Exhibit 10.7
SUPPLY CONTRACT
dated as of January 3, 2006 by and among
Eurand S.p.A., a company incorporated under the laws of Italy, with offices at Via Martin Luther King, 13, 20060 Pessano con Bornago — Milan, Italy (hereafter calledCustomer)
and
Nordmark Arzneimittel GmbH & Co., a company incorporated under the laws of Germany, with offices at Pinnaualle, 4 25436 Uetersen — Germany (hereafter calledSupplier)
(each a “Party” and Eurand and Nordmark, the “Parties”).
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PREAMBLE
| A. | Whereas,Customermanufactures drug products containing Pancreatin for sale worldwide (hereafter called theDrug Product); |
| B. | Whereas,Customeris also planning to apply in its own name fora Marketing Authorizationfor theDrug Productin the USA, Europe and any other markets and – upon registration – to distribute directly or indirectly theDrug Productin the USA, Europe and any other markets; and wishes to be supplied bySupplierwith Pancreatin of a specified quality, as defined in Article 1 and; |
| C. | Whereas,Suppliermanufactures APIs and drug products and is the holder of the manufacturing authorizations issued by the competent authorities. |
| D. | Whereas,Supplierwishes to supplyCustomerwith Pancreatin. |
NOW THEREFORE, the Parties agree the following terms and conditions for the supply of Pancreatin.
DEFINITIONS
Affiliate means a company or other entity or organization or person that owns or controls, is owned or controlled by or is under common ownership or control with another company or other entity or organization or person.
API means Active Pharmaceutical Ingredient.
cGMP means current Good Manufacturing Practice as defined in the guidelines Part II (Basic Requirements for Active Substances used as Starting Materials) of the “The Rules Governing Medicinal Products in the European Union” (Volume 4, EU Guidelines to Good Manufacturing Practice Medicinal Products for Human and Veterinary Use) and the FDA Guidance for Industry Q7A (Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients).
Contract is this agreement for the non-exclusive supply by Nordmark to Eurand of the Contracted Product.
Costs means any cost or expense, including reasonable attorneys’ fees and costs of investigating and defending against lawsuits, complaints, actions or other pending or threatened litigation.
Current Supply Agreement means the agreement signed between the Parties 13th and 21st July 2003.
Delivery Date means the date set forth in the Orders with which Customer requests Supplier to deliver Contracted Product to Customer’s warehouse.
Drug Productmeans drug products containing Pancreatin for sale worldwide.
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Lead Time means the time mutually agreed upon (as specified inAppendix 3) for each individual Contracted Product, in advance of any requested Delivery Date, by which an Order must be placed by Customer for Supplier to be obligated to deliver by the Delivery Date under this Contract.
Marketing Authorization means any approvals, authorizations, licenses or registrations from a relevant health authority for the distribution, promotion, marketing and sale of a drug product.
Order means the written purchase orders by fax or by e-mail placed by Customer to Supplier as defined in Article 3.2.
Quality Agreement (attached to thisContractasAppendix 4) means the agreement between Supplier and Customer defining the roles and responsibilities of the Supplier’s Quality Department when providing services for Customer. This agreement also defines how the Supplier’s and Customer’s Quality Departments will interact with each other.
Recall means any action to recover title or possession or halt distribution, prescription, or consumption of Contracted Product or Drug Product sold or shipped to third parties. The term “Recall” also applies to Contracted Product or Drug Product due to non-conformities identified in the Contracted Product that would have been subject to recall if it had been shipped.
Regulatory Authoritiesmeans the US FDA, the European authorities (the EMEA and competent authority of each single EU member state), and any other regulatory authority where a request for Marketing Authorization of a drug product containing the Contracted Product has been or will be filed or Marketing Authorization has been or will be obtained,
Service Level means the level of service that the Supplier guarantees to the Customer according to Article 3.5.
Article 1
Subject of the Contract
1.1 ThisContractis for the non-exclusive purchase byCustomerfromSupplierand the non-exclusive sale bySuppliertoCustomerof the active pharmaceutical ingredient Pancreatin (hereafter called theContracted Product)as set out in theSpecificationsattached to thisContractasAppendix 1 (theSpecifications).TheSpecificationsalso include the differentCustomercodes of theContracted Product.
1.2Customerundertakes to purchase fromSupplierat least [*]% ofCustomer’srequirements ofthe Contracted ProducthavingCustomercodes 0001785 (or any future code relating to the code 0001785 N-API quality) and 0001786.Supplierundertakes to supplyCustomerwith up to 100% ofCustomer’stotal requirements of theContracted Product,if requested byCustomer.Given the strategic importance of theDrug ProductforCustomer,it isCustomer’sintention and strategy not to be dependent on one supply source, but to have alternative suppliers of theContracted Product.
