akba-ex1060_1473.htm



Exhibit 10.60

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Double asterisks denote omissions.

EXCLUSIVE DISTRIBUTION AGREEMENT

This Exclusive Distribution Agreement (the “Agreement”) is made as of this 16th day of October, 2014 (the “Effective Date”), between Keryx Biopharmaceuticals, Inc., a Delaware corporation, with an address of 750 Lexington, 20th Floor, New York, NY 10022 (“Client”), and Cardinal Health 105, Inc., an Ohio corporation, with a place of business at 15 Ingram Boulevard, Suite 100, LaVergne, Tennessee, 37086 (“Cardinal Health”) each individually a (“Party”) and collectively (the “Parties”).

RECITALS

A.        Client is, among other things, in the business of developing and marketing pharmaceutical products in the United States, its territories, possessions and commonwealths (“Territory”).

B.        Cardinal Health is, among other things, in the business of distributing pharmaceutical products to wholesalers, specialty distributors, physicians, clinics, hospitals, pharmacies, and other health care providers in the Territory, and of providing information systems and other services that support its clients’ use of its distribution capabilities.

C.        Client desires to engage Cardinal Health as its exclusive third party logistics distribution agent for commercial sales of all pharmaceutical Products manufactured and/or marketed by Client in all formulations (collectively, “Product”), and to perform certain other services described in this Agreement, all upon the terms and conditions set forth in this Agreement.

THEREFORE, in consideration of the mutual covenants, terms and conditions set forth below, the Parties agree as follow;

ARTICLE 1
APPOINTMENT/AUTHORIZATION

1.1       Appointment.  Subject to the terms and conditions set forth in this Agreement, during the term of this Agreement, Client appoints Cardinal Health as its exclusive third party logistics distribution agent and as an authorized distributor of record of Product in the Territory to Client’s Customers, including, but not limited to, wholesalers, specialty distributors, physicians, clinics, hospitals, pharmacies and other health care providers in the Territory (collectively, “Customers”).

1.2       Acceptance of Appointment.  Subject to the terms and conditions set forth in this Agreement, Cardinal Health accepts the appointment to represent Client as its exclusive third party logistics distribution agent and as an authorized distributor of record of Product to Customers in the Territory.

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ARTICLE 2
SERVICES

2.1       Services.  Cardinal Health shall provide the services set forth in the Operating Guidelines, which include, without limitation, storage, distribution, returns, customer support, financial support, EDI and system access support (“Services”).  The Operating Guidelines shall be mutually agreed upon and a copy of the finalized Operating Guidelines shall be attached hereto as Exhibit A and made a part hereof.

2.2       Operating Guidelines.  The Operating Guidelines may be amended from time to time upon the mutual written agreement of the Parties; provided, however, that any change, modification or amendment to the Operating Guidelines may result in an increase in the Fees (as defined in Article 5).

2.3       Compliance to Operating Guidelines.  Cardinal Health’s services shall comply with the Operating Guidelines for up to [**]% of Client’s Forecast (defined below).  If (i) Client’s shipments of Product to Cardinal Health or (ii) Client’s Customers’ Product orders exceed Client’s Forecast by more than [**] percent ([**]%), Cardinal Health shall use commercially reasonable efforts to meet the requirements of the Operating Guidelines, provided however, that Client acknowledges that Cardinal Health may not be able to meet all guidelines relating to response and shipping times.

2.4       Product Returns.  All Product returns shall be processed and handled by Cardinal Health in accordance with the Operating Guidelines; and any customization or additional return services requested by Client shall be performed at an additional fee as agreed by the Parties.

2.5       Product Recalls.  Client is solely responsible for all Product recalls, provided however that Cardinal Health shall be responsible for Product recalls to the extent arising from Cardinal Health’s gross negligence or willful misconduct, subject to the terms of this Agreement.  In the event Product is subject to recall, or Client, on its own initiative, recalls any Product, Cardinal Health shall provide assistance to Client as set forth in the Operating Guidelines and as mutually agreed upon, provided that Client shall pay to Cardinal Health an amount equal to Cardinal Health’s actual costs incurred with any such recall services.  Such cost shall be in addition to the Fees described in Article 5 below.

ARTICLE 3
PRODUCT SUPPLY/CLIENT RESPONSIBILITIES

3.1       Facility.  Client shall deliver Product to Cardinal Health at Cardinal Health’s facility located at 15 Ingram Boulevard, Suite 100, LaVergne, TN 37086, or to such other distribution facility as may be designated by Cardinal Health to Client in writing and agreed upon by Client (“Facility”).

3.2       Delivery and Title.  Client shall be responsible for delivery of Product to and from the Facility, including all costs, expenses and risk of loss associated with such delivery.  Title to Product shall remain with Client at all times, even when Product is stored or warehoused at the Facility.  Client shall at all times insure the Product for damage, loss, destruction, theft or any such other property damage (“Loss”) as further set forth in Article 13 below.  Except for Loss resulting solely from the gross negligence or willful misconduct of Cardinal Health, Client shall bear all risk of loss or damage with respect to the Product.

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3.3       Forecast and Price List.

A.        Forecast.  Client shall provide Cardinal Health with a forecast of the volume of Product to be handled by Cardinal Health under this Agreement, not less often than [**](“Forecast”).  All forecasts, including the Forecast, are used for the express purpose of operational planning.  In the event of a significant variance from the Forecast or a change in core business that could reasonably be expected to have a material effect upon the obligations of either Party hereunder, the Party so affected may notify the other Party that it wishes to discuss an appropriate adjustment to the Fees.  The Parties must meet within [**] of such notification to discuss the merits and implementation of any such adjustment and during such meeting, the Parties shall negotiate in good faith.

B.        Price List.  Upon execution of this Agreement, Client shall deliver to Cardinal Health a customer list, which sets forth the Product prices (the “Customer Price List”).  Client shall notify Cardinal Health of any change in the Customer Price List not less than [**] prior to the effective date of any such change.  Cardinal Health shall use commercially reasonably efforts to implement such price change in accordance with Client’s instruction.

3.4       Shipment Inspection.  Cardinal Health shall visually inspect each shipment of Product for external damage or loss in transit and notify Client of any such evident damage or loss as provided in the Operating Guidelines.

ARTICLE 4
INFORMATION SYSTEM ACCESS

4.1       Access.  During the Term of this Agreement and subject to the terms herein, Client may use password(s) and identification number(s) provided by Cardinal Health to remotely access Client’s data maintained on Cardinal Health’s web enabled Operating System Base and certain support services associated therewith, as further set forth in the Operating Guidelines (collectively, the “System”) provided that such access is used solely by Client’s employees and for Client’s own internal business purposes.  Client shall use that access solely to access Client’s data and shall not access or attempt to access any other data, systems or software.  Client shall be responsible for all use of the passwords and identification elements and shall ensure that they are used solely to effect the limited access authorized herein.  The limited license to access the System granted herein does not include the right to copy, download or otherwise use any software or non-Client data maintained on the System.

4.2       Fees.  The System shall be made available to Client at the fees set forth in the Fee Schedule.  If Cardinal Health agrees to perform any custom enhancements to the System requested by Client, such customization services shall be billed separately based on an hourly rate set forth in the Fee Schedule (as defined in Article 5) and prior to such performance, Cardinal Health shall notify Client of any related increase in the periodic Fees hereunder relative to the ongoing support of the customizations.

4.3       Security.  During the term of this Agreement, Cardinal Health shall employ commercially reasonable security measures and policies designed to safeguard the integrity, accessibility, and confidentiality of Client’s data resident on the System and establish and maintain reasonable disaster and emergency recovery plans designed to minimize disruption from System operation interruptions.  Such measures shall be no less secure than those utilized by Cardinal Health to protect its own confidential information.

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4.4       Client Obligations.  Client shall not reverse engineer, reverse assemble, decompile, create derivative works, modify, or otherwise attempt to derive the source code of any software on the System or copy, download, modify, or create derivative works of such software.  Also, Client shall not permit access to the System or related documentation to any other person or entity.  The System and all parts thereof, in all of their tangible and intangible manifestations, all existing or new enhancements, developments, derivative works, and other modifications to the System (or any part thereof), and all related proprietary rights, are and shall remain the exclusive property of Cardinal Health.

4.5       Disclaimer.  THE SYSTEM, THE SOFTWARE THEREON AND ANY RESULTS OBTAINED THEREFROM ARE PROVIDED ON AN “AS IS” BASIS, WITHOUT WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE.  CARDINAL HEALTH MAKES NO REPRESENTATIONS OR WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, RELATING DIRECTLY OR INDIRECTLY TO THE SYSTEM OR ANY PART THEREOF INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.

4.6       System Availability.  Cardinal Health shall use commercially reasonable efforts to make the System available for access twenty-four (24) hours a day, seven (7) days a week absent scheduled and emergency maintenance periods.

