Exhibit 10.1

TAX MATTERS AGREEMENT

by and between

RECRO PHARMA, INC.

and

BAUDAX BIO, INC.

Dated as of November 20, 2019

 

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TAX MATTERS AGREEMENT

THIS TAX MATTERS AGREEMENT (this “Agreement”), dated as of November 20, 2019 by
and between Recro Pharma, Inc., a Pennsylvania corporation (“Recro”), and Baudax
Bio, Inc.1, a Pennsylvania corporation (“Baudax”). Each of Recro and Baudax is
sometimes referred to herein as a “Party” and, collectively, as the “Parties”.
Capitalized terms used and not defined herein shall have the meaning set forth
in the Separation Agreement entered into between the Parties as of the date
hereof (the “Separation Agreement”).

WHEREAS, Recro, acting through itself and its direct and indirect Subsidiaries,
currently conducts the CDMO Business and the Acute Care Business;

WHEREAS, the Board has determined that it is appropriate, desirable and in the
best interests of Recro to separate the CDMO Business from the Acute Care
Business, and to divest the Acute Care Business in the manner contemplated by
the Separation Agreement;

WHEREAS, pursuant to the Separation Agreement (a) to the extent not previously
effected pursuant to the Internal Reorganization, Recro will, and will cause its
Subsidiaries to transfer certain assets and liabilities of the Acute Care
Business to Baudax, as a result of which Baudax will own, directly and
indirectly through its Subsidiaries, the Acute Care Business (collectively, the
“Restructuring”), and (b) Recro will distribute, on a pro rata basis, all of the
issued and outstanding shares of Baudax Common Stock owned by Recro to the
holders of Recro Common Stock (the “Distribution”) as described therein; and

WHEREAS, the Parties wish to provide for the payment of Tax liabilities and
entitlement to Refunds thereof, allocate responsibility for, and cooperation in,
the filing of Tax Returns, and provide for certain other matters relating to
Taxes.

NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. General. As used in this Agreement, the following terms shall have
the following meanings:

“Accounting Firm” has the meaning set forth in Section 7.1.

“Adjustment” means an adjustment of any item of income, gain, loss, deduction,
credit or any other item affecting Taxes of a taxpayer pursuant to a Final
Determination.

“Baudax Entity” means any Subsidiary of Baudax immediately after the
Distribution.

 

1 

Baudax was formerly known as Recro Enterprise, Inc.

 

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“Baudax Group” means, individually or collectively, as the case may be, Baudax
and any Baudax Entity.

“Baudax Ireland” means Baudax Ireland Limited, an Irish limited company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Parent” means the common parent corporation of an affiliated group (in
each case, within the meaning of Section 1504 of the Code) filing a U.S. federal
consolidated Income Tax Return.

“Contribution” means the contribution, directly or indirectly, by Recro of all
of the assets of the Acute Care Business to Baudax in exchange for all of the
Baudax Common Stock and the assumption by Baudax of liabilities related thereto.

“Distribution Date” means the date on which the Distribution is effective.

“Due Date” means (a) with respect to a Tax Return, the date (taking into account
all valid extensions) on which such Tax Return is required to be filed under
applicable Law and (b) with respect to a payment of Taxes, the date on which
such payment is required to be made to the applicable Taxing Authority to avoid
the incurrence of interest penalties and/or additions to Tax.

“Extraordinary Transaction” means any action that is not in the Ordinary Course
of Business, but shall not include (a) any action described in or contemplated
by the Separation Agreement or any Ancillary Agreement, or (b) any action that
is undertaken pursuant to the Restructuring or the Distribution.

“Final Determination” means the final resolution of liability for any Tax for
any taxable period, by or as a result of (a) a final decision, judgment, decree
or other order by any court of competent jurisdiction that can no longer be
appealed to a court other than the Supreme Court of the United States, (b) a
final settlement with the IRS, a closing agreement or accepted offer in
compromise under Sections 7121 or 7122 of the Code, or a comparable agreement
under the Laws of other jurisdictions, which resolves the entire Tax liability
for any taxable period, (c) any allowance of a Refund or credit in respect of an
overpayment of Tax, but only after the expiration of all periods during which
such Refund or credit may be recovered by the jurisdiction imposing the Tax, or
(d) any other final resolution, including by reason of the expiration of the
applicable statute of limitations or the execution of a pre-filing agreement
with the IRS or other Taxing Authority.

