EXHIBIT 10.56
MANUFACTURING AND SUPPLY AGREEMENT
DPT LABORATORIES, LTD.
AND
CONNETICS CORPORATION
This Manufacturing and Supply Agreement (the "Agreement") is made as of
this 12 day of March, 2002 by and between Connetics Corporation, a corporation
organized under the laws of the State of Delaware, with its principal place of
business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Connetics")
and DPT Laboratories, Ltd., a Texas Limited Partnership with a place of business
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("DPT"). Connetics and
DPT are sometimes referred to in this Agreement individually as a "Party" and
collectively as the "Parties."
BACKGROUND
A. Connetics owns certain patented technologies for the formulation and
filling of aerosol pharmaceutical, over-the-counter and cosmetic products.
B. DPT owns and has a broad spectrum of technologies for the
development, formulation, testing, control, manufacture, filling and
distribution of pharmaceutical, over-the-counter and cosmetic products.
C. DPT and Connetics are parties to a Research & Development Services
Agreement dated July 20, 2001, which relates to the development and supply of
research products, and which anticipates a separate manufacturing agreement for
the manufacture and supply of commercial Products.
D. DPT and Connetics have agreed to enter into a transaction whereby
Connetics will provide the necessary capital to construct an aerosol
filling/packaging operation on DPT's leased distribution facilities, and DPT
will manufacture and fill Connetics aerosol products. That transaction will be
memorialized in a Contribution Agreement between the Parties.
NOW, THEREFORE, in consideration of the mutual covenants expressed
below, the Parties agree as follows:
1 - DEFINITIONS
ACT
"Act" means the Federal Food, Drug and Cosmetic Act, as amended, and
regulations promulgated thereunder.
AQL
"AQL" means Acceptable Quality Limits.
BULK PRODUCT
"Bulk Product" means a drug product that has been manufactured but not
filled or packaged into a final dosage presentation.
cGMPS
"cGMPs" means the current Good Manufacturing Practices of the FDA, as
set forth in Title 21 of the U.S. Code of Federal Regulations.
CONTRACT MINIMUMS
"Contract Minimums" means either [*] of Connetics Product and/or
Connetics licensed product, as further described in SECTION 3.1.
FDA
"FDA" means the United States Food and Drug Administration, or any
successor entity thereto.
FORECASTED NEEDS
"Forecasted Needs" means Connetics' estimate of Products to be ordered
from DPT for each of the twelve (12) months following the month in which
such estimate is provided.
INITIAL PROJECT
"Initial Project" means the construction and qualification of the
production and laboratory aerosol filling facilities referred to in
ARTICLE II.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
2
LABEL, LABELED, OR LABELING
"Label", "Labeled", or "Labeling" means all labels and other written,
printed, or graphic matter upon: (i) Product or any container or wrapper
utilized with Product or (ii) any written material accompanying Product.
MANUFACTURING FEE
"Manufacturing Fee" means the fee paid by Connetics to DPT for services
required to manufacture and package Products. The Manufacturing Fee is
quoted in single final Product unit increments (i.e., by the bottle, can
or tube). The Manufacturing Fee shall include services for incoming
inspection of materials (including costs associated with establishing,
testing and storing Raw Materials or Components), compounding of bulk,
packaging Product, testing Product for release, making Product ready for
shipment, and minimum product documentation (one copy of Certificate of
Analysis, batch records). The Manufacturing Fee does not include,
without limitation, any research & development support, package
engineering studies, validation support, FDA audit support, extensive
reporting requirements, or additional laboratory testing performed by an
outside testing laboratory or testing beyond that required in the
Specifications, warehousing or distribution of Product, any materials
costs or costs associated with establishing or manufacturing new
materials such as art charges, die costs, plate costs, or packaging
equipment change parts.
MARKET YEAR
"Market Year" means a period of twelve (12) consecutive months
commencing on the first day of the month following the initial invoicing
of Product commercially manufactured by DPT in accordance with this
Agreement and beginning on January 1st of each consecutive year
thereafter.
MATERIALS FEE
"Materials Fee" is quoted in single final Product unit increments and is
defined as DPT's Standard Cost plus ▇▇▇▇-up of 8% for administration and
carrying costs. Materials Fee does not include, without limitation,
costs associated with establishing, testing or manufacturing components
or new materials such as reference standards, reagents, art charges, die
costs, mold or tooling costs, plate costs, or packaging equipment change
parts. These items will be invoiced to Connetics at DPT's cost net
thirty (30) days and Connetics agrees to reimburse DPT for any such
authorized expenditures made on Connetics' behalf.
3
MATERIAL SAFETY DATA SHEET
"Material Safety Data Sheet" ("MSDS") means written or printed material
concerning a hazardous chemical which is prepared in accordance with the
regulations promulgated by the Occupational Safety & Health
Administration, or any successor entity thereto.
PCR
"PCR" means Product Change Request.
PACKAGING
"Packaging" means all primary containers, cartons, shipping cases,
inserts or any other like material used in packaging, or accompanying,
Product.
PRODUCT(s)
"Product(s)" means product(s) listed in SCHEDULE A manufactured,
packaged, labeled and/or finished by DPT pursuant to this Agreement.
QUALITY AGREEMENT
"Quality Agreement" means the Quality and Technical Agreement between
DPT and Connetics dated March, 2002, as it may be amended from time to
time, a copy of which is attached as SCHEDULE B.
RAW MATERIALS AND/OR COMPONENTS
"Raw Materials and/or Components" means any and all raw materials and
components (such as chemicals, containers, closures, packaging,
labeling, etc.) other than the Bulk Product needed by DPT to manufacture
and supply Product to Connetics according to the terms and conditions of
this Agreement.
REGULATORY FILINGS
"Regulatory Filings" means new drug applications (including abbreviated
or supplemental new drug applications) and other filings with the FDA or
equivalent international agencies, requesting approval to market and
sell Product.
4
REJECTED PRODUCT
"Rejected Product" shall have the meaning set forth in SECTION 3.7.
SPECIFICATIONS
"Specifications" means the (1) raw material specifications (including
chemical, micro, and packaging specifications); (2) sampling
requirements (i.e., lab, chemical, and micro); (3) compounding module,
including compounding process and major equipment; (4) intermediate
specifications; (5) packaging module (including packaging procedures,
torque and fill weights); and (6) finished Product specifications
release criteria including DPT's AQL's. Specifications shall be
established and/or amended from time to time upon the written agreement
of both DPT and Connetics via a PCR in accordance with ARTICLE IX below.
