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Exhibit 10.3
PURCHASE AND SUPPLY AGREEMENT
BETWEEN
GENZYME CORPORATION
&
INVITROGEN CORPORATION
CONTRACT # SPM-254
JANUARY 1, 2005 TO DECEMBER 31, 2007
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TABLE OF CONTENTS:
1. Definitions
2. Scope
3. Term
4. Payment Terms
5. Products and Pricing
6. Release of Orders
7. Forecasting, Purchase Orders and Supply
Obligations
8. Biosurgery Products
9. Security of Supply
10. Acceptance; Rejection; Pre-shipment
Samples
11. Certificate of Analysis; Other
Documentation
12. Storage; Delivery
13. Manufacturing Obligations;
Warranties
14. Other Obligations
15. Termination
16. SBA Socio-Economic Reporting
17. Confidentiality
18. Insurance
19. Work on Genzyme's Premises and
Security
20. Research Product Warranties
21. Authorized use of Research Products
22. Regulatory
23. Export Control
24. Indemnification
25. Compliance Laws
26. Limitation of Liability
27. Assignment
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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28. Jurisdiction
29. Severability; Remedies; Waiver;
30. Notices
31. Advertising
32. Statutes and Executive Orders
33. Survival
34. Additional or Inconsistent Terms
35. Entire Agreement
36. General Provisions
The following Attachments are attached to
this Purchase and Sale Agreement and
made a part hereof:
ATTACHMENT A: Global Buying Entities.
ATTACHMENT B1: Listing and prices of Custom
Manufactured Products.
ATTACHMENT B2: Listings and prices of
Biosurgery Products.
ATTACHMENT B3: Listing and prices of
Research Products.
ATTACHMENT B4: Listing of Standard Custom
Products
ATTACHMENT C: Specifications, Certificates
of Analysis, [**] and Herd Management
ATTACHMENT D: List of Account Managers
ATTACHMENT E: Genzyme Accounts Payable
Contacts
ATTACHMENT F: Supplemental Product
Amendment for Biosurgery Products
ATTACHMENT G: GENZYME Materials and
Materials Specifications
ATTACHMENT H: [**] Protocols
ATTACHMENT I: Biosurgery Refrigeration
& Transportation Requirements
ATTACHMENT J: Supplemental Product
Amendments
ATTACHMENT K: Change Notification
Process
ATTACHMENT L: Certification of Suitability
of Monographs of the European
Pharmacopoeia
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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PURCHASE AND SUPPLY AGREEMENT
This Purchase and Supply Agreement (the
"AGREEMENT") effective January 1, 2005
("EFFECTIVE DATE") is between Invitrogen
Corporation ("SUPPLIER"), a Delaware
corporation with a principal place of
business at 1600 Faraday Avenue, Carlsbad,
CA 92008 and Genzyme Corporation
("GENZYME"), a Massachusetts corporation with a
principal place of business at One Kendall
Square, Cambridge, MA 02139.
RECITALS:
A. GENZYME
and Life Technologies, Inc. ("LIFE") were parties to a
Supply Agreement effective January 1, 1999 ("ORIGINAL
AGREEMENT"),
whereby Life supplied certain products to GENZYME (GENZYME
contract
number
C-194). The Original Agreement expired on December 31, 2001.
B. SUPPLIER
and GENZYME are parties to that certain Contract
Manufacture Agreement effective March 17, 1996 for the supply
of
Biosurgery Products to GENZYME ("BIOSURGERY AGREEMENT").
C. On
September 14, 2000, Life was acquired by and merged into
SUPPLIER. GENZYME desires to have SUPPLIER continue supplying
products similar to those supplied under the Original Agreement
and
the Biosurgery Agreement. SUPPLIER is willing to supply such
products.
D. By
entering into this new Agreement, GENZYME and SUPPLIER desire
to
(i) renew and extend the supply relationship established by the
Original Agreement; and (ii) terminate the Biosurgery Agreement
as
of the Effective Date, replacing such agreement with this
Agreement; provided, however, that the Supplemental Product
Amendments entered into under the Biosurgery Agreement shall not
be
terminated, and shall be incorporated herein as described in
Section 8.2.
NOW THEREFORE,
in consideration of the premises and the mutual covenants
and agreements contained herein and for
other good and valuable consideration,
the receipt and sufficiency of which are
hereby acknowledged, the parties
intending to be legally bound agree as
follows:
1. Definitions:
1.1 "AFFILIATE"
shall mean any entity or person that, directly or
indirectly, controls, is controlled by, or is under common
control
with another person. A person shall be deemed to control
another
person if the controlling person possesses, directly or
indirectly,
the power to direct or cause the direction of the management or
policies of the controlled person, whether through ownership of
stock, the power to elect or appoint the board of directors or
trustees, by contract, or otherwise.
