Exhibit 10.10

 

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(c) and Rule 24b-2

 

 

 

 

 

 

 

COMMERCIAL API SUPPLY AGREEMENT

BETWEEN

F.I.S. - FABBRICA ITALIANA SINTETICI S.p.A.

AND

NEUROCRINE BIOSCIENCES Inc.,

DATED AS OF

March 9, 2017

 

 

 

 

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EXHIBITS AND SCHEDULES TO AGREEMENT

 

1.1Initial Validation Stability Studies

1.2Commercial Stability Studies

2.1Initial Non-Binding Forecast

2.2Batch Sizes

3.1

API Prices

4.1Minimum Expiration Dating

5.1Quality Agreement

 

 

 

 

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COMMERCIAL SUPPLY AGREEMENT

 

THIS COMMERCIAL SUPPLY AGREEMENT (the “Agreement”) is made and entered into as
of the 9th day of March, 2017 (the “Effective Date”) by and between F.I.S. -
FABBRICA ITALIANA SINTETICI S.p.A., a corporation organized under the laws of
the Republic of Italy, with offices at Viale Milano 26, 36075 Montecchio
Maggiore (VI), Italy (hereinafter “FIS”) and NEUROCRINE BIOSCIENCES Inc., a
corporation organized under the laws of Delaware, with offices at 12780 El
Camino Real, San Diego, California, 92130, USA (“Neurocrine”), on behalf of
itself and its wholly-owned subsidiary, Neurocrine Therapeutics, Ltd., a
corporation organized under the laws of the Republic of Ireland, (“Subsidiary”,
and together with Neurocrine, "Purchaser").

FIS and Purchaser are sometimes referred to herein individually as a “Party” and
collectively as “Parties.”

RECITALS

WHEREAS, FIS is a pharmaceutical company engaged in the development, manufacture
and sale of pharmaceutical active ingredients;

WHEREAS, Purchaser is a company that is engaged in the development, distribution
and sale of certain pharmaceutical products;

WHEREAS, FIS and Purchaser entered into a Master Services Agreement dated July
18, 2014 for Services including process scale up and manufacture of fine
chemicals.

WHEREAS, FIS and Purchaser also entered into a Validation Agreement dated
September 22, 2015 (the “Validation Agreement”) for validation and stability
services for the API, which will automatically terminate as of the Effective
Date with remaining services, specification, and payment schedules incorporated
by reference into Exhibit 1.1.

WHEREAS, FIS is now willing to supply the API and, in general, the Services to
Purchaser upon the terms and conditions set forth herein. This agreement now
supersedes all previous Agreements entered into by the Parties for supply of API
and the Services.

NOW, THEREFORE, in consideration of the foregoing recitals, mutual covenants,
agreements, representations and warranties contained herein, the Parties hereby
agree as follows:

Article I
Definitions

“API” shall mean the active pharmaceutical ingredient, valbenazine tosylate
(NBI-98854).

“API Price” shall have the meaning provided in Section 3.1 of this Agreement.

“Adverse Event” shall mean any adverse event associated with the use of the
Finished Product in humans, whether or not considered drug-related, including
(i) an adverse event

1

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occurring in the course of the use of the Products in professional practice;
(ii) an adverse event occurring from an overdose, whether accidental or
intentional, related to the Products; (iii) an adverse event occurring from drug
abuse related to the Products; (iv) an adverse event occurring from withdrawal
of the Products; and (v) any failure of expected pharmacological action, or such
other definition as may from time to time be set forth in 21 CFR Part 314.80.  

“Alternative Dispute Resolution” shall have the meaning provided in Section
15.7(b) to this Agreement.

“Breach Notice” has the meaning specified in Section 14.2(a).

“Business Day” shall mean a day when both (i) banks operating in Vicenza, Italy
are generally open for business and (ii) banks operating in San Diego,
California are generally open for business.

“Certificate of Analysis” shall mean a document identified as such and provided
by FIS to Purchaser that (i) sets forth the analytical test results for a
specified lot of API shipped to Purchaser hereunder, (ii) is in conformance with
each applicable Drug Application and (iii) states whether such API is
manufactured in accordance with the Specifications and cGMPs.

“Certificate of Conformance” shall mean a document identified as such and
provided by FIS to Purchaser that states that the specified lot of API shipped
to Purchaser hereunder is manufactured in accordance with the Specifications and
cGMPs.

“Confidential Information” shall have the meaning provided in Section 12.3 of
this Agreement.

“Consent” shall mean any consent, authorization, permit, certificate, license or
approval of, exemption by, or filing or registration with, any Governmental
Authority or other Person.

“Current Good Manufacturing Practices” or “cGMPs” shall mean the regulatory
requirements for the current good manufacturing practices in the United States
Code of Federal Regulations 21 CFR Part 210 & Part 211, as amended, European
Union (“EU”) “Eudralex Volume 4 Good Manufacturing Guidelines - Part 2 - Basic
Requirements for Active Substances used as Starting Materials”, also known as
the ICH Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients
(Q7) the MHLW GMP/GQP ordinances and accompanying regulations in Japan, as
applicable to the API manufacturing, and all applicable rules, regulations,
promulgations, policies and guidelines in effect at any given time during the
applicable Term.

“Data” shall mean information relating to: (i) the business of Purchaser or any
Purchaser Affiliate; (ii) customers or suppliers of Purchaser or any Purchaser
Affiliate, as it relates to any API or Finished Product; (iii) any of the API or
Finished Product information including all  Specifications therefore and any
other information relating thereto delivered by Purchaser to FIS under this
Agreement.“Delivery Date” shall mean the date specified by Purchaser that FIS
shall make particular API(s) available for shipment out of the applicable
Facility(ies) in accordance with this Agreement.

“Disclosing Party” shall have the meaning provided in Section 12.3(a) of this
Agreement.

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“Drug Application” shall mean any New Drug Application filed with the FDA, any
Supplemental New Drug Application filed with the FDA, any product license or any
equivalent drug application or similar pharmaceutical product approval
administered by any foreign Governmental Authority, or extension or renewal of
any of the foregoing.

“Facility” shall mean, with respect to the APIs, FIS’s manufacturing facility
located at Viale Milano 26, 36075 Montecchio Maggiore (Vicenza), Italy, or other
facilities of FIS as are mutually agreed upon in writing by the parties.

“FCA” shall mean the Incoterm Free Carrier.

“FDA” shall mean the US Food and Drug Administration .

“FD&C Act” shall mean the Food, Drug, and Cosmetic Act., a set of laws amended
from time to time giving authority to the U.S. Food and Drug Administration
(FDA) to oversee the safety of food, drugs, and cosmetics.

“Finished Product” means commercially packaged and labeled valbenazine tosylate.

“Firm Zone” shall have the meaning provided in Section 2.2(b) of this Agreement.

“FIS Affiliate” shall mean any Person who, directly or indirectly, through one
or more intermediaries, Owns, is Owned by or is under common Ownership with FIS,
a Party, where “Own,” “Owned” or “Ownership” refers to (i) direct or indirect
possession of at least fifty percent (50%) of the outstanding voting securities
of a corporation or a comparable ownership in any other type of entity; or (ii)
the actual ability of a Person or group to control and direct the management of
the Person, whether by contract or otherwise.

“Force Majeure Event” shall have the meaning provided in Article XIII of this
Agreement.

“FIS Confidential Information” shall have the meaning provided in Section 12.1
of this Agreement.

“FIS Indemnitee” shall have the meaning provided in Section 10.2 of this
Agreement.

“FIS Intellectual Property” shall mean (i) all Intellectual Property owned by or
licensed to FIS prior to the Effective Date and (ii) all Intellectual Property
developed by FIS independent of FIS’s performance of its obligations under this
Agreement; provided, however, that such Intellectual Property does not relate to
the API, or utilizes or is based on any Purchaser Intellectual Property

“FIS Nonconformity” shall have the meaning set forth in Section 5.7 of this
Agreement.

“Governmental Authority” shall mean any nation or government, any state,
province, or other political subdivision thereof or any entity with legal
authority to exercise executive, legislative, judicial, regulatory or
administrative functions or pertaining to government in any of the Markets.

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“Key Raw Materials” shall have the meaning as set forth on Schedule 4.4(c) of
this Agreement.

“Incoterm” shall mean the mean the international commercial terms published by
the International Chamber of Commerce, 2010 edition.

“Indemnified Party” shall have the meaning provided in Section 10.3 of this
Agreement.

“Indemnifying Party” shall have the meaning provided in Section 10.3 of this
Agreement.

