EXECUTION COPY SUPPLY AGREEMENT

Exhibit 10.16

 

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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT (INDICATED BY ASTERISKS) HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER 17 C.F.R. SECTIONS 200.80(B)(4), 200.83 AND 230.406.

 

EXECUTION COPY

 

 

SUPPLY AGREEMENT

 

Between

 

BRISTOL-MYERS SQUIBB COMPANY

 

and

 

SKINMEDICA, INC.

 

for

 

VANIQA ^®

 

Dated as of May 14, 2004

 

 

TABLE OF CONTENTS

 

 

(i)

TABLE OF CONTENTS ( continued)

 

 

(ii)

TABLE OF CONTENTS (continued)

 

 

SCHEDULES

 

 

(iii)

THIS SUPPLY AGREEMENT (this “ Agreement” ) dated as of May 14, 2004 (the “Agreement Date ”), is between Bristol-Myers Squibb Company, a Delaware corporation (“ BMS ”), and SkinMedica, Inc., a Delaware corporation (the “ Company” ).

 

RECITALS

 

WHEREAS, the Company has entered into that certain Asset Purchase Agreement (the “Asset Purchase Agreement ”) dated April 29, 2004 with Women First HealthCare, Inc. ( “WFHC ”) to purchase certain rights, title and interest in and to the Product; and

 

WHEREAS, the Company wishes to purchase the Product from BMS, and BMS wishes to supply the Product to the Company, pursuant to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties (as defined below) hereby agree as follows:

 

SECTION 1.

 

DEFINITIONS

 

Section 1.01. Definitions .

 

For purposes of this Agreement:

 

“ Affiliate ” means, with respect to any Person, any Person which, directly or indirectly, controls, is controlled by, or is under common control with, the specified Person. For the purposes of this definition, the term “ control ”, as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management of that Person, whether through ownership of voting securities or otherwise.

 

“ Agreement ” means this agreement, together with all appendices, exhibits and schedules hereto, and as the same may be amended or supplemented from time to time.

 

“ BMS Know-How ” shall have the meaning set forth in the License Agreement.

 

“ BMS Manufacturing Know-How ” means ***.

 

“ C.F.R. ” means the U.S. Code of Federal Regulations.

 

“ Controlled by ” shall have the meaning set forth in the License Agreement.

 

“ Effective Date ” means the date on which the Company and WFHC close the Company’s purchase of the Vaniqa ^® assets pursuant to that certain Asset Purchase Agreement, dated April 29,2004 entered into by the Company and WFHC (as amended from time to time). For the sake of clarity, in the event that the United States Bankruptcy Court of the District of Delaware or any bankruptcy trustee

 

***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.

 

related thereto modifies any obligation or duty in this Agreement, BMS reserves the right to void this Agreement immediately.

 

“ EXW ” means Ex Works as defined in the International Chamber of Commerce Incoterms 2000.

 

“ Facility ” means any manufacturing facility(ies), whether located within or outside the United States, that manufacture, finish, label or package the Product pursuant to this Agreement.

 

“ FDA ” means the United States Food and Drug Administration, or any successor entity.

 

“ FD&C Act ” means the United States Food, Drug and Cosmetics Act, as amended.

 

“ Firm Order ” means a written irrevocable firm purchase order for the Product, which order shall include a delivery schedule specifying the requested delivery date and quantity of the Product ordered, and the location to which shipment of the Product is to be delivered.

 

“ Fully-Burdened Cost ” means: ***.

 

“ GAAP ” means United States generally accepted accounting principles consistently applied.

 

“ Gillette Know-How ” shall have the meaning set forth in the License Agreement assigned to the Company by WFHC as of the Effective Date.

 

“ Good Manufacturing Practices ” or “cGMP” means current good manufacturing practices, as established by the FDA and all other applicable Laws, as may be amended from time to time.

 

“ Governmental Entity ” means any court of competent jurisdiction, legislature, governmental agency, administrative agency, regulatory agency or commission or other governmental authority or other instrumentality of the United States or any other country, any state, county, city or other political subdivision (including the FDA and the corresponding authorities in the jurisdictions where the Product is marketed, distributed or sold).

 

“ Improvement ” means any modification by the Purchaser or its Affiliates to the Product, including, without limitation, any modification in its manufacture, composition, preparation, means of delivery or dosage but shall specifically exclude (a) any such modification by Gillette, BMS or any of their respective Affiliates and (b) any modification to the Product that alters or substitutes the Product’s active ingredient.

 

“ Laws ” means all laws, rules, regulations, ordinances and other requirements of any Governmental Entity.

 

“ License Agreement ” means the License Agreement, dated as of June 25, 2002, among the WFHC, BMS and Gillette that was assigned by WFHC to the Company as of the Effective Date.

