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DISTRIBUTION AGREEMENT

Distribution Agreement

DISTRIBUTION AGREEMENT | Document Parties: HENRY SCHEIN, INC | ID BIOMEDICAL CORPORATION You are currently viewing:
This Distribution Agreement involves

HENRY SCHEIN, INC | ID BIOMEDICAL CORPORATION

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Title: DISTRIBUTION AGREEMENT
Date: 3/4/2005

DISTRIBUTION AGREEMENT, Parties: henry schein  inc , id biomedical corporation
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EXHIBIT 10.31

Portions of this agreement have been omitted and separately filed with the SEC with a request for confidential treatment. The location of those omissions have been noted by [**].

DISTRIBUTION AGREEMENT
FOR FLUVIRAL™ (INFLUENZA VACCINE)

between

ID BIOMEDICAL CORPORATION

and

HENRY SCHEIN, INC.


 

TABLE OF CONTENTS

             
        Page
 
           
1.
  DEFINITIONS     1  
 
           
2.
  APPOINTMENT AND AUTHORITY OF DISTRIBUTOR     3  
 
           
3.
  SUPPLY AND PURCHASE OF PRODUCT     4  
 
           
4.
  PURCHASE PRICE AND PAYMENT     7  
 
           
5.
  DELIVERY OF PRODUCT     7  
 
           
6.
  MARKETING OF PRODUCT     9  
 
           
7.
  REGULATORY COMPLIANCE     10  
 
           
8.
  TRADEMARKS AND OTHER INTELLECTUAL PROPERTY     12  
 
           
9.
  CONFIDENTIAL INFORMATION; PUBLICITY     13  
 
           
10.
  FORCE MAJEURE     14  
 
           
11.
  WARRANTIES OF IDB AND HSI     15  
 
           
12.
  INDEMNIFICATION OBLIGATIONS OF IDB AND HSI     17  
 
           
13.
  INSURANCE OBLIGATIONS OF IDB AND HSI     18  
 
           
14.
  LIMITATION OF LIABILITY     18  
 
           
15.
  TERM AND TERMINATION     19  
 
           
16.
  NOTICES     21  
 
           
17.
  ASSIGNMENT     21  
 
           
18.
  GOVERNING LAW, JURISDICTION AND VENUE     21  
 
           
19.
  MISCELLANEOUS     22  
     
SCHEDULES:
   
SCHEDULE 1
  MINIMUM QUANTITY; PURCHASE PRICE AND ADJUSTMENT; RESALE TO OTHER DISTRIBUTORS; AND PAYMENT TERMS
SCHEDULE 2
  TRADEMARK(S)
SCHEDULE 3
  COMMITMENTS TO GOVERNMENT OF CANADA
SCHEDULE 4
  ADVERSE REACTION REPORTING
SCHEDULE 5
  PRODUCT RECALL PROCEDURE

i


 

Portions of this agreement have been omitted and separately filed with the SEC with a request for confidential treatment. The location of those omissions have been noted by [**].

DISTRIBUTION AGREEMENT

      This DISTRIBUTION AGREEMENT (together with the attachments and exhibits hereto, the “Agreement”) is entered into as of December 2, 2004 (the “Effective Date”) by and between ID BIOMEDICAL CORPORATION , a corporation organized and existing under the laws of the Company Act of British Columbia and having its principal office at 1630 Waterfront Centre, 200 Burrard Street, Vancouver, BC V6C 3L6 Canada (“IDB”), and HENRY SCHEIN, INC. , a corporation organized and existing under the laws of the State of Delaware, USA and having its principal office at 135 Duryea Road, Melville, NY 11747 USA (“HSI”).

WHEREAS:

      A. IDB develops and manufactures proprietary vaccines, including an injectable vaccine for the prevention of influenza virus infection in humans that is approved in Canada and under development for the U.S. market, and has all right, title and interest in the Product (as defined below); and

      B. HSI is a leading distributor of vaccines in the Territory (as defined below), with expertise in sales, marketing and cold chain logistics, and desires to and has agreed to act as non-exclusive distributor of IDB for sales of Product in the Territory; and

      C. IDB is willing to supply HSI with Product for resale in the Territory, and HSI is willing to purchase Product for resale in the Territory, on the terms and conditions of this Agreement.

