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PRODUCT SUPPLY AGREEMENT

Supply Agreement

PRODUCT SUPPLY AGREEMENT | Document Parties: KING PHARMACEUTICALS INC | Selamine Limited, You are currently viewing:
This Supply Agreement involves

KING PHARMACEUTICALS INC | Selamine Limited,

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Title: PRODUCT SUPPLY AGREEMENT
Governing Law: New York     Date: 5/10/2006
Industry: Biotechnology and Drugs     Law Firm: Weil, Gotshal & Manges LLP ,Weil, Gotshal & Manges LLP     Sector: Healthcare

PRODUCT SUPPLY AGREEMENT, Parties: king pharmaceuticals inc , selamine limited
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                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

                            PRODUCT SUPPLY AGREEMENT

          This PRODUCT SUPPLY AGREEMENT ("Agreement") is entered into as of the
12th day of February, 2006 (the "Effective Date") among Selamine Limited, a
corporation organized under the laws of Ireland with its principal place of
business at Unit 4/5, Willsborough Cluster, Clonshaugh, Dublin 17, Ireland
("Selamine"), Robin Hood Holdings Limited, a corporation organized under the
laws of Malta with its principal place of business at 57 St. Christopher Street,
Valletta VLT 08, Malta ("Robin Hood"), Arrow Pharm Malta Limited, a corporation
organized under the laws of Malta with its principal place of business at 57 St.
Christopher Street, Valletta VLT 08, Malta ("Arrow Malta"), and King
Pharmaceuticals, Inc., a corporation organized under the laws of Tennessee with
its principal place of business at 501 Fifth Avenue, Bristol, Tennessee 37620
USA ("King"). Selamine, Robin Hood and Arrow Malta, on the one hand, and King,
on the other hand, are sometimes referred to individually as a "Party" and
collectively as the "Parties."

          WHEREAS, Selamine, Robin Hood, King, and King Pharmaceuticals Research
and Development, Inc. ("King R&D") have entered into a Ramipril Patent License
Agreement ("License Agreement"), of even date herewith, whereby Selamine granted
to King a license under the Ramipril Patents (as that term is defined in
Appendix A) to market, sell and distribute [***] within the Territory;

          WHEREAS, Arrow International Limited ("Arrow") (the indirect parent of
Selamine), Robin Hood, King and King R&D have entered into a Ramipril
Application License Agreement (the "Application Agreement"), of even date
herewith, whereby Arrow granted to King a license under the Ramipril Application
and Ramipril Know-How (as those terms are defined Appendix A) to market, sell
and distribute [***];

          WHEREAS, King has agreed to exclusively purchase its entire
requirements of [***] from Selamine pursuant to the terms hereof; and

          WHEREAS, Selamine is willing arrange the manufacture and supply of
[***] to King under the terms and conditions set forth hereinafter;

          NOW, THEREFORE, in consideration of the rights and obligations set
forth in this Agreement, the Parties agree as follows:

1.    DEFINITIONS

          Capitalized terms used in this Agreement have the meanings ascribed to
such terms in Appendix A attached hereto.

2.    PURCHASE AND DELIVERY

     2.1   GENERAL OBLIGATION TO PURCHASE.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.

<PAGE>

          (a) During the term of this Agreement, except as provided in Article 4
and Section 2.8(b), King, its Affiliates and its sublicensees shall exclusively
purchase from Selamine [***] for use in the Territory, and Selamine through
Arrow Malta, its manufacturing Affiliate, shall arrange for the manufacture,
sale and delivery to King and its Affiliates, of such quantities of [***] as
King, its Affiliates and its sublicensees shall order from Selamine, with such
purchasing, manufacturing, sale and delivery to be in accordance with the terms
of this Agreement and as follows:

               (i) During the Aventis Agreement Term, [***] manufactured using
Ramipril API purchased from Aventis and supplied to Selamine by King; and

               (ii) Upon expiration or termination of the Aventis Agreement Term
and thereafter, [***] manufactured using Ramipril API supplied by Selamine.

           (b) Selamine and Arrow Malta covenant and agree that neither Selamine,
Arrow Malta, or any Selamine Designees (as defined in Section 2.12(a)(i) below)
nor any of their Affiliates shall manufacture or sell, directly or indirectly,
[***] within the Territory on their own behalf or on behalf of anyone other than
King, its Affiliates and its sublicensees.

