Document:

Exhibit 4.5

 

DATED                                                 2019

 

NOVARTIS PHARMA AG

 

and

 

ALCON INC.

 

 

 

MANUFACTURING AND SUPPLY AGREEMENT
 relating to the separation of the Alcon surgical and vision care business

 

Aspex/Fort Worth/Singapore

 

 

1

 

MANUFACTURING AND SUPPLY AGREEMENT

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS AND   INTERPRETATION
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
MANUFACTURE AND SUPPLY
    	
21
    
	
 
    	
 
    	
 
    
	
3.
    	
FORECASTS AND ORDERS
    	
24
    
	
 
    	
 
    	
 
    
	
4.
    	
CAPACITY BASELINE AND   GATING PLAN
    	
28
    
	
 
    	
 
    	
 
    
	
5.
    	
TOLL MANUFACTURE
    	
33
    
	
 
    	
 
    	
 
    
	
6.
    	
PRODUCTS MANUFACTURED   USING MATERIALS PURCHASED FROM PURCHASER
    	
34
    
	
 
    	
 
    	
 
    
	
7.
    	
SHARED CONTRACTS
    	
35
    
	
 
    	
 
    	
 
    
	
8.
    	
SHARED CHEMICAL/API   PRODUCT/SHARED PACKAGING MATERIAL
    	
35
    
	
 
    	
 
    	
 
    
	
9.
    	
DELIVERY OF PRODUCT
    	
36
    
	
 
    	
 
    	
 
    
	
10.
    	
PRICE AND PRICE   ADJUSTMENTS
    	
39
    
	
 
    	
 
    	
 
    
	
11.
    	
INVOICE, PAYMENT AND   CURRENCY CONVERSION
    	
44
    
	
 
    	
 
    	
 
    
	
12.
    	
ELECTRONIC SYSTEMS
    	
45
    
	
 
    	
 
    	
 
    
	
13.
    	
QUALITY CONTROL
    	
46
    
	
 
    	
 
    	
 
    
	
14.
    	
KEY PERFORMANCE   INDICATORS
    	
46
    
	
 
    	
 
    	
 
    
	
15.
    	
RELATIONSHIP MANAGEMENT
    	
49
    
	
 
    	
 
    	
 
    
	
16.
    	
DISPUTE ESCALATION
    	
50
    
	
 
    	
 
    	
 
    
	
17.
    	
ACCEPTANCE OF PRODUCT
    	
51
    
	
 
    	
 
    	
 
    
	
18.
    	
REGULATORY MATTERS
    	
53
    
	
 
    	
 
    	
 
    
	
19.
    	
DOCUMENTATION AND   REPORTS
    	
54
    
	
 
    	
 
    	
 
    
	
20.
    	
PRODUCT SPECIFICATIONS
    	
55
    
	
 
    	
 
    	
 
    
	
21.
    	
NEW PRODUCT SKUS
    	
55
    

 

i

 

	
22.
    	
CAPITAL EXPENDITURE AND   COSTS OF DEVELOPMENT WORK
    	
57
    
	
 
    	
 
    	
 
    
	
23.
    	
DEVELOPMENT WORK
    	
58
    
	
 
    	
 
    	
 
    
	
24.
    	
CONTINUOUS IMPROVEMENT   PROGRAMME
    	
59
    
	
 
    	
 
    	
 
    
	
25.
    	
WRITE OFF COSTS
    	
59
    
	
 
    	
 
    	
 
    
	
26.
    	
ARTWORK AND SHARED   MOULDS
    	
60
    
	
 
    	
 
    	
 
    
	
27.
    	
SERIALISATION,   AGGREGATION AND OTHER ANTI-FALSIFICATION REGULATIONS
    	
61
    
	
 
    	
 
    	
 
    
	
28.
    	
PHARMACOVIGILANCE
    	
61
    
	
 
    	
 
    	
 
    
	
29.
    	
PRODUCT ACTION
    	
62
    
	
 
    	
 
    	
 
    
	
30.
    	
SUPPLIERS OF MATERIALS   AND SHARED PACKAGING MATERIALS
    	
62
    
	
 
    	
 
    	
 
    
	
31.
    	
CONFIDENTIALITY
    	
63
    
	
 
    	
 
    	
 
    
	
32.
    	
FORCE MAJEURE
    	
65
    
	
 
    	
 
    	
 
    
	
33.
    	
AUDIT AND INSPECTION   RIGHTS
    	
66
    
	
 
    	
 
    	
 
    
	
34.
    	
ETHICAL STANDARDS AND   HUMAN RIGHTS
    	
68
    
	
 
    	
 
    	
 
    
	
35.
    	
SAFETY HAZARDS
    	
70
    
	
 
    	
 
    	
 
    
	
36.
    	
WARRANTIES
    	
70
    
	
 
    	
 
    	
 
    
	
37.
    	
INDEMNITY AND LIABILITY
    	
71
    
	
 
    	
 
    	
 
    
	
38.
    	
INSURANCE
    	
73
    
	
 
    	
 
    	
 
    
	
39.
    	
INTELLECTUAL PROPERTY
    	
73
    
	
 
    	
 
    	
 
    
	
40.
    	
DURATION AND   TERMINATION
    	
76
    
	
 
    	
 
    	
 
    
	
41.
    	
CONSEQUENCES OF   TERMINATION
    	
79
    
	
 
    	
 
    	
 
    
	
42.
    	
TECHNICAL TRANSFER
    	
80
    
	
 
    	
 
    	
 
    
	
43.
    	
BRIDGING STOCK
    	
85
    
	
 
    	
 
    	
 
    
	
44.
    	
RISK MANAGEMENT
    	
86
    

 

ii

 

	
45.
    	
NOTICE
    	
87
    
	
 
    	
 
    	
 
    
	
46.
    	
SURVIVAL OF RIGHTS AND   OBLIGATIONS
    	
88
    
	
 
    	
 
    	
 
    
	
47.
    	
ASSIGNMENT
    	
88
    
	
 
    	
 
    	
 
    
	
48.
    	
WHOLE AGREEMENT
    	
89
    
	
 
    	
 
    	
 
    
	
49.
    	
THIRD PARTY RIGHTS
    	
89
    
	
 
    	
 
    	
 
    
	
50.
    	
GOVERNING LAW AND   ARBITRATION
    	
90
    
	
 
    	
 
    	
 
    
	
51.
    	
VARIATION OR WAIVER
    	
91
    
	
 
    	
 
    	
 
    
	
52.
    	
COSTS
    	
92
    
	
 
    	
 
    	
 
    
	
53.
    	
INTEREST
    	
92
    
	
 
    	
 
    	
 
    
	
54.
    	
PAYMENTS
    	
92
    
	
 
    	
 
    	
 
    
	
55.
    	
INVALIDITY
    	
92
    
	
 
    	
 
    	
 
    
	
56.
    	
COUNTERPARTS
    	
93
    
	
 
    	
 
    	
 
    
	
57.
    	
RELATIONSHIP OF THE   PARTIES
    	
93
    
	
 
    	
 
    	
 
    
	
58.
    	
FURTHER ASSURANCE
    	
93
    
	
 
    	
 
    	
 
    
	
EXHIBIT 1 PRODUCTS
    	
95
    
	
 
    	
 
    
	
EXHIBIT 2   MANUFACTURING SITES
    	
98
    
	
 
    	
 
    
	
EXHIBIT 3 QUALITY   AGREEMENT
    	
103
    
	
 
    	
 
    
	
EXHIBIT 4 KEY   PERFORMANCE INDICATORS
    	
104
    
	
 
    	
 
    
	
EXHIBIT 5 NEW   PRODUCT SKU — IN FLIGHT PROJECTS
    	
110
    
	
 
    	
 
    
	
EXHIBIT 6 INITIAL   GATING PLAN
    	
111
    
	
 
    	
 
    
	
EXHIBIT 7 TOLL   MANUFACTURE PROVISIONS
    	
112
    
	
 
    	
 
    
	
EXHIBIT 8   PURCHASER MATERIALS
    	
124
    
	
 
    	
 
    
	
EXHIBIT 9 SHARED   MOULDS
    	
129
    

 

iii

 

	
EXHIBIT 10   STANDARDS AND POLICIES
    	
134
    
	
 
    	
 
    
	
EXHIBIT 11 FORMAT   OF FORECAST SCHEDULE
    	
139
    
	
 
    	
 
    
	
EXHIBIT 12 DATA   PACK REQUIREMENTS
    	
140
    
	
 
    	
 
    
	
EXHIBIT 13 AGREED   CAPITAL EXPENDITURE
    	
143
    
	
 
    	
 
    
	
EXHIBIT 14 INITIAL   PRODUCT FORECAST SCHEDULE
    	
144
    
	
 
    	
 
    
	
EXHIBIT 15 INITIAL   LONG TERM TRANSFER PLAN
    	
145
    
	
 
    	
 
    
	
EXHIBIT 16 SUPPLY   PRICE ADJUSTMENT AND CATALOGUE
    	
147
    
	
 
    	
 
    
	
EXHIBIT 17 DUAL   SOURCING
    	
157
    
	
 
    	
 
    
	
EXHIBIT 18   INFLATION RATE SOURCE
    	
160
    

 

iv

 

THIS MANUFACTURING AND SUPPLY AGREEMENT  is made the              day of                    2019 (the “Effective Date”)

 

BETWEEN:

 

(1)                                ALCON INC., a corporation (Aktiengesellschaft) incorporated in the Canton of Fribourg, Switzerland with enterprise identification number (UID) CHE-234.781.164 and its registered office at Rue Louis-d’Affry 6, 1701 Fribourg, Switzerland (the “Supplier”);

 

AND

 

(2)                                NOVARTIS PHARMA AG, a corporation (Aktiengesellschaft) incorporated in Switzerland whose registered office is at Lichtstrasse 35, 4056 Basel, Switzerland (the “Purchaser”),

 

(each a “Party” and together the “Parties”).

 

WHEREAS:

 

(A)                              By an agreement dated                       2019  (the “Separation Agreement”) the Alcon surgical and vision care business will be transferred from its existing ownership structure under the ultimate control of Novartis AG to be held on a standalone basis under the Supplier on the terms and conditions set out in the Separation Agreement.

 

(B)                              In the Separation Agreement, the parties to the Separation Agreement have agreed to enter into this Agreement (or procure the Parties hereto enter into this Agreement) for the Manufacture of Products by the Supplier and the supply of those Products to the Purchaser.

 

(C)                              The Purchaser wishes to have Manufactured and to purchase, and the Supplier wishes to Manufacture or have Manufactured and supply, the Products subject to the terms and conditions of this Agreement.

 

NOW IT IS AGREED as follows:

 

1.                                 DEFINITIONS AND INTERPRETATION

 

1.1                              In this Agreement:

 

“Additional HSE Requirements” means the Purchaser’s requirements for the Supplier with respect to environmental, health and safety matters associated with the Manufacture of Products under this Agreement, as set out in Part A, Exhibit 10 (Standards and Policies). For the avoidance of doubt, Additional HSE Requirements do not include the Purchaser’s internal HSE policies and procedures.

 

“Affected Products” has the meaning given to it in clause 4.9.

 

“Affected Site” has the meaning given to it in clause 4.8.

 

1

 

“Affiliate” means with respect to any person, any such person that controls, is controlled by or is under common control with such person, and “Affiliates” shall be interpreted accordingly. For purposes of this definition, “control” means the power to direct the management and policies of a person (directly or indirectly), whether through ownership of voting securities, by contract or otherwise (and the terms “controlled by” and “under common control” shall be interpreted accordingly).

 

“Agreement” means this agreement and the Exhibits and Annexures attached thereto.

 

“Alcon Group” means Alcon, Inc. and its Affiliates from time to time.

 

“Allocation” has the meaning given to it in clause 4.9.

 

“Anti Falsification Regulations” means the serialisation and other traceability requirements under the EU Falsified Medicines Directive 2011/62/EU (EUFMD) (and delegated legislation including Regulation (EU) 2016/161) and the Drug Supply Chain Security Act and any successor legislation or materially equivalent legislation enacted or adopted as of the date hereof in any Territory.

 

“API” means, on a Product-by-Product basis, the active pharmaceutical ingredient or drug substance, as applicable, for such Product (or constituting such Product, in the case of Shared Chemical/API Products).

 

“API Supplier” means, with respect to a Product, the supplier of any API used in the Manufacture of such Product as at the Effective Date and any additional supplier of such API subsequently approved by the Purchaser.

 

“Applicable Law” means, to the extent applicable to the Parties or their activities under this Agreement, any supra-national, European Union, federal, national, state, municipal or local statute, law, ordinance, regulation, rule, code, order (whether executive, legislative, judicial or otherwise), judgment, injunction, notice, decree, or other requirement or rule of law or legal process (including common law), or any other order of, or agreement issued, promulgated or entered into by, any Governmental Entity, any applicable Codes of Conduct, or any rule or requirement of any national securities exchange, including cGMP, each as may be amended from time to time.

 

“Artwork” means, with respect to a Product and an applicable Territory, the artwork (including the electronic files from which printed components are generated, including technical specifications, graphic files, technical drawings and reproduction files and materials), labelling and packaging for such Product in such Territory, and references to “Artwork” shall include a reference to each component of such artwork.

 

“Aspex Droptainer Products” has the meaning set out in clause 4.3.

 

“Aspex Requirements” has the meaning set out in clause 4.3.

 

2

 

“Batch Constrained Products” has the meaning set out in clause 3.3(E).

 

“Batch Record” means a document that records the details required by cGMP and the Quality Agreement about the Manufacture of a batch of a Product, in the form prescribed by the Quality Agreement.

 

“Base Price” has the meaning set out in clause 10.2.

 

“Bridging Stock” has the meaning set out in clause 43 (Bridging Stock).

 

“Bulk Product” means:

 

(A)                              each of the SKUs listed in Part B of Exhibit 1 (Products);

 

(B)                              any applicable New Product SKU introduced under this Agreement as a Bulk Product,

 

in each case, requiring further primary and/or secondary packaging or other manufacture prior to being commercialised, and “Bulk Products” shall be construed accordingly.

 

“Business Continuity Plan” shall mean a plan clearly defining and documenting a set of measures designed to (i) allow a quick response to a disruptive event so that the business process is restored to a minimum required operational level; (ii) recover the business process in a defined time frame and/or (iii) address dual sourcing requirements for specific Products (as agreed by the Parties), such plan shall cover in particular all key personnel, resources, services and actions which are required to manage the business continuity management process.

 

“Business Day” means a day which is not a Saturday, a Sunday or a public holiday in the canton of Basel-Stadt (Switzerland), Fort Worth, Texas (USA), or a jurisdiction in which a relevant obligation under this Agreement is to be performed, but excluding any day in the period 24 December to 1 January (inclusive).

 

“Business Review Meetings” has the meaning given to it in clause 15.3.

 

“Calendar Year” means any period of twelve (12) months commencing on 1 January.

 

“Capital Expenditure” means a capital expenditure made in respect of the Manufacture of Products under this Agreement.

 

“Certificate of Analysis” means a certificate signed by a qualified person pursuant to the Quality Agreement confirming that the batch of Products to which it relates meet the applicable Specifications.

 

3

 

“Certificate of Compliance” means a certificate signed by a qualified person pursuant to the Quality Agreement confirming that the batch of Products to which it relates has been manufactured in accordance with the relevant Marketing Authorization and cGMP.

 

“Chemicals” means, on a Product-by-Product basis, all non API ingredients used in the applicable formulation for such Product.

 

“Commencement Date” means the Effective Date, except in respect of a New Product SKU, for which it means the applicable NPS Commencement Date.

 

“Commercially Reasonable Efforts” means, with respect to the efforts (including financial spend) to be expended by a Party to achieve any objective, all reasonable, diligent commercial efforts to accomplish such objective that a person with operations of a similar scale and standing in the pharmaceutical industry would normally use when conducting an on-going business for its own benefit to accomplish a similar objective under similar circumstances.

 

“Confidential Information” means, subject to clause 31.5, all information (including all oral and visual information, and all information recorded in writing or electronically, or in any other medium or by any other method) directly or indirectly disclosed to or obtained by one Party or its Affiliates from the other Party or its Affiliates, or a Third Party acting on that Party’s behalf that either (i) the disclosing party designates as being confidential or (ii) which, under the circumstances surrounding disclosure, ought reasonably to be treated as confidential, including the following information:

 

(A)                              any information relating to the business of either Party including, any ideas; business methods; finance; prices, business, financial, sales, marketing, development or manpower plans or forecasts; customer lists or details; computer systems and software; products or services; know-how or other trade secrets; processes; marketing opportunities; other matters connected with the Products or services Manufactured, marketed, provided or obtained by either Party; information concerning either Party’s relationships with actual or potential clients, customers or suppliers and the needs and requirements of either Party and of such persons; information relating to the packaging and admission of Products, including packaging methods, testing methods and results, and storage and transportation details;

 

(B)                              any information ascertainable by the inspection or analysis of samples;

 

(C)                              any information disclosed pursuant to the Quality Agreement; and

 

(D)                              any other information which the disclosing Party has reasonably advised the non-disclosing Party in writing would, if disclosed in breach of the confidentiality obligation being imposed under this Agreement, be liable to cause material harm to the Party whose information is disclosed.

 

4

 

“Contract Year” means a period of twelve (12) months commencing on the Effective Date or any anniversary thereof (provided that the last Contract Year for each Product shall end on the date of expiry or termination of this Agreement in respect of that Product).

 

“Contract Execution Manager” has the meaning given to it in clause 15.2.

 

“Control” means, in relation to a person, the ability of another person to ensure that the activities and business of the first mentioned person are conducted in accordance with the wishes of that other person (whether by exercise of contractual rights, ownership of shares or otherwise), and a person shall be deemed to have “Control” of a body corporate if that person has the contractual right to procure that the activities and business of that body corporate are conducted in accordance with that person’s wishes or if that person possesses the majority of the issued share capital or the voting rights in that body corporate or the right to receive the majority of the income of that body corporate on any distribution by it of all of its income or the majority of its assets on a winding up.

 

“Conversion Cost” means, in respect of a Product, the Total Product Cost of that Product less, to the extent included therein, the Materials Costs (excluding production consumables) representing third party and intercompany landed costs and excluding testing costs and material handling costs.

 

“current Good Manufacturing Practice” or “cGMP” means all applicable standards relating to current good manufacturing practice for fine chemicals, intermediates, active pharmaceutical ingredients, bulk products and/or finished pharmaceutical/medical device products (as appropriate) required by:

 

(A)                              the provisions of Commission Directive 2003/94/EC together with the guidance for the interpretation of the principles and guidelines of good manufacturing practices for medicinal products for human use contained in Volume 4 “Guidelines for good manufacturing practices for medicinal products for human and veterinary use” of “The Rules Governing Medicinal Products in the European Union” (as the same may be amended from time to time);

 

(B)                              the then-current standards, practices and procedures required, promulgated or endorsed by the FDA as defined in the provisions of 21 U.S.C. § 351(a)(2)(B) and 21 C.F.R. Parts 210-211 and 600-680; and

 

(C)                              the equivalent Applicable Law in any relevant country,

 

in each case, as applicable to the relevant Manufacturing Site or the Product or both.

 

“Customer Relationship Manager” has the meaning given to it in clause 15.1.

 

“Data Pack” means, in respect of a Product, a data pack containing such of the technical information listed in Exhibit 12 (Data Pack Requirements) that is in the possession of the Supplier’s Group, that is not in the possession of the Purchaser’s Group, and that is required to accomplish the technical transfer of such Product.

 

5

 

“Default Delivery Terms” means FCA Delivery Terms.

 

“Defaulting Party” has the meaning given in clause 40.8.

 

“Defective” means, with respect to a Product, that such Product did not, at the time of Delivery, meet the representations, warranties or covenants set out in this Agreement with respect to Products Manufactured and supplied to the Purchaser under this Agreement, including as set out in clause 2.3, or the quality requirements set out in the Quality Agreement (but excluding, for clarity, any such failure to meet such representations, warranties, covenants, or requirements as a result of any action or omission of the Purchaser or its Affiliates), and “Defect” shall be construed accordingly.

 

“Delivery Failure” has the meaning given in clause 9.3(A).

 

“Delivery Terms” means, in respect of each Product, the Default Delivery Terms or such other delivery terms as are set out with respect to such Product in Exhibit 1 (Products) or as the Parties may otherwise agree from time to time, and “Deliver”, “Delivery” and “Delivered” shall be construed accordingly as applicable.

 

“Development Work” means, in respect of a Product, any analysis, testing, reformulation, redesign or other research and development activity (including the preparation of reports in relation to those activities), but excluding any such activities that:

 

(A)                              are required for the Manufacture or supply of that Product as at the Effective Date;

 

(B)                              are required to be undertaken in relation to that Product by the Quality Agreement;

 

(C)                              are agreed by the Parties pursuant to clauses 23 (Development Work) and 24 (Continuous Improvement Programme); or

 

(D)                              comprise a change of Artwork in accordance with clause 26 (Artwork and Shared Moulds).

 

“Dispute” has the meaning given in clause 50.3.

 

“Dispute Notice” has the meaning given in clause 50.4.

 

“Droptainer Products” means those Products set out in Part A of Exhibit 1 (Products).

 

“Effective Date” has the meaning given on the first page of this Agreement.

 

“Executive Officers” means, for the Supplier the Head of Novartis Technical Operations and Senior Vice President, Global Manufacturing and Technical Operations of the Purchaser, or their respective designees.

 

6

 

“Export Documentation” means, in respect of each Product, shipping documentation evidencing the export of such Product from the territory in which the relevant Manufacturing Site is located.

 

“FCA Delivery Terms” means FCA (Insert Manufacturing Site) (Incoterms 2010), as the case may be.

 

“FDA” means the United States Food and Drug Administration, or any successor agency thereto.

 

“Finished Product” means:

 

(A)                              each of the SKUs listed in Part A of Exhibit 1 (Products); and

 

(B)                              any applicable New Product SKU introduced under this Agreement as a Finished Product,

 

and “Finished Products” shall be construed accordingly.

 

“Firm Order” has the meaning given in clause 3.2(C).

 

“Firm Zone” means in respect of each Product the first four (4) months of each Forecast Schedule for each such Product or such other period as may be agreed between the Parties on a Product-by-Product basis.

 

“First Approval” has the meaning set out in clause 42.3;

 

“Forecast Schedule” has the meaning given in clause 3.1(C).

 

“Force Majeure” means, any cause or circumstance preventing, hindering or delaying either Party performing all or part of its obligations under this Agreement which arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control of the Party so prevented, including any of the following:

 

(A)                              war, threat of or preparation for war, armed conflict;

 

(B)                              terrorist attack, civil war, civil commotion or riots;

 

(C)                              epidemic or pandemic;

 

(D)                              any law or governmental order, rule, regulation or direction, or any action taken by a Governmental Entity, including but not limited to imposing an embargo, export or import restriction, quota or other restriction or prohibition, in each case, of general application or generally affecting the industries in which the Parties participate;

 

7

 

(E)                               any flood, earthquake, hurricane or other natural disaster, weather-related conditions, explosions or fires; and

 

(F)                                to the extent beyond the reasonable control of the relevant Party (or, as applicable, the Permitted Subcontractor), any labour dispute, including strikes, industrial action or lockouts.

 

For the purposes of this definition of Force Majeure neither increasing costs (unless in excess of market norms due to acts, events, omissions or accidents beyond the reasonable control of the Party affected) nor a lack of funds will be interpreted as putting the event beyond the reasonable control of the Party affected.

 

“Gating Plan” has the meaning given to it in clause 4.1.

 

“Gating Volumes” means in relation to a Product Technology for each Calendar Year of the relevant Product Term for that Product, the aggregate volume of that Product Technology to be Manufactured by (or for) Supplier’s Group during that Calendar Year as set out in the Gating Plan for that Calendar Year or as otherwise agreed by the Manufacturing and Supply Team in accordance with clause 4.1.

 

“Gating Year” means a Calendar Year in the Gating Plan (provided that the last Gating Year for each Product shall end on the date of expiry or termination of this Agreement in respect of that Product).

 

“Global PV Agreement” means the pharmacovigilance agreement in relation to (among other things) the Products entered into between the Supplier (and/or its Affiliate), the Purchaser (and/or its Affiliate) on the Effective Date.

 

“Governmental Entity” means any supra-national, European Union, federal, national, state, county, local, municipal or other governmental, regulatory or administrative authority, agency, commission or other instrumentality, any court, tribunal or arbitral body with competent jurisdiction, or any national securities exchange or automated quotation service including, any governmental regulatory authority or agency responsible for the grant approval, clearance, qualification, licensing or permitting of any aspect of the research, development, Manufacture, marketing, distribution or sale of the Products including (as applicable) the FDA, the European Medicines Agency, or any successor agency thereto.

 

“Group” means the Supplier’s Group and/or the Purchaser’s Group (as the context requires).

 

“IFRS” means the edition of the International Financial Reporting Standards as published by the International Accounting Standards Board that is effective at the time that any cost to be calculated by reference to these standards hereunder is recognized.

 

8

 

“Improvement” means any new or improved process, technique, method, formula, invention or know-how that arises out of a continuous improvement programme agreed by the Parties pursuant to clause 24 (Continuous Improvement Programme) or any Development Work or Artwork, in each case devised, made or reduced to practice either by the Supplier or the Purchaser during the Term.

 

“Independent Expert” means a laboratory or expert mutually agreed upon by the Parties or, if no such agreement can be reached within twenty (20) Business Days of either Party proposing the referral of a dispute under clause 17 (Acceptance of Product) or Exhibit 7 (Toll Manufacture Provisions) for the determination by (or recommendation in respect of, as applicable) an independent expert, a laboratory or expert appointed by the President of the International Chamber of Commerce or his nominee upon the application of either Party.

 

“Inflation Adjustment” has the meaning given to it in clause 10.4(A).

 

“Inflation Reconciliation” has the meaning given to it in clause 10.7(B).

 

“Information Access Agreement” means the information access agreement to be entered into between Novartis AG and Alcon Inc. on or about the date of this Agreement.

 

“Initial Term” has the meaning given to it in clause 40.3.

 

“Insolvency Event” means, in relation to a person:

 

(A)                              it is, or is deemed for the purpose of any Applicable Law to be, insolvent or unable to pay its debts as they fall due;

 

(B)                              it admits an inability to pay debts as they fall due;

 

(C)                              it suspends making payments on any of its debts or announces an intention to do so;

 

(D)                              by reason of actual or anticipated financial difficulties, it begins negotiations with any creditor for the rescheduling of any of its indebtedness outside the ordinary course of business;

 

(E)                               it is in breach of any covenant or other term of a loan or financial facility and a counterparty under such loan or financial facility accelerates, or calls for repayment of, any outstanding indebtedness as a result of such breach;

 

(F)                                the fair value of its assets is less than its liabilities (taking into account contingent and prospective liabilities and disregarding inter-company loans between Affiliates);

 

(G)                              a moratorium is declared in respect of any indebtedness; or

 

9

 

(H)                             any event occurs, or proceeding is taken, with respect to the person in any jurisdiction in which it has assets and to which it is subject, that has an effect equivalent to any of the events mentioned in (A) to (G) above.

 

“Insolvency Proceeding” means, in relation to a person:

 

(A)                              any step is taken with a view to entering into a moratorium or a composition or similar arrangement with its creditors;

 

(B)                              a meeting of its shareholders or directors is convened for the purpose of considering any resolution for, to bring an application for, or to file documents with a court or any registrar for, its winding-up, judicial management or dissolution or any such resolution is passed;

 

(C)                              any person brings an application for, or files documents with a court or any registrar for, its winding-up, judicial management or dissolution or such order is made; or

 

(D)                              a liquidator, judicial manager, administrator or similar officer is appointed in respect of any of its assets.

 

“Intellectual Property Rights” means all: (i) patents; (ii) know-how and trade secrets; (iii) trademarks; (iv) internet domain names; (v) copyrights; (vi) rights in designs; (vii) database rights; and (viii) all rights or forms of protection, anywhere in the world, having equivalent or similar effect to the rights referred to in paragraphs (i) to (vii) above, in each case whether registered or unregistered and including applications for registration of any such thing.

 

“Invoice Currency” means (i) U.S Dollar (USD); or (ii) in circumstances where the U.S Dollar (USD) is not the applicable operating currency of the Supplier or Nominated Supplier (as the case may be), the applicable operating currency of the Supplier or Nominated Supplier (as the case may be) that issues the invoice, as determined by the Supplier or Nominated Supplier and indicated in an applicable invoice.

 

“ISRM Security Standards” means the ISRM security standards of Novartis as may be updated from time to time.

 

“Joint Improvement IP” means any Intellectual Property Rights allocated to the joint ownership of the Parties (or their respective Affiliates) in accordance with clause 39.4(C)(iii).

 

“Key Performance Indicators” or “KPIs” means the key performance indicators set out in Exhibit 4 (Key Performance Indicators) or otherwise agreed by the Parties from time to time in accordance with clause 14 (Key Performance Indicators).

 

“KPI1 (ASP)” has the meaning set out in Exhibit 4, Part A (Key Performance Indicators).

 

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“KPI2 (SDP)” has the meaning set out in Exhibit 4, Part A (Key Performance Indicators).

 

“Latent Defect” means any Defect that is not readily determinable upon a reasonable inspection of the Product, based on visual inspection or other agreed inspection method (without the obligation to open the packaging) and review of the Certificate of Analysis, Certificate of Compliance and/or Batch Record (if applicable).

 

“Lead Time” means, in respect of each Product, the minimum number of days between when a Firm Order must be placed to when it can be shipped, as set out against such Product in Exhibit 1 (Products) or, as applicable, agreed pursuant to clause 21 (New Product SKUs) or agreed following implementation of the Lead Time reduction contemplated in clause 3.3(D).

 

“LIBOR” means the London interbank offered rate, being the interest rate offered in the London inter-bank market for three month US dollar deposits or any equivalent interest rate agreed by the Parties in good time prior to LIBOR ceasing to exist if LIBOR ceases to exist.

 

“Long Term Transfer Plan” has the meaning set out in clause 42.1.

 

“Manufacture” means the planning, purchasing of materials for, manufacturing, producing, processing, compounding, holding and storage, filling, packaging, labelling, leafleting, warehousing, quality control testing, waste disposal, quality assurance and release, sample retention and quality testing of Product.

 

“Manufacturer’s Batch Certificate” means a certificate attesting that a Product batch has a Certificate of Analysis and a Certificate of Compliance.

 

“Manufacturing and Supply Team” has the meaning given to it in clause 15.2

 

“Manufacturing Licences” means any certificates, permits, licences and approvals issued by any relevant Governmental Entity in connection with Manufacture by or on behalf of the Supplier at the Manufacturing Sites.

 

“Manufacturing Sites” means facilities of the Supplier and/or its Affiliates or Permitted Subcontractors:

 

(A)                              at which the Products listed against such facilities in Exhibit 1 (Products) are Manufactured as at the Effective Date, as further summarised in Exhibit 2 (Manufacturing Sites);

 

(B)                              in relation to which the Supplier has, as at the Effective Date, entered into a binding agreement for the Manufacture of Products, as set out in Exhibit 2 (Manufacturing Sites); and

 

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(C)                              such other manufacturing facilities as the Parties may agree from time to time in writing in accordance with clause 2.7 or clause 2.8.

 

For each of the facilities included under (A) and (B) above, Exhibit 2 (Manufacturing Sites) shall set out the identity of the Supplier entity or Permitted Subcontractor which owns and operates such facility.

 

“Margin” has the meaning set out in Exhibit 16, Part C.

 

“Marketing Authorisations” means, in respect of a Product, such marketing authorisation, approval, licence, registration or other authorisations issued by a Governmental Entity from time to time in connection with the placing of that Product on the market in the relevant Territory (or, as applicable, a finished product manufactured using that Product), and “Marketing Authorisation” shall be construed accordingly.

 

“Marketing Authorisation Holder” means, in respect of a Marketing Authorisation, the holder of such Marketing Authorisation from time to time.

 

“Materials” means, as applicable and to the extent used in the Manufacture of the Products, any materials, compounds or components including, without limitation: (a) raw ingredients, (b) intermediates, (c) excipients, (d) processing aids, (e) Chemicals, (f) with respect to Bulk Products and Finished Products, API, and (g) with respect to Bulk Products (as applicable) and Finished Products, packaging and labelling materials and components (including printed and non-printed components) thereof

 

“Materials Adjustment” has the meaning given to it in clause 10.4(B).

 

“Materials Cost” means the costs of Manufacture that relate to the Materials including the purchase prices, inbound freight, customs and insurance charges and non-deductible tax charges.

 

“Minimum Order Quantity” or “MOQ” means, in respect of each Product, the volume of that Product set out in Exhibit 1 (Products) or, as applicable, agreed pursuant to clause 21 (New Product SKUs).

 

“Minimum Remaining Shelf Life” has the meaning given to it in clause 3.4(B).

 

“Minimum Target Volume” has the meaning given to it in clause 4.2.

 

“New Product Launches” has the meaning given to it in clause 21.

 

“New Product SKU” means:

 

(A)                              a new SKU for an existing Product that does not require the performance of Development Work, packaging or transportation testing, or generation of new stability data (such as, by way of example, a line extension of an existing Product

 

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requiring only changes to pack sizes and/or labelling or other Artwork to allow for sales in different markets);

 

(B)                              a SKU comprising a Bulk Product that is already Manufactured by the Supplier or the Permitted Subcontractor in the course of Manufacturing an existing Finished Product for the Purchaser; or

 

(C)                              a SKU comprising a Shared Chemical/API Product or a Shared Packaging Material that is already Manufactured under the terms of a Shared Contract in the course of Manufacturing an existing Finished Product or Bulk Product for the Purchaser, and ,

 

in each case the existing Product, Finished Product or Bulk Product in (A) to (C) shall be referred to as the “Original Product”).

 

“Nominated Supplier” means any member of the Supplier’s Group to whom the Supplier sub-contracts the Manufacture or supply of Products to the Purchaser (including invoicing).

 

“Non-Defaulting Party” has the meaning given to it in clause 40.8.

 

“Notice” has the meaning given to it in clause 45.1.

 

“Novartis Control Manual” means the Novartis control manual as set out in Appendix 1 to Exhibit 16 (Supply Price Adjustment and  Catalogue).

 

“Novartis’s Group” means Novartis AG and its Affiliates from time to time.

 

“NPS Commencement Date” means, in respect of a New Product SKU, the first date that such New Product SKU is added to this Agreement pursuant to clause 21.5.

 

“Ointments Products” means those Products identified as an ointment product set out in Part A of Exhibit 1 (Products).

 

“Payment” has the meaning given to it in clause 1.2(O).

 

“Permitted Subcontractor” means a Third Party to whom the Supplier directly or indirectly sub-contracts in whole or in part the Manufacture of one or more Products and that is approved or deemed approved by the Purchaser in accordance with clause 2.6 of this Agreement and listed under Annex E of the Quality Agreement.

 

“Product” means, as applicable, a Finished Product, a Bulk Product, a Shared Chemical/API Product or a Shared Packaging Material (including in each case, if applicable and with effect from the relevant Commencement Date, any a New Product SKU) in each case as set out in Exhibit 1 (Products) and in each case, Manufactured and supplied under this Agreement, and “Products” shall be construed accordingly.

 

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“Product Action” means a recall or withdrawal with respect to any Product supplied under this Agreement, whether such recall or withdrawal pertains to Products held by end customers, held by the Supplier or the Purchaser in storage, or at any other point in the supply chain.

 

“Product Technology” means the following categories of Finished Product (as indicated for each Finished Product in Exhibit 1 to this Agreement):

 

(A)                              Droptainer Product; and

 

(B)                              Ointment Products.

 

each a Product Technology and together the “Product Technologies”.

 

“Product Term” has the meaning given to it in clause 40.5.

 

“Purchaser” has the meaning given to it in the preamble.

 

“Purchaser’s Group” means the Novartis Group.

 

“Purchaser Improvement IP” means any Intellectual Property Rights subsisting in an Improvement, ownership of which is allocated to the Purchaser or its Affiliates in accordance with clause 39.4(C)(ii), and excluding, for the avoidance of doubt, any Joint Improvement IP.

 

“Purchaser Material” means in respect of a Product or other Material purchased by or on behalf of the Supplier from a member of the Purchaser’s Group or a Shared Contract CMO for use in the Manufacture of a Product to be supplied to the Purchaser (or its Affiliate) under this Agreement as listed in Exhibit 8 (Purchaser Materials) and “Purchaser Materials” shall be construed accordingly.

 

“Quality Agreement” means, in respect of a Product, the quality assurance agreement relating to the Manufacture and supply of Products in substantially the form attached to this Agreement at Exhibit 3 (Quality Agreement) entered into between the Purchaser or its Affiliate and the Supplier or its Affiliate on the Effective Date (together with, in respect of each Product, a Product-specific annex setting out specific details in relation to that Product), each as may be amended by the Parties from time to time during the Term.

 

“Quality Management System” means the Supplier’s Group’s system of quality management controls designed to ensure regulatory compliance and to assure product safety, quality and efficacy in the Supplier’s Group’s operations with regard to the manufacture and supply of investigational materials or products for sale or distribution.

 

“Quality Standards” means, in respect of each Product, the more stringent of either:

 

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(A)                              the Supplier’s Group’s quality standards in respect of the Manufacture of the Products and the traceability of API used in the Products, in each case as at the Effective Date; or

 

(B)                              the quality standards in respect of the Products and the traceability of API used in the Products, in each case as prescribed from time to time during the Term by Applicable Law, including cGMP and applicable industry codes,

 

provided that the same shall always be in compliance with Applicable Law, including cGMP.

 

“S&OP Meetings” has the meaning given to it in clause 15.1.

 

“Sales Tax” means any sales, goods, services, turnover, value-added, or similar Tax and any Tax charged on the import or export of any goods or services.

 

“Sanctions and Export Controls” means any Applicable Law that prohibits or places restrictions on the supply of certain products, materials, equipment, technology, software, know-how and/or information to certain markets and/or that prohibits or places restrictions on other dealings (including financial transactions) with certain territories or with particular persons or organisations within certain territories.

 

“Separation” has the meaning set out in the Separation Agreement.

 

“Separation Agreement” means the Separation Agreement entered into by and between Novartis AG and Alcon Inc., dated              2019.

 

“Shared Chemical/API Product” means:

 

(A)                               each of the SKUs listed in Part C of Exhibit 1 (Products);

 

(B)                               any applicable New Product SKU introduced under this Agreement as a Shared Chemical/API Product in accordance with clause 21 (New Product SKUs),

 

in each case, comprising an API or Chemical for use in the manufacture of pharmaceutical products (as applicable) by or for the Purchaser or its Affiliates, and “Shared Chemical/API Products” shall be construed accordingly.

 

“Shared Contract” means any contract that has not been Separated, is in effect as at the Effective Date and provides for  the supply of the Shared Chemical/API Products, Shared Packaging Materials and/or Purchaser Materials listed in Exhibit 1 (Products) or Exhibit 8 (Purchaser Materials).

 

“Shared Packaging Material” means packaging and labelling materials and components (including printed and non-printed components) supplied for use in the

 

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manufacture of Product and/or any equivalent Purchaser Materials in each case  listed in Exhibit 1 (Products) or Exhibit 8 (Purchaser Materials).

 

“Site Volume Reconciliation” has the meaning given to it in clause 10.7.

 

“SKU” means stock-keeping unit.

 

“Specifications” means, in respect of a Product, or a Material used in the Manufacture of that Product:

 

(A)                              the specifications for that Product or Material (as applicable) registered or approved in the relevant Marketing Authorisation; or

 

(B)                              if there is no Marketing Authorisation in respect of the Product (because such Product can, in accordance with Applicable Law be put on the market without a Marketing Authorisation) or if the Marketing Authorisation in respect of that Product does not contain any specifications for that Product or Material (as applicable), the specifications for that Product or Material as set out in the relevant Annex to the Quality Agreement (as amended from time to time in accordance with the Quality Agreement).

 

“Specific Technical Transfer” has the meaning given to it in clause 42.5.

 

“Supplier” has the meaning given to it in the preamble.

 

“Supplier Code” means the Novartis Supplier Code as set out in Exhibit 10 (Standards and Policies).

 

“Supplier Improvement IP” means any Intellectual Property Rights subsisting in an Improvement, ownership of which is allocated to the Supplier or its Affiliates in accordance with clause 39.4(C)(i), and excluding, for the avoidance of doubt, any Joint Improvement IP.

 

“Supplier’s Group” means the Alcon Group.

 

“Supplier System IP” means any and all Intellectual Property Rights subsisting in the Supplier’s System that is owned by or licensed to the Supplier’s Group.

 

“Supply Price” means, in respect of each Product, the supply price determined in accordance with clause 10 (Price and Price Adjustments).

 

“Target Gating Volume” has the meaning set out in clause 4.1(A).

 

“Tax” means all taxes, levies, duties, imposts, charges and withholdings of any nature whatsoever together with all penalties, charges and interest relating to any of them or to any failure to file any return required for the purposes of any of them.

