<PAGE>
EXHIBIT 10.34
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF
THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN FILED
SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
COMMERCIAL SUPPLY AGREEMENT
FOR
PRODUCTION OF AGI-1067 AND PROBUCOL
BETWEEN
THE DOW CHEMICAL COMPANY
AND
ATHEROGENICS, INC.
<PAGE>
OCTOBER 6, 2005
TABLE OF CONTENTS
<TABLE>
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Page
<S>
<C>
Article 1 - Definitions
1
Article 2 - Purpose and Responsibilities
6
Article 3 - Term
7
Article 4 - Manufacture of AGI-1067 and Probucol
8
Article 5 - Warranty; Testing; Rejection and Samples
9
Article 6 - Quantities
11
Article 7 - Price
15
Article 8 - Delivery, Title, Transportation
18
Article 9 - Invoices and Payment
18
Article 10 - Regulatory Matters: Records
19
Article 11 - Disclaimer of Warranties
21
Article 12 - Notice of Claims
21
Article 13 - Limitation of Remedies and Liability
21
Article 14 - Intellectual Property
22
Article 15 - Indemnity
22
Article 16 - Insurance
23
Article 17 - Dow Facility
24
Article 18 - Product Stewardship
24
Article 19 - Force Majeure
25
Article 20 - Early Termination
26
Article 21 - Assignment
27
Article 22 - Notices
28
Article 23 - Confidentiality of Information
28
Article 24 - Export Control of Technical Data
29
Article 25 - Taxes
29
Article 26 - Independent Contractor
29
Article 27 - Severability
30
Article 28 - Non-Waiver of Defaults
30
</TABLE>
<PAGE>
OCTOBER 6, 2005
<TABLE>
<S>
<C>
Article 29 - Governing Law
30
Article 30 - Dispute Resolution
30
Article 31 - Arbitration
30
Article 32 - Rules of Construction
31
Article 33 - Use of Names and Public Announcements
31
Article 34 - Entire Agreement
32
Schedule 1 - Deliverables
33
Schedule 2 - AGI-1067 Specifications
34
Schedule 3 - Probucol USP Specifications
36
Schedule 4 - List of Compounds Referenced for Improvements
37
</TABLE>
<PAGE>
OCTOBER 6, 2005
COMMERCIAL SUPPLY AGREEMENT
FOR PRODUCTION OF AGI-1067 AND PROBUCOL
This Commercial Supply Agreement, effective on the Effective Date,
is between
DowPharma, a business unit of The Dow Chemical Company, a Delaware
corporation
with offices at 574 Building, Michigan Operations, Midland, MI
48674 ("DOW"),
and Atherogenics, Inc., a Georgia corporation with offices at 8995
Westside
Parkway, Alpharetta, GA 30004 ("AGIX"), each also singularly
referred to as a
"Party" and collectively referred to as the "Parties." In
consideration of the
mutual covenants set forth in this Agreement, Dow and AGIX agree as
follows:
ARTICLE 1 - DEFINITIONS
"AFFILIATE" means, with respect to a Party, any corporation,
company,
partnership, joint venture and/or firm which controls, is
controlled by or is
under common control with such Party. As used in this Agreement,
"control" means
(a) in the case of corporate entities, direct or indirect ownership
of greater
than fifty percent (50%) of the stock or shares having the right to
vote for the
election of directors, and (b) in the case of non-corporate
entities, the direct
or indirect power to manage, direct or cause the direction of the
management and
policies of the non-corporate entity or the power to elect at least
fifty
percent (50%) of the members of the governing body of such
non-corporate entity.
Each Party acknowledges that the direct or indirect ownership of a
lesser
percentage of such shares will not necessarily preclude the
existence of
control.
"AGI-1067" means [****].
"AGI-1067 PRICE" means the charge to AGIX for the contract
manufacturing of
AGI-1067 in United States dollars as shown in Article 7.
"AGI-1067 PROCESS START-UP" means the process technology transfer
to the
Facility, [****] AGI-1067 Process Start-up shall be deemed
completed once the
first water batch demonstration of the AGI-1067 process is started.
AGI-1067
Process Start-up shall be completed prior to the Process Validation
Campaign.
"AGI-1067 REQUIREMENTS" means the amount of AGI-1067 purchased by
AGIX and the
Marketing Partner world-wide during each Calendar Year.
"AGI-1067 SPECIFICATIONS" means the written specifications
established for the
characteristics, quality and quality control testing procedures for
AGI-1067, as
developed and approved by AGIX and confirmed by Dow set forth in
Schedule 2 as
amended or supplemented from time to time in accordance with
Section 4.4.
