SUPPLY AGREEMENT

 

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TABLE OF CONTENTS

Exhibit 10.43
Confidential Treatment(1)

SUPPLY AGREEMENT

(1)

Redacted portions have been marked with brackets containing asterisks ([***]). The redacted portions are subject to a request for confidential treatment and have been filed seperately with the Securities and Exchange Commission.

TABLE OF CONTENTS

1.		DEFINITIONS
2.		TERMINATION OF 2000 SUPPLY AGREEMENT; MANUFACTURE AND SALE OF PRODUCTS
		2.1		Termination of 2000 Supply Agreement
		2.2		Supply
		2.3		Purchase Obligations
		2.4		Sale of Viscoelastic Products by Seller to Third Parties
3.		ORDERS AND DELIVERY
		3.1		Forecasts
		3.2		Orders
		3.3		Inventory Maintenance
		3.4		Delivery and Inspection
		3.5		Title and Risk of Loss
		3.6		On Time Delivery
		3.7		Second Source of Supply
		3.8		Equivalent Product
4.		PRICE, PAYMENT, AND SPECIFICATION CHANGES
		4.1		General
		4.2		Price
		4.3		[Intentionally Omitted]
		4.4		Invoice and Payment
		4.5		Changes to Product Specifications/Manufacturing Process Changes
		4.6		Future Development
		4.7		Manufacturing Equipment
5.		WARRANTIES AND INDEMNITIES
		5.1		Representations and Warranties
		5.2		Indemnification by Seller
		5.3		Indemnification by Buyer
		5.4		Insurance
		5.5		Product Recalls
		5.6		Limitation
		5.7		Responsibility for Third Party Claims
		5.8		Notice of Claims
6.		REGULATORY SUPPORT IMPROVEMENTS
		6.1		Clinical Support; Regulatory Affairs
		6.2		ICI Process Know-How
		6.3		Manufacturing Inventions
		6.4		Product Inventions
		6.5		Buyer's Inventions
7.		CONFIDENTIALITY AND CONDUCT
		7.1		Confidentiality
		7.2		Conduct
8.		MARKETING AND REGULATORY PROVISIONS
		8.1		Governmental Approvals
		8.2		Product Identification
		8.3		Trademarks and Trade Names of Buyer
		8.4		Regulatory Cross Reference Rights

 

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9.		TERM, TERMINATION AND TRANSFER OF SUPPLY OBLIGATIONS
		9.1		Term
		9.2		Partial Termination
		9.3		Effect of Termination
		9.4		Transfer of Supply Obligations
		9.5		Duties Upon Transfer of Manufacturing Responsibilities
		9.6		Limitation of Liability
10.		MISCELLANEOUS
		10.1		Payments
		10.2		Status of Parties
		10.3		Assignment by Buyer
		10.4		Assignment by Seller
		10.5		Registration
		10.6		Publicity and Disclosure
		10.7		Representations
		10.8		Entire Agreement
		10.9		Waivers
		10.10		Force Majeure
		10.11		Notification
		10.12		Governing Law; Severability
		10.13		Dispute Resolution Process
		10.14		Captions
		10.15		References
		10.16		Survival
		10.17		Counterparts and Fax Signatures
EXHIBIT A-1 CURRENT AMVISC SPECIFICATIONS (BUFFERED)
EXHIBIT A-2 CURRENT AMVISC PLUS SPECIFICATIONS (BUFFERED)
EXHIBIT B Equipment List
EXHIBIT C Trademarks and Tradenames
Annex A Pricing Schedule Administration Example

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         THIS AGREEMENT , effective as of the Effective Date (subject to the retroactive pricing provisions of Section 4.1 hereof), is by and between Anika Therapeutics, Inc., a Massachusetts corporation (the "Seller"), and Bausch & Lomb Incorporated, a New York corporation (the "Buyer" and together with Seller, the "Parties"). Unless the context otherwise requires, all references to Buyer and Seller (or to the Parties) shall include their respective Affiliates (as defined below).

I. BACKGROUND

        A.    Seller is engaged in the business of manufacturing Products, as defined in Section 1.39 and Buyer would like to purchase Products from Seller.

        B.    Seller and Bausch & Lomb Surgical, Inc. ("BLS") were parties to a Supply Agreement dated August 1, 1994, as amended, ("1994 Supply Agreement") and a Distribution Agreement (defined in Section 1.17) each of which were superseded by a Supply Agreement between the companies, effective July 25, 2000 ("2000 Supply Agreement");

        C.    BLS merged into Buyer on March 31, 2001, resulting in Buyer becoming the successor in interest to BLS under the 2000 Supply Agreement; and

        D.    The Parties hereby desire to terminate the 2000 Supply Agreement and acknowledge that this Agreement is intended to supersede the 2000 Supply Agreement, the effect of which is, among other things, to provide that, subject to the terms of this Agreement, Seller shall (i) continue to remain the exclusive supplier of Products to Buyer in the Territory, and (ii) subject to certain limited exceptions as set forth specifically in this Agreement, not sell any Viscoelastic Products to any party other than Buyer.

