Exhibit 10.10
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXECUTION COPY
COMMERCIAL MANUFACTURING AGREEMENT
THIS MANUFACTURING AGREEMENT (the "Agreement") is made and entered into this
25th day of July, 2005 (the "Closing Date"), by and between AAI DEVELOPMENT
SERVICES, A DIVISION OF AAIPHARMA INC. ("AAI DS") having a place of business at
0000 Xxxxxxxxxx Xxxx Xx., Xxxxxxxxxx, XX 00000 and XANODYNE PHARMACEUTICALS,
INC., a Delaware corporation ("Purchaser") having a place of business at 0000
Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, XX 00000.
BACKGROUND
A. On May 10, 2005, aaiPharma, Inc., aaiPharma, LLC, AAI DS, and each of
the other Debtors (as defined in the Sale Order) filed voluntary
petitions for relief under chapter 11 of title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Cases").
B. The Debtors are authorized to continue to operate their businesses and
manage their properties as debtors in possession pursuant to sections
1107(a) and 1108 of the Bankruptcy Code.
C. aaiPharma Inc., aaiPharma LLC and Purchaser have entered into that
certain Asset Purchase Agreement dated as of the 6th day of May, 2005,
as amended as of June 7, 2005 and July 18, 2005 (the "APA").
D. It is a condition precedent to the closing of the transactions
contemplated by the APA that the parties enter into this Agreement.
E. Subject to the terms and conditions contained in this Agreement,
Purchaser desires to engage the services of AAI DS to Manufacture the
Products (each as defined below) for subsequent commercial
distribution by Purchaser.
F. AAI DS is willing to undertake such Manufacture for Purchaser
according to the terms and conditions provided for in this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing premises and of
the mutual covenants of the parties hereinafter set forth, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings given to them in the APA. The following words, terms and phrases, when
used herein, shall have the following respective meanings:
1.1 "AAI DS" shall have the meaning set forth in the preamble.
1.2 "AAI DS INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 8.1.
1.3 "APA" shall have the meaning set forth in Paragraph C of the Background
Statement.
1.4 "API" shall mean the active pharmaceutical ingredient with respect to
each Product.
1.5 "ACT" shall mean the United States Food, Drug and Cosmetic Act, (21
U.S.C. 301 et seq.) as amended from time to time, and the regulations
promulgated thereunder.
1.6 "ADDITIONAL PRODUCTS" shall mean the Lifecycle Products and the New
Products with respect to which AAI DS has Manufacturing rights under Section 3.1
herein.
1.7 "AGREEMENT" shall have the meaning set forth in the preamble.
1.8 "APPLICABLE DEA QUOTA FORECAST" shall have the meaning set forth in
Section 4.7.
1.9 "BATCH" shall mean a specific quantity of material produced in a
contiguous process or series of processes that is expected to be homogeneous
within specified limits. The Batch size for each Initial Product is set forth in
Exhibit A attached hereto and incorporated herein by reference.
1.10 "CGMP" shall mean the FDA's current Good Manufacturing Practice
requirements as promulgated under the Act at 21 CFR (parts 210 and 211), and as
further defined by FDA guidance documents, as such may be amended from time to
time.
1.11 "CLOSING DATE" shall have the meaning set forth in the preamble.
1.12 "COGS" shall have the meaning set forth in Section 5.2.
1.13 "COMMERCIALIZE" or "COMMERCIALIZATION" shall mean, with respect to a
Product, the marketing, promotion, sale and distribution of such Product.
1.14 "DEA QUOTA" shall have the meaning set forth in Section 4.7.
1.15 "FIRM COMMITMENT" shall have the meaning set forth in Section 4.1.
1.16 "FIRM FORECAST" shall have the meaning set forth in Section 4.1.
1.17 "FIRM ORDER" shall have the meaning set forth in Section 4.2(b).
1.18 "INDEMNIFICATION CLAIM" shall have the meaning set forth in Section
8.3(h).
1.19 "INITIAL PRODUCTS" shall mean those pharmaceutical products listed on
Exhibit B attached hereto and incorporated herein by reference and only in those
dosage forms and presentations listed on Exhibit B.
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1.20 "INITIAL TERM" shall have the meaning set forth in Section 9.1.
1.21 "LONG-TERM FORECAST" shall have the meaning set forth in Section 4.1.
1.22 "LOSSES" shall have the meaning set forth in Section 8.1.
1.23 "MANUFACTURE/MANUFACTURING" shall mean the manufacture, processing,
packaging, labeling (subject to Section 3.7), quality control and testing of the
Products performed prior to their delivery by AAI DS in accordance with the
terms of this Agreement.
1.24 "MARKETING AUTHORIZATIONS" shall mean the United States new drug
application or abbreviated new drug application, as applicable, for the
Product(s).
1.25 "MATERIAL CHANGE" shall have the meaning set forth in Section 3.3.
1.26 "MAXIMUM PURCHASE QUANTITY" shall mean, with respect to each Initial
Product other than the methadone hydrochloride Product, [**] Batches of such
Initial Product in a calendar month, with respect to the methadone hydrochloride
Product, [**] Batches in a calendar month, and, with respect to each Additional
Product, the quantity of such Additional Product agreed to in writing by the
Parties.
1.27 "MINIMUM ORDER REQUIREMENT" shall have the meaning set forth in
Section 4.2(a).
1.28 "PARTIES" shall mean Purchaser and AAI DS.
1.29 "PARTY" shall mean each of Purchaser, on the one hand, and AAI DS, on
the other hand.
1.30 "PRODUCT(S)" shall mean the Initial Products and the Additional
Products.
1.31 "PURCHASE PRICES" shall have the meaning set forth in Section 5.1.
1.32 "PURCHASER" shall have the meaning set forth in the preamble.
1.33 "PURCHASER INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 8.2.
1.34 "QUALITY AGREEMENT" shall have the meaning set forth in Section 6.5.
1.35 "RAW MATERIALS" shall mean any excipient and component materials used
to Manufacture the Products, but excluding the API.
1.36 "RECALLS" shall have the meaning set forth in Section 6.4(b).
1.37 "RENEWAL PERIOD" shall have the meaning set forth in Section 9.1.
1.38 "SPECIFICATIONS" shall mean the specifications for the Initial
Products set forth in Exhibit C attached hereto and incorporated herein by
reference.
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1.39 "TERM" shall have the meaning set forth in Section 9.1.
1.40 "TERRITORY" shall mean the United States, its territories and
possessions.
