Exhibit 2.4
INTERIM SUPPLY AGREEMENT
This Interim Supply Agreement (this "Supply Agreement") is
made and entered into as of the 13th day of December, 2001 by and between NEOSAN
PHARMACEUTICALS INC., a Delaware corporation and a wholly owned subsidiary of
aaiPharma Inc., a Delaware corporation NeoSan Pharmaceuticals Inc. (being
referred to herein as the "Company") and NOVARTIS PHARMACEUTICALS CORPORATION, a
Delaware corporation (the "Manufacturer").
WITNESSETH:
WHEREAS, pursuant to that certain Asset Purchase Agreement,
dated as of the date hereof, by and among the Parties hereto (the "Asset
Purchase Agreement"), the Company purchased certain Purchased Assets from the
Manufacturer and Novartis Corporation, a New York corporation, relating to the
Products (the "Acquisition"); and
WHEREAS, in connection with the Acquisition, the Company
desires to engage the Manufacturer to manufacture and/or supply the Products in
the Territory to the Company on the terms and conditions set forth herein; and
WHEREAS, the Manufacturer wishes to manufacture and/or supply
the Products to the Company on the terms and conditions set forth herein; and
WHEREAS, the rules of construction set forth in Section 1.02
of the Asset Purchase Agreement are incorporated by reference herein and any
capitalized terms or any other terms specifically defined in the Asset Purchase
Agreement used herein shall have the meaning ascribed to them in the Asset
Purchase Agreement, unless otherwise expressly set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
As used in this Supply Agreement, the following terms shall
have the meanings ascribed to them below:
(a) "API Costs" has the meaning set forth in Section 13.12 of
this Supply Agreement.
(b) "Adverse Reactions" means any adverse event associated
with the use of a drug in humans, whether or not considered drug related,
including the following: an adverse event occurring in the course of the use of
a drug product in professional practice; an adverse event occurring from drug
overdose, whether accidental or intentional; an adverse event occurring from
drug abuse; an adverse event occurring from drug withdrawal; and any failure of
pharmacological action.
(c) "cGMP Requirements" means the requirements of the US cGMP.
(d) "Contract Year" means each period of one (1) year
commencing on the Effective Date or any anniversary thereof during the Term of
this Supply Agreement.
(e) "Effective Date" means the date set forth in the preamble
of this Supply Agreement.
(f) "FDA" means the United States Food and Drug
Administration.
(g) "FFDCA" means the Federal Food, Drug, and Cosmetic Act, 21
U.S.C. Sections 301 et seq., as amended.
(h) "Forms" has the meaning set forth in Section 13.6 of this
Supply Agreement.
(i) "Including" or "includes" means "including, without
limitation," or "includes, without limitation".
(j) "IP" has the meaning set forth in Section 12.2 of this
Supply Agreement.
(k) "Manufacturer" has the meaning set forth in the preamble
of this Supply Agreement.
(l) "Manufacturing Fee" means the fee paid to the Manufacturer
pursuant to Section 6.1 of this Supply Agreement.
(m) "NDA" or "New Drug Application" means any new drug
application for any Product filed with the FDA pursuant to 21 C.F.R., Part 314,
and all supplements, amendments and revisions thereto.
(n) "Party" means each of the Manufacturer and the Company.
(o) "Product Manufacturing Technology" means all trade secrets
in the possession or under the control of the Manufacturer, including research
and development, formulae, test procedures, manufacturing procedures, Product
formulations or other technical or proprietary information and knowledge,
whether or not patentable, that are necessary for, and used by the Manufacturer
solely and specifically in the manufacture of the Products in the Territory,
that are included in the Licensed Intellectual Property (as
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defined in the License Agreement) or the Product Intellectual Property
(excluding, in any event, any plant, tangible property or equipment).
(p) "Rolling Monthly Forecast" has the meaning set forth in
Section 3.1 of the Supply Agreement.
(q) "Specifications" means the requirements and standards for
the Products set forth on Exhibit A, as amended or supplemented in accordance
with this Supply Agreement.
(r) "Term" has the meaning set forth in Section 8.1 of this
Supply Agreement.
(s) "US cGMP" means the FDA's current good manufacturing
practice requirements as promulgated under the FFDCA at 21 C.F.R. (parts 210 and
211), and as further defined by FDA guidance documents, as such may be amended
from time to time.
ARTICLE II
MANUFACTURE AND SALE OF PRODUCTS
2.1 Engagement. During the Term of this Supply Agreement and
subject to the terms and conditions set forth herein, the Company hereby agrees
to purchase, and the Manufacturer agrees to supply, all of the Company's and its
Affiliates' requirements for the Products for sale in the Territory. The Company
and its Affiliates shall purchase all of their requirements for the Products
exclusively from the Manufacturer. Subject to the terms set forth herein, the
Manufacturer is responsible for the purchase, at its own expense and for its own
account, of all raw materials, active pharmaceutical ingredients, packaging
components and other items necessary for the manufacture of the Products.
2.2 Sale and Distribution. The Company and its Affiliates
shall sell the Products only in the Territory and shall not directly or
indirectly sell or otherwise distribute the Products outside of the Territory.
2.3 Labeling. The Company shall specify all labeling to be
used on each Product and the packaging thereof, including any changes or
modifications to such labels; provided that the Company shall ensure that all
such labeling complies with applicable Law and the Specifications. Each Product
and all labeling and packaging used in connection therewith shall include the
trademark associated with such Product, in the manner and to the extent
specified in the Specifications. The Manufacturer agrees to use the specified
labeling (and only such labeling) on the Products, and not to use such labeling
on any other product. Any change or modification to any Product label shall be
implemented by the Manufacturer (i) as soon as possible if required by Law, or
(ii) within a reasonable timeframe to be agreed upon by the Parties, following
the Manufacturer's receipt of notification of such label changes; provided such
changes or modifications meet regulatory requirements. The Company shall
reimburse the Manufacturer for costs incurred in connection with any change made
in accordance with this Section 2.3, including the costs of obsolescence of
goods-in-process, packaging materials and
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supplies, and finished goods not suitable for marketing in the Territory,
provided, that the Company shall not be liable for any goods-in-process,
packaging materials and supplies, and finished goods in excess of those
quantities necessary for Manufacturer to meet the Company's requirements, as set
forth in the Rolling Monthly Forecast (as defined below), for the first three
complete calendar months following the date of such change. The Company shall
own all intellectual property on and related to such labeling of products.
