Exhibit 10.3

TRANSITION SERVICES AGREEMENT

by and between

RECRO PHARMA, INC.

and

BAUDAX BIO, INC.

Dated as of November 20, 2019

 

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS; INTERPRETATION

     3  

Section 1.1.

  General      3  

Section 1.2.

  Interpretation      4  

ARTICLE II SERVICES

     4  

Section 2.1.

  General      4  

Section 2.2.

  Standard for Services      4  

Section 2.3.

  [Protection of Information Systems      5  

Section 2.4.

  Transitional Nature of the Services      5  

Section 2.5.

  Omitted Services      5  

Section 2.6.

  Additional Services      6  

Section 2.7.

  Use of Third Parties      6  

Section 2.8.

  Cooperation      7  

Section 2.9.

  Access      7  

Section 2.10.

  Intellectual Property      7  

ARTICLE III FEES AND PAYMENT

     7  

Section 3.1.

  Fees      7  

Section 3.2.

  Expense      8  

Section 3.3.

  Invoice; Payment      8  

Section 3.4.

  Late Payments      8  

Section 3.5.

  Taxes      8  

Section 3.6.

  No Right to Set-Off      8  

ARTICLE IV SERVICE MANAGEMENT

     9  

Section 4.1.

  Service Managers      9  

Section 4.2.

  Service Coordinators      9  

ARTICLE V SUB-CONTRACTING; THIRD PARTY AGREEMENTS

     9  

Section 5.1.

  Sub-Contractors      9  

Section 5.2.

  Third Party Agreements      9  

Section 5.3.

  Consents      9  

ARTICLE VI TERM AND TERMINATION AND EFFECTS OF TERMINATION

     10  

Section 6.1.

  Term      10  

Section 6.2.

  Termination for Breach      10  

Section 6.3.

  Early Termination of a Service      10  

Section 6.4.

  Termination Upon Insolvency      11  

Section 6.5.

  Accrued Rights      11  

Section 6.6.

  Effect of Termination      11  

ARTICLE VII LIMITATION OF LIABILITY; INDEMNIFICATION

     12  

Section 7.1.

  Limited Liability      12  

Section 7.2.

  Services Provided “As-Is”      12  

Section 7.3.

  Indemnification      12  

 

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ARTICLE VIII INSURANCE MATTERS

     13  

Section 8.1.

  Insurance      13  

ARTICLE IX CONFIDENTIALITY

     13  

Section 9.1.

  Confidentiality      13  

ARTICLE X MISCELLANEOUS

     14  

Section 10.1.

  General      14  

Section 10.2.

  Inconsistencies      14  

Section 10.3.

  Dispute Resolution      14  

Section 10.4.

  Force Majeure      14  

Section 10.5.

  Titles and Headings      15  

Section 10.6.

  Independent Contractor Status      15  

 

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TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “Agreement”), dated as of November 20,
2019, is entered into by and between Recro Pharma, Inc., a Pennsylvania
corporation (“Recro”), and Baudax Bio, Inc., a Pennsylvania corporation
(“Baudax”). “Party” or “Parties” means Recro or Baudax, individually or
collectively, as the case may be.

RECITALS

WHEREAS, in conjunction with a Separation Agreement executed by and between
Recro and Baudax of even date hereof (the “Separation Agreement”) each of Baudax
and Recro desires to provide to the other certain transition services, as more
particularly described herein and upon the terms and subject to the conditions
hereinafter set forth; and

WHEREAS, the Parties agree and acknowledge that the efficient and effective
transition of the Services (as defined below), in a manner that permits the
successful operations of each Party following consummation of the transactions
contemplated by the Separation Agreement, is a priority to the shareholders of
each Party.

NOW, THEREFORE, in consideration of the foregoing and the respective warranties,
covenants and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS; INTERPRETATION

Section 1.1. General. Capitalized terms used but not otherwise defined in this
Agreement shall have the meanings assigned to them in the Separation Agreement.
As used herein, the following terms shall have the following meanings:

(a) “Service Provider” means, as the context may require, any member of the
Recro Group or the Baudax Group, as applicable, in its capacity as the provider
of any Services to any member of the Baudax Group or the Recro Group,
respectively, or, any other Person providing the Services on behalf of the Recro
Group or the Baudax Group, as applicable.

(b) “Service Recipient” means, as the context may require, any member of the
Recro Group or the Baudax Group, as applicable, in its capacity as the recipient
of any Services from any member of the Baudax Group or the Recro Group,
respectively,

(c) “Services” means all of the services to be provided by or on behalf of
Service Provider under this Agreement and described on Schedule I-A, with
respect to the Services provided by or on behalf of the Recro Group, or Schedule
I-B, with respect to the Services provided by or on behalf of the Baudax Group,
respectively, as such Schedules may be updated and supplemented from time to
time in accordance with the provisions of this Agreement, along with any Omitted
Services and any Additional Services. “Service” means each such service.

 

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(d) “Term” means the period commencing on the date hereof and ending, subject to
Section 6.1, on the date of the last to expire Service as set forth on Schedule
I-A or Schedule I-B, as applicable.

(e) “Third Party” means any person or entity other than a member of the Recro
Group, the Baudax Group, or their respective Affiliates.

Section 1.2. Interpretation. Except where the context otherwise requires, the
singular will include the plural, the plural will include the singular, the use
of any gender will be applicable to all genders, and the word “or” means
“and/or.” References to a number of days, unless otherwise specified, means
calendar days. The captions of this Agreement are for convenience of reference
only and do not define, describe, extend or limit the scope or intent of any
provision contained in this Agreement. The terms “including,” “include,” or
“includes” are not intended to limit generality of any description preceding
such term. The Parties have participated jointly in the negotiation and drafting
of this Agreement. The language of this Agreement will be deemed to be the
language mutually chosen by the Parties, and no rule of strict construction will
be applied against either Party.