          (c) King shall use reasonable efforts to market, sell and distribute
[***] within the Territory; provided that King may choose which indications and
dosage strengths to market and sell, and Selamine understands and agrees that
King may choose not to sell or market the [***] for the same indications or
dosages for which King's Altace(R) product is currently sold; provided further
that King does agree to label the [***] for hypertension. For the avoidance of
doubt, King agrees to sell and market the [***] for all currently existing and
future indications (in addition to hypertension) that (1) do not obligate King
to purchase Ramipril API from Aventis pursuant to the terms of King's
pre-existing agreements with Aventis and (2) with respect to which King is not
contractually, under King's pre-existing agreements with Aventis, or legally
prohibited from making, having made, using, selling or offering to sell [***] in
the Territory, except such [***] that are made from Ramipril API supplied by
Aventis.

          (d) Except with the prior written consent of King, such consent not to
be unreasonably withheld or delayed, Selamine shall perform its manufacturing,
sale and delivery obligations hereunder in Arrow Malta's Maltese facility. Arrow
Malta consents to the use of its Maltese facility for the purposes of Selamine
performing its obligations hereunder, and Arrow Malta agrees to abide by, and
assist Selamine in fulfilling, the obligations of Selamine and its Affiliates
set forth in this Agreement. For the avoidance of doubt, subject to King's prior
written consent, Selamine has the right to propose and qualify additional
manufacturing, sale and delivery locations, and King shall not unreasonably
withhold or delay its consent to such locations; provided that Selamine shall
bear all costs for such qualification.

     2.2 FORECASTS. King shall provide Selamine with rolling [***] forecasts as
follows:

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                         2

<PAGE>

          (a) King shall provide Selamine with a non-binding [***] forecast at
least [***] before the expected Launch of [***] within the Territory. King shall
provide Selamine with a non-binding [***] forecast within [***] after receipt of
Regulatory Approval for the [***]. Neither of the foregoing forecasts shall be
binding.

          (b) After receipt of Regulatory Approval for the [***], King shall
provide Selamine with a rolling [***] forecast [***] prior to the start of each
Calendar Quarter. Each of such quarterly [***] forecasts shall constitute
binding commitments of King, with respect to the first [***], to purchase the
percentages of [***] set forth below pursuant to purchase orders issued in
accordance with Section 2.3:

<TABLE>
<CAPTION>
Period of Forecast     Percentage Required to be Purchased
------------------     -----------------------------------
<S>                    <C>
First [***] period                   [***]%
Second [***] period                  [***]%
</TABLE>

          (c) Each of King's forecasts shall specify the quantities of and
delivery dates for [***] within the Territory (by dosage strength) and include
such other information agreed upon by the Parties, with the first such forecast
also to include the anticipated Launch date.

     2.3 PURCHASE ORDERS. King shall place orders for [***] no later than the
[***] day of the month by delivering a duly completed Purchase Order to Selamine
in writing. Each Purchase Order shall include, but not be limited to, the
information set forth in Appendix 2. Each Purchase Order shall be for at least
the minimum quantities specified in the Packaging Quantity, set forth in
Appendix 1. In the event of any conflict between the terms of this Agreement and
the terms of any Purchase Order, the terms of this Agreement shall prevail.

     2.4 ACCEPTANCE BY SELAMINE. No Purchase Order shall be binding on Selamine
until accepted in writing with the confirmation of the date of shipment.
Selamine shall accept the Purchase Order as presented and confirm date of
shipment within ten (10) business days of receiving King's written Purchase
Order; provided that Selamine shall not be obligated to accept a Purchase Order
to the extent it exceeds (i) [***] [***] during the first [***] period for
which a Purchase Order is submitted and (ii) thereafter [***]% of the average
monthly forecasts of [***] supplied by King pursuant to Section 2.2(b) over the
prior [***]. Selamine shall be obligated to manufacture and deliver the
specified quantity of [***] in accordance with the delivery schedule set forth
in such Purchase Order, subject to the terms and conditions of this Agreement.
Selamine shall not be required to accept Purchase Orders for quantities of [***]
(a) below the quantities specified in the Packaging Quantity, (b) in excess of
the amount specified in the forecast for the relevant month, (c) during the
Aventis Agreement Term, to the extent Selamine is unable to manufacture the
[***] as a result of King's failure to provide Selamine with sufficient Aventis
API, or (d) the delivery lead time for the Purchase Order is less than [***], or
[***] with respect to the first month's supply.

     2.5 CHANGES IN REQUESTS.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                        3

<PAGE>

          (a) King may request that Selamine increase the quantity of [***] for
Purchase Orders already placed or to change the date of shipment. Upon receipt
of such request, Selamine shall inform King within [***] whether it can accept
such additional purchase orders, wholly or in part, or comply with the requested
date of shipment. In case of partial acceptance, Selamine shall specify
quantities and date of shipment. Selamine will use commercially reasonable
efforts to accept such requested changes, subject to the terms and conditions of
this Agreement.

