Exhibit
10.6
THE SYMBOL ‘***’ IS USED
THROUGHOUT THIS EXHIBIT TO INDICATE THAT A PORTION OF THE EXHIBIT
HAS BEEN OMITTED AS CONFIDENTIAL.
Confidential
Manufacturing and Supply
Agreement
by and among
Angiotech Pharmaceuticals,
Inc.
Angiotech International,
GmbH
Cohesion Technologies,
Inc.
and
Baxter Healthcare
Corporation
Baxter Healthcare, S.A.
CONFIDENTIAL
Manufacturing and
Supply Agreement
This Manufacturing and Supply Agreement
(“Manufacturing Agreement”), dated as of April 1, 2003
(“Effective Date”) is entered into by and
among:
Angiotech Pharmaceuticals,
Inc. (“Angiotech”), a British Columbia
corporation with principal offices at 1618 Station Street,
Vancouver, British Columbia, Canada V6A 1B6;
Angiotech International
GmbH (“Angiotech
International”), which is organized and existing under the
laws of Switzerland, and is a wholly-owned subsidiary (and an
“Affiliate” as defined herein) of Angiotech;
Cohesion Technologies, Inc.
(“Cohesion”), a Delaware
corporation with principal offices at 2500 Faber Place, Palo Alto,
California 94303, and a wholly-owned subsidiary (and an
“Affiliate” as defined herein) of Angiotech.
(Angiotech, Angiotech International and Cohesion shall be
collectively referred to herein as “AAC”);
Baxter Healthcare
Corporation (“Baxter
Healthcare”), a Delaware corporation with principal offices
at One Baxter Parkway, Deerfield, Illinois 60015; and
Baxter Healthcare, S.A.
(“BHSA”), which is organized
and existing under the laws of Switzerland (Baxter Healthcare and
BHSA shall be collectively referred to herein as
“Baxter”).
RECITALS
WHEREAS, Angiotech has acquired Cohesion
which Controls certain biosurgical products, and particularly the
CoSeal Sealant Unit, CoSeal Adhesion Prevention Unit (each as
defined below) and their components, as well as certain CoSeal
Accessory(ies);
WHEREAS, Baxter has substantial expertise
in distributing and commercializing medical products and devices
worldwide, and through the Distribution and License Agreement (as
defined herein) has acquired exclusive rights to exploit the CoSeal
Sealant Unit in the Sealant Territory; exclusive rights to exploit
the CoSeal Adhesion Prevention Unit in the Adhesion Prevention
Territory; exclusive rights to exploit certain CoSeal
Accessory(ies) in the Territory for use with CoSeal Unit(s); and an
option to obtain (a) exclusive rights to exploit the CoSeal Sealant
Unit in Japan, and (b) exclusive rights to exploit the CoSeal
Adhesion Prevention Unit in the United States;
WHEREAS, the Distribution and License
Agreement contemplates that Baxter will manufacture and supply for
clinical and commercial purposes the CoSeal Sealant Products and
the CoSeal Adhesion Prevention Products solely for use, testing and
sale as a component of a CoSeal Unit, and the CoSeal Accessories
solely to sell for use with a CoSeal Unit; and
WHEREAS, AAC wishes to convey such
manufacturing and supply rights to Baxter.
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CONFIDENTIAL
NOW, THEREFORE, in consideration of the
premises and mutual covenants hereinafter set forth, the
sufficiency of which is hereby acknowledged, AAC and Baxter
(individually referred to as “Party” and collectively
as “Parties”) hereby agree as follows:
Article 1
Definitions
Any capitalized terms not defined in this
Manufacturing Agreement shall have the meaning given such term(s)
in the Distribution and License Agreement. Any references in
this Manufacturing Agreement to “Sections” shall refer
to Sections of this Manufacturing Agreement, unless specified to be
referring to Sections of the Distribution and License Agreement.
For purposes of this Manufacturing Agreement, the following
capitalized terms, whether used in the singular or plural, shall
have the following meanings:
1.1
“AAC Manufacturing
Know-How” shall mean
information, trade secrets, data, materials and formulations,
together with all Improvements, that are Controlled by AAC or its
Affiliates; and (a) that are in existence as of the Effective Date,
or that arise thereafter until the date of Successful Completion of
Manufacturing Technology Transfer, and (i) are used for the
manufacture of CoSeal Accessory(ies), Product(s) or CoSeal Units by
AAC prior to the Successful Completion of Manufacturing Technology
Transfer, and (ii) are transferred to Baxter; and (b) that are in
existence as of the date of Successful Completion of Manufacturing
Technology Transfer or that arise thereafter until expiration or
termination of this Manufacturing Agreement, and (i) are necessary
or used for the manufacture of CoSeal Accessory(ies), Product(s) or
CoSeal Units by AAC, and (ii) are transferred to Baxter at the sole
option of AAC. AAC Manufacturing Know-How shall expressly
include AAC’s or its Affiliates’ communications with
any Regulatory Authority regarding the CoSeal Accessory(ies),
Products or the CoSeal Units or components thereof; provided,
however, that such communications shall continue to be accorded the
status of Confidential Information of AAC under this Manufacturing
Agreement.
1.2
“AAC Manufacturing
Patents” shall mean (a)
the Patents Controlled by AAC and its Affiliates from the Effective
Date until the date of Successful Completion of Manufacturing
Technology Transfer having one or more valid and unexpired claims
(i) that cover one or more CoSeal Accessory(ies), Products or
CoSeal Units, or (ii) that cover processes directed to making one
or more CoSeal Accessory(ies), Products or CoSeal Units, and (b)
all Patent applications filed and Patents obtained for AAC’s
or its Affiliates’ Improvements directly relating to the
CoSeal Sealant Product, the CoSeal Adhesion Prevention Product, or
any CoSeal Unit that are discovered, conceived or reduced to
practice by AAC and/or its Affiliates (or on their behalf) under
the Distribution and License Agreement during its term, but
excluding Joint Patents. For purposes of this Manufacturing
Agreement, the phrase “valid and unexpired claim” shall
mean a composition of matter, method or device claim (or equivalent
thereof) of an issued and unexpired Patent, or a composition of
matter, method or device claim (or equivalent thereof) of a pending
application within the Patents in the Territory covering a CoSeal
Accessory(ies), Product(s) or a CoSeal Unit(s), which (y) has not
been revoked or held unenforceable or invalid by a decision of a
court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal; and
(z) has not been abandoned, disclaimed, denied or admitted to be
invalid or unenforceable through reissue or disclaimer or
otherwise.
