EXHIBIT NO. 10.3
EXECUTION VERSION
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SUPPLY AGREEMENT
BY AND BETWEEN
MILLENNIUM PHARMACEUTICALS, INC.
AND
SCHERING CORPORATION
SEPTEMBER 1, 2005
<PAGE>
SUPPLY AGREEMENT
This SUPPLY
AGREEMENT (the "Supply Agreement") is entered into as of
September 1, 2005 (the "Execution Date") by
and among Millennium
Pharmaceuticals, Inc. (including its
Affiliates, "Millennium"), a Delaware
corporation with offices at 40 Landsdowne
Street, Cambridge, Massachusetts
02139, and Schering Corporation, a New
Jersey corporation having its principal
place of business at 2000 Galloping Hill
Road, Kenilworth, New Jersey 07033,
U.S.A. ("Schering"). In this Agreement,
Millennium and Schering are referred to
individually as a "Party" and collectively
as the "Parties", and references to
Millennium and Schering include their
respective Affiliates.
WHEREAS,
Millennium and Schering Corporation entered into a
Collaboration
Agreement dated April 10, 1995, as amended
(the "Collaboration Agreement")
pursuant to which Schering had the
opportunity to participate in the development
and commercialization of INTEGRILIN;
and
WHEREAS,
Millennium and Schering Corporation have entered into an
Amended
and Restated INTEGRILIN Agreement as of
July 22, 2005 (as amended from time to
time, the "A-R Agreement") pursuant to
which Schering shall have an exclusive
license to commercialize and distribute
INTEGRILIN Product(s) in the Schering
Territory; and
WHEREAS,
pursuant to the A-R Agreement, Schering shall hold the
Regulatory
Authorization for the INTEGRILIN Product(s)
in the Schering Territory; and
WHEREAS,
Millennium has entered into agreements with Third Party
Contractors for the Manufacture of Compound
and Product; and
WHEREAS,
Millennium and UCB S.A. have developed a new process for the
manufacture of Compound ("New Compound
Process"), different from the process
approved for the Manufacture of Compound as
of the date of Execution of the A-R
Agreement; and
WHEREAS,
Millennium has agreed to sell to Schering Product and Compound
manufactured for Millennium by Third Party
Contractors, and Schering has agreed
to purchase Product and Compound from
Millennium.
NOW, THEREFORE,
in consideration of the mutual covenants contained herein,
and for other good and valuable
consideration, the receipt of which is hereby
acknowledged, the Parties agree as
follows:
1.
DEFINITIONS
Capitalized terms used but not otherwise
defined in this Supply Agreement shall
have the meanings ascribed thereto in the
A-R Agreement. Unless this Supply
Agreement shall expressly provide to the
contrary, the following terms herein,
whether used in the singular or plural,
shall have the respective meanings set
forth below:
1.1 "COMPOUND"
Compound means the compound known as eptifibatide
manufactured in bulk form for use as the
active pharmaceutical ingredient in the
Manufacture of the INTEGRILIN Product, as
further described in SCHEDULE A-1.
1.2 "COST OF
GOODS SHIPPED" means the cost of Compound or Product
Manufactured for Schering under this Supply
Agreement. As used herein, the cost
of the Compound or Product, as the case may
be, means the unit costs of
manufacture, including without limitation
the acquisition costs for Product or
Compound, as applicable, (i) from Third
Party Contractors (including the
royalties due to Solvay with respect to
purchases from Diosynth B.V.), (ii) for
services contracted by Millennium and (iii)
for services provided by Millennium,
each in connection with the Manufacture of
such Product or Compound, plus the
variances. Actual unit costs shall consist
of direct material and direct labor
costs plus manufacturing overhead directly
attributable to the Compound or
Products for Schering at standard cost plus
variances, all calculated in
accordance with reasonable cost accounting
methods, consistently applied, of the
Party performing the work.
Direct material
costs shall include the costs incurred in purchasing
materials, including sales and excise taxes
imposed thereon and customs duty and
charges levied by government authorities,
and all costs of filling, finishing
and packaging, as applicable.
Direct labor
shall include the cost of employees engaged in the direct
activities of procurement, planning,
production, testing and releasing of
Compound or Product, as applicable, for
Schering.
Overhead
attributable to the Compound or Products for Schering shall
include a reasonable allocation of indirect
labor (not previously included in
direct labor) and manufacturing department
supplies and expenses, a reasonable
allocation of administrative costs, and a
reasonable allocation of facilities
costs including electricity, water, sewer,
waste disposal, property taxes, and
depreciation over the expected life of
buildings and machinery. Such allocations
shall be in accordance with reasonable cost
accounting methods, consistently
applied, of the Party performing the work.
Overhead shall not include corporate
overhead. Overhead shall not include costs
associated with capacity not
incorporated into standard unit costs.
Actual costs shall exclude costs
associated with excess capacity not
directly related to Compound or Product
Manufactured for Schering.
Cost of Goods
Shipped shall also include manufacturing variances and other
attributable costs not in standard (but
excluding capacity not incorporated into
standard manufacturing unit costs) such as,
but not limited to, excess and
obsolescence, and batches that do not
conform to specification. Cost of Goods
Shipped shall also include a recovery of
process improvement costs and
environmental compliance costs.
Notwithstanding
the foregoing of this Section 1.2, in no event will Cost of
Goods Shipped include (i) costs or
allocations that have not been customarily
used by the Parties in the implementation
of the Collaboration Agreement prior
to the date of Execution of the A-R
Agreement; (ii) except as required by Laws,
additional reviews or analyses of
Manufactured Compound or Product beyond the
reviews and analyses conducted by
Millennium as of the date of execution of the
A-R Agreement for the release of Compound
or Product, or (iii) any of the costs
or allocations set forth in this Section
1.2 to the extent attributable to
Compound or products manufactured for GSK.
In addition, in circumstances where
Millennium purchases from multiple Third
Party Contractors and/or on behalf of
GSK and Schering, the parties agree that
standard cost represents a blended
cost.
1.3 "DIOSYNTH
SUPPLY AGREEMENT" means the Supply Agreement between Diosynth
B.V. and Millennium Pharmaceuticals, Inc.
dated July 21, 1998, a true and
correct copy of which has been provided to
Schering by Millennium.
1.4 "FDA" FDA
means the United States Food and Drug Administration,
including any successor agency thereto.
1.5 "JOINT
PRODUCTION COMMITTEE" Joint Production Committee means the
committee which shall be formed as set
forth in Section 2.2 of this Supply
Agreement.
1.6 "LAWS" Laws
means any federal, state or local, foreign, national or
multinational law, statute, standard,
ordinance, code, rule, regulation,
resolution or promulgation, or any
government order, or any license, franchise,
permit or similar right granted under any
of the foregoing, or any similar
provision having the force or effect of
law.
