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Exhibit 10.16
DEVELOPMENT AND MANUFACTURING
SERVICE AGREEMENT
BETWEEN
LONZA BIOLOGICS ***
AND
TRUBION PHARMACEUTICALS, INC.
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TABLE OF CONTENTS
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PAGE
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1.
Definitions.........................................................
3
2. Customer
Obligations, Warranties and Indemnities....................
10
3. Provision of
the Services...........................................
12
4. Quality;
Project Management.........................................
15
5. Delivery,
Transportation of Product and Customer Tests..............
16
6. Price and
Terms of Payment..........................................
18
7. LB Warranties
and Covenants and Indemnity........................... 19
8.
Confidentiality and
Non-Use......................................... 21
9. Termination;
Ownership; License Rights..............................
23
10. Force
Majeure.......................................................
26
11. Governing Law,
Jurisdiction and Enforceability; Dispute Resolution.. 27
12.
Notices.............................................................
28
13.
Miscellaneous.......................................................
28
14. Limitation of
Liability; Exclusion of Certain Damages............... 30
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THIS
AGREEMENT is made effective as of the 8th day of January 2004
(the
"Effective Date") BETWEEN
1.
LONZA BIOLOGICS *** (herein after referred to as "LB"), and
2.
TRUBION PHARMACEUTICALS, INC., (formerly known as GENECRAFT, INC.)
of
24014th Avenue, Suite 1050, Seattle, WA 98121, USA (herein after
referred to as
the "Customer").
WHEREAS
A.
The Customer has created or controls certain Cell Lines as
defined
herein; and
B.
LB has expertise in the evaluation and production of proteins
for
therapeutic use using such Cell Lines; and
C.
The Customer wishes to contract LB for Services as defined
herein
relating to the Cell Line as described in the Agreement; and
D.
LB is prepared to perform such Services for the Customer under the
terms
and conditions set out herein.
NOW
IT IS AGREED AS FOLLOWS:
1.
DEFINITIONS. The following terms shall have the following
meanings:
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"Affiliate"
means any company, partnership or
other entity which directly or
indirectly Controls, is Controlled
by or is under common Control with
the relevant party to this
Agreement. "Control" means the
ownership of more than fifty per
cent (50%) of the issued share
capital or the legal power to direct
or cause the direction of the
general management and policies of
the party in question.
"Agreement"
means this agreement, including and
incorporating Schedule 1
(Definitions and Specifications),
Schedule 2 (Services), Schedule 3
(Price and Terms of Payment),
Schedule 4 (Quality Agreement), and
Schedule 5 (Commercial Terms for
Technology Transfer), all as the
same may be amended or varied from
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time to time by written agreement of
the parties.
"August 2003 Services Agreement"
means that certain development and
manufacturing agreement dated 12
August 2003 between the parties for
the development and manufacture of
the Product, as amended or varied
from time to time by written
agreement of the parties.
"Batch"
means the total quantity of
Manufactured Product obtained from
one fermentation and associated
purification run using the Process.
"Cell Line"
means the cell line provided by
Customer to LB, the particulars of
which are set out in Schedule 1.
"cGMP"
means the regulatory requirements
for current Good Manufacturing
Practices and General Biologics
Products Standards as promulgated by
the United States Food and Drug
Administration ("FDA") (or any
successor agency thereto) under the
United States Federal Food Drug and
Cosmetic Act and the Public Health
Service Act, at 21 CFR (Parts 210,
211, 600 and 610), and
the Guide to
Good Manufacturing Practices for
Medicinal Products as promulgated
under European Directive 91/356/EEC,
all as the same may be amended from
time to time.
"cGMP Product"
means Product which is required
under Schedule 2 to be manufactured
in accordance with cGMP.
"Certificate of Analysis"
means, for each Batch, a document in
a format agreed to by the parties
and prepared by LB listing (a) the
date of manufacturing, unique Batch
number, tests performed,
Specifications, test dates, and test
results, (b) the quantity of
Manufactured Product in such Batch,
and certifying that such Batch was
manufactured in accordance with the
Specifications and cGMP, and (c) the
tests performed by LB or permitted
Testing Laboratories,
Specifications, and test
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results; all with respect to such
particular Batch and as required by
the Specifications, the accuracy of
which has been certified by LB.
"Critical Raw Materials"
has the meaning given to it in
Clause 4.6 below.
"Customer"
means Trubion Pharmaceuticals, Inc.,
and its successors in title and
lawful assigns.
