Exhibit 10.17

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
with Rule 24b-2 of the Securities and Exchange Act of 1934, as amended. REDACTED
PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***

SUPPLY AGREEMENT

By and Between

Endo Pharmaceuticals Inc.

and

Noramco, Inc.

This SUPPLY AGREEMENT (this “Agreement”) is made effective as of April 27, 2012
(the “Effective Date”), by and between ENDO PHARMACEUTICALS INC., a corporation
organized under the laws of the State of Delaware and having a place of business
at 100 Endo Boulevard, Chadds Ford, Pennsylvania, 19317 and all of its
subsidiaries and Affiliates (as defined herein) and listed in Exhibit 4 as of
the Effective Date (“Company”); and NORAMCO, INC., a Georgia corporation having
a place of business at 500 Swedes Landing Road, Wilmington, Delaware 19801
(“Supplier”) (each individually a “Party” and collectively the “Parties”).

WITNESSETH:

WHEREAS, Company wishes to purchase the Products for incorporation into certain
finished dosage form pharmaceuticals for human use; and

WHEREAS, Supplier has the experience and expertise necessary to perform the
Manufacturing Services for, and supply the Products to, Company; and

WHEREAS, Company desires Supplier to perform the Manufacturing Services and to
supply such Products to Company; and Supplier desires to perform the
Manufacturing Services and to sell such Products to Company, all on the terms
and conditions set forth in this Agreement;

API Supply Agreement – EXECUTION VERSION

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NOW, THEREFORE, in consideration of the mutual covenants and promises set forth
herein, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

The following terms, whether used in the singular or plural, shall have the
meaning assigned to them below for purposes of this Agreement:

1.1 “ANDA” means abbreviated new drug application as defined in FD&C Act
Section 201(aa), as amended from time to time.

1.2 “Affiliate” shall mean any entity or individual which directly or indirectly
controls, is controlled by, or is under common control with a Party. An entity
shall be regarded as in control of another entity if it owns or directly or
indirectly controls at least fifty (50%) of the voting interests of the other
entity, or, in the absence of the ownership of at least fifty percent (50%) of
the voting interests of an entity, has the power to direct or cause the
direction of the management and policies of such entity, as applicable.

1.3 “Agreement” shall have the meaning set forth in the Preamble hereof.

1.4 “API (active pharmaceutical ingredient)” shall mean any substance or mixture
of substances intended to be used in the manufacture of drug product and that,
when used in the production of a drug, becomes an active ingredient of the drug
product. Such substances are intended to furnish pharmacologic activity or other
direct effect in the diagnosis, cure, mitigation, treatment or prevention of
disease or to affect the structure and function of the body.

1.5 “Applicable Laws” means all laws, statutes, rules, regulations, orders,
judgments, injunctions and/or ordinances of any Governmental Agency.

1.6 “Batch Record” shall mean the written procedures for production, process
control and testing of the Products designed to assure that the Products has the
identity, strength, quality, and purity they purport or are represented to
possess and is used to ensure uniformity from batch to batch and compliance with
cGMPs.

1.7 “Binding Forecast” shall have the meaning set forth in Section 4.2 hereof.

1.8 “Business Day” means a day other than a Saturday, Sunday or a day that is
bank holiday in the United States of America.

1.9 “cGMP” means those practices in the manufacture of pharmaceutical products
that are recognized as the current good manufacturing practices by the FDA in
accordance with FDA regulations, guidelines, other administrative
interpretations, and rulings in connection therewith, including but not limited
to those regulations cited in 21 C.F.R. parts 210 and 211, all as they may be
amended from time to time.

1.10 “Company Facility” means either Company’s manufacturing facility or other
location designated by Company.

1.11 “Contract Manufacturer” means a company selected by Company to perform
manufacturing services on behalf of Company.

 

API Supply Agreement – EXECUTION VERSION   2  

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1.12 “Confidential Information” shall have the meaning set forth in Section 13.1
hereof.

1.13 “Contract Year” shall mean, for the first year, the period commencing on
the Effective Date up to and including December 31 of the same calendar year,
and for each year thereafter, shall mean a calendar year beginning on January 1
and ending on December 31.

1.14 “DEA” shall mean the Drug Enforcement Administration of the U.S. Department
of Justice, or any successor entity.

1.15 “DMF” means Supplier’s Drug Master File for each Product.

1.16 “Delivery Date” shall mean a date for which delivery of any Product is
stated in a Purchase Order given in accordance with the provisions of this
Agreement.

1.17 “Effective Date” shall have the meaning set forth in the Preamble hereof.

1.18 “FD&C Act” shall mean the United States Federal Food, Drug and Cosmetic
Act, as amended.

1.19 “FDA” shall mean the United States Food and Drug Administration, or any
successor entity.

1.20 “Finished Product” means any finished pharmaceutical product in human
dosage form that contains any Product and is intended for commercial sale by
Company or any Affiliate.

1.21 “Force Majeure Event” shall have the meaning set forth in Section 14.1
hereof.

1.22 “Governmental Agency” means any court, agency, authority, department,
regulatory body or other instrumentality of any government or country or of any
national, federal, state, provincial, regional, county, city or other political
subdivision of any such government or any supranational organization of which
any such country is a member, which has competent and binding authority to
decide, mandate, regulate, enforce, or otherwise control the activities of the
Parties or their Affiliates contemplated by this Agreement, including, without
limitation, the FDA and the DEA.

1.23 “Inability to Supply” shall have the meaning set forth in Section 4.4
hereof.

1.24 “Initial Term” shall have the meaning set forth in Section 10.1 hereof.

1.25 “Manufacture” and “Manufacturing Services” means the manufacturing, quality
control, quality assurance and stability testing, packaging and related
services, as contemplated in this Agreement, required to produce the Products.

1.26 “Manufacturing Process” shall mean any and all processes (or any step in
any process) used or planned to be used by Supplier to Manufacture the Products,
as evidenced in the Batch Records.

 

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1.27 “Manufacturing Quota” shall mean the amount of a Product allotted to
Supplier by the DEA pursuant to applicable DEA regulations so that that Supplier
may manufacture Product.

1.28 “Manufacturing Site(s)” means the facilities, owned and operated by
Supplier that are located at ***

1.28 “NDA” shall mean a new drug application filed pursuant to 21 U.S.C.
Section 505(b)(1), as amended from time to time.

1.29 “Procurement Quota” means the quota allotted to the Company or the Contract
Manufacturer on behalf of the Company by the DEA pursuant to applicable DEA
regulations so as to permit shipment of Product from Supplier to the Company or
the Contract Manufacturer.

1.30 “Product” or “Products” means the API(s) set forth on Schedule A hereto, as
may be modified by mutual agreement of the Parties.

1.31 “Product Prices” shall mean the prices for the Products set forth in
Exhibit 1 attached hereto and made a part hereof.

1.32 “Purchase Order” means an order from Company specifying requested Delivery
Dates and quantities of the Products to be Manufactured by Supplier.

1.33 “Quality Agreement” shall mean the responsibility for the quality
activities related to manufacturing, testing, release, storage and dispatch of
API(s)as described in the agreement referenced on Exhibit 2.

1.34 “Raw Material” means, collectively, all excipients, packaging components,
raw materials and ingredients required to be used in order to produce the
Products.

1.35 “Rolling Forecast” shall have the meaning set forth in Section 4.1 hereof.

1.36 “Scheduled ***” shall mean***

1.37 “Specifications” means the specifications for the Products set forth in
Exhibit 3.

1.38 “Third Party” shall mean any person or entity other than Company, Supplier
and their respective Affiliates.

 

API Supply Agreement – EXECUTION VERSION   4  

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ARTICLE 2

MANUFACTURING SERVICES

2.1 Supplier will perform the Manufacturing Services for, and supply the
Products to, Company in accordance with this Agreement. In performing the
Manufacturing Services and supplying the Products to Company, Supplier agrees as
follows:

(a) Quality Control and Quality Assurance. Supplier will perform the quality
control and quality assurance testing as specified in the Quality Agreement.
Batch review and release to Company will be the responsibility of Supplier’s
quality assurance group. Supplier will perform its batch review and release
responsibilities in accordance with Supplier’s standard operating procedures.
Each time Supplier ships any Products to Company, it will give Company a
certificate of analysis. The form and style of batch documents, including, but
not limited to, batch production records, lot packaging records, equipment set
up control, operating parameters, and Supplier data printouts, DMFs, Raw
Material data, and laboratory notebooks are the exclusive property of Supplier.
The Quality Agreement further details the quality assurance obligations and
responsibilities of the Parties with respect to the Products and may include
other requirements not covered in this Agreement.