1.7
"MANUFACTURE" and "MANUFACTURING" Manufacturing or Manufacture,
means,
1.7.1 in connection with Compound, any steps, process and
activities
necessary to
produce Compound, including without limitation, the
sourcing of raw
materials, and the manufacturing, processing, quality
control testing,
release or storage of Compound in accordance with the
terms and
conditions set forth in the relevant Third Party Compound
Manufacturing
Agreement and shipping to storage and/or fill/finish
manufacturing
sites;
1.7.2 in connection with Product for sale in the United States, all
the
activities
relating to production of each INTEGRILIN Product, including
without
limitation, purchasing raw materials, production of the
Product, quality
control and quality assurance, filling, finishing,
labeling,
packaging, release, holding, shipping and the analytical
quality control
tests and analyses conducted in connection therewith in
accordance with
the terms and conditions set forth in the relevant
Third Party
Agreement; and
1.7.3 in connection with Product for sale in the Schering
Territory
except for the
United States, all the activities relating to production
of each
INTEGRILIN Product, including without limitation, purchasing
raw materials,
production of the Product, quality control and quality
assurance,
filling, finishing, release in unlabeled vials and the
analytical
quality control tests and analyses conducted in connection
therewith and
shipping of such unlabeled vials, as directed by
Schering, all in
accordance with the terms and conditions set forth in
the relevant
Third Party Agreement.
1.8 "PATHEON
SUPPLY AGREEMENT" means the Manufacturing Services Agreement
between Patheon Italia S.p.A. and
Millennium Pharmaceuticals, Inc. dated June
10, 2005, a true and correct copy of which
has been provided to Schering by
Millennium.
1.9 "PRODUCT"
Product means the pharmaceutical product containing the
active ingredient eptifibatide Manufactured
in accordance with this Agreement
and the Third Party Agreements and
conforming to the Specifications, to be
marketed by Schering as INTEGRILIN(R)
(eptifibatide) Injection. Product includes
product that has undergone Manufacturing
for the United States (including
labeling and secondary packaging) as well
as product that has undergone
Manufacturing for the Schering Territory
except for the United States.
1.10 "SOLVAY
SUPPLY AGREEMENT" means the New Long Term Supply Agreement
between Solvay, Societe Anonyme
(Peptisyntha) and Millennium Pharmaceuticals,
Inc. dated January 1, 2003, and the License
and Supply Agreement between Solvay,
Societe Anonyme dated July 24, 1994, as
amended from time to time, a true and
correct copy of which has been provided to
Schering by Millennium.
1.11
"SPECIFICATIONS" Specifications means the written
specifications
established for the characteristics,
quality and quality control testing
procedures for Compound or Product, as
applicable, as defined in the Regulatory
Approval for the INTEGRILIN Product(s) in
the countries for which the INTEGRILIN
Product(s) is approved in the Schering
Territory, and as amended from time to
time. The Specifications for the United
States and Canada as of the Execution
Date are attached hereto as SCHEDULE A-1
(COMPOUND) AND SCHEDULE A-2 (PRODUCT).
1.12 "TECHNICAL
AGREEMENT" Technical Agreement means the Technical
Agreement of even date entered into by the
Parties, a copy of which is attached
hereto as EXHIBIT A.
1.13 "TEVA
SUPPLY AGREEMENT" means the Manufacturing Agreement between
Gensia Sicor Pharmaceuticals, Inc. and
Millennium Pharmaceuticals, Inc. dated
February 1, 2001, as amended from time to
time, and the Interim Manufacture
Agreement between Sicor Pharmaceutical
Sales, Inc. and Millennium
Pharmaceuticals, Inc. dated February 18,
2004, a true and correct copy of which
has been provided to Schering by
Millennium.
1.14 "THIRD
PARTY AGREEMENTS" Third Party Agreement means, collectively,
the Third Party Product Manufacturing
Agreements, Third Party Compound
Manufacturing Agreements, Third Party
Packaging Agreements, and agreements
between Millennium and vendors for testing
of Compound or Product or for storage
of Compound or Product.
1.15 "THIRD
PARTY COMPOUND MANUFACTURER" Third Party Compound Manufacturer
means, currently, each of Peptisyntha
(Solvay) and Diosynth B.V., and following
receipt of approval from the FDA,
UCB-Bioproducts, and any other manufacturer of
Compound selected by JPC and approved by
the FDA for the Manufacture of
Compound.
1.16 "THIRD
PARTY COMPOUND MANUFACTURING AGREEMENT" Third Party Compound
Manufacturing Agreement means an agreement
executed by a Third Party Compound
Manufacturer and Millennium, existing as of
the Execution Date or in the future,
pursuant to which the Third Party Compound
Manufacturer agrees to Manufacture,
and Millennium agrees to purchase,
Compound.
1.17 "THIRD
PARTY CONTRACTOR" Third Party Contractor means a Third Party
Compound Manufacturer, Third Party Product
Manufacturer, packager of Product,
testing laboratory or storage vendor.
1.18 "THIRD
PARTY PRODUCT MANUFACTURER" Third Party Product Manufacturer
means Teva Pharmaceuticals, Inc. (successor
to Sicor Pharmaceuticals, Inc.),
and, following receipt of FDA approval,
Patheon Italia S.p.A. or any other
manufacturer of Product selected by JPC and
approved by FDA for the Manufacture
of Product.
1.19 "THIRD
PARTY PRODUCT MANUFACTURING AGREEMENT" Third Party Product
Manufacturing Agreement means an agreement
executed by a Third Party Product
Manufacturer and Millennium, existing as of
the Execution Date or in the future,
pursuant to which the Third Party Product
Manufacturer agrees to Manufacture,
and Millennium agrees to purchase,
Product.
1.20 "THIRD
PARTY PACKAGING AGREEMENT" Third Party Packaging Agreement
means an agreement with a vendor, existing
as of the Execution Date or in the
future, for the labeling of vials and
packaging into secondary packaging for
distribution for sale.
1.21 "UCB SUPPLY
AGREEMENT" means the Supply Agreement between UCB S.A. and
Millennium Pharmaceuticals, Inc. dated
January 14, 2005, a true and correct copy
of which has been provided to Schering by
Millennium.
1.22 ADDITIONAL
DEFINITIONS Each of the following definitions is set forth
in the Section of the Supply Agreement
indicated below.
DEFINITION
SECTION
Early
Manufacturing Plan Transfer to Schering 3.1.1
Execution
Date
First Paragraph
Force
Majeure Event
11.3
Schering
Indemnified Parties
10.1
Losses
10.1
Millennium
Indemnified Parties
10.2
New
Compound Process
Preamble
Records
3.5
Representative
2.4
Retention
Period
3.5
Secondary
Compound Supplier
3.2
Severed
Clause
11.6
2.
PERFORMANCE
2.1 SUPPLY AND
PURCHASE
2.1.1 SUPPLY OF COMPOUND AND PRODUCT. Subject to the terms and
conditions of
this Agreement, Millennium shall exercise its rights under
the Third Party
Agreements to arrange for the Manufacture of Compound and
Product under
the terms of the applicable Third Party Agreements and shall
perform the
services described in the Technical Agreement. Schering
shall pay to
Millennium the Costs of Goods Shipped for the Manufacture
of such Compound
and Product.
2.1.2 MANUFACTURING PLAN. Subject to the terms and conditions of
this
Agreement,
Millennium shall use Diligent Efforts to perform its
obligations
under the Manufacturing Plan (an outline of which is attached
hereto as
Schedule B (subject to finalization and agreement by the JPC at
Closing)) as
described in Section 3 of this Agreement.
