Exhibit 10.1
SUPPLY AGREEMENT
THIS AGREEMENT made as of this 31st day of December, 2004 (the
"Effective Date") by and between Vaupell, Inc., a Delaware corporation with a
place of business at 00 Xxxx Xxxxxx, Xxxx Xxxxxxxx, XX 00000 ("Supplier") and
MannKind Corporation, a Delaware corporation with a place of business at 0
Xxxxxx Xxxxxx, Xxxxxxx, XX 00000 ("Customer"). Supplier and Customer are
collectively referred to herein as the "Parties" and individually as a "Party."
WITNESSETH:
WHEREAS, Customer desires to purchase from Supplier, and Supplier
desires to manufacturer and supply to Customer, the product(s) listed on
Schedule A attached hereto (the "Products"), subject to and in accordance with
the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following words and
phrases shall have the meanings set forth below:
(a) "Affiliate" means, with respect to any Person, any other
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such Person.
(b) "control" (including, with its correlative meanings, the terms
"controlled by" and "under common control with"), with respect to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person (whether through the
ownership of voting securities, by contract or otherwise); provided, that in
each event in which any Person owns directly or indirectly more than 50% of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or more than 50% of the ownership interest of
any other Person, such Person shall be deemed to control such corporation or
other Person.
(c) "Change in Control" means a change in the control of a Party
to this Agreement occurring after the date of execution of this Agreement;
provided, however, that, without limitation, a Change in Control shall be deemed
to have occurred if any person or entity becomes the beneficial owner, directly
or indirectly, of more than 35% of the securities having ordinary voting power
for the election of directors or other governing body of a corporation.
(d) "Confidential Information" means any and all information (in
any and every form and media) not generally known in the relevant trade or
industry, which was obtained from any Party or any Affiliate thereof in
connection with this Agreement or the respective rights
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and obligations of the Parties hereunder, including, without limitation, (a)
information relating to trade secrets of such Party or any Affiliate thereof,
(b) information relating to existing or contemplated products, services,
technology, designs, processes, formulae, research and development (in any and
all stages) of such Party or any Affiliate thereof, (c) information relating to
the Products or any of the patents, trade secrets, know-how, and other
technology and information relating to the Products and their design, and (d)
information relating to business plans, methods of doing business, sales or
marketing methods, customer lists, customer usages and/or requirements and
supplier information of such Party or any Affiliate thereof.
(e) "FCA" means free carrier, as such term is defined in INCOTERMS
2000.
(f) "FDA" means the United States Food and Drug Administration or
any successor agency thereof.
(g) "Intellectual Property" includes, without limitation, rights
in patents, patent applications, formulae, trade-marks, trade-xxxx applications,
trade-names, confidential information, trade secrets, inventions, copyright,
industrial designs, know-how, artwork, advertising and packaging information,
and the Specifications.
(h) "Losses" means all losses, liabilities, damages, claims,
expenses, suits, recoveries, judgments and fines (including reasonable
attorneys' fees and expenses).
(i) "Person" means any individual, estate, trust, partnership,
joint venture, association, firm, corporation or licensee, or governmental body,
agency or official, or any other entity.
(j) "QSR" means the quality system regulation relating to the
manufacture of medical devices as described in 21 C.F.R. Parts 808, 821 and 820,
together with any other standards of good manufacturing practices provided by
Customer to Supplier and approved in writing by Supplier from time to time,
which approval will not be unreasonably withheld or delayed..
(k) "Raw Materials" means all raw materials, supplies, components,
packaging materials and labels required to be used in order to manufacture the
Products in accordance with the Specifications.
(l) "Specifications" means the information provided by Customer to
Supplier in written, digital or other documental form relating to each Product,
including, without limitation, a detailed description of each Product;
manufacturing and packaging directions; shipping and storage requirements;
protocols for validating processes or equipment to produce Products; and quality
control procedures for sampling, testing, documenting and releasing Raw
Materials and in-process and finished Products, all as set forth in Schedule B
attached hereto and as updated, amended and revised from time to time by
Customer.
(m) "Term" has the meaning ascribed to such term in Section 7.2.
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1.2 Headings. The headings used in this Agreement have been inserted
solely for convenience of reference and in no way define, limit or describe the
scope or substance of any provision of this Agreement.
1.3 Incorporation of Exhibits. The Exhibits attached to this Agreement
are incorporated herein and made a part hereof.
ARTICLE 2
MANUFACTURE BY SUPPLIER
2.1 Manufacture and Supply. During the Term, Supplier shall manufacture
and supply to Customer the Products listed on Schedule A for the prices
specified on Schedule A. Schedule A may be amended from time to time by mutual
written agreement to reflect additions, deletions and modifications of Products
and the prices of added or modified Products. In performing its obligations
under this Section 2.1, Supplier shall purchase Raw Materials, convert such Raw
Materials in Products, perform quality control testing and package the Products.
2.2 Supplier Capacity. At all times during the Term, Supplier agrees to
maintain the ability to manufacture with no delay in production all requirements
of Customer for Products at a site of the Supplier not then being used to
manufacture Products. At any time, and from time to time, but not more
frequently than once in every calendar year during the Term, Customer may
request in writing that its requirements for Products be manufactured at a site
of the Supplier not then being used to manufacture Products (a "New Site")
whereupon Supplier shall manufacture such requirements for Products at such New
Site until Customer gives a further notice pursuant to this Section that its
requirements for Products be manufactured at another New Site.
2.3 Adherence to Specifications. During the Term, Supplier shall supply
the Products in strict accordance with QSR and with the Specifications. No
changes to the Specifications shall be effected without the prior written
approval of both Parties. Subject to Section 3.2(c), Supplier shall implement
agreed-upon changes to the Specifications promptly.
2.4 Quality Control. Promptly after the Effective Date but in any event
prior to the manufacture of Product, Supplier shall set up and maintain a
quality control system in conjunction with the Customer. The Parties have
included as part of the Specifications certain quality control tests to be
implemented by Supplier with respect to the manufacture of the Products. All raw
materials and production process variables shall be qualified and maintained
within the Specifications as agreed upon by the Parties in writing from time to
time hereunder. Supplier shall maintain such written records as are necessary to
enable the Parties to monitor these variables and shall supply copies of all
laboratory records of quality control testing of the Products to Customer. All
quality control tests shall be conducted under appropriate laboratory validation
and QSR. Each shipment of Products shipped to Customer by Supplier shall include
therewith a letter certifying the tests performed, results obtained and
conformity to specifications of the given shipment of Products.
