SUPPLY AGREEMENT

 

 

TABLE OF CONTENTS

 

SUPPLY AGREEMENT			1
W I T N E S S E T H:			1
1.	DEFINITIONS		1
2.	COORDINATION; SUPPLY CHAIN MANAGEMENT		5
	2.1	Relationship Managers	5
	2.2	Joint Manufacturing Committee	5
	2.3	Meetings	6
	2.4	Decision Making; Authority	6
	2.5	Third Party Manufacturers	7
3.	SUPPLY		7
	3.1	Exclusive Supply	7
	3.2	General Scope of Services	7
	3.3	Quality Agreement	7
	3.4	Third Party Manufacturers	7
4.	FORECASTS AND ORDERS		8
	4.1	Forecast	8
	4.2	Long-Term Forecast	8
	4.3	Amending Forecasts	8
	4.4	Launch Stocks	8
	4.5	Purchase Orders	9
	4.6	Fulfillment of Purchase Orders	9
	4.7	Supply Uncertainty	10
	4.8	Safety Stock	10
5.	PRODUCTION		10
	5.1	Specifications	10
	5.2	Changes to the Specifications, Processing or the Facility	11
	5.3	Quality Assurance	12
	5.4	Preservation of Samples	13
6.	DELIVERY AND PAYMENT		13

 

 

	6.1	Delivery	13
	6.2	Price and Reimbursements	14
	6.3	Elan Compensating Payment and Acorda Costs	14
	6.4	Remittance of Payments	14
	6.5	Tax Withholding	14
	6.6	VAT	15
7.	REGULATORY		15
	7.1	Information Provided to Manufacturers	15
	7.2	Governmental Inspection	15
	7.3	Right of Inspection	15
	7.4	Records	16
8.	REPRESENTATIONS AND WARRANTIES		16
	8.1	Mutual Representations and Warranties	16
	8.2	Additional Representations and Warranties of Acorda	17
	8.3	Additional Covenants of Acorda	17
	8.4	Disclaimer	18
	8.5	Limitation of Damages	18
9.	CONFIDENTIALITY		18
10.	TERM AND TERMINATION		18
	10.1	Term	18
	10.2	Termination	18
	10.3	Rights Upon Termination	19
	10.4	Effect of Termination	19
	10.5	Survival	19
11.	GOVERNING LAW		19
	11.1	Governing Law	19
	11.2	Dispute Resolution	19
12.	MISCELLANEOUS		20
	12.1	Notices	20
	12.2	Entire Agreement	20
	12.3	Amendment and Waiver	21
	12.4	No Implied Waivers	21

 

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	12.5	Order of Precedence	21
	12.6	Covenant of Further Assurances	21
	12.7	Relationship	21
	12.8	Severability	21
	12.9	Assignment	21
	12.10	Force Majeure	22
	12.11	Export Compliance	22
	12.12	Performance by Affiliates and Third Party Distributors	22
	12.13	Counterparts and Facsimile Signatures	22
Exhibit A		Acorda Supply Agreements	1

 

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1.6                                  “ Breaching Party ” shall have the meaning set forth in Section 10.2(a).

 

1.7                                  “ Business Day ” shall mean a day other than Saturday or Sunday on which the banks in New York, New York and Boston, Massachusetts are open for business.

 

1.8                                  “ Calendar Quarter ” shall mean a calendar quarter ending on the last day of March, June, September or December.

 

1.9                                  “ Calendar Year ” shall mean a period of time commencing on January 1 and ending on the following December 31.

 

1.10                            “ cGMP ” shall mean current Good Manufacturing Practices and standards as provided for in the United States Code of Federal Regulations, and the requirements thereunder imposed by the FDA, all promulgated and published, and in EC Directive 91/356/EEC of 13 June 1991 as well as EC Directives 2003-94-EC and 2005-28-EC and in accordance with industry practices.

 

1.11                            “ Documentation ” shall have the meaning set forth in Section 5.3(b).

 

1.12                            “ Effective Date ” shall mean that date set forth in the Preamble.

