Exhibit 10.1
Certain portions marked by asterisks have been omitted subject to a confidential
treatment request and filed separately with the Securities & Exchange
Commission.
This Cell Therapy Manufacturing Agreement (the "Agreement") is made as of
October 29, 2003, (the "Effective Date") between Cambrex Bio Science
Walkersville, Inc., a Delaware corporation ("CBSW"), and Ortec International,
Inc., a Delaware corporation ("Client")(each of CBSW and Client, a "Party" and,
collectively, the "Parties").
RECITALS
A. CBSW operates a multi-client production facility located at 0000 Xxxxx
Xxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000 (the "Facility").
B. Client desires to have CBSW optimize one or more processes to produce a
product containing human cells and intended for therapeutic use in humans, and
thereafter to produce such product for commercial sale, and CBSW desires to
optimize such processes and produce such product.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth, CBSW and Client, intending to be legally
bound, hereby agree as follows:
AGREEMENT
1. DEFINITIONS
When used in this Agreement, capitalized terms will have the meanings as
defined below and throughout the Agreement. Unless the context indicates
otherwise, the singular will include the plural and the plural will include the
singular.
1.1 "Affiliate" means a legal entity that, directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with a Party. For purposes of this definition only, "control" and, with
correlative meanings, the terms "controlled by" and "under common control with"
means (a) the possession, directly or indirectly, of the power to direct the
management or policies of a legal entity, whether through the ownership of
voting securities or by contract relating to voting rights or corporate
governance, or (b) the ownership, directly or indirectly, of more than 50% of
the voting securities or other ownership interest of a legal entity; provided,
however, that if local law restricts foreign ownership, control will be
established by direct or indirect ownership of the maximum ownership percentage
that may, under such local law, be owned by foreign interests.
1.2 "Additional Production Suite" has the meaning set forth in Section
3.3.4
1.3 "Batch" means a specific quantity of Product that is intended to have
uniform character and quality, within specified limits, and is produced
according to a single manufacturing order during the same cycle of manufacture.
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1.4 "Batch Record" means the production record pertaining to a Batch.
1.5 "CBSW Inventions" means any know-how, media, assays, methods or other
inventions, whether or not patentable, conceived, developed or reduced to
practice by CBSW: (a) on or before the Effective Date; or (b)(i) in connection
with the performance of a Development Plan or Production Plan, and (ii) relating
generally to CBSW's business of producing biological materials. However, if any
such know-how, media, assays, methods or other inventions incorporates any
Client Inventions or portions thereof, such Client Invention or portion thereof
shall not constitute a part of the CBSW Invention.
1.6 "CBSW Operating Documents" means the standard operating procedures,
standard manufacturing procedures, raw material specifications, protocols,
validation documentation, and supporting documentation, such as environmental
monitoring, for operation and maintenance of the Facility and CBSW equipment
used in the process of producing the Product, excluding any of the foregoing
that are unique to the manufacture of Product.
1.7 "CBSW Parties" has the meaning set forth in Section 17.1.
1.8 "cGMP" means current Good Manufacturing Practices as contained in 21
CFR Parts 210 and 211 as amended from time to time.
1.9 "Change Order" has the meaning set forth in Section 4.2.
1.10 "Client Development Materials" has the meaning set forth in Section
4.3.
1.11 "Client Inventions" means: (a) any know-how or inventions, whether or
not patentable, that are conceived, developed or reduced to practice by Client
(i) on or before the Effective Date, or (ii) in connection with the performance
of a Development Plan or Production Plan; and (b) any patentable inventions
conceived, developed or reduced to practice by CBSW, solely or jointly with
Client, directly in the course of performance of a Development Plan or
Production Plan and specifically claiming the Product and/or the manufacture or
use thereof, including, without limitation, the Process and any related Master
Production Record (excluding any CBSW Operating Documents or CBSW Confidential
Information included therein).
1.12 "Client Materials" means the Client Development Materials and the
Client Production Materials.
1.13 "Client Personnel" has the meaning set forth in Section 6.5.1
1.14 "Client Production Materials" has the meaning set forth in Section
2.2.
1.15 "Commencement Date" means (a) with respect to Phase I, November 1,
2003, and (b) with respect to Phase II, the date of completion of commissioning
and validation of the Custom Production Suite.
1.16 "Cryopreserved Product" has the meaning set forth in Schedule 1.15
attached hereto and hereby incorporated herein by reference.
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1.17 "Cryopreserved Product Specifications" has the meaning set forth in
Schedule 1.15 attached hereto and hereby incorporated herein by reference.
1.18 "Cryopreserved Product Unit" has the meaning set forth in Schedule
1.15 attached hereto and hereby incorporated herein by reference.
1.19 "Custom Production Suite" means a Production Suite at the Facility
designed and constructed pursuant to this Agreement for the dedicated purpose of
producing Product.
1.20 "Development Plan" has the meaning set forth in Section 4.1.
1.21 "Facility" means the entire CBSW manufacturing facility, which
consists of considerably more than the Production Suite and/or the Custom
Production Suite.
1.22 "FDA" means the U.S. Food and Drug Administration, and any successor
agency thereof.
1.23 "Fresh Product" has the meaning set forth in Schedule 1.15 attached
hereto and hereby incorporated herein by reference.
1.24 "Fresh Product Specifications" has the meaning set forth in Schedule
1.15 attached hereto and hereby incorporated herein by reference.
1.25 "Fresh Product Unit" has the meaning set forth in Schedule 1.15
attached hereto and hereby incorporated herein by reference.
1.26 "Lead Time" has the meaning set forth in the Production Plan.
1.27 "Master Production Record" means a detailed description of a Process
and any other instructions to be followed in the production of Product by means
of such Process.
1.28 "Materials" means all raw materials and supplies to be used in the
production of Product.
1.29 "Monthly Fee" has the meaning set forth in Schedule 11.1 attached
hereto and hereby incorporated herein by reference.
1.30 "Phase I" means the period of time commencing on the Effective Date
and ending upon the occurrence of one or more events described in Section 2.6.
1.31 "Phase I Production Plan" has the meaning set forth in Section 2.1.
1.32 "Phase II" means the period of time commencing as set forth in Section
3.1 and ending upon the occurrence of one or more events described in Section
3.5.
1.33 "Phase II Production Plan" has the meaning set forth in Section 3.2.
1.34 "Plan Approval Date" has the meaning set forth in section 3.3.2.
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1.35 "Process" means a manufacturing process for Product.
1.36 "Product" means Fresh Product and/or Cryopreserved Product.
1.37 "Product Warranties" has the meaning set forth in Section 7.1
1.38 "Production Plan" means a plan describing the activities to be
performed by CBSW, or to be subcontracted by CBSW to Third Parties, in the
production of Product, including, without limitation, the creation of a Master
Production Record for such Product.
1.39 "Production Rerun" has the meaning set forth in Section 7.4.1.
1.40 "Production Rerun Expenses" has the meaning set forth in Section
7.4.1.
1.41 "Production Suite" means a production facility and associated common
space that is validated and meets FDA standards and applicable guidelines.
1.42 "Production Term" means (a) with respect to Phase I, the period
commencing on the Commencement Date of Phase I and ending on the Commencement
Date of Phase II or upon termination of this Agreement, whichever is sooner; and
(b) with respect to Phase II, the period commencing on the Commencement Date of
Phase II and ending upon termination of this Agreement.
1.43 "Regulatory Approval" means the approval by the FDA to market and sell
Product in the United States.
1.44 "SOP" means a standard operating procedure.
1.45 "Third Party" means any party other than CBSW, Client or their
respective Affiliates.
2. MANUFACTURE OF PRODUCT - PHASE I
2.1 Production Plan. Promptly after the Effective Date, the Parties will
discuss and prepare a Production Plan covering the production of Product during
Phase I (the "Phase I Production Plan"). A draft outline of the Phase I
Production Plan is included in Schedule 2.1 attached hereto and hereby
incorporated herein by reference. After the Parties have verbally agreed on a
Phase I Production Plan, CBSW will deliver such plan to Client for approval. The
Phase I Production Plan will not be binding on the Parties until signed by both
Parties.
2.2 Technology Transfer. Promptly after the Effective Date, Client will
provide CBSW with Client's complete manufacturing process for Fresh Product and
Cryopreserved Product and any protocols, SOPs and other information and
documentation in possession or control of Client and necessary for the
manufacture of such Products by means of such process in conformance with cGMP,
including, without limitation, manufacturing process information, SOPs,
development data and reports, quality control assays, raw material
specifications (including vendor, grade and sampling/testing requirements),
product and sample packing and
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shipping instructions, and product specific cleaning and decontamination
information (collectively, the "Client Production Materials"). The provision of
the Client Production Materials by Client to CBSW shall not constitute a
transfer or assignment of ownership of any portion thereof and the ownership
thereof shall remain with Client.
2.3 Master Production Records. Based on the Client Production Materials,
CBSW will prepare Master Production Records for Fresh Product and Cryopreserved
Product under the terms and conditions set forth in Section 5.
2.4 Commencement Date. Client understands and agrees that CBSW has no
obligation under this Agreement to produce Product for Client prior to November
1, 2003, the Commencement Date for production of Product during Phase I.
2.5 Manufacture by CBSW. During the Production Term for Phase I CBSW will,
provided that Client has timely provided the Client Production Materials to
CBSW, manufacture, package, ship, handle quality assurance and quality control
for Product, all as set forth in greater detail in the Phase I Production Plan,
and deliver to Client or deliver to a third party at Client's direction as
provided in Section 6.3, the quantities of Product ordered by Client up to the
amounts set forth in Section 6.2 attached hereto, all in accordance with the
terms and conditions set forth in this Agreement. During the Production Term for
Phase I, CBSW will provide sufficient appropriately trained and supervised
personnel to effect such manufacture.
2.6 Production Facility. During the Production Term for Phase I, CBSW will
provide, in its Facility, a Production Suite, as further described in the third
paragraph of Section 3 of Schedule 11.1 attached hereto, which Production Suite
will be used exclusively for the manufacture of the Product.
2.7 Termination. Phase I will commence on the Effective Date and will
continue until the initiation of Phase II pursuant to Section 3.1 or until
termination of this Agreement, whichever is sooner.
3. MANUFACTURE OF PRODUCT - PHASE II
3.1 Initiation. At any time during Phase I, Client may elect to initiate
Phase II of this Agreement by written notice to CBSW. Client will accompany such
notice with a one-time, non-refundable initiation fee in the amount of
[***] (the "Phase II Initiation Fee"). Such notice will become effective
upon receipt by Client of written confirmation by CBSW of the initiation of
Phase II, which confirmation will not be unreasonably withheld or delayed, and
Phase II will commence as of such receipt.