"AGIX KNOW-HOW" means AGIX's proprietary business and technical
information
concerning AGI-1067 or Probucol and the processes used to
Manufacture the
AGI-1067 or Probucol, including, but not limited to, (a) business
plans and
AGI-1067 and Probucol forecasts; (b) AGI-1067, Probucol, raw
material, packaging
and equipment
-------
[****] indicates that certain confidential information contained in
this
document has been omitted pursuant to a request for confidential
treatment and
filed separately with the Securities and Exchange Commission.
Page 1 of 37
<PAGE>
OCTOBER 6, 2005
specifications and samples; (c) process and manufacturing
information consisting
of descriptions, pertinent documents concerning methods, formulae
and standards
for the Manufacture of AGI-1067 or Probucol; (d) quality control
information and
data; (e) analytical procedures and data; (f) performance test
data; and (g) all
information that AGIX develops in the course of Manufacturing
AGI-1067 or
Probucol.
"AGREEMENT" means this Commercial Supply Agreement, including the
expressly
referenced schedules, as amended from time to time by the Parties
in accordance
with Article 34.
"AUTHORITY" AND "AUTHORITIES" means any government regulatory
authority,
including the FDA, that is responsible for granting approvals for
(a) the
Manufacturing of the AGI-1067 or Probucol by Dow, or (b) the
manufacturing,
marketing, sale and/or pricing of the Finished Drug Product by
AGIX.
"PRODUCTION YEAR" OR "PRODUCTION YEAR" means one year during this
Agreement as
it may apply to Minimum Requirements and Capacity Reserve Fees. In
order to
match the beginning of such Production Years with the anticipated
timing of the
NDA submission, each Production Year shall be defined as
follows:
2006 - [****]
2007 - [****]
2008 - [****] 2009 -
[****]
2010 - [****] 2011 -
[****]
2012 - [****]
The Production Year shall be defined as [****] during subsequent
years during
the Term of this Agreement.
"CAPACITY RESERVE FEE" means the fee paid by AGIX to Dow if AGIX
does not
purchase the Minimum Requirements during a Production Year, as
further defined
in Section 6.1.
"CERCLA" means the Federal Comprehensive Environmental Response,
Compensation
and Liability Act, 42 U.S.C. 6901 et seq., and the regulations
promulgated
thereunder, as may be amended from time to time.
"CERTIFICATE OF ANALYSIS" AND "C OF A" mean a written document,
signed by an
authorized representative of Dow, listing the items tested,
AGI-1067
Specifications or Probucol Specifications, testing methods and test
results for
a specific lot or batch of AGI-1067 or Probucol, as applicable.
"CERTIFICATE OF COMPLIANCE" AND "C OF C" mean a written document,
signed by an
authorized representative of Dow, certifying that a specific lot or
batch of
AGI-1067 or Probucol was manufactured in accordance with cGMP, as
applicable.
-------
[****] indicates that certain confidential information contained in
this
document has been omitted pursuant to a request for confidential
treatment and
filed separately with the Securities and Exchange Commission.
Page 2 of 37
<PAGE>
OCTOBER 6, 2005
"CLAIM" or "CLAIM" means any legal or equitable causes of action
(including but
not limited to negligence; strict liability; other tort; express or
implied
warranty, indemnity or contract; contribution; or subrogation)
related to or
arising out of the performance or nonperformance of this
Agreement.
"CMC" means the chemistry, manufacturing and controls set forth in
21 C.F.R. 312
and 21 C.F.R. 314 or as otherwise required by applicable law for
an
Investigational New Drug Application (IND) and a New Drug
Application (NDA),
respectively all other foreign equivalents thereof, in each case as
applicable
to the relevant territory.
"DELIVERABLES" means those items that Dow shall develop pursuant to
this
Agreement as are specifically set forth in Schedule 1 attached
hereto (and
incorporated herein by this reference).
"DELIVERABLES FEE" means the compensation AGIX will pay to Dow for
each
Deliverable as specifically set forth in Schedule 1.
"DOW KNOW-HOW" means Dow's proprietary business and technical
information
concerning Probucol and the processes used to Manufacture Probucol,
including,
but not limited to (a) Probucol production forecasts; (b) Probucol,
raw
material, packaging and Equipment specifications and samples; (c)
process and
Manufacturing information consisting of descriptions, pertinent
documents
concerning methods, formulae and standards for the Manufacture of
Probucol; (d)
quality control information and data; (e) analytical procedures and
data related
to the Manufacturing of Probucol; (f) performance test data related
to the
Manufacturing of Probucol; and (g) all information that Dow
develops in the
course of Manufacturing Probucol. Dow Know-how also includes Dow's
proprietary
fiber optic probe technology.
