Exhibit 10(ah)
Supply Agreement dated May 27 1997
SUPPLY AGREEMENT
This Agreement, entered into as of the 27th day of May 1997, by
and between Lannett Company, Inc. ("Lannett"), a Delaware corporation, having
offices in Philadelphia, Pennsylvania, and having offices in
WHEREAS, Xxxxxxx xxxxx pharmaceutical products and manufactures
pharmaceutical products for distribution by others: and ___________
WHEREAS, ______ wishes to have Lannett manufacture its products upon
the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
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1.1 The Products. The "Products" shall mean each of the Products listed
in Exhibit A. Products may be added to Exhibit A by written agreement
of the parties.
1.2 The FDA. The "FDA" shall mean the United States Food and Drug
Administration.
1.3 Patents. The "Patents" shall mean any issued patents or patent rights
held by third parties which would be infringed by the manufacture,
use or sale of the Products to be manufactured by Lannett for _______
pursuant to the terms of this Agreement.
1.4 Purchase Term. The "Purchase Term" shall mean the ten (10) year
period that begins on the date the first order for Products is
shipped after the date first appearing above. In the event that
neither party gives the other written notice eighteen (18) months
prior to the end of the initial ten (10) year Purchase Term, the
Agreement shall automatically be extended so that after the end of
the initial Purchase Term the Agreement may be terminated only upon
eighteen (18) months prior written notice by Lannett or _______ to
the other.
1.5 Purchase Price. The "Purchase Price" shall mean the price per unit as
specified in Exhibit A hereof and subject to adjustment in accordance
with Paragraph 2.7 hereof.
1.6 Affiliate. "Affiliate" shall mean, with respect to either party, all
corporations or other business entities which, directly or
indirectly, are controlled by, control or
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are under the common control with that party. For this purpose, the
meaning of the word "control" shall include, but not be limited to,
ownership of more than fifty percent (50%) of the voting shares or
equitable ownership interest of such corporation or other business
entity.
ARTICLE 2 - SUPPLY
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2.1 Supply. Subject to the terms and conditions of this Agreement,
Lannett shall manufacture and supply and _____________ shall
purchase from Lannett a substantial portion of ______ requirements
for the Products throughout the Purchase Term.
2.2 Forecasts. As early as reasonably possible after the date first
appearing above, and thirty (30) days prior to every calendar quarter
thereafter, ________ shall give to Lannett a written forecast of the
quantities of the Products, including quantities for each strength
and unit size of the Products, and delivery dates that ________
anticipates it will order from Lannett during the two (2) calendar
quarters following the date of the written forecast. ________ shall
promptly advise Lannett of any significant changes in its estimated
forecast of products.
2.3 Orders. ________ shall submit written purchase orders to Lannett for
the quantities of the Products, including the quantity of each
strength and unit size and delivery dates, which ________ desires to
purchase under this Agreement. ________ shall submit purchase orders
to Lannett for at least seventy-five (75%) of the forecasted
quantities for that period on the then current forecast. Regardless
of the quantities ordered, Lannett shall use all reasonable efforts
to deliver the full quantities of the Products ordered by ________ .
Deliveries of the Products ordered by ________ to the destination
designated by ________ will be made within sixty (60) days following
the date on which ________ submitted the purchase order unless a
later delivery date has been specified by ________ .
2.4 Inability to Supply. Within thirty (30) days following its receipt of
each forecast according to Paragraph 2.2 hereof, Lannett shall advise
________ in writing if it will be unable to supply the entire
quantity forecasted. ________ shall have the right to purchase from
third parties, such quantities of any of the Products for which
Lannett shall have advised that it will be unable to supply, for as
long as Lannett's inability to supply the Products(s) continues and
for a three (3) month period following notice by Lannett that it is
able to supply ________ the entire quantity forecasted.
2.5 Shipments. Delivery shall be F.O.B. Lannett..
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2.6 Billing and Payment. Lannett shall invoice ________ the Purchase
Price for all units in each shipment of Products delivered to
________ . Payment terms shall be Net forty-five (45) days from
receipt of the invoice therefor. Interest shall accrue at a monthly
rate of one and one-half percent (1 1/2%) on balances for which
payment has not been received sixty (60) days from the date of
delivery.