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CONFIDENTIAL
AAC Manufacturing Patents shall expressly include the Patents owned
or Controlled by AAC that are set forth in Schedule 1.2, as it may
be amended by the Parties from time to time. For the purposes
of Patent prosecution and maintenance, AAC Manufacturing Patents
shall be considered AAC Patents under Article 10 of the
Distribution and License Agreement.
1.3
“Baxter Manufacturing
Know-How” shall mean
information, trade secrets, data, materials and formulations
together with all Improvements: (a) that are Controlled by Baxter
or its Affiliates during the term of this Manufacturing Agreement;
and (b) that are transferred to AAC at the sole option of Baxter
and are necessary or used for the manufacturing of CoSeal
Accessory(ies), Product(s) or CoSeal Unit(s) by Baxter.
Baxter Manufacturing Know-How shall expressly include
Baxter’s or its Affiliates’ communications with any
Regulatory Authority regarding the CoSeal Accessory(ies), Products
or the CoSeal Units or components thereof; provided, however, that
such communications shall continue to be accorded the status of
Confidential Information of Baxter under this Manufacturing
Agreement.
1.4
“Baxter Manufacturing
Patents” shall mean
Patent applications filed and Patents obtained that are directly
related to the manufacture of CoSeal Accessory(ies), Products,
CoSeal Units or Improvements, and that are discovered, conceived or
reduced to practice by Baxter and/or its Affiliates (or on their
behalf) during the term of this Manufacturing Agreement, but
excluding Joint Patents.
1.5
“Baxter Supply
Agreement” shall mean an
agreement setting forth the terms under which Baxter shall
manufacture and supply a product for AAC pursuant to Section
4.2.
1.6
“Commercialization
Date” shall mean, with
reference to a CoSeal Unit in existence as of the Effective Date,
the occurrence of either of the following events without regard to
order: (a) with regard to the United States, the date of FDA
approval to manufacture at a manufacturing facility by or on behalf
of Baxter, but excluding an AAC facility, or (b) with regard to the
European Union, the date of the acceptance of the change
notification by the notified body. The first of these events
to occur shall be referred to herein as the “First
Commercialization Date,” and the second of these events to
occur shall be referred to herein as the “Second
Commercialization Date.”
1.7
“Deliver” or “Delivery,”
with respect to CoSeal Accessory(ies) and
CoSeal Units, shall mean, and shall take place upon, the transfer
of possession of such CoSeal Accessory or CoSeal Unit to a carrier
F.O.B at the place of manufacture, or F.O.B at the place of final
sterilization, if any, of such CoSeal Accessory or CoSeal
Unit.
1.8
“Distribution and License
Agreement” shall mean
the Distribution and License Agreement among the Parties, dated as
of the same date as this Manufacturing Agreement.
1.9
“Manufacturing
Agreement” shall mean
this Manufacturing and Supply Agreement together with all exhibits,
schedules, and appendices attached to this Manufacturing and Supply
Agreement, all as respectively amended, modified or supplemented by
the Parties in accordance with the terms of this Manufacturing and
Supply Agreement.
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CONFIDENTIAL
1.10
“Non-Licensed
Product” shall mean any
product for which Baxter has not acquired sales, marketing and
distribution rights pursuant to the Distribution and License
Agreement.
1.11
“Specification(s)”
means the requirements, standards,
quality control testing and other attributes pertaining to a
Product or a CoSeal Unit, as set forth in Schedule 1.11, along with
any valid amendments or modifications thereto.
1.12
“Successful Completion of
Manufacturing Technology Transfer” shall mean the day after the completion of three (3)
consecutive successful validation runs of the first CoSeal Unit
that are performed by or on behalf of Baxter.
Article 2
Grant of Manufacturing Rights
2.1
CoSeal Sealant Product and CoSeal
Adhesion Prevention Product Exclusive Manufacturing
Rights.
(a)
CoSeal Sealant Product
. Subject to the terms and
conditions of this Manufacturing Agreement, AAC hereby grants to
Baxter and its Affiliates, and Baxter, on behalf of itself and its
Affiliates, hereby accepts:
(i) a sole and exclusive (even as
to AAC and its Affiliates) license, with right to sublicense in
accordance with Section 2.4, under AAC Manufacturing Patents to
make and have made the CoSeal Sealant Products, for the purpose of
assembly into CoSeal Sealant Units, in the Sealant
Territory.
(ii) a non-exclusive license under
AAC Manufacturing Know-How, with right to sublicense as set forth
in Section 2.4, to make and have made the CoSeal Sealant Products,
for the purpose of assembly into CoSeal Sealant Units, in the
Sealant Territory during the term of this Manufacturing Agreement.
Upon expiration or termination of this Manufacturing
Agreement, the license granted in this Section 2.1(a)(ii) shall be
deemed paid in full and irrevocable with regard to all AAC
Manufacturing Know-How transferred to Baxter under this Section
2.1(a)(ii) during the term of this Manufacturing
Agreement.
(b)
CoSeal Adhesion Prevention
Product . Subject to the
terms and conditions of this Manufacturing Agreement, AAC hereby
grants to Baxter and its Affiliates, and Baxter, on behalf of
itself and its Affiliates, hereby accepts:
(i) a sole and exclusive (even as
to AAC and its Affiliates) license, with right to sublicense in
accordance with Section 2.4, under AAC Manufacturing Patents to
make and have made the CoSeal Adhesion Prevention Products, for the
purpose of assembly into CoSeal Adhesion Prevention Units, in the
Adhesion Prevention Territory and the United States.
(ii)
a non-exclusive license under AAC
Manufacturing Know-How, with right to sublicense as set forth in
Section 2.4, to make and have made the CoSeal Adhesion Prevention
Products, for the purpose of assembly into CoSeal Adhesion
Prevention Units, in the Adhesion Prevention Territory and the
United States. Upon expiration or termination of
this
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CONFIDENTIAL
Manufacturing Agreement, the license granted in this Section
2.1(b)(ii) shall be deemed paid in full and irrevocable with regard
to all AAC Manufacturing Know-How transferred to Baxter under this
Section 2.1(b)(ii) during the term of this Manufacturing
Agreement.
(c)
CoSeal Devices and CoSeal
Accessories . Subject to
the terms and conditions of this Manufacturing Agreement, AAC
hereby grants to Baxter and its Affiliates, and Baxter, on behalf
of itself and its Affiliates, hereby accepts:
(i) a sole and exclusive (even as
to AAC and its Affiliates) license, with right to sublicense in
accordance with Section 2.4, under AAC Manufacturing Patents to
make and have made the CoSeal Devices, for the purpose of assembly
into CoSeal Units, and the CoSeal Accessories in the Field in the
Territory.
