EXECUTION VERSION SUPPLY AGREEMENT BETWEEN TEVA PHARMACEUTICAL INDUSTRIES LTD. AND IMPAX LABORATORIES, INC. DATED AS OF JUNE 20, 2016 -------------------------------------------------------------------------------- TABLE OF CONTENTS Page Article I. DEFINITIONS 3 Section 1.1. Definitions. 3 Section 1.2. Incorporation by Reference and Supremacy of FTC Order 5 Article II. MANUFACTURE AND SALE OF SUPPLY PRODUCTS 5 Section 2.1. Engagement. 5 Section 2.2. Sale and Distribution. 6 Section 2.3. Packaging and Labeling. 6 Section 2.4. Facility Maintenance; Inspection; Reports. 6 Section 2.5. Adverse Events. 7 Article III. FORECASTS, ORDERS AND SHIPMENT 8 Section 3.1. Forecasts. 8 Section 3.2. Orders. 8 Section 3.3. Delivery. 9 Article IV. REPRESENTATIONS AND WARRANTIES 10 Section 4.1. Representations and Warranties of the Manufacturer. 10 Section 4.2. Representations and Warranties of the Buyer. 12 Article V. QUALITY ASSURANCE 12 Section 5.1. The Manufacturer’s Covenants. 12 Section 5.2. The Buyer’s Covenants 13 Section 5.3. Rejection of Delivered Supply Products. 13 Section 5.4. Non-Conforming Supply Products. 14 Section 5.5. Recall. 14 Section 5.6. Quality Procedures. 14 Section 5.7. Regulatory Communications. 15 -------------------------------------------------------------------------------- Article VI. PRICE AND PAYMENTS 15 Section 6.1. Prices. 15 Section 6.2. Adjustment. 15 Section 6.3. Invoices. 16 Section 6.4. Taxes, etc. 16 Section 6.5. Separate Sale. 16 Section 6.6. Deductions. 16 Article VII. TERM AND TERMINATION 17 Section 7.1. Term. 17 Section 7.2. Termination. 17 Section 7.3. Effects of Termination. 18 Article VIII. FORCE MAJEURE 19 Section 8.1. Force Majeure. 19 Article IX. CONFIDENTIALITY 20 Section 9.1. Non-disclosure and Non-use Obligation. 20 Article X. INDEMNIFICATION 21 Section 10.1. By the Manufacturer. 21 Section 10.2. By the Buyer. 21 Section 10.3. Procedures. 21 Section 10.4. Insurance. 21 Section 10.5. Limitations. 21 Article XI. INTELLECTUAL PROPERTY RIGHTS 22 Section 11.1. License. 22 ii -------------------------------------------------------------------------------- Article XII. MISCELLANEOUS 22 Section 12.1. Assignment. 22 Section 12.2. Severability. 23 Section 12.3. Notices. 23 Section 12.4. Applicable Law. 25 Section 12.5. Jurisdiction, Venue, Service of Process, WAIVER OF JURY TRIAL. 25 Section 12.6. Entire Agreement. 26 Section 12.7. Headings. 26 Section 12.8. Independent Contractors. 26 Section 12.9. Intentionally Omitted 27 Section 12.10. Waiver. 27 Section 12.11. Counterparts. 27 Section 12.12. No Benefit to Third Parties. 27 Exhibits and Schedules Schedule 1.1 Specifications Schedule 3.2(d) Initial Firm Order Schedule 3.2(f) Certain Products Schedule 4.1(a) Minimum Shelf Life Schedule 6.1 Transfer Prices and Batch Quantities iii -------------------------------------------------------------------------------- SUPPLY AGREEMENT This Supply Agreement (this “Supply Agreement”), dated as of June 20, 2016, by and between Impax Laboratories, Inc., a Delaware corporation (“Buyer”), and Teva Pharmaceutical Industries Ltd., an Israeli corporation, acting directly or through its Affiliates (“Teva” or the “Manufacturer”). WITNESSETH: WHEREAS, the United States Federal Trade Commission (“FTC”) Staff has raised the concern that the proposed acquisition (the “Proposed Allergan Transaction”) of certain businesses and assets of Allergan plc (“Allergan”) by Teva pursuant to that Master Purchase Agreement dated as of July 26, 2015, by and between Allergan and Teva, as it may be amended from time to time (the “Master Purchase Agreement”), may produce anti-competitive effects in the alleged relevant product market(s) in the United States for the generic pharmaceutical on-market products listed on Schedule 6.1 (as such products are more specifically identified in this Supply Agreement), which would not be in the public interest, including, but not limited to, by eliminating competition between Teva and Allergan; WHEREAS, in order to resolve the concerns raised by the FTC Staff in these alleged product markets in the United States, Teva has agreed to divest certain assets relating to these products to the Buyer, to permit the Buyer to replace the lost competition by manufacturing, marketing and selling the generic products referred to above into the respective alleged product markets; WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of the date hereof, by and between the Buyer and the Manufacturer (the “Asset Purchase Agreement”), the Buyer purchased certain assets relating to the Supply Products (the “Acquisition”); WHEREAS, in connection with the Acquisition, the Buyer desires to engage the Manufacturer to manufacture and/or supply the Supply Products to the Buyer on a transitional basis, and to provide the Buyer with ample opportunity to establish its own Manufacturing capabilities, whether directly or through a third-party, upon the terms and subject to the conditions set forth herein; WHEREAS, the Manufacturer wishes to manufacture and/or supply the Supply Products to the Buyer upon the terms and subject to the conditions set forth herein; WHEREAS, concurrently with the execution of this Supply Agreement, certain Persons who will be Affiliates of Manufacturer as of the Closing entered into a supply agreement with the Buyer related to the Order (the “Other Supply Agreement”), pursuant to which (i) the Buyer agrees to engage the Affiliates of Manufacturer as of the Closing to manufacture and/or supply the Supply Products (as defined in the Other Supply Agreement) to the Buyer on a transitional basis, and to provide the Buyer with ample opportunity to establish its own Manufacturing (as defined in the Other Supply Agreement) capabilities, whether directly or through a third party, all upon the terms and conditions set forth therein and (ii) the Affiliates of -------------------------------------------------------------------------------- Manufacturer as of the Closing agree to Manufacture (as defined in the Other Supply Agreement) and/or supply the Supply Products (as defined in the Other Supply Agreement) to the Buyer upon the terms and subject to the conditions set forth therein; and WHEREAS, the FTC has or is about to issue an Order governing the scope, nature, extent and requirements of this Supply Agreement. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereto agree as follows: 2 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- Article I. DEFINITIONS Section 1.1. Definitions. Any capitalized terms or any other terms specifically defined in the Asset Purchase Agreement and used herein will have the meaning ascribed to them in the Asset Purchase Agreement, unless otherwise expressly set forth below or herein. As used herein the words “including” or “includes” shall be deemed to mean “including, without limitation,” or “includes, without limitation”. As used in this Supply Agreement, the following terms will have the meanings ascribed to them below: (a)“[****] Customers” means the retailers, wholesalers, and distributors whose [****] in units, of that Supply Product to U.S. customers during the [****] period prior to the date hereof. (b)“Actual Manufacturing Costs” has the meaning set forth in Section 6.1. (c)“ANDA” means the abbreviated new drug application for each Supply Product as approved by the FDA. (d)“API” means active pharmaceutical ingredient. (e)“Asset Purchase Agreement” has the meaning set forth in the Recitals. (f)“[****]” has the meaning set forth in Section 6.2(a). (g)“Buyer Taxes” has the meaning set forth in Section 6.4. (h)“Buyer Trademark” has the meaning set forth in Section 11.1. (i)“cGMP Requirements” means the FDA’s current good manufacturing practice requirements as promulgated under the FFDCA at 21 C.F.R. (parts 11, 210 and 211), and as further defined by FDA guidance documents, as such may be amended from time to time. (j)“COA” has the meaning set forth in Section 3.3(b). (k)“COC” has the meaning set forth in Section 3.3(b). (l)“Extended Term” has the meaning set forth in Section 7.1. (m)“FFDCA” means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et seq., as amended. 3 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- (n)“Firm Order” has the meaning set forth in Section 3.2. (o)“[****]” [****]. (p)“Force Majeure” has the meaning set forth in Section 8.1. (q)“Forecast” has the meaning set forth in Section 3.1. (r)“Forms” has the meaning set forth in Section 12.6. (s)“FTC Interim Monitor” means the monitor appointed by the FTC pursuant to the Decision and Order in In the Matter of Teva Pharmaceutical Industries Ltd. in 2016 relating to the Proposed Allergan Transaction. (t)“[****]” has the meaning set forth in Section 6.1. (u)“Initial Term” has the meaning set forth in Section 7.1. (v)“Manufacturer” has the meaning set forth in the preamble. (w)“Manufacturing” or “Manufactured” means the manufacture and packaging of Supply Products, including, without limitation, mix, fill and finish. (x)“Master Purchase Agreement” has the meaning set forth in the recitals. (y)“[****]” means the [****]. (z)“Party” or “Parties” means the Manufacturer and/or the Buyer, as applicable. (aa)“Purchase Order Date” has the meaning set forth in Section 3.2(a). (bb)“[****]” means the [****]. (cc)“Specifications” means the requirements and standards for the Supply Products set forth on Schedule 1.1, as amended or supplemented in accordance with this Supply Agreement. (dd)“Successful Product Technology Transfer” has the meaning set forth in Section 7.1 (ee)“Supply Agreement” has the meaning set forth in the preamble. (ff)“Supply Failure” means, [****], the inability of Manufacturer to supply at least [****] percent ([****]%) of ordered quantities of Supply Product to Buyer for a period of at least [****] following the confirmed delivery date set forth in a Firm Order. 4 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- (gg)“Supply Products” means the generic pharmaceutical on-market Supply Products listed on Schedule 6.1 that are to be supplied by the Manufacturer to the Buyer hereunder. (hh)“Term” has the meaning set forth in Section 7.1. (ii)“Transfer Prices” means the amount(s) to be paid by the Buyer to the Manufacturer pursuant to Section 6.1 and as may be adjusted from time to time pursuant to Section 6.2. Section 1.2. Incorporation by Reference and Supremacy of FTC Order (a)Incorporation of FTC Order. The Parties hereby agree and acknowledge that the terms and provisions of the Order of the FTC shall govern this Supply Agreement. The terms and provisions of the Order that pertain to this Supply Agreement are hereby deemed incorporated by reference into this Supply Agreement. (b)Supremacy of FTC Order. To the extent that any term or provision of this Supply Agreement conflicts with any corresponding term or provision of the Order, the Parties hereby agree that the terms or provisions of the Order shall control the rights and obligations of the Parties. (c)Supremacy of Certain Terms and Provisions of this Supply Agreement. Notwithstanding the application of Section 1.2(b), above, the Parties hereby agree that to the extent that any terms or provisions of this Supply Agreement do not conflict with the Order, but confer greater rights or benefits to the Buyer, or more greatly obligate the Manufacturer, than the corresponding terms or provisions of the Order, then the terms or provisions of this Supply Agreement shall control the rights and obligations of the Parties. Article II. MANUFACTURE AND SALE OF SUPPLY PRODUCTS Section 2.1. Engagement. During the Term and upon the terms and subject to the conditions set forth herein, the Buyer hereby agrees to purchase from Manufacturer and the Manufacturer agrees to supply the Supply Products to Buyer for sale by Buyer in the Territory. The Manufacturer shall have the right to subcontract its obligations under this Supply Agreement to a third party; provided, however that the Manufacturer shall be responsible for all the acts and omissions of the subcontractor and no subcontract shall release the Manufacturer from its responsibility for its obligations under this Supply Agreement. 