SUPPLY AND TECHNOLOGY TRANSFER AGREEMENT
BETWEEN
HOECHST XXXXXX XXXXXXX, INC.
AND
ALLIANCE PHARMACEUTICAL CORP.
dated as of
February 28, 1996
** INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
MATERIAL MANUFACTURE; SUPPLY; TERMS. . . . . . . . . . . . . . . . . . . . . 3
2.1 Supply of Material . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Forecasts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Rejected Goods/Shortages . . . . . . . . . . . . . . . . . . . . . 6
2.6 Back-Up Inventory. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Failure to Supply; Capacity Allocation . . . . . . . . . . . . . . 7
2.8 Capacity Expansion . . . . . . . . . . . . . . . . . . . . . . . . 7
2.9 Manufacturing Changes. . . . . . . . . . . . . . . . . . . . . . . 8
2.10 Price, Price Adjustments and Payment . . . . . . . . . . . . . . . 8
2.11 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Temporary Idling . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.13 Packaging Information. . . . . . . . . . . . . . . . . . . . . . . 10
2.14 Supply of Material to Affiliates . . . . . . . . . . . . . . . . . 10
2.15 Exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Early Termination. . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Consequences of Termination & Survival . . . . . . . . . . . . . . 12
ARTICLE IV
CERTIFICATES AND ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1 Certificates of Analysis . . . . . . . . . . . . . . . . . . . . . 12
4.2 Certificate of Manufacturing Compliance. . . . . . . . . . . . . . 12
4.3 Supplier Certification . . . . . . . . . . . . . . . . . . . . . . 12
4.4 Access to Facilities . . . . . . . . . . . . . . . . . . . . . . . 12
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ARTICLE V
COMPLAINTS AND MATERIAL RECALLS. . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Complaints . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Material Recalls . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI
WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1 Conformity with the Specifications . . . . . . . . . . . . . . . . 13
6.2 Conformity with CGMP . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Compliance with the Federal Food, Drug and Cosmetic Act. . . . . . 14
ARTICLE VII
CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1 Nondisclosure Obligations. . . . . . . . . . . . . . . . . . . . . 14
7.2 Disclosure of Confidential Information . . . . . . . . . . . . . . 15
7.3 Review of Publications . . . . . . . . . . . . . . . . . . . . . . 15
7.4 Delay of Publications. . . . . . . . . . . . . . . . . . . . . . . 15
7.5 Approval of Publications . . . . . . . . . . . . . . . . . . . . . 15
7.6 Injunctive Relief. . . . . . . . . . . . . . . . . . . . . . . . . 15
7.7 Contractual Publication Rights of Third Parties. . . . . . . . . . 16
ARTICLE VIII
INDEMNIFICATION AND INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 By Alliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 By HMRI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.3 Conditions of Indemnification. . . . . . . . . . . . . . . . . . . 16
8.4 Product Liability Insurance. . . . . . . . . . . . . . . . . . . . 17
8.5 Manufacturer's Insurance.. . . . . . . . . . . . . . . . . . . . . 17
8.6 Product Liability Claims.. . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IX
MANUFACTURE OF MATERIAL BY HMRI. . . . . . . . . . . . . . . . . . . . . . . 18
9.1 Transfer of Technology . . . . . . . . . . . . . . . . . . . . . . 18
9.2 Transfer of Supply Relationships . . . . . . . . . . . . . . . . . 18
9.3 Right of First Refusal to Purchase . . . . . . . . . . . . . . . . 18
9.4 Agreement to Purchase Raw Materials. . . . . . . . . . . . . . . . 19
ARTICLE X
ALTERNATIVE DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . 19
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ARTICLE XI
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.2 Entire Agreement; Amendment. . . . . . . . . . . . . . . . . . . . 20
11.3 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.4 Consequential Damages. . . . . . . . . . . . . . . . . . . . . . . 20
11.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.8 Headings, Interpretation . . . . . . . . . . . . . . . . . . . . . 21
11.9 Attachments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.10 . . . . . . . . . . . . . . . . . .Independent Parties. . . . . . 21
11.11 . . . . . . . . . . . . . . . . . . . . . . .Execution. . . . . . 21
11.12 . . . . . . . . . . . . . . . . . . . . .Governing Law. . . . . . 21
EXHIBIT 1
SHORT TERM (12 MONTH) FORECAST . . . . . . . . . . . . . . . . . . . . . . . 23
SCHEDULE 9.1
TRANSFER OF TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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SUPPLY AND TECHNOLOGY TRANSFER AGREEMENT
SUPPLY AND TECHNOLOGY TRANSFER AGREEMENT dated as of February 28,
1996, by and between HOECHST XXXXXX XXXXXXX, INC., a Delaware corporation
("HMRI"), and ALLIANCE PHARMACEUTICAL CORP., a New York corporation
("Alliance"). The effective date of this Agreement shall be the date of the
Closing as such term is defined in the Stock Purchase Agreement of even date
herewith between HMRI and ALLIANCE (hereinafter referred to as the "Effective
Date").
WHEREAS, Alliance and HMRI have entered into a License Agreement (the
"License Agreement") of even date herewith, pursuant to which Alliance has
granted rights and licenses to HMRI under certain Patents and Know-How (both as
defined in the License Agreement) necessary or useful to use, develop,
manufacture, market, sell and distribute Material (as defined herein);
WHEREAS, Alliance desires to sell to HMRI and HMRI desires to purchase
from Alliance, Material for clinical and regulatory work and commercial sale by
HMRI in the Territory (as defined in the License Agreement) under the terms and
conditions herein;
WHEREAS, HMRI intends to manufacture Material, but currently does not
have the capability or requisite regulatory approvals to manufacture Material;
and
WHEREAS, the parties desire further to provide for the transfer by
Alliance to HMRI of batch records, specifications, analytical methods and other
manufacturing information and Know-How necessary or useful for the manufacture
of Material and for other assistance by Alliance in setting up manufacturing
operations by HMRI to manufacture Material.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "Affiliate" shall mean any entity which, directly or indirectly,
controls, is controlled by, or is under common control with another entity. An
entity shall be deemed to be in control of another entity if the former owns
directly or indirectly more than 50% of the outstanding voting equity or owns
directly or indirectly an interest in more than 50% of the assets of the latter.