“Income Tax Return” means any Tax Return on which Income Taxes are reflected or
reported.

“Income Taxes” means any net income, net receipts, net profits, excess net
profits or similar Taxes based upon, measured by, or calculated with respect to
net income.

“Indemnified Party” means the Party which is entitled to seek indemnification
from the other Party pursuant to the provisions of Article III.

 

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“Indemnifying Party” means the Party from which the other Party is entitled to
seek indemnification pursuant to the provisions of Article III.

“Information” has the meaning set forth in Section 5.1(a).

“Ireland Loan” has the meaning set forth in Section 4.2(a)(i).

“IRS” means the United States Internal Revenue Service.

“Ordinary Course of Business” means an action taken by a Person only if such
action is taken in the ordinary course of the normal operations of such Person.

“Past Practice” means past practices, accounting methods, elections and
conventions.

“Post-Closing Period” means any taxable period (or portion thereof) beginning
after the Distribution Date, including the portion of any Straddle Period
beginning on the day after the Distribution Date.

“Pre-Closing Period” means any taxable period (or portion thereof) ending on or
before the Distribution Date, including the portion of any Straddle Period
through the end of the Distribution Date.

“Recro Consolidated Return” means the U.S. federal Income Tax Return required to
be filed by Recro as the Common Parent.

“Recro Consolidated Taxes” means any U.S. federal Income Taxes attributable to
any Recro Consolidated Return.

“Recro Entity” means any Subsidiary of Recro immediately after the Distribution.

“Recro Group” means, individually or collectively, as the case may be, Recro and
any Recro Entity, excluding any member of the Baudax Group.

“Recro Taxes” means, without duplication, (a) any Recro Consolidated Taxes,
(b) any Taxes imposed on Baudax or any member of the Baudax Group under Treasury
Regulations Section 1.1502-6 (or any similar provision of other Law) as a result
of Baudax or any such member being or having been included as part of a Recro
Consolidated Return or a Recro Unified Tax Return, (c) any Taxes of the Recro
Group and any former Subsidiary of Recro (excluding any member of the Baudax
Group) for any Pre-Closing Period, (d) any Recro Transaction Taxes, and (e) any
Recro Unified Taxes.

“Recro Transaction Taxes” means any Taxes imposed on or by reason of the
Restructuring or the Distribution (including Transfer Taxes and Taxes payable by
reason of deferred intercompany transactions or excess loss accounts triggered
by the Contribution or the Distribution).

 

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“Recro Unified Tax Return” means any unified, combined, consolidated or similar
Tax Returns (other than the Recro Consolidated Tax Return) which includes or
included Recro and Baudax.

“Recro Unified Taxes” means any state or local Taxes attributable to a Recro
Unified Tax Return.

“Refund” means any refund (or credit in lieu thereof) of Taxes (including any
overpayment of Taxes that can be refunded or, alternatively, applied to other
Taxes payable) including any interest paid on or with respect to such refund of
Taxes.

“Retention Period” has the meaning set forth in Section 6.2.

“Straddle Period” means any taxable period that begins on or before and ends
after the Distribution Date.

“Tax” or “Taxes” means all taxes, charges, fees, duties, levies imposts, or
other similar assessments, imposed by any U.S. federal, state or local or
foreign governmental authority, including net income, gross income, gross
receipts, excise, real property, personal property, sales, use, service, service
use, license, lease, capital stock, transfer, recording, franchise, business
organization, occupation, premium, environmental, windfall profits, profits,
customs, duties, payroll, wage, withholding, social security, employment
unemployment, insurance, severance, workers compensation, excise, stamp,
alternative minimum, estimated, value added, ad valorem, hospitality,
accommodations, transient accommodations unclaimed property, escheat and other
taxes, charges, fees, duties, levies, imposts, or other similar assessments, and
any interest penalties or additions attributable thereto.

“Tax Attributes” means net operating losses, capital losses, tax credit
carryovers earnings and profits, foreign tax credit carryovers, overall foreign
losses, previously taxed income, tax bases, separate limitation losses and any
other losses, deductions, credits or other comparable items that could affect a
Tax liability for a past or future taxable period.