2.7 Purchase Price. The quoted Prices set forth in Exhibit A shall be
valid for one year from date of initial order, whereupon they shall
be reviewed by both parties on an annual basis.
2.8 Price Increases. If the parties are unable to achieve an agreement on
the price of any of the Products during any year during the term of
this Agreement, the following will apply. Lannett shall not increase
the price of any of the Products more than five (5%) percent over the
price charged for that Product the previous year, unless Lannett can
demonstrate that a larger increase is necessary due to an increase in
cost of raw materials or other unavailable expense to it. In any such
case, Lannett shall demonstrate the need to ________ of the increase
in price. Lannett shall be entitled to an increase in price
determined by the increase in its costs plus fifteen (15%) percent of
that increase in cost. Lannett shall provide ________ the benefit of
any decrease in costs to it.
ARTICLE 3 - QUALITY
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3.1 Quality Control. Prior to each shipment of the Products, Lannett
shall perform such quality control procedures to verify that each
shipment of the Product(s) made under this Agreement conforms to the
specifications for the Product(s) contained in the approved NDA, ANDA
and specifications provided by ________ to Lannett and otherwise
complies with the representations and warranties given by Lannett in
Article 4 hereof. For any DESI, OTC or other non-ANDA products,
Lannett shall similarly perform appropriate official compendial or
other such mutually agreed upon testing in accordance to
specifications supplied by _______________to Lannett.
3.2 Rejection. ________ shall have thirty (30) days following the day on
which it receives a shipment to reject same because all or part of
the shipment fails to conform to the applicable specifications or
otherwise fails to conform to the representations and warranties
given by Lannett herein, by giving written notice to Lannett
specifying the manner in which all or part of such shipment fails to
meet the foregoing requirements. If ________ rejects a shipment
before the date on which payment therefor is due according to
Paragraph 2.6 hereof, it may withhold payment for that shipment or
the rejected portion thereof. All shipments or portions thereof not
rejected by ________ before such date shall be paid for in accordance
with Paragraph 2.6 hereof. All shipments or portions thereof which
____________rejected but, as determined pursuant to Paragraph 3.4
hereof, did not have the right to reject, shall be paid within
fifteen
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(15) days following the day on which such determination was made,
unless ________ had paid earlier. In the event __________rejects a
shipment or portion thereof within such thirty (30) day period in
accordance with the terms hereof but after payment therefor had been
made,__________shall be entitled to recoup the payment amount by, at
________ election, Lannett's issuing a prompt refund or by ________
offsetting such amount against the payment of future invoices or
other payments that may become due hereunder. The representation and
warranties given by Lannett hereunder shall survive any failure to
reject by ________ under this Paragraph. All disputes about the
rejection of any lot will be resolved pursuant to Paragraph 3.4.
3.3 Recalls. If any of the Products is recalled pursuant to FDA
regulation or other applicable laws or because________ or Lannett
determines that a recall is necessary to protect the public health
and such recall is due to Lannett's negligence or willful misconduct
or a breach of any representation or warranty of Lannett hereunder,
then Lannett shall bear all incremental out-of-pocket direct costs in
connection with the recall, including, but not limited to, all
notification letters and all shipping expenses. In no event shall
Lannett be responsible for any indirect expenses incurred by ________
. If the recalled Products are to be destroyed, Lannett, at
________'s request, shall replace free of charge said Products or
issue a credit to ___________ account or refund payment to
__________. If the recalled Products are to be reworked, Lannett
shall bear all costs of reworking said Products. If the recalled
Products are recalls and such recall is due to ____________
negligence or willful misconduct or a breach of any representation or
warranty of _________ hereunder, then ___________ shall bear all
incremental out-of-pocket direct costs in connection with the recall,
including, but not limited to, all notification letters and all
shipping expenses and Lannett shall not be responsible for replacing
product free of charge or for issuing a credit to ___________'s
account. In no event shall ___________ be responsible for any
indirect expenses incurred by Lannett. The parties agree to cooperate
in case of a recall of any of the Products and provide such
information as may be necessary to effectuate the recall and to
satisfy any regulatory requests about the recall.
