CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT
MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY
DISCLOSED. 
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.

SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (this “Agreement”) is made this 21 day of November, 2019
(the “Effective Date”), by and among North & South Brother Pharmacy Investment
Co., Ltd, a Hong Kong corporation (“N&S BPICL”), HEC GROUP PTY LTD, an
Australian corporation (“HEC GROUP” and, collectively with, N&S BPICL,
“Seller”), and Lannett Company, Inc., a Delaware corporation (“Lannett”). 

WHEREAS, Lannett and Seller have entered into that certain Collaboration and
License Agreement, dated as of the Effective Date (the “Collaboration
Agreement”), for Lannett to develop and commercialize Product in the US;

WHEREAS, Seller has developed and manufactured the insulin glargine identified
on Exhibit A hereto (the “Drug Substance”) and shall manufacture the finished
product containing the Drug Substance assembled with an injection drug delivery
device identified on Exhibit A hereto (such finished product, the “Product”) at
Seller’s new manufacturing facility to be constructed in Yidu, China in
accordance with the terms of the Collaboration Agreement (the “New Facility”);
and

WHEREAS, Lannett desires to purchase Product from Seller; and

WHEREAS, Seller is willing to supply such Product for Lannett’s use,
distribution and sale in the U.S. on the terms and conditions set forth in this
Agreement. 

NOW THEREFORE, in consideration of the promises and the mutual covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree and
covenant as follows:

1. Manufacture and Sale. 

1.1. Supply.  During the term of this Agreement and subject to the terms and
conditions set forth herein, Lannett or its Affiliates shall purchase Product
from Seller, and Seller shall directly or through one or more of its Affiliates
or (sub)licensees manufacture and supply Product to Lannett (or a third party
designated by Lannett) in such quantities as from time to time shall be ordered
by Lannett.  “Affiliate” means any entity, directly or indirectly, controlling,
controlled by, or under common control with an entity or person.  For purposes
of this definition, "controlling" (including its cognates, “controlled by” and
“under common control”) shall mean:  (i) ownership of more than fifty percent
(50%) of the equity capital or other ownership interest in or of an entity;
(ii) the power to control or otherwise direct the affairs of an entity; (iii) in
the case of non-stock organizations, the power to control the distribution of
profits of an entity; or (iv) such other relationship as, in fact, results in
actual control over the management, business, and affairs of an entity.    In
addition, if requested by Lannett, Seller shall use commercially reasonable
efforts to supply up to one hundred twenty-five percent (125%) of Lannett’s
requirement forecast of Product for the applicable period. During the term of
this Agreement, Seller shall ensure that it has the capacity to meet all of
Lannett’s requirements for Product in a timely manner, including

106569863.v1

 

in accordance with Section 4.3 of the Collaboration Agreement.  In addition,
Seller shall maintain at all times a  three (3) month supply of all raw
material, Drug Substance and packaging component inventory based on the most
recent forecast.

1.2. Product Specifications.  The specifications of the Product are set forth in
Exhibit B to this Agreement (the “Product Specifications”), as such Exhibit may
be amended from time to time by mutual agreement of the parties in a writing
signed and dated by each of the parties which makes specific reference to
Exhibit B of this Agreement.   Product Specifications include Lannett’s required
labelling and packaging including all United States Food and Drug Administration
(the “FDA”) requirements including labelling, packaging and serialization.

1.3. Costs.  Seller shall be responsible for all costs and expenses related to
providing data, analytical samples and documentation, and related technical
information that the FDA and/or Lannett may require with regard to the Drug
Substance and Product including packaging and serialization to develop the
Product and to prepare any submission to the FDA and/or any other applicable
regulatory authority.  Seller shall also be responsible for any and all
development costs and expenses associated with this Agreement, all of which will
be included in the development plan set forth in the Collaboration Agreement.

1.4. Supply Chain Committee.  In order to better monitor and safeguard the
supply of the Product hereunder, within thirty (30) days after the Effective
Date, the parties shall agree on the composition, schedule and logistics of a
supply chain committee (“Supply Chain Committee”), which shall (i) be
compromised of one (1) representative from each party, (ii) meet at least two
(2) times per calendar year, and (iii) coordinate efforts and resolve supply
issues.  Each party shall bear its own costs associated with holding and
attending such meetings.

2. Price, Orders and Terms of Payment. 

2.1Pricing. Subject to Section 2.9, the pricing for the Product shall be as set
forth on Exhibit C hereto, as may be amended from time to time by mutual
agreement of the parties in writing (the “Price”). Price is determined by
Seller’s Costs of Goods Sold.

Any increase to the Price during any calendar year cannot be greater than the
percentage increase in the Chinese equivalent of the Consumer Price Index for
all Urban Consumers for Medical Care Commodities for the twelve (12) month
period ending three (3) months prior to the commencement of such calendar year,
unless the Seller can provide relevant documentation or evidences to justify an
increase greater than the percentage increase in the Chinese equivalent of the
Consumer Price Index for all Urban Consumers for Medical Care Commodities thirty
 (30) days prior to such increase of the Price.   A reasonable quantity of the
Product shall be made available to Lannett for marketing samples for the Product
and shall be deductible by Lannett, with advance notice to Seller, from any
amounts due to Seller under future Purchase Orders.  All sums shall be expressed
in and payable in U.S. Dollars.

2.2. Purchase Orders.  Lannett will order Product by sending purchase orders for
quantities of the Product (each, a “Purchase Order”) to Seller in accordance
with the Shipping Instructions set forth on Exhibit D, which Purchase Order
shall also specify the delivery date (such date, the “Delivery Date”).  Lannett
shall have the right to place orders for Product up through the last day of the
term of this Agreement.  Seller shall fill all orders even though Product may be
shipped and paid for after this Agreement has expired or terminated. 

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2.3. Lead Time.  Lannett will provide Seller with a minimum lead-time of twelve
(12) weeks on all Purchase Orders.  Within three (3) business days after its
receipt of a Purchase Order from Lannett submitted for all amounts up to the
Binding Forecast amount for the applicable calendar month, Seller shall notify
Lannett of its acceptance of such Purchase Order.  If notification is not
received within three (3) business days after receipt of a Purchase Order, the
Purchase Order will be deemed to be accepted.  Both parties shall make
reasonable efforts to adjust order requirements to reflect market conditions. 

2.4. Modification of Orders.  Purchase Orders may be modified by written notice
to Seller up to four  (4) weeks prior to the Delivery Date required in such
Purchase Order. 

