EXHIBIT 10.15
XXXXXX INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
EXECUTION COPY
SUPPLY AGREEMENT
This Supply Agreement (the “Supply Agreement”) is entered into as of
December 15, 2010 (the “Effective Date”) by and between Impax Laboratories,
Inc., a Delaware corporation with its principal place of business at 30831
Huntwood Avenue, Hayward, CA 94544 (“Impax”), and Glaxo Group Limited, doing
business as GlaxoSmithKline, a company organized and existing under the laws of
England and having an office and place of business at Glaxo Wellcome House,
Berkeley Avenue, Greenford, Middlesex, UB6 ONN, United Kingdom (“GSK”). Impax
and GSK are sometimes referred to herein individually as a “Party” and
collectively as the “Parties”.
RECITALS
Whereas, Impax is developing a controlled release carbidopa-levodopa capsule
product for the treatment of Parkinson’s disease;
Whereas, Impax and GSK are parties to a certain License, Development and
Commercialization Agreement of even date hereof (the “License Agreement”), under
which Impax has granted GSK the right to develop and commercialize such product
in the Licensed Territory and an option to obtain such right with respect to an
improved version of such product; and
Whereas, the License Agreement contemplates that Impax will manufacture and
supply such product to GSK for development and commercial use, and Impax is
willing to manufacture and supply such product to GSK, on the terms and
conditions set forth below.
Now, Therefore, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained in this Supply Agreement, the
Parties agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Supply Agreement but not defined herein shall
have the meanings set forth in the License Agreement.
1.1 “Backup Manufacturer” has the meaning set forth in Section 2.9.
1.2 “Capacity Planning Forecast” has the meaning set forth in Section 2.2(e).
1.3 “Certificate of Analysis” means a document identified as such and provided
by Impax to GSK with each shipment of Product that sets forth the Specifications
and the analytical test results, approved by the quality assurance department,
for the batch of Product shipped to GSK.

 

 

--------------------------------------------------------------------------------

 

1.4 “Certificate of Conformance” means a document identified as such and
provided by Impax to GSK with each shipment of Product that states that (a) the
batch of Products shipped to GSK thereunder was manufactured in accordance with
the Specifications and cGMPs, and (b) the batch of Products shipped to GSK
thereunder is in conformance with each applicable Regulatory Approval in the
Licensed Territory.
1.5 “Certificates” shall mean all or any one or combination of Certificate of
Analysis and/or Certificate of Conformance.
1.6 “Change Control Operating Procedures” has the meaning set forth in
Section 4.12(a).
1.7 “Clinical Supply Forecast” has the meaning set forth in Section 2.2(a).
1.8 “Consent” means consent, authorization, permit, certificate, license or
approval of, exemption by, or filing or registration with, any Governmental
Authority or other person.
1.9 “Current Good Manufacturing Practices,” “cGMPs” or “GMPs” means (a) the
principles detailed in the U.S. Current Good Manufacturing Practices, 21 C.F.R.
Parts 11, 210 and 211 and Directive 2003/94/EC, as each may be amended from time
to time; (b) comparable Laws promulgated by any Governmental Authority having
jurisdiction over the manufacture of the Product, or (c) comparable guidance
documents (including but not limited to advisory opinions, compliance policy
guides and guidelines) promulgated by any Governmental Authority having
jurisdiction over the Manufacture of the Product, which guidance documents are
being implemented within the pharmaceutical manufacturing industry for such
Product.
1.10 “Environmental, Health and Safety Guiding Principles” has the meaning set
forth in Section 4.10.
1.11 “Facility” means, collectively, Impax’s manufacturing facility located in
Hayward, California, and the manufacturing facility of its Affiliate, Impax
Laboratories (Taiwan), Inc. (TW) (“Impax Taiwan”), which manufacturing facility
is located in Jhunan, Taiwan.
1.12 “Firm Zone” has the meaning set forth in Section 2.2(d).
1.13 “Launch Forecast” has the meaning set forth in Section 2.2(b).
1.14 “Laws” means all applicable laws, statutes, rules, regulations, ordinances
and other pronouncements having the effect of law of any federal, national,
multinational, state, provincial, county, city or other political subdivision,
domestic or foreign, including Regulatory Acts, whether now or hereafter
enacted.
1.15 “License Agreement” has the meaning set forth in the Recitals.

 

2

--------------------------------------------------------------------------------

 

1.16 “Manufacture” with a correlative meaning for “Manufacturing” means all
activities related to the manufacturing and production of the Original Product
(including, without limitation, inspection, processing, labeling, packaging,
testing, storing, distribution, transport and other handling), and if GSK
exercises an Option, all activities (both prior to and after GSK’s exercise of
such Option) related to the manufacturing and production of the particular
Improved Product in question, in each case in bulk finished form for use in
Development or Commercialization, including in-process and finished product
testing, release of Product or any component or ingredient thereof, quality
assurance activities related to manufacturing and release of Product, stability
testing for intermediates and bulk finished Product to support expiration
dating, conformance testing and regulatory activities related to any of the
foregoing.
1.17 “Manufacturing Cost” means, with respect to Product that is
(a) Manufactured by Impax or its Affiliates, Impax’s and/or its Affiliates’
fully burdened product manufacture costs, including costs reductions due to
continuous improvement efforts, computed in accordance with generally accepted
accounting principles applicable in the United States of America (“USA GAAP”) by
application of Impax’s accounting policies, procedures, and/or conventions
applied on a consistent basis, or (b) manufactured for and supplied to Impax by
a Backup Manufacturer, XXXXXX. For clarity, if GSK exercises one or more Options
pursuant to the License Agreement, the Manufacturing Cost shall be calculated
separately for the Original Product and each Improved Product, on a
Product-by-Product basis.
1.18 “Manufacturing Invention” has the meaning set forth in Section 8.1.
1.19 “Materials” mean (i) all raw materials, API, components, work-in-process,
and other ingredients required to Manufacture the Product and (ii) all packaging
materials used in the Manufacturing, storage, and shipment of the Product.
1.20 “Operating Expenses” means costs of plant operations and plant support
services for the Facility where the Product is manufactured, including
utilities, maintenance, engineering, safety, human resources, information
technology, finance, plant management and other similar activities, to the
extent allocable to Product ordered by GSK pursuant to this Supply Agreement.
1.21 “Product” means the Original Product or, following GSK’s timely exercise of
the Option pursuant to the License Agreement, the Improved Product, in each case
delivered in bulk finished form.
1.22 “Quality Agreement” has the meaning set forth in Section 2.10.
1.23 “Regulatory Acts” means all applicable laws and regulations of any of the
countries in the Licensed Territory that govern the approval, manufacture, sale
or licensing of pharmaceutical products, or ingredients for inclusion therein,
including, without limitation, the United States Federal Food, Drug and Cosmetic
Act, as amended, and the rules and regulations promulgated thereunder.
1.24 “Regulatory Authority” means any division of the United States Food and
Drug Administration (as applicable) and any other applicable counterpart agency
that administers the Regulatory Acts.

 

3

--------------------------------------------------------------------------------

 

1.25 “Rolling Forecast” has the meaning set forth in Section 2.2(c).
1.26 “Specification” means the written specification for the Product to be
Manufactured and supplied to GSK pursuant to this Supply Agreement, as the same
may be amended from time to time by Impax or in accordance with FDA
requirements, or upon GSK’s reasonable request in accordance with requirements
of Regulatory Authorities in the Licensed Territory. Specifications may be
required to be different for the Product for use in different countries in the
Licensed Territory due to individual Regulatory Authority requirements in such
countries. For clarity, if GSK exercises the Option pursuant to the License
Agreement, there will be separate Specifications, those for the Original Product
and those for the Improved Product(s).
1.27 “Term” has the meaning set forth in Section 12.1.
1.28 “Transfer Price” has the meaning set forth in Section 3.1.
ARTICLE 2
PRODUCT SUPPLY
2.1 Purchase and Sale. Pursuant to the terms and conditions of this Supply
Agreement, Impax, itself or through its Affiliates or Third Party subcontractors
shall use Commercially Reasonable Efforts to Manufacture and supply to GSK, its
Affiliates or permitted sublicensees, and GSK shall purchase from Impax, all of
GSK’s and its Affiliates’ and sublicensees’ requirements for the Product for use
in Development and Commercialization in the Field in the Licensed Territory
pursuant to and in accordance with the License Agreement, in such quantities as
GSK shall order pursuant to and in accordance with this Article 2. For clarity,
Impax may perform its obligations under this Supply Agreement through one or
more Third Party subcontractors, provided that Impax remains responsible for the
work allocated to, and payment to, such subcontractors as it selects, to the
same extent it would if it had done such work itself. The use of any Third Party
subcontractor shall be approved by the Parties using the agreed Change Control
Operating Procedures. Impax shall ensure audit rights for GSK with any Third
Party subcontractors.
2.2 Forecasts.
(a) Clinical Supply Forecast. Within three (3) months after the Effective Date,
GSK shall provide Impax with a written monthly rolling forecast (“Clinical
Supply Forecast”) of its and its Affiliates’ and sublicensees’ anticipated
requirements for the Product, in mutually agreed full batch sizes (“Full Batch
Sizes”) for each Product configuration, for use in Development of the Product
for the following eighteen (18) months, which Clinical Supply Forecast shall be
updated thereafter on a monthly basis by GSK no later than ten (10) Business
Days prior to the beginning of the next calendar month.

 

4

--------------------------------------------------------------------------------

 

(b) Launch Forecast. No less than nine (9) months prior to the anticipated first
delivery date of Product that is intended for commercial sale in any XXXXXX, GSK
shall provide Impax with a written monthly forecast (a “Launch Forecast”) of its
and its Affiliates’ and sublicensees’ anticipated requirements for the Product
for such XXXXXX, in Full Batch Sizes for each Product configuration for use in
Commercialization for the XXXXXX (XXXXXX) month period following such
anticipated first delivery date. No later than fifteen (15) Business Days after
Impax’s receipt of a Launch Forecast, the Parties shall meet and shall work
collaboratively to prepare and adopt a supply plan for such XXXXXX, including
the month of release (a “Supply Plan”), for the launch of the Product in such
XXXXXX. GSK will provide monthly updates to each Launch Forecast in a rolling
fashion, and the Parties will update the corresponding Supply Plan accordingly,
until such time as GSK provides the first Rolling Forecast pursuant to
Section 2.2(c) that includes the forecast for the applicable XXXXXX, at which
time the Rolling Forecast shall supersede the then-current Launch Forecast and
corresponding Supply Plan for such XXXXXX. GSK will keep Impax apprised as to
timing and Product requirements due to subsequent Product launches in other
regulatory jurisdictions in the Licensed Territory, will notify Impax as soon as
is practicable regarding any unique Specifications required by any Regulatory
Authority, and will work with Impax to develop a launch plan for such subsequent
Product launches in other regulatory jurisdictions in the Licensed Territory.
XXXXXX. For the sake of clarity, XXXXXX.
(c) Rolling Forecast. No less than three (3) months prior to the first delivery
date of Product that is intended for commercial sale in the Licensed Territory,
GSK shall provide Impax with a written monthly rolling forecast (“Rolling
Forecast”) of its and its Affiliates’ and sublicensees’ anticipated requirements
for the Product, in Full Batch Sizes for each Product configuration for use in
Commercialization for the following eighteen (18) months, which Rolling Forecast
shall (i) specify a quantity of Product for each of the first five (5) months of
such forecast, which quantity is no less than fifty percent (50%) and no more
than one hundred twenty percent (120%) of the quantity forecasted for such month
when such month was the sixth (6th) month in the Launch Forecast, (ii) supersede
the then-current Launch Forecast and corresponding Supply Plan, and (iii) be
updated thereafter on a monthly basis by GSK no later than ten (10) Business
Days prior to the beginning of the next calendar month.
(d) Binding Commitment. The first three (3) months of each Clinical Supply
Forecast and Rolling Forecast shall constitute a binding commitment for Impax to
Manufacture and supply and GSK to purchase the full batch quantity of Product
specified therein as set forth below in Section 2.3, such quantity shall not be
altered in subsequent monthly updates and such quantity for each month therein
shall be no less than fifty percent (50%) and no more than one hundred twenty
percent (120%) of the quantity forecasted for such month when such month was the
sixth (6th) month in the applicable previous forecast (each such three (3)-month
period shall be referred to herein as the “Firm Zone”). For example, under a
forecast with January as month 1 and June as month 6, if the forecast for June
(month 6) is for a quantity of 1,000 units, then when the June forecast moves
into month 3 of the Firm Zone, the minimum quantity of Product that GSK would be
required to order and Impax would be required to supply for such month would be
500 units (50% of the 1,000 units forecasted) and the maximum quantity of
Product that Impax would be required to supply (to the extent ordered by GSK)
for such month would be 1,200 units (120% of the 1,000 units forecasted). Months
four (4) through eighteen (18) of each Clinical Supply Forecast and Rolling
Forecast shall be made in good faith and shall be nonbinding on GSK or Impax,
provided however that the forecast for any month in the fourth (4th) and fifth
(5th) months of any Clinical Supply Forecast or Rolling Forecast shall be no
less than fifty percent (50%) and no more than one hundred twenty percent (120%)
of the quantity forecasted for such month when such month was the sixth (6th)
month in the applicable previous forecast.

