Exhibit 10.36
AMENDED AND
RESTATED
MANUFACTURING AND SUPPLY
AGREEMENT
THIS AMENDED AND RESTATED
MANUFACTURING AND SUPPLY AGREEMENT (the
“Agreement” ) made as of January 1, 2004
(the “Effective Date” ), by and between FIRST
HORIZON PHARMACEUTICAL CORPORATION ( “First
Horizon” ), a Delaware corporation, having offices at
6195 Shiloh Road, Alpharetta, Georgia, USA, 30005, and PATHEON INC.
( “Patheon” ), a corporation existing under the
laws of Canada having its registered office at 7070 Mississauga
Road, Suite 350, Mississauga, Ontario, L5N 7J8.
WHEREAS Patheon and
Sanofi-Synthelabo Inc. entered into a Manufacturing and Supply
Agreement dated October 1, 1999, which was subsequently
assigned by Sanofi-Synthelabo Inc. to First Horizon on
August 20, 2001 (the “Original Agreement”
); and
WHEREAS Patheon and First Horizon
have decided to amend and restate the Original Agreement in order
to add a new product and to revise certain of the existing terms as
set forth herein;
NOW THEREFORE in consideration of
the rights conferred and the obligations assumed herein, and
intending to be legally bound, the parties hereby agree that the
Original Agreement is amended and restated as follows:
1.0
INTERPRETATION
1.1
Definitions
. The following terms shall,
unless the context otherwise requires, have the following meanings,
respectively:
“Active
Materials” shall
mean the materials listed on Exhibit A hereto.
“Affiliate” shall mean any Persons directly or indirectly
controlling, controlled by, or under common control with such other
Person at any time during the period for which the determination of
affiliation is being made. For purposes of this definition,
the term “controlled” (including the correlative
meanings of the term “controlled by “and “under
common control with”), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of management policies of such Person
whether through ownership of voting securities, by contract or
otherwise.
“Client”
shall mean First Horizon
Pharmaceutical Corporation.
“Components” shall mean, collectively, all packaging
components, raw materials and ingredients (including labels,
product inserts and other labeling for the
* Redacted text
has been omitted and filed separtely pursuant to a request for
confidential treatment.
Products), required to be used in
order to produce the Products in accordance with the
Specifications, including Active Materials, and
“Component” means any one of the
foregoing.
“Confidential
Information” has
the meaning given to the term “Information” in the
Confidentiality Agreement between the parties dated as of
March 12, 2002 (the “ Confidentiality Agreement
”).
“Deficiency
Notice” shall have
the meaning ascribed thereto in Subsection 2.6(a).
“FDA”
shall mean the United States Food
and Drug Administration.
“Firm
Orders” shall have
the meaning ascribed thereto in Section 3.2.
“GMPs”
shall have the meaning ascribed
thereto in Subsection 2.5(a).
“Inventory” shall mean all inventories of Components and
work-in-process produced or held by Patheon in connection with the
manufacture of the Products in accordance with the
Specifications.
“Patheon”
shall mean Patheon Inc.
“Patheon Manufacturing
Requirements” shall
have the meaning ascribed thereto in
Subsection 2.5(a).
“Person”
shall mean a natural person, a
corporation, a partnership, a limited liability company, a trust, a
joint venture, any governmental authority or any other entity or
organization.
“Products”
shall have the meaning ascribed
thereto in Section 2.1.
“Quality
Agreement” shall
mean the quality agreement dated the date hereof between the
parties hereto, a copy of which is attached as
Exhibit D.
“Specifications”
shall mean, collectively,
(i) the product formulae, raw materials specifications,
manufacturing process and packaging specifications for the
Products, (ii) the quality control testing procedures and
specifications for the Products, and (iii) the Client incoming
inspection standards, all as provided or approved by Client in
connection herewith.
1.2
Annual Quantity.
In this Agreement for
purposes of calculating the volume of product in a calendar year or
any other period specified in this Agreement, references to
“Products shipped and delivered” or “Products
purchased” shall include Products ordered in conformity with
the provisions of this Agreement for delivery within that calendar
year, whether or not delivered, unless non-delivery is a result of
the actions of Client.