Notwithstanding the foregoing, to the extent that Manufacturer shall purchase
certain packaging materials and supplies having extended lead times (as
designated on Schedule 2.3 hereto) in order to satisfy its obligations under the
terms of this Supply Agreement, the Company shall purchase all of such materials
and supplies owned by Manufacturer at the time of any change made in accordance
with this Section 2.3 that are made obsolete as a result of such change.
ARTICLE III
FORECASTS, ORDERS AND SHIPMENT
3.1 Forecasting. In order to assist the planning of production
runs for the Products, the Company shall, prior to the commencement of each
calendar month during the Term of this Supply Agreement, provide the
Manufacturer with its forecast for each month of the remaining Term of this
Supply Agreement of the quantities of each of the Products that the Company
estimates it will be ordering during such months (the "Rolling Monthly
Forecast"). The Company shall forecast in amounts comprising full batch
quantities, as such quantities are set forth on Schedule 3.1. The Manufacturer
shall be entitled to order sufficient quantities of long lead time components to
meet the Company's forecasts.
3.2 Inventory Purchase Order.
(a) In accordance with the terms hereof, the Company hereby
orders for delivery and the Manufacturer hereby acknowledges and accepts such
order for the Products listed on Schedule 3.2(a) at the applicable Manufacturing
Fee payable on the Closing Date, in the volumes and dosage strengths as noted on
said Schedule 3.2(a) (the "Inventory Purchase Order").
(b) The Company and the Manufacturer hereby agree that the
Inventory Purchase Order shall include all of Seller's inventory of Finished
Goods located in the Territory that exist on and as of the Closing Date,
provided that, such inventory shall exclude any Finished Goods that, on and as
of the Closing Date, have a remaining shelf-life of less than one (1) year.
Except as otherwise set forth in this Section 3.2(b), the Finished Goods
delivered pursuant to the Inventory Purchase Order will conform to the
specifications set forth in this Supply Agreement and otherwise applicable to
Finished Goods. Manufacturer shall deliver the Finished Goods pursuant to the
Inventory Purchase Order on the Closing Date.
3.3 Orders.
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(a) On the Effective Date, the Company will provide
Manufacturer a purchase order for the Products it will require during the first
four-month period of the Term and the quantities listed therein will constitute
a firm order and the Company shall be fully responsible for any changes to such
firm order (the "Initial Purchase Order," as set forth in Schedule 3.3(a)).
(b) Along with each Rolling Monthly Forecast described in
Section 3.1 above, the Company will provide the Manufacturer with a purchase
order for the Company's Product requirements for the fourth month of the
attached Rolling Monthly Forecast and the quantities listed therein will
constitute a firm order and the Company shall be fully responsible for any
changes to such firm order. If the Manufacturer does not refute the purchase
order in writing within ten (10) days of receipt on the basis that such purchase
order exceeds the limits on orders for the applicable period or for other
nonconformance with this Agreement, the purchase order will have been deemed
accepted. Subject to Section 3.3(d), if the Manufacturer refutes the purchase
order, both parties shall expeditiously work together to amicably resolve any
issues.
(c) The Company shall place orders for Products in various
forms and formulations in writing in advance of the Company's requested delivery
dates. Each order shall specifically refer to this Supply Agreement and shall
specify the quantity and description of each Product ordered and the requested
delivery dates (which delivery dates shall not be on Saturday, Sunday or
holiday). The minimum size of any order placed by the Company shall be a full
batch in accordance with Schedule 3.1, except with the advance approval of the
Manufacturer. The purchase orders shall be delivered to such location as the
Manufacturer designates in writing to the Company from time to time.
(d) The Manufacturer shall not be required to manufacture more
than one hundred twenty-five percent (125%) of the forecasted monthly quantities
in each of months five through twelve, inclusive, of the most recent Rolling
Monthly Forecast. The Company shall be required to purchase at least
seventy-five percent (75%) of the forecasted monthly quantities in each of
months five through twelve, inclusive, of the most recent Rolling Monthly
Forecast. The forecasted quantities in months thirteen and beyond in the Rolling
Monthly Forecast are nonbinding on the parties.
(e) Changes to any issued and accepted purchase orders must be
in writing and agreed upon by both parties.
3.4 Delivery.
(a) The Manufacturer shall supply the Products in response to
orders placed in accordance with the terms of this Supply Agreement by the
Company. Delivery dates as set forth in any order or confirmation thereof shall
be deemed to be estimated only. The Manufacturer shall use its commercially
reasonable efforts to meet each delivery date, but shall not be liable for any
delay in the delivery of any Products. The Manufacturer shall not be required to
fill orders during any calendar month that exceed the Purchase Orders placed by
the Company prior to the commencement of such calendar
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month. Each shipment of Products shall be accompanied by a Certificate of
Analysis and/or a Certificate of Compliance.