ARTICLE II

SERVICES

Section 2.1. General. During the Term, subject to Section 2.2, Service Provider
shall provide to Service Recipient and, to the extent directed by Service
Recipient, its Affiliates, the Services, in each case subject to the terms and
conditions set forth herein. Notwithstanding anything to the contrary herein,
Service Provider shall not be required to perform or cause to be performed any
of the Services for the benefit of any Person other than Service Recipient and
its Affiliates. The Parties agree to negotiate in good faith any proposed
changes to the Services, including pricing related thereto, during the Term.
Such proposed changes shall become effective only upon mutual agreement of the
Parties as reflected in an addendum to Schedule I-A or Schedule I-B, as
applicable. The Parties acknowledge and agree that the Services are generally
intended to facilitate the transactions contemplated by the Separation
Agreement, and, to the extent the Services described in the applicable Schedule
I are general in nature, are intended to support the continued respective
operations of the Parties following consummation of the transactions
contemplated by the Separation Agreement.

Section 2.2. Standard for Services. The Services shall be provided hereunder
(i) in accordance with the terms and conditions of this Agreement and in a
manner generally consistent with the provision of such Services during the
twelve (12) months immediately prior to the date hereof (the “Prior Period”),
(ii) in a manner at least as complete in all material respects as the manner in
which such Services have been provided during the Prior Period, (iii) with the
same degree of skill, care and diligence as provided during the Prior Period,
and (iv) giving substantially equal priority and substantially equal treatment
that such Services received during the Prior Period; provided that if Service
Provider has not previously provided any such Service to another Person, Service
Provider will provide such Service in a manner substantially similar to similar
services provided to its Affiliates or businesses. To the extent a more specific
standard of care is specified in the respective Schedule I with respect to any
Service, the Service Provider shall use its commercially reasonable efforts to
comply with such more specific standard. It is the Parties’

 

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shared objective to transition responsibility for the performance of Services
from Service Provider to Service Recipient and its Affiliates in a manner that
minimizes, to the extent reasonably possible, disruption to the business
operations of Service Provider and its Affiliates and the business operations of
Service Recipient and its Affiliates. Notwithstanding any provision of this
Agreement or the Separation Agreement to the contrary, Service Provider shall
not be required to (i) perform any Service in any manner that violates or
contravenes any restrictions imposed on Service Provider by applicable Law or
(ii) perform any Service in any manner that breaches or contravenes any
contractual obligations owed by Service Provider to any Third Party(ies), or
(iii) perform any Service to the extent that the conduct of such would, in the
good faith belief of Service Provider, infringe, violate or misappropriate
intellectual property rights of any Third Party.

Section 2.3. Protection of Information Systems

(a) In providing any information technology Services hereunder, Service Provider
shall have the right to implement reasonable processes from time to time under
which there will be no greater threat to Service Provider’s information
technology operating environment than would exist in the absence of the
provision of such Services. Without limiting the foregoing, Service Recipient
shall, and shall cause each of its employees with access to Service Provider’s
information technology operating environment to, comply with the terms and
conditions of Service Provider’s information technology use policies in place at
the time of provision of such Services.

(b) If, in connection with the provision of any Services under this Agreement,
it is reasonably necessary for Service Provider to implement any information
technology connections, firewalls or the like (“Information System Additions”)
specifically in connection with the provision of such Services and that would
not have otherwise been implemented in the absence of the provision of the
Services, the costs of implementing such Information System Additions shall be
borne by Service Recipient, unless specifically provided otherwise in the
respective Schedule I hereto or otherwise agreed to in writing by Service
Recipient.

Section 2.4. Transitional Nature of the Services. Service Recipient understands
that the Services provided hereunder are transitional in nature and are
furnished by Service Provider as an accommodation and for the purpose of
facilitating the transactions contemplated by the Separation Agreement. Service
Recipient agrees to use, and shall cause its Affiliates to use, commercially
reasonable efforts to transition from the Services as provided by Service
Provider to services performed by Service Recipient or furnished by another
party as soon as practically possible, but in no case later than the expiration
of the Term. Service Recipient further understands that Service Provider is not
in the business of providing Services to Third Parties and will not provide the
Services beyond the Term.

Section 2.5. Omitted Services. If, during the sixty (60) day period immediately
following the date of this Agreement, Service Recipient identifies a service
that was provided in connection with Service Recipient’s business (other than
those services expressly excluded hereunder) during the Prior Period, or which
are reasonably anticipated as of the date hereof to be necessary to continue to
support Service Recipient’s business during the Term, but such services were
inadvertently omitted from the list of Services in the applicable Schedule I
hereto (each, to

 

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the extent included in the Services pursuant to this Section 2.5, an “Omitted
Service”), then Service Provider shall use commercially reasonable efforts to
cooperate with Service Recipient to amend the applicable Schedule I to add such
Omitted Service as a Service; provided that Service Provider shall not be
obligated to provide any Omitted Service if it does not, in its reasonable
judgment, have adequate resources to provide such Omitted Service or if the
provision of such Omitted Service would significantly disrupt the operation of
its business. In the event that the Parties agree that Service Provider should
provide any such Omitted Service, the Parties shall execute amendments for such
Omitted Service to the applicable Schedule I for such Omitted Service that shall
set forth, among other things, (i) the time period during which such Omitted
Service shall be provided, (ii) a description of such Omitted Service in
reasonable detail, (iii) primary points of contact for each of the Parties with
respect to the Service, (iv) any additional Fees, as applicable, related to such
Omitted Service and agreed upon by the Parties, and (v) any additional terms and
conditions specific to such Omitted Service. Service Provider’s obligations with
respect to providing any such Omitted Service shall become effective only upon
mutual agreement of the Parties as reflected in an amendment to the applicable
Schedule I being duly executed and delivered by each Party. Notwithstanding the
foregoing, the time period for any such Omitted Service shall expire not later
than the expiration of the Term as calculated prior to the addition of such
Omitted Service unless the Parties agree otherwise.

