Sample Business Contracts

Development Agreement - Applied Analytical Industries Inc. and GenerEst inc.

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                             DEVELOPMENT AGREEMENT

         This Agreement is made and entered into this 25th day of April, 1994,
by and between Applied Analytical Industries, Inc. (hereinafter "AAI"), a
Delaware corporation, having its principal place of business at 1206 North 23rd
Street, Wilmington, North Carolina, 28405 and GenerEst, Inc. (hereinafter the
"Company"), a Delaware corporation having its principal place of business at
1726 North 23rd Street, Wilmington, North Carolina 28405.

                              W I T N E S S E T H

         WHEREAS, the Company and AAI have contemporaneously entered into an
Technology Assignment Agreement (the "Assignment Agreement") concerning certain
AAI technology and prototype formulations to be assigned to the Company;

         WHEREAS, the Company has requested AAI to assist it in the development
of certain hormone pharmaceutical products by providing pharmaceutical
services; and

         WHEREAS, AAI has agreed to assist the Company in the development of
said pharmaceutical products by providing requested pharmaceutical services
including formulation, testing, clinical production and regulatory services.

         NOW THEREFORE, for and in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:

                                   ARTICLE I


         DEFINED TERMS.  As used in this Development Agreement (hereinafter
"Agreement"), the following terms shall have the meanings described below:

         1.1     "ACT" shall mean the Federal Food Drug and Cosmetic Act, as

         1.2     "ACTIVE INGREDIENT" shall mean an ingredient contained in a
NEW PRODUCT which provides an intended pharmacologic or therapeutic effect.
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         1.3     "ANDA" shall mean an Abbreviated New Drug Application as
provided for in Section 505(j) of the ACT and as set forth in 21 CFR Part 314,
as amended.

         1.4     "ANNUAL BUDGET" shall mean a budget prepared by AAI and the
Company which establishes the Company's estimated monthly requirements of
DEVELOPMENT SERVICES and related expenses for the upcoming calendar year.  The
ANNUAL BUDGET shall be prepared on or prior to December 31, of each calendar
year and shall be attached hereto and incorporated herein as part of EXHIBIT

         1.5     "CLINICAL STUDIES" shall mean adequate and well controlled
bioequivalency studies as more fully described and set forth in 21 CFR Parts
314 and 320, as amended, and/or pilot studies designed to provide clinical
information to assist in the development of clinical bioequivalency protocols
and bioanalytical methods.

         1.6     "CLINICAL SUPPLIES" shall mean a NEW PRODUCT, ACTIVE
INGREDIENT, COMPARATIVE INGREDIENT, or PLACEBO prepared for administration to
patients in CLINICAL STUDIES or use in cGMP stability studies.

         1.7     "COMPARATIVE INGREDIENT" shall mean either ACTIVE INGREDIENT
or a pharmaceutical product containing ACTIVE INGREDIENT which is intended to
be compared to one or more NEW PRODUCTS.

         1.8     "COMMERCIALIZE" shall mean the commercial exploitation of a
product through (i) manufacturing and selling the product, (ii) sublicensing
some or all the commercial rights to the product to third parties, (iii)
entering into a joint venture, partnership or other business combination
regarding the manufacture and/or marketing of the product, or (iv) some other
arrangement to produce revenue from the product.

         1.9     "CURRENT GOOD MANUFACTURING PRACTICES" or "cGMP" shall mean
those current good manufacturing practice regulations established in 21 CFR
Parts 210 and 211, as amended.

         1.10    "DEVELOPMENT SERVICES" shall mean those formulation,
development, clinical production, pharmaceutical testing, monitoring CLINICAL
STUDIES, regulatory, consulting and project management services which AAI may
provide to the Company upon request under the terms and conditions of this

         1.11    "FDA" shall mean the United States Food and Drug
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         1.12    "FDA APPROVAL" shall mean a marketing approval for commercial
distribution of a NEW PRODUCT in the United States pursuant to Section 505 of
the ACT, as amended.

