (5) years following
termination of this Agreement or if such coverage
is of the “claims made” type, for ten years following termination of
this Agreement.

 

12.          MISCELLANEOUS

 

12.1.        Assignment. Neither
this Agreement nor any interest herein may be assigned, in whole or in party,
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, 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. 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.

 

12.2.        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 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. 

 

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

 

 

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 in the opinion
of the disclosing party 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 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

 

(iv)          which
the recipient is required to disclose to the extent required under the laws or
regulations or any governmental agency lawfully requesting the same, or to any
court of competent jurisdiction acting pursuant to its powers.

 

12.3.        Exchange of Information.
RELIANT will periodically inform EURAND about any useful marketing information
concerning the sales of the Finished Dosage Form 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 Modified
Release Composition, Product or Finished Dosage Form. 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.

 

12.4.        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. If
the Force Majeure exceeds ninety (90)
days then the party who has 

 

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

 

 

been adversely affected by such Force Majeure
may terminate this Agreement under the procedure set forth in paragraph 10.1
above.

 

12.5.        Amendment. 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.

 

12.6.        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.

 

12.7.        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 New York law without giving effect to its conflict of laws principles.

 

12.8.        Notice. 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.

Center Drive

Vandalia, Ohio 45377

Attn: Director of Business Development

Fax: 937-898-9529

 

If to RELIANT, to:

 

RELIANT PHARMACEUTICALS, INC.

721 Route 202/206 South

Bridgewater, NJ 08807

Attn: Joseph Krivulka, President

Fax: 908.526.5521

 

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

 

12.10.      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.

 

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

 

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

 

 

12.12.      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.

 

12.13.      Minimum Annual Royalties.
Unless the Non-Compete Period has been
terminated, RELIANT shall be required to pay minimum royalties on Net
Sales of Finished Dosage Form (“Minimum Annual Royalties”) as set forth
immediately below for the year ending on the anniversary of the date of the first commercial sale indicated in
the table below.

 

Minimum Annual Royalty

 

	
  Anniversary #

  	
   

  	
  Finished Dosage Form

  
	
  1

  	
   

  	
  [*******]

  
	
  2

  	
   

  	
  [*******]

  
	
  3

  	
   

  	
  [*******]

  
	
  4

  	
   

  	
  [*******]

  
	
  5 and thereafter

  	
   

  	
  [*******]

  

 

Should the
royalties on Net Sales of Finished Dosage Form payable by RELIANT to EURAND for
the Product fail to reach the applicable Minimum Annual Royalty amount in any
ear of this Agreement, EURAND, as its sole remedy hereunder, shall on 30 days
written notice to RELIANT, be relieved of its obligations under Section 4.3(b).
However, RELIANT shall have the option to supplement the royalty payments made
to EURAND to the extent necessary to meet the Minimum Annual Royalty, for the
year in issue. RELIANT’s failure to maintain the Minimum Annual Royalties and
termination of the Non-Compete Period shall have no effect whatsoever on
RELIANT’s exclusive rights in the Product as set forth in Section 3.1 pursuant
to which EURAND shall not develop a composition containing the [*******] having
a [*******] for any third party.

 

12.14.      Independent Relationship.
Nothing herein contained shall be deemed to create an employment, agency, joint
venture or partnership relationship between the parties hereto or any of their
agents or employees, or any legal arrangements that would impose liability upon
one party for the act or failure to act of the other party. Neither party shall
have any power to enter into any contracts or commitments or to incur any
liabilities in the name of, or on behalf of, the other or to bind the other
party in any respect whatsoever. All activities undertaken by EURAND hereunder
shall be that of an independent contractor.

 

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, 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.

  	
   

  	
  RELIANT
  PHARMACEUTICALS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John
  Fraher 

  	
   

  	
  /s/ Joseph
  Krivulka

  
	
   

  	
   

  	
   

  
	
  Name: John
  Fraher, President

  	
   

  	
  Name: Joseph
  Krivulka, President

  

 

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.

EXHIBIT B: SPECIFICATIONS

 

 

 

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

EXHIBIT C: MANUFACTURING COSTS

 

[***]

PORTIONS OF THIS EXHIBIT HAVE
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.Exhibit 10.8

 

 

LICENSE
AGREEMENT

 

THIS LICENSE AGREEMENT (“Agreement”) is made as of Dec. 19 2002 (the
“Effective Date”) by and between Kyowa Hakko Kogyo Co., Ltd., with its
principal place of business at 1-6-1 Ohtemachi, Chiyodaku, Tokyo, 100-8185,
Japan (“Kyowa”) and Eurand Pharmaceuticals Limited, with offices at Block 1,
Harcourt Centre, Harcourt Street, Dublin 2 Ireland (“Eurand”).

 

WHEREAS, Kyowa is the owner of a fast disintegrating tablet technology
which it markets under the trademark SOLBLET (“SOLBLET Technology”) and a
tablet forming technology involving an external lubricant which it markets
under the trademark EXLUB(“EXLUB Technology”) ; and

 

WHEREAS, Eurand desires a license to Kyowa’s such technologies and
Kyowa is willing to grant Eurand and its Affiliates certain rights to the
technologies, subject to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, the parties agree as follows:

 

ARTICLE
1 - DEFINITIONS

 

All terms defined in the singular shall have the same meanings when
used in the plural (and visa versa, as appropriate), unless otherwise
specified. The following capitalized terms shall have the following meanings:

 

1.1           “Active
Ingredient” means active ingredient in a pharmaceutical for human use.

 

1.2           “Affiliate”
means any legal entity directly or indirectly owned or under common ownership
with a party to this Agreement. Own or ownership means direct or indirect
possession of at least fifty percent (50%) of the outstanding voting securities
of a corporation

 

1.3           “FDT Patent”
means patent and patent application on the [****] Technology entitled [****]. A
list of current 

 

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

 

 

 

patents
and patent applications are attached hereto as Schedule 1, and this list will
be automatically amended from time to time as additional patents are applied or
issued by Kyowa.

