WHOLESALE PRODUCT PURCHASE AGREEMENT

THIS WHOLESALE PRODUCT PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time to time, this "Agreement") is made this 3rd day of April, 2013, (the "Effective Date") by and between Accredo Health Group, Inc., a Delaware corporation having offices at 1640 Century Center Parkway, Memphis, TN 38134 ("Distributor"), and Raptor Pharmaceuticals Inc., a Delaware corporation having offices at 9 Commercial Boulevard, Suite 200, Novato, CA 94949 ("Company").  Distributor and Company are referred to herein individually as a "Party" and collectively as the "Parties".  All Exhibits attached hereto are incorporated herein to the Agreement.  The Parties hereto agree as follows:

WHEREAS, Company is a pharmaceutical company that wishes to contract with Distributor so that Distributor can distribute Company's pharmaceutical products; and

WHEREAS, Distributor wholesales certain products to its customers, which include specialty pharmacies and certain health care institutions and facilities located in the United States and Puerto Rico; and

WHEREAS, the Parties desire to enter into this Agreement so that Distributor can distribute Company's pharmaceutical products to Distributor's customers.

NOW THEREFORE, in consideration of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:

Subject to the terms and conditions contained in this Agreement, Company hereby appoints Distributor and Distributor hereby accepts appointment as the exclusive distributor of Product (defined below in Section 3) for a nephropathic cystinosis indication and an Authorized Distributor of Record (as defined in Section 503(e)(1)(A) of the Prescription Drug Marketing Act of 1987) in the United States, its territories or possessions (the "Territory").  Company acknowledges that Distributor may sell and/or transfer Product to its Affiliates and to specialty pharmacies, health care institutions and facilities.  [****].  As used herein, an "Affiliate" of either Party means any entity that controls, is controlled by, or is under common control with such Party, where "control" means ownership of fifty percent (50%) or more of the outstanding voting securities (but only as long as such entity meets these requirements).

Unless and until this Agreement is terminated as provided for herein, this Agreement shall have an initial term of three (3) years, commencing on the Effective Date.  Following the initial term, this Agreement will not automatically renew provided that this Agreement may be renewed upon mutual agreement of both parties for additional one-year terms.

: This Agreement governs Distributor's distribution of those Company products set forth in Exhibit A (the "Products"), which is attached hereto and incorporated by reference herein and which may be modified from time to time by the Parties upon written mutual consent.

Distributor will supply purchase orders to Company on a mutually acceptable form, electronic data interface (EDI), via fax, email or phone.  All purchase orders are subject to acceptance by Company.  Purchase orders may not be modified or cancelled upon acceptance by Company.

 

 

The Product price will be determined when the Product is launched and will be listed in Exhibit A.

[****].

All of Company's invoices for Product shall reflect pricing and the payment terms set forth under this Agreement.  All of Company's invoices for Product shall be due and payable by Distributor within [****] days after invoice date by Distributor and payment shall be by check; provided, however, if Distributor pays such invoice within [****].

: If Distributor fails to make any payment as stated herein, Company may charge a late payment fee equal to [****] for every undisputed invoice or statement past due.  The late payment fee shall be calculated on the basis of a [****] for the actual number of days elapsed between the date upon which payment was due and the date upon which payment is made.  Company agrees to pay reasonable attorney fees and expenses incurred by Distributor in enforcing its right of collection.

Prices provided in Exhibit A exclude any sales, use, excise, import, export, value added, or other similar taxes or governmental rebates or charges, including any related penalties and interests however designated, with respect to the sale of Products, other than taxes based on net income of Company (collectively "Taxes").  Distributor will pay to Company any and all Taxes imposed on the sale of Products by Company to Distributor under this Agreement as invoiced.