5 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- Section 2.2. Sale and Distribution. The Buyer will sell the Supply Products only in the Territory and will not directly or indirectly sell or otherwise distribute the Supply Products outside of the Territory. The Buyer shall have the sole and exclusive right to determine all terms and conditions of sale by it of the Supply Products. Section 2.3. Packaging and Labeling. Supply Products and all labeling and packaging used in connection therewith shall include the appropriate product trademarks associated with any specific Supply Product, in the manner and to the extent specified in the Specifications. The Buyer will be responsible for ensuring the accuracy of all information contained on all labels for Supply Products and for the compliance of all such labels with applicable Governmental Rules. The Manufacturer will, or will cause its contractors to, supply all packaging and labels for Supply Products under this Supply Agreement. Such packaging and labels will be in accordance with the Specifications. The Manufacturer will make any changes to labeling and packaging specifications required in writing by the Buyer, at the Buyer’s sole cost and expense, within a reasonable timeframe to be agreed upon in writing by both Parties. The Buyer will be responsible for submitting any such changes to all applicable Governmental Entities for approval, if required, and the Manufacturer shall provide all support and documents reasonably necessary in this regard. Section 2.4. Facility Maintenance; Inspection; Reports. (a)The Manufacturer shall, at all times, maintain and operate, or cause its contractors to maintain and operate, all facilities where Supply Products are manufactured, packaged, tested, stored, warehoused or shipped, and implement such quality control procedures, as is reasonably required so as to be able to perform its obligations hereunder in accordance with all applicable Governmental Rules, including without limitation, the cGMP Requirements. Not more than [****] (or more often for follow‑up audits or inspections directed at significant or critical quality issues observed during the regular audit or brought to the Buyer’s attention through customer complaints or claims or by Governmental Entities), the Manufacturer shall permit, or cause its contractors to permit, quality assurance representatives of the Buyer or designated third parties to inspect such facilities, operations, documents, and records related to the handling, manufacture, testing, inspection, packaging, storage, disposal and transportation of the Supply Products by the Manufacturer or the applicable contractor upon reasonable notice (which shall not be less than [****]), during normal business hours and on a confidential basis. The Manufacturer shall also permit, and cause its contractors to permit, representatives of the FDA to inspect such facilities as requested by the FDA. The Manufacturer shall promptly provide, or cause its contractor to provide, the Buyer with a copy of any FDA Form 483s received at the conclusion of an inspection relating to any Supply Product or any facility where any Supply Product is Manufactured (to the extent the observation affects the Manufacture of the Supply Product). 6 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- (b)The Manufacturer shall maintain adequate and accurate records consistent with the applicable Specifications, including records covering quality control testing and release of the Supply Products and all other Manufacturing services provided hereunder in material compliance with the cGMP Requirements and any other relevant Governmental Rules, at all times during the performance of the Manufacturing services and for a period as required by Governmental Rules. (c)The Manufacturer shall promptly notify Buyer of any FDA inspection of the Manufacturing facilities (but in any event no later than [****] after the commencement of such inspection) if such inspection pertains to any Supply Product and, in such case, shall make all such records available to the FDA as required by applicable Governmental Rules. The Manufacturer shall promptly notify Buyer of any such disclosure and shall provide copies of any records made available to FDA, but only if and to the extent the same relate to the Supply Products and the Manufacturer’s obligations hereunder (redacted as appropriate to reflect any confidential information of the Manufacturer and its other customers); provided that any such disclosure shall be for this limited purpose and Buyer shall hold such information in confidence, and may not share any such information with any third parties except as required by a Governmental Entity or by Governmental Rules. (d)Subject to the foregoing record maintenance requirement and only with respect to any Supply Product that is supplied by the Manufacturer, the Manufacturer shall notify Buyer before destroying any records developed under this Supply Agreement and maintained in accordance with Section 2.4(b), it being understood that in respect of any Supply Product that is supplied by the Manufacturer pursuant to a retained ANDA, the Manufacturer shall only be required to notify Buyer before destroying any records to the extent the records relate to the Supply Products purchased by Buyer under this Supply Agreement. In such case, Buyer shall have the option of having the records shipped to Buyer in accordance with Buyer’s reasonable instructions and at Buyer’s sole cost and expense. Buyer shall also have the option, at any time not later than [****] after the termination date of this Supply Agreement, of having one copy of any records developed under this Supply Agreement shipped to Buyer in accordance with Buyer’s reasonable instructions and at Buyer’s sole cost and expense. Section 2.5. Adverse Events. Prior to the Closing Date the Parties shall each assign a representative to negotiate in good faith and agree on a process and procedure for sharing adverse event information which shall be documented in a pharmacovigilance agreement which the Parties shall use commercially reasonable efforts to agree upon and execute prior to the Closing Date. Pending adoption of such agreement, the Parties shall implement a transition plan for exchange of any and all information concerning adverse events related to use of the Supply Products regardless of source, and the Parties shall ensure compliance with legal requirements. 