text:
Amendment No. 1 to Form S-1
As filed with the Securities and Exchange Commission on March 27, 2007
Registration No. 333 -141164
AMENDMENT NO. 1
FORM S-1
REGISTRATION STATEMENT
THE SECURITIES ACT OF 1933
JAZZ PHARMACEUTICALS, INC.
Delaware 2834 05-0563787
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
3180 Porter Drive
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Samuel R. Saks, M.D.
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Suzanne Sawochka Hooper, Esq.
John M. Geschke, Esq.
Cooley Godward Kronish LLP
Five Palo Alto Square
Carol A. Gamble, Esq.
Philip J. Honerkamp, Esq.
Bruce K. Dallas, Esq.
Davis Polk & Wardwell
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ¨
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
This Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-141164) of Jazz Pharmaceuticals, Inc. is being filed solely for the purpose of (a) amending "Part II—Item 16. Exhibits and Financial Statement Schedules" and "Part II—Exhibit Index" and (b) filing herewith Exhibits 10.30 through 10.53, the omitted portions of which have been filed separately with the Securities and Exchange Commission in connection with the request for confidential treatment of such omitted portions.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the common stock being registered. All amounts shown are estimates except for the SEC registration fee, the NASD filing fee and the NASDAQ Global Market filing fee.
Amount to be
SEC registration fee
NASD filing fee
NASDAQ Global Market initial listing fee
Blue sky qualification fees and expenses
Printing and engraving expenses
Legal fees and expenses
Accounting fees and expenses
Transfer agent and registrar fees and expenses
Miscellaneous expenses
* To be filed by amendment.
Item 14. Indemnification of Directors and Officers.
We are incorporated under the laws of the State of Delaware. Section 145 of the Delaware General Corporation Law provides that a Delaware corporation may indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer, director, employee or agent of such corporation, or is or was serving at the request of such person as an officer, director, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, or are threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person was a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best interests except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses that such officer or director has actually and reasonably incurred. Our third amended and restated certificate of incorporation and our amended and restated bylaws, each of which will become effective upon the closing of this offering, provide for the indemnification of our directors and officers to the fullest extent permitted under the Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for liability for any:
transaction from which the director derives an improper personal benefit;
act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
unlawful payment of dividends or redemption of shares; or
breach of a director's duty of loyalty to the corporation or its stockholders.
Our third amended and restated certificate of incorporation and amended and restated bylaws include such a provision. Expenses incurred by any officer or director in defending any such action, suit or proceeding in advance of its final disposition shall be paid by us upon delivery to us of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified by us.
Section 174 of the Delaware General Corporation Law provides, among other things, that a director who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption may be held liable for such actions. A director who was either absent when the unlawful actions were approved, or dissented at the time, may avoid liability by causing his or her dissent to such actions to be entered in the books containing minutes of the meetings of the board of directors at the time such action occurred or immediately after such absent director receives notice of the unlawful acts.
As permitted by the Delaware General Corporation Law, we have entered into indemnity agreements with each of our directors and officers that require us to indemnify such persons against any and all expenses (including attorneys' fees), witness fees, judgments, fines, settlements and other amounts incurred (including expenses of a derivative action) in connection with any action, suit or proceeding or alternative dispute resolution mechanism, inquiry hearing or investigation, whether threatened, pending or completed, to which any such person may be made a party by reason of the fact that such person is or was a director, an officer or an employee of Jazz Pharmaceuticals or any of its affiliated enterprises, provided that such person's conduct did not constitute a breach of his or her duty of loyalty to us or our stockholders, and was not an act or omission not in good faith or which involved intentional misconduct or a knowing violation of laws. The indemnity agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder.
At present, there is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
We have an insurance policy covering our officers and directors with respect to certain liabilities, including liabilities arising under the Securities Act or otherwise. Messrs. Clammer, Michelson and Momtazee are further insured by liability insurance that has been purchased by Kohlberg Kravis Roberts & Co. L.P. on their behalf for any excess liabilities that are not covered by our liability insurance. Mr. Colella is insured by liability insurance purchased on his behalf by, and indemnified pursuant to the governing agreements of, Versant Ventures for his service on our board of directors.
We plan to enter into an underwriting agreement that provides that the underwriters are obligated, under some circumstances, to indemnify our directors, officers and controlling persons against specified liabilities, including liabilities under the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
The following list sets forth information regarding all unregistered securities sold by us since our inception through January 31, 2007.
(1) Since our inception through January 31, 2007, we have granted options under our 2003 Stock Equity Incentive Plan, to purchase 18,810,045 shares of common stock to employees and directors, having exercise prices ranging from $.10 to $4.09 per share. Of these, options to purchase 463,924 shares of common stock have been exercised for aggregate consideration of $52,536.02, at exercise prices ranging from $.10 to $1.36 per share. As of January 31, 2007, we have cancelled options to purchase 773,347 shares of common stock.
(2) On March 20, 2003, we issued and sold an aggregate of 3,960,000 shares of common stock to two of our executive officers for aggregate consideration of $9,108.
(3) On March 31, 2003, we issued and sold 815,000 shares of common stock to one of our executive officers for aggregate consideration of $1,874.50.
(4) On April 18, 2003, we issued and sold 300,000 shares of common stock to one of our executive officers for aggregate consideration of $1,500.
(6) On April 30, 2003, we issued and sold an aggregate of 2,150,000 shares of Series A preferred stock to a total of six accredited investors for aggregate consideration of $2,150,000.
(7) On August 29, 2003, we issued and sold an aggregate of 5,000,000 shares of Series A preferred stock to a total of five accredited investors for aggregate consideration of $5,000,000.
(8) On October 30, 2003, we issued and sold 660,000 shares of common stock to one of our executive officers for aggregate consideration of $66,000.
(9) On January 9, 2004, we issued and sold an aggregate of 232,500 shares of common stock to one of our executive officers for aggregate consideration of $23,250.
(10) On January 14, 2004, we issued and sold an aggregate of 7,850,000 shares of Series A preferred stock to a total of five accredited investors for aggregate consideration of $7,850,000.
(11) On February 18, 2004, we issued and sold an aggregate of 17,307,128 shares of Series B preferred stock to a total of thirty-one accredited investors for aggregate consideration of $23,599,999.74.
(12) On February 18, 2004, we issued and sold an aggregate of 19,067,175 shares of Series B Prime preferred stock to a total of two institutional and accredited investors for aggregate consideration of $25,999,999.83.
(13) On April 6, 2004, we issued and sold an aggregate of 293,341 shares of Series B preferred stock to a total of two accredited investors for aggregate consideration of $399,999.79.
(14) On September 24, 2004, we issued and sold an aggregate of 146,671 shares of common stock to one of our directors for aggregate consideration of $200,000.58.
(15) On June 20, 2005, we issued and sold an aggregate of 35,200,937 shares of Series B preferred stock to a total of thirty-four accredited investors for aggregate consideration of $47,999,997.69.
(16) On June 20, 2005, we issued and sold an aggregate of 38,134,351 shares of Series B Prime preferred stock to a total of two accredited investors for aggregate consideration of $52,000,001.02.
On June 24, 2005, in connection with the issuance of our senior secured notes in the aggregate principal amount of $80,000,000, we issued and sold warrants to purchase an aggregate of 8,695,652 shares of Series BB preferred stock to a total of eight accredited investors. Pursuant to the terms of
the agreement governing the issuance of the senior secured notes and warrants, the aggregate consideration allocated to the warrants was $5,360,000.00.
(18) On January 26, 2006, we issued and sold an aggregate of 12,320,326 shares of Series B preferred stock to a total of thirty-two accredited investors for aggregate consideration of $16,799,996.53.
(19) On January 26, 2006, we issued and sold an aggregate of 13,347,023 shares of Series B Prime preferred stock to a total of two accredited investors for aggregate consideration of $18,200,000.56.
(20) On December 14, 2006, we issued and sold an aggregate of 22,880,598 shares of Series B preferred stock to a total of thirty-two institutional and accredited investors for aggregate consideration of $31,199,983.44.
(21) On December 14, 2006, we issued and sold an aggregate of 24,787,326 shares of Series B Prime preferred stock to a total of two institutional and accredited investors for aggregate consideration of $33,799,997.74.
The offers, sales and issuances of the securities described in Item 15(1) were exempt from registration under the Securities Act under Rule 701 in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of such securities were our employees or directors and received the securities under our 2003 Equity Incentive Plan. Appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions had adequate access, through employment or business relationships, to information about us.
The offers, sales, and issuances of the securities described in Items 15(2) through 15(21) were exempt from registration under the Securities Act under Section 4(2) of the Securities Act and Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
Description of Document
1.1† Form of Underwriting Agreement.
2.1* Agreement and Plan of Merger dated as of April 18, 2005, by and among the Registrant, Twist Merger Sub, Inc. and Orphan Medical, Inc.
3.1* Second Amended and Restated Certificate of Incorporation of the Registrant, currently in effect.
3.2† Form of Third Amended and Restated Certificate of Incorporation of the Registrant to be effective upon the closing of this offering.
3.3* Amended and Restated Bylaws of the Registrant, currently in effect.
3.4† Form of Amended and Restated Bylaws of the Registrant to be effective upon the closing of this offering.
4.1 Reference is made to exhibits 3.1 through 3.4.
4.2† Specimen Common Stock Certificate.
4.3+* Second Amended and Restated Investor Rights Agreement, dated as of June 24, 2005, by and between the Registrant and the other parties named therein.
4.4* Senior Secured Note and Warrant Purchase Agreement, dated as of June 24, 2005, by and among the Registrant, Twist Merger Sub, Inc. and the Purchasers.
4.5* Form of Senior Secured Note of the Registrant.
4.6* Form of Series BB Preferred Stock Warrant of the Registrant.
5.1† Opinion of Cooley Godward Kronish LLP.
10.1+* Form of Indemnification Agreement between the Registrant and its officers and directors.
10.2+* Employment Agreement, dated as of February 18, 2004, by and between the Registrant and Bruce Cozadd.
10.3+* Employment Agreement, dated as of February 18, 2004, by and between the Registrant and Samuel Saks.
10.4+* Employment Agreement, dated as of February 18, 2004, by and between the Registrant and Robert Myers.
10.5+* Employment Agreement, dated as of February 18, 2004, by and between the Registrant and Matthew Fust.
10.6+* Employment Agreement, dated as of February 18, 2004, by and between the Registrant and Carol Gamble.
10.7+* Employment Agreement, dated as of February 18, 2004, by and between the Registrant and Janne Wissel.
10.8+* Stock Purchase Agreement, dated as of September 24, 2004, by and between the Registrant and Alan Sebulsky.
10.9+* Common Stock Purchase Agreement, dated as of March 20, 2003, by and between the Registrant and Bruce Cozadd.
10.10+* Stock Restriction Agreement, dated as of April 30, 2003, by and between the Registrant and Bruce Cozadd.
10.11+* Amendment to Stock Restriction Agreement, dated as of October 30, 2003, by and between the Registrant and Bruce Cozadd.
10.12+* Common Stock Purchase Agreement, dated as of October 30, 2003, by and between the Registrant and Bruce Cozadd.
10.13+* Common Stock Purchase Agreement, dated as of March 20, 2003, by and between the Registrant and Samuel Saks.
10.14+* Stock Restriction Agreement, dated as of April 30, 2003, by and between the Registrant and Samuel Saks.
10.15+* Amendment to Stock Restriction Agreement, dated as of October 30, 2003, by and between the Registrant and Samuel Saks.
10.16+* Amended and Restated Stock Purchase Agreement, dated as of April 30, 2003, by and between the Registrant and Robert Myers.
10.17+* Amendment No. 1 to Amended and Restated Stock Purchase Agreement, dated as of December 18, 2003, by and between the Registrant and Robert Myers.
10.18+* Common Stock Purchase Agreement, dated as of January 9, 2004, by and between the Registrant and Robert Myers.
10.19+* Amended and Restated Stock Purchase Agreement, dated as of April 30, 2003, by and between the Registrant and Matthew Fust.
10.20+* Amended and Restated Stock Purchase Agreement, dated as of April 30, 2003, by and between the Registrant and Carol Gamble.
10.21+† 2003 Equity Incentive Plan, as amended.
10.22+† Form of Stock Option Agreement and Form of Option Grant Notice under the 2003 Equity Incentive Plan.
10.23+† 2007 Equity Incentive Plan.
10.24+† Form of Option Agreement and Form of Option Grant Notice under the 2007 Equity Incentive Plan.
10.25+† 2007 Non-Employee Directors Stock Option Plan.
10.26+† Form of Stock Option Agreement and Form of Option Grant Notice under the 2007 Non-Employee Directors Stock Option Plan.
10.27+† 2007 Employee Stock Purchase Plan.
10.28+† Form of 2007 Employee Stock Purchase Plan Offering Document.
10.29+* Jazz Pharmaceuticals, Inc. Cash Bonus Plan.
10.30# Asset Purchase Agreement, dated as of October 4, 2004, by and among the Registrant, Glaxo Group Limited and SmithKline Beecham Corporation dba GlaxoSmithKline.
10.31# Sodium Gamma Hydroxybutyrate Development and Supply Agreement, dated as of November 6, 1996, by and between Orphan Medical, Inc. and Lonza, Inc.
10.32# Amendment No. 1 to Sodium Gamma Hydroxybutyrate Development and Supply Agreement, dated as of February 7, 2005, by and between Orphan Medical, Inc. and Lonza, Inc.
10.33# Amended and Restated Services Agreement, dated as of May 31, 2005, by and between Orphan Medical, Inc. and Express Scripts Specialty Distribution Services, Inc.
10.34# Consent and Addendum to Amended and Restated Master Services Agreement, dated as of June 1, 2006, by and between the Registrant and Express Scripts Specialty Distribution Services, Inc.
10.35# Addendum No. 2 to Amended and Restated Master Services Agreement, dated as of June 22, 2006, by and between the Registrant and Express Scripts Specialty Distribution Services, Inc.
10.36# Addendum No. 3 to Amended and Restated Master Services Agreement, dated as of August 17, 2006, by and between the Registrant and Express Scripts Specialty Distribution Services, Inc.
10.37# Xyrem Supply Agreement, dated as of June 30, 2000, by and between Orphan Medical, Inc. and Catalytica Pharmaceuticals, Inc.
10.38# Letter Amendment No. 1, dated as of November 9, 2000, by and between Orphan Medical, Inc. and Catalytica Pharmaceuticals, Inc.
10.39# Amendment No. 2 to the Xyrem Supply Agreement, dated as of August 19, 2002, by and between Orphan Medical, Inc. and DSM Pharmaceuticals, Inc. (formerly Catalytica Pharmaceuticals, Inc.).
10.40# Amendment No. 3 to the Xyrem Supply Agreement, dated as of March 21, 2005, by and between Orphan Medical, Inc. and DSM Pharmaceuticals, Inc. (formerly Catalytica Pharmaceuticals, Inc.).
10.41# Amended and Restated Xyrem License and Distribution Agreement, dated as of June 30, 2006, by and between the Registrant and UCB Pharma Limited.
10.42# License Agreement, dated as of January 31, 2007, by and between the Registrant and Solvay Pharmaceuticals, Inc.
10.43# Supply Agreement, dated as of January 31, 2007, by and between the Registrant and Solvay Pharmaceuticals, Inc.
10.44# Trademark License Agreement, dated as of January 31, 2007, by and between the Registrant and Solvay Pharmaceuticals, Inc.
10.45 Assignment, Assumption and Consent, dated as of January 31, 2007, by and among the Registrant, Solvay Pharmaceuticals, Inc and Elan Pharma International Limited.
10.46# License Agreement, dated as of December 22, 1997, by and between Solvay Pharmaceuticals, Inc and Elan Corporation plc.
10.47# Amendment to License Agreement, dated as of March 1, 1999, by and between Solvay Pharmaceuticals, Inc and Elan Corporation plc.
10.48# Letter Amendment No. 2 to License Agreement, dated April 13, 2000, by and between Solvay Pharmaceuticals, Inc and Elan Pharmaceutical Technologies.
10.49# Amendment Agreement No. 3 to License Agreement, dated as of November 7, 2006, by and between Solvay Pharmaceuticals, Inc. and Elan Corporation plc.
10.50# Xyrem Manufacturing Services and Supply Agreement, dated as of March 13, 2007, by and between the Registrant and Patheon Pharmaceuticals, Inc.
10.51# Quality Agreement, dated as of March 13, 2007, by and between the Registrant and Patheon Pharmaceuticals, Inc.
10.52 Commercial Lease, dated as of June 2, 2004, by and between the Registrant and The Board of Trustees of the Leland Stanford Junior University.
10.53 Sublease Agreement, dated as of February 25, 2007, by and between Xerox Corporation and the Registrant.
21.1* Subsidiaries of the Registrant.
23.1* Consent of Independent Registered Public Accounting Firm.
23.2* Consent of Independent Auditors.
23.3† Consent of Cooley Godward Kronish LLP (included in Exhibit 5.1).
24.1* Power of Attorney (see page II-10 to the Registration Statement on Form S-1 (File No. 333-141164) filed with the SEC on March 9, 2007).
* Previously filed.
† To be filed by amendment.
+ Indicates management contract or compensatory plan.
# Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
(b) Financial Statement Schedules. The following financial statement schedule is included herewith:
Schedule II
Valuation and Qualifying Accounts
Balance at
of period Additions(3) Additions
charged to
costs and
expenses(4) Deductions Balance at
For the year ended December 31, 2006
Allowance for doubtful accounts(1)
$ 25 $ — $ 28 $ (3 ) $ 50
Allowance for sales discounts(1)
71 — 880 (857 ) 94
Allowance for chargebacks(1)
26 — 212 (233 ) 5
Allowance for customer rebates(1)
— — 44 (26 ) 18
Allowance for wholesaler fees(1)
153 — 203 (325 ) 31
Allowance for government rebates(2)
$ — $ 25 $ 14 $ (14 ) $ 25
— 62 381 (372 ) 71
— 25 57 (56 ) 26
— 134 64 (45 ) 153
— 115 135 (162 ) 88
$ — $ — $ — $ — $ —
Allowance for sales discounts
Allowance for chargebacks
Allowance for customer rebates
Allowance for wholesaler fees
Allowance for government rebates
(1) shown as a reduction of accounts receivable
(2) included in accrued liabilities
(3) amounts represent the liabilities assumed as a result of the acquisition of Orphan Medical, Inc. on June 24, 2005
(4) all charges except doubtful accounts are reflected as a reduction of revenue
All other schedules are omitted because they are inapplicable or the requested information is shown in the consolidated financial statements of the registrant or related notes thereto.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California, on the 27th day of March, 2007.
/s/ SAMUEL R. SAKS, M.D.
II-10
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Chief Executive Officer and Member of the Board of Directors (Principal Executive Officer)
/s/ MATTHEW K. FUST
Matthew K. Fust
Senior Vice President and Chief Financial Officer (Principal Accounting and Financial Officer)
Adam H. Clammer
Samuel D. Colella
Bruce C. Cozadd
Bryan C. Cressey
Michael W. Michelson
James C. Momtazee
Kenneth W. O'Keefe
Alan M. Sebulsky
James B. Tananbaum, M.D.
*By:
Attorney-in-Fact
EXHIBIT INDEX
10.49# Amendment Agreement No. 3 to License Agreement, dated as of November 7, 2006, by and between Solvay Pharmaceuticals, Inc. and Elan Corporation, plc.
Asset Purchase Agreement, dated as of October 4, 2004
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made as of this 4th day of October, 2004 by and between Glaxo Group Limited, a company incorporated under the laws of England and Wales with offices at Glaxo Wellcome House, Berkeley Avenue, Greenford, Middlesex, UB6 0NN, UK ("GGL"), SmithKline Beecham Corporation, doing business as GlaxoSmithKline, a company incorporated under the laws of the Commonwealth of Pennsylvania with offices at One Franklin Plaza, 200 North 16th Street, Philadelphia, Pennsylvania 19101 U.S.A. ("SB") (GGL and SB are collectively referred to in this Agreement as "GSK"), and Jazz Pharmaceuticals, Inc., a company incorporated under the laws of the State of Delaware with offices at 3180 Porter Drive, Palo Alto, California 94304, U.S. ("Jazz Pharmaceuticals"). GSK and Jazz Pharmaceuticals are referred to herein on occasion separately as a "Party" or together as the "Parties".
WHEREAS, GSK owns intellectual property rights covering a type IIa sodium channel antagonist compound, designated by GSK [ * ], and other related compounds (hereinafter defined together as the "Compounds");
WHEREAS, Jazz Pharmaceuticals desires to purchase, and GSK desires to sell, the rights to the Compounds and certain assets [ * ] including the intellectual property rights covering the Compounds; and
WHEREAS, Jazz Pharmaceuticals desires to [ * ] under the intellectual property rights covering the Compounds for [ * ], as further provided herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1—DEFINITIONS; INTERPRETATION
1.1 Definitions. The following terms will have the following meanings in this Agreement:
1.1.1. "Additional Consideration Payment" has the meaning ascribed to it in Section 3.5.
1.1.2. "Additional Consideration Payment Statement" has the meaning ascribed to it in Section 4.2.
"Affiliate" of a Party means any corporation or other business entity which is directly or indirectly controlling, controlled by, or under common control with such Party for so long as such control exists. For purposes of this definition, "control" means the direct or indirect ownership of at least fifty percent (50%) of the
outstanding shares or voting interest in such corporation or other entity having the power to vote or direct the affairs of the entity. If the laws of the jurisdiction in which such entity operates prohibit ownership by a Party of at least fifty percent (50%), "control" will be deemed to exist at the maximum level of ownership allowed by such jurisdiction. Notwithstanding the foregoing, the owners of preferred stock (or common stock issued upon conversion thereof) of Jazz Pharmaceuticals, such as financial institutions, venture capital funds and private equity investors, will not be its "Affiliates" for purposes of this Agreement.
1.1.4. "Agreement" means this Asset Purchase Agreement, together with the Schedules hereto, and any instrument amending this Agreement as referred to in Section 12.7. The expressions "Article" and "Section" followed by a number mean and refer to the specified Article or Section of this Agreement.
1.1.5. "Asset Transfer Period" has the meaning ascribed to it in Section 2.4.
1.1.6. "Business Day" means any day other than Saturday or Sunday on which the New York Stock Exchange is open for business. If not designated as a "Business Day", a "day" shall include Saturdays, Sundays and holidays.
1.1.7. "Closing Date" means the date provided for in Section 5.1.
1.1.8. "Combination Product" means a product that is a pharmaceutical preparation for human use incorporating two or more therapeutically active ingredients, including a Compound, as active ingredients. Notwithstanding the foregoing, additives and excipients, including, but not limited to, drug delivery vehicles and formulations, adjuvants, carriers, bulking, stabilizing and flavoring agents, taste-masking agents, surfactants, antimicrobial agents and antioxidants will not be deemed to be "therapeutically active ingredients," and their presence will not be deemed to create a Combination Product under this Section 1.1.8.
1.1.9. "Compound(s)" means GSK's type IIa sodium channel antagonist compound [ * ], any compound covered by the Patents, and all derivatives, and salts of such Compounds to the extent covered by the Patents.
1.1.10. "Confidential Information" has the meaning ascribed to it in Section 11.1.
1.1.11. "Diligent Efforts" means the carrying out of obligations in a sustained manner consistent with the efforts a Party devotes to [ * ], and [ * ] resulting from [ * ] efforts, with the objective of launching a Product. Diligent Efforts requires that: (i) the Party promptly [ * ] for such [ * ] who are [ * ] an on-going basis, (ii) the Party [ * ] objectives for carrying out such obligations, and (iii) the Party consistently [ * ] designed to advance progress with respect to such objectives.
1.1.12. "Effective Date" means the date of this Agreement as set forth above, which shall be the same date as the Closing Date.
1.1.13. "EMEA" means the European Medicines Evaluation Agency (European Medicines Agency) and the Committee for Proprietary Medicinal Products (Committee for Medicinal Products for Human Use) or any successor agency thereof.
1.1.14. "Europe" or the "EU" means the countries comprising the European Union and includes any of the following twenty-five (25) countries that are members of the European Union as of the Effective Date, and any other countries that subsequently become part of the European Union as of the date such membership becomes effective, including, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
1.1.15. "FDA" means the U.S. Food and Drug Administration and any successor agency thereof.
1.1.16. "First Commercial Sale" of a Product means the first invoiced commercial sale by Jazz Pharmaceuticals, its Affiliates or sublicensees (excluding, however, sales made by one such entity to another such entity) to a Third Party for commercial purposes in a country after Marketing Approval to market such Product in such country has been granted by the governing health regulatory authority of such country.
1.1.17. "[ * ]" has the meaning ascribed to it in Section 6.1.
1.1.18. "Gross Sales" has the meaning ascribed to it in Section 1.1.28.
1.1.19. "Gross Selling Price" means the gross price at which a product is sold to a Third Party before discounts, deductions, credits, taxes, and allowances.
1.1.20. "[ * ]" means GSK's type IIa sodium channel antagonist compound with the chemical structure shown in Schedule 1.1.20.
1.1.21. "Know-How" means technical and other information that is not subject to published patent rights and that is not in the public domain, including, but not limited to, information comprising or relating to concepts, discoveries, data, designs, formulae, ideas, inventions, methods, assays, research, procedures, designs for experiments and tests and results of experimentation and testing, including results of research and development, manufacturing processes specifically related to [ * ], specifications and techniques, chemical, pharmacological, toxicological, clinical, analytical, and quality control data, trial data, case report forms, data analyses, reports, manufacturing data or summaries relating to the quantities of [ * ] being transferred hereunder, and information contained in submissions to and information from regulatory authorities. Know-How includes documents containing Know-How. Except as set forth above with respect to manufacturing process specifically related to [ * ], Know-How does not include GSK Know-How relating to manufacturing processes.
1.1.22. "Licensed GSK Patents" means those GSK patents set forth in Schedule 2.6, attached hereto and incorporated herein.
1.1.23. "Marketing Approval" means, in any country, all approvals, licenses, registrations or authorizations, (including, in Europe and Canada only, governmental pricing approvals and governmental formulary acceptance based on pricing approval (but excluding formulary acceptance of private parties)), of any federal regulatory agency, department, bureau or other governmental entity, necessary for the sale of the Product. Marketing Approval in a country shall be deemed to occur upon first receipt of notice from the FDA, EMEA or similar agency in such country that sale of a Product in such country has been approved, including governmental pricing approval and governmental formulary acceptance based on pricing approval in Europe and Canada. Marketing Approval in Europe shall include the approval of any Central Marketing Authorization that is filed through the centralized procedure for the EU and approved by the European Commission. If a Central Marketing Authorization is filed through the centralized procedure for the EU and approved by the European Commission, Marketing Approval for the EU shall be deemed to have occurred when pricing approval is received in at least one country in the EU. In the countries of Europe and in Canada, "Marketing Approval" shall not be deemed to occur until pricing or formulary approval is obtained. Marketing Approval shall be deemed to have occurred in such country where government approval of pricing has not been obtained if, at any time, Jazz Pharmaceuticals, its Affiliates or sublicensees makes the First Commercial Sale of Product in the country without obtaining pricing approval, with the date of MAA approval deemed to have occurred on the date of the First Commercial Sale of the Product in the country.
1.1.24. "Marketing Approval Application" or "MAA" shall mean a New Drug Application ("NDA") (as defined in 21 C.F.R. § 314.50 et. seq.), or a comparable filing for Marketing Approval in a country, in each case with respect to a Product in the Territory.
1.1.25. "Major Market Country" means any one of the [ * ].
1.1.26. "Milestones" mean the events identified in Section 3.3.
1.1.27. "Milestone Payments" mean the payments to be made by Jazz Pharmaceuticals to GSK pursuant to Section 3.3.
1.1.28. "Net Sales" means the aggregate gross sales amount ("Gross Sales") invoiced for Product, as applicable, in the countries of the Territory on which Additional Consideration Payments are due hereunder, by Jazz Pharmaceuticals, its Affiliates and sublicensees, to Third Parties,
(a) less the following deductions:
(i) trade, quantity and cash discounts and rebates allowed and taken by Jazz Pharmaceuticals (and its Affiliates and sublicensees);
(ii) any adjustments on account of price adjustments, billing errors, rejected goods, damaged goods and returns;
(iii) credits, charge-backs and prime vendor rebates, fees, reimbursements, and similar payments granted or given to wholesalers and other distributors, buying groups, health care insurance carriers, pharmacy benefit management companies, health maintenance organizations, other institutions or health care organizations or other customers; and
(iv) rebates or other price reductions provided, based on sales by Jazz Pharmaceuticals (and its Affiliates and sublicensees) of Product, as applicable, to any governmental or regulatory authority in respect of any state or federal Medicare, Medicaid or similar programs; and
(b) less an amount equal to all freight, insurance and handling costs, import costs, duties, tariffs, taxes, excises and other governmental charges incurred and paid by Jazz Pharmaceuticals (and its Affiliates and sublicensees).
The foregoing deductions from Gross Sales will only be deducted once and only to the extent not otherwise deducted from Gross Sales. Net Sales shall not include any sales among Jazz Pharmaceuticals, its Affiliates and sublicensees.
1.1.29. "Patents" means all the GSK granted patents and pending applications covering the Compounds and the processes for making a Compound, or any formulation or use thereof in the Territory, including any patent term extensions, supplementary protection certificates, registrations, extensions, reissues, reexaminations or divisionals thereof, and including any granted patents arising from the pending applications, which are listed in attached Schedule 1.1.29.
1.1.30. "Phase I Clinical Trial" means clinical trials for the first introduction into humans of a Product, including small scale clinical studies conducted in normal volunteers and/or patients to obtain information on the Product's safety, tolerability, pharmacological activity or pharmacokinetics, as more fully defined in 21 C.F.R. 312.21(a).
1.1.31. "Phase II Clinical Trial" means a human clinical trial that is intended to initially evaluate the effectiveness of a Product in the targeted patient population for a particular indication or indications in human subjects with the disease or indication under study, as more fully defined in 21 C.F.R. 312.21(b).
1.1.32. "Phase III Clinical Trial" means a pivotal efficacy trial whose primary objective is to obtain a definitive evaluation of the therapeutic efficacy and safety of a Product in patients for the particular indication in question that is needed to evaluate the overall risk-benefit profile of a Product and to provide adequate basis for obtaining requisite Marketing Approval(s) and product labeling, as more fully defined in 21 C.F.R. (S) 312.21(c).
1.1.33. "Product" means any pharmaceutical product that includes a Compound as an active pharmaceutical ingredient. "Product" shall include Combination Products.
1.1.34. "Purchase Price" has the meaning ascribed to it in Section 3.1.
1.1.35. "Purchased Assets" means the following Assets to be acquired by Jazz Pharmaceuticals pursuant to this Agreement on the Closing Date:
(a) the Patents and information and hard-copy (i.e., non-electronic) records used by GSK's Corporate Intellectual Property group in filing, prosecuting, reviving, maintaining, renewing, enforcing and defending the Patents, and file wrappers and hard-copy (i.e., non-electronic) correspondence with the patent office in all jurisdictions in which the Patents are pending or granted;
(b) data (including without limitation, all pharmacological, pre-clinical, clinical, analytical and quality control data), manufacturing data (including batch records and technical reports) for the quantities of [ * ] being transferred hereunder, results and material correspondence, and other documents relating to the Purchased Assets, all of which are listed on Schedule 1.1.35, all in electronic form;
(c) quantities of [ * ] set forth on Schedule 1.1.35(c), and, to the extent they exist, retained stability samples [ * ] and tissue samples used in the toxicology work relating to [ * ]; and
(d) any Know-How specifically relating to [ * ] developed, acquired or licensed by GSK prior to the Closing Date, as set forth in Schedule 1.1.35.
