Common use of Supply Failure Clause in Contracts

Supply Failure. (a) During the term of this Agreement in which Patheon, for any reason, except to the extent due to Client’s failure to supply Active Materials, including, without limitation, force majeure as defined in Section 13.7, fails to supply at least [***] of the quantities of Product in any two (2) consecutive calendar quarters in a Year pursuant to Firm Orders submitted by Client pursuant to and in accordance with the terms and conditions of this Agreement within thirty (30) days of the dates specified in such Firm Orders in compliance with this Agreement, then such event shall be deemed a “Supply Failure.” (b) In the event of a Supply Failure, Client’s obligation under Section 3.1 to purchase the Purchase Commitment of Product from Patheon shall terminate and Client shall be free to purchase any amount of Product from any third party for any purpose without restriction, subject to the terms of Section 3.6(c) below. Notwithstanding anything to the contrary in Section 3.1 above (including the Purchase Commitment): (i) Client shall have the right, at any time, to qualify a third party manufacturer such that such third Party may manufacture and commercially supply Product to Client in the event of a Supply Failure; and (ii) as part of such qualification process, such third party may manufacture and supply for Client, at any time (including during the term of this Agreement), quantities of Product reasonably necessary for such qualification; provided, however, that, except as provided otherwise in this Section 3.6 in the event of a Supply Failure, for so long as the Purchase Commitment is in effect, Client shall only be allowed to sell (x) [***] of Product produced by such third party manufacturer, and (in addition to the amounts described in the foregoing part (x)) (y) annually, [***] of Product produced by such third party manufacturer. Patheon shall, at Client’s cost, cooperate with Client and assist in the transfer to Client of all legal and technical documents concerning Active Materials and Products, including master batch records, validation reports, stability reports and relevant manufacturer authorizations, existing retention samples and all such other documents and materials as may be reasonably necessary or useful for Client to source Products from other qualified third parties. Client shall reimburse Patheon for all of Patheon’s reasonable time, material and other costs associated with the qualification of a third party manufacturer. (c) In the event that a Supply Failure occurs and such Supply Failure is the first Supply Failure to occur during the term of this Agreement, at the written request of Patheon, if Patheon has taken the necessary steps to ensure that a Supply Failure will not re-occur, the Parties shall discuss in good faith reinstating Client’s obligation under Section 3.1 to purchase the Purchase Commitment from Patheon. If the Parties mutually agree in good faith that Patheon has remedied the Supply [***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission. Failure and has taken all steps necessary to ensure that a Supply Failure will not re-occur, Client’s obligation under Section 3.1 to purchase the Purchase Commitment from Patheon shall be reinstated, effective three (3) months following the date of such agreement (such effective date of reinstatement, the “Purchase Commitment Re-instatement Date”); provided, however, that, (i) the terms of such re-instated Purchase Commitment may be re-adjusted, as mutually agreed upon by the Parties, to increase the preparedness of Client in the event of a subsequent Supply Failure, including without limitation by initially providing for a smaller Purchase Commitment that increases over a period of Years to its original amount if there are no subsequent Supply Failures during such time; (ii) for the Year that the Client’s obligation to purchase the Purchase Commitment is re-instated, the Purchase Commitment shall be pro-rated to be only with respect to Client’s requirements for Products for the period commencing on the Purchase Commitment Re-Instatement Date and ending on the last day of such Year; and (iii) Client’s obligation to purchase the Purchase Commitment under Section 3.1 shall be subject to, and modified to the extent necessary to comply with, any obligations incurred by Client between the date of the Supply Failure and the date that the Parties agreed that the Purchase Commitment should be re-instated.