ARTICLE 2
LICENSE GRANT TO AAI DS TO MANUFACTURE PRODUCT
2.1 GRANT. Purchaser hereby grants to AAI DS during the Term of this
Agreement a nonexclusive, royalty-free right to Manufacture the Products in the
Territory and to use any and all of Purchaser's licenses, trademarks, regulatory
data and/or technical information, Know How and Confidential Information of
Purchaser related to the Products (including, without limitation, the Purchased
Intellectual Property and the Licensed Intellectual Property) for the purpose of
AAI DS carrying out its obligations hereunder, subject to the conditions of this
Agreement. The Manufacturing rights shall also include a non-exclusive,
royalty-free sublicense of the Azathioprine Product Assets to the extent
exclusively licensed to Purchaser under the APA.
2.2 MARKETING AUTHORIZATIONS. Purchaser shall maintain the Marketing
Authorizations in full force and effect at all times. Upon request by Purchaser,
AAI DS shall use commercially reasonable efforts to assist Purchaser in
connection therewith; provided that, in exchange, Purchaser will pay AAI DS its
standard fees and expenses therefor.
ARTICLE 3
MANUFACTURING
3.1 ENGAGEMENT.
(a) During the Term of this Agreement and subject to the terms and
conditions set forth herein, Purchaser agrees to purchase from AAI DS, and AAI
DS agrees to supply, one hundred percent (100%) of Purchaser's requirements for
the Initial Product(s) for Commercialization in the Territory. Notwithstanding
the foregoing, Purchaser shall be entitled, at its sole cost and expense, to
qualify other manufacturer(s) to manufacture Initial Products solely for the
purpose of such manufacturer(s) supplying Purchaser with quantities of Initial
Product that AAI DS is unable to supply (i) in breach of this Agreement, (ii)
pursuant to Section 4.2(e), or (iii) during events of force majeure.
(b) No later than [**] months prior to the commercial launch of an
Additional Product, the Purchaser shall offer in writing to AAI DS the option to
Manufacture such Additional Product. AAI DS shall accept or reject any such
offer to Manufacture such Additional Product in writing (an "Option Election
Notice") within [**] days of receipt of Purchaser's offer. If AAI DS elects to
Manufacture such Additional Product, the parties shall enter into a contract on
terms that are substantially similar to those set forth in this Agreement,
pursuant to which the Purchaser will agree to purchase from AAI DS, and AAI DS
will agree to supply, one hundred percent (100%) of Purchaser's requirements for
such Additional Product for Commercialization in the Territory and containing
specific terms relating to such Additional Product, including Purchase Prices,
Batch Size and applicable Maximum Purchase Quantities. Notwithstanding the
foregoing, Purchaser shall be entitled, at its sole cost and expense, to qualify
other manufacturer(s) to manufacture Additional Products solely for the purpose
of such manufacturer(s) supplying Purchaser with quantities of Additional
Product that AAI DS is unable
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to supply (i) in breach of this Agreement, (ii) pursuant to Section 4.2(e), or
(iii) during events of force majeure. If the parties are unable to agree on the
specific terms upon which AAI DS will Manufacture any such Additional Product
for Purchaser within [**] days after Purchaser's receipt of the applicable
Option Election Notice, Purchaser may contract with a third party to Manufacture
such Additional Product, but only on terms that are more favorable to Purchaser
than AAI DS' offer. If, pursuant to this paragraph (b), AAI DS elects not to
Manufacture an Additional Product for the Purchaser, then the Purchaser shall
have the right to contract with any third party for the Manufacture of such
Additional Product.
(c) Notwithstanding the foregoing, to the extent the Purchaser intends to
Commercialize a Product in a jurisdiction outside the Territory, for purposes of
such Product only, the term "Territory" shall be expanded to include such
jurisdiction provided that AAI DS agrees in writing and AAI DS is or becomes
compliant with all laws, regulations and other legal and industry requirements
applicable to the Manufacture of such Product for subsequent Commercialization
of such Product in such jurisdiction.
3.2 MANUFACTURE OF COMMERCIAL DRUG PRODUCT. Subject to the terms and
conditions contained herein, AAI DS shall Manufacture, hold, handle and ship all
Product Manufactured pursuant to this Agreement (a) in accordance with the
Specifications, this Agreement and the Quality Agreement, and (b) in material
compliance with CGMP applicable to the Manufacturing of the Product to be
Commercialized in the Territory.
3.3 AAI DS CHANGES TO MANUFACTURING PROCESS. Except as required by
Applicable Law or CGMP, AAI DS shall not Materially Change the Manufacturing
process of a Product or change the facility where a Product is Manufactured that
requires a change to a Marketing Authorization without the prior written consent
of Purchaser, which consent shall not be unreasonably withheld or delayed. AAI
DS shall notify Purchaser of all material changes, including Material Changes
required by Applicable Law, as soon as practicable after AAI DS learns of such
change. A "Material Change" is one that requires a submission to the FDA prior
to being implemented.
3.4 PURCHASER REQUESTED CHANGES. Purchaser shall inform AAI DS in writing
of any proposed modifications to the Specifications or the Manufacturing
process. Any proposed change shall require AAI DS' prior written consent, which
consent shall not be unreasonably withheld or delayed. AAI DS shall make changes
it agrees to as promptly as practicable; provided, however, that such changes
comply with Applicable Law, CGMP and the Marketing Authorizations.
3.5 COSTS OF CHANGES. Unless otherwise agreed by the parties, any and all
direct costs associated with changes requested by AAI DS and changes required by
Applicable Law that apply generally to AAI DS' facility where the applicable
Manufacturing occurs shall be borne by AAI DS. Unless otherwise agreed by the
parties, any and all direct costs associated with all other changes, including,
without limitation, changes requested by Purchaser, changes required by
Applicable Laws that apply specifically to a Product, and changes required by a
change to a Marketing Authorization, shall be borne by Purchaser (collectively,
the "Other Changes"). If the change is an Other Change, (i) the Purchase Prices
shall be adjusted by the change in AAI DS' cost of Manufacture of the Product
caused by such Other Change, plus an
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amount necessary to maintain AAI DS' profit margin on such Product (with such
profit margin calculated as the percentage markup of the Purchase Price over
COGS for such Product), and (ii) Purchaser shall reimburse AAI DS for costs,
expenses or losses associated with write-offs, obsolescence and/or destruction
of any work in process or finished inventory resulting from any such Other
Change.
3.6 NOTIFICATION AND APPROVAL OF CHANGES. Purchaser shall have sole
responsibility for obtaining any and all necessary regulatory approvals from the
FDA for changes to the Specifications and the Marketing Authorizations for the
Products other than the Azathioprine Product and for reporting any changes to
such Specifications and the Marketing Authorizations to the FDA as appropriate;
and AAI DS shall have such responsibility with respect to the Azathioprine
Product. Upon request by Purchaser, AAI DS shall use commercially reasonable
efforts to assist Purchaser in obtaining any such approvals; provided that
Purchaser will pay AAI DS its standard fees and expenses therefor.