(b) All Products shipped under this Supply Agreement shall be
shipped FOB to such location designated by the Company in the applicable
purchase order. The Company shall pay all freight, insurance charges, taxes,
import and export duties, inspection fees and other charges applicable to the
sale and transport of Products purchased by the Company. Title and risk of loss
and damages to Products purchased by the Company shall pass to the Company upon
delivery to the carrier. In the event of damage or loss to the Products after
delivery to the carrier, the Company shall be responsible to file claims with
the carrier. The Manufacturer shall cooperate with the Company in the filing of
such claims. The Company shall select the method of shipment and the carrier.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Manufacturer. The
Manufacturer hereby represents and warrants to the Company:
(a) Products. All Products delivered pursuant to the terms
hereof by the Manufacturer (or any subcontractor thereof) to the Company during
the Term will at delivery be in compliance with the Specifications and the cGMP
Requirements and, at the time of delivery of the Products, the Products will be
free from defects in materials and workmanship and shall not be adulterated or
misbranded within the meaning of the FFDCA, and will not be an article which may
not, under the FFDCA, be introduced into interstate commerce. Except for the
change currently contemplated by Manufacturer with respect to packaging the
Product in Dividilla ampules at the Novartis Pharma XX Xxxxx facility, the
Manufacturer will not make any material changes in its manufacturing or testing
procedures with respect to the Product, or any of its bulk drug substance
suppliers for the Product, without the Company's prior written consent, which
shall not be unreasonably withheld. For purposes of the foregoing sentence,
material changes shall be limited to those which would place the Product outside
the NDA and/or the Product Specifications (or cGMP) and which would not be
corrected through a deviation report, or which would interrupt supply of the
Product to the Company.
(b) Authorization. This Supply Agreement has been duly
executed and delivered by the Manufacturer and constitutes valid and binding
obligations of the Manufacturer, enforceable against the Manufacturer in
accordance with its terms, except as enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other Laws relating to creditors' rights generally and by general equitable
principles. The execution, delivery and performance of this Supply Agreement
have been duly authorized by all necessary corporate action on the part of the
Manufacturer.
(c) Absence of Conflicts. The execution, delivery and
performance of this Supply Agreement by the Manufacturer does not conflict with
or constitute a default
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under any agreement, instrument or understanding, oral or written to which it is
a party or by which it may be bound, does not conflict with any provision of any
organizational document of the Manufacturer and does not conflict with or
violate any applicable Law.
(d) Organization and Standing. The Manufacturer is a
corporation, duly organized, validly existing and in good standing under the
Laws of the State of Delaware.
(e) Power and Authority. The Manufacturer has corporate power
and authority to execute, deliver and perform this Supply Agreement and to
consummate the transactions contemplated hereby.
(f) EXCEPT AS EXPRESSLY STATED IN THIS SUPPLY AGREEMENT, THE
MANUFACTURER MAKES NO EXPRESS OR IMPLIED WARRANTY AS TO THE MERCHANTABILITY OF
THE PRODUCTS, OR AS TO THEIR FITNESS FOR A PARTICULAR PURPOSE AND DISCLAIMS ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED.
4.2 Representations and Warranties of the Company. The Company
hereby represents and warrants to the Manufacturer:
(a) Authorization. This Supply Agreement has been duly
executed and delivered by the Company and constitutes valid and binding
obligations of the Company, enforceable against the Company in accordance with
its terms except as enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other Laws relating to or
affecting creditors' rights generally and by general equitable principles. The
execution, delivery and performance of this Supply Agreement has been duly
authorized by all necessary action on the part of the Company, its officers and
directors.
(b) Absence of Conflicts. The execution, delivery and
performance of this Supply Agreement by the Company does not conflict with or
constitute a default under any agreement, instrument or understanding, oral or
written to which it is a party or by which it may be bound, does not conflict
with any provision of any organizational document of the Company and does not
conflict with or violate any applicable Law.
(c) Organization and Standing. The Company is a corporation,
duly organized, validly existing and in good standing under the Laws of
Delaware.
(d) Power and Authority. The Company has full corporate power
and authority to execute, deliver and perform this Supply Agreement and to
consummate the transactions contemplated hereby.
ARTICLE V
QUALITY ASSURANCE
5.1 Manufacturer's Covenants. The Manufacturer hereby
covenants during the Term it shall (and cause its subcontractors to):
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(a) manufacture, fill, package, test, release and warehouse
the Products in conformity with applicable cGMP Requirements and the
Specifications, and in accordance, in all material respects, with all other
applicable Law;
(b) maintain all records as are necessary and appropriate to
demonstrate compliance with applicable cGMP Requirements; and
(c) grant the Company the right, on reasonable advance notice
and during normal business hours (once per year) during the Term of this Supply
Agreement, to inspect and audit the facilities and operations of the
Manufacturer directly related to the manufacture and supply of the Products in
order to confirm compliance with the covenants contained in this Supply
Agreement and, in the event that the Manufacturer shall rely upon contractors to
manufacture and supply any Products, the Manufacturer shall use commercially
reasonable efforts to cause such contractors to permit the Company's inspection
and audit of their facilities directly responsible for the manufacture and
supply of Products, on reasonable advance notice and during normal business
hours (once per year); provided, however, the Manufacturer reserves the right to
refuse access, or to cause or permit its contractors to refuse access, to any
facilities where there is a risk to health or safety or to the security or
quality of the Products or any other products of the Manufacturer or its
contractors.
5.2 The Company's Covenants. The Company hereby covenants
during the Term that it shall:
(a) hold, store, handle, ship, deliver, distribute and/or sell
the Products (i) in substantial accordance with applicable cGMP Requirements and
applicable Laws; and (ii) in compliance with the Specifications;
(b) enter into all necessary compliance agreements designated
by the Manufacturer, including but not limited to agreements to cover adverse
incident reporting; and
(c) upon delivery of the Products to the Company, the Company
shall be solely responsible for compliance with all quality control testing and
other testing requirements set forth in this Supply Agreement and all applicable
Laws with respect to such Product.
5.3 Non-Conforming Products. Notwithstanding any other
provisions of this Supply Agreement, the Company agrees, if so requested by the
Manufacturer in advance, to return to the Manufacturer, at the Manufacturer's
expense, any Products that are, or are claimed to be, damaged or defective, or
otherwise to dispose of such Products as the Manufacturer may direct.