“Intellectual Property” shall mean (i) trademarks, trademark registrations,
trademark applications, service marks, service mark registrations, service mark
applications, business marks, brand names, trade names, trade dress, names,
logos and slogans and all goodwill associated therewith; (ii) patents, patent
rights, provisional patent applications, patent applications, designs,
registered designs, registered design applications, industrial designs,
industrial design applications and industrial design registrations, including
any and all divisions, continuations, continuations-in-part, extensions,
substitutions, renewals, registrations, revalidations, reexaminations, reissues
or additions, including supplementary certificates of protection, of or to any
of the foregoing items; (iii) copyrights, copyright registrations, copyright
applications, original works of authorship fixed in any tangible medium of
expression, including literary works (including all forms and types of computer
software, including all source code, object code, firmware, development tools,
files, records and data, and all documentation related to any of the foregoing),
musical, dramatic, pictorial, graphic and sculptured works; (iv) trade secrets,
technology, discoveries and improvements, know-how, proprietary rights,
formulae, confidential and proprietary information, technical information,
techniques, inventions, designs, drawings, procedures, processes, models,
formulations, manuals and systems (whether or not patented, patentable,
copyrighted, or copyrightable) including all biological, chemical, biochemical,
toxicological, pharmacological and metabolic material and information and data
relating thereto and formulation, clinical, analytical and stability information
and data which have actual or potential commercial value and are not available
in the public domain; and (v) all other intellectual property or proprietary
rights, in each case whether or not subject to statutory registration or
protection.

“Laws” shall mean any and all applicable local, municipal, provincial, federal
and international laws, statutes, ordinances, rules, regulations or operating
procedures now or hereafter enacted or promulgated by any Governmental
Authority, including the FD&C Act.

“Losses” shall mean, collectively, any and all costs, expenses, including
reasonable fees and disbursements of counsel and any consultants or experts and
expenses of investigation, obligations, liens, assessments, judgments, damages,
liabilities, fines and penalties imposed upon or incurred by an Indemnified
Party.

“Materials” shall mean (i) all raw materials (including Key Raw Materials),
components, work-in-process and other ingredients required to manufacture the
APIs and (ii) all packaging materials used in the manufacture, storage and
shipment of APIs.

“Materials Certification” shall have the meaning provided in Section 4.4(b) of
this Agreement.

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“Nonconformity” shall have the meaning provided in Section 5.3(a) of this
Agreement.

“Non-binding Forecast” shall have the meaning provided in Section 2.2(a) of this
Agreement.

“Party” and “Parties” shall have the meanings given such terms, respectively, in
the first paragraph of this Agreement.

“Purchaser Affiliate” shall mean any Person who, directly or indirectly, through
one or more intermediaries, Owns, is Owned by or is under common Ownership with
Purchaser, where “Own,” “Owned” or “Ownership” refers to (i) direct or indirect
possession of at least fifty percent (50%) of the outstanding voting securities
of a corporation or a comparable ownership in any other type of entity; or
(ii) the actual ability of a Person or group to control and direct the
management of the Person, whether by contract or otherwise.

“Purchase Order” shall have the meaning provided in Section 2.3 of this
Agreement.

“Purchaser Confidential Information” shall have the meaning provided in Section
12.2 of this Agreement.

“Purchaser Indemnitee” shall have the meaning provided in Section 10.1 of this
Agreement.

“Purchaser Intellectual Property” shall mean any and all Intellectual Property
relating to the APIs that is (i) owned or controlled by Purchaser as of the
Effective Date, or (ii) developed, acquired, or controlled by Purchaser after
the Effective Date.

“Quality Agreement” shall have the meaning provided in Section 4.5 of this
Agreement.

“Receiving Party” shall have the meaning provided in Section 12.3(a) of this
Agreement.

“Regulatory Approval” means all approvals, product and/or establishment
licenses, registrations or authorizations of federal, state or local regulatory
agency, department, bureau or other governmental entity, necessary for the sale,
offering for sale, and distribution of a human pharmaceutical product in the
Territory.

“Remediation Period” has the meaning specified in Section 14.2(a).

“Representative” shall have the meaning provided in Section 12.3(b) of this
Agreement.

“Services” shall mean activities contemplated to be completed pursuant to the
Validation Agreement dated September 22, 2015.

“Specifications” shall mean, with respect to any API, all specifications for
Materials, approved suppliers, formula, manufacturing, analytical and testing
procedures, release, packaging, storage, and other processes relating to the
manufacture of such API as agreed by the Parties and specified in the Quality
Agreement (Exhibit 5.1), including all master formulas, process flow

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diagrams, bills of materials, master batch records and all manufacturing and
packaging work orders, all as amended from time to time by the Parties.

“Tax” shall mean any liability imposed by a Governmental Authority (as defined
above and applied without geographical or other restriction) on gross receipts,
sales, use, permits, value added, personal property, intangibles, and any stamp
duty, customs duty, transfer, license, registration, premium or withholding tax,
or any other kind of tax of any kind whatsoever; except that the term, “Tax”
shall include any interest, fines, penalties, additions to tax, or additional
amounts in respect of the foregoing Taxes or returns required to be filed under
applicable Laws.

“Term” shall mean, with respect to a particular API, the period during which
this Agreement is in effect with respect to such API pursuant to Article XIV.

“Third-Party” shall mean a person or entity other than FIS or Purchaser, or
either of their respective Affiliates or successors.

“Third-Party Claim” shall have the meaning provided in Section 10.1 of this
Agreement.

Article II
Sale and Purchase of API

2.1

General.  

(a)

Subject to the terms and conditions of this Agreement, FIS agrees to
manufacture, to the extent ordered by Purchaser in accordance with this
Agreement, the API at the applicable Facility(ies) for sale to Purchaser.  

(b)Subject to the terms and conditions of this Agreement, FIS agrees to perform
the Services at a price and timing as agreed between the Parties and set forth
on Schedule listed in Exhibit 3.1.

2.2

Quarterly Forecasts.

(a)General.  During the Term of this Agreement, Purchaser shall provide to FIS a
non-binding projection for the next succeeding […***…] (or such shorter period
remaining under the term of this Agreement) of the anticipated volumes of each
API to be ordered by Purchaser pursuant to Section 2.3 below (each, a
“Non-binding Forecast”).  The initial such Non-binding Forecast is set forth on
Schedule 2.1.  Beginning on the […***…] after the Effective Date, Purchaser
shall provide such rolling projections to FIS on the 10th day of the first month
of each calendar quarter (January 10, April 10, July 10, October 10) during the
Term of this Agreement. FIS shall notify the Purchaser in writing within ten
(10) Business Days of receipt of any Non-binding Forecast if the quantities of
API indicated therein by the Purchaser exceed FIS’s production capacity.

(b)

Firm Zone.  The volume requirements for each API as set forth for each of the
first […***…] of each such Non-binding Forecast will be a binding commitment by
FIS to manufacture and supply to Purchaser, and by Purchaser to purchase,

 

* *** Confidential Treatment Requested

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the specified volumes of those APIs (each such […***…] period shall be referred
to herein as the “Firm Zone”). FIS acknowledges and agrees that the first
[…***…] of the Term the Non-Binding Forecast submitted by Purchaser may, at the
discretion of the Purchaser, be zero.   Should Purchaser wish to increase order
quantities at any time in excess of the volumes permitted under this Section
2.2(b), then the Purchaser may contact FIS to request and FIS shall determine
subject to Section 2.4, if and how it will supply any such increase in volumes.

(c)

Non-Binding Forecasts.  The API volumes specified for the […***…] through the
[…***…] month (or, if earlier, the final month) of each volume forecast shall be
non-binding estimates of future API requirements.

 

2.3Purchase Orders.  Purchaser shall deliver to FIS an initial purchase order
for the aggregate volume of API in Firm Zone. Thereafter with the release of
each Quarterly Forecast, Purchaser shall deliver […***…] for each subsequent
[…***…] period which becomes the new Firm Zone (each a “Purchase Order”). Each
such aggregate API volume shall constitute an amount equal to a multiple of
FIS’s standard batch size for the applicable API (as specified in Schedule 2.3),
which such amount shall be at least […***…] batches for the year 2019, and at
least […***…] batches for the years 2020 and 2021.  Each Purchase Order shall
specify the volume of each API ordered, which shall be comprised of volumes
equivalent to FIS’s standard batch size for applicable API (as specified in
Schedule 2.3) or multiples thereof, and the Delivery Date the API is to be made
available to Purchaser for pick-up by the carrier or freight
forwarder.  Acceptance of any Purchase Order which does not represent a full
batch size for the relevant API (or multiple thereof) will be subject to FIS’s
sole discretion.  Purchase Orders may be delivered electronically or by other
means to such location as FIS shall designate.  Each Purchase Order that is
submitted, or deemed submitted, in accordance with this Section 2.3 shall be
accepted or rejected by FIS within […***…] Business Days. If FIS does not accept
or reject any Purchase Order within […***…] Business Days, such Purchase Order
shall be deemed accepted. If FIS rejects any Purchase Order, Purchaser shall
have the right to modify such Purchase Order within […***…] Business Days, and
FIS shall have […***…] Business Days to accept or reject such modified Purchase
Order. If FIS deosn’t accept or reject such modified Purchase Order within
[…***…] Business Days, then such modified Purchase Order shall be deemed
accepted.