3.7 LABELING. Purchaser shall be responsible for the labeling to be used on
each Product and the packaging thereof, including any changes to such labels;
provided that Purchaser shall ensure that all such labeling complies with
Applicable Laws. AAI DS shall use the specified labeling (and only such
labeling) on the Products, and shall not use such labeling on any other product.
Any Purchaser-directed change to a Product label shall be implemented by AAI DS
as soon as reasonably practicable following AAI DS' receipt of written
notification of such label changes. Purchaser shall reimburse AAI DS for costs
incurred in connection with any such label changes, including without
limitation, the costs of obsolescence of goods-in-process, packaging materials
and supplies and finished goods not suitable for Commercializing in the
Territory due to such label changes.
3.8 FINISHED PRODUCT RELEASE. AAI DS will provide the Purchaser with a
Certificate of Analysis and such manufacturing documents as are necessary for
Purchaser to release each lot of Product for human use. The Purchaser shall be
responsible for the final release of Product for human use.
3.9 RAW MATERIALS AND API. AAI DS shall purchase at its own expense and for
its own account all Raw Materials, API, packaging components and other items of
any nature whatsoever that AAI DS may use to Manufacture the Products. Except as
otherwise agreed to between the Parties, all right, title and interest in and to
these items, and in and to all work-in-process incorporating these items, shall
remain the sole property of AAI DS until Products incorporating such items are
delivered to Purchaser.
ARTICLE 4
FORECASTS, ORDERS, DELIVERY AND ACCEPTANCE
4.1 FORECASTING. On or before the Closing Date, Purchaser shall have
provided AAI DS with a written good faith forecast estimating Purchaser's
quarterly requirements (broken out on a month-to-month basis) of each Initial
Product for each of the first [**] calendar quarters during the Term. In
addition, on or before the Closing Date, Purchaser shall have provided, and
thereafter not later than [**] days prior to the commencement of each calendar
quarter during the Term, Purchaser shall provide, AAI DS with rolling [**]
quarter forecasts estimating Purchaser's
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quarterly requirements (broken out on a month-to-month basis) of each Product
that shall cover the succeeding [**] quarter period (or the period until the
expiration of the Term, if shorter) (each such forecast, the "Long-Term
Forecast"). Except as set forth in Sections 4.2(a) and 4.2(b), the Long-Term
Forecast shall not be binding on either Party, but the [**] calendar quarter of
a Long-Term Forecast shall be a "Firm Commitment" with respect to each Product
and the [**] calendar quarter of a Long-Term Forecast shall be a "Firm Forecast"
with respect to each Product.
4.2 FIRM COMMITMENTS.
(a) Each Firm Commitment shall be a binding commitment for the quantities
of each Product forecasted for the first calendar quarter of the Long-Term
Forecast. The quantity of each Product specified in any Firm Commitment for
delivery to, and purchase by, Purchaser in any calendar quarter shall not be
less than 80% of the quantities forecasted for such quantities when it was the
applicable Firm Forecast (the "Minimum Order Requirement"). Notwithstanding
anything in this Agreement to the contrary, in no event shall Purchaser purchase
less than 1600 kilograms of azathioprine API during a calendar year, which shall
be (i) used in the Manufacture of Azathioprine Product under this Agreement or
(ii) delivered to Purchaser or as otherwise directed by Purchaser in accordance
with this Agreement; provided, however, that in no event shall Purchaser be
required to purchase any azathioprine API if 1600 kilograms of azathioprine API
were used in the Manufacture of Azathioprine Product for Purchaser, and AAI DS
shall only invoice Purchaser for unused azathioprine API, if any, following the
end of such calendar year.
(b) With respect to each Firm Commitment, Purchaser shall submit to AAI DS
binding written purchase orders (a "Firm Order") no later than [**] days prior
to the requested delivery dates confirming the quantity of each Product ordered
(which shall be in full Batch quantities), the requested delivery dates (which
delivery dates shall not exceed [**] times per calendar quarter and shall be on
a Business Day), the destinations and such other information as AAI DS may find
reasonably necessary to Manufacture the ordered Products.
(c) If Purchaser fails to order and purchase the Minimum Order Requirement,
then within [**] days following the end of the quarter in which the Minimum
Order Requirement was not met, Purchaser shall pay to AAI DS the difference
between: (i) the Purchase Price for the applicable Minimum Order Requirement,
and (ii) the Purchase Price that was paid by Purchaser for the quantity ordered.
(d) AAI DS shall Manufacture and deliver the quantity of a Product
specified in the Firm Commitment and related purchase orders. Notwithstanding
the foregoing, with respect to a Product, in no event shall AAI DS be required
in any month to deliver more than the lesser of (i) the Maximum Purchase
Quantities for such Product, or (ii) as applicable, (x) [**]% of the quantities
of such Product in the applicable Firm Forecast if such Product is the methadone
hydrochloride Product or (y) or [**]% of the quantities in the applicable Firm
Forecast if such Product is a Product other than the methadone hydrochloride
Product, but AAI DS shall use its commercially reasonable and good faith efforts
to deliver quantities in excess of [**]% or [**]%, as applicable, of the
applicable Firm Forecast when such quantity is less than the Maximum
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Purchase Quantity. The Firm Commitments shall be delivered in accordance with
Section 4.4 to such location as Purchaser designates in writing to AAI DS from
time to time.
(e) Notwithstanding anything in this Agreement to the contrary, AAI DS will
not be required to Manufacture and deliver to Purchaser more Product than AAI DS
is permitted to manufacture and sell by the DEA through its quota system or
otherwise under Applicable Law.
4.3 CHANGES IN ORDERS. AAI DS shall exercise its commercially reasonable
efforts to comply with any proposed amendments to accepted Firm Orders that
Purchaser may request, but AAI DS shall not be liable in any way for its
inability to do so. Firm Orders may be amended only by mutual agreement of the
parties and such amendments shall not affect the Minimum Order Requirement.
4.4 DELIVERY. AAI DS shall use commercially reasonable efforts to deliver
Product within ten (10) Business Days of the delivery date requested in the
applicable Firm Order. All Product(s) shall be shipped F.O.B. AAI DS'
manufacturing facility. Title and risk of loss of Product shall pass to
Purchaser upon such shipment. AAI DS shall be responsible for arranging the
shipment of the Product(s) from AAI DS' manufacturing facility to its final
destination, using Purchaser's preferred carrier as Purchaser designates in
writing to AAI DS from time to time; provided, however, that Purchaser must
provide AAI DS with reasonable evidence (e.g. a copy of the current DEA
registration for the destination) that such destination is authorized to handle
the Product. Notwithstanding anything to the contrary in this Agreement,
Purchaser acknowledges and agrees that AAI DS shall have no obligation to
release Product for shipment to any destination for which Purchaser has not
provided adequate evidence of authorization as required in this Section 4.4. All
shipping costs and Taxes associated with the sale to Purchaser of Products
hereunder will be for the account and expense of Purchaser.
