Document:

exv10w16

EXHIBIT 10.16

     XXXXX 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.

SUPPLY AND DISTRIBUTION AGREEMENT

BETWEEN

IMPAX LABORATORIES, INC.

AND

DAVA PHARMACEUTICALS, INC.

DATED AS OF

NOVEMBER 3, 2005

 

 

SUPPLY AND DISTRIBUTION AGREEMENT

     This Supply Agreement (“Agreement”) is dated as of the 3rd day of November, 2005 by and
between DAVA Pharmaceuticals, Inc., a Delaware corporation (hereinafter referred to as “DAVA”),
with offices located at 400 Kelby Street, 10th Floor, Fort Lee, NJ 07024, and IMPAX
Laboratories, Inc., a Delaware corporation (hereinafter referred to as “IMPAX”), with headquarters
located at 30831 Huntwood Avenue, Hayward, CA 94544.

     WHEREAS, IMPAX is the holder of the ANDA for the 80mg dosage strength of the Product (as
hereinafter defined), has received tentative approval for the ANDA for the 10mg, 20mg and 40mg
dosage strengths of the Product and is or expects to be approved by the FDA (as hereafter defined)
to manufacture, market and sell the Products as noted above, in the Territory (as hereinafter
defined); and

     WHEREAS, DAVA is engaged in marketing and distributing generic pharmaceutical products in the
Territory and possesses qualified marketing and distribution systems and organizations to enable
it to promote, market and distribute the Products throughout the Territory; and

     WHEREAS, DAVA and IMPAX have determined that it would be in their mutual interests to enter
into this Agreement in order to grant to DAVA the exclusive right to market and distribute the
Products in the Territory, subject to the terms and provisions of this Agreement.

     NOW, THEREFORE, in consideration of the premises set forth and covenants exchanged herein and
other good and valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, DAVA and IMPAX, intending to be legally bound, agree as follows:

I. DEFINITIONS

	 	1.1	 	“Accountant” means one of the then ten (10) largest independent certified public
accounting firms.
	 
	 	1.2	 	“Acquisition Price” means, initially, for each Product, by dosage strength, the
price set forth in Exhibit A, as attached hereto and incorporated herein, and
as may be modified pursuant to Section 5.2(b) hereof.
	 
	 	1.3	 	“Adverse Drug Experience” or “ADE” has the meaning set forth in 21 CFR
§314.80(a), as amended from time to time.
	 
	 	1.4	 	“Affiliate(s)” means any corporation, association, company, organization or
other entity that directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with DAVA or IMPAX, as the case may be.
For purposes of this definition, control includes the ability, directly or indirectly,
through
ownership of securities, by agreement, or by any other method, to direct
fifty percent (50%) or more of the outstanding equity votes of any entity,
whether or not represented by securities.

Page 1 of 45

 

	 	1.5	 	“Agreement” means this Agreement, together with all appendices, exhibits and
schedules attached hereto, as the same may be amended or supplemented from time to
time, by written agreement of the Parties.
	 
	 	1.6	 	“ANDA” means the abbreviated new drug applications of IMPAX numbered, with
respect to the 80mg, 76-318, and with respect to the 40mg, 20mg, and 10mg 76-446,
seeking approval for the Products under Section 505(j) of the FFDCA and FDA’s
implementing regulations, including all amendments and supplements, filed pursuant to
the requirements of the FDA, including all documents, data and other information
concerning such Products submitted by IMPAX as part of the application or in amendments
or supplements thereto that are necessary for FDA approval to market such Products in
the Territory during the term of this Agreement.
	 
	 	1.7	 	“Appointment Fee” has the meaning set forth in Section 5.1(a) hereof.
	 
	 	1.8	 	“Availability Notice” has the meaning set forth in Section 4.3 hereof.
	 
	 	1.9	 	“Business Day” means any day other than a Saturday, Sunday or any day banks are
authorized or required to be closed in the State of New York.
	 
	 	1.10	 	“cGMPs” means current good manufacturing practices set forth in Title 21 of the
C.F.R., Parts 210 and 211, as amended from time to time, and all other Laws applicable
to the manufacture of the Products that are in effect at the time and place of
manufacture of the Products during the term of this Agreement.
	 
	 	1.11	 	“Calendar Quarter” means those three (3) month periods beginning on January 1,
April 1, July 1, and October 1.
	 
	 	1.12	 	“COA” has the meaning set forth in Section 6.1 hereof.
	 
	 	1.13	 	“Competing Equivalent Product(s)” means any dosage strength of the tablet form
of generic oxycodone hydrochloride extended release product(s) approved under (i) an
Abbreviated New Drug Application, (ii) a 505(b)(2) New Drug Application, or (iii) in
the case of the “authorized generic”, the new drug application (“NDA”) held by Purdue
Pharma, L.P. or its Affiliates.
	 
	 	1.14	 	“Confidential Information” has the meaning set forth in Section 10.2 hereof.
	 
	 	1.15	 	“DAVA Activities” has the meaning set forth in Section 9.1 hereof.
	 
	 	1.16	 	“DAVA Label and Tablet Specifications” means the label copy (which shall include
DAVA’s National Drug Code (“NDC”)), packaging and tablet imprinting requirements of
DAVA, which are subject to final approval by IMPAX, as attached hereto and incorporated
herein in Exhibit B.
	 
	 	1.17	 	“DEA” means the United States Drug Enforcement Administration, or any successor

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	 	 	 	agency with responsibilities comparable to those of the United States Drug Enforcement
Administration.
	 
	 	1.18	 	“Delay Payment” has the meaning set forth in Section 4.1(d) hereof.
	 
	 	1.19	 	“Discount” has the meaning set forth in Section 5.3(d).
	 
	 	1.20	 	“Effective Date” means the date first above written in this Agreement.
	 
	 	1.21	 	“Excess Gross Profit Split” has the meaning set forth in Section 5.3(c) hereof.
	 
	 	1.22	 	“FDA” means the Food and Drug Administration of the United States or any
successor entity thereto.
	 
	 	1.23	 	“FFDCA” means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C.
§301 et seq., and any related federal and/or state law or regulation pertaining to the
safety, effectiveness, adulteration, misbranding, mishandling, packaging, labeling or
storage of pharmaceutical ingredients, finished pharmaceutical products, and/or medical
devices that may be applicable to the Product during the term of this Agreement.
	 
	 	1.24	 	“Firm Order” means a firm, binding, written purchase order for Product to be
manufactured by IMPAX, specifying quantities and delivery schedules for each Product,
which order shall be in full manufacturing lot size quantities as described in
Exhibit A.
	 
	 	1.25	 	“Force Majeure” has the meaning set forth in Article XV hereof.
	 
	 	1.26	 	“Forecasts” has the meaning set forth in Section 4.1(b) hereof.
	 
	 	1.27	 	“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied.
	 
	 	1.28	 	“Gross Profit” means Net Sales minus the sum of (i) the Marketing Allowance,
(ii) with respect to the Products sold during the period commencing on the Launch Date
and ending on the first anniversary of the Launch Date, the Label Conversion Fee and
(iii) the Acquisition Price of such Products.
	 
	 	1.29	 	“Gross Profit Split” has the meaning set forth in Section 5.3(b) hereof.
	 
	 	1.30	 	“IMPAX Activities” has the meaning set forth in Section 9.2 hereof.
	 
	 	1.31	 	“Indemnified Party” has the meaning set forth in Section 9.3 hereof.
	 
	 	1.32	 	“Indemnifying Party” has the meaning set forth in Section 9.3 hereof.
	 
	 	1.33	 	“Initial Delivery Schedule” has the meaning set forth in Section 4.1(a) hereof.

Page 3 of 45

 

	 	1.34	 	“Initial Firm Order” has the meaning set forth in Section 4.1(a) hereof.
	 
	 	1.35	 	“Initial Forecast” has the meaning set forth in Section 4.1(a) hereof.
	 
	 	1.36	 	“Initial Term” has the meaning set forth in Section 8.1 hereof.
	 
	 	1.37	 	“Intellectual Property” means all intellectual property owned by, or licensed to
a Party related to the Products including, without limitation, patents, patent
applications, continuations-in-part, divisionals, trade secrets, know-how, copyrights,
trade names, trademarks, and trade dress.
	 
	 	1.38	 	“Label Conversion Fee” means XXXXX percent (XXXXX%) of Net Sales.
	 
	 	1.39	 	“Launch Date” means, with respect to any Product, the later of December 5, 2005
or the date of FDA final approval of the ANDA applicable to the Product.
	 
	 	1.40	 	“Law” means any local, state or federal rule, regulation, statute or law
relevant to the manufacture, distribution, promotion, marketing, handling, storage
and/or sale of the Products, and to any other matters set forth herein.
	 
	 	1.41	 	“Losses” means any liabilities, damages (including, solely for purposes of
Section 4.1(d) hereof, diminished, forfeited or lost Gross Profits), costs or expenses,
including reasonable attorneys’ fees, incurred by any Party that arise from any claim,
lawsuit or other action by a Third Party.
	 
	 	1.42	 	“Marketing Allowance” means XXXXX percent (XXXXX%) of Net Sales.
	 
	 	1.43	 	“MSDS” has the meaning set forth in Section 6.1 hereof.
	 
	 	1.44	 	“Net Sales” means the gross amount invoiced by DAVA to Third Parties for the
Products sold by DAVA in the Territory, less the sum of (i) the Sales Amount and (ii)
the Shipping Expense incurred by DAVA with respect to such Products.
	 
	 	1.45	 	“Party” or “Parties” means DAVA or IMPAX, or both of them, depending upon the
context in which such word may appear.
	 
	 	1.46	 	“Person” means a natural person, a corporation, a partnership, a trust, a joint
venture, a limited liability company, any governmental authority or any other entity or
organization.
	 
	 	1.47	 	“Pre-Marketing Period” means that period commencing on the Effective Date and
ending on the Launch Date.
	 
	 	1.48	 	“Product” means each of the finished 80mg, 40mg, 20mg, and 10mg dosage
strengthsof oxycodone hydrochloride extended release tablets that are approved for
sale in the Territory under the ANDA as generic versions of OxyContin® tablets.

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	 	1.49	 	“Promotional Materials” means all printed or graphic matter containing the name
of or any information about any of the Products that is intended for distribution to a
person who is not an employee or agent of DAVA and any such matter that does not
reference a Product but is intended for use in the promotion of a Product. Promotional
Materials include, but are not limited to, print and broadcast advertisements in any
medium, brochures, booklets, mailing pieces, detailing pieces, file cards, bulletins,
calendars, catalogs, letters to physicians or consumers, audio or video recordings,
exhibits, literature, reprints, and press releases in any medium.
	 
	 	1.50	 	“Quality Agreement” has the meaning set forth in Section 7.8 hereof.
	 
	 	1.51	 	“Receiving Facility” has the meaning set forth in Section 4.3 hereof.
	 
	 	1.52	 	“Reconciliation Statement” has the meaning set forth in Section 5.3(a) hereof.
	 
	 	1.53	 	“Reporting Period” means a three-month period corresponding to a Calendar
Quarter.
	 
	 	1.54	 	“Risk Management Plan” means the activities and security controls that
IMPAX will require to institute in order to enter into this Agreement as set
out on Exhibit F hereto.
	 
	 	1.55	 	“Rolling Forecasts” has the meaning set forth in Section 4.1(b) hereof.
	 
	 	1.56	 	“Sales Amount” has the meaning set forth in Section 5.3(d) hereof.
	 
	 	1.57	 	“Serious ADE” has the meaning set forth in 21 CFR §314.80(A), as amended from
time to time.
	 
	 	1.58	 	“Shipping Expense” means DAVA’s actual freight, storage, and incremental
insurance expense incurred exclusively in connection with the storage and distribution
of the Products.
	 
	 	1.59	 	“Specifications” means all product design, regulatory, manufacturing, quality
control, and quality assurance procedures, processes, practices, standards,
instructions and specifications comprising IMPAX’s FFDCA approval applicable to the
manufacture, labeling and packaging of Products as set forth in the ANDA, as attached
hereto and incorporated herein as Exhibit C, and as may be hereafter modified
by written agreement of the Parties.
	 
	 	1.60	 	“States” means the 50 states of the United States and the localities therein.
	 
	 	1.61	 	“Territory” means the United States of America and the Commonwealth of Puerto
Rico.
	 
	 	1.62	 	“Third Party” means any Person that is neither a Party nor an Affiliate of a
Party.
	 
	 	1.63	 	“Wholesalers” means any recognized national or major regional pharmaceutical
wholesaler.

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II. SCOPE OF AGREEMENT

	 	2.1	 	Subject to the provisions of this Agreement, IMPAX hereby appoints DAVA as the
sole and exclusive distributor of the Products for the Territory and DAVA hereby
accepts such appointment and agrees to act as the sole and exclusive distributor of the
Products for the Territory and to promote, market and distribute the Products to
maximize Gross Profit therefrom in the Territory upon the terms and conditions herein
provided.
	 
	 	2.2	 	During the Pre-Marketing Period, DAVA shall be permitted to communicate,
including the solicitation and receipt of orders, with customers regarding the Product
to the extent permitted by Law. The foregoing notwithstanding, DAVA shall only be
permitted to ship Product
to its customers during the Pre-Marketing Period, if and to the extent
Product is available for shipment, provided that the receiving customers
agree not to commence sales of the Product prior to the Launch Date. Upon
the Launch Date, DAVA’s customers shall be permitted to commence dispensing
Product.
	 
