Exhibit
10.30


 


Execution
Copy


***
TEXT OMITTED AND SUBMITTED SEPARATELY


 PURSUANT TO CONFIDENTIAL TREATMENT REQUEST


UNDER
17 C.F.R. SECTIONS 200.80(b)(4) AND 230.406


 


SUPPLY AGREEMENT


 


BY AND BETWEEN


 


BAYER HEALTHCARE LLC


BIOLOGICAL PRODUCTS DIVISION


BERKELEY, CALIFORNIA


 


AND


 


TALECRIS BIOTHERAPEUTICS, INC.


RALEIGH, NORTH CAROLINA


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
  ARTICLE 1

  	
  TERM OF
  AGREEMENT

  	
  1

  
	
  ARTICLE 2

  	
  PURCHASE AND
  SALE OF PPF

  	
  2

  
	
  2.1

  	
  Volume
  Requirements

  	
  2

  
	
  2.2

  	
  Forecasts

  	
  2

  
	
  2.3

  	
  Purchase
  Orders

  	
  2

  
	
  2.4

  	
  Shipments

  	
  3

  
	
  2.5

  	
  Inventory
  Levels

  	
  3

  
	
  2.6

  	
  Cooperation
  of the Parties

  	
  4

  
	
  2.7

  	
  Meetings

  	
  4

  
	
  ARTICLE 3

  	
  QUALITY AND
  SPECIFICATIONS

  	
  4

  
	
  3.1

  	
  Specifications

  	
  4

  
	
  3.2

  	
  Testing

  	
  5

  
	
  3.3

  	
  Acceptance

  	
  5

  
	
  3.4

  	
  Latent
  Defects

  	
  5

  
	
  3.5

  	
  Deviation
  Report

  	
  5

  
	
  3.6

  	
  Records

  	
  6

  
	
  ARTICLE 4

  	
  PRICE AND PRICE
  ADJUSTMENT

  	
  6

  
	
  4.1

  	
  Price

  	
  6

  
	
  4.2

  	
  Adjustment
  to Price

  	
  6

  
	
  4.3

  	
  Price
  Adjustment Calculation

  	
  6

  
	
  ARTICLE 5

  	
  BILLING AND
  PAYMENT

  	
  6

  
	
  5.1

  	
  Payments

  	
  7

  
	
  5.2

  	
  Payment
  Disputes

  	
  7

  
	
  ARTICLE 6

  	
  REGULATORY
  REQUIREMENTS

  	
  7

  
	
  6.1

  	
  Compliance
  with Regulations

  	
  7

  
	
  6.2

  	
  Audit

  	
  8

  
	
  6.3

  	
  Regulatory
  Filings

  	
  8

  
	
  6.4

  	
  Regulatory
  Approvals

  	
  8

  
	
  6.5

  	
  Onsite
  Personnel

  	
  8

  
	
  ARTICLE 7

  	
  NONCONFORMING
  PRODUCT AND RECALLS

  	
  9

  
	
  7.1

  	
  Nonconforming
  Product

  	
  9

  
	
  7.2

  	
  General
  Requirements

  	
  9

  
	
  7.3

  	
  Distribution
  and Use Records

  	
  9

  
	
  7.4

  	
  Adverse
  Events

  	
  9

  
	
  7.5

  	
  Customer
  Notification of Adverse Reactions

  	
  10

  
	
  7.6

  	
  Withdrawals
  and Recalls

  	
  10

  
	
  7.7

  	
  Complaints

  	
  10

  
	
  7.8

  	
  Responsibility

  	
  10

  
	
  ARTICLE 8

  	
  FORCE
  MAJEURE

  	
  10

  
	
  ARTICLE 9

  	
  REPRESENTATIONS
  AND WARRANTIES AND DISCLAIMER

  	
  11

  
	
  9.1

  	
  Regulatory
  Requirements

  	
  11

  
	
  9.2

  	
  Debarment

  	
  11

  
	
  9.3

  	
  Compliance

  	
  11

  



 


-i-

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Intellectual
  Property

  	
  12

  
	
  9.5

  	
  Representations
  and Warranties

  	
  12

  
	
  9.6

  	
  Disclaimer

  	
  14

  
	
  ARTICLE 10

  	
  TERMINATION

  	
  14

  
	
  10.1

  	
  Termination
  for Cause

  	
  14

  
	
  10.2

  	
  Termination
  for Supplier’s Force Majeure

  	
  14

  
	
  10.3

  	
  Other
  Termination Provisions

  	
  15

  
	
  10.4

  	
  Termination
  Without Cause

  	
  15

  
	
  10.5

  	
  Effect of
  Termination

  	
  15

  
	
  10.6

  	
  Remedies

  	
  16

  
	
  10.7

  	
  Special
  Assistance

  	
  16

  
	
  10.8

  	
  Survival

  	
  16

  
	
  ARTICLE 11

  	
  INDEMNITIES
  AND DAMAGES

  	
  16

  
	
  11.1

  	
  Indemnifications

  	
  16

  
	
  11.2

  	
  Indemnification
  Process

  	
  17

  
	
  11.3

  	
  Insurance

  	
  18

  
	
  11.4

  	
  Liquidated
  Damages And Other Damages For Failure To Deliver PPF

  	
  18

  
	
  11.5

  	
  Insurance
  Recoveries

  	
  20

  
	
  ARTICLE 12

  	
  CONFIDENTIALITY

  	
  20

  
	
  12.1

  	
  Confidentiality
  Obligations

  	
  20

  
	
  12.2

  	
  Exceptions

  	
  20

  
	
  12.3

  	
  Term of
  Obligations

  	
  21

  
	
  ARTICLE 13

  	
  MISCELLANEOUS

  	
  21

  
	
  13.1

  	
  Consent to
  Assignment

  	
  21

  
	
  13.2

  	
  Entire
  Agreement and Amendments

  	
  22

  
	
  13.3

  	
  Notices

  	
  22

  
	
  13.4

  	
  Independent
  Contractor

  	
  23

  
	
  13.5

  	
  Non-Waiver

  	
  23

  
	
  13.6

  	
  Choice of
  Law

  	
  23

  
	
  13.7

  	
  Captions

  	
  23

  
	
  13.8

  	
  Severability

  	
  23

  
	
  13.9

  	
  Dispute Resolution

  	
  23

  
	
  13.10

  	
  Defined
  Terms

  	
  26

  
	
  13.11

  	
  Set-Off

  	
  26

  



 


-ii-

















 


Execution Copy


 


SUPPLY AGREEMENT


 


THIS SUPPLY AGREEMENT (this “Agreement”) is
entered into as of March 31, 2005 (the “Effective Date”), by and between Bayer
HealthCare LLC, Biological Products Division (“Bayer”) and Talecris Biotherapeutics,
Inc. (f/k/a NPS BioTherapeutics, Inc.) (“Supplier,” along with Bayer, the “Parties”).


 


WITNESSETH


 


WHEREAS,
Bayer, Talecris Holdings, LLC (f/k/a NPS Bio Holdings, LLC), Talecris
Biotherapeutics Holdings Corp. and Supplier have entered into that certain
Amended and Restated Joint Contribution Agreement, dated as of March 30, 2005
(the “Contribution
Agreement”);


 


WHEREAS,
Supplier is engaged in the manufacture and distribution of plasma-derived
biological products;


 


WHEREAS,
Supplier fractionates plasma into biological products and one of the components
of the fractionation process is an intermediate blood fraction known as PPF (“PPF”);


 


WHEREAS,
Bayer is in the business of producing and selling recombinant Factor VIII (sold
under the Kogenate® trademark) and other biological products derived
from PPF (the “Products”);


 


WHEREAS,
Bayer desires to purchase from Supplier PPF derived from plasma fractionated at
Supplier’s facility as its sole source qualified with various Regulatory
Authorities (as defined herein) for use in the manufacture and development of
the Products; and


 


WHEREAS,
Bayer and Supplier wish to set forth their mutual agreements and understandings
regarding the sale by Supplier and the purchase by Bayer of the PPF hereunder.


 


NOW,
THEREFORE, for and in consideration of the premises
and the mutual covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereto do hereby agree as follows:


 


ARTICLE
1  Term of Agreement


 


This Agreement shall have an initial term
commencing on the Effective Date and terminating on December 31, 2008 (“Initial Term”) unless
earlier terminated as provided in Article 10 below. The Initial Term may be
renewed for two consecutive two (2) year periods at the option of Bayer,
provided that Bayer gives Supplier at least one (1) year’s written notice prior
to the end of each expiring term of its intent to renew (each an “Extended Term,” and
along with the Initial Term, the “Term”).


 


1

















 


ARTICLE
2  Purchase and Sale of PPF


 


2.1        Volume Requirements.
With respect to each calendar year during the Initial Term, Supplier shall make
available to Bayer from its Clayton, North Carolina facility, and Bayer may purchase,
that number of kilograms of PPF set forth in Exhibit A, attached hereto and incorporated herein by
reference (which conform to the Specifications (as defined in Section 3.1
below)) (as adjusted herein, “Required Quantity”). Upon providing a notice of renewal
for an Extended Term in accordance with Article 1, Bayer shall amend Exhibit A to set forth the number of
kilograms of PPF that Supplier shall make available to Bayer and that Bayer
will purchase from Supplier during such Extended Term; provided that any such
number of kilograms cannot exceed one hundred twenty percent (120%) of that
number of kilograms shown on Exhibit A
then in effect on the date the notice of renewal is provided. Subject to the
other provisions contained herein, including, without limitation, Section 2.2
below, in each calendar year during the Term of this Agreement, Bayer may in
its sole discretion request, and Supplier shall supply, a minimum of
seventy-five percent (75%) of the Required Quantity and a maximum of one
hundred fifteen percent (115%) of the Required Quantity (each, as determined
after deducting quantities representing Nonconforming Product (as defined in
Section 7.1 below)). Subject to the foregoing, on or prior to October 1 of each
calendar year, the Required Quantity applicable for the immediately following
calendar year shall be reviewed and may be revised by mutual agreement of the
Parties.