3.4 Disputes. If Lannett disputes ___________'s right to reject all or
part of any shipment of the Products as set forth in Paragraph 3.2 or
__________'s decision to recall any Product pursuant to paragraph 3.3
hereof (except where requested by FDA to do so), such dispute shall
be resolved by an independent approved FDA testing organization or
consultant of recognized repute within the U.S. pharmaceutical
industry mutually agreed upon by the parties, the appointment of
which shall not be unreasonably withheld or delayed by either party.
The determination of such entity with respect to all or part of any
shipment of the Products shall be final and binding upon the parties,
but only as to the reasons given by ______________ in rejecting or
recalling the shipment or portion thereof and shall have no effect on
any matter for which said entity did not render
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a determination. The fees and expenses of the third party making the
determination shall be paid by the party against which the
determination is made.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
------------------------------------------
4.1 Joint Representations and Warranties. "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
term of this contract." Each party represents and warrants that the
person signing this Agreement does so with authority to act on behalf
of respective party.
4.2 Representations and Warranties by Lannett. Lannett represents and
warrants that (a) all products processed and manufactured for and
sold to_________hereunder will be processed and manufactured by it
and stored in accordance with established Good Manufacturing
Practices. 21 C.F.R. & 211: (b) all Product will not be adulterated
or misbranded within the meaning of the Federal Food, Drug, and
Cosmetic Act or any other domestic government bodies where the
Product is shipped as of the date of shipment by Lannett to
____________: (c) all Products will meet in all respects the
specifications provided by ___________to Lannett concerning the
Products: and (d) all documentation about the Products provided by
Lannett to _____________ will be complete and accurate in all
respects.
4.3 Representations and Warranties by . __________ represents and
warrants that (a) all documentation provided by __________ to Lannett
about the Products will be complete and accurate in all respects: and
(b) it will notify Lannett promptly in case of any changes in the
manufacture, processing or storage of the Products necessary to
comply with applicable laws or the terms of any FDA approval.
4.4 Generic Drug Debarment. Lannett hereby certifies, pursuant to Section
2(k) of the Generic Drug Enforcement Act of 1992.21 U.S.C & 335a(k)
that Lannett has not used, is not using and will not in the future
use in any capacity within Lannett's ability to determine the
services of any person who has been debarred pursuant to Section 2(a)
and/or Section 2(b) of the Generic Drug Enforcement Act of 1992.21
U.S.C. && 335a(a) and/or (b) in connection with services to ________
under this Agreement. Lannett further certifies that there have been
no convictions of it for any of the types of crimes set forth in
Section 2(a)Section 2(b) of the Generic Drug Enforcement Act of
1992.21 U.S.C. && 335a(a) (b)within the five years prior to the date
of this Agreement, nor has any person affiliated with Lannett been
convicted of a crime of the types listed in Section 2(a) and
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Section 2(b) of the Generic Drug Enforcement Act of 1992. 21 U.S.C. &
335a(a) and (b) within the five years prior to the date of this
Agreement.
4.5 Infringement. Each party represents and warrants that it will not
commit any act of patent, trademark or copyright infringement during
the term of this Agreement and that if it does so, it shall indemnify
and hold the other party harmless, pursuant to the provisions of
Article 6. Lannett represents and warrants that nothing it will do in
the manufacturing process for any of the Products shall infringe any
Patent. __________ represents and warrants that there are no Patents
covering any of the Products.
ARTICLE 5 - REGULATORY MATTERS
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5.1 Regulatory Documentation. Lannett shall be responsible for providing
to _________ all data's, exhibits, analysis and other documentation
necessary for ___________'s regulatory obligations to the FDA and the
Product(s).
5.2 Product Complaints. Each party shall immediately inform the other by
telephone or facsimile of quality, health or safety related concerns
or inquiries that raise potentially serious and unexpected quality,
health or safety concerns as to any of the Products. All such other
information not involving any of the above shall be transmitted to
the other party within three (3) business days following receipt.