1
1.2 "Agreement" means this Supply and Technology Transfer Agreement,
including all attachments to this Agreement.
1.3 "Contract Year" means, for the first Contract Year, the period
commencing on the date of the first long term forecast for quantities of
Material under Section 2.2(a) hereof and ending on the last day of that calendar
year, and for subsequent Contract Years, the successive calendar years
thereafter.
1.4 "Cost Accounting System" means an accounting system which tracks
and records the Manufacturing Costs and calculates the cost per Unit of
Material.
1.5 "CGMP" means Current Good Manufacturing Practices as promulgated
under the United States Federal Food Drug and Cosmetic Act at 21 CFR (chapters
210 and 211) and, when appropriate, any corresponding regulations in any other
country in the Territory as the same may be amended or re-enacted from time to
time. CGMP documentation for use in the manufacture and marketing of Material
will be developed by the parties in accordance with the License Agreement.
1.6 "FDA" means the United States Food and Drug Administration, and,
when appropriate, any corresponding regulatory agency in any other country in
the Territory.
1.7 "IND" shall mean an Investigational New Drug Application filed
pursuant to the requirements of the FDA as more fully defined in 21 C.F.R.
Section 312 as well as equivalent submissions to the appropriate health
authorities in other countries in the Territory.
1.8 "Manufacturing Costs" means **
1.9 "Manufacturing Variances" means the result obtained when actual
Manufacturing Costs are compared to the budgeted and/or Standard Manufacturing
Costs resulting in differences that reconcile the Standard Manufacturing Costs
to actual Manufacturing Costs.
1.10 "Material" shall mean liquids, including in nebulized or aerosol
form, which perform Bronchoalveolar Lavage or Liquid Ventilation or provide
Therapeutic Effects (all
2
as defined in the License Agreement), together with the infusion set necessary
for the intratracheal administration of such liquids.
1.11 "NDA" shall mean a New Drug Application and all supplements filed
pursuant to the requirements of the FDA, including all documents, data and other
information concerning Material which are necessary for or included in, FDA
approval to market Material, as more fully defined in 21 C.F.R.
Section Section 314.35 et seq., as well as any other submissions required by the
FDA to market Material and equivalent submissions to the appropriate health
authorities in other countries in the Territory.
1.12 "Specifications" means the written specifications for Material
which shall be agreed upon by the parties hereto, provided that such
specifications for Material intended for Clinical Work (as defined in the
License Agreement) shall at all times conform with the approval received with
the IND and for Material intended for commercial sale shall at all times conform
with the approval received with the NDA and shall in all other respects comply
with the relevant regulations of the FDA or other regulatory agency in the
country in which the Clinical Work is being performed or Material is being sold,
as the case may be. Such specifications may be amended from time to time by the
written agreement of the parties. Copies of such specifications shall be
maintained by both parties, and shall become a part of this Agreement as if
incorporated herein.
1.13 "Standard Manufacturing Costs" means the accumulation of budgeted
Manufacturing Costs to derive an average expected cost per Unit manufactured.
1.14 "Third Party" shall mean any person, corporation or
unincorporated body other than HMRI and Alliance and their Affiliates.
1.15 "Unit" means an individual package of Material intended for use
with an individual person.
All other capitalized terms used and not defined herein shall have the
meaning given them in the License Agreement.
ARTICLE II
MATERIAL MANUFACTURE; SUPPLY; TERMS
2.1 SUPPLY OF MATERIAL.
(a) CLINICAL SUPPLY. Subject to the terms and conditions of
this Agreement, and at HMRI's request in accordance with the terms hereof,
Alliance shall manufacture, as a sole or joint source, and supply Material in
finished packaged form to HMRI
3
for all Clinical Work in the Territory. Alliance shall use commercially
reasonable efforts to meet HMRI's demand for Material ordered in accordance with
the terms hereof. Alliance shall provide Material in packaged form as
reasonably requested by HMRI and as agreed upon by Alliance.
(b) COMMERCIAL SALES. Subject to the terms and conditions of
this Agreement, and at HMRI's request in accordance with the terms hereof,
Alliance shall manufacture, as a sole or joint source, and supply to HMRI
Material in finished packaged form for commercial sale up to the capacity of
Alliance's existing manufacturing facility in Otisville, New York (the
"Otisville Facility"). Alliance shall use commercially reasonable efforts to
meet HMRI's demand for Material ordered in accordance with the terms hereof.
Alliance shall provide Material in packaged form as reasonably requested by HMRI
and as agreed upon by Alliance. Except as provided in Section 2.2, Alliance's
commitment to supply Material to HMRI under the terms of this Agreement shall
not imply any long-term commitment by HMRI to purchase Material from Alliance.
(c) SUBLICENSE TO MANUFACTURE. Pursuant to its right under the
License Agreement to grant sublicenses to the Patents and Know-How, HMRI hereby
grants Alliance the non-exclusive right to use the Patents and Know-How in the
Field of Use (as defined in the License Agreement) for the purposes of this
Agreement and the License Agreement. Alliance hereby undertakes not to use or
exploit the Patents or the Know-How (or any part thereof) in the Field of Use
for any purpose other than as set forth in this Agreement and the License
Agreement. The rights and licenses granted herein may not be sublicensed by
Alliance except upon the prior written consent of HMRI. Except as herein
provided, no license or other right is granted by HMRI to Alliance or any other
party by implication or otherwise with respect to any proprietary right of HMRI
by virtue of this Agreement.