1.2 "BIOPRODUCTION"
means any materials that are procured to a GENZYME
part number and specification as contained in ATTACHMENT B1 and
B2.
1.3 "FDA" means the
U.S. Food and Drug Administration.
1.4 "PURCHASE ORDER"
means any purchase order that GENZYME either
itself or through a Buying Entity completes and delivers to
SUPPLIER either directly or through one of its Affiliates listed
in
ATTACHMENT D in accordance with Section 6.
1.5 "QSR" means
regulations set forth in FDA's Quality System
Regulations at 21 C.F.R. Part 820.
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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1.6 "SPECIFICATIONS"
means the' procedures, test results, requirements,
criteria, specifications, standards and other data relating to
the
manufacture and supply of Products, as more particularly set
forth
on ATTACHMENT C.
1.7 "STERILE" means
that any Product described as Sterile has been
manufactured in compliance with medical device QSR's through
aseptic processing to a sterility assurance level of 10-3.
1.8 "THIRD PARTY"
means any person or entity other than GENZYME,
SUPPLIER, their respective Affiliates, and a Buying Entity.
2. SCOPE:
2.1 PRODUCTS. The
products ("PRODUCTS"), individually or collectively,
to be bought and sold by GENZYME from SUPPLIER are any of the
following:
2.1.1 "CUSTOM
MANUFACTURED PRODUCTS", as set forth more
particularly on ATTACHMENT B 1, and which are:
[**]
2.1.2 SUPPLIER's
research products, as set forth in SUPPLIER's
then-current U.S. Catalog, and its Affiliates'
then-current written catalogs ("RESEARCH PRODUCTS"),
including research products supplied under on-site
stocking programs.
2.1.3 SUPPLIER's
biosurgery products listed on ATTACHMENT B2
[**] (collectively, "BIOSURGERY PRODUCTS").
Products excludes services, custom products
not listed above, and software
products.
2.2 Buying Entities.
Only GENZYME and an entity listed on ATTACHMENT A
(each a "BUYING ENTITY") may place Purchase Orders for Products
under this Agreement.
2.2.1 An entity
not listed on ATTACHMENT A may not place
Purchase Orders, either for itself or on behalf of any
other party, and is not entitled to the benefits of this
Agreement.
2.2.2 A GENZYME
Affiliate or other entity may only become a
Buying Entity by a written amendment of ATTACHMENT A
signed by SUPPLIER and GENZYME. Removal of an entity
from ATTACHMENT A requires only written notice from
GENZYME to that Buying Entity and to SUPPLIER.
2.2.3 GENZYME
warrants and represents to SUPPLIER that the
Buying Entities listed on ATTACHMENT A, are Affiliates
of GENZYME. If, at any time during this Agreement, any
entity listed on ATTACHMENT A ceases to be a GENZYME
Affiliate, then GENZYME shall so notify SUPPLIER, and
such entity shall be removed from ATTACHMENT A and shall
no longer be a Buying Entity.
2.2.4 Removal of
a Buying Entity from ATTACHMENT A shall not,
alone, release such Buying Entity from its obligations
hereunder.
2.2.5 GENZYME
and SUPPLIER each acknowledge and agree that the
terms and conditions of this Agreement shall apply to
all Purchase Orders submitted by GENZYME or any of the
Buying Entities during the Term of this Agreement. Where
the terms of this Agreement conflict with any such
Purchase Order, this Agreement shall govern.
2.2.6 The
placement of a Purchase Order by a Buying Entity
constitutes such Buying Entity's acceptance that the
terms and conditions of this Agreement govern such
Purchase Order and agreement to abide by this Agreement.
2.2.7 SUPPLIER
shall provide GENZYME with a list of all
SUPPLIER Affiliates who are selling Products subject to
this Agreement (together with SUPPLIER, "SELLING
ENTITIES"). The acceptance of a Purchase Order by a
Selling Entity constitutes
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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such Selling Entity's agreement (i) that the terms and
conditions of this Agreement govern such Purchase Order;
and (ii) to abide by the applicable terms and conditions
of Agreement. SUPPLIER shall also provide GENZYME with
written notice in due commercial course of any companies
acquired by SUPPLIER during the term of this Agreement,
any new product offerings, and new discounts or other
promotional offerings.
2.2.8 The only
role of the Buying Entities and Selling
Entities under this Agreement is to facilitate the
ordering, delivery and payment process on a
multinational level. No Buying Entity or Selling Entity
shall be liable under this Agreement except as expressly
stated herein. GENZYME and SUPPLIER shall each be fully
liable and responsible for all supply, delivery,
quality, payment, warranty, security, insurance, use,
indemnity, and other commitments under this Agreement,
regardless of which Buying Entity or Selling Entity
(respectively) placed or accepted a Purchase Order, or
received or delivered Products.
