Supply Agreement
EXHIBIT 10.30
*** Text omitted and Filed Separately
with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. §§200.80(b)(4) and 240.24b-2
with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. §§200.80(b)(4) and 240.24b-2
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This Supply Agreement (the “Agreement”) is made as of the 7th day of November, 2007
(the “Effective Date”) by and between MannKind Corporation, a Delaware corporation (“MannKind”),
with its principal office and place of business at 00000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxx, XX 00000,
U.S.A., and N.V. Organon, a Dutch company (“Organon”) with its principal office and place of
business at Xxxxxxxxxxxxxx 0, 0000 XX XXX, Xxx Xxxxxxxxxxx (each of MannKind and Organon, a “Party”
and together, the “Parties”).
RECITALS
Whereas, MannKind is in the business of developing, manufacturing and/or distributing
pharmaceutical products, medical devices and/or biotechnology products;
Whereas, Organon is in the business of manufacturing and supplying active
pharmaceutical ingredients, including the Product (as defined below);
Whereas, MannKind and Organon now desire to enter into this Agreement to provide the
terms and conditions upon which Organon shall manufacture for and supply to MannKind the Product.
Agreement
Now Therefore, in consideration for the covenants set forth below, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as set forth below.
1. Certain Definitions.
1.1 “Additional Quantities” means any quantities for which MannKind has issued a Purchase
Order in accordance with § 4.2.
1.2 “Affiliate” means, with respect to any Party, another entity or person which directly
or indirectly, is controlled by, or controls, or is under common control with such Party, where, for purposes of this definition, the term “control” means ownership,
directly or indirectly, of more than 50% of the shares of stock entitled to vote for the
election of directors, in the case of a corporation, or more than 50% of the equity interests
in the case of any other type of legal entity, status as a general partner in any partnership,
or any other
arrangement whereby a Party controls or has the right to control the Board of Directors or equivalent governing body of a corporation or other
entity, or if such level of ownership or control is prohibited in any country, any entity owning or controlling at the
maximum control or ownership right permitted in the country where such entity exists.
1.3 “Confidentiality Agreement” means the confidentiality agreement between the Parties
dated October 9, 2007, which agreement is amended per even date as the Effective Date (as
amended, the “Confidentiality Agreement”) and attached to this Agreement as Exhibit C.
1.4 “Confidential Information” means any confidential or proprietary information of a
Party disclosed to the other Party or generated in the course of this Agreement, including
inventions, know-how, works of authorship, software, data, software tools, designs, schematics,
plans or other information relating to any work in process, future development, engineering,
manufacturing, marketing or business plan, or financial or personnel matters relating to either
Party, its present or future products, sales, suppliers, customers, employees, investors or
business, however excluding any such information disclosed by Organon to MannKind under the
Confidentiality Agreement, which is and remains governed thereby.
1.5 “CPR” means the International Institute for Conflict Prevention & Resolution.
1.6 “End Product” means MannKind’s proprietary insulin formulation, currently known as
Technosphere®Insulin, as developed by MannKind and distributed and/or sold in the Territory and
other such proprietary insulin formulations as Organon will, at the written request of
MannKind, approve of to be governed by this Agreement, which approval shall not be unreasonably
withheld.
1.7 “Excluded Countries” are:
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1.8 “Fixed Annual Quantities” means the fixed quantities of Product as described in § 4.1.
1.9 “Current Good Manufacturing Practice” or “cGMP” means the methods to be used in, and
the facilities or controls to be used for, the manufacture, processing, packing, or holding of
a drug to assure that such drug meets the regulatory requirements of the United States Food and
Drug Administration and as further defined in 21 C.F.R. Parts 210 and 211 and the guidance of
the Center for Drug Evaluation and Research (“CDER”) and the Center for Biologics Evaluation
and Research (“CBER”), and the European Commission Directive 2003/94/EC of October 8, 2003.
1.10 “Intellectual Property Rights” means any and all rights in and to discoveries,
concepts, ideas, technical information, developments, specifications, methods, drawings,
designs, flow charts, diagrams, models, formulae, procedures, processes, schematics,
specifications, algorithms, apparatus, inventions, ideas, know-how, materials, techniques,
methodologies, modifications, improvements, works of authorship and data (whether or not
protectable under patent, copyright, trade secrecy or similar laws), including patents, utility
models, and registered and unregistered designs, including mask works, copyrights, trade
secrets, design history, manufacturing documentation, and any other form of protection afforded
by law to inventions, models, designs, works of authorship, databases or technical information
and applications and registrations with respect thereto.
1.11 “Non-conforming Product” means Product that does not conform to the Specifications,
the Quality/Technical Agreement, or is not free and clear of all liens, claims and encumbrances
upon delivery.
1.12 “Product” means Recombinant Human Insulin manufactured for and supplied to MannKind
under this Agreement for use in its manufacturing process of the End Product.
1.13 “Project Team” has the meaning set forth in § 2.2(a).
1.14 “Purchase Order” means a purchase order that is issued by, and binding on, MannKind
and accepted by Organon for the purpose of obtaining the Product under this Agreement.
1.15 “Quality/Technical Agreement” means a separate agreement, executed in accordance
with § 8.3 of this Agreement, between the Parties which shall be incorporated herein by
reference, and following its execution shall be attached hereto and made a part hereof as
Exhibit B, and which sets forth, among other things, the quality control and quality assurance
terms for the Product. In case of a discrepancy between this Agreement and the Quality
/Technical Agreement, as to quality and technical matters the terms of the Quality/Technical
Agreement shall govern, otherwise the provisions of this Agreement shall prevail.
1.16 “Specifications” means the technical specifications for the Product, as further
described in Exhibit A.
