Exhibit 10.5
PHARMACEUTICAL SERVICES AGREEMENT
This Pharmaceutical Services Agreement (the "Agreement") is made and entered
into this 4th day of February, 2002, by and between Endeavor Pharmaceuticals,
Inc., a Delaware Corporation having its principal place of business at 127
Racine Drive, Wilmington, North Carolina ("Endeavor") and aaiPharma, Inc., a
Delaware Corporation having its principal place of business at 2320 Scientific
Park Drive, Wilmington, North Carolina 28405 ("aaiPharma").
WHEREAS, aaiPharma provides pharmaceutical and chemical services to third
parties on a routine basis and has agreed to perform such services for and on
behalf of Endeavor from time to time, as mutually agreed upon (the "Services");
WHEREAS, aaiPharma and Endeavor wish to enter into this Agreement, which terms
shall apply to all Services performed by aaiPharma for or on behalf of Endeavor
unless specifically modified in a writing executed by both parties;
WHEREAS, to facilitate business, Endeavor and aaiPharma have agreed to execute
aaiPharma's standard form proposal or quotation for Services, but intend for the
terms of this Agreement to be incorporated into all such form proposals or
quotations for Services.
NOW THEREFORE, for and in consideration of the mutual covenants and agreements
set forth hereinafter and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Services. aaiPharma shall perform Services for and on behalf
of Endeavor as mutually agreed upon by the parties as
evidenced by a written proposal or quotation executed by both
parties (the "Proposal"). Upon execution, such Proposal shall
automatically incorporate the terms and conditions of this
Agreement and such executed Proposal shall become a part of
this Agreement and shall be construed in accordance with this
Agreement. Unless otherwise agreed upon in writing by
Endeavor, all Services hereunder shall be performed in
accordance with applicable FDA regulations, cGMP's, GLP's, FDA
standards for PAI batches and in substantial conformance in
all material respects to aaiPharma's standard operating
procedures. aaiPharma shall not subcontract Services to third
parties without Endeavor's prior written consent. aaiPharma
recognizes and agrees that Endeavor's use of the results of
the Services aaiPharma provides shall be unrestricted, and may
be used by Endeavor in FDA filings. Further, Endeavor may
identify aaiPharma as a service provider to Endeavor to
appropriate government agencies.
2. Compliance with Laws. aaiPharma shall perform Services in
compliance with all applicable laws, ordinances, and
governmental rules and regulations.
3. Invoice and Payment. The Proposal shall specify the fee for
Services and the method of accrual of such fees (e.g. hourly
or milestone), along with pertinent rate and/or milestone
information. Hourly charges will be invoiced as completed;
however, unless otherwise agreed upon by Endeavor, any
substantially completed project invoice based on hourly
charges shall be accompanied by a final project report no
later than 20 days from receipt
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of such invoice. A milestone payment shall not be due until
aaiPharma has submitted a report as specified in the
applicable Proposal detailing the accomplishment of the
milestone and the results. In addition, Endeavor will be
charged for reasonable out-of-pocket costs incurred by
aaiPharma as a direct result of providing Services, subject to
such costs being approved in the Proposal. aaiPharma shall
notify Endeavor prior to incurring any unusual cost or expense
exceeding $1,000. aaiPharma will invoice Endeavor on a monthly
basis with payment due 30 days from the receipt of the
invoice. Service activities will be initiated within 10 days
of Endeavor's acceptance of a Proposal, unless otherwise
mutually agreed upon by the parties in the Proposal.
4. Changes in Services. Any changes in (a) the scope or the
nature of the Services; (b) the cost of the Services; or, (c)
the schedule for commencement or completion of Services must
be mutually agreed upon by the parties hereto and confirmed by
a written "Change Order" signed by both parties.
5. Endeavor Ownership. All data, information, reports, and any
and all related documentation, which are developed, generated
or derived, directly or indirectly, by aaiPharma (or by any
subcontractor or agent of aaiPharma) for Endeavor during the
course of the project (collectively "Data"), and all
inventions, discoveries, formulae, procedures, processes,
analytical methods, technology, trade secrets and any other
intellectual property, and any improvements thereto, whether
patentable or not, which result or evolve from the performance
of Services by aaiPharma (or by any subcontractor or agent of
aaiPharma) for or on behalf of Endeavor (collectively
"Inventions") where such Inventions are directly related to
the Services shall be and remain the sole and exclusive
property of Endeavor. Neither aaiPharma, its employees, its
subcontractors nor its agents shall have or acquire any right,
title, or interest in or to such Data or Inventions. aaiPharma
shall promptly disclose in writing to Endeavor any Inventions
and shall assign any and all rights in any Data and Inventions
to Endeavor at Endeavor's request without any further
consideration. All copyrightable Data shall be considered
"works for hire." aaiPharma shall assist Endeavor in
perfecting its rights in such Data and Inventions.