(b) Process and Specification Changes.

(i) Supplier Requested Changes. Supplier shall notify Company of proposed
changes to the Raw Material, Manufacturing Process, Manufacturing Site(s), or
Specification(s) to the extent required to do so by the Quality Agreement. If
change notification is required by the Quality Agreement, Company and Supplier
shall first discuss what if any costs and/or benefit to the Company of a
proposed change. Supplier shall supply Company with samples of Product(s) at no
cost to Company which have undergone Manufacturing Process or Specification
changes. Supplier shall continue to supply to Company the pre-change Product(s)
then in effect, according to and consistent with the terms of this Agreement
until approval to implement the proposed change is received by Supplier from
Company.

Without limiting the foregoing, Company agrees to implement the changes outlined
below by making appropriate regulatory filings at Company’s expense in
connection with:

 

  •  

***

 

  •  

***

 

  •  

***

With respect to the second bullet above, Company agrees to accept validated
material ***. Should Company, in its sole discretion, warrant that the ***
process is not suitable for its Finished Products, Company will be relieved of
its obligations to purchase from Supplier, and Supplier shall be relieved of its
obligation to supply *** as set forth in this Agreement and a mutually agreeable
transition plan will be discussed. Supplier will provide commercially reasonable
technical, analytical, and regulatory support, and the filing of changes with
the FDA shall not be unreasonably withheld by Company.

(ii) Company Requested Changes. In the event Company desires Supplier to make
any changes to the Raw Materials, Manufacturing Process, or Specifications for
any Product, Company shall promptly advise Supplier in writing of such request.
For the avoidance of doubt, Supplier is under no obligation to make any changes
to the Raw

 

API Supply Agreement – EXECUTION VERSION   5  

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Materials, Manufacturing Process, or Specifications for any Product, and
Supplier shall determine, in its sole discretion, whether to make any Company
requested changes. In the event Supplier agrees to assess the possibility of a
change to its Raw Materials, Manufacturing Process or Specifications for a
Product, it shall conduct a technical review to determine any scheduling,
out-of-pocket expenses, capital expenditure costs, and/or other price
adjustments caused by any such change. Prior to implementation of any such
change, the Parties shall negotiate in good faith in an attempt to reach
agreement on (1) the new price for any Product affected by such change, and
(2) any other amendments to this Agreement which may be necessitated by such
change (e.g., an adjustment to the lead time for Purchase Orders).

(iii) Changes Required by Applicable Law. If Supplier is required to change any
Raw Material, Manufacturing Process or the Specification for a Product in order
to comply with Applicable Law, Supplier will promptly notify Company of such
change and the cost of such change. The costs of any such change shall be
equitably allocated by Supplier amongst its then existing customer base.

(c) Technical Data. Supplier shall reasonably provide to Company upon written
request, without charge, all statistical, analytical and laboratory testing
methods of the Products which it generally utilizes in its business related to
specified and other identified impurities, specified and other degradation
products identified in stability studies, and any other applicable studies and
reports, as needed and required for Company’s NDA(s) or ANDA(s) or other FDA
requests and/or requirements, in each case relating to any Finished Product.
Supplier shall also provide to Company, upon request, without charge, technical
and/or process data generated in the ordinary course in accordance with its
standard operating procedures in the Manufacturing of the Products if necessary
for the Company to support investigations related to Finished Product or
respective Finished Product compliance. Supplier will provide up to *** each of
API related impurity standards to support new filings free-of-charge. Supply of
reference standards for routine commercial production and testing will be at
current list prices.

(d) Raw Materials. Supplier shall purchase and test all Raw Materials as
required by cGMP and the Quality Agreement and consistent with Supplier’s
DMF(s).

(e) Packaging. Supplier will package the Products in package size quantities as
reasonably specified by Company in a manner suitable for safe and lawful
shipment.

(f) Validation Activities. Supplier shall prepare the documentation, protocols,
and procedures. Supplier shall make documents available on site for audit or
review by Company in accordance with the Quality Agreement.

(g) DMFs. Supplier shall maintain all DMF(s) in compliance with FDA regulations
and shall make reasonable commercial efforts to update such DMF(s) to
accommodate any additional references thereto in any amendments that may be made
to Company’s NDA(s) or ANDA(s) or any accompanying supplements. For the
avoidance of doubt, Supplier is under no obligation to make any changes to a DMF
absent mutual agreement. Supplier shall furnish Company with a Letter of
Authorization granting Company permission to cite the Supplier’s DMF in filings.

 

API Supply Agreement – EXECUTION VERSION   6  

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(h) Customer Specific Specifications. The Parties agree and acknowledge that as
of the Effective Date, as described in the cover page to the Specifications
included in Exhibit 3, ***

ARTICLE 3

COMPANY’S OBLIGATIONS

3.1 Payment. Company will pay Supplier for performing the Manufacturing Services
according to the Product Prices specified in Exhibit 1.

3.2 Purchasing Requirement. Company shall purchase from Supplier, and Supplier
shall supply to Company, in each case in accordance with the terms and
conditions of this Agreement, including but not limited to compliance with
forecasting and manufacturing and procurement quota provisions herein, the
volume of Product(s) on an annual basis as indicated in the attached Addendum A
to Exhibit 1. Following each Contract Year, at Supplier’s written request,
Company shall deliver written confirmation from an officer of Company who is a
vice president or higher that it has complied with the purchase commitments set
forth on Addendum A for each Product for that Contract Year.

ARTICLE 4

FORECASTS

4.1 Initial and Rolling Forecast. Upon execution of this Agreement, Company
shall deliver to Supplier a *** month forecast indicating its reasonable
estimate of volume for each of the Products that Company intends to request
Supplier to Manufacture for each of the ***calendar months after the Effective
Date (the “Initial Forecast”). The Initial Rolling Forecast shall be updated ***
by the Company with a *** (except as set forth in Section 4.2 below) *** month
forecast delivered to Supplier by the tenth (10th) Business Day prior to the
start of the next month (each a “Rolling Forecast”).

In accordance with Section 4.2 below, the quantity of each Product for months
*** of any Rolling Forecast are fixed and once an amount is fixed in the ***
month of a Rolling Forecast, it *** except as may be mutually agreed to by
Supplier and Company.

In addition, with respect to the Initial Forecast and each Rolling Forecast,
Supplier may within five (5) days of receipt thereof, notify the Company that it
will not be able to meet Company’s anticipated demand as reflected for the ***
month for any Product. In such event, the Parties shall promptly meet to discuss
in good faith to revise such Rolling Forecast to be resubmitted by Company to
Supplier with amounts mutually acceptable to both Parties. The Parties agree
that they will meet no less than *** per calendar year to discuss long range
forecast and assess Supplier’s ability to meet demand.

 

API Supply Agreement – EXECUTION VERSION   7  

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4.2 Binding Forecast. The first ***(***) months of each Rolling Forecast shall
be a binding commitment on the Company and Supplier, subject in each case to
availability of Procurement Quota and Manufacturing Quota as set forth in
Article 15 (each a “Binding Forecast”), and Company shall deliver a Purchase
Order with respect thereto pursuant to Article 5. With respect to any Rolling
Forecast submitted hereunder, the quantity of Product(s) that becomes a binding
commitment with respect to the *** (***) month in such Rolling Forecast may not
deviate by more than *** (***) from the quantity of Product(s) forecast for the
same in the *** (***) month in the immediately prior Rolling Forecast as
submitted, or resubmitted and agreed to, as set forth in the immediately
preceding paragraph. The amount of Products forecasted for the remaining months
of each Rolling Forecast are for planning purposes and shall not constitute a
commitment to supply or purchase Product (it being understood that amounts
forecasted in a Rolling Forecast shall eventually become binding under this
Section 4.2 in accordance with the forecasting requirements of Section 4.1).

