CONFIDENTIAL EXECUTION VERSION
ORPHAN MEDICAL INC.
AND
CELLTECH PHARMACEUTICALS LTD.
XYREM(R) LICENSE AND DISTRIBUTION AGREEMENT
** The appearance of a double asterisk denotes confidential information that
has been omitted from the exhibit and filed separately, accompanied by a
confidential treatment request, with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS...............................................................................1
ARTICLE II APPOINTMENT...............................................................................6
2.1 Appointment as Distributor................................................................6
2.2 License Grant.............................................................................7
2.3 Right of First Negotiation for Other Indications..........................................7
2.4 Subdistributors/Sublicensees..............................................................8
2.5 Sales Outside the Territory...............................................................8
2.6 Option to Expand the Territory............................................................9
2.7 Competitive Product.......................................................................9
ARTICLE III REGULATORY APPROVALS; COMPLIANCE WITH LAWS AND
REGULATIONS...............................................................................9
3.1 Marketing Authorizations..................................................................9
3.2 Regulatory Timelines.....................................................................10
3.3 Other Approvals..........................................................................11
3.4 Return of Initial Payment................................................................11
3.5 Product Changes..........................................................................11
3.6 Clinical Trials..........................................................................12
3.7 Compliance With Applicable Laws..........................................................12
3.8 Approved Product Packaging and Labeling; Relevant Testing................................12
3.9 Steering Committee.......................................................................13
ARTICLE IV ROYALTIES AND MILESTONE PAYMENTS.........................................................14
4.1 Milestone Payments.......................................................................14
4.2 Royalty..................................................................................14
4.3 Minimum Royalty Requirement..............................................................15
4.4 Royalty and Milestone Payments...........................................................15
4.5 Exchange Rates...........................................................................16
4.6 Taxes....................................................................................16
4.7 Reports..................................................................................16
4.8 Books and Records; Audit.................................................................16
ARTICLE V REGULATORY Compliance; product manufacture...............................................17
5.1 Regulatory Reporting.....................................................................17
5.2 Product Recalls..........................................................................17
5.3 Adverse Event Notifications and Reporting................................................17
5.4 Correspondence/Complaints................................................................17
5.5 Translations.............................................................................18
5.6 Manufacture; Quality.....................................................................18
5.7 Product Specifications...................................................................18
5.8 Manufacturing Audits by Celltech.........................................................18
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ARTICLE VI MARKETING EFFORTS........................................................................19
6.1 Marketing Efforts........................................................................19
6.2 Approved Product Claims..................................................................19
6.3 Development of Marketing Strategy........................................................19
6.4 Marketing Materials......................................................................20
6.5 Sales and Technical Literature Developed by Orphan Medical...............................20
6.6 Marketing Reports........................................................................20
6.7 Cooperation..............................................................................20
6.8 Named Patient Basis Sales................................................................21
ARTICLE VII PURCHASE AND DELIVERY OF PRODUCT.........................................................21
7.1 Forecasts................................................................................21
7.2 Pricing..................................................................................22
7.3 Consignment of Product...................................................................22
7.4 Purchase Orders..........................................................................24
7.5 Delivery From Other Than Consignment Inventory...........................................25
7.6 Transfer Price Variations................................................................25
7.7 Payment Terms............................................................................26
7.8 Short Supply Allocation..................................................................27
7.9 Product Expiration.......................................................................27
7.10 Certificate of Analysis..................................................................28
7.11 Storage..................................................................................28
7.12 Rejection of Shipments For Product Non-Conformance.......................................28
7.13 Testing of Product Upon Receipt..........................................................29
ARTICLE VIII REPRESENTATIONS AND WARRANTIES...........................................................29
8.1 Orphan Medical Warranties................................................................29
8.2 Disclaimer...............................................................................32
8.3 Celltech Warranties......................................................................32
ARTICLE IX INDEMNIFICATION..........................................................................33
9.1 Indemnification by Orphan Medical........................................................33
9.2 Indemnification by Celltech..............................................................34
9.3 Procedure................................................................................34
9.4 Insurance................................................................................34
ARTICLE X INTELLECTUAL PROPERTY RIGHTS PERFECTION AND USE..........................................35
10.1 License Perfection.......................................................................35
10.2 Quality Standards........................................................................35
10.3 Use of Trademark.........................................................................35
10.4 Registration and Approvals...............................................................35
10.5 Reservation of Rights....................................................................36
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TABLE OF CONTENTS
ARTICLE XI INTELLECTUAL PROPERTY INFRINGEMENTS......................................................36
11.1 Protection of Intellectual Property......................................................36
ARTICLE XII IMPROVEMENTS.............................................................................37
12.1 Improvements by Celltech.................................................................37
12.2 Improvements by Orphan Medical...........................................................37
12.3 Disclosure...............................................................................37
ARTICLE XIII CONFIDENTIALITY..........................................................................37
13.1 Proprietary Information..................................................................37
13.2 Exclusions...............................................................................38
13.3 Third Party Disclosure...................................................................38
13.4 Third Party Confidentiality Agreement....................................................38
13.5 Confidentiality of Agreement.............................................................39
13.6 Prior Confidentiality Agreement..........................................................39
ARTICLE XIV TERM AND TERMINATION.....................................................................39
14.1 Term.....................................................................................39
14.2 Mutual Termination.......................................................................39
14.3 Termination by Orphan Medical............................................................39
14.4 Rights and Obligations on Termination....................................................40
14.5 Partial Termination......................................................................40
14.6 Sell-Off Period..........................................................................40
14.7 Survival.................................................................................41
14.8 Assignment of Authorizations.............................................................41
14.9 Rights on Termination for Cause..........................................................41
14.10 No Compensation..........................................................................41
ARTICLE XV ARBITRATION..............................................................................41
15.1 Litigation Rights Reserved...............................................................41
15.2 Arbitration..............................................................................41
15.3 Governing Law............................................................................42
ARTICLE XVI FORCE MAJEURE............................................................................42
16.1 Events of Force Majeure..................................................................42
16.2 Notice...................................................................................43
16.3 Hardship.................................................................................43
ARTICLE XVII MISCELLANEOUS............................................................................43
17.1 Notices..................................................................................43
17.2 Waiver...................................................................................44
17.3 Entire Agreement.........................................................................44
17.4 Amendment................................................................................44
17.5 Headings.................................................................................44
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17.6 Relationship of the Parties..............................................................44
17.7 Assignment...............................................................................44
17.8 Severability.............................................................................44
17.9 Publicity................................................................................45
17.10 Counterparts.............................................................................45
17.11 LIMITATION OF DAMAGES....................................................................45
APPENDICES
Appendix A - Territory
Appendix B - Trademark and Patent Rights
Appendix C - Product Specifications
Appendix D - Standard Operating Procedure for Exchange of Safety Data
Appendix E - Quality Agreement Appendix F - Celltech First Commercial Year Forecast
Appendix G - Components of Standard Manufacturing Cost and Transfer Price
Appendix H - Regulatory Assistance Appendix I - Trademark Use Standards
SCHEDULES
ORPHAN MEDICAL
8.1(e)(ii) - Patent Rights, Trademarks and Other Intellectual Property
8.1(e)(iii) - Infringement or Conflict
8.1(f)(i) - Contracts
8.1(f)(ii) - Default, Breach or Violation
8.1(g)(i) - Claims
8.1(h) - Required Approvals
CELLTECH
8.1(e)(i) - Contracts
8.1(e)(ii) - Default, Breach or Violation
8.1(f)(i) - Claims
8.2(g) - Required Approvals
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XYREM LICENSE AND DISTRIBUTION AGREEMENT
This LICENSE AND DISTRIBUTION AGREEMENT (this "AGREEMENT") is made and
entered into as of October 29, 2003 ("EFFECTIVE DATE"), by and between Orphan
Medical, Inc., a corporation having its principal place of business at 00000
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxx 00000, XXX (together with its
Affiliates, "ORPHAN MEDICAL"), and Celltech Pharmaceuticals, Ltd., a
biopharmaceutical company organized under the laws of England having its
principal place of business at 000 Xxxx Xxxx, Xxxxxx, Xxxxxxxxx XX0 0XX, Xxxxxx
Xxxxxxx (together with its Affiliates, "CELLTECH").
RECITALS
WHEREAS, Orphan Medical has developed, patented, registered with the
FDA and currently sells the Product (as defined below) in the United States, and
wishes to sell the Product to Celltech for distribution in the Territory (as
defined below);
WHEREAS, Celltech has regulatory and marketing expertise necessary to
review and re-format regulatory pharmaceutical applications and to market
ethical pharmaceuticals targeted to specified populations of patients in the
Territory; and
WHEREAS, Celltech wishes to register, package, label, promote, market,
sell and distribute the Product in the Territory, as hereinafter defined, and
Orphan Medical wishes to authorize Celltech to do so, all on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Orphan Medical and Celltech agree as follows:
ARTICLE I
DEFINITIONS
"AFFILIATE" shall mean any corporation or non-corporate business entity
controlled by, controlling or under common control with, a party to this
Agreement. For the purpose of this definition, "control" shall mean the direct
or indirect ownership or control of at least fifty percent (50%) of the voting
stock of a corporation or a) in the absence of ownership of at least fifty
percent (50%) of the voting stock of that corporation, or b) in the case of a
non-corporate business entity, if it possesses, directly or indirectly, whether
by virtue of an ownership interest of any kind, by contract or otherwise, the
power to direct or cause the direction of the management and policies of the
corporation or non-corporate business entity or to elect or cause the election
of a majority of the board of directors or other governing body of such
corporation or non-corporate business entity.
"ADVERSE EVENT" means the ICH guideline definition as further defined
in Appendix D.
"API" means the active pharmaceutical ingredient sodium oxybate
contained in the Product.
"CLAIMS" shall have the meaning provided in Section 9.1.
"COMMERCIAL FORECASTS" shall have the meaning provided in Section 7.1.
"COMMERCIALLY REASONABLE EFFORTS" means all those efforts that are
commercially reasonable under the prevailing circumstances, but in no event will
such efforts be less than those that the applicable party would undertake for
its own purposes.
"COMPONENTS" means the dosing cups and lids, syringe, tamper resistant
seal and PIBA included in the pack issued to customers along with each bottle of
Product.
"CONTRACT YEAR" means each twelve (12) month period during the Term of
this Agreement starting on 01 January and ending on 31 December.
"CURRENT GOOD MANUFACTURING PRACTICES" or "CGMP" means the regulations
set forth in 21 C.F.R. Parts 210 - 211, 820 and 21 C.F.R. Subchapter C (Drugs),
Quality System Regulations and the requirements thereunder imposed by the FDA,
and the equivalent regulations and requirements applicable in the Territory.
"DEA" means the United States Drug Enforcement Administration, or any
successor thereto, having the administrative authority to regulate the
scheduling and distribution of certain drugs in the United States.
"EMEA" means the European Medicines Evaluation Agency or any successor
entity which coordinates the scientific review of human pharmaceutical products
under the centralized licensing procedure in the European Union.
"FDA" means the United States Food and Drug Administration or any
successor entity.
"FIRST COMMERCIAL SALE" means the first sale of the Product by or on
behalf of Celltech to a wholesaler, distributor or end-user in the Territory
following Registration of the Product in the Territory.
"ICH" means International Conference on Harmonization of technical
requirements for registration and manufacturing of pharmaceuticals for human use
as may be amended from time to time.
"INDEMNIFICATION AMOUNTS" shall have the meaning provided in Section
9.1.
"INDICATION" means any medical condition or set of symptoms for the
treatment of which a medicinal product is or may be prescribed.
"IMPROVEMENTS" means any and all inventions or discoveries (including,
without limitation, manufacturing, manufacturing processes and procedures,
analytical processes, procedures or methods and analytical results) any route(s)
of synthesis, new formulations and/or delivery forms of or with respect to the
API and/or Product (other than the current form of the Product as defined
herein), including all information and data relating thereto, whether patentable
or not, whether originating from Orphan Medical or from Celltech, including
copyrights, trademarks, patents, patent applications, trade secrets, NDAs and
Know How.
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"KNOW HOW" means data and information regarding toxicology,
pharmacology, clinical trials, analytical methodologies, and use of the Product
that is necessary or useful for Celltech to fulfill its obligations hereunder,
all of which is proprietary to Orphan Medical.
"LICENSED INDICATIONS" means narcolepsy and its associated conditions
including without limitation cataplexy and excessive daytime sleepiness and any
other Indication(s) for which Celltech obtains the right to develop the Product
pursuant to Section 2.3 hereof.
"LICENSED INTELLECTUAL PROPERTY" shall have the meaning provided in
Section 2.2.
"MAJOR EUROPEAN COUNTRY(IES)" means those countries listed as such on
Appendix A hereto, as such Appendix may be amended from time to time in
accordance with Section 2.6 of this Agreement.
"MANUFACTURING KNOW HOW" means all data, information and materials
relating to the manufacture of the Product that is not included in the Know How.
"MARKETING AUTHORIZATION" means a Regulatory Authority approval
necessary to commercially promote and distribute the Product for a Licensed
Indication in the Territory including where applicable, price and reimbursement
approval which must be granted for the Product to be sold in such country.
Marketing Authorization as applied to any country within the Territory does not
include the approval of a treatment IND, pre-approval human use trials under a
protocol or distribution of a product under an emergency use program, e.g.,
distribution on a Named Patient Basis.
"MARKET SALES PRICE" means the price for the Product approved by the
Regulatory Authority in each country of the Territory, or in countries where
pricing is not regulated, the price at which Celltech sells the Product.
"MINOR EUROPEAN COUNTRY(IES)" means those countries listed as such on
Appendix A hereto, as such Appendix may be amended from time to time in
accordance with Section 2.6 of this Agreement.
"NAMED PATIENT BASIS" means any distribution of Product by Orphan
Medical or Celltech, as its designee, for sale prior to Registration of the
Product through approval by a Regulatory Authority in the Territory or as
otherwise allowed by local law.
"NDA" means a New Drug Application filed by Orphan Medical with the FDA
or any equivalent successor application for approval to commercially promote and
distribute the Product in the United States.
"NET SALES" means for purposes of calculating the payments payable by
Celltech to Orphan Medical pursuant to Sections 4.1, 4.2 and 4.3 of this
Agreement, the gross sales prices received by Celltech, its Subdistributors or
Sublicensees from sales of the Product, not including Product samples, sold by
or for Celltech, its Subdistributors or Sublicensees to independent third
parties in the Territory, after in each case, deduction of the following items
allowed, given, granted, paid or borne by or for Celltech, its Subdistributors
or Sublicensees with respect to sales of the Product:
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(a) all bona fide promotional, cash, trade and quantity discounts and
rebates;
(b) all bona fide allowances to end users or credits (whether in the
form of a credit or free Product) on account of price adjustments, rejection or
return, recalls, charge backs or governmental program rebates (including without
limitation to managed care organizations);
(c) all sales, consumption, excise and any other taxes, tariffs, duties
or government charges (including any tax such as value added or similar tax or
government charge other than income tax) with respect to sales of the Product;
and
(d) any charges for freight or insurance.
For avoidance of doubt, in order to avoid any double counting when
determining Net Sales (i) Net Sales shall not include any royalties, proceeds or
other amounts paid to Celltech by any Sublicensee and (ii) if the gross sales
price received by a Subdistributor from one or more sales has been counted, then
Net Sales shall not include any royalties, proceeds or other amounts that are
paid by such Subdistributor to Celltech in connection with such sales.
"OPTION COUNTRY" means a country listed as such on Appendix A hereto
which is not currently located in the Territory and which Celltech has the
option, in its sole discretion, to include in the Territory, if after the
Effective Date, such Option Country joins the European Union or European Free
Trade Area.
"ORPHAN DRUG DESIGNATION" means designation by the EMEA as an orphan
drug, a drug for a specified rare disease or condition, or the equivalent
designation by a Regulatory Authority of any country of the Territory.
"PATENT RIGHTS" means European patent Number EP 1140061 and any other
patents listed on Appendix B hereto, the inventions described and claimed
therein relating to the Product and any application for letters patent relating
thereto, including, without limitation a continuation application, a continued
prosecution application, a continuation in part application or a divisional
application, and any supplementary protection certificates, extensions,
substitutions, confirmations, divisions, continuations, continuations-in-part,
patents issuing thereon and reissues or re-examinations thereof (each which
shall be automatically incorporated in and added to this Agreement and shall
periodically be added to Appendix B attached to this Agreement and made a part
hereof).
"PERSON" means any individual, general or limited partnership,
corporation, limited liability company, association, business trust, joint
venture, Regulatory Authority, business entity or other entity of any kind or
nature.
"PRODUCT" means Orphan Medical's proprietary pharmaceutical product
Xyrem containing the API as its active ingredient in bulk, unlabeled bottles,
for use as a treatment for the Licensed Indications and all Components therefor
unless Celltech shall elect to source such Components from a Third Party as
contemplated by Section 2.1(d).
"PRODUCT SPECIFICATIONS" means specifications of the Product as
approved in the Marketing Authorizations including specifications of secondary
packaging, or as otherwise
4
agreed upon by Orphan Medical and Celltech. The Product Specifications contained
in the NDA as of the Effective Date are attached as Appendix C hereto.
"PROPRIETARY INFORMATION" shall mean the terms and provisions of this
Agreement and all non-public information or data relating to the Product and the
subject matter hereof first communicated by or on behalf of one party to the
other, whether in writing or orally, including without limitation, all
scientific, clinical, commercial, financial and business information and data,
know-how, compilations, formulae, processes, plans, technical information, new
product information, compounds, formulations, methods of product-delivery, test
procedures, product samples, specifications and other information or data.
"REGISTRATION" shall have occurred and shall continue in each country
in the Territory when the Marketing Authorization required in respect of such
country shall have been issued and shall continue to be effective.
"REGULATORY AUTHORITY" means the EMEA and each other regulatory and
drug scheduling authority equivalent to the FDA and DEA in the Territory or a
country in the Territory, which has responsibility for scheduling drugs and
approving Marketing Authorizations.
"STEERING COMMITTEE" means the joint committee established pursuant to
Section 3.9.
"SUBDISTRIBUTORS" means any subdistributor (exclusive of
pre-wholesalers, wholesalers and Sublicensees) of the Product in the Territory
appointed by Celltech from and after the Effective Date pursuant to this
Agreement.
"SUBLICENSEE" means any Third Party who is licensed by Celltech to
promote, market, sell and distribute the Product in the Territory in
consideration of the payment to Celltech of a purchase price for the Product and
royalties on sales of the Product to Third Parties.
"TERM" shall have the meaning provided in Section 14.1 hereof.
"TERRITORY" means the Major European Countries and the Minor European
Countries set forth in Appendix A, as such Appendix may be amended from time to
time pursuant to Section 2.6 of this Agreement.
"THIRD PARTY" means a Person who or which is neither a party to this
Agreement nor an Affiliate thereof.
"TRADEMARK" means the trademark set forth in Appendix B.
"TRANSFER PRICE" means the price(s) Orphan Medical charges Celltech for
Product on a per bottle and per Component basis; provided, however, that the
Transfer Price shall not exceed ** for the Product, exclusive of Components
plus, when Components are being purchased, 100% of Orphan Medical's cost of
Components. The constituents comprising Orphan Medical's standard manufacturing
cost are listed on Appendix G, which also shows a Transfer Price of ** for the
Product including Components as of the date hereof.
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"WEIGHTED AVERAGE LIST PRICE" means Celltech's total annual gross sales
receipts for the Product received from Celltech's customers in the Territory
calculated based on the Market Sales Price, divided by the quantity of Product
sold in the Territory.
ARTICLE II
APPOINTMENT
2.1 Appointment as Distributor. Subject to the terms and conditions of this
Agreement, Orphan Medical hereby appoints Celltech, and Celltech accepts such
appointment, as Orphan Medical's exclusive distributor of the Product in the
Territory. During the Term of this Agreement, Celltech shall purchase all of its
requirements of the Product from Orphan Medical as the sole supplier except as
follows:
(a) Celltech Manufacturing. Orphan Medical agrees to discuss with
Celltech the feasibility and commercial viability of transferring the
manufacture of the Product to Celltech's FDA approved facilities or qualifying
and registering Celltech as a back-up manufacturer for the Product for the
Territory and/or for the rest of the world.