2.2 JOINT
PRODUCTION COMMITTEE. The Parties shall establish a Joint
Production Committee (the "JPC") which
shall include representatives from
Schering and Millennium responsible for
production planning, manufacturing,
product quality, and regulatory affairs.
The JPC shall be responsible to do the
following:
2.2.1 monitor the implementation of, and make decisions on
modifications or
revisions to, the Manufacturing Plan, including but not
limited to:
(a)
selecting additional Third Party Contractors;
(b)
deciding whether to extend or renew existing contracts for
Manufacturing, packaging, testing or
storage services;
(c) for
either Compound or Product that is Manufactured by a third
party
that is not approved by FDA for the
Manufacture of Compound or Product as of the
date of execution of the A-R Agreement,
assigning responsibilities between
Millennium and any manufacturer or testing
vendor for testing and quality review
of such Compound or Product;
2.2.2 exchange information on quality matters related to the
quality
of the Product
or the Compound, including but not limited to:
(a) any
trends in quality metrics such as customer complaints, release
data and stability data;
(b) any
corrective and preventive actions being taken by any Third
Party
Contractor with respect to the quality of
Compound or Product or the services
performed pursuant to the Third Party
Agreement;
2.2.3 advise the Parties on the status of regulatory
submissions
related to the
Manufacture of
Compound and Product;
2.2.4 decide upon the quantities and the delivery dates of
Schering's
portions of the
forecasts and the purchase orders that Millennium will
forward to the
Third Party Contractors, subject to and in accordance
with the
relevant terms of each of the Third Party Agreements, for the
Manufacture of
Compound and Product, based upon the following:
(a) sales
forecasts provided by Schering;
(b) the
goal of the Parties to maintain a minimum inventory in the
supply
chain prior to delivery to wholesalers of
Product released by Millennium to
Schering equal to approximately twelve (12)
weeks of Schering's forecasted
requirements;
(c) the
goal of the Parties to maintain a minimum inventory of Compound
released by Millennium equal to
approximately [**] months of the forecasted
requirements, or as otherwise is agreed is
necessary to transition successfully
to Compound Manufactured under the new
process;
2.2.5 discuss the terms of, and potential courses of action
with
respect to, any
material proposed amendment or modification to, or
notice of or
threatened termination of, any Third Party Agreements or
of any
developments known to Millennium materially and adversely
affecting such
arrangements.
2.2.6 manage the transition of the supply responsibility from
Millennium to
Schering following the exercise of rights under the call
options or put
options under Article 7.
2.3 JOINT
PRODUCTION COMMITTEE PROCESSES. The procedures for, and
frequency
of, the JPC meetings shall be agreed upon
between the Parties as soon as
reasonably possible following the Execution
Date. Each meeting of the JPC will
be documented in minutes that the Parties
agree upon jointly. The Parties agree
to resolve any issues or disputes in good
faith. In the event that the Parties
cannot agree upon a specific action to be
taken, the matter shall be resolved by
escalating the dispute to senior management
of the respective parties in
accordance with Article 14.1 of the A-R
Agreement; provided, however, that if
senior management cannot resolve the
dispute, neither Party may invoke the
provisions of Section 14.2 of the A-R
Agreement but, instead, Schering shall
make the final decision in its sole
discretion, subject to the following:
2.3.1 If such a final decision by Schering delays or extends the
time
for performance
of an activity under the Manufacturing Plan, and if the
extension of
such date causes a delay in (a) FDA's approval of UCB as a
Third Party
Compound Manufacturer beyond [**], or (b) FDA's approval of the
second supplier
or a second site using the New Compound Process by [**],
then the royalty
deduction with respect to a delayed Regulatory Approval
provided for
under in Section 6.4(a)(iv) and (v), respectively, under the
A-R Agreement
shall be extended by the same number of days beyond [**], in
the case of a
delay regarding clause (a), above, and beyond [**], in case
of a delay
regarding clause (b), above. For clarity, if Schering makes
such
a final decision
to select a second compound supplier or a second site,
whose
implementation schedule states that FDA approval will occur
after
[**] (in lieu of
another qualified potential second compound supplier or a
second site
whose implementation schedule states that FDA approval will
occur before
[**]), and if the implementation by such supplier or site
actually does
cause a delay beyond such date, then the effective date of a
royalty
deduction (as described in the preceding sentence), if any, will
be
extended for a
time period equivalent to the length of time in such
implementation
schedule for expected FDA approval beyond [**].
2.3.2 Schering may not require Millennium to incur costs for
which
Millennium is
not reimbursed other than as agreed to under Section 5.4 of
this
Agreement.
2.3.3 Schering may not require Millennium to reduce or eliminate
the
level of review
or analysis of the quality of Manufactured Compound or
Product that is
conducted by Millennium as of the date of execution of the
A-R Agreement
for the release of Compound or Product.
2.3.4 In the event that Schering exercises its tie-breaking
authority
and makes a
final decision to reduce Millennium's responsibilities for
testing and
quality review of a new Manufacturer of Product of Compound
(as compared to
its responsibilities with respect to Manufacturers
approved by FDA
as of the Execution Date) pursuant to Section 2.2.1 (c)
above, the
relevant provisions in Sections 10.1 and 10.2 (Indemnification)
with respect to
product liability claims arising from manufacturing defects
with respect to
Product or Compound Manufactured by the relevant Third
Party Contractor
will become effective.
2.3.5 Schering may not cause Millennium to violate any applicable
law
or to violate
Millennium's corporate integrity policies.
2.4 PARTY
REPRESENTATIVES. Each Party shall appoint a representative
having
primary responsibility for day-to-day
interactions with the other Party for the
performance of obligations hereunder (each,
a "Representative"). Except for
notices or communications required or
permitted under this Supply Agreement, or
unless otherwise mutually agreed by the
Parties in writing, all communications
between Schering and Millennium regarding
the performance of obligations
hereunder shall be addressed to or routed
directly through the respective
Representatives of each Party, as
appropriate, and the Parties shall hold JPC
meetings via teleconference or in person,
on a periodic basis as agreed upon by
the Representatives. Notwithstanding the
foregoing of this Section 2.4, the
Parties agree that the notice provisions of
the Technical Agreement shall
identify the representative from each Party
responsible for quality related
issues, and communications with respect to
such issues shall be performed by the
parties in accordance with the Technical
Agreement.
2.5 MANAGEMENT
OF VENDORS. The Parties agree that Millennium will be the
single point of contact with Third Party
Contractors, packaging vendors and
testing laboratories with whom Millennium
has a contract (for purposes of this
Section 2.5 only, collectively "Vendors")
for the purpose of communicating
forecasts, instructions, decisions and
other directions to the Vendors regarding
the Compound and Product. Schering may not
control or direct the performance of
any Vendor with respect to Compound or
Product. Schering may not engage in
independent discussions and other
communications with the Vendors with respect
to Compound or Product unless all of the
following conditions have been met:
2.5.1 the purpose of the communication relates to a specific for
cause
quality,
manufacturing, packaging or testing issue;
2.5.2 the number and scope of such communications do not
unreasonably
interfere with
the management of the Vendors by Millennium or with
Millennium's
performance of its obligations under the terms of this
Agreement;
2.5.3 Schering participates in the communication jointly with
Millennium;
provided, however, if (i) the specific issue is a time
sensitive matter
such as, by way of example only, a field alert report or
recall, (ii)
Schering promptly contacts Millennium, and (iii) Millennium
does not respond
to Schering's contact within four (4) business hours, then
Schering may in
such circumstances communicate directly with the Vendor
until Millennium
is available to participate;
2.5.4 Schering pays (i) the cost, if any, of any excessive
time,
material and
travel required of Millennium in order to participate in the
communication
and (ii) any incremental charges by the Vendor.
