SUPPLY AGREEMENT FOR ACTIVE PHARMACEUTICAL INGREDIENT

EXHIBIT 10.2

EXECUTION VERSION

[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT CONFIDENTIAL INFORMATION HAS BEEN OMITTED. CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE CONFIDENTIAL PORTIONS HAVE BEEN PROVIDED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

 

SUPPLY AGREEMENT FOR ACTIVE PHARMACEUTICAL INGREDIENT

by and between

INSPIRE PHARMACEUTICALS, INC.

and

INSITE VISION INCORPORATED

Dated as of February 15, 2007

 

TABLE OF CONTENTS

 

SUPPLY AGREEMENT

This SUPPLY AGREEMENT (this “ Agreement ”) is made and entered into as of the 15th day of February, 2007 (the “ Effective Date ”) by and between INSPIRE PHARMACEUTICALS, INC., a Delaware corporation having its principal office at 4222 Emperor Boulevard, Suite 200, Durham, North Carolina 27703 (the “ Purchaser ”), and InSite Vision Incorporated, a Delaware corporation having its principal office at 965 Atlantic Avenue, Alameda, California 94501 (the “ Supplier ”). The Purchaser and the Supplier are sometimes referred to herein individually as a “ Party ” and collectively as “ Parties .”

RECITALS

WHEREAS, [***] is engaged in the business of manufacturing and supplying the active pharmaceutical ingredient azithromycin [***];

WHEREAS, the Supplier purchases azithromycin [***] from [***] pursuant to that certain Commercial Supply/Purchase Agreement dated April 1, 2005 by and between the Supplier and [***] (the “[***] Agreement ”); and

WHEREAS, the Purchaser desires to purchase azithromycin [***] manufactured by [***] from the Supplier.

NOW, THEREFORE, in consideration of the foregoing recitals, mutual covenants, agreements, representations and warranties contained herein, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

In this Agreement:

1.1 “ Affiliate ” means a corporation or non-corporate business entity that, directly or indirectly, controls, is controlled by, or is under common control with the Person specified. An entity will be regarded as in control of another entity if: (i) it owns, directly or indirectly, at least 50% of the voting securities or capital stock of such entity, or has other comparable ownership interest with respect to any entity other than a corporation; or (ii) it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or non-corporate business entity, as applicable, whether through the ownership or control of voting securities, by contract or otherwise.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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1.2 “ Agreement ” means this Supply Agreement together with all of its schedules (the “ Schedules ”).

1.3 “ API ” means the active pharmaceutical ingredient azithromycin [***] as described in the relevant Specifications for use by the Purchaser and/or Purchaser’s Nominated Contract Manufacturer in the manufacture of Product pursuant to the License Agreement.

1.4 “ Applicable Laws ” means all Legal Requirements applicable to the Manufacture of API, including not only in the country of Manufacture but also (i) where API is to be supplied to another country, the Legal Requirements in such country applicable to the Manufacture and sale of Product in such country and (ii) the Legal Requirement of the United States, including the Regulatory Acts, applicable to the Manufacture and sale of Product in the United States.

1.5 “ Business Day ” means any day, except Saturday and Sunday, on which commercial banking institutions in New York are open for business. Any reference in this Agreement to “day” whether or not capitalized shall refer to a calendar day, not a Business Day.

1.6 “ Certificate of Analysis ” means a certificate provided by a representative of [***] authenticating the pharmaceutical analysis of each batch of API supplied under this Agreement.

1.7 “ Commercially Reasonable Efforts ” means, with respect to the efforts of a particular Party to complete specific tasks or obligations under this Agreement, the efforts and resources that would be used, consistent with prevailing pharmaceutical industry standards, by a company of similar size and scope to such Party taking into account efficacy, safety and other relevant factors. Commercially Reasonable Efforts shall be determined on a country-by-country basis. With respect to the efforts of the Supplier to compel [***] to undertake any action as required under this Agreement, the Supplier’s rights and obligations under the [***] Agreement shall be considered in the determination of what efforts constitute Commercially Reasonable Efforts.

