Common use of Back-Up Sources of Supply Clause in Contracts

Back-Up Sources of Supply. Should Orion desire to utilize a different supplier for Product other than Orion or should Orion desire to change manufacturing site for Product to a site other than used to manufacture Product as of the Date of Agreement, Orion shall notify USL in writing and the Parties shall thereafter meet to discuss the potential consequences of such a change. In the course of that discussion, if Orion intends to use a different supplier other than an Orion Affiliate, USL may elect itself to manufacture Product, in which case, USL shall be, and hereby is, granted (subject to USL’s royalty payment obligations stipulated for under Section 6.9 or 13.4 (as applicable)) a royalty free right and license to manufacture Product on the same terms as described in Section 6.5(d) and Section 6.6. Orion shall not change manufacturing sites for Product without obtaining USL’s prior written consent, such consent not to be unreasonably withheld. In no event shall USL be obligated to pay a greater Supply Price for Product manufactured at an alternate manufacturing site than the Supply Price paid for Product produced by Orion. In the event USL provides its consent that Orion shall change suppliers or manufacturing facilities for Product, USL shall, upon Orion’s request provide reasonable assistance, at Orion’s cost, to obtain whatever regulatory approvals are required in the Territory, endeavor to have the new site and supplier of the Product approved by the FDA under any current, pending and future Product NDAs. Orion shall at all times remain liable for the supply of Product to USL (as well as all other obligations of Orion under this Agreement) regardless of whether Product is manufactured by Orion, an Orion Affiliate, or a Third Party. To provide for back-up supply capabilities, Orion will take reasonable steps to ensure an ongoing source of supply of Product to meet USL’s requirements, including without limitation reservation of buffer stock of Compound as provided for herein below, and/or qualification of alternate source or site manufacturing capability for Product, bulk gel sachets, or any combination of the above. (a) In addition to any other remedies USL, may have under this Agreement due to for failure or delay by Orion in the delivery of Product, if Orion is unable, or if it appears reasonably likely that Orion will be unable, either directly, or through an alternative supply source or Orion’s Product reserves, to supply on a timely basis USL’s forecasted requirements for Product pursuant to Section 6.2(a) in accordance with the terms of this Agreement and such inability would continue for a period of greater than sixty (60) days, then USL shall thereafter have the continuing right to manufacture or have manufactured such Product under the terms of this Section 6.5. USL shall have the right to continue to manufacture some or all of its requirements for Product pursuant to this Section 6.5 even after Orion can reasonably demonstrate that it is able to itself resume normal Product manufacture and supply activities and meet USL’s requirements for Product on an ongoing basis. (b) USL shall have the right at any time to qualify, at its expense, its own manufacturing facility as a back-up site for the manufacture of Product at any time during the Term. Orion will provide USL, and shall provide USL, with the manufacturing, process and quality control procedures, documentation and other relevant know-how and information (hereinafter the “Product Manufacturing Know-How”) to the extent reasonably necessary to enable USL to exercise its back-up manufacturing rights pursuant to this Section 6.5. Orion shall assist USL in obtaining all necessary Regulatory Authority approvals for manufacture of Product, and as necessary, active ingredient for the manufacture of Product. In the event that USL exercises its back-up manufacturing rights pursuant to this Section 6.5 or Section 6.18, it shall be free to purchase, at its sole risk and responsibility, Compound from a Third Party. Following the Date of Agreement, Orion shall use commercially reasonable efforts to have USL qualified as an acceptable licensed manufacturer for Product under Orion’s standby manufacturing rights. Orion shall exercise its commercially reasonable efforts to ensure that USL shall have the right to cross reference the DME for Compound cross-referenced by Orion for Product for purposes of qualifying USL’s facility as an approved manufacturing source for Product and to otherwise enable USL to exercise its back-up manufacturing rights under this Agreement. (c) In the event that USL manufactures any Product pursuant to its exercise of its back-up manufacturing rights pursuant to this Section 6.5, then i7SL shall pay any royalty due under Section 6.9 or 13.4 (as applicable) on Net Sales of such Product by USL.