 

1.4           “Improvement”
means any and all inventions, modifications or improvements of [***]
Technology, whether patented or unpatented, which may be made, developed or
acquired by either Kyowa or its Affiliate or Eurand or its Affiliate during the
term of this Agreement.

 

1.5           “Japanese
Companies” shall mean companies that are registered in Japan and have their
ultimate parent company located in Japan. For the avoidance of doubt, neither
joint venture companies partially owned by a company that is not a Japanese
Company which may have a head office in Japan, nor any Japanese subsidiary
companies of a company that is not a Japanese Company shall be considered
“Japanese Companies” within the meaning of the term. For avoidance of doubt,
Japanese Companies shall not include Kyowa and Kyowa’s Affiliates in Japan.

 

1.6           “Kyowa Know How”
means unpatented technical and other information concerning [****] Technology
now or hereafter owned by Kyowa which is not in the public domain, including
information comprising or relating to concepts, discoveries, data, designs,
formulae, ideas, methods, models, assays, research plans, procedures, designs
for experiments and tests and results of experimentation and testing (including
results of research or development), processes (including manufacturing
processes, specifications and techniques), laboratory records, chemical,
pharmacological, toxicological, clinical, analytical and quality control data,
trial data, case report forms, data analyses, reports, manufacturing data or
summaries and information contained in submissions to and information from ethical
committees and regulatory authorities. The fact that an item is known to the
public shall not be taken to exclude the possibility that a compilation
including the item, and/or a development relating to the item, is not known to
the public.

 

1.7           “Kyowa Patent”
means patents and patents applications which are now or hereafter owned by
Kyowa or under which Kyowa hold rights on [****] Technology (including FDT
Patent). A list of current patents and patent applications except FDT Patent is
attached hereto as Schedule 2, and this list will be automatically amended from
time to time as additional patents are applied or issued by Kyowa.

 

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

 

 

1.8           “Kyowa Technology”
means Kyowa Know How, Kyowa Patents and Kyowa’s Improvement.

 

1.9           “Kyowa Reserved
Rights” means Kyowa’s (and certain of Kyowa licensees’) limited right to
continue using the Kyowa Technology, as set out in Section 2.3 below.

 

1.10         “Laws” means
all laws, statutes, rules, regulations, ordinances and other pronouncements
having the effect of law of any multinational, national, federal, state,
provincial, county, city or other political subdivision or agency.

 

1.11         “Net Sales”
means in the case of a sale by Eurand or any sublicensees of Eurand, the gross
amount invoiced on sales or other dispositions (excluding free samples) of a
Product to any person or entity other than the contracting parties, less the
following properly documented items: (a) discounts, credits, rebates,
allowances, bad debts, adjustments, rejections, recalls for which the customer
has been credited the original sales price and returns; (b) trade, quantity, or
cash discounts or rebates customary to the industry and actually allowed, given
or accrued (including, but not limited to, cash, governmental and managed care
rebates, and hospital or other buying group chargebacks); (c) sales, excise,
turnover, inventory, value-added, and similar taxes assessed on the sale of
such Product; (d) transportation, importation, insurance and other handling
expense allowance; and such calculation shall be consistent with generally
accepted accounting principals (“GAAP”) in the United States or the country in
which the sublicensee is domiciled.

 

1.12         “Product”
means a tablet covered by the Kyowa Technology.

 

1.13         “Regulations”
means the United States Federal Food, Drug and Cosmetic Act or similar act in
the Territory and rules and regulations thereunder, as amended from time to
time.

 

1.14         “Regulatory
Authority” means the U.S. Food and Drug Administration (“ FDA”), as well as
the regulatory authorities of any other country within the Territory with
responsibility for regulating the testing, manufacture, distribution, sale or
use of Product.

 

1.15         “Regulatory Filing”
means an application for Regulatory Approval and any other similar filing
pursuant to the regulations and procedures required by any Regulatory Authority
in the Territory for the testing, manufacture, distribution, 

 

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

 

 

sale,
or use of Product.

 

1.16         “Territory”
means the entire world.

 

1.17         “Valid Claim”
means a claim of any issued, unexpired patent which has not been revoked or
held unenforceable or invalid by a decision of a court or governmental agency
of competent jurisdiction.

 

ARTICLE
2 - GRANT OF LICENSES

 

2.1           Grant. Kyowa
hereby grants to Eurand an exclusive license to the Kyowa Technology in the
field of pharmaceuticals to make, have made, use, market, distribute, sell,
have sold, offer for sale, export and import Product in the Territory subject
to the Kyowa Reserved Rights set forth in Section 2.3. For license in the field
of nutraceuticals, the parties shall commence a good faith discussion for the
terms and conditions upon Eurand’s request.

 

2.2           Sublicenses. Eurand
shall further have the right to grant sublicenses under the license granted in
Section 2.1  All sales by the
sublicensees under such sublicense(s) shall be deemed sales by Eurand under
Eurand’s license for purposes of calculating and paying royalties under Section
4.3(a) below.

 

2.3           Reserved Rights. Under
the terms of this Agreement, notwithstanding the exclusive grant of rights to
Eurand as set out in Section 2.1. above, Kyowa reserves the following rights to
itself:

 

a)       Kyowa reserves the rights
to maintain and continue the business relationship with the companies for their
specific Products listed below to the extent the Kyowa Technology is concerned:

 

[*****]

 

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

 

 

Such companies shall have the rights to manufacture only in Japan and
sell the Product inside and outside of Japan. When Kyowa obtains information
that indicates that any of the companies intends to use Kyowa Technology to
sell the Product outside Japan, Kyowa shall provide such information to Eurand
provided that it does not breach any obligation of confidentiality that it may
have.

 

b)  i)  For a period of three (3) years from the date
of the Definitive Agreement, Kyowa reserves the rights to contact Japanese Companies
for the purposes of them licensing the Kyowa Technology to develop products for
sale in the Japanese market only.

 

ii)  Kyowa’s rights in above
paragraph b) i) are not exclusive and shall not preclude Eurand from
independently promoting the Kyowa Technology to the Companies, however, in
order to avoid confusion, both parties shall inform to each party when it
begins contact with the Japanese Companies.

