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Exhibit 10.55
CHINA BOTOX(R) SUPPLY AGREEMENT
BY AND BETWEEN
GLAXO GROUP LIMITED
AND
ALLERGAN PHARMACEUTICALS IRELAND
SEPTEMBER 30, 2005
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CHINA BOTOX(R) SUPPLY AGREEMENT
THIS CHINA
BOTOX(R) SUPPLY AGREEMENT (this "SUPPLY AGREEMENT") is made and
entered into effective as of September 30,
2005 (the "EFFECTIVE DATE"), by and
between ALLERGAN PHARMACEUTICALS IRELAND, a
Cayman Islands corporation, having
its principal place of business at
Carrowberg, Castlebar Road, Westport, County
Mayo, Ireland ("ALLERGAN") and GLAXO GROUP
LIMITED, a company incorporated in
England, having its principal place of
business at Glaxo Wellcome House,
Berkeley Avenue, Greenford, Middlesex, UB6
0NN, England ("GSK"). ALLERGAN and
GSK are hereinafter collectively referred
to as the "parties" or individually as
a "party."
RECITALS
WHEREAS,
Allergan, Inc. and Allergan Sales, LLC, Affiliates of ALLERGAN,
and GSK have entered into a separate
License Agreement of even date herewith
pursuant to which GSK and its Affiliates
have received, among other things, a
license to import, develop, promote, sell
and distribute BOTOX(R) in the
People's Republic of China; and
WHEREAS,
Allergan, Inc. and Allergan Sales, LLC agreed in the License
Agreement to procure from ALLERGAN the
supply of BOTOX(R)to GSK and its
Affiliates; and
WHEREAS, GSK
desires to purchase and ALLERGAN desires to sell to GSK all of
GSK's requirements of BOTOX(R), subject to
the terms and conditions set forth
herein.
AGREEMENT
NOW, THEREFORE,
in consideration of the mutual covenants and agreements
contained herein and for other good and
valuable consideration, the receipt and
adequacy of which are hereby acknowledged,
the parties agree as follows:
1. DEFINITIONS
1.1 Active
Pharmaceutical Ingredient (API). "Active Pharmaceutical
Ingredient" or "API" means Botulinum Toxin
Type A Manufactured by ALLERGAN to
the registered specifications at the API
Manufacturing Facilities which is
intended to cause pharmacological activity
or other direct effect in the
diagnosis, cure, treatment or prevention of
disease or to affect the structure
or function of the body of human or
animal.
1.2 Affiliate.
An "Affiliate" of a person or entity means any individual,
sole proprietorship, firm, partnership,
corporation, trust, joint venture or
other entity, whether de jure or de facto,
which, directly or indirectly,
controls, is controlled by or is under
common control with such person or
entity. As used in this definition,
"control" means the possession, directly or
indirectly, of the power to direct or cause
the direction of the policies and
management of a person or entity, whether
by the ownership of stock, by contract
or otherwise.
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
1
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1.3 Certificate
of Analysis and Compliance. "Certificate of Analysis and
Compliance" means a document in the form
set forth in Exhibit A (as may be
changed from time to time with the mutual
agreement of the Parties), signed by
ALLERGAN's designated quality manager and
provided by ALLERGAN to GSK, that sets
forth the analytical test results against
the Specifications for a specified Lot
of Product and that certifies that each
batch or Lot of Product was produced and
tested in compliance with the
Specifications, cGMPs, the master batch record and
all applicable Marketing Authorizations and
Manufacturing Authorizations.
1.4 Change
Control. "Change Control" means the process by which changes
may
be made to the Product, as set forth in
Section 2.5.
1.5 cGMPs.
"cGMPs" means all applicable standards relating to
manufacturing
practices for fine chemicals,
intermediates, bulk products or finished
pharmaceutical products. For purposes of
this Supply Agreement, cGMPs shall mean
(i) the principles detailed in the People's
Republic of China SFDA Regulation
No. 9 issued by the SFDA on 18 June 1999,
ICH Q7a, U.S. cGMP 21CFR Parts 210 &
211 and The Rules Governing Medicinal
Products in the European Community, Volume
IV Good Manufacturing Practice for
Medicinal Products as each may be amended
from time to time or (ii) legislation or
regulations or guidance documents
(including but not limited to advisory
opinions, compliance policy guides and
guidelines) promulgated by any Regulatory
Authority having jurisdiction over the
Manufacture of the Products, subject to any
arrangements, additions or
clarifications agreed to from time to time
by the parties.
1.6 For Cause.
"For Cause" means (i) an express requirement by the
Regulatory Authority in the Territory to
conduct a root cause investigation by
way of an audit or (ii) an adverse event or
serious problem in the Territory
that requires a root cause investigation
that cannot be finally resolved or
concluded solely by a review of
documentation.