 

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“ Losses ” means losses, liabilities, claims, damages and expenses (including, until such time as the indemnifying Party has notified the indemnified Party in writing that it will assume control of a given claim, reasonable attorneys fees and costs of litigation pertaining to such claim), and expenses paid or payable by an indemnified party to a Third Party.

 

“ MAA ” or “ Marketing Approval Application ” means a NDA or a Premarket Approval Application, as required under the FD&C Act and the regulations promulgated thereunder, or a comparable filing for marketing approval in a country.

 

“ Manufacturing Facility Registrations ” means the approvals, permits, applications, licenses or registrations granted by the relevant Governmental Entity to a Facility for the manufacture of the Product or any other products at such Facility. For sake of clarity, Manufacturing Facility Registrations do not include Product Registrations.

 

“ Material Safety Data Sheet ” means the material safety data sheet used to comply with the Occupational Safety and Health Administration’s Hazard Communication Standard, 29 C.F.R. 1910.1200.

 

“ NDA ” means any new drug application filed pursuant to the requirements of the FDA, as more fully defined in 21 C.F.R. Part 314.5 et seq., and any equivalent application filed with any Governmental Entity.

 

“ NDC ” means the unique, identifying number assigned to a drug product, including the labeler code, product code and package code, in connection with the drug listing requirements of Section 510(j) of the FD&C Act and applicable FDA rules and regulations.

 

“ Partnership Manufacturing Know-How ” means ***

 

“ Party ” means BMS or the Company and, when used in the plural, means BMS and the Company.

 

“ Past Due Sums ” means the *** that WFHC currently owes BMS.

 

“ Person ” means any individual, group, corporation, partnership or other organization or entity (including any Government Entity).

 

“ Prime Rate ” means the rate of interest from time to time announced as the prime commercial lending rate to the most creditworthy customers by a bank of national standing agreed to by the Parties.

 

“ Product ” means the prescription form of VANIQA® (eflornithine hydrochloride) Cream, 13.9% and further listed and described on Schedule 1.01 , as the same is manufactured, packaged and labeled in accordance with applicable Laws and the applicable Product Registration and Specifications, including all strengths and packaging configurations of the final finished dosage form presentation existing on the Effective Date or any new forms as agreed by the Parties.

 

“ Product Registrations ” means the approvals, permits, applications, licenses or registrations (including but not limited to the NDA) and any amendments or supplements thereto for the Product which

 

***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.

 

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have been received in order to market or sell same (and related submissions to and correspondence with the relevant Governmental Entity). For the avoidance of doubt, the Parties agree that Product Registrations do not include any Manufacturing Facility Registration, any NDC number or any drug listing required by 21 C.F.R. Part 207.

 

“Specifications ” for the Product means the written specifications set forth in the applicable NDA as of the Effective Date, as the same may be amended or supplemented from time to time hereafter by the Company in accordance with Section 2.06(b).

 

“ Third Party ” means any Person who or which is neither a Party nor an Affiliate of a Party.

 

“ United States” and “ U.S. ” means the fifty (50) states of the United States of America and the District of Columbia, Puerto Rico and any other territory or possession of the United States.

 

Section 1.02. Other Definitions .

 

The following terms have the meanings set forth in the Sections set forth below:

 

 

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Section 1.03. Interpretations .

 

(a) In the event an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

 

(b) The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ”, “ includes ” and “ including ” shall be deemed to be followed by the phrase “ without limitation” . The word “ will ” shall be construed to have the same meaning and effect as the word “ shall ”. Unless the context requires otherwise; (A) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document or any addenda, schedules, exhibits or amendments thereto, and as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein); (B) any reference to any Laws herein shall be construed as referring to such Laws as from time to time enacted, repealed or amended; (C) any reference herein to any Person shall be construed to include the Person’s successors and assigns; (D) the words “ herein ”, “ hereof ” and “ hereunder ”. and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof; (E) all references herein to Sections, Exhibits or Schedules shall be construed to refer to Sections, Exhibits and Schedules of this Agreement; and (F) the singular number includes the plural number and vice versa.

 

Section 1.04. Effective Date/Past Due Sums . The terms and conditions set forth in this Agreement shall not be binding on BMS until the Effective Date and receipt of the Past Due Sums from the Company. For the sake of clarity, in the event that the United States Bankruptcy Court of the District of Delaware or any bankruptcy trustee related thereto modifies any obligation or duty in this Agreement, BMS reserves the right to void this Agreement immediately.