2.2 FORECASTS.
(a) LONG-RANGE FORECASTS. Within 90 days from the execution of
this Agreement, and at least 90 days prior to the beginning of each calendar
year thereafter commencing with the second Contract Year, HMRI shall furnish
Alliance with a rolling forecast of the quantities of Material for Clinical Work
and commercial sale that HMRI intends to order during the following three year
period commencing with that calendar year. Such forecasts shall represent most
current estimates for planning purposes, not purchase commitments.
(b) SHORT TERM FORECASTS. At the time that HMRI first
reasonably expects that it will require Material for Clinical Work or commercial
sale within the ensuing 12 month period, and thereafter, at least 30 days prior
to the first day of each succeeding calendar quarter, HMRI shall furnish
Alliance with a rolling forecast of the quantities of Material that HMRI intends
to order by month, for the first six months, and by quarter, for the last six
4
months, during the 12 month period commencing with that calendar quarter. Such
forecasts shall constitute binding commitments of HMRI to purchase the
percentages of Material set forth below. An example of form for the short-term
forecast is set out in Exhibit 1 (forecasts 1 and 2). The binding commitment of
HMRI to purchase the forecasted quantities for the first three months of the
forecast shall be further evidenced by purchase orders to be issued to Alliance
in accordance with Section 2.3. HMRI shall be required to purchase that
percentage of the quantity of Material specified in the forecast for successive
quarters as follows:
Percentage of Material
Period indicated in Forecast that
of the Forecast HMRI is Required to Purchase
----------------- ----------------------------
**
2.3 ORDERS. HMRI shall place each purchase order with Alliance for
Material to be delivered hereunder at least 90 days prior to the delivery date
specified in each respective order. Such orders shall be in full lots and shall
specify for each three month period an aggregate quantity of Material which is
at least as great as the amount of Material required to be purchased by HMRI
pursuant to Section 2.2. Alliance shall confirm in writing each such purchase
order within ten business days of receipt thereof. Alliance shall deliver
against each such order in accordance with Section 2.4. HMRI shall be obligated
to purchase all such Material ordered and delivered by the delivery date
specified in HMRI's purchase order, provided that such Material meet the
Specifications. Alliance shall use reasonable efforts to meet any order for a
quantity of Material in excess of the amounts forecasted under Section 2.2(b)
for such period. Any purchase orders, purchase order releases, confirmations,
acceptances, advices and similar documents submitted by either party in
conducting the activities contemplated under this Agreement are for
administration purposes only and shall not add to or modify the terms of the
Agreement. To the extent of any conflict or inconsistency between this
Agreement and any such document, the terms and conditions of this Agreement
shall control as to a particular order unless otherwise agreed to in writing by
the parties.
2.4 DELIVERY. Delivery terms shall be F.O.B. the Otisville Facility
or such other facility mutually agreed to by the parties. Alliance shall ship
Material on a carrier or carriers specified by HMRI in accordance with HMRI's
purchase order form or as otherwise directed by HMRI in writing. Title to any
Material purchased by HMRI shall pass to HMRI upon the earlier of (i) a common
carrier accepting possession or control of such Material or (ii) the passage of
such Material from the loading dock of Alliance's facility to HMRI or any
employee, agent or contractor thereof.
5
2.5 REJECTED GOODS/SHORTAGES.
(a) HMRI shall notify Alliance in writing of any claim relating
to Material that fail to meet the Specifications, arising from defective
manufacture, storage or handling of such Material by Alliance prior to shipment
or any shortage in quantity of any shipment of Material within 45 days of
receipt of such Material. In the event of such rejection or shortage, Alliance
shall replace the rejected Material or make up the shortage within ten business
days if replacement stock is available, and in any case as soon as reasonably
possible after receiving such notice, at no additional cost to HMRI, and
Alliance shall make arrangements with HMRI for the return of any rejected
Material, such return shipping charges to be paid by Alliance for Material
determined after inspection and testing by Alliance to fail to meet the
Specifications. In the event that only a limited supply of Material is
available at the time of such rejection or shortage, then Alliance shall ship to
HMRI such quantities of Material as are available and HMRI will be promptly
reimbursed or credited against future orders, at HMRI's option, for amounts paid
for the remaining quantity of rejected Material.
(b) In the event of a disagreement regarding the Material which
fail to meet the Specifications which HMRI and Alliance are unable to resolve, a
sample of such Material shall be submitted by Alliance to an independent
laboratory reasonably acceptable to both parties for testing against the
Specifications and the test results obtained by such laboratory shall be final
and controlling. The fees and expenses of such laboratory testing shall be
borne entirely by the party against whom such laboratory's findings are made.
In the event the test results indicate that the Material in question do not
conform to the Specifications, Alliance shall replace such Material at no
additional cost to HMRI within seven business days after receipt of such results
if replacement stock is available, and in any case as soon as reasonably
possible after receipt of such results. In the event the test results indicate
that the Material in question does conform to the Specifications, HMRI shall pay
all additional shipping and transportation costs incurred as a result of the
disagreement.
2.6 BACK-UP INVENTORY. Subject to terms of this Agreement, Alliance
shall maintain an adequate back-up inventory of Material to meet HMRI's purchase
orders, to replace rejected Material and other similar situations. Such
inventory level shall be mutually agreed upon by the parties. Alliance will
notify HMRI promptly if such back-up inventory falls below such agreed upon
level and include the reason for the lower level. The parties will discuss and
agree upon a course of action to solve the problem, provided however, that such
agreement shall act in no way as a waiver of HMRI's rights or remedies herein if
Alliance fails to deliver Material under the provisions of this Agreement.
