EXHIBIT 10.24
THROMBIN JMI® SUPPLY AGREEMENT
This THROMBIN SUPPLY
AGREEMENT (this “ Agreement ”) is entered
into as of January 9, 2007, (the “ Effective Date
”), by and between Vascular Solutions, Inc., a Minnesota
corporation, with its offices at 6464 Sycamore Court, Minneapolis,
Minnesota 55369 (“ VSI ”) and King
Pharmaceuticals, Inc., a Tennessee corporation, with its offices at
501 Fifth Street, Bristol, Tennessee 37620 (“ King
”). King and VSI are also referred to herein individually as
a “ Party ” and collectively as the “
Parties. ”
WHEREAS , King and VSI are parties to that certain
Device Supply Agreement dated as of even date with this Agreement
(the “ Device Supply Agreement ”), under which
VSI will manufacture and supply to King and King will purchase from
VSI certain Devices (as defined herein); and
WHEREAS , King wishes to provide VSI with Product (as
defined herein) for VSI’s use in its manufacture as part of a
tolling arrangement to supply King with the Devices; and
WHEREAS , King wishes to sell and VSI wishes to purchase
Product for VSI’s own use outside of the Field (as defined
herein); and
WHEREAS , subject to the terms and conditions set forth
in this Agreement, VSI wishes to have King manufacture and supply
and King wishes to manufacture and supply the Product to
VSI.
NOW, THEREFORE
, in consideration of the foregoing,
the mutual promises and covenants of the Parties contained therein,
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as
follows:
ARTICLE I.
DEFINITIONS
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As
used herein, the following terms have the following
meanings:
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Section 1.1
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“ Act ” has the meaning set
forth in Section 5.3 .
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** The appearance of a double
asterisk denotes confidential information that has been omitted
from the exhibit and filed separately, accompanied by a
confidential treatment request, with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934.
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Section
1.2 “
Affiliate ” means, with respect to any Person, any
Persons directly or indirectly controlling, controlled by, or under
common control with, such Person. For purposes hereof, the term
“ controlled ” (including the terms
“controlling,” “controlled by” and
“under common control with”), as used with respect to
any Person, shall mean the direct or indirect ability or power to
direct or cause the direction of management policies of such Person
or otherwise direct the affairs of such Person, whether through
ownership of voting securities or otherwise.
Section
1.3 “
Agreement ” has the meaning set forth in the preamble
hereto.
Section
1.4 “
Applicable Law ” means all laws, rules, regulations,
including any rules, regulations, guidelines, guidances or other
requirements of the United States, any foreign country or any
domestic or foreign state, county, city or other political
subdivision or of any Governmental Authority that may be in effect
from time to time in the Territory applicable to this Agreement or
the activities contemplated hereunder, including the
FDCA.
Section
1.5 “
Business Day ” means a day other than Saturday, Sunday
or any day on which banks located in New York are authorized or
obligated to close. Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless Business Days
are specified.
Section
1.6 “
Certificate of Analysis ” means certificates
substantially in the form attached hereto in Exhibit B ,
evidencing the analytical tests conducted on a specific lot of
Product and setting forth, inter alia , the items tested,
specifications, and test results.
Section
1.7 “
C.F.R. ” means the United States Code of Federal
Regulations.
Section
1.8 “
cGMP ” shall mean current Good Manufacturing Practices
as promulgated under and in accordance with the FDCA, 21 C.F.R.
(Parts 210, 211, 600 and 610), as the same may be amended or
re-enacted from time to time and the ICH guidelines for Good
Manufacturing Practices for Active Pharmaceutical Ingredients
issued November 10, 2000.
Section
1.9 “
Confidential Information ” shall have the meaning set
forth in the License Agreement.
Section
1.10 “
Confirmed Firm Order ” has the meaning set forth in
Section 2.6(b) .
Section
1.11 “
Deviation ” has the meaning set forth in Section
2.2 .
Section
1.12 “
Device Supply Agreement ” has the meaning set forth in
the preamble hereto.
Section
1.13 “
Devices ” means all medical devices described in
Exhibit A-1 of the Device Supply Agreement (as amended from
time to time), developed, owned, or controlled by VSI having
application in the Field.
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Section 1.14
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“ Effective Date ” has the
meaning set forth in the preamble hereto.
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Section
1.15 “
Excess Product ” has the meaning set forth in
Section 2.7(c)(iii) .
Section
1.16 “
Exploit ” means to make, have made, import, use, sell,
offer for sale or otherwise dispose of a product or process,
including the research, development, registration, modification,
enhancement, improvement, Manufacture, storage, formulation,
optimization, export, transport, distribution, promotion or
marketing of a product or process.
Section
1.17 “
Facility ” means, as the context may require, the
facility of King located at Middleton, Wisconsin, and the
facilities of VSI located at Plymouth and Maple Grove,
Minnesota.
Section
1.18 “
FDA ” means the United States Food and Drug
Administration and any successor agency thereto.
Section
1.19 “
FDCA ” means the federal Food, Drug, and Cosmetic Act,
as amended, which is contained in Title 21 of the U.S. Code,
section 301 et seq ., as amended and the regulations
promulgated thereunder from time to time.
Section
1.20 “
Field ” means Hemostatic Devices with or without
active hemostats in all areas outside catheterization laboratories
(cardiac and peripheral), electrophysiology laboratories, and
holding and recovery rooms for all such laboratories.
Section
1.21 “
Firm Order ” means a written irrevocable firm purchase
order for Product, which order shall include a delivery schedule
specifying the requested delivery date and quantity for each
Product ordered, and the location to which shipment of the Product
is to be delivered.
Section
1.22 “
Forecasts ” means the King Device Forecast and the VSI
Device Forecast.