* Redacted text
has been omitted and filed separtely pursuant to a request for
confidential treatment.
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1.3
Exhibits. The following exhibits are attached
hereto and are incorporated in and are deemed to be an integral
part of this Agreement:
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Exhibit A
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Products
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Exhibit B
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Facilities
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Exhibit C
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Price List
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Exhibit D
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Quality Agreement
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Exhibit E
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Lot Numbering and Expiration
Dates
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1.4
Currency. All dollar amounts in this Agreement
expressed in the lawful currency of the United Sates of
America.
2.0
MANUFACTURE AND SUPPLY OF
PRODUCTS
2.1
Manufacture.
Patheon shall manufacture and
sell to Client the products listed on Exhibit A hereto (the
“Products” ) at the prices listed on
Exhibit C hereto (such prices being subject to adjustment in
accordance with the terms hereof). The Products will be
manufactured in the Patheon facilities listed in Exhibit B and
any change to a different manufacturing facility shall be approved
by the Client. Client shall purchase its entire requirement
of Products for sale in the United States from Patheon pursuant to
the terms of this Agreement, but the parties acknowledge that
Client is not hereby or herein, including the references to volume
in this Section 2.1, Article 9 and Exhibit C, giving
any guarantee of annual volume of Product. If and when Client
decides that it wishes to have Patheon manufacture the Product for
countries in addition to the United States, the Client shall inform
Patheon of any additional requirements related to such additional
jurisdiction and any resulting increase in cost will be borne by
the Client. The agreed additional costs and change over fees
shall be set out in a written amendment to this
Agreement.
2.2
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2.3
[Intentionally deleted.]
2.4
Packaging.
It is agreed that the
Products are to be supplied in bulk without packaging. Any
references in this Agreement to Patheon performing
packaging
* Redacted text
has been omitted and filed separtely pursuant to a request for
confidential treatment.
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means packaging of bulk Product as
opposed to finished Product. Client shall be responsible for
all finished Product packaging, labels, product inserts and other
labeling for the Products. Patheon’s name shall not
appear on the label nor anywhere else on the Products unless
required by a governmental authority or applicable laws or
regulations.
2.5
Quality Control and
Assurance.
(a)
Patheon shall manufacture, package,
test and ship the Products in accordance with (i) the current
good manufacturing practices as described in Division 2 of
Part C of the Food and Drug Regulations (Canada) and
Parts 210 and 211 of Title 21 of the United States Code of Federal
Regulations, together with the latest Health Canada and FDA
guidance documents pertaining to manufacturing and quality control
practices all as updated, amended and revised from time to time
(collectively “GMPs” ), and (ii) the
Specifications. Patheon’s responsibilities and
obligations described in the foregoing sentence are hereinafter
referred to as the “Patheon Manufacturing
Requirements” .
(b)
Patheon shall perform the quality
control and quality assurance testing specified in the Quality
Agreement.
(c)
If the Products as manufactured by
Patheon do not satisfy Patheon’s quality control and quality
assurance testing due to Patheon’s failure to produce the
Products in accordance with the Patheon Manufacturing Requirements,
Patheon shall, at its sole cost and expense, manufacture additional
Products to replace such defective Products. In such
circumstances, Client shall have no obligation to purchase or pay
for any rejected Products.
(d)
Notwithstanding any provisions of
this Agreement to the contrary, the parties agree that Patheon
shall not be liable or have any responsibility for any deficiencies
in, or other liabilities associated with: (i) the formulae and
procedures specified by Client; (ii) the safety (except to the
extent due to the fault of Patheon as determined in accordance with
the provisions of this Agreement), efficacy or marketability of the
Products; (iii) distribution risk; (iv) Components,
provided that any such deficiency was not reasonably discoverable
using the test methods detailed in the Specifications and applying
such test methods in accordance with GMP; or (v) services
provided by third parties in connection with the packaging of the
bulk Product.
(e)
Each time Patheon ships Products to
Client, it shall provide Client with a certificate of analysis that
sets out the actual test results for each lot of Products and which
certifies that the Products shipped to Client have been evaluated
by Patheon’s Quality Control/Quality Assurance department and
that the Products comply with the Patheon Manufacturing
Requirements.