4.7       Suspension of Access.  Notwithstanding anything to the contrary, in the event of a material breach of any term of this Agreement, Cardinal Health may revoke or suspend any or all passwords and identification numbers provided to Client hereunder, provided that access will be reinstated upon such a material breach being cured.

ARTICLE 5
PRICING AND PAYMENT TERMS

5.1       Fees.  As compensation for the Services, Client shall pay to Cardinal Health the fees (“Fees”) set forth on Exhibit B (“Fee Schedule”) attached hereto and incorporated by reference.

5.2       Invoices.  Cardinal Health shall issue an invoice to Client for the Services rendered under this Agreement or for any other amounts due on a monthly basis.  Payment is due within [**] of the invoice date via electronic funds transfer (“EFT”), If the invoice is not paid within [**] following written notice to Client of non-payment, Cardinal Health may, at its option, elect to (i) impose a service charge on the unpaid amount calculated at the rate of [**]% per month (or the maximum rate permitted by law if such rate is less than [**]% per month) until such amount is paid in full and/or (ii) suspend any further Services until such invoice is paid in full.

5.3       Fee Adjustment.

A.       The Fees shall be held firm for the first contract year.  Thereafter, Cardinal Health will evaluate the fee schedule and may adjust the fees not more often than [**] by [**] percent ([**]%), provided, however, that any such fee adjustment will then remain in place for the subsequent [**].  

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B.        Notwithstanding the terms set forth above in Section 5.3(A), if Cardinal Health can reasonably demonstrate that the costs for providing the Services have materially increased, or are likely to materially increase in the coming year due to the adoption of any applicable law or regulation (or any material change in the interpretation or administration thereof), or due to unforeseen circumstances beyond Cardinal Health’s reasonable control, then upon notice from Cardinal Health, the Parties agree to meet in good faith and discuss a mutually acceptable adjustment to the Fees, provided however, that Client shall be under no obligation to agree to such an adjustment to the Fees.

5.4       Taxes. Client shall pay when due all sales, use, gross receipts, excise and personal property taxes associated with the Product (excluding any personal property tax associated with Cardinal Health’s equipment used in connection with the Services), and other taxes now or hereafter imposed as a result of the transactions contemplated by this Agreement, none of which have been included in the fees payable to Cardinal Health under this Agreement; provided that the amounts payable by Client under this section shall not include taxes based on the net income of Cardinal Health.

ARTICLE 6
TERM AND TERMINATION

6.1       Term.  The Initial Term of this Agreement shall begin on the Effective Date and shall continue for a period of three (3) years following the first shipment of FDA-approved Product to a commercial customer (“Initial Term”), unless terminated earlier pursuant to this Agreement.  Thereafter, this Agreement shall automatically renew for additional terms of one (1) year each (each, a “Renewal Term,” and together with the Initial Term, the “Term”), unless written notice of termination is given by either Party at least ninety (90) days prior to the end of the Initial Term or any Renewal Term.

6.2       Intentionally Omitted.

6.3       Termination.  Either Party shall have the right to immediately terminate this Agreement if:

(A)        the other Party files a petition in bankruptcy, or enters into an agreement with its creditors, or applies for or consents to the appointment of a receiver or trustee, or makes an assignment for the benefit of creditors, or suffers or permits the entry of any order adjudicating it to be bankrupt or insolvent and such order is not discharged within thirty (30) days; or

(B)        the other Party materially breaches any of the provisions of this Agreement, and such breach is not cured within [**] after the giving of written notice; provided, however, that (i) in the case of a breach that cannot be cured within [**], the Parties agree to meet in good faith and within [**] after the giving of written notice, formulate a mutually agreeable plan to cure such breach within a reasonable period of time; and (ii) in the case of a failure of Client to make payments in accordance with the terms of this Agreement, Cardinal Health may terminate this Agreement if such payment breach is not cured within [**] following Cardinal Health’s delivery of a written notice of non-payment to Client.

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6.4       Effect of Termination.  Expiration or termination of this Agreement shall be without prejudice to any rights or obligations that accrued to the benefit of either Party prior to such expiration or termination.  Client shall pay Cardinal Health for all Services performed up to the date of termination, and shall reimburse Cardinal Health for all costs and expenses incurred in accordance with the terms of this Agreement.  Upon termination or expiration of this Agreement, all Product shall be returned to Client or a designee of Client, at Client’s sole cost and expense.

ARTICLE 7
REGULATORY

7.1       Audits.  No more than [**], Client or its designee shall have the right during normal business hours (i.e., 8:00 a.m. to 5:00 p.m. local Facility time), to conduct a complete quality audit upon [**] prior written notice to Cardinal Health.  Client shall have the right to conduct for cause audits immediately if necessary to ensure Product safety or if otherwise necessary to implement or support a Product recall.

7.2       Compliance with Laws.  Each Party shall conduct its activities in connection with this Agreement in compliance with all applicable United States laws, rules, regulations and guidelines.

ARTICLE 8
REPRESENTATIONS AND WARRANTIES

8.1       Cardinal Health.  Cardinal Health represents and warrants to Client that, unless otherwise agreed to by the Parties, Cardinal Health shall perform Services in accordance with this Agreement, the Operating Guidelines, and applicable United States laws, rules, regulations and guidelines.

8.2       Client.  Client represents, warrants and covenants to Cardinal Health that:

A.        Product.  The Product shall not be adulterated or misbranded as provided in the Food, Drug and Cosmetic Act, as amended from time to time;

B.        Safe Handling Instructions.  It has provided all safe handling instruction, health and environmental information and material safety data sheets applicable to the Product or to any materials supplied by Client in writing in sufficient time for review and training by Cardinal Health prior to delivery; and

8.3       Mutual.  Each Party represents and warrants to the other Party that:

A.        Existence and Power.  Such Party (i) is duly organized, validly existing and in good standing under the laws of the state in which it is organized, (ii) has the power and authority and the legal right to own and operate its property and assets, and to carry on its business as it is now being conducted, and (iii) is in compliance with all requirements of applicable laws, except to the extent that any noncompliance would not materially adversely affect such Party’s ability to perform its obligations under the Agreement;

B.        Authorization and Enforcement of Obligations.  Such Party (i) has the power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder and (ii) has taken all necessary action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;

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C.        Execution and Delivery.  This Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms;

D.        No Consents.  All necessary consents, approvals and authorizations of all regulatory authorities and other persons required to be obtained by such Party in connection with the Agreement have been obtained; and

E.        No Conflict.  The execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (i) do not conflict with or violate any requirement of applicable laws; and (ii) do not materially conflict with, or constitute a material default or require any consent under, any contractual obligation of such Party.

8.4       Limitations.  THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 8 ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY EACH PARTY TO THE OTHER AND NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND WHATSOEVER, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 9
TRADEMARKS

Neither Party shall have the right to use the name of the other Party or any Affiliate of the other Party, or the other Party’s or such Affiliates’ trademarks, service marks, logos, or other similar marks in any manner except with the prior written approval of that Party; provided that the foregoing shall not prohibit Cardinal Health’s use of Client’s names or marks in connection with the performance of the Services in a manner consistent with this Agreement.  “Affiliate,” as used in this Agreement, means any legal entity which, during the Term hereof, controls, is controlled by, or is under common control with, such Party.  For purposes of this definition, an entity shall be deemed to control another entity if it owns or controls, directly or indirectly, at least fifty percent (50%) of the voting interest of all equity interests of the other entity (or other such comparable ownership interest for an entity other than a corporation).

ARTICLE 10
CONFIDENTIALITY AND NON-USE

10.1     Mutual Obligation.  Cardinal Health and Client agree that they shall not use the other Party’s Confidential Information (defined below) except as necessary for the receiving Party to perform its obligations under this Agreement or disclose the other Party’s Confidential Information to any third Party without the prior written consent of the other Party except as required by law, regulation or court or administrative order; provided, however, that prior to making any such legally required disclosure, the Party making such disclosure shall give the other Party as much prior notice of the requirement for and contents of such disclosure as is practicable under the circumstances.  Notwithstanding the foregoing, each Party may disclose the other Party’s Confidential Information to any of its Affiliates that (A) need to know such Confidential Information for the purpose of performing under this Agreement, (B) are advised of the contents of this article, and (C) agree to be bound by the terms of this article.

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10.2     Definition.  As used in this Agreement, the term “Confidential Information” includes all such information furnished by Cardinal Health or Client, or any of their respective representatives or Affiliates, to the other or its representatives or Affiliates in connection with the services or performance of this Agreement, whether furnished before, on or after the date of this Agreement and furnished in any form, including but not limited to written, verbal, visual, electronic or in any other media or manner.  Confidential Information includes all proprietary technologies, know-how, trade secrets, discoveries, inventions and any other intellectual property (whether or not patented), analyses, compilations, business or technical information and other materials prepared by either Party, or any of their respective representatives, containing or based in whole or in part on any such information furnished by the other Party or its representatives.  Confidential Information also includes the existence of this Agreement and its terms.

