Agreement For Manufacturing And Supply

Exhibit 10.41


Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Askterisks denote omissions.


AGREEMENT


FOR


MANUFACTURING AND SUPPLY OF ZILEUTON


Made as of February 8, 2005 (the "Effective Date")


by and between


CRITICAL THERAPEUTICS, INC., (hereinafter referred to as "CTI"), a corporation duly organized and validly existing under the laws of the State of Delaware with its principal offices at 60 Westview Street, Lexington, MA 02421 USA


and


RHODIA PHARMA SOLUTIONS LTD., (hereinafter referred to as "RPS"), a corporation duly organized and validly existing under the laws of England, with its principal offices at Dudley, Cramlington, Northumberland, NE23 7QG, England


WHEREAS, CTI and RPS and RPS' affiliate, Rhodia Pharma Solutions Inc. are parties to a certain Confidential Proposal Agreement ANNSEN22032004A dated March 23, 2004, under which RPS and Rhodia Pharma Solutions Inc. provided CTI with certain research and development services concerning the manufacturing of the Compound (as defined below); and


WHEREAS, CTI and RPS desire to enter into a contract for the supply of commercial scale Compound batches manufactured by RPS at its Manufacturing Site (as defined below), subject to the terms and conditions contained herein.


NOW, THEREFORE, CTI and RPS hereby agree as follows:


1.0 DEFINITIONS


Unless otherwise specifically set forth herein, the following terms shall have the meanings set forth below:


1.1 Affiliate


Shall mean in relation to a party, any other entity controlled, directly
or indirectly, by a Party at the time in question or controlling that
Party or controlled directly or indirectly by an entity controlling the
Party, and where the term "control" means the holding of more than 50% of
the equity of an entity or having the right to appoint and/or remove more
than 50% of its board of directors or like penultimate governing body.


1.2 Agreement


Shall mean this Agreement for the Manufacturing and Supply of ZILEUTON and
all annexes hereto.


1.3 Annual Contract Volume


Shall mean for any Calendar Year, the lesser of (i) [**] percent ([**]%)
of the commercial scale volume of Compound required by CTI and its
Affiliates in that


Calendar Year for the manufacture of Drug Products plus any Excess
Compound Demand that RPS is entitled to produce in accordance with Section
2.1(b)(iii) below, and (ii) the [**] at the Manufacturing Site at Annan
during such Calendar Year.


1.4 cGMP


Shall mean the current good manufacturing practices promulgated by
Governmental Authorities and the International Conference on Harmonisation
("ICH"), including ICH guideline Q7A.


1.5 Compound


Shall mean the compound (+)-1-(1-benzo[b]thien-2-ylethyl)-1-hydroxyurea,
also known as zileuton.


1.6 Confidential Information


Shall mean all information, whether technical or non-technical, trade
secrets, discoveries, data, drawings, techniques, documents, models,
samples and know-how, whether or not patented or patentable, owned or
possessed by a Party on the date of this Agreement or later developed by
them that is not in the public domain. CTI's Confidential Information
shall include Intellectual Work Product (as defined in Section 8.1 (a).


1.7 Contract Year


Shall mean each calendar year during the Term hereof beginning upon
January 1st and ending upon December 31st of such year.


1.8 Drug Product


Shall mean any and all pharmaceutical preparations suitable for human use
manufactured by or for CTI that contain the Compound.


1.9 EMEA Territories


Shall mean the European countries of Austria, Belgium, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands,
Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and the United
Kingdom, and such other countries as may from time to time become member
states of the European Union.


1.10 European Union


Shall mean the European countries of Austria, Belgium, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the
Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and the
United Kingdom, and such other countries as may from time to time become
member states of the European Union.


1.11 Excess Compound Demand


As defined in Section 2.1(b)(iv) below.


1.12 FDA


Shall mean the United States Food and Drug Administration, or any
successor entity.


1.13 Governmental Approval


Shall mean all authorizations by the appropriate Governmental Authorities
that are required for the manufacture (other than manufacturing facility
licenses, approvals, or authorizations), marketing, promotion, and sale of
the Compound in the United States and the European Union.


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1.14 Governmental Authority


Shall mean any national, supra-national, regional, state, or local
regulatory agency, department, bureau, commission, council, or other
governmental entity in the United States or the European Union involved in
the granting of Governmental Approval for the Compound, including, without
limitation, the FDA and the EMEA.