1.17 “Territory” means all countries in the world except the Excluded Countries.
1.18 “Total Annual Quantity” means with respect to any calendar year, the total of the
Fixed Annual Quantities and Additional Quantities.
2. Performance Obligations
2.1 Supply.
(a) Performance. Organon shall manufacture and supply the Product in accordance with the
Specifications, Quality Agreement, and all applicable laws and regulations. Organon shall perform
its activities in accordance with professional standards and practices including, but not limited
to cGMP. Organon shall provide cGMP facilities as well as resources for such services including,
but not limited to testing, release, storage, and manufacture of the Product. MannKind shall
provide, upon request and only for use in accordance with the terms of this Agreement, Organon with
any information that Organon reasonably requires to perform its obligations under this Agreement.
(b) Quantities. Subject to the other provisions of this Agreement, Organon shall supply
MannKind with the Product in such quantities as MannKind may order.
(c) Subcontracting. Notwithstanding § 13.1, no Party shall delegate or subcontract the
performance of activities under this Agreement to third party subcontractors without the prior
written consent of the other Party, provided that such consent shall not be unreasonably withheld
if (a) the delegating or sub-contracting Party controls the performance of such activities and
remains fully responsible to the other Party for the performance of such activities and any breach
of this Agreement by such third party subcontractor, and further provided that such third party
subcontractor agrees in writing to comply with confidentiality restrictions at least as stringent
as those set forth in this Agreement and, if applicable, the Confidentiality Agreement and (b) such
delegating or sub-contracting Party provides prior written notice to the other Party of the
identity of any such third party subcontractor.
2.2 Project Team.
(a) Formation; Composition. The Parties shall form a team (“Project Team”), which shall be
responsible for oversight of the activities under this Agreement. Each Party shall appoint to the
Project Team an equal number of team members that have the requisite skills in the disciplines
necessary for performance of activities under this Agreement. Each Party may change its Project
Team members at any time by written notice to the other.
(b) Meetings. The Project Team shall meet at such times and locations as are agreeable to a
majority of the Project Team members, but no less than once per calendar year. Project Team
meetings may take place in person or through video or telephone communications. At the initial
meeting of the Project Team, the Project Team shall establish operating procedures for its meetings
and activities. At each meeting of the Project Team, the Parties shall provide an
update on the status of the activities conducted under this Agreement. Other personnel of each
Party may attend Project Team meetings. Each Party shall bear the expense of participation of its
respective Project Team members and other personnel in Project Team meetings. Written minutes shall
be kept of all Project Team meetings and shall include material decisions made at such meetings.
2.3 Regular Communication. Both Parties shall (i) be available for a reasonable number of
telephone and written consultations on a schedule to be determined by mutual arrangement
between the Parties, and (ii) shall respond to all telephone and written (e.g. letters, e-mail,
fax) communications from the other Party within ten (10) days or as otherwise reasonably
requested.
2.4 Regulatory Approval. The Parties shall cooperate diligently and in good faith to
obtain any and all necessary approvals and permits for the Product. The Parties shall bear the
respective costs and shall pay all costs, consistent with industry practice, associated with
obtaining such approvals or permits for the Product. The Parties shall provide such technical
assistance to each other as is necessary for this purpose.
2.5 Regulatory Compliance. In performing its obligations hereunder each Party shall comply
with all applicable federal, state, municipal, or local laws, rules, regulations, orders,
decisions or permits of any relevant jurisdiction relating to matters including, but not
limited to employment, safety, health, environmental standards and requirements,
non-discrimination, equal employment opportunity, import/export and privacy protection.
3. Ownership Rights
3.1 Ownership Rights. Each Party shall retain ownership and control of their respective
works of authorship, inventions, know-how, information, data, and all Intellectual Property
Rights therein that were in existence as of the Effective Date or are created hereafter,
whether or not in the course of the performance of its obligations under this Agreement. The
Parties hereby acknowledge that neither Party has, nor shall it acquire, any interest in any of
the other party’s Intellectual Property unless otherwise expressly agreed to in writing.
3.2 Reservation of Rights. Except for the rights expressly provided in this Agreement, no
other rights are granted by either Party to the other Party. Notwithstanding anything to the
contrary, no rights or licenses are granted under this Agreement by either Party to the other
for the use of any trade names, trademarks, and service marks.
4. Sale and Purchase Terms
4.1 Purchase. Subject to the other provisions of this Agreement, Organon shall sell to
MannKind and its Affiliates, and MannKind and its Affiliates shall purchase from Organon, for
use only in MannKind’s End Product, one hundred percent (100%) of the Fixed Annual Quantities
for the Product as provided in the table below.
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The Parties anticipate that Organon will supply and deliver, and MannKind will buy and take
delivery, with respect to any calendar year, twenty five percent (25%) of the corresponding
Fixed Annual Quantities per calendar quarter, unless otherwise agreed upon by the Parties.
Notwithstanding the foregoing, each year during the term of this Agreement the Parties shall
meet within the fourth calendar year quarter, and no later than 1 December, to discuss the
actual percentage of the Fixed Annual Quantities to be delivered for each of the subsequent
four (4) quarters.
4.2 Additional Quantity. [ *** ], Organon may, at its discretion, submit a binding
offer to MannKind for any Additional Quantity of Product it would be willing to supply to
MannKind [ *** ] in addition to the corresponding Fixed Annual Quantities. MannKind has the
right to accept such binding offer within thirty (30) days of its receipt thereof by submitting
a Purchase Order in accordance with § 4.3, after which period the offer is no longer binding
upon Organon.