Section 2.6. Additional Services. The Parties acknowledge that Schedule I might
not identify all of the Services that may be necessary or appropriate to affect
the understanding set forth in this Agreement. Service Recipient may request
such additional Services from Service Provider (each, to the extent included in
the Services pursuant to this Section 2.6, an “Additional Service”) in writing
during the Term. Service Provider will consider any such request for Additional
Services promptly and in good faith, except to the extent such request is for
Omitted Services (in which case Section 2.5 shall govern). In the event that the
Parties agree that Service Provider should provide any such Additional Service,
the Parties shall execute amendments for such Additional Service to the
applicable Schedule I that shall set forth, among other things, (i) the time
period during which such Additional Service shall be provided, (ii) a
description of such Additional Service in reasonable detail, (iii) primary
points of contact for each of the Parties with respect to the Service, (iv) any
additional Fees, as applicable, related to such Additional Service and agreed
upon by the Parties, and (iv) any additional terms and conditions specific to
such Additional Service. Service Provider’s obligations with respect to
providing any such Additional Service shall become effective only upon mutual
agreement of the Parties as reflected in an amendment to the applicable Schedule
I being duly executed and delivered by each Party. Notwithstanding the
foregoing, the time period for any such Additional Service shall expire not
later than the expiration of the Term as calculated prior to addition of such
Additional Service unless the Parties agree otherwise.

Section 2.7. Use of Third Parties. Service Recipient understands that certain
Services may be provided to it by Service Provider in accordance with this
Section 2.7 and pursuant to agreements between Service Provider and various
Third Parties. To the extent not prohibited by a Third Party and with Service
Recipient’s consent not to be unreasonably withheld, conditioned, or delayed,
Service Provider will coordinate the provision of Services by the Third Party to
Service Recipient and Service Recipient will reasonably cooperate with any Third
Party providing Services on behalf of Service Provider in order to facilitate
the provision and receipt of such Services.

 

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Section 2.8. Cooperation. Service Recipient and its Affiliates who are
recipients of the Services will reasonably cooperate with Service Provider in
order to facilitate the provision and receipt of the Services. Service Recipient
acknowledges that such Services are dependent on such reasonable cooperation,
and that its or its Affiliates’ failure to so cooperate, if not reasonable,
shall relieve Service Provider of its obligation to provide the related Services
to the extent such failure renders such provision impractical or impossible.
Service Recipient and its Affiliates who are recipients of the Services will
comply in all material respects with all applicable policies and procedures of
Service Provider.

Section 2.9. Access. Each Party shall allow the other Party and its Affiliates
and Representatives reasonable access to the facilities of such Party and its
Affiliates that is necessary for Service Provider to provide the Services or for
Service Recipient and its Affiliates to receive the Services. Each Party agrees
that all of its and its Affiliates’ employees shall, and that it shall use
commercially reasonable efforts to cause its Representatives’ employees to, when
on the property of the other Party or any of its Affiliates, or when given
access to any facilities, information, systems, infrastructure or personnel of
the other Party or any of its Affiliates, conform to the policies and procedures
of such other Party and any of its Subsidiaries, as applicable, concerning
health, safety, conduct and security which are made known to the Party receiving
such access from time to time.

Section 2.10. Intellectual Property. Neither Party will gain, by virtue of this
Agreement, any rights of ownership or use of copyrights, patents, trade secrets,
trademarks or any other intellectual property rights (“Intellectual Property
Rights”) owned by the other Party or its Affiliates. To the extent any
Intellectual Property Rights are developed by Service Provider or its Affiliates
solely, specifically and exclusively for Service Recipient in the course of the
performance of the Services, all right, title and interest in and to any such
Intellectual Property Rights shall be the sole and exclusive property of Service
Recipient, and Service Provider shall (and shall cause its Affiliates to)
assign, and does hereby assign, to Service Recipient all right, title and
interest in and to any such Intellectual Property Rights. Except as expressly
specified in the foregoing, as between the Parties, all right, title and
interest in any Intellectual Property Rights developed by or on behalf of
Service Provider in the course of providing the Services shall be owned by
Service Provider. To the extent that Service Provider performs any Services
through any Affiliate or subcontractor, Service Provider shall obligate such
Affiliate or such subcontractor to assign to Service Recipient all Service
Recipient’s Intellectual Property Rights, and Service Provider shall not utilize
any such Affiliate or subcontractor in the performance of such Services unless
such Affiliate or subcontractor is so obligated.

ARTICLE III

FEES AND PAYMENT

Section 3.1. Fees. The fees payable hereunder for the Services (the “Fees”)
shall be equal to: (i) with respect to the Services provided by or on behalf of
the Recro Group as the Service Provider, the amount specified for each such
Service as set forth Schedule I-A; and (ii) with respect to the Services
provided by or on behalf of the Baudax Group as the Service Provider, a fee of
$100,000 per month for twelve (12) months during the Term (the “Baudax Monthly
Fee”).