Supply Failure. (a) During In the term of this Agreement in which Patheon, for any reason, except to the extent due to Client’s failure to supply Active Materials, including, without limitation, force majeure as defined in Section 13.7, event that Supplier actually fails to supply at least [***] of the quantities of a type of Product in a particular calendar quarter or [***] in any two (2) consecutive [***] calendar quarters quarters, in a Year each case pursuant to Firm Orders orders submitted by Client Purchaser pursuant to and in accordance with the terms and conditions of this Agreement (including Article 5) within thirty (30) days [***] of the dates specified in such Firm Orders orders in compliance with this Agreement, then such event shall be deemed a “Supply Failure.” (b) ” In the event of a Supply Failure: 8.2.1. Supplier shall allocate the Product that it has in inventory, Clientor is able to produce, on a reasonable pro-rated basis, among Supplier’s obligation customers for Product (including Purchaser, its Affiliates, sublicensees and distributors) based on the forecasts of Purchaser, and Supplier’s other customers; and 8.2.2. Purchaser may, at its sole option: (i) elect to include any Similar Product under the terms of this Agreement, with the purchase price and lead times for Supplier’s supply of such Similar Product to be negotiated in good faith by the Parties, provided, however, that such purchase price shall not exceed the purchase price for Product described in Section 3.1 of this Agreement; or (ii) terminate this Agreement immediately upon written notice to purchase Supplier. In the Purchase Commitment event that, following a Supply Failure, Purchaser elects to include a Similar Product under the terms of Product from Patheon shall terminate and Client shall be free to purchase any amount of Product from any third party for any purpose without restriction, subject this Agreement pursuant to the terms of Section 3.6(c) below. Notwithstanding anything to the contrary in Section 3.1 above (including the Purchase Commitment): part (i) Client shall have the right, at any time, to qualify a third party manufacturer such that such third Party may manufacture and commercially supply Product to Client in the event of a Supply Failure; and (ii) as part of such qualification process, such third party may manufacture and supply for Client, at any time (including during the term of this Agreement)Section 8.2.2, and Supplier subsequently reasonably demonstrates to Purchaser that it has removed the cause of the Supply Failure and is able to supply quantities of Product reasonably necessary for such qualification; provided, however, that, except as provided otherwise in this Section 3.6 in the event of a Supply Failure, for so long as the Purchase Commitment is in effect, Client shall only be allowed to sell (x) [***] of Product produced by such third party manufacturer, and (in addition to the amounts described in the foregoing part (x)) (y) annually, [***] of Product produced by such third party manufacturer. Patheon shall, at Client’s cost, cooperate with Client and assist in the transfer to Client of all legal and technical documents concerning Active Materials and Products, including master batch records, validation reports, stability reports and relevant manufacturer authorizations, existing retention samples and all such other documents and materials as may be reasonably necessary or useful for Client to source Products from other qualified third parties. Client shall reimburse Patheon for all of Patheon’s reasonable time, material and other costs associated accordance with the qualification of a third party manufacturer. (c) In the event that a Supply Failure occurs and such Supply Failure is the first Supply Failure to occur during the term terms of this Agreement, at the written request of Patheon, if Patheon has taken the necessary steps to ensure that a Supply Failure will not re-occur, the Parties shall discuss in good faith reinstating Client’s obligation under Section 3.1 to purchase the Purchase Commitment from Patheon. If the Parties mutually agree in good faith that Patheon has remedied the Supply [***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission. Failure and has taken all steps necessary Agreement (including, without limitation, in accordance with Supplier’s Product supply obligations under Article 5), Supplier shall have the right to ensure adjust the price for future quantities of such Similar Product purchased by Purchaser hereunder to Supplier’s commercial list price for such Similar Product, subject to any adjustments provided for under Section 3.1. For clarity, in the event that a Supply Failure will not re-the events described in the foregoing sentence occur, Client’s obligation such Similar Product shall still be included under Section 3.1 to purchase the Purchase Commitment from Patheon shall be reinstated, effective three (3) months following the date of such agreement (such effective date of reinstatement, the “Purchase Commitment Re-instatement Date”); provided, however, that, (i) the terms of this Agreement, subject to Supplier’s right to adjust the price of such re-instated Purchase Commitment may be re-adjusted, Similar Product as mutually agreed upon by the Parties, to increase the preparedness of Client described in the event of a subsequent Supply Failure, including without limitation by initially providing for a smaller Purchase Commitment that increases over a period of Years to its original amount if there are no subsequent Supply Failures during such time; (ii) for the Year that the Client’s obligation to purchase the Purchase Commitment is re-instated, the Purchase Commitment shall be pro-rated to be only with respect to Client’s requirements for Products for the period commencing on the Purchase Commitment Re-Instatement Date and ending on the last day of such Year; and (iii) Client’s obligation to purchase the Purchase Commitment under Section 3.1 shall be subject to, and modified to the extent necessary to comply with, any obligations incurred by Client between the date of the Supply Failure and the date that the Parties agreed that the Purchase Commitment should be re-instatedforegoing sentence.

