Document:

Exhibit 10.15

 

Transfer Contract for the Right to the Use of State-owned Land

NKTZHZ [2010] No. (016)

 

Transferor: Nanjing Xingang Hi-Tech Company Limited

 

Assignee: Amphastar Nanjing Pharmaceuticals Co., Ltd.

 

 

Both parties of the contract hereunder:

 

Transferor: Nanjing Xingang Hi-Tech Company Limited (hereinafter referred to as “Party A”)

Assignee: Amphastar Nanjing Pharmaceuticals Co., Ltd. (hereinafter referred to as “Party B”)

 

Pursuant to the Interim Regulations of the People’s Republic of China Concerning the Assignment and Transfer of the Right to the Use of State-owned Land in the Urban Areas and other relevant laws and regulations, the two parties are hereby entering into this contract regarding the transfer and assignment of the right to the use of state-owned land by following the principles of being equal, voluntary, fair and mutually beneficial with thorough consultation.

 

Article I: Contract Subject

 

1.01 The land which Party A is transferring to Party B is located in the Nanjing Economic and Technological Development Zone, Title No. B-9-3, with a total area of 49,897 square meters (the final area shall be determined on the basis of the actual measurements of the land authority). Its location and four boundaries are shown in the figure attached.

 

Article II: Term of the Transfer

 

2.01 The term of transfer for the right to the use of state-owned land is 50 years starting from the date of transfer, which shall follow what is specified in the “State-owned Land Use Right Certificate” issued by the state-owned land administrative agency.

 

Article III: Use of the Land

 

3.01 The land referred to hereunder shall be used for industrial purposes.

 

3.02 During the transfer term, Party B is required to abide by the land use regulations as stipulated hereunder. Party B is required to obtain approval from the city’s state-owned land administrative agency and the city’s planning agency in the event of any changes in the land usage or planning requirements.

 

Article IV: Development and Utilization of the Land

 

4.01 Any development of and construction in the land to be transferred by Party B shall meet the planning requirements as set forth by the City of Nanjing and the Nanjing Economic and Technological Development Zone.

 

4.2 The area of the land used by Party B for its business offices and supporting facilities may not exceed 7% of the total area of the land to be transferred.

 

4.3 Party B agrees to commence construction before July 1, 2011. Should it fail to commence construction as scheduled, it shall obtain approval from the Administrative Committee of the Nanjing Economic and Technological Development Zone, and submit an application to the Administrative Committee 30 days in advance.

 

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If any delay to the construction is incurred due to any fault on the Assignee’s side, the term of delay may not exceed one year. If Party B follows the rules and submits the application for extension, the start date for construction shall be extended accordingly.

 

4.4 Party B agrees to complete the entire construction project by December 1, 2012 and meet the requirements for inspection and acceptance. Should it fail to complete the construction in a timely manner, it shall obtain approval from the Administrative Committee of the Nanjing Economic and Technological Development Zone, and submit an application to the Administrative Committee 30 days in advance. The extension may not exceed one year. If the start of construction is extended by the Administrative Committee of the Development Zone, the completion deadline of the construction shall be extended accordingly.

 

4.5 Party B agrees that it will invest a total of no less than RMB 100 million in fixed assets (including expenses spent on acquiring the land, constructing and installing buildings and structures, providing infrastructure, purchasing and installing equipment, etc.) within the land to be transferred, and it shall invest no less than RMB 2.6 million per Mu [0.1647 acre].

 

Article V: Infrastructure

 

5.01 Party A is responsible for providing infrastructure to the edge of the transferred land which includes “Seven Connections and One Leveling,” namely providing water supply, drainage, sewage, power supply, heat supply, communications and roads as well as leveling the site.

 

5.02 When carrying out development and construction within the scope of the land to be transferred, Party B shall follow the relevant regulations when connecting to the main lines, transformer substations and other facilities outside of the land to the transferred for water, gas, sewage and other utilities.

 

5.03 The Assignee agrees to allow various pipelines and conduits laid by the government as needed to enter, exit, cross over and pass through the land to be transferred. Such construction shall follow the principle of not impairing the regular operations of Party B.

 

Article VI: Transfer Price

 

6.01 The transfer price for the right to the use of the land hereunder is: RMB 336 (in traditional Chinese: RMB three hundred thirty-six) per square meter. The total of the transfer price is RMB 16,765,392 (in traditional Chinese: RMB sixteen million seventy hundred sixty-five thousand three hundred ninety-two) (the final amount shall be calculated on the basis of the area as specified in the Land Certificate).

 

Article VII: Payment Term and Method

 

7.01 Party B shall make a one-time payment to Party A for the land in the amount of RMB 16,765,392 (in traditional Chinese: RMB sixteen million seven hundred sixty-five thousand three hundred ninety-two) within 30 days upon the signing of this contract, of which RMB 3,350,000 (in traditional Chinese: RMB three million three hundred fifty thousand) shall serve as the security deposit.

 

7.02 Party B’s payments shall all be wired to the bank designated by Party A: Industrial and Commercial Bank of China, Xingang Branch, Account: 4301018609001010050.