 

Section 1.05. Closing Under the WFHC/Company Asset Purchase Agreement . The Company shall keep BMS informed of the status and timing of the closing under that certain Asset Purchase Agreement, dated April 29, 2004, entered into by the Company and WFHC (as amended from time to time). In addition, if the closing under such Asset Purchase Agreement occurs, the Company shall give BMS notice of such closing within one (1) business day of such closing and if such Agreement is terminated without a closing, the Company shall give BMS notice of the termination of such Agreement within one (1) business day of such termination. This Agreement shall be void and of no further force and effect on either of the Parties if that certain Asset Purchase Agreement, dated April 29, 2004, entered into by the Company and WFHC (as amended from time to time) terminates according to its terms or is terminated pursuant to the applicable provisions of such Agreement, without the closing having occurred thereunder. The Parties further agree that if this Agreement is not effective within one hundred twenty (120) days of the Agreement Date, that this Agreement shall be void and of no further force and effect, unless otherwise mutually agreed to by the Parties in writing.

 

SECTION 2.

 

GENERAL TERMS OF SUPPLY

 

Section 2.01. Sale and Purchase of Product .

 

(a) BMS (either itself or through its Affiliates) shall supply to the Company, and the Company shall, subject to the terms and conditions of this Agreement, purchase from BMS, one

 

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hundred percent (100%) of the Company’s requirements (except for quantities necessary to keep the Company’s back-up supplier qualified) the Product for marketing, distribution, sale and use during the Term, pursuant to Firm Orders submitted by the Company to BMS from time to time in accordance with Section 2.03, at the Purchase Price, and subject to Section 5.02.

 

(b) All quantities of the Product shall be supplied hereunder by BMS in finished dosage form, filled, labeled, branded and packaged for commercial sale or distribution, or as samples, as the case may be, in accordance with the terms and conditions of this Agreement, the Specifications and applicable Laws. BMS shall solely and exclusively supply the Product to the Company, its Affiliates and their respective designees. BMS shall be responsible for the purchase of all raw materials for the manufacture of the Product in accordance with the Product Registrations as necessary to supply the finished Product to the Company under this Agreement. Company shall be responsible for all costs incurred by BMS relating to any Firm Orders placed by Company (including, any raw materials or working inventory purchase by BMS on behalf of Company in connection with Firm Orders).

 

(c) Subject to BMS Regulatory review and approval, and pursuant to applicable law, BMS and the Company shall take any and all actions necessary to change, as expeditiously as possible, the NDC numbers for the Product and to apply new NDC numbers to the Product. Subject to BMS Regulatory review and approval, and pursuant to applicable law, for no more than six (6) months following the Effective Date, the Product manufactured hereunder may continue to be labeled and packaged with the same labels and packaging that are used by BMS in connection with its previous manufacture of the Product for WFHC; provided, however, that the Parties shall use their commercially reasonable efforts to complete the revision of all Product labeling and packaging sooner. Subject to BMS Regulatory review and approval, and pursuant to applicable law, after such time, the Product shall be manufactured with labeling, branding, trade dress and packaging identifying BMS or any Affiliate thereof as the manufacturer of the Product and the Company (or the Company’s designee) as the distributor thereof and the labeling shall reflect the Company’s NDC number. Promptly after the Effective Date, BMS shall provide to the Company samples and copies of all labeling, branding, trade dress and packaging for the Product as of the Effective Date. Within sixty (60) calendar days following the delivery by BMS to the Company of the current labeling and packaging, the Company shall provide to BMS final specifications for the revised labeling, branding, trade dress and packaging of the Product, including all necessary photo-ready art (or its substantial equivalent) reflecting such revisions.

 

(d) Subject to the provisions of Section 2.01 (c), the Company shall control and shall have sole responsibility for, the content and type of all labeling and packaging (and any changes or supplements thereto) for the Product. All such activities related to any changes or supplements to the labeling and packaging shall be conducted at the Company’s sole cost and expense, including any *** in securing any approvals required by the FDA or other applicable regulatory authorities for any such changes or supplements. BMS shall be responsible for obtaining such labels in accordance with the content specified by the Company. Any changes to the labeling and packaging shall be communicated to BMS in writing at least one hundred twenty (120) calendar days (or, if shorter, the period required by applicable Laws or Government Entities) prior to the desired implementation date together with the documentation specifying the content to be included in the labeling and packaging, including all necessary photo-ready art (or its substantial equivalent). BMS shall not be required to implement such changes until its first batch run after the expiration of such one hundred twenty (120) day (or shorter) period. However, BMS shall endeavor to implement the changes as early as practicable.

 

(e) No terms and conditions contained in any Firm Order, acknowledgment, invoice, bill of lading, acceptance or other preprinted form issued by either Party shall be effective to the extent they are inconsistent with or modify the terms and conditions contained herein.

 

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Section 2.02. Forecasts .

 

The Company shall submit to BMS upon execution of this Agreement and thereafter no later than the first week of each month during the Term hereof, a twenty-four (24) month rolling forecast (“ Forecast ”) organized by months and Product stock keeping units (“ SKUs ”) setting forth orders the Company expects to place for the Product during such period commencing with the beginning of said calendar month. The Company shall make all Forecasts in good faith given market and other information available to the Company. All Forecasts are non-binding except as set forth in Section 2.03 below.