5.4 Rejection of Delivered Products. Within 30 days of receipt
of any Product, the Company shall perform such samplings and tests using
validated test methods described in the applicable NDA, or equivalent filing,
for the Product, to determine whether the Product meets the requirements of this
Supply Agreement. It is understood and agreed that the Company will not perform
sampling and testing until it
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has validated its test methods. Any Product not refused within 30 days shall be
deemed accepted. If the Company wishes to refuse acceptance, the Company shall,
within such 30-day period, inform the Manufacturer of its refusal to accept the
lot(s) and the reason therefor. In the event that the Company refuses or revokes
acceptance, the Manufacturer, upon confirmation of the reasons for refusal of
the Product, shall either replace the defective Product or refund the purchase
price (including all transportation charges), as the Manufacturer may elect. If
the Manufacturer and the Company do not agree on the refusal or rejection of
Products, then either party may refer the matter for final analysis to a
specialized laboratory of national reputation acceptable to both parties for the
purpose of determining the results. Any determination by such laboratory shall
be final and binding upon the parties hereto.
ARTICLE VI
PRICE AND PAYMENTS
6.1 Manufacturing Fee. The prices for the supply of each
Product (the "Manufacturing Fee") shall be equal to the prices set forth in
Schedule 6.1; provided, however, the price for the Products set forth in
Schedule 6.1 shall be modified at the commencement of each Contract Year after
the initial Contract Year as set forth in Section 6.2.
6.2 Fee Adjustment. Commencing on January 1, 2003 and, on each
anniversary of the Effective Date thereafter, the price for each Contract Year
shall be determined by multiplying the price set forth in Schedule 6.1 by a
fraction, the denominator of which shall be the Consumer Price Index figure
published on or nearest to the Effective Date and the numerator of which will be
the Consumer Price Index figure published on or nearest to the first day of the
Contract Year for which the price is being determined. The Consumer Price Index
used shall be the consumer price index figure as published by the Bureau of
Labor Statistics of the U.S. Department of Labor. If the Company elects to have
a third party package the Product pursuant to Section 8.1, (i) the Manufacturing
Fee will be adjusted downward accordingly and the Parties shall reflect such
adjustment in a revised Schedule 6.1 which shall be acknowledged by the Parties
and appended hereto and (ii) the Company shall be responsible for paying the
third party for such packaging services.
6.3 Invoices. Upon delivery of each shipment of Products in
accordance with Section 3.4 of this Supply Agreement, the Manufacturer shall
promptly invoice the Company for such delivery. The Manufacturer shall send all
invoices to a single Company address.
6.4 Manner of Payment.
(a) The Company shall make all payments for Products sold
hereunder pursuant to this Article VI by check or by wire transfer in United
States currency, without any offset or deduction of any nature whatsoever,
within thirty (30) days after the date of the invoice. All payments shall be
made to such account as the Manufacturer shall have specified in writing to the
Company with written confirmation of payment sent by
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facsimile to such address as the Manufacturer shall have specified in writing to
the Company. If the Company fails to pay any invoiced amount when due, a service
charge will be imposed by the Manufacturer equal to the lesser of one and
one-half percent (1-1/2%) or the highest rate permitted by Law of the
outstanding amount for each month or portion thereof that such amount is
overdue.
(b) Each shipment of Products to the Company shall constitute
a separate sale, obligating the Company to pay therefor, whether said shipment
be in whole or only partial fulfillment of any order or confirmation issued in
connection therewith; provided that the quantity of Product contained in any
such shipment is no less than 90%, nor greater than 110% of the quantity
specified in the applicable purchase order. The Manufacturer shall provide a
written explanation for any shipments containing a deviation of greater than 10%
of the requested quantity. Notwithstanding the foregoing, in the event that
Manufacturer shall deliver Products in quantities less than 90% or greater than
110% of the quantity specified in the applicable purchase order, and the Company
shall accept delivery of the Products in such quantities, the Company shall pay
for such quantities of Products in accordance with the terms hereof.
(c) The Company agrees not to make any deductions of any kind
from any payments becoming due to the Manufacturer unless the Company shall have
received written authorization from the Manufacturer authorizing such deduction.
6.5 Taxes. The Company shall bear solely the cost of any
taxes, levies, duties or fees of any kind, nature or description whatsoever
applicable to the sale and transportation of any Products sold by the
Manufacturer to the Company, and the Company shall forthwith pay to the
Manufacturer all such sums upon demand. The Company shall provide to the
Manufacturer any applicable sales, use or resale tax exemption certificates
prior to shipment of any Products.
ARTICLE VII
REGULATORY MATTERS; RECORDS
7.1 Inspections. The Manufacturer shall be responsible for
handling and responding to any FDA or other Governmental Entity inspections with
respect to its manufacture of the Products during the Term of this Supply
Agreement. The Manufacturer shall provide to the Company any information
reasonably requested by the Company and all information requested by any
Governmental Entity concerning any governmental inspection related to the
Products. To the extent the Manufacturer requires the assistance of the Company
in order to fulfill its obligations pursuant to this Section 7.1, the Company
agrees to fully cooperate and assist the Manufacturer at the Company's expense.
7.2 Reporting. During the Term of this Supply Agreement, the
Manufacturer will be responsible for any reporting of matters regarding the
manufacture of the Products to the FDA or other Governmental Entity, or the
Company, as the case may be, in accordance with applicable Law. If reported
directly to the FDA or other Governmental Entity, the Manufacturer shall furnish
copies of such reports to the
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Company. The Manufacturer shall also advise the Company of any occurrences or
information that arises out of the manufacturing activities of the Manufacturer
or its contractors that have or could reasonably be expected to have adverse
regulatory compliance or reporting consequences concerning the Products. The
Company will be permitted to review all out of specification and deviation
reports affecting the components, materials, active ingredients, excipients,
environmental conditions, and any other Product-specific or Product-related
activities that adversely affect the acceptability of the finished Product.