STANDARD COST
"Standard Cost" means the average actual cost to DPT of materials plus
incoming freight plus yield loss adjustment.
TOTAL PRICE
"Total Price" is the price per Unit of Product payable by Connetics
pursuant to SECTION 3.10.
II - AEROSOL FILLING FACILITIES
2.1 AEROSOL FILLING FACILITIES
DPT agrees to design, build, obtain necessary permits and licenses for,
and manage an aerosol filling facility consisting of a production line and a
laboratory line (collectively, the "Initial Project") in San Antonio, Texas. The
Initial Project will support both cGMP research and development work and cGMP
commercial production capable of filling at an approximate rate of [*]. The
design and cost estimates for the facility shall be prepared by DPT and approved
in advance by Connetics. The agreement of the Parties with respect to all
aspects of the construction and use of the aerosol filling facility will be the
subject of a separate agreement between the Parties.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
5
2.2 LINE USE FEE
(a) During the term of this Agreement (including any extensions), DPT
shall pay Connetics a line use fee any time DPT uses the R&D line previously
funded by Connetics, or the production or laboratory lines of the aerosol
filling facility, to manufacture any product for its affiliates or a third
party.
(b) The amount of the line use fee shall be calculated as follows (or in
such different manner as the Parties may agree in the future):
[*]
The line use fee is due and payable to Connetics sixty (60) days after DPT first
invoices the third party for manufacturing the product.
(c) The line use fee payable pursuant to this SECTION 2.2 shall be over
and above any royalty required to be paid to manufacture under Connetics'
patents. It is understood that the manufacture of any product that infringes any
Connetics patent will require payment of a patent royalty by DPT or the third
party in an amount to be negotiated at the time.
III - PRODUCT MANUFACTURE AND SUPPLY
3.1 MANUFACTURE AND PURCHASE; MINIMUMS
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
6
(a) Subject to the terms and conditions of this Agreement, DPT agrees
that it will manufacture for and provide to Connetics the
Products. Connetics shall pay DPT for Products as set forth in
SECTIONS 3.8 and 3.9. DPT shall manufacture Products in
accordance with the Specifications and the Quality Agreement, and
in sufficient quantity to meet Connetics Forecasted Needs for the
length of this Agreement. The development of new product
candidates will continue to be governed by the Research &
Development Services Agreement.
(b) Connetics shall be required to purchase a minimum number of units
from DPT per year ("Contract Minimums"), according to the
schedule set forth below. If Connetics does not purchase the
minimum requirement during a given 12-month period, then at the
end of that 12-month period Connetics shall pay DPT an amount
equal to [*]
(c) The initial Contract Minimum shall be [*] for two years,
beginning 6 months after the opening of the commercial production
line (currently estimated to open in [*]. The Contract Minimum
will increase to [*] beginning 30 months after the commercial
production line is opened. The Contract Minimum can be satisfied
by the production of any combination of Products, or third party
products that are licensed by Connetics (e.g., minoxidil foam).
3.2 SUPPLY OF MATERIALS
(a) It shall be the obligation of DPT to obtain, supply and store all
Raw Materials and Components for the manufacture of the Products.
DPT shall use commercially reasonable efforts to obtain the best
price for all Raw Materials and Components.
(b) If for any reason Connetics undertakes to supply any Raw
Materials or Components for manufacture of Products, the
following requirements shall apply:
i. Connetics shall notify DPT, in writing, specifying which
materials or components it will supply.
ii. Connetics shall provide DPT with said materials at
Connetics' expense along with Certificates of Analysis and
MSDS sheets relating to same, at a minimum of thirty (30)
days prior to DPT's scheduled production of Product
requiring said materials and in sufficient amounts for
DPT's manufacture of Product but not to exceed quantities
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
7
necessary to support three (3) months of the most recently
supplied Forecasted Needs or the minimum order quantity
whichever is greater. Connetics-supplied material in
excess of these amounts shall be either subject to storage
fees or returned to Connetics.
iii. All Connetics supplied material shall be shipped to DPT
freight prepaid. If Connetics ships or causes to ship such
material freight collect, DPT shall invoice Connetics for
the cost of the freight plus a reasonable administrative
fee which invoice shall be paid promptly upon receipt.
iv. DPT is hereby authorized by Connetics to return any
portion of Connetics supplied material for which no future
production is planned.
v. Connetics shall be responsible for the quality of all
Connetics-supplied materials.
vi. Connetics shall be responsible for the payment of all
personal property and other taxes incident to the storage
of Connetics-owned material at DPT.
vii. For each lot of materials supplied by Connetics, DPT shall
perform the quality control and inspection tests as agreed
to in the Specifications and pursuant to DPT's Standard
Operating Procedures. DPT shall have the right to reject
any pre-approved material which does not meet the
Specifications in accordance with SECTION 2.3 below.
viii. DPT warrants that it will maintain, for the benefit of
Connetics, complete and accurate records of the inventory
of all such Connetics-supplied materials.
ix. If requested by Connetics, DPT will provide to Connetics a
monthly report of ending monthly inventory balance of each
Connetics supplied/owned materials stored at DPT. This
reporting will be supplied exclusively on DPT forms.
(c) DPT shall be responsible for supply, at the expense of Connetics
pursuant to subsection (d) below, of all other commodities
necessary for the manufacture of Products.
(d) Connetics shall provide DPT with Specifications (including art
proofs) for packaging and labeling, and DPT shall purchase, at
the expense of Connetics, packaging and labeling in accordance
with the Specifications.
8
(e) DPT shall invoice Connetics for all Raw Materials and Components
supplied by DPT in connection with the Product into which the Raw
Materials and Components were converted, as part of the Materials
Fee, in accordance with the provisions of SECTION 3.8.
3.3 MATERIALS TESTING
All materials and packaging supplies shall, when received by DPT, be
submitted to analysis and evaluation in accordance with DPT's SOP's and
the Quality Agreement. The cost of all such analyses and evaluations
shall be borne by DPT, except as otherwise provided in SECTION 3.2 of
this Agreement.
3.4 MATERIAL SAFETY DATA SHEETS
With respect to any Raw Materials and Components furnished by Connetics
pursuant to SECTION 3.2(b), before DPT receives and tests such
Connetics-supplied material, and as a condition precedent of any testing
or formulation work by DPT pursuant to this Agreement, Connetics shall
provide MSDS sheets to DPT. Any components or Products requiring
disposal shall be presumed hazardous unless otherwise provided in the
MSDS information provided.