6. aaiPharma Ownership. All methods, procedures, processes,
technology, trade secrets, or commercial or technical
"know-how" of general application, whether patentable or not,
(collectively, "Know-How") owned, possessed or developed by
aaiPharma independent of providing Services to Endeavor and
utilized during the performance of the Services, shall remain
the property of aaiPharma. To the extent that the Data
delivered by aaiPharma to Endeavor incorporates know-how in
any aaiPharma patent or future issued patent, aaiPharma hereby
grants to Endeavor a non-exclusive, worldwide, royalty-free
right and license in perpetuity to such patent(s) or Know-how
to the extent necessary for Endeavor to test, produce,
manufacture, use, market, distribute, and sell its products.
7. Nondisclosure. The parties' respective rights and obligations
with respect to the other party's confidential information
shall be governed by the Confidential Disclosure Agreement
between the parties hereto dated April 25, 2001 (the
"Confidentiality Agreement"), a copy of which is attached
hereto as Exhibit "A" and made a part hereof.
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8. Indemnity.
(a) aaiPharma shall indemnify and hold harmless
Endeavor, its directors, officers,
employees, agents, and internal review
boards (collectively the "Endeavor
Indemnitees"), from and against any and all
claims, suits, actions, damages, costs,
losses, and expenses (including reasonable
attorney's fees and court costs)
(collectively the "Liabilities") asserted by
third parties arising from or related to
aaiPharma's (i) negligent or wrongful
performance of the Services; (ii)
intentional misconduct or omission; or (iii)
aaiPharma's breach of any of its obligations
under this Agreement.
(b) Except for aaiPharma's conduct set forth in
Section 8(a) hereof, Endeavor shall
indemnify and hold harmless aaiPharma, its
directors, officers, employees, agents, and
internal review boards (collectively the
"aaiPharma Indemnitees"), from and against
any and all Liabilities asserted by third
parties arising from or in connection with
aaiPharma's provision of Services under this
Agreement, except such Liabilities which (i)
arise out of or are attributable to any
negligent act or omission on the part of one
or more aaiPharma Indemnitees, or (ii) are
related to aaiPharma employee injuries.
(c) A party (the "Indemnitee") which intends to
claim indemnification under this Section 8
shall promptly notify the other party (the
"Indemnitor") in writing of any Liabilities
in respect of which the Indemnitee or any of
its employees or agents intend to claim such
indemnification. The Indemnitee shall
permit, and shall cause its employees and
agents to permit, the Indemnitor, at its
discretion, to settle any such Liabilities
and agrees to the complete control of such
defense or settlement by the Indemnitor;
provided however, such defense or settlement
does not adversely affect the Indemnitee's
rights hereunder or impose any obligations
on the Indemnitee in addition to those set
forth herein for it to exercise such rights.
Indemnitor shall not settle Liabilities
admitting fault on the part of the
Indemnitee without the Indemnitee's prior
written consent, and Indemnitor shall not be
responsible for Liabilities settled by
Indemnitee without the Indemnitor's prior
written consent. Indemnitor shall not be
responsible for any legal fees or other
costs incurred other than as provided
herein. The Indemnitee, its employees and
agents, shall cooperate fully with the
Indemnitor and its legal representatives in
the investigation and defense of any
Liabilities covered by this indemnification.
The Indemnitee shall have the right, but not
the obligation, to be represented by counsel
of its own selection and expense.
9. Inspection. Endeavor reserves the right from time to time to
have representative(s) at aaiPharma's site in order to observe
and inspect all operations relating to the Services. Such
observations and inspections shall be subject to reasonable
notice and during normal business hours and shall not
interfere with aaiPharma's operations.
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10. Assignability. Except in the case of the sale of substantially
all of the assets of one party or the sale of a product by
Endeavor, neither this Agreement nor any right or obligation
hereunder shall be assignable by either party without the
prior written consent of the other party, and any purported
assignment without consent shall be void. Such consent will
not unreasonably be withheld.
