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Exhibit 10.4.5
AMENDMENT NO. 5 TO THE MANUFACTURING AGREEMENT
This AMENDMENT No. 5, dated as of January 1, 2005 (this "Amendment"), to the
Manufacturing Agreement dated as of September 18, 1995, as amended, (the
"Manufacturing Agreement"), by and between Merck & Co., Inc. ("MERCK") and
Regeneron Pharmaceuticals, Inc. ("REGENERON"). Capitalized terms used in this
Amendment but not defined herein shall have the meanings set forth in the
Manufacturing Agreement.
WHEREAS, MERCK and REGENERON, have been in discussions regarding certain matters
relating to the extension of the term of the Manufacturing Agreement;
WHEREAS, both parties wish to extend the term of the Manufacturing Agreement and
make such other changes to the Manufacturing Agreement as are set forth in this
Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and promises herein
contained, the receipt and sufficiency of which are hereby acknowledged, the
parties agree to the following:
1. Section 1.3 of the Manufacturing Agreement shall be amended by
replacing Section 1.3 in its entirety with the following text:
"1.3 The term "BATCH" shall mean one production run of INTERMEDIATE
using a [******] fermenter and related purification equipment with a
purification run starting with no less than [***] grams and no more
than [**************]."
2. Section 1.8 of the Manufacturing Agreement shall be amended by
replacing Section 1.8 in its entirety with the following text:
"The term `CONTRACT YEAR' shall mean the period of twelve (12)
consecutive calendar months commencing on the 1st day of November,
1999 and ending on the 31st day of October 2000, and each seven
consecutive twelve (12) month periods from November 1 through
October 31 thereafter, such that the seventh CONTRACT YEAR shall end
on October 31, 2006."
3. Section 4.2 of the Manufacturing Agreement shall be amended by
replacing the reference to "[******]" BATCHES of INTERMEDIATE per
CONTRACT YEAR therein with a reference to "[********] BATCHES of
INTERMEDIATE per CONTRACT YEAR."
4. Section 5.4 of the Manufacturing Agreement shall be amended by
replacing the phrase "Upon the termination of this Agreement," in
the first sentence
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therein with the sentence "Within thirty (30) days after the
effective date of the termination of this Agreement, MERCK shall
notify REGENERON in writing of its intent to remove any articles or
components of the machinery and equipment identified in Schedule E
and the parties shall agree on an appropriate schedule for such
removal; provided, that, (i) such schedule affords MERCK a
reasonable time during normal business hours to remove such articles
or components and (ii) such schedule does not unnecessarily
interfere with REGENERON's use of the FACILITY."
5. Section 6.1 of the Manufacturing Agreement shall be amended by
replacing the third sentence therein with the following sentence:
"The SUBSTANCE at REGENERON's FACILITY shall be stored by REGENERON
in accordance with the KNOW-HOW."
6. Section 7.1 of the Manufacturing Agreement shall be amended by
adding the following sentence to the end thereof:
"Notwithstanding anything in this Agreement to the contrary for
CONTRACT YEAR 6, CONTRACT YEAR 7 and CONTRACT YEAR 8 (if applicable)
only, no quarterly delivery schedule provided by MERCK in any
PURCHASE ORDER shall require delivery of more than [******] BATCHES,
and, for any full CONTRACT YEAR, the sum of the four quarterly
delivery schedules provided by MERCK in the four respective PURCHASE
ORDERS for that CONTRACT YEAR shall not require the delivery of more
than [******] BATCHES, unless otherwise agreed in writing by the
parties."
7. Section 7.2 of the Manufacturing Agreement shall be amended by
replacing paragraph (a) therein in its entirety with the following
text:
"(a) If both the original and revised PURCHASE ORDERS include the
delivery of no more than [**] BATCHES per CONTRACT YEAR and no more
than [**] BATCHES per CONTRACT QUARTER, REGENERON shall MANUFACTURE
INTERMEDIATE for the balance of the CONTRACT YEAR in accordance with
the revised PURCHASE ORDER."
8. Article 8 of the Manufacturing Agreement shall be amended by adding
a new Section 8.12 with the following text:
"8.12 Subsequent to the execution of this Amendment, the parties
shall enter into that certain Quality Agreement (the "QUALITY
AGREEMENT") within three (3) months of the execution of this
Amendment, which shall supplement the terms of this Article 8."