 


2.2        Forecasts. As of the
Effective Date, Bayer shall provide Supplier with a twelve (12) month rolling
forecast of Bayer’s estimated requirements of PPF by calendar month. Such
forecast shall be attached hereto as Exhibit
B, and incorporated herein by reference. Bayer shall provide an
updated rolling twelve (12) month forecast on or about the commencement of each
calendar month. The first six (6) months of each rolling twelve (12) month
forecast shall be a binding order (a “Binding Forecast”), and the last six (6)
months of the rolling forecast shall be a good faith estimate of Bayer’s future
requirements and shall not be binding on the Parties. Supplier agrees to
deliver PPF in such quantities, on such delivery dates as are specified in the
Purchase Orders issued by Bayer pursuant to Section 2.3. The Parties agree and
acknowledge that regardless of the volume of PPF requested by Bayer in the
Binding Forecasts, Bayer shall be obligated to purchase at least seventy-five
percent (75%) of the Required Quantity of PPF for each calendar year set forth
in Exhibit A (“Minimum Quantity”)
and Supplier shall be obligated to supply no more than one hundred fifteen
percent (115%) of the Required Quantity of PPF for each calendar year set forth
in Exhibit A. To the extent
that the aggregate volume of PPF set forth in the Binding Forecasts for any
calendar year does not at least equal the Minimum Quantity, the Supplier may,
within thirty (30) days of the end of such calendar year, invoice Bayer for the
total price attributed to such difference (based on the Prices set forth in
Section 4.1 below) and deliver to Bayer the invoiced PPF in accordance with
Section 2.4. Notwithstanding anything to the contrary herein, during any
Binding Forecast period, to the extent that Bayer’s actual needs for PPF exceed
those volumes set forth in the Binding Forecast, Supplier shall use
commercially reasonable efforts to adjust its production capacity to
accommodate Bayer’s additional requirements for PPF to the extent and subject
to the terms of Section 2.6.


 


2.3        Purchase Orders. Simultaneous
with the submission of the first forecast set forth in Section 2.2 above, Bayer
shall deliver to Supplier a purchase order reflecting the aggregate PPF


 


 


2





















 


volume in the Binding Forecast
and with each subsequent forecast set forth in Section 2.2 above, Bayer shall
deliver a purchase order reflecting the aggregate PPF ordered for the sixth
month of the Binding Forecast (in each case, a “Purchase Order”). Each Purchase Order
shall specify the volumes of PPF ordered and the delivery dates. Except as
otherwise permitted under this Agreement, with respect to any calendar year,
the aggregate volumes set forth in the Purchase Orders issued by Bayer shall
not exceed the Binding Forecasts for such calendar year. The Parties shall
cooperate to ensure that the PPF to be purchased by Bayer is ordered in a manner
so as to allow Supplier to produce such PPF efficiently, without material
swings in volume over the course of any twelve (12) month period.


 


2.4        Shipments. Supplier
agrees that it shall provide PPF in conformance with the delivery schedule
provided by Bayer based on issued Purchase Orders, provided that in no event
shall Supplier be required to provide PPF in excess of any Binding Forecast. Unless
otherwise agreed by the Parties, time is of the essence for the delivery of PPF
in accordance with the delivery schedule included in Bayer’s issued Purchase
Orders. Supplier shall include copies of production and test records with each
shipment. Bayer shall be responsible for making the necessary shipping
arrangements. All PPF purchased and sold hereunder shall be delivered F.O.B.
Supplier’s facility, Clayton, North Carolina. Risk of loss for PPF in transit
shall lie with Bayer. All financial arrangements for shipping and handling of
PPF shall be the responsibility of Bayer. Shipments shall be made, to the
extent possible, first from Supplier’s Inventory Reserves on a first in, first
out basis, and subject to Section 2.5, such reserves shall be replaced at
the same time with a reasonably equivalent volume of PPF produced pursuant
hereto.


 


2.5        Inventory Levels. For
purposes of maintaining continuity of supply of PPF, each of Bayer and Supplier
shall maintain at least [***] of Bayer’s requirements for PPF at their
respective facilities, based on the forecasts provided by Bayer in accordance
with Section 2.2 above, in inventory (each an “Inventory Reserve”) for distribution to
Bayer in the event that Supplier is unable for any reason to supply the Binding
Forecast in accordance with the delivery dates set forth in the Purchase Orders
issued by Bayer in accordance with Section 2.3 above; provided that Supplier
shall have no liability to Bayer pursuant to Subsections (b) and (e) of Section
11.4 for any failure to deliver PPF hereunder to the extent Bayer has depleted,
through no fault of Supplier, its Inventory Reserve to supply its actual needs
for PPF in excess of the Binding Forecasts solely in circumstances where
Supplier has been unable to accommodate Bayer’s requirements for PPF pursuant
to Section 2.2 hereof. Such Inventory Reserves shall be maintained in
accordance with the storage specifications set forth in Exhibit C, which specifications shall
not be changed without the prior written consent of Bayer. Bayer represents and
warrants to Supplier that as of the Effective Date there is sufficient
inventory on hand at Supplier’s facility both for Supplier to meet its
Inventory Reserve and for Supplier to supply Bayer with Bayer’s Inventory
Reserve. In the event that Supplier is unable for any reason to supply the
Binding Forecast in accordance with the delivery dates set forth in the
Purchase Order issued by Bayer in accordance with Section 2.3 above, the
Inventory Reserve maintained by Supplier at its facility shall be used first on
a first in, first out basis to meet Supplier’s delivery requirements. Thereafter,
Bayer shall utilize PPF from inventory stored at Bayer’s facility on a first
in, first out basis. Notwithstanding anything to the contrary herein, in the
event that the Inventory Reserve of either Bayer or Supplier is used to meet
Supplier delivery requirements, Supplier shall use its reasonable best efforts
to replace such quantities used in order to replace the Inventory Reserve
requirements pursuant to this Section 2.5.


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


3





















 


2.6        Cooperation of the Parties. Supplier shall inform Bayer promptly of any problems that could
reasonably be expected to prevent Supplier from providing timely deliveries of
PPF and the Parties shall cooperate in resolving such problems relating to the
manufacture and supply of PPF under this Agreement. In recognition of the fact
that Bayer’s business is dynamic and evolving based on market demand,
regulatory approvals and other factors, Supplier shall in good faith, but
subject to the terms of this Agreement, use commercially reasonable efforts to
seek to accommodate any reasonable request by Bayer to manufacture quantities
of PPF in excess of Supplier’s obligations hereunder; provided, however, that
Supplier shall have no liability as a result of any failure to accommodate such
requests despite such efforts. The Parties shall use their commercially
reasonable efforts to coordinate maintenance outages and shut-downs of Bayer’s
facility and Supplier’s facility, which coordination could include making
temporary changes to the Binding Forecast. For purposes of clarification, this
Section 2.6 does not diminish or expand the Parties’ respective aggregate
obligations over any 12-month period to supply and purchase PPF in accordance
with the Binding Forecast set forth in Section 2.2.


 


2.7        Meetings. Unless
otherwise mutually agreed, the manufacturing representative of each Party shall
meet (either in person or via conference call) no less than monthly to discuss
the forecasts delivered by Bayer pursuant to this Agreement and other matters
relevant to the supply of PPF hereunder. In addition, the senior manager of
each Party shall meet (either in person or via conference call) on a quarterly
basis to discuss matters relevant to the supply of PPF hereunder. At least
three (3) business days prior to each meeting, each Party shall deliver to the
other Party a written report regarding the issues to be discussed at such
meeting.


 


ARTICLE
3  Quality and Specifications


 


3.1        Specifications. Supplier
shall manufacture, process, store, distribute, test, transport, dispose and
otherwise handle PPF at all times in compliance with cGMPs (as defined in
Section 6.1) and other applicable Regulations (as defined in Section 6.1
below), the Manufacturing Agreement (attached hereto as Exhibit D  and incorporated herein by
reference), the specifications (attached hereto as Exhibit E and incorporated herein by
reference) (the “Specifications”)
and the SOPs as defined in Section 6.2. The Manufacturing Agreement shall be
renewed annually, consistent with the Term of this Agreement, with each such
renewal deemed attached hereto as Exhibit D
and incorporated herein by reference. In the event of a conflict between the
provisions of this Agreement and the provisions of the Manufacturing Agreement,
the provisions of this Agreement shall prevail. Neither Party shall make
changes to the batch production records or the Specifications without the prior
written approval of the other Party which approval will not be unreasonably
withheld. Supplier shall make no changes in the SOPs, production equipment,
production procedures, or testing methods existing as of the date of this
Agreement without providing reasonable notice to Bayer in advance of the change
and obtaining Bayer’s prior written consent. Bayer shall use commercially
reasonable efforts to provide such consent as soon as reasonably practicable
with the understanding that Bayer is under no obligation to provide any such
consent if the proposed change would substantially and adversely affect or
reduce Bayer’s production of Kogenate. Supplier shall maintain all records as
are necessary and appropriate to demonstrate compliance with the Regulations.
Bayer shall be entitled to request Supplier to change the Specifications and
the SOPs as defined in Section 6.2 where, in Bayer’s sole discretion, such
change would benefit Bayer’s production of Kogenate and Supplier shall use
commercially reasonable efforts to accommodate such change;


 


 


4





















 


provided that Bayer will
reimburse Supplier the reasonable direct costs Supplier incurs in making any
such change; provided further that the Parties shall engage in good faith
negotiations to adjust the Price set forth in Section 4.1 to reflect the
increase or decrease of ongoing costs of supplying PPF hereunder resulting from
any such change; provided further that if the Parties cannot reach agreement to
adjust the Price pursuant to this Section 3.1 despite such good faith
negotiations, then (i) if the requested change to Specifications and SOPs will
affect only the PPF operations of Supplier at its Clayton, North Carolina
facility, the matter shall be resolved in accordance with Section 13.9, or (ii)
if the requested change to Specifications and SOPs will in Supplier’s sole
discretion adversely affect in any material manner other operations of Supplier
at its Clayton, North Carolina facility separate from its PPF operations at its
Clayton, North Carolina facility, Supplier shall not be required to change the
Specifications or the SOPs as requested by Bayer until the Parties reach such
agreement.