"Customer Information"
means (a) all Customer Know-How and
other tangible and intangible data,
information, and know-how, whether
in written, printed, graphic,
electronic, or oral form, supplied
by or on behalf of Customer to LB
hereunder or under the August 2003
Services Agreement; (b) all
Documentation and all tangible and
intangible data, information,
know-how, and Intellectual Property
included in the Documentation; (c)
all Deliverables and all tangible
and intangible data, information,
know-how, and Intellectual Property
included in the Deliverables; and
(d) all tangible and intangible
data, information, know-how, and
Intellectual Property included in
the Customer Process; "Customer
Information" does not include LB
Know-How, the LB Patent Rights, the
LB Process, the New General
Application Intellectual Property,
and LB's other Intellectual
Property, "Customer Information" is
a part of "Customer Technology."
"Customer Know-How"
means all know-how, technical and
other information relating directly
or indirectly to the Cell Line, the
Customer Process (including for the
avoidance of doubt improvements or
modifications thereto from time to
time, other than and excluding the
LB Process and any New General
Application Intellectual Property),
Customer's business, technology,
finances or operations, trade
secrets, the Customer Materials,
and/or the Product, known by
Customer from time to time;
"Customer Know-How" does not include
LB Know-How, the LB Patent Rights
the LB Process, the New General
Application Intellectual Property,
LB's other
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Intellectual Property, and
information in the public domain;
"Customer Know-How" is a part of
"Customer Information."
"Customer Materials"
means the materials (if any)
supplied by Customer to LB pursuant
to this Agreement.
"Customer Patent Rights"
means all patents and patent
applications, together with any
extensions, reissues,
reexaminations, substitutions,
renewals, divisions, continuations,
and continuations-in-part thereof,
of any kind throughout the world
that are necessary or useful in
performance of the Services, which
from time to time Customer is the
owner of or entitled to use, other
than and excluding the LB Patent
Rights.
"Customer Process"
means that portion of the Process
not composed of or included within
the LB Process, including without
limitation all processes,
procedures, protocols, know-how,
technology, information and
Intellectual Property developed by
LB and/or Customer specifically with
respect to manufacture of the
Product under or as a result of this
Agreement or the August 2003
Services Agreement; "Customer
Process" does not include LB
Know-How, the LB Patent Rights, the
LB Process, the New General
Application Intellectual Property,
or LB's other Intellectual Property.
"Customer Technology"
means all data, information,
know-how, materials, and
Intellectual Property which from
time to time Customer is the owner
of or entitled to use, including
without limitation the Customer
Know-How, the Customer Patent
Rights, the Cell Line, the Customer
Materials, the Customer Information,
the Customer Process, the New
Customer Intellectual Property, and
the Product; "Customer Technology"
does not include LB Know-How, the LB
Patent Rights, the LB Process, the
New General Application Intellectual
Property, LB's other Intellectual
Property, and information in the
public domain.
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"Deliver", "Delivered" or "Delivery" has the meaning given to it
in
Clause 5.1 below,
"Deliverables"
means the data, information,
material, reports, Documentation,
Product, samples and other items
that LB is obligated to provide to
the Customer under the terms of the
Services, as set forth in Schedule
2.
"Documentation"
means all data, information and
materials, whether in written,
printed, graphic, or electronic
form, resulting from the work
conducted and/or results achieved in
connection with the Services,
including without limitation
documents reasonably necessary for
Customer to complete any regulatory
filings for the Product;
"Documentation" does not include LB
Know-How, the LB Patent Rights, the
LB Process, the New General
Application Intellectual Property,
and LB's other Intellectual
Property; "Documentation" is a part
of "Customer Information."
"Intellectual Property"
means proprietary methods,
discoveries, inventions, patents,
trade secrets, copyrights,
trademarks, service marks, trade
dress, compositions, products,
procedures, know-how, data, reports,
programs, processes, protocols,
written or electronic writings,
illustrations, images, and any other
form of proprietary rights, and, as
the context requires, includes,
among other things, the Customer
Know-How, the Customer Patent
Rights, the Customer Process, the
New Customer Intellectual Property,
the
LB Know-How, the LB Patent
Rights, the LB Process and the New
General Application Intellectual
Property.
"LB
Know-How"
means all know-how, technical and
other information relating directly
or indirectly to the LB Patent
Rights, the LB Process (including
for the avoidance of doubt
improvements; or modifications
thereto from time to time, other
than and excluding the Customer
Process and any New Customer
Intellectual Property) LB's
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business, technology, finances or
operations, and trade secrets known
to LB from time to time; "LB
Know-How" does not include the
Customer Patent Rights, the Customer
Know-How, the New Customer
Intellectual Property, the Customer
Process, Customer's other
Intellectual Property, and
information in the public domain.
"LB
Patent Rights"
means all patents and patent
applications, together with any
extensions, reissues,
reexaminations, substitutions,
renewals, divisions, continuations,
and continuations-in-part thereof,
of any kind throughout the world
relating to the LB Process which
from time to time LB is the owner of
or is entitled to use; "LB Patent
Rights" does not include the
Customer Patent Rights and the New
Customer Intellectual Property and
Customer's other Intellectual
Property.