4.3 Purchase Orders. Subject to § 4.1 and § 4.2, MannKind shall issue Purchase Orders to
Organon [ *** ] in advance. All orders shall be evidenced by specific and separate Purchase
Orders issued by MannKind to Organon pursuant to this § 4.3. Purchase Orders for Product may be
submitted by MannKind to Organon in writing, or electronically pursuant to a mutually agreed
upon process. All Purchase Orders shall contain: (a) the quantities ordered in accordance with
§ 4.1 and § 4.2; (b) the purchase price for Product ordered in accordance with § 7; (c)
mutually agreed to delivery dates; and (d) shipping/installation instructions. Each Purchase
Order shall be deemed to be a transaction issued under the terms of this Agreement between the
Parties upon Organon’s acceptance of such Purchase Order. If MannKind issues any such Purchase
Orders, Organon shall inform MannKind in writing of its acceptance or rejection thereof. Any
deviation from an agreed upon scheduled delivery date for Product shall occur only upon
approval by the Parties. No additional or inconsistent terms in any Purchase Orders or
Purchase Order acknowledgements shall have any legal effect.
4.4 Limits on Production of the Product. Notwithstanding anything to the contrary
herein, if Organon, at such time it knows or becomes aware, does not have or is unable to
secure the manufacturing capacity necessary to provide to MannKind the Product that MannKind
desires to purchase during any year, then Organon shall inform MannKind in writing with [ ***
] notice of any reduced capacity, and Organon shall use commercially reasonable efforts to
resolve the condition that caused the need to reduce such capacity.
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5. Manufacture
5.1 Raw Materials. Organon shall be responsible for obtaining, and shall store at no cost
to MannKind, any and all materials required for the manufacture of the Product, in reasonable
quantities consistent with MannKind’s forecasts and orders for the Product.
5.2 Manufacture of Product. Organon shall manufacture Product in accordance with § 2.1, §
2.5, and any applicable regulations with respect to the transportation, storage, use, handling
and disposal of hazardous materials. Each Party shall promptly notify the other of any new
instructions or specifications with respect to the Product required under any applicable laws
and shall confer with each other with respect to the best means to comply with such
requirements. Organon represents and warrants to MannKind that it has, and shall maintain
during the term of this Agreement, all government permits, including without limitation health,
safety and environmental permits, necessary for the conduct of the actions and procedures that
it undertakes pursuant to this Agreement.
5.3 Product Specifications; Testing. Product supplied hereunder shall conform to the
Specification as set forth in Exhibit A and the warranty set forth in § 8.2. Organon shall
perform quality control testing and quality oversight on the Product to be delivered to
MannKind or its designee hereunder.
5.4 Audits. Upon MannKind’s written request to Organon and in accordance with the
Quality/Technical Agreement, MannKind shall have the right to have its representatives audit
Organon’s facility during normal business hours to review Organon’s manufacturing operations
related to the Product and to discuss any related issues with Organon’s manufacturing and
management personnel.
5.5 Change in Manufacturing Process. Organon shall, in accordance with the
Quality/Technical Agreement, provide prior written notice to MannKind before Organon implements
any major change in the materials, equipment, processes or procedures used to manufacture the
Product.
5.6 Required Change of Specifications. In the event any controlling regulatory authority
requires updated, amended or revised Specifications that may directly affect the End Product,
the Parties shall discuss in good faith the consequences thereof, including amending this
Agreement. Organon shall not in any event be required to implement updated, amended or revised
Specifications to the extent that this would necessitate a material change in its current
manufacturing operations. For purposes of this § 5.6, a material change in Organon’s current
manufacturing operations means a change or modification to the form, fit, function, method or
process of manufacture or production of the Product hereunder which could (i) require any new
regulatory filing with respect to the Product or (ii) affect the safety, efficacy or quality of
the Product. If the Parties fail to mutually agree on the consequences of such required
updated, amended or revised Specifications (including, without limitation, the division of the
costs and expenses associated therewith), then the Parties shall attempt to resolve the matter
through mediation in accordance with § 13.9 and § 13.12. If the Parties fail to reach
agreement through mediation then either Party may terminate this Agreement in accordance with §
11.2 (e).
5.7 Documentation. Organon shall keep complete, accurate and authentic accounts, notes,
data and records of the work performed under this Agreement adequate to comply with all
applicable laws. Organon shall maintain complete and adequate records pertaining to the methods
and facilities used by it for the manufacture, testing and supply of the Product. Upon
MannKind’s written request, Organon shall supply MannKind with copies of the documentation
referenced in this § 5.7. MannKind acknowledges that all copies of Organon’s manufacturing
records shall be protected under the confidentiality provisions of § 12.
6. Delivery and Acceptance
6.1 Time and Place of Delivery. Organon shall ship the Product to MannKind’s Danbury,
Connecticut facility, to arrive on the scheduled date, or within the timeframe specified, as
set forth in the Purchase Orders as accepted by Organon in accordance with § 4.3. Organon shall
retain samples of each batch as described in the Quality/Technical Agreement.
During the [ *** ] of this Agreement no Product shall be delivered to MannKind with less
than [ *** ] shelf life left, provided that as a result of any mutually agreed to delivery
postponements such required level of shelf life left can no longer be met, such required level
shall be reduced with the duration of any such postponement, and from the [ *** ] of this
Agreement onwards, in no event shall Product be delivered to MannKind with less than [ ***
] shelf life left.
6.2 Risk of Loss. Organon shall bear the risk of loss for the Product until delivery to
such designated facility at which time title to the Product and the risk of loss shall pass to
MannKind.
6.3 Documents. Each shipment of the Product shall be accompanied by accurate and complete
documents including, but not limited to relevant certificates of analysis, certificates of
compliance and a copy of the invoice.