         1.13    "MANUFACTURING MATERIALS" shall mean all ACTIVE INGREDIENT,
COMPARATIVE INGREDIENT and PLACEBO in bulk or semi-finished state, inactive
materials, ingredients, excipient, capsules, etc., and all packaging and
labeling components and materials furnished by the Company directly, or
manufactured, acquired or segregated by AAI for the account of the Company as
herein provided, for use in the preparation of CLINICAL SUPPLIES.

         1.14    "NEW PRODUCT" or "NEW PRODUCTS" shall mean any one or more of
the following three (3) products, and other hormone pharmaceutical products as
AAI and the Company may jointly designate from time to time, to be developed by
AAI as set forth below:

                 (i) generic estradiol product which is THERAPEUTICALLY
         EQUIVALENT to Estrace in the following tablet dosage strengths:  1.0
         mg and 2.0 mg;

                 (ii) generic estropipate product which is THERAPEUTICALLY
         EQUIVALENT to Ogen in the following tablet dosage strengths:  0.75 mg,
         1.5 mg, and 3.0 mg;

                 (iii) generic conjugated estrogens product which is
         THERAPEUTICALLY EQUIVALENT to Premarin in the following tablet dosage
         strengths:  0.3 mg, 0.625 mg, 0.9 mg, 1.25 mg, and 2.50 mg.

         1.15    "PLACEBO" shall mean a composition in dosage form having no
therapeutic or prophylactic effect.

         1.16    "THERAPEUTICALLY EQUIVALENT" shall mean a pharmaceutically
equivalent product meeting the necessary requirements set forth by the FDA to
qualify as therapeutically equivalent to a marketed comparison product as
published in the current issue of the FDA Approved Products with Therapeutic
Equivalence Evaluations or equivalent publication.
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                                   ARTICLE II

                              DEVELOPMENT SERVICES

         AAI agrees to utilize best commercially reasonable efforts, consistent
with sound scientific principles, in providing DEVELOPMENT SERVICES for and on
behalf of the Company.  All DEVELOPMENT SERVICES shall be performed in
accordance with applicable CURRENT GOOD MANUFACTURING PRACTICES and other
agreed upon terms and conditions.  The parties may agree to develop additional
pharmaceutical products, in which case, the parties shall amend this Agreement

         Section 2.1      DEVELOPMENT ACTIVITIES.  As requested by the Company,
AAI will provide DEVELOPMENT SERVICES including, but not limited to, (i) drug
substance and raw material characterizations; (ii) formulation development;
(iii) analytical method development and validation; (iv) sourcing raw
materials; (v) raw material, finished product and packaging specifications;
(vi) laboratory scale development batches; and (vii) finished dosage form
characterizations and stability studies.  Data generated from development
activities will be collected and presented in a format suitable for support of

         Section 2.2      CLINICAL PRODUCTION.  As requested by the Company,
AAI shall produce quantities of a NEW PRODUCT as mutually agreed upon for use
in CLINICAL STUDIES.  Clinical production services shall be provided in
accordance with CURRENT GOOD MANUFACTURING PRACTICES and shall include
developing manufacturing procedures, batch records, packaging and labeling
instructions, release specifications, and quality assurance procedures.

                 (a)      INFORMATION.  As requested by the Company, AAI shall
         submit relevant production records to the Company, including the
         product formulation, master batch record, specifications, analytical
         results and related supporting documentation.

                 (b)      MANUFACTURING MATERIALS.  AAI shall acquire
         MANUFACTURING MATERIALS identified by the Company required for the
         preparation of CLINICAL SUPPLIES.  AAI's obligation to obtain said
         MANUFACTURING MATERIALS or CLINICAL SUPPLIES on behalf of the Company
         is subject to market availability.
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                 (c)      VENDOR AUDITS.  As requested by the Company, AAI will
         conduct MANUFACTURING MATERIALS vendor audits.