 

iii)  Kyowa also reserves the
rights after such three (3) year period to maintain any relationship with such
Japanese Companies as established by a definitive agreement executed during
such three year period. For any business other than that involved in
maintaining an established contractual relationship with such Japanese
Companies, Kyowa and Eurand shall hold good faith discussions as to Eurand
obtaining an exclusive license for the Japanese market, subject to the terms
agreed in the original license at no additional cost after the three year
period. For avoidance of doubt, such license shall not include Kyowa’s reserved
rights set forth in Section 2.3 c) and d) below.

 

c)  Kyowa and its Affiliates in
the world reserves the rights to use the Kyowa Technology as well as the
Improvement set forth in Article 4 herein for any product which Kyowa or any of
its Affiliates now or in the future market or will market with its or its
Affiliates’ own name. Such products shall include any product that Kyowa, or
any of its Affiliates, presently holds a license or in the future obtains a
license from any third party in the world.

 

d)  i) Kyowa and its Affiliates
in the world reserves the rights to have its licensees and the licensees’
sublicensees use the Kyowa Technology on any products which are based on an
Active Ingredient that is or has been or will be proprietary to Kyowa, and ii)
Kyowa and its Affiliates in the world reserves the rights to have its
sublicensees use the Kyowa technology on any products which are or have been or
will be licensed in to Kyowa or its Affiliates from third parties. Such license-in
products shall be for Kyowa’s pipeline or products for 

 

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

 

 

the purpose of strengthening Kyowa’s pipeline and Kyowa shall not
license in any products solely for the purpose to apply Kyowa Technology to
them.

 

2.4           Non-Promotion.Except
as provided in Section 2.3, Kyowa will not license, sublicense, or promote the
Kyowa Technology or market any Product during the term of this Agreement.

 

ARTICLE 3 – TECHNOLOGY TRANSFER

 

3.1           Training.  Kyowa shall disclose the Kyowa Know How and
shall transfer to Eurand, and cooperate fully with and assist Eurand in such
transfer of Kyowa Know How including receiving personnel of Eurand’s designated
Affiliate at Kyowa’s Fuji plant in Japan for a minimum of five and a maximum of
eight weeks for training in the Kyowa Technology. Further Kyowa will
subsequently send its personnel to the plant of Eurand’s designated Affiliate in
Vandalia, Ohio U.S.A. for a period of at least four weeks to train personnel of
Eurand’s designated Affiliate on the tableting and the external lubrication
equipment. The aforesaid training, which shall be free of charge, is
tentatively scheduled for                ,
2002 in Japan and in Ohio between                 
and additionally March 3 and March 28, 2003. All such training may be
rescheduled by mutual written agreement of the parties. Each party shall bear
the costs it incurs in conjunction with the technology transfer set forth in
this Section 3.1. Kyowa Hakko will continue to provide technical support on
request until the end of 2003, at a level sufficient to ensure that the process
has continuity of operation in the USA during the period.

 

3.2           Machines. Eurand
or its designated Affiliate will purchase [****] and [****] for the transfer of
[****] Technology. For the purchase price of the machine(s) and the devices,
Kyowa, Matsui and Hata will propose a price level after such parties send their
personnel to the facilities of Eurand’s designated Affiliate, and Eurand and
the parties shall negotiate the price and the purchase conditions in good
faith.

 

3.3           Commercialization.
Except as otherwise set forth herein, Eurand will bear all the costs of
commercializing (including, but not limited to, purchase of equipment,
installation of equipment, promotion and marketing) the Kyowa Technology. Kyowa
will not be expected to bear any of the costs of commercializing the Kyowa
Technology under Eurand’s licensed rights. with the exception of the technology
transfer costs as identified in Section 3.1 above. For 

 

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

 

 

the
avoidance of doubt all costs related to the use of the Technology under the
terms of Kyowa’s reserved rights as set out in Section 2.3 and the costs of
preparation, filing maintenance and prosecution of patents, as specified in
Section 9.4 will be borne by Kyowa.

 

ARTICLE 4 - IMPROVEMENT

 

4.1           Eurand’s Improvement.
During the term of this Agreement, Eurand shall promptly disclose to Kyowa any
Improvement discovered or invented by Eurand. Eurand shall have intellectual
property rights on such Improvement discovered or invented by Eurand during the
term of this Agreement. Kyowa and its Affiliates (for avoidance of doubt, not
including its licensees of the Kyowa Technology) will have non-exclusive,
worldwide, royalty-free license to use such Improvement for an indefinite
period of time. Such use will only be allowed under the terms detailed in
Section2.3.

 

4.2           Kyowa’s Improvement.
During the term of this Agreement, Kyowa shall promptly disclose to Eurand the
Improvement discovered or invented by Kyowa during the term of this Agreement.
Such Improvement shall be included in the Kyowa Technology.

 

ARTICLE 5 – MILESTONE PAYMENTS AND ROYALTIES

 

5.1           Milestone
Payments. In consideration for the grant of rights as set out in this
agreement Eurand shall pay Kyowa Milestone Payments in the amounts set forth
below:

 

(a)                [****] upon [****]
of [****]

(b)                [****] upon granting
of the [****]

(c)                [****] upon granting
of the [****] patent [****]

(d)                [****] upon
receipt of [****] Regulatory Approval for a [****] [or [****]

 

5.2           Royalties and
Other Payments. The term Milestone and License fees in this clause 5.2
shall mean any lump sum cash payment made to Eurand for the grant of a license
to use the Technology or monies paid for the achievement of certain milestone
events including, but not restricted to, progression in clinical trials,
product registration or product launch. However, monies which are paid to 

 

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

 

 

Eurand
with respect to a repayment of Eurand’s research and development costs, which
include (but are not limited to) formulation activities, preparation of samples
or clinical trials materials will not be considered by the parties to be
Milestones or License fees and thus no compensation shall be due to Kyowa in
respect of such payments

 

In
further consideration for the grant of rights set out in this Agreement:

 

(a)        During the term of this Agreement, i) on the sale of Products
sold outside Japan that are [****], Eurand shall pay Kyowa a royalty of [****]
of [****] of [****] of the [****] sold by Eurand, or any of its
sublicensees. ii) For Products sold in Japan that are not covered by a Valid
Claim of an FDT Patent, Eurand will pay a royalty of [****] of [****] of [****] of the [****] sold by Eurand or any of its sublicensees, provided however,
in the event Eurand obtain the rights set forth in Section 2.3 (b) iii), Eurand
shall pay a royalty of [****] of [****] of [****] of the [****] sold by Eurand
or any of its sublicensees. The sublicensee in this Section 5.2 shall include
any third party for which Eurand undertakes to contract manufacture such
party’s product by applying the Kyowa Technology.

