Exhibit 10.1

 

SECOND AMENDMENT TO

COMMERCIAL OUTSOURCING SERVICES AGREEMENT

 

This Second Amendment to the Commercial Outsourcing Services Agreement (this
“Amendment”) is between AMAG Pharmaceuticals, Inc. (the “Company”) and
Integrated Commercialization Solutions, Inc. (“ICS”).  This Amendment is
effective as of December 1, 2011 (the “Amendment Effective Date”).

 

RECITALS

 

A.           The Company and ICS are parties to a Commercial Outsourcing
Services Agreement dated October 29, 2008, as amended by the First Amendment
dated April 14, 2011 (collectively, the “Agreement”);

 

B.             Pursuant to the Agreement, among other things, the Company
engaged ICS to perform commercialization services for certain pharmaceutical
products; and

 

C.             The parties now wish to amend the Agreement in certain respects.

 

AMENDMENT

 

NOW THEREFORE, the parties agree as follows:

 

1.               Defined Terms.  Capitalized terms in this Amendment that are
not defined in this Amendment have the meanings given to them in the Agreement. 
If there is any conflict between the Agreement and any provision of this
Amendment, this Amendment will control.

 

2.               New Section 3.4.  A new Section 3.4 is added to the Agreement
as follows:

 

3.4.          Consumer Price Index Changes.  The fees set forth on Schedule B
that are expressed in dollars (but not percentages) shall be adjusted annually
to reflect increases in the Consumer Price Index for All Urban Consumers, U.S.
City Average, for Merchant Wholesalers, nondurable goods, published by the
United States Department of Labor on its website at http://www.bls.gov/cpi (the
“CPI-U”).  The adjustment shall be effective on the first day of the month
following the publication by the United States Department of Labor after each
one year anniversary of the Effective Date and shall not exceed [***] percent
([***]%).  By way of example only, if the Effective Date is January 1, 2011, the
adjustment would effective on February 1, 2012 following publication of the
CPI-U on or about January 15, 2012.  Each of the fees set forth on Schedule B
shall be multiplied by the percent increase in the CPI-U, Merchant Wholesalers,
nondurable goods during each prior twelve-month period (for purposes of such
calculation, the fees shall be the fees set forth on a revised Schedule B
provided to the Company on an annual basis).  An example

 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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of the calculation of the increase is set forth on Schedule J.  If publication
of the CPI-U ceases, or if the CPI-U otherwise becomes unavailable or is altered
in such a way as to be unusable, the parties shall agree on the use of an
appropriate substitute index published by the Bureau or any successor agency.

 

3.               Term.  Section 4.1 of the Agreement is deleted in its entirety
and replaced with the following:

 

Term.  This Agreement will be effective as of the Effective Date and will
continue until January 31, 2014 (the “Term”), unless sooner terminated.  The
Term may be extended upon written mutual agreement of the parties, such
extension to be negotiated in good faith six (6) months prior to the expiration
of the Term.

 

4.               Schedule B.  The parties agree that Schedule B to the Agreement
is hereby deleted in its entirety and replaced with the attached Revised
Schedule B.

 

5.               Schedule J.  The parties agree that attached Schedule J to the
Agreement is hereby added to this Agreement.

 

6.               No Other Changes.  Except as otherwise provided in this
Amendment, the terms and conditions of the Agreement will continue in full
force.

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the Amendment
Effective Date.

 

Integrated Commercialization Solutions, Inc.

AMAG Pharmaceuticals, Inc.