9. Section 8.3 of the Manufacturing Agreement shall be amended by
replacing Section 8.3 in its entirety with the following text:
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"8.3 REGENERON hereby agrees that MERCK or an AFFILIATE shall have
the right to have reasonable access to the FACILITY during normal
business hours in order to ascertain compliance by REGENERON with
the terms of this Agreement, including but not limited to,
inspection of MANUFACTURE of INTERMEDIATE, storage facilities for
SUBSTANCE, MATERIALS, and SUPPLIES, all equipment and machinery used
in the MANUFACTURING of INTERMEDIATE, and all records relating to
such MANUFACTURE, storage facilities, equipment, and machinery.
Observations and conclusions of any audit by MERCK or an Affiliate
will be discussed with and then issued to REGENERON, and a written
response to this audit shall be submitted to MERCK or an AFFILIATE
by REGENERON within thirty (30) days after MERCK or an AFFILIATE
delivers its audit report to REGENERON. Corrective action shall be
agreed upon by MERCK or an AFFILIATE and REGENERON and such
corrective action shall be implemented by REGENERON and MERCK within
the time period agreed upon by the parties. MERCK shall have the
right to request copies of all necessary documents, reports, test
results, etc. evidencing completion of any such corrective action.
10. Section 8.7 of the Manufacturing Agreement shall be amended by
replacing Section 8.7 in its entirety with the following text:
"8.7 Should any BATCH (i) suffer an atypical process event, as such
term is described in the KNOW-HOW, (ii) be exposed to conditions
which exceed environmental action limits agreed upon by MERCK and
REGENERON, or (iii) otherwise fail to meet the quality control
specifications, as defined in the KNOW-HOW, MERCK shall be
IMMEDIATELY notified of any such circumstances upon REGENERON's
discovery thereof. MERCK and REGENERON shall agree in each case on
the nature and scope of any investigations to be conducted regarding
such occurrence or circumstance and actions to be taken to correct
any problem discovered and suitability for use relating to any BATCH
involved. The final disposition, RELEASE and use of any BATCH for
the generation of PRODUCT shall be at MERCK's sole discretion."
11. Section 12.3 of the Manufacturing Agreement shall be amended by
replacing Section 12.3 in its entirety with the following text:
"12.3 REGENERON shall deliver the RELEASED INTERMEDIATE, which has
been packed in accordance with the KNOW-HOW, to a carrier designated
by MERCK so as to allow delivery to [***], at MERCK's cost, in
accordance with the mutually agreed upon delivery schedule provided
by MERCK unless otherwise agreed to by the parties.
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The parties agree that the delivery schedule is dependent upon
multiple factors including but not limited to the supply of
MATERIALS and SUBSTANCE by MERCK to REGENERON, the performance of
equipment [***] to the production of INTERMEDIATE and the
communication and processing of PROCESS CHANGE REQUESTS and other
routine documentation; therefore the parties shall meet on a
quarterly basis to review, revise and mutually agree upon the
production and delivery schedules.
For purposes of determining if REGENERON has met its quarterly
delivery obligation and the BATCH FEES payable to REGENERON only,
REGENERON shall be deemed to have delivered INTERMEDIATE to MERCK as
of the date of the receipt of the [***] plus thirty (30) days (the
"Deemed Delivery Date")."
12. Section 13.1.b of the Manufacturing Agreement shall be amended by
replacing the last sentence therein with the following sentence:
"For the purposes of this Agreement, (x) "Prepayment Period" shall
mean each period in which MERCK is making a prepayment pursuant to
this paragraph (b) and (y) "Resumption Date" shall mean the day
after the date in which MERCK has RELEASED and paid REGENERON for
[**] consecutive BATCHES of INTERMEDIATE within ninety (90) days of
receipt by MERCK of the [***] release package."