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ARTICLE 3
PURCHASE BY CUSTOMER
3.1 Purchase. During the Term, Customer shall purchase Products from
Supplier in accordance with the ordering, lead times, delivery, payment and
other provisions hereof.
3.2 Pricing. The pricing for each Product shall be as set forth on
Schedule A and shall be fixed throughout the Term, except as such prices may be
adjusted as follows:
(a) Annual Price Adjustments. On December 1st of each year during
the Term, commencing December 1, 2004, Supplier shall give Customer a notice in
writing that shall include evidence of any increase or decrease in Supplier's
actual costs in the manufacturing of the Products, including, but not limited to
costs of Raw Materials (but excluding the cost of resin raw material) and direct
labor, if any. On January 1st of each year during the Term, commencing January
1, 2005, either Party may notify the other in writing of any desired change in
the price of any of the Products as a result of an increase or decrease in
Supplier's actual costs in the manufacturing of the Products. After a Party has
received such notice, if such Party does not accept any or all of such price
changes, Supplier and Customer shall negotiate in good faith for a period not to
exceed ten (10) days. In the absence of agreement regarding any proposed price
changes, the prices shall remain unchanged pending resolution pursuant Article
12. Any mutually, agreed-upon change in the price for the Products will be
documented in writing signed by Customer and Supplier and will be implemented on
the date agreed by the Parties.
(b) Resin Price Adjustments. Prices of Products shall be subject
to adjustment upwards or downwards quarterly based on the increase or decrease
in Supplier's actual resin raw material cost per pound relative to such cost at
the Effective Date and thereafter at the time of the previous quarterly
adjustment (at each interval, the "Previous Resin Cost"). In the event
Supplier's actual resin raw material cost increases or decreases from the
Previous Resin Cost, Supplier shall notify Customer in writing, stating the
amount of the proposed price increase or decrease and including evidence such as
copies of invoices from suppliers showing changes in Supplier's actual resin raw
material cost. After Customer has received such notice, if Customer does not
accept any or all of such price changes, Supplier and Customer shall negotiate
in good faith for a period not to exceed ten (10) days. In the absence of
agreement regarding any proposed price changes, the prices shall remain
unchanged pending resolution pursuant to Article 12. Thereafter, the price for
each Product will be correspondingly increased or decreased only by the amount
necessary to reflect such resin raw material price increase or decrease and such
price change will take effect with the first firm purchase order submitted by
Customer following Customer's receipt of the written notice required by this
Section 3.2(b).
(c) Changes in Specifications. Changes to the Specifications
requested by Customer will be implemented following agreement between the
Parties regarding changes, if any, to the prices specified in Schedule A. Such
price changes will become effective only with respect to orders of Products that
are manufactured in accordance with the revised Specifications. Customer will
pay to Supplier the cost of any work in process which cannot be manufactured in
accordance with the revised Specifications and cannot be returned as Raw
Materials as a result of a Customer-directed change in Specifications.
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3.3 Taxes. The price set forth in Section 3.2 hereof does not include
use, sales or other tax of any taxing authority. The amount of such taxes, if
any, will be added to the price of the Products in effect at the time of
shipment and shall be reflected on the invoices submitted to Customer by
Supplier. Customer shall pay the amount of such taxes to Supplier in accordance
with the payment provisions relating to shipments of Products. Any claims and
Losses for any expenditures which Customer may be required to make as a result
of Supplier's failure to pay such taxes to the relevant taxing authority shall
be covered by the indemnity contained in Article 13.
ARTICLE 4
ORDERS
4.1 Orders and Forecasts.
(a) Forecast. Upon execution of this Agreement, Customer shall
submit to Supplier a non-binding forecast of Customer's requirements for
Products for the subsequent twelve (12) months, with the first three (3) months
covered by a separate firm purchase order. Each quarter thereafter, on a rolling
basis, Customer will submit subsequent twelve (12) month forecasts together with
a firm purchase order for the next three (3) months.
(b) Purchase Orders. Each purchase order shall specify (i) the
type and quantity of Product, (ii) one or more Product delivery dates, none of
which may be earlier than thirty (30) days after the date of the purchase order,
unless the parties agree to a shorter delivery period ("Delivery Date(s)"),
(iii) method of shipment and (iv) one or more Product delivery destinations.
Supplier shall accept all purchase orders placed under this Agreement which are
received by it during the Term, which specify a Delivery Date or Dates within
the Term and which otherwise conform to the terms of this Agreement. Supplier
shall acknowledge all purchase orders in writing not more than five (5) business
days after receipt thereof.
(c) Cancellation. Customer shall have the right to cancel any
purchase order or portion thereof by providing to Supplier written notice (or
oral notice, so long as such oral notice is confirmed in writing within ten (10)
business days) before the Delivery Date specified in the purchase order;
provided, however, that Customer shall promptly, and in any event within thirty
(30) days after the applicable Delivery Date upon invoice from Supplier, (i)
`take delivery of any finished Product completed by Supplier under such purchase
order at the time of cancellation notice, (ii) pay to Supplier the cost of any
work in process which cannot be returned as Raw Materials, (iii) pay to Supplier
the cost for any Raw Materials purchased by Supplier to fulfill such purchase
order which cannot be returned by Supplier and (iv) reimburse Supplier for any
restocking charges paid by Supplier on account of any returned Raw Materials;
provided that such Raw Materials and finished Product were produced or purchased
by Supplier in good faith to meet the intended requirements of such purchase
order.
(d) Excess Quantities. Customer may submit a purchase order for
quantities in excess of the quantities specified in Customer's most recent
forecast, and Supplier shall accept and satisfy such orders subject to
Supplier's available production capacity and reasonably adequate lead times.