1.8 “ Confidential Information ” of a Party means all secret, confidential or proprietary information or data, whether provided in written, oral, graphic, video, computer or other form, provided by such Party (the “ Disclosing Party ”) to the other Party (the “ Receiving Party ”) pursuant to this Agreement (including information generated by or on behalf of such Party pursuant to this Agreement and disclosed to the other Party), which may include without limitation information relating to the Disclosing Party’s existing or proposed research, development efforts, patent applications, business or products and any other materials that have not been made available by the Disclosing Party to the general public. The terms of this Agreement shall also be deemed Confidential Information of each Party, except to the extent

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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disclosed pursuant to Section 11.3 herein. Notwithstanding the foregoing sentences, the term “Confidential Information” shall not include any information or materials that the Receiving Party can demonstrate:

(a) were already known to the Receiving Party (other than under an obligation of confidentiality), at the time of disclosure by the Disclosing Party to the extent such Receiving Party has documentary evidence to that effect;

(b) were generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;

(c) became generally available to the public or otherwise part of the public domain after its disclosure or development, as the case may be, and other than through any act or omission of the Receiving Party in breach of its confidentiality obligations under this Agreement;

(d) were subsequently lawfully disclosed to the Receiving Party by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others;

(e) were independently discovered or developed by or on behalf of the Receiving Party without the use of the Confidential Information belonging to the other Party and the Receiving Party has documentary evidence to that effect; or

(f) is approved for release by the Disclosing Party in writing.

1.9 “ Consent ” means any consent, authorization, permit, certificate, license or approval of, exemption by, or filing with, any Regulator or other Person.

1.10 “ Current Good Manufacturing Practices ” or “ cGMPs ” shall mean the then-current version of ICH-Q7A Good Manufacturing Practice Guidance For Active Pharmaceutical Ingredients and the then-current principles detailed in the U.S. Current Good Manufacturing Practices, 21 CFR Parts 210 and 211.

1.11 “ Delivery ” means in each case the delivery of API in accordance with the requirements of Section 4.1.

1.12 “ Disclosing Party ” has the meaning set forth in Section 1.8.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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1.13 “ DMF ” means in relation to API the Drug Master File containing all the information on the production and control of API.

1.14 “ Effective Date ” has the meaning set forth in the first (1 ^st ) paragraph hereof.

1.15 “ Eighteen Month Supply ” means the quantity of API forecasted in the applicable Forecast Schedule.

1.16 “ FDA ” means the United States Food and Drug Administration, or any successor agency thereof.

1.17 “ Firm Order ” or “ Firm Orders ” has the meaning set forth in Section 3.3.

1.18 “ Force Majeure Event ” has the meaning set forth in Section 12.1.

1.19 “ Forecast Schedule ” has the meaning set forth in Section 3.2.

1.20 “ Good Condition ” means that API supplied is the right product, made in accordance with the registered process, has in no way deteriorated or broken down, is not damaged or contaminated upon Delivery, is in the right container, is correctly labelled and properly sealed in its container, accords with the relevant Specifications and is capable of any agreed standard of performance.

1.21 “ Indemnitee ” has the meaning set forth in Section 14.3(a).

1.22 “ Indemnitor ” has the meaning set forth in Section 14.3(a).

1.23 “ Independent Laboratory ” means such laboratory as shall be mutually agreed in writing between the Parties for the purpose of Article 9.

1.24 “ Initial Term ” has the meaning set forth in Section 16.1.

1.25 “ Knowledge ” means, with respect to a particular fact or matter, the applicable Party or its Affiliate is actually aware of that fact or matter as of the Effective Date following a reasonably comprehensive internal investigation among such Party’s or Affiliate’s officers and employees who could reasonably be expected to be aware of such fact or matter.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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1.26 “ Legal Requirements ” shall mean any and all applicable local, municipal, provincial, federal and international laws, statutes, ordinances, rules, regulations or operating procedures now or hereafter enacted or promulgated by any Regulator, including the Regulatory Acts.

1.27 “ License Agreement ” shall mean that certain License Agreement by and between the Purchaser and the Supplier dated as of February 15, 2007.

1.28 “ Loss ” or “ Losses ” has the meaning set forth in Section 14.1.

1.29 “ Manufacture ” or “ Manufacturing ” means the planning, purchasing, manufacture, processing, compounding, storage, filling, packaging, waste disposal, labelling, leafleting, testing, quality assurance, sample retention, stability testing, release, dispatch and supply of API.