10.3     Exclusions.  Notwithstanding Section 10.2, Confidential Information does not include information that (A) is or becomes generally available to the public other than as a result of a breach of this Agreement, or (B) is already known by the receiving Party at the time of disclosure as evidenced by the receiving Party’s written records, or (C) becomes available to the receiving Party on a non-confidential basis from a source that is entitled to disclose it on a non-confidential basis, or (D) was or is independently developed by or for the receiving Party without reference to the Confidential Information, as evidenced by the receiving Party’s written records.

10.4     No Implied License.  The receiving Party shall obtain no right of any kind or license under any patent application or patent by reason of this Agreement.  All Confidential Information shall remain the sole property of the Party disclosing such information or data.

10.5     Return of Confidential Information.  Upon termination of this Agreement, the receiving Party shall, upon request, promptly return within [**] all such information, including any copies thereof, and cease its use or, at the request of the disclosing Party, shall promptly destroy the same and certify such destruction to the disclosing Party; except for a single copy thereof, which may be retained for the sole purpose of determining the scope of the obligations incurred under this Agreement.

10.6     Survival.  The Parties intend for this Article 10 to supersede that certain Confidentiality Agreement between the parties dated the 9th day of April, 2014.  The obligations of this Article 10 shall terminate [**] from the expiration of this Agreement.

ARTICLE 11
INDEMNIFICATION

11.1     Indemnification by Cardinal Health.  Cardinal Health shall indemnify and hold harmless Client, its Affiliates, and their respective directors, officers, employees and agents (“Client Indemnitees”) from and against any and all suits, claims, losses, demands, liabilities, damages, costs and expenses (including reasonable attorney’ fees) in connection with any suit, demand or action by any third party (“Liabilities”) arising out of or resulting from (A) any breach of its representations, warranties or obligations set forth in this Agreement or (B) any negligence or willful misconduct by Cardinal Health, except to the extent that any of the foregoing arises out of or results from any Client Indemnitee’s negligence, willful misconduct or breach of this Agreement.

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11.2     Indemnification by Client.  Client shall indemnify and hold harmless Cardinal Health, its Affiliates, and their respective directors, officers, employees and agents (“Cardinal Health Indemnitees”) from and against all Liabilities arising out of or resulting from (A) any breach of its representations, warranties or obligations set forth in this Agreement; (B) any manufacture, sale, promotion, distribution, shipping, use of or exposure to the Product or any materials supplied by Client, including, without limitation, product liability or strict liability; (C) any actual or alleged infringement or violation of any patent, trade secret, copyright, trademark or other proprietary rights concerning the Product or provided by Client; or (D) any negligence or willful misconduct by Client, except to the extent that any of the foregoing arises out of or results from any Cardinal Health Indemnitee’s negligence, willful misconduct or breach of this Agreement.

11.3     Indemnification Procedures.  All indemnification obligations in this Agreement are conditioned upon the Party seeking indemnification:  (A) promptly notifying the indemnifying Party of any claim or liability of which the Party seeking indemnification becomes aware (including a copy of any related complaint, summons, notice or other instrument); provided, however, that failure to provide such notice within a reasonable period of time shall not relieve the indemnifying Party of any of its obligations hereunder except to the extent the indemnifying Party is prejudiced by such failure; (B) reasonably cooperating with the indemnifying Party in the defense of any such claim or liability (at the indemnifying Party’s expense); and (C) not compromising or settling any claim or liability without prior written consent of the indemnifying Party.

ARTICLE 12
LIMITATIONS OF LIABILITY

12.1     CARDINAL HEALTH’S TOTAL LIABILITY UNDER THIS AGREEMENT, WHETHER IN CONTRACT OR TORT, INCLUDING.  WITHOUT LIMITATION, ANY OF CARDINAL HEALTH’S INDEMNITY OR OTHER FINANCIAL OBLIGATIONS UNDER ARTICLE 11, SHALL NOT EXCEED [**] TIMES THE TOTAL FEES PAID BY CLIENT TO CARDINAL HEALTH FOR THE SERVICES WHICH WERE INVOLVED IN CAUSING ANY CLAIMS, DAMAGES, LOSSES, COSTS OR EXPENSES, NOT TO EXCEED $[**].

12.2     NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF PERFORMANCE UNDER THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, LOSS OF REVENUES, PROFITS OR DATA, WHETHER IN CONTRACT OR TORT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

12.3     NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE LIMITATIONS IN THIS ARTICLE 12 SHALL NOT LIMIT CLIENT’S LIABILITY OR RESPONSIBILITY RELATING TO A BREACH OF ITS OBLIGATIONS UNDER ARTICLE 4 HEREIN.

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ARTICLE 13
INSURANCE

13.1     Insurance Policies.  During the term of this Agreement, Client shall obtain and maintain the following insurance with limits not less than those specified below:

A.        Products and Completed Operations Liability Insurance covering the Products included in this Agreement with a limit of $[**] per occurrence;

B.        All-Risk Property Insurance, including transit coverage, in an amount equal to full replacement value covering Client’s property while it is at the Facility or in transit to or from the Facility.  Client’s all-risk property insurance shall apply to all losses and be primary (with respect both to any insurance issued to Cardinal Health and to any deductible amount or self- insured amount retained by Cardinal Health) except for losses resulting solely from the gross negligence or intentional misconduct of Cardinal Health.

In the event that any of the required policies of insurance are written on a claims made basis, then such policies shall be maintained during the entire term of this Agreement and for a period of not less than [**] following the termination or expiration of this Agreement.

13.2     Waiver.  Client shall obtain a waiver from any insurance carrier with whom Client carries Property Insurance releasing its subrogation rights against Cardinal Health except for losses resulting solely from the gross negligence or intentional misconduct of Cardinal Health, Client shall not seek reimbursement for any property claim, or portion thereof that is not fully recovered from Client’s property insurance except for losses resulting solely from the gross negligence or intentional misconduct of Cardinal Health.

13.3     Additional Insured Status, Cardinal Health Inc., and its Affiliates shall be named as additional insureds under the Products and Completed Operations Liability insurance policies as respects the Products and completed operations outlined in this Agreement.  Such insurance shall be primary (with respect both to any insurance issued to Cardinal Health and to any self-insured amount retained by Cardinal Health) with regard to Cardinal Health’s liability for damage arising out of those products for which they have been added as additional insureds.  Such additional insurance status shall continue during the term and, if the policies are written on a claims made basis, shall continue for not less than [**] following termination or expiration of this Agreement.

13.4     Certificates.  Client shall furnish certificates of insurance to Cardinal Health evidencing the required insurance and additional insured status as soon as practicable after the Effective Date and within [**] after renewal of such policies.  Such certificates shall state that Client’s insurers will endeavor to provide [**] written notice of any cancellation prior to the policy(ies) expiration date(s).  Each insurance policy that is required under this article shall be obtained from an insurance carrier with an A.M. Best rating of at least A-VII.

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ARTICLE 14
NOTICES

All notices and other communications hereunder shall be in writing and shall be deemed given:  (A) when delivered personally; (B) when delivered by facsimile transmission (receipt verified); (C) when received or refused, if mailed by registered or certified mail (return receipt requested), postage prepaid; or (D) when delivered if sent by express courier service, to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice; provided, that notices of a change of address shall be effective only upon receipt thereof):

 


	
To Client:
	
Keryx Biopharmaceuticals, Inc.

	
 
	
750 Lexington Avenue, 20th Floor

	
 
	
New York, NY 10022

	
 
	
Attn:  Ron Bentsur, CEO 

	
 
	
 

	
With a copy to:
	
Keryx Biopharmaceuticals, Inc.

	
 
	
One Marina Park Drive, 10th Floor

	
 
	
Boston, MA 02110

	
 
	
Attn:  General Counsel

	
 
	
 

	
To Cardinal Health:
	
Cardinal Health 105, Inc.

	
 
	
Specialty Pharmaceutical Services

	
 
	
Ingram Boulevard, Suite 100

	
 
	
LaVergne, TN 3708615 

	
 
	
Attn:  VP, Third-Party Logistics Services

	
 
	
 

	
With a copy to:
	
Cardinal Health, Inc.

	
 
	
7000 Cardinal Place

	
 
	
Dublin, Ohio 43017

	
 
	
Attn:  Associate General Counsel

	
 
	
Facsimile:  (614) 757-8919

	
 
	
 




 

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ARTICLE 15
MISCELLANEOUS

15.1     Entire Agreement; Amendments.  This Agreement, the attachments and any amendments thereto constitute the entire understanding between the Parties and supersede any contracts, agreements or understanding (oral or written) of the Parties with respect to the subject matter hereof.  No term of this Agreement may be amended except upon written agreement of both Parties, unless otherwise provided in this Agreement.

15.2     Captions.  The captions in this Agreement are for convenience only and are not to be interpreted or construed as a substantive part of this Agreement.

15.3     Further Assurances.  The Parties agree to execute, acknowledge and deliver such further instruments and to take all such other incidental acts as may be reasonably necessary or appropriate to carry out the purpose and intent of this Agreement.