2.6 FORECASTS.
Except as expressly provided otherwise in this Section,
forecasts and orders, including binding
forecasts and orders, must be placed in
accordance with the requirements of the
applicable Third Party Agreements. To
facilitate such compliance, Schering shall
provide good faith [**] year
forecasts for Product, with updates every
twelve (12) months. In the case of
Product to be purchased from Patheon,
Schering will commit to [**] and [**] with
binding commitments as defined in the
Patheon Supply Agreement. Annually the JPC
will have the ability to make revisions to
the [**] twelve (12) month period
subject to the limits and penalties
described in the Patheon Supply Agreement
and shall also establish a new [**] binding
commitment. In connection with
orders placed at Teva, the JPC will provide
each month a rolling [**] month
forecast the first [**] months of which
will be binding upon Schering. For such
[**] month binding forecast, Millennium
will be authorized to commit purchase
orders to Teva to meet the stocking
policies as agreed to by the JPC with the
understanding that purchase orders within
the current [**] month period are
locked and are binding with regard to
Teva's production schedule. To the extent
allowed by the contract with Teva, purchase
orders within the trailing [**]
month period may be rescheduled within the
current fiscal year. Millennium
agrees that it will use commercially
reasonable efforts to notify Schering and
to assist Schering in avoiding placing
orders that, when combined with orders
placed with GSK quantities, will result in
a take-or-pay obligation or other
minimum payment obligation or penalty to
any Third Party Contractor by Schering.
Millennium shall notify Schering promptly
in the event of a potential failure to
meet minimum purchase quantities in any
Third Party Agreement.
2.7 PRODUCT
SUPPLY. Millennium will order, pursuant to the forecasts agreed
upon by the JPC, Product from the Third
Party Product Contractor(s). The Product
will be supplied to Schering in accordance
with the terms of the Teva Supply
Agreement and/or the Patheon Supply
Agreement, each as may be amended or
replaced from time to time or the relevant
provisions of any other Third Party
Product Manufacturing Agreement approved by
Schering and the relevant Third
Party Packaging Agreement, as applicable,
except that payment terms shall be as
described in Section 5.2 of this
Agreement.
2.8 COMPOUND
SUPPLY. Millennium will order, pursuant to the forecasts
agreed upon by the JPC and subject to
Section 4.2, Compound from Third Party
Compound Manufacturers, in accordance with
the terms of the relevant Third Party
Compound Manufacturing Agreements.
2.9 SHORTAGE OF
SUPPLY. In the event of a shortage of supply, Millennium
shall allocate any shortage of Compound or
Product between Schering for the
Schering Territory and Millennium for the
European Territory in proportion to
the respective binding forecasts and orders
of Schering and GSK made for the
quarter in which the shortfall occurs.
2.10
NON-CONFORMING PRODUCT
2.10.1 NON-CONFORMING PRODUCT NOTICE. In the event that Product
shipped
to Schering does
not conform to the Specifications or otherwise comply with
the terms of the
relevant Third Party Agreement, Schering shall notify
Millennium
within the shorter of thirty (30) days from the date of
physical
receipt of the
shipment at Schering's premises or the number of days that
is set forth in
the relevant Third Party Agreement less three (3) Business
Days to
accommodate lead time required for Millennium to transmit the
notice of
non-conformance to the Third Party Manufacturer. Schering
understands that
Millennium, under Millennium's existing agreement with
Teva, has thirty
(30) days from the date of receipt of samples and
completed batch
records to provide Teva notice of non-conforming Product.
In order to
provide Schering with the benefit of the rights and remedies
available to
Millennium under the relevant Third Party Product
Manufacturing
Agreement, Millennium shall use Diligent Efforts to test
samples and
review documents from a Third Party Product Manufacturer in
sufficient time
to notify such manufacturer of any non-conforming Product
(other than a
latent defect) within the time periods set forth in the
relevant Third
Party Product Manufacturing Agreement. In the event that
Schering
discovers any other failure of the Product shipment to conform
with the
Specifications or the terms of the relevant Third Party
Agreement
(other than as
described above in this paragraph 2.10.1 in that such
failure is
latent and not obvious) Schering shall notify Millennium within
twenty (20) days
from the date of Schering's discovery.
2.10.2 REMEDY. In order to provide Schering with the benefit of
the
rights and
remedies available to Millennium under the relevant Third Party
Agreements,
Millennium shall, upon request from Schering, enforce all of
its rights under
the applicable Third Party Agreement with respect to
non-conforming
Product delivered pursuant to this Agreement. Millennium's
obligations
under this Section 2.10.1 shall survive the termination of this
Supply Agreement
with respect to any Product Manufactured during the term
hereof. Except
to the extent that Millennium agrees to indemnify Schering
pursuant to
Section 10.1 of this Agreement, Schering's sole contractual
rights and
remedies in connection with the Manufacture of Product shall be
the obligation
of Millennium to exercise the contractual rights and
remedies that
Millennium has against the relevant Third Party Product
Manufacturer
with respect to non-conforming Product, except that the
timeframes for
notification are reduced as described in subsection 2.10.1
above.
2.11
NON-CONFORMING COMPOUND. In order to provide Schering with the
benefit
of the rights and remedies available to
Millennium under the relevant Third
Party Agreements, Millennium shall use
Diligent Efforts to test samples and
review documents from a Third Party
Compound Manufacturer in sufficient time to
notify such manufacturer of any
non-conforming Compound (other than a latent
defect) within the time periods set forth
in the relevant Third Party Compound
Manufacturing Agreement. In addition,
Millennium shall, upon request from
Schering, enforce all of its rights under
the applicable Third Party Agreement
with respect to incomplete or damaged
orders or non-conforming Compound
delivered pursuant to this Agreement.
Millennium's obligation under this Section
2.11 shall survive the termination of this
Supply Agreement with respect to any
Compound Manufactured during the term
hereof. Except to the extent that
Millennium agrees to indemnify Schering
pursuant to Section 10 of this
Agreement, Schering's sole contractual
rights and remedies in connection with
the Manufacture of Compound shall be the
obligation of Millennium to exercise
the contractual rights and remedies that
Millennium has against the relevant
Third Party Compound Manufacturer with
respect to non-conforming Compound,
except that the timeframe for notification
of non-conforming Compound is reduced
to the number of days that is set forth in
the relevant Third Party Agreement
less three (3) Business Days to accommodate
lead time required for Millennium to
transmit the notice of non-conformance to
such Third Party. Schering understands
that the existing Solvay Supply Agreement
and the existing UCB Supply Agreement
require notification of non-conformance
within sixty (60) days of delivery of
the relevant batch documentation, as
described in each such agreement.
