Common use of Payment for Services Rendered Clause in Contracts

Payment for Services Rendered. 3.1 The initial prices for the Services are set forth on Exhibit A (the “Purchase Prices”). Purchaser agrees to pay for Services according to the applicable Service Contract. A deposit of 15% of the projected cost of each project shall be due upon the signing of the applicable Service Contract. 3.2 AAI DS may increase the Purchase Prices effective as of each January 1 during the Term by the amount equal to the percentage change in the Producers Price Index, Drugs and Pharmaceuticals, Preparations, ethical (prescription) (Code 0635) (or any comparable successor index) during the twelve month period ending on the September 30 immediately preceding the January 1 Purchase Price adjustment. AAI DS shall provide written notification of any increase in the Purchase Prices by the November 1 prior to the January 1 effective date of the increase in Purchase Prices. 3.3 During the first year of the Initial Term (“Year 1”), Purchaser shall purchase or offer to purchase, in accordance with this Section 3.3 (collectively, “Acquire”) Services from AAI DS for amounts, inclusive of Out-of-Pocket Expenses (as defined in Section 3.7) (“Service Amounts”) that, in the aggregate, are equal to at least $10,000,000 (the “Year 1 Minimum”). During the second year of the Initial Term (“Year 2”), Purchaser shall Acquire Service Amounts that, in the aggregate, are equal to at least $5,000,000 (as may be adjusted, the “Year 2 Minimum”). During the third year of the Initial Term (“Year 3”, and collectively with Year 1 and Year 2, the “Subject Years”), Purchaser shall Acquire Service Amounts that, in the aggregate, are equal to at least $5,000,000 (as may be adjusted, the “Year 3 Minimum”, and collectively with the Year 1 Minimum and the Year 2 Minimum, the “Minimum Purchase Amounts”); provided, however, that if on or prior to April 30, 2006, there has been completion of the appropriate Phase I PK Study or Studies for the Darvocet-N XR Product and agreement or consent by the FDA to allow the initiation of the Phase III efficacy studies based on the Phase I data, the Year 2 Minimum and the Year 3 Minimum shall each be $10,000,000 (subject to adjustment as provided for in Section 3.5 and Section 3.6 (as applicable)). (a) The Service Amounts that shall be credited towards Purchaser’s satisfaction of the Minimum Purchase Amount in each of the Subject Years shall be for the actual Services in respect of which payments are accrued during the applicable Subject Year plus the Out-of-Pocket Expenses that are invoiced to Purchaser by AAI DS during the applicable Subject Year plus any Out-of-Pocket Expenses that are invoiced on or prior to 45 days after the end of the applicable Subject Year but which relate to the applicable Subject Year. The Parties acknowledge and agree that, notwithstanding anything herein or in any Service Contract to the contrary, AAI DS shall be entitled to invoice, and Purchaser shall pay, all Service Amounts that are credited towards Purchaser’s satisfaction of the Minimum Purchase Amount for an applicable Subject Year. (b) Each of Purchaser and AAI DS acknowledges and agrees that (i) Services which Purchaser has engaged AAI DS to provide with regard to XP12B on and after the Effective Date shall be credited towards Purchaser’s satisfaction of the Minimum Purchase Amount for the applicable Subject Year and (ii) any Services performed by AAI DS with regard to the Odyssey Product engaged by Purchaser or a third party shall be credited towards Purchaser’s satisfaction of the Minimum Purchase Amount for the applicable Subject Year. For the avoidance of doubt, any out-of-pocket expenses invoiced to a third-party by AAI DS related to Services performed for such third-party shall only be credited against Purchaser’s satisfaction of the applicable Minimum Purchase Amount if such out-of-pocket expenses paid by such third-party are Out-of-Pocket Expenses, as defined in Section 3.7 below (i.e., if Purchaser pays a 20% margin on such Out-of-Pocket Expenses). (c) If Purchaser offers to engage AAI DS to provide Services for which AAI DS has the expertise and resources to perform, as determined in AAI DS’s reasonable discretion (solely for purposes of this clause (c)), and AAI DS does not choose to perform the Services, an amount equal to the replacement cost for the same Services incurred by Purchaser shall be credited towards Purchaser’s satisfaction of the