Exhibit 10.70
*** INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS
REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
TRANSITION AGREEMENT
     This Transition Agreement (this “Agreement”) is entered into as of
January 28, 2005, by and between Medicis Pharmaceutical Corporation, a Delaware
corporation, having offices at 8125 North Hayden Road, Scottsdale, AZ 85258
(hereinafter “Medicis”), and aaiPharma Inc., a Delaware corporation and the
parent company of AAI Development Services, Inc. (formerly known as AAI
International, Inc.), having offices at 2320 Scientific Park Drive, Wilmington,
NC 28405 (hereinafter “AAI,” and together with Medicis, hereinafter the
“Parties,” or individually, hereinafter a “Party”).
RECITALS:
     A. Medicis and AAI entered into that certain Development, Commercialization
and License Agreement, effective as of June 26, 2002, as amended on December 18,
2002 (collectively, the “DCL Agreement”). Capitalized terms used in this
Agreement which are not defined herein shall have the meanings given to such
terms in the DCL Agreement.
     B. On January 28, 2005 (the “Termination Date”), pursuant to a letter
agreement, Medicis and AAI mutually terminated the DCL Agreement under
Section 7.2.4 thereof effective as of the Termination Date.
     C. The Parties mutually desire to enter into certain arrangements and
agreements to facilitate transition matters arising from the termination of the
DCL Agreement.
STATEMENT OF AGREEMENT:
     Now, therefore, in consideration of the mutual promises and agreements
herein contained and for other good, valuable and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
     1. Return of Work Product; Survival.
          1.1 The Parties acknowledge and agree that Medicis is the owner of all
Work Product in accordance with Sections 7.3.2, 2.4.4 and 10.4 of the DCL
Agreement, and in furtherance of such ownership and to facilitate the return of
Medicis’ property to Medicis on the Closing Date (as such term is defined in
Section 5.1 hereof) AAI shall (a) provide Medicis or its designee with a
complete disclosure of all Work Product not yet disclosed to Medicis and shall
deliver to Medicis or its designee the Work Product, and (b) execute such
documents and take such steps as Medicis may reasonably request in order to vest
Medicis with full record ownership of all Work Product.
          1.2 The Parties acknowledge and agree that Section 7.4 (and the
additional sections referenced therein) of the DCL Agreement shall survive the
termination of the DCL Agreement.
     2. Assignment of Agreements.

1

--------------------------------------------------------------------------------

 

          2.1 On the Closing Date, AAI shall hereby transfer and assign to
Medicis or its designee all of AAI’s and its Affiliates rights, title and
interests in and to and obligations under the contracts and agreements set forth
on Schedule 2 hereto (each a “Transferred Contract” and collectively, the
“Transferred Contracts”) designated by Medicis to be assumed by Medicis. AAI
represents and warrants to Medicis that the Transferred Contracts represent all
of the contracts and agreements entered into by AAI or its Affiliates
exclusively for purposes of performing AAI’s obligations under the DCL Agreement
and that to AAI’s knowledge as of the Closing Date, there are no other material
contracts or agreements to which AAI or any of its Affiliates is a party which
are necessary for the performance of the Work Plan. For each Transferred
Contract designated by Medicis to be assumed by Medicis on Schedule 2 hereto,
Medicis shall assume all of AAI’s obligations thereunder to the extent arising
following the Closing Date.
          2.2 AAI shall use its commercially reasonable efforts, and Medicis
shall cooperate with AAI, to obtain all necessary consents in order to transfer
or assign on the Closing Date each Transferred Contract designated by Medicis to
be assumed by Medicis on Schedule 2 hereto to Medicis or its designee; provided,
however, that neither AAI nor Medicis shall be obligated to pay any
consideration therefor to the third party from whom such consent is requested.
In the event and to the extent that the required consent to the transfer or
assignment of any of the Transferred Contracts has not been obtained by the
Closing Date, AAI shall continue to be, or shall cause its Affiliates to
continue to be, bound thereunder in accordance with the terms thereof and shall
use its commercially reasonable efforts to perform and discharge fully all of
the obligations of AAI or its Affiliates thereunder from and after the Closing
Date; provided, however, that (a) Medicis shall pay, or reimburse AAI upon
receipt of a reasonably detailed invoice, for AAI’s standard hourly rate, if
any, and AAI’s out-of-pocket, third party costs under each such Transferred
Contract in accordance with its terms, and (b) AAI shall not alter, modify or
extend the terms and conditions of any such Transferred Contract without the
prior written consent of Medicis, and at the request of, the sole expense of,
and for the account of, Medicis, AAI shall take all reasonably requested actions
to protect its rights thereunder.
     3. Transferred Contracts Indemnification.
          3.1 Medicis shall indemnify, defend and hold AAI, its Affiliates and
their respective directors, officers, shareholders, employees, representatives,
agents, successors and permitted assigns (collectively “AAI Indemnified
Parties”) harmless from and against any and all third party liabilities, losses,
claims, demands, obligations, judgments, causes of action, assessments, fines,
damages, costs and expenses (including, without limitation, reasonable
attorneys’ fees) (collectively, the “Claims”), in each case, to the extent such
Claims are incurred following the Closing Date and arise out of the Transferred
Contracts, but Medicis shall have no indemnification obligations under this
Section 3.1 to the extent any such Claim arises out of any negligence or willful
or reckless actions or misconduct of AAI or its employees, agents and/or
subcontractors.
          3.2 AAI shall indemnify, defend and hold Medicis, its Affiliates and
their respective directors, officers, shareholders, employees, representatives,
agents, successors and permitted assigns (collectively, the “Medicis Indemnified
Parties”) harmless from and against any and all Claims, in each case, to the
extent such Claims are incurred (i) on or prior to the

2

--------------------------------------------------------------------------------

 

Closing Date and arise out of the Transferred Contracts, and (ii) after the
Closing Date and arise out of any negligence or willful or reckless actions or
misconduct of AAI or its employees, agents and/or subcontractors. The Parties
acknowledge that the third parties who are parties to the Transferred Contracts
shall not be deemed to be AAI’s agents or subcontractors pursuant to such
Transferred Contracts for periods following the Closing Date.
     4. Closing Date Payments to AAI.
          4.1 Notwithstanding anything to the contrary contained in
Section 7.3.2(a) of the DCL Agreement, in consideration for the Parties entering
into this Agreement, Medicis shall pay to AAI on the Closing Date by wire
transfer in immediately available funds to an account designated by AAI an
amount equal to *** (the “Closing Sum”).
          4.2 ***
          4.3 Within *** following the date hereof, AAI shall prepare and
deliver to Medicis a detailed statement of AAI’s fees and expenses incurred from
and after January 1, 2005 through and including January 31, 2005, for the
services provided by or on behalf of AAI to Medicis (the “Expense Statement”),
accompanied by reasonably detailed invoices evidencing the incurrence of such
fees and expenses. Any and all expenses incurred in connection with the
preparation of the Expense Statement shall be the sole responsibility of AAI.
          4.4 The Expense Statement shall become final and binding upon the
Parties within thirty (30) days following the receipt thereof by Medicis, unless
Medicis notifies AAI of an objection thereto in writing within such 30-day
period, which writing shall set forth in reasonable detail the reasons for
Medicis’ objection (an “Objection Notice”). If Medicis sends an Objection Notice
to AAI, Medicis and AAI shall negotiate in good faith to resolve the matter or
matters in dispute. If, within thirty (30) days following the date of the
Objection Notice, such disputes have not been resolved, the Parties shall submit
the dispute to be resolved to *** or another “Big Four” accounting firm mutually
acceptable to the Parties (the “Accounting Firm”). Medicis and AAI will direct
the Accounting Firm to deliver within thirty (30) days after its retention a
written report stating its resolution of such disputes and Medicis and AAI and
their respective agents will cooperate with the Accounting Firm during its
engagement. Following the issuance of the Accounting Firm’s written report, the
Expense Statement (as adjusted in accordance with such written report) shall be
final, binding and not subject to any appeal. The fees and expenses of the
Accounting Firm shall be paid one-half by Medicis and one-half by AAI.
          4.5 If the aggregate amount of fees and expenses reflected on the
Expense Statement as finally determined in accordance with Section 4.4 is less
than the Estimated January Expenses, then AAI will, within *** after the date of
such final determination, reimburse and pay to Medicis an amount equal to the
difference between (a) the Estimated January Expenses and (b) the aggregate
amount of fees and expenses reflected on the Expense Statement as finally
determined in accordance with Section 4.4. No payment will be required by either
Party if the aggregate amount of fees and expenses reflected on the Expense
Statement as finally determined in accordance with Section 4.4 is greater than
the Estimated January Expenses.

3

--------------------------------------------------------------------------------

 

     5. Closing and Deliveries.
          5.1 Closing. The consummation of the transactions contemplated hereby
shall take place at a closing (the “Closing”), to be held at the offices of Akin
Gump Strauss Hauer & Feld LLP, 590 Madison Avenue, New York, NY, at 10:00 a.m.
local time, or another mutually acceptable time and location. The date of
Closing is hereinafter called the “Closing Date.” The Closing shall be effective
for all purposes as of 11:59 p.m. on the Closing Date.
          5.2 Deliveries.
               5.2.1 At the Closing, AAI shall deliver, or shall cause to be
delivered, the following to Medicis:

  (a)   The Work Product pursuant to Section 1;     (b)   The Transferred
Contracts pursuant to Section 2;     (c)   A quality control agreement, duly
executed by AAI; and     (d)   Such other agreements, consents, documents,
instruments and writings as are reasonably requested by Medicis or otherwise
required to be delivered by AAI at or prior to the Closing Date pursuant to this
Agreement.

               5.2.2 At the Closing, Medicis shall deliver, or shall cause to be
delivered, the following to AAI:

  (a)   The payments required to be made by Medicis to AAI pursuant to Sections
4.1 and 4.2;     (b)   A quality control agreement, duly executed by Medicis;
and     (c)   Such other agreements, consents, documents, instruments and
writings as are reasonably requested by AAI or otherwise required to be
delivered by Medicis at or prior to the Closing Date pursuant to this Agreement.

     6. Transition Services.
               6.1.1 Subject to the terms of this Agreement, following the
Closing Date and until termination as provided in Section 16.1 hereof, (i) AAI
shall, in accordance with the Work Plan, including the hourly fee rates attached
hereto as Exhibit II or Exhibit III and incorporated herein by reference,
perform certain clinical and non-clinical work relating to the Work Product,
including, but not limited to, clinical monitoring services, data management
services, stability work and Product optimization in accordance with industry
standards and manufacturing-related services relating to the Products in
accordance with industry standards, all as more fully described in each written
service estimate or statement of work to be signed by both of the Parties hereto
(“Service Estimates”) incorporated into the Work Plan (collectively, the
“Initial Services”), and (ii) Medicis shall pay AAI for such Initial Services in
accordance with the Service Estimates included within the Work Plan and their
related fee schedules until

4

--------------------------------------------------------------------------------

 

the Initial Services are terminated, as provided herein. The Parties acknowledge
and agree that all of the Service Estimates entered into and to be entered into
by the Parties are part of Exhibit II, and if applicable to manufacturing, shall
be subject to the terms and conditions of Exhibit III.
               6.1.2 The hourly fee rates shall be subject to annual review and
increase. Hourly fees are exclusive of third party fees, costs and expenses,
including shipping and material costs. All out-of-pocket third party costs and
expenses related to the Services, including shipping, shall be passed through to
Medicis at cost ***. Unless otherwise agreed to in any Service Estimate, Medicis
shall be billed monthly for the Initial Services. The Parties may agree in
writing to additional or modified Initial Services, all of which shall be
documented in a Service Estimate or change order incorporated into the Work Plan
by written agreement between the Parties.
               6.1.3 To the extent that certain components of the Work Product
are necessary in order for AAI to continue its services in accordance with the
provisions of this Section 6.1, AAI shall be permitted to retain a copy of such
materials; provided, that it provides Medicis with a written notice setting
forth the specific Work Product that it has copied and that such copies are
returned to Medicis promptly following the completion of such Initial Services.
AAI shall provide Medicis with a written update, not less than weekly, of the
Initial Services performed by AAI under this Section 6.1, including electronic
and hard copy documentation of the Work Product generated in performing the
Initial Services that are necessary or useful to obtaining governmental approval
for the commercialization or manufacture of the Products.
               6.1.4 Without the prior written approval of Medicis, AAI shall
not knowingly utilize in the performance of the Services hereunder or under any
Service Estimate, nor incorporate into the resulting Work Product, any
intellectual property or proprietary rights of AAI and/or any third party
(“Outside Technology”), except as AAI is freely permitted to do so without
further compensation from Medicis.
          6.2 Following the Closing Date, (a) AAI shall manufacture commercial
batches, including bulk clinical supply and samples, of Products in accordance
with industry standards and the manufacturing terms attached hereto as
Exhibit III and incorporated herein by reference (collectively, the
“Manufacturing Services”, and together with the Initial Services, the
“Services”), until such Manufacturing Services are terminated in accordance with
the terms hereof, including Exhibit III hereto, and (b) Medicis shall pay AAI
for such Manufacturing Services in accordance with Section 7 hereof and the fee
schedule set forth in Exhibit III hereto. AAI shall provide Medicis with
updates, not less than weekly, of the Manufacturing Services performed by AAI
under this Section 6.2, including available electronic and hard copy
documentation of the Work Product generated in performing the Manufacturing
Services that are necessary or useful to obtaining governmental approval for the
commercialization or manufacture of the Products.
          6.3 To the extent that the Services performed by AAI hereunder yield
Work Product, such Work Product shall be the property of Medicis. AAI shall
provide Medicis or its designee with a complete disclosure of all such Work
Product not yet disclosed to Medicis on a monthly basis, or more frequently, if
available, and (c) AAI shall execute such documents and