 

5

--------------------------------------------------------------------------------

 

(e) Capacity Planning Forecast. Within three (3) months after the Effective
Date, GSK shall provide Impax with a written quarterly rolling forecast
(“Capacity Planning Forecast”) of its and its Affiliates’ and sublicensees’
anticipated requirements for the Product, in Full Batch Sizes for each Product
configuration, for use in Development or Commercialization of the Product for
the five (5) year period following the eighteen (18) months covered by the
Clinical Supply Forecast or Rolling Forecast, as the case may be, which Capacity
Planning Forecast shall be updated thereafter on a semi-annual basis by GSK in
January and July of each calendar year. The Capacity Planning Forecast shall be
made in good faith for budget and capacity planning purposes only and shall be
nonbinding on GSK and Impax.
(f) Forecasts for Improved Product. For clarity, if GSK exercises one or more
Options pursuant to the License Agreement, GSK shall thereafter provide one
(1) set of forecasts pursuant to this Section 2.2 for each Product, on a
Product-by-Product basis.
2.3 Orders.
(a) GSK shall place orders for the Product with Impax using GSK’s electronic
global trading platform, XXXXXX (or such similar system as GSK may deploy from
time to time) for those quantities of Product identified in the applicable Firm
Zone, which orders shall be in Full Batch Sizes for each Product configuration.
Impax shall work with GSK, or GSK’s nominated representative, to ensure that
Impax is able to accept purchase orders via such global trading platform.
XXXXXX. GSK shall obtain for Impax, at GSK’s expense and request, all licenses
and other rights necessary for Impax to use GSK’s electronic global trading
platform in connection with this Supply Agreement. Each purchase order submitted
to Impax by GSK shall specify the quantity ordered and the requested date of
delivery to GSK at the Facility pursuant to Section 2.6, which delivery date
shall not be less than ninety (90) days after the date such purchase order is
received by Impax and may be extended only to the extent as reasonably necessary
to allow Impax to implement any changes to the Manufacture of the Product
requested by GSK or Regulatory Authorities in the Licensed Territory. Each
purchase order placed for any Firm Zone (a “Firm Order”) shall constitute a firm
obligation for GSK to purchase and for Impax to Manufacture and supply the
ordered quantities of the Product, provided that such quantities comply with the
next sentence. When a month enters the Firm Zone, GSK’s aggregate orders for
such month shall equal the quantity specified in the corresponding month of the
then current Clinical Supply Forecast or Rolling Forecast, as applicable. Within
one (1) week after receipt of any Firm Order, Impax shall notify GSK in writing
if Impax is not able to deliver the quantities so ordered by the requested
delivery date and such notice shall indicate the portion of such Firm Order that
Impax cannot supply by the requested delivery date and specify alternative
delivery dates therefor; provided, however, that the foregoing shall not be
deemed to provide Impax a right to reject any Firm Order. The terms and
conditions of this Supply Agreement shall be controlling over any conflicting
terms and conditions stated in any purchase order submitted pursuant to this
Supply Agreement or Impax’s invoice or confirmation. Any other document that
shall conflict with or be in addition to the terms and conditions of this Supply
Agreement is hereby expressly rejected (unless the Parties shall have mutually
agreed to the contrary in writing in respect of a particular instance).

 

6

--------------------------------------------------------------------------------

 

(b) From time to time, due to significant unforeseen circumstances, GSK may
deliver to Impax a purchase order for Product volumes in excess of those
specified in any Firm Zone. In the event that GSK delivers a purchase order
requesting that Impax provide Product volumes in excess the Product volume
specified in any Firm Zone, Impax shall use Commercially Reasonable Efforts to
provide GSK with such excess Product volumes up to one hundred twenty percent
(120%) of such Firm Zone if such request is received by Impax at least sixty
(60) days prior to the desired delivery date pursuant to Section 2.6. For
clarity, it shall not be a breach of this Supply Agreement if Impax, after using
Commercially Reasonable Efforts, fails to provide GSK with such excess Product
volumes.
2.4 Supply. Impax shall supply the Product as bulk unlabeled finished dosage
form. If Impax delivers to GSK all Products Manufactured in the number of
batches specified in the applicable Firm Order and the quantity of the Product
delivered per batch is no more than one hundred ten percent (110%) and no less
than ninety percent (90%) of the quantity of Product anticipated to be
Manufactured in each such batch, then Impax shall be deemed to have fulfilled
its obligation to supply the Product under such Firm Order and GSK shall accept
and pay for all Product in such delivery. Impax shall calculate the quantity
(number in capsules) of Product delivered by dividing the weight of the Product
delivered by the average weight of sample Product capsules. Impax shall invoice
GSK based on such calculation and GSK shall pay such invoice pursuant to
Section 3.2, provided that if the actual quantity (number of capsules) of the
Product delivered is less than ninety eight percent (98%) or more than one
hundred two percent (102%) of the quantity (number of capsules) billed by Impax
in the invoice, GSK shall promptly notify Impax and provide Impax with
supporting documentation, and the Parties shall adjust the invoice and payment
to reflect the quantity of the Product actually delivered. Impax shall use its
Commercially Reasonably Efforts to deliver the Product to GSK, pursuant to
Section 2.6, as released bulk within forty-five (45) days after encapsulation.
The Parties acknowledge that investigations may be required prior to release of
a batch and that Impax’s satisfaction of the obligations set forth in
Section 6.2(f) may lengthen the time between encapsulation and delivery of
Product, as released bulk, pursuant to Section 2.6.
2.5 Capacity. Impax shall at all times (i) maintain sufficient Manufacturing
capacity at the Facility to satisfy its obligations for the Product requirements
set forth in each Clinical Supply Forecast, (ii) maintain sufficient
Manufacturing capacity at the Facility to satisfy its obligations for the
Product requirements set forth in the Supply Plan (before it is superseded by
the Rolling Forecast), and (iii) maintain sufficient Manufacturing capacity at
the Facility to satisfy its obligations for the Product requirements set forth
in each Rolling Forecast, provided however, that if there is a Significant
Increase (as defined below) in the Product requirements set forth in a Clinical
Supply Forecast, Supply Plan or Rolling Forecast, as applicable, relative to
previous forecasts or plans, it may take some time for Impax to increase its
Manufacturing capacity to meet GSK’s increased Product requirements, and it
shall not be a breach of this Section 2.5 if Impax does not have sufficient
Manufacturing capacity to satisfy GSK’s increased Product requirements during
such period of time. For purposes of this Section 2.5, a “Significant Increase”
means one that would require Impax to make a capital investment in order to have
sufficient Manufacturing capacity to satisfy the Product requirements specified
in the applicable forecast or plan. Impax shall use its Commercially Reasonable
Efforts to implement its capital investment plan for additional capacity in
order to timely meet the Significant Increase in GSK’s Product requirements in
accordance with this Section 2.5.

 

7

--------------------------------------------------------------------------------

 

2.6 Shipping and Delivery. Delivery of Product from Impax to GSK shall take
place FCA at the Facility designated by Impax (INCOTERMS 2000). Impax shall be
responsible for obtaining all licenses or other authorizations for the
exportation of the Product from the country of such Facility. GSK shall be
responsible for obtaining all licenses or other authorizations for the
importation of the Product into the Licensed Territory, and shall contract for
shipment and insurance of the Product from such Facility, at GSK’s cost and
expense. GSK shall arrange for pick up by GSK’s designated freight forwarder and
Impax shall load the Product at the Facility into the means of transport
provided by GSK’s designated freight forwarder, at which time risk of loss for
Product shall transfer to GSK (i.e., Product shall be deemed delivered to GSK at
the Facility after the Product is loaded). GSK shall bear the risk of damage to
the Product after delivery to GSK at the Facility pursuant to this Section 2.6.
If the Product is damaged thereafter, including during shipping, and GSK wants
to order replacement Product, GSK shall promptly notify Impax of the damage and
any orders for replacement Product shall be subject to acceptance by Impax.
Notwithstanding any provision in this Supply Agreement to the contrary, neither
payment by nor passing of the title of the Product to GSK shall be deemed to
constitute acceptance of the Product. For clarity, acceptance of the Product by
GSK is governed by Section 6.2(b).
2.7 Business Continuity Plan. Impax shall maintain and update as necessary
during the Term a disaster recovery and business continuity plan in respect of
the Manufacture of Product at the Facility and shall make copies of the plan
(and any updates) available to GSK on request.
2.8 Allocation in the Event of Product Shortages. This Section 2.8 shall apply
in the event that Impax is unable to supply, with respect to a calendar quarter,
the total quantity of (a) Product ordered by GSK pursuant to Section 2.3 for
delivery in such calendar quarter plus (b) Product required by Impax or its
Affiliates or licensees, with respect to such calendar quarter, for use to
fulfill Impax’s Development responsibilities pursuant to Section 4.2 of the
License Agreement or for use outside the Licensed Territory, wherein such
Product is Manufactured to the same applicable Specification (such event, a
“Shortfall”). The purpose of these allocation rules is to permit GSK (with
respect to the Licensed Territory) and Impax (with respect to its Development
responsibilities pursuant to Section 4.2 of the License Agreement and with
respect to countries outside the Licensed Territory) to independently make their
respective long-term purchase decisions for the Product, with the benefits and
risks of such purchase decisions to be allocated to GSK or Impax, as the case
may be. In the event of a Shortfall, Impax shall not be obligated to fulfill any
portion of any GSK order for such Product scheduled for delivery in that
calendar quarter that exceeds one hundred percent (100%) of the quantity
forecasted for any month in such calendar quarter when such month was the sixth
(6th) month in the applicable forecast. If Impax is still unable to supply the
total quantity of (i) Product ordered by GSK pursuant to Section 2.3 (to the
extent the quantity so ordered does not exceed one hundred percent (100%) of the
quantity forecasted for such month when it was the sixth (6th) month in the
applicable forecast) plus (ii) Product required by Impax or its Affiliates or
licensees for use to fulfill Impax’s Development responsibilities pursuant to
Section 4.2 of the License Agreement or for use outside the Licensed Territory,
wherein such Product is Manufactured to the same applicable Specification, then
the available Product that is Manufactured to such applicable Specification in
each calendar quarter in which a Shortfall occurs shall be allocated as between
GSK (including its Affiliates and sublicensees) and Impax (including its
Affiliates and its licensees outside the Licensed Territory) pro rata on the
basis of the aggregate quantities scheduled for delivery in that calendar
quarter based upon GSK’s orders for such calendar quarter (to the extent the
quantity so ordered for each month in such calendar quarter does not exceed one
hundred percent (100%) of the quantity forecasted for such month when it was the
sixth (6th) month in the applicable forecast) and the Product requirements of
Impax, its Affiliates and its licensees outside the Licensed Territory for such
calendar quarter (to the extent the quantities of Impax, its Affiliates and
licensees for each month in such calendar quarter do not exceed one hundred
percent (100%) of the quantity forecasted for such month when it was the sixth
(6th) month in the applicable forecast). The allocation rules set forth in this
Section 2.8 shall restart for each calendar quarter, without any carryover of a
Shortfall realized for either GSK or Impax in the prior calendar quarter.

 

8

--------------------------------------------------------------------------------

 

2.9 Backup Manufacturing. GSK understands and acknowledges that Impax is
planning to Manufacture the Product in the Facility of its Affiliate, Impax
Taiwan, and to use Impax’s Facility in Hayward, California as a backup
manufacturing facility to supply the Product to GSK. Impax shall provide GSK
with Manufacturing data for GSK to include both the Taiwan Facility and Hayward
Facility in the MAA and all other Regulatory Submissions in the Licensed
Territory. XXXXXX. Impax shall maintain the equipment at Hayward Facility in a
state of readiness as necessary and shall initiate commercial manufacture using
available capacity at the Hayward Facility in the event that XXXXXX. XXXXXX.
Impax shall also take immediate action to ensure additional capacity is added to
the Hayward Facility or the Taiwan Facility in a commercially reasonable
timeframe such that the combined capacity in Hayward Facility and Taiwan
Facility can meet one hundred percent (100%) of the Rolling Forecast; provided
however, that Impax shall not be obligated to add capacity to the Hayward
Facility or the Taiwan Facility if Impax reasonably believes that sufficient
existing capacity at the Taiwan Facility, together with the Hayward Facility,
can be restored or made available to meet one hundred percent (100%) of the
Rolling Forecast before the time when it is reasonably anticipated that Product
Manufactured from such additional capacity will become available for supply to
GSK. Impax shall keep GSK apprised, through meetings pursuant to Section 2.13 or
through the JSC, of Impax’s plan for adding, restoring or making available
capacity in the Taiwan Facility and/or Hayward Facility to enable Impax to meet
GSK’s orders for the Product in the Rolling Forecast (such plan, the “Impax
Plan”). In the event that XXXXXX, Impax shall select a Third Party manufacturer
(a “Backup Manufacturer”) that is reasonably acceptable to GSK to Manufacture
the Product for supply to GSK solely to the extent Impax is unable to meet GSK’s
orders for the Product in the applicable Firm Zone. For clarity, GSK and its
Affiliates and sublicensees shall not have the right to Manufacture the Product
themselves, subject to Section 12.3. Impax shall use Commercially Reasonable
Efforts to negotiate and enter into an agreement with such Backup Manufacturer
to allow such Backup Manufacturer to Manufacture and supply the Product to GSK
on behalf of Impax solely to the extent Impax is unable to meet GSK’s orders for
the Product in the applicable Firm Zone. Pursuant to such agreement, Impax shall
transfer to such Backup Manufacturer all Information that is Controlled by Impax
or its Affiliates as of the Effective Date or during the Term that is necessary,
or is used by or on behalf of Impax, for the Manufacture of the Product. XXXXXX.
For the sake of clarity, Impax shall enter into a supply agreement with the
Backup Manufacturer (the “Impax-Backup Manufacturer Agreement”) and GSK shall
have no obligations under such Impax-Backup Manufacturer Agreement.
Notwithstanding the foregoing, GSK shall continue to provide Impax with the
forecasts for the Product as set forth in Section 2.2, shall continue to place
purchase orders for the Product with Impax as set forth in Section 2.3, and
shall continue to purchase the Product directly from Impax. XXXXXX.

