Exhibit 10.16
EXECUTION VERSION
DEVELOPMENT AND MANUFACTURING AGREEMENT
     THIS DEVELOPMENT AND MANUFACTURING AGREEMENT (this “Agreement”) is made
effective the 27th day of February, 2008, among Cornerstone BioPharma, Inc., a
Delaware corporation (“Company”), NEOS Therapeutics, L.P., a Texas limited
partnership (“Manufacturer”) and Coating Place, Inc., a Wisconsin corporation
(“Supplier”). Manufacturer, Supplier, and Company are sometimes referred to
herein individually as a “Party” and collectively as the “Parties.”
RECITALS
     WHEREAS, Manufacturer is in the business of developing, compounding,
processing, filling, testing and packaging human pharmaceutical products;
     WHEREAS, Supplier is in the business of supplying Wurster fluid bed coating
for encapsulation of solid particulate materials used in the manufacture of
human pharmaceutical products and, additionally, owns certain drug resin complex
technologies;
     WHEREAS, Company is in the business of research, development, marketing and
sales of human pharmaceutical products; and
     WHEREAS, the Parties desire to enter into this Agreement pursuant to which
each will contribute its respective expertise and/or technologies with a view
towards developing, manufacturing, marketing, and selling a [***]
Hydrocodone/[***] suspension [***] (the “Product”), subject to obtaining
necessary approvals from the United States Food and Drug Administration (“FDA”)
[***].
     NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements set forth hereby and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto have agreed and do hereby agree as follows:
     1. Definitions. In addition to the other terms defined elsewhere herein,
the following terms and phrases shall have the following meanings when used in
this Agreement.
     [***]
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 1 of 24

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

 

     “CMC” means the chemistry, manufacturing and controls section(s) and data
in the [***].
     “Development Work” means all the activities specified to be performed by
Supplier or Manufacturer under this Agreement including without limitation work
related to formulation of the Product, developing and documenting the
manufacturing process related to the Product, preparing the CMC section of the
[***] for the Product, and manufacturing the Product for use in connection with
the [***]submission.
     “DMF” means, in relation to Supplier’s Drug Resin Complex, the Drug Master
File containing all the information on the production and control of the Drug
Resin Complex.
     “Drug Resin Complex” means the certain drug resin complex technologies that
result in products with API ionically bound to an ion resin complex that may be
coated for sustained release characteristics, which technologies are the subject
of the Supplier Patent Applications (as defined in Section 9.9).
     “FDCA” means the federal Food, Drug and Cosmetic Act, as amended, and the
regulations promulgated thereunder.
     “GAAP” means United States generally accepted accounting principles.
     “GMP” or “cGMP” means the FDA’s current good manufacturing practices, as
specified in Title 21, Code of Federal Regulations, Part 210, and applicable FDA
guidance documents, as the same shall be amended from time to time.
     “Laws” means any and all federal, state, and local laws, rules,
Regulations, orders and requirements applicable to the Parties in performance of
this Agreement including without limitation the following: the Prescription Drug
Marketing Act of 1987, the Federal Food, Drug and Cosmetic Act, the Federal or
State Regulatory Authorities (as defined below), and all regulations and other
guidance or requirements of the FDA or any equivalent agency.
     “Manufacturer Adjusted COGs” means [***], all calculated in accordance with
GAAP.
     “Manufacturing Site” means Manufacturer’s facilities where the Product
formulation and manufacturing process are developed and where Product samples
and quantities of Product for commercial sale are manufactured, stored and
handled.
     “Net Profits” means [***], all calculated in accordance with GAAP.
     “Supplier Adjusted COGs” means [***], all calculated in accordance with
GAAP.
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 2 of 24

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

 

     “Territory” means the United States of America and Canada (upon approval by
the Canadian Regulatory Authority), including each of the states, provinces,
territories, possessions and protectorates thereof, the District of Columbia,
and the Commonwealth of Puerto Rico.
     2. General.
     2.1 Project Overview. Supplier, Manufacturer and Company each specialize in
separate and distinct processes needed for successful commercialization of the
Product, and each Party wishes to contribute its respective expertise and
technologies to further that end. Supplier and Manufacturer shall license their
respective intellectual property necessary to manufacture and commercialize the
Product. Supplier shall supply Manufacturer with the Drug Resin Complex for
manufacture of Product. Manufacturer shall develop, formulate, test and package
the Product for delivery to Company. Company shall prepare and prosecute any
applicable FDA approvals and, upon approval, shall market, sell and distribute
the Product in the Territory. In turn, as more specifically set forth in this
Agreement, each Party shall share equally in the Net Profits.
     2.2 Federal or State Regulatory Authorities; Regulations. The Parties are
regulated by the FDA, the U.S. Drug Enforcement Administration (DEA), the
Environmental Protection Agency (EPA), the Occupational Safety and Health
Administration (OSHA), the Federal Trade Commission (FTC), as well as other
federal agencies and ancillary state authorities (hereinafter referred to
individually and collectively as “Federal or State Regulatory Authorities”). The
Parties further acknowledge that each of these Federal or State Regulatory
Authorities has the authority to impose restrictions on their operations that
could result in the commercial infeasibility of the objectives of this
Agreement. Such restrictions may be the result of statutory or regulatory
change, changes in non-regulatory guidances and policies issued by such Federal
or State Regulatory Authorities, or enforcement actions, all of which are
outside of their control. The regulatory environment under which the Parties
operate, including current statutory and regulatory requirements, guidances, and
policies, as well as any changes to such statutory and regulatory requirements,
guidances, and policies promulgated or otherwise made effective after the date
of execution of this Agreement are hereinafter referred to as the “Regulations.”
Each of the Parties shall use reasonable efforts to keep all Parties apprised of
statutory or regulatory changes, changes in non-regulatory guidances and
policies issued by such agencies (i.e., changes to the Regulations) or
enforcement actions that could affect the successful achievement of the
objectives of this Agreement.
     2.3 Exclusivity/Non-Competition. During the Term of this Agreement, except
as otherwise permitted hereunder (e.g., bankruptcy of Manufacturer), Company
agrees not to purchase the Product, or any composition that directly competes
with the Product, from any person or entity other than Manufacturer or to
designate any other person or entity as a manufacturer of the Product, or any
composition that competes with the Product, in supplemental filings with the
FDA. During the Term of this Agreement, Manufacturer agrees not to (and not to
assist any other person or entity to) develop, formulate, manufacture or supply
the Product to any other person or entity, and, except as otherwise permitted
hereunder (e.g., bankruptcy of Supplier), agrees not to purchase the Drug Resin
Complex from any person or entity other than Supplier. During the Term of this
Agreement, Supplier agrees not to supply (or to license any

