EXHIBIT 10.1
Portions of this Exhibit have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
Page 1
SUPPLY AGREEMENT
This Supply Agreement ("Agreement") is entered into on this 2nd day of
February, 2005 (the "Effective Date"), by and between Xxxxxxx Pharma
Manufacturing, Inc., an Indiana corporation, doing business at 0000 "X" Xxxxxx
Xxxx, Xxxxxxx, Xxxxxxx 00000 ("Xxxxxxx"), and OSI Pharmaceuticals, Inc., a
Delaware corporation with executive offices at 00 Xxxxx Xxxxxxx Xxxx, Xxxxxxxx,
Xxx Xxxx 00000 ("OSI").
RECITALS
WHEREAS, OSI is a developer and marketer of pharmaceutical products,
including the Product (as hereinafter defined);
WHEREAS, OSI would like to engage Xxxxxxx to manufacture and supply its
commercial and clinical requirements of the Product for OSI pursuant to the
terms hereof; and
WHEREAS, Xxxxxxx has the capability and capacity to manufacture and
supply the Product pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by the parties, the
parties agree as follows:
ARTICLE 1. DEFINITIONS; INTERPRETATION
1.1 "Act" shall mean the United States Food, Drug and Cosmetic Act (21
U.S.C. 301, et seq.) and regulations promulgated thereunder, as each
may be amended from time to time.
1.2 "Affiliate" shall mean, with respect to a party, any person or entity
controlling, controlled by or under common control with such party,
with the term "control" (and its derivatives) meaning the direct or
indirect ownership of fifty percent (50%) or more of the voting common
stock or similar equity ownership interest or any other arrangement
whereby a party controls or has the right to control the Board of
Directors or equivalent governing body of a corporation or entity.
1.3 "API" shall mean the active pharmaceutical ingredient known as
erlotinib hydrochloride (formerly OSI-774-01).
1.4 "API Specifications" shall mean the specifications for the API as set
forth in Schedule 1.4 attached hereto, with such modifications as
Xxxxxxx and OSI may agree upon from time to time or as may be requested
by OSI from time to time and consented to in writing by Xxxxxxx, which
consent shall not be unreasonably withheld. Any such modification
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shall become effective upon being reduced to a writing signed by the
appropriate representatives of each party, whereupon Schedule 1.4 shall
be amended or replaced in accordance with such signed writing.
1.5 "cGMP" shall mean current good manufacturing practices required by the
Act and all applicable regulations thereunder.
1.6 "Failure to Supply" shall mean that, during any ** period during the
Term (which period shall be measured as set forth below), (i) multiple
instances of Inability to Supply have occurred and (ii) as a result of
such instances of Inability to Supply, the aggregate quantity of
Product that Xxxxxxx has supplied during such ** period, either on time
or within the ** cure period applicable to any Inability to Supply,
represents less than ** of the aggregate quantity of Product specified
in Valid Purchase Orders submitted to Xxxxxxx in accordance with this
Agreement for shipment during such ** . The ** period applicable to any
determination of whether a Failure to Supply has occurred shall
commence upon the required delivery date specified in the Valid
Purchase Order to which the first applicable instance of Inability to
Supply relates. Notwithstanding the foregoing, in the event that the
amount of Product specified in any Valid Purchase Order to which an
Inability to Supply relates constitutes more than ** of the aggregate
amount of all Product specified in Valid Purchase Orders submitted to
Xxxxxxx in accordance with this Agreement for shipment during any **
period as measured in accordance with this Article 1.6, then the total
amount that Xxxxxxx shall be deemed to have failed to timely supply as
a result of such Inability to Supply shall be limited to such amount
that is ** of such aggregate amount.
1.7 "FDA" shall mean the United States Food and Drug Administration.
1.8 "Inability to Supply" shall mean, with respect to any Valid Purchase
Order submitted to Xxxxxxx in accordance with the terms of this
Agreement, that (i) subject to the last sentence of Article 2.3.5,
Xxxxxxx has failed to supply at least the aggregate quantity of Product
specified in such Valid Purchase Order on or prior to the delivery date
specified in such Valid Purchase Order and (ii) Xxxxxxx has failed to
cure such failure within ** following Xxxxxxx'x receipt of written
notice from OSI of such failure by supplying, prior to the expiration
of such ** period, the quantity of Product which, together with the
quantity theretofore supplied in respect of such Valid Purchase Order,
equals at least the aggregate quantity of Product specified in such
Valid Purchase Order. Xxxxxxx shall give written notice to OSI prior to
the expiration of such ** period, specifically referencing this Article
1.8, in the event Xxxxxxx, in its sole discretion, determines that it
is incapable of curing such failure within ** , in which event an
Inability to Supply shall be deemed to have arisen as of the date of
such notification; provided that under no circumstances shall Xxxxxxx
have any liability to OSI hereunder in the event no such notification
is given.
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1.9 "NDA" shall mean the New Drug Application filed with the FDA in respect
of the Product, including any sNDA and all subsequent submissions in
respect of such New Drug Application or any such sNDA.
1.10 "Product" shall mean the pharmaceutical drug product containing
erlotinib HCl for human use currently known as Tarceva(TM) as intended
for either clinical or commercial use; provided that the intravenous
(IV) and oral solution/suspension formulations of Tarceva(TM) developed
by OSI shall not be included within this definition.
1.11 "Product Specifications" shall mean the specifications for the Product
as set forth in Schedule 1.11 attached hereto, with such modifications
as Xxxxxxx and OSI may agree upon from time to time or as may be
requested by OSI from time to time and consented to in writing by
Xxxxxxx, which consent shall not be unreasonably withheld. Any such
modification shall become effective upon being reduced to a writing
signed by the appropriate representatives of each party, whereupon
Schedule 1.11 shall be amended or replaced in accordance with such
signed writing.
1.12 "Proprietary Information" shall mean all confidential information
disclosed by either party to the other hereunder and designated in
writing by the disclosing party as "Confidential" (or equivalent), and
all material disclosed orally which is declared to be confidential by
the disclosing party, and shall include trade secrets, methods of
manufacture and operation, and any other technical data, provided by a
party or used in connection with the development, manufacture or sale
of a Product, including without limitation, the API Specifications, the
Product Specifications, Product formula, know-how, experimental data,
inventions, discoveries, improvements, processes, methods,
developments, ideas, suggestions, devices, Master Batch Records,
production batch records, clinical and pre-clinical data; documents,
memoranda, customer reports, customer data, marketing strategy, Product
costs and other financial information; licenses, and other intellectual
property rights, and any other information about the general business
operations as presently conducted by a party, or its Affiliate.
1.13 [RESERVED]
1.14 "Territory" shall mean the United States of America, its territories
and possessions and the Commonwealth of Puerto Rico.
1.15 "Trademark(s)" shall mean the trade name(s) used by OSI for the sale
and promotion of the Product as listed in Schedule 1.15 attached
hereto, as may be amended from time to time.
1.16 "Valid Purchase Order" shall mean a purchase order which meets the
requirements of Article 2.
1.17 Other Defined Terms. The following terms are defined in the Articles or
other sections of the Agreement indicated below.
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** Fee......................................................2.1.2
** Notice...................................................2.1.2
** Right....................................................2.1.2
Agreement...................................................preamble
Article 2.1.3 Fee..............................................2.1.3
Article 2.1.3 Right............................................2.1.3
Claim...........................................................13.1
Detailed Product Forecast......................................2.3.2
Effective Date..............................................preamble
Long-Term Product Forecast.....................................2.3.1
Manufacturing Documentation....................................8.6.2
Manufacturing Process..........................................8.6.1
OSI.........................................................preamble
OSI Indemnitees.................................................13.1
Purchase Order Agreement........................................17.9
Quality Assurance Agreement......................................2.8
Requirements...................................................2.1.1
Xxxxxxx.....................................................preamble
Xxxxxxx Indemnitees.............................................13.2
Term.............................................................8.1
1.18 Interpretation. Unless otherwise indicated to the contrary herein by
the context or use thereof: (a) the words, "herein," "hereto,"
"hereof," and words of similar import refer to this Agreement as a
whole and not to any particular Section or paragraph hereof; (b) the
word "including" means "including, but not limited to"; (c) words
importing the singular will also include the plural, and vice versa;
and (d) any reference to any federal, state, local, or foreign statute
or law will be deemed also to refer to all rules and regulations
promulgated thereunder. References to "$" or "Dollars" will be
references to United States Dollars.