4.5 ACCEPTANCE OF DELIVERED PRODUCTS. Purchaser will have sixty (60) days
from delivery to inspect and test Products for noncompliance with the applicable
Specifications and will only be able to reject or revoke acceptance of Products
for noncompliance with Specifications if Purchaser notifies AAI DS in writing
within such 60 day period. Products not rejected in the 60 day period for
noncompliance with Specifications shall be deemed accepted. Notwithstanding
anything to the contrary herein, AAI DS shall not be responsible for damages to
Product during shipment, and in no event shall AAI DS be responsible for
noncompliance with Specifications for Product that met Specifications at time of
delivery F.O.B. AAI DS' manufacturing facility. In the event that Purchaser
legitimately rejects Product(s), AAI DS shall use commercially reasonable
efforts (but within 60 days after AAI DS' receipt of Purchaser's notice of
noncompliance) to replace the defective Product(s) and shall credit Purchaser
for return of such Product(s). If Purchaser and AAI DS do not agree whether the
Product(s) failed to meet applicable Specifications at the time of delivery
F.O.B. AAI DS' manufacturing facility, such Products shall be submitted for
testing to an independent laboratory of national reputation acceptable to both
Parties for the purpose of determining the results. Any determination by such
laboratory shall be final and binding upon the parties hereto. The expenses
associated with such analyses shall be borne by the party whose position was not
substantiated by such testing.
4.6 NON-CONFORMING PRODUCT(S). Notwithstanding any other provisions of this
Agreement, Purchaser agrees, if so requested by AAI DS, to return to AAI DS any
Product(s)
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that fail to meet Specifications or otherwise to dispose of such Product(s) as
AAI DS may direct, each at AAI DS' expense.
4.7 DEA QUOTA. As soon as commercially reasonable after Purchaser's
submission of its first forecast to AAI DS, AAI DS will submit a request to the
DEA for a DEA quota related to applicable Products ("DEA Quota") for calendar
years 2005 and 2006 based on such forecast. Thereafter, except as provided for
herein, AAI DS will submit timely requests for a DEA Quota from the DEA for each
subsequent calendar year during the Term based upon each Long-Term Forecast
submitted by Purchaser on or before January 1 of the calendar year preceding the
calendar year for which the DEA Quota request is submitted (the "Applicable DEA
Quota Forecast"). For purposes of submitting a request for DEA Quota, AAI DS
will submit the request for [**] percent ([**]%) of the quantity forecasted in
the Applicable DEA Quota Forecast. In the event the DEA requires additional
information (including, but not limited to, firm purchase orders) in order to
grant DEA Quota, Purchaser agrees to cooperate in good faith with AAI DS to
obtain such DEA Quota to enable the Manufacture of the Products.
ARTICLE 5
PRICE, TERMS OF PAYMENT
5.1 PURCHASE OF PRODUCT(S). The initial prices to be paid for the Initial
Products by Purchaser to AAI DS shall be set forth in Exhibit D attached hereto
and incorporated herein by reference (the "Purchase Prices"). The Purchase
Prices are in United States dollars, and are exclusive of applicable Taxes.
Purchaser shall be responsible for the payment of any and all Taxes applicable
to the Products and services described herein.
5.2 PRICE CHANGE; NOTICE. AAI DS may increase the Purchase Prices effective
as of each January 1 during the Term by the amount equal to the sum of (i) AAI
DS' increase in API and Raw Materials ("COGS") and (ii) the percentage change in
the Producers Price Index, Drugs and Pharmaceuticals, Preparations, ethical
(prescription) (Code 0635) (or any comparable successor index as mutually agreed
to by the Parties in writing) during the twelve month period ending on the
September 30 immediately preceding the January 1 Purchase Price adjustment. Upon
request by Purchaser, AAI DS shall provide reasonable documentation that
reflects the increase in cost of COGS. AAI DS shall provide written notification
of any increase in the Purchase Prices by the November 1 prior to the January 1
effective date of the increase in Purchase Prices. In the event that the price
of Raw materials or API increase by more than [**]%, the Parties agree to
discuss in good faith additional price increases. Such a price increase, if any,
would be in addition to the annual price increase.
5.3 INVOICES. AAI DS shall invoice Purchaser for the Products at the time
of delivery, and Purchaser shall pay each such invoice, in United States
dollars, within thirty (30) days after its receipt of invoice. Purchaser shall
make no setoff or deduction of any kind from any payments due to AAI DS unless
Purchaser receives written authorization from AAI DS authorizing such setoff or
deduction.
5.4 Any amounts payable to Purchaser hereunder, including, without
limitation, claims for indemnification, shall be administrative expense priority
claims in the Bankruptcy Cases pursuant to Sections 503 and 507(a)(1) of the
Bankruptcy Code.
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5.5 The obligations of AAI DS under this Agreement shall not be discharged
by entry of an order confirming a plan of reorganization in the Bankruptcy Cases
and, pursuant to section 1141(d)(4) of the Bankruptcy Code, AAI DS has waived
such discharge.
ARTICLE 6
REGULATORY MATTERS; RECORDS
6.1 ANNUAL REVIEW AND STABILITY TESTING. AAI DS will conduct an annual
product review for the Products and upon completion of such review will forward
a copy to Purchaser. The Parties agree that AAI DS' Manufacturing process and
the Purchase Prices do not include stability testing. Stability testing services
and the fees thereof shall be governed by that certain Master Services Agreement
between the Parties of even date herewith.
6.2 ACCESS TO AAI DS' FACILITIES BY PURCHASER REPRESENTATIVES. Upon
reasonable prior written notice, and during normal business hours, and at
mutually agreed upon times, AAI DS will permit Purchaser to inspect AAI DS'
Manufacturing facilities once per calendar year to ensure CGMP compliance,
unless product quality issues require further action as reasonably determined by
Purchaser. Such audits shall be performed in a manner that does not unreasonably
interfere with AAI DS' conduct of business. Purchaser representatives conducting
such audits shall follow all security and facility access procedures as are
reasonably required by AAI DS. The Parties agree to use commercially reasonable
efforts to resolve any quality issues discovered during such inspections and
agree that the results of such inspections shall be subject to the
confidentiality provisions in Section 8.9(d) of the APA (as incorporated herein
pursuant to Section 10.1).
6.3 INSPECTIONS BY GOVERNMENTAL OR REGULATORY AUTHORITY. AAI DS shall be
responsible for handling and responding to any FDA or other Governmental Body
inspections or inquiries received by Purchaser or AAI DS regarding the
Manufacturing of the Product(s) during the Term. Each Party shall promptly
notify the other regarding any such inquiries. AAI DS shall provide to Purchaser
and any Governmental Body any information reasonably requested by Purchaser
and/or such Governmental Body concerning any governmental inspection related to
the Product(s) (with all information provided to Purchaser being subject to the
confidentiality provisions in Section 8.9(d) of the APA (as incorporated herein
pursuant to Section 10.1) and with AAI DS being able to redact any information
provided to Purchaser to remove third party confidential information that does
not relate to the Product(s)). Purchaser agrees to fully cooperate with and
assist AAI DS in fulfilling its obligations pursuant to this Section 6.3.