 

9

--------------------------------------------------------------------------------

 

2.10 Quality Agreement. No later than ninety (90) days following the Effective
Date, the Parties shall enter into a quality agreement (the “Quality Agreement”)
setting forth in detail the quality assurance arrangements and procedures with
respect to the Manufacture of the Product, which Quality Agreement shall be
incorporated herein by reference following its execution by both Parties. To the
extent that the terms of this Supply Agreement and those of the Quality
Agreement are in conflict, the terms of this Supply Agreement shall control
except with respect to quality issues, which shall be governed by the Quality
Agreement. For clarity, if there are any financial terms in the Quality
Agreement that are in conflict with this Supply Agreement, this Supply Agreement
shall control with respect to such financial terms.
2.11 Packaging by GSK. GSK shall package the Product into appropriate
configurations and stock keeping units (“SKUs”) for use in Development or
Commercialization in the Licensed Territory. GSK shall package the Product with
labels, product inserts or outserts and other labeling conforming to all
applicable Laws, including cGMPs, Regulatory Approval, approved labeling, and
all other requirements of applicable Regulatory Authorities in the Licensed
Territory.
2.12 Key Performance Indicators. GSK and Impax will use Key Performance
Indicators to evaluate Impax’s performance of its obligations under this Supply
Agreement. For purposes of this Supply Agreement, the indicators set forth on
Schedule 2.12 to this Supply Agreement are the “Key Performance Indicators”. The
Key Performance Indicators will reflect the Parties’ joint understanding as to
the standards to be met by Impax consistent with GSK Global Manufacturing and
Supply Key Performance Indicators.
2.13 Meetings and Reports. Unless otherwise mutually agreed in writing, the
Parties shall meet via teleconference no less than on a monthly basis to discuss
the forecasts delivered by GSK pursuant to this Supply Agreement, the Key
Performance Indicators and other matters relevant to the supply of Products
hereunder, including Materials inventory. The Parties shall also meet on a
quarterly basis to discuss strategies for improving the processes related to the
Manufacture of the Product for the Licensed Territory, to report other
developments in the Impax supply chain for the Product for the Licensed
Territory and, without relieving either Party of, or amending, any obligations
under this Supply Agreement, to designate additional persons for communications
relating to the performance of this Supply Agreement.
2.14 Continuous Improvement. The Parties acknowledge their common goal in
reducing the costs associated with Manufacturing the Product. The Parties will
discuss possible cost reduction mechanisms through the Joint Steering Committee.
Any reduction in Manufacturing Costs will be reflected when the Transfer Price
is calculated.

 

10

--------------------------------------------------------------------------------

 

ARTICLE 3
FINANCIALS
3.1 Price.
(a) GSK shall pay the transfer price (the “Transfer Price”) for each unit of
Product supplied by Impax to GSK and such Transfer Price shall be equal to the
XXXXXX. If it is necessary for Impax to obtain a license from a Third Party
under any Patent to permit Impax, its Affiliates, or a Backup Manufacturer to
Manufacture a Product in the country in which Impax is Manufacturing or having
Manufactured such Product for the purposes of supplying such Product to GSK
pursuant to this Supply Agreement, XXXXXX (“Third Party Patent Costs”), and
XXXXXX. For clarity, Impax shall be solely responsible for seeking and
maintaining any such license needed from a Third Party. Notwithstanding the
foregoing, if Impax obtains a license from a Third Party under any Patent to
permit Impax, its Affiliates, or a Backup Manufacturer to Manufacture a Product
in the country in which Impax is Manufacturing or having Manufactured such
Product for the purposes of supplying such Product to GSK, its Affiliate or
permitted sublicensees pursuant to this Supply Agreement as a settlement of a
dispute or litigation with a Third Party in which such Third Party alleged that
Impax’s Manufacture of the Product infringes such Third Party’s Patent(s),
XXXXXX. In addition, in the event of a breach of a representation or warranty
made by Impax under Section 9.2(c) of the License Agreement, Impax shall be
responsible for obtaining and paying for any license that is necessary to cure
or otherwise remedy such breach, other than any license necessary to permit
Impax, its Affiliates, or a Backup Manufacturer to Manufacture a Product in the
country in which Impax is Manufacturing or having Manufactured such Product for
the purposes of supplying such Product to GSK, its Affiliates or permitted
sublicensees pursuant to this Supply Agreement.
(b) Within three (3) months after the receipt of the first forecast submitted by
GSK, Impax shall set and notify GSK of the initial Transfer Price for the
Product, which Transfer Price will be based on the Product quantities specified
in such forecast. Thereafter, the Parties shall meet each once every six
(6) months to review (i) Impax’s XXXXXX in the immediately preceding six (6)
months, and (ii) any implemented or planned continuous improvements. Impax shall
provide GSK with reasonable and customary cost accounting schedules and
supporting documentation thereto that were used by Impax to calculate the
Transfer Price, so that GSK can confirm the accuracy of such calculation. Impax
shall adjust the Transfer Price after such review to reflect any updates to the
calculation of XXXXXX. Impax and GSK agree that the information in
Section 3.1(b)(i)-(ii) will be used as the primary basis to adjust the Transfer
Price. In addition, if the aggregate cost of Materials to Manufacture the
Product increases or decrease more than XXXXXX percent (XXXXXX%) since the date
of the last Transfer Price adjustment, or if Impax’s Manufacturing Cost
increases or decreases due to changes requested by GSK (including significant
changes in its forecasts for the Product) or Regulatory Authorities in the
Licensed Territory, then Impax will increase or decrease the Transfer Price, and
such increase or decrease will be implemented in the next Firm Order and all
subsequent Firm Orders until the next Transfer Price adjustment.

 

11

--------------------------------------------------------------------------------

 

(c) In addition to Section 3.1(b) and not in limitation thereof, no later than
April 15th and October 15th of each year, Impax shall provide a reconciliation
report to GSK (the “Reconciliation Report”). The Reconciliation Report shall
provide Impax’s XXXXXX during the last half of the prior calendar year (for the
April 15th report) or the first half of the current calendar year (for the
October 15th report) (the “Verified Transfer Price”) and shall be accompanied by
reasonable and customary cost accounting schedules and supporting documentation
thereto that were used by Impax to calculate the XXXXXX, so that GSK can confirm
the accuracy of such calculation. The Reconciliation Report shall also contain a
calculation of the difference between the amount paid by GSK for Product during
the applicable time period using the Transfer Price and the amount that should
have been paid by GSK using the Verified Transfer Price. A positive numerical
result shall result in a rebate or credit (at GSK’s discretion) being made to
GSK for its overpayment. A negative numerical result shall result in a payment
to Impax by GSK for GSK’s underpayment. To allow for GSK to confirm Impax’s
calculation of XXXXXX, Impax agrees, subject to the obligations of
confidentiality contained in this Supply Agreement and the License Agreement, to
operate on an open book cost basis with respect to the cost accounting schedules
and supporting documentation described above and shall meet with GSK regularly,
but no less than twice per calendar year, to determine the XXXXXX to be invoiced
GSK. Unless GSK notifies Impax within thirty (30) days after its receipt of the
Reconciliation Report that it objects to the computation (the “Reconciliation
Review Period”), the report shall be binding and conclusive. If GSK notifies
Impax during the Reconciliation Review Period that it has a good faith objection
to the computation, GSK shall select an independent certified public accounting
firm of internationally recognized standing and reasonably acceptable to Impax,
and Impax shall permit such accounting firm, at GSK’s expense, to have access to
the relevant books and records of Impax during Impax’s normal business hours to
verify the Reconciliation Report. Such accounting firm will endeavor during such
inspection to minimize disruption of the normal business activities of Impax to
the extent reasonably practicable, and shall complete such inspection and
verification within thirty (30) days after GSK notifies Impax of its objection.
The accounting firm shall disclose to GSK and Impax only whether the Verified
Transfer Price is correct or incorrect and the specific details concerning any
discrepancies, and such accounting firm’s conclusion shall be binding on the
Parties absent manifest error.
(d) In addition to the foregoing in this Section 3.1, during the Term, Impax
shall use Commercially Reasonable Efforts to provide GSK with at least ninety
(90) days notice should it determine that its Transfer Price will increase by
more than ten percent (10%) over the immediately preceding Transfer Price.
(e) For the avoidance of doubt, all costs incurred by Impax in relation to
non-binding forecasts provided by GSK, except where this Supply Agreement
expressly obligates GSK to make payment to Impax for any such costs (including
without limitation Sections 2.2(d) and 4.8), shall be Impax’s sole
responsibility.
(f) No later than April 15th of each year, Impax shall invoice GSK for costs
associated with bad batches incurred during the prior calendar year in
Manufacturing the Product, to the extent not exceeding XXXXXX percent (XXXXXX%)
of the cumulative Transfer Price of all Products delivered to GSK in the prior
calendar year. GSK shall pay the amount invoiced within sixty (60) days of the
receipt of such invoice. For the avoidance of doubt, GSK shall not be
responsible for costs associated with bad batches incurred in Manufacturing the
Product in any calendar year in excess of XXXXXX percent (XXXXXX%) of the
cumulative Transfer Price of all Products delivered to GSK in such calendar
year. For the purpose of this Section 3.1(f), “bad batches” means Materials,
finished bulk Product and intermediate components that were either determined by
Impax as not available for batch release or use, or terminated during production
with no portion thereof subsequently made available to GSK or for further
processing. By way of example, if the sum of Transfer Price of all units of
Products delivered to GSK in a particular calendar year (i.e. the cumulative
Transfer Price for such calendar year) is $XXXXXX (XXXXXX capsules with a
Transfer Price of $XXXXXX per capsule), then GSK’s maximum liability to Impax
for bad batches incurred during such calendar year under this Section 3.1(f)
shall be $XXXXXX (XXXXXX% of $XXXXXX).

 

12

--------------------------------------------------------------------------------

 

3.2 Invoice and Payment. Upon delivery of the Product to GSK, Impax shall submit
to GSK an invoice for payment, in U.S. dollars, of the Transfer Price for each
unit of Product included in such delivery. GSK shall pay each invoice, in U.S.
dollars, within sixty (60) days following the date of such invoice by wire
transfer of immediately available funds into an account designated by Impax, or
by GSK check drawn on a U.S. bank. Late payments shall bear interest as set
forth in Section 7.7 of the License Agreement.
3.3 Other Manufacture Related Costs. GSK shall be responsible for the XXXXXX,
subject to the remainder of this Section 3.3. Within thirty (30) days after the
end of each calendar quarter during which such work has been performed by or on
behalf of Impax at GSK’s request, Impax shall submit to GSK a reasonably
detailed invoice, in U.S. dollars, setting forth XXXXXX. GSK shall pay to Impax
the amount invoiced, in U.S. dollars, within sixty (60) days after the receipt
of the invoice by wire transfer of immediately available funds into an account
designated by Impax, or by GSK check drawn on a U.S. bank. Late payments shall
bear interest as set forth in Section 7.7 of the License Agreement. For the sake
of clarity, XXXXXX.
3.4 Tax.
(a) GSK shall pay Impax (if Impax is obligated to collect such amount from GSK)
or the applicable Government Authority (if Impax is not obligated to collect
such amount from GSK) any and all taxes (other than taxes calculated by
reference to the income, profits or gains of Impax or any of its Affiliates),
duties, and other charges and expenses imposed by any Government Authority in
connection with the supply and transfer of the Product to GSK, provided that
Impax provides GSK with an invoice for any such taxes that Impax is obligated to
collect from GSK.
(b) GSK, Impax and each of its Affiliates shall use reasonable efforts to
minimize any and all such taxes, duties, charges and expenses covered by the
payment obligation of GSK in Section 3.4(a), including, where it is reasonable
to do so, appealing against any assessment made by any Government Authority in
respect of such taxes, duties, charges or expenses. Any appeal under this
Section 3.4(b) made by Impax at the request of GSK shall be at GSK’s expense.
ARTICLE 4
MANUFACTURE OF PRODUCT
4.1 General. Impax shall Manufacture the Product in accordance with the
Specifications, the applicable Consents, the Quality Agreement, cGMPs, Laws, and
the Environmental, Health and Safety Guiding Principles, and ensure that all
Products supplied under this Supply Agreement comply with the Specifications.

 

13

--------------------------------------------------------------------------------

 

4.2 Specification Changes.
(a) GSK Requested Changes. GSK shall be entitled to change the Specifications
for a Product from time to time, and Impax shall make all revisions to the
Specifications requested by GSK in accordance with the Change Control Operating
Procedures, to the extent that such revisions are technically feasible. GSK
retains the right and responsibility for final approval of the Specifications
for the Product. Impax shall evaluate and provide to GSK in writing the
estimated costs, timing and technical feasibility of potential revisions to the
Specifications and GSK must approve such evaluation in writing before
implementation of a change under this Section 4.2(a).
(b) Impax Changes. All Impax initiated changes to the Specifications shall be
made in accordance with the Change Control Operating Procedures. GSK retains the
right and responsibility for final approval of the Specifications for the
Product. All requests by Impax for such revisions shall be submitted in writing
to GSK on the forms prescribed by the Quality Agreement. Impax shall notify GSK,
in writing and in reasonable detail, of (i) Impax’s suggested change; (ii) the
reasons for the suggested change; (iii) the perceived benefits of the suggested
change to Impax and GSK, respectively; and (iv) the estimated costs and timing
of implementing such change.
(c) Allocation of Costs. Except for the costs of implementing any Specification
changes required for compliance with Laws (which costs are governed by
Section 4.2(e) below), the costs for implementing any Specification changes
initiated by either GSK or Impax shall be allocated between the Parties as
follows:
(i) If the Specification changes only apply to Product supplied to GSK under
this Supply Agreement, XXXXXX.
(ii) If the Specification changes apply to both Product supplied to GSK under
this Supply Agreement and Product for Impax’s own use, XXXXXX.
(iii) For clarity, the cost allocation set forth above only covers the one-time
costs (including internal costs) incurred by Impax in implementing a
Specification change, and XXXXXX.
(d) Purchase Orders; Documentation. If a change to the Specifications is
implemented in accordance with Section 4.2(a) or Section 4.2(b), the Parties
shall negotiate any changes in any affected Purchase Order to provide reasonable
accommodation for changed circumstances. Impax shall be responsible for
documenting all revisions to the Specifications, subject to GSK’s prior
approval, in accordance with the Quality Agreement.