 

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“Technical Transfer Milestones” has the meaning set out in clause 42.12.

 

“Technical Transfer Team” means the representatives of each Party nominated as being responsible for the oversight and implementation of the Long Term Transfer Plan.

 

“Term” has the meaning set out in clause 40.1.

 

“Territory” means:

 

(A)                              in respect of each Finished Product, the country (or countries) in which that Finished Product is placed on the market (and where, if applicable, there is a granted Marketing Authorisation for such Product from time to time) and as set out in Part A of Exhibit 1 (Products) (as amended from time to time by agreement between the Parties);

 

(B)                              in respect of each Bulk Product or Shared Packaging Material, the country (or countries) in which products Manufactured using such Bulk Product or Shared Packaging Material are placed on the market (and where, if applicable, there is a granted Marketing  Authorisation for such product from time to time) and as set out in Part B of Exhibit 1 (Products) (as amended from time to time by agreement between the Parties); and

 

(C)                              in respect of each Shared Chemical/API Product, the country (or countries) in which products Manufactured using such Shared Chemical/API Product are placed on the market (and where, if applicable, there is a granted Marketing Authorisation for such product from time to time) and as set out in Part C of Exhibit 1 (Products) (as amended from time to time by agreement between the Parties).

 

“Third Party” means from any company other than the Purchaser and its Affiliates and the Supplier and its Affiliates.

 

“Toll Manufacturing Basis” has the meaning set out in clause 5.1.

 

“Toll Material” has, in respect of a Tolled Product, the meaning set out in Exhibit 7 (Toll Manufacture Provisions).

 

“Tolled Product” has the meaning set out in Exhibit 7 (Toll Manufacture Provisions).

 

“Total Product Cost” means, in respect of a Product, the fully-absorbed cost of Manufacture as calculated in a manner consistent with IFRS and the Total Product Costing methodology employed by the Supplier and its Affiliates for other products, including (without limitation) the costs of Materials, direct labour, ordinary course quality assurance costs, equipment maintenance costs, and other costs variable with production, plus an allocation of the Manufacturing Site’s fixed overhead consistent with the Supplier’s Total Product Cost calculated in accordance with the Novartis Control Manual, but excluding any profit made by the Supplier or any of its Affiliates through the application

 

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of transfer pricing. For the avoidance of doubt, the Total Product Cost of each Product for 2019 is reflected in Exhibit 1 (Products) as such Product’s Base Price.

 

“Transaction Documents” means this Agreement, the Separation Agreement, the Consignment Sales Agreement (India), the Transitional Distribution Services Agreement (Legacy Ciba), the Global Transitional Services Agreement, the Quality Agreement, the Global Pharmacovigilence Agreement, the Pharmacovigilence Services Agreement, the MA Transfer Agreement, the TRD Pilot Plant Services Agreement, Fort Worth Pilot Plant Lease Agreement, the Brand Licence Agreement, the IP Assignment Agreement, Information Access Agreement, Tax Matters Agreement and any document or instrument entered into or delivered pursuant hereto or thereto.

 

“Transitional Services Agreements” means the Global Transitional Services Agreement, the Pilot Plant Services Agreement dated on or around the Effective Date between a member of the Supplier’s Group (as the provider of services) and a member of the Purchaser’s Group (as the recipient of services).

 

“Trigger Date” means the date with effect from which the relevant Product (or proposed New Product SKU) shall be Manufactured on a toll (zero cost, consignment) manufacturing basis.

 

“Volume Based Adjustment” has the meaning set out in clause 10.4(C).

 

“Working Hours” means, in relation to a notice served or audit performed under this Agreement, 09:00 to 17:00 in the place of receipt of such notice or place of such audit on a Business Day.

 

1.2                              In this Agreement, unless specified otherwise:

 

(A)                              references to clauses, paragraphs, Exhibits and Annexes are to clauses and paragraphs of, and Exhibits and Annexes to, this Agreement;

 

(B)                              headings to clauses, Exhibits, Annexes and paragraphs are for convenience only and do not affect the interpretation of this Agreement;

 

(C)                              the Exhibits and Annexes form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement, and any reference to this Agreement shall include the Exhibits and Annexes;

 

(D)                              a reference to any statute, regulation or statutory provision shall be construed as a reference to the same as in effect at the applicable time, including as it may have been, or may from time to time be, consolidated, amended, modified, extended or re-enacted and any successor or materially equivalent legislation enacted or adopted;

 

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(E)                               references to a “company” shall be construed so as to include any firm, company, corporation, legal entity or body corporate;

 

(F)                                references to a “person” shall be construed so as to include any individual, company, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality);

 

(G)                              use of any gender includes the other genders;

 

(H)                             references to the singular shall include the plural and vice-versa;

 

(I)                                  references to writing shall include any modes of reproducing words in a legible and non-transitory form, and accordingly shall exclude e-mail and other transitory modes;

 

(J)                                  any reference to a “day” (including within the phrase “Business Day”) shall mean a period of 24 hours running from midnight to midnight;

 

(K)                              references to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than England, be treated as including what most nearly approximates in that jurisdiction to the English legal term;

 

(L)                               the word “registered”, when used in connection with Materials or with any process, is to be construed as a reference to the fact that details of such Materials or process have been (and/or are required to be) registered with any applicable Governmental Entity (whether in a Marketing Authorisation or otherwise);

 

(M)                           (i)                                    the rule known as the ejusdem generis rule shall not apply and accordingly general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things;

 

(i)                                    the use of the phrase “not unreasonably withheld” and similar constructions shall be deemed to mean “not to be unreasonably withheld, conditioned or delayed”;

 

(ii)                                 the use of the words “includes” or “including” shall be deemed to say also “without limitation”; and

 

(iii)                              general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words;

 

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(N)                              each Party may satisfy its obligations under this Agreement either directly or indirectly through one or more members of its Group (including, in the case of the Supplier, through a Nominated Supplier), whether or not expressly stated, provided that each Party shall remain the principal obligor for the performance of its obligations hereunder;

 

(O)                              any indemnity or covenant to pay (the “Payment Obligation”) being given on an “after-Tax basis” or expressed to be “calculated on an after-Tax basis” means that the amount payable pursuant to such Payment Obligation (the “Payment”) shall be calculated in such a manner as will ensure that, after taking into account:

 

(i)                                    any Tax required to be deducted or withheld from the Payment;

 

(ii)                                 the amount and timing of any additional Tax which becomes payable by the recipient of the Payment (or a member of the Supplier’s Group or the Purchaser’s Group, as the case may be) as a result of the Payments being subject to Tax in the hands of that person; and

 

(iii)                              the amount and timing of any Tax benefit which is obtained by the recipient of the Payment (or a member of the Supplier’s Group or the Purchaser’s Group, as the case may be) to the extent that such Tax benefit is attributable to the matter giving rise to the Payment Obligation or to the receipt of the Payment,

 

which amount and timing is to be determined by the auditors of the recipient at the shared expense of both Parties and is to be certified as such to the Party making the Payment, the recipient of the Payment is in the same position as that in which it would have been if the matter giving rise to the Payment Obligation had not occurred;

 

(P)                                unless specified to the contrary, references to “indemnify” and “indemnifying” any person against any circumstance include indemnifying and holding that person harmless on an after-Tax basis and:

 

(i)                                    the provisions of clause 37 (Indemnity and Liability) shall apply to such indemnification;

 

(ii)                                 references to the Supplier indemnifying each member of the Purchaser’s Group shall constitute undertakings by the Supplier to Purchaser for itself and on behalf of each other member of the Purchaser’s Group; and

 

(iii)                              references to the Purchaser indemnifying each member of the Supplier’s Group shall constitute undertakings by the Purchaser to the Supplier for itself and on behalf of each other member of the Purchaser’s Group;

 

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(Q)                              unless specified to the contrary, any amount to be paid or provided under any clause of this Agreement for any supply made under or in connection with this Agreement is exclusive of Sales Tax; and

 

(R)                              references to “costs” and “expenses” incurred by a person shall include any Sales Tax or amount in respect thereof comprised in such costs or expenses, other than Sales Tax or amounts in respect thereof for which that person or, if relevant, any other member of its Group for the relevant Sales Tax purposes is entitled to credit or repayment.

 

2.                                     MANUFACTURE AND SUPPLY

 

2.1                              On and subject to the provisions of this Agreement, the Supplier shall Manufacture and supply, or have Manufactured and supplied, to the Purchaser, and the Purchaser shall purchase, or procure the purchase by an Affiliate of the Purchaser of, the Products for which a Firm Order is placed until the end of the applicable Product Term in accordance with clause 3 (Forecasts and Orders) in respect of all Products.

 

2.2                              The Purchaser may commence purchasing each Product under this Agreement from the applicable Commencement Date, unless otherwise agreed in writing by the Parties.

 

2.3                              The Supplier shall (or, subject to clause 2.6, shall procure that a Permitted Subcontractor or Nominated Supplier will) Manufacture the Products at the Manufacturing Sites in accordance with:

 

(A)                              the applicable Specifications on the Effective Date (unless changed in accordance with clause 20 (Product Specifications));

 

(B)                              current Good Manufacturing Practice and responsible procurement guidelines;

 

(C)                              the applicable Manufacturing Licences;

 

(D)                              the applicable Marketing Authorisations (in the case of Shared Chemical/API Products, to the extent relevant);

 

(E)                               the Quality Agreement and the applicable Quality Standards;

 

(F)                                Firm Orders;

 

(G)                              Applicable Law in the country of Manufacture relevant to the Manufacture of the Product; and

 

(H)                             Applicable Law in the Territory where the Product (or in the case of Shared Chemical/API Products or Shared Packaging Materials, any product

 

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incorporating such Products or Materials) is to be sold in relation to the Manufacture of such Product.

 

2.4                              During the Term, the Supplier shall (or, subject to clause 2.6 shall procure that a Permitted Subcontractor or Nominated Supplier will) obtain (where not held already) and maintain all necessary Manufacturing Licences from the relevant Governmental Entity as are required for the Manufacture of the Products at the Manufacturing Sites.

 

2.5                              The Parties hereby acknowledge that the Supplier may, on prior written notice to the Purchaser, nominate any of its Affiliates to act as its Nominated Supplier under this Agreement to Manufacture and supply Products to, and receive payment from, the Purchaser (or its Affiliate), provided that:

 

(A)                              the Supplier shall remain primarily liable to the Purchaser as principal obligor for the performance of its obligations under this Agreement in respect of such supply; and

 

(B)                              such entity shall cease to be a Nominated Supplier if it ceases to be an Affiliate of the Supplier and the Supplier shall be required to either perform the obligations of such former Affiliate or procure its replacement by another Affiliate prior to it ceasing to be an Affiliate.

 

The Supplier may change the Nominated Supplier from time to time by notice in writing to the Purchaser (provided always that such Nominated Supplier is an Affiliate of the Supplier) subject to the terms set forth in clause 40 (Technical Transfer).  References in this Agreement to the Supplier shall be deemed to include any appointed Nominated Suppliers.

 

2.6                              The Supplier may not sub-contract the Manufacture of Products (or any part thereof) to a Third Party without the prior written consent of the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), provided that each Third Party arrangement set out in Annex E of the Quality Agreement shall be deemed to have been given the prior written consent of the Purchaser and the Third Party listed shall be a Permitted Subcontractor. Any Third Party sub-contractor engaged by the Supplier with the prior written consent of the Purchaser in accordance with this clause 2.6 shall be deemed to be a Permitted Subcontractor. The Supplier will ensure that all Permitted Subcontractors and all Nominated Suppliers act in compliance with the terms and conditions of this Agreement, including but not limited to, complying with all Applicable Laws, and shall ensure that the Permitted Subcontractors and Nominated Suppliers are subject to confidentiality obligations that are no less restrictive than those found at clause 31 (Confidentiality) and, to the extent practicable, grant the Purchaser audit and inspection rights substantially equivalent to those set out in clause 33 (Audit and Inspection Rights).  The engagement of Permitted Subcontractors and Nominated Suppliers shall not relieve the Supplier from any of its liabilities or

 

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obligations under this Agreement and the Supplier shall remain liable as primary obligor to the Purchaser for the acts or omissions of all Permitted Subcontractors and Nominated Suppliers as if they were the acts or omissions of the Supplier.

 

2.7                              The Supplier may not:

 

(A)                              change a Permitted Subcontractor;

 

(B)                              make any material amendments to contracts with Permitted Subcontractors relating to the Manufacture or supply of Products (including any amendment that would adversely affect the Purchaser or require an amendment to a Marketing Authorisation or permit held by the Purchaser) except where such changes are required by a Governmental Entity (and in such case, only upon reasonable advance notice to the Purchaser); or

 

(C)                              in respect of a Product, change (or permit a Nominated Supplier or Permitted Subcontractor to change) the API Supplier or the supplier of any registered Materials,

 

in each case without the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed) and in accordance with any applicable change control provisions set out in the Quality Agreement.

 

2.8                              The Supplier may not change or permit the change of any Manufacturing Site other than as provided for in the Long Term Transfer Plan without the prior written consent of the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), provided that any change of any Manufacturing Site (other than any provided for in the Long Term Transfer Plan) shall:

 

(A)                              be subject to any applicable change control provisions set out in the Quality Agreement; and

 

(B)                              comply with Applicable Law.

 

2.9                              In the event that Applicable Law or a Governmental Entity or local customs office requires that the Parties (or their Affiliates) enter into a local agreement in relation to the Manufacture or supply of a particular Product by the Supplier (or its Nominated Supplier) to the Purchaser (or its designated Affiliate), the Parties shall negotiate in good faith and enter into such local agreements on a Product-by-Product and country-by-country basis to give effect to the transactions contemplated by this Agreement in relation to such Product in such country, provided that:

 

(A)                              the Parties shall only enter into such local agreements where required by Applicable Law or a Governmental Entity or local customs office to do so;

 

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(B)                              each such local agreement shall be limited in scope to those matters for which it is necessary for the Parties (or their Affiliates) to contract locally;

 

(C)                              subject to clause 2.9(B), each local agreement shall be consistent with the terms of this Agreement and not have an disproportionate adverse effect on either Party;

 

(D)                              the Parties shall procure that, in respect of any Product, such local agreement is terminated in the event that this Agreement expires or is terminated in relation to such Product; and

 

(E)                               subject to clause 2.9(A) and any requirements of Applicable Law, in the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of such a local agreement, the provisions of this Agreement shall prevail.

 

Without prejudice to the rights and obligations of the Parties under clause 10 (Price and Price Adjustments), to the extent there is an inconsistency between the provisions of this Agreement and the provisions of any local agreement, either Party may refer the matter to the Manufacturing and Supply Team which may agree a mechanism to address any such inconsistency.

 

The Supplier shall not be obliged to Manufacture and/or supply, and the Purchaser shall not be obliged to purchase, any Product if such Manufacture, supply or purchase would cause that Party to be in breach of Sanctions and Export Controls (including but not limited to debarred individuals and ITAR). U.S. export control and economic sanctions laws and the export control and economic sanctions laws of other countries, including but not limited to EU Member States, Singapore, and Switzerland, may govern the export, sale, and/or use of Products. The Purchaser shall be responsible for obtaining any required government authorisations under the relevant Sanctions and Export Controls.  Each Party to this Agreement agrees to comply fully with all relevant Sanctions and Export Controls to assure that no Product or any portion thereof is exported, sold, or otherwise transferred directly or indirectly, in violation of Applicable Law.

 

3.                                     FORECASTS AND ORDERS

 

3.1                              Forecasting and ordering of Product(s) under this Agreement shall be conducted:

 

(A)                              on a pull Manufacturing basis in respect of the Products as set out in clauses 3.2 and 3.4; or

 

(B)                              on a Toll Manufacturing Basis in respect of Products that are Tolled Products as set out in clause 5 (Toll Manufacture) and Exhibit 7 (Toll Manufacturing Provisions), and

 

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(C)                              on the fifth (5th) Business Day of each calendar month commencing not later than the calendar month following the calendar month in which the Effective Date falls (or at such other dates as may be agreed between the Parties), the Purchaser shall provide to the Supplier a rolling demand forecast schedule (in such physical written format (as opposed to a data exchange) exchangeable by email as is agreed by the Parties) which shall align with the applicable Gating Plan for that Gating Year and comprise a good faith estimate of its anticipated aggregate monthly requirements for Products for at least the following twenty-four (24) months or, in each case, such shorter period remaining under the Term (including any proposed extension thereof), in accordance with clause 3.2 ( the “Forecast Schedule”).

 

3.2

 

(A)                              Manufacturing and supply of Products under this Agreement shall be pursuant to the Forecast Schedules and to the Firm Orders submitted by the Purchaser, as further described in this clause 3.2.

 

(B)                              The initial Forecast Schedule is attached to this Agreement at Exhibit 14 (Initial Product Forecast Schedule) and the Parties agree that the Purchaser and the Supplier shall be bound by the volumes of Products shown in the Firm Zone of such initial Forecast Schedule as at the Effective Date. The initial Forecast Schedule shall reflect the migration of all orders that are in progress immediately prior to the Effective Date.

 

(C)                              Provided that the volumes of Products shown in the Firm Zone of each Forecast Schedule align with the requirements of the Gating Plan in respect of such Products, such volumes shall be deemed to be firm orders binding on the Purchaser and the Supplier, and the quantities included for each Product in any Firm Zone may not be varied in any subsequent Forecast Schedule unless the Supplier agrees in writing (each such firm order being a “Firm Order”). Each Firm Order shall be for not less than the Minimum Order Quantity of Product and, if greater than the Minimum Order Quantity, shall be for the Minimum Order Quantity plus one or more multiples of the Minimum Order Quantity.  If the volumes specified in the Firm Order do not comply with this requirement then such variation to such volumes must be agreed between the Parties as part of the Firm Order confirmation process set out at 3.2(E).

 

(D)                              The Purchaser shall submit each Forecast Schedule either electronically or by such other means that the Manufacturing and Supply Team shall determine and to such location as reasonably requested by the Supplier in writing. No oral communications shall comprise a commitment to supply.  Each Firm Order shall specify the volumes of Product required and the Purchaser’s requested Delivery date in accordance with the applicable Lead Time requirements as set out in Exhibit 1 (Products).

 

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(E)                               The Supplier shall respond to each Firm Order that complies with the requirements of this clause 3.2 (including the applicable Gating Plan):

 

(i)                                    within two (2) Business Days of receipt (or such other date as agreed between the Parties) to acknowledge receipt of the Firm Order; and

 

(ii)                                 within ten (10) Business Days of receipt (or such other date as agreed between the Parties) to confirm the applicable order Delivery date and the volumes of Product required.

 

In the event that the Supplier fails to respond to any Firm Order within ten (10) Business Days after acknowledging it, the Supplier shall be deemed to have acknowledged and accepted that Firm Order. Unless otherwise agreed by the Parties, the Supplier shall be obliged to acknowledge Firm Orders which comply with the requirements of this clause 3.2 without proposed amendments. The response (or deemed response) will include confirmation of the Delivery date. To the extent that the Supplier proposes an amendment to the Firm Order, the Purchaser shall respond to any proposed amendments to the Firm Order within ten (10) Business Days confirming whether it accepts or rejects such proposed amendments.  If the Purchaser:

 

(iii)                              accepts such amendments, the Firm Order together with the relevant amendments shall be deemed to be acknowledged and accepted by the Supplier and shall be binding on both Parties; or

 

(iv)                             rejects such proposed amendments; the Parties will discuss the proposed amendments in good faith as promptly as practicable, but not more than five (5) Business Days following such rejection.

 

The Parties agree that if the Parties cannot agree an amendment to the Firm Order pursuant to this clause 3.2(E) that the Firm Order initially submitted without the suggested amendments shall be binding on the Parties to the extent it is in accordance with this clause 3.2 and the applicable Gating Plan, provided that the Supplier may refer the matter for resolution in accordance with clause 16 (Dispute Escalation), in which case such matter shall be determined in accordance with clause 16 (Dispute Escalation).

 

(F)                                The Purchaser, either electronically or by such other means determined by the Manufacturing and Supply Team, shall deliver to the Supplier purchase orders corresponding to the Product volumes shown in the Firm Orders to such location as reasonably requested by the Supplier in writing. The purchase order shall be in such form as is mutually agreed by the Manufacturing and Supply Team and shall specify the Product(s) and country(ies) to which it relates; have assigned to it a number which shall be used by the Parties in all correspondence relating thereto and shall be submitted in accordance with the Lead Times set out in

 

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Exhibit 1 (Products) and the applicable Firm Zone for the Product(s) shown in each Firm Order so that the Supplier may process the Firm Orders.

 

(G)                              The Supplier will supply Product in accordance with Firm Orders that comply with this clause 3.2 and the applicable Gating Plan and for which the Supplier receives purchase orders in accordance with clause 3.2(F), unless such requirements are changed in accordance with clause 3.2(H) or clause 3.2(I).

 

(H)                             Without prejudice to the Parties’ obligations with respect to the Firm Zone of any Forecast Schedule, if discussion of the relevant requirements of a Firm Order is requested by the Supplier, then the relevant planning personnel from both Parties will discuss in good faith, provided that the Supplier shall have no obligation to agree any production schedule or Delivery timetable which would exceed the applicable Gating Volumes for the relevant Product as set out in the Gating Plan for that Gating Year.

 

(I)                                  The Purchaser and the Supplier shall each establish a single point of ordering and forecasting in respect of Products for the purposes of carrying out its obligations under this clause 3.2, subject to any agreed delegation of supply and/or invoicing and/or payment to Nominated Suppliers or other Affiliates of a Party in accordance with this Agreement.

 

3.3                              Other requirements

 

(A)                              Bridging Stock shall not be treated on a different basis to any standard order of Product in the Forecast Schedules provided pursuant to this clause 3 (Forecasts and Orders). The Parties acknowledge that through long term S&OP planning, arrangements will be made to manage and record long term planning of Bridging Stock.

 

(B)                              Subject to clause 3.4(C) the Supplier shall ensure that on the day of Delivery in accordance with the Delivery Terms and clause 9 (Delivery of Product), and unless (i) agreed otherwise between the Parties on a Product-by-Product basis or (ii) a different percentage of registered shelf life is set forth on Exhibit 1 (Products) for the applicable Product, each Product shall have remaining at least seventy-five per cent. (75%) of their registered shelf life (with respect to each Product, the “Minimum Remaining Shelf Life”).

 

(C)                              Other than in relation to an agreed list of exceptional circumstances there shall be no requirement for the Supplier to maintain a specific level of safety stock of Products or Materials. Where any exceptional agreement is reached for the maintenance of any safety stock for Materials, the Purchaser requesting the provision of such safety stock will: (A) at the discretion of the Supplier, bear the carrying cost (calculated at 7% financial interest plus actual warehousing costs if any) associated with such safety stock, and (B) bear the associated risk for such safety stock, in each case due to (i) the expiry or termination of this Agreement

 

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in respect of any relevant Product; (ii) a change in the Forecast Schedule in respect of such Product; or (iii) a change in any Product requirements to the extent that any Materials comprising the safety stock do not comply with the applicable Specifications and Quality Standards or meet the other requirements of this Agreement, provided that the Supplier shall use reasonable endeavours to mitigate such risk (for example, and without limitation, by applying a First in First Out inventory management system).

 

(D)                              The Parties acknowledge that the Lead Time of one hundred and twenty (120) calendar days applicable to Products in Exhibit 1 (Products) on the Effective Date should be improved over time and the Supplier has resolved to use its Commercially Reasonable Efforts to reduce the Lead Time for all Product Technologies supplied under this Agreement to one hundred (100) calendar days within two (2) years from the Effective Date.

 

(E)                               In relation to any Products that are (i) the subject of an ongoing technical transfer pursuant to this Agreement and (ii) have been identified in Exhibit 1 (Products) as Products where a full batch of such Product must be ordered (“Batch Constrained Products”), if during the implementation of the relevant technical transfer the Purchaser orders Batch Constrained Product at a quantity below the batch size set out against such Batch Constrained Product in Exhibit 1 (Products) or the requirements for a particular Manufacturing run of such Product does not consume a full batch, then the Parties shall discuss in good faith how to mitigate the potential wastage of unused Materials used in the proposed Manufacture of such Batch Constrained Product. If the Supplier agrees to proceed with the Manufacture of any Batch Constrained Product it shall be on the basis that the Supplier shall be entitled to charge the Purchaser for the cost (without applying any mark-up) of the unused Materials that cannot be recovered.

 

(F)                                The provisions of this clause 3 (Forecasts and Orders) are subject to the provisions of clause 4 (Capacity Baseline and Gating Plan) in the event that an Allocation is required to be made.

 

4.                                     CAPACITY BASELINE AND GATING PLAN

 

4.1                              Within the third Quarter of each Calendar Year following the Effective Date during the Term, the Parties shall meet (the “Gating Meeting”) to agree on a gating plan specifying the Manufacturing capacity for each Product Technology to be allocated to the Purchaser by the Supplier at each Manufacturing Site for each month within the next Calendar Year (each a “Gating Year”) based on:

 

(A)                              a baseline indication of the Purchaser’s Group’s volume requirements (calculated on the basis of Products to be Delivered as opposed to Products ordered) as supplied in advance by the Purchaser to the Gating Meeting (the “Target Gating Volume”);

 

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(B)                              current available capacity at the relevant Manufacturing Sites supplied by the Supplier in advance to the Gating Meeting, taking due account of any actual or anticipated constraints on the capacity at any such Manufacturing Site for the Manufacture of relevant Products (including with reference to the applicable then-current Forecast Schedule and the Supplier’s other actual or anticipated operations at such Manufacturing Site) and taking account of any agreed New Product SKU volumes;

 

(C)                              the then current Aspex Requirements; and

 

(D)                              planned transfers of Product under the Long Term Transfer Plan and any Specific Technology Transfers,

 

in each case for each of the Product Technologies at the relevant Manufacturing Sites for the relevant Gating Year under consideration (each a “Gating Plan”). The Gating Plan shall be approved by the Manufacturing and Supply Team. The initial Gating Plan for all Product Technologies and containing, inter alia, the Aspex Requirements, is set out in Exhibit 6 (Initial Gating Plan) to this Agreement. Following a request from the Supplier (as an exception in the 2019 Gating Year to the Gating Plan mechanism set out in this Agreement) the Parties agree that, due to capacity constraints, the Supplier shall not be obliged to offer the full 10% flexibility above the monthly Target Gating Volumes for the Aspex Requirements in the 2019 Gating Year and that the volume per month that the Supplier commits to accept above the monthly Target Gating Volumes is as set out in the Initial Gating Plan for the Aspex Manufacturing Site in the 2019 Gating Year at Exhibit 6.

 

For the avoidance of doubt Gating Plans shall not include volumes of any Shared Chemical/API Product or Shared Packaging Material supplied under this Agreement. Further, even though the Aspex Requirements are set on an annual basis for a five (5) year period, the Parties shall seek to agree the applicable monthly allocation of such Gating Volumes of the Aspex Requirements for the applicable Gating Year at the relevant Gating Meeting.

 

4.2                              The Purchaser (or one of its Affiliates) shall place orders for Products for up to 90% of the Gating Volume for each Product Technology in the Gating Plan for the relevant Gating Year (“Minimum Target Volume”) on a take or pay basis, meaning that the Purchaser shall be obligated to pay the full Conversion Cost for all such Product up to the Minimum Target Volume for the relevant Product Technology irrespective of whether an order is placed for such Product, provided that the foregoing shall not apply:

 

(A)                              if the Parties agree in writing in advance to mitigate the order shortfall by substituting or increasing an alternative volume of Product (whether from another Product Technology or a New Product SKU);

 

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(B)                              in circumstances where the Supplier, through no fault of the Purchaser, is unable to or otherwise does not supply the Products within the Product Technology up to the Minimum Target Volume; or

 

(C)                              where the Supplier Delivers Products for that Product Technology that are Defective, or if such Product becomes Defective after Delivery to the Purchaser or its Affiliate, and in either case, the Supplier is unable to or otherwise does not supply replacement non-Defective Product in accordance with this Agreement.

 

If the Purchaser gives at least three (3) months’ advance notice in writing that it is not likely to meet the Minimum Target Volume for a Product Technology in a Gating Year the Parties agree to discuss any reasonable mitigation proposals in good faith (including the extent of any write-off of Materials) in the next S&OP Meeting and, if the Parties do not agree, the issue may be escalated in accordance with clause 4.5.

 

4.3                              The Parties shall agree a fixed Gating Volume for each of the five (5) Gating Years after the Effective Date (2019 to 2023) for the Droptainer Products Manufactured at the Aspex Manufacturing Site (“Aspex Requirements”) as part of the initial Gating Plan.

 

4.4                              In addition and subject to the Aspex Requirements, the Purchaser may request that the Gating Volumes for all other Product Technologies in any subsequent Gating Year’s Gating Plan at least match the capacity of a Product Technology available at a particular Manufacturing Site in the current Gating Year’s Gating Plan and the Parties shall consider such request in good faith, save that the Parties shall take account of actual usage of the previous year’s allocated capacity; agreed constraints on or commitments in relation to capacity; any Product divestments planned and mutually agreed upon by the Parties and the movement of Products in the Long Term Transfer Plan.

 

4.5                              If the Parties do not agree the Gating Plan by 30 September in the preceding Calendar Year to the Gating Year of the relevant Gating Plan or any matters relating to the Long Term Transfer Plan the matter shall be referred to the Manufacturing and Supply Team for resolution who shall respectively endeavour in good faith to resolve the matter presented to them as expeditiously as possible and shall take account of the factors set out in clauses 4.1, 4.7 and 4.8 to 4.10 . If any dispute related to the Gating Plan or Long Term Transfer Plan cannot be resolved within the Manufacturing and Supply Team within thirty (30) days after such request for referral, then the Manufacturing and Supply Team shall refer such dispute to the Executive Officers of each Party for resolution. If a referral is made to the Executive Officers, they shall meet by telephone or in person promptly to discuss the matter submitted and to determine a resolution in accordance with clause 16 (Dispute Escalation).

 

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4.6                              Save as is provided in clause 4.3, once agreed in writing by the Parties by the Manufacturing and Supply Team, a Gating Plan for a Gating Year shall become binding on the Parties and Firm Orders shall be placed in accordance with the applicable Gating Volumes set out in such Gating Plan, except that Purchaser shall be entitled to place Purchase Orders deviating from the Gating Volumes of Product (aggregated on a Product Technology basis) agreed in the Gating Plan for that Gating Year by no more than an aggregate + / - 10% for the balance of the Gating Year provided however, that volumes agreed in any Firm Order already placed may not be varied.

 

4.7                              If in any Gating Year the Purchaser requests a volume increase in respect of a Product Technology of a Product by more than 10% above the Gating Volumes agreed for the Product Technology in the Gating Plan for the applicable period, the Supplier shall use Commercially Reasonable Efforts to ensure it has  sufficient Manufacturing capacity at the applicable Manufacturing Site to satisfy the Purchaser’s requested increase in volumes of such Product Technology, subject always to the overall capacity constraints of the relevant Manufacturing Site(s) and the considerations set out in clauses 4.8 to 4.10 below. For the avoidance of doubt, the Supplier shall have no obligation to supply Product in excess of 110% of the Gating Volumes of relevant Product set out in the Gating Plan for the relevant period in the relevant Gating Year if unable to do so despite having used Commercially Reasonable Efforts to supply up to 110% of the Gating Volumes referred to above.

 

4.8                              The Supplier shall ensure that it has sufficient capacity over the applicable Product Term to meet the demand which will be agreed for a Product in the Gating Plan. If the Supplier, a Nominated Supplier or a Permitted Subcontractor is unable to Manufacture the quantities of Products forecasted or ordered by the Purchaser in accordance with this Agreement as a result of:

 

(A)                              shortages of Materials that are used both in the Manufacture of Products and in the manufacture of products for the Supplier’s Group or its Third Party customers; or

 

(B)                              constraints on the capacity at:

 

(i)                                    the Manufacturing Site; or

 

(ii)                                 any manufacturing site operated by the Supplier’s Group at which any Materials are manufactured,

 

(the “Affected Site”), in each case including as a result of any repair or remediation being required in respect of the Affected Site or any equipment at the Affected Site that is used in the Manufacture of Products or Materials (as applicable), then, without prejudice to the capacity threshold in the Gating Plan and clause 32 (Force Majeure), clauses 4.9 and 4.10 shall apply.

 

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4.9                              In the circumstances contemplated by clause 4.8, the Supplier shall (or shall procure that the Nominated Supplier or Permitted Subcontractor shall) refer the decision as to how to allocate the available Materials, or available capacity at the Affected Site to the Manufacturing and Supply Team who shall make such allocation, between:

 

(A)                              the Products;

 

(B)                              products manufactured by the Supplier’s Group for commercialisation by the Supplier’s Group that rely on the same Materials or Affected Site; and

 

(C)                              products manufactured by the Supplier’s Group for commercialisation by its Third Party customers that rely on the same Materials or Affected Site,

 

(collectively, the “Affected Products”) in a fair and reasonable manner as if all Affected Products were to be commercialised by and for the sole benefit of the Supplier’s Group, taking account of all relevant factors, including the indications of each Affected Product, the risk and likely duration of any stock out of each Affected Product, the availability in the relevant jurisdiction of alternatives to each Affected Product and whether or not each Affected Product is medically critical (the “Allocation”).

 

4.10                       In the circumstances contemplated by clause 4.8:

 

(A)                              the Purchaser shall, on request, provide the Manufacturing and Supply Team and the Supplier, Nominated Supplier or Permitted Subcontractor with such information as the Supplier, Nominated Supplier or Permitted Subcontractor may reasonably require in order to determine the Allocation in accordance with clause 4.9;

 

(B)                              notwithstanding anything to the contrary in clause 3 (Forecasts and Orders), each Firm Order shall be deemed to be revised (as to quantities of Products and/or Delivery dates, as applicable) to the extent necessary to accord with the Allocation as determined by the Manufacturing and Supply Team (and the Purchaser shall be deemed to agree with such revision) and the provisions of clause 25 (Write Off Costs) shall not apply to such change in volume; and

 

(C)                              for the purposes of clause 9 (Delivery of Product), the due date for Delivery in respect of any Firm Order shall reflect any revision to such Firm Order made pursuant to this clause 4.10.

 

4.11                       The Purchaser shall ensure that the quantities of Product shown in the Forecast Schedule do not, at the time such quantities first appear in the Firm Zone, exceed, on an annual basis, the available capacity at the relevant Manufacturing Site as mutually agreed in the Gating Plan and that Purchaser shall order and acquire ninety per cent (90%) of the Gating Volumes in any Gating Plan.

 

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5.                                     TOLL MANUFACTURE

 

5.1                              The Parties agree that at any time during the Term, the Purchaser may propose that a Product (including a New Product SKU introduced, or proposed to be introduced, pursuant to clause 21 (New Product SKUs)) shall be Manufactured on a Toll Manufacturing Basis) and any such proposal must identify the Materials that the Purchaser proposes to supply to the Supplier on a Toll Manufacturing Basis.

 

5.2                              The Supplier shall consider each proposal made pursuant to clause 5.1 in good faith and shall not unreasonably refuse to Manufacture (or have Manufactured) the proposed Product(s) on a Toll Manufacturing Basis. The Parties agree that a refusal to Manufacture on a Toll Manufacturing Basis due to lack of site-readiness shall be deemed to be unreasonable; provided, that the Supplier may condition its acceptance of any proposal to Manufacture on a Toll Manufacturing Basis on the Supplier being given a reasonable amount of time, which shall be no less than three (3) months in length, to prepare any applicable Manufacturing Site for Manufacturing on a Toll Manufacturing Basis and the Purchaser shall cooperate with and provide such information as is reasonably necessary for such preparations.).

 

5.3                              If the Parties agree that a Product shall be Manufactured on a Toll Manufacturing Basis it shall be Manufactured in accordance with this clause 5 (Toll Manufacture) and the terms set out in Part 1 of Exhibit 7 (Toll Manufacture Provisions) and further the Parties shall (each acting reasonably and in good faith) agree and execute a Tolled Product Exhibit in the form attached to this Agreement in Part C of Exhibit 7 (Form of Tolled Product Exhibit) (a form of which is annexed to this Agreement at Part B of Exhibit 7 (Form of Bulk Tolled Product Exhibit) for the Bulk Tolled Products that are Tolled Products as at the Effective Date), Each Tolled Product Exhibit shall specify (among other things):

 

(A)                              the Trigger Date with effect from which the relevant Product (or proposed New Product SKU) shall be Manufactured on a Toll Manufacturing Basis;

 

(B)                              if applicable (in accordance with paragraph 4 of Part 1 of Exhibit 7 (Toll Manufacture Provisions)), the Existing Materials Cost (as defined in Exhibit 7) at which the Purchaser shall purchase from the Supplier any stock-on-hand of the Materials that will, with effect from the Trigger Date, be supplied by the Purchaser on a Toll Manufacturing Basis, which Existing Materials Cost shall be calculated in accordance with paragraph 4.1 of Exhibit 7 (Toll Manufacture Provisions); and

 

(C)                              the Supply Price (and the applicable Invoice Currency) at which the Supplier shall supply the relevant Tolled Product to the Purchaser when Manufacturing using Materials supplied on a Toll Manufacturing Basis, which Supply Price shall be calculated in accordance with clause 10.1, save that in calculating the Total Product Cost of any Tolled Product Manufactured on a Toll Manufacturing Basis,

 

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the Actual Cost (as defined in Exhibit 7)  paid (or payable) by the Purchaser or its Affiliates for Toll Materials shall be disregarded in calculating the Total Product Cost of that Tolled Product.

 

5.4                              With effect from the Effective Date in relation to the Bulk Tolled Products and the Trigger Date for all other Products to be manufactured on a Toll Manufacturing Basis, the provisions of Exhibit 7 (Toll Manufacture Provisions) shall apply in respect of the Manufacture of the relevant Product.  Any product agreed to be supplied as a Tolled Product shall continue to be supplied on a Toll Manufacturing Basis unless mutually agreed by the Parties.

 

5.5                              In respect of the Bulk Tolled Product, the Parties acknowledge that as at the Effective Date the Supplier and Purchaser for the purposes of such Manufacture rely on interim systems, procedures and processes to manage such Manufacture on a Toll Manufacturing Basis (or with an equivalent capability in relation to the management of Manufacturing on a Toll Manufacture Basis) (the “Interim Toll Manufacture Systems”). The Parties agree that the Supplier shall be entitled to continue to Manufacture (or have Manufactured) that Product on a Toll Manufacturing Basis under this Agreement using those Interim Toll Manufacture Systems until the Parties have the capability to enable the Manufacture of the relevant Product(s) using new systems, procedures and processes that would enable the Manufacture of such Product(s) to continue to be undertaken on a Toll Manufacturing Basis taking account of the IT systems changes being implemented by both Parties after the Effective Date and both Parties shall use their Commercially Reasonable Efforts to implement and operate such new systems, processes and procedures as the Supplier may reasonably require (taking account of any updates to relevant IT systems) as soon as reasonably practicable in respect of any Bulk Tolled Products following a request from the Supplier.

 

6.                                     PRODUCTS MANUFACTURED USING MATERIALS PURCHASED FROM PURCHASER

 

6.1                              If, in respect of a Product, a member of the Purchaser’s Group is at any time during the Term:

 

(A)                              the supplier to the Supplier (or its Permitted Subcontractor) of any Materials used in the Manufacture of that Product; and

 

(B)                              the Supplier (or its Permitted Subcontractor) purchases and takes title to such Materials from the Purchaser or its Affiliate,

 

the provisions of Exhibit 8 (Purchaser Materials) shall apply in respect of the Manufacture of the relevant Product. Products which contain Purchaser Materials shall be identified as such on Exhibit 1 (Products).

 

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6.2                              For the avoidance of doubt, neither this clause 6 (Products Manufactured using Materials Purchased from Purchaser) nor Exhibit 8 ((Purchaser Materials) shall apply in respect of any Product for which the Purchaser’s Group supplies Materials on a Toll Manufacturing Basis.

 

7.                                     SHARED CONTRACTS

 

7.1                              The Parties have agreed the following to achieve a Separation of the relevant part of each Shared Contract after Separation in accordance with (A)7.1(A) and 7.1(B) below. Until satisfactory Separation of a Shared Contract the Supplier and the Purchaser shall respectively use their Commercially Reasonable Efforts to maintain relationships under the Shared Contracts and continue to operate the Shared Contracts, including without limitation fulfilling all their respective obligations under such Shared Contracts in the same manner as applied for the twelve months prior to the Separation in accordance with the terms of the Separation Agreement (where it is acknowledged that the obligation to transfer or separate the Shared Contracts has been delayed).

 

(A)                              Where the Purchaser requires the Supplier to continue to procure a Chemical/API or Shared Packaging Material which is subject to a Shared Contract under the terms of a Shared Contract for incorporation in a Product being supplied under this Agreement then such Shared Chemical/API will be deemed to comprise a “Purchaser Material” under this Agreement and the terms of clause 6 and Exhibit 8 (Purchaser Materials) shall apply.