The Purchased Assets do not include laboratory notebooks or other specific information pertaining to proof of invention or reduction to practice of [ * ] or the inventions claimed in the Patents. Should Jazz Pharmaceuticals require access to such information for purposes of responding to a challenge to the validity or enforceability of the Patents, or in order to initiate or participate in an interference proceeding in the United States (or a similar proceeding elsewhere), or to assert the Patents affirmatively against Third Parties, then in each case GSK shall promptly make such information available at no charge upon the reasonable request of Jazz Pharmaceuticals.
1.1.36. "ROW" means all countries and territories of the world except the U.S. and Europe.
1.1.37. "Territory" means all countries and territories of the world.
1.1.38. "Third Party" means any Party other than GSK or Jazz Pharmaceuticals or each of their respective Affiliates.
1.1.39. "Time of Closing" means 10:00 A.M. (Pacific Daylight Time) on the Closing Date or such other time and date as the Parties will mutually agree in writing at which time the Parties are to deliver the closing documents described in Section 5.2.
1.1.40. "U.S." means the United States of America, including the Commonwealth of Puerto Rico and the U.S. Virgin Islands.
1.1.41. "Valid Claim" means a claim of an issued, unexpired Patent which has not been revoked, held to be invalid or unenforceable by a final judgment of a court or other government agency of competent jurisdiction from which no appeal can be or is taken within the time allowed for appeal and which has not been admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise.
1.2 Interpretation. In this Agreement, words importing the singular number only will include the plural and vice versa, words importing a specific gender will include the other genders and references to persons will include corporations and one or more persons, their heirs, executors, administrators or assigns as the case may be. In addition, the division of this Agreement into Sections and the insertion of headings are for convenience of reference only and will not affect the interpretation hereof.
ARTICLE 2—PATENT ASSIGNMENT; POST-CLOSING ASSISTANCE; LICENSE GRANT
2.1 Assignment of Patents. On the Closing Date, and subject to the terms and conditions of this Agreement, GSK will sell, assign, convey, transfer and deliver to Jazz Pharmaceuticals, and Jazz Pharmaceuticals will purchase and accept from GSK, the entire ownership, right title and interest of GSK in and to the Purchased Assets. Within fifteen (15) Business Days of the Closing Date, GSK will authorize and request the Commissioner or Director of Patents and Trademarks of the United States to issue all U.S. patents that may issue in the future as a result of the Purchased Assets to Jazz Pharmaceuticals, its successors and assigns, in accordance with this Agreement.
2.2 Registration of Purchased Assets. GSK will cooperate with and reasonably assist Jazz Pharmaceuticals in relation to Jazz Pharmaceuticals' registration as the new owner of the Purchased Assets in the registers of the respective patent offices in the Territory. GSK will execute and deliver, or cause to be executed and delivered, at no cost to Jazz Pharmaceuticals, any and all documents reasonably requested by Jazz Pharmaceuticals that may be necessary, in accordance with the rules and regulations of the various patent offices worldwide, to transfer to Jazz Pharmaceuticals, its successors or other legal representative, GSK's right, title and interest in and to the Purchased Assets and to register the transfer at the Patent and Trademark Office of the United States and patent offices in all other territories where patent rights have been granted or are pending. If Jazz Pharmaceuticals elects to record this Agreement or any other documents with the appropriate United States or foreign governmental authorities or registries, Jazz Pharmaceuticals will bear the costs and fees associated with recording, but GSK will provide timely cooperation to Jazz Pharmaceuticals as reasonably requested at no cost to Jazz Pharmaceuticals.
2.3 Post-Closing Assistance. Upon the reasonable request of Jazz Pharmaceuticals, GSK will provide reasonable support to Jazz Pharmaceuticals, at no cost to Jazz Pharmaceuticals, to
assist Jazz Pharmaceuticals with the transfer and registration of the Purchased Assets and to respond to official actions relating to the Purchased Assets. GSK's obligation to reasonably assist Jazz Pharmaceuticals as provided for under this Section 2.3 will terminate six (6) months after the Effective Date. Thereafter, if Jazz Pharmaceuticals requires the assistance of GSK, Jazz Pharmaceuticals shall reimburse GSK for the reasonable cost of any assistance provided, including direct costs for the time of internal GSK employees.
2.4 Transfer of Compound and Other Purchased Assets. Within ninety (90) days after the Closing Date (the "Asset Transfer Period") (which period may be extended by the mutual agreement of the Parties), GSK will transfer to Jazz Pharmaceuticals, at no additional cost to Jazz Pharmaceuticals, the quantities of [ * ] and other Compounds identified in Schedule 1.1.35(c). Jazz Pharmaceuticals acknowledges that GSK and its Affiliates [ * ] as permitted by this Agreement, certain [ * ] in its [ * ], pursuant to [ * ] under Section 6.1.
2.5 Acknowledgement of Jazz Pharmaceuticals Regarding Purchased Assets. Jazz Pharmaceuticals acknowledges that GSK has not [ * ], and that, as a result, the [ * ] contained in the [ * ] may be [ * ]. Jazz Pharmaceuticals acknowledges that it is purchasing the Purchased Assets with this knowledge and with the understanding that successful development of [ * ] or the other Compounds will require significant efforts and expense of Jazz Pharmaceuticals. In addition, Jazz Pharmaceuticals acknowledges that the quantities of [ * ] and other Compounds identified in Schedule 1.1.35(c) transferred to Jazz Pharmaceuticals may not be suitable in their current condition for use in human clinical trials, and that Jazz Pharmaceuticals may need to conduct additional testing, without the assistance of GSK, on such quantities prior to any use in human clinical trials.
2.6 Non-Exclusive License Grant. Subject to the terms and conditions of this Agreement, effective as of the Closing Date, GSK grants Jazz Pharmaceuticals a worldwide, perpetual, royalty-free, non-exclusive license under the Licensed GSK Patents solely for the purpose of exploiting the rights granted under the Patents and developing and commercializing a Product; provided, however, that, pursuant to Sections 3.3 and 3.5, Jazz Pharmaceuticals shall be obligated to pay milestones and Additional Consideration Payments on Net Sales of Products for the indications covered by the Licensed GSK Patents. Such license granted hereunder shall be sublicensable by Jazz Pharmaceuticals in connection with activities relating to the development and commercialization of Products and Compounds. Additionally, should Jazz Pharmaceuticals require a license under any GSK patent relating to the composition of matter or method of manufacturing sodium channel antagonist compounds or other GSK patents that would block Jazz Pharmaceuticals from making and selling the Compounds as described in the Patents, GSK shall grant Jazz Pharmaceuticals a non-exclusive, royalty-free license under such GSK patents, to the extent GSK has the right to grant such license at the time of Jazz Pharmaceutical's request.
ARTICLE 3—PURCHASE PRICE; MILESTONE PAYMENTS AND ADDITIONAL CONSIDERATION
3.1 Purchase Price. In consideration of GSK's assignment and transfer of the Purchased Assets to Jazz Pharmaceuticals pursuant to Section 2.1, Jazz Pharmaceuticals will pay a total of Two Million U.S. Dollars (U.S. $2,000,000) (the "Purchase Price") on the Closing Date as follows: One Million U.S. Dollars (U.S. $1,000,000) to GGL, and One Million U.S. Dollars (U.S. $1,000,000) to SB. Of the Purchase Price, $50,000 is paid in consideration of the transfer to
Jazz Pharmaceuticals of the quantities of [ * ] and other Compounds identified in Schedule 1.1.35(c), which Jazz Pharmaceuticals, may use for research and development, including clinical activities.
3.2 Manner of Payment of Purchase Price. On the Closing Date, Jazz Pharmaceuticals will pay the Purchase Price to GGL and SB as set forth in Section 3.1 by electronic wire transfer into accounts that have been designated by GGL and SB in writing at least two (2) Business Days prior to the Closing Date.
3.3 Milestone Payments. As further consideration for the assignment and transfer of the Purchased Assets pursuant to Section 2.1, Jazz Pharmaceuticals shall pay GGL and SB the following non-refundable, non-creditable, irrevocable amounts (each, a "Milestone Payment") within ten (10) days after the first achievement by or on behalf of Jazz Pharmaceuticals, its Affiliates or sublicensees of the corresponding events set forth below (each, a "Milestone") for the first Product to reach such Milestone, regardless whether the development, promotion, or marketing of such Product is discontinued at any time after the achievement of such Milestone:
PRE-COMMERCIAL MILESTONES
MILESTONE PAYMENT
1. First patient enrolled in the first Phase I Clinical Trial for a Product anywhere in the Territory, for the first Product to reach this Milestone
(a) U.S. $1,500,000 to GGL,
and (b) U.S. $1,500,000 to SB
2. [ * ]
(a) U.S. $[ * ] and (b) U.S. $[ * ]
COMMERCIAL MILESTONES
(a) U.S. $[ * ] and (b) $[ * ]
3.4 Notes on Milestone Payments.
(a) Each Milestone Payment shall be made only once regardless of how many times such Milestones are achieved for each Product, except for Pre-Commercial Milestone number 5 and Commercial Milestone number 2 above which may be paid more than once (but only once for each [ * ]). No payment shall be owed for a Milestone which is not reached (except that, upon achievement of a Milestone for a particular Product, any previous Milestone for that Product for which payment would have been due hereunder but was not yet made shall be deemed achieved and payment therefore shall be made), if such a payment was due under the terms hereof.
(b) In the event that more than one Milestone is achieved with respect to the same Product at one time, then all applicable payments under Section 3.3 shall be made.
(c) For purposes of Milestone payments, an "indication" means [ * ].
(d) For purposes of [ * ] in the event federal governmental pricing approval is required to commercialize the Product in the U.S., then the Milestone Payment for [ * ] shall not become due until the earlier of (i) [ * ] or (ii) [ * ] of Marketing Approval.
3.5 Additional Consideration Payments. As further consideration for the assignment and transfer of the Purchased Assets pursuant to Section 2.1, Jazz Pharmaceuticals will pay GGL and SB the following percentage (each an "Additional Consideration Payment") on Net Sales of Product in the Territory in each calendar year:
(a) with respect to Net Sales of Product (other than Combination Products) in countries of the Territory as to which payments are due, in each calendar year:
(i) [ * ] percent ([ * ]%) of annual Net Sales of Product up to and including [ * ] U.S. Dollars (U.S. $[ * ]) in such calendar year; and
(ii) [ * ] percent ([ * ]%) of annual Net Sales of Product in excess of [ * ] U.S. Dollars (U.S. $[ * ]) in such calendar year.
(b) After calculating the total Additional Consideration Payments due under Section 3.5(a) for all Net Sales in the Territory, Jazz Pharmaceuticals shall determine the
amount of Net Sales in the U.S. and shall pay SB [ * ] percent ([ * ]%) or [ * ] percent ([ * ]%) of such Net Sales in the U.S., as appropriate, at the Additional Consideration Payment level required by Section 3.5(a). After calculating the total Additional Consideration Payments due under Section 3.5(a) for all Net Sales in the Territory, Jazz Pharmaceuticals shall determine the amount of Net Sales in Europe and the ROW and shall pay GGL [ * ] percent ([ * ]%) or [ * ] percent ([ * ]%) of such Net Sales in Europe and the ROW, as appropriate, at the Additional Consideration Payment level required by Section 3.5(a). In no event will any calculations under this paragraph result in a larger payment by Jazz Pharmaceuticals than would have been made had the entire payment been made to one entity. Jazz Pharmaceuticals will use its Diligent Efforts to divide the Additional Consideration Payments as described above. If GSK believes that the division of the payment was not done correctly, GSK will, itself, reapportion the payments between the GSK entities and will not have any recourse to Jazz Pharmaceuticals or request any audits as to the allocation between the GSK entities, and Jazz Pharmaceuticals will have no liability to GSK with respect to any division of the payments as described above.
(c) With respect to Net Sales of Combination Products in the Territory in each reporting period in each country:
(i) if and to the extent all therapeutically active agents comprising the Combination Product are marketed and sold separately in such country in commercially relevant quantities in such Payment Period (as defined in Section 4.1) and the Gross Selling Price for each agent can be separately determined for such Payment Period, Net Sales of each Combination Product for determining the Additional Consideration Payment payable with respect to such Combination Product for such country shall be calculated by multiplying the Net Sales of the Combination Product by A divided by the sum of A plus B (A/(A+B)), in which A is the Gross Selling Price of the single therapeutically active agent Product contained in the Combination Product sold in such country during such Payment Period and B is the Gross Selling Price of the other single therapeutically active agent(s) contained in the Combination Product sold in such country during such Payment Period. All Gross Selling Prices of the therapeutically active ingredients in the Combination Product shall be calculated as the average Gross Selling Price of the therapeutically active ingredients in such Combination Products during the applicable Payment Period for which the Net Sales are being calculated.
(ii) In the event that (a) separate sales, in commercially relevant quantities, in a particular country of the other therapeutically active agent (not the Product) comprising a single compound as a therapeutically active ingredient are made during the Payment Period in which the sale was made or if the Gross Selling Price for such other therapeutically active agent (not the Product) can be determined for a Payment Period, but (b) there are no such separate sales of the Product as the sole therapeutically active agent or such separate sales of the Product cannot be determined for such Payment Period, then the Net Sales of the Combination Product in such country for determining the Additional Consideration Payment payable with respect to such Combination Product for such country for such period shall be calculated by multiplying Net Sales of such Combination Product in such country by the number one (1) minus the result of
dividing X over Y (1—(X/Y)), in which X is the Gross Selling Price of the therapeutically active ingredient that is not a Product sold separately in commercially reasonable quantities during the Payment Period in question and Y is the Gross Selling Price of the Combination Product sold in the Payment Period in question in such country.
(iii) If neither of the single therapeutically active agent components of the Combination Product is sold separately in commercially relevant quantities in a country during a particular Payment Period, then the Additional Consideration Payment payable on such Combination Product in such country for such period will be [ * ] percent ([ * ]%) of the Additional Consideration Payment that would be due on a Product that is not a Combination Product.
(d) Any Additional Consideration Payment due on Combination Products shall be paid to SB for Net Sales of Combination Products in the U.S. and to GGL for Net Sales of Combination Products in the ROW. After determining the total Additional Consideration Payments due on Combination Products in accordance with Section 3.5(c) above, Jazz Pharmaceuticals shall determine the Additional Consideration Payments due on Net Sales in the U.S. and in ROW, respectively, and shall pay such amounts to SB and GGL, respectively.
3.6 Starting Date of Additional Consideration Payment Obligations. The obligation of Jazz Pharmaceuticals to pay Additional Consideration Payments to GGL and SB at the rates specified in Section 3.5 will become effective on a country by country basis on the date of the First Commercial Sale of a Product in such country.
3.7 Termination of Additional Consideration Payment Obligations. Additional Consideration Payments will be payable on Net Sales of Products in the U.S. until the expiration of the [ * ]. Additional Consideration Payments will be payable on Net Sales of Products in all countries of Europe until the expiration of the [ * ]. Additional Consideration Payments will be payable on Net Sales of Products in all countries in the ROW until the expiration of the [ * ]. Additional Consideration on Net Sales of Products [ * ] is being paid in this manner as an administrative convenience to the Parties as a result of the difficulty in allocating value for each of the Patents [ * ].
3.8 Transfer and Other Taxes. Jazz Pharmaceuticals will be responsible for and will pay all foreign, federal, state and local taxes payable in connection with the acquisition and transfer of the Purchased Assets to Jazz Pharmaceuticals by GSK. GSK will be responsible for and will pay all foreign, federal, state and local taxes payable on any income or gain resulting from the sale of the Purchased Assets to Jazz Pharmaceuticals. Notwithstanding the foregoing, Jazz Pharmaceuticals shall not be required to pay (i) any VAT in connection with the transfer of the Purchased Assets, or (ii) any tax as a result of the separate payment to SB pursuant to Sections 3.3 or 3.5 that it would not have been required to pay if making only one payment to GGL. In the event that Jazz Pharmaceuticals is required to withhold and remit any tax to the revenue authorities in any country in the Territory regarding the Purchase Price, any Milestone payment or any Additional Consideration Payments payable to GGL or SB due to the laws of such country, such amount shall be withheld by Jazz Pharmaceuticals, and Jazz Pharmaceuticals shall notify GSK and promptly furnish GSK with copies of any documentation evidencing such withholding.
ARTICLE 4—MANNER OF PAYMENTS; REPORTS; DILIGENCE
4.1 Manner of Additional Consideration Payments.
(a) Jazz Pharmaceuticals will deliver to GSK within sixty (60) days following the end of each "Payment Period", meaning a calendar quarter ending on March 31st, June 30th, September 30th or December 31st, the Additional Consideration Payment Statements (as defined in Section 4.2), along with Jazz Pharmaceuticals' payments to GGL and SB of any Additional Consideration Payment due and payable to GGL and SB for such Payment Period.
(b) Each Additional Consideration Payment will be computed and paid in U.S. Dollars. Monetary conversion calculations from the currency of a foreign country in which a Product is sold into U.S. Dollars will be made on a quarterly basis on the last day of each applicable calendar quarter using the exchange rate reported on the last Business Day of such calendar quarter in the Wall Street Journal, eastern edition.
(c) Whenever any Additional Consideration Payment is due on a day that is not a Business Day, such payment will be made on the immediately succeeding Business Day.
(d) In the event that any payment due hereunder is not made when due, the payment shall accrue interest from that date due at the rate of [ * ] percent ([ * ]%) per month, or the maximum rate allowed by law, whichever is less, and shall be calculated based on the number of days that the payment is delinquent. The payment of such interest shall not limit GSK from exercising any other rights it may have as a consequence of the lateness of any payment.
4.2 Additional Consideration Payment Statements. Each Additional Consideration Payment required hereunder will be accompanied by a report ("Additional Consideration Payment Statement") for the preceding Payment Period containing the following information:
(a) itemized accounting of the total Net Sales for Product during the applicable Payment Period in each country of sale in sufficient detail to permit confirmation of the accuracy of the Additional Consideration Payment;
(b) adjustments and calculation of Net Sales for the applicable Payment Period in each country of sale; and
(c) total Net Sales in U.S. dollars, together with the exchange rates used for conversion.
If no payment is due to GGL or SB for any Payment Period, the Additional Consideration Payment Statement will so state. All Additional Consideration Payment Statements will be considered Jazz Pharmaceuticals' Confidential Information under this Agreement, but GSK may disclose such Confidential Information in accordance with Section 11.2 or Section 11.3.
4.3 Additional Consideration Payment Post-Termination Report. Jazz Pharmaceuticals will make a written report to GSK within thirty (30) days after the date of any termination of
Additional Consideration Payment obligations under this Agreement, stating in such report the number, description and Net Sales of Products sold or otherwise disposed of and on which an Additional Consideration Payment is payable hereunder that was not previously reported to GSK.
4.4 Audit. Upon the written request of GSK (but not more frequently than [ * ]), GSK will have the right, upon thirty (30) days advance notice to Jazz Pharmaceuticals and at a mutually agreeable time, to have an independent certified public accountant or like individual reasonably acceptable to Jazz Pharmaceuticals (the "Auditor") inspect, during normal business hours, Jazz Pharmaceuticals' directly applicable records for the preceding two (2) years for the purpose of determining the accuracy of Additional Consideration Payment Statements and the associated Additional Consideration Payment made to GGL and SB pursuant to this Agreement. The results of any such examination shall be made available to Jazz Pharmaceuticals. In the event the Auditor concludes that there was an underpayment of the total Additional Consideration Payment to GGL and SB together, the underpayment will be paid by Jazz Pharmaceuticals to GGL or SB or both, as applicable (but subject to the provisions of Section 3.5(b) concerning allocations between GGL and SB), within sixty (60) Business Days after the date Jazz Pharmaceuticals receives such Auditor's written report; provided, however, if Jazz Pharmaceuticals desires to contest such audit results, Jazz Pharmaceuticals may do so by submitting the results of the audit to arbitration through JAMS New York or San Francisco offices within thirty (30) days after the receipt of such audit, and the arbitration shall be final and binding on GSK and Jazz Pharmaceuticals. Pending the results of such arbitration, Jazz Pharmaceuticals shall be entitled to withhold any disputed amounts claimed by GSK as a result of the audit. In the event the Auditor concludes that there was an overpayment of Additional Consideration Payment to GGL or SB or both, as applicable, the overpayment will be credited toward the next Additional Consideration Payment to be paid by Jazz Pharmaceuticals to GGL or SB or both, as applicable, under this Agreement until fully credited; provided, however, that in the event no further Additional Consideration Payment will become due under this Agreement, such overpayment will be paid by GGL or SB or both, as applicable, to Jazz Pharmaceuticals within sixty (60) Business Days after the date GSK receives such Auditor's written report. If the underpayment of Additional Consideration is greater than [ * ] percent ([ * ]%) of the Additional Consideration Payment determined by the Auditor to be payable to GSK, the reasonable fees and expenses charged by the Auditor will be paid by Jazz Pharmaceuticals; otherwise GSK will pay the reasonable fees and expenses charged by such Auditor. The Auditor will report to GSK only its conclusions as to whether Jazz Pharmaceuticals is in compliance with its Additional Consideration Payment obligations and the amount of any underpayment or overpayment, and such report and the conclusions contained therein will constitute Jazz Pharmaceuticals' Confidential Information in accordance with Section 11.1.
4.5 Diligence.
(a) Product Development Diligence. Jazz Pharmaceuticals shall exercise its Diligent Efforts to [ * ]. In connection therewith, Jazz Pharmaceuticals shall use its Diligent Efforts to [ * ] set forth below by the [ * ] set forth below:
(i) [ * ];
(ii) [ * ]; and
(iii) [ * ].
(b) Commercialization Diligence. Jazz Pharmaceuticals shall devote its Diligent Efforts to [ * ] within [ * ] after the date on which [ * ], subject to, with respect to each [ * ], the [ * ] and other [ * ].
(c) Patent Diligence. Jazz Pharmaceuticals shall devote its Diligent Efforts to [ * ] that have been transferred to Jazz Pharmaceuticals in accordance with [ * ].
(d) Failure to Achieve Objectives. Failure to achieve any of the development objectives described in Section 4.5(a) or the commercial objective set forth in Section 4.5(b) at the times set forth therein shall not be a breach of this Agreement and shall not result in the availability of the remedies set forth in Section 9.2; provided, however, that the failure of Jazz Pharmaceuticals to exercise Diligent Efforts to achieve the development and commercial objectives set forth above shall constitute material breach of this Agreement and, upon such breach, GSK, in its discretion, may terminate the Agreement in accordance with Section 9.2. Any time period described in Section 4.5(a) or (b) shall be extended for the same period of time as any delay caused by GSK in transferring the Purchased Assets to Jazz Pharmaceuticals or any delay which was outside the control of Jazz Pharmaceuticals.
4.6 Cessation or Suspension of Development Efforts. If Jazz Pharmaceuticals ceases or suspends development efforts for [ * ] and the other Products covered by the Patents (such that efforts have been suspended with respect to all of the Compounds) for [ * ], such cessation or suspension of development efforts shall constitute a failure of Diligent Efforts by Jazz Pharmaceuticals and a material breach of this Agreement. Upon such material breach, GSK, in its discretion, may terminate this Agreement in accordance with Section 9.2.
4.7 Termination of Development or Commercialization by Jazz Pharmaceuticals.
(a) If Jazz Pharmaceuticals determines to cease Diligent Efforts (alone or with a Third Party) to develop and commercialize all Products prior to [ * ] Jazz Pharmaceuticals shall so notify GSK in writing. In such event, GSK shall have a period of [ * ] days after the date of Jazz Pharmaceuticals' notice to reacquire the rights to all the Products in their then-current condition, for a price equal to [ * ]. If GSK reacquires the Products under this Section 4.7(a), Jazz Pharmaceuticals shall have no obligation to provide GSK with any data generated by Jazz Pharmaceuticals regarding the Products.
(b) If Jazz Pharmaceuticals determines to cease Diligent Efforts (alone or with a Third Party) to develop and commercialize all Products at any time after [ * ] Jazz Pharmaceuticals shall so notify GSK in writing. In such event, GSK shall have a period of [ * ] after the date of Jazz Pharmaceuticals' notice to reacquire the rights to the Products in their then-current condition, for a price equal to the sum of (a) [ * ], plus (b) [ * ]. In its notice to GSK, Jazz Pharmaceuticals shall advise GSK of the [ * ]. If GSK reacquires the Products under this Section 4.7(b), Jazz Pharmaceuticals shall provide GSK with all data generated by Jazz Pharmaceuticals regarding the Products.
Upon receipt of notice from Jazz Pharmaceuticals under Section 4.7(a) or 4.7(b), GSK shall have the option, exercisable by written notice to Jazz Pharmaceuticals given within [ * ] after Jazz Pharmaceuticals' notice, to reacquire the Product and all of Jazz Pharmaceuticals' rights to the Product. In the event that GSK exercises such option, the Parties shall work together
diligently to complete such reacquisition within the [ * ] following GSK's exercise of such option, and Jazz Pharmaceuticals shall provide assistance to GSK, on a level commensurate to the assistance provided by GSK to Jazz Pharmaceuticals pursuant to Section 2.2 and 2.3, to transfer and assign the Purchased Assets to GSK. If the option is not exercised within the [ * ] period described above, it will terminate, and GSK shall have no further right to reacquire any Products.
4.8 [ * ] Reports. On a [ * ] basis until [ * ], Jazz Pharmaceuticals shall submit summary written reports to GSK describing Jazz Pharmaceuticals' [ * ].
ARTICLE 5—CLOSING
5.1 Closing Date; Time and Place of Closing. The transfer of title to the Purchased Assets and the closing of the transactions contemplated by this Agreement will occur on October 4, 2004 (the "Closing Date") at or before the Time of Closing at 3180 Porter Drive, Palo Alto, California, U.S., or at such other place as may be agreed upon in writing by the Parties hereto.
5.2 Closing Arrangements.
(a) GSK's Delivery of Closing Documents. At the Time of Closing on the Closing Date, GSK will execute and deliver to Jazz Pharmaceuticals:
(i) a Bill of Sale in the form of Schedule A attached hereto and incorporated herein, duly executed by GSK;
(ii) an Assignment of Patent Rights in the form of Schedule B attached hereto and incorporated herein, duly executed by GSK; and
(iii) this Agreement, duly executed by GSK.
In addition, at the Time of Closing, GSK will pay and satisfy the [ * ] as provided in Section 6.1.
(b) Jazz Pharmaceuticals' Payment of Purchase Price and Delivery of Closing Documents: At the Time of Closing on the Closing Date, Jazz Pharmaceuticals will:
(i) pay and satisfy the Purchase Price as provided in Section 3.1, payable via wire transfer to accounts that have been designated by GGL and SB at least two (2) Business Days prior to the Closing Date; and
(ii) deliver this Agreement, duly executed by Jazz Pharmaceuticals.
5.3 Conditions of Obligations of Jazz Pharmaceuticals. The obligations of Jazz Pharmaceuticals to effect the transactions contemplated hereby are also subject to the satisfaction of the following conditions, unless waived in writing by Jazz Pharmaceuticals on or prior to the Closing Date:
(a) The representations and warranties of GSK set forth in this Agreement shall be true and correct as of the Time of Closing;
(b) GSK shall have performed all conditions, obligations and covenants required to be performed by it under this Agreement prior to the Time of Closing;
(c) Jazz Pharmaceuticals shall have received duly executed copies of all Third Party consents, approvals and assignments contemplated by this Agreement and necessary to transfer all of GSK's interest in the Purchased Assets, in form and substance reasonably satisfactory to Jazz Pharmaceuticals; and
(d) Subject to Section 2.5, there shall have been no material change in the Compounds or the Purchased Assets.
5.4 Conditions of Obligations of GSK. The obligations of GSK to effect the transactions contemplated hereby are also subject to the satisfaction of the following conditions, unless waived in writing by GSK on or prior to the Closing Date:
(a) The representations and warranties of Jazz Pharmaceuticals set forth in this Agreement shall be true and correct as of the Time of Closing;
(b) Jazz Pharmaceuticals shall have performed all conditions, obligations and covenants required to be performed by it under this Agreement prior to the Time of Closing; and
(c) There shall have been no material adverse change to the business or financial condition of Jazz Pharmaceuticals.
5.5 Transfer after Closing Date. While title to the Purchased Assets will pass to Jazz Pharmaceuticals on the Closing Date, the physical transfer of the Purchased Assets will take place during the Asset Transfer Period. In the event that Jazz Pharmaceuticals seeks additional data from GSK pertaining to the Purchased Assets, Jazz Pharmaceuticals may, during the Asset Transfer Period, make a specific request of GSK for copies of such additional data. GSK will endeavor to locate such data, where available, within a reasonable period of time. If, despite GSK's reasonable endeavors it cannot locate such additional data, GSK will promptly notify Jazz Pharmaceuticals in writing. GSK will be responsible for the physical transfer of the Purchased Assets (including compliance and costs associated with any export control laws or regulations and any required governmental authorizations) to Jazz Pharmaceuticals' chosen destination during the Asset Transfer Period. Risk of loss of the Purchased Assets will pass to Jazz Pharmaceuticals upon receipt of such by Jazz Pharmaceuticals.
5.6 Expenses for Transfer of the Purchased Assets. Except as provided in this Agreement, after the Time of Closing on the Closing Date, Jazz Pharmaceuticals will be responsible for all costs related to the recordation and perfection of the assignment of the Purchased Assets and Jazz Pharmaceuticals will bear all costs and fees imposed by governmental authorities related thereto and all postage costs. Except as otherwise expressly provided herein, all other costs, fees and expenses arising from the transfer of the Purchased Assets to Jazz Pharmaceuticals as contemplated by this Agreement will be paid by the Party incurring such costs and expenses.
ARTICLE 6 —[ * ]
6.1 [ * ] hereby grants to [ * ] a [ * ] and [ * ] under the [ * ], excluding [ * ]. In accordance with Section 6.3, until [ * ] shall have no right under the [ * ] to [ * ] or [ * ] any [ * ] in the [ * ], respectively. [ * ], respectively, should [ * ] wish to [ * ] in the [ * ] where a [ * ] to permit [ * ], but [ * ] will have no obligation to [ * ].
6.2 [ * ]. [ * ] will have the right to [ * ] to its [ * ] and [ * ] that enter into bona fide [ * ]; provided that, in each instance (a) such [ * ] shall be used solely for [ * ], purposes only and (b) any such [ * ] shall be [ * ] to those set forth in [ * ].
6.3 [ * ] by [ * ] of Products. [ * ] will not [ * ] or sell any Product in the U.S. [ * ] any Product in any country in Europe [ * ] any Product in any country in the ROW [ * ]. This provision shall not prevent [ * ] from researching any Compound covered by the Patents in accordance with the [ * ] granted to [ * ] in Section 6.1.
ARTICLE 7—REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of Jazz Pharmaceuticals. Jazz Pharmaceuticals hereby represents and warrants to GSK and acknowledges that GSK is relying on such representations and warranties in connection with the transactions contemplated by this Agreement that, as of the Closing Date:
(a) Incorporation, Organization and Qualification of Jazz Pharmaceuticals. Jazz Pharmaceuticals is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has the corporate power to own or lease its property and to carry on its business as now being conducted by it and to execute, deliver and perform this Agreement. Jazz Pharmaceuticals is duly qualified to do business as a foreign corporation and is in good standing in every jurisdiction where the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to so qualify does not in the aggregate have a material adverse effect on its respective businesses taken as a whole.
(b) Corporate Action. This Agreement, and any other agreements and instruments executed in connection herewith and therewith are the valid and binding obligations of Jazz Pharmaceuticals, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency or similar laws of general application affecting the enforcement of rights of creditors, and subject to equitable principles limiting rights to specific performance or other equitable remedies and subject to the effect of federal and state securities laws on the enforceability of indemnification provisions relating to liabilities arising under such laws. The execution, delivery and performance of this Agreement and any other agreement and instruments executed in connection herewith and therewith have been duly authorized by all necessary corporate action.