1.15 Initial Delivery Period


Shall mean the period commencing with the Effective Date and ending upon
December 31, 2006.


1.16 Manufacturing Site


Shall mean one or both of RPS' manufacturing facilities located at Dudley,
Cramlington, Northumberland, NE23 7QG, England and Three Trees Road,
Newbie, Annan, Dumfriesshire, DG12 5QHH, Scotland


1.17 Manufacturing Site Capital Project


Shall mean the capital build-out projects at the Manufacturing Site at
Annan, Scotland required to increase RPS' Compound manufacturing capacity
at the Manufacturing Site at Annan from [**] to [**] of Compound per
Calendar Year sites, together with the estimated costs and expenses of
such project and the estimated project timeline shown on Annex 12 attached
hereto.


1.18 Party


Shall mean CTI or RPS, and when used in the plural form both CTI and RPS.


1.19 Proposal Agreement


Shall mean the Confidential Proposal Agreement described in the preamble
of this Agreement together with any amendments and change orders agreed to
in writing between the Parties, a copy of which is attached hereto at
Annex 11.


1.20 Quality Agreement


Shall mean the written quality agreement for the manufacturing of the
Compound agreed between the Parties and attached hereto as Annex 9, as
such agreement shall be amended from time to time in writing by the
Parties.


1.21 Raw Materials


Shall mean all materials, chemicals and solvents used in the production of
the Compound by RPS hereunder.


1.22 Recall


Shall mean any action by CTI and its Affiliates or RPS and its Affiliates,
to recover title or possession or halt distribution, prescription, or
consumption of the Compound or any Drug Product sold or shipped to Third
Parties. The term "Recall" also applies to Compound or Drug Products that
would have been subject to recall if the Compound or Drug Products, as the
case may be, had been shipped.


1.23 Seizure


Shall mean any action by the FDA or other governmental authority to detain
or destroy the Compound or the Drug Products or prevent the distribution,
prescription, consumption, or release of the Compound or Drug Products.


1.24 Specifications


Shall mean the specifications for the Compound attached hereto in Annex 1.


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1.25 Supply Chain Introduction Date


Shall mean the date, for a given drum of Compound that is shipped by RPS
hereunder, upon which CTI or CTI's designated agent first breaks the seal
of such drum.


1.26 Term


Shall mean the duration of this Agreement as provided in Section 10.1
hereof.


1.27 Third Party


Shall mean any party other than CTI and its Affiliates and RPS and its
Affiliates.


1.28 Validations


Shall mean process validation, test method validation, milling validation
and cleaning validation, contemplated by the Parties to be undertaken for
preparation of the Process Validation Report.


1.29 Process Validation Report


Shall mean a written report prepared by RPS in consultation with CTI
evidencing the repeatability of Compound quality and stability over the
production of [**] Compound batches, as required for commercial release of
the Compound under applicable Government Approvals, and all Validations
and the achievement of any other production validation criteria so
required and as the Parties shall mutually agree, and which report shall,
subject to Section 10.6, be attached hereto at Annex 10 upon completion
and sign off, in writing, by both Parties.


1.30 Validation Schedule and Timeline


Shall mean the schedule of work and timelines for the Validations and the
manufacture by RPS of Phase 1 validation batches of Compound, described at
Annex 3 hereto.


1.31 Validation Success Criteria


Shall mean the criteria agreed between the parties for the Validations and
the successful completion of the manufacture by RPS of validation batches
of Compound, as set forth in the Validation Schedule and Timeline.


1.32 Vendors


Shall mean any and all Third Party suppliers of materials, processing
services and/or testing services engaged by RPS in connection with this
Agreement.


2.0 AGREEMENT SCOPE AND MANUFACTURE AND SUPPLY OF COMPOUND


2.1 (a) Phase 1 - Validation Batches of Compound.