4.3 Forecast Upside. Company may, at its discretion, include a forecasted upside
within a Binding Forecast. Such forecasted volumes may be used by Supplier for
planning purposes and shall not constitute a commitment to Manufacture or
purchase Product.

4.4 Inability to Supply. In the event that Supplier determines that it may not
be able to deliver Product in accordance with its obligations under this
Agreement, Supplier shall promptly notify Company thereof. Supplier shall use
reasonable commercial efforts to prevent the interruption of supply of Product
to Company. Supplier shall, within *** (***) Business Days, notify Company in
writing if and when Supplier determines that it will not be able to satisfy the
quantities and/or Delivery Dates of a Purchase Order given in accordance with
the terms of this Agreement (any such inability on behalf of Supplier other than
as a result of a failure to obtain Manufacturing Quota which is addressed in
Section 15 is hereinafter an “Inability to Supply”).

In the event of an Inability to Supply, Company may ***.

In the event of an Inability to Supply (i) if Company has not canceled the
Purchase Order, Supplier shall fulfill Purchase Orders with such quantities of
Product as are available in accordance with Section 4.7; and (ii) unless and
until such Inability to Supply is remedied, Company shall be relieved from its
obligations under this Agreement to (A) *** and (B) ***. Nothing in this
Section 4.4 shall relieve Supplier or Company of any other obligation or
liability under this Agreement.

4.5 Non-compliance Events and Events Where Product Meets Specifications. Upon
the occurrence of a Non-compliance Event (as defined below) with respect to a
Product, in addition to any other rights or remedies Company may have hereunder,
at law or in equity, and unless and until such Non-compliance Event is remedied,
Company shall be relieved from its obligations under this Agreement to
(A) purchase any quantities of that Product subject to any outstanding Purchase
Orders, and (B) submit any further Purchase Orders for that Product. Nothing in
this Section shall relieve Supplier or Company of any obligation or liability
under this Agreement.

 

API Supply Agreement – EXECUTION VERSION   8  

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For purposes of this Agreement, a “Non-compliance Event” shall mean the failure
of any batch of Product to comply, at the time of delivery to Company, with the
Specifications or cGMPs.

In addition, in the event that a Finished Product does not meet its applicable
specifications (and as a result of an on-going or completed investigation
conducted in accordance with the Quality Agreement, and the potential root cause
or root cause for the Finished Product not meeting its applicable specifications
results (or the investigation reasonably suggests results) from the Product
notwithstanding the fact that the Product met Specifications and cGMP(s), then
Company may upon thirty (30) days advance written notice source Product from an
alternate supplier as provided for under Section 4.6 below. The Company will be
temporarily relieved from its minimum purchase requirements provided that
(A) the Company shall diligently cooperate with Supplier under Section 2.1
(b) (ii) to allow for changes to Raw Materials, Manufacturing Process, or
Specifications for such Product and/or take reasonable commercial actions to
modify the raw materials, manufacturing process or specifications for such
Finished Product so as to permit the Company to resume the purchase of such
Product and (B) such root cause determination does not result from a change in
the Company’s Finished Product specifications.

4.6 Alternate Suppliers. Without prejudice to Section 3.2, nothing in this
Agreement shall prevent, prohibit or restrict Company from purchasing the
Products from any Third Party.

4.7 Allocation. If at any time Supplier is unable for any reason, including,
without limitation, a Force Majeure Event, to supply a Product to Company in the
quantities required under outstanding Purchase Orders, then Supplier shall
allocate among Company, Supplier’s other customers, and Supplier (including
Affiliates of Supplier) its entire supply of such Product in a fair and
equitable manner.

ARTICLE 5

PURCHASE OF PRODUCT; DELIVERIES

5.1 Purchase Orders. Except to the extent the Parties may otherwise agree with
respect to a particular shipment, the Products shall be ordered by Company
pursuant to written Purchase Orders consistent with the forecasts as described
in Sections 4.1 and 4.2 above, which shall be sent to Supplier not less than ***
(***) days prior to the Delivery Dates specified in such Purchase Orders. Any
Purchase Order requesting quantities of any Product that is consistent with a
properly delivered Rolling Forecast shall be deemed accepted by Supplier. If a
Purchase Order is for a quantity in excess of the amount set forth in a properly
delivered Rolling Forecast, then Supplier shall be deemed to have accepted such
Purchase Order amount up to the proper amount, and any amount in excess thereof
shall be accepted only upon written acknowledgment by Supplier that it agrees to
supply the additional amount. Once accepted by Supplier, a Purchase Order is
firm and may not be cancelled or modified without the consent of both Parties.

 

API Supply Agreement – EXECUTION VERSION   9  

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Each Purchase Order must be submitted with either (i) a certificate of available
Procurement Quota or a completed DEA Form 222 on a Product by Product basis or
(ii) specify on a Product by Product basis the amounts that are contingent upon
receipt of available Procurement Quota. In the event that Company specifies that
all or a portion of any Product submitted for a Purchase Order is contingent
upon receipt of Procurement Quota by it of its Contract Manufacturer, only the
portion of such Purchase Order for which Procurement Quota is available shall be
binding upon Supplier, and with respect to any portion of such Purchase Order
for which Procurement Quota is not available, the supply and purchase thereof,
including but not limited to delivery dates, shall be subject to Article 15.

5.2 Purchase Quantities.

(a) Each Purchase Order shall specify the quantity of each Product being
ordered. Quantities actually shipped pursuant to a given Purchase Order may vary
from the quantities reflected in such Purchase Order by up to *** (***%) and
still be deemed to be in compliance with such Purchase Order, unless a different
quantity is otherwise agreed to by Company prior to shipment (i.e. to maintain
batch integrity); provided that Company shall only be invoiced and required to
pay for the quantity of the Product which Supplier actually delivers to Company.
Changes to Delivery Dates are acceptable so long as they fall within the range
of *** (***) business days early and *** (***) business days late. Dock
appointments shall be requested at least forty-eight (48) hours prior to planned
delivery.

5.3 Adjustments to Forecasts and Purchase Orders. Should any Purchase Order
either seek to purchase any Product in amounts in excess of the properly
forecasted amount, or should Company desire to increase the amount of any
Product to be Manufactured pursuant to any already-accepted Purchase Order, then
Supplier shall use reasonable commercial efforts to comply with such requested
changes. For the avoidance of doubt, Supplier shall not be liable to Company for
any decision not to supply such additional requested amount.

Should Supplier determine that it would incur costs in excess of the normal
costs of Manufacturing to accommodate Company’s request to supply an additional
amount of Product as set forth above, then Supplier shall notify the Company in
advance of agreeing to supply such additional amount and what the additional
cost would be. If Company declines to pay such costs, then Supplier shall not
supply such additional amount.

5.4 Delivery Terms. The terms of delivery for the Product(s) shall be *** (ICC
Incoterms 2010). Title and risk of loss and/or damage to the Product(s) shall
pass to ***. All Product(s) shall be properly prepared for safe and lawful
shipment by Supplier, shall be shipped to the Company Facility via the common
carrier mutually agreed upon by the Parties, and shall be accompanied by
appropriate transportation and other agreed upon documentation. Supplier shall
make all arrangements for shipping per the agreed upon carrier. No products of
any Third Party shall be shipped with the Products unless mutually agreed upon
between Supplier and Company prior to shipment.

5.5 Key Performance Indicators. The Parties have agreed upon key performance
indicators (“KPIs”) that will be tracked on a monthly basis and reviewed to
ensure consistent performance. The details relating to such KPIs are attached as
Exhibit 5.

 

API Supply Agreement – EXECUTION VERSION   10  

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ARTICLE 6

PRICE; CREDIT; ADDITIONAL PAYMENTS

6.1 Price. For all Products which are the subject of Purchase Orders submitted
by Company hereunder, Company shall pay to Supplier the Product Prices set forth
in Exhibit 1 hereto, and such Product Prices shall not be modified or amended at
any time while this Agreement is in effect. ***.

6.2 Credit. Concurrent with the execution and delivery of this Agreement,
Company shall receive a credit of ***($***) to be applied to future purchases of
Products; provided that such credit must be used within *** (***) *** of the
Effective Date.