1.3Supplierrecognizes the right of theCustomerto purchase up to 100% of all its requirements of theContracted Productfrom other suppliers (theCustomerbeing thereby released from its obligations under Article 1.2) shouldSupplierbe unable to supplyCustomerwith theContracted Productboth in terms of quantity and quality. However,Customershall use its
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reasonable commercial efforts to reinstate its obligation under Article 1.2 as soon asSupplieris once again able to supply theContracted ProducttoCustomerin accordance with the quantity and quality requirements of thisContract.Subject to Article 8Suppliershall indemnifyCustomerfor any amount paid to the alternative supplier exceeding the agreed upon price. Such indemnity will not apply to the firstOrderthatSupplierhas been unable to supply in accordance with thisContract.
1.4Customershall be entitled to modify theSpecificationsat any time in the event that such modification is necessary or expedient based upon post-approval regulatory requirements. In any other circumstances,Customermay modify theSpecificationswith the approval ofSupplier,which approval shall not be unreasonably withheld. In the event that such modifications have a significant impact on the price of theContracted Productor the manufacturing time, the Parties shall negotiate in good faith to amend thisContractto reflect the new price and/or manufacturing time.
TheCustomer’sshare of costs for modifying theSpecificationsshall be established by the Parties taking into account (a) the possibility for theSupplierto also share such costs with its other customers and (b) thatCustomershall not be responsible for the entire or a disproportionate share of such cost.
TheSupplierundertakes to timely modify theSpecificationseven if the negotiations between the Parties regarding the new price and manufacturing time are still pending.
If the Parties cannot, in good faith, agree upon a price and/or manufacturing time for the modified products within three months of the date of theCustomer’sor competent authority’s written request for a modification of theSpecifications,then theContractwill remain in force butCustomershall be released from its obligations under Article 1.2.
1.5 Any new agreed uponSpecifications,or new Pancreatin based products with the agreed upon prices, will automatically be an integral part of theContractand included inAppendix 1 – “Specifications of the Contracted Product” andAppendix 2 – “Determination of the Prices”.
Article 2
Supply
2.1Supplierundertakes to supply the requirements ofCustomerfor theContracted Productin accordance with Articles 1 and 3 for the term of theContractas set out in Article 9. Under no circumstance shallSuppliersubcontract or otherwise delegate its obligations under thisContractto any third party, including anyAffiliate,without the prior written approval ofCustomer.
2.2 Any (previously authorized) sub-contract executed bySupplierin connection herewith shall be fully consistent with the provisions of thisContractand any relevant Sale/Purchase Contract, includingCustomer’sright of access to any of the sub-contractors’ facilities.
2.3Suppliershall be and remain in any case fully and solely responsible for any delay or any failure in the performance of thisContractor any Sale/Purchase Contract, even when directly or indirectly attributable to the responsibility of any of its sub-contractors.
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Article 3
Forecast and orders
3.1 Exclusively in order to facilitateSupplierin carrying out production planning appropriately,Customerwill provideSupplierwith a non-binding estimate ofCustomer’sannual requirements for theContracted Productfor each calendar year by September 30th of the previous calendar year. A more detailed non-binding forecast shall be given byCustomertoSupplierby October 31st of each calendar year, setting out the anticipated quantities on a month by month basis. Such forecast shall be updated quarterly byCustomer,and sent toSuppliertwo months before the end of the calendar quarter prior to the calendar quarter to which such estimate relates. None of such estimates however will constitute a binding order by theCustomer.The sole document which shall be binding upon theCustomer,shall be any purchase order issued pursuant to Articles 3.2 and 3.3.
3.2Customerwill place firm written purchase orders by fax or by e-mail (hereafter “Order”) withSupplierfor theContracted Product,specifying the quantity and the Customer Code of the orderedContracted Product,no later than the designatedLead Time(as foreseen in Appendix 3) before the requiredDelivery Date.TheDelivery Dateset out in theOrderis the date upon which delivery is to be made to theCustomer’swarehouse.Suppliershall deliver theContracted Productso ordered on theDelivery Date,or not earlier or not later than five (5) working days with respect to theDelivery Datedesignated on the applicableOrderunless otherwise provided below.Supplierwill acknowledge receipt of theOrderby sending anOrderconfirmation toCustomerby fax or e-mail within one (1) week of receipt of theOrder.However, such confirmation toCustomershall be required for information purposes only since the receipt bySupplierof anOrder(provided that it is in accordance with the provisions of thisContract)shall entail the immediate and automatic execution of a sale/purchase contract for the relevant orderedContracted Product(each,a Sale/Purchase Contract) which shall be governed by thisContractand the specific provisions of theOrder.