         NOW, THEREFORE , in consideration of the mutual promises, covenants and agreements hereinafter set forth, the Parties hereto agree as follows:

1.     DEFINITIONS     

        The following terms shall, except where the context otherwise requires, have the meanings set forth below:

        1.1    "Affiliate" shall mean, with respect to any Person, any other Person controlling, controlled by or under common control with, such Person. The term "control" of a Person shall mean Beneficial Ownership of securities or other interests in such Person constituting fifty percent (50%)(or, if lower, any applicable maximum foreign ownership percentage allowed under the laws of any jurisdiction) or more of the Voting Power in such Person. "Beneficial Ownership" shall be determined in compliance with Rule 13d-3 of the Securities Exchange Act of 1934.

        1.2    "Agreement" shall mean this agreement.

        1.3    "AMO" shall have the meaning set forth in Section 2.4.2 of this Agreement.

        1.4    "Amvisc" shall mean the medical device meeting the specifications described on Exhibit A-1 attached hereto or as otherwise changed in accordance with Section 4.5.

        1.5    "Amvisc Range Product" shall mean a viscoelastic solution ( i.e. , an aqueous polymeric solution with viscous and elastic properties that are used as surgical aids within the Surgical Ophthalmic Field) containing those ingredients set forth on Exhibit A-1, but no active ingredients other than those set forth in Exhibit A-1, except as permitted pursuant to both Section 2.4.4 and Section 4.5, and having all of the following properties:[* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ***]. In no event shall an Amvisc Range Product have a rheologic profile consistent with Amvisc Plus or an Amvisc Plus Range Product.

        1.6    "Amvisc Plus" shall mean the medical device meeting the specifications described on Exhibit A-2 attached hereto or as otherwise changed in accordance with Section 4.5.

 

        1.7    "Amvisc Plus Range Product" shall mean a viscoelastic solution ( i.e. , an aqueous polymeric solution with viscous and elastic properties that are used as surgical aids within the Surgical Ophthalmic Field) containing only those ingredients set forth on Exhibit A-2 (but no additional viscoelastic agents) and having all of the following properties:[* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ].

        1.8    "Amvisc Products" shall mean Amvisc and Amvisc Plus in a form of an aqueous polymeric solution with viscous and elastic properties that are used as surgical aids within the Surgical Ophthalmic Field, including, as provided in Section 4.5, any improvements or modifications of Amvisc or Amvisc Plus, provided that the resulting product shall not contain any viscoelastic agent other than HA and shall have all of the following properties: [* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ].

        1.9    "Annual Forecast" shall have the meaning set forth in Section 3.1.1 of this Agreement.

        1.10    "BF Amvisc Products" shall have the meaning set forth in Section 2.3.3 of this Agreement.

        1.11    "BLS" shall have the meaning set forth in the Recitals of this Agreement.

        1.12    "Buyer" shall have the meaning set forth in the Recitals of this Agreement.

        1.13    "Change Order" shall have the meaning set forth in Section 3.2 of this Agreement

        1.14    "Current Product Specifications" shall mean the product specifications for Amvisc and Amvisc Plus attached as Exhibit A-1 and Exhibit A-2 respectively of this Agreement or as otherwise changed in accordance with Section 4.5.

        1.15    "Current Manufacturing Processes" shall mean the manufacturing processes utilized by Seller on the Effective Date for Amvisc and Amvisc Plus (including but not limited to, quality control/quality assurance procedures and packaging) or as otherwise changed in accordance with Section 4.5.

        1.16    "Cytosol" shall have the meaning set forth in Section 2.4.2 of this Agreement

        1.17    "Distribution Agreement" shall mean the Distribution Agreement dated as of November 17, 1981, as amended, between Medchem Products, Inc. ("Medchem") and Iolab Corporation. Seller's obligations under the Distribution Agreement were assigned to Seller by Medchem and Iolab's obligations were assumed by Buyer in Buyer's acquisition of Chiron Vision Corporation in December 1997.

        1.18    "Effective Date" shall mean December 15, 2004.

        1.19    "Equipment" shall have the meaning set forth in Section 4.7.1 of this Agreement.

        1.20    "HA" shall mean hyaluronic acid.

        1.21    "Health Care Market" shall mean the worldwide human health care industry, including without limitation, the medical, surgical, dental, nursing professions and practices, as well as research and teaching relating to these professions and practices. Any products used in and for the diagnosis, monitoring, treatment or prevention of disease, sickness or other physical condition shall be considered products intended for use in the Health Care Market, provided, however , that the Health Care Market shall exclude, for all purposes of this Agreement, products used for

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"cosmetic" applications, as such term is defined under applicable laws and regulations of the U.S. Food and Drug Administration.

        1.22    "ICI Agreement" shall have the meaning set forth in Section 6.2 of this Agreement.

        1.23    "ICI Patent" shall mean United States patent no. 4,897,349, dated January 30, 1990.

        1.24    "ICI Process" shall have the meaning set forth in Section 6.2 of this Agreement.

        1.25    "Indemnitor" shall have the meaning set forth in Section 5.8 of this Agreement.

