Exhibit 10.6


 


CONFIDENTIAL TREATMENT REQUESTED


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OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


  


SUPPLY
AGREEMENT


 


FOR


 


COMMERCIAL
SUPPLY


 


BY
AND BETWEEN


 


SMITHKLINE
BEECHAM (CORK) LIMITED


 


AND


 


FLAMEL
TECHNOLOGIES S.A.


 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


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OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


Table
of Contents


 


	 	 	Page
	 	 	 
	1.	DEFINITIONS	1
	 	 	 
	2.	FLAMEL’S OBLIGATIONS	6
	 	 	 
	3.	PLACING OF ORDERS	7
	 	 	 
	4.	SUPPLY AND STORAGE OF GSK API, MATERIALS AND INTERMEDIATE PRODUCTS	7
	 	 	 
	5.	FORECASTS; MANUFACTURING CAPACITY	8
	 	 	 
	6.	ARRANGEMENT OF ALTERNATIVE SUPPLY	10
	 	 	 
	7.	PASSING OF TITLE AND RISK IN THE INTERMEDIATE PRODUCT	10
	 	 	 
	8.	PRICE OF THE INTERMEDIATE PRODUCTS	10
	 	 	 
	9.	INVOICE AND PAYMENT	11
	 	 	 
	10.	FAILURE TO SUPPLY	14
	 	 	 
	11.	QUALITY AND FITNESS FOR PURPOSE	14
	 	 	 
	12.	SUPPLY AND STORAGE OF MATERIALS AND INTERMEDIATE PRODUCTS	16
	 	 	 
	13.	THE INTERMEDIATE PRODUCT LICENSE	17
	 	 	 
	14.	MANUFACTURE OF THE INTERMEDIATE PRODUCT	17
	 	 	 
	15.	QUALIFIED PERSONS	18
	 	 	 
	16.	QUALITY ASSURANCE	18
	 	 	 
	17.	MANUFACTURING SITE UTILIZATION AND CONTINUOUS IMPROVEMENT	19
	 	 	 
	18.	REGULATORY, COMPLIANCE AND ENVIRONMENTAL	19
	 	 	 
	19.	INTELLECTUAL PROPERTY RIGHTS	20
	 	 	 
	20.	CUSTOMER COMPLAINTS AND INTERMEDIATE PRODUCT RECALL	20
	 	 	 
	21.	DOCUMENTATION AND REPORTS	21
	 	 	 
	22.	CONFIDENTIALITY	22
	 	 	 
	23.	RECORDS RETENTION	24
	 	 	 
	24.	FORCE-MAJEURE	25
	 	 	 
	25.	INSPECTION	25


 




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Table
of Contents


(continued)


 


	 	 	Page
	 	 	 
	26.	ENVIRONMENTAL, HEALTH AND SAFETY AUDIT OF FLAMEL	26
	 	 	 
	27.	COMPLIANCE WITH STATUTES AND REGULATIONS	26
	 	 	 
	28.	HAZARDS	27
	 	 	 
	29.	REPRESENTATIONS AND WARRANTIES	27
	 	 	 
	30.	ETHICAL STANDARDS AND HUMAN RIGHTS	29
	 	 	 
	31.	INDEMNIFICATION	31
	 	 	 
	32.	INSURANCE	32
	 	 	 
	33.	TERM; TERMINATION; REMEDIES	32
	 	 	 
	34.	CONSEQUENCES OF TERMINATION	34
	 	 	 
	35.	WAIVER	34
	 	 	 
	36.	NOTICE	35
	 	 	 
	37.	SURVIVAL OF RIGHTS DUTIES AND OBLIGATIONS	36
	 	 	 
	38.	RELATIONSHIP OF THE PARTIES	36
	 	 	 
	39.	ASSIGNMENT	36
	 	 	 
	40.	SUB-CONTRACTORS	37
	 	 	 
	41.	ENTIRE AGREEMENT	37
	 	 	 
	42.	AMENDMENTS	37
	 	 	 
	43.	SEVERABILITY	38
	 	 	 
	44.	COUNTERPARTS	38
	 	 	 
	45.	RELEASE OF CLAIMS	38
	 	 	 
	46.	THIRD PARTY RIGHTS	39
	 	 	 
	47.	GOVERNING LAW AND JURISDICTION	39
	 	 	 
	48.	LIST OF SCHEDULES	39


 


SCHEDULES


 


Schedule
A - Key Performance Indicators (KPI’s)


 




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Table
of Contents


(continued)


 


	 	Page
	 	 
	Schedule B - EHS Requirements for Contract Manufacturers	 
	 	 
	Schedule C - Records Retention	 
	 	 
	Schedule D - GSK Anti-Bribery and Corruption Requirements	 


 




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WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


SUPPLY
AGREEMENT


 


This Supply Agreement
for Commercial Supply (the “Agreement”) is made and entered into this 30 day of September 2011 (the “Signing
Date”), to be effective January 1, 2011 (the “Effective Date”), by and between SmithKline Beecham
(Cork) Limited, a company organized under the laws of the country of Ireland with a place of business at Curraghbinny, Carrigaline,
Country Cork, Ireland, on behalf of itself and its Affiliates (“GSK”), and Flamel Technologies S.A., a corporation
organized and existing under the laws of France, with its principal place of business at Parc Club du Moulin a Vent, 33 Avenue
du Docteur Georges Levy 69693 Venissleux Cedex, France (“Flamel”) (each a “Party” and collectively,
the “Parties”).


 


RECITALS


 


WHEREAS, Flamel
and GSK have entered into a License Agreement (as defined below) by which GSK has licensed certain proprietary rights from Flamel
related to the Flamel Micropump Technology (as defined below);


 


WHEREAS, Flamel
has the facilities and the ability to manufacture and supply to GSK promotional samples supplies and commercial supplies of Intermediate
Product;


 


WHEREAS, Flamel
wishes to sell to GSK and its Affiliates such promotional sample supplies and commercial supplies of Intermediate Product;


 


WHEREAS, it
is intended that orders for Intermediate Product to be supplied by Flamel shall be placed by GSK and its Affiliates and that Flamel
shall supply GSK or its Affiliates as appropriate with, and invoice them for, the same on the terms of and subject to the conditions
in this Agreement.


 


NOW, THEREFORE,
in consideration of the premises and of the mutual promises and undertakings contained herein, the Parties, intending to be legally
bound, do hereby agree as follows:


 


		1.	DEFINITIONS



 


“Affiliate”
shall mean any legal entity (such as a corporation, partnership, or limited liability company) that Controls, is Controlled by,
or is under common Control with a Party to this Agreement. For the purposes of this definition, the term “Control”
means (i) beneficial ownership of at least fifty percent (50%) of the voting securities of a corporation or other business organization
with voting securities (or such lesser percentage which is the maximum allowed by a foreign corporation in a particular jurisdiction);
(ii) a fifty percent (50%) or greater interest in the net assets or profits of a partnership or other business organization without
voting securities; or (iii) the ability to direct the affairs of any such entity.


 




    	 



    	 



    

 


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OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


“Agreement”
means this Commercial Supply Agreement together with all its schedules (the “Schedules”).


 


“API” means
the active pharmaceutical ingredient, Carvedilol, which is used in the manufacture of the Intermediate Product.


 


“Batch” means
the total Intermediate Product obtained from one Manufacturing run, including purification.


 


“Batch Record”
means a record in form and substance satisfactory to GSK signed by a Qualified Person pursuant to Section 15.2.


 


“Carvedilol”
means(1-(9H-carbazol-4-yloxy)-[(2-2(2-methoxyphenoxy)ethyljamino]-2-propanol), the compound that is known by the generic name
of Carvedilol and including all racemates, chelates, complexes, enantiomers, diastereoisomers, salts, bases, esters, hydrates,
solvates, polymorphs, crystal forms, crystal habits, prodrugs, isotopic or radiolabeled equivalents, metabolites, ‘or the
like, thereof and all mixtures and any of the foregoing, and compositions comprising Carvedilol.


 


“Certificate of Analysis”
means a document identified as such and provided by Flamel to GSK that (i) sets forth the analytical test results for a specified
lot of Intermediate Products shipped to GSK hereunder, (ii) is in conformance with each applicable Drug Application and (iii) states
whether such Intermediate Products are manufactured in accordance with the Specifications and cGMP’s.


 


“Current Good Manufacturing
Practices” or “cGMPs” means all applicable standards relating to manufacturing practices for fine
chemicals, intermediates bulk products or finished pharmaceutical products. For purposes of this Agreement, cGMPs shall mean the
principles: (1) detailed in the U.S. Current Good Manufacturing Practices, 21 CFR Parts 210 and 211, The Rules Governing Medicinal
Products in the European Community, Volume IV Good Manufacturing Practice for Medicinal Products, and the US Pharmacopoeia and
National Formulary, as each may be amended from time to time; (ii) promulgated by any Governmental Body having jurisdiction over
the manufacture of pharmaceutical products, in the form of laws or regulations; (iii) promulgated by any Governmental Body having
jurisdiction over the manufacture of pharmaceutical products, in the form of guidance documents (including but not limited to advisory
opinions, compliance policy guides and guidelines) which guidance documents are being implemented within the pharmaceutical manufacturing
industry for such products; or (iv) which Flamel knows or reasonably should have known to be current and shown to be feasible on
a commercially reasonable basis and valuable in ensuring drug quality within the pharmaceutical manufacturing industry for such
products, in each case as in effect at the Effective Date and as amended, promulgated or accepted from time to time during the
term of this Agreement.


 




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OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


“Confidential Information”
means (i) any proprietary or confidential information or material in tangible form disclosed hereunder that is marked as “Confidential”
at the time it is delivered to the receiving Party, and/or (ii) proprietary or confidential information disclosed orally hereunder
that is identified as confidential or proprietary when disclosed and such disclosure of confidential information is confirmed in
writing within a reasonable period of time thereafter by the disclosing Party.


 


“Delivery Terms”
means Ex Works Manufacturing Site (Incoterms 2000).”Drug Application” means any New Drug Application filed with the
United States Food & Drug Administration (“FDA”), any Abbreviated New Drug Application filed with the FDA,
any Supplemental New Drug Application filed with the FDA, any product license or any equivalent drug application or similar pharmaceutical
product approval administered by any foreign Governmental Body, or extension or renewal of any of the foregoing.


 


“Firm Order”
has the meaning set out in Section 5.1.


 


“Flamel Micropump Technology”
means a multiple-dose system containing a large number of microparticles that may be contained in capsule, tablet, orally dispersible,
sachet or suspension formulations. It is expected that the microparticles are released in the stomach and pass into the small intestine,
where each microparticle operates as a miniature delivery system, releasing the drug at a controlled rate and over an extended
period of time.


 


“Forecast”
has the meaning set out in Section 5.1.


 


“Force Majeure”
means in relation to either Party, any circumstances beyond the reasonable control of that Party (including without limitation
earthquakes, riots, civil commotions, terrorism, war, hostilities between nations, governmental laws, orders, or regulations, embargoes,
actions by the government or any agency thereof, acts of God, storms, fires, accidents, labor disputes or strikes, sabotage, explosions
or other similar or different contingencies).


 


“Generic Equivalent
Product” means a pharmaceutical product that has received FDA approval for marketing in the Territory and is directly
substitutable for the Product, including any product that is specified under an Abbreviated New Drug Application (ANDA).


 




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OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


“Good Condition”
means fit for intended purpose, of satisfactory quality, not damaged and capable of any agreed standard of performance.


 


“Governmental Body”
means any nation or government, any state, province, or other political subdivision thereof, or any entity with legal authority
to exercise executive, legislative, judicial, regulatory or administrative functions or pertaining to government.


 


“Improvements”
means any new or improved process, technique, method, formula, invention or know-how relating to the Manufacture of Intermediate
Product.