(ii) a non-exclusive license under
AAC Manufacturing Know-How, with right to sublicense as set forth
in Section 2.4, to make and have made the CoSeal Device(s) , for
the purpose of assembly into CoSeal Units, and the CoSeal
Accessory(ies) in the Field in the Territory. Upon expiration
or termination of this Manufacturing Agreement, the license granted
in this Section 2.1(c)(ii) shall be deemed paid in full and
irrevocable with regard to all AAC Manufacturing Know-How
transferred to Baxter under this Section 2.1(c)(ii) during the term
of this Manufacturing Agreement.
(d)
Limitations . The license grants to Baxter pursuant to this
Section 2.1 under AAC Manufacturing Patents, AAC Manufacturing
Know-How, and AAC Trademarks to make and have made Products and
CoSeal Devices shall be exercisable solely for the purpose of (i)
including Products or CoSeal Devices as components of CoSeal Units,
and (ii) selling the CoSeal Accessory(ies) for use with a CoSeal
Unit.
2.2
Grant Back of Rights to
AAC.
(a)
CoSeal Sealant Unit(s) and Components
Thereof . Subject to the
terms and conditions of this Manufacturing Agreement, Baxter hereby
grants to AAC and its Affiliates, and AAC, on behalf of itself and
its Affiliates, hereby accepts, a fully paid-up, irrevocable,
non-exclusive license under the rights granted to Baxter in this
Article 2, with the right to grant sublicenses, under AAC
Manufacturing Patents, AAC Trademarks, and AAC Manufacturing
Know-How that are in existence on the Effective Date, or that arise
thereafter until the date of Successful Completion of Manufacturing
Technology Transfer, to make and have made the CoSeal Sealant
Unit(s) and components thereof in the Sealant Territory in the
following instances:
(i)
from the Effective Date until the Second
Commercialization Date, for the purpose of fulfilling its
obligations under this Manufacturing Agreement, and thereafter only
for the purpose of acting as a source of supply of CoSeal Sealant
Unit(s) to Baxter; and
(ii)
at all times for all purposes other than
sales, marketing and distribution of the CoSeal Sealant
Unit(s).
(b)
CoSeal Adhesion Prevention Unit(s) and
Components Thereof .
Subject to the terms and conditions of this Manufacturing
Agreement, Baxter hereby grants to AAC and its
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CONFIDENTIAL
Affiliates, and AAC, on behalf of itself and its Affiliates, hereby
accepts, a fully paid-up, irrevocable, non-exclusive license under
the rights granted to Baxter in this Article 2, with the right to
grant sublicenses, under AAC Manufacturing Patents, AAC Trademarks,
and AAC Manufacturing Know-How that are in existence on the
Effective Date, or that arise thereafter until the date of
Successful Completion of Manufacturing Technology Transfer, to make
and have made the CoSeal Adhesion Prevention Unit(s) and components
thereof in the Adhesion Prevention Territory in the following
instances:
(i)
from the Effective Date until the Second
Commercialization Date, for the purpose of fulfilling its
obligations under this Manufacturing Agreement, and thereafter only
for the purpose of acting as a source of supply of CoSeal Adhesion
Prevention Unit(s) to Baxter;
(ii)
for the purpose of marketing, selling and
distributing the Adhesion Prevention Unit(s), in the event that
Baxter fails to exercise the CoSeal Adhesion Prevention Option, as
described in the Distribution and License Agreement, and no
agreement is reached by the Parties under Section 4.4 after
Baxter's election to continue to retain its exclusive manufacturing
rights under Section 2.6; and
(iii)
at all times for all purposes other than
sales, marketing and distribution of the CoSeal Adhesion
Prevention Unit.
(c)
CoSeal Accessory(ies)
. Subject to the terms and
conditions of this Manufacturing Agreement, Baxter hereby grants to
AAC and its Affiliates, and AAC, on behalf of itself and its
Affiliates, hereby accepts, a fully paid-up, irrevocable,
non-exclusive license under the rights granted to Baxter in this
Article 2, with the right to grant sublicenses, under AAC
Manufacturing Patents, AAC Trademarks, and AAC Manufacturing
Know-How that are in existence on the Effective Date, or that arise
thereafter until the date of Successful Completion of Manufacturing
Technology Transfer, to make and have made the CoSeal
Accessory(ies) and components thereof in the Field in the Territory
in the following instances:
(i)
from the Effective Date until the Second
Commercialization Date, for the purpose of fulfilling its
obligations under this Manufacturing Agreement, and thereafter only
for the purpose of acting as a source of supply of CoSeal
Accessory(ies) to Baxter;
(ii)
at all times for all purposes other than
sales, marketing and distribution of the CoSeal Accessory(ies) for
use with a CoSeal Unit(s); and
(iii)
at all times for all purposes in
connection with a CoSeal Unit(s) for which AAC has sales, marketing
and distribution rights.
2.3
CoSeal Devices and CoSeal Accessories
Exclusive Manufacturing Rights.
With respect to CoSeal
Devices, as of the date of Successful Completion of Manufacturing
Technology Transfer, and with respect to CoSeal Accessories, as of
the Effective Date, Baxter, at its sole option, shall have the
right to: (a) receive an assignment of such agreements as AAC may
have with Third Party CoSeal Device or Third Party CoSeal
Accessory(ies) manufacturers, subject to any required consents and
the effective assumption of such agreements by Baxter; (b)
negotiate new agreements with such Third Party CoSeal Device or
Third Party CoSeal
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CONFIDENTIAL
Accessory(ies) manufacturers; (c) use Third Party CoSeal Device or
Third Party CoSeal Accessory(ies) manufacturers of Baxter’s
choosing; (d) manufacture the CoSeal Device(s) or CoSeal
Accessory(ies) at a facility by or on behalf of Baxter; and/or (e)
with the consent of AAC, have AAC continue to purchase CoSeal
Devices or CoSeal Accessory(ies) on behalf of Baxter. In the
event that Baxter elects to receive an assignment of agreements
under this Section 2.3(a), then AAC may obtain such CoSeal
Device(s) or CoSeal Accessory(ies) from Baxter [***] for the term
of the applicable agreement (including any renewals or extensions)
or the term of any renegotiated agreement between Baxter and such
Third Party CoSeal Device or CoSeal Accessory(ies) manufacturer.
In the event that Baxter elects to interact directly with
such Third Party CoSeal Device manufacturers or Third Party CoSeal
Accessory(ies) manufacturers under this Section 2.3(b) or (c), and
Baxter does not receive an assignment under this Section 2.3(a), or
Baxter elects to manufacture CoSeal Device(s) or CoSeal
Accessory(ies) itself under this Section 2.3(d), then AAC may
obtain such CoSeal Device(s) or CoSeal Accessory(ies) from Baxter
[***]
2.4
Sublicense.