 

 

 

 

By:

/s/ Doug Cook

 

By:

/s/ Frank Thomas

 

 

 

 

 

Name:

Doug Cook

 

Name:

Frank Thomas

 

 

 

 

 

Title:

VP, General Manager

 

Title:

CEO

 

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SCHEDULE B

SUMMARY OF FEES

 

Assumptions:

 

·                  AMAG will ship to wholesalers, specialty distributors, large
clinics and hospitals and specialty pharmacies

 

·                 852/867 Reporting included in Monthly Management Fee for ABC,
McKesson and Cardinal.  Any additional reporting may require additional
management and development fees

 

·                 Standard operation procedures will be followed for all
processes.  If any custom work instructions are required, the fees listed may be
impacted

 

Fee

 

Amount

 

Description

3PL Services

 

 

 

 

Monthly Management Fee

 

 

 

 

Customer Service

 

Warehouse & Distribution

 

Returns Management

 

Finance

 

Contract & Chargeback Management

 

Information Technology & Reporting

 

852/867 Reporting — ABC, MCK, CAH

 

 

$[***]/month

 

Address customer inquiries as AMAG

 

Manage Customer Relationship

 

Account Set Up

 

License Verification

 

Order Processing

 

Returns

 

Product Inquiries

 

Inventory pick, pack and ship from ICS distribution center

 

AMAG-Branded Packing Slips

 

Daily Cycle Counts

 

One Physical Inventory Count per annum

 

Inventory Management

 

Invoicing as AMAG

 

Establish Credit Limits

 

Process Returns

 

Call Triage

 

Accounts Receivable Management

 

Collections

 

Maintenance of government and non-government reports

 

Process chargeback requests from wholesalers

 

Debit memo processing

 

Reconciliation reporting

 

Maintenance of AMAG specific DataMart and web reporting tool

 

Maintenance of Crystal Enterprise for web reporting

 

Future upgrades to ICS’ software

 

Includes two licenses to Crystal Enterprise reporting tool

 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Fee

 

Amount

 

Description

Dual Distribution/disaster recovery from Reno Facility

 

$[***]/month

 

Management fee for dual distribution and/or disaster recovery from the Reno
Facility

Customer Service Fees

Order Processing Fee

 

$[***]/order
MANUAL

 

Order is defined as a shipment to a unique address that leaves the distribution
center, regardless of the number of cartons or packages that constitute that
shipment and/or the number of inbound requests for said Order.

 

 

 

$[***]/order
EDI

 

Electronic orders are those that are imported into the system automatically
without manual intervention from customer service.

Customer Setup Fee

 

$[***]/account

 

Assessed for every new account setup completed for an authorized AMAG customer.
This includes license receipt and verification after initial launch setup.

Drop Shipment Surcharge

 

$[***]/order

 

Assessed in addition to Per Order fees outlined above, when drop shipments are
requested. Drop Shipments are defined as shipments that are shipped directly to
an end customer of the wholesaler, and invoiced directly to the wholesaler.

Allocation Fee

 

$[***]/week

 

Order allocations encompass any inbound orders to ICS that needs to have
original conditions revised and/or altered (i.e. manual intervention) as opposed
to allowing the order to automatically flow through the order process system. An
example of an allocation would be a backorder situation.

Rush Order

 

$[***]/order

 

Orders that are received and processed between 3pm and 5pm Eastern Time, at the
request of the AMAG.

Emergency Order

 

$[***]/order

 

Emergency shipments are defined as any order received outside of scheduled
working hours (currently M-F 8am to 5pm Eastern Time) requiring ICS staff to
return to the ICS facility to process the order within the same day.

International Order

 

$[***]/order

 

Fee applied in addition to any order processing fees.

Warehouse & Distribution Fees

Product Storage

 

$[***]/pallet (ambient/marketing materials)

 

 

Monthly fee for controlled room temperature pallet storage.

 

 

$[***]/pallet (premium ambient/marketing materials storage

 

Monthly fee for controlled room temperature pallet storage in Reno.

Order Processing Fees

 

$[***]/order

 

Order is defined as a shipment to a unique address that leaves the distribution
center, regardless of the number of cartons or packages that constitute that
shipment and/or the number of inbound requests for said Order.

 

 

$[***]/unit

 

This fee is in addition to the per order fee for each additional unit that is
shipped in the order.

Hazardous Material Fee

 

$[***]/order

 

Fee in addition to the per order fee for each order that requires hazardous
shipping documentation.

Case Break Fee

 

$[***]/order

 

Fee in addition to the per order fee for each order shipped at the

 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Fee

 

Amount

 

Description

Bulk Shipment Fee

 

$[***]/case

 

vial/bottle level. Bulk shipments incur an additional surcharge per case.