Supply Failure. (a) During 8.2.1 Without limiting Supplier’s obligations to supply Product to Purchaser under Article 2 above, Supplier shall give Purchaser prompt written notice if Supplier becomes aware that it will not be able to supply Purchaser’s orders for Product as required under this Agreement, and Supplier shall give Purchaser [***] written notice prior to any discontinuation by it of the term manufacture or sale of this Agreement in which Patheon, for any reason, except the Product. 8.2.2 Subject to the extent due to Clientterms of Sections 8.2.3 and 8.2.4 below and without limiting Supplier’s failure obligations to supply Active MaterialsProduct to Purchaser under Article 2 above, including, without limitation, force majeure as defined in Section 13.7, the event that Supplier actually fails to supply at least [***] of the quantities of Product in any two (2) consecutive a particular calendar quarters in a Year quarter pursuant to Firm Orders orders submitted by Client Purchaser pursuant to and in accordance with the terms and conditions of this Agreement (including Article 6) within thirty (30) days [***] of the dates specified in such Firm Orders orders in compliance with this Agreement, then such event shall be deemed a “Supply Failure.” (b) In the event of a Supply Failure, Client’s obligation under Section 3.1 to purchase the Purchase Commitment of Product from Patheon shall terminate and Client shall be free to purchase any amount of Product from any third party for any purpose without restriction, subject to the terms of Section 3.6(c) below. Notwithstanding anything to the contrary in Section 3.1 above (including the Purchase Commitment): (i) Client shall have the right, at any time, to qualify a third party manufacturer such that such third Party may manufacture and commercially supply Product to Client in the event of a Supply Failure; and (ii) as part of such qualification process, such third party may manufacture and supply for Client, at any time (including during the term of this Agreement), quantities of Product reasonably necessary for such qualification; provided, however, that, except as provided otherwise in this Section 3.6 in the event of a Supply Failure, for so long as the Purchase Commitment is in effect, Client shall only be allowed to sell (x) [***] of Product produced by such third party manufacturer, and (in addition to the amounts described in the foregoing part (x)) (y) annually, [***] of Product produced by such third party manufacturer. Patheon shall, at Client’s cost, cooperate with Client and assist in the transfer to Client of all legal and technical documents concerning Active Materials and Products, including master batch records, validation reports, stability reports and relevant manufacturer authorizations, existing retention samples and all such other documents and materials as may be reasonably necessary or useful for Client to source Products from other qualified third parties. Client shall reimburse Patheon for all of Patheon’s reasonable time, material and other costs associated with the qualification of a third party manufacturer. (c) In the event that a Supply Failure occurs and such Supply Failure is the first Supply Failure to occur during the term of this Agreement, at the written request of Patheon, if Patheon has taken the necessary steps to ensure that a Supply Failure will not re-occur, the Parties shall discuss promptly meet to develop a corrective action plan in good faith reinstating Client’s obligation under Section 3.1 order to purchase avoid such failure to supply in the Purchase Commitment from Patheonfuture. If the Parties mutually agree in good faith that Patheon has remedied the Supply [***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission. 