[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
MANUFACTURING AGREEMENT
between
BIOMERIEUX XXXXX, INC.
and
AFFYMETRIX, INC.
Confidential
MANUFACTURING AGREEMENT effective as of September 1, 1996 ("Effective
Date") between AFFYMETRIX, INC., a California corporation having its principal
place of business at 0000 Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000
(hereinafter referred to as "AFFX") and BIOMERIEUX XXXXX, INC., a Missouri
corporation, having its principal place of business at 000 Xxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000-0000 (hereinafter referred to as "BMX").
RECITALS
WHEREAS, pursuant to a Collaboration Agreement of even date herewith
(the "Collaboration Agreement") between AFFX and BMX, AFFX and BMX have agreed
with respect to certain terms of a collaboration for the purpose of developing
DNA probe array based products that will, among other things, assist BMX in the
development of DNA probe based diagnostic systems to detect the presence,
identity and/or susceptibility of bacterial, fungal and certain viral
microorganisms for use in the clinical diagnosis of human disease and such other
uses as the parties may agree; and
WHEREAS, in connection with and following upon such Collaboration
(such term, and all other capitalized terms not otherwise defined herein having
the meanings ascribed to them in the Collaboration Agreement), AFFX has agreed
to supply and BMX has agreed to purchase BMX's requirements of certain DNA Probe
Arrays to be manufactured by AFFX on the terms and conditions set
-1-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
forth herein and to be used by BMX only as permitted pursuant to the licenses
granted in the Collaboration Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Manufacturing Agreement and other good and valuable
consideration, AFFX and BMX hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Manufacturing Agreement, the following terms shall
have the following meanings, and additional capitalized terms shall have the
meanings set out in the Collaboration Agreement:
1.1 "Base Technical Specifications" shall have the meaning set forth
in Section 2.1(a).
1.2 "Chip Product(s)" means the Licensed DNA Probe Arrays for which
there are Specifications.
1.3 "Event of Force Majeure" means an act of nature, acts of the
public enemy, freight embargoes, quarantine restrictions, labor strife or
strikes, insurrection, riot or other such event or events beyond the control of
AFFX or BMX.
1.4 "FCA Place of Manufacture" means that term as defined in
INCOTERMS (1990) with delivery to the carrier being made by AFFX at its
manufacturing facility for the Chip Product.
1.5 "Firm Order" shall have the meaning set forth in Section 4.2.
1.6 "Fully-Loaded Manufacturing Cost" means (a) costs [ * ]
-2-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
[ * ]including, but not limited to [ * ] on account of the manufacture of
product to the extent that [ * ] plus [ * ] including but not [ * ] being
determined in accordance with United States generally accepted cost
accounting practices, and shall additionally include amounts [ * ] of the
Collaboration Agreement if the Parties so elect. AFFX's [ * ] but shall be
separately billed on each invoice as applicable.
1.7 "Good Manufacturing Practices" means current Good Manufacturing
Practices as defined in 21 CFR Section 210 et seq. as amended from time to
time.
-3-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
1.8 "Governmental Entity" means any federal, state, local, executive,
judicial, legislative, administrative or other governmental or public agency,
board, body or authority, as applicable.
1.9 "Governmental Rules" means all federal, state or local statutes,
regulations, ordinances, rules, guidelines, orders, actions, or policies,
whether now in effect or enacted after the date of this Manufacturing Agreement.
1.10 "Lead-time" means the time elapsed from the date of issuance of
BMX's P.O. through the Ship Date.
1.11 "Manufacturing Agreement" means this agreement, together with
all of the terms and conditions hereof and attachments and exhibit(s) annexed
hereto, as the same may be modified, amended or supplemented from time to time.
1.12 "On-time" means on, or no more than [ * ] days prior to or
later than, Ship Date.
1.13 "Parties" means the two parties (BMX and AFFX) named in the
heading of this Manufacturing Agreement.
1.14 "Purchase Order" ("P.O.") means the written notification from
BMX to AFFX to the effect that BMX shall buy from AFFX a specified amount of
Chip Products.
1.15 "Price" means the Price BMX shall pay for certain Chip
Product(s) as set forth in Section 5.1 hereof.
1.16 "Process Know-How" means with respect to any party to this
Manufacturing Agreement, all Know-How used by such party pursuant to performance
of its obligations under this Manufacturing Agreement, and all other commercial
and technical information, including but not limited to techniques, formulae,
-4-
trade secrets, processes, patent rights, and procedures, developed or used by
such-party in connection with the performance of its obligation under this
Manufacturing Agreement.
1.17 "Ship Date" means the xxxx of lading date or the airway xxxx
date for the purchased Chip Product(s).
1.18 "Specification(s)" means those acceptance and performance
specifications for a Chip Product, including probe selection layout and other
material characteristics, inspection standards and procedures therefor, based
upon or derived from the Base Technical Specifications established pursuant to
Section 2.2.
1.19 "Standards" means the applicable standards as detailed in the
Technical Information, applicable government and regulatory agency requirements
(such as FDA, CSA, CLIA, TUV, VDE), and other such Standards that apply to the
design, manufacture, and sale of the Chip Products.
1.20 "Standard Manufacturing Process" ("SMP") means with respect to a
Chip Product, characteristics of such Chip Product, as documented and recorded
pursuant to Section 3.4.
1.21 "Technical Information" means all technical knowledge,
information, data, trade secrets, manufacturing and test data, and technical
information involving or relating to the manufacture, production, maintenance
and operation of the Chip Products as have heretofore been or may hereafter be
disclosed to AFFX.
1.22 "Term" means the period commencing on the date of this
Manufacturing Agreement during which the Parties continue to be bound hereby.
-5-
ARTICLE 2
MANUFACTURE AND TECHNICAL INFORMATION
2.1 DELIVERY OF TECHNICAL INFORMATION AND DOCUMENTATION.
(a) Based on DNA Probe Arrays or prototypes developed in the
Collaboration, BMX and AFFX, following consultation with the Development
Coordinating Committee, and in full consideration of the results of the research
work performed during the course of the Collaboration (the applicable results of
which shall have been disclosed in a timely manner and in full by AFFX to BMX
and by BMX to AFFX to the extent each is responsible for such work), shall
establish certain technical specifications in accordance with the terms of this
paragraph, which specifications are intended to set forth the entire range of
specifications foreseeably applicable to the DNA Probe Arrays to be manufactured
pursuant to this Agreement (the "Base Technical Specifications"). The Base
Technical Specifications shall be proposed by BMX in consultation with AFFX, and
shall be subject to the written approval of AFFX, which approval shall not be
unreasonably withheld. The Base Technical Specifications shall state, for each
such foreseeably relevant specification, a range of potential variations of such
specifications (which could include, for example, references to the physical
characteristics of the Licensed DNA Probe Array, the configuration of the
Licensed DNA Probe Array, or any other characteristic of the Licensed DNA Probe
Array deemed relevant to the manufacture or use of the Licensed DNA Probe
Array). The Base Technical Specifications will include minimum and maximum chip
sizes and feature sizes for
-6-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
the DNA Probe Arrays. The currently anticipated specifications for the DNA
Probe Arrays are set forth in Exhibit 1.