 

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Article VIII: Transfer, Lease and Collateral of the Land

 

8.01 Lawful operations carried out by Party B on the land herein are protected by law. Upon receiving the “State-owned Land Use Right Certificate,” Party B is entitled to transfer and lease the land or use it as collateral in accordance with the law. However, should Party B transfer or lease the land herein, either partially or in its entirety, the new assignee is required to follow the overall planning requirements, environmental protection rules and industrial policies of the Development Zone in the course of all business which takes place on the land herein, and the new assignee shall obtain approval from relevant governmental agencies. In addition:

 

(1) If Party B transfers or leases a portion of the land herein for an industrial project of its cooperative business or affiliated entity, it shall at the same time transfer to the new assignee the discounted price of the land use right as stipulated hereunder. If the land herein is transferred with a profit, then section (2) below shall be enforced.

 

(2) In the event that Party B needs to transfer the land herein due to operational causes, either partially or in its entirety, it shall make up to the Administrative Committee of the Nanjing Economic and Technological Development Zone or one of its governmental agencies at a higher level the balance between the discounted price it is granted for the land use right and the base price of the same land (RMB 224,000 per Mu [0.1647 acre]) as of the signing of this contract.

 

(3) If Party B needs to transfer or auction the land herein as a result of shutdown, liquidation, dissolution or as required by the court in accordance with the law, it shall first use the payment for the land to make up to the Administrative Committee of the Nanjing Economic and Technological Development Zone or one of its governmental agencies at a higher level the balance between the discounted rate it is granted for the land use right and the base price of the same land (RMB 224,000 per Mu [0.1647 acre]) as of the signing of this contract.

 

8.02 Party B shall observe the following requirements if it transfers the right to the use of the land herein for the remaining term:

 

1. Party B must have possessed the State-owned Land Use Right Certificate for more than five years.

 

2. Party B shall obtain approval documents for the project transfer as well as the written comments from the Administration Commission of the Development Zone.

 

3. Party B must have completed more than 25% of the total development investment (excluding the land transfer price).

 

Article IX: Liabilities for Breach of Contract

 

9.01 Should Party A fail to perform the contract herein, it shall refund Party B twice the amount of the security deposit; should Party B fail to perform the contract herein, it shall forfeit its right to the security deposit refund.

 

9.02 Should any party breach this contract, the violating party shall pay a penalty in the amount of 3% of the total transfer price to the other party and assume damages for the actual loss incurred.

 

9.03 Party B shall pay a late fee for any outstanding payments in the amount of 0.3% of the total payable for each day the payment is overdue. If the overdue period exceeds three months, Party A is entitled to cancel this contract, and Party B shall be liable for any losses incurred to Party A as a result.

 

9.04 Should Party B fail to start its construction by the date as specified hereunder, and the land is deemed

 

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as unused, Party B shall be subject to the procedures of the state-owned land agency according to the law. This shall not apply in those instances whereby the failure to commence construction in a timely manner is the result of Force majeure or actions on the part of the government or any governmental agency.

 

9.05 Should Party B fail to complete its construction by the completion date as stipulated hereunder, it shall pay to a penalty to Party A in the amount of 1% of the total land transfer price for each day the construction is delayed. Should it fail to complete the construction within 1 year after the completion date as stipulated hereunder, the state-owned land agency may recover the use right for the undeveloped land for free. This shall not apply in those instances in which the failure to complete the construction in a timely manner is the result of Force majeure or any actions on the part of the government or any governmental agency.

 

9.06 Should the investment of Party B in the land herein fail to reach 90% of the total investment as stipulated hereunder, Party B shall pay a penalty to Party A in the amount of 1% of the total land transfer price for every 1% short.

 

9.07 If the proportion of land used for its business offices and supporting facilities exceeds the criteria stipulated hereunder, Party B shall pay a penalty to Party A in the amount of 1% of the total land transfer price for every 1% of excess. Should the overuse exceed 5%, Party B shall demolish [the construction] on its own.

 

Article X: Governing Law

 

10.01 The establishment, efficacy, interpretation and performance of this contract, as well as the resolution of any disputes, are protected and governed by the law of People’s Republic of China.

 

Article XI: Resolution of Disputes

 

11.01 The two parties hereto shall conscientiously perform all the terms hereunder. Any dispute arising in connection with the execution of this contract shall be resolved through consultation between the two parties. Should such consultation fail, either party may file a charge before the People’s Court [that has jurisdiction over] the land to be transferred herein.

 

Article XII: Effectiveness

 

12.01 This contract shall take effect once it is signed and sealed by the legal representatives (authorized representatives) of the two parties hereto.

 

Article XIII: Miscellaneous

 

13.01 The original Chinese copy of this contract and the appendices hereto shall be made in sextuplicate, two of which shall be held by each party while the remaining two copies shall be filed with the registration agency.

 

13.02 Once Party A transfers the right to the use of the land herein, all the rights and responsibilities as stipulated under the original contract and all of its appendices and registration documents are transferred as well.

 

13.03 Once Party B fulfills Article 7.01 hereunder, the two parties hereto shall apply for the registration of land use right transfer from the Nanjing Municipal Bureau of State-owned Land and Resources. At that time, both parties shall sign another contract for the transfer of land use right (in the format as provided by the Bureau of State-owned Land and Resources), the contents of which shall be based on this contract. Any portions stipulated hereunder which are not stipulated in the new contract shall continue to take effect.

 

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13.04 The two parties hereto may set up supplemental agreements after mutual consultation for any matters not covered hereunder, and the supplemental agreements shall carry the same legal force as the contract herein. Both parties agree to settle disputes arising from matters not covered hereunder in accordance with state, provincial and municipal laws and regulations.