3.2 Production Plan. Promptly after initiation of Phase II, CBSW and Client
will meet to create a Production Plan covering (a) the design and construction
of the Custom Production Suite (including dimension, layout, and equipment
requirements, as agreed upon by the Parties based on projections of commercial
demand for Product), and (b) the transfer of Product production to the Custom
Production Suite (the "Phase II Production Plan"). The Phase II Production Plan
will include a date for initiation of construction of the Custom
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Production Suite as well as the Commencement Date for production of Product
during Phase II. CBSW understands and agrees that the date set forth in the
Phase II Production Plan for initiation of construction of the Custom Production
Suite may be no later than the date of Regulatory Approval by the FDA of
Cryopreserved Product for any chronic wound indication, unless agreed otherwise
by both Parties. A draft outline of the Phase II Production Plan is included in
Schedule 3.1. After the Parties have verbally agreed on a Phase II Production
Plan, CBSW will deliver such plan to Client for approval. The Phase II
Production Plan will not be binding on the Parties until signed by both Parties.
3.3 Custom Production Suite.
3.3.1 Following approval of the Phase II Production Plan by the
Parties, CBSW will propose a design and engineering team consisting of CBSW and
Client personnel, along with outside consultants with expertise in the
construction of cell therapy clean room facilities, and CBSW will submit a list
of such members to Client for approval, which approval will not be unreasonably
withheld. CBSW will retain the approved team (the "D&E Team") to create design
and engineering plans for the Custom Production Suite based on the requirements
set forth in the Phase II Production Plan. Such plans will include an estimate
of costs relating to the construction and validation of the Custom Production
Suite. Upon completion of such plans, the D&E Team will present its proposal to
the Parties for approval. CBSW will bear all costs and expenses relating to any
activities performed by the D&E Team in connection with the design and
engineering of the Custom Production Suite.
3.3.2 The Client will pay [***] of the Custom Production Suite
construction costs in an amount corresponding to [***] of the estimated costs
set forth in such approved plans for the construction and validation of the
Custom Production Suite, provided, however, that the amount of such payment will
not exceed [***] (such payment, the "Construction Fee"). The Construction
Fee will be paid by Client in [***] installments as follows: [***] of the
Construction Fee shall be paid within [***] days after [***] (the "[***] "); an
additional [***] of the Construction Fee shall be paid [***]; the remaining
[***] of the Construction Fee shall be paid in [***] equal monthly
installments [***].
3.3.3 CBSW will, at its sole expense, use reasonable efforts to assure
that construction of the Custom Production Suite meets the specifications and
the schedule set forth in the Phase II Production Plan. As of the Effective
Date, the Parties anticipate that final commissioning and validation of the
Custom Production Suite will be complete within [***] following approval of
the Phase II Production Plan and the final design and engineering plans for the
Custom Production Suite by the Parties. CBSW will have sole decision-making
authority over the management of Custom Production Suite construction and
validation. CBSW will own the Custom Production Suite, including any equipment
therein, and will maintain the Custom Production Suite in a manner consistent
with regulatory guidelines and CBSW's maintenance of other suites at the
Facility. The Custom Production Suite shall be used exclusively for manufacture
of the Product during the Term of this Agreement.
Page 6 of 42
3.3.4 If CBSW is unable to provide the Custom Production Suite
pursuant to the Phase II Production Plan, then instead of providing the Custom
Production Suite, CBSW will, in addition to refunding to Client the portion of
the Construction Fee paid by Client, continue to provide the Production Suite
used in Phase I and provide an additional pre-existing Production Suite (the
"Additional Production Suite") at the Facility , both to be used exclusively for
manufacture of the Product during the Terms of this Agreement. The Production
Suite used in Phase I and the Additional Production Suite [***] produced in the
Production Suite used in Phase I during the month immediately preceding CBSW's
provision of the Additional Production Suite for Client's benefit.
3.3.5 Client acknowledges and agrees that its sole remedy with respect
to CBSW's failure to provide the Custom Production Suite in its entirety is as
set forth in Section 3.3.4, and in furtherance thereof Client hereby waives all
other remedies at law or in equity regarding any claim arising under or relating
to such failure. If CBSW is unable to provide the Custom Production Suite, the
Construction Fee will be refunded to Client in full.
3.3.6 Upon final commissioning and validation of the Custom Production
Suite CBSW will provide Client with written notice of completion of such
commissioning and validation. Within [***] days after completion of such final
commissioning and validation, CBSW will relocate the production of the Product
from the Production Suite used to produce the Product during Phase I to the
Custom Production Suite. Client will relinquish all rights to use the Phase I
Production Suite upon completion of such relocation. If relocation will be
delayed beyond such [***] day period because of acts or omissions of Client,
Client will relinquish all rights to use the Phase I Production Suite at the
end of such 30 day period
3.4 Manufacture by CBSW. During the Production Term for Phase II CBSW will
manufacture, package, ship, handle quality assurance and quality control for
Product, all as set forth in the Phase II Production Plan, and to deliver to
Client, or at Client's direction, the quantities of Product ordered by Client,
all in accordance with the terms and conditions set forth in this Agreement.
During the Production Term for Phase II CBSW will provide sufficient
appropriately trained and supervised technicians to effect such manufacture.
3.4.1 Master Production Record. Should CBSW need to create additional
Master Production Records as the result of commencement of Phase II or the
production of Product in the Custom Production Suite, CBSW will prepare such
additional Master Production Records under the terms and conditions set forth in
Section 5.
3.5 Termination. Phase II will commence on the date of receipt by Client of
confirmation from CBSW pursuant to Section 3.1 and will continue until
termination of this Agreement.
3.5.1 Scale-Down Period. During the Production Term for Phase II,
either Party may initiate a period of declining production of Product,
culminating in termination of this Agreement (the "Scale-Down Period"), by
written notice to the other Party under the terms and
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conditions set forth in Schedule 3.5.1 attached hereto and hereby incorporated
herein by reference.
4. PROCESS DEVELOPMENT
4.1 Development Plan. From time to time during the Term, Client may request
that CBSW perform certain process development activities relating to a Process.
Upon such request, the Parties will collaborate to develop a final plan
describing the activities to be performed by CBSW, or to be subcontracted by
CBSW to Third Parties, in the development of such Process and the associated
Master Production Record (each such plan, a "Development Plan"). A draft outline
of the initial Development Plan is included in Schedule 4.1 attached hereto and
hereby incorporated herein by reference. No final Development Plan will be
binding on the Parties until signed by both Parties.
4.2 Modification of Development Plan. Should Client want to change a
Development Plan or to include therein additional services to be provided by
CBSW, Client may propose to CBSW an amendment to such Development Plan with the
desired changes or additional services ("Change Order"). If CBSW determines that
it has the resources and capabilities to accommodate such Change Order, CBSW
will prepare a modified version of the applicable Development Plan reflecting
such Change Order and will submit such modified Development Plan to Client for
review and comment. The modified Development Plan shall be binding on the
Parties only if signed by both Parties, whereafter such modified version of the
Development Plan will be deemed to have replaced the prior version of the
Development Plan.
4.3 Client Deliverables. Within the time period specified in a Development
Plan, Client will provide CBSW with (a) the materials listed in such Development
Plan, and any handling instructions, protocols, SOPs and other documentation
necessary to maintain the properties of such materials for the performance of
such Development Plan, and (b) any protocols, SOPs and other information and
documentation in possession or control of Client and necessary for the
performance of such Development Plan, the preparation of the Master Production
Record, and the manufacture of Product pursuant to the Master Production Record
in conformance with cGMP, including, without limitation, process information,
SOPs, development data and reports, quality control assays, raw material
specifications (including vendor, grade and sampling/testing requirements),
product and sample packing and shipping instructions, and product specific
cleaning and decontamination information (collectively, the "Client Development
Materials").
4.4 Performance by CBSW. Subject to the provision by Client of the Client
Development Materials, CBSW will use reasonable efforts to perform, directly or,
subject to approval by Client (such approval not to be unreasonably withheld),
through a Third Party contractor, each Development Plan in a professional and
workmanlike manner in accordance with the terms of this Agreement. CBSW will use
reasonable efforts promptly to notify Client of any material delays that arise
during the performance of a Development Plan.
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5. MASTER PRODUCTION RECORD
5.1 Preparation. CBSW will prepare and Client will cooperate in the
preparation of all Master Production Records for each Process developed or
implemented by CBSW pursuant to this Agreement. Client will inform CBSW of any
specific requirements Client may have relating to such Master Production Record,
including, without limitation, any information or procedures Client wishes to
have incorporated therein. If CBSW intends to include in a Master Production
Record the use of any assay, medium, or other technology that is not
commercially available, CBSW will inform Client of such intention and the
Parties will meet to discuss and attempt to agree in good faith on the terms of
use of such non-commercially available materials or technology in the Process.
5.2 Client Production Materials. Client will cooperate with CBSW to assist
CBSW to develop each Master Production Record and Process, including, without
limitation, by providing CBSW with additional information and procedures as may
be required to create the applicable Master Production Record, Process, and/or
any of the following: (i) manufacturing process information, SOPs, development
data and reports, (ii) quality control assays, (iii) raw material specifications
(including vendor, grade and sampling/testing requirements), (iv) Product and
sample packing and shipping instructions, (v) Product specific cleaning and
decontamination information. Each of the foregoing, to the extent provided by
Client to CBSW, will be deemed "Client Production Materials" for purposes of
this Agreement.
5.3 Approval. CBSW will deliver a proposed final draft of the Master
Production Record to Client for its review and approval upon the completion of
such draft. Client will notify CBSW in writing of any objections it has to such
Master Production Record, and upon such notification, representatives of CBSW
and Client will meet promptly to resolve such objections. Upon Client's written
notification to CBSW that a draft Master Production Record is satisfactory, or
in the event that Client does not submit a written notice setting forth Client's
objections to the draft Master Production Record within [***] days from receipt
of such draft by Client, such draft will be deemed approved by Client.
5.4 Confidentiality. Any Process, Master Production Record, Specifications,
and any improvements or modifications thereto developed during the term of this
Agreement, but excluding any CBSW Operating Documents or CBSW Confidential
Information included in any of the foregoing, will (i) be deemed Confidential
Information of Client and subject to the provisions set forth in Section 12 and
(ii) be owned by Client.