 

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Section 3.2. Expense. The Fees are exclusive of expenses related to travel
(including long-distance and local transportation, accommodation and meal
expenses and other incidental expenses) by Service Provider’s personnel or any
subcontractor in connection with performing the Services. All of the costs and
expenses described in this Section 3.2 (“Expenses”) shall be charged by Service
Provider to the recipient of such Service on a pass-through basis. For the
avoidance of doubt, the Expenses described in this Section 3.2 shall be
consistent with Service Provider’s general approach with respect to such types
of costs and expenses; provided that with respect to any Service, the recipient
of such Service’s prior written approval shall be required to the extent that
Expenses exceed $10,000. For clarity, there shall be no mark-up added to
Expenses under this Agreement, unless such mark-up was actually paid by Service
Provider’s personnel or subcontractor.

Section 3.3. Invoice; Payment. Not later than fifteen (15) days after the last
day of each calendar month (or, if such date is not a Business Day, then on the
immediately succeeding Business Day), Service Provider shall provide to Service
Recipient an invoice for the preceding calendar month’s Services, which shall
list (i) the Services provided by Service Provider to Service Recipient for such
month, (ii) the Fees payable for such Services (and reasonable documentation
supporting such Fees, to the extent requested by Service Recipient), and
(iii) any Expenses for the preceding calendar month (and reasonable
documentation verifying such Expenses). The amount stated in such invoices shall
be paid by Service Recipient in full within thirty (30) calendar days of the
issuance of the invoices (or, if such date is not a Business Day, then on the
immediately succeeding Business Day) to an account designated by Service
Provider, except to the extent such amount is the subject of a good faith
dispute by Service Recipient as notified in writing to Service Provider.

Section 3.4. Late Payments. Without prejudice to Service Provider’s other rights
and remedies, where any sum remains unpaid ten (10) Business Days after the
applicable due date, it shall carry interest, which shall accrue daily, from the
due date until the date of actual payment, at a rate based on the prime rate
listed in the Wall Street Journal (Bond Yields and Rates) on the date such sum
is due and payable plus 1 percent (1%).

Section 3.5. Taxes. All payments due to Service Provider under this Agreement
shall be exclusive of any sales, use, value added, transfer, service, service
use or other similar or analogous Tax (“Service Taxes”). Service Recipient will
pay, and hold Service Provider harmless against, any Service Taxes applicable to
the provision of the Services. Each Party agrees to provide to the other Party
such information and data as reasonably requested from time to time, and to
fully cooperate with the other Party, in connection with (a) the reporting of
any Service Taxes payable pursuant to this Agreement, (b) any audit relating to
any such Service Taxes, or (c) any assessment, refund, claim or proceeding
relating to any such Service Taxes. To the extent any such reporting, audit,
assessment, refund, claim, or proceeding is in relation to Service Taxes owed or
claimed to be owed by Service Provider or any of its Affiliates by a
Governmental Entity, Service Provider shall direct and control such reporting,
audit, assessment, refund, claim, or proceeding.

Section 3.6. No Right to Set-Off. Each Party hereto acknowledges and agrees that
it shall not be permitted to set-off any amount owed by such Party pursuant to
this Agreement against any amount or obligation owed to such Party or an
Affiliate hereunder or pursuant to the Separation Agreement or any other
Ancillary Agreement.

 

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ARTICLE IV

SERVICE MANAGEMENT

Section 4.1. Service Managers. Each Party shall each appoint an employee to have
overall responsibility for managing and coordinating the delivery of Services in
accordance with this Agreement (such employee, a “Service Manager”). The initial
Service Managers shall be identified on Exhibit A hereto and may thereafter be
replaced from time to time upon written notice to the other Party. Service
Managers shall consult and coordinate with one another regarding the provision
of Services hereunder.

Section 4.2. Service Coordinators. Each Party has designated an employee or
title as the principal point of contact for the day-to-day implementation or
monitoring of each Service as specified in the applicable Schedule I (each, a
“Service Coordinator”). Communications relating to specific Services shall be
directed to the applicable Service Coordinators. The Service Coordinators will
report to the applicable Service Manager from time to time, as directed by the
Service Manager.

ARTICLE V

SUB-CONTRACTING; THIRD PARTY AGREEMENTS

Section 5.1. Sub-Contractors. Upon Service Recipient’s consent, not to be
unreasonably withheld, conditioned, or delayed, Service Provider may delegate or
sub-contract its duties under this Agreement to a qualified Third Party;
provided that, notwithstanding such delegation or sub-contracting, Service
Provider shall remain liable for the performance of its duties hereunder and
shall ensure and guaranty that any Services provided by a subcontractor shall
meet Service Provider’s obligations set forth in Sections 2.2(i), (ii), (iii)
and (iv). For the avoidance of doubt, Service Provider will not be liable with
respect to any agreement entered into directly by Service Recipient (or its
Affiliates) and a subcontractor, other than as mutually agreed in writing by the
Parties.

Section 5.2. Third Party Agreements. Service Recipient acknowledges that the
Services that were provided through Third Parties prior to the date hereof are
subject to the terms and conditions of any applicable agreements between Service
Provider and such Third Parties, and Service Recipient agrees to comply with
such terms and conditions to the extent applicable to Service Recipient and
necessary for purposes of receiving such Services by Service Recipient. For any
Service to be delegated to a Third Party after the date hereof, and so long as
any such Service is provided solely to Service Recipient and not to Service
Provider or any Affiliates of Service Provider, Service Provider shall provide
Service Recipient with a copy of any agreement contemplated to be entered into
with such Third Party in relation to such Service and seek Service Recipient’s
consent to such delegation, which consent may not be unreasonably withheld,
delayed, or conditioned. In the event any such consent is not granted, Service
Provider shall not have any liability resulting from any delay in providing any
such Service.

