Exhibit 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS
BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM
TO THE REGISTRANT IF PUBLICLY DISCLOSED.

SUPPLEMENTAL AGREEMENT NO. 3

TO THE

AMENDED AND RESTATED LICENSE AND SUPPLY AGREEMENT

(GENERIC VERAPAMIL)

This Supplemental Agreement No. 3 to the Amended and Restated License and Supply
Agreement (Generic Verapamil) (“Supplemental Agreement No. 3”) is made the 15th
day of April, 2019 (the “Supplemental Agreement No. 3 Effective Date”).

BETWEEN

(i)    Recro Gainesville LLC, as successor of Alkermes Pharma Ireland Limited,
as successor of Elan Corporation plc and Elan Pharma International Limited
(hereinafter “Recro”)

and

(ii)    Watson Laboratories, Inc., as assignee of Watson Pharma, Inc., formerly
known as Schein Pharmaceuticals, Inc. (hereinafter “Teva”).

RECITALS

(A)    On June 26, 2003, Elan Corporation, plc and Watson Laboratories, Inc.
entered into an Amended and Restated License and Supply Agreement relating to
the license and sale of generic Verapamil in the United States. This agreement
was subsequently amended by a Supplemental Agreement, which became effective on
December 8, 2004, and by Supplemental Agreement No. 2, which became effective on
January 17, 2014. The Amended and Restated License and Supply Agreement, as
amended by the Supplemental Agreement and Supplemental Agreement No. 2, is
hereinafter referred to as the “Principal Agreement”.

(B)    Recro and Teva wish to make certain changes to the Principal Agreement in
accordance with the terms and conditions set forth below.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1.    Defined terms used in this Supplemental Agreement No. 3 shall have the
meaning assigned to them in the Principal Agreement unless such terms are
specifically defined herein.

 

1

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2.    Section 1.1 Definitions;

a.    The definition of “Net Sales Price” (“NSP”) shall be deleted in its
entirety and replaced with the following:

“Net Sales Price” (“NSP”) shall mean, with respect to the Product sold by Watson
or an Affiliate in the Territory, the aggregate gross sales amount invoiced by
Watson and its Affiliates on an arms-length basis to third parties in the
Territory, less the following deductions, all determined in accordance with
Watson’s standard practices for other pharmaceutical products, consistently
applied:

(i)    [***] percent ([***]%) of gross sales in the Territory to cover cash
discounts given by Watson (and its Affiliates);

(ii)    reasonable estimates for any adjustments on account of price
adjustments, billing adjustments, bid defaults, shelf stock adjustments,
promotional payments, or other similar allowances affecting the Product;

(iii)    reasonable estimates for chargebacks, rebates, administrative fee
arrangements, reimbursements, and similar payments to wholesalers and other
distributors, buying groups, health care insurance carriers, pharmacy benefit
management companies, health maintenance organizations, other institutions or
health care organizations or other customers;

(iv)    reasonable estimates for amounts due to third parties on account of
rebate payments, including Medicaid rebates, or other price reductions provided,
based on sales by Watson and its Affiliates to any governmental or regulatory
authority in respect of state or federal Medicare, Medicaid or similar programs;

(v)    reasonable estimates for allowances and credits to third parties on
account of rejected, damaged, returned or recalled Product;

(vi)    [***];

(vii)    any government mandated manufacturing tax, including, without
limitation, the brand manufacturer’s tax imposed pursuant to the Patient
Protection and Affordable Care Act (Pub. L. No. 111-148) (as amended or
replaced);

(viii)    [***];

(ix)    [***];

(x)    other specifically identifiable amounts that have been credited against
or deducted from the Product’s gross sales and are substantially similar to
those credits and deductions listed above; and

(xi)    selling, marketing, and distribution expenses [***].

b.    The definition of “Profit” shall be deleted in its entirety and replaced
with the following:

“Profit” shall mean NSP less Supply Price.

 

2

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c.    The definition of “Supply Price” shall be added to Section 1.1 as follows:

“Supply Price” shall mean: (i) with respect to Product supplied by Elan to
Watson in final market packaged form, the Product Manufacturing Cost plus [***];
and (ii) with respect to Product supplied by Elan to Watson in bulk form, the
Product Manufacturing Cost.