Baxter and its Affiliates shall have the
right to grant a sublicense under the licenses granted to Baxter
and its Affiliates hereunder in connection with the performance of
Baxter’s manufacturing obligations under this Manufacturing
Agreement, upon fulfillment of the following conditions: (a) that
Baxter obtain the prior written consent of AAC before executing any
such sublicense agreement, which consent shall not be unreasonably
withheld or delayed; (b) that Baxter shall provide a copy of any
such executed sublicense agreement to AAC within ten (10) Business
Days after execution; and (c) that the execution and delivery by
Baxter of such sublicense agreement to any Third Party shall not in
any way diminish, reduce or eliminate any of Baxter’s
obligations under this Manufacturing Agreement, and Baxter shall
remain liable for such obligations. Baxter shall obtain
contractual undertakings from every sublicensee that will provide
that the rights of such sublicensee shall terminate upon
termination of this Manufacturing Agreement.
2.5
Ownership of Intellectual Property;
Retention of Certain Rights. AAC retains all rights to all AAC Manufacturing
Patents, AAC Trademarks, and AAC Manufacturing Know-How, to the
extent such rights are not expressly granted to Baxter herein or in
the Distribution and License Agreement. These retained rights
expressly include the right to develop, have developed, make, have
made, use, have used, offer for sale, sell, have sold, market, have
marketed, distribute, have distributed, import, export, and
otherwise fully exploit and commercialize (a) Non-Licensed Products
throughout the Territory at all times and (b) the CoSeal Accessories, the CoSeal Devices, the
Products and the CoSeal Units for the purpose of exercising its
retained rights regarding Non-Licensed Products at all
times.
2.6
Option to Manufacture If Distribution
Rights Are Terminated.
(a)
Termination of CoSeal Sealant Unit
Distribution Rights . In
the event that Baxter’s rights to market, distribute and sell
the CoSeal Sealant Unit are terminated under the Distribution and
License Agreement by AAC or by Baxter, then Baxter, at its option,
may elect to retain, or terminate, its exclusive manufacturing
rights with respect to both the CoSeal Sealant Unit and the CoSeal
Adhesion Prevention Unit. Baxter shall have ninety (90) days
from the date of termination of its rights by AAC under the
Distribution and License Agreement to decide whether it wishes to
continue to retain its exclusive manufacturing rights with respect
to both the
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CoSeal Sealant Unit and the CoSeal Adhesion Prevention Unit.
If Baxter elects to continue to retain its exclusive
manufacturing rights, Baxter shall provide written notice of such
election to AAC within such ninety (90) day period. If (i)
Baxter elects to terminate its exclusive manufacturing rights
pursuant to this Section 2.6(a), or (ii) Baxter fails to provide
written notice of such election pursuant to this Section 2.6(a),
then the exclusive manufacturing rights with respect to such CoSeal
Sealant Units and CoSeal Adhesion Prevention Units shall revert to
AAC without further action by the Parties, and Baxter shall act
promptly to facilitate the transfer of its then current
manufacturing technology used to manufacture the CoSeal Sealant
Units, CoSeal Adhesion Prevention Units, CoSeal Accessories, and
components of the CoSeal Units to AAC. Such transfer to AAC
of Baxter’s manufacturing technology used to manufacture the
CoSeal Sealant Units, CoSeal Adhesion Prevention Units, CoSeal
Accessories, and components of the CoSeal Units shall be conducted
at AAC’s sole expense, in accordance with a transitional
period plan that is consistent with the responsibilities and
timelines included with the transitional period plan prepared
pursuant to Section 4.1(a)(v). In no event shall
Baxter’s responsibilities relating to this transfer of
Baxter’s manufacturing technology be less than AAC’s
obligations and responsibilities under the transitional period plan
prepared pursuant to Section 4.1(a)(v) and as set forth under
Section 3.3 (including no less than two thousand eighty (2080)
personnel work hours at no cost to AAC, other than reimbursement to
Baxter of out-of-pocket expenses related thereto).
Notwithstanding the foregoing, if Baxter’s CoSeal
Sealant Unit distribution rights are terminated by Baxter for
reason other than AAC’s uncured material breach under Section
14.3 of the Distribution and License Agreement, Baxter will pay all
such manufacturing technology transfer costs. In no event
shall Baxter’s obligations under this Section 2.6(a) to
transfer manufacturing technology exceed eighteen (18) months after
(i) the date that Baxter provides written notice to AAC of
Baxter’s election to terminate its exclusive CoSeal Sealant
Unit and CoSeal Adhesion Prevention Unit manufacturing rights, or
(ii) in the absence of such written notice, the expiration of the
ninety (90) day notice period set forth in this Section 2.6(a),
whichever occurs first.
(b)
Termination of CoSeal Adhesion
Prevention Unit Distribution Rights . In the event that Baxter’s rights to
market, distribute and sell the CoSeal Adhesion Prevention Unit are
terminated under the Distribution and License Agreement by AAC or
by Baxter (or Baxter does not exercise the Adhesion Prevention
Option), then AAC, at its option, may choose to manufacture the
CoSeal Adhesion Prevention Unit or may elect to allow Baxter to
retain its exclusive manufacturing rights with respect to the
CoSeal Adhesion Prevention Unit, but in either event Baxter shall
retain its exclusive manufacturing rights with respect to the
CoSeal Sealant Unit. AAC shall have ninety (90) days from the
date of termination of Baxter’s rights under the Distribution
and License Agreement to decide whether it wishes to manufacture
the CoSeal Adhesion Prevention Unit. If AAC elects to
manufacture the CoSeal Adhesion Prevention Unit, it shall provide
written notice of such election to Baxter within such ninety (90)
day period. If AAC elects to allow Baxter to retain exclusive
manufacturing rights under this Section 2.6(b), then the exclusive
manufacturing rights with respect to such CoSeal Adhesion
Prevention Unit shall remain with Baxter without further action by
the Parties. If (i) AAC elects to manufacture the CoSeal
Adhesion Prevention Unit pursuant to this Section 2.6(b), or (ii)
AAC fails to provide written notice of its election to manufacture
the CoSeal Adhesion Prevention Unit pursuant to this Section
2.6(b), then the exclusive manufacturing rights with respect to
such CoSeal Adhesion Prevention Unit shall revert to AAC without
further action by the Parties, and Baxter shall act promptly to
facilitate the transfer of its then current manufacturing
technology
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used to manufacture the CoSeal Accessories, the CoSeal Adhesion
Prevention Unit and components of the CoSeal Adhesion Prevention
Unit to AAC. Such transfer to AAC of Baxter’s
manufacturing technology used to manufacture the CoSeal
Accessories, the CoSeal Adhesion Prevention Unit and components of
the CoSeal Adhesion Prevention Unit shall be conducted at
AAC’s sole expense, in accordance with a transitional period
plan that is consistent with the responsibilities and timelines
included with the transitional period plan prepared pursuant to
Section 4.1(a)(v). In no event shall Baxter’s
responsibilities relating to this transfer of Baxter’s
manufacturing technology be less than AAC’s obligations and
responsibilities under the transitional period plan prepared
pursuant to Section 4.1(a)(v) and as set forth under Section 3.3
(including no less than two thousand eighty (2080) personnel work
hours at no cost to AAC, other than reimbursement to Baxter of
out-of-pocket expenses related thereto). Notwithstanding the
foregoing, if Baxter’s CoSeal Adhesion Prevention Unit
distribution rights are terminated by Baxter for reason other than
AAC’s uncured material breach under Section 14.3 of the
Distribution and License Agreement, Baxter will pay all such
manufacturing technology transfer costs. In no event shall
Baxter’s obligations under this Paragraph 2.6(b) to transfer
manufacturing technology exceed eighteen (18) months after (i) the
date that AAC provides written notice to Baxter of AAC’s
election to manufacture the CoSeal Adhesion Prevention Unit, or
(ii) in the absence of such written notice, the expiration of the
ninety (90) day notice period set forth in this Section 2.6(b),
whichever occurs first.