Section
1.23 “
Governmental Authority ” means any governmental
agency, board or commission or other governmental or regulatory
authority or other instrumentality of the United States, any state,
county, city or other political subdivision within the United
States or any other jurisdiction within the Territory (including
the FDA).
Section
1.24 “
Hemostatic Devices ” means medical devices, whether
external, implanted, absorbable or otherwise, intended to produce
hemostasis by accelerating the clotting process of
blood.
Section
1.25 “
ICH ” means the International Conference for
Harmonization.
Section
1.26 “
Indemnification Claim Notice ” has the meaning set
forth in Section 7.3(a) .
Section
1.27 “
Indemnified Party ” has the meaning set forth in
Section 7.3(a) .
Section
1.28 “
Indemnifying Party ” has the meaning set forth in
Section 7.3(a) .
Section
1.29 “
Initial Term ” has the meaning set forth in Section
6.1 .
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Section
1.30 “
King ” has the meaning set forth in the preamble
hereto.
Section
1.31 “
King Device Forecast ” has the meaning set forth in
Section 2.6(a)(i) .
Section
1.32 “
King Supplied Product ” means topical thrombin U.S.P.
(bovine origin) marketed by King under the trademark Thrombin-JMI
® as further described in Exhibit A and
supplied by King to VSI in the vial form delivered to it by King
hereunder without any additional processing by VSI or other
changing or removing from such vial form for use by VSI to
manufacture and supply Devices to King under the Device Supply
Agreement as well as for its own use outside of the
Field.
Section
1.33 “
King Indemnified Parties ” has the meaning set forth
in Section 7.2 .
Section
1.34 “
License Agreement ” means that License Agreement
between VSI, King, King’s wholly owned subsidiary, King
Pharmaceuticals Research and Development, Inc. as of even date with
this Agreement.
Section
1.35 “
Losses ” has the meaning set forth in Section
7.1.
Section
1.36 “
Manufacture ” and “ Manufacturing ”
means the manufacturing, processing, formulating, packaging,
labeling, storage, handling and quality control testing of the
Product.
Section
1.37 “
Marketing Authorization ” means an approved New Drug
Application, Pre-Market Approval Application or Pre-Market
Notification (510(k)) as defined in the FDCA and the regulations
promulgated thereunder, an approved Biologics License as defined in
the Public Health Service Act and the regulations promulgated
thereunder or any corresponding foreign application, registration
or certification, necessary or reasonably useful to market any
product in a country or regulatory jurisdiction in the Territory
other than the United States, including applicable pricing and
reimbursement approvals.
Section
1.38 “
Materials ” means all raw materials, excipients,
components, packaging and labeling materials, and all other
supplies of any kind used in connection with Manufacturing the
Product.
Section
1.39 “
Minimum Usage ” has the meaning set forth in
Section 2.7(c)(iii) .
Section
1.40 “
Other Agreements ” means the Device Supply Agreement,
the Device Quality Agreement, and the Thrombin-JMI® Quality
Agreement, each entered into between VSI and King as of even date
with this Agreement, and the License Agreement.
Section
1.41 “
Party ” and “ Parties ” have the
meanings set forth in the preamble hereto.
Section
1.42 “
Person ” means an individual, sole proprietorship,
partnership, limited partnership, limited liability partnership,
corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture or other
similar entity or organization, including a government or political
subdivision, department or agency of a government.
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Section
1.43 “
PPI ” means the Producer Price Index for the industry
group Pharmaceutical Preparation Manufacturing (series
identification number PCU325412325412).
Section
1.44 “
Product ” means the King Supplied Product and the VSI
Modified Product.
Section
1.45 “
Purchase Price ” means the purchase price for the
Product.
Section
1.46 “
Regulatory Approval ” means any and all approvals
(including pricing and reimbursement approvals), licenses,
registrations or authorizations of any Governmental Authority
necessary to Exploit the Product in the United States and the
European Union, including any (a) premarket approval or premarket
notification of a Product, including any supplements and amendments
thereto; (b) post-approval Marketing Authorizations (including any
prerequisite Manufacturing approval or authorization related
thereto); (c) labeling approval; and (d) technical, medical and
scientific licenses.
Section
1.47 “
Specifications ” means the handling, composition,
testing, production, packaging, storage and shipping procedures and
specifications for the Product as may be amended, modified or
supplemented from time to time in accordance with the terms hereof.
The initial Specifications are attached hereto as Exhibit A
.
Section
1.48 “
Standard Potency ” has the meaning set forth in
Section 2.2 .
Section
1.49 “
Territory ” means the world.
Section
1.50 “
Term ” has the meaning set forth in Section 6.1
.
Section
1.51 “
Testing Laboratory ” has the meaning set forth in
Section 4.3 .
Section
1.52 “
Thrombin-JMI® Quality Agreement ” means the
Thrombin-JMI® Quality Agreement executed by the Parties on or
about the date hereof in relation to King’s supply to VSI of
the Product hereunder, substantially in the form attached hereto as
Exhibit E .
Section
1.53 “
Un-Acceptable Product ” has the meaning set forth in
Section 4.1 .
Section
1.54 “
Variation ” has the meaning set forth in Section
2.2 .
Section
1.55 “
VSI ” has the meaning set forth in the preamble
hereto.
Section
1.56 “
VSI Device Forecast ” has the meaning set forth in
Section 2.6(a)(ii) .
Section
1.57 “
VSI Device Purchase Price ” is the purchase price for
the supply by King to VSI of Product in accordance with the VSI
Device Forecast, as such purchase price is set forth in Exhibit
C .
Section
1.58 “
VSI Indemnified Parties ” has the meaning set forth in
Section 7.1 .
Section
1.59 “
VSI Modified Product ” means topical thrombin U.S.P.