Minimum Purchase Amount for the applicable Subject Year in which such amounts are incurred by Purchaser. (d) For the avoidance of doubt, Reimbursable Expenses under the Odyssey Co-Development Agreement shall not be credited towards Purchaser’s satisfaction of any Minimum Purchase Amount, other than Services as contemplated in Section 3.3(b) above and out-of-pocket expenses related to such Services invoiced by AAI DS that are Out-of-Pocket Expenses (as defined in Section 3.7 below). Notwithstanding anything to the contrary herein, Purchaser shall not be permitted to credit any amount against any Minimum Purchase Amount if (i) AAI DS is determined not to have the expertise or resources to perform the Service in accordance with the provisions of Article 2 of this Agreement or is otherwise unable to perform the Services, or (ii) except as provided in clause (c) of this Section 3.3, Purchaser employs or otherwise contracts for a third party to perform the Services. 3.4 In the event that Purchaser does not Acquire in a Subject Year Service Amounts that, in the aggregate, equal at least the then applicable Minimum Purchase Amount, Purchaser shall pay to AAI DS, within sixty (60) calendar days after the end of such Subject Year, the difference between (i) the applicable Minimum Purchase Amount for such Subject Year and (ii) the amount of the aggregate Service Amounts that Purchaser has accrued (in respect of Services) and paid (in respect of Out-of-Pocket Expenses) in respect of such Subject Year. 3.5 In the event that Purchaser has Acquired in Year 1 Service Amounts that, in the aggregate, equal more than the Year 1 Minimum, then the amount of such excess, but not to exceed twenty percent (20%) of the Year 1 Minimum (i.e., $2 million), shall be credited towards Purchaser’s satisfaction of the Year 2 Minimum. 3.6 In the event that Purchaser has Acquired in Year 2 Service Amounts that, in the aggregate, equal more than the Year 2 Minimum, then the amount of such excess, but not to exceed twenty percent (20%) of the Year 2 Minimum (i.e., $1 million or $2 million, as applicable), shall be credited towards Purchaser’s satisfaction of the Year 3 Minimum. 3.7 In addition, Purchaser will reimburse AAI DS for reasonable and customary documented out-of-pocket expenses for raw materials which shall be invoiced by AAIDS to Purchaser at cost plus a 20 percent (20%) handling fee (the “Raw Material Expenses”). Other out-of-pocket expenses, such as travel and pass through expenses (e.g., investigator fees), will be expensed at cost on a “pass through basis” plus a twenty percent (20%) handling fee (“Other Expenses”, and collectively, with the Raw Material Expenses, the “Out-of-Pocket Expenses”). AAI DS shall obtain prior written consent for any individual Other Expense in excess of $10,000. Purchaser agrees to pay in advance any substantial pass through expenses. 3.8 Unless otherwise set forth in the applicable Service Contract, AAI DS shall invoice Purchaser on a calendar month basis for Services rendered and expenses incurred during the previous calendar month. Invoices are due and payable within thirty (30) days of date of invoice. All payments to AAI DS shall be made in U.S. dollars. Invoice balances not remitted within thirty (30) days of receipt of invoice shall be subject to a one and one-half percent (1.5%) per month interest charge. Should any part of the invoice be in dispute, Purchaser shall pay the remainder of the undisputed amount according to the terms and conditions described herein while said dispute is being resolved. 3.9 The fees payable under this Agreement shall not, and shall not be construed to, include local, state, federal or foreign sales and use taxes, if any, and any such taxes shall be assumed and paid by Purchaser. 3.10 AAI DS shall not subcontract any of the Services as set forth in a Service Contract, other than to an Affiliate of AAI DS, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld or delayed. 3.11 Any amounts payable to Purchaser hereunder, including, without limitation, claims for indemnification, shall be administrative expense priority claims in the Bankruptcy Cases pursuant to sections 503 and 507(a)(1) of the Bankruptcy Code. 3.12 The obligations of AAI DS under this Agreement or the Service Contracts shall not be discharged by entry of an order confirming a plan of reorganization in the Bankruptcy Cases and, pursuant to section 1141 (d)(4) of the Bankruptcy Code, AAI DS has waived such discharge.