3. TERM:
This Agreement
shall be effective on the Effective Date and continue until
December 31,
2007 (the "INITIAL TERM"). Upon expiration of the Initial
term, this
Agreement shall automatically renew for successive one year
terms unless it is
terminated by either party pursuant to this Article 3 or
as otherwise
provided herein. Each party may terminate this Agreement after
the Initial Term
has expired by providing the other party with at least six
(6) months
written notice.
4. PAYMENT TERMS:
4.1 NON-U.S.
PURCHASES. Non-U.S. Buying Entities shall receive invoices
from, and payment on invoices shall be made to, the Selling
Entity
corresponding to the territory in which such Buying Entity is
located. Such non-U.S. invoices shall be stated in the currency
of
the invoicing Selling Entity or the Buying Entity, as such
parties
may determine from time to time.
4.2 PAYMENT. Except
as described in Section 4.3, invoices shall be paid
within thirty (30) days of receipt, provided that all invoices
shall include at least the following information: Buying Entity
account number, Purchase Order number, Product description,
quantity of Product desired, unit cost and extended cost of
Product, invoice number, and applicable Product part number.
4.3 CONSOLIDATED
INVOICES. SUPPLIER shall provide upon GENZYME's
request consolidated monthly invoices for each U.S. Buying
Entity.
All such consolidated invoices shall be paid in full within the
last date specified, provided that the parties agree on the
amount
invoiced. Consolidated invoices shall be submitted in Excel
format
and shall contain at least the following information: Buying
Entity
account number; Purchase Order number; Product description;
quantity of Product; unit cost and extended cost of Product;
invoice number; and applicable Product part number.
4.4 INVOICE
DISPUTES. In the event GENZYME disputes an invoice amount,
GENZYME shall notify SUPPLIER within fifteen (15) days of the
date
of receipt
of such invoice, may withhold payment of the disputed
amount, and shall pay the undisputed portion of such invoice by
such fifteenth (15th) days. The parties shall negotiate in good
faith how to address the disputed portion of the invoice.
5. PRODUCTS AND PRICING:
5.1 GENZYME
BIOPRODUCTION PRODUCTS AND PRICING.
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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[**]
5.2 PROCESS
DEVELOPMENT GENZYME & SUPPLIER SUPPORT.
SUPPLIER understands that GENZYME needs the freedom to operate
regarding the future development of mammalian cell base
technologies. Therefore GENZYME may elect to work with Vendors
whose skill set and know-how best suit GENZYME's timelines and
or
other requirements. GENZYME may use a reasonable effort to
provide
SUPPLIER an opportunity re: the above needs by using SUPPLIER's
catalogue products, custom products, and or optimized IP
platforms
to address the cell culture needs of GENZYME during the course
of
this Agreement, so long as SUPPLIER can meet GENZYME's
timelines,
budgets and other requirements for the project. [**]
5.3 [**]
[**]
5.4 PRICE AND
PAYMENT TERMS FOR [**] BATCHES.
The pricing for the [**] is set forth in ATTACHMENT B1. Delivery
of
the [**] will be consistent with terms outlined in Section 10.1
of
the Supply Agreement. [**]
5.5 CURRENCY
EXCHANGES.
For the
purposes of calculating rebates as described in Sections
5.3 and 5.7, SUPPLIER shall convert sales to Buying Entities
from
local currency to dollars using the methods it uses to convert
all
of its other foreign revenues, provided only that such methods
comply with US generally accepted accounting principles.
SUPPLIER
currently uses the exchange rates posted at www.oanda.com; if
that
source changes SUPPLIER will report that source and the rate at
the
close of the respective quarter.
5.6 PRICE AND
PAYMENT TERMS FOR [**] BATCHES.
[**]
USDA
Website-//www.ams.usda.gov/LSMNpubs/pdfmonthly/pharm.pdf
5.7 PRICING FOR
RESEARCH PRODUCTS.
Current US prices for SUPPLIER Research Products are set forth
in
SUPPLIER's current catalog ( "List Price"). Each Selling Entity
has
a different catalog and the List Prices may vary by country.
[**]
[**]
5.8 GENZYME/
SUPPLLER- [**] PROGRAM - RESEARCH PRODUCTS.
There are two levels of [**] status, with qualifications for
each
detailed below. In exchange for each level of [**] status,
SUPPLIER
will offer the stated price concessions.