15.4     No Waiver.  Failure by either Party to insist upon strict compliance with any term of this Agreement in any one or more instances shall not be deemed to be a waiver of its rights to insist upon such strict compliance with respect to any subsequent failure.

15.5     Severability.  If any term of this Agreement is declared invalid or unenforceable by a court or other body of competent jurisdiction, the remaining terms of this Agreement shall continue in full force and effect.

15.6     Independent Contractors.  The relationship of the Parties is that of independent contractors, and neither Party shall incur any debts or make any commitments for the other Party except to the extent expressly provided in this Agreement.  Nothing in this Agreement is intended to create or shall be construed as creating between the Parties the relationship of joint venturers, co-partners, employer/employee or principal and agent.

15.7     Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties, their successors and permitted assigns.  Neither Party may assign this Agreement, in whole or in part, without the prior written consent of the other Party, except that either Party may, without the other Party’s consent, assign this Agreement to an Affiliate or to a successor to substantially all of the business or assets of the assigning company to which this Agreement relates.

15.8     Governing Law.  This Agreement shall be governed by and construed under the laws of the State of Delaware, excluding its conflicts of law provisions.  The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

15.9     Dispute Resolution.  If any dispute, controversy or disagreement arises between the Parties (“Dispute”), such Dispute shall be presented to the respective presidents or senior executives of Cardinal Health and Client for their consideration and resolution.  If such Parties cannot reach a resolution of the Dispute within [**], either Party may submit the Dispute to a court of appropriate jurisdiction.

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15.10   Prevailing Party.  In any dispute resolution proceeding between the Parties in connection with this Agreement, the prevailing Party shall be entitled to its reasonable attorney’s fees and costs in such proceeding.

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

15.12   Publicity.  Neither Party shall make any press release or other public disclosure regarding this Agreement or the transactions contemplated hereby without the other Party’s express prior written consent, except as required under applicable law or by any governmental agency, in which case the Party required to make the press release or public disclosure shall use commercially reasonable efforts to obtain the approval of the other Party as to the form, nature and extent of the press release or public disclosure prior to issuing the press release or making the public disclosure.

15.13   Survival.  The rights and obligations of the Parties shall continue under Articles 10 (Confidentiality and Non-Use), to the extent expressly stated therein, 11 (Indemnification), 12 (Limitations of Liability), 13 (Insurance), to the extent expressly stated therein, 14 (Notice) and 15 (Miscellaneous) and Section 6.4 (Effect of Termination), notwithstanding expiration or termination of this Agreement.

15.14   Force Majeure.  Except as to payments required under this Agreement, neither Party shall be liable in damages for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in such Party’s performance hereunder if such default or delay is caused by events beyond such Party’s reasonable control including, but not limited to, acts of God, regulation or law or other action or failure to act of any government or agency thereof, war or insurrection, civil commotion, destruction of production facilities or materials by earthquake, fire, flood or storm, epidemic, or failure of suppliers, public utilities or common carriers; provided however, that the Party seeking relief hereunder shall immediately notify the other Party of such cause(s) beyond such Party’s reasonable control.  The Party that may invoke this section shall use all reasonable endeavors to reinstate its ongoing obligations to the other.  If the cause(s) shall continue unabated for [**] then both Parties shall meet to discuss and negotiate in good faith what modifications to this Agreement should result from this force majeure.

IN WITNESS WHEREOF, the undersigned have caused their duly authorized representative to execute this Agreement effective as of the date first written above.

 


	
CARDINAL HEALTH 105, INC.
	
 
	
KERYX BIOPHARMACEUTICALS, INC. 

	
 
	
 
	
 
	
 
	
 

	
By
	
/s/ David Cheetham
	
 
	
By
	
/s/ Greg Madison

	
 
	
 
	
 
	
 
	
 

	
David Cheetham
	
 
	
Greg Madison

	
 
	
 
	
 
	
 
	
 

	
Division President
	
 
	
EVP/COO

	
 
	
 
	
 
	
 
	
 

	
Date:
	
Oct 23, 2014
	
 
	
Date:
	
Oct 23, 2014




 

< Signature Page to Exclusive Distribution Agreement >

 

 

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EXHIBIT A

OPERATING GUIDELINES

Exhibit A
Operating Guidelines

Keryx Biopharmaceuticals, Inc.

and

Cardinal Health 105, Inc. - Third Party Logistics Services

The Operating Guidelines will be incorporated into the Exclusive Distribution Agreement between Keryx Biopharmaceuticals, Inc., (“Client”), and Cardinal Health 105, Inc. (“Cardinal Health”), dated the 16th day of October, 2014 (the “Agreement”).  Capitalized terms not otherwise defined in these Operating Guidelines have the same meaning as set forth in the Agreement.

1.        WAREHOUSING

1.1       Cardinal Health maintains its warehouse facility in compliance with 21CFR205 and applicable federal, state and local laws, as well as rules and regulations supporting applicable cGMPs.

1.2       With reference to those regulations set forth in 21CFR203, SPS supports Client PDMA programs related to storage and distribution.  Other PDMA compliance elements remain the sole responsibility of the Client.

1.3       Cardinal Health will maintain SOPs appropriate for a pharmaceutical distribution center operating environment.  SOPs are appropriately approved and controlled under the Cardinal Health controlled document management system.

1.4       Cardinal Health maintains compliant documented training programs including DEA, cGMP, and OSHA.  These training programs include training on SOPs.  Client will have the authorization to audit the training records.

1.5       Cardinal Health complies with storage, handling and shipping conditions mutually agreed to by the Client and Cardinal Health for the Product.

1.6       The Product will be stored by Cardinal Health [**].  Client will ensure that the storage requirements arc in human readable format and the Product NDC number, lot number, carton quantity, and expiry date will be in the standard HDMA barcode format.  Product is stored in areas designed to be continuously monitored for the temperature range specified for the Product.  Cardinal Health maintains daily temperature recordings.  Cardinal Health will provide such records to Client upon written request.

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1.7       Cardinal Health reports temperature excursions that last more than [**] to Client, and in no event, more than [**] from the point of discovery of the excursion.

1.8       Product will be stored in an approved warehouse facility with secured access, accessible only to authorized Cardinal Health personnel. 

2.        RECEIVING

2.1       Client, Client’s contract manufacturing agent, or mutually agreed upon Cardinal Health transportation agent, will arrange transportation services to transfer the Product to Cardinal Health, Client will notify Cardinal Health of the specific delivery schedule.

2.2       Client’s carrier will contact Cardinal Health [**] prior to expected delivery date to arrange a delivery appointment.

2.3       Client will retain title and ownership to the Product at all times.  Cardinal Health’s signature on the carrier’s bill of lading is an acknowledgement only of Cardinal Health’s receipt of Product.

2.4       Prior to first receipt of Product, Client will provide Cardinal Health with a Finished Goods Material Safety Data Sheet.

2.5       Client’s Product will meet the following standards for carton identification, documentation, palletization, and uniformity:

2.5.1    Client will provide the bill of lading, notice of release, packing list, and other documentation necessary.  Cardinal Health will follow its SOP for receiving Product.

2.5.2    Pallets will meet GMA standards of [**] dimensions with four-way entry; will be heat-treated, free of broken boards, treated for pests, and clean.

2.5.3    Receipt of Product on non-standard pallets may require restacking onto conforming pallets at Client’s expense.

2.5.4    Palletized Product must be uniform and consistent with specifications set up in the Product master for the number of cartons and eaches.

2.6       Cardinal Health will receive each shipment into a secure receiving area and perform requirements as detailed in Cardinal Health’s receiving SOP.

2.7       Cardinal Health will count and inspect the exterior packaging of the Product, noting evident shortages, overages, or damage on the carrier bill of lading.  Cardinal Health will obtain the carrier’s signature on the bill of lading acknowledging the condition of the Product upon receipt by Cardinal Health.

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2.8       Cardinal Health compares the Client documentation to Cardinal Health’s receiving report.  Discrepancies are noted.  Cardinal Health investigates and reports discrepancies to Client within [**] of receipt or discovery.  Client and Cardinal Health will determine corrective actions, if any.

2.9       At Client’s request, Cardinal Health will send via fax or email, necessary receiving documents and temp tale data to Client Quality Assurance for official lot release.  Product is kept in a “system hold” status in Cardinal Health’s Operating System until released in writing or by email by Client Quality Assurance.

2.10     Cardinal Health will provide Client with a designated, single point of contact for all Product release requests.  Client Quality Assurance will fax or email to designated contact at the appropriate facility (LaVergne or Reno), signed documentation to Cardinal Health to release the lot from “system hold” Product status to “approved” Product status.

2.11     Cardinal Health will post receipts in the Warehouse Management System within [**] of delivery unless count discrepancies, missing paperwork, damage investigation, and/or other receiving anomalies interfere with efficient receiving and documentation.  Upon request by Client, Cardinal Health will provide a report of any unresolved receiving discrepancies.