(c) Governmental Approvals. No authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any applicable laws, rules or regulations presently in effect, is or will be necessary for, or in connection with, the offer, issuance, sale, execution or delivery by Jazz Pharmaceuticals of the Agreement or any other agreement or instrument executed in connection herewith, or for the performance by it of its obligations under this Agreement.
(d) Sufficient Funds. Jazz Pharmaceuticals represents that it has, or will have at the Time of Closing, sufficient funds to fulfill its obligation to pay the Purchase Price and Milestone Payments to GSK.
(e) Compliance With Law. Jazz Pharmaceuticals has complied and is in compliance with all applicable foreign, federal, state and local laws, statutes, licensing requirements, rules and regulations, and judicial or administrative decisions applicable to Jazz Pharmaceuticals in connection with the transaction contemplated hereby.
7.2 Representations and Warranties of GSK. GSK hereby represents and warrants to Jazz Pharmaceuticals and acknowledges that Jazz Pharmaceuticals is relying on such representations and warranties in connection with the transactions contemplated by this Agreement that, as of the Closing Date:
(a) Incorporation, Organization and Qualification of GSK. Each of GGL and SB is a corporation duly incorporated, validly existing and in good standing under the law of the jurisdiction of its incorporation, and has the corporate power to own or lease its property and to carry on its business as now being conducted by it. Each of GGL and SB is duly qualified to do business as a foreign corporation and is in good standing in every jurisdiction where the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to so qualify does not in the aggregate have a material adverse effect on its respective businesses taken as a whole.
(b) Corporate Action. This Agreement, and any other agreements and instruments executed in connection herewith and therewith are the valid and binding obligations of each of GSK, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency or similar laws of general application affecting the enforcement of rights of creditors, and subject to equitable principles limiting rights to specific performance or other equitable remedies. The execution, delivery and performance of this Agreement and any other agreement and instruments executed in connection herewith and therewith have been duly authorized by all necessary corporate action.
(c) Governmental Approvals. No authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any applicable laws, rules or regulations presently in effect, is or will be necessary for, or in connection with, the offer, issuance, sale, execution or delivery by GGL or SB of the Agreement or any other agreement or instrument executed in connection herewith, or for the performance by it of it obligations under this Agreement.
(d) Title to Purchased Assets.
(i) GSK is the sole and exclusive owner of the Purchased Assets, and the Purchased Assets are free and clear of any and all liens, pledges, mortgages, security interests, restrictions, and encumbrances. By virtue of the deliveries made at the Time of Closing, Jazz Pharmaceuticals will obtain good and marketable title to all of the Purchased Assets, free and clear of any and all liens,
pledges, mortgages, security interests, restrictions and encumbrances. To GSK's knowledge, no government funds, equipment, facilities, personnel or other resources were used in connection with the discovery or development of the Purchased Assets.
(ii) None of GSK, GGL or SB has granted and will not grant during the Term of this Agreement, any right to any Affiliate or Third Party which would conflict with the rights granted to Jazz Pharmaceuticals hereunder, and GSK will not take (or cause any other person or entity to take) any action that will conflict with, contravene or otherwise limit or restrict the rights of Jazz Pharmaceuticals hereunder or the right of Jazz Pharmaceuticals to enjoy the benefits of this Agreement.
(iii) The Purchased Assets constitute all of the material assets used by GSK and its Affiliates in the development of [ * ] and the manufacturing Know-how specifically relating to [ * ], other than manufacturing equipment. Except for the quantities of [ * ] duly retained by GSK pursuant to Section 2.4, neither GSK nor its Affiliates will have any supply of [ * ] at the expiration of the Asset Transfer Period, nor is GSK or its Affiliates in the process of, or planning to, manufacture any additional amounts of [ * ], except for the purposes permitted by the [ * ].
(iv) Schedule 1.1.29 lists all Patents related to the Compounds, or any formulation or process of manufacture or formulation specifically related to [ * ], or use thereof in the Territory including any patent term extensions, supplementary protection certificates, registrations, extensions, reissues, reexaminations or divisionals thereof, and including any granted patents arising from the pending applications.
(e) Litigation. No action, claim, suit, proceeding or investigation is pending in respect of the Purchased Assets in the United States or Europe or, to GSK's knowledge, anywhere else in the Territory. To GSK's knowledge, no action, claim, suit, proceeding or investigation is threatened against GSK or its Affiliates in respect of the Purchased Assets anywhere in the Territory. There is no judgment, decree, injunction, rule or order of any court, governmental department, commission agency, instrumentality or arbitrator or other similar ruling outstanding against GSK or its Affiliates relating to the Purchased Assets. No action, claim, suit, proceeding or investigation is pending or threatened by GSK or its Affiliates, nor, to GSK's knowledge, is there any basis for such, against any Third Party relating to the Purchased Assets.
(f) No Existing Claims of Infringement. To the knowledge of GSK's Corporate Intellectual Property Group, there are no claims existing against GSK or its Affiliates asserting that the manufacture, use or sale of [ * ] infringes, constitutes contributory infringement, inducement to infringe or misappropriation of any patent rights, trade secret rights or other intellectual property or proprietary rights of any Third Party. GSK hereby represents and warrants that GSK's Corporate Intellectual Property group referenced in this Agreement is the only group within GSK that prosecutes and maintains patents.
(g) Taxes; Maintenance Fees. All taxes imposed by the United States, any state, municipality, other local government or other subdivision or instrumentality of the United
States or the countries of EU that are due or payable by GSK or any of its Affiliates with respect to the Purchased Assets, and all interest and penalties thereon, whether disputed or not, and that would result in the imposition of a lien, claim or encumbrance on any of the Purchased Assets, other than taxes that are not yet due and payable, have been paid in full, all tax returns required to be filed in connection therewith with respect to the Purchased Assets have been accurately prepared and duly and timely filed in the United States and countries of the EU. To GSK's knowledge, all taxes imposed by any other country or any state or other government thereof, or any other taxing authority, that are due or payable by GSK or any of its Affiliates with respect to the Purchased Assets, and all interest and penalties thereon, whether disputed or not, and that would result in the imposition of a lien, claim or encumbrance on any of the Purchased Assets, other than taxes that are not yet due and payable, have been paid in full, all tax returns required to be filed in connection therewith with respect to the Purchased Assets have been accurately prepared and duly and timely filed. GSK is not delinquent in the payment of any foreign or domestic tax, assessment or governmental charge or deposits in the U.S. or the EU or, to GSK's knowledge, in any other country that would result in the imposition of a lien, claim or encumbrance on any of the Purchased Assets or against Jazz Pharmaceuticals, and neither GSK nor any of its Affiliates has a tax deficiency or claim outstanding, proposed or assessed against it, and, to GSK's knowledge, there is no basis for any such deficiency or claim, that would result in the imposition of any lien, claim or encumbrances on any of the Purchased Assets or against Jazz Pharmaceuticals. All maintenance fees and any other fees for the Patents have been timely paid.
(h) Compliance With Law. To GSK's knowledge, GSK and its Affiliates have complied and are in compliance with all applicable foreign, federal, state and local laws, statutes, licensing requirements, rules and regulations, and judicial or administrative decisions applicable to their ownership and use of the Purchased Assets, including without limitation all laws, rules and regulations regarding the development, clinical testing, manufacture, licensing, marketing, promotion, importation, exportation or other use of pharmaceutical products, except where such failure to do so would not materially adversely affect, or reasonably be expected to so affect, any of the Purchased Assets or the ability of GSK to consummate the transactions contemplated herein. GSK and its Affiliates have been granted any and all licenses, permits (temporary and otherwise), authorization and approvals from federal, state, local and foreign government regulatory bodies necessary to own and use the Purchased Assets, except where the failure to possess such license, permit, authorization or approval would not have a materially adverse effect, or reasonably be expected to so affect, any of the Purchased Assets or the ability of GSK, GGL and SB have to consummate the transactions contemplated herein.
(i) Full Disclosure. This Agreement and the Schedules attached hereto, when taken as a whole, do not contain any untrue statement of a material fact nor, to GSK's knowledge, information and belief, omit to state a material fact necessary in order to make the statements contained herein or therein not misleading.
(j) Limitations.
(i) EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 7.2, THE COMPOUNDS AND PURCHASED ASSETS ARE PROVIDED "AS IS," AND
GSK MAKES NO REPRESENTATIONS OR WARRANTIES (WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) WITH RESPECT TO THE COMPOUNDS OR PURCHASED ASSETS, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, INCLUDING USE IN CLINICAL TRIALS, OR FREEDOM FROM INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY. JAZZ PHARMACEUTICALS ACKNOWLEDGES THAT ALL CHARACTERISTICS OF THE COMPOUNDS ARE NOT FULLY UNDERSTOOD AND ANY USE THEREOF MAY INVOLVE RISKS OR DANGERS THAT ARE NOT KNOWN OR FULLY APPRECIATED.
(ii) NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT, JAZZ PHARMACEUTICALS WILL BE RESPONSIBLE FOR (AND GSK WILL HAVE NO RESPONSIBILITY FOR) ALL LIABILITIES ARISING SOLELY FROM ACTS OR OMISSIONS TO ACT BY JAZZ PHARMACEUTICALS, ITS AFFILIATES OR SUBLICENSEES AFTER THE TIME OF CLOSING RELATED TO THE PURCHASED ASSETS OR THE USE BY JAZZ PHARMACEUTICALS, ITS AFFILIATES OR SUBLICENSEES OF THE PURCHASED ASSETS TO IDENTIFY, RESEARCH, DEVELOP, MANUFACTURE, MARKET, PROMOTE, DISTRIBUTE, SELL OR IMPORT ANY PRODUCTS, EXCEPT WHERE SUCH LIABILITY, LOSS, DAMAGE, COST AND EXPENSE HAS BEEN INCURRED OR SUFFERED AS A RESULT OF A MATERIAL BREACH OF GSK'S REPRESENTATIONS, WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT OR BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF GSK.
(k) Any representation or warranty by GSK herein will also be deemed to have been made by each of GGL and SB, individually as to itself, and the breach of any representation or warranty by any one of them will be deemed to be a breach by the others.
ARTICLE 8—LIABILITY AND INDEMNIFICATION
8.1 Indemnification by GSK. GSK will indemnify, defend and hold harmless Jazz Pharmaceuticals, its Affiliates, and each of their respective members, directors, officers, employees, advisors and agents (collectively, "Jazz Pharmaceuticals Indemnitees") from and against any and all suits, actions, damages, liabilities, claims (including death and bodily injury), demands, obligations, losses, fees, costs and expenses or money judgments (including reasonable attorneys' fees) (collectively, "Claims") incurred by or rendered against any Jazz Pharmaceuticals Indemnitee which arise out of or in connection with:
(a) any Claims related to the Purchased Assets or against the Purchased Assets, in each case based upon events which occurred at or prior to the Time of Closing; or
(b) liabilities of GSK or its Affiliates to the extent related to the Purchased Assets and existing as of, or prior to, the Closing Date or based on actions taken or omissions to act that occurred prior to the Time of Closing (including any infringement or misappropriation of Third Party patents or intellectual property);
(c) any breach or inaccuracy of any representation, warranty or covenant of GSK set forth in this Agreement; or
(d) the negligence or willful misconduct of any GSK Indemnitees;
provided, however, that in each case GSK will not be obligated to indemnify any Jazz Pharmaceuticals Indemnitee with respect to, and to the extent of, any Claims for which Jazz Pharmaceuticals is obligated to indemnify GSK pursuant to Section 8.2.
8.2 Indemnification by Jazz Pharmaceuticals. Jazz Pharmaceuticals will indemnify and hold harmless GSK and its Affiliates and each of their directors, officers, employees, advisors and agents (collectively, the "GSK Indemnitees") from and against any and all Claims incurred by or rendered against any GSK Indemnitee which arise out of or in connection with:
(a) the development, manufacture, licensing, marketing, promotion, importation, exportation, sale or other use of the Purchased Assets from and after the Time of Closing by or on behalf of any Jazz Pharmaceuticals Indemnitees of any Product or service or any product or material embodying or made through the use of any part of the Purchased Assets; provided however, it is agreed by the Parties that such indemnification will not apply to the extent that any product or service arises from the exercise of the [ * ] by GSK, its Affiliates, agents [ * ];
(b) any breach or inaccuracy of any representation, warranty or covenant made by Jazz Pharmaceuticals pursuant to this Agreement; or
(c) the negligence or willful misconduct of any Jazz Pharmaceuticals Indemnitees;
provided, however, that in each case Jazz Pharmaceuticals will not be obligated to indemnify any GSK Indemnitees with respect to, and to the extent of, any Claims for which GSK is obligated to indemnify Jazz Pharmaceuticals Indemnitees pursuant to Section 8.1.
8.3 Indemnification Process. No Party against whom a claim of indemnity is made under this Agreement (the "Indemnifying Party") will be liable unless the Party making such claim (the "Claimant Party") (a) promptly notifies the Indemnifying Party in writing of such claim upon becoming aware of the existence or threatened existence of any such claim giving rise to or which may give rise to a claim of indemnity (provided, however that the failure to provide written notice of such claim within a reasonable period of time will not relieve the Indemnifying Party of any obligations hereunder, except to the extent that the Indemnifying Party is prejudiced by such failure), (b) permit the Indemnifying Party to assume direction and control of the defense of the claim, and (c) cooperates in the defense of such claim. Notwithstanding the foregoing, the Indemnifying Party shall not enter into any settlement or compromise of any claims without the express written consent of the Claimant Party in each instance where such settlement would include any admission of liability on the part of the Claimant Party, where the settlement would impose any material restriction on the conduct of the Claimant Party of any of its activities, or where the settlement would not include an unconditional release of the Claimant Party from all liability for claims that are the subject matter of such claim.
8.4 Limitation on Indemnification. NEITHER JAZZ PHARMACEUTICALS AND ITS AFFILIATES NOR GSK AND ITS AFFILIATES WILL BE LIABLE HEREUNDER UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE REMEDIES FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS.
ARTICLE 9—TERM AND TERMINATION
9.1 Term; Expiration.
(a) This Agreement shall become effective as of the Effective Date, and GSK's sale, transfer and assignment of its rights to the Purchased Assets to Jazz Pharmaceuticals, and the transfer of title to such Purchased Assets shall be accomplished on the Closing Date, subject to satisfaction of the conditions set forth in Sections 5.3 and 5.4. As provided in Section 5.5, the physical transfer of the Purchased Assets will occur during the Asset Transfer Period. After the Closing Date, unless earlier terminated pursuant to Section 9.2, this Agreement shall expire on [ * ].
(b) The period from the Effective Date to the expiration of the entire Agreement pursuant to this Section 9.1 shall be the "Term." The end of the Term shall not terminate or affect the transfer of Patents pursuant to Section 2.1 or the license granted under Section 2.6; and no Purchased Assets transferred to Jazz Pharmaceuticals hereunder shall be returned at the end of the Term.
9.2 Termination for Cause.
(a) Material Breach. Either Party (the "Non-breaching Party") may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement in its entirety in the event the other Party (the "Breaching Party") shall have committed a material breach, and such material breach shall have continued and/or remained uncured for sixty (60) days after written notice thereof was provided to the Breaching Party by the Non-breaching Party. Any such termination shall become effective at the end of such sixty (60) day period, unless the Breaching Party has cured any such material breach prior to the expiration of such sixty (60) day period. The sixty (60) day cure period provided for herein shall be extended for as long as a Breaching Party is making Diligent Efforts to cure such material breach. The right of either Party to terminate this Agreement as provided in this Section 9.2 shall not be affected in any way by such Party's waiver or failure to take action with respect to any previous default.
(b) Effect of Termination by Jazz Pharmaceuticals on GSK's Material Breach. In the event Jazz Pharmaceuticals terminates this Agreement pursuant to Section 9.2(a) as a result of an uncured material breach by GSK, (i) all rights granted to Jazz Pharmaceuticals hereunder will continue unaffected, including the license granted to Jazz Pharmaceuticals pursuant to Section 2.6, (ii) no further payments will be due to GSK hereunder, (iii) Jazz Pharmaceuticals' diligence obligations under Section 4.5 will terminate, and (iv) Section 6.3 will continue in accordance with its terms.
(c) Effect of Termination by GSK on Jazz Pharmaceutical's Material Breach. In the event GSK terminates this Agreement pursuant to Section 9.2(a) as a result of an uncured material breach by Jazz Pharmaceuticals, (i) Jazz Pharmaceuticals shall cease all development and marketing of the Compounds or Products and immediately shall assign and transfer back to GSK all rights to the Purchased Assets; and (ii) the license
granted to Jazz Pharmaceuticals pursuant to Section 2.6 shall terminate. In consideration of the transfer of the Purchased Assets to it, GSK shall pay Jazz a sum equal to [ * ] excluding the [ * ]. In the event of such termination, the Parties will work together diligently to complete the reacquisition of the Purchased Assets by GSK within [ * ] following GSK's notice of termination and intent to reacquire the Purchased Assets. Jazz Pharmaceuticals shall provide assistance to GSK, on a level commensurate to the assistance provided by GSK to Jazz Pharmaceuticals pursuant to Section 2.2 and 2.3, to transfer and assign the Purchased Assets to GSK. In addition, Jazz Pharmaceuticals shall transfer to GSK all data generated by Jazz Pharmaceuticals regarding the Purchased Assets prior to termination by GSK pursuant to Section 9.2(a).
9.3 Survival. Termination of this Agreement will terminate all outstanding obligations and liabilities between the Parties arising from this Agreement except those described in Sections 2.1, 2.3, 2.5, 2.6 (except with respect to termination pursuant to Section 9.2(c)), 4.3, 4.4, 6.1, 6.2 and 9.2(b) and (c), 9.3, and Articles 1, 7, 8, 10, 11, and 12. Additionally, any other provision required to interpret and enforce the Parties' rights and obligations under this Agreement will also survive, but only to the extent required for the full observation and performance of this Agreement.
ARTICLE 10—DISPUTE RESOLUTION
10.1 Disputes. The Parties recognize that disputes as to certain matters may from time to time arise that relate to either Party's rights or obligations hereunder. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedited manner by mutual cooperation. To accomplish this objective, the Parties agree to follow the following procedures if and when a dispute arises under this Agreement:
(a) Any such disputes will be first referred by either Party to senior representatives designated by each Party. If such senior representatives are unable to resolve such a dispute within thirty (30) days of being requested by a Party to resolve the dispute, the matter will be presented to the chief executive officers of Jazz Pharmaceuticals and GSK, for resolution through good faith discussions. In the event that the chief executive officers of Jazz Pharmaceuticals and GSK cannot resolve the dispute within thirty (30) days of being requested by a Party to resolve a dispute, either Party may, by written notice to the other, invoke the mediation provisions of Section 10.1(b).
(b) Upon invocation as provided by Section 10.1(a), the Parties agree to try in good faith to resolve such dispute by non-binding mediation administered by the Center for Public Resources ("CPR") in accordance with the then current CPR Model Procedure for Mediation of Business Disputes, provided that specific provisions of this Section 10.1(a) will override inconsistent provisions of such CPR Model Procedure. The mediator will be selected from the CPR Panel of Neutrals and the location of the mediation be selected by mutual agreement of the Parties, and absent such mutual agreement, will be New York, New York. If the Parties cannot agree upon the selection of the mediator or its location within ten (10) Business Days of the initiation of the mediation, then CPR will appoint the mediator and the mediator will select the location. The Parties will attempt to resolve such dispute through mediation until one of the following occurs: (i) the Parties reach a written settlement; (ii) the mediator notifies the Parties in writing that
they have reached an impasse; (iii) the Parties agree in writing that they have reached an impasse; or (iv) the Parties have not reached a settlement within sixty (60) days of the initiation of the mediation. All aspects of any such mediation, including any resolution or decision relating thereto, will be non-binding, and will be held as confidential and all participants, including the mediator, will be bound by judicially enforceable obligations of strict confidentiality except to the extent the Parties agree in writing to waive in whole or part such confidentiality.
(c) If the Parties fail to resolve such dispute through mediation, then either Party may take such other action as such Party deems appropriate in its sole discretion, including pursuing litigation against the other Party.
10.2 Injunctive Relief. Notwithstanding the foregoing dispute resolution procedures, in the event of an actual or threatened breach hereunder, the aggrieved Party may seek restraining orders, specific performance or other injunctive relief without submitting to such dispute resolution procedure.
10.3 Tolling. The Parties agree that all applicable statutes of limitation and time-based defenses (such as estoppel and laches) will be tolled while the procedures set forth in this Article 10 are pending, and the Parties will cooperate in taking any and all actions necessary to achieve such a result.
ARTICLE 11—CONFIDENTIALITY
11.1 "Confidential Information" means all information disclosed by a Party to the other Party that would reasonably be regarded as of a confidential or commercially sensitive nature by the disclosing Party, including any matter relating to or arising in connection with this Agreement or the business or affairs of the disclosing Party. Without limitation, Confidential Information will include any confidential or commercially sensitive information relating to Jazz Pharmaceuticals and GSK and any of its or their Affiliates. For purposes of clarification, up to and on the Time of Closing, the Purchased Assets will be deemed the Confidential Information of GSK and thereafter will be deemed the Confidential Information of Jazz Pharmaceuticals and no longer the Confidential Information of GSK.
11.2 Exclusions. Confidential Information excludes the following:
(a) information which at the time of disclosure hereunder is already in the public domain;
(b) information which becomes available to the public after the date of disclosure hereunder through no fault of the receiving Party;
(c) information which the receiving Party can demonstrate by written records that (i) it already possessed without any confidentiality obligation therefore at the time of receipt thereof from the disclosing Party or (ii) it or its employees independently developed without use of, or reliance on, the disclosing Party's Confidential Information; or
(d) information which the receiving Party receives from a Third Party which has no confidentiality obligation to the disclosing Party and duly possesses it.
11.3 Disclosure Required By Law. Notwithstanding the foregoing, Confidential Information may be disclosed to the extent required by law, regulation or order of a competent authority (including any regulatory or governmental body or securities exchange) to be disclosed by the receiving Party; provided that, where practicable, the disclosing Party is given reasonable advance notice of the intended disclosure and the right to attempt to protect the confidentiality of the Confidential Information before any governmental agency.
11.4 Confidential Information and the [ * ]. With respect to Confidential Information of Jazz Pharmaceuticals that may be necessary for GSK to exercise [ * ] the [ * ], GSK, its Affiliates [ * ] will maintain the confidentiality of such Confidential Information, and will only use such Confidential Information as may be required to exercise the [ * ] thereof.
11.5 Publicity. Each of the Parties hereto agrees not to disclose to any Third Party the financial or other material terms of this Agreement without the prior written consent of the other Party hereto, except to advisors, investors and others on a need-to-know basis under circumstances that reasonably ensure the confidentiality thereof, or to the extent required by law.
11.6 Publications. After the Closing Date [ * ] shall submit any proposed publication (or other public disclosure, such as a lecture, presentation or seminar) related to the Purchased Assets containing Confidential Information of [ * ] at least sixty (60) days prior to the proposed publication or public disclosure, to allow [ * ] to review such planned publication or public disclosure. [ * ] shall promptly review such proposed publication and respond in any event in writing to [ * ] within forty-five (45) days and make any objections that it may have to the publication or public disclosure of Confidential Information contained therein and if no response is received from [ * ] within such forty-five (45) day period, [ * ] may conclusively presume that the publication may proceed without delay. Should [ * ] make an objection to the publication or public disclosure of any such Confidential Information, then [ * ] will have no right to include the Confidential Information in such publication or public disclosure.
ARTICLE 12—MISCELLANEOUS
12.1 Assignment. This Agreement will not be assignable by either Party to any Third Party without the written consent of the other Party hereto. Notwithstanding the foregoing, either Party may assign this Agreement, without the written consent of the other Party, to an Affiliate or to an entity that acquires all or substantially all of the business or assets of such Party to which this Agreement pertains in connection with a merger, acquisition, sale or similar reorganization or the sale of all or substantially all of its assets or the sale of all or substantially all of its pharmaceutical and/or healthcare assets, and such Third Party agrees in writing to be bound by the terms and conditions of this Agreement. This Agreement will survive any such merger, acquisition or reorganization of either Party with or into, or such sale of assets to, another Third Party and no consent for such merger, acquisition, reorganization or sale will be required hereunder. This Agreement will be binding upon and inure to the benefit of the successors and permitted assigns of the Parties. Any assignment not in accordance with this Agreement will be void.
12.2 Consent/Approval. Whenever provision is made in this Agreement for either Party to secure the consent or approval of the other, that consent or approval will not unreasonably be withheld, and whenever in this Agreement provision is made for one Party to object to or disapprove a matter, such objection or disapproval will not unreasonably be exercised.
12.3 Force Majeure. Neither Party will lose any rights hereunder or be liable to the other Party for damages or losses on account of failure of performance by the defaulting Party if the failure is occasioned by government action, war, fire, earthquake, explosion, flood, strike, lockout, embargo, act of God, or any other similar or dissimilar cause beyond the control of the defaulting Party, provided that the Party claiming force majeure has exerted all reasonable efforts to avoid or remedy such force majeure.
12.4 Notices. All notices hereunder will be in writing and will be deemed given if delivered personally or by facsimile transmission (receipt verified), telexed, mailed by registered or certified mail (return receipt requested), postage prepaid, or sent by express courier service, to the Parties at the following addresses (or at such other address for a Party as will be specified by like notice; provided, that notices of a change of address will be effective only upon receipt thereof). Further, any notice given by GGL and/or SB under this Agreement shall be deemed to have been given by GSK.
If to Jazz Pharmaceuticals:
Jazz Pharmaceuticals
Attn: General Counsel
If to GGL: If to SB:
Glaxo Group Limited
SmithKline Beecham Corporation
Glaxo Wellcome House
One Franklin Plaza
Berkeley Avenue
Greenford, Middlesex, UB6 0NN,
Attn: Corporate Secretary
Fax: 011.44.(0).20.8047.6904
with a copy to:
709 Swedeland Road
UW 2214
Attn: Head, Ventures Investment
2301 Renaissance Blvd, RN0510
Attn: SVP and Associate General Counsel
R&D Legal Operations
12.5 No Waiver. The waiver from time to time by either of the Parties of any of their rights or their failure to exercise any remedy will not operate or be construed as a continuing waiver of same or of any other of such Party's rights or remedies provided in this Agreement or excuse a similar subsequent failure to perform any such term or condition. Neither Party may waive or release any of its rights or interests in this Agreement except in writing.
12.6 Invalidity of Provisions/Severability. If any term, covenant or condition of this Agreement or the application thereof to any Party or circumstance will, to any extent, be held to be invalid or unenforceable, then (i) the remainder of this Agreement, or the application of such term, covenant or condition to Parties or circumstances other than those as to which it is held invalid or unenforceable, will not be affected thereby and each term, covenant or condition of this Agreement will be valid and be enforced to the fullest extent permitted by law; and (ii) the Parties hereto covenant and agree to renegotiate any such term, covenant or application thereof in good faith in order to provide a reasonably acceptable alternative to the term, covenant or condition of this Agreement or the application thereof that is invalid or unenforceable, it being the intent of the Parties that the basic purposes of this Agreement are to be effectuated.
12.7 Entire Agreement. This Agreement, including the Schedules and hereto, constitutes the entire agreement between the Parties with respect to the transactions provided for herein and, except as stated in this Agreement and in the instruments and documents to be executed and delivered pursuant hereto, contains all of the agreements between the Parties and there are no verbal agreements or understandings between the Parties not reflected in this Agreement. This Agreement may not be amended or modified in any respect except by written instrument executed by each of the Parties.
12.8 Governing Law. This Agreement and any dispute arising from the performance or breach hereof will be governed by and construed and enforced in accordance with the laws of the State of New York, U.S., without reference to conflicts of laws principles.
12.9 Performance Warranty. Each Party hereby warrants and guarantees the performance of any and all rights and obligations by its Affiliate(s).
12.10 Independent Contractors. Nothing herein will be construed to create any relationship of employer and employee, agent and principal, partnership or joint venture between the Parties. Each Party is an independent contractor. Neither Party will assume, either directly or indirectly, any liability of or for the other Party. Neither Party will have the authority to bind or obligate the other Party and neither Party will represent that it has such authority.
12.11 Headings. Headings used herein are for convenience only and will not in any way affect the construction of or be taken into consideration in interpreting this Agreement. The Recitals and Annexes to this Agreement constitute an integral part of this Agreement. In the event of
any conflict or inconsistency between any of the terms and conditions of this Agreement, the conflict or inconsistency will be resolved according to the following order or priority: The Sections of the Agreement, the Annexes and the Recitals.
12.12 Payment of Transaction Expenses. All legal fees and other expenses incurred on behalf of GSK in connection with the negotiation of this Agreement and the consummation of the transactions contemplated herein will be borne by GSK, whether or not the Time of Closing shall have occurred. All legal fees and other expenses incurred on behalf of Jazz Pharmaceuticals in connection with the negotiation of this Agreement and the consummation of the transactions contemplated herein will be borne by Jazz Pharmaceuticals, whether or not the Time of Closing shall have occurred.
12.13 Remedies Cumulative. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing Party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled.
12.14 Specific Performance. The Parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof in addition to any other remedy at law or in equity.
12.15 Further Assurances. Each Party hereto shall execute and cause to be delivered to each other Party hereto such instruments and other documents, and shall take such other actions, as such other Party may reasonably request (prior to, at or after the Time of Closing) for the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement.
12.16 Challenges by Each Party to the Agreement. Each of the Parties agrees that neither it nor any Affiliate will initiate or prosecute, or encourage or assist directly or indirectly any Third Party in initiating or prosecuting, any lawsuit attempting to challenge the validity of the transactions undertaken pursuant to this Agreement under any applicable law. In addition, GSK agrees that neither it nor any Affiliate shall seek to contest, or encourage or assist directly or indirectly any Third Party in contesting, the transfer of the Purchased Assets to Jazz Pharmaceuticals pursuant to this Agreement under any applicable law. Jazz Pharmaceuticals agrees that neither it nor any Affiliate shall seek to contest, or encourage or assist directly or indirectly any Third Party in contesting, the payment obligations of Jazz Pharmaceuticals to GSK hereunder under any applicable law.
12.17 Finder's Fee. Each Party represents that it neither is, nor will be, obligated for any finder's fee or commission in connection with this transaction. GSK agrees to indemnify and to hold harmless Jazz Pharmaceuticals from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which GSK or any of its officers, partners, employees, or representatives is responsible. Jazz Pharmaceuticals agrees to indemnify and to hold harmless GSK from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which Jazz Pharmaceuticals or any of its officers, employees or representatives is responsible.
12.18 Counterparts. This Agreement may be executed in two counterparts, each of which will be deemed an original, and all of which together, will constitute one and the same instrument.
{Signatures continue on next page.}
IN WITNESS WHEREOF, the Parties have executed this Asset Purchase Agreement in duplicate originals by their duly authorized representatives as of the Effective Date.
GLAXO GROUP LIMITED JAZZ PHARMACEUTICALS, INC.
/s/ S. M. Bicknell
/s/ Carol Gamble
Name: S. M. Bicknell Name: Carol Gamble
Title: Company Secretary Title: Senior Vice President and General Counsel
d/b/a GLAXOSMITHKLINE
/s/ Donald F. Parman
Name: Donald F. Parman
Title: Vice President and Secretary
SCHEDULE 1.1.20
Chemical Structure of [ * ]
[ * ]
PATENTS TRANSFERRED TO JAZZ PHARMACEUTICALS
Second Priority Application for [ * ]
App./Date
App.Date Patent No.
Status/
[ * ] [ * ] [ * ] [ * ]
[ * ] Process Case
Licensed GSK Patents
App No.