2.5. Forecasting.  On monthly basis, Lannett shall submit a twelve (12) month
rolling forecast, broken down on a monthly basis, covering Lannett’s anticipated
requirements of Product.  The first three (3) months of each rolling forecast
shall be a binding forecast (the “Binding Forecast”), and the last nine (9)
months will be for information purposes only and non‑binding, subject to
Lannett’s ability to (i) increase the quantity of the Product specified therein
up to twenty-five percent (25%) of the Binding Forecast, and (ii) decrease the
quantity of the Product specified therein up to twenty-five percent (25%) of the
Binding Forecast, in the case of either (i) or (ii), as specified in the
subsequent monthly forecast.  If Lannett fails to provide an updated forecast
for the next succeeding quarter as set forth above, the forecast that was last
provided by Lannett shall be considered to be Lannett’s forecast for such next
succeeding quarter.

2.6. Packaging and Delivery of Product.  Seller shall package the Product in a
manner that will protect the Product against damage or deterioration under
normal conditions and shall advise Lannett as to any special conditions which
may be required during transit and storage thereof. The Product shall be
packaged in cases and full cases on pallets.  Any partial cases of the Products
must have its own unique Serialized Shipping Container Code,
18-digit (“SSCC18”).   Electronic Product Code Information Service (“EPCIS”)
data associated with each LOT must be sent to Lannett either prior to shipment
or no later than Products shipment from Seller to Lannett.

2.7. Electronic Data Interchange.    Lannett prefers to utilize Electronic Data
Interchange (“EDI”) transactions for Product order placement and tracking. 
Lannett expects Seller to transmit at a minimum, an EDI856 ASN (Advance Ship
Notification) upon shipment of Product from Seller’s facility.  Additional EDI
transactions may be established upon mutual agreement by the parties.

2.8. Serialization.  All Product delivered by Seller to Lannett shall meet
serialization requirements, as outlined in the Drug Supply Chain Security Act
(Title II of the Drug Quality and Security Act) signed into law on November 27,
2013 and provide data to support Product traceability as deemed necessary by
Lannett.  Requirements include, but are not limited to, the addition of unique
Product identifiers  Global Trade Item Number (“GTIN”), Serial Number (“SN”),
Lot of batch number (“LOT”), expiration date (“EXP”) imprinted on each sellable
unit, the same unique Product identifiers mentioned above and Quantity (“QTY”)
are required on each homogeneous case and Serialized Shipping Container Code,
18-digit (“SSCC18”) on each pallet intended to be introduced in the US market.
Serial numbers must be aggregated from unit to case and case to pallet.
Reporting of serial number and aggregation data is required to coincide with
finished goods shipment and must conform to data exchange format and
connectivity specifications supported by TraceLink.

3

106569863.v1

 

2.9. Delivery Terms.  Seller agrees to deliver the Product on the Delivery Date
DDP (Incoterms 2010) to such U.S. location as may be designated by Lannett from
time to time. In the event less than one hundred percent (100%) of the Product
is delivered pursuant to this Agreement more than ten (10) days after the
Delivery Date (a “Late Delivery”) and there are at least two (2) Late Deliveries
during any one (1) calendar quarter, the parties, through the Supply Chain
Committee, shall in good faith discuss potential improvements to avoid such
delays as well as appropriate compensation for Lannett.

2.10. Payment Terms.  Subject to Section 2.9, each delivery of Product pursuant
to a Purchase Order shall be accompanied by an invoice based upon the Price and
quantity of Product requested in the applicable Purchase Order.  Lannett shall
pay each invoice within ninety (90) calendar days of the applicable Delivery
Date.  Payments shall be made to Seller by check or wire transfer to the bank
account designated by Seller. If within such ninety (90) day period, Lannett
disputes all or any portion of an invoice, it shall be required to pay only the
amount not in dispute, and in such event Lannett shall notify Seller of the
amount and nature of the dispute.  Any invoiced amounts not disputed within such
ninety (90) day period shall be deemed to be accepted by Lannett.  The parties
will use good faith efforts to resolve any dispute regarding payments owed by
Lannett as soon as reasonably practicable, but in any event within thirty  (30)
days of Lannett’s notice to Seller of such dispute. The dispute payment shall be
made to Seller in the amount both parties finally agree within fifteen (15)
calendar days after the dispute resolved. Seller shall keep complete, fair and
true books of accounts and records for the purpose of determining the amounts
payable by Lannett pursuant to this Section 2.10. Such books and records shall
be kept for such period of time required by law, but no less than three (3)
years following the end of the calendar year to which they pertain.

2.11. Minimum Number of Batches.  Seller shall use commercially reasonable
efforts to minimize the number of different batches shipped to fulfill a
Purchase Order.

2.12. Failure to Supply and Purchase.   Seller shall notify Lannett immediately
of any anticipated failure to meet Lannett’s forecasted supply of Product, for
any reason whatsoever (“Failure to Supply”). In the event that Seller fails to
supply Product in accordance with the Binding Forecast, Seller shall be liable,
upon reasonable proof by Lannett (redacted to preserve confidentiality), for any
and all costs, fees, penalties, charges or amounts, if any, otherwise incurred
by Lannett resulting directly or indirectly from such Failure to Supply. Lannett
may, in its sole discretion, invoice Seller for the amount of such Failure to
Supply or offset such amount against the amounts otherwise payable to Seller
pursuant to this Agreement. Lannett shall notify Seller immediately of any
anticipated failure to purchase according to Lannett’s Binding Forecast, for any
reason whatsoever (“Failure to Purchase”).  In the event that Lannett fails to
purchase Product in an amount less than the Binding Forecast, Lannett shall be
liable, upon reasonable proof by Seller (redacted to preserve confidentiality),
for any and all costs, fees, penalties, charges or amounts, if any, otherwise
incurred by Seller resulting directly or indirectly from such Failure to
Purchase.

2.13. Safety Stock.  Each party shall maintain safety stock for the Product in
such party’s location in the minimum amount of three (3) months of supply
measured, as of any date, based on Lannett’s most recently submitted Binding
Forecasts calculated on an annualized basis.

4

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2.14. Scope of Agreement.  The terms and conditions of this Agreement shall
apply to all Purchase Orders issued hereunder.  In no event shall any terms or
conditions included on any Purchase Order, invoice or acknowledgement thereof or
any other document, whether paper, electronic or otherwise, relating thereto,
apply to the relationship between the parties under this Agreement, unless such
terms are expressly agreed to by the parties in writing.  If there is a conflict
between the terms of any Purchase Order or other document and this Agreement,
the terms of this Agreement shall control, unless such Purchase Order or other
document, as applicable, has been signed by both parties, in which event such
Purchase Order or other document, as applicable, shall control, but solely to
the extent of the conflict.  The parties further agree that no course of dealing
between the parties shall in any way modify, change or supersede the terms and
conditions of this Agreement or the Collaboration Agreement. 