(b) The Base Technical Specifications shall be reviewed, periodically
as necessary but no less than annually after their establishment in accordance
with the preceding paragraph, and may be revised by mutual, written agreement of
the Parties to the extent the Parties deem it necessary to do so, based upon the
then-current results of work in the Collaboration and/or any other relevant
factors. It is recognized that from time to time the Base Specifications will
need to be revised to improve performance, increase information content, and
improve reliability of BMX's products. Such changes may be proposed by either
Party at an annual review, and will be reasonably considered by the other Party.
In the event that a mutually agreed upon change of Base Technical Specifications
or any agreed upon future revision thereof results in the need for changes to
instrumentation associated with the DNA Probe Arrays (i) AFFX shall continue to
manufacture DNA Probe Arrays of earlier designs during a reasonable instrument
phase-out program by BMX or until DNA Probe Arrays in accordance with the
revised Specifications are fully available, whichever is later, and (ii) AFFX
shall adapt its facilities, equipment and processes for manufacture of DNA Probe
Arrays in accordance with the revised specifications in a commercially
reasonable timeframe, and (iii) BMX shall adapt its instrumentation within a
commercially reasonable timeframe.
(c) In the event that (i) AFFX has proposed changes to the
specifications for the DNA Probe Arrays after [ * ] and is prepared to
commit as to a material reduction in
-7-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
manufacturing cost and transfer price as a result of such changes, (ii) such
specifications are met by other DNA Probe Arrays manufactured by AFFX in
quantity for use in similar applications as those of BMX and of similar quality,
and are able to be read on instrumentation of similar cost having technical
characteristics reasonably available to BMX pursuant to refitting or
substitution of instrumentation the cost of which would be commercially
reasonable, and (iii) BMX elects not to modify the specifications for such DNA
Probe Arrays, the "Cost Ratio" of the DNA Probe Arrays utilized in calculations
of royalties in Section 6.1 of the Collaboration Agreement commencing six (6)
months after such election shall [ * ]
2.2 DETAILED SPECIFICATIONS FOR LICENSED DNA PROBE ARRAYS. At least
six (6) months prior to the expected submission of the first P.O. for the Chip
Product(s), the Parties shall agree in writing on the Specifications for the
Chip Product(s) to be manufactured hereunder. AFFX will not unreasonably
withhold approval for such Specifications. The detailed Specifications shall be
consistent with the Base Technical Specifications. Thereafter BMX in
consultation with AFFX shall from time to time submit changes in the detailed
Specifications for existing Chip
-8-
Products, as may be required, together with detailed Specifications for new Chip
Products. All such Specifications shall be subject to consent of AFFX as to
technical characteristics and mode of manufacture. Such consent shall not be
unreasonably withheld and if withheld the reasons therefor shall be given with
suggested technical modifications as appropriate to enable BMX to modify the
Specifications to permit manufacture and supply to the extent reasonably
feasible of any Chip Products within the Licensed Field. BMX recognizes that
such changes may impact AFFX' previously forecast cost of goods sold.
ARTICLE 3
MANUFACTURE AND PURCHASE OF CHIP PRODUCTS
3.1 MANUFACTURE AND PURCHASE OBLIGATIONS OF AFFX AND BMX. AFFX shall
manufacture, supply and deliver to BMX, and BMX shall purchase from AFFX, Chip
Products as are required to be so manufactured, supplied, delivered and
purchased as provided in this Article 3, and such other products referred to in
Section 3.3 for which valid P.O.s are submitted by BMX to, and accepted by,
AFFX. AFFX's obligation hereunder shall include an obligation to make use as
BMX may require of any third-party technology which AFFX has licensed to BMX
under the Collaboration Agreement or to which BMX may obtain a license for the
purposes hereof. Any cost of use of such third-party technology shall be
included in Fully-Loaded Manufacturing Cost as appropriate unless directly borne
by BMX.
-9-
3.2 REQUIREMENTS. Subject to BMX's defined and limited right to
manufacture and have manufactured Chip Products as set forth in Section 3.5(b) -
(f) below, BMX shall be obligated to purchase from AFFX and AFFX shall be
obligated to supply BMX's Requirements for all High Density Probe Arrays in the
Licensed Field. For the purposes hereof, "Requirements" shall mean all High
Density Probe Arrays to be used or sold by BMX in the Licensed Field. In the
event that AFFX is unable to manufacture any portion of BMX Requirements whether
due to technical obstacles, difficulty of compliance with proposed
specifications, impediments created by third-party patent rights or other
causes, each Party shall use reasonable commercial efforts to seek to overcome
such inability, in such manner as to assure supply to BMX.
3.3 OTHER DISCRETIONARY P.O.s. In addition to the P.O.s relating to
purchased products as described in Section 3.2, BMX may, from time to time,
submit P.O.s for products not otherwise required to be purchased from AFFX, or
initiate the solicitation of a bid from AFFX with respect to such products. In
such case AFFX may, in its discretion, accept such P.O. and render performance
in connection therewith, or submit a bid with respect to such product.
3.4 PREPARATION FOR MANUFACTURE OF CHIP PRODUCTS. The following
terms and conditions shall apply to the Chip Product manufacturing process
development and shall be in addition to the terms and conditions set forth in
the Collaboration Agreement with respect to such manufacturing process
development.
(a) BMX's Obligations.
-10-
(i) BMX Know-How. To the extent BMX deems necessary, BMX may
provide AFFX with any BMX Know-How relating to the BMX Collaboration Technology
and any other information concerning the processes, quality control standards,
methods and apparatus for manufacturing Chip Products which may be reasonably
necessary in order for AFFX to manufacture the Chip Products pursuant to this
Manufacturing Agreement.
(ii)Testing of Chip Products. BMX and AFFX shall, respectively,
develop processes for evaluation and testing of Chip Products, and shall share
such information for use in testing of the Chip Products. Such information may
from time to time be reflected or incorporated in applicable specifications.
(b) AFFX's Obligations.
(i) AFFX Know-How. AFFX shall provide BMX in a timely manner
with all of AFFX's Know-How reasonably necessary or appropriate in order for BMX
and AFFX to establish the Specifications for each Chip Product. In so doing,
AFFX shall draw upon the full range as relevant of the AFFX Licensed Core
Technology and AFFX Collaboration Technology, including, without limitation,
manufacturing procedures for manufacture of the Chip Products and all other
information necessary or appropriate for the manufacture of the Chip Products.
All such information shall be documented and recorded by AFFX in the SMP of the
applicable Chip Product.
(ii) Standard Manufacturing Process Procedures; Capital
Modifications. AFFX shall develop the SMP for each Chip Product and the
procedural process improvements, and shall scale-up its facilities as may be
reasonably necessary for manufacture
-11-
of the Chip Products in the quantities required under this Manufacturing
Agreement. AFFX shall provide all reasonable assistance reasonably requested by
BMX in implementing process improvements based upon AFFX's general production
experience and/or as recommended by BMX. In addition and subject to the limits
set forth in this Manufacturing Agreement and other obligations of AFFX to third
parties presently existing and as shall have been revealed to BMX in connection
with due diligence inquiries or assumed in the future and reasonably consistent
with its burdens and obligations hereunder, AFFX shall use reasonable commercial
efforts to make such additional capital modifications to its facilities as are
reasonably necessary or appropriate to effect the process improvements, reduce
manufacturing costs, increase production capacity and implement Process
Know-How; provided, however, that, to the extent commercially reasonable and
consistent with its obligation to manufacture hereunder, AFFX may avoid any
changes to its facilities that would have a material negative impact on AFFX's
processes or would materially increase existing costs associated with products
that AFFX is manufacturing for itself or third parties. BMX may consult with
AFFX in connection with development of the SMP and may revise and suggest
changes to the SMP which shall be duly considered. The SMP (and any
modifications thereto) promulgated by AFFX shall be consistent with the Chip
Product Specifications, and shall enable AFFX to manufacture and deliver the
Chip Products in the quantities and with the quality standards required under
this Manufacturing Agreement including, as applicable for a particular product,
GMP and ISO-9000 requirements.