3.3Customerwill be entitled to placeOrdersfor amounts exceeding the quarterly estimated quantities as set out in Article 3.1 above. In such case, theSuppliershall be obligated to fulfill suchOrdersup to a maximum of [*] above such quarterly estimate in accordance with the terms of thisContract,as set out in Article 3.2. For any quantities ordered in excess of [*]% of the quarterly estimate,Supplierwill use its reasonable commercial efforts to supply these additional requirements as close to the specifiedDelivery Dateas possible and will informCustomerwithin one (1) week of receiving theOrderon which date such additional quantities ofContracted Product(i.e. in excess of [*]) will be delivered. Notwithstanding the above,Suppliershall supply the excess quantity no later than the beginning of the immediately following calendar quarter provided that there is not less than eight (8) weeks until that date.Customerhowever has the right to cancel theOrderand order the relevantContracted Productfrom another supplier if such a delay is not acceptable and must inform theSupplierof such cancellation immediately.
3.4 Independently of that which is provided for in Art. 3.3,Suppliershall continuously keep a security stock free of charge for eachCustomercode of theContracted Product,of a total quantity that corresponds to the average consumption foreseen for a period of 3 months as determined in theCustomer’sforecast applicable from time to time, in order to satisfy both unforeseen and urgent requests fromCustomerand to be able to supply orderedContractual ProductshouldSupplierhave any production problems for whatever reason.
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Should theDrug Productonly be allowed by the FDA to be manufactured withContracted Productonly originating from US and / or Canadian glands, theSupplierundertakes to execute long tern supply contracts with suppliers of porcine glands of American and / or Canadian origin in order to ensure the availability of such glands to manufacture theContracted Product.
3.5 With the exception of ‘Force Majeure’ events pursuant to Article8, Supplierguarantees the following service level (hereinafter called theService Level):
(a) Subject to the specifiedLead Time,85% of anyContracted Productssubject ofOrdersreceived fromCustomerin any calendar year shall be delivered no later than the requiredDelivery Date.In the event that anyOrdercontains requirements for more than one code of theContracted Product, Suppliershall be obliged to supply by the requiredDelivery Datea minimum of 85% (eighty-five percent) of each ordered code.
(b) Subject to Articles 3.1 and 3.2, the delivery of all otherContracted Productsubject ofOrders(i.e. the remaining 15%) which are not delivered by the requiredDelivery Date,shall be delivered by no more than two (2) weeks from the requiredDelivery Date.In such a case,Customerwill be notified as soon as possible in writing bySupplierof the actual date of delivery of such delayedContracted Product.
(c) In the event that any portion of any lot of deliveredContracted Productis incomplete or does not meet theSpecifications,the entire lot will be considered defective and not to have been delivered by theDelivery Date,provided that the defect in the lot is due to the fault ofSupplier.
Should theService Levelnot be met in relation to any twelve month period (from January 1st to 31st December of each year),Customershall be released from its purchase obligations under Article 1.2 in the following contractual year. If theService Levelis achieved in such following contractual year, the original purchase obligation as foreseen in Article 1.2 shall be reinstated starting from the subsequent year (e.g.Service Levelnot met during 2008, thenCustomeris released from its purchase obligations under Article 1.2 in 2009. If during 2009 theService Levelis met, the original purchase obligation as foreseen in Article 1.2 shall be reinstated starting from 2010).
Article 4
Conditions of supply
4.1 Deliveries of theContracted Productshall be atCustomer’swarehouse as indicated in the relevantOrder(CIP, all costs included).
4.2 Without prejudice to Article 5,Suppliershall enclose in each lot of deliveredContracted Product (Supplierwill use reasonable commercial efforts in good faith to use the minimum number of lots to fulfillOrderswhere the minimum lot shall be not less than [*]) a certificate of compliance stating that theContracted Productmeets theSpecifications.The minimum quantity ofContracted ProductperOrdershall be [*]. TheContracted Productdelivered bySuppliershall have at least [*] of residual shelf life or retest period, as set out in the certificate of analysis referred to in Article 4.3 (for example, if the retest period is 6 months,Customerwill not accept batches ofContracted Productthat are due to be retested earlier than 4.8 months from their delivery).
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4.3Suppliershall perform all the in-process and final release quality control tests and quality assurance reviews on theContracted Productas are required by theSupplier’slast DMF (Drug Master File) for the in-process control tests and theSpecificationsfor the final release tests, and shall certify in writing toCustomerthat each batch of theContracted Productdelivered toCustomerwas manufactured in conformity therewith and that theContracted Productcontained in each shipment complies with theSpecifications,and the other terms and conditions of thisContract.All deliveries ofContracted ProductbySuppliershall be accompanied by all appropriate documentation required under applicable laws in order forCustomerto offer theContracted Productfor sale, including (i) a certificate of analysis as provided for by the cGMP and (ii) a quality assurance or quality control certification that theContracted Productsupplied hereunder has been manufactured in conformity with cGMPs and other applicable regulations, which will be added to the certificate of analysis form bySupplier.