        1.26    "Indemnitee" shall have the meaning set forth in Section 5.8 of this Agreement.

        1.27    [Intentionally Omitted]

        1.28    "Manufacturing Inventions" shall have the meaning set forth in Section 6.3 of this Agreement.

        1.29    "Modified Amvisc Product" means an Amvisc Range Product that results from a Buyer-requested change to any Current Product Specifications or Current Manufacturing Processes under Section 4.5.

        1.30    "Newly Developed Products" shall mean viscoelastic solutions ( i.e. , aqueous polymeric solutions with viscous and elastic properties that are used as surgical aids within the Surgical Ophthalmic Field) other than Amvisc Products or Permitted Products.

        1.31    "1994 Supply Agreement" shall have the meaning set forth in the Recitals of this Agreement.

        1.32    "Ophthalmic Field" shall mean that part of the Health Care Market dealing with the structure, functions, diseases and conditions of the eye.

        1.33    "Option Period" shall have the meaning set forth in Section 4.6.1 (with respect to Buyer, the "Buyer Option Period") and Section 4.6.2 (with respect to Seller, the "Seller Option Period") of this Agreement.

        1.34    "Parties" shall have the meaning set forth in the Recitals of this Agreement.

        1.35    "Permitted Products" shall mean products that (i) are only Amvisc Range Products, (ii) Seller sells or is obligated to sell as of the Effective Date and (iii) are made and intended for use in a manner consistent with FDA-approved labeling for Amvisc related to the requirement of using refrigerated storage (in effect as of the Effective Date).

        1.36    "Permitted Purchasers" shall have the meaning set forth in Section 2.4.2 of this Agreement.

        1.37    "Person" shall mean an individual, partnership, limited liability company, business association, trust, corporation or other entity, whether de jure or defacto.

        1.38    "Pricing Schedule" shall have the meaning set forth in Section 4.2.1 of this Agreement.

        1.39    "Products" shall mean Amvisc, Amvisc Plus (including as each of those is modified in accordance with Section 4.5 of this Agreement) and any BF Amvisc Products that are made in accordance with Section 2.3.3 of this Agreement; provided, however , that Products shall not include any models, samples or other materials provided to Buyer by third-parties for research or testing purposes.

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        1.40    "Product Inventions" shall have the meaning set forth in Section 6.4 of this Agreement.

        1.41    "Proprietary Marks" shall have the meaning set forth in Section 8.3 of this Agreement.

        1.42    "Purchase Order" shall have the meaning set forth in Section 3.2 of this Agreement.

        1.43    "Purchase Order Delivery Date" shall have the meaning set forth in Section 3.2 of this Agreement.

        1.44    "Put Up Mix" shall have the meaning set forth in Section 3.2 of this Agreement.

        1.45    "Quarterly Forecast" shall have the meaning set forth in Section 3.1.2 of this Agreement.

        1.46    "Rolling Annual Forecast" shall have the meaning set forth in Section 3.1.2 of this Agreement.

        1.47    "Secondary Supplier" shall have the meaning set forth in Section 3.7 of this Agreement.

        1.48    "Seller" shall have the meaning set forth in the Recitals of this Agreement.

        1.49    "Seller Improved Permitted Product" shall have the meaning set forth in Section 2.4.3.

        1.50    "Service" shall have the meaning set forth in Section 4.7.4 of this Agreement.

        1.51    "Staar" shall have the meaning set forth in Section 2.4.2 of this Agreement.

        1.52    "Supply Relationship" shall have the meaning set forth in Section 9.2 of this Agreement.

        1.53    "Surgical Ophthalmic Field" shall mean that part of the Health Care Market for use in the structure, functions, diseases and conditions of the eye directly relating to intraocular refractive surgery, cataract surgery and intraocular vitreoretinal surgery.

        1.54    "Term" shall have the meaning set forth in Section 9.1 of this Agreement.

        1.55    "Territory" shall mean all countries and territories of the world.

        1.56    "Testing Methods" shall mean the laboratory methods used to determine whether Products meet the Current Product Specifications.

        1.57    "2000 Supply Agreement" shall have the meaning set forth in the Recitals of this Agreement.

        1.58    "Units" shall mean the single use packages of Amvisc and Amvisc Plus that are marketed on the Effective Date or other approved sizes of the Amvisc, Amvisc Plus or any other Product(s) that may be introduced from time to time as mutually agreed upon by the Parties.

        1.59    "Viscoelastic Products" shall mean (a) any viscous organic material containing HA, including but not limited to Amvisc Products, or (b) any viscous organic material not containing HA that, in the case of both (a) and (b), is intended for use in the Surgical Ophthalmic Field.

        1.60    "Voting Power" shall mean (i) if the Person is a corporation, the right to vote in the election of directors of the corporation in the ordinary course, (ii) if the Person is a trust, the right to appoint trustees of the trust, (iii) if the Person is a limited liability company, the right to name managing members of the limited liability company and (iv) if the Person is any other type of entity, any concepts similar to the foregoing relating to the power to control the business and affairs of such Person.

