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Strategic Supply Agreement

Supply Agreement

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 This Supply Agreement involves

Biotest Pharmaceuticals Corporation | ViroPharma Biologics, Inc

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Title: STRATEGIC SUPPLY AGREEMENT
Governing Law: Delaware     Date: 4/28/2010
Industry: Biotechnology and Drugs     Sector: Healthcare

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Exhibit 10.1

Confidential Treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as “***”. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

STRATEGIC SUPPLY AGREEMENT

This Strategic Supply Agreement (this “ Agreement ”) is entered into as of the 26 th day of February, 2010 (the “ Effective Date ”), by and between ViroPharma Biologics, Inc., a Delaware corporation (the “ Buyer ”) and Biotest Pharmaceuticals Corporation, a Delaware corporation (“ Seller ”). Buyer and Seller are referred to collectively herein as the “ Parties ” and each individually as a “ Party .”

RECITALS

WHEREAS, Seller owns and operates the Existing Centers and, on the terms and conditions described herein, is willing to construct and operate three (3) Initial New Centers and may agree to construct and operate up to two (2) Additional New Centers in the United States; and

WHEREAS, Seller desires to collect Plasma from the Existing Centers and Qualified Centers, and supply such Plasma to Buyer, and Buyer desires to obtain such Plasma from Seller, in accordance with and subject to the terms and conditions of this Agreement; and

WHEREAS, Buyer shall have the option to purchase the New Centers and such related assets, properties and rights described herein from the Seller, all on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.

Section 1. Certain Definitions.

Additional New Center(s) ” shall mean those additional plasma collection centers in the United States that Buyer may request that Seller design, construct and operate, in excess of the Initial New Centers (for a total of five (5) New Centers).

Additional New Center Notice ” shall mean a written request by the Buyer that Seller design, construct and operate up to two (2) Additional New Centers in the United States, provided that Buyer gives Seller at least *** months notice prior to the requested Opening Date.

Affiliate ” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. As used in this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.


Alternative Supplier ” shall mean a supplier of Plasma that wishes to supply Plasma to the Buyer, other than Seller.

Applicable Laws ” shall mean all applicable federal, state, local and foreign laws, requirements, regulations, guidelines, licenses and directives, including the Federal Food, Drug and Cosmetic Act and applicable current Good Manufacturing Practices (“ cGMP ”), including all cGMP for blood and blood components, specifications and procedures for plasma sourcing, plasma testing, and in process testing and all regulations, specifications, and procedures contained therein, including such laws, requirements, regulations, guidelines, licenses and directives promulgated by the United States Food and Drug Administration (or any successor agency thereto) (“ FDA ”) or the European Medicines Agency (or any successor thereto) (“ EMEA ”).

Approved Testing Centers ” shall mean those facilities (as set forth in Schedule “B”) that will test the Plasma, to be provided under this Agreement, in accordance with FDA and EMEA requirements and the Specifications.

Buyer Approved Collection Center ” shall have the meaning provided in Section 4.3.

CPI ” shall mean the increase (if any) in the Consumer Price Index published by the Bureau of Labor Statistics of the United States Department of Labor for all Urban Consumers (CPI-U)—U.S. All Items (1982-1984 = 100) for the prior November 1-October 31 period.

Center Pre-Payment ” shall mean the sum of *** which is payable as set forth in Section 3.2(b).

Costs ” shall mean Seller’s fully loaded costs to include all direct, indirect and fixed manufacturing costs and Seller’s allocated Plasma Operations and General & Administrative costs.

Development Payment ” shall mean the onetime non-refundable payment, in the amount of *** to cover the start up costs during the development phase of the Initial New Centers, which is payable as set forth in Section 3.2(a).

Development Proposal ” shall mean a proposal that includes the proposed location, terms of the lease, floor plan and other reasonable information regarding the development of each New Center.

Existing Centers ” shall mean those plasma collection centers that Seller owns and operates at various sites throughout the United States other than the New Centers.

Foreign Regulatory Approvals ” shall mean all necessary regulatory approvals, permits, certifications, consents, licenses, registrations, listings, certificates of origin, and any other requisite documents and authorizations for the operation of a Plasma collection facility and the sourcing, collection, manufacture, testing, marketing, use, sale, handling, storage or distribution of Plasma, pursuant to any laws, treaties, statues, regulations or other requirements applicable in the European Union or any member country of the European Union.

 

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Initial Term ” shall mean the period of time from the Effective Date of this Agreement until December 31, 2015.

Initial New Centers ” shall mean three (3) initial plasma collection centers to be developed and opened pursuant to the terms of this Agreement.