	 	2.3	 	Except as otherwise provided in this Section 2.3 or in Section 4.1(d) hereof,
during the term of this Agreement, DAVA shall purchase from IMPAX all of its
requirements of Products for sale in the Territory and DAVA shall not directly or
indirectly manufacture, market or distribute a Competing Equivalent Product. IMPAX
shall use its commercially reasonable efforts to timely manufacture and sell such
Products to DAVA at the Acquisition Price and on an exclusive basis in the Territory.
The foregoing notwithstanding, to the extent that for any reason (other than by reason
of a material breach by DAVA of its obligations under this Agreement), including Force
Majeure, IMPAX is unable to supply to DAVA, for a period of three (3) consecutive
calendar months, at least ninety percent (90%) of the quantity of any Product specified
by DAVA in a Firm Order submitted to IMPAX in accordance with Section 4.1(b), DAVA
shall be entitled to purchase a Competing Equivalent Product from a supplier other than
IMPAX (provided that DAVA shall use its commercially reasonable efforts to limit its
contractual obligations to purchase such Competing Equivalent Product and provide IMPAX
with copies of all such commitments) and shall be entitled to market, sell, promote
and/or distribute such Competing Equivalent Products in the Territory during such time.
For purposes of this Section 2.3, the amount of Product that IMPAX is unable to
supply to DAVA shall include Product delivered by IMPAX that is rejected by DAVA
pursuant to Article VI hereof. Other than with respect to the Delay Payments referred
to in Section 4.1(d), the foregoing provision shall be DAVA’s exclusive remedy for the
failure of IMPAX to timely supply Product to DAVA. DAVA shall be permitted to purchase
such Competing Equivalent Product only until the later of (i) DAVA’s receipt of written
notice from IMPAX to the effect that IMPAX shall resume delivery of Products to DAVA in
accordance with DAVA’s Firm Orders and Forecasts and (ii) the date DAVA, using
commercially reasonable efforts, is able to terminate the agreement(s), if any, under
which it is has been

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	 	 	 	acquiring such Competing Equivalent Product.
	 
	 	2.4	 	During the term of this Agreement, neither IMPAX nor any of its Affiliates shall
directly manufacture and sell or supply for resale in the Territory (except for the
supply of Products to DAVA pursuant to this Agreement) or sell, market or distribute
any Product in the Territory to any Third Party outside of the Territory that IMPAX
intends to cause to resell, or that IMPAX has reason to know intends to resell, such
Product in the Territory.
	 
	 	2.5	 	During the term of this Agreement, neither DAVA nor any of its Affiliates shall
promote or distribute the Products outside the Territory or to any purchaser,
distributor or distributee that DAVA has reason to know intends to utilize, resell or
redistribute the Products outside the Territory.
	 
	 	2.6	 	If, based upon the rolling two-year average of past payments made to IMPAX in
respect of the Gross Profit Split (as calculated on April 1 of each calendar year),
such payments shall be less than XXXXX dollars ($XXXXX) for a 12-month period, the
appointment effected by Section 2.1, upon written notice to DAVA, shall convert to a
non-exclusive appointment of DAVA as a distributor of the Products in the Territory,
and DAVA shall continue to comply with the terms and conditions of this Agreement as if
such conversion shall not have occurred. The foregoing notwithstanding, the conversion
to a non-exclusive appointment contemplated in this Section 2.6 shall not occur if,
within ten (10) Business Days of receipt of notice from IMPAX, DAVA elects to remit to
IMPAX the amount by which such payments were less than XXXXX dollars ($XXXXX).

III. DISTRIBUTION OF PRODUCTS

	 	3.1	 	During the term of this Agreement, DAVA shall use commercially reasonable
efforts (utilizing its marketing, distribution and management systems), which shall be
at least equivalent to those efforts used by DAVA with respect to other generic
products distributed by it, to develop a market for the Products in the Territory and
to actively and continuously promote the sale of and sell the Products in the Territory
to maximize Gross Profit. However, DAVA shall not be deemed to have failed to abide by
or have failed to perform in accordance with the foregoing standard to the extent that
DAVA is prevented from performing or hindered in its performance of such standard by
any act or omission of IMPAX. DAVA shall be solely responsible for the advertising and
promotion of the Products, including the Promotional Materials, and shall comply with
all applicable Laws in that regard including, without limitation, applicable DEA and
FDA regulations and guidelines.
	 
	 	3.2	 	DAVA shall have sole discretion in setting the price for the sale of the
Products in the Territory.
	 
	 	3.3	 	DAVA shall conduct or cause to be conducted such quality control tests as are
required of DAVA by Law including, but not limited to, cGMPs, prior to sale or other
release of

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	 	 	 	a Product in the Territory.

IV. FORECASTS AND SUPPLY

	 	4.1	(a)	 	Initial Forecast. The initial forecast, which covers the period commencing
on the Launch Date through the end of the subsequent five (5) Calendar Quarters
(“Initial Forecast”), is attached as Exhibit D. The forecast for the period
from the Launch Date through the end of the third (3rd) full calendar month
of the Initial Forecast will be considered firm and binding (“Initial Firm Order”) and
is attached hereto and incorporated herein as Exhibit E. The delivery of
Product from IMPAX to DAVA pursuant to the Initial Firm Order shall occur in
accordance with the delivery schedule specified in the Initial Firm Order (the
“Initial Delivery Schedule”).

	 	(b)	 	Subsequent Forecasts. Within five (5) days prior to the start of
each calendar month, DAVA shall provide IMPAX with an updated written rolling
forecast of DAVA’s expected requirements, in full manufacturing lot quantities,
for the Products during the following fifteen (15) calendar months (“Rolling
Forecasts” and, together with the Initial Forecast, the “Forecasts”). The first
two (2) calendar months of such forecast shall be a restatement of the
remaining firm order period of the prior forecast. The third calendar month
shall be within plus or minus twenty five percent (+/- 25%) of the amount
stated for such then non-binding calendar month in the immediately preceding
forecast, rounded up to the next incremental full standard lot size (i.e., DAVA
shall be obligated to order and purchase at least seventy-five percent (75%) of
the amount, rounded up to full lot size, set forth in the forecast for such
calendar month in the prior forecast). The forecast for the first three (3)
months shall be deemed a Firm Order. The amounts set forth for each of the
following twelve (12) calendar months shall constitute a non-binding, good
faith estimate of the Product requirements of DAVA for such period. IMPAX
shall deliver Product to DAVA’s Receiving Facility pursuant to each Firm Order
no more than five (5) days after DAVA’s requested delivery date, provided that
such Firm Order (other than the Initial Firm Order and the subsequent two (2)
Firm Orders is delivered to IMPAX at least three (3) months prior to DAVA’s
requested delivery date. The terms and conditions of this Agreement shall be
controlling over any conflicting terms and conditions stated in DAVA’s purchase
order or IMPAX’s invoice or confirmation. Any other document which shall
conflict with or be in addition to the terms and conditions of this Agreement
is hereby rejected (unless the Parties shall have mutually agreed to the
contrary in writing in respect of a particular instance).
	 
	 	(c)	 	IMPAX shall promptly notify DAVA in writing if at any time IMPAX
has reason to believe that IMPAX will not be able to fill at least ninety-five
percent (95%) of a Firm Order for any Product in accordance with

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	 	 	 	the delivery
schedule specified therein by DAVA and pursuant to the terms and conditions of
this Agreement.
	 
	 	(d)	 	To the extent that (1) IMPAX’s delivery to DAVA of at least
ninety
percent (90%) of any Product set forth in a Firm Order is delayed for more
than forty-five(45) days beyond the period permissible under Section 4.1(b)
hereof and (2) as a result of such delay DAVA is unable to fill an order by
a Third Party for such Product or a Third party rejects or fails to accept
a delivery of an order that included such delayed Product, then IMPAX shall
pay to DAVA an amount equal to DAVA’s Losses resulting from such inability,
rejection or failure to accept. (“Delay Payment”); provided, however, that
no such Delay Payment shall be payable if the delay is caused by (i) Force
Majeure, (ii) Product recall, (iii) a material breach by DAVA of its
obligations under this Agreement including, without limitation, DAVA’s
failure to deliver or delay in delivery of properly executed DEA Forms 222,
or (iv) IMPAX’s inability, through no fault of its own, to acquire
sufficient active ingredient of the Product due to DEA quota restrictions.
Notwithstanding the foregoing, such Delay Payment will be payable with
respect to the Products specified for the fourth shipment of the Initial
Firm Order irrespective of the cause of the delay, unless the delay is
caused by the material breach by DAVA as set forth in clause (iii) of the
proviso to the preceding sentence. Any obligation to make Delay Payments
hereunder shall not exceed the sum of XXXXX dollars ($XXXXX) . Any Delay
Payment shall be paid by IMPAX within seventy-five (75) days after receipt
of DAVA’s invoices therefor, which invoices shall set forth in reasonable
detail the manner in which the Delay Payments were calculated. If IMPAX
disputes the amount of such invoice, it shall notify DAVA within ten (10)
days of its receipt of such invoice and thereafter the Parties shall enter
into good faith negotiations in order to revise, if necessary, the amount
of the Delay Payment. If the Parties are unable to agree upon revisions to
the Delay Payment within twenty (20) days after the date of DAVA’s invoice
therefor, any Party shall have the right, exercisable by written notice to
the other Party, to invoke the arbitration provisions set forth in Article
XXXI. During the time period during which the Parties are unable to agree
upon the amount of the Delay Payment, IMPAX shall pay such invoice only to
the extent it is in agreement with it. Notwithstanding the provisions of
Section 2.3, DAVA, to mitigate its Losses, shall use its commercially
reasonable efforts to cause a Third Party to produce and sell to DAVA a
Competing Equivalent Product as to which there has been such delay in
delivery by IMPAX. To the extent that DAVA is able to purchase Competing
Equivalent Products from a Third Party, DAVA shall be entitled to Delay
Payments with respect to the sale of such Competing Equivalent Product to
the extent sales thereof result in Losses to DAVA.
	 
	 	(e)	 	All Firm Orders and Forecasts shall be in writing or may be
provided

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	 	 	 	electronically to IMPAX. Firm Orders shall be accompanied by
appropriate documentation, including DEA Form 222, if necessary.

	 	4.2	 	IMPAX shall accept all Firm Orders submitted in accordance with and on the
terms set forth in this Agreement. Notwithstanding anything to the contrary contained
herein, no terms and conditions contained in any Firm Order, acknowledgment, invoice,
bill of lading, acceptance or other preprinted form issued by either Party shall be
effective to the extent such are inconsistent with the terms of this Agreement or the
Quality Agreement.
	 
	 	4.3	 	Subject to receipt of proper documentation, including DEA Form 222 (if
necessary), IMPAX shall deliver ordered Product to the U.S. based warehouse designated
by DAVA (the “Receiving Facility”) C.I.F. DAVA facility(ies) in the United States.
Title to and risk of loss or damage to the Products shall pass to DAVA upon delivery
and receipt of the Products at the Receiving Facility. IMPAX shall promptly provide
DAVA by fax with a copy of the bill of lading stating that any order (or part thereof)
has been shipped to the Receiving Facility (this bill of lading shall hereafter be
referred to as the “Availability Notice”).
	 
	 	4.4	 	Products supplied by IMPAX shall (i) have a shelf life of at least twenty
four (24) months from the date of manufacture and (ii) at the time of the Availability
Notice, conform to the DAVA Label and Tablet Specifications. IMPAX agrees that no
Product shall have a remaining shelf life of less than eighteen (18) months from the
date of the Availability Notice.
	 
	 	4.5	 	All Products supplied hereunder will be in finished dosage form, filled,
packaged and labeled for commercial sale in accordance with the terms and conditions
of this Agreement, the Quality Agreement, the Specifications and applicable Laws.
IMPAX will be responsible for the purchase of all other materials that are included in
finished Products.
	 
	 	4.6	 	IMPAX shall be responsible for all DEA reporting, where applicable, in
connection with the shipment of the Products to DAVA’s designated distribution
facility and DAVA shall be responsible for all DEA reporting in connection with the
receipt of Products from IMPAX and the sale of Products to DAVA’s customers.
	 
	 	4.7	 	The Acquisition Price includes the expense of providing tablet imprinting,
package inserts and labelling and packaging materials in conformity with the DAVA
Label and Tablet Specifications and includes shipping costs. All packaging materials,
inserts and labels shall comply with the DAVA Label and Tablet Specifications provided
to IMPAX by DAVA. IMPAX shall be responsible, except with regard to DAVA’s logos,
trademarks and any other information provided by DAVA, for compliance of the packaging
materials, inserts and labels with the requirements of the Specifications, FDA and
FFDCA. IMPAX will not change in any manner the labelling of Products supplied to

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	 	 	 	DAVA
without the prior written consent of DAVA, except as may be required by Law, the FDA
or the FFDCA, in which case IMPAX shall give DAVA prompt and prior written notice
thereof. DAVA shall, at its sole cost and expense, supply
to IMPAX in a timely fashion, all required artwork for DAVA’s logo, trademarks and
other identifying features to be used in connection with the Product packaging and
labelling. DAVA acknowledges that all DAVA package inserts, labels, labeling and
Promotional Materials will be submitted by IMPAX to the FDA.
	 
	 	4.8	 	All orders for Product shall be placed using DAVA’s standard form of purchase
order and shall be invoiced using IMPAX’s standard form of invoice. All purchase orders
submitted by DAVA shall require the purchase of Product in minimum production whole
batch sizes, which sizes are indicated in Exhibit A hereto, or multiples
thereof (unless IMPAX agrees in writing to smaller quantities either generally or in
respect of any particular purchase order) and shall specify, amongst other things, the
required delivery date (which shall anticipate an order\delivery cycle of at least
twelve (12) weeks from acceptance or deemed acceptance thereof (as contemplated
below)).
	 
	 	4.9	 	Any and all transfer, sales, use, registration and other taxes imposed upon or
with respect to or measured by the sale or delivery by IMPAX to DAVA of any Product
under this Agreement will be the responsibility of and for the account of DAVA. Unless
IMPAX is provided with a certificate evidencing DAVA’s exemption from the payment of
sales taxes (i.e., Certificate of Authority), Sales tax will be included on IMPAX’s
invoices to DAVA for such Products. Notwithstanding the previous sentence, DAVA will
have no obligation to pay any income tax imposed on IMPAX or any of its Affiliates,
which may arise from the transactions contemplated by this Agreement.