 

Section 2.03. Ordering .

 

(a) On the Effective Date (provided that the Effective Date is no later than July 15, 2004), the Company shall provide BMS with a purchase order for *** batches of the 30 gram presentation of the Product priced at *** (the “Early Batches ”). For the sake of clarity, each of the Early Batches shall have a minimum theoretical batch size of *** tubes and minimum theoretical batch size of *** cases and the pricing thereto is based on the assumption that existing tubes as of the Effective Date can be utilized). Notwithstanding the foregoing, if the purchase order for the Early Batches is received after July 15, 2004 or if, in BMS Regulatory’s opinion, the existing tubes cannot be utilized, the price for the Early Batches shall be set to the Purchase Price set forth on Schedule 3.01(a) . In addition to the foregoing, by December 1, 2004, the Company shall provide BMS with its initial Firm Order of Product at the Purchase Prices set forth on Schedule 3.01(a) for its requirements for the *** batches requiring recrystallization of BMS’ existing inventory of the active pharmaceutical ingredient for the Product. The requested delivery date of the *** batches in the initial Firm Order shall not be sooner than March 31, 2005 (e.g., December 1, 2004 plus 120 calendar days). BMS and the Company understand and agree that the requested delivery date (March 31, 2005) for the *** batches in the initial Firm Order is a firm delivery date. The requested delivery date for the subsequent *** batches of the initial Firm Order are set forth on Schedule 2.03(a) and represents the Company’s best forecast of Product requirements and such forecasted dates may change based on market conditions, provided that the Company acknowledges and agrees that it is ultimately responsible for such *** batches. BMS will supply the quantities set forth in Schedule 2.03(a) for the Product in accordance with the delivery schedule set forth therein, and to the extent such initial Firm Order is not sufficient to meet the Company’s actual requirements for the Product for such period, BMS will use its commercially reasonable efforts to supply the Company with its requirements beyond the amounts specified in Schedule 2.03(a) . The Company agrees to purchase such quantities of the Product as supplied by BMS in accordance with Schedule 2.03(a) .

 

(b) Except as provided in Section 2.03(a), and subject to the terms and conditions of this Agreement, the Company shall purchase the Product solely by Firm Orders for the Product. The terms and conditions of this Agreement shall be controlling over any conflicting terms and conditions in such Firm Order. The Company shall submit each such written Firm Order (including the initial Firm Order) along with *** of the Purchase Price for such Product to BMS at least one hundred twenty (120) days in advance of the date specified in each Firm Order on which delivery of the Product is required. Each such Firm Order shall be binding on the Company and on BMS once such Firm Order is accepted by BMS (it being understood that such Firm Order shall be deemed to be accepted by BMS if it: (i) meets the requirements as set forth in this Agreement; and (ii) includes a minimum of *** of Product). In addition to the foregoing, BMS shall not be obligated to accept a Firm Order if (i) the Company does not pay its *** down payment along with such Firm Order and (ii) there are any outstanding balances for previous orders. Prior to the placement of Firm Orders, the Parties shall communicate regarding BMS’ production schedules for the Product and the Company’s anticipated delivery requirements for the Product so that the Parties can coordinate BMS’ production schedules and the Company’s delivery requirements to enable BMS to supply Product to the Company with the maximum practicable shelf life at the time of shipment. Notwithstanding the

 

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Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.

 

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foregoing, BMS shall attempt to accommodate any request of the Company for delivery of the Product in less than ***, and further, BMS will attempt to accommodate any changes requested by the Company in delivery schedules for the Product following BMS’ receipt of Firm Orders from the Company; provided , however , BMS shall not be liable for any failure or inability to do so. Subject to the foregoing, upon receipt of each Firm Order by BMS hereunder, BMS shall supply the Product in such quantities (with any variances permitted hereunder) and deliver the Product to the Company on the requested delivery dates specified in such Firm Order, unless otherwise mutually agreed in writing by the Parties. To the extent that such Firm Order is not sufficient to meet the Company’s actual requirements, BMS shall use commercially reasonable efforts to supply the Company with its requirements beyond the amounts specified in its Firm Order; provided , however , BMS shall not be liable for any failure or inability to do so. BMS is not entitled to accept verbal orders of any kind for the production of the Product hereunder.

 

(c) Quantities of the Product actually shipped by BMS may vary from the quantities specified in any Firm Order by ***, or as mutually agreed upon by the Parties, and still be deemed to be in compliance with such Firm Order; provided , however , the Company only shall be invoiced and required to pay for the quantities that BMS actually ships to the Company.

 

(d) Any Product ordered by the Company for delivery on each specified delivery date shall be consistent with BMS’ current minimum batch sizes for the Product, or multiples thereof, as set forth in Schedule 3.01(a) . BMS may change the batch size at any time; provided that BMS gives the Company no less than six months prior notice; and provided further that such changes in batch size conform with Product Registrations and applicable Laws.