4.4Customerundertakes that it shall inspect each lot of the deliveredContracted Productpromptly upon receipt atCustomer’splant, to verify that the lot is complete and was not damaged in shipment and will promptly informSupplierof any non-compliance.Customerwill subsequently test theContracted Productin accordance with theSpecifications. Suppliershall keep “reserve/retention” samples ofContracted Productunder proper storage conditions as specified in cGMPs (Eudralex, volume 4, part II, chapter 11.7) and will be responsible for all stability testing of theContracted Product,as required to meet ICH (International Conference of Harmonization) requirements (as they may be amended from time to time).
4.5 In the event of deviations from theSpecificationsor shortages being found during theCustomer’stests as provided for in Article 4.4,Customershall send a report toSupplieras soon as possible and in any event within four (4) weeks of receipt of theContracted ProductatCustomer’swarehouse. ShouldSupplierandCustomeragree that the claim is valid,Supplierundertakes to supplyCustomerfree of charge and as soon as possible (but in any event not later than two (2) weeks atCustomer’swarehouse from the date of the notice of claim) with a replacement quantity of theContracted Product. Suppliershall also reimburse toCustomerall shipping costs and expenses incurred by it arising out of or in connection with the claimed non-compliance of theContracted Productdelivered bySupplier.
Any dispute arising betweenCustomerandSupplierconcerning the conformity of any delivery ofContracted Productwith theSpecificationswhich cannot be settled between the two Parties, shall be submitted to an independent expert appointed by both Parties and the relevant cost will be borne by the Party in default.
The decision of said expert shall be binding onSupplierandCustomer.However, in the event of dispute and whilst awaiting the decision of the expert,Supplierundertakes to supplyCustomeras soon as possible, but in any event not later than two (2) weeks atCustomer’swarehouse from the date of the notice of claim, with a replacement quantity of theContracted Product.
The charges, including the fees and expenses of the expert, relating to any dispute described in this paragraph shall be paid bySupplierif the expert declares the delivery not to be in conformity with theSpecificationsand/or the relevantOrderand byCustomerif the expert declares the delivery to be in conformity with theSpecificationsand/or the relevantOrder.The sole remedy for shortages of theContracted Productor the rejection ofContracted Productthat does not meet theSpecificationsshall beSupplier’ssupply of replacementContracted Productas soon as possible and reimbursement of costs in accordance with this Article 4.5.
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4.6 Upon request ofCustomer, Supplier agrees to provideCustomer with the documentation described in theQuality Agreement.
4.7 The execution byCustomerof any inspection or test, as well as of any other document released upon any inspections and tests made at any time on theContracted Productshall not dischargeSupplierfrom any of its obligations and liabilities under Article 5 “Warranties”, or from any liability or responsibility deriving from the existence or the subsequent arising out or discovery of any defect, damage, discrepancy, lack of quality or irregularity affecting theContracted Product.
Article 5
Warranties
5.1 Without prejudice to its obligations to supplyCustomerwith up to 100% ofCustomer’stotal requirements of theContracted Product,if requested byCustomer. Supplierwarrants a production capacity of up to [*] metric tons p.a. ShouldCustomerrequire quantities exceeding the [*]mt p.a., the Parties will make specific agreements in good faith to meetCustomer’srequirements.
5.2Supplierwarrants to have all the authorizations, licenses and permits necessary to carry out the activities contemplated by thisContractand, generally, to perform all its obligations provided for hereunder and that it shall operate in full compliance with the laws and regulations applicable from time to time, also in the future, in relation to thisContract.Without prejudice to the generality of the foregoing,Supplierundertakes to seek to obtain approved supplier status from the FDA, EMEA and every local competent authority as an API manufacturer for the USA, Europe and other markets, to pass any regulatory inspection and undertakes to continuously satisfy all the relevant necessary regulatory requirements and maintain a “state of conformity” to the cGMP regulations (FDA, EU and other markets) for the purposes of maintaining such regulatory approval.
5.3Supplier warrants that theContracted Product shall, when delivered toCustomer, be free from defects of any kind (including materials, workmanship and manufacturing process) and comply with theSpecifications.
5.4Supplierwarrants that theContracted Productshall be produced in a facility and in a manner compliant with current EU and US cGMP and all other applicable laws and in accordance with theQuality Agreement.Furthermore,Supplierwarrants that its personnel that will carry out the activities contemplated by thisContractshall have the necessary qualifications, skills and organization to correctly perform such activities and will not need to sub-contract any of them.Supplieralso warrants the availability of the necessary number of its personnel to duly carry out such activities.Supplieralso represents and warrants that it complies and shall comply with all laws and regulations applicable from time to time, also in the future.
5.5Supplierfurther warrants that upon delivery toCustomer’swarehouse theContracted Productwill not have been adulterated or misbranded in any way.