7.3 Permits, Licenses and Approvals. During the Term of this
Supply Agreement, the Manufacturer shall have primary responsibility to maintain
all regulatory and governmental permits, licenses and approvals that are
necessary for the manufacture and shipment of the Products to the Company;
provided, however, that the Parties understand and agree that the Company owns
the NDAs and, as a result, the Company will be responsible for any and all
NDA-related filings required pursuant to this Section 7.3. Each Party agrees
that, to the extent required to fulfill their respective obligations under this
Section 7.3, each Party will reasonably cooperate and assist the other party at
the requesting Party's expense.
7.4 Complaints; Recalls; Market Withdrawals; Adverse
Reactions.
(a) Complaints. Product complaint reports concerning the
manufacture of Products received by the Company will be faxed within two
Business Days after receipt to:
Novartis Customer Interaction Center
attn: Xxxxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx 000, Xxxx 0000X
Xxxxxx, XX 00000-0000
Fax # 000-000-0000
The Manufacturer will investigate all complaints associated with the manufacture
of Products and provide a written report to the Company. The Company will
investigate all other complaints associated with the Products and provide a
written report to the Manufacturer. The Company also will provide a written
response on each complaint to each complainant with a simultaneous copy to the
Manufacturer.
(b) Recalls. In the event the Manufacturer shall be required
to initiate a recall, field alert, Product withdrawal or field correction
pursuant to any Product provided under this Supply Agreement, the Manufacturer
shall immediately notify the Company in writing. In the event that the Company
believes that a recall, field alert, Product withdrawal, or field correction is
necessary for Products provided under this Supply Agreement, the Company shall
so notify the Manufacturer. In the event of such a recall, the provisions of
Section 7.4(c) shall be applicable.
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(c) Cost of Recall. In the event that any Product manufactured
hereunder is quarantined or recalled, or is subject to stop-sale action, whether
voluntary or by governmental action, it is agreed and understood that any
expenses, including reasonable fees of any experts or attorneys that may be
utilized by either party, government fines or penalties, related to such recall,
quarantine or stop-sale, shall be borne by the Company unless it is determined
that the Manufacturer has breached its obligations under this Supply Agreement
and such breach is the primary basis upon which said recall, quarantine or
stop-sale was initiated, in which case such expenses shall be shared according
to the relative responsibility of each party. Said determination may be made by
the Governmental Entity involved, or by mutual agreement of the parties
following examination and review of all records pertinent to the manufacture of
the Products subject to such recall.
7.5 Adverse Reactions. The Company and the Manufacturer shall
observe the procedures and notification requirements with respect to Adverse
Reactions described in Section 8.07(b) of the Asset Purchase Agreement.
7.6 Insurance. At all times from the Closing Date through the
later of December 31, 2007 and the expiration date for any Product supplied to
the Company pursuant to this Supply Agreement, both the Company and Manufacturer
shall each maintain, or self-insure for, product liability insurance written on
a claims-made basis in an amount of not less than $5,000,000 annual aggregate.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term. This Supply Agreement shall commence as of the
Effective Date and shall expire on the earlier of (i) the third anniversary of
the Effective Date or (ii) twelve months after receipt of written notice from
the Company of its intent to terminate the contract, unless earlier terminated
pursuant to this Article VIII of this Supply Agreement (the "Term"). The
Company, upon six months prior notice to the Manufacturer, may elect to have the
packaging of the Products performed by a third party.
8.2 Termination. Subject to the Manufacturer's obligations
under Section 8.4 below, either Party shall have the right to terminate this
Supply Agreement with immediate effect upon written notice to the other upon the
occurrence of either of the following:
(a) the other Party files a petition in bankruptcy, or enters
into an agreement with its creditors, or applies for or consents to the
appointment of a receiver or trustee, or makes an assignment for the benefit of
creditors, or becomes subject to involuntary proceedings under any bankruptcy or
insolvency Law; or
(b) the other Party fails to cure any noncompliance with any
of the terms and conditions hereof within the time period specified in any prior
written notice (which shall be at least 30 days) delivered to the non-compliant
Party by the other Party.
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8.3 Effect of Termination. If this Supply Agreement is
terminated pursuant to Section 8.2:
(a) The Company acknowledges and agrees that the Manufacturer
shall be entitled to cancel any purchase order accepted prior to the date notice
of termination is given, and shall not be obligated to ship any Products ordered
by the Company pursuant to such purchase order except as such Products may be
included in those shipped pursuant to Section 8.4 below.
(b) If the Company shall default in the payment of any
indebtedness to the Manufacturer when and as the same shall become due and
payable, and if such default shall continue for a period of ten (10) days after
written notice of such default shall have been given to the Company, then all of
the liabilities and obligations of the Company to the Manufacturer, whether then
due or not, shall become immediately due and payable.
(c) The termination of this Supply Agreement shall not release
the Company from the obligation to pay any sum that may be owing to the
Manufacturer (whether then or thereafter due to the Manufacturer) or operate to
discharge any liability that had been incurred by either party prior to any such
termination.
(d) During the period between the giving of any notice of
termination pursuant to this Article VIII and the effective date of the
termination as set forth in such notice, all Products shall be delivered to the
Company solely on a C.O.D. basis.