"DMF" means a Drug Master File according to the usage of the FDA.
For nations
other than the United States, DMF means the corresponding filing
with the
appropriate Authority.
"EPA" means the United States Environmental Protection Agency.
"EFFECTIVE DATE" means the date of the last signature for initial
approval of
this Agreement.
"EQUIPMENT" means any equipment or machinery at the Facility that
is used by Dow
in the Manufacturing, storage, quality control testing, or
packaging of AGI-1067
or Probucol.
"FACILITY" means Dow's manufacturing facility located in Midland,
Michigan.
"FDA" means the United States Food and Drug Administration.
"FFDCA" means the Federal Food, Drug and Cosmetic Act, 21 U.S.C.
Sections 301 et
seq., and the regulations promulgateD thereunder, as may be amended
from time to
time.
Page 3 of 37
<PAGE>
OCTOBER 6, 2005
"FINISHED DRUG PRODUCT" means AGI-1067, in the final finished
dosage form(s),
fully manufactured, labeled and packaged for commercial sale and
ready for
administration to humans or animals for the prevention, treatment
or diagnosis
of a disease or condition.
"FORCE MAJEURE EVENT" means any event beyond the reasonable control
of the Party
affected which prevents a Party from performing any obligation
hereunder (other
than the payment of money) by reason of unforeseen mechanical
breakdown of
facilities, fire, flood, strike, labor trouble, riot, revolt, war,
drought,
action of governmental Authority and laws, rules, ordinances and
regulations
(including, but not limited to, those dealing with pollution,
health, ecology,
or environmental matters), and acts of God.
"GOOD MANUFACTURING PRACTICES" OR ("cgmp") means the current good
manufacturing
practices applicable to International Conference of Harmonization
of Technical
Requirements for Registration of Pharmaceuticals for Human Use
(ICH) Q7A "Good
Manufacturing Practice Guidance for Active Pharmaceutical
Ingredients" August
2001, as amended from time to time and current Good Manufacturing
Practices for
Active Pharmaceutical Ingredients defined in the FFDCA, and all
other foreign
equivalents thereof, in each case as applicable to the relevant
territory.
"IMPROVEMENTS" means methods, techniques, trade secrets,
copyrights, know-how,
data, regulatory submissions, and other intellectual property that
is invented,
discovered, or developed, on or after the Effective Date by Dow and
employed in
the Manufacture of AGI-1067. Technology that is invented,
discovered, or
developed, on or after the Effective Date by Dow and that is
related to Dow
Know-how shall not be considered an Improvement as defined
herein.
"IND" means an Investigational New Drug Application (as defined in
21 C.F.R.
312) filed with the FDA to commence human clinical testing of the
Finished Drug
Product or the corresponding application of any other
Authority.
"INITIAL TERM, RENEWAL TERM AND TERM" have the meanings set forth
in Section
3.1.
"LIABILITIES" has the meaning set forth in Section 15.1.
"MANUFACTURE" or "MANUFACTURING" means all steps and activities
necessary to
produce a compound (e.g., Probucol, AGI-1067) including without
limitation, the
manufacturing, processing, packaging, labeling, holding, quality
control testing
and release of such compound in accordance with the terms and
conditions hereof.
"MARKETING PARTNER" means the company with whom AGIX enters into an
agreement
for purpose of marketing of the Finished Drug Product.
Page 4 of 37
<PAGE>
OCTOBER 6, 2005
"MINIMUM REQUIREMENT(S)" means the minimum amount of AGI-1067 or
Probucol that
is purchased by AGIX from Dow during a Production Year in order to
satisfy the
minimum purchase obligations under this Agreement, as further
defined in Section
6.1.
"NDA" means a New Drug Application (as defined in 21 C.F.R. 314)
seeking
regulatory approval to make, manufacture, use, market, and sell the
Finished
Drug Product in the United States for a particular indication or
the
corresponding application of any other governmental Authority or
agency
regulating prescription pharmaceuticals.
"PATENT RIGHTS" means the rights and interests in issued patents
and pending
patent applications without limitation to any country, including,
without
limitation, all provisional applications, continuations,
continuations-in-part,
and divisionals, all letters patent granted thereon, and all
re-issues,
reexaminations and extensions thereof, and supplemental protection
certificates
relating thereto.
"PRICE INDEX PROBUCOL" means the Producer Price Index for Medicinal
and
Botanical Chemicals (Series ID: WPU0631) as announced by the U.S.
Department of
Labor, Bureau of Labor Statistics.
"PRICE INDEX AGI-1067" means an increase of [****] of the annual
change in the
PPI (WPU061403)).
"PROBUCOL" means Probucol USP made under cGMP conditions.