(bovine origin) marketed by King under the trademark Thrombin-JMI
® as further described in Exhibit A and
supplied by King to VSI in a vial form that VSI subjects to further
processing or otherwise changes or removes from such vial form for
use by VSI to manufacture and supply Devices to King under the
Device Supply Agreement as well as for its own use outside of the
Field.
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ARTICLE II.
MANUFACTURING
Section 2.1
Supply Obligations
. Subject to the terms and
conditions hereof, King shall Manufacture and supply the Product on
a non-exclusive basis to VSI and VSI shall obtain from King such
quantities of Product as VSI may order during the Term. King shall
Manufacture all Product delivered hereunder in accordance with the
Specifications, this Agreement, and the Thrombin-JMI® Quality
Agreement and in compliance with Applicable Law. King shall supply
to VSI and VSI shall obtain the Product from King pursuant to Firm
Orders or Confirmed Firm Orders submitted by VSI to King in
accordance with Section 2.6(b) at a price determined in
accordance with Section 2.3 . King shall supply VSI up to **
of the VSI Forecasts for the appli cable period and shall exercise
commercially reasonable efforts to supply VSI with Product in
excess of ** of any Forecast.
Section 2.2
Standard Potency, Variation,
Deviation, and Reconciliation . King shall supply VSI with such quantity of
Product as VSI shall require. The Parties acknowledge that the
Product will be supplied in vials that are labeled to show that the
vials contain 10,000 units and 5,000 units of Product. There are
fluctuations in the actual volume of Product from lot to lot, and,
for purposes of this Agreement, the Parties agree to measure,
tally, and reconcile the fluctuations in accordance with the
provisions of this Section 2.2 . The average potency for
each vial labeled 10,000 units is actually ** units and the average
potency for each vial labeled 5,000 units is ** units (“
Standard Potency ”). The Parties agree that the
Standard Potency varies by an acceptable ±** (plus or minus
**) from lot to lot (“ Variation ”). Any
fluctuation beyond the Variation is a deviation (“
Deviation ”). To determine the Deviation, the Parties
agree to use King’s standard method of measuring the
Product’s potency, which is to determine, from a
representative sample vial from the lot, the average potency of
that lot. The average potency for that lot will be stated in
King’s Certificate of Analysis in total units. Those units
will then be tallied and reconciled on a bi-annual basis in
accordance with the provisions of this Section 2.2 .
King’s Certificate of Analysis will, absent manifest error,
be conclusive to determine any Variation and Deviation for any
related Product. In no case will Product be included for purposes
of calculating a Deviation under this Section 2.2 when VSI
uses such Product in the intact, unopened vial form in which it is
delivered by King to VSI, by placing such intact, unopened vial,
into a kit that is marketed by either King or VSI. If a Deviation
is negative, King shall be responsible for the Deviation by
supplying VSI with, at VSI’s election, and as applicable for
the Product in question (i) Product sufficient to correct the
Deviation, in the case of Product supplied under a King Device
Forecast, or (ii) a credit for the Deviation, in the case of
Product supplied under a VSI Device Forecast, or (iii) a refund of
any Purchase Price overpaid that is equal to the value of the
Deviation, in the case of Product supplied under a VSI Device
Forecast. If the Deviation is positive and relates to Product
supplied under a King Device Forecast, VSI shall use the Deviation
exclusively for its manufacture and supply to King of Devices under
the Device Supply Agreement. If the Deviation is positive and
relates to Product supplied under a VSI Device Forecast, VSI shall
pay King the VSI Device Purchase Price for the amount of such
Deviation.
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Section 2.3
Purchase Price
. King will provide Product to VSI
in accordance with VSI Device Forecasts at the price set forth in
Exhibit C (the “ Purchase Price ”). The
Purchase Price shall be fixed for the Term, and subject only to the
adjustments applied in accordance with Section 2.2 ,
Section 2.8(b) , Section 6.4(c) , or for annual
inflation, and in the case of an annual inflation adjustment, such
adjustment shall not exceed a maximum annual increase of three
percent (3%), based on the change in the PPI for the preceding
year. Product supplied to VSI in accordance with King Device
Forecasts shall be supplied to VSI free of charge.
Section 2.4
Invoicing, Payment,
Currency . King shall
promptly invoice VSI for all quantities of Product delivered in
accordance with any VSI Device Forecasts as well as with respect to
any other payment hereunder. King shall issue no invoices for
Products delivered in accordance with any King Device Forecasts.
Payment with respect to such Product delivered shall be due thirty
(30) days after receipt by VSI of the invoice with respect thereto;
provided that if VSI rejects such Product pursuant to
Section 4.1 , then payment shall be due within thirty (30)
days after receipt by King of notice from the Testing Laboratory
that the invoiced Product is conforming or, subject to Section
4.4 , receipt by King of replacement Product, as the case may
be. All other payments shall be made thirty (30) days after receipt
of an invoice for the same. In all cases, if VSI disputes any
portion of an invoice, it shall pay the undisputed portion and
shall provide King with written notice of the disputed portion and
its reasons therefore, and VSI shall not be obligated to pay such
disputed portion. The Parties shall use good faith efforts to
resolve any such disputes promptly. In the event of any
inconsistency between an invoice and this Agreement, the terms of
this Agreement shall control. Payment of invoices shall be made in
United States Dollars by wire transfer to an account designated in
writing by King.
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Section 2.5
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Costs and Expenses.
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(a)
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King shall be solely responsible
for all costs and expenses incurred in connection with:
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(i)
the Manufacture of Product for VSI
(in vial form as delivered to VSI before further processing by VSI)
in accordance with the Specifications, including without
limitation, subject to Section 2.5(b) , all costs and
expenses of personnel, quality control testing, Manufacturing
facilities and equipment, Materials, government sales, use excise,
property or similar taxes or excises; and
(ii)
the delivery, transport and export
of Product pursuant to a King Device Forecast.