Page 3 of 24

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

 

other person or entity to supply) the Drug Resin Complex related to the Product
to any other person or entity.
     3. Formulation and Manufacturing Process Development.
     3.1 Manufacturer’s Site. Manufacturer shall, at its expense, establish the
Manufacturing Site as an FDA certified and approved GMP facility by the date
specified in the Product Development Plan (as defined below) and promptly shall
provide Company with a copy of the written GMP facility approval it receives
from the FDA. The Parties acknowledge that Manufacturer is in the process of GMP
recertification by the FDA and that it expects such approval prior to commencing
the clinical [***] study. However, in the event that Manufacturer has not
achieved GMP recertification from the FDA during the development phase,
Manufacturer shall provide sufficient technology transfer and personnel to
Supplier to transfer the development and manufacture of Product to Supplier’s
facility or a third-party facility as agreed by the Parties, such approval not
to be unreasonably withheld. If, pursuant to the preceding sentence, Supplier
assumes Manufacturer’s manufacturing responsibility, then Supplier shall assume
the rights and obligations of Manufacturer under this Agreement with respect to
the manufacture of the Product.
     3.2 Product Development Plan. The Parties agree to jointly develop a plan
of action and milestones to perform the Development Work (the “Product
Development Plan”), which will be negotiated in good faith, duly executed by the
Parties, and attached hereto as Exhibit A to this Agreement. All development
activities shall be performed by Manufacturer in compliance with all applicable
Laws. Manufacturer and Supplier shall use commercially reasonable efforts to
complete the development of the Product in a timely fashion consistent with the
Product Development Plan, and keep Company informed of the progress and status
of the development activities. Upon successful completion of the Development
Work, the Parties’ mutually agreed specifications for the Product (the
“Specifications”) will be attached hereto as Exhibit B. Except as set forth in
Section 3.4, fees for the development activities for the Product shall be as
provided in the Product Development Plan. Supplier shall invoice Manufacturer,
and Manufacturer shall invoice Company, for each of its completed steps of the
Product Development Plan monthly. Invoices shall contain details regarding the
steps completed and the amount being charged for such completed work. Payments
of invoices shall be in accordance with Section 7.5(a).
     3.3 CMC. Manufacturer shall, in consultation with Company’s development
staff, prepare and provide regulatory data and documentation and draft CMC
respecting the manufacture of the Product, all in compliance with applicable
Regulations. Company shall critically review and provide corrections to the CMC
section in a timely fashion. Manufacturer shall use commercially reasonable
efforts to be prepared for any FDA pre-approval inspection of the Manufacturing
Site. Manufacturer shall cooperate with Company to respond to any FDA
information requests relating to the CMC section that may arise during the [***]
submission, Federal or State Authorities Regulatory review and approval
processes and, upon Company’s reasonable request, will provide other assistance
related to obtaining [***] approval.
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 4 of 24

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

 

     3.4 Retesting; Manufacturer Adjusted COGs; Supplier Adjusted COGs. Company
acknowledges and agrees that, because this is a development project,
Manufacturer and Supplier may need to repeat certain steps in connection with
each FDA approval if testing indicates that additional work is necessary or if
additional work is requested by the FDA. In addition, Company acknowledges and
agrees that additional work may be required by the FDA after its inspection or
review of the documents filed with the FDA. Manufacturer and Supplier will
attempt to minimize any deviations from the Product Development Plan; however,
if additional steps or work are determined to be necessary by Manufacturer or
Supplier or the FDA to be necessary, Manufacturer or Supplier shall inform
Company of the nature, extent and expected costs associated with such additional
steps or work and Company and Manufacturer or Supplier, as the case may be,
shall negotiate in good faith to amend the Product Development Plan to provide
for same.
     3.5 Project Coordination. During the development phase, at least one
representative of each Party will participate in one weekly telephone conference
and one quarterly face-to-face conference at a mutually agreeable location to
review, coordinate, and discuss issues and progress regarding Product
development. For the avoidance of doubt, such representatives shall have no
authority to amend or waive compliance with the terms and conditions of this
Agreement, to resolve differences of opinion between the Parties regarding the
interpretation of this Agreement or to approve actions of the Parties that are
inconsistent with this Agreement.
     4. Manufacture of the Product.
     4.1 General. Following approval [***] by the FDA, and during the Term of
this Agreement, Manufacturer agrees to manufacture and supply the Product, the
Product of which shall conform to the Specifications, Regulations, and cGMPs.
Manufacturer or Supplier shall notify Company if there is any issue with time
lines and delivery of Product under this Agreement. The Specifications may be
amended from time to time by written agreement of the Parties without the
necessity of amending this Agreement.
     4.2 Testing and Documentation. Promptly following each manufacturing run,
Manufacturer shall (a) test each lot of finished Product in accordance with
Parties’ agreed upon written Product Specifications; and (b) certify within a
commercially reasonable period of lot release that: (i) each lot of finished
Product shall conform with all Regulations of all applicable Federal or State
Regulatory Authorities, (ii) each lot was produced and tested in accordance with
the Specifications, (iii) each lot is in compliance with cGMP requirements and
other applicable documents including the [***] and DMF for Product, and
(iv) each lot complies with any other regulatory documents that contain
procedures agreed upon in writing between the Parties. Manufacturer shall retain
all relevant records pertaining thereto as may be required by GMP and other
applicable Laws.
     4.3 Acceptance of Lots. Company shall have a period of thirty (30) days
following receipt of samples and completed batch records for a Product lot from
Manufacturer to notify Manufacturer that the Product lot is rejected. Rejection
of the Product shall be based on: (a) non-
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 5 of 24

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

 

conformance to Specifications; (b) adulteration or misbranding within the
meaning of the FCDA, or (c) Product not having been prepared under compliance
with cGMP or other applicable Laws. Along with rejection, Company shall provide
an accompanying report of analysis (including the Product sample and lot number
from the lot analyzed) conducted in accordance with the testing protocols in the
Product Specifications set forth in the [***]. If no such notice of rejection of
non-conforming Product is received by Manufacturer in accordance with the
procedure and time frame described herein, Company shall be deemed to have
accepted such delivery of Product.
     4.4 Remedies for Rejection of a Lot. Manufacturer shall cooperate in good
faith to resolve the rejection of a lot. Within thirty (30) days from
Manufacturer’s receipt of notice of rejection, Manufacturer shall notify Company
whether or not it accepts the basis for Company’s rejection. If Manufacturer’s
and Company’s testing data disagrees, each of Manufacturer and Company hereby
agree to submit a sample of the rejected Product to a mutually agreed upon
third-party laboratory for testing in accordance with the Product
Specifications. The fees and expenses for such laboratory testing shall be borne
equally by the Parties if the Product is found to be non-conforming and
otherwise by Company. Upon rejection of Product, Manufacturer shall use
commercially reasonable best efforts to replace such rejected Products.
     5. Supply of Drug Resin Complex and Materials for Commercial Supply.
     5.1 Drug Resin Complex.
          (a) Following approval [***] by the FDA, and during the Term of this
Agreement, Supplier agrees to supply Drug Resin Complex to Manufacturer with all
quantities needed to produce Product in any Firm Zone (as defined below) from
time to time, which Drug Resin Complex shall conform to and be supplied in
accordance with the DMF, Laws, and cGMPs. Supplier shall notify both
Manufacturer and Company, if there is any issue with time lines and delivery of
Drug Resin Complex to support quantities in any Firm Zone.
          (b) Supplier shall (i) test each lot of Drug Resin Complex in
accordance with the Specifications; and (ii) certify that: (A) each lot of Drug
Resin Complex shall conform with all Laws, (B) each lot was produced and tested
in accordance with the Specifications, (C) each lot is in compliance with cGMP
requirements and other applicable documents including the [***] and DMF for
Product, and (D) each lot complies with any other regulatory documents that
contain procedures agreed upon in writing between the Parties. Supplier shall
retain all relevant records pertaining thereto as may be required by GMP and
other applicable Laws.
     5.2 Materials. Manufacturer shall source all bulk materials, active
ingredients or inactive ingredients and other manufacturing and test materials
(other than Drug Resin Complex) in order to manufacture Product in accordance
with the Specifications, such items to be in accordance with the United States
Pharmacopeia (“USP”) and other Laws. Manufacturer shall perform all testing of
such Drug Resin Complex required by the applicable Specifications. Supplier
shall similarly source all materials needed by it for production of Drug Resin
Product.
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 6 of 24