 


3.2        Testing. With
respect to each shipment of PPF to be shipped to Bayer, Supplier shall test
such PPF to ensure compliance with the Specifications. Supplier shall include a
certificate of analyses (“COA”)
with each shipment of PPF disclosing the results of such testing and showing
conformance with the Specifications.


 


3.3        Acceptance. Subject
to Section 3.4 below, Bayer shall have a period of thirty (30) days from the
date of its receipt of a shipment of PPF to inspect the delivered PPF and the
accompanying COA and reject the corresponding shipment of PPF for nonconformity
with the Specifications. If Bayer rejects such shipment, it shall promptly so
notify Supplier and the provisions of Section 7.1 below shall apply.


 


3.4        Latent Defects. If
after accepting a shipment of PPF, Bayer subsequently discovers latent material
defects (including without limitation, nonconformance to the Specifications)
not reasonably discoverable during the acceptance period set forth in Section
3.3, Bayer may revoke its acceptance of such shipment of PPF by giving written
notice and disclosing the nature of any defects to Supplier as soon as
practicable after discovering such defects. In such event, such PPF shall be
considered a Nonconforming Product to the extent latent material defects in
fact are present and the provisions of Section 7.1 below shall apply.


 


3.5        Deviation Report. If
during the manufacture, processing, storage, distribution, testing, transport,
disposal or other handling of PPF by Supplier there arises a result that is
classified as either a Type I Incident or a Type II Incident (as defined
below), then Supplier shall prepare within seven (7) days following the
discovery of such deviation a written report detailing such deviation (a “Deviation Report”)
and promptly send to Bayer such Deviation Report prior to Supplier’s delivery
of the PPF which is the subject of such report. If Bayer rejects a shipment of
PPF based on a Deviation Report, it shall promptly notify Supplier, such PPF
shall be considered a Nonconforming Product and the provisions of Section 7.1
shall apply. For purposes of this Agreement, a “Type I Incident” shall be defined as an
unexpected result that has potential serious impact on product safety,
identity, strength, quality, purity, efficacy or manufacturing/testing process.
Examples of Type I Incidents include final product sterility and stability
failure, media fill failure, pyrogen specification exceeded for bulk or final
container and inadequate viral inactivation process. For purposes of this
Agreement, a “Type II
Incident” shall be defined as an unexpected result that has the
potential to affect product safety, identity, strength, quality, purity,
efficacy or manufacturing/testing process. Examples of Type


 


 


5





















 


II Incidents include clean
steam exceeding action level for LAL and Presterile in-process bioburden
exceeding action level.


 


3.6        Records. Supplier
shall maintain production records and other records required by cGMPs and the
Regulations for such time periods referenced thereby. Supplier shall make such
records available to Bayer for Bayer’s inspection promptly following a written
request by Bayer.


 


ARTICLE
4  Price and Price ADJUSTMENT


 


4.1        Price. During the
Term of this Agreement, Bayer shall pay the applicable price set forth on Exhibit F, attached hereto and
incorporated herein by reference, as adjusted pursuant to Section 4.2 below (“Price”). Supplier
shall be responsible for, or benefit from, yield experiences and variances,
rejects, losses, working capital, scrap, inventory obsolescence and any and all
other costs associated with the manufacturing, including all materials costs,
except as set forth in Section 4.2 below. All payments hereunder shall be made
in U.S. Dollars.


 


4.2        Adjustment to Price.


 


[***]


 


(b)  Other. The Price shall be further
subject to adjustment in accordance with Sections 3.1 and 6.4.


 


4.3        Price Adjustment Calculation. On October 1st of each calendar year or as soon thereafter
as possible, Supplier shall provide for Bayer’s review and approval the
computation of the Price Adjustment (as determined in accordance with Section
4.2 above) to be applied in the following calendar year, and the methodology
used in making such computation. Such adjustment shall be final and binding in
the absence of manifest error.


 


ARTICLE
5  Billing and Payment


 


5.1        Payments. Supplier
shall deliver to Bayer at the address set forth in Section 13.3 an invoice for
shipments of PPF to Bayer as the same is shipped. Each invoice shall reflect
the actual quantity of the PPF shipped and the price thereof, as computed in
accordance with Section 4.1. The amount invoiced by Supplier and payable by
Bayer during each Binding Forecast period will not be less than that charge
associated with such Binding Forecast, as computed in accordance with Section
4.1, unless the actual PPF delivered is less than the Binding Forecast due to
Supplier’s failure to perform its obligations under this Agreement. Within
thirty (30) days following the receipt of such invoice, Bayer shall pay to
Supplier the amount specified therein.


 










*** CONFIDENTIAL TREATMENT
REQUESTED


 


6





















 


5.2        Payment Disputes. All
billing and payment disputes between Bayer and Supplier shall be resolved in
accordance with Section 13.9 below.


 


ARTICLE
6  REGULATORY REQUIREMENTS


 


6.1        Compliance with Regulations. Supplier shall comply in all material respects with all applicable
laws, requirements, regulations, guidelines, licenses and directives, including
those in any Regulatory Approval of any Regulatory Authority (including without
limitation, applicable current Good Manufacturing Practices (“cGMPs”) as defined in
national and international laws and internationally accepted GMP compendia
including PIC/C and WHO GMP Guide) including all specifications and procedures
for plasma sourcing, plasma testing, and in process testing and all
regulations, specifications, and procedures contained therein (collectively, “Regulations”). For
the avoidance of doubt the term “Regulations” shall include those pertaining to
the use of PPF in Kogenate production. Supplier shall comply with all
Regulations that become effective after the Effective Date within the
timeframes required by such Regulation or applicable Regulatory Authority. Supplier
shall maintain all Regulatory Approvals necessary or desirable for the conduct
of its business, the sale of PPF, the use of PPF in Kogenate production, and
for the performance of its obligations under this Agreement. Notwithstanding
the foregoing, until the second anniversary of the Effective Date, Supplier
shall not be liable to Bayer for, or considered in breach of this Agreement as
a result of, any noncompliance or failure to comply with any Regulations to the
extent such noncompliance was in existence at the time of Closing (as defined
in the Contribution Agreement); provided, however, that all other obligations
of Supplier contained herein shall remain in full force and effect at all times
from and after the Effective Date. For purposes of this Agreement (i) “Regulatory Approvals”
shall mean all licenses, approvals, permissions, or consents required for the
manufacture and sale of Kogenate, including any licenses, approvals,
permissions, or consents required for the transfer or sale of PPF to Bayer and
Bayer’s use of PPF in the manufacture of Kogenate and (ii) “Regulatory Authority and Regulatory
Authorities” shall mean the FDA and any successor agency and all
other local, state, federal, or foreign governmental authorities with the
authority to grant or deny necessary Regulatory Approvals or to regulate the
manner or means by which PPF or Kogenate is manufactured, distributed, or sold.


 


6.2        Audit. Bayer shall
have the right, on reasonable written advance notice (to the extent
practicable, not less than one (1) week advance notice), and during normal
business hours, to inspect and audit Supplier’s facilities, Standard Operating
Procedures (as in effect as of the Effective Date and amended from time to time
upon mutual agreement of the Parties, and any replacement or successor thereof,
“SOPs”),
production, operations, testing, storage and books and records to confirm
compliance with Section 6.1 and Supplier’s compliance with the terms and
conditions of this Agreement, provided that such inspection or audit does not
unreasonably interfere with the conduct of business of Supplier. Supplier shall
use its commercially reasonable efforts to accommodate any reasonable request
made by Bayer to inspect such facility. Supplier shall respond in writing to
Bayer regarding any items of noncompliance identified by Bayer during such inspections
or audits within fifteen (15) days of Bayer’s notice thereof and shall develop
a plan, reasonably satisfactory to Bayer, to remedy any such items of
noncompliance within sixty (60) days of notice thereof and shall remedy such
items of 


 


7





















 


noncompliance as set forth
in such plan, the failure of which shall entitle Bayer to terminate this
Agreement in accordance with Section 10.1 hereof.


 


6.3        Regulatory Filings. Supplier
shall promptly accommodate all requests made by any Regulatory Authority to
audit Supplier’s facilities. Bayer shall have the right to review, during the
Term and for a period of five (5) years thereafter, all audit findings or
notices of any Regulatory Authority as such may, directly or indirectly, bear
upon the PPF, the Supplier’s ability to manufacture PPF or any of Supplier’s
obligations under this Agreement. Supplier shall develop and provide to Bayer a
plan, reasonably satisfactory to Bayer, to remedy, and shall remedy, any deficiencies
identified as a result of such regulatory inspection in the timeframes provided
in the applicable inspection report or the applicable Regulations. Supplier
shall promptly notify Bayer (i) after Supplier becomes aware of any
Regulatory Authority inspection of its facility and (ii) after Supplier
receives notice from any Regulatory Authority of any observation or regulatory
action, such as a warning letter. Supplier shall promptly provide a copy of any
audit finding with Supplier’s corrective action response to Bayer for items
that, directly or indirectly, relate to PPF or would affect Supplier’s ability
to manufacture PPF or any of Supplier’s obligations under this Agreement.