 


“Intellectual Property”
means patents, trademarks, service marks, design rights (whether registerable or otherwise), including applications for any of
the foregoing, copyright, rights in know-how, trade or business names and other similar rights or forms of protection of a similar
nature or having equivalent or similar effect to any of these which may subsist anywhere in the world whether registerable or not.


 


“Intermediate Product”
means any bulk presentation or presentations of Product before encapsulation and final packaging.”Intermediate Product License”
means each and every product license, marketing authorization or any other authorization(s) (as the case may be) as well as the
applications therefore relating to the marketing, sale and/or distribution of the Intermediate Product.


 


“Key Performance Indicators”
or “KPI’s” are those indicators set forth in Schedule A hereto to evaluate the production and supply of
Intermediate Product under this Agreement which are used merely as benchmarks to evaluate such production and supply of Intermediate
Product and for discussion criteria as to ways Flamel may improve such production and supply.


 


“License Agreement”
shall mean the License Agreement entered into by and between the Parties dated March 26, 2003.


 


“Level One Maximum
Capacity” means a maximum of [***] Batches per calendar year, “Level Two Maximum Capacity” means a
maximum of [***] Batches per calendar year.


 


“Manufacture”
means the planning, purchasing, manufacture, processing, compounding, storage, filing, packaging, labelling, testing, sample retention,
stability testing, release and shipment of Intermediate Product and such other matters as may be prescribed for each Intermediate
Product by GSK.


 




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[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


“Manufacturing License”
means all licenses necessary for or in connection with the Manufacture of the Intermediate Product at the Manufacturing Site(s).


 


“Manufacturing Site”
means the manufacturing facility of Flamel at Pessac, France or such other manufacturing facility of Flamel (or of any duly authorized
sub-contractor under Article 37 of this Agreement) as shall have been approved in writing by GSK.


 


“Materials”
means the raw materials and components used in the Manufacture of the Intermediate Products.


 


“Minimum monthly Fees”
has the meaning set out in Section 9.3.


 


“Nominated Contract
Manufacturer” means such of GSK’s and its Affiliates’ contract manufacturers as shall from time to time be
nominated by GSK as being persons to whom supplies of Intermediate Product shall be made pursuant to this Agreement.


 


“Order” has
the meaning set out in Section 3.1.


 


“Product”
means any presentation or presentations of Carvedilol that incorporate the Flamel Micropump Technology, alone or in combination
with other therapeutically active compounds, for the therapeutic or prophylactic treatment of diseases and conditions in humans
in any dosage or strength.


 


“Qualified Person”
means the person named in this Agreement or any replacement notified by Flamel and agreed by GSK.


 


“Reduction Notice”
has the meaning set out in Section 5.9.


 


“Regulator”
means any relevant authority which regulates any aspect of the Manufacture of the Intermediate Product and/or the sale or marketing
of any product of which an Intermediate Product forms part.


 


“Reserve Supply”
has the meaning set out in Section 10.3.


 


“Specifications”
means the preliminary specifications for the Intermediate Product as set forth in the Quality Agreement, as such specifications
may be amended from time to time in accordance with Section 2.3.


 


“Supply Price”
has the meaning set out in Section 8.1.


 




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OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


“Technical Change Procedure”
means the procedure for changing the manner in which Flamel Manufactures Intermediate Product.


 


“Term” has
the meaning set out in Article 29 hereof.


 


“Territory”
shall have the meaning set forth in the License Agreement.


 


“Third Party Suppliers”
means any such third party suppliers as may be notified to Flamel by GSK and such other supplier(s) of Materials as may be approved
by GSK from time to time.


 


		2.	FLAMEL’S OBLIGATIONS



 


		2.1	In accordance with the terms of this Agreement, Flame! shall Manufacture, carry out quality control,
package and supply GSK’s, and GSK’s Nominated Contract Manufacturer’s operating on behalf of GSK, requirements
for the Intermediate Product as ordered from time to time by the same in accordance with Article 5.



 


		2.2	Flamel shall Manufacture the Intermediate Product at the Manufacturing Site in accordance with
Good Manufacturing Practice, the Specifications, the Technical Agreement, the Manufacturing License and all laws and regulations
relevant to the Manufacture of the Intermediate Product, including not only the country of Manufacture but also, where any of the
Intermediate Product is to be supplied to another country, the applicable laws and regulations in such country as reasonably directed
by GSK. Without prejudice to the foregoing, Flamel shall not change any Manufacturing Site in which the Intermediate Product is
Manufactured, or the Materials, process or plant used in the Manufacture of the Intermediate Products without first obtaining written
consent from GSK (or where the Intermediate Product in question are to be supplied to one of GSK’s Affiliates, that Affiliate)
to such change.



 


		2.3	All of the Intermediate Product supplied by Flamel shall comply with the Specifications and be
in Good Condition. The Specifications may, subject to the laws and regulations in force in the relevant territory, only be changed
by agreement in writing. Flamel shall not unreasonably withhold its agreement to any change in the Specifications requested by
GSK. Any amendment to the Specifications shall be subject to the same rules regarding confidentiality as expressed herein.



 




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OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		3.	PLACING OF ORDERS



 


		3.1	GSK (and, if relevant, GSK’s Nominated Contract Manufacturers) shall place orders for Intermediate
Product by submitting an electronic order to Flamel via GSK’s External Supply Chain System (“ESC Collaborate”)
or in any other written or electronic form, setting out the type and quantity of Intermediate Product required and the date for
delivery (an “Order”). Flamel shall supply GSK with details of the anticipated lead times between placing an Order
and delivery of Intermediate Product and Flamel shall keep GSK informed of its progress.



 


		3.2	Time shall be of the essence in relation to the performance of any and all of Flannel’s obligations
pursuant to this Agreement.



 


		4.	SUPPLY AND STORAGE OF GSK API, MATERIALS AND INTERMEDIATE
PRODUCTS



 


		4.1	Flamel undertakes with GSK not to use any GSK API supplied by GSK or any Affiliate of GSK to
                                                               Flamel for any purpose whatsoever other than the Manufacture of Intermediate Products for GSK and that until such time as the
                                                               GSK API has been incorporated into the process of Manufacture of the Intermediate Products, the GSK API will remain the
                                                               property of GSK or any relevant Affiliate of GSK. Notwithstanding anything to the contrary in this Section 4.1, or in Clauses
                                                               12 and 13 of Schedule 4.7 to the License Agreement, if any commercial batches are rejected, Flamel will not be liable for any
                                                               API loss related to such batches provided, however, that such API loss is not attributable to the negligence of Flamel.
                                                               Flamel shall use commercially reasonable endeavours to Manufacture Product in accordance with the agreed minimum annual yield
                                                               limits [***]; provided, however, that in the event Flamel fails to meet such minimum annual yield limits during any calendar
                                                               quarter, the Parties shall meet to discuss and agree any necessary modifications to the minimum annual yield limits.



 


		4.2	Flamel will report yields of Intermediate Product on a bi-annual basis in writing to GSK.



 


		4.3	Ordering of GSK API and Materials:



 


		4.3.1	Flamel shall be solely responsible for ordering the relevant quantities of API and Materials by
reference to the forecasts provided by GSK in accordance with Article 5.



 




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OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		4.3.2	Flamel shall not obtain any supplies of API from any third party except GSK or its Affiliates,
unless mutually agreed upon between the Parties. Subject to Section 4.1 above, the cost of API shall be revised annually and GSK
will allow Flamel to benefit from any cost reduction.



 


		4.3.3	Any Materials required by Flamel to Manufacture Intermediate Product shall be purchased in accordance
with the Technical Agreement. Any purchases from a Third Party Supplier shall be on Flannel’s own behalf and not as an agent
for GSK and Flamel shall be fully responsible for all purchases from such Third Party Supplier.



 


		4.4	Storage of GSK API, Materials and intermediate Products:



 


		4.4.1	Flamel shall at all times store and warehouse all API , Materials and Intermediate Products manufactured
by Flamel pursuant to this Agreement in premises that are secure, clean, compliant with the Manufacturing License and otherwise
acceptable to GSK. Flamel shall operate a warehousing system that identifies all API and Intermediate Products according to type
and status.



 


		4.4.2	With regard to any API supplied by GSK or its Affiliates and any Intermediate Products, title to
which shall in accordance with the terms of this Agreement have passed to GSK or any Affiliates of GSK, Flamel shall ensure that
the containers of all such API and any such Intermediate Products are clearly identified to the effect that they are owned by GSK
or any relevant Affiliates of GSK or for use only for GSK and its Affiliates (as the case may be).



 


		5.	FORECASTS; MANUFACTURING CAPACITY



 


		5.1	GSK shall provide Flamel with a rolling [***] month forecast for commercial supply
                                                               of Intermediate Product (the “Forecast”), which shall be updated quarterly. The Intermediate Product detailed in
                                                               the first [***] months of each Forecast will constitute the firm order (“Firm Order”).



 


		5.2	The amount of Intermediate Product set forth in the Firm Order with regard to any particular month
shall not be less than [***], nor more than [***] of the amount of Intermediate
Product last forecasted for such particular month. The required delivery or shipment date for each such Firm Order will be specified
in the Forecast.



 


		5.3	Flamel shall respond to each Firm Order received from GSK within five (5) business days of receipt
of the updated Firm Order within ESC Collaborate. The response shall include confirmation of the delivery dates and quantity as
set out in the Firm Order.



 




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[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		5.4	Flamel shall satisfy GSK’s and its Affiliates’ requirements in respect of Intermediate
Product pertaining to each and every Firm Order confirmed by Flamel pursuant to Section 5.3 above and shall use reasonable best
endeavours to satisfy any changes in quantity, delivery phasing or dates requested by GSK in respect of such a Firm Order or any
additional order, subject to its other manufacturing requirements. In the event that Flamel becomes aware that any Firm Order previously
confirmed in accordance with this Section 5.4 will not be satisfied, then Flamel shall inform GSK as soon as reasonably practicable
and in any event within one (1) business day. This shall be without prejudice to GSK’s rights under this Agreement in respect
of failure to meet Firm Orders.



 


		5.5	It is understood that, subject to the requirements of Section 5.2 hereof, the remaining [***]
                                                               of the Forecast constitutes an estimate of the future Intermediate Product requirement of GSK and its Affiliates and does not
                                                               comprise any minimum purchase requirement or any binding commitment by GSK or its Affiliates to purchase such
                                                               Intermediate Product.



 


		5.6	Flamel shall ensure that Flannel and Flamel’s GSK-approved suppliers have adequate capacity
at all times to fulfill [***] of GSK’s Firm Orders within the agreed lead time, to be negotiated
in good faith on a case-by-case basis between the Parties. in the event that Flamel is approaching the Level One Maximum Capacity
or the Level Two Maximum Capacity and is unable to comply with the provisions of the immediately preceding sentence, then Flamel
shall notify GSK immediately of such situation and the Parties shall meet to discuss in good faith the situation and negotiate
alternatives.



 


		5.7	No capital expenditures shall be made by Flame! to support the development or manufacture of Intermediate
Product without GSK’s prior written approval where GSK will fund the expenditure (not unreasonably withheld and delayed).
Where capital expenditure shall be made by Flannel to support the development of Intermediate Product which is funded solely by
Flamel, Flamel shall notify GSK of this expenditure for GSK accounting purposes.



 


		5.8	During the Term of this Agreement, the maximum amount of Product which may be ordered by GSK in
any calendar year beginning from 1st January, 2012 is estimated to be no more than the Level One Maximum Capacity. In
case of higher demand, the Parties shall meet to discuss in good faith the situation and shall agree any necessary modifications
thereto. Notwithstanding the above, the Parties hereby agree that during the first quarter of 2012 Flamel shall Manufacture up
to [***] batches in excess of the Level One Maximum Capacity amount.



