Exhibit 10(ae)
Supply Agreement dated January 17, 1997*
* Certain portions of Exhibit 10(ae) have been omitted and have been filed
with the Commission pursuant to a request for confidential treatment
thereof.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION -- ASTERISKS DENOTE SUCH OMISSION
January 17, 1997
Xx. Xxxxxxx X. Xxxxxx
Vice President-Finance
Lannett Company, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Dear Xxxx:
This will set forth the terms on which Lannett Company, Inc.,
("Lannett") will supply certain Products to Duramed Pharmaceuticals, Inc.
("Duramed") for distribution and sale by Duramed under the Duramed label.
1. Lannett will supply Duramed, on the terms of this
agreement, all of Duramed's requirements of the Products listed in
Exhibit 1 (the "Products") for distribution and sale by Duramed in the
United States.
2. (a). Throughout the term of this Agreement, Lannett will not
directly sell or distribute Product to Hospitals and Managed Care
organizations (except **** ) and chain market segments. In the event a
potential customer expresses to Lannett or Duramed that it prefers to
establish business for Product directly with the manufacturer, then the
applicable party shall promptly notify the other of such potential customer
and Lannett will be able to sell directly to such customer. In addition,
Duramed will act as Lannett's exclusive sales agent for the sale of Lannett
label Products currently being sold by Lannett to the current Lannett chain
market customers, *****. For these two customers Duramed will submit each
order to Lannett, and Lannett will invoice and ship each order directly to
the customer. Within thirty days after the end of each calendar month,
Lannett will pay Duramed a 3% royalty on Lannett's net sales (net sales is
defined as gross sales, less discounts, rebates, returns and allowances) to
***** . New Products sold to *****, will be at the agreed upon transfer price
for both the Lannett and Duramed labels. Duramed shall not solicit sales,
directly sell or distribute Product to the customers included in Exhibit 2
hereof, except when such sale is made to service Hospital, Managed Care or
Chain market segment customers. Duramed shall promptly inform Lannett of
sales arrangements to such parties which require sales to customer included
in Exhibit 2. Such Exhibit may be
Lannett/Duramed
January 16, 1997
Page Two of Eight
modified from time to time by Lannett. The provisions of this section 2(a)
shall not be applicable to customers outside the U.S. Such international
customers shall be'handled on an individual basis.
2. (b). Lannett will deliver the finished Products to Duramed in
bottles as specified in Duramed's purchase order, except for
Dicyclomine Hydrochloride Capsules USP, 10 mg, which may be ordered in
bulk. In such case, Duramed agrees to package Lannett's Dicyclomine within
30 days of Date of Manufacture, and comply with the FDA's guidelines for
"Expiration Dating for Repackaging into Multiple-Use Containers, Including
Unit-of-Use Containers" attached as Exhibit 3.
2. (c). Duramed will distribute the Products under a Duramed
label in a manner consistent with their distribution as generic drugs.
Lannett will prepare the required labels and inserts for the Products other
than the Products ordered in bulk. Duramed will review and approve each
label and insert before final printing and Lannett will be responsible for
the accuracy and completeness of such materials and their compliance with
applicable laws and regulations. Lannett will make all regulatory filings
for advertising and other promotional materials for the Products which
Lannett is required to make as holder of the ANDA. Neither party will
acquire any rights in any trademarks or other identification owned or used
by the other in connection with the Products.
2. (d). Duramed will provide to Lannett on a monthly basis a
forecast of its orders for the Products for the then following six (6)
months, along with requested shipment dates for the Products. Each forecast
will be binding upon Duramed with respect to orders forecasted for the
lesser of the then following three (3) months or the remaining term of this
agreement. At the time of each order, the parties will agree on shipment
dates for the order, and Lannett will make all shipments in accordance with
the agreed dates. Lannett shall use all reasonable efforts to deliver the
full quantities of the Products ordered by Duramed. Within thirty (30)
days following its receipt of each forecast, according to paragraph 2(d)
hereof, Lannett shall advise Duramed in writing if it is unable to supply
the entire quantity forecasted. Duramed shall have the right to purchase
from third parties, such quantities of the Products (at Duramed's cost),
for which Lannett shall have advised that it will be unable to. supply, for
as long as Lannett's inability to supply continues and for a three (3) month
period following notice by Lannett that it is able to supply Duramed the
entire quantity forecasted.
2. (e). Lannett will ship the Products FOB Duramed via regular freight in
accordance with Duramed's delivery schedule instructions.
Lannett/Duramed
January 16, 1997
Page Three of Eight
2. (f). The terms of this agreement will prevail over any
inconsistent terms in any order, acknowledgment or invoice.
3. Lannett will supply the Products to Duramed at the sales
prices specified in Exhibit 1. Duramed will pay the sales price for each
shipment on payment terms of net 30 days.
4. (a). Lannett guarantees that the Products delivered to
Duramed will not be, on the date of shipment, adulterated or misbranded
within the meaning of the Federal Food, Drug and Cosmetic Act or an article
which may not, under the provisions of Sections 404, 505, or 512 of such
Act, be introduced into interstate commerce. Lannett further guarantees that
the Product will be manufactured in all respects in accordance with
requisite approvals by the FDA and will conform in all respects to current
good manufacturing practices, as published and amended from time to time by
the FDA. Lannett agrees to indemnify and hold harmless Duramed, its
directors, officers, employees and agents, from any liability or expense
they incur arising out of any personal injury caused by the Products or any
breach of Lannett's guarantees in this paragraph, 4(a). up to the limits of
Lannett's insurance.