V. PAYMENTS AND REPORTS

	 	5.1	 	Appointment Fee. In consideration for being appointed the exclusive
distributor of the Products for the Territory, DAVA shall pay the Appointment Fee set
forth in Exhibit G hereto.

	 	5.2 	(a) 	 	 Acquisition Price. DAVA shall remit payment for shipments of Products sent
by IMPAX to DAVA in U.S. dollars within seventy-five (75) days following the date of
IMPAX’s invoice which will be transmitted no earlier than with delivery of the
Product; provided, however, that with respect to the Initial Firm Order, DAVA shall
remit payment within one-hundred five (105) days of date of invoice and shipment. The
invoice, which shall not be dated prior to the date IMPAX provides DAVA with an
Availability Notice, shall reflect the Acquisition Price on date of shipment by IMPAX
for each Product.

	 	(b)	 	The Acquisition Price for each Product for the period commencing
on the

Page 11 of 45

 

	 	 	 	Launch Date and ending on December 31, 2006 is set forth on Exhibit
A attached hereto. By November 1 of each year (commencing with November 1,
2006) and each twelve (12) month period thereafter,
IMPAX will provide DAVA with (i) the new Acquisition Price and (ii)
documentation of the increase, if any, of IMPAX’s cost of the active
ingredient of the Product over the past twelve month period. The new
Acquisition Price for any year shall be the then-current fully-burdened cost
of manufacturing the Product (as calculated using the same methodology and
components used to calculate such costs for purposes of Exhibit A
hereto), plus an amount equal to XXXXX percent (XXXXX%) of such change. The
foregoing notwithstanding, the percentage increase in the Acquisition Price
in any one year for all components of the Acquisition Price, other than the
cost of the active ingredient of the Product, shall not exceed the annual
percentage increase for the period ending on the immediately preceding
October 30th in the Consumer Price Index, National for All Urban Consumers,
All Items, as reported by the United States Bureau of Labor Statistics or
any government successor thereof.
	 
	 	(c)	 	With respect to any payments which are not made when due under
this Agreement, DAVA shall, within five (5) days of receipt of written notice
from IMPAX, pay IMPAX interest at the rate of twelve percent (12%) per annum or
part thereof, until paid in full.

	 	5.3	(a) 	 	Gross Profit Split/Reconciliation Statement. Within fifteen (15) days
following the end of each Reporting Period, DAVA shall submit to IMPAX a written report
(“Reconciliation Statement”) setting forth the quantity of each Product sold by DAVA
during the Reporting Period and the Net Sales, Acquisition Price, Marketing Allowance,
Label Conversion Fee (if applicable), Shipping Expense and Gross Profit related to such
sales. DAVA will (i) provide IMPAX with ending inventory quantities for each Product as
of the end of each Reporting Period and (ii) upon reasonable notice to DAVA and during
normal business hours, make available to IMPAX, at DAVA’s offices, once each quarter,
all original invoicing source documentation regarding sales of the Products to enable
IMPAX to verify sales of Products and all adjustments made to calculate Gross Profit.

	 	(b)	 	Gross Profit Split. DAVA shall pay IMPAX an amount equal to
XXXXX percent (XXXXX%) of the Gross Profit (“Gross Profit Split”) with respect
to all Products sold by DAVA during each Reporting Period, which amount shall
be due and payable to IMPAX no later than thirty (30) days after each Reporting
Period. In the event that Gross Profit is a negative amount for any Reporting
Period, no payment or refund shall be due from DAVA to IMPAX or from IMPAX to
DAVA, in respect thereof, provided, however, the Gross Profit with respect to
the subsequent Reporting Period, shall be reduced by such negative amount for
purposes

Page 12 of 45

 

	 		 	of determining IMPAX’s Gross Profit Split for such subsequent
Reporting Period. For purposes of this Section 5.3(b), the period commencing
on the Launch Date and ending on December 31, 2005 shall be included in the
Reporting Period ending March 31, 2006.
	 
	 	(c)	 	Excess Gross Profit. The provisions of Section 5.3(b) hereof
notwithstanding, to the extent the aggregate Gross Profit generated by DAVA
with respect to the Products during any calendar year exceeds XXXXX dollars
($XXXXX), IMPAX’s share of the amount of Gross Profits generated during such
calendar year in excess of XXXXX dollars ($XXXXX) shall be XXXXX
percent (XXXXX%) (the “Excess Gross Profit Split”). DAVA shall remit any
amount payable by operation of this Section 5.3(c) simulatenously with the
Reconciliation Statement deliverable with respect to the fourth
(4th) Reporting Period in the calendar year to which this Section
applies, if any. DAVA will not knowingly engage in any practice which has as
its primary purpose the shifting of sales from one period into another period
so as to shift Gross Profits from one period to another period.
	 
	 	(d)	 	Sales Amount/Adjustment. In determining Net Sales, the Parties
shall agree upon a fixed percentage of the gross amount invoiced by DAVA to be
deducted from such gross amount (the “Discount”) to reflect, with respect to
sales to Third Parties, applicable (i) trade discounts, (ii) promotional
allowances, (iii) cash discounts, (iv) customer refunds and credits, (v)
returns, (vi) reprocurement charges, (vii) customer and government rebates
(viii) chargebacks, (ix) retroactive price or shelf stock adjustments and price
equalizations. The product of the gross amount invoiced multiplied by the
Discount is referred to herein as the “Sales Amount.” During the period
commencing on the Effective Date and ending on March 31, 2006, the
Discount shall be XXXXX percent (XXXXX%) with respect to sales to Wholesalers
and XXXXX percent (XXXXX%) with respect to sales to customers other than
Wholesalers. With repect to the Calendar Quarters beginning April 1, July 1,
and October 1, 2006, no later than fifteen (15) days prior to the commencement
of each such Calendar Quarter, the Parties shall mutually agree, in writing,
upon the Discounts to be applied with respect to Product sales during the
immediately following Calendar Quarter. With repect to each calendar year
commencing with the calendar year ending on December 31, 2007, no later than 30
days prior to the beginning of each such calendar year, the Parties shall
mutually agree, in writing, upon the Discounts to be applied with respect to
Product sales during such calendar year.
	 
	 	 	 	If the Parties are unable to agree upon any such Discount within the periods
set forth in this Section 5.3(d), any Party shall have the right,
exercisable by written notice to the other Party, to invoke the arbitration
provisions set forth in Article XXXI, and the Discount then in effect shall
remain in effect

Page 13 of 45

 

	 	 	 	pending resolution or agreement.
	 
	 	(e)	 	Records and Audit. (i) DAVA shall keep complete and accurate
books
and records setting forth Gross Profit, gross sales, Net Sales (including
all deductions to determine Net Sales), Marketing Allowance, Label
Conversion Fee, Shipping Expense, aggregate Acquisition Price, and any and
all amounts due to IMPAX hereunder, which books and records shall be
maintained in accordance with GAAP on an individual Product basis. DAVA
shall permit IMPAX, at IMPAX’s expense, to engage an Accountant, reasonably
acceptable to DAVA, to examine such books and records at any reasonable
time, but not more than two (2) times per year and not later than three (3)
years following the rendering of the reports, accountings and payments that
are the subject of the examination. IMPAX shall use resonable efforts to
cause the Accountant to execute a written agreement, reasonably satisfactory
to DAVA, obligating such Accountant to maintain in confidence all
information disclosed to such Accountant during the examination and all
information generated by such Accountant pursuant to the examination. In
the event such examination determines that DAVA has underpaid IMPAX for the
period under review by more than five percent (5%), DAVA shall also
reimburse IMPAX for the cost of such examination and pay to IMPAX interest
on such underpayment at the rate of 12% per annum. The determination by the
Accountant will be binding on the Parties.
	 
	 		 	(ii) IMPAX shall keep complete and accurate books and records setting forth
the cost of the active ingredient of the Product and the cost of the
components comprising, and the methodology of calculating, the Acquisition
Price. IMPAX shall permit DAVA, at DAVA’s expense, to engage an Accountant,
reasonably acceptable to IMPAX, to examine such books and records at any
reasonable time, but not more than one (1) time per year and not later than
three (3) years following the rendering of the reports, accountings and
payments that are the subject of the examination. DAVA shall use resonable
efforts to cause the Accountant to execute a written agreement, reasonably
satisfactory to IMPAX, obligating such Accountant to maintain in confidence
all information disclosed to such Accountant during the examination and all
information generated by such Accountant pursuant to the examination. In
the event such examination determines that DAVA has overpaid IMPAX for the
period under review by more than five percent (5%), IMPAX shall also
reimburse DAVA for the cost of such examination and pay to DAVA interest on
such underpayment at the rate of 12% per annum. The determination by the
Accountant will be binding on the Parties.

Page 14 of 45

 

VI. PRODUCT TESTING/INSPECTION

	 	6.1	 	IMPAX shall perform quality assurance testing with respect to the Products sold
hereunder, including stability testing, so that the Products conform with the
Specifications as of the date of the Availability Notice. Upon each delivery of Product
to DAVA, IMPAX shall provide to DAVA a certificate for the Product describing the
Product, product number, lot number and expiration date and certifying that the Product
meets the Specifications in the form of a Certificate of Analysis (hereinafter “COA”).
IMPAX will also provide DAVA with Material Safety Data Sheets (hereinafter “MSDS”) as
required by Law for the Products, and updates of same as necessary. DAVA will permit
IMPAX’s personnel, upon reasonable notice, to visit at reasonable intervals, and for
reasonable durations during regular business hours, any DAVA facility used for the
storage and distribution of the Products and will allow such personnel to review and
make copies of any relevant records in connection therewith.
	 
	 	6.2	 	DAVA shall have a period of thirty (30) days from the later of (a) the date of
shipment of the Products in accordance with Sections 4.3 and 4.4 hereof, or (b) the
date of DAVA’s receipt of the COA’s applicable to such Product, to inspect any shipment
of a Product to determine whether such shipment conforms to the Specifications. If
DAVA determines that a Product does not conform to the Specifications, it shall notify
IMPAX, immediately, if possible, but no later than five (5) Business Days after
determining a Product does not conform to the Specifications. DAVA’s failure to notify
IMPAX within the stipulated period will be deemed, for purposes of this Agreement, as
DAVA’s acceptance of such shipment and shall constitute a waiver of any claims DAVA may
have against IMPAX under this Article VI with respect to such shipment including,
without limitation, the right to return any such shipment. DAVA shall have no right to
return a Product unless such Product does not conform to the Specifications or is
damaged. If IMPAX agrees that a Product does not conform to the Specifications, DAVA’s
sole remedy shall be as set forth in this Section 6.2. DAVA shall return the
non-conforming Product to IMPAX, at a location designated by IMPAX and at IMPAX’s
expense. IMPAX, at no expense to DAVA, shall either, in IMPAX’s sole discretion, (i)
use commercially reasonable efforts to replace any non-conforming Product, or (ii)
immediately provide a credit to DAVA for any amounts paid by DAVA to IMPAX on account
of the Products in question. If IMPAX proceeds with replacing the non-conforming
Product, then replacement Products shall be supplied by IMPAX to DAVA at no cost to
DAVA if DAVA has already paid for the rejected Products and not received a credit
therefor, as aforesaid. DAVA shall have one (1) full Business Day after receipt of the
Product to claim a delivery shortage and failure of such notice shall constitute
acceptance of the amount of Product delivered.
	 
	 	6.3	 	In the event IMPAX does not agree with DAVA’s determination that a Product fails
to meet Specifications, the Parties shall, in good faith, attempt to resolve such
dispute. In the event the Parties cannot resolve such dispute among

Page 15 of 45

 

	 	 	 	themselves, either Party may submit the matter to an independent testing laboratory
agreeable to both DAVA and IMPAX for a binding opinion. The expenses of obtaining
the binding opinion shall be equally shared by DAVA and IMPAX. In the event that the
Parties do not agree to submit the dispute to a testing laboratory or do not agree
on an independent testing laboratory, the Parties shall remain free to pursue a
remedy in a manner consistent with Article XIV hereof.

VII. REGULATORY COMPLIANCE

	 	7.1	 	IMPAX shall remain responsible for maintaining and fulfilling all regulatory
requirements in the Territory with respect to a Product that are imposed by Law upon
IMPAX as the manufacturer of the Product and the holder of the ANDA in connection
therewith. IMPAX shall be responsible for all DEA reporting related to the manufacture
of the Products and sale to DAVA and DAVA shall be responsible for all DEA reporting
relating to its receipt of Products from IMPAX and the sale of the Products to its
customers. DAVA shall be responsible for obtaining, maintaining and fulfilling all
regulatory requirements in the Territory with respect to a Product that are imposed by
Law upon DAVA in connection with DAVA’s marketing, distribution and sale of such
Product. DAVA and IMPAX shall cooperate, to the fullest extent, to ensure that the
Parties comply with such regulatory requirements, including but not limited to the
prompt reporting of ADE information and other postmarketing reports as are required to
be filed with the FDA or its equivalent; provided however, that this provision shall
not be interpreted to require IMPAX to disclose to DAVA any Intellectual Property owned
by any Third Party, regardless of whether IMPAX has access to such Intellectual
Property. The parties agree that DAVA shall submit to IMPAX or its designee all
complaints, ADE reports and other medical inquiries associated with a Product as soon
as possible but within forty-eight (48) hours of DAVA’s receipt of such reports. IMPAX
will be responsible for fulfilling any regulatory requirements with respect to such
events and will make any necessary contact with the FDA regarding the subject matter of
same.

	 	7.2	 	IMPAX shall notify DAVA promptly, but in no event later than ten (10) Business
Days after it obtains knowledge, of any pending or threatened litigation or
governmental investigation, proceeding or action involving a Product or the facility
where a Product is being manufactured by IMPAX or its Affiliate of which IMPAX becomes
aware and of any defective, adulterated or misbranded Product manufactured by it or its
Affiliate. IMPAX shall notify DAVA promptly, but in no event later than ten (10)
Business Days, of any complaints related to the Products which it receives from
customers of DAVA or others concerning any Product.