3.5 DPT'S DUTIES
(a) DPT shall maintain sufficient quantities of the Bulk Product and
the Raw Materials and Components to manufacture the Product in
accordance with the terms and conditions of this Agreement. DPT
shall coordinate with Connetics before qualifying any alternate
sources of Bulk Product or Raw Materials and Components. Any Bulk
Product and Raw Materials and Components shall meet the
applicable Specifications.
(b) DPT shall assume all responsibility and risk for the safekeeping,
storage and handling of all Bulk Product and Raw Materials and
Components.
(c) DPT, agrees, at its sole cost and expense, that it shall maintain
any and all licenses, permits and consents (including without
limitation, facility licenses and permits required by applicable
laws) necessary and/or required for DPT to manufacture the
Product and otherwise perform its obligations under this
Agreement.
(d) Each shipment of Product under this Agreement shall have been
manufactured in accordance with cGMPs and the Specifications in
9
a duly licensed facility and in accordance with the provisions of the
Quality Agreement. DPT shall number each Product shipment with a vendor
lot number that is traceable to Raw Materials and/or Components used to
manufacture such Product.
3.6 FAILURE TO SUPPLY
DPT shall immediately notify Connetics if DPT is unable to fill any
purchase order placed by Connetics pursuant to SECTION 3.8 for any
reason, including without limitation force majeure) and advise Connetics
of the revised delivery date. Connetics shall then have the option of
terminating any such Purchase Order without obligation of payment or of
accepting the revised delivery date.
3.7 FORECASTS
No later than six (6) months prior to the initial Market Year of a new
Product added to this Agreement, Connetics agrees to notify DPT of its
delivery requirements, including firm orders for same, for the initial
three (3) months and shall provide its Forecasted Needs for the first
Market Year in order to ensure timely delivery of Product for initial
sale and marketing.
3.8 PURCHASE ORDERS
(a) Connetics agrees to purchase from DPT all Products manufactured
for Connetics by DPT in accordance with cGMP and Connetics'
purchase orders or Forecasted Needs to the extent such Products
meet the Specifications or exceptions approved by Connetics.
(b) Products shall be ordered by Connetics by the issuance of
separate, pre-numbered purchase orders in increments of full
batch quantities.
(c) No later than six (6) months prior to the initiation of the first
Market Year and thereafter at the end of each month, Connetics
shall provide DPT with specific data as to its Forecasted Needs.
It is understood and agreed that with respect to all Forecasted
Needs issued to DPT by Connetics pursuant to the terms of this
Agreement, the forecast for the first three (3) months thereof
shall constitute a firm order for Products, regardless of whether
or not Connetics issues actual purchase orders. DPT may produce
Product up to thirty (30) days prior to the requested delivery
date in order to accommodate fluctuations in production demands.
The second three (3) months of the period addressed in all
Forecasted Needs shall be utilized by DPT for purposes of
material acquisition
10
on behalf of Connetics and DPT production planning. DPT shall
attempt to minimize the material inventory purchased on behalf of
Connetics. Certain materials, however, may have long lead times
and/or require a minimum order quantity. Therefore, DPT may order
the [*] necessary to support up to six (6) months of Connetics'
Forecasted Needs, or the applicable minimum order quantity,
whichever is greater. Should Connetics subsequently reduce its
Forecasted Needs, Connetics will be financially responsible for
any material purchased by DPT on Connetics' behalf. DPT may
require a deposit for such materials and such materials may also
be subject to storage and inventory carrying cost fees.
(d) Connetics shall provide at least one hundred twenty (120) days
lead time prior to the requested delivery dates if the
requirements for any new forecast exceed the most recent
Forecasted Needs by more than one hundred twenty-five percent
(125%).
3.9 REJECTED PRODUCTS
(a) Connetics may reject any Product which fails to meet the
Specifications ("Rejected Product"). Connetics shall, within
twenty (20) days after its receipt of any shipment of Product and
related Certificate of Analysis of Product batch (as described in
SECTION 5.1 of this Agreement), notify DPT in writing of any
claim relating to rejected Product batch and, failing such
notification, shall be deemed to have accepted such Product
batch. Such notice to DPT shall specify why the Product batch
failed to perform to Specifications. Connetics shall grant to DPT
the right to inspect or test said Product batch. All Products
shall be submitted to inspection and evaluation in accordance
with DPT's SOP's to determine whether or not said Products meet
the Specifications.
(b) As to any Rejected Product pursuant to SECTION 3.7(a) above
(including phases of or complete batches of bulk product), DPT
shall replace such Rejected Product (in an agreed upon batch
order quantity, but in no event less than full batch increments)
promptly after all materials are available to DPT for the
manufacture. If requested, DPT shall make arrangements with
Connetics for the return or disposal of Rejected Product.
(c) If a Rejected Product clearly results from DPT's equipment
failure, damage from DPT's facilities, and/or DPT's misweighing
of chemicals, DPT shall bear one hundred percent of all costs
directly related to and invoiced by DPT for Rejected Product,
including costs of destruction, but excluding the cost of any
materials supplied by Connetics. Except as provided in the
preceding
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
11
sentence, for the initial three (3) batches and all validation
batches of a Product produced by DPT, or in the event a Rejected
Product is due to Connetics supplied information, formulations or
materials, Connetics shall bear one hundred percent (100%) of all
costs directly related to and invoiced by DPT for Rejected
Product including cost of destruction of the Rejected Product,
which shall be conducted by Connetics in accordance with all
applicable laws and regulations.
(d) If a validated Product does not meet final Specifications and
results in a Rejected Product, but such failure is not clearly
due to either Connetics supplied information or DPT's equipment
failure, failure to follow written Specifications, damage from
DPT's facilities and/or DPT's misweighing of chemicals, Connetics
shall bear all Materials Fees with DPT bearing all Manufacturing
Fees related to Rejected Product, and with destruction to be paid
by the Connetics.
(e) Destruction of Rejected Product shall be in accordance with all
applicable laws and regulations and the party conducting the
destruction shall indemnify the other party hereto for any
liability, costs or expenses, including attorney's fees and court
costs, relating to a failure to dispose of such Product in
accordance with such laws and regulations. The party conducting
the destruction shall also provide to the other party hereto all
manifests and other applicable evidence of proper destruction as
may be requested by applicable law.