(b) Third Party Manufacturing. If Orphan Medical is unable to
manufacture or supply the quantity of Product ordered by Celltech in accordance
with this Agreement for any reason whatsoever, including, without limitation, by
reason of an event described in Section 16.1 (Events of Force Majeure), Celltech
shall have the right at its sole election to (A) take over the manufacture of
the Product or appoint a Third Party manufacturer to fulfill Orphan Medical's
manufacturing and supply obligations under this Agreement thereafter through the
remaining Term of this Agreement and/or (B) purchase the API from Orphan Medical
and itself convert, or appoint a Third Party manufacturer to convert, the API
into Product through the Term of the Agreement; provided, however, such right
shall be exercisable only if (1) Orphan Medical's inability to manufacture or
supply the Product could reasonably be expected to result in a period of time of
at least three (3) months during which less than fifty percent (50%) of Product
ordered pursuant to Celltech's last firm purchase order would be available to
Celltech for commercial sale, (2) Celltech provides reasonable evidence of its
ability to procure a Third Party manufacturer or take over the manufacture of
the Product or the API more rapidly than Orphan Medical could restart production
and supply of Product, and (3) Orphan Medical's inability to manufacture or
supply Product did not result, wholly or in part, from a breach by Celltech of
its obligations hereunder. Orphan Medical shall provide Celltech with all
reasonable assistance in taking over or obtaining and qualifying a Third Party
manufacturer, including without limitation, licensing its Manufacturing Know-How
to Celltech and/or such Third Party manufacturer solely for the purpose of
manufacturing the API and/or the Product pursuant to this Section 2.1(b).
(c) Price for Manufacturing Changes. In the event Celltech shall
manufacture Product or API or cause Product or API to be manufactured pursuant
to this Agreement, a manufacturing royalty, transfer price or price of
manufacturing services to Orphan Medical, and any other related terms therefor,
shall be negotiated in good faith.
(d) Component Sourcing. Celltech shall be permitted at any time during
the Term on sixty (60) days prior written notice to Orphan Medical to cease
purchasing some or all Components from Orphan Medical and purchase some or all
of the Components directly from
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Orphan Medical's suppliers or qualify another Third Party(ies) to supply
Components; provided that, subject to Sections 7.7 and 7.12, Celltech must
purchase all Components delivered by Orphan Medical pursuant to a firm order
regardless of whether such delivery is made after Celltech delivers notice to
Orphan Medical of its intent to purchase the Components from Orphan Medical's
suppliers or another Third Party(ies). Celltech shall bear any and all costs
associated with qualifying any Third Party(ies) to supply Components pursuant to
this Section 2.1(d); provided that if Orphan Medical desires to purchase the
same Components from such Third Party(ies) as Celltech is purchasing, then
Orphan Medical and Celltech shall each bear fifty percent (50%) of any such
costs.
2.2 License Grant. Subject to the terms and conditions of this Agreement,
Orphan Medical hereby grants Celltech an exclusive nontransferable,
royalty-bearing right and license (with the right of sublicense, as specifically
set forth herein), to use the NDA, Know How, Trademark, Patent Rights and all
Improvements and Proprietary Information of Orphan Medical related thereto or to
the Product together with the goodwill associated therewith (the "LICENSED
INTELLECTUAL PROPERTY") during the Term, solely in the Territory, and solely for
the purposes of (i) preparing applications for Marketing Authorizations and
obtaining and maintaining Registrations and packaging, labeling, promoting,
marketing, selling and distributing the Product under the Trademark in the
Territory solely for the Licensed Indications and (ii) exercising its other
rights under this Agreement including those provided in Articles X and XI hereof
and making or having made API and/or Product but only as provided in Section
2.1. Except as set forth in Section 6.8, no license is granted to Celltech
hereunder for any rights to market the Product for other Indications. Except as
provided in Section 14.6, the license set forth above shall terminate
automatically upon termination or expiration of this Agreement. Subject only to
the foregoing express license grant and its other rights as herein provided,
Celltech shall not have and shall not assert any claim, right, title or interest
in or to the Licensed Intellectual Property.
2.3 Right of First Negotiation for Other Indications.
(a) Negotiation Notice. If, during the Term of this Agreement, Orphan
Medical desires to pursue further development of the Product in the Territory
for one or more Indications other than the Licensed Indications, or in the
Option Countries or in Australia for the Licensed Indications or one or more
Indications other than the Licensed Indications, Orphan Medical shall provide
written notice to Celltech (the "NEGOTIATION NOTICE") of its intent to negotiate
an agreement therefor. The Negotiation Notice shall identify the relevant
country or countries and Indications. Delivery of a Negotiation Notice shall
create a mutual obligation to negotiate in good faith on an exclusive basis for
the grant to Celltech of exclusive rights to the Product for the specified
countries for such Indication(s). If no response is received within ninety (90)
days after delivery of the Negotiation Notice to Celltech, the offer shall be
deemed declined, and Orphan Medical may then negotiate with any Third Party for
the grant of any license for the Product for such countries for such
Indication(s) subject, however, to the last sentence of Section 2.3(b).
(b) Procedure of Negotiations. The parties shall have ninety (90) days
from the date Orphan Medical receives Celltech's response to the Negotiation
Notice to negotiate in good faith (and on a confidential basis), and enter into
a letter of intent, term sheet or final agreement with regard to, as applicable,
Celltech's distribution of the Product in the Territory for
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the new Indication(s) or in the Option Countries or Australia for the Licensed
Indications or one or more Indications other than the Licensed Indications. In
the event that (i) Celltech shall have failed to have responded to the
Negotiation Notice within the 90-day period provided in paragraph (a) above or
(ii) within the 90-day period provided in this paragraph (b) Orphan Medical and
Celltech have not entered into such letter of intent, term sheet or final
agreement, Orphan Medical shall have no further obligation to undertake or
continue negotiations with Celltech for such license, and Orphan Medical shall
be free to commence negotiations for a license to the Product for such countries
for such Indication(s) with any Third Party subject to the following: (i) if a
letter of intent, term sheet or final agreement with a Third Party shall not
have been signed by Orphan Medical and such Third Party within two hundred
seventy (270) days of the termination of Celltech's right of first negotiation,
then Celltech's right of first negotiation shall again become effective on the
terms herein provided and (ii) without Celltech's prior written consent, the
terms and conditions agreed by Orphan Medical with such Third Party may not be
in the aggregate materially more favorable to such Third Party than those last
offered to Celltech.
(c) Option Countries. If Orphan Medical shall determine to enter into a
license for the Product with a Third Party in an Option Country upon expiration
of Celltech's right of first negotiation pursuant to Section 2.3(b) above, such
license shall contain a provision automatically terminating such License should
such country subsequently join the European Union or European Free Trade Area
during the Term and Celltech shall have exercised its Option under Section 2.6
as to such country.
(d) No Trademark License. If pursuant to this Section 2.3 Orphan
Medical licenses to a Third Party the Product in the Territory for one or more
Indications other than the Licensed Indications or in the Option Countries or
Australia for one or more Indications other than the Licensed Indications, then
such Third Party shall be obligated to market the Product under a trademark
different from the Product Trademark and Orphan Medical shall not grant, license
or otherwise transfer to such Third Party any rights to the Trademark or
otherwise permit any use of the Trademark by such Third Party.
2.4 Subdistributors/Sublicensees. Celltech may appoint Subdistributors and
Sublicensees with the prior written approval of Orphan Medical, which approval
shall not be unreasonably withheld. No such appointment or delegation shall
relieve Celltech from any obligations hereunder, and each agreement with a
Subdistributor or Sublicensee shall include terms ensuring the protection of
Orphan Medical's rights under this Agreement. Celltech shall guarantee and be
responsible for the making of all payments due, and the making of reports
required under this Agreement by its Subdistributors and Sublicensees, and their
compliance with all applicable terms of this Agreement. All agreements between
Celltech and its Subdistributors and Sublicensees shall include a provision
prohibiting the further appointment of Subdistributors or Sublicensees, as the
case may be, and a provision terminating the Subdistributor or Sublicensee
agreement to the extent such agreement relates to the Product in the Territory
upon termination of this Agreement for any reason.
2.5 Sales Outside the Territory. Except as otherwise set forth in this
Agreement, Celltech shall not distribute, sell or otherwise provide the Product
outside of the Territory and shall not solicit customers for the Product outside
the Territory or establish any office through
8
which orders are solicited or any depot at which inventories of the Product are
stored outside the Territory. Celltech shall not sell the Product to customers
outside the Territory, provided that nothing herein shall preclude Celltech from
selling the Product to any customer, wherever located, who purchases Product
with a view to its use within any country of the Territory.
2.6 Option to Expand the Territory. If, after the Effective Date, an Option
Country joins the European Union or European Free Trade Area, Celltech, in its
sole discretion, may add such Option Country to the Territory and may designate
such Option Country as a Major European Country or a Minor European Country.
Celltech shall notify Orphan Medical of its decision within thirty (30) days
after the date Celltech first learns of such country joining the European Union
or European Free Trade Area, and, if Celltech so chooses to add such Option
Country to either the Major European Countries or Minor European Countries, then
Appendix A hereto shall be amended to so reflect such addition.
2.7 Competitive Product. Orphan Medical acknowledges that (i) Celltech has
developed and is marketing methylphenidate in certain countries within the
Territory for Indications other than the Licensed Indications, but that
methylphenidate is occasionally used on an off-label basis to treat the Licensed
Indications; (ii) Celltech is marketing dexedrine in the United Kingdom for the
Licensed Indications; and (iii) Celltech will be marketing Equasym IR in France
for the Licensed Indications. With the exception of the off-label use of
methylphenidate in the Territory, dexedrine in the United Kingdom, and Equasym
IR in France, Celltech shall not, for five (5) years from the Effective Date of
this Agreement, either directly or indirectly through subdistributors,
sublicensees or otherwise, develop, manufacture, promote, market or distribute
products in the Territory that are competitive with the Product; provided,
however, nothing herein shall prohibit Celltech from acquiring, by stock
purchase, asset purchase or merger any company, or division of a company, that
is developing, marketing, manufacturing, promoting or distributing a competitive
product where the annual sales (or in the case of a product in development, the
projected sales) of such competitive product in the Territory are less than
twenty percent (20%) of such company's or division's total annual sales. For
purposes of this Section 2.7, a competitive product shall be one that: (a) is
approved for prescription for a Licensed Indication or (b) is used off-label for
a Licensed Indication and such off-label sales comprise more than twenty percent
(20%) of such product's sales in the Territory or more than twenty percent (20%)
of the sales of the Product in the Territory.
ARTICLE III
REGULATORY APPROVALS;
COMPLIANCE WITH LAWS AND REGULATIONS
3.1 Marketing Authorizations. Celltech shall prepare and submit to Orphan
Medical, (i) within sixty (60) days of the Effective Date, a written plan for
obtaining approval from the EMEA to commercially promote and distribute the
Product for the cataplexy Licensed Indication and (ii) within one hundred twenty
(120) days of the Effective Date, a written plan for obtaining approval to
commercially promote and distribute the Product for the cataplexy Licensed
Indication from the Regulatory Authority of each country in the Territory not
covered by an EMEA Registration. On the basis of Orphan Medical's NDA and the
Know How and related Proprietary Information delivered pursuant to Section 3.2,
Celltech shall collect, assemble, organize and format all necessary components
required to apply for such approvals, and shall
9
submit such materials to the appropriate Regulatory Authorities in accordance
with Section 3.2. Celltech shall maintain, at its own expense, the Registrations
and other authorizations necessary to import, label, promote, market, sell and
distribute the Product in the Territory. Orphan Medical shall provide, at its
own cost and expense (but subject to the limitations set forth in Section 3.2),
reasonable assistance to Celltech in the acquisition of such Registrations,
including without limitation, the services set forth on Appendix H hereto. All
applications for Marketing Authorizations for the Product shall be submitted in
the name of Celltech and all Marketing Authorizations for the Product shall be
assigned to Orphan Medical upon termination of this Agreement for any reason.
Celltech shall ensure that all pages of documents submitted to Regulatory
Authorities for the purpose of obtaining Registrations and Marketing
Authorizations shall be coded as confidential.
3.2 Regulatory Timelines. (a) Within thirty (30) days of the Effective
Date, Orphan Medical shall (i) transfer the Orphan Medical Drug Designation in
the Territory from IDIS World Medicines to Celltech, and (ii) provide Celltech
with the NDA and the Know How and the related Proprietary Information to enable
Celltech to prepare and timely file the applications to commercially promote and
distribute the Product for the cataplexy Licensed Indication in the Territory.
Celltech shall use its Commercially Reasonable Efforts to cause a pre-submission
meeting to be held with the EMEA in respect of the cataplexy Licensed Indication
within one hundred eighty (180) days of the Effective Date. Within thirty (30)
days of such meeting with the EMEA, Celltech shall report to Orphan Medical
about the content of such meeting and advise Orphan Medical as to whether
additional data or documentation or additional action is required or deemed
reasonably necessary by Celltech to obtain approval from the EMEA to
commercially promote and distribute the Product for the cataplexy Licensed
Indication. If additional data or documentation or additional action is required
or deemed reasonably necessary by Celltech to obtain such approval and Orphan
Medical has or could readily produce such data or documentation or take such
additional action, Orphan Medical shall so provide the additional data or
documentation or take the additional action at its sole cost and expense;
provided, however, that in the event the cost of any single study or other
report required by the EMEA or deemed reasonably necessary by Celltech shall
exceed ** or the aggregate cost of all studies or other reports required by the
EMEA or deemed reasonably necessary by Celltech shall exceed **, Celltech and
Orphan Medical shall meet and discuss in good faith the apportionment of such
costs between them. Provided that Orphan Medical's NDA and other relevant Know
How and related Proprietary Information are deemed reasonably sufficient by
Celltech, Celltech shall, at its own expense, file the application for approval
of the Product by the EMEA as an orphan drug.
(b) Following approval from the EMEA to commercially promote and
distribute the Product for the cataplexy Licensed Indication, Celltech shall use
Commercially Reasonable Efforts to obtain Registration of the Product for the
cataplexy Licensed Indication (i) in the Major European Countries no later than
December 31, 2005 (the "REGISTRATION DATE") and (ii) in the other countries in
the Territory within such time frames as are consistent with the regulatory plan
submitted by Celltech to Orphan Medical as provided in Section 3.1; unless, in
any such case, additional data or documentation or additional action is
required, in which case, the timeframe shall be extended by the time required to
generate the additional data or documentation or take the additional action.
Where a Regulatory Authority requires additional data or documentation or
additional action that is not within Orphan Medical's sole obligation as
delineated in paragraph (a) above and that neither party has or could readily
produce or which
10
cannot readily be taken by either party, the parties shall negotiate in good
faith the terms upon which such data or documentation should be generated or
actions taken by either party, if at all, or failing agreement, to terminate
this Agreement in so far as it relates to a country in the Territory not a
member of the European Union or the European Free Trade Area.
(c) Anything herein to the contrary notwithstanding, (i) except as
provided in paragraphs (a) and (b) above, in connection with providing
additional data and documentation or taking additional actions pursuant to this
Section 3.2, each party shall be responsible for all costs and expenses of its
respective employees, agents, contractors, sublicensees and subdistributors, and
(ii) no party shall be obligated to conduct any clinical trials after
the Effective Date.
(d) Following the development by Orphan Medical of a supplemental NDA
for the excessive daytime sleepiness Licensed Indication, which such
supplemental NDA shall be developed by Orphan Medical as soon as practicable
after the Effective Date, a copy thereof shall be delivered to Celltech to
enable it to prepare an application to the EMEA for approval to commercially
promote and distribute the Product in the Territory for the excessive daytime
sleepiness Licensed Indication. Such application shall be filed by Celltech no
later than the later of (i) issuance of the license to Celltech by the EMEA for
the cataplexy Licensed Indication or (ii) one hundred eighty (180) days after
Orphan Medical delivers such supplemental NDA to Celltech, unless additional
data or documentation or additional action is required from Orphan Medical or a
Third Party, in which case the one hundred eighty (180) days shall be extended
by the time required to generate the additional data or documentation or take
the additional action.
3.3 Other Approvals. Celltech undertakes and covenants that as soon as
reasonably practicable following the Effective Date it shall take all other
actions to obtain and maintain during the Term all other approvals, licenses and
permits necessary to import, promote, market, sell and distribute the Product in
the Territory.
3.4 Return of Initial Payment. In the event that following and as a result
of the pre-submission meeting with the EMEA, the parties mutually agree that it
is not possible or commercially viable under the prevailing circumstances to
obtain Registration for the Product in the Major European Countries, the parties
may agree to terminate this Agreement, and such termination shall be subject to
the terms of Article 14. Upon any such termination, Orphan Medical shall refund
to Celltech a portion of the initial $2.5 million US Dollar payment due on the
Effective Date under Section 4.1(a). Such refund shall be $1.25 million US
Dollars within ninety (90) days of Celltech's providing to Orphan Medical input
relating to the pre-submission meeting pursuant to Section 3.2, and $750,000 US
Dollars ninety (90) days thereafter. If the parties do not mutually agree that
Registration in the Major European Countries is not possible or commercially
viable under the prevailing circumstances, then they shall submit the matter to
arbitration in accordance with the provisions of Section 15.2 of this Agreement.
3.5 Product Changes. Orphan Medical shall give Celltech ninety (90) days
prior written notice of any major formulation or packaging change to the Product
being requested or required by the FDA, or any other U.S. Regulatory Authority,
whenever such change affects a Registration in any country within the Territory.
Orphan Medical may change the Product, or analytical test methods as it deems
appropriate, provided Orphan Medical continues to supply Product conforming to
the Product Specifications then in effect until such times as the Marketing
11
Authorizations are amended to reflect such changes. In the event of such
changes, Celltech shall be solely responsible for additional submissions and/or
regulatory updates which may be required by the Regulatory Authorities in the
Territory, provided that all necessary data and information shall be furnished
by Orphan Medical at Orphan Medical's expense for such purposes, and provided;
further that in no event shall Celltech's failure to obtain any required
amendments to the Marketing Authorizations to reflect such additional
submissions and/or regulatory updates, relieve Orphan Medical of its obligation
to supply Product conforming to the Product Specifications. In the event a
Regulatory Authority in any country in the Territory requires a formulation or
packaging change to the Product, Orphan Medical and Celltech shall cooperate to
develop a mutually agreeable plan to address the regulatory requirement, and, if
necessary, to include the production of separate lots, at Celltech's expense,
for the Territory. In the event Orphan Medical and Celltech mutually agree it is
not commercially reasonable to meet such requirements, Celltech shall cease
promoting, marketing, selling and/or distributing the Product in that country in
the Territory and shall promptly terminate the Registrations in such country. If
the parties are in disagreement as to whether it is commercially reasonable to
meet such requirements, then they shall submit the matter to arbitration in
accordance with the provisions of Section 15.2 of this Agreement.
3.6 Clinical Trials. The parties shall keep one another fully and currently
informed as to all tests and trials that they intend to carry out for purposes
of compliance with regulatory requirements in the Territory or that might affect
Marketing Authorization applications or Registrations in the Territory. The
parties shall cooperate in the design of such tests and trials in order to
ensure to the maximum possible extent that duplication of effort shall be
avoided, and that the results shall be suitable for filing with the Regulatory
Authorities in the Territory and shall otherwise be useful for purposes of
meeting all applicable regulatory requirements. Without limiting the generality
of the foregoing, the parties shall use their Commercially Reasonable Efforts to
ensure that all clinical trials undertaken after the Effective Date, if any,
shall be designed and conducted in accordance with good clinical practices and
good laboratory practices as established for both the United States and the
European Union.
3.7 Compliance With Applicable Laws. Celltech shall comply with all
applicable laws and regulations of each country in the Territory (including,
without limitation, any laws or regulations in the Territory governing the
distribution of a scheduled drug, as designated under regulations promulgated by
the DEA). Celltech shall also comply with all U.S. laws applicable to the
Registration, promotion, marketing, sale and distribution of the Product in the
Territory, including but not limited to U.S. Export Administration Regulations,
the US Foreign Corrupt Practices Act and all regulations promulgated by the DEA.
Celltech shall comply with all Marketing Authorizations issued in the Territory.
3.8 Approved Product Packaging and Labeling; Relevant Testing. After the
Product receives a Marketing Authorization in any country of the Territory,
Celltech shall package and label the Product and shall include all required
labeling for Product sold in such country(ies). For all orders submitted by
Celltech after Registration is received in a particular country, Orphan Medical
shall supply to Celltech unlabeled bottles, and final labeling and packaging of
Product for such country(ies) shall be completed by Celltech. After the Product
receives Marketing Authorization in a country in the Territory, Celltech shall
be solely responsible for all final release testing in such country(ies) and for
ensuring in such country(ies) that the Product labeling
12
and packaging complies with the Marketing Authorizations and all other
applicable laws of each such country in the Territory. Celltech shall provide
Orphan Medical with copies of all foreign language labels. To the extent
permitted by applicable laws and regulations in each country in the Territory,
all labels shall identify Orphan Medical as the manufacturer of the Product for
Celltech.
3.9 Steering Committee. Within a reasonable period of time after the
Effective Date, Orphan Medical and Celltech shall form a Steering Committee made
up of commercial and technical employees from both companies that shall have
certain decision-making authority, and provide oversight for the administration
of this Agreement. Each party shall maintain two (2) members on the Steering
Committee with other members added as needed. The parties shall each select one
of its representatives to serve as a co-chairperson of the Steering Committee.