 




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[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		5.9	Commencing on October 1, 2012, and quarterly thereafter, GSK may, however, notify Flamel in writing,
with three (3) months prior notice, a reduction of the maximum capacity to the Level Two Maximum Capacity (a “Reduction
Notice”); provided, however, that in the event that GSK shall require an increase from Level Two Maximum Capacity to
Level One Maximum Capacity, the Parties shall meet to discuss in good faith the terms and conditions of such request. For the avoidance
of any doubt, in the event that the Parties agree to increase the capacity from the Level Two Maximum Capacity to the Level One
Maximum Capacity, the payment terms set forth in Section 9.3 above shall apply; provided, however, that Section 5.8 shall apply
in the event GSK requires any capacity in excess of the Level One Maximum Capacity.



 


		6.	ARRANGEMENT OF ALTERNATIVE SUPPLY



 


If Flamel is unable to supply
the Intermediate Product in accordance with the terms of this Agreement, Flamel shall use its best endeavours to source the same
quantity and quality of Intermediate Product from a Third Party Supplier. Flamel shall notify GSK of the identity of the Third
Party Supplier and the nature of the Intermediate Product available, (as soon as reasonably possible) prior to the delivery date,
and GSK at its sole discretion, which shall not be unreasonably withheld, shall elect whether to authorize the use of Third Party
Supplier by Flamel.


 


		7.	PASSING OF TITLE AND RISK IN THE INTERMEDIATE PRODUCT



 


		7.1	The title and risk in the Intermediate Product shall remain with Flamel until delivered to the
carrier selected by GSK at Flamel’s Manufacturing Site, at which point title and risk shall pass to GSK.



 


		7.2	Neither payment by nor passage of title or risk in the intermediate Product to GSK shall be deemed
to constitute acceptance of the Intermediate Product.



 


		8.	PRICE OF THE INTERMEDIATE PRODUCTS



 


		8.1	Throughout the Term of this Agreement, the prices for the Intermediate Product shall [***] (the
“Supply Price”). For the avoidance of doubt, all batches of the intermediate Product already delivered and invoiced
to GSK since January 1, 2011 shall be paid at the Supply Price set out above.



 




    	10



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		8.2	If GSK is able to obtain Intermediate Product of equivalent quality from a Third Party Supplier
at a price lower than the prices otherwise payable in accordance with this Agreement, GSK shall so notify Flamel in writing and
if so requested by Flamel shall procure that details of the lower price, and verification that such lower price applies to a similar
commercial package to that supplied under this Agreement, are provided to Flamel by a mutually acceptable independent Third Party
Supplier upon the condition that the identity of the Third Party Supplier is not disclosed to Flamel. With six (6) weeks of Flamel’s
receipt of such information, Flamel shall use its commercially reasonable endeavors to meet the lower price of the Third Party
Supplier; provided, however, that if Flamel does not for any reason wish to, or cannot, meet the lower price for substantially
the same quantity of Intermediate Product within that time GSK may exercise its termination right set forth in Section 33.1(b)
below.



 


		8.3	Flamel undertakes to submit to GSK within a period of fourteen (14) days of the end of each month
or of the termination of this Agreement or such other intervals as may be agreed between the Parties such reports as GSK may require
from time to time. Such reports shall include in respect of such month or part thereof or other time period as agreed between the
Parties statements of:



 


		(a)	the quantity of Materials and API used by Flamel in the Manufacture of Intermediate Product;



 


		(b)	the quantity of the Intermediate Product Manufactured by Flamel for GSK and GSK’s Nominated
Contract Manufacturers (as appropriate);



 


		(c)	the quantity of the Intermediate Product delivered to GSK and GSK’s Nominated Contract Manufacturers
(as appropriate), by Flamel and received in Good Condition and in saleable form; and,



 


		(d)	the stock of Intermediate Product broken down by work in process and passed finished Intermediate
Product.



 


		9.	INVOICE AND PAYMENT



 


		9.1	Upon shipment of Intermediate Product, Flamel shall invoice GSK or GSK’s Nominated Contract
Manufacturer (as appropriate, depending on who placed the order for the relevant Intermediate Products) for the quantity of Intermediate
Product shipped. Intermediate Product shall be invoiced at the Supply Price, as detailed in Section 8.1 above.



 




    	11



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		9.2	In consideration of this Agreement, taking into account the accommodations necessary to be made
by Flannel as a result of GSK’s anticipated fluctuations in demand during 2011 and 2012, GSK shall also pay to Flamel the
following one time additional payments:



 


		(a)	A payment of [***] no later than September 25, 2011; and,



 


		(b)	A payment of a further [***] to be paid ten (10) business days after execution of this Agreement,
upon invoice by Flamel.



 


		9.3	Notwithstanding the quantity of Intermediate Product, if any, ordered by GSK pursuant to this Agreement,
during the Term of this Agreement, GSK shall pay to Flamel “Minimum [***] Fees” to maintain either the Level One
Maximum Capacity, or the Level Two Maximum Capacity, as applicable, as follows:



 


		(a)	From September 2011 until December 31, 2013, [***], except as may be modified as provided in subsection
(c) below by receipt of a Reduction Notice no earlier than January 1, 2013, for Level One Maximum Capacity during such period;



 


		(b)	From January 1, 2014 until the end of the Term, [***], except as may be modified as provided in
subsection (d) below by receipt of a Reduction Notice, no earlier than January 1, 2013, for Level One Maximum Capacity during such
period;



 


		(c)	After January 1, 2013, if GSK has given a proper Reduction Notice pursuant to Section 5.9,
                                                             the Minimum [***] Fees due after the effectiveness of the Reduction Notice shall be [***] for Level Two Maximum Capacity
                                                             during such period; and,



 


		(d)	After January 1, 2014, if GSK has given a proper Reduction Notice pursuant to Section 5.9,
                                                             the Minimum [***] Fees due after the effectiveness of the Reduction Notice shall be [***] for Level Two Maximum Capacity
                                                             during such period; and,



 


		(e)	All amounts paid [***] pursuant to Section 8.1 shall be fully creditable against the Minimum
                                                             [***] Fees. If the total amount paid under Section 8.1 for the Intermediate Product supply exceeds the Minimum [***] Fees
                                                             for a given [***], then the Minimum [***] Fees for such [***] shall not be due from GSK. Conversely, if the total
                                                             amount paid under Section 8.1 for the Intermediate Product supply is lower than the Minimum [***] Fees for a given [***],
                                                             then Flamel shall submit an invoice to GSK equal to the complement payment to reach the amount of the applicable Minimum
                                                             [***] Fees, in addition to the Section 8.1 payment. For example, in 2012 if the total paid for the Intermediate Product
                                                             supply in any [***] was [***] under Section 8.1, then the Minimum [***] Fees for that [***] would be [***].



 




    	12



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		(f)	The minimum capacity charge will be reconciled quarterly, to allow for aggregation and equal
                                                             disbursement of the number of batches supplied to GSK over a [***] period of time. Following such reconciliation, GSK shall
                                                             pay the difference between the amount paid for the number of batches supplied in each [***] and the Minimum [***] Fee due in
                                                             accordance with Section 9.3 above. For the avoidance of doubt, if after the reconciliation it is determined that the
                                                             Supply Price multiplied by the number of batches supplied to GSK per [***] exceeds the Minimum [***] Fee for the applicable
                                                             [***], GSK shall not make be liable for any Minimum [***] Fee in such quarter.



 


		9.4	Each invoice issued by Flamel hereunder shall specify:



 


		(a)	FPA (Firm Planed Arrival), customer order reference or purchase order reference;



		(b)	Local item code and description as per the packing list;



		(c)	Invoice number and date;



		(d)	Supplier name and address;



		(e)	Supplier VAT reg. Number;



		(f)	Buyer (Trading Partner) name and address (including country);



		(g)	Consignee (Ship to) name and address (including country);



		(h)	Currency;



		(i)	Any direct pass through charges (e.g., freight and insurance charges on a shipment bases); and,



		(j)	Any Free of Charge products (quantity, item code, batch no).



 


		9.5	Unless otherwise stated in the Order, payment shall be [***] following receipt of the
                                                               relevant invoice bearing the applicable Order number from Flame!. GSK reserves the right to set off any sums in respect of
                                                               which Flamel may be in default to GSK.



 


		9.6	Supply Prices are and any other amounts shall be as stated and include delivery and packing taxes
and duties but are exclusive of VAT and customs duties. GSK shall only be obliged to pay to Flamel the rate of VAT chargeable in
respect of the supply of Intermediate Product upon presentation of a valid VAT invoice. Flamel will supply Intermediate Product
in accordance with the Delivery Terms.



 




    	13



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		10.	FAILURE TO SUPPLY



 


		10.1	Without prejudice to Flamel’s obligations under this Agreement in the event that Flamel is
unable to fulfill its supply obligations under this Agreement, whether it be due to a disruption in the Manufacture of the Intermediate
Product at the Manufacturing Site, at periods of peak demand or otherwise, Flamel shall at its own expense use its best endeavours
to procure access to capacity at alternative manufacturing plants. Flamel will obtain all necessary approvals and consents therefore
at Flamel’s cost. Flamel shall use commercially reasonable efforts to comply with all KPI’s, as set forth on Schedule
A. If any changes to these KPI’s are proposed by GSK, they will be reasonably agreed between GSK and Flamel. The mere failure
to reach a KPI not be deemed to be a breach of this Agreement; provided however, that the Parties shall meet to determine the cause
of such failure and shall work toward resolution in good faith.



 


		10.2	GSK or, if relevant, GSK’s Nominated Contract Manufacturer shall notify Flamel as soon as
possible if there is an incomplete delivery in accordance with the terms of this Agreement. If Flamel is notified by telephone
or in person, then such notification shall be confirmed by GSK or GSK’s Nominated Contract Manufacturer (as appropriate)
in writing. Flamel shall then be obliged to rectify the incomplete consignment promptly.



 


		10.3	Flamel shall at all times maintain a contingency Materials inventory equivalent to [***]
                                                                supply of Materials (“Reserve Supply”), subject to GSK’s obligation to provide Flamel with API.



 


		10.4	If Flamel is unable, or anticipates that it will be unable, to supply the Intermediate Product
in accordance with any Order placed in accordance with Article 3 from its current production or normal stocks of Materials, Flamel
shall, as soon as it becomes aware of the fact, and in any event not less than fourteen (14) days before the delivery due date,
given written notice to GSK of the reasons for the shortfall and will make up the shortfall, if possible, from the Reserve Supply.



 


		11.	QUALITY AND FITNESS FOR PURPOSE



 


		11.1	Flamel shall, prior to their use for Manufacture, analyze or cause to be analyzed against the relevant
Specification(s) each delivery of Materials and if in Flamel’s opinion such analysis reveals that any delivery of Materials
is defective by reference to such Specification, Flamel shall promptly notify GSK or the relevant supplier (as the case may be).



 




    	14



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		11.2	If Flamel considers that a delivery of Materials which has been supplied by any supplier is defective,
Flamel shall reject such delivery, and shall procure that substitute Materials complying with the Specification are promptly supplied
by the relevant supplier in substitution.



 


		11.3	GSK shall have the right exercisable within a reasonable time after delivery to reject the Intermediate
Product or any part thereof if any such Intermediate Product does not conform in quality with any stipulations in this Agreement
or the specific order.



 


		11.4	In the event of an Intermediate Product rejection:



 


		(a)	GSK shall notify Flamel in writing;



 


		(b)	that is attributable to the negligence or willful misconduct of Flamel, the payment obligation
in relation to any such delivery shall be suspended forthwith pending resolution of the dispute in accordance with this Section;



 


		(c)	the Parties shall immediately endeavor to agree whether or not the delivery in question complies
with the Specification; and,



 


		(d)	Flamel shall be entitled at all reasonable times to inspect and/or analyze the delivery in question.