7 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- Article III. FORECASTS, ORDERS AND SHIPMENT Section 3.1. Forecasts. In order to assist in the planning of production runs for the Supply Products, the Buyer will, within [****] following the execution of this Supply Agreement, provide the Manufacturer with a non-binding written forecast of estimated quantities of Supply Product that the Buyer anticipates ordering from the Manufacturer during the next [****] period (the “Forecast”). This initial Forecast will be updated monthly [****] basis and such updated Forecast will be promptly delivered to the Manufacturer by the Buyer; provided that, in any updated Forecast, Buyer may not [****]. The Buyer will forecast [****]. Each Forecast will be made by the Buyer in good faith, taking into account reasonable projections of demand for the Supply Products including, without limitation, demand in line with prescription trends, and allowing for reasonable safety stock. The Manufacturer shall use its commercially reasonable efforts to ensure sufficient manufacturing capacity to meet the Forecast. Section 3.2. Orders. (a)The Buyer will place firm purchase orders (“Firm Orders”) for Supply Products in writing for delivery at least [****] after the Purchase Order Date. The Manufacturer shall accept or reject each Firm Order in writing within [****] after its receipt of each order, it being understood that the Manufacturer may reject a Firm Order [****]. Each Firm Order will specifically refer to this Supply Agreement [****]. Except with respect to the initial Firm Order as set forth on Schedule 3.2(d) hereto, each Firm Order shall cover the Buyer’s desired quantity of the Supply Products for the [****] period immediately following the applicable delivery date. The minimum size of any order placed by the Buyer with respect to a Supply Product will be a [****], except with the advance approval of the Manufacturer. The Supply Products set forth in Firm Orders will be delivered to such location as the Manufacturer designates in writing to the Buyer from time to time. The date an order will be deemed placed (the “Purchase Order Date”) will be the date that the Manufacturer actually receives the purchase order form. The Buyer will be fully responsible for any changes to a Firm Order. Firm Orders will be deemed accepted by the Manufacturer unless the Manufacturer rejects a Firm Order for reasons constituting a Force Majeure or for the failure of a Firm Order to comply with the provisions of this Supply Agreement and provides notification of such rejection to the Buyer within [****] Days of receipt of the Firm Order. In the event that a Firm Order is so rejected, the Manufacturer shall provide to Buyer the reasons for rejection in writing and the Manufacturer and the Buyer will cooperate in good faith to promptly resolve any supply issues raised by such order. The Manufacturer shall use reasonable best efforts to timely supply any Supply Products in accordance with the resolution of a rejected Firm Order. (b)The Manufacturer will supply the Supply Products in accordance with each Firm Order placed pursuant to the terms of this Supply Agreement by the Buyer and accepted by the Manufacturer including the quantities and delivery dates requested in each Firm 8 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- Order. Each Firm Order will set forth a delivery date, not less than [****] after the date of such order. In the event delivery of Supply Products pursuant to a Firm Order is delayed by more than [****], the Buyer will be entitled to revise its forecasts and reschedule orders under Section 3.1 and this Section 3.2 to address such delay in a reasonable manner without penalty of any kind whatsoever; provided, however, that any revision shall not be deemed a waiver by the Buyer of any claim for a breach of this Section 3.2(b) by the Manufacturer. (c)Notwithstanding any other provisions to the contrary herein or in the Asset Purchase Agreement, the Manufacturer in its sole discretion may supply or cause its Affiliate to supply Buyer with the Supply Products listed on Schedule 6.1 from a facility approved as a Manufacturing site under the applicable ANDA or NDA retained by the Manufacturer or an Affiliate, and the Parties shall cooperate with each other to effectuate any changes to the labeling, packaging or ANDA or NDA that may be required due to such fulfillment from the alternate Manufacturing site. (d)The initial Firm Order is attached as Schedule 3.2(d) hereto. The Manufacturer will deliver the Supply Products subject to the initial Firm Order no later than [****] following the Closing Date. (e)[****]. Except as otherwise provided in Section 3.2(f), this Section 3.2(e) shall be the sole and exclusive remedy of the Buyer with respect to any such failure to timely deliver the initial Firm Order for the Supply Products by the Manufacturer under this Supply Agreement (including through purchases of Supply Products by Buyer under Section 3.2(f), if applicable). (f)The Parties agree that all or a portion of Manufacturer’s existing and available inventory of certain Supply Products bearing the Manufacturer’s or an Affiliate’s NDC Number as set forth on Schedule 3.2(f) or as may otherwise be agreed by the Parties may be supplied by Manufacturer in order to fulfill Buyer’s initial Firm Order with respect thereto and to enable Buyer to sell such Supply Products to third parties. Each Party’s responsibilities with respect to Medicaid Reimbursements and Rebates, returns, rebates, adverse event reporting, audits, administrative fees, chargebacks, shelf stock