Document:

Exhibit 10.5

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment
Agreement (the “Agreement”) is made and entered into as of this 1st day
of January, 2007, by and between MonoSol RX, LLC (the “Company”), and Carl G.
Fischer, an individual (the “Executive”).

 

W I T
N E S S E T H:

 

WHEREAS, the
Company desires to employ the Executive as its Senior Director Finance, and
Executive is willing to accept such employment by the Company, on the terms and
subject to the conditions set forth in this Agreement; and

 

WHEREAS, the
Company and the Executive desire that the terms of this Agreement begin on January 1,
2007 (the “Effective Date”);

 

NOW, THEREFORE,
in consideration of the promises and the mutual covenants herein set forth, and
for other good and valuable consideration, the parties hereto, intending to be
legally bound, hereby agree as follows:

 

1.                                       Employment. During the term of this
Agreement, the Executive agrees to be employed by and to serve the Company as
its Senior Director Finance, and the Company agrees to employ and retain
Executive in such capacity. The Executive shall report directly to Chief
Financial Officer. The Executive shall: (i) devote his entire business
time, energy and skill to the affairs of the Company; (ii) faithfully,
loyally, and industriously perform all duties incident to the position of
Sr. Director Finance, as well as any other duties consistent with the stature
and responsibility of the Executive’s position as may from time to time be
assigned by the Chief Financial Officer; and (iii) diligently follow and
implement all policies, practices, procedures, and rules of the Company.
Notwithstanding any provision herein to the contrary, Executive shall not be
precluded from devoting reasonable periods of time required for serving as a
member of one or more advisory boards or boards of directors of companies or
organizations or engaging in other minor business activities, so long as such
memberships or activities do not interfere with the performance of Executive’s
duties hereunder and are not directly or indirectly competitive with, nor
contrary to, the business or other interests of the Company, subject to prior
approval by the Chief Financial Officer, which approval shall be granted in the
Chief Financial Officer’s reasonable sole discretion.

 

2.                                       Employment Term. The Employment
Term of the Executive under this Agreement shall be for a period of six (6) months
(January 1 — June 29, 2007). The Employment Term shall commence on
the Effective Date of this Agreement as set forth above. Employment Term will
not automatically extend or renew unless the Company and Executive mutually
agree on new terms prior to expiration of this Agreement. If the terms of a new
Agreement or an extension of this Agreement cannot be reached prior to June 29,
2007, this Agreement shall expire. Expiration of this Agreement shall not
constitute a termination pursuant to Section 5 and shall not trigger any
of the obligations set forth in Section 6. In the event that this
Agreement expires, the Executive shall receive his Base Salary through June 29,
2007 and a Bonus of thirty percent (30%) of his Base Salary (provided that
Executive and the Company satisfy the performance targets) pro-rated to reflect
the six (6) month Employment Term, as well 

 

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as any benefits under any plans of the Company in
which the Executive is a participant, to the full extent of the Executive’s
rights under such plan. This Agreement may also be terminated by either
party prior to expiration of the Agreement pursuant to Section 5.

 

3.                                       Compensation.

 

A.                                   Base
Salary. As compensation for services rendered to the Company pursuant to
this Agreement, the Company shall pay to Executive a base salary (the “Base
Salary”) at a rate of $135,000.00 per annum, payable at a rate of $11,250.00
per month. The Base Salary will be paid in accordance with the standard payroll
policies of the Company as from time to time are in effect, from which shall be
deducted federal and, if applicable, state income taxes, social security taxes,
and such other and similar payroll taxes and charges as may be required or
appropriate under applicable law.

 

B.                                     Bonus.

 

(i)                                     Bonus. In addition to the Base
Salary, at the end of the Employment Term, Executive may be eligible for a
bonus of thirty percent (30%) of Executive’s Base Salary pro-rated to reflect
the six (6) month Employment Term. The Bonus is not guaranteed and is
contingent upon the Executive and the Company both achieving established
performance targets. Executive must be employed by the Company on June 29,
2007 in order to receive this Bonus payment.

 

4.                                       Additional Benefits.

 

A.                                   Executive
Benefits. During the Employment Term, Executive shall be eligible to
participate in employee benefit plans as are generally available to other
executive level employees in the Company. Benefit eligibility is determined by
the terms of each benefit plan. All employee benefit plans are subject to
change or cancellation, from time to time, at the Company’s discretion.

 

B.                                     Vacation.
During the Employment Term, the Executive shall be allowed to take up to two (2) weeks
of vacation. Unused vacation days at the end of the Employment Term shall be
paid to the Executive upon expiration of this Agreement. Pay for unused
vacation days upon termination is described in Section 6.

 

C.                                     Sick
Leave. During the Employment Term, the Executive shall be eligible for            
sick days. The Executive shall not receive pay for any unused sick days at the
end of the Employment Term or upon any termination as described in Section 5.

 

D.                                    Performance
Units Plan. During the Employment Term, the Executive’s eligibility,
rights, obligations, and requirements for participation in the Performance Unit
Plan shall be governed exclusively by the terms and conditions of the Performance
Units Plan Agreement.

 

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5.                                       Termination.

 

A.                                   Termination
for Cause. Notwithstanding anything to the contrary contained in this
Agreement, Termination for Cause may be effected by the Company at any time
during the term of this Agreement by written notification to the Executive in
accordance with Section 7(A) of this Agreement. For purposes of this
Agreement, “Termination for Cause” shall mean:

 

(1)                                  the
willful and continued failure of such Executive to perform his duties,
including, without limitation, such Executive’s failure or refusal to follow
the legitimate directions of the Company and/or of any of the persons to whom
such Executive reports (other than any such failure resulting from his death or
permanent disability); or

 

(2)                                  the
engaging by such Executive in willful, reckless or negligent conduct in
connection with his employment or other relationship which is materially
detrimental to the Company; or,

 

(3)                                  the
Executive has materially breached his obligations under Section 7 of this
Agreement; or,

 

(4)                                  the
conviction of such Executive of any felony or any crime involving moral
turpitude; or,

 

(5)                                  such
Executive’s reporting to work impaired by or under the influence of alcohol or
illegal drugs; or,

 

(6)                                  such
Executive’s engaging in the unlawful use (including being under the influence)
or possession of illegal drugs on the Company’s premises; or,

 

(7)                                  such
Executive’s engaging in sexual harassment or other violation of any harassment
or discrimination law; or

 

(8)                                  Executive’s
commission of fraud in connection with Executive’s employment or theft,
misappropriation or embezzlement of the Company’s funds; or,

 

(9)                                  the
demonstrated use or disclosure by Executive of any confidential proprietary or
trade secret information of Executive’s former employer or that Executive
learned or obtained through his former employer; or,

 

(10)                            the
demonstrated use or disclosure by the Executive of any confidential information
of the Company except when such disclosure is made pursuant to the directions
of the Company or in accordance with Company policy; or,

 

(11)                            such
Executive’s engaging in competitive behavior against the Company, purposely
aiding a competitor of the Company, or misappropriating or aiding in misappropriating
a material opportunity of the Company.

 

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All determinations of “Cause”
shall be made by the Chief Financial Officer. If the Company elects to
terminate Executive’s employment for Cause pursuant to clause (1) of the
definition of “Cause” and the action or inaction prompting such termination is
capable of cure, the Company shall first give Executive written notice thereof
including a description of the evidence upon which the Board has relied to
support such finding and, a period of thirty (30) days (the “Cause Notice
Period”) from the date of such notice to cure the action or inaction giving
rise to the written notice. If such action or inaction is not cured by
Executive by the end of the Cause Notice Period, as determined by the Chief
Financial Officer and communicated to the Executive in writing, such
termination shall be effective upon the first day after the expiration of the
Cause Notice Period. If Executive’s conduct falls within any clause of the
definition of Cause other than clause (1) or it falls within clause (1) and
is not curable, no notice need be given by the Company before terminating the
Executive for Cause.

 

B.                                     Termination
by Reason of Disability. In a manner consistent with the Americans with
Disabilities Act the Family and Medical Leave Act, and the New Jersey Family
Leave Act, this Agreement may be terminated at the Company’s option
immediately upon notice to Executive if Executive shall suffer a Permanent
Disability. For purposes of this Agreement, the term “Permanent Disability”
shall mean the Executive’s inability to perform the essential functions of
his job under this Agreement, with or without reasonable accommodation, for a
period of ninety (90) consecutive days or for an aggregate of one hundred twenty
(120) days, whether or not consecutive, in any twelve (12) month period, due to
illness, accident or other physical or mental incapacity, as determined by a
board certified physician mutually agreed to by both the Executive and the
Company.

 

C.                                     Termination
by Reason of Death. In the event of the Executive’s death, the Executive’s
employment shall be deemed to have terminated on the date of Executive’s death.

 

D.                                    Resignation.
Executive may terminate this Agreement at any time, subject to providing
sixty (60) days’ written notice to the Company in accordance with Section 7(B) of
this Agreement; provided, however, that Executive’s covenants and obligations
under Section 8 herein shall survive Executive’s voluntary resignation.

 

E.                                      Involuntary
Termination. Notwithstanding anything to the contrary contained in this
Agreement, after ninety (90) days of the Employment Term, involuntary
termination may be effected by the Company by giving written notification
to the Executive in accordance with Section 7(A) of this Agreement.
For purposes of this Agreement, the term “Involuntary Termination” shall mean
any termination of the Executive’s employment by the Company during the
Employment Term that does not qualify as one of the following: (i) Termination
for Cause; (ii) Termination by Reason of Disability; or (iii) Termination
by Reason of Death.