2.7
Sharing of Know-How.
During the term of this Manufacturing
Agreement, Baxter, at its sole option, may (but shall not have the
obligation to) transfer to AAC Baxter Manufacturing Know-How, and
AAC shall have the right to use such Baxter Manufacturing Know-How
in conjunction with Non-Licensed Products. After the date of
Successful Completion of Manufacturing Technology Transfer, AAC, at
its sole option, may (but shall not have the obligation to)
transfer to Baxter AAC Manufacturing Know-How, and Baxter shall
have the right to use such AAC Manufacturing Know-How in
conjunction with CoSeal Accessories, Products and CoSeal Units.
Any transfer under this Section 2.7 shall not be effective
until the content of such transfer has been set forth or confirmed
in writing and signed by both Parties.
Article 3
Technology Transfer
3.1
Technology Transfer.
The Parties shall cooperate to expedite
transfer of Cohesion’s Product and CoSeal Unit manufacturing
technology from the Cohesion facility to a facility designated by
Baxter, where manufacturing will be conducted by or on behalf of
Baxter. AAC will make employees of appropriate skill and
experience reasonably available to Baxter to facilitate such
transfer pursuant to Section 3.3. AAC and Baxter will
cooperate to minimize the expenses associated with such transfer
and to ensure that the transfer of such Product and CoSeal Unit
manufacturing is effectively coordinated.
3.2
Hiring of Employees.
Baxter shall have the right, but not the
obligation, to hire such Cohesion employees, including but not
limited to manufacturing, quality assurance, quality control and
regulatory employees, as are needed to facilitate the transfer of
Product and CoSeal Unit manufacturing to Baxter’s facility.
Any such hiring decisions, and the terms thereof, shall be
solely at Baxter’s discretion. AAC shall assist Baxter
in making its hire/no hire decision regarding employees by
providing Baxter with a list of key employees that have been
designated
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by AAC as available for hiring by Baxter, including information
regarding job titles, job descriptions, salary and benefit
information, as well as access to such individuals for interviews
and direct evaluations by Baxter. Notwithstanding the
foregoing, Baxter expressly agrees not to solicit for employment
any AAC employees, other than those identified on such list of key
employees, without AAC’s prior written consent, provided
however, that nothing herein shall prohibit Baxter from hiring any
AAC employees who respond to industry-wide or general employment
solicitations, advertised employment opportunities, or other
available employment opportunities at Baxter.
3.3
Costs of Technology Transfer.
Except for such costs
to be borne by AAC as set forth herein, Baxter shall be solely
responsible for any and all costs associated with the transfer of
manufacturing of Products and CoSeal Units from the Cohesion
facility to the facility where Products and CoSeal Units are to be
manufactured by or on behalf of Baxter. To facilitate the
transfer, AAC shall provide up to two thousand eighty (2080)
personnel work hours at no cost to Baxter, other than reimbursement
to AAC of out-of-pocket expenses related thereto. Baxter
shall pay to AAC [***] per personnel work hour, plus reimbursement
to AAC of related out-of-pocket expenses, for any personnel work
hours of assistance requested by Baxter and agreed to be provided
by AAC in excess of two thousand eighty (2080) personnel work
hours. AAC shall be responsible for all costs associated with
Cohesion’s termination of manufacturing the Product and the
CoSeal Unit at the Cohesion facility (including severance payments
to employees).
3.4
Delivery of Raw Materials and Finished
Goods Following Commercialization Date.
Following each Commercialization Date,
AAC and Baxter shall determine an appropriate allocation between
them relating to inventory of raw materials and finished goods on
hand at AAC. AAC shall deliver to such location in the United
States such allocation of inventory of raw materials and finished
goods as the Program Directors have reasonably agreed should be
transferred to Baxter pursuant to Section 3.1(a) of the
Distribution and License Agreement. Baxter shall reimburse to
AAC its cost for any such raw material transferred to
Baxter.
3.5
Batch Records and Data.
Upon request, within
thirty (30) days following Delivery, AAC shall provide (and shall
require any Third Party manufacturer to provide) Baxter with
properly completed copies of batch records prepared in accordance
with the Specifications and applicable laws; provided, however,
that if testing reveals an “out-of-Specification”
result, AAC (or the Third Party manufacturer, as the case may be)
shall provide such batch records within ten (10) days following
resolution of the “out-of-Specification” result.
The Parties agree that AAC shall provide these records to
Baxter solely for the purpose of assisting with manufacturing
technology transfer, and Baxter shall not bear the responsibility
for correction of any “out-of-Specification”
results.
Article 4
Manufacture and Supply
4.1
Manufacture of the CoSeal
Units.
(a)
Effective Date to Second
Commercialization Date .
With respect to CoSeal Units, from the Effective Date until
the Second Commercialization Date, and with
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respect to CoSeal Accessories, from the Effective Date until the
later of six (6) months after the Effective Date or the date of
Successful Completion of Manufacturing Technology Transfer, AAC
will be responsible for supplying Baxter with CoSeal Accessories
and CoSeal Units under the following terms and
conditions:
(i)
Forecasting . In accordance with Section 4.1(a), the CoSeal
Accessories (unless Baxter elects to obtain its own supply of
CoSeal Accessories pursuant to Section 2.3) and CoSeal Units shall
be supplied by AAC to Baxter. On or before the first day of
each calendar month, Baxter shall furnish to AAC a written twelve
(12) month rolling forecast of the quantities of CoSeal Accessories
and CoSeal Units that Baxter estimates it will order from AAC
during such twelve (12) month forecast period (the
“Forecast”; the first of which is attached hereto as
Schedule 4.1). The first three (3) months of each Forecast
shall constitute a binding order for the quantities of CoSeal
Accessories and CoSeal Units specified therein (the “Firm
Commitment”), and the following nine (9) months of the
Forecast shall be non-binding, good faith estimates.