 

Section 2.04. Shipments .

 

BMS shall ship each Firm Order, EXW Facility for the Product (whether manufactured by BMS, an Affiliate of BMS or a Third Party) to the Company or its designee to the destinations specified by the Company on the applicable Firm Order using the Company’s designated common carrier. Freight (including customs clearance costs) and insurance shall be for the account of the Company. Title shall pass to the Company and the risk of loss, delay or damage in transit shall be with the Company, from and after the Company’s designated common carrier takes custody of the Product from BMS at the Facility (including, without limitation any loss from an environmental impact arising from the release or consumption of the Product); provided, however, that such transfer of title and risk of loss, delay and damage shall not in any way otherwise obviate or limit the representations and warranties or indemnification obligations of BMS hereunder. BMS shall package the Product for shipment in accordance with appropriate packaging and shipping containers agreed upon by the Parties, unless otherwise specified in writing by the Company sixty (60) business days prior to such shipment, in which event any extra costs incurred by BMS on account of the packaging changes requested by the Company shall be promptly reimbursed by the Company. In the event that BMS receives less than sixty (60) business days notice of a request for alternate packaging, BMS shall not be required to repackage any shipments that have already been packed for shipment. BMS shall include the following with each shipment of the Product: (a) the Company purchase order number; (b) the BMS lot and batch numbers for the Product included; (c) the quantity of the Product; and (d) the Certificate of Analysis (the form of which is attached hereto as Schedule 2.04) .

 

Section 2.05. Receipt of Product .

 

(a) The Company shall be entitled to reject any portion or all of any shipment of the Product that does not conform to the Specifications or otherwise fails to comply in any material respect with Section 5.02(a) (unless such non-conformity was attributable to an act or omission of the Company

 

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or the common carrier once such Product, packaged for shipment in accordance with Section 2.04, was accepted by such common carrier from BMS), provided , that, (i) the Company shall notify BMS within *** calendar days after receipt of such shipment if it is rejecting a shipment due to obvious physical damage or quantity discrepancies that are evident upon visual inspection of the packaged Product as shipped by BMS (unless caused by the common carrier or the Company), (ii) except as otherwise provided in Section 2.05(a)(iii), the Company shall notify BMS within *** calendar days after receipt of such shipment if it is rejecting a shipment due to any defects other than those obvious visual defects, and (iii) the Company shall notify BMS within *** calendar days after the Company becomes aware of any defects in the case of Product having detects that are attributable solely to BMS’ manufacture of such Product. Notwithstanding anything contained herein, the Company shall have no obligation to inspect the Product beyond a visual inspection of each shipment for obvious physical damage or quantity discrepancies that are evident upon visual inspection of the packaged Product as shipped by BMS. Without in any way limiting BMS’ indemnity obligations as set forth in Section 6.01, if no notice is provided by the Company within the relevant time periods set forth above, then the Company shall be deemed to have accepted the shipment. Any notice of rejection by the Company shall be accompanied by a reasonably detailed statement of its reasons for rejection and a report of any pertinent analysis performed by the Company on the allegedly non-conforming Product, together with the methods and procedures used. BMS shall notify the Company as promptly and as reasonably possible, but in any event within *** calendar days after receipt of such notice of rejection, whether or not it accepts the Company’s assertions of non-conformity.

 

(b) Whether or not BMS accepts the Company’s assertion of non-conformity, promptly upon receipt of a notice of rejection, unless otherwise specified by the Company, BMS shall use commercially reasonable efforts to provide replacement Product for the Product that was rejected by the Company in the original shipment within *** calendar days of receipt of the Company’s notice of non-conformity. If any such Product rejected by the Company from such original shipment ultimately is found to be non-conforming (whether pursuant to Section 2.05(c) or if BMS so acknowledges in writing), BMS shall bear all expenses for such replacement Product (including all transportation and/or disposal charges and cost of manufacture for such non-conforming Product), to the extent the Company previously paid for any corresponding non-conforming Product. If it is determined subsequently that such non-conforming Product was in fact conforming (whether pursuant to Section 2.05(c) or if the Company so acknowledges in writing), then the Company shall be responsible not only for the *** of the allegedly nonconforming Product (including all transportation charges), but also, upon receipt and acceptance by the Company in accordance with the procedures (and at the same price charged in the original shipment) set forth above, ***. Replacement shipments shall also be subject to the procedures contained in Section 2.05(a). BMS shall be under no obligation to accept a return of Product except as provided in this Section 2.05(b).

