<PAGE>
Note: Certain portions of this document have been marked "[C.I.]"
to indicate
that confidential treatment has been requested for this
confidential
information. The confidential portions have been omitted and filed
separately
with the Securities and Exchange Commission.
SUPPLY AGREEMENT
AMIDE PHARMACEUTICALS, INC.
AND
SIRIUS LABORATORIES, INC.
<PAGE>
TABLE OF CONTENTS
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I.
DEFINITIONS..............................................................................................1
II.
MANUFACTURE AND SUPPLY OF
PRODUCT........................................................................3
2.1 Regulatory
Responsibility.......................................................................3
2.2
Manufacture and
Purchase........................................................................4
2.3 Raw
Materials...................................................................................5
2.4
Commencement of Manufacturing for New
Product...................................................5
2.5 Purchase
Orders.................................................................................5
2.6 Rejected
Product................................................................................6
2.7 Product
Price...................................................................................7
III.
SHIPMENT AND RISK OF
LOSS................................................................................8
3.1
Shipment........................................................................................8
3.2 Delivery
Terms..................................................................................8
3.3
Claims..........................................................................................8
IV. TERM AND
TERMINATION.....................................................................................8
4.1
Term............................................................................................8
4.2
Termination.....................................................................................9
4.3 Payment on
Termination..........................................................................9
4.4
Survival........................................................................................9
V.
CERTIFICATES OF ANALYSIS AND MANUFACTURING
COMPLIANCE....................................................9
5.1
Certificates of
Analysis........................................................................9
5.2 Stability
Testing..............................................................................10
5.3 Additional
Validation Work or Additional
Testing...............................................10
VI. WARRANTIES
AND
REPRESENTATIONS..........................................................................10
6.1 Conformity
with
Specifications.................................................................10
6.2 Compliance
with the
Act........................................................................10
6.3 Conformity
with FDA regulations and
CGMP's.....................................................10
6.4 Compliance
of Packaging and Labeling with Laws and
Regulations.................................10
6.5 Access to
AMIDE's
Facilities...................................................................11
6.6
Corporation
Bound..............................................................................11
6.7 Additional
Representations and
Warranties......................................................11
VII.
PRODUCT RECALLS AND PRODUCT
DESTRUCTION.................................................................12
7.1 Product
Recall.................................................................................12
7.2 Product
Destruction............................................................................13
VIII.
FORCE MAJEURE: FAILURE TO
SUPPLY........................................................................13
8.1 Force
Majeure
Events...........................................................................13
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8.2 Failure to
Supply..............................................................................13
IX.
IMPROVEMENTS............................................................................................14
9.1 Changes by
SIRIUS..............................................................................14
9.2 Changes by
AMIDE...............................................................................14
9.3 Changes by
Law or Regulatory
Authorities.......................................................14
9.4
Notice.........................................................................................14
9.5 Obsolete
Inventory.............................................................................14
9.6 Disposal
Costs.................................................................................15
X.
CONFIDENTIAL INFORMATION: INTELLECTUAL PROPERTY
RIGHTS.................................................15
10.1
Confidential
Information.......................................................................15
10.2
Trademarks and Trade
Names.....................................................................15
XI.
INDEMNIFICATION.........................................................................................16
11.1
Indemnification by
AMIDE.......................................................................16
11.2
Indemnification by
SIRIUS......................................................................16
11.3
No
Waiver......................................................................................17
11.4
Insurance......................................................................................17
11.5
Patent and Other Intellectual Property
Rights..................................................17
XII.