-12-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
(iii) Confirmation of Intent and Ability to Manufacture.
Within a reasonable time after achievement of the Milestones referred in
Section 3.5(e) of the Collaboration Agreement and in any event prior to [ * ]
BMX may elect to have AFFX and BMX carry out a consultation process in order
to confirm AFFX's ability to supply BMX Requirements as contemplated in the
Manufacturing Agreement. Such process shall be conducted at BMX' expense.
In this connection, it is understood and agreed that the Chip Products are
unique and not available from other manufacturing sources and that BMX will
be dependent for the success of its business on supply of Chip Products by
AFFX. As part of the consultation process, BMX, assisted by such consultants
as it may reasonably appoint and subject to such reasonable assurances of
confidentiality as AFFX may request, shall carry out an audit of AFFX's
ability to manufacture, including determination of remaining problems to be
resolved and additional steps taken to assure timely achievement of AFFX
ability to manufacture on a regular and reliable basis. AFFX shall confer
with BMX as to such audit and shall prepare a report of the results thereof
and in consideration of such report AFFX shall state in writing how it will
resolve or deal with any material issues or problems raised in the audit and
shall affirmatively represent to BMX that it shall be prepared to manufacture
and supply the Requirements of BMX on a timely basis. The Parties will use
best efforts on an ongoing basis to resolve any difficulties raised in the
audit.
(iv) Low-Cost Production. In consideration of BMX's reasonable
commercial efforts to manufacture and market
-13-
Licensed Diagnostic Assays, AFFX shall exert reasonable commercial efforts to
produce Chip Products as efficiently and at as low a cost as practicable
consistent with AFFX's internal quality standards, the maintenance of the
quality requirements for the Chip Product, and AFFX's presently existing
obligations to third parties and such future obligations of AFFX which AFFX may
undertake which are reasonably consistent with its burdens and obligations
hereunder, and the SMPs shall be developed by AFFX in accordance with this
objective. For each calendar year during the term of this Agreement, AFFX shall
provide BMX with its standard Fully Loaded Manufacturing Cost for the Chip
Product at the beginning of each calendar year and at mid-year based on
reasonable commercial efforts to forecast such Cost.
(v) Disposal of Materials. AFFX shall be responsible for the
proper disposal of all materials resulting from the manufacturing process and
not constituting the Chip Product and shall effect such disposal in accordance
with all applicable Governmental Rules.
(vi) Regulatory Compliance. AFFX shall be responsible for all
process and equipment validation required by any applicable Governmental Entity
and shall take all steps necessary to pass inspection by such Governmental
Entity. All Chip Products shall be manufactured by AFFX in accordance with Good
Manufacturing Practices. At BMX's expense, AFFX shall also reasonably assist
BMX in preparing and updating any submission or other document required by a
Governmental Entity for approval of the Chip Product.
-14-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
(c) Joint Obligations. The Parties recognize that from time-to-time
changes to the Chip Product may be desirable. AFFX and BMX agree to work
cooperatively and expeditiously to change Chip Products and the SMP for such
Chip Products in ways that will reduce total costs and/or improve Chip Product
performance. Notwithstanding the foregoing, AFFX, shall not be obligated to the
extent commercially reasonable and consistent with its obligations to
manufacture hereunder to make changes to its processes or equipment that would
negatively, materially impact AFFX's manufacturing processes and costs of
manufacture of products for third parties, and any changes to the SMPs shall be
at the sole discretion of AFFX, provided that AFFX shall make available SMPs as
advantageous as those applicable to AFFX's best customers.
3.5 MANUFACTURING RIGHTS OF BMX. BMX shall have the right to
manufacture or have others manufacture the Chip Products only as provided below
in this Section 3.5:
(a) Manufacture of Probe Arrays. BMX has the right to manufacture
or have manufactured DNA probe arrays having a Probe density of [ * ]
Probes/cm(2) or less and may cause the same to be form-factor compatible with
High Density Probe Arrays manufactured by AFFX and sold by BMX pursuant to
this Agreement. Subject to the terms and conditions of this Agreement, BMX
shall have the right to manufacture or have manufactured High Density Probe
Arrays in the circumstances described in Section 3.5(b) - (f) below.
(b) Failure to Meet Supply Obligations.
-15-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
(i) The Parties shall consult regularly as to the manner of
performance hereunder, and to assure reliability and continuity of supply of
Chip Product. If at any time either Party is of the view that AFFX may not be
able to meet future binding orders from BMX for Chip Product, such Party shall
notify the other Party in writing, and the Parties shall in good faith cooperate
and endeavor to make appropriate arrangements for a continuous and adequate
supply of Chip Product to BMX. In the event that AFFX becomes aware of any
occurrences or developments that could reasonably be anticipated to create
problems or impediments to supply of BMX Requirements, or to delay or interrupt
supply of such Requirements, AFFX shall give BMX reasonable advance notice
thereof and the Parties shall consult as to the resolution of the matter. If
AFFX has reason to believe the situation will result in an Initial Supply
Failure or a Further Supply Failure, as hereinafter defined, pursuant to which
BMX would be entitled to make other arrangements to manufacture any Deficiency
(as hereinafter defined) of Chip Products, then AFFX shall make reasonable
efforts to so notify BMX and, to mitigate loss. AFFX may elect to offer to BMX
early access to the manufacturing rights as referred to under Section 3.5 (b)
(c) and (d), subject to negotiation of any such proposal on a basis mutually
agreeable to the Parties.
(ii)If during the term of this Manufacturing Agreement AFFX
fails to supply on an "On-Time" basis and in accordance with applicable
rejection standards at least [ * ] of the units of Chip Products that are
subject to Firm Orders received from BMX for any quarter ("Initial Supply
-16-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
Failure"), then BMX shall give written notice, referring to the procedures of
this Section ("Section 3.5 Notice"), and the Parties shall meet promptly to
discuss the reasons for such failure to supply and attempt to arrive at an
appropriate remedy. (Firm Orders shall be taken into consideration for the
purposes of determining any Initial Supply Failure and any Further Supply
Failure (as hereinafter defined) only to the extent that such Firm Orders do
not exceed the limits based on prior forecasting as set forth in clauses (a)
and (b) set forth in the last paragraph of Section 4.2.(iii). If AFFX
continues in its failure to supply BMX's Requirements with respect to the
period referred to below which is consecutive to the quarter in which the
Initial Supply Failure occurred, a Further Supply Failure (as hereinafter
defined) shall occur, then BMX shall have the rights, subject to obligations
and limitations, as set forth below. Any of the following shall constitute a
Further Supply Failure if occurring in an applicable period consecutive to a
quarter in which an Initial Supply Failure has occurred and BMX has timely
given the Section 3.5 Notice: Supply on an "On-Time" basis and in accordance
with applicable rejection standards of: (a) less than [ * ] of total units
of Chip Product subject to Firm Orders for the three months comprising the
next consecutive quarter; (b) less than [ * ] of units of Chip Product
subject to Firm Orders for the first forty-five (45) days of the next
consecutive quarter; (c) less than [ * ] of units of Chip Product subject to
Firm Orders for the first of the three (3) months comprising such quarter.