      Now, therefore, in consideration of the foregoing premises and the mutual covenants and undertakings set forth below, the Parties hereby agree as follows:

1. DEFINITIONS

      1.1 “ Affiliate ” means, with respect to a Party, any corporation or other business entity that, directly or indirectly, is Controlled by, Controls or is under common Control with such Party, but only for so long as such relationship exists. “Control,” as used in this Section 1.1, means having the power to direct, or cause the direction of, the management and policies of any entity, whether through ownership of voting securities, by contract, or otherwise.

      1.2 “ Average Sell Price ” shall mean [**]

      1.3 “ Commencement Date ” shall mean the date that IDB receives the initial Marketing Authorization from the Regulatory Authority required to market Product in the Territory in the first Flu Season, which shall in no event be later than April 1, 2008 or, if such initial Marketing Authorization is received prior to such date, then the Commencement Date shall be as provided in Section 7.2 below.

[**] - Confidential or proprietary information redacted.

 


 

      1.4 “ Confidential Information ” shall mean any confidential or proprietary information (including, without limitation, know-how, trade secrets, and other confidential or proprietary information relating to Product research, development, manufacturing, marketing, sales and financial information related thereto), whether oral, visual or written, that is disclosed by one Party hereto (the “ Disclosing Party ”) to the other (the “ Receiving Party ”) in connection with this Agreement, including, without limitation, reports provided by HSI to IDB pursuant to Section 2.3 below.

      1.5 “ Flu Season ” shall mean the period from approximately October 1 through March 31.

      1.6 “ Intellectual Property ” shall mean any patent, copyright, trade secret, know-how, trademark, tradename, design right, moral rights or other intellectual property right related to the Product under the laws of any governmental authority, domestic or foreign, including all applications and registrations related to any of the foregoing.

      1.7 “ Marketing Authorization ” shall mean the Biologics License Application (BLA) approved by the Regulatory Authority and required to distribute or to deliver for distribution Product lawfully in the Territory, together with any renewals and replacements thereof and amendments thereto.

      1.8 “ Minimum Doses ” shall mean the number of doses of Product set forth in clause (i) of Paragraph 1 of Schedule 1 to this Agreement.

      1.9 “ Minimum Percentage ” shall mean the percentage set forth in clause (ii) of Paragraph 1 of Schedule 1 to this Agreement.

      1.10 “ Minimum Quantity ” shall mean the quantity of Product that the Parties have agreed shall be the minimum quantity to be purchased by HSI from IDB for each Flu Season, as specified in Paragraph 1 of Schedule 1 to this Agreement, as such Minimum Quantity may be modified from time to time in accordance with the terms of this Agreement; such Minimum Quantity shall be subject to IDB’s annual influenza vaccine commitments and pandemic commitments to the Government of Canada during the Term (as provided in Section 3.2).

      1.11 “ Net Sales Revenue ” shall mean [**]

      1.12 “ Other Distributors ” shall mean sub-distributors, wholesalers and other resellers to which HSI may sell Product in accordance with Paragraph 3 of Schedule 1 to this Agreement.

      1.13 “ Parties ” shall mean IDB and HSI, and “Party” shall mean either of them as the context indicates.

      1.14 “ Product ” shall mean IDB’s injectable influenza virus vaccine product [**]

      1.15 “ Purchase Price ” shall mean the price to be paid by HSI to IDB for all doses of Product supplied to HSI under this Agreement, as set forth in Paragraph 2 of Schedule 1 to this Agreement.

[**] - Confidential or proprietary information redacted.

2


 

      1.16 “ Regulatory Authority ” shall mean the United States Food and Drug Administration, an agency of the U.S. Department for Health and Human Services, and any successor agency thereto.

      1.17 “ Shipping Point ” shall mean a single distribution center located in the continental United States to which Product shall be shipped under this Agreement, which single distribution center shall be nominated by HSI in its discretion from time to time, but not more than once for any given Flu Season.