2.4

Accommodations.  From time to time, due to significant unforeseen circumstances,
Purchaser may deliver to FIS a Purchase Order for volumes of a particular API in
excess of those specified in any Firm Zone.  FIS shall use its commercially
reasonable efforts to provide Purchaser with such excess API volumes.

2.5

Meetings and Reports.  Unless otherwise mutually agreed in writing, the Parties
shall use commercially reasonable efforts to meet four (4) times per year in
person to discuss and review the business relationship, including
development/review of key performance indicators, the forecasts delivered by
Purchaser pursuant to this Agreement, quality and any nonconformance, and other
matters relevant to the supply of APIs hereunder (each such meeting hereinafter
referred to as the “Business Review Meeting”). Purchaser shall provide to FIS at
each Business Review Meeting all other readily available, appropriate data
relating to the APIs and Purchaser’s prospective demands and trends for the
Finished Product and API.

 

* *** Confidential Treatment Requested

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2.6[…***…]. If at any time […***…] determines […***…], or […***…] which is of a
type that would […***…] shall first […***…] and agrees to […***…].

Article III
Prices for APIs; Shipment; Payments

 

3.1

Price.

 

(a)

During the Term of this Agreement, Purchaser shall pay the applicable price for
the API set forth on Schedule 3.1, attached hereto and incorporated herein (“API
Price”).  Unless otherwise agreed upon by both Parties and specified in the
Purchase Order, such price shall include the costs of labor, facilities, Key Raw
Materials as set forth on Schedule 4.4(c), raw Materials, starting Materials,
reagents, solvents, analysis, standard packaging, waste disposal and reports.

 

 

(b)

During the Term of this Agreement, the Parties agree to share cost improvement
measures related to the manufacturing of the API. All cost improvement
investments specific to each API shall require the written consent of both
Parties. FIS shall be entitled to receive reimbursement for reasonable costs
which it incurred in developing such cost improvements. Cost improvement
benefits concerning such manufacturing shall be allocated 50:50 between the
Parties and reflected in the price set forth on an amended Schedule 3.1.

 

 

(c)

During the Term of this Agreement, Purchaser shall pay the applicable price for
the Services as forth on Schedule 3.1, and as specified in a Purchase Order.

3.2

Invoices. All invoices for expenses and fees due under this Agreement, other
than invoices for API, shall be submitted by FIS to Purchaser on a […***…] basis
during the Term of this Agreement. Invoices for API shall be submitted after any
API purchased that […***…] is released by FIS upon completion of its QA
procedures, in accordance with the terms of Quality Agreement, for shipment from
the Facility(ies) or within […***…] after any API purchased that […***…] is
released by FIS upon completion of its QA procedures, in accordance with the
terms of Quality Agreement, for shipment from the Facility(ies), whichever is
earlier.  

3.3

Payment.  Payments for APIs invoiced under Section 3.2 above shall be due net
[…***…] from the date of invoice provided, however, if Purchaser places any
portion of a shipment on hold pursuant to Section 5.2, or rejects any portion of
a shipment pursuant to section 5.3, no payment shall be required on the rejected
portion of the shipment until resolution on the rejected portion of the rejected
shipment has been reached.

 

* *** Confidential Treatment Requested

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3.4

Payment Denominations.  All payments to be made under this Agreement shall be
made in United States dollars unless otherwise specified herein or agreed by the
Parties.

3.5

Shipment; Title; Transport.

(a)

General.  Title to API supplied by FIS to Purchaser hereunder, as well as all
the relevant risks and costs, shall pass to Purchaser upon delivery of said API
to the Purchaser or to a forwarder delegated by Purchaser in accordance with the
FCA Incoterm. The API shall be shipped FCA/FIS’s facilities in Montecchio
Maggiore (Vicenza), Italy, packaged ready for export, including such items
required to confirm shipment of goods under controlled condition such as temp
tales, documentation suitable for export of the supplied API under controlled
conditions and other measures required to satisfy EC Guidelines of 5 November
2013 on Good Distribution Practice of medicinal products for human use (2013/C
343/01) and other Regulatory Agency’s guidance.  In amplification of the
provisions regarding FCA, and not in limitation thereof, FIS shall directly or
indirectly through Purchaser, upon request of Purchaser and at Purchaser’s cost
and risk, assist in (i) addressing special shipping requirements, (ii) obtaining
licenses, official authorizations, clearances, customs, or any other documents
and/or Information, including security related Information that Purchaser may
require for the export, import or transport of the API to the final destination;
(iii) making a contract for carriage; and (iv) loading the packed API in any
container, collecting vehicle or other means of transport. Purchaser shall, upon
request of FIS, provide Information required for taxation or reporting purposes
in respect of the export of the API.

3.6

Taxes.

 

(a)Purchaser shall timely pay any and all Taxes arising out of any payment,
transaction, or activity under this Agreement to the extent that Purchaser is
liable for such Taxes under the Laws of the Governmental Authority that imposes
said Taxes.  

 

(b)

Purchaser shall indemnify FIS, FIS’s Affiliates, successors or assigns, and
shall save and hold FIS harmless from and against Losses attributable to all
Taxes (or the nonpayment thereof) that are the responsibility of Purchaser
pursuant to this Section 3.6.  The procedures set forth in Section 10.3 will
apply, and the Parties expressly acknowledge that any payment of Tax by FIS will
not constitute the settlement of a Third-Party Claim.

 

Article IV
Manufacture of Product

4.1

General.  FIS shall manufacture, test, package, store, label, release and
deliver all APIs in accordance with the Specifications, cGMPs, Laws, FD&C Act,
and the Quality Agreement.  Each API must have the minimum number of months of
expiration dating remaining at the time of delivery from FIS to the Purchaser
(“Minimum Retest Dating”) as specified on Schedule 4.1.

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4.2

Specification Changes.

(a)

General.  

 

(i)

Either Party may request a Specifications change.  The Parties shall discuss in
good faith the implementation of any such requested changes; provided however,
that such changes shall be made only with the Parties’ mutual written consent
which consent shall not be unreasonably withheld. Either Party may request a
Specifications change required for compliance with Laws, and the Parties agree
to implement such change as soon as is reasonably possible. All requests by FIS
for such Specification changes shall be submitted in writing to Purchaser in
accordance with the Quality Agreement.

 

(ii)

Prior to implementation of any change to the Specifications, the Parties shall
agree upon a procedure to ensure that applicable Governmental Authorities have
approved the Specifications, to the extent necessary, and that FIS is given a
reasonable period of time to implement any changes required by any such
applicable Governmental Authority with regard to the Specifications.  

(b)

Payment.

 

(i)

From time to time Purchaser may require Specification changes that will affect
the API.  These changes may be initiated by Purchaser, pursuant to Section
4.2(a) above.  In the event of any change to Specifications other than any
change contemplated by Section 4.2(b)(ii) or 4.2(b)(iii) below, Purchaser shall
bear all costs associated with such a change. Should such Purchaser change to
Specifications have an impact on API Price, either to increase or decrease such
API Price, the Parties will agree to modifications, if any, to Schedule 3.1.

 

(ii)

Should either Party initiate a Specification change designed to improve the API
manufacturing process, the cost of such change will be agreed between the
Parties and subsequent cost improvement shall be shared between the Parties
subject to Section 3.1(b). The Parties will agree to modifications, if any, to
the Product Price and to Schedule 3.1.

 

(iii)

The costs of revisions (including any capital expenditure incurred to implement
any revision, costs of additional materials and one-time expenditures) requested
by either Party to maintain the Specificationsin conformity with cGMPs, laws,
Regulatory Acts or Applicable Laws that are applicable (A) solely to the API
shall be borne by Purchaser or (B) to the general manufacture of active
pharmaceutical ingredients shall be borne pro-rata by FIS customers relative to
their pro-rata use of the Facility and, to the extent reasonably economically
feasible, without any increase in the price of that API, if subsequently sold to
Purchaser.