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4.2 Inventory Position. Supplier shall maintain and manage such quantity
of finished Product inventory as determined by Customer from time to time (not
to exceed one calendar quarter of finished Product inventory), based on
Customer's purchase orders, at Supplier's facility or at Customer's facility in
Danbury, Connecticut at Supplier's sole expense. The Parties' intention in
maintaining such an inventory is to enable Supplier to decrease lead times
required for completing Product orders and to enable Customer to meet
unforeseeable sales requirements.
4.3 Process Improvements. Supplier acknowledges that Customer may assess
the feasibility of the procedures known in the industry as "just in time"
manufacturing and "electronic data interchange" and other process improvements
with respect to product orders, forecasts, and inventory positions. Should
Customer desire to implement "just in time" manufacturing and electronic data
interchange procedures and other process improvements, Supplier shall cooperate
in good faith to implement such procedures and the parties shall amend this
Agreement as appropriate.
ARTICLE 5
PAYMENT AND SECURITY
5.1 Invoices. Customer shall pay Supplier for each order within thirty
(30) days after receipt of Supplier's invoice. If Customer pays any invoice
within ten (10) days after invoice date, then Customer shall be permitted to
take a two percent (2.0%) discount from the total invoice amount. Supplier will
issue invoices upon shipment, except in the event that a purchase order
specifies that delivery will be made in installments, Supplier shall invoice
Customer, and Customer shall be liable for payment, only with respect to
Products actually delivered in each installment.
5.2 Payment Dispute. In the event of a dispute regarding payment, the
prevailing Party shall be entitled to recover from the other all costs and
expenses, including attorneys' fees, reasonably incurred by such party in the
resolution of any dispute hereunder including: in the case of the Supplier, the
collection of any unpaid invoice which is not the subject of a good faith
dispute. During the period of any payment delinquency by Customer of more than
60 days, which delinquency is not the subject of a good faith dispute, Supplier
may suspend further supply of Products to Customer until such delinquency is
corrected. Any delinquent amount shall bear interest at a compounded rate of
four percent (4%) per annum until paid in full.
ARTICLE 6
DELIVERY AND INSPECTION
6.1 Delivery. Delivery will be FCA Supplier's place of business in West
Xxxxxxxx, Massachusetts. All Products shall be deemed delivered and subject to
Customer's dominion and control when placed in the possession of the carrier,
packed and ready for shipment. All risk of loss or damage to the Products from
any cause whatsoever shall be borne by Supplier until delivery of the Products
to, and acceptance by, the carrier at the FCA point, at which time title and
risk of loss shall transfer to Customer. Supplier shall cooperate with Customer
in the documentation and proof of loss claims promptly presented by Customer to
the appropriate carrier and/or insurer.
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6.2 Shipping Instructions and Charges. Supplier will pack and ship
Products in accordance with the Specifications; provided, however, that, in the
absence of specific instructions, Supplier shall pack and ship Products in a
manner consistent with Supplier's usual practices, which shall be at least
reasonably satisfactory to ensure Products are received undamaged. Supplier
shall, in accordance with Customer's instructions and as agent for Customer, and
at Customer's expense for out of pocket expenses, obtain any export license or
other official authorization and carry out all customs formalities necessary to
export the Products. Costs of packing for shipments of Products made under this
Agreement are included in the prices set forth in Schedule A. Supplier shall add
shipping charges and the cost of any insurance which Customer may request in
connection with the Products to the price stated on invoices, and Customer shall
pay such charges at the time payment of the price for such Products is due and
payable; however, if Customer has specified to Supplier a particular carrier and
has provided to Supplier its billing account number, the carrier will invoice
Customer directly for shipping charges.
6.3 Product Deficiencies.
(a) Inspection. Customer shall have the right to give Supplier
written notice of rejection of any shipment of Products that, in whole or in
part, deviates from QSR or the Specifications, which notice shall be given
within sixty (60) days of the later of (a) discovery of such deviation or (b)
the date upon which such deviation could have been discovered with reasonable
diligence.
(b) Determination of Deficiency. At Supplier's request, Customer
shall promptly supply either some of the Products that are allegedly defective
or some other evidence of deficiency that Supplier may reasonably request.
Customer will segregate those Products containing alleged deviations and hold
them for a period of at least thirty (30) days for inspection by Supplier. In
the event that there is disagreement-between the Parties as to whether the
Products deviate from QSR or the Specifications, the Parties shall have such
Products tested by a mutually agreed-upon third party and such party's
determination as to whether such Products deviate from QSR or the Specifications
shall be binding on the Parties hereto. The expense for such testing and for any
costs associated with the destruction of such Products shall be borne by
Supplier if such third party determines such Products deviated from QSR or the
Specifications. The expense for such testing shall be borne by Customer if such
third party determines such Products did not deviate from QSR or the
Specifications.
(c) Replacement. Supplier shall replace as soon as reasonably
practicable any Products deviating from QSR or the Specifications taking into
account Customer's production schedule as communicated pursuant to its purchase
orders. Customer shall have the right to setoff any refund due Customer on
account of rejected Products against invoices otherwise due or which become due
to Supplier. The provisions of this Section 6.3 are in addition to any other
rights or remedies of Customer under this Agreement or available under
applicable law and shall survive the expiration or termination of this Agreement
with respect to Products supplied by Supplier that are received or sold by
Customer subsequent to the expiration or termination of this Agreement; provided
that Customer, in lieu of having Supplier replace such rejected Products, may
elect to have Supplier reimburse Customer for such Products.
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ARTICLE 7
TERM AND TERMINATION
7.1 Term. The term of this Agreement shall commence on the Effective
Date and shall continue through December 31, 2009 (the "Initial Term") unless
extended or sooner terminated in accordance with this Agreement.
7.2 Additional Terms. This Agreement shall automatically renew for
additional periods of one (1) year each (each a "Renewal Year") unless and until
either Customer or Supplier provides written notice to the other at least one
hundred eighty (180) days prior to the expiration of the then-current `Term
electing to terminate this Agreement at the end of such Term. For purposes of
this Agreement, "Term" shall refer collectively to the Initial Term and the
Renewal Year(s). Notwithstanding, if Supplier elects to terminate this Agreement
and Customer is diligently using reasonable commercial efforts to obtain another
supplier of the Products, Suppler shall have an obligation to supply Customer's
needs in accordance with the terms hereof until the earlier to occur of (a)
Customer obtaining Products acceptable to the FDA for commercial use from
another supplier or (b) the expiration of one (1) year from the expiration of
the then current Term.