ARTICLE 2. TERMS OF SUPPLY
2.1 Exclusivity.
2.1.1 Subject to the terms and conditions of this Agreement,
including Articles 2.1.2 and 2.1.3, (i) OSI agrees to purchase
exclusively from Xxxxxxx pursuant to the terms of this
Agreement OSI's entire commercial and clinical requirements of
the Product for use, distribution, sale or resale in the
Territory (hereinafter referred to as OSI's "Requirements")
and (ii) OSI shall not manufacture itself or purchase or
procure from any other manufacturer or source, including any
of its Affiliates, partners or any other parties with which
any of them has entered into any
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collaboration arrangement regarding the Product, any of its
Requirements of the Product. For the avoidance of doubt,
except as expressly provided in this Agreement, OSI shall not
obtain any of its Requirements of the Product manufactured by
Xxxxxxx from any third party (including, but not limited to,
X. Xxxxxxx-XxXxxxx Ltd. or any of its Affiliates).
2.1.2 Notwithstanding Article 2.1.1, subject to the terms of this
Article 2.1.2, commencing after the second anniversary of the
Effective Date, OSI shall have the right (the " ** Right") to
manufacture for itself or purchase or procure from any of its
Affiliates or any third party up to ** of its Requirements of
the Product during any one or more calendar years, as
determined on the basis of the aggregate quantities of the
Product actually purchased from Xxxxxxx, manufactured by OSI
and purchased or procured by OSI from any Affiliate of OSI or
any third party. The ** Right shall be exercisable on a
calendar year-by-calendar year basis and OSI shall have no
right to manufacture itself or procure from any party other
than Xxxxxxx any of OSI's Requirements for the Product during
any calendar year in respect of which the ** Right has not
been exercised in accordance herewith. In order to exercise
the ** Right, OSI shall deliver written notice (a " **
Notice") to Xxxxxxx not less than thirty (30) days prior to
placing an order for any portion of its Requirements of the
Product with an Affiliate of OSI or a third party or
commencing manufacture of any portion of its Requirements of
the Product itself. Not later than two (2) weeks after the
date on which OSI places any such order for any portion of its
Requirements of Product with an Affiliate or third party,
commences manufacture of any portion of its Requirements of
the Product itself or otherwise initiates supply of any
portion of its Requirements of the Product pursuant to its
exercise of the ** Right in a given calendar year, OSI shall
pay Xxxxxxx ** (the " ** Fee") by wire transfer of immediately
available funds to an account designated by Schwarz. In no
event shall the ** Fee be pro rated, including on the basis of
when during the applicable calendar year the ** Notice is
given or in the event that less than ** of OSI's Requirements
of the Product for such calendar year are actually purchased
or procured from parties other than Xxxxxxx. For the avoidance
of doubt, the ** Fee will be payable in respect of each
calendar year for which the ** Right is exercised. After
delivering a ** Notice, OSI shall provide to Xxxxxxx quarterly
written reports specifying the amount of Product manufactured
by OSI or purchased or procured from a party other than
Xxxxxxx during the preceding quarter, which reports shall be
certified by an officer of OSI and shall be delivered to
Xxxxxxx within thirty (30) days following the end of each
calendar quarter during each year in respect of which a **
Notice has been given. Once per year during the Term, OSI
shall permit Xxxxxxx and its authorized representatives to
review its books and records to the extent reasonably required
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to verify compliance with this Article 2.1.2 upon prior notice
and during normal business hours.
2.1.3 Notwithstanding Article 2.1.1, subject to the terms of this
Article 2.1.3, at any time following the fifth anniversary of
the Effective Date, OSI or an Affiliate of OSI shall have the
right (the "Article 2.1.3 Right") to manufacture, in its own
capacity, all or a portion of OSI's Requirements of the
Product during the remainder of the Term. OSI may exercise the
Article 2.1.3 Right by delivering written notice to Xxxxxxx
not less than ninety (90) days prior to commencing manufacture
of all or a portion of OSI's Requirements of the Product.
Concurrently with delivery of such notice, OSI shall pay
Xxxxxxx ** (the "Article 2.1.3 Fee") by wire transfer of
immediately available funds to an account designated by
Xxxxxxx.
2.1.4 Anything to the contrary notwithstanding, for purposes of this
Agreement, OSI's Requirements shall be deemed to include all
of the following parties' requirements of the Product for use,
distribution, sale and resale in the Territory: OSI and its
Affiliates and partners and any other party with whom any of
them has entered into any collaboration arrangement involving
the Product. OSI shall not avoid its purchase obligations
under this Agreement by purchasing or selling Product
indirectly through distributors, co-promotion partners,
licensees or similar purchasing or selling arrangements.
2.1.5 For the avoidance of doubt, (i) in no event shall OSI's
exercise of the ** Right diminish OSI's obligations pursuant
to Article 2.1.1 in respect of the remaining ** of OSI's
Requirements for any year during which the ** Right has been
exercised or OSI's obligations pursuant to Article 2.1.1 in
respect of any year during which the ** Right has not been
exercised and (ii) in no event shall any exercise by OSI of
the ** Right or the Article 2.1.3 Right affect, diminish or
otherwise modify any provision of this Agreement other than
Article 2.1.1.
2.1.6 Subject to the terms and conditions of this Agreement, OSI
shall be permitted to resell Product purchased from Xxxxxxx
hereunder to X. Xxxxxxx-XxXxxxx Ltd. corresponding solely to
special license sales to be made by X. Xxxxxxx-XxXxxxx Ltd.
within Europe prior to such time as X. Xxxxxxx-XxXxxxx Ltd.
receives marketing approval to sell its own erlotinib
hydrochloride product within the country in question; provided
that OSI shall bear all responsibility and expense regarding
legal and regulatory compliance associated with such sales.
OSI hereby represents and warrants that such sales shall only
be made in full compliance with all applicable legal and
regulatory requirements.
2.2 Supply of Product, API and Raw Materials. Subject to the terms and
conditions of this Agreement, Xxxxxxx agrees to supply the Product to
OSI in accordance with the Product Specifications, cGMP, any applicable
laws and regulations, and the Quality Assurance
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Agreement and in the quantities ordered and at the delivery times
agreed upon by the parties pursuant to this Article 2. OSI shall supply
to Xxxxxxx without charge (unless otherwise required herein) all API,
conforming to the API Specifications, which is required to manufacture
Product hereunder. OSI shall supply API which meets the API
Specifications on dates and in amounts necessary to allow Xxxxxxx to
supply Product to OSI consistent with the forecasts set forth in this
Article 2 and shall ensure that Xxxxxxx is at all times in possession
of sufficient API which meets API Specifications to meet such
forecasts. Xxxxxxx shall supply all other necessary raw materials for
the manufacture and packaging of the Product in accordance with the
terms of this Agreement. Notwithstanding any other provision of this
Agreement, Xxxxxxx shall not be liable for any failure or delay to meet
its obligations hereunder, to the extent such failure or delay is
attributable to OSI's failure or delay to supply API which meets the
API Specifications on a timely basis. Xxxxxxx shall promptly notify OSI
in writing if it becomes apparent to Xxxxxxx that any API does not meet
the API Specifications. Each party acknowledges that OSI shall be
responsible for all aspects of securing and maintaining API supply,
including, without limitation, obtaining FDA approval for any and all
API suppliers and complying with all relevant legal and regulatory
requirements regarding API supply. Xxxxxxx will provide monthly
inventory reports of the API held by Xxxxxxx. Xxxxxxx and OSI agree and
acknowledge that a true and correct report of Xxxxxxx'x inventory of
the API as of the Effective Date is set forth in Schedule 2.2. These
reports should be delivered no later than the close of business on the
nineteenth (19th) day of each calendar month for the preceding month.
Xxxxxxx will exercise reasonable commercial efforts to ensure the
accuracy of these inventory reports through proper internal controls.
OSI or its designee shall have the right to inspect Xxxxxxx'x inventory
reports and may at its own expense conduct a physical inventory of any
OSI assets being held by Xxxxxxx not more frequently than once each
calendar year upon reasonable notice to Xxxxxxx.
2.3 Forecasts.
2.3.1 Long-Term Forecasts for Required Product. No later than
January 15th of each calendar year during the Term, OSI shall
provide Xxxxxxx with a forecast (a "Long-Term Product
Forecast") setting forth OSI's estimate of its Requirements of
Product for each of the three (3) years following the date of
such forecast, which shall in all cases represent a good faith
estimate of its actual demand for the Product based on market
conditions and OSI's need for a reasonable safety stock. The
initial Long-Term Product Forecast is attached hereto as
Schedule 2.3.1.
2.3.2 Detailed Forecast for Required Product. OSI shall also provide
Xxxxxxx with a detailed rolling forecast setting forth OSI's
Requirements for the Product for each calendar quarter during
the succeeding twelve (12) month period (each, a "Detailed
Product Forecast") which shall in all cases represent a good
faith estimate of actual demand for the Product based on
market conditions and OSI's need for a reasonable safety
stock, the first quarter of which shall constitute a single
firm purchase order from OSI for all purposes hereunder. The
initial
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Detailed Product Forecast for the period ** is attached hereto
as Schedule 2.3.2 and shall be updated quarterly for the
subsequent twelve (12) months no later than ** preceding the
first month of the first calendar quarter in question, so that
each quarter Xxxxxxx shall have been provided with a rolling
Detailed Product Forecast for each calendar quarter during the
twelve (12) month period commencing ** after the date on which
such Detailed Product Forecast is due. The Detailed Product
Forecast shall be accompanied by a purchase order for the
first quarter of each such Detailed Product Forecast, which
purchase order shall contain quantities and delivery dates
consistent with this Article 2 and any other necessary detail.
The remaining portion of the Detailed Product Forecast shall
be firm, subject to the permissible variances set forth below
in Article 2.3.4. If OSI fails to provide any updated Detailed
Product Forecast, the Detailed Product Forecast last provided
by OSI shall be deemed to be OSI's Detailed Product Forecast
for the next succeeding twelve (12) month period.