The Steering Committee shall have the authority to conduct the following
activities and such other activities as may be agreed to in writing by the
parties: (a) review ongoing regulatory issues, (b) review the medical aspects of
standards of care in the Territory, (c) review clinical developments across
territories, (d) review marketing campaigns and new marketing plans, (e) review
sales activities and results, (f) review aspects of Product manufacturing
campaigns and Product forecasts, consignment and non-consignment inventory
stocks and ordering, and (g) review the arrangement for distributing Product on
a Named Patient Basis. In the event and to the extent that the Steering
Committee is unable to come to a consensus on any matter relating to the
development or manufacture of the Product or the Registration, packaging,
labeling, promoting, marketing, sale or distribution of the Product outside the
Territory, the views of the Orphan Medical Steering Committee members shall
prevail. In the event and to the extent that the Steering Committee is unable to
come to a consensus on any matter relating to the Registration, packaging,
labeling, promoting, marketing, sale or distribution of the Product within the
Territory, the views of the Celltech Steering Committee members shall prevail.
Notwithstanding the foregoing, in the event a particular matter for which there
is no consensus of the Steering Committee could, in the good faith judgment of
the party who does not have the ultimate decision making authority as to such
matter (as provided in the previous two sentences), materially affect the rights
or obligations under this Agreement of such party, Orphan Medical and Celltech
agree to use Commercially Reasonable Efforts to resolve the matter in a manner
which will minimize the impact on such rights or obligations of such party.
During each Contract Year, the parties shall hold at least four (4) regular
meetings of the Steering Committee. Members of the Steering Committee may
participate in meetings of the Steering Committee in person or by conference
telephone call. At least one (1) of the four (4) Steering Committee meetings
shall be conducted in-person. Employees of each party who are not members of the
Steering Committee may attend meetings of the Steering Committee as required.
In-person Steering Committee meetings shall alternate between Orphan Medical's
designated facility and a facility designated by Celltech. The co-chairpersons
of the Steering Committee shall alternate responsibility for the preparation of
minutes setting forth discussions made at each committee meeting, with the
Orphan Medical Chairperson preparing minutes for the first Steering Committee
meeting; provided, however, that such minutes shall not become official until
agreed upon by both co-chairpersons.
13
ARTICLE IV
ROYALTIES AND MILESTONE PAYMENTS
4.1 Milestone Payments. In consideration of the rights and licenses granted
hereunder, Celltech shall pay to Orphan Medical milestone payments totaling **
US Dollars according to the following schedule:
(a) $2,500,000 US Dollars on the Effective Date.
(b) ** US Dollars upon filing of cataplexy Marketing Authorization
application with the EMEA.
(c) ** US Dollars upon approval by the EMEA to commercially promote and
distribute the Product for the cataplexy Licensed Indication.
(d) ** US Dollars upon pricing approval for the cataplexy Licensed
Indication in France provided the price approved (ex works) is at least 115
Euros per 180 ml bottle.
(e) ** US Dollars upon delivery to Celltech by Orphan Medical of
supplemental NDA package for the excessive daytime sleepiness Licensed
Indication.
(f) ** US Dollars upon approval by the EMEA to commercially promote and
distribute the Product for the excessive daytime sleepiness Licensed Indication.
(g) ** US Dollars upon first complete Contract Year in which Celltech's
and its Subdistributors annual Net Sales in the Territory exceed (pound)10
million.
(h) ** US Dollars upon first complete Contract Year in which Celltech's
and its Subdistributors annual Net Sales in the Territory exceed (pound)15
million.
(i) ** US Dollars upon first complete Contract Year in which Celltech's
and its Subdistributors annual Net Sales in the Territory exceed (pound)20
million.
4.2 Royalty. (a) In consideration of the license granted by Orphan Medical
hereunder, Celltech shall pay Orphan Medical a quarterly royalty of ** on Net
Sales of the Product. The royalty rate shall be reduced to ** as of the date
when Celltech ceases to have the exclusive right in the Territory, enforceable
against Third Parties, to promote, market and sell for the Licensed Indications
products containing sodium oxybate as an active pharmaceutical ingredient,
because of the expiration or termination in the Territory of Patent Rights
and/or regulatory exclusivity based on the Product's Orphan Drug designation in
the Territory. The royalty rate shall be further reduced to ** if there is
subsequent competition by a generic product for the Product in the Territory.
(b) If (i) Orphan Medical licenses the Product in the Territory to a
Third Party for one or more Indications other than the Licensed Indications
pursuant to Section 2.3(b), and (ii) the Product licensed in the Territory to
such Third Party by Orphan Medical is being used off-label for a Licensed
Indication, and (iii) Celltech can demonstrate that such off-label sales results
in material erosion of the Product's sale price in the Territory and/or a
material loss of
14
Product sales by Celltech for Licensed Indications in the Territory, then
regardless of whether the ** royalty rate is in effect, the parties shall
negotiate in good faith a reduction in the royalty rate to appropriately
compensate Celltech for such erosion of sales price and/or sales. As part of its
demonstration of such material erosion and/or material loss of sales, Celltech
shall obtain at its expense, and furnish to Orphan Medical, a report compiled by
a recognized market research company having substantial expertise in the
pharmaceutical industry, which sets forth both the sales of the Product and the
off-label sales of the Third Party product in the Territory or sets forth other
relevant information demonstrating that Celltech has lost material Product sales
or has suffered a material price reduction for the Product due to such off-label
sales of the product licensed to the Third Party.
4.3 Minimum Royalty Requirement. Commencing with the Contract Year in which
the First Commercial Sale in a Major European Country occurs, if the royalties
payable pursuant to Section 4.2 shall be less than the amounts set forth in this
Section 4.3, then Celltech shall pay such additional royalty amounts to Orphan
Medical so that Orphan Medical shall have received aggregate royalty payments
with respect to Net Sales of the Products in the Territory equal to the
following minimum amounts (reducing the minimum for the first year
proportionally for the days therein prior to the date of the First Commercial
Sale); provided, however that the following minimum royalty amounts shall be
adjusted by written agreement of the parties after the Effective Date as
appropriate to take into account any royalty rate reductions determined in
accordance with Section 4.2(b):
Minimum Royalty Payment ((pound))
---------------------------------
Year ** ** **
---- -- -- --
1 ** ** **
2 ** ** **
3 ** ** **
4 ** ** **
5-10 and 11+ ** ** **
For the avoidance of doubt, the parties acknowledge and agree that the
minimum royalty payment described in this Section 4.3 shall not be payable with
respect to any sales made by Celltech on a Named Patient Basis.
4.4 Royalty and Milestone Payments. Unless otherwise agreed by Orphan
Medical in writing, all milestone payments set forth in Section 4.1 shall be
payable within thirty (30) days after achievement of the relevant milestone,
except for the initial $2.5 million payment due on the Effective Date under
Section 4.1(a), which shall be due and payable by Celltech no later than five
(5) days after the Effective Date. Royalty payments shall be paid within
forty-five (45) days from the end of each calendar quarter after the date of
First Commercial Sale and any additional royalty amounts payable as stated in
Section 4.3 shall be paid within forty-five (45) days of the end of each
Contract Year. All payments shall be made in United States Dollars by wire
transfer to a USA bank designated by Orphan Medical. Any overdue payment from
Celltech to Orphan Medical under this Agreement shall accrue interest at the
rate of 3/4% per month or the highest rate allowed by law, whichever is less.
Orphan Medical shall have the right to recover its reasonable collection costs
and expenses (including attorneys' fees) for late payments.
15
4.5 Exchange Rates. For purposes of determining the amount of Net Sales and
the amount of royalties payable pursuant to Section 4.2 during any calendar
quarter, the total of all sales in each currency during such quarter shall be
converted into US Dollar currency at the average daily exchange rate for such
calendar quarter as reported by xxxxx.xxx or, if such website is not available,
the Wall Street Journal. For purposes of determining the minimum royalty amount
for each Contract Year as provided in Section 4.3, the amounts set forth therein
shall be converted into US dollar currency at the average daily exchange rate
for such Contract Year as reported by xxxxx.xxx or, if such website is not
available, The Wall Street Journal.
4.6 Taxes. Celltech shall be entitled to deduct from royalties paid
hereunder the amount of any withholding taxes or other taxes, levies or charges
required to be withheld by Celltech, to the extent Celltech pays to the
appropriate governmental authority on behalf, and for the account of, Orphan
Medical such taxes, levies or charges. Celltech shall use reasonable efforts
(including making, or assisting Orphan Medical in making, any relevant
application to any tax authority) to minimize any such taxes, levies or charges
which are required to be withheld by Celltech from royalties paid hereunder and
paid on behalf of Orphan Medical by Celltech. Celltech shall promptly deliver to
Orphan Medical proof of payment of all such taxes, levies and other charges,
together with copies of all communications from or with such governmental
authority with respect thereto.
4.7 Reports. Each royalty payment made by Celltech hereunder shall be
accompanied by a report showing all revenue generated by sales of the Product to
Third Parties (including all sales by Subdistributors and Sublicensees) during
the immediately preceding quarter, the computation of Net Sales, and the
calculation of royalty payments due for such quarter, all on a
country-by-country basis. If actual Net Sales of any Subdistributor or
Sublicensee for that quarter is unavailable at the time such quarterly report is
due, Celltech shall include in its report for that quarter a good faith estimate
of such Net Sales, and an appropriate adjustment for the difference between the
actual and estimated Net Sales shall be made in the report for the following
quarter, with a corresponding adjustment in the amount of royalties payable in
respect of that quarter.
4.8 Books and Records; Audit. Celltech shall keep for at least three (3)
years or such longer period as may be required by law following the end of the
calendar year to which they pertain, accurate and complete records showing all
sales of the Product by Celltech and its Subdistributors and Sublicensees. Such
records shall include all information reasonably necessary to verify the total
amount and computation of earned royalties hereunder, and shall be open to
inspection and audit, during reasonable business hours, to the extent necessary
to verify the amount of such royalties. Such inspection and audit shall be
conducted at the request and expense of Orphan Medical by an independent
Certified Public Accountant appointed by Orphan Medical. Such inspection and
audit shall be made not more often than once in each Contract Year. Such
Certified Public Accountant shall undertake a confidentiality obligation to
Celltech permitting it to disclose only to Orphan Medical the amount of the
royalties due hereunder, and no other information. Orphan Medical shall bear the
costs of any such inspection and audit; provided that if any inspection and
audit reveals an underpayment of more than five percent (5%), Celltech shall
reimburse Orphan Medical for its reasonable, documented out-of-pocket costs for
such inspection and audit.
16
ARTICLE V
REGULATORY COMPLIANCE; PRODUCT MANUFACTURE
5.1 Regulatory Reporting. Celltech shall timely file all reports relating
to the Product required by the Regulatory Authorities in each country in the
Territory and shall deliver a copy of each such report in hardcopy and on
diskette, if available, to Orphan Medical within thirty (30) calendar days of
making such report in accordance with laws in the Territory regarding transfer
of data and confidentiality of patient information.
5.2 Product Recalls. (a) Each party shall promptly notify the other party
in the event of any recall, market withdrawal or correction of Product ordered
by any Regulatory Authority, whether in the Territory, the United States, or
anywhere in the world. The parties shall cooperate in good faith to handle and
dispose of a recall, market withdrawal or correction in the Territory.
(b) Subject to Section 5.2(c) below, in the event of a recall, market
withdrawal or correction (i) by reason of the failure of all or part of the
Product supplied by Orphan Medical to meet the Product Specifications, any
requirement of the FDA or any Marketing Authorization or other requirement of
applicable law that is not the result of any action or omission of Celltech or
its Subdistributors or Sublicensees as described in paragraph (c) below or (ii)
because Product that meets the Product Specifications, by whomsoever
manufactured, is inherently defective, unsafe, dangerous or may harm users of
the Product, Orphan Medical shall bear the costs of such recall, market
withdrawal or correction (including without limitation Celltech's reasonable
attorney's fees).
(c) In the event of a recall, market withdrawal or correction by reason
of the failure of Celltech to have obtained or properly maintained or complied
with a Marketing Authorization or as a result of Celltech's (or its
Subdistributors', Sublicensees' or Third Party manufacturers') breach of any of
their obligations under this Agreement (including without limitation Section
3.7), or the willful misconduct or negligent acts or omissions of Celltech (or
its Subdistributors, Sublicensees' or Third Party manufacturers'), Celltech
shall bear all costs of such recall, market withdrawal, or correction (including
without limitation Orphan Medical's reasonable attorneys' fees).
5.3 Adverse Event Notifications and Reporting. The exchange of Adverse
Event reports relating to the Product between the parties shall be made
according to the procedures in Appendix D.
5.4 Correspondence/Complaints. (a) Celltech shall promptly provide Orphan
Medical with copies of any material regulatory correspondence with respect to
the Product in the Territory and all related documentation, information and
other materials received or prepared by Celltech, including, but not limited to,
copies of the proposed applications for Marketing Authorization prepared by or
on behalf of Celltech for Registration of the Products in the Territory and any
subsequent amendments, supplements, or annual updates thereto.
(b) Celltech agrees to inform Orphan Medical in writing of all
significant complaints regarding the Product that relate to Product
Specifications within fifteen (15) business days after Celltech's receipt
thereof in all countries of the Territory. Celltech shall also
17
provide written quarterly reports of all complaints regarding the Product,
regardless of significance, in English, as well as the actions taken by Celltech
to address all such complaints. Such reports shall be delivered to Orphan
Medical within thirty (30) days after the end of each calendar quarter during
the Term.
5.5 Translations. Celltech shall provide Orphan Medical English
translations of any material regulatory correspondence received in a language
other than the English language relating to a Serious Adverse Event (as defined
in Appendix D). Furthermore, Celltech shall provide to Orphan Medical copies of
translations of any other regulatory correspondence and reports delivered
pursuant to Sections 5.1, 5.3 or 5.4 to the extent Celltech has otherwise
translated such correspondence and reports for its own purposes.
5.6 Manufacture; Quality. Subject to Article VII, Orphan Medical agrees to
manufacture Celltech's requirements for Product as necessary to satisfy
Celltech's forecasts and purchase orders submitted by Celltech pursuant to this
Agreement. Products delivered to Celltech pursuant to this Agreement shall be
manufactured in accordance with the Quality Agreement negotiated and finalized
between Orphan Medical and Celltech prior to Marketing Authorization approval in
any country in the Territory, such agreement to be substantially in the form
attached hereto as Appendix E. Such Quality Agreement shall be agreed upon by
the parties no later than twelve (12) months after the Effective Date. The
Quality Agreement shall include the obligations and pharmaceutical
responsibilities of Orphan Medical, Orphan Medical's sub-contractors and
Celltech relating to the quality assurance requirements for the manufacture and
supply of the Product, all in accordance with cGMP and applicable regulatory
requirements.
5.7 Product Specifications. Product supplied to Celltech by Orphan Medical
shall meet the Product Specifications that are approved by the Regulatory
Authorities in the Territory. Should the approved Product Specifications differ
from the specifications contained in Orphan Medical's NDA which are set forth on
Appendix C, the Product Specifications approved by the Regulatory Authorities
shall control.
5.8 Manufacturing Audits by Celltech. Upon sixty (60) days prior written
notice for cause, or with one hundred eighty (180) days written notice for an
annual audit, Celltech or a representative thereof shall have the right, if
within the power of Orphan Medical to grant such right, to participate in the
conduct of compliance or other inspections, audits and/or investigations of the
operations and facilities where the Product and the raw materials and components
used to manufacture, package, inspect, test, store and supply the Product,
including, without limitation, the API and the Components, are manufactured,
packaged, inspected, tested and stored. Such inspections, audits and/or
investigations shall take place during normal business hours at the relevant
manufacturing site(s) in the presence of Celltech and Orphan Medical's
representatives and Celltech shall abide by any confidentiality requirements or
security procedures of Orphan Medical's suppliers. Orphan Medical shall
facilitate and lead the audit, and it shall be Orphan Medical's responsibility
to discuss any audit findings with its sub-contractors and suppliers. Celltech
and Orphan Medical along with any other licensing partner will agree upon a
final single audit report that will be sent to the vendor by Orphan Medical. In
the event of any disagreement among the parties relating to the audit report,
Orphan Medical shall be the deciding entity and will finalize the audit report.
Orphan Medical shall require its
18
sub-contractors and suppliers to take all reasonably necessary corrective
actions identified by Celltech as necessary to comply with cGMP requirements and
Registrations in the Territory. In the case where a vendor will not allow
Celltech to accompany Orphan Medical during such audit, Orphan Medical will
either audit on behalf of Celltech, or will jointly, with Celltech engage an
independent third party to audit the supplier on behalf of both parties. Orphan
Medical is generally allowed one audit each year of each vendor. If additional
costs are imposed due to accompaniment of Celltech with Orphan Medical during
such audits, Celltech shall bear the burden of any additional costs.
ARTICLE VI
MARKETING EFFORTS
6.1 Marketing Efforts. Celltech shall have, directly or through its
Subdistributors or Sublicensees, the following obligations with respect to the
marketing and distribution of the Product in the Territory:
(a) To use its Commercially Reasonable Efforts to promote, market, sell
and distribute the Product in the countries in the Territory where Registrations
are in good standing; provided, however, that Celltech shall not be required to
market the Product in any country in the Territory where pricing is regulated
and the approved end user price is less than ** of the Weighted Average List
Price;
(b) To promptly respond to all inquiries or complaints from purchasers
of the Product;
(c) To maintain adequate and qualified staff to enable it to fully
perform its obligations hereunder;
(d) To provide adequate and appropriate training to its staff
concerning the Product; and
(e) To conduct its business in a professional manner.
6.2 Approved Product Claims. Celltech shall not make and shall cause its
Subdistributors and Sublicensees to not make claims to any Third Party
concerning the Product except as contained in or permitted by the relevant
Marketing Authorization or as approved in the Territory by the appropriate
Regulatory Authority.
6.3 Development of Marketing Strategy. Celltech agrees to cooperate in the
development of a consistent message strategy to promote the Product in an effort
to protect and strengthen branding. The global positioning of the Product for
the U.S. and the Territory should be discussed before Celltech launches the
Product in a country in the Territory and at least once per year (or more
frequently if reasonably requested by Orphan Medical) to ensure a message which
is consistent with the local Marketing Authorizations and local treatment
guidelines in such country, and, where possible, consistent with the
international message. Celltech and Orphan Medical agree to work in good faith
to develop such a strategy.
19
6.4 Marketing Materials. Celltech agrees to provide Orphan Medical with
copies of all marketing and promotional materials within thirty (30) days of
first use. Celltech shall be solely responsible for the text, graphics, and
compliance of such materials with the laws and regulations of the Territory, but
may rely (without further investigation) on all Product information provided by
Orphan Medical, except that Celltech may not rely on such information to the
extent Celltech knows or reasonably should know that such information is
inaccurate.
6.5 Sales and Technical Literature Developed by Orphan Medical. From time
to time during the Term Orphan Medical shall provide to Celltech reasonable
quantities of such training, sales and technical literature and materials
relating to the Product as Orphan Medical may have prepared, including, without
limitation, the materials set forth on Appendix H hereto, and shall make
available copies of promotional artwork it may have. The cost of printing
quantities or customizing materials shall be borne by Celltech. Orphan Medical
shall provide the same to Celltech in electronic format. Orphan Medical shall
also provide Celltech with copies of all post-marketing studies and updates to
its regulatory filings that it provides to the FDA. Celltech shall use such
materials solely as provided under this Agreement. Orphan Medical retains all
right, title and interest in and to such materials subject, however, to the
terms of this Agreement.
6.6 Marketing Reports. (a) At least one hundred eighty (180) days prior to
the anticipated date of the First Commercial Sale, Celltech shall provide Orphan
Medical with sales and marketing plans for the Major European Countries for the
balance of the Contract Year in which such First Commercial Sale occurs;
provided, however, that in respect of Italy, Celltech shall deliver a proposal
to appoint a sub-licensee within one hundred eighty (180) days prior to the
anticipated date of the First Commercial Sale, and shall provide Orphan Medical
with a sales and marketing plan for Italy as soon as practicable after executing
an agreement with a sub-licensee relating to distribution of the Product in
Italy.
(b) By 31 January of each Contract Year following the year in which the
First Commercial Sale occurs, Celltech shall provide Orphan Medical with a
written report summarizing its sales and marketing activities in the Major
European Countries for the immediately preceding year, and sales and marketing
plans in the Major European Countries for the current Contract Year.
Simultaneously with delivery of each marketing report described in this Section
6.6(b), Celltech shall deliver reports as to the sales and marketing activities
in the Minor European Countries (for the same periods as provided for the Major
European Countries), provided that such reports need only outline the most
important aspects and plans of the sales and marketing in such Minor European
Countries. Each report shall include the potential market for the Product in all
countries of the Territory where Registration has been achieved and is
anticipated during the Contract Year in question, and other information that
Celltech deems helpful to determine the market for Product and the proper
marketing methods for the same.
