exv10w70






Exhibit 10.70



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




TRANSITION AGREEMENT




     This Transition Agreement (this “Agreement”) is entered into as of January 28, 2005, by and
between Medicis Pharmaceutical Corporation, a Delaware corporation, having offices at 8125 North
Hayden Road, Scottsdale, AZ 85258 (hereinafter “Medicis”), and aaiPharma Inc., a Delaware
corporation and the parent company of AAI Development Services, Inc. (formerly known as AAI
International, Inc.), having offices at 2320 Scientific Park Drive, Wilmington, NC 28405
(hereinafter “AAI,” and together with Medicis, hereinafter the “Parties,” or individually,
hereinafter a “Party”).



RECITALS:




     A. Medicis and AAI entered into that certain Development, Commercialization and License
Agreement, effective as of June 26, 2002, as amended on December 18, 2002 (collectively, the “DCL
Agreement”). Capitalized terms used in this Agreement which are not defined herein shall have the
meanings given to such terms in the DCL Agreement.



     B. On January 28, 2005 (the “Termination Date”), pursuant to a letter agreement, Medicis and
AAI mutually terminated the DCL Agreement under Section 7.2.4 thereof effective as of the
Termination Date.



     C. The Parties mutually desire to enter into certain arrangements and agreements to facilitate
transition matters arising from the termination of the DCL Agreement.



STATEMENT OF AGREEMENT:




     Now, therefore, in consideration of the mutual promises and agreements herein contained and
for other good, valuable and binding consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:



     1. Return of Work Product; Survival.



          1.1 The Parties acknowledge and agree that Medicis is the owner of all Work Product in
accordance with Sections 7.3.2, 2.4.4 and 10.4 of the DCL Agreement, and in furtherance of such
ownership and to facilitate the return of Medicis’ property to Medicis on the Closing Date (as such
term is defined in Section 5.1 hereof) AAI shall (a) provide Medicis or its
designee with a complete disclosure of all Work Product not yet disclosed to Medicis and shall
deliver to Medicis or its designee the Work Product, and (b) execute such documents and take such
steps as Medicis may reasonably request in order to vest Medicis with full record ownership of all
Work Product.




          1.2 The Parties acknowledge and agree that Section 7.4 (and the additional sections referenced
therein) of the DCL Agreement shall survive the termination of the DCL Agreement.




     2. Assignment of Agreements.



1









 





          2.1 On the Closing Date, AAI shall hereby transfer and assign to Medicis or its designee all
of AAI’s and its Affiliates rights, title and interests in and to and obligations under the
contracts and agreements set forth on Schedule 2 hereto (each a “Transferred Contract” and
collectively, the “Transferred Contracts”) designated by Medicis to be assumed by Medicis. AAI
represents and warrants to Medicis that the Transferred Contracts represent all of the contracts
and agreements entered into by AAI or its Affiliates exclusively for purposes of performing AAI’s
obligations under the DCL Agreement and that to AAI’s knowledge as of the Closing Date, there are
no other material contracts or agreements to which AAI or any of its Affiliates is a party which
are necessary for the performance of the Work Plan. For each Transferred Contract designated by
Medicis to be assumed by Medicis on Schedule 2 hereto, Medicis shall assume all of AAI’s
obligations thereunder to the extent arising following the Closing Date.




          2.2 AAI shall use its commercially reasonable efforts, and Medicis shall cooperate with AAI,
to obtain all necessary consents in order to transfer or assign on the Closing Date each
Transferred Contract designated by Medicis to be assumed by Medicis on Schedule 2 hereto to
Medicis or its designee; provided, however, that neither AAI nor Medicis shall be
obligated to pay any consideration therefor to the third party from whom such consent is requested.
In the event and to the extent that the required consent to the transfer or assignment of any of
the Transferred Contracts has not been obtained by the Closing Date, AAI shall continue to be, or
shall cause its Affiliates to continue to be, bound thereunder in accordance with the terms thereof
and shall use its commercially reasonable efforts to perform and discharge fully all of the
obligations of AAI or its Affiliates thereunder from and after the Closing Date; provided,
however, that (a) Medicis shall pay, or reimburse AAI upon receipt of a reasonably detailed
invoice, for AAI’s standard hourly rate, if any, and AAI’s out-of-pocket, third party costs under
each such Transferred Contract in accordance with its terms, and (b) AAI shall not alter, modify or
extend the terms and conditions of any such Transferred Contract without the prior written consent
of Medicis, and at the request of, the sole expense of, and for the account of, Medicis, AAI shall
take all reasonably requested actions to protect its rights thereunder.




     3. Transferred Contracts Indemnification.



          3.1 Medicis shall indemnify, defend and hold AAI, its Affiliates and their respective
directors, officers, shareholders, employees, representatives, agents, successors and permitted
assigns (collectively “AAI Indemnified Parties”) harmless from and against any and all third party
liabilities, losses, claims, demands, obligations, judgments, causes of action,
assessments, fines, damages, costs and expenses (including, without limitation, reasonable
attorneys’ fees) (collectively, the “Claims”), in each case, to the extent such Claims are incurred
following the Closing Date and arise out of the Transferred Contracts, but Medicis shall have no
indemnification obligations under this Section 3.1 to the extent any such Claim arises out
of any negligence or willful or reckless actions or misconduct of AAI or its employees, agents
and/or subcontractors.




          3.2 AAI shall indemnify, defend and hold Medicis, its Affiliates and their respective
directors, officers, shareholders, employees, representatives, agents, successors and permitted
assigns (collectively, the “Medicis Indemnified Parties”) harmless from and against any and all
Claims, in each case, to the extent such Claims are incurred (i) on or prior to the




2









 







Closing Date
and arise out of the Transferred Contracts, and (ii) after the Closing Date and arise out of any
negligence or willful or reckless actions or misconduct of AAI or its employees, agents and/or
subcontractors. The Parties acknowledge that the third parties who are parties to the Transferred
Contracts shall not be deemed to be AAI’s agents or subcontractors pursuant to such Transferred
Contracts for periods following the Closing Date.




     4. Closing Date Payments to AAI.



          4.1 Notwithstanding anything to the contrary contained in Section 7.3.2(a) of the DCL
Agreement, in consideration for the Parties entering into this Agreement, Medicis shall pay to AAI
on the Closing Date by wire transfer in immediately available funds to an account designated by AAI
an amount equal to *** (the “Closing Sum”).




          4.2 ***




          4.3 Within *** following the date hereof, AAI shall prepare and deliver to Medicis a detailed
statement of AAI’s fees and expenses incurred from and after January 1, 2005 through and including
January 31, 2005, for the services provided by or on behalf of AAI to Medicis (the “Expense
Statement”), accompanied by reasonably detailed invoices evidencing the incurrence of such fees and
expenses. Any and all expenses incurred in connection with the preparation of the Expense
Statement shall be the sole responsibility of AAI.




          4.4 The Expense Statement shall become final and binding upon the Parties within thirty (30)
days following the receipt thereof by Medicis, unless Medicis notifies AAI of an objection thereto
in writing within such 30-day period, which writing shall set forth in reasonable detail the
reasons for Medicis’ objection (an “Objection Notice”). If Medicis sends an Objection Notice to
AAI, Medicis and AAI shall negotiate in good faith to resolve the matter or matters in dispute.
If, within thirty (30) days following the date of the Objection Notice, such disputes have not been
resolved, the Parties shall submit the dispute to be resolved to *** or another “Big Four”
accounting firm mutually acceptable to the Parties (the “Accounting Firm”). Medicis and AAI will
direct the Accounting Firm to deliver within thirty (30) days after its retention a written report
stating its resolution of such disputes and Medicis and AAI and their respective agents will
cooperate with the Accounting Firm during its engagement. Following the issuance of the Accounting
Firm’s written report, the Expense Statement (as adjusted in accordance with such written report)
shall be final, binding and not subject to any appeal. The
fees and expenses of the Accounting Firm shall be paid one-half by Medicis and one-half by
AAI.




          4.5 If the aggregate amount of fees and expenses reflected on the Expense Statement as finally
determined in accordance with Section 4.4 is less than the Estimated January Expenses, then
AAI will, within *** after the date of such final determination, reimburse and pay to Medicis an
amount equal to the difference between (a) the Estimated January Expenses and (b) the aggregate
amount of fees and expenses reflected on the Expense Statement as finally determined in accordance
with Section 4.4. No payment will be required by either Party if the aggregate amount of
fees and expenses reflected on the Expense Statement as finally determined in accordance with
Section 4.4 is greater than the Estimated January Expenses.





3









 








     5. Closing and Deliveries.



          5.1 Closing. The consummation of the transactions contemplated hereby shall take
place at a closing (the “Closing”), to be held at the offices of Akin Gump Strauss Hauer & Feld
LLP, 590 Madison Avenue, New York, NY, at 10:00 a.m. local time, or another mutually acceptable
time and location. The date of Closing is hereinafter called the “Closing Date.” The Closing
shall be effective for all purposes as of 11:59 p.m. on the Closing Date.




          5.2 Deliveries.




               5.2.1 At the Closing, AAI shall deliver, or shall cause to be delivered, the following to
Medicis:




	 	(a)	 	The Work Product pursuant to Section 1;
	 
	 	(b)	 	The Transferred Contracts pursuant to Section 2;
	 
	 	(c)	 	A quality control agreement, duly executed by AAI; and
	 
	 	(d)	 	Such other agreements, consents, documents, instruments and writings as are
reasonably requested by Medicis or otherwise required to be delivered by AAI at or
prior to the Closing Date pursuant to this Agreement.





               5.2.2 At the Closing, Medicis shall deliver, or shall cause to be delivered, the following to
AAI:




	 	(a)	 	The payments required to be made by Medicis to AAI pursuant to Sections
4.1 and 4.2;
	 
	 	(b)	 	A quality control agreement, duly executed by Medicis; and
	 
	 	(c)	 	Such other agreements, consents, documents, instruments and writings as are
reasonably requested by AAI or otherwise required to be delivered by Medicis at or
prior to the Closing Date pursuant to this Agreement.





     6. Transition Services.



               6.1.1 Subject to the terms of this Agreement, following the Closing Date and until termination
as provided in Section 16.1 hereof, (i) AAI shall, in accordance with the Work Plan, including the
hourly fee rates attached hereto as Exhibit II or Exhibit III and incorporated
herein by reference, perform certain clinical and non-clinical work relating to the Work Product,
including, but not limited to, clinical monitoring services, data management services, stability
work and Product optimization in accordance with industry standards and manufacturing-related
services relating to the Products in accordance with industry standards, all as more fully
described in each written service estimate or statement of work to be signed by both of the Parties
hereto (“Service Estimates”) incorporated into the Work Plan (collectively, the “Initial
Services”), and (ii) Medicis shall pay AAI for such Initial Services in accordance with the Service
Estimates included within the Work Plan and their related fee schedules until



4









 




the Initial Services
are terminated, as provided herein. The Parties acknowledge and agree that all of the Service
Estimates entered into and to be entered into by the Parties are part of Exhibit II, and if
applicable to manufacturing, shall be subject to the terms and conditions of Exhibit III.




               6.1.2 The hourly fee rates shall be subject to annual review and increase. Hourly fees are
exclusive of third party fees, costs and expenses, including shipping and material costs. All
out-of-pocket third party costs and expenses related to the Services, including shipping, shall be
passed through to Medicis at cost ***. Unless otherwise agreed to in any Service Estimate, Medicis
shall be billed monthly for the Initial Services. The Parties may agree in writing to additional
or modified Initial Services, all of which shall be documented in a Service Estimate or change
order incorporated into the Work Plan by written agreement between the Parties.



               6.1.3 To the extent that certain components of the Work Product are necessary in order for AAI
to continue its services in accordance with the provisions of this Section 6.1, AAI shall
be permitted to retain a copy of such materials; provided, that it provides Medicis with a written
notice setting forth the specific Work Product that it has copied and that such copies are returned
to Medicis promptly following the completion of such Initial Services. AAI shall provide Medicis
with a written update, not less than weekly, of the Initial Services performed by AAI under this
Section 6.1, including electronic and hard copy documentation of the Work Product generated
in performing the Initial Services that are necessary or useful to obtaining governmental approval
for the commercialization or manufacture of the Products.



               6.1.4 Without the prior written approval of Medicis, AAI shall not knowingly utilize in the
performance of the Services hereunder or under any Service Estimate, nor incorporate into the
resulting Work Product, any intellectual property or proprietary rights of AAI and/or any third
party (“Outside Technology”), except as AAI is freely permitted to do so without further
compensation from Medicis.