(f) In the event of a conflict between the test results of DPT and
the test results of Connetics with respect to any shipment of
Product batch, a sample of such Product batch shall be submitted
by DPT to an independent laboratory acceptable to both parties
for testing against the Specifications utilizing the methods set
out in the Specifications. The fees and expenses of such
laboratory testing shall be borne entirely by the party against
whom such laboratory's findings are made. If results from the
independent laboratory are inconclusive, final resolution will be
settled in accordance with SECTION 14.6(b) below.
3.10 PRODUCT PRICE
(a) Price for Connetics' Products. Connetics shall pay DPT for
Products a price per Unit of Product equal to the Manufacturing
Fee plus the Materials Fee. Any services related to services not
included in the Manufacturing Fee, such as research & development
support, package engineering studies, validation support, FDA
audit support, extensive reporting requirements, or additional
laboratory testing performed by an outside testing
12
laboratory or testing beyond that required in the Specifications,
shall be billed by the hour at DPT's then-prevailing R&D hourly
rate in accordance with the Research & Development Agreement
between the Parties dated July 20, 2001.
(b) Manufacturing Fees. The initial Manufacturing Fees to be paid by
Connetics to DPT are listed in SCHEDULE C. The Parties agree that
the Manufacturing Fees set out in SCHEDULE C shall be
re-negotiated, in good faith, at the beginning of each calendar
year. If the parties are unable to agree on a re-negotiated price
at least thirty (30) days prior to the start of a new twelve (12)
month period, then this Agreement, effective the first day of
January of the new twelve (12) month period, shall continue in
force with prices being adjusted to reflect the change in the
Producer Price Index for the Pharmaceutical Sector ("PPI") during
the preceding twelve (12) month period until such time as to when
price negotiation can be completed. Prices for new Products or
new Product sizes, not initially included in SCHEDULE C, shall be
negotiated and DPT and Connetics shall arrive at a mutual
agreement with respect to prices at the time said new Products or
new Product sizes are added to SCHEDULE A. If a negotiated price
cannot be agreed upon, final pricing for any of the above will be
settled in accordance with SECTION 13.6(b).
(c) Materials Fees. The Materials Fee to be paid by Connetics to DPT
shall be listed in SCHEDULE C within ninety (90) days of
commencement of manufacturing of the initial commercial products
of the applicable Product. The Materials Fee will be adjusted
once annually at the beginning of each calendar year and SCHEDULE
C shall be amended accordingly based on changes in DPT's standard
costs for materials. In the event, however, the cost of a
material increases or decreases during any Market Year greater
than ten percent (10%), DPT may promptly upon the effective date
of such increase or decrease adjust its invoice price for said
material to Connetics to compensate for the increase or decrease.
3.11 PAYMENT
(a) Invoices. DPT shall submit to Connetics an invoice five (5) days
after DPT's internal release of Product by DPT's quality
department, or shipment of Product from DPT, whichever occurs
first. Total invoice shall be equal to the quantity of Product
released times the Total Price per unit, effective on the date of
Product release. Connetics shall make payment of each invoice
within thirty (30) days after receipt by Connetics. If within
thirty (30) days after the delivery of Product and the
accompanying Certificate of Analysis to Connetics, Connetics
demonstrates non-
13
conformance under SECTION 3.9 and DPT agrees with such finding,
Connetics shall not be obligated to pay for such non-conforming
shipment.
3.12 LATE PAYMENT
(a) A late fee of one percent (1%) of total invoice can be added each
month for late payments. DPT, at its sole discretion, has the
right to discontinue Connetics' credit on future orders and to
put a hold on any production or shipment of Product if Connetics'
account is not current. Such hold on production or shipment shall
not constitute a breach of this Agreement by DPT. In the event
credit is discontinued, a one hundred percent (100%) material
deposit paid by Connetics to DPT will be required prior to DPT
ordering materials. In addition, a fifty percent (50%)
Manufacturing Fee deposit will be required prior to DPT
manufacturing any Product and the balance of the invoice must be
paid in full prior to shipment.
(b) As collateral security for Connetics' payment obligations
contained in this Agreement, Connetics grants to DPT a security
interest in all Raw Materials and Components, including
inventory, work-in-progress, and finished goods ordered or
produced in connection with this Agreement. Chapter 9 of the
Texas Uniform Commercial Code shall govern the rights and
obligations of the Parties relative to the security interests
granted herein.
3.13 DISPOSAL COSTS
DPT reserves the right to invoice Connetics for all disposal costs,
related to manufacture of the Products, unless the disposal relates to a
Rejected Product causes by the failure of DPT to follow established
written procedures.
IV - SHIPMENT AND RISK OF LOSS
4.1 SHIPMENT
14
Shipment of Product shall be in accordance with Connetics instructions,
provided that shipment is made in accordance with all relevant statutory
requirements. Product will be shipped to Connetics or its designee
immediately upon release, freight collect. If Connetics requests DPT to
make any miscellaneous small shipments of Product, material, or other
items on Connetics' behalf, Connetics agrees to reimburse DPT for any
shipping charges incurred.
4.2 DELIVERY TERMS
The purchase price of Products in SCHEDULE C shall be F.O.B. DPT's plant
of manufacture, San Antonio, Texas, freight collect. Connetics will bear
all risk of loss, delay, or damage in transit, as well as cost of
freight and insurance. Should the parties enter into a Distribution
Agreement, transfer of title, as well as all risk of loss, shall occur
upon release of the Product from quarantine.
4.3 CLAIMS
The weights, tares and tests affixed by DPT's invoice shall govern
unless established to be incorrect. Claims relating to quantity, weight
and loss or damage to any Product sold under this Agreement shall be
waived by Connetics unless made within thirty (30) days of receipt of
Product by Connetics.
V - TERM AND TERMINATION
5.1 TERM
This Agreement shall commence on the first day of the month following
the mutual signing of this document and will continue until the
expiration of the Tenth (10th) Market Year for each Product added to
SCHEDULE A, unless sooner terminated pursuant to SECTION 5.2 below. This
Agreement shall thereafter automatically renew for periods of 36 months,
unless any Party shall give notice to the others to the contrary at
least 12 months prior to the expiration of the initial term or any
renewal term of the Agreement.
5.2 TERMINATION
This Agreement may be terminated at any time upon the occurrence of
either of the following events:
15
(a) The failure of either Party to comply with its obligations in
this Agreement, which failure is not remedied within sixty (60)
days after written notice thereof.
(b) Notice by either Party to the other upon the insolvency or
bankruptcy of the other Party.
