EXHIBIT 10.36
CONFIDENTIAL TREATMENT REQUESTED BY QLT INC.
ELIGARD(R) MANUFACTURING AND SUPPLY AGREEMENT
BETWEEN
QLT USA, INC.
AND
TOLMAR, INC.
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS............................................... 1
ARTICLE II LICENSE GRANT; PROVISION OF MATERIALS..................... 8
Section 2.01 License Grant......................................... 8
Section 2.02 Restrictions and Reservation of Rights................ 8
Section 2.03 Ownership of Improvements............................. 8
Section 2.04 Supplied Materials.................................... 10
Section 2.05 Storage............................................... 11
ARTICLE III MANUFACTURE AND SUPPLY.................................... 11
Section 3.01 Agreement to Purchase and Supply Product.............. 11
Section 3.02 Quality Assurance..................................... 11
Section 3.03 Manufacturer's Duties................................. 12
Section 3.04 Second Source......................................... 13
Section 3.05 Execution of Intermediate Manufacturing Agreement..... 14
ARTICLE IV PURCHASE AND SALE......................................... 14
Section 4.01 Purchase Price and Payment............................ 14
Section 4.02 Invoice; Payment Terms................................ 15
Section 4.03 Purchase Forms........................................ 15
Section 4.04 Confirmation.......................................... 15
Section 4.05 Delivery.............................................. 15
Section 4.06 Forecasts and Orders.................................. 16
Section 4.07 Failure to Supply..................................... 16
ARTICLE V WARRANTY, REJECTION AND INSPECTIONS....................... 17
Section 5.01 Product Warranties.................................... 17
Section 5.02 Rejection of Product for Failure to Conform to
Specifications........................................ 17
Section 5.03 Latent Defects........................................ 18
Section 5.04 Inspection Rights..................................... 18
Section 5.05 Product Recall........................................ 19
ARTICLE VI REGULATORY................................................ 20
Section 6.01 QLT USA's Responsibilities............................ 20
Section 6.02 Manufacturer Responsibility........................... 20
Section 6.03 Master File........................................... 20
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(continued)
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Section 6.04 Stability Testing and Final Product Release........... 21
ARTICLE VII LIABILITY AND INDEMNIFICATION............................. 21
Section 7.01 QLT USA Indemnification............................... 21
Section 7.02 Manufacturer's Indemnification........................ 21
Section 7.03 Limitation of Losses.................................. 22
Section 7.04 Indemnity Procedure................................... 22
Section 7.05 Maintenance of Insurance.............................. 23
ARTICLE VIII CONFIDENTIALITY........................................... 23
Section 8.01 Maintenance of Confidential Information............... 23
ARTICLE IX TERM AND TERMINATION...................................... 24
Section 9.01 Term.................................................. 24
Section 9.02 Termination By QLT USA................................ 25
Section 9.03 Termination By Manufacturer........................... 25
Section 9.04 Remedies.............................................. 26
Section 9.05 Effect of Termination................................. 26
ARTICLE X MISCELLANEOUS............................................. 26
Section 10.01 Force Majeure......................................... 26
Section 10.02 Applicable Law........................................ 26
Section 10.03 Assignment............................................ 26
Section 10.04 Notices............................................... 27
Section 10.05 Entire Agreement...................................... 28
Section 10.06 Amendments and Waivers................................ 28
Section 10.07 Foreign Corrupt Practices Act......................... 28
Section 10.08 Severability.......................................... 28
Section 10.09 Counterparts.......................................... 28
Section 10.10 Construction.......................................... 29
Section 10.11 Jurisdiction; Service of Process...................... 29
Section 10.12 Waiver of Jury Trial.................................. 29
Section 10.13 Recovery of Fees by Prevailing Party.................. 29
Section 10.14 Resolution of Certain Disputes........................ 29
Section 10.15 Time of the Essence................................... 30
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TABLE OF CONTENTS
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Schedule 1 - Cost Per Unit
Exhibit A - Atrigel(R) Patent Rights
Exhibit B - Certificate of Analysis
Exhibit C - Certificate of Compliance
Exhibit D - Components
Exhibit E - Quality Agreement
Exhibit F - Example of Calculation of Product Manufacturing Cost Per Unit
ELIGARD(R) MANUFACTURING AND SUPPLY AGREEMENT
This Eligard(R) Manufacturing and Supply Agreement (this "Agreement") is
made on December 22, 2006 (the "Effective Date") by and between QLT USA, Inc., a
Delaware corporation having its offices at 2579 Midpoint Drive, Fort Collins,
Colorado 80525-4417, USA ("QLT USA"), and Tolmar, Inc., a Delaware corporation,
having its offices at 701 Centre Avenue, Fort Collins, Colorado 80526
("Manufacturer"). Manufacturer and QLT USA are sometimes referred to
collectively herein as the "Parties" or individually as a "Party."
RECITALS
WHEREAS, QLT USA and Manufacturer have entered into that certain Asset
Purchase Agreement dated December 20, 2006 (the "Purchase Agreement"), under
which Manufacturer has agreed to purchase (the "Transaction") the Generic
Dermatology Business (as defined in the Purchase Agreement), the Dental Business
(as defined in the Purchase Agreement), the Facility and certain related assets,
and to assume certain liabilities (collectively, the "Business") in accordance
with the terms and conditions of the Purchase Agreement;
WHEREAS, as a result of the Transaction, QLT USA will no longer have the
ability to manufacture certain products, but will remain obligated to do so
under various license, supply or similar agreements with Third Parties; and
WHEREAS, as a condition precedent to the closing of the Transaction,
Manufacturer has agreed to enter into this Agreement and the other Manufacturing
and Supply Agreements (as defined in the Purchase Agreement) to manufacture and
supply various products and compounds for and on behalf of QLT USA.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, the Parties hereto, intending to be
legally bound, do hereby agree as follows:
ARTICLE I
DEFINITIONS
(a) As used in this Agreement (including the appendices and exhibits),
the following terms shall have the meanings set forth below:
"Active Ingredient" means leuprolide acetate.
"Affiliate" means, with respect to any Party, an individual, trust,
business trust, joint venture, partnership, corporation, association or any
other entity which owns, is owned by or is under common ownership with, such
Party. For the purposes of this definition, the term "owns" (including, with
correlative meanings, the terms "owned by" and "under common ownership with") as
used with respect to any Party, shall mean the possession (directly or
indirectly) of more than 50% of the outstanding voting securities of a
corporation or comparable equity interest in any other type of entity.
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"Applicable Laws" means all applicable laws, rules, regulations and
guidelines that may apply to the marketing, manufacturing, packaging or sale of
a Product or the performance of the applicable Party's obligations under this
Agreement, including laws, regulations and guidelines governing the import,
export, marketing, distribution and sale of a Product, to the extent relevant,
and including all cGMP or good clinical practices and other standards or
guidelines promulgated by the Competent Authorities and including trade
association guidelines, where applicable, as well as United States' export
control laws and the United States' Foreign Corrupt Practices Act.
"Atrigel(R) Know-How" means all Know-How related to QLT USA's proprietary
Atrigel(R) drug delivery system as of the Effective Date and at any time during
the Term of this Agreement, which is not covered by the Atrigel(R) Patent
Rights, but is necessary or useful to Manufacture the Product for QLT USA, which
is provided to Manufacturer by QLT USA pursuant to this Agreement, and which is
under the Control of QLT USA as of the Effective Date or at any time during the
Term of this Agreement.
"Atrigel(R) Patent Rights" means all Patent Rights related to QLT USA's
proprietary Atrigel(R) drug delivery system as of the Effective Date and at any
time during the Term of this Agreement, which are necessary or useful to
Manufacture the Product for QLT USA, and which are under the Control of QLT USA
as of the Effective Date. The Atrigel(R) Patent Rights as of the Effective Date
are set forth on Exhibit A.
"Atrigel(R) Technology" means the Atrigel(R) Patent Rights and the
Atrigel(R) Know-How.
"Batch" means a specific quantity of a Product, or a Sub Unit, that is
intended to have uniform character and quality, within specified limits, and is
produced according to a single manufacturing order during the same cycle of
Manufacture.
"Batch Production Record" means the set of detailed processing
instructions, which are to be followed by Manufacturer to Manufacture one Batch
of Product within the meaning of 21 CFR part 211.188, or its successor as in
effect from time to time.
"Certificate of Analysis" means a certificate, in the form attached hereto
as Exhibit B, to accompany each Batch of Product that documents the analytical
results, including a detailed report on sterility, endotoxin and appearance for
that Batch of Product and confirms compliance of that Batch of Product with the
Specifications in accordance with Governmental Approvals.
"Certificate of Compliance" means a certificate, in the form attached
hereto as Exhibit C, to accompany each Batch of Product that certifies the
accuracy, completeness and compliance of that Batch of Product with the
Specifications and cGMP practices and other Applicable Laws.
"cGMP" means current good manufacturing practices as defined and
established under Applicable Laws.
"Competent Authorities" means collectively the governmental entities
responsible for the regulation of medicinal products intended for human use,
including the FDA.
"Components" shall mean those materials that are to be either (a) supplied
by QLT USA or (b) purchased by Manufacturer on behalf of QLT USA, for the
Manufacture of a Product
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pursuant to the Specifications, including the Active Ingredient, inactive
ingredients, other raw materials, labels, inserts and other materials, all as
set forth in Exhibit D.
"Confidential Information" means any confidential information of a Party
relating to any use, process, method, compound, research project, work in
process, future development, scientific, engineering, manufacturing, marketing,
business plan, financial or personnel matter relating to the disclosing Party,
its present or future products, sales, suppliers, customers, employees,
investors or business, whether in oral, written, graphic or electronic form,
including the Specifications and the Quality Agreement, all technical and/or
proprietary information relating to the Products or the production process for
the Products and information relating to the marketing of, customers for, and
sales and pricing of the Products.
"Consumer Price Index" means the Consumer Price Index for all Urban
Consumers (Consumer Prices - All Urban Consumers, 1982-84 = 100) as published by
the Bureau of Labor Statistics of the Department of Labor of the United States
Department of Commerce.
"Control" means the possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any agreement
or other arrangement with any Third Party.
"Cost Per Unit" means the price per Unit or Sub Unit, on a
Product-by-Product basis, as set forth on Schedule 1.
"Demonstration Samples" means Units used to demonstrate the manner in which
a Product is prepared and used, and labeled "demonstration samples, for
demonstration purposes only, not for human use," as more fully described in the
Specifications.
"Facility" shall mean the Manufacturer's manufacturing facility located at
701 Centre Avenue, Fort Collins, Colorado 80526.
"FDA" means the United States Food and Drug Administration.
"FOB the Facility" shall have the meaning set forth in Section 2-319(1)(a)
of the Colorado Uniform Commercial Code.