2. Manufacture and Delivery of Product. 

2.1. Manufacture. The Product shall be manufactured by Seller at the New
Facility in accordance with all relevant current Good Manufacturing Practices
(as defined in Exhibit B, “cGMPs”) and all applicable laws, rules and
regulations promulgated by the FDA, as amended and revised from time to
time.  Seller shall not make any changes to the Product Specifications or any
proposed material changes in the methods, processes or procedures in
manufacturing Product, without the regulatory approval by the FDA.   If Seller
wants to make any material changes, Seller will propose changes to Lannett with
a written notice letter and the relevant documentation in English version, of
which the costs and expenses for the translation shall be incurred by both
parties calculated in the Profit & Loss Share.  Proposed changes to be submitted
to FDA shall be approved by Lannett in writing prior to their implementation by
Seller within thirty (30) days after Lannett’s receipt of the Seller’s written
notice letter and relevant documentation, which approval shall not be
unreasonably withheld or delayed; otherwise, Seller will regard it as an
approval by Lannett without written notice. 

2.2. Certificate of Analysis.  Seller shall provide certificates of analysis and
certificates of compliance to Lannett for each batch of Product delivered under
this Agreement confirming that the Drug Substance and Product has been
manufactured, packaged and tested, in each case in accordance with the Product
Specifications and applicable laws.  Seller shall test raw materials and
Product, and further, will use no raw materials in the manufacture of the
Product which are not in accordance with Product Specifications.  Seller shall
comply with applicable law for biopharmaceutical products (including the
electronic records and electronic signatures requirements of USC 21 CFR Part
11). 

2.3. Cooperation.  During the term of this Agreement, Seller shall assist
Lannett in its preparation of any documents or other materials which may be
required by the FDA and/or any other regulatory authority to validate, sell
and/or distribute the Product to be supplied by Seller under this Agreement. 

2.4. Required Changes. In the event Lannett is required to change the Product
Specifications pursuant to applicable laws or in response to the order or
request of the FDA or another applicable regulatory authority, no prior consent
of Seller shall be necessary to effect the changes of packaging materials and
appearance of the Product. Seller shall be informed by Lannett within five (5)
business days after the receipt of the request from the FDA or another
applicable regulatory authority. In the event Lannett wishes to change Product
Specifications absent a legal requirement to make such change, Lannett shall
deliver to Seller written notice of

5

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any required changes to the Product Specifications, and Seller shall use its
commercially reasonable efforts to make such changes to the Product
Specifications.  Seller shall cooperate with Lannett in good faith to implement
all changes to the Product Specifications as soon as practicable after notice
thereof. If any change to Product Specifications requested by Lannett materially
affects Seller’s costs of producing the Product, then Seller shall promptly so
inform Lannett in writing and the parties shall negotiate, in good faith, an
adjustment to the Price paid by Lannett for Product under this Agreement.  If
the parties cannot mutually agree on an adjustment to the Price, then either
Seller or Lannett may terminate this Agreement on not less than ninety (90) days
prior written notice, without any further obligation to the other party;
 provided,  however, that Lannett shall remain liable for all sums owed to
Seller for orders of Product that were placed prior to the date of termination. 

2.5. Inspection of Product. Within sixty (60) calendar days of the arrival of
each lot of Product at the U.S. location designated by Lannett, Lannett shall
inspect and test each lot of Product at its own cost and expense.  If, upon
inspecting and testing the Product, Lannett determines that a Product lot does
not materially conform to the Product Specifications or to any of the warranties
contained in Section 4.1 (any quantity of such Product, the “Non-Conforming
Product”), then Lannett shall, within such sixty (60) day period, in the case of
any defects readily observable based on visual inspection of the packaged
Product or the accompanying certificates, give Seller written notice of such
Non-Conforming Product (setting forth the details of such non-conformity). 

2.6. Latent Defects.  The parties acknowledge that it is possible for Product to
have manufacturing defects that are not discoverable through industry standard
physical inspection and which render the Product not usable in the ordinary
course of Lannett’s business or not fit for its intended purpose (hereinafter
referred to as “Latent Defects”).  Latent Defects may include, by way of
illustration and not definition or limitation, loss of potency/stability,
discoloration, contamination with foreign matter or substances or other
manufacturing defects.  Seller shall remain solely responsible for all such
Latent Defects that are directly attributable to the manufacture of Product.  If
any party discovers or becomes aware of a Latent Defect in any Product
manufactured by Seller and shipped to or for the benefit of Lannett, it shall
promptly notify the other party.  Nonetheless, Lannett agrees that Seller shall
not be liable for any loss or damages resulting from the inappropriately stored
or transported the Product by Lannett in a storage condition other than what is
provided by the Specification after the Product is delivered to Lannett. 

2.7. Disputes. Seller shall respond in writing to a rejection notice for
Non-Conforming Product or Product with a Latent Defect from Lannett within ten
(10) days from the date of receipt of such rejection notice in accordance with
Sections 3.5 and 3.6 above.  If Seller fails to respond within such time period,
Seller shall be deemed to have accepted such rejection and to agree with the
basis therefor.  If Seller does not agree with Lannett’s determination that such
Product fails to conform to the Product Specifications or the warranties
provided by Seller in Section 4.1, then Seller and Lannett shall use reasonable
efforts to resolve such disagreement as promptly as possible.    Without
limiting the foregoing, if such disagreement cannot be resolved within fourteen
(14) days following Seller’s notice that it disagrees with Lannett’s
determination, disputes between the parties as to whether all or any part of a
shipment rejected by Lannett materially conforms to the Product Specifications
shall be resolved by a mutually acceptable independent third party testing
laboratory approved by the FDA and the determination of such laboratory as to
whether such Product was non-confirming shall be final and binding on the

6

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parties. Seller shall pay all the fees of the independent third party
laboratory, unless the third party testing laboratory determines that the
delivered Product materially conforms to the Product Specifications, in which
case Lannett shall pay all the fees of such third party laboratory.

2.8. Refunds; Replacement of Product. Product accepted by Seller as not meeting
the applicable requirements from the FDA or another applicable regulatory
authority and/or the Product Specifications agreed by both Parties previously,
or which is determined by the independent third party laboratory not to meet
such requirements and/or the Product Specifications, shall be returned by
Lannett to Seller, or disposed of, as directed by Seller and at Seller’s sole
cost and expense (including, but not limited to, the cost of labor and supplies
to manufacture the replacement quantity, and all shipping costs and expenses to
deliver such replacement quantity).  At Lannett’s election, Seller shall either
(a) if approved by Lannett in writing, replace all such rejected Product as
promptly as practicable, but in any event, within sixty (60) days after its
receipt of Lannett’s notice of such rejection or the resolution of any dispute
relating to such notice or (b) promptly refund to Lannett any amount paid by
Lannett for such rejected Product or, if such Product has not been paid for,
cancel any outstanding invoice (or portion thereof) relating to such
Product.  Without limiting any other provision in this Agreement, Lannett may
withhold payment for such shipment or the portion thereof that has been rejected
by Lannett pursuant to Section 3.5 and 3.6 pending the resolution of any dispute
relating thereto, and in the event that the rejected Product is determined to be
non-conforming pursuant to Section 3.7, then Lannett shall have no obligation to
make any payment for such shipment of Product.  If Lannett does not elect to
have any rejected Product replaced by Seller, the quantity of Product that
Lannett is obligated to purchase hereunder for the period in which such rejected
Product was delivered shall be reduced by the quantity of Product so rejected.