5

--------------------------------------------------------------------------------

 

take such steps as are necessary in order to vest Medicis with full record
ownership of such Work Product.
          6.4 AAI shall reasonably cooperate with and assist Medicis, at
Medicis’ expense with respect to third party costs, (a) in transferring the
Manufacturing Services promptly following the date on which the United States
Food and Drug Administration (the “FDA”) approves the Product (the “FDA Approval
Date”) to a third party designated by Medicis (the “New Manufacturing Site”),
and (b) in obtaining appropriate governmental qualifications, including all
required FDA approvals, necessary for the New Manufacturing Site to perform the
Manufacturing Services. Upon the request of AAI, AAI shall have the right to
review and provide comments to Medicis with respect to the applications to be
submitted to the FDA for approval of the New Manufacturing Site. Within ***
following the later of the FDA Approval Date and the date on which the FDA
approves the New Manufacturing Site (the “New Site Approval Date”), Medicis
shall pay to AAI, by wire transfer in immediately available funds to a account
designated by AAI, ***; provided that AAI is not then in breach of its
obligations under this Section 6.4.
          6.5 During the term of Exhibit III hereto and until the *** of the
termination of Exhibit III hereto, AAI and its Affiliates shall not, for their
own benefit or for the benefit of any third party other than Medicis and its
successors and assigns or *** and its successors and assigns ***, manufacture
products containing modified minocycline or Extended Release Minocycline;
provided, however, that AAI and its Affiliates shall not manufacture products
containing modified minocycline or Extended Release Minocycline in capsule or
tablet form for ***.
     7. Payments for Services. (a) All payments for Services shall be made by
wire transfer in immediately available funds to a bank account designated in
writing by AAI prior to the date such payment is due. AAI shall provide to
Medicis written invoices for Services and Medicis shall pay such invoices ***
following Medicis’ receipt thereof. In the event Medicis fails to pay such
amount on the date due as referenced in the applicable invoice, AAI shall send
written notice to Medicis of such failure, and Medicis shall have the right to
pay such amount in full without interest thereon within *** of the date Medicis
receives such notice. AAI reserves the right to charge, and Medicis shall pay,
interest at the then Prime Rate as determined by Citibank N.A. plus *** on all
past due amounts; provided, however, that no such interest shall be charged to
the extent that the failure of Medicis to make a timely payment hereunder arises
from a good faith dispute between Medicis and AAI with respect to the amount
due. If AAI shall not have received payment of an invoice within *** following
the date of Medicis’ receipt of such invoice, AAI shall have the right to cease
performance of Services hereunder without liability to Medicis provided that AAI
is not then in breach of its obligations under this Agreement. AAI shall have no
further obligation to perform such Services, unless and until such amounts have
been paid, and following delivery of such payment, AAI shall promptly recommence
its obligations to perform Services hereunder. In the event that during the term
of this Agreement, Medicis shall fail on *** occasions to make payment of an
invoice within *** following the date of Medicis’ receipt of the applicable
invoice, AAI shall have the right upon one hundred eighty (180) days prior
written notice to Medicis to terminate this Agreement without liability to
Medicis provided that AAI is not then in beach of its obligations under this
Agreement.

6

--------------------------------------------------------------------------------

 

     (b) If the Parties have a dispute regarding any payment hereunder and they
are unable to reach agreement thereon within 60 days of the date of the first
invoice for such payment, an independent arbitrator mutually appointed by the
Parties and expert in accounting shall be retained to determine the matter or
matters in dispute. The Parties shall each submit one (1) proposal to the
arbitrator who shall be required to select one (1) of the submitted proposals,
and the arbitrator shall not be entitled to compromise between such proposals.
The arbitrator’s determination shall be made within thirty (30) days of
submission and shall be conclusive and binding upon the Parties. Each Party
shall provide the arbitrator with all relevant books and records, any work
papers, supporting documentation and any other documentation used in determining
its proposal pursuant to this Section 7(b); provided that such documentation
shall be concurrently provided to the other Party. All fees and expenses of the
arbitrator shall be paid by the Party whose proposal is not selected.
     8. AAI Performance. AAI shall use commercially reasonable efforts to
perform and timely complete its obligations under this Agreement in conformity
with the terms and conditions of this Agreement. AAI shall comply with all
applicable United States federal, state and local laws and regulations in
performing the Services, including but not limited to current Good Manufacturing
Practices, Good Clinical Practices, Good Laboratory Practices, ICH guidelines,
and all other applicable FDA regulations in effect at the time that the
obligations are performed (“Applicable Laws”).
     9. Mutual Representations, Warranties and Covenants. Each of the Parties
represents, warrants and covenants to the other that:
          9.1 It shall not use the services of any persons debarred or suspended
under 21 U.S.C. § 335a(a) or (b) in any capacity associated with or related to
the manufacture of Products. It shall not hire or retain as an officer or
employee any person who has been convicted of a felony under the laws of the
United States for conduct relating to the regulation of any drug product under
the United States Food, Drug, and Cosmetic Act (the “Act”);
          9.2 It is validly existing and in good standing under the laws of the
state of its incorporation;
          9.3 The execution of this Agreement and full and timely performance of
the covenants, duties and obligations described herein have been duly authorized
by all necessary corporate action in accordance with all applicable United
States federal, state and local laws;
          9.4 It has the full power and authority to execute and deliver this
Agreement and perform its covenants, duties and obligations described in this
Agreement;
          9.5 This Agreement is a valid, legal and binding obligation upon such
Party, enforceable against such Party in accordance with its terms, except as
enforceability may be limited by applicable insolvency and other laws affecting
creditors’ rights generally or by the availability of equitable remedies; and
          9.6 It is not aware of any impediment that would inhibit its ability
to perform its obligations hereunder.

7

--------------------------------------------------------------------------------

 

     10. AAI’S Representations, Warranties and Covenants.
          10.1 All Products manufactured or supplied by AAI or its agents shall
conform to, and shall be manufactured in conformity with, any and all Applicable
Laws, including, but not limited to, current Good Manufacturing Practices, Good
Clinical Practices, Good Laboratory Practices, ICH guidelines, the NDA and all
other applicable FDA regulations;
          10.2 When shipped from AAI, All Products shall conform to the
applicable Specifications (as such term is defined in Exhibit III hereto)
therefor;
          10.3 When shipped from AAI, Product shall not be adulterated within
the meaning of the Act, and shall not be an article which may not, under the
Act, be introduced into interstate commerce;
          10.4 Product shall be free and clear of all liens, security interests,
or other encumbrances;
          10.5 All studies performed by AAI and its agents shall be performed in
conformity with current and applicable Good Manufacturing Practices, Good
Clinical Practices, Good Laboratory Practices, ICH guidelines and all other
applicable FDA regulations;
          10.6 AAI and its agents shall maintain all records and reports as
required to comply with applicable United States federal, state and local work
regulations, as required by FDA regulations, and as further required under the
Work Plan and in connection with the Services;
          10.7 AAI and its agents shall obtain informed consent from any study
subjects used by AAI or its agents in the performance of this Agreement; and
          10.8 Provided that Medicis remains current on all amounts due to AAI,
AAI shall make prompt payment to all of its subcontractors under this Agreement.
          10.9 THESE EXPRESS WARRANTIES IN ARTICLE 10 ARE IN LIEU OF, AND AAI
DISCLAIMS ALL OTHER CONDITIONS, REPRESENTATIONS, WARRANTIES AND STATEMENTS
REGARDING THE PRODUCTS AND SERVICES PROVIDED TO MEDICIS HEREUNDER, WHETHER
EXPRESS OR IMPLIED BY STATUTE, CUSTOM OF THE TRADE OR OTHERWISE (INCLUDING,
WITHOUT LIMITATION, ANY SUCH CONDITION, WARRANTY, OR STATEMENT RELATING TO THE
DESCRIPTION OR QUALITY OF PRODUCTS, THEIR MERCHANTABILITY, OR THEIR FITNESS FOR
A PARTICULAR PURPOSE OR USE UNDER ANY CONDITION) AND ANY SUCH CONDITION,
WARRANTY OR STATEMENT IS HEREBY EXCLUDED.
          IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR LOST
PROFITS, PUNITIVE OR OTHER INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY
KIND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. THE LIMITATION ON
LIABILITY SET FORTH IN THIS SECTION SHALL NOT APPLY TO EITHER PARTY’S
INDEMNIFICATION OBLIGATIONS UNDER

8

--------------------------------------------------------------------------------

 

THIS AGREEMENT OR DAMAGES ARISING OUT OF A PARTY’S INTENTIONAL BREACH OF, OR
MISCONDUCT UNDER, THIS AGREEMENT.
     11. Certain Obligations.
            11.1 Supply of Active Ingredient.

  (a)   AAI shall use the Active Ingredient already provided to it by Medicis to
perform its obligations hereunder. Thereafter, Medicis shall, at its sole cost
and expense, deliver the Active Ingredient to AAI in quantities agreed to
between the Parties. All risk (other than arising from or in connection with
AAI’s or its employees’, agents’ or subcontractors’ negligence or willful or
reckless actions or misconduct), right, title and interest in and to the Active
Ingredient shall at all times belong to and remain in Medicis. AAI shall only
use the Active Ingredient received by it to perform the Services. AAI shall
promptly notify Medicis in writing of any Active Ingredient that does not meet
the specifications identified in Attachment I of Exhibit III, and AAI shall
return such Active Ingredient in accordance with Medicis’ instructions to either
Medicis or its designee at Medicis’ risk and expense.

  (b)   AAI shall not be responsible for any loss or damage to the Active
Ingredient, except where such loss or damage occurs as a result of AAI’s or its
employees’, agents’ or subcontractors’ negligence or willful or reckless actions
or misconduct. In such circumstances, AAI shall promptly reimburse Medicis for
the Reimbursable Value (as such term is defined in Exhibit III hereto) therefor.
Except as otherwise provided herein, all other supplies and materials that are
required for the Services shall be obtained by AAI.

          11.2 Safety. Each Party shall be responsible for the safety of its own
employees and agents with respect to the handling, use, or storage of materials
involved in performance of the Services.
          11.3 Regulatory Approvals. Medicis shall own all right, title and
interest in and to the regulatory approvals for the Products. Medicis has
responsibility for the content of any Product labels, packaging and instructions
and shall supply same to AAI.
          11.4 Regulatory Reporting. AAI shall promptly inform Medicis in
accordance with FDA regulations of any adverse events and other regulatory
reporting events or activities arising from performance of the Work Plan or the
Services.
          11.5 Subcontractors. In the event that AAI desires to use the services
of third parties to perform any of AAI’s obligations under this Agreement, AAI
shall first obtain the prior written approval of Medicis with respect to each
such subcontractor and, prior to such approval and thereafter, shall provide
Medicis with any information reasonably requested by Medicis or any governmental
or regulatory authority with respect to each such subcontractor. With respect to
each subcontractor approved by Medicis, which approval shall be granted by
Medicis in its sole and absolute discretion, AAI shall ensure that each such
subcontractor complies with the

9

--------------------------------------------------------------------------------

 

applicable obligations of AAI under this Agreement and shall enter into a
written agreement with each such subcontractor that:

  (a)   contains obligations of confidentiality on such subcontractor no less
protective of Medicis Confidential Information than the obligations of AAI under
this Agreement, unless otherwise agreed to by Medicis in a signed writing;    
(b)   requires such subcontractor to enter in to a confidentiality agreement in
the form attached as Exhibit IV hereto;     (c)   shall include substantially
the same terms as those appearing in Section 9 of the DCL Agreement “Ownership
of Work Product” to ensure that Medicis obtains the same rights in the Work
Product generated under such subcontractor agreement as those set forth in this
Agreement;     (d)   permits Medicis to exercise its inspection and audit rights
pursuant to Section 12 “Inspections and Audits” hereof; and     (e)   without
Medicis’ prior written consent, does not impose any payment obligations and/or
liability on Medicis.