"PROBUCOL PRICE" means the charge to AGIX for the contract
manufacturing of
Probucol in United States dollars as shown in Article 7.
"PROBUCOL SPECIFICATIONS" means the written specifications
established for the
characteristics, quality and quality control testing procedures for
Probucol
USP, as defined in Schedule 3 of this Agreement.
"PROCESS VALIDATION CAMPAIGN" shall mean the batches of AGI-1067
from the
initial AGI-1067 campaign at the Facility during which the process
for
commercial-scale manufacture of AGI-1067 (other than the probucol
recovery and
heptane recovery processes) shall be validated according to cGMP
guidelines to
produce AGI-1067 that meets AGI-1067 Specifications.
"PROPRIETARY INFORMATION" means confidential information
transferred in any form
that is disclosed or developed pursuant to the terms of this
Agreement.
"QUALITY AGREEMENT" means the specific agreement between AGIX and
Dow which
provides the basis for responsibilities of AGIX and Dow related to
the cGMP
manufacture of AGI-1067 and Probucol. The Quality Agreement as
amended from time
to time is executed separately from this Agreement on or about the
same date as
this Agreement. This Quality Agreement provides an overall summary
of
responsibilities which are also discussed in Articles 2, 4, 10, 17
and 18.
-------
[****] indicates that certain confidential information contained in
this
document has been omitted pursuant to a request for confidential
treatment and
filed separately with the Securities and Exchange Commission.
Page 5 of 37
<PAGE>
OCTOBER 6, 2005
"RCRA" means the Federal Resource Conservation and Recovery Act, 42
U.S.C. 6901
et seq., and the regulations promulgated thereunder, as may be
amended from time
to time.
"TERMINATION FEE" means the fee paid by AGIX to Dow if AGIX chooses
to terminate
this Agreement early for the reasons stated in Article 20.3.
"TECHNOLOGY" means all methods, techniques, trade secrets,
copyrights, know-how,
data, regulatory submissions, and other intellectual property of
any kind owned
by or licensed to AGIX relating to or necessary or useful for the
Manufacture of
AGI-1067.
"TSCA" means the Toxic Substances Control Act, 15 U.S.C. 2601 et
seq., and the
regulations promulgated thereunder, as may be amended from time to
time.
"WASTE" means any hazardous substance and/or hazardous materials
which is/are
disposed or released in accordance with CERCLA; Waste which is
handled in
accordance with RCRA; and waste of any kind including, without
limitation,
routine process waste and by-products, which is/are not used,
re-used or
recycled.
ARTICLE 2 - PURPOSE AND RESPONSIBILITIES
2.1 Dow agrees to Manufacture and sell AGI-1067 and Probucol to
AGIX and AGIX
agrees to purchase and receive AGI-1067 and Probucol from Dow,
pursuant to the
terms and conditions stated herein.
2.2 Dow's responsibilities are:
(a) Procuring or
making, unloading, handling and storing raw materials at the
Facility;
(b)
Manufacturing AGI-1067 and Probucol;
(c) Collecting
and retaining for at least eight (8) years samples of the
AGI-1067
and Probucol;
(d) Handling and
storing bulk AGI-1067 and Probucol under cGMP warehouse
conditions
reasonably specified by AGIX;
(e) Packaging
AGI-1067 and Probucol in accordance with AGI-1067
Specifications
provided
by AGIX and preparing AGI-1067 and Probucol for shipment;
(f) Making
AGI-1067 and Probucol available to a common carrier;
(g) Providing
information for labeling for Probucol and updating Probucol
Material
Safety Data Sheets;
(h) Completing
any and all required regulatory reports or filings and
obtaining
any and all approvals required by an Authority with respect to
Probucol
in all appropriate jurisdictions;
(i) Keeping
records and reporting to AGIX and applicable Authorities as may
be
required
by law and this Agreement; and
(j) Handling,
storing, treating, and disposing of Wastes generated by Dow in
connection
with Dow's performance hereunder.
Page 6 of 37
<PAGE>
OCTOBER 6, 2005
2.3 AGIX's responsibilities are:
(a) Transferring
the necessary Technology, standards, AGI-1067 Specifications,
analytical
methods and samples to Dow in order for Dow to develop
Deliverables and Manufacture AGI-1067 meeting the AGI-1067
Specifications.