2.9. FDA Delays.  To the extent that the FDA and/or any other applicable
regulatory authority acts inordinately slowly in approving any Product, clearing
paperwork or otherwise releasing Product to Lannett, Lannett and Seller shall
confer and cooperate with each other on the effect that such delay may have on
any obligations arising under this Agreement.  

2.10. Gap Analysis for New Facility. For each regulatory approval required by
the FDA to develop and commercialize the Product, the Seller agrees to provide a
“gap analysis”, performed by a third party approved by Lannett. The analysis
will compare the New Facility design and standards, quality system requirements,
operating, environmental and procedural requirements to the standards of the
FDA, and will contain proposed modifications to the facility and manufacturing
processes (the “Modification Plan”). Each Modification Plan, if requested by
Lannett, will be constructed and performed by the Seller and reported to the
Supply Chain Committee. The Supply Chain Committee will review each Modification
Plan progress, its deliverables and timelines.  The Supply Chain Committee will
communicate progress of each Modification Plan to the Seller and Lannett over
the lifetime of each Modification Plan.

2.11. Right of Audit. Lannett and its representatives shall have the right to
audit Seller for compliance with applicable regulatory requirements, including,
but not limited to, cGMPs, at reasonable intervals and upon reasonable
notice.  Such audits shall be scheduled at mutually agreeable times. 

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2.12. Inspection of Facilities by Lannett.  Lannett shall have the right to
inspect, at all reasonable times, during normal business hours, upon fifteen
(15) days’ advance notice or on less notice if reasonably required in order to
timely respond to or comply with inquiries from or requirements imposed by any
applicable regulatory authority, the operations and facilities wherein any
Product is manufactured, packaged, tested, labeled and/or stored for
shipping. All Product manufactured by Seller shall be subject to approval by
Lannett’s quality assurance group or such other technical representatives as
Lannett may select, with respect to whether or not each batch of Product meets
the Product Specifications and complies with all warranties contained in this
Agreement.  Seller covenants and agrees that the New Facility shall be in
compliance with all applicable laws and cGMPs and that such New Facility shall
be available for FDA inspection if and when the FDA so requests.

2.13. Regulatory Inspection.

(a) Regulatory Actions.  Seller shall permit the FDA and other regulatory
authorities, as applicable, to conduct such inspections of the New Facility,
and/or any other facility at which any of the manufacturing or processing
activities relating to the Drug Substance or Product are performed, as such
regulatory authorities may request, including pre-approval inspections, and
shall cooperate with such regulatory authorities with respect to such
inspections and any related matters, in each case in relation to the manufacture
and supply of Drug Substance and Product.  Seller shall (a) give Lannett prior
written notice, as far in advance as practicable, of any such inspections
related to the Product or that could reasonably be expected to have implications
for Seller’s obligations under this Agreement; (b) permit a representative of
Lannett to be present at any such inspection contemplated by clause (a);
(c) provide Lannett with a copy of any report(s), notices, findings or other
documentation received from the FDA or other regulatory authority within five(5)
 business days following such inspection, which may be redacted to remove
information that is unrelated to the Product and that relates to matters that
could not reasonably be expected to affect Seller’s performance of this
Agreement; and (d) otherwise keep Lannett informed about the results and
conclusions of each such regulatory inspection, including any actions taken by
Seller to remedy any conditions cited in such inspections related to the Drug
Substance or Product.

(b) Regulatory Responsibilities.  Seller will, at its own cost and expense,
continue to own and maintain the applicable regulatory approvals necessary to
market the Product in the US.  Seller shall be responsible for all regulatory
and safety reporting requirements associated with ownership of the regulatory
approvals, including, without limitation, Periodic Adverse Drug Experience
Reports and Annual Reports mandated by the applicable laws in the
US.  Additionally, Seller shall be responsible for complying with applicable
laws to appropriately categorize and report changes to the FDA, including
without limitation, amendments, supplements, and Annual Reports.  All
communications by Seller with the FDA relating to the Product as marketed in the
US shall be promptly provided in writing to Lannett, and Seller shall promptly
provide Lannett copies of all documents sent to or received from the FDA
regarding the Product. 

(c) Labeling.  Seller shall be responsible for the creation, content, and
printing of the labeling for the Product.  Seller shall send Lannett all
labeling materials for the Product (e.g., package insert, instruction for use,
container label, carton label, medication guide, patient labeling, etc.) in
final format for Lannett’s review and final written approval.  Seller is
responsible for ensuring the most current labeling content is consistent with
the BLA approval

8

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and all requested FDA updates and used on Product supplied to Lannett.  Seller
is responsible for notifying Lannett within three (3) business days of any FDA
communication requesting changes to labeling materials and changes required by
21CFR601.12.  Seller will provide Lannett with a copy of all FDA communications
related to labeling.  All changes to labeling materials for the Product require
Lannett’s review and final written approval.  Labeling materials that have not
been subject to Lannett’s review and written approval are prohibited to be used
on Product supplied to Lannett.  Seller is responsible for submitting the
content of labeling in Structured Product Labeling (“SPL”) format to the FDA for
Lannett’s NDC numbers within fourteen (14) days of BLA approval to ensure proper
drug listing.  Seller is also responsible for submitting updated SPL files
within fourteen (14) days when labeling changes are made and approved and as
required by applicable laws.

(d) Monitoring Adverse Events.  Seller shall be responsible for all safety
reporting requirements associated with ownership of the BLA approval mandated by
the laws in the US. The Parties shall enter into a separate Safety Data Exchange
Agreement (“SDEA”). The SDEA shall be executed as early as possible but no later
than the date of first commercial marketing of the Products covered by the
present Agreement.  To the extent there are any inconsistencies or conflicts
between this Agreement and the SDEA, the terms and conditions of this Agreement
shall control unless specifically otherwise agreed to in writing by the
Parties.  Notwithstanding the foregoing, in matters regarding safety reporting,
the terms of the SDEA shall supersede those in this Agreement. Seller, as the
owner of the BLA for the Product, shall be solely responsible for FDA reporting
in relation to the Product.