6.4 Inspection, Acceptance, and Rejection. MannKind shall have the right to inspect the
Product as follows:
(a) Initial Inspection. MannKind shall, without limitation, have the option to audit, inspect,
review, and document, at Organon’s facility, any activities related to the manufacture, including,
but not limited to processing, process testing, and final laboratory release testing to determine
whether the Product is acceptable to MannKind, complies with the Specifications, and is not a
Non-conforming Product. Any participation or presence by MannKind personnel does not waive
Organon’s responsibilities to provide the agreed upon quantity of the Product, on the time of
delivery, and in conformance with the Specifications.
(b) Delivery Inspection. Upon delivery at MannKind’s facility, MannKind shall perform further
testing to determine whether the Product is acceptable to MannKind, and is not a Non-conforming
Product.
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If MannKind determines that a batch of Product does not conform to the Specifications based on
MannKind’s analysis performed on the Product, or is for any other reason to be considered a
Non-conforming Product, MannKind shall notify Organon thereof in writing [ *** ]. In the
event the batch of Product does not conform to Specifications, or for any other reason is
confirmed to be Non-conforming Product, Organon shall at MannKind’s option either (i) replace
such Product free of charge as soon as reasonably possible, or (ii) issue a credit note on the
basis of the purchase price paid in accordance with § 7 for such Non-conforming Product. If
MannKind requests replacement of Non-conforming Product and Organon determines that replacement
of such Product in a timely manner is not commercially reasonable, then it shall notify
MannKind within a reasonable time, issue a credit note as described in (ii) above, and the
Parties shall discuss in good faith a reasonable plan, including timeframes, to address any
material delivery shortfall created by such Non-conforming Product. If MannKind does not
notify Organon that any batch of Product is a Non-conforming Product during the [ *** ]
period following delivery of such Product at MannKind’s facility, or does not reject any
Non-conforming Product in accordance with the procedure described above, such batches of
Product shall be deemed to have been accepted by MannKind; provided, however, that in the case
of any batch of Product having latent defects that could not have been discovered by MannKind
within the applicable period described above despite reasonable inspection by MannKind,
MannKind may reject such batch of Product by giving written notice to Organon of MannKind’s
rejection of such batch of Product [ *** ] after discovery of such latent defects.
In no event shall Product, whether Non-conforming or not, be returned to Organon without its
prior written consent.
6.5 Expert. If the Parties fail to agree on whether a batch of the Product does not
conform to the Specifications or for any other reason is to be considered a Non-conforming
Product or on the responsibility therefore the matter shall be finally determined by an expert
to be nominated by agreement between the Parties, or failing agreement, by an expert, to be
nominated by the CPR. The expert shall act as an expert and not as an arbitrator, but his
opinion shall be binding upon the parties and his fees and expenses shall be borne by the party
against which the expert’s opinion is rendered.
7. Pricing; Payment
7.1 Purchase Price. The purchase price of the Product purchased from and delivered by
Organon in any given calendar year pursuant to § 4 and § 6 shall be:
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[ *** ] in the Chemical Industry Wage Index [ *** ], as published by the Central Bureau
of Statistics in the Netherlands.
Beginning on [ *** ], in the event of any increases in prices of raw materials or other
materials necessary for the manufacture of Product to be delivered to MannKind, Organon has the
right to increase the purchase price of the Product [ *** ], to the extent it has been
based on one or more of these factors, provided that Organon shall give [ *** ] prior
written notice of each such increase, during which period Organon will in good faith consult
with MannKind; provided that any purchase price increase shall only apply to (i) Purchase
Orders following such purchase price increase, and (ii) to any deliveries under Purchase Orders
accepted by Organon in accordance with § 4.3, if such deliveries according to the corresponding
Purchase Order take place more [ *** ] following such purchase price increase.
Organon shall pursue continuous improvement and competitive best practice strategy to seek ways
of improving the manufacturing and packaging performance under this Agreement to reduce the
manufacturing and materials costs associated with the Product and mitigate any increases in
labor and materials necessary for the manufacture of the Product.
All amounts due under this § 7.1 shall be due and payable by MannKind to Organon (or, in the
case of a purchase by a MannKind Affiliate, by such Affiliate to Organon) in [ *** ] as at
the date of Organon’s invoice per § 7.2.
7.2 Payment. MannKind shall pay Organon for the Product within thirty (30) days of
delivery of Product in accordance with § 6.1, for which Organon shall submit an invoice to
MannKind, Attention: Accounts Payable, (electronically) xxxxxxxxx@xxxxxxxxxxxx.xxx or (paper
invoices) Xxx Xxxxxx Xxxxxx, Xxxxxxx, XX 00000. If it in good faith disputes any portion of an
invoice, then MannKind shall pay the undisputed amounts and the Parties shall use good faith
efforts to reconcile the disputed amount as soon as practicable, in accordance with the terms
of this Agreement. Organon shall not suspend work or seek to terminate this Agreement or any
Purchase Order on account of MannKind’s failure to pay any invoiced amount which is the subject
of a good xxxxx xxxx fide dispute, provided that MannKind pays all undisputed amounts.
In the event Organon has a good faith belief that MannKind may not meet it’s financial
obligations under this Agreement then Organon shall notify MannKind, in writing, within a
reasonable time, not to exceed five (5) business days of such concerns. The Parties shall
discuss, and meet as necessary, to negotiate a good faith resolution to such concerns, may
refer the matter to their respective senior management, or attempt to resolve through mediation
in accordance with § 13.12.
