EX-10.6 2 a05-2957_1ex10d6.htm EX-10.6

Exhibit 10.6

 

A mark of [***] in the text of this Exhibit indicates that confidential material has been omitted.

 

This Exhibit, including the omitted portions, has been filed separately with the Secretary of the Securities and Exchange Commission pursuant to an application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

 



 

AMENDED AND RESTATED DISTRIBUTION AGREEMENT

 

This Amended and Restated Distribution Agreement (“AGREEMENT”) is entered into as of February 23, 2005 (the “EFFECTIVE DATE”) by and between MedImmune, Inc., a Delaware corporation, having its principal place of business at One MedImmune Way, Gaithersburg, MD 20878 (“MEDIMMUNE”), and Abbott International LLC, a Delaware limited liability corporation (“ABBOTT”), having its principal place of business at 100 Abbott Park Road, Abbott Park, IL 60064.

 

Recitals:

 

A.                                   ABBOTT and MEDIMMUNE entered into a Distribution Agreement, dated December 1, 1997 (as amended as of April 28, 1999, October 8, 1999 and July 1, 2003, the “ORIGINAL AGREEMENT”), for the distribution of MEDI-493 (palivizumab), a humanized antibody directed against respiratory syncytial virus (“RSV”).

 

B.                                     MEDIMMUNE and ABBOTT desire to amend the ORIGINAL AGREEMENT to include the distribution of additional humanized antibody products directed against RSV and to further amend and restate the ORIGINAL AGREEMENT in its entirety as set forth in this AGREEMENT.

 

In consideration of the mutual promises and other good and valuable consideration, the parties hereby amend and restate the ORIGINAL AGREEMENT as follows:

 

Agreement:

 

1.                                      DEFINITIONS.

 

In addition to the terms defined above and other terms defined in other Sections of this AGREEMENT and Exhibit 3.2, the following terms when capitalized shall have the meanings set forth below for purposes of this AGREEMENT.

 

1.1                               “AFFILIATE” shall mean any corporation or other business entity that directly or indirectly controls, is controlled by, or is under common control with a PARTY.  Control means ownership or other beneficial interest in fifty percent (50%) or more of the voting stock or other voting interest of a corporation or other business entity the term, provided however that, the term shall specifically exclude TAP Pharmaceutical Products Inc., TAP Finance Inc., and TAP Pharmaceuticals Inc.

 

1.2                               “cGMP” shall mean the quality systems and current good manufacturing practices for the manufacture of the PRODUCT required by the REGULATORY AUTHORITIES in any country in the MAJOR MARKET, as amended from time to time.

 

1.3                               “CALENDAR QUARTER” shall mean the period of three consecutive calendar months ending on March 31, June 30, September 30 or December 31 of any CONTRACT YEAR, as the case may be; provided, however, that the first CALENDAR QUARTER shall commence on the EFFECTIVE DATE hereof and shall end on March 31, 2005, and the last CALENDAR QUARTER shall commence on the date following the last day of the immediately prior CALENDAR QUARTER and end on the date of the expiration of the TERM.

 

1.4                               “COMMERCIALLY REASONABLE EFFORTS” shall mean those efforts of a PARTY which are consistent with those utilized by such PARTY to achieve the intent and

 



 

objectives of the PARTIES under this AGREEMENT in good faith, taking into account all factors that impact the manufacturing, development, marketing and sales of the PRODUCTS, as applicable, which are commercially reasonable in the context of the PRODUCTS and the marketplace, unless the other PARTY can demonstrate that such PARTY’s efforts deviate meaningfully from the industry norm.

 

1.5                               “CONTRACT YEAR” shall mean July 1 of a calendar year through June 30 of the following calendar year, except that, solely for the purposes of calculating the amounts due under Section 3.8, the term “CONTRACT YEAR” shall mean the 12 month period commencing on December 1 of each calendar year and ending on November 30 of the immediately following calendar year; provided, however, that the first CONTRACT YEAR shall start on the EFFECTIVE DATE and end on June 30, 2005 (or November 30, in the case of Section 3.8) and that the last CONTRACT YEAR shall end on the last day this AGREEMENT remains in effect.

 

1.6                               “COST OF GOODS” shall mean the fully allocated cost to manufacture each UNIT of the PRODUCTS, determined in a reasonable manner consistent with MEDIMMUNE’s normal internal accounting practices and in accordance with generally accepted accounting principles (“GAAP”), which includes but is not limited to: (a) direct labor (salaries, wages and employee benefits); (b) direct materials; (c) operating costs of building and equipment used in connection with the manufacture of PRODUCT; (d) allocated depreciation and repairs and maintenance; (e) quality and in-process control; (f) an allocation of overhead costs incurred in connection with the manufacturing of PRODUCT, including: raw material supply and manufacturing administration and management, materials management, storage and handling; and manufacturing and employee training; (g) any charges for obsolescence, out of date product, spoilage, scrap or rework costs; (h) insurance costs; and (i) the cost of packaging and labeling, if applicable. To the extent that the manufacturing of the PRODUCTS is performed for MEDIMMUNE by a THIRD PARTY, amounts paid to such THIRD PARTY shall be included in COST OF GOODS in lieu of the items specified in (a) through (i) above.  No later than sixty (60) days following the start of each CONTRACT YEAR during the TERM of this AGREEMENT, MEDIMMUNE shall provide ABBOTT, in writing, with the COST OF GOODS for each presentation of the PRODUCT that will be supplied by MEDIMMUNE.

 

1.7                               “DEVELOPMENT COMMITTEE” shall have the meaning set forth in Section 6.6.

 

1.8                               “FDA” shall mean the United States Food and Drug Administration and any successor regulatory authority in the United States of America.

 

1.9                               “FIRM ORDER” shall have the meaning set forth in Section 5.1.

 

1.10                        “FTE RATE” shall mean the pro rata share of the fully burdened cost of a sales representative, per annum, based on time spent on the promotion of NUMAX in relation to the total time spent on all products promoted by such sales representative, comprising of the wages, bonuses, incentives, car expenses, other detailing costs typically associated with the promotion of a pharmaceutical product (including, but not limited to, expenses associated with training, promotional materials, travel and entertainment) and overhead costs reasonably allocable to such activities, as applicable in the country in the TERRITORY in which NUMAX will be co-promoted by MEDIMMUNE.

 

2



 

1.11                        “LAUNCH” shall mean the date of the first commercial sale of a PRODUCT sold on arm’s length terms to a THIRD PARTY by ABBOTT or any of its AFFILIATES in any country within the TERRITORY after the REGULATORY APPROVAL required for the marketing and sale of such PRODUCT in such country within the TERRITORY has been obtained.  Sales for clinical trial purposes shall not be considered a LAUNCH.  For clarity, a LAUNCH of a PRODUCT in the TERRITORY shall only be deemed to occur once upon the first commercial sale in the TERRITORY regardless of the number of countries in the TERRITORY in which such PRODUCT is approved and marketed.