PURCHASED ASSETS
Title Author Identifier Date
PRECLINICAL TOXICITY, SAFETY AND EFFICACY
CHEMICAL AND PHARMACEUTICAL DEVELOPMENT
Title Author Identifier Issue Date
SCHEDULE 1.1.35(c)
Quantities of [ * ] and other Compounds
Transferred to Jazz Pharmaceuticals
BILL OF SALE
This is a BILL OF SALE from Glaxo Group Limited, a company incorporated under the laws of England and Wales with its registered offices at Glaxo Wellcome House, Berkeley Avenue, Greenford, Middlesex UB6 0NN England ("GGL") and SmithKline Beecham Corporation, d/b/a GlaxoSmithKline, a company incorporated under the laws of the Commonwealth of Pennsylvania with offices at One Franklin Plaza, 200 North 16th Street, Philadelphia, Pennsylvania 19101 U.S.A. ("SB") (GGL and SB are collectively referred to in this Bill of Sale as "GSK") to Jazz Pharmaceuticals, Inc., a company incorporated under the laws of the State of Delaware with offices at 630 Hansen Way, Palo Alto, California 94304 U.S., ("Jazz Pharmaceuticals") pursuant to that certain Asset Purchase Agreement dated October 4, 2004 by and between GSK and Jazz Pharmaceuticals (the "Agreement").
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, GSK hereby sells, assigns, transfers, conveys, delivers and contributes to Jazz Pharmaceuticals, its successors and assigns, to have and to hold forever, all of its right, title and interest in and to the Purchased Assets (as defined in the Agreement), subject to all of the other provisions contained in the Agreement.
From and after the Closing Date (as defined in the Agreement) upon request of Jazz Pharmaceuticals, GSK will duly execute, acknowledge and deliver all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably required to convey to and vest the Purchased Assets in Jazz Pharmaceuticals or its permitted assignees and as may be appropriate to protect Jazz Pharmaceuticals' rights, title and interest in and enjoyment of all the Purchased Assets and as may be appropriate otherwise to carry out the transactions contemplated by the Agreement and this Bill of Sale.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has duly executed and delivered this Bill of Sale as of , 2004.
ASSIGNMENT OF PATENT RIGHTS
Glaxo Group Limited, a company incorporated under the laws of England and Wales with offices at Glaxo Wellcome House, Berkeley Avenue, Greenford, Middlesex, UB6 0NN England ("GGL") and SmithKline Beecham Corporation d/b/a GlaxoSmithKline, a company incorporated under the laws of the Commonwealth of Pennsylvania with offices at One Franklin Plaza, 200 North 16th Street, Philadelphia, Pennsylvania 19101 U.S.A. ("SB") (GGL and SB are collectively referred to in this Assignment as "Assignor"), hereby assign certain patent rights to Jazz Pharmaceuticals, Inc., a company incorporated under the laws of the State of Delaware with offices at 630 Hansen Way, Palo Alto, California 94304 ("Assignee").
Whereas, Assignor is the sole owner of the United States and foreign patents set forth on Exhibit 1 hereto (the "Patents"); and
Whereas, Assignor has agreed with Assignee for the transfer to it of Assignor's whole right, title and interest in and to such Patents and inventions described and/or claimed therein.
Now This Assignment Witnesseth that, for the consideration provided for in, and pursuant to that certain Asset Purchase Agreement between the Assignor and the Assignee dated October 4, 2004, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor, as beneficial owner, hereby assign and transfer to Assignee with full title guarantee the whole right, title and interest in and to the Patents covering the Purchased Assets, and any and all other patents in the United States of America or other countries which may be granted therefore and thereon, and in and to any and all reissues or extensions of the Patents or of such other patents, and the full exclusive benefits thereof, and all rights, privileges and advantages appertaining thereto, including the right to claim priority therefrom, including any and all rights to damages, profits or recoveries of any nature for past infringement of the Patents, and the payment of any and all maintenance fees, taxes, and the like, to hold the same unto and to the use of Assignee, its successors and assigns absolutely during the residue of the respective terms for which the Patents and such other patents were granted and during any such terms.
Assignor hereby covenants that Assignor has not executed and will not execute any agreements inconsistent with this Assignment.
Promptly upon Assignee's written request, Assignor hereby agrees to execute such additional form(s) of assignment for the foregoing Patents covering the Purchased Assets as may be required by the appropriate governmental authority of the United States of America or any foreign country for recordation of this Assignment. Without limitation, Assignor grants to Assignee the power to insert on this Assignment any further identification that may be necessary or desirable in order to record this Assignment.
Executed at , this day of 2004.
EXHIBIT 1 TO SCHEDULE B OF THE ASSET PURCHASE AGREEMENT
Assignor and Assignee hereby agree that this Exhibit 1 shall be identical to Schedule A to the Agreement. Assignee shall have the right to prepare multiple versions of this Exhibit 1 that list one or more of the Patents for a single country set forth on Schedule A for recordation with the appropriate governmental authority of such country.
Sodium Gamma Hydroxybutyrate Development and Supply Agreement
ORPHAN MEDICAL, INC.
SODIUM GAMMA HYDROXYBUTYRATE
DEVELOPMENT AND SUPPLY AGREEMENT
DEFINITIONS 4
TECHNOLOGY TRANSFER/DEVELOPMENT PROGRAM 8
VALIDATION ACTIVITIES 10
MARKETING RIGHTS 11
SUPPLY OF PRODUCT 12
FORECASTS, ORDERS AND DELIVERIES 14
PRICES AND PAYMENTS 18
REPRESENTATIONS,WARRANTIES AND INSPECTIONS 21
ACCEPTANCE, REJECTION AND CLAIMS 25
INDEMNIFICATION 27
INVENTIONS AND PATENTS 29
TRADEMARKS 30
TERM OF AGREEMENT 34
TERMINATION 34
FORCE MAJEURE 36
DISPUTE RESOLUTION 37
GHB Technology Transfer/Development Program 43
Reporting Requirements 45
Required Drug Specifications 48
Requirement For Stability Studies 49
Confidential Disclosure Agreement 53
APPENDIX F
Return Material Authorization Form 54
APPENDIX G
Change Control Request 56
APPENDIX H
Maximum Drug Price Estimates 57
THIS AGREEMENT ("Agreement") is made as of this 6th day of November, 1996 by and between ORPHAN MEDICAL, INC., a Minnesota corporation, having its principal offices at 13911 Ridgedale Drive, Minnetonka, Minnesota 55305 ("ORPHAN") and LONZA, INC., a New York corporation, having its principal offices at 17-17 Route 208, Fair Lawn, New Jersey 07410, ("Supplier").
1. Supplier develops and manufactures bulk pharmaceutical chemicals meeting the regulatory and governmental requirements for commercial use in pharmaceutical products.
2. ORPHAN develops and markets ethical Pharmaceuticals targeted to specified populations of patients.
3. ORPHAN and Supplier desire to cooperate in the transfer of the manufacture of a pharmaceutical chemical known as "Sodium Gamma Hydroxybutyrate" ("the Drug").
4. Supplier desires to manufacture the Drug exclusively for sale to ORPHAN.
5. Upon obtaining approval to market the DRUG, ORPHAN wishes to purchase all of its requirements of the Drug from Supplier and Supplier wishes to supply ORPHAN all of its requirements for the Drug in the Territory.
6. Supplier understands that the Drug will likely be scheduled by the Drug
Enforcement Administration (DEA) upon approval by the FDA. While Orphan anticipates a Schedule IV designation, Orphan cannot guarantee the level of scheduling that will be required. Supplier agrees that the Drug Price estimate is based on Schedule IV handling. Supplier also agrees to provide Drug to Orphan if a more restrictive level of scheduling is ultimately required at a price to be mutually agreed upon.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1 DEFINITIONS
The following terms, when capitalized, shall have the following meanings in this Agreement, whether used in the singular or the plural.
1.1 "Acquisition Cost" in respect of a particular item means the [ * ] price paid by either party to a Third Party for acquiring such item, including without limitation, [ * ].
1.2 "Affiliate" means any corporation or non-corporate business entity which controls, is controlled by, or is under common control with a party to this Agreement. A corporation or non-corporate business entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least forty-nine percent (49%) of the voting stock of another corporation, or (a) in the absence of the ownership of at least forty-nine percent (49%) of the voting stock of a corporation, or (b) in the case of a non corporate business entity, if it possesses, directly or indirectly, whether by virtue of an ownership interest of any kind, by contract or otherwise, the power to direct or cause the direction of the management and policies of the corporation or non-corporate business entity or to elect or cause the election of a majority of the board of directors or other governing body of such corporation or non-corporate business entity.
1.3 "Contract Year" means the twelve (12) month period beginning on the [ * ]. For purposes of this Section 1.3, [ * ] or a product containing the Drug by ORPHAN shall not be deemed to be [ * ] thereof.
1.4 "Delivery" means delivery of the Drug to a drug product manufacturer or any other ORPHAN-designated Third Party.
1.5 "Technology Transfer/Development Program" means the multi-staged Technology Transfer/Development Program further described in Appendix A which is attached hereto and made a part hereof, as well as any additional process or analytical development activities or process or analytical development modifications for the Drug to be mutually agreed upon in good faith by the parties after the date this Agreement is signed and subsequently attached hereto as a replacement for or as an addition to Appendix A.
1.6 "DMF" means a Type II Drug Master File intended for filing with the FDA.
1.7 "Dollars" or "$" means United States Dollars.
1.8 "Drug Price" means the price to ORPHAN, in [ * ], for manufacture of the Drug.
1.9 "Drug" means bulk Sodium Gamma Hydroxybutyrate (GHB).
1.10 "Effective Date" means the date appearing at the beginning of this Agreement.
1.11 "FDA" means the US Food and Drug Administration or any successor entity.
1.12 "FD&C Act" means the US Federal Food, Drug and Cosmetic Act, together with all regulations issued thereunder, as the same may be amended from time to time.
1.13 "GMPs" means the current Good Manufacturing Practices regulations promulgated by the FDA, and any applicable amendments thereto in effect at the time of the Drug's manufacture.
1.14 "Manufacturing Cost" means Supplier's costs of [ * ] (including without limitation [ * ] and [ * ] and [ * ] in the manufacture of the Drug, [ * ] (i.e. [ * ] and [ * ] and [ * ] of the [ * ]), all determined in accordance with generally accepted accounting principles applied on a consistent basis in the country of manufacture.
1.15 "NDA" means a New Drug Application filed with the FDA or any equivalent successor application or entity.
1.16 "Notification" means the date on which mailed as evidenced by the U.S. Postal Service or other carrier.
1.17 "Production Batch" means a production size batch of the Drug with a specified kilogram weight range, the size and range of which is to be established and mutually agreed upon by the parties during the Technology Transfer/Development Program. Each Production Batch is to have uniform character and quality within specified limits produced according to a single manufacturing order during the same cycle of manufacture.
1.18 "Proprietary Information" means all non-public information or data relating to the subject matter hereof first communicated by or on behalf of one party to the other, whether in writing or orally, including without limitation, all scientific, clinical, commercial, financial and business information and data, know-how, compilations, formulae, processes, plans, technical information, new product information, compounds, formulations, methods of product delivery, test procedures, product samples, specifications and other information or data.
1.19 "Registration" means any legally required approval by the relevant government authorities in a country of or community or association of countries included in the Territory (including, where applicable, price approvals) which must be granted for the Drug or a product containing the Drug to be manufactured and/or sold in such jurisdiction.
1.20 "Specifications" means the final specifications for the Drug attached hereto as Appendix C and made a part hereof, including the final NDA specifications as approved by the FDA, as well as any revised specifications and/or additional specifications for the Drug to be mutually agreed upon in good faith by the parties after the Effective Date and subsequently attached hereto as a replacement for or as an addition to Appendix C. Such additional specifications may include, but shall not be limited to specifications for degradation, identification of drug substance and physical appearance.
1.21 "Territory" means worldwide.
1.22 "Third Party" means any entity other than Supplier or ORPHAN or their respective Affiliates.
1.23 "Validation Protocol" means the written protocol which will be mutually approved by the parties in writing prior to the manufacture of the first Validation Batch and which will set forth the tests and acceptance criteria to demonstrate that a process used by Supplier in the manufacture of the Drug does what it purports to do and yields quantities of the Drug which consistently meet the Specifications. The Validation Protocol may be amended from time to time during the term of this Agreement upon mutual agreement of the parties hereto, giving due consideration to applicable legal and regulatory requirements pertaining to the Drug.
1.24 "Validation Batches" means the first three (3) Production Batches manufactured consecutively according to the approved Validation Protocol.
ARTICLE 2 TECHNOLOGY TRANSFER/DEVELOPMENT PROGRAM
2.1 Supplier hereby agrees to conduct the Technology Transfer/Development Program in accordance with Appendix A, the goal of which is to transfer the current process for commercial manufacture of the Drug, develop protocols for testing the Drug, and finalize Specifications. The Technology Transfer/Development Program shall consist of two (2) main stages (individually, a "Stage" or collectively, the "Stages"). Supplier agrees to provide or purchase all materials and supplies.
In general, Supplier shall perform validations for the Drug at its Conshohocken, Pennsylvania facility, provide stability samples, prepare an environmental assessment report, and prepare the chemical manufacturing section for ORPHAN to file in an NDA with FDA. A more detailed description, including the time schedule for completion of each Stage of the Technology Transfer/Development Program, is set forth in Appendix A attached hereto and made a part hereof.
2.2 Promptly upon completion of the development activities conducted by Supplier during each Stage of the Technology Transfer/Development Program, to the extent it has not already done so, Supplier shall deliver to ORPHAN a complete written report or reports. A detailed description of such reports, as well as other reports to be provided by Supplier during the Technology Transfer/Development Program is set forth in Appendix B. Within thirty (30) working days after the delivery to ORPHAN of all reports relating to such Stage, ORPHAN shall either (a) accept such reports and notify Supplier if it intends to proceed with the Technology Transfer/Development Program or (b) send Supplier written notice of Supplier's failure to conduct such Stage in accordance with the requirements set forth in Appendix A. Supplier agrees to take such corrective actions and to conduct such additional work required to satisfy the requirements set forth in Appendix A for completion of such Stage.
During ORPHAN'S review of each Stage completion report, Supplier and ORPHAN may mutually agree to continue execution of the Technology Transfer/Development Program based on previous verbal and written correspondence. If ORPHAN advises Supplier with a written notice to stop execution activities, Supplier will cease all program activities and bill ORPHAN [ * ].
2.3 In consideration of Supplier's conduct of the Technology Transfer/Development Program, ORPHAN agrees to pay Supplier the cost for each Stage as set forth in Appendix A. ORPHAN shall only pay Supplier for Stages which are completed. A breakdown of costs for each Stage is set forth in Appendix A. Payments for each Stage will be made within [ * ], as determined by [ * ] after review of the associated stage completion summary reports as set forth in Appendix B and any other data generated through execution of the Technology Transfer/Development Program. Supplier shall not incur any costs in excess of the amounts set forth in this paragraph without the prior written consent of ORPHAN.
2.4 Supplier and ORPHAN agree to designate one individual who will serve as a central liaison to the other at all times. The person designated will have the capability and authority to assist with coordination and resolution of any and all issues that might arise.
ARTICLE 3 VALIDATION ACTIVITIES
3.1 Supplier Validation Responsibilities. Supplier shall be responsible for regulatory required validations of its manufacture of the Drug and its facilities and shall take all reasonable steps to pass government inspection by the FDA or other regulatory agencies in the Territory. Supplier shall also provide reasonable assistance in preparing and updating the chemical manufacturing portion of the Registrations and all other documents required by the FDA and other regulatory agencies in the Territory for approval of the Drug. In the event non-U.S. Territory regulatory agencies require process development testing beyond that required for the U.S., Supplier agrees to provide the additional process development testing and associated documentation revisions at terms to be negotiated in good faith by the parties.
3.2 Validation of Cvtec Manufacturing Process . As provided in Appendix A, Supplier shall manufacture ORPHAN'S three (3) consecutive Production Batches of the Drug in accordance with the pre-approved Validation Protocol for validation purposes.
Supplier and ORPHAN will jointly review all process development and analytical test results, the Validation Protocol, and stability study results prior to manufacture of each Validation Batch.
3.3 Re-Validation of Larger Scale Batches. Supplier shall have the option to manufacture three additional commercial Validation Batches using larger scale equipment judged to be regulatorily appropriate by Supplier and ORPHAN, conduct appropriate validation testing, and prepare an updated Process Validation Report to improve manufacturing cost. Costs associated with efforts required for completion of such 'scale up' activities will be included in the Manufacturing Cost of the commercial quantities produced subsequent to the scaleup and within the first Contract Year thereafter.
If the larger scale Validation Batches may be sold commercially by ORPHAN and, if such Validation Batches meet the Specifications and the acceptance criteria set forth in the Validation Protocol at the time of FDA approval of a product containing the Drug, the Drug shall be sold, pursuant to the terms of this Agreement, by Supplier to ORPHAN in fulfillment of ORPHAN'S orders for the Drug.
3.4 Defective Or Deficient Validation Batches. If any of the Validation Batches do not meet the Specifications and the acceptance criteria set forth in the Validation Protocol, Supplier shall, at its own expense, for a reasonable period of time not to exceed ninety (90) days, make necessary modifications to its facilities, equipment, processes and/or procedures and, after such modifications, shall manufacture one or more additional Validation Batches which will meet the Specifications and the acceptance criteria set forth in the Validation Protocol. If ORPHAN concludes that such modifications cannot be made effectively and promptly or if the additional Validation Batches still do not meet the Specifications and the acceptance criteria set forth in the Validation Protocol, ORPHAN may terminate this Agreement upon written Notification to Supplier in accordance with Article 15 of this Agreement.
ARTICLE 4 MARKETING RIGHTS
4.1 ORPHAN shall have the exclusive right, directly or through any Affiliate, to market, distribute and sell the Drug or any product containing the Drug in the Territory, if the required Registrations have been obtained and if ORPHAN determines in its business judgment to do so. Supplier shall not market, distribute, make or sell the Drug or any product containing the Drug, directly or indirectly anywhere in the Territory and, except in the performance of its duties under this agreement, Supplier shall not reference or otherwise utilize any DMF or other filing made by Supplier on ORPHAN'S behalf unless required by a governmental agency or reference or otherwise utilize any data or information contained in such filing.
ARTICLE 5 SUPPLY OF PRODUCT
5.1 Material Safety Data Sheets. Prior to commencement of development or manufacturing operations hereunder, ORPHAN shall provide Supplier with a Material Safety Data Sheet (MSDS) and toxicity information for the Drug and any other information reasonably available to ORPHAN which relates to the safe conduct of the manufacturing and/or packaging operations to be conducted by Supplier. When and as such information becomes available, ORPHAN shall promptly update such information pertinent to the manufacture and/or packaging of the Drug.
5.2 Manufacture and Supply. During the term of this Agreement, ORPHAN shall purchase from Supplier, and Supplier shall supply ORPHAN and its Affiliates their requirements of the Drug for sale or other distribution in the Territory. Supplier and Orphan agree to cooperate closely to ensure that the Drug meets FDA, European, and Japanese standards and specifications. The International Conference on Harmonisation (ICH) guidelines will be followed for development and manufacturing decisions.
Supplier commits to provide the following [ * ] per year for the [ * ] and will use best efforts to provide any additional quantities that are required:
In the event Supplier is not able to provide quantities required that exceed those stated above, Supplier will no longer be the exclusive supplier in the Territory and will provide technology transfer support per the terms of 5.6 below, to a second supplier chosen by Orphan.
Supplier shall provide or purchase all materials and supplies necessary to manufacture the Drug. Supplier shall manufacture the Drug in accordance with the Specifications, the Validation Protocol and applicable cGMPs and shall package, label and/or otherwise prepare the Drug for bulk delivery to an ORPHAN-designated drug product manufacturer.
5.3 Packaging. Supplier shall furnish all packaging supplies and labels for the Drugs after such materials have been approved by ORPHAN prior to use. All such packaging and labels shall conform to applicable requirements and regulations of FDA or other regulatory authorities in the Territory. Packaging supplies and labels furnished by Supplier hereunder shall be timely approved by ORPHAN prior to use.
5.4 Qualification of Alternate Supplier Manufacturing Site. Supplier will develop a plan for qualification of an alternate Supplier site for manufacture of the Drug within one year of FDA approval of the Drug. If the plan allows for preparation to manufacture in 120 days or less, it will not be executed prior to determination of need. If the timeline for provision of the Drug from an alternate site is greater than 120 days, one year after approval of the Drug for commercial use by the FDA, Supplier agrees to take such actions as are reasonably necessary to qualify a second Supplier manufacturing site in addition to the current facility at Conshohocken, Pennsylvania. Supplier will provide regulatory documentation of processes or activities as required by each country of the Territory within which ORPHAN applies for approval of the Drug. ORPHAN will be responsible for determining the regulatory requirements for each submission. Supplier agrees to provide any additionally required development process testing at terms to be negotiated in good faith by the parties.
5.5 Conditions Requiring Backup Manufacture. Supplier agrees to support the successful transfer of manufacturing technology as set forth in Section 5.6 to a second bulk drug manufacturer chosen by ORPHAN to make, have made, use and sell the Drug if Supplier (a) for a period of [ * ], is unable to manufacture substantially all of ORPHAN'S orders for any reason covered by Section 16.1 hereof, or (b) if Supplier otherwise fails or refuses to meet ORPHAN'S orders for the Drug pursuant to the terms hereof.
5.6 Supplier Responsibility in Transfer of Technology to Back-Up Manufacturer. Subject to the provisions of Section 5.5, Supplier agrees to provide information and qualified personnel ([ * ]) to support the successful transfer of all analytical and manufacturing development, to include know-how and patent processes (the "Background Technology") and the right to reference any DMF filed with the FDA relating to the Drug. Supplier agrees to render all reasonable technical assistance to the secured contract manufacturer and to provide, [ * ], sources of or supplies of raw materials necessary to manufacture the Drug. ORPHAN shall [ * ] for its [ * ] incurred in rendering such [ * ] for which ORPHAN prior approval has been obtained for each day in excess of [ * ]. In addition, ORPHAN and Supplier will negotiate in good faith any additional time and cost for the successful transfer of manufacture to a backup supplier.
ARTICLE 6 FORECASTS. ORDERS AND DELIVERIES
6.1 Forecasts. ORPHAN shall provide Supplier with forecasts of ORPHAN'S anticipated [ * ] requirements of the Drug for distribution and sale in the United States commencing with the [ * ] period that begins at the time of an FDA approval. Such forecast will be provided [ * ] in advance of anticipated FDA approval of the NDA and ORPHAN shall update such [ * ] forecast on a [ * ] basis thereafter. Once FDA approval of the Drug is received, ORPHAN will provide Supplier, prior to the beginning of each [ * ], with forecasts of its anticipated requirements of the Drug for the following [ * ]. Supplier will provide [ * ] anticipated schedule for manufacture and will consult with ORPHAN on schedule changes.
(a) The forecasts provided to Supplier pursuant to this Section 6.1 are for planning purposes only and do not constitute a commitment by ORPHAN to have such or any quantity of Drug manufactured by Supplier or a commitment by Supplier to manufacture any quantity of the Drug for ORPHAN during [ * ].
(b) Supplier shall [ * ] manufacture during any [ * ] up to [ * ] of the quantity of the Drug ORPHAN forecasted it would purchase from Supplier during such [ * ] in its most recent forecast covering [ * ]. Supplier will promptly communicate with ORPHAN as to its ability to produce quantities requested.
(c) When and as ORPHAN proposes to commence its distribution and sale of the Drug outside the United States, ORPHAN shall supplement its [ * ] forecast accordingly to indicate the additional requirements of the Drug for such purposes.
(d) Supplier acknowledges that accurate forecasts of requirements are inherently difficult for a new pharmaceutical product. ORPHAN [ * ]. Accordingly, if [ * ], it will [ * ] ninety (90) days [ * ], in which case ORPHAN [ * ]. The [ * ] delivery of [ * ] are that during such [ * ] (i) ORPHAN shall be required to purchase [ * ] the amount set forth in the [ * ] and (ii) Supplier shall be required to manufacture [ * ] such amount. If ORPHAN does not deliver a [ * ], Supplier may accept [ * ] use its [ * ] to produce the Drug in accordance with ORPHAN'S purchase orders in a timely manner. It is agreed that this procedure will be used on an exception basis.
(e) If Supplier manufactures the Drug with a lead time of more than [ * ], ORPHAN shall not be required to pay any additional storage, or pay for the Drug sooner than as set forth in Section 7.5 nor shall any advance manufacture lead to a violation of the warranty of expiration date set forth in Section 8.1.
6.2 Orders. ORPHAN shall order the manufacturing of the Drug by Supplier
pursuant to written purchase orders, including delivery dates, with not less than [ * ] lead time prior to the requested delivery dates specified therein. Each purchase order for the Drug shall be in Production Batch sizes or whole multiples thereof. The terms contained in this Agreement shall govern over all purchase orders or sales orders of the Drug hereunder and shall not be varied by the terms of any ORPHAN purchase order or Supplier sales order or invoice. If ORPHAN requires manufacture of the Drug with less than [ * ] lead time, Supplier shall use reasonable efforts to accommodate ORPHAN'S requirements. Supplier shall not manufacture the Drug except upon receipt of an ORPHAN purchase order to ensure a supply of the Drug with the maximum expiration dating.
6.3 Late Manufacture and Delivery. When ORPHAN submits a purchase order at least [ * ] prior to the required delivery date, Supplier shall confirm delivery upon receipt of this order and provide Orphan with a manufacturing plan detailing timing within [ * ]. Changes in this manufacturing plan which could affect the timing of deliveries will not be made without the written agreement of ORPHAN. In the event of unexpected delays owing to manufacturing problems associated with the Drug, Supplier will inform ORPHAN immediately and action to be taken will be jointly decided. A failure to provide supply of Drug on schedule will be considered a material breach of this Agreement and Supplier will no longer be the exclusive supplier in the Territory and will provide technology transfer support per the terms of Section 5.6 above, to a second supplier chosen by ORPHAN.
6.4 Delivery of Drug. Supplier shall arrange all shipments of the Drug [ * ] to an ORPHAN designated location to be determined by ORPHAN prior to or upon regulatory approval of the Drug in accordance with reasonable commercial practices and, for shipments to be made in the United States, any applicable U.S. Department of Transportation regulations for pharmaceutical products to ensure against deterioration and damage of the Drug. ORPHAN shall approve any final shipping specifications subject to any stability findings for the Drug.
(a) Risk of loss of any shipment of the Drug shall pass to ORPHAN upon [ * ].
(b) ORPHAN shall pay (or reimburse) Supplier for [ * ]. Supplier may invoice ORPHAN for [ * ] of the Drug paid by Supplier for ORPHAN'S account immediately upon each shipment of the Drug, provided all such charges or costs fall within the terms and conditions established [ * ] for such shipment.
(c) [ * ] select one or more carriers for shipment of the Drug and to negotiate the terms and conditions for such shipment. Risk of loss of any shipment of the Drug would then [ * ].
(d) The quantity of Drug in any shipment may vary from the quantity reflected in the purchase order for such shipment by up to [ * ] and still be deemed to be in compliance with such purchase order; provided, however, that ORPHAN shall [ * ].
(e) All Drug shall be shipped in bulk a) using suitable packaging as provided for in the approved NDA, or in other regulatory approvals obtained in the Territory, and b) in accordance with such other contract specifications as may be mutually agreed upon by the parties hereto.
6.5 Finished Bulk Inventory Storage. Supplier agrees to store Drug manufactured for ORPHAN, in quantities of up to [ * ] for no longer than [ * ] beyond the purchase order delivery date according to the requirements established through conduct of a stability study program as outlined in Appendix D at a charge [ * ]. ORPHAN will [ * ] for storage beyond [ * ] at a cost to be negotiated in good faith upon FDA approval. Supplier shall have no responsibility for deterioration of Drug stored in accordance with such requirements.
6.6 Certifications. For each Validation Batch and upon request for Production Batches of the Drug manufactured for ORPHAN hereunder, Supplier shall furnish to ORPHAN at the time of its delivery copies of the following records. Originals are to be retained by Supplier:
(a) representative samples of such batch for assay and other testing;
(b) batch records and quality assurance data for such batch; and
(c) a Certificate of Analysis that such batch conforms to the Specifications and a Certificate of Manufacture which confirms that the Drug was manufactured, tested, and delivered in full compliance with all applicable laws and regulations.
ARTICLE 7 PRICES AND PAYMENTS
7.1 First Contract Year Manufacturing Price. After completion of Stage A of the Technology Transfer/Development Program, Supplier will quote the Drug Price that ORPHAN shall pay to Supplier for any orders of the Drug manufactured during the first Contract Year (including, if applicable, Validation Batches and any quantities ordered prior to the first Contract Year) as set forth in the Validation Protocol. The Drug Price for [ * ] shall be [ * ]. The Drug Price for the [ * ] will be [ * ].
7.2 Annual Price Adjustment Notification. At least [ * ] days prior to the end of the first Contract Year of this Agreement and each Contract Year thereafter, Supplier shall notify ORPHAN of the proposed Drug Price for the next succeeding Contract Year provided, however, that the proposed Drug Price for each new Contract year shall be [ * ], and (b) that ORPHAN will receive prior notification. Any increase or decrease in Drug Price shall be applicable only to those Production Batches of the Drug for which the production process is begun after the change in cost becomes effective and shall remain in effect until another price change becomes applicable.
In the event the cost of [ * ] increases by [ * ] within a single contract year, the Drug Price may be adjusted by the amount [ * ] for that year. Likewise, if the cost of [ * ] decreases by [ * ] within a single contract year, the Drug Price will be adjusted down by the amount [ * ] for that year. Any adjustments made as a result of [ * ] price increases or decreases are separate from and in addition to the annual price adjustments described above.
7.3 Justification of Price Increases. Supplier shall substantiate, upon ORPHAN'S request, Supplier's price increases for the Drug for any Contract Year. Supplier shall keep full and accurate books and records of account containing all particulars that may be necessary for the purpose of calculating the Manufacturing Cost of the Drug, including [ * ] for any [ * ] used in manufacturing the Drug. ORPHAN may, upon reasonable notice to Supplier and at ORPHAN'S expense, have an independent public accountant reasonably acceptable to Supplier conduct, during normal business hours, an examination of Supplier's books and records to verify the basis of such increases of the Drug Price for any Contract Year or Contract Years. If Supplier has increased Drug Price based on a claimed increase in Manufacturing Cost to ORPHAN in excess [ * ] above what such independent certified public accountant finds to be justifiable for any Contract Year, or Contract Years, Supplier shall reimburse ORPHAN'S reasonable cost and expenses of such examination. In no event shall the Manufacturing Cost with respect to any period be audited [ * ]. The independent public accountant used to conduct such audit shall enter into a confidentiality agreement satisfactory to Supplier and shall provide ORPHAN only with its conclusions.
7.4 Cost Reductions Through Process Improvements. To encourage active and open consideration of Manufacturing Cost reductions, it is agreed that [ * ] of a cost reduction benefit will be [ * ] to reduce cost. After the pilot campaign, the pricing offered shall be considered applicable to the process as then practiced (the "Baseline Process"). Any subsequent improvements which lead to realized manufacturing cost reductions [ * ]. Proposals for improvement will be outlined in writing or communicated verbally and will detail how the improvement should be realized. In the event of improvements developed through a joint collaboration where the originator is unclear, improvements will be shared 50% to each party. This sharing of benefits will come into effect only after [ * ] After realization of improvements and application of this mechanism, the Baseline Process will be redefined and. the same calculation will be applied to any subsequent Manufacturing Cost reductions.