3.    Section 10.4.1 of the Principal Agreement shall be deleted in its entirety
and replaced with the following:

“In the event Elan shall supply the Product to Watson in bulk form or in final
market packaged form, such Product shall be supplied to Watson at the prices set
forth on Schedule 6 attached hereto in accordance with the terms of this
Agreement. For the avoidance of doubt, in the event the Product is supplied by
Elan to Watson in final market packaged form, such prices shall include and
reflect the fully allocated costs of packaging the Product into final market
packaged form. The Supply Price for the Product as of the date of this Agreement
is as set forth on Schedule 6.

4.    Section 10.4.2 of the Principal Agreement shall be deleted in its entirety
and replaced with the following:

“Subject to the following paragraph, the Supply Price for the Product may be
reviewed by Elan once per annum and may be adjusted for the following calendar
year reflecting actual changes in direct manufacturing expenses. Elan shall
provide Watson with written notice of any such increase in the Supply Price for
the Product sixty (60) days before the end of each calendar year to take effect
in the following calendar year for new orders submitted by Watson for such
calendar year.”

5.    Section 10.4.3 of the Principal Agreement shall be deleted in its entirety
and replaced with the following:

“Any increases or decreases in the cost of the active ingredient or any other
components used in the Product in excess of [***] percent ([***]%) from the
then-current base are to be passed on in the Supply Price for the Product (as it
relates to Product manufactured from the effective date of use of such active
ingredient or any other component).”

6.    Section 10.4.4 of the Principal Agreement shall be deleted in its entirety
and replaced with the following:

“Payment for all Product delivered from Elan’s manufacturing facility to Watson
shall be effected in U.S. Dollars ($) within [***] after the date an invoice is
received by Watson.”

 

3

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7.    Section 10.4.5 shall be added to the Principal Agreement as follows:

“The combined increase under Section 10.4.2 and Section 10.4.3 shall not exceed
[***] percent ([***]%) annually, except in the event of an extraordinary
increase in costs directly allocable to the manufacture of Product and labeling
and/or packaging for Product, where such increase is due to higher costs to Elan
of raw materials supplied by third parties due to shortages of such raw
materials. Prior to any increase, Elan shall provide to Watson satisfactory
supporting documentation. Further, Elan will execute a mutual improvement and
competitive best practice strategy to improve the manufacturing performance and
reduce the manufacturing and materials costs for the Product. Any cost savings
resulting from projects between Watson and Elan shall be shared equally by the
Parties.”

8.    The last sentence of Section 11.1 of the Principal Agreement shall be
deleted in its entirety.

9.    Section 11.5 of the Principal Agreement shall be amended to add the
following as the last sentence of Section 11.5:

“For clarity, such access and audit shall include Elan’s Product Manufacturing
Cost.”

10.    Section 12.1 of the Principal Agreement shall be deleted in its entirety
and replaced with the following:

“This Agreement shall be deemed to have come into force on January 1, 2019, and
subject to the rights of termination outlined in this Clause 12 will expire on
December 31, 2024 (the “Initial Term”).”

11.    Section 12.2 of the Principal Agreement shall be deleted in its entirety
and replaced with the following:

“After the expiration of the Initial Term, this Agreement shall continue
automatically for rolling one (1) year periods thereafter, unless this Agreement
is (1) terminated by either of the Parties by serving written notice, or (2) not
renewed by the other Party, by giving in either case, at least eighteen
(18) months written notice prior to the end of the Initial Term or any
additional one (1) year period provided for herein.”

12.    Section 15.10.1 shall be added to the Principal Agreement as follows:

“15.10.1 Elan shall comply with, and Elan shall cause all of its officers,
directors, employees, advisors, agents and third party contractors (“Elan
Representatives”) to comply with, all applicable foreign and United States
federal, state and local laws, rules and regulations in performance of their
respective obligations pursuant to this Agreement, including, without
limitation, and as applicable, laws, rules and regulations related to promotion
of pharmaceutical products, fraud and abuse, insider trading, discrimination,
confidentiality, false claims, wage payment,

 

4

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payroll tax withholding, and prohibition of kickbacks. For the avoidance of
doubt, each Party shall comply with (i) the Anti-Kickback provisions of the
Social Security Act, 42 U.S.C. § 1320a-7b, and the relevant regulations at 42
C.F.R. Section 1001; (ii) the False Claims Act, 31 U.S.C. § 3729-33; and
(iii) the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§201, et seq. and the
relevant regulations at 21 C.F.R. § 202.

13.    Section 15.10.2 shall be added to the Principal Agreement as follows:

“15.10.2 Elan represents, warrants, and covenants that neither it nor any Elan
Representatives has made, will make or will promise to make any payment in
violation of the U.S. Foreign Corrupt Practices Act or similar applicable local,
federal or national law and shall comply with the requirements set forth on
Schedule 8 attached hereto.