7.3 Termination. This Agreement may be terminated immediately upon the
occurrence of one or more of the following events:
(a) by Customer or Supplier (i) in the case of a material breach
by the other Party of any one or more of the terms of this Agreement (other than
a breach resulting from failure of Customer to pay for the Product) which is not
remedied within thirty (30) days after receipt of written notice of the breach
by the terminating party, or if such breach cannot reasonably be cured within
such thirty (30) day period, if the breaching party has failed to commence such
cure within such period and diligently prosecute such cure to completion within
a reasonable time thereafter; and (ii) in the case of a pattern of persistent
material breaches (other than a breach resulting from failure to pay for the
Product), regardless of whether such persistent breaches are remedied within
thirty (30) days after receipt of written notice of the breach;
(b) by Customer, in the event Supplier, and by Supplier, in the
event Customer, files a petition in bankruptcy or enters into an arrangement
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 suffers or
permits the entry of an order adjudicating it to be bankrupt or insolvent. If
this sub-Section applies, then Supplier may immediately require pre-payment in
full for all orders prior to shipment;
(c) by Customer for any reason or no reason upon one hundred
eighty days (180) days prior written notice to Supplier; or
(d) by Customer upon not less than fifteen (15) days prior written
notice to Supplier if at any time during the Term of this Agreement Supplier is
acquired by or becomes an Affiliate of a competitor of Customer or there is a
Change in Control of Supplier.
7.4 Obligations upon Termination by Supplier. Upon termination by
Supplier pursuant to 7.3(a) or (b) or by Customer pursuant to 7.3(c) or (d),
Customer shall purchase from
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Supplier all inventories of finished Products at then-current pricing. Supplier
shall complete all work in process on purchase orders received prior to
termination, which shall also be purchased by Customer in accordance with the
applicable purchase order. Supplier shall use commercially reasonable efforts to
return Raw Materials in inventory to its suppliers; any Raw Materials that
Supplier cannot return or which Supplier cannot use in other Products shall be
purchased by Customer from Supplier at Supplier's cost. Customer shall also
reimburse Supplier for any restocking charges paid by Supplier on account of any
returned Raw Materials. Customer shall remove such inventories of products and
Raw Materials and all artwork, advertising and packaging, molds and tooling and
other Customer property in its possession or control at its own cost and expense
within thirty (30) days following termination. The provisions of this Section
7.4 are in addition to any other rights or remedies of Customer under this
Agreement or available under applicable law.
7.5 Obligations upon Termination by Customer. Upon termination by
Customer pursuant to 7.3(a) or (b), Customer may, at its election, purchase from
Supplier all inventories of finished Products at then-current pricing. At the
request of Customer, Supplier shall complete all work in process on purchase
orders received prior to termination, which shall then be purchased by Customer
in accordance with the applicable purchase order. Supplier shall use
commercially reasonable efforts to return Raw Materials in inventory to its
suppliers. Customer shall have no responsibility for any Raw Materials that
Supplier cannot return or which Supplier cannot use in other products nor for
any restocking charges paid by Supplier on account of any returned Raw
Materials. Supplier shall deliver to Customer's designated place of business all
inventories of Products and Raw Materials and all artwork, advertising and
packaging, molds and tooling and other Customer property in its possession or
control at its own cost and expense within thirty (30) days following
termination. The provisions of this Section 7.5 are in addition to any other
rights or remedies of Customer under this Agreement or available under
applicable law.
ARTICLE 8
CO-OPERATION
8.1 Reviews. At the request of either Party, but at least once per
month, Customer and Supplier will hold periodic meetings or conference calls to
discuss quality issues, supply chain issues, inventory levels, tool issues,
delivery issues, process improvements, non value-added activities and ways to
eliminate such activities, communication improvements and any other matter
relating to the Product that the requesting Party wishes to discuss.
8.2 Product Recalls and Returns.
(a) Product Recalls. Supplier and Customer shall each maintain
records as may be necessary to permit a recall or a field correction of any
Products delivered to Customer or customers of Customer, effected voluntarily or
under a threat of, or a directive by, any governmental or regulatory authority.
Each Party shall give notice within one business day by telephone (to be
confirmed in writing) to the other Party upon discovery that any Products should
be recalled or corrected, or may be required to be recalled or corrected, and
each Party upon receiving any such notice or upon any such discovery, shall
cease and desist from further shipments of such Products in its possession or
control until a decision has been made whether a recall or some other corrective
action is necessary. The decision to initiate a recall or to take
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some other corrective action, if any, shall be made and implemented by Customer
after consultation with Supplier. Supplier shall co-operate as reasonably
required by Customer, having regard to all applicable laws and regulations.
(b) Product Returns. Customer shall have the responsibility for
handling customer returns of the Products. Supplier shall provide Customer with
such assistance as Customer may reasonably need to handle such returns.
(c) Supplier's Responsibility. To the extent that a recall or
return results from, or arises out of, a failure of Supplier to manufacture and
supply the Products in accordance with the Specifications and QSR, such recall
or return shall be made at Supplier's cost and expense, and Supplier shall use
its best efforts to replace the recalled or returned Products with new Products
within sixty (60) days from the date that Customer definitively notifies
Supplier about the recalled or returned Products. In the event that Supplier is
unable to replace the recalled or returned Products within this sixty-day
period, then Customer may request Supplier to reimburse Customer for the price
that Customer paid to Supplier for manufacturing the affected Products. In all
other circumstances, recalls, returns or other corrective actions shall be made
at Customer's cost and expense.
8.3 Complaints. In connection with any product complaints forwarded by
Customer to Supplier, Supplier shall conduct all necessary reviews of records
and testing of such Product and investigate such complaint, at no additional
cost to Customer. To the extent such complaint is attributable to the failure of
Supplier to manufacture and supply the Products in accordance with the
Specifications and QSR, the Supplier will implement corrective action(s) to
prevent reoccurrence of such Product complaint(s).