3.        IMPORT SERVICES

3.1       Cardinal Health will arrange for transportation and applicable import services on the Client’s behalf as identified in the agreed upon International Import/Export Fee Schedule.

3.2       Client acknowledges and accepts its designation and responsibilities as the Importer of Record in these transactions.

3.3       At Client’s request, Cardinal Health will, on behalf of its Client, make recommendation for brokerage services and will assist with document management including the execution of customs, entry formalities and other government agency clearances.

3.4       At Client’s request, Cardinal Health will, on behalf of Client, arrange for transportation and applicable services to transfer product to the designated Cardinal Health facility and will use commercially reasonable efforts to ensure that product is transferred as required.

3.5       Cardinal Health will use commercially reasonable efforts to ensure that product is transferred in a timely and effective manner to meet delivery requirements and that required government releases are granted prior to product delivery; provided, however that Cardinal Health will not be responsible for any loss, liability or expense resulting from delays or other acts or omissions of any governmental entity relating to the import of the Product unless directly caused by Cardinal Health’s gross negligence or willful misconduct.

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3.6       Client or Client’s agent will provide to Cardinal Health all necessary details for completion of required documentation.

3.7       Cardinal Health will prepare and have ready at time of transfer, all required documentation, including but not limited to:  Commercial Invoice, Packing list, Certificate of origin, Parties to the Transaction, HTS, FDA Product Code, CBP and FDA Country of Origin, FDA Manufacturer, Product Valuation, Quantities, TSCA Statements, DEA Import Permits, USDA Certifications or Vet Certificates and any other applicable OGA documentation, to comply with applicable export and import regulations.

3.8       Client will ensure that product meets shipping and packaging standards set by the applicable mode of transportation, all local, state and federal regulations and Section 2.5 of the Operating Guidelines.

3.9       For all other instruction related to Import Services please refer to Section 2.0 of the Operating Guidelines regarding Receiving.

4.        EXPORT SERVICES

4.1       Cardinal Health will arrange for transportation and applicable export services on the Client’s behalf as identified in the agreed upon International Import/Export Fee Schedule.

4.2       Client acknowledges and accepts its designation and responsibilities as the U.S. Principal Party in Interest (“USPPI”) in these transactions.

4.3       At Client’s request, Cardinal Health will, on behalf of its Client, assist with document management including the execution of any license determination, export clearance formalities and other government agency clearances.

4.4       Client will prepare and have ready at time of transfer, all required documentation, including but not limited to:  Commercial Invoice, Packing list, Certificate of origin, and applicable OGA documentation, to comply with applicable export and import regulations.

4.5       Client will prepare and have ready at time of transfer, all required documentation, including but not limited to:  Parties to the Transaction, HTS/ECCN verification, Product Valuation, Quantities, Export packaging, Validation of Distribution Agreements and any other applicable OGA documentation, to comply with applicable export and import regulations.

4.6       In addition to the aforementioned documentation, current Power of Attorney (“POA”) from Client must be on file with Cardinal Health and must be renewed at the end of each calendar year.

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4.7       Orders approved and available for processing (pick & pack) by the agreed upon time, [**] local Facility time, Monday through Thursday, and on Fridays if approved by Client, will be processed and shipped within [**] (“Standard Export Hours”) in accordance with section 6.2 and section 6.8.  Orders received and processed after the agreed upon time, [**] local Facility time, will be handled on an exception basis.  Every attempt will be made to ship orders in the allotted time.  Any remaining volume not shipped will be communicated to the Customer along with recommendations and schedules for completion.  For orders received after Standard Export Hours, [**] local Facility time, Cardinal Health will consider these orders as the following day’s business.  If the day the Product is to be received by the Customer falls on a holiday or weekend, then the order will be shipped on the next business day.

4.8       Orders placed outside Standard Export Hours and in which the Customer has requested rush shipment will be defined as emergency orders.  All emergency orders will be billed to Client as set forth on the Fee Schedule.

4.9       Client will ensure that product meets shipping and packaging standards set by the applicable mode of transportation, all local, state and federal regulations and Section 2.5 of the Operating Guidelines.

4.10     Cardinal Health will not be responsible for any loss, liability or expense resulting from delays or other acts or omissions of any governmental entity relating to the export of the Product unless directly caused by Cardinal Health’s gross negligence or willful misconduct.

4.11     For all other instruction related to Export Services please refer to Section 6.0 of the Operating Guidelines regarding Distribution.

5.        INVENTORY

5.1       Inventory is received, tracked and controlled on Cardinal Health’s Warehouse Management System by item number, lot number, expiration date, quantity, and status.  Cardinal Health’s Warehouse Management System meets regulatory requirements for lot traceability and accountability, from receipt of Product at Cardinal Health to shipment of Product to Client’s Customer.

5.2       Cardinal Health performs a daily cycle count on forward pick locations that have had activity during a given day.  Cardinal Health will use commercially reasonable efforts to maintain accurate and timely inventory records.

5.3       Inventory variances are investigated by Cardinal Health and reported promptly to Client and in no event later than [**] from discovery.  Corrective actions will be determined jointly by Cardinal Health and Client.

5.4       Client may conduct a complete physical inventory [**] advance written notice is required prior to the start of a physical inventory.  More frequent physical inventories may occur if inventory variances exceed the standard of [**]% accuracy.

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5.5        [**], Cardinal Health notifies Client of expired or short dated Product, as specified by Client.  Client will have up to [**] to provide Cardinal Health disposition of said Product.  In the event Client docs not disposition said Product within [**], Cardinal Health reserves the right to assess additional charges for excessive storage.

5.6       Please Note:  Under the current federal EPA regulations, as a third party logistics provider, Cardinal Health is unable to accept or store “waste” or items that have no value or reasonable expectation of credit.  Waste is defined by the EPA as product that has received a disposition for destruction or deemed to have no value.  Once identified as waste, Cardinal Health (i) may not accept such Product into its warehouse if it is not already in Cardinal Health’s possession (e.g., returns), and (ii) must, within [**], send any items already in Cardinal Health’s possession to a destruction vendor utilizing special carriers certified to transport waste.  Cardinal Health receives returned Product according to Cardinal Health SOP and Client’s Returned Goods Policy.  If there is a discrepancy between the Cardinal Health SOP and Client’s Returned Goods Policy, the Client’s Returned Goods Policy shall govern.  Client will determine appropriate disposition of the returned Product.  Client must be notified prior to disposition of the Product.  If the disposition is to destroy the Product, Cardinal Health will subcontract the destruction through a third party supplier.  Cardinal Health will provide Client with the Certificate of Disposal.

6.        DISTRIBUTION

6.1       Orders approved and available for processing (pick & pack) by the agreed upon time, [**] local Facility time, Monday through Thursday, and on Fridays if approved by Client, will be shipped before the close of business the same day (“Standard Hours”) in accordance with section 6.2 and section 6.8.  Orders received and processed after the agreed upon time, [**] local Facility time, will be handled on an exception basis.  Every attempt will be made to ship orders in the allotted time.  Any remaining volume not shipped will be communicated to the Client along with recommendations and schedules for completion.  For orders received after Standard Hours, [**] local Facility time, Cardinal Health will consider these orders as the following day’s business.  If the day the Product is to be received by the Customer falls on a holiday or weekend, then the order will be shipped on the next business day, which will ensure the Product will not be delivered to the Customer on a holiday or weekend.

6.2       Orders placed within Standard Hours will be shipped to Customer via standard ground delivery service unless otherwise designated by Client.

6.3       Client will make best commercial efforts to encourage customers to submit orders to Cardinal Health and/or authorize the release of orders placed on system hold in a fashion that allows for an even distribution of work recognizing normal start times of 8:00 a.m. local Facility time.  Cardinal Health will use commercially reasonable efforts to meet the requested shipping schedule.  However, if orders received and/or released from system hold do not allow for an even distribution of work, Cardinal Health cannot commit to agreed upon “on time shipping” metric.

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6.4       Orders that have Drop Ship requirements within Standard Hours will be shipped and assessed any special charges or handling fees according to Client’s directions.

6.5       Orders placed outside Standard Hours and in which the Customer has requested delivery for the next day will be defined as emergency orders and will be shipped via priority overnight delivery.  All emergency orders will be billed to client as set forth on Fee Schedule.

6.6       When a Customer requests upgraded shipping service for an order placed during Standard Hours, Cardinal Health will process per Client’s direction.  Applicable upgrade charges will be assessed per an agreed upon flat fee.

6.7       Client is responsible for monitoring customer ordering practices.

6.8       Recognizing that order volume may fluctuate from time to time, Cardinal Health staffs to meet [**]% of the rolling average number of Client orders processed over the previous [**].  Cardinal Health uses commercially reasonable efforts to meet the shipping schedule outlined herein when order or unit volume exceeds [**]% of the rolling average number of orders or units; provided, however, that Cardinal Health cannot guarantee daily on-time shipping standards will be achieved during such increased activity periods.