 


6.4        Regulatory Approvals.
Bayer is solely responsible for obtaining and maintaining all necessary
Regulatory Approvals from all Regulatory Authorities necessary to sell and
market the Products. Supplier shall upon request by Bayer and as reasonably
necessary provide all documents or information requested by Bayer to support
Bayer’s efforts to obtain, maintain, or defend the Regulatory Approvals
necessary to sell the Products and/or will maintain and/or modify its
operations or facilities as required to permit Bayer to obtain, maintain, or
defend Regulatory Approvals necessary to sell and market the Products; provided
Bayer will reimburse Supplier the reasonable direct costs Supplier incurs in
making modifications requested by Bayer and the Parties shall engage in a good
faith negotiation to adjust the Price set forth in Section 4.1 to reflect the
increase or decrease of ongoing costs of supplying PPF hereunder resulting from
any such modifications; provided further  that
if the Parties cannot reach agreement to adjust the Price pursuant to this
Section 6.4 despite such good faith negotiations, then (i) if the requested
modifications will affect only the PPF operations of Supplier at its Clayton,
North Carolina facility, the matter shall be resolved in accordance with
Section 13.9, or (ii) if the requested modifications will in Supplier’s sole
discretion adversely affect in any material manner other operations of Supplier
at its Clayton, North Carolina facility separate from its PPF operations at its
Clayton, North Carolina facility, Supplier shall not be required to make any
such modifications until the Parties reach such agreement; provided further  Bayer will have no obligation to reimburse
Supplier for the costs of any maintenance, repair or replacement of existing
facilities or for the substitution of their equivalent or for any increases in
costs associated with Supplier’s conduct of operations in a fashion similar to
or equivalent to the manner in which those operations were being conducted in
the absence of such request on the date of this Agreement.


 


6.5        Onsite Personnel. At
the expense of Bayer, Bayer shall be entitled, in its sole discretion, to have
a designated employee (which designated employee may be different persons from
time to time) of Bayer present at Supplier’s facility in Clayton, North
Carolina for the purposes of monitoring PPF production and quality control. Such
designated employee shall (a) have access to all areas of Supplier’s facility
relating to PPF production, (b) comply with all safety 


 


 


8





















 


and health laws, regulations,
policies and procedures applicable to personnel of Supplier at Supplier’s
facility and (c) remain an employee of Bayer and continue to receive all
compensation and benefits directly from Bayer or its affiliates. Notwithstanding
anything to the contrary in the foregoing, the presence of a Bayer designated
employee at Supplier’s facility and any action taken by such employee in no way
impairs or waives any right or remedy Bayer may otherwise have pursuant to the
terms of this Agreement.


 


ARTICLE
7  NONCONFORMING PRODUCT AND RECALLS


 


7.1        Nonconforming Product.
In the event that Supplier provides PPF that does not meet the Regulations or
does not conform to the Specifications, or contains latent defects, or that has
not been manufactured, processed, stored, distributed, tested, transported,
disposed of or otherwise handled in accordance with applicable SOPs, the
Specifications, cGMPs and the Regulations (“Nonconforming Product”), Supplier will
at no cost to Bayer, and as soon as reasonably feasible, replace such
Nonconforming Product with an equivalent amount of conforming PPF. Bayer shall
destroy all Nonconforming Product and promptly provide a certificate of
destruction to Supplier. Supplier shall reimburse Bayer for the reasonable
costs of such destruction. In addition to those obligations set forth above,
Supplier shall provide Bayer with the identification number of any plasma unit
that was pooled and manufactured into a batch or lot of Nonconforming Product
delivered to Bayer.


 


7.2        General Requirements.
Bayer shall maintain accurate records of the quantities of PPF received and the
intermediate and final Products derived from such PPF.


 


7.3        Distribution and Use Records. Supplier shall maintain and give Bayer access, upon advance notice
and at reasonable times, to, for a period of not less than fifteen (15) years
from production, donor records and test results with respect to each unit of
plasma included in PPF delivered to Bayer. Such records and results shall be
maintained such that they can rapidly and unequivocally be accounted for and
made available to Bayer within fourteen (14) days from the date of request. Bayer
shall maintain and give Supplier access, upon advance notice and at reasonable
times, to, for a period of not less than fifteen (15) years from the date of
delivery, records identifying the use of each lot of PPF and the Products into
which such PPF was processed (including without limitation, Kogenate®).
Such records shall be maintained such that the use of each lot of PPF can be
rapidly and unequivocally accounted for and made available to Supplier within
fourteen (14) days from the date of request. Bayer shall assist Supplier in
identifying, tracking and controlling the use of any PPF identified in
post-donation information as contaminated or otherwise unsuitable for
processing into Products.


 


7.4        Adverse Events. Bayer
shall record and investigate all reports of adverse events in which Products
manufactured from PPF have been implicated. If Bayer determines that a Product
has caused adverse reactions as a result of such Product being manufactured
using PPF, Bayer shall immediately notify the applicable Regulatory Authorities
as required by the Regulations, and shall promptly notify Supplier. Supplier
shall promptly notify Bayer of any adverse event resulting in a market
withdrawal or recall and/or involving viral, bacterial or prion transmission
associated with other fractions processed from the same plasma units as the PPF
or associated with a specific plasma donor whose plasma was used in the
manufacture of PPF.


 


9





















 


7.5        Customer Notification of Adverse Reactions. In the event that during the course of a
preliminary investigation related to a report of any serious adverse reaction
associated with Kogenate® or other Product, Bayer obtains
preliminary evidence indicating that, according to indications and dosage, the
PPF used in the manufacture of such Product may have caused such specific
adverse reaction, each Bayer customer that received any such Product shall be
notified by Bayer and cautioned that any unused containers of the suspect lots
should be withheld from use, pending the outcome of more definitive
investigations and evaluations, with a copy of such notice to the applicable
Regulatory Authority if required. Bayer shall promptly provide Supplier with a
copy of such notice. Any and all of the foregoing actions will be executed with
the concurrence of all relevant Regulatory Authority, to the extent required by
law.


 


7.6        Withdrawals and Recalls.
Bayer shall make all contacts with the relevant Regulatory Authority and shall
be responsible for coordinating all activities in connection with any recall or
withdrawal of any Product. In the event that Supplier believes a recall or
withdrawal of a Product may be necessary or appropriate, Supplier shall
promptly notify Bayer in writing. In the event that Bayer initiates a recall or
withdrawal of a Product, Bayer shall promptly notify Supplier.


 


7.7        Complaints. Bayer
and Supplier will cooperate in the reporting, investigation and evaluation of
customer complaints according to policies mutually determined by the Parties in
writing.


 


7.8        Responsibility. In
the event that any market withdrawal, recall or third party return of any
Product results from Supplier’s supply of Nonconforming Product, then Supplier
shall assume the claims and costs associated with such withdrawal, recall or
return and the destruction of implicated Products to the extent attributable to
Supplier’s Nonconforming Product.


 


ARTICLE 8  Force Majeure


 


For the purpose of this Agreement, “Force Majeure” shall mean only (i) acts
of God, acts of the public enemy, insurrections, riots, sabotage, strike,
work-stoppage or other labor dispute and natural disasters; (ii) explosions,
fires, flood damage, or loss of electric power not resulting from the
negligence of the Party invoking Force Majeure; (iii) regulatory actions not
attributable to any violation of law after the date hereof on the part of
Supplier or Bayer, as the case may be, unless, in the case of Supplier,
Supplier is required as a result of any statute, law, regulation, ordinance,
rule, judgment, code, order, decree or other requirement of a Regulatory
Authority (“Applicable
Law”), not initiated by Supplier, to cease or materially curtail
production primarily based upon (x) violation of any Applicable Law which
violation was in existence on the Effective Date or (y) any condition in
existence on the Effective Date or any condition alleged in writing to have
been in existence on or prior to the Effective Date by a Regulatory Authority
which condition remained outstanding on the Effective Date and which condition
constituted a violation or alleged violation of Applicable Law or impacts
the  safety or efficacy of PPF; and (iv)
in the case of Supplier, events, circumstances, conditions and actions outside
of the control of Supplier that materially and adversely affect the
plasma-derived products industry generally, including interruptions of supply
of raw plasma due to viral outbreaks, eruption of new viruses and similar
events that are reasonably likely to be subject to action by any Regulatory
Authority; 


 


10

















 


any of (i), (ii), (iii) or (iv) of which, in the case of the Supplier,
prevents the Supplier from performing its obligations under this Agreement, or,
any of (i), (ii) or (iii) of which, in the case of Bayer, prevents Bayer from
producing Kogenate or performing its obligations under this Agreement; provided
that nothing in clause (iii) or (iv) shall excuse Supplier from complying with
cGMPs or excuse Supplier from remedying those matters which were capable of
remedy by Supplier through the application of commercially reasonable efforts
prior to the occurrence of the events identified in (iii) or (iv) preventing
Supplier from performing under the Agreement. Notwithstanding anything in this
Agreement to the contrary, except Section 10.7, Article 12 and Article 13, the
Party experiencing the Force Majeure shall be excused from the performance of
each of its obligations under this Agreement upon a Force Majeure, but only to
the extent performance of any such obligation is necessarily prevented,
hindered or delayed thereby and only during the continuance of any such Force
Majeure, and shall have no liability for damages arising from non-performance
of any obligation excused by a Force Majeure. Furthermore, if Bayer terminates
this Agreement pursuant to Section 10.2, there shall be no further damages
arising from any non-performance excused by a Force Majeure. The Party
suffering such Force Majeure shall invoke this provision by promptly notifying
the other Party in writing of the nature and estimated duration of the
suspension period, as well as the extent to which it will be unable to fulfill
its obligations under the Agreement. Each Party shall be relieved of
performance of its obligations under this Agreement during the time when it is
prevented from performing by the failure of the other Party to perform its
obligations or because of any event of Force Majeure.


