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EXHIBIT 10.102
[THE OMITTED PORTIONS INDICATED BY AN
ASTERISK HAVE BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934.]
SUPPLY AGREEMENT
This Supply Agreement (this "AGREEMENT") is entered into this
15th
day of July, 2004 between Medicis
Aesthetics Holdings Inc., a corporation
organized under the laws of the State of
Delaware ("MEDICIS"), and a
wholly-owned subsidiary of Medicis
Pharmaceutical Corporation, a corporation
organized under the laws of the State of
Delaware ("MEDICIS PHARMACEUTICAL"),
and Q-Med AB, a company organized under the
laws of the Kingdom of Sweden with
corporate registration number 556258-6882
("Q-MED").
RECITALS
WHEREAS, Medicis has been granted, pursuant to the License
Agreement
(as defined herein), a license under the
Licensed Rights (as defined herein)
without a right to manufacture or have
manufactured, the Licensed Products in
the Territory (as defined herein);
WHEREAS, in connection with entering into such License
Agreement,
Q-Med has agreed to supply Medicis and its
Affiliates (as defined herein) with
the Licensed Products and Medicis has the
right to sublicense immediately to
Medicis' Permitted Transferees (as defined
in the License Agreement) its rights
under the Licensed Rights pursuant to the
License Agreement; and
WHEREAS, Q-Med and Medicis desire to define their respective
rights
and obligations with regard to the supply
of the Licensed Products in this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the
sufficiency
and receipt of which are hereby
acknowledged, the Parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or as
referenced below:
"ACTION" shall mean any action, claim, suit, litigation,
arbitration, investigation, notification,
audit or other proceeding brought in
law or at equity by a Governmental
Authority or other Person.
"ACTUAL ASP" shall have the meaning given to such term in
Section
4.1(b).
"ADVERTISING" shall mean printed or descriptive matter not
classified by the FDA as labeling (e.g.,
promotional material airing on
television and radio or appearing in
journals, magazines and newspapers).
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"ADVERTISING IN CANADA" shall mean printed or descriptive matter
not
classified by the TPD as labeling (e.g.,
promotional material airing on
television and radio or appearing in
journals, magazines and newspapers).
"AESTHETIC ENHANCEMENT" shall mean the alteration of the visual
appearance, visual form, visual size, or
visual shape of the naked human body or
any of its components; provided, that
Aesthetic Enhancement shall not be deemed
to include modification of the functions,
restoration of the functions,
adjustment of the functions or correction
of the functions of the human body or
any of its component parts.
"AFFILIATE" of a Person shall mean, with respect to any Person,
any
other Person that directly or indirectly,
through one or more intermediaries,
controls, is controlled by, or is under
common control with, such Person. As
used in this definition, the term "CONTROL"
means the possession, directly or
indirectly, of the power to direct or cause
the direction of the management and
policies of a Person, whether through
ownership of voting securities, by
contract, or otherwise.
"AGREEMENT" shall mean this Agreement, as the same may be amended
or
supplemented from time to time in
accordance with the terms hereof.
"AMENDED MEDICAL DEVICE LICENSE" shall mean a license issued by
the
TPD approving an Amended Medical Device
License Application and allowing
Commercial Distribution of a Licensed
Product in Canada.
"AMENDED MEDICAL DEVICE LICENSE APPLICATION" shall mean an
application amending an approved Medical
Device License and requesting TPD's
approval to Commercially Distribute a
Licensed Product reflecting any change or
supplement to the Medical Device License
which is required or permitted to be
made pursuant to Canada's FDA and/or
regulations made thereunder or other TPD
policies or guidelines, including all
information submitted with or incorporated
by reference therein.
"AMENDED MEDICAL DEVICE LICENSE APPROVAL" shall mean TPD's
approval
of an Amended Medical Device License.
"AVERAGE SELLING PRICE" shall mean in U.S. dollars the Net
Revenues
for a given period divided by the number of
units sold of a Licensed Product for
such given period.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday
or
a day on which banks in Sweden or New York
are authorized or obligated by Law or
executive order to remain closed.
"CANADA'S FDA" shall mean Canada's Food and Drugs Act, R.S.C.
1985,
c. F-27, as amended.
"CHANGE IN CONTROL" shall mean (a) the disposition of all or
substantially all of the outstanding
shares, assets or business of a Party or
Medicis Pharmaceutical on a consolidated
basis; or (b) any transaction or event
(or series of transactions or events) as a
result of which any Person (other
than an Affiliate of such Party or Medicis
Pharmaceutical), acting singly or as
a
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part of a "partnership, limited
partnership, syndicate or group" (within the
meaning of Section 13(d)(3) of the United
States Securities Exchange Act of
1934, as amended): (i) acquires (by
purchase, merger, consolidation or
otherwise) or for the first time controls
or is able to vote (directly or
through nominees, beneficial ownership,
proxy or contract) fifty percent (50%)
or more of the aggregate of all outstanding
equity securities of a Party or
Medicis Pharmaceutical; or (ii) acquires
(by purchase, merger, consolidation or
otherwise) equity securities of a Party or
Medicis Pharmaceutical with the right
to or for the first time is otherwise able
to, nominate or designate (directly
or through nominees, beneficial ownership,
proxy or contract) at least fifty
percent (50%) of the nominees to the board
of directors of such Party or Medicis
Pharmaceutical, in each of (a) or (b), in
the event that Q-Med, Medicis or
Medicis Pharmaceutical, as the case may be,
was not a party to the applicable
transaction and/or such transaction was not
approved by the Board of Directors
of Q-Med, Medicis or Medicis
Pharmaceutical, as the case may be.
"CLOSING" shall have the meaning set forth in the License
Agreement.
"CLOSING DATE" shall mean the date of the Closing of the
transactions contemplated by the License
Agreement.
"COMMERCIAL DISTRIBUTION" shall mean a distribution in
accordance
with the terms and conditions of the
Transaction Agreements for all purposes
other than Investigational
Distribution.
"CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality
Undertaking, dated as of March 29, 2004
between Q-Med and Medicis
Pharmaceutical, as the same may be amended
from time to time in accordance with
its terms, which shall supercede and
replace in its entirety any and all
confidentiality agreements or arrangements
entered into prior to the date hereof
by the Parties or their respective
officers, directors, employees, agents,
consultants or representatives with respect
to the transactions contemplated by
the Transaction Agreements other than the
Mutual Disclosure and Confidentiality
Agreement, dated September 15, 1999,
between Medicis Pharmaceutical and Q-Med,
which shall continue in full force and
effect in accordance with its terms.
"COST OF PRODUCTION" shall mean the production cost for
producing
one unit, the calculation done once a year,
calculations based on an Activity
Based Costing (ABC) model, using the
information in the budget of Q-Med. Such
amount excludes the allocation of
administrative costs not related to the
production. Related production variances
will be determined by Q-Med subsequent
to the end of the calendar year and will be
billed or credited to future orders
placed by Medicis.
"DIRECT COSTS" shall mean Cost of Production and Overhead plus
any
additional direct costs applicable to
providing Licensed Products for
Investigational Distribution.
"FCA" shall mean FCA as defined in the International Chamber of
Commerce Incoterms 2000.
"FDA" shall mean the United States Food and Drug
Administration.
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"FDCA" shall mean the United States Federal Food, Drug, and
Cosmetic
Act of 1938, as amended (21 U.S.C. Sections
301 et. seq.).
"FIELD" shall mean Aesthetic Enhancement.
"FIRM ORDER" shall mean a written irrevocable firm purchase
order
for the Licensed Products, which order
shall set forth (i) the Licensed Product
requirement on a monthly basis for a three
(3) month period and (ii) shall
include a delivery schedule specifying the
monthly delivery date for each
Licensed Product ordered and the location
to which shipment of such Licensed
Product is to be delivered by Q-Med.
"GOVERNMENTAL AUTHORITY" shall mean any supranational,
national,
federal, state, provincial or local
judicial, legislative, executive or
regulatory authority.
"GUARANTEE" shall mean the guarantee dated as of the Closing
Date
from Medicis Pharmaceutical to Q-Med.
"IDE APPLICATION" shall mean an investigational device
exemption
application requesting FDA or TPD approval
to distribute an investigational
device for clinical study, pursuant to the
requirements of 21 C.F.R. Part 812
and Part 3 of the Canadian Medical Device
Regulations SOR/98-282 as amended.
"IDE APPROVAL" shall mean FDA's approval of an IDE Application or
an
IDE deemed approved pursuant to the
requirements set forth in 21 C.F.R. Part 812
permitting distribution of an
investigational product.
"IDE CANADA APPROVAL" shall mean TPD permission to distribute
an
investigational device for clinical study,
pursuant to the provisions of Part 3
of the Canadian Medical Device Regulations
SOR/98-282, as amended.
"IDE SUPPLEMENT" shall mean an IDE supplement application
requesting
approval for changes in the investigational
plan, clinical protocol, or
developmental or manufacturing changes
pursuant to the requirements of 21 C.F.R.
Part 812.
"IDE SUPPLEMENT APPROVAL" shall mean FDA's approval of an IDE
Supplement.
"IMPROVEMENTS" shall mean any replacements, improvements or
modifications, including without
limitation, new indications or new uses, in
each case in the Field.
"INVESTIGATIONAL DISTRIBUTION" shall mean distribution in
accordance
with the terms and conditions of the
Transaction Agreements pursuant to the
requirements of 21 C.F.R. Part 812 in the
United States and Part 3 of the
Canadian Medical Device Regulations
SOR/98-282 in Canada.
"LABELING" shall mean all labels and other written, printed or
graphic material upon any Licensed Product
or any of its containers or wrappers
accompanying such Licensed Product (e.g.,
instructions sheets, package inserts).
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"LAUNCH" of a Licensed Product shall mean the first offer for
sale
of the Licensed Product to the trade.
"LAWS" shall
mean all applicable laws, statutes, rules, regulations,
ordinances and other pronouncements of law
of any Governmental Authority.
"LICENSE AGREEMENT" shall mean the Intellectual Property
License
Agreement, dated as of the date hereof,
between Medicis and Q-Med.
"LICENSED KNOW-HOW" shall have the meaning given to such term in
the
License Agreement.
* * *
"LICENSED REGULATORY DATA" shall have the meaning given to such
term
in the License Agreement.
"LICENSED RIGHTS" shall have the meaning set forth in the
License
Agreement.
"LICENSEE REGULATORY MATERIALS" shall have the meaning given to
such
term in the License Agreement.
"LOSS" or "LOSSES" shall mean any and all damages, fines, fees,
penalties, deficiencies, losses and
expenses, including reasonable legal fees
and expenses, but excluding loss of profits
or other special, punitive or
consequential damages (except as set forth
in Sections 9.1(c) and 9.2(b)).
"MACROLANE SIDE LETTER" shall mean that certain letter from
Medicis
to Q-Med, dated as of the Closing Date.
"MANUFACTURE", "MANUFACTURED" or "MANUFACTURING" shall mean
manufacture, process, test, assemble, fill,
label and package and shall also
include the performance of any activity
that would render an entity a
"manufacturer" under 21 C.F.R. Sections
803.3(o) and 820.3(o).
"MANUFACTURING DIRECT COSTS" shall mean Cost of Production,
Overhead
and Profit.
"MEDICAL DEVICE DIRECTIVE" shall mean the European Council
Directive
concerning Medical Devices, 93/42/EEC (OJ
No L 169/1, July 12, 1993), as
amended.
"MEDICAL DEVICE LICENSE" shall mean a medical device license
issued
by the TPD and approving the Commercial
Distribution of a Licensed Product.
"MEDICAL DEVICE LICENSE APPLICATION" shall mean a medical
device
license application requesting TPD's
approval to commercially distribute a
Licensed Product, including all information
submitted with or incorporated by
reference therein.
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"MEDICAL DEVICE LICENSE APPROVAL" shall mean TPD's approval of
a
Medical Device License Application.
"MILESTONE PAYMENTS" shall have the meaning given to such term
in
the License Agreement.