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2.7 FAILURE TO SUPPLY; CAPACITY ALLOCATION.
(a) In the event that Alliance, upon receiving a forecast under
Section 2.2 or a firm order under Section 2.3, is, or anticipates that it will
be, unable to meet such forecast or firm order, either in whole or in part, and
whether due to circumstances arising under Section 11.3 or otherwise, Alliance
shall give written notice of such inability to HMRI within ten days of receipt
of such forecast or firm order. If such inability is partial, Alliance shall
deliver against firm orders such quantities of Material as are available.
(b) Alliance and HMRI shall meet within 15 days of such written
notice to consider and, if appropriate, pursue alternative arrangements for
meeting HMRI's requirements for Material. Such arrangements may include
transferring equipment and/or technology necessary for the production of
Material to an alternative site or to a Third Party, manufacturing Material at
HMRI's own facilities, or, if HMRI is already manufacturing quantities of
Material, increasing HMRI's production of Material, PROVIDED that any such
alternative pursued shall be subject to all required regulatory approvals. Any
alternative arrangements entered into pursuant to this Section 2.7 shall act in
no way as a waiver of any other rights or remedies which HMRI may have under
this Agreement or otherwise.
(c) In the event that Alliance's inability to meet firm orders or
forecasts is due to a shortage of production capacity at Alliance's facilities,
in addition to the requirements on Section 2.7(a) and Section 2.7(b) above,
Alliance shall promptly notify HMRI of such shortage of production capacity,
and, if possible, the date such shortage of production capacity is expected to
end. In such event, Alliance shall allocate its available production capacity
to the production of Material in such proportion as the production capacity
actually utilized to meet orders for Material over the previous 12 month period
bears to Alliance's total production capacity over that same period.
(d) Alliance shall notify HMRI as soon as possible of the date
upon which such shortage of production capacity will cease. Within 30 days of
such notification, HMRI shall resume obtaining its requirements for Material in
such proportions as HMRI ordered from Alliance prior to the shortage of
production to the extent such resumption is consistent with the contractual
arrangements entered into as provided in Section 2.7(b).
2.8 Capacity Expansion.**
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2.9 MANUFACTURING CHANGES. Alliance shall not change the specified
raw materials, analytical methods, components, equipment, packaging materials,
suppliers or processes used in the manufacture of Material without the prior
written consent of HMRI, which consent shall not be unreasonably withheld. Such
changes shall be reflected in related documentation and must receive all
required regulatory approvals.
2.10 PRICE, PRICE ADJUSTMENTS AND PAYMENT.
(a)**
(b)**
(c)**
(i)**
(ii)**
(d)**
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2.11 AUDITS. HMRI shall have the right to nominate an independent
certified public accountant reasonably acceptable to and approved by Alliance or
HMRI's own internal accountant who shall have access, during regular business
hours and upon reasonable notice, to audit those records and supporting
documentation of Alliance, to the extent necessary to verify the Manufacturing
Costs, but this right may not be exercised more than once in any calendar year,
and once a calendar year is audited it may not be reaudited, and said accountant
shall disclose to HMRI only information relating solely to the accuracy and
nature of the Manufacturing Costs and the payments made according to this
Agreement. Alliance shall maintain such records and supporting documentation
for a period of three years from the date HMRI receives the invoice which is
based upon such records and supporting documentation. If, pursuant to such
review, such accountant determines the actual Manufacturing Costs for a
9
particular year are less than the Standard Manufacturing Costs, then in addition
to paying the amounts as set forth in Section 2.10(d) above, Alliance shall pay
the costs of such investigation. For any refund owed by Alliance to HMRI under
this Section 2.11 greater than two percent, Alliance shall pay, in addition to
the amount due, interest on such amount from the time the amount was due at the
then current prime rate as quoted in the Eastern edition of THE WALL STREET
JOURNAL.
2.12 TEMPORARY IDLING. **
2.13 PACKAGING INFORMATION. All packaging and labelling information
and designs, including without limitation all art work and pharmacological
information, usage instructions and warnings to be applied to Material shall be
developed by the PMT (as defined in the License Agreement), subject to all
regulatory approvals, and provided to Alliance a sufficient period of time in
advance of any requirements that Material be delivered in packaged form to
enable Alliance to supply the necessary materials and meet such delivery
requirements.
2.14 SUPPLY OF MATERIAL TO AFFILIATES. HMRI shall have the right to
designate any of its Affiliates who are sublicensees under the License Agreement
in any country of the Territory as a direct purchaser (a "Direct Purchaser") of
Material under this Agreement. Alliance shall manufacture, sell and deliver,
and such Direct Purchaser shall purchase, Material for the same price and with
such other rights, obligations and conditions under this Agreement to which HMRI
is entitled, or by which HMRI is bound, as HMRI deems necessary or appropriate
to enable such Direct Purchaser to perform Clinical Work and to market, sell and
distribute Material, PROVIDED, that HMRI shall remain responsible to Alliance
for all obligations of HMRI and such Direct Purchasers.
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2.15 EXPORTS. The parties acknowledge that the export of technical
data, materials, or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of the exporting party. Alliance and HMRI agree not to export or re-export,
directly or indirectly, any information, technical data, the direct product of
such data, samples, or equipment received or generated under this Agreement in
violation of any statutes or governmental regulations which may be applicable,
including, but not limited to, the Export Administration Act of 1979, as
amended, its rules and regulations, including, but not limited to, Part 779 of
the United States Export Control Regulations, published by the United States
Department of Commerce, and other applicable export laws. Alliance and HMRI
agree to use reasonable best efforts to obtain similar covenants from their
licensees, sublicensees, and contractors with respect to the subject matter of
this Section.