 

(c) If BMS disagrees wife any alleged non-conformity with respect to any Product it shall so notify the Company in writing with *** calendar days of the Company’s notice of non-conformity and BMS and the Company shall promptly (and in no event longer than an additional *** calendar days) cooperate with one another to retain an independent laboratory of recognized repute, reasonably acceptable to both Parties, which shall analyze an aliquot sample or such other portion of a shipment of such Product, furnished by the Company from the shipment received by the Company, as may be necessary to substantiate whether the shipment rejected by the Company conformed to the Specifications or otherwise failed to comply in any material respect with Section 5.02(a) at the time of delivery to the Company or its designee. The laboratory shall use such procedures and tests as the laboratory may consider necessary or appropriate to reach a conclusion. Both Parties agree to cooperate with the independent laboratory’s reasonable requests for assistance in connection with its analysis hereunder. Both Parties shall be bound by the laboratory’s results of analysis, which, absent manifest error, shall be deemed final as to any dispute over compliance of the Product with the Specifications and/or compliance in any material respect with Section 5.02(a) at the time of delivery to the Company or

 

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its designee. If the laboratory analysis shows that the Product does not conform to the Specifications and/or that it does not comply in all material respects with Section 5.02(a), the costs of such analysis shall be paid by BMS. If the laboratory analysis shows that the Product does conform to the Specifications and/or that it does comply in all material respects with Section 5.02(a), the costs of such analysis shall be paid by the Company.

 

(d) If BMS acknowledges an alleged non-conformity (or if the laboratory concludes that the Product was non-conforming), BMS shall promptly (and in any case within *** calendar days thereafter) make arrangements for the return and disposal of the non-conforming Product. BMS shall pay, or reimburse the Company, for the *** incurred by the Company for such return shipment of such non-conforming Product in accordance with BMS’ instructions.

 

Section 2.06. Quality Control; Change in Specifications or Supplier .

 

(a) BMS shall conduct all quality control testing of the Product prior to shipment in accordance with the Product Registration and applicable Laws. BMS shall retain records and samples of the Product relating to such testing as required by applicable Law and shall provide the Company with reasonable access during normal business hours to such records during any Audit in accordance with the procedures set forth in Section 7.04; provided , however , that such access does not unreasonably disrupt the normal operations of BMS. If the Company conducts quality control testing of the Product after delivery thereof to the Company, the Company shall use a laboratory qualified by BMS to ensure consistency of testing with the BMS results. If reasonably required by the Company, BMS shall promptly after the Effective Date (and in no event later than *** days provide all analytical methodology used by BMS for quality control testing of the Product.

 

(b) The Company shall have the right: (i) subject to BMS’ prior written consent not to be unreasonably withheld, to change the Specifications with respect to the Product from time to time; (ii) subject to BMS’ prior written consent not to be unreasonably withheld, to change the tubes used for the Product; (iii) to change the Specifications with respect to the Product without prior written consent, from time to time, as may be required by any Governmental Entity having jurisdiction over the Product; or (iv) to change the Specifications with respect to the Product by mutual agreement of the Parties and in each case, on not less than *** calendar days prior written notice to BMS (or such shorter period as required by any Governmental Entity or mutually agreed by the Parties). In such event, upon the reasonable request of the Company and at the Company’s sole expense, BMS shall assist with all analytical or experimental work to be performed in connection with making such change, but the Company shall be responsible, at the Company’s expense, for filing all changes proposed by the Company to any Product Registration, and for seeking approval of any such change required by each applicable Governmental Entity. The Company shall reimburse BMS or its Affiliates for *** in implementing any changes to the Specifications in accordance with this Section 2.06(b) requested by the Company in BMS’ or its Affiliates’ Facility, and for filing, amending or supplementing any Manufacturing Facility Registration required thereby and shall not hold BMS responsible for any reasonable disruption of supply resulting from any such change in the Specifications.

 

(c) At any time and from time to time, BMS may, (i) in its sole discretion, without the consent of the Company (but with *** prior written notice) change the manufacturer or source of manufacturing used in the manufacturing of the Product to an Affiliate of BMS, or to another BMS owned and operated facility, provided that BMS shall remain responsible for all of its obligations set forth herein, and provided further that any such change which will result in a delay in BMS’ or such other party’s ability to meet the Company’s delivery requirements for Products pursuant to Firm Orders made pursuant to Section 2.03 shall require the prior written consent of the Company (not to be unreasonably withheld or delayed), (ii) with the Company’s prior written consent (not to be

 