          11.6 Storage of Original Records. Records related to or arising out of
the performance of the Services shall be stored by AAI in accordance with the
FDA’s archival guidelines. At least ninety (90) days prior to the expiration of
the storage period required by the FDA, AAI shall notify Medicis in writing of
such expiration, and at the end of such period, shall transfer such records to
Medicis in a manner designated by Medicis. Medicis shall be responsible for the
reasonable cost of the transfer of such records.
          11.7 Insurance. Each Party shall maintain comprehensive general
liability insurance, including blanket contractual liability insurance covering
its obligations under this Agreement while this Agreement is in effect, which
insurance shall afford limits of not less than *** for each occurrence for
bodily injury liability, personal injury liability, products liability, property
damage liability, contractual liability and completed operations liability. The
Parties shall provide each other with certificates of insurance evidencing the
above and showing the name of the issuing company, the policy number, the
effective date, the expiration date and the limits of liability. The insurance
certificate shall further provide for a minimum of thirty (30) days written
notice to the other Party of a cancellation of or material change in the
insurance. AAI’s insurance policy shall name Medicis as an additional insured,
and Medicis’ insurance policy shall name AAI as an additional insured. AAI’s
comprehensive general liability insurance policy shall contain a waiver of
subrogation rights which Medicis’ insurer(s) may have against it, and Medicis’
comprehensive general liability insurance policy shall contain a waiver of
subrogation rights which AAI’s insurer(s) may have against it.
     12. Inspections and Audits.
          12.1 Medicis and its authorized representatives shall have the right
to inspect the manufacturing and testing facilities of AAI and its
subcontractors or agents, and to discuss and review in detail the manufacturing
and testing process and quality control procedures used

10

--------------------------------------------------------------------------------

 

(and the records created) by AAI during the performance of the Services with any
employees or consultants familiar with the Services; provided, however, that
such inspections shall be during normal business hours and shall not
unreasonably interrupt the operations of AAI. Such inspections shall be made no
more frequently than once every *** unless (i) consented to by AAI, such consent
not to be unreasonably withheld; (ii) such inspection relates to a Product
recall, correction or failure or review of process optimization and validation
activities, or (iii) AAI is subject to any inspection pursuant to Section 12.2
below.
          12.2 AAI shall cooperate with the FDA or any other governmental agency
with respect to any inspections it may require of AAI’s facilities and
procedures in connection with provision of the Services. AAI shall promptly
notify in writing and provide copies to Medicis of any communications regarding
the Services, the manufacture of the Products or the Products sent to or
received from the FDA. Medicis shall promptly notify in writing and provide
copies to AAI of any written communications regarding the manufacture of the
Products or the Products sent to or received from the FDA.
     13. Indemnification.
          13.1 Indemnification by Medicis. Subject to the terms of Section 13.3,
Medicis shall indemnify, defend and hold the AAI Indemnified Parties harmless
from and against any and all Claims, in each case to the extent such Claims
arise out of: (a) a breach or inaccuracy of any representation or warranty made
by Medicis in this Agreement; (b) a material breach of this Agreement by
Medicis; (c) any negligence or willful or reckless actions or misconduct of
Medicis or its employees, agents and/or subcontractors; (d) any allegation of
infringement or misappropriation of copyright or trademark rights of any party
resulting from the Products, including Medicis’ instructions for labeling, or
packaging of the Products; (e) harm to a third party arising out of the inherent
toxicological properties of Active Ingredient and the Products or (f) the
handling, storage, shipment, labeling, marketing, sale and use of the Products
by Medicis. Notwithstanding the foregoing, Medicis shall not be liable for any
Claims to the extent caused by any of the AAI Indemnified Parties as determined
in a final, non-appealable order of a court of competent jurisdiction.
          13.2 Indemnification by AAI. Subject to the terms of Section 13.3, AAI
shall indemnify, defend and hold the Medicis Indemnified Parties harmless from
and against any and all Claims, in each case to the extent such Claims arise out
of: (a) a breach or inaccuracy of any representation or warranty made by AAI in
this Agreement; (b) a material breach of this Agreement by AAI; (c) any
negligence or willful or reckless actions or misconduct of AAI or its employees,
agents and/or subcontractors; (d) or any allegations of infringement or
misappropriation of any patent or trade secret rights arising out of AAI’s or
AAI’s employees’; agent’s or subcontractors performance of the Services.
Notwithstanding the foregoing, AAI shall not be liable for any Claims to the
extent caused by any of the Medicis Indemnified Parties as determined in a
final, non-appealable order of a court of competent jurisdiction.
          13.3 Procedures for Indemnification.
               13.3.1 General. Promptly after becoming aware of same, the Party
seeking indemnification (the “Indemnified Party”) shall notify the other Party
(the

11

--------------------------------------------------------------------------------

 

“Indemnifying Party”) of any Claim covered under the terms of Sections 13.1 or
13.2, as applicable, for which the Indemnified Party seeks indemnification;
provided, however, that any delay in giving such notice shall not relieve the
Indemnifying Party hereunder except to the extent such delay materially
prejudices the Indemnifying Party’s ability to defend against such Claim or
materially increases the amount of damages awarded or paid in settlement of such
Claim. For a period that shall not exceed ten (10) business days following any
such notification, the Indemnified Party and Indemnifying Party shall
investigate and discuss in good faith whether such claim is subject to
indemnification under Sections 13.1 or 13.2, as applicable. During such
discussions, the Indemnified Party shall give the Indemnifying Party full access
to all records, data and personnel of the Indemnified Party as may be reasonably
necessary to make such determination. If the parties are unable to agree on
whether the Indemnifying Party is required to indemnify the Indemnified Party
under the terms of Sections 13.1 or 13.2, as applicable, the Indemnifying Party,
at its option, shall either assume or decline defense of the Claim, including
negotiations for its settlement or compromise.
               13.3.2 Defense Assumed. If the Indemnifying Party assumes defense
of a third party Claim as described herein, the Indemnified Party shall
reasonably cooperate with the Indemnifying Party in the defense of such third
party Claim and may be represented, at the Indemnified Party’s expense, by
counsel of its choice, provided, that, where the Indemnifying Party has assumed
defense of a third party Claim, the Indemnifying Party shall have sole control
over such defense. The Indemnifying Party shall not be responsible for defending
any claims other than those described in Sections 13.1 or 13.2, as applicable,
even if brought in the same suit. In addition to the foregoing, if a court of
competent jurisdiction later determines that a third party Claim for which the
Indemnifying Party assumed defense was not eligible for indemnification under
Sections 13.1 or 13.2, as applicable, within *** following such determination,
the Indemnified Party shall reimburse the Indemnifying Party in full for all
judgments, costs and expenses (including reasonable attorneys’ fees) incurred in
connection with such third party Claim.
               13.3.3 Defense Declined. If the Indemnifying Party declines to
assume defense of any third party Claim, and it is later determined by a court
of competent jurisdiction that such third party Claim was eligible for
indemnification under Sections 13.1 or 13.2, as applicable, within *** following
such determination, the Indemnifying Party shall reimburse the Indemnified Party
in full for all judgments, costs and expenses (including attorneys’ fees and
expenses) incurred in connection with such third party Claim.
               13.3.4 Settlement of Third Party Claims. The Indemnifying Party
shall not settle any third party Claim without the prior written consent of the
Indemnified Party if such settlement: (a) materially diminishes any of the
Indemnified Party’s rights under this Agreement or seeks to impose additional
obligations on the Indemnified Party; or (b) arises out of or is a part of any
criminal action, suit or proceeding or contains a stipulation or admission or
acknowledgement of any liability or wrongdoing (whether in contract, tort or
otherwise) on the part of the Indemnified Party.
               13.3.5 Contributory Negligence; Right of Contribution. Nothing
contained herein shall bar a claim for contributory negligence or a Party’s
right of contribution.

12

--------------------------------------------------------------------------------

 

     14. Confidential Information.
          14.1 Medicis Confidential Information. AAI acknowledges and agrees
(a) that (i) Work Product created by or on behalf of AAI or Medicis pursuant to
this Agreement, (ii) any plans, specifications, designs, data, results,
information, works in progress and any other documents or material provided by
or on behalf of Medicis for the provision of Services, and (iii) any
information, works in progress, trade secrets, data or other secret, sensitive
or confidential material related to the business technology, products, systems,
formulas, practices, processes, customers or projects of Medicis that are
disclosed to or become known by AAI during the term of this Agreement and which
are not generally known to the public constitute the confidential information of
Medicis (collectively the “Medicis Confidential Information”); (b) to hold such
Medicis Confidential Information in strict confidence; (c) not to disclose such
Medicis Confidential Information to any third party, except as necessary to
perform its obligations hereunder, provided that such third party is bound to
keep such information confidential in accordance with the terms hereof and AAI
shall be responsible for any breach by such third party of the terms hereof;
(d) to use such Medicis Confidential Information only as necessary to perform
the Services; and (e) upon termination of this Agreement, to destroy or return
all tangible Medicis Confidential Information (including tangible media
containing Medicis Confidential Information) to Medicis. Notwithstanding the
foregoing, AAI may retain one (1) copy to the extent required by any Applicable
Law. Medicis Confidential Information shall include the identity of the
investigators used to conduct the clinical tests. This provision shall not
supercede and replace any previous confidentiality and/or non-disclosure
agreements between the Parties, other than those previous confidentiality and/or
non-disclosure provisions which directly and specifically cover the Services
provided hereunder.
          14.2 AAI Confidential Information. Medicis acknowledges and agrees
(a) that any information, work in progress, trade secrets, data or other secret,
sensitive or confidential material related to the business technology, products,
systems, formulas, practices, processes, customers or projects of AAI that are
disclosed to or become known by Medicis during the term of this Agreement and
which are not generally known to the public constitute the confidential
information of AAI (collectively the “AAI Confidential Information”) (b) to hold
such AAI Confidential Information in strict confidence; (c) not to disclose such
AAI Confidential Information to any third party; and (d) to use such AAI
Confidential Information only as reasonably useful to further develop,
manufacture, and/or commercialize any Products or any formulation based on the
Products. AAI Confidential Information includes AAI intellectual property,
technology, know-how and processes (whether or not patented or patentable)
developed by AAI prior to execution of this Agreement, including the AAI Test
Procedures (the “AAI Intellectual Property”). Medicis acknowledges that AAI
shall remain the exclusive owner of all AAI Intellectual Property; provided,
however, that in no event shall AAI Intellectual Property include any Work
Product.
          14.3 Notwithstanding Sections 14.1 and 14.2, either party may disclose
Medicis Confidential Information or AAI Confidential Information in response to
(i) an order from a court or governmental agency; (ii) in response to a party in
litigation, provided that an appropriate protective order has been entered; or
(iii) if such disclosure is necessary to comply with any other laws or
regulations applicable to the disclosing party.

13

--------------------------------------------------------------------------------

 

          14.4 Notwithstanding Section 14.2, Medicis may disclose any AAI
Confidential Information, including without limitation any plans,
specifications, designs, processes, reports, papers, formulas and any other
information and material provided to Medicis under this Agreement to third
parties as reasonably useful to further develop, enhance, improve, manufacture,
or commercialize any Products or any formulations based on the Products;
provided, however, that Medicis shall require any such third parties to execute
a corresponding confidentiality agreement reasonably acceptable to AAI.
     15. Further Assurances.
          15.1 From time to time following the date hereof, at the request of
any Party hereto and without further consideration, the other Party hereto shall
execute and deliver to such requesting Party such agreements, instruments and
documents and take such other action as such requesting Party may reasonably
request in order to consummate more fully and effectively the transactions
contemplated hereby.
     16. Termination.
          16.1 Term and Termination. This Agreement (including Exhibits II and
III) shall commence on the date of its execution. Unless sooner terminated, as
permitted by this Agreement, including Section 2.1(b) of Exhibit III, the
Manufacturing Services shall remain in full force and effect for an initial term
of four (4) years from the Post-Launch Date (as such term is defined in
Exhibit III and as more fully described in Section 2.1(b) of Exhibit III) , or
such other time as the parties hereto shall mutually agree. The Initial Services
may be terminated from time to time, in whole or in part, by Medicis upon thirty
days written notice to AAI or by AAI in accordance with Section 7 hereof.
Exhibits II and III and this Agreement to the extent related thereto, may also
be terminated as follows:

  (a)   by mutual agreement of the Parties;

  (b)   by either Party by written notice to the other upon the occurrence of
either of the following events:

  (i)   either Party is in material breach of this Agreement and fails to cure
such breach within *** after receipt of written notice from the other Party
identifying the breach;     (ii)   either Party enters into bankruptcy, whether
voluntary or involuntary, has a receiver appointed, becomes insolvent, enters
into any arrangement with its creditors, takes or suffers any similar action in
consequence of debt or ceases or threatens to cease to carry on its business as
usual or permits the entry of an order adjudicating it to be bankrupt or
insolvent and such order is not discharged within ***; or     (iii)   as
permitted by Section 17.5 hereof.