 

4.3

Validations and Stability Studies.

(a)

General.  The Parties shall perform  on an on-going basis all validations and
stability studies required by the Specifications, cGMPs or Laws in connection
with the

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regular course of manufacturing the APIs for commercial supply, provided that
Purchaser shall reimburse FIS for the cost of any validation or stability
studies necessitated by a change to the Specifications.

(b)

Reference Standards.  The Purchaser shall provide all analytical reference
standards for each of the APIs manufactured under this Agreement, at its own
cost and Purchaser shall have the right to refer to and otherwise use such
standards as may be reasonably necessary in connection with the manufacture and
sale in the Territory of Finished Product.

4.4

Materials.

(a)

General.  FIS shall perform all testing of Materials required by the applicable
Specifications.

(b)

Materials Certifications.  FIS shall prepare or cause to be prepared by FISs, as
the case may be, certifications as to any Materials required by cGMPs or Laws
(each, a “Materials Certification”), as detailed in the Quality Agreement.  

 

(c)Procurement.  FIS will be responsible for procuring all Materials required
for the manufacture of APIs under this Agreement, in particular the Key Raw
Materials as set forth in the Quality Agreement. FIS will procure the Key Raw
Materials from the approved suppliers set forth on in the Quality Agreement) and
at the Purchaser negotiated cost, such cost to be a pass through in the final
API price as set forth on Schedule 3.1.  FIS shall not procure the Key Raw
Materials from any supplier not listed in the Quality Agreement without the
prior written consent of Purchaser.

4.5

Quality Agreement.  Within sixty (60) days of the Effective Date, Purchaser and
FIS shall enter into a quality agreement for the APIs substantially in the form
set forth in Schedule 4.5 to this Agreement (the “Quality Agreement”).  Each
Party shall comply with its obligations set forth in the Quality Agreement.  In
the event of a conflict between the terms of the Quality Agreement and the terms
of this Agreement, the terms of this Agreement shall control with respect to all
commercial or business matters, and the terms of the Quality Agreement shall
control with respect to all quality matters.  The Quality Agreement shall
establish the procedure to be followed if either FIS or Purchaser desires to
change any aspect of the manufacturing process for any API, including but not
limited to any change in the Specifications as described in Section 4.2 above.  

Article V
Testing and Quality Assurance

5.1

Testing of Product.  Prior to release of API, FIS shall test the API in
accordance with the testing procedures described in the Specifications, and
shall provide Purchaser with a completed Batch Record, a Certificate of Analysis
(“CofA”), a Certificate of Conformance (“CofC”) and any other raw data or
documents requested by Purchaser as agreed upon in the Quality Agreement for
each batch of API.

5.2

FIS Holds and Rejections.

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(a)

General.  Purchaser shall notify FIS of Purchaser’s placing any API on hold for
further investigation of a Nonconformity, or of Purchaser’s rejection of any
batch (or part thereof) of any API within […***…] after receipt of such API by
Purchaser.  Purchaser’s notice shall state in as much detail as possible the
basis for the hold or rejection.  Failure to give notice within this […***…]
period shall constitute acceptance of any API delivered, except in the case of a
latent FIS Nonconformity that (i) would not have been revealed by a timely
inspection in accordance with customary and reasonable procedures, and (ii) is
discovered prior to the expiration date of the applicable API.

 

(b)Independent Testing.  If the Parties disagree as to whether any API(s)
subject to hold or rejected meets the Specifications, Purchaser’s most senior
quality assurance officer and FIS’s most senior quality assurance officer, or
such other persons as they may designate in writing, shall confer to review
samples and/or batch records, as appropriate.  If the disagreement is not
resolved, then samples, batch records and other data relating to the batch in
dispute shall promptly be submitted for testing and evaluation to an independent
Third Party (including a testing laboratory) approved in writing by both
Parties.  The findings of the Third Party shall be final and binding on the
Parties.  The cost of the testing and evaluation by the Third Party shall be
borne by the Party whose position was not supported by the determination of the
Third Party.

(c)

Notice.  In the event that after the release of any APIs, Purchaser becomes
aware that any batch of the APIs may have a Nonconformity, despite any testing
and quality assurance activities, Purchaser shall immediately notify FIS in
writing.

5.3

Nonconformity.

(a)

Nonconformity.  If FIS becomes aware that any batch or shipment of APIs has a
Nonconformity, at any time regardless of the status of FIS’s testing and quality
assurance activities, FIS shall notify Purchaser within one (1) business day of
becoming aware of a Nonconformity.  “Nonconformity” means a product
characteristic that (i) is attributable to FIS’s failure to manufacture, test,
package, store, label, release or deliver any API in accordance with the
Specifications or cGMPs or (ii) causes any API to fail to conform to the
applicable Specifications or cGMPs or meet the expiration dating requirement in
Section 4.1.  In the event of a Nonconformity, the Parties shall follow the
procedure for investigations as set forth in the Quality Agreement.

(b)

APIs Subject to Nonconformity.  Any batch or shipment of API, or Finished
Product that was manufactured using API, that is the subject of a Nonconformity
or notice of Nonconformity shall be handled as follows:

 

(i)

any portion of such batch or shipment of API held in inventory by FIS shall not
be delivered to Purchaser;

 

(ii)

any portion of such batch or shipment of API shipped to Purchaser and held in
stock by Purchaser or Purchaser’s designee shall maintain a “hold” or “unpassed”
status, and shall not be released into passed inventory of Purchaser or used in
the manufacture of any Finished Product, until Purchaser has completed

 

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any investigations related to such APIs and approved in writing the disposition
of the API subject to the Nonconformity; and

 

(iii)

any portion of any batch of Finished Product manufactured using such API that is
held in stock by Purchaser shall maintain a “hold” or “unpassed” status, and
shall not be released by Purchaser, until Purchaser has completed any
investigations related to the API that was the subject of the Nonconformity and
approved in writing the disposition of such API.

5.4

Product Complaints.  Any and all complaints of which FIS becomes aware relating
to any API or corresponding Finished Product shall promptly be forwarded to
Purchaser’s senior quality officer or his designee.  Purchaser shall promptly
inform FIS of any and all complaints that Purchaser receives which implicate
FIS’s manufacturing or other processes at the applicable Facility.  Notification
shall follow the procedure as set forth in the Quality Agreement.

5.5

Adverse Events.  With respect to any Finished Product, FIS shall notify
Purchaser promptly following any receipt of information of a possible Adverse
Event.  To the extent an Adverse Event of which Purchaser becomes aware
potentially implicates FIS’s manufacturing of any API or other processes at any
applicable Facility(ies), Purchaser shall promptly inform FIS of such Adverse
Event and shall disclose to FIS any information it has regarding that Adverse
Event.

5.6

Investigations.  The Parties shall investigate all reports of Nonconformity,
API-related complaints or Finished Product-related complaints and Adverse Events
in order to assure the conformity of APIs to the applicable Specifications and
cGMPs.  The Parties shall act promptly and shall cooperate fully in such
investigations.

5.7

Certain Product Events.  In the event Purchaser shall be required by a
Governmental Authority to initiate a recall (or Purchaser voluntarily initiates
a recall), withdrawal or field correction of, field alert report or comparable
report with respect to, any Finished Product manufactured using API supplied by
FIS pursuant to this Agreement, Purchaser shall notify FIS within 48 hours.

 

Purchaser shall be responsible for the costs of all recalls of Finished Products
and initiated by Purchaser or any Affiliate or licensee thereof; provided that,
notwithstanding the foregoing, FIS shall reimburse Purchaser for all reasonable
costs and expenses incurred by Purchaser in procuring or complying with the
requirements of any recall of Finished Products  that is attributable to FIS’s
failure to manufacture, test, package, store, label, release or deliver any API
in accordance with the Specifications, Laws, or cGMPs. FIS shall, at Purchaser’s
sole option, either (a) replace the API which is the subject of such recall at
no additional cost to the Purchaser as soon as reasonably practicable, or (b)
reimburse Purchaser for the amount paid by Purchaser to purchase and ship the
API which is the subject of such recall.

5.8

Retained Samples.  FIS shall retain samples from each batch of API for a period
of one (1) year after the shipment of such batch to Purchaser or such longer
period required by Laws or cGMPS and FIS internal procedure for record keeping,
testing and regulatory purposes. FIS shall provide thirty (30) days notice to
Purchaser prior to desctruction of any samples.  Purchaser shall also have the
right to retain, at its own cost, samples from each batch of API.