1.7 License
Agreement. "License Agreement" means the License Agreement for
the Product entered into by GSK and
Allergan, Inc. and Allergan Sales, LLC,
relating to the grant of certain rights and
licenses under certain intellectual
property for development and/or
commercialization of Product in the Territory
entered into on or about the date
hereof.
1.8 Lot. "Lot"
means each separate and distinct batch or lot of Product
processed under continuous and identical
conditions and designated by a unique
batch or lot number and expiration
date.
1.9 Manufacture.
"Manufacture" or "Manufacturing" means the planning,
purchasing, manufacture, processing,
compounding, storage, filling, packaging,
waste disposal, labeling, leafleting,
testing, sample retention, stability
testing, release and dispatch of Products
and such activities as may be required
for ALLERGAN to manufacture and supply each
Product respectively in accordance
with this Supply Agreement.
1.10
Manufacturing Facility. "Manufacturing Facility" or
"Manufacturing
Facilities" means ALLERGAN's Westport,
Ireland, secondary manufacturing
facility, or such other facility or
facilities used by ALLERGAN in the
Manufacture of the Product (including the
Active Pharmaceutical Ingredient
facilities), as may be designated from time
to time by ALLERGAN in
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
2
<PAGE>
accordance with the Change Control
procedure. Throughout this Supply Agreement
the term Manufacturing Facilities means
both the secondary manufacturing
facility at Westport and the API
manufacturing facilities. Each type of facility
will be referred to separately, as
necessary, as the "API Manufacturing
Facility" and the "Secondary Manufacturing
Facility".
1.11
Manufacturing Authorization. "Manufacturing Authorization" means,
with
respect to the Territory, the regulatory
authorization required to Manufacture
the Product and the API at the
Manufacturing Facilities as granted by the
relevant Regulatory Authority in the
Territory or the country of Manufacture, as
the case may be.
1.12 Marketing
Authorization. "Marketing Authorization" means the
approvals, licenses, registrations or
authorizations (as may be amended or
updated from time to time) necessary for
GSK to import and sell the Product in
the Territory.
1.13 Materials.
"Materials" means the raw materials (including API),
components and other ingredients required
to Manufacture the Product, each as
specifically identified in the Marketing
Authorization.
1.14 Product.
"Product" means finished drug product containing the API and
Manufactured by ALLERGAN to the
Specifications for supply to GSK under the terms
of this Supply Agreement.
1.15 Product
Change. "Product Change" shall have the meaning set forth in
Section 2.4.
1.16 Quality
Obligations. "Quality Obligations" means the additional
quality obligations set out at Exhibit
F.
1.17 Regulatory
Authority. "Regulatory Authority" means the national,
supranational, regional, state or local
regulatory agency, department, bureau,
commission, council or other government
entity involved in the granting of
Marketing Authorization for the Product in
the Territory or Manufacturing
Authorization for the Product or API in the
Territory or the country of
manufacture.
1.18
Specifications. "Specifications" means the specifications for
the
Product in finished pack form as approved
by the Regulatory Authority in the
Territory and as set forth in the Marketing
Authorization and the form of
Certificate of Analysis and Compliance.
1.19 Standard
Cost. "Standard Cost" means ALLERGAN's internal standard
cost, comprising direct and indirect fully
allocated costs to Manufacture
Botulinum Toxin Type A at the Manufacturing
Facility for supply to GSK or any of
ALLERGAN's other customers (be they Third
Parties or Affiliates), including
without limitation the ***, determined in
accordance with applicable law and
U.S. generally accepted accounting
principles using methodology consistently
applied by ALLERGAN.
1.20 Term.
"Term" shall have the meaning set forth in Section 8.1.
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
3
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1.21 Territory.
"Territory" means the People's Republic of China and its
territories and possessions, provided that
the Territory shall not include
Taiwan, Hong Kong or Macau.
1.22 Third
Party. "Third Party" means any person or entity other than
ALLERGAN or GSK or either of their
Affiliates.
1.23 Unit.
"Unit" shall mean each separate stock keeping unit of Product
with a distinct product number or item
code.
1.24 VAT &
Indirect Taxes. "VAT & Indirect Taxes." means the tax imposed
by
the sixth council directive of the European
Community and any national
legislation implementing that directive
together with legislation supplemental
thereto and in particular, in relation to
the United Kingdom, the tax imposed by
the Value Added Tax Act of 1994 or other
tax of a similar nature, including
sales taxes, imposed elsewhere instead of
or in addition to value added tax.