6.7 Cooperation. Orphan Medical and Celltech agree to maintain open
communications relating to the ongoing performance of this Agreement to ensure
joint understanding of current or new issues, data, and information. Orphan
Medical shall answer reasonable technical or marketing questions Celltech may
submit to Orphan Medical. Celltech acknowledges that Orphan Medical does not
have international marketing and regulatory staff for preparation of regulatory
submissions and marketing plans. Orphan Medical and Celltech agree to provide
each other copies of market research study protocols and subsequent results
20
therefrom, which studies are designed to generate qualitative and/or
quantitative data pertaining to the Product, subject to any Third Party rights
therein.
6.8 Named Patient Basis Sales. (a) Orphan Medical has contracted with ** to
distribute the Product on a Named Patient Basis until the Product receives
Marketing Authorization within the Territory. On or prior to the Effective Date,
Orphan Medical shall provide to Celltech marketing and sales information to
which Orphan Medical has rights under the ** agreement that has been collected
by ** .
(b) Promptly after the Effective Date, the Steering Committee shall
consider whether Orphan Medical should terminate Orphan Medical's contract with
** with respect to the Territory and cause ** to discontinue sales of the
Product within the Territory, in which event Celltech would then be granted the
right, subject to any necessary regulatory approvals, to distribute the Product
on a Named Patient Basis in the Territory.
(c) Upon determination by the Steering Committee to proceed according
to the arrangement described in Section 6.8(b) above, the parties shall in good
faith negotiate and establish the terms and conditions which shall apply to such
arrangement, including, the price at which the Product will be sold. If **
continues to distribute the Product on a Named Patient Basis, then the parties
shall in good faith negotiate and establish a royalty amount to be paid to
Celltech on the revenues received by Orphan Medical from ** on Named Patient
Basis Product sales.
ARTICLE VII
PURCHASE AND DELIVERY OF PRODUCT
7.1 Forecasts. Celltech will provide Orphan Medical with rolling five (5)
calendar quarter forecasts ("COMMERCIAL FORECASTS") of its anticipated
requirements of Product to assist Orphan Medical to adequately plan for and meet
Celltech's requirements for each country in the Territory. No later than one
hundred twenty (120) days prior to the anticipated date of the First Commercial
Sale, Celltech shall provide Orphan Medical with the initial Commercial Forecast
which shall cover the five (5) calendar quarters commencing with and including
the calendar quarter in which the First Commercial Sale is expected to occur.
Each Commercial Forecast after the first (i) shall cover the five (5) calendar
quarters commencing with the second calendar quarter of the preceding Commercial
Forecast (ii) shall be delivered to Orphan Medical at least one hundred twenty
(120) days prior to the first day of such five (5) calendar quarter period and
(iii) without Orphan Medical's written consent may not forecast an aggregate
quantity of Products that is more than three (3) times the aggregate quarterly
forecast in the preceding Commercial Forecast. The quantities of Product for the
first calendar quarter of each Commercial Forecast shall be firm and Celltech
shall be obligated to submit purchase orders in respect thereof. The quantities
of Product for the remaining four (4) calendar quarters in each Commercial
Forecast shall be non-binding estimates based on Celltech's reasonable business
judgment. Celltech's non-binding estimate for the first Contract Year in which
the First Commercial Sale is expected to occur is provided in Appendix F hereto.
21
7.2 Pricing. Subject to Sections 2.1(b) and 2.1(d) hereto, during the Term
of this Agreement, Celltech shall purchase from Orphan Medical all of its
requirements of the Product in the Territory for the Transfer Price, plus any
applicable customs duties or VAT.
7.3 Consignment of Product.
(a) General. Within a reasonable period in advance of the anticipated
date of the First Commercial Sale, to the extent importation is then permitted
under applicable law, Orphan Medical shall transfer to Celltech's specified
facility in England at least ** of the Product (such Product, together with
subsequent inventory of the Product to be held by Celltech as baillee pursuant
to the terms of this Section 7.3, shall be "CONSIGNMENT INVENTORY"). Orphan
Medical shall thereafter transfer to Celltech such quantities of the Product as
the parties, with input from the Steering Committee, may subsequently agree in
order that the amount of Consignment Inventory plus the amount of finished goods
inventory maintained by Celltech shall equal approximately the next six (6)
months anticipated demand for the Product in the Territory; provided, that,
Orphan Medical shall in no event be required to transfer, and Celltech shall in
no event be required to hold Consignment Inventory of more than one and one-half
full lot quantities ** without its prior written consent. Celltech shall hold
the Consignment Inventory as baillee for and on behalf of Orphan Medical.
Celltech hereby acknowledges and agrees that Celltech's holding the Consignment
Inventory in its premises pursuant to the terms of this Section 7.3 shall
constitute a gratuitous bailment and not a bailment for valuable consideration
governed by the U.K. Supply of Goods and Services Xxx 0000. The Product in the
Consignment Inventory will at all times remain under the control of Celltech and
be held for and on behalf of Orphan Medical by Celltech as baillee until such
time as the Product is removed from the Consignment Inventory by Celltech in
fulfillment of a purchase order placed by Celltech in accordance with Section
7.4 hereof or repossessed by Orphan Medical or returned by Celltech in
accordance with Section 7.3(e)(iii) hereof.
(b) Prices and Payment.
(i) Celltech may remove Product from Consignment Inventory
from time to time on a first-expired-first-out basis (subject, however,
to Section 7.9) once per month upon submission of a purchase order
pursuant to Section 7.4. Whenever an item of Consignment Inventory is
removed from the Consignment Inventory, Celltech shall inform Orphan
Medical in writing specifying the quantity removed, the batch/lot
number of each bottle of the Product removed and the expiration date
thereof. Orphan Medical shall thereupon forward an invoice for such
removed items of the Consignment Inventory, dated as of the date of
removal. Title to, ownership and risk of loss of each such item shall
be deemed to pass to Celltech as from the moment said item is
physically removed from the Consignment Inventory. The Transfer Price
for such item, including duties and VAT, if any, shall become due and
payable by Celltech by the last day of the first full calendar month
after the date of removal in accordance with provisions of Section 7.7
hereof.
(ii) Celltech agrees to act as the fiscal representative of
Orphan Medical for purposes of customs, duties and VAT, and Celltech
shall be solely
22
responsible for payment of all such duties and taxes to the appropriate
U.K. authorities when due.
(iii) Celltech shall pay (or reimburse Orphan Medical for) all
freight charges, insurance in transit, taxes (including import VAT) and
import duties incurred in connection with the transfer of the
Consignment Inventory from Orphan Medical's designated supplier in the
U.S. to Celltech's facilities.
(c) Storage and Risk.
(i) Celltech will at all times store the Consignment Inventory
in premises which have been certified by the Medicines Healthcare
Regulatory Authority and any other relevant Regulatory Authority as
suitable for U.K. Schedule 4, Part 1 controlled substances and as
otherwise provided in Section 7.11.
(ii) In the event that any item of Consignment Inventory is
lost or damaged through no fault of Orphan Medical, Celltech shall
indemnify Orphan Medical in respect of any such loss or damage by
paying the Transfer Price for each item lost or damaged, plus duties
and VAT, if any.
(iii) Celltech will store the Consignment Inventory separately
from any goods that belong to Celltech or any Third Party and shall
clearly xxxx and identify the Consignment Inventory as being held on
behalf of Orphan Medical.
(iv) Celltech shall at its expense at all times maintain
adequate insurance covering any risk of loss or damage to the
Consignment Inventory for its full Transfer Price and naming Orphan
Medical as sole loss payee and shall forward a copy of evidence of such
insurance and any amendment thereto to Orphan Medical.
(d) Records. Celltech shall maintain full and accurate records showing
the quantity of Consignment Inventory, the lot identification, expiration dates
and such other information as is necessary to enable a Third Party to identify
that each item of Consignment Inventory forms part of the Consignment Inventory
and is being held on behalf of Orphan Medical under the supervision and control
of Celltech.
(e) Termination.
(i) The bailment created pursuant to this Section 7.3 shall
terminate with immediate effect on the last day of the Term of this
Agreement.
(ii) Orphan Medical may also terminate the bailment created
pursuant to this Section 7.3 with immediate effect, by giving written
notice to that effect to Celltech, if any liquidation, receivership,
administration or other insolvency procedure is commenced or threatened
with respect to Celltech or any entity which has control over Celltech.
Orphan Medical may also terminate this
23
Agreement if any action is taken or threatened which might jeopardise
Orphan Medical's rights in the Consignment Inventory.
(iii) Termination of the bailment for whatever reason shall be
without prejudice to the accrued rights of a party. Celltech shall not
thereafter use any items of Consignment Inventory or remove any items
from Consignment Inventory without the specific prior written consent
of Orphan Medical. Upon such termination, Celltech's obligations under
this Section 7.3 shall continue in full force and effect until such
time as Orphan Medical has repossessed the Consignment Inventory as
provided in paragraph (f) or Celltech has returned the Consignment
Inventory by shipment to Orphan Medical Ex Works (Incoterms 2000) at
the Celltech facility at which it is kept.
(f) Return of Consignment Inventory. Orphan Medical shall be entitled
to repossess the Consignment Inventory immediately upon termination of the
bailment or prior to termination if Orphan Medical determines in its sole
discretion that repossession is necessary for any reason. Celltech, or any
person managing Celltech's activities, shall give any duly authorised
representative or agent of Orphan Medical such access to Celltech's premises as
are required for purposes of repossessing the Consignment Inventory.
(g) Periodic Review. At any time and from time to time, either party
may request the other party to discuss and consider in good faith changes in, or
termination of, the arrangements for Consignment Inventory, whereupon the
parties shall be mutually obligated to negotiate in good faith as to such
matters.
7.4 Purchase Orders.
(a) Content. All purchase orders placed by Celltech shall be in writing
and shall state the quantity of Product, the delivery date, shipping information
(except when the Product is to be drawn from Consignment Inventory
pursuant to Section 7.3) and such other similar information as may be reasonably
requested by Orphan Medical.
(b) Lead Time. Unless otherwise agreed by Orphan Medical, all purchase
orders must be delivered to Orphan Medical at least one hundred twenty (120)
days in advance of the requested delivery date(s) (except when the Product is to
be drawn from Consignment Inventory pursuant to Section 7.3).
(c) Number of Orders. Celltech may submit only one purchase order per
quarter for Product to be filled by Orphan Medical from other than Consignment
Inventory and may submit one purchase order per month for Product to be drawn
from Consignment Inventory.
(d) Maximum Quantities. Orphan Medical may in its sole discretion
reject purchase orders that specify a quantity of Product in respect of a
particular calendar quarter in excess of (A) ** of the firm Commercial Forecast
for such quarter if such firm Commercial Forecast is more than ** greater than
the most recent non-binding Commercial Forecast for such quarter and (B) ** of
the firm Commercial Forecast if such firm Commercial Forecast is less than **
greater than the most recent non-binding Commercial Forecast for such quarter;
provided, however, that the maximum quantities that Orphan Medical shall be
required to deliver
24
in a particular calendar quarter determined in accordance with clauses (a) and
(B) above shall be reduced by the quantity of Product Orphan Medical shall have
delivered in the preceding calendar quarter pursuant to paragraph (e) below in
excess of the maximum quantities it was required to provide in such preceding
calendar quarter as determined pursuant to this paragraph (d).
(e) Miscellaneous. Orphan Medical shall use its Commercially Reasonable
Efforts to fill purchase orders that exceed the quantity limits provided in
paragraph (d) above or that are delivered to Orphan Medical less than one
hundred twenty (120) days in advance of the requested delivery date(s) as
required by paragraph (b) above in respect of purchase orders to be filled by
Orphan Medical from other than Consignment Inventory. No accepted order may be
modified or canceled by either party except as agreed in writing by the parties.
Celltech's orders (including mutually agreed change orders) shall be subject to
the provisions of this Agreement, and any terms or conditions contained therein
that conflict with the terms of this Agreement shall be deemed excluded.
7.5 Delivery From Other Than Consignment Inventory. Where purchase orders
are to be filled by Orphan Medical from other than Consignment Inventory, Orphan
Medical shall deliver the Products no later than five (5) business days after
the date(s) indicated in the applicable purchase order and no earlier than five
(5) business days prior to such specified date(s). Orphan Medical shall provide
prompt written notice to Celltech in the event of any anticipated delays in the
scheduled delivery date and shall cooperate with Celltech to reschedule delivery
at the earliest possible date so as to minimize the impact on Celltech,
provided, however, the foregoing shall in no way modify or mitigate Orphan
Medical's obligation to supply Product properly ordered in accordance with this
Agreement or Celltech's rights and remedies under this Agreement in respect of
any failure to timely supply, including Celltech's right to assert its remedies
in respect of a breach hereof and Celltech's rights to appoint a Third Party
manufacturer in accordance with Section 2.1(b) or to terminate this Agreement in
accordance with Section 14.2(b). Orphan Medical shall send Celltech on the date
of shipment an invoice and shipping notice, in a format to be agreed upon by the
parties. All Products shall be properly packaged and shipped in accordance with
the Product Specifications and instructions included in the applicable purchase
order. Unless otherwise agreed in writing by Orphan Medical, all deliveries of
the Product from other than Consignment Inventory shall be made Ex Works
(Incoterms 2000) Orphan Medical's designated supplier in the U.S.
7.6 Transfer Price Variations. At least one hundred twenty (120) days prior
to the end of the 2004 Contract Year and each Contract Year thereafter, Orphan
Medical shall notify Celltech of the Transfer Price for the Product for the next
Contract Year. Orphan Medical shall reserve the right to increase transfer
pricing on an annual basis for any increases in the costs identified in Appendix
G imposed on Orphan Medical by its suppliers. Orphan Medical shall reduce
transfer pricing on an annual basis for any decreases in the costs referenced in
the preceding sentence and for any other reductions in the components of Orphan
Medical's standard manufacturing costs as listed on Appendix G (including any
reductions that may result from decreases in the required fill volume resulting
from improvements in the PIBA). Each such notice shall include all necessary
documentation reasonably required for Celltech to verify the adjusted Transfer
Price; provided, however that notwithstanding Orphan Medical's delivery of such
documentation, Celltech shall be permitted to conduct inspections and audits
during
25
reasonable business hours, to the extent necessary to verify the Transfer Price
and adjustments thereto. Such inspections and audits shall be conducted at the
request (not to be made more than once per Contract Year) and expense of
Celltech by an independent Certified Public Accountant appointed by Celltech.
Such Certified Public Accountant shall undertake a confidentiality obligation to
Orphan Medical permitting it to disclose only to Celltech the amount of the
Transfer Price and adjustments and the information required to verify such
Transfer Price and adjustments, and no other information.
7.7 Payment Terms.
(a) General. Unless otherwise agreed by Orphan Medical in writing,
payments for the Product shall be paid net on the last day of the first full
calendar month following the date of the invoice therefor, provided that no
invoice shall be dated prior to the date of actual shipment of the Product
covered by the invoice or removal of the Product from Consignment Inventory. All
payments shall be made in United States Dollars by wire transfer to a U.S. bank
designated by Orphan Medical at least five (5) days prior to the date of
payment. Any overdue payment from Celltech to Orphan Medical under this
Agreement shall accrue interest at the rate of 3/4% per month or the highest
rate allowed by law, whichever is less. Orphan Medical shall have the right to
recover its reasonable collection costs and expenses (including attorneys' fees)
for late payments. Notwithstanding the above, in the event Celltech disputes the
amount, or any portion thereof, of any invoice submitted to it by Orphan
Medical, Celltech shall promptly notify Orphan Medical of the amount and nature
of the disagreement. Before relying on the provisions of Section 15.2 hereof,
the parties first shall promptly attempt to resolve such disagreement in good
faith in a manner provided in Section 7.7(b) and Celltech shall make payments
with respect to disputed invoices as provided in such Section.
(b) Order and Invoice Non-Conformance.
(i) In the event Celltech disputes whether Product supplied by
Orphan Medical conforms to an order placed for such Product pursuant to
Section 7.4 with respect to quantity where purchase orders are to be
filled by Orphan Medical from other than Consignment Inventory,
Celltech shall provide notice to Orphan Medical in accordance with the
provisions relating to apparent non-conformities of Product set forth
in Section 7.12. In the case of any such non-conformity which results
from delivery of less Product than ordered, Orphan Medical shall supply
additional Product promptly. In such case, Celltech shall pay for the
quantity actually received in accordance with the provisions of Section
7.7(a). In the case of any such non-conformity which results from
delivery of more Product than ordered, Celltech may elect to (A) add
such excess Product to Consignment Inventory or, if Orphan Medical
shall so specify, return to Orphan Medical, at Orphan Medical's
expense, any Product in excess of the quantity of Product ordered in
accordance with the procedures for return set forth in Section 7.12, or
(B) accept any Product in excess of the quantity ordered as against
future orders of Product. In such latter case, Celltech shall pay for
the quantity actually received and accepted in accordance with the
provisions of Section 7.7(a) unless otherwise agreed.
26
(ii) In the event that Celltech disputes any invoice due to
the price at which any quantity of Product is invoiced as a result of
the parties being unable to reach agreement with respect to the
calculation of the Transfer Price, Celltech shall be obligated to pay
the undisputed amount of such invoice in full in accordance with the
provisions of Section 7.7(a) pending resolution of the dispute pursuant
to Section 15.2.
(iii) In the event that Celltech disputes any invoice due to
non-conformance of the Product supplied by Orphan Medical with the
Product Specifications, such dispute shall be resolved in accordance
with Sections 7.12 and 7.13 of this Agreement. Pending resolution of
such dispute, Celltech shall not be obligated to pay the amount of such
invoice that relates to Product alleged to be non-conforming. Upon
resolution of any such dispute in favor of Orphan Medical, Celltech
shall pay the unpaid balance of such invoice within ten (10) days of
such resolution.
7.8 Short Supply Allocation. If Orphan Medical is unable to supply all of
Celltech's orders for Product hereunder in a timely manner, Orphan Medical shall
equitably allocate its available sources and supplies among Celltech, Orphan
Medical and Orphan Medical's other partners (distributors, licensees, agents,
etc.) and internal needs, taking into consideration the respective requirements
of each of the parties during a reasonable time period prior to allocation and
their requirements during the allocation period, provided, however, the
foregoing shall in no way modify or mitigate Orphan Medical's obligation to
supply Product properly ordered in accordance with this Agreement or Celltech's
rights and remedies under this Agreement in respect of any failure to timely
supply, including in respect of a breach hereof and Celltech's rights to appoint
a Third Party manufacturer in accordance with Section 2.1(b) or to terminate
this Agreement in accordance with Section 14.2(b).
7.9 Product Expiration. (a) All Product supplied by Orphan Medical from
other than Consignment Inventory shall have a minimum expiration dating of
thirty-six (36) months at the time of its delivery Ex Work's Orphan Medical's
designated supplier pursuant to Section 7.5.
(b) The Product delivered in the initial transfer of Consignment
Inventory from Orphan Medical to Celltech made in accordance with the first
sentence of Section 7.3(a) shall have minimum expiration dating of forty-two
(42) months at the time it is delivered to Celltech's facility in England.
Thereafter, all Product delivered by Orphan Medical as Consignment Inventory
pursuant to Section 7.3 shall have minimum expiration dating of thirty-six (36)
months at the time it is delivered to Celltech's facility in England. Celltech
shall not be required to draw out of Consignment Inventory any Product with
expiration dating of less than twenty-four (24) months on the date that it is
drawn out of Consignment Inventory; provided, however, that if the Consignment
Inventory shall at any time contain Product with less than 24-month's expiration
dating, Celltech shall use Commercially Reasonable Efforts to sell such
Consignment Inventory, and provided, further, however, that if Celltech shall
not be able to sell such short-dated Consignment Inventory, Celltech shall, at
Orphan Medical's direction, either return such Product to Orphan Medical Ex
Work's Celltech's facility in England or destroy the Product and provide the
certification described in Section 7.12, and in either such event Orphan
27
Medical shall reimburse Celltech for all amounts paid by Celltech pursuant to
Sections 7.3(b)(ii) and (iii).
(c) In the event the applicable Regulatory Authority grants an
expiration date of less than thirty-six (36) months, Orphan Medical and Celltech
shall negotiate in good faith a reasonable minimum expiration, taking into
account the differing expiration dates set forth herein for Product which is and
Product which is not drawn out of Consignment Inventory.
(d) Celltech shall not sell any Product beyond its stated expiration
date.
7.10 Certificate of Analysis. With each delivery of the Product into
Consignment Inventory pursuant to Section 7.3 or to Celltech from other than
Consignment Inventory, Orphan Medical shall provide to Celltech (i) a
Certificate of Analysis and Certificate of Conformity confirming that the
Product has been manufactured in accordance with cGMP and the Product
Specifications, (ii) a copy of all batch documentation from the Product
manufacturer for the first three (3) batches of Product delivered to Celltech
and (iii) a copy of the annual stability test report, provided that the
provision of the certificates and other documents listed in (i) - (iii) above
shall not release Celltech from any of its obligations hereunder, including,
without limitation, its obligation to conduct all necessary release testing to
ensure that the Products distributed in the Territory comply with all applicable
regulatory requirements in the Territory.