* Redacted text
has been omitted and filed separtely pursuant to a request for
confidential treatment.
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Patheon shall not under any
circumstances ship Non-Conforming Products (as defined in
Section 2.6(a)) to Client.
2.6
Rejection of Products
.
(a)
Client shall inspect the Products
manufactured by Patheon within thirty (30) business days after
receipt at Client’s warehouse and shall give Patheon written
notice (a “Deficiency Notice” ) of all claims
for (i) Products which do not conform to the Patheon
Manufacturing Requirements or the tests results as shown on the
certificate of analysis (such Products being referred to herein as
“Non-Conforming Products” ), or
(ii) shortages in the amount of delivered Products, in each
case prior to the expiry of such thirty (30) day period.
Except as set out in Sections 4.2 and 4.3 below, Patheon shall have
no liability for any deviations or shortages for which it has not
received notice within such thirty (30) day period. Client
shall return, at Patheon’s expense, any Non-Conforming
Product. Cost and method of returned Non-Conforming Product
disposal shall be Patheon’s responsibility.
(b)
Upon receipt of a Deficiency Notice
relating to claims under 2.6(a)(i) above, Patheon shall have
10 business days to notify Client in writing as to whether it
agrees that the subject Products are Non-Conforming Products.
If Client and Patheon fail to agree within 10 business days after
Patheon’s notice to Client as to whether any Products
identified in the Deficiency Notice are Non-Conforming Products,
the parties shall mutually determine an independent laboratory to
evaluate whether the Products are Non-Conforming Products. If
such evaluation certifies that any Products are Non-Conforming
Products, Client may have those Products replaced in the manner
contemplated by Subsection 2.6(d).
(c)
Claims for shortages set out in a
Deficiency Notice delivered to Patheon pursuant to
Subsection 2.6(a)(ii) shall be dealt with in accordance
with normal commercial practices.
(d)
All fees and disbursements incurred
in connection with the independent determination by the laboratory
as described in Section 2.6(b) above shall be borne by
the party which determined incorrectly that the relevant Product
was or was not a Non-Conforming Product. Within 15 days of
the determination by the independent laboratory that the Product is
a Non-Conforming Product, Patheon shall replace such returned
Non-Conforming Product at its expense or if it is unable to make
prompt replacement, shall either credit Client’s account or
refund any payment made on the rejected Product, depending on
Client’s account balance.
2.7
Stability Testing.
Patheon shall conduct
stability testing on the Products as required by GMPs and in
accordance with the protocols approved by Client from time to time
and executed by the Client and Patheon. The fee proposal for
such
* Redacted text
has been omitted and filed separtely pursuant to a request for
confidential treatment.
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stability testing shall be prepared
by Patheon and approved by the Client, such approval to be
evidenced by the Client’s execution of such proposal.
Patheon shall not make any changes to these testing procedures
without prior written approval from Client. In the event that
any lot of Products fails stability testing, Patheon and Client
shall jointly determine the proceedings and methods to be
undertaken to investigate the causes of such failure, including
which party shall bear the cost of such investigation.
Patheon will provide any and all data and results relating to the
stability testing upon request by Client. From time to time,
Patheon shall, at the request of Client, also provide stability
testing services with respect to products not manufactured by
Patheon, the cost of such services to be agreed to between the
parties prior to such services being undertaken.
3.0
ORDERS, DELIVERY, INVOICING AND
PAYMENT
3.1
Yearly Forecast.
On the execution of this
Agreement, Client shall provide Patheon with a forecast of the
volume of each Product required during the first year of this
Agreement.
3.2
Orders/Forecasts.
During the term of this
Agreement, Client shall, on a monthly basis, submit to Patheon a 12
month rolling forecast that sets forth the total quantity of
Product that the Client has ordered and expects to order from
Patheon within the 12 month period. The first two months of
such forecast are to be considered firm orders (the “ Firm
Orders ”). Firm Orders in respect of batches of
Product of not more than 24 per month will be accompanied by a
purchase order for the Product to be produced and delivered to the
Client on a date not less than 75 days from the date Patheon
receives the purchase order. Each forecast and purchase order
will be provided to Patheon no later than the 15 th of
each month. The parties shall mutually agree on an acceptable
delivery schedule in the event the forecasted requirements
exceed 24 batches.