(i) be solely responsible for all costs and
expenses incurred in connection with: (x) the delivery, transport
and export of Product pursuant to a VSI Device Forecast; (y)
VSI’s purchase of the Product for its further processing; and
(z) VSI’s commercialization of its other devices and/or
products incorporating the VSI Modified Product outside of the
Field, including rebates, chargebacks, discounts, actual freight,
freight insurance cost, government sales, use, excise, property,
import, export or similar taxes or excises (except tax on income to
King); and
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(ii) reimburse King for the direct costs of the
Materials paid for by King in reasonable reliance upon Forecasts
(up to a maximum inventory of three (3) months based on average
annual usage) submitted by VSI hereunder which become obsolete and
which cannot be returned for a refund or otherwise used by King
upon any change required by VSI in the packaging of the Product. At
VSI’s option, VSI will pay for the return or destruction of
the obsolete Materials; and
(iii) reimburse King for the direct costs and expenses
that King incurs for Product packaging modifications in connection
with any Product that VSI, in its sole discretion, has required, in
which case King shall prepare and submit to VSI a good faith
estimate of a budget of costs and expenses for the same and VSI
shall reimburse King for all such VSI-approved costs and
expenses.
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Section 2.6
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Forecasts, Firm Orders, Batch
Sizes .
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(a)
Forecasts.
Within thirty (30) days after VSI
has received an initial forecast from King under the Device Supply
Agreement, VSI shall submit to King a non-binding good faith,
initial forecast of the quantities and delivery dates for Product
that VSI estimates it will require on a monthly basis during the
following twelve (12) month period, and thereafter on the first
Business Day of each calendar month during the Term, provided
that King has timely provided its forecasts for Devices under
the Device Supply Agreement, VSI shall deliver to King the
following “ Forecasts ,” which shall be made in
good faith given market and other information available to
VSI:
(i)
a twelve (12)-month rolling forecast
by month, estimating the quantities of Product (“ King
Device Forecast ”) that VSI expects to use on a monthly
basis for its use to supply King with Devices under the Device
Supply Agreement; and
(ii) a twelve (12)-month rolling forecast by month,
estimating the quantities of Product (“ VSI Device
Forecast ”) that VSI expects to use on a monthly basis
for its own use outside of the Field.
(b)
Firm Orders
. VSI shall order Product pursuant
to a King Device Forecast by use of Firm Orders and shall purchase
Product pursuant to a VSI Device Forecast solely by use of Firm
Orders. No terms or conditions contained in any Firm Order,
acknowledgment, invoice, bill of lading, acceptance, or other
writing or document issued by either Party shall be effective to
the extent such terms or conditions are inconsistent with or modify
the terms and conditions contained in this Agreement. VSI shall
submit each such Firm Order to King at least one hundred twenty
(120) days in advance of the delivery date specified in each Firm
Order. If VSI requests changes to any Firm Order after receipt
thereof by King, King shall use commercially reasonable efforts to
comply with such changes. King shall indicate its acceptance of
each of VSI’s Firm Orders within five (5) Business Days of
its receipt of a Firm Order, which acceptance shall confirm the
quantity ordered and delivery date set forth in such Firm Order.
Each request by VSI for changes to any Firm Order after receipt
thereof by King shall be confirmed by King by facsimile or email
showing the revised quantity and delivery date of Product within
five (5) Business Days after King’s receipt of such change
request (the “ Confirmed Firm Order ”). King
shall promptly notify VSI in writing if at any time King has reason
to believe that King will not be able to fill a Firm Order or
Confirmed Firm Order for any Product in all material respects in
accordance with the delivery schedule specified therein by VSI and
pursuant to the terms and conditions of this Agreement.
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(c)
Batch Sizes
. All quantities of Product ordered
by VSI shall be consistent with King’s current minimum batch
sizes for the Product as set forth in Exhibit A , or
multiples thereof. King shall give VSI not less than six (6) months
notice prior to changing its minimum batch sizes.
Section 2.7
Shipment and Delivery; Title and
Risk of Loss; Handling of Product Supplied under King Device
Forecasts .
(a)
Terms. King shall use commercially reasonable efforts
to deliver the quantities of Product set forth in each Firm Order
or Confirmed Firm Order FCA (Incoterms 2000), VSI’s Facility
by the delivery date set forth in the applicable Firm Order or
Confirmed Firm Order. All Product shall be packaged for shipment in
accordance with the Specifications and in accordance with
King’s customary practices therefore, including obtaining at
VSI’s cost all export authorizations as may be required,
unless otherwise specified in writing by VSI thirty (30) days prior
to such shipment, in which event any extra costs incurred by King
on account of the packaging changes requested by VSI shall be
promptly reimbursed by VSI. Each delivery of Product shall be
accompanied by a Certificate of Analysis and such other documents
as may be required pursuant to the Thrombin-JMI® Quality
Agreement. King will warehouse the Product and will make prompt
arrangements for shipment of the Product once the Product is
quality released by King and ready for shipment.
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(b)
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Title and Risk of
Loss.
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(i)
Product Supplied under King Device
Forecasts. Notwithstanding the FCA delivery term of Section
2.7(a) , title and risk of loss to Product supplied under King
Device Forecasts shall remain with King upon delivery to
VSI’s Facility and shall remain with King throughout
VSI’s use of such Product to manufacture and supply Devices
to King. VSI shall provide King with a receipt of delivery of such
Product with respect to each such shipment.
(ii)
Product Supplied under VSI Device
Forecasts. Title and risk of loss to Product supplied under VSI
Device Forecasts shall pass to VSI upon delivery to VSI’s
Facility. VSI shall provide King with a receipt of delivery of such
Product with respect to each such shipment.
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(c)
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Product Supplied under King
Device Forecasts .