 

6.                                       Obligations of the Company Upon Termination.

 

A.                                   Termination
for Cause. In the event that the Executive’s employment under this
Agreement is terminated for Cause, the Company shall have no obligation to pay
the Base Salary or any other Bonus or compensation provided under this
Agreement, to or for the 

 

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benefit of the Executive for any period after the date
of such termination; provided, however, that the Company shall promptly pay: (i) all
Base Salary earned by the Executive prior to the date of such termination; and (ii) any
benefits under any plans of the Company in which the Executive is a participant,
to the full extent of the Executive’s rights under such plan.

 

B.                                     Termination
by Reason of Disability. In the event that the Executive’s employment under
this Agreement is terminated in a Termination by Reason of Disability, the
Company shall have no obligation to pay the Base Salary provided under this
Agreement to or for the benefit of the Executive for any period after the date
of such termination; provided, however, that the Company shall promptly pay: (i) all
Base Salary earned by the Executive prior to the date of such termination; (ii) any
benefits under any plans of the Company in which the Executive is a
participant, to the full extent of the Executive’s rights under such plan; (iii) a
cash payment equal to the Bonus received by the Executive for the previous
year, pro-rated for the number of days employed up to the date of termination;
and (iv) accrued, unused vacation pay. In addition, notwithstanding
anything to the contrary in the Performance Units Plan, any Performance Units
held by the Executive shall vest on a pro rata basis up to the date of
termination and, at the option of the Executive, shall not be subject to
repurchase;

 

C.                                     Termination
by Reason of Death. If the employment of the Executive hereunder shall
terminate because of death of the Executive, the Company shall have no
obligation to pay the Base Salary provided under this Agreement to or for the
benefit of the Executive for any period after the date of such termination;
provided, however, that the Company shall promptly pay: (i) all Base
Salary earned by the Executive prior to the date of such termination; (ii) any
benefits under any plans of the Company in which the Executive was a
participant to the full extent of the Executive’s rights under such plans; and (iii) accrued,
unused vacation pay, and (iv) a cash payment equal to the Bonus received
by the Executive for the previous year, pro-rated for the number of days
employed up to the date of termination. In addition, notwithstanding anything
to the contrary in the Performance Units Plan, any Performance Units held by
the Executive shall vest on a pro rata basis up to the date of termination and,
at the option of the Executive, shall not be subject to repurchase.

 

D.                                    Resignation.
In the event that the Executive resigns from his employment prior to expiration
of the Employment Term, the Company may, at its discretion, continue the
Executive’s employment with the Company for the full amount of the notice
period. In the event of said termination, the Company shall have no obligation to
pay the Base Salary or any other Bonus or compensation provided under this
Agreement to or for the benefit of the Executive for any period after the end
of said notice; provided, however, that the Company shall promptly pay: (i) all
Base Salary earned by the Executive prior to the date of such termination; and (ii) any
benefits under any plans of the Company in which Executive is a participant, to
the full extent of the Executive’s rights under such plans.

 

E.                                      Involuntary
Termination. In the event that the Executive’s employment under this
Agreement is involuntarily terminated as defined in Section 5(E) of
this Agreement, the Company shall: (i) continue to pay the Executive the
Base Salary for the remainder of the Employment Term (the “Severance Period”),
at such intervals as the same would have been paid had the Executive remained
in the active service of the Company; and, (ii) pay any benefits under any
plans of the Company in which the Executive is a participant, to the full
extent of the 

 

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Executive’s rights under such plans for the remainder
of the Severance Period, (iii) reimburse Executive for his cost of
purchasing medical benefits solely for Executive under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, provided COBRA is available and
is elected during the Severance Period. Such reimbursement shall continue
through the Severance Period or until such time as Executive is eligible to
receive medical benefits from another employer, whichever period is shorter. If
during the Severance Period, the Executive materially breaches his obligations
under Section 8 of this Agreement, the Company may, upon written notice to
the Executive, terminate the Severance Period and cease to make any further
payments to Executive.

 

7.                                       Notice of Termination.

 

A.                                   The
Company may effect a termination of this Agreement pursuant to the provisions
of Section 5 of this Agreement upon giving two (2) weeks written
notice to the Executive of such termination; provided, however, that a
Termination for Cause under Section 5(A) shall take effect
immediately, at the option of the Chief Financial Officer of MonoSol RX, LLC.

 

B.                                     The
Executive may effect a termination of this Agreement pursuant to the
provisions of Section 5(D) of this Agreement upon giving two (2) weeks
written notice to the Company.

 

8.                                       Covenants of the Executive.

 

In order to induce the
Company to enter into this Agreement and employ the Executive hereunder, the
Executive hereby covenants and agrees as follows. For all purposes under this Section 8
herein, the Company’s “business” shall mean film based delivery systems to
deliver drug actives, nutraceuticals, cosmaceuticals or flavors, and soluble
film based packaging systems.

 

A.                                   Non-Competition;
Non-Solicitation. During the Employment Term and for one (1) year
following the Executive’s termination of employment by either party for any
reason, Executive shall not without the prior written consent of the Company,
which consent may be withheld at the sole discretion of the Company: (a) engage
or participate in or in any manner be connected or concerned, directly or
indirectly, whether as an officer, director, stockholder, partner, owner,
employee, advisor, creditor, or otherwise with the operation, management, or
conduct of any Competitor of the Company; (b) solicit, contact, interfere
with, or divert, or attempt to solicit, contact, interfere with, or divert, any
customer or vendor of the Company or potential customer or vendor identified by
Company during the Executive’s employment and with whom the Executive had any
dealings or relationship or from whom the Executive gained confidential
information; or (c) solicit or attempt to solicit, directly or indirectly,
any person employed by the Company at any time during the one (1) year
period prior to the Executive’s termination to resign from the Company or to
join the Executive, whether as a partner, agent, employee, or otherwise, with
any Competitor. The term “Competitor” as used in Sections 8(A) and 8(B) refers
to any business or entity which is or plans to develop, manufacture, market, or
sell any system or product designed to compete directly with the 

 

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systems and products of the Company and its subsidiaries
and affiliates which are under active development or are manufactured, marketed
or sold.

 

B.                                     Confidentiality.
During the Employment Term, and following the termination of this Agreement for
any reason for as long as the information remains confidential, Executive shall
not make any use, for his own benefit or for the benefit of a business or
entity other than Company, of any verbal or written secret or confidential
information. Such confidential information shall include, but not be limited
to, customer lists, trade secrets, sales, marketing or consignment information,
vendor lists or operational resource information, forms, processes or
procedures, budget and financial statements or information, files, records,
documents, compilation of data, engineering drawings, computer print-outs, or
any other data of or pertaining to Company, its business, customers and
financial affairs, or its services not generally known within Company’s trade
and which was acquired by him during his affiliation with Company. Executive
shall not remove from Company premises or retain without the Company’s written
consent any of Company’s confidential information as defined herein, or copies
of or extracts therefrom. Executive shall hold in a fiduciary capacity for the
benefit of Company all secret or confidential information, knowledge, or data
of Company or its business or production operations obtained by Executive
during his employment by Company, which shall not be generally known to the
public or recognized as standard practice (whether or not developed by
Executive) and shall not, during his employment hereunder or after the
termination of such employment, communicate or divulge any such information,
knowledge or data to any person, firm or corporation other than Company or
persons, firms or corporations designated by Company. Executive acknowledges
that this information is treated as confidential by Company, that Company takes
meaningful steps to protect the confidentiality of this information, and that
Company has at all times directed Executive to maintain the confidentiality of
this information. Immediately upon termination of this Agreement, Executive
shall return all of Company’s property to it, including any and all copies of
said property.

 

C.                                     Ownership
of Work Product. Executive agrees that Company shall own all intellectual
property including trade secrets, patents, patentable inventions, discoveries
and improvements that relate to Company’s business that Executive conceives,
develops during the Employment Term or delivers to the Company while performing
services pursuant to this Agreement (“Work Product”). Executive further agrees
to deliver to the Company, and that the Company shall thereafter own for all
purposes, all Work Product conceived or developed by the Executive relating to
the business of the Company which does not otherwise belong to Employee’s
former employer or to which the former employer has no legal right or claim.
Executive hereby irrevocably extinguishes for the benefit of the Company and
its assigns any moral right to the Work Product recognized by applicable law,
All Work Product shall be considered a work made for hire by Executive and
owned by Company. If any of the Work Product may not, by operation of law,
be considered work made for hire by Executive for Company, or if ownership of
all right, title and interest of the intellectual property rights therein shall
not otherwise vest exclusively in the Company, Executive agrees to assign, and
upon creation thereof automatically assign, without further consideration, the
ownership of all trade secrets, copyrights, patentable inventions, and other
intellectual property rights therein to Company, its successors and assigns.
Company, its successors, and assigns, shall have the right to obtain and hold in
its or their own name copyrights, patents, registrations and any other protection
available in the foregoing. For purposes hereof; a “trade secret” shall mean
any 

 

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information, including, but not limited to, technical
or nontechnical data, formulae, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
product plans or lists of actual or potential customers or suppliers that
derive economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from their disclosure or use and are the subject of
efforts that are reasonable under the circumstances to maintain their secrecy. Executive
agrees to perform, upon the reasonable request of Company and at no cost to the
Company (other than travel out of pocket costs where applicable), during or
after the period(s) that this Agreement remains in effect, such further acts as
may be necessary or desirable to transfer, perfect and defend the Company’s
ownership of Work Product, or to enforce the Company’s Work Product against
third parties. When requested, Executive shall promptly and at no cost to the
Company (other than travel out of pocket costs, where applicable): (a) execute,
acknowledge and deliver any requested affidavits and documents of assignment
and conveyance; (b) obtain and aid in the enforcement of copyright and, if
applicable, patents with respect to the Work Product in any countries; (c) provide
testimony in connection with any enforcement proceeding or any proceeding
affecting the right, title or interest of Company in any Work Product; and (d) perform any
other acts deemed necessary or desirable to carry out the purposes of this
Agreement.