2. MANUFACTURE AND SUPPLY
2.1 General.
During the Term, and subject to the terms and conditions of
this Supply Agreement, GSK agrees to
purchase all of its clinical trial and
commercial requirements of Product for the
Territory exclusively from ALLERGAN,
and ALLERGAN agrees to sell to GSK and
relevant GSK Affiliates all of GSK's
requirements of Product for the Territory.
ALLERGAN shall be the exclusive
supplier of Product to GSK, its Affiliates
and any permitted sublicensees or
assignees for the Territory.
2.2
Manufacturing.
(a) ALLERGAN shall only Manufacture the Product at the
Secondary
Manufacturing Facilities and the API at the
API Manufacturing Facilities. ***,
all Product shall be supplied to GSK from
ALLERGAN's Secondary Manufacturing
Facility***. GSK acknowledges that ALLERGAN
intends to add, within the next
three years, an additional production line
at the Secondary Manufacturing
Facility at Westport, Ireland, ("CORE 3")
and an additional API Manufacturing
Facility. If ALLERGAN wishes to change the
facility at which ALLERGAN
Manufactures Product or API or add
additional facilities at which ALLERGAN
Manufactures Product or API, ALLERGAN shall
provide GSK with prior written
notice to that effect in order to allow GSK
to comply with its regulatory and
legal obligations and obtain any necessary
approvals from a Regulatory Authority
of amendments to Marketing Authorizations
in relation to such a change. Any
changes to the Manufacturing Facilities
that cause a Product Change will be
dealt with in accordance with the Change
Control procedure set out in Section
2.5. Notwithstanding the foregoing,
ALLERGAN shall supply GSK with Product
pursuant to Marketing Authorizations for
the Territory, and ALLERGAN shall
maintain sufficient supplies of approved
Product to supply GSK its requirements
for the Territory until approvals from a
Regulatory Authority of amendments to
Marketing Authorization in the Territory is
obtained for any changes to the
Manufacturing Facilities. ALLERGAN shall
obtain any necessary Manufacturing
Authorizations from the Regulatory
Authority in the country of Manufacture prior
to any modifications to the API
Manufacturing Facilities or Secondary
Manufacturing Facilities.
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
4
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ALLERGAN will be solely responsible for
obtaining necessary Manufacturing
Authorizations in the country of
Manufacture for Manufacturing the Product at
any Secondary Manufacturing Facility and
the API at any API Manufacturing
Facility. GSK shall obtain (with reasonable
assistance from ALLERGAN) any
necessary Marketing Authorizations from the
Regulatory Authority in the
Territory prior to any modifications to the
API Manufacturing Facilities or
Secondary Manufacturing Facilities. GSK
shall be diligent in its efforts to
obtain approvals from a Regulatory
Authority of amendments to Marketing
Authorizations in the Territory to any
Product Changes, with the support of
ALLERGAN, in order to ensure that ALLERGAN
may implement such Product Changes as
soon as possible. ALLERGAN shall be
diligent in its efforts to obtain
Manufacturing Authorization in the country
of Manufacture to any Product
Changes, with the support of GSK, in order
to ensure that ALLERGAN may implement
such Product Changes as soon as
possible.
(b) ALLERGAN shall be solely responsible for ordering the
relevant
quantities of Materials and for the timely
delivery of such Materials. ALLERGAN
shall purchase and use only Materials in
the Manufacture of the Product which
comply with the requirements of cGMP, the
Manufacturing Authorizations and
Marketing Authorization, and which have
been tested in accordance with the
Marketing Authorization and applicable law
in the Territory. Any changes to the
suppliers of Materials that cause a Product
Change will be dealt with in
accordance with the Change Control
procedure set out in Section 2.5. ALLERGAN
shall at all times store and warehouse all
Materials and Products Manufactured
by ALLERGAN pursuant to this Supply
Agreement in premises that are secure and
clean.
(c) ***
2.3 Product
Packaging & Labeling.
(a) Each Unit of Product will be packaged and labeled by ALLERGAN
with
Territory-specific language, indications,
labeling and regulatory disclosures in
accordance with the Specifications,
however, if the laws of the Territory
require some local packaging operations to
be undertaken by GSK, the parties
will meet and discuss in good faith how to
comply with such requirement. The
parties shall design the packaging and
labeling, as set out in Section 2.3(b)
below, to the greatest extent possible, to
prevent the Product from being
distributed and sold outside the Territory.
Each Unit of Product shall bear a
label and be contained in an outer package
and/or carton and, if applicable, be
accompanied by a package insert, which
label, outer package and/or carton and/or
package insert shall comply with all
applicable regulatory requirements in the
Territory and shall carry a legend clearly
indicating that the Product was
licensed from ALLERGAN.