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(i)
VSI shall be and remain responsible
for the proper care and handling of all quantities of Product
supplied under King Device Forecasts and shall account to King for
the handling and disposition of all such quantities in accordance
with the provisions of this Section 2.7(c) . Without
limiting the preceding sentence, VSI shall hold all such Product
separate from other Materials owned or acquired by VSI and other
third parties and shall insure and identify such Product as the
property of King. VSI shall store, handle, and protect such Product
with the same level of care that it stores, handles, and protects
Product supplied to it under the VSI Device Forecast and in no
event at less than a reasonable level of care, which shall include
taking all reasonable precautions to ensure that all such Product
is not subject to contamination, deterioration, destruction, or
theft.
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(ii)
VSI shall keep adequate records of
its usage of all Product supplied under a King Device Forecast
during the Term. By the fifth (5 th ) business day of
each month, VSI shall provide King with a rolling three (3) month
report of VSI’s use of such Product, which report will show
the beginning balances by batch, usage by batch, and ending
balances by batch of all such Product in VSI’s inventory. VSI
shall promptly report to King any and all incidents or occurrences
pursuant to which any shipment of such Product is not used for
VSI’s manufacture into Devices, including spillage,
accidents, waste, spoilage, or other disposition.
(iii)
No less than ** of all Product
supplied to VSI under a King Device Forecast pursuant to this
Section 2.7 shall be used in VSI’s manufacture of
Devices (the “ Minimum Usage ”), as determined
by averaging the use of such Product on a quarterly basis; provided
that, in the event that the Minimum Usage is not met, King will
supply VSI with additional Product, subject to the terms and
conditions of this Section 2.7(c)(iii) . With respect to
excess Product as a result of VSI’s failure to meet the
Minimum Usage (“ Excess Product ”), King shall
be entitled to charge VSI and VSI shall pay King the VSI Device
Purchase Price for such Excess Product.
(iv)
King and its designated
representatives shall have the right, upon reasonable notice, to
visit VSI’s Facility for the purpose of conducting an
inventory of the amount of Products that are King property held at
VSI in accordance with the provisions of this Section 2.7(c)
.
(d)
Release . Prior to shipment of any Product, King shall
perform release testing pursuant to the Specifications and as
customarily conducted by King. With each shipment of Product, King
shall provide to VSI a Certificate of Analysis and such other
documents as may be required pursuant to the Thrombin-JMI®
Quality Agreement.
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Section 2.8
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Failure or Inability to Supply
Product .
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(a)
Notification
. In the event that King, at any
time during the Term, shall have reason to believe that it will be
unable to supply VSI with the full quantity of Product forecasted
to be ordered or actually ordered by VSI in a timely manner and in
conformity with the warranty set forth in Section 5.2
(whether as a result of events described in Section 2.8(b)
Section 2.8(c) , Section 8.14 , or otherwise), King
promptly shall notify VSI thereof. Promptly thereafter, the Parties
shall meet to discuss how VSI shall obtain such full quantity of
conforming Product. Compliance by King with this Section
2.8(a) shall not relieve King of any other obligation or
liability under this Agreement.
(i)
King Device Forecasts. If King fails
to deliver the full quantity of Product under a King Device
Forecast as specified in a Firm Order or Confirmed Firm Order, as
the case may be, by the required delivery date specified therein
and in conformity with the warranty set forth in Section 5.2
, and as a result of such failure, VSI is unable to timely
manufacture and supply Devices to King, then VSI shall be entitled
to delay its delivery of Devices to King to the extent that its
delay is attributable solely to such King failure.
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(ii)
VSI Device Forecasts. If King fails
to deliver the full quantity of Product under a VSI Device Forecast
as specified in a Firm Order or Confirmed Firm Order, as the case
may be, by the required delivery date specified therein and in
conformity with the warranty set forth in Section 5.2 , VSI
at its option, may: (i) cancel all or any portion of such Firm
Order or Confirmed Firm Order, as the case may be, in which event
VSI shall have no liability with respect to the portion of such
order so cancelled; and/or (ii) accept late delivery of all or any
portion of the Product specified in such Firm Order or Confirmed
Firm Order, in which event the VSI Device Purchase Price otherwise
payable by VSI with respect to such delayed Product shall be
reduced by **.
(c)
Allocation of Capacity
. If King is unable to meet Firm
Orders or Confirmed Firm Orders, as the case may be, as the result
of a shortage of production capacity at King’s Facility, King
shall promptly notify VSI in writing of the facts, circumstances
and reasons for such shortage of production capacity and King shall
allocate its available production capacity to the production of the
Product in such proportion (expressed as a function of equipment
utilized) as the production equipment capacity actually utilized to
meet orders for the Product over the previous twelve (12) month
period bears to total production equipment capacity in such King
Facility over that same period.
Section 2.9
Subcontracting of Manufacture and
Supply . During the Term,
King may subcontract its obligations to manufacture and supply
Product under this Agreement to a third-party, without the prior
written approval of VSI. The terms of any subcontract will be in
writing, and will be consistent with this Agreement. No
subcontracting will release King from its responsibility for its
obligations under this Agreement. King will be responsible for the
work and activities of each of King’s subcontractors,
including compliance with the terms of this Agreement.
Section 2.10
Material Safety
. King shall provide to VSI in
written form all public information regarding the handling,
precautions, toxicity and hazards associated with the
Product.
Section 2.11
Taxes . Each of the Parties agrees that, for the
purposes of Internal Revenue Code Section 199, because King retains
title and risk of loss to Product delivered pursuant to a King
Device Forecast, that King will be treated as being the
manufacturer of the Devices and VSI agrees not to take a position
inconsistent with this provision on VSI’s federal or state
income tax returns.