Management Agreement ” shall mean the definitive agreement which sets forth the terms and conditions whereby the Seller will manage the New Centers in the event that New Centers are purchased by the Buyer.

Material Adverse Effect ” shall mean any effect or change that would be materially adverse to the business, assets, condition (financial or otherwise), operating results, or operations, of the Existing Centers, New Centers or Seller or to the ability of any Party to consummate timely the transactions contemplated hereby.

New Center ” shall mean all plasma collection centers to be developed and opened pursuant to the terms of this Agreement.

New Center Assets ” shall mean those assets for each New Center as set forth in a New Center Purchase Agreement including without limitation the assets set forth in Section 5.7.

New Center Purchase Agreement ” shall mean the definitive asset purchase agreement that the Buyer and Seller shall negotiate in the event Buyer exercises its Purchase Option under Section 2.6 to require a sale and purchase of the New Centers.

Non-Qualified Center ” shall mean a New Center (defined above) that has not received all required Regulatory Approvals.

Opening Date ” shall mean the date on which a New Center commences business operations.

Option Period ” shall mean the period of time, as set forth in Section 2.6, during which Buyer may opt to purchase the New Centers pursuant to the terms and conditions of this Agreement.

Person ” shall mean any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including any governmental authority.

Plasma ” shall mean “ Source Plasma ” as defined by the FDA in 21 C.F.R. 640.60 that meets the definitions and specifications of Buyer set forth in Schedule 1 (as such specifications may be amended from time to time in accordance with the terms of this Agreement) (the “ Specifications ”), attached hereto and incorporated by reference herein.

Plasma Volume ” shall mean the annual calendar year commitment of Plasma that Seller agrees to sell and Buyer agrees to purchase as set forth in Section 4.1 of the Agreement.

 

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Primary Buyer Approved Collection Centers ” means those Buyer Approved Collection Centers from which Seller shall supply Buyer Plasma, in addition to Qualified Centers.

Product ” shall mean the human pharmaceutical product(s) processed or manufactured by or on behalf of Buyer using the Plasma purchased from Seller under this Agreement.

Proposed Transaction ” shall mean a transaction involving the acquisition of any capital stock, membership interests or other voting securities of either Party, by an entity in the plasma industry or which would result in a direct or indirect change in control of either Party (including by merger, consolidation, exchange, or purchase of a more than 50% controlling interest in either Party or any direct or indirect parent thereof) by an entity in the plasma industry or, in the case of Seller, a transaction involving the acquisition of all or substantially all of the Buyer Approved Collection Centers by an entity in the plasma industry.

Purchase Option ” shall mean the Buyer’s option to purchase the New Centers, as set forth in section 2.6 , pursuant to the terms and conditions of this Agreement.

Purchase Price ” shall mean the purchase price of the Plasma purchased by Buyer from the Seller, as set forth in Section 3.3(a) of this Agreement.

Qualified Center ” shall mean a New Center that has received all required Regulatory Approvals.

Regulatory Approvals ” shall mean all necessary regulatory approvals, permits, certifications, consents, licenses, registrations, listings, certificates of origin, and any other requisite documents and authorizations for the operation of a Plasma collection facility and the sourcing, collection, manufacture, testing, marketing, use, sale, handling, storage or distribution of Plasma, including FDA licensure, IQPP certification, CLIA and required state licensing, and including all Foreign Regulatory Approvals.

Renewal Term ” shall mean additional *** year periods, after the Initial Term.

Secondary Buyer Approved Collection Centers ” shall mean those Buyer Approved Collection Centers that Seller shall supply Plasma, provided Buyer approves, which shall not be unreasonably withheld.

Term ” shall mean the Initial Term of the Agreement and any Renewal Term(s) thereafter.

Total Pre-Payments ” shall mean the aggregate amount of all outstanding Center Pre-Payments paid by Buyer to Seller.

Section 2. General Terms and Obligations.

2.1 Supply of Plasma . During the Term and upon the terms and subject to the conditions of this Agreement, Buyer hereby agrees to purchase, and Seller agrees to supply, quantities of Plasma as further set forth herein.

 

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2.2 Development of New Centers . Pursuant to the terms and conditions of this Agreement, Seller shall design, construct and operate the Initial New Centers. In addition, pursuant to the terms and conditions of this Agreement during the Term of this Agreement, Buyer may provide an Additional New Center Notice to Seller for up to two (2) Additional New Centers in the United States (for a total of five (5) New Centers), provided that Seller agrees to such request, which shall not be unreasonably withheld.