5.6Supplierwarrants that theContracted Productworldwide will not infringe or violate any patent or other industrial or intellectual property right of any third party.
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5.7Supplier’swarranty obligations under this Article 5 shall continue as to each deliveredContracted Productfor a period of [*] years from its delivery toCustomer.
5.8 Each Party represents that it has maintained and shall maintain during the term of thisContract,as well as four years after termination of thisContract,sufficient product liability insurance, with appropriate policy limits, to cover the risks associated with the performance of its obligations under thisContract,but in any event each Party shall maintain pharmaceutical product liability insurance with limits not less than [*] per claim / per year and [*] per year in the aggregate for bodily injury (including death) and consequential damage. Each Party agrees to provide the other Party with copies of certificates of insurance, when applicable, upon request as written evidence of such coverage.
5.9Supplier will maintain appropriate records to enable the immediate identification ofany batches of theContracted Productdelivered toCustomer.
Article 6
Delivery price
6.1 The price of theContracted Product and the rules that discipline the price are specified inAppendix 2 of thisContract.
Article 7
Payment conditions
7.1 The price for theContracted Productshall be paid within 60 days from the date of theSupplier’sinvoice, which shall be issued by theSuppliernot earlier than the date of shipment of the relevantContracted Product.
7.2Customershall be entitled to set-off (if it is the case also on a provisional basis) any amount due toSupplierhereunder (and at any rate suspend the relevant payment pursuant to Article 1460 of the Italian Civil Code) against any amount which is or may become due bySuppliertoCustomerunder thisContract.
Article 8
Force Majeure
8.1 Each of the Parties shall be excused from the performance or delay in performance of its obligations under thisContractin the event such performance is prevented by Force Majeure (as defined in the next sentence) and such performance shall be excused as long as the condition constituting such Force Majeure continues plus an additional thirty (30) days after termination of such condition; provided, that the non-performing Party shall provide prompt notice to the other Party of the particulars of the occurrence constituting Force Majeure and of its cessation and the non-performing Party uses commercially reasonable efforts to remove the hindrance and to fulfill its obligations. Force Majeure shall mean any cause or causes which wholly or partially prevent or delay the performance of obligations arising under thisContractand which are not reasonably within the control of the non-performing Party, including Acts of God, government regulations, labor disputes (only at national level), floods, fires, civil commotion, embargoes, shortage of labor or materials due to disease or pestilence, or any delays in transportation or detention by customs, health or other government authorities.
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Article 9
Duration of contract - Termination
9.1 ThisContractshall come into force (theEffective Date)from the date of theMarketing Authorizationgrant of theDrug Productin the USA and will expire on the fifth (5th) anniversary of such date, unless earlier terminated as set forth in Article 9.2. It is hereby agreed that one year before the expiration date the Parties shall meet to discuss and negotiate the possible extension or renewal of thisContract.The Parties recognize that the date of registration and the subsequentDrug Productlaunch very much depend on the collaboration between the Parties and the preparation by both Parties of the data to be provided to the FDA. TheCustomerforesees the date of registration as taking place by 28th April 2008.
9.2 An event of default under thisContractshall be deemed to exist upon the occurrence of any one or more of the following events:
(a) failure bySupplierto correctly and fully perform any of its obligations under Articles 1.1, 1.2,3,4.2, 10, 12.3 and 12.5.
(b) failure byCustomer to correctly and fully perform any of its obligations under Articles 1.2, and 10.4.
(c) failure by either Party hereto to perform fully any material provision of thisContractand such breach continues (i) for a period of sixty (60) days after notice of such non-performance or (ii) if the non-performing Party shall commence within such sixty (60) days and shall thereafter proceed with all due diligence to cure such failure and such failure is not cured within such longer period (not to exceed sixty (60) days) as shall be reasonably necessary for such Party to cure the same with all due diligence;
(d) either Party liquidates its business; there is a request to appoint a receiver, administrator or similar officer over any of such Party’s assets or business; a Party makes an arrangement for the benefit of its creditors; or a Party goes into liquidation or is submitted to any other insolvency procedure.
9.3 Upon the occurrence and during the continuation of any event of default hereunder, the Party not in default shall have the right, at its option, to terminate thisContractin whole or terminate only the Sale/Purchase Contract affected by the event of default and to pursue any other remedies provided under thisContractor now or hereafter existing under the applicable law.