 

1.12                        “MAJOR MARKET” shall mean any of the following countries: [***], and, collectively, the MAJOR MARKETS, subject to adjustment as set forth in Section 14.3.

 

1.13                        “NET SALES” shall mean, with respect to any PRODUCT, that sum determined by deducting from the gross amount invoiced in the applicable period by ABBOTT or ABBOTT’s AFFILIATES for such PRODUCT sold for use in the TERRITORY in an arms length transaction to THIRD PARTIES: (a) transportation, importation, insurance and other handling charges to the extent included in the billing; (b) trade, quantity or cash discounts, to the extent allowed; (c) credits or allowances, if any, given or made on account of price adjustments, or returns, to the extent made; (d) any and all Federal, state or local government rebates, whether in existence now, or enacted at any time during the term of this AGREEMENT, to the extent made; (e) any sales, use, value-added, excise or similar tax or other governmental charge upon or measured by the production, sale, transportation, delivery or use of such PRODUCT; and (f) a reasonable allowance for bad debt; in each case determined in accordance with ABBOTT’s normal internal accounting practices and GAAP.

 

1.14                        “NUMAX” shall mean the product candidate being developed by MEDIMMUNE, known as of the EFFECTIVE DATE as MEDI-524, including any functional derivative, delivery form, dosage form, formulation, improvement or presentation of such product candidate developed by or on behalf of MEDIMMUNE following the EFFECTIVE DATE.

 

1.15                        “PHASE III CLINICAL TRIAL” shall mean the Phase III clinical trial for NUMAX ongoing as of the EFFECTIVE DATE (designated by MEDIMMUNE as of the EFFECTIVE DATE as STUDY #MI-CP110).

 

1.16                        “PARTY” or “PARTIES” shall mean ABBOTT and/or MEDIMMUNE, as the case may be.

 

1.17                        “PATENT” shall mean the patent and patent applications listed on Exhibit 10.8, and any and all reissues, extensions, substitutions, reexaminations, supplemental protection certificates, continuations, continuations-in-part or divisions of or to any of such patents and patent applications.

 

1.18                        “PRODUCT(S)” shall mean SYNAGIS and/or NUMAX.

 

1.19                        “REGISTRATION FILES” means the following documents and related correspondence with REGULATORY AUTHORITIES: (a) REGULATORY FILINGS; (b) Drug Master Files  (the “DMF’s”) and Registration Dossier for the PRODUCTS; (c) labeling for all dosage forms of the PRODUCTS; (d) all clinical raw data concerning PRODUCT, expert reports, pre-clinical and clinical reports; (e) stability study reports; (f) existing

 

3



 

specifications (including copies of validation of analytical methods); (g) formulations data included in the registration dossier for the PRODUCT; (h) any adverse event and pharmacovigilance reports; and (i) a summary of any outstanding regulatory issues.

 

1.20                        “REGULATORY APPROVAL” shall mean the applicable technical, medical and scientific licenses, registrations, authorizations and approvals required for marketing and/or use of the PRODUCTS in each country in the TERRITORY, including, without limitation, approvals of Biologics License Applications (BLA) or equivalent applications filed with REGULATORY AUTHORITIES in the TERRITORY, but excluding pricing, reimbursement or labeling approvals except to the extent required by a REGULATORY AUTHORITY in any country in the TERRITORY for the distribution, marketing, promotion, offer for sale, use, import or sale of PRODUCTS.  For the avoidance of doubt, an “approvable letter” (or its equivalent) issued by a REGULATORY AUTHORITY shall not be considered a REGULATORY APPROVAL.

 

1.21                        “REGULATORY AUTHORITY” shall mean the FDA and any national, supra-national (e.g., the European Commission, the Council of the European Union, or the European REGULATORY AUTHORITY for the Evaluation of Medicinal Products), regional, state or local regulatory authority, department, bureau, commission, council or other governmental entity.

 

1.22                        “REGULATORY FILINGS” shall mean a pre-market approval application and/or any other filings or dossier as may be required by REGULATORY AUTHORITIES to obtain or maintain REGULATORY APPROVALS for sale, use or marketing of any PRODUCT.

 

1.23                        “REVERSION DATE” shall mean, with respect to a REVERSION EVENT, the earlier of:  (a) [***] (or such later date on which ABBOTT declares a REVERSION EVENT in accordance with Section 3.4), (b) [***] years after the date of occurrence of a REVERSION EVENT defined in Sections 3.4 (a)(i) through (iv), or (c) the first date after occurrence of a REVERSION EVENT defined in Section 3.4(a)(v).

 

1.24                        “REVERSION EVENT” shall have the meaning set forth in Section 3.4.

 

1.25                        “SPECIFICATIONS” shall mean the written specifications for ingredients, composition, sampling,  test procedures, process descriptions, in-process criteria, final release criteria and other information relating to each of the PRODUCTS.  The current SPECIFICATIONS for the lyophilized formulation of SYNAGIS are attached as Exhibit A-1, the SPECIFICATIONS for the liquid formulation of SYNAGIS are attached as Exhibit A-2 and the SPECIFICATIONS for NUMAX are attached at Exhibit A-3.

 

1.26                        “SYNAGIS” shall mean any and all formulations of the humanized antibody product known as palivizumab that is marketed in the TERRITORY as of the EFFECTIVE DATE under the trademark Synagis®, and was previously known as MEDI-493.

 

1.27                        “TERRITORY” shall mean all countries of the world except the United States of America and its territories, possessions and commonwealths, subject to adjustment as set forth in Section 14.3.

 

1.28                        “THIRD PARTY” shall mean a party other than ABBOTT, MEDIMMUNE or their respective AFFILIATES.

 

4



 

1.29                        “THIRD PARTY MANUFACTURER” shall mean, for SYNAGIS, as of the EFFECTIVE DATE, Boehringer Ingelheim, or such other party that MEDIMMUNE appoints following the EFFECTIVE DATE for the manufacture of each of the finished PRODUCTS, in accordance with Section 7.8.

 

1.30                        “TRADEMARK” shall mean the trademark(s) for each of the PRODUCTS (with ownership determined in accordance with Section 10).

 

1.31                        “UNIT” shall mean a 50 mg vial, a 100 mg vial or other presentation of one or more of the PRODUCTS approved from time to time by the Manufacturing Steering Committee. For the purpose of any price calculations under this AGREEMENT, a UNIT shall be deemed to be a 100 mg equivalent vial of PRODUCT (e.g., a 50 mg vial would be equal to a 0.5 100 mg equivalent vial).