	 	7.3	 	Each of IMPAX and DAVA shall keep, or cause its Affiliates to keep, as required,
such samples and such records (or copies thereof) in respect of the

Page 16 of 45

 

	 	 	 	Products being manufactured, supplied or distributed by it as are required by the
applicable Specifications and/or applicable Law for such period of time as may be
required thereunder. Each of IMPAX and DAVA shall, and shall cause its Affiliate to,
permit the other to have access to such samples and original records as are required
to be maintained by such Party or its Affiliate upon reasonable notice to the other.

	 	7.4	 	Each of IMPAX and DAVA shall promptly, but in no event later than ten (10)
Business Days following its receipt thereof, provide the other with a copy of any
correspondence or notices received by such Party (or its Affiliate) from the FDA
regarding the Products. Further, each of IMPAX and DAVA shall promptly, but in no
event later than ten (10) Business Days following its transmission thereof, provide a
copy of any response to any such correspondence (provided that IMPAX or its Affiliate
or DAVA, as the case may be, shall be entitled to delete from any such correspondence
any references to IMPAX’s or such Affiliate’s, or DAVA’s, Confidential Information
unrelated to the Products). Each of IMPAX and DAVA shall notify the other promptly, but
in no event later than ten (10) Business Days following the occurrence thereof, of any
materially adverse inspections by the FDA, DEA or other regulatory authorities which
pertain to the Products or to the facilities of such Party or its Affiliate where the
Products are being manufactured or stored and provide the other with a copy of the
report received by such Party or its Affiliate from the FDA relating to such inspection
(appropriately redacted for Confidential Information unrelated to the Products).

	 	7.5	 	In the event DAVA or IMPAX shall be required or requested by any governmental
authority within the Territory (or shall voluntarily decide) to recall a Product
because such Product may violate any Laws or for any other reason, the Parties shall
cooperate fully with one another in connection with any recall. If either Party
believes a voluntary recall is necessary, the other Party shall not object to such
recall. If a recall is due to IMPAX’s negligence, willful misconduct or breach of this
Agreement, IMPAX shall reimburse DAVA for the Acquisition Price paid by DAVA for such
recalled Product (to the extent paid by DAVA), all of the reasonable costs and expenses
actually incurred by DAVA in connection with the recall, including, but not limited to,
the costs of retrieving Products already delivered to customers, the costs and expenses
DAVA is required to pay for notification, shipping and handling charges, reasonable
attorney’s fees, and such other costs as may be reasonably related to the recall. If a
recall is due to DAVA’s negligence, willful misconduct or breach of this Agreement,
DAVA shall remain responsible for the Acquisition Price for the recalled Product and
shall reimburse IMPAX for all the reasonable costs and expenses described above
actually incurred by IMPAX in connection with such recall including administration of
the recall and such other actual costs as may be reasonably related to the recall. If a
recall results from a cause other than the negligence, willful misconduct or breach of
this Agreement of or by DAVA or IMPAX, the Parties shall equally share all costs of the
recall, including the Acquisition Price. Prior to any reimbursements pursuant

Page 17 of 45

 

	 	 	 	to this Section 7.5, the Party claiming any reimbursement shall provide the other
Party with reasonably acceptable documentation of all reimbursable costs and
expenses. Neither party shall be liable to the other for consequential damages or
lost profits whether in contract, warranty, negligence, tort, strict liability or
otherwise, due to a product recall or the manufacture, storage, shipping,
transportation, delivery, labeling, sale, marketing, distribution or use of the
Product.

	 	7.6	 	DAVA shall be responsible for filing and maintaining all documentation and
other information as required by each and every State and the Commonwealth of Puerto
Rico (“Puerto Rico”) for the purpose of listing each Product on each such State’s and
Puerto Rico’s formulary or other similar authority, and for obtaining any approvals as
may be necessary to sell such Products in the Territory. IMPAX shall provide DAVA with
such assistance as reasonably necessary to obtain such listings including taking such
steps on DAVA’s behalf as may be required by a manufacturer under any State’s laws,
regulations or procedures. DAVA will pay Medicaid and other applicable rebates
required by law or contract.

	 	7.7	 	It shall be DAVA’s responsibility to enter into all agreements with state and
federal governments necessary for coverage of the Products under state or federal
health care programs and to list the Products under such agreements, including, but
not limited to, the Medicaid Rebate Agreement with the Centers for Medicare and
Medicaid Services, the PHS Pharmaceutical Pricing Agreement and the Master Agreement
with the U.S. Department of Veterans Affairs. It shall be DAVA’s responsibility to
make any required reporting and payments under such government agreements.
	 
	 	7.8	 	Within thirty (30) days following the Effective Date, DAVA and IMPAX shall
enter into a Quality Agreement in form and content reasonably acceptable to DAVA and
IMPAX (“Quality Agreement”). The Quality Agreement will include protocols and
specific responsibilities for handling all Product quality complaints, ADE reports,
and professional medical service inquiries in accordance with IMPAX’s standard
operating procedures and in conformity with applicable Laws.
	 
	 	7.9	 	IMPAX will permit DAVA’s representatives access, once prior to the Launch Date
and no more than once each calendar year during the Initial Term, at reasonable times
and on reasonable notice, to IMPAX’s manufacturing facilities for Product to conduct
inspections of the premises where the Products are being manufactured. All of DAVA’s
representatives will be obligated to execute a reasonable confidentiality agreement
prior to commencing any such inspection. DAVA will provide IMPAX with a written
report of the results of any inspections of IMPAX’s manufacturing facilities for
Product within 30 days of any such inspection. If IMPAX disputes the findings of the
inspection, such dispute will be resolved through the resolution procedures set forth
in the Quality Agreement.

Page 18 of 45

 

	 	7.10	 	The Risk Management Plan that IMPAX is implementing in connection with the
execution of this Agreement is attached hereto as Exhibit F. Beginning in the
calendar year ending December 31, 2006 DAVA will reimburse IMPAX for XXXXX percent
(XXXXX%) (XXXXX percent (XXXXX%)) in any year in which IMPAX shall have received a
payment under Section 5.3(c) hereof) of IMPAX’s actual out-of-pocket expenses related
to the implementation of the Risk Management Plan, provided that DAVA’s obligation in
any one calendar year, under this Section 7.10 shall not exceed XXXXX dollars
($XXXXX). DAVA shall remit amounts owing to IMPAX under this Section 7.10 within
forty five (45) days of receipt of an invoice from IMPAX detailing IMPAX’s expenses,
but in no event prior to IMPAX’s completion of delivery of Product ordered by DAVA in
its Initial Firm Order to DAVA in accordance with the Initial Delivery Schedule. DAVA
shall cooperate with IMPAX and IMPAX’s implementation of the Risk Management Plan
including, without limitation, including inserting elements of the Risk Management
Plan in DAVA’s Promotional Materials and on its website and in other materials, where
appropriate.
	 
	 	7.11	 	IMPAX, in its sole discretion, and at its cost, may perform periodic security
audits of DAVA’s Product distribution system and will disclose its findings to DAVA.
Except for cause, such security audits may be made no more than two times each calendar
year, at reasonable times and on reasonable notice. DAVA will give IMPAX reasonable
access and cooperation in connection with IMPAX’s security audits.

VIII. TERM AND TERMINATION

	 	8.1	 	The term of this Agreement shall begin on the Effective Date and shall terminate
on the tenth (10th) anniversary of such date (the “Initial Term”).
Thereafter, this Agreement shall automatically renew for successive one-year terms on
the terms and conditions described herein unless one Party informs the other in writing
of its intent to terminate this Agreement no less than twelve (12) months prior to the
expiration of the then current term.

	 	8.2 	(a)	 	If either Party commits a material breach of this Agreement, the other Party
shall have the right to terminate this Agreement upon sixty (60) days written notice to
the breaching Party specifying the breach, unless the Party allegedly in breach cures
the asserted breach within such sixty (60) day cure period.

	 	(b)	 	If either Party (i) institutes or has instituted against it any
insolvency, receivership, bankruptcy or other proceedings for the settlement of
that Party’s debts, and such proceedings are not dismissed within sixty (60)
days, (ii) makes an assignment for the benefit of creditors, or (iii) dissolves
or ceases to do business, the other Party may terminate this

Page 19 of 45

 

	 	 	 	Agreement immediately upon written notice.

	 	(c)	 	If IMPAX shall have paid DAVA a Delay Payment for a period of
twelve (12) consecutive months, DAVA may terminate this Agreement immediately
upon written notice.
	 
	 	(d)	 	DAVA may terminate this Agreement upon written notice to IMPAX in
the event that (i) any court in the Territory determines either that the sale of
the Product or any Competiting Equivalent Product is in violation of
Intellectual Property rights of the owner of OxyContin®
or (ii) a settlement is entered into between the owner of OxyContin®, on
the one hand, and IMPAX or the seller of a Competing Equivalent Product, on the other hand, pursuant to which
it is agreed that sales of the 40 mg. and 80 mg. dosage strengths of the Product
or Competing Equivalent Products, as the case may be, shall cease.

Notwithstanding anything to the contrary contained in this Section 8.2, DAVA may not
terminate this Agreement pursuant to the provisions of Section 8.2(a) or 8.2(c), if there
shall have been a material breach on the part of DAVA under this Agreement.

	 	8.3	 	Effect of Termination.

	 	(a)	 	Termination of this Agreement for any reason shall be without
prejudice to:

	 	(i)	 	IMPAX’s right to receive all payments already
due from DAVA;
	 
	 	(ii)	 	DAVA’s right to sell such Product remaining in
its inventory, and
	 
	 	(iii)	 	Any other legal, equitable, or administrative
remedies as to which a Party is or may become entitled, subject to the
limitations provided in this Agreement.

	 	(b)	 	Upon termination of this Agreement by IMPAX pursuant to the
provisions of Section 8.2(a), the installments of the Appointment Fee
remaining unpaid at the time of termination shall become immediately due and
payable.
	 
	 	(c)	 	Upon expiration or termination of this Agreement, IMPAX
shall, at the election of the terminating Party, either (i) manufacture and
ship, and DAVA shall purchase from IMPAX in accordance with the terms and
conditions of this Agreement, any and all amounts of Products actually
ordered for shipment by DAVA pursuant to a Firm Order prior to the

Page 20 of 45

 

	 	 	 	effective date of such expiration or termination or (ii) cease shipment of
product to DAVA whether or not subject to a Firm Order.

	 	(d)	 	Termination of this Agreement for any reason shall not
release either Party hereto from any obligation or liability which at such
time has already accrued or which thereafter accrues from a breach prior to
such expiration or termination, nor affect in any way the survival of any
other right, duty or obligation of either Party hereto which is expressly
stated elsewhere in this Agreement to survive such termination.
	 
	 	(e)	 	Termination of this Agreement by DAVA under Section 8.2
hereof shall relieve DAVA of its obligation to pay any installments of the
Appointment Fee payable subsequent to such termination.
	 
	 	(f)	 	In the event of a termination under Section 8.2 hereof, DAVA
shall either (i) sell to Third Parties any inventory of the Product held by
DAVA or by DAVA’s distributor at the time of such termination, or (ii) return
the inventory of Product held by DAVA or by DAVA’s distributor to IMPAX at
IMPAX’s expense if such sale is prohibited by court order or regulatory
action.

	 	8.4	(a)	 	Suspension of Payment of Appointment Fee. Notwithstanding Section
5.1, upon notice to IMPAX of the occurrence of any of the events set forth below (each,
an “Event”), DAVA may suspend payment of any installment of the Appointment Fee not
paid as of the date of the Event. An Event giving rise to a suspension of the
Appointment Fee payments is as follows:

	 	(i)	 	the failure of IMPAX to supply DAVA with ninety
percent (90%) of the amounts of any Product ordered in a Firm Order
(the amount by which the amount supplied failed to constitute 90% being
referred to herein as a “Deficiency”) for any three months during any
calendar year as a result of IMPAX’s inability, through no fault of its
own, to acquire sufficient active ingredient of the Product due to DEA
quota restrictions, unless such failure is a result of a material
breach by DAVA of its obligations hereunder (e.g. an Event shall have
occurred under this Section 8.4(a)(i) if during a calendar year (1)
IMPAX delivers 50% of any amount of a dosage strength of the Product
ordered in each of January, February and June or (2) IMPAX
delivers (i) only 85% of the amont of the 80mg dosage strength Product
ordered in January (ii) 70% of the amount of the 40mg dosage strength
Product ordered in February and (iii) 75% of the amount of the 20mg
dosage strength Product ordered in March); provided, however, that no
Deficiency shall be deemed to exist as to any month if IMPAX, in
fulfilling DAVA’s Firm Orders for the next suceeding one month,
delivers additional Product in the amount of the Deficiency;

Page 21 of 45

 

	 	(ii)	 	if the Launch Date is delayed for a period of
more than five (5) days after December 5, 2005,
	 
	 	(iii)	 	in the event the sale of the 20mg, 40mg, or
80mg dosage strength of OxyContin® is discontinued (either voluntarily
or involuntarily), or
	 
	 	(iv)	 	in the event that the NDA related to the 80mg
or 40mg dosage strength of OxyContin® is withdrawn voluntarily or
suspended or terminated by a regulatory body.

	 	(b)	 	Upon the occurrence of an Event, the Parties shall enter into
good faith negotiations in order to revise, if necessary, the remaining unpaid
Appointment Fee, Gross Profit Split and Excess Gross Profit Split (collectively,
the “Revised Terms”). If the Parties are unable to agree upon the Revised Terms
within ten (10) days after the occurrence of an Event, any Party shall have the
right, exercisable by written notice to the other Party, to invoke the
arbitration provisions set forth in Article XXXI. During the time period during
which the Parties are unable to agree upon Revised Terms, the terms then in
effect, other the remaining unpaid Appointment Fee, which shall remain
suspended, shall continue to remain in effect.