      1.18 “ Specifications ” shall mean the specifications provided in the Marketing Authorization, including, but not limited to, those specifications to ensure that the Product is and will continue to be safe, pure and potent, as such specifications may be modified from time to time in accordance with the terms of this Agreement or so as to comply with the requirements of the Regulatory Authority.

      1.19 “ Term ” shall mean the duration of this Agreement as specified in Section 15.1.

      1.20 “ Territory ” shall mean the United States of America, including all fifty (50) states and the District of Columbia, and all of its territories and possessions.

      1.21 “ Third-Party Vaccine Products ” shall mean injectable influenza virus vaccine products, manufactured by or on behalf of any person or entity other than IDB or its Affiliates, [**]

      1.22 “ Trademark(s) ” shall mean the trademark(s), trade names, service marks and logos identified in Schedule 2 to this Agreement, and such other trademark(s), trade names, service marks and logos as may be identified and indicated to HSI by IDB in writing from time to time during the Term.

      1.23 “ Transfer Price ” shall have the meaning given in Paragraph 2(B) of Schedule 1 to this Agreement.

2. APPOINTMENT AND AUTHORITY OF DISTRIBUTOR

      2.1 Subject to the terms and conditions of this Agreement, IDB hereby appoints HSI as its non-exclusive distributor for the resale of Product in the Territory, and HSI hereby agrees to act in that capacity beginning on the Commencement Date. HSI hereby agrees that [**] . HSI shall have the non-exclusive, non-assignable (except in accordance with Section 17 below), non-licensable and non-sublicensable right, after the Commencement Date and throughout the Term, to promote, sell, market and distribute Product to customers (either directly or through Affiliates or Other Distributors) in the Territory; provided, however, HSI shall not resell to Other Distributors more than the allowable maximum number of doses of Product specified in Paragraph 3 of Schedule 1. HSI may, on and after the Commencement Date, describe itself as a distributor of Product for IDB in the Territory but it shall not hold itself out as IDB’s agent or representative or as otherwise being authorized to bind IDB in any way. IDB hereby grants to each of HSI’s Affiliates and Other Distributors the rights granted to HSI in this Section 2.1 solely to the extent necessary to perform their obligations with respect to the Product.

[**] - Confidential or proprietary information redacted.

3


 

      2.2 HSI shall actively promote, distribute and sell Product only within the Territory, and neither HSI nor its Affiliates or Other Distributors shall promote or solicit orders for Product or donate, sell, offer to sell or otherwise distribute Product outside the Territory, or where they ought reasonably to be aware that the ultimate destination for Product is outside the Territory. HSI and its Affiliates and Other Distributors and their respective employees and agents shall not promote Product for any indications not approved for such Product by the Regulatory Authority. HSI shall forward to IDB all inquiries relating to Product from customers or potential customers outside the Territory.

      2.3 As Product distributor, HSI shall determine the prices and other terms and conditions under which it offers Product for sale and sells Product to customers within the Territory. On or prior to the Commencement Date, HSI shall provide IDB with a resale certificate in such form, and containing such information, as required by IDB. On a monthly basis during the Term, beginning after the Commencement Date, HSI shall provide a detailed written report to IDB, in a mutually agreeable format, describing [**]. HSI shall deliver such reports to IDB in connection with the monthly meetings conducted pursuant to Section 6.3. Notwithstanding the foregoing, HSI shall not be required to identify names or addresses of customers of Product or Third-Party Vaccine Products and shall not be required to provide information which HSI is prohibited by contract or law from providing to third parties.

      2.4 HSI shall not make any alterations or knowingly permit any alterations to be made to Product without IDB’s express written consent, which consent may be withheld in IDB’s sole discretion.

      2.5 The Parties acknowledge and agree that IDB may sell Product to any United States governmental agency or body at any time between the Effective Date and the Commencement Date under a special procurement process to address influenza vaccine shortages or other immediate needs of the U.S. government, and such sales shall not be subject to the terms of this Agreement; provided, however, that IDB may indicate to the U.S. government a preference for distribution of some quantity of Product under such circumstances by and through HSI, although IDB shall not be deemed to be in breach of this Agreement or to have any liability to HSI, and HSI shall have no right to terminate this Agreement or exercise any other remedies against IDB, if IDB does not indicate such preference to the U.S. government or the U.S. government fails to distribute Product under such circumstances by or through HSI.