7.5 Invoice Payment. Payment for each lot of the Drug shall be due net thirty (30) days from the date of the invoice therefor, provided that no invoice shall be dated prior to the date of actual release of the Drug reflected therein. ORPHAN will accept title to the Drug at the earlier of (a) when risk of loss passes pursuant to Section 6.4, and (b) the date of the payment of the invoice thereof. Supplier will retain liability for the safe keeping of the Drug until [ * ].
ARTICLE 8 REPRESENTATIONS, WARRANTIES AND INSPECTIONS
(a) ORPHAN represents and warrants to Supplier that:
(i) The execution of this Agreement and the performance by ORPHAN of its obligations hereunder have been duly authorized by all necessary corporate action and are within the power and authority of ORPHAN; and
(ii) The processes transferred to Supplier by ORPHAN pursuant to the Technology Transfer/Development Program do not [ * ].
(b) Supplier represents and warrants to ORPHAN that:
(i) The execution of this Agreement and the performance by Supplier of its obligations hereunder have been duly authorized by all necessary corporate action and are within the power and authority of Supplier;
(ii) Subject to ORPHAN'S warranty set forth in Section 8.1 (a)(ii), Supplier warrants that [ * ];
(iii) Supplier shall not use in any capacity persons, or the services of persons that are debarred, are on the Debarment List, or that have been convicted of actions that could lead to debarment as described in Section 306(a) and (b) of the Federal Food, Drug, and Cosmetic Act;
(iv) at the time of its delivery to a designated drug product manufacturer or other ORPHAN designated location, each Production Batch of the Drug manufactured by Supplier will:
(A) have an expiration date at the time of shipment equal to that approved by the FDA, via the initial NDA submission or via extended stability study data subsequently submitted;
(B) conform to the Specifications and will be stored under proper conditions ;
(C) have been manufactured in conformance with the Validation Protocol and the DMF or NDA CMC Section on file with the FDA for manufacture of the Drug at Supplier's facilities and in compliance with all other applicable laws and regulations, including, without limitation, the then-current FDA GMP's;
(D) not to be adulterated or misbranded by Supplier within the meaning of the FD&C Act, as amended, or be an article which may not be introduced into interstate commerce under Sections 404 or 505 of such Act. This guarantee shall be continuing and shall be applicable to any Drug shipped [ * ] drug product manufacturer [ * ] ORPHAN of written notice of revocation thereof;
(E) be free from all liens and encumbrances of any kind provided, however, THE WARRANTIES SET FORTH HEREIN ARE EXPRESSLY IN LIEU OF AND EXCLUDE, AND SUPPLIER EXPRESSLY DISCLAIMS AND NEGATES ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, ARISING BY OPERATION OF LAW OR OTHERWISE, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8.2 ORPHAN Inspection Rights. ORPHAN shall have the following inspection rights with respect to Supplier's manufacture of the Drug:
During the Technology Transfer/Development Program, upon five (5) days' prior written notice, ORPHAN'S authorized representatives may, during normal business hours, inspect Supplier's facilities at which the Technology
Transfer/Development Program is being conducted to monitor the progress of the Technology Transfer/Development Program. Supplier shall provide all data and records relating to the conduct of the Technology Transfer/Development Program reasonably requested by ORPHAN'S authorized representatives.
(b) Prior to commencement of manufacture and/or packaging of the Drug and [ * ] each Contract Year, upon [ * ] prior written notice, ORPHAN'S authorized representatives may, during normal business hours, review Supplier's governmental licenses and permits relating to the facilities and operations utilized by Supplier in the manufacture and/or packaging of the Drug.
(c) ORPHAN'S authorized representatives may inspect Supplier's manufacturing facilities during each production run of the Drug and at any other time upon reasonable notice to Supplier to audit any manufacturing, packaging, storage, and testing operations that ORPHAN deems reasonably appropriate to confirm that each batch of Drug has been manufactured, handled, and stored in accordance with the terms hereof. Upon ORPHAN'S request, Supplier shall notify ORPHAN at least thirty (30) days in advance of any production run of the Drug.
(d) Supplier shall provide ORPHAN'S authorized representatives with copies of all data and records relating to (i) process validation for the Drug including, without limitation, validation of associated automated systems, information systems and any other systems associated with process control, promptly after completion thereof and, promptly thereafter, following any revalidation; and (ii) the production of the Drug, including, without limitation, raw materials, additional validations, production batch records, packaging components, stability data and quality assurance records.
(e) Supplier shall keep ORPHAN updated on Supplier's internal audit and approval process for raw material suppliers, including, without limitation, an annual review of Supplier's audit reports of suppliers for materials to be used in the manufacture of the Drug.
ORPHAN shall perform assays on samples from each Production Batch of
the Drug and may perform such other tests as ORPHAN deems necessary or appropriate from any production run of the Drug manufactured for ORPHAN hereunder, and, without charge, Supplier shall furnish such samples, the analytical methodology and specifications relating thereto approved by FDA or other appropriate regulatory authorities and other testing materials as ORPHAN may reasonably request for such purposes.
(g) ORPHAN'S authorized representatives who are to conduct inspection or to review any Supplier records pursuant to this Section 8.3 shall execute a nondisclosure agreement substantially in the form attached hereto as Appendix E prior to conducting such inspections or reviewing such records.
8.3 Regulatory correspondence and Inspections. Supplier shall promptly inform ORPHAN of any regulatory correspondence or inspection with respect to Supplier's manufacture of the Drug as follows:
(a) Supplier shall provide ORPHAN with copies of any correspondence and other documentation received or prepared by Supplier in connection with the manufacture and testing of the Drug in the Territory, including, but not limited to, copies of the proposed NDA (but only of those portions for which Supplier is responsible) and of the potential DMF for the Drug and of annual submissions to the FDA and other regulatory authorities in the Territory. Copies of all such correspondence or other documentation prepared by Supplier shall be reviewed and approved by ORPHAN prior to its submission.
(b) If Supplier receives any regulatory correspondence or comments from any federal, state, or local regulatory agency in connection with its manufacture of the Drug requiring a response or action by Supplier, including, without limitation, receipt of an FDA Form 483 (Inspectional Observations) or an FDA "Warning Letter", Supplier shall immediately provide ORPHAN with a copy of each such regulatory correspondence or comment and a copy of Supplier's proposed response thereto for ORPHAN'S review and approval prior to its submission if Supplier's manufacture of additional products are not involved. In cases where Supplier's manufacture of additional products are involved, a good faith effort will be made to reach joint approval within an appropriate timeframe.
(c) If Supplier's manufacturing facility is inspected by representatives of any federal, state, or local regulatory agency in connection with Supplier's manufacture of the Drug, including, but not limited to, any pre-NDA approval inspection by the FDA, Supplier shall notify ORPHAN within [ * ] (by telephone and, if possible, by fax or letter) upon learning of such inspection, and shall supply ORPHAN with copies of any correspondence or portions of correspondence which relate to such regulatory inspection. ORPHAN may send representatives to Supplier's manufacturing facility to observe any portion of such regulatory inspection relating to the Drug.
ARTICLE 9 ACCEPTANCE. REJECTION. AND CLAIMS
9.1 Acceptance and Rejection. Each shipment shall be considered to conform to the Specifications and the other warranties set forth in Section 8.1(b) unless ORPHAN gives Supplier notice in writing that it does not consider a particular shipment to conform, together with supporting documentation, within [ * ] of receipt of such shipment (or, [ * ] within [ * ]). ORPHAN will analyze (or cause to be analyzed by its designated product manufacturer) each shipment of Drug using the validated methods approved by FDA for release of Drug. Such testing will be done for acceptance or rejection of the lot. If ORPHAN gives Supplier such notice, Supplier shall thereupon be given access to the shipment in question to conduct its own analysis thereof, and the parties will endeavor to agree amicably as to whether or not the shipment does conform to the Specifications and such other warranties and, if not, whether such non-compliance was due any action or inaction on the part of Supplier.
In the event that the parties are unable to agree as to whether or not the shipment conforms with the Specifications or other warranty, the question will be submitted to an independent quality control laboratory as the parties may mutually agree upon. Cost for the independent quality control laboratory shall be [ * ].
During the pendency of a dispute that requires settlement by an independent laboratory under this section, if requested to do so by ORPHAN, Supplier will replace the portion of such shipment under dispute until such dispute is resolved.
9.2 Rejected Shipments. If the nonconformity in a rejected shipment of the Drug was due to any action or inaction of ORPHAN, its carrier or its designated drug product manufacturer subsequent to delivery ([ * ]) of the Drug by Supplier, Supplier shall have no liability for such rejected shipment. If the nonconformity in a rejected shipment of the Drug was due to any action or inaction of Supplier prior to shipment delivery ([ * ]), Supplier at its cost shall either credit ORPHAN for the full Manufacturing Cost of such shipment or replace it with a conforming shipment within thirty (30) days of the notice of rejection. Such credit or replacement will be ORPHAN'S sole remedy for such rejected Drug provided Supplier provides replacement or credit within thirty (30) days of notice of rejection.
9.3 Disposal; Return Material Authorization. If ORPHAN expects to make a claim against Supplier with respect to a rejected shipment of the Drug, ORPHAN shall not dispose or allow the disposal of such Drug shipment without the express written authorization and instructions of Supplier. ORPHAN or any ORPHAN designated drug product manufacturer shall not return any rejected shipment of the Drug to Supplier without a Return Material Authorization ("RMA") from Supplier (Appendix F). Upon written request of ORPHAN or the ORPHAN designated drug product manufacturer, as the case may be, Supplier shall promptly issue a RMA for any rejected shipment, provided, however, appropriate samples may be retained as evidence of the basis for such rejection.
9.4 Product Recalls. Each party shall promptly notify the other party if any batch of the Drug is alleged or proven to be the subject of a recall, market withdrawal or correction ordered by the FDA or any other regulatory authority in the Territory. The parties shall cooperate in good faith to handle and dispose of such recall, market withdrawal or correction; provided, however, that in the event of a disagreement as to any
matters related to such recall, market withdrawal or correction, ORPHAN'S decision shall prevail. ORPHAN shall bear [ * ] costs of any such recall, market withdrawal or correction unless such recall, market withdrawal or correction was the result of Supplier's breach of any of its representations and warranties set forth in Article 8 above, in which case Supplier shall bear [ * ] of such recall, market withdrawal, or correction. Supplier will not bear the cost for recalls made as a result of errors that could have been detected by Orphan through acceptance and rejection testing as outlined in Article 9.
ARTICLE 10 INDEMNIFICATION
10.1 Supplier's Indemnification to ORPHAN. Subject to Suppliers warranty and ORPHAN'S compliance with its obligations in Section 10.3 hereof, Supplier hereby indemnifies, defends, and holds ORPHAN and its directors, officers, employees, agents, and Affiliates harmless against any and all losses, damages, expenses, reasonable attorneys' fees (regardless of outcome), settlement costs and judgments arising out of or resulting from Supplier's material breach of any of its representations or warranties under Article 8 above, including, but not limited to, development, manufacture, testing, shipping, storage, delivery and/or other handling or processing of the Drug, except to the extent that such losses, damages, expenses, fees, settlement costs and judgments result from the material breach by ORPHAN of its covenants or warranties under this Agreement or the negligence or willful misconduct of ORPHAN, its employees or agents. Supplier shall defend and indemnify ORPHAN for any injuries or claims of injuries which may arise during manufacturing of the Product.
10.2 ORPHAN Indemnification of Supplier. Except as provided in Section 10.1 above, and subject to Supplier's compliance with its obligations in Section 10.3 hereof, ORPHAN hereby indemnifies, defends, and holds Supplier and its directors, officers, employees, agents and Affiliates harmless against any and all claims, losses, damages, expenses, reasonable attorneys' fees (regardless of outcome), settlement costs and judgments (a) to which Supplier may be subject with respect to the Drug, except those which arise under facts and circumstances pursuant to which Supplier would be required to indemnify ORPHAN under the provisions of Section 10.1, or (b) arising out of or resulting from any subsequent formulation, repackaging, distribution or other use of the Drug supplied hereunder, including third party liability claims relating thereto.
10.3 Indemnification Procedures. A party (the "Indemnitee") which intends to claim indemnification under this Article 10 shall promptly notify the other party (the "Indemnitor") in writing of any action, claim or other matter in respect of which the Indemnitee or any of its directors, officers, employees, agents or Affiliates intend to claim such indemnification. The Indemnitee shall permit, and shall cause its directors, officers, employees, agents and Affiliates to permit, the Indemnitor, at its discretion, upon providing the Indemnitee with a written acknowledgment of full and complete responsibility for the indemnification of the Indemnitee with respect to any such action, claim or other matter, to settle any such action, claim or other matter; and to complete control of such defense or settlement by the Indemnitor; provided, however, that such settlement shall not adversely affect the Indemnitee's rights hereunder or impose any obligations on the Indemnitee in addition to those set forth herein in order for it to exercise such rights. No such action, claim or other matter shall be settled without the prior written consent of the Indemnitor, and the Indemnitor shall not be responsible for any legal fees or other costs incurred other than as provided herein. The Indemnitee, its directors, officers, employees, agents and Affiliates at the Indemnitor's expense shall cooperate with the Indemnitor and its legal representatives in the investigation and defense of any action, claim or other matter covered by this indemnification. The Indemnitee shall have the right, but not the obligation, to be represented by counsel of its own selection and at its own expense.
ARTICLE 11 INVENTIONS AND PATENTS
11.1 Inventions by Supplier. Supplier hereby assigns, releases, and transfers to ORPHAN its entire right, title and interest in and to any invention, discovery or improvement relating to the Drug (whether patentable or not) made or conceived by Supplier employees or contractors, including, without limitation, manufacturing, manufacturing processes and procedures, analytical process, procedure or method,
analytical results, and any route(s) of synthesis provided, however, ORPHAN hereby grants to Supplier a paid-up, worldwide, nonexclusive, nontransferable license to use patented inventions, discoveries, or improvements [ * ] for purposes of this Agreement, [ * ].
11.2 Inventions by ORPHAN. ORPHAN shall own all right, title and interest in and to any invention, discovery or improvement relating to the Drug (whether patentable or not) made or conceived solely by ORPHAN employees or by any ORPHAN contractor other than Supplier, including, without limitation, any manufacturing or analytical process, procedure or method or any source of synthesis given to Supplier.
11.3 Supplier shall promptly disclose to ORPHAN any and all inventions, discoveries and improvements relating to the Drug (collectively "Inventions"), by Supplier's employees or contractors, either alone or together with ORPHAN'S employees or contractors, and shall assign all its interests to ORPHAN or its designee in accordance with Section 11.1. Supplier shall execute at ORPHAN'S expense any assignments, applications or other instruments or documents reasonably requested by ORPHAN in accordance with this Article 11 and, at ORPHAN'S expense, give testimony which shall be deemed necessary to apply for and obtain Letters Patent of the United States or of any other country and otherwise to perfect ORPHAN'S interest therein. Supplier's and ORPHAN'S obligations hereunder shall survive termination of this Agreement. All data obtained in the Technology Transfer/Development Program and the stability program described in Appendix D—Requirements for Stability Studies, are the property of ORPHAN and cannot be used without its consent except for the performance by Supplier of its obligations hereunder.
ARTICLE 12 TRADEMARKS
12.1 ORPHAN Trademarks. ORPHAN may originate, select and apply to register one or more trademarks ("ORPHAN Trademarks") under which the Drug will be sold and distributed by ORPHAN or its Affiliates and distributors. ORPHAN shall own all
right, title, and interest in the ORPHAN Trademarks, subject to the limited license granted to Supplier in this Article 12. ORPHAN shall be solely responsible for all prosecution, defense, maintenance and costs relating to the ORPHAN Trademarks.
12.2 Limited Trademark License. ORPHAN hereby grants Supplier a paid-up, worldwide, nonexclusive, nontransferable license to the ORPHAN Trademarks solely for purposes of manufacturing and distributing the Drug under this Agreement. Supplier shall comply with ORPHAN'S standard policies and procedures for the use of the ORPHAN Trademarks and shall furnish ORPHAN with copies of any packaging, or other materials incorporating the ORPHAN Trademarks for ORPHAN'S review and approval prior to any use thereof. Supplier shall make any changes or additions reasonably requested by ORPHAN to comply with ORPHAN'S standard policies and procedures for the use of the ORPHAN Trademarks. Upon termination of this Agreement, Supplier shall promptly cease any use of the ORPHAN Trademarks.
12.3 Limitations. Supplier shall not use, or assert any claims to, any of the ORPHAN Trademarks or any trademark confusingly similar to any ORPHAN Trademarks, provided that ORPHAN shall not choose a trademark which is the same as, or confusingly similar to, a trademark previously used by Supplier.
12.4 Infringement. Supplier shall promptly notify ORPHAN if Supplier knows or reasonably suspects that a Third Party is infringing any ORPHAN Trademark and shall provide ORPHAN with any evidence thereof. At ORPHAN'S expense, Supplier shall reasonably cooperate in any investigation or other legal action with regard to such infringement.
ARTICLE 13 CONFIDENTIALITY
13.1 Proprietary Information. During the term hereof and for a period of [ * ] years thereafter, any Proprietary Information disclosed by the one party (the "Disclosing Party"), directly or indirectly, to the other party (the "Receiving Party") under this
Agreement shall be deemed confidential and trade secret information, whether so designated or not, and shall not be disclosed by the Receiving Party to any Third Party, except as set forth below. Access to such Proprietary Information will be limited to employees, agents, consultants or contractors of the Receiving Party who reasonably require such Proprietary Information for purposes of performing the Receiving Party's obligations hereunder and who are bound to the Receiving Party by similar obligations in respect of confidentiality and use. Such employees, agents, consultants or contractors will be advised of the nature and existence of the undertakings in respect of such Proprietary Information pursuant to this Agreement and of the applicability of such undertakings to them. The Receiving Party will use such Proprietary Information only to carry out its obligations or to exercise its rights hereunder and will not use such Proprietary Information for its own benefit or for the benefit of others or in any way inconsistent with this Agreement.
13.2 Exceptions. Information shall not be deemed Proprietary Information which:
(a) at the time of disclosure, is already in the public domain or thereafter becomes part of the public domain by publication or otherwise through no fault or act of the Receiving Party;
(b) was demonstrably in the possession of the Receiving Party prior to the time of the disclosure to it and was not acquired, directly or indirectly, from the Disclosing Party;
(c) is independently disclosed to the Receiving Party by a third party who has not violated any confidential obligation owed to the Disclosing Party;
(d) was independently developed by the Receiving Party without any use of or reliance on any Proprietary Information of the Disclosing Party;
(e) is required to be disclosed by legal process; provided that, in each case the party so disclosing information timely informs the other and uses its best efforts to limit the disclosure and maintain confidentiality to the extent possible and permits the other party to attempt by appropriate legal means to limit such disclosure;
is information which is required to be included in patent applications filed
hereunder or required to be provided to the FDA or any other regulatory authority in the Territory in order for ORPHAN or Supplier to obtain Registrations for the Drug or otherwise to comply with applicable regulatory requirements, or for Supplier to manufacture the Drug for ORPHAN hereunder; provided, however, that no Proprietary Information of ORPHAN or Supplier will be disclosed in any such patent application without the prior written consent of the other Disclosing Party, which consent will not be unreasonably withheld; or
(g) is information which is required to be disclosed to customers, users, and prescribers of the Product or which is reasonably necessary to disclose in connection with the ethical marketing of the Product, if applicable.
13.3 Disclosure by the Receiving Party to a Third Party shall be made only to the extent necessary to enable the Receiving Party to comply with its contractual obligations to the disclosing party.
13.4 Each Third Party to which Proprietary Information is disclosed other than a governmental agency will agree in writing prior to such disclosure to keep the Proprietary Information in strict confidence and to comply with the terms of this Article 13.
13.5 Both parties agree to limit access of Proprietary Information to those of its officers, directors, or employees, or any Third Party who must have Proprietary Information to carry out the terms of any agreement made between the parties.
13.6 Neither party shall utilize the Proprietary Information disclosed to it by the Disclosing Party after the completion of the Agreement between the parties, either in its own development work or for commercial purposes, without advance written consent of the Disclosing Party.
13.7 The party receiving Proprietary Information will obtain no right or license of any kind under any patent applications, patent or otherwise by reason of this Agreement and all Proprietary Information will remain the sole property of the Disclosing Party unless provided otherwise in this Agreement.
13.8 Except as otherwise required by law, applicable regulations or the terms of this Agreement or mutually agreed upon by the parties hereto, each party shall treat as confidential the terms, conditions, and existence of this Agreement.
13.9 Prior Confidentiality Agreement. The Confidentiality Agreement between the parties hereto dated February 27, 1996, is hereby superseded and terminated. Any disclosure of Proprietary Information by either party pursuant to such Confidentiality Agreement shall be deemed to have been made hereunder and shall be subject to this Article 13.
13.10 Terms of Agreement; Press Releases. Except as otherwise required by law or the rules and regulations of any stock exchange on which a party's securities may be publicly traded or in disclosures made in confidence to a party's professional or financial advisors, applicable regulations or the terms of this Agreement or mutually agreed upon by the parties hereto, each party shall treat the terms, conditions and existence of this Agreement as Proprietary Information. The parties shall cooperate in good faith in the preparation of any press releases or other public disclosures of their business relationship, and neither party shall issue any such press release or other disclosure without the prior approval of the other party, which approval shall not be unreasonably held.
ARTICLE 14 TERM OF AGREEMENT
14.1 Unless sooner terminated pursuant to Article 15 below, the initial term of this Agreement shall commence on the Effective Date and end upon expiration of the third (3rd) Contract Year. Supplier and ORPHAN may mutually agree to extend this Agreement on a for one or more additional three year terms. Supplier or ORPHAN must provide a written notice of intent to terminate the Agreement at least eighteen (18) months prior to the expiration of the initial or any extended term. All references herein to "term of this Agreement" shall be deemed to include both the initial and any extended terms.
15.1 Termination by Either Party. In addition to any other legal or equitable remedies it may have, either party may terminate this Agreement prior to the expiration of the term of this Agreement upon ten (10) days' written notice to the other party:
(a) If the other party breaches any material term or condition of this Agreement, including any term or condition in any appendix attached hereto, provided such other party has not cured such breach within thirty (30) days of written notice thereof; provided, further, that if at the end of such thirty (30) day period the party in breach is making a good faith effort to cure, a reasonable time thereafter (not to exceed an additional thirty (30) days) shall be allowed for such cure.
(b) If the other party is declared bankrupt or insolvent, or makes an assignment for the benefit of its creditors, or if a receiver is appointed or any proceedings are commenced, voluntary or involuntary, by or against either party under any bankruptcy or similar law, and such status is not cured within thirty (30) days from its occurrence.
(c) If an event of force majeure continues for more than six (6) months, either party, at its option, may elect to treat such continued suspension of performance as a material breach and may terminate this Agreement.
15.2 Termination by ORPHAN. In addition to any other legal or equitable remedies it may have, ORPHAN may terminate this Agreement upon thirty (30) days' written notice to Supplier:
(a) If the minimum requirements for the Drug or the timeframes for performance set forth in Appendix A hereto are not met by Supplier and no amendment thereof is acceptable to ORPHAN; or
(b) If ORPHAN determines, in its sole discretion, not to proceed further with the investigation of the Drug for the treatment of narcolepsy or any other indication.
15.3 Termination by Supplier. In addition to any other legal or equitable remedies it may have. Supplier may terminate this Agreement upon thirty (30) days' written notice to ORPHAN if [ * ], Supplier determines that solely, in order [ * ] under the terms of this Agreement, it will have to [ * ]. [ * ].
15.4 Effects of Expiration or Termination. Upon expiration or termination of this Agreement for any reason:
(a) Supplier shall manufacture and ship, and ORPHAN shall purchase, Production Batches of the Drug ordered by ORPHAN prior to the effective date of such expiration or termination.
(b) Supplier shall continue to provide manufacturing and quality assurance support and support of the stability studies for the Drug until the expiration date of the last production Batch of the Drug purchased by ORPHAN hereunder or the date required by any applicable law or regulation in the Territory, whichever is later, provided, however, if ORPHAN terminates this Agreement, ORPHAN shall [ * ] of any required support of the stability studies.
(c) Supplier shall take all steps reasonably requested by ORPHAN to confirm the assignment to ORPHAN all of Supplier's right, title and interest in the Inventions, including, without limitation, to execute or cause its employees or contractors to execute such documents as may be reasonably requested by ORPHAN to vest all such right, title and interest in such Inventions in ORPHAN, provided ORPHAN shall pay all reasonable expenses, including any of time and travel of Supplier's employees, in connection with steps.
(d) Each party shall return to the other party any Proprietary Information of the other party except for one (1) archival copy as may be required for purposes of compliance with any FDA regulation or other applicable law or regulation in the Territory.
15.5 Survival. The provisions of Articles 4 (Marketing Rights), 7 (Prices and Payments), 8 (Representations, Warranties, and Inspections), 9 (Acceptance, Rejection and Claims), 10 (Indemnification), 11 (Inventions and Patents), 12 (Trademarks), 13
(Confidentiality), 14 (Term of Agreement), 15 (Termination), 16 (Force Majeure), 17 (Dispute Resolution) and 18 (Miscellaneous) shall survive the expiration or termination of this Agreement and shall remain in full force and effect in accordance with the terms thereof.
ARTICLE 16 FORCE MAJEURE
16.1 Events of Force Majeure. Either party shall be excused from the performance of its obligations in the event such performance is prevented by a cause beyond the reasonable control of such party, including, without limitation, any act of God; regulation or law of any government or an agency thereof; war; insurrection or civil commotion; earthquake, tornado, fire, flood or storm; epidemic; or failure of suppliers, public utilities or common carriers. Such excuse shall continue as long as the condition preventing the performance continues. Upon cessation of such condition, such party shall promptly resume performance hereunder.
16.2 Notice. A party affected by an event of force majeure shall give the other party prompt written notice of the occurrence of any event of force majeure and the nature and duration thereof. An affected party shall use all reasonable efforts to resume performance as quickly as possible and to give the other party prompt written notice when it is again fully able to perform such obligations. If Supplier is the affected party, such notice of resumption of performance shall state the quantities of Drug manufactured but not shipped by Supplier due to any event of force majeure and the expiration dates thereof.
16.3 Cover. During any suspension of performance by Supplier under Section 16.1 above, ORPHAN may, at its option, purchase elsewhere the quantities of the Drug ORPHAN has ordered which Supplier is unable to deliver.
16.4 Short Supply Allocation. If Supplier is unable to supply all of ORPHAN'S orders for the Drug hereunder in a timely manner, Supplier shall [ * ] available resources and production capacity [ * ],
taking into consideration the respective requirements of [ * ] during a reasonable time period [ * ].
ARTICLE 17 DISPUTE RESOLUTION
17.1 Negotiation. The parties intend that any dispute, controversy or claim arising out of or relating to this Agreement, or any breach thereof, shall be resolved under the procedures set forth in this Section, including, as a final method of resolution, binding arbitration. The amount involved in any such dispute, controversy, or claim shall be conclusively determined for the sole purpose of determining whether such dispute, controversy, or claim is subject to the provisions of this Article 17, by the amount set forth in an initial letter from the party making the claim to the other party.
17.2 Mediation. If attempts to resolve the dispute pursuant to Section 17.1 are unsuccessful, before commencing arbitration, mediation shall be conducted by a single mediator appointed by mutual agreement of the parties. The mediator shall not have the power to bind the parties to the resolution. The mediation session shall take place in [ * ] , on [ * ] and shall be attended by a representative of each party with full authority to settle the matter, along with any other representatives reasonably necessary to discuss and address the issues involved in the Dispute. On the [ * ] day of mediation, each party shall be allotted [ * ] with other representatives necessary to discuss and address the issues involved in the Dispute to state its views of the Dispute to the mediator and to the other party. On the [ * ] day of mediation, the parties shall attempt to resolve the Dispute with the aid of the mediator in a format agreed to by the parties or imposed by the mediator. If the parties cannot agree upon a mutually acceptable mediator within [ * ] of the end of the [ * ] negotiation period in Section 17.1 or if the Dispute is not resolved by mediation within [ * ] after completion of the mediation session, either party may give notice in writing that the Dispute shall be decided by final and binding arbitration.
17.3 Arbitration. Final and binding arbitration of any Dispute shall be conducted
in [ * ], before three (3) arbitrators selected by mutual agreement of the parties or, if no such agreement is possible, appointed by the American Arbitration Association ("AAA"). The arbitration shall be conducted in accordance with the AAA Commercial Arbitration Rules then in effect, subject to the modifications set forth below, and judgment upon the award may be entered in any court of competent jurisdiction. At least one arbitrator shall have experience in the pharmaceutical industry, and at least one arbitrator shall be an attorney with experience in pharmaceutical industry licensing and contractual matters. The arbitration shall be closed to any Third Party. Notwithstanding any provision to the contrary in the AAA's Commercial Arbitration Rules, the parties hereby stipulate that any arbitration hereunder shall be subject to the following special rules:
(a) Each party shall have the right to request from the arbitrators, and the arbitrators shall order upon good cause shown, reasonable and limited pre- hearing discovery as permitted in civil matters in the courts of [ * ], , including (i) exchange of witness lists, (ii) depositions under oath of named witnesses, (iii) written interrogatories, and (iv) document requests;
(b) If a party is asked to reveal material in the arbitration which the party considers to be Proprietary Information, the party shall bring the matter to the attention of the arbitrators, who shall make such protective orders as are reasonable and necessary;
(c) Upon conclusion of the pre-hearing discovery, the arbitrators shall promptly hold a hearing upon the evidence to be presented by the parties and shall promptly render a written opinion and award but in no event later than sixty (60) days after the conclusion of the hearing.
(d) The arbitrators shall not add to, detract from, or alter the provisions of the Agreement of any applicable law or rule of civil procedure;
(e) The arbitrators my not award or assess punitive damages against either party;
(f) The arbitrators may require either party to specifically perform its obligations under this Agreement; and
(g) Each party shall bear its own costs and expenses of the arbitration and [ * ], subject to the power of the arbitrators, in their sole discretion, to award all such reasonable costs, expenses and fees, including, without limitation, attorney's fees, to the prevailing party.
ARTICLE 18 MISCELLANEOUS
18.1 Choice of Law. This Agreement shall be governed by and interpreted in accordance with the laws of [ * ], without regard to its conflict of laws provisions and the courts of [ * ] shall have exclusive jurisdiction over all matters arising out of this agreement.
18.2 Notices. Any and all notices provided for shall be sent to the respective parties at the following addresses by certified or registered mail or sent by a national courier service with proof of delivery, by personal delivery or by facsimile with an electronic and verbal confirmation of receipt:
If to Supplier: General Manager
Special Fine Chemicals
Lonza Inc.
17-17 Route 208
Fairlawn, New Jersey 07410-2821
If to ORPHAN: [ * ]
Orphan Medical, Inc. 3911
Ridgedale Drive Minnetonka,
Minnesota 55305
with a copy to each President's office, or to such other addresses as may be subsequently furnished by one party to the other in writing. Any such notice shall be deemed effective three (3) days after mailing or upon receipt if sent by courier service, personal delivery or facsimile.
18.3 Severability. If any term or condition of this Agreement is found by a court of competent jurisdiction in a final unappealed or unappealable order to violate the provisions of any applicable statute, law or regulation, the remainder of this Agreement shall remain in full force and effect. The parties shall then negotiate in good faith to modify this Agreement, but only to the extent necessary to make the affected term or condition of this Agreement valid and enforceable, having full regard for applicable laws and the intent and purposes of the parties entering into this Agreement.
18.4 Integration; Amendment. This Agreement and all appendices hereto constitute the entire agreement between the parties relating to the subject matter of this Agreement and supersedes all prior agreements, representations, and understandings. This Agreement may not be amended, modified, or varied except in writing signed by a duly authorized representative of each party. In the event of a conflict between the terms of this Agreement, and any appendix hereto, the terms of this Agreement shall control.