In the event an Initial Supply Failure is followed in the next consecutive
-17-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
applicable period, as above, by a Further Supply Failure then, at any time
within the [ * ] days after the close of such subsequent period BMX
may upon written notice to AFFX ("Manufacturing Assumption Effective Date")
elect to be relieved of its obligation to purchase a portion of its future
Requirements of units of Chip Product from AFFX, measured as follows. The
difference between the number of units of Chip Products subject to Firm Orders
for the quarter in which the Initial Supply Failure occurred and the number of
such units in fact Supplied for such quarter shall be determined and such
difference shall be added to the difference between the number of units of Chip
Products subject to Firm Orders for the period as to which the Further Supply
Failure occurred (six months, one and one-half months, or one month) and the
number of such units in fact Supplied for such period and the sum of the two
differences shall be divided by the number of months (whole or fractional)
included in the applicable periods, the resulting monthly average being
hereinafter referred to as the "Deficiency." In manufacturing any Chip Products
as to which an Initial or Further Supply Failure shall have occurred BMX shall
follow applicable Specifications previously submitted to AFFX (so long as AFFX
is continuing manufacturing operations hereunder), subject to normal evolution
and adaptation of such specifications for commercial or technical reasons
unrelated to any difficulties of manufacture which had a causative role in the
supply failure. BMX shall be required to make royalty payments pursuant to
Section 3.5(e)(ii) hereof, and BMX may manufacture or have manufactured such
number of units of Chip Products (including Chip Products for internal
-18-
testing and maintenance of supply) as will permit availability for use in
Licensed Diagnostic Assays of no more than 12 times such Deficiency in any year.
AFFX shall provide all reasonable assistance to enable BMX or its third party
manufacturer to manufacture the Chip Products permitted to be manufactured by
BMX hereunder. At such time as AFFX can give assurance of future performance
reasonably satisfactory to BMX that it is able to supply all of BMX's
Requirements of Chip Product, AFFX shall give notice thereof to BMX, and BMX
shall give reasonable consideration to allowing AFFX to resume supplying the
portion of its Purchase Orders consisting of the Deficiency; provided, however,
that BMX may (within the above limitations) take such commercial steps as it
deems reasonably necessary to assure an ongoing source of supply for such
Deficiency in or regarding future periods, and in the event it has made
significant investment or undertaken significant obligations hereunder in such
manufacturing operation shall be under no obligation to discontinue the same.
(c) Know-How Transfer. Promptly after the Manufacturing Assumption
Effective Date, AFFX will deliver to BMX, at BMX's request and expense, the
following "manufacturing assistance items" (all subject to the confidentiality
restrictions herein): SMPs for the Chip Product(s), specifications of all
tools, fixtures and equipment which were designed and built expressly for the
manufacture and testing of the purchased Chip Products, and all engineering
drawings, manufacturing documents or instructions and such other written
materials (including lists of AFFX's suppliers and their
-19-
addresses and AFFX's consent, where required, to the sale of such supplies to
BMX) which are used by AFFX and are necessary or useful to enable BMX to make or
have made Chip Products. In addition, AFFX shall, from and after the
Manufacturing Assumption Effective Date, upon BMX's request and expense, provide
technical assistance and other information as may be reasonably requested to
enable BMX to make or have made the Chip Products.
(d) BMX's Right to Manufacture. Pursuant to licenses granted to BMX
herein and in the Collaboration Agreement, after the Manufacturing Assumption
Effective Date and only up to the amount of the Deficiency that BMX is permitted
to manufacture pursuant to Section 3.5(b), BMX shall have the right under the
AFFX Licensed Core Technology and AFFX Collaboration Technology to make or have
others make Chip Products but only for the licensed uses permitted under the
Collaboration Agreement. In such case, BMX shall have sole responsibility and
obligation for the performance criteria, SMP, product characteristics, quality
control and other similar matters in respect of the Chip Products manufactured
by it. AFFX will be entitled to reasonably review all such products before
introduction to ensure that they will be sold in the appropriate field.
(e) Applicable Royalty After Manufacturing Assumption Effective Date.
(i) Upon assumption by BMX of its limited right to manufacture
Chip Products, AFFX's failure to supply any units of Chip Product which are not
subject to a Firm Order by BMX but are manufactured by BMX shall not be deemed
to constitute a breach of this Agreement. Except for such limited right of
-20-
manufacture, this Agreement shall continue in full force and effect (including
minimum royalty provisions which would otherwise be applicable) and BMX and AFFX
shall respectively be obligated to purchase and to supply all units of Chip
Products subject to future Firm Orders.
(ii) BMX shall continue to make royalty payments to AFFX pursuant
to Article VI of the Collaboration Agreement after the Manufacturing Assumption
Effective Date. The royalty rate for assays using Licensed DNA Probe Arrays
manufactured by BMX shall be the royalty rate as of the close of the quarter
preceding the Manufacturing Assumption Effective Date. In the event of
successive Manufacturing Assumption Effective Dates relating to successive
Deficiencies, a pro rata application as to applicable royalty rates shall be
made.
ARTICLE 4
FORECASTS AND PURCHASE ORDERS
4.1 BMX'S PURCHASE OBLIGATIONS. Nothing contained in this
Manufacturing Agreement shall require BMX to purchase any specified amount of
Licensed DNA Probe Arrays; it being understood that BMX's obligation to buy is
limited to its Requirements of Chip Product, if any, which is required by BMX.
4.2 ROLLING PURCHASE FORECAST AND PVP SCHEDULE. At least six (6)
months prior to BMX's first need for manufactured Chip Products, BMX shall
deliver to AFFX its preliminary purchase forecast, showing BMX's projected
requirements for Chip Products, by type of Chip Product and quantity thereof,
for each of the
-21-
first twelve (12) months of manufacturing ("Preliminary Forecast Period"),
including reference to the Specifications for each type of Chip Product. Within
thirty (30) days after AFFX's receipt of the preliminary forecast, AFFX shall
deliver to BMX a detailed proposed price/volume/production schedule for the Chip
Products ("PVP Schedule") for the Preliminary Forecast Period, reflecting the
requirements of BMX as indicated in its forecast and AFFX's reasonable
estimation of its ability to satisfy those requirements (and in such regard AFFX
shall use its best reasonable efforts to assure that supply is sufficient to
permit BMX to attain applicable milestones related to the exclusivity of its
licenses as provided in the Collaboration Agreement). In response thereto, and
ninety (90) days or more before commencement of the first month when Chip
Products shall be required, BMX shall deliver to AFFX a forecast of its
projected purchases of Chip Product during the first twelve (12) months.
(i) Projected purchases during the first three (3) months of such
forecast will constitute firm orders ("Firm Orders").
(ii) Projected purchases for the following three (3) months will
permit AFFX to purchase required materials, for which AFFX may request
reimbursement if BMX does not purchase the corresponding Chip Products within a
reasonable time.
(iii) The forecast for the remaining six (6) months shall be made in
good faith but shall be for planning purposes only.
Thereafter, ninety (90) days or more before the first day of each
succeeding month, BMX shall deliver to AFFX a
-22-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
forecast of its projected purchases of Chip Product during the following twelve
(12) months (forecast for the "Rolling Year").