Payment for Services Rendered. 3.1 The initial prices for the Services are set forth on Exhibit A (the “"Purchase Prices”"). Purchaser agrees to pay for Services according to the applicable Service Contract. A deposit of 15% of the projected cost of each project shall be due upon the signing of the applicable Service Contract. 3.2 AAI DS may increase the Purchase Prices effective as of each January 1 during the Term by the amount equal to the percentage change in the Producers Price Index, Drugs and Pharmaceuticals, Preparations, ethical (prescription) (Code 0635) (or any comparable successor index) during the twelve month period ending on the September 30 immediately preceding the January 1 Purchase Price adjustment. AAI DS shall provide written notification of any increase in the Purchase Prices by the November 1 prior to the January 1 effective date of the increase in Purchase Prices. 3.3 During the first year of the Initial Term (“"Year 1”"), Purchaser shall purchase or offer to purchase, in accordance with this Section 3.3 (collectively, “"Acquire”") Services from AAI DS for amounts, inclusive of Out-of-Pocket Expenses (as defined in Section 3.7) (“"Service Amounts”") that, in the aggregate, are equal to at least $10,000,000 (the “"Year 1 Minimum”"). During the second year of the Initial Term (“"Year 2”"), Purchaser shall Acquire Service Amounts that, in the aggregate, are equal to at least $5,000,000 (as may be adjusted, the “"Year 2 Minimum”"). During the third year of the Initial Term (“"Year 3”", and collectively with Year 1 and Year 2, the “"Subject Years”"), Purchaser shall Acquire Service Amounts that, in the aggregate, are equal to at least $5,000,000 (as may be adjusted, the “"Year 3 Minimum”", and collectively with the Year 1 Minimum and the Year 2 Minimum, the “"Minimum Purchase Amounts”"); provided, however, that if on or prior to April 30, 2006, there has been completion of the appropriate Phase I PK Study or Studies for the Darvocet-N XR Product and agreement or consent by the FDA to allow the initiation of the Phase III efficacy studies based on the Phase I data, the Year 2 Minimum and the Year 3 Minimum shall each be $10,000,000 (subject to adjustment as provided for in Section 3.5 and Section 3.6 (as applicable)). (a) The Service Amounts that shall be credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount in each of the Subject Years shall be for the actual Services in respect of which payments are accrued during the applicable Subject Year plus the Out-of-Pocket Expenses that are invoiced to Purchaser by AAI DS during the applicable Subject Year plus any Out-of-Pocket Expenses that are invoiced on or prior to 45 days after the end of the applicable Subject Year but which relate to the applicable Subject Year. The Parties acknowledge and agree that, notwithstanding anything herein or in any Service Contract to the contrary, AAI DS shall be entitled to invoice, and Purchaser shall pay, all Service Amounts that are credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount for an applicable Subject Year. (b) Each of Purchaser and AAI DS acknowledges and agrees that (i) Services which Purchaser has engaged AAI DS to provide with regard to XP12B on and after the Effective Date shall be credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount for the applicable Subject Year and (ii) any Services performed by AAI DS with regard to the Odyssey Product engaged by Purchaser or a third party shall be credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount for the applicable Subject Year. For the avoidance of doubt, any out-of-pocket expenses invoiced to a third-party by AAI DS related to Services performed for such third-party shall only be credited against Purchaser’s 's satisfaction of the applicable Minimum Purchase Amount if such out-of-pocket expenses paid by such third-party are Out-of-Pocket Expenses, as defined in Section 3.7 below (i.e., if Purchaser pays a 20% margin on such Out-of-Pocket Expenses). (c) If Purchaser offers to engage AAI DS to provide Services for which AAI DS has the expertise and resources to perform, as determined in AAI DS’s 's reasonable discretion (solely for purposes of this clause (c)), and AAI DS does not choose to perform the Services, an amount equal to the replacement cost for the same Services incurred by Purchaser shall be credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount for the applicable Subject Year in which