18.5 Assignment. Neither party may assign this Agreement without the prior written consent of the other party except that either ORPHAN or Supplier may assign this Agreement (a) to an Affiliate or (b) in connection with the sale or transfer of all or substantially all of the assets of such party or the division of such party manufacturing or marketing of the Drug, as the case may be, provided, however, any permitted assignee shall assume all obligations of its assignor under this Agreement. Any purported assignment in violation of the foregoing sentence shall be null and void. No assignment shall relieve either party of responsibility for the performance of any accrued obligation under this agreement. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the permitted successors or permitted assigns of Supplier and ORPHAN respectively.
18.6 Waiver. No course of dealing between Supplier and ORPHAN or delay or failure to exercise any rights hereunder shall operate as a waiver of such rights or preclude the exercise of any other rights hereunder.
18.7 Relationship. Each of the parties hereto is an independent contractor and nothing herein shall be deemed to constitute the relationship of partners, joint venturers, nor of principal and agent between the parties hereto.
18.8 Captions. The captions to the several Articles hereof are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles hereof and shall not affect the meaning or interpretation hereof.
18.9 Counterparts. Two (2) or more counterparts of this Agreement may be signed by the parties, each of which shall be an original, but all of which together shall constitute the same instrument.
18.10 Diligence. Each party agrees to use due diligence in preparing full disclosure of relevant information, in reviewing information when available, and in committing decisions necessary to enable completion of Stages within target timeframes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be entered into by their duly authorized representatives as of the Effective Date.
SUPPLIER ORPHAN MEDICAL, INC.
/s/ Peter Pollak
/s/ Bert Spilker
Print: Peter Pollak Print: Bert Spilker
Its: VP/GM Fine Chemicals Its: President
Date: November 8, 1996 Date: November 6, 1996
GHB TECHNOLOGY TRANSFER/DEVELOPMENT PROGRAM
Cost/Timeline
Stage A, Part I: [ * ]
Stage A, Part II $[ * ]
[ * ] $[ * ]
TOTAL [ * ]
1) Raw Material Specifications and Acceptance Criteria—[ * ]
2) Process Validation Protocol—[ * ]
APPENDIX A (continued)
Stage B [ * ]
The following items represent minimum content requirements. Actual reports should include all information that is relevant in assessing the status of the development program and in completing documentation that is required by regulatory agencies. Any documentation that is required for preparation of the CMC Section, Process Certification Report, Process Validation Report, etc. should not be rewritten as part of a stage completion report.
Progress reports on development will be discussed with ORPHAN on an agreed upon schedule depending on the level of activity at any point in time. Decisions, issues, and significant findings will be documented for review and concurrence. Reasonable efforts will be used to take corrective actions and conduct such additional work as is necessary to achieve the Required Specifications as outlined in Appendix C. The parties will mutually agree upon the time impact of any changes. Additional resources will be committed to conduct of the GHB Technology Transfer/Development Program if necessary to ensure completion of the project as close to the overall time frame specified as possible.
STAGE A: [ * ]
COMPLETION REPORT
A "Stage A Completion Report" will contain the data and analytical results from all processing and testing conducted to include the manufacture of one (1) Validation Batch. This report will also include a copy of the following for ORPHAN review and approval if approval has not already been obtained:
1) Manufacturing Validation Protocol and Report
2) Re-validation of analytical methods, tests and specifications (to include validation documentation to support all analytical methods)
3) Additional Testing
4) Raw Material Vendor and Specs, and Final Product Specifications and Methods Manual
5) Copies of executed Batch Record(s) and Certificate(s) of Analysis
6) Stability Report (See—'Requirements For Stability Studies')
7) Description of manufacturing facilities, personnel, Standard Operating Procedures, and appropriate supporting validation documentation as required for the NDA.
Util and Support Systems
Process Conditions
8) Update estimates for cost of goods
STAGE B: [ * ]
1) Mutually approved Bulk Drug Manufacturer Contract Release Specifications [ * ].
2) Subsequent to FDA approval, ORPHAN will be notified for prior approval of any updates made through standard operating "Change Control" procedures. Changes requiring notification for approval will include and not be limited to the following:
REQUIRED DRUG SPECIFICATIONS
REQUIREMENTS FOR STABILITY STUDIES
REQUIREMENTS FOR DEVELOPMENT PROGRAM STABILITY STUDIES
REQUIREMENTS FOR PRODUCTION STABILITY STUDIES
I. A Production Stability Protocol to be jointly approved. The protocol will meet requirements of the "Stability Testing of New Drug Substances and Products' endorsed by the ICH Steering Committee.
II. Reporting
Written stability study reports will be provided which include, but are not limited to, the following information for all Drug batches used for stability.
A) Certificate of analysis (include batch size, date of manufacture)
B) Batch numbers
C) Stability study results past two (2) consecutive failures or to 60 months, whichever is shortest, including both initial and data at the designated time points for analysis with references to analytical procedures used.
PROPOSED DEVELOPMENT PROGRAM STABILITY PLAN
REQUIRED TESTS, STORAGE CONDITIONS AND FREQUENCY
PRODUCTION STABILITY STUDY PLAN
CONFIDENTIAL DISCLOSURE AGREEMENT FOR INFORMATION EXCHANGED
BETWEEN LONZA AND AN EXTERNAL SOURCE
This Agreement is made and entered into this day of 19 , by and between Lonza Inc., a company located in Fair Lawn, New Jersey ("LONZA") and a company (the "POTENTIAL-COLLABORATOR") located in .
A. LONZA and the "POTENTIAL-COLLABORATOR" have entered into certain discussions the purpose of which is to explore and consider the possibilities of a business relationship between, or other transaction involving, LONZA and the "POTENTIAL-COLLABORATOR".
B. In this connection with and in furtherance of this possible business relationship, it is anticipated that both of the undersigned parties (i.e. LONZA and the POTENTIAL-COLLABORATOR) at various times will disclose (the "DISCLOSING PARTY") and receive (the "RECEIVING PARTY") certain information with each other which the undersigned parties consider proprietary and confidential.
The undersigned RECEIVING PARTY in consideration for the use of certain information, knowledge, software, data and/or know-how (hereinafter called "INFORMATION") related to the possible contract manufacturing of Sodium Gamma Hydroxybutyric Acid made available to it by DISCLOSING PARTY hereby agrees as follows:
1. RECEIVING PARTY agrees to keep in confidence and not to use the INFORMATION for its commercial benefit (except for technical and economic evaluation) for a period of [ * ] years from the date hereof.
2. RECEIVING PARTY further agrees that it shall keep in confidence and not disclose any part of INFORMATION to a third party for a period of five (5) years from the date hereof.
3. Obligations of RECEIVING PARTY shall not apply to any information, knowledge, software, data and/or know-how which:
(a) is or hereafter becomes a part of the public domain other than through a breach of this Agreement by RECEIVING PARTY;
(b) RECEIVING PARTY can demonstrate was in its possession prior to the time of disclosure by DISCLOSING PARTY or can demonstrate was received by it from a third party who shall not have received same from DISCLOSING PARTY
(c) is required by a court or other governmental authority with competent jurisdiction to be disclosed in a non- confidential manner.
4. Each party warrants and represents that the terms of this Agreement are not inconsistent with other contractual or legal obligations it may have, or with the policies or rules of any institution or company with which it is associated.
5. Each party agrees that, without the other party's prior written consent, it will not disclose the existence of this Agreement or the fact that each party is evaluating the Information.
6. RECEIVING PARTY agrees to obligate its employees who shall have access to any portion of INFORMATION to protect the confidential and proprietary nature of INFORMATION. If either or both parties are not interested in proceeding with the establishment of a manufacturing contract, or if a commercial arrangement is not entered into, each party shall return the Information of the other party to the other party, subject to retention of one copy for archival purposes.
7. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Minnesota.
Accepted and Agreed by Both Parties
Lonza, Inc.
Authorized Signature:
Name (Print):
Return Material Authorization (RMA)
For material return, Lonza operates a paperless, computer-supported system. The following procedure will be followed:
1. Orphan can request return authorization by calling Lonza at [ * ] and requesting the "Customer Service Department".
2. Lonza will issue material return authorization number generated by its quality performance database according to standard work practices in effect within Lonza at that time.
3. Lonza will organize transport of material through coordination with Orphan. The appropriate contact will be given by Orphan at the time of request for return of material.
4. Upon receipt of returned material, Lonza will send a confirmation of this to the designated contact at Orphan.
APPENDIX F Return Material Authorization Form (continued)
PROCEDURE FOR RETURNED MATERIALS
1.0 This procedure is to describe the system for accepting customer returned goods or return of material for salvaging.
2.0 Customer return calls for regulated products will be forwarded to the Quality Control Department either through direct customer contact or through communications with Shipping, Receiving, or the Manufacturing Department.
2.1 The Quality Control then reviews verbal return policy and forwards a preprinted Notice of Authorization to Return Form to the customer.
2.2 The customer will fill in the required information and forward the form to the Quality Control Department. The Quality Control Department will circulate the return goods form to Shipping & Receiving, Manufacturing, Purchasing, Accounting, and the Warehouse for information on return.
2.3 Upon receipt of the returned goods form, the material is authorized for return. The GMP Department will communicate authorization to customer approving the return.
2.4 Once the material is physically returned it shall be labeled "Hold Pending Investigation" by the Quality Control Department.
2.5 The disposition of the returned goods will be indicated on a Returned Goods Form by the Quality Control Department.
2.6 A Returned Goods Form will be circulated for approval by the Plant Manager, Project Engineer, and Quality Control Manager, indicating disposition of material.
2.7 Salvaging or rework shall be within the GMP guidelines and meet DMF and/or NDA considerations.
Approved:
CHANGE CONTROL REQUEST
Change Control Number
Name and address of person making request:
Requested by:
Product/Process Affected:
Requested change:
Reason for change:
¨ Change Request approved
¨ Change Request not approved
Approved Signatures:
Orphan Medical Regulatory Affairs Date
Orphan Medical QA Date
Orphan Medical Director of New Medicine Date
Contract Vendor Date
[ * ] DRUG PRICE ESTIMATES
according to Section 7.4
Amendment No. 1 to Sodium Gamma Hydroxybutyrate Development
Amendment No. 1, dated February 7, 2005 (this "Amendment"), between Orphan Medical, Inc., a Delaware corporation ("Orphan"), and Lonza, Inc., a New York corporation ("Supplier").
1. Orphan and Supplier are parties to a Sodium Gamma Hydroxybutyrate Development and Supply Agreement, dated November 6, 1996 (the "Agreement").
2. Orphan and Supplier wish to extend the term of the Agreement and to amend certain provisions of the Agreement.
3. Each capitalized term used in this Amendment and not defined herein shall have the meaning ascribed to it in the Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Orphan and Supplier agree as follows:
1. Acknowledgments. Orphan and Supplier acknowledge and agree that the initial Contract Year of the Agreement commenced [ * ], and that each Contract Year consists of the twelve-month period commencing [ * ] and extending through the following [ * ].
2. Amendments to the Agreement. Effective as of the date of this Amendment, the Agreement shall be amended and modified as follows:
a. Section 14.1 of the Agreement shall be amended in its entirety and shall hereafter read as follows:
14.1. Unless terminated pursuant to Article 15, the initial term of this Agreement shall commence on the Effective Date and end upon expiration of the third (3rd) Contract Year. Following the expiration of the initial term and any renewal terms, this Agreement shall be automatically extended for an additional term of three (3) Contract Years unless either party delivers a written notice of termination at least eighteen (18) months prior to the expiration of the initial or any renewal term. All references herein to the "term of the Agreement" shall be deemed to include both the initial and any renewal terms.
b. Appendix C {Required Drug Specifications} of the Agreement shall be amended in its entirety and shall be replaced by the Appendix C attached to this Amendment.
c. Section 18.2 of the Agreement is amended to replace the address for Orphan set forth in Section 18.2 with the following address:
13911 Ridgedale Drive
Attn: Vice President of Regulatory Affairs
d. Appendix H {Quality Agreement}. The Quality Agreement herein attached is incorporated within the overall Development and Supply Agreement.
3. Ratification. As modified by this Amendment, the Agreement is hereby ratified and confirmed in all respects.
IN WITNESS WHEREOF, each of Orphan and Supplier has caused this Amendment to be executed by a duly authorized representative as of the date set forth in the first paragraph.
LONZA, INC. ORPHAN MEDICAL, INC.
/s/ Simon Edwards Feb 7, 2005
/s/ John Howell Bullion
By (print): Simon Edwards By: John Howell Bullion
Its VP Sales & Business Development Its Chief Executive Officer
Orphan Medical, Inc. [ * ]
Bulk Drug Substance Specification
QUALITY AGREEMENT
BY AND BETWEEN
13911 Ridgedale Drive, Suite 250
Minnetonka, Minnesota 55305
(hereafter called "ORPHAN")
Approved by: Orphan
Medical, Inc.
(hereafter called "LONZA")
Date: April
1. QUALITY AGREEMENT 1
1.1 Purpose 1
1.2 Relationship to Supply Agreement 1
2. PRODUCT 1
3. ADMINISTRATIVE INFORMATION 1
3.1 ORPHAN Contact Names 1
3.2 LONZA Contact Names 1
4. TERM OF AGREEMENT 1
5. MANUFACTURING GMP COMPLIANCE 2
5.1 General 2
5.2 Premises 2
5.3 GMP Guidelines 2
5.4 Materials 2
5.5 Materials procured by ORPHAN 3
5.6 Materials Provided by ORPHAN for LONZA 3
5.7 Master Production Records 3
5.8 Standard Operating Procedures 3
5.9 Methods Validation 4
5.10 Batch Numbers 4
5.11 Dates of Manufacture and Expiration 4
5.12 Manufacturing and Equipment Data 4
5.13 Storage and Shipment 5
6. QUALITY CONTROL 5
6.2 In-Process and Finished Product Testing 5
6.3 Retain Samples 6
6.4 Routine Stability Program 6
6.5 Out-of-Specification (OOS) Investigations 6
6.6 Contract QC Laboratories 7
7. QUALITY ASSURANCE 7
7.1 Deviations and Investigations 7
7.2 Lot Disposition 7
7.3 Quality Assurance Certificate of Compliance/Analysis 7
7.4 Product Release 8
7.5 Product Complaints and Recalls 8
Quality Agreement: Page (ii)
7.6 Records Retention 9
7.7 Quality Assurance Presence in the Manufacturing Facility 9
8. REGULATORY COMPLIANCE 9
8.1 Regulatory Inspections 9
8.2 Regulatory Actions 10
8.3 Regulatory Affairs 10
8.4 Right to Audit 11
8.5 Audit Closeout 11
9. DISPUTE RESOLUTION 11
9.1 Non-Conformity Dispute 11
9.2 Other Disputes 12
10. CHANGE MANAGEMENT 12
10.1 Technical & cGMP Impact Assessment 12
11. PRODUCT AND PROCESS VALIDATION 13
11.1 Process Validation 13
11.2 Cleaning Verification/Validation 13
11.3 Equipment, Computer, Facility, and Utilities Qualification 13
11.4 Laboratory Qualification 13
12. ANNUAL PRODUCT REVIEW, ANNUAL REPORT AND DRUG LISTING 14
12.1 Annual Product Review 14
12.2 Drug Listing 14
Quality Agreement: Page (iii)
1. QUALITY AGREEMENT
1.1.1 This agreement (this "Agreement") defines the roles and responsibilities for the Quality Assurance and Regulatory Affairs Department ("Quality Assurance") of Lonza (LONZA) when providing services for Orphan Medical, Inc. ("ORPHAN").
1.1.2 This Agreement also defines how ORPHAN Quality Assurance and the LONZA Quality Department will interact with each other.
1.2 Relationship to Supply Agreement
1.2.1 This Agreement shall be incorporated within and constitute a part of the Supply Agreement by and between LONZA and ORPHAN.
1.2.2 In the event of a conflict between any of the provisions of this Quality Agreement and the Supply Agreement, the provisions of this Quality Agreement shall govern.
2. PRODUCT
The PRODUCT prepared for ORPHAN by LONZA are described in Appendix I.
3. ADMINISTRATIVE INFORMATION
3.1 ORPHAN Contact Names
See Appendix II.
3.2 LONZA Contact Names
4. TERM OF AGREEMENT
This Quality Agreement will expire with termination of the Supply Agreement (except for quality issues that may extend past the Supply Agreement; i.e. complaints). This Agreement can be modified as needed with the written approval of both parties.
Quality Agreement: Page l
5. MANUFACTURING GMP COMPLIANCE
The manufacturing operations for the PRODUCT to be performed by LONZA are defined in the Supply Agreement.
5.2 Premises
5.2.1 LONZA will perform required operations for manufacturing activities at approved sites.
5.2.2 The premises and equipment used to manufacture the PRODUCT will be maintained according to current regulatory requirements and in accordance with the controlled documentation approved by ORPHAN.
5.2.3 The manufacture of the PRODUCT will be conducted in a suitably controlled environment and such facilities will be regularly monitored for parameters critical to the process to demonstrate compliance with (i) applicable GMP guidelines and (ii) any conditions registered in the manufacturing authorization (NDA or investigational application).
5.2.4 LONZA will maintain controlled access to the premises. All visitors must sign in and are escorted during any visit to the areas of the premise.
5.3 GMP Guidelines
The principles detailed in the US Current Good Manufacturing Practices (21 CFR 210 and 211) that govern the standards of manufacture for active pharmaceutical ingredients, as well as the product Guidance for Industry "Q7A Good Manufacturing Practice, Guidance for Active Pharmaceutical Ingredients", will govern (i) the standards of manufacture of the PRODUCT, (ii) the product specifications, (iii) any applicable product license, and (iv) the NDA/ANDA application, pharmacopoeia or formulatory requirements.
5.4 Materials
5.4.1 LONZA will use only chemical materials, packaging, and labeling components approved by ORPHAN and tested and approved in accordance with the documentation reviewed and approved by ORPHAN.
Quality Agreement: Page 2
5.4.2 Prior to commercial use, all materials used in the PRODUCT shall meet ORPHAN'S requirements for production use.
5.5 Materials procured by LONZA
5.5.1 LONZA is responsible for auditing and qualifying vendors of actives and raw materials used in PRODUCT and will provide ORPHAN with a Certificate of Conformance statement for such vendors when requested. LONZA shall audit raw material vendors/suppliers at regular intervals according to a defined program; and the documentation of the vendors/suppliers audited and date of audit shall be available for review by ORPHAN upon request.
5.5.2 LONZA is responsible for ensuring that all materials and components procured by LONZA for use in the PRODUCT are in full compliance with the specifications listed in documentation reviewed and approved by ORPHAN. Raw Materials are given a repeat test date upon the satisfactory completion of all initial testing. Repeat testing will be performed at defined time intervals to ensure the chemical and physical stability of the raw materials unless ORPHAN provides an official expiration date.
5.5.3 LONZA is responsible for ensuring that all materials are labeled (for ID and current status) and stored properly, used correctly, appropriately tested upon receipt, and traceable to the relevant Certificate of Analysis for the materials.
5.6 Materials Provided by ORPHAN for LONZA
ORPHAN is responsible for ensuring that all materials and components provided by ORPHAN for use in the PRODUCT are in full compliance with the specifications registered, ORPHAN will provide LONZA with a Certificate of Compliance statement for the vendors that ORPHAN is responsible for qualifying.
5.7 Master Production Records
LONZA may transcribe the manufacturing information (i.e., bulk manufacturing) into its own fonnat and will obtain written approval from ORPHAN for major changes to the process before manufacturing. Additionally Lonza will provide Orphan with all changes to process documentation, analytical methods, and specifications. Agreed upon changes to documentation will be handled as outlined by Change Management (see Section 10) of this agreement.
5.8 Standard Operating Procedures
LONZA is responsible for writing and approval of any SOPs required to manufacture, test, and store the PRODUCT in accordance with applicable GMP guidelines.
5.9 Methods Validation
5.9.1 ORPHAN is responsible for providing to LONZA approved copies of the most current and complete filed analytical methods relating to the PRODUCT for receipt of API and raw materials, in-process product testing, product lot release, and drug and product stability and cleaning validation.
5.9.2 ORPHAN is responsible for providing to LONZA a Certification of Methods Validation for all critical methods practiced by LONZA (raw materials testing, in-process product testing, product lot release, and drug and product stability) . The certifications should state, "The methods are appropriate for the intended purpose, are validated per relevant regulatory guidelines, and are readily available in case of a regulatory inspection."
5.10 Batch Numbers
5.10.1 The convention for LONZA "Batch Identification Number" (BIN) is as follows:
5.11 Dates of Manufacture and Expiration
5.11.1 Date of Manufacture: LONZA will allocate the Date of Manufacture based on the date that drying is complete for the PRODUCT.
5.11.2 Expiration Date: LONZA will calculate the expiry date from the Date of Manufacture using the currently approved expiry period. The expiration date will be the last day of the month assigned. Changes to the expiration date will be handled by Change Management (see Section 10).
5.12 Manufacturing and Equipment Data
LONZA is responsible for keeping records of equipment usage (previous PRODUCT produced in non-dedicated equipment), cleaning, and any maintenance/calibration performed.
5.13 Storage and Shipment
5.13.1 Storage: LONZA will store the PRODUCT under conditions approved by ORPHAN. LONZA will ensure that during storage before shipping of the PRODUCT, appropriate controls are in place to insure that there is no interference, theft, product contamination, or mixture with any other product or materials. ORPHAN will provide details of any labeling requirements and storage and shipping conditions for the PRODUCT.
5.13.2 Packaging and Labeling for Transit: The PRODUCT will be labeled and packaged for transit pursuant to instructions timely provided to LONZA in writing by ORPHAN and complying with cGMP.
5.13.3 Segregation of PRODUCT: LONZA will maintain proper segregation of the PRODUCT according to systems reveiwed and approved by ORPHAN. Different lots of a single product or different types of product will not be mixed on a pallet.
5.13.4 Shipment of Product to ORPHAN: Only approved, finished (unless required by ORPHAN), labeled PRODUCT will be shipped by LONZA to ORPHAN. LONZA will not ship any product that is unapproved or under quarantine without prior written approval from Orphan Medical, Inc.
6. QUALITY CONTROL
The testing of the PRODUCT is to be performed by LONZA as defined in the PRODUCT Specification, see Appendix I. Following LONZA's release of the PRODUCT to ORPHAN, the ORPHAN Quality Control Unit shall be responsible for approving or rejecting drug product manufactured, processed, or packed by LONZA.
6.2 In-Process and Finished Product Testing
6.2.1 A method transfer of any validated test method developed by ORPHAN will be completed prior to product release by LONZA.
6.2.2 LONZA will perform all in-process and finished product testing using approved specifications and methods of analysis. Laboratory notebook pages and representative sample chromatograms can be reviewed on LONZA's site by ORPHAN.
6.2.3 A LONZA Qualified Person/QA Representative will sign a Certificate of Conformity confirming that the lots produced in a campaign have been manufactured, packaged, tested, and meets the requirements of the Master Batch Record and Drug Product Specification. The current release documentation information can be found in Appendix III.
6.2.4 Any reference standards that are supplied by ORPHAN or its Affiliates must be accompanied by a COA listing the expiration date and any correction factors that need to be applied.
6.2.5 ORPHAN may perform testing to confirm the LONZA data. ORPHAN may perform confirmatory testing during the initial term of this Agreement to validate the LONZA data. Periodically thereafter, ORPHAN may test material to confirm the LONZA data. Dispute resolutions in conflicting test data will be handled according to the provisions of Section 9.
6.2.6 ORPHAN may perform release testing at a contract laboratory. Copies of all related documentation will be provided to LONZA upon request to support final disposition by LONZA.
6.3 Retain Samples
6.3.1 LONZA will retain samples of the active ingredients for a [ * ] beyond the ingredient date manufactured. LONZA will retain samples of raw materials for [ * ]. The amount of sample retained will be [ * ] quantity required to carry out all of the tests required to determine if the material meets its specifications, with the exception of sterility and pyrogen testing (CFR 211.170a).
6.4 Routine Stability Program
6.4.1 ORPHAN is responsible for maintaining a Stability Program and will request samples from Drug Product lots to be placed on stability as required.
6.5 Out-of-Specification (OOS) Investigations
LONZA is responsible for investigating any testing performed that fails to meet specifications. Each investigation will be reviewed by LONZA's Quality Assurance designee, and will follow internal procedures that are in accordance with regulatory guidelines. LONZA will inform ORPHAN of OOS results and any subsequent retest results.
6.6 Contract OC Laboratories
ORPHAN is responsible for ensuring the compliance and documented qualification of any QC lab contracted to perform testing of the Raw Materials and PRODUCT used in the manufacture of the finished PRODUCT through an appropriate laboratory audit for compliance.
7. QUALITY ASSURANCE
7.1 Deviations and Investigations
7.1.1 Deviations: Any deviation from the process during manufacture or OOS result must be carefully documented and approved by LONZA Quality Assurance and appropriate area management. ORPHAN will be informed at the time of all Pharmaceutical Process/Formulation Exception Reports (PFERs) and reserves the right to participate in the investigation. A copy of the final investigation report will be included in the Release Documentation package provided to ORPHAN.
7.1.2 LONZA will notify ORPHAN of the disposition of any rejected PRODUCT [ * ].
7.1.3 LONZA will notify ORPHAN immediately, in writing, if any problems are discovered that may impact PRODUCT lots previously shipped to ORPHAN.
7.1.4 Some investigations may require additional testing, stability, or validation to be conducted. This work will be performed by LONZA as agreed by both parties.
7.2 Lot Disposition
For each lot, LONZA will provide the release documentation required in Appendix III.
7.3 Quality Assurance Certificate of Compliance/Analysis
7.3.1 LONZA will provide a standard Certificate of Analysis indicating the test results of each test performed as well as a signed Certificate of Compliance for the campaign confirming that the PRODUCT has been manufactured, tested, and stored according to the requirements of the Master Production Record.
7.3.2 LONZA will provide complete copies to ORPHAN of the lot documentation (Executed batch record and analytical data). Shipment of the lots will require written prior authorization by ORPHAN.
7.4 Product Release
7.4.1 Shipment of the PRODUCT, once dispositioned as "Approved" by LONZA, is the absolute responsibility of ORPHAN'S quality department. ORPHAN'S approval will be undertaken by ORPHAN, based on ORPHAN'S internal procedures, the full document package provided by LONZA, and completion of any release testing required by ORPHAN Quality Control for their internal release criteria.
7.4.2 Any problem discovered by ORPHAN likely to cause rejection of the PRODUCT will be communicated to LONZA within [ * ] from receipt of the full release documentation package (see Appendix III).
7.5 Product Complaints and Recalls
7.5.1 Product Complaints: ORPHAN is responsible for receiving and initially investigating any PRODUCT complaints. ORPHAN will notify LONZA of any problems thought to be due to manufacture which are found during the distribution of the PRODUCT. When LONZA receives notice of manufacturing problems from ORPHAN, LONZA will promptly perform investigations for alleged problems. Investigation reports will be forwarded to ORPHAN within [ * ]. ORPHAN is responsible for reporting any complaint to the appropriate regulatory authority including adverse drug events reports. Any PRODUCT complaint received by LONZA will be immediately forwarded to ORPHAN.
Product Recall: ORPHAN, with data and assistance provided by LONZA, is responsible for filing Field Alerts and initiating PRODUCT recalls due to any defect considered sufficiently serious. ORPHAN will provide LONZA with a copy of any regulatory correspondence related to field alerts or recalls. ORPHAN will notify LONZA of any recall. LONZA will provide a [ * ].
7.6 Records Retention
7.6.1 LONZA will retain, [ * ], lot production records for the PRODUCT and materials for [ * ] from manufacture of lots. Validation records may need to be held for [ * ].
7.6.2 LONZA will retain lot records for the expiry date of the Clinical Trial Materials for [ * ] of [ * ] unless notified of a shorter retention period by ORPHAN, [ * ] of [ * ] past the stop use date.
7.7 Quality Assurance Presence in the Manufacturing Facility
7.7.1 LONZA will maintain adequate Quality Assurance presence in the manufacturing facility during the manufacture of the PRODUCT to ensure compliance with GMPs.
7.7.2 LONZA will permit ORPHAN'S presence in the manufacturing facility during the manufacture of the PRODUCT if requested by ORPHAN'S quality group.
8. REGULATORY COMPLIANCE
8.1 Regulatory Inspections
8.1.1 LONZA will immediately inform ORPHAN of any regulatory inspections that may involve the PRODUCT and permit a representative from ORPHAN Quality to be present, if required by ORPHAN.
8.1.2 LONZA will secure ORPHAN'S agreement prior to making any commitment to a regulatory agency regarding ORPHAN'S PRODUCT.
8.1.3 Additionally, LONZA will immediately forward to ORPHAN any regulatory correspondence on the PRODUCT or on other system related issues that support manufacturing, packaging, or testing for ORPHAN'S PRODUCT.
8.1.4 ORPHAN will immediately inform LONZA in writing of any regulatory issue that impacts LONZA's ability to manufacture the PRODUCT.
8.2 Regulatory Actions
8.2.1 ORPHAN will notify LONZA of any regulatory actions on the PRODUCT that may impact LONZA.
8.2.2 LONZA is responsible for supporting all lot record investigations associated with regulatory actions.
8.2.3 LONZA agrees to supply ORPHAN with any manufacturing, testing, or storage data [ * ], if requested, as the result of a regulatory inspection, or a potential regulatory exposure such as a recall or significant product complaint.
8.3 Regulatory Affairs
8.3.1 ORPHAN is responsible for ensuring all appropriate regulatory filings and import/export documentation are filed with regulatory agencies prior to shipment/human administration.
8.3.2 LONZA Quality Assurance will act as the point of contact between ORPHAN'S regulatory affairs staff or consultant regarding issues that impact the CMC registration information for the drug substances and/or drug product.
8.3.3 LONZA Quality Assurance will perform a technical/regulatory review of all documentation provided to ORPHAN to support regulatory submission.
8.3.4 ORPHAN will be responsible for making final decisions regarding CMC regulatory strategy.
8.3.5 ORPHAN will provide a copy of final regulatory submissions to LONZA Quality Assurance for reference during inspections.
8.3.6 LONZA will provide support for ORPHAN with respect to proposing appropriate CMC regulatory strategies and identifying potential regulatory consequences for issues involving drug substance.
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8.4 Right to Audit
8.4.1 LONZA will allow representatives from ORPHAN Quality to have access to their manufacturing, warehousing, laboratory premises, and records for audit purposes pursuant to this Section 8.4. ORPHAN representatives will be escorted at all times by LONZA personnel.
8.4.2 ORPHAN will provide a [ * ] notification for all planned audits.
8.4.3 LONZA will permit ORPHAN Quality to conduct preparatory audits either for initiation of GMP manufacture of the PRODUCT or for pre-approval inspections (PAI).
8.4.4 LONZA will permit ORPHAN Quality to conduct audits to address significant product quality or safety problems.
8.4.5 LONZA will permit ORPHAN Quality to perform [ * ] GMP compliance audit per [ * ] and [ * ] of [ * ] each. This includes audits required by ORPHAN'S commercial partners.
8.5 Audit Closeout
8.5.1 An exit meeting will be held with representatives from LONZA and ORPHAN to discuss significant audit observations.
8.5.2 ORPHAN will provide a written report of all observations within [ * ] to LONZA. Within [ * ] of the audit report receipt, LONZA will provide a written response to all findings that details corrective action to be implemented. LONZA will follow up to ensure that all corrective actions are implemented.
