Exhibit 10.89

Portions of this exhibit marked [*] are omitted and

are requested to be treated confidentially.

Execution Copy

 

 

 

SUPPLY AGREEMENT

BETWEEN

Q-MED SCANDINAVIA INC.

AND

Q-MED AB

 

 

 

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SUPPLY AGREEMENT

This Supply Agreement (this “Agreement”) is entered into as of June 2, 2009
between Q-MED SCANDINAVIA INC., a corporation organized under the laws of
Delaware (“QMS”), and Q-MED AB, a company organized under the laws of the
Kingdom of Sweden with corporate registration number 556258-6882 (“Q-Med”). Each
of Q-Med and QMS shall be referred to herein as a “Party” and collectively as
the “Parties.”

BACKGROUND

QMS has been granted, pursuant to the License Agreement (as defined herein),
rights to sell the Licensed Products (as defined in the License Agreement),
including the Deflux® and Solesta® Products (as defined in the License
Agreement). In connection with entering into the License Agreement, Q-Med has
agreed to supply QMS and its Affiliates and Sublicensees (each as defined in the
License Agreement) with the Licensed Products, and Q-Med and QMS desire to
define in this Agreement their respective rights and obligations with regard to
the supply of the Licensed Products.

The Parties agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. For the purposes of this Agreement, the following words and
phrases shall have the following meanings and all other capitalized and
undefined terms shall have the meanings set forth in the License Agreement:

“Agreement” means this Agreement and all schedules and exhibits attached hereto,
as the same may be amended or supplemented from time to time in accordance with
the terms hereof.

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“Clinical Testing Products” means any Licensed Product to be used in clinical
trials to support Regulatory Approval or for other pre- or post-market studies
in the Territory, approved by the JSC and having the Specifications set forth in
the applicable IDE, PMA Application or Regulatory Approval.

“Deflux Product” means the product as specifically described on Schedule B
hereto, as Schedule B may be amended from time to time in accordance with
Section 2.3 of this Agreement.

“Delivery of Licensed Products to QMS” or similar wording means the point in
time when Licensed Products are delivered to QMS or its agent at the Facility or
any New Facility.

“Effective Date” means the date of the consummation of the transactions set
forth in that certain Stock Purchase Agreement, dated April 22, 2009, entered
into between Q-Med and Oceana Therapeutics, LLC.

“Facility” means Q-Med’s facilities located in Uppsala, Sweden, used in
connection with the Manufacturing activities.

“Firm Order” means an irrevocable purchase order for Licensed Products that
shall set forth (a) the quantity of each article number of each Licensed Product
ordered (indicating separate quantities for each label and each Unit size) on a
monthly basis, and (b) a delivery schedule specifying the monthly delivery date
for each Licensed Product ordered and the shipment destination(s), as submitted
in each Forecast in accordance with Section 2.2(a).

 

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“Full Manufacturing Costs” means Q-Med’s Manufacturing costs as determined by
reference to Q-Med’s standard operating and accounting procedures.

“GMP” means current Good Manufacturing Practices applicable to the Manufacture
of a Licensed Product that are promulgated or otherwise established by any
Governmental Authority, including those set forth in the FDA’s Quality System
Regulations in 21 C.F.R. Part 820 and any requirements imposed thereunder by the
FDA or in any FDA guidance applicable to Q-Med.

“Ireland License Agreement” means the License Agreement, dated as of the date
hereof, by and between Q-Med and Cetacea Limited (“Ireland”).

“Ireland Supply Agreement” means the Supply Agreement, dated as of the date
hereof, by and between Q-Med and Ireland.

“Labeling” means all labels and other written, printed or graphic material upon
or included with any Licensed Product or any of its containers or wrappers
accompanying such Licensed Product, including package leaflets, instructions for
use and package inserts and training materials developed by Q-Med.

“Manufacture” and “Manufacturing” and other forms of such words means the
manufacturing, processing, filling, handling, storage, packaging and quality
control testing (including in-process, raw materials, component, manufacturing
product release and stability testing) of Licensed Products.

 

3

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“Person” means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture or other entity or organization.

“QMS Purchasers” means QMS and any of its Affiliates and their permitted
Sublicensees.

“QMS License Agreement” means the License Agreement, dated as of the date
hereof, by and between Q-Med and QMS, as may be amended from time to time in
accordance with the terms thereof.

“Quality Agreement” means the Quality Agreement, dated as of the date hereof, by
and between Q-Med and QMS, allocating responsibilities for certain applicable
quality requirements between the Parties.

“Quality System Regulation” or “QSR” shall mean the quality system requirements
applicable to manufacturers of finished medical devices commercially distributed
in the United States and its territories and possessions, codified at 21 C.F.R.
Part 820.

“Solesta Product” means the product as defined in the License Agreement and more
specifically described on Schedule B hereto, as Schedule B may be amended from
time to time in accordance with Section 2.3 of this Agreement.

“Specifications” means the specifications applicable to the Manufacture of a
Licensed Product, including quality control testing procedures, that are
consistent with the applicable IDE or Regulatory Approval for such Licensed
Product, as may be amended from time to time in accordance with this Agreement,
substantially in the same form and using the same degree of specificity as used
in describing the Solesta Product and the Deflux Product on Schedule B.

 

4

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“Subcontractor” means any Person other than Q-Med or its Affiliates that
performs one or more aspects of the Manufacturing of the Licensed Products.

“Territory” means the United States, its territories and possessions.

“Units” means with respect to (a) the Solesta Product: a package containing four
pre-filled syringes, each containing 1 ml of gel, plus five needles plus a
package insert or instructions for use, or such other definition as the Parties
shall designate in the event of modifications to the Solesta Product hereunder
or pursuant to the License Agreement; (b) the Deflux Product: a package
containing one pre-filled syringe, containing 1 ml of gel, plus a package insert
or instructions for use, or such other definition as the Parties shall designate
in the event of modifications to the Deflux Product hereunder or pursuant to the
License Agreement; and (c) other Licensed Products, such other definition as the
Parties shall designate.

1.1 Interpretation.

(a) Whenever any provision of this Agreement uses the term “including” (or
“includes”), such term shall be deemed to mean “including without limitation” or
“including but not limited to” (or “includes without limitation” and “includes
but is not limited to”) regardless of whether the words “without limitation” or
“but not limited to” actually follow the term “including” (or “includes”);

(b) “Herein,” “hereby,” “hereunder,” “hereof,” and other equivalent words shall
refer to this Agreement as an entirety and not solely to the particular portion
of this Agreement in which any such word is used;

 

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(c) All definitions set forth herein shall be deemed applicable whether the
words defined are used herein in the singular or the plural;

(d) Unless otherwise provided, all references to Sections, Articles, Schedules
and Appendices are to Sections, Articles, Schedules, and Appendices of and to
this Agreement;

(e) All references to days, months, quarters, or years are references to
calendar days, calendar months, calendar quarters, or calendar years unless the
term “Business Days” is used; and

(f) Any reference to any supranational, national, federal, state, local, or
foreign statute or law shall be deemed to also refer to all rules and
regulations promulgated thereunder within any jurisdiction or jurisdictions
subject thereto, unless the context requires otherwise.

ARTICLE II.

SUPPLY OF LICENSED PRODUCT

2.1 Licensed Product to be Supplied. QMS shall, and shall cause QMS Purchasers
to, purchase from Q-Med, and Q-Med shall Manufacture and supply to the QMS
Purchasers, in accordance with the provisions of this Agreement, the
Specifications, GMP and Applicable Laws, all of their requirements for the
Licensed Products for Commercialization and for Projects in the Territory,
subject to the terms of this Agreement. Neither QMS nor any of the QMS
Purchasers shall directly or indirectly purchase from any Person other than
Q-Med (or as authorized under this Agreement) any injectable bulking agent
products for use in the Licensed Field.

 

6

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2.2 Forecasts.

(a) Forecasts and Orders. On or before the last Business Day of each month, QMS
shall provide a forecast of the QMS Purchasers’ estimated monthly requirements
of each commercially available Licensed Product for the [*] period beginning
with the following month (a “Forecast”). Such beginning month of each Forecast
shall be referred to below as “Month 1” and each subsequent month shall be
numbered sequentially. Each Forecast shall include Firm Orders for the quantity
of each Licensed Product set forth in Months [*] of such Forecast. Such Firm
Order for Month [*] shall be for a quantity of each article number of each
Licensed Product (i.e., separate quantities for each label and each Unit) that
is at least [*], but not more than [*] (“Firm Order Maximum Quantities”), of
such quantities of such Licensed Product in the most recent Forecast for such
month. The quantities of each label and Unit for each Licensed Product set forth
in Months [*] of each Forecast shall be at least [*], but not more than [*], of
such quantities of such Licensed Product in the most recent Forecast for such
months. For example, (i) the Forecast submitted on or before [*] shall cover the
period from [*] through [*], (ii) the quantities for each label and each Unit of
each Licensed Product set forth in such Forecast for [*] through [*] shall
constitute Firm Orders, (iii) such quantities set forth for [*] shall be at
least [*], but not more than [*], of such quantities for such month that were
set forth in the Forecast submitted on or before [*], and (iv) such quantities
set forth for [*] through [*] shall be at least [*], but not more than [*], of
such quantities for such months that were set forth in the Forecast submitted on
or before [*]. The quantities of Licensed Product stated in Firm Orders and
conforming to the forecast requirements of this Section 2.2(a) shall be provided
by Q-Med in accordance with the terms of this Agreement.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

7

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(b) Failure to Purchase. If QMS does not submit Firm Orders that are at least
[*] of the applicable forecasted quantity as described in Section 2.2(a), Q-Med
shall deliver to QMS and QMS shall be required to purchase an amount equal to
[*] of such applicable forecasted quantity.

(c) Additional Quantities. QMS shall be entitled to place orders in excess of
Firm Orders (“Excess Orders”). Prior to delivery of an Excess Order, the Parties
will discuss Q-Med’s ability to fill the Excess Order, proposed delivery dates
and other information relevant to the Excess Order. Notwithstanding the
foregoing, Q-Med shall not be obligated to supply Excess Orders, but shall use
Commercially Reasonable Efforts to do so, subject at all times to the
limitations imposed by Q-Med’s available production capacity and applicable lead
times.

(d) Delivery of Forecasts. All forecasts to be provided or delivered by QMS to
Q-Med pursuant to this Section 2.2 shall be in writing, which may be electronic.

(e) Alternative Ordering and Delivery Procedures. [*] months after the Market
Launch of the Solesta Product in the U.S., and the Market Launch of any new
Licensed Product (including a modified version of the Solesta Product), the
Parties shall implement more flexible ordering and delivery procedures than
described in Section 2.2(a) for such Licensed Product and/or applicable market.
Such procedures shall take into account the specific regulatory, marketing and
other issues relevant to each such event, QMS Purchasers’ anticipated
requirements for Licensed Product in the specific market affected, and Q-Med’s
seasonal production schedules and reasonable lead times for the delivery of
Licensed Products. For

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

8

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example, if QMS commits to the contents of the labeling of a Licensed Product in
advance of the [*] month lead time otherwise required by Q-Med, Q-Med shall use
commercially reasonable efforts to prepare such labeling in order to accommodate
a scheduled or accelerated Market Launch, provided QMS pays the pre-approved
costs of any subsequent change to the labeling, including any costs incurred by
Q-Med to scrap or otherwise dispose of any superseded materials.