5.3 PAYMENT ON TERMINATION
In the event of the termination or cancellation of this Agreement for
any reason, and without prejudice to any other rights and remedies
available to DPT hereunder, Connetics agrees to reimburse DPT the
Materials Fee for Raw Materials and Components ordered for the
manufacture of Products based on Connetics' Forecasted Needs, as well as
for work-in-process and finished Products.
5.4 SURVIVAL
Termination of this Agreement under SECTION 5.2 or due to expiration or
cancellation shall not relieve either party of obligations or liability
for breaches of this Agreement incurred prior to or in connection with
termination, expiration or cancellation. Articles VI, VII, IX, X, XI and
XII of this Agreement shall survive the termination or cancellation of
this Agreement for any reason.
5.5 EFFECT OF TERMINATION. Upon termination of this Agreement the following
shall occur:
(a) DPT shall have no right to manufacture Product or use any of
Connetics Confidential Information, and all rights, title or
interest in, or other incidents of ownership under, Connetics
Confidential Information, including the right to manufacture
Product, shall automatically revert to Connetics. In the event
any such termination relates solely to one or more Products, then
this Agreement shall only be terminated to the extent it applies
to such Product(s) and this Agreement shall remain in effect as
it applies to all other Product(s);
(b) except as otherwise provided in this Agreement, expiration or
termination of this Agreement shall not relieve the Parties of
any obligation accruing prior to such expiration or termination;
(c) within 30 days following the expiration or termination of this
Agreement, each Party shall return to the other Party, or
destroy, upon the written request of the other Party, any and all
Confidential Information of the other Party in its possession and
upon a Party's
16
request, such destruction (or delivery) shall be confirmed in
writing to such Party by a responsible officer of the other
Party, except for such Confidential Information which the
receiving Party is required to keep under Applicable Laws, in
which event such Confidential Information shall be held subject
to the terms and conditions of Article XI.
5.5 REMEDIES
All of the non-breaching Party's remedies shall be cumulative, and the
exercise of one remedy by the non-defaulting Party shall not be deemed
to be an election of remedies. These remedies shall include the
non-breaching Party's right to ▇▇▇ for damages for such breach without
terminating this Agreement.
VI- CERTIFICATES OF ANALYSIS AND MANUFACTURING COMPLIANCE
6.1 CERTIFICATES OF ANALYSIS
DPT shall test each lot of Product purchased pursuant to this Agreement
before delivery to Connetics, in accordance with the Quality Agreement.
6.2 STABILITY TESTING
DPT shall perform its standard stability test program as defined in
DPT's SOP's and the Quality Agreement.
6.3 VALIDATION WORK OR ADDITIONAL TESTING
It is understood by the Parties that the responsibility for any
validation work shall be the sole responsibility of Connetics. The
parties agree that for any validation work or additional testing in
connection with the Product, DPT and Connetics shall enter into a
specific written Project Protocol establishing methodology and pricing
for such services. It is understood between the Parties that if DPT is
required by regulatory authority to perform validation studies or
additional testing in order to legitimately continue to engage in the
manufacture of the Product for Connetics and DPT and Connetics cannot
reach an agreement on a written Project Protocol, then DPT shall be
under no obligation to continue the manufacture of the Product affected
by said regulation.
6.4 FDA INSPECTION
17
DPT shall advise Connetics if an authorized agent of the FDA or other
governmental agency visits DPT's manufacturing facility and requests or
requires information or changes which directly pertain to the Products.
FDA audit time specific to Products will be billed to Connetics from DPT
at the then-prevailing QA hourly rate. DPT agrees to provide Connetics
with copies of any written observations made in connection with such
inspections, and any written responses to those observations.
6.5 REGULATORY FILINGS
Connetics agrees to provide DPT with copies of any sections of any
Regulatory Filings applicable to the Products manufactured and/or tested
by DPT, and copies of any changes in or updates of same as they, from
time to time, hereafter occur.
18
VII - WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES.
(a) Subject to SECTIONS 7.2 and 7.3, DPT warrants that Product
delivered to Connetics pursuant to this Agreement shall, at the
time of release:
(i) have been manufactured, filled, packaged and stored in all
material respects in accordance with all applicable U.S.
laws, rules, regulations or requirements;
(ii) have been manufactured, filled, packaged and stored in
accordance with, and will conform to, the Product
Specifications or pursuant to exceptions approved by
Connetics at the time of manufacture and shipment;
(iii) be free from defects in material, manufacturing and
workmanship for the shelf life of the Product as set forth
in the Product Specifications; and
(iv) not be (as a result of the actions or omissions of DPT)
adulterated or misbranded within the meaning of the
Federal Food, Drug and Cosmetic Act (the "Act") as
amended, or within the meaning of any applicable state or
municipal law in which the definitions of adulteration and
misbranding are substantially the same as those contained
in the Act, as the Act and such laws are constituted and
effective at the time of delivery.
(b) Licensing. DPT represents and warrants that it has obtained and
will maintain on a current basis and will comply with all
licenses, permits and approvals of applicable governmental
agencies as may be required to manufacture, test and store the
Product pursuant to this Agreement and perform its other
obligations under this Agreement. DPT shall be responsible for
obtaining and maintaining licenses and permits for manufacture,
testing and storage of the Product and ensuring that its
facilities used in the manufacture of the Product meet cGMPs in
all respects.
(c) Compliance with Laws. DPT represents and warrants that it shall
comply in all material respects with all U.S. federal, state, and
local laws, regulations and other requirements applicable to the
manufacture, testing and storage of the Product and the
performance of DPT's obligations under this Agreement. DPT shall
19
have sole responsibility for adopting and enforcing safety
procedures for the handling and manufacture of the Product at its
facilities and the proper handling and proper disposal of waste
relating to the Product.
7.2 COMPLIANCE WITH THE ACT
Connetics shall bear sole responsibility for the validity of all test
methods and appropriateness of all Specifications. In addition,
Connetics shall bear sole responsibility for all regulatory approvals,
filings, and registrations and adequacy of all validation, stability,
and preservative efficacy studies. Connetics further warrants that it
shall have obtained any and all necessary approvals from all applicable
regulatory agencies necessary to manufacture and distribute all Products
under this Agreement prior to their introduction into interstate
commerce.