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

 

     6. Regulatory Filings.
     6.1 Filing Fees. Company shall be solely responsible for all costs and
expenses directly related to filings required by the FDA, with the exception of
the Pharmaceutical Development Utility Fee Act (“PDUFA”) fees, which shall be
shared equally by the Parties. Upon written demand by Company, each of
Manufacturer and Supplier shall within thirty (30) days reimburse Company for
its share of the PDUFA fees.
     6.2 Designation as Manufacturer. Manufacturer shall be responsible for
providing all documentation necessary for Company to designate Manufacturer as
the manufacturer and supplier of the Product [***]. Manufacturer shall be
available for any required FDA inspections of its facility or its documentation.
Manufacturer shall have no obligation to manufacture the Product unless and
until Manufacturer has successfully been designated and approved as a
manufacturer [***].
     6.3 [***] DMF References. Supplier shall be responsible for preparing and
filing the DMF for the Drug Resin Complex at its sole expense. Supplier promptly
thereafter shall issue a letter to FDA Drug Master File Staff granting the
Company reference authorization to its DMF for the Drug Resin Complex used in
the manufacture of the Product.
     6.4 [***] Submission. After Manufacturer successfully completes the
development and manufacture of samples of Product, Company shall have [***]
studies performed [***]. Company will, at its sole and exclusive expense,
arrange and pay for the performance of the studies that are necessary, if such
studies are successful, to satisfy the requirements of the FDA [***] (including
contracting with, at its sole and exclusive expense, the contract research
organization(s) (“CRO”) and approving the protocols and contracts for applicable
[***] studies [***]), and subject to successful completion of those studies, for
preparing and submitting to the FDA [***] to obtain regulatory approval for the
Product. Company shall use commercially reasonable efforts to receive regulatory
approval for the Product within [***] after Company submits [***] for the
Product to the FDA.
     6.5 Remedial Actions. If the [***] study for the Product fails or if [***]
the Product is rejected by the FDA, the Parties will investigate the reasons why
the [***] study for the Product failed or Company’s [***] was rejected by the
FDA, and the Parties will discuss the results of the investigation and the
additional research and development work they believe is necessary for the
Product and the anticipated costs to perform the additional research and
development work and to have the additional study or studies performed. If
Company decides to proceed with such additional work and/or studies, then
Manufacturer and Supplier will perform at Company’s request such additional
research and development work for the Product, and Company will pay Manufacturer
and Supplier for such additional work Manufacturer and Supplier perform for
Company based on a new Product Development Plan.
     7. Price; Sales.
     7.1 Compensation. Compensation for Parties shall be as follows: (a) Two
Hundred Fifty Thousand Dollars ($250,000) to be paid by Company to Manufacturer
upon execution of
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 7 of 24

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

 

this Agreement, (b) Two Hundred Fifty Thousand Dollars ($250,000) to be paid by
Company to Supplier upon execution of this Agreement, and (c) after Product is
launched, the Parties shall share Net Profits in equal parts.
     7.2 Cost Determination. [***]
     7.3 Selling Price Determination. Selling price, changes in selling price,
or pricing strategy related to selling price shall be determined by the Company
in its sole discretion (a) following a consultation with Supplier and
Manufacturer and (b) using a commercially reasonable methodology.
     7.4 Production Forecasts.
          (a) Manufacturer shall use commercially reasonable efforts to
manufacture and supply sufficient quantities of the Product to fulfill Company’s
anticipated requirements as indicated by actual purchase orders submitted by
Company from time to time during the Term; provided, that Manufacturer shall
have at least three (3) months after receipt of a purchase order to deliver the
Product and that Company shall have continued to provide Manufacturer three
(3) months in advance with a noncancellable, firm three (3) month purchase order
(the “Firm Zone”) and a non-binding rolling six (6) month forecast of
anticipated orders outside the Firm Zone. In the event that the Company at any
time fails to provide the Manufacturer with such purchase order and/or forecast,
the Manufacturer shall have no obligation to produce any quantities of Products
in excess of the quantities set forth in the last non-binding forecast received
by Manufacturer from the Company.
          (b) From time to time, due to significant unforeseen circumstances,
Company may deliver to Manufacturer a Purchase Order for Product volumes in
excess of those specified in any forecast. In the event that Company delivers a
purchase order requesting that Manufacturer provide Product volumes in excess of
the last non-binding forecast received by Manufacturer from the Company,
Manufacturer shall use commercially reasonable efforts to provide Company with
such excess Product volumes.
          (c) Promptly following Manufacturer’s receipt of each purchase order
and rolling forecast, Manufacturer shall place counterpart purchase orders and
non-binding forecasts with Supplier regarding its requirements for Drug Resin
Complex.
     7.5 Invoicing; Payments; Audit.
          (a) Supplier and Manufacturer will render invoices in connection with
their shipments of Drug Resin Complex and Product hereunder, which invoices
shall be due and payable by Manufacturer or Company as the case may be within
thirty (30) days after receipt.
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 8 of 24

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

 