8.4 Termination or Expiration of Supply Agreement.
(a) Upon the termination or expiration of this Supply
Agreement, the Manufacturer shall convert all work-in-progress to Finished Goods
and transfer, or shall cause to be transferred, all remaining Products and raw
materials (including artwork and film pertaining to the labeling of boxes,
cartons and prescribing information) relating to the Products then owned by the
Manufacturer and acquired in reasonable quantities during the Term of this
Supply Agreement to fulfill the Manufacturer's obligations hereunder, by
delivery to the Company for the additional consideration specified in clauses
(ii) and (iii) below; provided, however, in the event that the Manufacturer is
no longer actively manufacturing and packaging Products under this Supply
Agreement at the time of such termination or expiration, the Manufacturer shall
not be required to convert all work-in-progress to Finished Goods and shall
transfer, or shall cause to be transferred, all remaining Products, active
pharmaceutical ingredient and raw materials to the Company for the additional
consideration specified in clauses (i), (ii) and (iii) below:
(i) Active pharmaceutical ingredient - At the
aggregate cost of raw materials used, plus
all costs incurred by the Manufacturer and
its contractors to manufacture and produce
the active pharmaceutical ingredient.
(ii) Raw materials - At the aggregate cost of
acquisition, plus related inventory,
shipping and handling costs, incurred by the
Manufacturer and its contractors.
13
(iii) Finished Goods - At the price determined in
accordance with Article VI.
Notwithstanding the foregoing, upon the effective date of the
Company's election to have the packaging of the Products performed by a third
party pursuant to Section 8.1 herein, the Manufacturer shall transfer, or shall
cause to be transferred, the remaining raw materials, then owned by Manufacturer
and relating to the packaging of the Products, to the Company for the additional
consideration specified in clause (ii) above.
(b) It is understood and agreed that the Company shall be
responsible for all manufacturing of the Products after the earlier of the
termination or expiration of this Supply Agreement. In addition, it is
understood and agreed that the Company shall be responsible, at its sole
expense, for the validation and qualification, including analytic method
testing, of any new manufacturing facility to be used by the Company. For
purposes of this Section 8.4(b), "manufacturing" shall mean the manufacture and
packaging of Products, including mix, fill and finish, and the manufacture of
active bulk components.
(c) During the term of the Supply Agreement and during the
period prior to the transfer to the Company of the test materials and test
batches in accordance with this Section 8.4(c), the Manufacturer shall, or shall
use commercially reasonable efforts to cause its contractors to, continue to
perform any routine stability testing required by either Law, cGMP Requirements
or the NDAs for lots of Product manufactured prior to such termination or
expiration to the extent the Manufacturer or its contractors have been
performing such testing prior to the Effective Date. For lots of Product
manufactured by the Company, the Company shall be responsible for all required
stability testing for the validation of the Products and otherwise. Within a
reasonable time following the termination or expiration of this Supply
Agreement, the Manufacturer will, and will use commercially reasonable efforts
to cause its contractors to, transfer all remaining test material and test
batches to the Company, and the Company will be responsible for all routine
stability testing with regard to these transferred samples. Notwithstanding any
other provision of this Section 8.4(c), to the extent that the Manufacturer
shall, or shall cause its contractors to, continue to perform any routine
stability testing for lots of Product required by either Law, cGMP Requirements
or the NDAs following the termination or expiration of this Supply Agreement,
the Company shall compensate the Manufacturer for the performance of such
testing at a reasonable rate and on terms to be mutually determined by the
Manufacturer and the Company.
(d) To facilitate the Company's use of the Product
Manufacturing Technology subsequent to the termination or expiration of this
Supply Agreement, upon such termination, expiration or earlier upon the
reasonable request of the Company, the Manufacturer agrees to provide, and use
commercially reasonable efforts to cause its contractors to provide, the Company
with (i) reasonable access to the facilities of the Manufacturer and its
contractors and (ii) for a period of 60 days after such termination or
expiration, reasonable access to the personnel of the Manufacturer and its
contractors, in any case limited to those facilities or personnel directly
responsible for the manufacturing
14
of the Products. The Company hereby agrees to reimburse the Manufacturer or its
contractors, as the case may be, for all out-of-pocket expenses incurred in
connection with personnel of the Manufacturer or its contractors assisting the
Company at any location other than such person's regular place of work.
(e) Termination or expiration of this Supply Agreement shall
not relieve the Parties of any obligation accruing prior to such termination.
The rights and obligations of the Parties under Sections 8.3, 8.4, 10.1, Article
XI and Article XIII of this Supply Agreement shall survive the expiration or
termination of this Supply Agreement.
(f) Upon the expiration or termination of this Supply
Agreement, the Manufacturer and the Company shall promptly return all
confidential information that it was provided by the other Party pursuant to
this Supply Agreement.
ARTICLE IX
FORCE MAJEURE
9.1 Force Majeure. Except as otherwise expressly set forth in
this Supply Agreement, neither Party shall be deemed to have defaulted under or
breached this Supply Agreement for failure or delay in fulfilling or performing
any term or provision of this Supply Agreement (other than the payment of money)
when such failure or delay shall be caused (directly or indirectly) by fire;
flood; accident; explosion; sabotage; strike or any labor disturbance; civil
commotions; riots; invasions; acts of terrorism; wars; acts, restraints,
requisitions, regulations, or directions of any Governmental Entity; compliance
by the Manufacturer with any request of any Governmental Entity; compliance by
the Manufacturer with any request for material represented to be for purposes of
(directly or indirectly) producing articles for national defense or national
defense facilities; inability to obtain or delays of transportation facilities;
any act of God; any act of the Company; or any cause (whether similar or
dissimilar to the foregoing) beyond the reasonable control of the Manufacturer.
If by reason of such causes the Manufacturer's supply of any Products shall be
limited, the Manufacturer shall have the exclusive right to satisfy its own
internal needs, and the needs of the Manufacturer's customers, in such manner as
shall be determined by the Manufacturer. If any such disability shall delay any
shipment hereunder for more than thirty (30) days, said shipment may be canceled
at the Manufacturer's option. Notwithstanding anything to the contrary in the
foregoing, the failure or inability to locate and qualify a new supplier of
terbutaline sulfate active pharmaceutical ingredient for the Products that
conform to the cGMP Requirements and Specifications during the Term hereof, and
Manufacturer's failure or inability, for any reason whatsoever, to obtain such
conforming active pharmaceutical ingredient on a timely basis and in quantities
sufficient to fulfill the Company's orders hereunder, shall not constitute force
majeure under this Supply Agreement or excuse, release or delay the timely and
full performance of Manufacturer's obligations to manufacture and supply Product
ordered by the Company hereunder.