"Four Month Product" means the formulation comprised of leuprolide acetate
in an Atrigel(R) delivery system that provides for the sustained release of
leuprolide acetate over a period of about one hundred and twenty (120) days and
not less than one hundred and twelve (112) days with a primary indication for
the palliative treatment of prostate cancer.
"Full Batch Quantities," with respect to the One Month Product, Three Month
Product and Four Month Product, means Batches with a target yield of, in the
aggregate, [**], or [**] Sub Units, and with respect to the Six Month Product,
means Batches with a target yield of, in the aggregate, [**] Units, or [**] Sub
Units, it being understood that QLT USA may request Manufacturer to Package and
Ship, but not Manufacture, a Product in less than Full Batch Quantities.
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"Governmental Approval" means all permits, licenses and authorizations,
including but not limited to, import permits and Marketing Authorizations,
required by any Competent Authority as a prerequisite to the Manufacturing,
packaging, marketing or selling of a Product or the Units.
"Improvement" means any and all developments, inventions or discoveries
relating to the Manufacture of pharmaceutical products at the Facility,
developed or acquired by Manufacturer at any time during the Term whether in
connection with the Product or otherwise.
"Intermediate Step Manufacturing Agreement" means an agreement to be
entered into between [**] and Manufacturer for the sterilization of syringe A.
"Know-How" means all know-how, trade secrets, inventions, data, processes,
techniques, procedures, compositions, devices, methods, formulas, protocols and
information, whether or not patentable, which are not publicly known, including,
without limitation, all chemical, biochemical, toxicological, and scientific
research information.
"Latent Defect" means any defect in the Product to the extent resulting
solely from the Manufacture or Shipping of the Product that is not discovered
during routine acceptance or stability testing conducted by Manufacturer or
otherwise.
"Losses" means any damage, loss, cost or expense (including reasonable
attorneys' fees and reasonable costs of investigation incurred in defending
against any claim, action, demand, suit or proceeding).
"Manufacture," "Manufacturing" or "Manufacturing Process" means the
storage, handling, production, processing, and Packaging of a Product, and/or a
Demonstration Sample, in accordance with this Agreement and Applicable Laws.
"Marketing Authorization" means all necessary and appropriate regulatory
approvals, including but not limited to, variations thereto, and pricing and
reimbursement approvals, to put a Product on the market.
"Master Production Procedures" shall mean a written description of the
procedure to be followed for processing a Batch of Product including but not
limited to a complete list of all active and inactive ingredients, components,
weights and measures, descriptions of drug product containers, closures,
packaging materials, and labeling and complete specifications for each, within
the meaning of 21 CFR part 211.186, or its successor as in effect from time to
time.
"One Month Product" means the formulation comprised of leuprolide acetate
in an Atrigel(R) delivery system that provides for the sustained release of
leuprolide acetate over a period of about thirty (30) days and not less than
twenty-eight (28) days with a primary indication for the palliative treatment of
prostate cancer.
"Package," "Packaging" or "Packaging Specifications" means any and all
containers, cartons, shipping cases, inserts, package inserts, labels (including
any related artwork and
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engineering drawings) or other similar material used in packaging or
accompanying the Product in the most current revision approved in each country's
specific Governmental Approval.
"Patent Rights" means all rights under patents and patent applications, and
any and all patents issuing therefrom (including utility, model and design
patents and certificates of invention), together with any and all substitutions,
extensions (including supplemental protection certificates), registrations,
confirmations, reissues, divisionals, continuations, continuations-in-part,
re-examinations, renewals and foreign counterparts of the foregoing, and all
improvements, supplements, modifications or additions.
"Product" means collectively the One Month Product, the Three Month
Product, the Four Month Product, and the Six Month Product supplied in Unit
packages or any formulation of leuprolide acetate, in any concentration, in the
Atrigel(R) delivery system for the palliative treatment of prostate cancer, and
includes, as the context requires, each Sub Unit for such Product.
"Product Manufacturing Cost" means the actual cost to Manufacture the
Product by Manufacturer (including any subcontractor) during each calendar year
during the Term, including the related quality assurance and quality control
activities as required by Applicable Laws, which actual cost shall be determined
in accordance with GAAP, and shall include direct labor, direct material
(including raw material and components supplied by Manufacturer but not
including the Ordered Components), direct overhead (e.g. depreciation of a
packaging line solely dedicated to the Product) and the allocable portion of the
indirect Manufacturing overhead directly attributable to the Manufacture of the
Product. The allocable portion of the Manufacturing overhead of the Facility
shall be equal to [**].
Product Manufacturing Cost shall exclude selling, general and
administrative, research and development, interest expenses, any and all debt
service payments of Manufacturer, and any other costs not directly associated
with the Manufacture of the Product, other than direct and indirect
manufacturing overhead. The Parties agree that in no event shall the Product
Manufacturing Cost include capital expenditures and improvements to or for the
Facility, except as directly or indirectly allocated through Manufacturing
overhead.
"Product Manufacturing Cost Per Unit" shall be calculated on a
Product-by-Product basis by dividing actual Product Manufacturing Costs incurred
as set forth above by total Units Manufactured during each calendar year during
the Term. In cases where actual Unit production for a particular Batch does not
exceed a yield percentage of [**], the related Units and costs shall be excluded
in completing the Product Manufacturing Cost Per Unit calculation for the
applicable calendar period as set forth in Exhibit F to this Agreement. Also,
the allocable Manufacturing overhead component in any one year shall be subject
to a cap equal to the [**] during the period of Manufacture multiplied by the
prior period's allocable Manufacturing overhead component included within the
prior period's Product Manufacturing Cost Per Unit.
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"Quality Agreement " means the quality systems agreement, attached hereto
as Exhibit E, between QLT USA and Manufacturer, the purpose of which is to
measure the conformity of a Product hereunder to the Specifications.
"Shipment," "Ship" or "Shipped" means each individual group of Product with
respect to which title has passed to QLT USA from Manufacturer.
"Six Month Product" means the formulation comprised of leuprolide acetate
in an Atrigel(R) delivery system that provides for the sustained release of
leuprolide acetate over a period of about one hundred and eighty (180) days and
not less than one hundred and sixty-eight (168) days with a primary indication
for the palliative treatment of prostate cancer.
"Specifications" means the specifications, including the Master Production
Procedures, and all Packaging Specifications and labeling specifications, for a
Product as may be amended from time to time by the Parties and in compliance
with Applicable Laws in the most current revision approved in each country's
specific Governmental Approval.
"Sub Unit" means any one or more of the Syringe A Sub Unit, Syringe B Sub
Unit or the Packaging and Product Release Sub Unit, each as identified on
Schedule 1.
"Technical Information" shall mean all information, materials, knowledge,
data, drawings and other specifications involving or relating to the Manufacture
of a Product provided to Manufacturer by QLT USA pursuant to this Agreement,
including, without limitation, the Specifications.
"Third Party" means any entity other than: (a) Manufacturer, (b) QLT USA or
(c) an Affiliate of Manufacturer or QLT USA.
"Three Month Product" means the formulation comprised of leuprolide acetate
in an Atrigel(R) delivery system that provides for the sustained release of
leuprolide acetate over a period of about ninety (90) days and not less than
eighty-four (84) days with a primary indication for the treatment of prostate
cancer.
"Unit" means the Product packaged in a two-part system consisting of (a)
one syringe of Atrigel(R) delivery system and a plunger rod in a specified pouch
or tray and sterilized by gamma irradiation; (b) one syringe containing
sufficient leuprolide acetate for a One Month Product, Three Month Product, Four
Month Product or Six Month Product, aseptically filled and lyophilized in the
syringe, and a needle packaged in a specified pouch or tray; (c) instructions
for use, as such trade or sample package may be changed or reformulated by
Manufacturer and QLT USA from time to time; and (d) a commercial trade or sample
package.
(b) Each of the following terms is defined in the Section set forth
opposite such term below:
AAA Section 10.14
Agreement Preamble
Atrigel(R) Improvement Confidential Rights Section 2.03(a)
Atrigel(R) Improvements Section 2.03(a)
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Business Recitals
Disputed Amount Section 4.01
Effective Date Preamble
Four-Month Amount Section 2.05
Indemnity Claim Section 7.04
Insurance Section 7.05
Manufacturer Preamble
Manufacturing Improvement Confidential Rights Section 2.03(a)
Manufacturing Improvements Section 2.03(a)
Maximum Supply Amount Section 4.07(a)
Ordered Components Section 2.04(c)
Other Improvement Confidential Rights Section 2.03(c)
Other Improvements Section 2.03(c)
Party(ies) Preamble
Proposal Section 10.14
Purchase Agreement Recitals
Purchase Price Section 4.01(a)
QLT USA Preamble
Recall Section 5.05
Resolution Date Section 10.14
Revised Purchase Price Section 10.14
Rolling Forecast Section 4.06
Second Source Section 3.04
Term Section 9.01
Testing Period Section 5.02
Transaction Recitals
(c) The Section headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement. Except where the context clearly requires to the contrary: (i)
each reference in this Agreement to a designated "Section," "Exhibit" or
"Schedule" is to the corresponding Section, Exhibit or Schedule of or to
this Agreement; (ii) instances of gender or entity-specific usage (e.g.,
"his" "her" "its" "person" or "individual") shall not be interpreted to
preclude the application of any provision of this Agreement to any
individual or entity; (iii) "including" shall mean "including, without
limitation"; (iv) references to Applicable Laws shall mean such Applicable
Laws in effect during the Term (taking into account any amendments thereto
effective at such time without regard to whether such amendments were
enacted or adopted after the Effective Date); (v) references to "$" or
"dollars" shall mean the lawful currency of the United States; (vi)
references to "Federal" or "federal" shall be to laws, agencies or other
attributes of the United States (and not to any State or locality thereof);
(vii) the meaning of the terms "domestic" and "foreign" shall be determined
by reference to the United States; (viii) references to "days" shall mean
calendar days; (ix) references to months or years shall be to the actual
calendar months or years at issue (taking into account the actual number of
days in any such month or year); (x) days, business days and times of day
shall be determined by reference to local time in Denver, Colorado; (xi)
the English language version of this Agreement
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shall govern all questions of interpretation relating to this Agreement,
notwithstanding that this Agreement may have been translated into, and
executed in, other languages; and (xii) the terms "Product" and "Products"
shall refer to each individual Product and all Products collectively,
unless the context clearly indicates otherwise.
(d) This Agreement is entirely independent, separate and severable
from the Purchase Agreement and all rights and obligations set forth
therein.