          (b) If an event occurs that significantly affects the market
conditions for [***], King may request that Selamine decrease the quantity of
[***] for Purchase Orders already placed or to change the date of shipment. Upon
receipt of such request, Selamine and King shall meet within [***] to discuss
whether Selamine can accept such changes or to otherwise determine how to
address such market conditions. Each Party will negotiate in good faith to reach
a reasonable resolution.

     2.6 PACKAGING QUANTITY MINIMUM. If King wishes to order a quantity of
[***] of less than the minimum quantities specified in the Packaging Quantity,
Selamine shall notify King within [***] of receipt of any such Purchase Order of
the revised price of the [***] to reflect the increased costs to Selamine of
producing such smaller batch quantities. King may either confirm the Purchase
Order and shall pay such revised price for the [***] or may increase the
Purchase Order to the minimum batch quantities specified in the Packaging
Quantity.

     2.7 DELIVERY.

          (a) Selamine shall deliver the [***] FOB manufacturing, packaging site
or warehouse. Title and risk of loss as to the [***] purchased by King shall
pass to King upon the earlier of (i) a common carrier accepting possession or
control of such [***] and (ii) the passage of such [***] from the loading dock
of Selamine's site or warehouse to any employee, agent or contractor of King or
such common carrier. Regarding the first month's supply of [***], the delivery
lead time shall be within a maximum of [***] counted from the date of Selamine's
Purchase Order confirmation, thereafter the maximum delivery lead time shall be
[***] from the date of Selamine's Purchase Order confirmation. Selamine shall
tender the [***] in full on the dates for tender specified in the Purchase
Orders. If Selamine is unable for any reason to fulfill any Purchase Order for
the [***] on the specified date, Selamine shall immediately inform King in
writing. If such inability is partial, Selamine shall fulfill Purchase Orders
with such quantities of [***] as are available.

          (b) [***], Selamine shall ship [***] on a carrier or carriers
specified by King under the designated procedures provided by King for
transportation of [***]. The costs of all freight, insurance, handling, fees,
taxes and other costs associated with the shipment of [***} shall be borne
[***].

          (c) Selamine shall, and King will cooperate with Selamine to, prepare,
obtain, and maintain all necessary export and import registrations relating to
[***]. The

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                        4


<PAGE>

costs of all export licenses, import licenses and customs formalities for the
import and export of goods shall be borne [***], provided that any VAT shall be
[***].

     2.8 CAPACITY.

          (a) If Selamine, upon receiving a forecast under Section 2.2 or a
Purchase Order under Section 2.3, is, or anticipates that it will be, unable to
meet such forecast or Purchase Order, either in whole or in part, due to any
reason, Selamine shall give written notice of such inability to King within
[***] of receipt of such forecast or Purchase Order. If such inability is
partial, Selamine shall fulfill Purchase Orders with such quantities of [***] as
are available. Selamine shall use its commercially reasonable efforts to ensure
that Purchase Orders are supplied in full on a timely basis.

          (b) If Selamine is unable to meet King's Purchase Orders, except in
the case of the gross negligence or willful misconduct of Selamine, its
Affiliates, or any Selamine Designee, Selamine and King shall negotiate, for a
period of up to [***] from the date of notification given by Selamine pursuant
to Section 2.8(a), to consider alternative arrangements for meeting King's
requirements for [***] until Selamine is able to resume meeting such
requirements for King, including obtaining King's unfulfilled requirements from
a Third Party. Any alternative arrangement entered into pursuant to this Section
2.8(b) shall not exceed a commercially reasonable term. Any alternative
arrangements entered into pursuant to this Section 2.8(b) shall act in no way as
a waiver of any other rights or remedies that King or Selamine may have under
this Agreement or otherwise (unless expressly agreed otherwise in writing in
such alternative arrangements); provided, however, King shall have no obligation
to pay for orders of [***] that Selamine is unable to provide. If, at the end of
the [***] period, the Parties are not able to agree upon an alternative
arrangement, King may proceed with an alternative arrangement it selects. During
the [***] period, King may negotiate with Third Parties, and begin preparing its
own site, for the manufacture of [***], such that King will be in the position
to obtain supply from such Third Party or from King itself immediately after the
end of such [***] period.