5.8.1 [**] -
LEVEL 1. Within 60 days of signing the contract,
GENZYME and authorized Buying Entities will provide SUPPLIER
and
Selling Entities access to its end users for the purpose of
promoting SUPPLIER's products and services [**]
5.8.2 [**]
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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5.8.3 If
SUPPLIER provides specific product, seminars and or
special product pricing information during the year, GENZYME
may
list these in the Science and Research newsletter, as time and
space allow. SUPPLIER will be given an annual expected schedule
of
newsletters.
GENZYME Science and Research Procurement may sponsor product
shows
and technical meetings. Timing, content and location of these
product shows to be mutually agreed to and SUPPLIER must provide
at
least a three (3) week advance notice request to GENZYME
Science
and Research Procurement.
In exchange for its [**] status, Level 1, with respect to
Research
Products, addition discounts on Research Products are provided
as
listed in ATTACHMENT B3, Section A.
5.9 [**] - LEVEL II
QUALIFICATION.
5.9.1 GENZYME
will provide spend visibility on a quarterly basis
for selected life science reagents by product category which
SUPPLIER and GENZYME mutually agree too. GENZYME and SUPPLIER
will
agree as to the form and format of this data and the method of
reporting.
5.9.2 [**]
5.10
GROWTH
INCENTIVE ADJUSTMENTS.
5.10.1 If GENZYME
purchases a company that has not done business
with SUPPLIER historically, the growth incentive charts will
not
change and any new purchases from the acquired company can be
applied to the growth incentive tiers. If GENZYME purchases a
company that has done business with SUPPLIER historically, the
growth incentive tiers will be adjusted by adding the acquired
companies' historical volume to Tier 1. Each Tier will then be
adjusted upward by the same percent as current tiers.
5.10.2 Adjustments to
the growth incentives for GENZYME resulting
from GENZYME's acquisition of a company that is presently
procuring
products from SUPPLIER will be reviewed and approved by both
parties prior to any adjusts in the tiered rebates.
5.10.3 If SUPPLIER
purchases any company that GENZYME has bought
from historically the growth incentive rebates will be reviewed
by
both SUPPLIER and GENZYME and adjusted accordingly.
5.11
CONTINGENCY MANUFACTURING SITE AND DISASTER RECOVERY PLAN.
Outlined below is the current long-term manufacturing
capacities
reflective both the US and Scotland Sites.
5.11.1 [**]
5.11.2 [**]
5.11.3 Contingency
Manufacturing Site and Disaster Recovery Plan
Scotland Facility [Inchinnan]:
Plant capacity: currently staffed to run 5 days per week at two
shifts per day; 24/7 provides ample expansion capabilities
Based on above workweek, the current Inchinnan capacity
approximates:
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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[**]
6. RELEASE OF ORDERS:
6.1 PURCHASE ORDER
PLACEMENT. GENZYME shall have no obligation to order
any Product by virtue of this Agreement alone. In the event
that
GENZYME orders Products hereunder, GENZYME shall issue a
Purchase
Order to SUPPLIER stating, at a minimum, the description and
quantity of the Product(s) being ordered and the required
date(s)
for delivery of such Product(s). No Product shall be delivered
prior to receipt of an applicable Purchase Order (whether
electronically, by telephone, or fax). Purchase Orders for
Custom
Manufactured Products and Biosurgery Products shall be sent by
hard
copy or email only. In the event GENZYME does not receive a
written
notice of acceptance or rejection of a Purchase Order within
five
(5) business days of the Purchase Order date, acceptance of the
Purchase Order by SUPPLIER shall be conclusively presumed.
6.2 ELECTRONIC
ORDERS. Purchase Orders placed and acknowledgments sent
under this Agreement may be sent in writing or by electronic
means
in a mutually agreed upon platform. The parties agree that:
6.2.1 The electronically transmitted Purchase Orders shall be
deemed to satisfy any legal formalities requiring that
agreements
be in
writing.
6.2.2 Neither party shall contest the validity or enforceability
of
any such electronic transmission under any applicable statute
of
frauds.
6.2.3 Computer maintained records when produced in hard copy
form
shall constitute business records and shall have the same
validity
as any other generally recognized business records.
6.3 21 CFR PART 11
COMPLIANCE. SUPPLIER and GENZYME each represent and
warrant to the other that each is developing its electronic
transmission and computer maintained records/security to bring
such
transmission, records, and security into compliance with the
requirements of 21 CFR Part 11.
7. FORECASTING. PURCHASE ORDERS
AND SUPPLY OBLIGATIONS:
7.1 FORECASTS.
[**]
7.2 PURCHASE ORDER
REQUIREMENTS: SUPPLY OBLIGATIONS.