"LB
Process"
means the manufacturing process for
proteins that, as of the Effective
Date, is included within the LB
Patent Rights and LB Know-How, along
with any New General Application
Intellectual Property, as defined
herein in Clause 9.8.2.
"Legal Requirements"
means any and all laws, rules,
regulations, ordinances, guidelines,
and standards of any international,
national, state, or local
governmental authority, applicable
to LB, the Services, the Product, or
any facility at which any of the
Services are performed, including
without limitation (a) cGMP, and (b)
all laws and regulations requiring
permits, licenses, filings and
certifications with respect to LB,
the Services, the Product, or any
facility at which any of the
Services are performed.
"Manufactured Product"
means any and all tangible forms of
the Product which are manufactured
under this Agreement using the
Process, including without
limitation all in-process
intermediates, samples and
derivatives thereof.
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"New
Customer Intellectual Property" has the meaning given to it
in
Clause 9.8.3.
"New
General Application
Intellectual Property"
has the meaning given to it in
Clause 9.8.2.
"Price"
means the price specified in
Schedule 3 for the Services.
"Process"
means the process for the production
of the
Product from the Cell Line
pursuant to this Agreement, which is
composed of the LB Process and the
Customer Process, and including any
improvements, changes or
modifications to such process from
time to time.
"Product"
means the proprietary Small Modular
ImmunoPharmaceutical (SMIP) known as
TRU-015, including any derivatives
and improvements
thereof; and, when
the context requires, the term
"Product" also means and refers any
and all tangible forms of the
Product which are manufactured under
this Agreement using the Process,
including without limitation all
in-process intermediates, samples,
derivatives, and improvements
thereof.
"Quality Agreement"
means and refers to the quality
agreement between the parties, a
copy of which is attached hereto as
Schedule 4, as amended or varied
from time to time by written
agreement of the parties;
"Run" or "run"
means a single fermentation start of
the manufacturing Process at LB's
facility.
"Services"
means all or any part of the
services to be performed by LB under
this Agreement (including, without
limitation, cell culture evaluation,
purification evaluation, master,
working and extended cell bank
creation, sample and bulk
production, testing of finished
Product after fill-finish processing
of bulk Product at a third party
facility), as more particularly set
out in Schedule 2.
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"Specialized Raw Materials"
has the meaning given to it in
Clause 3.10 below.
"Specifications"
means the quality, functional and
analytical specifications for
Product, the particulars of which
are set
out in Schedule 1.
"Terms of Payment"
means the terms of payment specified
in Schedule 3.
"Testing Laboratories"
means any third party who has been
instructed by LB and authorized by
Customer to carry out tests on the
Cell Line or the Product.
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References to the singular number include the plural and vice
versa, references
to Clauses and Schedules are references to clauses and schedules to
this
Agreement.
2.
CUSTOMER OBLIGATIONS,
WARRANTIES AND INDEMNITIES
2.1 Customer shall pay the Price set out in Schedule 3 for
provision
of the Services together with any additional costs and expenses
mutually agreed
upon in writing by the parties that fall due under this Agreement
in accordance
with the Terms of Payment.
2.2 As agreed by the parties, the Customer shall supply to LB
certain
Customer Know-How, together with full details of any hazards known
to Customer
relating to the Cell Line and/or the Customer Materials, and their
storage and
use. On review of this Customer Know-How by LB, the Cell Line
and/or the
Customer Materials shall be provided to LB at LB's request, all as
set forth
with more particularity in and in accordance with Schedule 2
(Services) hereto.
All right, title, and interest in and to the Cell Line, the
Customer Materials,
the Customer Know-How and any other Customer Technology supplied to
LB in
connection with this Agreement or the August 2003 Services
Agreement shall, as
between the parties, remain vested in the Customer. Risk of loss to
the Cell
Line, Customer Materials and any tangible Customer Information
supplied to LB
under this Agreement shall transfer to LB upon delivery to LB
premises.
2.3 Subject to the terms and conditions of this Agreement, the
Customer hereby grants LB the non-exclusive, non-transferable
(other than to
LB's Affiliates), right to use the Cell Line, the Customer
Materials, the
Customer Know-How, and the New Customer Intellectual Property
during the term of
this Agreement solely for the purpose of providing Services under
this
Agreement.
2.4 The
Customer warrants and covenants to LB that:
2.4.1 Customer has the right to enter into this Agreement;
2.4.2 ***;
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2.4.3 ***;
2.4.4 ***;
2.4.5 ***; and
2.4.6 ***.
2.5 Subject to Clauses 2.8 and 14 below, and subject to and except
to
the extent of any indemnification from LB pursuant to Clause 7
below, the
Customer undertakes to indemnify and to maintain LB promptly
indemnified against
all losses, damages, liabilities, settlements, penalties, fines,
costs and
expenses of any nature (including court costs and reasonable legal
fees on a
full indemnity basis), that***.