ARTICLE 6 - INDEMNIFICATION
---------------------------
6.1 Lannett's Obligation to Indemnify. Lannett agrees to indemnify,
defend, and hold harmless ____________, its Affiliates and
subsidiaries and their respective employees, officers, directors,
shareholders, and agents against any and all claims, losses damages
and liabilities, including reasonable attorneys' fees and costs and
any costs associates with a recall of the Products as defined in
Paragraph 3.3 hereof, incurred by any of them arising out of any
breach of any obligation hereunder or any representation or warranty
by Lannett hereunder or any act or omission of Lannett in connection
with its obligations hereunder.
6.2 ________ 's Obligation to Indemnify. ___________ agrees to indemnify,
defend and hold harmless Lannett, its Affiliates and subsidiaries and
their respective employees, officers, directors, shareholders &
agents against any and all claims, losses, damages and liabilities,
including reasonable attorneys' fees and costs and any costs
associated with a recall of the Products as defined in Paragraph 3.3
hereof, incurred by any of them arising out of any breach of any
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obligation hereunder or any representation or warranty by
____________ hereunder or any act or omission of _____________ in
connection with its obligations hereunder.
6.3 Obligations of the Party Seeking to be Indemnified. If __________ or
any of its Affiliates or subsidiaries or Lannett or any of its
Affiliates or subsidiaries (in each case an "Indemnified Party")
receive any written claims which it believes is the subject of
indemnity hereunder by Lannett or ____________, as the case may be
(in each case an "Indemnifying Party"), the Indemnified Party shall,
soon as reasonably practicable after forming such belief, give notice
thereof to the Indemnifying Party; including full particulars of such
claim to the extent known to the Indemnified Party; provided, that
the failure to give timely notice to the Indemnifying Party as
contemplated hereby shall not release the Indemnifying Party from any
liability to the Indemnified Party except to the extent that the
Indemnifying Party is injured by such delay. The Indemnifying Party
shall have the right, by prompt notice to the Indemnified Party, to
assume the defense of such claim with counsel reasonably satisfactory
to the Indemnified Party, and at the cost of the Indemnifying Party.
If the Indemnifying Party does not assume the defense of such claim,
or, having done so, does not diligently pursue such defense, the
Indemnified Party may assume such defense, with counsel of its
choice, but for the account of the Indemnifying Party. If the
Indemnifying Party so assumes such defense, the Indemnified Party may
participate therein through counsel of its choice, but the cost of
such counsel shall be for the account of the Indemnified Party. The
party not assuming the defense of any such claim shall render all
reasonable assistance to the party assuming such defense, and all
out-of-pocket costs of such assistance shall be for the account of
the Indemnifying Party. No such claim shall be settled other than by
the party defending the same, and then only with the consent of the
other party, which shall not be unreasonably withheld; provided, that
the Indemnified Party shall have no obligation to consent to any
settlement of any such claim which imposes on the Indemnified Party
any liability or obligation which cannot be assumed and performed in
full by the Indemnifying Party.
6.4 Insurance. Each Party and its Affiliates shall carry products
liability insurance in an amount at least equal to $3,000,000 with an
insurance carrier reasonably acceptable to the other party. Such
Insurance shall cover the indemnifications set forth in Article 6
hereof. Each party shall name the other party as additional insured
under such policy. A certificate(s) of insurance evidencing such
coverage shall be delivered to the other party within ten (10) days
prior to the date any such Products are first commercially sold by
such party, and shall provide among other things, that such insurance
shall not be canceled or modified without giving the other party at
least thirty (30) days prior written notice. Either party can, at any
time during the term of this Agreement, require proof that it is
covered under
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the policy of the other party: the other party shall have ten (10)
days to provide evidence of such coverage.
ARTICLE 7 -TERMS, TERMINATION
7.1 Term. This Agreement shall become effective as of the date first
written above and shall remain in full force and effect through the
end of the Purchase Term.
7.2 Termination for Cause. This Agreement may be terminated at any time:
(a) by either party if the other party fails to remedy and make good
any default in the performance of any condition or obligation
under this Agreement within sixty (60) days of the date a written
notice of default is sent to the defaulting party thereof, or if
such breach cannot be reasonably remedied within such 60-day
period, the party in default diligently commences to remedy such
breach;
(b) by either party upon bankruptcy or insolvency of the other party
or placing of the business of such party in receivership;
7.3 Waiver. Failure to terminate this Agreement following a breach or
failure to comply with the terms and conditions of this Agreement
shall not be deemed a waiver of the non breaching party's defenses,
rights or causes of action arising from such or any future breach or
noncompliance.