“Tax Benefit” means any Refund, credit, or other reduction in Tax payments
otherwise required to be made to a Taxing Authority, including for the avoidance
of doubt, any actual Tax savings if, as and when realized arising from a step-up
in Tax basis or an increase in a Tax Attribute.

“Tax Cost” means any increase in Tax payments otherwise required to be made to a
Taxing Authority (or any reduction in any Refund otherwise receivable from any
Taxing Authority).

“Tax Group” means the members of a consolidated combined, unitary or other tax
group (determined under applicable U.S., State or foreign Income Tax law) which
includes Recro or Baudax, as the context requires recognizing that (i) Recro’s
Tax Group does not include any members of the Baudax Group and (ii) Baudax’s Tax
Group does not include any members of the Recro Group.

 

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“Tax Item” means any item of income, gain, loss, deduction, credit, recapture of
credit or any other item which increases or decreases Taxes paid or payable.

“Tax Matter” has the meaning set forth in Section 6.1(a).

“Tax Proceeding” means any audit, assessment of Taxes, pre-filing agreement,
other examination by any Taxing Authority, proceeding, appeal of a proceeding or
litigation relating to Taxes, whether administrative or judicial including
proceedings relating to competent authority determinations.

“Tax Return” means any return, report, certificate, form or similar statement or
document (including any related or supporting information or schedule attached
thereto and any information return, or declaration of estimated Tax) required to
be supplied to, or filed with, a Taxing Authority in connection with the
payment, determination, assessment or collection of any Tax or the
administration of any Laws relating to any Tax and any amended Tax Return or
claim for Refund.

“Taxing Authority” means any governmental authority or any subdivision agency
commission or entity thereof or any quasi-governmental or private body having
jurisdiction over the assessment determination collection or imposition of any
Tax (including the IRS).

“Transfer Taxes” means all sales, use, transfer, real property transfer
intangible, recordation, registration, documentary, stamp or similar Taxes
imposed on the Restructuring or the Distribution.

“Treasury Regulations” means the final and temporary (but not proposed) Income
Tax regulations promulgated under the Code; as such regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations).

“U.S.” means the United States of America.

ARTICLE II

PREPARATION, FILING AND PAYMENT OF TAXES SHOWN DUE ON TAX

RETURNS

Section 2.1. Recro Consolidated Returns.

(a) Recro Consolidated Returns. Recro shall prepare, or cause to be prepared,
and file all Recro Consolidated Returns for any Pre-Closing Period and a
Straddle Period and shall pay all Taxes shown to be due and payable on such Tax
Returns.

(b) Extraordinary Transactions. For all Tax purposes, the Parties shall report
any Extraordinary Transactions that are caused or permitted by Baudax or any
Baudax Entity on the Distribution Date after the Distribution as occurring on
the day after the Distribution Date pursuant to Treasury Regulation
Section 1.1502-76(b) (1)(ii)(B) or any similar or analogous provision of state,
local or foreign Law.

 

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Section 2.2. Recro Unified Tax Returns. Recro shall prepare and file any Recro
Unified Tax Returns for a Pre-Closing Period and shall pay all Taxes shown to be
due and payable on such Tax Returns.

Section 2.3. Tax Return Procedures.

(a) Recro Consolidated Returns. To the extent that the positions taken on any
Recro Consolidated Tax Return would reasonably be expected to materially and
adversely affect the Tax position of Baudax or a Baudax Entity for any period
after the Distribution Date, Recro shall prepare the portions of such Tax Return
that relates to the Acute Care Business in a manner that is consistent with Past
Practice unless otherwise required by applicable Law or agreed to in writing by
the Parties, and shall provide a draft of such portion of such Tax Return to
Baudax for its review and comment at least forty five (45) days prior to the Due
Date for such Tax Return. In the event that Past Practice is not applicable to a
particular item or matter, Recro shall determine the reporting of such item or
matter in good faith. The Parties shall negotiate in good faith to resolve all
disputed issues. Any disputes that the Parties are unable to resolve shall be
resolved by the Accounting Firm pursuant to Section 7.1. In the event that any
dispute is not resolved (whether pursuant to good faith negotiations among the
Parties or by the Accounting Firm) prior to the Due Date for the filing of any
such Tax Return, such Tax Return shall be timely filed by Recro and Recro agrees
to amend such Tax Return as necessary to reflect the resolution of such dispute
in a manner consistent with such resolution. All Recro Consolidated Returns will
be prepared in accordance with Section 4.2, below.