13. Section 13.2 of the Manufacturing Agreement shall be amended by
adding a new table in clause (ii) thereof following the existing
table, as follows:
"Number of BATCHES CONTRACT YEAR 7
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BATCHES [***] [$********]
BATCHES [*****] [$********]
14. Section 13.3 of the Manufacturing Agreement shall be amended by
adding clauses (iv) and (v), as follows:
(iv) The DIRECT STANDARD COST of any additional [***] run(s)
required to be conducted by REGENERON (above the single run
set forth in the KNOW-HOW) in order to have at least [*****]
of INTERMEDIATE available to MANUFACTURE a BATCH.
(v) The cost of REGENERON's FTEs (calculated using the UNIT LABOR
COST) and any out-of-pocket costs associated with AGENCY
inspections of the FACILITY related to the INTERMEDIATE or its
MANUFACTURE, except for costs associated with any "for cause"
inspections to the extent and only to the extent arising as a
result of an act or omission of REGENERON. REGENERON will
invoice MERCK for such FTE costs up to a maximum of [*******]
per Inspection Day (as hereinafter defined) or
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up to a maximum of [*****] for each such AGENCY inspection.
For the avoidance of doubt, the costs referred to in this
Section 13.3(v) shall include the FTE and out-of-pocket costs
required to prepare for such inspections, to respond to AGENCY
observations, and related follow-up activities. As used in
this Section 13.3(v), the term "Inspection Day" shall mean any
calendar day on which AGENCY inspectors are present at the
FACILITY related to the INTERMEDIATE or its MANUFACTURE. If
extenuating circumstances arise resulting in a prolonged
AGENCY inspection of the FACILITY, the parties shall negotiate
in good faith to agree on the funding of such inspection,
provided, however, that nothing herein shall obligate MERCK to
pay any additional costs of REGENERON relating to any such
inspection.
15. Section 15.1 of the Manufacturing Agreement shall be amended by
replacing Section 15.1 in its entirety with the following text:
"The initial term of this Agreement shall begin on the date first
appearing above and shall continue through the termination of the
seventh (7th) CONTRACT YEAR as defined herein. MERCK shall have an
option to renew this AGREEMENT for one (1) additional CONTRACT YEAR
exercisable with written notice to REGENERON twelve (12) months
prior to the end of the seventh (7th) CONTRACT YEAR. Such renewal
shall be on the same terms and conditions as set forth herein."
16. Section 16.2 of the Manufacturing Agreement shall be amended by
replacing Section 16.2 in its entirety with the following text:
"MERCK shall have the right to terminate this Agreement at any time
on ninety (90) days' notice prior to the date such termination shall
be effective. Upon the effective date of such termination by MERCK
without cause, MERCK shall pay to REGENERON the sum of
[************] as liquidated damages in total satisfaction of all
amounts which would otherwise thereafter become due under this
Agreement. MERCK's obligation to compensate REGENERON under this
Section shall not apply to the natural expiration of this Agreement
or to termination of this Agreement pursuant to any other Section
hereof. MERCK shall have no right to terminate this Agreement
pursuant to this Section if REGENERON has properly notified MERCK
under Section 16.1 that MERCK is in breach of a material provision
of this Agreement, which breach remains uncured as of the date MERCK
seeks to invoke the termination provisions of this Section 16.2."
17. Schedule A-1 of the Manufacturing Agreement shall be replaced with
the revised and updated Schedule A-1 attached hereto.
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18. Schedule C shall be amended by replacing the reference to
"[*****************]" therein with a reference to
"[****************]."
19. Schedule E shall be replaced with the revised and updated Schedule E
attached hereto.
20. Schedule H shall be amended by (i) replacing the reference to
"CONTRACT YEARS 5 and 6." in section 1(c) therein with a reference
to "CONTRACT YEARS 5 through 7." and (ii) replacing section 2
therein in its entirety with the following text:
"2. CALCULATION OF DIRECT STANDARD COST
2(a). DIRECT STANDARD COST per BATCH shall equal the sum of
STANDARD LABOR COST, STANDARD UTILITIES COST, STANDARD SUPPLIES COST
and STANDARD WASTE HAULING COST, as those terms are defined in this
Section, and shall be agreed to by MERCK and REGENERON at the
beginning of each CONTRACT YEAR.
2(b). Components of STANDARD LABOR COST are as follows:
(i) BASE UNIT LABOR COST shall equal [**************]
Dollars ($[*******]) per full time equivalent ("FTE")
person.