ARTICLE II
LICENSE GRANT; PROVISION OF MATERIALS
Section 2.01 LICENSE GRANT. Subject to the terms and conditions of this
Agreement, QLT USA hereby grants to Manufacturer for the Term a fully paid-up,
royalty-free, non-exclusive, non-transferable, non-sublicensable, right and
license to make, have made, and use the Technical Information and Atrigel(R)
Technology and the Manufacturing Improvements and the Atrigel(R) Improvements
solely to Manufacture the Products, solely at the Facility and solely for sale
to QLT USA. In addition, QLT USA shall provide to Manufacturer such Technical
Information and Atrigel(R) Technology as is reasonably necessary or advisable to
facilitate Manufacturer's Manufacture of the Product. At Manufacturer's request,
QLT USA shall answer reasonable questions with respect to the Technical
Information and the Atrigel(R) Technology. All Technical Information and
Atrigel(R) Technology shall constitute the Confidential Information of QLT USA.
Section 2.02 RESTRICTIONS AND RESERVATION OF RIGHTS. Manufacturer agrees
not to use the Technical Information and Atrigel(R) Technology or make or sell
the Product except as expressly permitted in Section 2.01. All intellectual
property rights in and to (a) the Product, the Technical Information and
Atrigel(R) Technology are and shall at all times be owned by QLT USA, and (b)
the Manufacturing Processes (not related to the Manufacture of the Product or to
the Atrigel(R) Technology) are and shall at all times be owned by Manufacturer,
subject in the case of both (a) and (b) only to the license rights expressly
granted to Manufacturer in Section 2.01 and, as applicable, the provisions of
Section 2.03. Any and all rights to the Technical Information and Atrigel(R)
Technology not expressly granted to Manufacturer herein are reserved by QLT USA.
Any and all rights to the Manufacturing Process (not related to the Manufacture
of the Product or to the Atrigel(R) Technology) not expressly granted to QLT USA
herein are reserved by Manufacturer.
Section 2.03 OWNERSHIP OF IMPROVEMENTS.
(a) Manufacturer agrees to disclose promptly in writing to QLT USA all
Improvements. Manufacturer further agrees that any and all Improvements to
the Manufacturing Process that are exclusively or primarily related to the
Products (the "Manufacturing Improvements") or that relate to or utilize
the Atrigel(R) Technology (the "Atrigel(R) Improvements"), shall be the
sole and exclusive property and Confidential Information of QLT USA.
Manufacturer hereby irrevocably assigns and agrees to assign to QLT USA all
right, title and interest worldwide in and to the Manufacturing
Improvements and the Atrigel(R) Improvements (in each case whether
currently existing
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or conceived, created or otherwise developed later), including, without
limitation, all trade secrets, patents, industrial rights and all other
intellectual and proprietary rights related thereto (respectively, the
"Manufacturing Improvement Confidential Rights" and the "Atrigel(R)
Improvement Confidential Rights"), effective immediately upon the
inception, conception, creation or development thereof. The Manufacturing
Improvement Confidential Rights shall include, without limitation, all
rights, whether existing now or in the future, whether statutory or common
law, in any jurisdiction in the world, related to the Manufacturing
Improvements. The Atrigel(R) Improvement Confidential Rights shall include,
without limitation, all rights, whether existing now or in the future,
whether statutory or common law, in any jurisdiction in the world, related
to the Atrigel(R) Improvements. Except for the license granted to
Manufacturer under Section 2.01 or as otherwise agreed in writing by the
Parties, Manufacturer retains no rights to use the Manufacturing
Improvements or the Atrigel(R) Improvements and agrees not to challenge the
validity of QLT USA's ownership in the Manufacturing Improvements and the
Atrigel(R) Improvements.
(b) To the extent, if any, that any Manufacturing Improvements,
Manufacturing Improvement Confidential Rights, Atrigel(R) Improvements, or
Atrigel(R) Improvement Confidential Rights are not assignable or that
Manufacturer retains any right, title or interest in and to any
Manufacturing Improvements, Manufacturing Improvement Confidential Rights,
Atrigel(R) Improvements, or Atrigel(R) Improvement Confidential Rights,
Manufacturer (i) unconditionally and irrevocably waives the enforcement of
such rights, and all claims and causes of action of any kind against QLT
USA with respect to such rights; (ii) agrees, at QLT USA's request and
expense, to consent to and join in any action to enforce such rights; and
(iii) hereby grants to QLT USA a perpetual, irrevocable, fully paid-up,
royalty-free, transferable, sublicensable (through multiple levels of
sublicenses), exclusive, worldwide right and license to make, have made,
use, lease, and sell Manufacturing Improvements and Atrigel(R)
Improvements. Manufacturer hereby waives and quitclaims to QLT USA any and
all claims, of any nature whatsoever, which Manufacturer now or may
hereafter have for infringement of any Manufacturing Improvements,
Manufacturing Improvement Confidential Rights, Atrigel(R) Improvements, or
Atrigel(R) Improvement Confidential Rights assigned and/or licensed
hereunder to QLT USA.
(c) All Improvements other than Manufacturing Improvements and
Atrigel(R) Improvements (the "Other Improvements") shall be the sole and
exclusive property and Confidential Information of Manufacturer.
Manufacturer hereby grants to QLT USA a perpetual, irrevocable, fully
paid-up, royalty-free, non-exclusive (with the right to sublicense only for
the purpose of Manufacturing the Product) worldwide right and license to
make, have made, and use only such Other Improvements as are necessary to
the Manufacture of the Products and solely for the Manufacture of the
Products. QLT USA hereby irrevocably assigns and agrees to assign to
Manufacturer any and all right, title and interest worldwide in and to the
Other Improvements (whether currently existing or conceived, created or
otherwise developed later), including, without limitation, all trade
secrets, patents, industrial rights and all other intellectual and
proprietary rights related thereto (the "Other Improvement Confidential
Rights"), effective immediately upon the inception, conception, creation or
development thereof. The Other
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Improvement Confidential Rights shall include, without limitation, all
rights, whether existing now or in the future, whether statutory or common
law, in any jurisdiction in the world, related to the Other Improvements.
Except for the license granted to QLT USA under this Section 2.03(c) or as
otherwise agreed in writing by the Parties QLT USA retains no rights to use
the Other Improvements and agrees not to challenge the validity of
Manufacturer's ownership in the Other Improvements.
(d) To the extent, if any, that any Other Improvements or Other
Improvement Confidential Rights are not assignable or that QLT USA retains
any right, title or interest in and to any Other Improvements or any Other
Improvement Confidential Rights, QLT USA (i) unconditionally and
irrevocably waives the enforcement of such rights, and all claims and
causes of action of any kind against Manufacturer with respect to such
rights; (ii) agrees, at Manufacturer's request and expense, to consent to
and join in any action to enforce such rights; and (iii) hereby grants to
Manufacturer a perpetual, irrevocable, fully paid-up, royalty-free,
transferable, sublicensable (through multiple levels of sublicenses),
exclusive, worldwide right and license to make, have made, use, lease, and
sell Other Improvements and Other Improvement Confidential Rights. QLT USA
hereby waives and quitclaims to Manufacturer any and all claims, of any
nature whatsoever, which QLT USA now or may hereafter have for infringement
of any Other Improvements or Other Improvement Confidential Rights assigned
and/or licensed hereunder to Manufacturer.
Section 2.04 SUPPLIED MATERIALS.
(a) At least thirty (30) days prior to the scheduled Manufacturing
date, QLT USA shall deliver, at its expense, sufficient quantities of the
Components to be delivered by QLT USA to the Facility to enable
Manufacturer to satisfy its obligations to QLT USA under this Agreement.
All Components (including Ordered Components) supplied by QLT USA shall
meet the applicable Specifications, including Master Production Procedures,
and shall remain the property of QLT USA until incorporated into the
Product;
(b) Manufacturer will be responsible for supplying sufficient
quantities of all materials necessary for Manufacturer to Manufacture the
Products (which materials are set forth on Exhibit D) other than the
Components to be delivered by QLT USA and the Ordered Components. All such
items supplied by Manufacturer shall meet the applicable Specifications,
including the Master Production Procedures; and
(c) Manufacturer shall order and hold for the benefit of QLT USA and
its designees those Components designated as "Ordered Components" on
Exhibit D (the "Ordered Components") at such times and in such amounts
sufficient to Manufacture Products in accordance with the firm order
portion of the Rolling Forecast. Upon receipt of the invoice from the
suppliers of the Ordered Components, Manufacturer shall invoice QLT USA
therefore at a price equal to the actual cost of the Ordered Components
[**] and payment shall be due [**] following QLT USA's receipt of such
invoice. For all purposes under this Agreement, Manufacturer shall not be
responsible for any delay in
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the Ordered Components, any failure of the Ordered Components to satisfy
the Specifications, or any other event or circumstance that could or would
constitute a breach of this Agreement that directly arises from, relates
to, or results from any such delay or failure, except if and to the extent
such delay or failure is caused by the gross negligence or willful
misconduct of Manufacturer.
Section 2.05 STORAGE. Manufacturer shall store the Components as well as
finished Products at the Facility, at no expense to QLT USA, in accordance with
QLT USA's instructions and Applicable Laws until such time as such Components
are incorporated into Products and Shipped to QLT USA or its customers, as
applicable; provided, however, that (a) Manufacturer shall not be required to
store finished Products at the Facility for more than [**] past the anticipated
delivery date; and (b) Manufacturer shall only be obligated to store [**] worth
of such Components, in accordance with the firm order portions of the Rolling
Forecast [**]. If QLT USA requests Manufacturer to store any Components
exceeding the [**], then QLT USA shall notify Manufacturer, in writing, at least
thirty (30) days before the date QLT USA intends to deliver such Components
exceeding the Four-Month Amount, which request shall be subject to the
Manufacturer's prior written consent (which consent shall be granted on a
space-available basis). QLT USA shall be responsible for reasonable storage
charges for such (i) excess Components, (ii) for any finished Product stored for
more than [**] past the anticipated delivery date, and (iii) Ordered Components
held for the benefit of QLT USA's designees, in each case, not to exceed [**]
for room-temperature storage or [**] for refrigerated storage, plus a reasonable
handling charge of [**] to the extent materials or products are reasonably
required to be moved. Commencing [**], such storage costs shall increase
annually by an amount equal to the [**]. Further, with respect to the Ordered
Components held for the benefit of QLT USA's designees, QLT USA shall reimburse
Manufacturer for all expenses to ship such Ordered Components to such designees
as and when instructed by QLT USA and all such shipments shall be FOB Facility.