Packing Supplies

 

[***]

 

Any packing materials that ICS must provide for the AMAG to ship Commercial and
Non-Commercial Products.

Freight

 

[***]

 

ICS will share AmerisourceBergen Corporation (ABC) discounted rates with AMAG
with a mark-up of 10%.

Finance

Invoice Processing

 

$[***]/invoice

 

Fee for sending invoice (electronic or paper) to customer, collection efforts
and cash posting.

Credit/Rebill Transactions

 

$[***]/each

 

Any AMAG requested credit or rebill transactions keyed in the system.

Credit Verification Reports — Dun & Bradstreet

 

$[***]/report

 

Any AMAG requested credit report. Dun & Bradstreet (D&B) typically tracks
information for corporate customers.

Credit Verification Reports — Experian

 

$[***]/report

 

Any AMAG requested credit report. Experian typically tracks information for
individual customers such as physicians.

Returns Management

RGA Initiation

 

$[***]/RGA

 

RGA: Returned Goods Authorization.

 

Fee for processing return request from customer and sending the customer an RGA.

Return Processing

 

$[***]/unit

 

Receipt of physical return at the distribution center. Fee includes itemizing
contents of the return

Return Processing

 

$[***]/line

 

Fee applied in addition to Return Processing fee for handling and counting
additional lines.

Returns Storage

 

$[***]/pallet

 

Monthly fee for controlled room temperature pallet storage.

Contract and Chargeback Management

Chargeback Processing — Manual

 

$[***]/line

 

Each SKU is considered a line. If customers cannot send information
electronically, they will mail information for manual processing. ICS and
Customer must have copies of contracts in order to process chargebacks without
manual intervention.

Chargeback Processing — Electronic

 

$[***]/line

 

Each SKU is considered a line. Customers will typically send chargebacks
electronically according to HDMA standards.

Information Technology and Reporting

Custom Reports

 

$[***]/hour

 

Fee for reports created that are not part of the standard reports provided by
ICS. Hourly report creation fees assessed for initial report creation but not
thereafter for running the same report.

Custom Development Services

 

$[***]/hour

 

Fee for customized processes developed at the request of AMAG. Hourly fees will
be assessed and approved by AMAG before development work is to begin.

Additional Fees

Product Destruction

 

[***]

 

Destruction of product per AMAG’s request and instruction.

FedEx/UPS/Postage Expenses

 

[***]

 

Freight expenses for shipments of documents or any other shipments related to
daily operations on behalf of AMAG.

Pre-Approved Assessorial Labor Charge - Warehouse

 

$[***]/hour

 

This fee will be assessed for work that is completed outside the scope of the
agreed upon services outlined in the Services

 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

5

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Fee

 

Amount

 

Description

 

 

$[***]/hour overtime

 

Agreement. AMAG must provide prior approval before assessorial labor takes
place.

Pre-Approved Assessorial Labor Charge — Office Staff

 

$[***]/hour

 

This fee will be assessed for work that is completed outside the scope of the
agreed upon services outlined in the Services Agreement. AMAG must provide prior
approval before assessorial labor takes place.

Pre-Approved Assessorial Labor Charge — QC, Management

 

$[***]/hour

 

This fee will be assessed for work that is completed outside the scope of the
agreed upon services outlined in the Services Agreement. AMAG must provide prior
approval before assessorial labor takes place.

ICS Travel

 

[***]

 

This is for AMAG requested travel. AMAG must provide prior approval before
travel takes place.

 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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SCHEDULE J

EXAMPLE OF PRICE ADJUSTMENT CALCULATION

 

Effective Date:

January 1, 2011

CPI-U for “Merchant Wholesaler, nondurable goods”

January 2009: [***]

CPI-U for “Merchant Wholesaler, nondurable goods”

January 2010: [***]

(published on or about January 15, 2012)

 

 

 

Change in CPI-U:

[***]

Percentage change in CPI-U:

[***]

 

 

[***]

 

 

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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