2.3 Development, Opening and Regulatory Approval . Seller will use commercially reasonable efforts to develop, open and obtain Regulatory Approvals for the Initial New Centers by *** (the “ Approval Deadline ”). In order to meet the Approval Deadline, Seller shall use commercially reasonable efforts to develop, open and obtain Regulatory Approvals for the Initial New Centers as follows:

 

***
Center

  

Development

Proposal

  

Approval of

Development

Proposal by Buyer

  

Opening Date

  

Regulatory Approval

Date

1    

  

No later than ***

days from Effective Date

  

No later than ***

days from receipt of Development Proposal

  

No later than ***

months from Effective Date

  

No later than ***

months from Effective Date

2    

  

No later than ***

months from Effective Date

  

No later than ***

days from receipt of Development Proposal

  

No later than ***

months from Effective Date

  

No later than ***

months from Effective Date

3    

  

No later than ***

months from Effective Date

  

No later than ***

days from receipt of Development Proposal

  

No later than ***

months from Effective Date

  

No later than ***

Provided however, that if there are delays beyond the reasonable control of the Seller, including without limitation, delays in receiving approvals from Buyer regarding the Development Proposal or the obtaining of Regulatory Approvals, or if there is force majeure as set forth in Section 13, or delays due to Landlord, the Opening Date and Regulatory Approval Date shall also be delayed and Seller shall not be liable to Buyer for any damages as a result thereof.

2.4 Additional New Centers . For each proposed Additional New Center, Buyer must provide Seller with an Additional New Center Notice. Seller must notify Buyer within *** days as to whether it approves the Buyer’s request for an Additional New Center (such approval may not be unreasonably withheld). If Seller agrees to open an Additional New Center, Seller agrees to use commercially reasonable efforts to open an Additional New Center, within the requested timeframe after approval of the Development Proposal for such Additional New Center; provided, however, that Seller shall not be required to open more than *** New

 

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Centers in any *** month period. Seller shall use commercially reasonable efforts to obtain all Regulatory Approvals no later than *** months after an Additional New Center’s Opening Date. Further, no Additional Center may be requested by Buyer prior to *** and after ***.

2.5 Operation of the New Centers . Seller shall operate the New Centers in accordance with current industry standards and the standards it uses in its Existing Centers. In addition, Seller shall comply with the operating covenants for the New Centers specified in this Agreement, including sourcing, collecting, testing, using, handling, selling, storing and distributing Plasma in accordance with all Applicable Laws and Regulatory Approvals. The New Centers shall be constructed and operated in a manner that is compliant with all Regulatory Approvals.

2.6 Acquisition of New Centers . Buyer has the option to purchase (or authorize an Affiliate to purchase, provided however that if an Affiliate has the option to purchase, the Buyer will remain primarily liable) the New Centers (including all related New Center Assets), subject to terms and conditions of the Agreement, from Seller on or after ***, upon *** months prior written notice from Buyer to Seller (for example, Buyer may exercise its purchase option on *** if Buyer notifies Seller by ***) provided, however, that the option will expire if Buyer does not provide notice by ***, with a closing date on or before ***. If Buyer notifies Seller of its intent to exercise its Purchase Option, Buyer and Seller must complete the transaction and transfer the New Centers within *** months, unless as set forth above. The Purchase Option shall be exercised in accordance with the terms of this Agreement and the New Center Purchase Agreement to be negotiated and executed by the Seller and Buyer (or the Buyer’s Affiliate) in accordance with Section 5.1. If Buyer does not provide notice of its intent to purchase all New Centers from Seller by the end of the Initial Term, the Parties shall meet and discuss in good faith an extension of the Option Period.

2.7 Semi-Annual Meetings . Seller and Buyer shall meet in good faith at least semi-annually to discuss the New Centers, the Plasma Volume (as defined below) and any other issues of mutual interest.

Section 3. Financial Matters.

3.1 Obligations of Seller . At all times prior to acquisition of the New Centers by Buyer (in which case Buyer shall thereafter be responsible for the costs of operation of each acquired New Center), Seller shall be solely responsible for all costs, fees and expenses associated with the cost of construction, operation and maintenance of the New Centers.

3.2 Buyer Payments .

(a) Buyer will pay the Development Payment to Seller upon the execution of this Agreement.

(b) Buyer will pay four separate Center Pre-Payments to Seller, one upon execution of this Agreement and the other three upon execution of each lease agreement for each Initial New Center, as a pre-payment on future Plasma purchases, for a total of ***. The latter three Center Pre-Payments are each due within *** business days after Seller notifies Buyer that Seller has entered into a lease for a particular Initial New Center. The Total Pre-Payments will be credited against the Purchase Price for Plasma in accordance with Section 3.4.