  (c)   Any termination or expiration of this Agreement shall not affect any
outstanding obligations or payments due hereunder prior to such termination or
expiration, nor

14

--------------------------------------------------------------------------------

 

      shall it prejudice any other remedies that the Parties may have under this
Agreement.

     16.2 Effect of Termination. Upon termination of the Initial Services, in
whole or in part, or Exhibit III or both:
               16.2.1 Upon termination of any Initial Services , AAI shall stop
the performance of such Initial Services and Medicis shall pay AAI for any
Initial Services performed prior thereto which have not yet been paid for and
shall reimburse AAI for costs and expenses incurred or uncancellable prior to
the date of such termination; provided, however, that in such event AAI shall
have a duty to cancel and mitigate such costs and expenses. Upon termination of
Exhibit III, AAI shall stop the performance of the Manufacturing Services
provided thereunder. Notwithstanding the foregoing, if requested, and pre-paid
for, by Medicis, AAI shall complete or cause the completion of the manufacturing
of any work-in-process that is subject to a firm order (including a Binding
Order (as such term is defined in Exhibit III)) on the date on which the
termination is effective.
               16.2.2 Medicis shall (in addition to any other remedies AAI may
have in the event of default by Medicis):

  (a)   ***     (b)   ***     (c)   ***

     17. Miscellaneous.
          17.1 Notices. All notices and consents required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given if and when (a) delivered personally, (b) mailed by first class
certified mail, return receipt requested, postage prepaid, on the date certified
by the U.S. Postal Service to have been received by the addressee, (c) by
facsimile, provided the sender personally calls the recipient and confirms
receipt of such facsimile, or (d) on the date certified by a nationally
recognized overnight express courier service to have been received by the
recipient, as follows:
If to AAI:
President
aaiPharma
2320 Scientific Park Drive
Wilmington, NC 28405
Tel: ***
Fax: 910-815-2387

15

--------------------------------------------------------------------------------

 

With a copy to:
General Counsel
aaiPharma
2320 Scientific Park Drive
Wilmington, NC 28405
Tel: ***
Fax: 910-815-2340
If to Medicis:
Chief Executive Officer
Medicis Pharmaceutical Corporation
8125 North Hayden Road
Scottsdale, AZ 85258-2463
Tel: ***
Fax: 602-778-6007
and
Legal Department
Medicis Pharmaceutical Corporation
8125 North Hayden Road
Scottsdale, AZ 85258-2463
Tel: ***
Fax: 602-808-3881
          17.2 Relationship Between Parties. The relationship of AAI to Medicis
shall be that of an independent contractor, and no provision of this Agreement
shall be construed to constitute any Party as a partner or joint venturer of the
other Party, or an employer or employee of the other. Except as may be more
specifically set forth herein, (a) neither Party shall be liable in any manner
for the debts and liabilities of the other Party, and (b) each Party shall be
solely responsible for all costs and expenses incurred by it in performing its
obligations under this Agreement.
          17.3 Media Releases. Neither Party shall issue or release any media
release or public announcement (including, without limitation, any announcements
made via any posting on the World Wide Web or Internet), or other similar
publicity announcing the existence of this Agreement, the termination letter
agreement or relating to any term or condition of this Agreement in any country
or the relationships created by this Agreement without providing the other Party
at least three (3) business days prior notice in order to review and comment on
such release or announcement; provided, however, that such prior notice shall
only be required to the extent that any release or announcement contains
information that is substantially different (including expansive) from that
previously issued or released by either or both of the Parties hereto; and
provided, further, however, that no such release or announcement shall include a
Party’s or its Affiliates’ corporate identifiers without the express prior
written approval of such Party. Notwithstanding the foregoing, each Party shall
have the right to issue media releases,

16

--------------------------------------------------------------------------------

 

immediately and without prior consent of the other Party, that disclose any
information required by the rules and regulations of the Securities and Exchange
Commission or any federal, state or foreign law or regulation; provided, that
the disclosing Party shall use commercially reasonable efforts to notify the
other Party prior to disclosure, provide a copy of the relevant wording relating
to the Agreement or term or condition of the Agreement, and seek confidential
treatment of any information that the other Party reasonably requests to be
maintained as confidential. AAI shall contact the following Medicis
representatives for any required approval: Chief Financial Officer at ***;
Director of Investor Relations at ***; or Chief Executive Officer at ***.
Medicis shall contact the following AAI representatives for any required
approval: Chief Executive Officer or General Counsel at ***.
          17.4 Assignments. Neither Party shall voluntarily, by operation of law
or otherwise, assign any of its rights or obligations under this Agreement
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, this Agreement
may be assigned by either party, without the other party’s consent, as part of a
merger transaction involving such Party or an assignment or sale of all, or
substantially all, of its assets or business to which this Agreement relates,
and either Party may assign its rights and obligations under this Agreement to
an Affiliate, provided that it promptly notifies the other Party of the
assignment.
          17.5 Force Majeure. Any delays in performance or failure to perform by
either Party under this Agreement (including the performance under the Exhibits
hereto) shall not be construed as a breach of this Agreement (or corresponding
Exhibit) if and to the extent such delay is caused by occurrences beyond the
reasonable control of the Party affected (“Force Majeure”), including but not
limited to acts of God, embargoes, governmental restrictions, strikes or other
concerted acts of workers, fire, flood, explosion, riots, terrorism, wars, civil
disorder, rebellion or sabotage. Delays caused by events for which a Party could
have but failed to take commercially reasonable steps to prevent or compensate
for (e.g. fire insurance, data backup) shall not be considered to be caused by
Force Majeure events and delays in making payments when due hereunder shall not
be considered to be caused by Force Majeure events. The non-performing Party
shall, upon giving written notice to the other Party of the reason for delay,
due to Force Majeure, be temporarily excused from such performance to the extent
of such prevention, interference or delay, provided that the non-performing
Party shall use its commercially reasonable best efforts to avoid or remove such
causes of non-performance and shall continue performance with the utmost
dispatch whenever such causes are removed. In the event that a Force Majeure
causes a continuous delay in excess of ***, the Agreement may be terminated by
either party upon *** written notice to the other party.
          17.6 Controlling Document. In the event of any conflict between the
terms and conditions of this Agreement and any terms and conditions set forth in
any Exhibits hereto or Service Estimates, proposals, invoices or purchase
orders, the terms and conditions of this Agreement shall control.
          17.7 Costs and Attorneys’ Fees. The prevailing Party in any suit or
proceeding arising out of or relating to this Agreement shall be entitled to
recover all of its costs and expenses, including reasonable attorneys’ fees.

17

--------------------------------------------------------------------------------

 

          17.8 Parties in Interest. This Agreement shall bind AAI and Medicis
and their respective successors, agents and permitted assigns, if any. There are
no third party beneficiaries to this Agreement, except for the AAI Indemnified
Parties and the Medicis Indemnified Parties.
          17.9 No Waivers. No failure to exercise, delay in exercising, or
single or partial exercise of any right, power, or remedy by either party shall
constitute a waiver of, or shall preclude any other or further exercise of, the
same or any other right, power, or remedy.
          17.10 Severability. If any provision of this Agreement is construed to
be invalid, illegal, or unenforceable, then the remaining provisions of this
Agreement shall not be affected thereby and shall be enforceable without regard
thereto but construed and reformed so as to conform as nearly as possible to the
intent of the Parties in entering into this Agreement.
          17.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary, in making proof of this Agreement, to
produce or account for more than one counterpart hereof.
          17.12 Controlling Law. This Agreement is made under, and shall be
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to that State’s conflict of law rules or principles.
          17.13 Entire Understanding. This Agreement, along with any other
attachments, appendixes, Exhibits, or schedules hereto, states the entire
understanding between the Parties with respect to the subject matter hereof, and
supersedes all earlier and contemporaneous oral and written communications and
agreements or promises made with respect to the same subject matter, and any
other previous agreements, promises, or representations of any kind with respect
to the relationship between the Parties hereto. This Agreement shall not be
modified except as provided in this Agreement or in a written document signed by
both Parties.
          17.14 Jurisdiction and Venue. The Parties hereby submit to the
jurisdiction of, and waive any venue objections against, the United States
District Court for the District of Delaware and the state courts of Delaware, in
any litigation or dispute arising out of this Agreement.
          17.15 Headings and References. The headings and captions used in this
Agreement are used for convenience only and are not to be construed or
interpreting this Agreement.
          17.16 Parties Represented by Counsel. Each of the Parties has been
represented by counsel in the negotiation and drafting of this Agreement. Both
Parties have participated in its drafting. This Agreement shall not be construed
against either Party on account of it having been drafted by the other Party or
by lack of representation by counsel.
          17.17 Survival. The Parties agree that the following provisions of
this Agreement shall survive the expiration or termination of this Agreement:
1.2, 3, 10.9, 11.6, 13, 14, 16, 17, and Article 4 and Section 6.1 of
Exhibit III.

18

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the date
first above written.

            MEDICIS PHARMACEUTICAL CORPORATION
      By:           Name:           Title:           AAIPHARMA INC.
      By:           Name:           Title:        

19

--------------------------------------------------------------------------------

 

Schedule 2
TRANSFER CONTRACTS
1. MP-0104-04:
***
13 sites

      Study Counter-party   Principal Investigator
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***

2. MP-010405:
***
16 sites

      Study Counter-party   Principal Investigator
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***

1

--------------------------------------------------------------------------------

 

3. MP-0104-07:
***
28 sites

      Study Counter-party   Principal Investigator
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***

4. MP-0104-09:
***

      Study Counter-party   Principal Investigator
***
  ***

5. MP-0104-10 — Study completed, awaiting data report
***

      Study Counter-party   Principal Investigator
***
  ***
***
  ***
***
  ***

2

--------------------------------------------------------------------------------

 

6. Other Agreements
•  ***
•  ***
•  ***
•  ***
•  ***
•  ***
7. MP-0104-01
14 sites

      Study Counter-party   Principal Investigator
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***
***
  ***

3

--------------------------------------------------------------------------------

 

EXHIBIT II
WORK PLAN

 

--------------------------------------------------------------------------------

 

EXHIBIT II-A
WORK PLAN
***

 

--------------------------------------------------------------------------------

 

EXHIBIT II-B
WORK PLAN
***

 

--------------------------------------------------------------------------------

 

EXHIBIT II-C
WORK PLAN
***

 

--------------------------------------------------------------------------------

 

EXHIBIT II-D
WORK PLAN
***

 

--------------------------------------------------------------------------------

 

EXHIBIT II - E
WORK PLAN
***

 

--------------------------------------------------------------------------------

 

EXHIBIT II-F
WORK PLAN
***

 

--------------------------------------------------------------------------------

 

EXHIBIT III
MANUFACTURING TERMS

 

--------------------------------------------------------------------------------

 

EXHIBIT III
[Execution Copy]
MANUFACTURING TERMS

1. INTERPRETATION   1.1   Definitions. Capitalized terms used herein which are
not defined shall have the meanings given to such terms in the Agreement. In
addition, as used herein, the following capitalized terms shall have the
meanings set forth below:

     “Active Materials” and “Minocycline” shall mean Minocycline Hydrocholoride.
     “Agreement” shall mean that certain Transition Agreement, dated as of
January 28, 2005, between Medicis and AAI, as the same may be amended from time
to time in accordance with its terms.
     “Alternate Supplier Products” shall mean modified release oral dosage forms
for Minocycline produced for Medicis by a manufacturer or manufacturers other
than AAI.
     “Closing Date” shall have the meaning given to such term in the Agreement.
     “Components” shall mean, collectively, all packaging components, raw
materials and ingredients (including labels, product inserts and other labeling
for the Products), required to be used in order to produce the Products in
accordance with the Specifications, other than the Active Materials.
     “Exhibit III” shall mean this Exhibit III – Manufacturing Terms to the
Agreement.
     “Inventory” shall mean all inventories of Components and work-in-process
produced or held by AAI in connection with the manufacture of the Products in
accordance with the Specifications, but, for greater certainty, shall not
include the Active Materials.
     “Product(s)” shall mean modified release oral dosage forms for Minocycline
as developed by AAI for Medicis.
     “Quality Control Agreement” shall mean that certain Quality Control
Agreement, dated as of the date of the Agreement, between Medicis and AAI, as
the same may be amended from time to time in accordance with its terms.
     “Reimbursable Value” shall mean the actual replacement cost of the Active
Materials at the time of replacement.
     “Shortage” shall mean, with respect to any batch, any amount of Product
delivered to Medicis from that batch that is less than *** of the Theoretical
Yield.

1

--------------------------------------------------------------------------------

 

     “Specifications” shall mean shall mean the specifications of the Product
set forth in Attachment A hereto and in the Quality Control Agreement.
     “Term” shall have the meaning given to such term in Section 5.1 hereof.
     “Theoretical Yield” shall mean the yield set forth in Attachment A hereto.
     “Trademarks” shall mean DYNACIN®, MEDICIS®, and all other trademarks and
trade names, registered or unregistered, that are owned or used by Medicis.