6.4 COMPLAINTS, RECALLS, AND INSURANCE
(a) COMPLAINTS. Product complaints received by Purchaser with respect to
Product Manufactured by AAI DS hereunder shall be faxed to AAI DS within five
Business Days after receipt to:
AAI Development Services
Attention: Corporate Quality
0000 Xxxxxxxxxx Xxxx Xx.
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Xxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
As more fully described in the Quality Agreement, AAI DS shall investigate all
complaints directly associated with the Manufacture of Product(s) and shall
provide an update every 30 days and a report to Purchaser regarding its
investigation and any conclusions. Purchaser shall investigate all other
complaints associated with the Product(s).
(b) RECALL PROCEDURES. Except as otherwise set forth in the APA, Purchaser
shall be solely responsible and liable for conducting all voluntary and
involuntary recalls, stop sales, field alerts, market withdrawals or other
related actions (collectively "Recalls") of units of any Products other than the
Azathioprine Product, and AAI DS shall be solely responsible and liable for
conducting all Recalls of units of Azathioprine Product; provided, however,
that, subject to Purchaser's compliance with this Section 6.4(b), AAI DS shall
reimburse Purchaser for all of its reasonable out-of-pocket costs and expenses,
including, but not limited to, notification, shipping and handling charges and
amounts refunded or credited to customers incurred in respect of any Recalls
relating to Product(s) that do not meet the Specifications due to AAI DS'
failure to perform its obligations under this Agreement, and Purchaser shall
reimburse AAI DS for all of its reasonable out-of-pocket costs and expenses,
including, but not limited to, notification, shipping and handling charges and
amounts refunded or credited to customers incurred in respect of any Recalls
relating to Azathioprine Product that met the Specifications as of the time of
delivery F.O.B. AAI DS's manufacturing facility. In addition to the foregoing,
in the event a Product is Recalled as a result of a noncompliance of the Product
with the applicable Specifications as of the time of delivery F.O.B. AAI DS's
manufacturing facility, as conclusively determined by an independent third party
mutually acceptable to the parties, AAI DS shall pay for the replacement cost of
such Product that is Recalled. Purchaser shall reasonably consult with AAI DS
and take into consideration AAI DS' reasonable recommendations regarding such
Recalls of Product other than the Azathioprine Product; provided, that Purchaser
shall not be required to consult with AAI DS in advance to the extent exigent
circumstances preclude prior consultation. In addition, Purchaser shall use
commercially reasonable efforts to mitigate the costs and expenses associated
with any such Recall.
(c) INSURANCE. At all times from the Closing Date and thereafter for so
long as it customarily maintains insurance for itself for similar products and
activities (but in any event no less than six years following the termination of
this Agreement), both Purchaser and AAI DS shall each maintain, or self-insure
for, products liability insurance in an amount of not less than $15,000,000
annual aggregate. Each Party shall name the other Party as a vendor under the
Broad Form Vendor Endorsement under its policy, and shall also provide the other
Party with such evidence thereof as is reasonably requested by the other Party
from time to time.
6.5 QUALITY AGREEMENT. The Parties shall enter into a quality agreement
acceptable by both Parties (the "Quality Agreement") as soon as practicable
after the Closing Date, but in any event not later than sixty (60) days after
the Closing Date. The Quality Agreement shall cover certain quality and
regulatory matters not fully covered in this Agreement; provided, however, that
in the event of conflict between the terms of this Agreement and the Quality
Agreement, the terms of this Agreement shall govern.
-11-
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES OF AAI DS. AAI DS hereby represents and
warrants as follows:
(a) As of delivery to Purchaser F.O.B. AAI DS' manufacturing facility, all
Product(s) delivered to Purchaser during the Term of the Agreement: (i) shall
have been Manufactured by AAI DS in accordance with the Specifications and
material compliance with this Agreement, the Quality Agreement, the Marketing
Authorizations and CGMP, in each case, as in effect at the time of Manufacture,
(ii) assuming compliance by Purchaser with Section 3.7, shall not be adulterated
or misbranded within the meaning of the Act, and (iii) shall not have been
Manufactured by AAI DS in violation of any Applicable Law in any material
respect.
(b) Upon delivery to Purchaser F.O.B. AAI DS' manufacturing facility, AAI
DS shall convey good title to all Product(s) so delivered to Purchaser.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby are within AAI DS' powers
and have been duly authorized by the Bankruptcy Court and by all necessary
action on the part of AAI DS. This Agreement has been duly executed and
delivered by AAI DS and, assuming the due execution and delivery hereof by
Purchaser and approval by the Bankruptcy Court, constitutes legal, valid and
binding obligations of AAI DS, enforceable against AAI DS in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws from time to time in
effect which affect the enforcement of creditors' rights generally.
(d) The execution, delivery and performance by AAI DS of this Agreement
does not and will not (i) contravene or conflict with the organizational
documents of aaiPharma Inc., (ii) contravene or conflict with or constitute a
violation of any Applicable Laws, or (iii) breach or constitute a default under
the provisions of any material contract, agreement or instrument to which it is
a party or by which it is bound.
(e) AAI DS is not debarred and has not and shall not knowingly and
intentionally use in any capacity the services of any Third Person debarred
under subsections 306(a) or (b) of the Generic Drug Enforcement Act of 1992.
(f) AAI DS shall not seek to reject or modify this Agreement in the
Bankruptcy Cases, including, without limitation, pursuant to any plan of
reorganization or liquidation filed in the Bankruptcy Cases or any confirmation
order entered in the Bankruptcy Cases and AAI DS shall not seek to modify this
Agreement in any subsequent chapter 11 cases commenced under the Bankruptcy
Code.
EXCEPT AS SET FORTH IN THIS SECTION 7.1, AAI DS MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ALL SUCH
REPRESENTATIONS AND WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF
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MERCHANTABILITY, INFRINGEMENT, TITLE OR FITNESS FOR A PARTICULAR PURPOSE.
7.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants as follows:
(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby are within Purchaser's
powers and have been duly authorized by all necessary action on the part of
Purchaser. This Agreement has been duly executed and delivered by Purchaser and,
assuming the due execution and delivery hereof by AAI DS and approval by the
Bankruptcy Court, constitutes legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect which affect the
enforcement of creditors' rights generally.
(b) The execution, delivery and performance by Purchaser of this Agreement
does not and will not (i) contravene or conflict with the organizational
documents of Purchaser, (ii) contravene or conflict with or constitute a
violation of any Applicable Laws, or (iii) breach or constitute a default under
the provisions of any material contract, agreement or instrument to which it is
a party or by which it is bound.