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Article VI
Regulatory Matters

6.1

Manufacturing Consents.  FIS holds all Consents required by FIS for the
performance of its obligations under this Agreement. FIS is responsible for
submitting to Italian Health Authorities (AIFA) the documents, also related to
the APIs, requested for obtaining and maintaining the manufacturing licence. In
the event any Consent held by FIS relating to the performance of its obligations
hereunder is suspended or revoked, FIS shall promptly notify Purchaser of the
event and shall promptly inform Purchaser of the impact on Purchaser’s past and
planned purchases of API.

6.2

Product Consents.  Purchaser shall, at its expense, obtain and maintain any
Consents which may from time to time be required by any Governmental Authority
with respect to ownership of the Drug Applications or with respect to the
marketing, distribution, clinical investigation, import or export of
APIs.  Purchaser shall be responsible for responding to all requests for
information related to such Consents made by, and making all legally required
filings relating to such Consents with any Governmental Authority.  In the event
any Consent held by Purchaser relating directly to any of the APIs is hereafter
suspended or revoked, Purchaser shall promptly notify FIS of the event and shall
promptly inform FIS of the impact on Purchaser’s purchases of the affected API
and Purchaser’s general intentions with respect to the affected API.

6.3

Drug Application Documentation.  Purchaser shall maintain all Drug Applications
with respect to the Finished Products.  Upon request from FIS, Purchaser shall
provide FIS with information regarding the CMC sections of such Drug
Applications, or discrete sections thereof.

6.4

Regulatory Changes.  The Parties will promptly notify each other of any material
revisions or amendment of or additions to cGMPs and will confer with each other
with respect to the best means to comply with such requirements.

6.5

Regulatory Inspections.  If FIS is notified that any API or Facility will be
subject to an inspection, which involves any APIs manufactured for Purchaser, by
any Governmental Authority, FIS shall promptly advise Purchaser of such
investigation and fully cooperate with and allow any such inspection to the
extent required by Laws.  Purchaser shall have the right to have representatives
present during any such inspection by a Governmental Authority.  

Article VII
Intellectual Property

7.1Ownership.

(a)Purchaser Intellectual Property.  FIS acknowledges and agrees that, as
between Purchaser and FIS, Purchaser owns all rights in and to the Purchaser
Intellectual Property, including all rights in and to the API, the Finished
Product, the Drug Applications for the Products, the Data and documentation,
specifications and processes associated with the API and/or Finished Product. In
particular, FIS acknowledges and agrees that: (i) all of the Specifications
contain confidential information of Purchaser and are and shall remain the
property of Purchaser; and (ii) all of the patents, trademarks and API
formulation owned by Purchaser which apply to the manufacture, or use of API

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covered by this Agreement are and shall remain Purchaser Intellectual Property.
Except as expressly provided in Section 7.3 below, nothing in the Agreement
shall be deemed to transfer or convey, expressly or by implication, any
Purchaser Intellectual Property to FIS.

(b)FIS Rights.  Purchaser acknowledges and agrees that FIS owns all rights in
and to the FIS Intellectual Property.

7.2New Developments and Modifications.

(a)API Developments.  All Intellectual Property relating to an API conceived,
reduced to practice, authored, or otherwise generated or developed in whole or
in part in the course of activities under this Agreement, whether patentable or
not, shall be “API Developments.” Such API Developments shall include without
limitation, any know-how or improvements relating to the API or the manufacture
of the API, conceived, reduced to practice or otherwise developed solely by or
on behalf of FIS, in connection with the performance of its obligations
hereunder.

(b)Ownership of API Developments.  FIS will, in accordance with applicable Law,
obtain the rights to assign to Purchaser all of the rights, title and interest
in and to API Developments and rights to Intellectual Property arising therefrom
to the extent any such API Developments and/or Intellectual Property are
developed wholly or in part by FIS personnel.  Without further payment to FIS,
as between the Parties, Purchaser shall own all right, title and interest in and
to all API Developments, whether made, conceived, reduced to practice, authored
or otherwise generated or developed solely by FIS personnel, solely by Purchaser
personnel, or jointly by FIS and Purchaser personnel, and all rights to
Intellectual Property arising therefrom.  FIS will, and hereby does, assign to
Purchaser all of its rights, title and interest in and to API Developments and
rights to Intellectual Property arising therefrom.  FIS will provide reasonable
assistance to Purchaser, at Purchaser’s expense, in obtaining and enforcing and
defending Purchaser’s ownership of the API Developments and appurtenant rights
to Intellectual Property, including without limitation and as applicable, the
assignment to Purchaser of all their right, title and interest of its employees
or independent contractors in and to such API Developments and appurtenant
rights to Intellectual Property.

7.3Grant of Licenses.

(a)By Purchaser.  Under the terms and subject to the conditions of this
Agreement, Purchaser hereby grants FIS the non-exclusive, royalty-free,
fully-paid, under the Purchaser Intellectual Property solely to perform FIS’s
obligations under this Agreement.

Article VIII
Access; Audit Rights

8.1

Audit and Inspection Rights.  During the Term of this Agreement, Purchaser shall
have the right to audit and inspect those portions of the Facilities used in the
manufacture, packaging, generation, storage, testing, treatment, holding,
transportation, or other handling or receiving of the APIs and Materials.
Purchaser shall have the right to audit and inspect all

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inventory of APIs and Materials contained at the Facilities. Such audits or
inspections shall occur during normal business hours and shall be scheduled by
Purchaser at least […***…] in advance; provided, however, that in the event of
an Adverse Event with respect to any Finished Product manufactured using any API
supplied hereunder or any proposed or actual inspection by the FDA or other
Governmental Authority, Purchaser shall have the right at any time upon oral or
written notice to FIS of […***…] to conduct an audit or inspection
hereunder.  Except in the case of an Adverse Event with respect to any Finished
Product manufactured using any API supplied hereunder, Purchaser shall limit
such audits to no more than […***…] per calendar year for each Facility except
for audit for cause, follow-up of corrective ation plans, or Pre-Approval
Inspection (PAI) preparation. FIS and Purchaser may agree to reduce the audit
frequency depending upon the results of the previous audit(s) and the quality
performance of Purchaser.

Purchaser’s audit and inspection rights under this Section 8.1 shall not extend
to any portions of any Facility, documents, records or other information which
do not relate to APIs or Materials or, to the extent they relate or pertain to
Third Parties or their products or materials, FIS may redact information
relating to Third Parties and their respective products or materials from any
documents deliverable to Purchaser in connection with Purchaser’s exercise of
its audit and inspection rights hereunder.  FIS shall participate in Purchaser’s
audit and shall respond to any issues raised by Purchaser based on such audit
with a corrective action plan.  

 

8.2

Documentation.  Each Party shall maintain, in accordance with and for the period
required under cGMPs and all other Laws, complete and adequate records
pertaining to the methods and facilities used for the cGMPs manufacture,
processing, testing, packing, labeling, holding and distribution of the APIs
and, in the case of Purchaser, Finished Products.

 

Article IX
Representations, Warranties, and Covenants

9.1

Representations and Warranties of FIS.  FIS represents and warrants that:

(a)

Status; Enforceability.  FIS is a validly existing corporation under the laws of
Italy; the execution, delivery and performance of this Agreement by FIS (where
applicable) has been duly authorized by all requisite corporate action; this
Agreement constitutes the legal, valid and binding obligation of FIS,
enforceable against FIS in accordance with the terms hereof; and the execution,
delivery and performance of this Agreement by FIS will not violate or conflict
with any other agreement or instrument to which FIS is a Party.

(b)

Certain Persons.  FIS has not used, in any capacity associated with or related
to the manufacture of the APIs, the services of any persons who have been, or
are in the process of being, debarred under 21 U.S.C. § 335a(a) or (b) or any
comparable Regulatory Act. Furthermore, neither FIS nor any of its officers,
employees, or consultants involved in the manufacture of APIs hereunder has been
convicted of an offense under (i) either a federal or state law that is cited in
21 U.S.C. § 335(a) as a ground for debarment, denial of approval, or suspension,
or (ii) any other law cited in any comparable Regulatory Act as a ground for
debarment, denial of approval or suspension.

 

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(c)

Consents.  FIS has all governmental approvals, permits and licenses necessary
for the performance of its obligations hereunder.

(d)

Compliance.  The manufacture, packaging, generation, processing, distribution,
transport, treatment, storage, disposal and other handling of any Materials or
APIs by FIS until delivery to a carrier or freight forwarder shall be in
accordance with and conform to the Specifications, cGMPs, the FD&C Act and all
other material Laws.  