If MannKind fails to pay any undisputed amount when due, then, without prejudice to any other
rights Organon may have, but only after having in good faith consulted MannKind, Organon may
provide notice to the immediate effect that:
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(i) default interest shall be due on the amount outstanding at the rate of [ *** ];
(ii) all costs, including judicial, made in order to obtain payment by MannKind of the
amount(s) due, shall be for account of MannKind;
(iii) [ *** ], Organon shall, notwithstanding its obligation to consult in good
faith with MannKind, at its discretion be entitled to demand adequate security to cover
arrears, to demand prepayment of further deliveries as the terms thereof shall be reasonably
discussed with MannKind, or to suspend further deliveries.
7.3 Taxes. Unless otherwise provided on the Purchase Order, in addition to the price
stated on the face of the Invoice, buyer shall pay costs for all sales, use, or excise taxes,
assessments or other charges attributable to the sale, use, shipment transportation, or
delivery of the goods.
8. Representations And Warranties; Covenants
8.1 General Representations and Warranties. Each Party represents and warrants:
(c) Corporate Power and Authorization. It is duly organized and validly existing under
the laws of the state of its incorporation, and has full corporate power and authority to
execute and deliver this Agreement and to perform all of its obligations hereunder; and
(d) Binding Agreement. This Agreement is a legal and valid obligation binding upon it
and enforceable in accordance with its terms; and
(e) No Conflict. The execution, delivery and performance of this Agreement by such
Party does not conflict with any agreement, instrument or understanding, oral or written, to
which it is a Party or by which it may be bound, nor violate any law or regulation of any
court, governmental body, or administrative or other agency having jurisdiction over it; and
(f) Resources. It has adequate resources, both financial and otherwise, to perform its
duties hereunder.
8.2 Warranty. Organon represents and expressly warrants that the Product provided
hereunder shall conform to the Specifications, including the Quality/Technical Agreement, shall
be in compliance with all applicable laws and regulations, and free from defect, claim,
encumbrance or lien, and, subject to § 4.3, shall be delivered according to the
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terms of the relevant Purchase Order. If and to the extent the corresponding event is not
governed by § 6.4, upon any breach of the warranty Organon shall at Organon’s sole expense
promptly (and in no event longer than [ *** ]) correct, at no cost to MannKind, and at
MannKind’s request, any such breach by replacement of the Product that did not conform to such
warranty and shall provide technical assistance to MannKind to address the Product
non-conformity issues. Any replacement shall be considered a new Product for purposes of this
§ 8.2.
Organon represents and expressly warrants that it has and shall at all times throughout the
term of this Agreement has, whether by right, title, interest, including by license or
otherwise, the Intellectual Property Rights that are required to use, manufacture, market,
offer to sell, sell, import and export the Product in accordance with the terms of this
Agreement and that this Agreement shall not infringe any third party rights.
EXCEPT AS EXPRESSLY PROVIDED HEREIN, ORGANON MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, AS
TO THE QUALITY OR FITNESS FOR PURPOSE OF THE PRODUCT SUPPLIED TO MANNKIND.
8.3 Covenants. Contemporaneous with the Effective Date, the Parties hereby agree to
negotiate in good faith the execution of a Quality/Technical Agreement. Such Quality/Technical
Agreement shall be mutually agreed to in writing prior to placement of any Purchase Order for
the Product.
9. Indemnification And Liability
9.1 Mutual Indemnification. Each Party (the “Indemnifying Party”) shall indemnify and hold
harmless the other Party and its Affiliates, and their respective directors, employees,
consultants and agents (the “Indemnified Parties”) from and against any and all liabilities,
losses, damages, costs, and other expenses (including attorneys’ and expert witnesses’ costs
and fees) (“Losses”) incurred by the Indemnified Parties as a result of any claim, demand,
action or proceeding by any third party (a “Claim”) to the extent arising from or relating to
(i) any material breach of any representation, warranty, covenant, or obligation of the
Indemnifying Party under this Agreement or any intentional misconduct or negligence by the
Indemnifying Party or any of its employees, agents, or subcontractors, or (ii) the manufacture,
sale and/or use of End Product by or on behalf of MannKind, except, in each case, to the extent
such Losses result from the intentional misconduct or negligence of, any of the Indemnified
Parties.
9.2 Indemnification Procedures. In the event of any Claim for which any Indemnified Party
is or may be entitled to indemnification hereunder, the Indemnified Party may, at its option,
require the Indemnifying Party to defend such Claim at the Indemnifying Party’s sole expense.
Indemnifying Party may not agree to settle any such Claim without the Indemnified Party’s
express prior written consent.
9.3 Failure to Defend or Settle. If the Indemnifying Party fails or wrongfully refuses to
defend or settle any Claims, then the Indemnified Party shall, upon written notice to the
Indemnifying Party, have the right to defend or settle (and control the defense of)
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such Claims. In such case, the Indemnifying Party shall cooperate, at its own expense, with the
Indemnified Party and its counsel in the defense and settlement of such Claims, and shall pay,
as they become due, all costs, damages, and reasonable legal fees incurred therefore.
9.4 Liability. IN NO EVENT WILL EITHER OF THE PARTIES BE LIABLE TO THE OTHER FOR ANY
INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGES OR LOSS OF PROFITS IN RELATION TO, OR ARISING OUT OF
THE OPERATION OR TERMINATION OF THIS AGREEMENT.
EACH PARTY’S LIABILITY TO THE OTHER PARTY UNDER THIS AGREEMENT, REGARDLESS OF THE CAUSE OF
ACTION, IS LIMITED TO THE TOTAL VALUE AMOUNT OF INVOICES PAID BY MANNKIND UNDER THIS AGREEMENT
WITHIN THE 12 MONTHS IMMEDIATELY PRECEDING SUCH CLAIM.