7.2.1 GENZYME
shall issue Purchase Orders for Products as
follows: (i) for Custom Manufactured Products and [**]
(after [**] has been approved by GENZYME for use in its
bioproduction process) [**] months prior to the
requested delivery date(s); (ii) for [**] and [**], [**]
months prior to the requested delivery date(s); (iii)
for Biosurgery Products (excluding [**]), [**] weeks
prior to the requested delivery dates.
7.2.2 Each
Purchase Order shall specify at a minimum the
amount of each Product required, the delivery dates and
location and any other ordering terms. Each Purchase
Order shall
constitute a binding obligation on GENZYME
to take and pay for the Product specified therein
subject to the terms of this Agreement.
7.2.3 [**]
7.2.4 DELAY OF
DELIVERY: GENZYME may delay deliveries under an
outstanding Purchase Order upon providing written notice
to SUPPLIER no less than (i) [**] days before the
scheduled delivery date for Custom Manufactured
Products, and (ii) [**] days before the scheduled
delivery date for Biosurgery Products. Such delays shall
be at no additional charge to GENZYME. The maximum
duration of any delay of [**] and Biosurgery Products
shall be [**] months from the date of
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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GENZYME's notification of acceptance of the pre-shipment
sample for the applicable Product (or, if no
pre-shipment sample is sent, then from the original date
of delivery of such Product); the maximum duration of
any delay of [**] or [**] shall be [**] months from date
of the Purchase Order.
8. BIOSURGERY PRODUCTS:
8.1 RAW MATERIALS
FOR BIOSURGERY PRODUCTS. Prior to or on even date
with its submission of a Purchase Order for Biosurgery
Products,
GENZYME shall deliver to SUPPLIER a sufficient amount of the
materials set forth in ATTACHMENT G ("MATERIALS") to enable
SUPPLIER to manufacture the amount of Biosurgery Products set
forth
in such Purchase Order. In the event that Materials are lost or
destroyed due to SUPPLIER's negligence or misconduct, SUPPLIER
will
reimburse GENZYME for its direct out-of-pocket costs of the
Materials and the associated shipping costs.
8.1.1 If GENZYME
delays delivery of the necessary Materials,
the affected Purchase Order delivery date(s) may be
extended for the duration equal to such delay.
8.1.2 The
parties acknowledge that SUPPLIER's manufacture of
Biosurgery Products manufactured using Materials is
conditional upon the Materials meeting certain
specifications ("MATERIALS SPECIFICATIONS") as set forth
on ATTACHMENT G. GENZYME shall accompany each delivery
of Materials with Certificates of Analysis confirming
that the delivered Materials meet the Materials
Specifications, along with instructions for proper
storage and handling of the Materials.
8.1.3 GENZYME
acknowledges that if the Materials do not
conform to the Materials Specifications upon their
delivery to SUPPLIER, then SUPPLIER's manufacture of the
Biosurgery Products may be adversely affected. [**]
8.1.4 Upon the
parties' agreement with respect to the amount
of
Materials necessary to manufacture Biosurgery
Products, GENZYME has the right to instruct SUPPLIER
that excess Materials be disposed of by SUPPLIER, in
which case GENZYME will reimburse SUPPLIER a disposal
fee to cover SUPPLIER's expense in destroying such
Material and other reasonable costs associated with the
disposal of the materials.
8.1.5 SUPPLIER will
provide reports to GENZYME prior to the
close of each month with respect to delivered Material
which will include: ending inventory, receipts, new
reserves, and usage details.
8.2 OTHER BIOSURGERY
PRODUCTS. The parties may enter into future
agreements from time to time to add additional Biosurgery
Products
to ATTACHMENT B2. Biosurgery Products may only be added to this
Agreement by execution of the Amendment form attached hereto as
ATTACHMENT F ("SUPPLEMENTAL PRODUCT AMENDMENT" or SPA), to which
a
Certificate of Analysis and sample label for such product shall
be
attached. Supplemental Product Amendments that are currently
effective between the parties as of the Effective Date are
identified on ATTACHMENT J, are incorporated by reference
herein,
and the products described thereunder shall be Biosurgery
Products
hereunder, provided that where the terms of this Agreement
conflict
with the terms of any Supplemental Product Amendment, the terms
of
this Agreement shall govern. Each Supplemental Product
Amendment
entered into after the Effective Date shall be attached hereto
as
ATTACHMENTS F1, F2, and so on.