IX. INDEMNIFICATION AND INSURANCE

	 	9.1	 	DAVA shall defend, indemnify and hold harmless IMPAX, its Affiliates and the
respective officers, directors, agents and employees of each from and against any
Losses resulting from or arising out of (i) DAVA’s storage, handling, marketing,
promotion, distribution, and/or delivery of the Products, including, without
limitation, product liability claims arising out of DAVA’s storage, handling,
marketing, promotion, distribution, or delivery of the Products, (ii) the execution
by DAVA of this Agreement, (iii) the performance or breach by DAVA of its
representations, warranties or obligations under this Agreement or (iv) the
negligence or willful misconduct of DAVA, its employees or its agents (collectively
“DAVA Activities”), except to the extent such Losses result from IMPAX Activities.
	 
	 	9.2	 	IMPAX shall defend, indemnify and hold harmless DAVA, its Affiliates and the
respective officers, directors, agents and employees of each from and against any
Losses resulting from or arising out of (i) IMPAX’s design, manufacturing, testing,
packaging, storage, handling, and labeling (other than Losses resulting from or arising
out of DAVA Label and Tablet Specifications) of the Products, including, without
limitation, product liability claims except for any claims arising out of DAVA’s
storage, handling, marketing, promotion, or delivery of the Products, (ii) the
execution by IMPAX of this Agreement, (iii)

Page 22 of 45

 

	 	 	 	the performance or breach by IMPAX of its representations, warranties or obligations
under this Agreement, (iv) the negligence or willful misconduct of IMPAX, its
employees or its agents (collectively “IMPAX Activities”), or (v) a violation of the
Intellectual Property rights of a Third Party arising out of the marketing and sale
of the Products in the Territory, except, to the extent such Losses result from DAVA
Activities. The foregoing notwithstanding, with respect to Section 9.2(v), DAVA
Activities shall be limited to the design of the DAVA Label and Tablet
Specifications and DAVA’s Promotional Materials.

	 	9.3	 	A Party seeking indemnification (“Indemnified Party”) shall notify, in writing,
the other Party or Parties (“Indemnifying Party”) within thirty (30) days of the
assertion of any claim or discovery of any fact upon which the Indemnified Party
intends to base a claim for indemnification. An Indemnified Party’s failure to so
notify the Indemnifying Party shall not, however, relieve such Indemnifying Party from
any liability under this Agreement to the Indemnified Party with respect to such claim
except to the extent that such Indemnifying Party is actually denied, during the period
of delay in notice, the opportunity to remedy or otherwise mitigate the event or
activity(ies) giving rise to the claim for indemnification and thereby suffers or
otherwise incurs additional liquidated or other readily quantifiable damages as a
result of such failure. The Indemnifying Party, while reserving the right to contest
its obligations to indemnify hereunder, shall be responsible for the defense of any
claim, demand, lawsuit or other proceeding in which the allegations, if proved, would
trigger the Indemnifying Party’s obligations under Section 9.1 or 9.2. The Indemnified
Party shall have the right at its own expense to participate with the Indemnifying
Party in the defense of any such claim, demand, lawsuit or other proceeding. The
Indemnifying Party shall have the right to settle, try or otherwise dispose of or
handle such claim, demand, lawsuit or other proceeding on such terms as the
Indemnifying Party shall deem appropriate subject to the consent of the Indemnified
Party, which consent shall not be unreasonably withheld; provided that the Indemnified
Party shall have no obligation to consent to any settlement of any such claim which
imposes on the Indemnified Party any liability or obligation which will not be assumed
and performed in full by the Indemnifying Party.

	 	9.4	 	During the term of this Agreement and for a period of not less than twenty four
(24) months following the termination of this Agreement, each of DAVA and IMPAX shall
(and shall cause their respective Affiliates who are involved in the manufacture or
distribution of the Products to) carry or be subject to coverage under (as an
additional insured under its own policy or policies or a policy or policies of its
parent corporation), at its own cost and expense, comprehensive general liability
insurance and product liability and contractual liability insurance with respect to
suits brought in the Territory, or maintain self insurance coverage (directly or
through an Affiliate), in an amount of not less than twenty million dollars
(US$20,000,000) in the aggregate and ten million dollars (US$10,000,000) per
occurrence, which insurance, if not in the form of self

Page 23 of 45

 

	 	 	 	insurance coverage, will be written on a claims made policy form for product
liability with an insurance carrier or carriers reasonably acceptable to the other
Party (which will have a retroactive date no later than the Effective Date). Each
of IMPAX and DAVA shall, at the request of the other, provide reasonable evidence to
such requesting Party of compliance with its insurance obligations under this
Section 9.4 and evidence of renewals of any such policy, from time to time. IMPAX
shall cause DAVA to be named as an additional insured\vendor under the product
liability insurance policy or policies to be obtained and maintained (or caused to
be obtained and maintained) by IMPAX pursuant hereto for bodily injury and property
damage caused by Products supplied by IMPAX to DAVA. DAVA shall cause IMPAX to be
named as an additional insured for bodily injury and property damage caused by those
acts or omissions for which DAVA is responsible hereunder under the product
liability insurance policy or policies to be obtained and maintained (or caused to
be obtained and maintained) by DAVA pursuant hereto.

X. CONFIDENTIAL INFORMATION

	 	10.1	 	Each of the Parties hereto agrees that, without the prior written consent of the
other, or except as may be required by law or court order, the existence and terms of
this Agreement shall remain confidential and shall not be disclosed to any Person other
than employees and professional advisers of such Party or its Affiliates who reasonably
require knowledge of the existence or terms of this Agreement and who are bound to such
Party or its Affiliates by a like obligation of confidentiality. Such employees and
advisors will be advised of the nature and existence of the confidentiality
undertakings of this Agreement and of the applicability of such undertakings to them.

	 	10.2	 	The Parties acknowledge that they are party to a Bilateral Confidential
Disclosure Agreement, dated October 14, 2005, (“CDA”) which is expressly superseded by
the terms provided herein. The Parties further acknowledge that the obligations set
forth in this Article X shall apply retroactively to the treatment of any and all
Confidential Information disclosed pursuant to the CDA. Confidential information is any
information relating to the business or business plans of a Party including, without
limitation, know-how, formulas, trade secrets, clinical or non-clinical data,
processes, specifications, costs and customers (“Confidential Information”).
Confidential Information as to either Party shall not include any portion thereof which
(i) is known to the receiving Party before receipt thereof under this Agreement or is
independently developed by or for the receiving Party without benefit of the
Confidential Information supplied hereunder, as evidenced by such Party’s written
records; (ii) is disclosed to the receiving Party without restriction after acceptance
of this Agreement by a Third Party having a legal right to make such disclosure; or
(iii) is or becomes part of the public domain through no breach of this Agreement by
the receiving Party. During the term of this Agreement and for five (5) years
thereafter, no Party and no Affiliate of a Party shall release to any Third Party any
Confidential

Page 24 of 45

 

	 	 	 	Information of any other Party or any information with respect to the existence and
terms of this Agreement without the prior written consent of such other Party.
Notwithstanding anything to the contrary contained herein, a Party may release
Confidential Information if (a) required by statute, ordinance, regulation or by
court order, (b) necessary in the opinion of the disclosing Party’s counsel, to
comply with any reporting or disclosure requirements of the Securities and Exchange
Commission, the New York Stock Exchange, NASDAQ or any governmental agency or other
regulatory body, (c) required pursuant to compulsory legal process or (d) to those
employees and professional advisors of a Party who reasonably require knowledge of
Confidential Information, provided, however, that such employees and advisors are
bound to such Party or its Affiliates by a like obligation of confidentiality and
have been advised of the nature and existence of the confidentiality undertakings of
this Agreement and of the applicability of such undertakings to them. If a Party is
disclosing information relating to this Agreement, or any of the terms hereof, to
comply with statutory or regulatory reporting or disclosure or legal process
requirements, such Party intending to make such disclosure shall give each other
Party at least one (1) days’ prior notice in writing of the content of the intended
disclosure and shall, in good faith, give reasonable consideration to any comments
proposed by such other Party. Once a particular disclosure has been approved, notice
of additional disclosure of the same information shall not be required. If such
statutory or regulatory reporting or legal process disclosure requirements would
require earlier disclosure, the notice shall be provided as early as practicable.

	 	10.2	 	The Parties agree that equitable relief, including injunctive relief and
specific performance, is appropriate in enforcing the confidentiality provisions of
this Agreement. In the event of any such action to construe this provision, the
prevailing Party will be entitled to recover, in addition to any charges fixed by the
court, its costs and expenses of suit, including reasonable attorney’s fees. Such
remedies shall not be deemed to be the exclusive remedies for a breach of this
provision, but shall be in addition to all other remedies available at law or equity.
The foregoing notwithstanding, in no event shall DAVA’s promotional communications
with customers during a Pre-Marketing Period be considered a violation of the
provisions of Section 10.2 or Section 10.4.

	 	10.3	 	Press Releases. As soon as practicable following the Effective Date, the
Parties agree to exert their best efforts to agree upon a public release announcing
the Agreement. During the term of this Agreement and for five (5) years thereafter,
no Party and no Affiliate of a Party shall make any public announcement or press
release or public disclosures or release to any Third Party any information with
respect to the existence and terms of this Agreement without the prior written consent
of each other Party, unless required by Law or previously disclosed.

XI. REPRESENTATIONS, WARRANTIES AND COVENANTS

Page 25 of 45

 

	 	11.1	 	IMPAX hereby represents, warrants and covenants to DAVA as follows:

	 	(a)	 	IMPAX is a corporation duly organized and validly existing under
the laws of the State of Delaware.
	 
	 	(b)	 	IMPAX has all the requisite corporate power and authority to
execute and deliver this Agreement and the Quality Agreement and to perform all
of its obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Quality Agreement and the performance by the Parties of
their respective obligations hereunder and thereunder have been authorized by
all requisite corporate action on their respective parts. This Agreement has
been validly executed and delivered by each Party, and, assuming that such
document has been duly authorized, executed and delivered by such Party,
constitute a valid and binding obligation of such Party, enforceable against
such Party in accordance with its terms.
	 
	 	(c)	 	Any Product provided by IMPAX to DAVA, at the time of shipment
shall (i) have been manufactured, packaged, stored and shipped by IMPAX in
conformity with cGMPs, Specifications and shall not be adulterated or
misbranded, (ii) conform to the standards set forth in the ANDA filing
commitment and the manufacturing process described in the ANDA and related
product approval and (iii) shall not be an article which may not, under the
provisions of Section 505 of the FFDCA, be introduced into interstate commerce.
	 
	 	(d)	 	The execution of this Agreement and performance of IMPAX’s
obligations hereunder are not, and will not be, in violation of or in conflict
with any obligation it may have to any Third Party, and
	 
	 	(e)	 	IMPAX will use commercially reasonable efforts to maintain
throughout the term of this Agreement all permits, licenses, registrations and
other forms of governmental authorization and approval required in order for
IMPAX to perform its obligations hereunder in accordance with all applicable
Laws.
	 
	 	(f)	 	IMPAX will use commercially reasonable efforts to secure DEA
quota of the active ingredient of the Product in an amount sufficient to
fulfill DAVA’s demand as provided for in DAVA’s Forecasts.
	 
	 	(g)	 	IMPAX owns and possesses all right, title and interest in, to
and under the ANDAs. The ANDA for the 80mg dosage strength of the Product has
been approved by the FDA, and the ANDA for the 10mg, 20mg, and 40mg dosage
strengths of the Product has been tenatively approved by the FDA, and neither
IMPAX nor any of its Affiliates has received any notice in writing which has,
or reasonably should have, led IMPAX to believe that the ANDA for the 80mg
dosage is not currently effective or not

Page 26 of 45

 

	 	 	 	currently in material compliance with all material Laws.

	 	(h)	 	To IMPAX’s knowledge upon due investigation, the manufacture,
use, importation or sale of the Products in the Territory pursuant to this
Agreement do not infringe, misappropriate or otherwise conflict with any
intellectual property rights of any Third Party.
	 
	 	(i)	 	To IMPAX’s knowledge upon due investigation, the inventory of
the 80mg dosage strength of the Product held by Third Parties as of the
Effective Date does not, on average, exceed three (3) months average usage of
the Products by each such Third Party and such inventory amount is consistent
with the average inventory over the four (4) months preceding the execution of
this Agreement.
	 
	 	(j)	 	Between the Effective Date and the Launch Date, IMPAX shall sell
and distribute the 80mg dosage strength of the Product only in the ordinary
course of business.
	 
	 	(k)	 	IMPAX has successfully completed validation testing of three (3)
batches of each of the 10 mg, 20 mg, and 40 mg dosage strengths of the Product,
but the validation reports for the 20 mg and 40 mg dosage strengths have not
been finalized.

	 	11.2	 	IMPAX MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO, WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
	 
	 	11.3	 	DAVA hereby represents, warrants and covenants to IMPAX as follows:

	 	(a)	 	DAVA is a corporation duly organized and in good standing
under the laws of the State of Delaware.
	 
	 	(b)	 	DAVA has all the requisite corporate power and authority to
execute and deliver this Agreement and the Quality Agreement and to perform
all of its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Quality Agreement and the performance by the Parties
of their respective obligations hereunder and thereunder have been authorized
by all requisite corporate action on their respective parts. This Agreement
has been validly executed and delivered by each Party, and, assuming that such
document has been duly authorized, executed and delivered by such Party,
constitute a valid and binding obligation of such Party, enforceable against
such Party in accordance with its terms.
	 
	 	(c)	 	The execution and performance of DAVA’s obligations hereunder,
are not and will not be in violation of or in conflict with any obligations it
may have to any Third Party.

