EX-10.13(C) AMENDMENT TO THE SUPPLY AGREEMENTSupply Agreement |
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Exhibit 10.13(c)
AMENDMENT
TO THE
SUPPLY AGREEMENT
This Amendment (the “ Amendment ”) entered into effective as of December 21, 2006 (the “ Amendment Effective Date ”) to the Supply Agreement, effective as of June 23, 2005 (the “ Supply Agreement ”), by and between Alkermes, Inc. (“ Alkermes ”) and Cephalon, Inc. (“ Cephalon ”), witnesseth that (capitalized terms used but not defined herein shall have the meaning set forth in the Supply Agreement):
RECITALS:
WHEREAS, pursuant to the Supply Agreement, the Parties agreed, among other things, that Alkermes was responsible for providing the capital necessary to permit the Manufacture of the Product Requirements pursuant to such Supply Agreement; and
WHEREAS, Alkermes and Cephalon have now agreed to amend the terms and conditions governing responsibilities for providing the capital necessary to meet the Product Requirements for the Product.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. A new Section 5.5 shall be added to the Supply Agreement and shall read as follows:
“5.5 Line 5 and Line 6.
(a) Product Manufacturing Equipment Purchase . Notwithstanding anything to the contrary herein, effective the Amendment Effective Date, Alkermes will sell and Cephalon will purchase for the Purchase Price described below all equipment that on September 30, 2006 (the “ Agreement Date ”) constituted the second wet process line for the Manufacture of the Product at the Alkermes Manufacturing Facility in Wilmington, Ohio (“ Line 5 ”) and the third wet process line for the Manufacture of the Product at the Alkermes Manufacturing Facility in Wilmington, Ohio (“ Line 6 ”) (such equipment along with all other equipment thereafter added to Line 5 and Line 6, the “ Product Manufacturing Equipment ”) as well as reimburse Alkermes for all related Capital Improvements (as defined below) made prior to the Agreement Date. Within ten (10) days of the Amendment Effective Date, Cephalon will pay Alkermes the purchase price of Nineteen Million Three Hundred Fifty-Six Thousand Seven Hundred Fifty-Six Dollars ($19,356,756) (the “ Purchase Price ”). Upon receipt of the Purchase Price Alkermes will transfer to Cephalon the title to and risk of loss of all Product Manufacturing Equipment in existence on the Agreement Date and all Capital Improvements made prior to the Agreement Date. Thereafter, Alkermes will supply to Cephalon at the end of each
calendar quarter a detailed listing of all Capital Improvements made to Line 5 and Line 6 during such calendar quarter and will supply supporting documentation for all Fully Capitalized Costs (as defined below) incurred by Alkermes as requested by Cephalon from time to time.
Notwithstanding anything to the contrary herein, whether or not Alkermes has supplied to Cephalon any listing thereof in accordance with the preceding paragraph, Cephalon will own any Product Manufacturing Equipment and other Capital Improvements made to Line 5 or Line 6 for which Cephalon has made the related payment to Alkermes of Fully Capitalized Costs pursuant to Section 5.5(b). To evidence and perfect Cephalon’s ownership interest in the Product Manufacturing Equipment and other Capital Improvements, Alkermes agrees to execute and deliver all deeds, assignments, bills of sale and other documents reasonably requested by Cephalon, including appropriate Uniform Commercial Code financing statements with respect to the Product Manufacturing Equipment and other Capital Improvements. Alkermes will keep the Product Manufacturing Equipment and other Capital Improvements free and clear of all liens and encumbrances, other than those which may result from any act of Cephalon. All costs incurred by Cephalon for insuring the Product Manufacturing Equipment and other Capital Improvements, and for paying any taxes, including personal property and sales taxes that may accrue with respect to the Product Manufacturing Equipment and other Capital Improvements, shall be deemed to be Cephalon Incurred Shared Expenses.
(b) Capital Improvements . Following the Agreement Date, Alkermes has continued and will continue to design, engineer, procure additional equipment for, develop, construct and validate Line 5 and Line 6 (all such activities the “ Capital Improvements ”). Within ten (10) days of the Amendment Effective Date, Cephalon will reimburse Alkermes for the Fully Capitalized Costs of Capital Improvements incurred by Alkermes during October 2006 and any other Fully Capitalized Costs associated with Line 5 and Line 6 incurred by Alkermes during this period. Within the period ending thirty (30) days after the later of (i) the Amendment Effective Date or (ii) Cephalon’s receipt of Alkermes’ invoice therefor, Cephalon will reimburse Alkermes for the Fully Capitalized Costs of Capital Improvements incurred by Alkermes during November 2006 and any other Fully Capitalized Costs associated with Line 5 and Line 6 incurred by Alkermes during this period. Within fifteen (15) days of the end of each month after the Amendment Effective Date, Alkermes will invoice Cephalon for the Fully Capitalized Costs of Capital Improvements incurred by Alkermes during the prior month and any other Fully Capitalized Costs associated with Line 5 and Line 6 incurred by Alkermes during such period. Cephalon will pay each such invoice within thirty (30) days of receipt; provided , however , that Cephalon shall not be obligated to pay pursuant to this Section 5.5(b) for any Fully Capitalized Costs exceeding in the aggregate Fifty-One Million Six Hundred Forty-Three Thousand Two Hundred Forty-Four Dollars ($51,643,244). All costs incurred by Alkermes with respect to Line 5 and Line 6 that are not
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reimbursed by Cephalon pursuant to this Section 5.5(b) or included in the Purchase Price will, to the extent covered by Development Plan budgets approved by the JSC, be deemed to be Alkermes Incurred Shared Expenses or, to the extent appropriate, be included in Fully Burdened Manufacturing Costs. “ Fully Capitalized Costs ” shall mean costs that normally would be capitalized in accordance with Cephalon’s accounting policies (whether incurred by Cephalon or Alkermes), including direct labor costs of both Cephalon and Al






