exv10w3







Exhibit 10.3


***Text Omitted and Filed Separately with the Securities and Exchange Commission.

Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2.



	 	 	 

	

	 	28903 North Avenue Paine, Valencia, California    91355      USA

61 South Paramus Road, Paramus, New Jersey 07652      USA

One Casper Street, Danbury, Connecticut 06810      USA

www.mannkindcorp.com






N.V. Organon

Kloosterstraat 6,

5349 AB Oss,

The Netherlands




Dear Sirs:




Supply Agreement (the “Supply Agreement”) made as of the 7th of November 2007, between
MannKind Corporation, a Delaware corporation (“MannKind”), with its principal office and place of
business at 28903 North Avenue Paine, Valencia, CA 91355, U.S.A., and N.V. Organon, a Dutch company
(“Organon”) with its principal office and place of business at Kloosterstraat 6, 5349 AB OSS, The
Netherlands (each of MannKind and Organon, a “Party” and together, the “Parties”).




A dispute has arisen between the Parties relating to the Supply Agreement (the “Dispute”). The
Parties have settled their differences and have agreed terms for the full and final settlement of
the Dispute. They wish to record those terms of settlement (including the termination of the Supply
Agreement), on a binding basis, in this letter agreement (“Letter Agreement”).




Agreed terms





	1.	 	Interpretation
	 
	 	 	Capitalised terms used but not defined in this Letter Agreement shall have the meaning
given to them in the Supply Agreement.
	 
	2.	 	Effect of this Letter Agreement
	 
	 	 	The Parties hereby agree that this Letter Agreement shall immediately be fully and
effectively binding on them.
	 
	3.	 	Payment, Delivery and Acceptance
	 
	3.1	 	The Supply Agreement is terminated. Notwithstanding such termination, the
provisions of the Supply Agreement explicitly referred to herein, as well as all provisions
designated to survive termination pursuant to Section 11.5 of the Supply Agreement, shall
survive this termination and remain in effect.
	 
	3.2	 	MannKind shall pay to Organon the total sum of US$16 million, divided into two
installments payable by way of bank transfer as follows:

	 
		 	(a) the amount of US$8 million to be paid within two days of
MannKind’s receipt of the
First Shipment (as defined in Section 3.3(a) below); And
	 
		 	(b) the amount of US$8 million to be paid within two days of
MannKind’s receipt of the
Second Shipment (as defined in Section 3.3(b) below).






 









 







	3.3	 	Organon shall manufacture and supply to MannKind’s Danbury, Connecticut facility a total of
[...***...] of Product manufactured in
accordance with the shelf life requirements of the Supply Agreement and divided into two
shipments deliverable as follows:
	 
		 	(a) A shipment of approximately [...***...] of Product to arrive at MannKind’s Danbury,
Connecticut Facility on 28 June 2011 (the “First Shipment”); and
	 
		 	(b) A shipment of the balance of the total of [...***...] of Product to be shipped from
Organon’s facility in France as soon as practicable following Organon’s receipt of the
payment from MannKind pursuant to Section 3.2(a) above (the “Second Shipment”). Organon shall
deliver the Second Shipment to MannKind’s Danbury, Connecticut facility as soon as
practicable following such Second Shipment’s having received all regulatory, customs, or FDA
clearances required for shipment into and within the United States, provided, however, that
Organon shall provide MannKind reasonable notice in advance of the planned delivery date and
provided further that such delivery date shall be extended as necessary to ensure that
delivery does not occur on any statutory holiday, a weekend, a Monday or a Friday. To
facilitate Organon’s delivery obligations under this Section 3.3(b), MannKind hereby agrees
to provide Organon with a Letter of Intended Use in the form attached hereto as Schedule A
and revised by MannKind as may be necessary in order to meet government/regulatory
requirements. For the avoidance of doubt, it shall be MannKind’s obligation to provide a
Letter of Intended Use that satisfies all government/regulatory requirements.
	 
	3.4	 	Organon shall bear the risk of loss for the Product until delivery to such designated
facility at which time title to the Product and the risk of loss shall pass to MannKind.
	 
	3.5	 	Each shipment of the Product shall be accompanied by accurate and complete documents
including, but not limited to, relevant certificates of analysis and certificates of
compliance.
	 
	3.6	 	The provisions of clause 6.4 (“Inspection, Acceptance and Rejection”) and clause 6.5
(“Expert”) of the Supply Agreement shall apply to each delivery of Product under this Letter
Agreement.
	 