"NET REVENUES" shall mean, with respect to any Licensed Product,
the
gross sales of such Licensed Product
invoiced by Medicis and/or its Affiliates
to Medicis' and/or its Affiliates'
customers who are not Affiliates, less, to
the extent actually paid or accrued net of
payments by Medicis and/or its
Affiliates (as applicable), (a) normal and
customary credits, allowances,
discounts and rebates to, and chargebacks
from the account of, such customers
for spoiled, damaged, out-dated and
returned Licensed Product; (b) normal and
customary freight and insurance costs
incurred in transporting such Licensed
Product to and from such customers; (c)
normal and customary cash, quantity and
trade discounts, rebates and other price
reductions or special programs for such
Licensed Product; and (d) excise, sales,
use, value-added and other direct taxes
(but not income taxes of any kind) imposed
upon the sale of such Licensed
Product to such customers. For avoidance of
doubt, Medicis shall calculate Net
Revenues for purposes of this Agreement
according to U.S. generally accepted
accounting principles applied on a
consistent basis and in a manner consistent
with Medicis Pharmaceutical's calculations
of consolidated net revenues and
consistent with the numbers used to
consolidate net revenues reported in Medicis
Pharmaceutical's periodic reports with the
United States Securities and Exchange
Commission.
"NOTIFIED BODY" shall mean the certification organization
designated
by the relevant national authority of any
member of the European Union,
authorized to conduct conformity
assessments in accordance with the procedures
listed in the Medical Device Directive.
"ONE TIME PAYMENTS" shall have the meaning given to such term in
the
License Agreement.
"ORDERED PRODUCTS" shall mean the Licensed Products ordered
pursuant
to a Firm Order.
"OVERHEAD" shall mean as to the Licensed Product in the
Territory
allocated, yearly sum, including the costs
for maintenance of the quality
system, interest if any, related solely to
loans on production facilities,
process development and production
development, such yearly sum based on the
budget of Q-Med, and allocated to the
number of units of Licensed Products.
"PARTY" shall mean Q-Med or Medicis and, when used in the
plural,
means both Q-Med and Medicis or their
respective Permitted Transferees or Third
Party transferees, in each case upon the
consummation of a Transfer in
accordance with the terms and conditions
herein.
"PERSON" shall mean any individual, firm, corporation,
partnership,
limited liability company, trust, joint
venture or other entity or organization.
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"PMA APPLICATION" shall mean a premarket approval application
under
section 515(c) of the FDCA requesting FDA's
approval to commercially sell and
distribute a Licensed Product in the United
States and its territories and
possessions, including all information
submitted with or incorporated by
reference therein.
"PMA APPROVAL" shall mean approval from the FDA of a PMA
Application.
"PMA SUPPLEMENT" shall mean a supplemental application to an
approved PMA Application requesting FDA's
approval of a Licensed Product or
relating to the Manufacture or Labeling
thereof, including all information
submitted with or incorporated by reference
therein.
"PMA SUPPLEMENT APPROVAL" shall mean FDA's approval of a PMA
Supplement allowing Commercial Distribution
of a Licensed Product.
"PPI" shall mean the Producer Price Index as published by the
Statistical Central Bureau of Sweden.
"PREVIOUS LICENSE LETTER AGREEMENT" shall mean that certain
letter
from Medicis Pharmaceutical to Q-Med, dated
as of the Closing Date, relating to
the Previous License Agreement (as such
term is defined in the License
Agreement).
"PRIOR SUPPLY AGREEMENT" shall mean that certain Supply
Agreement
dated March 7, 2003, between Medicis
Pharmaceutical and Q-Med, as the same may
be amended from time to time in accordance
with its terms.
"PRODUCT CLAIM" shall mean an Action by a Third Party in respect
of
potential or actual injury, harm or death
whether based in strict tort
liability, strict products liability,
negligence, misrepresentation, or breach
of express or implied warranty, allegedly
due and owing as a result of the
manufacture, use, application or defective
condition of any of the Licensed
Products or the Labeling of any of the
Licensed Products.
"PROFIT" shall mean an amount per unit of a Licensed Product
equal
to the amount of Cost of Production per
unit.
"PROMOTIONAL LABELING" shall mean a subset of Labeling that is
intended as marketing material that is
intended to promote Licensed Products
(e.g., customer presentations, detailing
pieces, press kits, brochures, trade
show presentations, flyers, booklets,
mailing pieces, and "Dear Doctor"
letters); provided, however, that excluded
from this definition are written
materials or communications intended for a
non-customer audience (e.g., United
States Securities Exchange Commission
filings and press releases for the
financial community), price sheets and
reminder labeling that sets forth the
product name but not the indications or
other use information as defined in 21
C.F.R. Section 801.109(d).
"QUALITY SYSTEM REGULATION" or "QSR" shall mean the quality
system
requirements applicable to manufacturers of
finished medical devices
commercially distributed in the United
States and its territories and
possessions, codified at 21 C.F.R. Part
820.
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"QUALITY SYSTEM REGULATION CANADA" or "QSRC" shall mean the
quality
system requirements applicable to
manufacturers of medical devices commercially
distributed in Canada, as set forth in
Canada's Medical Devices Regulations,
SOR/98-282, as amended.
"REGULATORY APPROVAL" shall mean a PMA Approval, PMA Supplement
Approval, IDE Approval, IDE Canada
Approval, Medical Device License Approval
and/or Amended Medical Device License
Approval.
"SEK" shall mean Swedish Krona, the currency currently used in
Sweden or the Euro if the Euro is adopted
as the official currency used in
Sweden at the official exchange rate.
"SPECIFICATIONS" shall mean the specifications for each of the
Licensed Products as set forth on Schedule
A; provided that all amendments
thereof shall be agreed to in a writing
signed by both of the Parties.
"STEERING COMMITTEE" shall mean the Steering Committee already
established pursuant to the Prior Supply
Agreement. It shall have all the same
membership, voting, delegation, and
deadlock resolution procedures and
requirements, except that it shall not use
the "most interested party" procedure
in connection with this Agreement. For
convenience, a copy of these provisions
are attached in Schedule B to this
Agreement. In the event of a conflict between
the provisions of Article VI hereof and
Schedule B, Article VI shall control.
"SUBQ" shall mean the first Licensed Product.