(b) Recro Unified Tax Returns. Recro shall prepare and file the Recro Unified
Tax Returns for the taxable year that includes the Distribution Date. To the
extent that the positions taken on any Recro Unified Tax Return would reasonably
be expected to materially and adversely affect the Tax position of Baudax, Recro
shall prepare the portions of such Tax Return that relates to the Acute Care
Business in a manner that is consistent with Past Practice unless otherwise
required by applicable Law or agreed to in writing by the Parties, and shall
provide a draft of such portion of such Tax Return to Baudax for its review and
comment at least forty five (45) days prior to the Due Date for such Tax Return,
provided, however, that nothing herein shall prevent Recro from timely filing
any such Tax Return. In the event that Past Practice is not applicable to a
particular item or matter, Recro shall determine the reporting of such item or
matter in good faith. The Parties shall negotiate in good faith to resolve all
disputed issues. Any disputes that the Parties are unable to resolve shall be
resolved by the Accounting Firm pursuant to Section 7.1. In the event that any
dispute is not resolved (whether pursuant to good faith negotiations among the
Parties or by the Accounting Firm) prior to the Due Date for the filing of any
such Tax Return, such Tax Return shall be timely filed by Recro, and Recro
agrees to amend such Tax Return as necessary to reflect the resolution of such
dispute in a manner consistent with such resolution. All Recro Unifies Tax
Returns will be prepared in accordance with Section 4.2, below.

Section 2.4. Amended Returns. Except as provided in Section 2.3 to reflect the
resolution of any dispute by the Accounting Firm pursuant to Section 7.1, except
with the prior written consent of Baudax (such consent not to be unreasonably
withheld, delayed or conditioned), Recro shall not, and shall not permit any
Recro Entity to, amend any Tax Return for any Pre-Closing Period to the extent
such amendment could reasonably be expected to increase the Taxes of any member
of the Baudax Group.

 

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Section 2.5. Timing of Payments. All Taxes required to be paid or caused to be
paid pursuant to this Article II by either Recro or a Recro Entity or Baudax or
a Baudax Entity, as the case may be, to an applicable Taxing Authority, shall be
paid on or before the Due Date for the payment of such Taxes.

Section 2.6. Expenses. Except as provided in Section 7.1 in respect of the
expenses relating to the Accounting Firm, each Party shall bear its own expenses
incurred in connection with this Article II.

Section 2.7. Distribution Tax Reporting. The Parties shall cause the
Distribution to be reported to holders of Recro Common Stock on IRS Form
1099-Div, or 1042-S, as appropriate. The Parties shall not take any position on
any U.S. federal or state Income Tax Return or take any other U.S. tax reporting
position that is inconsistent with the treatment of the Distribution as a
distribution to which Section 301 of the Code applies, except as otherwise
required by applicable Law. Recro will cause the Distribution Agent to comply
with Section 1441 and Section 1442 of the Code, on the basis that the
Distribution is a dividend as defined in Section 316 of the Code.

ARTICLE III

INDEMNIFICATION

Section 3.1. Indemnification by Recro. Subject to Section 3.3, Recro shall pay,
and shall indemnify and hold the Baudax Group harmless from and against, without
duplication, (a) Recro Taxes, (b) all Taxes incurred by Baudax or any Baudax
Entity arising out of, attributable to, or resulting from the breach by Recro of
any of its covenants hereunder, and (c) any out-of-pocket costs and expenses
related to the foregoing (including reasonable attorneys’ fees and expenses).

Section 3.2. Indemnification by Baudax. Subject to Section 3.3, Baudax shall
pay, and shall indemnify and hold the Recro Group harmless from and against,
without duplication, (a) all Taxes incurred by Recro or any Recro Entity arising
out of, attributable to, or resulting from the breach by Baudax of any of its
covenants hereunder, and (b) any out-of-pocket costs and expenses related to the
foregoing (including reasonable attorneys’ fees and expenses).

Section 3.3. Characterization of and Adjustments to Payments.

