Exhibit 10.25

 

AMENDMENT

 

TO

 

AGREEMENT DATED MARCH 23, 2004 BY AND BETWEEN

 

LANNETT COMPANY, INC. AND

 

JEROME STEVENS PHARMACEUTICALS, INC.

 

This AMENDMENT to the Supply Agreement (“Amendment”) is entered into as of this
19th day of August, 2013, by and between LANNETT COMPANY, INC., a Delaware
corporation with offices located at 13200 Townsend Road, Philadelphia,
Pennsylvania 19154 (“LCI”), and JEROME STEVENS PHARMACEUTICALS, INC., a New York
corporation with offices located at 60 DaVinci Drive, Bohemia, New York 11716
(“JSP”).

 

BACKGROUND

 

WHEREAS, LCI and JSP entered into a Supply Agreement, dated March 23, 2004 (the
“Agreement”), pursuant to which JSP agreed to provide LCI with Butalbital with
Aspirin, Caffeine and Codeine Phosphate capsules (“BACC”), Digoxin tablets
(“Digoxin”) and Levothyroxine Sodium tablets, as defined in the latest edition
of United States Pharmacopeia, sold under the generic name and the brand name
“Unithroid” (“Levothyroxine”) (collectively, the “JSP Products”).  (All
capitalized terms used and not defined herein will have the meanings given to
them in the Agreement.)

 

WHEREAS, the parties now desire to enter into this Amendment to set forth
certain changes to and modifications of the terms and conditions contained in
the Agreement.

 

NOW, THEREFORE, in consideration of the valuable consideration set forth herein,
the sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.                                      Term.  Paragraph 2 of the Agreement,
entitled “Term”, is hereby amended by adding the following at the end thereof:

 

Following the expiration of the initial ten-year term, the term of this
Agreement shall be extended for five (5) years, continuing through March 23,
2019 (the “Initial Renewal Term”).  In addition, the parties agree to discuss a
mutual extension, to renew this Agreement for an additional five (5) years,
continuing through March 23, 2024 (the “Second Renewal Term”). (The Initial
Renewal Term and Second Renewal Term, if exercised, will be collectively
referred to as the “Renewal Term”).

 

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2.             Initial Minimum Purchase Order Volumes.  Paragraph 5 of the
Agreement, entitled “Initial Minimum Purchase Order Volumes”, shall not apply to
the First Renewal Term and, if it takes effect, the Second Renewal Term.  In its
place shall be an obligation for LCI to purchase from JSP a minimum of $1.0
Million of BACC capsules, a minimum of $25.0 Million of Levothyroxine Sodium
tablets, and a minimum of $ 5.0 Million of Digoxin tablets, in the aggregate,
during each year of the First Renewal Term and, if it takes effect, the Second
Renewal Term.

 

In the event that such minimum purchase requirements are not met for any one or
more JSP Product in any given year, JSP reserves the right to reclaim the
product marketing and distribution rights for such JSP Product and LCI agrees to
transition such business to JSP.  For clarity, the parties agree that JSP will
not have the right or ability to reclaim any JSP Product for which LCI meets the
above minimum purchase requirements.

 

3.             Joint Sales Meetings.  Every three (3) months (quarterly) during
the First Renewal Term and, if it takes effect, the Second Renewal Term, the
relevant JSP and LCI staff will conduct a joint evaluation of sales during the
prior quarter, with the intention of renewing or evaluating the level of
purchasing currently in place for the trailing twelve months. Should the need
arise, this meeting shall also be used to arrange to transition the JSP products
back to JSP.  Such transition shall include LCI using its best efforts to obtain
written consent of customers to transfer to JSP any agreements and any of LCI’s
rights or obligations under such agreements should Lannett decided not to renew
or if JSP and LCI are unable to agree on terms for the Second Renewal Term.

 

4.             Consideration.  Paragraph 11 of the Agreement, entitled
“Consideration”, shall not apply to the First Renewal Term and, if it takes
effect, the Second Renewal Term.  In lieu thereof, the parties agree, that: 
(a)  LCI shall issue to JSP (or its nominee(s)) one million five hundred
thousand (1,500,000) shares of restricted common stock of LCI (“LCI Shares”)
effective as of the date of this Amendment; and (b)  if the Second Renewal Term
should take effect, LCI shall issue to JSP (or its nominee(s)) one million five
hundred thousand (1,500,000) shares of restricted common stock of LCI as of the
effective date of the Second Renewal Term (i.e., March 24, 2019). Such shares of
common stock shall be delivered free and clear of all lien and/or encumbrances,
with all required transfer taxes, if any, paid or provided for.