During the Term, RPS will manufacture at the Manufacturing Site under cGMP
[**] validation batches of the Compound from the Manufacturing Site at
Dudley and [**] validation batches of the Compound from the Manufacturing
Site at Annan in accordance with the Proposal Agreement, the Validation
Schedule and Timeline and the Validation Success Criteria. Should any such
validation batch be prepared under conditions determined not to meet the
Validation Success Criteria to the mutual satisfaction of the Parties, RPS
shall manufacture a new validation batch or batches. The price for these
Phase 1 validation batches of Compound is set forth in the Proposal
Agreement; provided, however, that CTI shall only be responsible for
paying for the [**] validation batches from the Manufacturing Site at
Dudley and the [**] validation batches from the Manufacturing Site at
Annan as outlined in the


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Proposal Agreement regardless of how many validation batches are needed to
be produced to achieve [**] validation batches that meet the Validation
Success Criteria. Further, the foregoing price shall be inclusive of the
cost of the Process Validation Report and all validation batches,
excluding the cost of the milling part of the Validations to the extent
any milling is done by a Third Party, in which case, the cost of such
milling by a Third Party shall be the sole responsibility of CTI. For the
milling validation part of the Validations, the extent of the milling
required of Compound from the foregoing validation batches, including, but
not limited to, how much Compound to be milled and the timing thereof,
shall be determined by CTI, in its reasonable discretion, in consultation
with RPS.


(b) Phase 2 - Commercial Batches of Compound.


(i) Price: The price for commercial scale batches of Compound shall be
US$[**] per kilo, [**] (per INCOTERMS 2000), during the Initial Delivery
Period. The foregoing price is inclusive of CTI's obligation to [**], but
not more than $[**], of (i) any costs and expenses incurred by RPS in
connection with the work described in the Manufacturing Site Capital
Project Project and (ii) the reasonable out-of-pocket cost of [**] any
such capital improvements that RPS must undertake, provided that CTI
performs its [**] per Section 2.1(b)(ii) below. The price for commercial
scale batches during any Calendar Year thereafter shall vary as provided
in Schedule 13 attached hereto depending upon the volume of Compound
ordered by CTI for such Calendar Year. The Parties shall meet no less than
once a Calendar Year to review Compound pricing under Schedule 13 of this
Agreement with a goal of achieving a Compound price of US$[**] per kilo
for Calendar Year volumes of Compound equal to or greater than [**] metric
tons, provided that no adjustments or changes to Schedule 13 pricing will
be binding upon the Partiers absent an amendment to Schedule 13 signed by
both of the Parties.


(ii) Compound Delivery Volumes: Subject to the terms of this Agreement,
during the Initial Delivery Period, RPS will manufacture at the
Manufacturing Site under cGMP, and CTI will purchase, [**] metric tons of
commercial scale batches of Compound Subject to the terms of this
Agreement, during each Calendar Year after the Initial Delivery Period,
RPS will manufacture at the Manufacturing Site under cGMP, and CTI will
purchase, the Annual Contract Volume.


(iii) Orders: If CTI has not already done so as of the Effective Date, CTI
will provide RPS with a written, rolling, twenty-four month forecast of
its Compound requirements no later than [**] months prior to the first
date proposed for delivery by RPS of commercial scale Compound batches
hereunder and shall provide an update of such forecast on or before the
first [**] thereafter during the Term of this Agreement (e.g., [**]). Such
forecasts shall constitute [**] months of firm orders from CTI for the
requested volume of Compound and shall then include [**] months of pro
forma volumes of Compound and [**] months of Compound delivery planning
horizon. The latter [**] months of each such forecast shall be
non-binding, subject always to CTI's minimum Compound volume purchase
obligations hereunder. RPS shall advise CTI if it cannot meet any of the
proposed delivery dates for Compound contained in CTI's newly forecasted
[**] within fifteen (15) business days of receiving each [**] updated
forecast, and the Parties shall negotiate mutually agreeable alternative
delivery dates. For the avoidance of doubt, once RPS has agreed that it
can accommodate the delivery dates for the first [**] months of CTI's
forecasts delivered as above, RPS shall only be able to object to the
delivery dates proposed in the updated forecast next due from CTI for the
[**] months immediately following the [**] months of firm orders then
pending under CTI's forecast. CTI's forecasts will also forecast the total
Compound requirements for CTI and its Affiliates over the forecast period
to the extent not reflected in CTI's firm orders. It is understood and
agreed between the


5


Parties that, for any Compound needed by CTI for commercial production of
Drug Product, RPS shall be the sole and exclusive supplier of Compound to
CTI and its Affiliates until the end of the Initial Delivery Period.