(e) Cooperation.  Without limiting the foregoing, each of Seller and Lannett
shall provide to each other in a timely manner with all information which the
other Party reasonably requests regarding the Product in order to enable the
other Party to comply with all laws applicable to the Product in the US.  Each
of Seller and Lannett shall provide to the other or, if applicable, directly to
the FDA, any assistance and all documents reasonably necessary to enable the
other to carry out its obligations under this Section 3.13.  In general,
requests for cooperation should be responded to by the other Party within three
(3) Business Days and both should make responsible efforts to ensure that
cooperation is maintained to ensure completion of the given project.

(f) Recalls, Etc.  Any recalls, withdrawals, field alerts or similar actions
involving the Product shall, as between the Parties, be controlled solely by
Lannett; provided,  however, that if Seller reasonably believes any such action
may be necessary by virtue of any Product provided under this Agreement, Seller
shall immediately notify Lannett in writing.  Seller shall provide assistance to
Lannett (and/or its designee), as reasonably requested by Lannett, in conducting
such action, including providing all pertinent records that may assist Lannett
in effecting such recall or other action.  In the case of a recall, withdrawal,
field alert or similar action involving the Product which is subject to
indemnification by Seller under Section 6, Seller will reimburse the Lannett for
any out-of-pocket cost reasonably expended by Lannett to effect the recall and
the replacement of the Product without charge; provided, however, that  in no
event Seller will reimburse the out-of-pocket cost for the recalls resulting
from the inappropriately stored or transported Product by Lannett in the storage
condition  other than what is provided by the Specification after the Product is
delivered to Lannett. The losses caused by the recalls shall be incurred solely
by the party that is responsible for the recalls and the losses shall be
calculated according to the commercialization price of per unit multiplies the
recall quantity of the Product.

9

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2.14. Representative in New Facility.  With respect to the New Facility, Lannett
will have the option to have one (1) representative of Lannett or its Affiliates
on site until the expiration or termination of the Collaboration
Agreement.  Lannett’s representative will, strictly for the purpose of ensuring
compliance with cGMPs: (i) have full access to the validation master plan for
the New Facility and the manufacturing operations and laboratories (including
facilities, equipment, documentation, and personnel) utilized for the
manufacture of Drug Substance when Drug Substance is being produced, tested, or
released, (ii) have the option to participate in batch record reviews, deviation
investigations, customer complaints, quality incidents, and other such
activities related to the release of Drug Substance, (iii) will have the ability
to convene periodic meetings with representatives of HEC with respect to
manufacture of Drug Substance, (iv) participate in routine and for-cause quality
audits, (v) review validation data for systems and processes relevant to Drug
Substance, (vi) ensure appropriate quality metrics are tracked and trended to
identify adverse quality trends in both Drug Substance and systems, (vii)
participate in scheduled periodic cGMP audits, (viii) participate with the site
supply chain team to review manufacturing schedules and provide input, and (ix)
participate in joint capacity review meetings to be conducted at least annually
based on HEC’s forecasts. The costs or expenses incurred by Lannett from the
outside representative of Lannett or its Affiliates that involved in the
activities listed in the clause (i) through (ix) above, if applicable, shall be
borne solely by Lannett and, for clarify, not part of Lannett’s Financial
Responsibility, the Share Development Costs, or Profit & Loss Share.

3. Warranties. 

3.1. Seller’s Warranties.  Seller represents and warrants to Lannett that: 

(a) It has full right and power to enter into this Agreement and perform its
obligations hereunder in accordance with its terms;

(b) The Product and all components and ingredients thereof shall be manufactured
and delivered in strict compliance with:  (i) the Product Specifications; (ii)
the terms of this Agreement; (iii) the methods processes and procedures,
including the site manufacture, together with all applicable regulatory
requirements relating to the manufacture of the Product; (iv) all applicable
United States state and federal laws, rules and regulations, including, but not
limited to, the provisions of the United States Federal Food, Drug and Cosmetic
Act (the “FFDCA”), and Public Health Service Act and The Patient Production and
Affordable Care Act as amended from time to time (collectively, the “Acts”), and
cGMPs; and (v) all quality control procedures and associated test methods for
the manufacturing process as developed by Seller in conformance with the Quality
Agreement (defined below) attached hereto and incorporated by reference herein
as Exhibit E and acceptance specifications and test methods for the Product as
jointly approved by Seller and Lannett;

(c) The Product does not include any components or ingredients that would cause
the Product to degrade over time; 

(d) Seller shall not deviate from manufacturing Product in accordance with
Section 4.1(b) without the prior written consent of a duly authorized
representative of Lannett; 

10

106569863.v1

 

(e) Good and valid title to the Product will pass to Lannett upon delivery by
Seller to Lannett at the shipping address set forth in the applicable Purchase
Order, free and clear of all third party liens, security interests, claims
and/or encumbrances of any kind or nature;

(f) All manufacturing, packaging and testing procedures utilized under this
Agreement have been or shall be validated under the Acts. 

(g) Prior to Lannett issuing its first Purchase Order to Seller pursuant to this
Agreement (and in any event, within ninety (90) days after the Effective Date),
the Parties shall enter into an agreement specifying the Parties’ respective
responsibilities for storage, release, quality control and quality assurance
with respect to the Product (the “Quality Agreement”). The Quality Agreement is
not intended and shall not be construed to limit any of the rights and
obligations of the parties set forth in this Agreement.  Subject to the
foregoing, to the extent possible, the Quality Agreement will be interpreted
with the terms set forth in this Agreement.  If there is any conflict or
inconsistency between the terms of the Quality Agreement and the terms set forth
in this Agreement, however, the terms set forth in this Agreement shall control;

(h) The Product has a shelf life of three (3) years.  All Product supplied by
Seller under this Agreement shall have eighty percent (80%) of its maximum shelf
life remaining at the time of delivery of such Product to Lannett (or its
designee);

(i) Seller has obtained and, at all times during the term of this Agreement,
shall maintain, all registrations, permits, licenses and approvals required by
regulatory authorities and other governmental authorities in order for Seller to
manufacture and supply Product to Lannett, and otherwise to perform its
obligations, under this Agreement and in accordance with applicable laws; and

(j) Neither Seller, nor any of its Affiliates, nor any of their respective
employees have been “debarred” or suspended by the FDA, or subject to a similar
sanction from any regulatory authority in any jurisdiction outside the United
States, nor have debarment proceedings against Seller, any of its Affiliates, or
any of their respective employees been commenced. Seller shall not, in the
performance of its obligations, under this Agreement use the services of any
person so “debarred” or suspended.