Any
changes to AGI-1067 Specifications will be mutually agreed to by
the
Parties;
(b) Providing
information, such as supply requirement forecasts for AGI-1067
or
Probucol, for supply and operations planning;
(c) Providing
information for labeling for AGI-1067 and updating of AGI-1067
Material
Safety Data Sheets;
(d) Completing
any and all required regulatory reports or filings and
obtaining
any and all approvals required by an Authority with respect to
the
Finished Drug Product in all appropriate jurisdictions;
(e) Providing
retest period, storage and AGI-1067 stability parameters;
(f) Storing
delivered AGI-1067 and Probucol under reasonable conditions to
maintain
shelf life; and
(g) Providing
Dow with reasonable access to knowledgeable people to consult
with Dow
on the implementation of AGIX Know-how. Such consultations will
be free of
charge and will occur at mutually agreeable times and places.
ARTICLE 3 - TERM
3.1 The "Initial Term" of this Agreement is from the Effective Date
until
October 1, 2012. This Agreement will automatically continue after
the Initial
Term for a period of five (5) years thereafter until October 1,
2017 (the
"Renewal Term") unless one Party provides the other Party with
written notice,
on or before October 1, 2010, of the notifying Party's intention to
let this
Agreement expire at the end of the Initial Term. For purposes of
this Agreement,
the "Term" means, collectively, the Initial Term and the Renewal
Term (if any),
under this Agreement.
3.2 Either Party may, without cause, terminate this Agreement at
the end of the
Initial Term by giving written notice of termination at least two
(2) years
prior to October 1, 2012 or any anniversary thereof.
3.3 AGIX plans to submit an NDA for the Finished Drug Product in
order to gain
marketing approval from the FDA. AGIX shall make reasonable efforts
to gain
marketing approval for the Finished Drug Product from the FDA. If
AGIX or the
Marketing Partner does not receive marketing approval, then AGIX
may terminate
or renegotiate the terms of this Agreement, with the payment of a
predefined
Termination Fee as defined in Article 20.3.
3.4 The Parties recognize that AGI-1067 Requirements may be lower
than expected.
If AGI-1067 Requirements are below the Minimum Requirements of this
Agreement
for two consecutive years after FDA approval of AGI-1067, then AGIX
and Dow
shall renegotiate the terms of this Agreement. The Parties will
negotiate in
good faith alternatives within Dow for production of such AGI-1067
volumes that
permit lower Minimum Requirements and/or Capacity Reserve Fees for
AGI-1067 or
Probucol.
Page 7 of 37
<PAGE>
OCTOBER 6, 2005
These alternatives may include a change in asset fit for AGI-1067
that would be
more efficient at lower volumes.
ARTICLE 4 - MANUFACTURE OF AGI-1067 AND PROBUCOL
4.1 Facility. Dow will conduct all Manufacturing of AGI-1067 and
Probucol at the
Facility, and will hold at the Facility all Equipment, packaging
components (for
bulk transport of AGI-1067 or Probucol) and other items used in the
Manufacture
of AGI-1067 and Probucol.
4.2 Equipment. Dow will supply and maintain, at Dow's expense,
Equipment
required for the purpose of Manufacturing the AGI-1067 and
Probucol.
4.3 Changes in Manufacturing Process. Dow will follow standard Dow
change
control procedures that will require prior notification to and
written approval
by AGIX of any changes to AGI-1067 Specifications or Probucol
Specifications, or
major changes to Equipment, packaging or Manufacturing that could
affect the
quality of AGI-1067 or Probucol in any material respect.
4.4 Amendments of CMC, AGI-1067 Specifications or Probucol
Specifications.
Amendments to the CMC, AGI-1067 Specifications or Probucol
Specifications may be
made upon mutual written agreement of the Parties. If an amendment
to the
AGI-1067 Specifications or Probucol Specifications proposed by AGIX
would entail
significant additional expense for Dow, then the Parties will meet
to discuss
appropriate additional compensation to Dow. In addition, Dow may
propose changes
to the AGI-1067 Specifications or Probucol Specifications for
AGIX's approval
based on advances in Dow's production process and analytical
techniques.
4.5 Cleaning. Dow is responsible for ensuring that adequate
cleaning is carried
out between campaigns of different products; for example, campaigns
of AGI-1067,
Probucol or another product. In support of this requirement, AGIX
will provide
information related to AGI-1067 toxicity to establish cleaning
limits and the
development of procedures for cleaning validation.
4.6 Packaging Components. Dow will purchase, at its own expense,
packaging
components and other items of any nature whatsoever that Dow may
use in
Manufacturing AGI-1067 and Probucol. All right, title and interest
in and to
such items, and in and to all work-in-process incorporating such
items, will
remain the sole property of Dow. Dow will ship AGI-1067 or Probucol
to AGIX
using packing specifications supplied to Dow by AGIX and agreed to
by Dow.