 

1.32                        “VACCINE” shall mean one or more biological and/or chemical materials that is or are designed to elicit an immune response in humans.

 

2.                                      GRANT OF RIGHTS.

 

2.1                               APPOINTMENT AND ACCEPTANCE.

 

(a)                                  During the TERM of this AGREEMENT, MEDIMMUNE hereby appoints ABBOTT as the exclusive distributor of each of the PRODUCTS in the TERRITORY.  In connection with such appointment, except as set forth in Section 9, ABBOTT shall exclusively conduct the marketing, promotion, sale and distribution of: (i) NUMAX for use in the prevention or treatment of all human, prophylactic and therapeutic, approved indications in any country within the TERRITORY (including all indications for which NUMAX is approved following the EFFECTIVE DATE in any country within the TERRITORY), and (ii) SYNAGIS for use in the prevention of RSV.  For the avoidance of doubt, ABBOTT’s appointment as the exclusive distributor means that, except as specifically provided otherwise in this AGREEMENT, MEDIMMUNE shall neither itself, directly or indirectly, market, promote, sell or distribute nor grant a THIRD PARTY any right to market, promote, sell or distribute in any country within the TERRITORY: (x) NUMAX for any human, prophylactic and therapeutic indication, or (y) SYNAGIS for the prevention of RSV.

 

(b)                                 ABBOTT hereby accepts the appointment as the exclusive distributor of the PRODUCTS as set forth in Section 2.1(a).  In connection with such appointment, ABBOTT agrees that following REGULATORY APPROVAL of a PRODUCT in each country of the TERRITORY, ABBOTT shall use its COMMERCIALLY REASONABLE EFFORTS to market, promote, sell and distribute at least one PRODUCT in each such country and, if NUMAX is approved in a particular country, then to the extent commercially viable (considering such factors as the breadth of the NUMAX label compared to the SYNAGIS label, the relative adverse event profile of each and the relative reimbursement rates of each), ABBOTT shall use its COMMERCIALLY REASONABLE EFFORTS to market, promote, sell and distribute NUMAX in any such countries.

 

5



 

(c)                                  For clarity, MEDIMMUNE agrees that, following the LAUNCH of NUMAX in any country in the TERRITORY, for as long as ABBOTT is actively distributing, marketing, promoting and selling NUMAX in such country, ABBOTT shall, in its sole discretion, have the right to cease the marketing, promotion, sale and distribution of SYNAGIS in such country upon written notice to MEDIMMUNE and subject to the transition provisions of Section 5.2.  ABBOTT’s failure to market, promote, sell or distribute SYNAGIS in any country in the TERRITORY during the active sale and distribution of NUMAX in such country shall not entitle MEDIMMUNE to terminate ABBOTT’s exclusive rights to SYNAGIS in such country under Section 14.3(c)(i) and shall not entitle MEDIMMUNE to itself market, promote, sell or distribute SYNAGIS for the prevention of RSV in any such country or grant any right to market, promote, sell or distribute SYNAGIS for the prevention of RSV in any such country to any THIRD PARTY.

 

(d)                                 ABBOTT hereby warrants and agrees as follows: (i) ABBOTT will only sell product for the treatment or prevention of RSV (including any indication for which NUMAX is approved in the future) in the TERRITORY which is purchased from MEDIMMUNE; (ii) ABBOTT will only sell and distribute product for the treatment or prevention of RSV (including any indication for which NUMAX is approved in the future) in the TERRITORY as to which ABBOTT maintains distribution rights under this AGREEMENT; (iii) ABBOTT will sell and distribute the PRODUCTS in accordance with the terms and conditions of this AGREEMENT; (iv) ABBOTT will sell each PRODUCT in the TERRITORY under the TRADEMARK applicable to such PRODUCT and only as purchased from MEDIMMUNE; and (v) to the extent commercially reasonable, ABBOTT will sell all PRODUCTS in its inventory on a first-in, first-out basis (i.e., UNITS of PRODUCT closest to their expiration date will be sold first).

 

(e)                                  ABBOTT agrees that neither ABBOTT nor an AFFILIATE of ABBOTT shall manufacture, promote, market or sell, directly or indirectly, or assist any THIRD PARTY in marketing or selling in the TERRITORY, any [***].  These restrictions will apply during the term of the AGREEMENT and for [***] after the termination or expiration of the AGREEMENT, except in the European Union, where the duration of the restriction is limited to [***] from the date of entry into force of the AGREEMENT.  Notwithstanding the foregoing, the restrictions set forth in the preceding two sentences shall not be applicable in any countries in the TERRITORY to the extent such restrictions are not permitted under applicable law, but if ABBOTT or an AFFILIATE of ABBOTT promotes, markets, sells or distributes any [***] in such countries, MEDIMMUNE shall have the sole right to either terminate this AGREEMENT or seek to renegotiate the terms of this AGREEMENT in light of the applicable antitrust laws and regulations (in which case ABBOTT will negotiate in good faith an appropriate amendment to this AGREEMENT).

 

(f)                                    ABBOTT agrees and acknowledges that neither ABBOTT nor its AFFILIATES has been granted any rights by MEDIMMUNE (either under this AGREEMENT or otherwise) to research, manufacture, develop, market, promote, sell or distribute NUMAX outside of the TERRITORY or SYNAGIS outside of the TERRITORY, except, in the case of SYNAGIS, pursuant to the terms of that

 

6



 

certain Co-Promotion Agreement, dated as of November 26, 1997, by and between MEDIMMUNE and Abbott Laboratories (through its Ross Products Division), as amended.

 

2.2                               NON-DIVERSION AND BUNDLING.  Notwithstanding the foregoing provisions of Section 2.1, to the extent permitted by applicable law, ABBOTT agrees that ABBOTT and its AFFILIATES will not sell any of the PRODUCTS to any THIRD PARTY if ABBOTT (or its AFFILIATES) knows or has reason to believe that the PRODUCT will be re-sold or exported outside of the TERRITORY by such THIRD PARTY.  If, after sale of the PRODUCT to a THIRD PARTY, ABBOTT (or its AFFILIATES) learns or reasonably suspects (based on information obtained from MEDIMMUNE or a THIRD PARTY) that such PRODUCT was re-sold or exported outside of the TERRITORY, ABBOTT agrees to provide prompt written notice to MEDIMMUNE (except to the extent such information was initially provided by MEDIMMUNE) and make (or cause its AFFILIATES to make) reasonable efforts to obtain assurance from such THIRD PARTY that it will not divert the sale of the PRODUCT outside the TERRITORY.  If such assurance cannot be timely obtained, ABBOTT shall, if permitted under local laws, cease (or cause its AFFILIATES to cease) further sales of all PRODUCTS to such THIRD PARTY until reasonable assurance has been obtained from such THIRD PARTY that it will cease its resale or export activities with respect to such PRODUCT.  ABBOTT agrees that, with respect to its procedures related to limiting resale or export of the PRODUCTS by THIRD PARTIES, in addition to the foregoing, ABBOTT will treat the PRODUCTS similarly to other ABBOTT products.  Furthermore, the PARTIES agree that if, despite the foregoing, the resale or export of the PRODUCTS by THIRD PARTIES results in significant negative economic consequences to MEDIMMUNE, the PARTIES will meet in good faith to negotiate an appropriate resolution to the situation.