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        1.61    "WIP" shall have the meaning set forth in Section 3.3 of this Agreement.

2.     TERMINATION OF 2000 SUPPLY AGREEMENT; MANUFACTURE AND SALE OF PRODUCTS     

        2.1     Termination of 2000 Supply Agreement .     The Parties hereby mutually agree to terminate the 2000 Supply Agreement and acknowledge that, except as otherwise expressly set forth herein, neither party has any further obligations thereunder. In connection with such termination, the provisions of the 2000 Supply Agreement shall no longer have any force or effect. Notwithstanding the foregoing, Buyer shall nonetheless be required to pay Seller for all Products sold to Buyer pursuant to the 2000 Supply Agreement, provided, however , that the pricing terms of Sections 4.1 through Section 4.4 of this Agreement shall be applied thereto.

        2.2     Supply.     Subject to the terms of this Agreement, Seller agrees to manufacture and supply all of Buyer's requirements of Amvisc Products for sale to Buyer in the Territory for the Surgical Ophthalmic Field on the terms and conditions hereinafter set forth.

        2.3     Purchase Obligations.     

        2.3.1 Except as otherwise provided in this Agreement, Buyer shall be obligated to purchase from Seller all of Buyer's requirements for Amvisc Products that Buyer makes available for commercial sale in the Territory for use in the Surgical Ophthalmic Field; provided, however , that for the purposes of this Section 2.3.1, "Territory" shall not include Japan. In the event that Buyer or an Affiliate of Buyer sells, markets, manufactures or distributes Amvisc Range Products or Amvisc Plus Range Products in Japan, then Buyer will take, to the extent not prohibited by law, reasonable efforts to prohibit and/or prevent the diversion of such products to other countries in the Territory and to remedy the occurrence of any such diversion through the taking of commercially reasonable actions.

        2.3.2    Other than with respect to a BF Amvisc Product, the purchase obligations of which are addressed in Section 2.3.3 below, Buyer shall notify Seller in writing at least [********] days in advance of its intent to sell any Amvisc Products in any country where such Amvisc Product has not already received regulatory approval, at which time the Parties shall mutually agree upon a time-line for filing the necessary regulatory applications and receiving necessary regulatory approvals (which shall be at Buyer's sole cost, expense and responsibility). Seller agrees to provide reasonable assistance to Buyer in connection with such activities. Buyer shall use commercially reasonable efforts to obtain regulatory approvals for Amvisc Products in such countries. Notwithstanding the foregoing, in the event that an Amvisc Product has not received regulatory approval in a country, until such time as Seller has been approved to sell Amvisc Products in such country, then Buyer may purchase Amvisc Products, or products substantially similar thereto, from other suppliers approved to sell such products in the country; provided, however , that Buyer shall use commercially reasonable efforts to avoid entering into contractual supply arrangements with other suppliers that exceed the anticipated time for regulatory approval in those countries for which regulatory approvals to manufacture Amvisc Products is sought; provided, further that, notwithstanding the foregoing, regardless of when regulatory approval for the applicable Amvisc Product is received, Buyer will have no obligation to terminate early any supply arrangement it enters into with parties other than Seller as permitted under this Section 2.3.2, and Buyer shall be permitted to purchase Amvisc Products from such suppliers for the initial term of any such contractual relationship (with the right to renew in the event that regulatory approval has not been received for the applicable Amvisc Product as of the expiration of the initial term). Notwithstanding the foregoing, this Section 2.3.2 shall not apply to any Amvisc Products that Buyer desires to sell, market, manufacture or distribute in Japan, and Buyer shall have no obligation to purchase from Seller any Amvisc Products that Buyer desires to sell, market, manufacture or distribute in Japan.

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        2.3.3    The Parties acknowledge that Amvisc Products manufactured under the Current Product Specifications use HA sourced from avian tissue. The Parties further acknowledge that, in some markets, certain of Buyer's customers, regardless of regulatory requirements, may request products using HA sourced from bacterial fermentation. In recognition of the fact that Buyer may desire to purchase Amvisc Products using bacterial-fermented HA (the "BF Amvisc Products"), then:

        (a)   In the event Buyer wishes to develop and manufacture (or have manufactured) a BF Amvisc Product, then Buyer shall send a written notice requesting Seller to develop and manufacture such a product. Subject to Buyer's obligations pursuant to Section 6.1 of the Agreement, within [*********] days of Seller's receipt of Buyer's written notice, the Parties shall mutually agree upon a time-line for developing and commencing the manufacturing of a BF Amvisc Product. The Parties hereby agree they shall endeavor to negotiate and prepare such time-line in good faith. In the event of a reasonable good faith dispute regarding the creation of a time-line at any time following Seller's receipt of Buyer's request, the dispute shall be submitted to the dispute resolution process in Section 10.13; provided, however , that for the purposes of this section 2.3.3, the time period in Section 10.13 shall be (instead of the [*********] days set forth therein) deemed to end the later of (a) [******] days from the date Seller received Buyer's request as provided in the third sentence of this Section 2.3.3, or (b) [** *********] days from submitting the dispute to the dispute resolution process.