3.2. Lannett’s Warranties.  Lannett represents and warrants to Seller that: 

(a) It has the full right and power to enter into this Agreement and perform its
obligations hereunder in accordance with its terms; and

(b) All processing, packaging and testing procedures utilized under this
Agreement have been or shall be validated under the Acts.

3.3. Mutual Warranties.  Each party represents and warrants to the other party
that it holds all necessary and required permits and authorizations, including,
but not limited to, those required by the Acts, and shall undertake throughout
the term of this Agreement to maintain the same in full force and effect.  Each
party further covenants that it shall use commercially reasonable efforts to
obtain all such other permits and authorizations as may be reasonably required
from time to time in either case to operate their respective facilities and/or
businesses in order to manufacture, provide, distribute and/or sell Product
hereunder. 

11

106569863.v1

 

3.4. No Adulteration.  For the purposes of Section 303(c) of the FFDCA:  (a)
Seller guarantees to Lannett that all Product shipped by or on behalf of Seller
hereunder will not, on the date of shipment, be adulterated or misbranded (i)
within the meaning of the FFDCA, or (ii) within the meaning of any applicable
state law in which the definitions of “adulteration” and/or “misbranding” are
substantially the same as those contained in the FFDCA, the provisions of which
are in effect at the time of such shipment, and will not be an article which may
not, under the provisions of Section 404 or 505 of the FFDCA, be introduced into
interstate commerce; and (b) Lannett guarantees to Seller that all Product
shipped by or on behalf of Lannett hereunder will not, on the date of shipment,
be adulterated or misbranded (i) within the meaning of the FFDCA, or (ii) within
the meaning of any applicable state law in which the definitions of
“adulteration” and/or “misbranding” are substantially the same as those
contained in the FFDCA, the provisions of which are in effect at the time of
such shipment, and will not be an article which may not, under the provisions of
Section 404 or 505 of the FFDCA, be introduced into interstate commerce. 

4. Confidentiality. 

4.1. Confidentiality.  Each party agrees to retain in confidence all proprietary
and confidential information of the others disclosed to it pursuant to this
Agreement, whether such disclosure occurred before or after the date
hereof.  Disclosed information shall not be deemed confidential hereunder
if:  (a) it is now or later becomes publicly known, other than through the fault
of the receiving party; (b) it is known to the receiving party prior to the time
of disclosure; (c) it is rightfully obtained by the receiving party from a third
party without restriction and without breach of this Agreement or any similar
agreement; (d) it is independently developed by the receiving party without
access to the disclosing party’s information; and/or (e) it is required to be
disclosed by order of a court of competent jurisdiction, administrative agency
or governmental body, or by subpoena, summons or other legal process, or by law,
rule or regulation; provided that, prior to such disclosure, the disclosing
party is given reasonable advance notice of such order and an opportunity to
object to such disclosure and the receiving party cooperates with the disclosing
party to take whatever action it may deem appropriate to protect the
confidentiality of the information and furnishes only that portion of the
disclosing party’s confidential information that the receiving party is legally
required to furnish.  The confidentiality of disclosed proprietary and
confidential information and the obligation of confidentiality hereunder shall
survive any expiration or termination of this Agreement and shall expire five
(5) years following termination or expiration of this Agreement.  The parties
specifically agree that all terms of this Agreement, all sales and Product
requirements and costs and all Purchase Orders shall be deemed to be
confidential; provided,  however, that this sentence shall not apply to any
person or entity that desires to acquire or merge with or into either party, so
long as such person or entity enters into a confidentiality agreement or
non-disclosure agreement on terms no less stringent than those set forth
herein.   Lannett agrees that all information observed or obtained by Lannett
during Lannett’s inspection of Seller’s facility pursuant to Section 3.12 of
this Agreement is confidential information no matter whether the information is
in writing or not in writing.

4.2. Public Announcements.  During the term of this Agreement, neither party
hereto shall issue or release, directly or indirectly, any press release,
marketing material or other communication to or for the media or the public that
pertains to this Agreement, the Product or the transactions contemplated hereby
(collectively, a “Press Release”) unless the content of such Press Release has
been approved by the other party hereto, such approval not to be unreasonably

12

106569863.v1

 

withheld or delayed; provided,  however, that nothing contained in this
Agreement shall prevent or preclude any party from making such disclosures as
may be required by applicable law, including, but not limited to, any
disclosures required by applicable securities laws. 

5. Indemnification. 

5.1. Lannett shall indemnify, defend and hold Seller and its officers,
directors, affiliates, agents and employees harmless from and against any and
all third party claims, demands, costs, expenses, losses, liabilities and/or
damages (including, but not limited to, reasonable attorneys’ fees and court
costs) of every kind and nature caused by or resulting from Lannett’s or its
officers, directors, affiliates, agents and employee’s negligence relating to,
or breach of,  this Agreement; provided,  however, that in no event shall this
Section 6.1 apply to any claim covered by Sections 6.2 or 6.3 below and Lannett
shall not have any liability or indemnification obligation hereunder to the
extent any such allegation is caused by the negligence, gross negligence or
willful misconduct of Seller or its officers, directors, agents and/or
employees. 

5.2. Seller shall indemnify, defend and hold Lannett and its officers,
directors, affiliates, agents and employees harmless from and against any and
all claims, demands, costs, expenses, losses, liabilities and/or damages
(including, but not limited to, third party claims, reasonable attorneys’ fees
and court costs) of every kind and nature caused by or resulting from Seller or
its officers, directors, affiliates, agents and employee’s negligence relating
to, or breach of, this Agreement, misrepresentation, breach of warranty and any
claim for personal or bodily injury (including death) arising from Seller’s
failure to manufacture the Product in accordance with the Product Specifications
and applicable laws; provided, however, that in no event shall this Section 6.2
apply to any claim covered by Sections 6.1 above and Seller shall not have any
liability or indemnification obligation hereunder to the extent any such
allegation is caused by the negligence, gross negligence or willful misconduct
of Lannett or its officers, directors, agents and/or employees.     

5.3. Seller shall also indemnify, defend and hold Lannett and its officers,
directors, affiliates, agents and employees harmless from and against any and
all claims, demands, costs, expenses, losses, liabilities, and/or damages
(including, but not limited to, third party claims, reasonable attorneys’ fees
and court costs) of every kind and nature incident to or resulting directly or
indirectly from any allegation that Product, or the manufacture and/or
processing thereof, infringes upon or violates any patent, copyright, trade
secret or other intellectual property right of any third party;  provided,
however,  that in no event shall this Section 6.3 apply to any and all claims,
demands, costs, expenses, losses, liabilities, and/or damages of every kind and
nature incident to or resulting directly or indirectly from any allegation that
the injection drug delivery device, or the assembly and/or use thereof,
infringes upon or violates any patent, copyright, trade secret, trademark or
other intellectual property right of any third party and Seller shall not have
any liability or indemnification obligation hereunder.    