 

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(c) If Buyer delivers an Additional New Center Notice to Seller, the Parties shall promptly meet to discuss the terms of additional Development Payments and Center Pre-Payments. The Parties shall structure such additional Development Payments and Center Pre-Payments, and the refund of such payments to Buyer, similar to the payments and refunds for the Initial New Centers.

3.3 Purchase Price of Plasma Sales .

(a) Subject to Section 3.4, the Purchase Price of the Plasma purchased by Buyer from the Seller pursuant to Section 4 of this Agreement shall be *** per liter of Plasma. Beginning ***, the Purchase Price shall be increased automatically at the beginning of each calendar year by CPI. In addition, Seller or Buyer may propose an increase or decrease in the Purchase Price of no more than *** based on current market conditions for the following calendar year. Such latter increase or decrease shall take effect only if approved by the other Party (such approval shall not be unreasonably withheld). Notwithstanding the above, at no time shall the Purchase Price be less than ***. If one Party notifies the other Party of its intent to renew the Agreement beyond the Initial Term pursuant to Section 9.1 then the Parties shall meet within *** days of the receipt of the notice to discuss in good faith the adaption of the Purchase Price to current market conditions.

(b) Seller shall invoice Buyer for all Plasma at the time of delivery of such Plasma to Buyer. Buyer shall pay undisputed invoices within *** days from date of Seller’s invoice. Such invoice shall not be dated or submitted prior to delivery of the underlying Plasma. All payments shall be made in U.S. Dollars. Seller’s invoices shall reflect the actual quantity of the Plasma shipped and the price thereof, as computed in accordance with this Agreement.

(c) In the event of a change to the Specifications, new governmental regulations or FDA or EU required testing, which cause an increase or decrease in Seller’s Costs, the Parties shall work in good faith to re-negotiate the Purchase Price.

3.4 Refund of Pre-Payments . Buyer shall be entitled to a credit of (i) *** per liter of Plasma delivered to Buyer from *** and (ii) *** per liter of Plasma delivered to Buyer on or after *** until such time as the aggregate amount of such credits equals the original Total Pre-Payments made by Buyer to Seller. In the event that this Agreement is terminated for any reason (except a termination of this Agreement by Seller pursuant to Section 9.2) at any time prior to Buyer’s full utilization of the credits for the Total Pre-Payments and Buyer does not elect to exercise its Purchase Option, Seller shall within *** business days pay to Buyer an amount equal to any remaining amount of such Total Pre-Payments which has not been so credited to Buyer.

Section 4. Purchase and Sale of Plasma.

4.1 Plasma Volume for 2011 . Seller will deliver and Buyer will purchase for the calendar year 2011, *** liters of Plasma. Buyer has an option to increase the volume for 2011 to up to *** liters provided Buyer provides written notice of such increase to Seller by ***. The Parties will negotiate in good faith a mutually agreeable and reasonable delivery schedule.

 

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4.2 Plasma Volume after 2011 . Beginning in 2012 and continuing through the Term, Seller shall sell and Buyer shall purchase the Plasma quantities in a range of *** liters of Plasma on a calendar year basis. Not later than *** months prior to January 1 st of a calendar year, Buyer will provide notification of the Plasma Volume required for that calendar year. The Parties will negotiate in good faith a mutually agreeable and reasonable delivery schedule. Seller shall provide the Plasma Volume regardless of the Plasma output at the New Centers. Buyer shall have the right to request the Plasma Volume for any calendar year within a range of (i) *** liters if no Additional New Centers are open, (ii) *** liters if one (1) Additional New Center is open and (iii) *** liters if two (2) Additional New Centers are open. In the event that Buyer requests the construction of an Additional New Center (but excluding, for clarity, any Initial New Center), then the Plasma Volume shall be increased by *** liters per each Additional New Center and become effective for that calendar year following the new centers opening on a pro rata base (e.g. if the opening date is in May 2012, than range for 2013 will be increase by *** of *** liters). In the event that Buyer and Seller consummate the purchase of all of the New Centers, then Buyer shall not be required to purchase any Plasma pursuant to this Agreement, once the Buyer owns all of the New Centers.