          (b) After Product is launched, a third of Net Profits shall be paid by
Company to Supplier and a third of the Net Profits shall be paid by Company to
Manufacturer, which payments shall be accompanied by a report detailing the
calculation of such Net Profits and paid within thirty (30) days after the end
of (i) each of the first six (6) full calendar months following commercial
launch, and (ii) each calendar quarter thereafter.
          (c) In determining the direct costs that any of the Parties attributes
to the Product (“Product Direct Costs”) for purposes of calculating Manufacturer
Adjusted COGS, Supplier Adjusted COGS or Net Profits, as the case may be, the
Parties shall not include any costs or expenses to the extent arising out of or
relating to (i) any contract or agreement entered into prior to the date of this
Agreement, or (ii) any event or occurrence happening prior to the date of this
Agreement.
          (d) In the event of a dispute regarding Product Direct Costs, the
Parties shall attempt to resolve the discrepancy in good faith by providing such
financial information as may be required, which information shall be
Confidential Information under Section 10. If the Parties are unable to resolve
the dispute informally, each of the Parties shall have the right, at its own
expense and at any reasonable time or times, to cause a third party independent
auditor not engaged on a contingency basis and approved by the audited Party
(not to be unreasonably withheld) to inspect and audit the books and records of
the other Party solely to verify Product Direct Costs attributed to their
respective contribution for a period of two (2) years from and after the period
in which such Product Direct Costs were incurred; provided, however, that once
Product Direct Costs have been audited with respect to any period, such Product
Direct Costs for such period shall not again be subject to audit. Any such audit
(i) shall be conducted after reasonable prior notice, during normal business
hours and at the location(s) where such books and records are normally kept and
(ii) may not be conducted more than once in any given twelve (12) month period.
The auditor shall only report to the Parties the amount, if any, of any
correction (each a “Correction Amount”) and shall not disclose to the Parties
either the detailed or underlying information supporting such conclusion or any
of such auditor’s work papers. The results of the Audit shall be Confidential
Information, shall be shared concurrently with all the Parties, and shall be
binding on the Parties. Notwithstanding the foregoing, in the event that any
such audit results in a Correction Amount, it shall be accounted for in the
following monthly or quarterly payment under Section 7.5(b) as follows:
               (i) If Product Direct Costs originally were overstated by a
Party, then such Party’s share of Net Profits shall be reduced by an amount
equal to two-thirds of the Correction Amount and the other Parties’ respective
share of Net Profits for such monthly or quarterly period shall be increased by
an amount equal to one-third of the Correction Amount.
               (ii) If Product Direct Costs originally were understated by a
Party, then such Party shall be entitled to a payment from monthly or quarterly
Net Profits prior to and in preference to the other Parties in an amount equal
to the Correction Amount. Following such preferential payment, the remaining Net
Profits for such monthly or quarterly period shall be allocated to the Parties
in equal shares as contemplated by Section 7.5(b).

Page 9 of 24

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

 

     8. Representations and Warranties.
     8.1 Mutual Representations and Warranties. Each Party hereby represents and
warrants to each of the other Parties as follows:
          (a) This Agreement has been duly authorized by all necessary corporate
action, has been duly executed and delivered, and is a legal and valid
obligation binding upon such Party and enforceable in accordance with its terms.
Such Party has the full power and authority to enter into this Agreement and to
carry out the obligations contemplated hereby.
          (b) Delivery and performance of this Agreement by such Party does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it is bound, nor violate any Regulations of laws
of any court having jurisdiction over it.
     8.2 Manufacturer’s Representations and Warranties. Manufacturer hereby
represents and warrants to Company and Supplier as follows:
          (a) As of the date hereof, Manufacturer has the right to license the
Manufacturer IP to Company for purposes of the Development Work and the
commercialization of the Product. Manufacturer owns all right, title and
interest in and to, or otherwise controls, the Manufacturer IP.
          (b) Manufacturer has not, and during the Term and will not, grant any
right to any third party relating to the Manufacturer IP in a manner, or pursue
any other activity that would otherwise conflict with the rights granted to
Company hereunder.
          (c) As of the date hereof, Manufacturer has no actual knowledge that
(i) any third party is infringing any of Manufacturer IP or misappropriating or
using Manufacturer IP, and (ii) the Manufacturer IP, as applied to the Product,
infringes any third party intellectual property rights. Manufacturer has not
received any written communication from a third party claiming that intellectual
property rights owned or controlled by such third party would be misappropriated
or infringed by the use of the Manufacturer IP.
          (d) As of the date hereof, Manufacturer has not been served with any
interference action or litigation with respect to the Manufacturer IP and
Manufacturer has not received any written communication that expressly threatens
interference actions or other litigation before any patent office, court, or any
other governmental entity in any jurisdiction in regard to any of the
Manufacturer IP. Manufacturer represents and warrants that as of the date of
this Agreement it is not aware of any prior art or other information that would
render any patent under the Manufacturer IP invalid. Manufacturer represents and
warrants that as of the date of this Agreement it is not aware of any patent or
any other third party intellectual property right that would be infringed by
Manufacturer in the fulfilling its obligations under this Agreement.
          (e) Without limiting the generality of the foregoing, Manufacturer
represents and warrants that it has the right to provide to Company the Product
and information provided by Manufacturer hereunder, and to grant Company the
right to use such Product and information for the conduct of Company’s rights
and obligations hereunder.

Page 10 of 24

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

 

          (f) Manufacturer will not use, in any capacity associated with or
related to the manufacture of the Product, the services of any persons who have
been debarred under 21 U.S.C. § 335a(a) (or who become the subject of new
debarment proceedings commenced after the Effective Date) or any comparable Law.
Furthermore, neither Manufacturer nor, to the knowledge of Manufacturer, any of
its officers, employees, or consultants has been convicted of an offense under
(i) either a federal or state law that is cited in 21 U.S.C. § 335a as a ground
for debarment, denial of approval, or suspension, or (ii) any other Law cited in
any comparable regulatory act as a ground for debarment, denial of approval or
suspension.
          (g) Following Manufacturer’ receipt of the FDA’s approval of the
Manufacturing Site as a GMP manufacturing facility, Manufacturer will use its
commercially reasonable efforts to thereafter maintain throughout the remainder
of the Term all manufacturing consents necessary for the performance of its
obligations hereunder.
          (h) The manufacture, packaging, processing, storage, disposal and
other handling of the Product by Manufacturer until delivery to Company’s
designated carrier or freight forwarder at the Manufacturing Site shall be in
material accordance with and conform to the Specifications, GMP, and applicable
Regulations. Product shall not be adulterated or misbranded within the meaning
of the Federal Food, Drug and Cosmetic Act.
     8.3 Supplier’s Representations and Warranties. Supplier hereby represents
and warrants to Company and Manufacturer as follows:
          (a) As of the date hereof, Supplier has the right to license the
Supplier IP to Manufacturer for purposes of the Development Work and the
commercialization of the Product. Supplier owns all right, title and interest in
and to, or otherwise controls, the Supplier IP.
          (b) Supplier has not, and during the Term and will not, grant any
right to any third party relating to the Supplier IP in a manner, or pursue any
other activity, that would otherwise conflict with the rights granted to Company
and Manufacturer hereunder.
          (c) As of the date hereof, Supplier has no actual knowledge that
(i) any third party is infringing any of Supplier IP or misappropriating or
using Supplier IP, and (ii) the Supplier IP, as applied to the Drug Resin
Complex or the Product, infringes any third party intellectual property rights.
Supplier has not received any written communication from a third party claiming
that intellectual property rights owned or controlled by such third party would
be misappropriated or infringed by the use of the Supplier IP.
          (d) As of the date hereof, Supplier has not been served with any
interference action or litigation with respect to the Supplier IP, and Supplier
has not received any written communication that expressly threatens interference
actions or other litigation before any patent office, court, or any other
governmental entity in any jurisdiction in regard to any of the Supplier IP.
Supplier represents and warrants that as of the date of this Agreement it is not
aware of any prior art or other information that would render any patent under
the Supplier IP invalid. Supplier represents and warrants that as of the date of
this Agreement it is not aware of any patent or any other third party
intellectual property right that would be infringed by Supplier in the exercise
or practice of this Agreement.