 

ABBOTT will not, without MEDIMMUNE’S written consent, (a) discount the selling price of any PRODUCT in order to promote the sales of other products of ABBOTT, or (b) bundle the PRODUCTS for sale with any other products (including other PRODUCTS).  ABBOTT agrees that in all cases it will conduct all price negotiations in good faith on an arms length basis.

 

2.3                               LABELING AND PACKAGING.  ABBOTT shall prepare all labeling, packaging and package inserts for PRODUCTS in conformity with regulatory guidelines in each country of the TERRITORY, which labeling shall clearly indicate that the PRODUCT is manufactured by or on behalf of MEDIMMUNE and is being distributed by ABBOTT, to the extent that such statements are allowed under the applicable laws and regulations in any particular country of the TERRITORY.

 

ABBOTT shall submit the company core datasheet (CCDS) and packaging to be used for PRODUCT in the MAJOR MARKETS to MEDIMMUNE for approval, which approval shall not unreasonably be withheld. If the proposed local labeling for a country in a MAJOR MARKET: (a) is materially changed from the CCDS previously approved by MEDIMMUNE  pursuant to this Section 2.3, (b) is approved for such country more than two (2) CONTRACT YEARS earlier, or (c) is reasonably requested to be submitted for review by MEDIMMUNE (provided however that, MEDIMMUNE may make such request to review no more than once annually), ABBOTT shall submit such labeling to MEDIMMUNE for approval, which approval shall not unreasonably be withheld. In all cases, MEDIMMUNE shall be deemed to have approved such submitted labeling, packaging or packaging inserts unless MEDIMMUNE provides ABBOTT written

 

7



 

objection or approval thereto within twenty (20) days after receipt thereof, but in no event later than ten (10) days prior to any applicable regulatory deadline (assuming timely notification by ABBOTT at least thirty (30) days before such deadline).

 

2.4                               SUBDISTRIBUTORS.  ABBOTT agrees not to sell the PRODUCTS through subdistributors without the written consent of MEDIMMUNE, which consent shall not be unreasonably withheld. If such consent is granted, ABBOTT shall remain fully liable and responsible to MEDIMMUNE for the activities of a subdistributor appointed by ABBOTT and will monitor any subdistributors to ensure that such subdistributors actions are not inconsistent with the obligations of ABBOTT under this AGREEMENT.

 

2.5                               RIGHT OF FIRST OFFERIf at any time during the TERM, MEDIMMUNE develops and has marketing rights to [***] (“COMPETING PRODUCT”) and MEDIMMUNE desires to grant rights to distribute a COMPETING PRODUCT in one or more countries of the TERRITORY, then MEDIMMUNE shall first notify ABBOTT in writing that it is seeking to appoint such a distributor and if, within thirty (30) days after such written notice, ABBOTT notifies MEDIMMUNE in writing that ABBOTT is interested in becoming that distributor, then MEDIMMUNE and ABBOTT shall negotiate in good faith the terms and conditions of a distribution agreement for such COMPETING PRODUCT in such countries.  If the PARTIES do not reach agreement as to the terms and conditions of such a distribution agreement within sixty (60) days after MEDIMMUNE receives such written notice from ABBOTT or ABBOTT does not notify MEDIMMUNE in writing of ABBOTT’s interest within the thirty (30) day period after the written notice from MEDIMMUNE, then MEDIMMUNE may grant such rights to a THIRD PARTY.  Notwithstanding the foregoing, in the event the PARTIES were unable to reach an agreement as to the terms and conditions, MEDIMMUNE shall not offer such appointment to a THIRD PARTY on  terms and conditions that are, on the whole, more favorable considering the economic value of the transaction, without first offering such terms and conditions to ABBOTT.  Neither PARTY shall have the obligation to enter into an agreement with respect to distribution of a COMPETING PRODUCT and neither shall have liability for failing to enter into any such agreement.  Notwithstanding anything in this Section 2.5 to the contrary, MEDIMMUNE may, itself, distribute a COMPETING PRODUCT in the TERRITORY through local wholesale distribution channels without first offering distribution rights to ABBOTT under this Section 2.5, provided that any THIRD PARTY appointed by MEDIMMUNE for such local distribution shall not market or promote the PRODUCT in the TERRITORY.

 

3.                                      PURCHASE OF PRODUCTS

 

3.1                               (a)                                  REQUIREMENTS.  Subject to the terms and conditions of this AGREEMENT, during  the TERM of this AGREEMENT, MEDIMMUNE shall sell exclusively to ABBOTT and ABBOTT shall purchase, exclusively from MEDIMMUNE, ABBOTT’s requirements of each PRODUCT for sale in the TERRITORY.  ABBOTT shall pay the price for such PRODUCT as set forth in Section 3.2.

 

(b)                                 SUPPLY PLANNING. Subject to the availability of PRODUCT from MEDIMMUNE, ABBOTT shall maintain sufficient inventories of PRODUCT to enable ABBOTT to effectively satisfy demand for PRODUCT in the TERRITORY.  Subject to Section 3.6, MEDIMMUNE shall use COMMERCIALLY REASONABLE EFFORTS to establish and maintain a manufacturing schedule and inventory on-hand of each PRODUCT sufficient to

 

8



 

supply ABBOTT’s demands of such PRODUCT, in 50 mg and 100 mg presentations (or any other presentations that may be approved by the Manufacturing Steering Committee) as set forth in the forecasts submitted by ABBOTT in accordance with the terms of Section 5 hereof.

 

3.2                               PRODUCT PRICE.  Certain definitions related to this Section 3.2 are set forth in Exhibit 3.2 which is hereby incorporated by reference.

 

(a)                                  INVOICE/PAYMENT.  MEDIMMUNE shall invoice ABBOTT for all PRODUCT delivered by MEDIMMUNE to the carrier and ABBOTT shall pay MEDIMMUNE for such PRODUCT, all in accordance with this Section 3.2.  The invoice amount shall be denominated in U.S. Dollars.  MEDIMMUNE shall forward all invoices for PRODUCT ordered hereunder to a U.S. location as designated by ABBOTT.  The invoice submitted by MEDIMMUNE shall include a statement of the royalties owed by MEDIMMUNE to THIRD PARTIES on the PRODUCT for the purposes of determining the BASE PRICE.