3. SUPPLY AND PURCHASE OF PRODUCT

      3.1 Subject to Section 3.2 and Paragraph 2(C) of Schedule 1 to this Agreement, IDB agrees to use commercially reasonable efforts to develop, manufacture, apply for Marketing Authorization of, apply for the release of and deliver to HSI, on or before the delivery dates specified in Schedule 1, the Minimum Quantity of Product as a final, packaged product. HSI hereby commits to purchase the Minimum Quantity of Product provided by IDB to HSI for each Flu Season from and after the Commencement Date during the Term, for the Purchase Price described in Schedule 1, provided delivery and release of the Minimum Quantity occurs on or before [**] of such Flu Season. IDB agrees to notify HSI promptly of any delay in the manufacturing and shipping schedule, the cause of such delay and the anticipated extent of such delay, or in the event IDB is unable to manufacture (and the cause for such inability to

[**] - Confidential or proprietary information redacted.

4


 

manufacture) some or all of the Minimum Quantity of Product for any given Flu Season. Recognizing the difficulties involved in vaccine manufacturing, the Parties acknowledge and agree that IDB shall not be deemed to be in breach of this Agreement or to have any liability to HSI, and HSI shall have no right to terminate this Agreement under this Section 3.1 or exercise any other remedies against IDB, if IDB fails to manufacture any or all of the Minimum Quantity of Product for any given Flu Season provided that IDB has used commercially reasonable efforts to develop, manufacture, apply for Marketing Authorization of, apply for the release of and deliver to HSI, on or before the delivery dates specified in Schedule 1, the Minimum Quantity of Product as a final, packaged product. [**]

      3.2 Notwithstanding anything to the contrary in this Agreement, HSI acknowledges and agrees that IDB’s obligation to supply the Minimum Quantity of Product to HSI under this Agreement is subject to, and the Minimum Quantity shall be reduced by, IDB’s contractual annual commitments to provide Product to the Government of Canada and additional contractual commitments to provide Product to the Government of Canada in the event of influenza pandemics in Canada, if any, which commitments shall have priority over IDB’s commitments to HSI hereunder. Such commitments to the Government of Canada are described further on Schedule 3. The Parties agree that IDB shall not be deemed to be in breach of this Agreement or to have any liability to HSI, and HSI shall have no right to terminate this Agreement, in the event IDB is unable to supply HSI with the Minimum Quantity of Product because of such commitments to the Government of Canada. IDB shall keep HSI informed, in the monthly meetings described in Section 6.3, of the quantity (if any) of Product necessary to meet such commitments to the Government of Canada for a given Flu Season and the impact on the Minimum Quantity of Product available to HSI with respect to such Flu Season.

      3.3 Except as otherwise specified in Section 3.4 below, IDB agrees that, with respect to the timing of shipment of a given quantity of Product into the Territory, IDB will allocate such quantity of Product among HSI and IDB’s other distributors in the Territory on a pro rata basis, based on HSI’s and each such other distributor’s respective Minimum Percentage. Thus, IDB will supply HSI with a percentage of each lot of Product that is shipped into the Territory that is approximately equal to HSI’s Minimum Percentage, subject to the overall Minimum Quantity limitations set forth in this Agreement.

      3.4 HSI shall be granted a first right of refusal to acquire a percentage of increased production of Product as provided in this Section 3.4. [**]

      3.5 All Product shall be packaged and labeled for sale and delivered by IDB to HSI in accordance with the regulations of the Regulatory Authority, such packaging indicating that the Product is manufactured by IDB and that the Trademarks are registered trademarks of IDB. Subject to compliance with applicable regulations of the Regulatory Authority, IDB may at any time withdraw the Product from the market or alter the Specifications as it deems necessary or appropriate and/or as may be required by the Regulatory Authority, including without limitation changes in design, production or packaging of Product.

      3.6 IDB shall be responsible for exporting Product from any location in which IDB may manufacture or have manufactured Product and shall obtain any necessary export licenses required for such export. IDB shall be responsible for obtaining any necessary licenses or

[**] - Confidential or proprietary information redacted.