 

 

	
Party A
    	
Party B
    
	
 
    	
 
    
	
Nanjing Xingang   Hi-Tech
    	
Amphastar Nanjing   Pharmaceuticals Co., Ltd.
    
	
Company Limited
    	
 
    
	
 
    	
 
    
	
[Seal] Nanjing   Xingang Hi-Tech 
    	
[Seal] Amphastar   Nanjing Pharmaceuticals Co., Ltd.
    
	
Co., Ltd.
    	
 
    
	
 
    	
 
    
	
Legal   Representative:
    	
 
    	
Legal   Representative:
    
	
 
    	
 
    	
[Signature] Zhang   Yongfeng
    
	
 
    	
 
    	
 
    
	
Authorized   Representative:
    	
 
    	
Authorized   Representative:
    
	
 
    	
 
    	
 
    
	
[Signature]   [illegible]
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date Signed:   December 31, 2010
    
	
 
    	
 
    	
Location: Nanjing   China
    
				

 

5

 

 

 

Supplemental Agreement

 

Both parties of the agreement hereunder:

 

Party A: Nanjing Xingang Hi-Tech Company Limited (hereinafter referred to as Party A)

Party B: Amphastar Nanjing Pharmaceuticals Co., Ltd. (hereinafter referred to as Party B)

 

For the purpose of satisfying the requirements with respect to the industrial layout and planning of the Development Zone and following its overall management and arrangements, after thorough consultation Party A and Party B are hereby entering into the following supplemental agreement regarding the transfer and assignment of the right to the use of the state-owned land located in the Nanjing Economic and Technological Development Zone, Title No. B-9-3:

 

Article I: Actual Transfer Price of Land

 

1.01 The transfer price for the right to the use of the land located in the Nanjing Economic and Technological Development Zone, B-9-3, is adjusted to: RMB 192 (in traditional Chinese: RMB one hundred ninety-two) per square meter. The total transfer price is thus RMB 9,580,224 (in traditional Chinese: RMB nine million five hundred eighty thousand two hundred twenty-four) (the final amount shall be calculated on the basis of the area as specified in the Land Certificate).

 

1.02 Party B shall make a one-time payment to Party A for the land transfer in the amount of RMB 9,580,224 (in traditional Chinese: RMB nine million five hundred eighty thousand two hundred twenty-four) within 30 days upon the signing of this agreement, of which RMB 1,916,000 (in traditional Chinese: RMB one million nine hundred sixteen thousand) shall also serve as the security deposit for the execution of the agreement herein.

 

1.03 Upon completion of the aforementioned payment, Party B shall apply for the State-owned Land Use Right Certificate from the Nanjing Municipal Bureau of State-owned Land and Resources.

 

Article II: Transfer, Lease and Collateral of the Land

 

2.01 Lawful operations carried out by Party B on the land herein are protected by law. Upon receiving the “State-owned Land Use Right Certificate,” Party B is entitled to transfer and lease the land or use it as collateral in accordance with the law. However, should Party B transfer or lease the land herein, either partially or in its entirety, it shall do so as stipulated by the Administrative Committee of the Nanjing Economic and Technological Development Zone.

 

2.02 Party B shall observe the following requirements if it transfers the right to the use of the land herein for the remaining term:

 

1. Party B must have possessed the State-owned Land Use Right Certificate for more than five years.

 

2. Party B shall obtain approval documents for the project transfer as well as the written comments from the Administration Commission of the Development Zone.

 

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3. Party B must have completed more than 25% of the total development investment (excluding the land transfer price).

 

Article III: Confidentiality

 

3.01 Once the supplemental agreement herein is signed, both parties shall abide by the confidentiality agreement and shall not disclose any information related to the supplemental agreement to any third party for any reason whatsoever.

 

3.02 Each of the parties hereto shall ensure that its respective employees, managers, management executives and other relevant personnel follow this article.

 

 

	
Party A: Nanjing   Xingang Hi-Tech
    	
Party B:
    	
Amphastar Nanjing
    
	
Company Limited
    	
 
    	
Pharmaceuticals Co.,   Ltd.
    
	

    	
 
    	

    
	
[Seal] Nanjing   Xingang Hi-Tech Co., Ltd.
    	
[Seal] Amphastar Nanjing
    
	
Designated Seal   for Contracts (1)
    	
Pharmaceuticals Co.,   Ltd.
    
	
 
    	
 
    
	
Legal   Representative:
    	
 
    	
Legal   Representative:
    
	
 
    	
 
    	
[Signature] Zhang   Yongfeng
    
	
 
    	
 
    	
 
    
	
Authorized   Representative:
    	
 
    	
Authorized   Representative:
    
	
[Signature]   [illegible]
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date signed:   Dec. 31, 2010
    
	
 
    	
 
    	
Location: Nanjing   China
    
				

 

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Explanation of Difference in Compensation for the Land

 

The following are the primary reasons as to why the actual amount compensated for the land that we purchased differed by a total of RMB 194,541.21 from the originally calculated price of RMB 3,774,585.21:

 

1.              We calculated the compensatory amount required for the land coded B-8-1 to be 9 * the actual amount paid / 50, namely 9 * 9,260,755.2 / 50 = RMB 1,666,935.93. After communicating with the Management Committee, they agreed to compensate our company a total of RMB 1,664,000 for the land coded B-8-1, which amounts to a difference in compensation of RMB 2,935.93.