        (b)   Upon commencement of the development stage as set forth in the time-line contemplated in Section 2.3.3(a), Seller shall provide Buyer with monthly progress reports detailing the status on any agreed upon development milestones, task progress or other information that Buyer reasonable requests from time-to-time. If, at any time subsequent to the establishment of the time-line, Buyer reasonably believes that such progress reports indicate that Seller will not commence manufacturing within the period required by the time-line, Buyer shall provide Seller with written notice of Seller's anticipated failure to meet the manufacturing time-line. Upon receipt of such notice, Seller and Buyer shall endeavor to discuss and negotiate in good faith towards a solution acceptable to both Parties and in the spirit of this Agreement. If the Parties fail to reach agreement within [********] days of the date notice was received by Seller, and at such time Buyer reasonably believes that Seller will not be able to commence manufacturing within the period required by the time-line, then Buyer shall be permitted to seek and utilize another third party supplier for the manufacture of the BF Amvisc Product until Seller is capable of commencing manufacturing of BF Amvisc Products.

        (c)   In the event Buyer engages a third party supplier to manufacture BF Amvisc Product as described under Section 2.3.3(b), then Buyer shall (1) use commercially reasonable efforts to avoid entering into contractual supply arrangements with other suppliers that exceed the anticipated time for Seller to take the necessary actions to enable it to commence manufacturing of the BF Amvisc Products, (2) not enter into any such contractual supply arrangements after Seller has become capable of commencing manufacturing of BF Amvisc Products and has notified Buyer in writing thereof, and (3) promptly provide Seller notice upon the entering into by Buyer of any such contractual supply arrangements which such notice shall include a summary of (i) the duration of such arrangement in the event that the term extends beyond the anticipated time for Seller to take the necessary actions, to Buyer's reasonable satisfaction, that would enable Seller to commence manufacturing of the BF Amvisc Products, and (ii) the pricing provisions thereof in the event the pricing is less than the prices for the BF Amvisc Products to be provided by Seller hereunder ( provided, however , that the information pursuant to (ii) need only be provided promptly after Seller has informed

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Buyer of Seller's pricing terms for manufacture of the BF Amvisc Product, as contemplated in Section 2.3.3(e)).

        (d)   Notwithstanding the foregoing in Section 2.3.3(c), Buyer will have no obligation to terminate early any supply arrangement it enters into with parties other than Seller as permitted under this Section 2.3.3, and Buyer shall be permitted to purchase BF Amvisc Products from such suppliers for the initial term of any such contractual relationship, regardless of when Seller is able to commence manufacturing BF Amvisc Products.

        (e)   The supply, price and payment terms for BF Amvisc Product supplied by Seller to Buyer shall be the same as any other Amvisc Product in accordance with Sections 4.1 through 4.4 of this Agreement; provided, however , that the price per Unit shall be increased by a per Unit premium equal to [* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ]; provided, further that, in the event Buyer enters into a contractual supply arrangements with other third party suppliers as contemplated by this Section 2.3.3, then the pricing terms for such BF Amvisc Product supplied by Seller to Buyer under this Agreement shall be [* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ].

        2.4     Sale of Viscoelastic Products by Seller to Third Parties.     

        2.4.1     No Sale to Third Parties .    Except pursuant to the terms of this Agreement, during the Term Seller will not directly or indirectly manufacture, market, distribute or sell, for itself or for or to any third party, any Viscoelastic Products. Additionally, Seller shall not, during the Term of this Agreement, seek or assist in seeking regulatory approval or commercialization of any Viscoelastic Products other than for the benefit of Buyer.

        2.4.2     Permitted Purchasers .    Notwithstanding and as a limited exception to Section 2.4.1, Seller shall be permitted to continue to sell Permitted Products to Advanced Medical Optics, Inc. ("AMO"), STAAR Surgical Company ("Staar") and Cytosol Ophthalmics, Inc. ("Cytosol" and together with AMO and Staar and their permitted successors and assigns under the existing agreements with such entities (including distributors and subcontractors), collectively the "Permitted Purchasers"); provided, however , that Seller shall not consent to the assignment of any existing agreement if Seller has the right to withhold its consent to such assignment in its sole and absolute discretion.

        2.4.3     Sale of Permitted Products Improved by Seller .    In the event that Seller or a Permitted Purchaser makes an improvement or modification to a Permitted Product (provided that the resulting product falls within the definition of a Permitted Product under Section 1.35 (other than clause (ii) thereof), a "Seller Improved Permitted Product"), then Seller shall be permitted to offer to supply such Seller Improved Permitted Product to a Permitted Purchaser; provided, however , that concurrent with any contractual arrangement by Seller to provide such Seller Improved Permitted Product to the Permitted Purchaser, Seller shall offer to supply such Seller Improved Permitted Product to Buyer on pricing or other terms [* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ]. If Seller does not offer to supply such Seller Improved Permitted Product to Buyer on such terms for any reason, then Seller shall not be permitted to supply such Seller Improved Permitted Product to the Permitted Purchasers. Notwithstanding the foregoing, in no event shall a Seller Improved Permitted Product be a product other than an Amvisc Range Product.