8.3 PURCHASE ORDERS.
Following receipt of a Purchase Order for a
biosurgery product that is not subject to a SPA, SUPPLIER and
GENZYME shall review execute an SPA in the form attached hereto
as
ATTACHMENT F to incorporate such Biosurgery Product. SUPPLIER
will
not manufacture and deliver to GENZYME any Biosurgery Product
that
is not subject to an executed SPA. SUPPLIER shall use
commercially
reasonable and good faith efforts to meet GENZYME's Purchase
Orders
and delivery requirements for
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
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Biosurgery Products. If SUPPLIER is unable for any reason to
supply
any portion of the total demand for Biosurgery Products
specified
in a Purchase Order that exceeds the then-applicable, accepted
GENZYME Forecast, SUPPLIER may allocate its available supply
among
any or all customers on such basis as SUPPLIER may deem fair
and
practical, without liability for any failure of performance
that
may result therefrom.
8.4 TERMINATION OF
SUPPLY OF BIOSURGERY PRODUCTS.
8.4.1 If GENZYME
cannot offer its services as a result of
action by the FDA, and the FDA's requirements cannot be
satisfied within [**], GENZYME may terminate SUPPLIER's
supply of Biosurgery Products hereunder by providing
[**].
8.4.2 Each party
may terminate the supply of Biosurgery
Products hereunder without cause [**] written notice to
the other party. Such termination shall not affect the
supply of Products other than Biosurgery Products.
9. SECURITY OF SUPPLY:
9.1 CUSTOM
MANUFACTURED PRODUCTS. Upon GENZYME's request in a written
or electronic Purchase Order, SUPPLIER shall commence
manufacture
of an inventory of Custom Manufactured Products (in the
quantity
(ies) set forth below) that are Pre-Approved Finished Goods
(defined below), custom manufactured and stored in accordance
with
the applicable Specifications, and held on reserve inventory
for
the purpose of security of supply ("Security of Supply").
Submission of such initial Purchase Order obligates GENZYME to
take
delivery of the Security of Supply. Upon completion of the
manufacture of the Security of Supply, SUPPLIER shall roll over
such Security of Supply into its delivery of Custom
Manufactured
Products under the next-occurring Purchase Order on a
first-in-first out-basis. At all times during the term of this
Agreement, SUPPLIER shall maintain the inventory dedicated for
Security of Supply in the following quantities and at the
following
locations:
(i) [**]
(ii) [**]
9.1.1 UNAPPROVED
FINISHED GOODS. "UNAPPROVED FINISHED GOODS"
means a Custom Manufactured Product which is tested,
approved, packaged and labeled in accordance with the
applicable Specifications for delivery to GENZYME by
SUPPLIER, but which GENZYME has not tested to confirm
conformity to the applicable Specifications.
9.1.2
PRE-APPROVED FINISHED GOODS. For GENZYME to approve a
lot of [**] as Security of Supply, SUPPLIER shall send
GENZYME a sample of such lot within [**] of receiving
GENZYME's Purchase Order requesting such Security of
Supply. Upon receipt of GENZYME's notification of
acceptance of a pre-shipment sample of [**] as
conforming to the applicable Specifications, the lot
from which preshipment sample was taken shall be
"Pre-Approved Finished Goods" for purposes of this
Section 9.1.
9.1.3 FORM OF
PACKAGING AND STORAGE CONDITIONS. The Security
of Supply of [**] shall be maintained in [**] unless
otherwise reasonably requested by GENZYME no less than
[**] in advance. The Security of Supply of [**] shall be
maintained in [**], unless otherwise reasonably
requested by GENZYME no less than [**] in advance.
9.1.4 ORDERING
SECURITY OF SUPPLY. GENZYME may, at any time,
request delivery of all or part of the Security of
Supply by placing a Purchase Order therefor ("SECURITY
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
-11-
<Page>
SUPPLY ORDER"). SUPPLIER shall deliver such Security of
Supply within[**] of receipt of such Security Supply
Order.
9.1.5
REPLENISHMENT OF SECURITY OF SUPPLY. If GENZYME takes
delivery of the entire inventory dedicated to Security
of Supply pursuant to this Section 9.1, SUPPLIER shall
use fully replenish the Security of Supply as follows:
[**]
9.2 BACK-UP
MANUFACTURING FACILITY: SUPPLIER has two manufacturing
locations for [**]. In the event the primary manufacturing
location
becomes or would become incapable of manufacturing Custom
Manufactured Products, SUPPLIER will use every available
opportunity to manufacture in the alternate location; provided
however, that manufacture in the Scotland facility must be
approved
by GENZYME in advance.
9.3 [**]
10. ACCEPTANCE: REJECTION:
PRE-SHIPMENT SAMPLES:
10.1
[**].
SUPPLIER will test a sample of each lot of [**] in accordance
with its Specifications prior to shipment of the full lot of
[**].