6.3 Taxes. The Product Prices do not include sales, use, consumption, or excise
taxes of any taxing authority. The amount of such taxes, if any, will be added
to the Product Prices in effect at the time of shipment thereof and shall be
reflected in the invoices submitted to Company by Supplier pursuant to this
Agreement. Company shall pay the amount of such taxes to Supplier in accordance
with the payment provisions of this Agreement.

6.4 Method of Payment. At the time the Products are shipped to Company, Supplier
shall invoice Company, and Company shall pay all correct invoices within sixty
(60) days of the date thereof. All payments due hereunder shall be sent at the
times set forth herein to such accounts as Supplier, may designate in writing
from time to time in accordance with the notice provisions contained in
Section 18.7 hereof.

ARTICLE 7

RECALLS

7.1 Control of Recall. All recalls of any Finished Product and FDA contacts
relating to any such recalls shall be the responsibility of, and under the
control of, Company. Company shall notify the FDA and any foreign regulatory
agencies of any recall, and shall be responsible for coordinating all necessary
activities regarding the action taken. In the event that either Party has reason
to believe that any Product should be recalled or withdrawn from distribution,
such Party shall promptly inform the other in writing prior to taking any such
action. Company shall have the responsibility for making the final decision
regarding any recall, withdrawal or field correction relating to any Finished
Product. All Finished Product recalls shall be at ***, except as specified in
Section 7.2.

7.2 Supplier Fault. If any Finished Product is recalled as a result of
Supplier’s breach of this Agreement, then Supplier shall, subject to the
limitation of liability provisions set forth herein, reimburse Company for all
documented direct expenses incurred by Company or its Affiliates to the extent
of Supplier’s responsibility for such recall. Company shall give Supplier prompt
written notice of any Finished Product recall that Company believes was caused
or may

 

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have been caused by Supplier’s breach of this Agreement. The “direct expenses”
of a recall shall mean the expenses of notification and destruction or return of
the recalled Finished Product. Supplier shall further reimburse Company for the
purchase price of the Product used in such Finished Product.

ARTICLE 8

REPRESENTATIONS AND WARRANTIES;DISCLAIMER;INFRINGEMENT; RESERVATION OF RIGHTS

8.1 Representations and Warranties of Supplier.

(a) Supplier represents and warrants to Company that the Products, at the time
of delivery to Company shall: (i) conform to the Specifications, as then in
effect; (ii) have been Manufactured in compliance with all Applicable Laws and
in accordance with cGMPs and (iii) shall have not have exceeded the minimum
shelf life, as mutually agreed upon by Supplier and Company.

(b) Other than with respect to the ***, Supplier further represents and warrants
that as of the Effective Date, it has not received written notice from a Third
Party asserting that Supplier’s Product or the Manufacturing Process of a
Product infringe a claim of a patent owned or controlled by such party.

(c) With respect to the ***, Supplier represents that as of the Effective Date,
to the best of Supplier’s knowledge and belief, *** *** ***.

8.2. Representations and Warranties of both Parties. Each Party represents and
warrants that: (i) it shall comply in all material respects with all Applicable
Laws applicable to the conduct of its business pursuant to this Agreement,
including, but not limited to, the FD&C Act and (ii) all corporate action on the
part of such Party and its officers and directors necessary for the
authorization, execution and delivery of this Agreement and the performance of
its obligations hereunder has been taken. In furtherance of the foregoing,
neither Party shall perform any actions that are prohibited by local and other
anti-corruption laws (including the U.S. Foreign Corrupt Practices Act,
collectively “Anti-Corruption Laws”) that may be applicable to one or both
parties to this Agreement. Without limiting the foregoing, neither Party shall
make any payments, or offer or transfer anything of value, to any government
official or government employee, to any political party official or candidate
for political office or to any other Third Party related to the transaction in a
manner that would violate Anti-Corruption Laws.

8.3 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF

 

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ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.

8.4 Alleged Infringement. If subsequent to the Effective Date, Supplier’s
Product or process of manufacture of a Product becomes or is likely to become
the subject of an infringement claim or action except with respect to a ***,
Supplier may at its sole option: (i) procure the right to use the applicable
intellectual property in the process for manufacture of such Product;
(ii) modify the process of manufacture; or (iii) if, in Supplier’s opinion,
neither (i) nor (ii) above are commercially reasonable, Supplier may terminate
Supplier’s obligations (and the Company’s rights) hereunder with respect to such
Product.

Allegations of *** with respect to any of the *** shall be governed by
Section 12.7.

8.5 Reservation of Rights. All rights to and interests in Supplier’s and its
Affiliates’ intellectual property, including any improvements thereto, will
remain solely with Supplier and its Affiliates and no right or interest therein
is transferred or granted to Company except as expressly provided for herein.
Company agrees that it does not acquire a license or any other right to Supplier
or its Affiliate’s intellectual property or improvements thereto. Without
limiting the foregoing, Supplier and its Affiliates expressly reserve all patent
rights directed to end products or to API(s) in combination with excipients or
other active pharmaceutical ingredients, including but not limited to
therapeutic uses and drug delivery technology.

ARTICLE 9

CO-OPERATION

9.1 Governmental Agencies. Each Party may communicate with any Governmental
Agency regarding the Products or Finished Products if, in the opinion of that
Party’s counsel, the communication is necessary to comply with the terms of this
Agreement or the requirements of any Applicable Law. Unless, in the reasonable
opinion of such Party’s counsel, there is a legal prohibition against doing so,
a Party will permit the other Party to accompany and take part in any
communications with any such Governmental Agency, and to receive copies of all
communications to or from such Governmental Agency.

9.2 Records and Accounting by Supplier. Supplier will keep records of the
Manufacture, testing, and shipping of the Products, and retain samples of the
Products as are necessary to comply with Applicable Law and in accordance with
the Quality Agreement. Copies of the records and samples will be retained
according to either Supplier’s policies or as required by Applicable Law.

9.3 Inspection. In accordance with the Quality Agreement, Company may inspect
the Manufacturing Sites, Supplier facilities, reports, and records relating to
this Agreement during normal business hours and with reasonable advance notice.
The right of inspection provided in this Section 9.3 does not include a right to
access or inspect Supplier’s financial records.

 

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9.4 Access. In accordance with the Quality Agreement, Supplier will give Company
access, together with Supplier representatives, to the Manufacturing Sites in
which the Products are Manufactured, stored, handled, or shipped so as to permit
Company to verify that the Manufacturing Services are being performed in
accordance with the Specifications, cGMPs, the DMFs and Applicable Laws.

9.5 Notification of Regulatory Inspection Action. In accordance with the Quality
Agreement, Supplier will notify Company of findings from an inspection by any
Governmental Agency that specifically relate to the quality of the Products.
Supplier will also notify Company of receipt of any Form 483s or Warning Letters
or any other significant regulatory action which Supplier’s quality assurance
group determines could impact the regulatory status of the Products.

ARTICLE 10

TERM; TERMINATION

10.1 Term. Unless sooner terminated pursuant to the terms hereof, the term of
this Agreement shall commence on the Effective Date and shall continue until
four (4) years from the Effective Date (the “Initial Term”). Thereafter, this
Agreement automatically renews for additional terms of one year each, unless
written notice of termination is given by any Party to the other at least ***
(***) *** prior to the expiration of the Initial Term or completion of a renewal
year as the case may be.

10.2 Termination by Mutual Agreement. This Agreement may be terminated at any
time upon mutual written agreement between the Parties.

10.3 Termination for Default; Finished Product Withdrawal.

(a) Default. This Agreement may be terminated by either Party in the event of
the material breach or default by the other Party of the terms and conditions
hereof; provided that the other Party shall first give to the defaulting Party
written notice of the proposed termination or cancellation of this Agreement,
specifying the grounds therefor. Upon receipt of such notice, the defaulting
Party shall have thirty (30) days to respond by curing such default; or by
delivering to the other Party a certificate that such breach is not capable of
being cured within such thirty (30) days and that the breaching Party is working
diligently to cure such breach; but in no event shall the time period for curing
such breach exceed an additional thirty (30) days. If the breaching Party does
not so respond or fails so to work diligently and to cure such breach within the
additional time set forth above, then the other Party may either suspend this
Agreement indefinitely or terminate this Agreement. Termination of this
Agreement pursuant to this Section 10.3(a) shall not affect any other rights or
remedies which may be available to the non-defaulting Party.