(c) Purchaser shall comply in all material respects with all Applicable
Laws relating to its Commercialization of the Product(s).
ARTICLE 8
INDEMNIFICATION
8.1 BY PURCHASER. Purchaser hereby indemnifies AAI DS and its directors,
officers, employees, Affiliates, stockholders, agents, attorneys,
representatives, successors and assigns (collectively, the "AAI DS Indemnified
Parties") against and agrees to hold each of them harmless from any and all
losses, liabilities, obligations, damages, costs and expenses ("Losses")
incurred by any AAI DS Indemnified Party to the extent based upon, attributable
to or resulting from: (a) any misrepresentation or breach of warranty made by
Purchaser in this Agreement, (b) any breach of any covenant or agreement made or
to be performed by Purchaser pursuant to this Agreement, (c) any negligence or
willful misconduct by a Purchaser Indemnified Party in connection with this
Agreement, and (d) the handling, storage, shipment, labeling, and
Commercialization of the Products, it being understood that Purchaser, by so
indemnifying the AAI DS Indemnified Parties pursuant to this clause (d), agrees
that it is responsible for all product liability claims associated with the
Products other than to the extent arising out of AAI DS' breach of this
Agreement, including but not limited to negligence on the part of AAI DS.
8.2 BY AAI DS. AAI DS hereby indemnifies Purchaser and its directors,
officers, employees, Affiliates, stockholders, agents, attorneys,
representatives, successors and Permitted Assigns (collectively, the "Purchaser
Indemnified Parties") against and agrees to hold each of them harmless from any
and all Losses incurred by any Purchaser Indemnified Party to the extent based
upon, attributable to or resulting from: (a) any misrepresentation or breach of
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warranty made by AAI DS in this Agreement, (b) any breach of any covenant or
agreement made or to be performed by AAI DS pursuant to this Agreement, and (c)
the negligence or willful misconduct by an AAI DS Indemnified Party in
connection with this Agreement. NEITHER AAI DS NOR ITS AFFILIATES SHALL BE
LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING FOR
LOST PROFITS), WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY
OR OTHERWISE, ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER OR NOT
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
8.3 INDEMNIFICATION PROCEDURES.
(a) In the event that any Legal Proceedings shall be instituted or that any
claim or demand shall be asserted by any Person in respect of which payment may
be sought under Section 8.1 or Section 8.2 hereof (regardless of the limitations
set forth in Section 8.2) "Indemnification Claim"), the indemnified party shall
reasonably and promptly cause written notice of the assertion of any
Indemnification Claim of which it has knowledge which is covered by this
indemnity to be forwarded to the indemnifying party. The indemnifying party
shall have the right, at its sole expense, to be represented by counsel of its
choice, which must be reasonably satisfactory to the indemnified party, and to
defend against, negotiate, settle or otherwise deal with any Indemnification
Claim which relates to any Losses indemnified against hereunder; provided that
the indemnifying party shall have acknowledged in writing to the indemnified
party its unqualified obligation to indemnify the indemnified party as provided
hereunder. If the indemnifying party elects to defend against, negotiate, settle
or otherwise deal with any Indemnification Claim which relates to any Losses
indemnified against hereunder, it shall within twenty (20) Business Days (or
sooner, if the nature of the Indemnification Claim so requires) notify the
indemnified party of its intent to do so. If the indemnifying party elects not
to defend against, negotiate, settle or otherwise deal with any Indemnification
Claim which relates to any Losses indemnified against hereunder, fails to notify
the indemnified party of its election as herein provided or contests its
obligation to indemnify the indemnified party for such Losses under this
Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Indemnification Claim. If the indemnified party defends
any Indemnification Claim, then the indemnifying party shall reimburse the
indemnified party for the Expenses of defending such Indemnification Claim upon
submission of periodic bills. If the indemnifying party shall assume the defense
of any Indemnification Claim, the indemnified party may participate, at his or
its own expense, in the defense of such Indemnification Claim; provided,
however, that such indemnified party shall be entitled to participate in any
such defense with separate counsel at the expense of the indemnifying party if
(i) so requested by the indemnifying party to participate or (ii) in the
reasonable opinion of counsel to the indemnified party a conflict or potential
conflict exists between the indemnified party and the indemnifying party that
would make such separate representation advisable; and provided, further, that
the indemnifying party shall not be required to pay for more than one such
counsel for all indemnified parties in connection with any Indemnification
Claim. The parties hereto agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such Indemnification Claim.
Notwithstanding anything in this Section 8.3 to the contrary, neither the
indemnifying party nor the indemnified party shall, without the written consent
of the other party, settle or compromise any Indemnification Claim or permit a
default or consent to
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entry of any judgment unless the claimant and such party provide to such other
party an unqualified release from all liability in respect of the
Indemnification Claim. Notwithstanding the foregoing, if a settlement offer
solely for money damages is made by the applicable third party claimant, and the
indemnifying party notifies the indemnified party in writing of the indemnifying
party's willingness to accept the settlement offer and, subject to the
applicable limitations of Section 8.2, pay the amount called for by such offer,
and the indemnified party declines to accept such offer, the indemnified party
may continue to contest such Indemnification Claim, free of any participation by
the indemnifying party, and the amount of any ultimate liability with respect to
such Indemnification Claim that the indemnifying party has an obligation to pay
hereunder shall be limited to the lesser of (A) the amount of the settlement
offer that the indemnified party declined to accept plus the Losses of the
indemnified party relating to such Indemnification Claim through the date of its
rejection of the settlement offer or (B) the aggregate Losses of the indemnified
party with respect to such Indemnification Claim. If the indemnifying party
makes any payment on any Indemnification Claim, the indemnifying party shall be
subrogated, to the extent of such payment, to all rights and remedies of the
indemnified party to any insurance benefits or other claims of the indemnified
party with respect to such Indemnification Claim.
(b) After any final judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement with respect to an Indemnification Claim hereunder, the
indemnified party shall forward to the indemnifying party notice of any sums due
and owing by the indemnifying party pursuant to this Agreement with respect to
such matter and the indemnifying party shall be required to pay all of the sums
so due and owing to the indemnified party by wire transfer of immediately
available funds within ten (10) Business Days after the date of such notice.
(c) The failure of the indemnified party to give reasonably prompt notice
of any Indemnification Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
8.4 EXCLUSIVE REMEDY. From and after the Closing, the right to
indemnification and other rights under this Article 8 shall constitute
Purchaser's (and its Affiliates) and AAI DS' (and its Affiliates) sole and
exclusive remedies with respect to any and all claims arising under or relating
to this Agreement. In furtherance of the foregoing, each of Purchaser and AAI DS
hereby waives, and shall cause any Affiliates to waive, from and after the
Closing, to the fullest extent permitted by Applicable Law, any and all rights,
claims and causes of action that they may have against any other Party or its
Affiliates in connection with such transactions, except those arising under
Article 8.