(ii) UNIT LABOR COST in any CONTRACT YEAR shall equal BASE
LABOR COST multiplied by the COST ADJUSTMENT FACTOR for
that CONTRACT YEAR.
2(c). STANDARD LABOR COST shall be calculated as follows:
REGENERON and MERCK shall agree on the STANDARD LABOR COST at the
beginning of each CONTRACT YEAR based on (i) the FTEs required to
MANUFACTURE the number of BATCHES in the BATCH ORDER for that
CONTRACT YEAR in accordance with the KNOW-HOW, (b) the UNIT LABOR
COST for that CONTRACT YEAR, and (c) any adjustment needed for
overtime or premium labor.
2(d). STANDARD UTILITIES COST shall equal the sum of STANDARD
ELECTRICITY COST and STANDARD WFI COST.
(i) STANDARD ELECTRICITY COST in any CONTRACT YEAR shall equal
BASE ELECTRICITY USAGE multiplied by UNIT ELECTRICITY COST for that
CONTRACT YEAR. BASE ELECTRICITY USAGE per BATCH in kilowatt-hours
shall be agreed to
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by MERCK and REGENERON within thirty (30) days following the end of
the CONSISTENCY AND VALIDATION PERIOD based on REGENERON's
experience in MANUFACTURING INTERMEDIATE during the CONSISTENCY AND
VALIDATION PERIOD. BASE ELECTRICITY USAGE shall be subject to
adjustment based on actual electricity usage as measured by
electricity meters in subsequent CONTRACT YEARS. UNIT ELECTRICITY
COST in any CONTRACT YEAR shall equal $[***] per kilowatt-hour
multiplied by the WHOLE LOT LOSS FACTOR multiplied by the COST
ADJUSTMENT FACTOR for that CONTRACT YEAR.
(ii) STANDARD WFI COST in any CONTRACT YEAR shall equal BASE WFI
USAGE multiplied by UNIT WFI COST for that CONTARCT YEAR. BASE WFI
USAGE per BATCH in gallons shall be agreed to by MERCK and REGENERON
within thirty (30) days following the end of the CONSISTENCY AND
VALIDATION PERIOD based on REGENERON's experience in MANUFACTURING
INTERMEDIATE during the CONSISTENCY AND VALIDATION PERIOD. UNIT WFI
COST in any CONTRACT YEAR shall equal [***********] per thousand
gallons multiplied by the WHOLE LOT LOSS FACTOR multiplied by the
COST ADJUSTMENT FACTOR for that CONTRACT YEAR.
2(e). BASE SUPPLIES COST shall be agreed to by MERCK and
REGENERON within thirty (30) days following the end of the
CONSISTENCY AND VALIDATION PERIOD based on REGENERON's experience in
MANUFACTURING INTERMEDIATE during the CONSISTENCY AND VALIDATION
PERIOD. BASE SUPPLIES COST shall be subject to adjustment based on
actual usage of SUPPLIES in subsequent CONTRACT YEARS. STANDARD
SUPPLIES COST in any CONTRACT YEAR shall equal BASE SUPPLIES COSTS
multiplied by the WHOLE LOT LOSS FACTOR multiplied by the COST
ADJUSTMENT FACTOR for that CONTRACT YEAR.
2(f). BASE WASTE HAULING COST shall be agreed to by MERCK and
REGENERON within thirty (30) days following the end of the
CONSISTENCY AND VALIDATION PERIOD based on REGENERON's experience in
MANUFACTURING INTERMEDIATE during the CONSISTENCY AND VALIDATION
PERIOD. BASE WASTE HAULING COST shall be subject to adjustment based
on actual waste quantities and associated disposal cost in
subsequent CONTRACT YEARS. STANDARD WASTE HAULING COST in any
CONTRACT YEAR shall equal BASE WASTE HAULING COST for that CONTRACT
YEAR multiplied by the WHOLE LOT LOSS FACTOR.
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2(g). BASE LABOR UNITS, BASE ELECTRICITY USAGE, BASE WFI
USAGE, BASE SUPPLIES COST, BASE WASTE HAULING COST, and the WHOLE
LOT LOSS FACTOR shall all be subject to adjustment, without maximum
or minimum, at any time that the KNOW-HOW or MANUFACTURING process
is changed in response to MERCK's instructions or to comply with
AGENCY regulations, guidelines, or directions.