adjustments and similar payments and reporting obligations in connection with the sale of such Supply Products bearing the Manufacturer’s or an Affiliate’s NDC Numbers are set forth in Appendix III of the Asset Purchase Agreement. (g)The terms of this Supply Agreement shall prevail over any conflicting, inconsistent or additional terms set forth in any Firm Order. Section 3.3. Delivery. (a)All Supply Products shipped under this Supply Agreement will be shipped [****] the Manufacturer’s facility or, if applicable, the designated facility of its contract manufacturer to such location designated by the Buyer in the applicable Firm Order. The [****] will pay all freight, insurance charges, taxes, import and export duties, inspection fees and other 9 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- charges applicable to the sale and transport of Supply Products purchased by the Buyer. Title and risk of loss and damages to Supply Products purchased by the Buyer will pass to the Buyer [****]. In the event of damage or loss to the Supply Products [****] will be responsible to file claims with the carrier. The Manufacturer shall notify Buyer of the following information concurrently with each shipment of Supply Product: (i) date of shipment, (ii) quantity and type of Supply Product shipped, and (iii) order number or other identifying information. (b)Manufacturer shall perform quality assurance testing with respect to the Supply Products sold hereunder, including stability testing, so that the Supply Products conform with the Specifications. With each shipment of Supply Products to Buyer, Manufacturer shall provide Buyer with a Certificate of Analysis (“COA”) and a Certificate of Compliance (“COC”) confirming that the Supply Products in such shipment have been tested in accordance with the ANDAs and meet the Supply Products Specifications. The results of such testing shall accompany each COA. In addition, with each shipment of Supply Products to Buyer, Manufacturer shall provide to Buyer a COC confirming that the Supply Products in such shipment have been manufactured in accordance with all of the requirements of the Agreement and the applicable ANDA, in all material respects (without giving effect to any materiality qualifications set forth in any provision of this Supply Agreement). Any deviations and investigations related to such Supply Products shall be completed in compliance with applicable ANDA, cGMP Requirements and the Quality Agreement (as defined in Section 5.6 hereof). (c)The Buyer represents and warrants that it will not ship Supply Product prior to the Closing Date. Article IV. REPRESENTATIONS AND WARRANTIES Section 4.1. Representations and Warranties of the Manufacturer. The Manufacturer hereby represents and warrants to the Buyer as follows: (a)Supply Product Compliance. All Supply Products delivered pursuant to this Supply Agreement by the Manufacturer (or any sub-contractor thereof) to the Buyer or its designee during the Term will at shipment be in compliance in all material respects with this Supply Agreement, the Specifications, the Quality Agreement and applicable Governmental Rules, including the cGMP Requirements, and the Manufacturing of such Supply Products will have been in accordance with the cGMP Requirements. At the time Manufacturer makes each shipment of Supply Product available for pick-up by Buyer (or Buyer’s carrier), the Supply Products shall: (i) not be adulterated or misbranded within the meaning of the FFDCA or within the meaning of any applicable state or municipal Law in which the definitions of adulteration and misbranding are substantially the same as those contained in the FFDCA, as such FFDCA and such Laws are constituted and in effect at the time of delivery; (ii) not be an article that may not be introduced into interstate commerce under the provisions of Sections 404 and 505 of the FFDCA; and (iii) have a shelf life that is not more than [****] into the product expiration, 10 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- provided, however, that with respect to the initial Firm Order, for Supply Products that have a normal shelf life [****], such Supply Products will have a minimum remaining shelf life of not less than [****], except with respect to the Supply Products set forth on Schedule 4.1(a), which shall have a minimum shelf life as set forth therein. (b)Authorization. This Supply Agreement has been duly executed and delivered by the Manufacturer and, assuming due execution and delivery by the Buyer, constitutes a valid and binding obligation, enforceable against the Manufacturer in accordance with its terms, except as enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Laws relating to creditors’ rights generally and by general equitable principles. The execution, delivery and performance of this Supply Agreement have been duly authorized by all necessary action on the part of the Manufacturer and its respective officers and directors. (c)No Encumbrance. Title to all Supply Products supplied to Buyer hereunder shall pass to Buyer as provided herein free and clear of all Encumbrances, other than Permitted Encumbrances. (d)Absence of Conflicts. The execution, delivery and performance of this Supply Agreement by the Manufacturer does not conflict with or constitute a default under any agreement, instrument or understanding, oral or written to which it is a party or by which it may be bound, does not conflict with any provision of any of its organizational documents and does not conflict with or violate any Governmental Rule or court order or decree. (e)Organization and Standing. The Manufacturer is a corporation, duly organized, validly existing and in good standing under the laws of the State of Israel. (f)Power and Authority. The Manufacturer has the corporate power and authority to execute, deliver and perform this Supply Agreement and to consummate the transactions contemplated hereby. (g)Compliance With Law. Manufacturer has and will maintain throughout the term of this Supply Agreement all permits, licenses, registrations