                 (d)      CONTROL SAMPLES.  AAI shall retain control samples
         for lots of CLINICAL SUPPLIES which it has produced for appropriate
         inspection by the Company or the FDA.

         SUPPLIES.  AAI shall safely dispose of, and the Company shall pay the
         cost for the safe disposal of, any MANUFACTURING MATERIALS or CLINICAL
         SUPPLIES requiring disposal according to all applicable federal, state
         and local laws and regulations.

                 (f)      MANUFACTURING SITE.  As requested by the Company, AAI
         shall assist the Company in qualifying a manufacturing site for a NEW

         Section 2.3      CLINICAL STUDIES.  AAI will select suitable clinical
research organizations ("CRO") to conduct appropriate CLINICAL STUDIES.  AAI
will monitor such CLINICAL STUDIES and coordinate material requirements of the

         Section 2.4      REGULATORY SERVICES.  Upon successful conclusion of
EQUIVALENT, AAI shall (i) prepare an ANDA for such NEW PRODUCT; (ii) respond to
regulatory questions related to services performed by AAI; and (iii) attend
meetings with appropriate regulatory agencies, if necessary, to facilitate FDA
APPROVAL of the NEW PRODUCT ANDA.  AAI will provide necessary authorization
letters to government agencies granting the Company the right to reference
appropriate AAI Drug Master Files.

         Section 2.5      PROJECT MANAGEMENT.  Both parties recognize that
providing DEVELOPMENT SERVICES shall require AAI project management services
including project coordination through multidisciplinary team meetings.  Each
such project shall be assigned an AAI team leader who will maintain overall
responsibility for coordination of the project.  The AAI team leaders will
coordinate their efforts with the project manager appointed pursuant to the
Administrative Services Agreement entered into by the parties of even date
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         Section 2.6      AUDIT RIGHTS.  The Company shall have the right to
audit those services performed by AAI on the Company's behalf.  Such an audit
will be conducted according to reasonable notice and at a reasonable time
specified by AAI.

         Section 2.7      INSPECTIONS.  Both parties recognize that the FDA may
request AAI to produce records, data and materials relating to NEW PRODUCTS and
CLINICAL SUPPLIES as the result of ANDA submissions or as the subject of FDA
inspections.  In such instances, AAI shall notify the Company of such requests,
and the Company shall have the right to send a representative immediately to
participate in the compilation of such records, data and materials as well as
be present during FDA inspections in so far as the subject matter of the
inspections relates to the NEW PRODUCTS or CLINICAL SUPPLIES.

         Section 2.8      RIGHTS TO OTHER DEVELOPMENT EFFORTS.  Both parties
agree that AAI may develop hormone products (other than any product
THERAPEUTICALLY EQUIVALENT to a NEW PRODUCT which AAI shall not develop at any
time during the term of this Agreement) on its own behalf or on behalf of
others.  For the term of this Agreement and for a period of three years after
the termination hereof (other than a termination pursuant to Section 8.2
resulting from a breach of this Agreement by the Company or as a result of the
bankruptcy or reorganization of the Company and provided that during such three
year period if the Company has exercised the Lease Option described in Section
4A of Exhibit B hereto, the lease thereunder shall not have been terminated
(other than upon a purchase of such facility by the Company)), prior to
entering into any agreement with a third party to COMMERCIALIZE such a hormone
product, AAI shall present the results of its development efforts to the
Company, and the Company will then have the option to purchase the rights to
the hormone product for a period of thirty (30) days from the date the results
were presented.  After the expiration of the thirty-day option period, AAI
will be under no further obligation to the Company with respect to the
submitted hormone product if the option is not exercised and may exploit,
assign, license or otherwise dispose of the hormone product at its sole
discretion and for its own account.  If the Company exercises its option to
purchase, (i) the purchase price will be based upon the amount of development
work expended by AAI charged at AAI's then standard hourly rates for such
services and all related out-of-pocket expenses, (ii) AAI will assign its
rights, title  and interest to the hormone product to the Company upon payment
for the same and (iii) the Company will subcontract further development efforts
to AAI pursuant to the terms of this Agreement.
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                                  ARTICLE III