 

D.                                    Inventions.
All discoveries, designs, improvements, ideas and inventions, whether
patentable or not, relating to (or suggested by or resulting from) products,
services, or other technology of Company or relating to (or suggested by or
resulting from) methods or processes used or usable in connection with the
business of Company that have been, or may be, conceived, developed or
made by Executive during the Employment Term (hereinafter “Inventions”), either
solely or jointly with others, shall automatically become the sole property of
Company. Executive shall immediately disclose to Company all such Inventions
and shall, without additional compensation, execute all assignments and other
documents deemed necessary by Company to perfect Company’s title thereto, or to
the patents issued thereon, or to otherwise secure and protect Company’s
property rights therein. These obligations shall continue beyond the
termination of Executive’s employment with respect to Inventions conceived,
developed or made by Executive during employment with Company. The Company
acknowledges and agrees that the provisions of this paragraph shall not apply
to any invention for which no equipment, supplies, facilities or trade secret
(or proprietary) information of Company is used by Executive and which is
developed entirely on Executive’s own time, unless (a) such invention
related to the business of Company or to Company’s actual or demonstrably
anticipated research or development; or (b) such invention results from
any work performed by Executive for Company.

 

E.                                      Acknowledgment.
Executive acknowledges that all of the restrictions set forth in this Section entitled
“Covenants of the Executive” are reasonable in scope and essential to the
preservation of Company’s business and proprietary properties and that the
enforcement thereof will not in any manner preclude Executive, in the event of
Executive’s termination of employment with Company, from becoming gainfully
employed in such manner and to such extent as to provide a standard of living
for himself, the members of his family, and those dependent upon him of at
least the sort and fashion to which he and they have become accustomed and may expect.

 

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F.                                      Representations
and Warranties. Executive represents and warrants to the Company as
follows: (a) Executive is under no contractual or other restriction or
obligation which may conflict with or be inconsistent with the execution
of this Agreement or with the performing of any duties for Company, or any
other rights of Company; (b) neither Company nor any of its affiliates nor
any of their respective officers, directors, employees, agents or employees has
requested that Executive communicate or otherwise make available to any such
parties at any time any proprietary information, data, trade secrets, or other
confidential information belonging to Executive’s former employers or others.

 

G.                                     Severability.
All of the covenants of Executive contained in this Section entitled “Covenants
of the Executive” shall each be construed as an agreement independent of any
other provision in this Agreement, and the existence of any claim or cause of
action of Executive against Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Company of such
covenants. Both parties hereby expressly agree that it is not the intention of
either party to violate any public policy, statutory or common law. If any sentence,
paragraph, clause or combination of the same of this Agreement is in violation of
the law of any state where applicable, such sentence, paragraph, clause or
combination of the same shall be void in the jurisdictions where it is
unlawful, and the remainder of such paragraph and this Agreement shall remain
binding on the parties to the extent that it may be lawfully done under
existing applicable laws. In the event that any part of any covenant of
this Agreement is determined by a court of law to be overly broad thereby
making the covenant unenforceable, the parties hereto agree, and it is their
desire that such court shall substitute a judicially enforceable limitation in
its place, and that as so modified the covenant shall be binding upon the
parties as if originally set forth herein.

 

H.                                    Remedies.
The Executive agrees that irreparable harm would result from any breach by
Executive of the covenants of this Section 8 in particular, and this
Agreement in general, and that monetary damages alone would not provide the
Company adequate relief for any such breach. Accordingly, if Executive breaches
any covenant in this Section 8, the parties acknowledge that equitable or
injunctive relief in favor of the Company is a proper remedy, and nothing in
this Agreement shall be construed as precluding the Company from seeking such
equitable or injunctive relief in a court of competent jurisdiction for
Executive’s violations of Section 8. Any award of equitable or injunctive
relief shall not preclude the Company from seeking or recovering any lawful
compensatory damages that may have resulted from a breach of the covenants
of this Agreement. Any waiver or failure to seek enforcement. or remedy for any
breach or suspected breach of any covenant of Executive in this Agreement shall
not be deemed a waiver of such provision in the future. Furthermore, the
existence of any claim of Executive against the Company, whether based upon
this Agreement or otherwise, shall not operate as a defense to the Company’s
enforcement of any provision of this Agreement. Proceedings seeking equitable
and injunctive relief to enforce the terms of this Section 8 may be
brought in any court of competent jurisdiction.

 

9.                                       Attorneys’ Fees. In any action
brought by any party under this Agreement to enforce any of its terms, or any
appeal therefrom the prevailing Party shall be entitled to an award of its reasonable
attorneys’ fees.

 

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10.                                 Cooperation. Executive agrees that
during the Employment Term, any Renewal Term and any other extension thereof;
and after his termination of employment for any reason, whether initiated by
the Company or by the Executive, he shall cooperate on a reasonable basis in
the truthful and honest prosecution and/or defense .of any claim in which the
Company, its affiliates and or its subsidiaries may have an interest
(subject to reasonable limitations concerning time and place), which may include,
without limitation, making himself available on a reasonable basis to
participate in any proceeding involving the Company, its affiliates and/or it
subsidiaries, appearing for depositions and testimony without requiring a
subpoena, and producing and/or providing any documents or names of other
persons with relevant information.

 

11.                                 Executive Offices. The executive
offices for MonoSol Rx LLC shall reside in the state of New Jersey.

 

12.                                 Travel Restrictions. As is
reasonable, Executive has the right to refuse travel to destinations deemed
politically unstable or otherwise hostile and/or those that may represent
a danger to the Executive’s health and well-being.

 

13.                                 Notices. Any notices permitted or
required under this Agreement shall be deemed given upon the date of personal
delivery or forty-eight (48) hours after deposit in the United States mail,
postage fully paid, certified mail, return receipt requested, addressed to the
following address:

 

If to the Company:                                           Keith
Kendall

MonoSol Rx

30 Technology Drive

Warren, NJ 07059

 

If to the Executive:                                        Carl G. Fischer

30 Hillcrest Road

Whitehouse Station, NJ 08889

 

Either party may change
the address to which notices to such party shall be delivered personally or
mailed by giving notice thereof to the other party hereto.

 

14.                                 Venue; Jurisdiction. Any suit
concerning this Agreement shall be filed solely in the courts of Tarrant
County, Texas. In any action brought concerning or arising from this Agreement,
Executive hereby agrees that he shall be subject to the jurisdiction of the
state and federal courts of Texas.

 

15.                                 Binding Effect; Assignment. Executive
shall not, without the prior written consent of the Company, assign, transfer,
or otherwise convey this Agreement, or any right or interest herein. This
Agreement, and all rights and obligations of the Company or any of its
successors, may be assigned or otherwise transferred to any of its
successors and shall be binding upon and inure to the benefit of its
successors. As used herein, the term “successor” shall mean any person,
corporation or other entity that, by merger, consolidation, purchase of stock,
assets, liquidation, voluntary or involuntary assignment, or otherwise,
acquires all or a substantial part of the assets of the Company or
succeeds to one or more lines of business of the Company.

 

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16.                                 Entire Agreement. This Agreement,
and the Monosol Rx, LLC, Performance Units Plan, and all benefit plans, as
amended from time to time, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings and arrangements, both oral and written, between the
parties hereto with respect to such subject matter, including but not limited
to any prior Employment Agreement. This Agreement may not be modified,
amended, altered or rescinded in any manner, except by written instrument
signed by all of the parties hereto; any waiver by either party with respect to
any provision hereof; or the breach of any provision hereof by the other party,
need be signed only by the party waiving such Provision or breach; provided,
further, that the waiver by either party hereto of a breach or compliance with
any provision of this Agreement shall not operate nor be construed as a waiver
of any subsequent breach or compliance.

 

17.                                 Severability. In case any one or
more of the provisions of this Agreement shall be held by any court of
competent jurisdiction to be illegal, invalid or unenforceable in any respect,
the remainder of this Agreement, or the application of such provision to
persons or circumstances other than those to which it is held to be illegal,
invalid, or unenforceable, shall not he affected thereby.

 

18.                                 Section Headings. The section headings
contained in this Agreement are for reference purposes only and shall not
affect in any manner the meaning or interpretation of this Agreement.

 

19.                                 Counterparts. This Agreement may he
executed in any number of counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.

 

20.                                 Survival. The provisions of
Sections 8-11 of this Agreement shall survive any termination of this Agreement
and the termination of Executive’s employment. The provisions of Section 8-11
shall also survive any party’s decision not to extend this Agreement as
provided in Section 2.

 

[Signature Page to
Follow]

 

11

 

IN WITNESS WHEREOF, the
parties hereto have executed and delivered this Agreement as of the day and
year first above written.