10. Insurance Protection. Each Party shall obtain and maintain during the term of this
Agreement liability, comprehensive, and workers’ compensation insurance with a reputable insurance
company to help protect against those insurable risks that such Party may incur in connection with
the performance of its obligations under this Agreement. Each Party shall provide, upon request, to
the other Party any such policies of such insurance, and the premium receipt(s) and insurance
certificate(s) therefore.
11. Term; Termination
11.1 Term. This Agreement shall begin on the Effective Date and, unless terminated sooner
as provided in § 11.2, end December 31st 2012 (the “Initial Term”); provided, however, that the
Initial Term is extended for consecutive two-year periods (each an “Extension Period”) unless:
(i) MannKind fails to provide Organon, at least twenty four (24) months prior to the
end of the Initial Term or an Extension Period, with a forecast of its Fixed Annual Quantity
requirements of the Product with respect to the two (2) calendar years following such
Initial Term or Extension Period, as appropriate; or
(ii) Either Party provides written notice to the other of the termination of this
Agreement at least twenty three (23) months prior to the end of the Initial Term or any
Extension Period, as appropriate.
11.2 Termination Events
(a) For Cause. A Party shall have the right to terminate this Agreement for cause if
the other Party materially breaches this Agreement and fails to cure such material breach
within sixty (60) days after receiving written notice that specifies the particulars of such
breach.
(b) Force Majeure. A Party shall have a right to terminate this Agreement in accordance
with § 13.13.
(c) Business Circumstances. A Party shall have the right to terminate this Agreement in
the event of the other Party’s liquidation, bankruptcy or state of insolvency.
(d) Regulatory Decisions. MannKind may terminate this Agreement upon a thirty (30) day
written notice to Organon in the event that the FDA, EMEA and/or JP either fail to approve
or withdraws approval of the End Product.
(e) Manufacturing Decisions. Either Party may terminate this Agreement upon a ninety
(90) day written notice to the other Party if the Parties fail to reach agreement after any
mediation conducted in accordance with § 5.6.
11.3 Effects of Termination. Upon the expiration or termination of this Agreement: (a)
MannKind shall pay to Organon all amounts due to Organon under this Agreement; and (b) Organon
shall deliver to MannKind all Product for which a delivery date under a Purchase Order has
passed; and (c) each Party shall return to the other Party, upon the other Party’s request, all
tangible items of the other Party in its possession or under its control evidencing the
Confidential Information of the other Party. The expiration or earlier termination of this
Agreement shall not affect any rights or claims of a Party hereunder that accrued prior to the
date of such expiration or earlier termination.
In the event (i) the Agreement is terminated pursuant to § 11.2(d), or, only in the event the
update, amendment or revision of Specifications referred to in § 5.6 is specifically related to
the use of the Product in the End Product, pursuant to § 11.2 (e), and (ii) Organon is not
able, under commercially viable terms, to sell all or part of the Fixed Annual Quantities for
which MannKind at the termination date had not (yet) submitted a Purchase Order in accordance
with § 4.1 (i.e. the Fixed Annual Quantities for both the Initial Term and the Extension
Periods, if appropriate), to one or more third parties [ *** ], Organon is entitled to, and
MannKind will pay[ *** ] a termination fee of [ *** ] in each case of the total price
per gram, as listed in § 7.1[ *** ]
11.4 Transition Plan. In the event of the termination by Organon of this Agreement for
any reason, Organon will cooperate in good faith with MannKind to bring about a smooth and
orderly transition to a new supplier of Product (including an Affiliate of MannKind), including
by assisting MannKind in transition planning (the Parties acknowledge that such planning must
be started well in advance of the termination). Organon shall reasonably provide customary
assistance, consistent with industry standards, to MannKind in securing inventory of Product to
mitigate the potential risks and damages associated with such termination. Nothing in the
foregoing creates an obligation by Organon to provide any of its Intellectual Property, or
rights thereto, to MannKind.
11.5 Survival. Sections (§) § 1, § 3, § 8, § 9, § 10, § 11.3 and § 11.4, § 12, and § 13
shall survive the expiration or termination of this Agreement.
| *** | CONFIDENTIAL TREATMENT REQUESTED |
12. Confidential Information
12.1 Confidentiality Obligations. Each Party shall at all times, and notwithstanding any
termination or expiration of this Agreement, hold in confidence and not disclose to any third
party Confidential Information of the other Party, except as approved in writing by the other
Party to this Agreement, and shall use the Confidential Information for no purpose other than
the purposes expressly permitted by this Agreement. Each Party shall only permit access to
Confidential Information of the other Party to those of its employees, consultants, agents, and
attorneys having a need to know and who are bound by confidentiality obligations at least as
restrictive as those contained herein. The obligations in this § 12.1 shall terminate [ ***
] from the date of expiration or termination of this Agreement in accordance with § 11.
12.2 Exceptions to Confidentiality Obligations. A Party’s obligations under this Agreement
with respect to any portion of the other Party’s Confidential Information shall terminate when
the Party that is subject to such obligations can document in writing that such information:
(a) entered the public domain through no fault of such Party; (b) it was in such Party’s
possession free of any obligation of confidence at the time it was communicated to such Party
by the other Party; (c) it was rightfully communicated to such Party free of any obligation of
confidence subsequent to the time it was communicated to such Party by the other Party; or (d)
it was developed by employees or agents of such Party independently of and without reference to
any information communicated to such Party by the other Party.
