Exhibit 10.46
SUPPLY AGREEMENT
This Agreement
is made and entered
into as of the last
day signed below
(the
"Effective Date") by
and between
Hollister-Stier
Laboratories LLC,
having a
principal place of
business at 3525 North Regal Street, Spokane, Washington,
99207-5788
("Hollister-Stier")
and Hemispherx
Biopharma,
Inc.,
having a
principal place of
business at 1716 John F. Kennedy Boulevard, Philadelphia,
Pennsylvania,
19103 ("Hemispherx"
or "Client"). Both Hollister-Stier and
Hemispherx are referred to herein individually as "Party" and collectively as
the "Parties."
WITNESSETH THAT:
WHEREAS, Client has a
commercial interest in the manufacture of the Product (as
hereafter
defined) and
requests the services of Hollister-Stier in the
manufacturing of the
Product pursuant with
the terms and conditions contained
herein, and
Hollister-Stier
desires to
manufacture
the Product on behalf
of
Client pursuant to the terms and conditions contained herein;
NOW, THEREFORE,
in consideration of the premises and
the mutual covenants and
agreements contained herein, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.
Certain terms are defined in the text of this Agreement.
In addition,
as used in this Agreement, the following definitions shall
apply:
1.1.
"Act" shall mean the U.S. Food, Drug and Cosmetics Act of 1934
(21 U.S. C.ss.301 et seq.) and the regulations promulgated
thereunder, as the same may be amended from time to time.
1.2. "Polymer I and Polymer
C12U" or "Polymer" shall mean the
polymer pharmaceutical starting material of the Product
further defined in Specifications.
1.3.
"Affiliate" shall mean
any individual, firm,
corporation or
other legal entity that directly or indirectly
controls, is
controlled by, or is
under common control
with, a Party. As
used in the preceding
sentence, "control"
means possession,
whether direct or
indirect, of the power to direct or
cause
the direction of the
management and
policies of such entity,
whether pursuant to
the ownership of
voting securities,
by
contract or otherwise.
1.4.
"Batch" or
"Lot" shall mean each separate and distinct
quantity of Product processed under continuous conditions and
designated by Hollister-Stier with a batch or lot number.
1.5.
"cGMP
Regulations"
means the applicable current Good
Manufacturing Practices as promulgated by the FDA from time to
time under the Act, as presently codified in 21 CFR Parts 210
and 211.
1.6.
"Certificate of Analysis" or "COA" shall mean a document
executed by Hollister-Stier to certify
that a Batch or Lot of Product meets the Specifications.
1.7.
"Client's
Technology
Package" shall
mean the technical
information supplied
by Client to
Hollister-Stier to
enable
Hollister-Stier to carry out its obligations hereunder.
Items
in Client's
Technology
Package may include, but are not
limited to,
raw material and manufacturing component
specifications, intermediate
Product
specifications,
analytical and
microbiological
method validation reports,
analytical method
transfer protocols, filter validation
reports, and storage specifications.
1.8.
"Confidential Information"
shall
mean
any nonpublic
information of
Hollister-Stier or
Client including
without
limitation,
trade secrets,
business
methods, operating
procedures,
manufacturing methods and processes, prices, and
customer information,
whether of a written,
oral, or visual
nature.
1.9.
"FDA" shall mean the United States Food and Drug
Administration.
1.10.
"Intellectual
Property" shall
mean patents, copyrights,
trademarks, trade
names, service
marks, licenses and other
intellectual property rights of a Party.
1.11.
"Master Batch Record" shall mean a written description of the
procedure to be followed by Hollister-Stier in processing of a
Batch or Lot of Product, which description shall include,
but
not be limited to, a complete list of all active and
inactive
ingredients,
components,
weights and
measures used in
processing the
Product within the meaning of 21 CFR part
211.186, or its successor as in effect from time to time.
1.12.
"Product" shall mean the pharmaceutical product described in
the Specifications.