	3.7	 	Product supplied by Organon hereunder shall conform to the Specification set forth in Exhibit
A to the Supply Agreement and the warranty set forth in clause 3.8 of this Letter Agreement.
Organon shall perform quality control testing and quality oversight on the Product to be
delivered to MannKind hereunder.
	 
	3.8	 	Organon represents and expressly warrants that the Product provided under this Letter
Agreement shall conform to the Specifications, including the Quality/Technical Agreement,
shall be in compliance with all applicable laws and regulations, and free from defect, claim,
encumbrance or lien. If and to the extent the corresponding event is not governed by clause
3.6 of this Letter Agreement, upon any breach of the warranty Organon shall at Organon’s sole
expense promptly (and in no event longer than ninety (90) calendar days) correct, at no cost
to MannKind, and at MannKind’s request, any such breach by replacement of the Product that did
not conform to such warranty and shall provide technical assistance to MannKind to address the
Product non-conformity issues. Any replacement shall be considered a new Product for purposes
of this clause 3.8.
	 
	 	 	Organon represents and warrants that it has and shall at all times throughout the term of
this Agreement have, whether by right, title, interest, including by license or otherwise,
the Intellectual Property Rights that are required to use, manufacture, market, offer to
sell, sell, import and export the Product in accordance with the terms of this Letter
Agreement and that this Letter Agreement shall not infringe third party rights.





***Confidential Treatment Requested

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	 	 	EXCEPT AS EXPRESSLY PROVIDED HEREIN, ORGANON MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED,
AS TO THE QUALITY OR FITNESS FOR PURPOSE OF THE PRODUCT SUPPLIED TO MANNKIND.
	 
	3.9	 	MannKind shall only use the Product for End Product in the Territory.
	 
	4.	 	Release
	 
	 	 	This Letter Agreement is in full and final settlement of, and each party hereby releases and
forever discharges, all and/or any actions, claims, rights, demands and set-offs, whether in
this jurisdiction or any other, whether or not presently known to the parties or to the law,
and whether in law or equity, that it, its parent, subsidiaries, assigns, transferees,
representatives, principals, agents, officers and directors or any of them ever had, may have
or hereafter can, shall or may have against the other party or any other of its parent,
subsidiaries, assigns, transferees, representatives, principals, agents, officers or
directors arising out of or connected with:
	 
		 	(a) the Dispute;
	 
		 	(b) the underlying facts relating to the Dispute;
	 
		 	(c) any agreement between or act by the parties, their parents, subsidiaries, assigns,
transferees, representatives, principals, agents, officers or directors, or any of them; and
	 
		 	(d) any other matter arising out of or connected with the relationship between the parties
(including the Supply Agreement).
	 
	 	 	(Collectively the “Released Claims”).
	 
	5.	 	Agreement Not to Sue
	 
	 	 	Except as necessary to enforce its rights under this Letter Agreement, each Party agrees, on
behalf of itself and on behalf of its parent, subsidiaries, assigns, transferees,
representatives, principals, agents, officers or directors, not to sue, commence, voluntarily
aid in any way, prosecute or cause to be commenced or prosecuted against the other party or
its parent, subsidiaries, assigns, transferees, representatives, principals, agents, officers
or directors, any action, suit or other proceeding concerning the Released Claims, in this
jurisdiction or any other.
	 
	6.	 	Costs
	 
	 	 	The Parties shall each bear their own costs (including but not limited to legal costs) in
relation to the Dispute and this Letter Agreement.
	 
	7.	 	Warranties and Authority
	 
	7.1	 	Each Party warrants and represents that it has not sold, transferred, assigned or otherwise
disposed of its interest in the Released Claims.
	 
	7.2	 	Each Party warrants and represents to the other with respect to itself that it has the full
right, power and authority to execute, deliver and perform this Letter Agreement.
	 
	8.	 	Indemnities
	 
	 	 	Each Party hereby indemnifies, and shall keep indemnified, the other party against all costs
and damages (including the entire legal expenses of the parties) incurred in all future
actions, claims and proceedings in respect of any of the Released Claims which they may bring
against the other party or its parent, subsidiaries, assigns, transferees, representatives,
principals, agents, officers or directors.




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	9.	 	No Admission
	 
	 	 	This Letter Agreement is entered into in connection with the compromise of disputed matters
and in the light of other considerations. It is not, and shall not be represented or
construed as, an admission of liability or wrongdoing on the part of either Party to this
Letter Agreement or any other person or entity.
	 