14.    Section 15.11 of the Principal Agreement shall be amended as follows:

The Alkermes contact details shall be replaced with the following Recro contact
details:

Recro Gainesville LLC

1300 Gould Drive

Gainesville, GA 30504

Attn:    Scott Rizzo, General Manager

Fax:     (770) 534-8247

Email: Scott.Rizzo@recrocdmo.com

With copy to :

Recro Pharma, Inc.

490 Lapp Road

Malvern, PA 19355

Fax:  (484) 395-2471

Email: mcelano@recropharma.com

The Watson contact details shall be replaced with the following Teva contact
details:

Teva Pharmaceutical Industries Ltd.

1090 Horsham Rd.

North Wales, PA 19454

Attn:    Director of Global Procurement

With copy to :

Teva Pharmaceuticals USA, Inc.

425 Privet Rd.

Horsham, PA 19044

Attn: Legal Department

 

5

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15.    Schedule 6 of the Principal Agreement shall be updated and replaced, as
of the Supplemental Agreement No. 3 Effective Date, with Schedule 6 attached
hereto.

16.    Schedule 7 of the Principal Agreement shall be updated and replaced, as
of the Supplemental Agreement No. 3 Effective Date, with Schedule 7 attached
hereto.

17.    Except as specifically amended by this Supplemental Agreement No. 3, all
terms and conditions of the Principal Agreement shall remain in full force and
effect, and this Supplemental Agreement No. 3 shall be deemed to be a part of
the Principal Agreement.

18.    This Supplemental Agreement No. 3 may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument. Signatures provided by
facsimile transmission or in .pdf format and sent by electronic mail shall be
deemed to be original signatures.

[Signatures on following page]

 

6

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Agreement
No. 3 to be duly executed and delivered on the dates set forth below their
signature lines, effective as of the Supplemental Agreement No. 3 Effective
Date.

 

TEVA PHARMACEUTICAL INDUSTRIES LTD. By:  

/s/ Michael Huss

Name:   Michael Huss Title:   Senior Director, TPO, Procurement, Americas Date:
  April 11, 2019 By:  

/s/ Jonathan Adar

Name:   Jonathan Adar Title:   VP, Third Party Operations Date:   April 11, 2019
RECRO GAINESVILLE LLC By:  

/s/ Scott Rizzo

Name:   Scott Rizzo Title:   General Manager Date:   April 15, 2019

 

[Signature page to Supplemental Agreement No. 3 to The

Amended and Restated License and Supply Agreement (Generic Verapamil)]

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SCHEDULE 6

 

LOGO [g738594g50k49.gif]

 

   1300 Gould Drive, Gainesville GA 30504-3947 USA    T +1 770 531 8100 F +1 770
534 8247    www.recropharma

Ms. Arlene Vital

Director, TPO Supplier Relationship Mgmt

Teva Generics

Teva Pharmaceuticals USA, Inc.

1090 Horsham Road

North Wales, Pennsylvania 19454

October 30, 2018                

 

RE: RECRO PHARMA 2019 SUPPLY PRICES 100 Count Bottle - Verapamil SR Generic

Dear Arlene,

In accordance with Clause 10.4 of our Agreement (dated 26 June 2003), I would
like to advise you of Recro Pharma 2019 Supply Prices for Verapamil SR generic.
Following a review of our costs, prices will [***].

 

[***]   

[***]

[***]

  

[***]

[***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

If you would like to discuss these further, please do not hesitate to contact
me.

We would like to thank Teva for their help in making the partnership successful!

 

Kind Regards,

/s/ Scott Rizzo

Scott Rizzo General Manager Recro Gainesville Site

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SCHEDULE 7

VERAPAMIL SR ROYALTY CALCULATION

RECRO CORPORATION

[insert date]

For the Quarter Ended [●]

 

     Notes      Verapamil
HCL SR Pellet
120MG Cap 100
00591-2880-01      Verapamil
HCL SR Pellet
180MG Cap 100
00591-2882-01      Verapamil
HCL SR Pellet
240MG Cap 100
00591-2884-01      Verapamil
HCL SR Pellet
360MG Cap 100
00591-2886-01      Total      % of
Gross  

Units Sold

                    

Cost of Goods Sold

      $        $        $        $        $       

Gross Sales

      $        $        $        $        $       

Less:

                    