          (c) If Selamine's inability to meet Purchase Orders or forecasts is
due to a shortage of production capacity at Selamine's or the Selamine
Designee's facility, in addition to the requirements of Sections 2.8(a) and
2.8(b) above, Selamine shall promptly notify King of such shortage of production
capacity, and, if possible, the date such shortage of production capacity is
expected to end. Selamine shall give priority to King's Purchase Orders and
satisfy and fulfill deliveries of [***] ordered pursuant to King's Purchase
Orders prior to utilizing such production capacity to produce products for any
other person, including Selamine and its Affiliates.

          (d) Selamine shall notify King as soon as possible of the date upon
which such shortage of production capacity will cease. Upon resumption of
production of [***], King shall resume obtaining its requirements, and those of
its Affiliates and its sublicensees, for [***] from Selamine to the extent such
resumption is consistent with any contractual arrangements entered into with
Third Parties pursuant to Section 2.8(b).

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                        5

<PAGE>

     2.9 CERTIFICATE OF ANALYSIS. Each delivery shall be accompanied by a
certificate of analysis, containing the types of information approved by mutual
agreement of the Parties, for each lot delivered and any other documents as
required under the Applicable Law within the Territory and pursuant to the
Quality Agreement to be entered into by the Parties within [***] following the
Effective Date. In addition, Selamine will supply King with reference standards,
at Selamine's expense, for normal commercial testing, which King may conduct
[***]. All other reference standards reasonably requested by King shall be
provided by Selamine to King [***].

     2.10 STOCK. Subject to any failure by Selamine to fulfill its supply
obligations hereunder, King shall at all times maintain a [***] stock of King's
requirements for [***] as indicated in its [***] forecasts.

     2.11 LATE DELIVERY. Notwithstanding anything herein to the contrary,
Selamine shall not be liable to King for late delivery of [***] or failure to
fulfill a Purchase Order in part or in full:

          (a) If fulfillment of such Purchase Order would result in Selamine
delivering [***] in any [***] period in excess of [***]% of the forecast given
by King in accordance with Section 2.2(b), unless Selamine has agreed to supply
the [***] in excess of [***]% of such forecast, as evidenced by Selamine's
acceptance of such Purchase Order in accordance with Section 2.4; provided that
Selamine must fulfill the Purchase Order up to [***]% of such forecast in
accordance with the terms and conditions of this Agreement;

           (b) If the required delivery dates in the Purchase Order are less than
[***], or [***] with respect to the first month, unless Selamine has accepted a
Purchase Order with a delivery date that is less than such periods;

          (c) If King fails to supply Selamine with sufficient API from Aventis
during the Aventis Agreement Term (including as a result of failing to supply
sufficient API that conforms with specifications, cGMP and Applicable Laws), to
the extent of such failure; or

          (d) If King fails to provide Selamine with artwork and camera ready
proofs for the [***].

     2.12 PRICES.

          (a) FEE FOR [***]. Within [***] after the end of each Calendar
Quarter, King shall pay Selamine the fee set forth in this Section 2.12(a) based
on Net Sales of King, its Affiliates and its sublicensees in the Territory, and
based on whether or not Wyeth Participates with respect to the [***] and when
the sale occurs, as follows:

               (i) SELAMINE DESIGNEES MANUFACTURE. If Selamine procures [***]
for King, whether through Selamine's Affiliates, including Arrow Malta, or
through Third Parties qualified in accordance with Section 4.1 (collectively,
the "Selamine Designees"), King shall pay Selamine as follows:

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                        6

<PAGE>

                         SELAMINE DESIGNEES MANUFACTURE

<TABLE>
<CAPTION>
                      WYETH DOES NOT PARTICIPATE    WYETH PARTICIPATES
                      --------------------------    ------------------
<S>                    <C>                            <C>
2007-2008              [***]                         [***]
2009 AND THEREAFTER    [***]                         [***]
</TABLE>

               (ii) KING MANUFACTURES OR SOURCES. If King manufactures [***],
causes a Third Party to manufacture [***] in accordance with Section 4.2, or
obtains [***] under an alternative arrangement, as described in Section 2.8(b),
King shall pay Selamine as follows:

                          KING MANUFACTURES OR SOURCES

<TABLE>
<CAPTION>
                       WYETH DOES NOT PARTICIPATE    WYETH PARTICIPATES
                      --------------------------    ------------------
<S>                    <C>                           <C>
2007-2008              [***]                         [***]
2009 AND THEREAFTER    [***]                         [***]
</TABLE>

The Parties agree that, in order to allocate the additional costs that are
incurred by King as a result of King's manufacturing or sourcing of [***], the
following deductions will be taken from either King's Net Sales or Selamine's
payments under this Section 2.12(a)(ii):

                    (A) If King manufactures or sources in accordance with
Section 4.2(ii) or (iii), for purposes of determining King's Net Sales under
this Section 2.12(a)(ii), Net Sales will be reduced by [***].