1.30 “ Manufacturing License ” means all licenses necessary for or required in connection with the Manufacture of API at the Manufacturing Site.

1.31 “ Manufacturing Site ” means the manufacturing facility of [***] at [***].

1.32 “ Material Safety Data Sheet ” means the material safety data sheet provided by a representative of [***] with respect to each batch of API supplied under this Agreement.

1.33 “ Other Purchaser Default ” has the meaning set forth in Section 16.6.

1.34 “ Other Supplier Default ” has the meaning set forth in Section 16.3.

1.35 “ Party ” or “ Parties ” has the meaning set forth in the first (1 ^st ) paragraph hereof.

1.36 “ Person ” or “ person ” means any individual, firm, corporation, partnership, limited liability company, trust, unincorporated organization or other entity or a government agency or political subdivision thereto, and shall include any successor (by merger or otherwise) of such Person.

1.37 “ Price ” means the price of API calculated pursuant to Article 5.

1.38 “ Product ” means the finished pharmaceutical products Manufactured by Purchaser pursuant to the License Agreement that contain API as an active ingredient.

1.39 “ Purchaser ” has the meaning set forth in the first (1 ^st ) paragraph hereof.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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1.40 “ Purchaser Indemnitee ” has the meaning set forth in Section 14.1.

1.41 “ Purchaser Material Default ” has the meaning set forth in Section 16.5.

1.42 “ Purchaser’s Nominated Contract Manufacturer ” means Cardinal Health PTS, LLC and such other Third Party manufacturer reasonably acceptable to Supplier as may be confirmed by the Purchaser to the Supplier in writing from time to time as being appointed by the Purchaser to manufacture Product on behalf of the Purchaser and to whom supplies of API shall be Delivered for this purpose pursuant to this Agreement.

1.43 “ Receiving Party ” has the meaning set forth in Section 1.8.

1.44 “ Regulator ” means any relevant nation or government, any state, province, or other political subdivision thereof or any entity with legal authority to exercise executive, legislative, judicial, regulatory or administrative functions or pertaining to government which regulates any aspect of the Manufacture of API or active pharmaceutical ingredient in general and/or the sale or marketing of any Product, including any division of the FDA (as applicable) and any other applicable counterpart agency that administers the Regulatory Acts of any jurisdiction.

1.45 “ Regulatory Acts ” means all Applicable Laws and regulations that govern the approval, manufacture, sale or licensing of pharmaceutical products, or ingredients for inclusion therein, including, without limitation, the United States Federal Food, Drug and Cosmetic Act, as amended and the rules and regulations promulgated thereunder.

1.46 “ Renewal Term ” has the meaning set forth in Section 16.1.

1.47 “[***]” has the meaning set forth in the first (1 ^st ) recital hereof.

1.48 “[***] Agreement ” has the meaning set forth in the second (2 ^nd ) recital hereof.

1.49 “[***] Confidential Information ” means Confidential Information (as defined in the [***] Agreement) of [***] received by the Supplier pursuant to the [***] Agreement.

1.50 “ Schedules ” has the meaning set forth in Section 1.2.

1.51 “ SEC ” has the meaning set forth in Section 11.2.

1.52 “ Seed Stock ” has the meaning set forth in Section 3.1.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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1.53 “ Specifications ” means the specifications for API as identified in Schedule 1 .

1.54 “ Supplier ” has the meaning set forth in the first (1 ^st ) paragraph hereof.

1.55 “ Supplier Indemnitee ” has the meaning set forth in Section 14.2.

1.56 “ Supplier Material Default ” has the meaning set forth in Section 16.2.

1.57 “ Term ” has the meaning set forth in Section 16.1.

1.58 “ Third Party(ies) ” means any Person other than the Supplier, the Purchaser and their respective Affiliates.

1.59 “ Third Party Claim ” means any Third Party claim, demand, suit, action or proceeding.

ARTICLE 2

MANUFACTURE AND SUPPLY OF API

2.1 Manufacture and Supply . In accordance with the terms of this Agreement, the Supplier shall sell to the Purchaser those requirements for API Manufactured by [***] as forecasted and ordered from time to time by the Purchaser in accordance with Article 3, and shall supply such quantities of API to the Purchaser and/or Purchaser’s Nominated Contract Manufacturer (as applicable) for use in the Manufacture of Product.