ARTICLE III
MANUFACTURE AND SUPPLY
Section 3.01 AGREEMENT TO PURCHASE AND SUPPLY PRODUCT. Subject to the terms
and conditions set forth in this Agreement, QLT USA agrees to purchase from
Manufacturer, and Manufacturer agrees to Manufacture for, and sell exclusively
to QLT USA or its designees during the Term, at least [**] of QLT USA's
aggregate Unit requirements for the Products and the Demonstration Samples;
provided, however, that a Product shall not be included in such [**] requirement
until such time as Manufacturer has received Governmental Approval to
Manufacture such Product (and QLT USA shall use commercially reasonable efforts
to obtain all Governmental Approvals necessary or advisable in order for the
Facility to Manufacture Products for sale in each country in which Products are
sold to end users or with respect to which QLT USA has entered into, or
hereafter enters into, any license agreement or arrangement) and then only with
respect to orders made by QLT USA or its designees after such date. In addition,
without limiting the generality of the preceding sentence, QLT USA agrees to
purchase from
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Manufacturer, in the aggregate, at least (a) [**] during the [**] calendar year,
and (b) [**] during the [**] calendar year. Manufacturer shall sell and QLT USA
shall purchase the Products in Full Batch Quantities.
Section 3.02 QUALITY ASSURANCE. QLT USA shall be responsible for furnishing
to Manufacturer appropriate Specifications, including Packaging Specifications
to be used in connection with the Manufacture of the Product. Manufacturer shall
Manufacture each Product in accordance with the Specifications and the Quality
Agreement. Except with respect to the Intermediate Step Manufacturing Agreement,
Manufacturer may not subcontract any part of the Manufacturing Process for the
Product and the Demonstration Samples to a Third Party, without the prior
written consent of QLT USA (which consent may be withheld in QLT USA's sole
discretion). Any such permitted subcontractor shall be subject to the terms and
conditions of this Agreement, and any costs related thereto shall be borne by
Manufacturer. Manufacturer shall consult with QLT USA as to any proposed changes
in the Specifications, or the Quality Agreement that might render Manufacturer
unable to supply Product in accordance with the terms of this Agreement, prior
to making those changes, and obtain QLT USA's prior written consent thereto
(which consent may be withheld in QLT USA's sole discretion). Each Party shall
immediately notify the other Party in writing of any changes required by a
Competent Authority in the Specifications or the Quality Agreement and the
Parties agree to develop and execute an appropriate action plan to address such
situation. Any additional costs or expenses resulting from changes requested by
a Competent Authority (i) specifically related to the Product shall be borne by
QLT USA and (ii) any other changes shall be borne by Manufacturer.
Independent of any changes required by a Competent Authority, with respect
to which the preceding paragraph shall apply, from time to time Manufacturer
shall, at QLT USA's expense, make such improvements in the Manufacturing Process
as are reasonably requested by QLT USA. Notwithstanding the foregoing, if
Manufacturer is required to purchase additional equipment to make such
improvements, or if the cost of Manufacture of the Products is materially
increased, the Parties shall negotiate in good faith how the cost of such
equipment and any such other costs shall be allocated between the Parties.
Section 3.03 MANUFACTURER'S DUTIES. Manufacturer covenants to Manufacture
each Product (a) within the time periods and in the quantities set forth in the
firm order portion of the Rolling Forecast; (b) in accordance with the
Specifications (including the Master Production Procedures), the Quality
Agreement and Applicable Laws, and label and Package each Product in accordance
with such Specifications (including the labeling specifications) and not affix
any other labeling to the Product, except with the prior written approval of QLT
USA; and (c) to furnish to QLT USA with every Shipment a written Certificate of
Analysis and Certificate of Compliance that confirms conformity of the Product
to the Specifications. The Product may be subjected to testing by QLT USA or its
designees in order to verify conformance of the Product with the Specifications.
In addition, unless QLT USA otherwise notifies Manufacturer in writing,
Manufacturer shall:
(i) upon request, provide QLT USA with a copy of the written
Batch Production Record;
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(ii) retain a Product sample of each Batch of Product for a
period of (A) [**] following the expiration date of such Batch of
Product or (B) such longer period as is required by Applicable Laws or
a Competent Authority in the country in which the end user to whom the
applicable Product is sold is located. Upon the written request of QLT
USA, Manufacturer shall make such Product samples available to QLT USA
or its designees for inspection in accordance with Section 5.04. The
retained Product sample shall be in an amount sufficient in size to
allow QLT USA or its designees and Manufacturer to perform tests to
determine whether or not the Product conforms to the Specifications.
The retained Product sample shall be kept under the approved storage
conditions;
(iii) maintain records to enable Manufacturer's ability to
perform a complete lot history via lot tracing of the Product;
(iv) keep on file all manufacturing records and analytical
results pertaining to the Manufacture of each Batch of Product
(including all Batch Production Records) for a period of (A) [**] or
(B) such longer period as is required by Applicable Laws or a
Competent Authority in a country in which the customer to whom the
applicable Product is sold is located, with such period commencing on
the expiration date of the last lot of the last Batch of Product
Manufactured and Shipped to QLT USA or its designees. Manufacturer
shall make all such records available to QLT USA or its designees upon
request;
(v) provide to QLT USA or its designees within two (2) business
days of receipt by Manufacturer, or immediately upon the receipt of a
"warning letter" or similar correspondence, complete copies of any and
all inspection reports pertaining to the Manufacture of the Product
that Manufacturer receives from any Competent Authority, or which is
obtained by Manufacturer from any Third Party or governmental agency;
(vi) in accordance with Section 5.04, provide QLT USA or its
designees with complete access to all existing and hereafter produced:
(A) Batch Production Records; (B) the records maintained under Section
3.03(iii), (C) quality inspection reports of the Product that are
externally generated; (D) any and all investigation reports of the
Product that are externally generated; and (E) packaging records
pertaining to the Product; and
(vii) provide to QLT USA or its designees inspection reports,
investigation reports or quality inspection reports internally
generated or produced by Manufacturer or its Affiliates; [**].
The Parties acknowledge and agree that QLT USA will be purchasing Product from
Manufacturer on behalf of its licensees and sublicensees and that such licensees
or sublicensees shall be entitled to exercise QLT USA's rights under this
Agreement to inspect, monitor, audit or review the book and records of
Manufacturer, the Facility and the Manufacturing Process,
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whether or not specifically noted in this Agreement, but subject to any
limitations or qualifications imposed on such rights under this Agreement.
Section 3.04 SECOND SOURCE. Manufacturer will reasonably cooperate with QLT
USA, at QLT USA's request, to establish a second source (any and each referred
to as a "Second Source") with the ability to Manufacture some or all of the
Products, including making available all records relating to the Products and
equipment specifications, Know-How and, to the extent reasonably required by QLT
USA, personnel employed by Manufacturer who have knowledge regarding the
Manufacturing of the Products. QLT USA shall reimburse Manufacturer for
Manufacturer's reasonable costs (including personnel time at a full-time
employee rate of [**]) incurred in connection with such cooperation.
Section 3.05 EXECUTION OF INTERMEDIATE MANUFACTURING AGREEMENT. Prior to
the Effective Date, Manufacturer has entered into the Intermediate Step
Manufacturing Agreement on substantially the same terms as QLT USA's existing
agreement with such Third Party.
ARTICLE IV
PURCHASE AND SALE
Section 4.01 PURCHASE PRICE AND PAYMENT.
(a) During the [**] calendar years, Manufacturer shall sell and QLT
USA shall purchase the Products and Demonstration Samples, including
retention samples, at the Cost Per Unit based on the activities performed
by Manufacturer with respect to each Batch as set forth on Schedule 1 (with
respect to each Product, the "Purchase Price"). Commencing [**], and
annually thereafter, the Purchase Price shall increase annually by an
amount equal to the [**]. Any increase in the Purchase Price for a Product
under this Section 4.01 shall result in an adjustment to the Sub Unit Cost
Per Unit for such Product, such that the cost of each Sub Unit shall
constitute the same percentage of the overall Cost Per Unit for such
Product as it did before the increase in the Purchase Price.
(b) Commencing [**], and annually thereafter, if the Product
Manufacturing Cost Per Unit decreases (determined on a Product-by-Product
basis), Manufacturer shall give QLT USA notice of such decrease and the
Purchase Price for each Product shall be reduced by an amount equal to [**]
of the decrease in the Product Manufacturing Cost Per Unit. Manufacturer
shall maintain and allow QLT USA to audit, or have audited by a Third
Party, from time to time, all such records as are necessary to determine
Manufacturer's Product Manufacturing Cost Per Unit. For the avoidance of
doubt, in the event the Product Manufacturing Cost Per Unit decreases,
there shall be no automatic increase in the Purchase Price of the Products
pursuant to Section 4.01(a), and instead both the increase required by
Section 4.01(a) and the decrease required by this Section 4.01(b) shall be
offset to determine the amount, if any, by which the Purchase Price of the
Products shall be increased or decreased. Any decrease in the Product
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Manufacturing Cost Per Unit for a Product shall be allocated among the Sub
Unit Cost Per Unit for such Product in the same manner as set forth in
Section 4.01(a).
(c) If QLT USA purchases less than [**], in the aggregate, during any
calendar year, then QLT USA and Manufacturer, at Manufacturer's request,
will negotiate, in good faith, a revised Purchase Price, on a
Product-by-Product basis, within [**] after the end of the calendar year in
which less than [**] were purchased. If the Parties cannot reach agreement
on a revised Purchase Price, Manufacturer shall have the option of either
(i) resolving such dispute in accordance with the procedures set forth in
Section 10.14; provided, however, that if Manufacturer exercises such
right, Manufacturer shall no longer have the right to [**].
Section 4.02 INVOICE; PAYMENT TERMS. Manufacturer shall invoice QLT USA
upon Shipment of the Product and Demonstration Samples Shipped by Manufacturer
to QLT USA and payment shall be due thirty (30) days from receipt of the
invoice, unless the invoice amount or any portion thereof is the subject of a
good faith dispute (the "Disputed Amount") between QLT USA and Manufacturer, in
which case QLT USA shall pay the undisputed portion of the invoice on or before
the due date of such undisputed portion, provide Manufacturer with notice of the
Disputed Amount describing in detail the reason for the Disputed Amount
(including, as applicable, any information reasonably necessary to support such
dispute). If any invoiced amount (other than the Disputed Amount) is not paid
within such time period, a late fee shall accrue equal to one and one-half
percent (1.5%) of the unpaid balance per month (commencing on the thirty-first
(31st) day following receipt of the invoice). If QLT USA fails to pay any
invoiced amount (other than the Disputed Amount) within [**] days after the
receipt of the applicable invoice, on more than one occasion during any rolling
twelve-month period, Manufacturer shall be entitled to require QLT USA to pay
full price for future Products before such Products are Shipped. If any invoiced
amount (other than the Disputed Amount) is not paid within [**] after receipt of
the applicable invoice, Manufacturer shall be entitled to terminate the
Agreement, unless such failure is cured by QLT USA within thirty (30) days after
notice thereof is delivered to QLT USA, or may cease production and/or
performance hereunder until such breach for non-payment is cured. If the Parties
cannot reach agreement on the Disputed Amount, at Manufacturer's request, the
Parties shall resolve such dispute in accordance with the procedures set forth
in Section 10.14.