and other forms of governmental authorization and approval as required by Law in order for Manufacturer to execute and deliver this Supply Agreement and to perform its obligations hereunder in accordance with all applicable Laws. (h)No Debarment. Manufacturer is not debarred and has not and will not use in any capacity the services of any person debarred under subsection 306(a) or (b) of the Generic Drug Enforcement Act of 1992. If at any time this representation and warranty is no longer accurate, Manufacturer shall promptly notify Buyer of such fact . (i)No Enforcement Actions. There are no pending or, to the Knowledge of Manufacturer, threatened enforcement actions, recalls, withdrawals or notices of health or safety 11 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- risks to or from the FDA or other federal, state or foreign Governmental Entity which has jurisdiction over the Manufacturer’s operations which relate to the Supply Products. Section 4.2. Representations and Warranties of the Buyer. The Buyer hereby represents and warrants to the Manufacturer as follows: (a)Authorization. This Supply Agreement has been duly executed and delivered by the Buyer and, assuming due execution and delivery by the Manufacturer, constitutes a valid and binding obligation, enforceable against the Buyer in accordance with its terms, except as enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Laws relating to creditors’ rights generally and by general equitable principles. The execution, delivery and performance of this Supply Agreement have been duly authorized by all necessary action on the part of the Buyer and its respective officers and directors. (b)Absence of Conflicts. The execution, delivery and performance of this Supply Agreement by the Buyer does not conflict with or constitute a default under any agreement, instrument or understanding, oral or written to which it is a party or by which it may be bound, does not conflict with any provision of any organizational documents of the Buyer and does not conflict with or violate any Governmental Rule or court order or decree. (c)Organization and Standing. The Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware. (d)Power and Authority. The Buyer has the corporate power and authority to execute, deliver and perform this Supply Agreement and to consummate the transactions contemplated hereby. Article V. QUALITY ASSURANCE Section 5.1. The Manufacturer’s Covenants. The Manufacturer hereby covenants during the Term that it will (and will use commercially reasonable efforts to cause its contractors to): (a) manufacture, fill, package, test, handle, store, warehouse and ship the Supply Products in conformity with this Supply Agreement, Quality Agreement, Governmental Rules, and cGMP Requirements and the Specifications; (b) promptly (but in any event no later than [****] after becoming aware) inform Buyer of any inspections, communications, or material issues raised by the FDA in 12 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- connection with the Manufacturing of the Supply Products, and, in each case, shall provide Buyer with copies of any correspondence (including emails) relating thereto; (c) obtain and maintain all permits reasonably necessary to Manufacture and supply all Supply Product subject to an FDA approved ANDA in accordance with the Specifications, applicable Governmental Rules and this Supply Agreement; and (d) if Manufacturer becomes aware of any Supply Products that have not been manufactured in accordance with the Specifications and that have been supplied, promptly take such corrective action as shall be reasonably necessary to correct such nonconformity and inform Buyer in writing. Section 5.2. The Buyer’s Covenants The Buyer hereby covenants during the Term that it will: (a)hold, store, handle, ship, deliver, distribute and/or sell the Supply Products (i) in accordance with applicable cGMP Requirements and Governmental Rules, including but not limited to any risk management programs required by the FDA; and (ii) in compliance with the Specifications; (b)enter into all necessary compliance agreements as may be reasonably designated by the Manufacturer, including but not limited to agreements to cover quality assurance and adverse incident reporting; and (c)except in respect of the requirements set forth in Section 3.3(b) and Section 5.1 hereof, upon delivery of the Supply Products to the Buyer, the Buyer will be solely responsible for compliance with all quality control testing and other testing requirements set forth in this Supply Agreement and all related Governmental Rules with respect to such Supply Products. Section 5.3. Rejection of Delivered Supply Products. Within [****] of receipt by the Buyer at its applicable warehouse of any shipment of Supply Product and applicable COA and COC, the Buyer will inspect the Supply Product, COA and COC and advise the Manufacturer of any defect whereby the Supply Product does not conform to the Specifications. Any Supply Product not refused within [****] will be deemed accepted. If the Buyer wishes to refuse acceptance, the Buyer will, within such [****] period, provide written notice to the Manufacturer of its refusal to accept the defective Supply Product and the reason(s) therefor. In the event a hidden defect (i.e., one which could not have been reasonably identified during the initial [****] Buyer inspection period) is discovered at a later date whereby the Supplied Product does not conform to the Specifications, the Buyer shall inform the Manufacturer as soon as practicable after Buyer becomes aware of the alleged hidden defect. In the event that the Buyer refuses acceptance or rejects the Supply Product due to a hidden defect, the Manufacturer, upon confirmation of the reasons for refusal or rejection of the 13 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- Supply Product, will replace within [****] days or as soon as reasonably practicable the defective Supply Product at the Manufacturer’s sole cost and expense or