7.4 Rights Upon Termination. Upon termination, Lannett agrees to provide
__________ with copies of any and all information relating to the
Products which will be necessary for _________ to satisfy any of its
regulatory obligations and which would enable it to find an alternate
supplier for the Products. All information to be provided within
thirty (30) days of request. ___________ shall be responsible for
payment of any and all purchase orders sent prior to the date of
termination.
7.5 Stability Studies. Lannett will continue to perform stability studies
on representative lots of all products manufactured by it for
________ during the term of this Agreement through the end of the
stability testing protocol for each of the Products. Lannett shall
report all such results to ________ promptly so that it can fulfill
its regulatory obligations. Such testing and reporting will be done
at Lannett's sole expense.
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7.6 Termination Upon Notice. Either party may terminate this Agreement
without cause provided it provides the other party with written
notice eighteen (18) months in advance of the date of termination.
ARTICLE 8 - NON ASSIGNABILITY
-----------------------------
8.1 This Agreement and the rights of the parties hereunder shall not be
assignable nor shall the obligations of either party be delegable,
except to Affiliates of ________ or Lannett, without the prior
written consent of the other party, which consent shall not be
unreasonably withheld. In the event either party seeks and obtains
the other party's consent to assign or delegate its rights or
obligations to another party, or in the event of an assignment or
delegation to an Affiliate, the obligations of the assignee or
transferee must be guaranteed in writing by the party who is the
assignor or transferor.
ARTICLE 9 - FORCE MAJEURE
-------------------------
9.1 Force Majeure. No failure or omission by the parties in the
performance of any obligation according to this Agreement shall be
deemed a breach of this Agreement or create any liability if the same
shall arise from any cause or causes beyond the control of the party,
including, but not limited to, strikes, riots, war, acts of God,
invasion, fire, explosion, floods, delay of carrier, shortage or
failure in the supply of materials, energy shortage and acts of
government or governmental agencies or instrumentalities.
9.2 Obligations of the Parties in case of Force Majeure. In the event
that due to force majeure either party hereto shall be delayed or
hindered in or prevented from the performance of its duties or doing
acts required under the terms of this Agreement, the performance of
such act, except for the obligation to pay amounts due under this
Agreement, shall be excused for the period of the delay.
Notwithstanding the aforementioned, the party subject to force
majeure shall take all reasonable steps to resolve the condition(s)
forming the basis of force majeure.
ARTICLE 10-CONFIDENTIAL INFORMATION; CONVENANTS
-----------------------------------------------
10.1 ____________ has and shall continue to furnish Lannett with written
confidential information, as available to _____________, consisting
of any technical data and
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information relating to the Products, which ________ may consider
necessary or useful in the manufacture, compounding, process control,
bottling and packaging of the Products by Lannett, including
information from NDA's and ANDA's. Lannett, during the term of this
Agreement, may furnish confidential information to ____________. The
confidential information of both parties shall thereafter be called
collectively the "Information".
10.2 The parties acknowledge that all Information will be considered to be
confidential by the other party, and shall not disclose to others or
make any use of the Information for themselves or for others without
the written consent of the other party while this Agreement is in
effect and for ten (10) years after its termination or, if the
Product is subject to an NDA or ANDA, such Product is not longer
approved, whichever is later. Both parties shall treat the
Information as confidential unless the Information (I) was known to
the receiving party prior to the disclosure hereunder; or (ii) is or
becomes publicly known through no fault or omission attributable to
the receiving party; or (iii) is rightfully given to the receiving
party from sources independent of the disclosing party, which sources
rightfully possess such Information; or (iv) is derived by the
receiving party independently of any disclosure from the disclosing
party or its affiliates; or (v) must be divulged to any Federal,
state or local government authority, in which case the party
divulging Information shall promptly notify the other party, so that
the party can take all steps necessary to protect its confidential
Information. In such case, the disclosing party agrees to take
whatever steps are necessary to protect the confidentiality of the
confidential Information. This limitation and disclosure shall extend
to the substance of any discussions concerning confidential
Information.