(f) Other Licensed Products. Upon the addition of a new Licensed Product, the
Parties shall negotiate in good faith such amendments to the terms of this
Agreement as may be required to implement the production of or in respect of
other terms directly affected by such new Licensed Product, including the
applicable Specifications, forecasting, and ordering lead times and quantities,
shelf-life and, as provided in Section 3.3, the applicable Purchase Price.

(g) Order Limitations. QMS shall order the Licensed Products in such minimum
quantities as reasonably determined and advised by Q-Med from time to time (the
current minimum order size for the Deflux Product is [*] or [*] Units and for
the Solesta Product is [*] Units), and package configurations as the Parties
shall establish and set forth in the applicable Specifications. Q-Med shall
without undue delay provide notice to QMS of any changes in the applicable
minimum order quantities, which shall apply immediately upon such notice from
Q-Med, unless a specific effective date has been provided by Q-Med.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

9

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2.3 Changes to Specifications; Manufacturing and Supplier Changes.

(a) Changes to the Specifications Required for Compliance. The Parties shall
cooperate with each other to amend or supplement the Specifications to the
extent necessary to comply with changes in GMP, Applicable Laws or other
requirements of Governmental Authorities. QMS shall be responsible for preparing
the appropriate documentation for Q-Med to review and for submitting the final
documentation for such amendment or supplement to the Specifications to the
Regulatory Authorities. In this connection the Parties shall cooperate, share
information, and otherwise act in good faith to secure and maintain appropriate
Regulatory Approvals. Any FDA or other Regulatory Authority filing fees or other
costs associated with any filings or changes made under this subsection shall be
borne by QMS. The Parties acknowledge that any changes under this subsection may
result in increases to the Purchase Price of a Licensed Product to reflect
changes in Q-Med’s Full Manufacturing Costs as provided in Section 3.2(b) prior
to the [*] and [*] anniversary dates mentioned in that subsection or thereafter.

(b) Manufacturing Changes. Q-Med may make any Manufacturing changes, consistent
with GMP, and any such Manufacturing changes shall not require QMS’ consent, but
Q-Med shall keep QMS advised of its efforts to effectuate such changes
consistent with QMS’ position as the holder of the PMA. Notwithstanding the
foregoing, any Manufacturing changes that are reasonably likely to shorten the
expiry dating of a Licensed Product shall require the prior written consent of
QMS, which consent shall not be unreasonably withheld, delayed (beyond twenty
(20) calendar days after receipt of written notice from Q-Med) or conditioned.
Q-Med shall be responsible for drafting relevant documentation and shall provide
to QMS any

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

10

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information reasonably necessary for QMS to make appropriate filings with the
applicable Regulatory Authority regarding changes under this subsection, if
applicable. In any event, Q-Med shall not implement any Manufacturing changes
under this subsection with respect to any Licensed Product prior to receipt of
any applicable Regulatory Authority approval required to make such changes.
Unless a Manufacturing change was required for compliance with changes in GMP,
Applicable Laws or other requirements of Governmental Authorities (as set out
above), (i) any FDA or other Regulatory Authority filing fees or other costs
associated with a certain filing or change made under this subsection shall be
borne by Q-Med; and (ii) such Manufacturing change shall not result in any
changes to the Purchase Price.

(c) Changes to the Specifications or to the Suppliers of Critical Raw Material
Requested by Q-Med. If Q-Med wishes to make any changes in the Specifications or
to the suppliers of critical raw materials, not necessary to comply with changes
in GMP, Applicable Laws or other requirements of Governmental Authorities, the
following shall apply: (i) changes to the Specifications directly relating to
the properties of the gel composition of the Licensed Product shall require the
prior written consent of QMS, which consent shall not be unreasonably withheld,
delayed (beyond twenty (20) calendar days after receipt of written notice from
Q-Med) or conditioned; and (ii) changes to the suppliers of the raw materials
included in the gel, shall not require QMS’ consent, but Q-Med shall keep QMS
advised of its efforts to effectuate such changes. For the avoidance of doubt, a
change in the gel composition shall be deemed to include any change in the
Critical Parameter/Characteristic of the gel as reflected in Items 1 through 11
under Product Specification on Schedule B or in any similar Specifications
applicable to any other Licensed Product. All other changes to the
Specifications other than as described in (i) shall not require the prior
written consent of QMS. Q-Med shall be responsible for drafting relevant
documentation and shall provide to QMS any information reasonably necessary for

 

11

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QMS to make appropriate filings with the applicable Regulatory Authority
regarding such change, if applicable. Any FDA or other Regulatory Authority
filing fees or other costs associated with any filings or changes made under
this subsection shall be borne by Q-Med. Changes to the Specifications or
otherwise implemented under this subsection shall not result in any changes to
the Purchase Price. Notwithstanding the foregoing, Q-Med shall not make any such
changes prior to receipt of any approval of the applicable Regulatory Authority
required to implement such changes.

(d) Other Changes Requested by QMS. If QMS wishes to make any changes in the
Specifications not necessary to comply with changes in GMP, Applicable Laws or
other requirements of Governmental Authorities, QMS shall notify Q-Med in
writing. Any such change will be subject to Q-Med’s consent, which consent shall
not be unreasonably withheld, delayed (beyond twenty (20) calendar days after
receipt of written notice from QMS) or conditioned. Any such change shall only
be implemented following a technical and cost review which shall be conducted as
promptly as is reasonably possible and in good faith by Q-Med and shall be
subject to QMS and Q-Med reaching agreement as to revisions, if any, to the
Purchase Price (or one-time costs) necessitated by any such change. If QMS
accepts a proposed Purchase Price change, the proposed change in the
Specifications shall be implemented, and the Purchase Price change shall become
effective only with respect to those orders of Licensed Products that are
Manufactured in accordance with the revised Specifications. QMS shall be
responsible to prepare the appropriate documentation for Q-Med to review and to
submit the final documentation to the Regulatory Authorities. In this connection
the Parties shall cooperate, share information, and otherwise act in good faith
to secure and maintain appropriate Regulatory Approvals. FDA or other Regulatory
Authority filing fees associated with the filings made under this subsection
shall be borne by QMS. Notwithstanding any of the foregoing, Q-Med

 

12

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may refuse to provide its consent to any changes in the Specifications proposed
by QMS if Q-Med reasonably determines that such amendment would have an adverse
effect on (i) any of Q-Med’s other products, or (ii) its Manufacturing
activities.

(e) Acknowledged Change. (i) QMS was advised by Q-Med of a proposed change to
the Specifications, described in Schedule B, specifically, changing from a glass
syringe to a plastic syringe, and QMS hereby consents to that change, subject to
FDA approval and such change shall not result in any increase in the Purchase
Price. Q-Med and QMS shall reasonably cooperate on the timing of implementing
this proposed change, taking into account existing inventory levels and the need
for commercially appropriate expiry dating, and to avoid any interruption in the
Manufacture or delivery to QMS by Q-Med of the Solesta Product; (ii) QMS was
also advised by Q-Med of the approval by the FDA of PMA Supplement P000029/S021
(approval for a change in the source of dextranomer material used to manufacture
Deflux injectable gel from DX-10 to DX), which change to the Deflux Product may
be implemented at Q-Med’s discretion.

2.4 Safety Stocks. Q-Med shall maintain a safety stock of at least [*] months
demand of the Licensed Products and QMS shall maintain a safety stock of at
least [*] months demand of the Licensed Products, based on the average
quantities of Licensed Products ordered in QMS’ last [*] monthly Firm Orders
(the “Q-Med Safety Stock” or the “QMS Safety Stock” as applicable). The Parties
intend to increase each Party’s safety stock to at least [*] months demand once
Licensed Product expiration dating makes it feasible to do so.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

13

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2.5 Use of Affiliates, Subcontractors and Alternative Facilities. Q-Med shall
have the right in connection with its obligations hereunder to contract with its
Affiliates or one or more Subcontractors for the Manufacture and supply of the
Licensed Product to QMS, which may involve the use of Affiliates, Subcontractors
or facilities other than those utilized in the Manufacture of Licensed Products
pursuant to the IDEs and Regulatory Approvals (each a “New Affiliate,” “New
Subcontractor” or “New Facility”), provided that: (i) Q-Med shall cause each New
Affiliate, New Subcontractor and New Facility to comply fully with the terms and
conditions set forth in this Agreement with respect to the Manufacture and
supply of Licensed Products, (ii) the use of any New Affiliate, New
Subcontractor or New Facility does not have a material adverse effect on QMS’
ability to Commercialize Licensed Products (provided, however, that any change
to a New Affiliate, New Subcontractor or New Facility approved by the FDA or
other applicable Governmental Authority and effected after Q-Med secures any
required Regulatory Approval, shall not be deemed to have a material adverse
effect on QMS’ ability to Commercialize Licensed Products), and (iii) Q-Med
shall remain fully responsible and liable for the Manufacture and supply of the
Licensed Product to QMS and the performance of any New Affiliate, New
Subcontractor or New Facility. Q-Med shall bear the costs and expense of any
required Regulatory Approvals due to its contracting with any New Affiliate, New
Subcontractor or New Facility for the Manufacture and supply of the Licensed
Products.

2.6 Quality Agreement. The Quality Agreement contains customary provisions,
including provisions addressing product changes, GMP compliance, adverse event
reporting, quality methods, records and inspections, and product recalls and
withdrawals. The Parties shall establish reasonable procedures for making
changes to the Quality Agreement. The terms and conditions of the Quality
Agreement shall be deemed incorporated by reference in this Agreement, and
references to this “Agreement” herein shall be deemed to include the Quality

 

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Agreement, unless otherwise provided in the Quality Agreement. In the event of a
conflict between the terms of this Agreement and the Quality Agreement, the
terms of this Agreement shall control.

2.7 Certain Q-Med Obligations.

(a) Conformity. All Licensed Products supplied hereunder shall (i) be in
finished form for Commercialization or (ii) be in an appropriate form for
Projects, and with respect to each of sub-clauses (i) and (ii), shall be
Manufactured by Q-Med in conformity with the terms and conditions of this
Agreement, GMP and the applicable Specifications.

(b) Shelf-Life. Unless otherwise agreed in writing by the Parties, (i) if the
applicable Regulatory Authority approves the Licensed Product with a [*] month
shelf-life, Q-Med will ship the Licensed Product to QMS with a remaining
shelf-life of not less than [*] months, (ii) if the applicable Regulatory
Authority approves the Licensed Product with a [*] month shelf-life, Q-Med will
ship the Licensed Product to QMS with a remaining shelf-life of not less than
[*] months, and (iii) if the applicable Regulatory Authority approves the
Licensed Product with less than a [*] month shelf-life, then the Parties will in
good faith discuss how that situation should be managed.