9. DISPUTE RESOLUTION
9.1 Non-Conformity Dispute
In the event that a dispute arises between LONZA and ORPHAN in the nonconformity of a lot of the PRODUCT, the supervisors of the Quality departments from both companies shall in good faith promptly attempt to reach an agreement. ORPHAN may only dispute a lot of PRODUCT which has been dispositioned and released by LONZA. Whatever the outcome, ORPHAN Quality retains the absolute right to determine product release status. Financial liability shall be determined according to the Supply Agreement.
9.2 Other Disputes
Other disputes shall be resolved in accordance with the Supply Agreement.
10. CHANGE MANAGEMENT
10.1 Technical & cGMP Impact Assessment
10.1.1 All changes shall proceed through a technical and cGMP impact assessment by the LONZA expert groups coordinated by LONZA's Quality Assurance change management personnel. The documents that contain ORPHAN'S intellectual property or changes that may affect (i) ORPHAN'S regulatory submissions or (ii) the support system that has a direct impact on the quality systems that will affect ORPHAN'S product, will also go through ORPHAN'S assessment for regulatory advice and implementation requirements, as per the agreements between ORPHAN and LONZA.
10.1.2 Any changes to documentation will be coordinated with ORPHAN by the responsible project scientist or project leader.
10.1.3 The scope of such a Change Management process includes Chemical Manufacturing, Pharmaceutical Manufacturing and Packaging processes. The associated changes may relate to: the Master Production Control Records (e.g. Master Formulas, Filling Work Orders, Packaging Work Orders); Bills of Materials; Analytical Standards and Test Methods (for Raw Materials and Finished Product); Stability Protocols; Purchase Specifications (for Raw Materials and Packaging Components); and ORPHAN specific Validated Equipment, Facilities, Utilities or Computer Systems.
10.1.3.1 All manufacturing, testing, and storage operations performed by LONZA for the PRODUCT will have ORPHAN Quality review and written approval within [ * ] of notification. ORPHAN'S Quality review and approval signifies the conformance of LONZA documents to ORPHAN'S CMC regulatory submissions.
10.1.3.2 Any significant changes will be mutually agreed upon in writing prior to implementation. All required regulatory approvals will be obtained prior to implementation.
10.1.3.3 Changes to the controlled documents or to validated equipment and systems specific to the PRODUCT must have ORPHAN Quality written approval, prior to implementation.
10.1.3.4 Administration changes to the controlled documents (e.g., typo corrections, formatting) do not require ORPHAN Quality written approval prior to implementation, but these changes must be submitted to ORPHAN Quality in a timely manner for review and approval.
11. PRODUCT AND PROCESS VALIDATION
11.1 Process Validation
LONZA is responsible for ensuring that the manufacturing process is validated. The validation should ensure that the process is capable of consistently achieving the PRODUCT acceptance specification.
11.2 Cleaning Verification/Validation
LONZA is responsible for ensuring that adequate cleaning is carried out between lots of different product to prevent contamination. Data should be available to support the campaign of lots of the same product and the type of cleaning that will be performed in between manufacturing of the same product. ORPHAN will provide information (i.e. [ * ]) to establish cleaning limits. The cleaning procedure and analytical methodology will be reviewed before the first product lots are made.
11.3 Equipment. Computer. Facility, and Utilities Qualification
LONZA is responsible for all equipment, computer, facility, and utility qualification activities associated with the PRODUCT.
11.4 Laboratory Qualification
LONZA is responsible for ensuring that all laboratories are in compliance with applicable cGMP's guidelines. If analytical work is performed at LONZA then ORPHAN will also provide any existing analytical documentation to assist in methods transfer or methods validation. In addition, if analytical work is not performed at the Conshohocken, Pennsylvania site, LONZA may elect to perform an audit on vendors to be used for analytical testing. LONZA will be responsible for insuring that the vendor is practicing within cGMP compliance.
12. ANNUAL PRODUCT REVIEW, ANNUAL REPORT AND DRUG LISTING
12.1 Annual Product Review
12.1.1 LONZA will perform an Annual Product Review for the PRODUCT and will issue a report to ORPHAN. This report will cover all manufacturing, testing, and storage activities performed by LONZA. It will be a review of any changes at LONZA in the manufacturing, testing, storage or validation of the PRODUCT in the previous calendar year and a summary of lots made, released, and rejected. Also, control charting or trend analysis of key product parameters will be performed. Any abnormalities will be explained in the annual review.
12.1.2 ORPHAN is responsible for preparing any Annual Report as required by applicable regulations, including 21 CFR 314.70, 314.81, and/or 601.12. At [ * ] calendar days before the Annual Report due date, ORPHAN shall request in writing from LONZA the chemistry, manufacturing, and controls data required for submission of the Annual Report. LONZA will provide the requested information to ORPHAN within [ * ].
12.2 Drug Listing
12.2.1 LONZA is responsible for drug listing as the manufacturer of the PRODUCT for ORPHAN, while ORPHAN is responsible for drug listing as the distributor of the PRODUCT. ORPHAN will provide LONZA with all required information needed to register the PRODUCT. ORPHAN will notify LONZA of the scheduled PRODUCT launch.
{Appendices are attached}
APPENDIX I: PRODUCT—SODIUM OXYBATE Specification
Sampling:
Contractual Release Specifications:
Some specification requirements for release of the bulk drug substance will be more restrictive than those approved in the NDA to ensure drug adequacy upon analytical retesting or anticipated degradation over time. Sodium Oxybate Powder must meet BP/EP/EC/Japan standards. Orphan Medical Quality Assurance will issue a certificate of analysis as the final release for the bulk drug substance.
APPENDIX II: LIST OF QUALITY CONTACTS
[ * ] [ * ]
Product Complaints
Note: *[ * ], as the Product Manager for SXB is the backup for all contacts.
Quality Agreement Appendix: Page 1
APPENDIX III: RELEASE DOCUMENTATION
The lot release document package will include copies of the batch record prior to release, analytical test data, a-Certificate of Analysis ("CO A") and a campaign Certificate of Compliance ("COC") and any deviations (manufacturing or laboratory).
Certificate of Analysis: A COA which is automatically generated by LONZA Quality Assurance will be provided and will include the name of the PRODUCT, lot number, date of manufacture, retest date, and analytical specifications. The COA will list the release tests performed by LONZA laboratories and actual test results.
Certificate of Compliance: The COC will attest to the fact that the PRODUCT lots produced during a campaign was performed in accordance with all applicable regulations, licenses, and company policies.
Amended and Restated Services Agreement
THIS AMENDED AND RESTATED SERVICES AGREEMENT (this "Agreement"), dated the 31st day of May, 2005 and effective as of January 1, 2005 (the "Effective Date"), is by and between EXPRESS SCRIPTS SPECIALTY DISTRIBUTION SERVICES, INC., a Delaware corporation ("SDS"), having a business address at 13900 Riverport Drive, Maryland Heights, Missouri 63043, and ORPHAN MEDICAL, INC. ("Orphan"), a Delaware corporation, having a business address at 13911 Ridgedale Drive, Suite 250, Minnetonka, Minnesota 55305.
WHEREAS, Orphan manufactures Product (as defined below), and desires to enter into an agreement with SDS, whereby SDS will facilitate the dispensing and distribution of Product, and perform certain services associated therewith;
WHEREAS, SDS has experience in providing the services desired by Orphan, and is willing to provide such services for Orphan on the terms set forth in this Agreement;
WHEREAS, SDS and Orphan are parties to a Services Agreement dated as of July 29, 2002 (the "Original Services Agreement"); and
WHEREAS, the parties wish to amend and restate in its entirety the Original Services Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises herein stated, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree that the Original Services Agreement shall be amended and restated in its entirety to read as follows:
As used in this Agreement, each of the following terms (and the plural or singular thereof, when appropriate) shall have the meaning set forth herein, except where the context makes it clear that such meaning is not intended:
"Act" shall mean the United States Federal, Food, Drug and Cosmetic Act, as amended from time to time.
"Additional Services" shall mean services relating to Product and the Xyrem Success Program(SM) to be performed by SDS as specified and agreed upon by the parties using an Additional Services Request Form included as Exhibit D to this Agreement. Such Additional Services Request Form shall be mutually agreed to and executed by both parties and, once so executed, shall be incorporated by reference and made a part of this Agreement.
"AWP" shall mean the average wholesale price of Product as reported by First Data Bank.
"Business Rules" shall mean the written documents related to the Xyrem Success Program(SM) that are mutually agreed upon by the parties which further describe the SOPs relating to how the Covered Services are to be performed.
"Confidential Information" shall have the meaning assigned to it in Section 5.1.
"Covered Services" shall mean those services to be performed by SDS relating to Product and the Xyrem Success Program(SM) as set forth in: (a) Exhibit A, (b) the SOPs and Business Rules as they existed on the Effective Date, and as modified during the term of this Agreement; provided that such modifications do not constitute a material change thereto, and (c) an Additional Services Request Form executed by both parties.
"DEA" shall mean the United States Drug Enforcement Administration.
"Facility" shall mean a distribution facility (or facilities) located in the United States that is owned and/or operated by SDS, and utilized by SDS in connection with performance of the Covered Services.
"FDA" shall mean the United States Food and Drug Administration.
"Fees" shall mean the fees as described in Section 4.2 hereof below to be paid by Orphan to SDS hereunder.
"HIPAA" shall mean Health Insurance Portability and Accountability Act of 1996, as further defined in the United States Code of Federal Regulations (CFR) 45, Part 164 – Security and Privacy section.
"Non-PAP Order" shall mean each shipment of Product by SDS to any Person other than a PAP Patient in accordance with applicable law and FDA guidelines.
"Non-PAP Patient" shall mean a Patient who is not eligible to participate in the PAP, as determined: (a) by NORD with respect to the financial eligibility of a patient; or (b) by Orphan with respect to other, non-financial criteria, and for whom SDS dispenses Product pursuant to a Non-PAP Order.
"NORD" shall mean the National Organization of Rare Disorders, which is responsible for determining whether individuals are eligible for participation in the PAP, based on financial criteria established by NORD, and for communicating such eligibility to SDS.
"PAP" shall mean the patient assistance program established by Orphan, pursuant to which SDS will provide dispensing services pursuant to the applicable SOPs and Business Rules.
"PAP Patient" shall mean a Patient who has been approved by NORD as eligible to participate in the PAP.
"PAP Order" shall mean a valid prescription indicating the dose, amount and strength of Product properly prescribed to a PAP Patient by a health care practitioner who is licensed to prescribe Product, and which is submitted to SDS in accordance with the relevant SOPs and Business Rules.
"Patient" means an individual who: (a) properly completes all necessary intake and Xyrem Patient Success forms (the form and content of which shall be mutually agreed upon by Orphan and SDS, and which shall comply with applicable laws and all applicable FDA requirements), as described in the relevant SOPs and Business Rules; and (b) is either deemed eligible by NORD to participate in the PAP, or is otherwise approved by SDS to receive Product.
"Patient Confidential Information" means individually-specific medical or prescription information and any other individually-identifiable information which may be deemed to be confidential or protected under federal or state law or regulations, including, without limitation, information that constitutes Protected Health Information under HIPAA.
"Person" shall mean any natural person, corporation, organization, association, partnership, limited liability company, HMO, or similar entity.
"Product" shall mean Orphan's proprietary Xyrem® (sodium oxybate) oral solution and dosing kit.
"SOPs" shall mean the written standard operating procedures mutually agreed upon by the parties which further describe the operational processes of SDS as they relate to the requirements of the Xyrem Success Program (SM) as required by Orphan and the FDA.
"Territory" shall mean the United States of America, including its territories where SDS is allowed to legally distribute and ship the Product.
"Marks" shall mean those registered and common law trademarks of Orphan that are listed in Exhibit C.
"VA FSS" shall mean the Veteran's Administration Federal Supply Schedule pricing contract provided to Orphan for the Product.
"WAC" shall mean the wholesale acquisition cost of Product,
"Xyrem Success Program(SM)" shall mean the pharmaceutical program for patients taking Xyrem® for which SDS shall perform the Covered Services hereunder, and which Orphan represents to be developed and implemented by, and proprietary to, Orphan.
Section 2.1 Covered Services. From and after the Effective Date, SDS shall provide the Covered Services for the benefit of Orphan.
Section 2.2 Exclusive Distributor. During the term of this Agreement, and for so long as the FDA mandates single central pharmacy administration of the Xyrem Success Program, all Product sold or made available through the PAP in the Territory will be distributed exclusively through SDS pursuant to this Agreement. If, during the term of this Agreement, the FDA no longer mandates single central pharmacy administration of the Xyrem Success Program and Orphan chooses to engage another distributor in addition to SDS (thus making SDS' distributorship hereunder non-exclusive), Orphan shall provide SDS one hundred eighty (180) days written notice thereof.
Section 2.3 Warehousing. All Product sold, or made available through the PAP, in the Territory shall be warehoused by SDS at the Facility in accordance with Exhibit A and any related SOPs and Business Rules.
SUPPLY OF PRODUCT; AUDIT
Section 3.1 Non-PAP Orders.
(a) General. Subject to direction from SDS regarding available space at the Facility, Orphan shall deliver to SDS at the Facility, at Orphan's own expense and on a consignment basis, sufficient quantities of Product to fulfill Non-PAP orders. The Product to be shipped pursuant to Non-PAP Orders will be furnished to, and held by, SDS on a consignment basis at the Facility at all times, except as provided in Subsection 3.1(b). The consignment of Product hereunder shall at no time be construed as a loan or other debt financing or secured transaction arrangement between the parties, and title to consigned Product shall remain with Orphan until transferred pursuant to Subsection 3.1(b).
(b) Transfer of Title. Upon confirmation of a Non-PAP Order in SDS' internal order processing system, SDS shall purchase from Orphan such Product being shipped from the Facility pursuant to such Non-PAP Order. Title to the consigned Product so purchased by SDS in connection with a Non-PAP Order shall pass to SDS at the time of such purchase.
(c) Pricing for Non-PAP Orders. Subject to the restrictions set forth in Subsection 4.1(d) of this Agreement or any FDA requirements, SDS shall have sole authority to determine pricing for Non-PAP Orders.
Section 3.2 PAP Orders. Subject to direction from SDS regarding available space at the Facility, Orphan shall deliver to SDS at the Facility, at Orphan's own expense, sufficient quantities of Product to fulfill PAP Orders. The Product to be shipped by SDS pursuant to PAP Orders shall be for the account of Orphan, and title to such Product shall remain with Orphan
until confirmation of the PAP order in SDS' internal order processing system, at which time title will pass to the PAP Patient. Once NORD approves a Patient as meeting the PAP financial criteria and eligible to participate in the PAP, SDS shall treat such Patient as so eligible until SDS (a) is notified otherwise by NORD or (b) determines that such Patient does not meet (i) the criteria established by NORD for financial eligibility, or (ii) other non-financial criteria established by Orphan as set forth in the Business Rules. SDS acknowledges and agrees that any determination made by SDS pursuant to Clause (b) above may be overruled by Orphan and the affected patient shall then be considered a PAP Patient and the relevant order treated as a PAP Order hereunder. SDS shall fulfill PAP Orders as set forth in the applicable SOP and Business Rule.
Section 3.3 Risk of Loss. All risk of Product loss or damage during the time that such Product is at the Facility, after receipt in good condition by SDS at the Facility, including inventory shortages which are unaccounted for, shall be borne by SDS, except to the extent caused by the negligence or willful misconduct of Orphan. Payment to Orphan by SDS for consigned Product lost or damaged while at SDS' Facility shall be based on Orphan's reasonable replacement costs, as reasonably determined and documented by Orphan.
Section 3.4 Financial Audit. During the term of this Agreement (excluding the months of December and January) and for a period of ninety (90) days after the expiration or termination of this Agreement, upon reasonable prior notice and during normal business hours, Orphan, or any third party auditor designated by Orphan, shall be entitled to audit and inspect those books and records of SDS which are maintained by SDS in connection with its performance of the Covered Services, subject to confidentiality constraints and applicable law. Such third party auditor (a) shall not have a conflict of interest with SDS or any of its affiliates (as determined by SDS in good faith), and (b) will be required to sign a confidentiality agreement in a form reasonably acceptable to SDS prior to commencing such audit. Neither Orphan nor its auditor shall have access to any Patient Confidential Information in the context of an audit.
Section 3.5 Regulatory and Compliance Audits and Information Requests.
(a) SDS shall provide to Orphan and/or the FDA, DEA or any other governmental body all documents and information requested by the FDA, DEA or any other governmental body in support of Orphan's regulatory filings or any governmental investigations or inquiries. Copies of all documents to be provided to the FDA or DEA shall be provided to Orphan in advance, if practicable, or otherwise within two (2) business days of delivery to the FDA or DEA. SDS shall notify Orphan immediately upon receipt of notice of any inspection by the FDA or DEA directed specifically toward Product, and Orphan shall have the right to have an employee present at any such inspection, if allowed by law. In addition, SDS shall notify Orphan of any FDA or DEA correspondence or inspections that concern SDS generally and which are related to any SDS compliance issues that may adversely impact SDS' ability to perform the services contemplated by this Agreement. SDS shall notify Orphan immediately of any notices, requests for information or other communications related to Product or SDS' ability to perform the Covered Services contemplated by this Agreement from the U.S. Department of Health and Human Services or any other government agency or any state healthcare program or other state agency and, to the extent permitted under applicable law, shall give Orphan copies of such communications.
(b) SDS shall from time to time submit to audits and inspections by Orphan during normal business hours or at any other time during which the services being audited are ongoing, including but not limited to, audits of regulatory and quality assurance SOPs and of records of contacts with regulatory agencies, provided the scope of any such audit or inspection shall be limited to information and facilities pertaining to Orphan's program. Orphan shall give SDS at least 2 business days' prior notice of any such inspection and at least 30 days' prior notice for any such audit, and Orphan shall bear the out of pocket costs of such audit or inspection.
(c) No employee of SDS who has been the subject of any disciplinary action by any State Board of Pharmacy shall be entitled to perform Covered Services.
Section 3.6 Returns and Replacement. In the event that Product is damaged in transit as a result of SDS' negligence or its designated shipper, SDS will replace the Product to the Patient free of charge once the damaged Product is returned to SDS. SDS will monitor all reports of lost Product for the potential for abuse and diversion. SDS will cooperate with state and federal authorities fully in any investigations of lost Product, and will provide reports of such loss to Orphan on a monthly basis for the purpose of allowing Orphan to track the Product and satisfy its FDA reporting requirements. SDS will investigate the loss of Product by interviewing the Patient, and/or physician, report the loss to Orphan and to the appropriate regulatory authorities, as required by law, and record the loss in the Patient's file. Where there is suspicion of abuse or diversion, SDS will contact the Orphan designee responsible for DEA issues, and lost Product will not be replaced without Orphan's approval. Where abuse or diversion is not suspected, SDS will replace the lost Product at no charge to the Patient in the event such loss is the result of SDS' negligence or its designated shipper and record the shipment in the Patient file. SDS will treat a repeat request for lost Product as suspicion of abuse or diversion and report it to the Orphan designee responsible for DEA issues, and SDS will not replace the lost Product without Orphan's approval. For damaged Product, SDS will make a good faith effort to arrange for the damaged Product to be returned to SDS. Upon receipt of damaged Product, SDS will keep the damaged Product in a secure locked area, and will dispose of it at SDS' cost in compliance with the applicable SOP for destruction of Product. If Product is returned to SDS due to a complaint of Product quality (i.e., Product taste, appearance, or faulty PIBA), Orphan shall reimburse SDS for the price paid by SDS to Orphan, if any, for such Product and for shipping costs associated with return of Product and SDS' sending of Product for quality assurance testing at Orphan's request. SDS shall not be required to disclose any Patient Confidential Information to Orphan pursuant to this Section 3.6 to the extent such disclosure is not permitted under HIPAA and other federal and state law.
Section 3.7 Recalls. If Orphan is required to recall or, on its own initiative, recalls or withdraws Product sold in the Territory, SDS shall reasonably assist Orphan in such recall in accordance with applicable laws and regulations. For such purposes, SDS shall maintain a complete and current list of all Patients and other third parties to whom SDS has shipped (or dispensed) Product, as well as from whom SDS has accepted returns of Product, with the lot numbers of Product dispensed/distributed or returned. Orphan shall pay for all reasonable costs and expenses incurred by SDS solely as a result of any such recall. SDS shall provide to Orphan, at Orphan's request, any information reasonably requested by Orphan in connection with Orphan investigations relating to recalled Product, subject to the confidentiality constraints imposed by HIPAA and any other federal or state law.
Section 3.8 Expired Product. Orphan will at its cost replace Product that expires prior to the purchase thereof by SDS. Orphan will not replace expired Product once it has been purchased by SDS. SDS will dispose of, or return, expired Product as reasonably directed by Orphan, subject to applicable law, and Orphan shall promptly reimburse SDS for all reasonable expenses incurred in complying with this Section 3.8.
Section 3.9 Territory. SDS shall use commercially reasonable efforts to obtain all necessary licenses and approvals to distribute Product in those areas of the Territory which, as of the Effective Date, SDS has not obtained such licenses and approvals. If SDS reasonably determines that there are one or more areas in the Territory in which SDS is likely able to obtain such licenses and approvals, but such distribution is not commercially feasible, the parties shall discuss SDS' concerns and mutually determine whether they will proceed with distribution in such area(s) of the Territory.
Section 3.10 Facility. Orphan reserves the right to inspect and approve any Facility used for Xyrem distribution prior to any change in the aforementioned Facility. The Facility shall be selected by SDS in its discretion and is subject to change from time to time upon no less than ninety (90) days prior written notice to Orphan. If there is an event of force majeure, as more fully described in Section 10.5, SDS shall provide such notice to Orphan as soon as reasonably practicable.
PURCHASE PRICE OF PRODUCT; FEES
Section 4.1 Purchase Price of Product.
(a) With respect to all Product purchased by SDS pursuant to Section 3.1, SDS shall pay a purchase price to Orphan equal to [ * ] as it may be changed by Orphan annually with at least five (5) days prior written notice to SDS. Orphan shall so notify SDS, First Data Bank and any other relevant drug pricing indices on the same date. Notwithstanding the foregoing, SDS shall pay Orphan the [ * ] for any Product for which SDS is required to charge such [ * ].
(b) The purchase price for Product purchased by SDS shall be due and payable to Orphan within thirty (30) days from the date of confirmation of the relevant orders for Product in SDS' internal order processing system. SDS shall provide Orphan with written confirmation of sales of Product on a weekly basis. If SDS makes payment in full of the purchase price of Product within the applicable time period, it shall be [ * ] of such Product, and the [ * ] by SDS by [ * ] to Orphan by [ * ].
(c) SDS shall be responsible for any sales tax or similar taxes payable in connection with the sale of Product to SDS.
(d) SDS shall have the right to establish the price at which it resells Product to Non-PAP Patients, and shall have all right, title and interest in and to any amounts that SDS receives from third parties in connection with Product dispensed or distributed pursuant to Non-PAP Orders; provided, however, that the price at which SDS sells Product shall not exceed the greater of (i) [ * ] percent of [ * ] for Product or (ii) the [ * ] Product.
Section 4.2 Fees. As compensation for the Covered Services performed by SDS, Orphan shall pay SDS the Fees described in Exhibit B or in an Additional Services Request Form executed by both parties. SDS shall invoice Orphan for the Fees on a monthly basis, and such Fees shall be due and payable to SDS within 30 days of the date of SDS' invoice. In the event that SDS has provided inaccurate information as listed under "Reporting" in the Covered Services, Orphan shall be credited at a rate of $[ * ] per hour for each hour expended by Orphan in correcting any such inaccuracies uncovered in the data received. Such credit shall be against the invoice for the month following the month in which such error(s) occurred and shall not exceed [ * ]. On the first anniversary of the Effective Date, and each anniversary thereafter, SDS shall be entitled to increase each of the Fees by no more than a percentage which is equal to the percentage increase to the then current 12 month Consumer Price Index (all items) as published by the U.S. Department of Labor, Bureau of Labor Statistics during such 12 month period. SDS shall notify Orphan in writing within 30 days after the effective time of any such increase in Fees.
Section 4.3 Late Penalty. Any amount not paid by the owing party on or before the respective due date thereof shall bear interest at the rate of [ * ] percent per annum ([ * ] percent per month) or, if lower, the highest interest rate permitted by law.
Section 4.4 Adjustment. In December 2006, and annually thereafter, the parties will, in good faith, re-evaluate the pricing set forth on Exhibit B to determine whether an adjustment thereto is warranted in light of certain unanticipated expenditures, efficiencies, reductions or other circumstances that may necessitate such an adjustment; provided, however, in no event shall either party be obligated at such time to agree to any such adjustment. Notwithstanding the foregoing, nothing in this Section 4.4 shall limit SDS' ability to increase Fees pursuant to Section 4.2 of this Agreement.
CONFIDENTIAL INFORMATION; OWNERSHIP
Section 5.1 Nondisclosure Commitments. The parties acknowledge that, as a result of this Agreement, each may learn confidential and proprietary information, including, but not limited to, information about Orphan's operations, business, and products, and information about SDS' report formats, computer software, business, and operations (all of which shall collectively be considered the "Confidential Information" of the respective party). Except as specifically provided herein, neither Orphan nor SDS shall disclose any Confidential Information of the other to any person or entity, or use, or permit any person or entity to use, any of such Confidential Information, excepting only: (a) disclosures to and use by the employees of Orphan or SDS who have a reasonable need to know such information in connection with performance of this Agreement, (b) disclosures which are required by law, and (c) disclosures that are made on a confidential basis to the attorneys, accountants, and other professional advisors of Orphan or SDS in connection with matters relating to this Agreement. Notwithstanding the foregoing, Confidential Information shall not include: (x) information which is public or becomes public through no fault of the receiving party, (y) information of which the receiving party has knowledge prior to receipt, and (z) information which is received by one party from a third person not under an obligation of confidentiality to the other party to this Agreement.
Section 5.2 Patient Confidential Information. Except as otherwise provided in Section 6.7, Orphan shall neither have access to nor be entitled to receive any Patient Confidential Information, except to the extent Orphan must have access to such Patient Confidential Information to satisfy its FDA reporting requirements associated with Product. Each party shall maintain the confidentiality of all information and records, including patient information if such party receives Patient Confidential Information in any form or manner, to the extent required by applicable law, including, but not limited to, HIPAA. All patient-related data and information obtained by SDS hereunder shall be and remain the property of SDS and shall be deemed the Confidential Information of SDS. SDS will not utilize Patient Confidential Information it comes into possession of as a result of this Agreement outside the scope of this Agreement. SDS will not engage in any activity designed to expand its information of individual Patients through the use of third parties for a purpose other than to effectuate the uses and disclosures contemplated by this Agreement. There shall be no prior use of Patient Confidential Information outside of the scope of this Agreement. Notwithstanding anything to the contrary, however, SDS and/or its affiliates may use any such Patient Confidential Information in the aggregate and on a de-identified basis with other drug-use data, to the extent permitted by law, without charge, for research, cost analysis, and other business purposes of SDS and its affiliates, so long as there is no specific disclosure of the Confidential Information of Orphan. Notwithstanding anything to the contrary herein, with respect to any information or documents that are subject to disclosure or that are requested pursuant to Section 3.5 or otherwise, and which contain Patient Confidential Information, SDS shall only be required to disclose such information and documents to the extent permitted by federal and state confidentiality laws and regulations, including, but not limited to, HIPAA and, in connection with any such disclosure to Orphan pursuant to Section 3.5 or otherwise which involves Patient Confidential Information, Orphan hereby represents that such disclosure is required by law or is intended for one of the purposes described in 45 C.F.R. § 164.512(b) and that such documents and information received by Orphan will be used solely to comply with such law or with one of the intended purposes under 45 C.F.R. § 164.512(b).
Section 5.3 Ownership. The parties acknowledge and agree that: (a) each party shall own all right, title, and interest in, to, and under, any and all Intellectual Property (Intellectual Property shall mean inventions, patents, copyrights, trade secrets, and other forms and types of intellectual property related to the distribution of sodium oxybate or gamma hydroxybutyrate, excluding trademarks, service marks, and/or trade dress) that it has independently made, conceived, and/or reduced to practice; (b) to the extent the parties have in the past or during the term of this Agreement, jointly invented any inventions, and/or jointly developed any other Intellectual Property, the parties shall jointly own, and have the right to use and/or otherwise exploit (on a non-exclusive basis), all right, title, and interest in, to, and under, any and all such Intellectual Property (however, under no circumstances shall there be any duty to account to the other party for any use and/or exploitation of any jointly owned Intellectual Property), and, further, the parties hereby grant to each other a non-exclusive, non-terminable, royalty-free, assignable license to any and all such jointly invented and/or jointly developed other Intellectual Property; and (c) this Agreement shall not constitute and/or be deemed to constitute either party's acknowledgement and/or agreement that any of the other party's alleged inventions, patent applications, patents, or other alleged Intellectual Property, is/are new, unobvious, valid, or enforceable, or that either party, any of its employees, and/or any of its independent contractors, are the inventors and/or owners of any patent applications that it has filed and/or any alleged inventions claimed in any such patent applications. Notwithstanding the foregoing, SDS disclaims any and all rights it may have in and to the mark Xyrem Success Program(SM).
Section 6.1 Initial Term; Renewal. The term of this Agreement shall begin on the Effective Date and continue through July 31, 2007, unless terminated earlier or automatically extended in accordance with the terms hereof. Not less than 120 days prior to the end of the initial or any renewal term of this Agreement, either party may notify the other party in writing that it desires to terminate this Agreement, effective as of the end of the then current term. If no such written notification is given, this Agreement shall automatically continue with the same terms and conditions as set forth herein for an additional 1 year term, subject to the right of termination as otherwise provided herein.
Section 6.2 Termination for Bankruptcy. Either party shall have the right to terminate this Agreement upon 5 days' written notice, if (a) the other party files a petition for reorganization or liquidation under any federal or state bankruptcy law, or any such petition is filed against such other party and, in either case, the petition is not withdrawn or dismissed within 60 days after filing, or (b) a receiver is appointed for any part of the other party's assets and said appointment is not vacated within 60 days.
Section 6.3 Termination for Noncompliance. Orphan shall have the right to terminate this Agreement upon 5 days' written notice to SDS if SDS is cited as non-compliant with regulatory requirements as determined by an audit of SDS facilities by Orphan and confirmed by a third-party audit, or if SDS is cited as non-compliant as determined by a regulatory body, and appropriate corrective action cannot be mutually agreed to by the parties within 30 days after such determination of non-compliance or such earlier date as is specified by the regulatory body.
Section 6.4 Termination for Cause. Notwithstanding anything to the contrary herein, either party may give the other written notice of a material breach of this Agreement. If the breaching party has not cured said breach within 30 days from the date such notice was sent, this Agreement may be terminated at the option of the non-breaching party. If the amount of time commercially reasonable for the breach to be cured is longer than 30 days, this Agreement may not be terminated by the non-breaching party pursuant to this provision until such commercially reasonable period of time has elapsed; provided, however, that in no event shall such cure period exceed 60 days from the date such notice was sent. Notwithstanding the foregoing, Orphan may terminate this Agreement under Section 10.5 if SDS is precluded from rendering Covered Services as a result of an event of force majeure.
Section 6.5 Transition of Covered Services. Upon termination or expiration of this Agreement, the parties shall mutually agree on an expeditious schedule of transition of the Covered Services. If Orphan terminates this Agreement pursuant to Section 6.2, 6.3 or 6.4, SDS shall be responsible for all costs and expenses incurred by SDS that are associated with such transition. If SDS terminates this Agreement pursuant to Section 6.2 or 6.4, Orphan shall be responsible for all costs and expenses incurred by SDS that are associated with such transition. If this Agreement expires pursuant to the terms of Section 6.1, each Party shall be responsible for its own costs and expenses incurred in connection with such transition. SDS shall promptly return to Orphan (or to any other third party in the Territory that can accept the Product as directed by Orphan) all Product then in SDS' possession or control which has not been purchased by SDS pursuant to Subsection 3.1(b).