7.3 COMPLIANCE OF PACKAGING AND LABELING WITH LAWS AND REGULATIONS
Connetics warrants that all Labeling copy and artwork approved,
designated or supplied by Connetics shall be in compliance with all
applicable laws and governmental regulations. Compliance with all
federal, state, and local laws and regulations concerning Packaging and
Labeling shall be the sole responsibility of Connetics, provided that
DPT purchases such Packaging and Labeling as provided in SECTION 3.2(c)
of this Agreement. Connetics hereby represents and warrants to DPT that
all Connetics designated formulas, components and artwork related to the
Product do not violate or infringe any patent, copyright or trademark
laws, and agrees to indemnify DPT, its employees, officers, directors
and representatives for any claim, loss or damage including reasonable
attorney's fees paid or incurred by any of them in connection therewith.
7.4 ACCESS TO DPT'S FACILITIES
Connetics shall have reasonable access to DPT's facilities for the
purpose of observing manufacturing of Products under this Agreement.
Connetics shall have access to DPT's facilities at a mutually agreeable
time for the sole purpose of auditing DPT's compliance with current Good
Manufacturing Practices and the Act. Such access shall in no way give
Connetics the right to any of DPT's confidential or proprietary
information. Further, audits shall normally be limited to every eighteen
(18) months and three (3) employees of Connetics who are subject to the
same requirements of confidentiality as Connetics.
20
7.5 LIMITATIONS; INDEMNIFICATION
(a) Limitations on Warranty. The warranty furnished in SECTION 7.1(b)
shall not apply to defects caused by accident or willful damage,
abuse, misuse, neglect, improper testing, handling, storage or
use after delivery by DPT of the Product in question to
Connetics.
(b) No Implied Representations; Warranties or Conditions. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER DPT NOR
Connetics MAKES ANY REPRESENTATIONS OR WARRANTIES AND THERE ARE
NO CONDITIONS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH
RESPECT TO PRODUCT SUPPLIED UNDER THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, ANY REPRESENTATIONS, WARRANTIES OR CONDITIONS
WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF SUCH PRODUCT, OR ARISING FROM A COURSE OF DEALING OR
USAGE OF TRADE PRACTICE.
(c) Limitation of Liability. EXCEPT FOR ANY LOSS, LIABILITY, DAMAGE
OR OBLIGATION ARISING OUT OF OR RELATING TO THE DISCLOSURE OF
CONFIDENTIAL INFORMATION PURSUANT TO ARTICLE 7 OR AS OTHERWISE
EXPRESSLY SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER
PARTY HAVE ANY LIABILITY TO THE OTHER PARTY OR ANY OTHER THIRD
PARTY FOR ANY LOST OPPORTUNITY, COSTS OF PROCUREMENT OF
SUBSTITUTE GOODS OR SERVICES, OR FOR ANY SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF
THIS AGREEMENT, UNDER ANY CAUSE OF ACTION OR THEORY OF LIABILITY
(INCLUDING NEGLIGENCE), AND WHETHER OR NOT SUCH PARTY TO THIS
AGREEMENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
21
VIII - PRODUCT RECALLS
If at any time or from time to time:
(a) the FDA or any other government authority requests,
directs, or orders a Party to recall or withdraw the
Product;
(b) a court of competent jurisdiction issues an order or
directive for the Product to be recalled or withdrawn; or
(c) a voluntary recall or withdrawal of the Product is
contemplated by either Party
(individually or collectively, a "Recall"), then the Party to whom such
request is made or the Party contemplating such Recall, as the case may
be, shall immediately notify the other Party. Neither Party shall carry
out a voluntary Recall in the Territory without the prior written
approval of the other Party, which approval shall not be unreasonably
withheld, conditioned or delayed. The Parties acknowledge and understand
due to the immediacy of any recall situation, such approval should be
given in 48 hours.
In addition, the Parties shall take all appropriate corrective actions
reasonably requested by the other Party hereto or by any government
agency. In the event that such recall results from the breach of DPT's
warranties under this Agreement, DPT shall be responsible for the
expenses of the Recall, in any case not to exceed one hundred thousand
dollars ($100,000.00) per Recall incident. In the event the Recall
results from the breach of Connetics' warranties under this Agreement,
Connetics shall be responsible for the expenses of the Recall. For the
purposes of this Agreement, the expenses of the Recall shall be the
expenses of notification and destruction or return of the recalled
Product, as well as any reasonable out-of-pocket costs incurred by DPT
and Connetics in connection with any corrective action taken by DPT and
Connetics.
IX - FORCE MAJEURE
Failure of either party to perform its obligations under this Agreement
shall not subject such party to any liability to the other if such
failure is caused by acts such as, but not limited to, acts of God,
fires, explosion, flood, drought, war, riot, sabotage, embargo, strikes,
compliance with any court order or regulation of any government entity
acting with color of right or by any other cause beyond the reasonable
control of the parties, whether or not foreseeable.
22
X - CHANGES TO PROCESS OR PRODUCT
10.1 CHANGES BY CONNETICS
If Connetics at any time requests a change to Product and DPT agrees
such change is reasonable with regard to Product manufacture; (i) such
change shall be incorporated within the Master Batch Record and/or
Specifications via a written PCR reviewed and agreed upon by both DPT
and Connetics; (ii) The parties shall adjust the price of Product, if
necessary, and SCHEDULE A shall be amended accordingly; and (iii)
Connetics shall pay DPT for the costs associated with such change
including, but not limited to, any additional development or validation
work required, charged at DPT's then-prevailing R&D rates in accordance
with Article XII contained in this Agreement.
10.2 CHANGES BY DPT
DPT agrees that any changes developed by DPT which may be incorporated
into the Product shall require the written approval of Connetics via a
PCR prior to implementation of the change. At the time of such
incorporation, such changes shall become part of the Specifications. No
such change may be instituted except in compliance with this Agreement
and the Quality Agreement. It is also agreed that any regulatory filings
incident to any such change shall be the sole responsibility of
Connetics. Connetics shall have the option of obtaining, or having DPT
obtain, any required FDA approval or other regulatory approval prior to
implementation of such a change.
10.3 CHANGES BY REGULATORY AUTHORITIES
The parties agree that any changes required by regulatory authority,
shall be incorporated into the Product as evidenced by the written
approval of Connetics via a PCR prior to such incorporation. At the time
of such incorporation, such changes shall become part of the
Specifications. If DPT is required by regulatory authority to perform
validation studies for purposes of validating new manufacturing process
or cleaning procedures or new material and finished Product assay
procedures with respect to Product in order to continue to engage in the
manufacture of said Product for Connetics, such studies shall be
conducted in accordance with SECTION 6.3 in this Agreement. Any costs to
DPT resulting from the operation of this Section shall be reimbursed by
Connetics.