2.6 Subject to Clauses 2.8 and 14 below, and subject to and except
to
the extent of any indemnification from LB pursuant to Clause 7
below, the
Customer shall further indemnify and maintain LB promptly
indemnified against
all losses, damages, liabilities, settlements, penalties, fines,
costs and
expenses of any nature (including court costs and reasonable legal
fees on a
full indemnity basis), that LB may incur arising out of or
resulting from:
2.6.1 ***; and
2.6.2 ***.
2.7 A party that intends to claim indemnification under this
Agreement
(the "Indemnitee") shall promptly notify the indemnifying party
(the
"Indemnitor") in writing of any third party claim, suit or
proceeding included
within the scope of the indemnification) described in Clauses 2 or
7 hereunder
(each a "Claim") with respect to which the Indemnitee intends to
claim such
indemnification, and shall tender the defense of such Claim to the
Indemnitor,
and the Indemnitor shall have sole control of the defense and/or
settlement of
such Claim. An Indemnitee hereunder shall have the right to retain
its own
counsel, subject to the following conditions: (a) the Indemnitee's
counsel's
role shall be limited to monitoring the Claim and performing a
watching brief of
the Claim and the Indemnitee's counsel shall have no right to
actively
participate in the defense and/or settlement of such Claim; and (b)
the
Indemnitor shall have the right to veto the Indemnitee's selection
of counsel,
acting reasonably and having provided substantive justification for
such veto.
So long as the foregoing conditions are met, the Indemnitor shall
bear the
reasonable costs and expenses of one attorney acting as the
Indemnitee's counsel
in accordance with this Clause 2.7, subject to the following
additional
conditions: (x) the attorney's hourly rate must be reasonable and
cannot exceed
the prevailing rate, based on the venue of the claim, suit or
proceeding; and
(y) the Indemnitor shall have the right to review and approve the
Indemnitee's
counsel's invoices. The indemnification obligations under this
Agreement shall
not apply to amounts paid in settlement of any Claim if such
settlement is
effected without the consent of the Indemnitor, such consent not to
be
unreasonably withheld. At the Indemnitor's request and expense,
each Indemnitee
shall, and shall cause its employees to, provide full information
and reasonable
assistance to Indemnitor and its legal representatives with respect
to the
related Claim(s).
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2.8 Notwithstanding anything herein seemingly to the contrary,
Customer shall have no indemnity obligations under this Clause 2
for any losses,
damages, liabilities, settlements, penalties, fines, costs and
expenses to the
extent such losses, damages, liabilities, settlements, penalties,
fines, costs
and expenses arise out of or result from:
2.8.1 ***; or
2.8.2 ***, or
2.8.3 ***; or
2.8.4 ***.
2.9 The provisions of this Clause 2, and the obligations of the
Customer and LB, respectively, under this Clause 2, shall survive
the expiration
or termination for whatever reason of the Agreement.
2.10 CLAUSE 2.4 IS IN LIEU OF ALL OTHER CONDITIONS, WARRANTIES
AND
STATEMENTS IN RESPECT OF THE CELL LINE, CUSTOMER MATERIALS,
CUSTOMER
INFORMATION, CUSTOMER KNOW-HOW, CUSTOMER PATENT RIGHTS, CUSTOMER
PROCESS, NEW
CUSTOMER INTELLECTUAL PROPERTY, AND CUSTOMER TECHNOLOGY, WHETHER
EXPRESSED OR
IMPLIED BY STATUTE, CUSTOM OF THE TRADE OR OTHERWISE (INCLUDING
WITHOUT
LIMITATION ANY SUCH CONDITION, WARRANTY OR STATEMENT RELATING TO
THE DESCRIPTION
OR QUALITY OF THE CELL LINE, CUSTOMER MATERIALS, CUSTOMER
INFORMATION, CUSTOMER
KNOW-HOW, CUSTOMER PATENT RIGHTS, CUSTOMER PROCESS, NEW CUSTOMER
INTELLECTUAL
PROPERTY, AND CUSTOMER TECHNOLOGY, THEIR FITNESS OR SUITABILITY FOR
A PARTICULAR
PURPOSE OR USE UNDER ANY CONDITIONS WHETHER OR NOT KNOWN TO
CUSTOMER) AND ANY
SUCH CONDITION, WARRANTY OR STATEMENT IS HEREBY EXCLUDED.
3.