 


		11.5	The Parties shall use their best endeavours to resolve any dispute that may arise pursuant to this
Section but if the Parties fail to agree, within thirty (30) days of being notified pursuant to Section 11.4 (a), whether any delivery
of Intermediate Product supplied by Flamel to GSK is defective or may be rejected for any other reason set out in Section 11.3,
the dispute shall be determined by the independent laboratory and the decision of the independent laboratory shall be final and
binding on the Parties. The independent laboratory shall act as an expert and not as an arbitrator and (unless the independent
laboratory otherwise determines) its fees shall be borne by the Party against whom the independent laboratory’s decision
is given.



 


		11.6	If Flamel agrees or the independent laboratory finds that any delivery of the Intermediate Product
has not complied with the relevant specification or may be rejected in accordance with this Section 11.6, without prejudice to
any other rights that GSK may have against Flamel:



 




    	15



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		(a)	Flamel may elect either to promptly collect at its own expense any rejected Intermediate Product
from wheresoever GSK may direct or to reimburse GSK for any costs incurred in its disposal of the rejected Intermediate Product;



 


		(b)	Flamel shall in addition promptly reimburse GSK in respect of any cost including but not limited
to manufacturing, packaging, freight, clearance, duty and storage charges incurred by GSK in respect of the defective delivery;
and,



 


		(c)	GSK shall initially give Flamel the opportunity to replace rejected Intermediate Product with the
Intermediate Product that complies with the requirements of this Agreement such that Flame] shall supply a replacement delivery
to GSK as soon as reasonably practicable and in any event so as to arrive at the specified delivery address.



 


		11.7	If a delivery of the Intermediate Product is found by the independent laboratory to comply with
the Specification therefore, GSK shall pay for such consignment in accordance with the payment provisions contained in this Agreement.



 


		11.8	Flamel shall, at GSK’s discretion, as soon as reasonably practicable replace Intermediate
Product, or refund to GSK the purchase costs of all Intermediate Product that is or becomes defective where such defects are not
the result of GSK’s actions and occur under proper usage and are due to faulty design, and/or Manufacture, Flamel’s
erroneous instructions as to use date, or inadequate or faulty Materials (other than Carvedilol) or workmanship, or any breach
of Flamel’s warranties.



 


		12.	SUPPLY AND STORAGE OF MATERIALS AND INTERMEDIATE PRODUCTS



 


		12.1	Flamel shall be solely responsible for ordering the relevant quantities of Materials and for the
timely delivery of such Materials. Flame! shall purchase and use only Materials and procedures in the Manufacture of the Intermediate
Product which comply with the requirements of the Intermediate Product License and with Good Manufacturing Practice and otherwise
are fit for purpose. Flame! shall not obtain any supplies of Materials from any party except a supplier reasonably agreed by GSK,
Any such purchase from a supplier shall be on Flamers own behalf and not as an agent for GSK and Flamel hereby agrees to indemnify
GSK against any claims which a supplier may make against GSK in respect of any such purchase,



 




    	16



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		12.2	Flamel shall at all times store and warehouse all Materials and Intermediate Product Manufactured
by Flamel pursuant to this Agreement in premises that are secure, clean, compliant with the Manufacturing License and otherwise
acceptable to GSK. Flamel shall operate a warehousing system that identifies all Intermediate Product according to type and status.



 


		12.3	Within thirty (30} days of the Effective Date, Flamel shall adopt a risk mitigation program that
will secure the supply of Materials.



 


		13.	THE INTERMEDIATE PRODUCT LICENSE



 


		13.1	Flamel undertakes with GSK to observe and comply with all requirements from time to time of the
Intermediate Product License and any amendments or additions thereto in so far as they apply to the Manufacture of intermediate
Product hereunder and have been disclosed by GSK to Flame!.



 


		13.2	GSK undertakes to inform Flamel of any amendments or additions to the Intermediate Product License
that are relevant to the performance by Flamel of its obligations under this Agreement at which time the Agreement shall be amended
in accordance with the Technical Change Procedure and the amendments or additions implemented by Flamel in the Manufacture of the
intermediate Product to the extent required.



 


		13.3	GSK shall be responsible for the registration of the Intermediate Product with all relevant authorities
and Flamel shall provide such assistance, at GSK’s cost, as GSK may reasonably request in connection therewith.



 


		14.	MANUFACTURE OF THE INTERMEDIATE PRODUCT



 


		14.1	Flamel shall at its own cost obtain and throughout the term of this Agreement maintain all necessary
Manufacturing Licenses and perform its obligations hereunder in accordance with the Manufacturing Licenses and all applicable laws
and legislation in the country in which the Manufacturing Site is situated. Flamel shall supply a copy of each such Manufacturing
License to GSK free of charge on request.



 


		14.2	All personnel employed by Flame! in the Manufacture of the Intermediate Product shall be suitably
trained, experienced and competent for their respective functions with particular reference to performing their assigned duties
in accordance with Good Manufacturing Practice, Flamel shall keep written records of the training provided to such employees, copies
of which shall be made available to GSK on request. Flamel covenants with GSK not at any time during the Term of this Agreement
to carry out any other activities that prejudice the quality, safety or efficacy of the Intermediate Product.



 




    	17



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		15.	QUALIFIED PERSONS



 


		15.1	Flamel shall at all times:



 


		(a)	employ a Qualified Person in accordance with Directive 2001/83/EC who shall be responsible for
confirming by his/her signature on the appropriate Batch Record that each batch of the Intermediate Product conforms with the requirements
of the Intermediate Product License and the Specification(s) therefore and is Manufactured in accordance with this Agreement and
Good Manufacturing Practice;



 


		(b)	promptly notify GSK in writing of any change in the identity of the Qualified Person and person
or persons responsible for quality assurance in respect of the Intermediate Product; and,



 


		(c)	immediately following completion of the Manufacture of each batch of the Intermediate Product supply
to GSK or any party nominated by GSK a Batch Record and a Certificate of Analysis duly signed by the Qualified Person.



 


		15.2	The Qualified Person shall be responsible for the release of each batch of the Intermediate Product
after the Batch Record and Certificate of Analysis (which shall be signed by the Qualified Person) for each batch of the Intermediate
Product has been produced.



 


		16.	QUALITY ASSURANCE



 


		16.1	Flamel shall supply to GSK or GSK’s Nominated Contract Manufacturers a Certificate of Analysis
or similar document for each batch of Intermediate Product supplied to GSK or GSK’s Nominated Contract Manufacturer (as appropriate).



 


		16.2	Flamel shall ensure that quality assurance tests agreed by the Parties from time to time are adopted
and that representative samples of the Intermediate Product are taken, analyzed and retained in accordance with such terms as may
be agreed between the Parties.



 


		16.3	Further, Flamel shall ensure that testing methodology and testing reference standards comply with
Good Manufacturing Practice.



 




    	18



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		16.4	Flamel shall institute and maintain process controls during the Manufacture of the Intermediate
Product to ensure continuity of good quality in accordance with Good Manufacturing Practice. Further, Flamel shall maintain full
records of such tests which shall upon request be made available to GSK or its nominees together with retained in-process samples,
in the event of a complaint or query arising in respect of the Intermediate Product. Such records and samples shall be retained
by Flamel in accordance with Section 2.2 of the Technical Agreement.



 


		16.5	Flamel must report any adverse trends to GSK that arise during the testing of the Intermediate
Product.



 


		17.	MANUFACTURING SITE UTILIZATION AND CONTINUOUS IMPROVEMENT



 


		17.1	During the Term, Flamel shall use its best endeavours, in the ordinary course of its business,
to increase utilization at the Manufacturing Site beyond GSK volume and any cost recovery shall be allocated to a reduction in
the Minimum Monthly Fee.



 


		17.2	Both Parties will continue to work together on improvement of supply and cost of the Intermediate
Product and will equally share resulting benefits out of those improvements.



 


		18.	REGULATORY, COMPLIANCE AND ENVIRONMENTAL



 


		18.1	Flamel shall promptly and at its own expense provide to each and every Regulator all such documents
and information as may be required by such Regulator with respect to the Manufacture, storage and testing of the Intermediate Product
and shall allow inspections of the Manufacturing Site and any other relevant sites and premises as may be requested by such Regulator
the findings of which inspections shall promptly be made known in writing to GSK.



 


		18.2	If any Regulator requires any changes to be made with respect to the Manufacture of the Intermediate
Product or disposal of effluent relating to such Manufacture, Flamel shall immediately notify GSK and send it copies of any relevant
documents delivered to it by the said Regulator within seven (7) days of receipt and will use its reasonable endeavours to defer
implementation of any such changes until such time as GSK has been able, in accordance with the Technical Change Procedure, to
make any such changes to its Intermediate Product License as may be necessary to accommodate any such changes as may be required
by the Regulator.



  



    	19



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		18.3	Flamel shall respond in an effective and timely manner to any questions of a regulatory nature
relating to the Intermediate Product or its Manufacture raised either by GSK, its Affiliates, sub-licensees or distributors or
by a Regulator.



 


		19.	INTELLECTUAL PROPERTY RIGHTS



 


All Intellectual Property Rights
of each Party shall be governed by the License Agreement dated March 26, 2003 by and between the Parties, including the indemnification
rights provided hereunder for infringement of such Intellectual Property Rights.


 


		20.	CUSTOMER COMPLAINTS AND INTERMEDIATE PRODUCT RECALL



 


		20.1	Flamel shall ensure that adequate manufacturing, shipping, and analytical records are kept and
made available to GSK in order to assess the quality and destination of the Intermediate Product in the event of a Intermediate
Product complaint or suspected defect



 


		20.2	In the event that GSK requires access to any records Flamel shall facilitate immediate access to
such records.



 


		20.3	Flamel shall use its commercially reasonable efforts notify GSK’s Supply and Quality Managers
immediately by telephone and in writing promptly upon becoming aware of any issue likely to result in a product recall including
but not limited to:



 


		(a)	where any Intermediate Product or its labeling may have been mistaken for or applied to another
Intermediate Product; or



 


		(b)	where any Intermediate Product may be affected by bacteriological or other contamination, significant
chemical, physical or other change or deterioration or stability failures; or



 


		(c)	where any Intermediate Product is the subject of a complaint by a third party or customer; or



 


		(d)	where any Intermediate Product may not comply with the Specifications.



 


		20.4	If any of the circumstances described in Section 20.3 arise whether notified to GSK or not, Flamel
shall take at GSK’s request and at Flamel’s cost, all such acts as GSK may reasonably direct and if GSK deems that
a Product recall is required, the recall strategy shall be developed by GSK and fully followed by Flamel including with strict
regard to timing requirements. All costs of such recall shall be borne by Flamel in the event that the need for the recall is necessitated
by a failure on the part of Flamel to comply with all its obligations under this Agreement solely through negligence on the part
of Flamel.



 




    	20



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		20.5	Complaints in respect of the Intermediate Product will be handled pursuant to Section 27 of the
Technical Agreement.



 


		20.6	If GSK deems that recall of a product containing Intermediate Product is required, the recall strategy
will be developed by GSK and followed by Flamel including strict regard to timing requirements. All costs of such recall shall
be borne by Flame! in the event that the need for the recall is necessitated by a failure on the part of Flamel to comply with
all its obligations under this Agreement, solely through negligence on the part of Flamel.



 


		21.	DOCUMENTATION AND REPORTS



 


		21.1	Flamel shall:



 


		(a)	complete the documentation relative to the Manufacture of each batch of the Intermediate Product
in accordance with Good Manufacturing Practice and any other reasonable requirements of GSK and shall retain such documentation
in accordance with Section 9 of the Technical Agreement;



 


		(b)	supply to GSK one (1) completed copy of the Certificate of Analysis relating to the Intermediate
Product which is the subject of any Batch Record at the time that such Intermediate Product is delivered;



 


		(c)	permit GSK access to all Manufacturing, regulatory and quality control records in respect of the
Intermediate Product and the Materials used in their Manufacture;



 


		(d)	supply to GSK a report for the validation batches for each batch of Intermediate Product Manufactured
summarizing, but not limited to, the analytical results for each batch Manufactured, the stability results, details of any batch
failures, process deviations and any out of specification results as provided for in this Agreement; and



 


		(e)	complete and lodge with the appropriate authorities where required all documentation relating to
the export of intermediate Product where delivery involves export from the country of Manufacture.