Page 27 of 45

 

	 	(d)	 	DAVA will use commercially reasonable efforts to maintain
throughout the term of this Agreement all permits, licenses, registrations and
other forms of governmental authorization and approval required in order for
DAVA to execute and deliver this Agreement and to perform its obligations
hereunder in accordance with all applicable Laws.
	 
	 	(e)	 	All Products made available or supplied to DAVA by or on behalf
of IMPAX will be received, handled, stored and delivered in accordance with the
Specifications applicable thereto and applicable cGMP and other FDA
requirements (and the requirements of all other applicable governmental or
regulatory bodies and agencies in the Territory) so that such Products do not
become adulterated or otherwise cease to meet their Specifications as a result
of any acts or omissions of DAVA, its Affiliates, and their respective agents,
employees, carriers, transporters or those for whom DAVA or any of its
Affiliates are responsible.
	 
	 	(f)	 	The DAVA Label and Tablet Specifications do not infringe any
Third Party trademarks, service marks, trade names, logos, designations, or
trade dress, and
	 
	 	(g)	 	The DAVA Label and Tablet Specifications do not violate the FFDCA.
	 
	 	(h)	 	DAVA will not use the IMPAX name or any IMPAX trademark, service
mark, trade name, logo, designation, or trade dress without IMPAX’ss prior
written consent.

	 	11.4	 	DAVA and IMPAX, in performing their respective obligations hereunder, shall comply
in all material respects with all applicable Laws (including FDA and DEA). In the event
IMPAX receives notice of an inspection or other notification by a governmental entity,
including FDA, directly relating to the Product, DAVA Promotional Materials or other
matters within the scope of this Agreement, IMPAX shall notify DAVA as soon as
practicable, and provide to DAVA, within ten (10) days, copies of all relevant
documents, including FDA Forms 482, 483 warning letters and other correspondence and
notifications, as DAVA may reasonably request. DAVA and IMPAX agree to cooperate with
each other during any inspection, investigation or other inquiry by FDA or any other
governmental entity, including providing information and/or documentation, as requested
by FDA or other governmental entity.

XII. LIMITATION OF LIABILITY

EXCEPT AS EXPRESSLY PROVIDED IN SECTION 4.1(d), IN NO EVENT SHALL IMPAX OR DAVA BE LIABLE FOR
ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL OR SPECIAL DAMAGES OF ANY NATURE WHATSOEVER
(INCLUDING WITHOUT LIMITATION, LOST REVENUE, LOST PROFITS OR

Page 28 of 45

 

LOST BUSINESS) ARISING OUT OF THIS AGREEMENT, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE,
TORT, STRICT LIABILITY OR OTHERWISE.

XIII. NOTICES

Any notices or reports required or permitted under this Agreement shall be deemed to have
been given for all purposes if mailed by first class certified or registered mail, by
overnight delivery service with mailed confirmation of receipt or transmitted electronically
by facsimile with mailed confirmation copy to the following address of such Party:

	 	 	 
	For DAVA:

	 	DAVA Pharmaceuticals, Inc.
	Lewis Tepper, Esq.

	 	Parker Plaza
	Vice President Global Business

	 	400 Kelby Street, 10th Floor
	Development & General Counsel

	 	Fort Lee, NJ 07024
	 

	 	Attn: Lewis Tepper
	 

	 	Facsimile No.: (201) 947-7536
	 
	 	 
	For IMPAX:

	 	IMPAX Laboratories, Inc.
	David S. Doll,

	 	121 New Britain Boulevard
	Senior Vice President

	 	Chalfont, PA 18914
	 

	 	Attn: David S. Doll
	 

	 	Facsimile No.: (215) 933-0333

or to such other addresses as shall have been subsequently furnished by written notice to the
other Parties.

XIV. GOVERNING LAW

The validity and interpretation of this Agreement and the legal relations of the Parties to
it shall be governed by the internal laws, and not the law of conflicts, of the State of
Delaware. The parties acknowledge and agree not to contest that the courts of the State of
Delaware have personal jurisdiction over them with respect to any action that may be taken
hereunder, and venue shall lie in such courts as to any such action.

XV. FORCE MAJEURE

No Party shall be liable to another for its delay or failure to perform any of its
obligations hereunder (except for payments due hereunder) caused by contingencies beyond its
control, including acts of God, fire, flood, wars, acts of terrorism, sabotage, strike and
government actions (“Force Majeure”). Any Party asserting its inability to perform any
obligation hereunder for any such contingency shall promptly notify the other Party of the
existence of any such contingency and shall use its commercially reasonable efforts to
re-commence its performance of such obligation a soon as commercially practicable.

Page 29 of 45

 

XVI. NO ORAL MODIFICATIONS

No change, modification, amendment or waiver of any obligation, term or provision contained
herein shall be valid or enforceable unless same is reduced to writing and signed by a duly
authorized representative of each of the Parties to be bound hereby.

XVII. INDEPENDENT CONTRACTORS

This Agreement does not constitute or create (and the parties do not intend to create
hereby) a joint venture, pooling arrangement, partnership, employee — employer
relationship, or formal business organization of any kind between the Parties. Each Party is
an independent contractor engaged in the operation of its own respective business, in
connection with the relationship created hereby. Neither Party shall be considered to be an
agent of the other for any purpose whatsoever. Neither Party has the power or authority to
act for, represent, or bind the other (or its Affiliates) in any manner.

XVIII. NO IMPLIED RIGHTS

Nothing in this Agreement shall be deemed or implied to be the grant by one Party to the
other of any right, title or interest in the Product(s), Intellectual Property (including
improvements) or any other proprietary right of any other Party except as is expressly
provided for herein.

XIX. SEVERABILITY

To the extent any provision or term set forth herein is or becomes unenforceable by
operation of Law, such unenforceability shall not affect the remaining provisions of this
Agreement. The Parties agree to renegotiate in good faith any provision or term held to be
unenforceable and to be bound by the mutually agreed substitute provision.

XX. CAPTIONS AND HEADINGS

Article and section headings are provided for convenience only and are not to be used in
construing the intent of the Parties.

XXI. SURVIVORSHIP

Any provisions contained herein which by their nature or effect are required or intended to
be observed after termination of this Agreement will survive the termination and remain
binding.

XXII. ENTIRE AGREEMENT

This Agreement, including the Exhibits attached hereto, contains the entire agreement
between the Parties relating to the matters described herein and supersedes all prior drafts
or understandings.

Page 30 of 45

 

XXIII. WAIVER

The waiver by any Party to this Agreement of a breach of any provision set forth herein or
of any right contained herein shall not operate as or be construed as a continuing waiver or
a waiver of any subsequent breach or right granted herein.

XXIV. SINGULAR AND PLURAL

The singular form of any noun or pronoun shall include the plural when the context in which
such a word is used is such that it is apparent the singular is intended to include the
plural or vice versa.

XXV. COUNTERPARTS

This Agreement may be executed in counterparts each of which is to be considered an original
and taken together as one and the same document.

XXVI. ASSIGNMENT

	 	26.1	 	Neither this Agreement nor rights of a Party hereunder may be assigned nor may
the performance of any duties hereunder be delegated by DAVA or by IMPAX without the
prior written consent of the other Party.
	 
	 	26.2	 	Notwithstanding the limitation of Section 26.1 hereof, IMPAX and/or DAVA may
delegate and assign from time to time some or all of their respective duties and rights
hereunder to (i) any of their respective Affiliates (but only for so long as such
Person remains an Affiliate of such Party) or (ii) to any Third Party that acquires
more than fifty percent (50%) of the voting securities of that Party whether by stock
purchase or by merger, provided in either case, that prior to any such delegation or
assignment, the delegating or assigning Party must provide written notice thereof to
the other Party hereto (indicating the duties being so delegated or assigned and the
duration of such delegation or assignment).
	 
	 	26.3	 	No assignment or delegation permitted under this Agreement shall relieve the
assigning Party of any of its obligations hereunder and any such delegation or
assignment must be in compliance with all of the requirements of the FDA and any other
requirements of applicable governmental or regulatory agencies in the Territory.
	 
	 	26.4	 	Subject to the foregoing this Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns.

Page 31 of 45

 

XXVII. DOCUMENT PREPARATION

The Parties acknowledge that this Agreement is a product of negotiations and that no
inference should be drawn regarding the drafting or preparation of this document.

XXVIII. DEBARMENT AND EXCLUSION

	 	28.1	 	DAVA represents and warrants that neither it, nor any of its employees or
agents working on IMPAX’s behalf, has ever been, is currently, or is the subject of a
proceeding that could lead to that party becoming, as applicable, a Debarred Entity or
Individual, an Excluded Entity or Individual or a Convicted Entity or Individual. DAVA
further covenants, represents and warrants that if, during the term of this Agreement,
it, or any of its employees or agents working on IMPAX’s behalf, becomes or is the
subject of a proceeding that could lead to that party becoming, as applicable, a
Debarred Entity or Individual, an Excluded Entity or Individual or a Convicted Entity
or Individual, DAVA shall immediately notify IMPAX, and IMPAX shall have the right to
immediately terminate this Agreement upon written notice. This provision shall survive
termination or expiration of this Agreement. For purposes of this provision, the
definitions provided in subsections (c) through (f) shall apply.
	 
	 	28.2	 	IMPAX represents and warrants that neither it, nor any of its employees or agents
working on DAVA’s behalf, has ever been, is currently, or is the subject of a proceeding
that could lead to that party becoming, as applicable, a Debarred Entity or Individual,
an Excluded Entity or Individual or a Convicted Entity or Individual. IMPAX further
covenants, represents and warrants that if, during the term of this Agreement, it, or
any of its employees or agents working on DAVA’s behalf, becomes or is the subject of a
proceeding that could lead to that party becoming, as applicable, a Debarred Entity or
Individual, an Excluded Entity or Individual or a Convicted Entity or Individual, IMPAX
shall immediately notify DAVA, and DAVA shall have the right to immediately terminate
this Agreement upon written notice. This provision shall survive termination or
expiration of this Agreement. For purposes of this provision, the definitions provided
in subsections (c) thorugh (f) shall apply.
	 
	 	28.3	 	A “Debarred Individual” is an individual who has been debarred by the FDA
pursuant to 21 U.S.C. §335a (a) or (b) from providing services in any capacity to a
person that has an approved or pending drug product application.
	 
	 	28.4	 	A “Debarred Entity” is a corporation, partnership or association that has been
debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting or assisting
in the submission of any abbreviated drug application, or a subsidiary or affiliate of
a Debarred Entity.
	 
	 	28.5	 	An “Excluded Individual” or “Excluded Entity” is (i) an individual or entity,
as applicable, who has been excluded, debarred, suspended or is otherwise ineligible

Page 32 of 45

 

	 	 	 	to participate in federal health care programs such as Medicare or Medicaid by the
Office of the Inspector General (OIG/HHS) of the U.S. Department of Health and Human
Services, or (ii) is an individual or entity, as applicable, who has been excluded,
debarred, suspended or is otherwise ineligible to participate in federal procurement
and non-procurement programs, including those produced by the U.S. General Services
Administration (GSA).

	 	28.6	 	A “Convicted Individual” or “Convicted Entity” is an individual or entity, as
applicable, who has been convicted of a criminal offense that falls within the ambit of
42 U.S.C. §1320a — 7(a), but has not yet been excluded, debarred, suspended or
otherwise declared ineligible.

XXIX. EXPENSES

Each of IMPAX and DAVA will bear its own direct and indirect expenses incurred in
connection with the negotiation and preparation of this Agreement and the Quality Agreement
and, except as set forth in this Agreement or the Quality Agreement, the performance of the
obligations contemplated hereby and thereby.

XXX. NO THIRD PARTY BENEFICIARIES

This Agreement will be binding upon and inure solely to the benefit of the Parties
hereto, their successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or will confer upon any other Person or Persons any right, benefits
or remedies of any nature whatsoever under or by reason of this Agreement.

XXXI. ARBITRATION OF CERTAIN DISPUTES

	 	31.1	 	Delay Payment/Discount/Revised Terms. If the Parties are unable to agree upon
the amount of the Delay Payment as provided in Section 4.1(d), any Discount, as
provided for in Section 5.3(d), or Revised Terms, as provided in Section 8.4(b),
within five (5) days after the time period set forth in Sections 4.1(d), 5.3(d) and
8.4(d), as applicable, the Parties shall promptly submit their dispute for expedited
determination to a panel comprised of three (3) arbitrators having expertise in the
pharmaceutical industry. Each Party shall select one arbitrator and the arbitrators
shall then select a third arbitrator. The Parties shall use commercially reasonable
efforts to expedite resolution of the arbitration. The arbitration shall be conducted
in New York, New York within thirty (30) days after submission of the dispute to
arbitration. Each Party shall submit to the arbitrators its proposed Delay Payment,
Discount or Revised Terms, as the case may be, and the Parties shall exchange their
proposals, provided that the proposals, once exchanged, may only be changed thereafter
in a manner that moves a Party’s proposal closer to the other Party’s proposal. At
the time of the exchange, each Party shall provide the other Party with any data and
information not previously provided to the other Party relevant to the issue of
resolving the dispute. There shall be no additional changes in each Party’s proposal
after the

Page 33 of 45

 

	 	 	 	tenth (10th) day following the date set by the arbitrators for completion of any
information exchange. The arbitrators shall make their own joint evaluation of any
Delay Payment, Discount or Revised Terms, as the case may be, and shall determine
the Discount or Revised Terms, as the case may be, as between the two proposals the
one that is closest to the amount they determine. The authority of the arbitrators
shall be limited solely to a choice between the two proposed Delay Payment,
Discounts or Revised Terms, as the case may be, that are submitted to them. The
decision of the arbitrators shall be final and not appealable, except in the case of
fraud or bad faith. The arbitrators shall determine the proportion in which the
Parties shall pay the costs and arbitrator fees of the arbitration and each Party
shall pay its own costs and expenses in connection with such arbitration.
	 	 	 