 

14

--------------------------------------------------------------------------------

 

(e) Payment for Certain Changes. Either Party may request a Specification change
intended to maintain compliance with Laws or to bring the Specifications into
compliance with Laws. Payment for Specification changes required for compliance
with Laws will be made per the following standards:
(i) The costs of revisions requested by either Party in order to maintain the
Specifications in conformity with that Product’s Regulatory Approval in the
Licensed Territory, cGMPs, or Laws (including with respect to any of the
Materials used in that Product), and not generally applicable to the manufacture
of pharmaceutical products or types of dosage forms (e.g., sterile vials or
blister packs) generally, shall be borne by GSK.
(ii) The costs of revisions requested by either Party to maintain the
Specifications in conformity with cGMPs, or Laws that are generally applicable
to the manufacture of pharmaceutical products or applicable dosage form (e.g.,
sterile vials or tablets in blister packs), shall be borne by Impax and
reasonably allocated between the Product supplied to GSK (which allocation shall
be included in the Transfer Price) and other pharmaceutical products that
benefit from such revision.
4.3 Storage Obligations. When storing Product, Materials or Product-derived
wastes, Impax shall comply with, and shall maintain all storage facilities in
compliance with, Specifications, cGMPs, Laws, and the Quality Agreement.
4.4 Manufacturing Facility. Any change to the site of Manufacture of the Product
to be supplied to GSK (or the site of manufacture of any of the Materials used
in the Manufacture of the Product to be supplied to GSK), the Materials used in
the Manufacture of the Product to be supplied to GSK, or the process used in the
Manufacture of the Product to be supplied to GSK, or any other change which may
be expected to have a regulatory impact, affect the Regulatory Approval in the
Licensed Territory or materially affect the quality or physical characteristics
of the Product to be supplied to GSK shall be made in accordance with the Change
Control Operating Procedures.
4.5 Premises, Equipment. Impax shall use Commercially Reasonable Efforts to
(a) provide and maintain premises of sufficient size and quality and all labor,
plant, machinery, equipment and services necessary to enable Impax to fulfill
all its obligations under this Supply Agreement including, in particular, the
Manufacture of the Product; and (b) maintain all premises, plant, machinery and
equipment used for or in connection with the performance of its obligations
under this Supply Agreement in good working condition and in compliance with
cGMPs, applicable Laws and any other relevant regulatory or manufacturer’s
requirements
4.6 Certificates. Each time Impax ships Products to GSK, Impax shall provide GSK
with the appropriate Certificates as required under this Supply Agreement.
4.7 Validation and Stability Studies.
(a) General. Impax shall perform on an on-going basis all validations and
stability studies of intermediates and bulk packaged Product to support
expiration dating as required by the Specifications, cGMPs, the Quality
Agreement or Laws in connection with the regular course of Manufacturing the
Products for commercial supply. XXXXXX. GSK shall be responsible for all
finished goods stability studies of the Product.

 

15

--------------------------------------------------------------------------------

 

(b) Duties. In performing its duties under Section 4.7(a) above, Impax shall
perform the following tasks:
(i) Collect, analyze, and maintain, for periods of time reasonably acceptable to
GSK, the resulting stability data; and
(ii) transfer to GSK the analytical methods Controlled by Impax that are
necessary for GSK to perform finished goods stability studies of Product as set
forth in the Quality Agreement.
4.8 Materials. Impax shall timely purchase and test, as applicable, all
Materials (unless GSK agrees in writing that no testing is required) as
specified by the Specifications, XXXXXX. Impax will use Commercially Reasonable
Efforts to obtain the lowest possible prices for equivalent quality Materials
consistent with its obligations under this Supply Agreement. Impax shall prepare
or cause to be prepared by its suppliers, as the case may be, all certifications
as to any Materials required by the Quality Agreement, cGMPs, or Laws (each, a
“Materials Certification”). Such Materials Certifications shall include, without
limitation, any and all required certifications related to Materials derived
from animal products. All Materials used by Impax in Manufacturing the Product
for supply to GSK, its Affiliates or permitted sublicensees should satisfy the
applicable local compendial requirements for the country in the Licensed
Territory in which such Product will be sold, provided that GSK identifies such
country in writing to Impax at least six (6) months prior to placing an order
therefor pursuant to Section 2.3. Title to all such Materials shall reside with
Impax until such Materials are incorporated into the Product and delivered to
GSK. During the Term, if any of the Materials procured by Impax for the
Manufacture of the Product for GSK based on months XXXXXX (XXXXXX) through
XXXXXX (XXXXXX) of the then-current Clinical Forecast, Rolling Forecast or the
Supply Plan is not consumed within XXXXXX (XXXXXX) months of its intended usage,
GSK shall reimburse Impax the cost of any such unconsumed Materials, provided
that Impax shall use Commercially Reasonable Efforts to mitigate such costs by
trying to use such Materials in the Manufacture of the Product for its own use
or in the manufacture of other products.
4.9 Quality Control and Quality Assurance. Impax shall implement and perform
operating procedures and controls of Impax for sampling, stability and other
testing of Materials and Products, and for validation, documentation and release
of the Products to GSK as required by the Specifications, the Quality Agreement,
cGMPs and Laws and such other quality assurance and quality control procedures
of Impax. Only Materials complying with Specifications, the Quality Agreement,
cGMPs and Laws may be released for use in Products.
4.10 Compliance with Environmental, Health and Safety Guiding Principles. Impax
shall comply with its environmental, health, and safety guiding principles as
set forth in Schedule 4.10 (the “Environmental, Health and Safety Guiding
Principles”). Impax is solely responsible for the safety and health of its
employees, consultants and visitors and compliance with all Laws and Regulatory
Acts related to health, safety and the environment, including, without
limitation, providing its employees, consultants and visitors with all
appropriate information and training concerning any potential hazards involved
in the manufacture, packaging, storage and supply of the Products and/or
Materials and taking any precautionary measures to protect its employees from
any such hazards. Impax shall: (i) provide GSK with information within three
(3) Business Days of the occurrence of any significant adverse event that is
specifically related to the Product or Materials or arose as a result of work
carried out for GSK hereunder (e.g. employee illness due to exposure to
Materials, significant injuries occurring to personnel while conducting work for
the Products or major spills of the Products or Materials); (ii) provide GSK
with information within three (3) Business Days of the occurrence of any
significant adverse event that could reasonably be expected to affect the
Manufacture of Product for GSK; and (iii) ensure that all waste generated in the
manufacturing or packaging of the Products is managed and disposed of in
accordance with all Laws. Impax acknowledges and agrees that XXXXXX.
Notwithstanding the foregoing in this Section 4.10, the Parties agree that GSK
will conduct its Environmental, Health, and Safety audits in accordance with
GSK’s environmental, health, and safety standards, and any differences between
Impax’s standards and GSK’s standards that are identified by GSK during such
environmental, health, and safety audit will be included in the list of issues
raised by GSK based on such audit conducted pursuant to Section 5.4.

 

16

--------------------------------------------------------------------------------

 

4.11 Certain Prohibitions. Impax shall not, as applicable, manufacture, store or
process any Materials or Product in the same building in which Impax
manufactures, stores or processes cytotoxics, penicillin, genetically modified
organisms, cephalosporins, sex hormones, anabolic steroids, or infectious agents
(e.g., spore-bearing and live viruses) (collectively, “Potential Contaminants”)
unless the Potential Contaminants are stored or manufactured in contained
environments and in compliance with cleaning, validation and changeover
standards of the Quality Agreement, cGMPs, and all Laws (including, without
limitation, the National Health Surveillance Agency (Anvisa)), provided that, if
Impax’s storage or manufacture of Potential Contaminants does not comply with
the Quality Agreement, cGMPs, or Laws, then following the receipt of such
non-compliance from GSK, Impax shall promptly commence action to cure such
non-compliance and shall cure such non-compliance within a commercially
reasonable time period. GSK may terminate this Supply Agreement and the License
Agreement on account of Impax’s breach of this Section 4.11 only if following
the receipt of such non-compliance from GSK, Impax fails to promptly commence
action to cure such non-compliance or fails cure such non-compliance within a
commercially reasonable time period. Notwithstanding the foregoing, nothing in
this Section 4.11 shall be deemed to limit any other rights or remedies
available to GSK under this Supply Agreement, the License Agreement, under law
or in equity.
4.12 Change Control Operating Procedure.
(a) General. The procedure set forth in the Quality Agreement shall establish
the procedure to be followed in the event either GSK or Impax desires to change
any aspect of the process by which the Products to be supplied to GSK are
Manufactured, including but not limited to, any change in the Product or
Specifications (the “Change Control Operating Procedure”). Impax may not
implement a change to the Manufacturing procedure for the Product to be supplied
to GSK hereunder unless it has complied with the Change Control Operating
Procedure.
(b) Amendment of Change Control Operating Procedure. Any change under the Change
Control Operating Procedure shall be completed under the Change Control
Operating Procedure in effect when the request for change was commenced.
(c) Governmental Approval. The Change Control Operating Procedure shall contain
a mechanism to assure that all required regulatory filings are made, and, to the
extent required, that the applicable Governmental Authority has approved any
changes to the Specifications. The Parties shall discuss the way and manner to
implement any changes in the Specifications required by any such Governmental
Authority, and the costs associated with any changes shall be borne in
accordance with Section 4.2(e).

 

17

--------------------------------------------------------------------------------

 

ARTICLE 5
REGULATORY AND QUALITY; COMPLIANCE
5.1 Transfer of Manufacture to Taiwan. Impax is currently Manufacturing the
Original Product in its facility in Hayward, California and is in the process of
transferring the Manufacture of the Original Product to the facility of its
Affiliate, Impax Taiwan. In connection with such transfer, Impax shall be
responsible for conducting Manufacture technology transfer, including the
Bioequivalence Study pursuant to the License Agreement.
5.2 GSK Assistance. At Impax’s request and expense, GSK shall provide Impax with
reasonable support and assistance in connection with Impax’s transfer of
Manufacture of the Original Product to Impax Taiwan’s facility. Within thirty
(30) days after the end of each calendar quarter during which GSK has provided
Impax with such assistance and support, GSK shall submit to Impax a reasonably
detailed invoice setting forth the number of GSK FTEs that were dedicated to
providing such assistance and support during such calendar quarter, including,
with respect to each individual comprising a GSK FTE or portion thereof, such
individual’s name, number of hours worked, and description of work performed.
Impax shall reimburse GSK, in U.S. dollars, for such FTEs at GSK’s then current
FTE Rate within thirty (30) days after the receipt of the invoice.
5.3 Regulatory Inspections. Impax shall cooperate with any inspection of its
Facility by any Regulatory Authority overseeing the Manufacture of Product for
use in the Licensed Territory. Impax shall notify GSK within two (2) Business
Days after Impax becomes aware of any such inspection and shall permit GSK’s
representative to observe such inspection to the extent permitted by applicable
Laws.
5.4 EHS, GMP and QA Audits. Upon written request to Impax not less than fifteen
(15) Business Days prior to the requested visit date, GSK shall have the right
to have its representatives visit the Facilities of Impax during normal business
hours to assess Impax’s compliance with the Environmental, Health and Safety
Guiding Principles, cGMPs and quality assurance standards and to discuss any
Manufacturing related issues with Impax management personnel, including
inspection of Impax’s records and those portions of the Facility used in the
Manufacture, testing, packaging, storing, labeling, releasing or delivery of any
Product to be supplied to GSK or Materials therefor. GSK shall have the right to
audit and inspect all inventory of Products to be supplied to GSK and Materials
therefor contained at the Facility; provided that such audit is conducted on
reasonable notice to Impax. Purposes for such inspections may include cGMPs
compliance, system audits, pre-approval inspections (PAI), compiling information
for reporting obligations, compliance with Specifications, compliance with
Quality Agreement, and/or investigations of complaints and/or compliance with
any Laws, the Environmental, Health and Safety Guiding Principles, or the terms
of this Supply Agreement (including all representations and warranties of
Impax). GSK’s audit and inspection rights under this Section 5.4 shall not
extend to

 