9.2

Representations and Warranties of Purchaser.  Purchaser represents and warrants
to FIS that:

(a)

Status; Enforceability.  Purchaser is a validly existing corporation and is in
good standing under the laws of the jurisdiction of its incorporation; the
execution, delivery and performance of this Agreement by Purchaser has been duly
authorized by all requisite corporate action; this Agreement constitutes the
legal, valid and binding obligation of Purchaser, enforceable against Purchaser
in accordance with the terms hereof; and the execution, delivery and performance
of this Agreement will not violate or conflict with any other agreement or
instrument to which it is a Party.

(b)

Intellectual Property.  The portion of Purchaser Intellectual Property licensed
to FIS under this Agreement is free and clear of any lien, encumbrance, security
interest or restriction on license inconsistent with the rights granted to FIS
herein.  The Purchaser has not previously granted and will not grant to any
Third Party during the Term of this Agreement, any right, license or interest in
or to the Purchaser Intellectual Property, or any portion thereof, inconsistent
with the rights granted to FIS herein.

 

(c)No Other License Required.  To Purchaser’s knowledge, the manufacture and
supply of APIs pursuant to this Agreement do not and shall not require a license
under any Intellectual Property owned or controlled by Purchaser or any Third
Party other than as provided to FIS hereunder.

(d)

Noninfringement.  To Purchaser’s knowledge, the manufacture and supply of APIs
pursuant to this Agreement in accordance with the Specifications will not
infringe the Intellectual Property of any Third Party.

 

9.3Storage and Distribution of the APIs.  Purchaser shall comply with cGMPs, the
Specifications, and all applicable Laws in the storage, handling, and
distribution of the APIs supplied by FIS pursuant to this Agreement and in the
manufacture, storage, handling, sale, and distribution of all Finished Products
manufactured using such API.

 

Article X
Liability and Indemnification

 

10.1Purchaser Indemnity: Purchaser shall indemnify, defend and hold harmless
FIS, its directors, officers, employees and agents, from and against any and all
Losses resulting from claims of any kind and character by any Third Party (a
“Third Party Claim”)   arising out of, or in connection with, or with respect to
the API supplied to and accepted by Purchaser pursuant to this

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Agreement, as well as including without limitation (a) the negligence and/or
wilful misconduct of the Purchaser (or any of its directors, officers, employees
or agents) in the performance of its obligations hereunder, or (b) the breach by
the Purchser of any of the terms of this Agreement. Notwithstanding the
foregoing, FIS and its directors, officers, employees, and agents shall not be
entitled to indemnification under this paragraph against any claim to the extent
resulting from (a) the negligence or wilful misconduct of FIS or any of its
directors, officers, employees or agents or (b) the breach by FIS of any of the
terms of this Agreement.

 

10.2FIS Indemnity: FIS shall indemnify, defend and hold harmless, Purchaser, its
directors, officers, employees and agents, from and against any and all Losses
resulting from claims of any kind and character by any Third Party  arising out
of or in connection with FIS's performance of its obligations hereunder
including without limitation (a) the negligence and/or wilful misconduct of FIS
(or any of its directors, officers, employees or agents) in the performance of
its obligations hereunder, or (b) the breach by FIS of any of the terms of this
Agreement. Notwithstanding the foregoing, Purchaser and its directors, officers,
employees, and agents shall not be entitled to indemnification under this
paragraph against any claim to the extent resulting from (a) the negligence or
wilful misconduct of Purchaser or any of its directors, officers, employees or
agents or (b) the breach by Purchaser of any of the terms of this Agreement.

 

10.3Limitation of Liability: Notwithstanding anything to the contrary herein,
neither Party shall be liable to the other for indirect, incidental or
consequential damages arising out of any terms or conditions in this Agreement
or with respect to the performance thereof.

 

10.4Indemnification Procedures:  Should a Party (the "Indemnified Party") be
notified of any Third Party claim in respect of which the other Party (the
"Indemnifying Party") may be reasonably liable under the indemnification
obligation provided for in this Section 10, the Indemnified Party shall (i) give
the Indemnifying Party prompt written notice thereof; and (ii) give the
Indemnifying Party the opportunity to defend, negotiate, and settle  any such
action or claim. To such extent, the Indemnified Party shall provide the
Indemnifying Party with all information in its possession, and all authority and
assistance necessary to enable Indemnifying Party to defend, negotiate,
compromise or settle any such claim, action or suit. The Indemnified Party shall
further cooperate fully with the Indemnifying Party and its legal
representatives (at the Indemnifying Party's sole cost and expense) in the
investigation, negotiation, compromise, settlement and defence of such claim,
action or suit. In any case, it is hereby understood that (i) the Indemnified
Party reserves the right to retain its own counsel to defend itself (at its own
cost and expense) in such claim, action or suit; and (ii) in no event shall
either Party enter into any settlement  without the prior written consent of the
other Party, which shall not be unreasonably withheld.

 

10.5Survival of Indemnification Obligations: The provisions of this Section 10
shall survive the expiration or termination of this Agreement.

 

10.6Procedures.  Any Person that may be entitled to indemnification under this
Agreement (an “Indemnified Party”) shall give written notice to the Person
obligated to indemnify it (an “Indemnifying Party”) with reasonable promptness
upon becoming aware of any Third-Party Claim or other facts upon which a claim
for indemnification will be based. Such notice shall set

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forth such information with respect thereto as is then reasonably available to
the Indemnified Party.  The Indemnifying Party shall have the right to undertake
the defense of any such Third-Party Claim with counsel reasonably satisfactory
to the Indemnified Party and the Indemnified Party shall cooperate in such
defense and make available all records, materials and witnesses reasonably
requested by the Indemnifying Party in connection therewith at the Indemnifying
Party’s expense.  If the Indemnifying Party shall have assumed the defense of
the Third-Party Claim with counsel reasonably satisfactory to the Indemnified
Party, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses (other than for reasonable costs of investigation)
subsequently incurred by the Indemnified Party in connection with the defense
thereof.  The Indemnifying Party shall not be liable for any Third-Party Claim
settled without its consent, which consent shall not be unreasonably withheld or
delayed.  The Indemnifying Party shall obtain the written consent of the
Indemnified Party prior to ceasing to defend, settling or otherwise disposing of
any Third-Party Claim.

 

Article XI
Insurance

 

11.1FIS Insurance Requirements.  During the Term of this Agreement and for
[…***…] after its expiration or termination, FIS shall at all times maintain
insurance policies or self-insurance in such amounts and with such scope of
coverage as are adequate to cover FIS’s obligations under this Agreement.

 

11.2Purchaser Insurance Requirements.  During the Term of this Agreement and for
[…***…] after its expiration or termination, Purchaser shall at all times
maintain insurance policies or self-insurance in such amounts and with such
scope of coverage as are adequate to cover Purchaser’s obligations under this
Agreement.

Article XII
Confidentiality

12.1 Definition of “Purchaser Confidential Information”.  As used herein, the
term “Purchaser Confidential Information” shall mean all confidential business
and technical communications, documents and other information, whether in
written, oral or other form, which Purchaser or a Purchaser Affiliate furnishes
or discloses to FIS or which FIS otherwise learns in connection with the
negotiation or performance of this Agreement (whether relating to Purchaser, a
Purchaser Affiliate or any Third Party for which Purchaser has an obligation of
confidentiality). FIS agrees that the provisions of this Agreement shall apply
to all Purchaser Confidential Information disclosed by Purchaser or a Purchaser
Affiliate to FIS or learned by FIS prior to the Effective Date. FIS represents
and warrants that prior to the Effective Date, it has not used or disclosed to
any Third Party any Purchaser Confidential Information, except as would be
permitted hereunder.

12.2 Definition of “FIS Confidential Information”.  As used herein, the term
“FIS Confidential Information” shall mean (i) all confidential business
information and (ii) technical communications, documents or other information in
each case, not constituting Purchaser Rights whether in written, oral or other
form, of FIS or a FIS Affiliate that are disclosed to Purchaser by

 

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FIS or an FIS Affiliate, or Purchaser otherwise learns in connection with the
negotiation or performance of this Agreement; provided, however, that subject to
the terms of this Agreement, all information relating to the API shall be
Purchaser Confidential Information. Purchaser agrees that the provisions of this
Agreement shall apply to all FIS Confidential Information disclosed by FIS or
any FIS Affiliate or learned by Purchaser prior to the Effective Date.