2.16 TAXES. Subject to the provisions of this Section 2.13, HMRI or
its Affiliates, as the case may be, shall reimburse Alliance for all tariffs,
duties and excise, sales or use, value added or other taxes or levies
(collectively, "Taxes") that may be paid by Alliance with respect to the
manufacture and sale to HMRI or its Affiliates, as the case may be, of Material.
Notwithstanding the foregoing, HMRI shall have no reimbursement obligations
under this Section 2.13 to the extent that (i) such Taxes are based on
Alliance's net income or (ii) such Taxes are recoverable or offset by Alliance,
in whole or in part, as a credit, rebate, deduction or otherwise.
ARTICLE III
TERM AND TERMINATION
3.1 TERM. **
3.2 EARLY TERMINATION.
(a) This Agreement shall terminate upon the early termination of
the License Agreement pursuant to Section 13.1 or 13.3 of the License Agreement
or Section 13.2 of the License Agreement upon the failure of HMRI to cure a
default thereunder.
(b) This Agreement may be terminated by either party upon 90
days written notice to the other party if any provision hereof is materially
breached, unless such breach is corrected or reasonable efforts are being made
to correct such breach within the 90-day notice period.
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3.3 CONSEQUENCES OF TERMINATION & SURVIVAL. Termination of this
Agreement shall not relieve either party of its obligations incurred prior to
termination. The obligations under Articles 5, Complaints and Product Recalls;
6, Warranties; 7, Nondisclosure and Confidentiality; and 8, Indemnification and
Insurance, shall survive expiration or termination of this Agreement or of any
extensions thereof.
ARTICLE IV
CERTIFICATES AND ACCESS
4.1 CERTIFICATES OF ANALYSIS. Alliance shall perform, or cause to be
performed, sample tests on each lot of Material purchased pursuant to this
Agreement before delivery to HMRI. Each test report shall set forth the items
tested, specifications and test results in a certificate of analysis, containing
the types of information which shall have been approved by mutual agreement of
the parties, for each lot delivered. Alliance shall send, or cause to be sent,
such certificates to HMRI prior to delivery of each lot.
4.2 CERTIFICATE OF MANUFACTURING COMPLIANCE. Alliance shall provide,
or cause to be provided, for Material purchased a certificate of manufacturing
compliance, containing the types of information which shall have been approved
by mutual agreement of the parties, which will certify that the lots of Material
are manufactured in accordance with the Specifications, CGMP and in compliance
with the regulatory requirements described in the IND or NDA, as applicable.
Alliance shall advise HMRI before release of a lot of Material of any deviation
in the manufacture of such Material. In case of failure to meet Specifications
in the manufacture of a lot of Material, Alliance shall inform HMRI of the
rejected lot, and shall provide a written summary of the investigation of the
causes by Alliance's quality organization. Alliance shall advise HMRI
immediately if an authorized agent of the FDA or other governmental regulatory
agency visits any of Alliance's manufacturing facilities concerning Material.
Alliance shall furnish to HMRI the report by such agency of such visit, to the
extent that such report relates to Material, and the application of such report
to Material delivered to HMRI, if any, within ten business days of Alliance's
receipt of such report. The parties agree to review and cooperate fully on any
written response to the FDA or other governmental regulatory agency regarding
these matters.
4.3 SUPPLIER CERTIFICATION. Alliance shall make all reasonable
efforts, with HMRI's assistance, and to the extent possible under regulatory
requirements, to become certified under HMRI's Certification Program.
4.4 ACCESS TO FACILITIES. HMRI shall have the right to inspect and
visit from time to time upon at least 24 hours prior notice and during normal
business hours those portions of the manufacturing facilities of Alliance where
Material is being manufactured, stored or tested, to ascertain compliance with
this Agreement and with CGMP and any time Alliance
12
proposes to change the process for manufacturing Material or any other change
and HMRI agrees to such change. If the FDA or other applicable governmental
regulatory agency asserts any notice to the effect that Alliance has failed to
comply with any law or regulation in connection with the manufacture, storage or
handling of Material, or if Alliance delivers nonconforming Material, then HMRI
shall have the right to inspect such portions of the manufacturing facilities of
Alliance that relate to the manufacture of Material upon reasonable notice and
during normal business hours as often as is reasonably necessary to ascertain
that Alliance is correcting such failure in an expedient manner.
ARTICLE V
COMPLAINTS AND MATERIAL RECALLS
5.1 COMPLAINTS. In the event that either Alliance or HMRI shall
receive any communications from third parties alleging adverse reactions due to
use of Material or other complaints involving Material, the parties shall
cooperate in addressing such complaints and shall take all appropriate
corrective actions.
5.2 MATERIAL RECALLS. In the event (a) any government authority
issues a request, directive or order that any Material be recalled, or (b) a
court of competent jurisdiction orders such a recall, or (c) Alliance or HMRI
shall reasonably determine that Material should be recalled, the parties shall
take all appropriate corrective actions, and shall cooperate in the
investigations surrounding the recall. In the event that such recall results
from any cause or event arising from defective manufacture, storage or handling
of such Material by Alliance, Alliance shall be responsible for all expenses of
the recall, and shall promptly replace such Material at no additional cost to
HMRI consistent with directions received from the appropriate governmental
authority. For the purposes of this Agreement, the expenses of recall shall
include, without limitation, the expenses of notification and destruction or
return of the recalled Material and all other costs incurred in connection with
such recall, but shall not include lost profits of either party.
ARTICLE VI
WARRANTIES
6.1 CONFORMITY WITH THE SPECIFICATIONS. Alliance warrants that all
Material sold and delivered pursuant to this Agreement will conform to the
Specifications.