 

(b)                                 MINIMUM PRICE/INVOICE PRICE.  No earlier than delivery of PRODUCT to the carrier, MEDIMMUNE shall invoice ABBOTT at the MINIMUM PRICE for such PRODUCT multiplied by the number of UNITS of PRODUCT delivered to the carrier, and ABBOTT shall pay MEDIMMUNE the total amount shown on such invoice (the “INVOICE PRICE”) within forty-five (45) days after the date of invoice.  The MINIMUM PRICE shall be non-refundable.

 

(c)                                  FINAL PRICE.  Within forty-five (45) days after the end of each CALENDAR QUARTER, ABBOTT shall pay MEDIMMUNE (without the need for any further invoice) the difference between (i) the aggregate FINAL PRICE and (ii) the aggregate INVOICE PRICE for all UNITS of PRODUCT sold by ABBOTT during such CALENDAR QUARTER plus the aggregate amount, if any, paid by ABBOTT for FIRST SEASON PRE-APPROVAL PRODUCT in connection with REGULATORY APPROVAL and in accordance with Section 3.2(e).  For any CALENDAR QUARTER, if the aggregate INVOICE PRICE for all PRODUCT sold by ABBOTT during that CALENDAR QUARTER (as determined by specific identification) plus the aggregate amount, if any, paid by ABBOTT for FIRST SEASON PRE-APPROVAL PRODUCT in connection with REGULATORY APPROVAL and in accordance with Section 3.2(e) is greater than the aggregate FINAL PRICE for all PRODUCT sold by ABBOTT during that CALENDAR QUARTER, then ABBOTT shall forfeit the excess amount paid.  This determination will be conducted with specific identification of and separate calculation of each inventory layer and each UNIT type.  For clarity, the calculation of FINAL PRICE will not include SAMPLES (i.e., ABBOTT shall only be obligated to pay the INVOICE PRICE for such SAMPLES).

 

(d)                                 EXPIRED, UNSOLD PRODUCT.  On December 15 of each CONTRACT YEAR and within forty-five (45) days of the last day of the TERM, ABBOTT shall pay MEDIMMUNE (without the need of any further invoice), the difference between the FINAL PRICE and the INVOICE PRICE for all UNITS of PRODUCT not sold by ABBOTT that expired during the period between October 1 of the previous CONTRACT YEAR and September 30 of the subject CONTRACT YEAR (or the last day of the TERM in the case of the last CONTRACT YEAR), other than FIRST SEASON PRE-APPROVAL

 

9



 

PRODUCT.  If the INVOICE PRICE is greater than the FINAL PRICE, then ABBOTT shall forfeit the excess amount paid.  This payment shall include a report with respect to the expired vials for the applicable period.

 

(e)                                  FIRST SEASON PRE-APPROVAL PRODUCT.  Within thirty (30) days after receipt of REGULATORY APPROVAL in any country in the MAJOR MARKETS, for all FIRST SEASON PRE-APPROVAL PRODUCT that has not expired and has a remaining shelf life as of the time of REGULATORY APPROVAL of [***] or greater, ABBOTT shall pay MEDIMMUNE the difference between (a) the INVOICE PRICE ABBOTT would have been obligated to pay to MEDIMMUNE had such PRODUCT initially not been designated FIRST SEASON PRE-APPROVAL PRODUCT and (b) the INVOICE PRICE initially paid by ABBOTT for such PRODUCT.  The additional payment together with the initial payment shall be deemed to be the aggregate nonrefundable minimum price for the applicable PRODUCT.  With respect to FIRST SEASON PRE-APPROVAL PRODUCT that has a remaining shelf life as of the time of REGULATORY APPROVAL of less than [***], ABBOTT shall have no payment obligation upon receipt of REGULATORY APPROVAL, but if such PRODUCT is sold by ABBOTT, then ABBOTT shall pay MEDIMMUNE the FINAL PRICE less the INVOICE PRICE for such PRODUCT in the CALENDAR QUARTER in which it is sold in accordance with Section 3.2(c). With respect to FIRST SEASON PRE-APPROVAL PRODUCT that, as of the time of REGULATORY APPROVAL,  has expired or has a remaining shelf life of less than [***] and is not subsequently sold by ABBOTT, ABBOTT shall have no payment obligations to MEDIMMUNE other than the INVOICE PRICE paid for such PRODUCT in accordance with Section 3.2(b).

 

(f)                                    FOREIGN EXCHANGE CALCULATION.  Whenever conversion from any currency into U.S. Dollars shall be required under this AGREEMENT (e.g., for the determination of NET SALES), such conversion shall be completed for each month of the CALENDAR QUARTER as follows:  the value to be converted shall be calculated with respect to each country in local currency and then converted into U.S. dollars based on the average rate of exchange for that month (based on daily noon buying rates for cable transfers in New York City certified for customs purposes by the Federal Reserve Bank of New York, available on the website for the Board of Governors of the Federal Reserve System (or any successor entity)).  In connection with its payment obligations each CALENDAR QUARTER, ABBOTT will provide electronically to MEDIMMUNE a detailed reconciliation, in form and substance reasonably acceptable to MEDIMMUNE, showing the rates used, confirming the source of the rates used and the conversion calculations.

 

(g)                                 NET SALES DOCUMENTATION.  With each quarterly payment, ABBOTT shall deliver to MEDIMMUNE a full and accurate accounting to include at least the following information:

 

(i)                                     Quantity of each PRODUCT sold and/or withdrawn by transaction type (by country, by month) by ABBOTT and its AFFILIATES.

 

10



 

(ii)                                  Total amount invoiced for each PRODUCT (by country, by month) in local currency.

 

(iii)                               Calculation of NET SALES (by country, by month) in local currency for each PRODUCT.

 

(iv)                              Exchange rates for converting each local currency into U.S. Dollars showing the source conversion rates used in accordance with Section 3.2(f) for each month of the CALENDAR QUARTER.

 

(v)                                 NET SALES in U.S. dollars in each country for each PRODUCT.

 

(vi)                              Total compensation payable to MEDIMMUNE; or to be credited to ABBOTT in accordance with Section 3.2(e).

 

(h)                                 INVENTORY RECONCILIATION REPORT.  Within forty-five (45) days following the end of each CONTRACT YEAR, ABBOTT shall provide MEDIMMUNE an inventory reconciliation for such CONTRACT YEAR.