 

1.13                            “ Elan ” shall mean Elan Pharma International Limited, its successors and assigns and, as applicable, its Affiliates.

 

1.14                            “ Elan Compensating Payment ” shall mean the amount paid or payable to Elan pursuant to Section 9.5 of the Elan Supply Agreement.

 

1.15                            “ Elan Consent ” means the consent among Acorda, Licensee and Elan, dated on or about the Effective Date.

 

1.16                            “ Elan Supply Agreement ” shall mean the Supply Agreement between Elan and Acorda, dated September 26, 2003, as amended from time to time.

 

1.17                            “ EMEA ” shall mean the European Medicines Agency or any successor agency thereof.

 

1.18                            “ EU ” shall mean the European Union, as it may be expanded or contracted from time to time, Iceland, Liechtenstein and Norway.

 

1.19                            “ Expert Panel ” shall have the meaning given to it in the License Agreement Disputes between the Parties under this Agreement that are eligible to be referred to an Expert Panel shall be resolved in accordance with the provisions set forth in Section 3.5(c)(iii) of the License Agreement.

 

1.20                            “ Facility ” shall mean Elan’s manufacturing facility in Monksland, Athlone, Co. Westmeath, Ireland, or such other facility as Acorda or its Third Party manufacturers may use to perform Acorda’s obligations under this Agreement.

 

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1.21                            “ FDA ” shall mean the United States Food and Drug Administration or any successor agency thereto.

 

1.22                            “ Firm Period ” shall have the meaning set forth in Section 4.1(a).

 

1.23                            “ Forecast ” shall have the meaning set forth in Section 4.1.

 

1.24                            “ JMC ” shall have the meaning set forth in Section 2.2.

 

1.25                            “ Latent Defect ” shall have the meaning set forth in Section 5.3(c).

 

1.26                            “ Launch Stocks ” shall mean the quantities of stocks of the Product required by Licensee, as determined in accordance with Section 4.4, in relation to the launch of the Product following Regulatory Approval in a Major Market Country.

 

1.27                            “ Law ” shall mean any law, statute, rule, regulation, government agency guidance, ordinance or other pronouncement having the effect of law, of any federal, national, multinational, state, provincial, county, city or other political subdivision, including (a) cGMP, good clinical practices and adverse event reporting requirements, guidance from the International Conference on Harmonization or other generally accepted conventions, and all other rules, regulations and requirements of the FDA and other applicable Regulatory Authorities, (b) the Foreign Corrupt Practices Act of 1977, as amended, or any comparable laws in any country, and (c) all export control laws.

 

1.28                            “ License Agreement ” shall have the meaning set forth in the Preamble.

 

1.29                            “ Licensee ” shall have the meaning set forth in the Preamble.

 

1.30                            “ Major Market Countries ” shall mean the United Kingdom, France, Germany, Italy, Spain and Japan.

 

1.31                            “ NDA ” shall mean a New Drug Application filed with the FDA or similar foreign application or submission for Regulatory Approval, including a MAA.

 

1.32                            “ Non-Breaching Party ” shall have the meaning set forth in Section 10.2(a).

 

1.33                            “ Party ” and “ Parties ” shall have the respective meanings set forth in the Preamble.

 

1.34                            “ Person ” shall mean any individual, limited or general partnership, corporation, limited liability company, joint venture, unincorporated organization or association, any trust, governmental body, authority, bureau or agency, or any other entity or body.

 

1.35                            “ Process ” or “ Processing ” shall mean the act of preparation, filling, testing, packaging, labeling and any other pharmaceutical manufacturing procedures, or any part thereof (including, but not limited to, product or process specifications, testing or test methods, raw material specifications or suppliers, equipment, etc.), relating to the Product.

 

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1.36                            “ Product ” shall mean any Licensed Product (as defined in the License Agreement).

 

1.37                            “ Purchase Order ” shall mean a written purchase order delivered by Licensee to Acorda for Products pursuant to this Agreement.