 




    	21



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		22.	CONFIDENTIALITY



 


		22.1	Except as expressly provided herein, the Parties agree that, for the Term of this Agreement
                                                                and for [***] years thereafter, the receiving Party shall keep completely confidential and shall not publish or otherwise
                                                                disclose and shall not use for any purpose except for the purposes contemplated by this Agreement any Confidential
                                                                Information furnished to it by the disclosing Party hereto pursuant to this Agreement, except that to the extent that it can
                                                                be established by the receiving Party by competent proof that such Confidential Information:



 


		(a)	was already known to the receiving Party, other than under an obligation of confidentiality, at
the time of disclosure;



 


		(b)	was generally available to the public or otherwise part of the public domain at the time of its
disclosure to the receiving Party;



 


		(c)	became generally available to the public or otherwise part of the public domain after its disclosure
and other than through any act or omission of the receiving Party in breach of this Agreement;



 


		(d)	was independently developed by the receiving Party without reference to any information or materials
disclosed by the disclosing Party; or



 


		(e)	was subsequently disclosed to the receiving Party by a person other than a Party without breach
of any legal obligation to the disclosing Party.



 


		22.2	Each Party hereto may disclose the other’s Confidential Information to the extent such disclosure
is reasonably necessary in connection with the conduct of the development activities to be conducted hereunder, in filing or prosecuting
patent applications, prosecuting or defending litigation, complying with applicable governmental regulations or otherwise submitting
information to tax or other governmental authorities, conducting clinical trials, or making a permitted sublicense or otherwise
exercising its rights hereunder, provided that if a Party is required to make any such disclosure of another Party’s Confidential
Information, other than pursuant to a confidentiality agreement, it will give reasonable advance notice to the latter Party of
such disclosure and, save to the extent inappropriate in the case of patent applications, will use its best efforts to secure confidential
treatment of such information prior to its disclosure (whether through protective orders or otherwise).



 




    	22



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		22.3	No public announcement or any other disclosure, including under a Confidentiality Disclosure Agreement,
to Third Parties concerning the existence of, terms, or subject matter or termination of this Agreement shall be made, either directly
or indirectly, by any Party to this Agreement, except as may be legally required or as may be required for recording purposes,
without first obtaining the written approval of the other Party and agreement upon the nature and text of such announcement or
disclosure; provided, however that in the case of disclosures made by Flamel to a bona fide financial analyst for modeling and
valuation purposes under a confidentiality agreement, Flamel shall provide GSK advance written notice of such disclosure (as set
forth below), but shall not be obligated to obtain GSK’s consent. The Party desiring to make any such public announcement
or other disclosure (including those which are legally required or may be required for recording purposes) shall inform the other
Party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, which shall be at least
five (5) business days prior to release of such proposed announcement or disclosure, and shall provide the other Party with a written
copy thereof, in order to allow such other Party to comment upon such announcement or disclosure. Each Party agrees that it shall
cooperate fully with the other with respect to all disclosures regarding this Agreement to the Securities Exchange Commission and
any other governmental or regulatory agencies, including requests for confidential treatment of proprietary information of either
Party included in any such disclosure. Notwithstanding the foregoing, within one (1) day of the Signing Date, Flamel shall be permitted
to issue a press release, to announce the execution of this Agreement and certain of its terms, such as its duration and general
terms; provided, however, that GSK shall have the right to review such press release prior to its issuance.



 


		22.4	Nothing herein shall be construed to prevent GSK from disclosing any information received from
Flame! hereunder: (i) to a Third Party contract manufacturer of GSK, subject to the consent of Flamel, such consent not to be unreasonably
withheld; or (ii) to an Affiliate, sublicensee, distributor, Third Party research or clinical contractor, of GSK, without the consent
of Flamel, provided, that in all cases of disclosure under clause (i) or (ii) above, the party to whom such disclosure is made
shall have undertaken a similar obligation of confidentiality with respect to the Confidential Information, Neither Party shall
submit for written or oral publication any manuscript, abstract or the like which includes data or other information pertaining
to Product or Intermediate Product without first obtaining the prior written consent of the other Party, which consent shall not
be unreasonably withheld, and shall be given or refused no later than thirty (30) days from the date of receipt by the reviewing
Party.



 




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CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		22.5	All Confidential Information disclosed by one Party to the other shall remain the intellectual
property of the disclosing Party. In the event that a court or other legal or administrative tribunal, directly or through an appointed
master, trustee or receiver, assumes partial or complete control over the assets of a Party to this Agreement based on the insolvency
or bankruptcy of such Party, the bankrupt or insolvent Party shall promptly notify the court or other tribunal (1) that Confidential
Information received from the other Party under this Agreement remains the property of the other Party, and (ii) of the confidentiality
obligations under this Agreement. In addition, the bankrupt or insolvent Party shall, to the extent permitted by law, take all
steps necessary or desirable to maintain the confidentiality of the other Party’s Confidential Information and to ensure
that the court, other tribunal or appointee maintains such information in confidence in accordance with the terms of this Agreement.



 


		22.6	Flamel shall maintain reasonable security policies at Flamel, to protect the integrity of all Confidential
Information and all Intermediate Product at Flamel’s facilities, which policies shall be no less stringent than those policies
that Flamel has in place to protect the integrity of its own Confidential Information and its own products.



 


		23.	RECORDS RETENTION



 


During the Term of this Agreement
and, thereafter, in accordance with any applicable records retention period(s) identified in Schedule C, Flamel shall keep complete
and systematic written records of all documentation relating to the manufacture of Intermediate Products by Flamel under this Agreement.
Such records shall include any operational documentation pertaining to Flamel’s supply of Intermediate Products under this
Agreement, including records relevant to any costs or expenses incurred by Flamel on behalf of GSK, any financial records, procedures
(including records for compliance with federal, state and local law) and such other documentation pertaining to Flamel’s
supply of Intermediate Products under this Agreement. All financial records shall be kept in sufficient detail to permit accurate
determination of all figures necessary for verification of payment obligations set forth in Sections 8.1 and 9.3 of this Agreement.
Flamel shall preserve all such records in accordance with the records retention period(s) specified in Schedule C; provided, however,
that in the event a specific retention period is not specified for the particular record, Flamel shall preserve such records for
the greater of (a) [***] years, or (b) such other period agreed upon in writing by the Parties.


 




    	24



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		24.	FORCE-MAJEURE



 


		24.1	If any Force Majeure occurs in relation to either Party which affects or may affect the performance
of any of its obligations under this Agreement, it shall notify the other Party forthwith as to the nature and extent of the circumstances
in question.



 


		24.2	Neither Party shall be deemed to be in breach of this Agreement, or shall be otherwise liable to
the other Party, by reason only of any delay in performance, or the nonperformance of any of its obligations hereunder, to the
extent that the delay or nonperformance is due to any Force Majeure of which it has duly notified the other Party, and the time
for performance of that obligation shall be extended accordingly.



 


		24.3	If the performance by either Party of any of its obligations under this Agreement is prevented
or delayed by Force Majeure for a continuous period in excess of five (5) working days, the Parties shall enter into bona fide
discussions with a view to alleviating its effects, or to agreeing upon such alternative arrangements as may be fair and reasonable
in the circumstances.



 


		24.4	If the performance by either Party of any of its obligations under this Agreement is prevented
or delayed by Force Majeure for [***] or more, consecutively or cumulatively, in anyone year, then the other Party shall
in its discretion have the right to terminate the Agreement forthwith upon written notice.



 


		24.5	Notwithstanding the foregoing, GSK may, by notice in writing to Flamel, cancel any deliveries that
in GSK’s reasonable opinion cannot be made within a reasonable time after the due date without incurring any additional liability
on the part of GSK.



 


		25.	INSPECTION



 


		25.1	Subject to Flamel’s obligation to inspect the Intermediate Product prior to the release of
such Intermediate Product and without prejudice to Flamel’s obligations under this Agreement, GSK and any third party it
appoints on its behalf shall have the right to inspect and carry out any tests, including batch sampling, it wishes at GSK’s
expense on all Intermediate Product at Flamel’s works and the works of any sub-contractors at all reasonable times to ensure
Intermediate Product compliance with Specifications and Flamel’s compliance with the terms of this Agreement and cGMP. Flamel
will provide any or all necessary Certificates of Analysis.



 




    	25



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION



 


		25.2	Any inspections, checking, tests, approval or acceptance given on behalf of GSK by its servants
or agents in relation to the Intermediate Product shall not relieve Flamel from its obligations assumed under this Agreement.



 


		25.3	Flamel shall and shall procure that its sub-contractors shall grant a right of reasonable access
to GSK and any third party it appoints in order to inspect and test the Intermediate Products.



 


		26.	ENVIRONMENTAL, HEALTH AND SAFETY AUDIT OF FLAMEL



 


GSK shall have the right to conduct,
or to nominate a third party to conduct on GSK’s behalf, an environmental, health and safety audit of Flamel to ensure that
Flamel complies with the GSK’s Environmental Health and Safety (“EHS”) Requirements for Contract Manufacturers,
which are set forth in Schedule B attached hereto and made a part hereof.


 


		27.	COMPLIANCE WITH STATUTES AND REGULATIONS



 


		27.1	Flamel must ensure that the Intermediate Product and the delivery thereof comply with the Agreement
and any standards specifically stated on it, all relevant statutes, regulations, other legal requirements and applicable guidelines,
including without limitation those relevant to the regulation of medicinal products, health, safety, welfare, production, storing,
handling and delivery of the Intermediate Product pertaining to the stated country for use of the Intermediate Product. Flamel
shall provide evidence of compliance with such legal requirements, for example, permits, inspection reports, Certificates of Analysis,
etc. promptly on request and within a reasonable time frame in any event.



 


		27.2	Flamel shall use its best endeavours to ensure that its sub-contractors comply with Section



 


		27.3	Flannel shall use its best endeavours to comply with all reasonable requests of GSK to minimize
GSK’s compliance costs in respect of applicable health, safety, environmental and producer responsibility obligations.



 




    	26



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		28.	HAZARDS



 


Flamel will inform and keep GSK
informed of all hazards, regulations and guidance (statutory or otherwise) which Flamel knows or believes to be associated with
the use, handling, storage labelling, transport, treatment and disposal of the Intermediate Product and Flamel will ensure that
relevant consignments are safe, packaged, labeled so as to prevent any health risk to persons, property or the environment and
properly marked with the appropriate internationally recognized danger symbols and that prominent hazard warnings appear in English
(and/or any other language specified by GSK) on all packages and documents.


 


		29.	REPRESENTATIONS AND WARRANTIES



 


		29.1	Flamel represents and warrants that:



 


		(a)	Flamel is a validly existing corporation in good standing under the laws of the jurisdiction of
its incorporation; the execution, delivery and performance of this Agreement by Flame! (where applicable) has been duly authorized
by all requisite corporate action; this Agreement constitutes the legal, valid and binding obligation of Flamel, enforceable against
Flamel in accordance with the terms hereof, subject to the effect of bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar laws affecting the rights and remedies of creditors generally and the effect of general principles of equity,
whether applied by a court of law or equity; and the execution, delivery and performance of this Agreement by Flamel will not violate
or conflict with any other agreement or instrument to which Flamel is a party.



 


		(b)	To fulfill its obligations under this Agreement, Flamel has allocated and will allocate equipment,
production lines, staffing, physical space and other resources sufficient to manufacture the quantities of Intermediate Products
required by GSK pursuant to this Agreement.