1.13. "Quality Systems
Agreement" shall mean an agreement to be
executed by the Parties relating to quality systems.
1.14.
"Regulatory Authority"
shall mean any federal, state, local,
or international
regulatory agency,
department,
bureau, or
other governmental agency.
1.15.
"Specifications" shall mean the performance parameters for the
Product.
Specifications may be amended from time to time by
written agreement of the Parties.
1.16.
"Third Party" shall mean any party other than Client or
Hollister-Stier and their respective Affiliates.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2. The
Parties agree to the following representations and warranties:
2.1.
Each Party represents and warrants to the other as follows:
2.1.1. It has
full power and authority to enter into this
Agreement and perform its obligations hereunder.
2.1.2. Subject
to Section 3.2 of this Agreement, it has such
permits, licenses,
and authorizations of
Regulatory
Authorities,
including, with
respect to Client,
Regulatory Authorities
with jurisdiction over the
Product, as
are necessary to own its respective
properties, conduct
its business and perform its
obligations hereunder.
2.1.3. It is not
currently debarred, suspended, or otherwise
excluded by the FDA or any other Regulatory Authority
from conducting
business and shall not knowingly use
in connection with this Agreement the services of any
person debarred by the FDA.
2.2.
Hollister-Stier represents and warrants to Client as follows:
2.2.1.
Hollister-Stier
shall process
the Product in
compliance in all material respects with the Quality
Systems Agreement,
the Master Batch
Record, the Act
and the cGMP Regulations.
2.2.2. The
Product when delivered shall comply in all
material respects with the Specifications; provided,
however, that Hollister-Stier shall have no liability
to Client or any Third
Party for any
breach of the
foregoing
representation and
warranty to the extent
that any such breach is caused in whole or in part by
Client or by any materials provided by Client.
2.2.3. The
manufacturing
facilities
for the Product
shall
conform in all material respects to the standards of
those Regulatory
Authorities with
jurisdiction over
such facilities, including, but not limited to, those
set forth in the cGMP Regulations.
2.3.
Client represents and warrants to Hollister-Stier as follows:
2.3.1. Neither
Client's Technology Package, nor the use
thereof by Hollister-Stier, shall infringe, violate
nor misappropriate the rights of any Third Party.
2.3.2
Client has
all necessary rights to enable
Hollister-Stier to
process the Product for Client in
accordance with the
terms and conditions of this
Agreement.
2.3.3 All
laboratory,
scientific, technical
and/or other
data submitted by or
on behalf of Client
(including
Client's Technology Package) relating to the Product,
to the best of Client's knowledge, shall be complete
and correct and shall not contain any falsification,
misrepresentation or omission.
2.3.4. All
materials supplied by or on behalf of Client for
use in processing the Product
shall conform to the Specifications.
2.4.
THE WARRANTIES
SET FORTH HEREIN ARE THE SOLE AND
EXCLUSIVE
WARRANTIES MADE BY
EITHER PARTY
UNDER THIS
AGREEMENT,
AND
NEITHER PARTY MAKES ANY OTHER WARRANTIES EXPRESS OR IMPLIED OR
ARISING BY LAW,
INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED
WARRANTY OF
MERCHANTABILITY
OR FITNESS FOR A PARTICULAR
PURPOSE OR USE OR
ARISING FROM THE COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE.
2.5.
EXCEPT AS NECESSARY TO SATISFY A THIRD PARTY CLAIM INDEMNIFIED
UNDER ARTICLE 6 OF THIS AGREEMENT, CLIENT'S SOLE AND EXCLUSIVE
REMEDY, AND HOLLISTER-STIER'S SOLE AND EXCLUSIVE LIABILITY AND
OBLIGATION FOR ANY BREACH OF A REPRESENTATION AND WARRANTY SET
FORTH IN SECTION 2.2
SHALL BE FOR
HOLLISTER-STIER TO
PEFORM
ITS OBLIGATIONS
UNDER SECTIONS 4.1 AND 4.2 OR UNDER
SECTION
4.4, AS THE CASE MAY BE.
