Common use of Acceptance of Bulk Drug Substance Clause in Contracts

Acceptance of Bulk Drug Substance. (a) Lilly shall have a period of thirty (30) days from the date of receipt of Bulk Drug Substance at the Lilly facility designated in the purchase order to inspect any shipment of Bulk Drug Substance to determine whether that shipment conforms to the Bulk Drug Substance Specifications. That inspection shall be performed in accordance with the Manufacturing Requirements Document. The parties may agree from time to time to revise the analytical methods with the revisions to become effective as of the date agreed by the parties. (b) If Lilly determines the Bulk Drug Substance does not conform to the Bulk Drug Substance specifications it shall notify Ophidian by telephone with a written confirmation. If Ophidian agrees that the Bulk Drug Substance does not conform to the Bulk Drug Substance, Lilly shall have the right to return that non-conforming Bulk Drug Substance to Ophidian. All or any part of any shipment which does not conform to the Bulk Drug Substance may be held for Ophidian's 50 -5- disposition and at Ophidian's expense. If Ophidian does not agree with Lilly's determination that the Bulk Drug Substance does not conform to the Bulk Drug Substance, Ophidian shall as quickly as possible, but in any event within thirty (30) days, so advise Lilly by telephone with written confirmation. Lilly and Ophidian shall meet and attempt to agree whether the Bulk Drug Substance conforms to the Bulk Drug Substance Specifications. (c) Ophidian shall use its best efforts to replace any non- conforming Bulk Drug Substance within the shortest possible time. Lilly shall have no responsibility to Ophidian for the price of non-conforming Bulk Drug Substance but shall pay Ophidian the price for the replacement Bulk Drug Substance. As to quantities of Bulk Drug Substance in relation to which Lilly and Ophidian are unable to agree as to whether they conform to the Bulk Drug Substance Specifications, the parties may submit appropriate samples of that Bulk Drug Substance to a mutually acceptable third party testing laboratory that will perform testing to determine whether the Bulk Drug Substance conforms to the Bulk Drug Substance Specifications, using the test protocols and methodology provided in the Manufacturing Requirements Document. If the third party testing laboratory determines that the Bulk Drug Substance conforms to the Bulk Drug Substance Specifications, Lilly shall pay Ophidian the price established under this Agreement for that Bulk Drug Substance. The parties hereto recognize that it is possible for a shipment of Bulk Drug Substance to have Latent Defects. As soon as either party becomes aware of a Latent Defect in any lot of Bulk Drug Substance, it shall immediately notify the other party and the lot or batch involved shall, at Lilly's election, be deemed rejected as of the date of such notice. The party shall then investigate to determine whether latent defects are caused by a party of negligence in production of Bulk Drug Substance or handling of Bulk Drug Substance after shipment from Ophidian, or whether there is unforeseen variability in the process requiring revalidation. The rejected lot will be paid for by the non-compliant party or shared by both parties if the process requires revalidation.

Acceptance of Bulk Drug Substance. (a) Lilly shall have a period of thirty (30) days from the date of receipt of Bulk Drug Substance at the Lilly facility designated in the purchase order to inspect any shipment of Bulk Drug Substance to determine whether that shipment conforms to the Bulk Drug Substance Specifications. That inspection shall be performed in accordance with the Manufacturing Requirements Document. The parties may agree from time to time to revise the analytical methods with the revisions to become effective as of the date agreed by the parties. (b) If Lilly determines the Bulk Drug Substance does not conform to the Bulk Drug Substance specifications it shall notify Ophidian Vertex by telephone with a written confirmation. If Ophidian Vertex agrees that the Bulk Drug Substance does not conform to the Bulk Drug Substance, Lilly shall have the right to return that non-conforming Bulk Drug Substance to OphidianVertex. All or any part of any shipment which does not Research and Development Agreement--Confidential--Schedule 10.2 Schedule 10.2 (continued) conform to the Bulk Drug Substance may be held for OphidianVertex's 50 -5- disposition and at OphidianVertex's expense. If Ophidian Vertex does not agree with Lilly's determination that the Bulk Drug Substance does not conform to the Bulk Drug Substance, Ophidian Vertex shall as quickly as possible, but in any event within thirty (30) days, so advise Lilly by telephone with written