Page 11 of 24

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

 

          (e) As of the time of release of Drug Resin Complex to Manufacturer in
accordance with this Agreement, all Drug Resin Complex released (i) will conform
to the applicable Specifications, and (ii) will have been manufactured in
material accordance with GMP (if applicable) and all applicable Laws and in
accordance with the applicable certificates of analysis.
          (f) Without limiting the generality of the foregoing, Supplier
represents and warrants that it has the right to provide to Manufacturer the
Drug Resin Complex and information provided by Supplier hereunder, and to grant
Company and Manufacturer the right to use such Drug Resin Complex and
information for the conduct of Company and Manufacturer’s rights and obligations
hereunder.
          (g) Supplier will not use, in any capacity associated with or related
to the supply of the Drug Resin Complex, the services of any persons who have
been debarred or who are currently under investigation for possible debarment
under 21 U.S.C. § 335a(a) or any comparable Regulations. Furthermore, neither
Supplier nor, to the knowledge of Supplier, any of its officers, employees, or
consultants has been convicted of an offense under (i) either a federal or state
law that is cited in 21 U.S.C. § 335a as a ground for debarment, denial of
approval, or suspension, or (ii) any other Regulations cited in any comparable
regulatory act as a ground for debarment, denial of approval or suspension.
     8.4 Company’s Representations and Warranties. Company hereby represents and
warrants to Supplier and Manufacturer as follows:
          (a) Company is the owner or has the lawful right to use or grant the
right to use any and all trademarks and trademark rights, trade names and trade
name rights, service marks and service mark rights, service names and service
name rights, brand names, copyrights and copyright rights, trade dress, business
and Product names, logos, slogans, other proprietary information and related
documentation, and all pending applications for and registrations of trademarks,
service marks and copyrights that (i) it provides to Manufacturer in connection
with the manufacture of the Product, or (ii) it uses in connection with the
marketing, sale or distribution of Product.
          (b) Company will not make any claims in any packaging, labeling,
advertising or promotional material regarding the Product that it knows to be
false.
          (c) As of the date hereof, Company has not been served with any
interference action or litigation with respect to the Product and Company has
not received any written communication that expressly threatens interference
actions or other litigation before any patent office, court, or any other
governmental entity in any jurisdiction in regard to the Product. Company
represents and warrants that as of the date of this Agreement it is not aware of
any prior art or other information that would render any patent under the
Supplier IP or the Manufacturer IP invalid. Company represents and warrants that
as of the date of this Agreement it is not aware of any patent or any other
third party intellectual property right that would be infringed by Company in
fulfilling its obligations under this Agreement.

Page 12 of 24

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

 

          (d) Company will not use, in any capacity associated with or related
to the clinical development and FDA submission of the Product, the services of
any persons who have been debarred or who are currently under investigation for
possible debarment under 21 U.S.C. § 335a(a) or any comparable Regulations.
Furthermore, neither Company nor, to the knowledge of Company, any of its
officers, employees, or consultants has been convicted of an offense under
(i) either a federal or state law that is cited in 21 U.S.C. § 335a as a ground
for debarment, denial of approval, or suspension, or (ii) any other Regulations
cited in any comparable regulatory act as a ground for debarment, denial of
approval or suspension.
     9. Intellectual Property.
     9.1 Existing Inventions and Know-How. Ownership of existing inventions and
know-how of any Party or future inventions and know-how of any Party made
outside the scope of this Agreement shall remain the sole property of such
Party, subject to any licenses granted in this Agreement.
     9.2 Inventions and Know-How Developed Under this Agreement by a Party. Any
and all inventions (including all results and know-how), whether or not
patentable, that is conceived, reduced to practice, or otherwise developed
within the scope of this Agreement solely by a single Party’s officers,
employees, contractors and agents shall be owned solely by such Party along with
all related intellectual property rights (“Sole Inventions”), subject to any
licenses granted in this Agreement.
     9.3 Inventions and Know-How Developed Jointly Under this Agreement. All
other inventions (including all results and know-how), whether or not
patentable, that is jointly conceived, reduced to practice, or otherwise
developed by officers, employees, contractors and agents of two or more Parties
under the scope of this Agreement shall be owned jointly by such Parties along
with all related intellectual property rights (“Joint Inventions”).
     9.4 Joint Invention Rights. Patent applications on Joint Inventions may be
filed only if the relevant Parties agree to file jointly on them. If such
Parties agree to file for and obtain patents on Joint Inventions, all expenses
incurred therein shall be shared equally, except that the employer of each
inventor, if applicable, will pay the inventor’s compensation. If a patent is
obtained on a Joint Invention, no such joint Party shall transfer its interest
in such patent to a third party unless the other Party agrees to do so.
Notwithstanding the foregoing, the Parties shall be entitled to transfer their
respective rights to their respective Affiliates and successors in interest.
Subject to the exclusivity arrangements described in this Agreement, each Party
is free to use and sublicense Joint Inventions to third parties without any
further obligations or accounting to any other Party; provided, however, that
nothing in this Section 9.4 gives another Party any rights with respect to
intellectual property that is owned solely by the other Party.
     9.5 Assignments of Inventions. Each Party shall, and shall cause its
officers, employees, contractors and agents to, (a) execute, all documents,
including, without limitation, assignments of inventions and discoveries and all
related intellectual property rights, and (b) perform such acts as may be
necessary, useful or convenient to secure or enforce for the other Party
statutory protection including patent, trademark, trade secret or copyright
protection within the Territory for all intellectual property assigned to it
pursuant to this Section 9.

