Amendment to Sinotherapeutics Distribution and Supply Agreement
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
AMENDMENT NO. 1
To the DISTRIBUTION AND SUPPLY AGREEMENT
This Amendment No.1 (this “Amendment No. 1”) to the DISTRIBUTION AND SUPPLY AGREEMENT with an effective date of August 2, 2019, by and between SINOTHERAPEUTICS INC., a limited company incorporated pursuant to the laws of the People’s Republic of China, with an business address at 1F, Building 3, No. 99 Haike Road, Pudong, Shanghai and/or its Affiliates (”Supplier”), and LANNETT COMPANY, INC., a Delaware corporation having an address of 9000 State Road, Philadelphia, PA 19136 and/or its Affiliates (“Lannett”), is made effective as of April 1, 2020 (the “Amendment No.1 Effective Date”). Supplier and Lannett may hereafter be referred to collectively as the “Parties” and individually as a “Party”. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.
WHEREAS, Supplier and Lannett have entered into the DISTRIBUTION AND SUPPLY AGREEMENT (the “Agreement”), which granted Lannett the right to distribute, market and sell the Product in the Territory;
WHEREAS, the Product was successfully launched in September 2019 in the Territory and is currently the sole generic product in the Territory (excluding the Authorized Generic) (the “Sole Generic”);
WHEREAS, pursuant to the Agreement, the Parties have set forth the supply price on EXHIBIT A, the Payment Terms in Section 3.5, the Net Profit Split model in Section 3.7, and the Term in Section 16.1;
WHEREAS, the Parties now mutually desire to amend the supply price, Payment Terms, Net Profit Split model, and Term, respectively, to the Agreement;
WHEREAS, the Parties also mutually desire to add an exclusive Right of First Offer for [***].
NOW, THEREFORE, in consideration of the foregoing recitals and mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Parties, intending to legally bound, do hereby agree as follows:
|i.||Net Profit Split to Lannett: Lannett shall retain the [***] percent ([***]%) of an amount equal to the sum of (i) Net Profits and, (ii) the value of $[***] multiplied by the quantity (Pack) of the sold Products with COGS booked at the Price T. For the purposes of determining Net Profit, and the Net Profit Split to Lannett, Lannett shall be entitled to Sales and Marketing Allowance of [***] of Gross Profits calculated using Pricing of $[***]/pack pursuant to EXHIBIT A to the Agreement.|
|ii.||Net Profit Split to Supplier: Lannett shall pay to Supplier the amount of Net Profits minus Net Profit Split retained by Lannett. In the event the calculation of the Net Profit Split to Supplier results in a negative value for any given calendar quarter, Lannett shall carry over this negative value in such calendar quarter and deduct this amount from the calculation of Supplier’s Net Profits for the following successive calendar quarter(s) until such amounts are fully absorbed.|
“2.5Right of First Offer.Upon the earlier of [***], Lannett shall have the right of first offer to exclusively negotiate with Supplier for [***] upon mutually agreed upon terms and conditions memorialized in a definitive agreement.”
“16.1.Term. This Agreement will commence as of the Effective Date and will continue in effect for [***], unless earlier terminated as provided herein or renewed in accordance with the provisions of this Section 16.1. If neither Party is in default, in any material respect, of any of its obligations under this Agreement, then the Term of this Agreement shall automatically renew for renewal terms of [***] unless either Party provides written notice to the other Party [***]. Any reference to the Term of this Agreement will include any renewal or extension of the Term hereof.”
Upon the Effective Date of this Amendment No. 1 and continuing through the Term as defined in Section 16.1 of the Agreement as amended by this Amendment No. 1, Supplier shall grant Lannett terms such that any payments due to Supplier, including but not limited to payments for inventory purchases, Net Profit Split, Distribution Fees and Earn Out Payments, etc., shall be made once per calendar quarter within sixty (60) days following the end of each applicable calendar quarter. For the avoidance of doubt, these payment terms shall apply to any and all payments currently due to Supplier as of the Effective Date of this Amendment No. 1 as well as any and all future payments due to Supplier during the Term of the Agreement.
As an example, all the payment for inventory purchased, Net Profit Split, Distribution Fees, Earn Out Payments occurred during the period from October 1st 2020 to December 31st 2020 will be paid to supplier before March 1st 2021.
Provided, however, that Lannett will not be obligated to pay any disputed amounts until such dispute has been resolved.
[Signature Page Immediately Follows]
IN WITNESS WHEREOF, the Parties intending to be bound have caused this Agreement to be executed by their duly authorized representatives as of the Amendment No.1 Effective Date.
By: /s/ Jiansheng Wan Date: June 5, 2020
Title:Chief Executive Officer
lannett company, Inc.
By: /s/ Timothy Crew Date: June 5, 2020
Title: Chief Executive Officer
LIST OF EXHIBITS
Exhibit C*Product and Price List
*Certain portions of this Exhibit have been redacted to preserve confidentiality. The registrant hereby undertakes to provide further information regarding such redacted information to the Commission upon request.
Product and Price List
Price T/ pack in USD
Posaconazole Delayed Release
1. The Price T