23
10.4 OBSOLETE INVENTORY
Any Connetics-specific inventory including, but not limited to,
materials, work-in-process, and Products rendered obsolete as a result
of formula, artwork or packaging changes requested by Connetics or by
changes required by regulatory authority shall be reimbursed to DPT by
Connetics at DPT's Materials Fee. At such time and unless otherwise
agreed by DPT, DPT will ship the obsolete inventory to Connetics for
destruction by Connetics. Connetics shall bear one hundred percent
(100%) of all shipping and destruction costs related to said obsolete
inventory. The destruction shall be in accordance with all applicable
laws and regulations and Connetics shall indemnify DPT for any
liability, costs or expenses, including attorney's fees and court costs,
relating to Connetics' failure to dispose of such inventory in
accordance with such laws and regulations. Connetics shall also provide
DPT with all manifests and other applicable evidence of proper
destruction as may be requested by DPT or required by applicable law. If
DPT does not receive disposition instructions from Connetics within
ninety (90) days from date of obsolescence, obsolete inventory remaining
at DPT's facilities shall be subject to storage fees.
XI - CONFIDENTIAL INFORMATION: INTELLECTUAL PROPERTY RIGHTS
11.1 CONFIDENTIAL INFORMATION
The Confidentiality and Material Transfer Agreement between DPT and
Connetics dated April 12, 2001 is hereby incorporated in its entirety by
this reference, and shall remain in effect until the later of (a)
expiration according to its terms, or (b) five years following the
expiration or termination of this Agreement. The terms of the
Confidentiality and Material Transfer Agreement shall be deemed amended
to the extent necessary to cover Products under this Agreement. For
convenient reference, a copy of the Confidentiality Agreement is
attached as SCHEDULE D.
11.2 TRADEMARKS AND TRADE NAMES
(a) Each Party hereby acknowledges that it does not have, and shall
not acquire, any interest in any of the other Party's trademarks
or trade names unless otherwise expressly agreed.
(b) Each Party agrees not to use any trade names or trademarks of the
other Party, except as specifically authorized by the other Party
in writing both as to the names or marks which may be used and as
to the manner and prominence of use.
24
XII - INDEMNIFICATION
12.1 INDEMNIFICATION BY DPT
Subject to SECTION 7.6 above, DPT will indemnify and hold Connetics
harmless against any and all liability, damage, loss, cost, or expense
(including reasonable attorney's fees) resulting from any third party
claims made or suits brought against Connetics which arise from DPT's
breach of its warranties set forth in Article VII of this Agreement,
provided such sum does not exceed available insurance coverage.
12.2 INDEMNIFICATION BY CONNETICS
Connetics will indemnify and hold DPT harmless against any and all
liability, damage, loss, cost or expense (including reasonable
attorney's fees) resulting from any third party claims made or suits
brought against DPT which are related to the breach of any of Connetics'
warranties provided for in this Agreement or which arise out of the
promotion, distribution, use, testing or sales of Products, including,
without limitation, any claims, express, implied or statutory, made as
to the efficacy, safety, or use to be made of Products, and claims made
by reason of any Product Labeling or any Packaging containing Product
(provided such packaging and Labeling was purchased by DPT as provided
in SECTION 3.2(c) of this Agreement), unless such liability, damage,
loss or expense is caused by the breach of DPT's warranties under
Article VII of this Agreement.
12.3 PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS
(a) Connetics further warrants that use of Products or sales of
Products will not infringe any patent or other proprietary rights
and that Connetics will indemnify, defend and hold DPT harmless
from any damage, judgment, loss, cost or other reasonable expense
(including reasonable attorney's fees) arising from claims that
Products or the use of the Product names and any other
trademarks, trade names, or trade dress used by Connetics in
connection with Products infringes patent or other proprietary
rights of a third party.
(b) DPT shall indemnify and hold Connetics harmless from all costs,
damages and expense (including reasonable attorney's fees)
arising out of any suit or action brought against Connetics based
upon a claim that any process or technical data furnished or
utilized by DPT infringes any patent or other proprietary rights.
25
12.4 CONDITIONS OF INDEMNIFICATION
If either Party expects to seek indemnification from the other under
SECTIONS 12.1, 12.2, or 12.3 of this Agreement, it shall promptly give
notice to the other party of any such claim or suit threatened, made or
filed against it which forms the basis for such claim of indemnification
and shall cooperate fully with the other party in the defense of all
such claims or suits. No settlement or compromise shall be binding on a
party hereto without its prior written consent.
12.5 EVIDENCE OF LIABILITY INSURANCE
It is further agreed that each Party shall furnish to the other evidence
of products and contractual liability insurance coverage affording not
less than [*] each occurrence combined single limit, bodily
injury/property damage and [*] aggregate liability limits. Each insurer
shall name the other as an additional insured. Such evidence of
insurance coverage can be in the form of the original policy or
Certificate of Insurance which shall provide that the insurer has
assumed the liability as provided for in this Agreement. In addition,
such insurers shall warrant that such insurance will not be changed or
canceled without at least thirty (30) days prior written notice to the
respective indemnities.
XIII - GENERAL PROVISIONS
13.1 NOTICES
Any notices permitted or required by this Agreement shall be sent by
certified or registered mail with a copy by fax and shall be effective
the earlier of the date received or three (3) days after deposit in the
U.S. mail, if sent and addressed as follows or to such other address as
may be designated by either party in writing:
If to DPT: DPT Laboratories, Ltd.
Attention: President
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the General Counsel's Office
If to Connetics: Connetics Corporation
Attention: President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
26
13.2 ENTIRE AGREEMENT; AMENDMENT
The Parties acknowledge that this document sets forth the entire
agreement and understanding of the parties and supersedes all prior
written or oral agreements or understandings with respect to the subject
matter of this Agreement, and shall supersede any conflicting portions
of DPT's quotation, acknowledgment and invoice forms and Connetics'
Purchase Order and other written forms. No modification of any of the
terms of this Agreement, or any amendments thereto, shall be deemed to
be valid unless in writing and signed by the party against whom
enforcement is sought. No course of dealing or usage of trade shall be
used to modify the terms and conditions in this Agreement. Nothing in
this Agreement is intended to alter the status of the Research &
Development Services Agreement or the Confidentiality and Material
Transfer Agreement already in effect between the parties.