7.11 Storage. Celltech shall at its own expense maintain adequate and
suitable storage facilities for the storage of Consignment Inventory and Product
delivered to Celltech from other than Consignment Inventory, in each case in
accordance with cGMP, the Marketing Authorizations, and all applicable laws and
regulations. Orphan Medical or its representative shall have the right no more
than twice per calendar year to inspect, during normal business hours, such
storage facilities upon sixty (60) days prior written notice.
7.12 Rejection of Shipments For Product Non-Conformance. If Celltech
rejects a shipment from other than Consignment Inventory on the determination
that such shipment of Product fails to conform to the purchase order therefor or
a shipment of Consignment Inventory or Product delivered to Celltech from other
than Consignment Inventory or drawn by Celltech out of Consignment Inventory on
the grounds that it fails to conform to the Product Specifications, Celltech
shall give written notice of such rejection to Orphan Medical within fifteen
(15) days after receipt thereof, in the case of apparent non-conformance, and
sixty (60) days of the receipt of definitive test results obtained pursuant to
Section 7.13 in the case of non-conformance established by such tests. Such
notice of rejection shall specify the manner in which the Product fails to
conform to the relevant purchase order, or otherwise fails to conform to the
Product Specifications. If Celltech fails to provide Orphan Medical such notice
in respect of Product delivered to Celltech pursuant to a purchase order,
whether drawn from Consignment Inventory or otherwise, within fifteen (15) or
sixty (60) days, as the case may be, of the date of delivery, the Product shall
be deemed accepted by Celltech; provided, however, that such deemed acceptance
shall not (i) impair Celltech's right to reject shipment or recover damages in
respect of any non-conformance that is not apparent and cannot be determined by
such tests or (ii) reduce, diminish or alter Celltech's rights to
indemnification as specified in Article IX hereof or to terminate this Agreement
in accordance with Section 14.2(b). If Celltech expects to make a claim against
Orphan Medical in accordance with this Section 7.12, Celltech shall not dispose
or
28
allow the disposal of the Product in question without the express written
authorization and instructions of Orphan Medical. Any such instructions from
Orphan Medical, or Celltech's compliance therewith, shall not relieve Celltech
of its obligation to dispose of any Product in accordance with all applicable
laws and regulations in the relevant country in the Territory. Celltech shall
not return any rejected Product to Orphan Medical without a Return Material
Authorization ("RMA") from Orphan Medical. Orphan Medical shall promptly issue a
RMA for any reasonably rejected Product, provided, however, appropriate samples
may be retained by Celltech as evidence of the basis for such rejection by
Celltech. Proof of destruction or disposal shall be certified in writing to
Orphan Medical by an officer of Celltech. Within thirty (30) days of receipt of
a statement detailing and documenting all of Celltech's costs and expenses
associated with Orphan Medical's delivery of non-conforming Products, including
without limitation, any payments made or other Indemnification Amounts arising
out of Claims and the return, destruction or disposal of such Product pursuant
to this Section 7.12, Orphan Medical shall reimburse Celltech for all such
amounts. Any disputes between the parties relating to such reimbursement amounts
shall be resolved in accordance with the procedures set forth in Section 15.2
7.13 Testing of Product Upon Receipt. Celltech shall, as soon as practical
after receipt of Product into Consignment Inventory or from other than
Consignment Inventory, examine the Product for any apparent non-conformance and
carry out or have carried out, routine laboratory testing and other chemical
analysis of the Product as required by the relevant Marketing Authorizations
and/or Regulatory Authority(ies). Celltech shall promptly notify Orphan Medical
if such examination or testing establishes the basis to reject the Product for
non-conformance. Any such notice shall identify the specific claims of
non-conformance and include copies of relevant test results or other materials
indicating such non-conformance. Upon receipt of a notification of
non-conformance, Orphan Medical and Celltech shall compare test results obtained
during release testing of the Product by Orphan Medical to the results Celltech
obtained during acceptance testing to evaluate the potential cause of
discrepancy. If Orphan Medical confirms such non-conformity, it shall promptly
so notify Celltech. If Orphan Medical does not confirm such non-conformity, it
shall promptly so notify Celltech, and the parties shall submit the disputed
Product shipment for testing to an independent testing laboratory or other
independent Third Party expert mutually acceptable to the parties.
Notwithstanding Section 15.2, the findings of the testing laboratory or Third
Party expert shall be binding on the parties. The expenses of such testing shall
be borne by Orphan Medical if the non-conformity is confirmed, and otherwise by
Celltech. Without limiting Celltech's other remedies as herein provided, Orphan
Medical shall promptly replace properly rejected Product. Celltech shall return
such Product or, if requested by Orphan Medical, destroy the Product and provide
the certification described in Section 7.12.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Orphan Medical Warranties. Orphan Medical represents and warrants to
Celltech that:
29
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware, U.S.A. and has the corporate
power to own its assets and properties and to carry on its business as now being
and heretofore conducted.
(b) It has all requisite power and authority (corporate and otherwise)
to enter into this Agreement and it has duly authorized, by all necessary
action, the execution and delivery hereof by the officer or individual whose
name is signed on its behalf below. Orphan Medical's execution and delivery of
this Agreement does not and will not conflict with or result in a breach of or a
default under its organizational documents or any agreement, instrument, order,
law or regulation applicable to it or by which it or the Product may be bound.
This Agreement has been duly and validly executed and delivered by Orphan
Medical and constitutes Orphan Medical's valid and legally binding obligation,
enforceable against Orphan Medical in accordance with its terms, except as
enforcement may be limited by laws of bankruptcy or insolvency or other laws of
general application relating to or affecting the enforcement of creditor's
rights and general equitable principles.
(c) At the time of its shipment to Celltech, each order of Product
shall have been manufactured, stored and shipped in accordance with cGMP, the
Product Specifications and the Marketing Authorizations and other applicable
laws and regulations, shall be in compliance with the Marketing Authorizations,
and shall not be adulterated or misbranded within the meaning of the United
States Food, Drug and Cosmetics Act, as in effect at the time of shipment;
(d) At the time of its shipment to Celltech, each order of the Product
shall conform to the Product Specifications until the expiration of the shelf
life approved by the Regulatory Authorities.
(e) Patent Rights, Trademarks and Other Intellectual Property Rights.
(i) Orphan Medical has good title and ownership or rights to
the Licensed Intellectual Property free and clear of all liens. To
Orphan Medical's actual knowledge, it has all intellectual property
rights necessary for (A) the manufacture of the Product by Orphan
Medical and the distribution, marketing, promotion and sale by Celltech
of the Product in the Territory in accordance with the terms of this
Agreement and (B) the grant by Orphan Medical to Celltech of the rights
granted under this Agreement.
(ii) Schedule 8.1(e)(ii) hereto contains a true and complete
list of all Patent Rights in the Territory and all Trademarks and all
other intellectual property rights of Orphan Medical relating to the
Product in the Territory, indicating for each whether it is registered
or is the subject of a pending application with any patent and/or
trademark office with jurisdiction in the Territory, and all licenses
and other contracts and similar rights relating thereto.
(iii) Except as set forth on Schedule 8.1(e)(iii), to Orphan
Medical's actual knowledge, the Product as manufactured and delivered
to Celltech by Orphan Medical for distribution in the Territory
pursuant to this Agreement, and Celltech's use of the Licensed
Intellectual Property in the Territory as
30
contemplated hereby, does not and will not infringe or conflict with
any intellectual property rights or trade secrets of any Person.
(f) Contracts; No Default.
(i) Except for those contracts described in Section 6.8 or set
forth on Schedule 8.1(f)(i) and Schedule 8.1(e)(ii) and except for this
Agreement, as of the date hereof, there are no material contracts,
agreements, understandings, arrangements or commitments, written or
oral, including without limitation, manufacturing, supply, sales
agency, sales representative, distributor, dealer, license, supplier,
wholesaler, or similar contracts or agreements ("CONTRACTS") of Orphan
Medical relating to the Product in the Territory.
(ii) Except as set forth on Schedule 8.1(f)(ii), Orphan
Medical and, to Orphan Medical's actual knowledge, each other party to
Orphan Medical's Contracts referenced in clause (i) above (other than
Celltech) has performed in all material respects, and is now performing
in all material respects, its obligations under, and is not in material
default (and would not by the mere lapse of time or the giving of
notice or both be in default) under, or in material breach or violation
of any of such Contracts; nor has Orphan Medical received notice of any
asserted claim of a default by any other party thereto under, or a
breach or violation by such other party of any of such Contracts.
(g) Actions.
(i) Except as set forth on Schedule 8.1(g)(i), there are no
Claims pending or, to Orphan Medical's actual knowledge, threatened
against Orphan Medical before any Regulatory Authority that (A)
question or challenge the validity of this Agreement or any action
taken or proposed to be taken by Orphan Medical pursuant hereto or in
connection with the transactions contemplated hereby, or (B) relate to
the Product or would if adversely determined, singly or in the
aggregate, prohibit or materially impair Orphan Medical's or Celltech's
ability to perform its obligations under this Agreement.
(ii) There are no outstanding judgments, orders, decrees,
writs, awards, stipulations, or injunctions of any Regulatory Authority
against or affecting the Product or Orphan Medical with respect to the
Product or which would if adversely determined, singly or in the
aggregate, prohibit or materially impair Orphan Medical's or Celltech's
ability to perform its obligations under this Agreement.
(h) Approvals. Except as contemplated by this Agreement or set forth on
Schedule 8.1(h) or as shall already have been made, obtained or given, no
approval of any Regulatory Authority or other Person is required to be made,
obtained or given by or with respect to Orphan Medical or the Product in
connection with the execution or delivery by Orphan Medical of this Agreement,
the performance by it of its obligations hereunder or the consummation by it of
the transactions contemplated hereby.
31
8.2 Disclaimer. EXCEPT AS SET FORTH IN THIS ARTICLE VIII, ORPHAN MEDICAL
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT WITH RESPECT TO THE PRODUCT OR CELLTECH'S SALE AND DISTRIBUTION
THEREOF IN THE TERRITORY. The warranties given by Orphan Medical are for the
sole benefit of Celltech and Celltech shall not extend such warranties to any
customer thereof or any Third Party. This provision does not affect the right of
any patient to pursue legal remedy in the event Orphan Medical provides Product
that is adulterated or misbranded or if Product does not meet Product
Specifications. Except as provided in Section 2.1, nothing in this Agreement
shall be construed as, and Orphan Medical expressly disclaims, any warranty or
agreement to furnish any manufacturing information beyond that required to
obtain Registrations for the Product in the Territory. Celltech agrees that as
between Celltech and Orphan Medical, Celltech alone shall be liable, to the
exclusion of Orphan Medical, for the breach of any warranties given by Celltech,
its Subdistributors or its Sublicensees to customers or others regarding the
Product, provided, however, nothing herein shall reduce, diminish or alter
Celltech's rights as herein provided including its right to assert claims
against Orphan Medical in respect of the same facts that form or might form the
basis of Claims against Celltech by its Subdistributors or Sublicensees and its
or their customers.
8.3 Celltech Warranties. Celltech represents and warrants to Orphan Medical
that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of England and has the corporate power to own its assets
and properties and to carry on its business as now being and heretofore
conducted.
(b) It has all requisite power and authority (corporate and otherwise)
to enter into this Agreement and it has duly authorized, by all necessary
action, the execution and delivery hereof by the officer or individual whose
name is signed on its behalf below. Celltech's execution and delivery of this
Agreement does not and will not conflict with or result in a breach of or a
default under its organizational documents or any agreement, instrument, order,
law or regulation applicable to it or by which it or the Product may be bound.
This Agreement has been duly and validly executed and delivered by Celltech and
constitutes Celltech's valid and legally binding obligation, enforceable against
Celltech in accordance with its terms, except as enforcement may be limited by
laws of bankruptcy or insolvency or other laws of general application relating
to or affecting the enforcement of creditor's rights and general equitable
principles.
(c) It shall and shall cause its Subdistributors, Sublicensees and
Third Party manufacturers to manufacture (if applicable), store, package, label,
promote, market, sell and distribute the Product in compliance with this
Agreement, the Registrations and all applicable laws and regulations in the
Territory.
(d) Celltech shall not, and shall cause its Subdistributors,
Sublicensees and Third Party manufacturers to not knowingly, infringe any Third
Party patents, copyrights, trademarks, trade secrets or other Third Party
intellectual property or proprietary rights in the performance of its
obligations hereunder.
32
(e) Contracts; No Default.
(i) Except for those Contracts set forth on Schedule 8.1(e)(i)
and except for this Agreement, as of the date hereof, there are no
material Contracts of Celltech relating to the Product in the
Territory.
(ii) Except as set forth on Schedule 8.1(e)(ii), Celltech and,
to Celltech's actual knowledge, each other party to Celltech's
Contracts referenced in clause (i) above (other than Orphan Medical)
has performed in all material respects, and is now performing in all
material respects, its obligations under, and is not in material
default (and would not by the mere lapse of time or the giving of
notice or both be in default) under, or in material breach or violation
of any of such Contracts; nor has Celltech received notice of any
asserted claim of a default by any other party thereto under, or a
breach or violation by such other party of any of such Contracts.
(f) Actions.
(i) Except as set forth on Schedule 8.1(f)(i), there are no
Claims pending or, to Celltech's actual knowledge threatened against
Celltech before any Regulatory Authority that (A) question or challenge
the validity of this Agreement or any action taken or proposed to be
taken by Celltech pursuant hereto or thereto or in connection with the
transactions contemplated hereby, or (B) would if adversely determined,
singly or in the aggregate, prohibit or materially impair Orphan
Medical's or Celltech's ability to perform its obligations under this
Agreement.
(ii) There are no outstanding judgments, orders, decrees,
writs, awards, stipulations, injunctions of any Regulatory Authority
against or affecting Celltech which would if adversely determined,
singly or in the aggregate, prohibit or materially impair Celltech's
ability to perform its obligations under this Agreement.
(g) Approvals. Except as contemplated by this Agreement or set forth on
Schedule 8.2(g) or as shall already have been made, obtained or given, no
approval of any Regulatory Authority or other Person is required to be made,
obtained or given by or with respect to Celltech or the Product in connection
with the execution or delivery by Celltech of this Agreement, the performance by
it of its obligations hereunder or the consummation by it of the transactions
contemplated hereby.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Orphan Medical. Subject to Section 9.2, Orphan
Medical shall indemnify and hold harmless Celltech and its directors, officers,
employees and agents from and against all claims, disputes, actions,
arbitrations, mediations, litigations, proceedings, suits and governmental
investigations brought by a Third Party and any appeal therefrom (the "CLAIMS")
and all liabilities, damages, losses, costs and expenses (including reasonable
33
attorneys' fees and expenses in respect of Claims and to enforce rights to
indemnification as herein provided ("INDEMNIFICATION AMOUNTS")) arising out of
(i) a breach by Orphan Medical of any representation, warranty or covenant
provided in this Agreement, including, without limitation, the representations
and warranties set forth in Section 8.l, (ii) an allegation that bodily injury
(including death) or tangible personal property damage was caused by, resulted
from or arose out of the use of the Product for a Licensed Indication by
whomsoever such Product was sold (including Celltech, its Subdistributors and
Sublicensees) and regardless of the legal theory on which such Claim is based,
except, however, where such bodily injury and/or property damage is due to (a) a
circumstance described in Section 9.2(i) or 9.2(iii) hereof or (b) failure of a
Third Party manufacturer appointed by Celltech pursuant to Section 2.1 to
manufacture, store or ship the Product in accordance with cGMP, the Marketing
Authorizations and other applicable laws and regulations or due to the action or
inaction of such Third Party manufacturer which causes the Product to be
adulterated or misbranded within the meaning of the United States Food, Drug and
Cosmetic Act, as in effect at the time of shipment; and (iii) negligence, gross
negligence or willful misconduct of or attributable to Orphan Medical, its
sublicensees (other than Celltech, its Subdistributors, Sublicensees or Third
Party manufacturers), contractors, manufacturers and its or their directors,
officers, agents, employees, consultants or clinical investigators in connection
with the manufacture, storage or supply of API and/or the Product.
9.2 Indemnification by Celltech. Celltech agrees to indemnify, defend and
hold harmless Orphan Medical and its directors, officers, employees and agents
from and against all Claims and Indemnification Amounts arising out of (i) a
breach by Celltech of any representation, warranty or covenant provided in this
Agreement, (ii) an allegation that bodily injury (including death) or tangible
personal property damage was caused by, resulted from or arose out of the
Products sold by Celltech, its Subdistributors, Sublicensees or Third Party
manufacturers that were used other than for a Licensed Indication, regardless of
the legal theory on which such Claim is based, except, however, where such
bodily injury and/or property damage is due to a circumstance described in
Sections 9.1(i) and 9.1(iii) hereof, (iii) negligence, gross negligence or
willful misconduct of or attributable to Celltech, its Subdistributors,
Sublicenses or Third Party manufacturers and its or their directors, officers,
agents, employees, consultants or clinical investigators in connection with the
storage, packaging, labeling, promotion, marketing, sale and distribution of the
Product in the Territory; and (iv) any express or implied warranty, whether oral
or written, including any implied warranty or the merchantability or fitness of
the Product for a particular purpose asserted by any customer of Celltech, its
Subdistributors or Sublicensees, if such warranty was extended by or arising
from any undertaking, action or inaction of Celltech, its Subdistributors or
Sublicensees.
9.3 Procedure. A party seeking indemnification (an "INDEMNIFIED PARTY")
shall give the other party (an "INDEMNIFYING PARTY") written notice of any Claim
promptly upon becoming aware thereof. The indemnifying party shall have sole and
exclusive control of the defense of any Claim, including the choice and
direction of legal counsel. The indemnified party shall have the right to
participate in such defense through its own counsel, at its own expense. Neither
party may settle or compromise any Claim for which indemnification is being
sought without the written consent of the other party, which may not be
unreasonably withheld.
9.4 Insurance. Both parties shall maintain during the Term of this
Agreement, and for a reasonable period thereafter, general liability insurance
(whether Third Party insurance or self-
34
insurance provided through a captive insurance subsidiary), which insurance
shall include product liability coverage and shall be in amounts and of a type
customarily maintained by companies similarly situated. Such insurance shall
provide at least ** U.S. Dollars in coverage per occurrence. Each party shall
use Commercially Reasonable Efforts to name the other party as an additional
insured on such party's insurance policy(ies). On or prior to the Effective
Date, each party shall deliver to the other evidence of its insurance.
ARTICLE X
INTELLECTUAL PROPERTY RIGHTS
PERFECTION AND USE
10.1 License Perfection. In the event that the execution and filing of any
document is required in connection with the license granted in Section 2.2 to
Celltech for the Trademark or Patent Rights under the laws of any country in the
Territory, Celltech shall promptly notify Orphan Medical, and Orphan Medical
shall cause such document to be executed and filed, and Celltech shall sign such
document if necessary and otherwise cooperate in the filing thereof.
10.2 Quality Standards. All Products sold and marketed under the Trademark
by Celltech or its Subdistributors or Sublicensees, including all related
advertising, promotional materials, and all other related uses of the Trademark
shall comply with the reasonable trademark use standards adhered to by Orphan
Medical in the manufacture, sale and promotion of the Product, which such
standards are set forth in Appendix I. In particular, and without limiting the
generality of the foregoing, upon reasonable request by Orphan Medical, Celltech
shall provide Orphan Medical with samples of Products bearing the Trademark, as
well as copies of all materials, including but not limited to brochures,
professional literature, packaging and consumer instructions, which are created
or intended for use by Celltech, its Subdistributors and/or Sublicensees in the
advertising, promotion, marketing or sale or other distribution of the Product
in the Territory, for examination and testing to verify compliance with the
trademark use standards set forth in Appendix I. Celltech shall also permit
Orphan Medical, not more than once per Contract Year and upon thirty (30) days
prior written notice and at reasonable times during normal business hours, to
examine stocks of the Product held by it or its Subdistributors or Sublicensees
to verify compliance with such standards. Orphan Medical shall notify Celltech
in writing of any noncompliance herewith, and Celltech shall use Commercially
Reasonable Efforts to correct the problem and bring such Products into
compliance with applicable standards.
10.3 Use of Trademark. Celltech shall and shall cause its Subdistributors
and Sublicensees to market the Product under the Trademark; provided, however
that if the Trademark is unavailable or unusable in a particular country in the
Territory, the parties shall mutually agree on a suitable alternative. In
addition, to the extent permitted by applicable law in each country in the
Territory, all labeling for the Product shall bear a legend, identifying Orphan
Medical as the manufacturer of the Product for Celltech.