refund the Transfer Price, at the Buyer’s option. If the Manufacturer and the Buyer do not agree on the refusal or rejection of Supply Products, then either Party may refer the matter for final analysis to [****]. [****]. Except as set out in this Section 5.3, the Manufacturer shall have no liability to Buyer for any defect (other than hidden defects) for which it has not received notice from the Buyer within the [****] Buyer inspection period or for any hidden defect for which it was not informed as soon as practicable after Buyer became aware of such hidden defect. Section 5.4. Non-Conforming Supply Products. Notwithstanding any other provisions of this Supply Agreement, the Buyer agrees to return to the Manufacturer (or, at Manufacturer’s direction, to its contractors) any Supply Products that do not conform with the Specifications at the time of shipment to the Buyer, or if the Buyer and the Manufacturer mutually agree, to dispose of such Supply Products as the Manufacturer may direct. The Manufacturer shall be responsible for the reasonable and documented costs associated with the return and proper disposal of all such Supply Products not in conformance with the Specifications at the time of shipment and shall promptly (and, in any event, within [****] or as soon as reasonably practicable) replace (at Manufacturer’s cost) or credit, at the option of the Buyer, such non-conforming Supply Products. Section 5.5. Recall. Manufacturer shall maintain traceability records in accordance with the applicable Governmental Rules, including cGMP Requirements, and in accordance with any written instructions or guidelines provided to Manufacturer by the Buyer, necessary to permit a recall, field correction or other notification to the field, of the Supply Products. Buyer, in consultation with Manufacturer, shall have the exclusive right to institute a recall and shall be responsible for managing the recall and communications with customers and Governmental Entities; provided, however, notwithstanding the preceding, that for any Supply Product supplied pursuant to an ANDA owned by Manufacturer, Manufacturer, in consultation with Buyer, shall have the exclusive right to institute a recall and shall be responsible for managing the recall and communications with customers and Governmental Entities. The Parties shall cooperate with each other in connection with any such efforts. In the event that any Supply Product is quarantined or recalled by Buyer, or is subject to stop-sale action, whether voluntary or by governmental action, it is agreed and understood that [****]. Said determination may be made by the Governmental Entity involved, or by mutual agreement of the Parties following examination and review of all records pertinent to the manufacture of the Supply Products subject to such recall. Section 5.6. Quality Procedures. Manufacturer and Buyer shall comply with the terms of the quality requirements set forth in a quality agreement to be negotiated in good faith by the Parties and entered into by the Parties as soon as practicable after the date hereof, but on or prior to the Closing Date (the 14 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- “Quality Agreement”) with respect to the manufacture of the Supply Products. To the extent that any inconsistencies or conflicts exist between the Quality Agreement and this Supply Agreement with regard to quality requirements and compliance with Governmental Rules, the provisions in the Quality Agreement shall prevail. Section 5.7. Regulatory Communications. Buyer shall be responsible for communicating with the FDA regarding the Supply Products and the Manufacturing performed by Manufacturer hereunder and Manufacturer shall not initiate contact with the FDA or such other regulatory authority regarding the Supply Products or the Manufacturing without Buyer’s prior written consent, except when required by the terms of this Supply Agreement or by applicable Governmental Rules; provided, however, notwithstanding the preceding, that for any Supply Products supplied pursuant to an ANDA owned by Manufacturer, Manufacturer shall be responsible for communicating with the FDA regarding such Supply Products and the Manufacturing performed by Manufacturer hereunder and Buyer shall not initiate contact with the FDA or such other regulatory authority regarding the Supply Products or the Manufacturing without Manufacturer’s prior written consent, except when required by the terms of this Supply Agreement or by applicable Governmental Rules. Each Party shall provide reasonable assistance to the other Party upon such Party’s reasonable request, and at the requesting party’s sole cost and expense, with respect to such regulatory communications. Article VI. PRICE AND PAYMENTS Section 6.1. Prices. The prices payable by the Buyer for each of the Supply Products will be the prices set forth on Schedule 6.1 and will be adjusted pursuant to Section 6.2 (the “Initial Price” and as may be adjusted pursuant to Section 6.2, the “Transfer Price”). The prices for the Supply Products set forth on Schedule 6.1 are [****] determined on a [****] in U.S. dollars over the [****] as the sum of the [****] as well as [****] as determined in accordance with U.S. GAAP [****] provided that the Transfer Prices for an applicable Supply Product [****] provided further that [****]. Section 6.2. Adjustment. (a)On each anniversary of the date Manufacturer fulfills an initial Firm Order with respect to any Supply Product, Manufacturer shall have the right to increase the Transfer Price of such Supply Product by [****]. (b)On the fourth and fifth anniversaries of the date Manufacturer fulfills an initial Firm Order with respect to any Supply Product, if the Buyer has not completed the transfer of the Product Technology (as defined in the Asset Purchase Agreement) pursuant to Section 15 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- 7.3(a) of the Asset Purchase Agreement, then Manufacturer shall have the right to a payment equal to [****] of total annual costs of goods for