 

1.38                            “ Quality Agreement ” shall mean a quality agreement entered into by Acorda and Licensee, or by Licensee and a Third Party manufacturer, as described in Section 3.3.

 

1.39                            “ Regulatory Authority ” shall mean any applicable government regulatory authority involved in granting approvals for the marketing and commercial sale of a pharmaceutical or biological product or medical device in a country or regulatory jurisdiction (including pricing and/or reimbursement approval in any country in which pricing and/or reimbursement approval is required by applicable Laws), including the FDA, the EMEA and foreign equivalents thereof.

 

1.40                            “ Second Source Agreement ” shall have the meaning set forth in Section 8.3(b).

 

1.41                            “ Semi-Firm Period ” shall have the meaning set forth in Section 4.1(a).

 

1.42                            “ Severed Clause ” shall have the meaning set forth in Section 12.8.

 

1.43                            “ Specifications ” shall mean (a) with respect to the bulk Licensed Product, the specifications for the bulk Licensed Product, as determined pursuant to the Elan Supply Agreement and Section 6.3 of the Elan License Agreement and as may be amended in accordance with Section 5.1 of this Agreement, and (b) with respect to the packaging and labeling for orders of the Licensed Product for sale in a particular country in the Territory, the specifications therefor mutually agreed upon by the Parties in accordance with Section 5.1(b).

 

1.44                            “ Supply Shortage ” shall have the meaning set forth in Section 4.7.

 

1.45                            “ Term ” shall have the meaning set forth in Section 10.1.

 

1.46                            “ Third Party ” shall mean any Person who is not a Party or an Affiliate under this Agreement.

 

1.47                            “ Transfer Price ” shall mean the price Acorda’s Third Party manufacturer(s) invoices Acorda for Product Manufactured by such Third Party manufacturer(s) supplied to Licensee pursuant to the agreement(s) between Acorda and such manufacturer(s).

 

1.48                            Construction .  In construing this Agreement, unless expressly specified otherwise;

 

(a)                                   references to Sections and Exhibits are to sections of, and exhibits to, this Agreement;

 

(b)                                  except where the context otherwise requires, use of either gender includes the other gender, and use of the singular includes the plural and vice versa;

 

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(c)                                   headings and titles are for convenience only and do not affect the interpretation of this Agreement;

 

(d)                                  any list or examples following the word “including” shall be interpreted without limitation to the generality of the preceding words;

 

(e)                                   except where the context otherwise requires, the word “or” is used in the inclusive sense;

 

(f)                                     all references to “dollars” or “$” herein shall mean U.S. Dollars; and

 

(g)                                  each Party represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof.  In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will apply against the Party which drafted such terms and provisions.

 

2.                                        COORDINATION; SUPPLY CHAIN MANAGEMENT

 

2.1                                  Relationship Managers .  Each Party shall appoint a manufacturing logistics and quality assurance manager to support the Parties’ respective manufacturing activities, and to function as a liaison with the other Party’s manufacturing logistics and quality assurance manager on matters relating to the manufacture and supply of the Product pursuant to this Agreement.

 

2.2                                  Joint Manufacturing Committee .

 

(a)                                   The Parties shall establish a joint manufacturing committee (“ JMC ”) to oversee the supply of Product to Licensee in accordance with this Agreement.  The JMC shall consist of three (3) representatives designated by each Party.  One (1) representative from each Party shall alternate in acting as the chairperson of the JMC for one Calendar Year term, with Acorda’s representative chairing the JMC for the first Calendar Year.  The chairperson shall not have any greater authority than any other representative on the JMC.  As soon as practicable following the Effective Date (but in no event more than thirty (30) days following the Effective Date), each Party shall designate its initial representatives on the JMC.  Each Party shall be free to change its representatives on notice to the other or to send a substitute representative to any JMC meeting; provided , however , that each Party shall ensure that at all times during the existence of the JMC, its representatives on such committee are appropriate in terms of seniority and expertise with respect to the manufacturing of pharmaceutical products and have the authority to bind such Party with respect to matters within the purview of the JMC.  Except as expressly provided in this Agreement, the JMC shall have no authority to bind the Parties hereunder and the JMC shall report to the JSC, subject to Section 2.4 of this Agreement.