Section 4.03 PURCHASE FORMS. Manufacturer shall Ship Product and
Demonstration Samples in accordance with QLT USA's purchase order form or as
otherwise directed by QLT USA in writing. All orders will be for Full Batch
Quantities. Purchase orders, purchase order releases, confirmations, acceptances
and similar documents submitted by a Party in conducting the activities
contemplated under this Agreement are for administrative purposes only and shall
not add to or modify the terms of the Agreement. To the extent of any conflict
or inconsistency between this Agreement and any such document, the terms of this
Agreement shall govern.
Section 4.04 CONFIRMATION. Manufacturer shall confirm each purchase order
within five (5) business days from the date of receipt of a purchase order and,
subject to Section 4.06,
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shall supply the Product within a maximum of [**] from the date of acceptance of
a purchase order. Failure of Manufacturer to confirm any purchase order shall
not relieve Manufacturer of its obligation to supply Product ordered by QLT USA
in conformity with this Agreement.
Section 4.05 DELIVERY. Delivery terms for Product and Demonstration Samples
shall be FOB the Facility. All Products shall be Shipped no later than [**]
following the commencement of Manufacturing of such Products. The Product when
delivered to the common carrier shall not have an expiration date of less than
[**] determined as of such date as the Manufacturing Process for such Product is
completed. Title to any Product or Demonstration Samples purchased by QLT USA
shall pass to QLT USA upon the earlier of (a) a common carrier accepting
possession or control of such Product or Demonstration Samples, as applicable,
or (b) passage of such Product or Demonstration Samples, as applicable, from the
loading dock of the Facility to QLT USA or its agent.
Section 4.06 FORECASTS AND ORDERS. On or prior to the Closing Date, QLT USA
will provide Manufacturer with a rolling twelve (12) month forecast (the
"Rolling Forecast") of QLT USA's requirement of Product, on a Product-by-Product
and a country-by-country basis, including Demonstration Samples, and thereafter
provide monthly updates on a rolling 12-month basis at least fifteen (15) days
prior to the first day of each month beginning February 2007. The first three
(3) months of each Rolling Forecast shall constitute a firm and binding order
from QLT USA to purchase the amount and type of Products listed in the first
three (3) months of each Rolling Forecast from Manufacturer, which may not be
changed by QLT USA or Manufacturer, including through the delivery of subsequent
Rolling Forecasts. Each Rolling Forecast shall set forth the number of Full
Batch Quantities of syringe A, syringe B and Packaging of Product to be provided
by QLT USA only with respect to the firm order portion of the Rolling Forecast.
At QLT USA's request and subject to the availability of the Components,
Manufacturer shall reprioritize the Manufacture of Product and other products
manufactured by Manufacturer for QLT USA. Any request to reprioritize
Manufacturing shall be delivered at least [**] prior to the scheduled
Manufacturing date. From time to time after the Effective Date, the Parties
shall consider whether, in light of market demand, Manufacturing capacity,
inventory levels and other pertinent factors, to revise the schedule for
delivery of forecasts and, if appropriate, negotiate in good faith to revise
such schedule.
Section 4.07 FAILURE TO SUPPLY.
(a) Manufacturer shall be obligated to provide Product in an amount up
to [**] of QLT USA's forecasted amount for any rolling twelve (12) month
period, as determined based on the Rolling Forecast for the first month of
such twelve (12) month period (the "Maximum Supply Amount"), provided,
however, that in no case shall Manufacturer be obligated to provide within
any three (3) month period the entire excess of the Maximum Supply Amount
over QLT USA's forecasted amount for the applicable rolling twelve (12)
month period based on the Rolling Forecast for the first month of such
twelve (12) month period. Manufacturer shall immediately notify QLT USA if
Manufacturer is unable to fill any order placed by QLT USA pursuant to this
Article IV whether or not such failure is because the order exceeds the
Maximum Supply Amount;
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provided, however, that Manufacturer shall not be deemed unable to fill any
order of QLT USA if such order exceeds the Maximum Supply Amount. Any
Product purchased by QLT USA from a Third Party or Second Source due to
Manufacturer's inability to supply Product to QLT USA, for any reason,
shall be deemed purchases made from Manufacturer for purposes of Sections
3.01(a) and 4.01(c).
(b) Subject to Section 4.07(a), Manufacturer shall immediately notify
QLT USA if Manufacturer is unable to fill any order placed by QLT USA
pursuant to this Article IV in accordance with the firm order portions of
the Rolling Forecasts (including due to a force majeure).
(i) If Manufacturer is unable to cure such failure within thirty
(30) days, then at QLT USA's request, Manufacturer shall, at its
expense, and as a non-exclusive remedy provide QLT USA with all
Know-How and information held by Manufacturer and reasonably necessary
to enable QLT USA, the Second Source or any other Third-Party
designated by QLT USA to Manufacture the Products or obtain any
required Governmental Approvals to do so, and shall assist QLT USA in
transferring the Manufacturing Process to QLT USA, such Second Source
or such Third-Party designee by providing all technical assistance and
documentation reasonably requested by QLT USA. Manufacturer shall
reimburse QLT USA for the amount by which the purchase price for the
Product obtained from the Second Source exceeds the Purchase Price
payable under this Agreement.
(ii) If Manufacturer is unable to cure such failure within ninety
(90) days, then such an event shall constitute material breach of this
Agreement and QLT USA may elect, in its sole discretion, to either (A)
immediately terminate this Agreement pursuant to Section 9.02(a)
(provided that the thirty (30) day cure period provided for therein
shall not apply), or (B) elect to continue to purchase Product from
Manufacturer under this Agreement; provided, however, that QLT USA
shall have no further obligations to purchase [**] of its requirement
for the Products, or otherwise be obligated to purchase any minimum
amount of Product, from Manufacturer whether or not such breach is
subsequently cured.
ARTICLE V
WARRANTY, REJECTION AND INSPECTIONS
Section 5.01 PRODUCT WARRANTIES. Manufacturer represents, warrants and
covenants to QLT USA that the Products and Demonstration Samples Manufactured
and/or Shipped pursuant to this Agreement by Manufacturer shall (a) comply with
the Specifications, Governmental Approvals and Applicable Laws (including
compliance with Applicable Laws related to adulterated or misbranded Products),
(b) conform to the Certificate of Analysis and Certificate of Compliance for
each such Product, and (c) at the time of Manufacture and delivery to QLT USA
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each Product will be free from any liens and encumbrances and QLT USA shall
receive good and marketable title to the Product.
Section 5.02 REJECTION OF PRODUCT FOR FAILURE TO CONFORM TO SPECIFICATIONS.
QLT USA or its designees shall have [**] after the receipt of any Shipment to
subject a Product, on a sample basis, to quality control testing to determine
conformity with the Specifications (the "Testing Period"). If testing of such
samples shows an actual failure to meet the Specifications, QLT USA may return,
or cause its designees to return, the entire Batch with respect to such testing
shows such failure, or any portion thereof to Manufacturer at Manufacturer's
expense [**] within a reasonable time following the Testing Period, provided
that notice of nonconformity is received by Manufacturer from QLT USA within
[**] after the end of the Testing Period and such notice includes a complete
copy of the results of all such testing and any additional documentation
necessary for Manufacturer to understand the nature of the failure. QLT USA
shall have the option to require Manufacturer (a) to replace, within [**] of
receipt of such returned Product, the non-conforming Product with Product that
meets the Specifications [**] or (b) to promptly provide QLT USA with full
credit. If QLT USA does not notify Manufacturer of the non-conformity of the
Product within [**] after the end of the Testing Period, the Product shall be
deemed to meet the Specifications, except as set forth in Section 5.03. In
either case, the cost of freight and handling to return or replace the goods
shall be at the expense of Manufacturer. Notwithstanding anything in this
Agreement to the contrary, the Parties may agree to a return of the Product or
an adjustment in the purchase price in the event of any failure or defect in the
Product. Should there be a dispute between QLT USA and Manufacturer as to
whether any Batch of Product fails to meet the Specifications, such dispute
shall be finally resolved by testing performed by an independent Third Party
mutually agreed upon by QLT USA and Manufacturer. The costs of such testing
shall be borne by the Party against whom the discrepancy is resolved.
Section 5.03 LATENT DEFECTS. As soon as either Party becomes aware of a
Latent Defect in any lot or Batch of Product, but in no case later than [**]
after reaching such awareness, it shall immediately notify the other Party and
the lot or Batch containing such Latent Defect shall be deemed rejected, but
only to the extent QLT USA has first determined that such Latent Defect
adversely effects the marketability of the Product. If such defect is the result
of Manufacturer's negligence, then, at QLT USA's option, (a) such Product will
be replaced by Manufacturer [**] within [**] of receipt of such returned
Product, at Manufacturer's expense [**] with conforming Product or (b)
Manufacturer will give QLT USA a credit for such Product. If such Product has
been sold by QLT USA and if such latent defect is the result of Manufacturer's
negligence, Manufacturer shall reimburse QLT USA for QLT USA's actual costs [**]
incurred in replacing any Product returned by the customer or other end user due
to such latent defect and QLT USA may offset such amount against amounts
otherwise payable by QLT USA to Manufacturer. [**]
Section 5.04 INSPECTION RIGHTS.
(a) Manufacturer shall provide QLT USA with notice within twenty-four
(24) hours after receiving notification of any scheduled inspection by any
Competent Authority of the Facility, the Manufacturer's books or records,
or of the facilities, books
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or records of any permitted subcontractor being used to Manufacture the
Product. Manufacturer shall inform such Competent Authority that QLT USA or
its designees may desire to be present at such inspection; provided that
QLT USA's or its designees' right to be present is subject to approval by
such Competent Authority and subject to QLT USA or its designees being
available at the time and date established by such Competent Authority.
Manufacturer shall use reasonable efforts to secure a time and date for
such inspection that is reasonably acceptable to QLT USA or its designees.