12.3

Treatment of Confidential Information.  Both during the Term of this Agreement
and thereafter, FIS shall treat all Purchaser Confidential Information and
Purchaser shall treat all FIS Confidential Information in accordance with the
requirements of this Article XII. For convenience, Purchaser Confidential
Information and FIS Confidential Information are both referred to herein as
“Confidential Information” for purposes of establishing the obligations of each
Party with regard to the other Party’s Confidential Information.

(a)

Nondisclosure.  Confidential Information of the other Party shall be kept
strictly confidential by the receiving Party and, except as expressly permitted
herein, shall not be disclosed to any Third Party by the receiving Party in any
manner whatsoever including without limitation, any affiliates, in whole or in
part, without first obtaining the other Party’s prior written consent to such
disclosure. The standard of care required of each Party in protecting the
confidentiality of the other Party’s Confidential Information shall be at least
the same standard of care that the receiving Party uses in protecting its own
confidential and trade secret information, but in no event shall either Party
use less than a reasonable standard of care. Confidential Information may be
used by the receiving Party only for the purpose of performing under this
Agreement.

(b)

Permitted Exceptions.  Each Party may disclose the other Party’s Confidential
Information (i) to its employees or outside advisors and financing sources in
connection with this Agreement who reasonably need to know such information for
the purpose of advising or assisting it in connection with this Agreement (each,
a “Representative”), (ii) to a Third Party pursuant to a contractual obligation
under a material contract, whereby failure to disclose such Confidential
Information shall have material adverse effect on the disclosing Party, and
(iii) to any Parties required under operation of law.  FIS acknowledges that
Purchaser will be required to file a copy of this Agreement with Purchaser’s
filings to the U.S. Securities Exchange Commission.  Purchaser and FIS agree to
cooperate in the preparation of a request for confidential treatment with
respect to the Agreement, pursuant to which portions of this Agreement will be
redacted from all public access.  Prior to disclosing any Confidential
Information to any Representative pursuant to this Section 13.3(b), the
receiving Party will inform such Representative of the proprietary nature of the
Confidential Information and will require such Representative to agree in
writing (except in the case of outside legal advisors or auditors engaged to
prepare either Party’s financial statements or Purchaser’s filings with the
Securities Exchange Commission, who may orally agree) to be bound by the
requirements of this Article XIII and not to use or disclose the Confidential
Information except as permitted herein. Each Party agrees to be responsible for
any breach of these confidentiality obligations by its Representatives. It is
specifically agreed that (i) Purchaser may disclose FIS Confidential Information
to any Purchaser Affiliate under the same conditions provided in this Article
XII on a need-to-know basis and (ii) FIS may disclose Purchaser Confidential
Information to any FIS Affiliate under the same conditions  provided in this
Article XII on a need-to-know basis.

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(c)

Consent.  Confidential Information of the other Party shall not be utilized by a
receiving Party except as expressly permitted herein, without first obtaining
the other Party’s prior written consent to such utilization and without first
entering into a separate agreement duly executed by authorized representatives
of the Parties hereto.

12.4

Excluded Information.  Notwithstanding any provision herein to the contrary, the
requirements of this Article XII shall not apply to any information of either
Party which:

(a)

at the time of disclosure hereunder is generally available to the public;

(b)

after disclosure hereunder becomes generally available to the public, except
through breach of this Article XII by the receiving Party or its
Representatives;

(c)

was not acquired directly or indirectly from the disclosing Party or its
Affiliates and which the receiving Party lawfully had in its possession prior to
disclosure by the disclosing Party;

(d)

is independently developed by employees or agents of the receiving Party without
the use of the Confidential Information of the disclosing Party; or

(e)

becomes available to the receiving Party from a Third Party that is not legally
prohibited from disclosing such Confidential Information, provided such
information was not acquired directly or indirectly from the disclosing Party or
its Affiliates.

12.6

Return of Confidential Information.  At any time upon the request of the
Disclosing Party, to the extent such Confidential Information is not reasonably
necessary to enable a Receiving Party to perform its obligations under this
Agreement, the Receiving Party shall promptly return to the Disclosing Party or
destroy the Disclosing Party’s Confidential Information, and shall destroy all
copies thereof, together with all notes, drawings, abstracts and other
information relating to the Disclosing Party’s Confidential Information prepared
by the Receiving Party or any of its Representatives, regardless of the medium
in which such information is stored; provided, however, that the Receiving Party
may maintain a single archival copy of the Disclosing Party’s Confidential
Information in its files solely for purposes of establishing the extent of
disclosures by the Disclosing Party under this Agreement.  At the Disclosing
Party’s written request, the Disclosing Party’s Confidential Information that is
otherwise required to be returned to it shall be destroyed by the Receiving
Party and such destruction shall be certified in writing by an authorized
officer of the Receiving Party.  The return and/or destruction of such
Confidential Information as provided above shall not relieve the Receiving Party
of its other obligations under this Article XII.

Article XIII
Force Majeure Event

13.1

General.  Neither Party shall be liable to the other on account of any failure
to perform or on account of any delay in performance of any obligation under
this Agreement, if and to the extent that such failure or delay shall be due to
a cause beyond the reasonable control of the relevant Party and which, by the
exercise of its commercially reasonable efforts of diligence and care, such
Party could not reasonably have been expected to avoid (a “Force Majeure
Event”).  The Party experiencing the delay and seeking relief under this Article
XIII shall promptly notify the

22611.4-688182 v821

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other Party of the delay and the probable duration of the delay and shall use
commercially reasonable efforts to overcome such delay.  The Party affected
shall be excused from the performance of such obligation to the extent such
performance is prevented, hindered or delayed thereby during the continuance of
any such happening or event.  This Agreement, in so far as it relates to such
obligation, shall be deemed suspended so long as and to the extent that such
cause delays the performance of any Force Majeure Event obligation.

 

Article XIV
Term; Termination; Remedies

14.1

Term.  Unless earlier terminated in accordance with this Article XIV, this
Agreement shall commence on the Effective Date and, with respect to each API,
will continue until either Party provides the other Party with written notice of
termination with respect to such API, in which case this Agreement shall expire,
and such termination shall be effective, on the date twenty four (24) months
following the date of such notice with respect to the API(s) which is(are) the
subject of such notice, provided that such notice shall not be given by either
Party prior to the fifth (5th) anniversary of the Effective Date.

14.2

Termination.  

(a)

Material Breach.  Either party at its sole option may terminate this Agreement
upon written notice where the other party has failed to remedy a material breach
of any of its representations, warranties, or other obligations under this
Agreement within […***…] following receipt of a written notice (the "Remediation
Period") of the breach from the aggrieved party that expressly states that it is
a notice under this Section 14.2(a) (a "Breach Notice").  The aggrieved party's
right to terminate this Agreement under this Section 14.2(a) may only be
exercised for a period of […***…] following the expiry of the Remediation Period
(where the breach has not been remedied) and if the termination right is not
exercised during this period then the aggrieved party will be deemed to have
waived the breach of the representation, warranty, or obligation described in
the Breach Notice.

(b)

Either party at its sole option may immediately terminate this Agreement or a
Product Agreement upon written notice, but without prior advance notice, to the
other party if: (i) to the extent and if permitted under applicable Law the
other party is declared insolvent or bankrupt by a court of competent
jurisdiction; or (ii) a voluntary petition of bankruptcy is filed in any court
of competent jurisdiction by the other party;

(c)

Purchaser may terminate this Agreement upon six months' prior written notice if
it intends to no longer order API due to the Finished Product's discontinuance
in the market.

 

14.3

Injunctive Relief.  In the event that either Purchaser or FIS breaches or
threatens to breach any provision of Article XII of this Agreement, the Parties
agree that irreparable harm to the other Party is presumed and the damage to
such Party likely would be very difficult to ascertain and would be
inadequate.  Accordingly, in the event of such circumstances, each of Purchaser
and FIS agree that, in addition to any other right and remedies available at law
or in equity, the non-breaching Party shall have the right to obtain injunctive
relief from any court of competent jurisdiction, and the breaching party waives
the requirement that a bond be posted.

 

* *** Confidential Treatment Requested

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Article XV
Miscellaneous

15.1

Standard Forms.  In all communications, FIS and Purchaser may employ their
standard forms, but nothing in those forms, including Purchase Orders, shall be
construed to modify or amend the terms and conditions of this Agreement, and, in
the case of any conflict herewith, the terms and conditions of this Agreement
shall control.