ARTICLE 9
TERM AND TERMINATION
9.1 TERM OF THE AGREEMENT. Unless earlier terminated in accordance with
this Article 9, this Agreement shall take effect and commence on the Closing
Date and continue in
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effect for seven (7) years (the "Initial Term"). In addition, after the
expiration of the Initial Term, the Agreement will automatically renew for
consecutive two (2) year terms (each, a "Renewal Period") unless either of the
Parties terminates this Agreement at the end of the Initial Term or any Renewal
Period by providing the other Party with written notice at least twenty-four
(24) months prior to the end of the Initial Term or applicable Renewal Period.
The Initial Term and all Renewal Periods shall be collectively referred to
herein as the "Term."
9.2 TERMINATION. Notwithstanding Section 9.1 herein, this Agreement may be
terminated as follows:
(a) immediately upon the delivery of written notice by one Party, if the
other Party materially breaches any of the provisions of this Agreement and such
breach is not cured within sixty (60) calendar days after receipt of written
notice identifying such breach (or if cure has been commenced during such
period, if it is not diligently prosecuted to completion);
(b) immediately upon the delivery of written notice by one Party, if the
other Party has been unable to perform its obligations hereunder for one hundred
twenty (120) calendar days by reason of force majeure (as defined in Section
11.11); or
(c) immediately if (i) the Bankruptcy Court enters an order in the
Bankruptcy Cases appointing a trustee, examiner with expanded powers or
responsible officer in the Bankruptcy Cases, (ii) any of the Bankruptcy Cases
are converted to a case(s) under chapter 7 of the Bankruptcy Code or (iii) the
Bankruptcy Cases are dismissed.
9.3 EFFECT OF TERMINATION. Upon termination or expiration of this
Agreement:
(a) Cessation of Activities. Except as provided in Section 9.3(d), AAI DS
shall stop the Manufacturing of Products; each Party shall return to the other
any Confidential Information of such other Party.
(b) Reimbursement of Cost. Purchaser shall reimburse AAI DS for its full
variable and fixed costs that AAI DS may have incurred in connection with the
Manufacturing of the Products, including any Raw Materials and API purchased by
AAI DS before the effective date of termination, that were reasonably required
by AAI DS in order to meet Purchaser's requirements of Products as set out in
any Firm Order or Firm Forecast applicable at the time of such termination.
(c) Purchaser to Take Product. Purchaser shall, at its option, be permitted
to take delivery upon prior payment to AAI DS (pursuant to Section 9.3(b) above)
for any Raw Materials, API, work-in-process (at AAI DS' material costs) or
finished Product (at prices then in effect under this Agreement).
(d) Firm Orders. If this Agreement is terminated by Purchaser pursuant to
Section 9.2(a), at Purchaser's option, Firm Orders not yet started shall be
cancelled, or, if requested by Purchaser in writing, AAI DS will complete or
cause the completion of the Manufacturing of any work-in-process that is subject
to a valid and effective Firm Order on the date on which the termination is
effective. Once such work-in-process is completed, the resulting Product shall
be
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shipped in accordance with Purchaser's Firm Orders and paid for by Purchaser in
accordance with Section 5.3.
9.4 SURVIVAL. The Parties agree that the following provisions shall survive
the termination of this Agreement; the definitions of Article 1 to the extent
such Definitions pertain to terms in surviving provisions, Section 6.4, Article
7, Article 8, Sections 9.2, 9.3, and 9.4, Article 10 and Article 11.
ARTICLE 10
CONFIDENTIALITY AND PUBLIC DISCLOSURE
10.1 CONFIDENTIALITY. Section 8.9(d) of the APA is incorporated herein by
reference and shall be binding on the Parties, and as incorporated herein shall
continue until the fifth (5th) anniversary of the expiration or earlier
termination of this Agreement.
10.2 PUBLIC DISCLOSURE. Neither Party (nor any of their respective
Affiliates) shall issue any press release or make any public announcement with
respect to this Agreement and the transactions contemplated hereby without
obtaining the prior written consent of the other Party (such consent not to be
unreasonably withheld or delayed), except as may be required by Applicable Law
upon the advice of counsel and only if the disclosing Party provides the
non-disclosing Party with a reasonable opportunity to first review the release
or other public announcement, to the extent practicable.
ARTICLE 11
MISCELLANEOUS
11.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns; provided, however, that the Parties may not assign any of
their rights, duties or obligations hereunder without the prior written consent
of the other Party, which consent may not be unreasonably withheld, conditioned
or delayed.
11.2 NOTICES. Any notice required or permitted under this Agreement shall
be in writing, shall specifically refer to this Agreement, and shall be sent by
hand, recognized overnight courier, confirmed facsimile transmission, or
registered or certified mail service, postage prepaid, return receipt requested,
to the following addresses or facsimile numbers of the Parties:
Purchaser:
Xanodyne Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxx Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
AAI DS:
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President
aaiPharma Inc.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
With a copy sent to:
aaiPharma Inc.
0000 Xxxxxxxxxx Xxxx Xx.
Xxxxxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
All notices under this Agreement shall be deemed received (i) upon receipt when
sent by hand, (ii) two (2) business days after deposit with a recognized
overnight courier, (iii) upon confirmation of delivery when sent by facsimile
and (iv) five (5) business days after deposit in registered or certified mail
service. A party may change its contact information immediately upon written
notice to the other party in the manner provided in this Section.
11.3 WAIVER. No delay on the part of AAI DS or Purchaser in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of either Party of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. Any provision of this Agreement may
be waived if, and only if, such waiver is in writing and signed by the Party
against whom the waiver is to be effective.
11.4 ENTIRE AGREEMENT. This Agreement, the APA and the Quality Agreement
constitute the entire agreement between the Parties with respect to the subject
matter hereof and supersede all prior agreements, understanding and
negotiations, both written and oral, between the Parties with respect to the
subject matter of this Agreement.
11.5 AMENDMENT. This Agreement may be modified or amended only by written
agreement of the Parties hereto.
11.6 COUNTERPARTS. This Agreement may be executed by facsimile and in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute a single instrument. This Agreement may be
executed on signature pages exchanged by facsimile, in which event each Party
shall promptly deliver to the others such number of original executed copies as
the others may reasonably request.
11.7 GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be governed and construed in accordance with the
laws of the State of New York excluding any choice of law rules which may direct
the application of the law of another state.
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(b) Any action or proceeding arising out of or relating to this Agreement
or any of the transactions contemplated hereby may be brought in the United
States District Court for the Southern District of New York, and each of the
Parties irrevocably submits to the exclusive jurisdiction of such court in any
such action or proceeding, waives any objection it may now or hereafter have to
venue or to convenience of forum, agrees that all claims in respect of such
action or proceeding shall be heard and determined only in such court and agrees
not to bring any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby in any other court.