6.2 CONFORMITY WITH CGMP. Alliance warrants that it shall
manufacture, store and ship all Material in compliance with all applicable
Federal, state and local laws and governmental regulations, including without
limitation, CGMP.
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6.3 COMPLIANCE WITH THE FEDERAL FOOD, DRUG AND COSMETIC ACT.
Alliance warrants that all Material delivered to HMRI pursuant to this Agreement
will, at the time of such delivery, not be adulterated within the meaning of the
Federal Food, Drug and Cosmetic Act, as amended (the "Act"), or within the
meaning of any applicable state or municipal law as the Act and such laws are
constituted and effective at the time of delivery, and will not be an article
which may not, under the provisions of the Act, be introduced into interstate
commerce. Notwithstanding anything to the contrary in this Section 6.3,
Alliance's warranty hereunder does not extend to any packaging or labeling
provided by, or at the direction of, HMRI.
ARTICLE VII
CONFIDENTIALITY
7.1 NONDISCLOSURE OBLIGATIONS. All confidential information
transmitted by either party to the other, including all confidential information
developed pursuant to this Agreement or the License Agreement, shall be
identified as confidential and the receiving party shall, while this Agreement
is in effect and for five years after termination thereof, make no use of this
information other than in furtherance of this Agreement or the License Agreement
and shall use the same efforts to keep secret and prevent the disclosure of such
information to parties other than its Affiliates, sublicensees, agents,
officers, employees and representatives authorized to receive such information
as it would for its own confidential information except for such confidential
information that,
(a) was known to the receiving party or its Affiliates or
sublicensees at the time of its disclosure and not previously subject to any
obligation of confidentiality at the time of its disclosure;
(b) was generally available to the public or was otherwise part
of the public domain at the time of its disclosure;
(c) became generally available to the public or became otherwise
part of the public domain after its disclosure and other than through any act or
omission of the receiving party or its Affiliates or sublicensees in breach of
this Agreement or the License Agreement; or
(d) became known to the receiving party or its Affiliates or
sublicensees after its disclosure (i) from a source other than the disclosing
party (including from dependent development by the receiving party), (ii) other
than from a Third Party who had an obligation to the disclosing party not to
disclose such information to others, and (iii) other than under an obligation of
confidentiality; or
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(e) is disclosed by the receiving party pursuant to oral
questions, interrogatories, requests for information or documents, subpoena or
civil investigative demand issued by a court or governmental agency; PROVIDED,
that the receiving party notifies the other party immediately on receipt thereof
and the disclosing party furnishes only that portion of the confidential
information that counsel advises is legally required.
7.2 DISCLOSURE OF CONFIDENTIAL INFORMATION. Each receiving party or
its Affiliates or sublicensees may disclose any of the Know-How and confidential
information to the extent such disclosure is necessary to comply with applicable
laws or regulations, or to make and use Products (as defined in the License
Agreement) or Material in accordance with the terms of this Agreement and/or the
License Agreement.
7.3 REVIEW OF PUBLICATIONS. Each party recognizes the mutual
interest in obtaining valid patent protection. Consequently, either party and
its employees or consultants or any other Third Party wishing to make a
publication (including any oral disclosure made without obligation of
confidentiality) relating to work performed by such party as part of the work
performed under this Agreement or the License Agreement (the "Publishing Party")
shall transmit to the other party (the "Reviewing Party") a copy of the proposed
written publication at least 45 days prior to submission for publication, or an
abstract of such oral disclosure at least 15 days prior to submission of the
abstract of the oral disclosure, whichever is earlier. The Reviewing Party
shall have the right (a) to propose modifications to the publication for patent
reasons, (b) to request a delay in publication of presentation in order to
protect patentable information, or (c) to request that the information be
maintained as a trade secret and, in such case, the Publishing Party shall not
make such publication. Each party shall designate an individual to whom
proposed publications shall be directed and such individual shall be responsible
for obtaining the necessary internal approvals of the Reviewing Party.
7.4 DELAY OF PUBLICATIONS. If the Reviewing Party requests a delay
as prescribed in subsection 7.3(b) the Publishing Party shall delay submission
or presentation of the publication for a period of up to 90 days to enable
patent applications protecting each party's rights in such information to be
filed.
7.5 APPROVAL OF PUBLICATIONS. Upon the receipt of written approval
of the Reviewing Party or the expiration of the applicable waiting period
without comment, the Publishing Party may proceed with the written publication
or the oral presentation.
7.6 INJUNCTIVE RELIEF. The parties hereto understand and agree that
remedies at law may be inadequate to protect against any breach of any of the
provisions of this Article 7 by either party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf. Accordingly, each party shall be entitled to the granting of injunctive
relief by a court of competent jurisdiction against any action that constitutes
any such
15
breach of this Article 7. It is understood that such injunctive relief is
intended solely as provisional relief pending the dispute resolution procedures
described in Article 10 herein.
7.7 CONTRACTUAL PUBLICATION RIGHTS OF THIRD PARTIES. Notwithstanding
the foregoing, the right of any party to withhold or delay consent to publish or
delay publication shall be subject to any contractual publication rights of
Third Parties involved in research or clinical trials for the Products or
Material, as the case may be. The parties will use reasonable efforts to obtain
the voluntary consent of any Third Party with publication rights agreed to prior
to the Effective Date, to comply with the notice and timing requests in this
Article 7 and will promptly review any publications delivered for review.