 

(i)                                     ABBOTT BOOKS AND RECORDS.  ABBOTT shall keep, and shall cause each of its AFFILIATES to keep full and accurate books of account containing all particulars that may be necessary for the purpose of calculating all payments payable to MEDIMMUNE. Such books of account shall be kept at their principal place of business and, with all necessary supporting data shall, for the next two (2) years following the end of the calendar year to which each shall pertain be open for inspection by an independent certified accountant selected by MEDIMMUNE and reasonably acceptable to ABBOTT upon reasonable notice during normal business hours, at MEDIMMUNE’s expense, for the sole purpose of verifying payments or compliance with this AGREEMENT, but in no event more than once in each calendar year. All information and data offered shall be used only for the purpose of verifying payments.  The independent certified public accountant performing any such audit shall not disclose to MEDIMMUNE or to any other Person any confidential information of ABBOTT or any of its AFFILIATES.  The independent certified public accountant shall report to MEDIMMUNE only the results of such audit and only such underlying facts as is necessary to explain the results of such audit.  In the event that such inspection shall indicate that in any CONTRACT YEAR that the payments which should have been paid by ABBOTT are at least five percent (5%) greater than those which were actually paid by ABBOTT, then ABBOTT shall pay the cost of such inspection. All underpayments are immediately due and payable.

 

(j)                                     PRODUCT EXPIRATION.  All expired PRODUCT in ABBOTT’s possession shall be immediately destroyed by ABBOTT, at ABBOTT’s expense, and evidence of such destruction shall be sent to MEDIMMUNE.

 

(k)                                  REPORTS.  Within forty-five (45) days following the end of each CALENDAR QUARTER, as part of the report under Section 3.2(c), ABBOTT shall provide to MEDIMMUNE a written country-by-country and PRODUCT-by-PRODUCT report of the inventory and sales of each PRODUCT during each month of such CALENDAR QUARTER.

 

11



 

(l)                                     MEDIMMUNE BOOKS AND RECORDS.  MEDIMMUNE shall keep, and shall cause each of its AFFILIATES to keep full and accurate books of account containing all particulars that may be necessary for the purpose of calculating all THIRD PARTY royalties on the PRODUCT owing and/or paid by MEDIMMUNE and the calculation of the COST OF GOODS.  Such books of account shall be kept at their principal place of business and, with all necessary supporting data shall, for the next two (2) years following the end of the calendar year to which each shall pertain be open for inspection by an independent certified public accountant selected by ABBOTT and reasonably acceptable to MEDIMMUNE upon verifying such royalties or compliance with this AGREEMENT, but in no event more than once in each calendar year.  All information and data offered shall be used only for such purpose.  The independent certified public accountant performing any such audit shall not disclose to ABBOTT or to any other Person any confidential information of MEDIMMUNE or any of its AFFILIATES.  The independent certified public accountant shall report to ABBOTT only the results of such audit and only such underlying facts as is necessary to explain the results of such audit.  In the event that such inspection shall indicate that in any CONTRACT YEAR, the THIRD PARTY royalties reported as owed and/or paid by MEDIMMUNE  or the calculation of the COST OF GOODS are at least five percent (5%) greater than those which were actually owed and/or paid by MEDIMMUNE, then MEDIMMUNE shall pay the cost of such inspection.  All amounts reported as owed and/or paid for THIRD PARTY royalties which are in excess of the amounts actually owed and/or paid by MEDIMMUNE on the PRODUCT shall immediately be credited against any and all amounts due and owing by ABBOTT to MEDIMMUNE under this AGREEMENT.

 

3.3                               [Reserved.]

 

3.4                               REVERSION EVENT.

 

(a)                                  REVERSION EVENT.  A REVERSION EVENT will be deemed to have occurred if:

 

(i)                                     MEDIMMUNE is required by a REGULATORY AUTHORITY in any country in the MAJOR MARKETS to discontinue due to a safety concern or other reason beyond the control of MEDIMMUNE, the development of NUMAX prior to obtaining REGULATORY APPROVAL for NUMAX in such country; provided, however, that, a suspension of development activities for the purpose of redesigning the protocols in response to a regulatory request or action shall not be considered a discontinuation of development for purposes of this subsection;

 

(ii)                                  the PARTIES mutually agree in writing that the development of NUMAX should be discontinued prior to the filing for REGULATORY APPROVAL of NUMAX in any country in the MAJOR MARKET due to material adverse deviations from the anticipated safety profile for NUMAX that arise or become known to either PARTY after the EFFECTIVE DATE;

 

12



 

(iii)                               [***]: (A) NUMAX has not received REGULATORY APPROVAL in at least [***] of the MAJOR MARKETS, and (B) all pivotal clinical trials for NUMAX in all countries of the MAJOR MARKETS, including but not limited to the PHASE III CLINICAL TRIAL, have been terminated;

 

(iv)                              the PHASE III CLINICAL TRIAL is stopped voluntarily by MEDIMMUNE; provided, however, that, a suspension of the PHASE III CLINICAL TRIAL for the purpose of redesigning the protocols in response to a regulatory request or action shall not be considered a stoppage of the PHASE III CLINICAL TRIAL for purposes of this subsection;

 

(v)                                 the PHASE III CLINICAL TRIAL is (A) permanently discontinued or (B) suspended and reasonably estimated to be delayed for more than [***] from the date of suspension as a result of action or inaction by a THIRD PARTY or by MEDIMMUNE, in either case as a result of gross negligence or willful misconduct by MEDIMMUNE in the execution of (but not the design, analysis, interpretation or any other aspect of) the PHASE III CLINICAL TRIAL (e.g., for failure to pay the necessary clinical research organization(s) to complete the trial).

 

Notwithstanding the foregoing, in the event that the PHASE III CLINICAL TRIAL is ongoing on or after [***] and NUMAX has not been approved in at least [***] of the MAJOR MARKETS, then at any time after [***], subject to the limitation in Section 3.4(b), ABBOTT shall have the sole discretion to declare a REVERSION EVENT upon ninety (90) days written notice to MEDIMMUNE.

 

With respect to Section 3.2(a)(v) above, a REVERSION EVENT shall only be deemed to have occurred upon a finding of gross negligence or willful misconduct by a court of competent jurisdiction (or in accordance with the alternate dispute resolution mechanism set forth provided for in Section 15.7).  If, as a result, a REVERSION EVENT has been deemed to have occurred and MEDIMMUNE cures the cause of the discontinuation or delay within one (1) year following the occurrence of such REVERSION EVENT, then no later than forty-five (45) days after any notice of cure, ABBOTT shall have the right, in its sole discretion and with written notice to MEDIMMUNE, to declare that a REVERSION EVENT did not take place, in which case ABBOTT’s rights to NUMAX shall be reinstated as if such REVERSION EVENT had not occurred and the FINAL PRICE from that point forward shall also be calculated as if a REVERSION EVENT had not occurred.  In addition, no later than thirty (30) days after the reinstatement of ABBOTT’s rights hereunder, ABBOTT shall pay MEDIMMUNE [***] of the total amount of any excess of the FINAL PRICE that would have been paid if the REVERSION EVENT had not occurred over the total amount of the FINAL PRICE that was actually paid during the period that such REVERSION EVENT existed.