Company will accept chargebacks in accordance with the following chargeback policy:

Company may enter into an arrangement with a customer that specifies the price at which customer will purchase Product from Distributor.  Each such customer is defined as a "Direct Customer".  If the Company's contract with a Direct Customer (or the Direct Customer's purchasing agent) (referred to below as a "Direct Customer Contract") [****] (i) the continued validity of such Direct Customer Contracts; and (ii) in accordance with applicable law and this Agreement.  Chargeback amounts, or other amounts billed as specified in the Direct Customer Agreement, owed by Company to Distributor hereunder for Distributor's distribution of Products to Direct Customers shall be paid or credited to Distributor within [****] days following Distributor's submissions of a request for those amounts.  Legitimate chargeback reconciliation issues should be resolved as soon as practicable with each Party responding to the other within [****] days following receipt of documentation supporting those issues.  Company shall provide documentation of all contracts with Direct Customers that require chargebacks.  [****]

 

Distributor will submit to Company [****] report of all contracts sales to Direct Customers.  Distributor's chargeback reports must be received by Company and Company's Government Reporting Vendor within [****].  The chargeback report shall include the following information, as appropriate, as to each sale made to Direct Customer during the month:

Upon its receipt and approval of Distributor's chargeback reports, Company shall issue a credit memo to Distributor equal to the difference between the [****] on the date invoiced and the price agreed upon between Company and Company's Direct Customer.  Such credit shall be applied against subsequent purchases by Distributor pursuant to this Agreement.

In consideration for Distributor's performance of chargeback services (the "Chargeback Services") and for providing the [****], Company shall pay Distributor a chargeback processing fee of $[****].  After the initial term, and each anniversary thereafter, Accredo may increase the [****] by up to [****].  If Distributor intends to increase the Service Fee as stated herein for any renewal period, Distributor shall notify Company in writing no later than [****] days before this Agreement is renewed.

Chargebacks submitted shall be valid for sales to Company customers for a period not to exceed [****] days following the date of sale to the Direct Customer.  Company reserves the right to deny any chargebacks submitted later than [****] days

 

following the date of sale.  Corrections and adjustments to chargebacks submitted will be considered provided they are submitted within [****] days of Company's denial date.  Distributor shall not deduct any re-submissions credit amounts prior to approval and receipt of a chargeback credit from Company.

Should Distributor issue a credit to a Direct Customer related to a prior sale of Product(s) under contract (for which Distributor previously billed and collected a chargeback from Company), the chargeback will be reversed and remitted to Company under the following terms and conditions:

Distributor will submit to Company and/or Company's Government Reporting Vendor [****].

 

              number and customer information, including defective or returned units of Product, such that the units of Product may be traced for purposes of stock reconciliation, recall and general marketing and shipping review.  Company shall also have the right to inspect Distributor's storage conditions and shipping procedures for Product upon ten (10) business days' prior notice, during regular business hours.

Accredo Health Group, Inc.

1680 Century Center Parkway, Suite 8

Memphis, TN 38134

All Products returned from end customer shall be made in accordance with Company's standard returns policy and Distributor's return policy in effect.  Company's standard returns policy is attached hereto as Exhibit C and incorporated by reference herein.  Distributor will be responsible for crediting end customer based on these policies.  Company will direct end customers to Distributor for any product returns.  Distributor will be entitled to receive a replacement unit from Company at no charge for all Product returned in accordance with Company's Returned Goods Policy.  Notwithstanding anything herein to the contrary, all Product returns made in conjunction with this Agreement will be made on behalf of Distributor.  Distributor may use a designated third party company for receipt and handling of returned Products ("Third Party").  In addition, all fees associated with the use of the Third Party's services will be paid by Distributor and not Company.  All Products returned from end customer, with the exception of Products returned due to package damage, will be returned via overnight shipping to Company.