Section 6.6 Return of Confidential Information. Upon termination or expiration of this Agreement, each party shall, if requested by the other party, promptly: (a) return to the other party all documentation and other materials (including all copies of original documentation or other materials) containing any Confidential Information, and (b) certify to the other party as to the destruction or return of all such documentation and other materials public through no fault of the receiving party.
Section 6.7 Transfer of Patient Information, Etc. Upon termination or expiration of this Agreement, for whatever reason, Orphan shall have the right to transfer all mutually-developed Xyrem Success Program(SM) SOPs and Business Rules and the toll free Xyrem telephone number to another specialty pharmacy and/or distributor of its choice, and SDS shall cooperate with Orphan in the transfer of such items to another qualified specialty pharmacy and/or distributor. Notwithstanding the foregoing, SDS shall not be required to, and Orphan shall not, disclose SOPs and Business Rules that contain Confidential Information of SDS to such other qualified specialty pharmacy and/or distributor, except to the extent required by law. In addition, Orphan may request that SDS also transfer Patient Confidential Information to such other specialty pharmacy for the purpose of continuing "treatment" (as that term is defined under HIPAA) of such Patients, and SDS shall expeditiously honor such request to the extent disclosure of such Patient Confidential Information by SDS is permitted under applicable law, including, but not limited to, HIPAA. If this Agreement has been terminated by Orphan under Sections 6.2, 6.3 or 6.4, SDS shall be responsible for all expenses incurred by SDS in connection
with the transition described in this Section 6.7. If SDS terminates this Agreement pursuant to Section 6.2 or 6.4, Orphan shall be responsible for all costs and expenses incurred by SDS that are associated with such transition. If this Agreement expires pursuant to the terms of Section 6.1, each Party shall be responsible for its own costs and expenses incurred in connection with such transition.
COMPLIANCE WITH LAW; REPRESENTATIONS AND WARRANTIES
Section 7.1 Compliance With Law. Each party agrees that it will perform its respective obligations hereunder in accordance with applicable federal, state and local laws, including but not limited to applicable DEA, FDA, state and local retail and wholesale pharmacy requirements. Orphan agrees that it will not use language stating that any entity other than SDS is the licensed pharmacy that distributes Product pursuant to this Agreement in any written materials that SDS is requested by Orphan to send to Patients as part of the Covered Services. Orphan may, without restriction, use any language referring to the Xyrem Success Program(SM), as well as any references to "pharmacy" in, or in conjunction with, any written materials that SDS is not requested by Orphan to send to Patients or any other party; provided that Orphan shall not use SDS' name in connection with such references. If SDS reasonably believes that any correspondence from Orphan to Patients that Orphan requests SDS to send to Patients as part of the Covered Services does not comply with any applicable federal, state, or local law, SDS shall notify Orphan and provide reasonable detail as to its determination. The parties shall discuss SDS' reasonable concerns and agree upon an alternative mailing or other course of action, if necessary. FDA laws are not limited to section 505 of the Federal Food, Drug and Cosmetic Act, but also include any special considerations required by the FDA for approval of any additional indication for the Product. SDS will be notified of such requirements in writing by Orphan. In the event any such special FDA requirements cause SDS' obligations under this Agreement to be materially more burdensome or expensive, the parties shall promptly negotiate an appropriate modification to the Fees, and if the parties cannot agree on such a modification, or SDS in good faith views such additional responsibility as too burdensome to continue with the Agreement, SDS shall have the right to terminate this Agreement without penalty upon 5 days' written notice to Orphan.
Section 7.2 Representations and Warranties.
(a) Each party hereby represents and warrants to the other party that: (i) it has all requisite corporate power and authority to enter into this Agreement and perform and observe all obligations and conditions required to be performed or observed by that party under this Agreement; (ii) neither the execution and delivery of this Agreement nor the performance by that party of its respective obligations under this Agreement will conflict with or result in a breach of any covenant or agreement between that party and any third party; (iii) this Agreement represents the legal, valid and binding obligation of that party; and (iv) such party has (or will have at such time as performance of its obligations under this Agreement may require) obtained all of the local, state and federal permits, licenses or other regulatory registrations or approvals necessary for the performance of its obligations under this Agreement. In the future, if necessary, SDS shall make a good faith effort to apply and obtain the requisite DEA license necessary in order for SDS to distribute Product to Persons other than the end-user; provided, however, that the foregoing obligation shall not apply if such license is not available.
(b) Orphan hereby represents and warrants that Product at the time of shipment to SDS' facility: (i) shall not be adulterated or misbranded within the meaning of the Act, or within the meaning of any applicable state or municipal law in which the definitions of adulteration or misbranded are substantially the same as those contained in the Act, as the Act and such laws are constituted and effective at the time of shipment; and (ii) shall not be a product which may not, under the provisions of the Act or FDA guidelines pertaining to the Product, be introduced into interstate commerce.
INDEMNIFICATION AND INSURANCE
Section 8.1 Indemnification.
(a) SDS shall indemnify and hold harmless Orphan and its directors, officers, employees, and affiliates from and against all third party claims, liabilities, losses, damages, costs, and expenses (including without limitation reasonable attorney's fees) arising out of: (i) any material breach by SDS of this Agreement, including, but not limited to, its representations and warranties; (ii) the negligent act or negligent omission, or the willful misconduct, of SDS or any of its employees or agents in connection with the performance of its obligations under this Agreement; and (iii) SDS' use of patient information in violation of applicable laws governing confidentiality; except to the extent any of the foregoing claims arise out of Orphan's negligence or willful misconduct or breach hereunder, including, but not limited to, a breach of Orphan's representations and warranties hereunder.
(b) Orphan shall indemnify and hold harmless SDS and its directors, officers, employees and affiliates from and against all third party claims, liabilities, losses, damages, costs, and expenses (including without limitation reasonable attorneys' fees) arising out of: (i) any material breach by Orphan of this Agreement, including, but not limited to, its representations and warranties; (ii) the negligent act or negligent omission, or the willful misconduct, of Orphan or any of its employees or agents in connection with the performance of its obligations under this Agreement; (iii) any claim relating to the manufacturing of the Product or use of the Product by a Patient or other individual; and (iv) use by SDS of a Mark in accordance with the terms of this Agreement; except to the extent any of the foregoing claims arise out of SDS' negligence or willful misconduct or breach hereunder, including, but not limited to, a breach of SDS' representations and warranties hereunder.
Section 8.2 Insurance. Each party shall procure and maintain during the term of this Agreement, comprehensive general liability insurance in the amount of [ * ] per claim made, and in the aggregate, including but not limited to, for contractual liability, personal and bodily injury, and product liability. Each party shall provide the other party with evidence of such insurance upon request. A party may not cause or permit such insurance to be canceled without obtaining comparable replacement coverage or modified to materially reduce its scope or limits of coverage during the term of this Agreement.
Section 9.1 Grant of License. Orphan grants to SDS a nonexclusive, royalty-free, nontransferable license to use the Marks in the Territory in connection with the rendering of the Covered Services and sale of Product contemplated by this Agreement, and SDS accepts the license subject to the following terms and conditions.
Section 9.2 Ownership of the Service Marks. SDS acknowledges that Orphan is the exclusive owner of the Marks and that all use of the Marks by SDS will inure to the benefit of and be on behalf of Orphan. SDS will do nothing inconsistent with such ownership and will reasonably assist Orphan in recording the evidence of this license arrangement with any appropriate government authorities. Nothing in this Agreement shall give SDS any right, title, or interest in the Marks other than the right to use the Marks in accordance with this Agreement, and SDS will not attack the title of Orphan to the Marks.
Section 9.3 Quality Standards. All use of the Marks by SDS will be in compliance with the quality control standards that are furnished from time to time by Orphan or its agents. SDS will reasonably cooperate with Orphan in facilitating Orphan's ultimate control of such nature and quality standards, will permit reasonable inspection of SDS' operation, and, upon request of Orphan, will supply Orphan with specimens of all uses by SDS of the Marks.
Section 9.4 Marking. SDS' use of the Marks will comply with all marking requirements and other laws pertaining to trademarks in force during the term of this Agreement.
Section 9.5 Form of Use. SDS will use the Marks only in the form and manner and with appropriate legends as prescribed from time to time by Orphan.
Section 9.6 Infringement Proceedings. SDS will promptly notify Orphan of any unauthorized uses of the Marks by others that come to SDS' attention. Orphan will have the sole right and discretion to bring infringement, dilution or unfair competition proceedings involving the Marks.
Section 9.7 Effect of Termination. Upon termination of this Agreement, SDS will immediately discontinue all use of the Marks and any term or symbol confusingly similar thereto, will cooperate with Orphan or its agents to apply to the appropriate authorities to cancel any recording of evidence of this Agreement from all government records, and will destroy all printed materials bearing the Marks.
Section 10.1 Notices. Except as otherwise specified in this Agreement any notice or other communication required or contemplated under the provisions of this Agreement shall be in writing and (a) delivered in person, evidenced by a signed receipt, (b) deposited in the United States mail, first class postage prepaid, (c) sent by electronic facsimile transmission, or (d) sent via Federal Express, Airborne, or any other similar express delivery service, to the addresses indicated below or to such other persons or addresses as the parties may provide by written notice to the other. The date of the notice shall be (x) the date of delivery if the notice is personally delivered or sent via Federal Express or similar express delivery service, or (y) three (3) days after the date of mailing if the notice is mailed by United States mail.
If to SDS:
Express Scripts Specialty Distribution Services, Inc.
13900 Riverport Drive
Maryland Heights, Missouri 63043
Attn: Vice President and General Manager
Fax No. (314) 702-7120
Express Scripts, Inc.
If to Orphan:
Attn: Vice President of Commercial Operations
Section 10.2 Invalidity. Should any of the provisions hereof become legally invalid or unenforceable, the remainder of this Agreement shall remain effective, provided that the essential purpose of the Agreement can still be carried out. In such event, the parties agree to negotiate a mutually acceptable amendment to the terms and conditions of this Agreement.
Section 10.3 Non-Waiver. A failure by either party to insist upon strict compliance with any term of this Agreement, to exercise any option, to enforce any right, or to seek any remedy upon any default of the other party shall not affect, or constitute a waiver of, the first party's right to insist upon strict compliance with that term, to exercise that option, to enforce that right, or to seek that remedy with respect to that default or any prior, contemporaneous, or subsequent default. No custom or practice of the parties at variance with any provision of this Agreement shall affect, or constitute a waiver of, a party's right to demand strict compliance with all provisions of this Agreement.
Section 10.4 Remedies. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY PUNITIVE, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR ANY LOSS OF PROFIT OR REVENUES RESULTING FROM EITHER PARTY'S BREACH OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION 10.4 SHALL LIMIT EITHER PARTY'S RIGHT TO INDEMNIFICATION UNDER SECTION 8.1 OF THIS AGREEMENT AGAINST ANY CLAIM BROUGHT BY A THIRD PARTY. The rights and remedies of each party under this Agreement shall be cumulative and in addition to any other rights or remedies available to such party, whether under any other agreement, at law, or in equity, including without limitation specific performance, a temporary restraining order, and temporary or permanent injunctions.
Section 10.5 Force Majeure. If the performance of any part of this Agreement by either party shall be affected for any length of time by fire or other casualty, government restrictions, war, riots, strikes, or labor disputes, lock out, transportation delays, and acts of God, or any other similar causes which are beyond the reasonable control of such party, such party shall not be responsible for delay or failure of performance of this Agreement for such length of time; provided, however, that the obligation of the parties to pay amounts then due shall not be suspended or delayed; and provided, further, that if SDS is precluded from rendering Covered Services for a continuous period in excess of 10 business days, Orphan shall be entitled to terminate this Agreement upon 5 days' written notice to SDS.
Section 10.6 Governing Law. This Agreement and performance hereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to choice of law principles.
Section 10.7 Successors and Assigns. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties, which consent shall not be unreasonably withheld.
Section 10.8 Relationship of the Parties. The parties are independent contractors and shall not be considered as an employee, agent or legal representative of any other party for any purposes whatsoever. Nothing herein shall be construed to create a partnership, joint venture or general agency. Except as expressly provided for herein, the parties shall have no authority to act for or on behalf of the any party or to sign or otherwise enter into any kind of contract, undertaking or agreement, or make any promise, warranty or representation, with respect to the Product or any other matter on behalf of any other party, and no other party shall be bound by or liable for any acts, obligations, or defaults of the other party, its employees or agents. Each party shall have exclusive liability and responsibility for workers' compensation insurance, taxes and other obligations with respect to itself, its employees and agents.
Section 10.9 Equal Opportunity. This contract is subject to the equal opportunity clause set forth in 41 C.F.R.s. 61-1.4(a), which is incorporated herein by reference.
Section 10.10 Complete Agreement; Amendment. This Agreement (together with the exhibits, Business Rules, and SOPs, all of which are hereby incorporated herein by reference) contains the entire agreement between the parties and supersedes all prior or contemporaneous discussions, negotiations, representations, warranties, or agreements relating to the subject matter of this Agreement. This Agreement may not be amended or changed in any of its provisions except by a subsequent written agreement between the parties.
Section 10.11 Headings. The article, section and paragraph headings used in this Agreement are for convenience only and are not part of the agreement between the parties.
Section 10.12 Survival. Notwithstanding any provision of this Agreement to the contrary, Section 3.3, Section 3.5(a), Article IV, Article V, Section 6.5, Article VII, Sections 8.1, 8.2, 10.3, 10.4, 10.6 and 10.12 shall survive the expiration or termination of this Agreement for any reason.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date indicated below.
EXPRESS SCRIPTS SPECIALTY
DISTRIBUTION SERVICES, INC.
/s/ Gerard A. Carino
/s/ John H. Bullion
Name: Gerard A. Carino Name: John H. Bullion
Title: President PBS & SDS Title: CEO
Date: 5/31/05 Date: 6/1/05
Administration of the Xyrem Success ProgramSM
Drug Information and Fulfillment Services
Physician and Patient Registries
Xyrem Patient Assistance Program as described in Section 3.2, and as outlined the Business Rules.
Dispensing Services
Provision of a Xyrem program manager
Orphan monitors production cycles and expected inventories and communicates information with SDS
SDS' inventory system tracks Product production cycles and planned availability
Inventory reports monthly to Orphan
Master Warehouse
Distribution agent for Xyrem within the Territory
Sole source distribution agent for Xyrem within the Territory
Separate storage, dispensing distribution and security area for Xyrem
Inventory of Xyrem
Inventory storage in compliance with Orphan's reasonable requirements
Maintaining mutually agreed upon inventory levels.
Tracking of Xyrem, by lot #, NDC# and expiration date.
Maintaining an FIFO inventory
Full Class I Recall capabilities
Management of a database of lot numbers
Return goods-storage, processing and disposal
Reporting that has been mutually agreed upon by the parties and verified by SDS for accuracy shall include the following:
Reporting as agreed on Product inventory (non-patient identifiable)
Adverse event reporting as required by Orphan and agreed to by SDS
Additional reports mutually agreed upon by the parties and within expectations that SDS is able to provide
Custom and ad hoc reports reasonably requested by Orphan
Other Covered Services
Free Trial Program
Opt-In Program (business reply cards processing of patients who have agreed to receive further correspondence from Orphan)
InSights Newsletters
Patient Surveys
Relabeling of Xyrem bottles
Xyrem pallet shipments
Any other services as mutually agreed upon by the parties by completing and executing an Additional Services Request Form.
Type of Fee
Amount Owed by Orphan
Base Business Non-PAP Administrative Fee* [ * ]
Supplemental Business Non-PAP Administrative Fee** [ * ]
PAP Administrative Fee [ * ]
PAP Order Dispensing Fee [ * ]
Custom and ad hoc reports [ * ]
Enrollment Fee*** [ * ]
Shipment Fee**** [ * ]
Faxes or e-mails to Orphan's sales force [ * ]
Re-verification of Patient insurance benefits under Free Trial Program [ * ]
Obtaining new prescription under Free Trial Program [ * ]
Production of offer letters under Free Trial Program [ * ]
Processing of Patient Business Reply Cards for opting-in to Patient correspondence from Orphan [ * ]
Processing and mailing of "inSIGHTS" Patient newsletters for new patients [ * ]
Processing and mailing of "inSIGHTS" Patient newsletters for pending/approved Patients [ * ]
Patient surveys [ * ]
Bottle re-labelling of [ * ]***** [ * ]
Bottle re-labelling of [ * ] [ * ]
Shipment of Xyrem pallets [ * ]
Preparation of Reimbursement letters to Patients (sent via Fed Ex) [ * ]
Preparation of Pharmacy letters to Patients (sent via Fed Ex) [ * ]
Orphan shall reimburse SDS for all [ * ], on a pass-through basis, meaning that Orphan shall reimburse SDS for the actual amount billed to SDS by its [ * ]. If the [ * ] cost is related to an SDS error (e.g., [ * ]), Orphan will not be responsible for [ * ] related to such errors.
Orphan shall pay SDS for any Additional Services as mutually agreed upon in an Additional Services Request Form executed by both parties.
*Payable on first [ * ] bottles of Product shipped by SDS per calendar year on Non-PAP Orders
**Payable on bottles of Product shipped by SDS per calendar year on Non-PAP Orders in excess of [ * ] bottles
***Orphan shall pay this Enrollment fee for [ * ], including but not limited to insurance verification and processing of a patient's prescription, regardless of whether Product is ultimately shipped.
****Orphan shall pay this Shipment Fee on the [ * ].
*****Orphan shall pay at this rate for re-labelling of bottles in [ * ], whether the occurrence of such re-labelling is before or after the Effective Date.
EXHIBIT C
XYREM
XYREM & DESIGN (As identified in U.S. Reg. No. 2,472,156)
XYREM & DESIGN (Color) (As identified in U.S. Reg. No. 2,423,880)
XYREM CIII SODIUM OXYBATE ORAL SOLUTION & DESIGN
XYREM SUCCESS PROGRAM
XYREM PATIENT SUCCESS PROGRAM
XYREM PHYSICIAN SUCCESS PROGRAM
1-866-XYREM88
O ORPHAN MEDICAL & Design (As shown in U.S. Reg. No. 1,906,107)
ORPHAN MEDICAL
EXHIBIT D
ADDITIONAL SERVICES REQUEST FORM
This Additional Services Request Form relates to and is part of the Amended and Restated Services Agreement between Express Scripts Specialty Distribution Services, Inc. and Orphan Medical, Inc. effective as of January 1, 2005.
1. Description of Additional Services to be Provided
2. Fees for Additional Services
Consent and Addendum to Amended and Restated Master Services Agreement
CONSENT AND ADDENDUM TO
AMENDED AND RESTATED MASTER SERVICES AGREEMENT
This Addendum (the "Addendum") to the AMENDED AND RESTATED MASTER SERVICES AGREEMENT dated as of May 31, 2005, as amended (collectively, the "Agreement"), by and between EXPRESS SCRIPTS SPECIALTY DISTRIBUTION SERVICES, INC. ("ESSDS") and ORPHAN MEDICAL, INC. ("Orphan Medical"), is entered into as of the 1st day of June 2006 (the "Effective Date") by and between ESSDS and Jazz Pharmaceuticals, Inc. ("Jazz Pharmaceuticals"). Capitalized terms not otherwise defined herein shall have the same meanings as in the Agreement.
WHEREAS, Jazz Pharmaceuticals acquired Orphan Medical on June 24, 2005 and desires to assume all rights and obligations of Orphan Medical under the Agreement; and
WHEREAS, pursuant to Section 10.7 of the Agreement, such assignment requires the written consent of ESSDS, which consent cannot be unreasonably withheld; and
WHEREAS, the parties further desire to clarify and describe in more detail the provision by ESSDS of certain Voucher Program Services (as defined in Section 2 of this Addendum) to Jazz Pharmaceuticals; and
WHEREAS, Section 10.10 of the Agreement provides that the Agreement may be amended by a written instrument signed by both parties; and
WHEREAS, ESSDS desires to consent to the assignment to Jazz Pharmaceuticals and the parties desire to supplement the Agreement as provided herein.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein and in the Agreement, the parties hereto agree as follows:
1. Incorporation of Recitals. The Recitals are hereby incorporated into the Addendum.
2. Assignment. In accordance with Section 10.7, ESSDS hereby consents to the assignment of the Agreement to Jazz Pharmaceuticals; provided, however, in the event that (i) the Xyrem® (sodium oxybate) License Agreement dated January 1, 2006 by and between Jazz Pharmaceuticals and Orphan Medical terminates and (ii) Orphan Medical notifies ESDSS in writing that the rights to Xyrem® (sodium oxybate) have reverted back to Orphan Medical, ESSDS hereby further consents to the assignment of the Agreement back to Orphan Medical. Jazz Pharmaceuticals accepts the foregoing assignment of the Agreement and all covenants and
responsibilities thereunder, and agrees to be bound by the terms and conditions of the Agreement. All references to "Orphan" in the Agreement are hereby replaced by "Jazz Pharmaceuticals".
3. Notices. In connection with the assignment of the Agreement to Jazz Pharmaceuticals, the parties agree to amend Section 10.1 of the Agreement to replace the notice information for Orphan Medical with the following:
If to Jazz Pharmaceuticals: General Counsel
Any future invoices or payments shall be sent to:
4. Definitions. As used in this Addendum, the following term (and the plural thereof, when appropriate) shall have the meaning set forth herein, except where the context makes it clear that such meaning is not intended:
(a) "Voucher Program Services" shall mean those services set forth in Exhibit A, attached hereto and incorporated herein by reference.
(b) Capitalized terms used herein but not defined herein shall have the meaning ascribed to them in the Agreement.
5. Fees. Jazz Pharmaceuticals shall pay ESSDS the fees described in Exhibit B in consideration of the performance of Voucher Program Services. The fees described on Exhibit B shall constitute full and complete payment for performance of the Voucher Program Services by ESSDS under the Agreement.
6. Certifications. In the performance of Voucher Program Services, ESSDS represents and warrants that:
(a) The prescriptions filled in connection with the Voucher Program Services will meet the requirements of the Xyrem Risk Management program and be filled in accordance with the terms of the voucher and the Standard Operating Procedures attached hereto as Exhibit A;
(b) ESSDS has not and will not (and shall use best efforts to ensure that its personnel has not and will not) receive payment from the patient or from Medicare, Medicaid or any other third party payor and has not and will not (and shall use best efforts to ensure that its personnel has not and will not) file a claim for payment from any source (other than in accordance with the terms of this Addendum); and
(c) The Voucher Program Services will be performed in accordance with all applicable laws, rules and regulations.
7. Continuation of Agreement. Except as expressly set forth herein, all of the terms and conditions of the Agreement shall remain in full force and effect.
{SIGNATURE PAGE FOLLOWS}
IN WITNESS WHEREOF, the parties have executed or caused this Addendum to be executed as of this day of June, 2006.
Its: President PBS & SDS Its: Chief Financial Officer
VOUCHER PROGRAM SERVICES
See attached.
Procedure Title:
Jazz Pharmaceuticals Program Enrollment
Procedure Number
JPP-0022-07-02
SOP Approval
[ * ] Sr. Compliance Manager Signature on File
[ * ] Director of Patient Care Coordination Signature on File
[ * ] Patient Direct Pharmacy Signature on File
Procedure Section Titles
Section Number
Enrollment 2
Voucher Processing 3
©2006 Express Scripts Specialty Distribution Services, Inc.
Confidential and Proprietary
Controlled Copy
This SOP outlines the process in which patient enrollments are completed in a consistent manner as individuals contact the program for consideration.
1. Enrollment
2. Voucher Processing
Word/Acronym
Admissions Team
Applicable Documents
Document Number
Change Control History
Change Implemented
[ * ] [ * ] [ * ]
Voucher Program Administrative Fee
$[ * ]/per patient
Voucher Program Dispensing Fee
$[ * ]/per prescription
Voucher Program Shipment Fee
The fee associated with enrolling a new patient into the Xyrem Success Program shall be billed in accordance with Exhibit B, Fees of the Agreement.
Addendum No. 2 to Amended and Restated Master Services Agreement
ADDENDUM No. 2 TO
This Addendum No. 2 (the "Addendum") to the AMENDED AND RESTATED MASTER SERVICES AGREEMENT dated as of May 31, 2005, as amended (collectively, the "Agreement"), by and between EXPRESS SCRIPTS SPECIALTY DISTRIBUTION SERVICES, INC. ("ESSDS") and ORPHAN MEDICAL, INC. ("Orphan Medical") and assigned to JAZZ PHARMACEUTICALS, INC. ("Jazz Pharmaceuticals"), is entered into as of the 22nd day of June, 2006 (the "Effective Date") by and between ESSDS and Jazz Pharmaceuticals. Capitalized terms not otherwise defined herein shall have the same meanings as in the Agreement.
WHEREAS, Jazz Pharmaceuticals desires ESSDS to provide certain Nursing Program Services (as defined in Section 2 of this Addendum) as a trial pilot program for its product, Xyrem, and related PAP; and
WHEREAS, the parties desire to include and describe in more detail the provision by ESSDS of certain Nursing Program Services as a trial pilot program under the PAP to Jazz Pharmaceuticals as described herein; and
WHEREAS, the parties desire to supplement the Agreement as provided herein.
a. "Nursing Program Services" shall mean those services set forth in Exhibit A, attached hereto and incorporated herein by reference that are
b. provided as a trial pilot program for the Jazz Pharmaceutical product, Xyrem and related PAP.
c. Capitalized terms used herein but not defined herein shall have the meaning ascribed to them in the Agreement.
3. Performance of Nursing Program Services. ESSDS shall perform the Nursing Program Services set forth in Exhibit A as a trial pilot program for Jazz Pharmaceuticals for its product, Xyrem and related PAP. ESSDS agrees to perform such Nursing Program Services with due care in accordance with the standards and practices which are generally accepted in the industry and exercised by other persons engaged in performing similar services in the local area and in accordance with all applicable federal and state laws and regulations. In the event the pilot program is transitioned into a permanent program under the PAP, the parties agree to renegotiate, in good faith, an agreement under which Nursing Program Services will be provided as a permanent program under the PAP.
4. Term and Termination. The term of this Addendum shall commence on the Effective Date, and continue through November 30, 2006, unless this Addendum is earlier terminated as provided herein or extended by the parties. Either party may terminate this Addendum on thirty (30) days' prior written notice to the other party, provided, however, that neither party may terminate this Addendum prior to August 31, 2006.
5. Fees. Jazz Pharmaceuticals shall pay ESSDS the fees described in Exhibit B in consideration of the performance of Nursing Program Services. The fees described on Exhibit B shall constitute full and complete payment for performance of the Nursing Program Services by ESSDS under the Agreement.
a. Except as expressly set forth in this Addendum, all of the terms and conditions of the Agreement shall remain in full force and effect.
b. To the extent there is a conflict between the terms and conditions of this Addendum and the terms and conditions of the Agreement, this Addendum shall control.
c. This Addendum may be executed in one or more counterpart copies, each of which shall be deemed an original, and all of which shall together be deemed to constitute one agreement. Facsimile execution and delivery of this Addendum is legal, valid and binding execution and delivery for all purposes.
IN WITNESS WHEREOF, the parties have executed or caused this Addendum to be executed as of this 22nd day of June, 2006.
/s/ Janne L. T. Wissel
Its: President PBS & SDS Its: SR VP Development
NURSING PROGRAM SERVICES
Patients to whom Nursing Program Services will be offered under the trial pilot program (the "pilot patient population") will include all new enrollees on a given day of the week (e.g., every Tuesday or such other day as determined by the parties) over a recommended period of [ * ].
ESSDS nurses will contact a random, select group of the pilot patient population at designated intervals over the course of the first 90 days of such individual's Xyrem therapy. There will be [ * ] "touch points" with the patient through the [ * ] refill: [ * ]
The patient may contact the nurse at other intervals throughout the pilot program. Additionally, it may be necessary for the nurse to contact the patient's physician throughout the pilot program for clarification of orders and/or compliance issues.
ESSDS will document all contact with the patients selected from the pilot patient population and their physicians' offices.
ESSDS will provide a monthly report to include patient [ * ].
Program Continuation
Outcomes for improvement in length of therapy will be measured and reported to determine whether permanent PAP program-wide implementation should occur.
Monthly Management Fee (prorated for partial months)
$[ * ]
The fee schedule listed above is subject to the following qualifications:
The fees apply to the Nursing Program Services only.
In the event the Nursing Program Services are canceled and this Addendum terminated, the nursing staff will continue to contact patients through the [ * ] refill.
SDS will be paid the Monthly Management Fee each month until all patients have cycled through the [ * ] refill.
Pricing will be re-evaluated upon permanent program-wide implementation.
ADDENDUM No. 3
TO AMENDED AND RESTATED MASTER SERVICES AGREEMENT
THIS ADDENDUM NO. 3 TO AMENDED AND RESTATED MASTER SERVICES AGREEMENT (this "Addendum") is entered into as of the 17th day of August, 2006 (the "Effective Date") by and between Express Scripts Specialty Distribution Services, Inc. ("SDS") and Jazz Pharmaceuticals, Inc.
WHEREAS, this Addendum relates to and is hereby incorporated into the Amended and Restated Services Agreement between Express Scripts Specialty Distribution Services, Inc. and Orphan Medical, Inc., dated May 31, 2005, which was effective as of January 1, 2005, as assigned to Jazz Pharmaceuticals, Inc., together with the Consent and Addendum dated June 1, 2006 and the Addendum No. 2 dated June 22, 2006 (hereinafter collectively referred to as the "Agreement"); and
WHEREAS, the NDC code for Xyrem (the "Product") has been changed due to the change in marketing company from Orphan Medical, Inc. to Jazz Pharmaceuticals, Inc.; and
WHEREAS, Jazz Pharmaceuticals, Inc. is awaiting a rebate agreement acceptance ("Acceptance") from Centers for Medicare and Medicaid Services ("CMS") which would provide rebates for the Product under the new NDC code ("New Lot"); and
WHEREAS, Jazz Pharmaceuticals, Inc. desires SDS to provide to Medicaid Patients (as defined below) the Product under the prior NDC code ("Prior Lot"), as opposed to the New Lot, until such Acceptance is completed; and
WHEREAS, Article 1, Additional Services, allows additional services to be incorporated into the Agreement through use of an Additional Services Request Form as described on Exhibit D of the Agreement; and
WHEREAS, the parties desire to supplement the Agreement through this Addendum.
2. Interim Management of Medicaid Patients. SDS shall provide the Prior Lot to Medicare Patients (as defined below) as further detailed below ("Additional Services").
SDS will manage and provide the Covered Services, described in the Agreement and on Exhibit A of the Agreement, for the specific provision, to Non-PAP Patients who have Medicaid coverage and are approved by Medicaid to receive the Product ("Medicaid Patients"), of the Prior Lot, as opposed to the New Lot, until such time as notification is received from Jazz Pharmaceuticals, Inc. that the Acceptance is finalized. Additional Services will require SDS to perform system program changes to ensure the accuracy of selection and provision of the Prior Lot for this particular group of Patients. In addition, the SDS operations team will need to develop the processes necessary and train staff to effectively transition the Medicaid Patients, These programming changes will have an impact on reporting, purchase orders, inventory management and other associated program aspects.
3. Fees for Additional Services:
a. A one time $[ * ] set up fee.
b. Medicaid Patients will be billed at $[ * ] per order for shipments from the Prior Lot to such patients.
IN WITNESS HEREOF, the parties have executed or caused this Addendum to be executed as of the date indicated above.
Name: Gerard A. Carino Name: Carol Gamble
Title: President, PBS & SDS Title: Sr. Vice President & General Counsel
Xyrem Supply Agreement dated as of June 30, 2000
AND CATALYTICA PHARMACEUTICALS, INC.
SUPPLY AGREEMENT