6.9       Cardinal Health personal are available for emergency Product shipments, via phone request, twenty-four (24) hours per day, three hundred sixty-five (365) days per year.  For shipments called in after the carrier’s cutoff time (approximately 6:00 p.m. Central Time for overnight airfreight), Cardinal Health will ship the Product the following day.

6.10     Cardinal Health’s inventory system complies with [**] inventory allocation.  Exceptions from [**] must be approved by the Client in writing prior to shipment.

6.11     Cardinal Health performs quality verification on Client shipments, either systematically or by an individual other than the employee who picked the order.  Cardinal Health uses commercially reasonable efforts to pick, pack, and ship Customer orders accurately.

6.12     Cardinal Health and Client mutually determine and agree in writing on the packaging requirements for shipping the Product.  Cardinal Health and Client will issue appropriate guidelines and pack-out training to the distribution department to assure compliance with Client’s specifications.  These specific Client specifications are controlled in the Cardinal Health controlled document management system.

6.13     Cardinal Health provides shipment confirmation information to Client through Cardinal Health’s information System.  Such information is available the next business day after which the shipment occurs.

6.14     Cardinal Health manages shipping supplies - including ordering, inventory record keeping, and storage.  Cardinal Health will invoice Client for mutually agreed upon shipping materials; corrugated cartons, insulated coolers (if specified), address labels, inner packing; as may be requested by Client’s packing specifications.

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7.        PATIENT ASSISTANCE PROGRAM - *Client specific (Not Applicable)

8.        TRANSPORTATION

8.1       Cardinal Health and Client mutually agree upon a common carrier(s) based on shipment size, destination, freight rates, availability of standard and special services, reliability of delivery, and claim history among other requirements.

8.2       If the carrier supplies one and if Client agrees, Cardinal Health will provide its discounted rate.

8.3       Shipping charges, including special charges for insurance, proof of delivery, hazardous materials, service upgrades, and so forth, are billed directly to Cardinal Health’s account with the carrier and passed through, including a handling fee, to Client.

8.4       Client will designate Freight terms as [**].

8.5       Cardinal Health, at the request of the Client, will provide proof of delivery for specific Customer shipments.  Fees, if any, charged by carriers for proof of delivery will be passed directly to Client.

9.        CUSTOMER SERVICE

9.1       Cardinal Health provides a dedicated, inbound phone and fax line for Client’s Customers to submit purchase orders and phone in general inquiries.

9.2       Cardinal Health staffs the inbound phone line from 7:00 a.m. - 6:00 p.m. Central Time, Monday through Friday, except for the following holidays:  Christmas Day, New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the day after Thanksgiving and any other days as mutually agreed to.

9.3       Cardinal Health is responsible for training Cardinal Health’s client service specialists and backup representative(s).  Client will provide company and Product specific information for training of the client service specialists.

9.4       Cardinal Health is responsible for initial set up and on-going maintenance of Customer master files.  The initial Customer master file will be approved and signed by Client.  Contract clients should authorize each new customer that is set up in the operating system via the customer maintenance form or an email.

9.5       Cardinal Health accepts Customer orders by electronic data interchange (“EDI”), mail or fax.  Cardinal Health maintains Customer records.  Customer orders must be in writing or by EDI.  Cardinal Health will not accept telephone orders without a mail or fax confirmation.

9.6       Cardinal Health uses commercially reasonable efforts to answer inbound phone calls within the first [**].

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9.7       As a backup to the client service specialists, a voice mail system is maintained to collect messages from Customers.

9.8       Cardinal Health’s client service specialists re-route, via warm transfer, misdirected calls (product complaint/adverse event calls) to the appropriate vendors designated by Client.

10.      ORDER ENTRY

10.1     Client will designate minimum and multiple order quantities.  Order entry requests are maintained by Cardinal Health through its Operating System.

10.2     Client will instruct its Customers to place orders based on the contract between Client and Customer.

10.3     Client will determine when Customers will pay for premium freight, special handling, and emergency order processing.

10.4     Cardinal Health uses commercially reasonable best efforts to enter orders accurately.

11.      CUSTOMER CREDIT

11.1     Client will establish credit limits for each Customer or group of Customers.

11.2     Cardinal Health’s Operating System monitors orders against the Customer’s credit limit and holds orders when credit limits are exceeded.

11.3     Client may elect, with written authorization, to place a Customer’s account on credit hold so that orders arc reviewed prior to shipment.

11.4     Client will review and approve Customer orders held for credit limits prior to shipment.  Client must release orders or provide written and/or email authorization to release.

12.      PRICING AND TERMS

12.1     Client will publish terms and conditions of sale to all Customers.  Standard terms are provided by the Client.  Contracted Customers may have non-standard terms.

12.2     Client will publish list prices for Customers, which are subject to change from time to time at the sole discretion of Client.

12.3     Cardinal Health will perform system maintenance of Product pricing and terms.  Client will provide to Cardinal Health, in no less than [**], written changes to Product pricing or terms to the following pricing mailbox:

[**].

Cardinal Health will be responsible for updating the Cardinal Health system within [**] of effective date and time of the price increase.

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12.4     Cardinal Health employees are bound by the confidentiality provisions of the Agreement between Cardinal Health and Client and, as such, will not disclose Client sales data or pricing information outside the specific Cardinal Health employees who have a need to know this information in the course of performing their routine job responsibilities.

13.      INVOICING (Not Applicable)

14.      CHARGEBACKS (Not Applicable)

15.      ACCOUNTS RECEIVABLE (Not Applicable)

16.      GOVERNMENT REPORTING

16.1     Client may access data as needed through Cardinal Health’s reporting system.  Various reports are available for client use to complete government reporting calculations.

16.2     Cardinal Health provides the necessary reports within stipulated time frames To ensure Client can comply with the reporting requirements of Medicaid, Veterans Healthcare Act, PHS Covered Entities, Deficit Reduction Act (“DRA”), and state rebate programs.  Client will define reporting requirements against which Cardinal Health will produce the required reports.

17.      MONTH-END CLOSE (Not Applicable)

18.      RETURNED GOODS

18.1     Returns are processed in accordance with Client’s Returned Goods Policy.

18.2     If the client makes an exception to their Returned Goods Policy, the client must submit written direction prior to returns being processed.

18.3     Client is responsible for providing all pertinent pricing and lot information.  Cardinal Health will use commercially reasonable efforts to complete the processing of returns and, if applicable, credit issuance within [**] of receipt of the return.

18.4     The Client is responsible for ensuring all vendors are provided with and arc following the Returned Goods Policy.

18.5     Cardinal Health will use commercially reasonable efforts to process returned goods as timely and accurately as possible.

18.6     [**], Cardinal Health will notify Client of returned product.  Client will have up to [**] to provide Cardinal Health disposition of said product.  In the event Client does not disposition said product within [**], Cardinal Health reserves the right to assess additional fees for excessive storage.

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Please Note:  Under the current federal EPA regulations, as a third party logistics provider, Cardinal Health is unable to accept or store “waste” or items that have no value or reasonable expectation of credit.  Waste is defined by the EPA as product that has received a disposition for destruction or deemed to have no value.  Once identified as waste, Cardinal Health (i) may not accept such Product into its warehouse if it is not already in Cardinal Health’s possession (e.g., returns), and (ii) must, within [**], send any items already in Cardinal Health’s possession to a destruction vendor utilizing special carriers certified to transport waste.

18.7     Cardinal Health will subcontract the destruction of returned product through a third party supplier.  Cardinal Health will provide Client with the Certificate of Disposal.

19.      PRODUCT COMPLAINT RETURNS

19.1     Client or designated vendor will handle product complaints and determine the appropriate action to be taken.  Cardinal Health may ship replacement product or issue credit at Client’s direction.  Cardinal Health will follow its SOPs with regard to executing these requirements.

20.      RECALL ASSISTANCE

20.1     Client is responsible for decision to initiate recall or product withdrawal.

20.2     Client is responsible for notification of recall or product withdrawal to appropriate regulatory agencies.

20.3     Client is responsible for management of a recall event.

20.4     If there is a recall or withdrawal of Product, then Cardinal Health agrees to stop shipping recalled lots promptly, and in no event later than [**] after Cardinal Health receives written notification of such recall from authorized representative of Client.

20.5     If mutually agreed upon, Cardinal Health will provide assistance to Client and cooperate fully in any such recall.  Client will pay to Cardinal Health an amount equal to Cardinal Health’s actual costs incurred with any such recall services.  Such cost will be in addition to the fees set forth in the Fee Schedule.  Such assistance will include but not be limited to:

20.5.1     Contacting consignees (wholesaler, ship to locations) who may have received affected Product and requesting prompt quarantine of all affected lots pending further disposition instructions from Cardinal Health or Client.

20.5.2     Storage and control of on-hand inventory of recalled Product.

20.5.3     Receipt, storage and control of returned recalled Product.

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20.5.4     Documentation of recalled Product used, destroyed or returned to the distributor through established document systems at Cardinal Health.