PROVISION OF THE SERVICES
3.1 LB shall diligently carry out the Services as provided in
Schedule
2, and shall use all reasonable efforts consistent with levels of
effort that LB
uses with its most important customers, to achieve the objectives
and estimated
timescales set out in that Schedule and deliver the Product,
samples of the
Product, and other Deliverables to Customer as provided in Schedule
2; provided,
however, that the timescales and Product quantities set forth in
Schedule 2 are
estimates only. LB shall communicate with Customer regularly
regarding LB's
performance of the Services and shall inform Customer promptly if
LB determines
that LB will not or may not be able to meet the objectives or
timescales, or
deliver the Product quantities, Product samples, or other
Deliverables set forth
in Schedule 2.
3.2 LB shall perform Runs and manufacture the Product in
accordance
with this Agreement, and, except as expressly set forth to the
contrary in
Schedule 2 or as otherwise agreed to
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by the parties from time to time, in compliance with the Legal
Requirements,
including without limitation the requirements of cGMP, LB warrants
and covenants
that, except as expressly set forth to the contrary in Schedule 2
and in Clause
3.3 below, the Product resulting from the Runs shall conform to
the
Specifications. The Product resulting from the Runs shall be
provided to
Customer at no additional cost to Customer over and above the
Price, and
Customer may make whatever further use of such Product as Customer
shall
determine in its sole discretion, provided, however, that, in
accordance with
Schedule 2, the Product manufactured in Stage 5 shall not be used
in humans.
3.3 The parties agree that the *** Batches of Product
manufactured
under Stage 8 of Schedule 2 attached hereto shall comply fully with
cGMP and
with the parameters and target Specifications agreed to jointly by
LB and the
Customer, with an emphasis on the safety of the Product for use in
human
clinical testing and with pass/fail testing for analytical methods
relating to
safety. In addition, notwithstanding anything in Schedule 3
seemingly to the
contrary, with respect to the Batches of Product manufactured under
Stage 8,
Customer shall ***.
3.3.1 ***
If a
failure to perform the Services or produce the Product for
Delivery
arises due to a breach of this Agreement by LB, or LB's negligent
act or
omission or willful misconduct, Customer shall be entitled to all
of its rights
and remedies.
3.4 LB shall comply with cGMP and the International Committee
for
Harmonisation ("ICH") regulatory requirements, from time to time
and to the
extent that the foregoing are applicable to the Services. In the
event of a
conflict between the ICH regulatory requirements and the cGMP
regulatory
requirements, the cGMP regulatory requirements shall prevail,
except as may
otherwise be agreed by the parties in writing.
3.5 LB hereby undertakes not to use the Cell Line, the Customer
Materials, the Customer Information, the Customer Technology, the
Customer
Know-How or the Customer Patent Rights, or any part of any of the
foregoing, for
any purpose other than to perform the Services and supply Product
under this
Agreement. The obligations of LB under this Clause 3.6 shall
survive the
expiration or termination for whatever reason of the Agreement.
3.6 LB shall:
3.6.1 at all times use best efforts to keep the Cell Line, the
Customer Materials and the Product secure and safe from loss and
damage;
3.6.2 not part with possession of the Cell Line or the Customer
Materials or the Product, except as permitted under Clause 3.8
below for the
purpose of tests at the Testing Laboratories.
3.7 LB shall procure that all Testing Laboratories are subject
to
obligations of confidence and non-use substantially in the form of
and at least
as strict as those obligations of confidence and non-use imposed on
LB under
this Agreement. Each Testing Laboratory shall be
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subject to the prior written approval of Customer, which approval
shall not be
unreasonably withheld. Notwithstanding anything herein seemingly to
the
contrary, Customer shall have the right, at Customer's option and
with no
penalty, to enter into an agreement directly with one or more of
the Testing
Laboratories, and transfer the associated testing services from LB
under this
Agreement to the Testing Laboratory. LB shall ensure that Customer
has the right
to perform, directly or through Customer's representatives,
inspections and
audits of all Testing Laboratories, and Customer may condition
Customer's
approval of any Testing Laboratory to Customer's performance of and
satisfaction
with the results of such an inspection and audit. Customer shall
perform and
shall cause its representatives to perform any such inspections and
audits in
compliance with Clause 4 of this Agreement. Notwithstanding
Customer's approval
of any Testing Laboratory, LB shall not disclose the contents of
this Agreement
(including without limitation the Schedules hereto) or any of
Customer's
Confidential Information to such approved Testing Laboratory except
to the
extent necessary for such Testing Laboratory to conduct the related
tests, and
LB shall not transfer possession of any of the Cell Line, Customer
Materials or
Product to such approved Testing Laboratory except to the extent
necessary for
such Testing Laboratory to conduct the related tests. Neither LB
nor Customer
shall be liable in connection with this Agreement for any of the
acts or
omissions of the Testing Laboratories. LB waives, releases and
agrees not to
assert against Customer any claims for any losses, damages,
liabilities,
settlements, penalties, fines, costs and expenses of any nature
that LB may
incur which directly or indirectly arise out of or result from any
negligent
acts or omissions or willful misconduct of the Testing
Laboratories; ***. LB
shall, at Customer's expense, cooperate fully with Customer in the
investigation
and prosecution of any claim, lawsuit or other proceeding by
Customer against a
Testing Laboratory in connection with this Agreement for losses,
damages,
liabilities, settlements, penalties, fines, costs and expenses of
any nature
that Customer may incur which directly or indirectly arise out of
or result from
any negligent acts or omissions or willful misconduct of the
Testing
Laboratories, Nothing in this Clause shall release or shall be
deemed to release
either party from any liability which arise out of or result from
that party's
own negligent acts or omissions or willful misconduct. This Clause
3.8 shall
survive the expiration or termination for whatever reason of the
Agreement.