4.7 AGI-1067 Labeling and MSDS. AGIX will provide the information
for the
labeling to be used on the AGI-1067 and on the packaging thereof at
AGIX's
expense. Dow will label AGI-1067 and ship AGI-1067 Material Safety
Data Sheets
as provided by AGIX and, as such, Dow does not warrant their
accuracy or
content. AGIX will update AGI-1067 labels and AGI-1067 Material
Safety Data
Sheets as necessary to comply with all applicable Authorities and
promptly
notify Dow of such changes. AGIX will be listed as
Page 8 of 37
<PAGE>
OCTOBER 6, 2005
the emergency contact on all AGI-1067 labels and AGI-1067 Material
Safety Data
Sheets. AGIX will satisfy all governmental requirements for
registrations,
permits, notices, reports, licenses, and supplier notifications and
agrees to be
the "responsible party" as that term is utilized in 29 CFR
1910.1200 (the
Occupational Safety and Health Act Hazardous Communications
Standard) with
respect to manufacturing, packaging, labeling and AGI-1067
Specifications and
use of AGI-1067 at AGIX's expense.
4.8 Probucol Labeling and MSDS. Dow will provide the information
for the
labeling to be used on the Probucol and on the packaging thereof at
Dow's
expense. Dow will label Probucol and ship Probucol Material Safety
Data Sheets.
Dow will update Probucol labels and Probucol Material Safety Data
Sheets as
necessary to comply with all Authority and promptly will notify
AGIX of such
changes. Dow will be listed as the emergency contact on all
Probucol labels and
Probucol Material Safety Data Sheets. Except as provided elsewhere
in this
Agreement, Dow will satisfy all governmental requirements for
registrations,
permits, notices, reports, licenses, and supplier notifications and
agrees to be
the "responsible party" as that term is utilized in 29 CFR
1910.1200 (the
Occupational Safety and Health Act Hazardous Communications
Standard) with
respect to manufacturing, packaging, labeling and Probucol
Specifications.
Without limiting the forgoing, Dow will file with the FDA or
foreign equivalent,
in Dow's own name all DMFs or non-US equivalents required for
Probucol.
ARTICLE 5 - WARRANTY; TESTING; REJECTION AND SAMPLES
5.1 Warranty. Dow warrants and represents to AGIX that AGI-1067 and
Probucol:
(i) have been Manufactured in accordance with cGMP; (ii) will meet
the AGI-1067
Specifications and Probucol Specifications at the time of delivery
to the
carrier at the Facility provided, however, that Dow will not be
responsible for
any failure of the AGI-1067 to meet the AGI-1067 Specifications
that is due to
the failure of raw material supplied by AGIX to meet the raw
material's
applicable specifications after passing Dow's normal testing for
incoming
materials; (iii) will not be adulterated or misbranded within the
meaning of the
FFDCA provided, however, that Dow will not be responsible for
misbranding that
is due to any labeling, instructions or package insert text
provided to Dow by
AGIX; and (iv) will be conveyed with good title and free of all
lawful security
interests, liens, or encumbrances.
5.2 Testing Requirements. Dow will be responsible for testing
AGI-1067, Probucol
and associated raw materials in accordance with mutually agreed
upon test
methods, as set forth in the AGI-1067 Specifications and
Probucol
Specifications.
5.3 Rejection of Delivered AGI-1067 or Probucol.
(a) In the
event that AGIX reasonably determines that any shipment of
AGI-1067 or Probucol does not conform to any of the warranties set
forth in
Section 5.1, then AGIX will give Dow notice thereof (including a
sample from
such shipment) within sixty (60) days after receipt thereof. In
such event, Dow
will undertake appropriate testing of such sample and will notify
AGIX whether
it has confirmed such non-conformity within ten (10) days after
receipt of such
notice from AGIX. If Dow notifies
Page 9 of 37
<PAGE>
OCTOBER 6, 2005
AGIX that it has not confirmed such non-conformity, AGIX will
submit the
disputed shipment for testing to a mutually agreed upon independent
testing
laboratory of recognized standing in the industry. The findings of
this
laboratory will be binding on the Parties. The expenses of such
laboratory
testing will be borne by Dow if the testing confirms the
non-conformity or by
AGIX if the testing does not confirm the non-conformity.
(b) If any
AGI-1067 or Probucol delivered to AGIX pursuant to this
Agreement does not conform to the warranty set forth in Section
5.1, Dow will
reimburse or credit AGIX with the AGI-1067 Price plus AGIX's cost
of the
Probucol used to manufacture the AGI-1067 or Probucol Price paid on
account of
such AGI-1067 or Probucol as well as any transportation,
repackaging and holding
charges reasonably incurred by AGIX in connection with such
non-conforming
AGI-1067 or Probucol. At AGIX's election: (i) Dow will be relieved
of any
obligation to deliver any AGI-1067 or Probucol in replacement of
such
non-conforming AGI-1067 or Probucol, or (ii) Dow will replace the
non-conforming
AGI-1067 or Probucol with AGI-1067 or Probucol that conforms to the
warranty set
forth in Section 5.1 and Dow shall receive full payment with
respect thereto.