"TERM" shall have the meaning set forth in Section 8.1.
"TERRITORY" shall mean the United States, including its
territories
and possessions, and Canada.
"TERRITORY SPECIFIC MATERIALS" shall have the meaning given to
such
term in the License Agreement.
"THIRD PARTY" shall mean any Person who or which is neither a
Party
nor an Affiliate of a Party.
"TPD" shall mean Canada's Therapeutic Products Directorate.
"TRANSACTION AGREEMENTS" shall mean this Agreement, the License
Agreement, the Macrolane Side Letter, the
Previous License Letter Agreement, the
Guarantee and the Confidentiality
Agreement.
"TRANSFER" shall mean any Change in Control or Volitional Change
in
Control of a Party or Medicis
Pharmaceutical or a transfer or assignment by a
Party of its rights and obligations under
this Agreement.
"VOLITIONAL CHANGE IN CONTROL" shall mean (a) the disposition of
all
or substantially all of the outstanding
shares, assets or business of a Party or
Medicis Pharmaceutical on a consolidated
basis; or (b) any transaction or event
(or series of transactions
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or events) as a result of which any Person
(other than an Affiliate of such
Party or Medicis Pharmaceutical), acting
singly or as a part of a "partnership,
limited partnership, syndicate or group"
(within the meaning of Section 13(d)(3)
of the United States Securities Exchange
Act of 1934, as amended): (i) acquires
(by purchase, merger, consolidation or
otherwise) or for the first time controls
or is able to vote (directly or through
nominees, beneficial ownership, proxy or
contract) fifty percent (50%) or more of
the aggregate of all outstanding equity
securities of a Party or Medicis
Pharmaceutical; or (ii) acquires (by purchase,
merger, consolidation or otherwise) equity
securities of a Party or Medicis
Pharmaceutical with the right to or for the
first time is otherwise able to,
nominate or designate (directly or through
nominees, beneficial ownership, proxy
or contract) at least fifty percent (50%)
of the nominees to the board of
directors of such Party or Medicis
Pharmaceutical, in each of (a) or (b),in the
event that Q-Med, Medicis or Medicis
Pharmaceutical, as the case may be, was a
party to the applicable transaction or of
which the Board of Directors of Q-Med,
Medicis or Medicis Pharmaceutical, as the
case may be, shall have approved.
1.2 Other Definitional Provisions.
(a) The words "HEREOF", "HEREIN", "HERETO" and "HEREUNDER" and
words
of similar import, when used in this
Agreement, shall refer to this Agreement as
a whole and not to any particular provision
of this Agreement unless otherwise
indicated.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice
versa.
(c) The term "INCLUDING" shall mean "INCLUDING, WITHOUT
LIMITATION".
(d) When a reference is made in this Agreement to an Article, a
Section or Schedule, such reference shall
be to an Article of, a Section of or a
Schedule to, this Agreement unless
otherwise indicated.
ARTICLE II
SUPPLY OF LICENSED PRODUCTS; FORECASTS AND PURCHASE ORDERS
2.1 Licensed Products to be Supplied. Medicis shall, and shall
cause
its Affiliates to, purchase from Q-Med or
any manufacturer designated by Q-Med
as permitted by the terms of this
Agreement, and Q-Med shall sell, and shall
cause to have sold, to Medicis and its
Affiliates, except as otherwise provided
herein, all of Medicis' and its Affiliates'
requirements for the Licensed
Products during the Term as provided herein
for marketing, use, import, offer
for sale, commercializing or otherwise
disposing of and sale for Commercial
Distribution and Investigational
Distribution in the Territory in accordance
with the terms of the Transaction
Agreements. Medicis shall, and agrees to cause
its Affiliates to, solely and exclusively
purchase the Licensed Products from
Q-Med or any manufacturer designated by
Q-Med, and neither Medicis nor any of
its Affiliates shall have the right to
purchase any Licensed Product or any
generic version thereof from, directly or
indirectly, any other Person.
2.2 Forecasts. (a) With respect to all Licensed Products to be
supplied for Commercial Distribution and
Investigational Distribution in the
Territory, including any
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portion thereof, Medicis shall provide
Q-Med with a forecast of Medicis' and its
Affiliate's estimated monthly requirements
of the applicable Licensed Products
(with Licensed Products required for
Commercial Distribution and Licensed
Products required for Investigational
Distribution being reported as separate
line items) for the twelve (12) month
period commencing on the date hereof in
substantially the form attached hereto as
Schedule C, which forecast shall be
delivered by Medicis to Q-Med within
fourteen (14) calendar days of the date
hereof. Medicis shall update such forecast
on a monthly basis until such time as
Medicis is providing forecasts and placing
Firm Orders pursuant to Section
2.2(b). Such updates shall be delivered to
Q-Med on the fifth (5th) Business Day
prior to the commencement of the subsequent
month. In addition, until such time
as Medicis is providing forecasts and
placing Firm Orders pursuant to Section
2.2(b), Medicis may provide Q-Med with
three (3) separate initial Firm Orders
for Licensed Products (one for
Investigational Distribution in the Territory,
one for Commercial Distribution in Canada
and one for Commercial Distribution in
the United States) at any time; provided
that (i) Q-Med shall not be obligated
to supply Licensed Products in accordance
with each such initial Firm Order
prior to the later of ten (10) weeks after
(A) the date on which Medicis
provides Q-Med with such initial Firm Order
or (B) the date that Medicis
provides the approved Labeling with respect
to such initial Firm Order,
provided, that Q-Med shall use commercially
reasonable efforts to supply such
Licensed Products in less than ten (10)
weeks; (ii) Q-Med shall not be obligated
to supply Licensed Products in accordance
with each such initial Firm Order
unless Medicis has made all applicable One
Time Payments and Milestone Payments
then due under the terms of the License
Agreement, including Section 8.5
thereof; (iii) if Medicis, by placing an
initial Firm Order prior to receipt of
the applicable Regulatory Approval for such
Licensed Products, requests that
Q-Med commence the Manufacture of any
Licensed Products prior to the receipt of
the applicable Regulatory Approval for such
Licensed Products, Medicis shall
bear any risks, including without
limitation additional direct (which shall be
deemed to include labor) costs and
expenses, of any changes required, including,
without limitation, any changes in
Labeling, to comply with such Regulatory
Approvals subsequently received and in such
event, Q-Med shall then commence
such Manufacture as so requested; (iv) with
respect to SubQ, Q-Med shall not be
obligated to supply, in excess of * * *
pursuant to each such initial Firm
Order; and (v) with respect to all other
Licensed Products, Q-Med shall advise
Medicis of the maximum number of syringes
that it may be obligated to deliver
pursuant to the applicable initial Firm
Order within five (5) Business Days of
the date of such Initial Firm Order.