(a) For all Tax purposes, Recro and Baudax shall treat any payment by Recro to a
member of the Baudax Group or by Baudax to a member of the Recro Group required
by this Agreement (other than payments with respect to interest accruing after
the Distribution Date) as either a contribution by Recro to Baudax or a
distribution by Baudax to Recro, as the case may be, and, in each case, as
occurring immediately prior to the Distribution.

 

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(b) Notwithstanding the foregoing, the amount that any Indemnifying Party is or
may be required to provide indemnification to or on behalf of any Indemnified
Party pursuant to this Article III shall be (i) decreased to take into account
any Tax Benefit to the Indemnified Party (or any of its Affiliates) arising from
the incurrence or payment of the relevant indemnified item and actually realized
in or prior to the taxable year succeeding the taxable year in which the
indemnified item is incurred (which Tax Benefit would not have arisen or been
allowable but for such indemnified item), and (ii) increased to take into
account any actual Tax Cost of the Indemnified Party (or any of its Affiliates)
arising from the receipt of the relevant indemnity payment.2

Section 3.4. Timing of Indemnification Payments. Indemnification payments in
respect of any liabilities for which an Indemnified Party is entitled to
indemnification pursuant to this Article III shall be paid by the Indemnifying
Party to the Indemnified Party within ten (10) days after written notification
thereof by the Indemnified Party, including reasonably satisfactory
documentation setting forth the basis for, and calculation of, the amount of
such indemnification payment, or within ten (10) days after resolution pursuant
to Section 7.1.

ARTICLE IV

REFUNDS AND TAX ATTRIBUTES

Section 4.1. Refunds and Credits. Recro shall be entitled to all Refunds of
Taxes for which Recro is responsible pursuant to Article II, and Baudax shall be
entitled to all Refunds of Taxes for which Baudax is responsible pursuant to
Article II.

Section 4.2. Attributes.

(a) As soon as reasonably practicable after the Distribution Date, Recro shall
reasonably determine in good faith the allocation of Tax Attributes, arising in
a Pre-Closing Period, between the Recro Group and the Baudax Group in accordance
with the Code and Treasury Regulations, including any applicable state, local
and foreign Tax Laws. Subject to the preceding sentence, Recro shall be entitled
to make any determination as to (i) basis, and (ii) valuation, and shall make
such determinations reasonably and in good faith and consistent with Past
Practice. Recro shall consult in good faith with Baudax regarding such
allocation of Tax Attributes and determinations as to basis and valuation, and
shall consider in good faith any comments received in writing from Baudax
regarding such allocation and determinations. Recro and Baudax hereby agree to
compute all Taxes for Post-Closing Periods consistently with the determination
of the allocation of Tax Attributes pursuant to this Section 4.2(a) unless
otherwise required by a Final Determination. Notwithstanding anything to the
contrary in this Agreement, it is agreed that:

(i) For all Pre-Closing Tax Periods, the Recro Group will treat the historical
advances (the “Ireland Loan”) provided by Recro to Baudax Ireland as
indebtedness of Baudax Ireland for U.S. federal Income Tax purposes, and

 

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(ii) The Recro Group will treat the cancellation of the Ireland Loan, effective
on July 12, 2019, prior to the close of business, as giving rise to (a) a
partial bad debt deduction to Recro under Section 166(a) of the Code equal to
Recro’s unrecovered basis in the Ireland Loan and (b) a capital contribution
from Recro to Baudax, equal to the fair market value of Baudax Ireland’s assets.

(b) To the extent that the amount of any Tax Attribute is later reduced or
increased by a Taxing Authority or Tax Proceeding, such reduction or increase
shall be allocated to the Party to which such Tax Attribute was allocated
pursuant to Section 4.2(a).

ARTICLE V

TAX PROCEEDINGS

Section 5.1. Notification of Tax Proceedings. Within ten (10) days after an
Indemnifying Party becomes aware of the commencement of a Tax Proceeding that
may give rise to Taxes for which the Indemnifying Party is responsible pursuant
to Article II, the Indemnifying Party shall notify the Indemnified Party of such
Tax Proceeding, and thereafter shall promptly forward or make available to the
Indemnifying Party copies of notices and communications relating to such Tax
Proceeding. The failure of the Indemnified Party to notify the Indemnifying
Party of the commencement of any such Tax Proceeding within such ten (10) day
period or promptly forward any further notices or communications shall not
relieve the Indemnifying Party of any obligation which it may have to the
Indemnified Party under this Agreement except to the extent that the
Indemnifying Party is prejudiced by such failure.