1.2   Attachments. The following exhibits are attached to this Exhibit III and
are incorporated in and are deemed to be an integral part hereof:

         
Attachment A
  -   Product List and specifications for Products and Active Materials
 
       
Attachment B
  -   Price List
 
       
Attachment C
  -   Stability Testing Procedures/Fee Schedule
 
       
Attachment D
  -   Lot Numbering and Expiration Dates

2.   MANUFACTURE AND SUPPLY OF PRODUCTS   2.1   Manufacture.

  (a)   From and after the Closing Date and until the later of (i) the date
which is *** after the FDA Approval Date, or (ii) the New Site Approval Date
(the “Post-Launch Date”), AAI shall manufacture and sell to Medicis, and Medicis
shall be required to purchase from AAI, one hundred percent (100%) of Medicis’
required commercial supply, including bulk clinical supply and samples, of the
Products.     (b)   From and after:

  (i)   the Post-Launch Date and until and including the ***, AAI shall
manufacture and sell to Medicis, and Medicis shall be required to purchase from
AAI, not less than *** of the following: Medicis’ required commercial supply of
the Products plus Alternate Supplier Products during such time period;     (ii)
  the *** and until and including ***, AAI shall manufacture and sell to
Medicis, and Medicis shall be required to purchase from AAI, not less than ***
of the following: Medicis’ required commercial supply of the Products plus
Alternate Supplier Products during such time period;

2

--------------------------------------------------------------------------------

 

    (iii)   the *** and until and including ***, AAI shall manufacture and sell
to Medicis, and Medicis shall be required to purchase from AAI, not less than
*** of the following: Medicis’ required commercial supply of the Products plus
Alternate Supplier Products during such time period; and     (iv)   the *** and
until and including ***, AAI shall manufacture and sell to Medicis, and Medicis
shall be required to purchase from AAI, not less *** of the following: Medicis’
required commercial supply of the Products plus Alternate Supplier Products
during such time period;]

; provided, however, that in no event shall Medicis be required to purchase any
Products from AAI under this Section 2.1(b) if, at any time, or from time to
time, the prices offered by AAI for its Products are less favorable than the
prices available to Medicis for Alternate Supplier Products by *** or more. In
the event that the prices offered by AAI are less favorable than the prices
offered by another supplier by *** or more and Medicis purchases from AAI an
amount of Products which is less than the percentage of the Products set forth
in this Section 2.1(b) during the periods set forth in this Section 2.1(b), then
AAI shall have the right, upon *** notice to Medicis, to terminate the
Manufacturing Services. Within *** of each year-end referenced in
Section 2.1(b), Medicis shall provide AAI with all documentation reasonably
necessary for AAI to confirm the total amount of Products plus Alternate
Supplier Products purchased by Medicis during the applicable year, and in the
event Medicis has purchased less than the required applicable percentage from
AAI, documentation regarding the price paid by Medicis for the Alternate
Supplier Products.

2.2   Packaging. Medicis shall be solely responsible for the content of all
labels, product inserts and other labelling (“Labeling”) and shall ensure that
all such Labeling complies in all material respects with applicable law. AAI
shall package the Products with Labeling as specified and approved by Medicis.
Medicis may, in its sole discretion, make changes to Labeling for the Products,
which changes shall be submitted by Medicis to all applicable governmental
agencies and other third parties responsible for the approval of the Products,
if required. AAI’s name shall not appear on the Labeling or anywhere else on the
Products unless required by a governmental authority or other applicable laws or
regulations.   2.3   Quality Control and Assurance.

  (a)   AAI shall manufacture and supply the Products in accordance with (i) the
Specifications; (ii) the approved NDA; and (iii) the current Good Manufacturing
Practices for manufacturing finished products specified by the FDA
(collectively, “GMPs”). AAI’s responsibilities and obligations with respect to
the manufacture of Products as set forth in this Section 2.4(a) are hereinafter
referred to as the “AAI Manufacturing Requirements.”     (b)   AAI shall perform
such quality control and quality assurance testing as is reasonably required by
the Quality Control Agreement to ensure that the Products

3

--------------------------------------------------------------------------------

 

      comply with all of the AAI Manufacturing Requirements as of the date of
shipment to Medicis.

  (c)   If the Products as manufactured by AAI do not satisfy its quality
control and quality assurance testing obligations due to AAI’s failure to
produce the Products in accordance with the Quality Control Agreement, AAI
shall, at its sole cost and expense, manufacture additional Products to replace
such defective Products. In such circumstances, Medicis shall have no obligation
to purchase or pay for any rejected Products that are defective, unless and only
to the extent that such Product is used by Medicis for another purpose, in which
event Medicis shall only be required to pay for that portion of the rejected
Products which it actually so uses.     (d)   The Parties hereto agree that
except in the circumstances where AAI has failed to comply with the AAI
Manufacturing Requirements, AAI shall not be liable or have any responsibility
for any deficiencies with respect to the Labeling and procedures specified by
Medicis, sales and marketing of the Products or distribution of the Products.  
  (e)   AAI shall provide Medicis with a certificate of conformance, a
certificate of analysis, and copies of the batch record, any deviation and
investigation reports, and Labeling prior to shipping Products to Medicis. The
certificate of analysis will set out the actual test results for each lot of
Products, and will certify that the Products shipped to Medicis have been
evaluated by AAI’s Quality Control/Quality Assurance department and that the
Products comply with the Specifications. Medicis shall issue a formal QA release
prior to the shipment of product by AAI.

2.4   Delivery. All Product(s) shall be delivered F.O.B. from AAI’s
manufacturing facility. Medicis shall be responsible for arranging the shipment
of the Product(s) from AAI’s manufacturing facility to its final destination.
All shipping costs and taxes associated with the sale to Medicis of Products
hereunder will be for the account and expense of Medicis.   2.5   Rejection of
Products.

  (a)   Medicis shall inspect the Products manufactured by AAI within *** after
receipt thereof and shall give AAI written notice (a “Deficiency Notice”) of all
Shortages and obvious damage to or defects in the delivered Products, prior to
the expiry of *** day period, except that Medicis shall give AAI a Deficiency
Notice of any non-obvious defects, including failure to meet Specifications,
within *** following discovery thereof. Except as set forth in Section 4.2
below, AAI shall have no liability for any Shortages or defects for which it has
not received a Deficiency Notice within such ***.     (b)   A Deficiency Notice
pursuant to this Section 2.5 shall describe the deficiency in such detail as to
reasonably inform AAI of its nature and basis. Thereafter, upon

4

--------------------------------------------------------------------------------

 

      request, Medicis shall provide AAI with all information and documentation
reasonably requested by AAI in order to evaluate the Deficiency Notice. AAI
shall have a period of *** after its receipt of a Deficiency Notice to present
in writing to Medicis any objections AAI may have to the matters set forth
therein. If no objections are raised within such ***, the Deficiency Notice
shall be deemed final and accepted and approved by AAI on such ***. If AAI shall
raise any objections, Medicis and AAI shall attempt to resolve the matters in
dispute, and if resolved, the Parties shall accordingly revise the Deficiency
Notice and the Deficiency Notice as so revised shall become final. If such
dispute cannot be resolved by the Parties within *** after delivery of the
Deficiency Notice to AAI, then, upon *** prior written notice to the other
party, the matters in dispute shall be submitted to Boston Analytical, Inc. of
Salem, New Hampshire, unless objected to by either party within the *** notice
period, or such other laboratory as agreed to in writing by the Parties (in
either case, the “Laboratory”), which Laboratory shall make a final and binding
determination as to such matters. The expenses associated with such dispute
determination by the Laboratory shall be borne by the Party whose position was
not substantiated by such firm.

  (c)   To the extent that a deficiency is set forth in a final Deficiency
Notice, AAI shall, as soon as is commercially reasonable but in no event later
than *** after the Deficiency Notice becomes final in accordance with
Section 2.6(b) hereof, supply Medicis with Product conforming to the
Specifications in an amount equal to the deficiency, and reimburse Medicis for
all Active Materials consumed in the production of such Product, at the
Reimbursable Value.

2.6   Manufacturing-Related Services.

  (a)   Upon the written request of Medicis, AAI shall conduct stability testing
on the Products in accordance with the protocols submitted by Medicis and a
Service Estimate to be agreed to between the Parties, the particulars of which
will be incorporated into Attachment C hereto once agreed to and executed by the
Parties. AAI shall not make any changes to the testing procedures without prior
written approval from Medicis. In the event that any lot of Products fails
stability testing, AAI and Medicis shall jointly determine the proceedings and
methods to be undertaken to investigate the causes of such failure, including
which Party shall bear the cost of such investigation. AAI shall not be liable
for any costs of such investigation, unless there has been a breach by AAI of
the AAI Manufacturing Requirements. In the event of a breach by AAI of the AAI
Manufacturing Requirements, AAI shall promptly reimburse Medicis for
(a) Medicis’ actual costs with respect to the Active Materials delivered by
Medicis to AAI in the manufacture of such Products, and (b) the purchase price
paid for any batches of Products which fail stability testing as a result of
AAI’s breach. AAI will provide Medicis with any and all data and results
relating to the stability testing in accordance with the Quality Control
Agreement. From time to time, AAI may, at the request of Medicis, also provide
Medicis with stability testing services with respect to products not
manufactured by AAI, the cost of such services to be agreed to between the
Parties prior to such services being undertaken. Medicis

5

--------------------------------------------------------------------------------

 

      reserves its right to use an alternative second source of stability
testing at any time.

  2.6.2   The pricing contained in Attachment B does not apply to
manufacturing-related services set forth in Service Estimates.

2.7   Manufacturing Changes. Except with respect to the New Manufacturing Site
and as provided in the Quality Control Agreement, AAI shall not make any change
in the manufacturing site of the Products or make any change to the
manufacturing equipment or manufacturing process of the Products without having
such changes approved in writing by Medicis prior to implementation. Medicis may
not unreasonably withhold or delay such approval. Both Parties will establish a
change control procedure.

3.   ORDERS, DELIVERY, INVOICING AND PAYMENT   3.1   Yearly Forecasts. On the
Closing Date, Medicis shall provide AAI with a forecast of the volume of each
Product required during the first year of the Agreement. Medicis shall provide
AAI with rolling forecasts of the volume of each Product required during the
next *** months (or such shorter period if expiration of the Term shall be less
than *** months from the date of such forecasts). Such rolling quarterly volume
forecasts shall (i) be updated by Medicis by the 15th day of every month with
respect to the next full ***; (ii) with respect to the first *** months of such
forecasts, be a binding commitment that Medicis is obligated to order and
purchase from AAI as forecasted and shall not be subject to reduction (“Binding
Order”); and (iii) with respect to all periods other than the *** of such
forecasts subject to the Binding Order, be updated as soon as practicable by
Medicis upon its determination that the volumes contemplated in the most recent
of such forecasts have changed by *** or more.   3.2   Written Orders. The
written Binding Orders submitted by Medicis to AAI pursuant to Section 3.1(ii)
hereof shall specify Medicis’ purchase order number, quantities by Product type,
monthly pick-up schedule and any other elements reasonably necessary to ensure
the timely production of the Products.   3.3   Packaging and Raw Materials. All
Components shall be purchased (with the exception of those which are supplied by
Medicis), and tested in accordance with the Quality Control Agreement, by AAI at
AAI’s expense to ensure that such Components meet any Specifications. Amendments
to such Specifications requested by Medicis will only be implemented with the
approval of AAI following a technical and cost review, such approval not to be
unreasonably withheld but being subject to Medicis and AAI reaching agreement as
to price revisions necessitated by any such amendment in accordance with
Section 3.7 below.   3.4   Change in Specifications.

  (a)   If Medicis requests a change in the manufacturing process,
Specifications or Labeling which would result in an increase in AAI’s costs for
Components, the Parties shall discuss what impact, if any, such change should
have on the price of the Products. Unless otherwise agreed by the Parties, any
and all direct costs

6

--------------------------------------------------------------------------------

 

      associated with Specification changes, including changes requested by
Medicis or required by applicable law, shall be borne by Medicis. The price
change shall become effective only with respect to those orders of Products
which are manufactured in accordance with the revised Specifications.     (b)  
Notwithstanding any change in the Specifications implemented in accordance with
the terms of Section 3.4(a) above, Medicis agrees to purchase all Products
manufactured by AAI and ordered by Medicis based upon any “old” Specifications
at the then-current price for those Products. In addition, Medicis agrees to
purchase, at AAI’s out-of-pocket cost, all Inventory, defined as the finished
product, raw materials and components, utilized under the “old” Specifications
and purchased or maintained by AAI in order to fill firm written orders
(including a Binding Order), to the extent that such Inventory can no longer be
utilized under the revised Specifications. Medicis shall reimburse AAI for any
out-of-pocket costs associated with destruction of such obsolete Inventory or
Active Materials. Open purchase orders for Components no longer required under
any revised Specifications which were placed by AAI with suppliers in order to
fill firm written orders (including a Binding Order) shall be cancelled where
possible, and where such orders are not subject to cancellation without penalty,
such orders shall, at AAI’s election, either (i) be cancelled, with Medicis
paying the penalty; or (ii) be assigned to and satisfied by Medicis.