2.12 SHIPMENT.
Millennium shall, in accordance with Schering's
instructions, provide to the relevant Third
Party Contractor validated shipping
configurations and routes for both air and
ocean freight and listing of all
required documentation.
2.13 DELIVERY.
Delivery of Product and Compound by a Third Party Contractor
shall occur in accordance with the terms of
the relevant Third Party Agreement.
Notwithstanding the foregoing, title and
risk of loss transfer from Millennium
to Schering upon transfer of title and risk
of loss from the Third Party
Contractor to Millennium; provided,
however, that in order to provide Schering
with the benefit of the rights and remedies
available to Millennium under the
relevant Third Party Agreements, Millennium
shall, upon request from Schering,
enforce any and all rights it may have
under the applicable Third Party
Agreement with respect to a shipment of
Compound or Product that is damaged or
incomplete.
2.14 CHANGE
PROCEDURES. Change procedures are as detailed in the Technical
Agreement (attached hereto as Exhibit A).
Millennium shall not authorize a Third
Party Contractor to make any change in the
materials or processes used in the
Manufacture of Compound or Product, except
to the extent authorized in
accordance with the Technical Agreement.
Schering shall pay for incremental
costs associated with changes to the
process or amendments to the Specifications
that may be initiated by Schering hereunder
and agreed to and implemented by
Millennium.
3. MANUFACTURING PLAN
3.1
MANUFACTURING PLAN IMPLEMENTATION
3.1.1 The Parties have agreed upon the Manufacturing Plan, an
outline
of which is
attached hereto as SCHEDULE B (to be agreed upon and finalized
by the JPC at
Closing). Millennium shall use Diligent Efforts to perform
services agreed
to in the Manufacturing Plan; provided that Millennium's
obligations to
use Diligent Efforts to perform the Manufacturing Plan under
this Supply
Agreement shall terminate and become obligations of Schering
upon the
effective date of the exercise of the Put option in Section 7.2
by
Millennium if
such Put option is exercised prior to the completion of the
Manufacturing
Plan (an "Early Manufacturing Plan Transfer to Schering").
In the event
that Schering becomes obligated to perform the Manufacturing
Plan, as set
forth above, Schering shall solely be responsible to perform
the obligations
of the JPC set forth in Section 2.2.1, above.
3.1.2 Subject to the extension allowed under Section 2.3.1, in
the
event UCB is not
approved by FDA on or before [**], the royalty rate
payable to
Millennium is reduced in accordance with the terms set forth in
Section 6.4(iv)
of the A-R Agreement. Subject to the extension allowed in
Section 2.3.1,
in the event a second supplier or second supply site for
manufacture of
Compound utilizing the New Compound Process is not approved
by FDA by [**],
the royalty rate payable to Millennium is reduced in
accordance with
the terms set forth in Section 6.4(v) of the A-R Agreement.
For clarity, if
Schering makes a final decision, as described in
Section 2.3.1,
above, to select a second compound supplier or a second
site, whose
implementation schedule states that FDA approval will occur
after [**] (in
lieu of another qualified potential second compound supplier
or a second site
whose implementation schedule states that FDA approval
will occur
before [**]), and if the implementation by such supplier or
site
actually does
cause a delay beyond such date, then the effective date of a
royalty
deduction (as described in the preceding sentence), if any, will
be
extended for a
time period equivalent to the length of time in such
implementation
schedule for expected FDA approval beyond [**].
3.1.3 Artwork for Product packaging will be transferred to
Schering
promptly after
Closing, and Schering will then be responsible for
maintaining
artwork revision levels and delivering to Millennium completed
artwork changes
for implementation at the relevant Third Party Contractors.
Millennium will
work with Schering and the relevant Third Party Contractors
to develop an
implementation timeline for any new revision of packaging.
3.2 SECONDARY
COMPOUND SUPPLIER
3.2.1 The JPC will select an additional Third Party Compound
Manufacturer
that will utilize the New Compound Process ("Secondary
Compound
Supplier") no later than September 1, 2005.
3.2.2 Millennium will negotiate and contract with the Secondary
Compound
Supplier, subject to Millennium using Diligent Efforts to
obtain
agreement with
the Secondary Compound Supplier on inclusion in the contract
of covenant and
liability provisions substantially similar to the
comparable
provisions set forth in SCHEDULE C. The failure of Millennium
to
obtain such
terms and conditions, after exercising Diligent Efforts, shall
not be a breach
of this Supply Agreement.
3.2.3 Millennium will use Diligent Efforts to complete any
technical or
methods
transfers to, and to otherwise qualify, the Secondary Compound
Supplier unless
and until an Early Manufacturing Plan Transfer to Schering.
3.2.4 Schering shall use Diligent Efforts to prepare and file
the
regulatory
submissions designating the Secondary Compound Supplier as a
manufacturer of
Compound. Schering shall provide Millennium with
information from
such submission applicable to the Secondary Compound
Supplier to
facilitate the Manufacture of Compound in accordance with the
relevant Third
Party Agreement and the Regulatory Approvals unless and
until an Early
Manufacturing Plan Transfer to Schering.
3.2.5 Millennium shall require the Secondary Compound Supplier
to
provide Schering
with such information and assistance as Schering may
require for
purposes of applying for and maintaining all relevant
Regulatory
Approvals for the Product including without limitation,
providing
Schering with all reports, authorizations, certificates,
methodologies,
specifications and other documentation in the possession or
under the
control of Secondary Compound Supplier relating to the
pharmaceutical/technical development and Manufacture of Compound or
any
component
thereof needed for Schering's filings. Millennium shall require
the Secondary
Compound supplier to grant Schering an irrevocable,
worldwide,
paid-up license to use such information, data or other
intellectual
property rights reflected in such documentation for the
purpose of
obtaining and maintaining the Regulatory Approvals in the
Schering
Territory for the Product.
3.3 REGULATORY
APPROVALS. Millennium shall be responsible for providing
Schering with all supporting data and
information relating to the Manufacture of
Compound and Product(s) necessary for
obtaining and maintaining Regulatory
Approvals, including, without limitation,
all Records, raw data, reports
(including annual product review and annual
reports), authorizations,
certificates, methodologies, batch records,
raw material specifications, SOPs,
standard test methods, Certificates of
Analysis and other batch documentation in
the possession or under the control of
Millennium relating to the Manufacture of
Product. The format and content of
information to be provided by Millennium to
Schering for Schering submission to a
Regulatory Agency shall be agreed in
advance by the Representatives or the
JPC.
3.4 NOTIFICATION
OF REGULATORY INSPECTIONS. Millennium agrees to notify
Schering immediately, but in no event more
than twenty-four (24) hours, after it
obtains notice of any inquiries,
notifications, or inspection activity by any
Governmental Authority in regard to the
Product or Compound. In furtherance and
not in limitation of the foregoing,
Millennium shall notify Schering prior to
the commencement of any inspection activity
by any Governmental Authority,
unless such inspection activity is an
unannounced inspection. Subject to Section
2.5 of this Supply Agreement and to
Millennium's rights under the Third Party
Agreements, Schering shall have the right
to be present at any such inspection.