THE REMEDY IN THIS PARAGRAPH WILL BE AGIX'S EXCLUSIVE REMEDY THAT
AGIX WILL HAVE
HEREUNDER, OR AT LAW OR EQUITY, FOR BREACH OF DOW'S WARRANTIES
UNDER SECTION
5.1.
(c) Hidden
Defect. If there is subsequently found to be a non-conformity
in any shipment of AGI-1067 or Probucol or portion thereof which is
attributable
to Dow's sole negligence or willful misconduct, then any claim by
AGIX related
to a Hidden Defect may be deemed a rejection of delivery and shall
be handled
pursuant to Sections 5.3 (a) and (b) of this Agreement. To the
extent possible,
AGIX will obtain a sample for testing in order to establish
non-conformity. If
no sample can be obtained, AGIX shall detail in writing its reasons
for
believing such shipment is non-conforming. Either Party may submit
such reasons
to an independent third party agreeable to both Parties whose
determination of
conformity will be binding on both Parties.
5.4 Samples. Dow will retain a sample of each lot of AGI-1067 or
Probucol tested
for up to eight (8) years from the date of shipment; however, AGIX
is
responsible for retaining AGIX's own samples for FDA purposes. For
each lot
shipped, Dow will prepare a Certificate of Analysis setting forth
the items
tested, the AGI-1067 Specifications or Probucol Specifications and
test results
and forward the Certificates of Analysis to AGIX, or its designee,
at the time
the AGI-1067 or Probucol is shipped.
ARTICLE 6 - QUANTITIES
6.1 Subject to and in compliance with the other terms and
conditions of this
Agreement including this Article 6, and provided that Dow obtains
and maintains
the capability to manufacture AGI-1067 and Probucol as required
under Article 17
below, the parties agree as follows: (i) AGIX agrees that it shall
purchase from
Dow and Dow agrees that it shall sell to AGIX, AGI-1067 and
Probucol as
specified in Section 6.1(b) below during the Term of this
Agreement; (ii) AGIX
shall be entitled (but not obligated) to order and Dow shall be
entitled (but
not obligated) to supply additional amount(s) of
Page 10 of 37
<PAGE>
OCTOBER 6, 2005
AGI-1067 and Probucol during the Term of this Agreement; (iii) AGIX
agrees that
if AGIX purchases less than the Minimum Requirements of either
AGI-1067 or
Probucol during any Production Year, then AGIX shall pay a portion
of the
Capacity Reserve Fees as calculated in Section 6.1(c) below; and
(iv) AGIX
agrees that if AGIX does not purchase any AGI-1067 or Probucol
during any
Production Year, then AGIX shall pay the Capacity Reserve Fee for
AGI-1067 as
specified in Section 6.1(c) below during the Term of this
Agreement.
(a)
Minimum Campaign Size - AGI-1067 and Probucol. The Parties have
agreed
that the minimum campaign size for AGI-1067 shall be [****] and the
minimum
campaign size for Probucol shall be [****]. However, on a one-time
basis, Dow
will complete a [****] AGI-1067 Process Validation Campaign for
AGIX. The
Minimum Campaign Size may be reduced upon mutual agreement of the
Parties, for
example, by Improvements or other changes in the process for
Manufacturing
AGI-1067 or Probucol.