the applicable Supply Product for the immediately preceding contract year and Buyer shall promptly (and in any event within [****] of such anniversary) deliver or cause to be delivered to Manufacturer payment of such amount by wire transfer in immediately available funds, to the account or accounts designated in writing by Manufacturer to Buyer. Section 6.3. Invoices. The Manufacturer will send all invoices in respect of any Supply Products to a single address specified in writing by the Buyer to the Manufacturer following the date that such Supply Products subject to any Firm Order shall have been made available to the Buyer under Section 3.3(a). Payments for Supply Product sold hereunder will be made by the Buyer to the Manufacturer within [****] after the date of the invoice by check or electronic funds transmission in United States dollars as specified in any invoice, without any offset or deduction of any nature whatsoever. Notwithstanding the foregoing, the Parties acknowledge that the Manufacturer shall not invoice the Buyer, and the Buyer shall have no obligation to make payment hereunder, prior to the Closing Date. All payments will be made to such account as the Manufacturer will have specified in writing to the Buyer with written confirmation of payment sent by facsimile to such address as the Manufacturer will have specified in writing to the Buyer. If the Buyer fails to pay any undisputed invoiced amount when due, a service charge will be imposed by the Manufacturer equal to [****] that such undisputed amount is overdue. For the avoidance of doubt, Buyer will not have any obligation to make any payment in respect of the initial Firm Order if the Asset Purchase Agreement is terminated prior to the Closing Date. Section 6.4. Taxes, etc. The Buyer will bear solely the cost of any taxes, levies, duties or fees of any kind, nature or description whatsoever applicable to the sale and transportation of Supply Product sold by the Manufacturer to the Buyer (“Buyer Taxes”), and the Buyer will forthwith pay to the Manufacturer all such sums upon demand. Manufacturer and Buyer shall cooperate with each other and use their commercially reasonable efforts to obtain any certificate or other document from any person as may be necessary to mitigate, reduce or eliminate any such Buyer Taxes. Section 6.5. Separate Sale. Each shipment of Supply Product to the Buyer will constitute a separate sale, obligating the Buyer to pay therefor, whether said shipment is in whole or only partial fulfillment of any order or confirmation issued in connection therewith. Section 6.6. Deductions. Except as otherwise required by applicable Law, the Buyer agrees not to make any deductions of any kind from any payments becoming due to the Manufacturer unless the 16 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- Buyer will have received prior written authorization from the Manufacturer authorizing such deduction. Article VII. TERM AND TERMINATION Section 7.1. Term. The provisions of this Supply Agreement will commence on the date hereof and will expire on the second (2nd) anniversary of the Closing Date unless earlier terminated in accordance with this Article VII (the “Initial Term”). On a Supply Product-by-Supply Product basis, prior to the date on which (i) Buyer has successfully completed the transfer of the Product Technology pursuant to Section 7.3(a) of the Asset Purchase Agreement and (ii) Buyer has begun independent manufacture or supply and sales of the applicable Supply Product (“Successful Product Technology Transfer”), this Supply Agreement may be extended three (3) times at the request of the Buyer (the Buyer having provided at least [****] written notice prior to the expiration of the Initial Term to the Manufacturer) for an additional one (1) year term, subject to approval of the FTC Staff or the FTC Interim Monitor, and subject to earlier termination in accordance with this Article VII (the “Extended Term” and together with the Initial Term, the “Term”). Section 7.2. Termination. Either the Manufacturer, on the one hand, or the Buyer, on the other hand, as applicable, will have the right to terminate this Supply Agreement with immediate effect (except as otherwise stated below) upon written notice to the other upon the occurrence of the following: (a)the Manufacturer, on the one hand, or the Buyer, on the other hand, files a petition in bankruptcy, or enters into an agreement with its creditors, or applies for or consents to the appointment of a receiver or trustee, or makes an assignment for the benefit of creditors, or becomes subject to involuntary proceedings under any bankruptcy or insolvency Law; or (b)the Manufacturer, on the one hand, or the Buyer, on the other hand, fails to cure any non-compliance with any of the terms and conditions hereof within the time period specified in any prior written notice (which will be at least [****]) delivered to the non-compliant Party by another Party; provided; however, that the Manufacturer shall be permitted to terminate under this Section 7.2(b) only for the Buyer’s failure to pay amounts due to the Manufacturer pursuant to this Supply Agreement and not disputed in good faith by Buyer (it being understood that any amounts due for Supply Product rejected pursuant to Section 5.3 shall be deemed to be disputed in good faith); or (c)if the Buyer believes it has sufficient alternative supply of any Supply Product to meet its needs, then the Buyer may terminate this Supply Agreement with respect to such Supply Product upon [****] prior written notice to the Manufacturer; or 17 [****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- (d)except as specifically provided in Section 7.2(b), the Manufacturer shall not have any right to terminate its supply obligations under this Supply Agreement as a result of any breach by the Buyer; provided, however, that the Manufacturer shall be entitled to seek all other remedies available at Law or in equity; or (e)if the Parties mutually
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