4. (b). "Each party represents to the other that it will not take
any action or failure to take any action, that would cause a violation of
the Federal Food Drug and Cosmetic Act, or any other Federal, State or local
law during the terms of this contract" Duramed agrees to indemnify and
hold harmless Lannett, its directors, officers, employees and agents, from
any liability or expense they incur arising out of any personal injury
caused by the Products or any breach of Duramed's guarantees in this
agreement, up to the limits of Duramed's insurance.
4. (c). If any Product is found to fail to conform to applicable
FDA specifications, and such failure is due to the fault of Lannett, Lannett
will replace the Products at no cost to Duramed. Lannett will bear the
cost of any recall, seizure or market withdrawal of any of the Products due
to acts or omissions of Lannett. If the Products are recalls and such recall
is due to Duramed's negligence or willful misconduct or a breach of any
representation or warranty of Duramed hereunder, then Duramed shall
bear all incremental out-of-pocket direct costs in connection with the
recall and Lannett shall not be responsible for replacing product free of
charge or for issuing a credit to Duramed's account. The parties will
immediately notify each other of, and assist each other in answering,
customer or regulatory inquires and complaints concerning the Products.
Lannett/Duramed
January 16, 1997
Page Four of Eight
4. (d). Lannett will not be liable to Duramed for any interruption
in the supply of the Products, if the interruption is caused by an act of
God or other event beyond the control of Lannett. Lannett will immediately
notify Duramed of any anticipated long-term interruption and will diligently
attempt to resume supply as soon as possible.
5. This agreement will have an initial term of one (1) year and
will be extended for additional one (1) year terms unless either party gives
the other notice of termination at least six (6) months before the scheduled
termination date. Either party may terminate this agreement by written
notice if the other party materially breaches this agreement and fails to
cure the breach within sixty (60) days after written notice of the breach.
6. During the term of this agreement and thereafter, neither party
will use or disclose to others any confidential information furnished by the
other party.
7. This agreement will be governed by Pennsylvania law.
If this sets forth our agreement, please so indicate this agreement and fails
to cure the breach within sixty (60) days after written by signing below.
Sincerely,
Duramed Pharmaceuticals, Inc. Lannett Company, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxx By: Xxxxxxx X. Xxxxxx
------------------------ ----------------------
Xxxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxx
Senior Vice President Vice President-Finance
Date: January 17, 1997
Lannett Company, Inc./Duramed Pharmaceuticals, Inc. Agreement
Xxxxxxx Company, Inc./Duramed Pharmaceuticals, Inc. Agreement
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION -- ASTERISKS DENOTE SUCH OMISSION
EXHIBIT I
Product Brand Reference Sales Price
------- --------------- -----------
Dicyclomine Bentyl 10mg Capsules ****
Hydrochloride
10mg Capsules
Primdone 250mg Mysoline ****
Tablets
Butalbital w/Aspirin & Fiorinal Capsules ****
Caffeine Capsules
An invoice discount of **** will be honored.
Page 5 of 8
Lannett Company, Inc./Duramed Pharmaceuticals, Inc. Agreement
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION -- ASTERISKS DENOTE SUCH OMISSION
EXHIBIT 2
CUSTOMER LIST
****
Page 6 of 8
Lannett Company, Inc./Duramed Pharmaceuticals, Inc. Agreement
EXHIBIT 3
Expiration Dating for Repackaging into Multiple-Use Containers,
Including Unit-of-Use Containers
A firm may repackage solid oral dosage form drug products into containers
that contain more than a single dosage unit, without conducting stability
studies to support the expiration dates used, provided all of the following
conditions are met:
1. The original bulk container of drug product has not been opened
previously and the entire contents are to be repackaged in one
operations; and
2. The repackaging and storage of the drug product are accomplished in
a controlled environment that is consistent with the conditions
described in the labeling for the bulk and repackaged drug product.
Where no temperature of humidity is specified, a controlled room
temperature with a relative humidity not exceeding 75 percent should
be maintained during repackaging or storage; and
3. The container materials meet the following standards:
(a) Where the original container is made of glass, the drug product is
repackaged into glass ( must meet current USP requirements for
Chemical Resistance Glass Containers (CRGC)); or
(b) Where the original container is a material other than glass (control
records must describe the type of material), the drug product is
repackaged into (1) CRGC glass or (2) a container that is
demonstrated to be equivalent to or exceeds the original container
in terms of water vapor permeation and compatibility with the drug
product (i.e, provides equivalent or increased protection against
oxidation, moisture, ingredient migration from container to drug and
vice versa); or
Page 7 of 8
Lannett Company, Inc./Duramed Pharmaceuticals, Inc. Agreement
EXHIBIT 3 (continued)
Expiration Dating for Repackaging into Multiple-Use Containers
Including Unit-of-Use Containers
(c) Where the original container is polyethylene, the drug product is
repackaged into (1) CRGC glass or (2) a polyethylene container which
meets current USP standards for high density polyethylene containers
(i.e., multiple internal reflectance, thermal analysis, light
transmission, and water vapor permeation); and
4. The container is (a) equivalent to or exceeds the original container
specifications for light transmission of (b) meets current USP
standards for light transmission; and
5. The container meets or exceeds the special protective features of
the original container, for instance, the use of materials to
prevent leaking of container materials into the drug product or the
use of desiccants to maintain low moisture content; and
6. For container-closure system meets current USP standards for a
"tight container" or a "well-closed container", and
7. The expiration date used for the repackaged drug product does not
exceed the expiration date of the original bulk container.
Documentation must be on file to verify that all of the conditions listed
above are met.
If any of the above conditions ARE NOT met, the repackager must use
expiration dates that are determined by appropriate stability testing as
described in 21 CFR 211.166.
Page 8 of 8