5.4. Each party will promptly notify the other of any actual or threatened
judicial or other proceedings which could involve either or both parties.  Each
party reserves the right to defend itself in any such proceedings; provided,
 however, that, if indemnity is sought, then the party from whom indemnity is
sought shall have the right to control the defense of the claim (provided that
such claim is solely for monetary damages and the indemnifying party agrees to
pay all damages relating to such matter, as evidenced in a written confirmation
delivered by the

13

106569863.v1

 

indemnifying party to the indemnified party), and the indemnified party may
participate with counsel of its choice at its own expense.  The parties shall
cooperate with each other to the extent reasonably necessary in the defense of
all actual or potential liability claims and in any other litigation relating to
the Product supplied pursuant to this Agreement.  Each party will supply
information to the other relevant to any product liability claims and litigation
affecting the Product and/or the Product, as the case may be. 

6. Insurance.  Unless the parties otherwise agree in writing, the following
terms shall apply:  

6.1. Beginning on the commencement of the first Clinical Trial of a Product and
thereafter during the term of this Agreement and for a period one (1) year after
any expiration or termination of this Agreement, each of Lannett and Seller
shall maintain in full force and effect a comprehensive general liability
insurance policy, including coverage for products liability, contractual
liability, bodily injury (including death) and property damage, with minimum
limits of at least Five Million U.S. Dollars ($5,000,000) per claim and Ten
Million U.S. Dollars ($10,000,000) annual aggregate. 

6.2. On or before the date on which Lannett begins to sell the Product in the
United States, each party shall deliver to the other party a Certificate of
Insurance with a broad form vendors endorsement naming such other party as an
additional insured to verify the coverage required by this Agreement, which
endorsement provides a thirty (30) day written notice of cancellation,
termination or non-renewal to each of Lannett and Seller.  Each party shall
maintain such endorsement in effect for so long as Lannett ships, stores and/or
delivers any Product under this Agreement and for a period of one (1) year
thereafter.  Each party agrees to promptly renew all insurance policies in a
timely manner and so notify the other party with certificates evidencing
same.  Each party further agrees to notify the other party at least thirty (30)
days in advance of any proposed cancellation, termination or non-renewal of any
such policies. 

7. Term and Termination. 

7.1. Termination. Unless terminated in accordance with the provisions of Section
8.2 below, the term of this Agreement shall commence on the Effective Date and
shall terminate upon the expiration or termination of the Collaboration
Agreement.  

7.2. Continuing Obligations; Survival.  In no event shall any termination or
expiration of this Agreement excuse either party from any breach or violation of
this Agreement and full legal and equitable remedies shall remain available
therefor, nor shall it excuse either party from making any payment due under
this Agreement with respect to any period prior to the date of expiration or
termination.  Notwithstanding any provision of this Agreement to the contrary,
Sections 3.5, 3.6, 3.8, 3.9, 4, 5, 6, 7, 8.2, 9, 11, and 12 hereof shall survive
any termination or expiration of this Agreement. 

8. Agreement to Consummate; Further Assurances.  Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use
commercially reasonable efforts to do all things necessary, proper or advisable
under this Agreement, applicable laws and regulations to consummate and make
effective the transactions contemplated hereby.  If, at any time after the date
hereof, any further action is necessary, proper or advisable to carry out the
purposes of this Agreement, then, as soon as is reasonably practicable, each
party to this Agreement shall take, or cause its proper officers to take, such
action. 

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106569863.v1

 

9. Annual Facility and Regulatory Fees.  Any facility fees and regulatory
expenses required to certify and maintain FDA approval of the manufacturing
facilities for the Product (collectively, the “Facility Fees”), are the sole
responsibility of the Seller. Seller acknowledges that it is a violation of U.S.
federal law to ship Product in interstate commerce or to import Product into the
United States if manufactured in a facility that has not met its obligations to
self-identity or to pay fees when they are due.  Seller will indemnify and hold
harmless Lannett for any and all costs, fees, fines or penalties paid by Lannett
associated with Seller’s failure to self-identify or to pay Facility Fees when
due during the term. 

10. Force Majeure.  Any delay in the performance of any of the duties or
obligations of either party hereto (except for the payment of money) caused by
an event outside the affected party’s reasonable control shall not be considered
a breach of this Agreement and the time required for performance shall be
extended for a period equal to the period of such delay.  Such events shall
include, but will not be limited to, acts of God, acts of a public enemy, acts
of terrorism, insurrections, riots, injunctions, embargoes, fires, explosions,
floods, or any other unforeseeable causes beyond the reasonable control and
without the fault or negligence of the party so affected.  The party so affected
shall give prompt written notice to the other party of such event, and shall
take whatever reasonable steps are appropriate in that party’s reasonable
discretion to relieve the effect of such event as rapidly as possible. 

11. General Provisions. 

11.1. Assignment.  Neither this Agreement nor any interest herein may be
assigned, in whole or in part, by either party without the prior written consent
of the other, which consent shall not be unreasonably withheld or delayed,
except that either party may assign its rights and obligations under this
Agreement:  (a) to an affiliate, division or subsidiary of such party; and/or
(b) to any third party that acquires all or substantially all of the stock or
assets of such party, whether by asset sale, stock sale, merger or otherwise,
and, in any such event such assignee shall assume the assignor’s obligations
hereunder.  However, notwithstanding any such assignment, the assignor shall
remain liable under this Agreement (in addition to the assignee) unless such
liability is specifically waived in writing by the other party hereto.  Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and permitted assigns. 

15

106569863.v1

 

11.2. Notice.  Any notice or other communication required or permitted to be
made or given by either party pursuant to this Agreement shall be in writing in
English and will be deemed to have been duly given:  (i) five (5) business days
after the date of mailing if sent by registered or certified U.S. mail, postage
prepaid, with return receipt requested; or (ii) upon receipt, if sent by email
or by facsimile (with confirmation of transmission); or (iii) when delivered, if
delivered personally or sent by national overnight delivery service.  All
notices will be sent to the other party at its address as set forth below or at
such other address as such party will have specified in a notice given in
accordance with this Section:

If to Seller, then to:

HEC Pharm US Inc.

2 Enfield Circle,

West Windsor, NJ, 08550

Attn:  Kevin Kong

Email: kongweiheng@yahoo.com__

with a copy, sent as provided herein, to:

Hill Wallack LLP

21 Roszel Rd, Princeton, NJ 08540

Attention:  Quinn Zhao
Telephone:  (609) 924-0808

If to Lannett, then to:

Lannett Company, Inc.