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unreasonably withheld) change the manufacturer or source of manufacturing used in the manufacturing of the Product to a Third Party; provided that BMS shall be responsible for the acts or omissions of such Third Party or (iii) without the consent of the Company (but with *** prior written notice) change the manufacturer or manufacturing source used in the manufacturing of the Product to a successor (whether by merger, consolidation, reorganization or other similar event) or purchaser of the Facility and/or substantially all of its business assets relating to the Product, provided , that, such successor or purchaser has agreed in writing to assume all of BMS’ rights and obligations hereunder and a copy of such assumption is provided to the Company, and provided further that any such change which will result in a delay in BMS’ or such other party’s ability to meet the Company’s delivery requirements for Products pursuant to Firm Orders made pursuant to Section 2.03 shall require the prior written consent of the Company (not to be unreasonably withheld or delayed). The Company shall cooperate with BMS (and such other manufacturer, if applicable) in any reasonable manner to effect such transfer to an Affiliate of BMS, Third Party or successor. BMS shall be responsible for making any required Manufacturing Facility Registration with respect to such change in manufacturer and seeking approval from each applicable Governmental Entity. The Company shall be responsible for making any required filing with respect to any Product Registration in connection with such change in manufacturer or source of manufacturing. BMS shall bear all costs incurred by either Party with respect to such change in manufacturer or source of manufacturing including without limitation any Product Registration filings, and shall compensate the Company for *** incurred pursuant to any such change.

 

(d) At any time and from time to time, BMS in its sole discretion may change, without the consent of but with *** prior written notice to and consultation with the Company, any manufacturing processes used in manufacturing the Product, any active pharmaceutical ingredient, intermediates, excipients, reagents or other compounds used in the manufacture of the Product, and any suppliers of any components used in making the Product; provided that , any such change requiring approval of an amendment or supplement to any Product Registration will not be effected or implemented without the prior written consent of the Company (not to be unreasonably withheld or delayed); and provided further that except where such change results from a manufacturing Improvement made in response to a pronouncement of a Governmental Entity (other than as a result of non-compliance by BMS), a Force Majeure Event, or a change in applicable Law, no such change shall be effected in a manner that would result in or cause an interruption of supply of the Product to the Company. Each Party will fully cooperate with the other in any reasonable manner to effect such change in a timely manner. The Company shall be responsible for all Product Registration filings needed to effect such change, and will use its commercially reasonable efforts to make all such regulatory filings (subject to receipt of necessary information from BMS) and take such actions as may be required to implement and seek regulatory approval for such change on a timely basis. BMS shall be responsible for making any required filing to any Manufacturing Facility Registration with respect to such change and seeking approval from each applicable Governmental Entity, BMS shall reimburse the Company for *** in seeking and obtaining or assisting BMS in seeking and obtaining any qualification or regulatory approval of such change. However, if such change is required by a change in Law or by a Governmental Entity (other than as a result of non-compliance by BMS), or is requested by the Company, in which event the Company shall reimburse BMS for *** to seek and obtain any regulatory approval for such change and to implement such change.

 

(e) With respect to any regulatory filings and approvals made or sought by either Party under this Section 2.06, each Party shall provide reasonable cooperation to the other Party in connection therewith. If a change proposed to be made under this Section 2.06 requires prior approval by any applicable Governmental Entity before implementation, such change will not be implemented until such change has been so approved.

 

***

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Section 2.07. Material Safety Data Sheets .

 

BMS shall provide the Company with all information in the applicable Material Safety Data Sheets as they exist as of the Effective Date for the Product provided by BMS and thereafter as reasonably requested by the Company.

 

Section 2.08. BMS Supply Contracts .

 

BMS shall have the sole right, but not the obligation, at its sole discretion and expense, to maintain and enforce any contract entered into by BMS or its Affiliates covering the supply of any active pharmaceutical ingredient, compounds, intermediates, biomaterials, packaging components, containers and other materials used in the manufacture of the Product. Upon termination of BMS’ supply obligation under this Agreement, BMS will assign, to the extent assignable and if requested by the Company, any contracts relating to the supply of any active pharmaceutical ingredient, compounds, intermediates, biomaterials, packaging components, containers and other material used exclusively in the manufacture of the Product, and the Company shall be solely responsible for all obligations arising under such assigned contracts after the date of assignment. Except as provided by Section 11, nothing contained in this Section 2.08 shall excuse BMS from performing its obligations under this Agreement. For the avoidance of doubt, termination without cause by BMS and/or expiration of a supply contract by BMS, in itself, does not constitute a Force Majeure event; provided , however , BMS’ inability to obtain bulk supply shall constitute a Force Majeure event.

 

Section 2.09. Line Extension Product and New Product .

 

(a) BMS shall have no obligation, express or implied, to develop or assist in the development or manufacture of new formulations, dosages, forms of administration or preparations for the Product.

 

(b) BMS and the Company acknowledge and agree that within *** days of the Effective Date they will enter into good faith negotiations on the qualification of a *** as a new sample configuration for the Product. These negotiations will include but not be limited to:

 

(i) Cost and schedule for the creation, implementation and completion, of a production qualification/Validation protocol for the filling of the *** on BMS’ equipment. Such protocol to be approved by both BMS and the company

 

(ii) Cost and schedule for BMS to perform all analytical work necessary for the Company to submit the *** to the FDA for approval as a marketed package.

 

(iii) Pricing for BMS to produce the *** for the Company in quantities previously quoted on by BMS for the current *** blend sample tube.