 

2.              We calculated the compensatory amount for the land coded B-9-3 to be 11 * contract amount / 50, namely 11 * 9,580,224 / 50 = RMB 2,107,649.28. After communicating with the Management Committee, they agreed to compensate our company a total of 10 * contract amount / 50 for the land coded B-9-3, namely 10 * 9,580,224 / 50 = RMB 1,916,044. The means of compensation for this land was to adjust the original land purchase price of RMB 192 per square meter to RMB 153.6 (192 / 50 *4). Thus the total land purchase price went from RMB 9,580,224 to RMB 7,664,180, which amounts to a difference in compensation of RMB 191,605.28.

 

Analysis of primary reasons for the [price] difference: When calculating [the price] for the land coded B-9-3, we determined the difference in the lifespan to be 11 years, as the actual lifespan is from December 2010 to February 2050. The Management Committee followed its convention of performing calculations on only an annual basis; hence, the difference [in the lifespan] was determined to be 10 years. Adding to that the amount of compensation taken for the land coded B-8-1 has resulted in a final difference in compensation of RMB 194,541.21.

 

	
Explained By:
    	
[Signature] Hu Zhendong
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
June 5, 2012
    	
 
    

 

 

Supplemental Agreement

 

Both parties of the agreement hereunder:

 

Party A: Nanjing Xingang Hi-Tech Company Limited (hereinafter referred to as “Party A”)

Party B: Amphastar Nanjing Pharmaceuticals Co., Ltd. (hereinafter referred to as “Party B”)

 

On December 29, 2009, Party A and Party B signed a “Transfer Contract for the Right to the Use of State-owned Land (NKTZHZ [2009] No.012)” with respect to the land coded B-8-1 located in the Nanjing Economic and Technological Development Zone; on December 31, 2010, Party A and Party B signed a “Transfer Contract for the Right to the Use of State-owned Land (NKTZHZ [2010] No.016)” as well as a “Supplemental Agreement” with respect to the land coded B-9-3 located in the Nanjing Economic and Technological Development Zone. Due to the fact that the land coded B-8-1 and the land coded B-9-3 only have a lifespan of 41 years and 40 years, respectively, Party A shall provide reasonable compensation to Party B for the two parcels of land which have less than 50 years of land use rights. After thorough consultation, Party A and Party B are hereby entering into the following agreement with respect to the transfer and assignment of the right to the use of the state-owned land in the land parcels B-8-1 and B-9-3:

 

Article I: Actual Transfer Price of Land

 

1.1 The transfer price for the right to the use of the land coded B-8-1 is adjusted to: RMB 157.70 (in traditional Chinese: RMB one hundred fifty-seven and seventy fen) per square meter. The total transfer price is thus RMB 7,596,750 (in traditional Chinese: RMB seven million five hundred ninety-six thousand seven hundred fifty), which differs from the actual amount paid by Party B when the land B-8-1 was assigned by a total of RMB 1,664,000 (in traditional Chinese: RMB one million six hundred sixty-four thousand). The balance shall serve as a reasonable means of compensation from Party A to Party B to discount the transfer price for the right to the use of the land coded B-9-3.

 

1.2 The transfer price for the right to the use of the land coded B-9-3 is adjusted to: RMB 153.60 (in traditional Chinese: RMB one hundred fifty-three and sixty fen) per square meter. The total transfer price is thus RMB 7,664,180 (in traditional Chinese: RMB seven million six hundred sixty-four thousand one hundred eighty) (the final amount shall be calculated on the basis of the area as specified in the Land Certificate). The compensatory price of the land coded

 

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B-8-1 in the amount of RMB 1,664,000 (in traditional Chinese: RMB one million six hundred sixty-four thousand) shall be deducted from the total transfer price; thus the total payable by Party B for the transfer of the right to the use of the land coded B-9-3 is RMB 6,000,180 (in traditional Chinese: RMB six million one hundred eighty).

 

1.3 Party B shall make a one-time payment to Party A for the land transfer in the amount of RMB 6,000,180 (in traditional Chinese: RMB six million one hundred eighty) within 30 days upon the signing of this agreement.

 

1.4 Upon completion of the aforementioned payment, Party B shall apply for the State-owned Land Use Right Certificate from the Nanjing Municipal Bureau of State-owned Land and Resources.

 

Article II: Development and Utilization of the Land

 

2.1 Party B agrees to commence construction before November 1, 2012. Should it fail to commence construction as scheduled, it shall obtain approval from the Management Committee of the Nanjing Economic and Technological Development Zone, and submit an application to the Management Committee 30 days in advance. If any delay to the construction is incurred due to any fault on the Assignee’s side, the term of delay may not exceed one year. If Party B follows the rules and submits the application for extension, the start date for construction shall be extended accordingly.

 

2.2 Party B agrees to complete the entire construction project before May 1, 2014 and meet the requirements for inspection and acceptance. Should it fail to complete the construction in a timely manner, it shall obtain approval from the Management Committee of the Nanjing Economic and Technological Development Zone, and submit an application to the Management Committee 30 days in advance. The extension may not exceed one year. If the start of construction is extended by the Management Committee of the Development Zone, the completion deadline of the construction shall be extended accordingly.