(iv) Right of First Refusal: Beginning with the Calendar Year 2007, CTI
hereby grants to RPS the right of first refusal to supply CTI and its
Affiliates with an additional [**] percent ([**]%) of their total annual
Compound requirements above [**] percent ([**]%) of such volume under this
Agreement ("Excess Compound Demand"), which right shall be exercisable by
RPS for all or any part of such Excess Compound Demand that RPS is capable
of producing subject to the capacity limitations at the Manufacturing Site
for any such Calendar Year by written notice issued to CTI within fifteen
(15) days after the date that RPS first receives from CTI firm orders for
Compound for that Calendar Year under Section 2.1(b)(iii) above (i.e.,
forecast due date from CTI of April 1st of each Calendar Year covering the
twenty-four (24) month period commencing with July 1st of that year) (the
"Exercise Period"). If RPS has received written notice from CTI on or
prior to an Exercise Period, containing reasonably detailed information
and supporting documents for RPS' evaluation (subject always to any
confidentiality obligations to Third Parties to which CTI or its
Affiliates may be bound), that CTI and/or one or more of its Affiliates
have received a written offer, binding upon a Third Party supplier(s) of
Compound, to supply CTI and/or its Affiliates with between [**] percent
([**]%) and [**] percent ([**]%) of its Compound requirements for the
succeeding Calendar Year and such offer, or offers on average if there are
more than one, evidence a lower price delivered to the final destination
designated by CTI than that which will be payable hereunder during such
succeeding Calendar Year, taking into account [**], then RPS' right of
first refusal for the Excess Compound Demand represented by such offer(s)
shall be subject to RPS' agreement to supply such Excess Compound Demand
hereunder at a price that is more favorable to CTI than such offered
price. If RPS does not exercise its right of first refusal with an
agreement by RPS to supply all or any part of such Excess Compound Demand
at a price that is more favorable to CTI than the offered price, then CTI
shall be free to purchase any Excess Compound Demand so declined by RPS
for the relevant succeeding Calendar Year from the Third Party supplier(s)
who has made the competitive offer.


(c) Compound Deliveries


All deliveries of Compound shall be made by RPS to CTI, either [**].
facility of RPS' Affiliate, Rhodia Pharma Solutions Inc. [**] to the
carrier nominated by CTI or its designated agent or [**] (per INCOTERMS
2000) as the Parties shall agree based upon CTI's firm Compound orders,
and title and risk of loss to the Compound shall pass from RPS to CTI upon
completion of delivery as aforesaid. CTI shall be the importer of record
and shall be responsible for paying all customs duties and any other
importation charges and fees on any Compound brought into the United
States, including without limitation any [**] that RPS must maintain at
[**] per Section 2.1(d) below, but CTI shall not take title to the
Compound until delivered to the carrier selected by CTI and/or its
designated agent at [**].


It is expressly understood by the Parties that [**] in the [**] hereunder
or [**] agreed between the Parties.


(d) [**]


During the Term of this Agreement, RPS agrees to [**], as requested by
CTI, an [**] RPS' then-current monthly production capacity of Compound at
the Manufacturing


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Site, or [**] agreed between the Parties ("[**]") to support RPS' [**]
hereunder; provided, however, that after the milling portion of the
Validations is complete, a [**] of the [**] in [**] Compound to be
processed by CTI or its designated agents into Drug Product in the United
States, as advised by CTI to RPS with appropriate advance notice, shall
[**] unless otherwise agreed in writing by the Parties (e.g. if [**] of
CTI's [**] are for the processing of Drug Products in the United States,
then [**] of the [**] will be [**]). Notwithstanding the foregoing, CTI
agrees that RPS will not be obligated to have such [**] until [**], and
that [**], RPS shall only be required to [**] a [**] of [**] as a [**].


CTI further agrees that RPS may supply Compound to CTI [**], including for
milling validation as described in section 2.1(a), but shall [**] to the
extent necessary to have the [**]; provided, however, the [**] by RPS [**]
will, if reasonably required by CTI, be [**] by RPS, at RPS' sole expense,
[**] to CTI to [**] that the [**]. Title and risk of loss to Compound [**]
shall at all times remain with RPS prior to the delivery to CTI of such
Compound by RPS. CTI shall purchase [**] from RPS at the termination of
this Agreement for any reason whatsoever, at RPS's cost of [**] unless
[**] from CTI to be filled by RPS during the termination periods set forth
in Sections 10.2, 10.5 and 10.6 below or as otherwise agreed between the
Parties in which case [**] by CTI at the price for [**] hereunder.