                    (B) If King manufactures or sources in accordance with
Section 4.2(i), (iv), or (v), the fees owed by King to Selamine under this
Section 2.12(a)(ii) will be reduced by [***].

                    (C) For purposes of this Section 2.12(a)(ii), "King's
[***] Manufacturing Costs" shall equal USD $[***] plus USD $[***] for packaging,
which amounts are to be adjusted annually according to the rate of inflation in
the relevant country of manufacture or packaging with 2008 as the base year.

                    (D) For purposes of this Section 2.12(a)(ii), the "Cost of
Non-Aventis API" will equal the API Cost paid to Selamine or its Affiliates, or
any Third Party, with respect to any Ramipril API obtained by Selamine or its
Affiliates after the Aventis Agreement Term; provided that Selamine and its
Affiliates agree that they will sell such Ramipril API to King [***].

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                        7

<PAGE>

          (b) UNDERSTANDING REGARDING RAMIPRIL API FROM AVENTIS.

                (i) To the extent King is obligated to purchase Ramipril API from
Aventis in 2008, Selamine agrees to reimburse King, on a quarterly basis, for
[***]% of the amount paid by King to Aventis for Ramipril API that is actually
used in the manufacture of [***] that are actually sold to Third Parties. Such
payment will be deducted from King's payment under Section 2.12(a), as confirmed
by written quarterly reports from King, until all such reimbursements are made.

               (ii) If Selamine manufactures [***] for King, or King is
manufacturing [***], to the extent King is obligated to purchase Ramipril API
from Aventis in 2007, Selamine agrees to reimburse King, on a quarterly basis,
for [***]% of the amount paid by King to Aventis for Ramipril API that is
actually used in the manufacture by Selamine or King of [***] that are actually
sold to Third Parties. Such payment will be deducted from King's payment due
under Section 2.12(a), as confirmed by written quarterly reports from King,
until all such reimbursements are made.

               (iii) The determination of the amount of [***] that are actually
sold to Third Parties pursuant to clauses (i) and (ii) above will be based on
both King's sales to Third Parties and no more than [***] of inventory sold to
wholesalers; provided that the Parties quarterly will compare King's sales to
Third Parties to the amounts prescribed to patients based on IMS prescription
data during the relevant period, and, if there is a discrepancy of more than
[***]% between such amounts, the Parties will negotiate in good faith to correct
such discrepancy in order for the Parties, as closely as possible, to
approximate actual prescriptions written for [***] during the relevant period.

               (iv) After expiration or termination of the Aventis Agreement
Term, King and its Affiliates agree, and King or the relevant King Affiliate
shall cause each sublicensee to agree, that it shall not purchase bulk Ramipril
API for use in [***] from any Third Party, including but not limited to Aventis.

               (v) If, prior to the end of 2008, King is able to negotiate with
Aventis an early termination of King's obligations for bulk Ramipril API for use
in [***], pursuant to King's agreements with Aventis, Selamine agrees to
reimburse King for [***]% of any payments due to Aventis in connection with such
early termination; provided that in no event will Selamine be obligated to
reimburse King for any amount paid to Aventis that is in excess of an amount
equal to Selamine's [***]% payment obligation otherwise payable hereunder for
2007 or 2008 (adjusted to take into account the payments already made by
Selamine pursuant to Sections 2.12(b)(i) and (ii) above) minus, if either of the
two events described in Section 2.12(c) has not occurred, the API Cost to
Selamine of purchasing bulk Ramipril API from another source for use in 2007 or
2008. For the avoidance of doubt, if, at the time King is able to negotiate such
early termination, the two events described in Section 2.12(c) both have
occurred, the maximum amount of Selamine's reimbursement under this Section
2.12(b)(v) will be equal to Selamine's [***]% payment obligation otherwise
payable hereunder for 2007 or 2008.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                        8

<PAGE>

          (c) ADJUSTMENT FOR GENERIC COMPETITION. The fees payable to Selamine,
as described in Section 2.12(a) above, shall be payable until such date as both
of the following have occurred:

               (i) [***]; and

               (ii) [***].

Upon the occurrence of both events set forth in (i) and (ii) above, King shall
no longer be obligated to pay Selamine fees pursuant to Section 2.12(a), and
King shall thereafter purchase [***] from Selamine at [***] with Section 2.12(d)
below. In addition, upon the occurrence of both events set forth in (i) and (ii)
above, Selamine's reimbursement obligations to King pursuant to Section 2.12(b)
shall be reduced from [***]% to [***]%.