2.6 EXCEPT AS
NECESSARY TO SATISFY A THIRD PARTY CLAIM INDEMNIFIED
UNDER
ARTICLE 6 OF THIS
AGREEMENT,
AND/OR IN THE EVENT OF
A
BREACH OF THE CONFIDENTIALITY OBLIGATIONS SET FORTH IN ARTICLE
9 OF THIS AGREEMENT,
UNDER NO CIRCUMSTANCES WILL EITHER PARTY
BE LIABLE TO THE
OTHER UNDER ANY CONTRACT, TORT, STRICT
LIABILITY, NEGLIGENCE
OR OTHER LEGAL OR EQUITABLE THEORY, FOR
THE COST OF COVER OR FOR ANY INDIRECT, INCIDENTAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS)
IN
CONNECTION WITH
THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING, WITHOUT
LIMITATION,
THE PRODUCT OR ANY
SERVICES
PROVIDED IN CONNECTION
WITH THE PRODUCT, EVEN
IF A PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
2.7 EXCEPT AS
NECESSARY TO SATISFY A THIRD PARTY CLAIM INDEMNIFIED
UNDER ARTICLE 6 OF
THIS AGREEMENT,
AND/OR IN THE EVENT OF
A
BREACH OF ITS CONFIDENTIALITY OBLIGATIONS SET FORTH IN ARTICLE
9 OF THIS AGREEMENT, UNDER NO CIRCUMSTANCES SHALL
HOLLISTER-STIER'S TOTAL LIABILITY TO CLIENT IN CONNECTION WITH
THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE PRODUCT OR ANY SERVICES PROVIDED IN CONNECTION
WITH THE PRODUCT,
EXCEED THE TOTAL
AMOUNT PAID BY CLIENT
TO
HOLLISTER-STIER UNDER THIS AGREEMENT.
2.8 NOTHING
SET FORTH IN THIS
AGREEMENT SHALL
RESTRICT OR LIMIT
HOLLISTER-STIER'S
RIGHT TO RECOVER DIRECT DAMAGES, INCLUDING
LOST PROFITS,
FOR ANY BREACH BY
CLIENT OF ITS
OBLIGATION TO
PAY THE PRICE FOR DELIVERED PRODUCT IN ACCORDANCE WITH ARTICLE
3.
ARTICLE 3
SUPPLY AND
PROCESSING OF PRODUCT; FORECASTS, PURCHASE ORDERS AND PAYMENT
3.
The Parties
agree to the following supply and processing provisions:
3.1. Except
as set forth in the
following sentence, Client shall be solely
responsible for
obtaining and maintaining all permits, licenses, and
authorizations necessary for Hollister-Stier to process, ship and
otherwise deal
with Product.
Hollister-Stier
shall be solely
responsible
for securing and
maintaining approval of Hollister-Stier's facility as a registered
FDA facility.
3.2 Polymer:
3.2.1Client will supply, at its expense, sufficient quantities of Polymer to
Hollister-Stier's
facility prior to the
date of delivery set forth in any
purchase order to enable Hollister-Stier to meet its obligations
hereunder.
All
such Polymer
shall conform to the Specifications. Title to Polymer
shall remain at all
times with Client. Except as expressly provided
otherwise in Sections
3.2.2, 3.2.3 or 3.2.4,
risk of loss of the
Polymer
shall remain at all times with Client.
3.2.2If Polymer
is lost or damaged prior to processing as a result of
Hollister-Stier's
negligent acts or omissions, Hollister-Stier will allow
Client a purchase price credit for that number of Batches for which
Polymer
was
lost or damaged as its sole liability and Client's sole remedy. For
example, if Client has provided Hollister-Stier with sufficient
Polymer to
process three
Batches, and such Polymer is lost or damaged prior to
processing as a result of Hollister-Stier's negligent acts or omissions,
Hollister-Stier will
process three replacement Batches at no charge to
Client (except that
Client shall provide
replacement Polymer at
Client's
expense).