18

--------------------------------------------------------------------------------

 

any portions of the Facility, documents, records or other information which do
not relate to Products or Materials therefor, or to the extent they relate or
pertain to Product for Impax’s own use or Materials therefor (except to the
extent that Product for Impax’s own use and Product supplied to GSK share common
raw Materials and/or intermediates), Impax’s other products or materials or
Third Parties or their products or materials. Impax may redact information
relating to Product for Impax’s own use or Materials therefor (to the extent
that Product for Impax’s own use and Product supplied to GSK do not share common
raw Materials and/or intermediates), Impax’s other products or materials, or
Third Parties and their respective products or materials from any documents
deliverable to GSK in connection with GSK’s exercise of its audit and inspection
rights hereunder. Impax shall participate in GSK’s audit and respond to any
issues raised by GSK based on such audit, and if Impax agrees with the result of
such audit, with a correction action plan within thirty (30) calendar days
following receipt of GSK’s audit report. GSK may exercise such audit right no
more than one (1) time per calendar year and each audit should not last for more
than three (3) days; provided, however, that GSK may conduct a reasonable number
of additional “for cause” audits with reasonable prior notice to Impax. For the
purpose of this Section 5.4, examples of “for cause” include a recall of the
Product is reasonably expected or underway, a stability failure has been
identified, a Manufacture-related Adverse Event has occurred, or other emergency
involving any Product supplied to GSK, or Material therefor or Facility to the
extent relating to any Product supplied to GSK.
5.5 cGMP Documentation. Each Party shall maintain, in accordance with and for
the period required under the applicable MAA, cGMPs, and Laws, complete and
adequate records pertaining to the methods and facilities used for the cGMPs
manufacture, processing, testing, packing, labeling, holding and distribution of
the Products. Impax shall also maintain all records related to its compliance
with its Environmental, Health and Safety Guiding Principles in accordance with
Section 5.6.
5.6 Records Retention. During the Term and, thereafter, in accordance with
Impax’s standard records retention policy, Impax shall keep complete and
systematic written records of all documentation relating to the Manufacture of
Products by Impax under this Supply Agreement, including, without limitation,
and retain samples (per Section 6.11) of such bulk finished Products and raw
Material thereof as are necessary to comply with manufacturing regulatory
requirements applicable to Impax, as well as to assist with resolving Product
complaints and other similar investigations in accordance with the Quality
Agreement and incorporated herein by reference. Such records shall include any
operational documentation pertaining to Impax’s supply of Products under this
Supply Agreement, including records relevant to any costs or expenses incurred
by Impax on behalf of GSK, any financial records, procedures (including records
for compliance with federal, state and local law) and such other documentation
pertaining to Impax’s supply of Products under this Supply Agreement. All
financial records shall be kept in sufficient detail to permit accurate
determination of all figures necessary for verification of payment obligations
set forth in Article 3 of this Supply Agreement. Impax shall preserve all such
records in accordance with Impax’s standard records retention policy. GSK
acknowledges that Impax has provided GSK with a copy of its current standard
records retention policy as of the Effective Date, and Impax will provide
updated copies to GSK as its standard records retention policy is updated from
time to time.

 

19

--------------------------------------------------------------------------------

 

5.7 Supply Consents. Impax holds all Consents now required by Impax for the
performance of its obligations under this Supply Agreement. At all times, Impax
shall maintain and comply with all the Consents which may from time to time be
required by any Governmental Authority having jurisdiction with respect to its
manufacturing operations and facilities and otherwise to be obtained by Impax to
permit the performance of its then current obligations under this Supply
Agreement. Impax shall bear all expenses incurred in connection with its
obligations under this Section 5.7. In the event any Consent held by Impax
relating to the Facility or its ability to manufacture the Products in
accordance with this Supply Agreement is hereafter suspended or revoked, or
Impax has material restrictions imposed upon it by any Governmental Authority
affecting any of the Products or the Facility, Impax shall immediately notify
GSK and shall promptly provide a schedule of compliance and such other
information related thereto as is reasonably requested by GSK.
5.8 Product Consents. GSK and GSK Affiliates shall, at their expense, obtain and
maintain any Consents which may from time to time be required by any
Governmental Authority with respect to ownership of the Regulatory Approval for
the Product in the Licensed Territory or with respect to the marketing,
distribution, clinical investigation, import or export of the Products in the
Licensed Territory. GSK shall, with Impax’s assistance and cooperation, in both
cases at GSK’s expense, be responsible for responding to all requests for
information required by GSK’s Consents from, and making all legally required
filings relating to GSK’s Consents with, any Governmental Authority in the
Licensed Territory having jurisdiction to make such requests or require such
filings. In the event any Consent held by GSK relating directly to any of the
Products is hereafter suspended or revoked, GSK shall promptly notify Impax of
the event and shall promptly inform Impax of the impact on GSK’s purchases of
the affected Product (when known by GSK) and GSK’s general intentions with
respect to the affected Product.
ARTICLE 6
TESTING; ACCEPTANCE AND REJECTION
6.1 Acceptance; Reliance by GSK. In determining whether to accept any shipment
of Product and authorize any subsequent release of Product to the market, GSK
shall be entitled to rely upon the Certificate of Analysis provided by Impax,
except to the extent that GSK has actual knowledge that such Certificate of
Analysis is inaccurate. Except as agreed to by the Parties in writing, GSK shall
be under no obligation to accept any shipment of Product without the
accompanying Certificate of Analysis.
6.2 Rejection; Determination of Deficiency; Notice.
(a) General. GSK has the right to reject all or any portion of any shipment of
Products that deviates from the Specifications, the Quality Agreement, cGMPs or
Laws.
(b) Inspection. GSK shall inspect the Products manufactured by Impax upon
receipt thereof and shall give Impax written notice (a “Deficiency Notice”) of
all claims for Products that deviate from the Specifications, the Quality
Agreement, cGMPs or Laws within thirty (30) days after GSK’s or GSK’s designee’s
receipt thereof. Should GSK fail to provide Impax with the Deficiency Notice
within the applicable thirty (30) day period, then the delivery shall be deemed
to have been accepted by GSK, subject to Section 6.2(c), on the thirty-first
(31st) day after delivery; provided, however, that Impax shall continue to be
liable for (i) the failure of any Products to conform to Specifications (unless
and to the extent the failure to conform to Specifications is caused by
occurrences after the title to such Products passes to GSK pursuant to
Section 2.6), or (ii) the failure of Impax to Manufacture the Product in
accordance with the Quality Agreement, cGMPs and Laws.

 

20

--------------------------------------------------------------------------------

 

(c) Latent Defects. Except where the shelf-life of a Product has expired, GSK
shall have the right to reject Product if it later discovers non-obvious defects
not reasonably susceptible to discovery upon receipt of the Product and provides
notice to Impax within ten (10) Business Days after discovery thereof by GSK;
provided the latent defect must be attributable to Impax’s failure to
Manufacture the Product in accordance with Specifications, the Quality
Agreement, cGMPs or Laws.
(d) Determination of Deficiency.
(i) Upon receipt of a Deficiency Notice, Impax shall have fifteen (15) Business
Days to advise GSK by notice in writing that Impax disagrees with the contents
of such Deficiency Notice. Should Impax provide such a notice of disagreement,
Impax’s most senior quality assurance officer and GSK’s Quality Head, Contract
Manufacturing Quality, or such other persons as they may designate in writing,
shall confer to review samples and/or batch records, as appropriate to determine
whether any Products identified in the Deficiency Notice deviate from the
Specifications, the Quality Agreement, cGMPs or Laws. If the Parties are unable
to resolve whether any Products identified in the Deficiency Notice deviate from
the Specifications, the Quality Agreement, cGMPs or Laws, Impax and GSK shall
conduct an investigation pursuant to Section 6.5 and the Quality Agreement. If
as a result of such investigation Impax and GSK resolve that the Products in
question: (A) deviates from the Specifications (other than due and to the extent
the deviation is caused by occurrences after the title to such Product passes to
GSK pursuant to Section 2.6), (B) were not Manufactured in accordance with
cGMPs, Laws or the Quality Agreement, or (C) is nonconforming due to the failure
of a Impax-supplied Material or any Materials purchased by Impax, then GSK shall
be entitled to reject the Products, and the cost of the investigation shall be
borne by Impax. If as a result of such investigation Impax and GSK resolve that
the Products in question: (X) meet the Specifications; (Y) were Manufactured in
accordance with the Quality Agreement, cGMPs and Laws, and (Z) the nonconformity
of the Product is caused by occurrences after the title to such Product passes
to GSK pursuant to Section 2.6, then GSK shall thereafter be deemed to have
accepted delivery of such Products, and the cost of such investigation shall be
borne by GSK.
(ii) If, after completion of an investigation pursuant to the Quality Agreement
and this Supply Agreement, GSK and Impax fail to resolve whether any Products
identified in the Deficiency Notice deviate from the Specifications, the Quality
Agreement, cGMPs or Laws, then the Parties shall mutually select an independent
laboratory to evaluate if the Products in question deviate from the
Specifications, the Quality Agreement, cGMPs or Laws. If the independent
laboratory’s evaluation certifies that the Products in question: (A) deviate
from the Specifications (other than and to the extent caused by occurrences
after the title to such Product passes to GSK pursuant to Section 2.6), (B) were
not Manufactured in accordance with cGMPs, Laws or the Quality Agreement, or
(C) is nonconforming due to the failure of a Impax-supplied Material or any
Materials purchased by Impax, then GSK shall be entitled to reject the Products,
and the cost of the testing, evaluation by the independent laboratory shall be
borne by Impax. If the independent laboratory’s evaluation certifies that the
Products in question: (X) meet the Specifications; (Y) were Manufactured in
accordance with the Quality Agreement, cGMPs or Laws, or (Z) the nonconformity
is caused by occurrences after the title to such Product passes to GSK pursuant
to Section 2.6, then GSK shall thereafter be deemed to have accepted delivery of
such Products, and the cost of the testing and evaluation by the independent
laboratory shall be borne by GSK.

 

21

--------------------------------------------------------------------------------

 

(iii) In the event that the independent laboratory cannot determine that the
failure of Product to meet Specifications, the Quality Agreement, cGMPs or Laws
could be attributed to either Party, per Section 6.2(d)(ii) above, Impax shall
invoice GSK for fifty percent (50%) of the Transfer Price for such Product
unless otherwise mutually agreed by both Parties in writing. Impax and GSK shall
share equally the cost of the testing and evaluation by the independent
laboratory.
(e) Shortages. GSK shall inform Impax of any claim relating to quantitative
deficiencies in any shipment of Products within thirty (30) days following
receipt of any shipment. In the event there is a quantitative deficiency in any
shipment, with respect to the Product volumes indicated on the applicable
invoice, GSK shall only pay for actual quantities delivered. All quantitative
deficiencies and actual quantities shall be determined in accordance with
Section 2.4.
(f) Deviation Reports. If, during the Manufacture or other handling of a Product
by Impax, (i) the process or analytical parameters vary from typical or
established report ranges, release guidelines or release limits, (ii) there is
reasonable evidence that Specifications, the Quality Agreement, cGMPs or Laws
were not followed in production of the Products, (iii) there is reasonable
evidence that the Products fail to conform to Specifications, (iv) other events
or conditions occur (including, without limitation, events first identified as
affecting non-GSK products) that could reasonably be expected to adversely
affect the strength, safety, identity, purity and quality of the Products or
otherwise are unusual or not expected, or (v) any physical characteristic or
attribute of the Products is recognizable at any time during the manufacturing
process to be unusual, atypical or irregular by an individual with appropriate
technical knowledge and experience exercising his or her best professional
judgment, then Impax shall investigate the matter pursuant to provisions of the
Quality Agreement and this Supply Agreement and, only if such matter is a
Critical Deviation or Major Deviation (as such terms are defined in the Quality
Agreement), prepare as soon as practicable following the discovery of such
Critical Deviation or Major Deviation a written report detailing such Critical
Deviation or Major Deviation (a “Deviation Report”) and send such Deviation
Report, along with all supporting documentation, to GSK prior to the shipment of
the Product. Impax shall include in its Deviation Report its analysis and
recommendation for the disposition of the Product in the Deviation Report.
(g) Nonconformity. If either Party becomes aware or has a reasonable basis to
believe that any batch or shipment of Products may have a Nonconformity, at any
time regardless of the status of Impax’s testing and quality assurance
activities or of GSK’s acceptance as provided above, such Party shall notify the
other Party within two (2) Business Days of becoming aware of a Nonconformity.
“Nonconformity” means a product characteristic, or potential for existence of
product characteristic, that is attributable to Impax’s failure to Manufacture,
test, package, store, label, release or deliver any Product in accordance with
the Specifications, the Quality Agreement, cGMPs or Laws. In the event of a
Nonconformity, Impax shall immediately conduct an investigation in accordance
with this Supply Agreement and, until resolution of the investigation, handle
the Products as provided in Section 6.2(h) of this Supply Agreement.