When the forecast for a new Rolling Year is delivered, the purchases
projected for the third month thereof shall become a Firm Order, but in no
case (without the consent of AFFX, which shall not be unreasonably withheld):
shall the Firm Order for Chip Products to be purchased in such month having
the same Base Technical Specifications, apply to a number of units of Chip
Product which, when combined with all units of Chip Products having the same
Base Technical Specification which were the subject of Firm Orders for the
two (2) previous months, would constitute (a) more than [ * ] or less than
[ * ] of the units of such Chip Products having such Specifications as were
projected to be purchased in the same three-month period in the forecast for
the Rolling Year that commenced three (3) months prior to commencement of
such new Rolling Year (such months then constituting the fourth, fifth and
sixth months of such Rolling Year); or (b) more than [ * ] or less than [ * ]
of the units of Chip Product having such Specifications as were projected to
be purchased in the same three-month period in the forecast for the Rolling
Year that commenced six (6) months prior to commencement of the new Rolling
Year (such months then constituting the seventh, eighth and ninth months of
such Rolling Year). In the event that any purchases projected for such third
month exceed the applicable maximum and AFFX elects to withhold its consent
to inclusion of such excess in the Firm Order it shall so notify BMX within
thirty (30) days of receipt of such forecast but no later
-23-
than ten (10) days after specific written inquiry by BMX. In the event of a
deficiency in the amount of units subject to Firm Order for such month and AFFX
withholds its consent hereto as permitted hereby, it shall so notify BMX within
ten (10) days after specific written inquiry by BMX and, absent contrary
instruction by BMX, shall supply such deficiency by reference to units of Chip
Product as previously forecast by BMX for such month.
4.3 PURCHASE ORDERS. This Manufacturing Agreement is not a P.O. and
does not authorize delivery of or payment for any Chip Products and/or services
as described herein, except pursuant to implementation of the specific
provisions herein. Such authority or order shall be evidenced by P.O.s issued
by BMX pursuant to this Manufacturing Agreement.
(a) Form and Content of P.O. BMX's rolling purchase forecasts shall
be accompanied by P.O.s for the third month of each such forecast, stating:
BMX's P.O. number(s), BMX's and AFFX's part numbers, quantity ordered, requested
Ship Date and desired carrier for shipping to the destination specified by BMX.
In addition, each P.O. will reference this Manufacturing Agreement. Terms and
conditions printed on the face or reverse side of BMX's P.O. form and/or AFFX's
acknowledgment form shall not be part of this Manufacturing Agreement or add to
or modify the terms of this Manufacturing Agreement unless both Parties hereto
expressly agree in writing to include any such terms or conditions.
(b) Issuance of P.O. and Acceptance by AFFX. Subject to the last
sentence of subsection (a) above, AFFX agrees to
-24-
accept any P.O. that is in compliance with the terms and conditions of this
Manufacturing Agreement. For expediency purposes, BMX may issue P.O.s by
facsimile or electronic mail.
(c) Verification of Active P.O.s. BMX may periodically request AFFX
to verify all active P.O. delivery commitment quantities and schedules. AFFX
shall respond to such request within five (5) working days after receipt of
request by BMX.
(d) Preferential Treatment of BMX. AFFX shall consider BMX a
preferred customer, such that BMX shall be accorded treatment at least equal to
that accorded AFFX's other most favored customers. For example, if the case
arises whereby AFFX's production capacity, Events of Force Majeure, or other
limiting factors require that AFFX determine an allocation of material and/or
resources, BMX's preferential status will assure BMX that AFFX will fulfill its
obligations to BMX with priority at least equal to that accorded AFFX's other
best customers. In addition, AFFX shall take reasonable steps to ensure
continuity of supply to BMX and shall from time-to-time if requested by BMX
report as to available stock of Chip Products.
(e) Cancellation of P.O. Should resale market conditions occur which
both Parties agree are justifiable reasons for the cancellation of any P.O.s,
the Parties shall endeavor to negotiate a just and equitable solution, including
cancellation terms for such P.O.s.
(f) Special Orders. Special orders shall be accepted by AFFX for
Additional DNA Probe Arrays required for purposes of the Collaboration, Licensed
DNA Probe Arrays for purposes of
-25-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
clinical trials (both as provided in Section 4.2 of the Collaboration Agreement)
and Licensed DNA Probe Arrays required after product introduction for marketing
promotion and other applications for which BMX does not receive any revenue,
only for use in or with Licensed Diagnostic Assays in the Licensed Field. To
the extent applicable, such orders will be processed in the manner provided with
respect to other orders hereunder, except that the Parties will consult
informally as to a reasonable schedule for production and delivery.
ARTICLE 5
PRICING AND PAYMENT
5.1 PRICING.
(a) Price. The Price for the Chip Products, including those for
clinical trials, (except the Chip Products for which a different price is
negotiated pursuant to the terms hereof and the DNA Probe Arrays supplied
pursuant to Section 4.2 of the Collaboration Agreement) shall be equal to
[ * ] The price for Additional DNA Probe Arrays shall be [ * ]. The Price
for orders of DNA Probe Arrays required for clinical trials shall be capped
at [ * ] each. The Price for special orders of DNA Probe Arrays purchased
after market launch for marketing promotions and other applications for which
BMX receives no revenue shall be capped at [ * ] each.
(b) Terms of Shipment. Unless otherwise specified, all shipments
shall be F.C.A. Place of Manufacture and the
-26-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
invoice accompanying shipment shall separately state the Price and the cost of
shipment and insurance applicable to such shipment, if purchased by AFFX on
BMX's behalf. In the event AFFX purchases insurance or pays any shipment costs
on BMX's behalf, BMX shall reimburse AFFX for such expenditures at the time of
its payment of the invoices for the Chip Product in question.
(c) Calculation. As Price is [ * ], AFFX agrees to update its
calculation of such cost on a regular basis (not more than twice per year)
and to provide BMX with a new PVP Schedule and updated pricing for future
P.O.s.
5.2 TERMS OF PAYMENT. BMX agrees to pay all invoices within sixty
(60) days after the later of (a) the date of receipt of the applicable
invoice or (b) the date of delivery of the Chip Product. All payments to
AFFX shall be made by check or bank draft to AFFX's address as provided in
Section 13.6 of the Collaboration Agreement and shall indicate to which
invoice(s) the payment applies. Late payments shall bear interest at the
rate of [ * ] per month on the unpaid balance.
5.3 AUDIT RIGHTS.
(a) Procedures. BMX shall have the right, upon thirty (30) days
notice and at its own expense, to appoint an independent auditor, reasonably
acceptable to AFFX, to examine and audit AFFX's books and records relating to
costs (including Fully Loaded Manufacturing Costs) with respect to Chip Products
under this Manufacturing Agreement. Such right shall include the
-27-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
right to make copies or extracts of such books and records as may be reasonably
necessary for such audit. The audit shall not be used as a channel for
transmission of manufacturing information except as may be strictly relevant to
the audit itself. The auditor shall inform BMX and AFFX whether the costs and
payments made have been in compliance with this Agreement or not, or the extent
of any adjustment that in its opinion is required. Such audit shall occur
during regular business hours no more frequently than once a year.