15
ARTICLE X
CONFIDENTIALITY
10.1 Nondisclosure and Nonuse Obligation. The Manufacturer or
its contractors may, from time to time, give the Company valuable information of
a technical or nontechnical nature that is not generally known to the trade or
public. The Company agrees that it will not disclose to anyone in any manner
whatsoever (except as authorized in writing by the Manufacturer) any such
information, including information relating in any way to the Products,
processes, and services of Manufacturer or its contractors, which becomes known
to the Company during the period that this Supply Agreement is in effect. The
obligations of this Article X shall not apply to information (i) that is known
to the Company as shown by written records prior to its disclosure by the
Manufacturer or its contractors; (ii) that becomes public information or is
generally available to the public other than by an unauthorized act or omission
of the Company; or (iii) that is received by the Company from third parties who
are in rightful possession of such information and who are lawfully entitled to
disclose such information to the Company. Upon termination of this Supply
Agreement, the Company shall return to the Manufacturer all documents that
include confidential information of the Manufacturer or its contractors,
including all copies of such documents, and shall make no further use of such
information.
ARTICLE XI
INDEMNIFICATION
11.1 By Manufacturer. From and after the Effective Date, the
Manufacturer shall indemnify, defend and hold harmless the Company and its
Affiliates and their respective officers, directors, employees, agents, advisors
and shareholders from and against any and all Damages arising solely from a
breach by the Manufacturer of any of its agreements, covenants or obligations
contained in this Supply Agreement; provided, however, that the indemnifications
in favor of the Company and its Affiliates contained in this Section 11.1 (A)
shall not be effective until the aggregate dollar amount of all Damages
indemnified against under Section 9.02(a) of the Asset Purchase Agreement and
this Section 11.1 exceeds the Deductible Amount, and then only to the extent
such aggregate amount exceeds the Deductible Amount; and (B) shall terminate
once the aggregate dollar amount of all Damages indemnified against under
Section 9.02(a) of the Asset Purchase Agreement and this Section 11.1 aggregates
the Cap Amount, and the Seller shall thereafter have no further obligations or
liabilities with respect to any of such Damages.
11.2 By The Company. From and after the Effective Date, the
Company shall indemnify, defend and hold harmless the Manufacturer and its
Affiliates and their respective officers, directors, employees, agents, advisors
and shareholders from and against any and all Damages resulting from any claim
by a third party regarding the Products, except where such claim is a result of
the negligence or willful misconduct of the Manufacturer or a breach by the
Manufacturer of its obligations under this Supply Agreement.
16
11.3 Procedures. In the event of any claims for
indemnification made by one party against the other party under this Article XI,
the procedure to be used for the administration and resolution of such claims
will be as set forth in Section 9.02(c) of the Asset Purchase Agreement. The
amount of any Damages for which indemnification is provided under this Article
XI shall be net of any amounts recovered by the indemnified party under
insurance policies with respect to such Damages.
ARTICLE XII
INTELLECTUAL PROPERTY RIGHTS
12.1 License. The Company hereby grants to the Manufacturer,
and to each contractor which the Manufacturer may cause to manufacture and
supply Products, (as provided in Section 13.2A below) for the Term of this
Supply Agreement, a royalty-free, nontransferable right and license under the
Product Intellectual Property, such license to be nonexclusive in the Territory
to manufacture and supply the Products to and for the Company without limitation
to the purchase obligations of the Company and its Affiliates under Section 2.1
hereof.
12.2 Inventions. Each Party shall own all right, title to and
interest in any inventions, discoveries or innovations, whether patentable or
not, that such Party or its employees or agents may make in performing such
Party's obligations hereunder (the "IP").
ARTICLE XIII
MISCELLANEOUS
13.1 LIMITATION ON LIABILITY.
NONE OF THE MANUFACTURER, THE COMPANY OR THEIR RESPECTIVE
AFFILIATES SHALL BE LIABLE FOR PUNITIVE, EXEMPLARY, SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE,
TORT, STRICT LIABILITY OR OTHERWISE, ARISING OUT OF OR RELATING TO THIS SUPPLY
AGREEMENT; PROVIDED, HOWEVER, THIS EXCLUSION IS NOT INTENDED TO, NOR SHALL,
EXCLUDE ACTUAL OR COMPENSATORY DAMAGES OF THE AFFECTED PARTY.
13.2 Assignment. The Company shall not assign or otherwise
transfer this Supply Agreement or any interest herein or any right hereunder
without the prior written consent of the Manufacturer; and any such purported
assignment, transfer, or attempt to assign or transfer any interest or right
hereunder without the prior written consent of the Manufacturer shall be null,
void and of no effect.
13.2A Subcontractors. Manufacturer shall not engage any third
party to perform any of the manufacturing, packaging, filling or other services
required in the manufacture of the Products without the prior written consent of
the Company, which consent will not be unreasonably withheld. Such consent is
not required if the third
17
party contractor (i) is listed in the Product's approved NDA on file with the
FDA, or (ii) performs any of the services required in the manufacture of the
Products, as of the Effective Date.
13.3 Severability. If any provision of this Supply Agreement
is held to be illegal, invalid or unenforceable by any Law or public policy, the
remaining provisions of this Supply Agreement shall nevertheless remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or unenforceable, the parties shall
negotiate in good faith to modify this Supply Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
13.4 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and delivered personally,
sent by telecopier (and promptly confirmed by personal delivery, registered or
certified mail or overnight courier), sent by nationally-recognized overnight
courier or sent by registered or certified mail, postage prepaid, addressed as
follows:
If to the Manufacturer, to:
Novartis Pharmaceuticals Corporation
00 Xxxxx 00
Xxxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx,
Head, U.S. Mature Products
Xxxx Xxxxxx
Associate General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
18
If to the Company, to:
NeoSan Pharmaceuticals Inc.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Vice President, Manufacturing
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
aaiPharma Inc.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn.: Office of General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered. It is
understood and agreed that this Section 13.4 is not intended to govern the
ordinary course business communications necessary between the Parties in
performing their duties, in due course, under the terms of this Supply
Agreement, including the placement of orders and the delivery of forecasts.