(b) Finished Product Withdrawal; Judicial Holding. Schedule A of this Agreement
will automatically be updated to delete a particular Product without any further
action by either Party if all Finished Products containing such Product are
either withdrawn as a result of FDA actions or voluntarily withdrawn by Company.
In addition, upon written notice from Supplier to Company, Schedule A of this
Agreement may be updated to delete a particular Product without any further
action by either Party if a court or other judicial body determines that such
Product infringes a third party’s patent.

 

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10.4 Bankruptcy; Insolvency. Either Party may terminate this Agreement upon the
occurrence of either of the following:

(a) the entry of a decree or order for relief by a court having jurisdiction in
respect of the other Party in an involuntary case under the Federal Bankruptcy
Code, as now constituted or hereafter amended, or under any other applicable
federal or state insolvency or other similar law and the continuance of any such
decree or order unstayed and in effect for a period of sixty (60) consecutive
days; or

(b) the filing by the other Party of a petition for relief under the Federal
Bankruptcy Code, as now constituted or hereafter amended, or any other
applicable federal or state insolvency or other similar law.

10.5 Expiration; Termination; Consequences.

(a) Upon expiration or termination of this Agreement, whichever is sooner (but
in the case of termination, only if directed by the terminating Party in the
notice of termination), Supplier shall Manufacture and ship, and Company shall
purchase in accordance with the provisions hereof, any and all amounts of
Products subject to Purchase Orders submitted pursuant to this Agreement prior
to the date on which such notice is given; provided that, upon termination due
to withdrawal of all Finished Product(s) for a specific Product as described
above, Company shall no longer be obligated to such Purchase Orders and shall
have no obligation to purchase any further amounts of the applicable Product
from Supplier or to comply with the purchase requirement pursuant to Section 3.2
hereof.

(b) Any expiration or termination of this Agreement does not release the Parties
from liabilities or obligations accrued as of the date thereof. The obligations
undertaken by each Party under with respect to Indemnification; Limitations of
Liability and Claims, Confidentiality (for the period provided therein),
Reservation of Rights, Notices and Dispute Resolution survive termination and/or
expiration of this Agreement.

ARTICLE 11

CLAIMS

11.1 Claims. In the event that any Product delivered to a Company Facility fails
to conform with any warranty set forth herein, Company shall inform Supplier of
Product rejection by giving written notice (a “Deficiency Notice” ) to Supplier
within thirty (30) days after Company’s receipt of such Product, the certificate
of analysis, and other quality assurance documents required by the Quality
Agreement; provided however that in the event that Company could not have
reasonably discovered such non-conformity upon proper physical inspection and
standard testing of Product promptly upon receipt of such Product, then for a
period of up to six

 

API Supply Agreement – EXECUTION VERSION   15  

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months after receipt of a Product, a Deficiency Notice may be given within ten
(10) days of the Company’s discovery of such non-conformity. Any Deficiency
Notice given hereunder shall specify the manner in which the Product fails to
meet the Specifications, cGMPs or Applicable Laws. Following an investigation
conducted in accordance with the Quality Agreement, if Company and Supplier fail
to agree as to whether any Products identified in the Deficiency Notice deviate
from the Specifications, cGMPs or Applicable Laws, then the Parties shall
mutually select an independent laboratory or Third Party expert to evaluate if
the Products deviated from the Specifications, cGMPs or Applicable Laws. The
determination of conformance by such laboratory (or Third Party expert) with
respect to all or part of such Product will be final and binding on all Parties
absent manifest error. The fees and expenses of the laboratory (or Third Party
expert) incurred in making such determination will be paid by Supplier, if the
determination is made against Supplier or by Company, if the determination is
made against Company.

11.2 Disposition of Nonconforming Product. In any case where Company makes a
claim against Supplier with respect to damaged or otherwise nonconforming
Product, Company shall not dispose of such Product without written authorization
and instructions of Supplier either to dispose of the Product or to return the
Product to Supplier.

ARTICLE 12

INDEMNIFICATION AND INSURANCE

12.1 Indemnification by Company. Company shall indemnify, defend and hold
Supplier, its Affiliates and their respective directors, officers, employees,
agents, successors and assigns, harmless from and against any damages,
judgments, claims, suits, actions, liabilities, costs and expenses (including,
but not limited to, reasonable attorneys’ fees) resulting from any Third Party
claims or suits or government investigations arising out of: (i) the use,
handling, distribution, marketing or sale of any Finished Product;
(ii) Company’s breach of this Agreement; or (iii) Company’s negligent act or
omissions or willful misconduct (in each case except to the extent caused by
Supplier’s breach of this Agreement, or its negligent acts or omissions or
willful misconduct).

12.2 Indemnification by Supplier. Supplier shall indemnify, defend and hold
Company, its Affiliates and their respective directors, officers, employees,
agents, successors and assigns harmless from and against any damages, judgments,
claims, suits, actions, liabilities, costs and expenses (including, but not
limited to reasonable attorneys’ fees) resulting from any Third Party claims or
suits or government investigations arising out of either: (i) Supplier’s breach
of this Agreement or (ii) Supplier’s negligent acts or omissions or willful
misconduct (in each case except to the extent caused by Company’s breach of this
Agreement, or its negligent acts or omissions or willful misconduct); provided
however that any Third Party claim or suit regarding any of the *** shall be
governed by Section 12.7.

 

API Supply Agreement – EXECUTION VERSION   16  

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12.3 Indemnification Procedures. A Party (the “Indemnitee”) which intends to
claim indemnification under this Article 12 shall promptly notify the other
Party (the “Indemnitor”) in writing of any action, claim or other matter in
respect of which the Indemnitee or any of its Affiliates, or any of their
respective directors, officers, employees or agents intend to claim such
indemnification providing reasonable details of the nature of the event and
basis of the indemnity claim and further expressly stating therein that it is
seeking indemnity pursuant to this Agreement. For the avoidance of doubt, and
without prejudice to the Indemnitee’s obligation to give prompt written notice,
an Indemnitor’s knowledge of events or circumstances pursuant to which an
Indemnitee might seek indemnification, including but not limited to
correspondence between the Parties regarding a matter but for which indemnity is
not expressly sought, shall not constitute the notice required by this
provision, and any attorneys, experts or consultant fees or expenses incurred by
an Indemnitee prior to proper notice shall be the sole responsibility of such
Party; provided that the failure to provide such notice within a reasonable
period of time shall not relieve the Indemnitor of any of its obligations
hereunder except to the extent the Indemnitor is prejudiced by such failure. The
Indemnitee, its Affiliates, and their respective directors, officers, employees
and agents shall cooperate fully with the Indemnitor and its legal
representatives in the investigation, negotiation, settlement and defense of any
action, claim or other matter covered by this indemnification. The Indemnitor
shall control any such investigation, negotiation, settlement and defense, and
shall have the right to select counsel with respect thereto, provided that the
Indemnitor shall promptly notify the Indemnitee of all developments in the
matter. In no event shall the Indemnitor or Indemnitee settle any such matter
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed; nor shall the non-consenting Party be bound by
any such settlement provided, however, that the Indemnitor shall have no
obligation to obtain the consent to any settlement that does not impose on the
Indemnitee any liability or obligation. The Indemnitee shall have the right, but
not the obligation, to be represented by counsel of its own selection at its own
expense.

12.4 Limitation of Liability and Claims. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES, INCLUDING, BUT NOT LIMITED TO, ANY CLAIM FOR DAMAGES BASED UPON LOST
PROFITS OR LOST BUSINESS OPPORTUNITY, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE,
TORT, STRICT LIABILITY OR OTHERWISE EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY THEREOF, EXCEPT TO THE EXTENT THAT SUCH DAMAGES ARE AWARDED TO A
THIRD PARTY IN A CLAIM AGAINST AN INDEMNITEE FOR WHICH AN INDEMNITOR IS
RESPONSIBLE FOR INDEMNIFICATION HEREUNDER AND FOR WHICH THE INDEMNIFICATION
PROCEDURES WERE PROPERLY FOLLOWED BY INDEMNITEE. IN NO EVENT SHALL SUPPLIER’S
MAXIMUM LIABILITY TO COMPANY UNDER THIS AGREEMENT, INCLUDING ANY AND ALL RECALL
OR INDEMNITY OBLIGATIONS EXCEED *** ($***).