 

Article III: Transfer, Lease and Collateral of the Land

 

3.1 Lawful operations carried out by Party B on the land herein are protected by law. Upon receiving the “State-owned Land Use Right Certificate,” Party B is entitled to transfer and lease the land or use it as collateral in accordance with the law. However, should Party B transfer or lease the land herein, either partially or in its entirety, it shall do so as stipulated by the Management Committee of the Nanjing Economic and Technological Development Zone.

 

3.2 Party B shall observe the following requirements if it transfers the right to the use of the land herein for the remaining term:

 

1. Party B must have possessed the State-owned Land Use Right Certificate for more than five years.

 

2. Party B shall obtain approval documents for the project transfer as well as the written comments from the Management Committee of the Development Zone.

 

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3. Party B must have completed more than 25% of the total development investment (excluding the Land Transfer Price).

 

Article IV: Confidentiality

 

4.1 Once the supplemental agreement herein is signed, both parties shall abide by the confidentiality agreement and shall not disclose any information related to the supplemental agreement to any third party for any reason whatsoever.

 

4.2 Each of the parties hereto shall ensure that its respective employees, managers, management executives and other relevant personnel follow this article.

 

Article V: Miscellaneous Stipulations

 

5.1 The supplemental agreement herein shall take effect once it is signed and shall govern in the event of conflict with the original contract or its supplementary agreement.

 

 

	
Party A:
    	
Party B:
    
	
Nanjing Xingang   Hi-Tech Company Limited
    	
Amphastar Nanjing   Pharmaceuticals Co., Ltd.
    
	
 
    	
 
    
	

    	

    
	
 
    	
 
    
	
[Seal] Nanjing   Xingang Hi-Tech Co., Ltd.,
    	
[Seal] Amphastar   Nanjing Pharmaceuticals
    
	
Designated Seal   for Contracts (1)
    	
Co., Ltd.   Designated Seal for Contracts
    
	
 
    	
 
    
	
Legal   Representative:
    	
Legal   Representative:
    
	
 
    	
[Signature] Zhang   Yongfeng
    
	
 
    	
 
    
	
Authorized   Representative:
    	
Authorized   Representative:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date Signed:   May 23, 2012
    
	
 
    	
Location: Nanjing   China
    

 

3Exhibit 10.16

 

LONG-TERM SUPPLY AGREEMENT

 

This Supply Agreement (this “Agreement”) dated the 30th of November, 2008, is by and between Qingdao Jiulong Biopharmaceutical Co., Ltd. located at Qingdao Jiulong Industrial Area, Jiaozhou, Qingdao, Shandong, P.R. China, 266319 (the “Supplier”) and International Medication Systems, Ltd. located at 1886 Santa Anita Avenue, South El Monte, California 91733 (the “Buyer”).

 

Whereas Buyer is a company engaged in the manufacture, marketing and sale of pharmaceutical products,

 

Whereas Supplier manufactures bulk raw material, including porcine-derived Heparin Sodium (the “Product”) for the pharmaceutical industry,

 

Whereas Buyer desires to buy quantities of the Product from Supplier, and Supplier desires to sell quantities of the Product to Buyer.

 

Now, therefore, in consideration of the premises and the mutual covenants hereinafter provided for, the parties agree as follows:

 

1.              Basic Agreement- Supplier agrees to manufacture and sell the Product to Buyer during the term of this Agreement and Buyer agrees to purchase the Product from Supplier during the term of this Agreement upon the terms and conditions set forth herein.

 

2.              Specifications, DMF and Manufacturing Methods and Quality — The Product means the bulk material meeting the specifications provided in Appendix-1 hereto (the “Specifications”). The Specifications are based on the updated USP monograph and/or the FDA requests. The Supplier represents, warrants, and covenants that the Product supplied to IMS shall at all times meet Buyer’s expected quality and the Specifications and be tested by the methods listed in Appendix-1 for each testing item. Drug Master File (DMF) filed with US FDA is specific for the Product of Supplier.

 

In the event that any health administration or governmental authority in any country requests additional information from the Buyer concerning the Product, Supplier shall promptly provide such information to the respective administration or Buyer. For the term of this Agreement, Supplier shall not change any Specification or any manufacturing methods that will impact the DMF or site of manufacture for the Product, without Buyer’s prior written consent to any such changes. The parties hereby acknowledge that the Product, covered by DMF, and supplied by Supplier to IMS is utilized as the starring material of the API of low molecular weight heparin, which will be used for commercial purposes in accordance with U.S. FDA approval (“Buyer’s Commercial Use”). When required by Buyer, and/or the FDA, Supplier agrees to change the Specifications by executing a written amendment to this Agreement.

 

The site of manufacture for the Product supplied hereunder shall be the Supplier’s facility in Jiulong Industrial Area Shandong P.R. China (“QJBC”). Supplier represents, warrants and covenants that its manufacturing facility is and shall always be in full compliance with current Good Manufacturing Practices (“cGMP”) as promulgated by the U.S. Food and Drug Administration and the International Committee on Harmonization (ICH) Guidance for Industry Q7A. Supplier also agrees to store samples, batch records and other documentation pertaining to the manufacturing, testing and release of the Product as required by applicable law, regulation (including cGMP), or industry practice.

 

3.              Price and Delivery Terms- The price for the Product, inclusive of delivery by air to Buyer (the “Purchase Price”) shall be assigned by purchase order (“Purchase Order” or “PO”). An example of a Purchase Order is set forth in Appendix-3. The delivery terms shall be at the Los Angeles port of entry, and the Product shall be preceded or accompanied by a quality control report signed by the head of quality unit for Supplier.