13.3 WAIVER
No waiver by either party of any default shall be effective unless in
writing, nor shall any such waiver operate as a waiver of any other
default or of the same default on a future occasion.
13.4 OBLIGATIONS TO THIRD PARTIES
Each party warrants and represents that proceeding in this Agreement is
not inconsistent with any contractual obligations, express or implied,
undertaken with any third party.
13.5 ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
successors or permitted assigns of each of the parties and may not be
assigned or transferred by either party without the prior written
consent of the other, which consent will not be unreasonably withheld,
except that such consent shall not be required in connection with a
merger or acquisition of a substantial portion of the assets of either
party by a third party and provided that the successor or assignee
assumes all obligations imposed in this Agreement. Any assignments,
including but not limited to, sale, transfer, or license of brand or
Products, shall not release the original party hereto from their duties
and obligations under this Agreement.
27
13.6 GOVERNING LAW AND DISPUTE RESOLUTION
(a) Governing Law
The validity, interpretation and effect of this Agreement shall
be governed by and construed under the laws of the State of
Texas, U.S.A.
(b) Mediation
The Parties agree to attempt to settle any disputes that arise in
connection with this Agreement through good faith non-binding
mediation efforts. The Parties agree that any dispute that arises
in connection with this Agreement which is not settled through
good faith mediation efforts and which does not involve a claim
for equitable relief shall be settled by arbitration according to
the provisions of SECTION 13.6(c) below.
(c) Arbitration
(i) Any dispute, claim or controversy arising from or related
in any way to this Agreement or the interpretation,
application, breach, termination or validity of this
Agreement, including any claim of inducement of this
Agreement by fraud or otherwise, which is not resolved by
good faith mediation efforts, will be submitted for
resolution to arbitration pursuant to the commercial
arbitration rules then pertaining of the Center for Public
Resources ("CPR"), except where those rules conflict with
these provisions, in which case these provisions control.
Such arbitration shall be held in (A) Santa ▇▇▇▇▇ County,
California, if the demand for arbitration is initiated by
DPT or (B) Bexar County, Texas, if the demand for
arbitration is initiated by Connetics.
(ii) A single arbitrator shall be chosen from the CPR Panels of
Distinguished Neutrals and shall be a lawyer specializing
in business litigation with at least 15 years experience
with a law firm of over 25 lawyers or who was a judge of a
court of general jurisdiction.
(iii) The parties agree to cooperate (A) to obtain selection of
the arbitrator within 30 days of initiation of the
arbitration, (B) to meet with the arbitrator within 30
days of selection and (C) to agree at that meeting or
before upon procedures for discovery and as to the conduct
of the hearing which will result in the hearing being
concluded within no more than 9 months after selection of
the arbitrator and in the award being rendered
28
within 60 days of the conclusion of the hearings, or of
any post-hearing briefing, which briefing will be
completed by both sides within 20 days after the
conclusion of the hearings. In the event no such agreement
is reached, the CPR will select the arbitrator, allowing
appropriate strikes for reasons of conflict or other cause
and three peremptory challenges for each side. The
arbitrator shall set a date for the hearing, commit to the
rendering of the award within 60 days of the conclusion of
the evidence at the hearing, or of any post-hearing
briefing (which briefing will be completed by both sides
in no more than 20 days after the conclusion of the
hearings), and provide for discovery according to these
time limits, giving recognition to the understanding of
the Parties that they contemplate reasonable discovery,
including document demands and depositions, but that such
discovery be limited so that the time limits specified in
this Agreement may be met without undue difficulty. In no
event will the arbitrator allow either side to obtain more
than a total of 40 hours of deposition testimony from all
witnesses, including both fact and expert witnesses. In
the event multiple hearing days are required, they will be
scheduled consecutively to the greatest extent possible.
(iv) The arbitrator shall render an opinion setting forth
findings of fact and conclusions of law with the reasons
therefor stated. A transcript of the evidence adduced at
the hearing shall be made and shall, upon request, be made
available to either Party.
(v) To the extent possible, the arbitration hearings and award
will be maintained in confidence.
(vi) Any court of competent jurisdiction may enter judgment
upon any award.
(vii) Each party has the right before or during the arbitration
to seek and obtain from the appropriate court provisional
remedies such as attachment, preliminary injunction,
replevin, etc. to avoid irreparable harm, maintain the
status quo, or preserve the subject matter of the
arbitration.
(viii) EACH PARTY TO THIS AGREEMENT WAIVES ITS RIGHT TO TRIAL OF
ANY ISSUE BY JURY.
(ix) The decision of the arbitrator shall be final and binding
upon all Parties and their respective successors and
assigns.
29
(d) Costs
The costs of mediation and/or arbitration, including reasonable
attorneys' fees, shall be borne by the losing Party, as allocated
by the arbitration award.
13.7 SEVERABILITY
In the event that any term or provision of this Agreement shall violate
any applicable statute, ordinance, or rule of law in any jurisdiction in
which it is used, or otherwise be unenforceable, such provision shall be
ineffective to the extent of such violation without invalidating any
other provision of this Agreement.
13.8 HEADINGS, INTERPRETATION
The headings used in this Agreement are for convenience only and are not
a part of this Agreement.
13.9 NO HIRING
During the term of this Agreement, neither Party shall take any
affirmative action to hire away any employees of the other Party.
13.10 INDEPENDENT CONTRACTOR
In performing its services under this Agreement, DPT shall act as an
independent contractor.
13.11 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same original.
30
IN WITNESS WHEREOF, the Parties have each caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
CONNETICS DPT LABORATORIES, LTD.
By: DFB PHARMACEUTICALS, INC.
Sole General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/
-------------------------------- ------------------------------
Its: President/CFO Its: President
------------------------------- -----------------------------
INDEX TO SCHEDULES
SCHEDULE A PRODUCTS
SCHEDULE B QUALITY AGREEMENT
SCHEDULE C MANUFACTURING FEES
SCHEDULE D CONFIDENTIALITY AND MATERIAL TRANSFER AGREEMENT BETWEEN
DPT AND CONNETICS DATED APRIL 12, 2001
31
SCHEDULE A
PRODUCTS
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
32
SCHEDULE B
QUALITY AGREEMENT
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
33
SCHEDULE C
MANUFACTURING FEES
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
34
SCHEDULE D
CONFIDENTIALITY AND MATERIAL TRANSFER AGREEMENT
BETWEEN DPT AND CONNETICS DATED APRIL 12, 2001
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
35