GENERAL
PROVISIONS......................................................................................18
12.1
Notices........................................................................................18
12.2
Entire Agreement;
Amendment....................................................................18
12.3
Waiver.........................................................................................18
12.4
Assignment.....................................................................................18
12.5
Governing Law and
Arbitration..................................................................19
12.6
Severability...................................................................................19
12.7
Modification By Operation Of
Law...............................................................19
12.8
Headings,
Interpretation.......................................................................19
12.9
Singular And
Plural............................................................................19
12.10
Document
Preparation...........................................................................19
12.11
Counterparts...................................................................................19
12.12
Independent
Contractors........................................................................19
12.13
Implied
Rights.................................................................................20
12.14
Parties
Relationship...........................................................................20
12.15
Right to Purchase Product
Formulation..........................................................20
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<PAGE>
This Supply Agreement (the "Agreement") is made as of this 18th day
of
May, 2001 by and between Sirius Laboratories, Inc., an Illinois
corporation
headquartered at 100 Fairway Drive, Suite 130, Vernon Hills, IL
60061
(hereinafter referred to as "SIRIUS"), and Amide Pharmaceuticals,
Inc, a New
Jersey Corporation with its principal place of business at 101 East
Main Street,
Little Falls, New Jersey 07424 (hereinafter referred to as
"AMIDE")
(collectively, the "Parties").
RECITALS
A. SIRIUS is the innovator of a pharmaceutical product to be known
as
NICOMIDE(TM) (hereinafter the "Product"), which is a
vitamin-mineral product
that can, at SIRIUS's option, be marketed either as a
prescription
pharmaceutical nutritional supplement that does not require FDA
marketing
approval, or as a non-prescription dietary supplement;
B. AMIDE manufactures pharmaceutical products for itself and
others;
C. SIRIUS has developed a formulation (the "Formulation") for
the
Product, and SIRIUS desires AMIDE to Manufacture and Sell the
Product to SIRIUS;
D. AMIDE has the capability to Manufacture and Sell the Product
to
SIRIUS; and
E. the Parties desire to enter into a supply agreement for the
Manufacture and sale of the Product;
NOW, THEREFORE, in consideration of the mutual covenants, promises,
and
conditions contained herein, and for other good and valuable
consideration, the
receipt and sufficiency of which are acknowledged, the Parties
agree as follows:
I. DEFINITIONS
1.1 "Act" means the Federal Food, Drug and Cosmetic Act, as
amended, and
regulations promulgated thereunder.
1.2 "Affiliate(s)" shall mean any corporation, association,
company,
organization or other entity which directly or indirectly controls,
is
controlled by or is under common control with one of the Parties.
For purposes
of this definition, control means the ability, directly or
indirectly, through
ownership of securities, by agreement, or by any other method, to
direct more
than [c.i.] percent ([c.i.]%) of the outstanding equity votes of
any entity,
whether or not represented by securities, or to otherwise control
the management
decisions of any entity.
1.3 "Commercialization" shall mean the sale, distribution,
marketing and
promotion of the Product by SIRIUS.
1.4 "DSHEA" shall mean the Dietary Supplement Health and Education
Act of 1994
and any related federal and/or state rule, regulation, statute or
law pertaining
to the safety, effectiveness, adulteration, mishandling, packaging,
labeling or
storage of dietary supplement ingredients and/or finished dietary
supplement
products that may be applicable to the Product during the term of
this
agreement.
1.5 "FDA" shall mean the United States Food and Drug
Administration, or any
successor entity thereto.
1
<PAGE>
1.6 "Forecasted Needs" means SIRIUS's estimate of Product to be
ordered from
AMIDE for [c.i.] following the [c.i.] in which such estimate is
provided.
1.7 "Formulation" means the Product as detailed on Exhibit A, or as
amended from
time to time by SIRIUS in accordance with this Agreement.
1.8 "Intellectual Property" shall mean patents, patent
applications,
continuations, continuations-in part, divisionals, reissues,
reexaminations,
trade names, trademarks, and trade dress.
1.9 "Label", "Labeled", or "Labeling" means all labels and other
written,
printed, or graphic matter upon: (i) the Product or any container
or wrapper
utilized with the Product or (ii) any written material accompanying
the Product.
1.10 "Law" shall mean any local, state or federal rule, regulation,
statute or
law relevant to the manufacture, distribution and/or sale of the
Product, and to
any other matters set forth herein.