(b) Manufacturer shall upon reasonable [**] prior written notice by
QLT USA and during normal business hours, allow QLT USA or its designees
and cause any permitted subcontractor to allow QLT USA or its designees, to
inspect or audit the Facility and the facilities of any permitted
subcontractor used to Manufacture the Product and the Demonstration
Samples, to confirm that the facilities and the equipment, personnel and
operating and testing procedures used by Manufacturer and such
subcontractor in the Manufacture, testing, storage and distribution of the
Product are in compliance with Applicable Laws and the Governmental
Approvals; provided that such inspection or audit does not unreasonably
interfere with Manufacturer's or such subcontractor's normal operations or
cause Manufacturer or such subcontractor to violate or be in breach of any
confidentiality agreements with any Third Party; and provided further, that
any audits or inspections shall be limited to [**] during any calendar
year. QLT USA, however, will in good faith attempt to ensure that any
audits or inspections performed by QLT USA, its licensees and sublicensees
are performed at substantially the same time to alleviate any undue
inconvenience to Manufacturer. Notwithstanding the foregoing, no limitation
shall apply and QLT USA may inspect or audit the Facility and the books and
records at any time if (i) Manufacturer breaches this Agreement, and during
the continuance of any such breach, or (ii) any regulatory action by a
Competent Authority is initiated or pending related to the Manufacture of
the Products or against Manufacturer. Manufacturer shall cause any approved
subcontractor to comply with the terms of this provision.
(c) Manufacturer shall notify QLT USA at least two (2) business days
prior to the date a Batch of Product is expected to be Manufactured and QLT
USA or its designees shall have the right to have an employee or other
representative monitor the Manufacturing Process during the Manufacture of
such Batch.
Section 5.05 PRODUCT RECALL. Notwithstanding anything contained in Section
5.02 to the contrary, QLT USA or its designees shall be responsible for
conducting any recall of any Product in the event (x) the FDA or any other
Competent Authority issues a request, directive, or order that a Product be
recalled, (y) a court of competent jurisdiction orders such a recall, or (z) QLT
USA or a Third Party (with which QLT USA has a contractual relationship for the
license, distribution or sale of such Product) reasonably determine after
consultation with each other that a Product should be recalled (in each case,
whether voluntary or otherwise, a "Recall") and the cost and expense of a Recall
shall be allocated as follows:
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(a) if such Recall is caused by or due to (i) the breach by
Manufacturer of this Agreement, or (ii) the negligence or willful
misconduct of Manufacturer, Manufacturer shall replace all recalled Product
and shall bear all costs and expenses related to such Recall [**] and
Manufacturer will reimburse QLT USA for any such costs and expenses paid by
QLT USA within thirty (30) days of receipt of an invoice for such costs and
expenses from QLT USA, and if not so paid QLT USA shall have the right to
offset such amounts against amounts otherwise due by QLT USA to
Manufacturer hereunder; and
(b) if such Recall is caused by or due to reasons other than those set
forth in Section 5.05(a), all such costs and expenses shall be borne and
paid solely by QLT USA and QLT USA will reimburse Manufacturer for any such
costs and expenses paid by Manufacturer within thirty (30) days of receipt
of an invoice and appropriate documentation for such costs and expenses
from Manufacturer.
ARTICLE VI
REGULATORY
Section 6.01 QLT USA'S RESPONSIBILITIES. QLT USA will be responsible for
(a) obtaining and maintaining all necessary Governmental Approvals for the
distribution and sale of the Product; (b) maintaining claim files and submitting
appropriate reports to the Competent Authorities; (c) promptly notifying
Manufacturer of all communications from the Competent Authorities, that impact
or change the Manufacturing Process; (d) notifying Manufacturer of any consumer
complaints concerning Product, which might reasonably be attributed to
Manufacturer's obligations and warranties, within [**] of receipt by QLT USA of
any such complaints; and (e) any other obligations or responsibilities relating
to the Manufacturing Process required by any Competent Authority and not
otherwise expressly the responsibility of Manufacturer under this Agreement or
the Transition Services Agreement between the Parties dated of even date
herewith. All such information disclosed to Manufacturer shall be considered
Confidential Information under Article VII below.
Section 6.02 MANUFACTURER RESPONSIBILITY. So long and insofar as necessary
to permit it to perform its obligation hereunder, Manufacturer shall maintain or
obtain all Manufacturing registrations/validations and records required by
applicable Competent Authorities in order for the Facility to Manufacture
Products for sale in each country in which Products are sold to end users and
provide QLT USA with access to all regulatory records required to be filed with
the FDA or any other applicable Competent Authority, including its Annual
Registration of Drug Establishment (form FDA 2656e) and its Annual Registration
of Device Establishment (form FDA 2891a) granted by the FDA updated and in good
order and will make the license and copies of all related documents available to
QLT USA and its designees for inspection, upon reasonable request and in
accordance with Section 5.04. Manufacturer shall file and maintain a facility
master file as required by the FDA and maintain Product complaint files pursuant
to applicable federal regulations. Manufacturer will be further responsible for
promptly notifying QLT USA of all communications from any Competent Authority
that may impact or change the
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** Confidential Treatment Requested.
20
Manufacturing Process. QLT USA shall pay, or promptly reimburse Manufacturer
for, all costs associated with complying with this Section 6.02.
Section 6.03 MASTER FILE. Manufacturer shall maintain one or more Facility
master files at the FDA and agrees to provide QLT USA with any requisite letters
authorizing the FDA access to the Facility master file in conjunction with
regulatory review of the Manufacturing Process.
Section 6.04 STABILITY TESTING AND FINAL PRODUCT RELEASE.
(a) Manufacturer will be responsible for performing ongoing stability
studies of the Products, including base components, maintaining stability
protocols, storage of stability samples, testing the samples in accordance
with the protocols and reports for the studies as set forth in the Quality
Agreement. QLT USA shall have access to the stability reports generated by
Manufacturer, including historic stability data. QLT USA will inform
Manufacturer in writing when it receives Governmental Approvals for its
facility to begin stability testing of the Products. Following such date,
QLT USA will be responsible for issuing the stability protocols, storage of
stability samples, testing the samples in accordance with the protocols and
reports for the studies; provided, however, that Manufacturer shall
continue to perform stability studies for all Products that were commenced
prior to the date QLT USA takes over this responsibility.
(b) Until such time as QLT USA is able to do so, Manufacturer shall
conduct all finished Product and release testing for the Products in
accordance with the Quality Agreement. QLT USA will inform Manufacturer in
writing when it receives Governmental Approvals for its facility to conduct
all finished Product and release testing for the Products and following
such date, Manufacturer shall no longer be responsible therefore.
(c) As compensation for Manufacturer's services under this Section
6.04, QLT USA agrees to pay Manufacturer a full-time employee rate of [**].
ARTICLE VII
LIABILITY AND INDEMNIFICATION
Section 7.01 QLT USA INDEMNIFICATION. QLT USA agrees to indemnify, defend
and hold Manufacturer and its Affiliates harmless from and against any Losses
that may be incurred or suffered by Manufacturer or its Affiliates in connection
with a claim, action or proceeding made or brought by a Third Party relating to
or arising out of (a) the use or sale of the Atrigel(R) Technology, the
Technical Information, or the Products including, without limitation, those
relating to or arising out of any actual or alleged infringement or
misappropriation of any patent, trademark, copyright or other intellectual
property right in connection with Atrigel(R) Technology, the Technical
Information, or any Product or the Manufacture, use, or sale of any Product,
except for Losses in which Manufacturer is obligated to indemnify QLT USA under
Section 7.02; (b) the breach of QLT USA's representations, warranties or any
covenants or
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** Confidential Treatment Requested.
21
agreements contained in this Agreement; or (c) the gross negligence or willful
misconduct of QLT USA.
Section 7.02 MANUFACTURER'S INDEMNIFICATION. Manufacturer agrees to
indemnify, defend and hold QLT USA and its Affiliates harmless from and against
any Losses that may be incurred or suffered by QLT USA or its Affiliates in
connection with a claim, action or proceeding made or brought by a Third Party
relating to or arising out of (a) the failure of a Product or Demonstration
Sample to meet the Specifications due to the Manufacture of such Product or
Demonstration Sample or the failure of Manufacturer to Manufacture such Product
or Demonstration Sample in accordance with cGMP; (b) the breach of
Manufacturer's representations, warranties or any covenants or agreements
contained in this Agreement, including the Quality Agreement; or (c) the gross
negligence or willful misconduct of Manufacturer.
Section 7.03 LIMITATION OF LOSSES. EXCEPT FOR EACH PARTY'S OBLIGATIONS OF
CONFIDENTIALITY AND INDEMNIFICATION CONTAINED IN THIS AGREEMENT, NEITHER PARTY
OR ITS AFFILIATES SHALL BE LIABLE FOR CONSEQUENTIAL DAMAGES INCLUDING, WITHOUT
LIMITATION, LOSS OF PROFITS OR INDIRECT LOSS ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT.
Section 7.04 INDEMNITY PROCEDURE. Each indemnified Party agrees to give the
indemnifying Party prompt written notice of any matter upon which such
indemnified Party intends to base a claim for indemnification (an "Indemnity
Claim") under this Article VII. The indemnified Party (or the Party seeking
indemnification) must promptly notify the other Party in writing of the
Indemnity Claim. The indemnifying Party shall have the sole right to control the
defense, settlement or other disposition of the Indemnity Claim, provided that
the indemnified Party may, at the indemnified Party's own expense, participate
jointly with the indemnifying Party in the indemnified Party's defense,
settlement or other disposition of any Indemnity Claim. With respect to any
Indemnity Claim relating solely to the payment of money damages which could not
result in the indemnified Party's becoming subject to injunctive or other
equitable relief or otherwise adversely affect the business of the indemnified
Party in any manner, and as to which the indemnifying Party shall have
acknowledged in writing the obligation to indemnify the indemnified Party
hereunder, the indemnifying Party shall have the sole right to defend, settle or
otherwise dispose of such Indemnity Claim, on such terms as the indemnifying
Party, in its sole discretion, shall deem appropriate, provided that the
indemnifying Party shall provide reasonable evidence of its ability to pay any
damages claimed and with respect to any such settlement shall have obtained the
written release of the indemnified Party from the Indemnity Claim. The
indemnifying Party shall obtain the written consent of the indemnified Party,
which shall not be unreasonably withheld, prior to ceasing to defend, settling
or otherwise disposing of any Indemnity Claim if as a result thereof the
indemnified Party would become subject to injunctive or other equitable relief
or the business of the indemnified Party would be adversely affected in any
manner. In addition, the indemnified Party will provide the indemnifying Party
with reasonable assistance in the defense of the Indemnified Claim at the
reasonable expense of the indemnifying Party. Notwithstanding the foregoing, if
the indemnifying Party shall not be entitled to assume the defense of any
Indemnity Claim (and shall be liable for the fees and expenses of counsel
incurred by the indemnified Party in defending such Indemnity Claim) if (i) the
Indemnity Claim seeks an order, injunction or other equitable relief or relief
for other than
22
money damages against the indemnified Party which the indemnifying Party
reasonably determines, after conferring with its outside counsel, cannot be
separated from any related claim for money damages or (ii) if (A) the
indemnifying Party has failed after a reasonable period of time to assume such
defense and to employ counsel, or (B) as evidenced by the opinion of counsel,
different defenses would be available to the indemnified Party in such action
such that a conflict of interest exists that makes control by the Indemnitor not
advisable; and in such an event, the indemnified Party shall be entitled but not
obligated to, with respect to clause (i), assume the defense of the portion
relating to money damages and, with respect to clause (ii), assume the defense
of the entire proceeding.