(c) Acknowledged Obligations. Q-Med shall at its sole cost qualify all suppliers
and shall purchase and store all product and packaging components (including
materials to prepare labels, product inserts and other labeling for the Licensed
Product), raw materials and other ingredients for the manufacture of the
Licensed Product, and be responsible for all raw material non-conformities.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

15

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2.8 Cooperation and Project Review Meetings. Promptly following the Effective
Date, each Party shall designate those of its employees to be part of a team
responsible for managing the manufacturing and supply relationship between the
Parties (the “Relationship Team”). The Relationship Team, which shall be a
subcommittee of the Joint Steering Committee, shall meet in person or by
telephone or video conference not less frequently than semi-annually to review
the current status of activities by the Parties under this Agreement, but its
actions shall be consistent and not in conflict with the activities of the Joint
Steering Committee under the License Agreement.

2.9 Manufacturing Capacity. Following the submission by QMS of each Forecast,
Q-Med will alert QMS to any reasonably foreseeable problems that Q-Med may have
fulfilling the forecasted requirements. The Parties shall thereafter in good
faith discuss the Forecasts and Q-Med shall propose reasonable remedial plans to
address any potential problems. Such remedial plans may include (i) the addition
of another production shift to increase capacity, and (ii) seeking timely
approval from all applicable Regulatory Authorities of Q-Med’s second plant,
located adjacent to the Facility, for production of the Licensed Products.

 

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ARTICLE III.

CONSIDERATION

3.1 Pricing. Subject to the terms of this Article, the purchase price of the
Licensed Products shall equal:

(a) [*] SEK per Unit for the Solesta Product;

(b) [*] SEK per Unit for the Deflux Product; and

(c) such other prices for different formulations or Units of the Licensed
Products as established in accordance with Section 3.3.

Each price, as adjusted or established as provided in this Article, shall be
referred to as the “Purchase Price”.

3.2 Purchase Price Adjustments.

(a) The Purchase Prices set forth in Section 3.1(a) and (b) shall be fixed for a
period of [*] years for the Deflux Product and [*] years for the Solesta Product
from the Effective Date, except as provided in this Section 3.2. As of the [*]
and [*] anniversary of the Effective Date respectively, and each anniversary
thereafter, all such prices (including those established after the Effective
Date under Section 3.3), shall be increased (but never decreased) by the lesser
of (i) [*], or (ii) [*], except that the first increase to be implemented on the
[*] and [*] anniversary of the Effective Date respectively shall take into
account changes in the [*] from the Effective Date, but in such case the [*]
shall not exceed [*] in the aggregate for the entire applicable [*] or [*]-year
period. Notwithstanding the foregoing, in the event of the appointment of a
Third Party Manufacturer under Section 6.4, the Purchase Price then in effect
shall be adjusted, if necessary, to ensure that Q-Med receives the same profit
margin it was receiving

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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prior to the appointment of the Third Party Manufacturer without considering any
costs incurred by Q-Med to establish and validate the Third Party Manufacturer.
If it appears likely that any Purchase Price will increase by [*] or more as a
result of the appointment of a Third Party Manufacturer, then Q-Med will
promptly notify QMS and QMS may participate in the price negotiations with the
Third Party Manufacturer.

(b) The Purchase Price for each Licensed Product shall also be adjusted from
time-to-time, including during the period from the Effective Date to the [*] and
[*] anniversary respectively thereof, to reflect increases in Q-Med’s Full
Manufacturing Costs of the Licensed Product as a result of required changes in
GMP, Applicable Laws or other requirements of Governmental Authorities. If Q-Med
desires to implement any price adjustment under this Section, it shall provide
QMS at least [*] days written notice, accompanied by written documentation
justifying the adjustment. Any such adjustment will be implemented with regard
to any Firm Orders or Excess Orders placed after such [*] day period.

(c) At the request of QMS, Q-Med shall allow an independent auditor to verify
any adjustment to the Purchase Prices pursuant to this Section 3.2 or any
determination of or adjustment to the Purchase Prices under Section 3.3. QMS
shall pay the costs of such auditor. For the purpose of clarity, QMS
acknowledges that it will not have access to the information supplied to the
independent auditor by Q-Med under this Section.

(d) Q-Med shall keep and cause its Affiliates to keep, and shall use
Commercially Reasonable Efforts to cause Third Parties to keep, complete and
accurate records in sufficient detail to enable a calculation of Full
Manufacturing Costs or the applicable Purchase Price adjustment.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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3.3 Purchase Price for other Licensed Products. The initial Purchase Prices for
Licensed Products (other than the Deflux and Solesta Products as of the
Effective Date as described in Section 3.1(a) and (b)), shall equal such amount
as the Parties shall negotiate in good faith following finalization of the
Specifications for such Licensed Product and QMS’ submission of its first
Forecast for such Licensed Product. If the Parties are unable to agree on the
Purchase Price within [*] days after QMS submits its first Forecast, the
Purchase Price for such Licensed Product shall be equal to Q-Med’s Full
Manufacturing Costs as determined by using the same cost accounting method used
by Q-Med, plus the same overhead and profit margin (in SEK), that was included
in determining the Purchase Prices in Section 3.1(a) and (b). The Purchase
Prices, as so determined for Licensed Products other than the Solesta Product
and the Deflux Product, shall be subject to adjustment thereafter under
Section 3.2.

3.4 Purchase Price for Clinical Testing Products. The purchase price for any
Clinical Testing Products, not corresponding to any of Q-Med’s then commercially
available products, shall be agreed between the Parties on a case by case basis.

3.5 Payment Obligations.

(a) Invoices for the Purchase Price shall be issued upon shipment and shall be
payable in SEK within [*] days from the date of invoice.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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(b) All payments shall be made by wire transfer to an account, which account
shall be designated in writing by Q-Med at least [*] Business Days prior to the
date such payment is due or as specified in such invoice. Any required payment
hereunder not made by QMS on or before the date specified in this Section 3.5
shall bear interest from the date such payment is due (without considering any
cure period) until the date it is actually received by Q-Med at an annual rate
equal to the rate of interest per annum publicly announced from time to time by
JPMorgan Chase Bank as its prime rate in effect on the date such payment is due
at its principal office in New York City, plus [*]. Notwithstanding the
foregoing, if at any time QMS has failed to pay an invoice or part thereof, in
full when due (a “Delinquent Payment”) and the aggregate amount of such
Delinquent Payments exceeds [*] of the value of the most recently placed Firm
Order, Q-Med shall automatically be entitled to pre-payment for all subsequent
deliveries until such Delinquent Payment has been paid in full with interest
from and including the date such Delinquent Payment was due (such interest to be
determined in accordance with the immediately preceding sentence) to but
excluding the date of payment.

ARTICLE IV.

DELIVERY AND WARRANTY

4.1 Purchases, Shipments and Delivery.

(a) Delivery Terms. Q-Med shall deliver the Licensed Products FCA (INCOTERMS
2000) Q-Med’s Facility, or New Facility, as the case may be, and Q-Med shall, on
behalf of QMS and at QMS’ expense, make such arrangements for shipping and
export as instructed by QMS and shall provide all export and import
documentation within Q-Med’s

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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control to provide, with respect to the Licensed Products. QMS may designate one
(1) destination for shipments of Licensed Products. Q-Med shall not be required
to ship the Licensed Products to more than one (1) destination. If a shipment of
Licensed Product ordered by QMS under this Agreement has not been available for
pick-up at the shipping point within [*] Business Days after the scheduled
delivery date (any date of delivery that is more than [*] Business Days after
the scheduled delivery date is hereinafter referred to as a “Late Delivery
Date”) stated on the corresponding accepted Firm Order (a “Late Shipment”), or
if the shipment received by QMS contains a variance of greater than plus or
minus [*] of the quantity specified in the corresponding Firm Order or Excess
Order (a “Variant Shipment”), QMS shall promptly notify Q-Med upon such
discovery. Q-Med shall use its best efforts with respect to a Firm Order (and
commercially reasonable efforts with respect to an Excess Order) to deliver the
quantity of Licensed Product it had failed to ship in the case of a Late
Shipment or a Variant Shipment that is short the quantity ordered, as soon as
possible after notification of such shortage, by air transportation on the next
available commercial flight, at Q-Med’s expense in respect of any difference in
cost for such means of transportation relative to QMS’ regular delivery costs if
the cause for such Variant Shipment was within Q-Med’s control and if such means
of transportation is requested by QMS. In the case of a Variant Shipment that
contains more than the quantity ordered, QMS may elect to deduct such excess
deliveries from future Firm Orders. Notwithstanding the foregoing, QMS shall be
entitled to return to Q-Med any Licensed Products delivered in excess of that
ordered in the corresponding Firm Order or Excess Order if in the preceding [*]
month period it has accepted, under the terms of this Section, delivery of
Licensed Products in excess of [*] of one or more Firm Orders or Excess Orders
during that period.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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(b) Orders. Q-Med’s sales of Licensed Product shall be subject to the terms and
limitations of this Agreement and not to any QMS Firm Order, Excess Order, Q-Med
order acknowledgement or any other document, or any other terms and conditions
included in any such other document, except insofar as any such mutually
accepted order or other document establishes: (i) the quantity of Licensed
Products ordered and sold; (ii) the delivery date of Licensed Products; or
(iii) the destination of shipment of Licensed Products. Any additional,
inconsistent or different terms and conditions contained in such other documents
are hereby expressly rejected.

(c) Shipping Documentation. Q-Med shall include a packing list in each shipment
of Licensed Products which shall provide the following information: (i) the
applicable Firm Order, (ii) quantity, and (iii) Q-Med lot number, a copy of the
applicable Certificate of Analysis (see Schedule C) and all export and import
documentation within Q-Med’s control to provide.