 


ARTICLE
9  REPRESENTATIONS AND WARRANTIES
AND DISCLAIMER


 


9.1        Regulatory Requirements.
Supplier represents and warrants that Supplier has all material government
approvals, permits and licenses necessary or desirable in the performance of
its obligations under this Agreement. Notwithstanding the foregoing, Supplier
shall not be deemed to be in breach of this Section 9.1 if such breach derives
from Bayer’s failure to comply with its obligation at the Closing under the
Contribution Agreement with respect to all material government approvals
necessary in the performance of its obligations under this Agreement.


 


9.2        Debarment. Supplier
certifies it will not use in any capacity the services of any person, including
any firm or individual, that has been debarred or is subject to debarment under
the Generic Drug Enforcement Act of 1992, amending the Food Drug and Cosmetic
Act of 21 U.S.C. 335a (a) or (b). Supplier agrees to notify Bayer promptly in
the event any person providing services to Supplier under the scope of this
Agreement is debarred or becomes subject to debarment.


 


9.3        Compliance. (i)  Bayer represents and warrants as of the time
immediately prior to the Closing (as defined in the Contribution Agreement)
that the manufacture, processing, distribution, testing, transport, storage,
disposal and other handling of PPF by Bayer until delivery to and processing at
Bayer’s facility located at Berkeley, California (i) did conform to applicable
SOPs, the Specifications, cGMPs and the Regulations, and (ii) were free from
defects in materials and workmanship and were not adulterated or misbranded
within the meaning of the applicable Regulations.


 


(ii)  Supplier represents and warrants that the
manufacture, processing, distribution, testing, transport, storage, disposal
and other handling of PPF by Supplier until delivery to and 


 


11





















 


processing by Bayer shall
(i) conform to applicable SOPs, the Specifications, cGMPs and the Regulations,
and (ii) be free from defects in materials and workmanship and shall not be
adulterated or misbranded within the meaning of the applicable Regulations.


 


9.4        Intellectual Property.
(i) Bayer represents and warrants as of the time immediately prior to the
Closing (as defined in the Contribution Agreement) that the manufacture,
processing, testing, distribution, transport, storage, disposal and other
handling of PPF did not infringe the intellectual property rights of any third
party and that Bayer validly possessed all licenses to third party intellectual
property necessary or appropriate for the manufacture, processing, testing,
distribution, transport, storage, disposal and other handling of PPF.


 


(ii)         During the Term of this Agreement, Supplier represents and warrants that
the manufacture, processing, testing, distribution, transport, storage,
disposal and other handling of PPF pursuant to this Agreement will not infringe
the intellectual property rights of any third party; provided that for purposes
of making this representation and warranty Supplier is entitled to rely to the
extent applicable on the representations and warranties made by Bayer as of the
Closing Date (as defined in the Contribution Agreement) pursuant to the
Contribution Agreement for so long as such representations and warranties
survive in the Contribution Agreement. During the Term of this Agreement,
Supplier agrees to maintain at its sole cost and expense all licenses to third
party intellectual property necessary or appropriate for the manufacture, processing,
testing, distribution, transport, storage, disposal and other handling of PPF.


 


9.5                                 Representations and Warranties.


 


(a)           Bayer hereby represents
and warrants to Supplier that:


 


(i)            Due Organization, Good Standing and
Power. Bayer is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of Delaware. Bayer
has all requisite corporate or other power and authority to own or lease and to
operate its assets and to conduct the business now being conducted by it. Bayer
is duly authorized, qualified or licensed to do business as a foreign
corporation or other organization in good standing in each of the jurisdictions
in which its ownership of property or the conduct of its business requires such
authorization, qualification or licensing, except where the failure to have
such authorization, qualification or licensing could not reasonably be expected
to have a material adverse effect on Bayer or on the consummation of the
transactions contemplated hereunder. Bayer has all requisite corporate power
and authority under Applicable Law and its Charter Documents to enter into this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby.


 


(ii)           Authorization and Validity of Agreement.
The execution and delivery of this Agreement by Bayer and the consummation by
it of the transactions contemplated hereby have been duly authorized and
approved by all necessary corporate action under Applicable Law and the
relevant Charter Documents on the part of Bayer and do not require the approval
of the stockholders of Bayer. This Agreement has been duly executed and
delivered by Bayer and constitutes the legal, valid and binding obligation of 


 


12

















 


Bayer enforceable against it in accordance with its terms, except as
that enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally, (ii) subject to general principles
of equity (regardless of whether that enforceability is considered in a
proceeding in equity or at law) and (iii) limited by general principles of
Applicable Law regarding the enforceability of arbitral awards and judicial
decisions.


 


(iii)          Lack of Conflicts. Neither the
execution and delivery of this Agreement by Bayer or the consummation by it of
the transactions contemplated hereby, does or will (i) conflict with, or result
in the breach of any provision of, the Charter Documents of Bayer or (ii)
violate any Applicable Law or any permit, order, award, injunction, decree or
judgment of any Governmental Authority applicable to or binding upon Bayer or
to which any of its properties or assets is subject.


 


(iv)          No Consents. The execution, delivery
and performance of this Agreement by Bayer and the consummation of the
transactions contemplated by this Agreement do not require any Governmental
Approval. No consent (other than Governmental Approvals) will be required to be
obtained by Bayer for the consummation of the transactions contemplated by this
Agreement.


 


(b)           Supplier hereby
represents and warrants to Bayer that:


 


(i)            Due Organization, Good Standing and
Power. Supplier is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware. Supplier has all
requisite corporate or other power and authority to own or lease and to operate
its assets and to conduct the business now being conducted by it. Supplier is
duly authorized, qualified or licensed to do business as a foreign corporation
or other organization in good standing in each of the jurisdictions in which
its ownership of property or the conduct of its business requires such
authorization, qualification or licensing, except where the failure to have
such authorization, qualification or licensing could not reasonably be expected
to have a material adverse effect on Supplier or on the consummation of the
transactions contemplated hereunder. Supplier has all requisite corporate power
and authority under Applicable Law and its Charter Documents to enter into this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby.


 


(ii)           Authorization and Validity of Agreement.
The execution and delivery of this Agreement by Supplier and the consummation
by it of the transactions contemplated hereby have been duly authorized and
approved by all necessary corporate action under Applicable Law and the
relevant Charter Documents on the part of Supplier and do not require the
approval of the stockholders of Supplier. This Agreement has been duly executed
and delivered by Supplier and constitutes the legal, valid and binding
obligation of Supplier enforceable against it in accordance with its terms,
except as that enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally, (ii) subject to general principles
of equity (regardless of whether that enforceability is considered in a
proceeding in equity or at law) and (iii) limited by 


 


 


13

















 


general principles of Applicable Law regarding the enforceability of
arbitral awards and judicial decisions.


 


(iii)          Lack of Conflicts. Neither the
execution and delivery of this Agreement by Supplier or the consummation by it
of the transactions contemplated hereby, does or will (i) conflict with, or
result in the breach of any provision of, the Charter Documents of Supplier or
(ii) violate any Applicable Law or any permit, order, award, injunction, decree
or judgment of any Governmental Authority applicable to or binding upon
Supplier or to which any of its properties or assets is subject.


 


(iv)          No Consents. The execution, delivery
and performance of this Agreement by Supplier and the consummation of the
transactions contemplated by this Agreement do not require any Governmental
Approval. No consent (other than Governmental Approvals) will be required to be
obtained by Supplier for the consummation of the transactions contemplated by
this Agreement.


 


9.6        Disclaimer. SUPPLIER
MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN THOSE
EXPRESSLY MADE IN THIS AGREEMENT. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED.


 


ARTICLE
10  TERMINATION


 


10.1      Termination for Cause.
If either Party commits a substantial violation of any material provision of
the Agreement (which means (i) in the case of Bayer, nonpayment of amounts
owing to Supplier in accordance with Section 5.1 or any other material breach
of any representation, warranty, covenant or performance obligations under this
Agreement by Bayer and (ii) in the case of Supplier, any material breach of any
representation, warranty, covenant or performance obligation under this
Agreement (other than breach of its obligation to deliver PPF under this
Agreement, any such breach to be governed exclusively under Section 11.4
hereof)), the other Party may, without prejudice to any other right or remedy,
and after giving the breaching Party sixty (60) days’ written notice of the
breach, terminate the Agreement. This Agreement shall not be so terminated if
the breaching Party has cured the breach, or submitted a plan for curing the
breach reasonably acceptable to the non-breaching Party within sixty (60) days
after the non-breaching Party’s notice. If the breaching Party fails to cure
the breach as set forth in the aforementioned plan in accordance with the
deadlines set forth therein, the non-breaching Party may terminate this
Agreement without further notice. The non-breaching Party shall have the right
to recover all direct damages and losses arising as a result of any such
material breach, including lost profits but not including consequential
damages, provided that any such recovery shall be reduced by the amount that
such non-breaching Party actually recovers under any insurance it maintains.


 


10.2      Termination for Supplier’s Force Majeure. Bayer may terminate this Agreement in its
sole discretion upon thirty (30) days’ prior written notice in the event of any
failure or inability of Supplier extending beyond ninety (90) days to provide
supply hereunder (other than from inventory) due to Force Majeure. In the event
of termination under this Section 10.2, Supplier 


 


 


14





















 


shall have no liability for
damages arising solely from such termination or otherwise excused by a Force
Majeure.


 


10.3      Other Termination Provisions. By Bayer if Supplier or by Supplier if Bayer:


 


(i)            admits in writing that
it is unable to pay its debts as they become due;


 


(ii)         starts a proceeding, or
indicates its acquiescence to a proceeding started by another, relating to it
under any bankruptcy, reorganization, rearrangement, insolvency, readjustment
of debt, dissolution, liquidation or similar law;


 


(iii)        makes an assignment for
the benefit of creditors;


 


(iv)       consents to the appointment
of a receiver, trustee or liquidator for a substantial part of its property;


 


(v)        files, or has filed
against it, a petition in bankruptcy, reorganization, rearrangement or
insolvency which, if filed against it, is not dissolved or dismissed within
ninety (90) days after filing; or


 


(vi)       has entered against it an
order by a court of competent jurisdiction appointing a receiver, trustee or
liquidator for it or a substantial part of its property, or approving its
dissolution or termination, and if not consented to or acquiesced in by such
Party, such order is not vacated or set aside or stayed within ninety (90)
days.