SUPPLIER will provide GENZYME with a pre-shipment sample of
[**]
within [**] of the Purchase Order date. Such pre-shipment
sample
shall be [**] derived from one (1) lot of [**]. Upon receipt of
such sample, GENZYME will have [**] to retest the sample in
accordance with the [**] Specifications, and will notify
SUPPLIER
within such time whether the sample complies with the [**]
Specifications. Within [**] of receipt of GENZYME's acceptance
of
such pre-shipment sample, SUPPLIER shall ship the full order of
[**]
from its New Zealand facility to its U.S. facility, and
SUPPLIER'S U.S. facility will then deliver such [**] to the
GENZYME
location specified on the Purchase Order on or by the
applicable
delivery date. GENZYME's failure to provide timely notice of
acceptance or rejection of the sample may result in a delay in
delivery, and if so, will relieve SUPPLIER of breach with
respect
to a Purchase Order delivery late.
10.1.1
If
GENZYME determines that the [**] sample does not
comply with the [**] Specifications, GENZYME shall
provide evidence to SUPPLIER supporting the claim. If
SUPPLIER agrees that the [**] sample does not comply
with the [**] Specifications, SUPPLIER shall provide a
sample from a replacement batch of [**] within [**]
after written notification of such rejection.
10.1.2 If SUPPLIER'S
assays confirm that the [**] samples are
in compliance with the Specifications, but GENZYME's
assays determine that the samples are not in compliance
with the Specifications, SUPPLIER and GENZYME will
investigate the discrepancy and attempt to reach a
reasonable settlement.
10.1.3 Prior to the
next-scheduled shipment of [**], SUPPLIER
will provide to GENZYME a Certificate of Analysis (COA)
with respect to such shipment to allow GENZYME to
determine the appropriate GENZYME location for the
shipment to be shipped.
10.2
[**] AS A
BIOSURGERY PRODUCT.
10.2.1 PRE-SHIPMENT
SAMPLES. Prior to delivering [**] as a
Biosurgery Product under a Purchase Order, SUPPLIER will
use
commercially reasonable efforts to provide GENZYME
with a pre-qualification sample of [**] meeting the
Specifications derived from at least one (1) lot of
[**].
10.2.2 INVENTORY. In
response to GENZYME's Purchase Order for
[**] as a Biosurgery Product, SUPPLIER will maintain an
inventory [**] equal to the amount set forth in such
Purchase Order, at no obligation to GENZYME, for [**]
from the date of delivery of the preshipment sample in
accordance with Section 10.2.1.
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
-12-
<Page>
10.2.3
ACCEPTANCE/REJECTION OF SAMPLE. If GENZYME rejects the
sample of [**] in such [**] period, then SUPPLIER will
provide a new sample of [**] from different lot; GENZYME
acknowledges that such rejection may affect the delivery
date of [**], notwithstanding any other provision
herein. If GENZYME does not notify SUPPLIER of
acceptance or rejection of the sample of [**] within
such time period, then SUPPLIER shall have no obligation
to fill the corresponding Purchase Order. If GENZYME
notifies SUPPLIER of acceptance of the sample within the
time period, then SUPPLIER shall ship the amount of [**]
set forth in the Purchase Order, at GENZYME's
instruction, either: (i) promptly in its entirety; or
(ii) in installments over a period not to exceed [**].
If such installments are instructed by GENZYME to be
delivered within [**] from notification of acceptance,
then the price for such [**] shall be as the price
existed on the date of the applicable Purchase Order;
and if such installments are instructed by GENZYME to be
delivered beyond [**] from notification of acceptance,
then the price for [**] shall be subject to change as
described in Section 5.6.
10.3
ALL
BIOSURGERY PRODUCTS.
10.3.1 SHORTAGES:
PATENT DEFECTS. Immediately upon receipt of a
Biosurgery Product, GENZYME shall inspect same, and
notify SUPPLIER of any claims for shortages, patent
defects or damages, and shall hold any such Biosurgery
Product pending receipt of SUPPLIER's written
instructions regarding disposition. The failure of
GENZYME to notify SUPPLIER within five (5) days after
receipt shall constitute confirmation that the
Biosurgery Product delivered was in the correct
quantity, and that there were no patent defects or
damages in the packaging containers. SUPPLIER will
notify GENZYME if the delivery reflects an overage in
excess of one hundred ten percent (110%) of the amount
requested in the Purchase Order within thirty (30) days
of the day of manufacture; and acceptance of such
overage will be at the sole discretion of GENZYME at the
original Purchase Order price.
10.3.2 COMPLIANCE WITH
THE SPECIFICATIONS. GENZYME shall have
thirty (30) days from the date of receipt of Biosurgery
Products to confirm compliance of such Biosurgery
Products with the Biosurgery Product Specifications
(latent defects). The failure of GENZYME to notify
SUPPLIER in writing that any Biosurgery Product was not
in compliance with the Biosurgery Product Specifications
shall constitute GENZYME's final acceptance of the
Biosurgery Product.