Cash Discounts

     [***]                    

Chargebacks

     [***]                    

Rebates

     [***]                    

Government Rebates

     [***]                    

Returns

     [***]                    

Other Deductions

     [***]                          

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Deductions

                          

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Net Sales

      $        $        $        $        $       

Less:

                    

Cost of Goods Sold

                          

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Profit

      $        $        $        $        $             

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

% of Profit

                          

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Net Royalty Earned

      $        $        $        $        $             

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

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[***]

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SCHEDULE 8

COMPLIANCE WITH ANTI-CORRUPTION LAWS

1.    Anti-Corruption Principles and Legislation. The Organization for Economic
Co-operation and Development (“OECD”) adopted a convention on combating bribery
of foreign public officials in international business transactions, effective
15 February 1999 (the “Convention”). The Convention requires contracting states
to enact legislation relating to combating bribery of foreign public officials
in international business transactions. Such legislation has been passed in
Israel and, separately, in the United States as the Foreign Corrupt Practices
Act (“FCPA”) and in the United Kingdom as the U.K Bribery Act 2010. These and
other anti-corruption laws are herein referred to collectively as the
“Anti-Corruption Laws” and, together with the Convention, as the
“Anti-Corruption Laws and Principles.”

The Anti-Corruption Laws and Principles prohibit the corrupt payment, offer,
promise, or authorization of the payment or transfer of anything of value or any
benefit, directly or indirectly, to any Government Official, or to any other
person while knowing that all or some portion of the payment, thing of value, or
benefit will be offered, given, promised, or passed on to a Government Official.
Certain of the Anti-Corruption Laws and Principles also prohibit commercial
bribery—i.e., the payment or transfer of anything of value, any benefit, or any
advantage, directly or indirectly, to any private person with the intention to
improperly obtain or retain business or any business advantage or to improperly
influence the recipient’s behavior.

2.    Knowledge and Compliance. Elan understands, and shall ensure that all Elan
Personnel understand, that Teva Pharmaceutical Industries Ltd. and/or its
subsidiaries (collectively, the “Teva Group”) are subject to the Anti-Corruption
Laws and Principles. Elan agrees that it shall cause all Elan Personnel to be
similarly bound by the provisions contained herein.

Elan agrees to ensure that it and all Elan Personnel are knowledgeable regarding
the purpose and provisions of the Anti-Corruption Laws and Principles, and also
agrees to take appropriate steps to ensure that it and such Elan Personnel will
comply with the letter and spirit of the Anti-Corruption Laws and Principles and
will not take any actions which would cause either Party to violate or
contravene the Anti-Corruption Laws and Principles.

Elan will maintain, and ensure that any Company that uses Elan Personnel
likewise maintain, policies, procedures, and internal controls to ensure that it
will be in compliance with the Anti-Corruption Laws and Principles in connection
with its performance of the Agreement. Such policies, procedures, and internal
controls will include processes through which all Elan Personnel will obtain
approval for expenditures that may be incurred on behalf of or result in
payments to Government Officials, healthcare professionals, or customers in
connection with Elan’s and any Elan Personnel’s performance of the Agreement
(e.g., gift, travel, entertainment, hospitality, conference, meeting, event,
consulting, and research expenditures).

3.     Status of Employees, Family Relationships. Elan represents that no Elan
Personnel are Government Officials. Elan represents that it has fully disclosed
to the Teva Group any existing Close Family Member relationships between any
Elan Personnel and any Government Official, and Elan agrees to notify the Teva
Group of any such Close Family Member relationship that may arise during the
Term.

4.    No Action Contrary to Anti-Corruption Laws and Principles. Elan represents
that neither it nor any Elan Personnel has been found by a government agency or
court to have violated the FCPA or any Anti-Corruption Law of any country. Elan
represents and covenants further that nothing of value received by it or any
Elan Personnel under or in connection with the Agreement has been or will be
accepted or used by it for any purpose that would violate or be contrary to the
Anti-Corruption Laws and Principles, nor has it or will it take any action that
would violate or be contrary to Anti-Corruption Laws and Principles.

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

5.    Method of Payments. The Parties agree that all payments made to Elan in
connection with the Agreement shall be made after receipt by the Teva Group of
an invoice detailing the products or services provided during the Term. All
payments under the Agreement shall be made by check or bank transfer for the
benefit of, or to the account of, Elan in the country where goods and/or
services are delivered/provided or the country of residence/principle place of
business of Elan. Elan shall ensure that all payments made to Elan Personnel in
connection with the Agreement shall be made in the same manner as payments made
to Elan.