8.2.3 Notwithstanding anything in this Agreement to the contrary (including, without limitation, the terms of Section 8.2.2 above), in the event that Supplier actually fails to supply [***] of the quantities of Product in any two consecutive calendar quarters pursuant to orders submitted by Purchaser pursuant to and in accordance with the terms and conditions of this Agreement (including Article 6) within [***] of the dates specified in such orders in compliance with this Agreement, such event shall be deemed a “Supply Failure.” 8.2.4 In the event of a Supply Failure, Supplier shall allocate the Product that it has in inventory, or is able to produce, on a reasonable pro-rated basis, among Supplier’s customers for Product (including Purchaser, its Affiliates, sublicensees and distributors) based on the forecasts of Purchaser, and Supplier’s other customers; and Purchaser’s Purchase Obligation under Section 2.1 shall terminate, and Purchaser shall have the right to purchase quantities of Product from the Secondary Source at its discretion (and the Secondary Source shall have the right to Manufacture such quantities). In addition to the terms of this Section 8.2.4 above, the following terms shall apply in the event of a Supply Failure. (a) In the event that such Supply Failure is the first Supply Failure to occur during the term of this Agreement, at the written request of Supplier, if Supplier has taken the necessary steps to ensure that a Supply Failure will not re-occur, the Parties shall discuss in good faith reinstating Purchaser’s Purchase Obligation under Section 2.1. If the Parties mutually agree in good faith that Supplier has remedied the Supply Failure and has taken all steps necessary to ensure that a Supply Failure will not re-occur, ClientPurchaser’s obligation Purchase Obligation under Section 3.1 to purchase the Purchase Commitment from Patheon 2.1 shall be reinstated, effective three (3) months [***] following the date of such agreement (such effective date of reinstatement, the “Purchase Commitment Obligation Re-instatement Date”); provided, however, that, (i) the terms of such re-instated Purchase Commitment Obligation may be re-adjusted, as mutually agreed upon by the Parties, to increase the preparedness of Client Purchaser in the event of a subsequent Supply Failure, including without limitation by initially providing for a smaller Purchase Commitment Obligation that increases over a period of Years years to its original amount if there are no subsequent Supply Failures during such time; (ii) for the Year calendar year that the ClientPurchaser’s obligation to purchase the Purchase Commitment Obligation is re-instated, the Purchase Commitment Obligation shall be pro-rated to be only with respect to ClientPurchaser’s requirements for Products for the period commencing on the Purchase Commitment Obligation Re-Instatement Date and ending on the last day of such Yearcalendar year; and (iii) ClientPurchaser’s obligation to purchase the Purchase Commitment Obligation under Section 3.1 2.1 shall be subject to, and modified to the extent necessary to comply with, any obligations incurred by Client Purchaser between the date of the Supply Failure and the date that the Parties agreed that the Purchase Commitment should be re-instated. (b) In the event that such Supply Failure is not the first Supply Failure to occur during the term of this Agreement (i.e. one or more Supply Failures have occurred during the term of this Agreement prior to such Supply Failure), (i) Purchaser’s Purchase Obligation under Section 2.1 shall terminate without any obligation on the part of Purchaser to discuss reinstatement of such Purchase Obligation with Supplier; and (ii) Purchaser may, at its sole option, terminate this Agreement immediately upon written notice to Supplier. [***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission. 8.2.5 This Section 8.2 shall in no way limit any of Purchaser’s legal, equitable or other remedies for Supplier’s breach of its obligations to supply Product to Purchaser under Article 2.