3.8 LB shall procure, maintain and store such amounts of raw
materials
and components as required for the Runs, and shall perform testing
and
evaluation of such materials and components as set forth in the
Quality
Agreement attached hereto as Schedule 4 or agreed upon in writing
by the
parties, and the cost and expense for such materials and components
and the
testing and evaluation of such materials and components shall be
deemed included
in the Prices shown on Schedule 3 hereto. LB shall be responsible
for and
Customer may assist with oversight and coordination of the supply
logistics for
the raw materials and components required for the Runs. LB shall
not procure
Specialized Raw Materials (defined below) until authorized to do so
by Customer.
3.9 The term "Specialized Raw Materials" as used in this
Agreement
means the specialized raw materials and components which are used
under this
Agreement to manufacture the Product. The parties shall in good
faith agree in
writing which raw materials and components shall be deemed to be
"Specialized
Raw Materials" for the purposes of this Clause 3.10. In the event
the cost and
expense of any Specialized Raw Materials materially exceed LB's
original pricing
assumptions for such Specialized Raw Materials under this
Agreement, then
Customer shall pay to
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LB the difference between the assumed cost and expense for such
Specialized Raw
Materials and the actual cost and expense (not including any LB
mark-up or
administrative fees) for such Specialized Raw Materials.
4.
QUALITY; PROJECT
MANAGEMENT
4.1 Responsibility for quality assurance and quality control shall
be
allocated between the parties in accordance with the Quality
Agreement, a copy
of which is attached hereto as Schedule 4, and standard operating
procedures as
may be agreed upon in writing by the parties from time to time.
4.2 Customer and its designated representatives shall have the
right
to witness, inspect and audit the performance of LB's obligations,
at the times
and for durations set forth in the Quality Agreement and as
otherwise agreed by
the parties. Customer shall have access to the facilities, data and
records of
LB which are related to this Agreement for the purpose of
conducting such
inspections and audits, and LB shall use reasonable endeavours to
ensure that
all Testing Laboratories provide similar access to the Testing
Laboratories'
facilities, data and records which are related to this Agreement
for such
purposes. In accordance with the Quality Agreement, Customer shall
have the
right to review LB's non-proprietary standard operating procedures
relating to
the services of LB under the Quality Agreement or this
Agreement.
4.3 In accordance with the Quality Agreement, Customer will have
the
sole right to correspond with and submit regulatory applications
and other
filings to the FDA, EMEA and other regulatory authorities to obtain
approvals to
import, export, conduct clinical trials with, or take any other
action with
respect to the Product, alone or with other products
(collectively,
"Approvals"), when and as Customer may deem useful or necessary.
Accordingly,
except as otherwise required by Legal Requirements, LB will not
correspond
directly with the FDA, EMEA or any other regulatory agency with
respect to the
Product without, in each instance, first obtaining Customer's prior
written
consent. Notwithstanding the foregoing, LB will assist Customer, as
requested by
Customer and at Customer's expense, in preparing, submitting, and
maintaining
applications for such Approvals.
4.4 As set forth with particularity in the Quality Agreement, LB
will
permit the FDA, EMEA and other regulatory authorities to conduct
inspections of
LB's facilities as the FDA, EMEA or other regulatory authorities
may request,
and will cooperate with the FDA, EMEA or other regulatory
authorities with
respect to the inspections and any related matters, in each case
related to the
Product.
4.5 Notwithstanding anything in this Agreement seemingly to the
contrary, LB shall not undertake any modifications to the Process
or testing
processes that could delay or otherwise impact the Approvals or
other regulatory
submissions, including without limitation, regulatory product
reviews,
Investigational New Drug applications (INDs), or any other
compliance status
without in each case the prior written agreement of Customer.
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4.6 In accordance with the Quality Agreement, Customer shall have
the
right (a) to review the specifications, grades and vendors of all
raw materials
and components used under this Agreement to manufacture the
Product, and (b) to
approve the specifications, grades and vendors of all Critical Raw
Materials
(defined below), including excipients, and of all raw materials and
components
of animal or human origin, all to the extent used under this
Agreement to
manufacture the Product. Customer shall provide a written list to
LB of those
certain raw materials and components which shall constitute and be
deemed to be
"Critical Raw Materials" for purposes of this Agreement, and shall
update the
list from time to time as appropriate. Each version of the written
list of the
Critical Raw Materials shall be jointly agreed to by Customer and
LB. Raw
materials of and components of animal or human origin shall be
avoided when
possible.