such amounts are incurred by Purchaser. (d) For the avoidance of doubt, Reimbursable Expenses under the Odyssey Co-Development Agreement shall not be credited towards Purchaser’s 's satisfaction of any Minimum Purchase Amount, other than Services as contemplated in Section 3.3(b) above and out-of-pocket expenses related to such Services invoiced by AAI DS that are Out-of-Pocket Expenses (as defined in Section 3.7 below). Notwithstanding anything to the contrary herein, Purchaser shall not be permitted to credit any amount against any Minimum Purchase Amount if (i) AAI DS is determined not to have the expertise or resources to perform the Service in accordance with the provisions of Article 2 of this Agreement or is otherwise unable to perform the Services, or (ii) except as provided in clause (c) of this Section 3.3, Purchaser employs or otherwise contracts for a third party to perform the Services. 3.4 In the event that Purchaser does not Acquire in a Subject Year Service Amounts that, in the aggregate, equal at least the then applicable Minimum Purchase Amount, Purchaser shall pay to AAI DS, within sixty (60) calendar days after the end of such Subject Year, the difference between (i) the applicable Minimum Purchase Amount for such Subject Year and (ii) the amount of the aggregate Service Amounts that Purchaser has accrued (in respect of Services) and paid (in respect of Out-of-Pocket Expenses) in respect of such Subject Year. 3.5 In the event that Purchaser has Acquired in Year 1 Service Amounts that, in the aggregate, equal more than the Year 1 Minimum, then the amount of such excess, but not to exceed twenty percent (20%) of the Year 1 Minimum (i.e., $2 million), shall be credited towards Purchaser’s 's satisfaction of the Year 2 Minimum. 3.6 In the event that Purchaser has Acquired in Year 2 Service Amounts that, in the aggregate, equal more than the Year 2 Minimum, then the amount of such excess, but not to exceed twenty percent (20%) of the Year 2 Minimum (i.e., $1 million or $2 million, as applicable), shall be credited towards Purchaser’s 's satisfaction of the Year 3 Minimum. 3.7 In addition, Purchaser will reimburse AAI DS for reasonable and customary documented out-of-pocket expenses for raw materials which shall be invoiced by AAIDS AAI DS to Purchaser at cost plus a 20 percent (20%) handling fee (the “"Raw Material Expenses”"). Other out-of-pocket expenses, such as travel and pass through expenses (e.g., investigator fees), will be expensed at cost on a “"pass through basis” " plus a twenty percent (20%) handling fee (“"Other Expenses”", and collectively, with the Raw Material Expenses, the “"Out-of-Pocket Expenses”"). AAI DS shall obtain prior written consent for any individual Other Expense in excess of $10,000. Purchaser agrees to pay in advance any substantial pass through expenses. 3.8 Unless otherwise set forth in the applicable Service Contract, AAI DS shall invoice Purchaser on a calendar month basis for Services rendered and expenses incurred during the previous calendar month. Invoices are due and payable within thirty (30) days of date of invoice. All payments to AAI DS shall be made in U.S. dollars. Invoice balances not remitted within thirty (30) days of receipt of invoice shall be subject to a one and one-half percent (1.5%) per month interest charge. Should any part of the invoice be in dispute, Purchaser shall pay the remainder of the undisputed amount according to the terms and conditions described herein while said dispute is being resolved. 3.9 The fees payable under this Agreement shall not, and shall not be construed to, include local, state, federal or foreign sales and use taxes, if any, and any such taxes shall be assumed and paid by Purchaser. 3.10 AAI DS shall not subcontract any of the Services as set forth in a Service Contract, other than to an Affiliate of AAI DS, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld or delayed. 3.11 Any amounts payable to Purchaser hereunder, including, without limitation, claims for indemnification, shall be administrative expense priority claims in the Bankruptcy Cases pursuant to sections 503 and 507(a)(1507(a)(l) of the Bankruptcy Code. 3.12 The obligations of AAI DS under this Agreement or the Service Contracts shall not be discharged by entry of an order confirming a plan of reorganization in the Bankruptcy Cases and, pursuant to section 1141 (d)(4) of the Bankruptcy Code, AAI DS has waived such discharge.