 

Distributor will provide Company with reports as specified on Exhibit D, which is attached hereto and incorporated by reference herein.  The parties intend that these reports will comply with the applicable statutory and regulatory laws.  In the event of any inconsistency between the data file layouts set forth in Exhibit D and the applicable statutory and regulatory laws, Distributor shall discuss with Company the need to modify the data reports in a manner consistent with applicable law.  If Company requests additional report fields, frequency or timing of reports, changes to the report fields post execution, or data configurations not specified on Exhibit D, an amendment will be executed to authorize such work [****].  Any changes to the Data Reports must be done in an amendment to this Agreement signed by both Parties before any work will begin.

 

Nothing herein shall be construed to limit Distributor from entering into agreements with other manufacturers or wholesalers that allow Distributor to distribute products that compete with Company's Products.

Distributor will not promote Company's Products, but Distributor will promote its own distribution services to its customers in accordance with Distributor's standard business practices, which typically include (but are not limited to) informing Distributor's customers of pricing available for products distributed by Distributor.  Accordingly, Distributor shall not distribute or generate any promotional material containing claims relating to the Product.  Distributor may, however, provide its customers with educational information concerning the Product.  Company represents and warrants that any materials relating to the Product that it provides to Distributor: (i) are limited to communications that are intended to describe the Product or provide important Product-related information; (ii) if required under applicable law, have received the appropriate regulatory approval(s) prior to use (e.g., FDA approval); and (iii) do not involve the counseling or promotion of any off-label use.

In accordance with and to the extent required by state and/or federal law, Distributor shall create and maintain all records, manifests, or other documentation, in electronic and/or written form, necessary to evidence the pedigree (i.e., a record of each distribution) of any Product purchased from Company and shipped, resold, or provided to another distributor or customer.

Distributor shall promptly notify Company upon learning of any activity that appears to illegally divert any Products.

Distributor agrees not to distribute or sell Products outside of the Territory, unless otherwise agreed to between the Parties in a written amendment to this Agreement.  However, shipments to Puerto Rico are subject to additional fees equal to additional and actual out- of-pocket costs incurred by Distributor.

This Agreement is made in good faith based on the assumption that early termination shall not be required.  Notwithstanding the foregoing, early termination shall be permissible as follows:

Each party represents and warrants that (i) it possesses all corporate power and authority necessary to enter into this Agreement and to perform its obligations under this Agreement; (ii) all corporate acts and other proceedings required to be taken by or on the part of each Party to authorize it to perform its obligations under this Agreement have been duly and properly taken; (iii) this Agreement has been duly executed and delivered by each Party and constitutes legal, valid and binding obligations of each Party enforceable in accordance with its terms, subject to the application of general principles of equity and that the execution and performance of this Agreement will not conflict with or violate any other agreement or obligation binding on it; (iv) no approval, authorization, consent or other order or action of or filing with any court, administrative agency or other governmental authority is required for the execution and delivery by such Party of this Agreement or its consummation of the transactions contemplated by this Agreement; and (v) neither it nor its officers, directors, and employees were or are debarred, suspended, proposed for debarment, or otherwise determined to be ineligible to participate in Federal health care programs (as that term is defined in 42 U.S.C. 1320a-7b(f)), convicted of a criminal offense related to the provision of health care items or services, or currently the subject of any Office of Inspector General investigation (collectively, an "adverse enforcement action") and shall notify the other party immediately upon becoming the subject of an adverse enforcement action.

Distributor represents and warrants that it has the necessary expertise, skills, personnel and resources to carry out its obligations under this Agreement.

THE WARRANTIES STATED IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY BOTH PARTIES, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF TITLE, MERCHANTABILITY, OR FITNESS FOR PARTICULAR PURPOSE OR USE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS.