4.7 By not later than March 31, 2004, the Parties will establish
a
Joint Project Team (the "JPT"). The JPT shall be composed of
representatives
appointed by each of LB and the Customer. Such representatives may
include, but
not be limited to, the Project Manager, Technical Lead,
Manufacturing Lead,
Quality Control Lead, Quality Assurance/Regulatory Lead, Raw
Materials Lead,
Supply Chain Lead and Engineering Lead, or other individuals with
expertise and
responsibilities in the same areas of manufacturing, process
sciences, quality
control or regulatory affairs. The JPT will meet by teleconference
at least once
each week, or more frequently, as agreed by the JPT. The JPT will
operate by
unanimous decision, except as expressly set forth herein. If the
JPT is unable
to resolve a dispute regarding any issue presented to it, such
dispute shall be
resolved in accordance with Clause 11.4. The JPT is responsible for
the daily
monitoring and guidance of the Services to successfully achieve the
deliverables
of the project as outlined herein.
4.8 By not later than March 31, 2004, each Party shall appoint
a
Project Manager to act as the primary contact for such Party in
connection with
matters related to the performance of the Services. Each such
Project Manager,
unless otherwise mutually agreed, shall serve as a member of the
JPT.
4.9 As set forth in the Quality Agreement, Customer shall have
the
right to designate one of its employees or consultants as
Customer's person on
plant, to be present in LB's facility during normal business hours
during the
term of this Agreement to observe the Runs and observe LB's
performance of its
obligations under this Agreement at times and for durations to be
agreed. While
at LB's facility, Customer's representative shall comply with all
of LB's
applicable policies and procedures, and, at LB's option, shall be
escorted by LB
personnel.
5.
DELIVERY,
TRANSPORTATION OF PRODUCT AND CUSTOMER TESTS
5.1 *** Unless otherwise agreed, LB shall package and label
Manufactured Product for Delivery in accordance with the
Specifications and its
standard operating procedures and all applicable Legal
Requirements. It shall be
the responsibility of the Customer to inform LB in writing in
advance of any
special packaging and labeling requirements for Manufactured
Product. All
additional costs and expenses of whatever nature incurred by LB in
complying
with such special requirements shall be charged to the Customer in
addition to
the Price, Transportation of Manufactured Product, whether or not
under any
arrangements made by LB on behalf of Customer,
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shall be made at the sole risk and expense of the Customer,
provided that LB has
complied with any instructions provided by Customer with respect
to
transportation and insurance as set forth in Clauses 5.2 and 5.3
below.
5.2 If requested in writing by the Customer, LB will (acting as
agent
of the Customer for such purpose) arrange the transportation of
Manufactured
Product from LB's premises to the third-party fill-finish
contractor or other
destination indicated by the Customer, together with insurance
coverage for
Manufactured Product in transit at its invoiced value. All
additional reasonable
costs and expenses of whatever nature incurred by LB in arranging
such
transportation and insurance shall be charged to the Customer in
addition to the
Price provided that LB has obtained Customer's prior written
consent to
incurring such additional costs and expenses.
5.3 If requested in writing by the Customer, LB will (acting as
agent
for Customer) arrange for insurance of Product whilst held by LB
after Delivery
(awaiting transportation). The costs and expenses of such insurance
shall be at
Customer's expense and on reasonable terms equivalent to those
under which LB
insures other comparable products prior to Delivery. All such
additional
reasonable costs and expenses of whatever nature incurred by LB in
arranging
such insurance shall be charged to the Customer in addition to the
Price,
provided that LB has obtained Customer's prior written consent to
incurring such
additional costs and expenses. Notwithstanding the foregoing, in
the event LB
has been requested to arrange the transportation of Manufactured
Product in
accordance with Clause 5.2 above, the costs and expenses of such
insurance of
Manufactured Product whilst held by LB after Delivery (awaiting
transportation)
shall be at LB's expense for up to fourteen (14) days and
thereafter shall be at
Customer's expense, provided, however, that in the event the delay
in
transportation is caused by LB, then the costs and expenses of such
insurance
shall be at LB's expense until the Manufactured Product has been
loaded onto the
appropriate collecting vehicle, except as may be otherwise agreed
by the parties
in writing.