Page 13 of 24

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

 

     9.6 Regulatory Files. Company shall own all regulatory files with respect
to the Product including without limitation regulatory data and documentation
prepared by Manufacturer respecting the manufacture of the Product, including
without limitation the [***] filing with the FDA related to the Product.
     9.7 Manufacturer IP. Manufacturer shall provide the intellectual property
necessary for each Party to perform under this Agreement including all
applicable know-how, trade secrets and United States Patent Application Serial
Nos. 11/068,124 and 60/940,956 (the “Manufacturer IP”).
     9.8 License of Manufacturer IP. Subject to the terms of this Agreement,
Manufacturer hereby grants to Company, and Company hereby accepts, an exclusive,
irrevocable license, with right to sublicense, under the Manufacturer IP (a) for
performance of Company and Supplier’s respective rights and obligations under
this Agreement related to the Product in the Territory, and (b) to use, make,
have made and otherwise to sell, market and commercialize the Product (as
successfully developed under this Agreement) in the Territory; provided,
however, that Company and Supplier shall only have the right under this
Section 9.8 to make or have made such Product by a third-party manufacturer
(i) if Manufacturer suffers an Insolvency Event, (ii) if following
Manufacturer’s receipt of the FDA’s approval of the Manufacturing Site as a GMP
manufacturing facility, the FDA revokes such approval, or (iii) if Manufacturer
is unable to manufacture such Product for a period exceeding ninety (90) days
due to Force Majeure or other cause.
     9.9 Supplier IP. Supplier shall provide the intellectual property necessary
for each Party to perform under this Agreement including with respect to its
technologies which are the subject of U.S. Patent Application Nos. 11/225,834,
11/674,921, and 11/674,940 (the “Supplier Patent Applications”), related
know-how and trade secrets (collectively, the “Supplier IP”).
     9.10 License of Supplier IP. Subject to the terms of this Agreement,
Supplier hereby grants to Company and Manufacturer, and Company and Manufacturer
hereby accept, an exclusive, irrevocable license, with right to sublicense,
under the Supplier IP (a) for performance of Company and Manufacturer’s rights
and obligations under this Agreement related to the Product in the Territory,
and, and (b) to use, make, have made and otherwise commercialize the Product (as
successfully developed under this Agreement) in the Territory.
     9.11 Protection of Licensed IP. Manufacturer and Supplier may, but are not
obligated to seek, in their respective name and sole expense, appropriate patent
protection for its intellectual property. In the event that Manufacturer or
Supplier have not sought patent protection for a particular feature of their
respective intellectual property, the Parties may agree that Manufacturer or
Supplier should apply for protection and Manufacturer or Supplier shall take
reasonable steps to obtain such protection, with the out-of-pocket costs of
seeking such protection being borne equally by the Parties.
     9.12 Section 365(n) of the Bankruptcy Code. All rights and licenses granted
under or pursuant to this Agreement by any Party to the other Parties are, and
shall otherwise be deemed
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 14 of 24

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

 

to be, for purposes of Section 365(n) of the United States Bankruptcy Code, 11
U.S.C. Section 101, et seq. (the “Bankruptcy Code”), licenses of rights to
“intellectual property” as defined under Section 101(56) of the Bankruptcy Code.
Each Party further agrees that, in the event that any proceeding shall be
instituted by or against it seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief of composition or it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking an
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or any substantial part of its property or it shall take
any action to authorize any of the foregoing actions, the other Parties as
licensees shall have the right to retain and enforce their rights and license
under this Agreement and shall retain and may fully exercise all of their
respective rights and elections under the Bankruptcy Code.
     9.13 Further Assurances. Both during the Term of this Agreement and at any
time thereafter, the Parties agree to execute any documents reasonably requested
by the other Party to effect any of the above provisions.
     10. Confidential Information.
     10.1 Except as permitted below, each of the Parties (the “Receiving Party”)
shall keep strictly confidential any information disclosed in writing, orally,
visually or in any other manner by the other Party (the “Providing Party”) or
otherwise made available to the Receiving Party which the Providing Party
considers to be and treats as proprietary or confidential (“Confidential
Information”). Confidential Information shall not include information (a) which
is or becomes generally available to the public other than as a result of
disclosure thereof by the Receiving Party; (b) which is lawfully received by the
Receiving Party on a nonconfidential basis from a third party that is not itself
under any obligation of confidentiality or nondisclosure to the Providing Party
or any other person with respect to such information; (c) which by written
evidence can be shown by the Receiving Party to have been independently
developed by or for the Receiving Party; (d) which the Receiving Party
establishes by competent proof was in its possession at the time of disclosure
by the Providing Party and was not acquired, directly or indirectly from the
Providing Party; or (e) which is required to be disclosed by applicable Laws.
     10.2 Scope of Use. The Receiving Party shall not use any portion of the
Confidential Information outside the scope of this Agreement.
     10.3. Restrictions on Use. The Receiving Party shall not directly or
indirectly disclose, display, provide, transfer or otherwise make available all
or any part of the Confidential Information to any person or entity at any time,
unless the Receiving Party has received prior written permission from the
Providing Party. The Receiving Party shall not make copies of the Confidential
Information or any portion thereof. The Receiving Party shall not provide access
to the Confidential Information to third parties, including consultants and
independent contractors. The Receiving Party shall not at any time incorporate
all or any portion of the Confidential Information into any other work,
presentation, or product.
     10.4. Return of Information. The Receiving Party shall agree upon request
of the Providing Party to return to the Providing Party all copies of the
Confidential Information and all notes, memoranda or analysis relating thereto.
In addition, the Receiving Party shall erase,

Page 15 of 24

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

 

delete or destroy all notes, documents, electronic mail, magnetic media or other
computer storage, including system backups, which contain any Confidential
Information.
     10.5. Compelled Disclosure. In the event that the Receiving Party, or
anyone to whom Confidential Information is transmitted, becomes legally
compelled to disclose any of the Confidential Information, the Receiving Party
will provide the Providing Party with prompt notice so that the Providing Party
may seek a protective order or other appropriate remedy and/or waive compliance
with the provisions of this Agreement. In the event that such protective order
or other remedy is not obtained, or that the Providing Party waives compliance
in writing with the provisions of this Agreement, the Receiving Party or its
representatives will furnish only that portion of the Confidential Information
that is legally required to be disclosed (by judicial or similar process that
would subject the Receiving Party or its representatives to contempt or similar
penalty for failure to disclose) and will exercise the Receiving Party’s or its
representatives’ best efforts to obtain reliable assurance that confidential
treatment will be afforded to the Confidential Information.
     10.6. Responsibility for Breach by Representatives. The Receiving Party
shall be responsible for any breach of this Agreement by its representatives.
     10.7 Survival. The confidentiality and nondisclosure obligations of this
Section 10 shall survive the expiration or termination of this Agreement and
remain in effect for a period of five (5) years following the expiration or
termination of this Agreement.
     11. Term/Termination.
     11.1 Unless sooner terminated pursuant to the terms hereof, this Agreement
shall remain in full force and effect for fifteen (15) years after approval of
the [***] (the “Term”). This Agreement may be extended beyond the Term for
successive five (5) year period(s) (a “Successive Term”) if, at least one
hundred eighty (180) days prior to the expiration of the Term or the expiration
of a Successive Term, the Parties agree, in writing, that this Agreement will be
extended for a Successive Term.
     11.2 This Agreement may be terminated by a Party hereto with respect to any
other Party if: (a) such other Party hereto applies for or consents to the
appointment of a custodian, receiver, trustee, or liquidator of all or a
substantial part of its assets, or makes a general assignment for the benefit of
creditors; or (b) such other Party hereto files, or submits, a petition or
answer seeking an arrangement with its creditors under any bankruptcy or
insolvency law or proceeding; or (c) any order, judgment or decree is entered
against such other Party hereto, without the application, consent or approval of
such Party appointing a custodian, receiver, trustee or liquidator or a
substantial part of its assets or approving a petition seeking reorganization of
such Party and such order, judgment, or decree shall continue unstayed and in
effect for any period of sixty (60) days; or (d) such other Party hereto fails
to remove an involuntary petition in bankruptcy filed against it within
forty-five (45) days of the filing thereof; or (e) any order for relief is
entered against such other Party hereto under the Bankruptcy Code
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 16 of 24