Section 7.05 MAINTENANCE OF INSURANCE. Each Party shall, at its own cost
and expense, obtain and maintain in full force and effect, during the Term,
commercial general liability insurance written on a standard approved policy
form, including products and completed operations liability and blanket
contractual liability, with limits of liability of not less than [**] combined
single limit bodily injury and property damage covering the Party's obligations
under this Agreement (collectively, the "Insurance"). Said Insurance can be
provided through a combination of primary and excess/umbrella insurance
programs. Each Party shall upon written request provide the other Party with
certificates of insurance attesting to the existence of such Insurance. However,
it is understood and agreed that furnishing of such Insurance coverage will not
relieve either Party of its obligations under this Agreement.
ARTICLE VIII
CONFIDENTIALITY
Section 8.01 MAINTENANCE OF CONFIDENTIAL INFORMATION.
(a) Each Party covenants and agrees to take all necessary steps to (i)
hold in strict confidence any and all such Confidential Information of the
other and shall not disclose it to anyone or use it for its own benefit or
the benefit of others, except within each Party's own organization, and
only to those of its employees who have agreed in writing to protect and
preserve the confidentiality of such disclosures and who are designated by
each respective Party to evaluate the Confidential Information for
necessary business purposes; (ii) prohibit such Confidential Information of
the other from being duplicated in any manner (except as necessary for such
Party to perform its obligations under this Agreement), and (iii) prohibit
the Confidential Information from being published in any form, without the
prior express written consent of the other Party. In such case, the Party
requesting such consent of the disclosing Party shall cause any person to
whom such disclosure may be authorized as aforesaid, to agree to hold such
information in confidence and not to use or disclose same to the same
extent as such Party.
(b) The foregoing obligations, however, shall not apply to information
or data that: (i) at the time of or after disclosure, is published, known
publicly or becomes part of the public domain through no fault of the
receiving Party; (ii) prior to disclosure, is
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** Confidential Treatment Requested.
23
known by the receiving Party as evidenced by its written records maintained
in the ordinary course of business (except for such information that a
Party would otherwise be prohibited from disclosing pursuant to the terms
of Section 7.01 of the Purchase Agreement); (iii) information which has
been or is disclosed to the receiving Party without any obligation of
confidentiality from a Third Party not having an obligation of
confidentiality with the disclosing Party; (iv) is required by law
(including reporting requirements of the Securities Exchange Act of 1934)
to be disclosed, provided that each Party shall notify the other Party as
soon as possible after learning of the need for the disclosure and
undertake its best efforts to maintain the confidentiality of such
information; or (v) is disclosed in connection with the filing with, or
approval, certification or endorsement from, any governmental body or
medical protocol, provided that the information is not the inventive
subject matter of an unpublished patent application and that each Party
shall notify the other Party of the disclosure as soon as possible after
learning of the need for the disclosure and undertake its best efforts to
maintain the confidentiality of such information and will notify the other
Party if disclosure involves Confidential Information.
(c) The mutual obligations of confidentiality under this Article VIII
shall survive the expiration or earlier termination of this Agreement for
the longer of a period of five (5) years after the expiration or earlier
termination of this Agreement and the termination of any trade secret
protection applicable to the Confidential Information under Applicable
Laws. Upon termination of this Agreement the Parties undertake to refrain
from using any of the technical Know-How, specifications and process
information acquired from each other Party or made available to the other
Party, and to promptly return in full all such Party's specifications to
the other Party without retaining any copies thereof except as set forth in
Section 8.01(d) of this Agreement.
(d) Upon termination of this Agreement, each Party shall destroy or
immediately deliver to the other (and cause any of its employees, agents,
representatives or sub-contractors to deliver), at such Party's expense,
all Confidential Information of the other Party, including, without
limitation, any and all copies, duplications, summaries and/or notes
thereof or derived therefrom, regardless of the format. Notwithstanding the
above, each Party may retain one (1) complete record copy for archiving
purposes to confirm compliance with this Agreement or to ensure its
compliance with applicable statutory and regulatory requirements.
(e) A Party will inform the other Party of any subcontractor, licensee
or sublicensee of such Party, and obtain the other Party's prior written
consent, which shall not be unreasonably withheld, prior to disclosing any
Confidential Information to such sub-contractors, licensee or sublicensee.
Each Party is responsible to ensure that every sub-contractor, licensee or
sublicensee accepts the confidentiality obligations herein contained in
order to protect the other Party's Confidential Information. It is
understood by the Parties that QLT USA's existing licensees or sublicensees
are currently bound by such restrictions.
24
ARTICLE IX
TERM AND TERMINATION
Section 9.01 TERM. This Agreement will take effect on the Effective Date
and, unless earlier terminated in accordance with this Article IX, will expire
on the seven (7) year anniversary of the Effective Date; provided, however, that
this Agreement shall be automatically extended for successive terms of four (4)
years each, unless either Party notifies the other Party that it does not intend
to renew this Agreement at least three (3) years prior to the last day of the
then current term (the "Term").
Section 9.02 TERMINATION BY QLT USA. QLT USA may terminate this Agreement
as follows:
(a) Immediately upon written notice to Manufacturer, if Manufacturer
has committed any material breach of this Agreement (except for any breach
that is the subject of Section 9.02(b), to which none of the provisions of
this Section 9.02(a) shall apply) and Manufacturer fails to cure such
breach within thirty (30) days after the date QLT USA first gave
Manufacturer written notice thereof, which notice shall specify the details
of such breach, provided that no such cure period shall apply to a breach
that is not capable of being cured within such period;
(b) Immediately upon written notice to Manufacturer, if Manufacturer
has two Batches of Products that fail to meet or conform to the
Specifications, Applicable Laws or the Certificates of Analysis in any
consecutive ninety (90) day period, but only if (i) such failure is due to
Manufacturer's negligence, intentional misconduct or failure to follow the
Quality Agreement and Master Production Procedures, and (ii) Manufacturer
fails to cure such failure within sixty (60) days after learning of it; and
provided further, that Manufacturer shall only have the opportunity to cure
any such breach [**] provided that no such cure period shall apply to a
breach that is not capable of being cured within such period;
(c) Immediately in the event that any Competent Authority or
Applicable Law, in each case in the United States of America or the
European Union, prohibits the Manufacture, distribution or sale of a
Product;
(d) After [**], upon [**] notice to Manufacturer if QLT USA [**]; or
(e) Immediately in the event Manufacturer becomes insolvent or
bankrupt.
Section 9.03 TERMINATION BY MANUFACTURER. Manufacturer may terminate this
Agreement as follows:
(a) Immediately upon written notice to QLT USA, if QLT USA has
committed any material breach of this Agreement, including without
limitation by failing to purchase at least the minimum amount of Products
during the [**] of the term of the
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** Confidential Treatment Requested.
25
Agreement set forth under Section 3.01, and QLT USA fails to cure such
breach within thirty (30) days after the date Manufacturer first gave QLT
USA written notice thereof, which notice shall specify the details of such
breach, provided that QLT USA shall have ninety (90) days to cure any
breach under Section 3.01; and provided, further, that no such cure period
shall apply to a breach that is not capable of being cured within such
period;
(b) Subject to the limitations set forth in Section 4.01(c),
immediately upon written notice to QLT USA, if QLT USA [**] of the Term,
and does not cure such breach within ninety (90) days following written
notice of such breach from Manufacturer; or
(c) Immediately in the event that if QLT USA becomes insolvent or
bankrupt.
Section 9.04 REMEDIES. Except as specifically noted herein, all of the
non-breaching Party's remedies shall be cumulative, and the exercise of one
remedy hereunder by the non-defaulting Party shall not be deemed to be an
election of remedies. These remedies shall include the non-breaching Party's
right to sue for damages for such breach without terminating this Agreement.
Section 9.05 EFFECT OF TERMINATION. Except as otherwise provided in this
Agreement, expiration or termination of this Agreement shall not relieve the
Parties of any obligation accruing prior to such expiration or termination.
Except as set forth below or elsewhere in this Agreement, the obligations and
rights of the Parties under Sections 2.02, 2.03, 3.03(i) through (vi), 5.05,
7.01, 7.02, 7.03, 7.04, 10.02, 10.04, 10.05, 10.08, and 10.10 through 10.13, and
Article I, Article VIII and this Article IX shall survive expiration or
termination of this Agreement. Within thirty (30) days following the expiration
or termination of this Agreement, each Party shall comply with Section 8.01(d)
as to the destruction (or delivery) of the other Party's Confidential
Information, such destruction (or delivery) shall be confirmed in writing to
such Party by a responsible officer of the other Party.
ARTICLE X
MISCELLANEOUS
Section 10.01 FORCE MAJEURE. Neither Party shall be liable for or
responsible to the other Party nor be deemed to have defaulted under or breached
this Agreement for delay or failure to perform its obligations hereunder when
such failure or delay is caused by or results from causes beyond the reasonable
control of a Party, after reasonable efforts to exercise such control,
including, but not limited to war (declared or undeclared), riot, terrorism,
political insurrection, rebellion, revolution, acts or orders of or
expropriation by any government (whether de facto or de jure), prohibition of
the import or export of the Product, quarantine restrictions, or fire, snow,
flood, explosion, earthquake or tornadoes, in each case solely with respect to
the United States. The Party affected by such event of force majeure shall not
later than two (2) business days after the commencement of such event (if
practicable in given the circumstances of the event) give the other Party notice
of the event and shall use all reasonable means to resume full performance of
its obligations under this Agreement as soon as commercially possible.
26
Section 10.02 APPLICABLE LAW. This Agreement is to be construed in
accordance with and governed by the internal laws of the State of Colorado,
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Colorado to the rights and duties of the Parties.
Section 10.03 ASSIGNMENT. This Agreement may not be assigned by either
Party without the prior written consent of the other, except that upon notice to
the other Party, QLT USA may assign all or a portion of its rights and/or
obligations hereunder, to any person succeeding to all or substantially all of
the business or assets of QLT USA or to any Affiliate of QLT USA, whether in the
aggregate, or with respect solely to the Products or the Atrigel(R) Technology,
whether through purchase, merger, consolidation or otherwise, as long as such
successor, whether by operation of law, by contract, or otherwise, becomes
subject to and bound by all of the obligations of QLT USA hereunder. Subject to
the foregoing sentence, this Agreement shall bind and inure to the benefit of
the Parties hereto and their respective successors and assigns.