15.2

Notices.  In addition to the other specific procedures for notification required
herein, all notices, demands, requests and other communications made hereunder
shall be in writing and shall be given either by personal delivery, by
nationally recognized overnight courier (with charges prepaid), or by facsimile
transmission (with telephone confirmation), and shall be deemed to have been
given or made: (i) if personally delivered, on the day of such delivery; (ii) if
sent by overnight courier, on the day following the date deposited with such
overnight courier service; or (iii) if by facsimile transmission, on the date
transmitted to receiving facsimile machine and confirmed by telephone, in each
case pending the designation of another address, addressed as follows:

 

If to FIS:

 

F.I.S. FABBRICA ITALIANA SINTETICI S.p.A.

Viale Milano 26, 36075 Montecchio Maggiore (VI), Italy

Attn: Marketing & Sales Director

 

If to Purchaser:    

 

NEUROCRINE BIOSCIENCES Inc.,

12780 El Camino Real, San Diego, California, 92130, USA

Attention: Vice President, Manufacturing

 

With a copy to

Attention: Chief Legal Officer

Email: dlippoldt@neurocrine.com

15.3

Independent Contractors.  In the exercise of its obligations and in respect of
its rights and entitlements hereunder or in respect hereof, Purchaser and FIS
are and shall in all respects be treated as independent contractors with respect
to each other.  Neither Party shall be deemed to be a co-venturer or partner of
the other.  Neither Party is an employee or a legal representative of the other
Party for any purpose.  Neither Party shall have the authority to enter into any
contracts in the name of or on behalf of the other Party.

15.4

Entire Understanding.  This Agreement and Quality Agreement, the Schedules
attached hereto, and any other document identified herein, represents the entire
understanding and agreement between the Parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements
and understandings between the Parties with respect to such subject matter,
which are hereby expressly terminated.

22611.4-688182 v823

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15.5

Unintentional Omissions.  The Parties acknowledge that they have expended
substantial effort in preparing this Agreement and attempting to describe, in
the Schedules hereto, as thoroughly and precisely as possible, Specifications,
APIs, and other information.  However, despite these efforts, the Parties
acknowledge the possibility of involuntary or inadvertent omissions from the
Schedules.  The Parties will agree in writing to the changes to be made to the
Schedules to add these inadvertent or involuntary omissions and any such written
agreement executed by the Parties shall serve as an amendment to this Agreement.

15.6

Transferability; Binding Effect.  Neither this Agreement, nor any of the rights
or obligations of a Party may be directly or indirectly assigned, sold,
delegated or otherwise disposed of without the prior written consent of the
other Party, which consent may not be unreasonably withheld; provided, however,
that either Party may assign this Agreement to an Affiliate, and either Party
may assign this Agreement, in whole or part, to a successor by merger,
acquisition, or sale of all or substantially all of such Party’s business or
assets to which this Agreement relates, without the consent of the other Party.

 

 

15.7

Dispute Resolution.  

 

 

(a)

If the Parties fail to resolve any claim, dispute, or controversy of whatever
nature arising out of or relating to this Agreement (other than one relating to
a breach of Article XII or to the validity, enforceability, infringement or
misappropriation of Intellectual Property rights, which shall not be subject to
this Section 15.7), or concerning the interpretation, effect, termination,
validity, performance and/or breach of this Agreement (a “Claim”), either Party
may refer the dispute, by notice to the other Party, to their respective chief
executive officers, or their designees, for attempted resolution by good faith
negotiations within thirty (30) days after that notice is received.

 

(b) Alternative Dispute Resolution.  If the Parties cannot reach a resolution of
the dispute according to Section 15.7(a), then such dispute shall be finally
resolved by binding arbitration in accordance with the then existing commercial
arbitration rules under the Rules of Arbitration of the International Chamber of
Commerce (“ICC”) by a single  arbitrator  appointed by ICC in accordance with
the said rules.  Arbitration shall be conducted in New York City, New York,
United States if Purchaser is the defendant party, and in Vicenza, Italy, if FIS
is the defendant party, and shall be conducted in the English language.   

15.8

Subcontractors.  FIS may not subcontract to Third Parties any manufacturing
functions in connection with the API without prior written approval from
Purchaser.

15.9

Amendment.  Any amendment, modification or supplement of or to any provision of
this Agreement, including the Schedules hereto, shall be effective only in
writing and manually signed by a duly authorized officer of suitable title of
all Parties hereto.  The Parties hereto waive the right to amend the provisions
of this Section 15.9 orally.

15.10

Severability.  If and to the extent that any court of competent jurisdiction
holds any provision (or any part thereof) of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the validity or
enforceability of the remainder of this Agreement, and the invalid

22611.4-688182 v824

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or unenforceable provision shall be fully severed from this Agreement and there
shall automatically be added in lieu thereof a provision as similar in terms and
intent to such severed provision as may be legal, valid and enforceable.

15.11

Waiver.  Any failure of Purchaser or FIS to comply with any obligation,
covenant, agreement or condition herein contained may be expressly waived, in
writing only, by the other Party hereto and such waiver shall be effective only
in the specific instance and for the specific purpose for which made or given.

15.12

Survival.  Article I, Article VII, Article X, Article XI, Article XII, Article
XV, and Sections 2.8, 3.3, 3.6, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 9.1(e), 9.3
13.2, and 14.3, and any other provision which by its terms specifically shall so
state, together with any obligation to make accrued but unpaid payments due
hereunder, shall survive the termination or expiration of this Agreement.

15.13

Drafting Ambiguities.  Each Party to this Agreement and its counsel have
reviewed and revised this Agreement.  The rule of construction to the effect
that any ambiguities are to be resolved against the drafting Party shall not be
employed in the interpretation of this Agreement or any amendment or Schedule to
this Agreement.

15.14

Headings; Schedules; Counterparts.

(a)

Headings.  The headings of the Sections of this Agreement are for reference
purposes only, are not part of this Agreement and shall not in any way affect
the meaning or interpretation of this Agreement.

(b)

Schedules.  All Schedules delivered pursuant to this Agreement shall be deemed
part of this Agreement and incorporated herein by reference, as if fully set
forth herein.  All provisions contained in any Schedule delivered by or on
behalf of the Parties hereto, or in connection with the transactions
contemplated hereby, are an integral part of this Agreement.

(c)

Counterparts.  This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.

 

15.15

Governing Law.  This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of New York without regard to principles
of conflicts of law,.  

 

[Signature page to follow.]

22611.4-688182 v825

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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
duly executed as of the date first written above.

 

 

By:F.I.S. - FABBRICA ITALIANA SINTETICI S.p.A

 

Name:/s/ illegible

 

 

 

Title:illegible

 

 

 

 

 

By:NEUROCRINE BIOSCIENCES Inc.

 

Name:/s/ Darin Lippoldt

 

 

 

 

 

 

 

Title:Chief Legal Officer

 

 

 

22611.4-688182 v826

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Schedule 1.1

Initial Validation Stability Studies

 

22611.4-688182 v8

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Schedule 1.2

Commercial Stability Studies

 

Services

 

 

 

Stability Studies

•Total cost = $[…***…]

•Long term stability study ([…***…])  @ $[…***…]

•Accelerated stability study ([…***…])  @ $[…***…]

•Intermediate stability study ([…***…])  @ $[…***…]

•Long term stability study ([…***…])  @ $[…***…]

 

 

 

Terms of payment

[…***…] from invoice date for each delivery

$[…***…] down payment upon signature

$[…***…] after first stability pull

$[…***…] year 2 stability start

$[…***…] year 3 stability start

$[…***…] year 4 stability start

 

 

 

* *** Confidential Treatment Requested

22611.4-688182 v8

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Exhibit 2.1

 

Initial Non-Binding Forecast

Valbenazine Tosylate

 

22611.4-688182 v8

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Schedule 2.3

 

Batch Sizes

 

API

Batch Sizes (in Kilograms)

valbenazine tosylate

[…***…]

 

 

 

 

22611.4-688182 v8

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Schedule 3.1

 

API Prices

 

 

API

Number of Batches1 Purchased per Year

Price Per Kilogram ($)

        valbenazine tosylate

[…***…]

               […***…]

        valbenazine tosylate

[…***…]

 

        valbenazine tosylate

[…***…]

 

        valbenazine tosylate

[…***…]

 

        valbenazine tosylate

[…***…]

 

 

Note 1 - Based Upon Batch Size Detailed in Schedule 2.2

 

Schedule 4.1

 

Minimum Retest Dating

 

API

Number of Months

valbenazine tosylate

[…***…]

 

 

 

* *** Confidential Treatment Requested

* *** Confidential Treatment Requested

 

--------------------------------------------------------------------------------

 

Exhibit 5.1

 

Quality Agreement