3.2.3If Polymer
is lost or damaged in processing as a result of
Hollister-Stier's negligent acts or omissions, Hollister-Stier will
replace
the
spoiled Batch at no
charge to the Client
(except that
Client shall
provide replacement Polymer at Client's expense) as
Hollister-Stier's
sole
liability and Client's sole remedy.
3.2.4In the event
any loss or damage of Polymer is caused by the gross
negligence or willful misconduct of Hollister-Stier, as Hollister-Stier's
sole
liability and Client's sole remedy with respect to such gross
negligence or willful misconduct Hollister-Stier, at its option, shall (i)
reimburse Client for
the documented actual
direct manufacturing
cost to
Client of the lost or damaged Polymer or (ii) allow Client a
purchase price
credit equal to the documented actual direct manufacturing cost to Client
of
the lost or damaged
Polymer, up to a maximum credit of Five Hundred
Thousand Dollars
($500,000), which
purchase price credit shall be applied
against future purchase orders of the Product.
3.3. Client
shall be responsible for release of Product for sale or
distribution.
3.4. Client shall be
responsible
for any stability testing program for the
Product required by the Act and the cGMP Regulations.
3.5. Client shall be responsible for maintaining any retention
samples of the
Product required by the Act and the cGMP Regulations.
3.6. Client
shall have the right, upon reasonable advance notice to
Hollister-Stier,
to conduct
an annual audit to observe and inspect
Hollister-Stier's
facilities and procedures for processing Product. Such annual
inspections will be
made by no more than four (4) Client representatives, who
shall execute confidentiality agreements as requested by
Hollister-Stier.
Each
annual inspection
shall last no more
than two (2) business
days. During such
inspection,
Client's
representatives
shall (a)
be accompanied by a
representative of Hollister-Stier, (b) follow such security and
facility access
procedures as are
reasonably
requested by
Hollister-Stier,
and (c) use good
faith efforts to avoid disrupting Hollister-Stier's operations.
3.7 Unless
specifically
requested
otherwise
by Client in writing,
Hollister-Stier will purchase or manufacture reasonable quantities
of components
and raw materials
(other than Polymer, which will be supplied by Client in
accordance with
Section 3.3), based on
the estimates set forth in the Forecast
(as defined below).
If the quantity of
Product set forth in any purchase order
deviates from the estimate set forth in the immediately preceding
Forecast, and
Hollister-Stier's reliance thereon causes obsolescence of any such
components or
raw materials, Client
shall reimburse
Hollister-Stier
for its out-of-pocket
costs incurred in
association
therewith (including, but not limited to, any
out-of-pocket costs
related to returning such component or raw materials to the
vendor or otherwise disposing thereof).
3.8. Forecasts, Purchase Orders, Price, Terms of Payment:
3.8.1. Forecasts: At
least 90 days in advance of Client's first purchase order
for
Product, Client shall
supply Hollister-Stier
with a written,
rolling
twelve (12) month forecast of Client's estimated requirements for Product
from
Hollister-Stier during such 12 month period (the "Forecast"). Every
90
days
thereafter, Client will update and extend the Forecast to cover the
12
months beginning
with the date of such
updated Forecast.
Each Forecast
shall include an estimated number of Batches and requested
delivery dates
for
the 12 months covered by such Forecast. Amounts set forth in a
Forecast
are
estimates, to be used
for planning purposes
only, and Forecasts shall
not
constitute purchase orders.
3.8.2. Purchase Orders: Client will provide Hollister-Stier with a
firm purchase
order at least sixty (60) days prior to the earliest delivery date
specified in such
purchase order. All purchase orders will be sent by
facsimile or electronic mail to the address specified by
Hollister-Stier.