5


 

approvals of applicable regulatory agencies in the Territory required for the importation of Product into the Territory and for the payment of all duties, fees and charges required for such importation; provided , that, HSI shall be the importer of record of Product into the Territory and HSI shall cooperate with and assist IDB, upon IDB’s written request and at IDB’s expense, in obtaining approvals of regulatory agencies in the Territory required for the importation of Product into the Territory.

      3.7 The Regulatory Authority’s release of each lot of Product is necessary before HSI is allowed to distribute Product. The Parties recognize that the timing for obtaining Regulatory Authority release is uncertain. However, IDB shall use its commercially reasonable efforts to obtain the necessary Regulatory Authority releases as soon as reasonably possible each Flu Season and, to the extent reasonably possible, by [**] of each Flu Season after the Commencement Date for [**] of the Minimum Quantity and by [**] of each Flu Season after the Commencement Date for [**] of the Minimum Quantity; provided , that, if and to the extent that Product is not manufactured or available for release, or that some or all Regulatory Authority releases are not obtained, on or before either [**] in a given Flu Season after the Commencement Date, irrespective of the reason therefor, (i) IDB shall not be deemed to have breached any obligations under this Agreement or to be liable to HSI hereunder provided that IDB has used its commercially reasonable efforts to obtain the necessary Regulatory Authority releases as soon as reasonably possible each Flu Season, and (ii) notwithstanding the provisions of Section 10 below, if [**] of the Minimum Quantity of Product is not released by [**] in such Flu Season, HSI shall not be obligated to purchase the amount of Product that was not released by such date. Notwithstanding the foregoing, HSI may elect to purchase Product released after [**] (provided release is obtained by a date acceptable to HSI), in which case it shall notify IDB in writing of HSI’s decision to acquire Product released after [**] within five (5) business days after [**] , which notice shall include the quantity of Product HSI desires to purchase and the acceptable post- [**] release date for such Product. If IDB reasonably believes such release date is achievable, IDB shall use its commercially reasonable efforts to obtain Product release by such date (or by such other date as the Parties may mutually agree in writing). HSI shall return to IDB (at IDB’s expense) any Product not released by [**] that HSI decides not to purchase. HSI shall pay IDB the Purchase Price for all Product released by [**] , as well as all Product released after [**] that HSI elects to purchase, in accordance with the terms and conditions of this Agreement, with no right to return such Product to IDB (except only as set forth in Sections 5.2 and 5.3) even if HSI is unable to sell such Product.

      3.8 IDB will provide HSI with a copy of IDB’s key clinical development milestones for Product in the Territory (the “Milestones”) promptly after execution of this Agreement, which Milestones shall be subject to modification by IDB from time to time. IDB will provide HSI with written reports regarding progress made with respect to the Milestones (as modified) as of June 30, 2005, December 31, 2005, and quarterly thereafter through December 31, 2006. HSI agrees that the Milestones and progress reports are being provided by IDB for informational purposes only, and that IDB shall not be deemed to be in breach of this Agreement or to have any liability to HSI, and HSI shall have no right to terminate this Agreement under this Section 3.8 or exercise any other remedies against IDB, in the event the development of Product does not proceed in accordance with the Milestones. HSI further agrees that the Milestones and all progress reports shall be considered Confidential Information of IDB under this Agreement.

[**] - Confidential or proprietary information redacted.

6


 

      3.9 [**]

4. PURCHASE PRICE AND PAYMENT

      4.1 HSI shall pay IDB the Purchase Price for the Minimum Quantity of Product, and all other Product supplied by IDB to HSI under this Agreement, as the Purchase Price is described and calculated in accordance with Paragraph 2 of Schedule 1.