 

(B)                              Where the Purchaser requires the Supplier to continue to procure a Chemical/API or Shared Packaging Material which is subject to a Shared Contract under the terms of a Shared Contract for incorporation in a product of the Purchaser that will not be Manufactured under this Agreement, then such Chemical/API will be deemed to comprise a “Shared Chemical/API Product” or a Shared Material under this Agreement and the terms of clause 8 shall apply.

 

8.                                     SHARED CHEMICAL/API PRODUCT/SHARED PACKAGING MATERIAL

 

Where the Purchaser requires the Supplier to continue to procure a Chemical or API or any packaging Materials under the terms of a Shared Contract for incorporation into a product of the Purchaser that will not be Manufactured under this Agreement, but requires the Supplier to provide testing or other quality related services in relation to that Shared Chemical/API Product or Shared Packaging Material, then all other terms and conditions of this Agreement apply in respect of that Shared Chemical/API Product or Shared Packaging Material as if it were a Product, save that the Supplier shall not be obliged to incur any greater cost or expense than would apply to the supply of the applicable Shared Chemical/API Product or Shared Packaging Material under the relevant part of the Shared Contract and the terms of Schedule 2 of the Separation Agreement shall apply to any Liabilities incurred under or in respect of, and any rights arising in relation to, the relevant part of such Shared Contract.

 

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9.                                     DELIVERY OF PRODUCT

 

9.1                              Under the terms of this Agreement Delivery of Product by the Supplier shall commence on or following the applicable Commencement Date and all provisions of this clause 9 (Delivery of Product) (including references to the Product Term) apply from the applicable Commencement Date.

 

9.2                              Delivery Terms

 

The Supplier (or the Nominated Supplier) shall Deliver or procure the Delivery of the Product specified in the Firm Order for that month on the date confirmed for Delivery by the Supplier in the Firm Order, within - eight (8) or +zero (0) days, in accordance with the Delivery Terms, provided that:

 

(A)                              such Firm Order meets the requirements set forth in clause 3 (Forecasts and Orders), including the applicable Lead Time requirements as set out in Exhibit 1 (Products) for the Products covered by such Firm Order;

 

(B)                              the quantity of Products Delivered by the Supplier (or the Nominated Supplier) may vary by ± ten per cent. (10%) from the quantities specified by the Purchaser in the relevant Firm Order. For the avoidance of doubt, such variance shall not constitute a breach of this Agreement by the Supplier and, without prejudice to clause 17 (Acceptance of Product), the Purchaser (or its relevant Affiliate) shall not be entitled to reject any Delivery on the basis of such variance;

 

(C)                              the Supplier (or the Nominated Supplier) shall notify and confirm with the Purchaser of the actual Delivery date and quantities in accordance with clause 3.2(E) and notify any subsequent anticipated delay in Delivery or change in the actual Delivery date as promptly as practicable.

 

9.3                              Delivery Failure

 

(A)                              Where the quantity of Products Delivered is less than that required by the relevant Firm Order, the Parties shall enter into good faith discussions regarding replacements of such under-Delivered Products (where requested by the Purchaser), and, unless otherwise agreed by the Purchaser, in the event of any such Product shortfall greater than ten per cent. (10%) of a Firm Order or the Products are not delivered on the Delivery date (“Delivery Failure”), the Supplier shall use Commercially Reasonable Efforts to Deliver any such Product shortfall as soon as reasonably practicable after the original Delivery date in accordance with such Delivery schedule as may be mutually agreed between the Parties and in any event within ten (10) Business Days of the date specified for Delivery of the relevant Product.

 

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(B)                              In the event of a Delivery Failure following the expiration of the period referred to in clause 9.3(A), for any Firm Order (or portion thereof) which cannot be Delivered, the Purchaser shall be entitled to either:

 

(a)                                cancel such Firm Order (or the relevant portions thereof) without penalty to Purchaser; or

 

(b)                                purchase replacement Product from a Third Party, and the Supplier shall be obliged to reimburse the Purchaser the difference between the recorded price paid for such replacement Product and the Supply Price that Purchaser would have paid to Supplier for the equivalent quantities of Product;

 

(C)                              In the event of a Delivery Failure following the expiration of the period referred to in clause 9.3(A), additionally or alternatively to the remedies in 9.3(B) above, the Purchaser shall be entitled to recover from Supplier any costs, expenses, fees, loss and liability (including legally binding commitments to pay out of pocket damages to end customers or third party suppliers) actually incurred by the Purchaser as a direct result of such Delivery Failure (subject always to the variance referred to at clause 9.3(B) above and any variation agreed by the Parties); and

 

(D)                              Any delay in Delivery to the extent due to any reason listed below shall not be regarded as Delivery Failure:

 

(a)                                Force Majeure;

 

(b)                                Purchaser’s change of a Firm Order or any gross negligence on the part of the Purchaser; or

 

(c)                                 as specifically provided in respect of Purchaser Materials as set out in Exhibit 8 (Purchased Materials).

 

9.4                              The Supplier shall provide or procure the provision to the Purchaser (or its relevant Affiliate) with each Delivery the corresponding Manufacturer’s Batch Certificate (or Certificate of Analysis plus Certificate of Compliance) and any other agreed Delivery documentation (which shall include any documentation required by Applicable Law and, where applicable, the relevant Batch Record).  In respect of Shared Chemical/API Product, and where required by Applicable Law with respect to the Manufacture of Products using such Shared Chemical/API Product, Delivery documentation shall include written confirmation from the relevant Governmental Entity that the Manufacturing Site complies with standards of cGMP at least equivalent to those required for the Manufacture of APIs in the European Union.

 

9.5                              Risk in and title to the Products (other than Tolled Products) shall remain with the Supplier until Delivered in accordance with the Delivery Terms at which point it will

 

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pass to the Purchaser (or its relevant Affiliate).  Risk in and title to the Tolled Products shall pass in accordance with paragraph 5.4 of Exhibit 7 (Toll Manufacture Provisions).

 

9.6                              The Purchaser (or its relevant Affiliate as applicable) shall collect the Products Delivered from the agreed Delivery site within five (5) Business Days of the Delivery date set out by the Purchaser in the relevant Firm Order, or within five (7) Business Days of the Delivery date set out in the notice delivered by the Supplier (or the Nominated Supplier) pursuant to this clause 9.1, if different.

 

9.7                              If, pursuant to clause 9.1, the Supplier in any three (3) consecutive month period during the Term delivers quantities of Product that are, in aggregate, in excess of those specified in the relevant Firm Orders (disregarding the ± ten per cent. (10%) variance referred to in clause 9.2(B)), the Purchaser may, at its election and if such aggregate excess is at least equal to the applicable Minimum Order Quantity, delete a quantity equal to that aggregate excess from any pending Firm Order.  For the purposes of clause 3 (Forecasts and Order ), the Supplier shall be deemed to have agreed to any change to a Firm Order, or additional Firm Order, that the Purchaser may require pursuant to this clause 9.7.

 

9.8                              Without prejudice to the provisions of clauses 9.2 to 9.7 and subject to clause 9.9, in respect of Products to be exported from the country in which the applicable Manufacturing Site is located:

 

(A)                              Unless the Parties agree otherwise or agree on alternate Delivery Terms for that Product, the Parties acknowledge and agree that in accordance with the FCA Delivery Terms (where applicable):

 

(i)                                    the Supplier (or the Nominated Supplier) shall be the exporter of record in respect of Products Delivered under this Agreement;

 

(ii)                                 the Purchaser (or its relevant Affiliate) shall be the importer of record and shall be responsible for all import formalities and responsible for arranging the transport or shipment of such Products from the territory in which they are Manufactured; and

 

(iii)                              from time to time, in order to demonstrate to competent Governmental Entities that the Products have been exported from the territory of Manufacture and that the Supplier has charged the appropriate rate of applicable Sales Tax in respect of such Products, the Supplier may reasonably require original Export Documentation or a copy otherwise acceptable to the applicable Governmental Entity in relation to some or all of the Products Delivered under this Agreement.

 

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(B)                              The Purchaser shall:

 

(i)                                    retain or cause the retention of originals or electronic copies of all Export Documentation in respect of Products Delivered under this Agreement; and

 

(ii)                                 except as requested by the Supplier pursuant to clause 9.8(A)(iii), require its Third Party logistics service provider to retain originals or electronic copies of all such Export Documentation,

 

in each case until the end of the seventh (7th) Calendar Year following the Calendar Year in which Delivery occurs.

 

(C)                              In the event that the Supplier requires Export Documentation in respect of any Products Delivered under this Agreement, the Supplier shall notify the Purchaser accordingly with reference to the invoice numbers to which the required Export Documentation relates and the Purchaser shall:

 

(i)                                    provide or procure the provision of electronic copies of such Export Documentation to the Supplier as promptly as reasonably practicable, and in any event within ten (10) Business Days of receipt of notice from the Supplier pursuant to this clause 9.8(C); and

 

(ii)                                 if so requested by the Supplier, use its Commercially Reasonable Efforts to provide or procure the provision of the following to the Supplier:

 

(a)                                printed copies (certified to be true copies of the originals) of such Export Documentation as promptly as reasonably practicable and in any event within two (2) weeks of notice from the Supplier pursuant to this clause 9.8(C); and/or

 

(b)                                originals of such Export Documentation as promptly as reasonably practicable.

 

9.9                              Clause 9.8 shall not apply if the Parties have agreed that Delivery of Products to be exported shall not occur on the basis of the FCA Delivery Terms, in which case the agreed Delivery Terms shall apply.

 

10.                              PRICE AND PRICE ADJUSTMENTS

 

10.1                       The initial Supply Price for Products for the 2019 Calendar Year shall be set out in Exhibit 1 (Products) of this Agreement (calculated as Base Price plus applicable Margin as set out in Exhibit 16, Part C). The Supply Price of each Product for any subsequent Calendar Year shall equal the Base Price for such Calendar Year (as adjusted in accordance with clause 10.4, if applicable) plus the applicable Margin.

 

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10.2                       The “Base Price” for each Product shall be determined as follows:

 

(A)                              the Base Price for each Product for 2019 as set out in Exhibit 1 (Products) in local currency (being the actual price of a relevant Product for 2018 (comprising Total Product Cost and agreed variances from the 2018); and

 

(B)                              in each subsequent Calendar Year the Base Price for each Product shall be equal to the Base Price for that Product in the preceding Calendar Year, as adjusted in accordance with clause 10.4, if applicable.

 

10.3                       The “Margin” for each Product shall be determined in accordance with Exhibit 16, Part C.

 

10.4                       Within thirty (30) Business Days of receipt of the Gating Plan for the next Gating Year (as agreed in accordance with clause 4), the Supplier shall notify the Purchaser of the Base Price, the Margin and the Supply Price for each Product for the following Calendar Year during the applicable Term (each such notice, a “Pricing Notice”), such Pricing Notice shall include the inflation indices applied under clause 10.4(A) for each country. The Base Price for each Product for the following Calendar Year will be calculated as follows:

 

(A)                              Inflation Adjustments: the part of the then-existing Base Price corresponding to the Conversion Cost, over-head rate and the Supply Price Catalogue shall be adjusted by an amount equal to such part of the then-existing Base Price multiplied by the percentage increase or decrease in the most recently available prior twelve (12) months of the relevant index specified in Exhibit 18 (Inflation Rate Source) for the country in which such Manufacture takes place (“Inflation Adjustment”), provided, that if the relevant body does not report an index for the relevant country for the relevant period, the source of the relevant index shall be as mutually agreed by the Parties through the Manufacturing and Supply Team. Provided that the Inflation Adjustment will only be made for the country in which such Manufacture takes place if the percentage increase or decrease represented by the Inflation Adjustment exceeds 3% and then only to the extent of the incremental inflation amount above 3%. An illustrative example of the Inflation Adjustment is set out in Part A of Exhibit 16.

 

(B)                              Material Price Adjustments: the part of the then-existing Base Price corresponding to the Materials Cost shall be adjusted on an aggregate basis to reflect the full amount (and not just the amount above the threshold) of variations in the price of the Material components for the relevant Product Technology if the following thresholds are met by Manufacturing Site and by Product Technology for both the budget for the following Calendar Year and the end of year reconciliation, such thresholds being:

 

(i)                                    Chemicals / APIs +/- $150k

 

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(ii)                                 All other Materials +/- 5%

 

(each a “Materials Adjustment”).  For purposes of this clause 10.4(B), the variation in the price of the Material components shall be measured based on the average price paid by the Supplier for all volumes of such Material component at such Manufacturing Site.

 

(C)                              Volume Based Price Adjustments: a volume based price adjustment shall be applied to the Base Price as follows:

 

(i)                                    if the Target Gating Volume agreed in the Gating Plan for the next Gating Year for the aggregate of each Product Technology at each Manufacturing Site) deviates by more than +/- 5% compared to the 2018 baseline Gating Volume, the Supply Price per unit shall: (1) where volumes are less than the baseline Gating Volume, be increased; or (2) where volumes are greater than the baseline Gating Volume, decreased, by a percentage of the Conversion Costs (as set out in Exhibit 1 (Products)) equivalent to the percentage of such entire Gating Volume deviation;

 

(ii)                                 the end of year Site Volume Reconciliation mechanism set out in clause 10.7 will be applied if at the end of Gating Year the actual Gating Volume of each Product Technology at each Manufacturing Site deviates from the Target Gating Volume (the “Volume Based Adjustment”).

 

Provided that

 

(iii)                              the Volume Based Adjustment shall not apply to the extent that the Gating Volume deviates downwards due to the Supplier’s inability to supply the relevant Product (including in the event of Force Majeure);

 

(iv)                             Product transfers included in the Long Term Transfer Plan in that Gating Year shall not be considered when calculating the Volume Based Price Adjustments to the Supply Price;

 

(v)                                in the case of termination by the Supplier pursuant to clause 40 (other than in the case where the Purchaser is in material breach) and a technical transfer plan applies, the mechanism above shall apply (i.e. the Volume Based Adjustment shall not apply to increase the Supply Price on the remaining Products). Similarly, if volume decreases as a result of Supplier request, the Volume Based Adjustment shall not apply to increase the Supply Price on the remaining Products; and

 

(vi)                             in the case of any termination by the Purchaser pursuant to clause 40 (other than where the Supplier is in material breach), the volume adjustment pricing mechanism described in this clause 10.4(C) applies.

 

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(D)                              the Base Price for the following Calendar Year shall be the sum of such adjusted parts of the Base Price calculated pursuant to clause 10.4(A) to 10.4(C). As shown in the illustrative example attached as an Appendix to Exhibit 16 (Supply Price Adjustment and Catalogue).

 

10.5                       The Supply Price catalogue indicating what should be included in the calculation of the Supply Price and what should form an additional service to be invoiced separately is set out in Exhibit 16 (Supply Price Adjustment and Catalogue).

 

10.6                       The Parties agree to review the Base Price and the application of the Supply Price mechanism referred to above at the end of the Initial Term. If no agreement is reached as to the basis for any such change, the current mechanism shall continue to apply.

 

10.7                       At the end of each Calendar Year, the Supplier shall calculate:

 

(A)                              in respect of each Product Technology:

 

A x CC

 

where:

 

(i)                                    A is the amount by which the actual volume of the relevant Product Technology is either greater than one hundred and five per cent. (105%) of the target Gating Volume (a positive value) or less than ninety-five per cent. (95%) of the target Gating Volume (a negative value); and

 

(ii)                                 CC is the applicable Conversion Cost of the relevant Product Technology,

 

and the results of these calculations shall be aggregated for each Manufacturing Site to determine the “Site Volume Reconciliation”.

 

(B)                              in respect of each Product Technology the Parties shall undertake a reconciliation of the amount determined through the Inflation Adjustment for that Product Technology against the actual percentage increase or decrease in the relevant index specified in Exhibit 18  (Inflation Rate Source) for the country in which such Manufacture takes place in the previous twelve (12 months) provided, that if the relevant body does not report an index for the relevant country for the relevant period, the source of the relevant index shall be as mutually agreed by the Parties

 

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through the Manufacturing and Supply Team in the original Inflation Adjustment (the “Inflation Reconciliation”).

 

(C)                              If the aggregate of the Inflation Reconciliation and the Site Volume Reconciliation is:

 

(i)                                    a positive sum, the Supplier shall issue a credit note to the Purchaser in respect of such sum and shall, at the Purchaser’s option, either:

 

(a)                                apply that credit note to offset the Supply Price in respect of subsequent purchases of Product by the Purchaser or its Affiliate; or

 

(b)                                pay to the Purchaser or its nominated Affiliate a sum equal to the value of that credit note within sixty (60) days of the date of that credit note by electronic transfer to the account nominated by the Purchaser (or its Affiliate) in writing; or

 

(ii)                                 a negative sum, the Supplier shall issue a debit note to the Purchaser in respect of such sum and the Purchaser shall pay that debit note within sixty (60) days of receipt by electronic transfer to the account nominated by the Supplier (or the Nominated Supplier) in writing,

 

provided that (i) the debit/credit offset set out in this clause 10.7 may only be applied in the original currency of the Supply Price and as between the original parties to the supply relationship and not other members of their respective Groups and (ii) prior to the issuance of any credit note or debit note pursuant to this clause 10.7, the Manufacturing and Supply Team shall convene a meeting to review and discuss the Inflation Reconciliation and the Site Volume Reconciliation.

 

10.8                       The Purchaser shall respond to any Pricing Notice delivered by the Supplier to the Purchaser pursuant to Exhibit 16, Part C within thirty (30) days of receipt of the notice (or by such other date as agreed between the Parties) and such response will either acknowledge the Base Prices of the Products for the following Calendar Year or may, in good faith, propose such amendments as may be reasonably requested in accordance with this Agreement.  Unless otherwise agreed by the Parties, the Purchaser shall be obliged to acknowledge the Base Prices, without proposed amendments, which comply with the requirements of this clause 10 (Supply Price).  In the event that the Purchaser fails to respond to the Supplier’s Pricing Notice within thirty (30) days, the Purchaser shall be deemed to have acknowledged the Base Prices for the following Calendar Year.  The Supplier shall respond to any such proposed amendments to the Base Prices within five (5) Business Days confirming whether it accepts or rejects such proposed amendments.  In the event of any disagreement between the Parties regarding any adjustment to a Base Price, the matter shall be considered by the Manufacturing

 

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and Supply Team, in accordance with clause 15 (Relationship Management). During the pendency of any good faith dispute regarding an adjustment to a Base Price, the then current Base Price shall apply for all Firm Orders placed in accordance with this Agreement, and following the resolution of such good faith dispute the Supplier shall issue a credit or debit note (as applicable) to the Purchaser to reflect the difference between the Supply Price actually paid during such good faith dispute and the Supply Price that should have been paid had the Base Price from the start of the relevant Contract Year corresponded to the Base Price applicable as a result of such resolution of such good faith dispute.

 

10.9                       The Supply Price and any amounts payable or reimbursed pursuant to a Site Volume Reconciliation shall be exclusive of any Sales Tax or amounts in respect thereof that may be applicable to any payment, transaction or activity contemplated under this Agreement, which the Purchaser shall pay in addition to the Supply Price under presentation by the Supplier or its Nominated Supplier of a valid Sales Tax invoice (where applicable).

 

10.10                Delivery shall be in accordance with the Default Delivery Terms unless otherwise agreed between the Parties.  Where, irrespective of the relevant Delivery Terms agreed in respect of a Product, the Supplier pays for any expenses, costs and charges in respect of freight, customs clearance (other than the costs of clearance for export under the FCA Delivery Terms) and/or insurance that are not included in the Supply Price, then the Purchaser shall reimburse the Supplier for such expenses, costs and charges.

 

11.                              INVOICE, PAYMENT AND CURRENCY CONVERSION

 

11.1                       From the applicable Commencement Date, the Supplier (or the Nominated Supplier) shall invoice the Purchaser, or any Affiliate of the Purchaser that the Purchaser designates to receive invoices by reasonable advance written notice to Supplier (or the Nominated Supplier), for Products Manufactured and supplied under the terms of this Agreement upon or following Delivery of such Products at the Supply Price in effect at the time the applicable Firm Order was placed.  Each invoice shall be in a form mutually agreed by the Parties, and shall include such information as is reasonably requested by the Purchaser, provided that each invoice issued pursuant to this clause 11.1 shall specify:

 

(A)                              the Purchaser’s (or its Affiliate’s) purchase order number;

 

(B)                              the Supply Price in respect of the Product Delivered denominated in the Invoice Currency;

 

(C)                              the quantity of the Product actually Delivered and SKU reference;

 

(D)                              the amount of Sales Tax due in respect of the Product Delivered; and

 

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(E)                               any other amounts reimbursable to the Supplier or its Nominated Supplier pursuant to this Agreement.

 

11.2                       Any amounts reimbursable to the Supplier or its Nominated Supplier pursuant to this Agreement other than the Supply Price for Product Delivered and any associated Sales Tax may be invoiced and paid separately from any invoice relating to the Supply Price for Product Delivered and any associated Sales Tax.

 

11.3                       The Purchaser shall pay to the Supplier the Supply Price for the Products Delivered following the applicable Commencement Date pursuant to Firm Orders within sixty (60) days of receipt of invoice from the Supplier or its nominated Affiliate (the “Payment Terms”).

 

11.4                       The Purchaser shall pay or procure the payment of the invoices issued by the Supplier (or the Nominated Supplier) to the Supplier in the Invoice Currency for that Product within sixty (60) days of receipt of invoice from the Supplier or the Nominated Affiliate (as applicable) by electronic transfer to the account nominated by the Supplier or the Nominated Supplier in the invoice.

 

11.5                       If the Purchaser does not pay or procure the payment of any invoice when due, the Purchaser shall pay (or procure the payment of) to the Supplier (or the Nominated Supplier) interest on any outstanding undisputed amount at the rate set out in clause 53 (Interest).

 

11.6                       In the event that:

 

(A)                              either Party is required to pay any sum (other than the Supply Price) to reimburse the other Party for any costs or expenses incurred by that other Party; and

 

(B)                              those costs or expenses are incurred by that other Party in a currency other than the applicable Invoice Currency,

 

the amount to be paid by the first Party by way of reimbursement shall be calculated by the invoicing Party by calculating the United States Dollars (USD) or Invoice Currency (as applicable) equivalent using such invoicing Party’s then-current standard exchange rate methodology as applied in its external reporting.

 

12.                              ELECTRONIC SYSTEMS

 

12.1                       Subject to the Transitional Services Agreement and the Information Access Agreement, each Party shall take reasonable care to ensure that:

 

(A)                              nothing done by it or its Affiliates’ employees shall contaminate, corrupt, impair or adversely affect any of the other Group’s computers, computer software and computer data and, without prejudice to the generality of the foregoing, shall take due care to ensure that no invasive programs, “computer viruses” or “logic

 

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bombs” shall be introduced to any of the other Group’s computers, computer software or data; and

 

(B)                              it operates reasonably up to date commercially available anti-virus software, including regularly updating the virus signature files of such software, and an electronic firewall and such other technical safeguards as good IT practice requires in relation to network or IT infrastructure (in each case, to the extent that such network or infrastructure may connect to the other Group’s information technology) and in accordance with ISRM Security Standards.

 

13.                              QUALITY CONTROL

 

13.1                       The Supplier and the Purchaser shall enter into the Quality Agreement which shall govern matters relating to quality assurance, quality control and quality management systems with respect to the Manufacture of Products as more particularly set out therein.

 

13.2                       The Supplier or any Permitted Subcontractor will perform such quality assurance tests on Products as may be provided for in the Quality Agreement.

 

13.3                       The Supplier shall, or shall procure that any Permitted Subcontractor shall, maintain all records as necessary and appropriate to demonstrate compliance with cGMP and the Quality Standards.

 

13.4                       In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of the Quality Agreement in respect of quality assurance, quality management and compliance with cGMP, the provisions of the Quality Agreement shall, to the extent of such conflict or inconsistency, prevail.

 

14.                              KEY PERFORMANCE INDICATORS

 

14.1                       Subject to clause 14.2, the Parties have agreed for all Products a set of (i) operational Key Performance Indicators and (ii) quality Key Performance Indicators, as set out in Part A and Part B of Exhibit 4 (Key Performance Indicators) respectively.

 

14.2                       The Parties acknowledge that in respect of KPI 1 (SDP) and KPI 2 (ASP) set out in Part A of Exhibit 4 (Key Performance Indicators) specific KPI targets for the Supplier shall not be implemented prior to 01 January 2020 and thereafter shall only be implemented following the establishment, by mutual agreement of the Parties, of:

 

(A)                              a baseline for KPI performance for KPI 1 (SDP) and KPI 2 (ASP) in the 2019 Contract Year; and

 

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(B)                              specific KPI targets for KPI 1 (SDP) and KPI 2 (ASP) for the 2020 and 2021 Contract Years.

 

Either Party may escalate a failure to agree such KPI targets prior to 01 December 2019 through the dispute escalation and resolution process set out in clause 16 (Dispute Escalation).

 

14.3                       The Supplier shall use Commercially Reasonable Efforts to achieve:

 

(A)                              the Key Performance Indicators set out in Exhibit 4 (Key Performance Indicators) Part A and B (except for KPI 1 (SDP) and KPI 2 (ASP)), with the specific targets therefor (including any variations for specific Products or Manufacturing Sites);

 

(B)                              subject to agreement of the specific targets for KPI 1 (SDP) and KPI 2 (ASP) in accordance with clause 14.2,  KPI 1 (SDP) and KPI 2 (ASP) from the date of agreement of the specific targets for those Key Performance Indicators; and

 

(C)                              thereafter during the Term, the Key Performance Indicators as mutually agreed between the Parties through the Manufacturing and Supply Team.

 

14.4                       Without prejudice to clause 14.1, the Parties shall monitor the Supplier’s performance against the Key Performance Indicators at the S&OP Meetings in good faith with a view to improving such performance.

 

14.5                       Without limiting the Supplier’s obligation under clause 14.3 to use Commercially Reasonable Efforts, the Parties agree and acknowledge that any failure of the Supplier to meet the Key Performance Indicators shall not in and of itself amount to a breach of this Agreement, save that in respect of KPI 1 (SDP) and KPI 2 (ASP) the bonus/malus incentive system set out in clause 14.6 and Exhibit 4, Part C (Key Performance Indictors) shall be implemented during the annual budgeting process, once each Calendar Year.

 

14.6                       Subject to agreement of the specific targets for KPI 1 (SDP) and KPI 2 (ASP) in accordance with clause 14.2, the Parties shall calculate the percentage point variance against the agreed specific KPI targets allocated to each of KPI 1 (SDP) and KPI 2 in accordance with Exhibit 4, Part C (Key Performance Indictors) and the following adjustment mechanism shall be applied in relation to the aggregate Supply Price for the relevant Calendar Year as part of the annual budgeting process:

 

(A)                              underachievement of the specific annual KPI targets for KPI 1 (SDP) and KPI 2 (ASP) shall lead to a Supply Price reduction by way of a credit note being issued to the Purchaser by the Supplier for an amount calculated in accordance with Exhibit 4, Part C (Key Performance Indictors) and the Supplier shall, at the Purchaser’s option, either:

 

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(i)                                    apply that credit note to offset the Supply Price in respect of subsequent purchases of Product by the Purchaser or its Affiliates; or

 

(ii)                                 pay to the Purchaser or its nominated Affiliate a sum equal to the value of that credit note within sixty (60) days of the date of that credit note by electronic transfer to the account nominated by the Purchaser (or its Affiliate) in writing; or

 

(B)                              overachievement of the specific annual KPI targets for KPI 1 (SDP) and KPI 2 (ASP) shall lead to a Supply Price increase by way of a bonus payment payable by the Purchaser to the Supplier for an amount calculated in accordance with Exhibit 4, Part C (Key Performance Indictors) in addition to the total annual of Supply Price paid for that Calendar Year and the Supplier shall issue a debit note to the Purchaser in respect of such sum and the Purchaser shall pay that debit note within sixty (60) days of receipt by electronic transfer to the account nominated by the Supplier (or the Nominated Supplier) in writing,

 

provided that (i) the debit/credit offset set out in this clause 14.6(B) may only be applied in the Invoice Currency and (ii) prior to the issuance of any credit note or debit note pursuant to this clause 14.6(B) the Manufacturing and Supply Team shall convene a meeting to review and discuss the adjustments contemplated in this clause 14.6.

 

(C)                              Any amounts payable or reimbursed pursuant to this clause 14.6 shall be exclusive of any Sales Tax or amounts in respect thereof that may be applicable to any payment, transaction or activity contemplated under this Agreement, which the Purchaser shall pay in addition to the Supply Price under presentation by the Supplier or its Nominated Supplier of a valid Sales Tax invoice (where applicable).

 

14.7                       Consequences of underachievement of KPIs.  If the Supplier fails to meet its KPI commitments under clause 14.3, then the Purchaser may request that the Supplier prepare a remediation plan. Upon request from the Purchaser, the Supplier shall, no later than forty (40) Business Days following the request, present a draft remediation plan to the Purchaser to discuss at the S&OP review meetings held in accordance with clause 15 (Relationship Management). Following the Purchaser’s approval of that plan, the Supplier shall implement that approved remediation plan, including any specific corrective actions that the Purchaser has requested as part of its approval. If the Supplier does not (i) prepare a remediation plan within forty (40) Business Days following request; or (ii) diligently perform the actions required in the agreed remediation plan in all material respects, then the Purchaser may escalate the non-delivery or non-performance of the remediation plan (as applicable) to the Manufacturing and Supply Team.

 

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15.                              RELATIONSHIP MANAGEMENT

 

15.1                       In relation to the Manufacturing Sites, the Parties shall each appoint a Customer Relationship Manager (each a “Customer Relationship Manager”). The Customer Relationship Managers shall meet once a month for the purposes of sales and operations planning, including but not limited to reviewing and coordinating the forecasting and ordering and supply related activities of each of the Parties, review and discussion of available capacity at the relevant Manufacturing Site, any ongoing technical transfer activities, any ongoing issues (if any) with respect to the performance of this Agreement at that Manufacturing Site, forthcoming proposals for New Product SKUs affecting that Manufacturing Site and performance by the Supplier against Key Performance Indicators in relation to that Manufacturing Site (the “S&OP Meetings”).  Other representatives of the Parties (such as technical or quality personnel) shall attend S&OP Meetings at the invitation of either Customer Relationship Manager.

 

15.2                       The Parties shall, as soon as reasonably practical after the Effective Date, establish a manufacturing and supply team (the “Manufacturing and Supply Team”), led by a Contract Execution Manager nominated by each of the Parties (each a “Contract Execution Manager”), which shall remain in place from the Effective Date for the duration of this Agreement, for the purposes set out in clause 15.3. The Contract Execution Managers shall have overall oversight of and responsibility for implementation of this Agreement.

 

15.3                       The Manufacturing and Supply Team shall meet from time to time as frequently as is necessary, including as reasonably requested by either Party and shall meet in respect of Manufacture and supply of Products, and all other issues relating to the implementation of this Agreement, at least three (3) times in the first Contract Year and thereafter at least once in each subsequent Contract Year to review and discuss business relationship matters and other matters relating to the implementation of this Agreement (the “Business Review Meetings”).

 

15.4                       At the first Business Review Meeting, the Manufacturing and Supply Team shall establish its own terms of reference and those of its sub-teams (if any), including any thresholds for decision-making escalation, and each Party shall appoint regular representatives to attend meetings of the Manufacturing and Supply Team, including the Business Review Meetings.

 

15.5                       Neither the Manufacturing and Supply Team nor any sub-team or committee thereof shall have the authority to:

 

(A)                              amend or modify the terms of this Agreement or any other Transaction Document;

 

(B)                              expand the scope of its or their authority;

 

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(C)                              waive any right that either Party may have pursuant to this Agreement or any other Transaction Document; or

 

(D)                              determine any issue in a manner that would conflict with the express terms and conditions of this Agreement or any other Transaction Document.

 

15.6                       The teams and committees established under this clause 15 (Relationship Management) shall escalate any matters they are not able to resolve in accordance with the provisions of clause 16 (Dispute Escalation).

 

16.                              DISPUTE ESCALATION

 

16.1                       Any dispute or difference that is not the subject of resolution by reference to an Independent Expert under the terms of this Agreement, but which arises between the Parties under this Agreement and cannot be resolved by discussion shall be referred to the Customer Relationship Managers for determination (including upon receipt of a Dispute Notice pursuant to clauses 50.3 to 50.8). If the Customer Relationship Managers are unable to resolve the matter within ten (10) Business Days of its referral thereto, the matter shall be referred to the Contract Execution Managers for resolution.  If the Contract Execution Managers are unable to resolve the matter within twenty (20) Business Days of its referral thereto, the matter shall be referred to the Manufacturing and Supply Team for resolution. If the matter is not resolved by the Manufacturing and Supply Team within twenty (20) Business Days of its referral thereto, the matter shall be referred to the Executive Officers. If the matter is not resolved by the Executive Officers within twenty (20) Business Days of its referral thereto, the dispute escalation and resolution process under this clause 16 (Dispute Escalation) will be deemed to have been exhausted in respect of such matter and, notwithstanding that the time limits for resolution of disputes specified in this clause 16 may be extended by the written agreement of the Parties, each Party shall be free to pursue its rights under clauses 50.3 to 50.8 of this Agreement or Applicable Law in respect of such dispute without further reference to this dispute escalation and resolution process.

 

16.2                       Notwithstanding anything to the contrary herein, any matter referred to the Customer Relationship Managers, Contract Execution Managers, or the Manufacturing and Supply Team (as applicable, the “Reviewing Body”) for resolution pursuant to this clause 16 (Dispute Escalation) may, upon the determination of the Reviewing Body, be escalated to the next Reviewing Body prior to the expiration of the applicable review period if the Reviewing Body determines that it would be in the best interest of either Party to do so based on the significance of the matter and/or the potential harm caused by delaying such an escalation. The length of any reduced review period for such escalations shall be jointly agreed between the Parties (and ad hoc meetings to discuss such escalation shall be arranged by the relevant Reviewing Body) and conducted in accordance with such pre-defined terms of reference as agreed at the initial Business Review Meeting.

 

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17.                              ACCEPTANCE OF PRODUCT

 

17.1                       The Purchaser or its relevant Affiliate shall not be entitled to reject any Delivery of Product except in accordance with this clause 17 (Acceptance of Product) or as set out in the Quality Agreement.  For the avoidance of doubt, if the Purchaser or its relevant Affiliate fails to check the Product or notify the Supplier (or the Nominated Supplier) within the agreed timeframes set out in clause 17.3 and the Quality Agreement, the Purchaser shall be deemed to have accepted the relevant Delivery of Product.  Without limiting the foregoing, the Supplier shall inform the Purchaser as soon as reasonably practicable and in any event within forty-eight (48) hours if a Delivery is delayed or stopped for any reason.  In such event, the Parties shall work together to agree on a plan (each acting reasonably and in good faith) to ensure the Delivery takes place as soon as possible thereafter and the Supplier shall implement such plan.

 

17.2                       Subject only to clauses 36 (Warranties) and 37 (Indemnity and Liability) and any termination rights under clause 40 (Duration and Termination), the remedies prescribed under this clause 17 (Acceptance of Product) shall be the sole and exclusive remedies of the Purchaser or its relevant Affiliate in relation to the quantity of Product Delivered under this Agreement and/or non-compliant, damaged or Defective Product Delivered.

 

17.3                       The Purchaser or its Affiliate shall visually inspect (but not be required to open the packaging of) the Product Delivered for variances and Defects and shall notify the Supplier (or, if directed by the Supplier, the Nominated Supplier and/or Permitted Subcontractor) in writing:

 

(A)                              within thirty (30) days of Delivery if there is an apparent Defect in the Product (in which case the Purchaser or its relevant Affiliate shall submit a sample of the allegedly Defective Product with such notice);

 

(B)                              within thirty (30) days of Delivery if there is any shortfall below or excess above the Delivery tolerance agreed in clause 9.1;

 

(C)                              within thirty (30) days of Delivery if there are any other Defects or non-compliance, whether or not this includes any quality or actual Defect; or

 

(D)                              during the relevant Product’s Minimum Remaining Shelf Life within thirty (30) days of discovery of a Defect if there is a Latent Defect.

 

17.4                       Complaints in connection with the Product will be handled in accordance with this Agreement and the Quality Agreement.

 

17.5                       If the Purchaser or its Affiliate notifies the Supplier, the Nominated Supplier and/or the Permitted Subcontractor of a Product which is (or is alleged to be) damaged or Defective (including any Latent Defects) under clause 17.3 or under the Quality

 

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Agreement, the Purchaser or its Affiliate shall store, at Supplier’s expense, the Product concerned in quarantine in accordance with the Supplier’s, the Nominated Supplier’s or the Permitted Subcontractor’s reasonable instructions and give the Supplier, the Nominated Supplier and/or the Permitted Subcontractor reasonable opportunity to inspect and analyse the Product concerned.  On the Supplier’s request, the Purchaser shall return the Product concerned to the Supplier (or, if so directed by the Supplier, the Nominated Supplier or Permitted Subcontractor), at Supplier’s expense, but the Purchaser and/or its Affiliate shall be entitled to retain a sample for testing.  For the avoidance of doubt, any Product Actions resulting from any notifications made by the Purchaser or its Affiliate to the Supplier, the Nominated Supplier and/or the Permitted Subcontractor pursuant to this clause 17 (Acceptance of Product) shall be dealt with in accordance with clause 29 (Product Action).

 

17.6                       If the Purchaser or its Affiliate notifies the Supplier, the Nominated Supplier and/or the Permitted Subcontractor under clause 17.3 or under the Quality Agreement, the Parties shall promptly endeavour to agree whether or not the Product in question is damaged or Defective, or if there was a shortfall or excess of Product on Delivery or a delay in Delivery of Product.  If no agreement is reached within twenty (20) days of the Purchaser’s (or its Affiliate’s) notice under clause 17.3 or under the Quality Agreement the matter shall be determined by an Independent Expert and the decision of the Independent Expert shall be final and binding on the Parties.  The Independent Expert’s fees shall be borne by the Party against whom the Independent Expert’s decision is given.

 

17.7                       To the extent that the Supplier agrees or the Independent Expert finds in favour of the Purchaser, then the Supplier shall either:

 

(A)                              use its Commercially Reasonable Efforts to replace or procure the replacement of the Product(s) referable to the Delivery in question on a timeframe to be agreed between the Parties on a Product-by-Product basis, each acting reasonably and in good faith; or

 

(B)                              at the Purchaser’s election (acting reasonably), or where it is not reasonably practicable for the Supplier to replace or procure the replacement of the Product(s) referable to the Delivery in question within a timeframe acceptable to the Purchaser (and meet any reasonable associated transportation costs), refund the Purchaser for the Supply Price of such Delivery (if already paid); and

 

(C)                              in either case, the Purchaser shall be entitled to recover costs in accordance with clause 9.3(C)

 

and the Supplier shall, at its option, either promptly collect at its own expense any damaged or Defective Product from the Purchaser or its Affiliate or reimburse the Purchaser’s Group for any reasonable costs incurred in its disposal of such Product or in shipping such Product to the Supplier.  For the avoidance of doubt, the

 

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Purchaser shall have no obligation to pay the Supplier for any Product agreed or found to be damaged or Defective in accordance with this clause 17 (Acceptance of Product) unless such damaged or Defective Product is replaced free of charge pursuant to clause 17.7(A) and the Supplier shall reimburse the Purchaser for any amounts already paid for such Product where such Product is to be refunded and not replaced.

 

17.8                       If the Parties agree, or the Independent Expert finds, that a Delivery of Product complied with the Specification at the time of Delivery and was Manufactured in accordance with cGMP and the Quality Standards, or that there was no shortfall in the volumes Delivered, the Purchaser shall pay for such Delivery in accordance with this Agreement.

 

17.9                       The Parties agree that this clause 17 shall not place a requirement on the Supplier to rework or reprocess rejected Defective Products unless such activity has been expressly approved and authorised in writing by the Purchaser in accordance with the Quality Agreement.

 

18.                              REGULATORY MATTERS

 

18.1                       Each Party shall ensure that it, or shall procure that where relevant, its Affiliate, at its or their own cost, obtains and maintains throughout the Term all Governmental Entity certificates, permits, licences or approvals that it (or the relevant Affiliate) respectively requires for the purposes of this Agreement and for the performance of its obligations (or the obligations of its Affiliates) under this Agreement.

 

18.2                       Without prejudice to clause 18.1, the Supplier shall, or shall procure that the Nominated Supplier or Permitted Subcontractor shall, at its own cost, (A) obtain and maintain throughout the Term any Manufacturing Licences required in connection with the Manufacture of the Products, and (B) subject to Applicable Laws, provide to the Purchaser promptly upon reasonable request thereof copies of any documentation relating to such Manufacturing Licenses that are required for the Purchaser (or its Affiliate) to obtain or maintain its Governmental Entity certificates, permits, wholesale distribution licences, licences and approvals, including all Marketing Authorisations, referred to in clause 18.3, or to respond to any official requests or CMC-related questions from any Governmental Entity.