(b) Adjustments. In the event that such examination or audit
indicates an adjustment to payments made hereunder is necessary, then
appropriate payments shall be made to the Party entitled thereto within
thirty (30) days after such Party receives written demand therefor from the
other Party. In the event such examination discloses an overstatement of
fully loaded manufacturing cost of [ * ] or more, the cost of such
examination shall be borne by AFFX and the overpaid amount (accounting for
all necessary adjustments to the transfer price and royalty calculations)
shall be offset against amounts otherwise due to AFFX or otherwise be
refunded to BMX with payment of interest at an annual rate of two percentage
points above the prime interest rate quoted by Bank of America on the date of
such reporting, for the period from the date of excess payment to the date of
refund.
(c) Confidential Information. Any information furnished or acquired
pursuant to this Section 5.3 shall be deemed Confidential Information to be
treated in accordance with Article VIII of the Collaboration Agreement.
-28-
ARTICLE 6
SHIPPING AND DELIVERY
6.1 AUTHORIZED MEANS OF TRANSPORTATION. BMX reserves the right to
designate a freight forwarder or carrier reasonably satisfactory to AFFX for the
shipment of Chip Products.
6.2 ON-TIME DELIVERY. AFFX shall use reasonable commercial efforts
to ship Chip Products to BMX On-time. In the event Chip Products are not
expected to be shipped on the agreed Ship Date, and the delay is the fault of
AFFX, AFFX shall immediately notify BMX, and AFFX shall bear the difference
between shipping cost via normal transit and expedited transit, including air
freight.
6.3 PACKAGING OF CHIP PRODUCTS. AFFX shall provide Licensed DNA
Probe Arrays in diced form, left on plastic sheets or in the form of undiced
wafers, as BMX may direct on reasonable advance notice to AFFX. In the event
AFFX is to carry out dicing of the wafers, it shall consult with BMX as to cost
and shall give BMX the benefit of the most cost efficient methods available to
it. The Parties will consult on the best means for packaging for ease of
handling and to ensure maximum protection of the Chip Products from damage due
to rough handling and any other hazard which might occur in transit.
6.4 FCA PLACE OF MANUFACTURE. AFFX shall deliver the Chip Products
FCA Place of Manufacture and BMX shall include the destination for delivery in
the P.O.s. Title and liability for loss and damage shall pass to BMX upon
delivery to the common carrier specified by BMX. BMX shall be responsible for
the cost
-29-
of obtaining any export control or other clearance required for export outside
the U.S. BMX will provide reasonable assistance in obtaining any export
clearances required to ship outside of the U.S.
6.5 RESCHEDULING. On reasonable notice, AFFX shall endeavor to
accommodate BMX's request to reschedule deliveries. Furthermore, BMX reserves
the right to reschedule without charge if the Chip Products do not meet
Specifications therefor upon quality testing at AFFX's facility.
6.6 COMPLIANCE WITH GOVERNMENTAL RULES. In the event of export of
any Chip Product supplied hereunder, the Parties shall comply with all
applicable Governmental Rules and AFFX shall supply all documentation which may
be required under applicable Governmental Rules, which costs shall be included
in Fully Loaded Manufacturing Costs for the Chip Product.
ARTICLE 7
QUALITY
7.1 COMPLIANCE WITH SMP SPECIFICATIONS; TESTING BY AFFX. BMX expects
and AFFX agrees to use all commercially reasonable efforts to supply one hundred
percent (100%) of the Chip Products purchased herein meeting the Specifications
therefor. AFFX shall be in material compliance with the manufacturing
processes, quality control procedures and specifications set forth in the
relevant SMP applicable to such Chip Product, and shall conform to all
applicable Good Manufacturing Practices and other relevant Governmental Rules,
-30-
including all such rules and standards compliance with which may be reasonable
and necessary to permit maximization of sales in all markets served by BMX.
Such compliance shall include but is not limited to the performance of quality
control and quality assurance testing on the Chip Product to be delivered to
BMX. BMX and AFFX shall mutually agree on who will serialize Chip Products to
track them. Serialization costs above AFFX normal production processes shall be
borne by BMX
7.2 FACILITY ACCESS. BMX shall, upon reasonable advance notice to
AFFX, have access during normal business hours to AFFX's facilities where the
Chip Product is being manufactured, tested, inspected, packaged and/or stored in
order to observe and inspect the manufacturing, quality control and testing
processes for, and the records of all production and quality assurance data
related to, the Chip Product. Any persons conducting such inspection shall be
required to enter into a confidentiality agreement with AFFX in form and content
reasonably satisfactory to AFFX and BMX.
7.3 TESTING AND STANDARDS OF REJECTION.
(a) Incoming and Source Inspection. BMX reserves the right to
process incoming Chip Product dock-to-stock with no incoming inspection. BMX
shall, however, retain the right to conduct, at BMX's expense, incoming
inspection of Chip Products at the designated destination in accordance with the
inspection standards and procedures set forth in the Specifications.
Alternatively, upon prior written notice, BMX shall have the right to conduct,
at BMX's expense, source inspection at AFFX's site, in accordance with the
inspection standards and procedures
-31-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
set forth in the Specifications. Any shipment of Chip Product delivered to
BMX hereunder shall be deemed accepted if not rejected by BMX within [ * ]
days of receipt thereof.
(b) Standards of Rejection. BMX shall use a commercially reasonable
standard for the industry in determining whether to reject the Chip Products
based on the failure to meet Specifications therefor.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS AND WARRANTIES OF AFFX. AFFX represents and
warrants to BMX as follows:
(a) Power and Authority. The execution and delivery of this
Manufacturing Agreement and the performance of the transactions contemplated
hereby have been duly authorized by all appropriate corporate action, and AFFX
has all requisite power and authority to enter into this Manufacturing Agreement
and to perform its obligations hereunder, and this Manufacturing Agreement
constitutes a valid and binding obligation of AFFX, enforceable in accordance
with its terms.
(b) No Breach. The performance by AFFX of any of the terms and
conditions of this Manufacturing Agreement on its part to be performed does not
and will not constitute a breach of any other agreement or understanding,
whether written or oral, to which it or any of its affiliates is a party.
(c) Product Warranty. All Chip Products delivered to BMX pursuant to
this Manufacturing Agreement shall conform in all
-32-
material respects to the Specifications and the applicable SMP and Good
Manufacturing Practices, excluding any warranty for defects in Chip Products
solely related to the Specifications as provided by BMX, or due to user abuse or
misapplication.
(d) Title to Chip Products. All right, title and interest in and to
the Chip Products will pass directly to BMX under this Manufacturing Agreement
free and clear of any and all liens and encumbrances.
8.2 REPRESENTATIONS AND WARRANTIES OF BMX.
(a) Power and Authority. The execution and delivery of this
Manufacturing Agreement and the performance of the transactions contemplated
hereby have been duly authorized by all appropriate corporate action, and BMX
has all requisite power and authority to enter into this Manufacturing Agreement
and to perform its obligations hereunder, and this Manufacturing Agreement
constitutes a valid and binding obligation of BMX, enforceable in accordance
with its terms.
(b) No Breach. The performance by BMX of any of the terms and
conditions of this Manufacturing Agreement on its part to be performed does not
and will not constitute a breach of any other agreement or understanding,
whether written or oral, to which it or any of its affiliates is a party.