          6.2 Following the Closing Date, (a) AAI shall manufacture commercial batches, including bulk
clinical supply and samples, of Products in accordance with industry standards and the
manufacturing terms attached hereto as Exhibit III and incorporated herein by reference
(collectively, the “Manufacturing Services”, and together with the Initial Services, the
“Services”), until such Manufacturing Services are terminated in accordance with the terms
hereof, including Exhibit III hereto, and (b) Medicis shall pay AAI for such
Manufacturing Services in accordance with Section 7 hereof and the fee schedule set forth in
Exhibit III hereto. AAI shall provide Medicis with updates, not less than weekly, of the
Manufacturing Services performed by AAI under this Section 6.2, including available
electronic and hard copy documentation of the Work Product generated in performing the
Manufacturing Services that are necessary or useful to obtaining governmental approval for the
commercialization or manufacture of the Products.




          6.3 To the extent that the Services performed by AAI hereunder yield Work Product, such Work
Product shall be the property of Medicis. AAI shall provide Medicis or its designee with a
complete disclosure of all such Work Product not yet disclosed to Medicis on a monthly basis, or
more frequently, if available, and (c) AAI shall execute such documents and




5









 







take such steps as are
necessary in order to vest Medicis with full record ownership of such Work Product.




          6.4 AAI shall reasonably cooperate with and assist Medicis, at Medicis’ expense with respect
to third party costs, (a) in transferring the Manufacturing Services promptly following the date on
which the United States Food and Drug Administration (the “FDA”) approves the Product (the “FDA
Approval Date”) to a third party designated by Medicis (the “New Manufacturing Site”), and (b) in
obtaining appropriate governmental qualifications, including all required FDA approvals, necessary
for the New Manufacturing Site to perform the Manufacturing Services. Upon the request of AAI, AAI
shall have the right to review and provide comments to Medicis with respect to the applications to
be submitted to the FDA for approval of the New Manufacturing Site. Within *** following the later
of the FDA Approval Date and the date on which the FDA approves the New Manufacturing Site (the
“New Site Approval Date”), Medicis shall pay to AAI, by wire transfer in immediately available
funds to a account designated by AAI, ***; provided that AAI is not then in breach of its
obligations under this Section 6.4.




          6.5 During the term of Exhibit III hereto and until the *** of the termination of
Exhibit III hereto, AAI and its Affiliates shall not, for their own benefit or for the
benefit of any third party other than Medicis and its successors and assigns or *** and its
successors and assigns ***, manufacture products containing modified minocycline or Extended
Release Minocycline; provided, however, that AAI and its Affiliates shall not manufacture products
containing modified minocycline or Extended Release Minocycline in capsule or tablet form for ***.




     7. Payments for Services. (a) All payments for Services shall be made by wire
transfer in immediately available funds to a bank account designated in writing by AAI prior to the
date such payment is due. AAI shall provide to Medicis written invoices for Services and Medicis
shall pay such invoices *** following Medicis’ receipt thereof. In the event Medicis fails to pay
such amount on the date due as referenced in the applicable invoice, AAI shall send written notice
to Medicis of such failure, and Medicis shall have the right to pay such amount in full without
interest thereon within *** of the date Medicis receives such notice. AAI reserves the right to
charge, and Medicis shall pay, interest at the then Prime Rate as determined by Citibank N.A. plus
*** on all past due amounts; provided, however, that no such interest shall be
charged to the extent that the failure of Medicis to make a timely payment hereunder arises from
a good faith dispute between Medicis and AAI with respect to the amount due. If AAI shall not
have received payment of an invoice within *** following the date of Medicis’ receipt of such
invoice, AAI shall have the right to cease performance of Services hereunder without liability to
Medicis provided that AAI is not then in breach of its obligations under this Agreement. AAI shall
have no further obligation to perform such Services, unless and until such amounts have been paid,
and following delivery of such payment, AAI shall promptly recommence its obligations to perform
Services hereunder. In the event that during the term of this Agreement, Medicis shall fail on ***
occasions to make payment of an invoice within *** following the date of Medicis’ receipt of the
applicable invoice, AAI shall have the right upon one hundred eighty (180) days prior written
notice to Medicis to terminate this Agreement without liability to Medicis provided that AAI is not
then in beach of its obligations under this Agreement.



6









 





     (b) If the Parties have a dispute regarding any payment hereunder and they are unable to reach
agreement thereon within 60 days of the date of the first invoice for such payment, an independent
arbitrator mutually appointed by the Parties and expert in accounting shall be retained to
determine the matter or matters in dispute. The Parties shall each submit one (1) proposal to the
arbitrator who shall be required to select one (1) of the submitted proposals, and the arbitrator
shall not be entitled to compromise between such proposals. The arbitrator’s determination shall
be made within thirty (30) days of submission and shall be conclusive and binding upon the Parties.
Each Party shall provide the arbitrator with all relevant books and records, any work papers,
supporting documentation and any other documentation used in determining its proposal pursuant to
this Section 7(b); provided that such documentation shall be concurrently provided to the
other Party. All fees and expenses of the arbitrator shall be paid by the Party whose proposal is
not selected.



     8. AAI Performance. AAI shall use commercially reasonable efforts to perform and
timely complete its obligations under this Agreement in conformity with the terms and conditions of
this Agreement. AAI shall comply with all applicable United States federal, state and local laws
and regulations in performing the Services, including but not limited to current Good Manufacturing
Practices, Good Clinical Practices, Good Laboratory Practices, ICH guidelines, and all other
applicable FDA regulations in effect at the time that the obligations are performed (“Applicable
Laws”).



     9. Mutual Representations, Warranties and Covenants. Each of the Parties represents,
warrants and covenants to the other that:



          9.1 It shall not use the services of any persons debarred or suspended under 21 U.S.C. §
335a(a) or (b) in any capacity associated with or related to the manufacture of Products. It shall
not hire or retain as an officer or employee any person who has been convicted of a felony under
the laws of the United States for conduct relating to the regulation of any drug product under the
United States Food, Drug, and Cosmetic Act (the “Act”);




          9.2 It is validly existing and in good standing under the laws of the state of its
incorporation;




          9.3 The execution of this Agreement and full and timely performance of the covenants, duties
and obligations described herein have been duly authorized by all necessary corporate action in
accordance with all applicable United States federal, state and local laws;




          9.4 It has the full power and authority to execute and deliver this Agreement and perform its
covenants, duties and obligations described in this Agreement;




          9.5 This Agreement is a valid, legal and binding obligation upon such Party, enforceable
against such Party in accordance with its terms, except as enforceability may be limited by
applicable insolvency and other laws affecting creditors’ rights generally or by the availability
of equitable remedies; and




          9.6 It is not aware of any impediment that would inhibit its ability to perform its
obligations hereunder.




7









 








     10. AAI’S Representations, Warranties and Covenants.



          10.1 All Products manufactured or supplied by AAI or its agents shall conform to, and shall be
manufactured in conformity with, any and all Applicable Laws, including, but not limited to,
current Good Manufacturing Practices, Good Clinical Practices, Good Laboratory Practices, ICH
guidelines, the NDA and all other applicable FDA regulations;




          10.2 When shipped from AAI, All Products shall conform to the applicable Specifications (as
such term is defined in Exhibit III hereto) therefor;




          10.3 When shipped from AAI, Product shall not be adulterated within the meaning of the Act,
and shall not be an article which may not, under the Act, be introduced into interstate commerce;




          10.4 Product shall be free and clear of all liens, security interests, or other encumbrances;




          10.5 All studies performed by AAI and its agents shall be performed in conformity with current
and applicable Good Manufacturing Practices, Good Clinical Practices, Good Laboratory Practices,
ICH guidelines and all other applicable FDA regulations;




          10.6 AAI and its agents shall maintain all records and reports as required to comply with
applicable United States federal, state and local work regulations, as required by FDA regulations,
and as further required under the Work Plan and in connection with the Services;




          10.7 AAI and its agents shall obtain informed consent from any study subjects used by AAI or
its agents in the performance of this Agreement; and




          10.8 Provided that Medicis remains current on all amounts due to AAI, AAI shall make prompt
payment to all of its subcontractors under this Agreement.




          10.9 THESE EXPRESS WARRANTIES IN ARTICLE 10 ARE IN LIEU OF, AND AAI DISCLAIMS ALL
OTHER CONDITIONS, REPRESENTATIONS, WARRANTIES AND STATEMENTS REGARDING THE PRODUCTS AND SERVICES
PROVIDED TO MEDICIS HEREUNDER, WHETHER EXPRESS OR IMPLIED BY STATUTE, CUSTOM OF THE TRADE OR
OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY SUCH CONDITION, WARRANTY, OR STATEMENT RELATING TO
THE DESCRIPTION OR QUALITY OF PRODUCTS, THEIR MERCHANTABILITY, OR THEIR FITNESS FOR A PARTICULAR
PURPOSE OR USE UNDER ANY CONDITION) AND ANY SUCH CONDITION, WARRANTY OR STATEMENT IS HEREBY
EXCLUDED.




          IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR LOST PROFITS, PUNITIVE OR OTHER
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT. THE LIMITATION ON LIABILITY SET FORTH IN THIS SECTION SHALL NOT APPLY TO EITHER PARTY’S
INDEMNIFICATION OBLIGATIONS UNDER



8









 




THIS AGREEMENT OR DAMAGES ARISING OUT OF A PARTY’S INTENTIONAL
BREACH OF, OR MISCONDUCT UNDER, THIS AGREEMENT.




     11. Certain Obligations.



            11.1 Supply of Active Ingredient.





	 	(a)	 	AAI shall use the Active Ingredient already provided to it by Medicis to
perform its obligations hereunder. Thereafter, Medicis shall, at its sole cost and
expense, deliver the Active Ingredient to AAI in quantities agreed to between the
Parties. All risk (other than arising from or in connection with AAI’s or its
employees’, agents’ or subcontractors’ negligence or willful or reckless actions or
misconduct), right, title and interest in and to the Active Ingredient shall at all
times belong to and remain in Medicis. AAI shall only use the Active Ingredient
received by it to perform the Services. AAI shall promptly notify Medicis in writing
of any Active Ingredient that does not meet the specifications identified in Attachment
I of Exhibit III, and AAI shall return such Active Ingredient in accordance
with Medicis’ instructions to either Medicis or its designee at Medicis’ risk and
expense.






	 	(b)	 	AAI shall not be responsible for any loss or damage to the Active Ingredient,
except where such loss or damage occurs as a result of AAI’s or its employees’, agents’
or subcontractors’ negligence or willful or reckless actions or misconduct. In such
circumstances, AAI shall promptly reimburse Medicis for the Reimbursable Value (as such
term is defined in Exhibit III hereto) therefor. Except as otherwise provided
herein, all other supplies and materials that are required for the Services shall be
obtained by AAI.





          11.2 Safety. Each Party shall be responsible for the safety of its own employees and
agents with respect to the handling, use, or storage of materials involved in performance of the
Services.




          11.3 Regulatory Approvals. Medicis shall own all right, title and interest in and to
the regulatory approvals for the Products. Medicis has responsibility for the content of any
Product labels, packaging and instructions and shall supply same to AAI.




          11.4 Regulatory Reporting. AAI shall promptly inform Medicis in accordance with FDA
regulations of any adverse events and other regulatory reporting events or activities arising from
performance of the Work Plan or the Services.




          11.5 Subcontractors. In the event that AAI desires to use the services of third
parties to perform any of AAI’s obligations under this Agreement, AAI shall first obtain the prior
written approval of Medicis with respect to each such subcontractor and, prior to such approval and
thereafter, shall provide Medicis with any information reasonably requested by Medicis or any
governmental or regulatory authority with respect to each such subcontractor. With respect to each
subcontractor approved by Medicis, which approval shall be granted by Medicis in its sole and
absolute discretion, AAI shall ensure that each such subcontractor complies with the




9









 







applicable obligations of AAI under this Agreement and shall enter into a written agreement with each such
subcontractor that:





	 	(a)	 	contains obligations of confidentiality on such subcontractor no less
protective of Medicis Confidential Information than the obligations of AAI under this
Agreement, unless otherwise agreed to by Medicis in a signed writing;
	 
	 	(b)	 	requires such subcontractor to enter in to a confidentiality agreement in the
form attached as Exhibit IV hereto;
	 
	 	(c)	 	shall include substantially the same terms as those appearing in Section 9 of
the DCL Agreement “Ownership of Work Product” to ensure that Medicis obtains the same
rights in the Work Product generated under such subcontractor agreement as those set
forth in this Agreement;
	 
	 	(d)	 	permits Medicis to exercise its inspection and audit rights pursuant to
Section 12 “Inspections and Audits” hereof; and
	 
	 	(e)	 	without Medicis’ prior written consent, does not impose any payment obligations
and/or liability on Medicis.