12.3 Authorized Disclosure. Notwithstanding anything to the contrary, a Party shall not be
in violation of § 12.1 with regard to a disclosure of the other Party’s Confidential
Information that is in response to a valid order by a court or other governmental body or
necessary to comply with applicable law or governmental regulations, provided that if such
Party is required to make any such disclosure of the other Party’s Confidential Information it
shall to the extent practicable give reasonable advance notice to the other Party of such
disclosure requirement in order to permit the other Party to seek confidential treatment of or
to limit the Confidential Information required to be disclosed.
12.4 Separate Confidential Disclosure Agreements. Any prior confidential disclosure
agreements between the Parties are incorporated by reference to this Agreement, except for the
Confidentiality Agreement. In case of a discrepancy between the terms of this Agreement and
such prior agreements, the terms of this Agreement shall prevail; in case of a discrepancy
between the terms of this Agreement and the Confidentiality Agreement, the terms of the
Confidentiality Agreement shall prevail. Notwithstanding the foregoing, the Parties from time
to time may execute additional confidential disclosure agreements, as required by their
respective SOPs, for the limited and specific purpose of conducting audits.
13. Miscellaneous
13.1 Assignment. Except as expressly provided hereunder, and subject to the Confidentiality
Agreement, neither this Agreement nor any rights or obligations hereunder may be assigned or
otherwise transferred by either Party without the prior written consent of
| *** | CONFIDENTIAL TREATMENT REQUESTED |
the other Party (which consent shall not be unreasonably withheld); provided, however, that
either Party may assign this Agreement and its rights and obligations hereunder without the
other Party’s consent, to any Affiliate. Notwithstanding the foregoing, any such assignment to
an Affiliate shall not relieve the assigning Party of its responsibilities for performance of
its obligations under this Agreement. The rights and obligations of the Parties under this
Agreement shall be binding upon and inure to the benefit of the successors and permitted
assigns of the Parties. Any assignment not in accordance with this Agreement shall be void.
13.2 Relationship of the Parties. It is expressly agreed that Organon and MannKind shall
be independent contractors and that the relationship between the Parties shall not constitute a
partnership, joint venture or agency of any kind. Neither Party shall have the authority to
make any statements, representations or commitments of any kind, or to take any action, which
shall be binding on the other Party, without the prior written consent of the other Party.
13.3 Amendment. Unless otherwise provided herein, this Agreement may not be changed,
waived, discharged, or terminated orally, but instead only by a written document that is signed
by the duly authorized officers of both Parties.
13.4 Waiver. No failure or delay by either Party in exercising any right, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any single or
partial waiver thereof include any other or further exercise thereof or the exercise of any
other right, power, or privilege.
13.5 Severability. Whenever possible, each provision of the Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any term or provision
of this Agreement is held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity, without invalidating
the remainder of the Agreement and this Agreement shall be interpreted and construed as if such
provision had never been contained herein.
13.6 Notices. All notices and statements to be given (which shall be in writing) and all
payments to be made hereunder shall be given or made at the respective addresses of the Parties
as set forth above, unless notification of a change of address is given. All notices, payments
and statements to be made hereunder shall be mailed by certified or registered mail, return
receipt requested, or sent by overnight courier, or by facsimile or other electronic means. Any
notice given pursuant to this Agreement by mail shall be considered effective three (3)
business days after mailing. Any notice sent by overnight courier shall be considered effective
one day after mailing. The date of transmission of any notice sent by electronic means shall be
deemed to be the date the notice or statement is transmitted.
13.7 Construction. The section headings of this Agreement are inserted only for ease of
reference only, and shall not be used to interpret, define, construe, or describe the scope or
extent of any aspect of this Agreement. Unless otherwise expressly stated, when used in this
Agreement the word “including” means “including but not limited to.” Each Party represents that
it has had the opportunity to participate in the preparation of this
Agreement and hence the Parties agree that the rule of construction that ambiguities be
resolved against the drafting Party shall not apply to this Agreement.
13.8 No Third Party Beneficiaries. Unless expressly provided, no provisions of this
Agreement are intended or shall be construed to confer upon or give to any person other than
MannKind and Organon any rights, remedies, or other benefits under or by reason of this
Agreement.
13.9 Dispute Resolution. If a dispute arises under this Agreement, the Parties shall use
reasonable efforts to attempt to resolve such dispute, including escalation of discussions to
the appropriate level of management, as provided in § 13.12, prior to exercising any remedies
that may exist before commencing an action against the other Party. Notwithstanding the
foregoing, either Party may at any time seek equitable relief under § 13.10 without first
attempting to resolve a dispute under this § 13.9 provided, however, that such Party notifies
the other Party promptly after it files any such action.
13.10 Equitable Relief. Each Party acknowledges and agrees that any breaches or violations
of § 3 or § 12 may cause the non-breaching Party irreparable damage for which the award of
monetary damages would be inadequate. Consequently, the non-breaching Party may seek to enjoin
the breaching Party from any and all acts in violation of any such provisions, which remedy
shall be cumulative and not exclusive, and a Party may seek the entry of an injunction
enjoining any breach or threatened breach of such provisions, in addition to any other relief
to which the non-breaching Party may be entitled at law or in equity.
13.11 Governing Law. This Agreement shall be governed by and interpreted under the laws of
England without regard to its conflict or choice of law provisions. The United Nations
Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.
13.12 Alternative Dispute Resolution. The Parties shall attempt by direct negotiation,
between the Project Team, or pertinent members, in good faith to resolve promptly any dispute
arising out of or relating to this Agreement. If the matter cannot be resolved in the normal
course of business either Party shall give the other Party written notice of any such dispute
not resolved at which time the dispute shall be referred to the senior management of the
respective Parties who shall likewise attempt to resolve the dispute.