2(h). At any time that a revision is made to the PURCHASE
ORDER pursuant to Section 7.2 of the Agreement:
(i) If the revision is made pursuant to Section 7.2(a), the DIRECT
STANDARD COST per BATCH for the CONTRACT YEAR shall be recalculated
based on the revised BATCH ORDER. The revised DIRECT STANDARD COST
shall be applied to BATCHES RELEASED thereafter. With respect to
BATCHES RELEASED previously, either, as appropriate, MERCK shall
PROMPTLY make an additional payment to REGENERON reflecting the
increase in DIRECT STANDARD COST or REGENERON shall issue a credit
to MERCK to be applied against BATCHES to be RELEASED subsequently.
(ii) If the revision is made pursuant to Section 7.2(b), REGENERON
and MERCK shall agree on the STANDARD LABOR COST and DIRECT STANDARD
COST to be applied to BATCHES MANUFACTURED and RELEASED in the
balance of the CONTRACT YEAR in accordance with the revised PURCHASE
ORDER."
2(i). DIRECT STANDARD COST to manufacture an extra [***] run
(as per Section 13.3 (iv)) shall be calculated analogous to DIRECT
STANDARD COST per BATCH, but shall only take into account the
incremental FTE cost, UTILITIES COST, SUPPLIES COST, and WASTE
HAULING COST required to manufacture such extra [***] run.
21. In consideration of Regeneron's agreement to extend the term of the
Manufacturing Agreement as set forth in this Amendment, Merck hereby
agrees to make payments to Regeneron in an amount equal to the
EXTENSION PAYMENT on each November 1 and May 1 of the seventh and
eighth CONTRACT YEARS. As used above, the term "EXTENSION PAYMENT"
shall equal the product of (i) [**********] and (ii) the sum of one
plus the percentage increase in the annual CPI from (a) December 31,
1999 to December 31, 2004 for the seventh CONTRACT YEAR or (b)
December 31, 1999 to December 31, 2005 for the eighth CONTRACT YEAR
if such CONTRACT YEAR is entered into as defined in Section 15.1. It
is agreed that the EXTENSION PAYMENTS shall only be made on the
dates specified in this Section 20 if the Manufacturing Agreement
remains in effect
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on the date in question, as Merck's obligation to make any such
payment ceases with the termination of the Manufacturing Agreement.
A breach of this Section 20 shall be deemed a breach of a material
provision of the Manufacturing Agreement.
22. Except as specifically set forth above, all other terms and
conditions of the Manufacturing Agreement shall remain unchanged and
in full force and effect.
23. Each and every reference to the Manufacturing Agreement shall
hereinafter refer to the Manufacturing Agreement as amended by this
Amendment.
24. This Amendment, together with the Manufacturing Agreement, are the
only, entire and complete agreement of the parties relating to the
subject matter hereof. All prior discussions, negotiations, and
agreements have been and are merged, canceled, and integrated into,
and are superseded by, the Manufacturing Agreement, as amended by
this Amendment. None of the parties hereto shall be bound by any
conditions, definitions, warranties, understandings, or
representations with respect to such subject matter other than as
expressly provided herein.
25. The parties acknowledge agreement to the terms of this Amendment by
having an authorized representative sign one copy in the space
provided below. Each party represents and warrants that the
authorized representative has actual power and authority to execute
this Amendment on behalf of the respective company, and that this
Amendment shall be binding upon the respective company, its
successors and assigns.
26. This Amendment shall be interpreted by and construed according to
the substantive laws of the State of New York without reference to
any rules of conflict of laws or renvoi.
27. This Amendment may be executed in one or more counterparts, each of
which shall for all purposes be deemed an original and all of which
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first above written.
MERCK & CO., INC. REGENERON PHARMACEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx X. Xxxxx Name: Xxxxxx Xxxxxxxx
Title: VP, Vaccine & Sterile Title: VP, Finance &
Operations Administration and CFO
SCHEDULE A-1
[****************]
SCHEDULE E
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