Further, subject to Millennium's authority
to obtain the following information
under the Third Party Agreements,
Millennium shall provide a reasonable
description to Schering of any such
governmental inquiries, notifications or
inspections promptly (but in no event later
than two (2) calendar days) after
such visit or inquiry. Millennium shall
furnish to Schering, (a) within two (2)
days after Millennium's receipt, any report
or correspondence issued by the
Governmental Authority in connection with
such visit or inquiry, including but
not limited to, any FDA Form 483,
Establishment Inspection Report, or warning
letter, and (b) copies of any and all
responses or explanations to any
Governmental Authority relating to items
set forth above, in each case purged
only of trade secrets of Millennium or the
applicable Third Party Contractor
that are unrelated to its/their obligations
under this Supply Agreement or the
Third Party Agreement, as the case may be,
and are unrelated to the Product or
Compound, prior to the submission of such
responses or explanations to any
Governmental Authority by Millennium or the
Third Party Contractor.
3.5 RECORDS
3.5.1 GENERALLY. Millennium shall, and shall require its Third
Party
Contractors to,
complete and retain records related to the Manufacture of
Compound and
Product for the Schering Territory in accordance with
applicable Laws
and the requirements specified in the Technical Agreement
("Records").
Millennium shall not transfer, deliver or otherwise provide
any such Records
to any party other than Schering, without the prior
written approval
of Schering unless required by applicable Law. For routine
Manufacture,
Millennium shall make summary batch records available at
reasonable times
and with reasonable notice for inspection, examination and
copying by or on
behalf of Schering. For cause, Millennium shall provide
all Records
related to the Product as required to resolve for cause
investigations.
All original Records of the Manufacture and supply of
Compound and
Product hereunder shall be retained and archived by
Millennium or
its contractors in accordance with cGMP and applicable Law,
but in no case
for less than a period of five (5) years following delivery
of such Product
or, in the case of Compound, five (5) years following
delivery of the
Product into which the Compound has been incorporated (the
"Retention
Period"). Millennium shall provide written notice to Schering
no
less than sixty
(60) days prior to the end of the Retention Period. If
requested by
Schering, Millennium shall ship such documents to Schering.
Upon Schering's
request, Millennium shall promptly provide Schering with
copies of such
records. If Schering does not make such a request, then,
after the
Retention Period, copies of all of the aforementioned records
shall no longer
be available to Schering through Millennium.
3.5.2 CERTIFICATES AND BATCH RECORDS. Millennium shall supply
to
Schering one (1)
completed a certificate of analysis and any other
certifications
that may be required relating to the Product that is the
subject of any
batch record at the time the Product is delivered.
Millennium shall
provide Schering a report for the validation batches
required for any
significant changes to the Manufacturing process or the
Product Facility
for each batch of Product Manufactured summarizing, but
not limited to,
the analytical results for each batch Manufactured, the
stability
results, details of any batch failures, process deviations and
any out of
Specification results as provided for in this Supply Agreement.
Upon receipt of
instruction from Schering, Millennium shall complete and
lodge with the
appropriate authorities where required all documentation
relating to
Product where delivery involves export from the country of
Manufacture.
4.
TRANSACTIONS UPON CLOSING
4.1 COMPOUND IN
INVENTORY. Schering agrees to purchase from Millennium all
Compound in inventory existing at the time
of Closing at a price equal to the
standard cost plus manufacturing variances.
In the event that any quantity of
such Compound purchased by Schering
pursuant to this Section 4.1 is damaged or
nonconforming and cannot be utilized in the
Manufacture of Product, Millennium
shall reimburse Schering [**] percent
([**]%) of the amount paid for the
quantity of such Compound. At Closing,
Millennium will prepay to Schering for
product to be supplied by Millennium to
GSK. By making such prepayment,
Millennium shall have, and is hereby
granted, a purchase money security interest
in the quantities of Compound for which it
has made such prepayment. Millennium
shall assume, solely, the risk of loss for
the quantities of Compound for which
it has made such prepayment. The Compound
inventory amount, its price and the
quantities for which Millennium will prepay
are listed on SCHEDULE D hereto.
4.2 COMPOUND ON
ORDER. Schering agrees to reimburse Millennium for all
prepayments made by Millennium to Third
Party Contractors as set forth on
SCHEDULE D hereto in connection with
current purchase orders issued for
Compound.
5.
PRICE AND PAYMENT
5.1 PAYMENT FOR
INVENTORY AND PREPAYMENTS EXISTING AS OF CLOSING. Schering
shall pay Millennium for any amounts due
under Sections 4.1 and 4.2 by wire
transfer at Closing. Millennium shall pay
Schering for any amounts due under
Section 4.1 at the same time that Schering
shall pay Millennium.
5.2 PAYMENT FOR
MANUFACTURING OF COMPOUND AND PRODUCT. For Compound and
Product delivered and invoiced to
Millennium pursuant to the terms of a Third
Party Agreement, Millennium shall invoice
Schering for the quantity shipped by
the Third Party Contractor at an amount
equal to the Cost of Goods Shipped per
unit of Compound or Product, as applicable.
Schering shall pay to Millennium the
amounts due under such Millennium invoice
by the date that is five (5) calendar
days prior to the date by which payment is
due to be paid by Millennium under
the Third Party Agreement, but in no event
will Schering be required to make
such payment to Millennium prior to [**]
calendar days from Schering's receipt
of Millennium's invoice. For purchases of
Compound, Schering will make payments
to Millennium by wire transfer. Payments by
Schering to Millennium for Product
may be made by check or wire.
5.3 PAYMENT FOR
PREPAYMENT OBLIGATIONS. Schering shall pay Millennium for
any amounts due in connection with
prepayments required for Compound or Product
under any relevant Third Party Agreements.
By way of example, as of the
Execution Date, under the existing Solvay
(Peptisyntha) agreement, [**] percent
([**]%) of the value of the orders placed
during that year are due before the
end of that September. In addition, under
the existing (as of the Execution
Date) UCB Supply Agreement, a prepayment is
due for key raw materials annually,
with the exact date and amount to be
determined as set forth in Section 5.1 of
the UCB Supply Agreement.
5.4 CAPITAL
EQUIPMENT COSTS IN CONNECTION WITH THE SECONDARY COMPOUND
SUPPLIER. Regardless of whether Millennium
or Schering exercise their respective
rights to either a Put or a Call pursuant
to Section 7.2 or 7.3, respectively,
Schering and Millennium will share equally
the cost of capital equipment,
including any related software and cost of
installation and start-up for such
equipment, charged by the Third Party
Contractor, necessary to qualify the
Secondary Compound Supplier.