 

	
   

  	
  MonoSol RX, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Keith J. Kendall

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  3/29/07

  	
   

  	
  Title:

  	
   

  	
  Sr. VP & CFO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Carl G. Fischer, Individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  3/28/07

  	
   

  	
  /s/ Carl G. Fischer

  	
   

  
									

 

12Exhibit
10.6

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

	
  Confidential
  treatment has been requested for portions of this exhibit. The copy filed
  herewith omits the information subject to the confidentiality request. Omissions
  are designated as [*]. A complete version of this exhibit has been field
  separately with the Securities and Exchange Commission.

  

 

SUPPLY
AGREEMENT

                This
SUPPLY AGREEMENT (together with the Exhibits and Schedules hereto, this “Agreement”)
is entered into
as of March 15, 2007 by and
between MonoSol Rx, LLC., a Delaware limited liability company (“MonoSol”)
and Adams Respiratory Operations, Inc., a Delaware corporation (“Buyer”).  MonoSol
and Buyer are referred to hereinafter individually as a “Party” and
collectively as the “Parties.”

R E C I T A L S

A.            Simultaneously with the execution of this Agreement, the
Parties are entering into a License Agreement (the “License Agreement”)
pursuant to which MonoSol grants to Buyer a license in and to certain know-how
and other intellectual property related to thin strip technology (“MonoSol IP
Rights”).;

B.            Simultaneously with the execution of this Agreement, the
Parties are entering into a Development Agreement (the “Development
Agreement”) pursuant to which MonoSol agrees to use the MonoSol IP Rights
to develop for Buyer the [*] Product;

C.            Pursuant to the Development Agreement, once the [*] Product has been developed, Buyer and MonoSol will work
together to obtain Regulatory Approvals of the [*]
Product.  Once Regulatory Approval has
been obtained, Buyer wishes MonoSol to Manufacture and supply to Buyer the
Finished Product, and MonoSol is willing to perform such services on the terms
and subject to the conditions set forth in this Agreement and the Quality Agreement;

In consideration of the mutual representations,
warranties and covenants contained herein, the Parties hereto agree as follows.

SECTION 1.                            DEFINITIONS

1.1.         “Affiliate”
means, with respect to a Person, (i) any other Person at least fifty percent
(50%) of the issued and voting capital of which is owned or controlled,
directly or indirectly, by said Person, (ii) any other Person that owns or
controls, directly or indirectly, at least fifty percent (50%) of the issued
and voting capital of said Person, or (iii) any other Person at least fifty
percent (50%) of the issued and voting capital of which is owned or controlled,
directly or indirectly, by any Person referenced in clause (i) or (ii) above.

1.2.          “Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to close.

 

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

1.3.          “Commercial
Launch” means the first commercial sale of the Finished Product in the
Territory after Regulatory Approval of the Finished Product is obtained from
the FDA.

1.4.         “Commercial
Launch Date” means the date of the Commercial Launch.

1.5.          “Cost”
means, with respect to the Finished Product and on a per Unit basis, MonoSol’s
cost of Manufacturing such Finished Product, which shall be limited to the
actual costs of the Materials; labor time; quality assurance time; and
overhead.  The initial Cost with respect
to each SKU of the Finished Product on a per unit basis is set forth on Schedule
1.11.

1.6.         “FDA”
means the Food and Drug Administration or any successor agency.

1.7.         “Finished
Product” means the thin strip [*] product
developed under the Development Agreement.

1.8.         “Indemnified
Parties” means (i) with respect to claims arising under Section 6.4 Buyer
Indemnified Parties, and (ii) with respect to claims arising under Section 6.5,
MonoSol Indemnified Parties.

1.9.         “Indemnifying
Party” means (i) with respect to claims arising under Section 6.4, MonoSol,
and (ii) with respect to claims arising under Section 6.5, Buyer. 

1.10.       “Manufacture”
means to process, produce, package, label and test the Finished Product in
accordance with the terms of the Specifications.  

1.11.       “Materials”
means all ingredients and components required to Manufacture the Finished
Product, including active ingredients, excipients, packaging components, labels
and printed materials.

1.12.        “NDA”
means a New Drug Application, including amendments and supplements thereto,
filed by a Person with the FDA to obtain FDA approval of a new drug or therapy,
as the context indicates, as defined in 21 C.F.R. § 314.3.

1.13.       “Person”
means an individual, a corporation, a general partnership, a limited
partnership, a limited liability company, a limited liability partnership, an
association, a trust or any other entity or organization, including a
governmental authority.

1.14.       “[*] Product” means the thin
strip [*] product developed under the
Development Agreement.

1.15.       “Quality
Agreement” means the Quality Agreement to be entered into between the
Parties prior to the Regulatory Approval of the [*]
Product by FDA which shall be substantially in the form of Exhibit A.

 

2

 

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

1.16.       “Regulatory
Approvals” means the technical, medical, and scientific licenses,
registrations, authorizations, permits, approvals and franchises of or from any
Regulatory Authority used or useful in the formulation, manufacturing,
distribution, marketing, promotion, offer for sale, use or sale of the Finished
Product in the Territory.

1.17.       “Regulatory
Authority” means any governmental or regulatory body, court or arbitrator,
including the U.S. Environmental Protection Agency and the FDA.

1.18.       “Samples”
means any
samples of the Finished Product requested by Buyer in a purchase order or
otherwise that indicates the Finished Product is not for commercial sale, but
is for providing to doctors and other Third Parties without cost.  

1.19.        “Specifications”
means, collectively, the specifications for the Finished Product set forth in
the Quality Agreement, as such Specifications may be amended, supplemented or
otherwise modified from time to time in accordance with this Agreement and the
Quality Agreement.  

1.20.        “Territory”
means the Mexico, Canada and the United States, and its territories and
possessions, including Puerto Rico.

1.21.       “Trade Secrets”
means information, including technical and nontechnical data, a formula,
pattern, compilation, program device, method, technique, process or other
information similar to any of the foregoing, that (i) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other Persons who can derive economic value
from its disclosure or use and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.

1.22.       “Unit” means a finished goods package
of the Finished Product in 15mg thin strips in a box of 100 individually
packaged thin strips.

SECTION 2.         SUBJECT MATTER

Buyer
hereby selects MonoSol as its exclusive partner to Manufacture and supply to
Buyer all of its requirements for the Finished Product in the Territory and
(ii) MonoSol hereby agrees to Manufacture the Finished Product in its plant in Portage,
Indiana (in accordance with Section 5.2, below) and to supply to Buyer the
Finished Product for sale in the Territory in such quantities and at such times
as ordered by Buyer in accordance with this Agreement and not to Manufacture
Finished Product for, or supply Finished Product to, any other Person for sale
in the Territory.

SECTION 3.         MATERIALS

3.1.         Purchase of Materials. MonoSol shall
exercise reasonable commercial efforts to obtain from third parties at its
expense all Materials required to Manufacture the Finished Product.  MonoSol shall purchase such Materials from
qualified suppliers in accordance with 

 

3

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

the Quality Agreement.  Such
Materials shall meet the Specifications in accordance with the Quality
Agreement.

3.2.         Inspection,
Handling and Storage of Materials. MonoSol shall handle and
store the Materials in accordance with the Quality Agreement.  MonoSol shall inspect and analyze the
Materials in accordance with the Quality Agreement prior to using such
Materials in the Manufacture of Finished Product supplied to Buyer hereunder.

SECTION 4.         FORECASTS AND ORDERS

4.1.         Forecasts.  The Parties agree to work together in good
faith to prepare for the Commercial Launch of the Finished Product.

a)            Approximately six (6) months
prior to the first day of  the calendar
quarter in which the Commercial Launch of the Finished Product is projected by
the Parties to occur, Buyer shall provide MonoSol with a twelve (12) month
non-binding forecast of Buyer quantity requirements of the Finished Product to
prepare for Commercial Launch of, and for the twelve (12) months of sales
following the Commercial Launch of, the Finished Product (collectively the “Launch
Requirements”).

b)            To the extent the purchase
order specifies delivery dates for the Finished Product that are at least
ninety (90) days after the date of purchase order issuance, not in excess of
the forecast supplied under 4.1(a) or 4.1(d) as the case may be and Buyer does
not during such 90-day period request any revisions or modifications to the
packaging or labelling, MonoSol shall supply the Finished Product in the
requested quantities and otherwise in accordance with the terms and conditions
of this Agreement.  In the case of the
Launch Requirements, the Parties agree to collaborate to coordinate appropriate
delivery schedules and storage for such Launch Requirements within the
Specifications.

c)             To the extent the purchase
order specifies delivery dates for the Finished Product that are less than
ninety (90) days after the date of purchase order issuance, materially in
excess of the forecast supplied under 4.1(a) or Buyer does request any
revisions or modifications to the packaging or labelling after the date of the
purchase order, the Parties shall work together in good faith to achieve
delivery of such Finished Product as soon as is reasonably practicable under
the circumstances.

d)            No less than one hundred
twenty (120) days prior to the estimated date that the Commercial Launch of the
Finished Product is projected to occur, Buyer shall provide MonoSol with a
binding purchase order for its Launch Requirements of the Finished Product and
a revised forecast of its quantity requirements for the Finished Product for
the subsequent twelve (12) calendar months. 
Following Commercial Launch by Buyer, Buyer 

 

4

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

shall
thereafter issue firm purchase orders to MonoSol for the Finished Product on a
rolling basis — each purchase order shall be accompanied by a non-binding
forecast of Buyer quantity requirements for the Finished Product for the
subsequent six (6) months following the period for which the purchase order is
made, provided that no forecasts or orders need be given for any period after
the term of this Agreement. Buyer forecasts and orders shall reflect its good
faith expectations of customer demand and Buyer shall act in a commercially
reasonable manner to schedule orders to avoid creating production capacity
problems for MonoSol.  All purchase
orders will be made and fulfilled in batch size quantities only.