      4.2 IDB may invoice HSI at any time after Product has been delivered to the Shipping Point. Payment in full of the Transfer Price of all Product in each shipment shall be due and paid by HSI to IDB within thirty (30) days after the later of (i) the date of delivery of such Product to the Shipping Point or (ii) the date of release of such Product by the Regulatory Authority. Reconciliation and payment or credit of the final Purchase Price (the Transfer Price as adjusted in accordance with Paragraph 2(B) of Schedule 1) shall be made as provided in Paragraph 2(D) of Schedule 1. Should HSI fail to pay IDB any amount due IDB on or before the due date for payment, HSI shall pay IDB the full amount due plus interest on such unpaid amount from its original due date until the date IDB receives full payment, such interest to be at the rate specified in Paragraph 5 of Schedule 1. For the avoidance of doubt, in the event that Product is delivered to HSI and invoiced by IDB, but subsequently is properly rejected by HSI in accordance with Sections 5.2 and 5.3 of this Agreement, then HSI shall pay the full Transfer Price, but IDB shall give appropriate credit to HSI unless the rejected Product is replaced by IDB at IDB’s expense in accordance with Section 5.3.

      4.3 During the term of this Agreement and for a period of three (3) years thereafter, HSI and its Affiliates shall keep accurate books and records with respect to the sale and distribution of Product in accordance with U.S. generally accepted accounting principles (“GAAP”) consistently applied and in sufficient detail to enable IDB to determine the correctness of all payments made to IDB hereunder. Upon written request by IDB, HSI shall permit an independent certified public account or IDB in-house auditor or accountant (“Accountant”) (to be determined and selected by IDB and reasonably acceptable to HSI), to inspect HSI’s books, records and facilities, and copy such books and records, to the extent such Accountant reasonably deems necessary or appropriate for the sole purposes of verifying the completeness and accuracy of the reports delivered and payments made under this Agreement and ascertaining HSI’s compliance with its obligations under this Agreement. The Accountant’s report based on such inspection shall be limited to a detailed report on those subjects. [**] HSI will pay IDB the amount of any such deficiency within thirty (30) days of the date of the invoice therefor, and shall pay interest at the rate specified in Paragraph 5 of Schedule 1 for any past due amounts.

5. DELIVERY OF PRODUCT

      5.1 Subject to HSI’s satisfaction of its importation obligations under Section 3.6, IDB agrees to deliver all Product ordered by HSI hereunder FOB Shipping Point.

      5.2 All Product is shipped on a non-returnable basis except only as set forth in Sections 3.7 and 5.3 and except if there is a Product recall. HSI shall pay IDB the Purchase Price for all Product delivered to HSI and released by the Regulatory Authority even if HSI is unable

[**] - Confidential or proprietary information redacted.

7


 

to sell such Product, subject only to HSI’s right to reject Product as provided below. Not later than [**] days after its receipt of each shipment of Product at the Shipping Point, and sooner if reasonably possible, HSI shall notify IDB as provided in Section 5.3 of any basis for rejecting any such Product (the only bases for rejection being as specified in Section 5.3). If HSI fails to give such notice to IDB within such period, then such Product shall be deemed to be finally accepted by HSI. Notwithstanding the foregoing, if HSI thereafter discovers a latent defect which could not readily be identified upon a reasonable inspection of Product at the time of delivery to the Shipping Point, and such latent defect constitutes a Defective Product (as defined in Section 11.4 below), HSI shall inform IDB of such Defective Product within five (5) business days of such discovery, and the provisions of Section 5.3 shall apply.

      5.3 To reject Product, HSI shall, within the rejection period specified in Section 5.2, notify IDB of its rejection in writing, describing in detail the basis for such rejection (which must be either, and shall be limited to, (i) a Defective Product as defined in Section 11.4 below, or (ii) physical damage to Product in the course of shipment to HSI) and the amount of Product affected, and request a return authorization (“RA”) number. IDB shall provide the RA number to HSI within [**] days after receipt of the request. Within [**] days after HSI’s receipt of the RA number, HSI shall return to IDB the rejected Product, freight prepaid, with the RA number displayed on the outside of the carton. IDB reserves the right to refuse to accept any rejected Product that does not bear an RA number on the outside of the carton. As promptly as possible, and within [**] days after receipt of properly rejected Product if reasonably possible, IDB shall use commercially reasonable efforts to replace the Product, at its expense, as provided in Section 5.4. IDB shall pay the shipping charges back to HSI for properly rejected Product; otherwise, HSI shall be responsible for the shipping charges.