 

22

--------------------------------------------------------------------------------

 

(h) Products Subject to a Nonconformity or Deviation Report. Any batch or
shipment of Product that is the subject of a Nonconformity or of a Deviation
Report shall be handled as follows:
(i) Such Products held in inventory at the Facility shall be placed on
quarantine status and shall not be shipped to GSK or its Affiliates, unless
directed otherwise by GSK;
(ii) For any such Products shipped to GSK and held in stock by GSK, GSK shall
maintain a “quarantine” or “unpassed” status until Impax has completed any
investigations pursuant to this Supply Agreement and approved the disposition of
the Product subject to GSK’s review and approval of the Nonconformity or the
Deviation Report; and
(iii) Payment for such Products whether shipped or unshipped shall not be due
from GSK until Impax has completed any investigations pursuant to this Supply
Agreement and GSK has approved the acceptability of the Product subject to the
Nonconformity or Deviation Report. For the avoidance of doubt, GSK shall be
responsible for payment of invoices relating to Products which are ultimately
not rejected pursuant this Article 6.
(k) Suspension of Manufacture. Upon learning of any Nonconformity of Product or
in connection with a Remedial Action pursuant to Section 6.7, Impax shall have
the right to suspend Manufacture of the affected Products at the Facility until
the cause of such Nonconformity has been remedied or addressed. Impax shall
notify GSK in writing within two (2) Business Days of Impax’s decision to
suspend Manufacture of the affected Product. Impax shall provide GSK with a
written summary of the cause of such suspension of Manufacture and GSK shall
have the right to conduct a “for cause” audit pursuant to Section 5.4. During
the period of suspended production, and until the suspension is lifted, GSK
shall be relieved of all financial obligations associated with any Firm Orders
or portion thereof that is not Manufactured as a direct consequence of the
suspension.
6.3 Product Complaints. GSK shall have the sole responsibility for responding to
questions and complaints from GSK’s customers. Questions or complaints received
by Impax from GSK’s customers shall be promptly referred to GSK’s Quality Head,
Contract Manufacturing Quality, or his designee. GSK shall promptly inform Impax
of any and all complaints that GSK receives which implicate Impax’s
Manufacturing or other processes at the Facility. Impax shall cooperate as
reasonably required to allow GSK to determine the cause of and resolve any
customer questions and complaints. Such assistance shall include follow-up
investigations, including testing. In addition, Impax shall provide GSK with all
mutually agreed upon information that will enable GSK to respond properly to
questions or complaints relating to the Products as provided in the Quality
Agreement to the extent that such complaint involves an issue involving the
Manufacture of the Product supplied to GSK under this Supply Agreement. GSK
shall bear the costs of activities performed pursuant to this Section 6.3,
unless it is determined that the cause of any customer complaint resulted from
Impax’s failure to Manufacture the applicable Product in accordance with the
Specifications, the Quality Agreement, cGMPs or Laws and to the extent not
caused by any occurrence after the title to such Product passes to GSK pursuant
to Section 2.6, in which case Impax shall bear the reasonable costs of
activities performed pursuant to this Section 6.3. In the event that either
Party believes it has incurred significant internal costs in providing
assistance to the other Party under this Section 6.3, upon the written request
of either Party, GSK and Impax shall consider in good faith a fair allocation of
such significant internal costs.

 

23

--------------------------------------------------------------------------------

 

6.4 Adverse Events. Impax and GSK shall comply with their obligations set forth
in Section 5.7 of the License Agreement with respect to adverse event reporting
and safety data exchange until the execution of the Pharmacovigilance Agreement,
at which time the adverse event reporting and safety data exchanges shall be
superseded and governed by the provisions of the Pharmacovigilance Agreement.
The Pharmacovigilance Agreement or the relevant portions thereof shall be
attached to or included in the Quality Agreement.
6.5 Investigations. The Parties shall act promptly and shall cooperate fully
with each other in any investigation required under this Supply Agreement, the
Quality Agreement, and the License Agreement, including, but not limited to,
Nonconforming Product, Product complaints, stability failures, Remedial Actions.
Such cooperation shall include, but not be limited to, all necessary or
appropriate testing, analysis of retained samples, review of batch records, and
other reasonably requested assistance and information in connection with such
investigation.
6.6 Corrective Action. Impax shall implement corrective actions under the
Quality Agreement to solve root causes of any factory-related complaints or
Nonconformities.
6.7 Certain Product Events.
(a) The Parties shall establish a joint product incident review team to consider
any proposed Remedial Action with respect to Product in the Licensed Territory.
If either Party is aware of a defect, incident or other information in respect
of Product that they believe may lead to a Remedial Action, then it shall
promptly inform the other Party’s primary contact on the Product incident review
team. Upon such notice, the Product incident review team shall promptly meet to
consider the appropriate action. Each Party shall cooperate fully with the other
with respect to the consideration of any such matter. If the Product incident
review team cannot agree upon how to proceed, such matter shall be escalated to
the head of quality for each Party (or his or her designee) for determination.
In the event of a deadlock on such matter, GSK will have the right to make the
decision; except that, after such deadlock, GSK shall commence the proposed
Remedial Action in the Licensed Territory upon Impax’s request, notwithstanding
such deadlock, if Impax reasonably believes that the proposed Remedial Action is
appropriate due to Impax’s nonconformance with cGMP requirements.
Notwithstanding any provision in this Supply Agreement to the contrary,
including this Section 6.7, GSK shall not be required to commence any Remedial
Action (including, without limitation, Remedial Action requested by Impax), that
would violate applicable Laws in any jurisdiction in the Licensed Territory.

 

24

--------------------------------------------------------------------------------

 

The conduct of any Remedial Action will be handled in accordance with the
Quality Agreement. For the avoidance of doubt, none of the Alliance Managers,
Joint Steering Committee or Joint Patents Committee shall have any
responsibility for decisions in respect of a Remedial Action.
Without limiting the generality of the foregoing, with respect to Remedial
Action, each Party shall:
(i) Inform the other Party immediately of any defect found, subsequent to
release, which may be grounds to initiate a Remedial Action;
(ii) Maintain a procedure to cover Remedial Action, including contact
arrangements for hours falling outside the typical Business Day;
(iii) Provide all support reasonably necessary to support any investigation and
subsequent actions in connection with Remedial Action; and
(iv) Maintain component traceability records of Products for the periods
required by the Quality Agreement, cGMPs or Laws, enabling traceability at the
Product batch number level to customers of the Products supplied by Impax.
(b) Contacts and Statements. With respect to any Remedial Action in the Licensed
Territory with respect to any Product, GSK shall make all contacts with the
applicable Governmental Authority or Regulatory Authority and shall be
responsible for coordinating all of the necessary activities in connection with
any such Remedial Action, and GSK shall make all statements to the media,
including press releases and interviews for publication or broadcast as provided
in Section 11.4 of the License Agreement. GSK agrees to make no statement to the
media referencing Impax or the Facility, unless otherwise required by Laws and,
in any such event, GSK shall provide notice to and collaborate with Impax on the
content of any such Impax reference. Impax agrees to make no statement to the
media referencing GSK with respect to any Remedial Action in the Licensed
Territory unless otherwise required by Laws and, in any such event, Impax shall
collaborate with GSK on the content of any such statement.
(c) Remedies. GSK shall bear the costs of any Remedial Action with respect to
any Product in the Licensed Territory, except for any Remedial Action that is
initiated (i) upon Impax’s request in accordance with Section 6.7(a) or
(ii) because of a defect arising from Impax’s failure to Manufacture, test,
package, store, label, release or deliver that Product or any Materials in
compliance with the Specifications, the Quality Agreement, cGMPs and Laws and to
the extent not caused by occurrences after the title to such Product passes to
GSK pursuant to Section 2.6, in which case Impax shall bear all reasonable costs
of such Remedial Action and GSK shall, in addition to any other remedies
available to it, be obligated to handle the affected Product and charges
relating thereto as provided in Sections 6.8 and 6.9.

 

25

--------------------------------------------------------------------------------

 

(d) Responsibility for Recalled Products. Any batch or shipment of Product that
is the subject of a Remedial Action shall be handled as follows:
(i) Such Products held in inventory at Impax shall be placed on “Hold” status
and shall not be shipped to GSK or its Affiliates, unless directed otherwise by
GSK;
(ii) For any such Products shipped to GSK and held in stock by GSK may maintain
a “Hold” or “Unpassed” status until Impax has completed any investigations
pursuant to this Supply Agreement and GSK has approved, acting reasonably, the
disposition of the Product subject to GSK’s review and approval of investigation
report; and
(iii) Payment for Products that are the subject of a Remedial Action that is
(1) initiated upon Impax’s request in accordance with Section 6.7(a), or
(2) because of a defect arising from Impax’s failure to Manufacture, test,
package, store, label, release or deliver that Product or any Materials in
compliance with the Specifications, the Quality Agreement, cGMPs or Laws and to
the extent not caused by occurrences after the title to such Product passes to
GSK pursuant to Section 2.6, whether shipped or unshipped, shall not be due from
GSK until Impax and GSK have completed any investigations pursuant to the
Quality Agreement and this Supply Agreement, and GSK has approved the
disposition of the Product subject to the Remedial Action. For the avoidance of
doubt, GSK shall be responsible for payment of invoices relating to Products
which are ultimately not subject to Remedial Action per this Article 6 and for
payment of invoices relating to Products which are subject to Remedial Action to
the extent not due to the failure of Impax to Manufacture, test, package, store,
label, release or deliver that Product in accordance with the Specifications,
the Quality Agreement, cGMPs and Laws.
6.8 Disposition of Certain Products. In the event any quantity of a Product is
found not to comply with Specifications, or in the event any Remedial Action, or
Third Party return of any Product, in each case determined to be a result of
Impax’s failure to Manufacture, test, package, store, label, release or deliver
that Product in accordance with the Specifications, the Quality Agreement, cGMPs
and Laws and to the extent not caused by occurrences after the title to such
Product passes to GSK pursuant to Section 2.6, then GSK or the GSK Affiliate
receiving the Product shall, at Impax’s option, either (a) return the Product to
Impax for rework or reprocessing by Impax, all at Impax’s expense; (b) return
the affected Products to Impax for destruction by Impax at Impax’s expense; or
(c) have the Product disposed of by a Third Party designated by GSK at Impax’s
expense and in accordance with applicable Laws. In addition, GSK may seek a
credit under Section 6.9 below. The Party undertaking destruction of the Product
shall be solely responsible for compliance with all Laws in connection with the
destruction and shall be liable for any losses resulting from such destruction.
6.9 Credits. In the event any quantity of a Product is found (i) to not comply
with Specifications, or (ii) in the event any Remedial Action or Third Party
return of any Product, in each case is determined to be a result of Impax’s
failure to Manufacture, test, package, store, label, release or deliver that
Product in accordance with the Specifications, the Quality Agreement, cGMPs or
Laws and to the extent not caused by occurrences after the title to such Product
passes to GSK pursuant to Section 2.6, then Impax shall, at GSK’s election:
(a) reimburse or credit GSK the price paid by GSK for the affected Product;
(b) reimburse or credit GSK for the actual costs for shipping (including freight
and insurance), applicable transit charges, insurance premiums, duties, or taxes
paid in connection with such Product, in each case to the extent incurred by
GSK; (c) reimburse or credit GSK for any out-of-pocket costs

 

26

--------------------------------------------------------------------------------

 

paid by GSK to Third Parties for transportation and destruction of such Product;
and (d) reimburse or credit GSK for the actual administrative expenses and all
other reasonable costs incurred by GSK outside of the ordinary course of
business in connection with the disposition of such Product under Section 6.8.
GSK shall provide Impax with such information and documentation as Impax may
reasonably request to confirm any of the foregoing charges, costs or expenses.
Alternatively, GSK may apply any amounts due to GSK pursuant to
Sections 6.9(a)-(d) above to one or more outstanding invoices issued pursuant to
Article 6 above provided GSK gives Impax timely notice of such invoice
reductions. If there is outstanding credit to GSK on the termination or
expiration of this Supply Agreement, Impax shall reimburse GSK for the amount of
such credit within forty five (45) days after this Supply Agreement is
terminated or expires. Notwithstanding anything to the contrary in this Supply
Agreement, the remedy set forth in this Section 6.9 shall be the sole and
exclusive remedy and recourse with respect to any shortages, Nonconformity,
Deviation Report, Remedial Action, Third Party return or complaint with respect
to any Product delivered to GSK by Impax hereunder or breach by Impax of the
representations and warranties set forth in Section 10.2; provided, however,
that the foregoing shall not be deemed to in any way limit Impax’s obligations
under Section 11.1.
6.10 Product Returns from the Field. GSK shall instruct its distributors and
customers to direct any returns of Products to GSK in accordance with GSK’s
standard return policy. Impax shall promptly notify GSK in writing (including
all information Impax has relating thereto) in the event that any distributor,
customer or other Third Party returns any Product to Impax. Impax shall, at
GSK’s expense, promptly forward all such Product to the location specified by
GSK and shall take no other action regarding such Product (except for
safeguarding such Product), unless requested in writing by GSK or required by
Laws. After a commercially reasonable period of time safeguarding the Products
so held, Impax may destroy the Products, at GSK’s expense, if it has given
written notice of its intention to GSK and GSK has not directed otherwise within
ten (10) Business Days of receipt of that notice.
6.11 Retained Samples. Impax shall retain samples from each batch of bulk
finished Products supplied to GSK, excipients, and Active Pharmaceutical
Ingredient (API) thereof for a period of one (1) year after expiration of such
Product as packaged by GSK, provided that GSK promptly notifies Impax of such
expiry date, or such longer period required by applicable Laws for record
keeping, testing and regulatory purposes or specified in the Quality Agreement.
When storing Products, Materials, Nonconforming Products or Product-derived
wastes, Impax shall comply with, and shall maintain all storage facilities in
compliance with, Specifications and in accordance with the Quality Agreement,
cGMPs and Laws.
6.12 Annual Product Review. During the Term, upon GSK’s request, Impax shall
prepare and provide to GSK an annual review for the Products as required by
cGMPs and applicable regulations (each, an “Annual Product Review”). Each Annual
Product Review will cover all aspects of manufacturing that occur at the
Facility or at the facility of any party with whom Impax subcontracts pursuant
to this Supply Agreement. Unless otherwise specified, each Annual Product Review
will include, without limitation, summaries of changes, Deviation Report trends,
release testing records trends, production record trends and other relevant data
as more particularly set forth in the Quality Agreement, to allow GSK to produce
an annual product quality review as required.