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        2.4.4     Sale of Amvisc Modified by Buyer.     In the event that Buyer requests Seller to manufacture, a Modified Amvisc Product, then, subject to Section 4.5, Seller shall be permitted to provide the Modified Amvisc Product to any of the Permitted Purchasers; provided, however , that if Buyer has received a patent for, or has in good faith submitted a patent application for, the Modified Amvisc Product then, from the date of the filing of any such patent application, Seller shall not be permitted to enter into any new contractual arrangement to supply the Modified Amvisc Product to any of the Permitted Purchasers or any third party.

        2.4.5     Permitted Regulatory Filings.     Notwithstanding the prohibitions contained in Section 2.4.1, to the extent determined advisable by Seller, Seller may seek or assist in seeking regulatory approval or commercialization (for the benefit of the Permitted Purchasers and the Seller) with respect to (1) Permitted Products supplied to Permitted Purchasers as permitted by Section 2.4.2, (2) Seller Improved Permitted Products supplied to Permitted Purchasers as permitted by Section 2.4.3 and (3) Modified Amvisc Products supplied to Permitted Purchasers as permitted by Section 2.4.4.

3.     ORDERS AND DELIVERY     

        3.1     Forecasts.     Forecasts provided hereunder shall be updated if there is a material change in any information on which the forecast is based.

        3.1.1     Annual Forecasts .    Buyer shall furnish Seller with a written non-binding general order forecast for each Product on or before each [*******] for the immediately following calendar year, and such general forecast shall set forth Buyer's estimated monthly requirements for each Product ("Annual Forecast"). The Parties acknowledge that the Annual Forecast previously provided by Buyer under the 2000 Supply Agreement with respect to the 2005 calendar year shall be deemed the Annual Forecast for the 2005 calendar year pursuant to this Agreement.

        3.1.2     Quarterly Forecasts .    At least [******] days prior to the beginning of each quarter, Buyer shall advise Seller in writing of (a) its binding forecast for such quarter (the "Quarterly Forecast") setting forth the expected order date(s), quantity on each order, the "Put-Up" Mix (as defined in Section 3.2) of Units and expected shipping date(s) and (b) its nonbinding forecast for the [*****] months thereafter ("the Rolling Annual Forecast"). Seller shall have [******] days after receipt of each such Quarterly Forecast to notify Buyer in writing that it is unable to manufacture the quantities specified, shall provide demonstrable evidence that the production cycle cannot accommodate the quantities specified and shall state what amount of the Product requested Seller estimates it can provide by the expected delivery dates. Failure by Seller to so notify shall be deemed to constitute acceptance of, and an obligation to perform under, the Quarterly Forecast. If Seller so provides Buyer with a revised Quarterly Forecast, as contemplated by this paragraph above, then the Parties shall negotiate in good faith to resolve their differences and Seller shall endeavor to deliver by the expected delivery date at least that amount of Product it stated that it could deliver in its notice of objection. If the Parties so resolve their differences, the agreed upon revised Quarterly Forecast shall be the binding forecast for such quarter.

        3.1.3     Purchases Against Forecasts .    Buyer shall, subject to the provisions of Section 10.10, be required to purchase from Seller during each quarterly period not less than [******] percent ([**]%) of the total number of Units of each Product (not broken down by size) contained in the Quarterly Forecast. If, subject to the provisions of Section 10.10, within [*****] days prior to the end of any quarterly period, Seller shall not have received orders from Buyer for at least [*****] percent ([**]%) of the total number of Units of each Product (but not broken down by size) contained in the applicable Quarterly Forecast, Seller shall notify Buyer of such fact. If, within [*****] days prior to the end of such quarterly period, Seller shall not have received orders from Buyer for delivery during such quarterly period of at least [*****] percent ([**]%) of the total number of Units of each Product (but not broken down by size) contained in the applicable

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Quarterly Forecast and Seller and Buyer shall not have reached a mutually acceptable agreement with respect to such shortfall, then Seller may ship such number of Units as shall equal the difference between the number of Units of each Product ordered by Buyer for delivery during such quarterly period as of the date [*****] days prior to the end of the quarterly period and the number of Units of each Product equaling [*****] percent ([**]%) of Buyer's Quarterly Forecast. The Product sizes for any Product so shipped shall be in the same proportion as specified in the Quarterly Forecast. In any such event, Buyer shall be obligated to pay for such Units shipped by Seller but not ordered by Buyer on the same terms and conditions as if such Units had been ordered by Buyer on the date [*****] days prior to the end of the quarterly period. Notwithstanding anything to the contrary herein, upon [*****] working days notice prior to shipment, Seller may ship up to [*****] percent ([**]%) in additional Units against any order. Buyer shall be invoiced at the actual number of Units shipped and shall be obligated to pay for such Units in accordance with Section 4.