CTI shall be provided with all batch records related to the [**] and shall
be agreed between the Parties as contemplated in Section 2.2(b) below.


(e) Price Adjustments [**]


After the Initial Delivery Period, RPS shall be allowed to [**] the
Compound price each Calendar Year by [**]. By way of example only, if
[**], RPS will be entitled to [**] the Compound price [**]. RPS will
advise CTI in writing of any such [**] during the term of this Agreement,
and will adjust any invoices already submitted to CTI for Compound
produced during the new Calendar Year that do not reflect such [**] and
shall submit a [**] to the next succeeding Compound invoice following such
written notice to CTI. [**]


(f) Price Adjustment for [**]


In the event that RPS [**] the cost of the [**] Compound hereunder to a
price, delivered to the Manufacturing Site, to [**], whether through the
[**] or otherwise, then [**] percent ([**]%) of such [**] shall be [**]
through [**] the purchase price per kilogram for the Compound.


2.2 (a) All Compound shall be manufactured to meet the Specifications
indicated in Annex 1. Any reasonable changes in Annexes 1, 2, 4, 5, 6, 9
and/or 10 provided by CTI, or required due to new or changed governmental
laws rules or regulations that come into force during the term hereof,
shall be adopted and the relevant Annex shall be amended by a signed
written amendment to this Agreement to reflect the change, provided that
CTI shall reimburse RPS, on terms designated by RPS, for any and all
increased costs and expenses that RPS incurs to produce Compound in
compliance with such changes. In the event that RPS wishes, in its
reasonable discretion, to amend Annexes 1, 2, 4, 5, 6, 9 and/or 10, RPS
shall provide such proposed amendment to CTI and the terms of such changes
will be evidenced in a signed, written amendment to this Agreement
negotiated between CTI and RPS and the costs and expenses of producing
Compound in compliance with such changes shall be for RPS account. All Raw
Materials and intermediates necessary for the manufacturing by RPS of the
Compound at the Manufacturing Site will be supplied by


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RPS without additional charge to CTI. A list of critical Raw Materials
necessary for the manufacture of the Compound by RPS is set forth at Annex
2 hereto.


(b) Batch records, specifications for Raw Materials and intermediates to
be used in the manufacture by RPS of the Compound and the analytical test
methods for same will be developed by RPS in consultation with CTI during
the Phase 1 stage of this Agreement, and shall be reduced to writing and
attached hereto at Annex 4. [**]. All batch record forms, specifications
for Raw Materials and intermediates to be used in the manufacture by RPS
of the Compound and the analytical test methods for same must be approved
in writing by CTI prior to use by RPS, which approval will not be
unreasonably withheld or delayed. Any material changes in the batch
records, specifications for Raw Materials and intermediates to be used in
the manufacture by RPS of the Compound and the analytical test methods for
same or equipment specifically used for the Compound by RPS at the
Manufacturing Site will require prior written approval by CTI as per the
Quality Agreement attached hereto at Annex 9. RPS will provide a
Certificate of Analysis and a Certificate of Compliance with cGMP in the
forms shown at Annex 5 attached hereto and executed batch record(s) in the
then agreed form with each shipment of the Compound hereunder.


(c) RPS shall follow the Procedures for Release of Compound attached at
Annex 6 hereto prior to delivery of any Compound to CTI. The procedures to
be followed upon the occurrence of an Out of Specification ("OOS") event
are contained in the standard operating procedures ("SOPs") for the
Manufacturing Site. Current copies of such SOPs will be provided by RPS to
CTI and shall be reviewed by CTI and shall be subject to CTI's approval
before implementation in relation to this Agreement, which approval will
not be unreasonably withheld or delayed. No new SOP shall be adopted by
RPS in relation to this Agreement without the express written approval of
CTI, which approval will not be unreasonably withheld or delayed. RPS will
promptly provide CTI with any changes to such SOPs that RPS desires to
make in relation to this Agreement. Such changes shall be reviewed by CTI
and shall be subject to CTI's approval before implementation with respect
to this Agreement, which approval will not be unreasonably withheld or
delayed. These procedures contain specific timelines for investigation of
OOS events. Procedures to be followed for a batch failure due to
circumstances other than OOS events shall also be contained in the SOPs
for the Manufacturing Site. As outlined in the Quality A ...