Section 5.3. Consents. Notwithstanding anything to the contrary contained
herein, Service Provider shall use commercially reasonable efforts to obtain all
consents from vendors that are necessary in order to provide any of the Services
to Service Recipient under this Agreement; provided, however, that Service
Provider shall not be required to pay any out-of-

 

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pocket fees to any vendor in order to obtain such consent, but shall, instead,
request that Service Recipient pay such out-of-pocket fees. In the event that
Service Provider is unable to obtain any such consent, the Parties will work
together to agree upon a commercially reasonable alternative arrangement, which
may include identification of alternate resources and equivalent services from
such alternative resources on commercially reasonable terms. Any actual
out-of-pocket fees levied on Service Provider (i) in connection with its efforts
to obtain and implement such consents and (ii) in connection with the
implementation of any such commercially reasonable alternative arrangement,
shall be borne by Service Recipient.

ARTICLE VI

TERM AND TERMINATION AND EFFECTS OF TERMINATION

Section 6.1. Term. Except as otherwise provided herein or unless otherwise
agreed in writing by the Parties, Service Provider’s obligation to provide or
procure, and Service Recipient’s obligation to purchase, each Service shall
cease as of the end of the term specified for such Service in the applicable
Schedule I hereto, and the Agreement shall terminate in its entirety at the end
of the Term; provided that (i) this Agreement may be extended, with respect to
one or more Services, by mutual written agreement of the Parties, consent to
which extension shall be in each Party’s absolute discretion, and (ii) in the
event that a Service shall not have been transitioned to Service Recipient
solely as a result of a material breach by Service Provider of its obligations
under this Agreement, the term for such Service will be extended solely for such
period as shall be necessary for Service Provider to cure such material breach;
provided that the breach is curable with the use of commercially reasonable
efforts and is not related to a Service that could reasonably be obtained or
performed by Service Recipient itself.

Section 6.2. Termination for Breach. In the event that a Party hereto commits a
material breach with respect to any of the Services, the other Party may
terminate this Agreement with respect to such Service only, unless such breach
is cured not later than thirty (30) days after receipt by the breaching Party of
written notice of such breach.

Section 6.3. Early Termination of a Service. Subject to the restrictions set
forth herein, if Service Recipient should wish to terminate a Service (in whole,
but not in part), Service Recipient shall provide written notice to Service
Provider not later than one hundred and eighty (180) days prior to the requested
termination date for such Service; provided, however, that no such notice of
termination may be delivered to Service Provider during the one hundred and
eighty (180) day period immediately following the date hereof. Notwithstanding
the foregoing provisions, the Parties acknowledge and agree that, in certain
instances, terminating certain Services may require time periods longer than the
one hundred and eighty (180) day period specified in this Section 6.3. In any
such event, the Parties agree to negotiate in good faith a longer period of time
for any and all such transfers following the termination notice. Service
Recipient shall remain liable for any Fees or other amounts payable hereunder in
connection with the terminated Service(s) incurred prior to the effective date
of termination of such Service(s), including in the event that such terminated
Services contemplated a deliverable that was not provided due to such early
termination (for the avoidance of doubt, and notwithstanding anything to the
contrary contained herein, in the event that any Services are terminated prior
to the expiration of the Term by Recro, Recro shall remain liable for the Baudax
Monthly Fee through the remainder of the Term). Service Recipient acknowledges
and agrees that (i) Services provided by Third

 

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Parties may be subject to term-limited licenses and contracts between Service
Provider and applicable Third Parties (collectively, “Provider Third Party
Contracts”), (ii) the renewal periods under the Provider Third Party Contracts
may be for fixed periods, and (iii) Service Provider may not have the right to
renew certain Provider Third Party Contracts. As a result, Service Recipient
agrees that (i) if Service Provider is required to extend any Provider Third
Party Contract in order to continue to provide any Service during the Term, then
Service Provider shall notify Service Recipient and, if Service Recipient
informs Service Provider within fifteen (15) days of such notice that it wishes
to continue to receive such Service, then Service Recipient shall be required to
pay Service Provider the amount of any renewal fees or purchase commitments
applicable to the relevant Service for the full renewal period specified in the
applicable Provider Third Party Contract, regardless of whether the Term or
Service Provider’s provision of the relevant Service ends prior to the end of
the relevant renewal period, and (ii) Service Provider will not be required to
provide any Service to the extent it is unable to renew any applicable Provider
Third Party Contract or Service Recipient either informs Service Provider that
it does not wish to continue to receive such Service under this Section 6.3 or
does not respond to Service Provider’s notice in the applicable fifteen (15) day
period.

Section 6.4. Termination Upon Insolvency. Either Party may terminate this
Agreement immediately in the event the other Party (i) becomes insolvent,
(ii) is generally unable to pay, or fails to pay, its debts as they become due,
(iii) files, or has filed against it, a petition for voluntary or involuntary
bankruptcy or pursuant to any other insolvency Law, (iv) makes or seeks to make
a general assignment for the benefit of its creditors, or (v) applies for, or
consents to, the appointment of a trustee, receiver or custodian for a
substantial part of its property or business.