4.2 Product Acceptance.

(a) Product Acceptance. QMS shall be entitled to reject all or any portion of a
shipment of Licensed Products within [*] days of delivery of such shipment of
Licensed Products to QMS, based solely on obvious physical, packaging or
Labeling damage or defect that would be evident upon visual inspection of the
packaged Licensed Products and discoverable without affecting the integrity of
the Licensed Product packaging, as shipped by Q-Med (unless such obvious
physical, packaging or Labeling damage or defect was attributable to an act or
omission

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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of QMS or any of its Affiliates or any carrier after delivery by Q-Med in
accordance with this Agreement (a “Visual Non-Conformity”). If QMS does not
provide written notice of any such rejection within the period set forth above
together with a reasonably detailed statement to support any such rejection,
then QMS shall be deemed to have accepted the entire shipment and waived its
right to reject the shipment based upon a Visual Non-Conformity. QMS shall
provide Q-Med with written notice of any such rejection within the period set
forth above together with a reasonably detailed statement to support any such
rejection. Q-Med shall notify QMS as promptly as reasonably possible, but in any
event within [*] Business Days after receipt of such written notice, whether it
agrees with QMS’ assertions with respect thereto. If Q-Med agrees with such
assertions, all such rejected Licensed Products shall be returned to Q-Med
together with the notice of rejection, a copy of the delivery receipt and the
reasonably detailed statement of QMS’ reasons for rejection and Q-Med shall
replace such Licensed Products and shall reimburse QMS for the cost of shipping
(including insurance). If Q-Med does not agree with QMS’ assertions and QMS
accepts Q-Med’s determination, then QMS shall be responsible for the price of
the Licensed Product (including the shipping cost and insurance), and if QMS
does not accept Q-Med’s determination, then the Parties shall refer the dispute
to a mutually acceptable independent testing laboratory for final resolution. If
such independent laboratory affirms QMS’ finding of a Visual Non-Conformity,
Q-Med shall promptly supply QMS with the same quantity of such Licensed Product
so found to be non-conforming. The cost of such independent laboratory shall be
borne by the Party whose findings are contrary to the findings of such
independent laboratory. While any dispute regarding nonconformity of Licensed
Product is pending, Q-Med, using Commercial Reasonable Efforts, shall replace
any shipment or portion of a shipment under dispute, and QMS shall pay the
applicable Purchase Price, subject to a credit if such dispute is resolved in
QMS’ favor.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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(b) Latent Defects. For purposes of this subsection, a latent defect is a defect
not reasonably susceptible to discovery by visual inspection, including a defect
requiring laboratory analysis to identify (a “Latent Defect”), other than
non-conformities covered under 4.1(d)(ii) or 4.2(a) above. If it comes to QMS’
attention that any Licensed Products previously accepted may have a Latent
Defect, QMS shall provide prompt notice thereof to Q-Med (and in no event later
than [*] Business Days thereafter) together with a reasonably detailed statement
describing the alleged Latent Defect. If the Latent Defect occurred or is
attributable to an event which occurred prior to delivery to QMS at Q-Med’s
Facility or New Facility, as the case may be, of the applicable Licensed
Products to QMS, then all subject Licensed Products remaining on hand shall be
returned to Q-Med and Q-Med shall replace such Licensed Products in accordance
with Section 4.2(a) and shall reimburse QMS for the cost of shipping and
insurance. If the cause of the Latent Defect is attributable to any other event,
then QMS shall be responsible for the price of the subject Licensed Products (if
not already paid).

(c) Shelf-Life of Replacement Products. All Licensed Products provided in
replacement shipments pursuant to Sections 4.2(a) or (b) above shall have a
minimum remaining shelf-life consistent with the provisions of Section 2.7(b).

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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4.3 Warranties.

(a) Product Warranties. Q-Med warrants to QMS:

(i) that Q-Med shall convey good title to the Licensed Products, upon delivery
of the Licensed Products to QMS in accordance with this Agreement and such
Licensed Products shall be free and clear of any security interest, claim, lien
or encumbrance;

(ii) that the Licensed Products shall comply and shall have been Manufactured by
or on behalf of Q-Med in conformity with GMP and the Specifications;

(iii) that the Licensed Products shall not be adulterated or misbranded (QMS
being responsible, however, for any Labeling or other materials or instructions
provided by QMS in writing to Q-Med) within the meaning of the FDCA or other
Laws as of the time that the Licensed Product is transferred to the carrier at
Q-Med’s shipping point; and

(iv) that the shelf-life of Licensed Products shipped to QMS is consistent with
the provisions of Section 2.7(b).

(b) Exclusions. Q-Med’s warranties shall not apply to any Licensed Products to
the extent such Licensed Products: (1) have been subjected to misuse, negligence
or accident after delivery to QMS or its designee; (2) have been stored or used
in a manner contrary to Labeling after delivery to QMS or its designee; (3) were
used after their respective expiration dates; or (4) have been modified or
combined in any way with other products in a manner not permitted by the
labeling for such Licensed Products.

(c) Exclusive Remedies. Indemnification under Section 4.4 and correction of
nonconformities in the manner and for the period of time provided in this
Agreement shall be QMS’ exclusive remedy and shall constitute fulfillment of all
liabilities of Q-Med, its Affiliates and their subcontractors (including any
liability for direct, indirect, special, incidental or consequential damages),
whether in warranty, contract, negligence, tort, strict liability, or otherwise,
with respect to any nonconformance of or defect or deficiency in the Licensed
Products.

 

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4.4 Indemnification.

(a) Except to the extent provided in (c) below, and subject to Section 9.1
below, Q-Med shall indemnify, defend and hold harmless QMS and its Affiliates
and Sublicensees, and its and their respective officers, directors, shareholders
successors, assigns, agents, employees and insurers in such capacity
(collectively the “QMS Indemnified Parties”) from and against any and all
liability, claims, damages, losses or reasonable expenses (including attorneys’
fees, expert fees and costs of investigation incurred by QMS), arising out of or
relating to Actions against QMS Indemnified Parties by Third Parties
(collectively “QMS Losses”) in respect of, without duplication (including any
remedy or indemnification under any other agreement between the Parties or their
Affiliates):

(i) the breach by Q-Med of any of its representations, warranties, covenants and
other agreements made hereunder;

(ii) personal injury or death sustained by any patient through the use of a
Licensed Product, but only if such use was fully in conformity with Labeling,
and provided further that such injury is proximately caused by: (A) a flaw,
defect or imperfection in the Manufacturing or design of such Licensed Product;
or (B) a Licensed Product containing an inherently dangerous characteristic not
then required to be disclosed in Labeling or required to be disclosed but was
not so disclosed (clauses (A) and (B) hereof being referred to collectively as
“Q-Med’s Responsibility”); provided, however, no claim for indemnity under this
subsection (ii) may be brought by QMS unless and until the aggregate amount of
QMS Losses sustained in

 

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respect of matters within Q-Med’s Responsibility, including any amounts paid by
QMS under Section 4.4(b)(ii), exceed $[*] (the “Threshold”) whereupon Q-Med’s
liability shall be for amounts in excess of the Threshold; and

(iii) any property damage, or non-patient personal injury or death sustained
through the use of a Licensed Product solely to the extent proximately caused by
the negligence of Q-Med in Manufacturing such Licensed Product.

(b) Except to the extent provided in (c) below, and subject to Section 9.1
below, QMS shall indemnify, defend and hold harmless Q-Med and its Affiliates,
and its and their respective officers, directors, shareholders successors,
assigns, agents, employees and insurers in such capacity (collectively the
“Q-Med Indemnified Parties”) from and against any and all liability, claims,
damages, losses or reasonable expenses (including attorneys’ fees, expert fees
and costs of investigation) incurred by Q-Med, arising out of or relating to
Actions against Q-Med Indemnified Parties by Third Parties (collectively “Q-Med
Losses”), in respect of, without duplication (including any remedy or
indemnification under any other Agreement between the Parties or their
Affiliates):

(i) the breach by QMS of any of its representations, warranties, covenants and
other agreements made hereunder;

(ii) personal injury or death sustained by any patient through the use of a
Licensed Product proximately caused by matters within Q-Med’s Responsibility,
until the aggregate amount of QMS’ Losses incurred by QMS under
Section 4.4(a)(ii) and this Section 4.4(b)(ii)

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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exceed the Threshold, but nothing in this subsection (ii) shall be deemed to
obligate QMS to reimburse Q-Med for any expenses incurred by Q-Med in connection
with any such Actions by Third Parties against Q-Med Indemnified Parties;

(iii) personal injury sustained by any patient through the use of a Licensed
Product proximately caused by acts or omissions of QMS or its Sublicensees not
in accordance with Labeling; and

(iv) any property damage, or non-patient personal injury or death sustained
through the use of a Licensed Product solely to the extent proximately caused by
the negligence of QMS, or by other acts or omissions of QMS or its Sublicensees
not in accordance with Labeling.

(c) Notwithstanding anything to the contrary set forth in this Agreement,
neither Party shall be obligated to indemnify the other Party as provided in
this Section: (i) to the extent any indemnifiable Losses thereunder are caused
by such other Party’s, or its Affiliates’, sublicensees’ or assigns’ negligence,
intentional misconduct or breach of such other Party’s obligations, warranties
or representations set forth herein; (ii) any claim by a sublicensee,
distributor, wholesaler or other person in the business of purchasing products
such as a Licensed Product for resale and not for use; or (iii) any Third Party
Action seeking, directly or indirectly, to recover consequential, incidental,
punitive or liquidated damages (collectively “Special Damages”) pursuant to
contract with a Party that fails to exclude the right of such Third Party to
recover such Special Damages, provided, however, to the extent such contract
contains such an exclusionary provision but such provision is avoided or
annulled in the Third Party Action under applicable principles of law or equity,
the indemnifying Party’s liability shall equal fifty percent (50%) of the
Special Damages awarded therein. The foregoing limitations in (ii) and
(iii) above

 

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shall not apply to the extent such Third Party Action seeks recovery of damages
for personal injury or death or property damage sustained by an end user of a
Licensed Product that were the proximate result of matters within Q-Med’s
Responsibility, or due to the negligence of QMS, or due to other acts or
omissions of QMS not in accordance with Labeling. Nothing in this Article IV
shall limit any other rights or remedies either Party may have against the other
under this Agreement in respect of such other Party’s negligence, intentional
misconduct or breach of any provision of this Agreement unless such a claim or
remedy is otherwise expressly barred under the terms of this Agreement.

(d) Procedure. The Party seeking indemnification shall provide the indemnifying
Party with written notice of any claim or action within [*] business days of its
receipt thereof, and shall afford the indemnifying Party the right to control
the defense and settlement of such claim or action. A failure by the Party
seeking indemnification to give notice and to tender the defense in a timely
manner pursuant to this Section 4.4(d) shall not limit the obligation of the
indemnifying Party under this Article IV, except to the extent such indemnifying
Party is materially prejudiced thereby. The Party seeking indemnification shall
provide reasonable assistance to the indemnifying Party in the defense of such
claim or action at its own expense. If the defendants in any such action include
both Parties, and the indemnified Party concludes that there may be legal
defenses available to it which are different from, additional to, or
inconsistent with, those available to the indemnifying Party, the indemnified
Party shall have the right to select separate counsel to participate in the
defense of such action on its behalf, and the indemnified Party shall bear the
cost and expense of such separate defense,

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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unless and to the extent the Parties otherwise agree or it is determined through
dispute resolution hereunder that such costs and expense are or were required to
be indemnified by the indemnifying Party and are or were required to be incurred
separately due to such different, additional, or inconsistent defenses. Should
the indemnifying Party determine not to defend such claim or action, the
indemnified Party shall have the right to maintain the defense of such claim or
action and the indemnifying Party shall provide reasonable assistance to it in
the defense of such claim or action and shall bear the reasonable cost and
expense of such defense (including reasonable attorneys’ fees). Neither Party
shall settle any such claim or action in a way that prejudices or adversely
impacts the other Party without the prior approval of such other Party (which
approval shall not be unreasonably conditioned, withheld or delayed). Following
issuance of a notice of demand for indemnity by the indemnified Party, to the
extent requested by the indemnifying Party, the indemnified Party must, as soon
as reasonably practicable, discontinue any conduct that forms the basis for the
claim or claims in any such action or threatened action.