          11.6 Storage of Original Records. Records related to or arising out of the
performance of the Services shall be stored by AAI in accordance with the FDA’s archival
guidelines. At least ninety (90) days prior to the expiration of the storage period required by
the FDA, AAI shall notify Medicis in writing of such expiration, and at the end of such period,
shall transfer such records to Medicis in a manner designated by Medicis. Medicis shall be
responsible for the reasonable cost of the transfer of such records.




          11.7 Insurance. Each Party shall maintain comprehensive general liability insurance,
including blanket contractual liability insurance covering its obligations under this Agreement
while this Agreement is in effect, which insurance shall afford limits of not less than *** for
each occurrence for bodily injury liability, personal injury liability, products liability,
property damage liability, contractual liability and completed operations liability. The Parties
shall provide each other with certificates of insurance evidencing the above and showing the
name of the issuing company, the policy number, the effective date, the expiration date and the
limits of liability. The insurance certificate shall further provide for a minimum of thirty (30)
days written notice to the other Party of a cancellation of or material change in the insurance.
AAI’s insurance policy shall name Medicis as an additional insured, and Medicis’ insurance policy
shall name AAI as an additional insured. AAI’s comprehensive general liability insurance policy
shall contain a waiver of subrogation rights which Medicis’ insurer(s) may have against it, and
Medicis’ comprehensive general liability insurance policy shall contain a waiver of subrogation
rights which AAI’s insurer(s) may have against it.




     12. Inspections and Audits.



          12.1 Medicis and its authorized representatives shall have the right to inspect the
manufacturing and testing facilities of AAI and its subcontractors or agents, and to discuss and
review in detail the manufacturing and testing process and quality control procedures used




10









 







(and the
records created) by AAI during the performance of the Services with any employees or consultants
familiar with the Services; provided, however, that such inspections shall be
during normal business hours and shall not unreasonably interrupt the operations of AAI. Such
inspections shall be made no more frequently than once every *** unless (i) consented to by AAI,
such consent not to be unreasonably withheld; (ii) such inspection relates to a Product recall,
correction or failure or review of process optimization and validation activities, or (iii) AAI is
subject to any inspection pursuant to Section 12.2 below.




          12.2 AAI shall cooperate with the FDA or any other governmental agency with respect to any
inspections it may require of AAI’s facilities and procedures in connection with provision of the
Services. AAI shall promptly notify in writing and provide copies to Medicis of any communications
regarding the Services, the manufacture of the Products or the Products sent to or received from
the FDA. Medicis shall promptly notify in writing and provide copies to AAI of any written
communications regarding the manufacture of the Products or the Products sent to or received from
the FDA.




     13. Indemnification.



          13.1 Indemnification by Medicis. Subject to the terms of Section 13.3,
Medicis shall indemnify, defend and hold the AAI Indemnified Parties harmless from and against any
and all Claims, in each case to the extent such Claims arise out of: (a) a breach or inaccuracy of
any representation or warranty made by Medicis in this Agreement; (b) a material breach of this
Agreement by Medicis; (c) any negligence or willful or reckless actions or misconduct of Medicis or
its employees, agents and/or subcontractors; (d) any allegation of infringement or misappropriation
of copyright or trademark rights of any party resulting from the Products, including Medicis’
instructions for labeling, or packaging of the Products; (e) harm to a third party arising out of
the inherent toxicological properties of Active Ingredient and the Products or (f) the handling,
storage, shipment, labeling, marketing, sale and use of the Products by Medicis. Notwithstanding
the foregoing, Medicis shall not be liable for any Claims to the extent caused by any of the AAI
Indemnified Parties as determined in a final, non-appealable order of a court of competent
jurisdiction.




          13.2 Indemnification by AAI. Subject to the terms of Section 13.3, AAI shall
indemnify, defend and hold the Medicis Indemnified Parties harmless from and against any and all
Claims, in each case to the extent such Claims arise out of: (a) a breach or inaccuracy of any
representation or warranty made by AAI in this Agreement; (b) a material breach of this Agreement
by AAI; (c) any negligence or willful or reckless actions or misconduct of AAI or its employees,
agents and/or subcontractors; (d) or any allegations of infringement or misappropriation of any
patent or trade secret rights arising out of AAI’s or AAI’s employees’; agent’s or subcontractors
performance of the Services. Notwithstanding the foregoing, AAI shall not be liable for any Claims
to the extent caused by any of the Medicis Indemnified Parties as determined in a final,
non-appealable order of a court of competent jurisdiction.




          13.3 Procedures for Indemnification.




               13.3.1 General. Promptly after becoming aware of same, the Party seeking
indemnification (the “Indemnified Party”) shall notify the other Party (the



11









 




“Indemnifying Party”)
of any Claim covered under the terms of Sections 13.1 or 13.2, as applicable, for
which the Indemnified Party seeks indemnification; provided, however, that any
delay in giving such notice shall not relieve the Indemnifying Party hereunder except to the extent
such delay materially prejudices the Indemnifying Party’s ability to defend against such Claim or
materially increases the amount of damages awarded or paid in settlement of such Claim. For a
period that shall not exceed ten (10) business days following any such notification, the
Indemnified Party and Indemnifying Party shall investigate and discuss in good faith whether such
claim is subject to indemnification under Sections 13.1 or 13.2, as applicable.
During such discussions, the Indemnified Party shall give the Indemnifying Party full access to all
records, data and personnel of the Indemnified Party as may be reasonably necessary to make such
determination. If the parties are unable to agree on whether the Indemnifying Party is required to
indemnify the Indemnified Party under the terms of Sections 13.1 or 13.2, as
applicable, the Indemnifying Party, at its option, shall either assume or decline defense of the
Claim, including negotiations for its settlement or compromise.




               13.3.2 Defense Assumed. If the Indemnifying Party assumes defense of a third party
Claim as described herein, the Indemnified Party shall reasonably cooperate with the Indemnifying
Party in the defense of such third party Claim and may be represented, at the Indemnified Party’s
expense, by counsel of its choice, provided, that, where the Indemnifying Party has assumed
defense of a third party Claim, the Indemnifying Party shall have sole control over such defense.
The Indemnifying Party shall not be responsible for defending any claims other than those described
in Sections 13.1 or 13.2, as applicable, even if brought in the same suit. In
addition to the foregoing, if a court of competent jurisdiction later determines that a third party
Claim for which the Indemnifying Party assumed defense was not eligible for indemnification under
Sections 13.1 or 13.2, as applicable, within *** following such determination, the
Indemnified Party shall reimburse the Indemnifying Party in full for all judgments, costs and
expenses (including reasonable attorneys’ fees) incurred in connection with such third party Claim.



               13.3.3 Defense Declined. If the Indemnifying Party declines to assume defense of any
third party Claim, and it is later determined by a court of competent jurisdiction that such third
party Claim was eligible for indemnification under Sections 13.1 or 13.2, as
applicable, within *** following such determination, the Indemnifying Party shall reimburse
the Indemnified Party in full for all judgments, costs and expenses (including attorneys’ fees and
expenses) incurred in connection with such third party Claim.



               13.3.4 Settlement of Third Party Claims. The Indemnifying Party shall not settle any
third party Claim without the prior written consent of the Indemnified Party if such settlement:
(a) materially diminishes any of the Indemnified Party’s rights under this Agreement or seeks to
impose additional obligations on the Indemnified Party; or (b) arises out of or is a part of any
criminal action, suit or proceeding or contains a stipulation or admission or acknowledgement of
any liability or wrongdoing (whether in contract, tort or otherwise) on the part of the Indemnified
Party.



               13.3.5 Contributory Negligence; Right of Contribution. Nothing contained herein shall
bar a claim for contributory negligence or a Party’s right of contribution.



12









 





     14. Confidential Information.



          14.1 Medicis Confidential Information. AAI acknowledges and agrees (a) that (i) Work
Product created by or on behalf of AAI or Medicis pursuant to this Agreement, (ii) any plans,
specifications, designs, data, results, information, works in progress and any other documents or
material provided by or on behalf of Medicis for the provision of Services, and (iii) any
information, works in progress, trade secrets, data or other secret, sensitive or confidential
material related to the business technology, products, systems, formulas, practices, processes,
customers or projects of Medicis that are disclosed to or become known by AAI during the term of
this Agreement and which are not generally known to the public constitute the confidential
information of Medicis (collectively the “Medicis Confidential Information”); (b) to hold such
Medicis Confidential Information in strict confidence; (c) not to disclose such Medicis
Confidential Information to any third party, except as necessary to perform its obligations
hereunder, provided that such third party is bound to keep such information confidential in
accordance with the terms hereof and AAI shall be responsible for any breach by such third party of
the terms hereof; (d) to use such Medicis Confidential Information only as necessary to perform the
Services; and (e) upon termination of this Agreement, to destroy or return all tangible Medicis
Confidential Information (including tangible media containing Medicis Confidential Information) to
Medicis. Notwithstanding the foregoing, AAI may retain one (1) copy to the extent required by any
Applicable Law. Medicis Confidential Information shall include the identity of the investigators
used to conduct the clinical tests. This provision shall not supercede and replace any previous
confidentiality and/or non-disclosure agreements between the Parties, other than those previous
confidentiality and/or non-disclosure provisions which directly and specifically cover the Services
provided hereunder.




          14.2 AAI Confidential Information. Medicis acknowledges and agrees (a) that any
information, work in progress, trade secrets, data or other secret, sensitive or confidential
material related to the business technology, products, systems, formulas, practices, processes,
customers or projects of AAI that are disclosed to or become known by Medicis during the term of
this Agreement and which are not generally known to the public constitute the confidential
information of AAI (collectively the “AAI Confidential Information”) (b) to hold such AAI
Confidential Information in strict confidence; (c) not to disclose such AAI Confidential
Information to any third party; and (d) to use such AAI Confidential Information only as
reasonably useful to further develop, manufacture, and/or commercialize any Products or any
formulation based on the Products. AAI Confidential Information includes AAI intellectual
property, technology, know-how and processes (whether or not patented or patentable) developed by
AAI prior to execution of this Agreement, including the AAI Test Procedures (the “AAI Intellectual
Property”). Medicis acknowledges that AAI shall remain the exclusive owner of all AAI Intellectual
Property; provided, however, that in no event shall AAI Intellectual Property include any Work
Product.




          14.3 Notwithstanding Sections 14.1 and 14.2, either party may disclose Medicis
Confidential Information or AAI Confidential Information in response to (i) an order from a court
or governmental agency; (ii) in response to a party in litigation, provided that an appropriate
protective order has been entered; or (iii) if such disclosure is necessary to comply with any
other laws or regulations applicable to the disclosing party.






13









 








          14.4 Notwithstanding Section 14.2, Medicis may disclose any AAI Confidential
Information, including without limitation any plans, specifications, designs, processes, reports,
papers, formulas and any other information and material provided to Medicis under this Agreement to
third parties as reasonably useful to further develop, enhance, improve, manufacture, or
commercialize any Products or any formulations based on the Products; provided,
however, that Medicis shall require any such third parties to execute a corresponding
confidentiality agreement reasonably acceptable to AAI.




     15. Further Assurances.



          15.1 From time to time following the date hereof, at the request of any Party hereto and
without further consideration, the other Party hereto shall execute and deliver to such requesting
Party such agreements, instruments and documents and take such other action as such requesting
Party may reasonably request in order to consummate more fully and effectively the transactions
contemplated hereby.




     16. Termination.



          16.1 Term and Termination. This Agreement (including Exhibits II and
III) shall commence on the date of its execution. Unless sooner terminated, as permitted
by this Agreement, including Section 2.1(b) of Exhibit III, the Manufacturing Services
shall remain in full force and effect for an initial term of four (4) years from the Post-Launch
Date (as such term is defined in Exhibit III and as more fully described in Section 2.1(b)
of Exhibit III) , or such other time as the parties hereto shall mutually agree. The
Initial Services may be terminated from time to time, in whole or in part, by Medicis upon thirty
days written notice to AAI or by AAI in accordance with Section 7 hereof. Exhibits II and
III and this Agreement to the extent related thereto, may also be terminated as follows:





	 	(a)	 	by mutual agreement of the Parties;






	 	(b)	 	by either Party by written notice to the other upon the occurrence of either of
the following events:






	 	(i)	 	either Party is in material breach of this Agreement and fails
to cure such breach within *** after receipt of written notice from the other
Party identifying the breach;
	 
	 	(ii)	 	either Party enters into bankruptcy, whether voluntary or
involuntary, has a receiver appointed, becomes insolvent, enters into any
arrangement with its creditors, takes or suffers any similar action in
consequence of debt or ceases or threatens to cease to carry on its business as
usual or permits the entry of an order adjudicating it to be bankrupt or
insolvent and such order is not discharged within ***; or
	 
	 	(iii)	 	as permitted by Section 17.5 hereof.