 

18.3                       Without prejudice to clause 18.1, the Purchaser shall (or shall procure that its Affiliates shall), at its own cost, obtain and maintain all Governmental Entity certificates, permits, wholesale distribution licences, licences and approvals, including all Marketing Authorisations, necessary for the Purchaser’s Group to export from the Delivery site, import to the destination Territory, distribute, sell and otherwise commercialise each Product (or, as applicable, Finished Products manufactured using Products) in the relevant Territory and is responsible for any interaction with the relevant Governmental Entity regarding such certificates, permits, licences and approvals.

 

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18.4                       The Supplier shall notify the Purchaser as soon as reasonably practicable of any Governmental Entity inspection of Manufacturing Sites in respect of a matter relating to the Manufacture of the Products or of any other regulatory action taken or intended to be taken by a Governmental Entity in relation to the Manufacture of the Products in accordance with the Quality Agreement.

 

19.                              DOCUMENTATION AND REPORTS

 

19.1                       The Parties shall comply with the terms of the Information Access Agreement.

 

19.2                       The Supplier shall, or shall procure that any Nominated Supplier or Permitted Subcontractor (as applicable) shall:

 

(A)                              maintain complete and maintain the documentation relating to the Manufacture of each batch of the Products in accordance with cGMP (including, without limitation, Batch Records, analysis and data supporting each Certificate of Analysis and Certificate of Compliance) and in accordance with the Quality Agreement and shall retain such documentation for the periods set out in the Quality Agreement;

 

(B)                              supply to the Purchaser upon reasonable request copies of the documentation referred to in clause 19.2(A);

 

(C)                              keep complete and systematic records of any other documentation generated pursuant to this Agreement; such records to include any operational documentation relating to Manufacture of the Product, any financial records and procedures (including records for compliance with Applicable Laws), distribution and disposition records and all such other documentation relating to the Products and Manufacturing activities under this Agreement;

 

(D)                              preserve all records referred to in clause 19.2(C) in accordance with the relevant retention periods specified in the Quality Agreement (where applicable) and shall preserve any records not identified in such Quality Agreement for the greater of: (i) five years and (ii) such other period agreed in writing by the Parties; provided that, in the event a legal matter arises requiring preservation of certain records, the Supplier shall suspend destruction of such records as requested by the Purchaser or any Governmental Entity; and

 

(E)                               permit the Purchaser, its Affiliates and their respective representatives access upon reasonable request during Working Hours to all records retained pursuant to this clause 19 (Documentation and Reports).

 

19.3                       For the avoidance of doubt, nothing in clause 19.2(E) shall entitle the Purchaser, its Affiliates or their respective representatives to access financial records, which may be accessed only in accordance with clause 33 (Audit and Inspection Rights).

 

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19.4                       In the event of any conflict or inconsistency between the provisions of this clause 19 (Documentation and Reports) and the provisions of the Quality Agreement, the provisions of the Quality Agreement shall, to the extent of such conflict or inconsistency, prevail.

 

20.                              PRODUCT SPECIFICATIONS

 

20.1                       None of the Supplier, a Nominated Supplier or any Permitted Subcontractor may undertake any change with respect to the Manufacture of the Products and/or the Specifications unless the change is first agreed between the Parties or is required by a Governmental Entity in accordance with the change control procedure set out in clause 16 of the Quality Agreement.

 

20.2                       Any change with respect to the Manufacture of the Product and/or the Specifications pursuant to clause 20.1 shall be implemented in accordance with the Quality Agreement.

 

20.3                       If a Governmental Entity requires any change to be made with respect to the Manufacture of the Product and/or the Specifications, the Parties shall, each acting reasonably and in good faith, use all reasonable endeavours to agree an action plan in relation to the implementation of such change within fifteen (15) Business Days of receipt of notice from the Governmental Entity of the required change.

 

20.4                       In the event of any conflict or inconsistency between the provisions of this clause 20 (Product Specifications) and the provisions of the Quality Agreement, the provisions of the Quality Agreement shall, to the extent of such conflict or inconsistency, prevail.

 

21.                              NEW PRODUCT SKUS

 

21.1                       The Purchaser may, from time to time and in accordance with this clause 21 (New Product SKUs), request that the Supplier Manufacture (or have Manufactured) and supply (or have supplied) New Product SKUs under this Agreement.  Any such request shall be accompanied by reasonable details of:

 

(A)                              the characteristics of the New Product SKU (including whether it would, if Manufactured and supplied pursuant to this Agreement, be a Product or a Shared Chemical/API Product and, if applicable, dose form, strength and number of doses);

 

(B)                              the anticipated market(s) to supply; and

 

(C)                              a non-binding volume plan for a period equal to the required duration of a Forecast Schedule for a Product or a Shared Chemical/API Product (as applicable) or, if shorter, until the scheduled expiration of the Term.

 

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21.2                       The Purchaser must notify any request for a New Product SKU to the Supplier reasonably in advance of the first intended Delivery of such New Product SKU.

 

21.3                       Subject to clauses 21.3(A) and 21.3(B), upon receipt of a request pursuant to clause 21.1, the Supplier will consider such request in good faith and will conduct an impact assessment as soon as reasonably practicable, but in no event more than one (1) month other than in exceptional circumstances following Purchaser’s notice delivered under clause 21.1. Following such impact assessment, the Supplier and the Purchaser, acting through the S&OP Meetings, shall review and, if appropriate depending on the outcome of the impact assessment and subject to any amendments that may be agreed between the Parties, agree upon the proposal for the New Product SKU, on a basis consistent with the terms of this Agreement (including the applicable MOQ, Lead Time, Specifications, Firm Zone, Total Product Cost, Supply Price, Manufacturing Site and, if applicable, Permitted Subcontractor(s) in respect of the Manufacture of such New Product SKU and a budget for the estimated costs to be incurred in connection with such New Product SKU), provided that:

 

(A)                              no member of the Supplier’s Group shall be obliged to incur any Capital Expenditure in connection with the introduction of a New Product SKU (and any Capital Expenditure so incurred shall be at the cost and expense of the Purchaser);

 

(B)                              without prejudice to clause 23 (Development Work), any incremental costs incurred by any member of the Supplier’s Group associated with such New Product SKU shall be paid by the Purchaser, provided that (i) such costs are approved in advance in writing by the Purchaser; (ii) all such costs are reasonable and, insofar as they consist of amounts payable to any Third Party, are supported by invoices and (iii) no such costs shall be factored into the calculation of Total Product Cost of the New Product SKU.

 

21.4                       The Purchaser will provide a first non-binding forecast schedule in respect of each New Product SKU introduced in accordance with this clause 21 (New Product SKUs) not less than six (6) months prior to the first intended Delivery of such New Product SKU (or, if longer, a period equal to the Firm Zone for the New Product SKU).  Such forecast schedule shall be included in the rolling Forecast Schedule provided under clause 3 (Forecasts and Orders).

 

21.5                       Any New Product SKU that is introduced in accordance with this clause 21 (New Product SKUs) shall be subject to the terms of this Agreement and shall, with effect from the date on which the Parties record in writing their agreement to add such New Product SKU to this Agreement, be deemed to be a Product.

 

21.6                       Following the introduction of a New Product SKU in accordance with this clause 21 (New Product SKUs), the Supply Price of that New Product SKU shall be adjusted in accordance with clause 10 (Price and Price Adjustment); provided, that the initial

 

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Supply Price for such New Product SKU shall be reviewed and mutually agreed by the Parties.

 

21.7                       In addition to clause 21.1, the parties have pre-agreed that certain in-flight projects as listed in Exhibit 5 (New Product SKU — In-Flight Products) (the “New Product Launches”) shall, subject to proposals for the in-flight projects being agreed by the Parties on a basis consistent with the terms of this Agreement (including the applicable MOQ, Lead Time, Specifications, Firm Zone, Total Product Cost, Supply Price, Manufacturing Site and, if applicable, Permitted Subcontractor(s) in respect of the Manufacture of such New Product SKU and a budget for the estimated costs to be incurred in connection with such New Product SKU) and the terms of this clause 21, be Manufactured under the terms of this Agreement.  Where the context permits, references in this Agreement to New Product SKUs shall be deemed to include the New Product Launches.

 

22.                              CAPITAL EXPENDITURE AND COSTS OF DEVELOPMENT WORK

 

22.1                       In the course of the S&OP Meetings and/or Business Review Meetings, the Parties shall discuss in good faith and seek to reasonably determine whether, over the course of the Forecast Schedule and the remaining Term, Capital Expenditure or cost for Development Work at any Manufacturing Site is or is likely to be required to meet anticipated demand and/or to mitigate any capacity constraints that have been identified under clause 3 (Forecasts and Orders), clause 4 (Capacity Baseline and Gating Plan), and/or clause 15 (Relationship Management) over the following twenty-four (24) months or for any other reason. Provided that it is understood by the Parties that standard recapitalisation activity in respect of any Manufacturing line is already captured as part of Total Product Costs of the relevant Products on that Manufacturing line and no further adjustment is required for the Total Product Costs.

 

22.2                       Exhibit 13 (Agreed Capital Expenditure) sets out the agreed Capital Expenditure as at the Commencement Date and allocates responsibilities between the Parties for these known costs that are exceptions to the Total Product Cost.

 

22.3                       Where the Parties agree following good faith discussions that Capital Expenditure or cost for Development Work at Manufacturing Sites (in addition to the Agreed Capital Expenditure) is required in respect of the Manufacture of the Products such Capital Expenditure and cost for Development Work shall to the extent that it relates to requirements arising or related to the period after the Commencement Date be at the Purchaser’s cost and expense, unless any such Capital Expenditure or cost for Development Work:

 

(A)                              is requested by an applicable Governmental Entity relating to an applicable Manufacturing process in respect of regulatory compliance, in which case the Purchaser shall bear no cost of such Capital Expenditures or cost for Development Work;

 

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(B)                              is related to investments for the establishment, maintenance or improvement of cGMP compliance relating to an applicable Manufacturing process, in which case the Purchaser shall bear no cost of such Capital Expenditures or cost for Development Work;

 

(C)                              is triggered by a change in Materials or Manufacturing process requested by Supplier, in which case the Purchaser shall bear no Capital Expenditures or cost for Development Work; or

 

(D)                              does not relate exclusively to the Products and does not fall within clause 22.3(A) or clause 22.3(C) above, in which case the Supplier and the Purchaser shall each bear a proportionate part of the cost of such Capital Expenditures and costs for Development Work, taking into account the benefit through the Capital Expenditures and Development Work to the Product(s) compared to other products Manufactured or anticipated for Manufacture at that Manufacturing Site, provided that the costs and responsibility for such Capital Expenditures or costs shall be agreed in advance by the Parties.

 

For the avoidance of doubt, the costs and expenses to be borne by the Purchaser for Development Work shall, to the extent incurred by a member of the Supplier’s Group, be invoiced to the Purchaser by the Supplier apart from Total Product Costs.

 

22.4                       Notwithstanding anything else contained herein to the contrary, Purchaser shall not be responsible for costs incurred in connection with any remediation plan(s) required by a Governmental Entity or otherwise relating to legal compliance matters occurring prior to the Commencement Date.

 

22.5                       In the event that the Purchaser does not agree to meet the cost of any Development Work that is to be met by the Purchaser, then the Supplier shall not be under any obligation to undertake Development Work and shall have no obligation to Manufacture Product for the Purchaser where the failure to undertake Development Work would result in the Supplier being in breach of Applicable Law.

 

23.                              DEVELOPMENT WORK

 

23.1                       The Purchaser acknowledges that, with effect from the Effective Date, the Supplier will not be required to perform or procure the performance of any Development Work in respect of the Manufacture of any Product (including variations to Marketing Authorisations required as a result of such work), with the exception that the Supplier shall be obliged to perform any Development Work that is:

 

(A)                              requested by an applicable Governmental Entity relating to an applicable Manufacturing process in respect of regulatory compliance;

 

(B)                              required by Applicable Law;

 

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(C)                              necessary in order to transfer a Marketing Authorisation or as contemplated by the Separation Agreement or the Transitional Distribution Services Agreement;

 

(D)                              agreed between the Parties pursuant to clause 23.2;

 

(E)                               necessary in connection with a technical transfer of the Manufacture of a Product or contemplated in the Long Term Transfer Plan.

 

23.2                       The Parties shall identify and agree on any Development Work that is required by Applicable Law in order to complete a Marketing Authorisation transfer or a Marketing Authorisation re-registration or a technical transfer of the Manufacture of a Product, including in accordance with the Long Term Transfer Plan or pursuant to the Separation Agreement, including with respect to the costs to be borne by each Party, and shall agree on timing for the performance of such Development Work.

 

23.3                       Save as provided in clause 22, any Development Work pursuant to this clause 23 (Development Work), and any associated Sales Tax, shall be at the Purchaser’s cost and expense, provided that (i) all such costs are reasonable and, insofar as they consist of amounts payable to any Third Party, are supported by invoices.

 

23.4                       Without prejudice to the generality of clause 23.3 but subject to the provisions of the Separation Agreement, in the event that any variation is required to be made to a Marketing Authorisation as a result of or in connection with any Development Work undertaken pursuant to this clause 23 (Development Work), the Purchaser shall bear the costs of such variation.

 

24.                              CONTINUOUS IMPROVEMENT PROGRAMME

 

24.1                       The Parties shall meet regularly, but no less than annually, to discuss potential areas of cost reduction applicable to the Manufacture of Products under this Agreement, including any reduction in Material Costs and any potential Improvements.  The Parties shall agree on potential areas of cost reduction in writing and each Party may from time to time suggest Improvements to the other.  All cost reductions achieved by an Improvement agreed by the Parties shall be shared equally between the Supplier and the Purchaser.  The Parties shall determine (acting reasonably) whether a portion of the benefit of any Improvement accruing to the Purchaser shall be applied by way of a reduction in the Supply Price.

 

25.                              WRITE OFF COSTS

 

25.1                       The Purchaser shall reimburse the Supplier’s Group for any write-off costs (calculated in accordance with IFRS and the Novartis Control Manual) that the Supplier’s Group incurs for applicable Materials, API, work-in-progress, or Products to the extent caused by:

 

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(A)                              any material failure on the part of the Purchaser to purchase the volumes of a Product shown in the Firm Zone of any Forecast Schedule; or

 

(B)                              any changes to the Manufacture of a Product requested by the Purchaser (including any changes to the Specifications or Artwork in respect of a Product),

 

in each case, such reimbursement to be made only to the extent that:

 

(i)                                    Materials have been reasonably purchased or ordered (a) in light of the volumes indicated in the Firm Zone of any Forecast Schedule or (b) as safety stock pursuant to clause 3.4(C); and/or

 

(ii)                                 work-in-progress or Products have been undertaken or Manufactured by or for the Supplier’s Group in light of the volumes indicated in the Firm Zone of any Forecast Schedule.

 

25.2                       Any write-off costs (calculated in accordance with IFRS) that the Supplier’s Group incurs for applicable Materials, API, work-in-progress, or Products held beyond reasonable levels in the context of binding Purchase Orders placed by the Purchaser (and not varied) should be for the account of the Supplier and not the Purchaser.

 

26.                              ARTWORK AND SHARED MOULDS

 

26.1                       The Supplier shall (or shall procure that the Nominated Supplier or Permitted Subcontractor shall) Manufacture the Products incorporating the Artwork used by the Supplier’s Group as at the Effective Date, subject to any subsequent changes made in accordance with Applicable Laws, the Separation Agreement and this clause 26 (Artwork and Shared Moulds).

 

26.2                       The Purchaser shall bear the costs of changing the Artwork as required by a Governmental Entity or Applicable Law, or which is otherwise requested by the Purchaser or any of its Affiliates.  If a change in Artwork leads to write off costs for stocks of old Artwork which can no longer be used for the purposes of Manufacturing the Products, such write off costs shall be dealt with under clause 25 (Write Off Costs).

 

26.3                       Save as provided in clauses 26.2 and 26.4, the Parties shall mutually agree on provisions regarding responsibility for undertaking any work related to any Artwork changes, including through the addition of any New Product SKU.

 

26.4                       The arrangements made by the Parties for the sharing of certain key moulds and tools by the relevant Manufacturing Sites are as further described in Exhibit 9 (Shared Moulds).

 

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27.                              SERIALISATION, AGGREGATION AND OTHER ANTI-FALSIFICATION REGULATIONS

 

27.1                       The Parties will agree responsibility for the application of Anti Falsification Regulations to the Products on a market-by-market basis, provided that serialisation of the Products or other measures implemented pursuant to Anti Falsification Regulations shall be subject to and in accordance with any applicable provisions of the Quality Agreement.

 

27.2                       Any changes to serialisation or other measures implemented pursuant to Anti Falsification Regulations will be carried out in accordance with applicable change control procedures set out in the Quality Agreement.

 

27.3                       Each Party shall bear their own costs in respect of any changes to serialisation or other measures implemented pursuant to Anti Falsification Regulations required, in accordance with Applicable Law, by either Party or any of their respective Affiliates, subject to any Capital Expenditure costs which shall be allocated in accordance with clause 22 (Capital Expenditure and Costs of Development Work) save that it is agreed that:

 

(A)                              equipment costs, IT infrastructure costs and connectivity costs at the Supplier Manufacturing Site (in particular when the Supplier is using a Third Party interface provider) arising in connection with the serialisation of Products or compliance with Anti Falsification Regulations, should be borne by the Supplier;

 

(B)                              connectivity cost at the Purchaser (in particular when the Purchaser is using a Third Party interface provider) arising in connection with the serialisation of Products or compliance with Anti Falsification Regulations should be borne by the Purchaser;

 

(C)                              costs of the Market Authorisation Holder arising in connection with the Anti Falsification Regulations (assuming the Purchaser is the Market Authorisation Holder) should be borne by the Purchaser.

 

27.4                       Serialisation of the Products or other measures implemented pursuant to Anti Falsification Regulations will be carried out in a manner consistent with the Purchaser’s Group’s systems and in accordance with such other technical requirements as may be agreed between the Parties.

 

28.                              PHARMACOVIGILANCE

 

On or prior to the Effective Date, the Parties shall enter (or shall procure that one of their respective duly authorised Affiliates enters) into the PV Agreement.  The PV Agreement will govern all pharmacovigilance obligations arising as a result of entry into and implementation of this Agreement as more particularly set out therein.  Each Party separately and independently undertakes that, if one of its Affiliates enters into the PV

 

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Agreement, that Party shall comply with its Affiliate’s obligations under the PV Agreement as if it were a party thereto.

 

29.                              PRODUCT ACTION

 

29.1                       If a Governmental Entity requires a Product Action, or the Marketing Authorisation Holder deems it necessary under Applicable Law or customary industry practice to initiate a Product Action (whether as a result of a Party’s request or otherwise), each Party shall provide such assistance as the Marketing Authorisation Holder reasonably requests to facilitate such Product Action and, where applicable, in accordance with the PV Agreement.  The Marketing Authorisation Holder shall have final decision making authority with respect to Product Actions and related matters, including communications with Governmental Entities and the public.

 

29.2                       Where a Product Action is necessitated by a failure by the Supplier or its Affiliate to comply with its responsibilities under this Agreement, the Supplier shall at the sole discretion of the Purchaser, either:

 

(A)                              replace the Product recalled; or

 

(B)                              refund the Purchaser for the recalled Product; and

 

within sixty (60) days of receipt of an invoice for the same, reimburse the Purchaser for all documented and reasonable costs incurred by the Purchaser or its Affiliates in carrying out the Product Action.

 

29.3                       Each Party shall promptly provide to the other Party any information obtained by it suggesting that a Product Action is or may be necessary.  Further, the Parties shall cooperate in obtaining any additional information that may bear upon whether to initiate a Product Action and in carrying out the Product Action, including by providing or procuring the provision of any information reasonably requested by the other Party.

 

30.                              SUPPLIERS OF MATERIALS AND SHARED PACKAGING MATERIALS

 

30.1                       The Supplier shall, or shall procure that the Nominated Supplier or Permitted Subcontractor shall, be responsible for obtaining and maintaining all Materials necessary for the Manufacture of Products in accordance with this Agreement and Applicable Law, and shall be responsible for ensuring the quality of Materials provided by its suppliers, in each case, in compliance with cGMP and the Quality Standards.

 

30.2                       The Supplier agrees to use its Commercially Reasonable Efforts to source the Materials at a price and on terms and conditions (if any) that are at least as favourable, when taken as a whole, as the terms and conditions of agreements which the Supplier has entered in respect of the supply of materials for its own

 

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products or for another customer of the Supplier’s products in the past 12 months.  The assessment of terms will only apply in relation to the supply of materials for products that are the same in all material respects to the Materials including, but not limited to:

 

(A)                              the same or broadly equivalent specification;

 

(B)                              of equal or better quality;

 

(C)                              for substantially the same volume;

 

(D)                              to be supplied over the same or broadly equivalent term; and

 

(E)                               delivery of the products to the same geographical area.

 

Without limiting the foregoing, the Supplier will use Commercially Reasonable Efforts to source the Materials at reasonably competitive pricing, terms, and conditions.

 

30.3                       The arrangements for contracts and arrangements relating to the supply of Materials which, as at the Commencement Date, are sourced for both Parties from a single Shared Chemical/API Product Supplier or Shared Packaging Materials Supplier are as further described in clauses 7 to 8 (inclusive) and Exhibit 8 (Purchaser Materials).

 

31.                              CONFIDENTIALITY

 

31.1                       No announcement, communication or circular concerning the existence or the subject matter of this Agreement shall be made or issued by or on behalf of any member of the Supplier’s Group or the Purchaser’s Group without the prior written approval of the Supplier and the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed) that contains any information, statement, fact or opinion that is not either (i) in the public domain prior to the date of this Agreement through no fault of any member of the Novartis Group or the Alcon Group, as applicable, or any of its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives; or (ii) disclosed in the Listing Prospectus, the Registration Statement or any document publicly filed in connection therewith.

 

31.2                       Subject to clause 31.4, each of the Parties shall treat as confidential and not disclose or use any Confidential Information received or obtained as a result of entering into this Agreement which relates to:

 

(A)                              the existence and provisions of this Agreement or the other Transaction Documents; or

 

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(B)                              the negotiations relating to this Agreement or the other Transaction Documents.

 

31.3                       Subject to clause 31.4, each of the Parties shall treat as confidential and not disclose any Confidential Information of the other Party, and neither Party will use the other Party’s Confidential Information for any purpose other than to perform its obligations arising out of or in connection with this Agreement.  Each Party will ensure that its Affiliates and their respective officers, employees and Permitted Subcontractors comply with the obligations of confidentiality set out in this clause 31 (Confidentiality).

 

31.4                       This clause 31 (Confidentiality) shall not prohibit disclosure or use of any information by a Party if and to the extent:

 

(A)                              the disclosure or use is required by Applicable Law, any Governmental Entity or any stock exchange on which the shares of such Party (or its holding company) are listed;

 

(B)                              the disclosure or use is required to vest the full benefit of this Agreement in such Party;

 

(C)                              the disclosure or use is required for the purpose of any arbitral or judicial proceedings arising out of this Agreement;

 

(D)                              the disclosure is made to a Tax authority in connection with the Tax affairs of such Party;

 

(E)                               the disclosure is made to a ratings agency on a confidential basis in connection with the affairs of such Party;

 

(F)                                the disclosure is made to professional advisers of such Party on a need to know basis and on terms that are no less restrictive than the provisions of this clause 31 (Confidentiality);

 

(G)                              the information was lawfully in the possession of such Party or its Affiliates without any obligation of confidentiality prior to such information being received from the other Party hereunder, as evidenced by written records and taking due account of the impact of the Separation on the ownership of such information with a view to preserving any rights of confidentiality that should survive such a Separation;

 

(H)                             the other Party has given prior written approval to the disclosure or use; or

 

(I)                                  such disclosure or use is permitted under clauses 24 (Continuous Improvement Programme), 39 (Intellectual Property) or 42 (Technical Transfer) or any Transaction Document,

 

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provided that prior to disclosure or use of any information pursuant to clause 31.4(A), (B) or (C), the Party concerned shall, where not prohibited by Applicable Law, promptly notify the other Party of such requirement with a view to providing the other Party with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use.

 

31.5                       Notwithstanding anything herein to the contrary, Confidential Information shall not include any information in the possession of either Party that:

 

(A)                              is lawfully received by such Party or its Affiliates from a third party, without any obligation of confidentiality;

 

(B)                              is publicly available (other than by breach of this Agreement, the Separation Agreement, or any other agreement between or among the Parties or their Affiliates); or

 

(C)                              is independently developed by such Party, as evidenced by contemporaneous documentation.

 

31.6                       On termination or expiration of this Agreement and subject to the provisions of clause 42 (Technical Transfer), each Party shall (i) return to the disclosing Party all Confidential Information furnished by the disclosing Party to the locations reasonably designated by the disclosing Party and (ii) at the disclosing Party’s sole discretion return, destroy or erase (in each case to the extent reasonably practicable) any copies of the disclosing Party’s confidential information and summaries thereof (whether tangible or intangible and whether or not created or provided by the disclosing Party) in the possession of the receiving Party or any member of the receiving Party’s Group thereof or any of their respective employees, consultants, agents, representatives, contractors or sub-contractors, except: (i) where such Confidential Information is required to be retained by either Party in compliance with Applicable Laws and (ii) that each Party shall be entitled to retain one copy of such Confidential Information, in addition to any archival copies on backup media created automatically in the ordinary course of business, for archival purposes only.

 

32.                              FORCE MAJEURE

 

32.1                       If any Force Majeure event occurs in relation to a Party, a Nominated Supplier or a Permitted Subcontractor which affects or may affect the performance of any of a Party’s obligations under this Agreement, that Party shall promptly notify the other Party as to the nature and extent of the circumstances in question.

 

32.2                       Neither Party shall deemed to be in breach of this Agreement, or shall be otherwise liable to the other Party, by reason only of any delay in performance, or the non-performance of any of its obligations, to the extent that the delay or non-performance is due to any Force Majeure event of which it has duly notified the

 

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other Party, and the time for performance of that obligation shall be extended accordingly.

 

32.3                       If the performance by either Party of any of its obligations under this Agreement is prevented or delayed by a Force Majeure event for a continuous period in excess of thirty (30) days, the Parties (or their Affiliates) shall enter into good faith discussions with a view to alleviating its effects, or to agreeing upon such alternative arrangements as may be fair and reasonable in the circumstances.

 

32.4                       If the performance by either Party of any of its material obligations under this Agreement is prevented or delayed by Force Majeure for sixty (60) days or more, either consecutively or cumulatively in any one Contract Year, then the other Party may terminate this Agreement, in whole or in part with respect to the applicable Product(s), immediately upon written notice.

 

33.                              AUDIT AND INSPECTION RIGHTS

 

33.1                       Subject to clause 33.5, the Purchaser or its authorised representative shall be entitled, not more than once every two (2) Contract Years (unless for cause or in accordance with clause 33.2) per Manufacturing Site and in any event on not less than thirty (30) days’ prior written notice (unless for cause in which case the Purchaser shall provide reasonable notice), to enter and inspect the Manufacturing Site and any related plant, utilities, machinery and equipment used in the Manufacture of Products for the purposes of conducting an audit of compliance with the terms of this Agreement, the Quality Agreement and Applicable Law, including cGMP; provided, that such audit shall be conducted in accordance with the terms set forth in clauses 31.1 to 31.5 (inclusive) and shall be completed on or before the date that is seven (7) days after its initiation unless otherwise agreed by the owner and operator of the relevant Manufacturing Site.

 

33.2                       The Purchaser or its authorised representative shall also be entitled to carry out follow-up audits within two (2) Contract Years of the preceding audit if any critical observations have been noted during any audit conducted pursuant to clause 33.1.

 

33.3                       As far as reasonably practicable, the Purchaser or its authorised representative shall coordinate any audits conducted pursuant to this clause 33 (Audit and Inspection Rights) so as to minimise disruption to the Supplier and/or the Permitted Subcontractor.

 

33.4                       The Supplier shall, and shall procure that the Nominated Supplier or Permitted Subcontractor shall, use its Commercially Reasonable Efforts to ensure that any corrective and preventative actions identified in any audit (or follow-up audit) conducted pursuant to clause 33.1 or clause 33.2 are carried out as soon as reasonably practicable.

 

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33.5                       In the event of a conflict or inconsistency between the provisions of clauses 33.1 to 33.4 (inclusive) and the provisions of the Quality Agreement, the provisions of the Quality Agreement shall (to the extent of such conflict or inconsistency) prevail.

 

33.6                       Subject to clause 33.7, the Purchaser shall be entitled, not more than once in each Calendar Year during the Term, to conduct an audit of records required to determine the correct calculation of Total Product Costs on which Supply Prices are based and the calculation upon which any other payment due under this Agreement is based.  In the first such audit the Purchaser shall also be entitled to audit any orders placed (or deemed placed) prior to the Effective Date that are scheduled to be delivered on or after the Effective Date.  In respect of Total Product Costs, each audit shall relate only to such Total Product Costs as have been set or revised since the Effective Date.

 

33.7                       Any audit undertaken pursuant to clause 33.6 shall be subject to the following conditions:

 

(A)                              the audit shall be performed by an internationally recognised independent auditor reasonably acceptable to both Parties acting under such obligations of confidentiality owed to the Supplier as the Supplier may reasonably require;

 

(B)                              the Supplier shall be given not less than forty five (45) Business Days’ notice of any proposed audit under clause 33.6 and each such audit shall be conducted during Working Hours and completed on or before the date that is seven (7) days after such audit’s initiation unless otherwise agreed by the Supplier;

 

(C)                              an audit with respect to the Supply Prices or Total Product Costs in any Calendar Year must be notified to the Supplier and initiated by the independent auditor prior to the end of the following Calendar Year and shall only extend to one Calendar Year;

 

(D)                              the independent auditor shall, prior to its delivery to the Purchaser, provide a draft copy of any report to the Supplier for comment.  Any final report issued by the independent auditor will be made available to both Parties simultaneously promptly upon its completion (and the independent auditor shall take care not to disclose in that report any information or data in respect of which the Supplier owes a duty of confidence to a Third Party);

 

(E)                               the Supplier shall provide the independent auditor with such documents and information as the independent auditor may require in order to determine whether the relevant Supply Prices accord with the relevant provisions of this Agreement;

 

(F)                                if the independent auditor determines that any Supply Prices do not accord with the relevant provisions of this Agreement, and this discrepancy has led to the Supplier over-charging or under-charging the Purchaser for Products of any Product Technology Manufactured at any Manufacturing Site by an amount that

 

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is in aggregate not less than three (3%) of the sums paid by the Purchaser (or its Affiliates) to the Supplier for all Products of such Product Technology Manufactured at such Manufacturing Site in the twelve (12) months prior to the audit, then:

 

(i)                                    the Supplier shall issue a credit note or debit note (as applicable) to the Purchaser in respect of such difference; and

 

(ii)                                 the Supplier shall pay the fees of the independent auditor and all documented and reasonable costs incurred by the Purchaser in connection with that audit or inspection; and

 

(G)                              subject to clause 33.7(F)(ii), the Purchaser shall pay the fees of the independent auditor.

 

33.8                       If pursuant to clause 33.7 the Supplier:

 

(A)                              issues a debit note in respect of any under-charging, the Purchaser shall pay that debit note within sixty (60) days of receipt by electronic transfer to the account nominated by the Supplier (or the Nominated Supplier) in writing; and

 

(B)                              issues a credit note in respect of any over-charging, the Supplier shall (or shall procure that the Nominated Supplier shall), at the Purchaser’s option either:

 

(i)                                    apply that credit note to offset the Supply Price in respect of subsequent purchases of Product by the Purchaser or its Affiliate (provided that the offset may only be applied in the original currency and as between the original parties to the supply relationship and not other members of their respective Groups); or

 

(ii)                                 pay to the Purchaser or its nominated Affiliate a sum equal to the value of that credit note within sixty (60) days of the date of that credit note by electronic transfer to the account nominated by the Purchaser (or its Affiliate) in writing.

 

33.9                       For the avoidance of doubt, clauses 33.6 to 33.8 (inclusive) do not apply to or include any Manufacturing audit or inspection, to which clauses 33.1 to 33.5 (inclusive) and the Quality Agreement apply.

 

34.                              ETHICAL STANDARDS AND HUMAN RIGHTS

 

34.1                       The Supplier warrants, to the best of its knowledge and belief, that in relation to its performance of this Agreement and unless otherwise required or prohibited by Applicable Law:

 

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(A)                              it does not employ engage or otherwise use any child labour in circumstances such that the tasks performed by any such child labour could reasonably be foreseen to cause either physical or emotional impairment to the development of such child;

 

(B)                              it does not use forced labour in any form (prison, indentured, bonded or otherwise) and its employees are not required to lodge papers or deposits on starting work;

 

(C)                              it provides a safe and healthy workplace, presenting no immediate hazards to its employees.  Any housing provided by the Supplier to its employees is safe for habitation.  The Supplier provides access to clean water, food, and emergency healthcare to its employees in the event of accidents or incidents at the Supplier’s workplace;

 

(D)                              it does not discriminate against any employees on any ground (including race, religion, disability or gender);

 

(E)                               it does not engage in or support the use of corporal punishment, mental, physical, sexual or verbal abuse and does not use cruel or abusive disciplinary practices in the workplace;

 

(F)                                it pays each employee at least the minimum wage or a fair representation of the prevailing industry wage (whichever is the higher) and provides each employee with all legally mandated benefits;

 

(G)                              it complies with Applicable Laws on working hours and employment rights in the countries in which it operates; and

 

(H)                             it is respectful of its employees’ right to join and form independent trade unions and freedom of association.

 

34.2                       In relation to its performance of this Agreement, the Supplier complies with and shall continue to comply with the Supplier Code set out in Exhibit 10 (Standards and Policies) and hereby gives the agreements, representations and covenants contained in that Exhibit.

 

34.3                       The Supplier is responsible for controlling its own supply chain and shall encourage compliance with ethical standards and human rights by any supplier of goods and services (including Materials) that are used by the Supplier when performing its obligations under this Agreement (including the Nominated Suppliers and Permitted Subcontractors).

 

34.4                       The Supplier shall ensure that it has ethical and human rights policies and an appropriate complaints procedure to deal with any breaches of such policies.  In

 

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the case of any complaints, the Supplier shall report the alleged complaint and proposed remedy to the Purchaser.

 

34.5                       The Purchaser reserves the right upon reasonable notice (unless inspection is for cause, in which case no notice shall be necessary) to enter the Supplier’s premises to monitor compliance with the provisions of this clause 34 (Ethical Standards and Human Rights) and Exhibit 10 (Standards and Policies) and the Supplier shall, subject to compliance with Applicable Laws, provide the Purchaser with any relevant documents requested by the Purchaser in relation thereto.

 

35.                              SAFETY HAZARDS

 

35.1                       The Supplier shall (or shall procure that the Nominated Suppliers and Permitted Subcontractor will) inform and keep the Purchaser informed of all safety hazards and changes in regulations and guidance (statutory or otherwise) which the Supplier (or the Nominated Suppliers or Permitted Subcontractor) knows or believes affect or may affect the use, handling, storage, labelling, transport, treatment and disposal of Product or any Materials.

 

35.2                       The Supplier shall ensure that all consignments of Product are safe, packaged and labelled so as to prevent any health risk to persons, property or the environment and properly marked with the appropriate internationally recognised danger symbols and that prominent hazard warnings appear in English (and/or any other language specified by the Purchaser) on all packages and documents.

 

35.3                       Without prejudice to its other obligations under this Agreement, the Supplier shall, and shall procure that the Nominated Suppliers or Permitted Subcontractor shall, comply with the Additional HSE Requirements in all matters relating to the performance of this Agreement.

 

36.                              WARRANTIES

 

36.1                       The Supplier hereby warrants and undertakes that the Products supplied under this Agreement:

 

(A)                              shall conform to the applicable Specifications at the time of Delivery;

 

(B)                              shall be Manufactured in accordance with Applicable Law, including current Good Manufacturing Practice, the Quality Standards and terms set out in the Quality Agreement; and

 

(C)                              at Delivery in accordance with the Delivery Terms the shelf life of each Product shall meet the Minimum Remaining Shelf Life requirements.

 

36.2                       Except as expressly set out in this Agreement or another Transaction Document, none of the Supplier, the Purchaser or their respective Affiliates provides in respect

 

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of any Product or its Manufacture or supply under this Agreement any further or additional warranty or representation of any kind, express or implied and any warranties, representations, conditions or other terms that may be implied by statute or general law are, to the fullest extent permitted by law, excluded from this Agreement, including any implied warranties of merchantability or fitness for purpose.

 

36.3                       Each Party has obtained all corporate authorisations and (other than to the extent any such consent, license or authorisation constitutes a Global Condition (as defined in the Separation Agreement)) all other governmental, statutory, regulatory or other consents, licences or authorisations required to empower it to enter into and perform its obligations under this Agreement where failure to obtain them would adversely affect to a material extent such Party’s ability to enter into or perform its obligations under this Agreement.

 

37.                              INDEMNITY AND LIABILITY

 

37.1                       The Supplier shall be liable for and shall indemnify each member of the Purchaser’s Group (on an after-Tax basis) and defend the Purchaser and its Affiliates from and against any Third Party actions, proceedings, claims and demands brought against or incurred or suffered by the Purchaser and/or any of its Affiliates in respect of (i) death, illness or injury to any Third Party or for loss or damage to any Third Party’s property which arise directly as a result of a breach by the Supplier (or any Nominated Supplier or Permitted Subcontractor) of the provisions of this Agreement or the Quality Agreement or (ii) a violation of Applicable Law by Supplier (or any Nominated Supplier or Permitted Subcontractor), but in each case excluding to the extent that the same arise directly as a result of breach by the Purchaser or its Affiliates of its obligations under this Agreement or another Transaction Document.

 

37.2                       The Purchaser shall be liable for and indemnify each member of the Supplier’s Group (on an after-Tax basis) and defend the Supplier and its Affiliates from and against any Third Party actions, proceedings, claims and demands brought against or incurred or suffered by the Supplier and/or any of its Affiliates in respect of death, illness or injury to any Third Party or for loss or damage to any Third Party’s property which arise directly as a result of:

 

(A)                              the use, storage, sale, distribution or marketing of Products after Delivery by the Purchaser, its Affiliates and/or distributors (excluding the Supplier and its Affiliates); and/or

 

(B)                              any wilful default or gross negligence on the part of the Purchaser or its Affiliates arising under or in connection with the performance of this Agreement or the Quality Agreement,

 

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but in each case excluding to the extent that the same arise directly as a result of breach by the Supplier or its Affiliates of its obligations under this Agreement or another Transaction Document.

 

37.3                       Subject to clauses 37.4, 37.5 and 37.6, each Party’s liability under or in connection with this Agreement shall be limited in any Contract Year during the Term, whether in contract, tort or otherwise, to one hundred per cent. (100%) of the aggregate annual sales, at the Supply Price, of the Products supplied under this Agreement during that Contract Year (or in the first Contract Year, Products to be supplied to the Purchaser as set out in the Forecast Schedule).

 

37.4                       Subject to clause 37.5, neither Party shall be liable to the other Party under or in relation to this Agreement or any other document issued or entered into under or in connection with this Agreement, in tort, as a result of negligence or wilful default, or otherwise howsoever (including, for the avoidance of doubt, under or in relation to any indemnity given in this Agreement) for:

 

(A)                              loss of profit;

 

(B)                              loss of anticipated savings;

 

(C)                              loss of business or business opportunities;

 

(D)                              loss of or damage to goodwill;

 

(E)                               any indirect or consequential loss or damage; or

 

(F)                                any punitive or exemplary damages.

 

37.5                       Notwithstanding any other provision of this Agreement, nothing in this Agreement shall exclude or limit either Party’s liability for:

 

(A)                              the Purchaser’s liability to pay the Supply Price under this Agreement;

 

(B)                              death or personal injury resulting from that Party’s or its Affiliate’s negligence or that of their respective officers, employees, agents or sub-contractors (as applicable);

 

(C)                              fraud or fraudulent misrepresentation by it, its Affiliates, or their respective officers or employees; or

 

(D)                              any other liability to the extent the same may not be excluded or limited as a matter of Applicable Law.

 

37.6                       The Parties agree that nothing in this Agreement is intended to limit the rights and obligations of any Party or its Affiliates under the Separation Agreement.

 

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38.                              INSURANCE

 

Each Party shall procure and maintain at its own cost adequate insurance, which may be by means of self-insurance, reasonably necessary to cover its actual and potential liabilities under this Agreement (including in respect of the Supplier, any actions of its sub-contractors).

 

39.                              INTELLECTUAL PROPERTY

 

39.1                       On and subject to the terms set out in this Agreement, the Purchaser hereby grants to, and shall procure that each of its Affiliates grants to, the Supplier a non-exclusive, fully paid-up, worldwide, royalty-free licence (or sub-licence, as appropriate) during the Term to use the Intellectual Property Rights owned by or licensed to the Purchaser or any of its Affiliates for the purposes of performing its obligations under this Agreement.  The Supplier shall only use the Intellectual Property Rights of the Purchaser to the extent necessary for, and for the sole purpose of, Manufacturing and supply of the Products in accordance with the terms of this Agreement.