4.2.         Material
Inventory. MonoSol shall exercise reasonable commercial efforts
to maintain appropriate levels of inventory of Materials in order to support
Buyer’s orders of Finished Product subject to then-issued Purchase Orders.

4.3.         Packaging.  Monosol shall package Units of the Finished
Product in accordance with the Specifications. Buyer represents and warrants
that in connection with packaging of the Finished Product, Buyer shall provide
all text, designs, logos, similar content required for such packaging in order
to comply with all legal and regulatory requirements and that such text,
designs, logos and other content will not violate, infringe or misappropriate
the intellectual property of any third party. 
 MonoSol shall have the right, at
its election, to include an appropriately sized logo on the Finished Product
which MonoSol represents and warrants will not violate, infringe or
misappropriate the intellectual property of any third party and shall comply
with all legal and regulatory requirements.

SECTION 5.         MANUFACTURING

5.1.         Testing Prior to
Delivery. MonoSol shall test the Finished Product according to
the methods of analysis set forth in the Quality Agreement prior to delivery of
the Finished Product by MonoSol to Buyer. 
If the Finished Product is found not to be in compliance with the
Specifications, MonoSol shall at its own expense handle, store, transport,
treat and dispose of the Finished Product according to all applicable laws,
directives, codes, rules, regulations, ordinances, orders, permits, licenses,
consents and other authorizations (including but not limited to the environment
and employee health and safety).

5.2.         Manufacturing
Facility. Except to the extent otherwise agreed in writing by
the Parties, MonoSol shall Manufacture the Finished Product at its current facility
located at 6560 Melton Road, Portage, Indiana. Notwithstanding the foregoing, MonoSol
shall have the right to transfer the Manufacture of the Finished Product to a
new facility located at 6465 Ameriplex Drive, Portage, Indiana, so long as, the
following conditions have been met: (a) MonoSol has paid all costs and expenses
associated with such transfer, and (b) the new facility has been approved by
the Regulatory Authority for Manufacture of the Finished Product. 

 

5

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

5.3.         Acceptance and
Rejection. 

a)            MonoSol shall
deliver to Buyer, concurrently with the delivery of each shipment, a
certificate of analysis and other documents and materials set forth in the
Quality Agreement.  Within ten (10) days
after receipt of any shipment of Finished Product, Buyer shall assess the quantity
and visually inspect the quality of the Finished Product.  Within thirty (30) days after delivery of
Finished Product to Buyer in accordance with Section 7, Buyer shall examine the
Finished Product to determine whether the Finished Product conforms to the
Specifications.  No claim for defective
quality or shortage in quantity of any individual shipment of Finished Product
shall be valid unless made by written notice given within thirty (30) days from
the date of delivery, except in the case of latent (or other non-obvious)  defects, in which case such claims shall be made in writing
within thirty (30) days from the date such defect was discovered by Buyer (but
in no event later than the date upon which the Finished Product has expired
according to its expiry date).  Any such
notice shall describe in reasonable detail the defect or non-conformity, and
shall include samples of the Finished Product being rejected, if appropriate,
and copies of written reports, if any, relating to tests, studies or
investigations performed by or on behalf of Buyer on the Finished Product being
rejected.  Failure to deliver a notice of
non-conformance in the manner contemplated in this Section 5.3(a) shall
constitute an acceptance of the applicable Finished Product by Buyer.

b)            If there is any
dispute as to whether any shipment fails, in whole or in part, to meet the
Specifications, such dispute shall be resolved by an independent testing
organization of recognized repute within the pharmaceutical industry in the
Territory appointed by both MonoSol and Buyer. 
The expense of hiring such organization shall be borne by the Party
against whom the decision is rendered.

c)             MonoSol shall
make up any shortfall and/or replace any non-conforming Finished Product or
rework the rejected Finished Product, if applicable, as promptly as practicable
and at no additional cost to Buyer.  Upon
MonoSol’s instructions, Buyer shall destroy or return, in either case at
MonoSol’s cost, the non-conforming Finished Product. Buyer shall not knowingly
distribute any Finished Product with a defect or non-conformity.

5.4.         Alternate
Packaging Site Validation.  

a)            Buyer shall have the right
during the term of this Agreement, at its sole cost and expense, to qualify and
validate a facility to package the Finished Product to the extent set forth in
this Section 5.4.  Monosol shall
cooperate with Buyer in the qualification and validation of the alternate site
and use its reasonable best efforts to assist in the qualification of the
alternate site.

Buyer shall
only be entitled to package that quantity of the Finished Product at the
alternate site which (i) Monosol informs Buyer it would be unable to package in
accordance with Section 4.3 above, (ii) MonoSol refuses or is unable to package
despite its prior acceptance 

 

6

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

of the
relevant purchase order or revised purchase order, (iii) MonoSol is unable to
deliver pursuant to Sections 12.5 or 11 below, or (iv) the parties mutually
agree to do so.

SECTION 6.         WARRANTIES; LIABILITY

6.1.         MonoSol
Warranties. MonoSol warrants that (i) at the time of delivery of
Finished Product to Buyer, the Finished Product shall comply with the
Specifications, and (ii) MonoSol shall comply with the terms and conditions of
the Quality Agreement and all applicable laws and regulations governing the
Manufacture of the Finished Product, including compliance with FDA’s current
good manufacturing practices (“cGMP”), and perform its other obligations
under this Agreement.  MonoSol warrants
that, at the time of delivery of Finished Product to Buyer, the Finished
Product shall not (a) be misbranded or adulterated provided that MonoSol shall
have the right to rely on any packaging or similar information provided by Buyer
or (b) be subject to any liens, encumbrances, security interests or other
encumbrances.  

6.2.         Buyer Warranties. Buyer shall
store, handle, transport, market, promote, sell, distribute, use and otherwise
dispose of any Finished Product supplied by MonoSol, and any Materials used in
connection with such Finished Product, including any labeling, packaging and
advertising, in accordance with all applicable laws and regulations.

6.3.         MonoSol
Indemnification. MonoSol will indemnify and hold harmless the Buyer
and its Affiliates (each, a “Buyer Indemnified Party”) from, against and
in respect of any and all actions, liabilities, governmental orders,
encumbrances, losses, damages, bonds, dues, assessments, fines, penalties,
taxes, fees, costs (including costs of investigation, defense and enforcement
of this Agreement), expenses or amounts paid in settlement (in each case,
including attorneys’ and experts’ fees and expenses), involving a Third Party
Claim (collectively, “Losses”), incurred or suffered by the Buyer
Indemnified Parties or any of them as a result of, arising out of, or directly
or indirectly relating to (i) any breach by MonoSol of any of its
representations, warranties, covenants, agreements or obligations under this
Agreement, or (ii) the failure of Finished Product delivered by MonoSol
hereunder to meet the warranties set forth in Section 6.1 except to the extent
that such Loss is directly caused by the breach of any representations,
warranties, covenants, agreements or obligations under this Agreement by Buyer
or Buyer’s gross negligence.

6.4.         Buyer
Indemnification. Buyer will indemnify and hold harmless MonoSol and
its Affiliates (each, a “MonoSol Indemnified Party”) from, against and
in respect of any and all Losses incurred or suffered by the MonoSol
Indemnified Parties or any of them as a result of, arising out of, or directly
or indirectly relating to (i) any breach by Buyer of any of its
representations, warranties, covenants, agreements or obligations under this
Agreement, or (ii) the distribution, marketing, promotion, sale, handling, use,
shipping or storage of the Finished Product (or other product into which the
Finished Product has been transformed), including 

 

7

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

without limitation (A) liabilities for product liability and returned
goods, (B) liabilities in respect of product warranties and (C) liabilities for
any design or other defects with respect to the Finished Product.  

6.5.         Third Party
Claims.

a)            If any third
party notifies an Indemnified Party with respect to any matter (a “Third
Party Claim”) which may give rise to a claim against the Indemnifying Party
under this Section 6, then the Indemnified Party will promptly give written
notice to the Indemnifying Party; provided, however, that no
delay on the part of the Indemnified Party in notifying the Indemnifying Party
will relieve the Indemnifying Party from any obligation under this Section 6,
except to the extent such delay actually prejudices the Indemnifying Party.

b)            The Indemnifying
Party will have the right to defend the Indemnified Party against the Third
Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as the Indemnifying Party promptly assumes such
defense.  The Indemnified Party may
retain separate co-counsel at its own cost and expense and participate in the
defense of the Third Party Claim. 
Notwithstanding anything to the contrary contained herein, whether or
not an Indemnifying Party assumes the defense of any Third Party Claim
hereunder shall not constitute a presumption or omission with respect to
whether the Losses related to such Third Party Claim are, in fact, subject to
indemnification hereunder.  The
Indemnified Party’s right to an indemnity is conditional upon it providing
reasonable support and access to the Indemnifying Party.

c)             The Indemnifying
Party will not consent to the entry of any judgment or enter into any
compromise or settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party, which shall not be unreasonably
withheld, unless such judgment, compromise or settlement (i) provides for the
payment by the Indemnifying Party of money as sole relief for the claimant (or
otherwise does not require any limitations, covenants or other agreements of
the Indemnified Parties) (ii) results in the full and general release of the
Indemnified Parties from all liabilities arising or relating to, or in connection
with, the Third Party Claim and (iii) involves no finding or admission of any
violation of legal requirements or the rights of any Person and no effect on
any other claims that may be made against any Indemnified Party.

d)            The Indemnified
Party may not consent to the entry of any judgment or enter into any compromise
or settlement with respect to a Third Party Claim with respect to which
indemnification is being sought hereunder without the prior written consent of
the Indemnifying Party, which shall not be unreasonably withheld.  If the Indemnifying Party does not assume the
control and defense of a Third Party Claim under Section 6.5(b), the
Indemnified Party may defend such Third Party Claim and seek indemnification
hereunder from the Indemnifying Party for any Losses associated therewith.  