	 	(c)	 	Any termination or expiration of this Agreement shall not affect any
outstanding obligations or payments due hereunder prior to such termination or
expiration, nor




14









 






	 	 	 	shall it prejudice any other remedies that the Parties may have under
this Agreement.





     16.2 Effect of Termination. Upon termination of the Initial Services, in whole or in
part, or Exhibit III or both:




               16.2.1 Upon termination of any Initial Services , AAI shall stop the performance of such
Initial Services and Medicis shall pay AAI for any Initial Services performed prior thereto which
have not yet been paid for and shall reimburse AAI for costs and expenses incurred or uncancellable
prior to the date of such termination; provided, however, that in such event AAI shall have a duty
to cancel and mitigate such costs and expenses. Upon termination of Exhibit III, AAI shall
stop the performance of the Manufacturing Services provided thereunder. Notwithstanding the
foregoing, if requested, and pre-paid for, by Medicis, AAI shall complete or cause the completion
of the manufacturing of any work-in-process that is subject to a firm order (including a Binding
Order (as such term is defined in Exhibit III)) on the date on which the termination is
effective.



               16.2.2 Medicis shall (in addition to any other remedies AAI may have in the event of default
by Medicis):




	 	(a)	 	***
	 
	 	(b)	 	***
	 
	 	(c)	 	***





     17. Miscellaneous.



          17.1 Notices. All notices and consents required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if and when (a) delivered
personally, (b) mailed by first class certified mail, return receipt requested, postage prepaid, on
the date certified by the U.S. Postal Service to have been received by the addressee, (c) by
facsimile, provided the sender personally calls the recipient and confirms receipt of such
facsimile, or (d) on the date certified by a nationally recognized overnight express courier
service to have been received by the recipient, as follows:


If to AAI:



President

aaiPharma

2320 Scientific Park Drive

Wilmington, NC 28405

Tel: ***

Fax: 910-815-2387




15









 







With a copy to:



General Counsel

aaiPharma

2320 Scientific Park Drive

Wilmington, NC 28405

Tel: ***

Fax: 910-815-2340



If to Medicis:



Chief Executive Officer

Medicis Pharmaceutical Corporation

8125 North Hayden Road

Scottsdale, AZ 85258-2463

Tel: ***

Fax: 602-778-6007



and



Legal Department

Medicis Pharmaceutical Corporation

8125 North Hayden Road

Scottsdale, AZ 85258-2463

Tel: ***

Fax: 602-808-3881




          17.2 Relationship Between Parties. The relationship of AAI to Medicis shall be that
of an independent contractor, and no provision of this Agreement shall be construed to constitute
any Party as a partner or joint venturer of the other Party, or an employer or employee of the
other. Except as may be more specifically set forth herein, (a) neither Party shall be liable in
any manner for the debts and liabilities of the other Party, and (b) each Party shall be solely
responsible for all costs and expenses incurred by it in performing its obligations under this
Agreement.




          17.3 Media Releases. Neither Party shall issue or release any media release or public
announcement (including, without limitation, any announcements made via any posting on the World
Wide Web or Internet), or other similar publicity announcing the existence of this Agreement, the
termination letter agreement or relating to any term or condition of this Agreement in any country
or the relationships created by this Agreement without providing the other Party at least three (3)
business days prior notice in order to review and comment on such release or announcement;
provided, however, that such prior notice shall only be required to the extent that
any release or announcement contains information that is substantially different (including
expansive) from that previously issued or released by either or both of the Parties hereto; and
provided, further, however, that no such release or announcement shall
include a Party’s or its Affiliates’ corporate identifiers without the express prior written
approval of such Party. Notwithstanding the foregoing, each Party shall have the right to issue
media releases,





16









 







immediately and without prior consent of the other Party, that disclose any
information required by the rules and regulations of the Securities and Exchange Commission or any
federal, state or foreign law or regulation; provided, that the disclosing Party shall use
commercially reasonable efforts to notify the other Party prior to disclosure, provide a copy of
the relevant wording relating to the Agreement or term or condition of the Agreement, and seek
confidential treatment of any information that the other Party reasonably requests to be maintained
as confidential. AAI shall contact the following Medicis representatives for any required
approval: Chief Financial Officer at ***; Director of Investor Relations at ***; or Chief
Executive Officer at ***. Medicis shall contact the following AAI representatives for any required
approval: Chief Executive Officer or General Counsel at ***.




          17.4 Assignments. Neither Party shall voluntarily, by operation of law or otherwise,
assign any of its rights or obligations under this Agreement without the prior written consent of
the other Party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, this Agreement may be assigned by either party, without the other party’s consent, as
part of a merger transaction involving such Party or an assignment or sale of all, or substantially
all, of its assets or business to which this Agreement relates, and either Party may assign its
rights and obligations under this Agreement to an Affiliate, provided that it promptly notifies the
other Party of the assignment.




          17.5 Force Majeure. Any delays in performance or failure to perform by either Party
under this Agreement (including the performance under the Exhibits hereto) shall not be construed
as a breach of this Agreement (or corresponding Exhibit) if and to the extent such delay is caused
by occurrences beyond the reasonable control of the Party affected (“Force Majeure”), including but
not limited to acts of God, embargoes, governmental restrictions, strikes or other concerted acts
of workers, fire, flood, explosion, riots, terrorism, wars, civil disorder, rebellion or sabotage.
Delays caused by events for which a Party could have but failed to take commercially reasonable
steps to prevent or compensate for (e.g. fire insurance, data backup) shall not be considered to be
caused by Force Majeure events and delays in making payments when due hereunder shall not be
considered to be caused by Force Majeure events. The non-performing Party shall, upon giving
written notice to the other Party of the reason for delay, due to Force Majeure, be temporarily
excused from such performance to the extent of such prevention, interference or delay, provided
that the non-performing Party shall use its commercially reasonable best efforts to avoid or remove
such causes of non-performance and shall continue performance with the utmost dispatch whenever
such causes are removed. In the
event that a Force Majeure causes a continuous delay in excess of ***, the Agreement may be
terminated by either party upon *** written notice to the other party.




          17.6 Controlling Document. In the event of any conflict between the terms and
conditions of this Agreement and any terms and conditions set forth in any Exhibits hereto or
Service Estimates, proposals, invoices or purchase orders, the terms and conditions of this
Agreement shall control.




          17.7 Costs and Attorneys’ Fees. The prevailing Party in any suit or proceeding
arising out of or relating to this Agreement shall be entitled to recover all of its costs and
expenses, including reasonable attorneys’ fees.





17









 








          17.8 Parties in Interest. This Agreement shall bind AAI and Medicis and their
respective successors, agents and permitted assigns, if any. There are no third party
beneficiaries to this Agreement, except for the AAI Indemnified Parties and the Medicis Indemnified
Parties.




          17.9 No Waivers. No failure to exercise, delay in exercising, or single or partial
exercise of any right, power, or remedy by either party shall constitute a waiver of, or shall
preclude any other or further exercise of, the same or any other right, power, or remedy.




          17.10 Severability. If any provision of this Agreement is construed to be invalid,
illegal, or unenforceable, then the remaining provisions of this Agreement shall not be affected
thereby and shall be enforceable without regard thereto but construed and reformed so as to conform
as nearly as possible to the intent of the Parties in entering into this Agreement.




          17.11 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original hereof, and it shall not be
necessary, in making proof of this Agreement, to produce or account for more than one counterpart
hereof.




          17.12 Controlling Law. This Agreement is made under, and shall be construed and
enforced in accordance with, the laws of the State of Delaware, without regard to that State’s
conflict of law rules or principles.




          17.13 Entire Understanding. This Agreement, along with any other attachments,
appendixes, Exhibits, or schedules hereto, states the entire understanding between the Parties with
respect to the subject matter hereof, and supersedes all earlier and contemporaneous oral and
written communications and agreements or promises made with respect to the same subject matter, and
any other previous agreements, promises, or representations of any kind with respect to the
relationship between the Parties hereto. This Agreement shall not be modified except as provided
in this Agreement or in a written document signed by both Parties.




          17.14 Jurisdiction and Venue. The Parties hereby submit to the jurisdiction of, and
waive any venue objections against, the United States District Court for the District of Delaware
and the state courts of Delaware, in any litigation or dispute arising out of this Agreement.




          17.15 Headings and References. The headings and captions used in this Agreement are
used for convenience only and are not to be construed or interpreting this Agreement.




          17.16 Parties Represented by Counsel. Each of the Parties has been represented by
counsel in the negotiation and drafting of this Agreement. Both Parties have participated in its
drafting. This Agreement shall not be construed against either Party on account of it having been
drafted by the other Party or by lack of representation by counsel.




          17.17 Survival. The Parties agree that the following provisions of this Agreement
shall survive the expiration or termination of this Agreement: 1.2, 3, 10.9, 11.6, 13, 14, 16, 17,
and Article 4 and Section 6.1 of Exhibit III.







18









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their duly authorized officers as of the date first above written.



	 	 	 	 	 
	 	MEDICIS PHARMACEUTICAL CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AAIPHARMA INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




19











 





Schedule 2




TRANSFER CONTRACTS




1. MP-0104-04:




***




13 sites




	 	 	 
	Study Counter-party	 	Principal Investigator
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***






2. MP-010405:




***




16 sites




	 	 	 
	Study Counter-party	 	Principal Investigator
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***






1









 






3.
MP-0104-07:




***




28 sites




	 	 	 
	Study Counter-party	 	Principal Investigator
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***






4. MP-0104-09:




***




	 	 	 
	Study Counter-party	 	Principal Investigator
	***

	 	***






5. MP-0104-10 — Study completed, awaiting data report




***




	 	 	 
	Study Counter-party	 	Principal Investigator
	***

	 	***
	***

	 	***
	***

	 	***






2









 






6. Other Agreements



•  ***



•  ***



•  ***



•  ***



•  ***



•  ***




7. MP-0104-01




14 sites




	 	 	 
	Study Counter-party	 	Principal Investigator
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***






3









 






EXHIBIT II




WORK PLAN







 









 








EXHIBIT II-A

WORK PLAN




***



 









 





EXHIBIT II-B

WORK PLAN




***



 









 





EXHIBIT II-C

WORK PLAN




***



 









 





EXHIBIT II-D

WORK PLAN




***



 









 





EXHIBIT II - E

WORK PLAN




***



 









 





EXHIBIT II-F

WORK PLAN




***



 









 





EXHIBIT III




MANUFACTURING TERMS
















































 









 








EXHIBIT III




[Execution Copy]




MANUFACTURING TERMS





	1. INTERPRETATION
	 
	1.1	 	Definitions. Capitalized terms used herein which are not defined shall have the
meanings given to such terms in the Agreement. In addition, as used herein, the following
capitalized terms shall have the meanings set forth below:






     “Active Materials” and “Minocycline” shall mean Minocycline Hydrocholoride.




     “Agreement” shall mean that certain Transition Agreement, dated as of January 28,
2005, between Medicis and AAI, as the same may be amended from time to time in accordance with its
terms.




     “Alternate Supplier Products” shall mean modified release oral dosage forms for
Minocycline produced for Medicis by a manufacturer or manufacturers other than AAI.




     “Closing Date” shall have the meaning given to such term in the Agreement.




     “Components” shall mean, collectively, all packaging components, raw materials and
ingredients (including labels, product inserts and other labeling for the Products), required to be
used in order to produce the Products in accordance with the Specifications, other than the Active
Materials.




     “Exhibit III” shall mean this Exhibit III – Manufacturing Terms to the
Agreement.




     “Inventory” shall mean all inventories of Components and work-in-process produced or
held by AAI in connection with the manufacture of the Products in accordance with the
Specifications, but, for greater certainty, shall not include the Active Materials.




     “Product(s)” shall mean modified release oral dosage forms for Minocycline as
developed by AAI for Medicis.




     “Quality Control Agreement” shall mean that certain Quality Control Agreement, dated
as of the date of the Agreement, between Medicis and AAI, as the same may be amended from time to
time in accordance with its terms.




     “Reimbursable Value” shall mean the actual replacement cost of the Active Materials at
the time of replacement.




     “Shortage” shall mean, with respect to any batch, any amount of Product delivered to
Medicis from that batch that is less than *** of the Theoretical Yield.



1









 






     “Specifications” shall mean shall mean the specifications of the Product set forth in
Attachment A hereto and in the Quality Control Agreement.




     “Term” shall have the meaning given to such term in Section 5.1 hereof.




     “Theoretical Yield” shall mean the yield set forth in Attachment A hereto.