6. ORDER PROCESS; DELIVERIES
6.1 Requirements. During Phase I Client will have [***] under this
Agreement. During Phase II Client will order [***] from CBSW under this
Agreement, subject to the reductions set forth in Schedule 3.5.1 relating to
manufacture of Product during the Scale-Down Period. Provided, however, [***],
at any time thereafter Client must purchase from CBSW [***]
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[***], and Client shall have the right to order and purchase [***].
6.2 Forecasting and Order Process.
6.2.1 For Phase I no later than [***], and for Phase II no later than
[***], unless otherwise agreed by the Parties, Client will provide to CBSW a
forecast of Client's monthly requirements of commercial Product to be delivered
under this Agreement during the [***] period starting with the Commencement
Date. Client will provide an updated [***] rolling forecast no later than [***].
CBSW will notify Client if any portion of the forecast exceeds CBSW's production
capacity. The quantities of Product set forth in the first [***] months
contained in any such forecast will be firm and binding on both Parties, so
long as CBSW has not previously notified Client that the forecast for such [***]
month period exceeds CBSW's production capacity, subject to Section 6.2.2. The
quantities of Product set forth in the [***] months in any such forecast will
be non-binding good faith estimates of Client's commercial Product requirements
to be delivered under this Agreement.
6.2.2 At any time, Client may submit to CBSW binding orders for
delivery of Product during a Production Term, which orders will include at a
minimum the quantity of Product ordered and the requested delivery date thereof;
provided, however, that no such order will be binding to the extent that it
includes (a) a delivery date that does not allow for the Lead Time listed in the
applicable Production Plan from the date Client submits such order, (b)
quantities exceeding the Production Capacity listed in such Production Plan for
any given time period; or (c) quantities exceeding the quantity of Product set
forth in the binding portion of the last forecast covering the calendar month
during which such Product is to be delivered (unless CBSW consents to supply
such overage). Client is obligated to order for delivery, and CBSW is obligated
to deliver up to the Production Capacity, during each calendar month in a
Production Term the quantities of Product set forth in the binding portion of
the last forecast covering such calendar month.
6.2.3 No term or provision set forth in any order or similar document
submitted by Client for purposes of ordering Product will be construed to amend
or supersede any provision of this Agreement, and any such terms or provisions
are hereby expressly rejected.
6.3 Packaging and Shipping. CBSW will package and label Product for
shipment in accordance with the applicable Master Production Record and CBSW's
standard practices in effect at the time of performance by CBSW. Product will be
shipped FCA (Incoterms 2000), delivered at the Facility by CBSW to a common
carrier designated by Client to CBSW in writing. Such written designation must
be submitted by Client not less than ten days prior to the scheduled delivery
date set forth in the applicable order submitted pursuant to Section 6.2 or such
other date specified by Client and reasonably agreed to by CBSW. Client will
provide to CBSW its account number with the selected carrier and will pay for
all shipping costs in
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connection with each shipment of Product. Each shipment will be accompanied by
the documentation listed in the applicable Production Plan. On the delivery date
specified in the purchase order submitted pursuant to Section 6.2 or such other
date specified by Client and agreed to by CBSW, CBSW will (i) deliver each
shipment of Product to the common carrier designated by Client or (ii) at
Client's request, place such Product in inventory for future delivery to
Client's designated common carrier on a date specified by Client and agreed to
by CBSW. Should CBSW at any time during the term of this Agreement have reason
to believe that it will be unable to meet a delivery date, CBSW will promptly
notify Client.
6.4 Records. CBSW will maintain accurate records for the production of
Product, as required by applicable laws and regulations. CBSW will retain
possession and ownership of all Batch Records and CBSW Operating Documents, and
will make copies thereof available to Client upon Client's request and at
Client's expense. CBSW Operating Documents will remain CBSW Confidential
Information. Client will have the right to use and reference any of the
foregoing in connection with a filing for or maintenance of Regulatory Approval
of Product or as otherwise authorized by the Agreement. CBSW may not, without
Client's written approval, use Product specific information contained in the
Batch Records or the Master Production Record other than to produce the Product
or in connection with Regulatory Approval of a Product.
6.5 Client Access.
6.5.1 Client's employees and agents (including its independent
contractors) (collectively, "Client Personnel") may with prior notice
participate in the production of the Product in such capacities as may be
approved in writing in advance by CBSW, which approval shall not be unreasonably
withheld. Client Personnel working at the Facility are required to comply with
CBSW's Operating Documents and any other applicable CBSW Facility and/or safety
policies.
6.5.2 Client Personnel working at the Facility will be and remain
employees of Client, and Client will be solely responsible for the payment of
compensation for such Client Personnel (including applicable Federal, state and
local withholding, FICA and other payroll taxes, workers' compensation
insurance, health insurance, and other similar statutory and fringe benefits).
Client covenants and agrees to maintain workers' compensation benefits and
employers' liability insurance as required by applicable Federal and Maryland
laws with respect to all Client Personnel working at the Facility.
6.5.3 Client will pay for the reasonable cost of repairing or
replacing (to the extent that CBSW determines, in its reasonable judgment, that
repairs cannot be adequately effected) any property of CBSW damaged or destroyed
by Client Personnel, provided the Client shall not be liable for repair or
replacement costs resulting from ordinary wear and tear.
6.5.4 Client Personnel authorized to have access to the Facility will
abide by the security procedures established by CBSW. Client will be liable for
any breaches of security by Client Personnel. In addition, Client will reimburse
CBSW for the cost of any lost security cards issued to Client Personnel, at the
rate of US$50 per security card. All Client Personnel xxxx
Xxxx 11 of 42
agree to abide by CBSW policies and SOPs established by CBSW, and will sign a
confidentiality agreement in the then-current form used by CBSW.
6.6 Disclaimers. Client acknowledges and agrees that CBSW Parties will not
engage in any Product refinement or development of the Product, other than as
expressly set forth in this Agreement. Client acknowledges and agrees that CBSW
Parties have not participated in the invention or testing of any Product, and
have not evaluated its safety or suitability for use in humans or otherwise.
6.7 Insurance. Client will maintain, at all times during the Term of this
Agreement and for five years thereafter, to cover Products manufactured by CBSW,
a products liability insurance policy (the "Insurance Policy") with limits of
not less than [***] per occurrence, and will provide a Certificate of
Insurance to CBSW that the Insurance Policy has been endorsed to designate CBSW
as an additional named insured. [***] All other portions of this Section shall
remain unchanged. Client will maintain the Insurance Policy with an insurance
company that is licensed to do business in the State of Maryland and that is
reasonably acceptable to CBSW. The Insurance Policy will contain a provision
requiring at least 30 days' prior written notice to CBSW before it can be
terminated.
7. PRODUCT WARRANTIES; ACCEPTANCE AND REJECTION OF PRODUCTS
7.1 Product Warranties. CBSW warrants that any Product manufactured by CBSW
pursuant to this Agreement, at the time of delivery pursuant to Section 6.3: (a)
conforms to the applicable Specifications; (b) was manufactured in accordance
with the applicable Master Production Record; (c) was manufactured in accordance
with cGMP (collectively, the "Product Warranties"). CBSW also warrants to Client
that it has the capacity and ability to manufacture the Product in accordance
with the terms of this Agreement.
7.2 Approval of Shipment.
7.2.1 When a shipment of Product ordered by Client pursuant to Section
6.2 is ready for delivery, CBSW will notify Client and supply Client with the
required shipping documentation set forth in the Production Plan. CBSW will not
ship any shipment of Product until the required shipping documentation for such
shipment has been approved in writing by Client.
7.2.2 Client will have [***] days after receipt of documentation
regarding each shipment of Product (such period, the "Acceptance Period") to
review such documentation. If Client asserts that the Product does not comply
with the Product Warranties, Client will deliver to CBSW, in accordance with the
notice provisions set forth in Section 18.4 hereof, written notice of
disapproval (the "Disapproval Notice") of such Product, stating in reasonable
detail the basis for such assertion of non-compliance with the Product
Warranties. If a valid Disapproval Notice is received by CBSW during the
Acceptance Period, then CBSW and Client
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will provide one another with all related paperwork and records (including, but
not limited to, quality control tests) relating to both the production of the
Product and the Disapproval Notice.
7.2.3 If Client does not approve within the Acceptance Period
documentation regarding a shipment of Product that complies with the Product
Warranties, CBSW will charge storage fees at the then-current rate for such
shipment of Product until such time as such Product has been shipped. CBSW's
current storage rates are set forth in Schedule 11.1.
7.3 Dispute Resolution.
7.3.1 CBSW and Client will attempt to resolve any dispute regarding
the conformity of a Batch of Product or portion thereof with the Product
Warranties. If such dispute cannot be settled within 30 days of the submission
by each Party of such related paperwork and records to the other Party, then
such dispute will be resolved as follows.
(a) If the Product is alleged not to conform with the Product
Warranties set forth in Section 7.1(a), then Client will submit a sample of the
Batch of the disputed shipment to an independent testing laboratory of
recognized repute selected by Client and approved by CBSW (such approval not to
be unreasonably withheld) for analysis, under Quality Assurance approved
procedures, of the conformity of such shipment of Product with the
Specifications. The costs associated with such analysis by such independent
testing laboratory will be paid by the Party whose assessment of the conformity
of the shipment of Product with the Specifications was mistaken. The
determination by the independent testing laboratory, unless clearly erroneous,
will be final and binding.
(b) If the Product is alleged not to conform with the Product
Warranties set forth in Section 7.1(b) or 7.1(c), such dispute will be submitted
to an arbitrator located in the state where the Product is manufactured, with
adequate scientific background and training, and selected jointly by CBSW and
Client. Such arbitrator, employing the Commercial Arbitration rules of the
American Arbitration Association, will determine whether the Product is in
non-conformance with the Product Warranties set forth in Section 7.1(b) or
7.1(c), and such arbitrator's findings will be final and binding. The costs and
expenses associated with the retention of such arbitrator will be borne by CBSW
in the event that such arbitrator orders CBSW to produce a Production Rerun
pursuant to Section 7.4 below. In all other events, Client will be responsible
for the payment of all such costs and expenses.