 


		(c)	Flamel has not used, in any capacity associated with or related to the manufacture of the Intermediate
Products, the services of any persons who have been, or are in the process of being, debarred under 21 U.S.C. § 335a(a) or
(b) or any comparable Regulatory Act. Furthermore, neither Flamel nor any of its officers, employees, or consultants has been convicted
of an offense under (i) either a federal or state law that is cited in 21 U.S.C. § 335(a) as a ground for debarment, denial
of approval, or suspension, or (ii) any other law cited in any comparable Regulatory Act as a ground for debarment, denial of approval
or suspension.



 


		(d)	Flamel has all consents necessary or desirable in performance of its obligations hereunder and
the manufacture of the Intermediate Products for commercial sale in the Territory.



 




    	27



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		(e)	Flamel will not market the Products produced under this Agreement and will not sell the Products
produced under this Agreement except for sales to GSK permitted by this Agreement.



 


		(f)	The manufacture, generation, processing, packaging, distribution, transport, treatment, storage,
disposal and other handling of any Materials or Intermediate Products by Flamel until delivery to a carrier or freight forwarder
shall (i) be in accordance with and conform to the Specifications, cGMPs and GSK Global Quality Policies and Guidelines; (ii) be
in accordance with and conform to any applicable standards specified by the United States Pharmacopeia and Pharmacopeia Forum and
the European Pharmacopeia and Pharmacopeia! Forum, and (iii) otherwise conform to any provisions of the regulatory acts not reflected
in cGMPs, GSK’s EHS Requirements and, subject to reliance on GSK’s representations and warranties in Section29.1(b),
(c), (d) and (e) above, all laws. The Intermediate Products will strictly comply with the Specifications, shall be free from defects
in materials and workmanship and shall not be adulterated or misbranded within the meaning of applicable Regulatory Acts or the
United States Federal Food, Drug, and Cosmetic Act. THE REPRESENTATIONS AND WARRANTIES PROVIDED IN THIS AGREEMENT DO NOT APPLY
TO PRODUCTS TO THE EXTENT THAT, AFTER SHIPMENT BY FLAMEL, OCCURRENCES AFFECTING OR ALTERING THE INTERMEDIATE PRODUCTS AFTER THEY
ARE DELIVERED TO THE CARRIER, OR ACTIONS TAKEN OR FAILED TO BE TAKEN AFTER THE INTERMEDIATE PRODUCTS WERE SHIPPED, THE PRODUCTS
FAIL TO CONFORM TO SPECIFICATIONS. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 29.1, FLAMEL DISCLAIMS ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT
OF THE INTELLECTUAL PROPERTY OF ANY THIRD PARTY.



 


		(g)	During the Term of this Agreement, Flame] shall maintain the Manufacturing Site, all personal property,
equipment, machinery, systems, intangibles, Intellectual Property Rights (as defined in the License Agreement dated March 26, 2003)
in use at the Manufacturing Site in the ordinary course of business, and free of material defects, except for defects attributable
to wear and tear consistent with the age and usage of such assets, and except for such defects as do not and will not, in the aggregate,
materially impair the ability to use such assets in connection with the manufacture, generation, processing, packaging, distribution,
transport, treatment, storage, disposal or other handling of any Materials or Intermediate Products.



 




    	28



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		(h)	Flamel shall not pledge or otherwise transfer, without GSK’s prior written consent, Materials
or any work-in-process or finished goods inventory of Intermediate Products, other than to GSK or a GSK Affiliate as expressly
provided in this Agreement.



 


		(i)	Flamel shall maintain reasonable security policies at the Manufacturing Site to protect the integrity
of the Intermediate Products and all other GSK assets, tangible and intangible, at the Manufacturing Site.



 


		(j)	Flamel may be a participant in the Customs Trade Partnership Against Terrorism (C-TPAT) initiative
sponsored by the United States Customs Service (Customs), and Customs has certified Flamel as a C-TPAT member. in the event that
Flame! is not currently a participant in C-TPAT, it shall maintain similar security procedures with respect to the supply chain
associated with the Products.



 


		(k)	The manufacture, generation, processing, distribution, transport, treatment, storage, disposal
and other handling of any API by Flamel shall (i) be in accordance with and conform to the API specifications and cGMPs; and (ii)
be in accordance with and conform to any standards specified by the United States Pharmacopeia and Pharmacopeia Forum and the European
Pharmacopeia and Pharmacopeial Forum applicable to such API. The API shall be free from defects in materials and workmanship and
shall not be adulterated or misbranded within the meaning of applicable Regulatory Acts or the U.S. Federal Food, Drug, and Cosmetic
Act.



 


		(l)	Flamel represents and warrants that to the extent it relies upon materials of foreign origin in
its performance of the services or supply of the goods or materials hereunder, Flamel has accurately identified, to the best of
its knowledge, the ultimate source of such services, goods or materials, including, but not limited to, information relating to
its downstream Flamel’s and subcontractors.



 


		30.	ETHICAL STANDARDS AND HUMAN RIGHTS



 


		30.1	Unless otherwise required or prohibited by law, Flamel warrants, to the best of its knowledge and
belief, that in relation to its performance of this Agreement:



 


		(a)	it does not employ engage or otherwise use any child labour in circumstances such that the tasks
performed by any such child labour could reasonably be foreseen to cause either physical or emotional impairment to the development
of such child;



 




    	29



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		(b)	it does not use forced labour in any form (prison, indentured, bonded or otherwise) and its employees
are not required to lodge papers or deposits on starting work;



 


		(c)	it provides a safe and healthy workplace, presenting no immediate hazards to its employees. Any
housing provided by Flamel to its employees is safe for habitation. Flamel provides access to clean water, food, and emergency
healthcare to its employees in the event of accidents or incidents at the Flamel’s workplace;



 


		(d)	it does not discriminate against any employees on any ground (including race, religion, disability
or gender);



 


		(e)	it does not engage in or support the use of corporal punishment, mental, physical, sexual or verbal
abuse and does not use cruel or abusive disciplinary practices in the workplace;



 


		(f)	it pays each employee at least the minimum wage, or a fair representation of the prevailing industry
wage, (whichever is the higher) and provides each employee with all legally mandated benefits;



 


		(g)	it complies with the laws on working hours and employment rights in the countries in which it operates;



 


		(h)	it is respectful of its employees right to join and form independent trade unions and freedom of
association; and



 


		(i)	it complies with the GSK Anti-Bribery and Corruption Requirements set out in Schedule D.



 


		(1)	Flamel is responsible for controlling its own supply chain and shall encourage compliance with
ethical standards and human rights by any subsequent Flamel of goods and services that are used by Flamel when performing its obligations
under this Agreement.



 


		(2)	Flamel shall ensure that it has ethical and human rights policies and an appropriate complaints
procedure to deal with any breaches of such policies. In the case of any complaints, Flamel shall report the alleged complaint
and proposed remedy to GSK.



 




    	30



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		(3)	GSK reserves the right upon reasonable notice (unless inspection is for cause, in which case no
notice shall be necessary) to enter upon Flamel’s premises to monitor compliance with the provisions of this Section 30,
and Flamel shall, subject to compliance with Applicable Laws, provide to GSK any relevant documents requested by GSK in relation
thereto.



 


		31.	INDEMNIFICATION



 


		31.1	Flamel shall indemnify GSK and hold GSK harmless from and against any and all liability for death,
illness or injury to any third party or for loss or damage to any third party’s property and against all claims, demands,
proceedings and causes of action resulting directly or indirectly therefrom and arising out of any act or default on the part of
Flame!, its employees, agents or sub-contractors in the performance of or in compliance with any of their obligations under this
Agreement, including without limitation any and all loss in relation to defective Intermediate Products, and any liability arising
under any relevant product liability legislation which may apply from time to time due to faulty Intermediate Product, provided
that such damage is not due to any negligence on the part of GSK.



 


		31.2	GSK shall indemnify Flamel and hold Flamel harmless from and against any and all liability for
death, illness or injury to any third party or for loss or damage to any third party’s property and against all claims, demands,
proceedings and causes of action resulting directly or indirectly therefrom and arising out of any act or default on the part of
GSK, its employees, agents or sub-contractors in the performance of or in compliance with any of their obligations under this Agreement,
including without limitation any and all loss in relation to defective API and/or Intermediate Product supplied to GSK by Flamel
under this Agreement, and any liability arising under any relevant product liability legislation which may apply from time to time
due to faulty API and/or Intermediate Product supplied to GSK by Flamel under this Agreement; provided, however, that such faulty
API and/or Intermediate Product supplied to GSK by Flamel under this Agreement is not due to improper handling or storage of such
API or Intermediate Product, or due to any negligence on the part of Hamel.



 


		31.3	In the event that either Party receives a claim or demand in respect of a matter which is the subject
of an indemnity under this Article 31 it shall give the other Party notice thereof as soon as reasonably practicable and shall
permit the other Party to assist in the defense thereof at the other Party’s expense. The Parties shall co-operate in such
defense by providing reasonable access to evidence available to them and each shall be entitled to participate in the other’s
defense to the extent that in its judgment it may be prejudiced thereby.



 




    	31



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		31.4	IN NO EVENT SHALL EITHER PARTY OR THEIR AFFILIATES BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL,
PUNITIVE, TREBLE OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER LEGAL THEORY; PROVIDED, HOWEVER, THAT
THIS LIMITATION SHALL NOT LIMIT THE INDEMNIFICATION OBLIGATION OF SUCH PARTY UNDER THE PROVISIONS OF SECTIONS 31.2 AND 31.3 OF
THIS ARTICLE 31 FOR SUCH DAMAGES CLAIMED BY A THIRD PARTY AND NOTHING IN THIS SECTION 31.4 IS INTENDED TO LIMIT GSK’S PAYMENT
OBLIGATIONS EXPRESSLY REQUIRED UNDER SECTION 8.1 AND ARTICLE 9.



 


		32.	INSURANCE



 


Flamel shall maintain at its
own cost full and sufficient third party, product liability, public and product recall insurance to cover its actual and potential
liabilities hereunder within limits reasonably acceptable to GSK and grant GSK the right to inspect the policy which Flamel obtains
in support of the indemnity provided by Flame! to GSK.


 


		33.	TERM; TERMINATION; REMEDIES



 


		33.1	General:



 


		(a)	This Agreement shall commence on the Effective Date and will continue in force for the longer of
(i) [***] after the Effective Date, or (ii) [***] after market entry of a Generic Equivalent Product in the United States, unless
earlier terminated in accordance with this Article 33 (collectively, the “Term”).



 


		(b)	No earlier than January 1, 2013, GSK may, in its sole discretion, terminate this Agreement with
or without cause by giving six (6) months written notice to Flamel.



 


		(c)	In the event that Flamel terminates this Agreement, the Party terminating this Agreement shall
provide thirty (30) months written notice prior to the expiration of the Term; provided, however, that in such event, Flamel shall
supply all forecasted Intermediate Product until the later of: (i) the end of the notice of termination period; and (ii) (A) until
the technology transfer from Flamel to GSK has been completed and (B) GSK shall have a robust supply alternative to Flamel in place.



 




    	32



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		33.2	Either Party may terminate this Agreement by giving [***] written notice to the other Party
                                                                if the other Party is in material breach of any term of this Agreement and fails to cure that breach within such [***]
                                                                period.



 


		33.3	Termination of this Agreement shall not affect the rights and obligations of the Parties that accrued
prior to the effective date of termination.



 


		33.4	If voluntary or involuntary proceeding by or against a Party are instituted in bankruptcy under
any insolvency law, or a receiver or custodian is appointed for such Party, or proceedings are instituted by or against such Party
for corporate reorganization or the dissolution of such Party, which proceedings, if involuntary, shall not have been dismissed
within sixty (60) days after the date of filing, or if such Party makes an assignment for the benefit of creditors, or substantially
all of the assets of such Party are seized or attached and not released within sixty (60) days thereafter, the other Party may
immediately terminate this Agreement effective upon receipt of notice of such termination.