 

The Purchase Price shall be fixed for [***] months from the date hereof (“Initial Price Period”). Thereafter during the term of this Agreement, the Purchase Price shall be negotiated quarterly in a good faith and timely manner between Supplier and Buyer. Price increases shall be limited to a maximum of [***] percent [***] per year and only occur as a result of an increase in Supplier’s labor, starting materials, or processing costs exceeding [***] percent [***] of such respective cost, in the prior negotiated quarter, if applicable. Supplier will provide to Buyer adequate written evidence of such increases which is satisfactory to Buyer.

 

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

 

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If the price of crude heparin increases by greater than [***] percent [***] for at least a [***] consecutive month period (as compared to an average of the price of crude heparin during the previous [***] consecutive months) after the Initial Price Period, then Supplier may negotiate for an increase in the Purchase Price by the pro rata amount of such increase of crude heparin. Any negotiated increase shall be temporary, and the Purchase Price shall be proportionately reduced (based on the negotiated increase) should the price of crude heparin decline below such negotiated increase (based on a [***] average).

 

During the negotiating period, the price shall remain fixed and Supplier shall continue to sell the Product at the Purchase Price. If the Buyer does not agree to any change in the Purchase Price, the Buyer may immediately terminate this Agreement in Buyer’s sole discretion.

 

The Buyer will create a line of credit (“L/C”) arrangement with a mutually agreed to financial institution that will be used to make payments required hereunder to the Supplier (the “Bank”). The amount to be funded under the L/C will be based on the number of Product lots that are acceptable for shipping.

 

At Supplier’s sole expense, Supplier shall provide the Buyer with [***] samples for every Product lot (the “Sample”) with a Notice of Amount Available (“NAA”) for Buyer, prior to shipping of the entire lot of the Product (the “Batch”). The Buyer shall make every reasonable effort to test the Sample as quickly as possible (typically within [***] days). After testing, Buyer will either reject the lot, due to failure to meet preliminary specifications, or notify Supplier to ship the lot for formal testing.

 

If the sample is acceptable in accordance with the terms and conditions hereunder, a shipping notice will be issued by the Buyer and the L/C will be funded by the Buyer in the amount determined by mutually agreed unit price ($ per Mega) times the lot size (in Mega) shipped..

 

The Buyer will provide to Supplier written notice when the following has occurred; (1) the lot is exported by the supplier and received by the Buyer; and (ii) the formal full quality tests for the lot, performed within [***] weeks By Buyer, meet all expected quality and specification for the Product.

 

The Supplier may draw upon the L/C for payment when Supplier submits to the Bank a written notice prepared by the Buyer expressly stating that funds or a portion of the funds are to be released from the L/C (the “Written Notice”). The Written Notice will include the dollar amount to be released to Supplier along with a description of the product shipped.

 

In the event that the lot fails to meet the full quality tests referenced hereunder, the lot will be returned to the Supplier at Supplier’s sole cost and expense. Under such a circumstance, Buyer shall have the sole discretion to determine whether the funds available in the L/C for this lot will be available to fund other lots or returned to Buyer.

 

Notwithstanding anything to the contrary, in the event that any OSCS peak is observable in any Product lots, such Product will be destroyed in the United States at Supplier’s sole cost and expense in accordance with the current U.S. FDA policy. The parties hereby agree that Buyer shall have no financial responsibility for any Product lots that have an observable OSCS peak. The funds in the L/C for these lots with an observable OSCS peak will be assigned to other lots or returned back to Buyer, at the Buyer’s sole discretion.

 

In the event that the actual received amount of the lot is different from that on the NAA, the difference will be added in or deducted from the L/C payment for the next lot, and a notice will be sent, by mail, fax or e-mail, to the Supplier

 

4.              Warranty and Inability to Supply- The Product shall meet the Specifications and expected quality set forth in Appendix-1 for the entire shelf-life of the Product. In the event that Supplier is unable to meet the orders set forth in a PO or is only able to meet partial orders, Buyer shall be free to claim monetary damages from Supplier for such non-performance, including loss of revenue resulting from an inability to obtain the Product. In such cases, Supplier shall make every best effort to provide a sufficient quantity of Product in an expedited manner, Similarly, Buyer shall have the right to reject defective Product that it has received from Supplier, and Supplier shall replace the defective Product as set forth above. The defective Product shall be returned to Supplier at the sole expense of Supplier. In any situation, including a force majeure event, Supplier will give first priority to Buyer’s PO prior to supplying the Product to any of Supplier’s other customers.

 

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

 

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5.              Right of Inspection- Buyer shall have the right to inspect Supplier’s facilities. The Supplier represents, warrants, and covenants that QJBC will follow all applicable laws, regulations, rules, ordinances and codes, including but not limited to cGMP regulations, which are required by both the SDA and U.S. FDA for the manufacturing of the Product.

 

The Supplier further represents, warrants and covenants that Supplier may be audited by IMS or its representatives periodically during reasonable business hours; provided that Buyer provides Supplier with prior written notice at least five (5) days prior to the requested audit. Supplier shall provide all necessary conveniences to accommodate such audits.

 

The Supplier further represents, warrants and covenants that all documents related to production, quality assurance, laboratory analysis, storage records, shipping records and any other documents required by cGMP for the Product manufactured for the Buyer by the Supplier and its predecessor, Qingdao Kangyuan Pharmaceutical Co. Ltd, must be maintain for at least fifteen (15) years.

