Exhibit 10.8
AMENDMENT NO. 1
TO
CELL THERAPY MANUFACTURING AGREEMENT
AMENDMENT NO. 1 (this "Amendment"), dated as of October 18, 2004, to that
certain CELL THERAPY MANUFACTURING AGREEMENT (the "Agreement"), dated as of
October 29, 2003, between Cambrex Bio Science Walkersville, Inc., a Delaware
Corporation ("CBSW"), and Ortec International, Inc., a Delaware corporation
("Ortec") (each of CBSW and Ortec, a "Party" and, collectively, the "Parties").
Defined terms not otherwise defined herein shall have the meanings ascribed to
them in the Agreement.
RECITALS
WHEREAS, pursuant to the Agreement, subject to certain limitations,
CBSW agreed to manufacture, and Ortec agreed to purchase from CBSW, Ortec's
commercial requirements for Product; and
WHEREAS, the Parties desire to amend the Agreement to reflect, among
other things, the fact that CBSW has agreed to distribute Product in the United
States on behalf of Ortec pursuant to the Sales Agency Agreement, dated as of
the date hereof, between Ortec and CBSW (the "Sales Agency Agreement").
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants hereinafter set forth, CBSW and Ortec hereby agree as
follows:
1. Section 1.30 of the Agreement pertaining to the definition of
"Phase I" is hereby amended to change the reference to "Section 2.6" to "Section
2.7".
2. Section 2.5 (Manufacture by CBSW) of the Agreement pertaining to
the delivery obligations of CBSW during the Production Term for Phase I is
hereby amended such that, in addition to CBSW's obligation to deliver Product to
Client or to a third party at Ortec's direction, CBSW shall be responsible for
delivering Product directly to customers of the Product in the United States
pursuant to and in accordance with the Sales Agency Agreement.
3. Section 3.3.2 (Custom Production Suite) of the Agreement pertaining
to the amount to be contributed by Ortec for the construction of the Custom
Production Suite is hereby amended to lower the maximum amount of construction
and validation costs for which Ortec shall be responsible (the "Construction
Fee") to 50% of such costs (up to a maximum contribution of $1,000,000) from 50%
of such costs (up to a maximum contribution of $2,500,000). The Construction Fee
shall remain payable in five installments as set forth in Section 3.3.2 of the
Agreement.
4. Section 3.4 (Manufacture by CBSW) of the Agreement pertaining to
the delivery obligations of CBSW during the Production Term for Phase II is
hereby amended such that, in addition to CBSW's obligation to deliver Product to
Client or to a third party at Ortec's
direction, CBSW shall be responsible for delivering Product directly to
customers of the Product in the United States pursuant to and in accordance with
the Sales Agency Agreement.
5. For the avoidance of doubt, each reference to Ortec's commercial
requirements for Product in Section 6.1 (Requirements) of the Agreement shall be
deemed to include all Products to be sold by CBSW on behalf of Ortec pursuant to
the Sales Agency Agreement. Notwithstanding anything to the contrary contained
in Section 6.1 or any other Section of the Agreement, in the event that CBSW
advises Ortec that CBSW will be unable to, or is in fact unable to, supply
Ortec's commercial requirements of Product (such an event, a "Product
Shortage"), and such Product Shortage is primarily due to production capacity
restraints and occurs prior to the completion of a New Custom Production Suite
(as defined in the Sales Agency Agreement) or the occurrence of an Other
Capacity Event (as defined in the Sales Agency Agreement), Ortec shall not have
the right to order and purchase the remaining quantity of its commercial
requirements for Product from sources other than CBSW unless CBSW fails to
remedy such Product Shortage within the six-month period following such Product
Shortage. In addition, after the completion of a New Custom Production Suite or
the occurrence of an Other Capacity Event, in the event that a Product Shortage
occurs primarily as a result of a significant increase in customer demand for
Product, Ortec shall not have the right to order and purchase the remaining
quantity of its commercial requirements for Product from sources other than CBSW
unless CBSW fails to remedy such Product Shortage within the six-month period
following such Product Shortage; provided, however, that, if the Custom
Production Suite has previously been built and Ortec has paid to CBSW the
associated Construction Fee, CBSW shall be solely responsible for all costs
associated with implementation of such remedy (e.g., construction costs
associated with expansion of Production Suite), other than the fees described in
paragraphs 3, 4, 6, 7, 8, 9 and 10 of Schedule 11.1.