Section 2.12
Product Supplied Before Effective
Date . On or before the
Effective Date, King supplied Product to VSI under VSI purchase
orders and the Parties agree that VSI shall use such Product
exclusively for its own use and not for use in manufacturing
Devices for King. All VSI purchase orders outstanding but unfilled
on the Effective Date will be considered terminated by this
Agreement and replaced by Firm Orders placed under this
Agreement.
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ARTICLE III. QUALITY AND
REGULATORY MATTERS
Section 3.1
Permits . Except as otherwise set forth in this
Agreement, each Party shall, at such Party’s sole cost and
expense, maintain in full force and effect all necessary licenses,
approvals, permits, and other authorizations required by Applicable
Law to carry out such Party’s duties and obligations under
this Agreement.
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Section 3.2
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Testing and Quality Assurance
.
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(a)
King shall duly and punctually
perform all of its obligations under and pursuant to the
Thrombin-JMI® Quality Agreement. In connection therewith, King
shall perform, or cause to be performed the tests required to be
performed by King pursuant to the Thrombin-JMI® Quality
Agreement on each lot of Product Manufactured pursuant to this
Agreement before delivery to VSI, including, without limitation,
release testing pursuant to the Specifications and as customarily
conducted by King prior to shipment of Product.
(b)
King will perform stability testing
on the Product consistent with all Regulatory Approvals and will
report any stability test failure of the Product to VSI within
forty-eight (48) hours of confirming the results. In the event that
King determines that the cause of the stability failure has
affected a lot of Product that has been delivered to VSI, King will
perform the appropriate testing of retained samples within five (5)
days and will report the results of such tests to VSI within
forty-eight (48) hours of the completion of such
testing.
Section 3.3
Recalls; Product Technical
Complaints, Returns, Government Reporting .
(a)
Product Complaints,
Returns . VSI shall have
the sole authority and responsibility to respond to any
Governmental Authority, respond to all inquiries, complaints and
adverse events relating to VSI Modified Product and, subject to
Section 3.3(e) and Section 3.3(f) , to handle all
recalls and market withdrawals of VSI Modified Product in
accordance with Applicable Laws, at VSI’s cost and expense,
provided that in all cases, unless otherwise required to
comply with any Applicable Laws or any decision, order, request or
directive of a Governmental Authority, VSI shall release no
communication into the marketplace regarding such complaints,
medical complaints, recalls or market withdrawals without first
obtaining King’s consent to such communication, which shall
not be unreasonably withheld. VSI will be responsible for complying
with all federal, state, and local governmental reporting
requirements regarding adverse drug events and quality matters,
provided that , in each case, the Product is a VSI Modified
Product. VSI shall be responsible in accordance with the provisions
of the Device Supply Agreement and King shall assist VSI as VSI
shall require, but King shall have no responsibility to respond to
or be liable for such inquiries, complaints, or adverse events.
King shall have no responsibility for returns of VSI Modified
Product, which shall be the sole responsibility of VSI. For King
Supplied Product, King shall have the sole authority and
responsibility to respond to any Governmental Authority, to all
inquiries, complaints, and adverse events in relation to the
Product.
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(b)
Testing . If, as a result of a reported complaint or
adverse drug event, testing of the Product is required, VSI will,
at VSI’s cost and expense, perform the required testing in
accordance with Specifications for such Product if the Product in
question is a VSI Modified Product and King will, at King’s
cost and expense, perform the required testing in accordance with
Specifications for such Product if the Product in question is a
King Supplied Product. VSI shall be responsible for making the
applicable report to the FDA or any other Governmental Authority
provided that the reported complaint or adverse drug event
is related to VSI Modified Product and King shall be responsible
for making the applicable report to the FDA or any other
Governmental Authority provided that the reported complaint
or adverse drug event is related to King Supplied
Product.
(c) Disputes. If the Parties disagree as to which Party is
responsible, King and VSI representatives shall attempt to resolve
such dispute. If the representatives cannot resolve such dispute,
the samples of the relevant Product shall be jointly submitted by
King and VSI to a Testing Laboratory and the test results obtained
by such laboratory shall be final and controlling. The fees and
expenses of the Testing Laboratory testing shall be borne entirely
by the Party whose analysis was in error.
(d) Recalls . Each Party shall promptly (but in any case,
not later than forty-eight (48) hours) notify the other Party in
writing of any decision, order, request or directive of a
Governmental Authority to recall, withdraw or field correct the
King Supplied Product or the VSI Modified Product, as the case may
be. King shall promptly (but in any case, not later than
forty-eight (48) hours) notify VSI of any voluntary decision to
recall, withdraw or field correct King Supplied Product and King
shall be solely responsible for determining whether to issue a
recall, withdrawal, or field correction for King Supplied Product
(but shall comply with all Applicable Laws in making such
determination) and for the cost and expense of any such recall,
withdrawal or field correction; provided, that each such
responsible Party shall give due consideration to all comments
timely made by the other Party relating to testing of the relevant
Product and shall notify the other Party in writing if the
responsible Party declines to address any such comments, stating
the reason therefor. If any recall, market withdrawal or field
correction is not due to King’s Manufacture of the Product,
then King shall be relieved of King’s obligations to supply
the Product until the cause of such recall, withdrawal or field
correction has been resolved to the satisfaction of the Parties and
the applicable Governmental Authority.