Article 10
Recall
10.1 In the event of an actual or threatenedRecallof theDrug Productrequired or recommended by a governmental agency or authority of competent jurisdiction, or if aRecallis reasonably deemed advisable by either Party, or jointly deemed advisable by both Parties, suchRecallshall be promptly implemented and administered byCustomerin a manner which is appropriate and reasonable under the circumstances and in conformity with accepted trade practices. TheCostsof any suchRecallshall be borne by the Party or Parties whose actions or omissions caused theRecallto be necessary.Suppliershall have no obligation to payCostsof aRecallto the extent suchRecallis (a) caused
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by actions of third parties occurring after suchDrug Productis sold byCustomer;(b) due to packaging or labeling defects for whichSupplierhas no responsibility; or (c) due to any other breach byCustomerof its duties under thisContract,unless suchRecallis due to a breach by bothSupplierandCustomerof their duties under thisContract.
10.2 If anyof Supplier, Customeror any governmental authority having jurisdiction requires or reasonably requestsa Recalldue to a defect in the manufacture, processing, packaging or labeling of theContracted ProductorDrug Productcaused in whole or in part bySupplier(a Recall Defect),the most diligent Party shall immediately notify the other Party thereof. Prior to commencingany Recall, Customershall review withSupplierthe cause fora Recall,and if suchRecallis the responsibility ofSupplieras a result of aRecallDefect caused bySupplier,the proposed manner in whichCustomershall conduct theRecall.If theRecallis caused in whole or in part bySupplier, Suppliershall assistCustomerin theRecallin the manner agreed upon in as expeditious a manner as possible and in such a way as to cause the least disruption to business, and to preserve the goodwill and reputation of their respective customers.
10.3 With respect toany Recallcaused by the negligence, mistake, fault, error or omission ofSupplier,itsAffiliates,or subcontractors (including any adulteration or misbranding of theContracted Product by Supplier,or any introduction of theContracted Productinto commerce in violation of any applicable rule, statute, regulation or governmental requirementby Supplier),with respect toany Recallresulting froma RecallDefect caused bySupplier, Suppliershall:
| (i) | reimburseCustomerand itsAffiliatesfor any and all losses and reasonableCostsdirectly incurred byCustomeror itsAffiliatesin connection with theRecall;and |
| (ii) | indemnify, save and holdCustomerand itsAffiliatesharmless from and against any and all damages to or claims by third parties associated with or resulting from any suchRecall. |
10.4 With respect toany Recallcaused by the negligence, mistake, fault, error or omission ofCustomeror itsAffiliates(including any adulteration or misbranding of theContracted Product by Customer,or any introduction of theDrug Productinto commerce in violation of any applicable rule, statute, regulation or governmental requirementby Customer), Customershall:
| (i) | reimburseSupplierand itsAffiliatesand subcontractors for any and all losses and reasonableCostsdirectly incurred bySupplierin connection with theRecall;and |
| (ii) | indemnify, save and holdSupplier and itsAffiliates and subcontractors harmless from and against any and all damages to or claims by third parties associated with or resulting from any suchRecall. |
10.5 With respect to any Recallcaused by the shared negligence, mistake, fault, error, or omission ofSupplierandCustomeror theirAffiliatesor subcontractors, the Parties shall share the losses and reasonableCostsof theRecallin the proportion of their relative negligence, mistake, fault, error or omission, and they shall indemnify one another and their Affiliatesand subcontractors with respect to third party claims associated with or resulting from theRecallin the same proportion.
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Article 11
Indemnification
11.1Suppliershall indemnify, defend and hold harmlessCustomerand itsAffiliates,and their respective officers, directors and employees from any liability (including liability for death or injury), damage, deficiency, loss, judgments, assessments and,Costsarising from or attributable to:(a) Supplier’snegligent acts or omissions, willful wrongful acts or breach of any of its representations, warranties, covenants or other obligations hereunder, or (b) product liability claims including personal injury and death resulting from the manufacture, use, or sale of theContracted Productto the extent attributable to the responsibility ofSupplier.The indemnification is to be limited as follows: [*] per claim per year and up to a maximum of [*] per year, including liability for death or injury.
11.2Customershall indemnify, defend and hold harmlessSupplierand itsAffiliates,its officers, directors and employees fromCostsdirectly or indirectly arising from or attributable to: (a) Customer’snegligent acts or omissions, willful wrongful acts, breach of any of its representations, warranties, covenants or other obligations hereunder, or (b) product liability claims including personal injury and death resulting from the manufacture, use, or sale of theContracted Productto the extent attributable to the responsibility ofCustomer.The indemnification is to be limited as follows: [*] per claim per year and up to a maximum of [*] per year, including liability for death or injury.