 

39.2                       The licence granted under clause 39.1 shall not apply in respect of any Intellectual Property Rights owned by or licensed to the Purchaser or any of its Affiliates which are licensed to the Supplier’s Group under any Transaction Document on terms that permit the use of such Intellectual Property Rights for the Manufacture and supply of Products pursuant to this Agreement.

 

39.3                       The Supplier may sub-license and/or assign to its Affiliates and Permitted Subcontractors any licences (or sub-licences, as appropriate) granted to it pursuant to clause 39.1.

 

39.4                       The rights in and title to Improvements made after the Effective Date which give rise to Intellectual Property Rights shall be owned as follows:

 

(A)                              Intellectual Property Rights in an Improvement that is made solely by the Supplier and/or its Affiliates, without use of or reference to any Purchaser’s Group’s Intellectual Property Rights, shall be owned solely by the Supplier or its Affiliate;

 

(B)                              all Intellectual Property Rights in an Improvement that is made solely by the Purchaser and/or its Affiliates, without use of or reference to any Supplier’s Group’s Intellectual Property Rights, shall be owned solely by the Purchaser or its Affiliate;

 

(C)                              all Intellectual Property Rights in an Improvement that is made by either Party with use of or reference to the other Party’s Group’s Intellectual Property Rights, shall:

 

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(i)                                    if it is capable of being used independently of the Purchaser’s Group’s Intellectual Property Rights but is not capable of being used independently of the Supplier’s Group’s Intellectual Property Rights, be owned by the Supplier or its Affiliate, and the Purchaser hereby assigns and undertakes to assign (and to procure that its Affiliates shall assign) all its rights in relation to such Improvements to the Supplier or its nominated Affiliate;

 

(ii)                                 if it is capable of being used independently of the Supplier’s Group’s Intellectual Property Rights but is not capable of being used independently of the Purchaser’s Group’s Intellectual Property Rights, be owned by the Purchaser or its Affiliate, and the Supplier hereby assigns and undertakes to assign (and to procure that its Affiliates shall assign) all its rights in relation to such Improvements to the Purchaser or its nominated Affiliate; and

 

(iii)                              if it is capable of being used independently of both the Purchaser’s Group’s Intellectual Property Rights and the Supplier’s Group’s Intellectual Property Rights, or if it is incapable of being used independently of either the Purchaser’s Group’s Intellectual Property Rights or the Supplier’s Group’s Intellectual Property Rights, be owned jointly by the Purchaser (or its Affiliate) and the Supplier (or its Affiliate).

 

39.5                       The Purchaser hereby grants (and shall procure that each of its Affiliates grants) to the Supplier and its Affiliates a non-exclusive, worldwide, royalty-free licence (with the right to grant sub-licences to Permitted Subcontractors) during the Term to use for the purposes of Manufacturing Products and otherwise performing its obligations and exercising its rights under this Agreement any Purchaser Improvement IP that would, but for the grant of such licence, be infringed by the Supplier, its Affiliates and/or its Permitted Subcontractors in performing those obligations or exercising those rights.

 

39.6                       The Supplier hereby grants (and shall procure that each of its Affiliates grants) to the Purchaser and its Affiliates a non-exclusive, royalty-free licence to use for the purposes of commercialising the Products (or, as applicable, Finished Products manufactured using Products) in the Territory and otherwise performing its obligations and exercising its rights under this Agreement any Supplier Improvement IP that would, but for the grant of such licence, be infringed by the Purchaser and/or its Affiliates in performing those obligations or exercising those rights or in so commercialising the Products (or, as applicable, Finished Products manufactured using Products).

 

39.7                       Each Party hereby grants (and shall procure that each of its Affiliates grants) to the other Party and its Affiliates such non-exclusive, royalty-free, worldwide, sub-licensable (save as prohibited under clause 39)  perpetual, irrevocable and

 

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assignable licences, permissions or consents as may be required to confer on that other Party and its Affiliates the right:

 

(A)                              to use (and to license the use of) without restriction and free of charge throughout the world for any purpose;

 

(B)                              assign (or otherwise transfer) its interest in; and/or

 

(C)                              charge (or otherwise encumber) its interest in,

 

any Joint Improvement IP.

 

39.8                       With respect to all such Joint Improvement IP:

 

(A)                              the Parties shall cooperate in good faith, using counsel mutually agreed upon by the Parties and at the Parties shared (50%/50%) cost and expense, to diligently prosecute and maintain any patent rights contained therein;

 

(B)                              The Parties shall collaborate in good faith with respect to establishing and implementing a litigation strategy for enforcement of any Intellectual Property Rights contained therein against any infringement of such rights by a Third Party, (“Third Party Infringement”) which strategy shall at a minimum provide for:

 

(i)                                    where the Parties jointly agree to enforce such rights against such Third Party Infringement, (a) the Parties will join in, or be named as a party to such enforcement, (b) the costs and expenses of such enforcement shall be shared (50%/50%), and (c) the proceeds of any such enforcement shall be similarly shared (50%/50%);

 

(ii)                                 where a Party elects not to jointly enforce such rights against such Third Party Infringement, (a) the non-enforcing Party shall assist and cooperate with the enforcing Party, as such enforcing Party may reasonably request from time to time, including joining in, or being named as a party to, such enforcement, (b) the enforcing Party shall bear 100% of the costs and expenses of such enforcement, including the reasonable costs and expenses incurred by the non-enforcing Party in cooperating with and joining in such enforcement; and (c) 100% of the proceeds of any such enforcement shall accrue solely to the benefit of the enforcing Party; and

 

(iii)                              in no event shall either Party grant any licenses to or otherwise settle with any Third Party Infringement or potential Third Party Infringement without the other Party’s prior written approval such approval not to be unreasonably withheld, delayed, or conditioned.

 

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39.9                       If a Party becomes aware of any claim alleging infringement of any Third Party Intellectual Property Rights related to a Product supplied under this Agreement, then it shall as soon as reasonably practicable notify the other Party.

 

40.                              DURATION AND TERMINATION

 

40.1                       This Agreement shall continue in force from the Commencement Date and shall automatically terminate as a whole on the date the last Product Term(s) expire unless terminated earlier in accordance with this clause 40 (Duration and Termination) or extended by written agreement of the Parties (the “Term”).

 

40.2                       Product Term for Droptainer Products in the Long Term Transfer Plan: the Long Term Transfer Plan aims to achieve successful completion of technical transfers of the Droptainer Products listed in it within five (5) years of the Commencement Date in order to achieve Separation of the Droptainer Product portfolio and balance capacity utilisation between the Puurs, Barcelona, Singapore and Aspex/Fort Worth Manufacturing Sites. Unless terminated earlier in accordance with this clause 40.  Droptainer Products in the Long Term Transfer Plan shall have a Product Term with a designated termination date of no more than five (5) years from the Commencement Date (with the last date of Manufacture of each Droptainer Product in the Long Term Transfer Plan being designated for the relevant Manufacturing Site and successful completion of technical transfer of each such Droptainer Product occurring within that five (5) year term), subject to any modifications to the Long-Term Transfer Plan as mutually agreed by the Technical Transfer Team in accordance with clause 15(Relationship Management).

 

40.3                       Product Term and convenience termination for all Products not included in the Long Term Transfer Plan: unless terminated earlier in accordance with this clause 40, the term of this Agreement for each such Product will be a fixed period of three (3) years from the Commencement Date (“Initial Term”) and shall continue thereafter in respect of such Product until this Agreement is terminated for convenience as follows:

 

(A)                              by the Purchaser (in whole or in part, including on a Product-by-Product basis) giving at least three (3) years’ prior notice to the Supplier, such notice not to be served prior to the end of the Initial Term; and

 

(B)                              by the Supplier (in whole or in part, including on a Product-by-Product basis) giving at least five (5) years’ prior notice to the Purchaser, such notice not to be served prior to the end of the Initial Term;

 

provided, that for any New Product SKU (i) if the Commencement Date for such New Product SKU is a date prior to the third (3rd) anniversary of the Effective Date, the Initial Term shall begin on the Commencement Date and end on the third (3rd) anniversary of the Effective Date; and (ii) if the Commencement Date for such New Product SKU is a date after the third (3rd) anniversary of the

 

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Effective Date, there shall be no Initial Term and this Agreement may be terminated on notice in accordance with clauses (A) and (B) above or such earlier date where notice of termination of this Agreement as a whole in respect of the Original Product has been given prior to the New Product SKU Commencement Date.

 

40.4                       Convenience termination of a Product at a Manufacturing Site by the Purchaser: the Parties shall enter good faith discussions (each acting reasonably) with a view to the early termination of a Product at a Manufacturing Site by the Purchaser of that Product where the Purchaser can demonstrate that it can mitigate the removal of that volume of Product from this Agreement for the balance of the Initial Term and the contemplated three year notice period with either (i) the substitution of other products of the same Product Technology to be Manufactured for the Purchaser at that Manufacturing Site; or (ii) an increase in volumes of other Products of the same Product Technology Manufactured at the Manufacturing Site.

 

40.5                       The terms referred to in clauses 40.2 to 40.4 shall each be referred to in this Agreement as a “Product Term” in respect of the Product(s) referred to in the relevant clause.

 

40.6                       The Parties may jointly terminate this Agreement (in whole or in part, including on a Product-by-Product basis) at any time by mutual written agreement.  In the event that the Parties jointly terminate this Agreement in respect of a specific Product, such Product shall be deemed to be removed from the definition of “Products” and this Agreement shall be amended accordingly.

 

40.7                       The Purchaser may terminate this Agreement (in whole or in part, including on a Product-by-Product basis) immediately on written notice to the Supplier if the Supplier, or any Nominated Supplier or any Permitted Subcontractor breaches or fails to comply with Quality Standards to a material extent and/or repeatedly or persistently fails to comply with the Quality Standards.

 

40.8                       Without prejudice to clause 40.7, if either Party (the “Defaulting Party”) commits any material breach of this Agreement or Applicable Law and, if the breach is capable of remedy, does not remedy that breach following receipt of a request from the other Party (the “Non-Defaulting Party”) to do so within thirty (30) days, the Non-Defaulting Party may terminate this Agreement (in whole or, in the Non-Defaulting Party’s discretion, in respect of the Product affected by the breach) immediately (subject to the thirty (30) day cure period) by written notice to the Defaulting Party.

 

40.9                       If an Insolvency Event or an Insolvency Proceeding occurs (save as part of a bona fide reorganisation not involving insolvency) in respect of a Party or its ultimate parent, that Party shall promptly notify the other Party in writing, giving particulars of the circumstances.  In such circumstances (whether or not notified in accordance with this clause 40.9), the Party which is not the subject of the Insolvency Event or

 

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Insolvency Proceeding may terminate this Agreement immediately by notice in writing.

 

40.10                Either Party may terminate this Agreement (in whole or in part, including on a Product-by-Product basis) in accordance with clause 32.4.

 

40.11                If the Marketing Authorisation for a Product in a Territory is revoked by a Governmental Entity due to a health, safety or efficacy concern then either Party may terminate this Agreement in respect of such Product.

 

40.12                If any Governmental Entity intervenes to prevent Manufacture for a significant technical or regulatory reason (a “Material Safety Issue”) either Party may (a) suspend, or require the suspension of, any activities under this Agreement impacted by the relevant Material Safety Issue with respect to such Product and (b) refer the matter to the relevant Governmental Entity as soon as reasonably practicable (and never later than any required regulatory reporting timeline). If a Party disputes that there is a Material Safety Issue or has a good faith belief that the root cause of the Material Safety Issue is resolvable within a reasonable timeframe then the following will apply:

 

(A)                              if the Governmental Entity determines that there is a Material Safety Issue and it is not resolvable within a reasonable timeframe, its decision shall be binding on the Parties and either Party may terminate this Agreement in respect of such Product;

 

(B)                              if the Governmental Entity determines that no Material Safety Issue exists, neither Party may terminate this Agreement in respect of such Product for such purported Material Safety Issue; and

 

(C)                              if the Governmental Entity determines that the root cause of the Material Safety Issue is resolvable within a reasonable timeframe, with respect to such Product, then the Party seeking to terminate this Agreement may, if it continues to have a reasonable and substantiated good faith belief that there is a Material Safety Issue in relation to the Product, require the continued suspension of the Agreement in respect of such Product until satisfactory remediation activity has been undertaken in relation to the Material Safety Issue to the satisfaction of the Governmental Entity in which case the Agreement shall continue in respect of such Product,

 

provided, that the suspension of activities under this Agreement, or the termination of this Agreement, pursuant to this clause 40.12 shall not in any way diminish or limit the rights or remedies of either Party to recover for the other Party’s breach of its obligations under this Agreement that caused such Material Safety Issue.

 

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41.                              CONSEQUENCES OF TERMINATION

 

41.1                       Expiry or termination of this Agreement shall be without prejudice to the continuation in force of any of its provisions which are intended to continue to have effect after it has come to an end, including clauses 13 (Quality Control), 19 (Documentation and Reports), 25 (Write Off Costs), 29 (Product Action), 31 (Confidentiality), 33 (Audit and Inspection Rights), 36 (Warranties), 37 (Indemnity and Liability), 41 (Consequences of Termination), 42 (Technical Transfer), 43 (Bridging Stock), 46 (Survival of Rights and Obligations), 48 (Whole Agreement), 49 (Third Party Rights) and 50 (Governing Law and Arbitration).

 

41.2                       After expiry or termination, the Parties shall provide each other with reasonable support with respect to any investigation carried out by a Governmental Entity with respect to the Manufacture of any Product under this Agreement, provided that the reasonable costs of the assisting Party in providing such assistance shall be reimbursed by the Party requesting such assistance.

 

41.3                       Expiry or termination of this Agreement (or termination of this Agreement in respect of any Product) pursuant to clause 40 (Duration and Termination) will not affect the accrued rights, remedies (including a remedy in damages) and liabilities of the Parties under this Agreement or the enforceability of this clause 41 (Consequences of Termination) or any other provisions of the Agreement that are intended to remain in force after its termination.

 

41.4                       The Purchaser will:

 

(A)                              continue to pay the Supply Price and any costs due under this Agreement for Firm Orders as long as the supply of Products continues, despite a notice of termination having been given;

 

(B)                              reimburse the Supplier for the cost of any Capital Expenditure or Development Work undertaken by the Supplier and for which the Purchaser is, pursuant to the terms of this Agreement, required to reimburse the Supplier in the event of a termination of this Agreement by the Supplier under clauses 32 (Force Majeure), 40.8 or 40.9, provided that the Supplier shall use Commercially Reasonable Efforts to minimise the costs required to be reimbursed by the Purchaser pursuant to this clause 41.4(B), including, if agreed by the Parties (each acting reasonably), by abandoning any relevant Capital Expenditure or Development Work that relates exclusively to the Products if doing so would be less costly than continuing with such Capital Expenditure or Development Work.

 

41.5                       Without prejudice to clause 43 (Bridging Stock), in the event of expiry or termination of this Agreement, the Purchaser shall purchase in accordance with the terms and conditions of this Agreement any Products that comply with the Specifications and Quality Standards and meet the Minimum Remaining Shelf Life requirements and other requirements of this Agreement, save that the Purchaser shall only be obliged

 

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to purchase any Product under this clause 41.5 for which Purchaser has placed a Firm Order. The Purchaser shall be responsible for any additional write-off costs agreed to be paid by the Purchaser on termination of this Agreement (including in respect of Materials which have not yet been used in the Manufacture of Products) in accordance with clause 25.1(A) but only in connection with Forecast Schedules delivered prior to the delivery of any notice of termination of this Agreement.

 

41.6                       The provisions of this clause 41 (Consequences of Termination) shall apply to the termination of this Agreement in part in respect of any particular Product mutatis mutandis and such Product shall no longer be a Product for the purposes of this Agreement from the date of such termination.

 

42.                              TECHNICAL TRANSFER

 

Long Term Transfer Plan:

 

42.1                       The initial Long Term Transfer Plan for Droptainer Products being transferred between Manufacturing Sites to achieve Separation (excluding Droptainer Products at the Delayed Site) is appended to this Agreement at Exhibit 15 (the “Long Term Transfer Plan”). The plan will demonstrate the intended status of technical transfers for Products in the Long Term Transfer Plan up to 01.01.2023.

 

42.2                       Products not listed in the Long Term Transfer Plan are those Droptainer Products which cannot be easily Separated due to transfer complexities and/or commercial requirements and where Separation is unlikely to be achieved by the end of 2023. These Droptainer Products are not included as technical transfers contemplated in the Long Term Transfer Plan and references in this Agreement to Products in the Long Term Transfer Plan shall not be deemed to include them.

 

42.3                       The Commencement Date is deemed to be the date of initiation of technical transfer for all Droptainer Products in the Long Term Transfer Plan and each Party shall respectively each use their Commercially Reasonable Efforts to agree the budget and timelines for the Technical Transfer Milestones in respect of each such Droptainer Product and implement the same in order to determine and monitor the progress of the relevant Technical Transfer Milestones and implement successful completion of each of the technical transfers contemplated in the Long Term Transfer Plan (with the “successful completion of a technical transfer” of a Product under this Agreement being deemed to be when the first approval of a variation to the CMC (Marketing Application Core Dossier) to reflect the change of source of Manufacture of any Product in a Product Technology is completed in any jurisdiction in which such submission is made as part of the Technical Transfer) (“First Approval”). Save where otherwise agreed by the Parties, any Technical Transfer Milestones that relate to a Product shall be deemed included in the relevant Long Term Transfer Plan for that Product and shall form the basis for the sequencing of that technical transfer.

 

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42.4                       The Parties shall monitor and update the Long Term Transfer Plan (including the budget and which Products should form part of the Long Term Transfer Plan) through the Manufacturing and Supply Team, but shall take due account of the Gating Plan and any other applicable capacity baseline requirements (addressing product volumes and Bridging Stock). The Long Term Transfer Plan shall also contain commitments where reasonably required, on both Parties with respect to certain agreed volumes of Bulk Products. Without prejudice to the right of the Parties to adjust the Long Term Transfer Plan as required from time to time through the Technical Transfer Team the Parties intend to issue a fully updated Long Term Transfer Plan no less than once in each Calendar Year.

 

Additional Specific Technical Transfers

 

42.5                       On a Product-by-Product basis, for Products not addressed in the Long Term Transfer Plan upon request from Purchaser at any time during the applicable Term for that Product or in the event of expiration or termination of this Agreement for any reason the Parties shall each use their respective Commercially Reasonable Efforts to agree a technical transfer plan, with applicable Technical Transfer Milestones and a technical transfer budget for the relevant Product(s) within three (3) months of the notice of termination, notice of request for a technical transfer or the expiration of this Agreement (as applicable) (each a “Specific Technical Transfer”)

 

Terms applying to all Technical Transfers (for Products in the Long Term Transfer Plan and Products not in it)

 

42.6                       References in clauses 42.6 to 42.16 and Exhibit 15 to a “Technical Transfer Plan” shall include the arrangements in the Long Term Transfer Plan and each technical transfer plan referenced in clause 42.5, as applicable. In each case the Parties shall cooperate to enable the Supplier to provide or cause to be provided, technical transfer services to support a smooth and efficient transfer of Manufacturing of each of the Products or if legally permissible a component thereof from the Supplier, its Affiliate(s) and/or Permitted Subcontractor(s) to the Purchaser or its designee(s) in accordance with Applicable Laws and any regulatory requirements arising from, or connected to, such technical transfer services. Each Party shall use its respective Commercially Reasonable Efforts to:

 

(A)                              undertake the activities allocated to that Party in the relevant Technical Transfer Plan (including, without limitation, those in the applicable technical transfer support budget to be agreed by the Parties);

 

(B)                              undertake such activities in a manner that facilitates the satisfaction of the applicable Technical Transfer Milestones; and

 

(C)                              otherwise provide such assistance and support to the other Party as is reasonably necessary to meet each applicable Technical Transfer Milestone on or before the

 

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date specified for that Technical Transfer Milestone (provided that neither Party shall be liable to the extent such failure is caused by a failure of the other Party to perform their obligations).

 

42.7                       Without limiting the foregoing, if the Purchaser is in good faith pursuing an ongoing technology transfer with respect to Manufacturing of a Product at the time of any expiration or termination of this Agreement, the Parties shall consider in good faith on a Product-by-Product basis, an extension of the Product Term for an additional period of up to the earlier of (i) a maximum of two years with respect to such Product or (ii) successful completion of a technical transfer of such Product, provided that it shall be reasonable to grant such an extension in the event of (a) a regulatory or legitimate unforeseen delay to the technical transfer outside either Parties’ control or (b) where the Supplier has been grossly negligent in its execution of the Technical Transfer Plan and the Purchaser is not at fault, but any build-up of Bridging Stock and the condition of any relevant Manufacturing line shall be taken into account in determining the length of any extension of the Product Term, it being acknowledged that the Supplier shall not incur any Capital Expenditure in relation to any Manufacturing line in order to accommodate an extension of the Product Term for any Product.

 

42.8                       Both Parties acknowledge that the Purchaser may need to be supplied with certain quantities of stock (whether Materials or Products) in order to meet the requirements of any Technical Transfer Plan/Long Term Transfer Plan and to meet the date of the expiry of the Product Term in respect of a particular Product.  Accordingly such requirements for quantities of Bridging Stock as are reasonably necessary (including with respect to shelf life for the relevant markets, Delivery dates, MOQ, Lead Times) shall be agreed in good faith by the Parties (each acting reasonably) and included in the applicable Technical Transfer Plan/Long Term Transfer Plan. For the avoidance of doubt, (i) such Bridging Stock shall be included in the relevant Forecast Schedule of the Purchaser, (ii) shall not amount to more than one (1) years’ worth of volume of Product in the prior Gating Year, (iii) shall be counted in the Gating Plan or volume requirements for that Product in that Calendar Year, (iv) shall be supplied on the terms of this Agreement and (v) any plans of the Supplier to retire or decommission any line required for the Manufacture of such Bridging Stock shall be taken into account in the determination of such Bridging Stock quantities. If an agreement is reached to Manufacture an amount of Bridging Stock the Purchaser shall be obliged to purchase such Bridging Stock on the terms of this Agreement as if it were a Firm Order for the full amount of such Bridging Stock.

 

42.9                       As referenced in clause 42.6 each Party shall use its respective Commercially Reasonable Efforts to implement each Technical Transfer Plan and such plans shall set out the activities to be performed by each Party with respect to the relevant technical transfer. The activities in the Technical Transfer Plan shall (without limitation) include, in each case subject to Clause 31(Confidentiality) and any mandatory restrictions imposed by Applicable Law (including, without limitation,

 

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restrictions relating to anti-trust or restrictions imposed under any binding agreement then in force between the Supplier or Purchaser (as applicable) and a third party):

 

(A)                              in the case of the Supplier: transfer by the Supplier of all required technical documentation, specifications and procedures, know-how owned or controlled by Supplier and its Affiliates (including where it is not reduced to writing or otherwise incorporated in a tangible embodiment), access to a sufficient number of qualified scientists, production and QA personnel and engineers, as well as QC personnel, reasonable access to the Manufacturing Sites, Nominated Affiliates and Permitted Subcontractors during Product Manufacturing runs and any other support or training reasonably requested by Purchaser; and

 

(B)                              the case of the Purchaser: provision of access to a sufficient number of appropriately qualified personnel of the Purchaser) to facilitate the transfer of relevant know-how; allowing access to the Manufacturing Site and equipment that will be used by the Purchaser for manufacture of the relevant Product; disclosing relevant information relating to the Product and the Purchaser’s planned method of manufacture for the Product (subject to any mandatory restrictions imposed by Applicable Law); procuring such materials and licences as are required for the validation process and the Manufacture of the Products by the Purchaser.

 

42.10                The Parties shall coordinate regarding technical transfer matters through the Technical Transfer Planning Team.

 

42.11                The Parties shall mutually agree the timing of technical transfer services, provided that such technical transfers shall be staged to prioritize the technical transfer of certain Products as reasonably requested by Purchaser and as agreed by the Parties in the Long Term Transfer Plan. The Long Term Transfer Plan shall identify the last date of Manufacture for the Products addressed by that Long Term Transfer Plan.

 

42.12                The Parties agree that the key technical transfer milestones that need to be established in respect of each Product included in the Long Term Transfer Plan or a specific Technical Transfer Plan (as applicable) are as follows:

 

(A)                              joint kick-off meeting;

 

(B)                              creation of Data Pack in accordance with Exhibit 12 (Data Pack Requirements) including any new regulatory data needed for submission;

 

(C)                              method transfer (analytical, cleaning, sterilization, etc.) (if applicable);

 

(D)                              stability batches (if applicable);

 

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(E)                               validation batches (if applicable);

 

(F)                                regulatory dossier package preparation;

 

(G)                              regulatory dossier submission (market specific); and

 

(H)                             First Approval is obtained for that Product in any country,

 

(individually and together, the “Technical Transfer Milestones”).

 

42.13                The Long Term Transfer Plan and each Specific Transfer Plan shall take due account of all relevant factors and circumstances in each case, with a view to ensuring that:

 

(A)                              there is a smooth, orderly and efficient transfer, on a Product-by-Product basis, of the Manufacturing of such Product from the Supplier to the Purchaser or its designee(s);

 

(B)                              the availability of each Party’s relevant personnel to support the technical transfer of the Manufacturing of such Product;

 

(C)                              unless otherwise agreed (and without prejudice to clauses 40.1, 40.2 and 42.7) the Supplier will cease to Manufacture (or have Manufactured) each Product not later than the expiry of the applicable Product Term;

 

(D)                              continuity of supply or availability of each Product to the Purchaser’s Group is maintained throughout the technical transfer process in relation to the Manufacture of such Product; and

 

(E)                               access to sites and documents necessary to support the technical transfer process is controlled and limited to authorised personnel only.

 

(F)                                The technical transfers contemplated in the Long Term Transfer Plan and otherwise under Technical Transfer Plans agreed pursuant to this clause 42 (Technical Transfer) shall not involve the transfer of physical assets and equipment save in relation to the Shared Moulds identified to be transferred under the Long Term Transfer Plan on the terms set out in Exhibit 9 (Shared Moulds).

 

Technical Transfer costs

 

42.14                The terms of Exhibit 15, Part B shall apply in relation to the allocation and reimbursement of certain costs and expenses incurred in relation to the implementation of a Technical Transfer Plan for each Product.

 

42.15                At the either Party’s request, the Parties (each acting reasonably and in good faith) shall discuss whether, in connection with the transfer of Manufacture of a Product,

 

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the Supplier should procure the assignment or novation, in whole or in part, to a member of the Purchaser’s Group of any agreements between the Supplier and Third Parties relating to the Manufacture of that Product, including the supply of Materials used in such Manufacture and/or the licensing of any technology required for use in such Manufacture.

 

42.16                If (i) the Parties agree that the Supplier shall assign, transfer or novate an agreement, in whole or in part, to the Purchaser’s Group pursuant to clause 42.15 and (ii) such agreement cannot effectively be assigned, novated or transferred to the Purchaser except by an agreement, transfer or novation with the consent of the relevant counterparty thereto:

 

(A)                              the Supplier shall use Commercially Reasonable Efforts to procure consent to the novation, transfer or assignment in accordance with timeframe necessary to align that novation, transfer or assignment with the technical transfer of the relevant Product in accordance with the Technical Transfer Plan; and

 

(B)                              until the relevant contract is novated, transferred or assigned, or (if earlier) until the relevant contract can be terminated by Supplier without incurring any financial detriment, the Supplier shall hold the benefit of such contract on trust for the Purchaser absolutely and the Purchaser shall (if such sub-contracting is possible under the contract), as the Supplier’s sub-contractor, perform all the obligations of the Supplier that relate to the Manufacture of the relevant Product under the contract in accordance with the provisions of Exhibit 8 (Purchaser Materials).

 

43.                              BRIDGING STOCK

 

43.1                       In connection with the technical transfer of the Manufacture of any Product under this Agreement and always subject to the capacity as may be agreed pursuant to clause 4 (Capacity Baseline and Gating Plan) in respect of the relevant Manufacturing Site or Product, the Purchaser may request that the Supplier shall Manufacture (or have Manufactured) and the Purchaser shall purchase (or procure the purchase of), an additional quantity of the affected Product (including any New Product SKU introduced under this Agreement pursuant to clause 21 (New Product SKUs)) (“Bridging Stock”) prior to the expiry of the Term.

 

43.2                       Any quantity of Bridging Stock that may be requested by the Purchaser and other relevant terms of Manufacture and Delivery (including with respect to shelf life, order quantities and lead times) and, if relevant, any revisions to Artwork that may be required in respect of some or all of the Bridging Stock in respect of a Product (including in anticipation of Marketing Authorisation transfer or Marketing Authorisation re-registration) shall be mutually agreed by the Parties on a basis entirely consistent with the terms of this Agreement and the relevant parameters for such supply of Bridging Stock shall be agreed between the Parties, taking into consideration the Supplier’s available Manufacturing capacity and ongoing operations at Manufacturing Sites.

 

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43.3                       Once mutually agreed, quantities of Bridging Stock and the applicable Delivery Dates shall be reflected in the applicable Forecast Schedule and, except as otherwise mutually agreed between the Parties, the Purchaser shall be deemed to have provided a purchase order for such Bridging Stock on the date on which the Firm Zone for such Bridging Stock would commence in accordance with the Forecast Schedule, having regard to the due date for Delivery of such Bridging Stock mutually agreed between the Parties.

 

43.4                       Where Bridging Stock is requested by the Supplier (including for example, where it is required in relation to an artwork change) any costs associated with that Bridging Stock shall be borne by the Supplier.

 

44.                              RISK MANAGEMENT

 

44.1                       Consistent with diligent risk management practices, the Supplier will develop, implement and keep current a risk management program including a Business Continuity Plan for each of its Manufacturing Sites in accordance with its corporate policies and procedures. The Business Continuity Plan shall include adequate security and protective measures to ensure business continuity in case of any potential disruptive events on the supply chain of the Products. The Business Continuity Plan does not relieve the Supplier from any liability under this Agreement and, for the avoidance of doubt, does not increase the Supplier’s obligations under this Agreement.

 

44.2                       Once in any Calendar Year or at such other frequency as the Purchaser reasonably deems to be appropriate, the Supplier will conduct a test and evaluation of the Business Continuity Plan which, upon the Purchaser’s request, may be witnessed by the Purchaser representatives.

 

44.3                       The Parties agree that any issues arising from the risk and business continuity management will be promptly communicated to the other Party.

 

44.4                       The costs of business continuity requests initiated after the Commencement Date shall be borne by the requestor (i.e. materials, validations, stability batches, etc for dual sourcing). The non-requesting Party agrees to support a requestor’s reasonable request provided such efforts and resources are not detrimental to the non-requesting Party’s other obligations under this Agreement.

 

44.5                       Dual sourcing shall be established for a select number of Products and Shared Chemical/API Products as set out in Exhibit 17 (Dual Sourcing) and the Supplier shall be supportive of such sourcing activity. Cost incurred to maintain dual sourcing (including cost of stability batches) will be borne by the Party requesting the dual sourcing. The Supplier shall, to the extent reasonably practicable, give advance notice to the requesting Party of any costs arising in connection with the dual sourcing before such costs are incurred. The Parties shall once per Calendar Year meet to align the list of dual sourced Products and Shared Chemical/API

 

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Products to determine whether, as a result of the Long Term Transfer or otherwise, the requesting Party should still be entitled to require the dual sourcing to be maintained and the revised list of dual sourced products shall be approved by the Manufacturing and Supply Team.

 

45.                              NOTICE

 

45.1                       Any notice in connection with this Agreement (a “Notice”) shall be:

 

(A)                                in writing in English; and

 

(B)                              delivered by hand or by courier using an internationally recognised courier company.

 

45.2                       A Notice to the Supplier shall be sent to such Party at the following address, or such other person or address as the Supplier may notify to the Purchaser from time to time:

 

Alcon Inc.

c/o Alcon Laboratories, Inc.

6201 South Freeway

Fort Worth, TX 76134, USA

 

Attention: Legal Department

 

Copy (which shall not constitute Notice) to:

 

Alcon Inc.

c/o Alcon Laboratories, Inc.

6201 South Freeway

Fort Worth, TX 76134, USA

 

45.3                       Attention: Senior Vice President,A Notice to the Purchaser shall be sent to such Party at the following address, or such other person or address as the Purchaser may notify to the Supplier from time to time:

 

Novartis Pharma AG

Lichtstrasse 35

4056 Basel,

Switzerland

 

Attention:                                          Purchaser Contract Execution Manager

 

Copy (which shall not constitute Notice) to:

 

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Novartis Pharma AG

Fabrikstrasse 4

Novartis Campus

CH-4056, Basel

 

Attention:                                          General Counsel NTO & Group Quality

 

45.4                       A Notice shall be effective upon receipt and shall be deemed to have been received at the time of delivery provided that any notice deemed to be received outside of Working Hours shall be effective at the start of the next period of Working Hours.

 

46.                              SURVIVAL OF RIGHTS AND OBLIGATIONS

 

Termination or expiry of this Agreement shall not release either Party from any liability or right of action which, at the time of termination or expiry, has already accrued to a Party or which may thereafter accrue in respect of any act or omission prior to such termination or expiry.  Such rights may include the recovery of any monies due.

 

47.                              ASSIGNMENT

 

47.1                       The Purchaser may, by notice in writing to the Supplier, assign the whole or any part of this Agreement to any Affiliate of the Purchaser, provided that the Purchaser shall remain liable to the Supplier in its capacity as principal obligor.

 

47.2                       The Supplier may, by notice in writing to the Purchaser, assign the whole or any part of this Agreement to any Affiliate of the Supplier, provided that the Supplier shall remain liable to the Purchaser in its capacity as principal obligor.

 

47.3                       Save as provided in clause47.5, neither Party may assign or novate its rights or obligations under this Agreement at any time to any Third Party, or novate the whole or any part of this Agreement to any of its Affiliates, without the prior written consent of the other Party.

 

47.4                       The provisions of this clause 47 (Assignment) are without prejudice to the Parties’ rights under clause 40 (Duration and Termination).

 

47.5                       Either Party (the “Assigning Party”) may, with the prior written consent of the other Party, such consent not to be unreasonably, withheld, conditioned or delayed, assign or transfer this Agreement (in whole or in part) to a Third Party: (i) in connection with the sale or disposal of all or part of the assets of the Assigning Party or its Affiliates which includes the sale or disposal of any Products; or (ii) if the Assigning Party or an Affiliate of the Assigning Party otherwise divests, out-licenses or disposes of any Product(s), without prejudice to its respective right of termination under clause 40 (Duration and Termination), provided always that no Shared Moulds shall be transferred to such Third Party pursuant to this clause 47 (Assignment).

 

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48.                              WHOLE AGREEMENT

 

48.1                       This Agreement, together with the Transaction Documents, constitutes the entire agreement and understanding between the Parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract and supersedes any previous written or oral agreement between the Parties in relation to the matters dealt with in this Agreement. The Parties further agree that the terms and conditions of this Agreement will apply to the exclusion of any terms and conditions of sale or purchase submitted at any time by either Party, whether printed or sent with any acknowledgement of any Delivery of Product or otherwise.

 

48.2                       Each Party acknowledges that, in entering into this Agreement, it is not relying on any representation, warranty or undertaking not expressly incorporated into it.

 

48.3                       Except as expressly stated herein, each of the Parties agrees and acknowledges that its only right and remedy in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement and each of the Parties waives all other rights and remedies (including those in tort or arising under statute) in relation to any such representation, warranty or undertaking.

 

48.4                       Nothing in this clause 48 (Whole Agreement) excludes or limits any liability for fraud (including the making of any statements fraudulently).

 

48.5                       A Party shall be entitled to make more than one claim under this Agreement arising out of the same subject matter, fact, event or circumstance but shall not be entitled to recover under this Agreement or any relevant Transaction Document or otherwise more than once in respect of the same Liabilities suffered or amount for which the Party is otherwise entitled to claim (or part of such Liabilities or amount), regardless of whether more than one claim arises in respect of it. No amount (including any relief) (or part of any amount) shall be taken into account, set off or credited more than once under this Agreement or any relevant Transaction Document or otherwise, with the intent that there will be no double counting under this Agreement or any Transaction Document or otherwise. For the avoidance of doubt any claims in relation to testing services provided under the Transitional Services Agreements must be brought under the relevant Transitional Services Agreement.

 

49.                              THIRD PARTY RIGHTS

 

49.1                       Subject to clause 49.2, the Parties do not intend that any term of this Agreement should be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Agreement.

 

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49.2                       Certain provisions of this Agreement confer benefits on the Affiliates of the Purchaser and the Affiliates of the Supplier and, subject to clause 49.3, are intended to be enforceable by each such Affiliate by virtue of the Contracts (Rights of Third Parties) Act 1999.

 

49.3                       Notwithstanding clause 49.2, this Agreement may be varied in any way and at any time without the consent of any Affiliate who is entitled to enforce this Agreement under clause 49.2.

 

50.                              GOVERNING LAW AND ARBITRATION

 

50.1                       This Agreement and any non-contractual obligations arising out of or in connection with this Agreement shall be governed by, and interpreted in accordance with, the substantive laws of Switzerland (excluding its rules on conflict of laws and excluding the UN Convention on Contracts for the International Sale of Goods).

 

50.2                       Nothing contained in this clause 50 (Governing Law and Submission to Jurisdiction) shall limit the right of either Party to seek an injunction in any other competent jurisdiction in which a Product is Manufactured, marketed or sold, nor shall the seeking of an injunction in on one or more jurisdiction preclude the seeking of an injunction in any other jurisdiction, whether concurrently or not.

 

50.3                       Clauses 50.3 to 50.8 shall apply to any dispute, controversy or claim arising out of, relating to, or in connection with this Agreement, including, without limitation, any dispute relating to the existence, validity or termination of this Agreement and a dispute which could not be resolved through the processes set out in clause 16 (each, a “Dispute”).

 

50.4                       Before entering into any arbitration pursuant to clauses 50.6 or 50.6(A), a Party shall give written notice of a Dispute to the other Party (a “Dispute Notice”). The Dispute Notice shall:

 

(A)                              state that it is a Dispute Notice being submitted pursuant to clause 50.3 of this Agreement;

 

(B)                              identify the Dispute in sufficient detail to allow the Party receiving the Dispute Notice to understand reasonably the nature of the Dispute; and

 

(C)                              set out any steps taken by that Party or its Affiliates to resolve it.

 

50.5                       Upon receipt of a Dispute Notice, each Party shall refer the Dispute to its Group General Counsel (or, if they are not reasonably available during the relevant period, their appointed alternate, who shall be of sufficient seniority within the relevant Party and have authority to be able to reach a resolution of the Dispute) and the two Group General Counsel shall attempt in good faith to settle the Dispute by means of an appropriate written agreement setting out the terms on which the Dispute is resolved within twenty (20) Business Days of the date of receipt of the

 

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Dispute Notice (the “Resolution Period”).  The time limit specified in this clause 50.5 may be extended by the written agreement of the Parties.

 

50.6                       If the Parties do not conclude a binding written agreement settling the Dispute within the Resolution Period, either Party shall be entitled to refer the Dispute to be finally resolved by arbitration. In those circumstances, the Parties agree that:

 

(A)                              the arbitration shall be conducted in accordance with the LCIA Arbitration Rules in effect at the date of this Agreement (the “LCIA Rules”);

 

(B)                              the tribunal shall comprise three arbitrators, with one arbitrator selected by each Party and the chairperson selected by the LCIA Court. The chairperson shall not be of Swiss or American nationality;

 

(C)                              the seat of arbitration shall be London; and

 

(D)                              the written and spoken language to be used in the arbitral proceedings shall be English.

 

50.7                       Where the Dispute relates to or is in any way connected with any dispute referred to arbitration under any other Transaction Document, either Party may apply to the LCIA Court at any time before the tribunal is fully constituted in either arbitration requesting that the two arbitrations be consolidated and the Parties hereby agree that in such circumstances the arbitrations are to be consolidated by the LCIA Court. In the event of consolidation, the Parties agree that the consolidated arbitration shall be conducted under the LCIA Rules in accordance with clause 50.6.

 

50.8                       The Parties agree that any settlement discussions and communications or negotiations in connection with the proposed resolution of a Dispute are without prejudice to the Parties’ positions, are to be kept confidential, and shall not be used or submitted in any arbitration or other legal proceeding between the Parties for any purpose. For the avoidance of doubt, this clause 50.8 shall not affect a Party’s right to submit and rely on any correspondence marked “without prejudice save as to costs” for the purpose of the tribunal’s determination on costs.

 

51.                              VARIATION OR WAIVER

 

51.1                       No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the Parties.

 

51.2                       No failure or delay by a Party in exercising any right or remedy provided by Applicable Law or under this Agreement or any Transaction Document shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any further exercise of it or the exercise of any other remedy.

 

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52.                              COSTS

 

Each Party shall bear all costs incurred by it and its Affiliates in connection with the preparation and negotiation of, and the entry into, this Agreement.