5.5 PAYMENT FOR
MILLENNIUM'S SERVICES IN CONNECTION WITH IMPLEMENTING THE
MANUFACTURING PLAN. For its services
required to implement the Manufacturing
Plan, Millennium shall invoice Schering
quarterly for [**] percent ([**]%) of
its labor costs at the hourly rates based
upon FTE Rates for the categories of
personnel plus direct, out of pocket
expenses. Attached as SCHEDULE E are the
hourly rates for each category of personnel
as of the Execution Date, which
rates have been calculated consistent with
the practices of the Parties in the
implementation of the Collaboration
Agreement prior to the Execution Date and
are equal to the following: the amount of
the salary and other monetary
compensation that Millennium has incurred
for the specified category of
personnel plus benefits, actual
departmental expenses incurred, including but
not limited to depreciation, supplies and
expenses and allocated utilities, the
sum of which is divided by 2080. Payment of
each Millennium invoice shall be
made by Schering within [**] calendar days
from the date of Schering's receipt
of such invoice. Schering shall make all
payments pursuant to this Supply
Agreement by check or wire transfer to a
bank account designated in writing by
Millennium. All payments hereunder shall be
made in United States Dollars.
5.6 LATE PAYMENTS. In the
event that Schering does not make payments to
Millennium pursuant to Section 5.2 above,
by the date established pursuant to
the terms of Section 5.2, then, to the
extent that any interest payment
obligations or late fees that are (i)
imposed upon Millennium under the terms of
the applicable Third Party Agreement and
(ii) actually assessed against
Millennium by the third party, Schering
shall be obligated to reimburse
Millennium the amount of. such interest
payment or late fee applicable to the
number of days that Schering's payment was
delinquent. In the event that
Schering does not make payments to
Millennium pursuant to Section 5.6 above,
then Millennium reserves the right to
invoice Schering a 1.5% per month late
fee on all open balances due Millennium
without foregoing any other remedies
hereunder.
6.
TECHNICAL AGREEMENT; AUDIT RIGHTS
6.1 TECHNICAL
AGREEMENT. Schering and Millennium have entered into a
Technical Agreement, a copy of which is
attached as EXHIBIT A hereto and by this
reference is made a part hereof as if fully
set forth herein. Millennium shall
perform its obligations agreed to in the
Technical Agreement.
6.2 AUDIT
RIGHTS. Millennium shall use Diligent Efforts to enforce its
contractual rights under the Third Party
Manufacturing Agreements to audit the
quality systems of the Third Party
Contractors and to use Diligent Efforts to
assure that the Third Party Contractors
maintain systems of operation and
quality assurance that are consistent with
applicable laws, including without
limitation cGMPs, as defined in the
Technical Agreement. With respect to the
Manufacture of Compound and Product,
Millennium will use Diligent Efforts to
assure such systems shall include written
policies and procedures that address,
at a minimum the following:
o Quality
Systems,
o
Facilities and Equipment Systems,
o
Materials Systems,
o
Production Systems,
o
Packaging and Labeling Systems, and
o
Laboratory Control Systems.
Schering's representatives may accompany
Millennium representatives as
observers on Millennium scheduled audits of
Third Party Contractors, to the
extent Schering is permitted to do so under
the Third Party Agreements, or as
otherwise permitted by such contractors.
Millennium shall use its Diligent
Efforts to secure such permission in its
agreements with all other Third Party
Contractors prior to entering into such
agreements. In addition, Schering shall
have the right to request through
Millennium additional audits for cause. Audits
for cause shall be conducted in the same
manner as described above with
Millennium Quality Assurance representative
leading the conduct of the audit and
Schering representatives as observers.
Millennium shall promptly respond to
Schering's request and the Parties shall
agree on the time, scope and manner of
the audit. Notwithstanding the foregoing,
the Parties understand and agree that
all technical and other contact with such
Third Party Product Contractors
relating to INTEGRILIN Product(s) shall be
made solely through Millennium,
except for communications between Schering
and the Third Party Contractors
permitted under Section 2.4, above. In the
event that Schering discovers a
deficiency in its observation of the
Millennium audit that Millennium disputes,
such matter shall be referred to the Joint
Production Committee for discussion
and resolution by mutual agreement. For
purposes of clarity, the restrictions in
this Supply Agreement regarding contact
with Third Party Contractors relate only
to the Compound, Product and INTEGRILIN
Product(s) and not to any matters that
are the subject of other Schering
contractual arrangements with such Third Party
Contractors.
7.
TRANSFER OF RESPONSIBILITY OF SUPPLY TO SCHERING
7.1 MILLENNIUM'S
EFFORTS; UCB AND EARLY MANUFACTURING PLAN TRANSFER TO
SCHERING. To facilitate the transfer to
Schering of responsibility for supply of
Compound and Product, Millennium shall use
Diligent Efforts to execute the
following:
7.1.1 Millennium shall negotiate with the Secondary Compound
Supplier
selected by the
JPC to execute two, separate contracts for the Manufacture
of Compound, one
that is assignable to Schering and one that is either
directly with,
or assignable to GSK, in proportion to their respective
requirements for
Compound:
7.1.2 Assist and encourage GSK to qualify a facility operated by,
or in
contract with,
GSK to manufacture product from Compound for GSK's own
requirements of
product; and
7.1.3 Negotiate
with UCB, GSK and Schering, provide information or
assistance to
any such entity, and execute necessary contractual releases
or modifications
in order for UCB to have separate agreements with Schering
and GSK for the
Manufacture of Compound. To facilitate the assignment of
the UCB Supply
Agreement in connection with an Early Manufacturing Plan
Transfer to
Schering, Schering hereby agrees to permit Millennium to
release up to
[**] of annual manufacturing capacity allocated to Millennium
under the UCB
Supply Agreement for re-allocation under a separate agreement
to be entered
into between Millennium or GSK with UCB for the express
purposes of
supplying Compound to the European Territory. Such release of
capacity shall
only become effective upon the effective date of the Put
option in
Section 7.2 in connection with Early Manufacturing Plan
Transfer
to Schering. In
such event, Millennium shall have the right to assign to
Schering the UCB
Supply Agreement amended to provide that the take or pay
supply rights
and purchase obligations apply to an annual amount of at
least [**] and
not more than [**]. Schering shall, upon request of
Millennium,
furnish any consents or authorizations reasonably necessary to
facilitate such
amendment with UCB.
7.2 PUT OPTION.
At any time after [**], Millennium has the option to
transfer to Schering, on [**] advance
notice to be given no earlier than [**],
all Third Party Compound Manufacturing
Agreements and all Third Party Product
Manufacturing Agreements and the related
Third Party Packaging Agreements to the
extent necessary to supply Schering will
its required share of the quantities of
Compound and Product Manufactured for the
Schering Territory and to provide
Schering all contractual rights of
Millennium under such agreements
7.3 CALL OPTION.
Schering may choose to require Millennium to transfer
responsibility for manufacturing and supply
to Schering as follows:
7.3.1 FOR API,
PRODUCT AND PACKAGING SIMULTANEOUSLY. At any time after
the date by
which two Third Party Compound Manufacturers utilizing the New
Compound Process
are approved by FDA to Manufacture Compound to be used in
Product,
Schering has the option to require Millennium to transfer all
Third Party
Compound and Product Manufacturing Agreements and Third Party
Packaging
Agreements to Schering on [**] advance notice to be given no
earlier than
receipt of FDA approval for the Secondary Compound Supplier;
provided,
however, that in the event that (i) neither of such Third Party
Compound
Manufacturers is approved by the applicable regulatory
authority
to supply GSK
with Compound, or (ii) in spite of Millennium's Diligent
Efforts pursuant
to Section 7.1, above, both Third Party Compound
Manufacturers
refuse to supply GSK separately from supplying Schering, the
[**] of advance
notice shall be extended to the extent necessary to remove
the obstacle(s)
giving rise to either clause (i) or (ii) of this paragraph
7.3.1, and
Millennium shall remain obligated to continue such Diligent
Efforts set
forth in Section 7.1, above.