4.3 Plasma Source . Seller will supply and Buyer shall purchase Plasma collected at the Qualified Centers and/or Buyer Approved Collection Centers only, subject to the terms and conditions of this Agreement. During the period of time that any New Center has not received all Regulatory Approvals and is therefore a Non-Qualified Center, Seller shall be solely responsible for any plasma produced at such Non-Qualified Center. Under no circumstance is Buyer required to purchase plasma from any Non-Qualified Center(s) or Buyer Approved Collection Center that has not received all Regulatory Approvals. However, for avoidance for doubt, and for clarification purposes once a New Center has received all Regulatory Approvals, any Plasma collected during the time the New Center was a Non-Qualified Center may be sold to Buyer pursuant to the terms and conditions of this Agreement if and only if such Plasma has been licensed by the FDA and approved by the EU. For the purpose of this Agreement, a center is a “Buyer Approved Collection Center” if it is listed on Exhibit A. Buyer may add a collection center to the list if: (i) the center has received and maintains as current all necessary regulatory approvals, registrations and permits including, but not limited to, FDA licensure, EU approval, iQPP, CLIA, and required state licensing; (ii) the center has completed and Buyer has approved an affirmation of compliance, or the center has been audited by Buyer or its agents pursuant to Section 4.16 with no significant observations; (iii) the center satisfies the requirements described in the “Origin of Plasma” section of the attached Specifications; and (iv) the center has been added to the list of Buyer Approved Collection Centers by Buyer, as set forth in Exhibit A. If any Buyer Approved Collection Center (i) receives a significant enforcement correspondence from a governmental authority (ii) is identified by Buyer or its agents to have significant compliance or quality concerns during an audit under Section 4.16, (iii) or Buyer determines that the plasma collection center is materially deficient in its compliance with applicable laws, regulations or quality requirement, Seller will have *** business days to provide, in writing, a corrective action plan acceptable to Buyer. If the action plan is found unacceptable or if the Buyer Approved Collection Center cannot provide Plasma within *** days of any such event, then Buyer may modify Exhibit A to eliminate such Buyer Approved Collection Center from the list Buyer and

 

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Seller shall list Primary Buyer Approved Collection Centers and Secondary Buyer Approved Collection Centers on Exhibit A. Seller will supply Plasma to Buyer from the Qualified Centers and Primary Buyer Approved Collection Centers only. To the extent that Seller is required to supply Plasma from Secondary Buyer Approved Collection Centers, Seller shall notify Buyer and request approval from Buyer, which shall not be unreasonably withheld.

4.4 Right of First Refusal of Seller . If Buyer requires, for a certain calendar year, any Plasma in addition to (i) the then-current Plasma Volume supplied under this Agreement plus (ii) *** liters Buyer is currently contractually bound to purchase, on a notice period shorter than *** months, then Buyer, must first request an increase in the Plasma Volume up to the maximum Plasma Volume set forth in Section 4.2 under the terms and conditions of this Agreement. If Seller agrees to provide the additional Plasma Volume in the requested time frame, then the Plasma Volume will increase by the proposed amount and Buyer will purchase the additional Plasma from Seller in the requested time frame subject to the terms and conditions of this Agreement. If Seller does not agreed to provide the additional Plasma Volume within the requested time frame, then, notwithstanding anything to the contrary in this Agreement, Buyer is permitted to purchase such additional Plasma from an Alternative Supplier. If the requirement exceeds the maximum Plasma Volume set forth in Section 4.2, then Buyer shall provide Seller with a right of first refusal to supply such additional Plasma. Buyer will notify Seller in writing of any terms proposed by an Alternative Supplier and Seller will have *** business days to exercise its right of first refusal. If Seller elects not to exercise its right of first refusal or fails to respond to buyers request or refuses to supply the requested additional plasma within such *** business day period to increase the Plasma supply, then Buyer may purchase Plasma from the Alternative Supplier. Seller’s failure to exercise its option at any time does not waive Buyer’s requirement to provide Seller with a right of first refusal for all future plasma needs during the Term of the Agreement.

4.5 Hyperimmune Plasma Supply . So long as Seller is able to satisfy all requirements for Plasma pursuant to this Agreement, Seller shall have the right to produce hyperimmune plasma in a New Center for Seller’s own use; provided that (i) the volume of hyperimmune plasma does not exceed *** of the total volume, including Plasma and hyperimmune plasma, produced at such New Center at any time and (ii) the production thereof in such New Centers is in compliance with all applicable Regulatory Approvals and Applicable Laws. Buyer shall not be required to purchase any hyperimmune plasma nor continue any hyperimmune plasma program if Buyer purchases the New Centers.

4.6 Delivery . Except as otherwise agreed in writing by the Parties, all deliveries of Plasma shall be ***. Buyer will arrange for a shipping agent or carrier to pick-up the Plasma at Seller’s facility. The shipping agent or carrier shall be selected and contracted by Buyer.