 


		33.5	If GSK ceases to use the Intermediate Product for a significant technical or regulatory reason
(and a significant technical or regulatory reason for these purposes is agreed to include, without limitation, any adverse technical
or regulatory impact for GSK that is or may be attributable in whole or in significant part to the use by GSK of the Intermediate
Product) GSK may terminate this Agreement immediately by notice; provided, however, that GSK shall notify Flamel immediately upon
learning of such technical or regulatory impact, and, as appropriate, work together with Flamel to remedy such impact.



 


		33.6	GSK may terminate this Agreement in accordance with Section 24.4.



 


		33.7	If GSK, for any reason, shall terminate this Agreement, GSK shall reimburse Flamel for any inventory
of finished Intermediate Product manufactured by Flamel, as well as for any raw material purchased by Flamel for the production
of the Intermediate Product; subject, however, to Flamel’s obligation to mitigate its damages by using its commercially reasonable
efforts to use such raw materials for other purposes, cancel all outstanding and cancellable orders for such raw materials, and
return any and all returnable raw materials to the Third Party Supplier. In such event, Flamel shall, at GSK’s option, shall
either return all such materials to GSK when paid for or dispose of them as Flamel sees fit upon payment.



 




    	33



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		34.	CONSEQUENCES OF TERMINATION



 


		34.1	On termination of the Agreement Flamel shall, not later than seven (7) days after GSK’s request
but at GSK’s cost:



 


		(a)	deliver to GSK (or as GSK shall direct) all quantities of the conforming Intermediate Product and
API in its possession;



 


		(b)	return to GSK all other documents provided to Flamel by GSK;



 


		(c)	ensure that all copies of GSK’s Confidential Information, know-how and/or any information
of a technical nature relating to the Intermediate Product and the Manufacture of the Intermediate Product or of a confidential
nature and supplied by GSK to Flamel will be returned to GSK or destroyed by Flamel at GSK’s option; and



 


		(d)	deliver title to the Equipment, listed in the Side Agreement entered into by the Parties, dated
December 3, 2004, and as amended in the Letter Agreement dated July 28, 2006, as provided by the provisions of Section 3 of the
Side Agreement, to Flamel.



 


		34.2	Termination of the Agreement shall be without prejudice to the continuation in force of Articles
1, 5, 9 (sections 5 and 9 each with respect to activities up to the date of termination) 11, 13, 18, 19, 20, 21, 22, 25, 26, 27,
29, 30, 31, 32, 33, 45. Furthermore, Flamel agrees to provide GSK with ail reasonable support with respect to any investigation
required by GSK or any Regulator with respect to Manufacture of the Intermediate Product carried out prior to such termination
or withdrawal even after such termination or withdrawal provided that Flamel’s reasonable costs in providing such assistance
shall be at GSK’s cost.



 


		35.	WAIVER



 


No waiver or forbearance by a
Party in enforcing any of its rights under this Agreement shall prejudice or affect the ability of that Party to enforce such rights
or any of its other rights at any time in the future. No waiver shall be effective unless in writing and signed by Party granting
the waiver. For the avoidance of doubt, it is agreed that a waiver of a right on one occasion shall not constitute a waiver of
the same right in the future.


 




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[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		36.	NOTICE



 


In addition to the other specific
procedures for notification required herein, all notices, demands, requests and other communications made hereunder shall be in
writing and shall be given either by personal delivery, by nationally recognized overnight courier (with charges prepaid), by electronic
transmission (provided such transmission shall include information from which it can be determined that it was authorized by a
Party hereto and the receipt of such transmission is confirmed by telephone) or by facsimile transmission (with telephone confirmation),
and shall be deemed to have been given or made: (i) if personally delivered, on the day of such delivery; (ii) if sent by overnight
courier, on the day following the date deposited with such overnight courier service; (iii) if sent by electronic transmission,
on the date transmitted on such electronic medium; or (iv) if by facsimile transmission, on the date transmitted to receiving facsimile
machine and confirmed by telephone, in each case pending the designation of another address, addressed as follows:


 


If to GSK:


GlaxoSmithKline


GSK House


Great West Road


Brentford, Middlesex


TW89GS


United Kingdom


Attention:        Director, Solid Dose External Supply


Telephone:      +44 2080474835


Telecopy:        +44 20804721 86


 


with copy to:


GlaxoSmith Kline


Legal Operations — GMS


 


Five Moore Drive


Research Triangle Park, NC 27709


Attention:        VP and Associate General Counsel, Legal
Operations - GMS


Telephone:      +1 919 483 2444


Telecopy:        +1 919 483 2881


 


If to Flamel:


Flamel Technologies, S.A.


11, Avenue Gustave-Eiffel


33608 Pessac Cedex


France


Attention:        Director of Manufacturing Facility


Telephone:      +33 557 260 770


Telecopy:        +33 556 367 659


 




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CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


With copy to:    Rafael Jorda, Executive Vice President

                          Chief Operating Officer (jorda@flamel.com)


 


with copy to:


Flamel Technologies, S.A.


Parc Club du Moulin a Vent


33 Avenue du Docteur Georges Lèvy


69693 Venissieux


France


Fax:                +33 472 783 446


Attention:        Stephen Willard, Chief Executive Officer


With copy to:  Alliance Management (alliance@flamel.com)


 


		37.	SURVIVAL OF RIGHTS DUTIES AND OBLIGATIONS



 


Termination or expiry of this
Agreement shall not release either Party hereto from any liability or right of action which at the time of termination has already
accrued to either Party hereto or which may thereafter accrue in respect of any act or omission prior to such termination. Such
rights shall include but not be limited to the recovery of any monies due hereunder.


 


		38.	RELATIONSHIP OF THE PARTIES



 


In the exercise of its obligations
and in respect of its rights and entitlements hereunder or in respect hereof, Flamel is and shall in all respects be treated as
an independent contractor of GSK. Neither Party shall be deemed to be a co-venturer or partner of the other. Neither Party is an
employee or a legal representative of the other Party for any purpose. Neither Party shall have the authority to enter into any
contracts in the name of or on behalf of the other Party.


 


		39.	ASSIGNMENT



 


		39.1	Flamel’s rights and obligations under this Agreement may not be assigned in whole or in part
to any third party without the prior written consent of GSK (acting in its sole discretion} and any such consent shall not be deemed
to relieve Flamel of any of its obligations and liability to GSK pursuant to this Agreement.



 


		39.2	GSK shall be entitled at any time by notice in writing to Flamel to assign the whole or any part
of its rights and obligations under this Agreement to any Affiliate or to any successor in title to the whole or part of that part
of GSK’s business which relates to the Intermediate Product.



 




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CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		39.3	Notwithstanding anything to the contrary in this Agreement, if another entity acquires all or a
substantial part of the assets or shares of a Party or merges with a Party hereto, both Parties agree, if appropriate, to re-negotiate
the terms of this Agreement. If the Parties are unable to reach subsequent agreement, the Agreement shall terminate forthwith upon
notice by the other Party.



 


		40.	SUB-CONTRACTORS



 


Flamel shall not, without the
prior written consent of GSK, which shall not unreasonably be withheld, appoint any sub-contractor or any person or persons to
carry out its obligations under this Agreement. In the event that Flamel appoints a sub-contractor or other person to perform its
obligations it shall remain liable to GSK for the performance of all its obligations and shall ensure that any such sub-contractor
or other person reads and understands the implications of this Agreement.


 


		41.	ENTIRE AGREEMENT



 


		41.1	This Agreement, including the Schedules hereto and any other document identified herein, represents
the entire understanding and agreement between the Parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements an understandings between the Parties with respect to such subject matter, which are hereby
expressly terminated.



 


		41.2	The Parties acknowledge that they have expended substantial effort in preparing this Agreement
and attempting to describe, in the Schedules hereto, as thoroughly and precisely as possible, Specifications, Intermediate Products,
and other information. However, despite these efforts, the Parties acknowledge the possibility of involuntary o inadvertent omissions
from the Schedules. The Parties will agree in writing to the changes to be made to the Schedules to add these inadvertent or involuntary
omissions and any such written agreement executed by the Parties shall serve as an amendment to this Agreement.



 


		42.	AMENDMENTS



 


Any amendment, modification or
supplement of or to any provision of this Agreement, including the Schedules hereto, shall be effective only in writing and signed
by a duly authorized officer of suitable title of all Parties hereto. The Parties hereto waive the right to amend the provisions
of this Article 42 orally.


 




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CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		43.	SEVERABILITY



 


Each Section of this Agreement
is a distinct and severable Section and if any Section is deemed illegal, void or unenforceable, the validity, legality, or enforceability
of any other Section or portion of this Agreement shall not be affected thereby.


 


		44.	COUNTERPARTS



 


This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the
same instrument.


 


		45.	RELEASE OF CLAIMS



 


		45.1	For purposes of this Agreement, “Claims” shall mean any and all claims, actions, rights,
causes of action, demands, liabilities, debts, contracts, agreements, assignments, assumptions, obligations, losses, and damages
of every kind and nature, whether separate, joint, individual, or class claims, counterclaims, cross-claims, third-party claims,
or claims for indemnity or contribution, whether asserted or unasserted, anticipated or unanticipated, accrued or unaccrued, direct
or indirect, fixed or contingent, known or unknown, under federal, state, or common law or any other law or regulation, at law
or in equity, which Flamel did have, may have, or could claim to have against GSK relating to: GSK’s submission of the CASPER
abstract for publication in August 2007; the securities/shareholder litigation currently pending against Flamel; and/or GSK’s
decision not to assert its patents against any of the current or future generics who have filed or will file paragraph iv certifications
that reference GSK patents listed in the Orange Book.



 


		45.2	As part of the consideration for the execution of this Agreement, and the obligations and agreements
of GSK set forth hereunder, Flame!, on its own behalf and on behalf of its principals, affiliates, officers, directors, shareholders,
partners (limited and general), employees, agents, representatives, counsel, predecessors, successors, assigns, insurers, parents,
subsidiaries, affiliates, divisions, custodians, heirs, executors, trustees, and administrators, hereby releases, remises, quitclaims,
and forever discharges GSK and its principals, affiliates, officers, directors, shareholders, partners (limited and general), employees,
agents, representatives, counsel, predecessors, successors, assigns, insurers, parents, subsidiaries, affiliates, divisions, custodians,
heirs, executors, trustees, and administrators, from all Claims from the beginning of the world through the date of this Agreement.
This release does not include and specifically excludes all obligations that either GSK or Flamel has under this Agreement.



 




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CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


		46.	THIRD PARTY RIGHTS



 


No person who is not a party
to this Agreement shall have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.


 


		47.	GOVERNING LAW AND JURISDICTION



 


This Agreement shall be deemed
to have been made in the United States of America (USA), and its form, execution, validity, construction and effect shall be determined
in accordance with, and any dispute arising from the performance or breach hereof shall be governed by and construed in accordance
with, the laws of the State of New York (USA), without reference to conflicts of laws principles.


 


		48.	LIST OF SCHEDULES



 


Schedule A         Key Performance Indicators

Schedule B         EHS Requirements for Contract Manufacturers


Schedule C         Records Retention


Schedule D         GSK
Anti-Bribery and Corruption Requirements


IN WITNESS WHEREOF,
the Parties have caused this Supply Agreement for Commercial Supply to be duly executed by their authorized representatives as
of the Effective Date.