 

(b)                                  The JMC shall be responsible for (i) managing the supply chain for Product in the Territory; (ii) monitoring logistical strategies, capacity planning and inventory levels for the Product for Commercialization in the Field in the Territory; and (iii) providing a forum for the Parties to discuss any material quality-related issues concerning the Product.

 

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(c)                                   The appointment of members of the JMC is a right of each Party and not an obligation and shall not be a “deliverable” as referenced in any existing authoritative accounting literature.  Each Party shall be free to determine not to appoint members to the JMC.  If a Party does not appoint members of the JMC, it shall not be a breach of this Agreement, nor shall any consideration be required to be returned, and unless and until such persons are appointed, all decisions and obligations within the purview of the committee shall henceforth be handled directly between the Parties; provided , that in the event of any disputes between the Parties, the dispute resolution procedures set forth in Section 2.4(a) shall continue to apply (substituting in such provision references to “the Parties” instead of “the JMC”).

 

2.3                                  Meetings .   The JMC shall hold at least one (1) meeting per Calendar Quarter at such times during such Calendar Quarter as the chairperson elects to do so.  Meetings of the JMC shall be effective only if at least one (1) representative of each Party is present or participating.  The JMC may meet either (a) in person at either Party’s facilities or at such locations as the Parties may otherwise agree or (b) by audio or video teleconference; provided , that no less than one (1) meeting of the JMC during each Calendar Year shall be conducted in person.  Other representatives of each Party involved with the Product may attend meetings as non-voting participants, subject to the confidentiality provisions set forth in this Agreement.  Additional meetings of the JMC may also be held with the consent of each Party, or as required under this Agreement, and neither Party shall unreasonably withhold its consent to hold such additional meetings.  Each Party shall be responsible for all of its own expenses incurred in connection with participating in the JMC meetings.

 

2.4                                  Decision Making; Authority .

 

(a)                                   Approval by the JMC .  Subject to the provisions of this Section 2.4, the JMC shall approve matters before it only following a unanimous vote, with each Party having one (1) vote.  If the JMC fails to reach unanimous agreement on a matter before it for decision for a period in excess of thirty (30) days, the matter shall be referred to the JSC as constituted under and in accordance with the License Agreement and any dispute that may arise from such matter shall be resolved pursuant to the terms of Section 3.5 of the License Agreement.  Notwithstanding anything to the contrary in this Agreement or the License Agreement, neither any Party, the JSC nor any Expert Panel shall exercise its right to finally resolve a dispute pursuant to the License Agreement in a manner that (i) excuses such Party from any of its obligations specifically enumerated under this Agreement, (ii) negates any consent rights or other rights specifically allocated to the other Party under this Agreement, (iii) would cause Acorda to breach an Acorda Third Party Agreement (including any Acorda Supply Agreement) or to require any Third Party to take any actions not required to be performed by such Third Party under any Acorda Third Party Agreement, (iv) increases the Development Plan costs for the other Party for a given Calendar Year by more than [*****] above the then current Development Budget for the Calendar Year, or (v) would require either Party (or require Acorda to require a Third Party)  to perform any act that it (or such Third Party) reasonably believes to be inconsistent with any Law or any approval, order, policy or guidelines of a Regulatory Authority; provided , that, if such decision would require Acorda, in order to comply with such decisions, to compel the Third Party counterparty to an Acorda Third Party Agreement to perform any act or to refrain from performing any act, Licensee acknowledges and agrees that

 

*****Omitted pursuant to a confidential treatment request.

 

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Acorda shall only be obligated to use Commercially Reasonable Efforts to compel such activity or to refrain from performing such activity.  The JMC shall have only the powers assigned expressly to it in this Agreement and shall not have any power to amend, modify or waive compliance with this Agreement or the Acorda Third Party Agreements.