1.11 "Losses" shall mean any [c.i.], including [c.i.], incurred by
either Party
which arise from any [c.i.].
1.12 "Manufacture" means the activities undertaken to create the
Product from
its Raw Materials in accordance with the Specifications (as
hereinafter defined)
including but not limited to Product creation, testing, packaging,
and labeling.
1.13 "Manufacturing Cost" shall mean [c.i.] (as hereinafter
defined), [c.i.].
1.14 "Manufacturing Fee" means the fee paid by SIRIUS to AMIDE for
services
required to Manufacture Product. The Manufacturing Fee is quoted in
single final
Product unit increments (i.e. by the bottle or sample carton) The
Manufacturing
Fee shall include services for [c.i.] The Manufacturing Fee does
not include,
without limitation, any [c.i.]. These services are in addition to
the
Manufacturing Fee and shall be billed [c.i.] at [c.i.] not to
exceed [c.i.].
Manufacturing Fee also does not include any [c.i.] or [c.i.]. These
items are
billed separately in accordance with paragraph 2.2 below.
1.15 "Market Year" means a period of twelve (12) months commencing
on the date
of the launch by SIRIUS of Product Manufactured by AMIDE.
1.16 Material Safety Data Sheet" ("MSDS") means written or printed
material
concerning a hazardous chemical which is prepared in accordance
with the
regulations promulgated by the Occupational Safety & Health
Administration, or
any successor entity thereto.
1.17 "Packaging" means all primary containers, cartons, shipping
cases, inserts
or any other like material used in packaging or otherwise
accompanying the
Product.
2
<PAGE>
1.18 "Product" or "Products" whenever used herein shall mean the
pharmaceutical
product or products identified on Exhibit A. Each dosage strength
shall be
considered a separate Product.
1.19 "Raw Materials" means the active ingredients, excipients and
any other
components necessary to create and package the Product.
1.20 "Active Raw Materials" shall mean niacinimide, folic acid and
zinc.
1.21 "Sell" (for SIRIUS) means the activities undertaken to
commercialize,
market, promote and sell the Product in the market. Sell by AMIDE
means the
Manufacture and sale of the Product to SIRIUS.
1.22 "Specifications" means all regulatory, manufacturing, quality
control, test
methods and quality assurance procedures, processes, practices,
standards,
instructions and specifications comprising AMIDE's manufacturing
and packaging
of the Product and such other FDA and/or other regulatory
requirements as may be
applicable, including the specifications for Raw Materials and
manufacturing
procedures of the Product as either submitted by AMIDE and approved
in writing
by SIRIUS or covered under AMIDE's Standard Operating Procedures
("SOP's"). The
Specifications shall include, without limitation: (i) Raw
Material
specifications (including approved suppliers, art proofs, chemical,
micro, and
packaging specifications); (ii) sampling requirements (i.e., lab,
chemical, and
micro); (iii) compounding module, including compounding process and
major
equipment; (iv) intermediate specifications; (v) packaging module
(including
packaging procedures, torque and fill weights); (vi) finished
Product
specifications release criteria including AMIDE's Acceptable
Quality Limits
("AQL's"); (vii) stability specifications; and (viii) test
methods.
Specifications shall be established and/or amended from time to
time upon the
written agreement of both AMIDE and SIRIUS via a Product Change
Request ("PCR")
in accordance with Section IX below.
II. MANUFACTURE AND SUPPLY OF PRODUCT
2.1 REGULATORY RESPONSIBILITY.
(a) AMIDE shall remain responsible for maintaining and fulfilling
all
regulatory requirements with respect only to the Manufacture of
Products that
are imposed by Law upon AMIDE as the manufacturer of the
Products.