ARTICLE VIII
INDEMNIFICATION AND INSURANCE
8.1 BY ALLIANCE. Notwithstanding Alliance's right to indemnification
in the License Agreement, Alliance will indemnify and hold HMRI harmless against
any and all liability, damages, losses, costs or expenses ("Liability")
resulting from any Third Party claims made or suits brought against HMRI to the
extent such Liability arises from Alliance's failure to comply with the
Specifications, Alliance's gross negligence or willful misconduct in the
manufacture, storage, handling or shipping of Material or Alliance's breach of
any express warranty set forth in Article 6 hereof.
8.2 BY HMRI. Without limiting Alliance's right to indemnification in
the License Agreement, HMRI will indemnify and hold Alliance harmless against
any and all Liability resulting from (i) any packaging or labeling of any
Material to the extent that such packaging or labeling has been supplied by or
at the direction of HMRI and applied in accordance with instructions from HMRI
or (ii) any Third Party claims made or suits brought against Alliance to the
extent such Liability arises from HMRI's gross negligence or willful misconduct
in the storage, handling, shipping, use, marketing, distribution or sale of
Material.
8.3 CONDITIONS OF INDEMNIFICATION. A party or any of its Affiliates
or other respective employees or agents (the "Indemnitee") that intends to claim
indemnification under this Article 8 shall promptly notify the other party (the
"Indemnitor") of any Liability in respect of which the Indemnitee intends to
claim such indemnification reasonably promptly after the Indemnitee is aware
thereof, and the Indemnitor shall assume the defense of any related Third Party
action, suit or proceeding with counsel mutually satisfactory to the parties;
PROVIDED, HOWEVER, that an Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnitor, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such
proceedings. The indemnity agreement in this Article 8 shall not apply to
amounts paid in settlement of any
16
claim, loss, damage or expense if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld unreasonably.
The Indemnitee under this Article 8 and its employees and agents shall cooperate
fully with the Indemnitor and its legal representatives in the investigation of
any matter covered by this indemnification. The Indemnitor shall additionally
be liable to pay the reasonable legal costs and attorneys' fees incurred by the
Indemnitee in establishing a successful claim for indemnity hereunder.
8.4 PRODUCT LIABILITY INSURANCE. HMRI shall obtain and maintain in
effect for the term of this Agreement, if such policies are occurrence based, or
for ten years after the term of this Agreement, if such policies are claims
made, product liability insurance or indemnity policies which name Alliance as a
coinsured, with respect to the manufacture, sale and use of Material, which
policies may be worldwide, blanket policies. Such policies shall insure against
liability on the part of HMRI and any of its Affiliates, as their interests may
appear, due to injury, disability or death of any person or persons, or injury
to property, arising from the manufacture, sale or use of Material. HMRI shall
provide to Alliance a certificate of insurance indicating that the terms of
HMRI's insurance policy are in accordance with this Section 8.4. Such
certificate of insurance shall be provided within ten days of the commencement
date of the first Contract Year.
8.5 MANUFACTURER'S INSURANCE. Alliance shall obtain and maintain in
effect for the term of this Agreement, if such policies are occurrence based, or
for ten years after the term of this Agreement, if such policies are claims
made, such appropriate insurance policies which name HMRI as a coinsured, with
respect to the manufacture of Material according to the Specifications. Such
policies shall insure against liability on the part of Alliance and any of its
Affiliates, as their interests may appear, due to injury, disability or death of
any person or persons, or injury to property, arising from the failure to
manufacture Material according to the Specifications. Alliance shall provide to
HMRI a certificate of insurance indicating that the terms of Alliance's
insurance policy are in accordance with this Section 8.5. Such certificate of
insurance shall be provided within ten days of the commencement date of the
first Contract Year.
8.6 PRODUCT LIABILITY CLAIMS. Each party will give the other prompt
written notice of any injury alleged to have occurred as a result of the use or
application of a Material to the extent such party has knowledge thereof,
specifying the time, place and circumstances thereof and the names and addresses
of the persons involved. Each party will also furnish promptly to the other
copies of all papers received in respect of any claim, action or suit arising
out of such alleged injury.
17
ARTICLE IX
MANUFACTURE OF MATERIAL BY HMRI
9.1 TRANSFER OF TECHNOLOGY. HMRI intends to make appropriate
submissions for regulatory approval in order that HMRI may manufacture Material
at its own facilities by **_________________________________________________.
To enable HMRI to obtain any relevant approvals and to begin manufacturing
Material, Alliance shall, as requested by HMRI, provide to HMRI all of its
regulatory submission files, batch records, analytical methods, cleaning
procedures and other manufacturing and test procedure information relating to
the manufacture of Material and shall provide all other reasonable assistance,
including but not limited to the information and assistance set forth on
Schedule 9.1 attached hereto. Alliance agrees upon request by HMRI to make its
employees available to HMRI to assist in the transfer of manufacturing. HMRI
agrees to pay all out-of-pocket travel expenses if these employees must visit
HMRI facilities.
9.2 TRANSFER OF SUPPLY RELATIONSHIPS. **
9.3 RIGHT OF FIRST REFUSAL TO PURCHASE.
(a) During the term of this Agreement and any extensions thereof,
Alliance shall offer HMRI the right of first refusal on the sale of the
Otisville Facility and/or any sale of any of the equipment ("Equipment") used by
Alliance in the manufacture of Material. Upon receiving a bona fide offer (an
"Offer") by a Third Party to purchase the Otisville Facility or any Equipment,
Alliance shall provide HMRI a notice specifying the proposed item or items to be
sold and the terms of the Offer. Upon receipt of such notice, HMRI shall have
90 days to exercise the right of first refusal upon the same terms as contained
in the Offer.
(b) If HMRI desires to exercise the right of first refusal on
terms that differ from those provided in the Offer, then Alliance and HMRI shall
negotiate in good faith to agree on the terms pursuant to which the right of
first refusal shall be exercised.