confirmation. Lilly and Ophidian Vertex shall meet and attempt to agree whether the Bulk Drug Substance conforms to the Bulk Drug Substance Specifications. (c) Ophidian Vertex shall use its best efforts to replace any non- non-conforming Bulk Drug Substance within the shortest possible time. Lilly shall have no responsibility to Ophidian Vertex for the price of non-conforming Bulk Drug Substance but shall pay Ophidian Vertex the price for the replacement Bulk Drug Substance. As to quantities of Bulk Drug Substance in relation to which Lilly and Ophidian Vertex are unable to agree as to whether they conform to the Bulk Drug Substance Specifications, the parties may submit appropriate samples of that Bulk Drug Substance to a mutually acceptable third party testing laboratory that will perform testing to determine whether the Bulk Drug Substance conforms to the Bulk Drug Substance Specifications, using the test protocols and methodology provided in the Manufacturing Requirements Document. If the third party testing laboratory determines that the Bulk Drug Substance conforms to the Bulk Drug Substance Specifications, Lilly shall pay Ophidian Vertex the price established under this Agreement for that Bulk Drug Substance. The parties hereto recognize that it is possible for a shipment of Bulk Drug Substance to have Latent Defects. As soon as either party becomes aware of a Latent Defect in any lot of Bulk Drug Substance, it shall immediately notify the other party and the lot or batch involved shall, at Lilly's election, be deemed rejected as of the date of such notice. The party shall then investigate to determine whether latent defects are caused by a party of negligence in production of Bulk Drug Substance or handling of Bulk Drug Substance after shipment from OphidianVertex, or whether there is unforeseen variability in the process requiring revalidation. The rejected lot will be paid for by the non-compliant party or shared by both parties if the process requires revalidation.

Acceptance of Bulk Drug Substance. 5.1 Bulk Drug Substance Conformity. With respect to each Batch, no later than thirty (30) calendar days from AVID'S delivery of the COA and Released Executed Batch Record (provided by HALOZYME) for such Batch, HALOZYME shall either (a) Lilly accept the Batch and title shall transfer to HALOZYME, or (b) notify AVID in writing of the failure of the Batch to meet the Bulk Drug Substance Requirements. All risk of loss for the Bulk Drug Substance shall pass to HALOZYME at the close of business on the 30th calendar day following the later of delivery of the COA and Released Executed Batch Record for such Batch unless HALOZYME has notified AVID of the failure of the Batch to meet the Bulk Drug Substance Requirements. It shall be the responsibility of HALOZYME to provide AVID the Shipping Instructions for the Bulk Drug Substance and any labeling requirements for the Bulk Drug Substance. All reasonable costs and expenses associated with HALOZYME's packaging and shipping requests shall be paid by HALOZYME. Notwithstanding the foregoing, if HALOZYME accepts a Batch but wishes to have AVID store the Bulk Drug Substance under a xxxx and hold arrangement beyond the thirty (30) day period, HALOZYME shall provide AVID with written notice to store the BDS and shall pay AVID *** a month per Batch (not to exceed six (6) months) and AVID shall store such Batch in accordance with cGMP at its facilities ("Xxxx and Hold Arrangement"). Promptly following the end of such six (6) month period, AVID shall, at HALOZYME's expense, ship the remaining BDS (if any) to such as address as HALOZYME shall provide. Under the xxxx and hold arrangement, HALOZYME shall provide to AVID, prior to the close of the thirtieth (30th) calendar day following the later of delivery of the COA and Released Executed Batch Record, a written fixed schedule covering a period not to exceed such six (6) month period for delivery of the BDS. Other than AVID's obligations relating to the storage and delivery of the BDS, AVID shall not be responsible for any additional performance obligations with respect to the BDS after the thirty (30) day period. HALOZYME agrees that all *** Confidential material redacted and submitted separately to the Commission CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY risk of loss of the BDS shall transfer to HALOZYME at the close of the thirtieth (30th) calendar day following AVID'S delivery of the COA and Released Executed Batch Record for such Batch under any Xxxx and Hold Arrangement. HALOZYME shall pay all amounts required to be paid to AVID pursuant to this Agreement no later than thirty (30) days from the date of receipt of Bulk Drug Substance at the Lilly facility designated in the purchase order to inspect any shipment of Bulk Drug Substance