11. Notices. All Change Orders or notices under this Agreement
shall be in writing and shall be delivered personally or by
sending such notice by first class mail, by a nationally
recognized courier service guaranteeing next-day delivery or
by facsimile (and promptly confirmed by such first class mail
or courier service), addressed if to Endeavor:
Endeavor Pharmaceuticals, Inc.
127 Racine Drive, Suite 202
Wilmington, NC 28403
Attention: Dr. Thomas Leonard
Chief Scientific Officer
Facsimile: (910) 790-9041
If to aaiPharma:
aaiPharma, Inc.
2320 Scientific Park Drive
Wilmington, NC 28405
Attention: Dr. David Johnston
Title: Executive Vice President
Phone: 910 254-7000 Fax: 910 815-2340
12. Independent Contractors. Each of the parties hereto is an
independent contractor and nothing herein contained shall be
deemed to constitute the relationship of partners, joint
venturers nor of principal and agent between the parties
hereto. Neither party may hold itself out to third persons as
purporting to act on behalf of, or serving as the agent of,
the other party. aaiPharma shall assume all applicable federal
and state employment or income tax payments or withholdings
for each of its agents or employees furnishing Services to
Endeavor pursuant to this Agreement. aaiPharma agrees to
indemnify and hold Endeavor harmless from and against any and
all costs, expenses (including reasonable attorneys' fees),
and liabilities incurred by Endeavor in connection with, or
resulting from, any claim, action, or proceeding by the
Internal Revenue Service, any state revenue department, or by
agents or employees of aaiPharma for failure to pay or
withhold such taxes.
13. Term and Termination. The term of this Agreement shall
commence upon execution of this Agreement by both parties
hereto and shall terminate on February 1, 2005, unless sooner
terminated as set forth herein. Either party shall be entitled
to terminate this Agreement at any time by providing written
notice to the other party. If Endeavor terminates the
Agreement, it shall be obligated to pay aaiPharma: (a) the
cost of all
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Services completed through the effective date of such
termination; and, (b) aaiPharma's cost of materials previously
acquired or contracted for in good faith in connection
herewith which are uncancellable and which cannot be utilized
by aaiPharma in other day-to-day operations, but in no such
event shall such costs ((a) and (b) above) exceed the Proposal
amount, less all amounts previously paid by Endeavor to
aaiPharma in partial payment of the Proposal amounts, plus
relevant Change Orders. Within thirty (30) days after receipt
of Endeavor's notice of termination of the Agreement,
aaiPharma shall pay the difference, if any, between the total
amount paid by Endeavor as a prepayment and the total amount
owed to aaiPharma as set forth in this paragraph. Prior to
termination by aaiPharma, it agrees to use commercially
reasonable efforts to conclude all Service projects then in
progress unless otherwise agreed upon in writing by Endeavor.
14. Waiver. No waiver of any term, provision, or condition of this
Agreement whether by conduct or otherwise in any one or more
instances shall be deemed to be or construed as a further or
continuing waiver of any such term, provision, or condition of
this Agreement.
15. Continuing Obligation. The provision of Sections 5, 6, 7, 8,
12, and 17 hereof shall survive the termination or expiration
of this Agreement.
16. Severability. If any term, condition, or provision of this
Agreement shall be found, by a court of competent
jurisdiction, to be invalid or unenforceable, or to violate or
contravene any federal or state law, then the term, condition,
or provision so found shall be deemed severed from this
Agreement, but all other terms, conditions, and provisions
shall remain in full force and effect.
17. Governing Law - Entirety. The validity, interpretation, and
performance of this Agreement shall be governed and construed
in accordance with the laws of the State of North Carolina.
This document supersedes all previous agreements, either oral
or written, between the parties with respect to the subject
matter hereof, except for the Confidentiality Agreement. No
terms, conditions, understanding, or agreement purporting to
modify or vary the terms of this Agreement shall be binding
unless hereafter made in writing and signed by each of the
parties to be bound.
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IN WITNESS WHEREOF the parties have caused this Agreement to be
executed by their duly authorized officers as of the date and year
first written above.
ENDEAVOR PHARMACEUTICALS, INC.
By: /S/ R. Forrest Waldon
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R. Forrest Waldon
President and Chief Executive Officer
AAIPHARMA, INC.
By: /s/ David Johnston
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Authorized Officer
Name: David Johnston
Title: Executive Vice President