(b)
Minimum Requirements - AGI-1067 and Probucol. The Parties have
agreed
on the following Minimum Requirements for AGI-1067 and Probucol for
the
following time periods during the Term of this Agreement: (i) for
the time
period consisting of Production Year 2006 only, the Minimum
Requirements shall
be [****] of AGI-1067, which obligation the parties acknowledge
will be
satisfied under the Process Validation Campaign as provided under
Section 7.2
below; (ii) for the time period consisting of Production Year 2007
only, the
Minimum Requirements shall be the larger of [****] of AGI-1067 or
[****] of the
AGI-1067 Requirements for such Production Year or [****] of
Probucol; (iii) for
the time period consisting of Production Year 2008 only, the
Minimum
Requirements shall be the larger of [****] of AGI-1067 or [****] of
the AGI-1067
Requirements for such Production Year or [****] of Probucol; (iv)
for the time
period consisting of Production Year 2009 only, the Minimum
Requirements shall
be the larger of [****]of AGI-1067 or [****]of the AGI-1067
Requirements for
such Production Year or [****]of Probucol; (v) for the time period
consisting of
Production Year 2010 only, the Minimum Requirements shall be the
larger of
[****] of AGI-1067 or [****] of the AGI-1067 Requirements for such
Production
Year or [****] of Probucol; (vi) for the time period consisting of
Production
Year 2011 only, the Minimum Requirements shall be the larger of
[****] of
AGI-1067 or [****] of the AGI-1067 Requirements for such Production
Year or
[****] of Probucol; and (vii) for the period of time consisting of
Production
Years 2012 through the remainder of the Agreement Term, the Minimum
Requirements
shall be the larger of [****] per year of AGI-1067 or [****] of the
AGI-1067
Requirements for such Production Years, or [****] of Probucol. For
the time
period from 2008 through the remainder of the Agreement Term, if
Dow's share of
the AGI-1067 Requirements for such Production Year equals greater
than [****],
then AGIX shall be obligated to meet the Minimum Requirements for
such
Production Year solely by purchasing such amount of AGI-1067 based
on Dow's
share. For the time period from 2008 through the remainder of the
Agreement
Term, if Dow's share of the AGI-1067 Requirements for such
Production Year
equals less than [****], then AGIX shall have the option to meet
the Minimum
Requirements for such Production Year by purchasing either AGI-1067
or Probucol,
however AGIX shall be obligated to purchase at least [****]
AGI-1067 during any
two (2) Production Year period starting in 2008 in order to meet
the Minimum
-------
[****] indicates that certain confidential information contained in
this
document has been omitted pursuant to a request for confidential
treatment and
filed separately with the Securities and Exchange Commission.
Page 11 of 37
<PAGE>
OCTOBER 6, 2005
Requirements. For each Production Year referenced above, Dow agrees
to reserve
its Facility for a time period appropriate to meet the applicable
Minimum
Requirements for AGI-1067 and Probucol.
In the event that AGI-1067 is not approved in [****] as
anticipated, the timing
of the market share provision changes as it applies to the Minimum
Requirements
set above shall be modified. Dow's market share minimum shall
remain at [****]
of the AGI-1067 Requirements until one (1) year past AGI-1067
approval by the
FDA. During the second (2nd) year after AGI-1067 approval by the
FDA, Dow's
market share minimum shall be lowered to [****] of the AGI-1067
Requirements.
During the third (3rd) year after AGI-1067 approval by the FDA,
Dow's market
share minimum shall be lowered to [****]of the AGI-1067
Requirements. During the
fourth (4th) year after AGI-1067 approval by the FDA, Dow's market
share minimum
shall be lowered to [****] of the AGI-1067 Requirements. During the
fifth (5th)
year after AGI-1067 approval by the FDA, Dow's market share minimum
shall be
lowered to [****] of the AGI-1067 Requirements for the remainder of
the
Agreement Term.
(c)
Capacity Reserve Fee - AGI-1067 and Probucol. The Parties have
agreed
on the following Capacity Reserve Fee for AGI-1067 and Probucol for
the
following time periods during the Term of this Agreement: (i) for
the time
period consisting of Production Year 2006 only, the Capacity
Reserve Fee for
AGI-1067 and Probucol shall be [****]; (ii) for the time period
consisting of
Production Year 2007 only, the Capacity Reserve Fee for AGI-1067
and Probucol
shall be [****]; and (iii) for the period of time consisting of
Production Years
2008 through the remainder of the Agreement Term, the Capacity
Reserve Fee per
year for AGI-1067 and Probucol shall be [****]. The Capacity
Reserve Fee for
AGI-1067 and Probucol will be considered satisfied if AGIX meets
the Minimum
Requirements listed above during such Production Years.
The
Capacity Reserve Fee for each Production Year shall be paid in
[****]
equal parts on a [****]basis during the Production Year, unless
AGIX has
committed orders according to the forecast as provided under
section 6.2 below
or has submitted a Purchase Order for quantities exceeding the
Minimum Quantity
for such year. This Capacity Reserve Fee shall be credited toward
any purchase
of AGI-1067 or Probucol during such Production Year.
These
calculations for the Capacity Reserve Fee are described in the
following Examples:
Example #1:
[****]
Example #2:
[****]
Formula:
-------
[****] indicates that certain confidential information contained in
this
document has been omitted pursuant to a request for confidential
treatment and
filed separately with the Securities and Exchange Commission.
Page 12 of 37
<PAGE>
OCTOBER 6, 2005
A formula could be applied to explain the Capacity Reserve Fee
payment.
[****]
[****]
(d)
AGI-1067 Requirements. For purposes of calc