     “Trademarks” shall mean DYNACIN®, MEDICIS®, and all other trademarks and trade names,
registered or unregistered, that are owned or used by Medicis.




	1.2	 	Attachments. The following exhibits are attached to this Exhibit III and are
incorporated in and are deemed to be an integral part hereof:





	 	 	 	 	 
	Attachment A

	 	-
	 	Product List and specifications for Products and
Active Materials
	 
	 	 	 	 
	Attachment B

	 	-
	 	Price List
	 
	 	 	 	 
	Attachment C

	 	-
	 	Stability Testing Procedures/Fee Schedule
	 
	 	 	 	 
	Attachment D

	 	-
	 	Lot Numbering and Expiration Dates







	2.	 	MANUFACTURE AND SUPPLY OF PRODUCTS
	 
	2.1	 	Manufacture.






	 	(a)	 	From and after the Closing Date and until the later of (i) the date which is
*** after the FDA Approval Date, or (ii) the New Site Approval Date (the “Post-Launch
Date”), AAI shall manufacture and sell to Medicis, and Medicis shall be required to
purchase from AAI, one hundred percent (100%) of Medicis’ required commercial supply,
including bulk clinical supply and samples, of the Products.
	 
	 	(b)	 	From and after:






	 	(i)	 	the Post-Launch Date and until and including the ***, AAI shall
manufacture and sell to Medicis, and Medicis shall be required to purchase from
AAI, not less than *** of the following: Medicis’ required commercial supply of
the Products plus Alternate Supplier Products during such time period;
	 
	 	(ii)	 	the *** and until and including ***, AAI shall manufacture and
sell to Medicis, and Medicis shall be required to purchase from AAI, not less
than *** of the following: Medicis’ required commercial supply of the Products
plus Alternate Supplier Products during such time period;




2









 






	 
	 	(iii)	 	the *** and until and including ***, AAI shall manufacture and
sell to Medicis, and Medicis shall be required to purchase from AAI, not less
than *** of the following: Medicis’ required commercial supply of the Products
plus Alternate Supplier Products during such time period; and
	 
	 	(iv)	 	the *** and until and including ***, AAI shall manufacture and
sell to Medicis, and Medicis shall be required to purchase from AAI, not less
*** of the following: Medicis’ required commercial supply of the Products plus
Alternate Supplier Products during such time period;]






; provided, however, that in no event shall Medicis be required to purchase
any Products from AAI under this Section 2.1(b) if, at any time, or from time to
time, the prices offered by AAI for its Products are less favorable than the prices
available to Medicis for Alternate Supplier Products by *** or more. In the event that the
prices offered by AAI are less favorable than the prices offered by another supplier by ***
or more and Medicis purchases from AAI an amount of Products which is less than the
percentage of the Products set forth in this Section 2.1(b) during the periods set forth in
this Section 2.1(b), then AAI shall have the right, upon *** notice to Medicis, to terminate
the Manufacturing Services. Within *** of each year-end referenced in Section 2.1(b),
Medicis shall provide AAI with all documentation reasonably necessary for AAI to confirm the
total amount of Products plus Alternate Supplier Products purchased by Medicis during the
applicable year, and in the event Medicis has purchased less than the required applicable
percentage from AAI, documentation regarding the price paid by Medicis for the Alternate
Supplier Products.




	2.2	 	Packaging. Medicis shall be solely responsible for the content of all labels,
product inserts and other labelling (“Labeling”) and shall ensure that all such Labeling
complies in all material respects with applicable law. AAI shall package the Products with
Labeling as specified and approved by Medicis. Medicis may, in its sole discretion, make
changes to Labeling for the Products, which changes shall be submitted by Medicis to all
applicable governmental agencies and other third parties responsible for the approval of the
Products, if required. AAI’s name shall not appear on the Labeling or anywhere else on the
Products unless required by a governmental authority or other applicable laws or regulations.
	 
	2.3	 	Quality Control and Assurance.






	 	(a)	 	AAI shall manufacture and supply the Products in accordance with (i) the
Specifications; (ii) the approved NDA; and (iii) the current Good Manufacturing
Practices for manufacturing finished products specified by the FDA (collectively,
“GMPs”). AAI’s responsibilities and obligations with respect to the manufacture
of Products as set forth in this Section 2.4(a) are hereinafter referred to
as the “AAI Manufacturing Requirements.”
	 
	 	(b)	 	AAI shall perform such quality control and quality assurance testing as is
reasonably required by the Quality Control Agreement to ensure that the Products




3









 






	 	 	 	comply with all of the AAI Manufacturing Requirements as of the date of shipment to Medicis.






	 	(c)	 	If the Products as manufactured by AAI do not satisfy its quality control and
quality assurance testing obligations due to AAI’s failure to produce the Products in
accordance with the Quality Control Agreement, AAI shall, at its sole cost and expense,
manufacture additional Products to replace such defective Products. In such
circumstances, Medicis shall have no obligation to purchase or pay for any rejected
Products that are defective, unless and only to the extent that such Product is used by
Medicis for another purpose, in which event Medicis shall only be required to pay for
that portion of the rejected Products which it actually so uses.
	 
	 	(d)	 	The Parties hereto agree that except in the circumstances where AAI has failed
to comply with the AAI Manufacturing Requirements, AAI shall not be liable or have any
responsibility for any deficiencies with respect to the Labeling and procedures
specified by Medicis, sales and marketing of the Products or distribution of the
Products.
	 
	 	(e)	 	AAI shall provide Medicis with a certificate of conformance, a certificate of
analysis, and copies of the batch record, any deviation and investigation reports, and
Labeling prior to shipping Products to Medicis. The certificate of analysis will set
out the actual test results for each lot of Products, and will certify that the
Products shipped to Medicis have been evaluated by AAI’s Quality Control/Quality
Assurance department and that the Products comply with the Specifications. Medicis
shall issue a formal QA release prior to the shipment of product by AAI.






	2.4	 	Delivery. All Product(s) shall be delivered F.O.B. from AAI’s manufacturing
facility. Medicis shall be responsible for arranging the shipment of the Product(s) from
AAI’s manufacturing facility to its final destination. All shipping costs and taxes
associated with the sale to Medicis of Products hereunder will be for the account and expense
of Medicis.
	 
	2.5	 	Rejection of Products.






	 	(a)	 	Medicis shall inspect the Products manufactured by AAI within *** after receipt
thereof and shall give AAI written notice (a “Deficiency Notice”) of all Shortages and
obvious damage to or defects in the delivered Products, prior to the expiry of *** day
period, except that Medicis shall give AAI a Deficiency Notice of any non-obvious
defects, including failure to meet Specifications, within *** following discovery
thereof. Except as set forth in Section 4.2 below, AAI shall
have no liability for any Shortages or defects for which it has not received a
Deficiency Notice within such ***.
	 
	 	(b)	 	A Deficiency Notice pursuant to this Section 2.5 shall describe the
deficiency in such detail as to reasonably inform AAI of its nature and basis.
Thereafter, upon 




4









 






	 	 	 	request, Medicis shall provide AAI with all information and
documentation reasonably requested by AAI in order to evaluate the Deficiency Notice.
AAI shall have a period of *** after its receipt of a Deficiency Notice to present in
writing to Medicis any objections AAI may have to the matters set forth therein. If no
objections are raised within such ***, the Deficiency Notice shall be deemed final and
accepted and approved by AAI on such ***. If AAI shall raise any objections, Medicis
and AAI shall attempt to resolve the matters in dispute, and if resolved, the Parties
shall accordingly revise the Deficiency Notice and the Deficiency Notice as so revised
shall become final. If such dispute cannot be resolved by the Parties within *** after
delivery of the Deficiency Notice to AAI, then, upon *** prior written notice to the
other party, the matters in dispute shall be submitted to Boston Analytical, Inc. of
Salem, New Hampshire, unless objected to by either party within the *** notice period,
or such other laboratory as agreed to in writing by the Parties (in either case, the
“Laboratory”), which Laboratory shall make a final and binding determination as to such
matters. The expenses associated with such dispute determination by the Laboratory
shall be borne by the Party whose position was not substantiated by such firm.






	 	(c)	 	To the extent that a deficiency is set forth in a final Deficiency Notice, AAI
shall, as soon as is commercially reasonable but in no event later than *** after the
Deficiency Notice becomes final in accordance with Section 2.6(b) hereof, supply
Medicis with Product conforming to the Specifications in an amount equal to the
deficiency, and reimburse Medicis for all Active Materials consumed in the production
of such Product, at the Reimbursable Value.






	2.6	 	Manufacturing-Related Services.






	 	(a)	 	Upon the written request of Medicis, AAI shall conduct stability testing on the
Products in accordance with the protocols submitted by Medicis and a Service Estimate
to be agreed to between the Parties, the particulars of which will be incorporated into
Attachment C hereto once agreed to and executed by the Parties. AAI shall not
make any changes to the testing procedures without prior written approval from Medicis.
In the event that any lot of Products fails stability testing, AAI and Medicis shall
jointly determine the proceedings and methods to be undertaken to investigate the
causes of such failure, including which Party shall bear the cost of such
investigation. AAI shall not be liable for any costs of such investigation, unless
there has been a breach by AAI of the AAI Manufacturing Requirements. In the event of
a breach by AAI of the AAI Manufacturing Requirements, AAI shall promptly reimburse
Medicis for (a) Medicis’ actual costs with respect to the Active Materials delivered by
Medicis to AAI in the manufacture of such Products, and (b) the purchase price paid for
any batches of Products which fail stability testing as a result of AAI’s breach. AAI
will provide Medicis with any and all data and results relating to the stability testing in
accordance with the Quality Control Agreement. From time to time, AAI may, at the
request of Medicis, also provide Medicis with stability testing services with
respect to products not manufactured by AAI, the cost of such services to be agreed
to between the Parties prior to such services being undertaken. Medicis




5









 






	 	 	 	reserves its right to use an alternative second source of stability testing at any time.






	 	2.6.2	 	The pricing contained in Attachment B does not apply to manufacturing-related
services set forth in Service Estimates.






	2.7	 	Manufacturing Changes. Except with respect to the New Manufacturing Site and as
provided in the Quality Control Agreement, AAI shall not make any change in the manufacturing
site of the Products or make any change to the manufacturing equipment or manufacturing
process of the Products without having such changes approved in writing by Medicis prior to
implementation. Medicis may not unreasonably withhold or delay such approval. Both Parties
will establish a change control procedure.






	3.	 	ORDERS, DELIVERY, INVOICING AND PAYMENT
	 
	3.1	 	Yearly Forecasts. On the Closing Date, Medicis shall provide AAI with a forecast of
the volume of each Product required during the first year of the Agreement. Medicis shall
provide AAI with rolling forecasts of the volume of each Product required during the next ***
months (or such shorter period if expiration of the Term shall be less than *** months from
the date of such forecasts). Such rolling quarterly volume forecasts shall (i) be updated by
Medicis by the 15th day of every month with respect to the next full ***; (ii) with
respect to the first *** months of such forecasts, be a binding commitment that Medicis is
obligated to order and purchase from AAI as forecasted and shall not be subject to reduction
(“Binding Order”); and (iii) with respect to all periods other than the *** of such forecasts
subject to the Binding Order, be updated as soon as practicable by Medicis upon its
determination that the volumes contemplated in the most recent of such forecasts have changed
by *** or more.
	 
	3.2	 	Written Orders. The written Binding Orders submitted by Medicis to AAI pursuant to
Section 3.1(ii) hereof shall specify Medicis’ purchase order number, quantities by
Product type, monthly pick-up schedule and any other elements reasonably necessary to ensure
the timely production of the Products.
	 
	3.3	 	Packaging and Raw Materials. All Components shall be purchased (with the exception
of those which are supplied by Medicis), and tested in accordance with the Quality Control
Agreement, by AAI at AAI’s expense to ensure that such Components meet any Specifications.
Amendments to such Specifications requested by Medicis will only be implemented with the
approval of AAI following a technical and cost review, such approval not to be unreasonably
withheld but being subject to Medicis and AAI reaching agreement as to price revisions
necessitated by any such amendment in accordance with Section 3.7 below.
	 
	3.4	 	Change in Specifications.






	 	(a)	 	If Medicis requests a change in the manufacturing process, Specifications or
Labeling which would result in an increase in AAI’s costs for Components, the Parties
shall discuss what impact, if any, such change should have on the price of the
Products. Unless otherwise agreed by the Parties, any and all direct costs




6









 






	 	 	 	associated with Specification changes, including changes requested by Medicis or required by
applicable law, shall be borne by Medicis. The price change shall become effective
only with respect to those orders of Products which are manufactured in accordance with
the revised Specifications.
	 