2.3.3 Initial Purchase Orders. An initial binding purchase order is
attached hereto as Exhibit A-1, which binding purchase order
covers the period from the ** . In addition, Xxxxxxx and OSI
hereby agree that the outstanding purchase order attached
hereto as Exhibit A-2 (the "Prior Purchase Order") shall be
subject to and governed in accordance with the terms of this
Agreement as though such purchase order was made during the
term of and expressly subject to this Agreement; provided,
however, that (i) the price applicable to the Product to be
supplied pursuant to such Prior Purchase Order shall be as set
forth in that certain Purchase Order Agreement, dated October
21, 2004, between Xxxxxxx and OSI, as amended (the "Purchase
Order Agreement"), (ii) the quantities of Product specified in
the Prior Purchase Order shall not be counted as Product
purchased pursuant to this Agreement for purposes of Schedule
5.1 hereto, (iii) OSI hereby acknowledges that the Product
specified in the Prior Purchase Order has heretofore been
supplied by Xxxxxxx in full satisfaction of Xxxxxxx'x
obligations in respect of the Prior Purchase Order and under
the Purchase Order Agreement and this Agreement with respect
to the Prior Purchase Order, and (iv) OSI shall pay the entire
remaining unpaid balance owing to Xxxxxxx in respect of the
Prior Purchase Order, equal to ** , within ** after the
Effective Date, by wire transfer of immediately available
funds to an account specified by Xxxxxxx.
2.3.4 Detailed Product Forecast Variances. Each updated Detailed
Product Forecast may modify the amounts estimated in the
previous Detailed Product Forecast for the periods of time in
question in accordance with the following limitations:
(a) For the first calendar quarter covered by such
updated Detailed Product Forecast, no change in
excess of ** volume increase or decrease from the
prior Detailed Product Forecast for the period of
time in question may be made unless Xxxxxxx consents;
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(b) For the second calendar quarter covered by such
updated Detailed Product Forecast, no change in
excess of a ** volume increase or decrease from the
prior Detailed Product Forecast for the period of
time in question may be made unless Xxxxxxx consents;
and
(c) For the third calendar quarter covered by such
updated Detailed Product Forecast, no change in
excess of an ** volume increase or decrease from the
prior Detailed Product Forecast for the period of
time in question may be made unless Xxxxxxx consents.
2.3.5 Each of the Long-Term Product Forecasts and the Detailed
Product Forecasts shall contain a detailed forecast for each
period for each dosage strength of the Product. The Long-Term
Product Forecasts, the Detailed Product Forecasts and all
purchase orders submitted by OSI (including without limitation
those purchase orders submitted pursuant to Article 2.3.2
above) shall be limited to whole batch quantities and shall
under no circumstances contain partial batch quantities. To
the extent actual batch sizes manufactured by Xxxxxxx differ
from the batch sizes set forth in the Quality Assurance
Agreement based on variations in yield or other factors, the
quantities of actual Product units contemplated by the
applicable purchase orders will be automatically adjusted to
reflect the actual batch sizes manufactured by Xxxxxxx.
If OSI desires to exceed the limitations set forth in this Article 2,
Xxxxxxx shall make reasonable efforts to accommodate such changes, but
shall not be required to exceed such limitations.
2.4 Purchase Orders. OSI agrees to initiate purchases of the Product by
issuing to Xxxxxxx a purchase order not less than ** prior to the
required delivery date set forth in such purchase order. Xxxxxxx agrees
to accept any order issued in accordance with this Article 2 which
specifies quantities consistent with those set forth in the Detailed
Product Forecast and allowable variances in this Article 2 for such
quarter and to meet the delivery dates specified thereon. All purchase
orders hereunder shall be on OSI's standard purchase order form
attached hereto as Schedule 2.4, shall include a delivery date that is
consistent with the requirements of this Article 2 and shall be
directed to Xxxxxxx Manufacturing, Inc. ** . All purchase orders shall
be governed exclusively by the terms of this Agreement. Any term or
condition in any purchase order, confirmation, invoice or other
document furnished by Xxxxxxx or OSI that is in any way inconsistent
with these terms and conditions is hereby expressly rejected, unless
mutually agreed upon in writing by both parties. Xxxxxxx will provide
written confirmation and acceptance within ** after receipt of purchase
orders submitted by OSI, provided they meet the requirements of this
Article 2. In the event any purchase order is not accepted, a
substitute delivery date and/or other terms which would make the
purchase order acceptable must be submitted in writing to OSI within **
after receipt of the purchase
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order. OSI may then re-submit the modified purchase order for
acceptance by Xxxxxxx, or Xxxxxxx will consider that purchase order
null and void.
2.5 Xxxxxxx shall notify OSI as soon as practicable if Xxxxxxx is unable to
supply the quantity of Product ordered by OSI in accordance with this
Article 2; provided, however, that such notice shall in no way limit
any right Xxxxxxx may have to cure any supply failure as contemplated
by the definition of Inability to Supply or otherwise limit Xxxxxxx'x
rights hereunder. In the event that an Inability to Supply has
occurred, OSI shall have the right, upon written notice to Xxxxxxx, to
manufacture itself or procure from any Affiliate of OSI or any third
party (including X. Xxxxxxx-XxXxxxx Ltd. solely with regard to Product
not manufactured by Xxxxxxx) ** . Anything to the contrary herein
notwithstanding, any Product manufactured or procured in accordance
with this Article 2.5 may be manufactured or procured in full batch
quantities; provided that under no circumstances shall such full batch
quantities exceed the minimum batch sizes for the Product as then
currently or as previously approved by the FDA.
2.6 OSI may, at any time during the Term, identify, qualify with the FDA
and add to its NDA one or more alternate suppliers (the identity and
number of which shall be determined in OSI's sole discretion) for OSI's
Requirements of Product. Xxxxxxx shall use commercially reasonable
efforts to cooperate with OSI in connection with OSI's efforts to
qualify one such alternate supplier. Xxxxxxx acknowledges and agrees
that OSI and its alternate suppliers, at all times during the Term,
shall have the right to do all things, including filing documents with
the FDA, reasonably necessary to ensure that such alternate suppliers
are ready at all times to supply Product to OSI. OSI shall not be
prohibited from retaining and storing Product which has been
manufactured by an alternate supplier in connection with the steps
taken in accordance with this Article 2.6 to qualify (and maintain as
qualified) such alternate supplier with the FDA and add such alternate
supplier to OSI's NDA. Xxxxxxx agrees and acknowledges that the
activities contemplated by this Article 2.6 shall not violate OSI's
obligations pursuant to Article 2.1 hereof and OSI shall be free to use
Product manufactured by an alternative supplier contemplated by this
Article 2.6 to supply any amount of the Product which OSI has a right
to procure pursuant to Articles 2.1.2, 2.1.3 or 2.5; provided, however,
that OSI shall not otherwise use any of such Product manufactured by
any such alternative supplier to supply any of its Requirements of the
Product.
2.7 OSI agrees to and hereby does grant and execute, at no cost to Xxxxxxx,
all licenses and sub-licenses under any patents, regulatory approvals,
Trademarks and permits held by OSI, including but not limited to the
licenses and sub-licenses set forth on Schedule 2.7 attached hereto,
for the sole purpose of allowing Xxxxxxx to meet its obligations
hereunder.
2.8 After the Effective Date, the parties shall meet to negotiate in good
faith an agreement (the "Quality Assurance Agreement") that sets forth
the quality assurance and quality control responsibilities of the
parties, including documentation, raw material testing,
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CMC work and maintenance, batch release, batch deviations, batch
rejection, change control, stability program, annual reporting, audits,
retained samples, Product complaints, adverse drug event reporting,
complaints, recalls, contacts with FDA, FDA deficiency letters, and
notifying OSI of FDA inspections and visits. The parties shall use
commercially reasonable efforts to complete the Quality Assurance
Agreement on or before sixty (60) days from the Effective Date.
2.9 Xxxxxxx and OSI shall comply in all material respects with all
applicable United States federal, state, and local laws and regulations
applicable to each of the parties' activities related to the Product
and pursuant to this Agreement.
ARTICLE 3.
[RESERVED]
ARTICLE 4. RELEASE, STORAGE AND SHIPMENT
4.1 Release of Product shall be in accordance with the Quality Assurance
Agreement.
4.2 Xxxxxxx shall store the API and the Product in accordance with cGMP,
the Quality Assurance Agreement and the API Specifications or Product
Specifications, as the case may be.
4.3 Xxxxxxx shall package all Product in accordance with the Quality
Assurance Agreement and the Product Specifications.
4.4 Xxxxxxx shall use a common carrier as instructed by OSI, or as selected
by Schwarz and approved by OSI.
4.5 The Product will be supplied to OSI Ex-Works (Incoterms 2000) Seymour,
Indiana, and risk of loss of the Product shall pass from Xxxxxxx to OSI
upon delivery of the Product to a common carrier approved by OSI. OSI
shall at all times bear the risk of loss of API, except to the extent
that any loss is directly attributable to Xxxxxxx not storing or
otherwise handling the API in accordance with this Agreement, the API
Specifications, the Quality Assurance Agreement and cGMP.