 


Notwithstanding anything to the contrary herein, no Party shall take or
cause to be taken any action relating to the voluntary liquidation or
dissolution of such Party.


 


10.4      Termination Without Cause. In the event there is an express or constructive termination by
Supplier not meeting requirements of Section 10.1 of this Agreement and
constituting an intentional or willful breach of this Agreement, other than a
Force Majeure event applicable to Supplier under Article 8 hereof (“Termination Without Cause”),
Supplier will be liable for all losses and damages suffered by Bayer, including
all lost profits and all consequential damages, for the period which is the
shorter of (a) the remainder of the unexpired Term and any unexpired Extended
Terms, other than any such unexpired Extended Terms for which Bayer has failed
to give notice of its intent to renew for an Extended Term within the time
periods provided in Article 1, (b) the period between Termination Without Cause
and commencement of an uninterrupted alternate source of PPF supply on terms
and conditions comparable to those hereunder, and (c) the period between Termination
Without Cause and Bayer’s completion of the conversion of its Kogenate process
to one which does not require PPF. In no event shall the damages and losses
which Supplier must pay to Bayer under this Agreement (other than pursuant to
Section 10.1, and Section 11.1) exceed [***].


 


10.5      Effect of Termination.
Upon termination of this Agreement, Supplier shall immediately cease delivery
of all PPF under this Agreement, and Supplier shall prepare and submit to Bayer
an invoice for all PPF shipped by Supplier and not paid for by Bayer. Bayer
shall within thirty (30) days of receipt thereof pay the full amount of such
invoice and all other sums owed to Supplier; provided, however, that if the
aggregate total of the Purchase Orders placed by Bayer


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


15





















 


prior to the effective date
of such termination does not meet the Binding Forecast for the then current
calendar year and in the event that this Agreement is terminated by Supplier
pursuant to Section 10.1, Bayer shall be obligated to pay amounts associated
with PPF to be delivered under the then current Binding Forecast and, at Bayer’s
sole discretion, Supplier shall be obligated to deliver the same.


 


10.6      Remedies. The rights
of a Party to this Agreement to recover monetary damages from the other Party
to this Agreement with respect to termination of this Agreement are exclusively
set forth in this Article 10. Each Party shall have such non-monetary rights
and remedies provided under this Agreement or under law or in equity for
breaches of this Agreement, but only limited to the remedy of specific
performance.


 


10.7      Special Assistance. In
the event that Bayer terminates this Agreement pursuant to Sections 10.1 (other
than a termination as a result of breach by Bayer), 10.2 or 10.3, there is a
Termination Without Cause or a Force Majeure prevents Supplier from delivering
PPF for a period of three (3) months in accordance with any Purchase Orders
issued under Binding Forecasts, Supplier agrees to use commercially reasonable
efforts to assist Bayer (at the cost and expense of Bayer) to transfer the
manufacture of PPF to any other facility or facilities selected by Bayer, such
best efforts to include providing assistance in qualifying another facility or
facilities to manufacture PPF, providing SOPs and granting royalty-free
licenses for the remainder of the Term to intellectual property related to the
manufacture of PPF to such facility or facilities and providing such other
assistance in connection therewith reasonably requested by Bayer.


 


10.8      Survival. In the
event of any termination or expiration of this Agreement, each of the
provisions of Sections 2.4, 5.2, 6.1, 6.3, 6.4, 10.1, 10.4, 10.5, 10.6, 10.7
and 10.8 and Articles 3, 7, 8, 9, 11, 12 and 13 shall survive as long as any
such provision remains applicable, provided that Article 11 shall survive
indefinitely, unless a shorter period for survival is provided in any such
Article or Section.


 


ARTICLE
11  INDEMNITIES AND DAMAGES


 


11.1      Indemnifications.
Supplier hereby agrees to save, defend and hold Bayer and its affiliates and
its or their directors, officers, managers, employees, representatives,
consultants, stockholders, controlling persons and agents and each of the
heirs, executors, successors and assigns of any of the foregoing (together, the
“Bayer Group”)
harmless from and against any and all claims, suits, actions, liabilities,
expenses and/or losses, including punitive or exemplary damages and reasonable
attorneys’ fees and expenses (“Claims”) asserted by a person or entity other than a
member of the Bayer Group arising from any material breach of obligations under
this Agreement by Supplier Group (as defined below); provided that any Claims
for failure to deliver PPF in accordance with the terms of this Agreement shall
be governed exclusively under Section 11.4 hereof. Bayer hereby agrees to save,
defend and hold Supplier and its affiliates and its or their directors,
officers, managers, employees, representatives, consultants, stockholders,
controlling persons and agents and each of the heirs, executors, successors and
assigns of any of the foregoing (together, the “Supplier Group”) harmless from and
against any and all Claims asserted by a person or entity other than a member
of the Supplier Group arising from any material breach of obligations under
this Agreement by the Bayer Group. Where a 


 


 


16


















 


Claim arises directly or
indirectly from acts or omissions of both (i) the Supplier Group and (ii) the
Bayer Group, the obligation of the Supplier or Bayer to indemnify the other
shall not exceed the extent of the indemnifying party’s contribution to the harm
giving rise to the Claim.


 


11.2      Indemnification Process.
Each party indemnified under the provisions of this Agreement, upon receipt of
written notice of any Claim or the service of a summons or other initial legal
process upon it in any action instituted against it for which it may be
entitled to indemnification pursuant to this Agreement, shall promptly give
written notice of such Claim, or the commencement of such action, or threat
thereof, to the Party from whom indemnity shall be sought hereunder; provided,
however, that the 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. Each indemnifying party shall be entitled at its own expense to
participate in the defense of such Claim or action, or, if it shall elect, so
long as it has acknowledged in writing to the indemnified party its
indemnification obligations hereunder, by written notice to the indemnified
party within twenty (20) days of receipt of notice of the Claim or action from
the indemnified party to assume such defense, in which event such defense shall
be conducted by counsel chosen by such indemnifying party (without prejudice to
the right of the indemnified party to fully participate at its own expense
through counsel of its own choosing) which counsel may be any counsel
reasonably satisfactory to the indemnified party against whom such Claim is
asserted or who shall be the defendant in such action, and such indemnified
party shall bear all fees and expenses of any additional counsel retained by it
or them, provided that the indemnifying party shall obtain the consent of the
indemnified party (which consent may be withheld in its sole discretion) before
entering into any settlement, adjustment or compromise of such Claims, provided
further that the indemnifying party may, without the consent of the indemnified
party, settle or compromise or consent to the entry of any judgment in any
action involving only the payment of money which includes as an unconditional
term thereof the delivery by the claimant or plaintiff to the indemnified party
of a duly executed written release of the indemnified party 


 


17





















 


from all liability in
respect of such Claim or action which written release shall be reasonably
satisfactory in form and substance to the indemnified party. Notwithstanding
the immediately preceding sentence, if the named parties in such action
(including impleaded parties) include the indemnified and the indemnifying
parties, and the indemnified party shall have been advised by counsel that
there may be a conflict between the positions of the indemnifying party and the
indemnified party in conducting the defense of such action or that there are
legal defenses available to such indemnified party different from or in
addition to those available to the indemnifying party, then counsel for the
indemnified party, shall be entitled, if the indemnified party so elects, to
conduct the defense to the extent reasonably determined by such counsel to be
necessary to protect the interests of the indemnified party, at the expense of
the indemnifying party. If the indemnifying party shall elect not to assume the
defense of such Claim or action, such indemnifying party shall reimburse such
indemnified party for the reasonable fees and expenses of any counsel retained
by it, and shall be bound by the results obtained by the indemnified party in
respect of such Claim or action; provided, however, that no such Claim or
action shall be settled without the written consent of the indemnifying party
(which consent shall not be unreasonably withheld or delayed).


 


11.3      Insurance. During
the Term of this Agreement and for a period of at least two (2) years following
the expiration or earlier termination of this Agreement, Supplier shall
maintain, at its sole cost and expense, general liability insurance, including
product liability coverage, with bodily injury, death and property damage
limits, in such amounts and with such scope of coverage as is consistent with
plasma industry standards. Supplier shall have its insurance carrier furnish to
Bayer certificates stating that all insurance required under this Agreement is
in force. Such certificates shall indicate any deductible and self-insured
retention and the effective expiration dates of the policies. All certificates
are to stipulate that Bayer shall be given thirty (30) days written notice of
all cancellation, non-renewal or material changes in policy. Bayer shall be
named as an additional insured on all insurance policies obtained by Supplier
in accordance with this Section 11.3. Supplier also agrees to waive and will
require its insurers to waive all rights of subrogation against Bayer, its
directors, officers and employees on all of the foregoing coverages.


 


11.4      Liquidated Damages And Other Damages For Failure To Deliver PPF. (a) The Parties acknowledge that the
anticipated damages to Bayer in the event of a failure by Supplier to deliver
PPF to Bayer for a prolonged period of time is incapable of accurate estimation
as of the Effective Date and that Bayer will be unable for a prolonged period
of time to mitigate damages that it will suffer in such event.


 


(b) Subject to the last sentence of this
subsection (b), in the event at the conclusion of any month Supplier has failed
to deliver during the immediately preceding rolling twelve (12) months an
amount of PPF (including deliveries from Inventory Reserves held by Supplier
(but not held by Bayer) in accordance with Section 2.5) which conforms to the
Specifications aggregating at least [***] of the
Purchase Orders for the immediately preceding rolling twelve (12) months (“Threshold Deliveries”)
and such failure is not the result of Force Majeure (each, a “Triggering Event”),
then Supplier shall promptly pay Bayer liquidated damages as follows:


 


For each month following a Triggering Event
Supplier fails to make Threshold Deliveries, Supplier shall initially pay [***];


 


After Supplier has failed to make Threshold
Deliveries for two consecutive months following a Triggering Event, Supplier
shall thereafter pay [***] per month
for each following consecutive month in which Supplier fails to make Threshold
Deliveries; and


 


After Supplier has failed to make Threshold
Deliveries for five consecutive months following a Triggering Event, Supplier
shall pay [***] per month for each additional
consecutive month in which Supplier fails to make Threshold Deliveries.