2.2 Compliance with Specifications; Quality Standards . All API supplied hereunder shall comply with the warranty set forth in Section 13.2(c).

2.3 [***] Agreement . The Supplier shall comply with all material terms and conditions set forth in the [***] Agreement.

ARTICLE 3

ORDERS AND FORECASTING; EIGHTEEN MONTH SUPPLY; DELIVERY

3.1 Seed Stock . The Supplier shall Deliver to Purchaser and/or Purchaser’s Nominated Contract Manufacturer [***] (the “ Seed Stock ”). The Seed Stock shall be Delivered as follows: (a) [***] in the aggregate of API on the date hereof; and (b) sufficient quantities of API so that the Seed Stock equals [***] in the aggregate of API on [***]. Title and risk of loss for the Seed Stock shall transfer to Purchaser in accordance with Section 4.2. Purchaser shall pay for the Seed Stock as follows: (y) notwithstanding Section 6.1, [***]upon shipment of the Seed Stock in accordance with Section 6.1.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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3.2 Quarterly Forecast . The Purchaser and/or Purchaser’s Nominated Contract Manufacturer (as applicable) shall provide the Supplier with a rolling forecast schedule of demand showing their estimated requirements for API for the following [***] months (“ Forecast Schedule ”). The Forecast Schedule shall be updated [***] and shall contain, in addition to quantity of API required, the requested delivery date. The first such Forecast Schedule shall be provided to the Supplier on the date hereof and thereafter by the first (1 ^st ) day of each [***]. All forecasts and orders under this Agreement shall be in multiples of the minimum order quantity of [***].

3.3 Eighteen Month Supply . The Supplier shall build up at the Purchaser’s or Purchaser’s Nominated Contract Manufacture’s (as applicable) location the Eighteen Month Supply of API in accordance with the following schedule: (a) [***] in the aggregate of API on the date hereof; (b) [***] in the aggregate of API on June 30, 2007; (c) [***] in the aggregate of API on December 31, 2007; and (d) the Eighteen Month Supply shall be fully Delivered on June 30, 2008. The Seed Stock shall be part of the Eighteen Month Supply and shall be included in determining the quantity of the Eighteen Month Supply at all times. At all times after June 30, 2008 during the term of this Agreement, the Supplier shall ensure that API is Delivered to Purchaser or Purchaser’s Nominated Contract Manufacturer in amounts sufficient to maintain, in the aggregate, the Eighteen Month Supply. Notwithstanding the preceding sentence, Purchaser acknowledges and agrees that the Supplier shall not be in breach of such obligation to maintain the Eighteen Month Supply if: (y) the quantity of API in inventory at the Purchaser’s or Purchaser’s Nominated Contract Manufacturer’s (as applicable) location, in the aggregate, falls below the Eighteen Month Supply while awaiting Delivery of API from [***] on orders already placed by the Supplier for the benefit of the Purchaser; or (z) the amount of API required for the Eighteen Month Supply increases as a result of the Purchaser’s Forecast Schedule and the Supplier is using its Commercially Reasonable Efforts to expedite Delivery of such increased amount in accordance with the Supplier’s then-current ordering processes with [***] so long as (i) Delivery occurs no later than seven (7) months from the date of such Forecast Schedule and (ii) the Supplier satisfies such increase from the Supplier’s own inventory of API by allocating its existing stock among the Purchaser and such other Third Parties to whom the Supplier supplies API on a pro rata basis. If the Supplier allocates API to the Purchaser from the Supplier’s own inventory, the Parties will discuss in good faith how such allocation will be documented and applied toward the Supplier’s obligations under this Section 3.3. The Purchaser shall be responsible for all storage, insurance and other costs required to maintain the Eighteen Month Supply; provided, however, the Supplier shall reimburse the Purchaser for one-third (1/3) of all such reasonable and documented costs within thirty (30) days of invoice thereof by the Purchaser.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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3.4 Firm Orders . Upon submittal of each Forecast Schedule, the quantities of API required for the Supplier to meet its obligations under Section 3.3 above will be regarded by the Parties as a binding irrevocable commitment (each a “ Firm Order ”) by the Purchaser to buy from the Supplier, and by the Supplier to supply (or cause to be supplied) to the Purchaser and/or Purchaser’s Nominated Contract Manufacturer (as appropriate).