 

(b)                       i) For sublicensees of Eurand for the Kyowa
Technology that are not Japanese Companies, for which sublicensee’s Product is [****],
Eurand shall pay Kyowa [****] of any [****] or any [****] which Eurand or its
Affiliate receives from its sublicensee. ii) 
For sublicenses of Eurand and that are Japanese Companies,  Eurand shall pay Kyowa [****] of any [****]
or [****] which Eurand or its Affiliate receives from its sublicensee, provided
however, in the event Eurand obtain the rights set forth in Section 2.3 (b)
iii), Eurand shall pay Kyowa [****] of any [****] or any [****] which Eurand or
its Affiliate receives from its sublicensee.

 

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

 

 

(c)                        During the term of this Agreement, i) on the
sale of Products sold outside Japan that are [****], Eurand shall pay Kyowa a
royalty of [****] of [****] of the [****] sold by Eurand, or any of its
sublicensees. ii) For Products sold in Japan that are covered by a Valid Claim
of an FDT Patent, Eurand will pay a royalty of [****] of [****] of the [****] sold by Eurand or any of its sublicensees,
provided however, in the event Eurand obtain the rights set forth in Section
2.3 (b) iii), Eurand shall pay a royalty of [****] of [****] of the [****] sold by Eurand or any of its sublicensees.

 

(d)                       i) For sublicenses of Eurand for the Kyowa
Technology that are not Japanese Companies, for which sublicensee’s Product is [****],  Eurand shall pay Kyowa [****] of any [****]
or any [****] which Eurand or its Affiliate receives from its sublicensee.
ii)  For sublicenses of Eurand and that
are Japanese Companies,  Eurand shall pay
Kyowa [****] of any [****] or [****] which Eurand or its Affiliate receives from
its sublicensee, provided however, in the event Eurand obtain the rights set
forth in Section 2.3 (b) iii), Eurand shall pay Kyowa [****] of any [****] or
any [****] which Eurand or its Affiliate receives from its sublicensee.

 

(e)                        Notwithstanding Section 5.2 (d) above, for
sublicenses for which Eurand funds all or part of the cost of product
development, the amount to be paid to Kyowa under Section 5.2 (d) above shall
be calculated after deduction of all of Eurand’s external costs in respect of
such product development, the percentage of the payment made by Eurand to Kyowa
shall be [****] of [****] and [****] received by Eurand or its Affiliates after said deductions.

 

(f)                          For purposes of Section 5.2, the
determination of whether a Product is [****] shall be made as of the effective
date of the sublicense to which the royalty or payment relates.

 

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

 

 

5.3           Method of Payment
and Taxes.

 

(a)                 All payments
to be made by Eurand to Kyowa pursuant to this Article shall be made in United
States dollars by wire transfer to the bank account designated by Kyowa. The
payment of any necessary local withholding taxes shall be the responsibility of
Kyowa. Payments shall not be reduced by any taxes, licenses, fees or other
withholdings levied upon such payments by the government of any country in the
Territory, or political subdivisions or agencies thereof, unless the amount, if
any, by which the payments are reduced, is a tax imposed on royalties, license
fee, or income and is not an excise, franchise, privilege, turnover, sales,
production, value added, or property tax; and Eurand is required by Law to
withhold the tax from payments to Kyowa and to pay the tax withheld to any
governmental agency in the Territory; and Eurand uses all reasonable efforts to
furnish Kyowa with a tax receipt for the taxes withheld within sixty (60) days
of payment.

 

(b)                Within thirty
(30) days following the receipt of payments from its sublicensees, Eurand shall
pay the royalty or percentage of the license fee or milestone payments as they
are received according to the schedule agreed with Eurand’s sublicensee.
Translation of monies paid to Eurand in local currencies to U.S. dollars will
be performed in a manner consistent with the accounting practices that Eurand
normally uses to prepare its financial statements for internal and external
reporting purposes, which use a widely accepted source of published exchange
rates.

 

5.4           Review. Kyowa
shall have the right during the term of this Agreement and for one (1) year
following the termination or expiration of the Agreement to audit the relevant
books and records of Eurand. Such audit shall be carried out by an independent
firm of chartered accountants, who shall be reasonably acceptable to Eurand.
Such auditors shall give Eurand reasonable notice of their wish to audit the
relevant books and records and shall review such books and records solely for the
purposes of determining the accuracy of the payments made or due to Kyowa under
the terms of this Agreement. The costs of such audit shall be borne by Kyowa
unless the audit unequivocally shows an underpayment to Kyowa by Eurand, of
more that 5% of the total monies due, in which case the fees of the audit shall
be borne by Eurand.

 

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

 

 

ARTICLE 6 - WARRANTIES

 

6.1           Kyowa Warranties.
Kyowa warrants and represents to Eurand:

 

(a)           that it has no obligations, contractual or otherwise, that
would conflict with its entering into this Agreement;

 

(b)           that it will perform this Agreement in accordance with its
terms and conditions and that it has the full power and authority to execute
and deliver this Agreement and to perform its obligations hereunder;

 

(c)           with respect to the Kyowa Technology, that it has legal
power to extend the license and other rights granted to Eurand and its
Affiliates in this Agreement and that it has not made and will not make any
commitments to others inconsistent with or in derogation of such rights;

 

(d)           that it owns the Kyowa Technology; and

 

(e)           that as of the Effective Date of this Agreement,  to the best knowledge of Kyowa, the use of
the Kyowa Technology except FDT Patent does not infringe any patent or other
proprietary rights of third parties.