 

53.                              INTEREST

 

Without prejudice to clause 11.5, if any Party defaults in the payment when due of any sum payable under this Agreement, the liability of that Party shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (as well after as before judgment) at a rate of two per cent. (2%) above LIBOR per annum. Such interest shall accrue from day to day. The Parties acknowledge that the provisions of this clause provide a substantial contractual remedy for the late payment of such sums due under this Agreement.

 

54.                              PAYMENTS

 

54.1                       Subject to clause 54.2, any payments pursuant to this Agreement shall be made in full, without any set-off, counterclaim, restriction or condition and without any deduction or withholding (save as may be required by Applicable Law or otherwise agreed).

 

54.2                       If any deductions or withholdings are required by Applicable Law to be made from any of the sums payable pursuant to this Agreement then, except to the extent that the sum constitutes interest, the payer shall be obliged to pay to the recipient such sum as will, after the deduction or withholding has been made, leave the recipient with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding.

 

54.3                       If a person makes an increased payment pursuant to clause 54.2 and the recipient receives and utilises a credit, relief or repayment in respect of the Tax that gave rise to such increased payment, the recipient shall reimburse the payer such amount as shall leave the recipient in the same position as the recipient would have been in had no such deduction or withholding been required to be made.

 

55.                              INVALIDITY

 

55.1                       If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, the provision shall apply with whatever deletion or modification is necessary so that the provision is legal, valid and enforceable and gives effect to the commercial intention of the Parties.

 

55.2                       To the extent that it is not possible to delete or modify the provision, in whole or in part, under clause 55.1, then such provision or part of it shall, to the extent that it is illegal, invalid or unenforceable, be deemed not to form part of this Agreement

 

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and the legality, validity and enforceability of the remainder of this Agreement shall, subject to any deletion or modification made under clause 55.1, not be affected.

 

56.                              COUNTERPARTS

 

This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument.  Any Party may enter into this Agreement by executing any such counterpart. Delivery of a counterpart of this Agreement by email attachment shall be an effective mode of delivery.

 

57.                              RELATIONSHIP OF THE PARTIES

 

57.1                       Nothing in this Agreement, and no action taken by the Parties pursuant to this Agreement, will be deemed to constitute a relationship between the Parties of partnership, joint venture, principal and agent or employer and employee.  Neither Party has, nor may it represent that it has, pursuant to this Agreement, any authority to act or make any commitments on the other Party’s behalf.  Neither Party will have the authority or power to bind the other or to contract in the name of or create liability against the other in any way or for any purpose.

 

57.2                       Each of the Supplier and the Purchaser shall procure that each member of its respective Group complies with all obligations under this Agreement which are expressed to apply to any such member.

 

58.                              FURTHER ASSURANCE

 

58.1                       Without prejudice to any restriction or limitation on, and without extending the scope of, the extent of any Party’s obligations under this Agreement, each Party (the “first Party”) shall from time to time, so far as each is reasonably able, do or procure the doing of all such acts and/or execute or procure the execution of all such documents (including in relation to any relevant regulatory filings) in a form reasonably satisfactory to the other Party (the “other Party”) as that other Party reasonably requests to give such other Party the full benefit of its rights or the first Party’s obligations under this Agreement.

 

58.2                       Without prejudice to the generality of clause 58.1, if either Party identifies any error in or omission from any of the Exhibits, it may notify the other Party of such error(s) or omission(s) and the Parties shall agree in writing such revisions to the affected Exhibit(s) as may be required to correct the error(s) or omission(s) in question.

 

signature page follows

 

93

 

IN WITNESS of which, the Parties have entered into this Agreement on the day and year first before written.

 

 

	
 
    	
)
    	
 
    
	
Signed by
    	
 
    	
)
    	
 
    
	
for and on behalf of
    	
)
    	
 
    
	
NOVARTIS PHARMA AG
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
)
    	
 
    
	
Signed by
    	
 
    	
)
    	
 
    
	
for and on behalf of
    	
)
    	
 
    
	
ALCON INC.Exhibit 4.6

 

                                     2019

 

NOVARTIS AG

 

ALCON INC. 

 

 

 

TRANSITIONAL SERVICES AGREEMENT

 

 

 

 

Table of Contents

 

	
1.
    	
Relationship Management
    	
1
    
	
2.
    	
Integration
    	
3
    
	
3.
    	
Provision of Services
    	
7
    
	
4.
    	
Separation and   Information Technology Risk Control
    	
10
    
	
5.
    	
General Obligations
    	
14
    
	
6.
    	
Dependencies
    	
15
    
	
7.
    	
Third Party Suppliers
    	
16
    
	
8.
    	
Shared Premises
    	
19
    
	
9.
    	
Record Keeping
    	
19
    
	
10.
    	
Compliance with Laws
    	
20
    
	
11.
    	
Intellectual Property   Rights
    	
20
    
	
12.
    	
Service Charges and   Payment
    	
21
    
	
13.
    	
Employee Accounts
    	
24
    
	
14.
    	
Tax
    	
24
    
	
15.
    	
Warranty as to Capacity
    	
26
    
	
16.
    	
Liability
    	
26
    
	
17.
    	
Term
    	
29
    
	
18.
    	
Termination
    	
31
    
	
19.
    	
Brazil
    	
32
    
	
20.
    	
Consequences of   Termination
    	
33
    
	
21.
    	
Data Protection
    	
33
    
	
22.
    	
Change Management
    	
36
    
	
23.
    	
Confidentiality
    	
36
    
	
24.
    	
Force Majeure
    	
37
    
	
25.
    	
Local Service   Agreements
    	
38
    
	
26.
    	
Notices
    	
40
    
	
27.
    	
Miscellaneous   Provisions
    	
41
    
	
28.
    	
Governing Law
    	
43
    
	
Schedule 1 Definitions   and Interpretation
    	
45
    

 

ii

 

	
Schedule 2 Employees
    	
54
    
	
EXHIBIT 1   SERVICES AND SERVICE CHARGES
    	
55
    
	
EXHIBIT 2   GOVERNANCE
    	
56
    
	
EXHIBIT 3   SHARED PREMISES
    	
58
    
	
EXHIBIT 4   CHANGE MANAGEMENT
    	
59
    
	
EXHIBIT 5   IN-FLIGHT PROJECTS
    	
60
    
	
EXHIBIT 6   DATA PROCESSING DETAILS
    	
61
    
	
EXHIBIT 7   RATE CARD
    	
62
    
	
EXHIBIT 8   TEMPLATE LOCAL SERVICES AGREEMENT
    	
63
    
	
EXHIBIT 9   PAYMENT PROVISIONS FOR SPECIFIC JURISDICTIONS
    	
64
    
	
EXHIBIT 10   CURRENCY RATES CONVERSION TABLE
    	
65
    
	
EXHIBIT 11   E-QUALITY REQUIREMENTS
    	
66
    

 

iii

 

TRANSITIONAL SERVICES AGREEMENT

 

dated                                          

 

PARTIES:

 

(1)                                 NOVARTIS AG, a corporation (Aktiengesellschaft) incorporated in the Canton of Basel Stadt, Switzerland with enterprise identification number (UID) CHE-103.867.266 and its registered office at Lichtstrasse 35, 4056 Basel, Switzerland (Novartis); and

 

(2)                                 ALCON INC., a corporation (Aktiengesellschaft) incorporated in the Canton of Fribourg, Switzerland with enterprise identification number (UID) CHE-234.781.164 and its registered office at Rue Louis-d’Affry 6, 1701 Fribourg, Switzerland (Alcon),

 

(each a Party and, together, the Parties).

 

Words and expressions used in this Agreement shall be interpreted in accordance with Schedule 1 (Definitions and Interpretation).

 

Whereas:

 

A.                          The parties have entered into a Separation and Distribution Agreement dated as of               , 2019 (the Separation Agreement) to implement the separation of the Alcon Business from the Novartis Business.

 

B.                          Following the consummation of the transactions contemplated by the Separation Agreement, the Service Recipient requires the Service Provider to provide, or procure the provision of, the Services to the Service Recipient Group.

 

C.                          Subject to the terms of this Agreement, the Service Provider has agreed to provide, or procure the provision of, the Services to the Service Recipient Group and the Service Recipient has agreed to accept and pay, or procure payment, for the Services.

 

D.                          The parties have also agreed to co-operate in the implementation of the Integration Plans and the Integration Projects on the terms of this Agreement.

 

IT IS AGREED:

 

1.                   RELATIONSHIP MANAGEMENT

 

1.1                              Governance. Each Party shall, and shall procure that its Affiliates shall, comply with its obligations under the agreed governance model at Schedule 3 (Governance).

 

1.2                              Governance Roles.

 

(a)                                 Immediately on signing this Agreement, the Parties shall each appoint the various governance roles set out on slide 6 (TSA Post Day 1 Governance — Roles and Responsibilities) of the Jedi TSA Governance Model, including:

 

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(i)                       ‘Country Operational Leads’ and/or Local Functional Leads’ (as applicable);

 

(ii)                    in the case of Alcon, ‘Regional Leads’;

 

(iii)                 ‘Global Business Service Function Leads’ for the Services (in each case, a Global Function Lead);

 

(iv)                ‘TSA Leads’ (in each case, a TSA Lead); and

 

(v)                   ‘Separation Office Heads’,

 

which, in each case, shall have the responsibilities outlined in the Jedi TSA Governance Model. As set out in the Jedi TSA Governance Model, the TSA Leads shall: (1) have overall responsibility for overseeing and monitoring the: (A) provision and receipt of the Services and BAU Services; and (B) execution of the In-Flight Projects, Integration Plans and the Integration Projects; and (2) be the principal points of contact between the Parties in relation to issues arising out of this Agreement.

 

(b)                                 As at the Commencement Date, Novartis’s TSA Lead shall be [function description/title to be included] and Alcon’s TSA Lead shall be [function description/title to be included].

 

(c)                                  Each TSA Lead shall appoint an alternate in case he or she is unavailable from time to time.  Either Party may change the identity of its TSA Lead or any of its other representatives appointed under Clause 1.2 (Governance Roles) at any time by written notice to the other.

 

1.3                              The TSA Leads (or their alternates) shall use reasonable efforts to:

 

(a)                                 co-ordinate regular project meetings as set out on slide 7 (TSA Post Day 1 Governance — Key Activities) of the Jedi TSA Governance Model, and, in any event, as reasonably necessary to implement the Integration Plans and the Integration Projects in accordance with their terms and this Agreement, and to effect the integration of the systems, operational processes and services contemplated by this Agreement; and

 

(b)                                 provide regular status updates and performance reports relating to each Party’s progress in fulfilling milestones and performing its obligations under this Agreement, including progress on the Integration Plans and the Integration Projects.

 

1.4                              The Parties shall ensure that their respective TSA Lead and other personnel whose decisions are necessary for:

 

(a)                                 the implementation of the Integration Plans and the Integration Projects; or

 

(b)                                 the performance of the Services,

 

are available at reasonable times for consultation on any matter relating to them.

 

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2.                   INTEGRATION

 

2.1                              Responsibility for Integration.

 

(a)                                 The Service Recipient shall:

 

(i)                      be primarily responsible for the Integration of the Services and overseeing the implementation of each Integration Project; and

 

(ii)                   use all reasonable efforts to establish its own functions (including the IT environment and IT Systems), at its cost, to enable timely Integration.

 

(b)                                 The Parties shall use Commercially Reasonable Efforts to achieve the Integration of each Service by the end of the relevant Service Term.

 

2.2                              Integration Plans and Integration Projects.

 

(a)                                 With effect from the Commencement Date, the Service Provider shall (and shall procure that its Affiliates shall) provide the Service Recipient with sufficient information about the Services (including information relating to the relevant assets, technology, operations, people, contracts and processes) to enable the Service Recipient to plan for the integration of each of the Services by the Service Recipient (or any of its Affiliates or third party providers) (Integration).  For the avoidance of doubt, Integration shall include any and all commercial, operational and technical transition and integration measures or processes, including appropriate training, in each case implemented to exit, transition, migrate and integrate the Services and reasonably required to allow a Service Recipient to operate the business processes that form part of each Service on a standalone basis.

 

(b)                                 The Parties shall in good faith agree and finalize a critical path integration plan and related functional integration plans (collectively, the Integration Plans) to achieve Integration as soon as reasonably practicable after the Commencement Date, and then implement the Integration Plans in accordance with their terms.  The Integration Plans shall include details of any projects required for Integration (collectively, the Integration Projects), including the parameters and timelines for, and each Party’s responsibilities in respect of:

 

(i)                      all separation activities and processes to be carried out by the Service Provider, at the Service Recipient’s direction (other than with respect to any activities by Service Provider pursuant to Clause 2.2(b)(i)(A), which shall be at Service Provider’s sole discretion), in relation to the Services and their related functions that are related to and reasonably required for the Integration. For IT, this shall include any separation activities and processes within the Service Provider’s IT environment (infrastructure, systems, applications, tools and processes) (collectively, the IT Environment) and related measures, including:

 

(A)                               any activities required to optimize the shared IT Environment that the Service Provider continues to operate following the separation (including any partial  decommissioning of IT Systems or other equipment);

 

(B)                               the separation of any electronic data in connection with the separation of the Service Provider’s shared IT Environment. For the avoidance of doubt,

 

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the Parties agree that any such separation of electronic data shall form part of the IT separation under this Clause 2.2(b)(i)(B), and not part of the separation of Books and Records pursuant to Clause 2.2(b)(iii);

 

(ii)                   Service transition and cut-over (deliverables, resources and Integration);

 

(iii)                separation, retention and transfer of Books and Records (including redaction) in accordance with the provisions of the Separation Agreement; and

 

(iv)               in the case of Integration with respect to IT:

 

(A)                               the configuration of a network-to-network connection between the networks of the Parties for the purpose of the provision of the Services and for the purpose of Integration (a Network-to-Network Connection);

 

(B)                               cloning of IT Systems and any dependent interfaces owned or used by Service Provider or its Affiliates including the reasonably required related validation and operational documentation;

 

(C)                               establishment of the Parties’ future IT environment (infrastructure, systems, applications, tools and processes);

 

(D)                               development, planning and implementation of a Network-to-Network Connection);

 

(E)                                validation and training documentation required for the Service Recipient to receive the Services;

 

(F)                                 development, planning and implementation of a Network-to-Network Connection;

 

(G)                               Costs of wiping assets before they can be physically transferred or decommissioned (if applicable);  and

 

(H)                              IT Systems de-branding and tattoo removal (if applicable);

 

(v)                  relocating assets from the sites of the Service Provider or its Affiliates (if applicable);

 

(vi)               dates and timelines for the Integration and related separation activities and processes (as set out in Clause 2.2(b)(i)) and details of the anticipated Costs related thereto, which shall be borne by the relevant Party in accordance with Clause 2.6 (Integration Costs);

 

(vii)            Identified Stranded Costs, which shall be borne by the relevant Party in accordance with Clause 2.7 (Stranded Costs); and

 

(viii)         the right of the Service Recipient to use Service Materials (as defined in Clause 11.3) beyond the termination or expiry of this Agreement.

 

(c)                                  Each Party shall, and shall procure that its Affiliates shall:

 

4

 

(i)                      provide to the other such documentation as well as separation and Integration assistance as reasonably required to enable the other Party to complete its responsibilities and obligations under the Integration Projects by the dates specified in the Integration Plans in accordance with Clause 2.2(c)(ii); and

 

(ii)                   use Commercially Reasonable Efforts to complete the Integration Projects by the dates specified in the Integration Plans and, if not specified, in a timely manner.

 

(d)                                 If the Parties fail to complete the Integration Projects in accordance with Clause 2.2(c) the Parties shall meet and discuss in good faith the measures to be taken to achieve the completion of each Integration Projects as soon as reasonably possible after the date the relevant Integration Project was due to complete.

 

2.3                              Additional Assistance. Subject to Clause 4.2(b), the Service Recipient may request reasonable additional assistance from the Service Provider (including additional Integration assistance from the Service Provider to remedy technical or operational issues relating to the Service Recipient’s IT Systems and to restore them to operation as a result of carrying out the Integration Projects in the Integration Plans) (Additional Assistance).  Any request from the Service Recipient shall be in writing describing the scope and term of the requested Additional Assistance (not to exceed the Maximum Service Term) and the reason for the request.  The Service Provider shall consider in good faith any such request and shall in determining whether to provide the requested Additional Assistance and the overall feasibility of such request be entitled to take into account the following factors:

 

(a)                                 the Service Provider’s then available resources, capabilities and capacity to provide the requested Additional Assistance; and

 

(b)                                 whether the requested Additional Assistance could be provided by any third party providers.

 

If the Service Provider agrees to provide the requested Additional Assistance, the parties shall agree the terms that will apply to the provision of the Additional Assistance and the Service Recipient agrees to pay the Service Provider’s costs in accordance with Clause 2.6(b).  For the avoidance of doubt there shall be no obligation on the Service Provider to provide any Additional Assistance requested by the Service Recipient in accordance with this Clause 2.3 (Additional Assistance).

 

2.4                              Integration liability. In respect of any Integration Projects:

 

(a)                                 without limiting either Party’s rights under the Separation Agreement, the Service Recipient acknowledges and agrees that no express condition or warranty of any kind has been given by or on behalf of the Service Provider, and any terms or conditions implied in any jurisdiction are excluded to the fullest extent permitted by Applicable Law (or, if incapable of exclusion, any rights or remedies in relation to them are irrevocably waived), in relation to the effect of any Integration Project (or any documentation, Integration assistance or Additional Assistance provided by the Service Provider in relation to any Integration Project) being carried out under the Integration Plans or any other Additional Assistance, in each case, with regard to the state of the Service Recipient’s IT Systems, the ability of the Service Recipient to restore such Service Recipient’s IT Systems into operation, or its future use after carrying out the activities in the Integration Plan;

 

5

 

(b)                                 the Service Provider shall not, to the fullest extent permitted by Applicable Law, be liable to the Service Recipient, for any Costs that are incurred or payable by the Service Recipient and that arise from the Service Provider satisfying its obligations under the Integration Plan in relation to the Service Recipient’s IT Systems; and

 

(c)                                  the Service Recipient shall not, and shall ensure that the other members of the Service Recipient Group shall not, make or bring any claims against the Service Provider, or any member of the Service Provider Group in relation to such Costs referred to in Clause 2.4(b).

 

2.5                              Services set-up and operationalisation Costs.

 

All Costs relating to the set-up of Services and related operationalisation Costs shall be borne by the Service Provider.

 

2.6                              Integration Costs.

 

(a)                                 The Parties acknowledge and agree that all Costs relating to Integration pursuant to Clause 2.2 (Integration Plans and Integration Projects), including all Costs:

 

(i)                      incurred by the Service Provider and its Affiliates in connection with Integration and carrying out, at the Service Recipient’s direction, the Integration Plans and Integration Projects; and

 

(ii)                   associated with any Additional Assistance provided by a Service Provider or any of its Affiliates at the Service Recipient’s request under Clause 2.3 (Additional Assistance),

 

in each case, whether internal or external Costs (which shall be charged in accordance with Clause 2.6(b)), shall be borne by the Service Recipient, except that:

 

(A)                              the Service Provider shall bear all Costs relating to any separation activities or processes conducted in relation to the Services and their related functions pursuant to Clause 2.2(b)(i) (including the Costs of separating any electronic data in connection with the separation of the Service Provider’s shared IT Environment pursuant to Clause 2.2(b)(i)(B)); and

 

(B)                              all Costs relating to the separation (including the cost of modification, transformation and/or redaction, if necessary) and transfer of Books and Records shall be borne by the relevant Party in accordance with clause 17.6 (Costs Relating to Books and Records) of the Separation Agreement,

 

(all such Costs (excluding those under sub-paragraphs (A) and (B)) being the Integration Costs).

 

(b)                                 Subject to Clause 2.6(c), the Service Provider shall, and shall procure that each of its Affiliates shall, charge for any internal time and effort spent supporting or assisting the Integration or any Additional Assistance in accordance with this Clause 2 (Integration) on a time and materials basis without any mark-up, based on the agreed rate card at Exhibit 7 (Rate Card).

 

6

 

(c)                                  If an Integration Project is not complete within the due date for completion (including, if applicable, the date specified in the Integration Plan) (each delay being an Integration Project Delay), and provided that such Integration Project Delay is not caused by an act or omission of the Service Provider or any of its Affiliates, the Service Provider’s and its Affiliates’ attributable internal and external reasonable documented costs that are payable in relation to the steps agreed pursuant to Clause 2.2(d) in connection with that Integration Project shall (unless otherwise agreed upon in writing by both Parties) be subject to a mark-up of five per cent (5%) from the date that is thirty (30) days after the due date for completion until the actual completion of that Integration Project.

 

2.7                              Stranded Costs.

 

(a)                                 The Parties shall, while: (i) agreeing and finalizing the scope and operation of the Integration Plans and Integration Projects in accordance with Clause 2.2(b); and (ii) completing the Integration Projects in accordance with Clause 2.2(c), act reasonably and in good faith to avoid, or mitigate to the extent reasonably possible in the circumstances, any stranded or additional costs for the Service Provider as a result of the Integration (the Stranded Costs).

 

(b)                                 Subject to Clauses 2.7(a) and 2.7(c), the Parties acknowledge and agree that there may be certain identifiable: (i) Stranded Costs; and/or (ii) circumstances that may result in Stranded Costs ((i) and (ii) comprising the Identified Stranded Costs), and the Party liable for any such Identified Stranded Costs shall be set out in the relevant Integration Plan and/or Integration Project.

 

(c)                                  To the extent that the Service Recipient:

 

(i)                      fails to comply with its obligations under any Integration Plan or Integration Project;

 

(ii)                   requests any change to the implementation of any Integration Plan and/or Integration Project; or

 

(iii)                takes any other action,

 

which, in each case, results in any additional cost in excess of an estimated Identified Stranded Cost, or any stranded cost that is not an Identified Stranded Cost, the Service Recipient shall bear that additional or stranded cost.

 

3.                   PROVISION OF SERVICES

 

3.1                              Provision of Services.

 

(a)                                 Subject to the other provisions of this Agreement, the Service Provider shall provide (on a non-exclusive basis), or procure the provision of, the Services from the Commencement Date to the Service Recipient (or any other member of the Service Recipient Group as the Service Recipient directs) for the relevant Service Term (as may be extended in accordance with Clause 17.2).

 

7

 

(b)                                 For the avoidance of doubt, the Services shall not include any Excluded Service and, subject to Clause 3.3 (Omitted Services), the Parties shall not be required to provide any additional services or service components that are not specified in Exhibit 1 (Services and Service Charges) as at the Commencement Date.

 

3.2                              Standard of Service.

 

(a)                                 The Service Provider shall, and shall cause each other Service Provider to, provide, or procure each Service with:

 

(i)                      reasonable skill and care; and

 

(ii)                   subject to Clause 3.2(b), to the Standard Service Level to the extent that any Service is provided directly by the Service Provider, without any reliance on a Third Party Supplier for the provision of that Service.

 

(b)                                 Unless otherwise agreed by the Parties, or as otherwise permitted under the terms of this Agreement, no reduction to the scope, volume, quality or content of a Service shall be permitted during any Service Term, except that a Service Provider may provide, or procure the provision of a Service to a different standard to the Standard Service Level if that change is:

 

(i)                      required unilaterally by a Third Party Supplier;

 

(ii)                   as a result of a unilateral change to or required pursuant to a Third Party Supply Agreement; or

 

(iii)                required by the Service Provider as a result of a service change reasonably implemented across a material proportion of the Service Provider Group (and not solely targeted at the Service being provided to the Service Recipient), provided that, if the change is required under this (iii):

 

(A)                               the change does not result in a material diminution in the functionality of the Service provided to the Service Recipient; and

 

(B)                               if the change results in a reduction of costs for the Service Provider in providing the Service (a Cost Saving), the Service Provider will pass on a reasonable proportion of that Cost Saving to the Service Recipient in the form of a reduction to the relevant Service Charge for that Service,

 

in each case,  provided that any change to the Standard Service Level pursuant to this Clause 3.2(b) will not relieve the Service Provider from its obligations to continue to provide the relevant Service for the applicable Service Term.

 

(c)                                  The Service Provider shall ensure that the Services are provided in accordance with:

 

(i)                      all Applicable Laws that are relevant to the provision of the Services; and

 

(ii)                   the Service Provider’s policies and procedures which are notified to the Service Recipient from time to time.

 

8

 

3.3                              Omitted Services.

 

(a)                                 The Service Recipient may, during the period from the Commencement Date up to and including the date that is three (3) months after the Commencement Date, request that the Service Provider provides, or procures the provision of, any service that:

 

(i)                      is not included in the Services specified in Exhibit 1 (Services and Service Charges);

 

(ii)                   was provided by the Service Provider to a Service Recipient in the twelve (12) month period immediately before the Commencement Date;

 

(iii)                is necessary to ensure the business, research and/or manufacturing continuity of the Service Recipient;

 

(iv)               is not an Excluded Service; and

 

(v)                  has not been separately addressed under an internal restructuring project (including under Project Moonstone) intended to separate the Alcon Group and the Novartis Group within the twelve (12) months immediately before the Commencement Date,

 

(each, an Omitted Service),

 

by providing written notice to Novartis in accordance with Clause 26 (Notices).

 

(b)                                 The Parties shall, as promptly as reasonably practicable after the receipt of a notice under Clause 3.3(a), negotiate in good faith with respect to the duration for which the Omitted Service will be provided (subject, in each case to the Maximum Service Term), and, once agreed, the Parties shall amend Exhibit 1 (Services and Service Charges) to include the Omitted Service and the Omitted Service shall be deemed to be part of this Agreement (and deemed included in the definition of Services) from and after the date of that amendment. Unless otherwise expressly agreed in Exhibit 1 (Services and Service Charges), the Service Charges for any Omitted Service shall be materially the same as the charges paid by the relevant member(s) of the Service Recipient for the service equivalent to that Omitted Service immediately before the Commencement Date.

 

3.4                              In-Flight Projects.

 

(a)                                 The Service Recipient shall participate in the In-Flight Projects. The Service Recipient shall pay a proportionate share of the actual costs associated with any relevant In-Flight Project, which, in each case, shall be calculated using the same methodology as has been used to estimate the budgeted cost for the Service Recipient of that In-Flight Project set out in Schedule 6 (In-Flight Projects).

 

(b)                                 Any amounts paid or payable by any member of the Service Recipient Group under Clause 3.4(a) shall be invoiced, treated, and paid for, as if they were Service Charges and shall include a mark-up of five per cent (5%).

 

9

 

3.5                              BAU Services.

 

(a)                                 As part of the Services, the Service Provider shall provide, or procure the provision of, the services ordinarily carried out by the Service Provider as business as usual activities, and such other ad hoc measures undertaken by the Service Provider, that are implemented across a material proportion of the Service Provider’s business for its general benefit, to ensure that the Services and any related IT Systems or assets remain compliant with Applicable Laws and the applicable IT and security policies of the Service Provider (together, the BAU Services).

 

(b)                                 In relation to each BAU Services, the Service Recipient shall pay, or procure the payment of, a proportionate share of the reasonable documented costs associated with that BAU Service. The proportionate share to be paid by the Service Recipient shall reflect the relative usage of that BAU Service by and/or relative benefit associated with that BAU Service for the Service Recipient, and shall be agreed between the Parties in accordance with the provisions of Clause 22 (Change Management) on the same basis as a Change. Any amounts paid or payable by the Service Recipient under this Clause 3.5(b) shall be invoiced, treated, and paid for, as if they were Service Charges and shall include a mark-up of five per cent (5%).

 

3.6                              Material Errors.  Following the Commencement Date, if either Party identifies any material errors in the scope, content or description of the Services or the Service Charges (including any errors in the associated assumptions or the charging mechanisms), the Parties, acting reasonably and in good faith, shall correct such material errors as soon as reasonably practicable in accordance with the provisions of Clause 22 (Change Management).

 

4.                   SEPARATION AND INFORMATION TECHNOLOGY RISK CONTROL

 

4.1                              Access.

 

(a)                                 To prevent unauthorized access to, or use of, any IT Systems, Network-to-Network Connection or any confidential Information or data belonging to the other in connection with the provision or receipt of the Services, each Party shall, and shall procure that its Representatives shall:

 

(i)                      comply, and shall ensure that its personnel, agents and subcontractors comply, with the other Party’s rules regarding access to facilities, premises and automated systems, security, health and safety, and shall procure that its employees, agents and subcontractors engaged in the receipt of the Services comply with these obligations;

 

(ii)                   ensure that it has the prior written approval of the other Party before any Network-to-Network Connection is effected;

 

(iii)               prior to any connection between the Parties being effected, perform, and provide evidence of, appropriate penetration testing that demonstrates to both Parties reasonable satisfaction that a Party’s network is and will remain secure;

 

(iv)               subject to Clause 4.2(b)(vi), comply with the other Party’s and its Affiliates’ then current version of its security policies and procedures, including in relation to the

 

10

 

maintenance, protection and testing of the connection and connections with third parties, that are notified to it from time to time, provided that the then current version requires the same or greater level of protection as the security policies and procedures at the Commencement Date;

 

(v)                  co-operate to assist the other Party in establishing any reasonable security arrangements that the other Party considers necessary to prevent that Party, or any unauthorized third party, from accessing an IT System or data in a manner prohibited by this Agreement;

 

(vi)               use reasonable efforts to continually assess and, where relevant, report to the other Party any threats to the IT Systems;

 

(vii)            ensure that all users to whom access is granted to the other Party’s (or its Affiliates’) IT Systems undertake a controlled authorization process (including an individual confidentiality and non-use agreement) and remove access privileges in a timely manner once they are redundant; and

 

(viii)         in response to a request from the relevant competent body for the other Party (as defined in that Party’s and its Affiliates’ then current version of its security policies and procedures), who acting reasonably, has a legitimate concern relating to the integrity of confidential Information or IT Systems, terminate any connection to the other Party’s IT Systems.

 

(b)                                 If a Party detects a breach of protective measures that will (or is likely to) have a material impact on the Services or the integrity of any confidential Information or other data, in each case relating to the other Party, on the IT Systems of the detecting Party, including the loss or theft of a Managed Mobile Device (a Security Incident), it shall:

 

(i)                      report the breach to the other Party without undue delay, and in any event within twenty four (24) hours after the Security Incident was confirmed;

 

(ii)                   immediately, and in any event within forty eight (48) hours after the Security Incident was confirmed, act to prevent or mitigate the effects of the breach and minimise further exposure of the other Party’s IT Systems, including:

 

(A)                               where applicable, wiping any data on the relevant Managed Mobile Device (or the relevant business contained on the Managed Mobile Device);

 

(B)                               stopping inappropriate access or any other inappropriate activities;

 

(C)                               restoring normal operations; and

 

(D)                               periodically informing the other Party on progress of such remediation actions;

 

(iii)                identify steps to ensure that the breach does not re-occur, report those steps to the other Party and perform those steps; and

 

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(iv)               provide a written report to the other Party detailing actions performed and safeguards implemented.

 

(c)                                  The telephone number and email address for the purposes of reporting a Security Incident to the other Party in accordance with Clause 4.1(b) shall be:

 

	
Novartis
    	
 
    	
Phone:   +420 225 775 050 (backup number: +420 225 850 012)

 

Email:   soc@Novartis.com
    
	
 
    	
 
    	
 
    
	
Alcon
    	
 
    	
Phone:   [·]

 

Email:   [·]
    

 

(d)                                 Each Party shall notify the other in writing of any change to the details in Clause 4.1(c) from time to time.

 

(e)                                  Each Party shall maintain, and not disable, reasonable security measures and comply with its obligations in Clause 4.1(a) to protect the other Party’s systems from third parties, and in particular from disruption by any “back door”, “time bomb”, “Trojan Horse”, “worm”, “drop dead device”, “virus”, “keylogging” or other computer software routine intended or designed to:

 

(i)                      permit access or use of information technology systems by a third person other than as expressly authorized;

 

(ii)                   disable, damage or erase or disrupt or impair the normal operation of any information technology systems; or

 

(iii)                enforce licensing restrictions.

 

(f)                                   Subject to Clause 4.1(g), as part of the Services, the Service Recipient shall have the right to request that additional (as compared to the number of users of the relevant service (whether on a line item or bundled basis) as at the Effective Date) or replacement users have access to the IT Systems in connection with the receipt of the Services, provided that such access is required for business continuity (including access for replacement employees) as reasonably evidenced by the Service Recipient.

 

(g)                                  The Parties agree that, where any additional (as compared to the number of users of the relevant service (whether on a line item or bundled basis) as at the Effective Date) or replacement user(s) requested by the Service Recipient in accordance with Clause 4.1(f):

 

(i)                      only results in an increase to any third party costs, expenses, fees or charges associated with the provision of any Service:

 

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(A)                               the Service Provider may, on notice to the Service Recipient, increase the Service Charges (including, if applicable, as a result of any additional software licenses (as compared to the number of software licenses included in the relevant Service (whether on a line item or bundled basis) as at the Effective Date)) to reflect that increase with effect from the end of the calendar month in which the relevant request is made; and

 

(B)                               with effect from the end of the calendar month in which the relevant request is made, Exhibit 1 (Services and Service Charges) shall be deemed to be automatically updated to reflect: (1) any such increase to the Service Charges; and (2) to the extent applicable, any additional or replacement user(s) and/or any additional license(s) as a result of that request; and/or

 

(ii)                   otherwise requires a new or amended Authorization, it shall be considered a Change and the provisions of Clause 22 (Change Management) and Clause 7 (Third Party Suppliers) shall apply to that request.

 

4.2                              Managed mobile devices.

 

(a)                                 Without prejudice to Clause 4.1 (Access) and subject to Clause 4.2(b), the Service Provider shall, for the duration of the relevant Service Term, allow the Service Recipient to set up and synchronise the Service Recipient’s email, contacts and calendar systems (the Mobile Device Systems) on mobile devices provided by the Service Provider for use by the Service Recipient in connection with the Service Provider’s Services (the Managed Mobile Devices).

 

(b)                                 The Service Recipient acknowledges and agrees that in relation to the set-up, protection and synchronisation of the Mobile Device Systems on the Managed Mobile Devices (the Mobile Device Synchronization):

 

(i)                      the Service Recipient shall be responsible for the Mobile Device Synchronization;

 

(ii)                   the Service Provider shall not be required to configure the Managed Mobile Devices or provide the Service Recipient with any other assistance or support in relation to the Mobile Device Synchronization;

 

(iii)                the Service Provider shall not be required to provide any support services (including patches and updates) in relation to any configuration implemented by the Service Recipient in connection with the Mobile Device Synchronization;

 

(iv)               if the Service Recipient encounters any issue in respect of the use of the Mobile Device Systems, it will, in the first instance, contact the Service Provider’s helpdesk, details of which are notified by the Service Provider from time to time. The Service Provider’s helpdesk will follow its standard process of forwarding the call for resolution;

 

(v)                  notwithstanding Clause 7 (Third Party Suppliers), the Service Provider shall not be required to obtain or maintain any Authorizations which are necessary for the Mobile Device Synchronization; and

 

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(vi)               the Service Provider shall not be required to comply with any policies of the Service Recipient which relate to the Mobile Device Synchronization.

 

4.3                              Quality Assurance Services.  Each Party shall (or shall procure that its Affiliates shall) enter into one or more compliance quality agreements in the form attached at Exhibit 11 (E-Quality Requirements) (each, an eQuality Agreement) on or around the Commencement Date in relation to the provision of any IT Services and/or IT Systems.  The Parties shall, and shall procure that their Affiliates shall, comply with the terms of any eQuality Agreement.

 

4.4                              Interaction between this Agreement and eQuality Agreements:  The Parties acknowledge and agree that:

 

(a)                                 in the event of any conflict between this Agreement and any eQuality Agreement: (i) to the extent that conflict relates to processes or procedures relating to ‘Quality Assurance’ (as defined in the relevant eQuality Agreement), the relevant provision(s) of the applicable eQuality Agreement shall apply; and (ii) in all other respects, the relevant provision(s) of this Agreement shall apply;

 

(b)                                 neither Party (or their Affiliates) shall be liable for any breach of an eQuality Agreement, except to the extent that breach constitutes a breach of, and gives rise to liability under, this Agreement;

 

(c)                                  Clause 16 (Liability) of this Agreement shall apply in relation to each eQuality Agreement, and that Clause shall be construed accordingly; and

 

(d)                                 any dispute in relation to any aspect of, or failure to agree any matter arising in relation to, any eQuality Agreement shall be deemed to be a Dispute under this Agreement and Clause 27.1 (Dispute Resolution) shall apply.

 

5.                   GENERAL OBLIGATIONS

 

5.1                              The Service Recipient shall:

 

(a)                                 solely to the extent required by the Service Provider for the purposes of providing the Services under this Agreement:

 

(i)                      provided that the relevant employees or contractors have signed or otherwise agreed to the Service Provider’s standard third party non-disclosure and confidentiality undertaking or acknowledgement or such other undertaking or acknowledgment that may be agreed between the Parties in connection with this Agreement, give employees or contractors of the Service Provider or any of its Affiliates access to the facilities, premises or IT Systems of the Service Recipient or its Affiliates during Working Hours on the provision of reasonable advance written notice; and

 

(ii)                   promptly provide reasonable information (including copies of documents and data) and assistance required by the Service Provider;

 

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(b)                                 take reasonable steps to ensure the safety of any employees or contractors of the Service Provider or any of its Affiliates who visit the premises of the Service Recipient or any of its Affiliates; and

 

(c)                                  not use, or attempt to access or interfere with, any systems or data used by the Service Provider or any of its Affiliates, unless authorized to do so under this Agreement.

 

5.2                              The Service Recipient shall indemnify, on demand and hold harmless, the Service Provider and any of its Affiliates against all Costs that result from a breach of Clause 5.1.

 

5.3                              The Service Provider shall:

 

(a)                                 solely to the extent required by the Service  Recipient for the purposes of receiving the Services under this Agreement:

 

(i)                      provided that the relevant employees or contractors have signed or otherwise agreed to the Service Recipient’s standard third party non-disclosure and confidentiality agreement or such other undertaking or acknowledgment that may be agreed between the Parties in connection with this Agreement, give employees or contractors of the Service Recipient or any of its Affiliates access to the facilities or premises of the Service Provider or its Affiliates during Working Hours on the provision of reasonable advance written notice; and

 

(ii)                   promptly provide reasonable information (including copies of documents and data) and assistance required by the Service Recipient;

 

(b)                                 take reasonable steps to ensure the safety of any employees or contractors of the Service Recipient or any of its Affiliates who visit the premises of the Service Provider or any of its Affiliates; and

 

(c)                                  not use, or attempt to access or interfere with, any systems or data used by the Service Recipient or any of its Affiliates, unless authorized to do so under this Agreement.

 

5.4                              The Service Provider shall indemnify, on demand and hold harmless, the Service Recipient and any of its Affiliates against all Costs that result from a breach of Clause 5.3.

 

5.5                              The Service Recipient shall, and shall procure that each other member of its Group shall, use the Services solely for the purposes of carrying on the Alcon Business or the Novartis Business (as applicable), in each case, in substantially the same manner and scope as conducted immediately before the Commencement Date.

 

5.6                              The Service Recipient shall have sole responsibility for any data prepared and/or input by it or by any of its Affiliates, and the Service Provider shall not be responsible for any fault or error in that preparation and/or input.

 

6.                   DEPENDENCIES

 

6.1                              Dependencies.  To assist the Service Provider in performing the Services, the Service Recipient shall use Commercially Reasonable Efforts to satisfy any dependencies required for a

 

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Service Provider to provide, or procure the provision of, any element of the Services (as specified in Exhibit 1 (Services and Service Charges)).

 

6.2                              Failure to perform a dependency.  A Service Provider shall not be obliged to provide, or procure the provision of, any Service, and the Service Provider’s liability to the Service Recipient for a failure to perform any Service shall be reduced, to the extent that:

 

(a)                                the failure has been caused in whole or in part by the Service Recipient’s own failure to satisfy any specified dependencies relevant to that Service; or

 

(b)                                the Service Recipient has otherwise caused or contributed to the failure (whether by act or omission).

 

6.3                              Transferring assets. The Service Provider’s liability to the Service Recipient for a failure to perform any Service shall be reduced, to the extent that the failure relates to or is caused by (directly or indirectly) any asset, including any physical asset, IT System, inventory and contract, in the possession (whether the physical possession or legal ownership) of the Service Recipient, including as a result of any transfer contemplated or performed in connection with Project Moonstone.

 

6.4                              Steps to mitigate impact.  If a Service Provider’s performance under this Agreement has been adversely affected under Clause 6.1 or 6.2, then it shall:

 

(a)                                notify the Service Recipient of the Service Recipient’s failure to satisfy the dependency, or other act or omission, and all events or circumstances causing or contributing to the failure, act or omission, as soon as reasonably practicable after it becomes aware of them;

 

(b)                                continue to perform those of its obligations under this Agreement that are unaffected by the failure to perform the Service; and

 

(c)                                 use reasonable efforts to minimize and mitigate the likely impact of the failure on the Service Recipient.