13.5 Applicable Law. This Supply Agreement shall be governed
by and construed in accordance with the Laws of the State of New York, without
giving effect to principles of conflict of Laws thereof.
13.6 Entire Agreement. This Supply Agreement and the attached
Schedules and Exhibits, which are incorporated herein, constitute the entire
agreement between the Parties with respect to the subject matter hereof and all
prior agreements with respect hereto are superseded. Each Party confirms that it
is not relying on any representations, warranties, covenants or understandings
of any kind, nature or description whatsoever of the other Party, except such as
are as specifically set forth herein, except that nothing herein shall be
construed as intended to relieve or release the Company from its obligation to
make payment of monies or satisfy any other obligations which the Company may
owe to the Manufacturer. No amendment or modifications hereof shall be binding
upon the Parties unless set forth in a writing specified to be an explicit
amendment to this Supply Agreement duly executed by authorized representatives
of both Parties. The parties recognize that, during the Term of this Supply
Agreement, a purchase order, acknowledgement form or similar routine document
(collectively "Forms") may be used to implement or administer provisions of this
Supply Agreement. Therefore, the parties agree that the terms of this Supply
Agreement shall prevail in the event of any conflict between this Supply
Agreement and the printed provision of such Forms, or typed provisions of Forms
that add to, vary, modify or are at
19
conflict with the provisions of this Supply Agreement with respect to the
Products sold during the Term of this Supply Agreement.
13.7 Headings. The headings used in this Supply Agreement are
intended for convenience only and shall not be considered part of the written
understanding between the Parties and shall not affect the construction of this
Supply Agreement.
13.8 Independent Contractors. The relationship between the
Manufacturer and the Company is solely that of buyer and seller. It is expressly
agreed that the Manufacturer, on the one hand, and the Company, on the other
hand, shall be independent contractors and that neither the relationship between
the Parties nor this Supply Agreement shall be construed as creating a
partnership, joint venture or agency. Neither the Manufacturer, on the one hand,
nor the Company, on the other hand, shall have the authority to make any
statements, representations or commitments of any kind, or to take any action or
to incur any liability or obligation which shall be binding on the other,
without the prior consent of the other Party to do so. All persons employed by a
Party shall be employees of such Party and not of the other Party and all costs
and obligations incurred by reason of any such employment shall be for the
account and expense of such Party.
13.9 Waiver. The waiver by either Party of any right hereunder
or the failure to perform or of a breach by the other Party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other Party whether of a similar nature or otherwise.
13.10 Counterparts. This Supply Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.11 No Benefit to Third Parties. The representations,
warranties, covenants and agreements set forth in this Supply Agreement are for
the sole benefit of the Parties and their successors and permitted assigns, and
nothing herein, express or implied, is intended to or shall confer upon any
person or entity any legal or equitable rights, benefits or remedies.
13.12 New Supplier of Active Pharmaceutical Ingredient. The
Manufacturer shall use its commercially reasonable best efforts, with reasonable
assistance of the Company, during the Term to (i) locate and qualify a new
supplier of terbutaline sulfate active pharmaceutical ingredient that meets cGMP
Requirements and the Specifications and applicable Law ("Compliant API") for the
Products that are in tablet form and (ii) provide such documents and take such
other actions as are necessary to allow the Company to list and obtain FDA
approval for the new supplier as an alternate supplier in the NDA. The Company
shall have the responsibility of locating and qualifying a new supplier of
Compliant API for use in manufacturing the Products that are in ampule form,
provided that whether or not the Company is successful in doing so during the
Term shall not (a) be a basis for force majeure to apply for the benefit of the
20
Manufacturer during the Term, (b) excuse or delay Manufacturer's obligations to
deliver Products pursuant to the Company's orders hereunder, (c) reduce any
damages owed by Manufacturer for any breach of its obligations hereunder or (d)
prevent Manufacturer, in its sole discretion, from locating and qualifying a new
supplier of Compliant API for use by Manufacturer in manufacturing the Products
in ampule form. Manufacturer shall reasonably assist during the Term, and
reimburse the Company's invoiced out-of-pocket expenses and internal direct
costs associated with (i) the manufacture of terbutaline sulfate test batches,
(ii) regulatory filing fees and (iii) necessary clinical trials (at rates not
including any profit margin or upcharge) incurred, in the pursuit of such
responsibility to locate and qualify a new supplier of Compliant API for use in
Products in ampule form (the "API Costs"), up to a maximum of five hundred
thousand dollars ($500,000). API Costs shall not include any costs incurred by
the Company in connection with any transfer of sites for the manufacture of
Compliant API. As soon as reasonably possible, the Company shall provide
Manufacturer with a written estimate, for informational purposes only, of such
API Costs. In the event that API Costs incurred by the Company exceed $500,000,
then any excess shall be credited against any royalties owed by the Company to
the Manufacturer under the License Agreement, up to an additional five hundred
thousand dollars ($500,000).
[Remainder of Page Intentionally Left Blank]
21
IN WITNESS WHEREOF, the Parties have caused this Supply Agreement to be
executed by their duly authorized representatives as of the date first above
written.
NeoSan Pharmaceuticals Inc. Novartis Pharmaceuticals Corporation
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------- -----------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxxx X. Xxxxxx
-------------------------------- -----------------------------
Title: President Title: Senior Vice President and
-------------------------------- -----------------------------
General Manager of Commercial
Operations