11.3 Promptly after the receipt by any Party entitled to indemnity hereunder of (i) any claim or (ii) the commencement of any action or proceeding, such person (theAggrieved Party)will, if a claim with respect thereto is to be made against any Party obligated to provide indemnification pursuant to this Article 11 (theIndemnifying Party),give such Indemnifying Party written notice of such claim or the commencement of such action or proceeding and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting from such claim, and, upon such assumption, shall reasonably cooperate with the Indemnifying Party in the conduct of such defense. Failure by the Indemnifying Party to notify in writing the Aggrieved Party of its election to defend any such action within a reasonable time, but in no event more than fifteen (15) days after notice thereof shall have been given to the Indemnifying Party, shall be deemed a waiver by the Indemnifying Party of its right to defend such action. If the Indemnifying Party assumes the defense of any such claim or litigation resulting therefrom, the obligations of the Indemnifying Party as to such claim shall be limited to taking all steps necessary in the defense or settlement of such claim or litigation resulting therefrom. The Aggrieved Party may participate, at its expense, in the defense of such claim or litigation provided that the Indemnifying Party shall direct and control the defense of such claim or litigation. The Indemnifying Party shall not, in the defense of such claim or any litigation resulting therefrom, consent to entry of any judgment, except with the written consent of the Aggrieved Party (which shall not be unreasonably delayed or withheld), or enter into any settlement, except with the written consent of the Aggrieved Party (which shall not be unreasonably delayed or withheld), which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Aggrieved Party of a release from all liability in respect of such claim or litigation. In addition, all awards and costs payable by a third party to the Aggrieved Party or the Indemnifying Party shall belong to the Indemnifying Party.
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11.4 If the Indemnifying Party shall not assume the defense of any such claim or litigation resulting therefrom, the Aggrieved Party may defend against such claim or litigation in such manner as it may deem appropriate and, unless the Indemnifying Party shall deposit with the Aggrieved Party a sum equivalent to the total amount demanded in such claim or litigation, or shall deliver to the Aggrieved Party a surety bond in form and substance reasonably satisfactory to the Aggrieved Party in such amount, the Aggrieved Party may settle such claim or litigation on such terms as it may deem appropriate, and the Indemnifying Party shall promptly reimburse the Aggrieved Party for the amount of all expenses, legal or otherwise, incurred by the Aggrieved Party in connection with the defense against or settlement of such claim or litigation. If no settlement of such claim or litigation is made, the Indemnifying Party shall promptly reimburse the Aggrieved Party for the amount of any judgment rendered with respect to such claim or in such litigation and of all expenses, legal or otherwise, incurred by the Aggrieved Party in the defense against such claim or litigation.
11.5 The indemnification provided in this Article 11, subject to the limitations set forth herein, shall be the exclusive remedy for damages available to any Aggrieved Party and shall survive indefinitely the expiration or termination of thisContract.
Article 12
Final Clauses
12.1Suppliershall giveCustomerprompt notice of any governmental audit ofSupplieras it relates to the manufacture, production or testing of theContracted Product.Further,Suppliershall provideCustomerwith any relevant documentation provided to it relating to any such audit.Customershall have the right to audit and inspect the manufacturing facility ofSupplierprovided that such audit visits occur no more than once each calendar year per site and thatCustomergivesSuppliernotice of a minimum of 8 weeks or as otherwise agreed to by the Parties prior to such visits, unless quality problems arise of such seriousness as to justify an unforeseen audit visit.
12.2SupplierandCustomershall keep the other fully informed in writing of any notification or other information, whether received directly or indirectly, that might (i) affect the marketability, safety or effectiveness of anyDrug Product, (ii) result in liability issues or otherwise necessitate action on the part of either Party or (iii) result inRecallor seizure of anyContracted ProductorDrug Product.
12.3Suppliershall promptly comply with all FDA and otherRegulatory Authority’sfiling and reporting requirements with respect to theContracted Product. Suppliershall be responsible for any additional study relevant to any part of the drug substance section of Module 3 of the “Common Technical Document” that may be required during the registration process.
12.4 In the event that it is not possible to obtain registration of theDrug Productfrom the FDA or other health authority by 31th December 2010, other than for either Party’s default, both Parties will be entitled to terminate thisContractfor convenience and no compensation, indemnification, or other payment shall be due by either Party to the other in connection with such termination.
12.5 ThisContractand any and all information provided by one Party to the other pursuant to thisContract(including all information relating to duration and quantity and price of theContracted Product)shall be deemed to be confidential information(Confidential Information).Each Party will hold
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Confidential Information in complete confidence and will not, without the prior written consent of the other, use or disclose it in whole or in part to any person other than to those who are directly concerned with thisContract.The term “Confidential Information” shall not include information:
| (i) | which at the time of disclosure to the other is in the public domain; |
| (ii) | which after disclosure becomes generally available to third parties from a source other than the disclosing Party: provided that such source is not bound by a confidentiality or other similar agreement with the discloser or by any other legal contractual or fiduciary obligation which prohibits the disclosure of such Confidential Information; |
| (iii) | which was lawfully in possession of the recipient prior to disclosure as evidenced by written records and which was not acquired directly or indirectly from the discloser; or |
| (iv) | which the recipient is required to disclose under law or under the regulations of any Governmental entity or agency. |
The obligations in this Article 12.5 shall expire on the fifth (5th) anniversary of the expiration or termination of thisContract.