7.4 Remedies for Non-Conforming Product.
7.4.1 In the event that the Parties agree, or an independent testing
laboratory or an arbitrator determines, pursuant to Section 7.3, that a Batch of
Product or a portion thereof materially fails to conform to the Product
Warranties due to the failure of: (a) CBSW personnel properly to execute the
Master Production Record, (b) CBSW personnel to comply with cGMP, (c) CBSW or
its personnel otherwise, or (d) the Facility utilities, then CBSW will produce
for Client sufficient quantities of Product to replace the non-conforming Batch
of Product or portion thereof (the "Production Rerun"), in accordance with the
provisions of this Agreement without charging Client monthly fees or portion
thereof for the time needed for such Production
Page 13 of 42
Rerun, (ii) for Hourly Fees (as set forth on Schedule 11.1), (iii) for
Materials needed for the Production Rerun and (iv) other expenses incurred in
The Production Rerun (collectively the "Production Rerun Expenses"). In
addition, [***] .
7.4.2 In the event that the Parties agree, or an independent testing
laboratory or an arbitrator determines, pursuant to Section 7.3, that a Batch of
Product or portion thereof materially fails to conform to the Product Warranties
for any reason other than as set forth in Section 7.4.1, then CBSW will perform
a Production Rerun at Client's expense and Client will bear the expenses of any
resulting required Product recall.
7.4.3 Client acknowledges and agrees that its sole remedy with respect
to the failure of Product to conform with any of the Product Warranties is as
set forth in this Section 7.4, and in furtherance thereof, Client hereby waives
all other remedies at law or in equity regarding the foregoing claims.
7.4.4 Nothing in this Section 7.4 or elsewhere in this Agreement shall
preclude Client from making a claim against CBSW [***] .
8. DAMAGE OR DESTRUCTION OF MATERIALS AND/OR PRODUCT
8.1 Remedies. If during the manufacture of Product pursuant to this
Agreement, Product and/or Materials are destroyed or damaged by CBSW Personnel,
and such damage or destruction resulted from CBSW's material failure to execute
the applicable Process in conformity with the Master Production Record, then,
except as provided in Section 8.2 below, CBSW will provide Client with
additional Product production time equal to the actual time lost because of the
destruction or damage of the Product and/or Materials, without charging Client a
Monthly Fee or any portion thereof for such additional time or for any other
Product Rerun Expenses and will replace such Product and/or Materials at no cost
to Client. Client acknowledges and agrees that its sole remedy with respect to
damaged or destroyed Materials and/or Product (except for the non-conformity of
shipped Product described in Section 7) is as set forth in this Section 8.1, and
in furtherance thereof, Client hereby waives all other remedies at law or in
equity regarding the foregoing claims.
8.2 Limitations. Notwithstanding anything to the contrary set forth in the
preceding Section 8.1, if during the manufacture of Product pursuant to this
Agreement, Product or Materials are destroyed or damaged by CBSW Personnel while
CBSW Personnel were acting at the direction of Client Personnel, and without
negligence or other fault of CBSW Personnel, then CBSW will have no liability to
Client as the result of such destruction or damage.
8.3 Dispute Resolution. CBSW and Client will attempt to resolve any dispute
regarding the liability of CBSW under Section 8.1, but if such dispute cannot be
settled within 30 days after the occurrence of the applicable damage or
destruction, then the dispute will be
Page 14 of 42
submitted to an arbitrator, with the requisite scientific background and
training, and selected jointly by CBSW and Client. Such arbitrator, employing
the Commercial Arbitration Rules of the American Arbitration Association, will
determine the cause of such damage or destruction, and such arbitrator's
findings will be final and binding. The costs and expenses of such arbitrator
will be borne by the party that does not prevail in the arbitration proceeding.
If the arbitration proceeding is commenced by Client the arbitrator will be
located in, and the hearing held in Baltimore, Maryland. If the arbitration
proceeding is commenced by CBSW the arbitrator will be located in, and the
hearing held in, New York City, New York.
9. STORAGE AND ACQUISITION OF MATERIALS
9.1 Pre-Production. CBSW will store at the expense of Client any Client
Materials, equipment or other property delivered pursuant to the Development
Plan or the Production Plan to the Facility by Client more than [***] days prior
to the Commencement Date. The storage rates are set forth in Schedule 11.1, as
may be amended from time to time by CBSW. No storage fees will be charged during
the period starting [***] days prior to a Commencement Date and ending upon the
expiration or termination of the applicable Production Term.
9.2 Production Period. During the Production Term, CBSW will store at the
Facility, without charge to Client, so much of supplies, other Client Materials,
equipment or other property needed to manufacture the Product. In addition,
Client will supply to CBSW a cryogenic means for CBSW to store Cryopreserved
Product at the Facility and CBSW will store such Cyropreserved Product during
the Production Term up to the time specified for delivery in accordance with
Section 6.3.
9.3 Post-Production. CBSW will store at the Facility free of charge any
Product, in-process materials, Client Materials, equipment and other Client
property that remains at the Facility on the date of termination of this
Agreement (collectively "Remaining Client Property"), for up to [***] business
days. If Client has not provided any instructions as to the shipment or other
disposition of Remaining Client Property prior to the expiration of such [***]
day period, CBSW may, in its sole discretion, destroy such Remaining Client
Property, or continue to store such Remaining Client Property at the Facility or
elsewhere. In the event that CBSW continues to store such Remaining Client
Property, Client will pay to CBSW a storage charge at CBSW's then-standard
storage rates for the period beginning on the [***] day after the expiration
or termination of the Production Term through the date that the storage
terminates. CBSW's current storage rates are set forth in Schedule 11.1.
9.4 Materials Management. CBSW will use reasonable efforts to have on hand
enough supplies, other Client Materials, equipment or other property necessary
to the manufacture of the Product, so as to avoid creating delays in the
production of the Product.
10. REGULATORY MATTERS
10.1 Permits and Approvals. During the Production Term, CBSW will maintain
any licenses, permits and approvals necessary for the manufacture of the Product
in the Facility.
Page 15 of 42
CBSW will promptly notify Client if CBSW receives notice that any such license,
permit, or approval is or may be revoked or suspended.
10.2 Client Audits. Up to [***] times during any [***] period during the
Production Term and upon not less than [***] prior written notice, CBSW will
permit Client to inspect the parts of the Facility where the manufacture of
the Product is carried out in order to assess CBSW's compliance with cGMP, and
to discuss any related issues with CBSW's management personnel. Client Personnel
engaged in such inspection will abide by the terms and conditions set forth in
Section 6.5.4.
10.3 Inspections by Regulatory Agencies. CBSW will allow representatives of
any regulatory agency to inspect the relevant parts of the Facility where the
manufacture of the Product is carried out and to inspect the Master Production
Record and Batch Records to verify compliance with cGMP and other practices or
regulations and will promptly notify Client of the scheduling of any such
inspection relating to the manufacture of Product. CBSW will promptly send to
Client a copy of any reports, citations, or warning letters received by Client
or by CBSW in connection with an inspection of a regulatory agency to the extent
such documents relate to or affect the manufacture of the Product.
11. FINANCIAL TERMS
11.1 Payments. Client will make payments to CBSW in the amounts and on the
dates set forth in Schedule 11.1.
11.2 Security Deposit. Subject to the provisions of Section 16.5.4 of this
Agreement, the balance of the Security Deposit, if any, will be returned to
Client within [***] days after the date of termination of this Agreement but
only after deducting therefrom all fees, charges, or other payments due from
Client to CBSW in connection with charges incurred prior to the termination of
this Agreement, including, but not limited to, fees as provided in Section
16.4.5, charges for lost, destroyed, stolen or damaged property of CBSW (all
such fees, charges, or other payments, "Obligations"). The amount of the
Security Deposit remaining, if any, after such deductions will be returned to
Client. Client will remain liable to CBSW for any deficiencies remaining after
the application of the Security Deposit against the Obligations.
11.3 Construction Fee. The Construction Fee, as defined in Section 3.3.2,
will be credited against amounts payable by Client to CBSW under this Agreement
for services contracted under this Agreement during Phase II (including, without
limitation, any fees or costs set forth on Schedule 11.1), as follows: [***]
of the initial Construction Fee will be credited to Client's account and will be
applied against amounts payable by Client to CBSW which are not disputed by
Client.
11.4 Invoices. Within [***] days of the end of each month during which
charges were incurred, CBSW will provide Client with an invoice setting forth a
detailed account of any fees, expenses, or other payments payable by Client
under this Agreement for the preceding month.
Page 16 of 42
The amounts set forth in each such invoice will be due and payable within [***]
days of receipt of such invoice by Client.
11.5 Taxes. Client agrees that it is responsible for and will pay any
sales, use or other taxes resulting from CBSW's production of Product under this
Agreement (except for income, real property or personal property taxes payable
by CBSW). To the extent not paid by Client, Client will indemnify and hold
harmless the CBSW Parties from and against any and all penalties, fees, expenses
and costs whatsoever in connection with the failure by Client to pay such taxes.
CBSW will not collect any sales and use taxes from Client in connection with the
production of any Product hereunder if Client provides to CBSW the appropriate
valid exemption certificates.
11.6 Interest. Any fee, charge or other payment due to CBSW by Client under
this Agreement that is not paid within [***] days after it is due will accrue
interest from the date when the same was due and payable, at the [***] payable
on demand.
11.7 Method of Payment. All payments to CBSW hereunder by Client will be in
United States currency and will be by check, wire transfer or money order.
11.8 Cost Adjustments. [***] and on each anniversary thereafter, the
various costs and rates set forth in Schedule 11.1 [***] will increase by [***].
12. CONFIDENTIAL INFORMATION
12.1 Definition. "Confidential Information" means all technical, scientific
and other know-how and information, trade secrets, knowledge, technology, means,
methods, processes, practices, formulas, instructions, skills, techniques,
procedures, specifications, data, results and other material, pre-clinical and
clinical trial results, manufacturing procedures, test procedures and
purification and isolation techniques, and any tangible embodiments of any of
the foregoing, and any scientific, manufacturing, marketing and business plans,
any financial and personnel matters relating to a Party or its present or future
products, sales, suppliers, customers, employees, investors or business, that
has been disclosed by or on behalf of such Party to the other Party either in
connection with the discussions and negotiations pertaining to this Agreement or
in the course of performing this Agreement. Without limiting the foregoing, the
terms of this Agreement will be deemed "Confidential Information" and will be
subject to the terms and conditions set forth in this Section 12.
12.2 Exclusions. Notwithstanding the foregoing Section 12.1, any
information disclosed by a Party to the other Party will not be deemed
"Confidential Information" to the extent that such information:
(a) at the time of disclosure is in the public domain;
(b) becomes part of the public domain, by publication or
otherwise, through no fault of the Party receiving such information;
Page 17 of 42
(c) at the time of disclosure is already in possession of the
Party who received such information, as established by contemporaneous written
records;
(d) is received by a Party in good faith from any Third Party
independent of the disclosing Party, where the receiving Party has no reason to
believe that such Third Party has obtained such information by any wrongful
means; or
(e) is independently developed by a Party without use of or
reference to the other Party's Confidential Information, as established by
contemporaneous written records.