(b) Except as provided in Section 2.2(a), on or before the
fifth
(5th) Business Day prior to the first day
of each calendar month, Medicis shall
give to Q-Med a forecast of Medicis' and
its Affiliates' estimated monthly
requirements of the Licensed Products for
the twelve (12) month period
commencing with the next succeeding
calendar month (for example, a forecast
delivered on May 25 shall estimate the
monthly requirements of Licensed Products
for the twelve (12) month period commencing
July 1). The twelve (12) month
forecast delivered to Q-Med pursuant to the
preceding sentence shall represent
Medicis' reasonable estimates of the
quantity of the Licensed Products that
Medicis and its Affiliates will require
during such twelve (12) month period to
which such forecast applies, and the
forecast of its monthly requirements of the
Licensed Products during the first three
(3) months of such twelve (12) month
period shall be reflected in a Firm Order
accompanying such forecast.
(c) Notwithstanding the foregoing, any Firm Order for any
Licensed
Product placed for a one (1) month period
in accordance with Section 2.2(b)
shall be between 80% and
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120% of the most recent forecast estimated
quantity for such Licensed Product
for such one (1) month period provided by
Medicis to Q-Med in accordance with
this Section 2.2 prior to the Firm Order
being placed by Medicis. In the event
that Medicis shall submit a Firm Order that
is below 80% of the applicable
forecast estimated quantity, Q-Med shall
deliver to Medicis and Medicis shall be
required to purchase an amount equal to 80%
of such applicable forecast
estimated quantity. To the extent that the
Firm Order is for more than 120% of
the most recent forecast estimated quantity
for a Licensed Product, Q-Med shall
not be obligated with respect to the excess
over 120% to supply a greater
quantity than it is able to supply using
its commercially reasonable efforts.
(d) In addition to the foregoing forecast requirements,
commencing
on the date hereof, on or before the fifth
(5th) Business Day prior to the first
day of each calendar quarter, Medicis shall
give to Q-Med a forecast of Medicis'
and its Affiliate's estimated quarterly
requirements of the Licensed Products
for an additional thirty-six (36) month
period beyond the twelve (12) month
periods in Section 2.2(a) and (b). The
thirty-six (36) month forecast delivered
to Q-Med pursuant to this clause (d) shall
represent Medicis' reasonable
estimates of the quantity of the Licensed
Products that Medicis and its
Affiliates will require during such period
to which such forecast applies,
provided that such forecast shall be for
planning purposes of Q-Med only and
shall not constitute a Firm Order.
(e) All forecasts to be provided or delivered by Medicis to
Q-Med
pursuant to this Section 2.2 shall be in
writing, which may be electronic.
2.3 Capacity. (a) Q-Med shall use its commercially reasonable
efforts to obtain and maintain capacity or
inventory sufficient to meet Medicis'
requirements as indicated in the combined
forty-eight (48) month forecast
provided to Q-Med in accordance with
Section 2.2(b) and (d). If at any time
Q-Med reasonably believes that Q-Med may
not have sufficient capacity or
inventory to fulfill the requirements so
forecasted by Medicis (a "CAPACITY
SHORTAGE"), whether due to insufficient
manufacturing capacity or otherwise,
then Q-Med shall request written
confirmation from Medicis' Chief Executive
Officer of Medicis' forecasted requirements
for such forty-eight (48) month
period that give rise to such possible
Capacity Shortage (the "CERTIFIED MEDICIS
REQUIREMENTS").
(b) (i) If Q-Med reasonably determines after further
consideration
in light
of such Certified Medicis Requirements that there will be a
Capacity
Shortage within the first twenty-four (24) month period covered
by such
Certified Medicis Requirements, Q-Med shall provide Medicis
with
notice
thereof within five (5) Business Days of receipt of the
Certified
Medicis
Requirements. If Q-Med has a plan of action with respect to
such
Capacity
Shortage when it delivers such notice, Q-Med shall provide
Medicis
with a written outline of such plan and its reasonably
supported
conclusions relating thereto. Q-Med may take prompt action with
respect to
such plan
or, if Q-Med desires, Q-Med may promptly convene a meeting
between
Medicis and Q-Med to discuss such plan. If Q-Med has not
developed
a plan of action
at the time of its notice to Medicis of the Capacity
Shortage,
Q-Med shall promptly convene a meeting between Medicis and
Q-Med
to develop
in mutual consultation a course of action with respect to such
Capacity
Shortage, such course of action to be reasonable. As soon as
practicable after such meeting, Q-Med shall take commercially
reasonable
steps to
carry out such mutually
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<PAGE>
determined
plan of action. Q-Med shall be entitled to call a meeting at
any time
to discuss the amendment or revision of such mutually agreed
plan
of action.
If Q-Med has not taken reasonably sufficient steps towards
implementing the plan within one (1) month of the meeting, then
Q-Med
shall
promptly furnish to an alternate manufacturer identified by
Medicis
with
capacity sufficient to fulfill that portion of the Certified
Medicis
Requirements that Q-Med is unable to fulfill or, if the Certified
Medicis
Requirements are no longer applicable, the then current forecast
provided
under
Section 2.2(b), all information and assistance necessary to
qualify
and
operate such alternate manufacturer so proposed by Medicis, the
selection
of which shall be subject to Q-Med's prior consent, which
consent
shall not be unreasonably withheld or delayed. Notwithstanding
the
foregoing,
promptly upon notice by Q-Med that such Capacity Shortage has
been
remedied such that Q-Med has capacity sufficient to meet that
portion
of the
Certified Medicis Requirements that Q-Med was unable to fulfill
or
if the
Certified Medicis Requirements are no longer applicable, the
then
current
forecast provided under Section 2.2(b), Medicis shall resume,
as
promptly
as is commercially reasonable, the use of Q-Med as the
exclusive
supplier
of Medicis and its Affiliates.