8.4 FDA Cooperation. Customer shall own all documents related to the
Products filed by Supplier with the FDA and Customer shall be entitled to make
reference to all documents related to the Products and filed by Supplier with
the FDA. Supplier shall not make use of any Specifications or FDA filings
related to the Products except in connection with its performance under this
Agreement. The provisions of this Section 8.4 shall survive the termination or
expiration of this Agreement.
8.5 Site Visits. Customer shall have the right to inspect Supplier's
facilities, documentation and SOPs related to the Products upon request at
reasonable times and in a manner so as to not unnecessarily interfere with the
business of Supplier or result in the disclosure of any confidential information
of Supplier or another customer of Supplier. Supplier shall notify Customer of
any inspections by any governmental or regulatory authority.
8.6 Legal and Regulatory Filings and Requests. Supplier and Customer
shall cooperate and be diligent in responding to all requests for information
from, and in making all required filings with, regulatory authorities having
jurisdiction to make such requests or require such filings. Supplier shall
obtain and comply in all material respects with all licenses, consents, permits
and regulations that may from time to time be required by appropriate legal and
regulatory authorities with respect the performance of its obligations
hereunder. Seller agrees to maintain inspection and test documents that relate
to work performed under this Agreement for a period of seven (7) years.
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8.7 Mold Database. Within one month of the Effective Date, Supplier
will, with the advice and consent of Customer, develop and maintain a mold
database for each mold located at Supplier's place of business. The mold
database will be updated by Supplier on a monthly basis and reviewed quarterly.
The data to be reported will include without limitation, where applicable: mold
up/down time; the main reasons for mold downtime and the necessary corrective
actions to prevent the downtime from reoccurring; mold efficiency; cycle time;
number of cycles; the estimated number of cycles remaining in a mold's life; the
estimated number of cycles remaining before next major rebuild of a mold; a
report of the predictive and preventative mold maintenance performed during the
reporting period; the defect rating, as measured on a parts per million basis
for the parts produced during the reporting period; and tool capacity and
capacity utilization. The mold database shall be deemed the property of
Supplier. Notwithstanding, Customer from time to time upon request during normal
business hours have access to the mold data base for the purpose of examining
and copying the information contained therein.
8.8 Preventive Maintenance. Within one month of the Effective Date,
Supplier will, with the advice and consent of Customer, establish a preventative
maintenance program for Customer's molds and tooling. The relationship of
Supplier to Customer's molds, tooling and other property of Customer in its
possession is that of a bailee for hire. Notwithstanding the foregoing, Supplier
will not be liable for normal wear and tear of Customer's molds, tooling and
other property.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
9.1 General Representations and Warranties. Each Party represents and
warrants to the other Party that:
(a) such Party has full legal right, power and authority to
execute, deliver and perform its obligations under this Agreement;
(b) the execution, delivery and performance of this Agreement by
such Party does not contravene or constitute a default under any provision of
applicable law or of any agreement, judgment, injunction, order, decree or other
instrument binding upon such Party;
(c) all licenses, consents, authorizations and approvals, if any,
required for the execution, delivery and performance of this Agreement by such
Party have been obtained and are in full force and effect and all conditions
thereof have been complied with, and no other action by or with respect to, or
filing with, any governmental authority or any other person is required in
connection with the execution, delivery and performance of this Agreement by
such Party; and
(d) this Agreement constitutes a valid and binding agreement,
enforceable against such Party in accordance with its terms.
9.2 Representations and Warranties of Supplier. Supplier represents and
warrants to Customer that:
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(a) Supplier has, subject to agreed lead times, available the
capacity to manufacture Product in accordance with the forecast of requirements
set forth in Schedule A attached hereto;
(b) Supplier's actual resin raw material cost per pound for each
resin in effect at the Effective Date is set forth in Schedule B, as evidenced
by documentation delivered to Customer, and
(c) Products supplied to Customer, pursuant to this Agreement (i)
shall be free of any lien, charge, encumbrance and interest of any nature
whatsoever of any third party, and that Supplier shall have good and marketable
title thereto; (ii) conform with the Specifications; and (iii) shall be
manufactured in accordance with QSR; provided, however Supplier is not
responsible for defects occurring after delivery as a result of mishandling.
9.3 Representations and Warranties of Customer. Customer represents and
warrants to the Supplier that to the knowledge of Customer:
(a) The Products detailed by the Specifications, as they exist at
the Effective Date or as they may be amended from time to time hereunder will
not infringe the rights of any third party; and
(b) The trademarks, packaging, and designs it provides for
Supplier's use hereunder will not infringe the rights of any third party.
9.4 Disclaimer of Other Warranties. CUSTOMER ACKNOWLEDGES AND AGREES
THAT EXCEPT AS EXPRESSLY STATED IN SECTIONS 9.1 AND 9.2 ABOVE, SUPPLIER MAKES NO
REPRESENTATIONS OR WARRANTIES RELATED TO THE PRODUCTS OR OTHERWISE AND THAT THE
FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES,
INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE OR USE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED.
There are no oral promises, representations or warranties collateral to or
affecting this Agreement.
9.5 Debarred Persons. Supplier covenants that it will not in the
performance of its obligations under this Agreement use the services of any
Person debarred or suspended under 21 U.S.C. Section 335(a) or (b). Supplier
represents that it does not currently have, and covenants that it will not hire,
as an officer or an employee any Person who has been convicted of a felony under
the laws of the United States for conduct relating to the regulation of any drug
product under the Food, Drug and Cosmetic Act.
9.6 Survival. The representations, warranties and covenants contained in
this Article 9 shall survive the expiration or termination of this Agreement.