(b) SIRIUS shall perform all necessary regulatory filings and
will
obtain all necessary registrations in the United States, with the
FDA or other
relevant government agencies, as required by law, for Manufacture
of the
Product. SIRIUS shall be solely and exclusively responsible for
obtaining,
maintaining and fulfilling all regulatory requirements with respect
to the
Products that are imposed by Law upon SIRIUS in connection with
SIRIUS's
Commercialization and sale of the Products. SIRIUS shall, on a
timely basis,
provide AMIDE with all information that is reasonably necessary and
relevant to
assist AMIDE in fulfilling all of its regulatory obligations.
(c) AMIDE shall advise SIRIUS orally or in writing within [c.i.]
days
if an authorized agent of the FDA or other governmental agency
visits AMIDE's
manufacturing facility and requests or requires information or
changes which
directly pertain to the Product or which may negatively impact
AMIDE's ability
to continue to manufacture SIRIUS's Product under this Agreement.
FDA audit time
specific to Product [c.i.]. AMIDE shall notify SIRIUS of any FDA
determination
regarding failure to comply with CGMP.
3
<PAGE>
(d) AMIDE shall report adverse drug experience information
within
[c.i.] hours of receipt by AMIDE. AMIDE shall provide other
post
Commercialization reports as are required to be filed with the FDA
or its
equivalent. All telephone calls received by AMIDE relating to the
Product shall
be referred to SIRIUS. SIRIUS shall be responsible for fulfilling
any and all
regulatory requirements with respect to such events, including but
not limited
to the filing of all required forms, contact and follow-up with the
patient or
reporter of the event, and will make any necessary contact with the
FDA
regarding the subject matter of same.
(e) SIRIUS, in performing its obligations hereunder, shall
materially
comply with all applicable Laws. If SIRIUS receives notice of an
inspection or
other notification by a governmental entity, including FDA,
relating to
Products, promotional materials or other matters, SIRIUS shall
notify AMIDE on
the same day such notice or notification is received, and provide
to AMIDE,
within [c.i.] hours, copies of all relevant documents, warning
letters and other
correspondence and notifications relating to Products. SIRIUS
agrees to
cooperate with AMIDE during any inspection, investigation or other
inquiry by
FDA or any other governmental entity, including providing
information and/or
documentation, as requested by FDA or other governmental entity.
SIRIUS also
agrees to discuss any response to observations or notifications
received and to
give AMIDE an opportunity to comment on any proposed response
before it is made.
In the event of disagreement concerning the form or content of such
response,
however, AMIDE shall be responsible for deciding the appropriate
form and
content of any response with respect to any of its cited activities
and SIRIUS
shall be responsible for deciding the appropriate form and content
of any
response with respect to any of its cited activities.
2.2 MANUFACTURE AND PURCHASE.
(a) AMIDE will Manufacture, Package, Label, store, and ship the
Product
in accordance with the Specifications.
(b) SIRIUS shall designate AMIDE as its manufacturer and SIRIUS
shall
purchase [c.i.] of SIRIUS's Forecasted Needs of Product from
AMIDE.
(c) Nothing herein shall be construed to prohibit SIRIUS from
qualifying a secondary manufacturing facility, however, SIRIUS
shall not utilize
such secondary manufacturing facility unless and until one of the
following
occurs:
(i) [c.i.]; or
(ii) [c.i.]
(d) Subject to the terms and conditions of this Agreement, AMIDE
agrees
that it will manufacture for and provide to SIRIUS, and SIRIUS
agrees that it
will purchase from AMIDE, [c.i.] requirements of the Products,
identified in
Exhibit A attached hereto, as follows:
(i) [c.i.] until [c.i.], AMIDE shall Manufacture and sell and
SIRIUS shall purchase [c.i.] of SIRIUS's annual requirements;
(ii) [c.i.] for the [c.i.] AMIDE shall Manufacture and sell
and SIRIUS shall purchase [c.i.] of SIRIUS's annual requirements;
and
4
<PAGE>
(iii) [c.i.] for the [c.i.], AMIDE shall Manufacture and sell
and SIRIUS shall purchase [c.i.] of SIRIUS's annual
requirements.