3.5 Confirmation of Firm Orders . The Supplier shall respond to each Firm Order received from the Purchaser within thirty (30) days of receipt. The response shall include confirmation of the delivery dates and quantity as set out in the Firm Order. In the event that discussion is required regarding the timing of production and Delivery, then the relevant planning personnel from both Parties will agree and confirm any amendments to the Firm Order within ten (10) days of receipt by the Supplier of the original Firm Order.

3.6 Changes to Firm Orders . The Supplier shall satisfy the Purchaser’s requirements pertaining to each Firm Order and, subject to the Supplier’s rights under the [***] Agreement, shall use Commercially Reasonable Efforts to satisfy any changes in quantity, Delivery phasing or dates requested by the Purchaser in respect of such a Firm Order. In the event that the Supplier becomes aware that any Firm Order will not be satisfied, then the Supplier shall inform the Purchaser as soon as reasonably practicable and in any event within ten (10) Business Days. This shall be without prejudice to the Purchaser’s rights under this Agreement in respect of failure to meet Firm Orders.

3.7 Shipment . Each lot of API shall be shipped in reinforced cardboard boxes bagged in foil laminate pouches that meet U.S. Department of Transportation requirements per 49 CFR 171 and 178, as applicable, and each container will be clearly labelled with the weight, name, lot number, and expiration date. The Purchaser or Purchaser’s Nominated Contract Manufacturer (as appropriate) shall be provided with each Delivery the commercial invoice bearing the applicable order number relating to such Delivery and any other agreed Delivery documentation. At the Purchaser’s request, the Supplier shall provide the Purchaser with reasonable access to any applicable supporting data in the Supplier’s possession, available to the Supplier or that the Supplier is able to obtain using Commercially Reasonable Efforts.

3.8 Delivery . Delivery shall take place within the period from two days prior to two days after the delivery date contained in the Firm Order. If API is incorrectly delivered according to the Firm Order, the Supplier shall be held responsible for any reasonable and documented additional expense incurred in Delivering it to the correct point specified in the Firm Order.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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3.9 Incomplete Delivery . The Purchaser or, if relevant, Purchaser’s Nominated Contract Manufacturer shall notify the Supplier as soon as reasonably practicable if there is an incomplete delivery according to the terms of this Agreement. If the Supplier is notified by telephone or in person, then such notification shall be confirmed in writing. The Supplier shall then be obligated to rectify the incomplete delivery within sixty (60) days, running from the first date the Supplier receives such notification, provided this shall be without prejudice to any other rights or obligations under this Agreement. In addition, the Supplier shall rectify the incomplete delivery from the Supplier’s own inventory of API by allocating its existing stock among the Purchaser and such other Third Parties to whom the Supplier supplies API on a pro rata basis. If the Supplier allocates API to the Purchaser from the Supplier’s own inventory, the Parties will discuss in good faith how such allocation will be documented and applied toward the Supplier’s obligations under Section 3.3.

3.10 Certificate of Analysis; Material Safety Data Sheet . At the time of Delivery to the Purchaser or Purchaser’s Nominated Contract Manufacturer, the Purchaser shall be provided one (1) completed copy of the Certificate of Analysis and Material Safety Data Sheet relating to each batch of API Delivered.

3.11 Discontinuation . The Supplier shall notify the Purchaser in writing no less than twelve (12) months prior to such time as [***] may discontinue the manufacture of the API. The Purchaser shall have the right to purchase up to 150 additional kilograms of API on or prior to the effective date of such discontinuance.

3.12 Failure to Supply . If for any reason (including without limitation as a result of negligence, fault or omission of the Supplier or a Force Majeure Event) API is not able to be supplied to the Purchaser or the Eighteen Month Supply is not maintained at the amount required under Section 3.3 (or the Supplier anticipates that API will not be supplied to the Purchaser in accordance with any order placed in accordance with Article 3 or the Eighteen Month Supply will not be maintained at the amount required under Section 3.3), the Supplier shall, as soon as it becomes aware of the fact, give written notice to the Purchaser of the reasons for the shortfall. If the Supplier is in breach of its obligations under Section 3.3 and cannot for any reason whatsoever meet any such shortfall from allocation of Supplier’s existing stock, then the Purchaser may, without prejudice to its other rights and remedies pursuant to the Agreement or available at law, select and qualify a new supplier to manufacture and supply API to the Purchaser, and the reasonable and documented costs of such qualification shall be borne by the