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9.4 AGREEMENT TO PURCHASE RAW MATERIALS.**
ARTICLE X
ALTERNATIVE DISPUTE RESOLUTION
In case any dispute arises out of this Agreement, the parties will
endeavor to settle such dispute amicably between themselves. If necessary, the
dispute shall be presented to the Chief Executive Officer of Alliance and the
head of the Hoechst Xxxxxx Xxxxxxx Pharmaceutical Group of Hoechst AG for their
timely consideration and resolution. If the Chief Executive Officer of Alliance
and the head of the Hoechst Xxxxxx Xxxxxxx Pharmaceutical Group of Hoechst AG or
their designees cannot reach a resolution of the dispute, then such dispute
shall be resolved by binding arbitration in the manner described below.
In the event that the parties fail to agree, any such dispute shall be
finally settled by arbitration administered by and according to the Rules of
Commercial Arbitration of the American Arbitration Association. The arbitration
shall take place in New York, New York. The arbitration panel shall consist of
one arbitrator chosen by mutual consent of the parties and the decision shall be
final and binding on the parties and their legal successors. Should the parties
fail to agree on the appointment of an arbitrator, each party shall appoint one
arbitrator and the two arbitrators shall agree upon a neutral third arbitrator
to serve as the sole arbitrator. The arbitrator may, at his discretion, provide
for discovery by the parties during a period not to exceed four months from the
date of filing of the notice of arbitration and the arbitrator shall render his
decision within 30 days of the completion of the hearing and may, at his
discretion, award costs and expenses. The arbitrated award shall be final and
binding on the parties. The time period for cure recited in Section 3.2(b)
shall be suspended upon initiation of arbitration until completion of such
arbitration. Judgment on the award may be entered in any court of competent
jurisdiction.
ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES. Any notice required or permitted to be given under
this Agreement shall be mailed by registered or certified air mail, return
receipt requested, postage
19
prepaid, addressed to the party to be notified at its address stated below, or
at such other address as may hereafter be furnished in writing to the notifying
party or by telefax (with the telefax followed by sending the same by registered
or certified mail) to the numbers set forth below or to such changed telefax
numbers as may thereafter be furnished.
If to ALLIANCE: Alliance Pharmaceutical Corp.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Telefax: (000) 000-0000
If to HMRI: Hoechst Xxxxxx Xxxxxxx, Inc.
00000 Xxxxxx Xxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Telefax: (000) 000-0000
Any such notice shall be deemed to have been received when it has been
delivered or received by telefax (with the telefax followed by sending the same
by registered or certified mail).
11.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, between the parties. No
modification of any of the terms of this Agreement shall be deemed to be valid
unless it is in writing and signed by the party against whom enforcement is
sought. No course of dealing between the parties, industry custom or usage of
trade shall be used to modify the terms and conditions herein.
11.3 FORCE MAJEURE. No failure or omission by the parties hereto in
the performance of any obligation of this Agreement shall be deemed a breach of
this Agreement or create any liability if the same shall arise from any cause or
causes beyond the reasonable control of the parties, including but not limited
to the following which, for the purposes of this Agreement, shall be regarded as
beyond the control of the party in question: acts of God, acts or omissions of
any government or any rules, regulations or orders of any governmental authority
or any office, department, agency or instrument thereof; fire, storm, flood,
earthquake, accident, acts of the public enemy, war, rebellion, insurrection,
riot, invasion, strikes, lockouts or shortages of raw materials beyond the
party's reasonable control.
11.4 CONSEQUENTIAL DAMAGES. Neither party shall be liable to the
other for consequential, incidental, indirect or punitive damages arising from
the performance or nonperformance of such party under this Agreement.
20
11.5 WAIVER. No waiver by either party of any default, right or
remedy shall be effective unless in writing, nor shall any such waiver operate
as a waiver of any other or of the same default, right or remedy, respectively,
on a future occasion.
11.6 ASSIGNMENT. This Agreement may be assigned to a subsidiary of
HMRI in which HMRI owns, directly or indirectly, more than 50% of the voting
stock or other ownership interest of the subsidiary without the consent of
Alliance. This Agreement may not otherwise be assigned or transferred by either
party without the consent of the other party, such consent not to be withheld
unreasonably, except with respect to either party, in the event of a merger,
acquisition or transfer of substantially all of its assets. Any purported
assignment in violation of the preceding sentence shall be void. Any permitted
assignee shall assume all obligations of its assignor under this Agreement.
11.7 SEVERABILITY. In the event that any term or provision of this
Agreement shall violate any applicable statute, ordinance or rule of law in any
jurisdiction in which it is used, or is otherwise prohibited or unenforceable,
such provision shall be ineffective to the extent of such violation without
invalidating any other provision hereof.
11.8 HEADINGS, INTERPRETATION. The headings used in this Agreement
are for convenience only and are not a part of this Agreement.
11.9 ATTACHMENTS. All Attachments referenced herein are hereby made
a part of this Agreement.
11.10 INDEPENDENT PARTIES. This Agreement shall not be deemed to
create any partnership, joint venture, or agency relationship between the
parties. Each party shall act hereunder as an independent contractor.
11.11 EXECUTION. This Agreement may be executed in two counterparts
each of which shall for all purposes be deemed an original.
11.12 GOVERNING LAW. The construction, validity and performance of
this Agreement shall be governed in all respects by the laws of the State of New
York, excluding its conflict of laws principles.
21
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
HOECHST XXXXXX XXXXXXX, INC.
By: ____________________________
Name:
Title:
ALLIANCE PHARMACEUTICAL CORP.
By: ____________________________
Name:
Title:
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EXHIBIT 1
SHORT TERM (12 MONTH) FORECAST
**
23
SCHEDULE 9.1
TRANSFER OF TECHNOLOGY
**