 

8

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

e)             The Indemnifying
Party or the Indemnified Party, as the case may be, shall at all times use
reasonable efforts to keep the other reasonably apprised of the status of the
defense of any Third Party Claim and to cooperate in good faith with each other
with respect to the defense of any such matter. 

6.6.         Consequential
Damages. Notwithstanding anything to the contrary contained herein, no Party
shall be liable to any other Party for special, consequential, indirect or
incidental (including without limitation lost profits), punitive or multiple
damages under this Agreement except to the extent such damages shall be payable
to a third party.  

6.7.         Exclusive Remedy. Except as
otherwise provided in Sections 5.3(c) and 10.5, the sole and exclusive remedy
with respect to any breach of any representation, warranty, covenant or
agreement contained herein (other than (i) with respect to a breach of the
terms of a covenant or agreement as to which MonoSol or Buyer, as the case may
be, also shall be entitled to seek specific performance or other equitable
relief and (ii) with respect to claims for fraud) shall be a claim for Losses
(whether by contract, in tort or otherwise, and whether in law, in equity or
both) made pursuant to Section 6.3or 6.4 as the case may be.

SECTION 7.         DELIVERY OF FINISHED PRODUCT

MonoSol shall ship the Finished Product to Buyer’s
distribution facility or such other location as Buyer may advise MonoSol from
time to time (the “Buyer’s Facility”) upon release of the Finished
Product by MonoSol in accordance with the Quality Agreement or to such other
location in the Territory designated in writing by Buyer.  Delivery shall be made on or prior to the
delivery date specified in the Purchase Order. 
The Finished Product shall be supplied F.O.B. Seller’s facility.  Title to shipments of the
Finished Product and risk of loss in respect thereof shall pass to Buyer upon pick-up
of such shipments at Seller’s facility by common carrier.  The Finished Product shall be properly
prepared for safe and lawful bulk shipment by MonoSol according to the
Specifications, shall be shipped to Buyer’s Facility, via common carrier
designated by Buyer, and shall be accompanied by appropriate transportation and
other agreed upon documentation.  Said
common carrier shall execute all shipments under controlled storage conditions
and with proper documentation of such control, as required by the Quality
Agreement, the FDA and other applicable laws, and as set forth in the
Specifications.  Each Party shall use its reasonable commercial efforts to ensure timely
shipment and receipt of the Finished Product.  MonoSol shall pack
and label the Finished Product supplied in accordance with the Specifications
set forth in the Quality Agreement.

SECTION 8.         SUPPLY PRICE

8.1       Supply Price.
Subject to adjustment in accordance with this Section 8, in consideration of
the Manufacturing and supply of the Finished Product, Buyer shall pay to
MonoSol an amount equal to $[*] per Unit
(the “Supply Price”).  The payment of the
Supply Price hereunder shall be in addition to and independent of any amounts
payable by Buyer to MonoSol under the Development Agreement and the License
Agreement. Notwithstanding 

 

9

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

the
preceding, all Samples ordered by Buyer shall be supplied by MonoSol to Buyer
at MonoSol’s actual Cost, with no percentage increase.

8.2       Price Adjustment.  In the event of an increase or decrease in
MonoSol’s actual direct manufacturing  costs [*], MonoSol
shall promptly notify Buyer of such increase or decrease and shall provide
Buyer with documentation substantiating such changes.  Buyer and MonoSol shall promptly begin to
negotiate in good faith to adjust the Supply Price in an amount which reflects
such increase or decrease to MonoSol, which adjusted Supply Price shall become
the new Supply Price commencing with the next purchase order following MonoSol’s
notice to Buyer.

8.3       Adjustment
for Changes in Specifications. In the event any change in the  Specifications requested by Buyer or mandated
by law shall result in actual increased Costs to MonoSol, (i) the Supply Price
shall be increased [*], (ii) Buyer
shall reimburse MonoSol for [*]
implementing any changes, including costs in connection with labeling,
packaging and preprinting of package insert and label copy and of discontinuing
stock of the same due to such changes, and (iii) Buyer shall reimburse MonoSol [*] for the cost of any inventory of MonoSol, including
work-in-progress and finished goods rendered obsolete or rejected as a result
of such change, including any formula, process, artwork, labeling or packaging
change, as well as for the cost of destruction of any such inventory.  MonoSol shall be responsible for any increase
in Costs resulting from a discretionary change in Specifications requested by
MonoSol.  It is acknowledged and agreed
that changes to the Specifications shall only be made in accordance with the
provisions of the Quality Agreement.  

8.4       Invoice
and Payment. MonoSol shall invoice Buyer for the Supply Price promptly upon
delivery of Finished Product.  Buyer
shall pay the Supply Price within thirty (30) calendar days of receipt of the
invoice.  All payments to be made hereunder
shall be paid in United States dollars and made by a corporate check drawn on a
United States bank or by wire transfer to an account designated in writing by
MonoSol.  Overdue invoices shall bear
interest at a rate of one percent (1.0%) per month until paid.  

8.5       Taxes.
In addition to the Supply Price provided for in this Section 8, Buyer shall
reimburse MonoSol for any federal, state or local excise or other tax or
assessment that MonoSol may be required to pay upon the sale, production or
transportation of the Finished Product (excluding taxes based on MonoSol’s
income or MonoSol’s franchise fees or taxes).

SECTION 9.         TERM AND TERMINATION

9.1.         Term. Unless
otherwise terminated in accordance with Section 9.2, this Agreement shall
commence on the Effective Date and shall continue until the seventh anniversary
of the Commercial Launch Date (“Termination Date”), provided that Buyer may
renew this Agreement for three (3) successive three (3) year periods, in its
sole discretion, by written notice to MonoSol given at least six (6) months
prior to the end of the then current term (the initial term and all renewal
terms shall be “Term”).

 

10

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

9.2.         Termination. Notwithstanding
the provisions of Section 9.1, this Agreement may be terminated as follows.

a)            In the event the
Development Agreement is terminated prior to the Commercial Launch Date, this
Agreement shall terminate.

b)            Either MonoSol or
Buyer shall have the right to terminate this Agreement if the other commits a
material breach of any of the provisions of this Agreement and (in the case of
a breach that is capable of a remedy) fails to remedy the same within sixty
(60) days of receipt of written notice of such breach.

c)             Either MonoSol or
Buyer shall have the right to terminate this Agreement if (A) the other shall
fail to pay its debts or obligations as they become due in the ordinary course,
voluntarily seek appointment of a trustee, receiver or similar official of any
of its property, make a general assignment for the benefit of creditors,
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to bankruptcy, insolvency or
similar laws, or shall consent to any such relief or the appointment or taking
by any such official in an involuntary case or other proceeding commenced
against it, (B) an involuntary case seeking liquidation, reorganization or
other relief with respect to bankruptcy, insolvency or similar laws or the
appointment of a trustee, receiver or similar official of any of the other’s
property shall be commenced and shall remain undismissed and unstayed for a
period of one hundred eighty (180) days, or (C) an order for relief shall be
entered against the other under federal bankruptcy laws.

d)            Either MonoSol or
Buyer shall have the right to terminate this Agreement upon written notice to
the other if an event of force majeure contemplated in Section 11 shall
continue with respect to the other for more than six (6) months.

9.3.         Distribution of
Inventory Upon Termination. Unless otherwise agreed to
among the Parties, all stock on hand as of the effective date of the
termination or expiration of this Agreement shall be dealt with as soon as
practicable as follows:

a)            Finished Product
Manufactured pursuant to Purchase Orders from Buyer shall be delivered by
MonoSol to Buyer, whereupon Buyer shall pay MonoSol therefor in accordance with
the terms hereof;

b)            work in progress
commenced by MonoSol against Purchase Orders from Buyer shall be completed by
MonoSol and shall be invoiced to Buyer in accordance with this Agreement.

c)             packaging
materials acquired by MonoSol pursuant to Buyer’s Purchase Orders shall be
invoiced to Buyer at MonoSol’s actual cost and delivered to Buyer.

9.4.         Return of Confidential
Information. Except to the extent that such Confidential
Information was supplied in connection with another agreement between the
Parties which 

 

11

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

remains in effect, within thirty (30) days of any expiration or
termination of this Agreement, (i) Buyer shall cease to use and shall deliver
to MonoSol, upon written request, all Confidential Information of MonoSol,
except for any documents or records that Buyer is required to retain by
applicable law, and (b) MonoSol shall cease to use and shall deliver to Buyer,
upon written request, all Confidential Information of Buyer except for any
documents or records that MonoSol is required to retain by applicable law.