 


The first rolling twelve (12) months shall
commence on the first day of the calendar month immediately following the
Effective Date (the “Commencement
Date”). Any liability for payment of damages specifically under
this Section 11.4(b) shall not arise before the first day of the thirteenth
month after the Commencement Date.


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


18

















 


(c) From the Effective Date through December
31, 2010, in no event shall the aggregate amount of liquidated damages payable
by Supplier for all such incidences to Bayer pursuant to subsection (b) above
exceed [***] (as reduced below, the “Cap”). From January
1, 2011 through December 31, 2011, the Cap shall be reduced to an amount equal
to [***] minus the aggregate liquidated
damages payable by Supplier pursuant to subsection (b) above from the Effective
Date through December 31, 2010, but not less than zero. No liquidated
damages shall be payable by Supplier pursuant to subsection (b) after December
31, 2011.


 


(d) If the liquidated damages provision
provided for in this Section 11.4 is deemed unenforceable for any reason by a
court of competent jurisdiction, Supplier shall pay an amount to Bayer equal to
the direct damages or losses incurred by Bayer, including without limitation
all lost profits, costs of cover and delivery penalties but excluding
consequential damages as a result of Supplier’s failure to deliver PPF, subject
to the Cap.


 


(e) For the avoidance of doubt, the
requirement to pay liquidated damages in this Section 11.4 only applies where
there has been a failure of Supplier to make Threshold Deliveries and nothing
in this Section 11.4 shall be construed as relieving Supplier of liability for
its failure to deliver PPF which conforms to the Specifications in the amounts
required by Sections 2.1, 2.2 or 2.3 and/or meeting the requirements set forth
in Section 3.1 in circumstances (other than Force Majeure) where Supplier has
not made full deliveries of PPF (which may include deliveries from Inventory
Reserves held by Supplier and Bayer in accordance with Section 2.5) in full
compliance with a Purchase Order presented in accordance with Section 2.3 (“Circumstance of Under-Delivery”)
to the extent provided in this Section 11.4(e). In the event at the conclusion
of any month Supplier has failed to deliver during the immediately preceding
rolling three months PPF (including deliveries from Inventory Reserves held by
Supplier (but not held by Bayer) in accordance with Section 2.5) which conforms
to the Specifications in an amount aggregating one hundred percent (100%) of
the Purchase Orders for the immediately preceding rolling three (3) months and
Bayer suffers direct damages as a result thereof (without taking into account
Bayer’s Bayer may notify Supplier to that effect, in which case Supplier shall
have three (3) additional months within which to deliver such PPF. If Supplier
does in fact deliver such PPF within such period, then no damages shall apply
for such Circumstances of Under-Delivery. If Supplier does not deliver such PPF
within such period, then Supplier shall be liable to Bayer for all direct
damages or losses Bayer suffers after depleting Bayer’s Inventory Reserves,
including without limitation all lost profits, costs of cover and delivery penalties
but excluding consequential damages for each Circumstance of Under-Delivery in
an amount not exceeding, for that calendar year, [***]
provided that any such recovery shall be reduced (i) by any amounts previously
paid pursuant to Section 11.4(b) with respect to the failure to deliver in the
same period, (ii) by any amount that Bayer actually recovers under any
insurance it maintains and (iii) to the extent Bayer has not complied with its
obligations under Section 2.5 hereof. In no event shall Supplier have liability
for non-delivery of PPF greater than the aggregate limits set forth in Section
10.4.


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


19

















 


The first rolling three (3) months shall
commence on the date that is four (4) months following the Commencement Date.


 


(f)            The rights and remedies of Bayer provided
in this Section 11.4 shall be Bayer’s exclusive remedy for recovery of monetary
damages with respect to the Supplier’s failure to deliver PPF in amounts
required by this Agreement. Bayer shall have such non-monetary rights and
remedies provided under this Agreement or under law or in equity for Supplier’s
failure to deliver PPF in amounts required by this Agreement, including the
remedy of specific performance.


 


11.5      Insurance Recoveries.
If and to the extent the Supplier has acquired insurance in compliance with
Section 11.3, and to the extent such coverage is inadequate to cover all Claims
asserted against Supplier and Bayer and if and to the extent Bayer has its own
policy of insurance purporting to provide coverage for Claims against Bayer,
Bayer shall not be entitled to indemnification from Supplier for such claims
under Section 11.1 until Bayer has utilized all commercially reasonable means
to recover such loss under its policy of insurance.


 


ARTICLE
12  CONFIDENTIALITY


 


12.1      Confidentiality Obligations. All information provided by one Party to the other Party in
connection with this Agreement (including without limitation, the
Specifications and forecasts provided by Bayer) shall be maintained in strict
confidence by the receiving Party. Such information shall remain the property
of the providing Party,  and the
receiving Party shall not make use of any such information except for the
purposes for which it was provided. At the termination of this Agreement, the
receiving Party shall promptly return to the providing Party any physical
embodiments (including copies) of any such information. Each Party agrees to
keep confidential the existence of this Agreement, as well as all of its terms
and conditions; provided that if a public announcement or disclosure is
required by law, rule, regulation, court order, subpoena, interrogatory or
other discovery request (including without limitation applicable securities
laws or stock exchange regulations), and subject to Section 12.2(v), the Party
required to make the public announcement or disclosure shall be permitted to
make such disclosure and shall provide prompt prior written notice of such
requirement to the other Party, and the Parties shall thereafter negotiate in
good faith, to the extent appropriate and feasible, the contents of the public
announcement or disclosure.


 


12.2      Exceptions. The
covenants of the receiving Party contained in Section 12.1 shall not apply to
information which: (i) is already in the public domain at the time of
disclosure; (ii) becomes part of the public domain through no action or
omission of the receiving Party after disclosure to the receiving Party; (iii)
is already known to the receiving Party on a non-confidential basis at the time
of disclosure, as evidenced by the receiving Party’s written records, except
for information that was known to Bayer prior to the Effective Date; (iv) has
been or is disclosed to the receiving Party in good faith by a third party who
was or is not, at the time of disclosure, under any obligation of confidence to
the other Party hereto at the time the third party disclosed such information;
or (v) is required to be disclosed by law, provided that the receiving Party
shall cooperate with the disclosing Party (at the disclosing Party’s expense)
in obtaining any available protection for such information to be disclosed.


 


 


20





















 


12.3      Term of Obligations.
This Article 12 shall survive termination of this Agreement for a period of
five (5) years.


 


ARTICLE
13  MISCELLANEOUS


 


13.1      Consent to Assignment.
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, and it is not intended to confer upon any other person any rights or
remedies hereunder. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any of the parties without the prior
written consent of the other party hereto, except that each party may at any
time assign any or all of its rights or obligations hereunder to one of its
wholly owned subsidiaries (but no such assignment shall relieve such party of
any obligations under this Agreement). Notwithstanding the foregoing, Supplier
may assign this Agreement and any or all rights or obligations hereunder to (i)
any affiliate of Supplier provided that any such affiliate becomes a party to
this Agreement, (ii) any lender of Supplier as collateral security or (iii) any
successor in interest to Supplier, it being understood that any such successor
shall continue to supply PPF under this Agreement from the Clayton, North
Carolina facility; provided that any such successor becomes a party to this
Agreement; provided that no assignment under (i), (ii) or (iii) above shall
relieve Supplier from any obligation hereunder. Bayer may assign this Agreement
and any or all rights or obligations hereunder to (i) any affiliate of Bayer
provided that any such affiliate becomes a party to this Agreement or (ii) any
successor in interest to Bayer of its entire Kogenate business, provided that
any such successor becomes a party to this Agreement; provided that no
assignment under (i) or (ii) above shall relieve Bayer from any obligation
hereunder. Any purported assignment in contravention of this Section 13.1 shall
be void.


 


13.2      Entire Agreement and Amendments. This Agreement, together with the Exhibits, constitutes the entire
agreement between the Parties, and merges and supersedes all previous
agreements and understandings between Bayer and Supplier, whether oral or
written, relating to the subject matter hereof. In the event that this
Agreement conflicts with any Purchase Order, invoice or other written document,
the terms and conditions of this Agreement shall apply. No amendment,
modification or interpretation of this Agreement will have any effect unless it
is reduced to writing, makes specific reference to this Agreement and is signed
by all of the Parties.


 


13.3      Notices. All
notices, requests, demands and other communications required or permitted
hereunder shall be in writing and if mailed by prepaid first class mail or
certified mail, return receipt requested, at any time other than during a
general discontinuance of postal service due to strike, lockout or otherwise,
shall be deemed to have been received on the earlier of the date shown on the
receipt or three (3) business days after the postmarked date thereof and, if
telexed or telecopied, the original notice shall be mailed by prepaid first
class mail within twenty-four (24) hours after sending such notice by telex or
telecopy, and shall be deemed to have been received on the next business day
following dispatch and acknowledgment of receipt by the recipient’s telex or
telecopy machine. In addition, notices hereunder may be delivered by hand, in
which event the notice shall be deemed effective when delivered, or by
overnight courier, in which event the notice shall be deemed to have been
received on the next business day following delivery to such courier. All
notices and other 


 


 


21





















 


communications under this
Agreement shall be given to the parties hereto at the following addresses:


 


	
   

  	
  (a)

  	
  If to Bayer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bayer HealthCare LLC

  
	
   

  	
   

  	
  Biological Products Division

  
	
   

  	
   

  	
  800 Dwight Way

  
	
   

  	
   

  	
  P.O. Box 1986

  
	
   

  	
   

  	
  Berkeley, CA 94710

  
	
   

  	
   

  	
  Attention: Contract Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bayer HealthCare LLC

  
	
   

  	
   

  	
  400 Morgan Lane

  
	
   

  	
   

  	
  West Haven, CT 06516-4175

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Marilyn Mooney

  
	
   

  	
   

  	
  Fulbright & Jaworski L.L.P.