 

6.5                              Reliance on data and information.  The Service Provider and its Affiliates may, in providing the Services, rely on the provision of data and information to it by or on behalf of the Service Recipients and its Affiliates. Neither the Service Provider nor its Affiliates shall have any liability in connection with this Agreement whether in contract, tort (including negligence) or otherwise for Costs suffered or incurred by the Service Provider or its Affiliates as a result of the inaccuracy, insufficiency or incompleteness of the data or information provided by or on behalf of the Service Recipient.

 

7.                   THIRD PARTY SUPPLIERS

 

7.1                              Authorizations and Authorization Expenses.  The Parties agree that:

 

(a)                                 certain Services may be provided by, or under, the Third Party Supply Agreements (including Intellectual Property Rights licenses);

 

(b)                                 the use of Third Party Supply Agreements may require the Service Provider to obtain:

 

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(i)                      additional consents, approvals, permissions or licenses under; or

 

(ii)                   changes or amendments to,

 

the Third Party Supply Agreements (collectively, Authorizations).

 

(c)                                  obtaining Authorizations in accordance with Clause 7.1 may require the Service Provider to incur Costs (Authorization Expenses);

 

(d)                                 the Service Provider shall notify the Service Recipient of any Authorization Expenses as soon as reasonably practicable after it becomes aware of them. If the Parties agree within ten (10) Business Days of any such notification that they do not wish to pay an Authorization Expense, neither Party shall be required to pay that Authorization Expense and the Service Provider shall not be required to obtain the relevant Authorization or to provide the Services to which the relevant Third Party Supply Agreement relates;

 

(e)                                  the Service Recipient shall provide, at its own cost, any assistance required by the Service Provider to procure the Authorizations; and

 

(f)                                   the Parties acknowledge and agree that:

 

(i)                      any Authorization Expenses incurred before the Separation Date have been paid by Novartis; and

 

(ii)                   any Authorisation Expenses arising after the Separation Date shall be borne equally (on a 50/50 basis and without any mark-up) by the Service Provider and the Service Recipient. The Service Recipient’s share of any such Authorisation Expense shall be invoiced and paid in accordance with the payment terms in Clause 12 (Service Charges and Payment).

 

7.2                              Obtaining Authorizations.  The Service Provider shall use reasonable efforts:

 

(a)                                 to maintain in force all Third Party Supply Agreements required to provide the Services;

 

(b)                                 subject to Clause 7.1(d), to obtain the Authorizations necessary under any Third Party Supply Agreements to provide Services to the Service Recipient, but the Service Provider shall not be required to obtain any Authorizations where doing so would require the Service Provider to change a Third Party Supply Agreement in a manner that, in the Service Provider’s reasonable opinion, is detrimental to the Service Provider or its Affiliates;

 

(c)                                  to minimize the Authorization Expenses;

 

(d)                                 without prejudice to Clause 7.3(b), to minimize any adverse impact resulting from the failure to obtain the Authorizations, and shall work together with the Service Recipient to minimize any deterioration in the Services or impact on the Service Charges.  Any costs incurred under this Clause 7.2(d), shall be borne equally (on a 50/50 basis and without any mark-up) between the Service Provider and the Service Recipient; and

 

(e)                                  to notify the Service Recipient as soon as reasonably practicable if any third party refuses to provide an Authorization necessary under a Third Party Supply Agreement and to work

 

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with the Service Recipient to agree in good faith alternative means, provided that the Service Provider has complied with its obligations under this Clause 7.2, of continuing the provision of the Service for the duration of the Service Term. Any costs incurred under this Clause 7.2(e), shall be borne equally (on a 50/50 basis and without any mark-up) between the Service Provider and the Service Recipient.

 

7.3                              Refusal to grant, or loss of, an Authorization.  The Service Provider shall not be in breach of this Agreement, and its obligation to provide the Service, or part of a Service, to which the relevant Third Party Supply Agreement relates shall immediately cease if:

 

(a)                                 a Third Party Supplier does not grant an Authorization; or

 

(b)                                 an Authorization has expired or been terminated or revoked by the Third Party, or a Third Party Supply Agreement is terminated or expires during a relevant Service Term, provided that:

 

(i)                      in the case of a termination or revocation, that termination or revocation was not as a result of the Service Provider’s breach of the relevant Third Party Supply Agreement; and

 

(ii)                   in the case of an expiry, the Service Provider used Commercially Reasonable Efforts to extend the relevant Third Party Supply Agreement to cover the remainder of the relevant Service Term but not to the extent that doing so would require: (A) the Service Provider to incur any Cost that is, in the Service Provider’s reasonable opinion, excessive or unreasonable; or (B) the Service Provider to change the relevant Third Party Supply Agreement in a manner that, in the Service Provider’s reasonable opinion, is detrimental to the Service Provider or its Affiliates.

 

7.4                              Alternative means. If any of the circumstances described in Clauses 7.3(a) to 7.3(b) (inclusive) apply, the Parties shall, (provided that the Service Provider has complied with its obligations under Clause 7.2), work together to agree in good faith alternative means for the relevant Service Recipient(s) to receive the business processes comprised in the affected Service(s).  Any costs incurred under this Clause 7.4 shall be borne equally (on a 50/50 basis and without any mark-up) between the Service Provider and the Service Recipient.

 

7.5                              Compliance with Authorizations.  The Service Recipient:

 

(a)                                 shall comply, and shall procure that its Affiliates comply, with; and

 

(b)                                 shall not, and shall procure that its Affiliates shall not, cause the other Party to be in breach of,

 

the terms of the Authorizations and Third Party Supply Agreements to the extent they are relevant to the receipt of the Service, and provided that the Service Recipient has received prior written notification of the relevant terms of the Authorizations and Third Party Supply Agreement.

 

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7.6                              Indemnity for non-compliance.  The Service Recipient shall indemnify, on demand and hold harmless, the Service Provider against all Costs that result from a breach of Clause 7.5 (Compliance with Authorizations).

 

7.7                              Relationship with Third Party Suppliers.  The Service Provider shall manage exclusively its relationship with each Third Party Supplier. The Service Recipient shall not, and shall procure that each other member of its Group shall not, discuss with any Third Party Supplier the provision of the Services, except to the extent required to do so by Applicable Law. Without prejudice to the foregoing, the Service Recipient may discuss the Integration of the Services with a relevant Third Party Supplier provided, in each case, that: (a) the Service Provider is notified prior to, and is responsible for facilitating, the initial contact between the Service Recipient and that Third Party Supplier; and (b) except to the extent agreed otherwise by the Service Provider, the Service Recipient shall comply with the terms of Clause 23 (Confidentiality) in connection with its discussions with that Third Party Supplier.

 

7.8                              Costs of replacing Third Party Supply Agreements.  The Service Recipient shall be liable for the costs and expenses relating to the novation, separation, splitting, transfer or replacement of any contracts with the Third Party Suppliers for any Services it wishes to obtain for itself and its Affiliates directly from any such Third Party Supplier. The novation, separation, splitting, transfer or replacement of any such contract shall be documented in the Integration Plans and/or Integration Projects.

 

8.                   SHARED PREMISES

 

8.1                              Shared Premises.  From the Commencement Date, each Party shall, and shall procure that its Affiliates shall, comply with its obligations under Exhibit 3 (Shared Premises) in relation to the use of any shared premises.

 

9.                   RECORD KEEPING

 

9.1                              Record Keeping.  Subject to Clause 10 (Compliance with Laws) and without prejudice to the Books and Records provisions in the Separation Agreement and the Information Access Agreement (as defined in the Separation Agreement), each Party shall (and shall procure that its Affiliates shall):

 

(a)                                 maintain and keep secure accurate records and accounts relating to the performance of its obligations under this Agreement and the charges, expenses and fees charged by it under this Agreement; and

 

(b)                                 for up to six (6) years following the expiry or termination of this Agreement, on receipt of reasonable notice, provide the other with copies of these records and accounts as reasonably required to enable it, or its Affiliates, to monitor compliance with this Agreement or to comply with Applicable Law in connection with the provision and receipt of Services under this Agreement.

 

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10.            COMPLIANCE WITH LAWS

 

10.1                       Compliance with Laws.  Each Party shall:

 

(a)                                 comply in all material respects with Applicable Law and, subject to Clause 3.2(c)(ii), the applicable policies of the other Party that have been notified to it in connection with this Agreement; and

 

(b)                                 obtain and maintain in force all licenses, consents, permits and approvals of Governmental Entities that are necessary in connection with this Agreement, including, in the case of the Service Provider, the provision of its Services.

 

10.2                       Notification of regulatory or compliance issues.  Subject to Clause 10.1 (Compliance with Laws), each Party shall notify the other of any material regulatory or compliance issue arising under this Agreement of which it becomes aware, and the Parties shall co-operate in good faith to resolve those issues. If an additional agreement is required to satisfy any regulatory or compliance issue, the Parties agree to act reasonably and in good faith in putting in place the relevant agreement.

 

10.3                       Contact by a Governmental Entity.  If a Party is contacted by a Governmental Entity in connection with this Agreement, it shall, to the extent permitted by the Governmental Entity to do so:

 

(a)                                 promptly notify the other Party and co-ordinate any interaction with the Governmental Entity; and

 

(b)                                 keep the other Party informed of all discussions and correspondence with the Governmental Entity, unless it reasonably determines that to do so would either result in a breach of Clause 10.1 (Compliance with Laws) or create a conflict of interest between the Parties.

 

10.4                       No requirement to breach Applicable Law.  For the avoidance of doubt, neither Party shall be required to perform any obligation under this Agreement or to allow, take or omit to take any action that it reasonably believes would result in the breach of any Applicable Law or the breach of any term of any required regulatory approval.

 

11.            INTELLECTUAL PROPERTY RIGHTS

 

11.1                       Licence grant by the Service Provider.  Subject to Clause 7 (Third Party Suppliers) and without prejudice to clause 11.3(b) , the Service Provider hereby grants (and agrees to procure the grant) to the Service Recipient (and any other member of the Service Recipient Group that the Service Recipient directs will receive a Service under Clause 3.1(a)) a non-exclusive, worldwide, non-sublicensable, non-transferable and royalty-free licence under the Intellectual Property Rights owned by or licensed to, the Service Provider Group during the relevant Service Term solely for, and only to the extent necessary for, the receipt of each Service in accordance with this Agreement.

 

11.2                       Licence grant by the Service Recipient.  The Service Recipient hereby grants (and agrees to procure the grant) to the Service Provider of a non-exclusive, worldwide, sublicensable (solely for the purposes of the Service Provider providing Services to the Service Recipient), non-transferable and royalty-free licence under the Intellectual Property Rights

 

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owned by or licensed to, the Service Recipient Group during the relevant Service Term solely for, and only to the extent necessary for, the provision of each Service in accordance with this Agreement.

 

11.3                       No transfer of Intellectual Property Rights.

 

(a)                                 Except as set out in Clauses 11.1 and 11.2, nothing in this Agreement shall operate to transfer, assign or otherwise grant any Party any right or interest in the other Party’s (or its Affiliates’ or licensors’) Intellectual Property Rights (including in any Party’s records maintained in accordance with Clause 9 (Record Keeping)).

 

(b)                                 The Intellectual Property Rights in any software or other materials (including rights in relevant Third Party Software and Service Provider Proprietary Software) supplied, created or developed by, or on behalf of, the Service Provider Group after the Separation Date are, and shall remain, the exclusive property of the Service Provider or its licensors.  Subject to obtaining any relevant Authorizations and any associated costs having been borne by the Service Recipient, the Service Provider hereby grants (and agrees to procure the grant) to the Service Recipient, a non-exclusive, worldwide, perpetual, sublicensable, transferable and royalty free license under the Intellectual Property Rights in any software or other materials created as a result of providing the Services to Service Recipient (the Service Materials), solely for and only to the extent necessary for, the receipt of each Service in accordance with this Agreement and, if and to the extent specifically provided for in any Integration Plan, the continued use of such Service Materials after the relevant Service Term.

 

11.4                       Hosted Content. The Service Recipient shall ensure that any data or material which is:

 

(a)                                 created by the Service Recipient (including any data or material of the Service Provider which is modified by the Service Recipient); and

 

(b)                                 hosted on the Service Provider’s IT Systems on behalf of the Service Recipient or any other member of its Group,

 

complies with all Applicable Laws and does not breach any rights of third parties.

 

12.            SERVICE CHARGES AND PAYMENT

 

12.1                       Service Charges.

 

(a)                                 The Service Charges, which shall be based on the cost of providing each Service plus a mark-up of five per cent (5%), shall be set forth in Exhibit 1 (Services and Service Charges) for each Service.  The Service Charges shall reflect a best estimate of costs taking into account historical or actual costs and shall be payable for each Service for the relevant Service Term.

 

(b)                                 If any third party costs, expenses, fees or charges associated with the provision of the Services increase or decrease (including increased or decreased charges under a Third Party Supply Contract and all costs, expenses, fees or charges arising from changes in Law or the requirements of any Governmental Entity), the Service Provider may, on prior notice

 

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to the Service Recipient, and in accordance with the governance process agreed between the parties, when needed, increase or decrease (as applicable) the Service Charges to reflect that increase or decrease.

 

(c)                                  On each anniversary of the Commencement Date the Service Charges shall be adjusted for each Service by an amount equal to such Charges multiplied by the percentage increase or decrease of the Consumer Price Index or, if applicable, with the applicable country price index (i.e. high inflation countries) during the previous twelve (12) months.

 

(d)                                 Any reasonable documented:

 

(i)                      external third party costs or expenses (including any amounts payable as a result of increases in any third party costs, expenses, fees or charges associated with the provision of the Services); and/or

 

(ii)                   internal costs (including any administrative costs),

 

incurred by the Service Provider or its Affiliates in connection with the provision of any Service on the basis of the respective usage and/or consumption of that Service by, or the respective benefit of that Service for, the Service Recipient (the Expenses) shall, to the extent not already included or accounted for in the Service Charges, including the Expenses set out in Exhibit 1 (Services and Service Charges), be subject to a five per cent (5%) mark-up and be payable by the Service Recipient.  Any amounts paid or payable by any member of the Service Recipient Group under this Clause 12.1(d)  shall be treated, and paid for, as if they were Service Charges.

 

12.2                       Payments.

 

(a)                                 At the end of the calendar month that includes the Separation Date, and at the end of each calendar month thereafter, the Service Provider shall invoice the Service Charges in CHF to the Service Recipient for that month.

 

(b)                                 The Service Provider shall send its invoices to the Service Recipient to the address of the Service Recipient specified in Clause 26 (Notices).

 

(c)                                  The invoices shall set out the Service Charges and any Costs or Expenses for which the Service Recipient is liable for that month under this Agreement.

 

(d)                                 The Service Recipient shall pay the full amount invoiced to it by the Service Provider in arrears:

 

(i)                      within sixty (60) days of the date on which the invoice is received; or

 

(ii)                   for Services provided to or by, or invoiced to or by, entities located in the jurisdictions listed in Exhibit 9 (Payment Provisions for Specific Jurisdictions), in accordance with the relevant payment provisions in Exhibit 9 (Payment Provisions for Specific Jurisdictions).

 

(e)                                  Subject to Clause 12.3 and except as the relevant Service Recipient and Service Provider agree otherwise:

 

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(i)                      any payment to be made pursuant to this Agreement by a Service Recipient shall be made in CHF to the relevant Service Provider’s Bank Account; and

 

(ii)                   to the extent required, any conversion of amounts from another currency into CHF shall be calculated in accordance with the Currency Rate Conversion Table.

 

(f)                                   Payments under this Clause 12.2 shall be in immediately available funds by electronic transfer on or prior to the due date for payment.  Receipt of the amount due shall be an effective discharge of the relevant payment obligation.

 

(g)                                  If any sum due for payment in accordance with this Agreement is not paid by the due date for payment, the person in default shall pay Default Interest on that sum from but excluding the due date to, and including, the date of actual payment calculated on a daily basis.

 

(h)                                 If any amount payable under this Agreement is not paid within sixty (60) calendar days from and including the due date for payment, then, without limiting its rights under Clause 18 (Termination), the relevant Service Provider shall have the right to suspend all or part of any Service, including any Service in relation to which there is an outstanding amount that has not been paid by the Service Recipient. The suspending Party shall give at least five (5) Business Days’ notice of its intention to suspend the Services.

 

(i)                                     If the Service Recipient reasonably and in good faith believes that any invoice or part of an invoice issued by the Service Provider is incorrect, it shall within ten (10) Business Days of receipt of such invoice notify the Service Provider in writing stating the reasons why it believes the invoice to be incorrect.  The Service Recipient’s notice will constitute a Dispute and will be addressed in accordance with Clause 27.1 (Dispute Resolution).  During the existence of any such Dispute:

 

(i)                      the Service Recipient shall pay the disputed invoice in full; and

 

(ii)                   the Service Provider shall continue to provide the Services in accordance with this Agreement.

 

On settlement of any Dispute under this Clause 12.2(i), the Service Provider shall pay the Service Recipient any amount that was not properly due and owing under the disputed invoice, in accordance with the terms of the settlement.

 

12.3                       Service Charges payable in respect of Services provided under a Local Services Agreement shall, unless otherwise agreed by the Parties, be invoiced and paid in the currency of the country to which the Local Services Agreement applies.

 

12.4                       Unless otherwise agreed in this Agreement, all Costs incurred in connection with implementing this Agreement shall be paid by the Party (or its Affiliates) incurring the cost or expense.

 

12.5                       All income tax costs incurred by a Party with respect to the activities covered by this Agreement shall be paid by the Party (or its Affiliates) incurring the income tax costs.

 

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13.            EMPLOYEE ACCOUNTS

 

13.1                       For the purposes of this Clause 13 (Employee Accounts):

 

(a)                                 Employee Accounts means Employee Novartis Accounts (MKK) held by the applicable member of the Novartis Group in favour of Transferred Employees; and

 

(b)                                 Transferred Employees means members of staff employed by member(s) of the Novartis Group that have been transferred to member(s) of the Alcon Group.

 

13.2                       If and to the extent applicable, Novartis undertakes that the balance of all Employee Accounts shall be reduced to zero prior to the Commencement Date by transferring any outstanding balance to the accounts of the Transferred Employees with a bank or any other financial institution.

 

13.3                       Novartis undertakes that the Employee Accounts shall solely be used by the Novartis Group to process payroll services during the relevant Service Term by:

 

(a)                                 allocating funds received from Alcon to individual Transferred Employees based on the payroll accounting prepared by member(s) of the Novartis Group;

 

(b)                                 crediting the payment of salary and other payments in connection with the employment relationship between the Transferred Employees and Alcon to the Employee Account of the relevant Transferred Employee; and

 

(c)                                  as  soon  as  practicable  thereafter, transferring the balance of the Employee Accounts to the account of each relevant Transferred Employee with a third party bank or financial institution.

 

13.4                       Novartis undertakes that it and its Affiliates shall not offer any services in connection with the Employee Accounts and that, at any other time, the balance of the Employee Accounts shall be nil. Novartis undertakes that the Employee Accounts shall not bear interest at any time.

 

13.5                       Novartis undertakes to close all Employee Accounts upon the expiration of the relevant Service Term.

 

13.6                       In  respect  of  each  affiliate  of Alcon which  employs  Transferred  Employees following the Commencement Date (each being a Relevant Purchaser Affiliate), the Relevant Purchaser Affiliate and Novartis shall be jointly and severally liable for any outstanding balance of the Employee Accounts owed to the Transferred Employees employed by the Relevant Purchaser Affiliate for the duration of the relevant Service Term, and each of the Parties undertakes that each of their respective Affiliates shall assume such joint and several liability as contemplated by this Clause 13.6.

 

14.            TAX

 

14.1                       No Withholding.

 

(a)                                 All sums payable under this Agreement shall be paid free and clear of all deductions, withholdings, set-offs or counterclaims whatsoever, save only as may be required by Applicable Law.

 

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(b)                                 If any deductions or withholdings are required by Applicable Law in respect of any payment payable from or on behalf of the recipient of the supply (the Service Recipient) to the Service Provider under this Agreement in connection with the payment of Service Charges:

 

(i)                      the Service Recipient shall not be obliged to pay any additional amount as a result of that deduction or withholding;

 

(ii)                   the Service Provider shall:

 

(A)                               deduct from the Service Charges received by the Service Provider the relevant deduction or withholding required by Applicable Law,

 

(B)                               shall pay that sum to the relevant tax authority; and

 

(C)                               within sixty (60) days of the date on which payment to the relevant tax authority was made shall provide the Service Recipient of written evidence of such payment.

 

(c)                                  The Parties shall cooperate reasonably and in good faith, and shall take all steps reasonably required and lawfully available to them:

 

(i)                      to avoid any deductions or withholdings in respect of any payment payable from or on behalf of the Service Recipient;

 

(ii)                   to obtain appropriate relief for, or reduction of, any deductions or withholdings in respect of any payment payable from or on behalf of the Service Recipient,

 

and each Party shall take all reasonable steps in connection with the above, including through submitting or providing relevant certificates, forms or other information.

 

14.2                       Gross Up.

 

(a)                                 Where any payment is made under this Agreement pursuant to an indemnity, compensation or reimbursement provision and that sum is subject to a charge to taxation in the hands of the recipient (or would be in the absence of any tax reliefs) then the sum payable shall be increased to such sum as will ensure that:

 

(i)                      after payment of such taxation (including any taxation which would have been charged in the absence of any tax reliefs); and

 

(ii)                   after giving credit for any tax relief available to the recipient in respect of the matter giving rise to the payment,

 

(iii)               the recipient shall be left with a sum equal to the sum that it would have received in the absence of such a charge to taxation, provided that if either Party shall have:

 

(A)                               assigned or novated or declared a trust in respect of the benefit in whole or in part of this Agreement; or

 

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(B)                               changed its tax residence or the permanent establishment to which the rights under this Agreement are allocated,

 

then the liability of the other Party under this Clause 14.2 (Gross Up) shall be limited to that (if any) which it would have been had no such assignment, novation, declaration of trust or change taken place.

 

(b)                                 This Clause 14.2 (Gross Up) shall not apply to the extent that the amount of the indemnity, compensation or reimbursement payment has already been increased to take account of the taxation that will (or would) be charged on receipt.

 

14.3                       VAT.

 

(a)                                 All amounts payable under or provided for in this Agreement shall be exclusive of any amount in respect of VAT.  If VAT is chargeable on any supply under this Agreement, then the Recipient shall pay an amount equal to VAT on that supply, provided it has first received a valid VAT invoice for the supply.

 

(b)                                 Adjustments to any amounts payable pursuant to this Agreement shall also be calculated on a VAT-exclusive basis, and the person paying the adjustment shall pay any corresponding amount due in respect of VAT on paying the adjustment or, if later, promptly following receipt of a credit or debit note, as the case may be, in a form that is valid for VAT purposes.

 

(c)                                  So far as permitted by Applicable Law, each Party shall promptly provide valid VAT invoices or credit or debit notes which are consistent with Applicable Law, addressed to the entity, entities or branches of entities requested by the Recipient.

 

15.            WARRANTY AS TO CAPACITY

 

Each Party has obtained all corporate authorisations and (other than to the extent any such consent, license or authorisation constitutes a Global Condition (as defined in the Separation Agreement)) all other governmental, statutory, regulatory or other consents, licences or authorisations required to empower it to enter into and perform its obligations under this Agreement where failure to obtain them would adversely affect to a material extent such Party’s ability to enter into or perform its obligations under this Agreement.

 

16.            LIABILITY

 

16.1                        Service Provider Liability. Subject to Clause 16.3 (Exclusions) to Clause 16.9 (Liability) (inclusive), the Service Provider shall, with effect from the Commencement Date and to the fullest extent permitted by Applicable Law be liable, on a standard contractual basis, for:

 

(a)                                 any breach of the Service Provider’s (or its Affiliates’) obligations under this Agreement; or

 

(b)                                 the Service Provider’s or its Affiliates’ gross negligence or wilful misconduct.

 

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16.2                        Service Recipient Liability.  Subject to Clause 16.3 (Exclusions) to Clause 16.9 (Liability) (inclusive), the Service Recipient shall, with effect from the Commencement Date and to the fullest extent permitted by Applicable Law, be liable, on a standard contractual basis, for:

 

(a)                                 any breach of the Service Recipient’s (or its Affiliates’) obligations under this Agreement; or

 

(b)                                 the Service Recipient’s or its Affiliates’ gross negligence or wilful misconduct.

 

16.3                        Exclusions.  Notwithstanding any other provision of this Agreement, neither Party shall be liable for:

 

(a)                                 to the maximum extent permitted by Applicable Law, any Costs arising in relation to:

 

(i)                      the provision of Network-to-Network Connection;

 

(ii)                   the Mobile Device Synchronisation;

 

(iii)                wiping and tattoo removal of IT Assets; and/or

 

(iv)               functionality of IT Assets,

 

including in respect of: (A) any loss or corruption; (B) any Security Incident; (C) any poor end-user experience issues.

 

(b)                                 any punitive, incidental, special or indirect damages; and/or

 

(c)                                  any consequential damages or damages for loss of future profits, revenue or income, diminution in value or loss of business reputation or opportunity.

 

16.4                        Liability Caps. Subject to Clauses 16.5 (Unlimited Liability) and 16.6 (Recovery from Third Parties) other than in the case of fraud, breach of confidentiality, gross negligence or wilful misconduct, the total liability of each Party and its Affiliates under or in connection with this Agreement for all claims in each twelve (12) month period commencing on the date of this Agreement, whether in contract, tort or otherwise, shall not exceed one hundred per cent (100%) of the Service Charges associated with the provision of the Services and payable to the Service Provider in that twelve (12) month period.

 

16.5                        Unlimited liability.  The limitations in Clause 16.4 (Liability Caps) shall not apply to:

 

(a)                                 the Service Recipient’s liability to pay the Service Charges under this Agreement; or

 

(b)                                 any liability that cannot be excluded by Applicable Law.

 

16.6                        Recovery from Third Parties.

 

(a)                                 The Parties intend that any Liability subject to indemnification or reimbursement pursuant to this Agreement shall be net of:

 

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(i)                      Insurance Proceeds that actually reduce the amount of, or are paid to the applicable Indemnitee in respect of, such Liability; and/or

 

(ii)                   Third Party Proceeds.

 

(b)                                 Accordingly, the amount that either Party (an Indemnifying Party) is required to pay to any Person entitled to indemnification or reimbursement pursuant to this Agreement (an Indemnitee) shall be reduced by any Insurance Proceeds or Third Party Proceeds theretofore actually recovered by or on behalf of the Indemnitee from a Third Party in respect of the related Liability.

 

(c)                                  If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Liability (an Indemnity Payment) and subsequently receives Insurance Proceeds or Third Party Proceeds in respect of such Liability, then the Indemnitee shall pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if such Insurance Proceeds or Third Party Proceeds had been received, realized or recovered before the Indemnity Payment was made.

 

(d)                                 An insurer that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or have any subrogation rights with respect thereto by virtue of the indemnification provisions hereof, it being expressly understood and agreed that no insurer or any other Third Party shall be entitled to a “wind-fall” (i.e., a benefit it would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions of this Agreement.

 

(e)                                  Each Indemnitee shall use Commercially Reasonable Efforts to seek to collect or recover any Insurance Proceeds and any Third Party Proceeds to which such Indemnitee is entitled in connection with any Liability for which such Indemnitee intends to seek indemnification; provided, however, that such Indemnitee’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

 

16.7                        Duty to mitigate. Prior to making any claim under Clause 16.1 (Service Provider Liability) or Clause 16.2 (Service Recipient Liability), each Party shall, and shall procure that each relevant member of their respective Groups shall, use Commercially Reasonable Efforts to avoid or mitigate any Liabilities for which such Person intends to seek indemnification.

 

16.8                        No Double Recovery and No Double Counting. A Party shall be entitled to make more than one claim under this Agreement arising out of the same subject matter, fact, event or circumstance but shall not be entitled to recover under this Agreement or any relevant Transaction Document or otherwise more than once in respect of the same Liabilities suffered or amount for which the Party is otherwise entitled to claim (or part of such Liabilities or amount), regardless of whether more than one claim arises in respect of it. No amount (including any relief) (or part of any amount) shall be taken into account, set off or credited more than once under this Agreement or any relevant Transaction Document or otherwise, with the intent that there will be no double counting under this Agreement or any Transaction Document or otherwise.

 

16.9                        Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the affected Party shall have the right to

 

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specific performance and injunctive or other similar relief of its rights under this Agreement to prevent breaches of this Agreement and to enforce specific performance of the terms and provisions of this Agreement, in addition to any other remedy to which the affected Party is entitled pursuant to this Agreement.  The other Party shall not oppose the granting of such relief on the basis that money damages are an adequate remedy.  The Parties agree that the remedies under Applicable Law for any breach or threatened breach hereof, including monetary damages, are inadequate compensation for any loss and that any defence in any action for specific performance that a remedy under Applicable Law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived.

 

17.            TERM

 

17.1                        Term.

 

(a)                                 This Agreement starts on the Commencement Date and, subject to earlier termination in accordance with Clause 18 (Termination) or to any extension under Clause 17.2 (Extensions of Service Terms), shall terminate automatically on the date that the last of the Service Terms ends, as specified in Exhibit 1 (Services and Service Charges). The Service Provider and its Affiliates shall not be obliged to provide any Service to the Service Recipient following expiry or termination.

 

(b)                                 Each Service shall:

 

(i)                      be provided from the applicable Service Commencement Date; and

 

(ii)                   subject to earlier termination under Clause 18.1 (Termination of a Service) or to any extension under Clause 17.2 (Extensions of Service Terms), terminate automatically at 23.59 GMT on the last day of (i) the relevant Initial Service Term; or (ii) the term of any extension agreed as per Clause 17.2 (Extensions of Service Terms)), as specified in Exhibit 1 (Services and Service Charges).

 

(c)                                  Termination of a Service shall not relieve the Service Provider from its obligations to provide the remaining Services.

 

17.2                        Extensions of Service Terms.

 

(a)                                 The Service Recipient shall, at least ninety (90) days (or any longer period specified for that Service in the “Extension notice period (days)” column in Exhibit 1 (Services and Service Charges)) before the expiry of each Service Term, notify the Service Provider to confirm whether: (i) it wishes to extend a Service Term in accordance with Clause 17.2(d) or 17.2(e); or (ii) the Service will expire at the end of the Service Term.

 

(b)                                 The Service Recipient shall notify the Service Provider in writing in accordance with Clause 17.2(c) if it wishes to extend a Service Term in accordance with Clause 17.2(d) or 17.2(e).

 

(c)                                  Notwithstanding Clause 17.2(a), any notice to extend a Service in accordance with Clause 17.2(b) shall be provided in writing by the Service Recipient to the Service Provider:

 

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(i)                      on at least ninety (90) days’ notice (or any longer period specified for that Service in the “Extension notice period (days)” column in Exhibit 1 (Services and Service Charges)); or

 

(ii)                   in exceptional circumstances, any shorter extension notice period as agreed between the Parties, acting reasonably and taking into account the feasibility of any shorter notice period (a Shorter Extension Notice Period).

 

(d)                                 Notwithstanding Clause 17.2(e) and subject to Clause 17.2(f), if the Service Recipient provides notice in writing to the Service Provider to extend a Service, the Service Provider shall extend the Initial Service Term for that Service for a first extension period by a duration up to the shorter of (to be rounded to the nearest full calendar month and expiring on the final day of that calendar month):

 

(i)                      the duration of the Initial Service Term; and

 

(ii)                   the first extension period specified by the Service Recipient in the notice.

 

(e)                                  Notwithstanding Clause 17.2(d) and subject to Clause 17.2(f), if following any extension granted by the Service Recipient in accordance with Clause 17.2(d) and, despite having taken all steps reasonably required to cease reliance on the relevant 17.2(d) Service, the Service Recipient still reasonably and necessarily requires a further extension to the applicable Service Term, the Service Provider may consent (acting reasonably) to a second extension period for a duration to be agreed by the parties in good faith.

 

(f)                                   The Service Provider shall not be required to extend the Service Term for any Service in the following circumstances:

 

(i)                      the Service Recipient is unable to demonstrate that it has reasonable grounds for making a request to extend the Service Term for that Service, provided that this shall not apply to the first request by the Service Recipient to extend the Service Term for a Service pursuant to clause 17.2(d) but shall apply to any second request to extend the Service Term for a Service pursuant to clause 17.2(e);

 

(ii)                   the aggregate Service Term (as extended under this Clause 17.2 (Extensions of Service Terms)) for that Service exceeds the Maximum Service Term; and/or

 

(iii)                where the request by the Service Recipient to extend a Service is on a Shorter Extension Notice Period and the Service Provider will incur any documented additional Costs (including one-off or incremental costs, expenses or increases in the underlying Service Charges) as a result of that Shorter Extension Notice Period, unless the Service Recipient bears the additional costs in accordance with Clause 17.3 (Costs of Extensions).

 

17.3                        Costs of Extensions.  Any documented additional Costs (including one-off or incremental costs, expenses or increases in the underlying Service Charges) incurred, paid or payable by a Service Provider as a result of: (i) an extension under Clause 17.2 (Extensions of Service Terms); and/or (ii) an extension following a Shorter Extension Notice Period, shall be deemed to be Service Charges and the Service Recipient shall pay them, or procure their payment, in accordance with this Agreement.

 

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18.            TERMINATION

 

18.1                        Termination of a Service.

 

(a)                                 Except as expressly prohibited in Exhibit 1 (Services and Service Charges) or as set out in an Integration Plan, a Service Recipient may notify the Service Provider in writing in accordance with Clause 18.1(b) if it wishes to terminate a Service: (i) in whole; or (ii) in part, subject to the consent of the Service Provider, acting reasonably and, taking into account the feasibility of the termination.

 

(b)                                 [Any notice to terminate a Service in accordance with Clause 18.1(a) shall be provided in writing by the Service Recipient to the Service Provider:

 

(i)                      on the longer of: (A) six (6) months’ notice for IT Services or three (3) months’ notice for all other Services; and (B) the notice period specified for that Service in the “Termination notice period (days)” column in Exhibit 1 (Services and Service Charges); or

 

(ii)                   in exceptional circumstances and subject to Clause 18.1(c), any shorter termination notice period as agreed between the Parties, acting reasonably and taking into account the feasibility of any shorter notice period (a Shorter Termination Notice Period),

 

in each case, provided that the notice period expires on the last day of a calendar month.]

 

(c)                                  Following receipt of the Service Recipient’s notice under Clause 18.1(a), the Service Provider shall provide the Service Recipient with an impact statement which outlines any:

 

(i)                      Related Services that will also terminate on the same date as the relevant Service; and

 

(ii)                   the impact on any other remaining Service as a result of the requested termination.

 

(d)                                 The Service Recipient shall be entitled to withdraw a requested termination by written notice to the Service Provider for a period of ten (10) Business Days following its receipt of the Service Provider’s impact statement under Clause 18.1(c).  If the Service Recipient does not withdraw the requested termination within this period it shall be deemed to have accepted the termination of any Related Service and any impact on any other remaining Services set out in the Service Provider’s impact statement.

 

(e)                                  The Service Provider shall not be required to agree to a request by the Service Recipient to terminate a Service (in whole or in part) where the request by the Service Recipient to terminate a Service (in whole or in part) is on a Shorter Termination Notice Period and the Service Provider will incur documented additional Costs (including one-off or incremental costs, expenses or increases in the underlying Service Charges) as a result of that Shorter Termination Notice Period, unless the Service Recipient bears the documented additional costs in accordance with Clause 18.2.

 

18.2                        Costs of termination of a Service. Any reasonable documented additional costs (including one-off or incremental costs, expenses or increases in the underlying Service Charges) incurred, paid or payable by a Service Provider as a result of: (i) the termination in whole or in part of a Service under Clause 18.1(a) or the termination of a Related Service under Clause 18.1(d)

 

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(including any Costs in relation to the early termination of Third Party Supply Agreements); and/or (ii) a Shorter Termination Notice Period, shall be deemed to be Service Charges and the Service Recipient shall pay them, or procure their payment, in accordance with this Agreement.

 

18.3                        Service Provider termination.  The Service Provider may terminate:

 

(a)                                 this Agreement or the relevant Service with immediate effect by giving written notice to the Service Recipient:

 

(i)                      in the event of a breach of Clause 7.5 (Compliance with Authorizations) and, as a result, the relevant Third Party Supplier terminates, or serves notice to terminate, a Third Party Supply Agreement relating to that Service; or

 

(ii)                   a Service Recipient divests the business (or any part of a business) in relation to which the Services are provided; and

 

(b)                                 this Agreement or the relevant Service if the Service Recipient fails to pay undisputed amounts due under this Agreement within sixty (60) calendar days of the due date for payment of that amount.

 

18.4                        Termination by either Party.  Either Party may terminate this Agreement with immediate effect by giving written notice to the other Party if:

 

(a)                                 the other Party commits a material breach of any obligation under this Agreement and, in the case of a breach which is capable of remedy, fails to remedy it within thirty (30) days of receipt of written notice from the first Party of such breach and of its intention to exercise its rights under this Clause; or

 

(b)                                 an Insolvency Event occurs in relation to the other Party.

 

19.            BRAZIL

 

19.1                        In respect of any Services to be provided to the Brazilian Alcon Business:

 

(a)                                 the provision of such Services shall commence from the Brazil Delayed Closing Date;

 

(b)                                 the Service Charges in respect of such Services for the Brazilian Alcon Business shall become payable from the Brazil Delayed Closing Date; and

 

(c)                                  subject to Clause 19.2, notwithstanding that such Services in Brazil commenced from the Brazil Delayed Closing Date, the Service Term in respect of such Services shall be deemed to run from the Commencement Date and shall be subject to the limitations set out in Clause 17.2.

 

19.2                        If the Brazil Delayed Closing Date takes place after the date which is the final date of the Maximum Service Term, the Parties shall discuss in good faith what Services (if any) the Service Recipient requires in connection with the Brazilian Alcon Business to meet any applicable legal, finance, tax, accounting or operational requirements of the Brazilian Alcon Business and the Service Provider shall provide the relevant Services for a reasonable period to allow the Service Recipient to procure alternative service provision.

 

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20.            CONSEQUENCES OF TERMINATION

 

20.1                        Consequences of termination.  On termination or expiry of a Service or this Agreement, in either case under Clauses 17.1(b) or 18 (Termination):

 

(a)                                 except as provided in Clauses 17.1(c) and 20.2 (Surviving provisions), and subject to any rights or obligations that have accrued prior to termination, neither Party shall have any further obligation to the other Party in respect of the Service or this Agreement, as appropriate;

 

(b)                                 any licenses granted under Clause 11 (Intellectual Property Rights) in relation to the Service, or this Agreement, as appropriate, shall terminate with immediate effect, except for any license that: (i) also relates to any remaining Services; or (ii) has been granted on a perpetual basis in relation to any Service Materials in accordance with Clause 11.3(b);

 

(c)                                  in the event of a termination of a Service or this Agreement (but not on expiry of a Service or this Agreement, in which case the standard payment terms shall apply), each Party shall immediately pay all amounts accrued for the Service Charges and other work performed before termination that have not already been paid;

 

(d)                                 subject to Clause 17.1(c), either Party shall be entitled immediately to disconnect any communications link by which the Services may be accessed; and

 

(e)                                  the provisions of Schedule 2 (Employees) shall apply.

 

20.2                        Surviving provisions. The Surviving Provisions shall survive termination of this Agreement or a Service.

 

21.            DATA PROTECTION

 

21.1                        Data protection interpretation. For the purposes of this Clause 21 (Data Protection), terms and expressions not defined in this Agreement shall have the meaning given in Data Protection Laws.

 

21.2                        Application of Clause 21.3. The provisions of Clause 21.3 (Processing of Personal Data) shall apply only to the extent:

 

(a)                                 the Service Provider is required to process Personal Data, in respect of which the Service Recipient is the controller, on behalf of the Service Recipient in providing the Services; and

 

(b)                                 required by Data Protection Laws.