20.5.5     Assistance in preparation of final Recall Report including a copy of all communications, if any, with FDA concerning the recall.

20.5.6     Shipment of samples of recalled Product to Client or a designated testing site for analysis, if applicable.

20.5.7     Cardinal Health will maintain appropriate SOPs.  If there is any conflict between the Cardinal Health SOPs and the Operating Guidelines, Cardinal Health will follow its SOPs with regard to executing these requirements.

20.6     Cardinal Health will provide the necessary recall reports within [**] of notification by Client.  Reports will contain, but not be limited to, the following information for each recalled Product and lot number:  Customer shipments by date, item number, quantity, lot number, and ship to address.

20.7     Cardinal Health will provide Client Quality Assurance with signed and dated records documenting final disposition of the Product(s).  In addition, Cardinal Health will assist with the following information:

20.7.1     Name and location of distributors involved in the execution of the final disposition of the recalled Product.

20.7.2     Name and location of drug destruction sites (if applicable).

20.7.3     List of applicable State or Federal licenses currently required and held for drug transport and/or disposal for all drug destruction sites (if applicable).

20.7.4     Product disposition method.

20.7.5     Amount of Product dispositioned.

20.7.6     Date of Product disposition.

20.7.7     Documentation from each affected Distributor(s) head of Quality Assurance or designee attesting to the completion of the Product disposition functions and requirements set forth by Client’s Recall Committee.

21.      OPERATING SYSTEMS

21.1     Client retains ownership to Client Data in the Cardinal Health System but grants Cardinal Health a limited right to use such Client Data in the performance of its Services.

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21.2     Cardinal Health will use commercially reasonable efforts to maintain security of the Client Data in our systems, to segregate them and render them inaccessible to all third parties except those providing services or systems support hereunder.

21.3     Cardinal Health will provide Client with on-line access to account receivable, customers, general ledger, inventory, invoices, orders, returns, sales, shipping, and other business critical data as defined in Cardinal Health’s standard reports output.

21.4     Additional reporting and interfaces may be jointly defined by Client and Cardinal Health.

21.5     Cardinal Health will use commercially reasonable efforts to maintain all Systems within the change control SOPs.

21.6     Cardinal Health will use commercially reasonable efforts to make Cardinal Health’s System accessible to the Client twenty-four (24) hours per day seven (7) days per week and guaranteed between the hours of 7:00 a.m. - 9:00 p.m. Central Time, Monday through Friday (“Accessible Hours”), except for routine, scheduled or emergency maintenance.  Cardinal Health will provide [**] advance notification to Client of a scheduled maintenance, which would affect Client’s ability to access the System.

21.7     Cardinal Health will use commercially reasonable efforts to ensure that unscheduled System downtime for Cardinal Health Systems, will not exceed [**] percent ([**]%) of the Accessible Hours per [**].  Cardinal Health will promptly notify Client of any System problem that might affect services and if possible an estimated time for restoration of System access.

21.8     System backups will be generated on a nightly basis in conjunction with Cardinal’s corporate standard Backup and Recovery policy.  These backup tapes will be stored either off-site or in a fireproof cabinet as indicated by the policy.

21.9     Cardinal Health may upgrade, enhance, modify, or convert the System and will notify the Client of System changes as appropriate.  Initial training will be provided as agreed.  Any additional training will be provided at Client expense.

21.10   System development work may be undertaken by Cardinal Health on behalf of the Client.  Such work will be billed at the hourly development rate specified in the Fee Schedule plus any applicable travel expenses.  This applies but is not limited to Web Reporting enhancements, EDI transaction implementations, and enhancements to the System.

21.11   Enhancements to the System may from time to time be requested by the Client.  Requests will be evaluated and undertaken at Cardinal Health’s discretion.  Costs of design, quote, development, testing, and validation of system enhancements will be borne as mutually agreed to by the parties in writing.

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22.      AUDITS

22.1     No more than [**], Client or its designee has the right during normal business hours (i.e., 8:00 a.m. to 5:00 p.m. local Facility time), to conduct a complete quality audit upon [**] prior written notice to Cardinal Health.  In the event of a for cause audit, Client has the right to inspect immediately as pertains to recalls, product safety or potential product safety.

23.      MEASURED ATTRIBUTES

23.1     Cardinal Health will provide Client with reports on measurable attributes including but not limited to those identified in Section 23.5 below.  Such reports (“Specialty Pharmaceutical Services Scorecard” or “SPS Scorecard”) will be used to track and benchmark performance.

23.2     Client and Cardinal Health will agree to meet not less than [**] to review performance and to develop methods, policies, practices, and procedures that may improve the quality and efficiency of the Cardinal Health/Client relationship.

23.3     Cardinal Health will use commercially reasonable efforts to meet or exceed the Client’s expectation for performance based on the measured attributes.

23.4     Cardinal Health will notify Client in writing if there are changes to the attributes used to track and benchmark performance.

23.5     Measured Attributes and Performance Standards According to the SPS Scorecard.


	
Measured 
Performance Attribute
	
Operational Definition

	
Order/Shipment Accuracy
	
Any order not shipped to manufacturer order requirements (such as mispick quantity, mispick item, keying error etc.)

	
Late to Standard Orders
	
Any order that is received by cut-off or agreed upon time and is not shipped by agreed upon time.

	
SPS Inventory Exceptions
	
Measures Inventory Overages, Inventory Shortages, SPS Damages, Unexplained Product Damages and Missing Labels.

	
Inbound Receiving Exceptions
	
Measures Inbound Broken or Missing Seal, Inbound Damages, Inbound Incorrect Documentation, Inbound Missing Documentation, Inbound Overages, Inbound Shortages, Inbound Temperature Excursions, Inbound Missing Labels and Inbound Partial Cases.

	
Invoice Collection Process Lead Time
	
Measures from the date the invoice is created to the date the invoice is cleared from Accounts Receivable.  Please Note:  If an account is in a credit balance position or terms are extended beyond the initial terms invoiced, these transactions will be included in the metric and may increase the count of invoices collected greater than [**].




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Measured 
Performance Attribute
	
Operational Definition

	
Chargeback Process Lead Time
	
Measures from the date the chargeback is available to process to the date the credit is issued.  This metric includes manual and EDI Chargebacks.

	
Return Authorization Process Lead Time
	
Measures from the date the Return Authorization is requested by the customer to the date the Return Authorization is issued.

	
Return Process Lead Time
	
Measures from the date of the physical return to the date the Return Credit is issued.




 

24.      RECORD RETENTION GUIDELINES (Customer Operations)

The objective of these guidelines is to establish uniform procedures for the maintenance, storage and destruction of company records under the control of Cardinal Health.  The records are documentation produced through order management, accounts receivable, returns management and chargeback management.  The records do not include transactions that are electronically preserved in the Enterprise Resource Planning (“ERP”) System, Elite Series System or the Bid and Contract Chargeback System (“BACCS”) and the Returns (“IMPRS”) System.  Electronic systems are maintained by the EIT group and that group has responsibility for coordinating any appropriate record purge with any and all affected parties.

Procedures

1.   Records are locally housed in file cabinets or in storage boxes that have been labeled for content.  Labeling of boxes is uniform, by client, by function and by date.  Boxes are numbered and recorded on a record retention list that is maintained in customer operations.

2.   Records should be retained for the period designated on the attached Records Retention Schedule.  The retention periods have been established based on business need and/or requirements under applicable state and federal laws and regulations.  Retention periods are based upon the calendar year in which the records are created.

3.   Records should be discarded/destroyed or should be forwarded to the Client at the Client’s request, at the conclusion of the applicable retention period.  Cardinal Health will participate in regularly scheduled clean-up sessions to ensure that unnecessary records are destroyed on a timely basis.  Cardinal Health will provide the client with a listing of records that are eligible for destruction.  Client has [**] to review the list and approve records for destruction or to take ownership.  If Cardinal Health does not receive an answer within [**], Cardinal Health will (at Client’s expense) forward such records to Client’s corporate office.  Record destruction must be approved by the Client and fees assessed as set forth in the Fee Schedule.

4.   Records that are not ordinarily subject to retention but need to be retained due to unusual circumstances, such as litigation or government investigation will be maintained as directed by the client or as directed by the Cardinal Health Legal Department.  The Client will notify the Relationship Manager or the Customer Operations Director in writing stipulating which records are affected and the requirements for the records affected.

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5.   If services are terminated, Customer Operations records will be sent to the client within [**] of the termination date.