9.5.         Effect of
Termination. Upon termination, this Agreement shall forthwith
become void and of no further force or effect, except for the following
provisions, which shall remain in full force and effect: (i) Section 6 (Warranties;
Liability), (ii) this Section 9, (iii) Section 10 (Confidentiality), (iv)
Sections 12.1 and 12.6, and (v) Section 14 (Miscellaneous).  Any termination of this Agreement shall not
affect any right or claim hereunder that arises prior to such termination,
which claims and rights shall survive any such termination.  Termination of this Agreement shall not
impact the Parties’ obligations under the Purchase Agreement, the License
Agreement or any of the other Ancillary Agreements.

SECTION 10.       CONFIDENTIALITY

10.1.       General. Pursuant to the
terms of this Agreement, each of MonoSol and the Buyer (in such capacity, the “Disclosing
Party”) has disclosed and will be disclosing to the other Party, and to the
officers, directors, employees, agents and/or representatives of each (in such
capacity, the “Receiving Party”) certain secret, confidential or
proprietary data, Trade Secrets, know-how, intellectual property and related
information, including without limitation operating methods and procedures,
marketing, manufacturing, distribution and sales methods and systems, sales
figures, pricing policies and price lists and other business information (“Confidential
Information”).  The Receiving Party
shall make no use of any Confidential Information of the Disclosing Party
except in the exercise of its rights and the performance of its obligations set
forth in this Agreement or the Ancillary Agreements.  The Receiving Party (i) shall keep and hold
as confidential, and shall cause its officers, directors, employees, agents and
representatives to keep and hold as confidential, all Confidential Information
of the Disclosing Party, and (ii) shall not disclose, and shall cause its
officers, directors, employees, agents and representatives not to disclose, any
Confidential Information of the Disclosing Party.  Confidential Information disclosed by the
Disclosing Party shall remain the sole and absolute property of the Disclosing
Party, subject to the rights granted in this Agreement or the Ancillary
Agreements.  

10.2.       Exceptions. The above
restrictions on the use and disclosure of Confidential Information shall not
apply to any information which (i) is already known to the Receiving Party at
the time of disclosure by the Disclosing Party, as demonstrated by competent
proof (other than as a result of prior disclosure under any agreement between
or among the Parties with respect to confidentiality), (ii) is or becomes
generally available to the public other than through any act or omission of the
Receiving Party in breach of this Agreement or the Ancillary Agreements, (iii)
is acquired by the Receiving Party from a third party who is not, directly or
indirectly, under an obligation of confidentiality to the Disclosing Party with
respect 

 

 

12

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

to same, or (iv) is developed independently by the Receiving Party
without use, direct or indirect, of information that is required to be held
confidential under this Agreement or the Ancillary Agreements.  In addition, nothing in this Section 10 shall
be interpreted to limit the ability of any Party to disclose its own
Confidential Information to any other person on such terms and subject to such
conditions as it deems advisable or appropriate.

10.3.       Permitted
Disclosures. It shall not be a breach of Section 10.1 if a
Receiving Party discloses Confidential Information of a Disclosing Party (i)
pursuant to applicable law, including securities laws applicable to a public
company, to any Regulatory Authority or other governmental authority, or (ii)
in a judicial, administrative or arbitration proceeding to enforce such Party’s
rights under this Agreement.  In such
event, the  Receiving Party shall (A) provide the
Disclosing Party with as much advance written notice as possible of the
required disclosure, (B) reasonably cooperate with the Disclosing Party in any
attempt to prevent, limit or seek confidential treatment for the disclosure,
and (C) limit disclosure, if any, to the specific purpose at issue.  

10.4.       Confidential
Terms. Each Party acknowledges and agrees that the terms and conditions of
this Agreement shall be considered Confidential Information of each Party and
shall be treated accordingly. 
Notwithstanding the foregoing, each Party acknowledges and agrees that
the other may be required to disclose some or all of the information included
in this Agreement in order to comply with its obligations under securities
laws, and hereby consents to such disclosure to the extent deemed advisable or
appropriate by its respective counsel (but only after consulting with the other
to the extent practicable).  The Parties
may also disclose the existence of this Agreement and terms thereof to their
directors, investors, officers, employees, attorneys, accountants and other
advisers on a need to know basis and may, upon obtaining a written
confidentiality agreement, further disclose the existence and terms of this
Agreement to third parties to whom it may be relevant in connection with
financings, acquisitions and similar transactions.

10.5.       Equitable
Remedies. Each Party specifically recognizes that any breach
by it of this Section 10 may cause irreparable injury to the other Parties and
that actual damages may be difficult to ascertain, and in any event, may be
inadequate.  Accordingly (and without
limiting the availability of legal or equitable, including injunctive, remedies
under any other provisions of this Agreement), each Party agrees that in the
event of any such breach, notwithstanding the provisions of Section 6.10, the
other Parties shall be entitled to seek injunctive relief and such other legal
and equitable remedies as may be available.

SECTION 11.       FORCE MAJEURE

                In the event that any of the
Parties hereto becomes prevented from carrying out its obligations hereunder,
in whole or in part, by reason of duly evidenced force majeure events not
caused by an act or omission of such Party, including but not limited to acts
of God, changes in law, riots, wars, strikes, natural disasters, fire, flood,
explosions, acts of a public enemy, labor disturbances or the inability of
MonoSol to obtain (through no fault of MonoSol and provided 

 

13

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

that
MonoSol has used reasonable commercial efforts to obtain such Materials in
accordance with this Agreement) sufficient Materials to perform under this
Agreement, the Party so affected by such cause or event, upon giving prompt
written notice to the other Parties, shall be excused from such performance and
shall not be liable to any other Party for failure of such performance for so
long as such cause or event shall endure and to the extent such cause or event
prevents such performance; provided that the Party so affected shall use
diligent effort to avoid or remove such cause or causes of non-performance and
shall continue to perform under this Agreement with all reasonable dispatch
whenever such cause or causes are removed.  If, however, any such force majeure shall
delay any shipment hereunder or the receipt thereof for more than thirty (30)
days beyond the scheduled delivery date, then Buyer shall have the right,
without incurring any liability to MonoSol, to cancel its order and immediately
begin producing the Finished Product at the [alternate site, pursuant to
Section 10 above,] until such time as MonoSol is able to perform its
obligations hereunder.

SECTION 12.       REGULATORY AND
QUALITY MATTERS

12.1.       Certain Regulatory Matters. Buyer shall be responsible for
maintaining the NDA and all Regulatory Approvals, filings and submissions
associated with the Finished Product in the Territory.  Each Party shall cooperate with the other in
making and maintaining all regulatory filings that may be necessary in
connection with the performance of this Agreement.  Buyer shall have the responsibility for
communications with the FDA relating to the Finished Product.

12.2.       Quality Agreement. Simultaneously with the
execution of this Agreement, the Parties are entering into the Quality
Agreement.  Quality and regulatory
requirements, including use of qualified Materials suppliers, certification of
cGMP compliance by all bulk materials suppliers, manufacturing in full
compliance with cGMPs and maintaining cGMP compliant facilities, storing and
handling of Materials, temperature and moisture control, prevention of product
contamination (including cross-contamination), manufacturing facility audit
rights, implementation of required changes to specifications and manufacturing
processes, retention of samples, stability testing, failure reporting and other
quality related matters shall be governed by, and performed by the Parties in
accordance with, the terms and conditions of the Quality Agreement.  The Quality Agreement is intended to
supplement this Agreement, and is hereby incorporated in this Agreement in its
entirety, except that in the event of a conflict between any term, condition or
provision of this Agreement and any term, condition or provision of the Quality
Agreement, the applicable term, condition or provision of this Agreement shall
control unless otherwise agreed in writing by the Parties.

12.3.       Changes to Specifications. The Specifications may only be changed in
accordance with the procedures set forth in the Quality Agreement. 

12.4.       Manufacturing Facility Audits. MonoSol shall give access to representatives
of Buyer during the term of this Agreement (but no more than once every twelve (12) months) to MonoSol’s manufacturing facility to
conduct inspections in accordance with the inspection 

 

14

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

procedures set forth in the Quality Agreement.  When entering MonoSol’s facilities, Buyer and
its representatives shall comply with all standard operating procedures and
regulations issued by MonoSol regarding security, safety, health, hazard and
fire prevention.

12.5.       Inspections by
Regulatory Authorities. MonoSol shall promptly give Buyer advance
notice, to the extent that advance notice is given to MonoSol, of any site
visit to its manufacturing facility by any Regulatory Authority, the purpose of
which is to inspect the manufacture, testing, storage, disposal or transportation
of the Finished Product, in accordance with the terms and conditions of the
Quality Agreement.  In any event, MonoSol
shall advise Buyer of the occurrence of any such visit immediately following
such visit, and MonoSol shall furnish to Buyer all material information supplied to, or
supplied by, any Regulatory Authority, including the Form 483 observations and
responses, to the extent that such information relates to the Finished Product
or the ability of MonoSol to comply with the terms of this Agreement. In the event that any such
Regulatory Authority finds that MonoSol’s manufacturing facility fails to meet
any applicable laws, rules or regulations, MonoSol shall cure such deficiencies
within any applicable cure period permitted by the Regulatory Authority or
applicable law, rule or regulation.  If
at any time, MonoSol is prevented from delivering the Finished Product to Buyer
for a period exceeding forty-five (45) consecutive days, Buyer shall have the
option to manufacture the Finished Product [at the alternate site, in
accordance with Section 10 above,] until the MonoSol is able once again to
deliver the Finished Product.