10.3.3 CURE. If GENZYME
rejects a Biosurgery Product as not
complying with the Biosurgery Product Specifications
subject to Section 8.1.3, then SUPPLIER will use
commercially reasonable efforts to deliver to GENZYME a
replacement lot of the Biosurgery Product. The
replacement lot( s) size will be the same size as the
rejected lot, unless otherwise agreed to by the parties,
and will be priced at the same unit price as the failed
lot. SUPPLIER will fully reimburse GENZYME for GENZYME's
out of pocket cost of any raw materials consumed in the
failed lot.
10.4
CUSTOM
MANUFACTURED PRODUCT ACCEPTANCE
10.4.1 RECEIPT AND
TESTING OF CUSTOM MANUFACTURED PRODUCT. All
Custom Manufactured Product shipped shall be accompanied
by quality control certificates of analysis (as set
forth in Section 11) signed by a duly authorized
official of SUPPLIER confirming that each batch of
Custom Manufactured Product covered by such certificate
meets the Specification's release requirements and shall
be deemed accepted by GENZYME unless GENZYME, acting
reasonably and in good faith, shall give written notice
of rejection (hereafter referred to as a "REJECTION
NOTICE") to SUPPLIER within sixty (60) days after
receipt of the Custom Manufactured Product by, on behalf
of, or for the account of GENZYME.
[**] = Portions of this exhibit have been
omitted pursuant to a confidential
treatment request. An unredacted version of
this exhibit has been filed
separately with the Commission.
-13-
<Page>
10.4.2 REJECTION
NOTICE. The Rejection Notice shall state in
reasonable detail (sufficient to enable) SUPPLIER to
identify the nature of the problem, the reason why the
Custom Manufactured Product is not acceptable. Any
Rejection Notice shall be accompanied by copies of all
written reports relating to tests, studies or
investigations
performed to that date by or for GENZYME
on the Custom Manufactured Product rejected. GENZYME
shall have the right but not the obligation, to return
the rejected Custom Manufactured Product to SUPPLIER at
SUPPLIER's cost, and title to and risk of loss
associated with the rejected Custom Manufactured Product
shall transfer to SUPPLIER upon receipt by SUPPLIER of
the rejected Custom Manufactured Product.
10.4.3 RETURN OF CUSTOM
MANUFACTURED PRODUCT. Upon receipt of
such Rejection Notice, SUPPLIER may require GENZYME to
return the
rejected Custom Manufactured Product or
samples thereof (at SUPPLIER's cost) to SUPPLIER for
further testing, in which event such Custom Manufactured
Product or samples thereof as the case may be, shall be
returned by GENZYME to SUPPLIER. Upon receipt of the
rejected Custom Manufactured Product title to and risk
of loss associated with the rejected Custom Manufactured
Product shall transfer to SUPPLIER. If it is later
determined that GENZYME was not justified in rejecting
the Custom Manufactured Product, GENZYME shall reimburse
SUPPLIER for the costs of the return, as well as any
other costs or expenses incurred by SUPPLIER as a result
of the rejection or return and retest and title to and
risk of
loss associated with such Custom Manufactured
Product shall transfer to GENZYME upon placement of the
Custom Manufactured Product on the designated carrier by
SUPPLIER.
10.4.4 DISPUTE
RESOLUTION. GENZYME's basis for rejection shall
be conclusive unless SUPPLIER notifies GENZYME, within
thirty-five (35) days of receipt of the Rejection Notice
that it
disagrees with such rejection. In the event of
GENZYME's receipt of such a notice by SUPPLIER,
representative samples of the Custom Manufactured
Product in question shall be submitted to a mutually
acceptable independent laboratory or consultant for
analysis or review, the costs of which shall ultimately
be paid by the party that is determined by the
independent laboratory or consultant to have been
incorrect in its determination of whether the Product
should be rejected. Should the fees associated with the
work conducted by the independent laboratory or
consultant be due upfront, each of GENZYME and SUPPLIER
shall each pay fifty percent (50%) of such upfront fees,
and the party that is determined by the independent
laboratory or consultant to have been incorrect in its
determination shall then reimburse the other party.
10.4.5 PAYMENT
OBLIGATIONS SUSPENDED FOR REJECTED CUSTOM
MANUFACTURED PRODUCT. If any order of Custom
Manufactured Products is rejected by GENZYME under
Section 10.4, GENZYME's duty to pay all amounts payable
to SUPPLIER in respect of the rejected Custom
Manufactured Product shall be suspended until such time
as it is determined by an independent laboratory or
consultant that the Custom Manufactured Products in
question should not have been rejected by GENZYME. If
only a portion of an order is rejecte