Section 5.2. Tax Proceeding Procedures Generally. Recro shall be entitled to
contest, compromise, control and settle any Adjustment or deficiency proposed,
asserted or assessed pursuant to any Tax Proceeding with respect to any Recro
Consolidated Return or Recro Unified Tax Return, provided that to the extent
such Tax Proceeding could reasonably be expected to adversely affect the amount
of Taxes for which Baudax is responsible, Recro shall (a) defend such Tax
Proceeding diligently and in good faith (b) keep Baudax informed in a timely
manner of all actions proposed to be taken by Recro with respect to such Tax
Proceeding, and (c) in good faith consider any input from Baudax with respect to
such Tax Proceeding.

ARTICLE VI

COOPERATION

Section 6.1. General Cooperation.

(a) The Parties shall each cooperate fully (and each shall cause its respective
Subsidiaries to cooperate fully) with all reasonable requests in writing from
another Party hereto, or from an agent, representative or advisor to such Party,
in connection with the preparation and filing of Tax Returns, claims for
Refunds, Tax Proceedings, and calculations of amounts required to be paid
pursuant to this Agreement, in each case, related or attributable to or arising
in connection with Taxes of either of the Parties or their respective
Subsidiaries covered by this Agreement and in connection with any financial
reporting matter relating to Taxes (a “Tax Matter”). Such cooperation shall
include the provision of any information reasonably necessary or helpful in
connection with a Tax Matter (“Information”) and shall include, without
limitation:

 

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(i) the provision of any Tax Returns, other than any Recro Consolidated Return
or Recro Unified Tax Return that does not include Baudax , of the Parties and
their respective Subsidiaries, books, records (including information regarding
ownership and Tax basis of property), documentation and other information
relating to such Tax Returns, including accompanying schedules, related work
papers, and documents relating to rulings or other determinations by Taxing
Authorities;

(ii) the use of the Party’s reasonable best efforts to obtain any documentation
in connection with a Tax Matter;

(iii) the use of the Party’s reasonable best efforts to obtain any Tax Returns
(including accompanying schedules, related work papers, and documents) (other
than any Recro Consolidated Return), documents, books, records or other
information in connection with the filing of any Tax Returns of either of the
Parties or their Subsidiaries; and

(iv) the making of each Party’s employees, advisors, and facilities available on
a reasonable and mutually convenient basis in connection with the foregoing
matters.

(b) Notwithstanding anything in this Agreement to the contrary, neither Party
shall be required to provide the other Party or any of such other Party’s
Subsidiaries access to or copies of information, documents or personnel if such
action could reasonably be expected to result in the waiver of any Privilege. In
the event that either Party determines that the Provision of any information or
documents to the other Party or any of such other Party’s Subsidiaries could be
commercially detrimental, violate any Law or agreement or waive any privilege,
the Parties shall use commercially reasonable efforts to permit compliance with
its obligations hereunder in a manner that avoids any such harm or consequence.

(c) The Parties shall perform all actions required or permitted under this
Agreement in good faith. If one Party requests the cooperation of the other
Party pursuant to this Section 6.1 or any other provision of this Agreement,
except as otherwise expressly provided in this Agreement, the requesting Party
shall reimburse such other Party for all reasonable out-of-pocket costs and
expenses incurred by such other Party in complying with the requesting Party’s
request.

Section 6.2. Retention of Records. Recro and Baudax shall retain or cause to be
retained all Tax Returns, schedules and work papers and all material records or
other documents relating thereto in their possession, in each case that relate
to a Pre-Closing Period until the later of the six-year anniversary of the
filing of the relevant Tax Return or, upon the written request of the other
Party, for a reasonable time thereafter (the “Retention Period”). Upon the
expiration of the Retention Period, the foregoing information may be destroyed
or disposed of by the Party retaining such documentation or other information
unless the other Party otherwise requests in writing before the expiration of
the Retention Period. In such case, the Party retaining such documentation or
other information shall deliver such materials to the other Party or continue to
retain such materials, in either case at the expense of such other Party.