Thereafter, until the Second Commercialization Date,
Baxter’s sole legal remedy for AAC’s failure to provide
a given CoSeal Unit(s) according to the Forecast shall be either
suspension of Baxter’s Minimum Sales requirements for the
given CoSeal Unit(s) for that calendar year, or a downward
adjustment of Baxter’s Minimum Sales requirements for the
given CoSeal Unit(s) for that calendar year that is equal to the
sales that would be attributable to the given CoSeal Unit(s) that
AAC failed to provide. The Program Directors shall determine
which of the two remedies (i.e., suspension or adjustment) shall
apply.
(ii)
Purchase Orders
. On or before the first (1
st ) day of each calendar month, Baxter shall submit a
purchase order for the Firm Commitment portion of the Forecast, as
to which no purchase order has been previously submitted, which
specifies the actual quantities of CoSeal Accessories and CoSeal
Units to be delivered to Baxter hereunder and the requested
shipping dates for each order (“Purchase Order”).
Baxter shall submit each Purchase Order to AAC at least sixty
(60) days in advance of the shipment date requested in the Purchase
Order. For example, a Purchase Order placed on January 1
st will request shipping dates during the month of March
or at least sixty (60) days after January 1 st .
In the event of a conflict between the terms of any Purchase
Order and this Manufacturing Agreement, this Manufacturing
Agreement shall control. In any given month, Baxter shall not
submit a Purchase Order with respect to any month contained within
the Firm Commitment for less than [***] of the amount forecasted
one (1) month earlier for such month, nor shall AAC be obligated to
accept a Purchase Order to the extent that it exceeds by more than
[***] the amount forecasted one (1) month earlier for such month.
For example, the Firm Commitment included in a January 1
st forecast includes the months of January, February and
March. The Firm Commitment for the month of March must be no
less than [***] of the amount forecasted for March in the December
1 st forecast or one (1) month earlier than the January
1 st forecast. Likewise, the Firm Commitment for
the month of March must be no greater than [***] of the amount
forecasted for March in the December 1 st forecast or
one (1) month earlier than the January 1 st forecast.
Notwithstanding the foregoing, once AAC accepts a Purchase
Order that failed to meet such requirements, it shall not
thereafter reject such Purchase Order for such failure. All
Purchase Orders shall reflect orders of a size that the Parties
have agreed are within the reasonably anticipated capacity of
Cohesion.
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(iii)
Raw Material or Capacity
Shortage . In the event
that AAC is unable to supply Baxter with CoSeal Accessories or
CoSeal Units in the quantities ordered by Baxter in accordance with
Section 4.1(a)(ii), due to AAC’s insufficient supplies of raw
materials for Products or CoSeal Units or other manufacturing
capacity constraints, AAC shall use Commercially Reasonable Efforts
to equitably allocate available raw materials or manufacturing
capacity, as the case may be, in a manner consistent with the
Parties’ anticipated needs. Notwithstanding the
foregoing, AAC shall allocate manufacturing capacity and raw
materials first to the manufacture of CoSeal Units for commercial
sale.
(iv)
Baxter Modification or
Cancellation . Baxter
may request modification of the delivery date, Specifications or
quantity of CoSeal Accessories or CoSeal Units in a Purchase Order
only by submitting a written change order to AAC. Such change
order shall be effective and binding against AAC only upon written
or deemed acceptance by AAC, not to be unreasonably withheld or
delayed. Notwithstanding the foregoing, Baxter shall remain
responsible for the Firm Commitment portion of the Forecast.
AAC shall notify Baxter of its approval or rejection of any
such change order within ten (10) days after receipt thereof;
provided, however, that AAC’s failure to so notify Baxter
within such ten (10) day period, (A) with respect to a requested
modification of the delivery date or quantity of CoSeal Accessories
or CoSeal Units in a Purchase Order, shall be deemed to be an
acceptance of such change order if AAC received actual notice of
such requested modification, and (B) with respect to a requested
modification of the Specifications, shall be deemed to be a
rejection of such change order.
(v)
Transitional Period Plan
. Within ninety (90) days after the
Effective Date, the Parties shall negotiate in good faith and
devise a transitional period plan which will set forth, among other
things, the Parties’ responsibilities relating to the
manufacture of the CoSeal Accessories, Products and CoSeal Units
during the transfer of manufacturing technology from AAC to Baxter,
the time frame for such transfer, and the Parties’ mutually
determined collaborative and comprehensive plan that will ensure a
supply of CoSeal Accessories and a smooth transition of
manufacturing of the Products and CoSeal Units from AAC to
Baxter.
(b)
Second Commercialization Date to
Termination of Baxter’s Manufacturing Rights
. From the Second Commercialization
Date until the date of expiration or early termination of this
Manufacturing Agreement (in whole or in part), where such
expiration or early termination results in the loss of
Baxter’s right to manufacture and/or supply CoSeal
Accessories, Products and CoSeal Units, Baxter will be responsible
for manufacture of Baxter’s entire requirements for
commercial supply of such CoSeal Accessories, Products and CoSeal
Units.
4.2
Manufacture by Baxter for AAC.
(a)
Pre-Commercialization
Supply . If, following
the Second Commercialization Date, AAC requests that Baxter supply
to AAC formulations of the Products for AAC’s research or
clinical trial activities, Baxter may, in its sole discretion,
agree to provide AAC with then current formulations of the
Products, at a price to be negotiated by the Parties, in amounts
that are forecasted in the same manner as set forth in Sections
4.1(a)(i), (ii) and (iv), and
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in accordance with such other terms as are agreed to by the Parties
and set forth in a Baxter Supply Agreement.
(b)
Commercial
Supply . If, following
the second Commercialization Date, AAC requests that Baxter supply
to AAC a Non-Licensed Product containing the CoSeal Ingredients or
formulations of the Products for inclusion as part of a
Non-Licensed Product for AAC’s commercialization of such
Non-Licensed Product, Baxter, in its sole discretion, may supply
AAC with such Non-Licensed Product in amounts that are forecasted
in the same manner as set forth in Sections 4.1(a)(i), (ii) and
(iv), and in accordance with such other terms as are agreed to by
the Parties and set forth in a Baxter Supply Agreement. The
terms and conditions of such Baxter Supply Agreement, including
transfer price and forecasted amounts, shall be negotiated by the
Parties in good faith at least nine (9) months prior to the date
that AAC expects to obtain its first Regulatory Approval of such
Non-Licensed Product.