Payment for Services Rendered. 3.1 The initial prices for the Services are set forth on Exhibit A (the “"Purchase Prices”"). Purchaser agrees to pay for Services according to the applicable Service Contract. A deposit of 15[**]% of the projected cost of each project shall be due upon the signing of the applicable Service Contract. 3.2 AAI DS may increase the Purchase Prices effective as of each January 1 during the Term by the amount equal to the percentage change in the Producers Price Index, Drugs and Pharmaceuticals, Preparations, ethical (prescription) (Code 0635) (or any comparable successor index) during the twelve month period ending on the September 30 immediately preceding the January 1 Purchase Price adjustment. AAI DS shall provide written notification of any increase in the Purchase Prices by the November 1 prior to the January 1 effective date of the increase in Purchase Prices. 3.3 During the first year of the Initial Term (“"Year 1”"), Purchaser shall purchase or offer to purchase, in accordance with this Section 3.3 (collectively, “"Acquire”") Services from AAI DS for amounts, inclusive of Out-of-Pocket Expenses (as defined in Section 3.7) (“"Service Amounts”") that, in the aggregate, are equal to at least $10,000,000 (the “"Year 1 Minimum”"). During the second year of the Initial Term (“"Year 2”"), Purchaser shall Acquire Service Amounts that, in the aggregate, are equal to at least $5,000,000 (as may be adjusted, the “"Year 2 Minimum”"). During the third year of the Initial Term (“"Year 3”", and collectively with Year 1 and Year 2, the “"Subject Years”"), Purchaser shall Acquire Service Amounts that, in the aggregate, are equal to at least $5,000,000 (as may be adjusted, the “"Year 3 Minimum”", and collectively with the Year 1 Minimum and the Year 2 Minimum, the “"Minimum Purchase Amounts”"); provided, however, that if on or prior to April 30, 2006, there has been completion of the appropriate Phase I PK Study or Studies for the Darvocet-N XR Product and agreement or consent by the FDA to allow the initiation of the Phase III efficacy studies based on the Phase I data, the Year 2 Minimum and the Year 3 Minimum shall each be $10,000,000 (subject to adjustment as provided for in Section 3.5 and Section 3.6 (as applicable)). (a) The Service Amounts that shall be credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount in each of the Subject Years shall be for the actual Services in respect of which payments are accrued during the applicable Subject Year plus the Out-of-Pocket Expenses that are invoiced to Purchaser by AAI DS during the applicable Subject Year plus any Out-of-Pocket Expenses that are invoiced on or prior to 45 days after the end of the applicable Subject Year but which relate to the applicable Subject Year. The Parties acknowledge and agree that, notwithstanding anything herein or in any Service Contract to the contrary, AAI DS shall be entitled to invoice, and Purchaser shall pay, all Service Amounts that are credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount for an applicable Subject Year. (b) Each of Purchaser and AAI DS acknowledges and agrees that (i) Services which Purchaser has engaged AAI DS to provide with regard to XP12B on and after the Effective Date shall be credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount for the applicable Subject Year and (ii) any Services performed by AAI DS with regard to the Odyssey Product engaged by Purchaser or a third party shall be credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount for the applicable Subject Year. For the avoidance of doubt, any out-of-pocket expenses invoiced to a third-party by AAI DS related to Services performed for such third-party shall only be credited against Purchaser’s 's satisfaction of the applicable Minimum Purchase Amount if such out-of-pocket expenses paid by such third-party are Out-of-Pocket Expenses, as defined in Section 3.7 below (i.e., if Purchaser pays a 20% margin on such Out-of-Pocket Expenses). (c) If Purchaser offers to engage AAI DS to provide Services for which AAI DS has the expertise and resources to perform, as determined in AAI DS’s 's reasonable discretion (solely for purposes of this clause (c)), and AAI DS does not choose to perform the Services, an amount equal to the replacement cost for the same Services incurred by Purchaser shall be credited towards Purchaser’s 's satisfaction of the Minimum Purchase Amount for the applicable Subject