(b) ALLERGAN and GSK shall jointly design and agree upon any
changes
to the packaging and labeling for the
Product sold in the Territory, and shall
use reasonable efforts to design such
packaging and labeling to prevent the
Product manufactured for sale in the
Territory from being distributed and sold
outside the Territory. If either party
desires to change the packaging or
labeling for the Product, it shall submit
the proposed change to the other party
for review and approval. The party
receiving the proposed change shall promptly
review the proposal and respond in writing
with its approval or disapproval
(together with its reasons for such
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
5
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disapproval). Any disputes regarding the
design of labeling or packaging shall
be resolved in accordance with the dispute
resolution procedures specified in
Section 10.9 of this Supply Agreement. GSK
shall be responsible for ensuring
that the design of the packaging and
labeling is compliant with applicable law
in the Territory. ALLERGAN's review and
approval of the design of any packaging
or labeling shall not cause ALLERGAN to be
liable or otherwise responsible for
the compliance of the design of the
packaging and labeling with applicable laws,
provided that ALLERGAN shall not
unreasonably withhold approval of any design or
proposal which is necessary (in GSK's
opinion) for legal or regulatory
compliance purposes. For the avoidance of
doubt, nothing in this Section 2.3(b)
shall limit or exclude ALLERGAN's liability
attributable to the Manufacture of
the Product.
2.4 Product
Changes. All modifications to the Product (including changes to
Material suppliers), API, their
Specifications or changes to the Manufacturing
process of the Product or API which may
effect the legal or regulatory
obligations of GSK in the Territory
(including the Marketing Authorizations) or
the Product's quality, efficacy or safety
(together known as "PRODUCT CHANGE"),
shall be made in accordance with the Change
Control procedure set out in Section
2.5 below. For the avoidance of doubt the
Change Control Procedure, set out at
Section 2.5 below, shall not apply to
modifications that do not effect the legal
or regulatory obligations of GSK in the
Territory, or the Product's quality,
efficacy or safety.
2.5 Change
Control Procedure.
(a) GSK shall provide ALLERGAN with written notice of any
Product
Changes directed or recommended by the
Regulatory Authority in the Territory as
soon as reasonably practicable and ALLERGAN
shall promptly determine how best to
implement such Product Changes. If ALLERGAN
determines that the Product Changes
directed or recommended by the Regulatory
Authority in the Territory will
involve implementation costs of greater
than ***, the parties will conduct good
faith negotiations to determine how best to
implement the Product Changes.
(b) ALLERGAN shall provide GSK with written notice of any
proposed
Product Changes instigated by ALLERGAN at
its discretion or by GSK in accordance
with Section 2.5(a) as soon as reasonably
practicable.
(c) GSK shall promptly review the proposal for Product Change
and
respond in writing on whether the proposed
Product Change requires any
notification to, or request for
pre-approval from, the Regulatory Authority in
the Territory.
(d) Where GSK determines that the proposed Product Change
requires
notification or pre-approval from the
Regulatory Authority in the Territory,
ALLERGAN will provide appropriate
information to support GSK's submission to the
Regulatory Authority and shall maintain
sufficient supplies of approved Product
to supply GSK its requirements for the
Territory until approvals from a
Regulatory Authority of amendments to the
Marketing Authorization in the
Territory is obtained for any Product
Changes.
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
6
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(e) Any disagreement between the parties regarding Product Changes
or
that arises during this Change Control
procedure shall be discussed by the
party's relevant technical or operational
representatives in good faith and in a
consultative manner and escalate the matter
within their internal lines of
reporting as may be necessary. Where the
parties are unable to resolve a
disagreement in relation to the legal
obligations of either party it will be
resolved in accordance with the dispute
resolution procedures set out in Section
10.9 of this Supply Agreement.
2.6 Lead
Contacts. Each party shall appoint a lead contact (who for
ALLERGAN shall be a senior manufacturing
manager of ALLERGAN or Allergan, Inc.
and for GSK shall be a senior manufacturing
manager of the Procurement &
Contract Manufacturing department of GSK's
Global Manufacturing and Supply
Division) for the activities contemplated
by this Supply Agreement. The lead
contact for each party shall be identified
to the other party not later than ten
(10) days after the Effective Date. Either
party may change its lead contact
upon written notice to the other party. In
an endeavor to promote efficient and
effective sales and operations planning,
the appropriate personnel from each
party shall meet in person or by telephone
at mutually convenient times/places
on a regular basis to discuss, consider
and, if seen fit, implement such sales
and operations planning measures as they
consider appropriate to promote the
objects of this Supply Agreement. The Lead
Contacts will also discuss, on a
regular basis, the strategies that ALLERGAN
has in place to manage any risks
relating to interruption to supply.
3. PRICE AND PAYMENT
3.1 Purchase
Price.