4.7 Governing Documents . All sales of Plasma hereunder shall be subject solely to the terms and provisions of this Agreement (including all exhibits and schedules) and shall not be subject to other terms, conditions or provisions contained in any other purchase order, writings, or documents except to the extent a purchase order, writing or document sets forth or confirms quantity or schedule or place for delivery. Furthermore, in the event of any inconsistency or discrepancy between the terms and conditions of this Agreement and the schedules hereto, or any other record, the terms of this Agreement shall prevail.

 

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4.8 Records and Compliance Matters . Seller shall, at its expense, keep and maintain detailed records pertaining to the amount and type of Plasma sold hereunder during the Term and for a period equal to the longer of: (a) *** following the date of termination or expiration of this Agreement; and (b) the period of time required by the Applicable Laws. Such records shall be made available for inspection by Buyer during normal business hours, upon reasonable advance written notice, which shall not be less *** days (or such shorter period of time as may be mutually agreed upon by the Parties). Seller shall transfer such records related to the New Centers to Buyer in connection with the consummation of the acquisition of the New Centers by Buyer as contemplated by this Agreement.

4.9 Licenses and Approvals . Seller use commercially reasonable efforts to obtain and maintain in full force and effect all necessary licenses, permits, certifications, consents, licenses, registrations, listings, certificates of origin, and any other requisite documents and authorization, including approvals and registrations, and pay all applicable fees, charges, customs duties and taxes incurred in the performance of its obligations under this Agreement, including with respect to all New Centers and Buyer Approved Collection Centers. Without limiting the generality of the foregoing, Seller use commercially reasonable efforts to comply with all Applicable Laws, Regulatory Approvals, regulations, rules, and guidelines pertaining to its performances under this Agreement, including but not limited to those set forth in the U.S. Code of Federal Regulations, 21 C.F.R. parts 600-640 and any other applicable local, state or federal law, regulation or ordinance.

4.10 Storage, Shipping and Handling of Plasma . Plasma shall be stored, handled, packed and shipped by Seller in such a manner as to prevent damage to the Plasma and containers during shipping, consistent with Seller’s current practice and otherwise in compliance with all Applicable Laws and Regulatory Approvals, and shall be stored, handled, packed and shipped (including to any holding facility designated by Buyer) subject to such other conditions set forth in the Specifications. No Plasma shall be released by Seller to Buyer pursuant to this Agreement unless and until such Plasma fully complies with the Specifications, Applicable Laws and Regulatory Approvals, and Seller shall be responsible for ensuring compliance therewith.

4.11 Quality . Seller shall source, collect, process, store, distribute, test, transport, and otherwise handle Plasma, to be sold to Buyer in accordance with this Agreement, at all times in compliance with all Applicable Laws, Regulatory Approvals and the Specifications. Any and all reasonable changes sought by Buyer to the Specifications shall be sent to Seller for review and approval. Buyer shall advise Seller of any and all anticipated reasonable changes to Specifications as soon as practicable so as to provide Seller with as much advance notice as possible. Seller shall have *** business days to agree to implement the changes or to respond to Buyer with its reasons for refusing to implement such changes. If Seller agrees to implement such changes, Seller shall implement such changes as promptly as reasonably possible, but in all cases within *** days after receipt of written notice of such changes. For purposes of clarity, Seller shall not make changes to the process parameters or the Specifications without prior written approval of Buyer (in its reasonable discretion). Seller shall notify Buyer immediately and in any event not later than *** business days after: (a) any

 

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Existing Center (including without limitation, any Buyer Approved Collection Center) or New Center is closed as a result of regulatory sanctions placed on Seller by the FDA (or any foreign equivalent) or any other governmental authority; (b) Seller or any New Center or Buyer Approved Collection Center becomes subject to a significant enforcement action from the FDA (or any foreign equivalent) or any other governmental authority; (c) Seller or any New Center or Buyer Approved Collection Center fails an audit or inspection conducted by or on behalf of any governmental authority or any accrediting body; or (d) Seller otherwise learns of significant quality concerns that may impact the safety or quality of the Plasma provided to Buyer. In the event that Seller notifies Buyer of any of the foregoing, or Buyer otherwise determines that any New Center or Buyer Approved Collection Center is deficient in its compliance with Applicable Laws, Regulatory Approvals or Specifications, the Parties shall work in good faith to minimize overall shortfalls in quantities of Plasma delivered to Buyer, but any such shortfall shall remain the responsibility of Seller.