         Subject to the Company's payment to AAI for services provided
hereunder, all data, information, discoveries and inventions whether patentable
or not, and related documentation, which are generated by AAI during the course
of this Agreement (or by any subcontractor of AAI pursuant to an agreement
providing AAI ownership thereof) which are directly related to the NEW
for or on behalf of the Company shall be the exclusive property of the Company.

                                   ARTICLE IV


         The parties hereto recognize that AAI may have to subcontract with
third party contractors for the performance of certain services agreed upon
hereunder including the performance of CLINICAL STUDIES and bioanalytical
analysis of clinical specimens.

         Section 4.1      SUBCONTRACTOR CONFIDENTIALITY.  Subcontractors shall
be hired on an independent contractor basis and shall be bound to maintain all
information, methodologies and technologies relating to the Company's projects
as confidential.  AAI will procure confidentiality agreements from
subcontractors protecting the Company's proprietary and confidential
information prior to disclosure of such information and providing that services
performed thereunder are performed as a "work-for-hire" and that all data,
information, discoveries and inventions, whether patentable or not, and related
documentation shall be the exclusive property of the Company.

         Section 4.2      MONITORING SUBCONTRACTORS.  AAI shall monitor
subcontractors during the course of performance of contracted work and shall
incorporate the results of those services into its development efforts and
regulatory submissions as appropriate.
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                                   ARTICLE V

                          MANUFACTURE OF NEW PRODUCTS

         The parties acknowledge that the Company has entered into a License,
Development and Regulatory Filing Agreement with a third party wherein the
Company has agreed to enter into a supply agreement for conjugated estrogen NEW
PRODUCTS (the "SUPPLY AGREEMENT").  The Company and AAI agree to negotiate in
good faith the terms of a manufacturing agreement (the "MANUFACTURING
AGREEMENT"), according to the substantive terms contained in EXHIBIT "B"
attached hereto and incorporated herein, such that both the SUPPLY AGREEMENT
and MANUFACTURING AGREEMENT are entered into within a commercially acceptable
time not to exceed 90 days following the date of submission of an ANDA to the
FDA with respect to any of the New Products.

                                   ARTICLE VI

                         PAYMENT FOR SERVICES RENDERED

         Section 6.1      FEES AND EXPENSES.  The Company shall pay for
services rendered and related expenses hereunder according to the following
terms and conditions:

                 (a)      SERVICE CHARGES.  AAI shall charge the Company for
         DEVELOPMENT SERVICES rendered according to the following schedule:

                          Position                                           Hourly Rate
                          --------                                           -----------
                          <S>                                                <C>
                          Senior Formulator . . . . . . . . . . . . . . . .  $165/hour
                          Senior Chemist  . . . . . . . . . . . . . . . . .  $175/hour
                          Chemist   . . . . . . . . . . . . . . . . . . . .  $150/hour
                          Formulator  . . . . . . . . . . . . . . . . . . .  $125/hour
                          Project Team Meetings . . . . . . . . . . . . . .  $500/hour

         The parties recognize that certain routine technical functions are
         charged according to standard fractional hourly units (e.g., 0.2
         hours) for administrative convenience.
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                 (b)      TRAVEL AND OUT OF POCKET EXPENSES.  AAI anticipates
         that certain travel and out of pocket expenses will occur during the
         performance of its duties hereunder.  The Company agrees to pay for
         such expenses incurred in providing DEVELOPMENT SERVICES.

                 (c)      FACILITIES CHARGES.  The Company agrees to pay
         standard flat rate daily fees for utilization of production and
         storage facilities.