12.3 Disclosure and Use Restriction. Except as expressly provided herein,
the Parties agree that, for the longer of (i) fifteen years from the Effective
Date, and (ii) the term of the Agreement and the ten-year period following any
termination of the Agreement, each Party and its Affiliates will keep completely
confidential and will not publish or otherwise disclose any Confidential
Information of the other Party, its Affiliates or sublicensees. Neither Party
will use Confidential Information of the other Party except as necessary to
perform its obligations or to exercise its rights under this Agreement.
12.4 Permitted Disclosures. The obligations of Section 11.3 will not apply
to any disclosure of Confidential Information to the extent such disclosure is
required by operation of the law or the requirement of a court or governmental
agency; provided, however, that: (i) the Party subject to such required
disclosure will have promptly notified the other Party prior to such disclosure
and such other Party will have been given the opportunity to oppose such
disclosure by the Party subject to the required disclosure by seeking a
protective order or other appropriate remedy; (ii) the Party subject to such
required disclosure will disclose only that portion of Confidential Information
legally required to be disclosed; and (iii) the Party subject to such required
disclosure will exercise all reasonable efforts to maintain the confidential
treatment of Confidential Information.
12.5 Publicity. Neither Party will refer to, display or use the other's
name, corporate style, trademarks or trade names confusingly similar thereto,
alone or in conjunction with any other words or names, in any manner or
connection whatsoever, including any publication, article, or any form of
advertising or publicity, except with the prior written consent of the other
Party.
13. INTELLECTUAL PROPERTY
13.1 Ownership.
13.1.1 As between the Parties, Client will own all right, title and
interest in and to the Client Inventions. CBSW agrees to assign and hereby
assigns to Client all of CBSW's right, title and interest in and to the Client
Inventions.
13.1.2 As between the Parties, CBSW will retain all right, title and
interest in and to the CBSW Inventions. Client agrees to assign and hereby
assigns to CBSW all of Client's right, title and interest in and to the CBSW
Inventions.
Page 18 of 42
13.2 License Grants. Client hereby grants to CBSW a non-exclusive,
royalty-free, paid-up, license to use any Client Invention solely as needed by
CBSW to perform its obligations under this Agreement.
13.3 Further Assurances; Inventorship; Patentability. Each Party agrees to
take all necessary and proper acts, and will cause its employees, Affiliates,
contractors, and consultants to take such necessary and proper acts to
effectuate the ownership provisions set forth in this Section 13. Inventorship
with respect to any invention or discovery made pursuant to work carried out
under this Agreement that is or may be patentable will be determined in
accordance with this Agreement and the laws of the United States. The Parties
hereby agree to meet in good faith to resolve any dispute regarding whether a
particular invention developed hereunder is "patentable." In the event that the
Parties are unable to resolve such a dispute, the invention in question will be
deemed "patentable" if the Party claiming that such invention is patentable
promptly files a United States patent application claiming such invention, and
such invention will remain "patentable" for purposes of this Agreement until
such application is rejected or abandoned or has not issued into a patent within
5 years from the date of filing.
13.4 Prosecution of Patents.
13.4.1 CBSW will have the sole right and discretion to file, prosecute
and maintain patent applications and patents claiming CBSW Inventions at CBSW's
expense. Client will cooperate with CBSW to file, prosecute and maintain patent
applications and patents claiming CBSW Inventions.
13.4.2 Client will have the sole right and discretion to file,
prosecute and maintain patent applications and patents claiming Client
Inventions at Client's expense. CBSW will cooperate with Client to file,
prosecute and maintain patent applications and patents claiming Client
Inventions.
14. REPRESENTATIONS AND WARRANTIES
14.1 By Client. Client hereby represents and warrants to CBSW that, to the
best of its knowledge, (i) it has the requisite intellectual property and legal
rights related to the Client Deliverables and the Product to authorize the
performance of CBSW's obligations under this Agreement, and (ii) the performance
of the Development Plan and the production by CBSW of the Product as
contemplated in this Agreement will not give rise to a potential cause of action
by a third party against CBSW for infringement or another violation of
intellectual property rights. Such representation and warranty will not apply to
any production equipment supplied by CBSW.
14.2 By CBSW. CBSW hereby represents and warrants to Client that, to the
best of its knowledge, (i) it has the requisite intellectual property rights in
its equipment and Facility to be able to perform its obligations under this
Agreement, and (ii) that CBSW's use of its equipment and Facility as
contemplated in this Agreement will not give rise to a potential cause of action
by a Third Party against Client for infringement or another violation of
intellectual property rights.
Page 19 of 42
15. DISCLAIMER; LIMITATION OF LIABILITY
15.1 DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS
AGREEMENT, CBSW MAKES NO REPRESENTATIONS AND GRANTS NO WARRANTIES, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, WITH
RESPECT TO THE PRODUCTS, MATERIALS, AND SERVICES PROVIDED UNDER THIS AGREEMENT,
AND CBSW SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL,
OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO SUCH PRODUCTS,
MATERIALS, OR SERVICES.
15.2 Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR
LOST PROFITS OR LOSS OF DATA, OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR
NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING
UNDER ANY CAUSE OF ACTION AND ARISING IN ANY WAY OUT OF THIS AGREEMENT,
EXCEPT FOR DAMAGES OR PAYMENTS ARISING UNDER SECTION 12 OR 17 OF THIS
AGREEMENT OR AS OTHERWISE PROVIDED FOR BY THE TERMS OF THIS AGREEMENT. CLIENT
HEREBY AGREES THAT TO THE FULLEST EXTENT PERMITTED BY LAW, CBSW'S LIABILITY TO
CLIENT FOR ANY AND ALL INJURIES, CLAIMS, LOSSES, EXPENSES, OR DAMAGES
WHATSOEVER, ARISING UNDER ANY CAUSE OF ACTION AND ARISING IN ANY WAY OUT OF
THIS AGREEMENT, WILL NOT EXCEED THE TOTAL CHARGES PAID BY CLIENT TO CBSW
HEREUNDER.
16. TERM AND TERMINATION
16.1 Term. The term of this Agreement will commence on the Effective Date
and will continue until terminated pursuant to the terms of this Agreement.
16.2 Termination at Will.
16.2.1 During Phase I only, either Party may terminate this Agreement
by providing the other Party with written notice of termination, in the case of
Client not less than 6 months and in the case of CBSW not less than one year
in advance of the effective date of such termination; provided, however, that
no such termination will be effective prior to the date 12 months after the
Commencement Date for Phase I.
16.2.2 At any time after the first anniversary of the Commencement
Date for Phase II, Client may terminate this Agreement by providing CBSW with
written notice of termination, effective upon receipt, if such termination
is expressly required in connection with a merger, acquisition, or
consolidation of Client, or a transfer or sale of all or substantially all
of the assets of Client relating to the Product line.
Page 20 of 42
16.2.3 At any time after the fifth anniversary of the Commencement
Date for Phase II, either Party may terminate this Agreement upon giving one
year's written notice prior to the date selected by such Party as the
effective date of such termination.
16.2.4 During the Production Term for Phase II, either Party may
initiate the Scale-Down Period according to the following terms and the
Agreement will terminate upon the expiration of any Scale-Down Period:
16.2.4.1 CBSW may initiate the Scale-Down Period (a) at any time
after the 3rd anniversary of the Commencement Date for Phase II; or (b) if, at
the end of any calendar year during the Production Term for Phase II, with the
exception of the first full calendar year, Client has failed to order at
least 50% of the quantities of Product forecast by Client pursuant to
Section 6.2 for delivery during such period.
16.2.4.2 Client may initiate the Scale-Down Period (a) at any
time after the 1st anniversary of the Commencement Date for Phase II, subject
to payment of the scale-down fees described below in Section 16.2.4.5(d);
(b) at any time after the 3rd anniversary of the Commencement Date for
Phase II, without payment of scale-down fees; or (c) if, at the end of any
calendar year during the Production Term for Phase II, CBSW has failed
to provide at least 80% of the quantities of Product ordered by Client
pursuant to Section 6.2 for delivery during such period, without payment of
scale-down fees.
16.3 Termination for Material Breach.
16.3.1 Any failure by a Party to comply with any of its material
obligations contained herein shall constitute a material breach and shall
entitle the Party not in breach to give to the Party in breach written notice
specifying the nature of the breach. Such notice shall require the breaching
Party to make good or otherwise cure such breach.
16.3.2 If such breach is not cured within [***] days after the receipt
of notice pursuant to Section 16.3.1 above (or, if such default cannot be cured
within such [***]-day period, and the Party in breach does not commence actions
to cure such breach within such period and thereafter diligently continue such
actions and cure such breach within [***] days after the receipt of such notice,
except in the case of a payment default, as to which the breaching Party will
have only a [***]-day cure period), then the Party not in breach will be
entitled, without prejudice to any of the other rights conferred on it by this
Agreement, to terminate this Agreement upon written notice to the other Party.
16.4 Effects of Termination.
16.4.1 Accrued Rights. Termination of this Agreement for any reason
will be without prejudice to any rights that will have accrued to the benefit of
a Party prior to such termination. Such termination will not relieve a Party of
obligations that are expressly indicated to survive the termination of this
Agreement.
16.4.2 Disposition of Remaining Client Property and Confidential
Information. Upon termination or expiration of this Agreement, CBSW will store
any
Page 21 of 42
Remaining Client Property as set forth in Section 9.2 and, at Client's option,
return or destroy any Client Confidential Information in the possession or
control of CBSW. Likewise, Client will, at CBSW's option, return or destroy any
CBSW Confidential Information in the possession or control of Client.
Notwithstanding the foregoing provisions: (i) CBSW may retain and preserve, at
its sole cost and expense, samples and standards of each Product following
termination or expiration of this Agreement solely for use in determining CBSW's
rights and obligations hereunder; and (ii) each Party may retain such of the
other Party's Confidential Information as may be necessary for securing or
maintaining Regulatory Approval, or as otherwise required by applicable laws,
regulations, or guidelines.
16.4.3 Construction Fee.
16.4.3.1 Upon any termination of this Agreement pursuant to
Sections 16.2.2, or 16.2.3, CBSW will have the right to retain any amount of the
Construction Fee that has not been returned to Client under Section 3.3.4 or
credited to Client under Section 11.3.