6. Section 6.2 (Forecasting and Order Process) of the Agreement, to
the extent pertaining to (i) Ortec's obligation to supply CBSW with forecasts
for its requirements of commercial Product in the United States and (ii) Ortec's
obligations with respect to the submission of binding orders for Ortec's
requirements of commercial Product in the United States, is hereby deleted.
Hereafter, Ortec shall only be obligated to provide forecasting and otherwise
act pursuant to Section 6.2 of the Agreement to the extent such forecasting and
other obligations relate to the manufacture of Product by CBSW for distribution
outside the United States ("Non-US Distributed Products"). Instead of rolling
12-month forecasts, Ortec shall provide rolling 24-month forecasts of its
monthly requirements of Non-US Distributed Products with the first forecasted
month being at least 120 days in advance of such forecast date. CBSW shall,
within 60 days after receiving each such forecast, notify Ortec if any portion
of the first 12 months of each such forecast (each, a "12-Month Forecast")
exceeds CBSW's production capacity less CBSW's requirements of US Distributed
Products (as defined below) (but not including previous forecasted amounts not
timely objected to by CBSW in connection with previous 12-Month Forecasts).
Subject to CBSW's production capacity, CBSW shall be responsible for forecasting
CBSW's requirements of commercial Product to be sold by CBSW, on behalf of
Ortec, to customers in the United States pursuant to the Sales Agency Agreement.
Subject to CBSW's obligation to notify Ortec if any portion of a 12-Month
Forecast exceeds CBSW's production capacity as described above, CBSW shall only
be obligated to deliver Non-US Distributed Products to Ortec up to CBSW's
production capacity amount, less the amount of
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Product required by CBSW for sale, on behalf of Ortec, to customers in the
United States pursuant to the Sales Agency Agreement ("US Distributed
Products"). Subject to Ortec paying to CBSW the Construction Fee when such fee
becomes due and payable under the Agreement, to the extent that CBSW's supply
obligations with respect to US Distributed Products are made subject to CBSW's
production capacity, with respect to each full Target Year (as defined in the
Sales Agency Agreement) commencing after the expiration of the six-month period
after the completion of a New Custom Production Suite or the occurrence of an
Other Capacity Event, whichever is earlier (but no sooner than 2006), such
limitation shall only apply to the extent CBSW's requirements of US Distributed
Products for a particular Target Year exceed an amount equal to (x) 75% of the
Total US Forecast Amount (as defined in the Sales Agency Agreement) applicable
to such Target Year, less (y) the number of Non-US Distributed Products
delivered to Ortec during such Target Year.
7. Section 6.3 (Packaging and Shipping) of the Agreement (other than
the first sentence thereof), to the extent pertaining to the Parties'
obligations in connection with the shipment of US Distributed Products, is
hereby deleted. Hereafter, Product intended for distribution to customers in the
United States under the Sales Agency Agreement shall be shipped by CBSW, on
behalf of Ortec, FCA (Incoterms 2000), delivered at the Facility by CBSW to a
common carrier chosen by CBSW. Title and risk of loss of all Products shall pass
to Ortec upon delivery by CBSW to the carrier at the Facility. It is understood
and agreed by the Parties that the shipping costs in connection with each
shipment of US Distributed Product constitutes a part of the Transaction Fee (as
defined in the Sales Agency Agreement) associated with each customer order of
such Product pursuant to the Sales Agency Agreement.