	 	 	 	Promptly following the determination of the arbitrators, the Discount so
determined shall be applied retroactively to the Calendar Quarter or calendar year
in question and any payment due from one party to the other party as a result of
such retroactive application shall be paid within ten (10) days following the
determination of the arbitrators.

[The remainder of this page is intentionally left blank.]

Page 34 of 45

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by
their duly authorized representatives in the places provided below:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DAVA PHARMACEUTICALS, INC.	 	 	 	 	 	IMPAX LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ John H. Klein	 	 	 	By:	 	/s/ David S. Doll
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	John H. Klein
	 	 	 	 	 	Name:
	 	David S. Doll	 	 
	 

	 	Title:
	 	Chief Executive Officer
	 	 	 	 	 	Title:
	 	 Senior VP, Sales and Marketing	 	 

Page 35 of 45

 

EXHIBIT A

2005 & 2006 ACQUISITION PRICE

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Fully-Burdened	 	 
	 	 	 	 	Standard	 	 	 	Cost of	 	 
	NDC	 	Description	 	Batch Size	 	Shelf Life	 	Manufacturing	 	Acquisition Price
	0115-1611-01

	 	10 mg 100 ct
	 	XXXXX tablets
	 	24 months
	 	$ XXXXX
	 	$ XXXXX
	0115-1622-01

	 	20 mg 100 ct
	 	XXXXX tablets
	 	24 months
	 	$ XXXXX
	 	$ XXXXX
	0115-1633-01

	 	40 mg 100 ct
	 	XXXXX tablets
	 	24 months
	 	$ XXXXX
	 	$ XXXXX
	0115-1644-01

	 	80 mg 100 ct
	 	XXXXX tablets
	 	24 months
	 	$ XXXXX
	 	$ XXXXX

	 	•	 	Manufacturing Full Lot Quantities (Actual Yields will vary).
	 
	 	•	 	The Acquisition Price of each Product is equal to the fully-burdened cost of manufacturing,
plus XXXXX%.

Page 36 of 45

 

EXHIBIT B

DAVA LABEL AND TABLET SPECIFICATIONS

Initially, the DAVA Tablet specifications shall be identical to the current tablet identification.
The Parties shall exert Commercially Reasonable Efforts to modify such specifications to DAVA’s
Corporate Tablet specifications within six (6) months of the Launch Date.

Page 37 of 45

 

EXHIBIT C

SPECIFICATIONS

(See Attachment)

Page 38 of 45

 

EXHIBIT D

INITIAL FORECAST

(See Attachment)

Page 39 of 45

 

EXHIBIT E

INITIAL FIRM ORDER

(See Attachment)

Page 40 of 45

 

EXHIBIT F

RISK MANAGEMENT PLAN

Presented below is an overview of the Risk Management Plan needed to support ongoing marketing of
Oxycodone HCI ER Tablets. We will need to adjust certain elements of the RMP to accommodate a
scenario whereby a marketing partner takes over either partial or complete distribution of this
product.

Online Training and Educational Materials

We now have the following training/educational materials in place, which are currently accessible
from the IMPAX/Globalphar website:

	 	•	 	Physician Training
	 
	 	•	 	Pharmacist Training
	 
	 	•	 	Patient Information
	 
	 	•	 	Distributor Manual
	 
	 	•	 	(www.globaIphar.com)

The links on the Globalphar website all lead to a server maintained by LearnSomething, the company
that developed the training materials through collaboration with IMPAX and BuzzeoPDMA. Links could
also be assigned on the DAVA website (www.davapharma.com).

The accreditatiion body providing CME credits for the Physician Training required that no company
affiliation appear on that particular training module. As such, IMPAX’s logo and sponsorsh!ip is
not associated with the Physician Training. The other three modules all feature an IMPAX banner
logo at the top of each webpage. This will likely have to be modified to feature, for example,
IMPAX and DAVA or DAVA alone. Even if DAVA is the sole distributor of all product strengths we
will still have some 80 mg product in commercial channels that bear the Global label. Thus, it may
be necessary to feature both companies on the webpage banner until such time as no more Global
branded product remains in distribution channels.

The content of the training materials is now complete. Any additional changes to the webpage
presentation should involve just the revision of logo and other branding elements, so this should
be relatively easy to update. We will have to coordinate any such changes through LearnSomething
and BuzzeoPDMA.

Call Center Support

We currently use MedComm Solutions (Emeryville, CA) to provide Call Center support for questions
from healthcare providers, patients, and caregivers. Our labeling and marketing materials cite the
IMPAX toll-free number in Philadelphia (800-934-6729). Callers are then given the option to enter
“5” and be connected to IMPAX’s oxycodone information hotline.

Page 41 of 45

 

Entering the number 5 redirects callers to MedComm Solutions in Emeryville. MedComm identifies
incoming calls using the caller ID and answers the call on behalf of IMPAX. If DAVA is the sole
distributor of IMPAX’s oxycodone product line they will need to incorporate a separate toll-free
number on their labeling and marketing materials. MedComm Solutions maintains a bank of unused
toll-free numbers and can easily assign one for use by DAVA. The caller ID should then allow
MedComm Solutions to distinguish calls coming from IMPAX or from DAVA.

Adverse Event Support

We currently use Drug Safety Alliance (Durham, NC) to provide post-marketing adverse event support.
DSA collects all spontaneous AE’s, enters them into their validated database, conducts a medical
evaluation for severity and expectedness, and then prepares the appropriate MedWatch form, which
IMPAX RA submits to FDA. Reports from DSA are either expedited reports, requiring submission to
FDA within 15 days, or quarterly reports. After oxycodone has been marketing for 3 years we will
only be required to submit adverse event reports, other than 15-day reports, annually.

We will need to coordinate with DAVA and DSA in order that DAVA immediately forward any spontaneous
AE’s they receive on to DSA. It would make no sense for DAVA to forward any AE’s to IMPAX as we in
turn would just forward them on to DSA. IMPAX will continue to submit all required AE reports
since we remain the holder of the ANDA.

Adverse Event,Trendinq Reports

A significant piece of the ongoing RMP resides in the biannual trending reports prepared by GALT
Associates (Blue Bell, PA). GALT initially prepared a baseline trending report that evaluated
trends for 3 drug definitions over the most recently available 3-year baseline time interval. The 3
drug definitions were: a) all narcotic products, b) single entity hydromorphone, and c) single
entity oxycodone. The baseline report was submitted to FDA in our Year 1IQuarter 2 periodic Adverse
Event report.

Under the terms of the RMP we need to submit biannual trending reports that cover subsequent
6-month time intervals. Our plan is to submit these with every other periodic quarterly adverse
event report. If subsequent trending reports reveal increased incidences of abuse, misuse,
diversion, etc., we are then expected to implement measures aimed at curbing such abuse, misuse,
and diversion. Obviously, it is still too early in the marketing history of this product for such
trending reports to reveal any pattern of abuse or misuse associated with the IMPAX product. The
first 6-month report is due to FDA about the end of October.

Page 42 of 45

 

EXHIBIT G

APPOINTMENT FEE

DAVA shall pay sixty million dollars ($60,000,000)(“Appointment Fee”) to IMPAX as follows:

	 	(i)	 	One million dollars ($1,000,000) on the Effective Date;
	 
	 	(ii)	 	Nine million dollars ($9,000,000) upon delivery of Product ordered by the
Initial Firm Order, to be paid pro-rata based upon delivery in accordance with the
Initial Delivery Schedule, in each case, within fifteen (15) Business Days of such
delivery;
	 
	 	(iii)	 	Ten million dollars ($10,000,000) on December 31, 2006;
	 
	 	(iv)	 	Ten million dollars ($10,000,000) on December 31, 2007;
	 
	 	(v)	 	Ten million dollars ($10,000,000) on December 31, 2008;
	 
	 	(vi)	 	Ten million dollars ($10,000,000) on December 31, 2009; and
	 
	 	(vii)	 	Ten million dollars ($10,000,000) on December 31, 2010;

provided, however, that in the event that DAVA shall have instituted or have instituted against it
any insolvency, receivership, bankruptcy or other proceeding for the settlement of its debts, any
portion of the Appointment Fee then remaining unpaid shall, in the event such proceeding shall have
been instituted by DAVA, thereupon become immediately due and payable and, in the event such
proceeding shall have been instituted by a Third Party, become due and payable on the
61st day that such proceeding remains pending..

If the last Business Day of the year is other than December 31, any of the above payments shall be
made on the last Business Day.

The foregoing amounts shall be payable even in the event that the appointment shall have been
converted to a non-exclusive arrangement pursuant to the provisions of Section 2.6.

Page 43 of 45exv10w16w1

EXHIBIT 10.16.1

     XXXXX 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.

AMENDMENT NO. 2

to

Supply and Distribution Agreement Between IMPAX Laboratories, Inc.

and DAVA Pharmaceuticals, Inc. Dated as of November 3, 2005

     This agreement (“Amendment No. 2”) amends that certain Supply and Distribution Agreement
(“Agreement”) between DAVA Pharmaceuticals, Inc., a Delaware corporation (hereinafter referred to
as “DAVA”), and IMPAX Laboratories, Inc., a Delaware corporation (hereinafter referred to as
“IMPAX”), as amended by letter dated November 3, 2005 (“Amendment No. 1”). Capitalized terms not
otherwise defined herein shall have the meaning given to them in the Agreement.

     WHEREAS, DAVA and IMPAX entered into the Agreement, pursuant to which IMPAX appointed DAVA as
its exclusive distributor of the Products in the Territory and agreed to supply the Products to
DAVA in accordance with the terms of the Agreement;

     WHEREAS, the Parties simultaneously entered into Amendment No. 1, pursuant to which DAVA
agreed to provide a standby letter of credit to secure payment of the Appointment Fee to IMPAX
under the Agreement;

     WHEREAS, the Parties now wish to further amend the Agreement as set forth herein;

     NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as follows:

     1. Section 1 of the Agreement is amended by adding the following definitions:

“Amendment Effective Date” shall mean November 29, 2006.

“Bottle Delivery Target” means XXXXX bottles (100 Ct) of Product.

“Gross Profit Split Reversal Date” means the date upon which the aggregate number of
bottles (100 ct) of Product delivered by IMPAX to DAVA for the period commencing on
the Amendment Effective Date equals the Bottle Delivery Target.

     In addition, the definition of “Net Sales” is amended and restated in its entirety as follows:

 

 

“Net Sales” means the actual gross amount invoiced by DAVA for sales of Products in
the Territory to unaffiliated third parties (as distinct from gross revenue recorded
by DAVA in accordance with GAAP) less the sum of actual (or accrued in accordance
with GAAP) (i) trade discounts, promotional allowances, cash discounts, customer
refunds and credits, returns, customer and government rebates, chargebacks,
retroactive price or shelf stock adjustments and other price equalizations, and
other similar allowances taken against the gross selling price that effectively
reduce the amount paid by the customer from the invoiced amount, and (ii) the
Shipping Expense incurred by DAVA with respect to such Products.

     2. Section 2.6 of the Agreement is deleted in its entirety.

     3. The following is added to Section 4.1(d) of the Agreement at the end thereof:

With respect to all Product shipped following the Gross Profit Split Reversal Date,
the foregoing Delay Payment obligations shall be inapplicable and IMPAX shall not be
subject to payment of Delay Payments pursuant to this Section 4.1(d). At any time
following the Gross Profit Split Reversal Date, IMPAX, in its sole discretion, may
suspend the shipment of Products under this Agreement (a “Voluntary Suspension”) in
exchange for a one-time payment to DAVA of an amount equal to DAVA’s share of Gross
Profits with respect to the immediately prior Reporting Period (“Voluntary
Suspension Payment”). During such a Voluntary Suspension, DAVA shall have the right
to purchase Competing Equivalent Products from an alternative supplier and IMPAX
shall have no rights or obligations with respect to any products so purchased. No
Voluntary Suspension Payment shall be payable by IMPAX in connection with a
Litigation Suspension. Should IMPAX determine to lift a Voluntary Suspension and
resume shipment of Products, DAVA shall have the option of (i) continuing to
purchase Competing Equivalent Products from an alternative supplier, in which event
DAVA’s appointment as distributor of the Products shall no longer be exclusive and
IMPAX’ obligations under Section 2.4 shall terminate, or (ii) ceasing to purchase
Competing Equivalent Products and purchasing all of its requirements for Products
for sale in the Territory from IMPAX in accordance with Section 2.3 and distributing
them in accordance with the terms of this Agreement.

     4. A new Section 4.10 is added to the Agreement, reading in its entirety as follows:

DAVA agrees to use its best efforts to reasonably anticipate demand so as not to
forecast its requirements in any month for the Products in excess of amounts that
can reasonably be sold within a forty-five (45) day period following delivery and
which will provide DAVA with an inventory stock level of approximately three months
of its supply needs. IMPAX’s obligation to manufacture Products hereunder will be
subject to reasonable capacity and API quota limitations.

     5. Section 5.2(a) of the Agreement is amended and restated in its entirety to read as follows:

2

 

Acquisition Price. DAVA shall remit payment for shipments of Products sent by IMPAX
to DAVA by wire transfer or check in U.S. dollars within seventy-five (75) days
following the date of IMPAX’ invoice (the “Acquisition Price Payment Date”). In the
event that DAVA fails to remit such payment to IMPAX within five (5) Business Days
following the Acquisition Price Payment Date, then DAVA shall make the payment by
wire transfer within two (2) Business Days following DAVA’s receipt of a written
request for such amount from IMPAX. Failure to remit such payment on the Acquisition
Price Payment Date shall constitute a material breach by DAVA, following which IMPAX
may terminate this Agreement unless DAVA cures such breach within twenty-five (25)
days following written notice of such breach. The invoice, which shall not be dated
or transmitted prior to the date IMPAX provides DAVA with an Availability Notice,
shall reflect the Acquisition Price on date of shipment by IMPAX for each Product.