4.6 Xxxxxxx shall be responsible for and agrees to assume any excess
shipping charges related to express shipments, partial shipments, or
both, as necessary to meet the required delivery date in accordance
with Article 2.
4.7 To the extent Xxxxxxx maintains any inventory of Product, Xxxxxxx shall
maintain reasonable Product segregation and inventory rotation.
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ARTICLE 5. PRICE AND PAYMENT
5.1 Xxxxxxx shall supply the Product at the prices set forth on Schedule
5.1 attached hereto, subject to Article 5.2 of this Agreement. Such
price will be adjusted on ** of each calendar year during the term of
this Agreement subject to the terms of this Article 5.
5.2 All price increases for the Product shall be effective for purchase
orders placed after ** of each calendar year, beginning ** . Price
increases shall be equal to the greater of: (a) ** .
5.3 All invoices from Xxxxxxx for Product shall be payable within thirty
(30) days from receipt of the invoice by OSI.
5.4 Any amounts not paid by OSI within thirty (30) days shall be subject to
interest beginning on such date at a rate equal to the lesser of (a) **
per month or (b) the highest rate permitted by applicable law. In each
case, applicable interest shall be calculated monthly on the basis of a
twelve (12) month year. Any amounts that are the subject of a good
faith dispute shall not be subject to such interest.
5.5 Within five (5) days after the Effective Date, OSI shall pay Xxxxxxx **
owing to Xxxxxxx pursuant to Xxxxxxx'x invoice # 11304 in respect of
the acquisition of that certain Xxxxxx imprinter purchased by Xxxxxxx
in connection with the manufacture of the Product. OSI hereby agrees
and acknowledges that OSI has no interest in such imprinter and Xxxxxxx
owns such imprinter free and clear of any and all liens or encumbrances
of OSI.
ARTICLE 6. NON-CONFORMING GOODS
6.1 OSI (or its designee) shall examine all shipments of Product from
Xxxxxxx for damage, shortages or defects, and shall notify Xxxxxxx in
the manner set forth in this Article 6; provided, however, that OSI
must be able to show by reasonable proof that any alleged damage,
defect or shortage to the Product resulted from processing and/or
packaging of the Product by Xxxxxxx and not from any mishandling during
the transport to OSI's designated warehouse, or as a result of API
provided by OSI.
6.2 No later than thirty (30) days from the date of arrival of Product at
OSI's designated warehouse, OSI shall approve or reject any shipment of
Product produced by Schwarz hereunder based on whether or not the
Product meets the Product Specifications. In order for OSI to discharge
the aforesaid responsibility for each lot of the Product produced
hereunder, OSI shall receive from Xxxxxxx prior to or simultaneously
with shipment, a certificate of analysis (which references the
appropriate lot number). If, within ten (10) business days of being
informed by OSI that any lot of the Product does not meet Product
Specifications, Xxxxxxx does not agree with OSI that such lot of the
Product fails to meet Product Specifications, the parties will promptly
arrange for the lot in question to be
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Page 13
tested by a mutually acceptable independent laboratory for conformity
with Product Specifications and the determination of such laboratory
will be final and binding upon the parties. The cost of any such
testing by an independent laboratory shall be borne by the party whose
judgment as to the conformity of any lot of the Product with Product
Specifications proved to be incorrect. Any lots of the Product not
meeting applicable Product Specifications shall, at the request of
Schwarz, be destroyed by OSI or returned to Xxxxxxx at the expense of
Xxxxxxx. OSI shall not be required to pay any invoice with respect to
any shipment of Product properly rejected pursuant to this Article 6.
Notwithstanding the foregoing, OSI shall be obligated to pay in full
for any rejected shipment of Product that is subsequently determined to
meet the Product Specifications. Except to the extent Xxxxxxx may
otherwise have an indemnification obligation pursuant to Article 13.1
in respect of any Claims based upon damages incurred by third parties
as a result of the use or ingestion of non-conforming Product,
Xxxxxxx'x sole obligation regarding non-conforming Product shall be to
replace such non-conforming Product with conforming Product or to
refund the purchase price paid by OSI corresponding to such
non-conforming Product and such replacement or refund shall be OSI's
sole remedy in respect of such non-conforming Product and any lost
profits attributable thereto. Xxxxxxx shall also pay to OSI the cost of
API used to manufacture any such replacement Product at OSI's
acquisition price, which API shall be sourced by OSI; provided,
however, that if the non-conformity of Product is due to OSI's storage
or handling of the Product or attributable to the API used to
manufacture such non-conforming Product, then OSI shall provide Xxxxxxx
at no cost the API to be used to manufacture such replacement Product.
6.3 All claims against Xxxxxxx with respect to any shipment of the Product,
resulting from patent defects, shall be deemed waived unless made in
writing and received by Xxxxxxx within thirty (30) days after OSI's
receipt of such shipment. Nothing in this Article 6.3 shall limit OSI's
right to reject and return and receive replacement Product or a refund
pursuant to the terms of Article 6.2 above (including the limitation on
remedies set forth therein) in respect of Product found not to meet the
Product Specifications at the time of delivery by virtue of a latent
defect discovered by OSI more than thirty (30) days after delivery to
OSI; provided, however, that Schwarz shall have no liability for any
non-conforming Product that is reported to Schwarz after the expiration
date of such Product.
6.4 To the extent non-conformity of any Product arises from OSI's storage
and handling of the Product or the failure of OSI to provide API
meeting the API Specifications, Xxxxxxx shall have no liability to OSI
on the basis of this Agreement or otherwise. Without limiting the
generality of the foregoing, in the situation described in this Article
6.4, Xxxxxxx shall have no obligation to replace such Product, refund
or credit any amount paid by OSI for such Product, or reimburse OSI for
the cost of the API used in such Product. In the situation described in
this Article 6.4, OSI must replace non-complying API with API meeting
the API Specifications free of charge upon Xxxxxxx'x request. If API
becomes unusable based on Xxxxxxx'x negligence, willful misconduct or
failure to comply with the terms of this Agreement, Xxxxxxx shall
purchase replacement API at OSI's acquisition price.
Page 14
6.5 Stability testing and the on-going stability of Product shall be OSI's
sole responsibility and Xxxxxxx has no liability or obligation on the
basis of this Agreement or otherwise regarding Product that fails
stability or shelf-life requirements unless the failure in stability is
attributable to Xxxxxxx'x negligence or failure to comply with the
terms of this Agreement.
ARTICLE 7. RECORDS AND INSPECTIONS
7.1 Xxxxxxx shall keep and maintain all production, control, laboratory and
other records in accordance with and for the period required by all
applicable laws, including but not limited to, cGMP regulations. Upon
reasonable notice and request, such records shall be made available to
OSI, or its representatives or designees, and to the representatives of
any governmental or regulatory authority.
7.2 ** during each twelve (12) month period of this Agreement, OSI shall
have the right to inspect, or at OSI's designation have its
representatives or agents (including Genentech and its representatives)
inspect Xxxxxxx'x facility upon thirty (30) days advance notice. Such
inspections shall be done during regular business hours and shall be
limited to ** per inspection. Notwithstanding the foregoing, OSI shall
have the right to conduct additional inspections, or at OSI's
designation have its representatives or agents (including Genentech and
its representatives) conduct additional inspections during a twelve
(12) month period if Xxxxxxx materially deviates from the Quality
Assurance Agreement or if a regulatory agency has raised any concerns
that could materially affect the ability of Xxxxxxx to manufacture the
Product. In addition, OSI (and its representatives) shall have the
right to be kept reasonably informed during any regulatory inspection
associated with the Product during the Term. Xxxxxxx shall advise OSI
within ** business days if an FDA authorized agent or other regulatory
body authorized agent visits Xxxxxxx'x manufacturing facility and makes
inquiry of Xxxxxxx'x manufacturing methods of the Product during the
Term. Xxxxxxx shall provide OSI with access to any FDA documentation
resulting therefrom that relates to the Product. Xxxxxxx shall provide
notice to OSI of any deficiency noted in such inspection which
deficiency relates to the Product. Furthermore, Xxxxxxx shall notify
OSI, in writing, within ** business days of becoming aware of any
deficiency or adverse finding noted by any regulatory agency during any
such inspection of Xxxxxxx'x facilities, whether in relation to the
Product or otherwise which may materially impact Xxxxxxx'x ability to
supply Product hereunder.
7.3 Xxxxxxx and OSI agree that each will maintain a signed copy of this
Agreement, including current schedules, until five (5) years after the
final shipment and delivery of the Product.
7.4 Xxxxxxx shall exercise reasonable commercial efforts to provide OSI
with Product information in Xxxxxxx'x possession needed to fulfill
OSI's or its designees' obligations to governmental or regulatory
agencies upon the reasonable request of OSI. Further, Xxxxxxx
acknowledges that OSI or its designees shall be responsible for the
management
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Page 15
and response of all OSI information requests and complaints, and
Xxxxxxx agrees to forward any such inquiries to OSI in accordance with
the Quality Assurance Agreement.
ARTICLE 8. TERM AND TERMINATION
8.1 This Agreement shall commence on the Effective Date and expire ten (10)
years thereafter, unless earlier terminated in accordance with this
Article 8 (the "Term"). Not less than ** prior to the expiration of the
Term, OSI shall provide written notice to Xxxxxxx as to whether it
desires to renew this Agreement for an additional term. Upon receipt of
such written notice by Xxxxxxx, the parties shall commence good faith
negotiations with respect to the terms of any such renewal.
