Exhibit 10.314
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive San Diego, CA
April 30, 2007
David Wood
Vice President, Global General Manager
Modified Release Technologies
Cardinal Health PTS LLC
14 Schoolhouse Road
Somerset, NJ 08873
VIA FACSIMILE AND FEDERAL EXPRESS
Re: Release and Termination of Manufacturing and Packaging Agreement
Dear Dave:
As you know, Ligand Pharmaceuticals Incorporated (“Ligand”) and Cardinal Health
PTS, LLC (“Cardinal”) are parties to that certain Manufacturing and Packaging
Agreement, dated February 13, 2004, as amended (the “Manufacturing Agreement”)
and those certain Quality Agreements for AVINZA®, dated April 12, 2005, and
April 10, 2006, respectively (the “Quality Agreements”). As you are also aware,
Ligand has assigned to King Pharmaceuticals, Inc. (“King”), as of February 26,
2007 (the “Closing”), all or substantially all of its assets to which the
Manufacturing Agreement relates, including without limitation, its rights in and
to the AVINZA® product, pursuant to a Purchase Agreement, dated September 6,
2006, as amended (the “Purchase Agreement”). However, the Manufacturing
Agreement was not assigned to King as part of the Purchase Agreement. As such,
each of Ligand and Cardinal intend to terminate the Manufacturing Agreement
pursuant to the terms set forth below (the “Letter Agreement”).
1. Termination of Manufacturing Agreement. As of the date that this Letter
Agreement is fully executed by Cardinal and Ligand (the “Effective Date”) the
Manufacturing Agreement and the Quality Agreements shall be deemed terminated
and of no further force or effect, including without limitation, the termination
of any and all provisions in the Manufacturing Agreement which were expressly
designated to survive termination, provided that, Sections 4.8 – 4.12, 9.2 and
9.4 and Articles 11 and 16 (the “Surviving Provisions”) shall remain in full
force and effect. In addition, all open purchase orders under the Manufacturing
Agreement are deemed cancelled and of no further force or effect.
Notwithstanding the foregoing, the parties desire for Cardinal to continue to
provide certain ongoing stability services, including active reference
standards, analytical assays and related program support, which are associated
with the current validation and commercial batches of AVINZA®, as referenced in
Section 2.1 of the Manufacturing Agreement and as performed by Cardinal pursuant
to quotation [***]; quotation [***]; and one quotation as yet to be agreed by
the parties (altogether, the “AVINZA® Stability Services”).
2. WIP (Morphine) Reimbursement. From the Effective Date through [***], Cardinal
shall continue to maintain and be responsible for, at Cardinal’s sole cost, risk
and expense, the safekeeping of any batches of AVINZA® , the morphine in which
was previously paid for by Ligand and supplied to Cardinal under the
 

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with the Commission. Confidential treatment has been requested with respect to
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Ligand Pharmaceuticals Incorporated
30 April 2007
Page 2
Manufacturing Agreement, that are work-in-process and in Cardinal’s possession
(“WIP”). On or before [***], Ligand shall, at its sole discretion, provide
written notice to Cardinal of its decision whether to (a) have Cardinal arrange
for destruction of the WIP (at Ligand’s sole cost, risk and expense), (b) have
Cardinal pack the WIP for shipment on [***] (or such other date as Cardinal and
Ligand may agree in writing) to a designated non-Cardinal location (at Ligand’s
sole cost, risk and expense), or (c) assign the WIP to King; provided, that
Ligand may not elect the foregoing clause (c) if it has not granted its consent
for Cardinal to supply AVINZA® to King pursuant to paragraph 5(b) below. If
Ligand fails to timely provide notice of its decision or if Ligand elects the
foregoing clause (a), Cardinal shall destroy or deliver to a third party for
destruction all WIP (at Ligand’s sole cost, risk and expense) not later than
[***]. If Ligand elects the foregoing clause (c) and Cardinal receives
consideration from King for any WIP, then Cardinal shall promptly (but in any
event no later than five (5) business days thereafter) pay Ligand, in
immediately available funds, a dollar amount equal to [***]. In addition, if
Ligand elects the foregoing clause (c), it shall promptly provide to Cardinal
evidence of such assignment.
3. Raw Morphine. From the Effective Date through [***], Cardinal shall continue
to maintain and be responsible for, at Cardinal’s sole cost, risk and expense,
the safekeeping of any raw morphine in Cardinal’s possession previously paid for
by Ligand and supplied to Cardinal under the Manufacturing Agreement. On or
before [***], Ligand shall, at its sole discretion, provide written notice to
Cardinal of its decision whether to (a) have Cardinal arrange for destruction of
such morphine (at Ligand’s sole cost, risk and expense), (b) have Cardinal pack
such morphine for shipment on [***] (or such other date as Cardinal and Ligand
may agree in writing) to a designated non-Cardinal location (at Ligand’s sole
cost, risk and expense), or (c) assign such morphine to King; provided, that
Ligand may not elect the foregoing clause (c) if it has not granted its consent
for Cardinal to supply AVINZA® to King pursuant to paragraph 5(b) below. If
Ligand fails to timely provide notice of its decision or if Ligand elects the
foregoing clause (a), Cardinal shall destroy or deliver to a third party for
destruction all such morphine (at Ligand’s sole cost, risk and expense) not
later than [***]. If Ligand elects the foregoing clause (c), it shall promptly
provide to Cardinal evidence of such assignment.
4. CF Granulator. From the Effective Date through [***], Cardinal shall continue
to maintain and be responsible for the safekeeping of Ligand’s CF Granulator in
Cardinal’s possession. On or before [***], Ligand shall, at its sole discretion,
provide written notice to Cardinal of its decision whether to (a) have Cardinal
dismantle the CF Granulator in preparation for removal by Ligand (all at
Ligand’s sole cost, risk and expense), or (b) assign to Cardinal, pursuant to a
bill of sale reflecting terms and consideration mutually agreed upon by Ligand
and Cardinal, all of Ligand’s, right, title and interest in and to the CF
Granulator free of any liens and/or encumbrances for a purchase price not
greater than [***]. Notwithstanding the foregoing, if Ligand grants its consent
for Cardinal to supply AVINZA® to King pursuant to paragraph 5(b) below, the
foregoing clause (b) shall apply. In the event Ligand elects the foregoing
clause (a), Cardinal will pack or arrange for the packing of the CF Granulator
components and reasonably cooperate with Ligand’s shipper in connection with
Ligand’s removal of the CF Granulator (all at Ligand’s sole cost, risk and
expense); and Cardinal shall be entitled to invoice Ligand for all costs of
returning the room in which the CF Granulator is housed at Cardinal’s
Winchester, Kentucky, facility to its original condition, provided such invoice
shall not exceed [***]. If Ligand fails to timely provide such notice, Cardinal
shall be entitled to elect, at its sole discretion, either of the foregoing
options set forth in clauses (a) and (b) (all at Ligand’s sole cost, risk and
expense).
5. General Release. As of the Effective Date, each of Ligand and Cardinal will
for itself, its respective present and former heirs, agents, representatives,
officers, directors, employees, investors, shareholders, administrators,
affiliates, divisions, subsidiaries, related entities, predecessors, successors
and assigns
 