5.4 LB shall deliver to Customer the Certificate of Analysis not
later
than the date of Delivery. Notwithstanding the foregoing, at
Customer's request,
LB will Deliver Manufactured Product in quarantine prior to
delivery of the
Certificate of Analysis. Such request shall be accompanied by
Customer's written
acknowledgement that the Manufactured Product has been Delivered
without the
transmittal to Customer of a Certificate of Analysis, that
accordingly the
Manufactured Product cannot be administered to humans until
transmittal of the
Certificate of Analysis, and that Customer nevertheless accepts
full risk of
loss to and title and ownership of the Manufactured Product. The
Delivery of
Product in quarantine shall be subject to such testing requirements
as LB may
reasonably require, and the *** period referred to in Clause 5.7
shall run from
Customer's receipt of samples of such Manufactured Product together
with the
related consolidated Batch record.
5.5 Where LB has made arrangements for the transportation of
Manufactured Product, the Customer shall diligently examine the
Manufactured
Product as soon as practicable after receipt. Notice of all claims
(time being
of the essence) arising out of:
17
<PAGE>
5.5.1 visible damage to or total or partial loss of
Manufactured
Product in transit shall be given in writing to LB within *** of
receipt by
Customer at Customer's facility or of receipt by Customer's third
party supplier
at such third party's facility; or
5.5.2 non-Delivery shall be given in writing to LB within ***
after the later of (a) the date of LB's despatch notice, and (b)
Customer's
actual knowledge of non-Delivery.
5.6 The Customer shall make damaged Manufactured Product and
associated packaging materials available for inspection and shall
comply with
the requirements of any insurance policy covering the Manufactured
Product of
which LB has given Customer notice. LB shall offer the Customer all
reasonable
assistance (at the cost and expense of the Customer) in pursuing
any claims
arising out of the transportation of Manufactured Product.
5.7 LB shall deliver to Customer samples of all Batches
manufactured
under this Agreement, as and when Batches are manufactured,
together with the
related consolidated Batch record requested by Customer to enable
Customer to
inspect and perform testing on such samples. Promptly following
receipt of
Manufactured Product or any sample thereof, the Customer may
inspect the
Manufactured Product or sample and carry out any of the tests
outlined or
referred to in the Specifications set out in Schedule 1 and such
additional
tests as may be prudent in Customer's reasonable discretion.
Subject to Clause
3.2, if such tests show that the Manufactured Product fails to meet
the
Specifications, the Customer shall give LB written notice thereof
within ***
after Customer's receipt at Customer's facility of samples of such
Batch
together with the related consolidated Batch record and shall
return such
Manufactured Product (except for reference samples retained by
Customer) at LB's
expense to LB's premises for further testing. In the absence of
such written
notice, Manufactured Product shall be deemed to have been accepted
by the
Customer as meeting the Specifications. Subject to Clause 3.2, if
Customer has
reasonably demonstrated to LB that Manufactured Product returned to
LB fails to
meet the Specifications, and LB has failed to prove that such
failure is due (in
whole or in part) to acts or omissions of the Customer or any third
party after
Delivery, LB shall at Customer's discretion refund that part of the
Price that
relates to the production of such Manufactured Product or replace
such
Manufactured Product at LB's own cost and expense. In the event
Customer
requires LB to replace such Manufactured Product, LB shall use all
reasonable
endeavours to do so as soon as possible with the minimum delay.
5.8 Subject to Clause 3.2, if there is any dispute concerning
whether
Manufactured Product returned to LB fails to meet the
Specifications or whether
such failure is due (in whole or in part) to acts or omissions of
the Customer
or any third party after Delivery, such dispute shall be resolved
in accordance
with the dispute resolution procedures described in Clause 11.4
below.
5.9 Subject to Clause 7, LB's liability hereunder in respect of
Manufactured Product that fails to meet the Specifications shall be
limited to
refund or replacement, in accordance with and as set forth with
more
particularity in Clause 5,7 above; provided, however, that the
foregoing
limitation of liability shall not apply in the event such failure
is caused by
the negligent act or omission or willful misconduct of LB.
18
<PAGE>
6.
PRICE AND TERMS
OF PAYMENT
6.1 Unless otherwise indicated in writing by LB, all prices and
charges payable to Lonza are exclusive of Value Added Tax or of any
other
applicable taxes, levies, imposts, duties and fees of whatever
nature imposed by
or under the authority of any government or public authority, which
shall be
paid by the Customer (other than taxes on LB's income). LB shall
add all such
taxes as separate line items on invoices. All invoices are strictly
net and
payment must be made within thirty (30) days of Customer's receipt
of invoice.
Notwithstanding the foregoing, no amounts shall be invoiced until
such amounts
are then due and payable in accordance with the Schedules to this
Agreement,
including without limitation and as appropriate the completion of
the related
Services and Customer's receipt and acceptance of the related
Deliverables. The
invoices shall be in ***, and all payments made by Customer shall
be made in
***.
6.2 In default of payment on due date:
6.2.1 interest shall accrue on any amount overdue at the