 

(f)            Kyowa warrants that the companies disclosed and set out
in 2.3a have no further Product or territorial rights other than as set out in
this clause. Further, Kyowa represents and warrants that this is a full and
complete disclosure of all rights granted in respect to the Kyowa Technology
and the Products in the Territory.

 

6.2           Eurand Warranties.
Eurand warrants and represents to Kyowa:

 

(a)                 that
it has no obligations, contractual or otherwise, that would conflict with its
entering into this Agreement;

 

(b)                that
it will perform this Agreement in accordance with its terms and conditions and
that it has the full power and authority to execute and deliver this Agreement
and to perform its obligations hereunder.

 

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

 

 

(c)                 Eurand
shall and shall have its sublicensees of the Kyowa Technology comply with the
applicable Laws and Regulations relating to GMP and regulatory requirements in
using Kyowa Technology.

 

ARTICLE 7 - INDEMNIFICATION

 

7.1           By Eurand.
Eurand shall defend, indemnify and hold Kyowa and its Affiliates and the
respective officers, directors and employees of each harmless from and against
any and all claims, demands, losses, damages, liabilities (including without
limitation product liability), settlement amounts, costs or expenses whatsoever
(including reasonable attorneys’ fees and costs and court costs) arising from
or relating to any claim, action or proceeding made or brought against such
person by a third party as a result of a breach of any Eurand representation or
warranty, or Eurand’s negligence, willful misconduct or breach of this
Agreement.

 

7.2           By Kyowa.
Kyowa shall defend, indemnify and hold Eurand and its Affiliates and the
respective officers, directors and employees of each harmless from and against
any and all claims, demands, losses, damages, liabilities (including without
limitation product liability), settlement amounts, costs or expenses whatsoever
(including reasonable attorneys’ fees and costs and court costs) arising from
or relating to any claim, action or proceeding made or brought against such
person by a third party as a result of a breach of any Kyowa representation or
warranty, or Kyowa’s negligence, willful misconduct or breach of this
Agreement.

 

7.3           Notice; Defense.
In the event of any claim, action or proceeding for which a person is entitled
to indemnity hereunder, the person seeking indemnity (“Claimant”) shall
promptly notify the relevant party (“Indemnitor”) of such matter in writing.
Indemnitor shall then promptly assume responsibility for and shall have full
control of such matter, including settlement negotiations and any legal
proceedings, and Claimant shall fully cooperate in Indemnitor’s handling and
defense thereof.

 

7.4           Consequential
Damages. Notwithstanding any provision of this Agreement which might
otherwise be to the contrary, no party shall be liable to the other party for
lost profits or other consequential damages of any kind.

 

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

 

 

ARTICLE
8 - CONFIDENTIALITY

 

8.1           Eurand
Confidential Information. Any and all information disclosed to Kyowa or its
Affiliates, or to which Kyowa and its Affiliates have access including, but not
limited to,  information concerning
and/or relating to Eurand’s business, technology, methods, formulae or
analytical methods (“Eurand Confidential Information”), is confidential and
proprietary information of Eurand, and shall be maintained in strict confidence
by Kyowa and its Affiliates and not disclosed to any third party. Kyowa and its
Affiliates agree that they will restrict the disclosure of such information
within their own organizations to those persons and agents who are directly
concerned therewith and who have been informed of Kyowa’s or its Affiliates’
obligations hereunder. Eurand Confidential Information shall not be disclosed
by Kyowa or its Affiliates other than to its officers, agents and employees who
are engaged in its operations relating to this Agreement, who have the need to
know such Eurand Confidential Information.

 

8.2           Kyowa
Confidential Information. Any and all information disclosed to Eurand and
its Affiliates or to which Eurand and its Affiliates have access including, but
not limited to, information concerning the FDT Technology and/or relating to
Kyowa’s business, technology, methods, formulae or analytical methods (“Kyowa
Confidential Information”), is confidential and proprietary information of
Kyowa, and shall be maintained in strict confidence by Eurand and its
Affiliates and not disclosed to any third party. Eurand and its Affiliates
agree that they will restrict the disclosure of such information within their
own organizations to those persons and agents who are directly concerned
therewith and who have been informed of Eurand and its Affiliates’ obligations
hereunder. Kyowa Confidential Information shall not be disclosed by Eurand and
its Affiliates other than to

 

(i)                  its
officers, employees and agents who are engaged in its operations relating to
this Agreement,

 

(ii)                 sub-licensees
and third party manufacturers manufacturing Product or Finished Product for
Eurand provided the sublicensees and third party manufacturers shall be bound
by confidentiality obligations to Eurand no less stringent than those set forth
in this Article 7,

 

(iii)                Regulatory
Authorities if required or advisable to be included in Regulatory Filings and
investigators who may conduct pharmacological, toxicological and clinical
investigations for Regulatory Filings.

 

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

 

 

8.3           Survival. The
obligations to maintain in confidence all Eurand Confidential Information and
Kyowa Confidential Information shall survive the termination or expiration of
this Agreement for a period of ten (10) years from the date of termination or
expiration.

 

8.4           Limitations. It
is understood that the following shall not be included in the definition of
either Eurand Confidential Information or Kyowa Confidential Information:

 

(a)                                  Information that is now in the public domain
or subsequently enters the public domain without fault on the part of the party
receiving the information; or

 

(b)                                 Information that was known by the receiving
party prior to receipt from the disclosing party as shown by the receiving
party’s written records; or

 

(c)                                  Information that the receiving party obtains
from any third party not under any obligation to keep such information
confidential; or

 

(d)                                 Information that the receiving party
independently develops without use of any information received from the
disclosing party as shown by the receiving party’s written records; or

 

(e)                                  Information which is required to be disclosed
by Law provided the receiving party provides prior written notice of such
disclosure to the other party and takes reasonable and lawful actions to avoid
and/or minimize the degree of such disclosure.