(e) With respect to years in which SIRIUS is [c.i.] of SIRIUS'S
annual
requirements from AMIDE, SIRIUS [c.i.] may purchase from AMIDE and
AMIDE shall
Manufacture in excess of the minimum required, [c.i.] of the
annual
requirements. If SIRIUS does not achieve or maintain the minimum
volumes listed
in Schedule A, [C.I.] may, [c.i.], adjust [c.i.].
2.3 RAW MATERIALS.
(a) [c.i.], will select [c.i.] the Raw Materials, including
active
ingredients and excipients, for the Manufacture of the Product.
(b) SIRIUS shall provide AMIDE with Specifications (including
art
proofs) for Packaging and Labeling, and [C.I.] shall purchase,
[c.i.], Packaging
and Labeling in accordance with the Specifications. If SIRIUS
requires patient
booklets or other promotional materials (hereinafter collectively,
"Promotional
Materials") to be included in Packaging of Product, SIRIUS shall
supply such
Promotional Materials to AMIDE for prior approval and upon AMIDE's
written
approval, AMIDE shall obtain such Promotional Materials [c.i.].
Approval in this
section (b) shall mean only AMIDE's [c.i.] that AMIDE can
logistically and
physically include such Promotional Material as part of the
manufacturing of
Product. Nothing herein shall be deemed or construed to represent
that AMIDE has
read, reviewed or confirmed the accuracy of the Promotional
Material.
2.4 COMMENCEMENT OF MANUFACTURING FOR NEW PRODUCT.
No later than [c.i.] prior to the initial Market Year of the
Product,
SIRIUS agrees to notify AMIDE in writing of its delivery
requirements, including
firm orders for same, for the [c.i.] and shall provide its
Forecasted Needs in
writing for [c.i.] in order to ensure timely delivery of Product
for initial
sale and marketing.
2.5 PURCHASE ORDERS.
(a) SIRIUS agrees to purchase from AMIDE [c.i.] Product
Manufactured
for SIRIUS by AMIDE in accordance with SIRIUS's purchase orders
[c.i.] to the
extent such Product meets the Specifications.
(b) SIRIUS will transmit orders for Product to AMIDE using a
mutually
acceptable order entry system. All orders shall include the precise
quantity of
Product, the dates by which the ordered Product must be ready for
shipment, and
any additional information reasonably necessary to ensure proper
shipment of
Product.
(c) At the [c.i.] and thereafter at the [c.i.], SIRIUS shall
provide
AMIDE with specific data as to its Forecasted Needs for the
following [c.i.]. It
is understood and agreed that with respect to any forecasts issued
to AMIDE by
SIRIUS pursuant to the terms hereof, the forecast for the [c.i.]
thereof shall
constitute a firm order for Products, regardless of receipt of
SIRIUS's actual
purchase order, and shall specify the requested delivery dates
thereof and AMIDE
shall meet those dates, [c.i.]. [C.I.] may, [c.i.], Manufacture
Product up to
[c.i.] prior to the requested delivery date in order to accommodate
fluctuations
in production demands. The [c.i.] of the
5
<PAGE>
period addressed in the forecast shall be utilized by AMIDE for
purposes of Raw
Material acquisition on behalf of SIRIUS and AMIDE production
planning. Although
AMIDE shall [c.i.] [c.i.] the Raw Material inventory purchased on
behalf of
SIRIUS, certain Raw Materials may have long lead times, require a
minimum order
quantity, and/or present a substantial economic order quantity.
Therefore, AMIDE
may order the [c.i.] to support up to [c.i.] of SIRIUS's Forecasted
Needs, or
the [c.i.] quantity, whichever is [c.i.]. Should [C.I.]
subsequently [c.i.] will
be [c.i.] for the [c.i.] of any material purchased by AMIDE on
SIRIUS's behalf.
Any such material which is subsequently rendered [c.i.] that
required to support
up to [c.i.] of SIRIUS's Forecasted Needs shall be [c.i.].