          (d) EXCESS API. If, at the end of the Aventis Agreement Term, King
owns Ramipril API purchased from Aventis, Selamine will purchase such API from
King at the price of USD $[***] for use in [***] sold hereunder.

          (e) [***]. The Parties anticipate that, as a result of the Launch of
[***], King will receive [***]. In order to compensate King, in part, for such
{***], the Parties agree that they will [***] the costs of all returns of
Capsule Product, excluding any [***]. As such, Selamine agrees to reimburse King
for [***] percent ([***]%) of King's wholesale acquisition cost attributable to
the [***] following the Launch of [***], excluding [***], not to exceed USD
$[***]. Selamine may audit King's books and records with respect to such costs
in accordance with Section 2.13 hereof. The amounts reimbursable by Selamine to
King hereunder shall be deducted from King's payment under this Section 2.12, as
confirmed by written quarterly reports from King, until all such reimbursements
are made.

     2.13 AUDITING. During the term of this Agreement and for a period of [***]
following its expiration or termination, upon the request of a Party (but not
more frequently than once in each Calendar Year), an independent public
accountant selected by the requested Party and reasonably acceptable to the
other Party shall be allowed access, during ordinary business hours, to the
records, documents, bookkeeping systems, financial statements, records and any
other resources, materials and data of the audited Party and its Affiliates, or
Third Parties providing services hereunder on behalf of such Party, relevant to
verify the accuracy of the payments made or payable by King hereunder or the
Costs or API Costs incurred by Selamine during any of the [***] before the
audit. The cost of such audit shall be paid by the auditing Party unless the
audit reveals an under-reporting of payments in excess of [***] of the amount
due or cost incurred, as applicable, for any one-year period, in which case the
cost of the audit shall be paid by audited Party. If an audit discloses any
underpayment by King, King shall promptly make payment to Selamine of such
underpayment plus accrued interest, [***]. If the audit discloses any
overpayment by King, Selamine shall promptly repay such overpayment to King
plus, if the overpayment was a result of on over-reporting of Costs or API Costs
by Selamine, accrued interest, [***].

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                        9

<PAGE>

     2.14 PAYMENTS. All payments to be made hereunder shall be made in United
States Dollars ("USD") and shall be paid within [***] from receipt of invoice;
provided that invoices shall not be issued before the date of tender of the
[***]. Interest shall be payable upon all amounts not paid on the due date at
the rate of [***]% over the base rate of interest reported in the Wall Street
Journal, New York edition, on the due date and shall accrue from the due date
until such sum is paid, [***].

     2.15 [***]. As set forth in the Application Agreement, King is entitled to
Develop a [***] that is a [***]; provided that King may only launch such [***]
in accordance with the terms and conditions of Section 3.3 of the Application
Agreement. Until such time as King elects to launch such [***], the Parties will
perform their obligations hereunder in anticipation of manufacturing and selling
a [***] that is not a [***]. At such time as King elects to launch, in
accordance with the Application Agreement, such [***], the Parties will perform
their obligations hereunder with respect to such [***], including qualifying
manufacturing facilities with respect to such [***] in accordance with Section
4.1, which qualification the Parties will promptly seek to obtain following
King's notification to Selamine that King intends to launch such [***] or at
such other time as King reasonably determines. In addition, if King elects to
launch such [***], King will grant Selamine such license to King's Patents and
Technology as is needed for Selamine to perform its obligations hereunder.

3.    MANUFACTURE AND QUALITY

     3.1 GENERAL OBLIGATION TO MANUFACTURE. Selamine, as manufacturer of
[***], shall supply the [***] to King as finished packed [***]. Selamine
warrants that [***] sold to King by Selamine pursuant to this Agreement are
manufactured in accordance with the Specifications and in material compliance
with all cGMP and Applicable Laws with respect to the manufacturing of [***] to
be marketed and sold in the Territory. Upon Regulatory Approval, Appendix 3 of
this Agreement will be modified to include the Specifications for the [***],
which will be based on such Regulatory Approval.

     3.2 PACKAGING AND LABELING. King shall provide Selamine with all artwork
and camera ready proofs of applicable labeling and packaging materials for the
[***]. Selamine shall not make any changes thereto. Should changes be necessary
to artwork and proofs, King shall supply new materials promptly.