(e) The Parties understand and acknowledge that the provisions of this
Section 4.4 are identical to provisions included in the Ireland Supply
Agreement, that it is not intended that there be two (2) separate Thresholds and
consequently, amounts otherwise included in the Threshold under either agreement
shall be aggregated to determine if the Threshold of $[*] has been exceeded.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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4.5 Compliance with Laws.

(a) General. Q-Med and QMS shall each comply in all material respects with all
applicable Laws that pertain to the activities for which Q-Med and QMS are each
responsible under this Agreement and, except as otherwise contemplated by this
Agreement, each shall bear its own costs and expenses related to such
compliance. The termination or expiration of this Agreement shall not relieve
either Party of its responsibility to comply in all material respects with any
regulatory requirements associated with Licensed Products, which requirement
survives such termination or expiration.

(b) Manufacture of Licensed Products. Q-Med and QMS shall each operate in
substantial compliance with QSR requirements and corresponding foreign
requirements applicable to their respective activities with respect to Licensed
Products. Each Party shall bear its own costs and expenses related to such
compliance. Q-Med shall promptly inform QMS of any material issues raised by the
FDA, a Governmental Authority or a Notified Body, in each case in connection
with Manufacturing compliance for Licensed Products, and shall promptly provide
QMS with copies of any correspondence (including e-mails) related to such
material issues.

(c) Supply of Licensed Products. Q-Med shall maintain appropriate establishment
registration (including payment of establishment fees) with the FDA and
comparable Governmental Authorities when Manufacturing Licensed Products
supplied under this Agreement. Q-Med shall supply Licensed Products for Projects
that conform to the conditions of any applicable IDE, including the quality
controls described therein (or appropriate quality controls for an IDE
Application deemed approved pursuant to the requirements set forth in 21 C.F.R.
Part 812). QMS will similarly maintain all required registrations with the FDA
and comparable Governmental Authorities when performing under this Agreement.

 

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4.6 Product Complaint; Recalls.

(a) Product Complaints. The Parties shall cooperate in investigating and
resolving complaints concerning the Licensed Products, including, to the extent
practicable and feasible, obtaining relevant medical records, interviewing the
administering physician and obtaining such other information as is necessary to
a full understanding of the patient’s complaint, subject to compliance with
applicable laws relating to the privacy of patient records. Among other things,
the Parties shall promptly establish and implement a system for exchange of
complaint and adverse event information between the Parties sufficient to allow
each Party to comply with its respective indemnification obligations hereunder
and adverse event reporting obligations, which shall include appropriate
provisions for recording worldwide customer complaints relating to Licensed
Products and prompt notice to the other Party of significant and/or potentially
reportable adverse events. The Parties shall cooperate fully in dealing with
product complaints concerning the Licensed Products and shall take such action
to promptly resolve such complaints as may be reasonably requested by the other
Party. QMS shall provide appropriate medical advisory support to patients and
physicians concerning the use of the Licensed Products and responding to product
complaints and adverse events. Each Party shall be entitled to review the other
Party’s product complaint records related to the Licensed Products, not more
than [*] during any [*] month period, in order to verify information provided by
a Party to the other Party hereunder.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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(b) Recalls. If either Party determines that an event, incident or circumstance
has occurred which may reasonably result in the need for a recall or market
withdrawal (collectively, “Recalls”), that Party shall promptly (and in no event
more than two (2) Business Days after discovery) advise the other thereof by
telephone or facsimile, after which the Parties shall promptly discuss and work
together to effect an appropriate course of action. The Parties agree to
cooperate and acting in good faith shall consider and implement all reasonable
alternatives before initiating any Recall efforts. The Parties agree that
patient safety is the primary consideration. Notification to the applicable
Regulatory Authority or Government Authority and conducting a Recall shall be
the responsibility of QMS, but in that connection QMS shall reasonably consult
with Q-Med. Q-Med shall (i) cooperate fully with QMS in the event of a Recall of
any affected Licensed Products in Q-Med’s possession, and (ii) provide such
assistance in connection therewith as QMS may reasonably request. The Parties
shall allocate between them the expenses of any Recall in the same manner as
provided in Section 4.2(a) based upon which Party is responsible for the Recall.
Such expenses of Recall shall include the expenses of notification and
destruction or return of the recalled Licensed Products, and distribution of
replacement Licensed Products to Third Parties, if applicable. Any Recall
required by any applicable Governmental Authority shall be handled as described
in this Section unless the Governmental Authority directs otherwise. For the
avoidance of doubt, in the absence of any directive from a Governmental
Authority to recall a Licensed Product, QMS shall make the ultimate decision to
effect and handle a Recall, subject, however, to the terms of this Section and
provided such decision is reasonable under the circumstances.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

5.1 Representations. Each Party hereby represents and warrants that:

(a) It is duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and to perform its obligations hereunder.

 

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(b) Its execution, delivery and performance of this Agreement have been duly
authorized by all requisite corporate action.

(c) This Agreement has been duly executed and delivered by such Party and,
assuming the due authorization, execution and delivery hereof by the other
Party, constitutes a legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except to the
extent that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other Laws of general application
relating to or affecting enforcement of creditors’ rights and Laws concerning
equitable remedies.

(d) The execution, delivery and performance by such Party of this Agreement and
the consummation by such Party of the transactions contemplated hereby do not
and will not, with or without the giving of notice or the passage of time or
both, violate, conflict with or result in the breach or termination of or
constitute a default under (i) any provision of its corporate charter or by-laws
(or similar organizational documents) of such Party, (ii) the provisions of any
Law or governmental order applicable to such Party or its assets, properties or
businesses, (iii) any note, bond, mortgage, indenture, contract, agreement,
lease, sublease, license, permit, franchise or other instrument or arrangement
to which such Party is a party or by which any of such Party, the Licensed
Products or such Party’s intellectual property rights necessary for the
performance of this Agreement are bound or affected, or (iv) any judgment,
decree, order or award of any Governmental Authority applicable to such Party or
its properties or assets.

 

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(e) Except as otherwise described in this Agreement or the License Agreement, no
permit, approval, authorization or consent of any person is required in
connection with the execution, delivery and performance by either Party of this
Agreement or the consummation of the transactions contemplated hereby.

5.2 Additional Q-Med Representations and Covenants.

(a) Q-Med shall promptly disclose to QMS any and all form 483’s or warning
letters (including foreign equivalents) it receives with respect to the
Manufacture of the Licensed Products, including those with respect to the
Facility (or the New Facility) to the extent relevant to the Manufacture of the
Licensed Products and any import alerts about which Q-Med receives notice for
Licensed Products or any other products manufactured in the Facility.

(b) Neither Q-Med nor any of its Affiliates or the employees thereof, or any
Subcontractors performing services for, or raw material or component suppliers
providing such materials or components to, Q-Med hereunder is, to Q-Med’s
knowledge, (i) under investigation by the FDA for debarment action,
(2) presently debarred under the regulations of the FDA, or (3) presently
debarred pursuant to the Generic Drug Enforcement Act of 1992 (21 U.S.C. ‘301 et
seq.). Q-Med shall promptly (but in all events within thirty (30) Business Days)
of discovery) notify QMS in writing to the extent that this representation is no
longer true. For the purposes of this subsection, “knowledge” means the actual
knowledge of the directors and officers of Q-Med.

5.3 Additional QMS Representations and Covenants.

(a) QMS shall promptly disclose to Q-Med any and all form 483’s or warning
letters (including foreign equivalents) it receives with respect to the Licensed
Products.

 

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(b) Neither QMS nor any of its Affiliates or the employees thereof, or any of
QMS’ independent sales force is, to QMS’ knowledge, (i) under investigation by
the FDA for debarment action, (2) presently debarred under the regulations of
the FDA, or (3) presently debarred pursuant to the Generic Drug Enforcement Act
of 1992 (21 U.S.C. ‘301 et seq.). QMS shall promptly (but in all events within
thirty (30) Business Days of discovery) notify Q-Med in writing to the extent
that this representation is no longer true.

(c) QMS shall (i) cause all Licensed Products delivered to it to be stored and
transported properly and in accordance with the applicable labeling requirements
and GMP, (ii) and not ship any expired Licensed Products to customers.

5.4 NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN
SECTION 4.3, THIS ARTICLE 5 OR IN ARTICLE 8 OF THE LICENSE AGREEMENT, Q-MED
MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EITHER AT LAW OR IN
EQUITY, RELATED TO THE LICENSED PRODUCTS, INCLUDING ANY REPRESENTATION OR
WARRANTY AS TO VALUE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FOR
ORDINARY PURPOSES, OR ANY OTHER MATTER. THE FOREGOING WARRANTIES BY Q-MED ARE
EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES OF QUALITY AND PERFORMANCE,
WRITTEN, ORAL OR IMPLIED, AND ALL OTHER WARRANTIES INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY
DISCLAIMED BY Q-MED, ITS AFFILIATES AND THEIR SUBCONTRACTORS.

 

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ARTICLE VI.

TERM AND TERMINATION

6.1 Term. Unless earlier terminated in accordance with Section 6.2, this
Agreement shall commence on the Effective Date and shall continue until
expiration or termination of the License Agreement, unless earlier terminated in
accordance with the terms and conditions of this Agreement.

6.2 Early Termination for Default.

(a) Subject to the provisions of Section 6.4, if either Party (“Breaching
Party”) commits a material breach of a material obligation under this Agreement,
the other Party (“Terminating Party”) may terminate this Agreement. The
Terminating Party shall provide written notice to the Breaching Party, which
notice shall identify the material breach with specificity, the intent to so
terminate and the actions or conduct that it considers would be an acceptable
cure of such breach. The Breaching Party shall have a period of [*] days ([*]
days in respect of any payment default) after written notice is provided to cure
such breach. If such breach is not cured within [*] days (or [*] days if
applicable), or if the breach is not capable of cure, the Terminating Party may
terminate this Agreement immediately upon written notice to the Breaching Party.

(b) Either Party may terminate this Agreement at any time during the Term by
giving written notice to the other Party if the other Party files in any court
or agency pursuant to any statute or regulation of any state or country, a
petition in bankruptcy or insolvency or for reorganization or for an arrangement
or for the appointment of a receiver or trustee of the Party

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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or of its assets, or if the other Party is served with an involuntary petition
against it, filed in any insolvency proceeding, and such petition is not
dismissed with [*] days after the filing thereof, or if the other Party proposes
or is a party to any dissolution or liquidation, or if the other Party makes an
assignment for the benefit of creditors.

(c) Either Party may terminate this Agreement simultaneously with any
termination of the QMS License Agreement, the Ireland License Agreement or the
Ireland Supply Agreement.