 


	FLAMEL TECHNOLOGIES S.A.	 	SMITHKLINE BEECIIAM (CORK) 

LIMITED
	 	 	 
	By:	 	 	By:	 
	 	 	 
	 	 	Name:	 
	 	 	 
	 	 	Title:	 
	 	 	 
	Date:	 	 	Date:	 


 




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CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


Schedule A

Key Performance Indicators (KPI’s)


A – Quality


 


	Measure	 	Calculation	 	Proposed 

target	 	
        To be reported

        by:

	Batches Non Right

First Time	 	Number of batches not released first time (rejected, re-worked or re-processed) ÷ total number of batches produced, reported as percentage	 	As agreed between the two parties.	 	Flamel
	Number of recalls	 	Number of Product recalls or Withdrawals	 	 	GSK
	Complaints	 	Number of customer complaints	 	 	GSK
	Overdue Audit

CAPAS	 	Number of audit CAPAS not closed by the agreed

due date in the month of reporting	 	 	GSK
	Overdue PPR	 	Number of Periodic Product Review not delivered

by the date on the agreed schedule	 	 	GSK




 


B - Customer Service


 


	Measure	 	Calculation	 	
        Proposed 

        target
	 	
        To be reported

        by:

	Perfect Order Fill -

Secondary 3rd Party

Supplier	 	Number of customer orders for which all items on the order are filled within +/- 10% and to within minus 3, and plus 0 days of the last agreed due date ÷ Total number of orders due to be delivered	 	As agreed between the two parties.	 	Flamel
	Stock Out Index	 	% of days Out of Stock	 	 	GSK




 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


Schedule B


 


EHS Requirements for Contract Manufacturers


 


	EHS Management
	 
	 	Contract manufacturers and key Suppliers shall:
	•	comply with all applicable Environment Health and Safety (EHS) laws, regulations and codes of practice;
	•	demonstrate EHS leadership and commitment and establish a management system for making EHS integral to the management of the site’s business;
	•	ensure that there is senior management responsibility for EHS;
	•	ensure that the site has adequate EHS and employee health advisory resources to enable the effective assessment and control of EHS risks and impacts;
	•	ensure that EHS risks are identified and assessed, that appropriate measures are in place to manage those risks and that resources are commensurate with level of risk;
	•	ensure that employees receive adequate training and information and are competent to manage EHS risks within their areas of responsibility;
	•	provide processes to enable effective communication and liaison with personnel on EHS matters;
	•	collect, analyse and communicate agreed EHS performance data to GSK;
	•	ensure that ENS adverse events, including health effects, are investigated so that actions can be taken to prevent recurrence. Report to GSK all confirmed or suspected adverse health effects or adverse events that result in:
	•	assess the performance of individual EHS programmes and the overall EHS framework to identify opportunities for improvement;
	•	allow GSK to conduct EHS audits relating to the manufacture, process, storage and disposal of materials and processes related to GSK products on mutually agreed dates at appropriate intervals;
	•	provide a prompt response to GSK EHS Audit Reports;
	•	establish and maintain good terms with regulators, neighbours and other stakeholders.
	 
	Loss Prevention
	 
	 	Contract manufacturers and key Suppliers shall:
	•	protect physical assets from loss, damage or prolonged incapacity that might interrupt business- critical activities or seriously affect GSK business;
	•	provide plans and capabilities in line with the risks to minimise the disruption arising from major fires and other catastrophic events;


 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


	•	minimise the impact of emergencies on people, the environment and the business;



	•	provide resources and capabilities to respond to foreseeable emergencies;
	•	minimise the risks of explosions, fires and large-scale releases of hazardous materials arising from chemical processes, bulk storage facilities or utilities;
	•	prevent fires from starting and minimise the EHS and loss impacts of any fire that does occur;
	•	provide adequate measures to detect fires and ensure the safety of life;
	•	minimise the risks to people, property and the environment from adverse events involving flammable liquids and gases and combustible dusts;
	•	ensure that buildings, building services and work equipment are maintained in good condition and that the control measures selected through risk assessment are implemented and provide adequate control of EHS risks;
	•	inspect work areas and supervise work activities to ensure control measures are effective;
	•	ensure that the EHS implications of new, and changes to existing processes, facilities and equipment are identified, evaluated and addressed. Achieve appropriate standards suggested by GSK via technical and risk management reviews.
	 
	Employee Health
	 
	 	Contract manufacturers and key Suppliers shall:
	•	ensure that risk assessments and controls identify and protect the most susceptible subgroup within the population of workers who are likely to work with it (e.g., pregnant women if cytotoxics are present, asthmatics if respiratory irritants are present);
	•	carry out health surveillance to:
	•	
        ensure that individuals are fit for work under requirements
        of current Good Manufacturing Practice (cGMP) and Quality Assurance (QA);

        identify and manage appropriately and effectively any individual
        health factors that may affect people’s ability to work safely;

        detect and report the most likely health effects that could
        be caused by exposure to a given hazard;

	•	protect the reproductive health of employees from workplace risks;
	•	optimise tasks, equipment and the work environment to meet the physical capabilities of each individual and reduce ergonomically related disorders;
	•	provide first aid and emergency medical assistance appropriate to the risks.
	 
	Environmental Risks
	 
	•	Contract manufacturers and key Suppliers shall:
	•	ensure that wastes, including rejected or returned products declared as wastes, are managed from the point of generation to the point of final disposal in a safe and responsible manner;


 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


	•	select waste disposal options that represent the best feasible environmental option;
	•	manage returned and rejected goods to minimise EHS and product security risks and where applicable enable the safe return of GSK products;
	•	manage site operations in a way that minimises the resources used and the waste generated;
	•	ensure that any adverse environmental impacts or nuisances associated with air emissions are eliminated or minimised;
	•	ensure that water is used’ efficiently and that wastewater is treated and discharged in a way that minimises adverse impacts to the receiving environment;
	•	take all prudent measures to prevent contamination of soil and groundwater and address known areas of contamination;
	•	ensure that effective measures to prevent and contain spillages and fire-water are in place;
	•	minimise, and ultimately eliminate, the use of Ozone Depleting Substances (ODSs) and their release to the environment.
	 
	Hazardous Activities
	 
	•	Contract manufacturers and key Suppliers shall:
	•	store and transfer materials securely so that EHS risks are minimised;
	•	prevent EHS adverse events associated with the operation, cleaning, maintenance and repair of work equipment and systems;
	•	ensure the appropriate selection, use, cleaning, maintenance and storage of Personal Protective Equipment (PPE);
	•	ensure that EHS risks are minimised during potentially high-risk activities including construction, maintenance, cleaning and engineering tasks by implementing a permit-to-work system;
	•	minimise the risks of injuries, damage to property or environmental incidents arising from the use of vehicles and other transport equipment on sites;
	•	ensure that materials are transported and supplied to the recipient in a way that minimises risks to persons, property and the environment.
	 
	Hazardous Agents
	 
	•	Contract manufacturers and key Suppliers shall:
	•	ensure that the EHS hazards of materials stored, handled, produced or transported by the site are identified and communicated to all affected persons;
	•	ensure that occupational and environmental exposure limits or hazard categories are used in risk assessments and in the selection of control measures;
	•	ensure risks of exposure to GSK substances are controlled to below GSK Occupational Exposure Limits (OELs);
	•	prevent injury, illness and environmental impact arising from the use, storage and handling of chemical agents;


 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


	•	prevent employees from becoming sensitised to materials in the workplace and minimise the adverse effects on any employees who do become sensitised;



	•	control exposures to biological agents and prevent the uncontrolled release of such agents into the environment;
	•	control exposures to ionising radiation and prevent the uncontrolled release of radioactive materials into the environment;
	•	minimise the risks associated with the installation, use and maintenance of electrical systems and equipment;
	•	minimise the risk of noise-related adverse effects on personnel and on the local community.


 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


Schedule C


 


Records Retention


 


	Record	 	Retention Period
	•	Batch Related Records, including all records of laboratory testing, environmental monitoring, production, cleaning and sanitisation, calibration, equipment maintenance, equipment logbooks, process control deviations, out of specification (OOS), complaints, recalls, or other investigations.	 	•	[***]
	•	Raw material records, including documentation related to active materials, starting materials, intermediates, excipients and packaging components including all laboratory records, deviations, OOS or other investigations.	 	•	[***]
	•	Master Copies of Operating Instructions and Standard Operating Procedures	 	•	[***]
	•	Training Records, Job Descriptions and Organisation Charts	 	•	[***]
	•	Validation Documents, including Validation Master Plans, validation protocols, validation reports and validation batch records), method validation, specifications	 	•	[***]
	•	Facility Plans, Drawings and Qualification Reports	 	•	[***]
	•	Product Specifications (Every Version)	 	•	[***]
	•	Audit Schedules	 	•	[***]
	•	Audit Reports	 	•	[***]
	•	Change Control Documentation (Product Specific)	 	•	[***]
	•	Change Control Documentation (Not Product Specific)	 	•	[***]
	•	Periodic Product Review Reports	 	•	[***]
	•	Contract Personnel and Consultant Records, i.e. Curriculum vitae and any associated documentation.	 	•	[***]


 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


	•	Computer System Documentation — Manufacturing Applications/Systems	•	[***]


 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


Schedule D


 


GSK Anti-Bribery and Corruption Requirements


 


The GSK Anti-Bribery and Corruption Policy
(POL-GSK-007) requires compliance with the highest ethical standards and all anti-corruption laws applicable in the countries in
which GSK (whether through a third party or otherwise) conducts business. POL-GSK-007 requires all GSK employees and any third
party acting for or on behalf of GSK to ensure that all dealings with third parties, both in the private and government sectors,
are carried out in compliance with all relevant laws and regulations and with the standards of integrity required for all GSK business.
GSK values integrity and transparency and has zero tolerance for corrupt activities of any kind, whether committed by GSK employees,
officers, or third-parties acting for or on behalf of the GSK.


 


It is a material term of this Agreement
that Supplier (i.e. Flamel for the purpose of this Agreement) shall comply with the following:


 


1.       Supplier
shall comply fully at all times with all applicable laws and regulations, including but not limited to applicable anti-corruption
laws, of the territory in which Supplier conducts business with GSK.


 


2.       Supplier
agrees that it has not, and covenants and that it will not, in connection with the performance of this Agreement, directly or indirectly,
promise, authorise, ratify or offer to make or make any “payments” of “anything of value” (as defined in
the glossary section below) to any individual (or at the request of any individual) including a “government official”
(as defined in the glossary section below) for the improper purpose of influencing or inducing or as a reward for any act, omission
or decision to secure an improper advantage or to improperly assist the Supplier or GSK in obtaining or retaining business.


 


3.       Supplier
agrees that it has not, and covenants and that it will not, in connection with the performance of this Agreement, directly or indirectly,
promise, authorise, ratify or offer to make or make any “facilitating payments” (as defined in the glossary section)
to any individual (or at the request of any individual) including a “government official” (as defined in the glossary
section).


 


GLOSSARY


 


The terms defined herein should be construed
broadly to give effect to the letter and spirit of POL-GSK-007.


 


Anything of Value: this
term includes cash or cash equivalents, gifts, services, employment offers, loans, travel expenses, entertainment, political contributions,
charitable donations, subsidies, per diem payments, sponsorships, honoraria or provision of any other asset, even if nominal in
value.


 




    	 



    	 



    

 


CONFIDENTIAL TREATMENT REQUESTED


[***] – THE CONFIDENTIAL PORTION
OF THIS AGREEMENT WHICH HAS BEEN REDACTED IS MARKEED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.


 


EXECUTION VERSION


 


Facilitating Payments:
otherwise known as “greasing payments” shall mean a payment to an individual to secure or expedite the performance
of a routine government action by government officials.


 


Government Official shall
mean: (i) Any officer or employee of a government or any department, agency or instrument of a government; (ii) Any person acting
in an official capacity for or on behalf of a government or any department, agency, or instrument of a government; (iii) Any officer
or employee of a company or business owned in whole or part by a government; (iv) Any officer or employee of a public international
organisation such as the World Bank or United Nations; (v) Any officer or employee of a political party or any person acting in
an official capacity on behalf of a political party; and/or (vi) Any candidate for political office.


 


Payments: this term
refers to and includes any direct or indirect offers to pay, promises to pay, authorisations of or payments of anything of value.