Distributor and Company shall comply with all applicable federal, state, and local laws and regulations governing their activities related to this Agreement, including without limitation, laws related to fraud and abuse, false claims, provision of samples, and prohibition on kickbacks.  Without limiting the generality of the foregoing, the Parties further agree as follows:

Although Distributor does not submit claims or requests for payment to Medicare or Medicaid, the Parties have endeavored to structure the prompt pay discount arrangement and Discounted Product Price set forth herein (collectively, the "discounts")

 

as discounts otherwise consistent with the applicable characteristics of the statutory discount exception (42 U.S.C. § 1320a-7b(b)(3)(A)) and the discount safe harbor (42 C.F.R. § 1001.952(h)).  The applicable fixed percentages pursuant to which the discounts will be paid have been set in advance, as set forth herein.  This Agreement is not dependent on, and does not operate in conjunction with, (either explicitly or implicitly) any other arrangement or agreement between Company and Distributor.  Company represents and warrants that: (i) it will refrain from doing anything that would impede Distributor from meeting any reporting obligations Distributor may have under applicable law; (ii) it will comply with all reporting requirements for pharmaceutical manufacturers under all Federal health care programs and, in particular, will include any and all discounts paid hereunder in its calculations of "average manufacturer price" ("AMP") or "best price" under the Medicaid drug rebate program, and in the calculations of "average sales price" ("ASP") under Medicare, to the extent applicable; (iii) it will properly report the existence of the discounts on the invoices or statements submitted by Company to Distributor; and (iv) no discount paid pursuant to this Agreement is intended in any way as a discount related to a drug formulary or drug formulary activities and has not been negotiated or discussed between the Parties in connection with any such drug formulary or formulary activities.  To the extent required under applicable law, Distributor will report the discounts to appropriate Federal health care programs, and, in any event, will promptly disclose such discounts if requested by a governmental agency.

Company represents and warrants that: (i) it has engaged Distributor to perform bona fide, legitimate, reasonable, and necessary Services (as defined above); (ii) the Services are not intended to serve, either directly or indirectly, as a means of marketing the Product, (iii) the Services are not intended to diminish the objectivity or professional judgment of Distributor; (iv) the Services do not involve the counseling or promotion of any off-label use of the Products; (v) the Service Fee does not constitute a discount or other form of compensation that must be included in best price, AMP, or ASP reporting; (vi) the Service Fee is not intended in any way as remuneration for referrals or for other business generated; (vi) the Service Fee represents fair market value for the Services based on arms-length negotiations; (vii) the Services do not involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law; and (viii) the Service Fee paid pursuant to this Agreement is not intended in any way as a payment related to a drug formulary or drug formulary activities and has not been negotiated or discussed between the Parties in connection with any such drug formulary or formulary activities.

By executing this Agreement, Company hereby designates Distributor, and Distributor accepts such designation, as an authorized distributor of record for purposes of the parties' compliance with the Prescription Drug Marketing Act of 1987, as amended by the Prescription Drug Amendments of 1992, and as may be further amended from time to time, and any and all applicable state pedigree laws having the same or similar designation as an authorized distributor of record.

Company represents and warrants that it has received all applicable regulatory and/or statutory approvals in order for it to lawfully distribute the Product(s) to Distributor hereunder.

Company hereby represents that at the time of commercial sale of the Product Company will have received clearance from FDA to market the Product in the United States.  In the event FDA or any other governmental entity withdraws its marketing clearance for the Product, Company shall promptly notify Distributor.  Furthermore, Company represents and warrants that, at the time of shipment or delivery

 

from Company, the Products (a) shall not be adulterated, misbranded, or otherwise prohibited within the meaning of the Federal Food, Drug and Cosmetic Act, 21 U.S.C.A. 301 et. Seq., as amended, and in effect at the time of shipment or delivery (the "Act") or within the meaning of any applicable state or municipal law in which the definition of adulteration or misbranding are substantially the same as those contained in the Act; and (b) shall not be merchandise which may not be introduced or delivered for introduction into interstate commerce under the provisions of sections 301, 404 or 505 of the Act (21 U.S.C.A. 331, 344 and 355).