 

27

--------------------------------------------------------------------------------

 

ARTICLE 7
CONFIDENTIALITY
7.1 Confidentiality. Any and all Information disclosed by a Party to the other
Party under this Supply Agreement shall be deemed Confidential Information of
such Party under the License Agreement and subject to the confidentiality
provisions set forth in Article 11 of the License Agreement.
ARTICLE 8
INTELLECTUAL PROPERTY
8.1 Ownership of Inventions. Impax shall solely own any and all inventions,
whether or not patentable, generated solely by Impax (including its Affiliates,
employees, agents and independent contractors) in the course of conducting their
activities under this Supply Agreement. Impax shall solely own any and all
inventions, whether or not patentable, generated solely by GSK (including its
Affiliates, employees, agents and independent contractors), or jointly by Impax
and GSK (including their respective Affiliates, employees, agents and
independent contractors) in the course of conducting their activities under this
Supply Agreement to the extent that they relate to the Product or that are
necessary or useful for the Manufacture of the Product (all such inventions
together with all intellectual property rights therein collectively,
“Manufacturing Inventions”). Impax hereby grants to GSK a non-exclusive,
irrevocable, worldwide, fully paid up, royalty-free license (with the right to
grant sublicenses), under the Manufacturing Inventions, to make, have made, use,
import, sell and offer for sale products that are not Products. For inventions
made by GSK (including its Affiliates, employees, agents and independent
contractors) or jointly made by Impax and GSK which do not relate to the Product
and are not necessary or useful for the Manufacture of the Product, ownership
will follow inventorship as determined in accordance with U.S. patent laws. GSK
hereby assigns to Impax its interest in and to any and all Manufacturing
Inventions, and shall perform, and shall ensure that its Affiliates, employees,
agents and independent contractors perform, any and all acts necessary to assist
Impax in perfecting its rights to any and all Manufacturing Inventions,
including executing or have executed any documents affecting the appropriate
assignment to Impax. If Impax decides to cease the Prosecution or Maintenance of
any Patents covering the Manufacturing Inventions after such Patents have been
published, it shall notify GSK in writing sufficiently in advance so that GSK
may, at its discretion, assume the responsibility for the Prosecution or
Maintenance of such Patents, at GSK’s cost and expense. For clarity, if Impax
decides not to file a Patent covering the Manufacturing Inventions, or decides
to withdraw or abandon a Patent covering the Manufacturing Inventions before
such Patent is published, GSK shall not have any rights pursuant to the
preceding sentence.
8.2 Disclosure of Inventions. GSK shall use best efforts to promptly disclose to
Impax any and all Manufacturing Inventions either made by GSK (including its
Affiliates, employees, agents and independent contractors), whether solely or
jointly with Impax (including its respective Affiliates, employees, agents and
independent contractors), including any invention disclosures, or other similar
documents, submitted to it by its Affiliates, employees, agents or independent
contractors describing inventions that are Manufacturing Inventions, and all
Information relating to such inventions to the extent necessary or useful for
the preparation, filing and maintenance of any Patent with respect to such
invention.

 

28

--------------------------------------------------------------------------------

 

8.3 Prosecution and Enforcement of Patents. As the sole owner of Manufacturing
Inventions, Impax shall have the sole rights, but not the obligation, to
Prosecute and Maintain (as defined below), and enforce any Patents covering
Manufacturing Inventions, and shall bear all related expenses and retain all
related recoveries. For purposes of this Supply Agreement, “Prosecute and
Maintain” shall mean with respect to a Patent, the preparing, filing,
maintenance and prosecution of such Patent, as well as the conduct of
interferences, oppositions, re-examination, re-issues and other similar
proceedings.
8.4 Covenant Not to Sue. Impax or its Affiliates will not assert any Patent
covering Manufacturing Inventions, or any other Patent directed to the
Manufacture of the Product and Controlled by Impax or its Affiliates, against
GSK with respect to GSK’s use, sale, offer to sell, import or other
Commercialization of Product in the Licensed Territory during the Term as
permitted by the License Agreement, provided that such Product has been
(a) Manufactured by Impax, its Affiliates, or a Third Party on behalf of Impax
and (b) supplied to GSK or its Affiliates or permitted sublicensees under this
Supply Agreement.
ARTICLE 9
FORCE MAJEURE
9.1 Force Majeure. In the event that a Party is unable to perform any of its
obligations under this Supply Agreement because of a Force Majeure Event (as
defined below), such Party shall immediately give written notice to the other
Party of the occurrence of a Force Majeure Event, the nature thereof, and the
extent to which the affected Party will be unable to fully perform its
obligations hereunder and shall do everything reasonably possible to resume
performance. Upon receipt of such notice, the performance of the obligations by
the Party claiming a Force Majeure Event (except for payment obligations) shall
be suspended during the continuation of the Force Majeure Event. Upon cessation
of such Force Majeure Event, the affected Party shall promptly resume
performance hereunder or, if not able to promptly resume full performance, the
affected Party shall develop a plan (with the involvement and the written
approval of the other Party) for the prompt resolution of any failure of
performance under this Supply Agreement. For purposes of this Supply Agreement,
the term “Force Majeure Event” means, with respect to a Party, (i) fire, natural
disaster, act of God, action or decrees of governmental bodies, terrorism, war,
or embargos, or (ii) any other act or event, whether foreseen or unforeseen,
that (a) prevents such Party, in whole or in part, from performing its
obligations under this Supply Agreement and (b) is beyond the reasonable control
of and not the fault of such Party. For the avoidance of doubt, a Force Majeure
Event shall not include economic hardship, changes in market conditions, or
insufficiency of funds.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Mutual Representations and Warranties. Each Party hereby represents and
warrants to the other Party as of the Effective Date as follows:
(a) such Party is a company or corporation duly organized, validly existing, and
in good standing under the Laws of the state of its incorporation;
(b) such Party has the corporate/company power and authority and the legal right
to enter into this Supply Agreement and to perform its obligations hereunder,
and there is no contractual restriction or obligation binding on such Party
which would be materially contravened by execution and delivery of this Supply
Agreement or by the performance or observance of its terms; and

 

29

--------------------------------------------------------------------------------

 

(c) the execution, delivery, and performance of this Supply Agreement have been
duly authorized by all necessary corporate/company actions, and this Supply
Agreement constitutes a valid obligation of such Party and is binding and
enforceable against such Party in accordance with the terms hereof.
10.2 Product Warranties. Impax represents and warrants to GSK that:
(a) the Manufacture of each Product supplied to GSK pursuant to this Supply
Agreement (and the handling and storage, handling, disposal of any Materials)
shall (i) be in accordance with and conform to (i) cGMPs, (ii) the Quality
Agreement, and (iii) otherwise conform to the Environmental, Health and Safety
Guiding Principles, the Regulatory Approvals and Laws;
(b) each Product supplied to GSK pursuant to this Supply Agreement, at the time
title to such Product passes to GSK pursuant to Section 2.6, will strictly
comply with the Specifications for such Product then in effect, and will not be
adulterated or misbranded within the meaning of the FD&C Act and similar
provisions of Regulatory Acts in the Licensed Territory, and will not be an
article which may not, under the provisions of the FD&C Act and similar
provisions of Regulatory Acts in the Licensed Territory, be introduced into
interstate commerce (or provisions of similar import);
(c) each Product supplied to GSK pursuant to this Supply Agreement will, at the
time title to such Product passes to GSK pursuant to Section 2.6, be free and
clear of all liens, security interests and other encumbrances;
(d) Impax has not used, in any capacity associated with or related to the
Manufacture of the Product, the services of any persons who have been, or are in
the process of being, debarred under Sections 306(a) or 306(b) of the FD&C Act
or any comparable Regulatory Act; further, neither Impax nor any of its
officers, employees, or consultants has been convicted of an offense under (i)
either a federal or state law that is cited in Section 306 of the FD&C Act as a
ground for debarment, denial of approval, or suspension, or (ii) any other law
cited in any comparable Regulatory Act as a ground for debarment, denial of
approval or suspension;
(e) Impax has all Consents necessary in performance of its obligations hereunder
and the Manufacture of the Product;
(f) Impax will evaluate participation in the Customs Trade Partnership Against
Terrorism (C-TPAT) initiative sponsored by the United States Customs Service
(Customs). Notwithstanding the foregoing in this Section 10.2(f), during the
Term, Impax represents and warrants that it shall fully ensure the security of
the supply chain of the Product until delivery of Product to GSK pursuant to
Section 2.6.

 

30

--------------------------------------------------------------------------------

 

(g) To actual knowledge of Impax, (1) the Manufacture of the Product does not
and will not infringe any issued patents owned or controlled by a Third Party,
and (2) there are no outstanding orders, judgments or settlements against or
owed by Impax or any of its Affiliates, and there are no pending or threatened
claims or litigation, in either case relating to the Manufacture or Materials
for Product used or practiced by Impax.
10.3 Corporate Responsibility. Unless otherwise required or prohibited by Laws,
Impax warrants, to the best of its knowledge, that, in relation to the supply of
Product under the terms of this Supply Agreement:
(a) it does not employ, engage, or otherwise use any child labor in
circumstances such that the tasks performed by any such child labor could
reasonably be foreseen to cause either physical or emotional impairment to the
development of such child;
(b) it does not use forced labor in any form (prison, indentured, bonded or
otherwise) and its employees are not required to lodge papers or deposits on
starting work;
(c) it provides a safe and healthy workplace, presenting no immediate risks to
its employees; any housing provided by Impax to its employees is safe for
habitation; and access to clean water, food, and emergency healthcare is
provided to its employees in the event of accidents or incidents at Impax’s
workplace;
(d) it does not discriminate against any employees on any ground (including
race, religion, disability or gender); and it does not engage in or support the
use of corporal punishment, mental, physical, sexual or verbal abuse and does
not use cruel or abusive disciplinary practices in the workplace;
(e) it pays each employee at least the minimum wage and provides each employee
with all legally mandated benefits;
(f) it complies with the Laws on working hours and employment rights in the
countries in which it operates; and
(g) it complies with the Laws with respect to its employees’ right to join and
form independent trade unions and freedom of association.
10.4 DISCLAIMERS. EXCEPT AS EXPRESSLY STATED IN THIS SUPPLY AGREEMENT, NO
REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, ARE MADE OR GIVEN BY OR ON BEHALF A PARTY, AND ALL
REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR
OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.

 

31

--------------------------------------------------------------------------------

 

ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by Impax. Impax shall defend, indemnify, and hold the GSK
Indemnitees harmless from and against all Claims to the extent such Claims arise
out of, are based on, or results from: (a) any negligence or willful misconduct
of Impax, its Affiliates, or the officers, directors, employees or agents of
Impax or its Affiliates; (b) any breach of any of Impax’s covenants,
obligations, representations or warranties under this Supply Agreement;
(c) failure by Impax to obtain, maintain, or comply in any respect with any of
its Consents which are required to perform any of its obligations hereunder or
under the Regulatory Acts or other Laws; (d) any violation of Laws by Impax in
the performance of its obligations hereunder; (e) any infringement or
misappropriation of Third Party rights to intellectual property that is a result
of the use or practice in the Manufacturing process for the Product. The
foregoing indemnity obligations shall not apply to the extent that (i) the GSK
Indemnitees fail to comply with the indemnification procedure set forth in
Section 11.3 and Impax’s defense of the relevant Claims is prejudiced by such
failure; or (ii) any Claim is based on or results from any activities set forth
in Section 11.2(a), 11.2(b), or 11.2(c) for which GSK is obligated to indemnify
the Impax Indemnitees under Section 11.2.
11.2 Indemnification by GSK. GSK shall defend, indemnify, and hold the Impax
Indemnitees harmless from and against all Claims to the extent such Claims arise
out of, are based on, or results from: (a) any negligence or willful misconduct
of GSK, its Affiliates, or the officers, directors, employees or agents of GSK
or its Affiliates; (b) any breach of any of GSK’s covenants, obligations,
representations or warranties under this Supply Agreement; (c) failure by GSK to
obtain, maintain, or comply in any respect with any of its Consents which are
required to perform any of its obligations hereunder or under the Regulatory
Acts or other Laws; (d) any violation of Laws by GSK in the performance of its
obligations hereunder; or (e) the import, storage, packaging or labeling, by or
on behalf of GSK or its Affiliates or sublicensees, of any Product supplied by
Impax hereunder. The foregoing indemnity obligations shall not apply to the
extent that (i) the Impax Indemnitees fail to comply with the indemnification
procedure set forth in Section 11.3 and GSK’s defense of the relevant Claims is
prejudiced by such failure; or (ii) any Claim is based on or results from any
activities set forth in Section 11.1(a), 11.1(b), 11.1(c), 11.1(d) or 11.1(e)
for which Impax is obligated to indemnify the GSK Indemnitees under
Section 11.1.
11.3 Indemnification Procedures. The Party claiming indemnity under this
Article 11 (the “Indemnified Party”) shall give written notice to the Party from
whom indemnity is being sought (the “Indemnifying Party”) promptly after
learning of such Claim. The Indemnified Party shall provide the Indemnifying
Party with reasonable assistance, at the Indemnifying Party’s expense, in
connection with the defense of the Claim for which indemnity is being sought.
The Indemnified Party may participate in and monitor such defense with counsel
of its own choosing at its sole expense; provided, however, the Indemnifying
Party shall have the right to assume and conduct the defense of the Claim with
counsel of its choice. The Indemnifying Party shall not settle any Claim without
the prior written consent of the Indemnified Party, not to be unreasonably
withheld, unless the settlement involves only the payment of money. So long as
the Indemnifying Party is actively defending the Claim in good faith, the
Indemnified Party shall not settle or compromise any such Claim without the
prior written consent of the Indemnifying Party. If the Indemnifying Party does
not assume and conduct the defense of the Claim as provided above, (a) the
Indemnified Party may defend against, consent to the entry of any judgment, or
enter into any settlement with respect to such Claim in any manner the
Indemnified Party may deem reasonably appropriate (and the Indemnified Party
need not consult with, or obtain any consent from, the Indemnifying Party in
connection therewith), and (b) the Indemnifying Party shall remain responsible
to indemnify the Indemnified Party as provided in this Article 11.