16.4.3.2 Upon any termination of this Agreement pursuant to
Section 16.2.4.1(a) or pursuant to Section 16.2.4.2(c), CBSW shall upon the
effective date of the termination of this Agreement, refund to Client any amount
of the Construction Fee that has not been returned to Client under Section 3.3.4
or credited to Client under Section 11.3.
16.4.3.3 Upon any termination of this Agreement pursuant to
Section 16.3, (i) if such termination is based on a material breach of this
Agreement by CBSW, CBSW shall refund the amount of the Construction Fee that has
not been returned to Client under Section 3.3.4 or credited to Client under
Section 11.3 or (ii) if such termination is based upon a material breach of this
Agreement by Client, CBSW will have the right to retain any amount of the
Construction Fee that has not been returned to Client under Section 3.3.4 or
credited to Client under Section 11.3.
16.4.3.4 Any retainment by CBSW of the uncredited portion of the
Construction Fee shall not limit any of CBSW's rights in law or in equity under
this Agreement.
16.4.4 Security Deposit. Upon termination of this Agreement by CBSW
pursuant to Section 16.3, CBSW will have the right to retain the full amount of
the Security Deposit, without limiting any of its rights in law or in equity
under this Agreement. Upon any other termination or expiration of this
Agreement, the disposition of the Security Deposit will be made pursuant to
Section 11.2.
16.4.5 Fees.
16.4.5.1 Upon any termination of this Agreement by Client
pursuant to Section 16.2.2, Client will pay a one-time non-refundable close-out
fee as set forth on Schedule 16.4.5., attached hereto and hereby incorporated
herein by reference, in addition to any other payments due and payable under
this Agreement accrued prior to such termination.
16.4.5.2 Upon any termination of this Agreement pursuant to
Section 16.2.3, there shall be no close-out fee, but Client shall pay to CBSW
any payments due and
Page 22 of 42
payable under this Agreement accrued prior to such termination and Client shall
not be entitled to any refund of any uncredited portion of the Construction Fee.
16.4.5.3 Upon any termination of this Agreement pursuant to
Section 16.2.4:
(i) If CBSW initiates the Scale Down Period pursuant to
Section 16.2.4.1 then Client shall not pay any scale down fees.
(ii) If Client initiates the Scale-Down Period pursuant to
Section 16.2.4.2(a), then upon termination of this Agreement at the end of such
Scale-Down Period, Client will pay to CBSW a one-time, non-refundable scale-down
fee as set forth in Schedule 3.5.1, in addition to any other payments due and
payable upon such termination.
(iii) If Client initiates the Scale Down Period pursuant to
Section 16.2.4.2(b) or (c) then Client shall not pay any scale down fees.
(iv) Upon initiation of the Scale-Down Period, Client's
obligation under Section 6.1 to order from CBSW its full requirements of Product
intended for commercial sale will be reduced as follows. During the first [***]
of the Scale-Down Period Client must order from CBSW [***] it would otherwise
be required to order from CBSW under this Agreement. During the second 12 months
of the Scale-Down Period Client must order [***] it would otherwise be required
to order from CBSW under this Agreement. During the final 12 months of the
Scale-Down Period Client must order [***] it would otherwise be required to
order from CBSW under this Agreement.
16.4.5.4 Upon any termination of this Agreement by CBSW pursuant
to Section 16.3, Client will pay to CBSW a one-time, non-refundable close-out
fee as set forth on Schedule 16.4.5, such close-out fee will be in addition to
any other payments due and payable upon such termination.
16.4.5.5 Upon any termination of this Agreement by Client
pursuant to Section 16.3, [***].
16.4.6 Survival. Sections 1, 5.4, 6.7, 7.4.3, 11.2, 12, 13.1, 15,
16.5, 17 and 18 of this Agreement, together with any schedules referenced
therein, will survive any termination of this Agreement.
17. INDEMNIFICATION
17.1 Indemnification of CBSW. Client will indemnify CBSW and its
Affiliates, and their respective directors, officers, employees and agents (the
"CBSW Parties"), and defend and hold each of them harmless, from and against any
and all losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees and expenses) in connection with any and all liability suits,
investigations, claims or demands (collectively, "Losses") arising from or
Page 23 of 42
occurring as a result of or in connection with: (a) any material breach by
Client of this Agreement, (b) the use or sale of Product, except to the extent
such Losses relate to a breach by CBSW of the Product Warranties, (c) injuries
suffered by Client Personnel while at the Facility or elsewhere, (d) the
negligence or willful misconduct on the part of Client or its Affiliates in
performing any activity contemplated by this Agreement, or (e) the use or
practice by CBSW of any process, invention or other intellectual property
supplied by Client to CBSW under this Agreement, except for those Losses for
which CBSW has an obligation to indemnify Client pursuant to Section 17.2, as to
which Losses each Party will indemnify the other to the extent of their
respective liability for the Losses.
17.2 Indemnification of Client. CBSW will indemnify Client, its Affiliates,
and their respective directors, officers, employees and agents, and defend and
hold each of them harmless, from and against any and all Losses arising from or
occurring as a result of or in connection with (a) any material breach by CBSW
of this Agreement (except as precipitated by a breach by Client of this
Agreement), or (b) the negligence or willful misconduct on the part of one or
more of the CBSW Parties in performing any activity contemplated by this
Agreement, except for those Losses for which Client has an obligation to
indemnify CBSW and its Affiliates pursuant to Section 17.1, as to which Losses
each Party will indemnify the other to the extent of their respective liability
for the Losses.
17.3 Indemnification Procedure.
17.3.1 Notice of Claim. All indemnification claims in respect of a
Party, its Affiliates or their respective directors, officers, employees and
agents (each, an "Indemnitee") will be made solely by the applicable Party (the
"Indemnified Party"). The Indemnified Party will give the indemnifying Party
(the "Indemnifying Party") prompt written notice (an "Indemnification Claim
Notice") of any Losses or discovery of fact upon which such Indemnified Party
intends to base a request for indemnification under Section 17.1 or Section
17.2, but in no event will the Indemnifying Party be liable for any Losses that
result from any delay in providing such notice. Each Indemnification Claim
Notice must contain a description of the claim and the nature and amount of such
Loss, to the extent that the nature and amount of such Loss are known at such
time. The Indemnified Party will furnish promptly to the Indemnifying Party
copies of all papers and official documents received in respect of any Losses.
17.3.2 Third Party Claims. The obligations of an Indemnifying Party
under this Section 17 with respect to Losses arising from claims of any Third
Party that are subject to indemnification as provided for in Section 17.1 or
17.2 (a "Third Party Claim") will be governed by and be contingent upon the
following additional terms and conditions: At its option, the Indemnifying Party
may assume the defense of any Third Party Claim by giving written notice to the
Indemnified Party within thirty (30) days after the Indemnifying Party's receipt
of an Indemnification Claim Notice.
(a) Upon assuming the defense of a Third Party Claim, the
Indemnifying Party may appoint as lead counsel in the defense of the Third Party
Claim any legal counsel selected by the Indemnifying Party. In the event the
Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified
Party will immediately deliver to the
Page 24 of 42
Indemnifying Party all original notices and documents (including court papers)
received by any Indemnitee in connection with the Third Party Claim. Should the
Indemnifying Party assume the defense of a Third Party Claim, the Indemnifying
Party will not be liable to the Indemnified Party or any other Indemnitee for
any legal expenses subsequently incurred by such Indemnified Party or other
Indemnitee in connection with the analysis, defense or settlement of the Third
Party Claim.
17.3.3 Right to Participate in Defense. Without limiting Section
17.3.2(a) above, any Indemnitee will be entitled to participate in, but not
control, the defense of such Third Party Claim and to employ counsel of its
choice for such purpose; provided, however, that such employment will be at the
Indemnitee's own expense unless (i) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, or (ii) the Indemnifying Party
has failed to assume the defense and employ counsel in accordance with Section
17.3.2(a), in which case the Indemnified Party will control the defense.
17.3.4 Settlement. With respect to any Losses relating solely to the
payment of money damages in connection with a Third Party Claim and that will
not result in the Indemnitee's becoming subject to injunctive or other relief or
otherwise adversely affect the business of the Indemnitee in any manner, and as
to which the Indemnifying Party will have acknowledged in writing the obligation
to indemnify the Indemnitee hereunder, the Indemnifying Party will have the sole
right to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its
sole discretion, will deem appropriate, and will transfer to the Indemnified
Party all amounts which said Indemnified Party will be liable to pay prior to
the entry of judgment. With respect to all other Losses in connection with a
Third Party Claim, where the Indemnifying Party has assumed the defense of the
Third Party Claim in accordance with Section 17.3.2(a), the Indemnifying Party
will have authority to consent to the entry of any judgment, enter into any
settlement or otherwise dispose of such Loss provided it obtains the prior
written consent of the Indemnified Party (which consent will be at the
Indemnified Party's sole and absolute discretion). The Indemnifying Party will
not be liable for any settlement or other disposition of a Loss by an Indemnitee
that is reached without the written consent of the Indemnifying Party.
Regardless of whether the Indemnifying Party chooses to defend or prosecute any
Third Party Claim, no Indemnitee will admit any liability with respect to, or
settle, compromise or discharge, any Third Party Claim without the prior written
consent of the Indemnifying Party.
17.3.5 Cooperation. Regardless of whether the Indemnifying Party
chooses to defend or prosecute any Third Party Claim, the Indemnified Party
will, and will cause each other Indemnitee to, cooperate in the defense or
prosecution thereof and will furnish such records, information and testimony,
provide such witnesses and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested in connection
therewith. Such cooperation will include access during normal business hours
afforded to the Indemnifying Party, and reasonable retention by the Indemnified
Party of, records and information that are reasonably relevant to such Third
Party Claim, and making Indemnitees and other employees and agents available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder, and the Indemnifying Party xxxx
Xxxx 25 of 42
reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in
connection therewith.
17.4 Expenses. Except as provided above in this Section 17, the reasonable
and verifiable costs and expenses, including fees and disbursements of counsel,
incurred by the Indemnified Party in connection with any claim will be
reimbursed on a calendar quarter basis by the Indemnifying Party, without
prejudice to the Indemnifying Party's right to contest the Indemnified Party's
right to indemnification and subject to refund in the event the Indemnifying
Party is ultimately held not to be obligated to indemnify the Indemnified Party.