(ii) If Q-Med determines after further consideration in light
of
such
Certified Medicis Requirements that there will be a Capacity
Shortage
between
the twenty-fifth (25th) and thirty-sixth (36th) months of the
period
covered by such Certified Medicis Requirements, Q-Med shall
provide
Medicis
with notice thereof within ten (10) Business Days of its
receipt
of the
Certified Medicis Requirements and shall further consider such
Capacity
Shortage and shall develop a plan of action with respect
thereto.
If, within
three (3) months after delivery of such Certified Medicis
Requirements, Q-Med believes that there is no Capacity Shortage,
Q-Med
shall so
inform Medicis in writing. If, within three (3) months after
delivery
of such Certified Medicis Requirements, Q-Med believes that
there
is a
Capacity Shortage and Q-Med has developed a plan of action with
respect
thereto, Q-Med shall inform Medicis in writing of such plan of
action.
If, within three (3) months after delivery of such Certified
Medicis
Requirements, Q-Med has not developed a plan of action and/or
taken
action with respect to such Capacity Shortage, Q-Med shall convene
a
meeting
between representatives of Q-Med and Medicis to consider the
Capacity
Shortage and to develop in mutual consultation an appropriate
plan of
action with respect thereto, such course of action to be
reasonable. As soon as practicable after Q-Med and Medicis have
developed
a plan of
action with respect to the Capacity Shortage, Q-Med shall take
commercially reasonable steps to carry out such mutually determined
plan
of action.
Q-Med shall be entitled to call a meeting at any time to
discuss
the amendment or revision of such mutually agreed plan of
action.
If Q-Med
has not taken reasonably sufficient steps in accordance with
such
mutually
determined plan of action, Medicis shall deliver a written
notice
thereof.
Within ten (10) Business Days of its receipt of such notice,
Q-Med
shall provide reasonably sufficient evidence demonstrating its
reasonable
compliance with such plan. If Q-Med does not provide reasonably
sufficient
evidence within such period, then Q-Med shall promptly furnish
to an
alternate manufacturer identified by Medicis with capacity
sufficient to
fulfill that portion of the Certified Medicis Requirements
that Q-Med
is unable to fulfill or, if the Certified Medicis Requirements
are no
longer applicable, the then current forecast provided under
Section
2.2(b),
all information and assistance necessary to qualify and operate
such
alternate manufacturer so proposed by Medicis, the selection of
which
shall
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<PAGE>
be subject
to Q-Med's prior consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing,
promptly
upon
notice by Q-Med that such Capacity Shortage has been remedied
such
that Q-Med
has capacity sufficient to meet that portion of the Certified
Medicis
Requirements that Q-Med was unable to fulfill or, if the
Certified
Medicis
Requirements are no longer applicable, the then current
forecast
provided
under Section 2.2(b), Medicis shall resume, as promptly as is
commercially reasonable, the use of Q-Med as the exclusive supplier
of
Medicis
and its Affiliates.
(iii) If Q-Med determines after further consideration in light
of
such
Certified Medicis Requirements that there will be a Capacity
Shortage
after the
thirty-seventh (37th) month of the period covered by such
Certified
Medicis Requirements, Q-Med shall provide Medicis with notice
thereof
within ten (10) Business Days of its receipt of the Certified
Medicis
Requirements and shall further consider such Capacity Shortage
and
shall
develop a plan of action with respect thereto. If, within six
(6)
months
after delivery of such Certified Medicis Requirements, Q-Med
believes
that there is no Capacity Shortage, Q-Med shall so inform
Medicis
in
writing. If, within six (6) months after delivery of such
Certified
Medicis
Requirements, Q-Med believes that there is a Capacity Shortage
and
Q-Med has
developed a plan of action with respect thereto during such
period,
Q-Med shall inform Medicis in writing of such plan of action.
If,
within six
(6) months after delivery of such Certified Medicis
Requirements, Q-Med has not developed a plan of action and/or taken
action
with
respect to such Capacity Shortage, Q-Med shall convene a
meeting
between
representatives of Q-Med and Medicis to consider the Capacity
Shortage
and to develop in mutual consultation an appropriate plan of
action
with respect thereto, such course of action to be reasonable.
As
soon as
practicable after Q-Med and Medicis have developed a plan of
action
with respect to the Capacity Shortage, Q-Med shall take
commercially reasonable steps to carry out such mutually determined
plan
of action. Q-Med shall be
entitled to call a meeting at any time to
discuss
the amendment or revision of such mutually agreed plan of
action.
If Q-Med
has not taken reasonably sufficient steps in accordance with
such
mutually
determined plan of action, Medicis shall deliver a written
notice
thereof.
Within ten (10) Business Days of its receipt of such notice,
Q-Med
shall provide reasonably sufficient evidence demonstrating its
reasonable
compliance with such plan. If Q-Med does not provide reasonably
sufficient
evidence within such period, then Q-Med shall promptly furnish
to an
alternate manufacturer identified by Medicis with capacity
sufficient
to fulfill that portion of the Certified Medicis Requirements
that Q-Med
is unable to fulfill or, if the Certified Medicis Requirements
are no
longer applicable, the then current forecast provided under
Section
2.2(b),
all information and assistance necessary to qualify and operate
such
alternate manufacturer so proposed by Medicis, the selection of
which
shall be
subject to Q-Med's prior consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing,
promptly
upon
notice by Q-Med that such Capacity Shortage has been remedied
such
that Q-Med
has capacity sufficient to meet that portion of the Certified
Medicis
Requirements that Q-Med was unable to fulfill or, if the
Certified
Medicis
Requirements are no longer applicable, the then current
forecast
provided
under Section 2.2(b), Medicis shall resume, as promptly as is
commercially reasonable, the use of Q-Med as the exclusive supplier
of
Medicis
and its Affiliates.