8.2 OSI may terminate this Agreement immediately upon written notice to
Xxxxxxx:
(a) if the FDA, or other applicable governmental authority,
permanently prohibits the Product from being manufactured,
shipped, sold, or marketed, in which event all outstanding or
unfinished purchase orders (including any minimum purchase
obligations pursuant to any forecasts) shall be canceled. The
parties will attempt to affix responsibility for all costs
associated with outstanding or unfinished purchase orders
between themselves; provided that Xxxxxxx shall be reimbursed
for Xxxxxxx'x costs associated with work in progress and
materials on hand; or
(b) upon the occurrence of a Failure to Supply, provided that
OSI's right to terminate this Agreement upon the occurrence of
a Failure to Supply must be exercised within ** in which such
Failure to Supply has occurred pursuant to Article 1.6 hereof.
8.3 In addition to any other remedies Xxxxxxx may possess pursuant to this
Agreement or otherwise, Xxxxxxx may terminate this Agreement if, after
** written notice from Xxxxxxx, OSI (i) fails to make payment of an
invoice of over ** Dollars ** which is more than ** past due, or (ii)
fails to cease and desist activities which are in violation of the
FDA's regulations.
8.4 Except with respect to (i) payment defaults by OSI, which shall be
governed by Article 8.3 and (ii) any failure or delay by Xxxxxxx in
supplying Product or Xxxxxxx'x supply of non-conforming Product, which
shall be governed by Articles 2.5, 6.2, 8.2(b) and 13.5, each of
Xxxxxxx and OSI shall have the right to terminate this Agreement upon
the other party's uncured failure to comply in any material respect
with the terms and conditions of this Agreement. If a party seeks to so
terminate this Agreement pursuant to this Article 8.4, such party shall
give the other party written notice setting forth in reasonable detail
the breach or breaches which would form the basis of such termination.
If the breaching party fails to correct such breach or breaches within
forty-five (45) days after receipt of such notice, then, at the
breaching party's option, the asserted breach shall be submitted to
arbitration in accordance with Article 17.2. If the asserted breach is
confirmed by such arbitration panel or if the breaching party notifies
the other party in writing of its election
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Page 16
not to proceed with arbitration, then the other party shall have the
right to terminate this Agreement immediately upon notice to the
breaching party, and any reimbursements that accrued prior to the
effective date of such termination and that are owed to a party shall
be promptly paid by the other party. This Article 8.4 shall not be
exclusive and shall not be in lieu of any other remedies available to a
party hereto for any breach hereunder on the part of the other party.
8.5 If either Xxxxxxx or OSI (i) makes a general assignment for the benefit
of creditors, (ii) files an insolvency petition in bankruptcy, (iii)
petitions for or acquiesces in the appointment of any receiver, trustee
or similar officer to liquidate or conserve its business or any
substantial part of its assets, (iv) commences under the laws of any
jurisdiction any proceeding involving its insolvency, bankruptcy,
reorganization, adjustment of debt, dissolution, liquidation or any
other similar proceeding for the release of financially distressed
debtors, or (v) becomes the subject of any proceeding or action of the
type described above in (iii) or (iv) and such proceeding or action
remains undismissed or unstayed for a period of more than ninety (90)
days, then the other party may by written notice terminate this
Agreement in its entirety with immediate effect.
8.6 If OSI terminates this Agreement pursuant to Article 8.2(b), 8.4 or
8.5, or if OSI terminates this Agreement pursuant to Article 8.2(a) and
the governmental authority prohibition in question was caused by
Xxxxxxx'x negligence or breach of this Agreement, OSI shall, subject to
Article 17.6, have the right to procure some or all of the Product that
was to be manufactured by Xxxxxxx pursuant to this Agreement from a
third-party manufacturer.
8.6.1 Upon any termination by OSI of the nature described in the
first sentence of Article 8.6, Xxxxxxx shall, within a
reasonable time period, but in no event less than thirty (30)
days following written request from OSI: (a) use commercially
reasonable efforts to physically transfer to OSI or its
designee all API then in Xxxxxxx'x possession that was
provided to Xxxxxxx by OSI pursuant to Article 2.2 hereof, (b)
use commercially reasonable efforts to physically transfer to
OSI or its designee any inventory of Product then in its
possession that was manufactured by Xxxxxxx for OSI for which
OSI shall pay Xxxxxxx the full price due hereunder, (c) use
commercially reasonable efforts to physically transfer to OSI
or its designee all work in process for Product to be
manufactured by Xxxxxxx for OSI then in Xxxxxxx'x possession,
for which OSI shall pay Xxxxxxx a pro-rata portion of the full
price due hereunder corresponding to the amount of work
performed by Xxxxxxx, (d) physically transfer any and all
Manufacturing Documentation (as defined in Article 8.6.2) to
OSI or its designee and (e) if neither OSI nor any third party
has theretofore been qualified with the FDA to manufacture the
Product, (i) disclose to OSI or its designee Xxxxxxx'x
production process for the manufacture of the Product (the
"Manufacturing Process"); (ii) provide a license to OSI (with
the right to sublicense to Genentech, Inc.) for any
Proprietary Information that is required to make the Product;
and (iii) provide all cooperation and assistance reasonably
requested by OSI to the extent that such cooperation and
assistance is reasonably necessary to enable OSI (or its
designee) to assume the continued manufacture of the Product,
provided, that under no
Page 17
circumstances shall such obligation to provide assistance
extend beyond ** after such termination, result in
out-of-pocket expenses to Schwarz in excess of ** or result in
man hours expended by Schwarz exceeding ** hours in the
aggregate. All information transferred pursuant to this
Article 8.6.1 shall be deemed to be confidential and shall be
treated as such in accordance with Article 11, provided that
the transferee shall be permitted to use all such information
in connection with the manufacture of the Product, to the
extent reasonably required.
8.6.2 For the purposes of this Agreement, "Manufacturing
Documentation" shall mean all documents and records describing
or directly related to the Manufacturing Process or any part
of the Manufacturing Process which is in Xxxxxxx'x possession
and is reasonably necessary for proper equipment validation
and transfer of Product manufacture to OSI or its designee.
8.7 Upon any termination or expiration of this Agreement, Xxxxxxx shall
have the right to purchase that certain ** purchased pursuant to that
certain Cross-Purchase Agreement, dated as of March 9, 2001, between
OSI and Xxxxxxx, for a price equal to the book value thereof, as
reflected on OSI's books on the date of termination or expiration;
provided that such price shall reflect depreciation of such equipment
calculated in accordance with GAAP, consistently applied.
ARTICLE 9. OWNERSHIP AND PRODUCT SPECIFICATIONS
9.1 Xxxxxxx acknowledges and agrees that the Product Specifications, the
API Specifications, any and all formulae and processes related to the
Product (including, without limitation, master batch formulations and
procedures, production batch formulations and procedures), and all
related Proprietary Information provided by OSI to Xxxxxxx is, and
shall remain, the exclusive property of OSI and Xxxxxxx expressly
acknowledges and agrees that it has no rights pursuant to this
Agreement, and, except as expressly set forth herein, this Agreement in
no way confers upon it any rights, to make, use or sell Product for
itself (including any of its Affiliates, successors or assigns) or for
any third parties, except ** , its Affiliates, successors and assigns.
9.2 As applicable based on each party's obligations under this Agreement,
each party shall provide to the other, or its designated agent, the
certificate of analysis with each shipment of the Product or API made
hereunder. Such certificate of analysis shall certify with respect to
each shipment and lot identified by batch or lot number: (1) the
quantity of the shipment, (2) assay, release rate and content
uniformity, (3) other certification of conformance to Product
Specifications or API Specifications as appropriate, and (4) other such
certifications or information as set forth in the Quality Assurance
Agreement.
9.3 It is hereby agreed and acknowledged by the parties that Xxxxxxx may
enter into an agreement with ** whereby Xxxxxxx will manufacture and
supply pharmaceutical
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Page 18
product containing erlotinib to ** and, pursuant to the terms of that
agreement, ** designees and assignees. Notwithstanding any other
provision hereof, OSI hereby agrees that Xxxxxxx has full right and
authority to enter into such agreement and perform its obligations
thereunder and hereby authorizes Xxxxxxx to make use of the OSI
Proprietary Information to perform Xxxxxxx'x obligations pursuant to
such agreement.
ARTICLE 10. REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 Xxxxxxx warrants, represents, and covenants to OSI as follows:
10.1.1 Xxxxxxx is a corporation duly organized, validly existing and
in good standing under the laws of the State of Indiana.
10.1.2 Xxxxxxx has the power, authority and all other rights
necessary and sufficient to enter into and be bound by the
terms and conditions of this Agreement and to perform its
obligations hereunder.
10.1.3 Xxxxxxx has taken all necessary action on its part to
authorize the execution and delivery of this Agreement and
this Agreement has been duly executed and delivered on behalf
of Xxxxxxx and constitutes a legal, valid, binding obligation,
enforceable against Xxxxxxx in accordance with its terms.