3.8.2.1. Each purchase order and any acknowledgment thereof shall
be governed by
the
terms of this
Agreement. In the
event a Party uses forms or documents
to
place or accept
purchase orders that
contain terms and conditions that
are
in addition to or
contrary to those in this Agreement, the Parties
agree and acknowledge that such forms or documents will be used for
convenience only, and that no terms or conditions set forth
therein, except
with
respect to quantity, shall be of any force or effect. Hollister-Stier
shall be deemed to have accepted a purchase order unless it objects within
ten
business days after receiving a purchase order. If Hollister-Stier's
objection is based on
its belief that it cannot accommodate the delivery
date
requested in the purchase order then the Parties
will agree on an
alternative delivery schedule. If Hollister-Stier's objection is based on
Hollister-Stier's
inability to supply the quantity of Product set forth in
the
purchase order, Client
may cancel the purchase order without penalty,
payment or
consequence.
Once a purchase order is accepted or deemed
accepted by
Hollister-Stier,
Hollister-Stier
will be required to use
commercially
reasonable efforts to
produce the
quantity of Product set
forth in the purchase
order for delivery on the dates(s) set forth in such
purchase order.
3.8.2.2. Client
reserves the right to
cancel or postpone any
purchase order
after acceptance
by Hollister-Stier. However, should Client cancel or
postpone any purchase order within fourteen (14) calendar days
prior to the
scheduled delivery
date, Client shall pay
Hollister-Stier a
cancellation
fee
equivalent to 50% of
the purchase price for
the Product described
in
the
purchase order.
3.8.3. Price and Shipping: Client shall pay Hollister-Stier, in U.S. dollars,
the
price per quotation 576-2-9-0 attached as Exhibit A annexed hereto.
The
price excludes all taxes, duties, shipping, insurance and other expenses.
Beginning on the first
anniversary
of the Effective Date, and on each
succeeding anniversary
of the Effective Date during the term of this
Agreement, the
then current price shall be increased by the annual
percentage increase,
if any, for the most
recent twelve (12) month period
for
which figures are available in the "Producer Price Index -
Pharmaceutical
Preparations" (code
PCU2834) (the "PPI")
published by the
U.S.
Bureau of Labor
Statistics
(the "BLS") or, if the
same is no longer
published, the
successor index
published by the BLS
that is most similar
thereto. If the PPI is
discontinued and not
replaced with a corresponding
or
similar index,
then the Parties
shall, in good faith, agree upon a
replacement PPI. Price
increases shall be effective for all new
purchase
orders placed after the applicable anniversary. Product shall be delivered
FOB
Hollister-Stier's facility, Spokane, Washington, either freight
collect
or
freight prepaid, and Hollister-Stier will ship Product to the
destination, and via
the carrier,
that Client
specifies in the
purchase
order. Risk of loss
shall pass to Client
when the Product is
tendered to
the
carrier for
shipment. Shipment and insurance of Product shall be
arranged by Client and the price and liability of such shipment shall be
borne by Client.
3.8.4. Terms of Payment: Invoices shall be payable to Hollister-Stier within
thirty (30) calendar days after Client's acceptance or deemed
acceptance of
Product as set forth in Article 4. All amounts not paid when due
shall bear
interest from the due date at the rate of one and one-half
percent (1.5%)
per
month.
3.8.4.1. Invoices shall be sent to the following address:
Hemispherx BioPharma, Inc.
Attention: Accounts
Payable
1716 John F. Kennedy Boulevard
Philadelphia, PA
19103
3.8.4.2. All payments due hereunder to Hollister-Stier shall be sent by wire
transfer of funds via the Federal Reserve Wire Transfer System
to:
Wells Fargo Bank
ABA# 121000248
Beneficiary:Hollister-Stier Laboratories LLC
Account # 4131352601
Swift Code WFBIUS4S
Or by mail to:
Hollister-Stier Laboratories LLC
P.O. Box 201236
Dallas, TX
75320-1236
3.9. Right of First Refusal to Manufacture:
In the event Client makes any material modifications,
enhancements, or
impro