	 	(b)	 	Notwithstanding any change in the Specifications implemented in accordance with
the terms of Section 3.4(a) above, Medicis agrees to purchase all Products manufactured
by AAI and ordered by Medicis based upon any “old” Specifications at the then-current
price for those Products. In addition, Medicis agrees to purchase, at AAI’s
out-of-pocket cost, all Inventory, defined as the finished product, raw materials and
components, utilized under the “old” Specifications and purchased or maintained by AAI
in order to fill firm written orders (including a Binding Order), to the extent that
such Inventory can no longer be utilized under the revised Specifications. Medicis
shall reimburse AAI for any out-of-pocket costs associated with destruction of such
obsolete Inventory or Active Materials. Open purchase orders for Components no longer
required under any revised Specifications which were placed by AAI with suppliers in
order to fill firm written orders (including a Binding Order) shall be cancelled where
possible, and where such orders are not subject to cancellation without penalty, such
orders shall, at AAI’s election, either (i) be cancelled, with Medicis paying the
penalty; or (ii) be assigned to and satisfied by Medicis.






	3.5	 	Invoices and Payment. Except as otherwise provided in this Exhibit III, AAI
shall charge Medicis for only those Products that are released by Medicis in accordance with
the terms hereof, including Section 2.5 hereof. AAI shall submit to Medicis, with each such
shipment of Products, an invoice covering such shipment. AAI shall also provide Medicis with
an invoice covering any Inventory or Components purchased by Medicis from AAI in accordance
with the terms of this Exhibit III. Each such invoice shall, to the extent
applicable, identify the Medicis purchase order number, Product numbers, names and quantities,
unit price, freight charges and the total amount to be remitted by Medicis. Medicis shall pay
all such invoices within *** of the receipt thereof.
	 
	3.6	 	Lot Numbering/Expiration Dates. AAI shall make arrangements for and implement the
imprinting of lot numbers and expiration dates for each Product shipped. Such lot numbers and
expiration dates shall be affixed on the Products and on the shipping carton of each product
as is required by GMPs. The system used by AAI for lot numbering and expiration dates is
detailed on Attachment D hereto.
	 
	3.7	 	No Guarantee: Except as expressly provided in this Exhibit III, AAI
acknowledges that there are no guaranteed volumes of the Products.
	 
	4.	 	CO-OPERATION
	 
	4.1	 	Records and Accounting by AAI. AAI shall keep records of the manufacture, testing
and shipping of the Products, and retain samples of such Products that are necessary to comply
with FDA manufacturing requirements and AAI Manufacturing Requirements as well as to assist
with resolving product complaints and other similar investigations.





7









 





	 	 	Copies of such records and samples shall be made available to Medicis upon its reasonable request and shall be
retained by AAI and be available to Medicis for a period of *** following the date of
manufacture, or *** past expiry or longer if required by law.
	 
	4.2	 	Product Recalls.






	 	(a)	 	AAI and Medicis shall each maintain records as may be necessary to permit a
recall or a field correction of any the Products delivered to Medicis or customers of
Medicis, effected voluntarily or under a threat of, or a directive by, any governmental
agency. Each Party shall give immediate notice by telephone (to be confirmed in
writing) to the Director of Quality Control/Quality Assurance of the other Party upon
discovery that any Products should be recalled or corrected, or may be required to be
recalled or corrected, and, each Party upon receiving any such notice or upon any such
discovery, shall evaluate the need to cease and desist from further shipments of such
Products in its possession or control until a decision has been made whether a recall
or some other corrective action is necessary. The decision to initiate a recall or to
take some other corrective action, if any, shall be made and implemented by Medicis.
AAI will co-operate as reasonably required by Medicis, having regard to all applicable
laws and regulations. Each Party shall co-operate with the other in developing any
necessary recall plan, and the manner and extent of such plan shall be subject to prior
consultation, which consultation shall not unreasonably delay such plan.
	 
	 	(b)	 	To the extent that a recall results from, or arises out of, any breach by AAI
of the AAI Manufacturing Requirements then (i) AAI shall reimburse Medicis for Medicis’
documented out-of-pocket, direct costs and expenses arising from the recall, and (ii)
AAI shall replace the recalled Products with new Products as soon as commercially
reasonable, contingent upon the receipt or availability from Medicis of all Active
Materials; provided, however, that if AAI shall have all of the
Components and Active Materials necessary to manufacture the Products on its premises,
then AAI shall begin manufacturing to replace the recalled Products with new Products
within *** following the resolution of all issues related to such recall. AAI’s cost
for such Active Materials lost as a result of any breach by AAI of the AAI
Manufacturing Requirements shall be limited to the Reimbursable Value thereof. In the
event that (x) AAI is unable to replace the recalled Products within the time period
required by the immediately preceding sentence (except where such inability results
from a failure to receive the required Active Materials, Components or a Force Majeure
event), or (y) such new Products are also recalled or returned due to a breach by AAI
of the AAI Manufacturing Requirements, then AAI shall reimburse Medicis for the
purchase price that Medicis paid AAI for the returned inventory of the affected
Products. Medicis shall be responsible for all costs and expenses associated with a recall or
corrective action that does not result from, or arise out of, a breach by AAI of the
AAI Manufacturing Requirements.






	4.3	 	Governmental Agencies. Medicis shall have sole responsibility for obtaining any and
all necessary regulatory approvals from the FDA for modifications to the manufacturing




8









 






	 	 	process, Specifications and NDA and for reporting any modifications to such manufacturing
process, Specifications or the NDA to the FDA as appropriate.






	4.4	 	Customer Questions and Complaints. Medicis shall have the sole responsibility for
responding to questions and complaints from Medicis customers. Questions or complaints
received by AAI from Medicis customers shall be promptly referred to Medicis. AAI shall
co-operate as reasonably required to allow Medicis to determine the cause of and resolve any
customer questions and complaints. Such assistance shall include follow-up investigations
including testing. In addition, within ten (10) days from the date of request, AAI shall
provide Medicis with all available information that will assist Medicis in responding to
questions or complaints relating to the Products. All costs incurred in respect of this
Section 4.4 shall be borne by the respective Parties who incurred such costs. Medicis
shall fax product complaints to AAI within *** after Medicis confirms such complaint to:




AAI Development Services

Attention: Corporate Quality

2320 Scientific Park Dr.

Wilmington, NC 28405





	5.	 	TERM
	 
	5.1	 	Term. The term of the terms and conditions of this Exhibit III shall
commence on the Closing Date and continue for the term described in Section 16.1 of the
Agreement, unless terminated as provided therein or in Section 2.1(b) hereof or extended for
such period of time as the parties hereto shall mutually agree to in writing (the “Term”).
	 
	6.	 	REPRESENTATIONS AND WARRANTIES
	 
	6.1	 	Formulas and Trademarks. Medicis represents and warrants that the Specifications for
each of the Products are its property and that Medicis may lawfully disclose the
Specifications to AAI. Medicis further represents and warrants that any trademarks it
authorizes to be utilized by AAI in connection with any of the Products, including the
Trademarks, are its property and may be lawfully used as directed by Medicis. Medicis further
represents and warrants that the Specifications for all Products conform in all material
respects to all applicable laws and regulations, and that the Products if labelled and
formulated in accordance with the Specifications and manufactured in compliance with
applicable GMPs may be lawfully sold and distributed in every jurisdiction in which Medicis
markets such Products and Medicis will sell and distribute in compliance with applicable laws.
	 
	7.	 	PRICE
	 
	7.1	 	Price. The prices for the Products are shown in Attachment B hereto and
incorporated herein by reference. In addition, Medicis shall be responsible for the payment
of any and all sales and use taxes applicable to the Products and services described herein.
The prices may be adjusted by AAI on the anniversary of the first firm order by Medicis, and




9









 






	 	 	annually thereafter by the total percentage change in the price of the Product as reflected in
the *** over the preceding ***. AAI shall notify Medicis of such increase within *** days of
the price change date.






	8.	 	MISCELLANEOUS
	 
	8.1	 	Permits. AAI shall, at its own expense, obtain and maintain the necessary permits
required for the manufacture and supply of the Products, provided that AAI shall not be
responsible for obtaining or maintaining any other permits or other regulatory approvals in
respect of the Products or the Specifications, which shall be the sole responsibility of
Medicis.
	 
	8.2	 	Trademarks. Medicis and AAI hereby acknowledge that neither Party has, nor shall it
acquire, any interest in any of the other Party’s copyrighted material, trademarks, trade
names or other intellectual property unless otherwise expressly agreed to in writing. The
Parties agree not to use any trademark or trade name of the other Party, except as
specifically authorized by the other Party.
	 
	8.3	 	Reports. AAI will supply on an annual basis, Product data, including release test
results, complaint test results and all investigations (in manufacturing, testing and storage)
directly related to the Product and AAI’s ability to produce the Products in accordance with
all applicable laws, and will also prepare and complete the full Annual Product Review, which
Medicis will then review before preparing the Annual Report with the FDA. If Medicis
reasonably finds the Annual Product Review non-conforming, AAI shall prepare an appropriate
revision.
	 
	8.4	 	Additional Product. The Parties covenant and agree that additional products may be
added to Attachment A hereto and such additional products shall be governed by the
general conditions hereof with any special terms (including, without limitation, price)
governed by an addendum hereto.




10









 











ATTACHMENT A




PRODUCTS AND SPECIFICATIONS



***




1











 





ATTACHMENT B



A. PRICE LIST




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Product	 	Fill	 	 	Annual	 	 	Run	 	 	Unit Price	 
	Description	 	Size	 	 	Quantity	 	 	Quantity	 	 	(USD)	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





1









 






ATTACHMENT C




STABILITY TESTING PROCEDURES/FEE SCHEDULE




***








1









 








ATTACHMENT D




LOT NUMBERING AND EXPIRATION DATES




***








 









 








EXHIBIT IV




FORM OF CONFIDENTIALITY AGREEMENT




 









 






EXHIBIT IV




Form of Confidentiality Agreement for Subcontractors




CONFIDENTIALITY AGREEMENT




This
Agreement is made the             day of                     , 200___ (this “Agreement”), by and between
[COMPANY], a [INSERT STATE] corporation, having offices at                                                                                                      (hereinafter “COMPANY”), and
                                        , an individual residing [or a corporation, maintaining principal
offices] at (hereinafter referred to as “RECIPIENT”).




          WHEREAS, COMPANY possesses certain valuable and confidential information, data and expertise
(collectively the “Confidential Information”) relating to COMPANY’s pharmaceutical business
activities, technology, research and development activities, and COMPANY’S product development
activities in collaboration with Medicis Pharmaceutical Corporation, a Delaware corporation, having
offices at 8125 North Hayden Road, Scottsdale, AZ 85258 (hereinafter “MEDICIS”);




          WHEREAS, some of the Confidential Information has been provided to COMPANY by MEDICIS and is
considered by MEDICIS to be secret and confidential, and the Confidential Information is a valuable
commercial asset of MEDICIS, and COMPANY is contractually obligated to MEDICIS to treat and keep
this Confidential Information as secret and not allow it to be used other than on behalf of MEDICIS
in accordance with that certain                                                              Agreement between MEDICIS and
COMPANY dated as of                                          (as the same may be amended from time to time in
accordance with its terms, the “Medicis Agreement”);




          WHEREAS, COMPANY desires to contract with RECIPIENT to provide services to COMPANY as a
subcontractor to COMPANY in the performance of COMPANY’s obligations under the Medicis Agreement,
pursuant to a written agreement between COMPANY and RECIPIENT;




          WHEREAS, MEDICIS consents, subject to the terms and conditions hereof, to the disclosure of
Confidential Information, to RECIPIENT for the purpose of enabling RECIPIENT to perform its
functions and obligations as a subcontractor to COMPANY.




          NOW THEREFORE, in consideration of the foregoing premises that are hereby incorporated as a
part of this Agreement and the mutual covenants hereinafter set forth, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:





	1.	 	COMPANY shall disclose and/or authorize disclosure through designated representatives to
RECIPIENT all relevant Confidential Information as deemed necessary by COMPANY to facilitate
RECIPIENT’S ability to perform its functions and obligations as a subcontractor to





1









 





		 	COMPANY. RECIPIENT shall accept and hold such Confidential Information in confidence in
accordance with the provisions hereof.