                 (d)      MATERIALS AND HANDLING CHARGES.  The Company agrees
         to pay a fifteen percent (15%) handling fee for all MANUFACTURING
         MATERIALS or supplies acquired for or on behalf of the Company by AAI.

                 (e)      SUBCONTRACTORS.  The Company agrees to pay AAI for
         subcontracted services at cost and the supervision, auditing, and
         coordination of subcontractors at the hourly rates set forth in
         Section 6.1(a).

                 (f)      The rates quoted and to be charged to the Company by
         AAI in subsections (a) through (e) are no greater than the standard
         rates charged by AAI to others for the same or similar services.

         Section 6.2      ANNUAL BUDGET.  Prior to commencement of services
hereunder, AAI agrees to use reasonable and diligent efforts to prepare an
ANNUAL BUDGET establishing the Company's estimated monthly requirements of
DEVELOPMENT SERVICES for the upcoming calendar year.  The ANNUAL BUDGET will be
amended each calendar year on or before December 31, and will be attached
hereto and incorporated herein as EXHIBIT "A."  AAI shall provide notices of
significant cost overages to the Company.

                 (a)      MONTHLY PAYMENT.  On or before the first day of each
         month, the Company agrees to pay AAI the budgeted service fees and
         expenses for that month as established in the ANNUAL BUDGET.  AAI
         shall apply these prepaid funds against amounts due and payable to AAI
         by the Company under the terms and conditions of this Agreement.  AAI
         shall maintain accurate accounting records of the Company's monthly
         payments and deductions therefrom for services rendered and expenses

         Monthly payments shall be reconciled against AAI's cumulative service
         fees and expenses semi-annually on each six-month anniversary of this
         Agreement.  In
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         the event a reconciliation results in a credit or debit balance to the
         Company's account, it shall be handled as follows:

                          (i)     Credit Balances.  In the event the Company's
                 cumulative monthly payment to AAI exceeds the cumulative
                 service fees and expenses accrued through the date of
                 reconciliation,  AAI shall issue a credit to the Company in
                 the amount of the overpayment which shall be applied to the
                 Company's monthly payment obligation pursuant to the ANNUAL
                 BUDGET until such credit is exhausted.

                          (ii)    Debit Balances.  In the event the Company's
                 cumulative monthly payments to AAI are less than the
                 cumulative service fees and expenses accrued through the date
                 of reconciliation, the Company shall pay AAI the debit balance
                 within thirty (30) days of the Company's receipt of invoice
                 for said underpayment amount.  Should any part of the invoice
                 be in dispute, the Company covenants to pay the undisputed
                 amount according to the terms and conditions described herein
                 while said dispute is being resolved.

         Section 6.3      AUDIT RIGHTS.  The Company shall have the right, upon
reasonable notice and at its own expense, during AAI's performance of
DEVELOPMENT SERVICES, and for a period of two (2) years thereafter, to conduct
an audit of expenses charged to the Company for such services.  The audit shall
be conducted by a certified public accountant selected by the Company and
approved by AAI, which approval shall not be unreasonably withheld.  AAI shall
keep a complete and accurate account of expenses charged to the Company and
shall allow the examination of such records by the selected accountant during
regular business hours.  Such audits may be performed no more frequently than
annually.  In the event that such audit reveals that amounts charged by AAI to
the Company for the period commencing on the date of the most recent audit (or
from the date hereof with respect to the initial audit) exceed by 5 percent or
more the amount that AAI may rightfully have charged during such period, AAI
shall reimburse the Company for the expense of such audit.
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                                  ARTICLE VII

                         LIABILITY AND INDEMNIFICATION

parties agree that AAI's liability to the Company for the DEVELOPMENT SERVICES
under this Agreement shall be limited to the amount of compensation which AAI
has received from the Company for the DEVELOPMENT SERVICES rendered hereunder.
AAI shall not be liable to the Company for injuries sustained by third parties,
consequential damages or any cost associated with a NEW PRODUCT's recall.
AAI's liability for commercial manufacturing shall be negotiated by the parties
according to the substantive terms set forth on the Manufacturing Term Sheet
and attached hereto as EXHIBIT "B".