 

ARTICLE 9 – PATENT INFRINGEMENT

 

9.1           Notice of
Infringement. Kyowa and Eurand each shall immediately give written notice
to the other of any potential infringement or actual infringement by a third
party of any rights to Kyowa Patent, or any misappropriation or unauthorized
use of the Kyowa Technology of which they become aware.

 

9.2           Enforcement.
Eurand shall have the first right to enforce (including by agreement with
infringers or by litigation) the Kyowa Patent in the Territory against the
infringers at its own expense and at its own instigation or

 

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

 

 

[****]
in order to allow Eurand to fully enjoy the use of any such property rights
hereunder. Kyowa may reasonably cooperate with Eurand to enforce such rights
including by joining in such action voluntarily as a co-party plaintiff if
necessary. In the event that Eurand does not initiate action to address such third
party infringement, misappropriation, or unauthorized use within 180 days of
receiving notice of the same, Kyowa may initiate action on its own account and
at its own expense and Eurand shall reasonably cooperate with Kyowa to enforce
such rights including joining in any legal action as a voluntary co-party
plaintiff if necessary. During the pendancy of any litigation initiated by
Eurand under this Section 9.2, Eurand shall be entitled to suspend royalty
payments to Kyowa until the litigation is resolved.

 

9.3           Recovery. The
party initiating any action shall be entitled to retain any recovery in its
entirety.

 

9.4           Prosecution of
Kyowa Patent. All costs incurred in connection with the preparation,
filing, prosecution, and maintenance of the Kyowa Patent shall be paid by
Kyowa. Kyowa reserves the rights to dispose some peripheral patents and patent
applications among the Kyowa Patent except the FDT Patent with Eurand’s prior
written consent which shall not be unreasonably withheld by Eurand, provided
however, Eurand reserves the rights to request Kyowa not to dispose such
peripheral patents and to transfer the rights thereof to Eurand or its
Affiliate free of charge. In such case, after transfer of the rights to Eurand,
all the costs to maintain the peripheral patents shall be paid by Eurand,  and Eurand shall not execute such transferred
peripheral patent rights on the use of same by Kyowa, its Affiliates or its
licensees’  to the extent allowed under
the terms detailed in Section 2.3. Eurand shall have the right to dispose of
such transferred patents and patent application at its sole discretion and
without further obligation.

 

9.5           Prosecution of
FDT Patent  Kyowa shall cooperate
with Eurand in order for the pending patent applications of the FDT Patent to be
granted. Eurand shall be given an opportunity to review such applications and
provide input relative thereto. Kyowa shall keep Eurand advised as to all
developments with respect to such applications, and shall promptly supply to
the Eurand copies of all official papers received and filed in the respective
patent offices in connection with the prosecution thereof, in sufficient time
for Eurand to comment thereon.

 

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

 

 

ARTICLE 10 – TERM/TERMINATION

 

10.1         Term. The term
of this Agreement shall be from the Effective Date and, unless sooner
terminated in accordance with the provisions of this Article 10, until the
expiration of the last relevant Kyowa Patent listed in Schedule 1 and 2, at
which time the license granted to Eurand under Article 2 shall become perpetual
and fully paid up, such expiration to be on a country by country basis or for
the full Territory as indicated in Eurand’s notice.

 

10.2         Termination as a
result of a Default. Each party shall have the right to terminate this
Agreement upon the occurrence of any of the following events (each, an “Event
of Default”) with respect to the other party (the “Defaulting Party”) by giving
the Defaulting Party written notice, which notice shall specifically identify
the reason(s) for such termination: (a) a decree or order shall have been
entered by a court of competent jurisdiction adjudging the Defaulting Party
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, readjustment, arrangement, composition or similar relief for
the Defaulting Party under any bankruptcy Law or any other similar applicable
Law or a decree or order of a court of competent jurisdiction shall have been
entered for the appointment of a receiver or liquidator or trustee or assignee
in bankruptcy or insolvency of the Defaulting Party or a substantial part of
its property, or for the winding up or liquidation of its affairs, or (b) the
Defaulting Party shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy petition against it,
or shall file a petition or answer or consent seeking reorganization, readjustment,
arrangement, composition, liquidation or similar relief under any bankruptcy
Law or any other similar applicable Law or shall consent to the appointment of
a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of
it or of a substantial part of its property, or shall make an assignment for
the benefit of creditors, or shall be unable to pay its debts generally as they
become due; or (c) the Defaulting Party shall commit a breach of the terms of
this Agreement, and the same remains uncured sixty (60) days after written
notice thereof is given by the other party to the Defaulting Party (provided
that if within such sixty (60) days the Defaulting Party shall commence and
shall thereafter proceed with all due diligence to cure such breach, such
breach is not cured within such longer period as is required to cure, not to
exceed sixty (60) days) provided that in the event of a dispute as to whether a
breach has been cured, the non-defaulting party shall notify the Defaulting Party
and provide a detailed explanation of the deficiency in the cure and the
Defaulting Party shall 

 

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

 

 

respond
within 15 days or correct the cure.

 

10.3         Termination as a
result of no Execution of Product Development Agreements. In the event no
Product Development Agreements are executed by Eurand within five (5) years
from the Effective Date, Eurand’s exclusive rights under this Agreement may
become, at Kyowa’s sole discretion, non-exclusive.

 

10.4         Effect of
Termination. In the case Kyowa terminate this Agreement pursuant to Section
10.2  above, Eurand shall not have any
rights on Kyowa Technology, and in the case Eurand terminate this Agreement
pursuant to Section 10.2 above, the license granted to Eurand under Article 2
shall become perpetual and fully paid up.

 

10.5         Survival. The
provisions of Articles 7, 8 and 10 shall survive any expiration or other termination
of this Agreement.

 

ARTICLE 11 - MISCELLANEOUS

 

11.1         Notices. All
notices or other formal communications hereunder (other than routine business
communications) shall be made either by certified or registered letter, postage
prepaid, return receipt requested or by telefax or next business day delivery
service directed to the other party as provided below:

 

Party

 

	
  to
  Kyowa:

  	
   

  	
  Kyowa
  Hakko Kogyo Co.,Ltd.