(d) SIRIUS shall issue written purchase orders for Product to AMIDE
at
least [c.i.] to the requested delivery date if the requirements are
[c.i.] of
the most recently supplied Forecasted Needs for such period, and at
least [c.i.]
to the requested delivery date if the requirements exceed
[c.i.].
(e) AMIDE will only be required to meet the delivery dates
confirmed to
SIRIUS by AMIDE, in writing, so long as said dates [c.i.] from
receipt of
SIRIUS's purchase order. This Agreement allows for up to [c.i.] per
batch of
Product. Additional destinations may be accommodated for a shipping
preparation
fee [c.i.].
2.6 REJECTED PRODUCT.
(a) SIRIUS may reject any Product which fails to meet the
Specifications. SIRIUS shall, within [c.i.] days after its receipt
of any
shipment of Product and related Certificate of Analysis of Product
batch (as
described in paragraph 5.1 hereof), notify AMIDE in writing of any
claim
relating to rejected Product batch and, failing such notification,
shall be
deemed to have accepted such Product batch. Such notice to AMIDE
shall specify
why the Product batch failed to perform to Specifications. AMIDE
shall have an
opportunity to [c.i.] said Product batch. All Product shall be
submitted to
inspection and evaluation in accordance with AMIDE's SOP's to
determine whether
or not said Product meets the Specifications. As to any such
Product batch
(including phases of or complete batches of bulk product) which is
determined to
fail the Specifications and may be rejected by SIRIUS or AMIDE
("Rejected
Product"), AMIDE shall [c.i.] for the Manufacture of Product. If
requested,
AMIDE shall [c.i.] with SIRIUS for the [c.i.] of Rejected
Product.
Notwithstanding the foregoing, in the case of any nonconformity
which is not
readily apparent or discoverable upon reasonable inspection within
such [c.i.]
period, any claim of nonconformity with respect thereto shall not
be deemed
waived and delivery of Product shall not be deemed to have been
accepted if
SIRIUS notifies AMIDE as soon as practicable, but not later than
[c.i.],
following the date upon which SIRIUS learns of such
nonconformity.
(b) If there is a conflict between the test results of AMIDE and
the
test results of SIRIUS with respect to any shipment of Product,
batch samples of
such Product batch shall be submitted [c.i.] to an independent
laboratory [c.i.]
for testing against the Specifications under procedures employed in
the
Specifications. The fees and expenses of such laboratory testing
shall be
[c.i.]. If results from the independent laboratory are
inconclusive, final
resolution will be settled in accordance with paragraph 12.5(b)
below.
6
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(c) For the [c.i.] validation batches of Product produced by AMIDE,
or
if a Rejected Product is due to SIRIUS supplied information,
formulations or
materials, [C.I.] shall bear [c.i.] of [c.i.] for Rejected Product,
including
the [c.i.] of Rejected Product. If the [c.i.] registration batches
or [c.i.]
validation batches of Product fails to meet Specifications [C.I.]
shall bear
[c.i.] of [c.i.] to and [c.i.] the Rejected Product [c.i.].
Thereafter, in the
event a Rejected Product is due to the failure of AMIDE to comply
with
applicable written procedures, and such failure affects the
marketability of the
Product, [C.I.] shall bear [c.i.] of the [c.i.] supplied by [C.I.]
and [c.i.].
If the Product does not meet final specifications, but such failure
is not due
to either SIRIUS supplied information or AMIDE's failure to follow
written
procedures, [C.I.] shall bear [c.i.] with [C.I.] bearing [c.i.]
related to
Rejected Product.
2.7 PRODUCT PRICE.
(a) The initial Manufacturing Fees to be paid by SIRIUS to AMIDE
are
listed in Schedule A. The parties hereto agree that the
Manufacturing Fees set
out in Schedule A shall be [c.i.], at [c.i.]. If the parties are
unable to agree
on a [c.i.] at least [c.i.] prior to the start of a [c.i.], then
this Ag