6.    No Unlawful Payments. Elan represents and covenants further that, unless
permitted under the Anti-Corruption Laws and Principles, neither it nor any
Elan, has paid, promised to pay, authorized a payment, given, permitted to give,
or authorized the giving, nor will it or Elan pay, promise to pay, authorize a
payment, give, promise to give, or authorize the giving of anything of value or
any benefit to any Government Official for purposes of (i) influencing any act
or decision of such Government Official in his official capacity, (ii) inducing
such Government Official to do or omit to do any act in violation of the lawful
duty of such official; (iii) securing any improper advantage; or (iv) inducing
such Government Official to use his influence to affect or influence any act or
decision of the applicable government with respect to any activities undertaken
relating to the Agreement.

7.    Accurate Books and Records. Neither Elan nor any Elan Personnel will make
or permit any off-the-books accounts, inadequately identified transactions,
recording of non-existent expenditures, entry of liabilities with incorrect
identification of their object, or the use of false documents in connection with
performing the Services. Elan will, and will ensure that Elan Personnel will,
keep books, accounts, and records that, in reasonable detail, accurately and
fairly reflect its transactions and dispositions of funds paid under the
Agreement.

8.    Rights of Audit. Without derogating from any other rights which the Teva
Group has to audit the records of Elan and any Elan Personnel under the
Agreement or any other agreement between Elan or any Elan Personnel and any
member of the Teva Group, during the Term and a period of five (5) years
thereafter, the Teva Group shall be entitled to audit all books, records,
invoices, and relevant documentation of Elan and any Elan Personnel related to
the Agreement in order to verify compliance with the terms of this Schedule 8
and the requirements of the Anti-Corruption Laws and Principles. Elan will
cooperate fully in any audit or investigation conducted by the Teva Group in
relation to compliance with the Agreement or the Anti-Corruption Laws and
Principles.

9.    Obligation to Update/Report Changes. Elan agrees that all of the
representations contained herein shall remain true and accurate throughout the
duration of the Agreement. Elan must inform the Teva Group promptly if it
becomes aware of any potential breach of this Schedule 8 or the Anti-Corruption
Laws and Principles or any other change that would render any of the
representations herein untrue or inaccurate. Elan shall require all Elan
Personnel to inform Elan promptly if such Elan Personnel become aware of any
potential breach of this Schedule 8 or the Anti-Corruption Laws and Principles
or any other change that would render any of the Subcontractor’s representations
untrue or inaccurate. Failure to notify the Teva Group under this Schedule 8
shall constitute a material breach of the Agreement by Elan entitling the Teva
Group to terminate the Agreement.

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10.    Annual Certification. In its sole discretion, the Teva Group may require
that Elan (and any Elan Personnel) complete an annual certification or provide
some other form of assurance of compliance with this Schedule 8.

11.    Conflicting Anti-Corruption Law Requirements. In the event of
inconsistency in the requirements of the Anti-Corruption Laws applicable to Elan
and any Elan Personnel in connection with the Agreement, the Parties shall
comply with the stricter Anti-Corruption Law.

12.    Definitions. Capitalized terms not otherwise defined herein have the
meanings given such terms in the Agreement. For the purposes of this Schedule 8,
the following terms have the meanings assigned to them below:

(i)    “Close Family Member” means any parent, child, spouse, or sibling,
whether by blood or marriage.

(ii)    “Elan Personnel” means any person or entity employed or engaged by Elan,
including without limitation, its owners, directors, officers, employees,
subcontractors, consultants, advisors, agents and other representative who will
provide Services in connection with the Agreement.

(iii)    “Company” means a general or limited partnership, a corporation, a
trust, a joint venture, an unincorporated organization, a limited liability
entity, and any other business or legal entity.

(iv)    “Government Official” means any of the following: (a) official (elected,
appointed, or career) or employee of a federal, national, state, provincial,
local, or municipal government or any department, agency, or subdivision
thereof; (b) officer or employee of a government-owned or controlled enterprise,
company, or organization (e.g., a Healthcare Professional practicing at a
government-owned or controlled hospital or clinic); (c) officer or employee of a
public international organization (e.g., UN, World Bank, EU, WTO, NATO); (d)
individual acting for or representing a government or any of the organizations
referred to above, even if he/she is not an employee of such government or
organization; (e) individual who is considered to be a government official under
applicable local law; (f) candidate for political office; and (g) an official of
a political party.