3.5   Invoices and Payment. Except as otherwise provided in this Exhibit III,
AAI shall charge Medicis for only those Products that are released by Medicis in
accordance with the terms hereof, including Section 2.5 hereof. AAI shall submit
to Medicis, with each such shipment of Products, an invoice covering such
shipment. AAI shall also provide Medicis with an invoice covering any Inventory
or Components purchased by Medicis from AAI in accordance with the terms of this
Exhibit III. Each such invoice shall, to the extent applicable, identify the
Medicis purchase order number, Product numbers, names and quantities, unit
price, freight charges and the total amount to be remitted by Medicis. Medicis
shall pay all such invoices within *** of the receipt thereof.   3.6   Lot
Numbering/Expiration Dates. AAI shall make arrangements for and implement the
imprinting of lot numbers and expiration dates for each Product shipped. Such
lot numbers and expiration dates shall be affixed on the Products and on the
shipping carton of each product as is required by GMPs. The system used by AAI
for lot numbering and expiration dates is detailed on Attachment D hereto.   3.7
  No Guarantee: Except as expressly provided in this Exhibit III, AAI
acknowledges that there are no guaranteed volumes of the Products.   4.  
CO-OPERATION   4.1   Records and Accounting by AAI. AAI shall keep records of
the manufacture, testing and shipping of the Products, and retain samples of
such Products that are necessary to comply with FDA manufacturing requirements
and AAI Manufacturing Requirements as well as to assist with resolving product
complaints and other similar investigations.

7

--------------------------------------------------------------------------------

 

    Copies of such records and samples shall be made available to Medicis upon
its reasonable request and shall be retained by AAI and be available to Medicis
for a period of *** following the date of manufacture, or *** past expiry or
longer if required by law.   4.2   Product Recalls.

  (a)   AAI and Medicis shall each maintain records as may be necessary to
permit a recall or a field correction of any the Products delivered to Medicis
or customers of Medicis, effected voluntarily or under a threat of, or a
directive by, any governmental agency. Each Party shall give immediate notice by
telephone (to be confirmed in writing) to the Director of Quality
Control/Quality Assurance of the other Party upon discovery that any Products
should be recalled or corrected, or may be required to be recalled or corrected,
and, each Party upon receiving any such notice or upon any such discovery, shall
evaluate the need to cease and desist from further shipments of such Products in
its possession or control until a decision has been made whether a recall or
some other corrective action is necessary. The decision to initiate a recall or
to take some other corrective action, if any, shall be made and implemented by
Medicis. AAI will co-operate as reasonably required by Medicis, having regard to
all applicable laws and regulations. Each Party shall co-operate with the other
in developing any necessary recall plan, and the manner and extent of such plan
shall be subject to prior consultation, which consultation shall not
unreasonably delay such plan.     (b)   To the extent that a recall results
from, or arises out of, any breach by AAI of the AAI Manufacturing Requirements
then (i) AAI shall reimburse Medicis for Medicis’ documented out-of-pocket,
direct costs and expenses arising from the recall, and (ii) AAI shall replace
the recalled Products with new Products as soon as commercially reasonable,
contingent upon the receipt or availability from Medicis of all Active
Materials; provided, however, that if AAI shall have all of the Components and
Active Materials necessary to manufacture the Products on its premises, then AAI
shall begin manufacturing to replace the recalled Products with new Products
within *** following the resolution of all issues related to such recall. AAI’s
cost for such Active Materials lost as a result of any breach by AAI of the AAI
Manufacturing Requirements shall be limited to the Reimbursable Value thereof.
In the event that (x) AAI is unable to replace the recalled Products within the
time period required by the immediately preceding sentence (except where such
inability results from a failure to receive the required Active Materials,
Components or a Force Majeure event), or (y) such new Products are also recalled
or returned due to a breach by AAI of the AAI Manufacturing Requirements, then
AAI shall reimburse Medicis for the purchase price that Medicis paid AAI for the
returned inventory of the affected Products. Medicis shall be responsible for
all costs and expenses associated with a recall or corrective action that does
not result from, or arise out of, a breach by AAI of the AAI Manufacturing
Requirements.

4.3   Governmental Agencies. Medicis shall have sole responsibility for
obtaining any and all necessary regulatory approvals from the FDA for
modifications to the manufacturing

8

--------------------------------------------------------------------------------

 

    process, Specifications and NDA and for reporting any modifications to such
manufacturing process, Specifications or the NDA to the FDA as appropriate.

4.4   Customer Questions and Complaints. Medicis shall have the sole
responsibility for responding to questions and complaints from Medicis
customers. Questions or complaints received by AAI from Medicis customers shall
be promptly referred to Medicis. AAI shall co-operate as reasonably required to
allow Medicis to determine the cause of and resolve any customer questions and
complaints. Such assistance shall include follow-up investigations including
testing. In addition, within ten (10) days from the date of request, AAI shall
provide Medicis with all available information that will assist Medicis in
responding to questions or complaints relating to the Products. All costs
incurred in respect of this Section 4.4 shall be borne by the respective Parties
who incurred such costs. Medicis shall fax product complaints to AAI within ***
after Medicis confirms such complaint to:

AAI Development Services
Attention: Corporate Quality
2320 Scientific Park Dr.
Wilmington, NC 28405

5.   TERM   5.1   Term. The term of the terms and conditions of this Exhibit III
shall commence on the Closing Date and continue for the term described in
Section 16.1 of the Agreement, unless terminated as provided therein or in
Section 2.1(b) hereof or extended for such period of time as the parties hereto
shall mutually agree to in writing (the “Term”).   6.   REPRESENTATIONS AND
WARRANTIES   6.1   Formulas and Trademarks. Medicis represents and warrants that
the Specifications for each of the Products are its property and that Medicis
may lawfully disclose the Specifications to AAI. Medicis further represents and
warrants that any trademarks it authorizes to be utilized by AAI in connection
with any of the Products, including the Trademarks, are its property and may be
lawfully used as directed by Medicis. Medicis further represents and warrants
that the Specifications for all Products conform in all material respects to all
applicable laws and regulations, and that the Products if labelled and
formulated in accordance with the Specifications and manufactured in compliance
with applicable GMPs may be lawfully sold and distributed in every jurisdiction
in which Medicis markets such Products and Medicis will sell and distribute in
compliance with applicable laws.   7.   PRICE   7.1   Price. The prices for the
Products are shown in Attachment B hereto and incorporated herein by reference.
In addition, Medicis shall be responsible for the payment of any and all sales
and use taxes applicable to the Products and services described herein. The
prices may be adjusted by AAI on the anniversary of the first firm order by
Medicis, and

9

--------------------------------------------------------------------------------

 

    annually thereafter by the total percentage change in the price of the
Product as reflected in the *** over the preceding ***. AAI shall notify Medicis
of such increase within *** days of the price change date.

8.   MISCELLANEOUS   8.1   Permits. AAI shall, at its own expense, obtain and
maintain the necessary permits required for the manufacture and supply of the
Products, provided that AAI shall not be responsible for obtaining or
maintaining any other permits or other regulatory approvals in respect of the
Products or the Specifications, which shall be the sole responsibility of
Medicis.   8.2   Trademarks. Medicis and AAI hereby acknowledge that neither
Party has, nor shall it acquire, any interest in any of the other Party’s
copyrighted material, trademarks, trade names or other intellectual property
unless otherwise expressly agreed to in writing. The Parties agree not to use
any trademark or trade name of the other Party, except as specifically
authorized by the other Party.   8.3   Reports. AAI will supply on an annual
basis, Product data, including release test results, complaint test results and
all investigations (in manufacturing, testing and storage) directly related to
the Product and AAI’s ability to produce the Products in accordance with all
applicable laws, and will also prepare and complete the full Annual Product
Review, which Medicis will then review before preparing the Annual Report with
the FDA. If Medicis reasonably finds the Annual Product Review non-conforming,
AAI shall prepare an appropriate revision.   8.4   Additional Product. The
Parties covenant and agree that additional products may be added to Attachment A
hereto and such additional products shall be governed by the general conditions
hereof with any special terms (including, without limitation, price) governed by
an addendum hereto.

10

--------------------------------------------------------------------------------

 

ATTACHMENT A
PRODUCTS AND SPECIFICATIONS
***

1

--------------------------------------------------------------------------------

 

ATTACHMENT B
A. PRICE LIST

                                  Product   Fill     Annual     Run     Unit
Price   Description   Size     Quantity     Quantity     (USD)  
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       
 
                               
 
                       

1

--------------------------------------------------------------------------------

 

ATTACHMENT C
STABILITY TESTING PROCEDURES/FEE SCHEDULE
***

1

--------------------------------------------------------------------------------

 

ATTACHMENT D
LOT NUMBERING AND EXPIRATION DATES
***

 

--------------------------------------------------------------------------------

 

EXHIBIT IV
FORM OF CONFIDENTIALITY AGREEMENT

 

--------------------------------------------------------------------------------

 

EXHIBIT IV
Form of Confidentiality Agreement for Subcontractors
CONFIDENTIALITY AGREEMENT
This Agreement is made the             day of                     , 200___ (this
“Agreement”), by and between [COMPANY], a [INSERT STATE] corporation, having
offices at
                                                                                                    
(hereinafter “COMPANY”), and                                         , an
individual residing [or a corporation, maintaining principal offices] at
(hereinafter referred to as “RECIPIENT”).
          WHEREAS, COMPANY possesses certain valuable and confidential
information, data and expertise (collectively the “Confidential Information”)
relating to COMPANY’s pharmaceutical business activities, technology, research
and development activities, and COMPANY’S product development activities in
collaboration with Medicis Pharmaceutical Corporation, a Delaware corporation,
having offices at 8125 North Hayden Road, Scottsdale, AZ 85258 (hereinafter
“MEDICIS”);
          WHEREAS, some of the Confidential Information has been provided to
COMPANY by MEDICIS and is considered by MEDICIS to be secret and confidential,
and the Confidential Information is a valuable commercial asset of MEDICIS, and
COMPANY is contractually obligated to MEDICIS to treat and keep this
Confidential Information as secret and not allow it to be used other than on
behalf of MEDICIS in accordance with that certain
                                                             Agreement between
MEDICIS and COMPANY dated as of                                          (as the
same may be amended from time to time in accordance with its terms, the “Medicis
Agreement”);
          WHEREAS, COMPANY desires to contract with RECIPIENT to provide
services to COMPANY as a subcontractor to COMPANY in the performance of
COMPANY’s obligations under the Medicis Agreement, pursuant to a written
agreement between COMPANY and RECIPIENT;
          WHEREAS, MEDICIS consents, subject to the terms and conditions hereof,
to the disclosure of Confidential Information, to RECIPIENT for the purpose of
enabling RECIPIENT to perform its functions and obligations as a subcontractor
to COMPANY.
          NOW THEREFORE, in consideration of the foregoing premises that are
hereby incorporated as a part of this Agreement and the mutual covenants
hereinafter set forth, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1.   COMPANY shall disclose and/or authorize disclosure through designated
representatives to RECIPIENT all relevant Confidential Information as deemed
necessary by COMPANY to facilitate RECIPIENT’S ability to perform its functions
and obligations as a subcontractor to

1

--------------------------------------------------------------------------------

 

  COMPANY. RECIPIENT shall accept and hold such Confidential Information in
confidence in accordance with the provisions hereof.

2.   Without the prior written consent of COMPANY, RECIPIENT shall neither
(i) disclose, directly or indirectly, to any third party or permit any third
party to have access to any of MEDICIS’ Confidential Information disclosed to
RECIPIENT by COMPANY, nor (ii) use, directly or indirectly, such Confidential
Information for any purpose other than as set forth herein. However, the
aforesaid obligations of confidentiality assumed by RECIPIENT shall not apply to
any Confidential Information that RECIPIENT can clearly demonstrate falls within
any of the following categories:

  (a)   Confidential Information that is now generally known to the public in an
integrated written form or subsequently becomes generally known to the public in
an integrated written form through no fault of RECIPIENT or breach of any other
confidentiality obligation owed to COMPANY or MEDICIS;     (b)   Confidential
Information that, as of the time of disclosure to RECIPIENT, was already known
to and in the possession of RECIPIENT as evidenced by written records and not
otherwise subject to a confidentiality obligation; or     (c)   Confidential
Information obtained after the date hereof by RECIPIENT from a third party
lawfully in possession of, and having the right to disclose same.