Supply Failure. Except (ai) During the term of this Agreement in which Patheon, for any reason, except to the extent due to Client’s failure to supply Active Materials, including, without limitation, force majeure of a Force Majeure Event (as defined in Section 13.714.1), fails (ii) as a result of a breach by Teva of its obligations hereunder, (iii) as a result of a recall, market withdrawal, withholding from the market, or other similar action with respect to supply at least the relevant Product initiated by Teva or requested or required by a Regulatory Authority (other than, under this subclause (iii), as a result of Alvotech’s breach of its obligations hereunder), (iv) as a result of Teva’s change, cancellation or modification of a purchase order other than as expressly provided for under Section 3.2, or (v) as a result of a change pursuant to Section 8.3 or any gross negligence or wilful misconduct on the part of Teva, if Alvotech is unable to deliver to Teva the full quantities ordered pursuant to a valid purchase order for a Product meeting the Quality Standards by the Scheduled Delivery Date which order has been accepted (or deemed to have been accepted) pursuant to Section 3.2(c) (and including any mutually agreed variations to such order) (such event, a “Supply Failure”), Teva will, in addition to its other rights and remedies hereunder, have the right to (a) cancel, in whole or in part, the applicable Purchase Order(s) and any binding portion of the applicable rolling forecast for the Product Alvotech failed to timely deliver and (b) purchase substitute product from an alternate source. For purposes of this Agreement, any quantities of Product not delivered by the Scheduled Delivery Date will be referred to herein as the “Shortage.” For the avoidance of doubt, timely delivery of Non-Conforming Product will not be deemed delivery by the Scheduled Delivery Date and therefore will be deemed a Shortage. In the event of a Shortage, Teva will not be required to pay for the Shortage until it is Delivered and the following credit will apply to the Transfer Price of all quantities of Product set forth in the applicable purchase order. [***] of the quantities of Product in any two (2) consecutive calendar quarters in a Year pursuant to Firm Orders submitted by Client pursuant to and in accordance with the terms and conditions of this Agreement within thirty (30) days of the dates specified in such Firm Orders in compliance with this Agreement, then such event shall be deemed a “Supply Failure.” (b) In the event of a Supply Failure, Client’s obligation under Section 3.1 to purchase the Purchase Commitment of Product from Patheon shall terminate and Client shall be free to purchase any amount of Product from any third party for any purpose without restriction, subject to the terms of Section 3.6(c) below. Notwithstanding anything to the contrary in Section 3.1 above (including the Purchase Commitment): (i) Client shall have the right, at any time, to qualify a third party manufacturer such that such third Party may manufacture and commercially supply Product to Client in the event of a Supply Failure; and (ii) as part of such qualification process, such third party may manufacture and supply for Client, at any time (including during the term of this Agreement), quantities of Product reasonably necessary for such qualification; provided, however, that, except as provided otherwise in this Section 3.6 in the event of a Supply Failure, for so long as the Purchase Commitment is in effect, Client shall only be allowed to sell (x) late: [***]% [***] of Product produced by such third party manufacturer, and (in addition to the amounts described in the foregoing part (x)) (y) annually, days late: [***]% [***] of Product produced by such third party manufacturer. Patheon shall, at Client’s cost, cooperate with Client and assist in the transfer to Client of all legal and technical documents concerning Active Materials and Products, including master batch records, validation reports, stability reports and relevant manufacturer authorizations, existing retention samples and all such other documents and materials as may be reasonably necessary or useful for Client to source Products from other qualified third parties. Client shall reimburse Patheon for all of Patheon’s reasonable time, material and other costs associated with the qualification of a third party manufacturer. (c) In the event that a Supply Failure occurs and such Supply Failure is the first Supply Failure to occur during the term of this Agreement, at the written request of Patheon, if Patheon has taken the necessary steps to ensure that a Supply Failure will not re-occur, the Parties shall discuss in good faith reinstating Client’s obligation under Section 3.1 to purchase the Purchase Commitment from Patheon. If the Parties mutually agree in good faith that Patheon has remedied the Supply days late: [***]% [***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission. Failure and has taken all steps necessary to ensure that a Supply Failure will not re-occur, Client’s obligation under Section 3.1 to purchase the Purchase Commitment from Patheon shall be reinstated, effective three (3) months following the date of such agreement (such effective date of reinstatement, the “Purchase Commitment Re-instatement Date”); provided, however, that, (i) the terms of such re-instated Purchase Commitment may be re-adjusted, as mutually agreed upon by the Parties, to increase the preparedness of Client in the event of a subsequent Supply Failure, including without limitation by initially providing for a smaller Purchase Commitment that increases over a period of Years to its original amount if there are no subsequent Supply Failures during such time; (ii) for the Year that the Client’s obligation to purchase the Purchase Commitment is re-instated, the Purchase Commitment shall be pro-rated to be only with respect to Client’s requirements for Products for the period commencing on the Purchase Commitment Re-Instatement Date and ending on the last day of such Year; and (iii) Client’s obligation to purchase the Purchase Commitment under Section 3.1 shall be subject to, and modified to the extent necessary to comply with, any obligations incurred by Client between the date of the Supply Failure and the date that the Parties agreed that the Purchase Commitment should be re-instated.days late: [***]% [***] days late: [***]%