 

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ARTICLE VII

MISCELLANEOUS

Section 7.1. Dispute Resolution. For purposes of Article II of this Agreement,
the Parties shall appoint a nationally recognized public accounting firm
reasonably acceptable to both of the Parties (the “Accounting Firm”) to resolve
solely the identified disputes. In this regard, the Accounting Firm shall make
determinations with respect to the disputed items based solely on
representations made by Recro and Baudax and their respective Representatives,
and not by independent review, and shall function only as an expert and not as
an arbitrator and shall be required to make a determination within the ranges
submitted by the Parties. The Parties shall require the Accounting Firm to
resolve all disputes no later than thirty (30) days after the submission of such
dispute to the Accounting Firm, and agree that all decisions by the Accounting
Firm with respect thereto shall be final and conclusive and binding on the
Parties. The Accounting Firm shall resolve all disputes in a manner consistent
with this Agreement and, to the extent not inconsistent with this Agreement, in
a manner consistent with the Past Practices of Recro, except as otherwise
required by applicable Law. The Parties shall require the Accounting Firm to
render all determinations in writing and to set forth, in reasonable detail, the
basis for such determination. The total costs and expenses of the Accounting
Firm will be allocated and borne between Recro and Baudax based upon that
percentage or such fees and expenses equal to the percentage of the dollar value
of the proposed determinations submitted to the Accounting Firm determined in
favor of the other Party; provided, that if in light of the nature of the
dispute the foregoing is not feasible, such costs and expenses shall be borne
equally by the Parties. Any initial retainer required by the Accounting Firm
shall be funded equally by the Parties (and, following the Accounting Firm’s
determination, the Parties shall make appropriate payments between themselves as
are necessary to give effect to the preceding sentence).

Section 7.2. Interest on Late Payments. With respect to any payment between the
Parties pursuant to this Agreement not made by the due date set forth in this
Agreement for such payment (and any amount billed or otherwise invoiced or
demanded and properly payable that is not paid within sixty (60) days of such
bill, invoice or other demand) shall bear interest at a rate per annum equal to
the Prime Rate, from time to time in effect, plus two percent (2%), calculated
for the actual number of days elapsed, accrued from the date on which such
payment was due up to the date of the actual receipt of payment.

Section 7.3. Survival of Covenants. Except as otherwise contemplated by this
Agreement, all covenants and agreements of the Parties contained in this
Agreement shall survive the Distribution and remain in full force and effect in
accordance with their applicable terms.

Section 7.4. Successors. This Agreement shall be binding on and inure to the
benefit of any successor by merger, acquisition of assets, or otherwise, to
either of the Parties hereto (including without limitation any successor of
Recro or Baudax succeeding to the Tax Attributes of either under Section 381 of
the Code), to the same extent as if such successor had been an original party to
this Agreement.

Section 7.5. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced under any Law or as a matter of
public policy, all other conditions and provisions of this Agreement shall
remain in full force and effect. Upon such determination that any term or other
provision is invalid illegal or incapable of being enforced, the Parties to this
Agreement shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in a mutually
acceptable manner.

 

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Section 7.6. Entire Agreement. Except as otherwise expressly provided in this
Agreement, the Separation Agreement, this Agreement and the other Ancillary
Agreements constitute the entire agreement of the Parties hereto with respect to
the subject matter of this Agreement and supersede all prior agreements and
undertakings, both written and oral, between or on behalf of the Parties hereto
with respect to the subject matter of this Agreement.

Section 7.7. Assignment; No Third-Party Beneficiaries. This Agreement shall not
be assigned by any Party without the prior written consent of the other Party
hereto, except that each Party may assign (a) any or all of its rights and
obligations under this Agreement to any of its Subsidiaries and (b) any or all
of its rights and obligations under this Agreement in connection with a sale or
disposition of any of its assets or entities or lines of business, provided,
however, that, in each case, no such assignment shall release such Party from
any liability or obligation under this Agreement. This Agreement is for the sole
benefit of the Parties to this Agreement and their respective Subsidiaries and
their permitted successors and assigns. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.

Section 7.8. Specific Performance. From and after the Distribution, in the event
of any actual or threatened default in, or breach of, any of the terms,
conditions and provisions of this Agreement, the Party who is or is to be
thereby aggrieved shall have the right of specific performance and injunctive or
other equitable relief of its rights under this Agreement, in addition to any
and all other rights and remedies at law or in equity, and all such rights and
remedies shall be cumulative. The Parties agree that the remedies at law for any
breach or threatened breach, including monetary damages, may be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived. Any requirements
for the securing or posting of any bond with such remedy are waived by the
Parties to this Agreement.