10.1.4 Neither the execution and delivery of this Agreement, or any
other agreement or instrument contemplated hereby by Xxxxxxx,
nor the performance of the obligations contemplated hereby or
thereby will: (a) result in any violation of or constitute a
breach of any of the terms or provisions of, result in the
acceleration of any obligation under, or constitute a default
under (i) the certificate of incorporation or by-laws of
Xxxxxxx or (ii) any contract or any other obligation to which
Xxxxxxx or any of its Affiliates is a party or to which any of
them are subject or bound; (b) violate any judgment, order,
injunction, decree or award of any court, administrative
agency, arbitrator or governmental body against, or affecting
or binding upon, Xxxxxxx or any of its Affiliates; or (c)
constitute a violation by Xxxxxxx or any of its Affiliates of
any applicable law or regulation of any jurisdiction as such
law or regulation relates to Xxxxxxx or any of its Affiliates.
10.1.5 Each Product shall be manufactured by Xxxxxxx, and not by any
Affiliates, subcontractors or other persons or entities, and
shall be manufactured at the site specified in the Quality
Assurance Agreement.
10.1.6 Each Product shall be manufactured, processed, packaged and
shipped in conformance with the Quality Assurance Agreement
and cGMP and any applicable laws and regulations.
10.1.7 At the time of shipment each Product will meet the Product
Specifications, will not be adulterated or misbranded within
the meaning of the Act, nor an article
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Page 19
which may not be introduced into interstate commerce under the
provisions of Section 4.04 or 5.05 of the Act.
10.1.8 Each Product shall be manufactured in conformance with the
Product's master batch records.
10.1.9 All raw materials, ingredients, supplies actually supplied or
obtained by Xxxxxxx in accordance with Article 2.2 and all
equipment utilized in the manufacture of the Product shall
comply with all applicable laws and regulations.
10.1.10 The Product delivered pursuant to this Agreement shall be
delivered to OSI free and clear of any liens or encumbrances
of any kind that arise from any act or omission of Xxxxxxx or
any of its employees or agents.
10.1.11 Any premises used by Xxxxxxx to meet its obligations under
this Agreement currently are and shall be maintained in
accordance with cGMP and in such condition as will allow
Xxxxxxx to manufacture the Product in compliance with and
conformance to cGMP and the Product Specifications.
10.1.12 There are no pending or, to Xxxxxxx'x knowledge, threatened,
judicial, administrative or arbitral actions, claims, suits or
proceedings against Xxxxxxx relating to the activities
contemplated by this Agreement or the Product, or that
otherwise could reasonably be expected to have a material
adverse effect on Xxxxxxx in performing its obligations under
this Agreement.
10.1.13 ALL REPRESENTATIONS, WARRANTIES AND COVENANTS IN THIS
AGREEMENT ARE MADE BY XXXXXXX EXPRESSLY IN LIEU OF ANY OTHER
EXPRESS OR IMPLIED WARRANTIES INCLUDING, BUT NOT BY WAY OF
LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
10.2 OSI warrants, represents and covenants to Xxxxxxx as follows:
10.2.1 OSI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
10.2.2 OSI has the power, authority, rights to the Product and all
other rights necessary and sufficient to enter into and be
bound by the terms and conditions of this Agreement, to
license the intellectual property rights to Xxxxxxx pursuant
to Article 2.7 and to perform its obligations hereunder.
10.2.3 OSI has taken all necessary action on its part to authorize
the execution and delivery of this Agreement and this
Agreement has been duly executed and delivered on behalf of
OSI and constitutes a legal, valid, binding obligation,
enforceable against OSI in accordance with its terms.
Page 20
10.2.4 Neither the execution and delivery of this Agreement, or any
other agreement or instrument contemplated hereby by OSI, nor
the performance of the obligations contemplated hereby or
thereby will: (a) result in any violation of or constitute a
breach of any of the terms or provisions of, result in the
acceleration of any obligation under, or constitute a default
under (i) the certificate of incorporation or by-laws of OSI
or (ii) any contract or any other obligation to which OSI or
any of its Affiliates is a party or to which any of them are
subject or bound; (b) violate any judgment, order, injunction,
decree or award of any court, administrative agency,
arbitrator or governmental body against, or affecting or
binding upon, OSI or any of its Affiliates; or (c) constitute
a violation by OSI or any of its Affiliates of any applicable
law or regulation of any jurisdiction as such law or
regulation relates to OSI or any of its Affiliates.
10.2.5 The API Specifications and the Product Specifications provided
by OSI to Xxxxxxx are and will be those included in the NDA.
10.2.6 The intellectual property rights which OSI has granted Xxxxxxx
the right to use pursuant to Article 2.7 hereof constitute, to
the best of OSI's knowledge, all of the proprietary rights
necessary to enable Xxxxxxx to manufacture each dosage
strength of the Product and engage in all other activities as
contemplated by this Agreement. There are no demands,
proceedings, claims or other actions instituted, pending or,
to OSI's knowledge, threatened alleging that the use by OSI or
Xxxxxxx of any intellectual property or other proprietary
right pertaining to the Product, or that the use, manufacture,
sale or licensing of the Product or any material, design,
formula or process related to or comprising the Product,
infringes any patent or other intellectual property right of
any third party, or otherwise challenging the right of OSI,
with respect to the Product, to maintain or use any patent,
trademark or service xxxx, or any application or registration
therefore. OSI is not aware of and has not received any
communications challenging the validity or enforceability of
any such intellectual property rights. The exercise of
Xxxxxxx'x manufacturing and other activities as contemplated
in this Agreement will not, to the best of OSI's knowledge,
infringe, misappropriate or misuse any intellectual property
right of any third party. Without limiting the generality of
the foregoing, there are no pending or, to OSI's knowledge,
threatened judicial, administrative or arbitral actions,
claims, suits or proceedings against OSI relating to OSI's
filing of an NDA for the Product or obtaining FDA approval for
such NDA.
10.2.7 There are no pending or, to OSI's knowledge, threatened
judicial, administrative or arbitral actions, claims, suits or
proceedings against OSI relating to the activities
contemplated by this Agreement or the Product, or that
otherwise could reasonably be expected to have a material
adverse effect on OSI in performing its obligations under this
Agreement.
10.2.8 All API provided by OSI to Xxxxxxx and all methods of delivery
of such API shall conform to all applicable laws and
regulations and API Specifications.
Page 21
10.2.9 API delivered pursuant to this Agreement shall be delivered to
Xxxxxxx free and clear of any liens or encumbrances of any
kind that arise from the actions of OSI or any of its
employees or agents.
ARTICLE 11. CONFIDENTIALITY
11.1 Each party shall keep strictly confidential and not use, except for
purposes of conducting the activities permitted in this Agreement, any
Proprietary Information obtained from the other, and the terms and
conditions of the Agreement, except Proprietary Information which:
(a) at the time of disclosure is in the public domain;
(b) after disclosure becomes part of the public domain through no
act or omission of the receiving party;
(c) as shown by written records was in the possession of the
receiving party prior to disclosure by the disclosing party;
(d) is independently developed by employees of the receiving party
who did not have access to the disclosing party's confidential
information; or
(e) is subsequently obtained by the receiving party from a third
party not under an obligation to the disclosing party
requiring the third party to maintain the information in
confidence.
11.2 Each party agrees that they will disclose the other's Proprietary
Information to their own Affiliates, officers, employees, consultants
and agents only if and to the extent necessary to carry out their
respective responsibilities under this Agreement or in accordance with
the exercise of their respective rights under this Agreement, and such
disclosure shall be limited to the minimum extent possible consistent
with such responsibilities and rights. Neither party shall disclose
Proprietary Information of the other to any third party without the
other's prior written consent; provided, however, that (i) OSI may
disclose Xxxxxxx Proprietary Information to Genentech, Inc., or to any
third party supplier in accordance with Article 2.6; provided that
Genentech, Inc. or any such third party supplier shall be subject to
obligations of confidentiality no less restrictive than this Article 11
and (ii) Xxxxxxx may disclose OSI Proprietary Information to ** and its
Affiliates, successors and assigns; provided that ** and its
Affiliates, successors and assigns shall be subject to obligations of
confidentiality no less restrictive than this Article 11. Each party
shall take such action to preserve the confidentiality of each other's
Proprietary Information as it would customarily take to preserve the
confidentiality of its own Proprietary Information (but in no event
less than a reasonable standard of care). Each party, upon the other's
request, will return all the Proprietary Information disclosed by the
other party pursuant to this Agreement, including all copies and
extracts of documents promptly following the expiration or termination
of this
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Page 22
Agreement except for one copy maintained in its legal department files
solely for the purpose of ensuring compliance with the terms hereof.
Notwithstanding the foregoing, either party may disclose information
which is required to be disclosed by law, by a valid order of a court
or by order or regulation of a governmental agency including but not
limited to, regulations of the United States Securities and Exchange
Commission, or pursuant to a mandatory disclosure obligation in the
course of litigation, provided that in all cases the receiving party
shall give the other party prompt notice of the pending disclosure and
shall use commercially reasonable efforts to maintain the
confidentiality of the information.
11.3 Each party agrees that should it breach or threaten to breach any
provisions of this Article 11, the disclosing party will suffer
irreparable damages and its remedy at law will be inadequate. Upon any
breach or threatened breach by the receiving party of this Article 11,
the disclosing party shall be entitled to seek injunctive relief in
addition to any other remedy which it may have, without need to post
any bond or security.