	2.	 	Without the prior written consent of COMPANY, RECIPIENT shall neither (i) disclose, directly
or indirectly, to any third party or permit any third party to have access to any of MEDICIS’
Confidential Information disclosed to RECIPIENT by COMPANY, nor (ii) use, directly or
indirectly, such Confidential Information for any purpose other than as set forth herein.
However, the aforesaid obligations of confidentiality assumed by RECIPIENT shall not apply to
any Confidential Information that RECIPIENT can clearly demonstrate falls within any of the
following categories:






	 	(a)	 	Confidential Information that is now generally known to the public in an
integrated written form or subsequently becomes generally known to the public in an
integrated written form through no fault of RECIPIENT or breach of any other
confidentiality obligation owed to COMPANY or MEDICIS;
	 
	 	(b)	 	Confidential Information that, as of the time of disclosure to RECIPIENT, was
already known to and in the possession of RECIPIENT as evidenced by written records and
not otherwise subject to a confidentiality obligation; or
	 
	 	(c)	 	Confidential Information obtained after the date hereof by RECIPIENT from a
third party lawfully in possession of, and having the right to disclose same.






	3.	 	For purposes of keeping Confidential Information confidential, the RECIPIENT shall use
efforts at least commensurate with those employed by RECIPIENT for the protection of its own
Confidential Information, but the use of such efforts shall not constitute a defense in the
event that any of the Confidential Information is not kept confidential in accordance with the
terms of this Agreement. The RECIPIENT shall take all reasonable measures including, but not
limited to, court proceedings, at its own expense, to restrain consultants, agents,
associates, employees or former employees from unauthorized use or disclosure of Confidential
Information and RECIPIENT shall be liable to COMPANY and/or MEDICIS for any damages resulting
from the breach by any of RECIPIENT’S consultants, agents, associates, employees or former
employees of the terms hereof. RECIPIENT acknowledges that in the event of a breach of this
Agreement, both COMPANY and MEDICIS may suffer irreparable damage that may not be fully
remedied by monetary damages. RECIPIENT therefore agrees that COMPANY, or MEDICIS, or both of
them shall be entitled to seek injunctive relief against any such breach in any court of
competent jurisdiction. COMPANY’s and MEDICIS’ rights under this Section 3 shall not in any
way be construed to limit or restrict their rights to seek other damages or relief available
under this Agreement or applicable law.






	4.	 	Except as may otherwise be expressly set forth in an agreement between the parties hereto
entered into after the date hereof, neither COMPANY nor RECIPIENT make and shall not be deemed
to make or have made any representation or warranty as to the accuracy or completeness of the
Confidential Information or any part thereof.




2









 












	5.	 	Except as provided in Section 1 hereof, no license or other right to use the Confidential
Information is granted hereby.






	6.	 	The disclosure of Confidential Information by COMPANY to RECIPIENT shall not result in any
obligation on the part of either party to enter into any future agreement relating to the
Confidential Information or to undertake any other obligation not set forth in written
agreement signed by the parties hereto.






	7.	 	Confidential Information furnished by COMPANY to RECIPIENT under this Agreement shall remain
COMPANY’s or MEDICIS’ property, and any document or recording/reproduction containing such
Confidential Information in written or other form shall be promptly returned to COMPANY or
MEDICIS upon request. Return or destruction of Confidential Information of documents or other
tangible things which embody or record the Confidential Information does not affect the
continuing obligations of the RECIPIENT under this Agreement.






	8.	 	RECIPIENT acknowledges that any work product (including but not limited to data, reports
including case reports and case report forms, interpretations, opinions and recommendations),
trade secret information, copyrightable work product and any and all other intellectual
property rights developed, derived from or otherwise generated by RECIPIENT, directly or
indirectly, from the Information shall be owned by and belong exclusively to COMPANY. Further,
RECIPIENT agrees to treat such work product or information as Confidential Information subject
to the confidentiality, nonuse and nondisclosure obligations hereunder. RECIPIENT agrees to
promptly and fully disclose such work product or information to COMPANY. RECIPIENT hereby
assigns and agrees to assign to COMPANY the ownership right, title, and interest in such
material, including, without limitation, inventions (whether patentable or unpatentable), and
copyrightable work product and COMPANY shall have the right to obtain and hold in its own
name, without obligation of any kind to RECIPIENT, patents, copyrights, or other protection
which may be available or become available with respect to such items. RECIPIENT further
agrees to give COMPANY and its designees or assignees all assistance reasonably required to
perfect such rights, titles and interests. These obligations shall survive and continue beyond
the termination of this Agreement and shall be binding upon RECIPIENT’s assigns, executives,
administrators and other legal representatives.






	9.	 	With the exception of personal and confidential patient medical records, all case report
forms and other reports and data generated during the course of any study performed by
RECIPIENT as a subcontractor to COMPANY between the parties shall be the sole property of
COMPANY. Such data may be used by COMPANY or MEDICIS for any purpose without further
obligation or liability to the RECIPIENT, unless otherwise agreed to in writing by the
parties.






	10.	 	RECIPIENT represents and warrants that it is not now nor shall it be a party to any other
agreement or under any obligation to or restriction by any third party which would prevent the
RECIPIENT from entering into this Agreement or which would conflict with any of its
obligations under this Agreement or any of the undertakings set forth herein in any manner.




3









 












	11.	 	Neither party hereto shall be entitled to assign its rights hereunder without the express
written consent of the other party, except that COMPANY may assign it rights under this
Agreement to MEDICIS.
	 
	12.	 	A waiver by either party of any term or condition of this Agreement in any instance shall not
be deemed or construed to be a waiver of such term or condition for the future, or of any
subsequent breach thereof. All rights, remedies, undertakings, or obligations contained in
this Agreement shall be cumulative and none of them shall be in limitation of any other right,
remedy, undertaking, or obligation of either party.
	 
	13.	 	If and to the extent that any court of competent jurisdiction holds any provision or part of
this Agreement to be invalid or unenforceable, the remainder of this Agreement shall be
construed and reformed so as to as to as nearly as possible give effect to the intentions of
the parties in entering in to this Agreement, and to as completely as possible protect the
confidentiality of MEDICIS’ Confidential Information.
	 
	14.	 	In the event that RECIPIENT becomes legally compelled to disclose any of the Confidential
Information, RECIPIENT shall give COMPANY prompt notice so that they may seek a protective
order or other appropriate remedy or waive compliance with the provisions of this Agreement.
In the event that such protective order or other remedy is not obtained, or the COMPANY waives
compliance with the provisions of this Agreement, RECIPIENT shall furnish only that portion of
the Confidential Information which is legally required to be disclosed.
	 
	15.	 	Without the prior written consent of COMPANY, RECIPIENT shall not disclose to any person or
entity (a) the terms of its engagement involving COMPANY, MEDICIS and RECIPIENT, (b) that
RECIPIENT has requested or received any Confidential Information, or (c) any of the terms,
conditions or other facts with respect to any work performed by RECIPIENT as a subcontractor
to COMPANY, including the status thereof.
	 
	16.	 	This Agreement shall be construed in accordance with and governed by the laws of the State of
Delaware without regard to that State’s conflict-of-laws rules or principles requiring the
application of the laws of another jurisdiction. MEDICIS is an express third party
beneficiary of this Agreement, with full rights to enforce the provisions hereof as if a party
hereto.
	 
	17.	 	This Agreement contains the entire understanding between the parties with respect to the
matters contemplated herein and supersedes all previous written and oral negotiations,
commitments, and understandings. This Agreement cannot be altered or otherwise amended except
pursuant to an instrument in writing signed by each of the parties hereto and making specific
reference to this Agreement.





[Signature Page Follows]





4









 








          IN WITNESS HEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the date first above written.




	 	 	 	 	 	 	 
	COMPANY	 	RECIPIENT
	 
	By:  
	 	 	 	By:  	 	 
	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:
	 	 	Name:	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title:
	 	 	Title:	 
	 
	 	 	 	 	 	 










5









 








AGREEMENT OF QUALITY / TECHNICAL RESPONSIBILITY



This document constitutes the Quality/Technical Agreement (“QT Agreement”) of responsibilities
for contract pharmaceutical manufacture and/or packaging is between AAI Development Services
(“AAI”) and Medicis Pharmaceutical Corporation (“Medicis”). This QT Agreement is incorporated
within, and intended to supplement, the Manufacturing Terms attached as Exhibit III to that certain
Transition Agreement (the “Manufacturing Terms”) between the parties dated January 28, 2005 with
respect to the Product manufactured thereunder.



This QT Agreement defines the individual responsibilities of Medicis and AAI, and in particular
defines who is responsible for the cGMP aspects of manufacturing and specifies the way in which
Product Batches will be released for sale, ensuring that the Product complies with the Regulatory
Approval and the Product Specifications.



The QT Agreement takes the form of a detailed checklist of all the activities associated with
pharmaceutical production, analysis, release, and distribution. Responsibility for each activity
is assigned either to AAI or Medicis, or is designated as not applicable (“N/A”) in the appropriate
tick box. In the event of a conflict between terms of this QT Agreement and the Manufacturing
Terms, the terms of the Manufacturing Terms shall govern.




KEY CONTACTS:



All quality issues (except medical or non-medical Product complaints, or regulatory affairs) will
be directed through the Key Quality Assurance contact, as listed below, for each party.



If any key contacts change for a party, such party will notify the other party in writing and
designate a new contact person. Other contacts within each party may be identified as needed to
facilitate communication of technical issues.




KEY CONTACTS:




	 	 	 	 	 
	Area of Responsibility	 	AAI	 	Medicis
	Quality Assurance

	 	***
	 	***
	Regulatory Affairs

	 	***
	 	***
	Technical Services

	 	***
	 	***
	Medical Affairs

	 	***
	 	***
	Non-medical 

Product Complaints

	 	***
	 	TBD








 




			
	*	 	Key Quality Assurance contact




Page 1 of 13









 










DEFINITIONS



Capitalized terms used, but not defined herein, shall have the meaning given to them in the
Manufacturing Terms.




TERMS





	 	1.	 	The term of this QT Agreement will begin on the Effective Date (see 3. below)
and will expire on the date of expiration or earlier termination of the Manufacturing
Terms.
	 
	 	2.	 	The parties will review this QT Agreement at least annually to verify that
the technical responsibilities allocated in this QT Agreement are current and valid.
	 
	 	3.	 	The “Effective Date” of this QT Agreement will be the signature date of the
last party to sign this QT Agreement. The QT Agreement shall be fully implemented
within thirty (30) days of the Effective Date.





CHANGE CONTROL PROCESS





	 	 	 	Either party may propose updates, amendments, modifications, or supplements
(collectively, the “Amendments”) to this QT Agreement. No Amendment will be valid
or effective unless made in writing and signed by duly authorized officers of both
parties.






Page 2 of 13











 





	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	1	 	 	COMPLIANCE REQUIREMENTS
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.1	 	 	Perform and maintain all
audit documentation
regarding supplier(s) of
Active Ingredient for the
Products.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.2	 	 	Perform and maintain all
qualification
documentation regarding
suppliers of Components
for the Products.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.3	 	 	Manufacture, test and
package Product in strict
adherence to the approved
drug application, cGMPs,
and Specifications.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.4	 	 	*** shall not to
subcontract any of the
work to a third party
without prior written
agreement of ***, which
prior agreement shall not
be unreasonably withheld
or delayed. *** shall be
responsible for auditing
subcontractors to ensure
cGMP compliance.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.5	 	 	Provide *** with copies
of all information
supporting annual Product
reports for Products
supplied to Medicis.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.6	 	 	Provide *** with
copies/correspondence
regarding the approved
drug applications for the
Products.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.7	 	 	Notify *** and have
written authorization
from *** prior to
implementing any proposed
changes to the
facilities, manufacturing
process, materials,
Specifications, and/or
testing that impact the
approved registration, or
that require
revalidation. Identify
for ***, in writing prior
to delivery, the first
manufactured Batch
incorporating any
approved changes.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.8	 	 	Provide notification to
the other party of any
organizational and/or
personnel changes to
Quality Assurance,
Technical Services, or
Regulatory Affairs
Contacts.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.9	 	 	*** will make every
reasonable effort to
provide copies of any
Form 483s, Warning
Letters, Field Alerts or
similar correspondence
from Governmental
Authorities within one
(1) business day of
receipt and subsequent
responses(s) relating to
the Products or processes
used to produce, test, or
package the Products
promptly thereafter. ***
approval is required for
responses related to the
Products.