RECORD RETENTION SCHEDULE


			
	
Document Type
	
Document Retention Period
	
Storage Method

	
I. Customer Service
	
 
	
 

	
Customer order records
	
[**]
	
[**]

	
Patient Assistance Orders
	
[**]
	
[**]

	
Price Notifications
	
[**]
	
[**]

	
Adverse Events Notifications
	
[**]
	
[**]

	
Freight Claims
	
[**]
	
[**]

	
Bills of Lading
	
[**]
	
[**]

	
Customer Set-up & Maintenance
	
[**]
	
[**]

	
PAP Customer Set-Up
	
[**]
	
[**]

	
Invoice Adjustments
	
[**]
	
[**]

	
 
	
 
	
 

	
II. Accounts Receivable
	
 
	
 

	
Customer Invoices
	
[**]
	
[**]

	
Invoice collection documentation
	
[**]
	
[**]

	
Cash Receipts
	
[**]
	
[**]

	
Deduction documentation/resolution
	
[**]
	
[**]

	
Month end Close Records
	
[**]
	
[**]

	
Related correspondence
	
[**]
	
[**]

	
III. Returns Management
	
 
	
 

	
Return Authorizations
	
[**]
	
[**]

	
Return paperwork & credit memo
	
[**]
	
[**]

	
Related correspondence
	
[**]
	
[**]

	
Return Policy
	
[**]
	
[**]

	
Pricing Notification
	
[**]
	
[**]

	
 
	
 
	
 

	
IV. Contracts & Chargebacks
	
 
	
 

	
Contract Set-up/Contract Change
	
[**]
	
[**]

	
Contract Price Changes
	
[**]
	
[**]

	
Pricing Notifications
	
[**]
	
[**]

	
Chargeback Submissions
	
[**]
	
[**]

	
Chargeback Rejections
	
[**]
	
[**]

	
Credit Feed Report
	
[**]
	
[**]

	
Membership Rosters
	
[**]
	
[**]

	
Membership changes/notifications
	
[**]
	
[**]




 

25.      LINE EXTENSIONS

25.1     Client will provide Cardinal Health Account Management notification not less than [**] prior to receipt of a new product and [**] prior to receipt of an acquired product.

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25.2     Client will provide the following information [**] prior to receipt of a new product and [**] prior to receipt of an acquired product:


	
 
	
a)
	
Complete RFI





	
 
	
b)
	
Item Set Up





	
 
	
c)
	
Trade Letter





	
 
	
d)
	
MSDS





	
 
	
e)
	
Packing schematics (if applicable)





	
 
	
f)
	
Storage / shipping forecast





	
 
	
g)
	
Returns Pricing (for acquired Products)





	
 
	
h)
	
Return Guidelines (for acquired Products)





	
 
	
i)
	
Chargeback Guidelines (for acquired Products)




25.3     Cardinal Health will use commercially reasonable efforts to launch new product within [**] of initial receipt unless count discrepancies, missing paperwork, damage investigation, and other receiving anomalies interfere with efficient receiving and documentation.

26.      RELATIONSHIP MANAGEMENT

26.1     Appointment of Relationship Managers.  Each Party will forthwith upon execution of this Agreement appoint one of its employees to be responsible for all aspects of the relationship between the Parties (the “Relationship Manager”) and will promptly thereafter notify the other Party of such appointment.  Each Party may replace its Relationship Manager at any time and will fill a vacancy for its Relationship Manager as soon as reasonably practicable.  Each Party will promptly notify the other Party of any substitution of another person as its Relationship Manager, Each Party’s Relationship Manager will be available throughout the Term to answer any reasonable questions from the other Party’s Relationship Manager.

26.2     [**] Review by Relationship Managers.  The Relationship Manager may communicate as frequently as they deem necessary; provided that there is a formal meeting no less then [**]-to review the status of the relationship.  These business review meetings may take place in person, by videoconference or by telephone conference, as mutually agreed by the Parties.  There will be an agenda for each meeting, and written minutes of each meeting will be taken and will include the issues discussed and action items, if any, arising from such meeting.

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IN WITNESS WHEREOF, the undersigned have caused their duly authorized representative to execute these Operating Guidelines effective as of the date first written above.

 


	
CARDINAL HEALTH 105, INC. 
	
 
	
KERYX BIOPHARMACEUTICALS, INC.

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By
	
/s/ David Cheetham
	
 
	
By
	
/s/ Greg Madison

	
 
	
 
	
 
	
 
	
 

	
David Cheetham
	
 
	
Greg Madison

	
 
	
 
	
 
	
 
	
 

	
Division President
	
 
	
EVP/COO

	
 
	
 
	
 
	
 
	
 

	
Date:
	
Oct 23, 2014
	
 
	
Date:
	
Oct 23, 2014




 




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EXHIBIT B

FEE SCHEDULE

 

[**]

 


	
/s/ Makenna Knight
	
 
	
/s/ Greg Madison

	
Makenna Knight (Oct 23, 2014)
	
 
	
Greg Madison (Oct 23, 2014)

	
3PL Finance Manager Signature/Date
	
 
	
Keryx Approval Signature/Title/Date

	
 
	
 
	
EVP/COO

	
/s/ David Cheetham
	
 
	
 
	
 

	
David Cheetham (Oct 23, 2014)
	
 
	
 

	
3PL Vice President Signature/Date
	
 
	
 
	
 




 

 




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Exhibit B (Addendum to 3PL Distribution Fee Schedule)

Keryx

Transportation Management Services Addendum 

Freight Fee Schedule 

 

 

[**]

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AMENDMENT TO

EXCLUSIVE DISTRIBUTION AGREEMENT

BETWEEN

KERYX BIOPHARMACEUTICALS, INC.
AND
CARDINAL HEALTH 105, INC.

This Amendment to the Exclusive Distribution Agreement (“Amendment”) is dated effective as of the 14th day of April, 2015 (“Effective Date”) and is by and between Keryx Biopharmaceuticals. Inc. (“Client”) and Cardinal Health 105, Inc. (“Cardinal Health”) referred to each individually as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS Cardinal Health and Client are Parties to an Exclusive Distribution Agreement (the “Agreement”) dated as of October 16, 2014 and the Parties desire to amend the Agreement as provided in this Amendment; and

WHEREAS, the Parties mutually agree to amend the Agreement by adding language related to Samples Services to Exhibit A (Operating Guidelines).

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree that the Agreement is amended as follows:

1.         Amendment to Section 1. of Exhibit A (Operating Guidelines) of the Agreement related to Warehousing. The following section shall be added to Section 1. of the Operating Guidelines immediately after the existing Section 1.2:

“1.2(a) With reference to those regulations set forth in 21 CFR Part 203, Cardinal Health will support Client’s programs directed to ensure compliance with the Prescription Drug Marketing Act of 1987 (“PDMA”) provisions related to acceptance of valid sample requests, inventory, storage, distribution, shipment, document controls and record retention, and other services performed on behalf of the Client to maintain PDMA compliance.

Please Note:  Other aspects of compliance with the PDMA, such as manual, wet-ink or part 11 exempt, signature verification, providing Product labeled specifically for sampling, forwarding requests for samples to Cardinal Health and interacting with regulatory authorities, will remain the sole responsibility of the Client.

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2.         Amendment to Section 6.0 of Exhibit A (Operating Guidelines) of the Agreement related to Distribution. The following section shall be added to Section 6. of the Operating Guidelines:

6.15     Please Note:  Responsibility for verifying sample order forms, conducting physician signature audits and submitting sample order requests to Cardinal Health, will be the responsibility of the Client.

3.         No Other Changes.  Except as specifically set forth in this Amendment, the Agreement will continue in full force and effect without change.

4.         Interpretation.  To the extent there are any inconsistencies between the provisions of this Amendment and the provisions of the Agreement, the provisions of this Amendment will control.  Capitalized terms not otherwise defined herein shall have the same meaning given those terms in the Agreement, it being the intent of the Parties that the Agreement and this Amendment will be applied and construed as a single instrument.  The Agreement, as modified by this Amendment, constitutes the entire agreement between Cardinal Health and Client regarding the subject matter of this Amendment and supersedes all prior or contemporaneous writings and understandings between the Parties regarding the same.

5.         Counterparts.  This Amendment may be executed in one or more counterparts (with facsimile signatures acceptable), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  Any photocopy, facsimile or electronic reproduction of the executed Amendment shall constitute an original.

6.         Authorized Signatories.  All signatories to this Amendment represent that they are authorized by their respective companies to execute and deliver this Amendment on behalf of their respective companies. and to bind such companies to the terms herein.

IN WITNESS WHEREOF, the Parties hereto have agreed to this Amendment by having their duly authorized representative execute this Amendment effective as of the Effective Date first written above.

 


	
CARDINAL HEALTH 105, INC.
	
 
	
KERYX BIOPHARMACEUTICALS, INC.

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By:
	
/s/ David Cheetham
	
 
	
By:
	
/s/ Greg Madison

	
 
	
 
	
 
	
 
	
 

	
David Cheetham

 
	
 
	
Print Name:
	
Greg Madison

	
Division President
	
 
	
 
	
 

	
 
	
 
	
 
	
Title:
	
President, COO

	
 
	
 
	
 
	
 
	
 

	
Date:
	
 
	
 
	
Date:
	
4/17/15




 

< Signature Page to Amendment >

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