  
	
   

  	
   

  	
  Pharmaceutical
  Company

  
	
   

  	
   

  	
  Business
  Development Dept.

  
	
   

  	
   

  	
  1-6-1
  Ohtemachi, Chiyodaku, Tokyo, 100-8185, Japan

  
	
   

  	
   

  	
  Attn.
  General Manager

  
	
   

  	
   

  	
  Fax.
  +81-3-3282-0107

  

 

	
  to
  Eurand:

  	
   

  	
  Eurand
  Pharmaceuticals Limited,

  
	
   

  	
   

  	
  Block
  1, Harcourt Centre,

  
	
   

  	
   

  	
  Harcourt
  Street,

  
	
   

  	
   

  	
  Dublin
  2

  
	
   

  	
   

  	
  Ireland

  

 

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

 

 

	
   

  	
  With a copy to:

  
	
   

  	
  Eurand International S.p.A

  
	
   

  	
  Via
  Martin Luther King, 13

  
	
   

  	
  20060

  
	
   

  	
  Pessano
  con Bornago

  
	
   

  	
  Milano,
  Italy

  
	
   

  	
  Attn: Corporate Development Director

  
	
   

  	
  Fax no. 39 0295743381

  

 

No
notice by telefax shall be valid unless confirmed by certified or registered
letter dispatched within twenty-four (24) hours after transmission of the
telefax. Either party from time to time may change its address or telefax
number by giving the other party notice as provided herein.

 

11.2         Entire Agreement.
This Agreement (including its Schedules) constitutes the entire agreement
between the parties relating to the subject matter hereof. All prior agreements
or arrangements, written or oral, between the parties relating to the subject
matter hereof are hereby canceled and superseded. This Agreement may not be
modified except in writing signed by both parties.

 

11.3         Conflict. In
the event of any conflict between the terms of this Agreement and any Schedule,
the terms of the body of this Agreement shall control.

 

11.4         Headings. Headings
are inserted for convenience and shall not affect the meaning or interpretation
of this Agreement.

 

11.5         Assignment. Neither
party may assign any right or obligation hereunder without the prior written
consent of the other party; provided, however, that either party shall be
entitled to assign this Agreement in whole or in part, without the prior
written consent of the other party, to an Affiliate or any entity which
succeeds, as a going concern, to the business presently conducted by the party
by merger, consolidation or sale of all or substantially all of the party’s
assets. Any attempted assignment or delegation in violation hereof shall be
void.

 

11.6         Waiver of Default.
No waiver of any default by either party shall be deemed to constitute a waiver
of any subsequent default with respect to the same or any other provision
hereof. No waiver shall be effective unless made in writing with specific
reference to the relevant provision(s) of this Agreement and signed by a duly
authorized representative of the party granting the waiver.

 

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

 

 

11.7         Governing Law.
This Agreement shall be governed by and construed in accordance with the Laws
of the State of New York without regard to its conflict of laws principles.

 

11.8         Force Majeure.
If either party is prevented from performing any obligation hereunder by reason
of fire, explosion, strike, labor dispute, casualty, accident, lack or failure
of transportation facilities, flood, war, civil commotion, acts of God, any
law, order or decree of any government or subdivision thereof or any other
cause beyond the reasonable control of such party, whether or not similar to
the foregoing and whether or not foreseeable, such party shall be excused from
performance hereunder to the extent and for the duration of such prevention,
provided it first notifies the other party in writing of such prevention. If
such prevention continues for at least ninety (90) days, the party not affected
may terminate this Agreement effective immediately on notice to the other
party.

 

11.9         Use of Names and Publicity.
Neither party will use the name of the other party or issue any press release
or other publicity relating to this Agreement in any form without the written
permission of the other, except as may be required by applicable Law. Neither
party will unreasonably withhold its written permission if the other party
wishes to issue such a press release or other publicity with respect to this
Agreement. The parties agree to keep the terms of this Agreement confidential,
however, either party may disclose the terms of this Agreement to a sublicensee
or a prospective sublicensee in conjunction with the negotiation or
administration of any sublicense provided that the sublicensee or prospective
sublicensee agrees in writing to keep the terms of this Agreement confidential.

 

11.10       Independent
Contractors. The parties agree that their relationship shall be that of
independent contractors in the performance of each and every part of this
Agreement. Nothing in this Agreement shall constitute one party as an employee,
agent, joint venturer, partner, or servant of another. Each party is solely
responsible for all of its employees and agents and its labor costs and
expenses arising in connection therewith.

 

11.11       Bankruptcy. All
rights and licenses granted under or pursuant to this Agreement are, and shall
otherwise be, deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, licenses of rights to “intellectual property” as defined under
Section 101(52) of the U.S. Bankruptcy Code and any similar provision
protecting licensee’s rights under Dutch or other applicable Law. The parties
to this Agreement shall retain and may fully exercise all of their respective 

 

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

 

 

rights
and elections under the U.S. Bankruptcy Code. The parties further agree that,
in the event of the commencement of bankruptcy proceeding by or against Kyowa
under the U.S. Bankruptcy Code or its Dutch or other applicable Law equivalent,
Eurand shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in its possession, shall be
promptly delivered to Eurand (a) upon any such commencement of a bankruptcy
proceeding upon written request thereof by Eurand, unless Kyowa elects to
continue to perform all of its obligations under this Agreement, or (b) if not
delivered under (a) above, upon the rejection of the Agreement by or on behalf
of Kyowa upon written request thereof by the licensee, provide, however, that
upon Kyowa’s (or its successor’s) written notification to Kyowa that it is
again willing and able to perform all of its obligations under this Agreement,
Eurand shall promptly return all such tangible materials to Kyowa, but only to
the extent that Eurand does not require continued access to such materials to
enable Eurand to perform its obligations under this Agreement.