If the dispute has not been resolved by negotiation as detailed above, or if the Parties fail
to meet, within twenty (20) business days from such notice, then the Parties shall endeavor to
settle the dispute by mediation under the supervision of and in accordance with the CPR Model
Mediation Procedure for Business Disputes in Europe. Unless otherwise agreed, both parties or
each individual party may request the CPR to appoint an independent mediator. The language of
the mediation shall be in English and the seat of mediation shall be agreed upon by both
parties and, in the event the parties do not timely agree, the seat will be determined by the
mediator.
If the dispute has not been resolved by mediation as detailed above, either party may submit
the dispute to arbitration to the CPR for resolution in accordance with the CPR Arbitration
Rules and Commentary. A single, impartial arbitrator mutually acceptable to the Parties shall
conduct the arbitration. In the event the Parties cannot agree on an arbitrator within ten (10)
business days after the end of the aforesaid twenty (20) business days, either Party may have
an arbitrator appointed by the CPR.
The location of the arbitration shall be in London, United Kingdom, unless the Parties agree
otherwise. As a condition of appointment of the arbitrator, said arbitrator shall agree to use
her/his best efforts to conclude the proceeding within thirty (30) business days. Said
arbitrator shall further have the authority to limit the volume of evidence and documents to be
submitted by the Parties. Any court having jurisdiction thereof may enter judgment upon the
award rendered by the arbitrator. This § 13.2 shall, however, not be construed to limit or to
preclude either Party from bringing any action in any court of competent jurisdiction for
injunctive or other provisional relief as necessary or appropriate.
13.13 Force Majeure. Neither Party shall be liable to the other for any failure or delay
in the performance of any of its obligations under this Agreement arising out of any event or
circumstance beyond its reasonable control, including war, rebellion, terrorism, civil
commotion, strikes, lock-outs or industrial disputes; fire, explosion, earthquake, acts of God,
flood, drought, or bad weather; or requisitioning or other act or order by any government,
council, or constituted body. If such failure or delay occurs, then the affected Party shall
give the other Party notice of the circumstances causing such failure or delay, and such Party
shall be excused from the performance of such of its obligations that it is thereby disabled
from performing for so long as it is disabled and for thirty (30) days thereafter; provided,
however, that such affected Party commences and continues to take reasonable and diligent
actions to cure such failure or delay. Notwithstanding the foregoing, if a Party is disabled
from the performance of any material obligation under this Agreement for a period of ninety
(90) days or more, then the other Party shall have the right to terminate this Agreement upon
written notice to the other Party, in which event the provisions of § 11.3 shall apply.
13.14 Attorneys’ Fees. If any claim, action, or dispute arises between the Parties with
respect to any matter covered by this Agreement that leads to a proceeding before a court of
competent jurisdiction to resolve such claim, the Prevailing Party in such proceeding shall be
entitled to receive from the other Party its reasonable attorneys’ fees, expert witness fees,
court costs and other out-of-pocket costs incurred in connection with such proceeding, in
addition to any other relief that it may be awarded. For purposes of this § 13.14, the term
“Prevailing Party” means that Party in whose favor any monetary or equitable award is made or
in whose favor any dispute is resolved, regardless of any settlement offers.
13.15 Publicity. Neither Party shall disclose the fact that they are conducting business
together or the existence of, or the provisions of, this Agreement to any other party unless
such disclosure is in response to a valid order by a court or other governmental body or
necessary to comply with applicable governmental law or regulations provided. Notwithstanding
the foregoing, each Party shall have the right to issue from time to time press releases that
disclose the relationship of the Parties under this Agreement upon the
agreement of the Parties, which agreement shall not be unreasonably withheld, delayed, or
conditioned. Any press releases that are to be issued by either Party shall be in a form and
substance as may be mutually agreed upon by the Parties.
13.16 Entire Agreement. This Agreement includes all exhibits attached hereto (subject to §
8.3 with regard to the Quality/Technical Agreement) and any Specifications that are executed by
authorized representatives of the Parties, and constitutes the entire Agreement by and between
the Parties as to the subject matter hereof. Notwithstanding § 12.4, this Agreement supersedes
and replaces in its entirety all prior agreements, understandings, letters of intent, and
memoranda of understanding by and between the Parties hereto, in either written or oral form.
No amendment or modification of this Agreement shall be valid unless set forth in writing
referencing this Agreement and executed by authorized representatives of both Parties.
13.17 English Language. This Agreement has been prepared in the English language and the
English language shall control its interpretation. In addition, all notices required or
permitted to be given hereunder, and all written, electronic, oral or other communications
between the Parties regarding this Agreement, or delivered pursuant to the terms of this
Agreement, shall be in the English language. Any proceedings related to dispute resolution
including, but not limited to legal, equitable, or alternative dispute resolution, shall be
conducted in the English language.
In Witness Whereof, the Parties hereto have this day caused this Agreement to be
executed by their duly authorized officers.
| N.V. Organon | MannKind Corporation | |||||||||
By:
|
/s/ Xxxxx Xxxxxx Title: EVP Global Manufacturing |
By: | /s/ Xxxxx Xxxxxxx Title: President & Chief Operating Officer |
|||||||
| Date: 7-11-2007 | Date: 11-16-07 | |||||||||
| N.V. Organon | ||||||||||
By:
|
/s/ Gert-Jan Renardel xx Xxxxxxxxx | |||||||||
| Title: VP Marketing & Sales | ||||||||||
| Date: 7-11-2007 | ||||||||||
Exhibit A
SPECIFICATION
[ *** ]
| *** | CONFIDENTIAL TREATMENT REQUESTED |
Exhibit B
QUALITY/TECHNICAL AGREEMENT
Exhibit C
CONFIDENTIALITY AGREEMENT