4.12 Testing and Approval . Seller shall be responsible, at its sole cost and expense, for testing Plasma in accordance with FDA and EMEA requirements and the Specifications. Seller shall be responsible for qualifying appropriate testing centers. Seller shall send all Plasma to be provided to Buyer pursuant to this Agreement only to Approved Testing Centers. However, Seller may send Plasma to an alternative laboratory upon the approval of Buyer, which shall not be unreasonably withheld. With respect to each shipment of Plasma to be shipped to Buyer, Seller shall test such Plasma to ensure compliance with the Specifications, Applicable Laws and Regulatory Approvals, and warranties as set forth in Section 8.2. Seller shall include a certificate of analysis and certificate of compliance, as well as all other documentation described in the Specifications, with each shipment of Plasma disclosing the results of such testing and certifying conformance with the Specifications and other requirements. Buyer may reject any Plasma after review of the accompanying documentation or upon inspection after receipt by Buyer or Buyer’s designee if such Plasma is not in compliance with the Specifications or any warranty hereunder. Buyer shall *** each shipment of Plasma received from Seller and the associated documentation and shall notify Seller in writing in the event of Buyer intends to rejects such shipment within *** business days after receipt. In the case of Plasma with defects not readily discoverable during inspection upon receipt by Buyer, Buyer shall notify the Seller of such defects *** following Buyer’s discovery thereof and shall be entitled to reject such Plasma. Rejected Plasma will be destroyed in compliance with Buyer’s internal procedures and local environmental requirements. Seller reserves the right to *** the *** concerning the *** of ***.

4.13 Remedies For Non-Conformity . In the event that Seller disputes Buyer’s determination that the Plasma is not in compliance with the Specifications or the warranty hereunder, the Parties shall attempt to cooperate in good faith to resolve the disagreement. If, after *** calendar days, the Parties are unable to resolve the disagreement, then, at either Party’s request, the Parties shall engage an independent testing laboratory or other appropriately qualified expert of recognized repute and credentials, mutually agreeable to the Parties and subject to confidentiality provisions set forth in this Agreement, to analyze a sample of the allegedly nonconforming Plasma and the associated documentation. The laboratory or expert shall use such procedures and tests as such laboratory or expert may consider necessary or appropriate to reach a conclusion. Both Parties agree to cooperate with the independent laboratory’s or expert’s reasonable requests for assistance in connection with its analysis

 

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hereunder. Both Parties shall be bound by the laboratory’s or expert’s results of analysis, which, absent manifest error, shall be deemed final as to any dispute over nonconformity. The costs incurred by the laboratory or expert shall be borne by ***, or, if the laboratory or expert cannot ***, then the Parties shall *** in connection with such laboratory or expert. If the Plasma is determined to be non-conforming, whether by agreement of the Parties or by an independent laboratory, then the Seller will determine whether to either replace the non-conforming Plasma or issue a credit to the Buyer.

4.14 Remedies For Supply Failure . Without limiting any other right or remedy Buyer may have hereunder or under law or equity and notwithstanding anything to the contrary in this Agreement, including without limitation, Section 4.4, in the event that Seller does not supply the quantities of Plasma as set forth in this Agreement, and Seller does not cure the ability to supply the Plasma at the quantities requested, within *** days of notice by Buyer that it will procure such Plasma from an Alternative Supplier, Buyer shall have the right to engage an Alternative Supplier to collect and supply those quantities of Plasma that Seller cannot supply. In such event, Seller shall reimburse Buyer for the following: (i) if the price charged by the Alternative Supplier for such Plasma is higher than the price charged by the Seller, for the difference between such prices, provided Buyer used commercially reasonable efforts to secure the best price from the Alternative Supplier and (ii) any other reasonable additional incremental costs or expenses arising from Buyer’s engagement of the Alternative Supplier of the Plasma. If Buyer is required to enter into a supply agreement with the Alternative Supplier to collect and supply all or part of Buyer’s requirements for Plasma then Buyer shall not be required to purchase Plasma pursuant to the terms of this Agreement until the supply agreement with the Alternative Supplier expires. Upon expiration of such supply agreement ***, Buyer *** to *** from *** pursuant to the ***).

4.15 Right to Audit . Buyer (or its agent) will have the right to audit Seller’s Existing Centers (including without limitation, any Buyer Approved Collection Center) and the New Centers and other facilities, systems and records during the Term as they relate to the Plasma provided hereunder to assess Seller’s compliance with the Applicable Laws, Regulatory Approvals, Specifications under the terms of this Agreement at Buyer’s sole cost and expense, during normal business hours and after providing Seller with reasonable advance notice. Buyer shall coordinate with Seller to schedule audits at mutually agreeable dates and times. Except as set forth below, in no event shall such audits occur more frequently (and with respect to Seller’s collection and/or testing centers, per site) than once every *** months. The limitation on the number of audits per *** month period shall not apply in the event that (i) a site receives a significant enforcement correspondence, (ii) Buyer identifies a significant compliance or quality concern at a site, or (iii) Buyer otherwise determines that a site is materially deficient in it compliance with applicable laws, regulations or quality requirements, as described in more detail in Section 4.3. No audit of any one collection/and or testing center shall continue in duration for more than *** days. Notwithstanding anything to the contrary in Section 4.8, Seller shall make its records available for inspection by Buyer (or its agent) during any audit pursuant to this Section 4.15. Seller shall respond in writing to all audit observations to Buyer within *** days of receipt of the audit report. Responses are to include timelines and plans for closure of all corrective actions and commitments.