 

(b)                                  No Limitation on Remedies .  Nothing in this Section 2.4 shall affect the right of a Party to exercise its rights or remedies for a breach of this Agreement by the other Party.

 

2.5                                  Third Party Manufacturers .  Where this Agreement provides that Acorda shall use Commercially Reasonable Efforts to obtain the consent of or response from one of its Third Party manufacturers, then, to the extent that Licensee has been allowed to interact directly with such Third party Manufacturer with respect to such matters, Licensee shall also be required to use Commercially Reasonable Efforts to obtain such result.

 

3.                                        SUPPLY

 

3.1                                  Exclusive Supply .  Except as expressly provided in this Agreement, Licensee shall exclusively purchase from Acorda all Product in order to meet Licensee’s and its Affiliates’ and Third Party Distributors’ requirements of the Product.

 

3.2                                  General Scope of Services .  Acorda shall use Commercially Reasonable Efforts to manufacture, or arrange for a Third Party(ies) to manufacture, and supply Licensee’s requirements of Product for use in the Field in the Territory pursuant to the License Agreement in final, packaged, labeled form; provided , however , that the foregoing shall be subject to Acorda’s and its Third Party manufacturer(s)’ capacity and ability to manufacture such quantities in their current manufacturing facilities, taking into account Acorda’s and such Third Party manufacturer(s)’ responsibilities to manufacture the Product for use outside the Territory or outside the Field and to manufacture other pharmaceutical products.

 

3.3                                  Quality Agreement .  Promptly after the Effective Date, the Parties shall negotiate and execute a “Quality Agreement” specifying the testing, storage, release, cGMP, regulatory and other quality assurance requirements relating to manufacture and shipment of Product by or on behalf of Acorda under this Agreement. To the extent that Acorda or an Acorda Third Party manufacturer supplying Product hereunder reasonably requests, Licensee shall also enter into a “Quality Agreement” with such Third Party manufacturer regarding supply of Product.

 

3.4                                  Third Party Manufacturers .  Licensee acknowledges and agrees that the provisions set forth in this Agreement are subject to the requirements and limitations of the agreements set forth in Exhibit A , including the Elan Supply Agreement (collectively, such agreements, the “ Acorda Supply Agreements ”).  Exhibit A may be updated by Acorda from time to time after the date hereof upon Acorda providing to Licensee true and correct copies of any additional agreements to be listed on such Exhibit A ; provided , however , that Acorda shall, prior to executing or otherwise agreeing to be bound by any such additional agreement, (i) supply material drafts, including the final draft, of such agreement to Licensee for its review, (ii) allow Licensee to comment on such draft within a reasonable period of time following Licensee’s

 

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receipt; and (iii) reasonably consider, in good faith, Licensee’s comments to such draft (but Licensee shall not have the right to approve such agreement).

 

4.                                        FORECASTS AND ORDERS

 

4.1                                  Forecast .  Commencing [*****] prior to the anticipated date of first Regulatory Approval in any Major Market Country, Licensee shall submit to Acorda on or before the first Business Day of each month a [*****] rolling forecast that sets forth the total quantity of Product for supply that Licensee either has ordered, desires to order, or expects to order from Acorda within the next [*****] period (the “ Forecast ”). In the Forecast, Licensee shall include a breakdown of the total quantity of Product forecast on a month-by-month and country-by-country basis.

 

(a)                                   Firm Period and Semi-Firm Period .  Once Regulatory Approval for the Product has been received in a Major Market Country or the United States, the monthly breakdown of the [*****] of the Forecast shall include a firm, irrevocable order for the first [*****] of the Forecast (“ Firm Period ”), which shall be the subject of a binding Purchase Order delivered in accordance with Section 4.5.  For purposes of clarity, in the event that a Forecast delivered to Acorda in accordance with the terms of this Agreement lists a total quantity of Product for supply for each of the first [*****] of such Forecast as zero (0), the Firm Order for such [*****] period shall be for a quantity of zero (0).  The next [*****] of the Forecast period shall be a semi-firm period that is non-binding (“ Semi-Firm Period ”); provided , that, subject to Section 4.3(c), if Licensee requests more than a [*****] increase in the ordered quantities of Product for such Semi-Firm Period, Acorda shall have the right to change the lead time for delivery of the Product if such a change is commercially reasonable given the increase in ordered Product quantity.  The remainder of the Forecast is non-binding.