	 	***
	 	***
	 	***






Page 3 of 13









 






	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	1.10	 	 	Notify *** within one (1) business day of
any circumstances likely to result in a
recall, Product withdrawal or field
correction, including any confirmed
Product failure.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.11	 	 	Perform and maintain as current all
appropriate validation, including but not
limited to: process, analytical method,
cleaning, computer, and packaging.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.12	 	 	Dispose of all production residue,
manufacturing rejects, tailings, other
chemicals, containers and packaging
materials associated with Products
manufactured for Medicis in compliance
with all applicable laws and regulations.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.13	 	 	*** will notify *** within (2) two
business days, then proceed to promptly
investigate and resolve to the reasonable
satisfaction of *** all
“Out-of-Specification” results. *** to
review and approve any retesting
scenarios in OOS investigations.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.14	 	 	Notify *** of any requests for
information, notices of violations or
other communication from a Governmental
Agency related to the Medicis Products or
processes promptly within no more than
two (2) business days after *** receipt
thereof.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	1.15	 	 	Notify *** of any incident affecting
compliance to environmental, occupational
health and safety laws related to
handling *** Products or processes within
three (3) business days.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2	 	 	PRODUCTION AND TESTING OF BULK PRODUCT
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.1	 	 	*** to Maintain the Master Formula (or
Product structure). *** to review and
approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.2	 	 	*** will maintain approved Specifications.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.3	 	 	Provide consistent Batch identification
system for bulk manufacture. Immediately
notify *** of any proposed changes to
identification system prior to
implementation of any such changes.

	 	***
	 	***
	 	***






Page 4 of 13









 






	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	2.4	 	 	Qualify Active Ingredient suppliers.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.5	 	 	Maintain Active Ingredient Specification, and ensure
compliance of the Specification with regulatory and
compendial requirements.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.6	 	 	Procure Active Ingredient (include Certificate of
Analysis, COA, for the Active Ingredient). The Active
Ingredient shall have not less than *** left to
expiration upon receipt at AAI. Any exceptions to the
above must be approved in writing by AAI.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.7	 	 	Store Active Ingredient.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.8	 	 	Sample Active Ingredient.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.9	 	 	Validate and/or transfer test method for Active
Ingredient to AAI. *** to approve the analytical
method.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.10	 	 	Analyze Active Ingredient (include documentation, COA).

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.11	 	 	Release Active Ingredient.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.12	 	 	Retain reference samples of Active Ingredient for a
minimum of *** beyond Product expiration date, of the
last lot using each batch of API.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.13	 	 	Qualify inactive substance suppliers in accordance with
AAI policies. Qualification does not include on-site
audits.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.14	 	 	Procure inactive substances (include COA).

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.15	 	 	Store inactive substances.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.16	 	 	Sample inactive substances.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.17	 	 	Validate and/or transfer test methods for the inactive
substances to ***.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.18	 	 	Analyze inactive substances (include documentation, COA).

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.19	 	 	Release inactive substances.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.20	 	 	Perform Process Validation. *** to review and approve.

	 	***
	 	***
	 	***






Page 5 of 13









 






	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	2.21	 	 	Perform Cleaning Validation. *** to review and approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.22	 	 	Provide Bill of Materials (BOM) for bulk manufacture.
*** to review and approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.23	 	 	Provide Manufacturing Transfer Document for transfer
within ***. *** to review and approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.24	 	 	Prepare Manufacturing Instructions (Production
Operating Instructions). *** to review and approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.25	 	 	*** will maintain Specification for bulk Product and
ensure compliance of the Specification with regulatory
and compendial requirements. *** will maintain
approved Specifications.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.26	 	 	Produce bulk Product (include Batch documentation).

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.27	 	 	Document, investigate and resolve deviations from
approved manufacturing instructions or Specifications.
*** to review and approve all deviations. *** to be
notified within (2) two business days of discovery of a
deviation.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.28	 	 	Not to reprocess or salvage any partially processed or
fully processed materials without the written consent
of *** unless such activities are expressly allowed in
applicable approved regulatory documents.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.29	 	 	Develop bulk Product sampling plan. *** to review and
approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.30	 	 	Sample bulk Product.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.31	 	 	Validate and/or transfer test method for bulk Product
to ***. *** to approve analytical method.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.32	 	 	Analyze bulk Product.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.33	 	 	Approve bulk Product for packaging.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.34	 	 	Produce Certificate of Analysis for bulk Product.

	 	***
	 	***
	 	***






Page 6 of 13









 






	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	2.35	 	 	Retain reference samples of bulk Product for the period
of time specified in AAI’s Standard Operating
Procedures.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.36	 	 	Perform manufacturing facility, equipment and instrument
qualification, preventive maintenance and calibration.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.37	 	 	Perform laboratory facility, equipment and instrument
qualification, preventive maintenance and calibration.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	2.38	 	 	Perform stability storage and testing of bulk Product.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.	 	 	INSPECTION, PACKAGING OF FINISHED PRODUCT
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.1	 	 	Maintain finished Product Specification, and ensure
compliance of the Specifications with regulatory and
compendial requirements.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.2	 	 	Provide Batch identification system for finished Product.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.3	 	 	Provide artwork and labeling text (blister, carton,
leaflet, label, etc.) to ***.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.4	 	 	Perform labeling review and approval.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.5	 	 	*** will provide Specifications for packaging materials,
and ensure compliance of the Specifications with
regulatory and compendial requirements. *** will
maintain approved Specifications.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.6	 	 	Validate and/or transfer test method(s) for Product
packaging materials to ***. *** to approve analytical
methods.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.7	 	 	Qualify packaging component and labeling suppliers in
accordance with AAI policies. Qualification does not
include on-site audits.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.8	 	 	Procure packaging materials.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.9	 	 	Analyze packaging materials.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.10	 	 	Release packaging materials.

	 	***
	 	***
	 	***







Page 7 of 13











 





	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	3.11	 	 	Retain samples of labeling materials for a minimum of
*** past Product expiry date. [NOTE: Other packaging
materials need not be retained separately since they are
part of the finished Product retains].

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.12	 	 	Perform Packaging Validation. *** to review and approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.13	 	 	*** will provide Bill of Materials (BOM) for packaging.
*** to review and approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.14	 	 	*** will prepare Packaging Instructions (Production
Operating Instructions for packaging). *** to review
and approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.15	 	 	Perform packaging operations (include documentation).

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.16	 	 	Perform in-process controls during packaging (include
documentation).

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.17	 	 	Develop finished Product sampling plan consistent with
the Manufacturing Terms for retain and stability
samples. Provide finished Product release sampling plan
for *** review and approval.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.18	 	 	Sample finished Product including retain samples,
stability samples, release samples, and customer
samples.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.19	 	 	Retain reference samples of finished Product for a
minimum of one *** past Product expiry date.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.20	 	 	Reconcile packaging materials.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.21	 	 	Perform manufacturing facility, equipment and instrument
qualification, preventive maintenance and calibration.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.22	 	 	Perform laboratory facility, equipment and instrument
qualification, preventive maintenance and calibration.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	3.23	 	 	Document, investigate and resolve any deviations from
approved packaging instructions or Specifications. ***
to review and approve all deviations. Notify *** within
(2) two business days of discovery of deviations.

	 	***
	 	***
	 	***






 Page 8 of 13 









 






	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	4.	 	 	TESTING AND RELEASE OF FINISHED PRODUCT
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.1	 	 	Validate and/or transfer test method(s) for finished Product
to ***. *** to review and approve.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.2	 	 	Perform laboratory equipment and instrument qualification,
preventive maintenance and calibration.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.3	 	 	Analyze finished Product.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.4	 	 	*** to approve shipment of finished Product to ***. *** to
release Product for distribution.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.5	 	 	Review Batch Record including all pertinent documentation
and data. Provide copy to *** for review.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.6	 	 	Produce Certificate of Analysis for finished Product testing.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.7	 	 	Perform stability storage and testing as requested by *** in
accordance with the Manufacturing Terms. Notify ***
immediately within (1) one business day, if the Product
fails to meet Specifications during stability testing.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.8	 	 	Stability Testing Protocol

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Define protocol requirements.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	For each packaging configuration, place the *** production
Batches of Product on stability and then at least one Batch
annually.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Pull stability samples as per the approved stability
protocol. Provide reviewed/approved test results to Medicis
within *** of completion of testing.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Perform stability facility, equipment and instrument
qualification, preventive maintenance and calibration.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.9	 	 	Establish approved expiration date.

	 	***
	 	***
	 	***






 Page 9 of 13 









 






	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	4.10	 	 	Adverse Events and Product Complaints
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	*** shall document Product complaints and
adverse event claims. *** shall notify the
other’s key contact as specified in the
Manufacturing Terms following receipt of any
Adverse Event or Product Complaint.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	*** shall promptly investigate any such
complaints. *** shall provide *** with a
summary of its investigation as soon as
practicable, but in no event later than ***.
Complaints designated by *** as “high priority
complaints” shall be investigated by *** within
***.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	*** shall respond to regulatory agencies and
reporters and shall be responsible for all
activities relating to medical surveillance.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Complete follow-up corrective action.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.11	 	 	Visually examine retain reference samples of
finished Product annually. Investigate if
required. Report all results to ***.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.12	 	 	Perform Annual Product Review. Provide copies
of all information supporting annual Product
reporting to ***.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.13	 	 	Prepare annual Product report and file with
applicable regulatory agencies.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	4.14	 	 	Product Recall

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Decide to initiate recall.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 Notify appropriate regulatory agencies.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Manage recall.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Reconcile returned Product.

	 	***
	 	***
	 	***






 Page 10 of 13 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	4.15	 	 	Responsibility to Authorities

	 	 	 	 	 

	 	 	 	 	Liaison with Regulatory Authorities for
approval, maintenance and updating of drug
application.
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	 	 	 	Liaison with Regulatory Authorities for any
site visits related to the Products produced
for Medicis. ***to notify*** promptly within
no more than one (1) business day after being
contacted regarding such site visits.
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	 	 	 	Maintain safety/hazard and handling data on
Products and Active Ingredient.
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	 	 	 	Maintain safety/hazard and handling data on
Components.
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	4.16	 	 	Special test requirements (specify):  
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	4.17	 	 	Maintain all Batch Records for a minimum of ***
past Product expiry date and supply copies
(true or electronic) of all such records to
Medicis on request.
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	5	 	 	STORAGE AND TRANSPORTATION OF BULK PRODUCT,
FINISHED PRODUCT AND WASTE DISPOSAL
	 
	 	 	 	 	 

	 	5.1	 	 	Store bulk Product up to packaging.  
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	5.2	 	 	Store finished Product after release by Medicis.  
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	5.3	 	 	Store all materials under appropriate
conditions of temperature, humidity, light and
cleanliness and in a manner to avoid
deterioration, theft, interference and Product
contamination.
	 	***
	 	***
	 	***
	 	 	 	 	 

	 	6	 	 	DOCUMENTATION

	 	 	 	 	 

	 	6.1	 	 	Provide *** with complete copies of Process
Validation reports for the first*** Batches of
each Product.
	 	***
	 	***
	 	***






 Page 11 of 13 









 






	 	 	 	 	 	 	 	 	 	 	 
	NO.	 	RESPONSIBILITIES	 	N/A	 	Medicis	 	AAI
	 	6.2	 	 	Provide *** with complete copies of Packaging
Validation reports for each Product.

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	6.3	 	 	Provide the following documentation to *** for each
Batch:

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Executed Batch record, including copies of labeling
documenting expiration date and lot number

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Test results for Active Ingredient and Components (upon
request)

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Manufacturing release summary: Certificate of
Compliance (COC) statement indicating Product
conformance with cGMP, signed by the responsible
Quality individual performing Product approval

	 	***
	 	***
	 	***
	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	If Product release testing is performed by ***, testing
release summary, Certificate of Analysis (COA),
including:

	 	***
	 	***
	 	***
	 
	 	 	 	 	- Tests performed
	 	 	 	 	 	 
	 
	 	 	 	 	- Test methods used
	 	 	 	 	 	 
	 
	 	 	 	 	- Test Specifications
	 	 	 	 	 	 
	 
	 	 	 	 	- Test results including retest results if required
	 	 	 	 	 	 
	 
	 	 	 	 	- Date of release
	 	 	 	 	 	 
	 
	 	 	 	 	- Signature of responsible Quality individual performing testing release
	 	 	 	 	 	 






 Page 12 of 13 









 






	 	 	 	 	 
	Medicis

	 	 	 	AAI
	 

	 	 	 	Quality Assurance Approval:
	 
	 	 	 	 
	Name: Mark A. Prygocki, Sr.

	 	 	 	Name:
	 

	 	 	 	 
	(Print/Type)

	 	 	 	(Print/Type)
	Title: Chief Financial Officer

	 	 	 	Title:
	 	 	 	 	 
	 
	 	 	 	 
	Signature:

	 	 	 	Signature:
	 

	 	 	 	 
	 
	 	 	 	 
	Date:

	 	 	 	Date:
	 

	 	 	 	 





	 	 	 	 	 
	 

	 	 	 	AAI
	 

	 	 	 	Executive Approval:
	 
	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	 
	 

	 	 	 	(Print/Type)
	 

	 	 	 	Title:
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Signature:
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Date:
	 

	 	 	 	 






 Page 13 of 13