 

6.              Force Majeure- A party shall not be held liable to the other for failure to perform or fulfill an obligation required of the party to the extent such is prevented by force majeure including, but not limited to, acts of God, fire, industrial disputes, technical problems or disturbances, natural disasters, wars declared or undeclared, civil strike, embargo, lack of failure of transport facilities, currency restrictions, or events caused by legislation, regulations, or orders by any government or governmental agency or by any other supervening circumstances beyond the reasonable control of either party; provided, however, that the force majeure is limited to a period of three (3) months. If the force majeure event continues beyond three (3) months, then either party may terminate this Agreement by written notice to the other.

 

7.              Confidentiality- Supplier represents, warrants and covenants to use Buyer’s Confidential Information (defined below) only for the purpose of manufacturing and selling the Product to Buyer. Buyer undertakes to use all information named hereunder and received from or through Supplier, and in particular during any inspections pursuant to the provisions of Article 6 of this Agreement, only for the purpose of purchasing the Product from Supplier or for manufacturing any products containing the Product. The parties hereto guarantee to treat as confidential all documents, details, information and experience of a proprietary nature to the other party, especially concerning know-how, knowledge, information, business operations, agreements, processes and formulas that has come to the knowledge of the party at any stage in connection with this Agreement. The phrase “Buyer’s Confidential Information” shall mean all confidential and proprietary information, including, but not limited to, all of Buyer’s trade secrets, data, know-how, formulas, designs, drawings, photographs, documentation, forms of software or electronic media, equipment, processes, ideas, methods, concepts, facilities, construction plans and specifications, research, development, and business and financial information. At Buyer’s request, all tangible Buyer’s Confidential Information possessed by Supplier, including, but not limited to, all copies, translations, interpretations and adaptations thereof must be returned immediately to Buyer. In the event Supplier becomes legally compelled to disclose any of Buyer’s Confidential Information, Supplier shall provide the Buyer with written notice thereof, in order to provide Buyer an opportunity to obtain a protective order or other appropriate remedy, and shall obtain reliable assurances that such information will be accorded confidential treatment.

 

8.              Non-Infringement and Indemnity- Supplier represents and warrants that its process for manufacturing the Product doss not infringe the intellectual property of any third party and hereby agrees to fully indemnify Buyer against any liability, damage, loss, cost or expense (including reasonable attorneys’ fees) for any such infringement. Upon filing of any such claim or suit, Buyer shall immediately notify Supplier and shall permit Supplier, at its sole cost, to handle and control such claim or suit. Buyer shall have the right to participate in the defense of such claim or suit at its own expense. Both Buyer and Supplier shall each maintain a comprehensive general liability insurance policy providing sufficient extensive coverage for personal injury, bodily injury, property damage, or such other coverage as is usual and customary in the pharmaceutical industry to procure in the case of activities to be carried out by the respective party because of and under this Agreement.

 

9.              Term- This Agreement shall become effective on the date first set forth above, and shall continue thereafter for five (5) years. Thereafter, this Agreement shall be automatically renewed for successive two-year periods unless either party hereto gives written notice to the other party at the respective address set forth herein of its intentions not to extend the term, said notice to be given at least one (1) month prior to expiry of the then current term.

 

10.        Termination for Cause- Buyer shall have the right in its sole discretion to immediately terminate this Agreement by written notice to Supplier in the event that: a) Supplier should breach or fail to observe or perform any term or condition of this Agreement and such breach or default is not cured and remedied in full within sixty (60) days after written notice thereof is given to Supplier; b) Supplier by voluntary of involuntary action goes into liquidation or receivership; or dissolves or files a petition for bankruptcy or reorganization or for suspension of payments or is adjudicated as bankrupt, becomes insolvent or assigns or makes

 

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any composition of its assets for the benefit of creditors; c) Buyer determines in good faith that there are reasonable scientific or commercial reasons to stop the supply of the Product by Supplier. Notwithstanding the foregoing, Supplier shall have the right in its discretion to immediately terminate this Agreement by written notice to Buyer in the event that: a) Buyer should breach or fail to observe or perform any term or condition of this Agreement, and such breach or default is not cured and remedied in full within sixty (60) days after written notice thereof is given to Buyer; or b) Buyer by voluntary or involuntary action goes into liquidation or receivership; or dissolves or files a petition for bankruptcy or reorganization or for suspension of payments or is adjudicated as bankrupt, becomes insolvent or assigns or makes any composition of its assets for the benefit of creditors.

 

The parties hereby agree that any termination by Buyer due to a breach by Supplier, shall not release Supplier from its obligation and liabilities under this Agreement

 

11.        Severability- In the event that individual provisions of this Agreement become wholly or partially invalid, the effectiveness of the remaining rulings shall not be affected. The contracting parties undertake to replace an invalid ruling by a valid one which most closely corresponds with the economic intention of the invalid ruling.

 

12.        Exclusivity- Supplier shall sell the Product exclusively to Buyer in the United States. Buyer agrees to purchase the Product from Supplier unless:

 

(1) The Product cannot meet the Specifications or the expected quality, which is attached in Appendix-1 and is agreed to by the parties, and such failure to achieve the Specifications or the expected quality set forth in Appendix-1 occurs frequently;

 

(2) The Supplier fails to provide Buyer with sufficient quantity of the Product to meet Buyer’s Commercial Use;

 

(3) The price of the Product is 10% greater than the price of heparin sodium that is commercially available from any other supplier, or

 

(4) A material violation of cGMP is caused by any sites of the Supplier.