12.5 Insurance. Each Party shall maintain during the performance of this
Agreement the following insurance or self-insurance in amounts no less than that
specified for each type:

(a) General liability insurance with combined limits of not less than $*** per
occurrence and $*** per accident for bodily injury, including death, and
property damage;

 

API Supply Agreement – EXECUTION VERSION   17  

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(b) Worker’s compensation insurance in the amounts required by the law of the
state(s) in which such Party’s workers are located and employer’s liability
insurance with limits of not less than $*** per occurrence;

(c) In the event that the use of a Supplier-owned motor vehicle is required in
the performance of this Agreement, automobile liability insurance with combined
limits of not less than $*** per occurrence and $*** per accident for bodily
injury, including death, and property damage is required; and

(d) Product liability insurance with limits not less than $***.

12.6 Evidence of Insurance. Each Party shall provide the other with evidence of
its insurance. Each Party shall provide to the other thirty (30) days, prior
written notice of any cancellation or change in its coverage.

12.7 Special Provision regarding Scheduled Patents.

(a) Notwithstanding anything to the contrary in this Article 12, Supplier shall
defend Company and its directors, officers, employees, agents, successors and
assigns against any Third Party claims or suits brought with respect to any of
the *** to Company by Supplier hereunder or ***. In the event of such a Third
Party claim or action, Company shall promptly notify Supplier in writing
thereof. Supplier shall control the investigation, negotiation, settlement and
defense, and shall have the right to select counsel with respect thereto.
Company shall have the right, but not the obligation, to be represented by
counsel of its own selection provided that it shall be solely responsible for
any attorneys fees or expenses incurred by it. Company and its directors,
officers, employees and agents shall cooperate fully, at their own expense, with
Supplier and its legal representatives in the investigation, negotiation,
settlement and defense of any claim or suit covered by this Section 12.7. In no
event shall Supplier settle any such matter without the prior written consent of
Company, which consent shall not be unreasonably withheld or delayed; provided,
however, that Supplier shall have no obligation to obtain the consent to any
settlement that does not impose on Company any liability or obligation. Company
shall have the right, but not the obligation, to take over control of the
investigation, negotiation, settlement and defense, and to select counsel with
respect thereto. If Company exercises its right to take such control, Supplier
shall be relieved of its indemnity obligations provided for under this
Section 12.7(a).

(b) Upon Supplier’s written request, Company shall diligently cooperate with
Supplier to *** *** in accordance with ***.

(c) During such time as the negotiations or defense of any suit or claim under
this Section 12.7 is pursued, Supplier shall, at Company’s written request,
continue to supply *** under the *** to Company as provided for in this
Agreement for so long as Supplier continues ***. Any decision by Company to
incorporate such *** ***, and any damages, losses, expenses or judgments with
respect thereto arising from claims or suits related to any of the *** shall be
at the sole risk and liability of Company except that, notwithstanding
Supplier’s belief in Section 8.1(c), Supplier shall be responsible for the
initial *** ($***) (inclusive of any costs and expenses (including, but not
limited to, reasonable attorneys’ fees) incurred by Supplier in the defense of
such claims or suits) of any such liability imposed upon Company.

 

API Supply Agreement – EXECUTION VERSION   18  

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(d) In the event that Supplier determines to cease *** under the ***, Supplier
shall give Company not less than twelve (12) months advance written notice
thereof, to the extent practical and allowed by law, and each Party’s rights and
obligations with respect to *** under this Agreement shall terminate on the
specified date.

ARTICLE 13

CONFIDENTIALITY

13.1 Each of Company and Supplier agrees not to publish, disclose or use for any
purpose other than its performance hereunder any of the other Party’s
confidential or proprietary information, including, without limitation,
information stored on audio or video tapes and disks, or information or
knowledge visually acquired by or generated by Company or Supplier personnel in
the form of written notes and memoranda memorializing information or knowledge
acquired visually, aurally or orally as might be the case, in the course, for
example, of one Party’s inspection of the other’s Manufacturing or Product
records (collectively, “Confidential Information”).

13.2 Each Party shall limit disclosure of Confidential Information received
hereunder to only those of its (or its Affiliates’) officers and employees who
are directly concerned with the performance of this Agreement. Each Party shall
advise such officers or employees upon disclosure of any Confidential
Information to them of the confidential nature of the Confidential Information
and the terms and conditions of this Article 13, and shall use all reasonable
safeguards to prevent unauthorized disclosure of the Confidential Information by
such officers and employees.

13.3 Both Parties agree that the following shall not be considered Confidential
Information subject to this Agreement:

 

  (a) information that is in the public domain by publication or otherwise,
provided that such publication is not in violation of this Agreement or any
other confidentiality agreement;

 

  (b) information that the receiving Party can establish in writing was in the
receiving Party’s possession prior to the time of disclosure by the disclosing
Party and was not acquired, directly or indirectly, from the disclosing Party;

 

  (c) information that the receiving Party lawfully receives from a Third Party;
provided that such Third Party was not obligated to hold such information in
confidence; and

 

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  (d) information that, prior to the disclosing Party’s disclosure thereof, was
independently developed by the receiving Party without reference to any
Confidential Information as established by appropriate documentation;

Notwithstanding the foregoing, a Party may disclose Confidential Information
that the receiving Party is compelled to disclose by a court, administrative
agency, or other tribunal; provided that in such case the receiving Party shall
immediately give as much advance notice as feasible to the disclosing Party to
enable the disclosing Party to exercise its legal rights to prevent and/or limit
such disclosure. In any event, the receiving Party shall disclose only that
portion of the Confidential Information that, in the opinion of the receiving
Party’s legal counsel, is legally required to be disclosed and will exercise
reasonable commercial efforts to ensure that any such information so disclosed
will be accorded confidential treatment by said court, administrative agency or
tribunal.

13.4 All Confidential Information shall remain the property of the disclosing
Party. At the termination of this Agreement upon the request of the disclosing
Party, a receiving Party shall immediately return or destroy any of the other
Party’s Confidential Information in its possession, custody or control, except
that it may keep one (1) copy for archival purposes.

13.5 Each Party acknowledges and expressly agrees that the remedy at law for any
breach by it of the terms of this Article 13 may be inadequate and that the full
amount of damages which would result from such breach may not be readily
susceptible to being measured in monetary terms. Accordingly, in the event of a
breach or threatened breach by either Party of this Article 13, the other Party
shall be entitled to seek immediate injunctive relief prohibiting any such
breach and requiring the immediate return of all Confidential Information. The
remedies set forth in this Section 13.5 shall be in addition to any other
remedies available for any such breach or threatened breach, including the
recovery of damages from the breaching Party.

13.6 The terms and conditions of this Agreement, but not the fact of its
existence, shall constitute Confidential Information of the Parties, except that
either Party may disclose such terms and conditions to its Affiliates in
accordance with Section 13.2 hereof and to the extent required by a Party’s
obligations to any Governmental Agency under Applicable Law.

ARTICLE 14

FORCE MAJEURE

14.1 Effects of Force Majeure. Neither Party shall be held liable or responsible
for failure or delay in fulfilling or performing any of its obligations under
this Agreement in case such failure or delay is due to any condition beyond the
reasonable control of the affected Party including, without limitation, Acts of
God, Government/FDA actions or guidance, strikes or other labor disputes, war,
riot, earthquake, tornado, hurricane, fire, civil disorder, explosion, accident,
flood, sabotage, lack of or inability to obtain adequate fuel, power, materials,
labor, containers, transportation, supplies or equipment, breakage or failure of
machinery or apparatus,

 

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national defense requirements, or supplier strike, lockout or injunction (a
“Force Majeure Event”). Such excuse shall continue as long as the Force Majeure
Event continues, provided that Company may cancel without penalty affected
Purchase Orders in the event Supplier is unable to fulfill an outstanding
Purchase Order within ninety (90) days of its scheduled Delivery Date due to a
Force Majeure Event. Upon cessation of such Force Majeure Event, Supplier shall
promptly resume performance on all Purchase Orders which have not been
terminated.