Year in which such amounts are incurred by Purchaser. (d) For the avoidance of doubt, Reimbursable Expenses under the Odyssey Co-Development Agreement shall not be credited towards Purchaser’s 's satisfaction of any Minimum Purchase Amount, other than Services as contemplated in Section 3.3(b) above and out-of-pocket expenses related to such Services invoiced by AAI DS that are Out-of-Pocket Expenses (as defined in Section 3.7 below). Notwithstanding anything to the contrary herein, Purchaser shall not be permitted to credit any amount against any Minimum Purchase Amount if (i) AAI DS is determined not to have the expertise or resources to perform the Service in accordance with the provisions of Article 2 of this Agreement or is otherwise unable to perform the Services, or (ii) except as provided in clause (c) of this Section 3.3, Purchaser employs or otherwise contracts for a third party to perform the Services. 3.4 In the event that Purchaser does not Acquire in a Subject Year Service Amounts that, in the aggregate, equal at least the then applicable Minimum Purchase Amount, Purchaser shall pay to AAI DS, within sixty (60) calendar days after the end of such Subject Year, the difference between (i) the applicable Minimum Purchase Amount for such Subject Year and (ii) the amount of the aggregate Service Amounts that Purchaser has accrued (in respect of Services) and paid (in respect of Out-of-Pocket Expenses) in respect of such Subject Year. 3.5 In the event that Purchaser has Acquired in Year 1 Service Amounts that, in the aggregate, equal more than the Year 1 Minimum, then the amount of such excess, but not to exceed twenty percent (20%) of the Year 1 Minimum (i.e., $2 million), shall be credited towards Purchaser’s 's satisfaction of the Year 2 Minimum. 3.6 In the event that Purchaser has Acquired in Year 2 Service Amounts that, in the aggregate, equal more than the Year 2 Minimum, then the amount of such excess, but not to exceed twenty percent (20%) of the Year 2 Minimum (i.e., $1 million or $2 million, as applicable), shall be credited towards Purchaser’s 's satisfaction of the Year 3 Minimum. 3.7 In addition, Purchaser will reimburse AAI DS for reasonable and customary documented out-of-pocket expenses for raw materials which shall be invoiced by AAIDS AAI DS to Purchaser at cost plus a 20 percent (20%) handling fee (the “"Raw Material Expenses”"). Other out-of-pocket expenses, such as travel and pass through expenses (e.g., investigator fees), will be expensed at cost on a “"pass through basis” " plus a twenty percent (20%) handling fee (“"Other Expenses”", and collectively, with the Raw Material Expenses, the “"Out-of-Pocket Expenses”"). AAI DS shall obtain prior written consent for any individual Other Expense in excess of $10,000. Purchaser agrees to pay in advance any substantial pass through expenses. 3.8 Unless otherwise set forth in the applicable Service Contract, AAI DS shall invoice Purchaser on a calendar month basis for Services rendered and expenses incurred during the previous calendar month. Invoices are due and payable within thirty (30) days of date of invoice. All payments to AAI DS shall be made in U.S. dollars. Invoice balances not remitted within thirty (30) days of receipt of invoice shall be subject to a one and one-half percent (1.5%) per month interest charge. Should any part of the invoice be in dispute, Purchaser shall pay the remainder of the undisputed amount according to the terms and conditions described herein while said dispute is being resolved. 3.9 The fees payable under this Agreement shall not, and shall not be construed to, include local, state, federal or foreign sales and use taxes, if any, and any such taxes shall be assumed and paid by Purchaser. 3.10 AAI DS shall not subcontract any of the Services as set forth in a Service Contract, other than to an Affiliate of AAI DS, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld or delayed. 3.11 Any amounts payable to Purchaser hereunder, including, without limitation, claims for indemnification, shall be administrative expense priority claims in the Bankruptcy Cases pursuant to sections 503 and 507(a)(1507(a)(l) of the Bankruptcy Code. 3.12 The obligations of AAI DS under this Agreement or the Service Contracts shall not be discharged by entry of an order confirming a plan of reorganization in the Bankruptcy Cases and, pursuant to section 1141 (d)(4) of the Bankruptcy Code, AAI DS has waived such discharge.