10.4 Registration and Approvals. Attached hereto as Appendix B is a list of
the registrations and pending applications for registration for the Trademark
and Patent Rights in the Territory. Orphan Medical shall file applications and
maintain trademark registrations (including for the Trademark and any
alternative trademarks pursuant to Section 10.3) and patent
35
registrations (including for the Patent Rights) in each country in the Territory
including without limitation the registrations and pending applications for the
Trademark and Patent Rights in each country listed in Appendix B as shall be
reasonably useful or necessary to protect Celltech's rights under this
Agreement; provided, however, that if Orphan Medical shall fail to file a useful
or necessary application or maintain a useful or necessary registration for any
trademarks, alternative trademarks or patents in a country in the Territory, or
to maintain the Trademark and Patent Rights registrations in each country listed
in Appendix B, Celltech shall have the right to file such applications and
maintain such registrations in each such country in the Territory for such
trademarks, alternative trademarks or patents at the expense and in the name and
on behalf of Orphan Medical (or in Celltech's own name if that is not permitted
in the applicable country). Such registration and use of the Trademark and
Patent Rights shall inure to the benefit of and be on behalf of Orphan Medical.
On any termination of this Agreement pursuant to Article XIV hereof, Celltech
shall promptly assign to Orphan Medical registrations and any applications for
registration of trademarks, alternative trademarks or patents for the Product in
the Territory filed in its name pursuant to this Section 10.4.
10.5 Reservation of Rights. Except as otherwise provided herein, (i)
nothing in this Agreement shall entitle Celltech to any right, title or interest
in or to any of the Patent Rights, Know How, Manufacturing Know How, Trademark,
Improvements, and Proprietary Information of Orphan Medical or any associated
goodwill, which is and shall remain the sole and exclusive property of Orphan
Medical and (ii) Celltech shall not take and shall cause its Subdistributors,
Sublicensees and Third Party manufacturers to not take any action that might (a)
impair any right, title or interest of Orphan Medical in and to the Patent
Rights, Know How, Manufacturing Know How, Trademark, Improvements and
Proprietary Information; or (b) create any right, title or interest in or to
such Patent Rights, Know How, Trademark, Improvements and Proprietary
Information in Celltech or any other Person. Celltech acknowledges Orphan
Medical's proprietary rights as provided in the preceding sentence, and hereby
waives in favor of Orphan Medical any right Celltech may have in and to the
Patent Rights, Know How, Manufacturing Know How, Trademark, Improvements and
Proprietary Information except as herein provided.
ARTICLE XI
INTELLECTUAL PROPERTY INFRINGEMENTS
11.1 Protection of Intellectual Property. Celltech shall cooperate with
Orphan Medical and take all reasonable actions which Orphan Medical may
reasonably request, at Orphan Medical's sole cost and expense, in order to
protect and enforce Orphan Medical's intellectual property rights, including,
but not limited to, carrying out any act Orphan Medical may reasonably require
in connection with any registration, enforcement or protection thereof. Celltech
shall promptly notify Orphan Medical upon becoming aware of any use in the
Territory by a Third Party of the Patent Rights, Know How, Manufacturing Know
How, Trademark, Improvements or Proprietary Information of Orphan Medical
related thereto, or any other Orphan Medical intellectual property relating to
the Product which may constitute an infringement thereof. Orphan Medical shall
have the first right, at its option, to institute proceedings against Third
Party infringers in respect of infringements occurring in the Territory. If
Orphan Medical elects not to institute such proceedings within a period of
thirty (30) days after its discovery of the infringement, Celltech shall have
the right at its option to do so. The party instituting proceedings in the
Territory pursuant to this Article XI shall bring all such
36
proceedings in the name of both parties. Orphan Medical shall have the exclusive
right in its sole discretion to institute proceedings solely in its name against
Third Party infringers in respect of infringements occurring outside the
Territory. Each party shall cooperate fully with the other party in connection
with any such proceedings against third-party infringers. All expenses of any
such proceedings shall be borne by the party instituting the proceedings and
damages which may be awarded or agreed upon in settlement of such action shall
be allocated first to reimburse the documented costs of the proceedings incurred
by the party bringing suit, with the balance of such amounts, if any, to be
allocated between the parties in accordance with their relative economic loss
from such infringement.
ARTICLE XII
IMPROVEMENTS
12.1 Improvements by Celltech. Subject to Celltech's rights therein as
provided elsewhere in this Agreement, including without limitation Section 2.2,
Celltech hereby irrevocably assigns, releases, and transfers to Orphan Medical
its entire right, title and interest in and to any Improvement solely relating
to the API and/or Product (whether patentable or not) made or conceived solely
by Celltech employees or contractors.
12.2 Improvements by Orphan Medical. Subject to Celltech's rights therein
as provided elsewhere in this Agreement, including without limitation Section
2.2, Orphan Medical shall own all right, title and interest in and to any
Improvement relating to the API and/or Product (whether patentable or not) made
or conceived solely by Orphan Medical employees or by any Orphan Medical
contractor, other than Celltech, including, without limitation, any
manufacturing or analytical process, procedure or method or any source of
synthesis given to Celltech.
12.3 Disclosure. Celltech shall promptly disclose to Orphan Medical any and
all Improvements relating to the API and/or Product by Celltech's employees or
contractors, either alone or together with Orphan Medical's employees or
contractors. Celltech shall execute at Orphan Medical's expense any assignments,
applications or other instruments or documents reasonably requested by Orphan
Medical to obtain, maintain, and otherwise to perfect Orphan Medical's interest
therein as provided by this Agreement. Celltech's and Orphan Medical's
obligations hereunder shall survive termination of this Agreement.
ARTICLE XIII
CONFIDENTIALITY
13.1 Proprietary Information. During the Term hereof and for a period of
five (5) years thereafter, any Proprietary Information disclosed by one party
(the "DISCLOSING PARTY"), directly or indirectly, to the other party (the
"RECEIVING PARTY") under this Agreement shall be deemed confidential, and trade
secret information, whether so designated or not, and shall not be disclosed by
the Receiving Party to any Third Party, except as set forth below. Access to
such Proprietary Information shall be limited to employees, agents, consultants
or contractors of the Receiving Party who reasonably require such Proprietary
Information for purposes of performing the Receiving Party's obligations
hereunder and who are bound to the Receiving Party by similar obligations in
respect of confidentiality and use. Such employees, agents, consultants or
37
contractors shall be advised of the nature and existence of the undertakings in
respect of such Proprietary Information pursuant to this Agreement and of the
applicability of such undertakings to them. The Receiving Party shall use such
Proprietary Information only to carry out its obligations or to exercise its
rights hereunder and shall not use such Proprietary Information for its own
benefit or for the benefit of others or in any way inconsistent with this
Agreement.
13.2 Exclusions. Information shall not be deemed Proprietary Information
which:
(a) at the time of disclosure, is already in the public domain or
thereafter becomes part of the public domain through no act or omission of the
Receiving Party;
(b) was rightfully in the possession of the Receiving Party prior to
the time of the disclosure;
(c) is independently disclosed to the Receiving Party by a Third Party
who has not violated any confidential obligation owed to the Disclosing Party;
(d) was independently developed by the Receiving Party without any use
of or reliance on any Proprietary Information of the Disclosing Party;
(e) is required to be disclosed by legal process, provided that, in
each case the party so disclosing information timely informs the other and uses
its best efforts to limit the disclosure and maintain confidentiality to the
extent possible and permits the other party to attempt by appropriate legal
means to limit such disclosure;
(f) is information which is required to be included in patent
applications or required to be provided to the FDA or any other Regulatory
Authority in the Territory in order that Registrations for the Product can be
obtained or otherwise to comply with applicable regulatory requirements;
provided, however, that no Proprietary Information of Celltech or Orphan Medical
shall be disclosed in any such patent application or Registration without the
prior written consent of the Disclosing Party, which consent shall not be
unreasonably withheld; or
(g) is information which is required to be disclosed to customers,
users, and prescribers of the Product or which is reasonably necessary to
disclose in connection with the ethical marketing of the Product, if applicable.
13.3 Third Party Disclosure. Disclosure by the Receiving Party to a Third
Party shall be made only to the extent necessary to enable the Receiving Party
to comply with its contractual obligations to the Disclosing Party, and only if
such Third Party has executed a confidentiality agreement containing terms that
are at least as protective as the terms of this Agreement.
13.4 Third Party Confidentiality Agreement. Each Third Party to which
Proprietary Information is disclosed other than a Regulatory Authority shall
agree in writing prior to such disclosure to keep the Proprietary Information in
strict confidence.
38
13.5 Confidentiality of Agreement. Except as otherwise required by law,
applicable regulations or the terms of this Agreement or as mutually agreed upon
by the parties hereto, each party shall treat as confidential the terms and
conditions of this Agreement.
13.6 Prior Confidentiality Agreement. The Confidentiality Disclosure
Agreement between the parties hereto dated 20 November 2002 is hereby superseded
and terminated. Any disclosure of Proprietary Information by either party
pursuant to such Confidentiality Agreement shall be deemed to have been made
hereunder and shall be subject to this Article 13.
ARTICLE XIV
TERM AND TERMINATION
14.1 Term. This Agreement shall become effective as of the Effective Date
and shall remain in full force and effect until the last of Orphan Medical's
Patent Rights to expire or ten (10) years from the date Celltech receives
approval from the EMEA to commercially promote and distribute the Product,
whichever is longer. This Agreement will be automatically extended indefinitely
thereafter unless and until terminated by Celltech upon not less than twelve
(12) months written notice to Orphan Medical. All references herein to "TERM" or
"TERM OF THIS AGREEMENT" shall be deemed to include both the initial and any
extended terms.
14.2 Mutual Termination. This Agreement may be terminated prior to its
normal Term as follows:
(a) Either party may terminate this Agreement immediately upon notice
if the other party files a petition of any type as to its bankruptcy, is
declared bankrupt, becomes insolvent, makes an assignment for the benefit of
creditors, goes into liquidation or receivership, or otherwise loses legal
control of its business involuntarily.
(b) Either party may terminate this Agreement if the other party
materially defaults or commits a material breach of this Agreement and has
failed to cure such default or breach within ninety (90) days of receipt of
written notice thereof from the first party.
(c) Either party may terminate this Agreement in accordance with
Section 16.2 or Section 16.3.
14.3 Termination by Orphan Medical. Orphan Medical may terminate this
Agreement upon written notice to Celltech if any of the following continues
uncured for a period of ninety (90) days following receipt of written notice
thereof from Orphan Medical:
(a) Celltech shall have failed to meet the applicable minimum royalty
payment requirements for the Product as provided in Article IV hereof.
(b) Celltech ceases to sell the Product in the Territory.
(c) Celltech alters any Product except as permitted hereunder or with
Orphan Medical's prior written consent.
39
(d) Except as otherwise herein provided, as to the countries in which
EMEA approval is required for a Registration, if Celltech shall have failed to
obtain a Registration in at least one Major European Country by December 31,
2006, and as to each other country in the Territory, if Celltech shall have
failed to use Commercially Reasonable Efforts to obtain a Registration in such
country, if, in each case, such failure shall not be due to a breach by Orphan
Medical of its obligations under this Agreement.
14.4 Rights and Obligations on Termination. In the event of termination of
this Agreement for any reason, the parties shall have the following rights and
obligations:
(i) Neither party shall be released from the obligation to
make payment of all amounts then or thereafter due and payable in
respect of the Term prior to such termination as otherwise herein
provided.
(ii) Except as provided in Section 14.6, Celltech shall cease
to market, promote, sell and distribute the Product and shall return to
Orphan Medical, at Celltech's expense, all copies of promotional and
technical materials and artwork provided by Orphan Medical; provided,
however, that if this Agreement is terminated by Celltech pursuant to
Section 14.2(b), Orphan Medical shall pay all expenses related to such
return of materials and artwork;
(iii) Orphan Medical may, if Celltech elects not to pursue its
sell-off rights under Section 14.6, repurchase Celltech's inventory of
non-obsolete and non-expired Product at the price paid by Celltech for
such Product or direct Celltech to sell them to the Third Party or
parties selected by Orphan Medical at the price paid by Celltech;
provided, however, that if this Agreement is terminated by Celltech
pursuant to Section 14.2(b), Orphan Medical must repurchase such
inventory at the price paid by Celltech if Celltech elects not to
pursue its sell-off rights under Section 14.6;
(iv) Celltech shall return or, if requested by Orphan Medical,
destroy all of Orphan Medical's Proprietary Information, including, if
applicable, all electronic copies thereof and shall certify in writing
that it has done so; and
(v) Celltech shall comply with the provisions of Section 10.4
regarding the assignment to Orphan Medical of trademark and/or patent
rights registrations filed in Celltech's name.
14.5 Partial Termination. In the event that a cause of termination shall
relate solely to any country not subject to regulation by the EMEA, then
termination of this Agreement shall be limited and applied only to such country
or portion of the Territory.
14.6 Sell-Off Period. Notwithstanding anything to the contrary in Section
14.4 hereto, upon expiration or termination of this Agreement, Celltech shall
have the right to continue to distribute its existing inventory of non-expired
Product for a period of six (6) months after the effective date of expiration or
the effective date of termination of this Agreement as the case may be. Any such
continued distribution shall be in accordance with all applicable laws and
regulations and the terms of this Agreement.
40
14.7 Survival. The provisions of Articles I (Definitions), VIII
(Representations & Warranties), IX (Indemnification), XIII (Confidentiality),
XIV (Term and Termination), XV (Arbitration), and XVII (Miscellaneous), as well
as the provisions of Articles III (Compliance with Laws and Regulations), XI
(Intellectual Property Infringement), XII (Improvements) Article XIII
(Confidentiality), Article XIV (Termination), Article XV (Arbitration), Article
XVII (Miscellaneous) and the other provisions hereof which by their terms are
intended to survive the expiration or termination of this Agreement (including
without limitation, Sections 3.4 (Return of Initial Payment), Section 4.8 (Books
and Records) and Section 7.3(e) (Consignment of Product - Return of Consignment
Inventory) shall survive any termination or expiration of this Agreement.
14.8 Assignment of Authorizations. As soon as possible following the
expiration or earlier termination of this Agreement, Celltech shall take all
necessary steps to ensure expeditious assignment of all Marketing Authorizations
and Orphan Drug Designations which are in Celltech's name to Orphan Medical. If
an assignment to Orphan Medical is prohibited under the laws of a country in the
Territory, Celltech agrees to and hereby grants Orphan Medical authorization to
distribute the Product under such Marketing Authorization until Orphan Medical
or its designee has obtained Marketing Authorizations and Orphan Drug
Designations in its own name for the Product in that country; provided that
Orphan Medical shall defend, indemnify and hold harmless Celltech from and
against all Claims and Indemnification Amounts of whatsoever kind or nature that
result from, arise out of or relate to Orphan Medical's distribution of the
Product under the Marketing Authorizations and Drug Designations continuing in
Celltech's name as contemplated by this Section 14.8.
14.9 Rights on Termination for Cause. In the event of termination of this
Agreement by Orphan Medical pursuant to the provisions of Sections 14.2(a) or
(b) or 14.3 (a) - (c), Celltech shall provide to Orphan Medical, at no expense
to Orphan Medical, its then current list of prospects and customers, including
company name, contact, address and telephone number.
14.10 No Compensation. In the event of any expiration or termination of
this Agreement for any reason, neither party shall owe any compensation to the
other party for lost profits, lost opportunities, good will, or any other loss
or damage in respect of future periods as a result of or arising from such
termination or expiration.
ARTICLE XV
ARBITRATION
15.1 Litigation Rights Reserved. If any dispute arises with respect to the
unauthorized use of Proprietary Information by either Party or, Orphan Medical's
Trademark, Patent Rights, Know How, Manufacturing Know How, and Improvements by
Celltech, or with respect to acts or omissions of Celltech or Orphan Medical
relating to the Product which in the good faith discretion of Orphan Medical or
Celltech, as the case may be, negatively impact the safety of the public, Orphan
Medical or Celltech, as the case may be, may seek any available equitable remedy
from a court of competent jurisdiction.
15.2 Arbitration. Except as provided in Sections 7.13 and 15.1, all
disputes arising between the parties in connection with this Agreement shall be
settled through friendly
41
consultations between the parties and if no agreement can be reached through
consultations, they shall be submitted to arbitration for settlement. The
arbitration shall take place in New York, New York, and be conducted by the
American Arbitration Association in accordance with the commercial arbitration
rules thereof (the "RULES") except as modified hereby. All necessary
determinations, including the arbitration decision, shall be made by a panel of
three arbitrators (the "PANEL"). Within ten (10) days after delivery of a notice
of arbitration, each of the two parties shall select one arbitrator as a member
of the Panel. The two parties shall select as the third member of the Panel an
independent arbitrator with no past or current business affiliations with either
party, and if the parties cannot agree on such independent arbitrator within ten
(10) days after delivery of a notice of arbitration, such independent arbitrator
shall be selected in accordance with the Rules. The Panel shall establish a
schedule of discovery and hearing such that the Panel's final written decision
shall be issued within one hundred and twenty (120) days after selection of the
independent arbitrator serving on the Panel. Each party must produce all
relevant non-privileged documents requested by the other party within thirty
(30) days after the request therefor. The Panel's decision must be in writing
and shall set forth the reasons therefor. Such decision shall be conclusive
determination of the matter and binding on the parties, shall have the effect of
an arbitration award, and shall not (to the extent permitted by applicable law)
be contested by any of them. The fees and expenses of an arbitrator selected by
a party shall be borne by such party. The fees and expenses of the third
independent arbitrator shall initially be borne equally by the parties, and
shall be allocated between the parties in accordance with the final decision of
the Panel, which decision shall allocate such fees between the parties as
determined by the Panel.
15.3 Governing Law. This Agreement shall be governed by, and interpreted
and construed in accordance with, the laws of the State of New York, U.S.A.,
excluding (i) its choice of law rules and (ii) the United Nations Convention on
the International Sale of Goods, provided that (x) enforcement and operation of
the Consignment Inventory arrangements in Section 7.3 shall be governed by the
laws of England, and (y) enforcement and operation of the arbitration agreement
contained in Section 15.2 hereof, and the enforcement of any award rendered
pursuant thereto, shall be governed by United States federal law to the
exclusion of State law.
ARTICLE XVI
FORCE MAJEURE
16.1 Events of Force Majeure. Anything in this Agreement to the contrary
notwithstanding, neither party shall be liable or responsible for any failure or
delay in performance (excluding payment of sums owed hereunder) due to causes
affecting such party and, in the case of Orphan Medical, its designated
suppliers, and, in the case of Celltech, its Subdistributors, Sublicensees and
Third Party manufacturers, beyond the reasonable control of such party,
including, without limitation, any act of God; regulation or law of any
government or an agency thereof, excluding, however, if a Regulatory Authority
enjoins manufacture of the Product or otherwise closes the Product manufacturing
facilities due to Orphan Medical's failure to comply with cGMP or any other
breach by Orphan Medical of its obligations under this Agreement; war;
terrorism; insurrection or civil commotion; earthquake, tornado, fire, flood or
storm; epidemic; or failure of public utilities or common carriers. Such excuse
shall continue as long as the condition preventing the performance continues.
Upon cessation of such condition, such party shall promptly resume performance
hereunder.
42
16.2 Notice. A party affected by an event of force majeure shall give the
other party prompt written notice of the occurrence of any event of force
majeure and the nature and duration thereof. An affected party shall use all
Commercially Reasonable Efforts to resume performance as quickly as possible and
to give the other party prompt written notice when it is again fully able to
perform such obligations. If such event of force majeure continues for more than
one hundred eighty (180) days, either party may terminate this Agreement by
giving ten (10) days written notice to the other party. If Celltech is the
affected party, such notice of resumption of performance shall state the
quantities of Product Orphan Medical needs to ship to enable Celltech to resume
performance of obligations.
16.3 Hardship. In the event that, during the Term, any law or
government-enacted regulation or decree renders the performance by either party
of its respective obligations hereunder unduly onerous or infeasible to
implement, Celltech and Orphan Medical shall consult each other and show mutual
understanding with a view to making such adjustments as would appear to be
necessary and feasible. The party who considers that the change in regulation or
decree is unduly onerous or infeasible to implement, shall notify the other
within ninety (90) days of the change in regulation or decree, specifying the
specific date and change, an evaluation of the hardship which is or shall be
suffered and the proposal made by it to remedy that change if feasible. If the
parties fail to reach an agreement within ninety (90) days after the date of the
notice, either party shall at any time thereafter be entitled to terminate this
Agreement upon written notice only with respect to the country or countries
affected by such change in regulation or decree.
ARTICLE XVII
MISCELLANEOUS
17.1 Notices. All notices to the parties shall be made at the following
addresses (or at such other address as shall be specified by it by like notice):
To: Orphan Medical, Inc.
Attention: Chief Executive Officer
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Xxxxxx Xxxxxx
Copy: Director of International Business
Fax: 000 000 0000
To: Celltech Pharmaceuticals Ltd.