14.2 Notice of Force Majeure Event. In the event either Party is delayed or
rendered unable to perform due to a Force Majeure Event, the affected Party
shall give notice thereof and its expected duration to the other Party promptly
after the occurrence of the Force Majeure Event; and thereafter, the obligations
of the affected Party will be suspended during the continuance of the Force
Majeure Event. The affected Party shall take commercially reasonable steps to
remedy the Force Majeure Event with all reasonable dispatch, but such obligation
shall not require the settlement of strikes or labor controversies on terms
unfavorable to the affected Party.

ARTICLE 15

MANUFACTURING QUOTA AND PROCUREMENT QUOTA

15.1 Manufacturing Quota. It is the sole responsibility of Supplier, and
Supplier shall use commercially reasonable efforts, to obtain Manufacturing
Quota for Products provided that Company shall reasonably cooperate with the
Supplier to assist Supplier in obtaining Manufacturing Quota.

15.2 Procurement Quota. It is the sole responsibility of Company, and Company
shall use commercially reasonable efforts, to obtain Procurement Quota for
Products provided that Supplier shall reasonably cooperate with Company to
assist Company in obtaining Procurement Quota.

15.3 Failure to Obtain Quota. Each Party shall use commercially reasonable
efforts to prepare and plan for the supply and purchase of Product against
Purchase Orders given in accordance with the Rolling Forecasts in anticipation
of each Party receiving applicable quota from the DEA. However, in the event
that a Party has not obtained the necessary Manufacturing Quota or Procurement
Quota, as the case may be, to allow it to perform its obligations under this
Agreement, such Party shall immediately inform the other Party in writing. In
the event that there is not sufficient Manufacturing Quota or Procurement Quota
with respect to a Purchase Order for a Product at the time such Purchase Order
is delivered by the Company to Supplier pursuant to Article 5, the Parties shall
promptly meet to discuss the prospects and timing of receipt of necessary
Manufacturing Quota or Procurement Quota, as the case may be. Until such time as
the necessary Manufacturing Quota or Procurement Quota has been received, ***.
Each Party shall keep the other advised of developments with respect to the
receipt of the necessary quota. As soon as pending Procurement Quota or
Manufacturing Quota is in fact received, the receiving Party shall promptly
notify the other Party, and the Parties shall promptly meet to coordinate on an
Delivery Date for such Product. Notwithstanding the foregoing, in the event that
the pending Manufacturing Quota or Procurement Quota is not received (*** of the

 

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applicable Purchase Order, then the Party not experiencing the quota deficit
with respect to such Purchase Order may, but is not required to, *** to the
other Party (e.g. the Party which has been unable to obtain quota). The effect
of such *** shall be that each Party’s obligations with respect to purchase and
supply of Product under that specific Purchase Order is *** (it being understood
that (A) Company shall not be *** in the event that Company was unable to obtain
Procurement Quota and (b) Company’s minimum purchase requirement will be *** if
Supplier fails to secure Manufacturing Quota).

ARTICLE 16

PRESS RELEASES; USE OF NAMES

16.1 Press Releases. Any press release, publicity or other form of public
written disclosure related to this Agreement prepared by one Party shall be
submitted to the other Party prior to release for approval, which approval shall
not be unreasonably withheld or delayed by such other Party; provided that
Company and Supplier may announce the signing of this Agreement in their
quarterly results release and in any other filing such Party is required to make
under Applicable Laws without prior approval.

16.2 Use of Names. Except as expressly provided or contemplated hereunder and
except as otherwise required by Applicable Law, no right is granted pursuant to
this Agreement to either Party to use in any manner the trademarks or name of
the other Party, or any other trade name, service mark, or trademark owned by or
licensed to the other Party in connection with the performance of this
Agreement. Notwithstanding the above, as may be required by Applicable Law,
Company, Supplier and their respective Affiliates shall be permitted to use the
other Party’s name and to disclose the existence and terms of this Agreement in
connection with securities or other required filings under Applicable Law.

ARTICLE 17

DISPUTE RESOLUTION; VENUE

17.1 Dispute Resolution.

The Parties recognize that a bona fide dispute may from time to time arise while
this Agreement is in effect which relates to either Party’s rights and/or
obligations hereunder. In the event of the occurrence of such a dispute, either
Party may, by notice to the other Party, have such dispute referred to their
senior officers as may be designated by each Party for attempted resolution by
good faith negotiations within thirty (30) days after such notice is received.
In the event the designated officers are not able to resolve such dispute within
such thirty (30) day period, or such other period of time as the Parties may
mutually agree in writing, then such dispute shall be resolved as follows:

(a) Any controversy or claim arising out of or relating to this Agreement,
including any such controversy or claim involving the parent company,
subsidiaries, or affiliates under common control of any Party (a “Dispute”),
shall first be submitted to mediation according to the Commercial Mediation
Procedures of the American Arbitration Association (“AAA”) (see www.adr.org).
Such mediation shall be attended on behalf of each Party for at least one
session by a senior business person with authority to resolve the Dispute. Any
period of limitations that would otherwise expire between the initiation of a
mediation and its conclusion shall be extended until 20 days after the
conclusion of the mediation.

 

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(b) Any Dispute that cannot be resolved by mediation within 45 days of notice by
one Party to the other of the existence of a Dispute (unless the parties agree
to extend that period) shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the AAA (“AAA Rules”; see www.adr.org) and the
Federal Arbitration Act, 9 U.S.C. §1 et seq. The arbitration shall be conducted
in New Jersey, by a three (3) person arbitration panel, one (1) of which shall
be appointed by Company, one (1) of which shall be appointed by Supplier and one
(1) of which shall be appointed in accordance with the AAA Rules.

(c) The arbitrator panel shall follow the ICDR Guidelines for Arbitrators
Concerning Exchanges of Information in managing and ruling on requests for
discovery. Each person on the arbitrator panel, by accepting appointment,
undertakes to exert her or his best efforts to conduct the process so as to
issue an award within eight months of her or his appointment, but failure to
meet that timetable shall not affect the validity of the award.

(d) The arbitrator panel shall decide the Dispute in accordance with the
substantive law of ***. The arbitrator panel may not award punitive or
consequential damages, nor may the arbitrator panel apply any multiplier to any
award of actual damages, except as may be required by statute. The award of the
arbitrator panel may be entered in any court of competent jurisdiction.

ARTICLE 18

MISCELLANEOUS

18.1 Independent Contractors. The relationship between Company and Supplier is
that of independent contractors and nothing herein shall be deemed to constitute
the relationship of partners, joint venturers, nor of principal and agent
between Company and Supplier. Neither Party shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of the other Party or to bind the other Party to any contract, agreement or
undertaking with any Third Party.

18.2 Assignment; Subcontractors. This Agreement may not be assigned or otherwise
transferred by either Party without the prior written consent of the other
Party; provided that either Party may, without such consent, assign this
Agreement: (i) in connection with the transfer or sale of all or substantially
all of the assets of such Party or the line of business of which this

 

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Agreement forms a part; (ii) in the event of the merger or consolidation of a
Party hereto with another; or (iii) to any Affiliate of the assigning Party. Any
purported assignment in violation of the preceding sentence shall be void. Any
permitted assignee shall assume all obligations of its assignor under this
Agreement. No assignment shall relieve either Party of responsibility for the
performance of any obligation which accrued prior to the effective date of such
assignment. Supplier may not use subcontractors to perform any part of this
Agreement without Company’s prior written consent.

18.3 Continuing Obligations. Termination, assignment or expiration of this
Agreement shall not relieve either Party from full performance of any
obligations incurred prior thereto.

18.4 Waiver. Neither Party’s waiver of any breach or failure to enforce any of
the terms and conditions of this Agreement, at any time, shall in any way
affect, limit or waive such Party’s right thereafter to enforce and compel
strict compliance with every term and condition of this Agreement.