12.6.       Product
Recalls. In the event (i) any national
government authority or other regulatory agency issues a request, directive or
order that the Finished Product be recalled, or (ii) a court of competent
jurisdiction orders such a recall, or (iii) Buyer reasonably determines after
consultation with MonoSol that the Finished Product should be recalled, each
Party, at its own expense, shall cooperate in any investigations surrounding
the recall and take appropriate corrective actions.  In the event that such recall results from
the breach of the terms of this Agreement by MonoSol, MonoSol shall be
responsible to Buyer for the Supply Price of the Finished Product and shall
reimburse Buyer for the amount of any Supply Price paid with respect to any
such recalled Finished Product in addition to being responsible for all
expenses and costs arising out of the recall and will reimburse Buyer for any
and all expenses incurred by Buyer, including but not limited to, costs to
return recalled Finished Product and communication with customers regarding
recall, incurred as a result of the recall. 
In the event that such recall results from any reason other than MonoSol’s
breach of the terms of this Agreement, Buyer will be responsible for all
expenses and costs arising out of the recall and will indemnify MonoSol for any
Losses suffered by MonoSol arising out of or resulting from such recall.  Buyer will be solely responsible for
all administrative aspects of any recall.

12.7.       Adverse Event Reporting. The Parties
shall be responsible for reporting adverse events and complaints with respect
to the Finished Product (including the Materials), and for responding to any
such reports and complaints, in accordance with the terms and conditions of the
Quality Agreement.

 

15

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

12.8.       Product Returns. Buyer shall
have responsibility for all product returns in accordance with the Quality
Agreement.  Without limiting the
foregoing, in the event that MonoSol (or any of its Affiliates) shall receive
any returned goods of Finished Product from a third party, MonoSol shall notify
Buyer of such returned goods and, at Buyer’s option, either destroy such
returned goods or deliver such return goods to Buyer, in each case at Buyer’s
expense.  Buyer shall not have the right
to return any Finished Product received by Buyer as returned goods from third
parties to MonoSol, other than in accordance with Section 5.3.  The Parties shall notify each other of, and
shall respond to, any customer complaints associated with returned Finished
Product in accordance with the terms and conditions of the Quality
Agreement.  In the event an adverse event is reported with
respect to the Finished Product, MonoSol shall, at  Buyer’s
expense, perform any and all appropriate testing of corresponding retention
samples and provide the results thereto to Buyer as reasonably practicable.

SECTION 13.       INSURANCE

During
the term of this Agreement, each of Buyer and MonoSol shall, each for its
respective liability, secure and maintain a comprehensive general liability
insurance policy providing sufficient extensive coverage for personal injury
and bodily injury, property damage, or such coverage as is usual and customary
in the pharmaceutical industry to procure. 
Each of Buyer and MonoSol shall deliver a certificate with regard to
said policies to the other upon request.

SECTION 14.       MISCELLANEOUS

14.1.       Notices. Any notice or
other communication required or permitted hereunder shall be in writing and
shall be deemed given when so delivered in person, by reputable overnight
courier, by facsimile transmission (with receipt confirmed by automatic
transmission report) or two (2) Business Days after being sent by registered or
certified mail (postage prepaid, return receipt requested), as follows:

                if to the Buyer, to:

Adams Respiratory Operations, Inc.

4 Mill Ridge Lane

Chester, New Jersey  07930

Attn:  General Counsel

Facsimile:  (908) 879-1404

with a copy to:

Alston & Bird LLP

One Atlantic Center

1201 West Peachtree Street

Atlanta, Georgia  30309

Attn: 
J. Vaughan Curtis

 

16

 

 

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

Facsimile: 
(404) 253-8247

if
to MonoSol, to:

MonoSolRx LLC

30 Technology Drive

Warren, NJ  07059

Attn: A. Mark Schobel,
CEO

Facsimile: 908.561.1209

 

With a copy to:

 

MonoSolRx LLC

1100 Connecticut Ave.

Suite 440

Washington DC 20036

Attn: Joe Fuisz

Facsimile: 202.223.9069

 

Any Party may by notice
given in accordance with this Section 14.1 to the other Parties designate
another address or person for receipt of notices hereunder.

14.2.       Amendment; Waiver. This Agreement
may not be amended except by an instrument signed by each of the Parties
hereto.  Any Party hereto may (a) extend
the time for the performance of any of the obligations or other acts of another
Party hereto or (b) waive compliance with any of the agreements of another
Party or any conditions to its own obligations, in each case only to the extent
such obligations, agreements, or conditions are intended for its benefit; provided, however, that any such
extension or waiver shall be binding upon a Party only if such extension or
waiver is set forth in a writing executed by such Party.

14.3.       Entire Agreement. This Agreement
and the Ancillary Agreements contain the entire agreement among the Parties
with respect to the subject matter hereof and supersede all prior agreements,
written or oral, among the Parties thereto.

14.4.       Governing Law. This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of New York.

14.5.       Binding Effect;
No Assignment; No Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. 
Neither MonoSol nor Buyer may assign any of its rights or delegate any
of its liabilities or obligations hereunder without the prior written consent
of the other; provided that either Party may assign its rights and
obligations under this Agreement without the other Party’s prior written
consent upon written notice to the other Party in connection with the transfer
or sale of all or substantially all of the assets or business of such Party or
any of its 

 

17

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

affiliates
or the merger or consolidation with another Person of such Party or any of its
affiliates.  Nothing in this Agreement,
express or implied, is intended to or shall confer upon any person other than
the Buyer and MonoSol and their respective successors and permitted assigns any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, except for affiliates or representatives entitled to indemnification
pursuant to Section 6.4 or 6.5.

14.6.       Section Headings;
Construction. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation.  All references to “Section”
or “Sections” refer to the corresponding Section or Sections of this
Agreement.  All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require.  Unless otherwise expressly
provided, the word “including” does not limit the preceding words or terms. 

14.7.       Counterparts. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, and both of which together shall constitute one and the same
instrument.

14.8.       Severability. If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement shall remain in
full force and effect.  Any provision of
this Agreement held invalid or unenforceable only in part or degree will remain
in full force and effect to the extent not held invalid or unenforceable.  The Parties further agree to replace such
invalid or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such invalid or unenforceable provision.

14.9.       Submission to
Jurisdiction; Waiver. Except with respect to Third Party Claims, in the
event any action shall be brought to enforce or interpret the terms of this
Agreement, the Parties agree that such action will be brought in the U.S.
District Court for the Southern District of New York.  Each of MonoSol and the Buyer hereby
irrevocably submits with regard to any action or proceeding for itself and in
respect to its property, generally and unconditionally, to the nonexclusive
jurisdiction of the aforesaid courts. 
Each of MonoSol and the Buyer hereby irrevocably waives, and agrees not
to assert, by way of motion, as a defense, counterclaim or otherwise, in any
action or proceeding with respect to this Agreement, (a) any claim that it is
not personally subject to the jurisdiction of the above-named courts for any
reason other than the failure to lawfully serve process, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper, and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts. 

 

18

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

14.10.     Rules of
Construction. The Parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or ruling
of construction providing that ambiguities in an agreement or other document
will be construed against the Party drafting such agreement or document.

14.11.     Waiver of Jury
Trial. EACH OF THE BUYER AND MONOSOL HEREBY IRREVOCABLY WAIVES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER RELATED DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENT OR ACTION RELATED HERETO OR THERETO.

14.12.     Expenses. Except as
expressly set forth herein, each Party hereto shall bear all fees and expenses
incurred by such Party in connection with, relating to or arising out of the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, including attorneys’, accountants’ and
other professional fees and expenses.

14.13.     Independent
Contractor. Neither MonoSol nor Buyer, together in each case
with their respective employees or representatives, are under any circumstances
to be considered as employees or agents or representatives of the other by
virtue of this Agreement, and neither shall have the authority or power to bind
the other or contract in the other’s name.

14.14.     No Implied
Waivers; Rights Cumulative. No failure on the part of
MonoSol or Buyer to exercise and no delay in exercising any right, power, remedy
or privilege under this Agreement, or provided by statute or at law or in
equity or otherwise, including the right or power to terminate this Agreement,
shall impair, prejudice or constitute a waiver of any such right, power, remedy
or privilege or be construed as a waiver of any breach of this Agreement or as
an acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise
thereof or the exercise of any other right, power, remedy or privilege.

 

 

[Remainder
of Page Intentionally Left Blank]

 

19

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

                IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and delivered as of the date first stated above.

	
   

  	
  ADAMS
  RESPIRATORY OPERATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Robert
  Casale

  	
   

  
	
   

  	
   

  	
  Name: Robert
  Casale

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  MONOSOL Rx, LLC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Alexander M.
  Schobel

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Alexander M. Schobel

  
	
   

  	
   

  	
  Title:

  	
  Pres. & CEO

  
						

 

 

 

 [Signature Page to Supply Agreement]

 

 

 

CONFIDENTIAL
TREATMENT REQUESTED

Pursuant
to 17 C.F.R. §§200.80(b) and 230.406

Schedule
1.11

 

 

The initial Cost per Unit is $[*] (US
dollars).

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