Attention: Chief Executive Officer
000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
Copy: Company Secretary
Fax: 000 00 000 000 0000
Notices permitted or required to be given hereunder shall be
deemed sufficient if given by (a) registered or certified airmail, postage
prepaid, return receipt requested, (b) private
43
courier service or (c) facsimile transmission with electronic confirmation of
receipt. Notices so given shall be effective (1) upon receipt by the party to
whom notice is given, or (2) on the tenth (10th) day following international
mailing, as may be the case, whichever occurs first.
17.2 Waiver. No failure by either party to take any action or assert any
right hereunder shall be deemed to be a waiver of such right in the event of the
continuation or repetition of the circumstances giving rise to such right.
17.3 Entire Agreement. This Agreement and the Schedules and Appendices
hereto constitute the entire agreement of the parties with respect to the
subject matter hereof, and supersede all previous agreements by and between the
parties as well as all proposals, oral or written, and all negotiations,
conversations or discussions heretofore had between the parties related to this
Agreement.
17.4 Amendment. No modification or amendment of this Agreement shall be
binding unless in writing and signed by both parties.
17.5 Headings. Article, section and paragraph headings used in this
Agreement are for convenience only, have no legal significance, and in no way
change the construction or meanings of the terms hereof.
17.6 Relationship of the Parties. The parties shall be deemed independent
contractors of each other and, as such, they shall not be entitled to any
benefits applicable to employees of the other party. Nothing contained in this
Agreement shall be construed or implied to create an agency, partnership, or
employer and employee relationship between Orphan Medical and Celltech. At no
time shall one party make commitments or incur any charges or expenses for or in
the name of the other party except as specifically provided herein.
17.7 Assignment. Neither party may assign this Agreement without the prior
written consent of the other party except that either Orphan Medical or Celltech
may assign this Agreement (a) to an Affiliate or (b) in connection with a
merger, stock sale, or the sale or transfer of all or substantially all of the
assets of such party or the division of such party manufacturing or marketing
the Product, as the case may be, provided, however, any permitted assignee shall
assume all obligations of its assignor under this Agreement and in the case of
clause (a), the assigning party shall remain primarily liable for the
performance of such Affiliate. Any purported assignment in violation of the
foregoing sentence shall be null and void. No assignment shall relieve either
party of responsibility for the performance of any accrued obligation under this
Agreement. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the permitted successors or permitted assigns of
Celltech and Orphan Medical, respectively.
17.8 Severability. If any term or condition of this Agreement is found by a
court of competent jurisdiction to violate the provisions of any applicable
statute, law or regulation, the remainder of this Agreement shall remain in full
force and effect. The parties shall then negotiate in good faith to modify this
Agreement, to the extent necessary to make the affected term or condition of
this Agreement valid and enforceable, having full regard for the original intent
of the parties.
44
17.9 Publicity. This Agreement is confidential and neither party shall
issue press releases or engage in other types of publicity of any nature
(whether written or oral) dealing with the existence or details of this
Agreement without the other party's prior written approval, which approval shall
not be unreasonably withheld; provided that, approval of such disclosure shall
be deemed to be given to the extent such disclosure is required to comply with
governmental rules, regulations or requirements. In such event, the disclosing
party shall furnish a copy of such disclosure to the other party.
17.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same Agreement. This Agreement may be
executed and delivered via facsimile transmission with the same force and effect
as if it were executed and delivered in writing. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
fully executed counterpart.
17.11 LIMITATION OF DAMAGES. NEITHER ORPHAN MEDICAL NOR CELLTECH SHALL HAVE
ANY LIABILITY OF ANY KIND TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL LOSSES OR DAMAGES, EVEN IF ORPHAN MEDICAL OR
CELLTECH, AS THE CASE MAY BE, SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
POTENTIAL LOSS OR DAMAGE BY THE OTHER PARTY. FOR PURPOSES OF THE LIMITATION OF
LIABILITY IN THE IMMEDIATELY PRECEDING SENTENCE, (i) LEGAL FEES AND EXPENSES
THAT ARE RECOVERABLE AS PROVIDED IN ARTICLE IX SHALL NOT BE CONSIDERED INDIRECT
DAMAGES, (ii) INDIRECT DAMAGES PAYABLE BY AN INDEMNIFIED PARTY TO A THIRD PARTY
THAT WOULD BE RECOVERABLE UNDER THE INDEMNITY PROVISIONS IN ARTICLE IX BUT FOR
SUCH LIMITATION OF LIABILITY SHALL BE RECOVERABLE NOTWITHSTANDING SAID
LIMITATION OF LIABILITY AND (III) LOST PROFITS SHALL NOT BE DEEMED TO BE
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES EXCEPT IN RESPECT OF FUTURE PERIODS
FOLLOWING A TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF.
45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their respective duly authorized representatives as of the Effective Date.
CELLTECH PHARMACEUTICALS LTD.
By: /s/ Xxxxx Xxxx
-----------------------------------
Name: Xxxxx Xxxx
Title: Chief Executive Officer
ORPHAN MEDICAL, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
APPENDIX A
TERRITORY
---------
MAJOR EUROPEAN COUNTRIES MINOR EUROPEAN COUNTRIES
France Austria
Germany Belgium
Italy Czech Republic
Spain Denmark
United Kingdom of Great Britain and Northern Ireland Estonia
Finland
Greece
Hungary
Iceland
Ireland
Latvia
Lithuania
Luxemburg
Malta
Netherlands
Norway
Poland
Portugal
Slovak Republic
Slovenia
Sweden
Switzerland
OPTION COUNTRIES
Turkey
X-0
XXXXXXXX X
TRADEMARK
Xyrem(R)
European Community Trademark Reg. No.: 957712
Registered: 10 March 2000
Norway Reg. No.: 217395
Registered: 23 January 2003
Iceland Reg. No.: 679/2002
Registered: 31 July 0000
Xxxxxxxxxxx Reg. No.: 503.859
Registered: 9 October 2002
Czech Republic Reg. No.: 251135
Registered: 27 January 0000
Xxxxxx Xxxxxxxx Application No.: POZ 1676-2002
Registered: Pending
Poland Appl. No.: Z-251131
Registered: Pending
Hungary Appl. No.: M 02 02667
Registered: Pending
PATENT RIGHTS
-------------
Country Stage Serial # Date Filed Patent # Issue Date
-------------------------------------------------------------------------------------------------
European Granted 99964320.8 12/22/99 1140061 5/2/03
Austria Granted 99964320.8 12/22/99 1140061 5/2/03
Belguim Granted 99964320.8 12/22/99 1140061 5/2/03
Denmark Granted 99964320.8 12/22/99 1140061 5/2/03
Finland Granted 99964320.8 12/22/99 1140061 5/2/03
France Granted 99964320.8 12/22/99 1140061 5/2/03
Germany Granted 99964320.8 12/22/99 69907508.408 5/2/03
Ireland Granted 99964320.8 12/22/99 1140061 5/2/03
Italy Granted 99964320.8 12/22/99 1140061 5/2/03
Netherlands Granted 99964320.8 12/22/99 1140061 5/2/03
Spain Granted 99964320.8 12/22/99 1140061 5/2/03
Sweden Granted 99964320.8 12/22/99 1140061 5/2/03
Switzerland Granted 99964320.8 12/22/99 1140061 5/2/03
United Kingdom Granted 99964320.8 12/22/99 1140061 5/2/03
B-1
APPENDIX C
PRODUCT SPECIFICATIONS
Xyrem(R)(sodium oxybate) oral solution
EXPIRATION PERIOD: 48 months
STORAGE CONDITIONS: 15 - 30(Degree)C
RELEASE SPECIFICATIONS:
**
APPROVAL SIGNATURES ON FILE:
Regulatory Affairs
VERIFIED BY: ____________________________
C-1
APPENDIX D
STANDARD OPERATING PROCEDURE FOR EXCHANGE OF SAFETY DATA
The Orphan Medical and Celltech individuals in charge of
pharmacovigilance shall follow the procedure outlined below in reporting adverse
experiences.
1. Definitions. Definitions shall be those in use by the International
Conference on Harmonization (ICH) as may be amended by ICH from time to time.
Current definitions are:
1.1. Adverse Event ("AE") means any untoward medical occurrence in a
patient or clinical investigation subject administered a pharmaceutical product
and which does not necessarily have to have a causal relationship with this
treatment. An AE can therefore be any unfavorable and unintended sign (including
an abnormal laboratory finding), symptom, or disease temporarily associated with
the use of a medicinal (investigational) product, whether or not related to the
medicinal (investigational) product.
1.2. Serious Adverse Event ("SAE") means any untoward medical
occurrence that at any dose:
o results in death,
o is life-threatening,
o requires inpatient hospitalization or prolongation of
existing hospitalization,
o results in persistent or significant
disability/incapacity, or
o results in a congenital anomaly/birth defect.
1.3. Adverse Drug Reaction ("ADR")
o ADRs in the clinical setting refer to all noxious and
unintended responses to a medicinal product (i.e.,
where the relationship between an adverse event and
product can not be ruled out) related to any doses.
o ADRs regarding marketed medicinal products shall
refer to a response to a drug which is noxious and
unintended and which occurs at doses normally used in
man for prophylaxis, diagnosis, or therapy of disease
or for modification of physiological function.
1.4. Serious Adverse Drug Reaction ("SADR") means an ADR having the
characteristics described in 1.2.
1.5. Unexpected Adverse Drug Reaction ("UADR") means an ADR, the nature
or severity of which is not consistent with the applicable product information
(e.g.,
D-1
Investigator's Brochure for an unapproved investigational product or package
insert for an approved product.)
2. Transmission of data between Orphan Medical and Celltech.
2.1. In the context of clinical trials:
2.1.1. All the SAEs related (expected and unexpected) to the
drug as assessed by investigators shall be forwarded on a quarterly basis under
the form of tabulated summary in English. Such summary shall bear at least the
following information: patient's ID number, protocol identification,
Investigator Center, type of serious event, symptomatology or pathology
observed, notified SAE. These clinical or biological manifestations shall be
named according to the dictionary in use by each party (e.g. MeDRA or WHO).
2.1.2. Each party, upon request, may receive available
additional or follow-up data from the other party.
2.2. In the context of post-marketing surveillance:
2.2.1. In the case of SAEs, the parties shall exchange data within
five (5) days of becoming aware of such SAE. In the case of SADRs and UADRs, the
parties shall exchange data within ten (10) days after becoming aware of such
SADR or UADR. In the case of any other AE or ADR the parties shall exchange data
within thirty (30) days of becoming aware of such AE or ADR.
2.3. All information between the parties shall be sent using the
standard reporting format for Health Authorities in force in the respective
countries concerned.
D-2
APPENDIX E
QUALITY AGREEMENT
BY AND BETWEEN
ORPHAN MEDICAL, INC.
00000 XXXXXXXXX XXXXX, XXXXX 000
XXXXXXXXXX, XXXXXXXXX, XXX 00000
(HEREAFTER CALLED "ORPHAN")
ON ONE HAND
APPROVED BY: DAYTON X. XXXXXXX, PH.D., RAC
VICE PRESIDENT OF REGULATORY AFFAIRS, ORPHAN MEDICAL, INC.
DATE:_______________ SIGNATURE:_____________________
AND
CELLTECH PHARMACEUTICALS LTD.
(HEREAFTER CALLED "CELLTECH")
APPROVED BY: _____________________
QUALITY ASSURANCE CELLTECH PHARMACEUTICALS LTD.
DATE:_______________ SIGNATURE:_____________________
FOR THE PRODUCT XYREM(R) (SODIUM OXYBATE) 50% ORAL SOLUTION,
HEREAFTER CALL THE "PRODUCT"
E-1
TABLE OF CONTENTS
1. QUALITY AGREEMENT...............................................1
1.1 PURPOSE.......................................................1
1.2 RELATIONSHIP TO LICENSE AGREEMENT.............................1
2. DEFINITIONS........................................................1
3. ADMINISTRATIVE INFORMATION......................................1
3.1 ORPHAN CONTACT NAMES........................................1
3.2 CELLTECH CONTACT NAMES......................................1
3.3 EMERGENCY CONTACTS NAMES....................................1
4. TERM OF AGREEMNT...................................................2
5. MANUFACTURING GMP COMPLIANCE.......................................2
5.1 GENERAL.....................................................2
5.2 PREMISES....................................................2
5.3 GMP GUIDELINES..............................................3
5.4 MATERIALS...................................................3
5.5 MASTER PRODUCTION RECORDS...................................4
5.6 STANDARD OPERATION PROCEDURES AND DOCUMENTATION.............4
5.7 METHODS VALIDATION / CERTIFICATION..........................4
5.8 BATCH NUMBERS...............................................4
5.9 DATES OF MANUFACTURE AND EXPIRATION.........................4
5.10 MANUFACTURING AND EQUIPMENT DATA............................5
5.11 STORAGE AND SHIPMENT........................................5
6. QUALITY CONTROL....................................................6
6.1 GENERAL.....................................................6
6.2 IN-PROCESS AND PRODUCT TESTING..............................6
6.3 RETAIN SAMPLES ........................................6
6.4 ROUTINE STABILITY PROGRAM...................................7
6.5 OUT-OF-SPECIFICATION (OOS) INVESTIGATIONS...................7
6.6 CONTRACT QUALITY CONTROL LABORATORIES.......................7
E-2
7. QUALITY ASSURANCE..................................................8
7.1 DEVIATIONS AND INVESTIGATIONS...............................8
7.2 LOT DISPOSITION.............................................8
7.3 QUALITY ASSURANCE CERTIFICATE OF COMPLIANCE/ANALYSIS........8
7.4 PRODUCT RELEASE.............................................9
7.5 PRODUCT COMPLAINTS AND RECALLS..............................9
7.6 RECORDS RETENTION...........................................9
7.7 QUALITY ASSURANCE PRESENCE IN THE MANUFACTURING FACILITY...10
8. REGULATORY COMPLIANCE.............................................10
8.1 REGULATORY COMPLIANCE......................................10
8.2 REGULATORY ACTIONS.........................................11
8.3 REGULATORY AFFAIRS.........................................11
9. DISPUTE RESOLUTION................................................11
9.1 NON-CONFORMITY DISPUTE.....................................11
9.2 OTHER DISPUTES.............................................12
10. CHANGE MANAGEMENT.................................................12
10.1 TECHNICAL & CGMP IMPACT ASSESSMENT.........................12
11. PRODUCT AND PROCESS VALIDATION....................................13
11.1 PROCESS VALIDATION.........................................13
11.2 EQUIPMENT, COMPUTER, FACILITY AND UTILITIES QUALIFICATION..13
11.3 LABORATORY QUALIFICATION...................................13
12. ANNUAL PRODUCT REVIEW AND ANNUAL REPORT...........................14
12.1 ANNUAL PRODUCT REVIEW......................................14
E-3
APPENDIX 1 : ORPHAN and CELLTECH's responsibilities
APPENDIX 2 : Formula and specifications of the Product
APPENDIX 3 : Contact names
APPENDIX 4 : Release documentation
E-4
1. QUALITY AGREEMENT
1.1 Purpose
1.1.1. This Quality Agreement (this "Agreement") defines the roles
and responsibilities for the Quality Assurance ("QA") and
Regulatory Affairs Department of ORPHAN , and for the QA
Department of CELLTECH when ORPHAN supplies the Product to
CELLTECH
1.1.2. This Agreement also defines how ORPHAN and CELLTECH QA
Departments will interact with each other.
1.1.3. Appendix 1 summarizes the responsibilities of each party for
the steps involved in the supply of the Product by ORPHAN to
CELLTECH
1.2 Relationship to License Agreement
1.2.1. This Agreement shall be incorporated within and constitute a
part of the Xyrem License and Distribution Agreement (the
"License Agreement") by and between CELLTECH and ORPHAN
effective October 29, 2003.
1.2.2. In the event of a conflict between any of the provisions of
this Agreement and the License Agreement, the provisions of
the License Agreement shall govern.
1.2.3. All capitalized terms used in this Agreement and not otherwise
defined herein shall have the meaning set forth in the License
Agreement.
2. DEFINITIONS
Definitions within this Agreement are adopted from the License
Agreement.
3. ADMINISTRATIVE INFORMATION
3.1 ORPHAN Contact Names
See Appendix 3
3.2 CELLTECH Contact Names
See Appendix 3.
QUALITY AGREEMENT APPENDIX: PAGE 1
3.3 Emergency Contacts Names
Emergency contact names and numbers, during and outside working hours:
ORPHAN
Dayton X. Xxxxxxx
Vice President of Regulatory Affairs
Work Phone: (000) 000-0000
Cell Phone: 000-000-0000
Home Phone: 000-000-0000
CELLTECH:
Name of Celltech contact
Title
Work phone:
Cellular phone:
Home Phone:
4. TERM OF AGREEMENT.
This Agreement will expire with termination of the License Agreement.
This Quality Agreement can be modified as needed with the written
approval of both parties.
5. MANUFACTURING GMP COMPLIANCE
5.1 General
ORPHAN has appointed CELLTECH as its exclusive distributor of the
Product in the Territory. As such, CELLTECH shall package, label, test,
release, promote, market, sell and distribute the Product in the
Territory. During the term of the License Agreement, ORPHAN shall
provide to CELLTECH documentation confirming that the Product has been
manufactured in accordance with European and United States cGMPs and
the Marketing Authorizations
5.2 Premises
5.2.1. ORPHAN will ensure required operations for manufacturing
activities are conducted at sites approved by CELLTECH and
Regulatory Authorities of the Territory.
5.2.2. The premises and equipment used to manufacture the Product
will be maintained according to current regulatory
requirements and in accordance with the controlled
documentation approved by ORPHAN and CELLTECH.
5.2.3. The manufacture of the Product will be performed in a suitably
controlled environment and such facilities will be regularly
monitored for parameters critical to the process to
demonstrate compliance with (i) applicable GMP guidelines and
(ii) any conditions approved in the Marketing Authorization
granted for the
QUALITY AGREEMENT APPENDIX: PAGE 2
Product in the Territory. Audits of such facilities will be
performed in accordance with Section 5.9 of the Licensing
Agreement.
5.3 GMP Guidelines
The principles detailed in the US Current Good Manufacturing Practices
(21 CFR 210 and 211) that govern the standards of manufacture for any
product intended for human use, as well as the product cGMP Guidelines,
will govern (i) the standards of manufacture of the Product, (ii) the
Product Specifications, (iii) any applicable Product license, and (iv)
the Marketing Authorizations, pharmacopoeias or formulatory
requirements.
5.4 Materials
5.4.1. CELLTECH will only use packaging materials in the Product
("Materials") conforming to ORPHAN's requirements and to the
Marketing Authorizations granted by the Regulatory Authority
in the Territory.
5.4.2. Contract manufacturers and/or ORPHAN is responsible for
auditing and qualifying suppliers of materials used in the
Product and will provide CELLTECH with a Certificate of
Conformance for such suppliers when requested. ORPHAN shall
audit or shall cause to be audited materials suppliers at
regular intervals according to a defined program and the
documentation of the suppliers audited and date of audit shall
be available for review by CELLTECH upon request if available
to ORPHAN. Manufacturers may be required to be responsible for
raw material, labeling, or component suppliers as defined
contractually between the two firms.
5.4.3. ORPHAN is responsible for ensuring that Materials procured by
contract manufacturers for use in the Product are of required
and consistent quality, in full compliance with the Product
Specifications and approved by ORPHAN and in compliance with
the Product Specifications approved in the Marketing
Authorizations of the Product. Materials are given a repeat
test date upon the satisfactory completion of all initial
testing. Repeat testing will be performed at defined time
intervals to ensure the chemical and physical stability of
Materials unless ORPHAN provides an official expiration date.
5.4.4. Contract manufacturers are responsible for ensuring that
Materials are stored properly, used correctly, appropriately
tested upon receipt, and traceable to the relevant Certificate
of Analysis for the materials.
5.5 Master Production Records
Master Production Records will be handled as outlined under Change
Management in Section 10 of this Agreement.
QUALITY AGREEMENT APPENDIX: PAGE 3
5.6 Standard Operating Procedures and Documentation
CELLTECH is responsible for maintaining any SOPs required to
manufacture, test and store the Product in accordance with applicable
European cGMP guidelines for those activities performed at CELLTECH
facilities or under contract direct to CELLTECH. CELLTECH is
responsible for documenting equipment, facilities, process, computer
and cleaning operations in accordance with European cGMP. ORPHAN shall
be afforded opportunity to audit and/or review validation documentation
for validation.
5.7 Methods Validation / Certification
5.7.1. ORPHAN is responsible for providing to CELLTECH approved
copies of the most current and complete filed analytical
methods relating to the Product for receipt of Materials,
in-process product testing, Product lot release, Product
stability and cleaning validation.
5.7.2. ORPHAN is responsible for providing to CELLTECH a
Certification of Methods Validation for all critical methods
practiced by ORPHAN or its contractors (Materials testing,
in-process Product testing, Product lot release, Product
stability and cleaning validation). The certifications should
state "THE METHODS ARE APPROPRIATE FOR THE INTENDED PURPOSE,
ARE VALIDATED PER RELEVANT REGULATORY GUIDELINES AND ARE
READILY AVAILABLE IN CASE OF A REGULATORY INSPECTION."