Each Party shall take all reasonable actions and do all things reasonably necessary to ensure that any information contained in this Agreement, as well as any information relating to this Agreement or is acquired by virtue of this Agreement (in either case, "Confidential Information") shall not be disclosed or used for purposes outside this Agreement; provided, however, that the foregoing shall not apply to information that: (i) is provided to the disclosing Party's attorney or accountant; (ii) is requested by a legal or regulatory authority; (iii) is provided by the disclosing Party to its Affiliate (provided such Affiliate is subject to the confidentiality restrictions herein), and for the purpose of this section "Affiliate" shall mean an entity which the disclosing Party maintains an ownership position; (iv) a Party can show it knew prior to disclosure without obligation of confidentiality; (v) is or becomes public knowledge through no fault said Party; (vi) is lawfully disclosed by a third Party under no obligation of confidentiality; or (vii) is required to be disclosed pursuant to court order or by law.  This Section shall survive any termination of this Agreement for a period of [****].  Each Party shall either return to the disclosing Party, or destroy, all Confidential Information received hereunder upon the expiration or termination of this Agreement, except that either Party may retain one (1) copy of such Confidential Information in order to satisfy any future legal obligations it may have.  Notwithstanding anything to the contrary contained herein, if reasonably necessary, either Party may disclose to any potential permitted purchaser of such Party the general terms of this Agreement.

 

In no event shall either Party be liable to the other under this Agreement for any special, incidental, indirect, exemplary, or consequential damages, whether based on breach of contract, warranty, tort (including negligence), lost profits or savings, punitive damages, injury to reputation, loss of customers or business, product liability, or otherwise, and whether or not such party has been advised of the possibility of such damage.  In no event shall Company's cumulative liability under this Agreement exceed the amount of fees owed by Company to Distributor and Distributor's cumulative liability under this Agreement (other than for the Product prices owed) exceed the amount of fees received by Distributor from Company.  The foregoing limitations on liability shall not apply to any breach of confidentiality or for any indemnification obligations provided in Section 26.  The Parties acknowledge and agree that the foregoing limitations of liability are a condition and material consideration for their entry into this Agreement.

Distributor and Company shall maintain such policies of [****].  Notwithstanding the foregoing, Company shall, at a minimum, maintain throughout the term of this Agreement after shipment of the first commercial Product [****].  Each Party shall provide the other with reasonable proof of insurance upon written request.

Any notice, demand, request, consent, or approval required or permitted hereunder shall be in writing and shall be delivered: (i) personally; (ii) by certified mail, return receipt requested, postage prepaid; (iii) by facsimile transmission; or (iv) by overnight courier by a nationally recognized courier service, to the address indicated below or to such other address as may be designated in writing by each Party from time to time.

If to Company:

Raptor Pharmaceuticals Inc.

9 Commercial Boulevard

Suite 200

Novato, CA 94949

Attention: Vice President, Health Services

If to Distributor:

Express Scripts, Inc.

One Express Way

St.  Louis, MO 63121

Attn: General Counsel, Accredo

With a copy to:

Accredo Health Group, Inc.

1640 Century Center Parkway

Memphis, TN 38134

Attn: VP, Account Management

All such communications shall be deemed to have been received by the intended recipient: [****]; (iii) upon confirmation of receipt of a facsimile transmission if sent by facsimile; or (iv) [****].

 

In the event any portion of this Agreement not material to the remaining portions hereof shall be held illegal, void or ineffective, such portion(s) shall be deemed stricken and the remaining portions hereof shall remain in full force and effect.  Subject to the consent of both Parties, such consent not to be unreasonably withheld, if any of the terms or provisions of this Agreement are in conflict with any applicable statute or rule of law, then such terms or provisions shall be deemed inoperative to the extent that they may conflict therewith and shall be deemed to be modified to conform with such statute or rule of law.