4.3
CoSeal Unit Manufacturing Procedures,
Standards and Compliance with Laws. All CoSeal Accessories and CoSeal Units used for
pre-clinical, clinical and commercial purposes will be
manufactured, tested and released by the Parties according to
current good manufacturing practices (“GMPs”),
standards, and applicable corresponding laws in the Territory for
the production of the CoSeal Accessories and CoSeal Units.
During the time in which it is responsible for manufacturing
the CoSeal Accessories or CoSeal Units(s), each Party will be fully
responsible for maintaining its facilities and procedures, and for
ensuring that any Third Party used by such Party for manufacturing
CoSeal Accessories or CoSeal Units or components thereof maintains
its facilities and procedures, in compliance with current GMPs,
standards and applicable corresponding laws.
4.4
Transfer Price if Baxter Elects To
Manufacture, But Does Not Distribute, Product; Inventory.
If Baxter retains its
exclusive manufacturing rights with respect to a CoSeal Unit in
accordance with Section 2.6, the Parties will negotiate in good
faith a mutually acceptable transfer price for such CoSeal Units
that are manufactured by Baxter and distributed by AAC (or its
Third Party distributor).
4.5
Rights and Obligations after Transfer
of Manufacturing. Where Baxter, during the term of this
Agreement or by termination or expiration of this Agreement, is
obligated to transfer manufacturing technology and Baxter
Manufacturing Know-How pertaining to any CoSeal Accessories,
Product or CoSeal Unit hereunder from Baxter to AAC (or to a Third
Party manufacturer identified by AAC) to enable AAC (or such Third
Party manufacturer) to manufacture and/or supply such CoSeal
Accessories, Product or CoSeal Unit, Baxter will use its
Commercially Reasonable Efforts to effect such transfer fully and
efficiently. In such event, Baxter shall continue to
manufacture and supply CoSeal Accessories, Product or CoSeal Unit
to AAC according to AAC’s current forecasts for such CoSeal
Accessories, Product or CoSeal Unit, until such time that AAC (or
such Third Party manufacturer) is able to independently manufacture
such CoSeal Accessories, Product or CoSeal Unit in amounts needed
by AAC. However, in no event shall Baxter be required to
continue to supply AAC for a period of more than eighteen (18)
months after (a) with respect to a transfer pursuant to Section
2.6(a), (i) the date that Baxter provides written notice to AAC of
Baxter’s election to terminate its exclusive CoSeal Sealant
Unit and CoSeal Adhesion Prevention Unit manufacturing rights, or
(ii) in the absence of such written notice, the expiration of the
ninety (90) day notice period set forth in
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Section 2.6(a), whichever occurs first; (b) with respect to a
transfer pursuant to Section 2.6(b), (i) the date that AAC provides
written notice to Baxter of AAC’s election to manufacture the
CoSeal Adhesion Prevention Unit, or (ii) in the absence of such
written notice, the expiration of the ninety (90) day notice period
set forth in Section 2.6(b), whichever occurs first; (c) with
respect to a transfer following termination of this Manufacturing
Agreement pursuant to Section 10.3, the expiration of the thirty
(30) day cure period; and (d) with respect to a transfer pursuant
to Section 10.4, the date that AAC receives written notice from
Baxter of Baxter’s election to discontinue manufacturing
either of the CoSeal Units. The Parties will negotiate in
good faith a mutually acceptable transfer price for such CoSeal
Units that are manufactured by Baxter and distributed by AAC (or
its Third Party distributor).
4.6
Certificate of Analysis.
AAC shall deliver to
Baxter with fulfillment of each CoSeal Unit order a certificate of
analysis confirming that such order meets the Specifications
applicable to such CoSeal Unit (each, a “Certificate of
Analysis”) and a certificate of compliance of such order.
AAC shall test batches Delivered hereunder in accordance with
agreed upon standard testing and inspection protocols, which shall
in any event be consistent with generally accepted standards in the
medical device industry as then in effect. Baxter shall be
responsible for reasonable inspection of each order for physical
damage in shipping and shortage. Within twenty-one (21) days
after receipt of each order of CoSeal Unit, together with AAC's
Certificate of Analysis and certificate of compliance pertaining to
each such order, Baxter shall notify AAC if, in Baxter's
determination, such order fails to conform to the Specifications.
Baxter shall provide notice of rejection of the applicable
order to AAC within such twenty-one (21) day period. Orders
not rejected within such twenty-one (21) day period in a written
notice of rejection sent to AAC shall be deemed to have been
accepted by Baxter. Once Baxter accepts an order of CoSeal
Unit, it shall not have the right to reject such order thereafter.
If Baxter determines that such order does not conform to
Specifications, it shall send to AAC, via overnight delivery
service or certified mail, return receipt requested, within such
twenty-one (21) day period a written notice of rejection of the
order, along with a sample of the rejected order to the VP,
Manufacturing at the following address: Cohesion Technologies,
Inc., 2500 Faber Place, Palo Alto, CA 94303. If AAC
agrees that the order is defective or non-conforming, it will, at
its option (a) replace, whether through reprocessing or otherwise,
such order, or (b) reimburse Baxter its out-of-pocket costs in
destroying such order. Furthermore, AAC shall pay for the
shipping cost associated with the delivery of the replacement
order, if any. If AAC does not agree with Baxter's
determination that such order is defective or non-conforming, then
after reasonable efforts to resolve the disagreement, either Party
may submit a sample from the order to a mutually agreed upon
independent Third Party laboratory for resolution of the dispute.
The independent laboratory’s results shall be final and
binding. Unless otherwise agreed to by the Parties in
writing, the costs associated with such testing and review shall be
borne by the Party against whom the independent laboratory rules.
For purposes of this Section 4.6, the twenty-one (21) day
period shall commence on the date of Baxter’s receipt of the
order and the related Certificate of Analysis.
4.7
Replacement of Defective Item.
In accordance with the
terms set forth in this Manufacturing Agreement, AAC shall replace,
whether through reprocessing or otherwise, at its sole expense, all
items that do not comply or are found not to comply with the
Specifications (“Defective Item”), or shall credit
Baxter for amounts already paid for the Defective Item.
EXCEPT IN THE EVENT OF A BAXTER THIRD PARTY
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CLAIM OR AAC THIRD PARTY CLAIM, AS SET FORTH IN ARTICLE 11, THE
OBLIGATION OF AAC TO REPLACE DEFECTIVE ITEMS IN ACCORDANCE WITH THE
SPECIFICATIONS OR APPLICABLE LAWS SHALL BE BAXTER’S SOLE AND
EXCLUSIVE REMEDY UNDER THIS MANUFACTURING AGREEMENT FOR DEFECTIVE
ITEMS, AND IS IN LIEU OF ANY OTHER WARRANTY, EXPRESS OR
IMPLIED.