In addition, in January and
June of each year, the Client shall provide Patheon with a
written non-binding three year forecast (broken down by quarters
for the second and third years of the forecast) of the volume of
each Product the Client then anticipates will be required to be
produced and delivered to the Client during such three-year
period.
3.3
Written Orders.
The Firm Orders submitted to
Patheon pursuant to Section 3.2 shall specify Client’s
purchase order number, quantities by Product type, monthly delivery
schedule and any other elements necessary to ensure the timely
production and delivery of the Products. The quantities of
Products ordered in such Firm Orders shall be firm and binding on
Client and shall not be subject to reduction. Patheon shall
provide written confirmation of receipt of Firm Orders to the
Client within ten (10) calendar days of receipt
thereof.
3.4
Reliance by Patheon.
Client agrees that purchases
may be made by Patheon of the Components to satisfy the production
requirements for Firm Orders. In addition, the Client
authorizes Patheon to purchase Components in order to
satisfy
* Redacted text
has been omitted and filed separtely pursuant to a request for
confidential treatment.
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the production requirements for
Products for the first six months contemplated in the most recent
forecast provided by the Client pursuant to Section 3.2, and
agrees that Patheon may make such other purchases of Components to
meet production requirements during such longer periods as may be
agreed to in writing from time to time by the Client at the request
of Patheon. In such circumstances, if such Components are not
included in finished Products purchased by Client within six months
after such purchases have been made (or such longer period as the
parties may have agreed to), Client will pay to Patheon its costs
thereof and, in the event such Components are incorporated into
Products subsequently purchased by Client, Client will receive
credit for any of such costs previously paid to Patheon by
Client.
3.5
Minimum Orders.
The Products to be
manufactured and packaged by Patheon may only be ordered in
quantities equal to or greater than the minimum order quantities
specified in Exhibit C.
3.6
Late Shipments.
Patheon agrees that time is
of the essence of this Agreement. If Patheon becomes aware
that it will not meet a scheduled delivery date, Patheon will
promptly communicate this to Client. In the event of repeated
late deliveries, Patheon and Client shall meet to determine a
mutually satisfactory solution to this problem. If after such
meetings, there are continued late deliveries, Client shall be
entitled to treat same as a material breach of this Agreement and
the provisions of Section 5.3(a) hereof shall apply and
the time period specified in Section 5.3(a) shall
commence.
3.7
Termination.
If this Agreement expires or
is terminated in whole or in part for any reason other than a
default by Patheon as set out in subsection 5.3(a) or
(b), Client shall (in addition to any other remedies Patheon may
have in the event of default by Client):
(a)
purchase, at Patheon’s cost,
the Inventory applicable to the Products which were purchased,
produced or maintained by Patheon in contemplation of filling Firm
Orders, or in accordance with Section 3.4, prior to notice of
termination being given. Client’s obligation under this
section shall not exceed Patheon’s actual costs of
Components and Inventory in order to manufacture a six month supply
of Product based upon the most recent forecast unless the purchase
of such Components and Inventory was authorized by the Client
pursuant to Section 3.4;
(b)
purchase all undelivered Products
which were manufactured and/or packaged pursuant to a Firm Order,
at the price in effect at the time the order was placed;
and
(c)
satisfy the purchase price payable
pursuant to Patheon’s orders with suppliers of Components, or
in accordance with Section 3.4, provided such orders were made
by Patheon in reliance on Firm Orders.
* Redacted text
has been omitted and filed separtely pursuant to a request for
confidential treatment.
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If this Agreement is terminated as a
result of a default by Patheon, Client shall have the option to
purchase such of the items referred to in (a), (b) and
(c) above if it determines in its absolute discretion that the
items can be used by it.
3.8
Specifications.