Section 7.9. Amendment. No provision of this Agreement may be amended or
modified except by a written instrument signed by the Parties to this Agreement.
No waiver by any Party of any provision of this Agreement shall be effective
unless explicitly set forth in writing and executed by the Party so waiving. The
waiver by any Party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other subsequent breach.

Section 7.10. Rules of Construction. Interpretation of this Agreement shall be
governed by the following rules of construction (a) words in the singular shall
be held to include the plural and vice versa and words of one gender shall be
held to include the other gender as the context requires; (b) references to the
terms Article, Section, paragraph, clause, Exhibit and Schedule are references
to the Articles, Sections, paragraphs, clauses, Exhibits and schedules of this
Agreement, unless otherwise specified; (c) the terms “hereof,” “herein,”
“hereby,” “hereto,” and derivative or similar words refer to this entire
Agreement, including the Schedules and

 

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Exhibits hereto; (d) references to $ shall mean U.S. dollars; (e) the word
“including” and words of similar import when used in this Agreement shall mean
“including, without limitation,” unless otherwise specified; (f) the word “or”
shall not be exclusive; (g) references to “written” or “in writing” include in
electronic form; (h) provisions shall apply, when appropriate, to successive
events and transactions; (i) the headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement; (j) Recro and Baudax have each participated in
the negotiation and drafting of this Agreement and if an ambiguity or question
of interpretation should arise, this Agreement shall be construed as if drafted
jointly by the Parties hereto and no presumption or burden of proof shall arise
favoring or burdening either Party by virtue of the authorship of any of the
provisions in this Agreement or any interim drafts of this Agreement; and (k) a
reference to any Person includes such Person’s successors and permitted assigns.

Section 7.11. Counterparts. This Agreement may be executed in one or more
counterparts each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
facsimile or portable document format (PDF) shall be as effective as delivery of
a manually executed counterpart of any such Agreement.

Section 7.12. Expenses. Except as otherwise provided in this Agreement, whether
or not the Distribution or the other transactions contemplated by this Agreement
or the Separation Agreement are consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the Party incurring such costs or expenses.

Section 7.13. Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the Commonwealth of Pennsylvania, without giving
effect to the conflicts of laws principles thereof that might lead to the
application of laws other than the Laws of the Commonwealth of Pennsylvania.

Section 7.14. Notices. Any notice, demand, claim or other communication under
this Agreement will be in writing and will be deemed to have been given (a) on
delivery if delivered personally, (b) on the date on which delivery thereof is
guaranteed by the carrier if delivered by a national courier guaranteeing
delivery within a fixed number of days of sending, or (c) on the date of
facsimile or email transmission thereof if delivery is confirmed, but, in each
case, only if addressed to the Parties in the following manner at the following
addresses or facsimile numbers (or at the other address or other number as a
Party may specify by notice to the others).

To Recro:

Recro Pharma, Inc.

1300 Gould Drive

Gainesville, GA 30504

Attn: Chief Financial Officer

Phone: 770-534-8239

Fax: 770 534-8247

 

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To Baudax:

Baudax Bio, Inc.

490 Lapp Road

Malvern, PA 19355

Attn: Chief Financial Officer

Phone: 484-395-2440

Fax: 484-395-2471

Section 7.15. Coordination with Ancillary Agreements. Except as explicitly set
forth in the Separation Agreement or any other Ancillary Agreement, this
Agreement shall be the exclusive agreement among the Parties with respect to all
Tax Matters, including indemnification in respect of Tax Matters. The Parties
agree that this Agreement shall take precedence over any and all agreements
among the Parties with respect to Tax Matters.

Section 7.16. Effective Date. This Agreement shall become effective only upon
the occurrence of the Distribution.

[Signature page follows]

 

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

 

RECRO PHARMA, INC. By:   /s/ Gerri Henwood Name:   Gerri Henwood Title:  
President and Chief Executive Officer BAUDAX BIO, INC. By:   /s/ Ryan Lake Name:
  Ryan Lake Title:   Chief Financial Officer and Treasurer

[Signature page to Tax Matters Agreement]