 

(b)                                 LIMITATION ON REVERSION EVENT.  Notwithstanding anything Section 3.4(a) to the contrary, if, upon receipt of REGULATORY APPROVAL in [***] of the MAJOR MARKETS a REVERSION EVENT has not previously occurred or been declared, then for the remainder of the TERM this Section 3.4 shall be

 

13



 

deemed null and void (i.e., there shall not be a REVERSION EVENT at any time thereafter).

 

3.5                               REASONABLE EFFORTS TO SUPPLY.  Subject to this Section 3.5 and Section 5.2, MEDIMMUNE agrees to use its COMMERCIALLY REASONABLE EFFORTS to supply ABBOTT with ABBOTT’s requirements of each of the PRODUCTS for sale to customers in the TERRITORY.  Following the LAUNCH of NUMAX in any country in the TERRITORY, MEDIMMUNE shall continue to supply SYNAGIS to ABBOTT for sale in all countries in the TERRITORY in which the relevant REGULATORY AUTHORITIES have refused to permit ABBOTT to remove SYNAGIS from the market or in which the transition of the market from SYNAGIS to NUMAX has not, in ABBOTT’s determination after consultation with the Manufacturing Steering Committee, been completed.  ABBOTT shall use COMMERCIALLY REASONABLE EFFORTS to discontinue older PRODUCTS or formulations of PRODUCTS (including, but not limited to, the lyophilized formulation of SYNAGIS) or to transition from one PRODUCT to another as such new formulations or PRODUCTS are made available by MEDIMMUNE per the direction of the Manufacturing Steering Committee.

 

3.6                               SHORTAGE AND ALLOCATION.  MEDIMMUNE’s obligation to supply PRODUCT under Section 3.1 hereof shall at all times be subject to the condition that MEDIMMUNE is able to obtain or make a sufficient supply of such PRODUCT for sale both inside and outside of the TERRITORY. In the event that PRODUCT available to MEDIMMUNE is in short supply, MEDIMMUNE shall notify ABBOTT of such shortage as soon as possible. In the event there is a short supply of PRODUCT and MEDIMMUNE cannot supply PRODUCT to ABBOTT in an amount equal to ABBOTT’s FIRM ORDER, then MEDIMMUNE shall allocate available PRODUCT to ABBOTT in each month that such a shortfall exists (and in each month thereafter until the shortfall to ABBOTT is remedied) in an amount equal to the product of (a) the amount of available PRODUCT for that month and (b) a fraction the numerator of which is (1) the aggregate quantity of FIRM ORDERS made by ABBOTT over the subsequent [***] period including the shortfall month and the denominator of which is (2) the sum of (x) the aggregate quantity of FIRM ORDERS made by ABBOTT over the subsequent [***] period including the shortfall months and (y) the aggregate quantity of PRODUCT over the same [***] period required by MEDIMMUNE outside the TERRITORY by reference to FIRM ORDERS placed with THIRD PARTY MANUFACTURERS for MEDIMMUNE’s requirements and the amount to be produced at a MEDIMMUNE facility for MEDIMMUNE’s requirements, in each case outside the TERRITORY.  Notwithstanding the foregoing, provided that ABBOTT has previously requested or consented in writing to the discontinuation of a PRODUCT in one or more countries of the TERRITORY, MEDIMMUNE will not be required to provide such PRODUCT in such countries for the remainder of the TERM.

 

3.7                               [Reserved.]

 

3.8                               MINIMUM SALE THRESHHOLD.  Notwithstanding anything to the contrary herein, in the event that the NET SALES of all PRODUCTS in the TERRITORY fails to exceed [***] in any CONTRACT YEAR, unless ABBOTT pays to MEDIMMUNE, within thirty (30) days following the end of the CONTRACT YEAR, [***] of the difference between [***] and the NET SALES achieved by ABBOTT, MEDIMMUNE may, at its sole discretion, convert the exclusive rights granted herein to non-exclusive rights in the TERRITORY.

 

14



 

The PARTIES agree that the [***] minimum sales threshold referenced in the preceding paragraph will be reduced as follows in the event that ABBOTT’s rights to a PRODUCT in one or more countries are terminated pursuant to Section 14.3:

 

(a)                                  if ABBOTT terminates its right to Canada, the minimum sales threshold will be reduced by [***];

 

(b)                                 if ABBOTT terminates its right to all of the countries of the European Union, the minimum sales threshold will be reduced by [***]; and

 

(c)                                  if ABBOTT terminates its right to Japan, the minimum sales threshold will be reduced by [***].

 

(b)                                 ABBOTT shall be excused from its minimum sales obligations under this Section 3.8 with respect to any CONTRACT YEAR in which the failure to meet such minimum sales requirement is related to: (i) a failure by MEDIMMUNE to fill ABBOTT’s FIRM ORDERS during such CONTRACT YEAR, (ii) MEDIMMUNE’s failure to promptly replace material quantities of defective or non-conforming PRODUCT, or (iii) as a result of a THIRD PARTY selling a product in the TERRITORY which infringes a granted patent in the TERRITORY which is based on Patent Cooperation Treaty Application [***] and the net sales of the infringing THIRD PARTY product is [***] of ABBOTT’s NET SALES of PRODUCT in the TERRITORY in the applicable CONTRACT YEAR; provided, however that, if ABBOTT’s failure to meet such obligations is not wholly due to a cause set forth in subsections (i), (ii) or (iii) above, then applicable minimum sales obligation threshold will be prorated to the extent such cause impaired ABBOTT’s ability to meet its obligations.

 

4.                                      DELIVERY, PAYMENT AND RISK OF LOSS

 

4.1                               (a)                                  CURRENCY.  All payments under this AGREEMENT shall be remitted in immediately available funds. Unless otherwise agreed between the PARTIES all payments shall be in U.S. Dollars.

 

(b)                                 LATE FEES.  In the event that any payment due hereunder is not made when due, the payment shall accrue interest beginning on the first day of the month following the date when such payment was due, calculated at the annual rate of the sum of (i) two percent (2%) plus (ii) the prime interest rate quoted by Citibank, N.A., New York, New York, on the date such payment is due, or on the date payment is made, whichever is higher, the interest being compounded on the last day of each calendar month; provided that in no event shall said annual rate exceed the maximum legal interest rate for corporations. Such payment when made shall be accompanied by all interest accrued.  Said interest and the payment and acceptance thereof shall not negate or waive the right of MEDIMMUNE to any other remedy, legal or equitable, to which MEDIMMUNE may be entitled because of the delinquency of the payment.