18.5 Severability. Each Party hereby expressly agrees that it has no intention
to violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries, and that if any word,
sentence, paragraph, clause or combination thereof in this Agreement is found by
a court or executive body with judicial powers having jurisdiction over this
Agreement or either Party hereto, in a final unappealed order, to be in
violation of any such provisions in any country or community or association of
countries, such words, sentences, paragraphs, clauses or combination shall be
inoperative in such country or community or association of countries and the
remainder of this Agreement shall remain binding upon the Parties, so long as
enforcement of the remainder does not violate the Parties’ overall intentions in
this transaction.

18.6 Exhibits, Schedules and Attachments. Any and all exhibits, schedules and
attachments referred to herein form an integral part of this Agreement and are
incorporated into this Agreement by such reference.

18.7 Notices. All notices and other communications required or permitted to be
given under this Agreement shall be in writing and shall be delivered personally
or sent by: (i) registered or certified mail, return receipt requested; (ii) a
nationally-recognized courier service guaranteeing next-day delivery, charges
prepaid; or (iii) facsimile (with the original promptly sent by any of the
foregoing manners), and shall be deemed to have been given upon mailing or upon
transmission by facsimile, as the case may be. Any such notices shall be
addressed to the receiving Party at such Party’s address set forth below, or at
such other address as may from time to time be furnished by similar notice by
either Party.

 

If to Supplier:    Noramco, Inc.    500 Swedes Landing Road    Wilmington, DE
19801    Attn: Vice President Sales and Marketing    Phone No.: ***    Facsimile
No.:***

 

API Supply Agreement – EXECUTION VERSION   24  

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If to Company:    Endo Pharmaceuticals Inc.    100 Endo Boulevard    Chadds
Ford, PA 19317    Attn: Chief Legal Officer    Phone No.: (610) 558-9800   
Facsimile No.: (610) 558-9682

18.8 Counterparts. This Agreement and any amendment or supplement hereto may be
executed in any number of counterparts and any Party hereto may execute any such
counterpart, each of which when executed and delivered shall be deemed to be an
original and all of which counterparts taken together shall constitute but one
and the same instrument. The execution of this Agreement and any such amendment
or supplement by any Party hereto will not become effective until counterparts
hereof have been executed by both Parties hereto.

18.9 Governing Law; Entire Agreement. The validity, interpretation and
performance of this Agreement shall be governed and construed in accordance with
the laws of the State of New York without regard to the conflicts of laws
provisions thereof. This Agreement constitutes the full understanding of the
Parties and a complete and exclusive statement of the terms of their agreement.
No terms, conditions, understanding, or agreement purporting to modify or vary
the terms of this Agreement shall be binding unless hereafter made in writing
and signed by the Party to be bound. No modification to this Agreement shall be
effected by any Purchase Order, the acknowledgement or acceptance of any
Purchase Order or shipping instruction forms or similar documents provided by
either Party containing terms or conditions at variance with or in addition to
those set forth herein.

18.10 Additional Company Entities. Subsequent to the Effective Date, if a new
Affiliate of the Company is to participate in the Agreement, and both Company
and Supplier agree that such Affiliate may become a participating affiliate
(each a “Participating Affiliate”), such Affiliate and Supplier will complete a
Participation Agreement for the new entity in form attached hereto as Exhibit 4.

18.11 Exhibits/Schedules. The following Exhibits and Schedules are attached
hereto and incorporated herein by reference:

 

  Schedule A:   Products   Exhibit 1:   Product Prices   Exhibit 2:   Quality
Agreement   Exhibit 3:   Specifications and Cover Page thereto   Exhibit 4:  
Initial Affiliates as Parties to the Agreement and Participation Agreement  
Exhibit 5:   Key Performance Indicators

[Signature Page Follows]

 

API Supply Agreement – EXECUTION VERSION   25  

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized representative as of the Effective Date.

 

ENDO PHARMACEUTICALS INC.     NORAMCO, INC. BY:  

/s/ David Holveck

    By:  

/s/ Leslie Storms

Title:  

President and CEO

    Title:  

Vice President, Global Sales

Date:  

April 27, 2012

    Date:  

April 27, 2012

 

API Supply Agreement – EXECUTION VERSION   26  

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Schedule A

***

 

API Supply Agreement – EXECUTION VERSION

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EXHIBIT 1

PRODUCT PRICES

 

PRODUCT PRICES

   Annualized Volume
(kg.)    Price ($/kg.) ****    ***    ***    ***    ***    ***    *** ***    ***
   ***    ***    ***    ***    *** ***    ***    ***    ***    ***    ***    ***
***    ***    ***    ***    ***    ***    *** ****    ***    ***    ***    ***
   ***    ***    ***    ***    ***    ***

***

ADDENDUM A TO EXHIBIT 1

PURCHASING REQUIREMENT

Pending the necessary qualifications of each respective Product by Supplier,
Company makes the following purchasing commitment and Supplier makes the
following supply commitment in each case subject to the terms and conditions of
the Agreement:

***

All percentage share requirements are calculated based on all of Company and all
of its Affiliates ***, including *** made available for sale after the Effective
Date (provided however that in the event that Supplier declines to permit a new
Affiliate subsequent to the Effective Date of the Agreement to become a
Participating Affiliate, then such percentage share calculation shall not
include *** of such new Affiliate).

 

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EXHIBIT 2

QUALITY AGREEMENT

Quality Agreement are those set forth in the Responsibility Matrix of GMP
relevant Activities and the Responsibility Matrix of other Compliance Activities
of the quality agreement Version 2009-04-02 between Vintage Pharmaceuticals and
Supplier except that the Company and its Affiliates listed in Exhibit 4 (and
Participating Affiliates added pursuant to Section 18.10) shall be understood as
the Contract Giver (CG) and that an updated list of Responsible Contact Persons
shall be promptly exchanged.

Notwithstanding any of the foregoing, Company and Supplier hereby agree that a
new Quality Agreement shall be executed between the Parties within thirty
(30) days of the Effective Date and that upon execution of such Quality
Agreement, the agreement referenced above will have no further force and effect
and will be superseded in its entirety by such agreement.

 

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EXHIBIT 3

SPECIFICATIONS

***

 

API Supply Agreement – EXECUTION VERSION

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EXHIBIT 4

Affiliates and subsidiaries as of the Effective Date that are parties to the
Agreement

• Vintage Pharmaceuticals, LLC d/b/a Qualitest Pharmaceuticals

 

 

PARTICIPATION AGREEMENT FOR NEW AFFILIATES

Endo Pharmaceuticals Inc. (“Company”), and Noramco, Inc. (“Supplier”) entered
into a Supply Agreement, effective as of April 27, 2012 (the “Agreement”). The
terms of the Agreement permit the Company and Supplier to agree to extend the
benefits and obligations of the Agreement to new Affiliates (as defined therein)
and to become a Participating Affiliate (as defined therein). The undersigned is
a new Affiliate of Company and desires to participate under the Agreement as a
Participating Affiliate.

Each party agrees that any existing agreement for the supply of Product (as
defined in the Agreement) between Supplier and Participating Affiliate will be
terminated effective as of                     .

Thereafter, the purchase and sale of Products as between Supplier and the
Participating Affiliate and Supplier will be governed by the terms of the
Agreement.

By signing below, the parties have executed this Participation Agreement on
    day of                    .

 

Undersigned Company Name:  

 

  Signed by:  

 

  Title:  

 

  NORAMCO, INC.  

 

  Signed by:  

 

  Title:  

 

 

 

API Supply Agreement – EXECUTION VERSION

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EXHIBIT 5

***

 

Metric

   Key Performance
Indicator   

Agreed Target

     ***    ***    ***    *** ***    ***    ***    *** ***    ***    ***    ***
***    ***    ***    *** ***    ***    ***    *** ***    ***    ***    *** ***
   ***    ***    *** ***    ***    ***    *** ***    ***    ***    *** ***   
***    ***    *** ***    ***    ***    ***

 

  

***

  

***

  

***

  

***

  

***

 

API Supply Agreement – EXECUTION VERSION

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***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

API Supply Agreement – EXECUTION VERSION

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***

 

***

 

***

 

***

 

API Supply Agreement – EXECUTION VERSION