(e) Costs of Recall . In the event that King is required to recall,
withdraw, or undertake a field correction of any King Supplied
Product in accordance with the provisions of this Section
3.3(e) , in such event, King shall bear the actual cost of
conducting such action or withdrawal, including costs imposed by
the applicable Governmental Authority(ies) such as costs for
detention and inspection, in accordance with the recall guidelines
of the applicable Governmental Authority(ies) or standard U.S.
medical device industry practices; and, at the sole election of
VSI, King shall either:
(i)
in the case of Product supplied
under a King Device Forecast or a VSI Device Forecast, supply
Product, without charge to VSI, in an amount sufficient to replace
the amount of the Product recalled, withdrawn, or subjected to
field correction; or
(ii)
in the case of Product supplied
under a VSI Device Forecast, refund to VSI, or give credit to VSI
against outstanding receivables due from VSI against the VSI Device
Purchase Price for shipments of the Product to be delivered to VSI
in the future, in amounts equal to the VSI Device Purchase Price
paid by VSI to King for Product so recalled, withdrawn, or
subjected to field correction, plus the reasonable transportation
costs incurred by VSI and not recovered by VSI in respect of such
Product recalled, withdrawn, or subjected to field
correction.
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(f)
Government Inquiries
. If either Party shall be
contacted by any Governmental Authority for any regulatory purpose
pertaining specifically to this Agreement or to the Product, such
Party shall immediately notify the other Party. Either Party may
permit unannounced inspections of the Product or its Facility by a
Governmental Authority with competent jurisdiction and may respond
to the extent necessary to comply with such Party’s
obligations under Applicable Law.
(g)
Medical Inquiries
. King shall handle all medical
inquiries concerning the Product in the Territory. King shall
notify VSI of any medical information requests or medical inquiries
involving any VSI Modified Product.
Section 3.4
Letter of Reference
. At King’s expense, King
shall provide VSI with reasonable assistance to support its filings
and submissions with Governmental Authorities with respect to the
Devices, and to this end, upon VSI’s written request, King
shall promptly provide a letter of authorization to the relevant
Governmental Authority allowing such Governmental Authority to
review King’s biologics license application relating to the
Product and to reference that application and the data therein in
its consideration and evaluation of VSI’s filings and
submissions, which letter shall be substantially in the form
attached hereto as Exhibit D . Accompanying such request to
King, VSI shall also provide King with a copy of any proposed
filing or submission with any Governmental Authority with respect
to the Devices that include any information relating to King,
including information from King’s quality assurance standard
operating procedures. VSI must receive King’s consent (which
King may withhold in its discretion) with respect to such filing or
submission before VSI may file or submit the same with such
Governmental Authority. All of King’s proprietary information
with respect to the Product shall be subject to reasonable
protection and VSI shall comply with King’s rules and
procedures with respect thereto. Notwithstanding any of the
foregoing, nothing in this Agreement shall require King to provide
VSI with any information pertaining to King’s batch records
for the Product or with any information pertaining to the
proprietary processes utilized in manufacturing the Product, all
such information being deemed King’s trade
secrets.
Section 3.5
Audit by VSI
. VSI and its designated
representatives shall have the right, upon reasonable notice, to
audit records of King for the purpose of determining King’s
compliance with the obligations set forth in Section 5.2 ,
the terms of this Agreement, and any Firm Order or Confirmed Firm
Order. This right to audit shall be subject always to the
provisions of Section 3.4 concerning King’s trade
secrets and their protection. This right to audit shall extend
throughout the Term of this Agreement and for one (1) year after
expiration or termination of this Agreement.
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Section 3.6
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Maintenance of Facility .
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(a)
King shall maintain the Facility
where it Manufactures the Product, Materials and such related
equipment in a state of repair and operating efficiency consistent
with the requirements of the Specifications, the Regulatory
Approvals, cGMP and all other Applicable Laws.
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(b)
King may Manufacture Product at an
alternate facility in King’s sole discretion and subject to
approval of the applicable Regulatory Authorities, provided
that King shall bear all costs of transferring the Manufacture
of Product to such alternate facility.
Section 3.7
Additional Information
. Subject always to the provisions
of Section 3.4 concerning King’s trade secrets and
their protection, each Party shall provide to the other in a timely
manner, but in no event less than sixty (60) days prior to the due
date of such Party’s annual report to the FDA or any other
Governmental Authority with respect to the Product, all information
in written form that such Party requests regarding the Product in
order to comply with Applicable Laws.
Section 3.8
Manufacturing Records
. King shall maintain, or cause to
be maintained, (i) all records necessary to comply with cGMP and
all other Applicable Law relating to the Manufacture of Product,
and (ii) all manufacturing records, standard operating procedures,
validation records, equipment log books, batch records, laboratory
notebooks and all raw data relating to the manufacturing of Product
and all records relating to the shipment of the Product. All such
material shall be retained for such period as may be required by
cGMP and all other Applicable Law.
ARTICLE IV.
INSPECTION OF
PRODUCT
Section 4.1
Inspection by VSI
. Within thirty (30) days after
delivery of Product to the destination specified by VSI, VSI shall
visually inspect such Product in accordance with its customary
procedures. VSI shall advise King in writing if it is rejecting a
shipment due to obvious physical damage, obvious packaging defect
or quantity discrepancies that are evident upon such visual
inspection of the packaged Product as shipped by King. VSI shall
have no obligation to inspect the Product beyond the visual
inspection provided for in this Section 4.1 . If a visual
inspection reveals evidence of defects in the Product, or VSI or
its designee determines that the Product does not conform to the
Specifications (“ Un-Acceptable Product ”), VSI
shall notify King in writing within the thirty (30)-day period
after such inspection to identify the Product or portion thereof
which VSI will return because such Product is Un-Acceptable
Product. VSI’s failure to deliver such notice to King shall
not relieve King of its obligation to supply Product in compliance
with this Agreement.
Section 4.2
Investigation by King
. King shall undertake reasonably
appropriate investigation regarding all alleged Un-Acceptable
Product and shall notify VSI whether it has confirmed such alleged
non-conformity within thirty (30) days after receipt of such notice
from VSI.