13
<PAGE>
(c) In addition to the requirements set forth in clauses (a) and
(b)
above, in the event of a Capacity Shortage,
Q-Med shall allocate to Medicis
capacity for each stock keeping unit
("SKU") of each Licensed Product based on
the forty-eight (48) month forecast
referenced in the first sentence of clause
(a) above based on a fraction, the
numerator of which shall be the Certified
Medicis Requirements for such SKU of
Licensed Product for the period in question
and the denominator of which shall be the
total forecasted requirements for
Q-Med's manufacturing facilities for all
SKUs of such Licensed Product for the
period in question.
(d) If Medicis receives a shipment of Licensed Products that
contains less than 90% of the monthly
requirement of Licensed Product to be
delivered pursuant to the applicable Firm
Order and Q-Med does not deliver such
missing Licensed Product within one (1)
month of Q-Med's receipt of a written
notice from Medicis of such shortage, then
Medicis shall be entitled to deliver
written notice to Q-Med of a Capacity
Shortage. Upon deliver of such notice of a
Capacity Shortage, Section 2.3(b)(i) shall
govern.
2.4 Acceptance of Firm Order. Q-Med shall accept all Firm
Orders
submitted in accordance with and on the
terms set forth in this Agreement. No
terms and conditions contained in any Firm
Order, acknowledgment, invoice, bill
of lading, acceptance or other preprinted
form issued by either Party shall be
effective to the extent they are
inconsistent with or modify the terms and
conditions contained herein.
2.5 Delivery. All Licensed Products sold pursuant to this
Agreement
shall be delivered to not more than ten
(10) distribution centers in the
Territory by the means designated by
Medicis and shall be delivered FCA Q-Med's
place of manufacture or such other
manufacturing facility as permitted under
this Agreement. For the avoidance of doubt,
Q-Med shall be responsible for
coordinating the transportation with the
carriers designated by Medicis for the
delivery of the Licensed Products and for
providing all export and import
documentation with respect to such Licensed
Products.
ARTICLE III
SUPPLY AND SERVICES CRITERIA
3.1 Certain Q-Med Obligations. All Licensed Products supplied
hereunder shall (i) be in finished form for
Commercial Distribution or (ii) be
in an appropriate form for Investigational
Distribution, and with respect to
each of sub-clauses (i) and (ii), shall be
Manufactured by Q-Med in conformity
with the terms and conditions of this
Agreement, the Specifications and the
applicable Regulatory Approval.
3.2 Shelf Life. (a) Unless otherwise agreed by the Parties in
writing and except as set forth in clause
(b) below, Q-Med shall deliver to
Medicis Ordered Products with a remaining
shelf life of not less than * * * from
the date of delivery to Medicis for
Licensed Products having a Regulatory
Approval for shelf life (a "REGULATORY
SHELF LIFE") equal to * * *; provided,
however, that in the event a Regulatory
Shelf Life of any Licensed Product is
obtained which is greater than * * *, Q-Med
shall deliver to Medicis Ordered
Products with a remaining shelf life not
less than * * *. For example, if a
Licensed Product has a Regulatory Shelf
Life of
14
<PAGE>
* * *, then Q-Med shall deliver Ordered
Products with a remaining shelf life of
not less than * * *.
(b) Unless otherwise agreed in writing by the Parties, for any
Licensed Product with a Regulatory Shelf
Life that is less than * * *, Q-Med
shall deliver to Medicis Ordered Products
with a minimum remaining shelf life
equal to the applicable * * *.
ARTICLE IV
CONSIDERATION
4.1 * * *. (a) * * *
(b) * * *
(c) The Parties agree that the SubQ Unit Price and each Other
Licensed Product Price for purposes of
investigational supplies thereof during
the Term shall be the Direct Costs
therefor.
4.2 Procedures for the Determination of A New SubQ Unit Price or
New
Other Licensed Product Price. (a) * * *
Fifteen (15) days following the date of
receipt of the Proposed Price Change
Notice, the Party delivering the Proposed
Price Change Notice shall permit an
independent certified public accounting firm
of nationally recognized standing, selected
by the Party receiving the Proposed
Price Change Notice and reasonably
acceptable to the other Party, at the expense
of the Party receiving the Proposed Price
Change Notice, to have access during
normal business hours to such of the
personnel and of the books and records of
Q-Med or Medicis, as the case may be, as
may be reasonably necessary to verify
the accuracy of the information described
in the Proposed Price Change Notice
and the compliance of the Proposed Price
Change Notice to the requirements of
this Agreement including the definition of
Manufacturing Direct Cost and the
other defined terms included therein. For
the avoidance of doubt the accounting
firm shall have at least five (5) Business
Days of such access. The accounting
firm shall disclose to Medicis or Q-Med, as
the case may be, only whether the
information described in the Proposed Price
Change Notice is accurate and the
specific details concerning discrepancies,
if any. Each Party shall treat all
financial information subject to review
under this Section 4.2 as Confidential
Supplier Information or Confidential
Medicis Information, as the case may be,
and shall cause its accounting firm to
retain all such financial information in
confidence. Thereafter, the Parties agree
to negotiate a new SubQ Unit Price or
new Other Licensed Product Price, as the
case may be, in accordance with Section
4.1 hereof, in good faith, such
negotiations to commence within thirty (30) days
after the receipt of the Proposed Price
Change Notice. If the Parties reach
agreement with respect to the applicable
pricing within sixty (60) days after
receipt of the Proposed Price Change
Notice, based on such agreement Medicis
shall receive a credit from or owe
additional amounts to Q-Med retroactive to
the date of receipt of the Proposed Price
Change Notice pursuant to this Section
4.2(a). * * *
(b) If the Parties are unable to reach agreement with respect to
the
applicable pricing pursuant to Section
4.2(a) within sixty (60) days after
receipt of the Proposed Price Change
Notice, an independent arbitrator mutually
appointed by the Parties and expert in
15
<PAGE>
marketing and sales in the Territory shall
be retained to determine the new SubQ
Unit Price or new Other Licensed Product
Price, as the case may be, which shall
be determined on the basis of the Parties'
Proposed Price Change Notice and
proposals submitted pursuant to this
Section 4.2(b). The Parties shall each
submit one (1) proposal to the arbitrator
who shall be required to select one
(1) of the submitted proposals, and the
arbitrator shall not be entitled to
compromise between such proposals. The
arbitrator's determination shall be made
within thirty (30) days of submission and
shall be conclusive and binding upon
the Parties. With its proposal, each Party
shall provide copies of those
portions of its books and records, any work
papers, supporting documentation and
any other documentation supporting its
proposal pursuant to this Section 4.2, as
it may determine; provided that such
information and documentation shall be
provided to the other Party, except that
the information and documentation
provided to the accounting firm pursuant to
Section 4.2(a) hereof shall be
provided to the arbitrator, but shall not
be provided to the other Party. The
arbitrator shall maintain the
confidentiality of any information or
documentation it may receive pursuant to
this Section 4.2(b) and shall not
disclose to the other Party the information
and documentation provided to the
accounting firm pursuant to Section 4.2(a)
hereof. All fees and expenses of the
arbitrator shall be paid by the Party whose
proposal is not selected. Based on
the proposal which is selected, Medicis
shall either receive a credit from or
owe additional amounts to Q-Med retroactive
to the date of receipt of the
Proposed Price Change Notice.