Section 6.5. Accrued Rights. Termination or expiration of this Agreement for any
reason will be without prejudice to any rights that have accrued to the benefit
of a Party prior to such termination or expiration. Such termination or
expiration will not relieve a Party from obligations that are expressly
indicated to survive the termination or expiration of this Agreement.

Section 6.6. Effect of Termination. Not later than thirty (30) days following
the date it receives a final invoice from Service Provider following termination
or expiration of any Services or this Agreement, Service Recipient shall pay to
Service Provider all remaining monies due to Service Provider hereunder in
respect of Services provided prior to such termination or expiration except for
any amounts then the subject of a good faith dispute. In addition, at the end of
the Term, each Party hereto shall, at the disclosing Party’s option, return or
destroy the Confidential Information of the disclosing Party. In the event that
the disclosing Party elects destruction, the other Party shall furnish to the
disclosing Party a written certificate of destruction signed by an officer of
the certifying Party. Any provision which by its nature should survive,
including the provisions of this Section 6.6 (Effect of Termination), and
Section 2.10 (Intellectual Property), Article III (Fees and Payment), Article
VII (Limitation of Liability; Indemnification), Article IX (Confidentiality),
and Article X (Miscellaneous), shall survive the termination of this Agreement.

 

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ARTICLE VII

LIMITATION OF LIABILITY; INDEMNIFICATION

Section 7.1. Limited Liability.

(a) The aggregate Liabilities of Service Provider and its Affiliates and
Representatives, collectively, under this Agreement for any act or failure to
act in connection herewith (including the performance or breach of this
Agreement), or from the sale, delivery, provision or use of any Services
provided under or contemplated by this Agreement, whether in contract, tort
(including negligence and strict liability) or otherwise, at law or equity,
shall not exceed the aggregate amount of the Fees and Expenses paid (and not
previously paid back as a Liability hereunder) to Service Provider (or its
Affiliates) under this Agreement prior to the date on which Service Provider’s
action or inaction giving rise to the Liability arises or occurs.

(b) Notwithstanding anything to the contrary contained in the Separation
Agreement or this Agreement, Service Provider shall not be liable to Service
Recipient or any of its Affiliates or Representatives, whether in contract, tort
(including negligence and strict liability) or otherwise, at law or equity, for
any special, indirect, incidental, punitive or consequential damages whatsoever
(including lost profits or damages calculated on multiples of earnings
approaches), which in any way arise out of, relate to or are a consequence of,
the performance or nonperformance by Service Provider (including any Affiliates
and Representatives of Service Provider and any unaffiliated third party
providers, in each case, providing the applicable Services) under this Agreement
or the provision of, or failure to provide, any Services under this Agreement,
including with respect to loss of profits, business interruptions or claims of
customers.

(c) The limitations in this Section 7.1 shall not apply with respect to any
Liability arising out of, relating to, or in connection with (i) any Third Party
claim to the extent a Party has an indemnification obligation to the other Party
for such Liability under Section 7.3(a) or Section 7.3(b) (ii) any breach of
Article IX or (iii) the gross negligence, willful misconduct, or fraud of or by
the Party to be charged.

Section 7.2. Services Provided “As-Is”. SERVICE PROVIDER PROVIDES ANY AND ALL
SERVICES ON AN “AS-IS” BASIS AND, EXCEPT AS SET FORTH IN SECTION 2.2, MAKES NO
REPRESENTATIONS OR WARRANTIES AS TO THE SERVICES PROVIDED. SERVICE PROVIDER
DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IN CONNECTION WITH THIS
AGREEMENT.

Section 7.3. Indemnification.

(a) Subject to Section 7.1, Service Recipient hereby agrees to indemnify, defend
and hold harmless Service Provider and its Affiliates and Representatives from
and against any and all Liabilities arising from, relating to or in connection
with (i) the use of any Services by Service Recipient or any of its Affiliates,
Representatives or other Persons using such Services or (ii) a material breach
by Service Recipient of any covenant or agreement contained in this Agreement,
except in each case to the extent that such Liabilities arise out of, relate to
or are a consequence of Service Provider’s or its Affiliates’ or
Representatives’ gross negligence, willful misconduct or fraud.

 

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(b) Subject to Section 7.1, Service Provider hereby agrees to indemnify, defend
and hold harmless Service Recipient and its Affiliates and Representatives from
and against any and all Liabilities arising from, relating to or in connection
with (i) the gross negligence or willful misconduct of Service Provider in
connection with the provision of the Services or (ii) a material breach by
Service Provider of any covenant or agreement contained in this Agreement,
except in each case to the extent that such Liabilities arise out of, relate to
or are a consequence of Service Recipient’s or its Affiliates’ or
Representatives’ gross negligence, willful misconduct or fraud.

(c) The Party seeking to be indemnified (the “Indemnified Party”) shall provide
prompt written notice of a Liability or events likely to give rise to a
Liability to the Party with the obligation to indemnify (the “Indemnifying
Party”) (in any event within sufficient time so as not to prejudice the defense
of such claim). The Indemnifying Party shall be given the opportunity at all
times to control the defense of the claim, with the cooperation and assistance
of the Indemnified Party; provided, however, that the Indemnifying Party shall
not settle any claim for which it has an indemnification obligation under this
Section 7.3 with an admission of liability or wrongdoing by the Indemnified
Party without such Party’s prior written consent.