         Section 7.2      INDEMNIFICATION OF AAI.  The Company shall indemnify
and hold harmless AAI, its agents, employees and affiliates from any loss,
expense and liability, including reasonable attorney's fees arising from or in
connection with the distribution or sale of any NEW PRODUCT or CLINICAL
SUPPLIES developed under this Agreement, except as limited by the MANUFACTURING
AGREEMENT to be entered into pursuant to the substantive terms of EXHIBIT "B".
Provided, however, that AAI will promptly notify the Company of any such claim
or suit, and at the Company's discretion and cost permit the Company's
attorneys to handle such claims or suits exclusively so long as the Company's
attorneys actively pursue the defense of the same.  Provided further that this
indemnification and hold harmless shall not apply to any loss, expense or
liability caused by the gross negligence or willful misconduct of AAI.

         Section 7.3      SURVIVAL.  The covenants and obligations of
indemnification set forth herein shall survive the termination of this

                                  ARTICLE VIII

                              TERM AND TERMINATION

         Section 8.1      TERM OF AGREEMENT.  Unless sooner terminated in a
manner herein provided, this Agreement shall continue for a period of seven (7)

         Section 8.2      TERMINATION.  A party may terminate this Agreement if
the other party commits a material breach of this Agreement (which is not cured
within thirty
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(30) days of receipt of written notice of such), or files for bankruptcy or
reorganization.  The development of any NEW PRODUCT may be terminated by the
Company if the cost of development becomes prohibitive.  Upon termination by
either party, the Company shall be obligated to pay the cost of all work
completed and expenses incurred through the effective date of termination in
accordance with this Agreement, including AAI's cost of all materials and
services previously acquired or contracted which AAI cannot readily utilize in
other day-to-day operations.

                                   ARTICLE IX


         Section 9.1      NONDISCLOSURE.  All confidential and proprietary
information directly or indirectly related to the NEW PRODUCTS shall be deemed
confidential.  Such confidential information shall be safeguarded by AAI, shall
not be disclosed to third parties by AAI except as permitted herein and shall
be made available only to AAI's employees, subcontractors or consultants who
have a need to know for the purposes specified under this Agreement.  These
obligations of confidentiality shall apply during the term of this Agreement,
and shall survive the termination of this Agreement, but such obligations shall
not apply to any information to the extent that such information:

                 (a)      is or hereafter becomes generally available to the
         public other than by reason of any default with respect to a
         confidentiality obligation under this Agreement;

                 (b)      is disclosed to AAI by a third party who is not in
         default of any confidentiality obligation to the Company;

                 (c)      is submitted to governmental agencies to facilitate a
         NEW PRODUCT's FDA APPROVAL hereunder provided that reasonable measures
         shall be taken to assure confidential treatment of such information;

                 (d)      is provided to third party subcontractors under
         appropriate terms and conditions including confidentiality provisions
         at least as stringent as those in this Agreement;

                 (e)      is required to be disclosed in compliance with
         applicable laws or regulations in connection with the manufacture or
         sale of a NEW PRODUCT;
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         provided that AAI provides the Company with notice of intended
         disclosure as far in advance as is possible under the circumstances;

                 (f)      is otherwise required to be disclosed in compliance
         with applicable laws or regulations or order by a court or other
         regulatory body having competent jurisdiction; provided that AAI
         provides the Company with notice of intended disclosure as far in
         advance as is possible under the circumstances.