11.4 The confidentiality provisions of this Article 11 shall survive any
termination or expiration of this Agreement for whatever reason for a
period of seven (7) years following the date of such termination or
expiration.
ARTICLE 12. INSURANCE
12.1 Xxxxxxx shall maintain in full force and effect during the Term and all
renewals or extensions thereof, and for a period thereafter equal to
the shelf life of the final Product batch manufactured pursuant to this
Agreement, product liability and comprehensive and general business
liability insurance coverage, with minimum limits of ** Dollars ** per
occurrence and ** Dollars ** annual aggregate of all claims. All
insurance shall be maintained with an independent, reputable insurance
carrier. Xxxxxxx will notify OSI of any cancellation at the earliest
possible time. Upon request at any time during the term hereof, Xxxxxxx
shall furnish OSI with a certificate of insurance evidencing such
insurance coverage.
12.2 OSI shall maintain in full force and effect during the Term and all
renewals or extensions thereof, and for a period thereafter equal to
the shelf life of the final Product batch manufactured pursuant to this
Agreement, product liability and comprehensive and general business
liability insurance coverage, with minimum limits of ** Dollars ** per
occurrence and ** Dollars ** annual aggregate of all claims. All
insurance shall be maintained with an independent, reputable insurance
carrier. OSI will notify Xxxxxxx of any cancellation at the earliest
possible time. Upon request at any time during the term hereof, OSI
shall furnish Xxxxxxx with a certificate of insurance evidencing such
insurance coverage.
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ARTICLE 13. INDEMNIFICATION; LIMITATION OF REMEDIES; CONTROL OF LITIGATION
13.1 Xxxxxxx shall indemnify, defend and hold harmless OSI, its Affiliates
and their respective officers, directors, employees and agents (the
"OSI Indemnitees") from and against any and all liability, damage,
loss, costs or expenses, including, but not limited to, any costs or
expenses (including reasonable legal fees and expenses) (collectively,
"Claims") incurred or payable by an OSI Indemnitee, relating to (a)
Xxxxxxx'x material breach of its representations, warranties, covenants
or other obligations under this Agreement or (b) gross negligence or
willful misconduct of a Xxxxxxx Indemnitee (as hereinafter defined),
except to the extent such Claims arise out of the material breach or
default, gross negligence or willful misconduct of a OSI Indemnitee.
13.2 OSI will indemnify, defend and hold harmless Xxxxxxx, its Affiliates
and their respective officers, directors, employees and agents (the
"Xxxxxxx Indemnitees") from and against any and all Claims incurred or
payable by a Xxxxxxx Indemnitee, relating to (a) the packaging,
storage, distribution, promotion, sale or use of any Product by OSI or
any of OSI's sublicensees, distributors, agents or other parties with
which OSI has entered into any collaboration regarding the Product
(including, but not limited to, Genentech, Inc.) or the use of the
Product by any patient or other third party, (b) any recall of the
Product, (c) infringement or contributory infringement of any patent,
trademark or copyright of any third party by virtue of Xxxxxxx'x
activities regarding the Product or pursuant to the terms of this
Agreement, (d) OSI's breach of its representations, warranties,
covenants or other obligations under this Agreement, or (e) gross
negligence or willful misconduct of an OSI Indemnitee, except to the
extent such Claims arise out of the material breach or default, gross
negligence or willful misconduct of a Xxxxxxx Indemnitee.
13.3 THE FOREGOING INDEMNIFICATION PROVISIONS SHALL APPLY TO CLAIMS OF THE
PARTIES HERETO, AS WELL AS THIRD PARTY CLAIMS.
13.4 With respect to third party Claims, the indemnifying party shall have
sole control over, and shall assume all expense with respect to, the
defense, settlement, adjustment or compromise of any Claim as to which
this Article 13 requires it to indemnify the other, provided that (a)
the indemnifying party shall use counsel reasonably satisfactory to the
other party, (b) the other party may, if it so desires, employ counsel
at its own expense to assist in the handling of such claim, (c) the
parties shall reasonably cooperate in the sharing of pertinent
information related to the claim, and (d) the indemnifying party shall
obtain prior written approval of the other party, which shall not be
unreasonably withheld, before entering into any settlement, adjustment
or compromise of such Claim, or ceasing to defend against such claim,
if pursuant thereto, or as a result thereof, injunctive or other
non-monetary relief would be imposed upon the other party or monetary
relief would be imposed upon the other party for which such other party
is not indemnified hereunder.
13.5 XXXXXXX'X AND OSI'S LIABILITY IN CONNECTION WITH THIS AGREEMENT AND THE
SUBJECT MATTER HEREOF IS SUBJECT TO THE FOLLOWING LIMITATIONS: (A)
EXCEPT WITH RESPECT TO THE FRAUD, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF OSI OR XXXXXXX, THEIR
Page 24
RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS AND
EXCEPT TO THE EXTENT ATTRIBUTABLE TO A THIRD PARTY CLAIM IN RESPECT OF
WHICH A PARTY MAY OTHERWISE HAVE AN INDEMNIFICATION OBLIGATION PURSUANT
TO ARTICLE 13.1 OR 13.2, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR ANY INDIRECT OR INCIDENTAL DAMAGES OF ANY NATURE;
(B) IN NO EVENT SHALL XXXXXXX'X AGGREGATE LIABILITY FOR ALL CLAIMS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF EXCEED THE AMOUNTS PAID BY OSI TO XXXXXXX PURSUANT TO THIS
AGREEMENT PRIOR TO THE APPLICABLE DATE OF DETERMINATION; (C) EXCEPT TO
THE EXTENT XXXXXXX MAY OTHERWISE HAVE AN INDEMNIFICATION OBLIGATION
PURSUANT TO ARTICLE 13.1 IN RESPECT OF ANY CLAIMS BASED UPON DAMAGES
INCURRED BY INDIVIDUALS AS A RESULT OF THE USE OR INGESTION OF
NON-CONFORMING PRODUCT, OSI'S SOLE REMEDY FOR CLAIMS ATTRIBUTABLE TO
XXXXXXX'X SUPPLY OF NON-CONFORMING PRODUCT, INCLUDING ANY LOST PROFITS
ATTRIBUTABLE THERETO, SHALL BE AS SET FORTH IN ARTICLE 6.2; AND (D)
OSI'S SOLE REMEDY IN CONNECTION WITH XXXXXXX'X FAILURE TO TIMELY SUPPLY
ANY QUANTITY OF PRODUCT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT
SHALL BE AS SET FORTH IN ARTICLES 2.5 AND 8.2(b).
ARTICLE 14. NOTICES
Any notices, requests, estimates or other communications hereunder
shall be deemed to have been properly given three (3) days after being deposited
in the United States mail, first class postage prepaid, or if sent via facsimile
with a written acknowledgment from the recipient, or sent via nationally
recognized next business day courier addressed as follows:
If to OSI:
OSI Pharmaceuticals, Inc.
00 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Vice President, Global Regulatory and CMC
Fax: **
With a copy to:
OSI Pharmaceuticals, Inc.
00 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Vice President and General Counsel
Fax: **
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If to Xxxxxxx:
Xxxxxxx Pharma Manufacturing, Inc.
0000 "X" Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Vice President, Manufacturing
Fax: **
With a copy to:
Xxxxxxx Pharma, Inc.
0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
Fax: **
ARTICLE 15. TAXES
15.1 OSI shall pay all national, state, municipal or other sales, use,
excise, property or other similar taxes, tariffs or assessments,
assessed upon or levied against the sale of the Product hereunder
(other than taxes or charge imposed on Xxxxxxx'x income).
ARTICLE 16. FORCE MAJEURE
16.1 The performance by either party of any covenant or obligation on its
part to be performed hereunder, other than the obligation of either
party to pay money to the other and OSI's exclusive purchase
obligations pursuant to Article 2.1 hereof, will be excused by reason
of strikes or other labor disturbances, riots, fires, accidents, wars,
embargoes, delays of carriers, inability to obtain raw materials,
failure of power or natural resources of supply, acts, injunctions, or
restraints of government, or any other cause preventing such
performance whether similar, or dissimilar, to the foregoing, provided
that such excuse will only be valid to the extent that such
nonperformance are beyond the reasonable control of the party bound by
such covenant or obligation, and provided that the party affected will
exert its reasonable best efforts to eliminate any such causes, and
resume performance of its covenant with all reasonably possible speed.
Notwithstanding the above, OSI shall retain its rights pursuant to
Article 2.5 hereof corresponding to an Inability to Supply caused by a
force majeure event as described in this Article 16 directly affecting
Xxxxxxx'x performance of its obligations under this Agreement.