      5.4 In the event HSI rejects any shipment of Product in accordance with Sections 5.2 and 5.3 or in the event of failure to obtain Product releases from the Regulatory Authority by [**] of a given Flu Season, then IDB shall use commercially reasonable efforts to provide, but shall not guarantee to provide, replacement Product, subject in all respects to IDB’s commitments to the Government of Canada as provided in Section 3.2. In the event IDB does not supply replacement Product to HSI within a reasonable period (at least [**] days) and HSI notifies IDB in writing that it elects not to wait beyond such period for replacement Product, then IDB shall credit HSI for the amount, if any, previously paid by HSI for such rejected or unreleased Product, but IDB shall not be deemed to be in breach of this Agreement or to have any liability to HSI because it failed to supply replacement Product; provided, however, that if HSI has not yet paid for such rejected or unreleased Product and IDB fails to supply replacement Product, HSI shall have no obligation to pay for such rejected or unreleased Product. If IDB will not be able to supply replacement Product until after [**] of a given Flu Season, then HSI may elect, at its option, to accept such replacement Product after such date or to receive a credit for the amount, if any, previously paid by HSI for the rejected or unreleased Product, provided that HSI notifies IDB in writing of its election within five (5) business days after [**] . If HSI wrongfully rejects Product or wrongfully fails to take delivery of any shipment of Product, then IDB shall be entitled to invoice HSI for the Transfer Price and then the Purchase Price of such Product as set forth in Schedule 1, together with the cost of disposing of such Product, if applicable, and HSI shall pay such invoiced amount within thirty (30) days of the invoice date.

[**] - Confidential or proprietary information redacted.

8


 

      5.5 Risk of loss of or damage to Product supplied by IDB to HSI shall pass to HSI at the time Product is delivered to the Shipping Point. If HSI properly rejects Product in accordance with Sections 5.2 and 5.3, then risk of loss of or damage to Product will pass back to IDB upon delivery by HSI to the first return carrier. Title to Product shall pass to HSI at the time Product is delivered to the Shipping Point. If any shipment of Product is delivered to the Shipping Point before such Product is released by the Regulatory Authority, HSI shall quarantine such Product, at its sole cost, until such Product is released. HSI shall have title to, and shall bear all responsibility and liability with respect to, all Product after it is delivered to the Shipping Point, including all Product in quarantine.

6. MARKETING OF PRODUCT

      6.1 Notwithstanding anything to the contrary in this Agreement, HSI hereby agrees that [**] . Without limiting HSI’s obligations under this Agreement, HSI may promote, sell and distribute Third-Party Vaccine Products provided that such promotion, sale and distribution are consistent with this Section 6.1 and HSI’s other obligations under this Agreement. [**]

      6.2 Without limiting its other obligations under this Agreement, HSI shall exercise commercially reasonable efforts to actively promote the use and sale of Product and the use of the Fluviral brand name (or other Trademark as may be indicated by IDB) throughout the Territory. In this context, “commercially reasonable efforts” means at least the quality and quantity of efforts that HSI does or would use to promote the use and sale, and expand the sale, of any influenza vaccine originated or sold by HSI that is distributed in substantially the same quantities as the quantities of Product contemplated in this Agreement (with at least the same level of advertising, promotion and sales support). IDB agrees to provide HSI with such technical and clinical data as HSI may reasonably require in order to promote, distribute and sell Product in the Territory, subject to the provisions of Section 9.

      6.3 HSI and IDB shall convene by telephone, videoconference or in person, on a quarterly basis—and more frequently if reasonably requested by either Party— until the initial Marketing Authorization for Product is received and then monthly thereafter—and more frequently if reasonably requested by either Party—to discuss (as may be relevant at the time) regulatory developments affecting Product, HSI’s marketing plan, strategy and marketing and sales efforts proposed for Product for a given Flu Season, IDB’s Product supply issues, if any, IDB’s Product commitments to the Government of Canada for a given Flu Season, as described in Section 3.2, and such other relevant issues as either Party may propose. [**] Each Party shall consider in good faith the views expressed by the other Party during such meetings.

      6.4 HSI shall, and shall require its Affiliates and Other Distri


 
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