6.3 Effect of Termination or Expiration.

(a) Upon expiration of this Agreement (for any reason other than pursuant to the
provisions of Section 6.2), Q-Med will promptly furnish to QMS a complete
inventory of all work-in-progress for the Manufacture of the Licensed Products
and an inventory of all finished Licensed Products. Unless otherwise agreed to
between the Parties, all stock on hand as of such termination will be dealt with
promptly as follows:

(i) Licensed Products Manufactured pursuant to Firm Orders accepted by Q-Med
will be delivered by Q-Med to QMS, whereupon QMS will pay Q-Med therefor in
accordance with the terms of the Supply Agreement;

(ii) For a period of [*] months following termination, QMS shall be entitled to
sell in the ordinary course of business any Licensed Products comprising its
inventory (and all Licensed Products then in transit or subject to Firm Orders);
provided that, absent evidence of justifying market conditions that QMS shall
have the burden to establish, QMS shall

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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not sell Licensed Products at a per Unit price less than the average Unit price
obtaining in the [*] months preceding such termination (all such sales shall be
subject to all applicable terms of this Agreement and the License Agreement,
including QMS’ obligation to report and pay applicable Royalties with respect to
those sales).

(b) Upon termination of this Agreement pursuant to the provisions of
Section 6.2, the following provisions shall apply:

(i) If Q-Med is the Terminating Party, it may either (1) buy back all of QMS’
inventory of Licensed Products at the Purchase Price of such Licensed Product,
provided it elects to do so within [*] days of termination in which event QMS
shall thereafter cease any sales of the Licensed Products, or (2) permit QMS for
a period of [*] months after termination to sell in the ordinary course of
business any Licensed Products comprising QMS’ inventory of all Licensed
Products (and all Licensed Products then in transit or subject to Firm Orders);
provided that, absent evidence of justifying market conditions that QMS shall
have the burden to establish, QMS shall not sell Licensed Products at a per Unit
price less than the average Unit price obtaining in the [*] months preceding
such termination (all such sales shall be subject to all applicable terms of
this Agreement and the License Agreement, including QMS’ obligation to report
and pay applicable Royalties with respect to those sales).

(ii) If QMS is the Terminating Party, it may either (1) sell all of its
inventory of Licensed Products to Q-Med at the Purchase Price of such Licensed
Products, or (2) accept delivery by Q-Med of all Firm Orders and thereafter for
a period of [*] months after

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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termination sell in the ordinary course of business any Licensed Products
comprising its inventory (and all Licensed Products then in transit or subject
to Firm Orders); provided that, absent evidence of justifying market conditions
that QMS shall have the burden to establish, QMS shall not sell Licensed
Products at a per Unit price less than the average Unit price obtaining in the
[*] months preceding such termination (all such sales shall be subject to all
applicable terms of this Agreement and the License Agreement, including QMS’
obligation to report and pay applicable Royalties with respect to those sales).

(c) Upon expiration or termination of this Agreement pursuant to Section 6.2,
each of QMS and Q-Med will immediately at its expense return to the other Party
all proprietary and confidential documents, work papers and other material of
the other Party and its Affiliates relating to the transactions contemplated
hereby obtained from that other Party or its Affiliates pursuant to this
Agreement, whether so obtained before or after the execution hereof, and all
copies, extracts or other reproductions, in whole or in part thereof which may
have been made by or on behalf of QMS or Q-Med or their respective
representatives, as the case may be, and shall deliver to the other Party or
destroy all notes or memorandum or other stored information of any kind
containing, reflecting or derived from such documents, work papers and other
material, except that one archival copy may be retained by each Party’s outside
counsel or in-house counsel. The return or destruction, as applicable, of such
documents, work papers and other material (and all copies, extracts or other
reproductions in whole or in part thereof) pursuant to this Section 6.3(c) shall
be certified in writing by an authorized officer supervising the same.
Notwithstanding such return or destruction, each Party will continue to be bound
by its

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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obligations of confidentiality under Article 8 herein. Each Party shall not use
or disclose to any Person any information derived from such confidential and
proprietary documents, work papers and other material of the other Party and
shall be responsible for preventing the disclosure of any such information as
provided in Article 8. Further, in the event that QMS is selling off inventory
pursuant to Section 6.3(a) over a [*] month period, it may be necessary for QMS
to maintain certain documentation to effectuate a permitted sell off hereunder,
and so, therefore, the archival copy referenced above shall function in such
capacity to facilitate the permitted sell off and QMS will continue to be bound
by its obligations of confidentiality under Article 8 herein.

(d) Upon termination or expiration this Agreement, all obligations of the
Parties hereunder shall terminate, except for Section 3.5, Article IV,
Section 5.4, Section 6.3, Section 7.2, Section 8.1 and Article IX; provided,
that termination will not relieve a defaulting or breaching Party from any
liability to the other Party, including the obligation to pay invoiced amounts
when due.

(e) The Parties agree that in connection with any action by the Terminating
Party against the Breaching Party, the Terminating Party shall not be entitled
to claim or recover lost profits or similar damages unless the Breaching Party
is determined to have willfully and intentionally committed a material breach of
a material obligation under this Agreement. Subject to the provisions of
Section 6.4, the Parties further agree that in any action alleging that Q-Med is
the Breaching Party, QMS shall not seek nor shall any court have the power or
authority by agreement of the Parties to appoint, or grant a license in, to, or
under any Q-Med IP (as such term is defined in the License Agreement) to, a
Third Party as an alternative or supplementary manufacturer of any of the
Licensed Products.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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6.4 Failure to Supply.

(a) Notwithstanding any of the foregoing, QMS’ sole remedy in the event of a
failure by Q-Med to supply Licensed Products in accordance with the terms of
this Agreement shall be governed by this Section 6.4.

(b) A failure by Q-Med to supply Licensed Products shall be deemed to occur if
Q-Med fails to supply at least [*] of the aggregate quantities of Licensed
Products covered by Firm Orders under this Agreement and the Ireland Supply
Agreement for a period of any [*] consecutive months and fails to deliver the
shortfall during the [*] month period following such [*] month period. In
determining the percentage of a Firm Order delivered in a specific delivery
period, and whether a shortfall below [*] has occurred, the aggregate quantity
of Excess Orders shipped during the prior [*] month period under this Agreement
and the Ireland Supply Agreement shall be allocated on a pro-rata basis to the
quantities shipped under Firm Orders under this Agreement and the Ireland Supply
Agreement covering the same period. In the event a failure to supply occurs
hereunder, QMS may request that Q-Med appoint at Q-Med’s expense an additional
Third Party Manufacturer of the Licensed Products, which may also be QMS. If so
requested, Q-Med shall use Commercially Reasonable Efforts to promptly enter
into an arrangement with a Third Party to Manufacture the Licensed Products.
Upon conclusion of a manufacturing agreement with such Third Party Manufacturer,
Q-Med shall promptly provide

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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such relevant and necessary Manufacturing information and other assistance as
may be required to enable the Third Party Manufacturer to validate a
manufacturing facility and commence the Manufacture of Licensed Products in
accordance with the applicable Specifications and GMP, for sale to QMS under
this Agreement and for sale to Ireland under the Ireland Supply Agreement.
Following the appointment of an additional Manufacturer, if [*] of Firm Orders
are thereafter delivered to QMS and under the Ireland Supply Agreement for a
consecutive [*] month period, then Q-Med may at any time thereafter, decide, in
its sole discretion, to continue using the Third Party Manufacturer or terminate
such manufacturing arrangement. Any damage to the Facility (or any New Facility)
that causes or contributes to a failure by Q-Med to supply Licensed Products
under the terms of this Section 6.4(b), and which would otherwise be considered
an event of Force Majeure under Section 9.2 shall, notwithstanding the
provisions of Section 9.2, trigger the rights and obligations of the Parties
under this Section 6.4(b), but in the latter event, the Parties shall equally
share all costs attributable to the appointment and validation of any such
additional Third Party Manufacturer.

(c) The Parties understand and acknowledge that the rights granted in this
Section 6.4 are duplicative of rights that have been granted to Ireland under
the Ireland Supply Agreement and that such rights may only be exercised by
either QMS or Ireland (but not both) in the event of a failure to supply as
described under Section 6.4(a).

6.5 Manufacturing License Option. Upon the occurrence of a Major Financial
Deficit (as defined below), QMS shall have the right to require Q-Med to grant
QMS the non-exclusive right to Manufacture the Licensed Product, with a right to
sublicense, on the terms set

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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forth in Schedule D (“Manufacturing License”). A “Major Financial Deficit” means
the point in time when Q-Med’s equity capital, calculated in accordance with
Chapter 25, Section 14 of the Swedish Companies Act (2005:551), is less than
seventy percent (70%) of Q-Med’s registered share capital (currently SEK
24,845,500), as modified from time to time.

Upon occurrence of a Major Financial Deficit, Q-Med shall promptly provide
written notice to QMS and inform QMS of the situation and explain the
circumstances causing the Major Financial Deficit. Before QMS may invoke its
Manufacturing License Option, the Parties shall promptly and in good faith
discuss how Q-Med intends to cure the Major Financial Deficit and evaluate any
available alternative options for securing the supply of Licensed Product to
QMS.

If the Parties fail to agree on an alternative measure within [*] business days
following Q-Med’s notice that a Major Financial Deficit has occurred, QMS may
invoke its option hereunder to secure a Manufacturing License, in which event
Q-Med shall promptly initiate the procedure to provide to QMS such relevant and
necessary Manufacturing information and other assistance as may be required to
enable QMS to validate a Manufacturing facility in order to commence Manufacture
of Licensed Products in accordance with the applicable Specifications and GMP,
for sale to QMS under this Agreement and for sale to Ireland under the Ireland
Supply Agreement.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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Following the occurrence of a Major Financial Deficit and the subsequent grant
to QMS of a Manufacturing License hereunder, if it is concluded that no Major
Financial Deficit has in fact occurred under the applicable provisions of the
Swedish Companies Act, then Q-Med may decide, at any time thereafter, in its
sole discretion, to revoke the Manufacturing License granted to QMS. For the
sake of clarity, in the event of any such revocation, QMS’ right to secure a
Manufacturing License under this Section shall remain valid under this Agreement
for any subsequent Major Financial Deficit occurring thereafter. If Q-Med should
revoke such a license, QMS has the right to be compensated for all reasonable
costs that have occurred in connection with any technology transfer, including
the cost of any equipment acquired in connection therewith.

6.6 Option to Build Manufacturing Facility. At any time on or after the [*]
anniversary of the Effective Date, QMS may in its sole discretion decide to
purchase, build or otherwise acquire a Manufacturing facility capable of
producing the Licensed Products, in Uppsala, Sweden or on such other site as the
Parties select (the “QMS Facility”).

In the event QMS decides to move forward to purchase, build or otherwise acquire
the QMS Facility, it shall provide written notice to Q-Med of its intention to
do so, and Q-Med agrees to meet with QMS to discuss in good faith the logistics
involved in starting up such a Manufacturing operation. Q-Med further agrees to
supervise the construction of the Manufacturing facility and ensure that all
relevant and necessary Manufacturing information is provided (the “Know How”).
Q-Med will further validate the QMS Facility and the processes used and provide
adequate documentation to QMS to enable the QMS Facility to commence the
Manufacture of Licensed Products in accordance with the applicable
Specifications and GMP, for sale to QMS under this Agreement and for sale to
Ireland under the Ireland Supply

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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Agreement, provided appropriate safeguards are agreed to by the Parties to
protect the confidentiality of the Know How both during and after the Term (the
“Know How Agreement”).