ARTICLE 9
REMEDIES FOR NON-CONFORMANCE WITH WARRANTY
If Chip Products are found not in conformity with the warranty
provided in Section 8.1(d), determined in accordance
-33-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
with a commercially reasonable standard in the industry, the following exclusive
remedies shall be available to BMX:
9.1 INCOMING INSPECTION. In case of Chip Product rejection at
BMX's incoming inspection, at AFFX's election, one of the following
corrective actions shall be made: [ * ] All returns of defective Chip
Products will be at AFFX's expense. Notwithstanding the foregoing, [ * ]
9.2 SOURCE INSPECTION. In case of Chip Product rejection during
source inspection, AFFX shall promptly perform a failure analysis, screening,
rework and re-submission of the failed Chip Products to a mutually agreed
schedule.
9.3 FAILURE ANALYSIS. If a sufficient quantity of Chip Products
fail to meet Specifications such that BMX has rejected more than [ * ] of the
DNA Probe Arrays in any calendar year, upon request by BMX, AFFX shall
perform a failure analysis of a reasonable number of such defective Chip
Products and shall deliver to BMX, in writing, detailed results of the
failure analysis and proposed corrective actions to prevent recurrence.
-34-
Such analysis shall be provided no later than thirty (30) working days after
receipt of any defective Chip Product by AFFX.
9.4 DEFECTIVE PRODUCTS INCORPORATED IN ASSAYS. If BMX includes a
Chip Product in a Licensed Diagnostic Assay, responsibility for performance of
the final product rests with BMX, subject to the Chip Product warranty as
provided in Section 8.1(d). Notwithstanding the foregoing, if BMX demonstrates
to AFFX's reasonable satisfaction that any failure of a Licensed Diagnostic
Assay was caused solely by a Chip Product manufactured by AFFX within the
aforesaid warranty, and not caused by BMX's handling or packaging, AFFX agrees
to cooperate with BMX to review all relevant materials and procedures used to
manufacture such Chip Product and to use its best efforts to determine the cause
and to implement corrective action to prevent recurrence.
ARTICLE 10
INTELLECTUAL PROPERTY
Nothing contained in this Manufacturing Agreement shall be construed
as granting or implying any rights by license, estoppel or otherwise, to BMX's
or AFFX's ideas, inventions, or patents that are issued now or in the future,
copyrights, trademarks, trade secrets, or any other intellectual property,
either with respect to Chip Products manufactured for BMX under this
Manufacturing Agreement or with respect to any other of BMX's or AFFX's
products, services, technologies or background technologies, respectively, not
covered by this Manufacturing Agreement.
-35-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
ARTICLE 11
INDEMNIFICATION
11.1 AFFX'S INDEMNITY. AFFX agrees to indemnify, defend and hold
harmless BMX, [ * ] provided, however, that:
(i) in no event shall the foregoing indemnity include or apply
to [ * ] and
(ii) in no event shall the foregoing indemnity include or apply
to [ * ] and
-36-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
(iii) the aggregate liability of AFFX under the foregoing
indemnity for Claims and Losses relating to the matters referred to above [ * ]
11.2 BMX'S INDEMNITY. BMX agrees to indemnify, defend and to hold
harmless AFFX, [ * ] provided, however, that in no event shall the foregoing
indemnity include or apply to any Claims and Losses relating solely to the
matters referred to in Section 11.1 above. BMX shall, at its costs and
expense, obtain
-37-
and maintain appropriate product liability insurance covering the Licensed
Diagnostic Products with limits of not less than US$20 million covering all
markets where the Licensed Diagnostic Products are sold or used.
11.3 OTHER LIMITATIONS OF LIABILITY. NOTWITHSTANDING ANYTHING WHICH
MAY BE CONTAINED IN THIS MANUFACTURING AGREEMENT TO THE CONTRARY, IN NO EVENT
WILL THE INDEMNITY OBLIGATIONS OF AFFX OR BMX UNDER SECTIONS 11.1 AND 11.2 ABOVE
INCLUDE (AND IN NO EVENT SHALL EITHER PARTY OTHERWISE BE LIABLE TO THE OTHER
FOR) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECULATIVE DAMAGES, WHETHER
SUCH ALLEGED DAMAGES ARE LABELED IN TORT, CONTRACT, OR INDEMNITY.
ARTICLE 12
TERMINATION
12.1 TERMINATION OF AGREEMENT FOR BREACH. Each Party shall be
entitled (but not required) to terminate this Manufacturing Agreement by written
notice to the other Party in the event that the other Party shall be in default
of any of its material obligations hereunder or of the Collaboration Agreement,
and shall fail to remedy any such default within thirty (30) days after notice
thereof by the non-breaching Party; provided, however, that in the event of any
dispute as to the existence of a default or the adequacy of remedy thereof, the
Party charged with breach or failure to remedy may require that the right to
terminate be determined in arbitration pursuant to Section 14.1 of the
Collaboration Agreement and in the event the arbitrator(s)
-38-
determine there were reasonable grounds for the Party so charged to dispute
termination and that such Party acted in good faith, the arbitrator(s) may
afford reasonable opportunity to cure upon such terms as they may direct. Any
notice by a Party of termination pursuant to this section shall specifically
state that the non-breaching Party intends to terminate this Manufacturing
Agreement in the event that the breaching Party shall fail to remedy the
default. Notwithstanding the foregoing, BMX may not terminate this
Manufacturing Agreement by reason of any inability of AFFX to supply Chip
Products hereunder other than a failure to supply substantially all BMX's
Requirements of Chip Product continuing over a period in excess of six (6)
months. As to any such inability or defaults, BMX may have recourse to any
other remedies authorized by law or made available hereunder, including such
rights as are provided in Section 3.5.
12.2 TERMINATION FOR OTHER CAUSES. Either Party may also (but shall
not be required to) terminate this Manufacturing Agreement in the event of (a)
the insolvency of the other Party (however such insolvency may be evidenced,
including the inability of such Party to meet its debts as they mature); (b) the
complete or partial liquidation or suspension of the business of the other
Party; (c) the filing by or against the other Party of a voluntary or
involuntary petition pursuant to any present or future bankruptcy law or law for
the protection of debtors; (d) the institution of any proceeding by or against
the other Party for any relief under law relating to the relief of debtors,
adjustment of indebtedness, reorganizations,
-39-
arrangements, compositions or extensions; (e) the dissolution thereof; or (f)
the termination of the Collaboration Agreement due to breach by the other Party
or expiration of applicable licenses under the Collaboration Agreement, or,
after the expiration of the licenses granted pursuant to Section 5.2(a)(I) of
the Collaboration Agreement, in the event that there is a substantial
elimination of Requirements hereunder such that continued production is no
longer economical.
12.3 EFFECT OF TERMINATION ON P.O.S. In the event of termination of
this Manufacturing Agreement pursuant to Sections 12.1 or 12.2 above the
terminating Party may at its sole discretion cancel by prompt notice any P.O.s
for the Chip Products which are unshipped at the date of such cancellation.
12.4 RETURN OF DOCUMENTS. Upon the termination of this
Manufacturing Agreement pursuant to Sections 12.1 or 12.2 above, each Party
shall promptly return to the other Party all documents, letters, records,
notebooks, papers, writings, designs, drawings, models, blueprints and all other
materials and all copies thereof embodying or showing any of the Technical
Information provided by a Party to the other Party or any Confidential
Information disclosed by the other Party, then in the Party's possession or
under its control, by whomever prepared, and all other tooling or property owned
by the Party shall be returned.