 

5.             Restrictions on Transfer of Shares.  JSP agrees, on behalf of
itself and all nominee(s) who receive any LCI Shares (collectively, the
“Nominees”), that, until after March 24, 2014, neither it nor they shall,
directly or indirectly, without the prior written approval of LCI:  (a) offer,
sell, assign, transfer, pledge, contract to sell, or otherwise dispose of any of
the LCI Shares issued under Section 4(a) above (the “First Renewal

 

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Shares”); (b) enter into any swap, hedge or other agreement or arrangement that
transfers in whole or in part, the economic risk of ownership of any of the
First Renewal Shares; or (c) engage in any short selling of any of the First
Renewal Shares. Each Certificate issued with respect to the LCI Shares shall
include an appropriate legend with regard to the restrictions set forth in this
Section.  Such Certificates may be re-issued after March 24, 2014 without such
legend.

 

6.             Proxy.  JSP, on behalf of itself and all Nominees, hereby
irrevocably grants to Arthur Bedrosian, as the President and Chief Executive
Officer of LCI (“Bedrosian”), and appoints Bedrosian (with full power of
substitution) as its and their irrevocable proxy to vote, abstain from voting,
execute and deliver written consents, and/or take any other action whatsoever in
respect of the LCI Shares during the period of time between the date of this
Amendment and March 24, 2014, as fully, to the same extent and with the same
effect as JSP and the Nominees might or could do under applicable law.  This
proxy may be exercised by Bedrosian on any one or more occasions.  JSP, on
behalf of itself and all Nominees, hereby further affirms that this irrevocable
proxy is coupled with an interest and may under no circumstances be revoked.
JSP, on behalf of itself and all Nominees, ratifies and confirms all that
Bedrosian may lawfully do or cause to be done by virtue hereof.  This proxy
shall expire on March 25, 2014.

 

7.             Separate Documents for Nominees.  If requested by LCI, each of
the Nominees shall be required to sign and deliver to LCI, as a condition
precedent to their receipt of Certificates evidencing their portion of the LCI
Shares, a document affirming their agreement to be bound by Sections 5 and 6
above, including, but not limited to, an irrevocable proxy in a form acceptable
to LCI.

 

8.             Return of Unithroid.  The parties will continue to negotiate the
nature, form and process for the return of the Unithroid brand name for further
sales by JSP at brand prices.  It is understood that the price differences
between the resale of JSP manufactured Levothyroxine Sodium sold under LCI’s
label will not be in conflict with the selling price of Unithroid sold at brand
prices by JSP or others.  All branding opportunities developed by LCI for the
Unithroid brand will be transferred to JSP.  The parties agree to use their best
efforts to finalize such negotiations by no later than December 31, 2013.

 

9.             Non-Compete Covenant.  For the duration of the First Renewal Term
and, if it takes effect, the Second Renewal Term, LCI agrees not to submit any
applications to the U.S. Food and Drug Administration for any of the JSP
Products or to distribute to its customers any products that compete with any of
the JSP Products, nor to enter into any agreement with a third party to
distribute the JSP Products from a competing source.

 

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10.          Sale of Business.  If, during the First Renewal Term and, if it
takes effect, the Second Renewal Term, LCI enters into any negotiations for the
sale of LCI, LCI will notify JSP so that preparations can be taken and options
can be considered.

 

11.          Repackaging.  LCI agrees to use commercially reasonable efforts to
identify and qualify any of its customers that indicate to LCI that they intend
to repack or repackage any of the JSP Products.

 

12.          Notices.  The last sentence of Paragraph 11 of the Agreement is
hereby deleted and replaced with the following:

 

A copy of any notice sent to LCI shall also be sent to:

 

Samuel H. Israel, Esquire

Fox Rothschild LLP

2000 Market Street

20th Floor

Philadelphia, PA 19103

 

13.          Agreement.  Unless the context clearly indicates otherwise, all
references to the term “Agreement” contained in the Agreement and/or this
Amendment will mean the Agreement as amended hereby.

 

14.          Counterparts.  This Amendment may be executed in counterparts, each
of which will be deemed an original, but all of which together will constitute
one and the same instrument.

 

15.          Miscellaneous.  All terms and provisions of the Agreement that are
not expressly amended or modified by this Amendment will remain in full force
and effect. In the event of any conflict between any of the terms of the
Agreement and the terms of this Amendment, the terms of this Amendment will
control.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
effective as of the date first indicated above.

 

LANNETT COMPANY, INC.

 

 

 

 

 

 

By:

/s/ Arthur Bedrosian

 

 

Arthur Bedrosian, President & CEO

 

 

 

 

 

JEROME STEVENS PHARMACEUTICALS, INC.

 

 

 

By:

/s/ Jerome Steinlauf

 

 

Jerome Steinlauf, President

 

 

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