     3.3 SPECIFICATIONS.

          (a) For changes to the Specifications or manufacturing processes that
are required by Applicable Laws ("Required Manufacturing Changes"), Selamine and
King shall cooperate in making such changes in a timely manner.

          (b) For changes to the Specifications or material manufacturing
process that are not required by Applicable Laws ("Discretionary Manufacturing
Changes"), Selamine and King must each agree to any such changes and shall, to
the extent commercially reasonable under the circumstances, cooperate in making
such changes, and each agrees that it shall not

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                       10

<PAGE>

unreasonably withhold its consent to such changes. Notwithstanding the
foregoing, King's standard change control procedures will be utilized in
reviewing such changes.

          (c) Notwithstanding the foregoing, all internal and external costs,
including, without limitation, obsolete raw materials, work-in-process,
packaging and labeling materials (i) associated with Required Manufacturing
Changes shall be borne by King, provided that such costs will be limited to the
levels of materials that are reasonable based on current forecasts, and (ii)
associated with Discretionary Manufacturing Changes shall be borne by the Party
initiating such changes; provided that, in each case, all such costs shall be
commensurate with costs common in the industry for the types of changes being
made.

          (d) In the event of any changes to the Specifications or manufacturing
processes, as provided in this Section 3.3, King undertakes to update its
Regulatory Approval in the Territory with any modifications. The pertaining
Specifications shall be updated accordingly.

     3.4 SHORTCOMINGS AND DEFECTS. King shall notify Selamine in writing within
[***] after receipt of [***] delivered by Selamine of any complaint regarding
obvious qualitative faults and/or quantitative shortcomings, and King shall
simultaneously send samples of faulty [***] to Selamine. If King fails to notify
Selamine within such period, King shall be deemed to have accepted the order
with respect to such obvious faults or shortcomings. King shall notify Selamine
in writing within [***] of King becoming aware of any defects in the [***] which
may not or would not have been obvious at delivery by visual inspection of such
[***] made with reasonable care.

          (a) In cases of properly notified objections on the ground of
defective quality, which objections are agreed upon by both Parties or have been
confirmed by an independent party pursuant to clause (b) below, Selamine shall
replace the faulty consignment free of charge at the next practical delivery
date agreed to by the Parties. All quantitative deficiencies shall be made up
free of charge at the next practical delivery date. If only a limited supply of
[***] is available to replace or supply such rejection or shortage, then
Selamine shall ship to King such quantities of [***] as are available, and King
will be promptly reimbursed or credited against future orders, at King's option,
for amounts paid for the remaining quantity of rejected [***].

          (b) If Selamine disagrees with the defect of such [***] that King has
found to be defective, the Parties shall endeavor to settle such disagreement
amicably and constructively between themselves. If they fail to agree within
[***] after receipt of the notice of defects, the Parties agree to nominate an
independent, reputable laboratory within the Territory, acceptable to both
Parties, which shall examine representative samples taken from such consignment,
using the methods of analysis specified in the Specifications, and the result
shall be binding on both Parties. The charges for such examination shall be
borne by the Party found to be at fault.

          (c) Selamine's entire responsibility for defective [***] supplied to
King hereunder is limited to the replacement, refund or credit mentioned in
Section 3.4(a) only. This, however, does not limit Selamine's responsibility
pursuant to Section 6 of this Agreement.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                       11

<PAGE>

          (d) King shall make arrangements with Selamine for the return or
disposal of any [***] rejected in accordance with this Section 3.4; the costs of
such return or disposal shall be paid by Selamine.

     3.5 SELAMINE STOCK AND RAW MATERIALS.

          (a) During the Aventis Agreement Term, King shall supply Selamine with
Ramipril API from Aventis required to manufacture [***], and Selamine shall be
solely responsible for obtaining all other Raw Materials. During the Aventis
Agreement Term, King's supply to Selamine of Ramipril API from Aventis shall be
as follows:

               (i) [***] prior to the start of each Calendar Quarter, Selamine
shall provide King with rolling [***] forecasts of Selamine's Ramipril API
requirements; provided that the first such forecast shall be provided to King
[***] after the receipt of King's forecast for [***] pursuant to Section 2.2.
Selamine shall place orders for Ramipril API no later than the [***] of the
month by delivering a duly completed purchase order to King in writing. Each
purchase order shall include, but not be limited to, the information set forth
in Appendix 5. Each purchase order shall be for at least the minimum quantities
specified on Appendix 5. In the event of any conflict between the terms of this
Agreement and the terms of any purchase order, the terms of this Agreement shall
prevail. No purchase order shall be binding on King until accepted in writing
with the confirmation of the date of shipment. King shall accept the purchase
order as presented and confirm date of shipment within [***] of receiving
Selamine's written purchase order; provided that King shall not be obligated to
accept a purchase order to the extent it exceeds the amounts necessary for
Selamine to meet its supply obligations with respect to Purchase Orders for
[***] accepted by Selamine pursuant to Section 2.4. The delivery lead time for
Ramipril API shall be within a maximum of [***] counted from the date of King's
purchase order confirmation. Selamine shall provide King with monthly and annual
inventory reports with respect to Selamine's stock of Ramipril API, with the
monthly reports provided on the [***] of each month and the annual report
provided on January 31st of each year.