9000 State Road

Philadelphia, PA 19136

USA

Attn:  Legal Department

Facsimile:  (215) 464-1861

Email: samuel.israel@lannett.com

11.3. Entire Agreement.  This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges all
prior discussions and negotiations between them, and neither party shall be
bound by any conditions, definitions, warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein or as duly set forth on or subsequent to the date hereof in
writing and signed by a proper and duly authorized officer or representative of
the parties to be bound thereby. 

11.4. Amendment and Modification.  This Agreement may be amended, modified and
supplemented only by written agreement duly executed and delivered by each of
the parties hereto. 

11.5. Waiver.  The failure of any party to exercise any right or to demand the
performance by the other party of duties required hereunder shall not constitute
a waiver of any rights or obligations of the parties under this Agreement.  A
waiver by any party of a breach of any of the terms of this Agreement by any
other party shall not be deemed a waiver of any subsequent breach of the terms
of this Agreement. 

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11.6. Dispute Resolution.  The parties agree that any disputes arising with
respect to the interpretation, enforcement, termination or invalidity of this
Agreement (each, a “Dispute”) shall first be presented to the parties’
respective Executive Officers (as defined in the Collaboration Agreement) for
resolution.  If the parties are unable to resolve a given dispute pursuant to
this Section 12.6 after in-person discussions between the Executive Officers
within ten (10) business days after referring such dispute to the Executive
Officers, either party may, at its sole discretion, seek resolution of such
matter in accordance with Section 12.7.

11.7. Submission to Arbitration for Resolution.  Subject to Section 12.6, any
Disputes shall be submitted to binding arbitration under the Rules of
Arbitration (the “Rules”) of the International Chamber of Commerce (“ICC”). The
arbitration shall be conducted by a tribunal of arbitrators experienced in the
business of pharmaceuticals. The tribunal shall be compromised of three (3)
arbitrators, one of whom shall be nominated by each Party and a third of whom,
who shall serve as the presiding arbitrator, shall be nominated by mutual
agreement of the two party-nominated arbitrators.  If the two party-nominated
arbitrators do not nominate the third arbitrator within thirty (30) days of the
second arbitrator’s appointment, then the third arbitrator shall be appointed by
the International Court of Arbitration of the ICC. If the issues in dispute
involve scientific, technical or commercial matters, the arbitrators chosen
hereunder shall engage experts that have educational training or industry
experience sufficient to demonstrate a reasonable level of relevant scientific,
medical and industry knowledge, as necessary to resolve the dispute. Within
thirty (30) days after initiation of arbitration, the Parties shall select the
arbitrators.  The arbitration proceeding shall be conducted in the English
language.  That is, neither Party shall be requested to provide any documents or
other evidence beyond the documents and other evidence that each Party chooses
to submit in support of its case. The place of arbitration shall be
Singapore.  The award of such arbitration shall be conclusive and binding on the
Parties, and judgment upon the award may be entered in any court having
jurisdiction thereover. All costs of the arbitration shall be borne in
accordance with the Rules and, if different, according to the award rendered,
but each Party shall be responsible for its own legal and other costs.

11.8. Governing Law.  This Agreement is to be governed by and construed in
accordance with the laws of Hong Kong, notwithstanding any conflict of law
principles to the contrary.  The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to this Agreement.  The parties
waive any and all rights to have any dispute, claim or controversy arising out
of or relating to this Agreement tried before a jury. 

11.9. Severability.  Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any action in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had not been
contained herein. 

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106569863.v1

 

11.10. Construction.  The parties have participated jointly in the negotiation
and drafting of this Agreement.  In the event of any ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.  As used in this Agreement, the singular shall
include the plural and vice versa, and the terms “include” and “including” shall
be deemed to be immediately followed by the phrase “but not limited to.”  The
terms “herein” and “hereunder” and similar terms shall be interpreted to refer
to this entire Agreement, including any schedules attached hereto. 

11.11. Relationship of the Parties.  Neither party shall hold itself out to
third parties as possessing any power or authority to enter into any contract or
commitment on behalf of any other party.  This Agreement is not intended to, and
shall not, create any agency, partnership or joint venture relationship between
or among the parties.  Each party is an independent contractor with respect to
the others.  No party is granted any right or authority to assume or create any
obligation or responsibility, express or implied, on behalf of, or in the name
of any other party hereto, or to bind any other party hereto in any manner or
with respect to anything, whatsoever.    

11.12. Captions.  The captions and headings in this Agreement are inserted for
convenience and reference only and in no way define or limit the scope or
content of this Agreement and shall not affect the interpretation of its
provisions. 

11.13. Counterparts.  This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.  The delivery of a facsimile signature
or e-mail signature shall have the same force and effect as the delivery of an
original signature. 

11.14. Subcontractors.  Any work that is to be done by any party under this
Agreement may be subcontracted to a third party upon prior written consent of
the other party and in accordance with the approved Biologics License
Application, cGMPs and any applicable FDA guidelines which relate to the work to
be performed under the direction and supervision of such party, as the case may
be; provided,  however, that, as between the parties hereto, the subcontracting
party shall be and remain responsible for all acts and omissions of any such
subcontractor. 

11.15. Schedules and Exhibits.  All Schedules and Exhibits referenced in this
Agreement, if any, are hereby incorporated by reference into, and made a part
of, this Agreement. 

11.16. Currency.  All sums set forth in this Agreement and any appendices,
exhibits or schedules hereto are, and are intended to be, expressed in United
States dollars.

 

18

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.

SELLER:  

NORTH & SOUTH BROTHER PHARMACY INVESTMENT CO., LTD

 

 

By:  /s/ Zhongneng Zhang

 

Name:  ZhiongnengZhang

 

Its:  Chairman

 

Date:  November 21, 2019

 

 

HEC GROUP PTY LTD

 

By:  /s/ Wenjia Li

 

Name:  Wenjia Li

 

Its:  Executive Director

 

Date:  November 21, 2019

 

LANNETT:  

LANNETT COMPANY, INC.

 

 

By:  /s/ Timothy Crew

 

Name:  Timothy Crew

 

Its:  Chief Executive Officer

 

Date: November 21, 2019

 

 

 

 

106569863.v1

 

LIST OF EXHIBITS

 

Exhibit A+Product

Exhibit B+Product Specifications

Exhibit C*Pricing

Exhibit D+Shipping Instructions

Exhibit E+Quality Agreement

 

 

_________________________________________

 

*This Exhibit have been redacted to preserve confidentiality.  The registrant
hereby undertakes to provide further information regarding such redacted
information to the Commission upon request.

+This Exhibit has been omitted pursuant to Item 601(a)(5) of Regulation
S-K.  The registrant undertakes to provide further information regarding such
omitted materials to the Commission upon request.

 

 

 

EXHIBIT C

 

Pricing 

[***]