12.5 EFFECT OF TERMINATION ON DUTIES AND OBLIGATIONS. Unless
otherwise expressly provided in this Manufacturing Agreement or in any exhibit
hereto, upon the termination of this Manufacturing Agreement pursuant to
Sections 12.1 or 12.2 above,
-40-
neither AFFX nor BMX shall have any further duties or obligations under this
Manufacturing Agreement; provided, however, that no such termination shall
relieve either Party hereto from any liability which it is otherwise responsible
for under this Manufacturing Agreement (including liabilities under Article 11
hereof) with respect to any event, act, transaction or failure to act which
occurred prior to the date of such termination or with respect to any Claims and
Losses relating to Chip Products or Licensed Diagnostic Products made or shipped
prior to the date of such termination.
ARTICLE 13
AFFX'S EMPLOYEES NOT DEEMED EMPLOYEES OF BMX
Except as otherwise expressly provided in the Collaboration Agreement,
both Parties agree that AFFX is retained as an independent contractor and in no
event will employees or agents hired by AFFX be or be considered employees of
BMX. Matters governing the terms and conditions of employment of AFFX's
employees are entirely within the control of AFFX. BMX will have no right to
control any of the actions of the employees of AFFX. AFFX's matters such as
work schedules, wage rates, withholding income taxes, disability benefits or the
manner and means through which the work under this Manufacturing Agreement will
be accomplished are entirely within the discretion of AFFX.
ARTICLE 14
-41-
ORDER OF PRECEDENCE
In the event of an inconsistency in the various documents which govern
the Parties, performance under this Manufacturing Agreement, the order of
precedence will be: (A) this Manufacturing Agreement; (B) the face side of the
P.O. attached hereto; and (C) the reverse side of the P.O. attached hereto.
ARTICLE 15
MISCELLANEOUS/ARBITRATION
15.1 FURTHER ASSISTANCE. From time to time, each Party shall execute
and deliver such instruments of transfer or other documents, and take such other
actions, as may be reasonably requested by the other Party in order to carry out
the purposes and intent of this Manufacturing Agreement and consummate the
transactions contemplated hereunder.
15.2 REMEDIES CUMULATIVE. Except as expressly provided for herein,
all of the rights and remedies permitted or available to either Party under this
Manufacturing Agreement or at law or equity shall be cumulative and not
alternative, and invocation of any such right or remedy shall not constitute a
waiver or election of remedies with respect to any other permitted or available
right or remedy.
15.3 ADDITIONAL PROVISIONS. The following numbered and captioned
provisions of the Collaboration Agreement shall be deemed to be incorporated and
restated herein as if set out in full and shall constitute a part of this
Manufacturing Agreement:
-42-
Section 13.1 Publicity
Section 13.2 Assignment
Section 13.3 Governing Law
Section 13.4 Force Majeure
Section 13.5 Waiver
Section 13.6 Notices
Section 13.7 Calendar and Business Day
Section 13.8 No Agency
Section 13.9 Entire Agreement
Section 13.10 Headings
Section 13.11 Severability
Section 13.12 Successors and Assigns
Section 13.13 Third Parties
Section 13.14 Counterparts
Section 14.1 Arbitration
-43-
IN WITNESS WHEREOF, this Manufacturing Agreement has been executed and
delivered as of the date first above written.
BIOMERIEUX XXXXX, INC.
By: /s/ Philippe Archinard
-------------------------------------------
Name: Philippe Archinard
------------------------------------
Title: President
-----------------------------------
AFFYMETRIX, INC.
By: /s/ Xxxxxxx P.A. Xxxxx
-------------------------------------------
Name: Xxxxxxx P.A. Xxxxx
------------------------------------
Title: President
-----------------------------------
-44-
[ * ] Confidential Treatment Requested
by Affymetrix, Inc.
EXHIBIT 1
PRELIMINARY DNA PROBE ARRAY SPECIFICATIONS
Minimum Maximum
Wafer Size [ * ] [ * ]
Wafer Thickness [ * ] [ * ]
Wafer Material [ * ] [ * ]
Die Size Goal: [ * ] [ * ]
Probe Number [ * ] [ * ]
Probe Length [ * ] [ * ]
Probe Density [ * ] [ * ]
Dicing Ring [ * ] [ * ]
Die per Wafer [ * ] [ * ]
-45-
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS............................................... 2
ARTICLE 2 MANUFACTURE AND TECHNICAL INFORMATION..................... 6
2.1 Delivery of Technical Information and Documentation....... 6
2.2 Detailed Specifications for Licensed DNA Probe Arrays..... 9
ARTICLE 3 MANUFACTURE AND PURCHASE OF CHIP PRODUCTS................. 9
3.1 Manufacture and Purchase Obligations of AFFX and BMX...... 9
3.2 Requirements.............................................. 10
3.3 Other Discretionary P.O.s................................. 10
3.4 Preparation for Manufacture of Chip Products.............. 11
3.5 Manufacturing Rights of BMX............................... 16
ARTICLE 4 FORECASTS AND PURCHASE ORDERS............................. 22
4.1 BMX's Purchase Obligations................................ 22
4.2 Rolling Purchase Forecast and PVP Schedule................ 22
4.3 Purchase Orders........................................... 25
ARTICLE 5 PRICING AND PAYMENT....................................... 27
5.1 Pricing................................................... 27
5.2 Terms of Payment.......................................... 28
5.3 Audit Rights.............................................. 28
ARTICLE 6 SHIPPING AND DELIVERY..................................... 30
6.1 Authorized Means of Transportation........................ 30
6.2 On-time Delivery.......................................... 30
6.3 Packaging of Chip Products................................ 30
6.4 FCA Place of Manufacture.................................. 31
6.5 Rescheduling.............................................. 31
6.6 Compliance with Governmental Rules........................ 31
ARTICLE 7 QUALITY................................................... 31
7.1 Compliance with SMP Specifications; Testing By AFFX....... 31
7.2 Facility Access........................................... 32
7.3 Testing and Standards of Rejection........................ 32
ARTICLE 8 REPRESENTATIONS AND WARRANTIES............................ 33
8.1 Representations and Warranties of AFFX.................... 33
8.2 Representations and Warranties of BMX..................... 34
ARTICLE 9 REMEDIES FOR NON-CONFORMANCE WITH WARRANTY................ 35
9.1 Incoming Inspection....................................... 35
9.2 Source Inspection......................................... 36
-i-
TABLE OF CONTENTS (Continued)
PAGE
----
9.3 Failure Analysis.......................................... 36
9.4 Defective Products Incorporated in Assays................. 36
ARTICLE 10 INTELLECTUAL PROPERTY..................................... 37
ARTICLE 11 INDEMNIFICATION........................................... 37
11.1 AFFX's Indemnity.......................................... 37
11.2 BMX's Indemnity........................................... 38
11.3 Other Limitations of Liability........................... 39
ARTICLE 12 TERMINATION............................................... 40
12.1 Termination of Agreement for Breach...................... 40
12.2 Termination for Other Causes............................. 41
12.3 Effect of Termination on P.O.s........................... 42
12.4 Return of Documents..................................... 42
12.5 Effect of Termination on Duties and Obligations.......... 42
ARTICLE 13 AFFX'S EMPLOYEES NOT DEEMED EMPLOYEES OF BMX.............. 43
ARTICLE 14 ORDER OF PRECEDENCE....................................... 43
ARTICLE 15 MISCELLANEOUS/ARBITRATION................................. 44
15.1 Further Assistance....................................... 44
15.2 Remedies Cumulative...................................... 44
15.3 Additional Provisions.................................... 44
EXHIBIT 1............................................................... 47
-ii-