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

 

(each, an “Insolvency Event”). Any such termination shall not affect the rights
and obligations of the other Party hereto that is not subject to such Insolvency
Event.
     11.3 This Agreement may be terminated immediately by written notice of any
Party to the other Parties hereto if the Product is not commercially launched
within the Territory by the fifth anniversary of this Agreement. Additionally,
if following a failed [***] study for the Product or Company’s receipt of an FDA
rejection of [***] the Product, Company decides not to proceed with additional
work or studies, Company may by written notice to Manufacturer and Supplier
immediately terminate this Agreement.
     11.4 Effects of Termination. Termination or expiration of this Agreement
for any reason shall (a) be without prejudice to any rights that shall have
accrued to the benefit of each Party prior to the effective date of such
termination or expiration, including without limitation rights to be paid any
amounts owed to such Party hereunder as of such date, and (b) not relieve either
Party from obligations that are expressly indicated to survive termination or
expiration of this Agreement under Section 10.7.
     12. Dispute Resolution. In the event that a Party to this Agreement
perceives the existence of a dispute with any Party or the other Parties to this
Agreement concerning any right or duty provided for herein, the President, Chief
Executive Officer or designee with authority to resolve the dispute completely
of each Party will, as soon as practicable, confer in an attempt to resolve the
dispute.
     13. Indemnification.
     13.1 Company hereby indemnifies and holds Manufacturer and Supplier
harmless from and against any and all direct costs including actions, suits,
proceedings, claims, losses, liabilities, damages and expenses (“Direct Costs”)
arising out of or in connection with:
          (a) any breach by Company of any term, provision, covenant, agreement,
representation or warranty contained herein; and
          (b) the sale, distribution or marketing of Product by Company or the
administration or use thereof.
     13.2 Manufacturer hereby indemnifies and holds Company and Supplier
harmless from and against any and all Direct Costs arising out of or in
connection with any breach by Manufacturer of any term, provision, covenant,
agreement, representation or warranty contained herein.
     13.3 Supplier hereby indemnifies and holds Manufacturer and Company
harmless from and against any and all Direct Costs arising out of or in
connection with any breach by Supplier of any term, provision, covenant,
agreement, representation or warranty contained herein.
 

[***]   Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.

Page 17 of 24

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

 

     13.4 Notwithstanding Sections 13.1, 13.2 and 13.3, the indemnification
obligations under those Sections shall not apply in each case to the extent any
particular Loss is a direct result of (i) the negligence or intentional
misconduct of the Party seeking indemnification or its representatives, or
(ii) any matter for which the Party seeking indemnification is obligated to
provide indemnification under Section 13.1, 13.2 or 13.3 to the other Party.
     13.5 Upon the occurrence of any event giving rise to a right to seek
indemnification hereunder, the Party seeking indemnification shall give the
indemnifying Party written notice of such claim, action or proceeding within ten
(10) days after it becomes known to such Party; provided, however, that the
failure to give such notice shall not relieve the indemnifying Party of its
obligations to indemnify unless such failure materially and adversely affects
the defense of such action and increases the liability of the indemnifying
Party. The indemnifying Party shall, within ten (10) days after receipt of such
notice, notify the other Party as to whether or not it intends to take over the
defense of such action, failing which, the Party seeking indemnification shall
be entitled to take over the defense of the action. Upon proper notification by
the indemnifying Party of its intention to defend the claim, the indemnifying
Party shall engage counsel reasonably satisfactory to the indemnified Party to
assume the investigation and defense of the claim and shall keep the indemnified
Party and its counsel currently informed as to all material aspects of the claim
and its investigation and defense. The indemnified Party may, in such case,
engage counsel to assist in the investigation and defense of the claim, but
shall not be entitled to reimbursement for any expenses related to the
engagement of such counsel. If the indemnifying Party elects not to assume the
investigation and defense of the claim, or fails to make any election within the
time period herein provided, then the indemnified Party shall be entitled to
engage its own counsel for such investigation and defense, and shall be entitled
to the full indemnification therefor.
     13.6 Notwithstanding the Parties’ respective rights to indemnification
under this Section 13, no Party, nor any of its Affiliates or their respective
directors, officers, employees or agents shall have any liability to any other
Party for any special, incidental, indirect or consequential damages, including,
but not limited to the loss of opportunity, use, revenue or profit, in
connection with or arising out of this Agreement, even if such damages were
foreseeable.
     14. Notices. Any and all notices, elections, demands, requests and
responses thereto permitted or required to be given under this Agreement shall
be in writing, signed by or on behalf of the Party giving the same, and shall be
deemed to have been properly given and shall be effective upon being personally
delivered or delivered by nationally recognized courier such as Federal Express
which maintains a record of receipt and delivery, or three (3) days after being
deposited in the United States mail, postage prepaid, registered or certified
with return receipt requested, to another party at the address of such other
Party set forth below or at such other address within the continental United
States as such other Party may designate by notice specifically designated as a
notice of change of address and given in accordance herewith; provided, however,
that the time period in which a response to any such notice, election, demand or
request must be given shall commence on the earlier of the date of actual or
deemed receipt thereof; and provided further that no notice of change of address
shall be effective until the earlier of the date of actual or deemed receipt
thereof. Personal delivery to a Party or to any

Page 18 of 24

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

 

officer, agent or employee of such Party at said address shall constitute
receipt. Rejection or other refusal to accept or inability to deliver because of
changed address of which no notice has been received shall also constitute
receipt. Any such notice, election, demand, request or response shall be
addressed as follows:

         
 
  If to Manufacturer, to:   NEOS Therapeutics, Inc.
 
      2940 N. Hwy. 360, Suite 100
 
      Grand Prairie, Texas 75050
 
       
 
  If to Supplier, to:   Coating Place, Inc.
 
      PO Box 930310
 
      Verona, WI 53593
 
       
 
  If to Company, to:   Cornerstone BioPharma, Inc.
 