5.8 Batch Numbers
5.8.1. **
5.8.2. **
5.9 Dates of Manufacture and Expiration
5.9.1. Date of Manufacture: ORPHAN and CELLTECH agree that the Date
of Manufacture assigned will be based on the date of
compounding for the Product.
5.9.2. Expiration Date: ORPHAN will calculate the expiry date from
the Date of Manufacture using the currently approved expiry
period. The expiration date will be the last day of the month
assigned. Changes to the expiration date will be handled by
Change Management (see Section 10).
5.10 Manufacturing and Equipment Data
ORPHAN, CELLTECH, and any contract manufacturer is responsible for
keeping records of equipment usage (in case of using non-dedicated
equipment), cleaning, any maintenance/calibration performed, batch
records and laboratories raw data as appropriate for their facilities
and equipment.
QUALITY AGREEMENT APPENDIX: PAGE 4
5.11 Storage and Shipment
5.11.1. Storage: All parties will ensure that the Product is stored
under temperature controlled conditions, i.e., 25(degree)C
with excursions allowed for 15-30(degree)C. ORPHAN and/or its
contractor will ensure that during storage before shipping of
the Product, appropriate controls are in place to ensure that
there is no interference, theft, product contamination or
mixture with any other products or materials. ORPHAN will
provide details of any labeling requirements and storage
conditions for the Product. Documentation of chain of custody
and of appropriate storage conditions will be made available
upon request of via on site audit.
5.11.2. Packaging and Labeling for Transit: The Product will be
labeled and packaged for transit pursuant to instructions
timely provided to CELLTECH in writing by ORPHAN and complying
with cGMP. A temperature recorder device will be put in place
for each shipment.
5.11.3. Segregation of Product: All parties will maintain proper
segregation of the Product. Different lots of a single Product
or different types of products will not be mixed on a pallet.
5.11.4. Availability of Product for Shipment: Only approved, finished
(unless finished by CELLTECH), labeled Product will be shipped
by ORPHAN under CELLTECH's responsibility. Unless approved by
CELLTECH, ORPHAN will not ship any product that is unapproved
or under quarantine unless.
6. QUALITY CONTROL
6.1 General
The testing activities for the Product will be managed by ORPHAN as
defined in the License Agreement, before delivery of the Product to
CELLTECH. At receipt, CELLTECH's Quality Control and QA Units shall be
responsible for any pharmaceutical testing required and release of the
Product in the Territory. Copies of release and testing documentation
shall be provided to ORPHAN upon release.
6.2 In-Process and Product Testing
6.2.1. Any test method developed by ORPHAN will be transferred to
CELLTECH and the transfer complete prior to the Product
release.
6.2.2. Contract and approved testing laboratories will perform all
in-process and Product testing using approved specifications
and methods of analysis. Laboratory notebook pages and
representative sample chromatograms can be reviewed on site at
ORPHAN by CELLTECH. Such data will be made available by ORPHAN
to CELLTECH upon request.
6.2.3. A Qualified Person/QA Representative from either ORPHAN or a
contract manufacturer will sign a Certificate of Conformity
confirming that the Product
QUALITY AGREEMENT APPENDIX: PAGE 5
has been manufactured, packaged, tested, and meets the
requirements of the Master Batch Record and Product
Specifications. The current release documentation information
are attached in the main agreement.
6.2.4. Any reference standards must be accompanied by a COA listing
the expiration date and any correction factors that need to be
applied.
6.2.5. CELLTECH will perform controls of the Product before
pharmaceutical release in the Territory. Dispute resolutions
in conflicting test data will be handled according to the
provisions of Section 9.
6.2.6. CELLTECH may perform release testing at a contract laboratory.
Copies of all related documentation will be provided to ORPHAN
upon request to support final disposition by CELLTECH.
6.3 Retain Samples
6.3.1. ORPHAN and/or its contract manufacturer pursuant to separate
contract are responsible for ensuring that samples of the drug
are retained for one (1) year beyond the expiry date of the
Product. ORPHAN is responsible for ensuring that samples of
excipients are retained for one (1) year after expiry of the
Product in which such excipients are utilized. The amount of
sample retained will be three times the quantity required to
carry out all the tests required to determine if the material
meets its specifications.
6.3.2. ORPHAN is responsible for ensuring that samples of the Product
are retained for at least one (1) year beyond the expiry date
of the Product. The amount of sample retained will be three
times the quantity required to carry out all of the tests
required to determine if the material meets its
specifications.
6.4 Routine Stability Program
ORPHAN is responsible for maintaining a Stability Program and
will retain samples from Product lots to be placed on
stability.
The quantity of retained Product will be the amount necessary
to complete the approved stability protocol, typically with
the addition of enough sample to allow one additional test
station (time point) not specified in the protocol.
6.5 Out-of-Specification (OOS) Investigations
6.5.1. ORPHAN's Investigations
**
6.5.2. CELLTECH's Investigations
**
QUALITY AGREEMENT APPENDIX: PAGE 6
6.6 Contract Quality Control Laboratories
ORPHAN is responsible for ensuring the compliance and documented
qualification of any Quality Control laboratory contracted to perform
testing of the Materials used in the manufacture of the Product through
an appropriate laboratory audit for compliance. Each party in their
territory is responsible for ensuring such laboratories are on file
with regulatory authorities and authorized under appropriate marketing
applications or supplements.
7. QUALITY ASSURANCE
7.1 Deviations and Investigations
7.1.1. Deviations: Any deviation from the process during manufacture
or OOS result must be carefully documented and approved by
ORPHAN QA and appropriate area management. A copy of the final
investigation report will be included in the Release
Documentation package (Appendix 4) provided to CELLTECH.
7.1.2. ORPHAN will notify CELLTECH of the disposition of any rejected
Product which was previously shipped to CELLTECH.
7.1.3. ORPHAN will notify CELLTECH within 48 hours, in writing, if
any problems are discovered that may impact upon Product lots
previously shipped to CELLTECH.
7.1.4. Some investigations may require additional testing, stability,
or validation to be conducted. This work will be performed by
ORPHAN or CELLTECH as agreed by both parties.
7.2 Lot Disposition.
For each lot, ORPHAN will provide the documentation and a copy of
executed Batch Record of the Product, as listed in Appendix 4.
7.3 Quality Assurance Certificate of Compliance/Analysis
7.3.1. ORPHAN will provide a standard Certificate of Analysis
indicating the test results of each test performed as well as
a signed Certificate of Compliance from the manufacturer
confirming that the Product has been manufactured, tested and
stored according to the requirements of the Master Production
Record.
7.3.2. ORPHAN will provide complete copies to CELLTECH of the
executed Master Production and Packaging Record. Shipments of
the lots may require prior authorization by CELLTECH.
7.4 Product Release
7.4.1. **
QUALITY AGREEMENT APPENDIX: PAGE 7
7.4.2. **
7.4.3. **
7.5 Product Complaints and Recalls
7.5.1. Product Complaints: **
7.5.2. Product Recall: **
7.6 Records Retention
7.6.1. **
7.7 Quality Assurance Presence in the Manufacturing Facility
7.7.1. **
7.7.2. **
8. REGULATORY COMPLIANCE
8.1 Regulatory Inspections
8.1.1. ORPHAN will immediately inform CELLTECH of any regulatory
inspections that directly affect the Product and CELLTECH will
likewise inform ORPHAN of any inspections that directly affect
the Product.
8.1.2. **
8.1.3. Additionally ORPHAN will immediately forward to CELLTECH and
CELLTECH will immediately forward to ORPHAN any regulatory
correspondence exchanged with the Regulatory Authority and
related to the Product or to other system issues that impact
manufacturing, packaging or testing for the Product.
8.1.4. ORPHAN will inform CELLTECH in writing of any regulatory issue
that impacts ORPHAN's ability to manufacture the Product.
8.2 Regulatory Actions
8.2.1. ORPHAN will notify CELLTECH of any regulatory actions on the
Product that may impact CELLTECH.
8.2.2. **
8.3 Regulatory Affairs
8.3.1. **
QUALITY AGREEMENT APPENDIX: PAGE 8
8.3.2. **
8.3.3. **
8.3.4. **
9. DISPUTE RESOLUTION
9.1 Non-Conformity Dispute
CELLTECH is responsible for the pharmaceutical release of the Product
in Territory. In the event that a dispute arises between ORPHAN and
CELLTECH in a non conformity in manufacturing and testing a lot of the
Product, the supervisors of the QA departments from both companies
shall in good faith promptly discuss the OOS results. They will
possibly ask for a second control by an independent approved laboratory
agreed by both ORPHAN and CELLTECH. Awaiting the resolution of the
dispute and if necessary, ORPHAN will send another batch of Product to
avoid any disruption in the treatment of patients. Financial liability
shall be determined according to the License Agreement.
9.2 Other Disputes
Other disputes shall be resolved in accordance with the License
Agreement.
10. CHANGE MANAGEMENT
10.1 Technical & cGMP Impact Assessment
10.1.1. **
10.1.2. **
10.1.3. **
10.1.4. **
11. PRODUCT AND PROCESS VALIDATION
11.1 Process Validation
ORPHAN is responsible for ensuring that the manufacturing process is
validated. The validation should ensure that the process is capable of
consistently achieving the Product acceptance specifications.
ORPHAN will submit to CELLTECH copies of the Process Validation Reports
as required by CELLTECH.
QUALITY AGREEMENT APPENDIX: PAGE 9
11.2 Equipment, Computer, Facility and Utilities Qualification
Contract manufacturers are responsible for all equipment, computer,
facility and utility qualification activities associated with the
Product. CELLTECH, ORPHAN, and their respective contractors are
responsible for 21 CFR Part 11 compliance of computerized equipment as
may be required. ORPHAN will submit to CELLTECH any qualification
documentation report as required by CELLTECH.
11.3 Laboratory Qualification
ORPHAN is responsible for ensuring that all laboratories and laboratory
equipment are in compliance with applicable cGMP's guidelines and
particularly 21 CFR Part 11. ORPHAN will provide to CELLTECH support in
the form of existing analytical documentation to assist in methods
transfer or methods validation.
12. ANNUAL PRODUCT REVIEW AND ANNUAL REPORT
12.1 Annual Product Review
12.1.1. ORPHAN QA will perform an Annual Product Review (APR) for the
Product and will issue a report to CELLTECH no less than once
each calendar year. This report will summarize manufacturing
and testing complaints related to the Product. It will be a
review of any minor changes at ORPHAN in the manufacturing,
testing, storage or validation of the Product in the previous
calendar year and a summary of lots made, released and
rejected. Also control charting or trend analysis of key
Product parameters will be performed. Any abnormalities will
be explained in the APR.
12.1.2. ORPHAN Regulatory Affairs is responsible for preparing any APR
as required by applicable regulations, including 21 CFR
314.70, 314.81, and/or 601.
QUALITY AGREEMENT APPENDIX: PAGE 10
APPENDIX 1: ORPHAN AND CELLTECH'S RESPONSIBILITIES
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
RESPONSIBILITIES SECTION ORPHAN CONTRACTOR CELLTECH
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o MANUFACTURING OPERATIONS 5.1 X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o SECONDARY PACKAGING, LABELLING AND 5.1 X X
PHARMACEUTICAL RELEASE OPERATIONS
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o PROMOTION, MARKETING AND DISTRIBUTION 5.1 X X
OPERATIONS
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o CGMP COMPLIANCE: X X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Manufacturing operations 5.2 X X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Site, premises, equipment, environment, 5.2 X X X
cleaning
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Materials and suppliers, tests and 5.4-5.5 X X X
controls, storage, traceability
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o PRODUCTION AND RETENTION OF
DOCUMENTATION AND REPORTS:
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Master Batch Records (manufacturing 5.6 - 5.7 X X X
and primary packaging)
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* SOP 5.7 X X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Reports and records (manufacturing, 5.11 X X X
equipment, analytical controls)
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o VALIDATION OF ANALYTICAL METHODS AND 5.8 X X
TRANSFER TO CELL TECH
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o RETAIN MANUFACTURING AND EQUIPMENT 5.11 X
DATA
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o STORAGE AND SHIPMENT OF PRODUCT 5.12 X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o QUALITY CONTROLS AND RETAIN SAMPLES 6.1 to 6.3
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Materials X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* In-process controls X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Product controls X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Packaged Product X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o STABILITY STUDIES 6.4 X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
QUALITY AGREEMENT APPENDIX: PA
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
OOS INVESTIGATIONS:
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* On the Product 6.5 X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* On the Packaged Product 6.5 X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o DEVIATIONS AND INVESTIGATIONS 7.1 X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o CERTIFICATES OF COMPLIANCE, CERTIFICATES 7.3 X
OF ANALYSIS
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o PHARMACEUTICAL RELEASE IN THE TERRITORY 7.4 X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o PRODUCT COMPLAINTS AND RECALLS IN THE 7.5 X
TERRITORY
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o QA AUDITS OF SUPPLIERS OF MATERIALS 5.5 X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o QA AUDITS OF THE MANUFACTURER OF THE 7.7 X
PRODUCT
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o CHANGE MANAGEMENT: 10.1
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Minor X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Major X X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
* Critical X X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o PRODUCT AND PROCESS VALIDATION 11 X X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
o ANNUAL PRODUCT REVIEW 12 X
-------------------------------------------------------- -------------- --------------- ------------------------ -------------------
QUALITY AGREEMENT APPENDIX: PAGE 2
APPENDIX 2: FORMULA AND PRODUCT SPECIFICATIONS
**
QUALITY AGREEMENT APPENDIX: PAGE 1
EUROPEAN PRODUCT SPECIFICATIONS
See Licensing Agreement dated October 29, 2003
To be established upon approval of a marketing application in the EU
QUALITY AGREEMENT APPENDIX: PAGE 2
APPENDIX 3: CONTACT NAMES
--------------------------------------------------------------------------------
ISSUE ORPHAN CELLTECH
--------------------------------------------------------------------------------
Quality Assurance Xxxxxxx Xxxxx
Assoc. Manager, Quality
Assurance
Ph: (000) 000-0000
Fax: (000) 000-0000
xxxxxx@xxxxxx.xxx
--------------------------------------------------------------------------------
Quality Control Xxxxxxxx Xxxxx
Assoc. Manager, Quality
Assurance
Ph: (000) 000-0000
Fax: (000) 000-0000
xxxxxx@xxxxxx.xxx
--------------------------------------------------------------------------------
Regulatory Affairs Dayton Reardan, Ph.D.. RAC Xxxxx Xxxxx, Ph.D.
VP Regulatory Affairs
Phone: 000-000-0000
FAX: 000-000-0000
E-mail: Xxxxxxxx@Xxxxxx.xxx
--------------------------------------------------------------------------------
Manufacturing Dayton Reardan, Ph.D.. RAC Xxxx Xxxxx?
VP Regulatory Affairs
Phone: 000-000-0000
FAX: 000-000-0000
E-mail: Xxxxxxxx@Xxxxxx.xxx
--------------------------------------------------------------------------------
Production Planning Xxxxxxxx Xxxxxx
Director of Production Planning
Phone: 000-000-0000
FAX: 000-000-0000
E-mail: XXxxxxx@Xxxxxx.xxx
--------------------------------------------------------------------------------
Finance/billing Xxx XxXxxxx
VP, CFO
Phone: 000-000-0000
FAX: 000-000-0000
E-mail: XXxXxxxx@Xxxxxx.xxx
--------------------------------------------------------------------------------
QUALITY AGREEMENT APPENDIX: PAGE 1
APPENDIX 4: RELEASE DOCUMENTATION
**
QUALITY AGREEMENT APPENDIX: PAGE 1
APPENDIX F
CELLTECH FIRST COMMERCIAL YEAR FORECAST
**
F-1
APPENDIX G
COMPONENTS OF STANDARD MANUFACTURING COST
AND
TRANSFER PRICE
**
G-1
APPENDIX H
REGULATORY ASSISTANCE
1. Marketing Authorizations and Registrations
In connection with Celltech's acquisition of the Marketing
Authorizations and Registrations and in addition to Orphan Medical's obligations
set forth elsewhere in this Agreement, Orphan Medical will, at its own cost and
expense (but subject to the limitations set forth in Section 3.2), take the
following actions:
A. Promptly provide Celltech with copies of the NDA(s)
and other relevant Know How and documentation
currently in Orphan Medical's possession;
B. On Celltech's reasonable request, provide reasonable
assistance in reviewing Product clinical studies; and
C. Promptly review and comment upon, as necessary, all
applications for Marketing Authorizations and
supporting documentation that Celltech shall submit
to Orphan Medical for review prior to filing with the
appropriate Regulatory Authorities in the Territory.
2. Training, Sales and Technical Literature.
In addition to the materials that Orphan Medical is to provide Celltech
pursuant to Section 6.5 of this Agreement, Orphan Medical shall also provide to
Celltech in accordance with Section 6.5, the following materials:
A. All training materials used by Orphan Medical during
the Term;
B. Copies of all studies relating to the Product
conducted by or on behalf of Orphan Medical, and all
updates thereto;
C. During each of the first three (3) years of the Term,
Orphan Medical, at its sole cost and expense, shall
provide five (5) eight (8) hour days of sales and
technical training to Celltech's employees, agents,
independent contractors, Subdistributors or
Sublicensees at the Celltech facility specified by
Celltech. Celltech and Orphan Medical shall use
Commercially Reasonable Efforts to coordinate
mutually convenient days for such training; provided,
however, if the parties cannot agree on a mutually
convenient time for Orphan Medical to provide such
services, Celltech shall designate the dates for such
training and notify Orphan Medical thereof at least
thirty (30) days prior to the first designated
training date.
x-0
XXXXXXXX I
TRADEMARK USE STANDARDS
The trademark use standards below are minimum requirements to ensure consistent
and appropriate use of the Xyrem(R) trademark. The consistent application of the
Xyrem(R) trademark standards are essential to conveying a common image to
reinforce consumer awareness and recognition of the Xyrem(R) trademark.
USE REQUIREMENTS:
**
COLOR REQUIREMENTS
TWO COLOR XYREM LOGO: **
FOUR COLOR PRINT TO MATCH XYREM LOGO: **
BLACK AND WHITE XYREM LOGO: **
I-1
SCHEDULE 8.1(E)(II)
PATENT RIGHTS, TRADEMARK AND OTHER INTELLECTUAL PROPERTY
RELATING TO THE PRODUCT IN THE TERRITORY
PATENT(1)
Country Stage Serial # Date Filed Patent # Issue Date
------------------------------------------------------------------------------------------------------
European Granted 99964320.8 12/22/99 1140061 5/2/03
Austria Granted 99964320.8 12/22/99 1140061 5/2/03
Belgium Granted 99964320.8 12/22/99 1140061 5/2/03
Denmark Granted 99964320.8 12/22/99 1140061 5/2/03
Finland Granted 99964320.8 12/22/99 1140061 5/2/03
France Granted 99964320.8 12/22/99 1140061 5/2/03
Germany Granted 99964320.8 12/22/99 69907508.408 5/2/03
Ireland Granted 99964320.8 12/22/99 1140061 5/2/03
Italy Granted 99964320.8 12/22/99 1140061 5/2/03
Netherlands Granted 99964320.8 12/22/99 1140061 5/2/03
Spain Granted 99964320.8 12/22/99 1140061 5/2/03
Sweden Granted 99964320.8 12/22/99 1140061 5/2/03
Switzerland Granted 99964320.8 12/22/99 1140061 5/2/03
United Kingdom Granted 99964320.8 12/22/99 1140061 5/2/03
TRADEMARK(1)
European Community Trademark Reg. No.: 957712
Registered: 10 March 2000
Norway Reg. No.: 217395
Registered: 23 January 2003
Iceland Reg. No.: 679/2002
Registered: 31 July 0000
Xxxxxxxxxxx Reg. No.: 503.859
Registered: 9 October 2002
Czech Republic Reg. No.: 251135
Registered: 27 January 0000
Xxxxxx Xxxxxxxx Application No.: POZ 1676-2002
Registered: Pending
Poland Appl. No.: Z-251131
Registered: Pending
Hungary Appl. No.: M 02 02667
Registered: Pending
**
--------------------------------
(1) All are registered in the name of Orphan Medical Inc.
1
SCHEDULE 8.1(E)(III)
INFRINGEMENT OR CONFLICT
None
SCHEDULE 8.1(F)(I)
CONTRACTS
**
SCHEDULE 8.1(F)(II)
DEFAULT, BREACH OR VIOLATION
None
SCHEDULE 8.1(G)(I)
CLAIMS
None
SCHEDULE 8.1(H)
REQUIRED APPROVALS
None
SCHEDULE 8.1(E)(I)
CONTRACTS
None
SCHEDULE 8.1(E)(II)
DEFAULT, BREACH OR VIOLATIONS
None
SCHEDULE 8.1(F)(I)
CLAIMS
None
SCHEDULE 8.2(G)
REQUIRED APPROVALS
None