(d) Indemnification pursuant to this Section 7.3 represents the Parties’ sole
and exclusive remedy under this Agreement; provided that, if Service Provider
commits an error with respect to, incorrectly performs or fails to perform any
Service, at Service Recipient’s request, without prejudice to any other rights
or remedies Service Recipient may have, Service Provider shall use commercially
reasonable efforts to correct such error, re-perform such Service or perform
such Service, as applicable, at no additional cost to Service Recipient. To the
extent Service Provider is unable to provide in its entirety a Service because
of a partial delay which excuses performance pursuant to Section 10.4, Service
Provider shall allocate such resources and/or products as are then currently
available to it and necessary for the performance of such Service ratably
between Service Provider for its own account and Service Recipient for the
performance of such Services hereunder.

ARTICLE VIII

INSURANCE MATTERS

Section 8.1. Insurance. Each Party hereto shall, throughout the term of this
Agreement, carry appropriate insurance with a reputable insurance company
covering property damage, business interruptions, automobile and general
liability insurance (including contractual liability) to protect its own
business and property interests; provided, that each Party shall be permitted to
reasonably self-insure against the liabilities specified in Article VII.

ARTICLE IX

CONFIDENTIALITY

Section 9.1. Confidentiality. The provisions of Section 7.6 of the Separation
Agreement shall apply to disclosures of information made pursuant to this
Agreement mutatis mutandis.

 

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ARTICLE X

MISCELLANEOUS

Section 10.1. General. The provisions in Sections 10.1, 10.3, 10.6, 10.7, 10.8,
10.9, 10.10, 10.13, 10.15, 10.16, 10.17 and 10.21 of the Separation Agreement
shall apply, mutatis mutandis, as if fully set forth in this Agreement.

Section 10.2. Inconsistencies. Nothing contained in this Agreement (or any
Schedule or Exhibit) shall be deemed to supersede or change any of the
agreements, obligations, representations or warranties of the Parties to the
Separation Agreement or any other Ancillary Agreement. To the extent that any
provision in this Agreement (or any Schedule or Exhibit) is inconsistent or
conflicts with any provision of the Separation Agreement or any other Ancillary
Agreement, the provisions of the Separation Agreement or such other Ancillary
Agreement, as the case may be, shall control. To the extent that any provision
of any Schedule or Exhibit is inconsistent or conflicts with any other provision
of this Agreement, such other provision of this Agreement shall control.

Section 10.3. Dispute Resolution. The provisions in Article VIII of the
Separation Agreement shall apply to any Dispute related to this Agreement,
mutatis mutandis.

Section 10.4. Force Majeure.

(a) Neither Party hereto shall be liable for delay in performance (other than
the payment of money) of its obligations to the extent caused by events which
could not have been reasonably foreseen and are beyond the reasonable control of
the Party affected (an event of “Force Majeure”), including, but not limited to
(i) acts of God, the elements, epidemics, explosions, accidents, landslides,
lightning, earthquakes, fires, storms (including but not limited to tornadoes
and hurricanes or tornado and hurricane warnings), sinkholes, floods, or
washouts; (ii) labor shortage or trouble including strikes or injunctions
(whether or not within the reasonable control of such Party and provided that
the settlement of strikes and other labor disputes shall be entirely within the
discretion of the Party experiencing the difficulty); (iii) inability to obtain
material, equipment or transportation; (iv) national defense requirements, war,
blockades, insurrections, sabotage, terrorism, riots, arrests and restraints of
the government, either federal or state, civil or military (including any
governmental taking by eminent domain or otherwise); or (v) any changes in
applicable Law, regulation or rule or the enforcement thereof by any
governmental or regulatory agency having jurisdiction, that limits or prevents a
Party from performing its obligations hereunder or any notice from any such
agency of its intention to fine or penalize such Party or otherwise impede or
limit such Party’s ability to perform its obligations hereunder.

(b) Service Provider will endeavor to provide to Service Recipient uninterrupted
Services through the Term. In the event, however, that (i) Service Provider is
wholly or partially prevented from providing a Service or Services either
temporarily or permanently by reason of any Force Majeure event, or (ii) Service
Provider, in the exercise of its reasonable good faith judgment, deems it
necessary to suspend delivery of a Service hereunder for purposes of inspection,
maintenance, repair, replacement of equipment parts or structures, or similar
activities consistent with past practices, Service Provider shall not be
obligated to deliver such Service during such periods, and, in the case of the
immediately preceding clause (ii), Service Provider shall cooperate with Service
Recipient with respect to the timing of such interruption. Notices provided
under this Section 10.4 shall be provided to Service Recipient’s Service Manager
(or other executive designated in writing by Service Recipient) in accordance
with Section 10.6 of the Separation Agreement.

 

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Section 10.5. Titles and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.

Section 10.6. Independent Contractor Status. Each Party shall be deemed to be an
independent contractor to the other Party. Nothing contained in this Agreement
shall create or be deemed to create the relationship of employer and employee
between the Parties. The relationship created between the Parties pursuant to or
by this Agreement is not and shall not be one of partnership or joint venture.
No Party to this Agreement shall, by reason hereof, be deemed to be a partner or
a joint venture of the other Party hereto in the conduct of their respective
businesses and/or the conduct of the activities contemplated by this Agreement.
No Party to this Agreement is now, shall become, or shall be deemed to be an
agent or representative of the other Party. Except as herein explicitly and
specifically provided, neither Party shall have any authority or authorization,
of any nature whatsoever, to speak for or bind the other Party to this
Agreement.

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IN WITNESS WHEREOF, the Parties have caused this Transition Services Agreement
to be duly executed as of the day and year first above written.