 

4.2                                  Long-Term Forecast .  Not later than July 1 st  in each Calendar Year, Licensee shall provide Acorda a [*****] forecast of its estimated requirements of the Product, broken down on an annual basis.  For the avoidance of doubt, except with respect to any Firm Period included in such [*****] forecast and subject to Section 4.3(c), any long-term forecast provided by Licensee under this Section 4.2 shall be non-binding.

 

4.3                                  Amending Forecasts .  Any portion of the Forecast that is not a Firm Period is to be considered an estimated forecast to be used for planning purposes, and shall not be construed as a firm commitment by Licensee to Acorda; rather, it can be increased or reduced by Licensee from time to time; provided , however , that (a) Licensee may not decrease the quantities specified in any Forecast with respect to any Firm Period; (b) if Licensee increases the quantities specified in any Forecast with respect to any Firm Period, Acorda shall use Commercially Reasonable Efforts (having regard to its and its Third Party manufacturers’ manufacturing capacity and ability), but shall not be obligated, to supply such additional Product; and (c) Licensee may not increase or decrease by more than [*****] in the aggregate the amount of Product required in a Calendar Quarter compared to the previous Calendar Quarter, except for Launch Stocks or unless otherwise agreed by Acorda.

 

4.4                                  Launch Stocks .   At least [*****] prior to an anticipated Regulatory Approval in a Major Market Country, the Parties shall discuss and agree upon the manufacture and purchase of

 

*****Omitted pursuant to a confidential treatment request.

 

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specific quantities of Launch Stocks for launch of the Product in the applicable Major Market Country.  Launch Stocks shall be ordered not later than [*****] from receipt by Licensee of an approval letter from a Regulatory Authority in respect of an NDA in a Major Market Country.

 

4.5                                  Purchase Orders .

 

(a)                                   General .  Licensee shall accompany its monthly update of the Forecast with a Purchase Order for each Firm Period for which Product has not been previously ordered or for which additional Product is required; provided , that in the event the Forecast contains a binding forecast for Launch Stocks pursuant to Section 4.4, the Purchase Order shall also contain an order for the Launch Stocks.  Each Purchase Order shall specify the Product ordered, the quantity of Product ordered and the time, manner and address of delivery, all of which shall be subject to this Article 4 and Section 6.1.  In order for the Product to be properly labeled and packaged, each such Purchase Order shall specify the countries in which the Product from such order shall be marketed or sold, the quantity of Product from such Purchase Order destined for each such country and the quantity of Product for promotional and sample use.  Each Purchase Order shall also specify the requested date of delivery and the delivery destination.

 

(b)                                  Terms .  Purchase Orders issued by Licensee or its Affiliates shall be effective solely with respect to specifying the quantity, requested delivery date (subject to the terms of this Agreement) and means of shipment of the Product being ordered.  All other terms and conditions printed or included on such Purchase Orders shall be of no effect or force.

 

(c)                                   Rejection of Purchase Orders .  Within [*****] of receipt, Acorda shall have the right to reject any Purchase Order issued by Licensee that Acorda reasonably believes to be materially inconsistent with the terms of this Agreement.  Subject to Acorda’s obligation set forth in Section 4.3 to use Commercially Reasonable Efforts to address fluctuations in Licensee’s Product demand, if Acorda reasonably believes that a Purchase Order is materially inconsistent with the forecasted quantities of the Firm Period and/or the Launch Stocks, it shall have the right to reject such Purchase Order; provided , that Acorda shall reject no Purchase Order solely on the basis of quantity so long as the quantity spe