 

11.12          Dispute Resolution. In the
event of any dispute or disagreement between the parties as to the
interpretation of any provision of this Agreement (or the performance of
obligations hereunder), the matter, upon written request of either party, shall
first be referred to representatives of the parties for decision. The
representatives shall promptly meet in a good faith effort to resolve the
dispute. If the dispute cannot be resolved by the representatives within thirty
(30) days after its submission or if either party does not to participate in
such resolution procedure, the matter shall be resolved by binding arbitration
in accordance with the rules of American Arbitration Association, each party to
select a neutral arbitrator and the two arbitrators to select a third. Each
party shall bear its own expenses. The cost of the arbitration shall be shared
equally by the parties. The judgment shall be enforceable in any court having
jurisdiction over the parties. The arbitration shall be conducted in English
language, in New York City, New York State.

 

11.13          Communications with any Agency.
Except to the extent required by law each party hereby agrees that it shall not
contact, notify or otherwise communicate with any agency of any government regarding
this Agreement or the transactions contemplated hereby or thereby without the
prior consent of the other party which shall not be unreasonably withheld.

 

11.14          Counterparts. This Agreement
shall become effective upon execution by both parties. This Agreement may be
executed by facsimile in multiple 

 

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

 

 

counterparts,
each of which shall be deemed an original and which together shall constitute
one and the same instrument.

 

11.15       No Strict
Construction. This Agreement has been prepared jointly and shall not be
strictly construed against either party.

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.

 

 

	
  Kyowa
  Hakko Kogyo Co.,Ltd.

  	
   

  	
  Eurand
  Pharmaceuticals Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/
  

  	
   

  	
  By

  	
  /s/
  GEAROID FAHERTY

  
	
   

  	
   

  	
   

  	
   

  	
  GEAROID FAHERTY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  Senior
  Managing Director

  	
   

  	
  Title
  

  	
  MANAGING
  DIRECTOR

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
  December
  19, 2002

  	
   

  	
  Date
  

  	
  December
  13, 2002

  

 

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

 

 

[*****]

 

 

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

 

 

[*****]

 

 

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

 

 

 

ADDENDUM
TO SOLBLET/EXLUB LICENSE AGREEMENT

 

Dated:  18 September , 2006

 

This
Addendum refers to the License Agreement dated December 19, 2002 (the “License
Agreement”) between Kyowa Hakko Kogyo Co, Ltd. (“Kyowa”) and Eurand
Pharmaceuticals Limited (“Eurand”).

 

WHEREAS, under the License Agreement, Kyowa has
licensed to Eurand certain Kyowa Technology (as defined in the License
Agreement);

 

WHEREAS, the License Agreement provides for the
license to be granted on an exclusive basis, but with certain exceptions to
such exclusivity referred to as Kyowa’s “reserved rights”;

 

WHEREAS, Kyowa had prior to the License Agreement
executed certain agreements with affiliates of [****] in [****] (hereinafter
including all affiliates collectively “[****]”) whereby in effect [****] (via
its affiliate in Japan) as licensor granted a license (the “[****] License”) to
Kyowa for certain technology concerning [****] under which Kyowa produces and
sells pharmaceutical products containing [****] as their active ingredient (“[****]
Products”) under the brand name of “[****]”;

 

WHEREAS, the [****] License requires Kyowa to grant
back to [****] worldwide, non-cancelable, royalty-free, non-exclusive rights
(including the right to grant sublicense) for any invention or development made
by Kyowa to improve the compounds, products or methods of any products licensed
under the [****] License;

 

WHEREAS, Kyowa intends to use the Kyowa Technology
(including both the SOLBLET Technology and the EXLUB Technology) in connection
with [****] Products under the [****] License, and may therefore be required to
grant to [****] a worldwide royalty-free license to the Kyowa Technology for
use in connection with [****] Products; 
and

 

WHEREAS, Kyowa and Eurand desire to confirm certain
matters relating to the handling of Kyowa’s obligations under the [****] License
to the extent they relate to the Kyowa Technology;

 

Now therefore, Kyowa and Eurand agree as follows:

 

1.                   In the event Kyowa decides to use the Kyowa
Technology in connection with [****] Products produced under the [****] License
and marketed in Japan by 

 

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

 

1

 

Kyowa, Kyowa may grant to [****] a worldwide,
royalty-free, sublicensable license for Kyowa Technology in connection with [****]
Products as [****] may claim to be required under the [****] License.

 

2.                   If [****] or any [****] sublicense of [****] (hereinafter
including [****] and [****] such sublicensees collectively re-defined as “[****]”)
desires to use the Kyowa Technology in connection with [****] Products and
seeks to outsource the production, Kyowa shall use its best efforts to
introduce Eurand as a potential contract manufacturer of such tablets and to encourage [****] to outsource such tablet supply needs to Eurand.
Eurand shall then make a good faith effort to reach agreement with [****] under which Eurand shall supply the tablets to [****]; although Eurand is under no obligation to supply [****] products to [****]. If agreement is
reached between Eurand and [****], no compensation,
royalties or any other consideration shall be payable by Eurand to Kyowa with
respect to such tablets supplied to [****].

 

3.                   If [****] and Eurand do not reach agreement on a supply
agreement from Eurand to [****], and if [****] chooses to use the Kyowa Technology rather than to
outsource the production thereof to Eurand, (i) Eurand acknowledges and accepts
that Kyowa shall not enforce or bring infringement claims of Kyowa Technology
against [****] in connection with
[****] products, and (ii) no compensation, royalties or
any other consideration shall be payable by Kyowa to Eurand.

 

4.                   In all respects
other than the matters specified in this Addendum, the License Agreement
remains unchanged and in full force and effect.

 

	
  Kyowa Hakko Kogyo Co., Ltd.

  	
   

  	
  Eurand Pharmaceuticals Limited

  
	
   

  	
   

  	
   

  
	
  /s/ [****]

  	
   

  	
   

  	
  /s/ Gearoid Faherty

  	
   

  
	
  [****]

  	
   

  	
  Gearoid Faherty

  
	
  Managing Officer

  	
   

  	
  Managing Director

  
	
  Division Head

  	
   

  	
   

  
	
  Strategic Planning Division

  	
   

  	
   

  
	
  Pharmaceuticals Business Unit

  	
   

  	
   

  
					

 

2

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