18. MISCELLANEOUS
18.1 Independent Contractors. Neither Party is authorized, nor will
undertake, to bind the other Party in any way as agent, partner, joint venturer
or otherwise, whether in the name of CBSW or Client or otherwise. CBSW is an
independent contractor of Client, and neither CBSW nor any person or entity
employed, contracted, or otherwise utilized by CBSW for any purposes will be
deemed to be an employee, representative or agent of Client.
18.2 Force Majeure. In the event of a delay caused by war, terrorist act,
civil unrest, riots, inclement weather, fire, flood, strike or other labor
dispute, acts of God, acts of governmental officials or agencies, or any other
cause beyond the control of CBSW or Client, CBSW and Client, as the case may be,
will be excused from performance hereunder for the period or periods of time
attributable to such delay. There will be no increase in compensation as a
result of any event of delay under this Section 18.2 or otherwise.
18.3 Condemnation. If the Facility is condemned or taken as a result of the
exercise of the power of eminent domain or will be conveyed to a governmental
agency having power of eminent domain under the threat of the exercise of such
power (any of the foregoing, a "Condemnation"), then this Agreement will
terminate as of the date on which title to the Facility vests in the authority
so exercising or threatening to exercise such power and Client will only have
the right to a portion of the Condemnation proceeds if the Custom Production
Suite was actually built. Client's right to a portion of the Condemnation
proceeds shall be in the from of a refund and shall be calculated according to
the following formula: the numerator equal to the uncredited portion of the
Construction Fee and the denominator equal to the total cost of construction of
the Custom Production Suite multiplied by a portion of the net proceeds received
by CBSW as a result of such condemnation.
18.4 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been given
when (i) delivered by hand (with written confirmation of receipt), (ii) sent by
fax (with written confirmation of receipt), provided that a copy is mailed by
U.S. registered mail, return receipt requested, (iii) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate address and fax numbers set
forth below (or to such other addresses and fax numbers as a Party may designate
by notice to the other Party):
Page 26 of 42
If to CBSW, to:
Cambrex Bio Science Walkersville, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Fax (000) 000-0000
Attention: Xxxxx X. Xxxxx, Business Director, Cell Therapy
With a copy to:
Cambrex Corporation
0000 X. Xxxxxxx Xx.
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Corporate Counsel
and
If to Client, to:
Ortec International, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Fax:
Attention: Xxx Xxxxxxxx, Vice Chairman
With a copy to:
Xxxxx Xxxxxxxxx Xxxxxxxx Xxxxx Xxxxx Bass &Rhine, LLP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Either Party may change its address for notice by giving notice thereof in the
manner set forth in this Section 18.4.
18.5 Entire Agreement. This Agreement, including the Schedules hereto,
constitutes the entire agreement of the Parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral and
written, among the Parties with respect to the subject matter hereof. The
Recitals and Schedules hereto are hereby incorporated herein by reference.
18.6 Governing Law and Jurisdiction. This Agreement will be governed by and
construed in accordance with the internal laws of the State of Maryland, without
giving effect to any conflicts of laws provisions thereof that would cause the
application of the laws of a
Page 27 of 42
different jurisdiction. All suits, disputes, actions, and other legal
proceedings (collectively, "Suits") related to or arising out of this Agreement,
will be brought in the state or federal courts located [***].
18.7 Counterparts. This Agreement and any Schedule hereto may be executed
in counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
18.8 Amendments. This Agreement (including any Schedule hereto) may not be
amended or modified, and no provisions hereof may be waived, without the written
consent of the Parties.
18.9 Severability. Each provision of this Agreement (and each Schedule
hereto) will be treated as a separate and independent clause, and the
unenforceability of any one clause will in no way impair the enforceability of
any of the other clauses herein. If one or more of the provisions contained in
this Agreement (or any Schedule hereto) will for any reason be held to be
excessively broad as to scope, activity, subject or otherwise, so as to be
unenforceable at law, such provision or provisions will be construed by the
appropriate judicial body by limiting or reducing it or them so as to be
enforceable to the maximum extent compatible with the applicable law as it will
then appear.
18.10 Titles and Subtitles. The titles and subtitles used in this Agreement
(including any Schedule hereto) are for convenience only and are not to be
considered in construing or interpreting any term or provision of this Agreement
(or any Schedule hereto).
18.11 Pronouns. Where the context requires, (i) all pronouns used herein
will be deemed to refer to the masculine, feminine or neuter gender as the
context requires, and (ii) the singular context will include the plural and vice
versa.
18.12 Assignment. Neither Party will assign this Agreement (or any Schedule
hereto), in whole or in part, without the prior written consent of the other
party, which consent shall not be unreasonably withheld, and except that CBSW
will be permitted to assign its rights and obligations hereunder to one or more
of its Affiliates. Any purported assignment not permitted under this Section
18.12 will be null, void, and of no effect. Any permitted assignment shall not
release the assignor from liability hereunder if such assignor's obligations
hereunder are not performed by its assignee.
18.13 Waiver. The failure of any Party at any time or times to require
performance of any provision of this Agreement (including any Schedule hereto)
will in no manner affect its rights at a later time to enforce the same. No
waiver by any Party of the breach of any term contained in this Agreement
(including any Schedule hereto), whether by conduct or otherwise, in any one or
more instances, will be deemed to be or construed as a further or continuing
waiver of any such breach or the breach of any other term of this Agreement
(including any Schedule hereto).
Page 28 of 42
18.14 Waiver of Jury Trial. CBSW and Client hereby waive trial by jury in
any suit brought by either of the parties hereto against the other or on any
counterclaim in respect thereof on any matters, whatsoever, arising out of, or
in any way in connection with, this Agreement (including any Schedule hereto).
18.15 No Presumption Against Drafter. For purposes of this Agreement, both
Client and CBSW hereby waive any rule of construction that requires that
ambiguities in this Agreement (including any Schedule hereto) be construed
against the drafter.
18.16 Non-Solicitation. Each Party agrees not to employ or solicit for
employment (or for use as an independent contractor), any employee of the other
Party or its Affiliates during the term of this Agreement and [***] thereafter,
except with such other Party's prior written consent.
[Remainder of page intentionally left blank. Signatures appear on
following page.]
Page 29 of 42
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WITNESS: ORTEC INTERNATIONAL, INC.
By: By:
---------------------------------- ------------------------------
Xxx Xxxxxxxx
Vice Chairman, Board of
Directors
WITNESS: CAMBREX BIO SCIENCE WALKERSVILLE,
INC.
By: By:
---------------------------------- ------------------------------
N. Xxxxx Xxxxxx
President
BioProducts Strategic
Business Unit
Page 30 of 42
SCHEDULE 1.15
PRODUCTS
Fresh Product & Cryopreserved Product
Description:
A bilayered cellular matrix in which normal human allogeneic skin cells
(epidermal keratinocytes and dermal fibroblasts) are cultured in two
separate layers on and within a Type I bovine collagen sponge matrix. Donor
dermal fibroblasts are cultured on and within the porous sponge side of the
collagen matrix while keratinocytes, from the same donor, are cultured on
the coated, non-porous side of the collagen matrix. The Product serves as
an absorbable biocompatible matrix that provides a favorable environment
for host cell migration and has been shown to contain the following
cell-expressed cytokines and growth factors: FGF-1 (bFGF), XXX, XX-XXX,
XX-0(xxxxx), XX-0(xxxx), XX-0, HGF, KGF-1 (FGF-7), M-CSF, PDGF-AB,
TGF-(alpha), TGF-(beta)1, TGF-(beta)2, and VEGF. The Product is not
intended to be a human skin replacement and does not contain Langerhans
cells, melanocytes, macrophages, lymphocytes, blood vessels or hair
follicles.
The Product is manufactured under aseptic conditions from human neonatal
foreskin tissue. The donor's mother is tested and found to be negative for
syphilis and for human viruses, including CMV, HSV I & II, HTLV I & II,
Hepatitis A, B&C, HIV 1&2, EBV and HHV-6. The donor's fibroblast and
keratinocyte cells are tested and found to be negative for viruses and
retroviruses (including HTLV I&II, Hepatitis B, HIV 1&2, EBV, and HHV-6),
bacteria, fungi, yeast, mycoplasma, and tumorigenicity. The donor cells are
tested and are found to be normal human cells using karyology, isoenzyme,
growth and morphological analyses. Prior to cell seeding, the sponge matrix
is cross-linked and then coated on one side with a thin gel layer prepared
from acid-soluble collagen. The final Product is tested for morphology,
cell density, cell viability, metabolic activity, sterility, mycoplasma,
endotoxins and physical container integrity. All animal derived reagents
are tested for: viruses, bacteria, fungi, yeast, and mycoplasma before use,
and all bovine material is obtained from countries free of Bovine
Spongiform Encephalopathy (BSE). The device measures approximately 6 cm x 6
cm (minimally 36 cm(2)).
Page 31 of 42
SCHEDULE 1.15 (cont.)
Specifications:
=============================================================================================================================
Specification, Fresh Specification,
Characteristic Test Method Product Cryopreserved Product
-----------------------------------------------------------------------------------------------------------------------------
1 Product in-process Visual [***] No Defects No Defects
Inspection (pre-packaging) Client procedure WI
o cracks 09-0393
o transparencies
o color
o other defects
=============================================================================================================================
2 Product final Visual [***] No Defects No Defects
Inspection Client procedure WI
(post-packaging) 09-0393
o seal integrity of
inner pouch
o seal integrity of
outer pouch
o label is present
o blue and white mesh
present
o not folded
-----------------------------------------------------------------------------------------------------------------------------
3 Cell Density CBSW procedure based [3 - 10 x 10'pp'5] cells/ cm'pp'2 [4 - 11 x 10'pp'5 cells/ cm'pp'2
on Client procedure TM
07-0004
& TM 07-0060
-----------------------------------------------------------------------------------------------------------------------------
4 Cell Viability [***] >= 70% >= 70%
Client procedure TM
07-0004 & TM 07-0060
-----------------------------------------------------------------------------------------------------------------------------
5 Metabolic Activity [***] >= 6 FU/cm'pp'2/hr NA
(Alamar Blue) Client procedure TM
07-0003
-----------------------------------------------------------------------------------------------------------------------------
6 Endotoxin [***] <= 0.5 EU/ml/unit <= 0.5 EU/ml/unit
Client procedure TM
07-0001
LAL - Kinetic
Chromogenic
-----------------------------------------------------------------------------------------------------------------------------
7 Histology [***] Xxxx Xxxx
Client procedure TM (Post-release to shipping) (Pre-release to shipping)
07-0037
=============================================================================================================================
Page 32 of 42
=======================================================================================================================
& Standard 08-0005
-----------------------------------------------------------------------------------------------------------------------
8 Sterility (in-process) [***] No Growth No Growth
Client procedure TM (Pre-release) (Pre-release)
07-0058
-----------------------------------------------------------------------------------------------------------------------
9 Sterility (final) Gibraltar 56M, "Direct No Growth No Growth
Transfer" (Post-release) (Pre-release)
-----------------------------------------------------------------------------------------------------------------------
10 Mycoplasma Bionique M-700 Negative Negative
(Post-release) (Pre-release)
=======================================================================================================================
Page 33 of 42
SCHEDULE 2.1
PHASE I PRODUCTION PLAN
Completion of Draft of Phase I Production Plan
CBSW will complete a final draft of the Phase I Production Plan within [***]
days after receipt by CBSW of all Client Production Materials pursuant to
Section 2.2.