               (ii) King shall deliver the Ramipril to Selamine's manufacturing
site. Title and risk of loss as to the Ramipril API shall pass to Selamine upon
delivery to Selamine's site. The costs of all freight, insurance, handling,
fees, taxes, export licenses, import licenses, customs formalities and other
costs associated with the shipment of Ramipril API from King shall be borne
[***], provided that any VAT shall be [***]. Each delivery shall be accompanied
by a certificate of analysis, containing the types of information approved by
mutual agreement of the Parties, for each lot of Ramipril API delivered and any
other documents as required under Applicable Law within the Territory and
pursuant to the Quality Agreement.

               (iii) Selamine shall provide King with a receipt of delivery with
respect to each shipment of Ramipril API supplied to Selamine by King hereunder.
Selamine shall be and remain responsible for the proper care and handling of all
quantities of Ramipril API so supplied and shall account to King for the
handling and disposition of all such quantities. Without limiting the preceding
sentence, Selamine shall promptly report to King any and all incidents or
occurrences pursuant to which any shipment of Ramipril API is not manufactured
into finished [***], including, without limitation, spillage, accident, waste,
spoilage

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                       12

<PAGE>
or other disposition. Selamine shall reimburse King or credit King's account,
as King may elect, for the replacement cost of all quantities of Ramipril API
that are not manufactured into finished [***] as a consequence of Selamine's
negligence or any other breach by Selamine of its obligations hereunder.

               (iv) Selamine shall notify King in writing within [***] after
receipt of Ramipril API delivered by King of any complaint regarding obvious
qualitative faults and/or quantitative shortcomings, and Selamine shall
simultaneously send samples of faulty Ramipril API to King. Selamine shall
notify King in writing within [***] of Selamine becoming aware of any defects in
the Ramipril API which may not or would not have been obvious at delivery by
visual inspection of such Ramipril API made with reasonable care. Selamine will
assist King in substantiating any defects or shortcomings and otherwise assist
King in order for King to obtain replacement API or a refund or credit from
Aventis.

               (v) Selamine shall reimburse King for the replacement cost of any
Ramipril API supplied by King that has been used by Selamine in [***] that have
been rejected by King in accordance with the provisions of Section 3.4. Selamine
shall use Ramipril API supplied by King solely for the purpose of performing
Selamine's obligations under this Agreement and shall not provide such materials
to any Third Party.

          (b) Following the Aventis Agreement Term, Selamine shall be solely
responsible for obtaining all Raw Materials, including Ramipril API, required
for the manufacture of [***], which Raw Materials will be obtained from cGMP and
FDA-qualified suppliers.

          (c) Subject to King supplying Selamine with sufficient Ramipril API
during the Aventis Agreement Term, Selamine shall maintain sufficient supplies
of Raw Materials and other required resources to perform the services required
under this Agreement.

          (d) In addition, at all times during the Term, Selamine shall maintain
at its facility [***] of inventory of [***], calculated as the [***] sales for
the [***] period.

     3.6 RECALL POLICIES. King shall comply, and Selamine shall assist King as
appropriate in complying, with [***] recall policies regarding [***] issued from
time to time by King or any applicable Regulatory Authority and communicated to
King. In the event of a [***] recall, the Party instituting the recall shall
promptly advise the other Party, and the Parties shall take all appropriate
corrective actions.

     3.7 RECALLS.

          (a) [***] shall bear the expenses of any recall resulting from (i)
damages to or defects in the [***] occurring after Selamine's shipment of the
[***], (ii) the King layout for packaging and labeling of the [***], (iii) the
King actions or in-actions as seller, sublicensor to its sublicensees, and
distributor of the [***], (iv) infringement claims regarding any trademarks,
trade names or trade dress to be used with the [***], or (v) during the Aventis
Agreement Term, damages to or defects in the Ramipril API supplied to Selamine
by King occurring or in existence prior to King's shipment of such API to
Selamine.

  PORTIONS OF THI


 
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