        3.2     Orders.     Buyer shall issue firm, noncancelable, binding, purchase orders (each, a "Purchase Order") for Products to Seller from time to time, which orders shall be consistent, to the extent practicable and subject to Section 3.1.3, with the applicable Quarterly Forecast. Seller agrees to fill such orders for Products submitted by Buyer up to the amount stated in the applicable Quarterly Forecast and to use its reasonable best efforts to fill all orders for Products in excess of the quantity stated in the Quarterly Forecast. Seller shall not be required to sell in excess of [************] percent ([****]%) of the amounts forecasted in the Quarterly Forecast set forth in the most recent Rolling Annual Forecast. Any orders placed by Buyer for an amount that would cumulatively exceed [**********] percent ([****]%) of the most recent Quarterly Forecast shall require notice to and confirmation of Seller. Buyer shall place orders such that the scheduled delivery date indicated in a Purchase Order (the "Purchase Order Delivery Date") is at least [********] days from the date Buyer submits the Purchase Order; provided, however , that Buyer may change the Put-Up Mix of the Units with respect to such order (but not the total Unit quantity) no later than [*****] days prior to the Purchase Order Delivery Date by providing a written change order to Seller within such period (a "Change Order"). "Put Up Mix" shall mean the Unit packaging sizes [*****] within each category of Amvisc Products purchased by Buyer under the Agreement. If Buyer submits a Change Order less than [*****] days prior to the Purchase Order Delivery Date, prior to Seller processing and fulfilling such order, the Parties shall first agree upon the additional amount, if any, to be paid by Buyer to Seller to offset any increased incremental costs (including materials, labor and variable overhead) incurred by Seller in order to process and fulfill the Change Order.

        3.3     Inventory Maintenance .     Seller shall use commercially reasonable efforts to maintain, based on the number of Units estimated in the updated Quarterly Forecasts, work in progress ("WIP") inventory of bulk HA in an amount sufficient [*********** **************************************************].

        3.4     Delivery and Inspection.     Seller shall be responsible for delivering the Products to a carrier specified by Buyer, F.O.B. Seller's plant. Buyer shall have the right to inspect all Products delivered by Seller and to reject (by batch, lot or Unit) any Products which fail to conform to the Purchase Order thereof or to be in the condition warranted under this Agreement, which failure to conform is determined not to be due to damage to the Products caused subsequent to delivery of the Products to a carrier at Seller's plant. Buyer shall notify Seller and confirm in writing if any nonconforming Products are rejected and shall hold the rejected Products until receipt of Seller's written instructions for the disposal or return to Seller of the rejected Products which written instruction shall be given promptly by Seller. Subject to provisions of this Section 3.4, Buyer shall be entitled to receive a refund of the purchase price or any portion thereof actually paid to Seller for the rejected Products (plus applicable freight). The costs of any agreed upon reworking by Buyer of nonconforming Products shall be borne by Seller. Any Products not rejected within [*******] after Seller's delivery to Buyer shall be

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deemed to be accepted by Buyer. At Seller's request, Buyer shall provide a sample of the Product alleged to be defective together with a copy of the records pertaining to Buyer's testing of the Product, which records shall have been made at the direction of Buyer's quality control group using the Testing Methods. If, after Seller analyzes the sample (including, as compared to analysis against Seller's own retained sample), which analysis shall be completed within [*********] days of receipt of the sample from Buyer, Seller confirms such non-conformity, then Seller shall replace such shipment at its expense. If, after its own analysis, Seller does not confirm such non-conformity, the Parties shall agree to retest the shipment or otherwise attempt in good faith to agree upon a settlement of the issue. In the event that the Parties cannot resolve the issue, the Parties shall submit the disputed Product and Anika's own retained samples to an independent testing laboratory, to be mutually agreed upon by the Parties, for testing using the Testing Methods. The findings of such laboratory shall be binding on the Parties, absent manifest error. Expenses of such laboratory testing shall be borne by Seller unless the findings demonstrate that no non-conformity existed, in which case the testing expenses shall be borne by Buyer. In the event that any such shipment or batch thereof is ultimately agreed or found not to meet the Current Product Specifications, Seller shall replace such shipment at its expense, including charges incurred by Buyer for shipping and/or storage, if applicable. If instructed by Seller, Buyer shall return any such rejected shipment to Seller at Seller's expense. In the event that any such shipment or batch thereof is ultimately agreed or found to meet the Current Product Specifications, Buyer shall retain such shipment or batch, and all the terms and conditions of this Agreement shall continue to apply to such Product.

        3.5     Title and Risk of Loss .     Title and ownership to the Products shall pass to Buyer upon delivery of the Products to a carrier F.O.B. Seller's manufacturing plant. Seller shall cooperate with the reasonable request of Buyer in processing all claims for loss or damage to the Products. Buyer shall be responsible for and shall pay for any and all demurrage, storage and other charges accruing after the arrival of any shipment at Buyer designated destination. Except as provided in Section 3.4, if Buyer shall fail or refuse for any reason to accept delivery of any of the Products ordered by it, in addition to other payments required pursuant to Section 4 of this Agreement, then Buyer shall pay Seller the amount of all expenses incurred by Seller in returning the Products to the original shipping point or diverting them to another destination as the case may be.