Draft Outline of Phase I Production Plan
[***]
[***]
[***]
[***]
Page 34 of 42
SCHEDULE 3.1
PHASE II PRODUCTION PLAN
Completion of Draft of Phase II Production Plan
CBSW will use commercially reasonable efforts to complete a final draft of the
Phase II Production Plan within [***] days after initiation of Phase II.
Draft Outline of Production Plan
[***]
[***]
[***]
[***]
[***]
[***]
Page 35 of 42
SCHEDULE 3.5.1
TABLE OF SCALE-DOWN FEES
----------------------------------------------------------------------------------------------
Expiration of Scale-Down Period Scale-Down Fee
----------------------------------------------------------------------------------------------
On or after 4th anniversary of Phase II Forfeiture of uncredited amount of
Commencement Date, but before 5th Construction Fee, plus a payment equal to
anniversary of Phase II Commencement Date [****] [$2,625,000]
----------------------------------------------------------------------------------------------
On or after 5th anniversary of Phase II Forfeiture of uncredited amount of
Commencement Date, but before 6th Construction Fee, plus a payment equal to
anniversary of Phase II Commencement Date [****] [$1,050,000]
----------------------------------------------------------------------------------------------
Page 36 of 42
SCHEDULE 4.1
DEVELOPMENT PLAN
Draft Outline of Development Plan
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Page 37 of 42
SCHEDULE 11.1
PAYMENTS
1. Security Deposit
On the Effective Date, Client will pay to CBSW a security deposit in the amount
of US$[****] (the "Security Deposit"). Within [****] after the Effective Date,
Client will either: (a) pay to CBSW an additional security deposit of US$[****],
or (b) provide CBSW a [****]. If the additional US$[****] is paid it will be
added to the Security Deposit, making the total Security Deposit US$[****].
2. Construction Fee
Client will pay to CBSW the Construction Fee under the terms and conditions set
forth in Section 3.3.2.
3. Monthly Fee ([****] Increase Applicable)
During each Production Term, Client will pay to CBSW a monthly fee (the "Monthly
Fee"). The amount of the Monthly Fee during Phase I will be US$[****]. The
amount of the Monthly Fee will increase to US$[****] upon the Commencement Date
for Phase II. If pursuant to the provisions of Section 3.3.4 CBSW is unable to
provide the Custom Production Suite but instead provides the Additional
Production Suite, the Monthly Fee for both the Production Suite used during
Phase I and the Additional Production Suite shall be $[****].
During each Production Term, the Monthly Fee will initially be due and payable
at least [****] days prior to the applicable Commencement Date, and will
thereafter be due [****] during the applicable Production Term. If such
Production Term includes a period of time which is less than a full month, the
amount of the Monthly Fee for such partial month will be equal to the number of
days in such partial month multiplied by the daily rate, which is the Monthly
Fee divided by the number of days in such month.
The Monthly Fee in the amount of US$[****] covers the following: a monitored and
validated [****] Production Suite (approximately [****], excluding gowning
in/out and staging area); [****] incubators; [****] biosafety hood; two
refrigerator/freezer units; routine maintenance & installation qualification
(IQ) and operational qualification (OQ) of the Production Suite and CBSW
supplied equipment; Facility common areas, utilities, HEPA filters; routine
environmental monitoring and testing of the Production Suite and associated
common areas; standard gowning materials; and all documentation related to
CBSW's quality assurance release of the Product to Client for further
processing.
The Monthly Fee in the amount of US$[****] covers the following (a) use of the
Custom Production Suite (including any equipment therein); routine maintenance &
IQ and OQ of the Custom Production Suite and CBSW supplied equipment; Facility
common areas, utilities, HEPA filters; routine environmental monitoring and
testing of the Custom Production Suite and associated common areas; standard
gowning materials; and all documentation related to CBSW's quality assurance
release of the Product to Client for further processing; or (b) the
Page 38 of 42
Production Suite used during Phase I and the Additional Production Suite,
each of which will be as described in the immediately preceding paragraph.
The Monthly Fee specifically excludes the following: performance qualification
(PQ) of any equipment used in any portion of the process used to manufacture
Product; routine maintenance, IQ, OQ, PQ and repair of the cryogenic storage
unit provided to CBSW by Client in accordance with Section 9.2.
4. Reimbursement of Costs:
Client will pay for the following [****] within [****] days after receipt of a
duly itemized invoice:
[****]
[****]
5. Capital Expenses
Client will reimburse CBSW for costs and expenses incurred by CBSW in the
acquisition of specialized or additional equipment (e.g., [****]) required for
the performance of each Development Plan and Production Plan and approved by
Client (collectively, "Capital Expenses"). CBSW will invoice Client [****] of
[****], whichever is earlier. Upon any termination of this Agreement, any
outstanding Capital Expenses will become due and payable within [****] days of
the effective date of such expiration or termination. Client will own any
movable equipment purchased pursuant to this Clause 5 upon receipt by CBSW of
full payment for such equipment.
6. Hourly Fees ([****] Increase Applicable)
For work performed by CBSW personnel pursuant to a Development Plan or
Production Plan, Client will pay CBSW the following hourly fees:
(a) Technology Transfer: [****]
o Review of Client Materials
o Evaluation of Client-specific processes and personnel training
o Qualification of QC assays.
Note: CBSW will not charge Client any Monthly Fee during technology
transfer.
(b) Process Development: [****]
o Performance of the Development Plan, media optimization and/or the
care and maintenance of cell lines or Products;
Page 39 of 42
o Preparation of draft Master Production Record and Specifications, raw
material specifications, SOPs; identification of equipment
requirements & modifications
(c) Regulatory and Audit Services: [****]
o Preparation of CMC section of the application for Regulatory Approval
o Other regulatory and tissue acquisition consulting activities
o Services associated with internal audits by Client and audits of
vendors by CBSW
Prices have been set for some standard activities.
o Preparation of new DMF: US$7500
o Annual update of DMF: US$2000;
o Vendor audit: US$3000 (out-of-pocket costs charged separately)
(d) Validation Services: [****]
[****]
o Client-specific validation of assays, cleaning procedures, equipment
or processes.
If these services require utilization of the clinical suite, the labor
rate is $[****] plus the applicable Monthly Fee. If these services do
not require utilization of the clinical suite, the labor rate is
US$[****]. QA/QC/Validation/Supervisory support is included in the
hourly rate of the technician.
7. Production Services ([****] Increase Applicable)
Operation technicians provided by CBSW will be charged at a rate of
(i) US$[****] for the first [****] of Phase I and (ii) US$[****]
thereafter. CBSW and Client will mutually agree to the number of
technicians necessary to perform each Production Plan and for
maintenance of cell lines or Products. Client may request an increase
to the number of technicians upon [****] prior written notice to CBSW;
provided, however, that the effective date of such increase may be
accelerated if CBSW agrees to provide such additional technicians.
Client may decrease such number of technicians upon [****] prior
written notice to CBSW, but in no event shall the number of
technicians be reduced below the number of technicians necessary to
produce the necessary quantities of Product ordered by Client pursuant
to this Agreement.
8. Quality and Release Testing
Testing prices will be charged [****].
9. Handling/Shipping Fee
Client shall be responsible for payment of a handling/shipping fee
related to packaging, shipment, and storage of Product. Such fee shall
be agreed to in writing by the Parties once Ortec has finalized the
parameters for packaging, shipment and storage of Product. Absent
mutual agreement of the Parties, CBSW will charge Client a reasonable
Page 40 of 42
handling/shipping fee, such fee shall include (but shall not be
limited to) costs related to: shipping supplies, validated storage,
handling and inventory control of shipping supplies, and CBSW handling
charges related to storage and shipment of Product.
10. Monthly Storage Rates ([****] Increase Applicable)
(a) US$[****] for Room Temperature Storage
(b) US$[****] for Refrigerated Storage
(c) US$[****] for Freezer Storage
Page 41 of 42
SCHEDULE 16.4.5
CLOSE-OUT FEE
-----------------------------------------------------------------------------------------------
Effective Date of Termination Close-Out Fee
-----------------------------------------------------------------------------------------------
On or after 1st anniversary of the Phase II Forfeiture of uncredited amount of
Commencement Date, but before 2nd Construction Fee, plus a payment equal to
anniversary of Phase II Commencement Date [****] [$6,300,000]
-----------------------------------------------------------------------------------------------
On or after 2nd anniversary of the Phase II Forfeiture of uncredited amount of
Commencement Date, but before 3rd Construction Fee, plus a payment equal to
anniversary of Phase II Commencement Date [****] [$5,250,000]
-----------------------------------------------------------------------------------------------
On or after 3rd anniversary of the Phase II Forfeiture of uncredited amount of
Commencement Date, but before 4th Construction Fee, plus a payment equal to
anniversary of Phase II Commencement Date [****] [$3,675,000]
-----------------------------------------------------------------------------------------------
On or after 4th anniversary of the Phase II Forfeiture of uncredited amount of
Commencement Date, but before 5th Construction Fee, plus a payment equal to
anniversary of Phase II Commencement Date [****] [$2,625,000]
-----------------------------------------------------------------------------------------------
On or after 5th anniversary of the Phase II Forfeiture of uncredited amount of
Commencement Date, but before 6th Construction Fee, plus a payment equal to
anniversary of Phase II Commencement Date [****] [$1,575,000]
-----------------------------------------------------------------------------------------------
On or after 6th anniversary of Phase II Forfeiture of uncredited amount of
Commencement Date Construction Fee, plus a payment equal to
[****] [$1,050,000]
-----------------------------------------------------------------------------------------------
Page 42 of 42