 

RECRO PHARMA, INC. By:  

/s/ Gerri Henwood

Name: Gerri Henwood Title: President and Chief Executive Officer BAUDAX BIO,
INC. By:  

/s/ Ryan Lake

Name: Ryan Lake Title: Chief Financial Officer and Treasurer

[Signature Page to Transition Services Agreement]

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Schedule I-A

Recro Group Services

 

#

  

Detailed Description of Service

  

Service Coordinator

  

Term

1    Assistance with transfer of ownership for any applications/INDs currently
owned by Recro or its Subsidiaries (e.g. DMF, IND, NDA’s, etc.) that relate
solely to Baudax to the extent not fully transferred to Baudax at Closing,
provided that Recro and Baudax shall collaborate with respect to the
letters/correspondence to be provided to Governmental Entities regarding
transfer of regulatory responsibilities before such applications/INDs are
transferred.    TBD    Until ownership is transferred 2    Assistance with
transfer of patents patent applications and trademark registrations in the name
of Baudax Bio, Inc. from the current owner of record;    TBD    Until patents
are transferred 3    Payroll for Baudax Group employees        O’Conner Group   
Thru 12/31/19

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Schedule I-B

Baudax Group Services and Fees

 

#

  

Detailed Description of Service

  

Service Coordinator

  

Term

1    Transfer of emails and other electronic data (including electronic
documents and employee data) related primarily to the Baudax Group to the extent
not fully transferred to at Closing or prior to Closing.    Carol Bolger    Thru
12/31/19 2    Transfer of any hard copy records related primarily to the Baudax
to the extent not fully transferred to the Baudax Group at Closing.    Diane
Myers    Thru 12/31/19 3    Transfer of ownership for any applications/INDs
currently owned by Recro or its Subsidiaries (e.g. DMF, IND, NDA’s, etc.) that
relate solely to Baudax to the extent not fully transferred to Baudax at
Closing, provided that Recro and Baudax shall collaborate with respect to the
letters/correspondence to be provided to Governmental Entities regarding
transfer of regulatory responsibilities before such applications/INDs are
transferred.    Diane Myers    Until ownership is transferred 4   

Assistance with the support and transfer to Recro of corporate finance functions
including:

•  Financial audit,

•  Tax (federal, state, R&D tax credit),

•  RGD accounting,

•  stock based compensation maintenance and activity,

•  financial planning (forecasting),

•  SEC Filings,

•  Insurance, including claims handling, and

•  treasury functions.

Baudax will collaborate with Recro to transfer such items after Closing. Baudax
will support these functions until September 30, 2020 at the latest. The Parties
shall develop a plan by August 15, 2020 for the transport on or before
September 30, 2020. Such plan shall be mutually agreed upon by the parties.

   Carla Lusby    Thru 9/30/20 quarter end close

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5    Transfer of information with respect to Baudax and in the possession and
control of Recro or its Subsidiaries relating to R&D related primarily to the
Baudax products, manufacturing and facilities, to the extent not fully
transferred to Recipients at Closing.    Chris Sharr    Thru 12/31/19 6   
Transfer of information with respect to Baudax and in the possession and control
of Recro relating to Clinical Trial Masterfiles and case report forms and
nonclinical data relating to the Products, to the extent not fully transferred
to Recipients at Closing.    Diane Myers    Thru 12/31/19 7    Assistance to
Recro employees who hold stock or stock options in Recro in exercising options,
determining tax basis of equity grants, retrieving tax/transaction reports.   
Jillian Dilmore    Thru 9/30/20 quarter end close 8   

Transfer of flat files, data, and/or an alternate solution where appropriate)
from the items listed below:

•  Compliance Wire Learning Management System

•  Veeva Vault (QA Doc Mgmt)

•  Microsoft Office Tenant

•  Intranet Support Services (Valo)

•  E-mail (SmartPhone, Tablet, Exchange, External gateways, Mobile Device
Management, Spam Filtering, PGP)

•  IT Help Desk Application (Alphaserve)

•  End-user Computing Infrastructure (Internet, Wireless, PC Desktop control,
P/W Management, PC desktop support)

•  Wide Area Network (switches, equipment)

•  Active Directory Domain Services Support (Alphaserve)

•  Network Infrastructure Services and Support (Backup/Replication, Monitoring,
Anti-virus, VMware, Web Filtering, Firewalls, etc.) (Alphaserve)

•  IT Contracts Management and Support

   Carol Bolger    Thru 12/31/19

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9    Promptly following the Closing, file documentation with relevant patent
authorities to effect recordal of transfer of patents, patent applications and
trademark registrations in the name of Baudax Bio, Inc. from the current owner
of record; provided, that if the Closing occurs before 10:00 a.m., prevailing
Eastern time, on the Closing Date, such documentation shall be filed with the
United States Patent and Trademark Office on the Closing Date.    Randall Mack
   Until Patents are transferred 10    Services with respect to SOX controls,
IT, Financial and Governance, for Recro. Baudax will support these functions for
the 2019 audit year which is expected to complete by March 15, 2020. The Parties
shall develop a plan by July 15, 2020 for the transport of SOX controls
coordination and testing for the 2020 audit year and beyond on or before
August 15, 2020. Such plan shall be mutually agreed upon by the parties.   
Carla Lusby    Thru August 15, 2020 11   

Services with respect to Administrative Rights and maintenance for the following
systems:

•  Intacct

•  Navex

•  Recro Pharma Inc. email (for Gerri Henwood and Ryan Lake)

   Carol Bolger    Thru 9/30/20 quarter end close 12    Corporate Mgmt/IR   
Ryan Lake    TBD

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Exhibit A

Initial Service Managers

Baudax Group: Ryan D. Lake

Recro Group: Scott Rizzo