11.8 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any Party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom, and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar to the terms to
such illegal, invalid or unenforceable provision as may be possible and
reasonably acceptable to the Parties herein.
11.9 NO THIRD PARTY RIGHTS. Except as otherwise expressly set forth herein,
no provision of this Agreement shall be deemed or construed in any way to result
in the creation of any rights or obligations in any Person not a Party to this
Agreement.
11.10 EXHIBITS. The Exhibits referenced in this Agreement are an integral
part of this Agreement and are incorporated herein by reference.
11.11 FORCE MAJEURE. If either Party is prevented from complying, either
totally or in part, with any of the terms or provisions set forth herein by
reason of force majeure, including, by way of example and not of limitation,
fire, flood, explosion, storm, hurricane, strike, lockout or other labor
dispute, riot, war, rebellion, accidents, acts of God, or acts of governmental
agencies or instrumentalities, in each case to the extent beyond its control
despite its commercially reasonable efforts to avoid, minimize, and resolve such
cause as promptly as possible, said Party shall (a) provide written notice of
same to the other Party, and (b) subject to the obligations set forth above with
respect to said Party's efforts to remove the disability, its obligations that
are prevented from compliance by such force majeure are suspended, without
liability, during such period of force majeure. Said notice shall be provided
within five (5) business days of the occurrence of such event and shall identify
the requirements of this Agreement or such of its obligations as may be
affected. The Party so affected shall give to the other Party a good faith
estimate of the continuing effect of the force majeure condition and the
duration of the affected Party's nonperformance.
11.12 NO OTHER RELATIONSHIP. It is expressly agreed that the AAI DS, on the
one hand, and the Purchaser, on the other hand, shall be independent contractors
and that nothing contained herein shall be deemed to create any joint venture or
partnership between the Parties hereto, and, except as is expressly set forth
herein, neither Party shall have any right by virtue of this Agreement to bind
the other Party in any manner whatsoever.
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SIGNATURE PAGE TO FOLLOW
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EXECUTION PAGE TO COMMERCIAL MANUFACTURING AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
XANODYNE PHARMACEUTICALS, INC.
By: /s/ S.A. STAMP
-----------------------------------
Printed name: S.A. STAMP
Title: CHIEF FINANCIAL OFFICER
AAI DEVELOPMENT SERVICES, a division of
aaiPharma Inc.
By:
-----------------------------------
Printed name:
-------------------------
Title:
--------------------------------
EXECUTION PAGE TO COMMERCIAL MANUFACTURING AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
XANODYNE PHARMACEUTTCALS, INC.
By:
-----------------------------------
Printed name:
-------------------------
Title:
--------------------------------
AAI DEVELOPMENT SERVICES, a division of
aaiPharma Inc.
By: /s/ Ludo X. Xxxxxxxx
-----------------------------------
Printed name: Ludo X. Xxxxxxxx
Title: President/CEO
EXHIBIT A
BATCH SIZES
Product Name Generic Description Strength Package Batch Size
------------ ------------------- -------- --------- ----------
Darvon 65 Propoxyphene Hydrchloride Pulvules 65mg 100 [**]
Darvon Compound Propoxyphene Hydrchloride+ASA+ Caffeine Pulvules 65mg 100 [**]
Darvon-N Propoxyphene Napsylate tabs 100mg 100 [**]
Darvocet-N 50 Propoxyphene Napsylate+Acetaminophen Tabs 50mg 100 [**]
Azathioprine Azathioprine Tabs 50mg 100 12,000
Methadone Methadone Injection 10mg/ml 20ml vial [**]
EXHIBIT B
INITIAL PRODUCTS
Darvocet-N 50 marketed [**]
Darvon (65mg) marketed [**]
Darvon-N marketed [**]
Darvon Compound-65 marketed [**]
Methadone Hydrochloride Injection ([**]mg/ml) marketed [**]
Azathioprine Tablets (50mg) marketed under ANDA 75-252 and in 100 count bottles
EXHIBIT C
SPECIFICATIONS
[**]
[30 pages of Confidential Materials omitted and filed separately with the
Securities and Exchange Commission].
EXHIBIT D
PURCHASE PRICES
[**]
WILMINGTON PLANT
Darvon 65 mg Pulvule 100 ct $[**]
Darvon Compound 65 mg Pulvule 100 ct $[**]
Darvocet-N 50 mg Tablet 100 ct $[**]
Darvon-N 100 mg Tablet 100 ct $[**]
Azathioprine 50 mg Tablet 100 ct $[**]
CHARLESTON PLANT
Methadone 10 mg/mL 20mL vial $[**]
EXHIBIT B
MANUFACTURING AGREEMENT AMENDMENT
AMENDMENT TO COMMERCIAL MANUFACTURING AGREEMENT
This Amendment to the Commercial Manufacturing Agreement ("Amendment") is
made by and between AAIPharma Inc. ("AAI") and Xanodyne Pharmaceuticals, Inc.,
("Xanodyne", and together with AAI, the "Parties"), and is effective as of the
25th day of May, 2006 (the "Effective Date").
WHEREAS, AAI Development Services, a then division of AAI, and Xanodyne
entered into a Commercial Manufacturing Agreement dated July 25, 2005
("Agreement");
WHEREAS, the AAI Development Services division of AAI has been dissolved,
leaving AAI as the successor in interest of AAI Development Services under the
Agreement; and
WHEREAS, Xanodyne and AAI desire to amend the Agreement upon the terms and
conditions set forth in this Amendment.
NOW, THEREFORE, the Parties hereby agree as follows:
G. All references in the Agreement to "AAI Development Services" are hereby
replaced with references to "AAIPharma Inc." and references to "AAI DS" are
hereby replaced with references to "AAI."
H. The last sentence of Section 4.2(a) is hereby deleted in its entirety.
I. In consideration of the amendment to Section 4.2(a) set forth above,
Xanodyne shall pay to AAI $90,000 on or before January 1, 2007 and $90,000 on or
before January 1, 2008.
J. This Amendment contains the entire agreement of the Parties with respect
to the subject matter covered in this Amendment.
K. Except as otherwise expressly modified or amended herein, the terms and
conditions of the Agreement remain in full force and effect.
L. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which taken together shall
constitute one and the same document. In addition, this document may be executed
by facsimile, and the parties agree that facsimile copies of signatures shall
have the same effect as original signatures.
M. This Amendment shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and performed in such
State.
[Signature Page Immediately Follows]
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the
Effective Date.
XANODYNE PHARMACEUTICALS, INC. AAIPHARMA INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx Xxxxxxxxx
------------------------------ ---------------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx Xxxxxxxxx
Title: CEO Title: President, North American Operations
Dated: 5/18/06 Dated: 5/25/06
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