12
ARTICLE 10
OWNERSHIP, TRADEMARKS AND LIMITED USE
10.1 Ownership of Intellectual Property. Title to, and ownership of, the
Products and all of the Intellectual Property relating to the Products shall be
the sole and exclusive property of Customer. Any improvements or modifications
to the Products and/or the processes or methods for the manufacture of the
Products and the Intellectual Property relating thereto that are discovered or
developed by Supplier and/or Customer during the Term shall be owned solely by
Customer. Supplier shall hold all such improvements and modifications in
confidence for Customer's sole benefit in the development and/or the operation
of manufacturing processes with respect to the Products. Supplier shall disclose
to Customer and receive the approval of Customer with respect to all such
improvements or modifications developed by Supplier. Supplier shall have no
right or license to use any Intellectual Property relating to the Products at
any time before, during or after the Term of this Agreement, except as necessary
for the manufacture, processing, packaging and supply of the Products to
Customer hereunder. To the extent that the manufacture of the Products by a
third party using manufacturing processes, systems or methods used by Supplier
to manufacture Products under this Agreement would infringe any Intellectual
Property of Supplier, Supplier hereby grants to Customer and its designated
contract manufacturers a non-exclusive, world-wide, royalty-free, non-revocable
license under such Intellectual Property to make, use and sell Products, this
license to survive termination of this Agreement.
10.2 Reproduction of Trademarks. In connection with Supplier's
performance of this Agreement, Customer hereby grants Supplier the right to
reproduce and print on the Products Customer trademarks, trade dress and/or
trade names of any such Products which Customer may designate in writing from
time to time, in accordance with trademark usage guidelines set forth in the
Specifications or otherwise provided by Customer. Samples of all such uses of
such trademarks and/or trade names on any Products or Products packaging shall
be submitted to Customer for its written approval prior to production. The
permission granted herein is restricted to the Products supplied under this
Agreement and extends only for the Term of this Agreement.
10.3 Supplier's Limited Rights to Use. Nothing set forth in this
Agreement shall be construed to grant to Supplier any title, right or interest
in or to any Intellectual Property owned by Customer, or any of its Affiliates,
or to which Customer, or any of its Affiliates, may have rights. Supplier's use
of such Intellectual Property shall be limited exclusively to its performance of
this Agreement. Any other use of such Intellectual Property shall constitute an
infringement thereof and/or violation of Customer's rights.
10.4 Supplier's Manufacture of Other Products. Any technology or
information owned by Customer or provided by Customer to Supplier in connection
with this Agreement shall not be used by Supplier in the manufacture of any
product other than the Products or disclosed or made available to any customers
of Supplier or other third parties. All such information shall be deemed
Confidential Information subject to the provisions of Section 11 hereof. It is
further agreed that Supplier shall in no event manufacture or package any
private label versions of products competitive with Customer's Products for
itself or for other customers during the Term of this Agreement and for a period
of two (2) years after the later of the expiration or termination of the Term of
this Agreement.
13
ARTICLE 11
CONFIDENTIALITY
11.1 Confidentiality. The parties recognize that the Confidential
Information of one another and any and all of their Affiliates constitutes
valuable confidential and proprietary information. Accordingly, the parties
agree, on their own behalf and on behalf of any Affiliates with whom they share
such confidential information, that they shall, during the term of this
Agreement and for a period of five (5) years after the termination or expiration
hereof for any reason, hold in confidence all Confidential Information of the
other party and its Affiliates (including the existence of this Agreement and
the terms hereof) and not use the same for any purpose other than as set forth
in this Agreement nor disclose the same to any other Person except to the extent
that it is necessary for a party to enforce its rights under this Agreement or
if required by law or any governmental authority (including, without limitation,
any stock exchange upon which a party's shares or other equity securities may be
traded); provided, however, if a party shall be required by law to disclose any
such Confidential Information to any other Person, such party shall give prompt
written notice thereof to the other party and shall minimize such disclosure to
the amount required. The parties acknowledge that violation of this Section 11.1
could cause the other party irreparable harm. Data and other information created
or discovered prior to or during the term of this Agreement relating to the
Product and/or the processes or methods for the manufacture of the Products
whether created or discovered solely by Customer or Supplier or jointly by the
parties shall, for purposes of this Agreement, be deemed Confidential
Information solely owned by Customer and furnished by Customer to Supplier
hereunder.
11.2 Exception. The obligations of a party under Section 11.1 shall not
apply to any information which (a) at the time of disclosure, is generally known
to the public, (b) after disclosure, becomes part of the public knowledge (by
publication or otherwise) other than by breach of this Agreement by the
receiving party, (c) the receiving party can verify by written documentation was
in its possession at the time of disclosure and which was not obtained, directly
or indirectly, from the other party or any Affiliate thereof, (d) the receiving
party can verify by written documentation results from research and development
by the receiving party or any Affiliate thereof independent of disclosures by
the other party or any Affiliate thereof or (e) the receiving party can prove
was obtained from any Person who had the legal right to disclose such
information, provided that such information was not obtained to the knowledge of
the receiving party or any Affiliate thereof by such Person, directly or
indirectly, from the other party or any Affiliate thereof on a confidential
basis.
11.3 Further Exception. Notwithstanding the foregoing, a party may
disclose Confidential Information of the other party (a) to its attorneys,
accountants and other professional advisors under an obligation of
confidentiality to the other party, (b) to banks or other financial institutions
or venture capital sources for the purpose of raising capital or borrowing money
or maintaining compliance with agreements, arrangements and understandings
relating thereto, and (c) to any Person who proposes to purchase or otherwise
succeed (by merger, operation of law or otherwise) to all of a party's right,
title and interest in, to and under this Agreement, if such Person agrees to
maintain the confidentiality of such Confidential Information pursuant to a
written agreement in form and substance reasonably satisfactory to the
14
parties. The standard of care required to be observed hereunder shall be not
less than the degree of care which a party uses to protect its own information
of a confidential nature.
11.4 Non-Use of Names. Neither party shall use the name of the other
party nor the name of any of Affiliates or employees of such other party, nor
any adaptation thereof, in any advertising, promotional or sales literature
without the prior written consent of such other party in each case, which
consent shall not be unreasonably withheld or delayed.