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Supplier. In the event the Purchaser selects and qualifies a new supplier pursuant to the preceding sentence, at the Supplier’s written request: (a) the Purchaser and the Supplier shall use Commercially Reasonable Efforts to agree to a mutually acceptable arrangement where the Purchaser supplies the Supplier some portion of the API received by the Purchaser from such new supplier; or (b) the Purchaser will use Commercially Reasonable Efforts to assist the Supplier to obtain the right to order API directly from such new supplier.

3.13 Secondary Supplier . At any time while this Agreement is in effect, the Purchaser may select and qualify a secondary supplier (at the Purchaser’s sole expense) to manufacture and supply API to the Purchaser.

3.14 Regular Meetings . In order to promote efficient and effective supply chain planning, the appropriate personnel from the Parties’ respective manufacturing organizations will meet on a regular basis (and in any event no less than once each year) during the term of this Agreement to discuss, consider and implement such measures as they consider appropriate to manage the demand and supply aspects of this Agreement and review performance.

ARTICLE 4

PASSING OF TITLE AND RISK OF LOSS IN API

4.1 Shipment; Transport . API shall be Delivered to the Purchaser or Purchaser’s Nominated Contract Manufacturer (as specified in the Firm Order) FCA (Incoterms 2000 edition, published by the International Chamber of Commerce, ICC Publication 560) the location specified in the Firm Order, except with regard to title and risk of loss, which is described below in Section 4.2.

4.2 Title; Risk of Loss . Title and risk of loss in API shall remain with the Supplier until receipt by the Purchaser or Purchaser’s Nominated Contract Manufacturer (as the case may be), at which point title and risk of loss shall pass to the Purchaser or Purchaser’s Nominated Contract Manufacturer (as the case may be).

4.3 No Acceptance . Neither payment by nor passing of title or risk in API to the Purchaser or Purchaser’s Nominated Contract Manufacturer (as the case may be) shall be deemed to constitute acceptance of API.

ARTICLE 5

PRICE OF API

5.1 Price . The Price payable by the Purchaser for API shall be calculated in accordance with Schedule 2 . The Price and any other amounts payable pursuant to this Agreement shall be as stated and exclude the cost of Delivery, insurance and packing costs and applicable taxes and duties which shall be paid by the Purchaser.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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5.2 Annual Review . The Supplier will keep accurate books and accounts of record in connection with its purchase of API from [***] in sufficient detail to permit accurate determination of all figures necessary for verification of payment obligations set forth in this Article 5. The Parties shall meet annually during the term of this Agreement (unless otherwise mutually agreed in writing) to review the Price payable by the Purchaser. Prior to such meeting, the Supplier shall (subject to the Supplier’s confidentiality obligations to [***] (which the Supplier shall use Commercially Reasonable Efforts to compel [***] to waive)) provide the Purchaser with the details of the pricing at which the Supplier purchases API from [***].

ARTICLE 6

INVOICE AND PAYMENT

6.1 Invoices . Upon shipment of API, the Supplier shall invoice the Purchaser for the relevant quantity of API contained in such shipment. Each invoice issued by the Supplier hereunder shall specify:

(a) The Price in respect of API shipped;

(b) The quantity of API shipped and the corresponding Firm Order; and

(c) Any other amounts reimbursable to the Supplier pursuant to this Agreement.

6.2 Payment . Payment to the account identified by the Supplier in writing and shall be made in either Euros or United States Dollars in the Purchaser’s discretion. If a conversion in currency is required, the amount of payment shall be determined by converting the price in Schedule 2 to United States Dollars according to the exchange rate listed in the Wall Street Journal on the date of payment. Payments shall be made within thirty (30) days from the date of Supplier’s invoice to the account identified by the Supplier in writing.

6.3 Taxes .

(a) The Purchaser shall pay and otherwise be responsible for all applicable sales, goods and services and transfer taxes in connection with any payment made to the Supplier pursuant to this Agreement.