7.3.2 FOR PACKAGING ALONE. Subject to the termination and
notice
provisions and
penalties, if any, of the Third Party Packaging Agreements
for INTEGRILIN
Products, Schering has the option to require Millennium to
transfer all
Packaging Vendor Agreements to Schering at any time, upon [**]
advance
notice.
7.4 EFFECT OF
PUT OR CALL. Upon the effectiveness of either a Put or Call
in accordance with Section 7 of this
Agreement, and, upon Schering's request,
Millennium shall effect any transfer of
applicable data, know-how and
information immediately forthwith and
provide commercially reasonable assistance
to Schering to enable Schering to assume
the Third Party Agreements, as
applicable. Any associated internal
Millennium costs shall be borne by
Millennium. The parties shall identify and
segregate, and Millennium will take
title to any quantities of Compound for
which Millennium has paid with respect
to the European Territory. Subject to any
allocations pursuant to a shortage of
supply under Section 2.9, above, in the
event that the quantity of such
Millennium inventory is less than an amount
equal to [**] of inventory for the
European Territory, Millennium shall
purchase the difference in quantity in
order to take title to such [**]
quantity.
8. TERM
AND TERMINATION
8.1 TERM AND
TERMINATION. Unless earlier terminated by mutual agreement of
the Parties, the term of this Supply
Agreement shall commence on the Closing and
shall terminate on the earlier of (i) the
effective date of either the Call
Option or the Put Option in accordance with
Article 7 of this Agreement to the
extent all of the rights under the Call
Option and/or Put Option have been fully
exercised and (ii) the termination of the
A-R Agreement. This Supply Agreement
shall terminate upon any termination or
expiration of the A-R Agreement.
8.2 TERMINATION
FOR BREACH. Either Party may, without prejudice to any
other remedies available to it at Law or in
equity, terminate this Supply
Agreement in the event that the other Party
(as used in this subsection, the
"Breaching Party") shall have materially
breached or defaulted in the
performance of any of its obligations under
this Supply Agreement. The Breaching
Party shall, if such breach can be cured,
have sixty (60) days after written
notice thereof was provided to the
Breaching Party by the non-breaching Party to
remedy such default (or, if such default
cannot be cured within such 60-day
period, if the Breaching Party must
commence and diligently continue actions to
cure such default during such sixty
(60)-day period). Any such termination shall
become effective at the end of such sixty
(60)-day period unless the Breaching
Party has cured any such breach or default
prior to the expiration of such sixty
(60)-day period (or, if such default is
capable of being cured but cannot be
cured within such sixty (60)-day period,
the Breaching Party has commenced and
diligently continued actions to cure such
default provided always that, in such
instance, such cure must have occurred
within one hundred twenty (120) days
after written notice thereof was provided
to the Breaching Party by the
non-breaching Party to remedy such default
unless such cure period is extended
by the non-breaching Party).
8.3 EFFECT OF
TERMINATION OF THE A-R AGREEMENT. In the event this Supply
Agreement terminates due to the termination
of the A-R Agreement, the Parties
shall have no further obligations hereunder
other than as set forth in Section
8.7 hereof or in the A-R Agreement.
8.4 EFFECTS OF
EXPIRATION. Upon the expiration of this Supply Agreement,
each Party, at its own cost, shall promptly
return to the other Party, or
destroy at the Disclosing Party's request,
all relevant records and materials in
such Party's possession or control
containing Confidential Information of the
other Party (provided that each Party may
keep one copy of such Confidential
Information of the other Party for archival
purposes and to comply with
applicable Laws).
8.5 PURCHASE OF
INVENTORIES. Upon expiration or termination of this Supply
Agreement, Schering shall be obligated to
purchase any amounts of Compound or
Product (complete or in-process) that are
the subject of an open purchase order
placed by Millennium consistent with the
binding forecast approved by the JPC,
at a price to be mutually agreed (it being
understood that such price shall
reflect, on a pro rata basis, work
performed and non-cancelable out-of-pocket
expenses actually incurred by Millennium).
In addition, unless otherwise agreed
by Millennium, Schering shall purchase any
raw materials identified in the
Specifications for the Manufacture of
Compound or Product, as applicable, that
were purchased but not used in the
Manufacturing process at the applicable cost
of such raw materials. Raw materials for
purposes of this Section 8.5 shall
include, but not be limited to components
and materials necessary to manufacture
either the Product or the API.
8.6 ACCESS TO
RECORDS/MAINTENANCE OF CRITICAL SAMPLES AND TEST PROGRAMS.
Upon termination of this Supply Agreement,
Millennium shall (a) provide Schering
access for a period up to one (1) year
after the latest expiry date of Product
batches or, with respect to Compound
batches, up to one (1) year after the
latest expiry date of Product into which
the Compound has been incorporated, as
applicable, produced under this Supply
Agreement to records, reports and master
files relating to the Products or Compound
batches, as applicable, to enable
Schering (i) to answer complaints, (ii) to
answer queries from Governmental
Authorities or (iii) to conduct
investigations necessary to ensure the safety,
efficacy and compliance of the Product,
and, (b) if Millennium is unable to
continue to retain such records transfer
such records to Schering.
8.7 SURVIVAL.
Notwithstanding anything in this Supply Agreement to the
contrary, the following provisions herein
shall survive any expiration or
termination of this Supply Agreement:
Sections 2.3, 2.10.2, 2.11, 3.5.1, 7.4,
8.3, 8.4, 8.5, 8.6, 8.7, 9.3, 11.1, 11.2,
11.3, 11.4, 11.5, 11.6, 11.7, 11.8,
11.9, 11.10, 11.12, 11.13, and Articles 5
and 10, and the provisions of the
Technical Agreement which by their terms
survive such expiration or termination.
9.
REPRESENTATIONS AND WARRANTIES
9.1 THE PARTIES.
Each Party represents and warrants to the other Party
that: (a) it has the full right, power and
authority to enter into this Supply
Agreement and to perform its obligations
hereunder, (b) it has taken all
necessary action on its part to authorize
the execution and delivery of this
Supply Agreement and the performance of its
obligations hereunder; (c) this
Supply Agreement has been duly executed and
delivered on behalf of it, and
constitutes a legal, valid and binding
obligation, enforceable against it in
accordance with the terms hereof; (d) the
execution and delivery of this Supply
Agreement and the performance of its
obligations hereunder do not conflict with,
or constitute a default under any
contractual obligation of such Party; and (e)
it has sufficient capability and resources
to fulfill its obligations set forth
in this Supply Agreement.
9.2 DEBARMENT.
During the Term of this Supply Agreement and subject to the
terms of the Third Party