3.1.1 Supply Price. For each Unit of Product supplied to GSK
hereunder, GSK shall pay ALLERGAN a price
per Unit of Product equal to
ALLERGAN's Standard Cost per Unit in the
Calendar Year in which the delivery
date specified by GSK occurs, as such
Standard Cost is determined in accordance
with this Supply Agreement, plus *** (the
"PRICE"). The Standard Cost as of the
Effective Date is *** per Unit, and the
Price to be paid by GSK per Unit as of
the Effective Date is therefore ***.
ALLERGAN may, though it shall not be
obliged to, use the assistance and
expertise of GSK to identify and target
potential areas of reduction to its
Standard Cost.
3.1.2 Amendments to Supply Price. ALLERGAN shall recalculate
the
Standard Cost once during the fourth
quarter of each calendar year (either
upward or downwards as the case may be)
(the "RECALCULATED STANDARD COST") to
become effective 1 January of the
succeeding year. ALLERGAN shall provide GSK
with written notice detailing each
Recalculated Standard Cost promptly after its
determination. Subject to the
reconciliation process set out in Section 3.1.4
below, the Price paid by GSK from 1 January
in each succeeding year during the
Term shall be the Recalculated Standard
Cost for that year plus ***.
3.1.3 Maximum Increase. For the purposes of the reconciliation
process
set out in Section 3.1.4 below, (A) the
maximum allowable increase to the
Standard Cost for calendar years through
the end of *** shall be *** and (B) the
maximum allowable increase to the Standard
Cost
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
7
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for calendar years from and after *** shall
be *** (the "ALLOWABLE STANDARD
COST"). When calculating the Allowable
Standard Cost for each Calendar Year
after the first Calendar Year, the
'Standard Cost' referred to in this Section
3.1.3 shall be the lower of Recalculated
Standard Cost or the Allowable Standard
Cost for the immediately preceding Calendar
Year.
3.1.4 Reconciliation Process. In circumstances where the
Recalculated
Standard Cost exceeds the Allowable
Standard Cost, ALLERGAN will give a credit
to GSK to be used against the royalty
payable under the License Agreement in an
amount equal to the difference between (A)
the Recalculated Standard Cost plus
*** and (B) the Allowable Standard Costs
plus ***, multiplied by the number of
Units purchased by GSK during the given
year. A working example of this
reconciliation process is set forth in
Exhibit G.
3.2 Invoices.
ALLERGAN shall invoice GSK or GSK's nominated Affiliate for
all Product purchased by GSK upon shipment
in accordance with the delivery terms
and the requirements of Section 4.4 and
such invoices shall be paid by GSK
within sixty (60) days of the date of the
invoice. All amounts shall be invoiced
and paid in U.S. Dollars. Each invoice
issued by ALLERGAN hereunder shall
specify: (a) the price in respect of the
Product delivered; (b) the quantity of
the Product delivered; and (c) the amount
of tax due in respect of the Product
delivered (if any).
3.3 Taxes. All
amounts in this Supply Agreement are stated exclusive of VAT
and Indirect Taxes. GSK is responsible for
the payment of all such appropriately
levied taxes to ALLERGAN. ALLERGAN will
provide to GSK within thirty (30) days
of the receipt of any consideration, valid
VAT invoice if appropriate. Should
such amounts of VAT be refunded
subsequently by the fiscal authorities to
ALLERGAN, ALLERGAN will refund these monies
to GSK within thirty (30) days of
receipt.
3.4 Wire
Transfers. All payments hereunder shall be made to ALLERGAN by
bank wire transfer in immediately available
funds to ALLERGAN in accordance with
the wire instructions set forth in Exhibit
E, which may be changed only by
written notice to GSK from the Chief
Financial Officer of ALLERGAN under Section
10.7 (Notices).
3.5 Late
Payments. Subject to the other terms of this Supply Agreement,
payments not made to ALLERGAN within the
time period set forth in this Article 3
shall bear interest at an annual rate equal
to *** per month. The payment of
such interest shall not limit ALLERGAN from
exercising any other rights it may
have under this Supply Agreement as a
consequence of the lateness of any
payment.
3.6 Financial
Audit Rights. ALLERGAN shall permit its independent
registered public accounting firm, who as
of the Effective Date is Ernst & Young
LLP, acting for GSK, to have access, no
more than once in each calendar year
during the term of this Supply Agreement,
during regular business hours and upon
at least thirty (30) days' written notice,
to ALLERGAN's records and books only
to the extent necessary to determine the
accuracy of the Standard Cost or
Recalculated Standard Cost (as the case may
be). Any report provided by
ALLERGAN's
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
8
<PAGE>
company appointed auditors to GSK shall,
unless mutually agreed between the
parties, be limited to:
(i) a statement to
verify that the Standard Cost is consistent or
equivalent with ALLERGAN's internal standard cost; and
(ii) in circumstances where the Standard Cost or Recalculated
Standard
Cost charged by ALLERGAN has been determined by the auditor to
have been higher than ALLERGAN's internal standard cost ,
disclosure of the actual standard cost.