                                   ARTICLE X

                           CORRESPONDENCE AND NOTICE

         Until advised in writing to the contrary by the intended recipient,
documentation, reports, communications, and notices hereunder shall be
effective upon receipt and shall be addressed to:

         GenerEst:        GenerEst, Inc.
                          1726 North 23rd Street
                          Wilmington, NC  28405
                          (Attention:  President)

         AAI:             Applied Analytical Industries, Inc.
                          1206 North 23rd Street
                          Wilmington, NC 28405
                          (Attention:  General Counsel)

                                   ARTICLE XI

                                 GOVERNING LAW

         This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of North Carolina.
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                                  ARTICLE XII


         Section 12.1     LIMITATIONS OF RIGHTS.  Except as expressly provided
for in this Agreement, nothing contained herein shall be construed as
conferring any license or other rights, by implication, estoppel or otherwise,
under any patent (including design and utility patents) or patent applications,
or any copyrights, trademarks, trade names or trade dress.

         Section 12.2     WAIVER.  The failure of either party hereto at  any
time or times to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same.  No waiver
by any party hereto of any condition, or of the breach of any provision, term,
covenant, representation, or warranty contained in 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 condition or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement.

         Section 12.3     PAROLE EVIDENCE.  This Agreement contains the entire
agreement between the parties with respect to the subject matter thereof as of
its date and supersedes all prior agreements, negotiations, representations and
proposals, written and oral, relating to its subject matter.

         Section 12.4     SEVERABILITY. If a court or other tribunal of
competent jurisdiction holds any term or provision, or portion thereof, of this
Agreement to be invalid, void or unenforceable, the remaining provisions of
this Agreement shall remain in full force and effect.  It is the parties'
intention that if a court or other tribunal holds any term or provision of this
Agreement to be excessive in scope, such term or provision shall be adjusted
rather than voided, if possible.

         Section 12.5     MODIFICATION.  This Agreement may not be amended or
modified except by written instrument signed by AAI and the Company.

         Section 12.6      COOPERATION.  Each party will execute and deliver
all such instruments and perform all such other acts as the other party may
reasonably request to carry out the transactions contemplated by this

         Section 12.7     FORCE MAJEURE.  Neither AAI nor the Company shall be
liable  for delay or failure in the performance of the obligations contained in
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Agreement caused solely by any one or more of the following:  (a) acts of God,
or public enemy or war (declared or undeclared); (b) acts of governmental or
quasi-governmental authorities of the United States, or any political
subdivision thereof, or of any department or agency thereof, or regulations or
restrictions imposed by law or by court action, except as they may result from
the unreasonable failure of AAI or the Company to perform as required
hereunder; (c) acts of persons engaged in subversive activities or sabotage;
(d) fires, floods, explosions or other catastrophes; (e) strikes or similar
labor disruptions; (f) epidemics or quarantines restrictions; (g) freight
embargoes or interruption of transportation; (h) unusually severe weather; (i)
delays of a supplier of either party due to any of the above causes or events;
or (j) any other extraordinary causes, similar or dissimilar, beyond the
reasonable control of the party concerned; and provided that due diligence is
exercised to cure such cause and resume performance, and the time for
performance by such party shall be extended by the period of any such delay.

         Section 12.8     BINDING EFFECT.  Subject to the restrictions on
transfers, assignments and encumbrances set forth herein, this Agreement shall
inure to the benefit of and be binding upon the undersigned parties, their
respective legal successors and assigns.

         Section 12.9     ASSIGNMENT.  Neither party shall assign its rights
under this Agreement without the prior written consent of the other party.

                  [Remainder of page left blank intentionally]
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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.


By:      /s/ Frederick D. Sancilio                                          
         Frederick D. Sancilio, Ph.D.


By:      /s/ R. Forrest Waldon                                          
         R. Forrest Waldon, Secretary


BY:      /s/ Frederick D. Sancilio                                          
         Frederick D. Sancilio, Ph.D.


By:       /s/ R. Forrest Waldon                                         
          R. Forrest Waldon, Secretary