ARTICLE 17. MISCELLANEOUS PROVISIONS
17.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
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17.2 Arbitration. The parties hereto agree that any dispute, controversy or
claim arising out of or relating to this Agreement, or the breach,
termination, or invalidity thereof, shall be resolved through binding
arbitration, the result of which shall not be subject to appeal or
judicial consideration in any manner other than the entry of an
arbitration decision as contemplated below. If the dispute arises
between the parties, and if such dispute cannot be resolved after good
faith negotiations by the parties, any unresolved controversy or claim
between the parties shall be resolved by binding arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association as presently in effect, except as modified
herein. Each such arbitration shall be conducted by a panel of three
(3) arbitrators appointed in accordance with the Commercial Arbitration
Rules as presently in effect; provided that at least one (1) such
arbitrator shall have had, by the time of the actual arbitration, at
least ten (10) years of experience as an attorney and experience in the
pharmaceuticals manufacturing industry so as to better understand the
legal, business and scientific issues addressed in the arbitral
proceeding. A reasoned arbitration decision shall be rendered in
writing within thirty (30) days of the conclusion of the arbitration
hearing and shall be binding and not be appealable to any court in any
jurisdiction. The prevailing party may enter such decision in any court
having competent jurisdiction. Unless otherwise mutually agreed upon by
the parties, the arbitration proceedings shall be conducted at the
location of the party not originally requesting the resolution of the
dispute. Each party must bear its own attorneys' fees and associated
costs and expenses. The arbitrators shall have the authority to grant
specific performance and allocate costs between the parties (excluding
attorney's fees). Notwithstanding the foregoing, any dispute relating
to the determination of validity of claims, infringement or claim
interpretation relating to a party's patents shall be submitted
exclusively to federal court.
17.3 Waiver. The failure of either party to enforce at any time and for any
period the provisions hereof in accordance with its terms shall not be
construed as a waiver of such provisions or of the right of either
party thereafter to enforce each and every such provision, unless such
waiver is in writing, and signed by the party to be charged.
17.4 Relationship of the Parties. Each of the parties hereto are independent
contractors and nothing in this Agreement is intended or shall be
deemed to constitute a partnership, agency, employer-employee, or joint
venture relationship between the parties. No party shall incur any
debts or make any commitments for the other party.
17.5 Severability. The provisions of this Agreement are separate and
independent covenants, and it is agreed that the invalidity or
unenforceability of one or more of the provisions hereof shall not
invalidate any other provision hereof, and this Agreement shall
thereafter continue in full force and effect. In the event that any
provision of this Agreement is found to be too broad, invalid or
unenforceable by any court having jurisdiction, then such court shall
have the authority to reform any such provisions as shall be necessary
to make the provisions valid and enforceable; however, if the provision
is not capable of being reformed, then that invalid or unenforceable
provision shall be deemed deleted to the same extent as if it had never
existed.
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17.6 Survival; Continuing Obligations. All representations, warranties and
covenants made in this Agreement shall survive the execution of this
Agreement, and consummation of the transactions contemplated herein;
provided, however, that unless explicitly specified to the contrary,
the representations and warranties set forth in Articles 10.1.1 through
10.1.4 and Article 10.1.12 and Articles 10.2.1 through 10.2.4 and
Article 10.2.7 shall be made solely as of the execution date of this
Agreement. Termination of this Agreement for any reason shall not
relieve or release the parties of any obligations accruing before
termination occurred. Further, the obligations of the parties under
Articles 6.2 through 6.4 (Non-Conforming Goods), 7 (Records and
Inspections), 8 (Term and Termination), 9 (Ownership and Product
Specifications), 11 (Confidentiality), 12 (Insurance), 13
(Indemnification), 14 (Notices), 15 (Taxes) and 17 (Miscellaneous),
shall survive the expiration or termination of this Agreement in
accordance with their respective terms.
17.7 Assignment. Neither this Agreement, nor any right or obligation of
either party hereunder, shall be assignable except with the other
party's prior written consent, except that without such consent and,
upon prior written notice to the other party, (i) either party may
assign this Agreement to any successor in interest to substantially all
of the party's business and assets to which this Agreement relates,
(ii) OSI or Xxxxxxx may assign this Agreement to one or more of its
Affiliates and (iii) only upon the occurrence of a Triggering Event, as
defined in that certain Manufacturing and Supply Agreement, dated as of
June 4, 2004, between Genentech, Inc. and OSI (the "Genentech
Agreement"), as in effect on the date hereof, OSI may assign this
Agreement in its entirety, but not in part, to Genentech, Inc., any
successor of Genentech, Inc. or any party to whom Genentech, Inc. or
its successor has assigned the Genentech Agreement. This Agreement
shall be binding upon and shall inure to the benefit of any successor
or permitted assign of either party.
17.8 Third-Party Beneficiaries. Nothing in this Agreement shall be construed
to create any rights or obligations except among the parties hereto.
17.9 Entire Agreement. This Agreement, including all Exhibits and Schedules
attached hereto, together with the Quality Assurance Agreement, that
certain Cross-Purchase Agreement, dated as of March 9, 2001, between
Xxxxxxx and OSI, constitute the entire understanding of the parties
with respect to the subject matter hereof, and supersedes all prior
contracts, agreements and understandings between the parties related to
the same subject matter, including (i) the Purchase Order Agreement,
and (ii) that certain Manufacturing and Development Agreement, dated as
of April 15, 2001, between OSI and Xxxxxxx.
17.10 Amendments. Except as expressly contemplated elsewhere herein, this
Agreement may not be amended, supplemented or modified except by an
agreement in writing signed by both parties.
17.11 Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be deemed an original and all of which taken
together shall constitute one instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
XXXXXXX PHARMA MANUFACTURING, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President, Manufacturing
OSI PHARMACEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President, Regulatory Affairs & CMC
Page 29
SCHEDULE 1.4
API SPECIFICATIONS
[Please see attached] **
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SCHEDULE 1.11
PRODUCT SPECIFICATIONS
[Please see attached] **
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SCHEDULE 1.15
TRADEMARKS
Tarceva(TM)
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SCHEDULE 2.2
API INVENTORY AS OF EFFECTIVE DATE
[Please see attached] **
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SCHEDULE 2.3.1
INITIAL LONG-TERM PRODUCT FORECAST
[Please see attached] **
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SCHEDULE 2.3.2
INITIAL DETAILED PRODUCT FORECAST
[Please see attached] **
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SCHEDULE 2.4
FORM OF PURCHASE ORDER
[Please see attached]
Page 36
(OSI) pharmaceuticals PURCHASE ORDER
PURCHASE ORDER NO REVISION PAGE
00 Xxxxx Xxxxxxx Xxxx 0
Xxxxx 000 THIS PURCHASE ORDER NUMBER MUST APPEAR
Xxxxxxxx, XX 00000 ON ALL INVOICES, PACKING LISTS, CARTONS
(000) 000-0000 AND CORRESPONDENCE RELATED TO THIS ORDER.
VENDOR: XXXXXXX PHARMA
**
XXXX TO:
00 Xxxxx Xxxxxxx Xxxx
Xxxxx: Accounts Payable
Xxxxxxxx, XX 00000
Xxxxxx Xxxxxx
CUSTOMER ACCOUNT NO. VENDOR NO. DATE OF ORDER/BUYER REVISED DATE/BUYER
1925
--------------------------------------------------------------------------------
PAYMENT TERMS SHIP VIA F.O.B.
30 Net EXWORKS, SEYMOUR
--------------------------------------------------------------------------------
FREIGHT TERMS REQUESTOR/DELIVER TO CONFIRM TO/TELEPHONE
Paid (000) 000.0000
--------------------------------------------------------------------------------
ITEM PART NUMBER/DESCRIPTION DELIVERY DATE QUANTITY UNIT UNIT PRICE EXTENSION TAX
Your #: n/a N
Seller to supply the Product to OSI in accordance with the Supply Agreement
between Xxxxxxx Pharma Manufacturing, Inc. and OSI Pharmaceuticals, Inc.
TOTAL
AUTHORIZED SIGNATURE
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SCHEDULE 2.7
LICENSES
U.S. Patent No. 5,747,498
Tarceva(TM) Trademark
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SCHEDULE 5.1
PRICE SCHEDULE
FOR QUANTITIES OF PRODUCT PURCHASED UP TO ** TABLETS EACH ** ** /tablet
FOR QUANTITIES OF PRODUCT PURCHASED IN EXCESS OF ** TABLETS EACH ** ** /tablet
FOR QUANTITIES OF PRODUCT PURCHASED IN EXCESS OF ** TABLETS EACH ** ** /tablet
For the avoidance of doubt, the ** per tablet and the ** per tablet prices set
forth above shall only apply to quantities of Product above each of the
thresholds set forth above ( ** tablets each ** and ** tablets each **
respectively).
Quantities of Product purchased pursuant to the Purchase Order Agreement shall
not be taken into account in the calculation of prices pursuant to this
Supply
Agreement.
For the purposes of the above schedule, the first year shall be the twelve month
period beginning on the day of the execution of this
Supply Agreement and ending
twelve months thereafter, and subsequent years shall fall within each such
subsequent twelve month period. The quantities of Product purchased in any such
year shall be calculated based on the quantities delivered during such year
based on the delivery dates specified in the relevant purchase orders; provided
such delivery dates are consistent with Article 2 hereof.
The above prices shall be subject to annual increases based upon the Producer
Price Index (PPI), pursuant to Article 5.2 hereof.
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EXHIBIT A-1
INITIAL PURCHASE ORDER
[Please see attached] **
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EXHIBIT A-2
PRIOR PURCHASE ORDER
[Please see attached] **
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