ARTICLE 12
ARBITRATION
12.1 Arbitration. Except as expressly provided herein, any dispute,
controversy, or claim arising out of or relating to this Agreement, its
validity, construction or enforceability or the breach of any of the terms or
provisions hereof shall be settled by arbitration under the American Arbitration
Association by one arbitrator selected as provided in the rules. Any arbitration
proceeding commenced by either party shall be held in Hartford, Connecticut. The
decision of the arbitrator shall be final and binding upon the parties and
judgment upon the decision by the arbitrator may be entered in any court of
competent jurisdiction, and execution may be had thereon. Pending the decision
of the arbitrator, the parties shall continue to perform their obligations
hereunder to the extent not in dispute and no default hereunder shall be deemed
to occur until such decision is rendered. The expense of such arbitration,
including, without limitation, attorneys' fees, shall be allocated between the
parties as the arbitrator may decide and as the claims and interests of each
party may prevail. Notwithstanding anything to the contrary contained in this
Section 12.1, any dispute, controversy or claim relating to actual or threatened
unauthorized use or disclosure of any Confidential Information, or the validity,
applicability, enforceability or infringement of any patent or intellectual
property rights, shall not be required to be submitted to arbitration hereunder
and shall be resolved by a court competent jurisdiction.
ARTICLE 13
INDEMNITIES
13.1 Customer Indemnity. Customer shall indemnify, defend and hold
Supplier, each Affiliate of Supplier and the officers, directors and employees
thereof (each a "Supplier Indemnified Party") harmless from and against any and
all Losses that may be incurred by any Supplier Indemnified Party arising out of
any
(a) actual or alleged damage to property or injury or death
occurring to any Person arising out of possession or use by any Person of any
Product except to the extent that such damage, injury or death was caused by the
failure of Supplier to manufacture and supply the Products in accordance with
the Specifications and QSR;
(b) claim, action or proceeding brought by any governmental or
regulatory authority except to the extent that such claim, action or proceeding
arose as a result of the failure of Supplier to manufacture and supply the
Products in accordance with the Specifications and QSR; or
(c) breach by Customer of any of its obligations, representations
or warranties under this Agreement, including a breach which results in a recall
of any Products
15
except to the extent that any such Losses are due to the gross negligence or
intentional misconduct of a Supplier Indemnified Party.
13.2 Supplier Indemnity. Supplier shall indemnify, defend and hold
Customer, each Affiliate of Customer and the officers, directors and employees
thereof (each a "Customer Indemnified Party") harmless from and against any and
all Losses that may be incurred by any Customer Indemnified Party arising out of
any
(a) actual or alleged damage to property or injury or death
occurring to any Person arising out of possession or use by any Person of any
Product to the extent that such damage, injury or death was caused by the
failure of Supplier to manufacture the Products in accordance with the
Specifications and QSR, regardless of whether such failure is attributable to
Supplier or to a third party to which Supplier subcontracted some or all of its
manufacturing responsibilities hereunder after having obtained the prior written
consent of Customer in accordance with Section 14.1 hereof;
(b) claim, action or proceeding brought by any governmental or
regulatory authority arising as a result of the failure of Supplier to
manufacture and supply the Products in accordance with the Specifications and
QSR;
(c) or breach by Supplier of any of its obligations,
representations, warranties or covenants under this Agreement, including a
breach which results in a recall of any Products
except to the extent that any such Losses are due to the gross negligence or
intentional misconduct of a Customer Indemnified Party.
13.3 Procedure. Any Person that may be entitled to indemnification under
this Agreement (an "Indemnified Party") shall give written notice to the Person
obligated to indemnify it (an "Indemnifying Party") with reasonable promptness
upon becoming aware of any claim or other facts upon which a claim for
indemnification will be based; the notice shall set forth such information with
respect thereto as is then reasonably available to the Indemnified Party. The
Indemnifying Party shall have the right to undertake the defense of any such
claim asserted by a third party with counsel reasonably satisfactory to the
Indemnified Party and the Indemnified Party shall cooperate in such defense and
make available all records, materials and witnesses reasonably requested by the
Indemnifying Party in connection therewith at the Indemnifying Party's expense.
If the Indemnifying Party shall have assumed the defense of the claim with
counsel reasonably satisfactory to the Indemnified Party, the Indemnifying Party
shall not be liable to the Indemnified Party for any legal or other expenses
(other than for reasonable costs of investigation) subsequently incurred by the
Indemnified Party in connection with the defense thereof. The Indemnifying Party
shall not be liable for any claim settled without its consent, which consent
shall not be unreasonably withheld or delayed. The Indemnifying Party shall
obtain the written consent of the Indemnified Party prior to ceasing to defend,
settling or otherwise disposing of any claim. In no event shall Supplier
institute, settle or otherwise resolve any claim or potential claim, action or
proceeding relating to any Product or any trademarks or other intellectual
property rights of Customer without the prior written consent of Customer. The
indemnification obligations set forth in this Article 13 shall survive the
expiration or termination of this Agreement.
16
13.4 Limitation on Losses. Notwithstanding anything to the contrary
contained herein, each Party shall be liable only for direct and actual damages
to the other, and shall not be liable for any special consequential (including
without limitation lost profits), indirect, incidental or punitive damages;
provided, that nothing contained herein shall limit Supplier's or Customer's
obligation fully to indemnify the other Party under Article 13 for actions
brought by third parties, even if such actions include claims by third parties
for special, consequential, indirect, incidental or punitive damages.
ARTICLE 14
MISCELLANEOUS
14.1 Assignment. Neither Party shall assign this Agreement in whole or in
part without prior written consent of the other party; except that either party
without prior written consent of the other party may assign this Agreement in
connection with the sale or other disposition of all or substantially all of its
business and assets related to this Agreement. Supplier shall not delegate,
transfer, convey, assign, subcontract or pledge any of its rights or obligations
under this Agreement to any other person, firm, or corporation without the prior
written consent of Customer which consent will not be unreasonably withheld or
delayed.