to determine whether that shipment conforms to the Bulk Drug Substance Specifications. That inspection shall be performed invoice in accordance with the Manufacturing Requirements Document. The parties may agree from time to time to revise the analytical methods with the revisions to become effective as of the date agreed by the partiesPurchase Price. (b) 5.1.1 If Lilly determines HALOZYME fails to notify AVID within the time period specified in Section 5.1 that any Bulk Drug Substance does not conform to the Bulk Drug Substance specifications it Requirements, then HALOZYME shall notify Ophidian by telephone with a written confirmation. be deemed to have accepted such Bulk Drug Substance and waived its right to revoke acceptance. 5.1.2 If Ophidian agrees that the HALOZYME believes any Bulk Drug Substance does not conform to the Bulk Drug SubstanceSubstance Requirements, Lilly it shall have give written notice to AVID specifying the right to return that non-conforming manner in which such Bulk Drug Substance fails to Ophidian. All or any part of any shipment which does not conform to meet the Bulk Drug Substance may be held Requirements. Guidelines for Ophidian's 50 -5- disposition and at Ophidian's expense. resolving any disputed claims regarding conformity of Bulk Drug Substance are set forth in Section 5.1.3. 5.1.3 If Ophidian does not agree with Lilly's determination that there is any dispute concerning whether the Bulk Drug Substance does not conform complies with the Bulk Drug Substance Requirements or whether any such failure is due (in whole or in part) to acts or omissions of HALOZYME after delivery of the Bulk Drug Substance, Ophidian the parties first shall refer such matter to the head of Quality Department of each company for amicable settlement. In the event that the head of each Quality Department does not settle such dispute within ten (10) business days (or such later time as quickly as possiblethe parties may agree in writing) after one party referred the matter to the other company's Quality Department, but in any event within thirty (30) days, so advise Lilly by telephone with written confirmation. Lilly and Ophidian shall meet and attempt to agree whether a sample of the Bulk Drug Substance conforms to retained by AVID and a sample of the Bulk Drug Substance Specifications. (c) Ophidian delivered to HALOZYME shall use its best efforts to replace any non- conforming Bulk Drug Substance within be exchanged between the shortest possible timeparties for a counter-check. Lilly shall have no responsibility to Ophidian for If such counter-check does not resolve the price dispute, a sample of non-conforming Bulk Drug Substance but shall pay Ophidian the price for the replacement Bulk Drug Substance. As to quantities of Bulk Drug Substance in relation to which Lilly and Ophidian are unable to agree as to whether they conform to the Bulk Drug Substance Specifications, retained by AVID and a sample of the parties may submit appropriate samples of that Bulk Drug Substance delivered to a HALOZYME shall be submitted to an independent, qualified third party laboratory that is mutually acceptable third party testing and selected by the parties promptly in good faith. Such laboratory that will perform testing to shall determine whether the Bulk Drug Substance conforms delivered to HALOZYME met the Bulk Drug Substance SpecificationsRequirements at the time of delivery by AVID, using and such laboratory's determinations shall be final. In the test protocols and methodology provided in the Manufacturing Requirements Document. If the third party testing laboratory determines that event the Bulk Drug Substance conforms provided by AVID to the independent, qualified third party laboratory meets the Bulk Drug Substance SpecificationsRequirements, Lilly HALOZYME shall immediately and without delay pay Ophidian AVID the price established under this Agreement for that Bulk Drug SubstancePurchase Price. The parties hereto recognize that it is possible for a shipment of Bulk Drug Substance to have Latent Defects. As soon as either non-prevailing party becomes aware of a Latent Defect in any lot of Bulk Drug Substance, it shall immediately notify bear the other party and the lot or batch involved shall, at Lilly's election, be deemed rejected as of the date costs of such notice. The party shall then investigate to determine whether latent defects are caused by a party of negligence laboratory or consultant, except as set forth in production of Bulk Drug Substance or handling of Bulk Drug Substance after shipment from Ophidian, or whether there is unforeseen variability in the process requiring revalidation. The rejected lot will be paid for by the non-compliant party or shared by both parties if the process requires revalidationSection 5.2.2.