Section 4.3
Disputes over Product
. If King, after good faith
consultation with VSI, disputes any finding by VSI that the Product
is Un-Acceptable Product, then representative samples of such
Product shall be forwarded for analysis to an independent testing
laboratory or other appropriate expert mutually acceptable to the
parties (the “ Testing Laboratory ”)
for
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evaluation, which analysis shall be
performed in compliance with applicable FDA regulations and with
reference to the Specifications. The parties shall cooperate with
the Testing Laboratory’s reasonable requests for assistance
in connection with its evaluation hereunder. The findings of the
Testing Laboratory regarding whether the Product was Un-Acceptable
Product, absent manifest error, shall be binding upon the parties.
The expenses of the Testing Laboratory shall be borne by King if
the testing confirms the nonconformity and otherwise by
VSI.
Section 4.4
Replacement of Product that is
Un-Acceptable Product .
If the Testing Laboratory or King confirms that any Product is
Un-Acceptable Product, King promptly shall, at King’s cost
and expense, including shipping costs and at VSI’s option:
(i) with respect to Product supplied to VSI under a King Device
Forecast or a VSI Device Forecast, supply VSI with a conforming
quantity of Product at King’s expense (if there is a limited
supply of Product available to replace Un-Acceptable Product, then
King shall ship to VSI such quantities of conforming Product as are
available and, for Product supplied under a VSI Device Forecast,
shall promptly reimburse VSI for amounts paid for the remaining
quantity of such Un-Acceptable Product) or (ii) with respect to
Product supplied to VSI under a VSI Device Forecast, reimburse VSI
the VSI Device Purchase Price paid by VSI with respect to such
Un-Acceptable Product, if already paid. In addition, King promptly
shall reimburse VSI for all reasonable costs incurred by VSI with
respect to such Un-Acceptable Product, including costs of recalls,
market withdrawals, returns and destruction, which costs VSI shall
have the right to offset against any payments owed by VSI to King
under this Agreement. King may only rework Un-Acceptable Product if
there is a validated and FDA-approved process to rework the
shipment or lot and VSI agrees in advance to the reworking of
Un-Acceptable Product. King shall instruct VSI as to the
disposition of any Product ordered or portion thereof determined to
be Un-Acceptable Product. At the sole option of King, said
Un-Acceptable Product may be returned to King, at King’s
expense, including shipping costs, or destroyed in an
environmentally acceptable manner, in accordance with Applicable
Laws, at King’s expense.
ARTICLE V. REPRESENTATIONS AND
WARRANTIES
Section 5.1
Mutual Representations and
Warranties . Each Party
hereby represents and warrants to the other Party, as of the
Effective Date, as follows:
(a)
such Party (i) is duly formed and in
good standing under the laws of the jurisdiction of its formation,
(ii) has the power and authority and the legal right to enter into
this Agreement and perform its obligations herein, and (iii) has
taken all necessary action on its part required to authorize the
execution and delivery of this Agreement and the performance of its
obligations herein;
(b)
upon execution, this Agreement will
have been duly executed and delivered on behalf of such Party and
constitutes a legal, valid and binding obligation of such Party and
is enforceable against it in accordance with its terms, subject to
the effects of bankruptcy, insolvency or other similar laws of
general application affecting the enforcement of creditor rights,
and judicial principles affecting the availability of specific
performance and general principles of equity, whether
enforceability is considered a proceeding at law or
equity;
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(c)
all necessary consents, approvals
and authorizations of all regulatory and governmental authorities
and other Persons required to be obtained by such Party in
connection with the execution and delivery of this Agreement and
the performance of its obligations herein have been obtained,
including, without limitation, any and all Regulatory Approvals for
the Facility; and
(d)
the execution and delivery of this
Agreement and the performance of such Party’s obligations
herein (i) do not and will not conflict with or violate any
requirement of Applicable Law or any provision of the articles of
incorporation, bylaws or limited partnership agreement of such
Party and (ii) do not and will not conflict with, violate, or
breach, or constitute a default or require any consent under, any
contractual obligation or court or administrative order by which
such Party is bound.
Section 5.2
Additional Representations,
Warranties and Covenants of King . King warrants, represents and covenants as of
the Effective Date and, unless otherwise set forth below, at all
times during the Term, that:
(a)
each of the representations,
warranties and covenants made by King in each of the Other
Agreements are true and correct as of the date they are
made;
(b)
it has facilities, personnel,
experience and expertise sufficient in quality and quantity to
perform its obligations hereunder, (ii) it shall so perform with
reasonable due care and in conformity with current generally
accepted standards and procedures and (iii) its management shall
establish appropriate quality assurance, quality controls and
review procedures;
(c)
as of the Effective Date, it has
access to sufficient supplies of Materials, components and other
required resources to perform the services required under this
Agreement, and shall exercise commercially reasonable efforts to
maintain access to sufficient supplies without interruption during
the Term;
(d)
it has complied at the Effective
Date, and shall comply during the Term, at its sole cost and
expense, with (i) all Applicable Laws now in force or which may
hereafter be in force, pertaining to the Products under this
Agreement including those that concern: (A) equal employment
and non-discrimination, (B) the FDA governing the promotion of
drugs, (C) federal and state anti-kickback and (D) submission of
false claims to governmental or private health care payors, and any
laws, orders, regulations, rules or ordinances issued in addition
to, as a supplement to or as a replacement of the foregoing, and
(ii) applicable industry and professional standards including,
without limitation, the PhRMA Code on Interactions with Healthcare
Professionals;
(e)
the Manufacture and sale of the
Product (in the vial form at the time of delivery of Product to
VSI) by King pursuant to this Agreement will not infringe upon any
patent or other proprietary rights of any third-party;
(f)
pursuant to the Generic Drug
Enforcement Act of 1992, 21 U.S.C. § 335a, as may be amended
or supplemented (the “ Act ”):
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(i)
neither it, nor any of its
Affiliates is currently debarred by the FDA under the Act. (The
FDA’s debarment list appears at
http://www.fda.gov/ora/compli