 

21.3                        Processing of Personal Data. Subject to Clause 21.2 (Application of Clause 21.3), the Parties acknowledge that, in respect of all Personal Data processed under this Agreement, the Service Recipient is the controller and the Service Provider is the processor and the Service Provider shall:

 

(a)                                 process Personal Data only on documented instructions from the Service Recipient, including with regard to transfers of Personal Data outside the European Economic Area,

 

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the UK or to an international organisation (unless the Service Provider is otherwise required to process Personal Data by European Union, Member State or UK law to which the Service Provider is subject, in which case the Service Provider shall inform the Service Recipient of that legal requirement unless prohibited by that law on important grounds of public interest);

 

(b)                                 prior to commencing the processing, inform the Service Recipient if, in the Service Provider’s opinion, any instruction given by the Service Recipient to the Service Provider infringes Data Protection Laws;

 

(c)                                  ensure that all Service Provider employees and subcontractors authorised to process Personal Data:

 

(i)                      are subject to binding confidentiality obligations in respect of the Personal Data; and

 

(ii)                   only process Personal Data in accordance with the Service Recipient’s instructions (unless otherwise required to do so by European Union, Member State or UK law);

 

(d)                                 taking into account the Service Provider’s IT Systems’ capabilities, the state of the art, the costs of implementation and the nature, scope, context and purposes of processing as well as the potential risk to data subjects in light of the nature of the Personal Data, implement appropriate technical and organisational measures to ensure a level of security appropriate to the risk, including to the extent appropriate:

 

(i)                      the pseudonymisation and encryption of Personal Data;

 

(ii)                   the ability to ensure the ongoing confidentiality, integrity, availability and resilience of processing systems and services;

 

(iii)               the ability to restore the availability and access to Personal Data in a timely manner in the event of a physical or technical incident; and

 

(iv)               a process for regularly testing, assessing and evaluating the effectiveness of technical and organisational measures for ensuring the security of the processing;

 

(e)                                  only engage another processor either:

 

(i)                      as permitted under Clause 27.2 (Assignment and Subcontracting); or

 

(ii)                   with the Service Recipient’s prior specific written authorisation and the Service Recipient hereby acknowledges and authorises the engagement of any processor involved in the provision of services to the Service Recipient (or a member of the Service Recipient Group) prior to the Commencement Date to the extent that those services are substantially equivalent to the Services,

 

and in each case by entering into a legally binding written agreement that places the same data protection obligations as those set out in this Clause 21.3 (Processing of Personal Data) on the processor, provided that if the processor fails to fulfil its data protection obligations the Service Provider shall remain fully liable to the Service Recipient for the performance of the processor’s obligations; and

 

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(f)                                   in each case at the Service Recipient’s reasonable request and at the Service Recipient’s Cost:

 

(i)                      taking into account the nature of the processing, adopt appropriate technical and organisational measures to assist the Service Recipient to respond to requests from data subjects for access to or rectification, erasure or portability of Personal Data, or for restriction of processing or objections to processing of, their Personal Data, in each case under Data Protection Laws;

 

(ii)                   assist the Service Recipient in ensuring compliance with the Service Recipient’s security, data breach notification, privacy impact assessment and supervisory authority consultation obligations under Data Protection Laws, taking into account the nature of processing and information available to the Service Provider;

 

(iii)                delete or return all Personal Data and existing copies to the Service Recipient at the end of the provision of the Services (unless European Union, Member State or UK law requires the Service Provider to retain the Personal Data), provided that, if the Service Recipient fails to provide instructions at the end of the provision of the Services, the Service Provider shall delete the relevant data upon expiry of the statutory retention period or periods under Data Protection Laws; and

 

(iv)               make available to the Service Recipient all information necessary, and allow for and contribute to audits and inspections conducted by the Service Recipient or its mandated auditor, to the extent required to enable the Service Recipient to demonstrate its compliance with its obligations imposed by Data Protection Laws under this Agreement.

 

21.4                       Notifications and Registrations.  The Service Recipient shall ensure that it has secured all consents, registrations, notices and notifications in place, or implemented other measures required by Applicable Law, as may be required to enable lawful transfer of the Personal Data to the Service Provider for the duration and purposes of this Agreement.

 

21.5                        If under Clause 21.3 (Processing of Personal Data) the Service Recipient requires the Service Provider to provide any assistance to the Service Recipient, implement any policies or operational changes or otherwise take any action that is not consistent with the standards of Service set out at Clause 3.2 (Standard of Service) or the data protection policies and practices of the Service Provider, or which otherwise results in the Service Provider incurring any Costs as a result of taking any action which the Service Provider, in the absence of this Agreement, is not itself required to incur or take under Applicable Laws, the Service Recipient shall reimburse the Service Provider for any incremental Costs incurred by the Service Provider to comply with the relevant obligations under Clause 21.3 (Processing of Personal Data).

 

21.6                        The Parties acknowledge that Exhibit 6 (Data Processing Details) sets out a description of the nature and purpose of the processing carried out by the Service Provider under this Agreement, and the type of Personal Data and categories of data subjects contained in the Personal Data.

 

21.7                        Compliance with Data Protection Laws.  Notwithstanding Clause 3.2(c), each Party shall, and shall procure that other members of its Group will, comply with all Applicable Laws in relation to the transfer, receipt, retention and use of any Personal Data provided by the other Party under this Agreement, and in particular with all Data Protection Laws.

 

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22.            CHANGE MANAGEMENT

 

22.1                        Change Management.  Where either Party wishes to make any:

 

(a)                                 change or addition to the scope of, and the timescale for, the Integration Plans and/or any Integration Project;

 

(b)                                 change to a Service or the Service Charges;

 

(c)                                  subject to Clause 3.4 (In-Flight Projects), any change in the costs to be paid by the other Party for an In-Flight Project as compared to the budgeted costs for that In-Flight Project set out in Exhibit 5 (In-Flight Projects);

 

(d)                                 provision or receipt of a BAU Service or cost allocation for a BAU Service pursuant to Clause 3.5(b);

 

(e)                                  in the case of the Service Recipient, request for any Additional Assistance pursuant to Clause 2.3 (Additional Assistance);

 

(f)                                   request for an Omitted Service;

 

(g)                                  change to correct a material error in the scope, content or description of the Services or Service Charges pursuant to Clause 3.6 (Material Errors);

 

(h)                                 early termination of, or extension to, any Service; or

 

(i)                                     change to an Integration Plan or an Integration Project,

 

(each, a Change), that Change must be submitted in accordance with the procedure set out in Exhibit 4 (Change Management). Unless specified otherwise in this Agreement, any other amendment to, or variation of, this Agreement must be made in accordance with Clause 27.7 (Variations).

 

22.2                        Changes to locations, premises or Service Provider.  The Service Provider shall be entitled to change the location or premises from which any of its Services are provided, or the entity providing those Services, and this shall not be considered a Change for the purposes of this Agreement provided that such change does not have a negative impact on: (a) regulatory (e.g. GxP) compliance; or (b) the Standard Service Level.

 

22.3                        One-off costs.  Any one-off costs arising as a result of agreed Changes shall be borne by the requesting party. Any Change to the applicable service charges for the changed Service shall take effect from the month following the implementation of that Change.

 

23.            CONFIDENTIALITY

 

23.1                        Confidentiality Obligation. Each of the Parties shall, and shall procure that each member of their respective Groups shall, hold, and cause its Representatives to hold, in strict confidence and not release or disclose, with at least the same degree of care that each Party applies to its own confidential and proprietary Information pursuant to policies in effect immediately prior to the Separation (but no less than a reasonable degree of care), all Information concerning the Alcon

 

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Business (in respect of the obligations of the members of the Novartis Group) or the Novartis Business (in respect of the obligations of the members of the Alcon Group) that is either in its possession (including Information in its possession prior to the Separation), accessible under this Agreement or furnished by the other Group or its respective Representatives at any time pursuant to this Agreement (including under an eQuality Agreement), or the Separation Agreement or any other Ancillary Agreement, and shall not use any such Information other than for such purposes as shall be expressly permitted hereunder or thereunder, except, in each case, to the extent that such Information is:

 

(a)                                 in the public domain through no fault of any member of the Novartis Group or the Alcon Group, as applicable, or any of its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives;

 

(b)                                 lawfully acquired from other sources by any member of the Novartis Group or the Alcon Group, as applicable, or any of their respective Representatives, which sources are not themselves bound by a confidentiality obligation to the knowledge of Novartis or Alcon, as applicable;

 

(c)                                  independently generated without reference to any proprietary or confidential Information of the Novartis Group or the Alcon Group, as applicable; or

 

(d)                                 required to be disclosed by Applicable Law; provided, however, that the Person required to disclose such Information shall give the applicable Person prompt, and to the extent reasonably practicable, prior notice of such disclosure and an opportunity to contest such disclosure and shall use Commercially Reasonable Efforts to cooperate, at the expense of the requesting Person, in seeking any reasonable protective arrangements requested by such Person.

 

23.2                        Exceptions to Confidentiality Obligation. Notwithstanding the foregoing, each Party (and the members of their respective Group) may release or disclose, or permit to be released or disclosed, any Information concerning the Alcon Business (in respect of the obligations of the members of the Novartis Group) or the Novartis Business (in respect of the obligations of the members of the Alcon Group):

 

(a)                                 to their respective Representatives who need to know such Information (who shall be advised of the obligations hereunder with respect to such Information) and

 

(b)                                 to any nationally recognised statistical rating organisation as it reasonably deems necessary, solely for the purpose of obtaining a rating of securities or other debt instruments upon normal terms and conditions; provided, however, that the Party whose Information is being disclosed or released to such rating organisation is promptly notified thereof.

 

24.            FORCE MAJEURE

 

24.1                       No liability.  A Party shall not be under any liability whatsoever to the other Party for any failure or delay in the performance of any of its obligations under this Agreement where that failure or delay results from a Force Majeure.

 

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24.2                       Notice of a Force Majeure.  If a Party learns of the occurrence of a Force Majeure that gives rise to a failure or delay in the performance of its obligations under this Agreement, it shall promptly notify the other Party, and the Parties shall promptly initiate good faith negotiations in order to mutually agree upon a solution, including agreeing which Party shall be responsible for approaching any third party providers to obtain replacement services for any affected Services.

 

24.3                       Mitigation. The affected Party shall, and shall procure that its Affiliates shall:

 

(a)                                 use reasonable efforts to remove the Force Majeure as soon as, and to the extent, reasonably and practically possible; and

 

(b)                                 use reasonable efforts to resume its performance of any affected obligations in accordance with this Agreement as soon as reasonably practicable after the cessation of the Force Majeure to minimize any delay.

 

24.4                       Replacement services.  If the effect of a Force Majeure on the performance of a Service cannot be resolved by the affected Service Provider or its Affiliates within a time period appropriate to the urgency of the situation, then the Service Recipient may, after consultation with the Separation Office, obtain replacement services from a third party provider.

 

24.5                       Effect of Force Majeure.  During the period of Force Majeure:

 

(a)                                 no Service Charges or associated Taxes shall be incurred in relation to any Services that are suspended or delayed as a result of the Force Majeure; and

 

(b)                                 the Service Provider’s Group shall treat Service Recipients the same as any other internal or external service recipient of the affected Services, if any.

 

24.6                       Right to terminate.  If any event of Force Majeure prevents performance by a Party for more than ninety (90) days, then the other Party shall be entitled to terminate this Agreement or the relevant Service by giving ninety (90) days’ written notice to the non-performing Party.

 

25.            LOCAL SERVICE AGREEMENTS

 

25.1                       Requirement for local services agreements. Where:

 

(a)                                 local services agreements are required to be entered into by Applicable Laws to give effect to this Agreement; or

 

(b)                                 the Parties agree, acting reasonably and taking into account either Party’s tax, accounting and corporate governance requirements, to enter into a local services agreement,

 

each Party shall procure that a local entity of that Party shall enter into an agreement substantially in the form set out in Exhibit 8 (Template Local Services Agreement) (each, a Local Services Agreement).

 

25.2                       Terms and conditions of local services agreements. The terms and conditions of:

 

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(a)                                 this Agreement; and

 

(b)                                 the relevant Local Services Agreement,

 

shall govern the provision or receipt of the relevant Services by the relevant local entities. In respect of Clause 16 (Liability), references to a Party’s Group or a member of a Party’s Group shall be read as references to the relevant local entity of that Party, and references to Service Charges shall be read as references to the charges payable under the relevant Local Services Agreement.

 

25.3                       To the extent that any Service Charges have been paid in accordance with the provisions of a Local Services Agreement and this Agreement to a local entity in respect of Services provided under a Local Services Agreement, those amounts shall not also be payable under this Agreement.

 

25.4                       Notwithstanding any Local Services Agreements that may be entered into, each Party shall remain responsible for ensuring (and shall procure) that the performance and receipt of the Services are in accordance with the terms of this Agreement and the relevant Local Services Agreement, including by ensuring that each Party’s relevant local entity complies with the terms of this Agreement and the relevant Local Services Agreement.

 

25.5                       Each Party shall ensure, and shall procure that the relevant members of that Party’s Group ensure, that neither it nor any other member of its Group shall:

 

(a)                                 agree to any modifications to the application of this Agreement to the Local Services Agreement or the form of the template agreement set out in Exhibit 8 (Template Local Services Agreement) unless such modifications are strictly necessary to comply with the legal and regulatory requirements of the relevant jurisdiction; or

 

(b)                                 enter into a Local Services Agreement (or a change to a Local Services Agreement) with any member of the other Party’s Group without first providing a copy of the proposed Local Services Agreement (or the proposed change to a Local Services Agreement) to the other Party at least twenty (20) Business Days before such Local Services Agreement (or change to a Local Services Agreement) is proposed to be signed.

 

25.6                       Each Party shall ensure that any local entity that is party to a Local Services Agreement:

 

(a)                                 does not bring any claims or actions arising under or in connection with this Agreement or the relevant Local Services Agreement against any member of the other Party’s Group without that Party’s consent; and

 

(b)                                 refers each Dispute and any other issue arising in relation to this Agreement or the relevant Local Services Agreement to the other Party for resolution in accordance with Clause 27.1 (Dispute Resolution).

 

25.7                       Each Party shall indemnify and hold harmless the other Party and the other members of the other Party’s Group (the indemnified party) against any losses of whatever nature incurred by the indemnified party arising out of or in connection with any claims or actions brought by Alcon or any other member of the Alcon Group which are not brought in accordance with this Clause 25 (Local Service Agreements).

 

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25.8                       Subject to Applicable Law, where any provision of any Local Services Agreement conflicts with any provision of this Agreement (including to the extent this Agreement applies to the Local Services Agreement), the provisions of this Agreement shall prevail.

 

25.9                       Any notices served under a Local Services Agreement shall also be served to the Parties to this Agreement in accordance with Clause 26 (Notices).

 

26.            NOTICES

 

26.1                        Form of Notice.  Any notice to be given in connection with this Agreement shall be in writing in English and signed by or on behalf of the Party giving it (in the case of notice by e-mail, a notice signed electronically or a scanned copy of a signed original notice shall suffice).  It shall be delivered by hand, registered post, e-mail or courier using an internationally recognised courier company. Any notice to Novartis shall be deemed notice to all members of Novartis Group, and any notice to Alcon shall be deemed notice to all members of Alcon Group.

 

26.2                        Effectiveness of Notice.  A notice shall be effective upon receipt and shall be deemed to have been received at the time of delivery, if delivered by hand, registered post or courier, or at the time of transmission if delivered by e-mail (subject to confirmation or evidence of receipt). Where delivery occurs outside Working Hours, notice shall be deemed to have been received at the start of Working Hours on the next following Business Day.

 

26.3                        Notice Details.  The addresses and e-mail addresses of the Parties for the purpose of Clause 26.1 (Form of Notice) are:

 

	
Novartis and each member of the   Novartis Group
    	
For the attention of:   Head of Legal Transactions, Novartis AG

 

Novartis AG
   Lichtstrasse 35,
   4056 Basel,
   Switzerland

 

augusto.lima@novartis.com
    
	
 
    	
 
    
	
Alcon and each member of the   Alcon Group
    	
For the attention of:   General Counsel

 

Alcon Inc.
   Rue Louis-d’Affry 6,
   1701 Fribourg,
   Switzerland

 

royce.bedward@alcon.com
    

 

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26.4                        Change of Notice Details.  Each Party shall notify the other in writing of a change to its details in Clause 26.3 (Notice Details) from time to time.

 

27.            MISCELLANEOUS PROVISIONS

 

27.1                       Dispute Resolution. Any dispute in relation to any aspect of, or failure to agree any matter arising in relation to, this Agreement or any document agreed or contemplated as being agreed pursuant to this Agreement shall be resolved in accordance with the escalation procedure (including as to timings) set out in Exhibit 2 (Governance) and the Jedi TSA Governance Model.  In the event the Parties fail to resolve the dispute in accordance with that escalation procedure (in each case, a Dispute), the Dispute shall be resolved in accordance with clause 41 (Dispute Resolution) of the Separation Agreement.

 

27.2                       Assignment and Subcontracting.

 

(a)                                 Subject to Clause 27.2(c), the Service Provider may:

 

(i)                      assign all or any part of its rights under this Agreement to:

 

(A)                               an Affiliate of the Service Provider, provided that before the assignee subsequently ceases to be a member of the Service Provider Group, the Service Provider shall ensure that it shall re-assign that benefit to the Service Provider or to another continuing member of the Service Provider Group; or

 

(B)                               any third party purchaser of the whole or a substantial part of the Service Provider’s business; and

 

(ii)                   delegate or sub-contract any of its obligations hereunder without the prior written consent of the Service Recipient.

 

(b)                                 Subject to Clause 27.2(c), the Service Recipient may assign all or any part of its rights under this Agreement to an Affiliate of the Service Recipient, provided that before the assignee subsequently ceases to be a member of the Service Recipient Group, the Service Recipient shall ensure that it shall re-assign that benefit to the Service Recipient or to another continuing member of the Service Recipient Group.

 

(c)                                  Neither Party may assign or otherwise transfer, including as a result of a business divestment, its right to access the other Party’s IT System without that other Party’s written consent.

 

(d)                                 If a Party assigns, delegates, subcontracts or otherwise transfers this Agreement or any obligations hereunder (including to any Third Party Supplier) in accordance with this Clause 27.2 (Assignment and Subcontracting):

 

(i)                      the liability of the other Party under this Agreement shall not be greater than it would have been in the absence of the relevant assignment, delegation, subcontracting or transfer;

 

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(ii)                  any delegation or subcontracting of the performance of any obligations shall not relieve that Party from the liability for performance of that obligation, such that the Party delegating or subcontracting its obligations shall remain responsible for breaches of and compliance with this Agreement by the delegee or subcontractor; and

 

(iii)               that Party shall ensure that any delegee and subcontractors comply with confidentiality undertakings at least as protective of the other Party’s confidential Information as those set out in Clause 23 (Confidentiality).

 

27.3                       Further Assurances.

 

(a)                                 Subject to the express limitations in this Agreement, each of the Parties shall, at such Person’s sole expense, perform (or procure the performance of) all further acts and things and execute and deliver (or procure the execution and delivery of) such further documents, as may be required by Applicable Law or as may be necessary or reasonably required to implement and give effect to this Agreement.

 

(b)                                 Each of Novartis and Alcon shall procure that each member of the Novartis Group and Alcon Group, respectively, complies with all obligations under this Agreement which are expressed to apply to any such member.

 

27.4                       Announcements.  The provisions of clause 29 (Announcements) of the Separation Agreement shall apply mutatis mutandis to this Agreement.

 

27.5                       Waivers, Rights and Remedies.  Except as expressly provided in this Agreement, no failure or delay by any Party in exercising any right or remedy relating to this Agreement or any of the Transaction Documents shall affect or operate as a waiver or variation of that right or remedy or preclude its exercise at any subsequent time.  No single or partial exercise of any such right or remedy shall preclude any further exercise of it or the exercise of any other remedy.

 

27.6                        Counterparts.  This Agreement may be executed in any number of counterparts, and by each Party on separate counterparts. Each counterpart is an original, but all counterparts shall together constitute one and the same instrument. Delivery of a counterpart of this Agreement by e-mail attachment shall be an effective mode of delivery.

 

27.7                        Variations.  Unless specified otherwise in this Agreement, no amendment of this Agreement (or of any other Transaction Document) shall be valid unless it is in writing and duly executed by or on behalf of all of the Parties to it.

 

27.8                        Invalidity.  Each of the provisions of this Agreement and the other Transaction Documents is severable.  If any such provision is held to be or becomes invalid or unenforceable in any respect under the law of any jurisdiction, it shall have no effect in that respect and the parties shall use Commercially Reasonable Efforts to replace it in that respect with a valid and enforceable substitute provision the effect of which is as close to its intended effect as possible.

 

27.9                        No Third Party Enforcement Rights.  A Person who is not a Party to this Agreement shall have no right under any statutory provision to enforce any of its terms.

 

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27.10                Whole Agreement.

 

(a)                                 This Agreement and the other Transaction Documents together set out the whole agreement between the Parties in respect of the subject matter of this Agreement and supersedes any previous draft, agreement, arrangement or understanding, whether in writing or not, relating to its subject matter. It is agreed that:

 

(i)                      no Party has relied on or shall have any claim or remedy arising under or in connection with any statement, representation, warranty or undertaking made by or on behalf of the other Party (or any of its Representatives) in relation to the subject matter of this Agreement that is not expressly set out in this Agreement and the other Transaction Documents;

 

(ii)                   any terms or conditions implied by Applicable Law in any jurisdiction in relation to the subject matter of this Agreement are excluded to the fullest extent permitted by Applicable Law or, if incapable of exclusion, any rights or remedies in relation to them are irrevocably waived;

 

(iii)                the only right or remedy of a Party in relation to any provision of this Agreement shall be for breach of this Agreement; and

 

(iv)               except for any liability in respect of a breach of this Agreement, neither Party (nor any of its Representatives) shall owe any duty of care or have any liability in tort or otherwise to the other Party (or its respective Representatives in relation to the subject matter of this Agreement.

 

(b)                                 Nothing in this Clause 27.10 (Whole Agreement) shall limit any liability for (or remedy in respect of) fraud or fraudulent misrepresentation.

 

(c)                                  Each Party agrees to the terms of this Clause 27.10 (Whole Agreement) on its own behalf and as agent for each of its Representatives.

 

28.            GOVERNING LAW

 

28.1                        Governing Law. This Agreement and any non-contractual obligations arising out of or in connection with this Agreement shall be governed by, and interpreted in accordance with, the substantive laws of Switzerland (excluding its rules on conflict of laws and excluding the UN Convention on Contracts for the International Sale of Goods).

 

Signature Page Follows

 

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SIGNATURES

 

This Agreement is signed by duly authorised representatives of the Parties on the date stated at the beginning:

 

 

	
 
    	
 
    	
 
    
	
Signed for and on   behalf of
    	
 
    	
Signed for and on   behalf of
    
	
NOVARTIS AG
    	
 
    	
NOVARTIS AG
    
	
by:
    	
 
    	
 
    	
by:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title: 
    	
 
    	
 
    	
Title: 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signed for and on   behalf of
    	
 
    	
Signed for and on   behalf of
    
	
ALCON INC.
    	
 
    	
ALCON INC.
    
	
by:
    	
 
    	
 
    	
by:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title: 
    	
 
    	
 
    	
Title: 
    	
 
    

 

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SCHEDULE 1
  
 DEFINITIONS AND INTERPRETATION

 

1.                                      Definitions. In this Agreement, the following words and expressions shall have the following meanings:

 

Additional Assistance has the meaning given in Clause 2.3 (Additional Assistance);

 

Affiliates has the meaning given in the Separation Agreement;

 

Agreement means this transitional services agreement;

 

Alcon Asset Transferors has the meaning given in the Separation Agreement;

 

Alcon Business has the meaning given in the Separation Agreement;

 

Alcon Group has the meaning given in the Separation Agreement;

 

Alcon Services means the Services to be provided to Novartis or any other member of the Novartis Group by Alcon or any other member of the Alcon Group, as identified with “rTSA” in the “TSA / rTSA” column in  Exhibit 1 (Services and Service Charges);

 

Ancillary Agreements has the meaning given in the Separation Agreement;

 

Applicable Law has the meaning given in the Separation Agreement;

 

Authorizations has the meaning given in Clause 7.1(b);

 

Authorization Expenses has the meaning given in Clause 7.1(c);

 

BAU Services has the meaning given in Clause 3.5(a) (BAU Services);

 

Books and Records has the meaning given in the Separation Agreement;

 

Brazil Delayed Closing Date has the meaning given in schedule 7 (Brazil) to the Separation Agreement;

 

Brazilian Alcon Business has the meaning given in schedule 7 (Brazil) to the Separation Agreement;

 

Business Day means a day, other than a Saturday or Sunday or public holiday in Switzerland or the United States, on which banks are open in Basel, Fribourg, Geneva, Zurich and New York City for general commercial business;

 

Change has the meaning given in Clause 22.1;

 

Change Representative has the meaning given in Exhibit 4 (Change Management);

 

Change Request has the meaning given in Exhibit 4 (Change Management);

 

Commencement Date means the date of this Agreement;

 

Commercially Reasonable Efforts has the meaning given in the Separation Agreement;

 

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Consumer Price Index means [·];

 

Costs means losses, damages, costs (including reasonable legal costs on an indemnity basis) and expenses (including Tax), in each case of any nature whatsoever;

 

Cost Saving has the meaning given in Clause 3.2(b)(iii)(B) (Standard of Service);

 

Currency Rates Conversion Table means the exchange rates set out in Exhibit 10 (Currency Rates Conversion Table);

 

Data Protection Laws means all laws, rules, regulations, and orders of any jurisdiction or subdivision thereof relating to the privacy, security, confidentiality and/or integrity of Personal Data that are applicable to the operations, services or products of the Service Provider and the Service Recipient, including but not limited to the US Health Insurance Portability and Accountability Act of 1996 (“HIPAA Privacy Rule”) set forth at 45 CFR 164.508(b), the applicable law indicated within the Agreement to which this exhibit is attached, and/or the General Data Protection Regulation;

 

Default Interest means: (a) for invoices in US Dollars, the prime lending rate as published in The Wall Street Journal minus two per cent (2%); and (b) for invoices in any other currency, the applicable local country one (1) month interest rate plus one per cent (1%);

 

Dispute has the meaning given in Clause 27.1;

 

eQuality Agreement has the meaning given in Clause 4.3;

 

Excluded Service means:

 

(a)                                any service or business process that is identified as an ‘Excluded Service’ in Exhibit 1 (Services and Service Charges);

 

(b)                                any service, service element or asset relating to a service transferred to the Service Recipient pursuant to Project Moonstone; and

 

(c)                                 any service or business process that will be provided under the Separation Agreement or any other Transaction Document;

 

Force Majeure means, any cause or circumstance preventing, hindering or delaying either Party performing all or part of its obligations under this Agreement which arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control of the Party so prevented, including any of the following:

 

(a)                                war, threat of or preparation for war, armed conflict;

 

(b)                                terrorist attack, civil war, civil commotion or riots;

 

(c)                                 epidemic or pandemic;

 

(d)                                any law or governmental order, rule, regulation or direction, or any action taken by a Governmental Entity, including but not limited to imposing an embargo, export or import restriction, quota or other restriction or prohibition, in each case, of general application or generally affecting the industries in which the Parties participate;

 

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(e)                                 any flood, earthquake, hurricane or other natural disaster, weather-related conditions, explosions or fires; or

 

(f)                                  to the extent beyond the reasonable control of the relevant Party (or, as applicable, the Permitted Subcontractor), any labour dispute, including strikes, industrial action or lockouts.

 

For the purposes of this definition of Force Majeure, neither increasing costs (unless in excess of market norms due to acts, events, omissions or accidents beyond the reasonable control of the Party affected) nor a lack of funds will be interpreted as putting the event beyond the reasonable control of the Party affected;

 

General Data Protection Regulation means:

 

(a)                                Regulation 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC; and

 

(b)                                laws implementing Regulation 2016/679 or any successor laws arising out of the withdrawal of a member state from the European Union;

 

GFC has the meaning given in Exhibit 2 (Governance);

 

Global Function Lead has the meaning given Clause 1.2(a) (Governance Roles);

 

Governmental Entity has the meaning given in the Separation Agreement;

 

Group means the Service Provider Group or the Service Recipient Group, as applicable;

 

GxP means any Good Practice guidelines and wherein the “x” shall stand for any specific practice descriptor.  GxP, by way of example but not in limitation of the foregoing, includes Good Manufacturing Practice, Good Clinical Practice, and Good Laboratory Practice;

 

Identified Stranded Costs has the meaning given in Clause 2.7(b) (Stranded Costs);

 

Indemnifying Party has the meaning given in Clause 16.6(b);

 

Indemnitee has the meaning given in Clause 16.6(b);

 

Information has the meaning given in the Separation Agreement;

 

In-Flight Projects means any and all activities, processes, projects and measures that:

 

(a)                                are specified in Exhibit 5 (In-Flight Projects);

 

(b)                                will impact the Services and/or the Standard Service Levels; and

 

(c)                                 are either being implemented, or are planned for implementation, as at the Commencement Date;

 

Initial Service Term means, for each Service, the initial period specified for the provision of that Service in the “Duration (months)” column in Exhibit 1 (Services and Service Charges);

 

Insolvency Event in relation to a Party, means any of the following:

 

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(a)                                it is unable or admits inability to pay its debts as they fall due; suspends or threatens to suspend making payments on any of its debts; or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness;

 

(b)                                the value of its assets is less than its liabilities (taking into account contingent and prospective liabilities);

 

(c)                                 a moratorium is declared in respect of any of its indebtedness (if a moratorium occurs, the ending of the moratorium will not remedy any Insolvency Event caused by that moratorium);

 

(d)                                any corporate action, legal proceedings or other procedure or step is taken (whether by a Party, its directors or a Third Party) in relation to:

 

(i)                          the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration (whether out of court or otherwise) or reorganization (by way of voluntary arrangement, scheme of arrangement or otherwise);

 

(ii)                       a composition, compromise, assignment or arrangement with any creditor;

 

(iii)                    the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of the Party or any of its assets (in each case whether out of court or otherwise);

 

(iv)                   enforcement of any security over any assets of Novartis or Alcon (as applicable), including a creditor attaching or taking possession of, or distress, execution, sequestration or other process being levied or enforced upon or sued against all or any part of the assets of the relevant party;

 

(v)                      a meeting of the Party, its directors or its members being convened for the purpose of considering any resolution for, or to petition for, or to apply for or to file documents with a court for its winding-up, administration (whether out of court or otherwise) or dissolution, or any such resolution is passed;

 

(vi)                   any person presenting a petition, application or motion for the winding-up, administration (whether out of court or otherwise) or dissolution of the Party; or

 

(vii)                the directors or other officers of the Party requesting the appointment of or giving notice of their intention to appoint or take any step with a view to appointing a liquidator, receiver, administrator, administrative receiver, compulsory manager, trustee in bankruptcy or other similar officer in respect of the Party (in each case whether out of court or otherwise),

 

(but paragraph (d) shall not apply to a solvent liquidation of the company or any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within fourteen (14) days of its presentation); or

 

(e)                                 there occurs in relation to the Party or any of its assets in any country or territory in which it is incorporated or carries on business or to the jurisdiction of whose courts it or any of its assets are subject any event which corresponds in that country or territory with any of those mentioned in (a) to (d);

 

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Insurance Proceeds has the meaning given in the Separation Agreement;

 

Integration has the meaning given in Clause 2.2(a) (Integration Plans);

 

Integration Costs has the meaning given in Clause 2.6(a) (Integration Costs);

 

Integration Plans has the meaning given in Clause 2.2(a) (Integration Plans);

 

Integration Project Delay has the meaning given in Clause 2.6(c);

 

Integration Projects means the projects that are identified and agreed in the Integration Plans and any projects that are agreed to be undertaken in accordance with Clause 22 (Change Management);

 

Intellectual Property Rights has the meaning given in the Separation Agreement;

 

IT Environment has the meaning given in clause 2.2(b)(i);

 

IT Service means any Service identified as “IT” in the “Function” column in Exhibit 1 (Services and Service Charges);

 

IT Systems means information and communications technologies, including systems, applications, data centers, networks, interfaces and any other system interface or infrastructure, whether owned or licensed in by a third party;

 

Jedi TSA Governance Model has the meaning given in Exhibit 2 (Governance);

 

Liability or Liabilities has the meaning given in the Separation Agreement;

 

Local Separation Agreement has the meaning given in the Separation Agreement;

 

Local Services Agreement has the meaning given in Clause 25.1 (Requirement for local services agreements);

 

Managed Mobile Devices has the meaning given in Clause 4.2(a);

 

Maximum Service Term means a period of twenty-four (24) months immediately following the Commencement Date;

 

Mobile Device Systems has the meaning given in Clause 4.2(a);

 

Mobile Device Synchronization has the meaning given in Clause 4.2(b) (Managed mobile devices);

 

Network-to-Network Connection has the meaning given in Clause 2.2(b) (Access);

 

Novartis Business has the meaning given in the Separation Agreement;

 

Novartis Group has the meaning given in the Separation Agreement;

 

Novartis Services means the Services to be provided to Alcon or any other member of the Alcon Group by Novartis or any other member of the Novartis Group, as identified with “TSA” in the “TSA / rTSA” column in  Exhibit 1 (Services and Service Charges);

 

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Omitted Services has the meaning given in Clause 3.3(a) (Omitted Services);

 

Person means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organisation, Governmental Entity or other entity;

 

Personal Data means any information that relates to an identified or identifiable person including without limitation electronic data and paper based files that is Processed directly or indirectly, by the Service Provider or the Service Provider’s subcontractors on behalf of and as instructed by the Service Recipient.  This may include: name or initials, home or other physical address, cell/mobile or telephone number; photograph and/or any data or information subject to Data Protection Laws. Personal Data includes Special/Sensitive Personal Data as defined below;

 

Project Moonstone means the internal restructuring project codenamed Project Moonstone, under which certain business services provided by the ‘Novartis Business Services’ business function to the Alcon Group are transferred from the Novartis Group to the Alcon Group;

 

Recipient has the meaning given in Clause 14.1(b);

 

Related Services means those other Services on which the provision of a Service is dependent, as specified in Exhibit 1 (Services and Service Charges);

 

Representatives has the meaning given in the Separation Agreement;

 

Security Incident has the meaning given in Clause 4.1(b) (Access);

 

Separation has the meaning given in the Separation Agreement;

 

Separation Date has the meaning given in the Separation Agreement;

 

Separation Office has the meaning given in Exhibit 2 (Governance);

 

Service means any business process (other than any Excluded Service) listed in Exhibit 1 (Services and Service Charges) that is selected by a Service Recipient to be provided, or procured, by the Service Provider on a transitional basis (including Alcon Services and Novartis Services as applicable and as the case may be);

 

Service Charges means the charges payable for the Services, as specified in Exhibit 1 (Services and Service Charges);

 

Service Commencement Date means, for each of the Alcon Services or the Novartis Services, the later of: (a) the Commencement Date; and (b) in the case of the Brazilian Alcon Business, the Brazil Delayed Closing Date;

 

Service Materials has the meaning given in Clause 11.3(b);

 

Service Provider means:

 

(a)                                in the case of Novartis Services, Novartis and all other members of the Novartis Group who are engaged in the provision of the Novartis Services or the performance of the Service Provider’s obligations under this Agreement; and

 

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(b)                                in the case of Alcon Services, Alcon and all other members of the Alcon Group who are engaged in the provision of the Alcon Services or the performance of the Service Provider’s obligations under this Agreement;

 

Service Provider’s Bank Account means a Service Provider’s bank account as notified to the relevant Service Recipient in writing from time to time;

 

Service Provider Group means:

 

(a)                                in the case of Novartis Services, Novartis and/or all other members of the Novartis Group; and

 

(b)                                in the case of Alcon Services, Alcon and/or all other members of the Alcon Group;

 

Service Provider Proprietary Software means software owned by a member of the Service Provider Group and used in the provision of the Services;

 

Service Recipient means:

 

(a)                                in the case of Alcon Services, Novartis and all other members of the of the Novartis Group who receive Alcon Services or other rights granted to the Service Recipient under this Agreement; and

 

(b)                                in the case of Novartis Services, Alcon and all other members of the of the Alcon Group who receive Novartis Services or other rights granted to the Service Recipient under this Agreement;

 

Service Recipient Group means:

 

(a)                                in the case of Alcon Services, the Service Recipient and all other member of the Novartis Group;

 

(b)                                in the case of Novartis Services, the Service Recipient and all other member of the Alcon Group;

 

Service Term means, for each Service:

 

(a)                                the Initial Service Term for that Service; and

 

(b)                                any extension(s) in accordance with Clause 17.2 (Extensions of Service Terms),

 

in each case, provided that the aggregate period does not exceed the Maximum Service Term;

 

Shorter Extension Notice Period has the meaning given in Clause 17.2(c)(ii);

 

Shorter Termination Notice Period has the meaning given in Clause 18.1(b)(ii);

 

Special/Sensitive Personal Data means: (a) an individual’s physical, physiological or mental characteristics, economic status, racial or ethnic origin, political, ideological, religious opinions or philosophical beliefs, trade union membership, health or medical information including information related to payment for health services, sex life or sexual preference, genetic material or information, human biological samples or cells, unique biometric data, personality profiles; or (b) an individual’s name or initials in combination with the individual’s: (i) Social Security number; (ii) alien registration number; (iii) driver’s license number; (iv) passport number, visa number or other government identifier; (v) credit card, debit card, or other financial account numbers, with or without any associated code or password that would permit access to such account; or (vi) mother’s maiden name. For the avoidance of doubt, Special/Sensitive Personal Data is a subset of Personal Data;

 

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Standard Service Level means the average standard of service and performance (including as to volume, quality and content and excluding any KPIs, additional service levels or other measures in respect to any of the Services) to which service(s) equivalent to the relevant Service were provided by the Service Provider to the Service Recipient during:

 

(a)                                to the extent a Service has been affected by an internal restructuring project (including under Project Moonstone) intended to separate the Alcon Group and the Novartis Group within the twelve (12) months immediately before the Commencement Date, the period from the completion of that restructuring project to the Commencement Date; and

 

(b)                                otherwise, the twelve (12) months immediately before the Commencement Date;

 

Stranded Costs has the meaning given in Clause 2.7(a) (Stranded Costs);

 

Surviving Provisions means Clause 2.4 (Integration liability), Clause 4.4 (Interaction between this Agreement and eQuality Agreements), Clause 5.2, Clause 5.4, Clause 6.2 (Failure to perform a dependency), 6.3 (Transferring Assets), Clause 6.5 (Reliance on data and information), Clause 7.6 (Indemnity for non-compliance), Clause 11.3 (No transfer of Intellectual Property Rights), Clause 14 (Tax), Clause 16 (Liability), Clause 20 (Consequences of Termination), Clause 21 (Data Protection), Clause 23 (Confidentiality), Clause 24.1 (No Liability), Clause 25 (Local Service Agreements), Clause 26 (Notices), Clause 27 (Miscellaneous Provisions), Clause 28 (Governing Law), Schedule 1 (Definitions and Interpretation) and Schedule 2 (Employees);

 

Tax has the meaning given in the Tax Matters Agreement;

 

Tax Authority has the meaning given in the Tax Matters Agreement;

 

Tax Matters Agreement means the tax matters agreement dated on or around the date of this Agreement and entered into between Novartis and Alcon;

 

Third Party means any Person other than a member of the Alcon Group or the Novartis Group;

 

Third Party Proceeds has the meaning given in the Separation Agreement;

 

Third Party Software means software owned by a Third Party that is licensed to a member of the Service Provider Group that are used by the Service Provider Group in the provision of the Services;

 

Third Party Supplier means a Third Party that supplies goods or services under a Third Party Supply Agreement;

 

Third Party Supply Agreements means the agreements entered into by members of the Service Provider Group under which Third Parties provide goods and services to the Service Provider Group that are used by the Service Provider Group in the provision of the Services;

 

Transaction Document has the meaning given in the Separation Agreement;

 

VAT means, within the European Union, such tax, duty, assessment or similar charges as may be levied in accordance with (but subject to derogations from) Council Directive 2006/112/EC, and outside the European Union, any tax, duty, assessment or similar charges levied by reference to added value, turnover or sales, in each case including all interest, penalties and additions imposed thereon by any Tax Authority; and

 

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Working Hours means 9.00am to 5.00pm in the relevant location on a Business Day.

 

2.                                      Interpretation. In this Agreement, unless the context otherwise requires:

 

(a)                                 headings do not affect the interpretation of this Agreement; the singular shall include the plural and vice versa; and references to one gender include all genders;

 

(b)                                 references to any English legal term or concept shall, in respect of any jurisdiction other than England, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction;

 

(c)                                  references to swiss francs or CHF are references to the lawful currency of Switzerland at the date of this Agreement;

 

(d)                                 references to US Dollars or $ are references to the lawful currency from time to time of the United States of America; and

 

(e)                                  any phrase introduced by the terms including, include, in particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.

 

3.                                      Enactments. Except as otherwise expressly provided in this Agreement, any express reference to an enactment (which includes any legislation in any jurisdiction) includes references to (i) that enactment as amended, consolidated or re-enacted by or under any other enactment before or after the date of this Agreement; (ii) any enactment which that enactment re-enacts (with or without modification); and (iii) any subordinate legislation (including regulations) made (before or after the date of this Agreement) under that enactment, as amended, consolidated or re-enacted as described in (i) or (ii) above, except to the extent that any of the matters referred to in (i) to (iii) occurs after the date of this Agreement and increases or alters the liability of Novartis or Alcon (or any Person on whose behalf it is acting as agent pursuant to this Agreement) under this Agreement.

 

4.                                      Schedules and Exhibits. The Schedules and Exhibits comprise schedules and exhibits to this Agreement and form part of this Agreement.

 

5.                                      Inconsistencies. Where there is any inconsistency between the definitions set out in this Schedule 1 (Definitions and Interpretation) and the definitions set out in any Clause or any Schedule or Exhibit, then, for the purposes of construing such Clause, Schedule or Exhibit, the definitions set out in such Clause, Schedule or Exhibit (as applicable) shall prevail.

 

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