If such
examination results in a determination that the Standard Cost
or
Recalculated Standard Cost has been
overstated, amounts overpaid by GSK shall be
refunded by ALLERGAN promptly. The fees and
expenses of ALLERGAN's company
appointed auditors for conducting the
services set out in this Section 3.6 shall
be paid by GSK unless the examination
results in a determination that Standard
Cost or Recalculated Standard Cost have
been overstated, or that amounts have
been overpaid by GSK, by more than *** for
the period examined, in which case
ALLERGAN shall pay all reasonable costs and
expenses of such auditor.
4. FORECASTS, ORDERS AND
SHIPMENT
4.1 Rolling
Forecasts. Prior to the beginning of each calendar quarter
during the Term, GSK shall provide ALLERGAN
with a written forecast of GSK's
expected requirements for Product during
the following eighteen (18) months
broken down by months (M1 through M18), and
which shall include projected order
dates, quantities and shipping dates
("ROLLING FORECASTS"). The initial Rolling
Forecast shall be delivered to ALLERGAN by
GSK within two (2) weeks after the
Effective Date. As pertains for each
Rolling Forecast, the Units of Product set
forth in the first three (3) months
designated M1-M3 shall be firm orders
binding on GSK, and the forecast for the
second three (3) months designated
M4-M6 may only be increased or decreased by
up to *** in the aggregate from the
original forecast for such months as the
forecast is rolled forward at the
beginning of the next quarter (but in no
event shall any order be for less than
*** Units), unless otherwise agreed to by
ALLERGAN. Except as set forth in this
Section 4.1, the Rolling Forecasts shall be
non-binding.
4.2 Purchase
Orders. Products shall be ordered by GSK by written or
electronic purchase order (or by any other
means agreed to by the parties), the
initial form of which is attached as
Exhibit B ("PURCHASE ORDER"). The initial
Purchase Order of Product by GSK to cover
the balance of the calendar quarter in
which the Effective Date falls, which may
account for a reasonable build of
stock for inventory purposes, shall be
provided before or with the initial
Rolling Forecast. Prior to the beginning of
each calendar quarter, but at least
thirty (30) days prior to the earliest
desired date of delivery, GSK shall place
binding Purchase Orders for Product for
M1-M3 as specified in the Rolling
Forecast to begin delivery in M1 of that
calendar quarter, and shall be
consistent with the forecast provided for
such calendar quarter in that Rolling
Forecast. Each Purchase Order must be for a
minimum order of *** Units. Purchase
Orders placed by GSK may not be changed
without ALLERGAN's prior written
consent. For the avoidance of doubt, the
minimum order quantity for each
Purchase Order set out in this Section 4.2
does not represent a
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
9
<PAGE>
minimum annual volume commitment by GSK. To
the extent of any conflict or
inconsistency between this Supply Agreement
and any Purchase Order, purchase
order release, confirmation, acceptance or
any similar document pertaining to
the supply of Product for sale in the
Territory, the terms of this Supply
Agreement shall govern.
4.3 Manufacture
and Shipment. ALLERGAN shall deliver to GSK the number of
Units of Product specified in each Purchase
Order no later than the dates
specified therein. ALLERGAN shall exercise
the same diligence in meeting GSK's
requirements of Product as it exercises
with respect to its own requirements.
4.4 Delivery
Terms. Shipments of Product to GSK shall be made FCA
Manufacturing Facility, Westport, Ireland,
INCOTERMS 2000 (as defined by the
International Chamber of Commerce (ICC)).
Delivery will not be complete unless
each shipment is accompanied by a valid
Certificate of Analysis and Compliance
and any required export documentation.
4.5
Manufacturing Capacity. ALLERGAN undertakes to ensure that it has
at
all times sufficient Manufacturing capacity
at the Manufacturing Facilities to
satisfy GSK's Product requirements set out
in the Rolling Forecasts.
(a) ALLERGAN shall routinely monitor the Manufacturing capacity
available to GSK at the Manufacturing
Facilities, such that ALLERGAN shall make
appropriate changes to its utilization of
such capacity to satisfy GSK's
requirements of Product in accordance with
this Supply Agreement.
(b) GSK and ALLERGAN shall review and discuss the Manufacturing
capacity available at the Manufacturing
Facilities in relation to the Rolling
Forecast as part of the regular review
meetings pursuant to Section 2.6.