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(b) Any income or other tax that one Party hereunder is required to withhold and pay on behalf of the other Party hereunder with respect to amounts payable under this Agreement shall be deducted from and offset against said amounts prior to payment to the other Party; provided, however, that in regard to any tax so deducted, the Party making the withholding shall give or cause to be given to the other Party such assistance as may reasonably be necessary to enable that other Party to claim exemption therefrom or credit therefor, and in each case shall furnish the Party on whose behalf amounts were withheld proper evidence of the taxes paid on its behalf. Each Party shall comply with reasonable requests of the other Party to take any proper actions that may minimize any withholding obligation.

ARTICLE 7

CAPACITY

The Supplier shall use Commercially Reasonable Efforts to ensure that sufficient manufacturing capacity to meet the Purchaser’s and/or Purchaser’s Nominated Contract Manufacturer’s (as the case may be) requirements for API as shown in the Forecast Schedule is available at all times in accordance Section 3.3. The Purchaser and the Supplier shall regularly review and discuss the Manufacturing capacity available at the Manufacturing Site in relation to the Forecast Schedule. In the event of a breakdown or fault in production which impacts the manufacturing capacity required hereunder or otherwise impacts the Manufacture of API for the Purchaser, the Supplier shall notify the Purchaser as soon as reasonably practicable and shall use Commercially Reasonable Efforts to ensure a return to production as soon as possible.

ARTICLE 8

COMPLAINTS AND PRODUCT RECALL

8.1 Complaints and Product Recall . The Purchaser shall be solely responsible in accordance with Applicable Laws and regulations for the reporting to Regulators in the territories in which the Purchaser is permitted to Manufacture and distribute Products pursuant to the License Agreement of any complaints and product recalls relating to Product which arise for any reason.

8.2 Manufacturing Events . The Supplier shall use Commercially Reasonable Efforts to advise, and shall use Commercially Reasonable Efforts to compel [***] to advise, the Purchaser of any occurrence or information which arises out of the Manufacturing activities that has or could reasonably be expected to have adverse regulatory compliance and/or reporting consequences concerning API and/or Product within forty-eight (48) hours of becoming aware of such information, and, subject to the Supplier’s confidentiality obligations to [***] (which the

 

*Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Supplier shall use Commercially Reasonable Efforts to compel [***] to waive), promptly furnish copies of any related information or reports to the Purchaser. In addition to the foregoing, the Supplier shall use Commercially Reasonable Efforts to notify, and shall use Commercially Reasonable Efforts to compel [***] to notify, the Purchaser of any problem related to the Manufacture of API under this Agreement within forty-eight (48) hours of becoming aware of such problem, including:

(a) where any API or its labelling may have been mistaken for or applied to another product; or

(b) where any API may be affected by bacteriological or other contamination, significant chemical, physical or other change or deterioration or stability failures; or

(c) where any API is the subject of a complaint by a Third Party or customer in circumstances where this may impact API Manufactured for the Purchaser under this Agreement; or

(d) where any API may not comply with the Specifications therefor.

8.3 Recall Strategy . If any of the circumstances described in Section 8.2 arise, at the Purchaser’s written request, the Supplier shall use Commercially Reasonable Efforts to take, and shall use Commercially Reasonable Efforts to compel [***] to take, all such acts as the Purchaser may reasonably direct in writing. If the Purchaser or any Regulator deems that a Product recall is required, the recall strategy shall be developed in good faith by the Parties and the Supplier shall use Commercially Reasonable Efforts to follow, and shall use Commercially Reasonable Efforts to compel [***] to follow, timing requirements. The reasonable and documented costs of any such action agreed upon by the Parties as a result of the circumstances described in Section 8.2, or of any such recall under this Section 8.3, shall be borne by the Supplier only in the event and to the extent the need for the action is the result of a failure on the part of the Supplier to comply with its obligations under this Agreement, and if not the result of a failure of the Supplier shall be borne by the Purchaser.

8.4 Complaint Investigations . Upon notification from the Purchaser that it has received a complaint in respect of the Product which the Purchaser reasonably believes is due to API, upon the Purchaser’s written request, the Supplier shall use Commercially Reasonable Effort to follow, and shall use Commercially Reasonable Efforts to compel [***] to conduct, all such necessary internal investigations as may be reasonably necessary to determine the validity of such complaint. The findings of any such investigations shall be reported in writing to the Purchaser

 

*Indicates that certain information contained herein has been omitted and filed separately with the Secur