3.   For purposes of keeping Confidential Information confidential, the
RECIPIENT shall use efforts at least commensurate with those employed by
RECIPIENT for the protection of its own Confidential Information, but the use of
such efforts shall not constitute a defense in the event that any of the
Confidential Information is not kept confidential in accordance with the terms
of this Agreement. The RECIPIENT shall take all reasonable measures including,
but not limited to, court proceedings, at its own expense, to restrain
consultants, agents, associates, employees or former employees from unauthorized
use or disclosure of Confidential Information and RECIPIENT shall be liable to
COMPANY and/or MEDICIS for any damages resulting from the breach by any of
RECIPIENT’S consultants, agents, associates, employees or former employees of
the terms hereof. RECIPIENT acknowledges that in the event of a breach of this
Agreement, both COMPANY and MEDICIS may suffer irreparable damage that may not
be fully remedied by monetary damages. RECIPIENT therefore agrees that COMPANY,
or MEDICIS, or both of them shall be entitled to seek injunctive relief against
any such breach in any court of competent jurisdiction. COMPANY’s and MEDICIS’
rights under this Section 3 shall not in any way be construed to limit or
restrict their rights to seek other damages or relief available under this
Agreement or applicable law.

4.   Except as may otherwise be expressly set forth in an agreement between the
parties hereto entered into after the date hereof, neither COMPANY nor RECIPIENT
make and shall not be deemed to make or have made any representation or warranty
as to the accuracy or completeness of the Confidential Information or any part
thereof.

2

--------------------------------------------------------------------------------

 

5.   Except as provided in Section 1 hereof, no license or other right to use
the Confidential Information is granted hereby.

6.   The disclosure of Confidential Information by COMPANY to RECIPIENT shall
not result in any obligation on the part of either party to enter into any
future agreement relating to the Confidential Information or to undertake any
other obligation not set forth in written agreement signed by the parties
hereto.

7.   Confidential Information furnished by COMPANY to RECIPIENT under this
Agreement shall remain COMPANY’s or MEDICIS’ property, and any document or
recording/reproduction containing such Confidential Information in written or
other form shall be promptly returned to COMPANY or MEDICIS upon request. Return
or destruction of Confidential Information of documents or other tangible things
which embody or record the Confidential Information does not affect the
continuing obligations of the RECIPIENT under this Agreement.

8.   RECIPIENT acknowledges that any work product (including but not limited to
data, reports including case reports and case report forms, interpretations,
opinions and recommendations), trade secret information, copyrightable work
product and any and all other intellectual property rights developed, derived
from or otherwise generated by RECIPIENT, directly or indirectly, from the
Information shall be owned by and belong exclusively to COMPANY. Further,
RECIPIENT agrees to treat such work product or information as Confidential
Information subject to the confidentiality, nonuse and nondisclosure obligations
hereunder. RECIPIENT agrees to promptly and fully disclose such work product or
information to COMPANY. RECIPIENT hereby assigns and agrees to assign to COMPANY
the ownership right, title, and interest in such material, including, without
limitation, inventions (whether patentable or unpatentable), and copyrightable
work product and COMPANY shall have the right to obtain and hold in its own
name, without obligation of any kind to RECIPIENT, patents, copyrights, or other
protection which may be available or become available with respect to such
items. RECIPIENT further agrees to give COMPANY and its designees or assignees
all assistance reasonably required to perfect such rights, titles and interests.
These obligations shall survive and continue beyond the termination of this
Agreement and shall be binding upon RECIPIENT’s assigns, executives,
administrators and other legal representatives.

9.   With the exception of personal and confidential patient medical records,
all case report forms and other reports and data generated during the course of
any study performed by RECIPIENT as a subcontractor to COMPANY between the
parties shall be the sole property of COMPANY. Such data may be used by COMPANY
or MEDICIS for any purpose without further obligation or liability to the
RECIPIENT, unless otherwise agreed to in writing by the parties.

10.   RECIPIENT represents and warrants that it is not now nor shall it be a
party to any other agreement or under any obligation to or restriction by any
third party which would prevent the RECIPIENT from entering into this Agreement
or which would conflict with any of its obligations under this Agreement or any
of the undertakings set forth herein in any manner.

3

--------------------------------------------------------------------------------

 

11.   Neither party hereto shall be entitled to assign its rights hereunder
without the express written consent of the other party, except that COMPANY may
assign it rights under this Agreement to MEDICIS.   12.   A waiver by either
party of any term or condition of this Agreement in any instance shall not be
deemed or construed to be a waiver of such term or condition for the future, or
of any subsequent breach thereof. All rights, remedies, undertakings, or
obligations contained in this Agreement shall be cumulative and none of them
shall be in limitation of any other right, remedy, undertaking, or obligation of
either party.   13.   If and to the extent that any court of competent
jurisdiction holds any provision or part of this Agreement to be invalid or
unenforceable, the remainder of this Agreement shall be construed and reformed
so as to as to as nearly as possible give effect to the intentions of the
parties in entering in to this Agreement, and to as completely as possible
protect the confidentiality of MEDICIS’ Confidential Information.   14.   In the
event that RECIPIENT becomes legally compelled to disclose any of the
Confidential Information, RECIPIENT shall give COMPANY prompt notice so that
they may seek a protective order or other appropriate remedy or waive compliance
with the provisions of this Agreement. In the event that such protective order
or other remedy is not obtained, or the COMPANY waives compliance with the
provisions of this Agreement, RECIPIENT shall furnish only that portion of the
Confidential Information which is legally required to be disclosed.   15.  
Without the prior written consent of COMPANY, RECIPIENT shall not disclose to
any person or entity (a) the terms of its engagement involving COMPANY, MEDICIS
and RECIPIENT, (b) that RECIPIENT has requested or received any Confidential
Information, or (c) any of the terms, conditions or other facts with respect to
any work performed by RECIPIENT as a subcontractor to COMPANY, including the
status thereof.   16.   This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware without regard to that State’s
conflict-of-laws rules or principles requiring the application of the laws of
another jurisdiction. MEDICIS is an express third party beneficiary of this
Agreement, with full rights to enforce the provisions hereof as if a party
hereto.   17.   This Agreement contains the entire understanding between the
parties with respect to the matters contemplated herein and supersedes all
previous written and oral negotiations, commitments, and understandings. This
Agreement cannot be altered or otherwise amended except pursuant to an
instrument in writing signed by each of the parties hereto and making specific
reference to this Agreement.

[Signature Page Follows]

4

--------------------------------------------------------------------------------

 

          IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.

              COMPANY   RECIPIENT  
By:  
      By:      
 
       
 
           
Name:
    Name:  
 
           
 
           
Title:
    Title:  
 
           

5

--------------------------------------------------------------------------------

 

AGREEMENT OF QUALITY / TECHNICAL RESPONSIBILITY
This document constitutes the Quality/Technical Agreement (“QT Agreement”) of
responsibilities for contract pharmaceutical manufacture and/or packaging is
between AAI Development Services (“AAI”) and Medicis Pharmaceutical Corporation
(“Medicis”). This QT Agreement is incorporated within, and intended to
supplement, the Manufacturing Terms attached as Exhibit III to that certain
Transition Agreement (the “Manufacturing Terms”) between the parties dated
January 28, 2005 with respect to the Product manufactured thereunder.
This QT Agreement defines the individual responsibilities of Medicis and AAI,
and in particular defines who is responsible for the cGMP aspects of
manufacturing and specifies the way in which Product Batches will be released
for sale, ensuring that the Product complies with the Regulatory Approval and
the Product Specifications.
The QT Agreement takes the form of a detailed checklist of all the activities
associated with pharmaceutical production, analysis, release, and distribution.
Responsibility for each activity is assigned either to AAI or Medicis, or is
designated as not applicable (“N/A”) in the appropriate tick box. In the event
of a conflict between terms of this QT Agreement and the Manufacturing Terms,
the terms of the Manufacturing Terms shall govern.
KEY CONTACTS:
All quality issues (except medical or non-medical Product complaints, or
regulatory affairs) will be directed through the Key Quality Assurance contact,
as listed below, for each party.
If any key contacts change for a party, such party will notify the other party
in writing and designate a new contact person. Other contacts within each party
may be identified as needed to facilitate communication of technical issues.
KEY CONTACTS:

          Area of Responsibility   AAI   Medicis
Quality Assurance
  ***   ***
Regulatory Affairs
  ***   ***
Technical Services
  ***   ***
Medical Affairs
  ***   ***
Non-medical
Product Complaints
  ***   TBD

 

*   Key Quality Assurance contact

Page 1 of 13

--------------------------------------------------------------------------------

 

DEFINITIONS
Capitalized terms used, but not defined herein, shall have the meaning given to
them in the Manufacturing Terms.
TERMS

  1.   The term of this QT Agreement will begin on the Effective Date (see 3.
below) and will expire on the date of expiration or earlier termination of the
Manufacturing Terms.     2.   The parties will review this QT Agreement at least
annually to verify that the technical responsibilities allocated in this QT
Agreement are current and valid.     3.   The “Effective Date” of this QT
Agreement will be the signature date of the last party to sign this QT
Agreement. The QT Agreement shall be fully implemented within thirty (30) days
of the Effective Date.

CHANGE CONTROL PROCESS

      Either party may propose updates, amendments, modifications, or
supplements (collectively, the “Amendments”) to this QT Agreement. No Amendment
will be valid or effective unless made in writing and signed by duly authorized
officers of both parties.

Page 2 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   1    
COMPLIANCE REQUIREMENTS
                   
 
              1.1    
Perform and maintain all audit documentation regarding supplier(s) of Active
Ingredient for the Products.
  ***   ***   ***        
 
              1.2    
Perform and maintain all qualification documentation regarding suppliers of
Components for the Products.
  ***   ***   ***        
 
              1.3    
Manufacture, test and package Product in strict adherence to the approved drug
application, cGMPs, and Specifications.
  ***   ***   ***        
 
              1.4    
*** shall not to subcontract any of the work to a third party without prior
written agreement of ***, which prior agreement shall not be unreasonably
withheld or delayed. *** shall be responsible for auditing subcontractors to
ensure cGMP compliance.
  ***   ***   ***        
 
              1.5    
Provide *** with copies of all information supporting annual Product reports for
Products supplied to Medicis.
  ***   ***   ***        
 
              1.6    
Provide *** with copies/correspondence regarding the approved drug applications
for the Products.
  ***   ***   ***        
 
              1.7    
Notify *** and have written authorization from *** prior to implementing any
proposed changes to the facilities, manufacturing process, materials,
Specifications, and/or testing that impact the approved registration, or that
require revalidation. Identify for ***, in writing prior to delivery, the first
manufactured Batch incorporating any approved changes.
  ***   ***   ***        
 
              1.8    
Provide notification to the other party of any organizational and/or personnel
changes to Quality Assurance, Technical Services, or Regulatory Affairs
Contacts.
  ***   ***   ***        
 
              1.9    
*** will make every reasonable effort to provide copies of any Form 483s,
Warning Letters, Field Alerts or similar correspondence from Governmental
Authorities within one (1) business day of receipt and subsequent responses(s)
relating to the Products or processes used to produce, test, or package the
Products promptly thereafter. *** approval is required for responses related to
the Products.
  ***   ***   ***

Page 3 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   1.10    
Notify *** within one (1) business day of any circumstances likely to result in
a recall, Product withdrawal or field correction, including any confirmed
Product failure.
  ***   ***   ***        
 
              1.11    
Perform and maintain as current all appropriate validation, including but not
limited to: process, analytical method, cleaning, computer, and packaging.
  ***   ***   ***        
 
              1.12    
Dispose of all production residue, manufacturing rejects, tailings, other
chemicals, containers and packaging materials associated with Products
manufactured for Medicis in compliance with all applicable laws and regulations.
  ***   ***   ***        
 
              1.13    
*** will notify *** within (2) two business days, then proceed to promptly
investigate and resolve to the reasonable satisfaction of *** all
“Out-of-Specification” results. *** to review and approve any retesting
scenarios in OOS investigations.
  ***   ***   ***        
 
              1.14    
Notify *** of any requests for information, notices of violations or other
communication from a Governmental Agency related to the Medicis Products or
processes promptly within no more than two (2) business days after *** receipt
thereof.
  ***   ***   ***        
 
              1.15    
Notify *** of any incident affecting compliance to environmental, occupational
health and safety laws related to handling *** Products or processes within
three (3) business days.
  ***   ***   ***        
 
              2    
PRODUCTION AND TESTING OF BULK PRODUCT
                   
 
              2.1    
*** to Maintain the Master Formula (or Product structure). *** to review and
approve.
  ***   ***   ***        
 
              2.2    
*** will maintain approved Specifications.
  ***   ***   ***        
 
              2.3    
Provide consistent Batch identification system for bulk manufacture. Immediately
notify *** of any proposed changes to identification system prior to
implementation of any such changes.
  ***   ***   ***

Page 4 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   2.4    
Qualify Active Ingredient suppliers.
  ***   ***   ***        
 
              2.5    
Maintain Active Ingredient Specification, and ensure compliance of the
Specification with regulatory and compendial requirements.
  ***   ***   ***        
 
              2.6    
Procure Active Ingredient (include Certificate of Analysis, COA, for the Active
Ingredient). The Active Ingredient shall have not less than *** left to
expiration upon receipt at AAI. Any exceptions to the above must be approved in
writing by AAI.
  ***   ***   ***        
 