(c) In the event of a break or fault in production that can
reasonably
be foreseen to affect supply of Product to
GSK, ALLERGAN shall notify GSK
promptly if such fault cannot be remedied
within five (5) business days and,
following such notification, will keep GSK
apprised of the status of the
remedial action to be taken by ALLERGAN.
ALLERGAN shall in any event use its
best endeavors to ensure a return to
production as soon as possible.
4.6 Minimum
Inventory. During the Term, ALLERGAN shall maintain a
reasonable stock of inventory of Product
and Materials throughout the supply
chain ("RESERVE SUPPLY"). The amounts of
inventory specified in this Section
shall be based on the Rolling Forecast.
4.7 Incomplete
Delivery. GSK shall notify ALLERGAN as soon as reasonably
practicable, and in no event later than
three (3) business days after receipt of
the delivery at GSK's site in the People's
Republic of China, if there is an
incomplete delivery in accordance with the
terms of this Supply Agreement. If
ALLERGAN is notified of the incomplete
delivery by telephone or in person, then
such notification shall be confirmed by GSK
in writing. ALLERGAN shall rectify
the incomplete delivery, making it up from
the Reserve Supply if necessary,
within fourteen (14) business days after
the first date of notification.
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as amended.
10
<PAGE>
4.8 Failure to
Meet Requirements. If ALLERGAN is unable, or anticipates
that it will be unable, to supply at least
*** of the Product ordered on any
Purchase Order placed in accordance with
Section 4 from its current production
or normal stocks, ALLERGAN shall, promptly
after it becomes aware of such fact,
and in any event not less than fourteen
(14) days before the due delivery date,
give written notice to GSK of the reasons
for the shortfall. ALLERGAN will make
up the shortfall in the next delivery of
Product ordered by GSK. GSK's remedies
in the event of any failure of ALLERGAN to
supply GSK's requirements under this
Supply Agreement are set forth in the
License Agreement. GSK's SOLE AND
EXCLUSIVE REMEDIES FOR FAILURE OF SUPPLY
SHALL BE LIMITED TO THE REMEDIES
PROVIDED IN THE LICENSE AGREEMENT.
5. QUALITY AND SAFETY
5.1 Compliance.
ALLERGAN shall Manufacture and supply Product, and maintain
and operate the Manufacturing Facilities,
in accordance with this Supply
Agreement, the Specifications, all
applicable laws and regulations and the
applicable Marketing Authorizations,
including any applicable cGMPs, Good
Quality Practices ("GQPS"), Good Vigilance
Practices ("GVPS") provisions
promulgated by the Regulatory Authority in
the Territory or the country of
Manufacture.
5.2 Inspection
by Regulatory Authorities. ALLERGAN shall permit
representatives of appropriate Regulatory
Authorities from the Territory or
country of Manufacture to inspect the
Manufacturing Facilities to verify the
Product and API is being manufactured and
supplied in accordance with cGMPs,
GQPs, GVPs and Product Specifications, API
specifications and in accordance with
the Manufacturing Authorizations and
Marketing Authorizations. ALLERGAN shall
provide GSK with a copy of any report or
deficiency notice arising from such
inspections conducted by Regulatory
Authorities from the Territory or country of
Manufacture, appropriately redacted to
maintain confidentiality of ALLERGAN's
proprietary trade secrets, however, for the
avoidance of doubt, any major or
critical observations of the Regulatory
Authority will be disclosed in
un-redacted form. GSK shall have the right
to make recommendations to ALLERGAN
regarding corrective action provided that
ALLERGAN shall make the final
determination with respect to the
corrective action taken. ALLERGAN shall
promptly remedy or cause the remedy of any
deficiencies which may be noted in
any such inspection by the Regulatory
Authority.
5.3 ***
5.4 Inspections
by GSK of the Secondary Manufacturing Facility. GSK may,
subject to Section 9 relating to
Confidentiality, conduct routine inspections of
the Secondary Manufacturing Facility to
verify the Product is being Manufactured
and supplied in accordance with cGMPs,
GQPs, GVPs and Product Specifications and
in accordance with the Manufacturing
Authorizations and Marketing
Authorizations. *** Plant inspections by
GSK shall be conducted during normal
business hours on not less than thirty (30)
days advance written notice, and
shall occur no more frequently than once in
any twelve (12) consecutive month
period, provided that GSK shall have
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
11
<PAGE>
the right to carry out follow up
inspections where it is legally obliged to do
so. GSK shall have the right to carry out
inspections For Cause at any time. Any
For Cause inspection will be limited to an
investigation of the For Cause issue
to discover the root cause. ALLERGAN and
GSK shall meet after each inspection to
discuss the results of the inspection.