12.6 ThisContract may only be amended or extended in writing.
12.7 If individual clauses of thisContractshould be or become invalid, then the remainder of theContractcontinues to be valid. In this case, the legally admissible regulation or action that has the closest financial effect to the invalid clause shall be substituted for the invalid clause.
12.8 ThisContractshall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and assigns. ThisContractmay be assigned and delegated byCustomertoan Affiliate,or in connection with any sale, merger or other business combination involving all or substantially all ofCustomer’sassets or capital stock. Except as set forth in the preceding sentence, neither thisContractnoranyother rights or obligations hereunder shall be assigned or delegated by either Party without the prior written consent of the other Party.
12.9 ThisContractandanySale/Purchase Contracts shall be governed by and construed in accordance with the laws of Italy.
12.10 In the event of any dispute arising out of thisContractor any Sale/Purchase Contract, the Parties shall first seek to settle the dispute amicably by submitting such dispute to the respective Chief Executive Officers who shall seek an amicable commercial resolution to such dispute. In the event however that such dispute cannot be settled in such a way within three (3) calendar months of the dispute being brought to the attention of the respective CEO’s then the Parties shall submit such dispute to the courts as set out in Section 12.11 below.
12.11 Each of the Parties hereby submits to the exclusive jurisdiction of the Court of Milan for the determination of any question or dispute arising under or in connection with theContractor any Sale/Purchase Contract.
12.12 ThisContract,including the Appendices attached hereto constitute the entire understanding and agreement of the Parties, and shall supersede any prior written or oral
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agreement or understanding between the Parties, including without limitation general terms and conditions of sale ofSupplier.In the event of conflict between the provisions of thisContractand/or any of its Appendixes or any Sale/Purchase Contract the following hierarchy shall apply: (1), thisContract,(2) theSpecifications,(3) the other Appendixes hereto and (4) the Sale/Purchase Contract.
12.13Supplierhereby agrees that theSpecificationsas well as all the Confidential Information provided by theCustomerto theSupplierregarding theContracted Productare the exclusive property ofCustomerand cannot be disclosed to any third Party without prior written consent ofCustomerunless otherwise required by law and, in that case, only after givingCustomerreasonable notice and a reasonable opportunity to move or petition the authority requiring such disclosure to implement measures to protect the Confidential Information.
12.14 The relationship betweenCustomer,on the one hand, andSupplier,on the other hand, is that of independent contractors and nothing herein shall be deemed to constitute or create the relationship of partners, joint ventures nor of principal and agent betweenCustomerandSupplier.Neither Party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement or undertaking with any third party.
12.15 All communications information and notices required to be given under thisContractshall be sent by registered mail (return receipt requested), or delivered by hand to a duly authorised representative of the addressee. Such communications information and notices can also be sent by telefax (but in this case they must be confirmed by subsequent registered mail, return receipt requested). Such communication information and notices shall be sent to the following addresses, (or at such other address as either Party may notify to the other in the manner set forth in this Clause 12.15):
Nordmark Arzneimittel GmbH & Co. KG
Pinnauallee 4
25436 Uetersen
Germany
Attention: Dr. Peter Tonne
Fax: 0049 4122 712 510
Eurand S.p.A.
Via Martin Luther King, 13
20060 Pessano con Bornago (MI)
Italy
Attention: Gearoid Faherty
Fax: 0039 02 95745018
IN WITNESS WHEREOF, the Parties have caused thisContractto be executed by their duly authorized representatives as of the day and year first above written.
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| | | | |
| Uetersen, January 3, 2006 | | Milan, January 3, 2006 |
| Nordmark Arzneimittel GmbH & Co. KG | | Eurand S.p.A. |
| | |
| Mr. Franz Empl | | Dr. Jorn Tonne | | Mr. Gearoid Faherty |
| Chief Financial Officer | | Vice President Marketing & Sales | | Chief Executive Officer |
| | |
/s/ Franz Empl | | /s/ Jom Tome | | /s/ Gearoid Faherty |
| | | | |
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APPENDIX 1 - SPECIFICATIONS OF THE CONTRACTED PRODUCT
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APPENDIX 2 - DETERMINATION OF THE PRICES
| (i) | The price of theContracted Product(the Price) shall be agreed upon by the Parties in good faith by the Effective Date. Negotiations will start six months before the expected Effective Date. |
| (iv) | The Price of theContracted Product will be denominated and paid in US$. |
| (v) | The Parties agree that the Price offeredby SuppliertoCustomerwill be calculated according to: |
[*]
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APPENDIX 3 - LEAD TIME
Provided that there is no other agreement made for anyOrders,the standard delivery date for theContracted Productshall be [*] calendar months from the date of receipt of theCustomer’sOrder bySupplier.
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