     6. Section 5.2(b) of the Agreement is amended and restated in its entirety to read as follows:

The Acquisition Price for each Product commencing on the Amendment Effective Date
shall be one-hundred percent (100%) of the fully-burdened cost of manufacturing the
Product on the Amendment Effective Date, as set forth on Exhibit A attached hereto.
By January 1 of each year, IMPAX will provide DAVA with (i) the new Acquisition
Price for the following twelve-month period, and (ii) documentation of the increase,
if any, of IMPAX’ cost of the active ingredient of the Product over the past
twelve-month period. The new Acquisition Price for any year shall be the
then-current fully burdened cost of manufacturing the Product. The foregoing
notwithstanding, the percentage increase in the Acquisition Price in any one year
for all components of the Acquisition Price, other than the cost of the active
ingredient of the Product, shall not exceed the annual percentage increase for the
period ending on the immediately preceding December 31st in the Consumer Price
Index, National for All Urban Consumers, All Items, as reported by the United States
Bureau of Labor Statistics or any government successor thereof.

     7. Section 5.3(b) of the Agreement is amended and restated in its entirety to read as follows:

Gross Profit Split. IMPAX’ share of the Gross Profit (IMPAX’ “Gross Profit Split”)
shall be calculated as follows:

	 	(i)	 	for sales of Products delivered by IMPAX to DAVA from the
Effective Date through the Gross Profit Split Reversal Date, DAVA shall pay
IMPAX an amount equal to XXXXX percent (XXXXX%) of the Gross Profit;

3

 

	 	(ii)	 	for sales of Products delivered by IMPAX to DAVA following the
Gross Profit Split Reversal Date, DAVA shall pay IMPAX an amount equal to XXXXX
percent (XXXXX%) of the Gross Profit;
	 
	 	(iii)	 	in the event IMPAX determines, in its sole discretion and in
accordance with Section 8.2(e), following the later to occur of the Gross
Profit Split Reversal Date and March 31, 2007, that it is in IMPAX’ interest to
voluntarily suspend Product shipment in light of the risks related to pending
litigation, the Parties will negotiate in good faith terms of a further
amendment to this Agreement that, in lieu of such voluntary suspension, will
provide IMPAX with a greater share of the Gross Profits from sales of the
Products, including by terminating DAVA’s right to distribute the Products in
exchange for royalty payments.

DAVA shall remit IMPAX’ Gross Profit Split by check or wire transfer (i) no later
than thirty (30) days after the end of each Reporting Period with respect to
Products shipped during the first two months of such Reporting Period, and (ii) no
later than sixty five (65) days after the end of each Reporting Period with respect
to Products shipped during the last month of such Reporting Period (each, a “Gross
Profit Split Payment Date”). In the event that DAVA fails to remit the Gross Profit
Split to IMPAX within five (5) Business Days following the Gross Profit Split
Payment Date, then DAVA shall make such payment by wire transfer within two (2)
Business Days following DAVA’s receipt of a written request for such amount from
IMPAX. Failure to remit such payment on the Gross Profit Split Payment Date shall
constitute a material breach by DAVA, following which IMPAX may terminate this
Agreement unless DAVA cures such breach within twenty-five (25) days following
written notice of such breach. In the event that Gross Profit is a negative amount
for any Reporting Period, no payment or refund shall be due from DAVA to IMPAX or
from IMPAX to DAVA, in respect thereof, provided, however, that the Gross Profit
with respect to the subsequent Reporting Period shall be reduced by such negative
amount for purposes of determining the Gross Profit Split for such subsequent
Reporting Period.

     8. Section 5.3(c) of the Agreement is deleted in its entirety.

     9. Section 5.3(d) of the Agreement is deleted in its entirety.

     10. Section 5.3(e)(i) of the Agreement is amended and restated in its entirety to read as
follows:

DAVA shall keep complete and accurate books and records setting forth Gross Profit,
gross sales, Net Sales (including all deductions to determine Net Sales), Marketing
Allowance, Label Conversion Fee, Shipping Expense, aggregate Acquisition Price, and
any and all amounts due to IMPAX hereunder, which books and records shall be
maintained in accordance with GAAP on an individual
Product basis. DAVA shall permit IMPAX, at IMPAX’ expense, to engage an Accountant,
reasonably acceptable to DAVA, to examine DAVA’s books and

4

 

records at any reasonable time, but not more than quarterly and not later than three
(3) years following the rendering of the reports, accountings and payments that are
the subject of the examination. With respect to DAVA’s calculation of Net Sales,
IMPAX’ audit right shall include a right to (i) verify actual credits granted to
customers, other actual reductions from gross sales, and sales pursuant to specific
contracts, (ii) reconcile reported transactions to originating source documentation,
and (iii) discuss such information with relevant DAVA management. IMPAX shall use
reasonable efforts to cause the Accountant to execute a written agreement,
reasonably satisfactory to DAVA, obligating such Accountant to maintain in
confidence all information disclosed to such Accountant during the examination and
all information generated by such Accountant pursuant to the examination. In the
event such examination determines that DAVA has underpaid IMPAX for the period under
review by more than five percent (5%), DAVA shall also reimburse IMPAX for the cost
of such examination and pay to IMPAX interest on such underpayment at the rate of
12% per annum. The determination by the Accountant will be binding on the Parties.

     11. Upon execution of this Amendment No. 2, DAVA shall, prior to March 31, 2007, provide IMPAX
with a written report setting forth a recalculation, based upon the definition of Net Sales set
forth in this Amendment No. 2, of Net Sales for Products sold by DAVA in the Territory during the
period from April 1, 2006 through the Amendment Effective Date. Concurrently with DAVA’s first
Gross Profit Split payment to IMPAX following the Gross Profit Split Reversal Date, DAVA shall
remit to IMPAX, by check or wire transfer in immediately available funds, the amount (if any) by
which IMPAX’ Gross Profit Split for such period as recalculated using the definition of Net Sales
set forth in this Amendment No. 2 exceeds IMPAX’ Gross Profit Split as determined in accordance
with the original definition of Net Sales under the Agreement. The foregoing notwithstanding, in
the event the amount payable to IMPAX under this Paragraph 9 exceeds the amount of DAVA’s share of
Gross Profits for Products delivered in excess of the Bottle Delivery Target for the Reporting
Period during which IMPAX achieves the Bottle Delivery Target, then the excess of the amount due
under this Paragraph 9 over DAVA’s share of Gross Profits in respect of bottles of Product
delivered in excess of the Bottle Delivery Target for such period shall be payable concurrently
with the Gross Profit Split payable to IMPAX for the immediately subsequent Reporting Period. IMPAX
shall have the right to audit such recalculation and, thereafter, to conduct audits in accordance
with Section 5.3(e).

     12. The sixty (60)-day cure period for a material breach provided by Section 8.2(a) of the
Agreement is subject to any other cure period specified elsewhere in the Agreement.

     13. A new Section 8.5 is added to the Agreement, reading as follows:

8.5 Litigation Suspension.

	 	(a)	 	IMPAX, in its sole discretion, may enter into a settlement of
any litigation regarding the Product with Purdue Pharma, LP or any of its
Affiliates (collectively, “Purdue”), which settlement (“Settlement”) may
include

5

 

	 	 	 	IMPAX’ suspension or cessation of sales of Products, or IMPAX may voluntarily
suspend Product shipment in light of the risks relating to pending litigation
with respect to the Products. IMPAX will notify DAVA of the terms of any
proposed Settlement. IMPAX shall use commercially reasonable efforts to include
in any Settlement terms that will permit the sale of DAVA’s then existing
Product inventory and shall not enter into any Settlement with Purdue that does
not include a release by Purdue, in a form and on terms reasonably acceptable
to DAVA, of any and all patent infringement claims by Purdue against DAVA with
respect to the Products. Further, IMPAX shall use its commercially reasonable
efforts to obtain a release of all non-patent infringement claims by Purdue
against DAVA related to the Products.
	 	 
	 	(b)	 	In the event of a Settlement or voluntary suspension in light
of the risks relating to pending litigation with respect to the Products, IMPAX
shall be entitled, subject to its rights and obligations under Section
5.3(b)(iii), to suspend its obligations with respect to the supply Products
under the Agreement and cause DAVA to cease selling the Products in a manner
consistent with the terms of the Settlement or with the voluntary suspension,
as the case may be (in either case, a “Litigation Suspension”). IMPAX shall
revoke the Litigation Suspension on the first date that the manufacture or
sale, whichever is earlier, of the Product is allowable under the Settlement
or, in light of the risks relating to pending litigation relating to the
Products, is voluntarily resumed. Notwithstanding anything to the contrary
herein, in the event of a Litigation Suspension, all outstanding Firm Orders
shall be void, and DAVA and IMPAX shall share the cost of any remaining Product
inventory and returned Product in proportion to each of their respective shares
of Gross Profits effective at the time of such Litigation Suspension.

     14. Section 31.1 is amended and restated in its entirety to read as follows:

Delay Payment/Revised Terms. If the Parties are unable to agree upon the amount of
the Delay Payment as provided in Section 4.1(d), or Revised Terms, as provided in
Section 8.4(b), within five (5) days after the time period set forth in Sections
4.1(d) and 8.4(d), as applicable, the Parties shall promptly submit their dispute
for expedited determination to a panel comprised of three (3) arbitrators having
expertise in the pharmaceutical industry. Each Party shall select one arbitrator and
the arbitrators shall then select a third arbitrator. The Parties shall use
commercially reasonable efforts to expedite resolution of the arbitration. The
arbitration shall be conducted in New York, New York within thirty (30) days after
submission of the dispute to arbitration. Each Party shall submit to the arbitrators
its proposed Delay Payment or Revised Terms, as the case may be, and the Parties
shall exchange their proposals, provided that the proposals, once exchanged, may
only be changed thereafter in a manner that moves a Party’s proposal closer to the
other Party’s proposal. At the time of the exchange, each Party shall provide the
other Party with any data and information not previously

6

 

provided to the other Party relevant to the issue of resolving the dispute. There
shall be no additional changes in each Party’s proposal after the tenth (10th) day
following the date set by the arbitrators for completion of any information
exchange. The arbitrators shall make their own joint evaluation of any Delay Payment
or Revised Terms, as the case may be, and shall determine the Delay Payment or
Revised Terms, as the case may be, as between the two proposals the one that is
closest to the amount they determine. The authority of the arbitrators shall be
limited solely to a choice between the two proposed Delay Payment or Revised Terms,
as the case may be, that are submitted to them. The decision of the arbitrators
shall be final and not appealable, except in the case of fraud or bad faith. The
arbitrators shall determine the proportion in which the Parties shall pay the costs
and arbitrator fees of the arbitration and each Party shall pay its own costs and
expenses in connection with such arbitration.

     15. An amended and restated Exhibit G to the Agreement is attached hereto. The Parties
acknowledge that (i) the Appointment Fee represents consideration for DAVA’s appointment as
exclusive distributor of the Products for the period from the Effective Date through the Amendment
Effective Date only, and that, in light of the change in the allocation of profits subsequent to
the Gross Profit Split Reversal Date contemplated by the Amendment, no Appointment Fee is payable
with respect to the period subsequent to the Amendment Effective Date and (ii) IMPAX’ share of
profits subsequent to the Gross Profit Split Reversal Date, which was negotiated at arms’ length,
constitutes fair and adequate consideration for the license granted hereunder for the period
subsequent to the Gross Profit Split Reversal Date.

     16. Amendment No. 1 is deleted in its entirety.

     17. Each of DAVA and IMPAX waives and holds the other harmless for any and all claims,
lawsuits or other actions resulting from or arising out of events or activities relating to the
Agreement or the Products (other than obligations under Section 7.5 and Article IX of the
Agreement) that occurred prior to the Amendment Effective Date, provided that in the event IMPAX
fails to meet the Bottle Delivery Target, such waivers shall extend only to the percentage of the
total amount of any such claim equal to the proportion of the Bottle Delivery Target delivered by
IMPAX at the time of the claim.

     18. DAVA and IMPAX will mutually agree upon a public statement to be released in connection
with the execution of this Amendment No. 2. For clarity, this Section 20 shall not limit IMPAX’
ability to make any and all statements and filings that may be required by applicable law.

     19. Except as amended herein, all other terms and conditions of the Agreement remain in full
force and effect.

     20. The validity and interpretation of this Amendment and the legal relations of the Parties
to it shall be governed by the internal laws, and not the law of conflicts, of the State of
Delaware. The parties acknowledge and agree not to contest that the courts of the State of Delaware
have personal jurisdiction over them with respect to any action that may be taken hereunder, and
venue shall lie in such courts as to any such action.

7

 

     21. This Amendment may be signed in two counterparts, each of which shall be deemed an
original and both of which shall together constitute one agreement.

     22. This Amendment is to take effect when both parties to it have signed the Agreement and
shall not be applied retroactively.

[The remainder of this page is intentionally left blank.]

8

 

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Supply and
Distribution Agreement on this 6th day of February, 2007.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DAVA PHARMACEUTICALS, INC.	 	 	 	IMPAX LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Aram Moezinia	 	 	 	By:	 	/s/ David S. Doll	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Printed Name:
	 	Aram Moezinia
	 	 	 	 	 	Printed Name:
	 	David S. Doll	 	 
	 

	 	Title:
	 	Executive Vice President
	 	 	 	 	 	Title:
	 	Executive Vice President,

Commercial Operations	 	 

9

 

EXHIBIT G

APPOINTMENT FEE

     DAVA shall pay ten million dollars ($10,000,000) (“Appointment Fee”) to IMPAX as follows:

	 	(i)	 	One million dollars ($1,000,000) on the Effective Date; and
	 
	 	(ii)	 	Nine million dollars ($9,000,000) upon delivery of Product
ordered by the Initial Firm Order, to be paid pro-rata based upon delivery in
accordance with the Initial Delivery Schedule, in each case, within fifteen
(15) Business Days of such delivery.

10

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