  
	
   

  	
   

  	
  801 Pennsylvania Avenue, N.W.

  
	
   

  	
   

  	
  Washington, D.C. 20004

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  If to Supplier:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Talecris Biotherapeutics, Inc.

  
	
   

  	
   

  	
  P.O. Box 13887

  
	
   

  	
   

  	
  79 TW Alexander Drive

  
	
   

  	
   

  	
  4101 Research Commons

  
	
   

  	
   

  	
  Research Triangle Park

  
	
   

  	
   

  	
  Raleigh, NC 27709

  
	
   

  	
   

  	
  Fax: (919) 316-6669

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With copies to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Alison S. Ressler, Esq.

  
	
   

  	
   

  	
  Sullivan & Cromwell LLP

  
	
   

  	
   

  	
  1888 Century Park East

  
	
   

  	
   

  	
  Suite 2100

  
	
   

  	
   

  	
  Los Angeles, CA 90067

  
	
   

  	
   

  	
  Fax: (310) 712-8800

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  



 


22

















 


	
   

  	
   

  	
  Raymond B. Grochowski, Esq.

  
	
   

  	
   

  	
  Latham & Watkins LLP

  
	
   

  	
   

  	
  555 11th Street, N.W.

  
	
   

  	
   

  	
  Suite 1000

  
	
   

  	
   

  	
  Washington, D.C. 20004

  
	
   

  	
   

  	
  Fax: (202) 637-2201

  



 


Any Party hereto may change its address specified
for notices herein by designating a new address by notice in accordance with
this Section 13.3.


 


13.4      Independent Contractor.
This Agreement does not create an employer-employee relationship between the
Parties, and is not an agency, joint venture or partnership. Neither Party
shall have the authority to act for the other or to bind the other in any way,
nor to sign the name or to represent that the other is in any way responsible
for the acts or omissions of the other. Supplier shall maintain its status as
an independent contractor engaged in the selling of PPF to Bayer.


 


13.5      Non-Waiver. The
waiver by either Party of any breach of any term, covenant, condition or
agreement contained herein or any default in the performance of any obligations
hereunder shall not be deemed to be a waiver of any other breach or default of
the same or of any other term, covenant, condition, agreement or obligation.


 


13.6      Choice of Law. The
rights and obligations of the Parties arising out of the Agreement shall be
governed in all respects by the laws of the State of New York, without giving
effect to its conflict of laws provisions.


 


13.7      Captions. All
captions are inserted for convenience only, and will not affect any
construction or interpretation of this Agreement.


 


13.8      Severability. Any
provision of this Agreement which is or may become prohibited or unenforceable,
as a matter of law or regulation, will be ineffective only to the extent of
such prohibition or unenforceability and shall not invalidate the remaining provisions
hereof if the essential purposes of this Agreement may be given effect despite
the prohibition or unenforceability of the affected provision.


 


13.9      Dispute Resolution.


 


(a)           Resolution by the Parties. The
Parties shall attempt to resolve any dispute, controversy, claim or difference
arising out of, or in connection with, this Agreement amicably and promptly by
negotiations between executives who have authority to settle the controversy. Either
Party may give the other Party written notice of any dispute not resolved in
the normal course of business (“Notice of Dispute”). Within seven (7) days after
delivery of such Notice of Dispute, executives of the Party shall agree to meet
at a mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to attempt to resolve the dispute. If the matter has not been
resolved within ten (10) days of the first meeting of such executives (or, if
the Parties are unable to mutually agree upon an acceptable time and place to
meet, within ten (10) days of


 


23

















 


the disputing Party’s Notice of Dispute),
either Party may, by notice to the other Party (“Dispute Escalation Notice”), refer the
matter to the respective officers of the Parties designated below.


 


	
  For Bayer:

  	
  Executive
  Vice President, Bayer HealthCare LLC

  
	
   

  	
  and
  President, Biological Product Division

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bayer HealthCare LLC

  
	
   

  	
   

  	
  400 Morgan Lane

  
	
   

  	
   

  	
  West Haven, CT 06516-4175

  
	
   

  	
   

  	
  Attention: General Counsel

  



 


For Supplier:   Chief
Executive Officer of Talecris Biotherapeutics, Inc.


 


Such officers
shall negotiate in good faith to resolve the matter in an amicable manner
within ten (10) days of the Dispute Escalation Notice. In the event the matter
is not resolved within such ten (10) days, either Party may initiate
arbitration of the dispute as provided for in this Section 13.9.


 


(b)           Binding Arbitration. In any event, if
any dispute, other than with respect to Article 10 and Section 4.2(b), is not
resolved in accordance with this Section 13.9(a) within thirty (30) days of the
date in which such dispute arose, either Party may submit the dispute to
binding arbitration by giving the other Party notice (the “Arbitration Notice”).
Such arbitration shall be conducted in accordance with the then valid
Commercial Arbitration Rules, in effect as of the Effective Date, of the
American Arbitration Association (the “Rules”). The arbitration shall be held in the
English language in New York, New York (U.S.) in accordance with the substantive
law of the State of New York, without giving effect to its conflict of laws
provisions. The arbitration will be conducted by one (1) arbitrator
knowledgeable in the subject matter that is at issue in the dispute and who is
selected by mutual agreement of the Parties or, failing such agreement by
thirty (30) days after the Arbitration Notice was given, will be selected
according to the Rules. Either Party reserves the right to object to any
individual arbitrator who shall be employed by or affiliated with a competing
organization. The arbitrator shall render a decision no later than ninety (90)
days from the date of such arbitrator’s selection. The award of the arbitrator
shall be final and binding on both Parties. Each Party hereby submits itself to
the jurisdiction of the courts of the place where arbitration is held, but only
for the entry of judgment with respect to the decision of the arbitrator
hereunder. Notwithstanding the foregoing, judgment upon the award may be
entered in any court in the state where the arbitration takes place, or any
court having jurisdiction over the Parties. In the event of any actual or
threatened breach or default which could give rise to irreparable harm, nothing
in this Agreement shall prevent either Party from seeking injunctive relief (or
any other provisional remedy or equitable relief) from any court having
jurisdiction over the Parties and the subject matter of this dispute to protect
their respective rights pending the outcome of the arbitration. The Parties
bind themselves to carry out the awards of the arbitrator. The fees and
expenses of the arbitrators, the fees and expenses


 


24

















 


of the court report and any expense for a
hearing room, and reasonable attorney’s fees may be awarded to the prevailing
party by the arbitrator, or if such award is not made, will be shared equally
by the Parties. The Parties will otherwise bear their respective expenses of
arbitration.


 


(c)           Reviewing Accountant. If the Parties
fail to resolve under Section 13.9(a) any dispute arising under Section 4.2(b)
within forty-five (45) days, the Parties shall select a firm of independent
certified public accountants of national standing (the “Reviewing Accountant”)
to resolve the areas of dispute or, if the Parties fail to agree upon a
Reviewing Accountant within twenty (20) days after the 45-day period lapses,
such firm shall be selected by lot from among all so-called “Big Four” firms
not having (and not having announced a pending combination with another firm
having) a disqualifying interest with respect to either party. The performance
of any such firm as the Reviewing Accountant under this Agreement shall not
constitute a disqualifying interest. The Parties shall make available to the
Reviewing Accountant all work papers and all other information and material in
their possession relating to the matters in dispute. The Reviewing Accountant
shall be instructed by the Parties to use its best efforts to deliver to the
Parties its determination as promptly as practicable after such submission of
the dispute to the Reviewing Accountant. The determination of the Reviewing
Accountant shall be final and binding on the Parties. Each Party shall bear its
own expenses and the fees and expenses of its own representatives and experts,
including its independent accountant, in connection with the preparation,
review, dispute (if any) and final resolution of the dispute. The Parties shall
share equally in the costs, expenses and fees of the Reviewing Accountant.


 


13.10    Defined Terms. Defined
terms used but not otherwise defined in this Agreement shall have the meaning
ascribed to those terms in the Contribution Agreement.


 


13.11    Set-Off. No Party to
this Agreement shall have any right of set off with respect to amounts it has
an obligation to pay hereunder.


 


 


{Remainder of this page has been intentionally left blank}


 


25

















 


IN WITNESS WHEREOF,
the Parties have caused their duly authorized representatives to execute this
Agreement as of the Effective Date.


 


	
   

  	
  BAYER HEALTHCARE LLC

  
	
   

  	
  Biological Products Division – Berkeley
  Facility

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Authorized Signatory

  	
   

  
	
   

  	
  Name:

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BAYER HEALTHCARE LLC

  
	
   

  	
  Biological Products Division – Berkeley
  Facility

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Authorized Signatory

  	
   

  
	
   

  	
  Name:

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TALECRIS BIOTHERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lawrence D. Stern

  	
   

  
	
   

  	
  Name:

  	
  Lawrence
  D. Stern

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
								



 


 


26

















 


EXHIBIT A: [***]


 


[***]


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


27





















 


EXHIBIT B: [*** 2 pages redacted]


 


[***]


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


28





















 


EXHIBIT C: [***]


 


[***]


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


29





















 


EXHIBIT D: [*** 2 pages redacted]


 


[***]


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


30





















 


EXHIBIT E: [*** 3 pages redacted]


 


[***]


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


 


31





















 


EXHIBIT F: [***]


 


[***]


 










*** CONFIDENTIAL TREATMENT REQUESTED


 


32