	10.	 	Severability
	 
	 	 	If any provision of this Letter Agreement is found to be void or unenforceable, that
provision shall be deemed to be deleted from this Letter Agreement and the remaining
provisions of this Letter Agreement shall continue in full
force and effect and the Parties shall use their respective reasonable endeavours to procure
that any such provision is replaced by a provision which is valid and enforceable, and which
gives effect to the spirit and intent of this Letter Agreement.
	 
	11.	 	Entire Agreement
	 
	 	 	This Letter Agreement, together with the provision of the Supply Agreement and Quality
Agreement referenced herein, constitutes the entire understanding and agreement between the
Parties in relation to the subject matter of this Letter Agreement.
	 
	 	 	Each Party acknowledges that it has not entered into this Letter Agreement in reliance wholly
or partly on any representation or warranty made by or on behalf of the other party (whether
orally or in writing) other than as expressly set out in this Letter Agreement.
	 
	12.	 	Confidentiality
	 
	 	 	The terms of this Letter Agreement, and the substance of all negotiations in connection with
it, are confidential to the Parties and their advisers, who shall not disclose them to, or
otherwise communicate them to, any third party other than:
	 
		 	(a) to the Parties’ respective auditors, insurers and lawyers on terms which preserve
confidentiality;
	 
		 	(b) pursuant to an order of a court of competent jurisdiction or pursuant to any proper order
or demand made by any competent authority or body where they are under a legal or regulatory
obligation to make such a disclosure; and
	 
		 	(c) as far as necessary to implement and enforce any of the terms of this Letter Agreement.
	 
	 	 	The Parties are entitled to confirm the fact of, but not the terms of, settlement of the
Dispute.
	 
	13.	 	Governing Law and Dispute Resolution
	 
		 	13.1 This Letter Agreement shall be governed by, and construed in accordance with English
law.
	 
		 	13.2 Any controversy or claim arising out of or relating to this Letter Agreement, or the
breach thereof, shall be settled by arbitration by a sole arbitrator administered by the
American Arbitration Association under its Commercial Arbitration Rules, and judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
Such arbitration shall be conducted in the English language in New York City.
	 
	14.	 	Contracts (Rights of Third Parties) Act 1999
	 
	 	 	No other person who is not a party to this Letter Agreement shall have any rights, whether
under the Contract (Rights of Third Parties) Act 1999 or otherwise, to enforce any terms of
this Letter Agreement.





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	15.	 	Co-operation
	 
	 	 	The Parties shall deliver or cause to be delivered such instruments and other documents at
such times and places as are reasonably necessary or desirable, and shall take any other
action reasonably requested by the other Party for the purpose of putting this Letter
Agreement into effect, including MannKind’s provision of appropriate purchase orders and a
Letter of Intended Use in the form attached hereto as Schedule A, revised by MannKind as may
be necessary to allow the Product to receive customs/FDA or other regulatory clearance. The
parties shall fully cooperate with each other to provide feedback, comments, questions or
other communications, if any, received from any governmental agency or authority with respect
to any documents or requirements necessary for importation of the Product into the United
States and shipment within the United States.
	 
	16.	 	Counterparts
	 
	 	 	This Letter Agreement may be signed in any number of counterparts, each of which, when
executed and delivered, shall be an original and all of which together evidence the same
Letter Agreement.
	 
	17.	 	Variation
	 
	 	 	Any variation of this Letter Agreement shall be in writing and signed by or on behalf of each
party.





IN WITNESS WHEREOF, the Parties hereto have this day caused this Letter Agreement to be executed by
their duly authorized officers.




	 	 	 	 	 	 	 

	N.V. Organon	 	MannKind Corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/ Dr. Ir. Jan Smook
	 	By:
	 	/s/ Hakan Edstrom
	 

	 	 
	 	 	 	 
	 

	 	Name: Dr. Ir. Jan Smook
	 	 	 	Name: Hakan Edstrom
	 

	 	Title: Vice President Manufacturing
	 	 	 	Title: President & COO
	 

	 	Date: 24 June 2011
	 	 	 	Date: 6/23/2011
	 
	 	 	 	 	 	 
	By:

	 	/s/ J.H.M. Pluymen
 

	 	 	 	 
	 

	 	Name: J.H.M. Pluymen	 	 	 	 
	 

	 	Title: Chairman of the Board	 	 	 	 
	 

	 	Date: 24 June 2011	 	 	 	 






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