During the term of this Agreement [****], Company shall have the right to conduct an audit of the books and records of Distributor as it relates to Products in this Agreement:

With regard to the issues addressed herein, this Agreement and the Exhibits hereto contain the entire agreement and understanding of the Parties, and supersedes any and all prior agreements and understandings regarding the same subject matter.  No amendment, modification, revision, representation, warranty, promise or waiver of or to this Agreement shall be effective unless the same shall be in writing and signed by both Parties.  However, Exhibit A (Product Pricing) and Exhibit C (Return Good Policy) may be modified with a written notification from Company to Distributor.  Upon the effective date of the change, the Exhibit(s) will be deemed amended to reflect such change.

This Agreement may be executed in any number of counterparts, all of which together shall constitute one and the same instrument.

Neither Party may assign this Agreement without the written consent of the other, provided however, that either Party may assign this Agreement to any Affiliate that is wholly owned by its corporate parent, or to a third party in connection with the sale of all or substantially all of the business and assets of the assigning Party related to this Agreement.  Furthermore, nothing herein shall be construed to limit Notwithstanding the foregoing, Distributor may subcontract portions of certain limited functions and responsibilities of this Agreement, provided that the subcontractor performs in a manner conforming to this Agreement, subcontractor enters into a confidentiality agreement with Distributor no less extensive than required by this Agreement; and Distributor retains full responsibility and liability for the performance of the subcontracted service.  At no time shall Distributor subcontract all or substantially all of any given function to a third party without the prior written consent of Company.

Distributor may engage a third party to conduct certain administrative functions on its behalf, including, but not limited to, data compilation and reporting services, financial accounting and processing services, or any other function relating to any of Distributor's obligations set forth herein, provided Distributor retains full responsibility and liability for the performance of the third party.  Company agrees to cooperate with Distributor's reasonable requests relating to Distributor's engagement of any such third party and such third will be bound by confidentiality restrictions no less restrictive than are set forth above in the Confidentiality Paragraph set forth above in this Agreement.

Notwithstanding anything to the contrary herein, neither Party shall be liable in any manner for any delay to perform its obligations hereunder which are beyond a Party's reasonable control, including, without limitation, any delay or failure due to strikes, labor disputes, riots, earthquakes, storms, hurricanes, floods or other extreme weather conditions, fires, explosions, acts of God, embargoes, war or other outbreak of hostilities, government acts or regulations, or the failure or inability of carriers, suppliers, delivery services, or telecommunications providers to provide services necessary to enable a Party to perform its obligations hereunder.  In any such circumstance, the Party unable to perform its obligations shall notify the other Party of such circumstance, and said other Party shall have the right to terminate this Agreement immediately upon provision of written notice if the Party of the first part continues to be unable to perform its obligations hereunder for a period of [****].

 

No waiver of any term of this Agreement shall be valid unless waived in writing and signed by the Party against whom the waiver is sought.  The failure of either Party to require performance by the other Party of any provision hereof shall not affect in anyway the right to require such performance at any time thereafter.

Nothing in this Agreement is intended to create any relationship between Distributor and Company other than as independent contractors and neither Party, nor any of their employees, staff, agents, officers or directors shall be construed to be the agent, fiduciary, employee, or representative of the other.

This Agreement and performance of the obligations hereunder, shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the conflicts of laws provision therein.

Each Party shall take all actions necessary and appropriate to assure that it complies with all applicable federal, state, and local laws and regulations, including, without limitation, the Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), the Public Contracts Anti-Kickback Act (41 U.S.C. § 51 et seq.), the Stark Law (42 U.S.C. § 1395nn), and any laws and regulations relating to the terms of this Agreement, as required.  In addition, Distributor will comply with its policies and procedures relating to compliance with the above names laws.

This Agreement is not a third Party beneficiary contract, and, therefore, there are no third Party beneficiaries to this Agreement.

IN WITNESS WHEREOF, the undersigned, duly authorized, has executed this Agreement, effective as of the date first written above.

Product Quality Controls.

Product Reimbursement

Procedure for Returning Items

Procedure for Returning Items to Inventory

DISCLAIMER OF LIABILITY

Distributor shall provide reports to Company containing the following data elements:

*[****].