      2000 Regency Parkway, Suite 255
 
      Cary, North Carolina 27511
 
      Attention: President

     15. Relationship between the Parties. The Parties acknowledge that they
are, and shall at all times remain, independent contractors. The Parties and
their agents, servants, and employees shall under no circumstances be deemed
agents or representatives of each other for any purpose whatsoever, unless
otherwise agreed to in writing, and the Parties shall have no authority to enter
into any contracts or commitments in the name or on behalf of each other or to
bind the other in any way. No Party hereto is or shall be deemed to be a
franchisee of any other Party hereto, and each covenants and agrees not to make
any representation to any person, express or implied, to the contrary.
     16. Severability. The Parties agree that each of the provisions included in
this Agreement is separate, distinct and severable from the other and remaining
provisions of this Agreement, and that the invalidity or unenforceability of any
Agreement provision shall not affect the validity or enforceability of any other
provision or provisions of this Agreement. Notwithstanding the foregoing, if
from any circumstances whatsoever fulfillment of any term or provision of this
Agreement shall involve transcending the limit of validity of any applicable Law
with regard to obligations of like character, then ipso facto the obligation to
be fulfilled shall be reduced to the limit of such validity and such obligation
shall be fulfilled to the limit of such validity.
     17. Assignment. This Agreement and the rights and obligations of the
Parties hereunder are freely assignable by each of the Parties; provided,
however, that new assignee shall be required to accept all the rights and
obligations of the assigning Party under this Agreement in a writing delivered
to each of the other two Parties hereto.
     18. Waiver. The waiver by a Party of any breach of this Agreement shall not
be effective unless in writing, and no such waiver shall operate or be construed
as a waiver of the same or another breach on a subsequent occasion.

Page 19 of 24

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

 

     19. Governing Law. All matters arising out of or relating to this Agreement
and the transactions it contemplates shall be governed, construed and enforced
in accordance with the laws of the State of New York, without regard to
conflicts-of-laws principles that would require the application of any other
law.
     20. Independent Judgment. The Parties acknowledge that: (a) they have read
this Agreement; (b) they understand the terms and conditions of this Agreement;
(c) they have had the opportunity to seek legal counsel and advice; (d) they are
of equal bargaining power; and (e) they have relied on their own judgment in
entering into this Agreement.
     21. Entire Agreement; Amendment. This Agreement, the Product Development
Plan and the purchase orders issued in connection herewith and consistent
herewith embody the entire agreement of the Parties on the subject matter
herein. No amendment or modification of this Agreement shall be valid or binding
unless made in writing and signed by the Parties hereto. All prior
understandings and agreements relating to the subject matter of this Agreement
are hereby expressly terminated.
     22. Force Majeure. No Party shall be liable for any failure to perform or
any delay in performing its obligations hereunder, when such failure or delay is
due to Force Majeure and without the fault or negligence of the Party so failing
or delaying. For purposes of this Agreement, “Force Majeure” is defined as acts
of God; newly interpreted or issued Laws of any government; war; civil
commotion; destruction of production facilities or materials by fire, flood,
earthquake, explosion or storm; labor disturbances; epidemic; failure of public
utilities or common carriers; and other similar extraordinary unforeseen events
that are beyond the control of the affected Party, but shall not include general
market or economic conditions and other ordinary risks of doing business. If,
for any of the reasons set forth in this Section 21, any Party shall be unable
to perform its obligations hereunder, it shall immediately notify the other
Parties of such inability and the specific causes thereof and of the period for
which such inability is expected to continue. The Party giving such notice shall
thereupon be excused from such of its obligations under this Agreement as it is
thereby disabled from performing during the pendency of such causes, provided
that it uses commercially reasonable efforts to overcome such causes.
     23. Insurance.
     23.1 Product Liability. Company shall, throughout the Term, obtain and
maintain at its own cost and expense from a qualified insurance company with a
Moody’s Rating of B+ or better, standard Product Liability Insurance naming
Manufacturer, Supplier, and each of its officers, directors, employees, agents,
and shareholders as additional insureds. Such policy shall provide protection
against all claims, demands, and causes of action arising out of any defects or
failure to perform, alleged or otherwise, of the Product or Drug Resin Complex
used in connection therewith or any use thereof.
     23.2 Other Insurance. Each Party shall, throughout the Term, obtain and
maintain at its own cost and expense from a qualified insurance company
sufficient insurance of the following types to insure its obligations under this
Agreement, including, but not limited to: (i) worker’s compensation insurance in
accordance with the statutory requirements of each state in which services
related to Product or Drug Resin Complex are to be performed; (ii) employer’s

Page 20 of 24

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

 

liability insurance; and (iii) comprehensive general liability insurance,
including contractual liability. Upon request, a Party shall provide any
requesting Party with an original signed certificate of insurance evidencing all
coverage herein required within thirty (30) days after such request. The
certificate must provide that thirty (30) days prior written notice of
cancellation or material change in insurance coverage will be provided to the
other Parties hereto.
     23.3 Insurance Primary. An insurer who is otherwise obligated to pay a
claim of a Party is not relieved of the responsibility with respect to such
claim and has no subrogation rights with respect to the claim, in either
instance, solely by virtue of the indemnification provisions of Section 13. Upon
payment of an indemnity claim, a Party that provides indemnification hereunder
is subrogated to the rights of an indemnified Party against any insurer
otherwise obligated to pay for such Direct Costs.
     24. Public Announcements. No Party shall use any other Party’s name in any
press release, publicity, advertising, or other disclosure without such other
Party’s prior written consent. Any public announcements or similar publicity
with respect to this Agreement shall be at such time and in such manner as the
Parties shall mutually agree, provided that nothing herein shall prevent any
Party from, upon notice to and opportunity to review and comment by the other
Parties, making such public announcements as such Party’s legal obligations
require.
     25. Counterparts. This Agreement may be signed in counterparts, each and
every one of which shall be deemed an original, notwithstanding variations in
format or file designation which may result from the electronic transmission,
storage and printing of copies of this Agreement from separate computers or
printers. The exchange of copies of this Agreement or amendments thereto and of
signature pages by facsimile transmission or by email transmission in portable
document format (PDF), or similar format, shall constitute effective execution
and delivery of such instrument(s) as to the Parties and may be used in lieu of
the original Agreement or amendment for all purposes. Signatures of the Parties
transmitted by facsimile or by email transmission in portable document format
(PDF), or similar format, shall be deemed to be their original signatures for
all purposes.
[signature page follows]

Page 21 of 24

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

 

[Signature Page to Development and Manufacturing Agreement]
     IN WITNESS WHEREOF, Company, Manufacturer and Supplier have each caused
this Agreement to be executed by its duly authorized officer as of the date
first shown above.

              COMPANY:
 
            Cornerstone BioPharma, Inc.
 
       
 
  By:   /s/ Craig Collard
 
       
 
  Name   Craig Collard
 
  Title:   CEO
 
            MANUFACTURER:
 
            NEOS Therapeutics, L.P.
 
       
 
  By:   /s/ Mark Tengle
 
       
 
  Name   Mark Tengle
 
  Title:   President
 
            SUPPLIER:
 
            Coating Place, Inc.
 
       
 
  By:   /s/ Tim A Breunig
 
       
 
  Name   Tim A Breunig
 
  Title:   President

 

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

 

EXHIBIT A
PRODUCT DEVELOPMENT PLAN

 

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

 

EXHIBIT B
SPECIFICATIONS