All Components shall be
purchased and tested by Patheon at Patheon’s expense in
accordance with Patheon Manufacturing Requirements. Patheon
will not change the Specifications used to manufacture, test,
package and ship the Products without the written consent of
Client. Amendments to Specifications requested by Client will
only be implemented following a technical and cost review, subject
to Client and Patheon reaching agreement as to price revisions
necessitated by any such amendment in accordance with
Section 3.9 below.
3.9
Change in
Specifications.
(a)
If Client requests a change in the
Specifications which would result in an increase or decrease in
Patheon’s costs for Components or would cause Patheon to
incur other costs as a result of the change in Specifications, the
parties shall discuss, each acting reasonably and based on
satisfactory documentation provided by Patheon indicating the cause
of the price change, what impact, if any, such change should have
on the price of the Products and payment to Patheon of the related
costs. If Client, acting reasonably, accepts a proposed price
change, the proposed change in the Specifications shall be
implemented, and the price change shall become effective only with
respect to those orders of Products which are manufactured in
accordance with the revised Specifications.
(b)
Notwithstanding any change in the
Specifications implemented in accordance with the terms of
(a) above, Client agrees to purchase all Products manufactured
by Patheon based upon any “old” Specifications at the
then-current price for those Products. In addition, Client
agrees to purchase, at Patheon’s cost, all Inventory,
utilized under the “old” Specifications and purchased
or maintained by Patheon in order to fill Firm written Orders to
the extent that such Inventory can no longer be utilized under the
revised Specifications. Open purchase orders for Components
no longer required under any revised Specifications which were
placed by Patheon with suppliers in order to fill Firm Orders or in
accordance with Section 3.4 shall be cancelled where possible,
and where such orders are not subject to cancellation without
penalty, shall be assigned to and satisfied by Client.
(c)
If a change in Specifications must
be made by Client solely as a result of Patheon’s acts or
omissions, the parties will meet to determine who will bear any
costs arising from such change in the Specifications.
3.10
Shipments.
Patheon shall ship and
deliver the Products at Patheon’s premises at the facilities
listed in Exhibit B to such Client locations as requested by
Client and
* Redacted text
has been omitted and filed separtely pursuant to a request for
confidential treatment.
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at Client’s expense.
Client shall select the freight carrier used by Patheon to ship the
Products and may monitor Patheon’s shipping/freight practices
as they pertain to this Agreement. Risk of loss and title
shall pass to Client upon delivery by Patheon to the freight
carrier selected by Client at Patheon’s premises. For
greater certainty, Patheon agrees that it will be responsible for
preparation, on Client’s behalf and at Client’s
expense, of all shipping documents, including customs formalities
for export of the Products.
3.11
Invoices and Payment.
Except as otherwise provided
in this Agreement, Patheon shall charge Client for only those
Products that are shipped to Client. Invoices shall be sent
by fax or email to such fax number or email address as may be
provided by the Client in writing from time to time. Patheon
shall also submit to the Client, with each shipment of Products, a
duplicate copy of the invoice covering such shipment. Each
such invoice shall, to the extent applicable, identify the Client
purchase order number, Product numbers, names and quantities, unit
price, freight charges and the total amount to be remitted by
Client. Client shall pay all such invoices within thirty (30)
days of the date thereof.
3.12
Lot Numbering/Expiration
Dates. Patheon
shall make arrangements for and implement the imprinting of lot
numbers, expiration dates, retest dates or “package-by”
dates, as applicable, on each Product container as required by GMPs
for each Product shipped. Such lot numbers and dates shall be
affixed on the Products and/or on the shipping carton of each
Product as is required by GMPs. The system used by Patheon
for lot numbering and expiration dates is detailed on
Exhibit E hereto. Except in circumstances constituting
force majeure pursuant to Section 10.10 or an inability of
Patheon to obtain Components due to no fault of Patheon or
circumstances beyond Patheon’s reasonable control (including,
without limitation, where Product is undergoing an investigation in
respect of quality matters), Patheon shall take best efforts to
ensure that Product shall have not less than 21 months remaining
before expiration at the time of shipment of such Product by
Patheon; provided, however, in the event that Product will have
less than