ALLERGAN shall give due consideration to
observations and recommendations made by
GSK at such meetings. Any Product
Changes as a result of the inspection shall
be made in accordance with the
Change Control procedure set out in Section
2.5. Any disagreements between the
parties regarding the results of the
inspection shall be discussed by the
party's relevant technical or operational
representatives in good faith and in a
consultative manner and escalate the matter
within their internal lines of
reporting as may be necessary. Where the
parties are unable to resolve a
disagreement in relation to the legal
obligations of either party it will be
resolved in accordance with the dispute
resolution procedures set out in Section
10.9 of this Supply Agreement.
5.5 Shelf Life.
The shelf life of the Product is three (3) years. Product
shall have a minimum of *** of shelf life
remaining at time of delivery to GSK.
5.6
Specification Testing. ALLERGAN shall test or cause to be tested,
in
accordance with the test methods and
procedures set forth in Exhibit C, each Lot
sold to GSK before delivery to GSK.
ALLERGAN shall provide GSK with a
Certificate of Analysis and Compliance,
which shall accompany each Lot delivered
to GSK. In addition, GSK may test or cause
to be tested each shipment of Product
received by GSK for the Territory. FOR THE
AVOIDANCE OF DOUBT, EXCEPT AS SET OUT
IN SECTION 5.10, ANY TESTING BY GSK SHALL
NOT SERVE TO LIMIT OR EXCLUDE
ALLERGAN'S LIABILITY OR RELIEVE ALLERGAN
FROM ITS OBLIGATIONS SET OUT IN THIS
SUPPLY AGREEMENT.
5.7 Replacement
or Credit for Refund. If GSK rejects any Lot of Product,
GSK shall promptly notify ALLERGAN in
writing of the reason(s) for rejection.
Following discussion with GSK and by mutual
agreement ALLERGAN shall, either
promptly replace the entire Lot in which
the defective Product was found and
deliver it to GSK at ALLERGAN's sole cost
and expense or credit to GSK the
invoiced amount of the entire Lot in which
the defective Product was found and
credit to GSK the actual cost of
transportation and storage of the defective
Product incurred by GSK. After consultation
with ALLERGAN, GSK may dispose of
any defective Lot in such reasonable manner
as GSK determines in its sole
discretion at ALLERGAN's cost and expense.
OTHER THAN THE REMEDIES FOR FAILURE
TO SUPPLY SET OUT IN THE LICENSE AGREEMENT,
GSK's SOLE AND EXCLUSIVE REMEDY FOR
REJECTION OF ANY LOT OR ANY UNITS OF ANY
LOT SHALL BE LIMITED TO THE REMEDY
PROVIDED IN THIS SECTION.
5.8 Disputes
Regarding Defect Claims. In the event of a dispute between the
parties over the validity of a rejection of
a Lot of Product, GSK and ALLERGAN
agree to submit samples of the rejected
Product to an independent test facility
to be agreed upon by both parties, and to
accept the results of the testing
performed by that facility as binding with
regard to that Lot. The expense of
such testing shall be borne by the losing
party. The parties acknowledge that
the time period for accurate testing for
the Product could impact the flow of
Product to market and that it may be
necessary to send a replacement Lot of
Product (which ALLERGAN shall invoice
GSK
*** Certain confidential information
contained in this document, marked with 3
asterisks, has
been omitted and filed separately with the Securities and
Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange
Act
of 1934, as
amended.
12
<PAGE>
for in the normal course of business)
pending determination or resolution of the
validity of a rejection.
5.9 Adverse
Event (AE) and Serious Adverse Event (SAE) Reporting. GSK and
ALLERGAN shall each comply with their
obligations in relation to medical event
reporting requirements as set out in the
License Agreement.
5.10 Product
Recall. If any Regulatory Authority in the Territory orders or
requires the recall of any Product in the
Territory, or if in GSK's opinion a
recall is necessary in the Territory, GSK
will promptly notify ALLERGAN and
provide such information regarding such
recall order or other information as may
be reasonably requested by ALLERGAN. GSK
shall, unless prohibited by applicable
law, consult with ALLERGAN on the need for
a recall and take all ALLERGAN
submissions into account when making a
decision whether to instigate a recall
(such decision not to be unreasonably
made). GSK shall be responsible for
conducting any recall of Product in the
Territory and ALLERGAN shall co-operate
with GSK by providing all such information
and assistance as may be reasonably
required to implement such recall. To the
extent that any recall of the Product
is implemented as a result of ALLERGAN's
failure to Manufacture Product in
accordance with the terms and conditions of
this Supply Agreement, ALLERGAN
shall (i) bear all direct expenses incurred
by GSK in connection with such
recall, (ii) shall indemnify the GSK
Indemnitees (as defined in Section 7.1)
from any and all Liabilities (as defined in
Section 7.1) incurred by any GSK
Indemnitee, to the extent that these are
proven to be attr