10.3 The receiving party shall return to the providing party any and all
documents of any type which contain Information and shall destroy any
copies thereof at the termination of this Agreement except that the
parties may retain such records pertaining to the Products as may be
required by any applicable laws and/or regulations.
10.4 The parties agree that the confidential Information shall be used by
it solely for the purpose of manufacture of the Products for
_________ and that they will make no use of their own of the
confidential Information of the other for any other purpose.
10.5 The parties agree to take all reasonable precautions to preclude the
disclosure to other, except as provided herein, by any of their
officers, employees, agents and representatives of all confidential
Information pertaining to the Products. Such precautions shall
include restriction of knowledge of, and access to, confidential
Information on a need-to-know basis to only those officers,
employees, agents, and representatives who are directly connected
with manufacturing the Products
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for __________ Employees of both parties sign company secrecy
agreement upon hire.
10.6 This Agreement is not, and shall not be construed to be, a grant of
any right or license, express or implies, by one party to the other
under any patent, trademark, copyright, or know-how or other rights
that either party may now have or hereafter hold relating to the
subject matter of the confidential Information disclosed hereunder
and/or as to the Products. It is understood that the confidential
Information disclosed by ________ shall remain ________'s property
and that disclosed by Lannett shall remain Lannett's property, and
that neither party shall make any use of the confidential Information
for their own purposes, including, but not limited to, applying for a
patent or developing an identical or similar product for itself or
for others.
10.7 Lannett agrees that it shall not contract manufacture an identical
product to any of the Products during the term of this Agreement and
for a period of one (1) year following termination of this Agreement,
written notice from Lannett to _______ that it will manufacture the
Product for _______, or written notice from ________ to Lannett that
it will not require the Product to be manufactured by Lannett.
ARTICLE 11 - MISCELLANEOUS
--------------------------
11.1 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania.
11.2 Severability. Should any section, or portion thereof, of this
Agreement be held invalid by reason of any law, statute or regulation
existing now or in the future in any jurisdiction by any court of
competent authority or by legally enforceable directive of any
governmental body, then such section or portion thereof shall be
validly reformed so as to approximate the intent of the parties as
nearly as possible and, if unreformable, shall be deemed divisible
and deleted with respect to such jurisdiction; this Agreement shall
not otherwise be affected.
11.3 Entire Agreement. The terms and provisions contained in this
Agreement, including the Exhibit hereto, constitute the entire
agreement between the parties and shall supersede all previous
communications, representations, agreements or understandings, either
oral or written, between the parties with respect to the subject
matter hereof. No agreement or understanding varying or extending
this Agreement shall be binding upon either party hereto, unless set
forth in a writing which specifically refers to this Agreement,
signed by duly authorized officers or representatives of the
respective parties, and the provisions hereof not specifically
amended thereby shall remain in full force and effect.
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11.4 Notices. All notices hereunder shall be deemed to have been delivered
if by certified mail, return receipt requested, or if sent by
facsimile, as follows.
If to Lannett:
Xx. Xxxxxxx X. Xxxxxx
Vice President-Finance
Lannett Company, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
(000) 000-0000 (facsimile)
If to__________:
11.5 Survival. The provisions of Article 4, Article 6 and Article 10 and
Paragraph 7.5 of the Agreement shall survive the termination of this
Agreement.
IN WITNESS WHEREOF, Lannett and ___________have executed this
Agreement in duplicate, each of which shall be considered an original, as of
the day and year first above written.
Lannett Company, Inc.
By: Xxxxxxx Xxxxxx By: __________________________
--------------
Name: Xxxxxxx Xxxxxx Name:
Title: Vice President - Finance Title:
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EXHIBIT A
Exhibit A to the Supply Agreement dated May 27, 1997 between Lannett
Company, Inc. and _________________.
Product and Pricing Schedule
----------------------------
Product Size Purchase Price
------- ---- --------------
(Confidential Information Omitted)
All active Pharmaceuticals ingredients and excipients to be provided
by Lannett, except for the _____________________
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