Once the QMS Facility is qualified by FDA, QMS will be entitled to utilize the
QMS Facility exclusively as a source of supply for the Licensed Products in the
event of an uncured failure to supply by Q-Med under Section 6.4, or if Q-Med,
on a voluntary or involuntary basis, declares bankruptcy.

QMS will pay for all costs and expenses in connection with the construction,
establishment, qualification and maintenance of the QMS Facility, as well as all
costs associated with its operation and will also control the cost of goods
produced in the QMS Facility.

Upon receipt of FDA approval to Manufacture Licensed Products at the QMS
Facility, QMS will assign a [*] ownership interest in the QMS Facility to Q-Med,
but without any obligation on Q-Med’s part to make any capital contributions or
otherwise be financially responsible for any costs associated with operating the
QMS Facility. In return for such interest, Q-Med will be responsible for
staffing and managing the QMS Facility and shall remain in control of the Know
How, subject to the terms and conditions of the Know How Agreement.

In the event Q-Med provides evidence reasonably satisfactory to QMS that it will
be able to provide [*] of Firm Orders to QMS for a period of [*] consecutive
months hereunder, QMS will then be obligated to purchase Licensed Products only
from Q-Med and the Parties will then cooperate in good faith to keep the QMS
Facility licensed and approved by FDA, at QMS’ sole cost.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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QMS’ option to purchase, build or otherwise acquire a QMS Facility as described
above is in addition to any other rights and remedies QMS has under this
Agreement in connection with a failure to supply by Q-Med under Section 6.4. QMS
acknowledges that the QMS Facility may only be used to Manufacture Licensed
Products and no other NASHA Product.

At the termination or expiration of the License Agreements and the Supply
Agreements, for any reason whatsoever, other than because of a default by Q-Med,
Q-Med shall have the option, exercisable in writing within [*] days after such
termination or expiration, to acquire the QMS Facility and/or the equipment for
cash, payable at closing, at its book value (less the book value attributable to
Q-Med’s ownership interest in the QMS Facility). In such event, the closing
shall be held within [*] days after Q-Med’s election to acquire the QMS
Facility.

ARTICLE VII.

INSPECTION OF MANUFACTURING FACILITIES

7.1 Inspection Rights.

(a) Q-Med shall provide QMS employees and/or Third Party representatives
identified by QMS (“QMS inspectors”) reasonable access upon reasonable prior
notice to inspect, review and audit the Facility where the Licensed Products are
being tested, handled, stored, distributed and/or Manufactured for the sole
purpose of confirming that all Licensed

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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Products for the Territory are tested, handled, stored, distributed and/or
Manufactured in accordance with this Agreement. To the extent that in connection
with such inspection any confidential information is inspected, reviewed or
audited, any QMS inspectors shall be bound by the confidentiality obligations
described in Article 8 hereof and shall review and inspect the applicable
Facility and records and meet with Q-Med’s personnel solely for the purpose of
confirming that Q-Med’s Manufacturing and record-keeping of its Manufacturing
activities are compliant with this Agreement, the FDCA and with the requirements
of comparable applicable Regulatory Authorities in the Territory and/or
regulations thereunder; provided that Q-Med has the option to delete or redact
information not relating to the Licensed Products. Such inspections, reviews and
audits shall occur upon not less than [*] days’ prior written notice to Q-Med,
shall only be conducted during normal business hours and shall not unreasonably
disrupt the normal operations of Q-Med; provided that Q-Med shall be entitled to
instruct QMS to conduct such inspection at an alternate date if Q-Med is
currently undergoing an inspection. Such inspections may be conducted only once
every per year (it being understood that participation in or observing an FDA
audit of Q-Med by QMS shall be considered a QMS inspection under this Article),
except that QMS may conduct follow-up inspections on less than [*] days’ notice
directed at significant or critical quality issues observed during the any
inspection or brought to QMS’ attention through customer complaints or FDA or
other comparable regulatory communications or enforcement actions or otherwise.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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(b) QMS will cause any Third Party representatives included in the QMS inspector
group to enter into agreements with Q-Med with respect to the proprietary and
confidential nature of such information. Such Third Party representatives will
be bound by such obligations and will follow such security and Facility access
procedures as are reasonably designated by Q-Med. Q-Med may require that at all
times QMS inspectors be accompanied by a Q-Med representative and that QMS
inspectors not enter areas of the Facility used in the production of the
Licensed Products when products other than Licensed Products are being
Manufactured.

(c) Q-Med will provide QMS with access to relevant personnel during the audit
and Q-Med will provide a written response to any written audit observations
provided by QMS within [*] days of Q-Med’s receipt thereof. In the event that
the Facility is the subject of an audit or inspection by FDA or a similar
Regulatory Authority relating to the manufacture of a Licensed Product for QMS,
Q-Med shall notify QMS, and if reasonably practicable under the circumstances
QMS inspectors shall have the right to be present during such audit or
inspection. The foregoing notwithstanding, QMS’ regulatory affairs staff may
with prior notice to Q-Med make non-audit visits to Q-Med’s facilities for the
purpose of assisting in preparation for FDA or other Regulatory Authority
visits. QMS acknowledges that any information provided to QMS during the course
of such audit shall be deemed Confidential Information as defined in this
Agreement.

(d) The Parties shall promptly notify one another when an FDA or comparable
Regulatory Authority’s inspection of its facilities (or an inspection by Third
Parties in accordance with the FDA or comparable regulations in the Territory,
as applicable, where such inspection pertains to the Licensed Products), is
expected or underway, and will promptly

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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provide such other Party with copies of all regulatory correspondence,
Establishment Inspection Reports, Form 483s, and Warning Letters issued by
inspecting Regulatory Authority (or the Third Party inspector) in connection
with any such inspection and pertaining to Licensed Products in accordance with
the terms of this Agreement.

(e) Nothing in this Section shall be deemed to obligate Q-Med to produce for
inspection by QMS any information that Q-Med reasonably considers to be
confidential and not necessary for QMS to fulfill its obligations under the
License Agreement, this Agreement or under applicable Laws. Notwithstanding the
foregoing, QMS shall be entitled to review batch records, test methods and
stability tests covering the Licensed Products.

(f) QMS shall provide Q-Med or Q-Med’s representatives reasonable access upon
reasonable prior notice to inspect, review and audit QMS’ records reflecting
(i) physician, patient or other relevant complaints about Licensed Products,
received by QMS or QMS Purchasers, and (ii) the storage of Licensed Products by
QMS or any party on QMS’ behalf. To the extent that in connection with such
inspection any confidential QMS information is inspected, reviewed or audited,
any Q-Med representatives shall be bound by the confidentiality obligations
described in Article 8 hereof. Such inspections, reviews and audits shall occur
upon reasonable prior written notice to QMS, shall only be conducted during
normal business hours and shall not unreasonably disrupt the normal operations
of QMS.

(g) Q-Med will cause any Third Party representatives utilized in connection with
an inspection, review or audit to enter into agreements with QMS with respect to
the proprietary and confidential nature of such information. Such
representatives will be bound by such obligations and will follow such security
and access procedures as are reasonably designated by QMS.

 

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(h) The Parties understand and acknowledge that the inspection rights granted in
this Section 7.1 are duplicative of rights that have been granted to Ireland
under the Ireland Supply Agreement and that such rights may only be exercised by
either QMS Ireland (but not both).

7.2 Records. Q-Med shall keep complete, accurate and detailed original records
pertaining to the Manufacture, including quality control of each lot, of
Licensed Products produced and Manufactured by Q-Med or its Affiliates or
Subcontractors hereunder. Records shall be maintained for the longer of any
period required under applicable Law or GMP, but in any event no less than [*]
years after expiry of the expiration dating of such lot. For validation batches,
Q-Med shall keep the documents throughout the commercial life of the relevant
Licensed Product. Q-Med shall make available to QMS such records (including
making copies thereof) without unreasonable delay to the extent reasonably
requested and required by QMS to comply with its regulatory and other legal
requirements.

ARTICLE VIII.

CONFIDENTIALITY

8.1 Confidentiality. The terms and provisions of Article X of the License
Agreement are incorporated herein by reference and each Party agrees to be bound
by such terms and provisions as if expressly stated herein. All data and
information disclosed pursuant to this Agreement, including all batch records,
Certificates of Analysis and other information relating to the Manufacture of
the Licensed Products, shall be deemed “Confidential Information” of Q-Med and
subject to the foregoing provisions.

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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ARTICLE IX.

MISCELLANEOUS

9.1 Disclaimers. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 4.4 WITH RESPECT TO
CERTAIN THIRD PARTY ACTIONS, IN NO EVENT SHALL EITHER PARTY OR THEIR AFFILIATES
BE LIABLE FOR SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
OF THE OTHER PARTY OR THEIR AFFILIATES, WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER LEGAL THEORY; PROVIDED, HOWEVER, THE FOREGOING SHALL NOT LIMIT THE ABILITY
OF AN INDEMNIFIED PARTY TO RECOVER SPECIAL DAMAGES PAID TO THIRD PARTIES AS
PERMITTED UNDER SECTION 4.4 OF THIS AGREEMENT.

9.2 Force Majeure. Neither Party shall be responsible or liable in any way for
failure or delay in carrying out the terms of this Agreement (other than any
payment or confidentiality obligations) resulting from any cause or circumstance
beyond its reasonable control, including acts of God, embargoes, fire, flood,
other natural disasters, war, labor difficulties, interruption of transit,
accident, explosion, civil commotion, delays in performance or supplies from its
suppliers and subcontractors (where such delays in performance or supplies are
attributable to an event of force majeure suffered by such supplier or
subcontractor) and acts of any governmental authority (“Force Majeure”);
provided, that the Party so affected shall give prompt notice thereof to the
other including the period for which the Force Majeure is expected to continue.
Any time for performance hereunder (other than any time for payment) shall be
extended by the actual time of delay caused by the Force Majeure event. Except
as provided in the preceding sentence, no such failure or delay shall terminate
this Agreement, and each Party shall use its Commercially Reasonable Efforts to
mitigate any damages incurred by the other Party as a result of the Force
Majeure event and to complete its obligations hereunder as

 

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promptly as reasonably practicable following cessation of the cause or
circumstances of such failure or delay. In the event of delay due to any such
cause, the date of delivery shall be adjusted as may be reasonably necessary.
QMS may cancel any Firm Order or Excess Order, in whole or in part, which cannot
be completed due to any of the foregoing causes within sixty (60) days after the
delivery date specified in such order.