              2.7    
Store Active Ingredient.
  ***   ***   ***        
 
              2.8    
Sample Active Ingredient.
  ***   ***   ***        
 
              2.9    
Validate and/or transfer test method for Active Ingredient to AAI. *** to
approve the analytical method.
  ***   ***   ***        
 
              2.10    
Analyze Active Ingredient (include documentation, COA).
  ***   ***   ***        
 
              2.11    
Release Active Ingredient.
  ***   ***   ***        
 
              2.12    
Retain reference samples of Active Ingredient for a minimum of *** beyond
Product expiration date, of the last lot using each batch of API.
  ***   ***   ***        
 
              2.13    
Qualify inactive substance suppliers in accordance with AAI policies.
Qualification does not include on-site audits.
  ***   ***   ***        
 
              2.14    
Procure inactive substances (include COA).
  ***   ***   ***        
 
              2.15    
Store inactive substances.
  ***   ***   ***        
 
              2.16    
Sample inactive substances.
  ***   ***   ***        
 
              2.17    
Validate and/or transfer test methods for the inactive substances to ***.
  ***   ***   ***        
 
              2.18    
Analyze inactive substances (include documentation, COA).
  ***   ***   ***        
 
              2.19    
Release inactive substances.
  ***   ***   ***        
 
              2.20    
Perform Process Validation. *** to review and approve.
  ***   ***   ***

Page 5 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   2.21    
Perform Cleaning Validation. *** to review and approve.
  ***   ***   ***        
 
              2.22    
Provide Bill of Materials (BOM) for bulk manufacture. *** to review and approve.
  ***   ***   ***        
 
              2.23    
Provide Manufacturing Transfer Document for transfer within ***. *** to review
and approve.
  ***   ***   ***        
 
              2.24    
Prepare Manufacturing Instructions (Production Operating Instructions). *** to
review and approve.
  ***   ***   ***        
 
              2.25    
*** will maintain Specification for bulk Product and ensure compliance of the
Specification with regulatory and compendial requirements. *** will maintain
approved Specifications.
  ***   ***   ***        
 
              2.26    
Produce bulk Product (include Batch documentation).
  ***   ***   ***        
 
              2.27    
Document, investigate and resolve deviations from approved manufacturing
instructions or Specifications. *** to review and approve all deviations. *** to
be notified within (2) two business days of discovery of a deviation.
  ***   ***   ***        
 
              2.28    
Not to reprocess or salvage any partially processed or fully processed materials
without the written consent of *** unless such activities are expressly allowed
in applicable approved regulatory documents.
  ***   ***   ***        
 
              2.29    
Develop bulk Product sampling plan. *** to review and approve.
  ***   ***   ***        
 
              2.30    
Sample bulk Product.
  ***   ***   ***        
 
              2.31    
Validate and/or transfer test method for bulk Product to ***. *** to approve
analytical method.
  ***   ***   ***        
 
              2.32    
Analyze bulk Product.
  ***   ***   ***        
 
              2.33    
Approve bulk Product for packaging.
  ***   ***   ***        
 
              2.34    
Produce Certificate of Analysis for bulk Product.
  ***   ***   ***

Page 6 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   2.35    
Retain reference samples of bulk Product for the period of time specified in
AAI’s Standard Operating Procedures.
  ***   ***   ***        
 
              2.36    
Perform manufacturing facility, equipment and instrument qualification,
preventive maintenance and calibration.
  ***   ***   ***        
 
              2.37    
Perform laboratory facility, equipment and instrument qualification, preventive
maintenance and calibration.
  ***   ***   ***        
 
              2.38    
Perform stability storage and testing of bulk Product.
  ***   ***   ***        
 
              3.    
INSPECTION, PACKAGING OF FINISHED PRODUCT
                   
 
              3.1    
Maintain finished Product Specification, and ensure compliance of the
Specifications with regulatory and compendial requirements.
  ***   ***   ***        
 
              3.2    
Provide Batch identification system for finished Product.
  ***   ***   ***        
 
              3.3    
Provide artwork and labeling text (blister, carton, leaflet, label, etc.) to
***.
  ***   ***   ***        
 
              3.4    
Perform labeling review and approval.
  ***   ***   ***        
 
              3.5    
*** will provide Specifications for packaging materials, and ensure compliance
of the Specifications with regulatory and compendial requirements. *** will
maintain approved Specifications.
  ***   ***   ***        
 
              3.6    
Validate and/or transfer test method(s) for Product packaging materials to ***.
*** to approve analytical methods.
  ***   ***   ***        
 
              3.7    
Qualify packaging component and labeling suppliers in accordance with AAI
policies. Qualification does not include on-site audits.
  ***   ***   ***        
 
              3.8    
Procure packaging materials.
  ***   ***   ***        
 
              3.9    
Analyze packaging materials.
  ***   ***   ***        
 
              3.10    
Release packaging materials.
  ***   ***   ***

Page 7 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   3.11    
Retain samples of labeling materials for a minimum of *** past Product expiry
date. [NOTE: Other packaging materials need not be retained separately since
they are part of the finished Product retains].
  ***   ***   ***        
 
              3.12    
Perform Packaging Validation. *** to review and approve.
  ***   ***   ***        
 
              3.13    
*** will provide Bill of Materials (BOM) for packaging. *** to review and
approve.
  ***   ***   ***        
 
              3.14    
*** will prepare Packaging Instructions (Production Operating Instructions for
packaging). *** to review and approve.
  ***   ***   ***        
 
              3.15    
Perform packaging operations (include documentation).
  ***   ***   ***        
 
              3.16    
Perform in-process controls during packaging (include documentation).
  ***   ***   ***        
 
              3.17    
Develop finished Product sampling plan consistent with the Manufacturing Terms
for retain and stability samples. Provide finished Product release sampling plan
for *** review and approval.
  ***   ***   ***        
 
              3.18    
Sample finished Product including retain samples, stability samples, release
samples, and customer samples.
  ***   ***   ***        
 
              3.19    
Retain reference samples of finished Product for a minimum of one *** past
Product expiry date.
  ***   ***   ***        
 
              3.20    
Reconcile packaging materials.
  ***   ***   ***        
 
              3.21    
Perform manufacturing facility, equipment and instrument qualification,
preventive maintenance and calibration.
  ***   ***   ***        
 
              3.22    
Perform laboratory facility, equipment and instrument qualification, preventive
maintenance and calibration.
  ***   ***   ***        
 
              3.23    
Document, investigate and resolve any deviations from approved packaging
instructions or Specifications. *** to review and approve all deviations. Notify
*** within (2) two business days of discovery of deviations.
  ***   ***   ***

Page 8 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   4.    
TESTING AND RELEASE OF FINISHED PRODUCT
                   
 
              4.1    
Validate and/or transfer test method(s) for finished Product to ***. *** to
review and approve.
  ***   ***   ***        
 
              4.2    
Perform laboratory equipment and instrument qualification, preventive
maintenance and calibration.
  ***   ***   ***        
 
              4.3    
Analyze finished Product.
  ***   ***   ***        
 
              4.4    
*** to approve shipment of finished Product to ***. *** to release Product for
distribution.
  ***   ***   ***        
 
              4.5    
Review Batch Record including all pertinent documentation and data. Provide copy
to *** for review.
  ***   ***   ***        
 
              4.6    
Produce Certificate of Analysis for finished Product testing.
  ***   ***   ***        
 
              4.7    
Perform stability storage and testing as requested by *** in accordance with the
Manufacturing Terms. Notify *** immediately within (1) one business day, if the
Product fails to meet Specifications during stability testing.
  ***   ***   ***        
 
              4.8    
Stability Testing Protocol
  ***   ***   ***        
 
                   
Define protocol requirements.
  ***   ***   ***        
 
                   
For each packaging configuration, place the *** production Batches of Product on
stability and then at least one Batch annually.
  ***   ***   ***        
 
                   
Pull stability samples as per the approved stability protocol. Provide
reviewed/approved test results to Medicis within *** of completion of testing.
  ***   ***   ***        
 
                   
Perform stability facility, equipment and instrument qualification, preventive
maintenance and calibration.
  ***   ***   ***        
 
              4.9    
Establish approved expiration date.
  ***   ***   ***

Page 9 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   4.10    
Adverse Events and Product Complaints
                   
 
                   
*** shall document Product complaints and adverse event claims. *** shall notify
the other’s key contact as specified in the Manufacturing Terms following
receipt of any Adverse Event or Product Complaint.
  ***   ***   ***        
 
                   
*** shall promptly investigate any such complaints. *** shall provide *** with a
summary of its investigation as soon as practicable, but in no event later than
***. Complaints designated by *** as “high priority complaints” shall be
investigated by *** within ***.
  ***   ***   ***        
 
                   
*** shall respond to regulatory agencies and reporters and shall be responsible
for all activities relating to medical surveillance.
  ***   ***   ***        
 
                   
Complete follow-up corrective action.
  ***   ***   ***        
 
              4.11    
Visually examine retain reference samples of finished Product annually.
Investigate if required. Report all results to ***.
  ***   ***   ***        
 
              4.12    
Perform Annual Product Review. Provide copies of all information supporting
annual Product reporting to ***.
  ***   ***   ***        
 
              4.13    
Prepare annual Product report and file with applicable regulatory agencies.
  ***   ***   ***        
 
              4.14    
Product Recall
  ***   ***   ***        
 
                   
Decide to initiate recall.
  ***   ***   ***        
 
                   
Notify appropriate regulatory agencies.
  ***   ***   ***        
 
                   
Manage recall.
  ***   ***   ***        
 
                   
Reconcile returned Product.
  ***   ***   ***

Page 10 of 13

--------------------------------------------------------------------------------

 

                                  NO.   RESPONSIBILITIES   N/A   Medicis   AAI  
4.15    
Responsibility to Authorities
       
 
       
Liaison with Regulatory Authorities for approval, maintenance and updating of
drug application.
  ***   ***   ***        
 
       
Liaison with Regulatory Authorities for any site visits related to the Products
produced for Medicis. ***to notify*** promptly within no more than one
(1) business day after being contacted regarding such site visits.
  ***   ***   ***        
 
       
Maintain safety/hazard and handling data on Products and Active Ingredient.
  ***   ***   ***        
 
       
Maintain safety/hazard and handling data on Components.
  ***   ***   ***        
 
  4.16    
Special test requirements (specify):
  ***   ***   ***        
 
  4.17    
Maintain all Batch Records for a minimum of *** past Product expiry date and
supply copies (true or electronic) of all such records to Medicis on request.
  ***   ***   ***        
 
  5    
STORAGE AND TRANSPORTATION OF BULK PRODUCT, FINISHED PRODUCT AND WASTE DISPOSAL
         
 
  5.1    
Store bulk Product up to packaging.
  ***   ***   ***        
 
  5.2    
Store finished Product after release by Medicis.
  ***   ***   ***        
 
  5.3    
Store all materials under appropriate conditions of temperature, humidity, light
and cleanliness and in a manner to avoid deterioration, theft, interference and
Product contamination.
  ***   ***   ***        
 
  6    
DOCUMENTATION
       
 
  6.1    
Provide *** with complete copies of Process Validation reports for the first***
Batches of each Product.
  ***   ***   ***

Page 11 of 13

--------------------------------------------------------------------------------

 

                      NO.   RESPONSIBILITIES   N/A   Medicis   AAI   6.2    
Provide *** with complete copies of Packaging Validation reports for each
Product.
  ***   ***   ***        
 
              6.3    
Provide the following documentation to *** for each Batch:
  ***   ***   ***        
 
                   
Executed Batch record, including copies of labeling documenting expiration date
and lot number
  ***   ***   ***        
 
                   
Test results for Active Ingredient and Components (upon request)
  ***   ***   ***        
 
                   
Manufacturing release summary: Certificate of Compliance (COC) statement
indicating Product conformance with cGMP, signed by the responsible Quality
individual performing Product approval
  ***   ***   ***        
 
                   
If Product release testing is performed by ***, testing release summary,
Certificate of Analysis (COA), including:
  ***   ***   ***          
- Tests performed
                     
- Test methods used
                     
- Test Specifications
                     
- Test results including retest results if required
                     
- Date of release
                     
- Signature of responsible Quality individual performing testing release
           

Page 12 of 13

--------------------------------------------------------------------------------

 

         
Medicis
      AAI
 
      Quality Assurance Approval:
 
       
Name: Mark A. Prygocki, Sr.
      Name:
 
       
(Print/Type)
      (Print/Type)
Title: Chief Financial Officer
      Title:          
 
       
Signature:
      Signature:
 
       
 
       
Date:
      Date:
 
       

         
 
      AAI
 
      Executive Approval:
 
       
 
      Name:
 
       
 
      (Print/Type)
 
      Title:
 
       
 
       
 
      Signature:
 
       
 
       
 
      Date:
 
       

Page 13 of 13