4.8
Delivery.
AAC shall tender CoSeal Accessory and
CoSeal Unit for delivery, F.O.B. the place of manufacture (or as
otherwise designated by AAC), whether at the site of a Third Party
manufacturer or otherwise, as the case may be, in accordance with
the Specifications and addressed to the shipping address specified
by Baxter. Baxter shall provide AAC with standard shipping
instructions at least two (2) months prior to the first requested
shipping date hereunder; thereafter, such shipping instructions may
be changed upon reasonable written notice to AAC. AAC shall
not Deliver any batch of CoSeal Unit prior to completion of quality
control testing by AAC without the consent of Baxter, which consent
shall not be unreasonably withheld or delayed. Baxter shall
be responsible for all costs and risk of loss associated with the
shipping materials (from and after Delivery), shipping instructions
and the CoSeal Units from and after Delivery.
Article 5
Records; Regulatory Matters
5.1
Recordkeeping.
AAC shall maintain (and shall require any
Third Party manufacturer to maintain) true and accurate books,
records, test and laboratory data, reports and all other
information relating to manufacturing under this Manufacturing
Agreement, including all information required to be maintained by
applicable laws. Such information shall be maintained in
forms, notebooks and records for a period of at least two (2) years
from the relevant finished CoSeal Unit expiration date, or longer
if required under applicable laws.
5.2
Regulatory Responsibility and
Compliance.
(a)
AAC agrees to use Commercially Reasonable
Efforts to cause, (i) within six (6) months after the Effective
Date, the transfer of title and ownership to Baxter of Regulatory
Approvals and related Regulatory Filings which are owned by AAC and
are filed, issued and in full force and effect as of the Effective
Date, and (ii) within six (6) months after obtaining Regulatory
Approval for the each of the [***], [***] or [***] indications, the
transfer of title and ownership to Baxter of Regulatory Approvals
and related Regulatory Filings, licenses or permits for such
approved indication.
(b)
AAC shall be
responsible for obtaining and maintaining any establishment
licenses or permits required by the FDA, by applicable laws or by
Regulatory Authorities that pertain to its CoSeal Unit
manufacturing facility. AAC hereby grants to Baxter the right
to reference such establishment files for the purpose of obtaining
and maintaining Regulatory Approval.
5.3
Governmental Inspections and
Requests. AAC shall advise
Baxter within three (3) Business Days if an authorized agent of any
Regulatory Authority visits a facility where manufacturing activity
with respect to CoSeal Devices or CoSeal Units takes place, where
the
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interest of the Regulatory Authority is specifically related to
manufacturing activity with respect to CoSeal Devices or CoSeal
Units (and shall require any Third Party manufacturers to do the
same within five (5) Business Days with respect to their
facilities). In such circumstance, AAC shall furnish (and
shall require any Third Party manufacturer to furnish) to Baxter a
copy of sections of the report by such Regulatory Authority which
are specifically related to the CoSeal Devices or CoSeal Units
within ten (10) days of receipt of such report. Further, upon
receipt of a Regulatory Authority written request to inspect a
manufacturing facility or the manufacturing facilities of a Third
Party manufacturer, or to audit AAC’s (or its Third Party
manufacturer’s) books and records with respect to
manufacturing of CoSeal Devices or CoSeal Units under this
Manufacturing Agreement, AAC shall notify Baxter thereof within
three (3) Business Days (and require any Third Party manufacturer
to notify Baxter within five (5) Business Days thereof), and shall
provide (and require any Third Party manufacturer to provide)
Baxter with a copy of any written document received from such
Regulatory Authority. AAC shall provide Baxter with notice of
any such non-written inspection request from a Regulatory Authority
which specifically relates to the CoSeal Devices or CoSeal Units as
promptly as reasonably practicable under the circumstances.
AAC shall also provide to Baxter such notice as is reasonably
practicable under the circumstances of any action by a Regulatory
Authority, resulting from an inspection of a facility where
manufacturing activity with respect to CoSeal Devices or CoSeal
Units takes place, which is reasonably anticipated to materially
affect AAC’s ability to perform its obligations under this
Manufacturing Agreement. Nothing in this Section 5.3 shall
require AAC to submit to Baxter any books, records, data or
information relating to the manufacture or distribution of any
products not covered under this Manufacturing Agreement or the
Distribution and License Agreement.
5.4
Recall and Field Corrective Action.
This Section 5.4 shall
govern recall arising after the Effective Date from the CoSeal
Accessories and CoSeal Units manufactured by AAC (or on its behalf
by a Third Party) for Baxter. In the event that AAC
believes a recall, field alert, CoSeal Accessory or CoSeal Unit
withdrawal, or field corrective action may be necessary with regard
to any CoSeal Accessory or CoSeal Unit provided to Baxter under
this Manufacturing Agreement, AAC shall immediately notify Baxter
in writing. In the event that Baxter believes a recall, field
alert, CoSeal Accessory or CoSeal Unit withdrawal, or field
corrective action may be necessary with regard to any CoSeal
Accessory or CoSeal Unit provided by AAC under this Manufacturing
Agreement, Baxter shall immediately notify AAC in writing.
Baxter shall provide reasonable cooperation and assistance to
AAC. Notwithstanding Sections 4.7 and 4.8, the cost of any
such recall, field alert, CoSeal Accessory or CoSeal Unit
withdrawal, or field corrective action shall be borne by AAC,
unless such recall, field alert, CoSeal Accessory or CoSeal Unit
withdrawal, or field corrective action is caused in material part
by Baxter's breach of its obligations under this Manufacturing
Agreement, the Distribution and License Agreement (including
obligations regarding advertising, distribution and storage of the
CoSeal Units) or applicable laws, or by its willful misconduct;
then such cost shall be borne by Baxter to the extent such recall,
field alert, CoSeal Accessory or CoSeal Unit withdrawal, or field
corrective action was due to such causes. For purposes of
this Section 5.4, the Party bearing the costs of any recall, field
alert, CoSeal Accessory or CoSeal Unit withdrawal, or field
corrective action shall only be required to reimburse the other
Party for reasonable, actual and documented out-of-pocket costs
incurred by such other Party for such recall, field alert, CoSeal
Accessory or CoSeal Unit withdrawal, or
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field corrective action (including costs of retrieving CoSeal
Accessory or CoSeal Unit already delivered to customers, costs and
expenses such other Party is required to pay for notification,
shipping and handling charges, and all other costs
reason