 

13.         Most Favorable Pricing - Supplier represents, warrants and covenants that the Purchase Price or negotiated increase will not be less favorable than those prices charged by Supplier to any other North American customer under similar terms, purchasing equal or lesser quantities of the same or similar Product during the term. If lower prices are made available by Supplier to any other North American customer under similar terms, Supplier must promptly notify Buyer in writing and make those lower prices available to Buyer. The lower prices then will apply to all current and subsequent POs.

 

14.         Notice- All notices or other communication permitted or required hereunder shall be sufficiently given if sent by registered mail, postage prepaid, or by telefax or by e-mail Any such notice or communication required or permitted hereunder shall be deemed to have given as of the date mailed or telefaxed as evidenced by the postmark on the envelope or the official notice of time and date on a telefax, or by e-mail.

 

15.        Assignment and Subcontract- This Agreement or the rights and duties hereunder may be transferred, assigned, pledged or delegated by the Buyer to an affiliate without the prior written consent of the Supplier. Except as provided under this Agreement, Supplier may not assign or subcontract any of it obligations to manufacture and supply the Product to Buyer, in whole or in part, without Buyer’s prior written consent, which may be withheld at Buyer’s sole discretion.

 

16.       Governing Law and Dispute Resolution- Article 2 of the California Uniform Commercial Code (“UCC”) is incorporated herein and is intended to supplement this Agreement and any interpretation of it and any PO. In the event of a conflict between the UCC and any term hereunder, the term hereunder will control the parties’ rights and obligations. This Agreement and any PO shall be governed entirely by the laws of the State of California, U.S.A. The parties shall strive to settle any disputes amicably between themselves. Any controversy or claim arising under, out of, in connection with, or relating to this Agreement which cannot be settled amicably shall be resolved by arbitration in Los Angeles, California, before a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association and Supplier hereby agrees not to assert forum non convenience with respect to arbitration in Los Angeles.

 

17.        Compliance with Laws And Regulations — Supplier represents, warrants and covenants that Supplier shall at all times comply with all applicable federal, state or local laws, codes, ordinances, regulations, rules, standards, requirements or orders.

 

18.        Publicity- Supplier may not use the names of Buyer, its affiliates or products or any signs, markings or symbols from which a connection to Buyer may, in Buyer’s sole judgment, be reasonably inferred or implied, in any manner whatsoever without Buyer’s prior written approval. Buyer may withhold approval at Buyer’s sole discretion.

 

19.        Waiver- Waiver of any default or series of defaults by Buyer does not constitute a permanent waiver of any of Buyer’s rights or entitlements and does not bar enforcement by Buyer of any provision contained in this Agreement or any PO.

 

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20.        Remedies Cumulative - Any right of cancellation, termination or other remedy arising under this Agreement or conferred by applicable law, including the remedies of specific performance and cover, are cumulative and are not exclusive, unless otherwise specifically limited or excluded within this Agreement.

 

21.        Survival - Any provisions set forth in this Agreement related to insurance, indemnity, confidential information, publicity, assignment, governing law, records, audits, warranties or representations survive the completion of performance, cancellation or termination of this Agreement for a period of at least five (5) years.

 

22.        Entire Agreement- This Agreement contains the entire understanding of the parties with respect to the subject matter hereof. No amendment or alteration of this Agreement shall be valid unless agreed upon by both parties in writing. The Appendices to this Agreement shall be considered an integral part thereof.

 

IN WITNESS WHEREOF both parties have caused this Agreement to be signed by their respective duly authorized officers or representatives as set forth below.

 

	
Qingdao Jiulong   Biopharmaceutical Co. Ltd.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Wei Ru Wang
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Wei Ru Wang
    	
 
    
	
 
    	
 
    	
 
    
	
Its:
    	
President
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
International Medication   Systems, Ltd.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Stephen Campbell
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Stephen Campbell, Esq.
    	
 
    
	
 
    	
 
    	
 
    
	
Its:
    	
Senior Vice President of Regulatory Affairs
    	
 
    

 

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APPENDIX-1

 

[***]

 

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

 

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CERTIFICATE OF ANALYSIS

 

[***]

 

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

 

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Appendix-3 PO sample

 

Heparin Sales Contract

 

	
Supplier:
    	
 
    	
Qingdao   Jiulong Biochemical Pharmaceutical Co., Ltd. (QJBC)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Jiulong   Industry Park Jiaozhou Qingdao Shandong P.R. China
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
International   Medication Systems, Limited (IMS)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
1886 Santa Anita Ave. South, El Monte California   91733 USA
    

 

Items:

 

1. This contract is subject to the Long-Term Supply Agreement signed by both parties.

 

2. Price:          USD per USP Mega,          lots received, Price is effective for          months. (Number of lots is determined by number of lots actually received and accepted by the Buyer.) The weight per lot is approximately 50 kg.

 

3. Manufacturer: Supplier warrants that all lots of product provided are manufactured by QJBC.

 

4. Specifications: In accordance with the Long-Term Supply Agreement

 

5. This P.O. orders          lots.

 

6. P.O. #:          (Assigned by IMS)

 

	
Supplier:
    	
Buyer:
    
	
 
    	
 
    
	
Date:
    	
Date:
    

 

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