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Ligand Pharmaceuticals Incorporated
30 April 2007
Page 3
(“Releasor Parties”), release and absolutely and forever discharge the other
party and its present and former heirs, agents, representatives, officers,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, related entities, predecessors, successors and assigns
(“Releasee Parties”) of and from any and all claims, demands, damages, debts,
liabilities, accounts, reckonings, obligations, costs, expenses, liens, actions
and causes of action of every kind and nature whatsoever, whether now known or
unknown, suspected or unsuspected, which any Releasor Party now has, owns or
holds or at any time heretofore ever had, owned or held or could, shall or may
hereafter have, own or hold against any Releasee Party arising from or related
to the Manufacturing Agreement, including without limitation, [***]. Except with
respect to the obligations created by or arising out of this Letter Agreement,
Cardinal on the one hand, and Ligand on the other, hereby covenant not to sue
each other or any of the Releasee Parties, regarding any of the Released
Matters, and not to aid or encourage any third party to institute or prosecute
any claims (e.g., in arbitration or meditation) or litigation (including,
without limitation, by providing sworn testimony not compelled by judicial
process) with respect to any of the Released Matters and/or matters that in any
way relate to any act, omission, or other conduct underlying any Released
Matters. Notwithstanding anything to the contrary herein, the foregoing release
shall not and does not extend to (a) any obligations under this Letter Agreement
and/or (b) any obligations with respect to the AVINZA® Stability Services.
6. General Matters
(a) Neither Cardinal nor Ligand shall take any action that is materially
inconsistent with this Letter Agreement. Cardinal and Ligand shall each use
commercially reasonable efforts to cooperate in carrying out the terms hereof,
including, but not limited to, the execution and delivery of such other and
further documents and instruments that are reasonable and necessary to
accomplish such terms.
(b) Cardinal covenants and agrees that, in consideration for the general release
set forth above, [***], neither Cardinal nor any of its direct or indirect,
parents, subsidiaries, affiliates, successors and/or assigns shall manufacture,
supply or provide services in connection with the AVINZA® product to any third
party (including, without limitation, King) without the express prior written
consent of Ligand. Furthermore, Ligand and Cardinal acknowledge and agree that
either party would be irreparably damaged if any of the provisions of this
Letter Agreement are not performed in accordance with their specific terms and
that any breach of this Letter Agreement by the other party could not adequately
be compensated in all cases by monetary damages alone. Accordingly, in addition
to any other right or remedy to which either party may be entitled, at law or in
equity, it may seek to enforce any provision of this Letter Agreement, without
requirement to post bond (or if such requirement cannot be waived, then the
minimum amount so required), by a decree of specific performance and to
temporary, preliminary and permanent injunctive relief to prevent breaches or
threatened breaches of any of the provisions of this Letter Agreement.

 

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the omitted portions.

 

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(c) All fees and expenses incurred in connection with this Letter Agreement and
the transactions contemplated hereby, including all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred
by a party in connection with the negotiation and effectuation of the terms and
conditions of this Letter Agreement and the transactions contemplated hereby,
shall be the obligation of the respective party incurring such fees and
expenses.
(d) This Letter Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(e) This Letter Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreement and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
If you agree with the terms of this Letter Agreement, kindly countersign below.
Regards,
Ligand Pharmaceuticals Incorporated

                By:   /s/ John L. Higgins     Name:   John L. Higgins    Its:
Chief Executive Officer     

ACKNOWLEDGED, ACCEPTED AND AGREED:
Cardinal Health PTS, LLC

                By:   /s/ David Wood     Name:   David Wood    Its: Vice
President, Global General Manager    Dated: April 26, 2007