8. The provision to Ortec of required shipping documentation and the
shipment approval process as set forth in Section 7.2 (Approval of Shipment) of
the Agreement shall also apply to shipments of US Distributed Product, except
that the Acceptance Period with respect to US Distributed Product shall be
shortened from 15 days to 7 days. Notwithstanding Section 7.2.3, if no
Disapproval Notice with respect to a shipment of US Distributed Product is
received by CBSW within such 7-day period, such shipment shall be deemed
approved by Ortec.
9. Section 11.7 (Method of Payment) of the Agreement is hereby amended
such that, in addition to payment by check, wire transfer or money order,
payments due to CBSW under the Agreement (or a portion thereof) may be made in
the form of a deduction by CBSW of the amounts payable to Ortec pursuant to
Section 3(c)(i) of the Sales Agency Agreement or pursuant to Section 2 of the
Consent and Agreement, dated as of the date hereof, between Xxxx Royalty Fund,
L.P. and CBSW.
10. Section 12.5 (Publicity) of the Agreement is hereby amended such
that CBSW shall be permitted to refer to, display and use Ortec's name and
trademarks pursuant to and in accordance with the Sales Agency Agreement.
11. Section 16.2.4.2 of the Agreement is hereby amended to delete the
phrase "below in Section 16.2.4.5(d)" and to replace such phrase with "Schedule
3.5.1".
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12. Commencing with calendar year 2006 and thereafter, CBSW shall not,
without Ortec's prior written consent, invoice Ortec for Products manufactured
and released more than 3 months in advance of the first day of the calendar
month in which such Product is forecasted to be sold, as shown in the applicable
annual U.S. sales forecast of Product (expressed as a number of Product units)
which shall be mutually agreed upon by the Parties from time to time. CBSW shall
invoice Ortec for each such Product only after a period of 3 months has passed
from the date such Product was released. For purposes of this Section 12, the
invoice amount attributable to each such Product shall be equal to the quotient
of: (i) the total amount that would have been invoiced to Ortec for services
provided by CBSW under the Agreement during the calendar month in which such
Product was manufactured had it not been for the prohibition contained in this
Section 12 and (ii) the total number of Product units manufactured by CBSW
during such calendar month.
13. Effective simultaneously with the termination of the Sales Agency
Agreement, this Amendment (other than Sections 1 and 11) shall become null and
void and be of no further force and effect. Thereafter, the rights and
obligations of the Parties under the Agreement shall be governed solely by the
terms and condition set forth therein, without giving effect to any of the
provisions contained in this Amendment (other than Sections 1 and 11). As such,
for the avoidance of doubt, upon termination of the Sales Agency Agreement,
Ortec shall once again be responsible for paying (to the extent not already paid
or credited) 50% of the Custom Production Suite construction costs up to a
maximum amount of $2,500,000 (and not $1,000,000); provided, however, that if
(x) CBSW terminates the Sales Agency Agreement pursuant to Section 11(a)(3) or
11(a)(7) thereof or (y) Ortec terminates the Sales Agency Agreement pursuant to
Section 11(a)(1) or 11(a)(2) thereof, Ortec shall only be responsible for paying
up to a maximum amount of $1,000,000 (and not $2,500,000).
14. This Amendment 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.
15. This Amendment 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 different jurisdiction. The second sentence of Section 18.6 of the
Agreement is hereby amended to delete the second sentence thereof and to replace
such sentence with the following sentence: "All suits, disputes, actions, and
other legal proceedings related to or arising out of this Agreement, will be
brought in the state or federal courts located in New York City, New York."
16. This Amendment 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.
17. This Amendment may not be amended or modified, and no provisions
hereof may be waived, without the written consent of the Parties.
18. Each provision of this Amendment 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
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of the other clauses herein. If one or more of the provisions contained in this
Amendment 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.
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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the
day and year first above written.
WITNESS: ORTEC INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxxxxxx By: /s/ Xxx Xxxxxxxx
------------------------- ----------------------------------
Xxx Xxxxxxxx
Vice Chairman, Board of Directors
WITNESS: CAMBREX BIO SCIENCE
WALKERSVILLE, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxx
------------------------- ----------------------------------
N. Xxxxx Xxxxxx
President
BioProducts Strategic Business Unit
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