        3.6     On Time Delivery .     

        3.6.1    [* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ]

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        3.6.2    In the event a penalty is triggered in any one of the categories in Section 3.6.1 in [* * * * * * ] consecutive quarters, and Buyer has timely delivered notices in accordance with Section 3.6.1 for each such quarter, then, immediately upon written notice to Seller, Seller shall become a nonexclusive supplier of Products for the remainder of the Term and Buyer may immediately begin to purchase Products from a second source of supply.

        3.7     Second Source of Supply .     In addition to the triggering event in Section 3.6.2, in the event Seller fails to deliver [********] percent ([**]%) of ordered Products for [******] business days beyond the applicable Purchase Order Delivery Date, then Buyer shall, immediately upon written notice to Seller, have the option of purchasing Products from a second source of supply and Seller shall automatically become a nonexclusive supplier of Products to Buyer for the remainder of the Term; provided, however , this provision shall be applicable only if notice of failure to deliver ordered Products has been provided by Buyer to Seller within [*****] business days after the applicable Purchase Order Delivery Date. Buyer may, at any time, begin qualifying a second source of supply for producing the Products (a "Secondary Supplier"). Before qualifying a Secondary Supplier, such Secondary Supplier shall agree in writing to be bound by confidentiality provisions substantially similar to those contained in Section 7 of this Agreement. Within [******] days after receiving the written agreement in which the Secondary Supplier agrees to be bound by the confidentiality obligation as contemplated by this Section 3.7, Seller shall deliver to Buyer copies of technical, manufacturing, and other written information, including but not limited to process sheets, process specifications, manuals, vendor lists, equipment information, and other writings required in order for Buyer to qualify a Secondary Supplier to manufacture and package Products according to the Current Product Specifications and Current Manufacturing Processes. Notwithstanding the foregoing, Seller shall only be required to deliver materials in its actual possession and shall not be required to produce or create any additional materials. Seller shall also be required to provide such assistance to Buyer or its designees as might be reasonably necessary to instruct Buyer or its designees in the manufacturing technique and procedures to manufacture Products for the validation of the first three (3) lots of Products by the proposed Secondary Supplier. Notwithstanding the foregoing, Seller shall not be required to provide to Buyer information listed in this Section unless a triggering event in either Section 3.6.2, or this Section 3.7 occurs.

        3.8     Equivalent Product .     In the event Seller fails to deliver Products pursuant to a Purchase Order to Buyer for [******] consecutive business days beyond the applicable Purchase Order Delivery Date, Seller shall take all commercially reasonable efforts to supply, at no additional cost to Buyer (other than as required pursuant to Section 4 of this Agreement), equivalent commercially available ophthalmic HA products reasonably acceptable to Buyer within [******]business days of Buyer's request until the outstanding purchase orders are fulfilled.

4.     PRICE, PAYMENT, AND SPECIFICATION CHANGES     

        4.1     General.     The price to the Buyer for each Unit of an Amvisc Product throughout the term of this Agreement shall be determined in accordance with Sections 4.2, 4.3 and 4.5 below. The pricing set forth below shall be effective from, and applicable to all Products delivered to Buyer by Seller in accordance with Article III of the 2000 Supply Agreement commencing from January 1, 2004. The Parties mutually agree that the terms of Sections 4.1 - 4.4 of this Agreement are effective as of January 1, 2004 instead of the Effective Date. In contemplation thereof, Seller shall pay Buyer, prior to December 23, 2004, (a) a reconciliation amount reflecting the difference between amounts due under Section 4 of the 2000 Supply Agreement and Section 4 of this Agreement with respect to Amvisc Products sold from January 1, 2004 through the Effective Date, and (b) a one-time contractual renegotiation fee of [* * * * * * ].

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        4.2     Price.     

        4.2.1     Pricing Schedule .    The purchase price for the Products shall be based on total Unit volume per calendar year and, subject to the provisions of Sections 4.3 and 4.5 below, shall be as set forth on the following schedule (the "Pricing Schedule"):

[* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ].

        4.2.2     Pricing Schedule Administration .    The Parties agree that the administration of the Pricing Schedule shall be determined as follows:

        (a)   In all cases, the initial sale price to be paid by Buyer pursuant to any Purchase Order shall be as provided in the middle column in the tables in Section 4.2.1 above.

        (b)   Within [******] business days after the end of the first quarter of a calendar year, the Parties shall review the Units sold through such date to determine if any reconciliation is necessary. If no more than [******] Units were sold in the first quarter, then no reconciliation shall be necessary. If more than [******] Units were sold in the first quarter, then the Parties shall determine what the total amount due Seller pursuant to Section 4.2.1 should have been, assuming for the purposes of this calculation (i) that [************] Amvisc Products were ordered in the same proportion both above and below the [******] Unit threshold as such Amvisc Products were proportionately ordered overall through the first quarter and (ii) any Units sold after the [******] Unit will be paid pursuant to the third column in the tables above. After such reconciliation, if it is determined that the Buyer is due any amounts from Seller then any such amounts shall be credited to Buyer; on the other hand, if it is determined that the Seller is due add