 

32

--------------------------------------------------------------------------------

 

11.4 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES ARISING FROM
OR RELATING TO ANY BREACH OF THIS SUPPLY AGREEMENT, REGARDLESS OF ANY NOTICE OF
THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS
SECTION 11.4 IS INTENDED TO OR SHALL LIMIT OR RESTRICT CLAIMS TO THE EXTENT
ARISING IN CONNECTION WITH (A) THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY
PARTY UNDER SECTION 11.1 OR 11.2, (B) A PARTY’S BREACH OF CONFIDENTIALITY
OBLIGATIONS IN ARTICLE 7, OR (D) THE WILLFUL MISCONDUCT OF EITHER PARTY.
ARTICLE 12
TERM AND TERMINATION
12.1 Term. This Supply Agreement shall become effective on the Effective Date
and, unless earlier terminated pursuant to this Article 12, shall remain in
effect on a country-by-country and, if GSK exercises the Option,
Product-by-Product basis, until the expiration of the Royalty Term of such
Product in such country (the “Term”).
12.2 Termination.
(a) Termination for Breach. Each Party shall have the right to terminate this
Supply Agreement and the License Agreement for the other Party’s uncured
material breach of this Supply Agreement or the License Agreement as set forth
in Section 12.5 of the License Agreement.
(b) Termination Due to Termination of the License Agreement. This Supply
Agreement shall automatically terminate upon termination of the License
Agreement.
12.3 Continuing Supply; Manufacture Transfer. At least two (2) years prior to
the expiration of the Royalty Term for a Product in any country in the Licensed
Territory, Impax and GSK shall negotiate in good faith an agreement under which
Impax will continue to Manufacture and supply the Product to GSK, its Affiliates
or sublicensees, transfer to GSK, or to transfer to a Third Party manufacturer
selected by GSK and reasonably acceptable to Impax, all Information that is
Controlled by Impax or its Affiliates as of the Effective Date or during the
Term and is necessary, or is used by or on behalf of Impax, for the Manufacture
of the Product. Impax shall provide reasonable cooperation and assistance in
effecting the Product transfer at a reasonable expense to GSK.

 

33

--------------------------------------------------------------------------------

 

12.4 Performance on Termination; Survival. Termination or expiration of this
Supply Agreement shall not affect rights or obligations of the Parties under
this Supply Agreement that have accrued prior to the date of termination or
expiration. Upon termination of this Supply Agreement for any reason:
(a) Products manufactured pursuant to purchase orders shall be delivered on the
scheduled delivery dates and, if accepted by GSK, GSK shall pay Impax not later
than sixty (60) days after the invoice date (provided, that GSK makes advance
payment prior to shipment in the event of termination due to payment default by
GSK); and (b) XXXXXX in the event that Impax terminates this Supply Agreement
pursuant to Section 12.2(a) or that this Supply Agreement is terminated pursuant
to Section 12.2(b) as a result of termination of the License Agreement by GSK
pursuant to Section 12.2 of the License Agreement or by Impax pursuant to
Section 12.3 of the License Agreement or 12.5 of the License Agreement, provided
that Impax shall use Commercially Reasonable Efforts to mitigate such costs by
trying to use such Materials in the Manufacture of the Product for its own use
or in the manufacture of other products. Notwithstanding anything to the
contrary, the following provisions shall survive any expiration or termination
of this Supply Agreement: Sections 2.2(b) (last sentence only), 4.2(c) (solely
with respect to implementation costs incurred prior to the effective date of
termination), 4.2(e) (solely with respect to implementation costs incurred prior
to the effective date of termination), 4.7 (solely with respect to on-going
obligations of stability studies), 5.2 (solely with respect to GSK FTEs
dedicated prior to the effective date of termination), 5.5 5.6, 6.2 — 6.11
(solely with respect to Product ordered before the effective date of
termination), 8.1, 8.2, 8.3, 10.2 (solely with respect to Product ordered before
the effective date of termination), 10.4, 12.4 and 13.1 and Articles 3 (solely
with respect to Product ordered before the effective date of termination or,
with respect to Section 3.3, the costs and expenses described therein to the
extent incurred by Impax before the effective date of termination), 7, 11, and
14.
ARTICLE 13
INSURANCE
13.1 Coverage Requirements. During the Term and for three (3) years after its
expiration or termination in accordance with Article 12, Impax shall at all
times maintain in full force and effect, with financially sound and reputable
carriers, product liability, property, and fidelity insurance in such amounts
and with such scope of coverage as are appropriate for companies of like size,
taking into account the nature of the Product to be manufactured hereunder.
Notwithstanding the immediately preceding sentence, Impax shall maintain the
following types of insurance in the following minimum amounts: (a) product
liability insurance in the minimum amount of XXXXXX dollars ($XXXXXX) per
occurrence and in the aggregate annually, (b) property and fidelity coverage in
an amount as appropriate for the Product and Materials then in the care, custody
and control of Impax, (c) statutory workers’ compensation insurance and employer
liability coverage in a minimum amount of XXXXXX dollars ($XXXXXX) with respect
to occupational diseases; (d) general liability insurance in the minimum amount
of XXXXXX dollars ($XXXXXX) per occurrence; and (e) umbrella liability insurance
in the minimum amount of XXXXXX dollars ($XXXXXX). Impax acknowledges and agrees
that the requirements of this Article 13 in no way constitute a limitation on
Impax’s liabilities, including obligations to indemnify GSK under this Supply
Agreement.
13.2 Certificates of Insurance. Upon GSK’s request, Impax shall have its
insurance carrier or carriers furnish to GSK certificates that all insurance
required under this Supply Agreement is in force, such certificates to indicate
any deductible and/or self-insured retention, and the effective expiration dates
of policies.

 

34

--------------------------------------------------------------------------------

 

13.3 Additional Insured and Waiver of Subrogation. GSK shall be named as an
additional insured on all product liability policies of Impax. Impax also agrees
to waive, and will require its insurers to waive, all rights of subrogation
against GSK, its directors, officers and employees on all the foregoing
coverages.
ARTICLE 14
MISCELLANEOUS
14.1 Entire Agreement; Amendment. This Supply Agreement, including the Exhibits
hereto, together with the License Agreement, sets forth the complete, final and
exclusive agreement and all the covenants, promises, agreements, warranties,
representations, conditions and understandings between the Parties hereto with
respect to the subject matter hereof and supersedes, as of the Effective Date,
all prior and contemporaneous agreements and understandings between the Parties
with respect to the subject matter hereof, including the Confidentiality
Agreement. The foregoing shall not be interpreted as a waiver of any remedies
available to either Party as a result of any breach, prior to the Effective
Date, by the other Party of its obligations under the Confidentiality Agreement.
There are no covenants, promises, agreements, warranties, representations,
conditions or understandings, either oral or written, between the Parties other
than as are set forth in this Supply Agreement or the License Agreement. No
subsequent alteration, amendment, change or addition to this Supply Agreement
shall be binding upon the Parties unless reduced to writing and signed by an
authorized officer of each Party. No modification to this Supply Agreement shall
be effected by the acknowledgment or acceptance of any purchase order or
shipping instruction forms or similar documents containing terms or conditions
at variance with or in addition to those set forth herein.
14.2 Notices. Any notice required or permitted to be given under this Supply
Agreement shall be in writing, shall specifically refer to this Supply
Agreement, and shall be addressed to the appropriate Party at the address
specified below or such other address as may be specified by such Party in
writing in accordance with this Section 14.2, and shall be deemed to have been
given for all purposes (a) when received, if hand-delivered or sent by confirmed
facsimile or a reputable courier service, or (b) five (5) Business Days after
mailing, if mailed by first class certified or registered airmail, postage
prepaid, return receipt requested.

     
If to Impax:
  Impax Laboratories, Inc.
30831 Huntwood Avenue
Hayward, CA 94544
Attn: President, Impax Pharmaceuticals
Fax: 510-972-7756

With copies to (which shall not constitute notice): 
  Impax Laboratories, Inc.
30831 Huntwood Avenue
Hayward, CA 94544
Attn: Legal Department
Fax: 510-972-7756

 

35

--------------------------------------------------------------------------------

 

     
 
  Cooley LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attn: Marya A. Postner, Ph.D.
Fax: (650) 849-7400
 
   
If to GSK:
  Glaxo Group Limited
Glaxo Wellcome House, Berkeley Avenue
Greenford, Middlesex
UB6 0NN, England
Attn: Company Secretary
Fax: 44 20 8 047 6904
 
   
With a copy to (which shall not constitute notice): 
  GlaxoSmithKline LLC
Five Moore Drive
Research Triangle Park, NC 27709
Attn: Paul Noll, VP, Associate General Counsel
Fax: (919) 483-2881

14.3 No Strict Construction; Headings. This Supply Agreement has been prepared
jointly by the Parties and shall not be strictly construed against either Party.
Ambiguities, if any, in this Supply Agreement shall not be construed against any
Party, irrespective of which Party may be deemed to have authored the ambiguous
provision. The headings of each Article and Section in this Supply Agreement
have been inserted for convenience of reference only and are not intended to
limit or expand on the meaning of the language contained in the particular
Article or Section. Except where the context otherwise requires, the use of any
gender shall be applicable to all genders, and the word “or” is used in the
inclusive sense (and/or). The term “including” as used herein means including,
without limiting the generality of any description preceding such term.
14.4 Assignment. Neither Party may assign or transfer this Supply Agreement or
any rights or obligations hereunder without the prior written consent of the
other, except that a Party may make such an assignment without the other Party’s
consent to its Affiliates or to a Third Party successor to substantially all of
the business of such Party to which this Supply Agreement relates, whether in a
merger, sale of stock, sale of assets or other transaction; provided that the
License Agreement is also assigned to such Affiliate or a Third Party successor.
Any successor or assignee of rights and/or obligations permitted hereunder
shall, in writing to the other Party, expressly assume performance of such
rights and/or obligations. Any permitted assignment shall be binding on the
successors of the assigning Party. Any assignment or attempted assignment by
either Party in violation of the terms of this Section 14.4 shall be null, void
and of no legal effect.
14.5 Performance by Affiliates. Each Party may discharge any obligations and
exercise any right hereunder through any of its Affiliates. Each Party hereby
guarantees the performance by its Affiliates of such Party’s obligations under
this Supply Agreement, and shall cause its Affiliates to comply with the
provisions of this Supply Agreement in connection with such performance. Any
breach by a Party’s Affiliate of any of such Party’s obligations under this
Supply Agreement shall be deemed a breach by such Party, and the other Party may
proceed directly against such Party without any obligation to first proceed
against such Party’s Affiliate

 

36

--------------------------------------------------------------------------------

 

14.6 Further Actions. Each Party agrees to execute, acknowledge and deliver such
further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Supply
Agreement.
14.7 Severability. If any one or more of the provisions of this Supply Agreement
is held to be invalid or unenforceable by any court of competent jurisdiction
from which no appeal can be or is taken, the provision shall be considered
severed from this Supply Agreement and shall not serve to invalidate any
remaining provisions hereof. The Parties shall make a good faith effort to
replace any invalid or unenforceable provision with a valid and enforceable one
such that the objectives contemplated by the Parties when entering this Supply
Agreement may be realized.
14.8 No Waiver. Any delay in enforcing a Party’s rights under this Supply
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party’s rights to the future enforcement of its
rights under this Supply Agreement, except with respect to an express written
and signed waiver relating to a particular matter for a particular period of
time.
14.9 Independent Contractors. Each Party shall act solely as an independent
contractor, and nothing in this Supply Agreement shall be construed to give
either Party the power or authority to act for, bind, or commit the other Party
in any way. Nothing herein shall be construed to create the relationship of
partners, principal and agent, or joint-venture partners between the Parties.
14.10 English Language. This Supply Agreement was prepared in the English
language, which language shall govern the interpretation of, and any dispute
regarding, the terms of this Supply Agreement.
14.11 Counterparts. This Supply Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.12 Governing Law; Dispute Resolution. This Supply Agreement and all disputes
arising out of or related to this Supply Agreement or any breach hereof shall be
governed by and construed under the laws of the State of Delaware, without
giving effect to any choice of law principles that would require the application
of the laws of a different state. The application of the U.N. Convention on
Contracts for the International Sale of Goods (1980) is excluded. Any
controversy or claim arising out of, relating to, or in connection with any
provision of this Supply Agreement shall be resolved in accordance with
Article 13 of the License Agreement.
14.13 Compliance with Laws. Each Party shall comply in all material respects
with all applicable Laws and regulations, including, but not limited to, those
concerning drugs, drug manufacture regulatory requirements, or exportation or
importation of the Product, including but not limited to proper declaration of
dutiable values. GSK shall be responsible for obtaining all exportation and
importation license or other authorizations.
14.14 Debarment. Each Party certifies to the other that it is not debarred under
subsections 306(a) or 306(b) of the FD&C Act, as amended, and that it has not
and will not use in any capacity the services of any person debarred under such
law with respect to services to be performed under this Supply Agreement. Each
Party further certifies that it will amend this certification as necessary in
light of new information.

 

37

--------------------------------------------------------------------------------

 

In Witness Whereof, the Parties have executed this Supply Agreement in duplicate
originals by their duly authorized representatives as of the Effective Date.

                      Glaxo Group Limited       Impax Laboratories, Inc.
 
                    By:   /s/ Paul Williamson       By:   /s/ Larry Hsu        
         
 
  Name:   Paul Williamson           Name: Larry Hsu
 
  Title:   Authorised Signatory For and on behalf of Edinburgh Pharmaceutical
Industries Limited Corporate Director           Title: President & CEO

 

38

--------------------------------------------------------------------------------

 

Schedule 2.12
Key Performance Indicators for the Manufacture of the Product to be supplied to
GSK under this
Supply Agreement
XXXXXX

 

39

--------------------------------------------------------------------------------

 

Schedule 4.10
Impax’s Environmental, Health and Safety Guiding Principles
XXXXXX.

 

40