14.2 Supplier's Insurance. Supplier shall acquire and maintain at its
sole cost and expense (i) statutory workers' compensation insurance and
employer's liability insurance, (ii) all risk coverage for physical loss or
damage to materials and Products while at the facility or under its control and
(iii) product liability, bodily injury and property damage insurance (with a
broad form vendor's endorsement naming Customer, its subsidiaries and affiliated
companies and the officers, directors, employees and agents thereof, as well as
its authorized distributors and customers as additional insureds) with a
combined single limit of not less than $5,000,000. Supplier shall require its
subcontractors, to the extent approved hereunder, to provide the aforementioned
coverages, and any deficiencies in the coverages or policy limits of said
subcontractors will be the sole responsibility of Supplier. Supplier shall
submit certificates of such insurance to Customer (which shall include an
agreement by the insurer not to cancel such coverage except upon thirty (30)
days prior written notice to Customer) for its approval before commencing
performance of this Agreement. Supplier shall maintain such insurance coverage
in effect for Customer's benefit throughout the Term of this Agreement and for a
period of one (1) year from the date of the last delivery of Products to
Customer hereunder. In case of Supplier's failure to furnish such certificates
of insurance or cancellation of any required insurance, Customer shall notify
Supplier of such failure and shall allow Supplier a period of ten (10) days to
furnish such certificates. If such certificates are not furnished within ten
(10) days of Supplier's receipt of such notice, Customer may, at its option,
immediately terminate this Agreement and the effect of such termination will be
as if there had been a termination by Customer pursuant to 7.3(a) or (b).
14.3 Force Majeure. No Party shall be liable for delay or failure in the
performance of any of its obligations under this Agreement if and to the extent
such delay or failure is due to circumstances beyond the reasonable control of
such Party, including but not limited to fires, floods, explosions, accidents,
embargoes, disruptions in transportation, acts of God, war, riot, strike,
lockout or other concerted acts of workers, acts of government and shortages of
materials; provided, however, that the Party claiming that "force majeure" has
affected its performance
17
shall give timely notice to the other Party of becoming aware of the occurrence
of force majeure, giving full particulars of the cause or event and the date of
first occurrence thereof. The Party claiming "force majeure" shall use
commercially reasonable efforts to eliminate or prevent the cause so as to
continue performing its obligations under this Agreement.
14.4 No Waiver. The failure of either Party to terminate this Agreement
by reason of the breach of any of its provisions by the other Party, or the
failure to exercise any other rights or remedies under this Agreement, will not
be construed as a waiver of the rights or remedies available for any subsequent
breach of the terms and provisions of this Agreement.
14.5 Governing Law. This Agreement, its interpretation and effect shall
be governed by and construed under the laws of the State of Delaware excluding
conflict of laws principles. Each party hereby submits itself for the sole
purpose of this Agreement and any controversy arising hereunder to the
jurisdiction of the courts located in the State of Delaware and any courts of
appeal therefrom, and waives any objection (on the grounds of lack of
jurisdiction, or forum non conveniens or otherwise) to the exercise of such
jurisdiction over it by any such courts.
14.6 Independent Contractors. The relationship of the Parties created
hereby is that of independent contractors and neither Party shall have any right
or authority to create or assume any obligation of any kind on behalf of the
other.
14.7 Notices. All notices, requests, consents, waivers, elections and
other communications between the parties hereunder shall be in writing and shall
be delivered by hand, transmitted by facsimile, shipped by overnight courier
service with receipt requested, or mailed by certified mail, return receipt
requested, to the party to be notified as follows:
(a) If to Supplier:
Vaupell, Inc.
00 Xxxx Xxxxxx
Xxxx Xxxxxxxx, XX 00000
(b) If to Customer:
MannKind Corporation
0 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
unless and until notice of another or different address shall be given as
provided herein. All such notices, requests, consents, waivers, elections and
other communications shall be effective upon delivery and receipt as aforesaid.
14.8 Severability. The provisions of this Agreement are severable, and
the invalidity of any provision shall not affect; the validity of any other
provision.
14.9 Expenses. Unless otherwise provided herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party that shall have incurred the same and the
other party shall have no liability relating thereto.
18
14.10 Entire Agreement. In the event any purchase order, confirmation,
xxxx of lading, warehouse receipt or other document contains terms that are
inconsistent or conflict with the terms of this Agreement or contains terms in
addition to the terms of this Agreement, such inconsistent, conflicting and
additional terms shall be of no force or effect and the terms of this Agreement
shall in all events constitute the entire agreement of the parties. Except for
any confidentiality agreement between the Parties which shall remain in effect
in accordance with its terms with respect to information disclosed prior to the
Effective Date, this Agreement, the Exhibits hereto attached, and the Quality
Vendor Agreement between the parties of even date herewith sets forth the entire
understanding of the Parties with respect to the subject matter hereof and will
not be modified without written consent of both Parties. This Agreement, the
Exhibits and Quality Vendor Agreement and all of the rights and obligations of
the Parties hereunder, shall be binding upon and will inure to the benefit of
and be enforceable by the Parties hereto, their respective successors and
assigns.
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement, effective as of the date first above written.
VAUPELL, INC.
By: /s/ XXXXXX XXXX
---------------------------------
Name: Xxxxxx Xxxx
--------------------------------
Title: President and CEO
-------------------------------
MANNKIND CORPORATION
By: /s/ PER FOG
---------------------------------
Name: Per Fog
--------------------------------
Title: Senior Vice President
-------------------------------
19
SUPPLY AGREEMENT BETWEEN VAUPELL INC. AND MANNKIND CORPORATION
SCHEDULE A- PRODUCTS
[***...***] are comprised of the following parts:
MKC Sub-
Stock Component Vaupell Mold
No. Part Description Part No. # Supplier
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* CONFIDENTIAL TREATMENT REQUESTED
SUPPLY AGREEMENT BETWEEN VAUPELL INC. AND MANNKIND CORPORATION
SCHEDULE A- PRODUCTS
[***...***] are comprised of the following parts:
MKC Sub-
Stock Component Vaupell
No. Part Description Part No. Mold No. Supplier
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MKC Vaupell
Stock Mold Mold
k No. MKC Description Product Code No. Supplier Cavitation
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* CONFIDENTIAL TREATMENT REQUESTED
SUPPLY AGREEMENT BETWEEN VAUPELL INC. AND MANNKIND CORPORATION
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SCHEDULE A - PRICES
[***...***] as described on Schedule A and referenced in [***...***]
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[***...***] as described on Schedule A and referenced in [***...***]
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* CONFIDENTIAL TREATMENT REQUESTED
SUPPLY AGREEMENT BETWEEN VAUPELL INC. AND MANNKIND CORPORATION
SCHEDULE B - RESIN PRICES
[TO BE PROVIDED SEPARATELY BY THE PARTIES]