 

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4.16 Regulatory Inspections and Correspondence . Seller shall notify Buyer and, if applicable, provide Buyer with copies of any notices or communications, if any Plasma Center operated by Seller is closed as a result of regulatory sanctions placed or issued by the FDA or equivalent foreign regulatory body, or if any such facility receives a warning letter or consent decree from the FDA or equivalent regulatory body, fails an audit conducted on behalf of any foreign regulatory body or any accrediting body, or is otherwise the subject of similar quality concerns, Seller must notify Buyer in writing immediately and in any event not later than *** business days after the earlier of Seller’s receipt of the relevant communication or the date Seller learns of such quality concern.

4.17 Product Complaints and Adverse Event Reporting . For purposes of clarity, Buyer shall be responsible for receiving all Product complaints and Product adverse event reports and all communications with complainants. If Seller receives a Product complaint or Product adverse event report, Seller shall refer the complainant to Buyer and provide notification of such complaint to Buyer, including a description of the complaint or event and the name and contact information of the complainant, within *** business days after receipt by Seller. Seller shall maintain Biological Deviation Reports (“ BDRs ”) relating to the Plasma and other documentation as required by the applicable regulatory requirements. Seller shall cooperate with Buyer in investigating any Product complaint, Product adverse event or BDR that relates to the Plasma provided hereunder.

4.18 Product Regulatory Inspections and Correspondence . For purposes of clarity, Buyer shall be solely responsible for all contacts and communications with the FDA (or any foreign equivalent) and other governmental authorities with respect to all matters relating to the Products. Seller shall forward to Buyer any notices or communications received by Seller concerning the Products immediately, but in no case later than *** business days after receipt by Seller.

4.19 Plasma Recalls . Each Party will immediately notify the other if either Party discovers any issue that could potentially lead to a recall of the Plasma provided by Seller hereunder. The Parties shall then discuss reasonably and in good faith whether a Plasma recall is appropriate or required, and the manner in which any such recall should be conducted. Seller shall be responsible, at its sole cost and expense, for conducting and shall have the final decision for all Plasma recalls after consultation with Buyer (provided that, for clarity, Buyer shall have the sole right to determine whether to recall any Product). The Parties shall cooperate in good faith in coordinating the implementation of any Plasma recall.

Section 5. Purchase of New Centers.

5.1 Acquisition . In the event Buyer exercises its Purchase Option under Section 2.6 to require a sale and purchase of the New Centers, then the Parties shall negotiate and execute a New Center Purchase Agreement as set forth in Section 5.2 and shall use commercially reasonable efforts to promptly satisfy any and all closing conditions agreed upon in such New Center Purchase Agreement and within the timelines set forth in the New Center Purchase Agreement. The terms and conditions for the closing of such transactions shall be as defined in the New Center Purchase Agreement.

 

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5.2 New Center Purchase Agreement . The obligations of Buyer to acquire the New Centers and Seller to sell New Centers are subject in all respects to the terms of the definitive New Center Purchase Agreement. The New Center Purchase Agreement shall describe the specific assets to be purchased and/or assigned and the liabilities to be assumed and any other rights and obligations of the Parties arising out of such transaction.

5.3 Timing of Acquisitions . Once Buyer exercises its Purchase Option to purchase the New Centers, the Parties will, subject to satisfactory diligence by Buyer, to be performed within *** days of the Purchase Option, or the Buyer is deemed to have acquiesced, act in good faith and use their commercially reasonable efforts to negotiate, draft and execute the New Center Purchase Agreement within *** months from the date that Buyer notifies Seller of its election to exercise the Purchase Option under Section 2.6.

5.4 Acquisition Cost of New Centers . The purchase price for each New Center (including the related New Center Assets) to be purchased shall be equal to the amount set forth below, less any remaining amounts of the Total Pre-Payments that have not been refunded to Buyer hereunder and shall be paid no later than *** business days after the execution of a New Center Purchase Agreement:

 

Year of Purchase

  

Purchase Price per Qualified
Center

 

Purchase Price per Non-Qualified
Center

***

  

***

 

***

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