(c) * * *
4.3 Payment Obligations. Invoices for Licensed Products accepted
by
Medicis in accordance with Section 5.1(a)
shall be submitted to Medicis upon
delivery by Q-Med of the Ordered Products
and such invoices shall be payable in
SEK in full within thirty (30) days from
the acceptance of the applicable
delivery in accordance with Section 5.1(a).
Payment shall be made by Medicis by
wire transfer to an account designated in
writing by Q-Med at least three (3)
Business Days prior to the date such
payment is due or as specified in such
invoice; provided that Q-Med shall provide
Medicis with a credit against the
next invoice for Licensed Products to be
delivered to Medicis to the extent the
prior invoice includes a charge for Ordered
Products not actually delivered. Any
required payment hereunder not made by
Medicis on or before the date specified
in this Section 4.3 shall bear interest
from the date such payment is due until
the date it is actually received by Q-Med
at an annual rate equal to the rate of
interest per annum publicly announced from
time to time by JPMorgan Chase Bank
as its prime rate in effect on the date
such payment is due at its principal
office in New York City plus one percent
(1%). Notwithstanding the foregoing, if
at any time Medicis has failed to make a
payment in full when due in accordance
with the first and second sentence of this
Section 4.3 (a "DELINQUENT PAYMENT")
and the aggregate amount of such Delinquent
Payments exceeds 80% of the value of
the most recently placed Firm Order, Q-Med
shall automatically be entitled to
pre-payment for all subsequent deliveries
until such Delinquent Payment has been
paid in full with interest from and
including the date such Delinquent Payment
was due (such interest to be determined in
accordance with the immediately
preceding sentence) to but excluding the
date of payment.
16
<PAGE>
ARTICLE V
ACCEPTANCE OF Licensed PRODUCTS BY MEDICIS
5.1
Receipt of Licensed Product; Acceptance; Licensed Product
Returns.
(a) At least ten (10) Business Days prior to each shipment of
Licensed Products, Q-Med shall deliver
either electronically (if possible), by
facsimile, provided that the receipt of
such facsimile is promptly confirmed by
telephone, e-mail, or by overnight courier
to Medicis (if requested by Medicis,
the expense of any such courier to be borne
by Medicis), the following documents
and information with respect to each batch
in such shipment (the "ORDER
INFORMATION"): (i) Certificate of Analysis
(such Certificate of Analysis to
include, among other things, batch numbers,
expiry date information and a
statement of conformance), (ii) such copies
of all Labeling that will physically
accompany the Licensed Products (e.g.,
Package Insert), as are agreed upon by
the Parties from time to time, (iii)
quantity of syringes to be delivered in
such shipment and (iv) reports of
significant deviations and investigations into
such significant deviations. If Medicis
determines to reject any batch, Medicis
shall notify Q-Med of Medicis' rejection of
a batch within five (5) Business
Days following Medicis' receipt of the
Order Information; provided that the
Order Information shall be the sole basis
for such rejection. If no notice is
provided by Medicis within such time
period, then Medicis shall be deemed to
have accepted the shipment. Any notice of
rejection by Medicis shall be
accompanied by a reasonably detailed
statement of its reasons for rejection.
(b) Medicis shall be entitled to reject all or any portion of a
shipment of Licensed Products within ten
(10) Business Days of Medicis' receipt
in the Territory of such shipment of
Licensed Products based solely on obvious
physical, packaging or Labeling damage or
defect that is evident upon visual
inspection of the packaged Licensed
Products as shipped by Q-Med (unless such
obvious physical, packaging or Labeling
damage or defect was attributable to an
act or omission of Medicis or any of its
Affiliates or the carrier once the
shipment was received by such carrier).
Without in any way limiting Q-Med's
replacement obligation as set forth in
clause (d) below, if no notice is
provided by Medicis within such time
period, then Medicis shall be deemed to
have accepted the entire shipment. Medicis
shall provide Q-Med with written
notice of any such rejection within the
period set forth above together with a
reasonably detailed statement to support
any such rejection. Q-Med shall notify
Medicis as promptly as reasonably possible,
but in any event within ten (10)
Business Days after receipt of such written
notice, whether it agrees with
Medicis' assertions with respect thereto.
If Q-Med agrees with such assertions,
all such rejected Licensed Products shall
be returned to Q-Med together with the
notice of rejection, a copy of the delivery
receipt and the reasonably detailed
statement of Medicis' reasons for rejection
and Q-Med shall replace such
Licensed Products in accordance with
Section 5.1(c) and shall reimburse Medicis
for the cost of shipping (including
insurance). If Q-Med does not agree with
Medicis' assertions and Medicis accepts
Q-Med's determination, then Medicis
shall be responsible for the price of the
Licensed Product (including the
shipping cost and insurance). If Q-Med does
not agree with Medicis' assertions
and Medicis does not accept Q-Med's
determination, then the Parties shall refer
the dispute to an arbitrator pursuant to
and in accordance with the provisions
set forth in Section 12.6. If t