9.3 Governing Law; Jurisdiction; Arbitration and Venue. This Agreement and the
exhibits and schedules hereto shall be governed by and interpreted and enforced
in accordance with the laws of the State of New York, without giving effect to
any choice of law or conflict of laws rules or provisions (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. Any dispute,
controversy or claim arising out of or in connection with this contract, or the
breach, termination or invalidity thereof, shall be finally settled by
arbitration in accordance with the Arbitration Rules of the Arbitration
Institute of the Stockholm Chamber of Commerce. The arbitral tribunal shall be
composed of three (3) arbitrators. The seat of arbitration shall be Stockholm,
Sweden. The language to be used in the arbitral proceedings shall be English.
The foregoing notwithstanding, either Party may commence an Action to seek
declaratory or equitable relief to enjoin a breach of threatened breach of this
Agreement, which Action shall be brought solely in the United States District
Court for the Southern District of New York.

9.4 Assignment.

(a) Neither this Agreement nor any of the rights and obligations arising
hereunder may be assigned or transferred by either Party by merger, sale of
stock or assets, operation of law or otherwise, without the prior written
consent of the other Party; provided, however, that (i) QMS may assign this
Agreement without such consent in connection with the

 

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sale or transfer of all or substantially all of the business or assets relating
to or associated with the Licensed Field to any Third Party, whether by merger,
sale of stock or assets, operation of law or otherwise, provided that such
assignment occurs in connection with a substantially contemporaneous permitted
assignment of the Ireland Supply Agreement to the same assignee, (ii) the stock
of QMS or QMS’ interest in this Agreement may be collaterally pledged without
such consent to a financial institution or syndicate of financial institutions
represented by a single lenders’ agent to secure obligations to such lender(s)
in connection with a bona fide financing (the “QMS Pledge”), which pledge will
include the right of the lender(s) and their assigns to foreclose upon such
pledge, provided that such pledge occurs in connection with a substantially
contemporaneous permitted pledge of at least 65% of the voting stock of Ireland
(“Ireland Control Stock”) to the same lenders represented by the same lenders’
agent (the “Ireland Pledge”), and provided further that, notwithstanding any
other provision hereof, unless such lenders foreclose upon both the QMS Pledge
and the Ireland Pledge, and at all times after any such foreclosure the assignee
of QMS’ interest in this Agreement is also the owner of the Ireland Control
Stock or an affiliate thereof, this Agreement shall immediately terminate upon
notice thereof from Q-Med to QMS, and (iii) Q-Med may assign this Agreement
without such consent to any Third Party which acquires all or substantially all
of Q-Med’s NASHA DX business, whether by merger, sale of stock or assets,
operation of law or otherwise, provided that such assignment occurs in
connection with a substantially contemporaneous permitted assignment by Q-Med of
the Ireland Supply Agreement to the same assignee. Any attempted assignment,
sale or transfer in violation of the prior sentence will be void. Upon any
permitted assignment or transfer of this Agreement by either Party, (i) the
other Party shall be given prompt written notice of such assignment, and
(ii) the assignee shall agree in writing to be bound by the terms and conditions
set forth herein. Notwithstanding the foregoing, either Party may assign this

 

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Agreement to any Affiliate of such Party; provided, that such Affiliate assumes
such assignment in writing to the other Party and the assigning Party shall
remain joint and severally liable with such Affiliate for all of its obligations
under this Agreement.

(b) The rights and obligations of the Parties in the event of a Change of
Control shall be governed by the provisions of Section 12.5 of the License
Agreement.

9.5 Notices. Any notice to be given by one Party to the other shall be in
writing and shall be deemed given when delivered by electronic mail or delivered
personally (such notice to be effective on the date of transmission or delivery,
as applicable), or sent by reputable international courier (such notice to be
effective on the date which is three (3) Business Days after the date of
delivery to such courier), or sent by facsimile (such facsimile notice to be
effective upon receipt of confirmation (a) on the date so confirmed if prior to
5 p.m. local time on a local Business Day, or (b) if not so confirmed prior to 5
p.m. local time on a local Business Day, the following Business Day), and
addressed as follows (or to such other address as a Party may designate as to
itself by written notice to the other Party):

 

If to Q-Med: Q-Med AB

Seminariegatan 21

752 28 Uppsala, Sweden

Attention: General Counsel

Telephone: 011 46 18 474 90 00

Telefax: 011 46 18 474 90 97

With a copy to (which shall not constitute notice for purposes hereunder):

Michael L. Martell, Esq.

Morrison Cohen LLP

909 Third Avenue, 27th Floor

New York, NY 10022

Telephone: 212.735.8652

Telefax: 212.522.3152

 

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If to QMS: Q-Med Scandinavia Inc.

2035 Lincoln Highway

Edison, NJ 08817

Attention: Steven M. Bosacki

Telephone: 732.318.3801

Telefax: 732.318.3801

With a copy to (which shall not constitute notice for purposes hereunder):

Milbank, Tweed, Hadley & McCloy LLP

One Chase Manhattan Plaza

New York, NY 10005-1413

Attention: Robert S. Reder, Esq.

Telephone: 212.530.5680

Telefax: 212.530.5219

9.6 Amendment. This Agreement may be modified or amended only by written
agreement of the Parties hereto signed by authorized representatives of the
Parties hereto and specifically referencing this Agreement.

9.7 Entire Agreement. This Agreement together with the License Agreement and the
Quality Agreement, each of their appendices, exhibits, schedules and
certificates, and all documents and certificates delivered or contemplated in
connection herewith and therewith constitute the entire agreement between the
Parties with respect to the subject matter hereof and supersede all prior
agreements, representations or understandings of the Parties relating thereto.

9.8 Severability. The provisions of this Agreement are severable, and in the
event that any provisions of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of the law in any jurisdiction or
jurisdictions within the Territory, such invalidity or unenforceability shall
not in any way affect the validity or enforceability of the remaining provisions
of this Agreement in such jurisdiction, provided that the essential purpose of
this Agreement is not frustrated.

 

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9.9 Expenses. Q-Med and QMS will each bear their own expenses and the expenses
of their respective Affiliates incurred in connection with the negotiation and
preparation of this Agreement and, except as set forth in this Agreement, the
performance of the obligations contemplated hereby. In connection with any
Action brought to enforce or invalidate any right or obligation arising
hereunder, the Party against whom a judgment or arbitration award is entered
shall, in addition to any other remedy awarded, be obligated to pay the
prevailing Party all costs and expenses of its prosecution or defense of such
Action, including attorneys’ fees.

9.10 Further Actions. Q-Med and QMS each hereby agrees to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or proper and execute and deliver such documents and
other papers as may be required to make effective the transactions contemplated
by this Agreement.

9.11 Waiver. Any term or provision of this Agreement may be waived at any time
by the Party entitled to the benefit thereof only by a written instrument
executed by such Party. No delay on the part of Q-Med or QMS in exercising any
right, power or privilege hereunder will operate as a waiver thereof, nor will
any waiver on the part of either Q-Med or QMS of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder
nor will any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.

9.12 Relationship of the Parties. The Parties shall each be an independent
contractor in the performance of their respective obligations hereunder, and,
the provisions hereof are not intended to create any partnership, joint venture,
agency or employment relationship between the Parties. Each Party shall be
responsible for and shall comply with all state, local, federal and

 

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foreign laws pertaining to employment taxes, income withholding and other
employment related statutes applicable to that Party. Except as is expressly set
forth herein, neither Party will have any right by virtue of this Agreement to
bind the other Party in any manner whatsoever.

9.13 No Third Party Rights. Other than with respect to the rights of the Q-Med
Indemnified Parties and the QMS Indemnified Parties, no provision of this
Agreement will be deemed or construed in any way to result in the creation of
any rights or obligations in any person not a Party to this Agreement.

9.14 Construction. This Agreement will be deemed to have been drafted by both
Q-Med and QMS and will not be construed against either Party as the draftsperson
hereof.

9.15 Enforcement. The Parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the Parties
shall be entitled to specific performance of the terms of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity.

9.16 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same agreement.

9.17 Headings. The heading references herein are for convenience purposes only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

 

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9.18 Appendices, Exhibits, Schedules and Certificates. Each appendix, exhibit,
schedule and certificate attached hereto is incorporated herein by reference and
made a part of this Agreement.

9.19 Consent to Jurisdiction. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY
(A) SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK WITH RESPECT
TO ANY CLAIM SEEKING DECLARATORY OR EQUITABLE RELIEF ARISING UNDER OR RELATING
TO THIS AGREEMENT; PROVIDED, HOWEVER, THAT SUCH CONSENT TO JURISDICTION IS
SOLELY FOR THE PURPOSE REFERRED TO IN THIS SECTION 9.19 AND SHALL NOT BE DEEMED
TO BE A GENERAL SUBMISSION TO THE JURISDICTION OF SAID COURT OR IN THE STATE OF
NEW YORK OTHER THAN FOR SUCH PURPOSE, (B) WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT, (C) CONSENTS THAT ALL SERVICES OF PROCESS BE MADE BY REGISTERED
OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO IT AT ITS ADDRESS AS
SET FORTH IN SECTION 9.5, AND (D) ACKNOWLEDGES THAT SERVICE SO MADE SHALL BE
TREATED AS COMPLETED WHEN RECEIVED. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
BASED ON FORUM NON CONVENIENS AND WAIVES ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day
and year first above written.

 

Q-MED AB By:  

/s/ Bengt Agerup

Name:   Bengt Agerup Title:   CEO Q-MED SCANDINAVIA INC. By:  

/s/ Carina Bolin

Name:   Carina Bolin Title:   Vice President

[Signature Page –QMSI Supply Agreement]

 

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SCHEDULE A

Intentionally Deleted

 

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SCHEDULE B

SPECIFICATIONS

[*]

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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SCHEDULE C

CERTIFICATE OF ANALYSIS

[*]

 

 

* Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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SCHEDULE D

TERMS OF MANUFACTURING LICENSE

Upon QMS invoking its Manufacturing License Option under Section 6.5 of the
Supply Agreement, Q-Med and QMS shall enter into a manufacturing license
agreement (“Manufacturing License Agreement”). The Manufacturing License
Agreement shall include such customary terms as Q-Med and QMS shall negotiate.

Under the Manufacturing License Agreement, QMS shall be granted a limited right
to sublicense to its Affiliates, and such Third Party contract Manufacturers
that are approved by Q-Med in writing, the right to manufacture the Licensed
Products, however, only for the account of QMS. QMS may not, however, sublicense
the Manufacturing rights to a Party that may be reasonably determined to be a
competitor of Q-Med.

Under the Manufacturing License Agreement, Q-Med shall be the sole owner of any
improvements to any Q-Med Manufacturing technology, whether conceived of,
created or developed by Q-Med and/or QMS.

Q-Med shall not be responsible for any Licensed Products Manufactured by or for
QMS under the Manufacturing License Agreement, and Q-Med shall not have any
warranty or indemnity obligations under the Supply Agreements in respect of such
Licensed Products, except for claims covered by Section 4.4(a)(ii)(A), as it
relates to the design of Licensed Products only, and Section 4.4(a)(ii)(B),
subject to Section 4.4(c). QMS shall not Manufacture under the Manufacturing
License Agreement any Licensed Products that have been withdrawn from the market
by Q-Med for safety reasons. QMS shall indemnify Q-Med from all other
liabilities arising out of the Manufacture of such Licensed Products by or for
QMS.