 

4.2                               TITLE AND RISK OF LOSS.  Title to PRODUCT sold hereunder, and risk of loss with respect to such PRODUCT, shall pass to ABBOTT upon delivery of the PRODUCT to a carrier designated by ABBOTT at the place at which the PRODUCT is manufactured or

 

15



 

stored. Upon the passage of title, MEDIMMUNE’s liability with respect to risk of loss shall cease, and ABBOTT shall be the owner of such PRODUCT for all purposes, including, without limitation, the marketing, sale and setting of prices for the PRODUCT sold by ABBOTT to its customers.  ABBOTT shall, in writing, provide MEDIMMUNE with instructions regarding the  delivery destination for each order of the PRODUCT and MEDIMMUNE shall arrange the shipment of each order in accordance with such instructions. ABBOTT shall be responsible for the cost of freight and insurance with respect to each shipment of the PRODUCTS.

 

4.3                               CONFLICTING TERMS.  No provision on ABBOTT’s purchase order forms which may purport to impose different conditions upon the parties hereto shall modify the terms of this AGREEMENT.

 

5.                                      FORECASTS AND ORDERS

 

5.1                                 (a)                                  FORECASTS.  ABBOTT shall provide MEDIMMUNE, on or before the tenth day of the last month of each CALENDAR QUARTER, with a three-year product forecast planning horizon for each PRODUCT.   The rolling forecasts are to be broken down to single months and shall include the anticipated quantity of PRODUCT in terms of the formulation and presentation of each PRODUCT. The forecasts for each PRODUCT within the first year (months 1 through 12) are FIRM ORDERS and cannot be changed and the forecasts for the second year (month 13 through 24) are partly binding forecasts which means that the forecasts can be changed within this period. The forecasts can be increased in consultation with the Manufacturing Steering Committee, but are limited to the following restrictions when decreased:

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

The forecast for the third year (months 25-36) is a non-binding forecast.

 

Notwithstanding the foregoing, in the event that MEDIMMUNE assumes the manufacture of any PRODUCT that is, as of the EFFECTIVE DATE, manufactured by a THIRD PARTY MANUFACTURER, the PARTIES shall discuss, in good faith, an adjustment to the forecast reductions that ABBOTT will be permitted.  If the PARTIES cannot come to an agreement regarding any such adjustment, the forecast reductions shall remain as set forth above.

 

Notwithstanding the foregoing, MEDIMMUNE shall use its COMMERCIALLY REASONABLE EFFORTS to comply with unplanned changes in FIRM ORDERS, but shall not be held liable for its inability to do so. In each FIRM ORDER for any month, ABBOTT shall state, after consultation with MEDIMMUNE, a reasonable delivery schedule for PRODUCTS to be delivered in that month.

 

Notwithstanding anything to the contrary in this Section 5.1(a), MEDIMMUNE reserves the right to spread the supply of PRODUCT throughout the

 

16



 

CONTRACT YEAR, provided that if the supply does not meet the specified order dates, then the supply shall be reasonably related to ABBOTT’s demand requirements for the PRODUCTS at the time of delivery in such CONTRACT YEAR.

 

(b)                                 NUDE VIALS.  All PRODUCT shall be supplied to ABBOTT by MEDIMMUNE and shall be ordered by ABBOTT based on UNIT type; without labeling, packaging and packaging inserts. ABBOTT shall be responsible for the labeling, packaging and packaging inserts of PRODUCT at ABBOTT’s sole cost and expense (subject to MEDIMMUNE’s approval right set forth in Section 2.3).

 

(c)                                  MINIMUM ORDER QUANTITY.   Except as otherwise provided in Section 5.2 below, forecasts and order totals for each CONTRACT YEAR shall be a minimum of [***] 100mg equivalent vials for any one formulation of PRODUCT (e.g., lyophilized SYNAGIS, the liquid formulation of SYNAGIS or NUMAX) (“Minimum Order Quantity”).  Notwithstanding the foregoing, during the period of conversion of the market to the liquid formulation of SYNAGIS or to NUMAX,  ABBOTT shall, upon prior approval of the Manufacturing Steering Committee, be entitled to order less than the Minimum Order Quantity.  In any CONTRACT YEAR of conversion described above, in the event that ABBOTT does not order the Minimum Order Quantity and has not obtained Manufacturing Steering Committee approval, then ABBOTT shall pay MEDIMMUNE an amount equal to the COST OF GOODS (plus royalties, if any, due by MEDIMMUNE to any THIRD PARTIES on such COST OF GOODS) multiplied by the amount by which the number of UNITS ordered by ABBOTT in any CONTRACT YEAR is less than the Minimum Order Quantity (such amount, the “Deficiency”).  For the sake of clarity, in the event the Manufacturing Steering Committee has approved the ordering of less than the Minimum Order Quantity, ABBOTT shall not be liable to pay the Deficiency.  ABBOTT shall pay MEDIMMUNE any amount due hereunder no later than thirty (30) days after the end of the applicable CONTRACT YEAR.

 

5.2                                 SUPPLY HARMONIZATION.   ABBOTT and MEDIMMUNE shall jointly create a steering committee (“Manufacturing Steering Committee”) to coordinate: (a) the material management/supply chain logistics related to the partial or complete conversion of one formulation of a PRODUCT to another (including, but not limited to, the conversion from the lyophilized formulation of SYNAGIS to the liquid formulation of SYNAGIS), (b) the manufacture and distribution of the PRODUCTS in the event of the introduction of any PRODUCT or formulation of the PRODUCT in the TERRITORY (including any related REGULATORY FILINGS or communications related to REGULATORY APPROVAL thereof, but in each such case only to the extent specifically related to the manufacture or distribution of the PRODUCTS), (c) the development and management of change control processes for any PRODUCT, (d) the development of an inventory management process for any PRODUCT, (e) participation in THIRD PARTY MANUFACTURER interactions, and (f) any adjustment of the minimum order quantities set forth in Section 5.1(c) above, as necessary to facilitate any launch of NUMAX or of the liquid formulation of SYNAGIS and to minimize the amount of expired PRODUCT.  The Manufacturing Steering Committee shall develop and implement plans for the initial introduction of the PRODUCT or conversion of any formulation of the PRODUCT with the goal of  minimizing the amount of expired PRODUCT or formulation upon conversion.  Except as otherwise provided under Section 7.7(b), a deadlock with respect

 

17