Section 10.04 NOTICES. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received (a) when
delivered personally or by telecopy; (b) one (1) day following the day when
deposited with a reputable, established overnight courier service for delivery
to the intended addressee; or (c) three (3) days following the day when
deposited with the United States Postal Service as first class, registered or
certified mail, postage prepaid and addressed as set forth below:
If to Manufacturer: Tolmar, Inc.
701 Centre Avenue
Fort Collins, Colorado 80526
Attention: Chief Executive Officer
Telephone No.: (970) 212-4990
Facsimile No.: (970) 494-0241
With a copy, which shall not Tolmar, Inc.
constitute notice, given in the Av. Cabildo 86
manner prescribed above, to: 5 floor (1426)
Capital Federal
Buenos Aires, Argentina
Attention: Secretary
Telephone No.: +(54)-11-4776-7197
Facsimile No.: +(54)-11-4899-2828
With a copy, which shall not Holme Roberts & Owen LLP
constitute notice, given in the 1700 Lincoln Street, Suite 4100
manner prescribed above, to: Denver, Colorado 80202
Attention: Troy R. Braegger, Esq.
Telephone No.: (303) 866-0454
Facsimile No.: (303) 866-0200
27
If to QLT USA: QLT USA, Inc.
2579 Midpoint Drive
Fort Collins, Colorado 80525
Attention: Corporate Counsel
Telephone No.: (970) 482-5868
Facsimile No.: (970) 482-9735
With a copy, which shall not Morrison & Foerster LLP
constitute notice, given in the 5200 Republic Plaza
manner prescribed above, to: 370 Seventeenth Street
Denver, CO 80202
Attention: Warren L. Troupe, Esq.
Telephone No.: (303) 592-1500
Facsimile No.: (303) 592-1510
Either Party may alter its notice address by notifying the other Party of
such change of address in conformity with the provisions of this Section 10.04.
Section 10.05 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
or Schedules hereto, contains the entire understanding between the Parties
hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, between the Parties. The Parties intend
that this Agreement, together with the Exhibits or Schedules hereto, be the
several, complete and exclusive embodiment of their agreement, and that any
evidence, oral or written, of a prior or contemporaneous agreement that alters
or modifies this Agreement shall not be admissible in any Proceeding concerning
this Agreement. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
Section 10.06 AMENDMENTS AND WAIVERS. This Agreement may not be amended,
supplemented or modified, except by an agreement in writing signed by each of
the Parties. Either Party may waive compliance by the other Party with any term
or provision of this Agreement; provided, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other or subsequent failure. No
waiver shall be effective unless it is in writing and is signed by the Party
asserted to have granted such waiver.
Section 10.07 FOREIGN CORRUPT PRACTICES ACT. Each Party will not, and shall
cause its agents, representatives and employees not to, conduct any activities
in connection with the transactions contemplated hereby that would, if performed
by a United States corporation, constitute a violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.
Section 10.08 SEVERABILITY. If any provision of this Agreement, or the
application of any such provision to any Person or set of circumstances, shall
be determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent permitted by
law.
28
Section 10.09 COUNTERPARTS. This Agreement may be executed (including,
without limitation, by facsimile signature) in one or more counterparts, with
the same effect as if the Parties had signed the same document. Each counterpart
so executed shall be deemed to be an original, and all such counterparts shall
be construed together and shall constitute one agreement.
Section 10.10 CONSTRUCTION. The construction of this Agreement shall not
take into consideration the Party who drafted or whose representative drafted
any portion of this Agreement, and no canon of construction shall be applied
that resolves ambiguities against the drafter of a document. Each Party
acknowledges that: (a) it has read this Agreement; (b) it has been represented
in the preparation, negotiation and execution of this Agreement by legal counsel
of its own choice or has voluntarily declined to seek such counsel; and (c) it
understands the terms and consequences of this Agreement and is fully aware of
the legal and binding effect of this Agreement.
Section 10.11 JURISDICTION; SERVICE OF PROCESS. Subject to Section 10.14,
any Proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the Parties only in
the courts of the State of Colorado, City and County of Denver, or, if it has or
can acquire the necessary jurisdiction, in the United States District Court for
the District of Colorado. Each of the Parties hereby waives, and agrees not to
assert, as a defense in any action, suit or proceeding for the interpretation or
enforcement of this Agreement, that it is not subject thereto or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that the venue thereof may not be appropriate or that this Agreement
may not be enforced in or by such courts and the Parties hereto irrevocably
agree that all shall be heard and determined in such a Colorado State or federal
court. Process in any Proceeding referred to in the preceding sentence may be
served on either Party anywhere in the world.
Section 10.12 WAIVER OF JURY TRIAL. THE PARTIES HEREBY EXPRESSLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY OR AGAINST
EITHER OF THEM RELATING TO THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS
AGREEMENT INVOLVES COMPLEX TRANSACTIONS AND THAT DISPUTES HEREUNDER WILL BE MORE
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT DECISION MAKER.
ACCORDINGLY, THE PARTIES AGREE, BASED ON THE ADVICE OF THEIR COUNSEL, THAT ANY
DISPUTE HEREUNDER BE RESOLVED BY A JUDGE APPLYING APPLICABLE LAW.
Section 10.13 RECOVERY OF FEES BY PREVAILING PARTY. Except as otherwise
specifically provided for in this Agreement, if any legal action, including,
without limitation, an action for arbitration or injunctive relief, is brought
relating to this Agreement or the breach or alleged breach hereof, the
prevailing Party in any final judgment or arbitration award, or the
non-dismissing Party in the event of a voluntary dismissal by the Party
instituting the action, shall be entitled to the full amount of all reasonable
expenses, including all court costs, arbitration fees and actual attorneys' fees
paid or incurred in good faith.
29
Section 10.14 RESOLUTION OF CERTAIN DISPUTES. If the Parties cannot resolve
the dispute by the date (the "Resolution Date") that is [**] after the date QLT
USA receives a written request from Manufacturer to renegotiate the Purchase
Price in accordance with Section 4.01(c) or the date payment was due on the
invoice, as applicable, the Parties agree to hold a meeting, attended by the
Chief Executive Officer or President of each Party, or their executive level
designees, to attempt in good faith to negotiate the revised Purchase Price (the
"Revised Purchase Price") or to resolve the Disputed Amount. If, within [**]
after the Resolution Date, the Parties have not succeeded in negotiating a
resolution of the dispute, such dispute shall be submitted to final and binding
arbitration under the then current commercial rules and regulations of the
American Arbitration Association ("AAA") relating to voluntary arbitrations. The
arbitration proceedings shall be held in Denver, Colorado before a single
arbitrator to be chosen by the mutual agreement of the Parties from a panel of
arbitrators provided by the Judicial Arbiter Group of Denver or, if such group
no longer exists or if the Parties cannot reach such mutual agreement within
[**] after the Resolution Date, by the AAA. The arbitrator so selected shall
have substantial experience in the pharmaceutical industry and be familiar with
agreements of this type. The arbitration shall be conducted in accordance with
the following time schedule unless otherwise mutually agreed to in writing by
the Parties: (a) within [**] after the appointment of the arbitrator, each of
QLT USA and Manufacturer shall provide all documents, records and supporting
information reasonably necessary to resolve the dispute; (b) within [**] after
the date the above records are due, each of QLT USA and Manufacturer shall
provide the arbitrator with a sealed envelope containing each Party's best,
final and irrevocable offer for the Revised Purchase Price or the resolution of
the Disputed Amount, as applicable (each, a "Proposal"), and (c) within [**]
thereafter, the arbitrator shall render its decision. To resolve the dispute,
the arbitrator shall choose, in its entirety and without any modification,
either QLT USA's or Manufacturer's Proposal. The decision of the arbitrator
shall be final, binding and conclusive on the Parties. The fees and expenses of
the arbitrator shall be shared equally by both Parties. Each Party shall
initially bear its own costs and legal fees associated with such arbitration,
however, the prevailing Party in any such arbitration shall be entitled to
recover from the other Party the reasonable attorney's fees, costs and expenses
incurred by such prevailing Party in connection with such arbitration.
Section 10.15 TIME OF THE ESSENCE. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the Effective Date.
MANUFACTURER:
TOLMAR, INC.
By: /s/ Patricio Martin Rodriguez
-----------------------------------
Name: Patricio Martin Rodriguez
Title: Vice President
QLT USA, INC.
By: /s/ Sean F. Moriarty
-----------------------------------
Name: Sean F. Moriarty
Title: President
SCHEDULE 1
COST PER UNIT
[**]
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**Confidential Treatment Requested.
EXHIBIT A
PATENT RIGHTS
[**]
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**Confidential Treatment Requested.
EXHIBIT B
FORM OF CERTIFICATE OF ANALYSIS
Specification: XXXXXX REV: XXX
Description: Eligard Product
Lot Number: XXXX Test Request No.: QXXXX
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------
Characteristic Method Parameter Requirements Results/Reference
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</Table>
Prepared By: Date:
-------------------------------- --------------------
QC (Chemistry) Management
Prepared By: Date:
-------------------------------- --------------------
QC (Microbiology) Management
Approved By: Date:
-------------------------------- --------------------
Quality Management
NOTES
- --------------------------------------------------------------------------------
Date of Manufacture:
Expiry:
See Country-specific requirements
- --------------------------------------------------------------------------------
EXHIBIT C
FORM OF CERTIFICATE OF COMPLIANCE
Issue Date:
--------------------
CERTIFICATE OF COMPLIANCE
FOR
----------------------------------------------------------------------------
LOT NUMBER
------------------------------------------------------------
MFG DATE EX DATE
----------------------------------------- -----------------
DOSAGE
-------------------------------------------------------------------------
QUANTITY OF RELEASABLE UNITS
---------------------------------------------------
The Batch production record for this product has been reviewed for accuracy,
completeness, and compliance with established written standard procedures and in
accordance with cGMP requirements. Any deviations/abnormal occurrences from the
aforementioned requirements have been appropriately documented, reviewed, and
approved.
- --------------------------------------------------------------------------------
QA Approved By:
- --------------------------------------------------------------------------------
Name:
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Title:
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EXHIBIT D
COMPONENTS
Legend:
X Components or materials to be supplied by QLT USA or Manufacturer, as
applicable, at their expense.
XX "Ordered Components" -- Components to be ordered by Manufacturer on
behalf of, and at the expense of, QLT USA as set forth in
Section 2.04(c)
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**Confidential Treatment Requested.
EXHIBIT E
QUALITY SYSTEMS AGREEMENT
BETWEEN
QLT USA, INC.
AND
TOLMAR, INC.
(CONFIDENTIAL)
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**Confidential Treatment Requested.
EXHIBIT F
EXAMPLE OF MANUFACTURING COST PER UNIT DETERMINATION
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**Confidential Treatment Requested.