 

Costs and expenses relating to the protocol and any analytical work necessary pursuant to this Section 2.09(b) shall be the Company’s sole responsibility.

 

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Section 2.10. Maintenance of Manufacturing Facility Registrations .

 

For so long as BMS is manufacturing the Product for the Company:

 

(a) BMS shall have sole responsibility at its expense for maintaining, and shall use commercially reasonable efforts to maintain, each Manufacturing Facility Registration covering the manufacture of the Product.

 

(b) The Company agrees to provide to BMS all material manufacturing and supply information (the “Facility Technical Information ”) necessary to enable BMS (i) to make any filings required by applicable Law in connection with any Manufacturing Facility Registration, (ii) to otherwise maintain each such Manufacturing Facility Registration, and (iii) to include complete and accurate information in reports required to be made by BMS to any applicable Governmental Entity with respect to any Product with respect to such Manufacturing Facility Registration. BMS shall, to the extent it is not required to be reported to BMS by the Company under applicable Laws, provide written notice to Company setting forth in reasonable detail the nature of the Facility Technical Information in respect of the Product and the date by which such Facility Technical Information shall be provided to BMS in respect of the Product. Any such written notice shall allow the Company reasonable time to accumulate such Facility Technical Information requested. The Company shall use its commercially reasonable efforts to provide such Facility Technical Information to BMS on or before the date set forth in any such written request. The Company will use its commercially reasonable efforts to do all such other acts, as promptly as reasonably possible, which may be necessary or appropriate to make all necessary reports to BMS to allow appropriate and timely filings required by Law to the Manufacturing Facility Registration. BMS shall reimburse the Company *** to provide such information and reports.

 

(c) Each Party shall keep the other informed on a timely basis as to any developments that would have a material adverse effect on a Manufacturing Facility Registration. BMS shall have the final decision-making authority in every case on how to maintain each Manufacturing Facility Registration and any other issues in connection therewith; provided , that, BMS will not, except where required by, or to fulfill its obligations under, applicable Laws or except where required by a Governmental Entity acting within the scope of its authority, supplement, amend or otherwise alter a Manufacturing Facility Registration so as to breach this Agreement or to materially and adversely alter the rights granted to, or the obligations imposed upon, the Company hereunder that are derived from such Manufacturing Facility Registration.

 

Section 2.11. Maintenance of Product Registrations .

 

(a) As between the Parties, the Company shall retain all rights, title and interests in and to, and all obligations under, the Product Registration. The Company shall have sole responsibility for maintaining, and shall use commercially reasonable efforts to maintain, the Product Registration, including filing NDA annual reports.

 

(b) BMS agrees to provide all material information (the “ Technical Information ”) necessary to enable the Company (i) to make any filings required by applicable Law in connection with any Product Registrations anywhere in the world, (ii) to otherwise maintain any Product Registrations anywhere in the world (including any Supplemental Registrations), and (iii) to include complete and accurate information in the annual reports required to be made by the Company to the FDA in relation to the Product. The Company shall, to the extent it is not required to be reported to the Company by BMS under applicable Laws and/or as listed on Form FDA 2252, provide written notice to BMS setting forth in reasonable detail the nature of the Technical Information in respect of the Product and the date by which such Technical Information shall be provided to the Company in respect of the Product. Any such

 

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written notice shall allow BMS reasonable time to accumulate such Technical Information requested. BMS shall use its commercially reasonable efforts to provide such Technical Information to the Company on or before the date set forth in any such written request. BMS will use its commercially reasonable efforts to do all such other acts, as promptly as reasonably possible, which may be necessary or appropriate to make all necessary reports to the Company, including reports of Serious and Non-Serious Adverse Events in accordance with Section 8.03, that are required by Law to allow appropriate and timely filings to the Product Registration. Except as otherwise provided in the Asset Purchase Agreement, the Company shall reimburse BMS *** to provide such information and reports with respect to Product Registrations outside U.S.

 

(c) Each Party shall keep the other informed on a timely basis as to any developments that would have a material adverse effect on the Product Registrations. Where the Company may lawfully do so and subject to any confidentiality obligations it may have to Third Parties with respect to Third Party information included therein, the Company shall provide BMS, upon request after reasonable notice from BMS, with access to copies of all filings submitted by the Company based on any information submitted by BMS or that relate to any Facility. The Company shall have the final decision-making authority in every case on how to maintain each Product Registration and any other issues in connection therewith, provided, however , the Company shall consult with BMS, on whether and how to communicate with the applicable Governmental Entity with respect to decisions on Recall of the Product. The Company will not, except where required by, or to fulfill its obligations under, applicable Law or except where required by a Governmental Entity acting within the scope of its authority, supplement, amend or otherwise alter any Product Registration so as to breach this Agreement or to materially and adversely alter the rights granted to, or the obligations imposed upon, BMS hereunder or