Exhibit 10.3
CONFIDENTIAL MATERIALS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS
MANUFACTURING AND SUPPLY AGREEMENT
     This Manufacturing and Supply Agreement (this “Agreement”) is made as of
the date of the last Party to sign below (the “Effective Date”) by and among OSI
Pharmaceuticals, Inc., a Delaware corporation, with offices at Suite 110, 58
South Service Road, Melville, New York 11747 (“OSI”), and Davos Chemical
Corporation and its affiliates listed on Appendix A, a New Jersey corporation,
with offices at 600 East Crescent Avenue, Upper Saddle River NJ 07458 (the
“Distribution Agent”) and Dipharma SPA with offices at Via Bissone, 5, 20021
Baranzate, MI, Italy and its affiliates, subsidiaries and controlled companies
(the “Manufacturer”). OSI, Distribution Agent and Manufacturer are referred to
herein individually as a “Party” and, together, as the “Parties”.
     WHEREAS, OSI and its collaborator, Genentech, Inc. (“Genentech”), entered
into a Manufacturing and Supply Agreement as of June 4, 2004 (the “OSI/GNE
Manufacturing Agreement”), pursuant to which, among other things, OSI and
Genentech agreed to set the terms and conditions under which OSI shall provide
Finished Product (as hereinafter defined) to Genentech;
     WHEREAS, to satisfy its obligations under the OSI/GNE Manufacturing
Agreement, OSI desires to develop and commercialize the active pharmaceutical
ingredient, erlotinib hydrochloride (formerly OSI-774-01, the “Product”) and the
drug products manufactured from the Product (Tarceva® (erlotinib), the “Finished
Product”);
     WHEREAS, the Manufacturer desires to manufacture and supply Product to OSI
using ** (“470”) and ** (“380”), collectively the “Starting Materials”;
     WHEREAS, the Manufacturer desires to manufacture the Starting Materials for
the purpose of using such materials to manufacture Product for OSI and, if
requested by OSI, to manufacture Starting Materials for the sale of OSI or its
manufacturers for use in their manufacture of Product;
     WHEREAS, the Manufacturer is willing to manufacture and sell Product and,
if requested by OSI, Starting Materials in accordance with the requirements of
this Agreement to OSI through the Distribution Agent and OSI is willing to
purchase the same through the Distribution Agent; and
     WHEREAS, the Distribution Agent desires to purchase from the Manufacturer
and then sell to OSI Product, and to OSI and its manufacturers Starting
Materials, manufactured by the Manufacturer in accordance with the terms and
conditions of this Agreement.
     NOW THEREFORE, in consideration of the mutual covenants set forth herein,
the Parties agree as follows:
 

**   This portion has been redacted pursuant to a confidential treatment
request.

 

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     Section 1. Scope of Agreement.
     1.1 This Agreement shall apply to all purchases of Product and Starting
Materials during the Term (as defined in Section 12). In the event that any
purchase orders issued by OSI in connection with this Agreement (individually,
an “OSI Purchase Order” and, collectively, the “OSI Purchase Orders”) to the
Distribution Agent, as well as purchase orders issued by the Distribution Agent
in connection with this Agreement (individually, a “Distribution Agent Purchase
Order” and, collectively, the “Distribution Agent Purchase Orders”) to the
Manufacturer conflict with the terms and conditions of this Agreement, the
subject term or condition of this Agreement shall take precedence unless
specifically agreed to by the Parties in writing.
     1.2 OSI agrees to purchase a minimum of ** of its total Product
requirements for Finished Product to be sold in the United States from Dipharma,
except as such percentage may be reduced in accordance with this Agreement.
     1.3 This Agreement does not constitute a purchase order. Purchases under
this Agreement shall be made only with OSI Purchase Orders by OSI to the
Distribution Agent and with Distribution Agent Purchase Orders by the
Distribution Agent to the Manufacturer in accordance with Section 3.4.
     1.4 The Manufacturer agrees that all 380 supplied to OSI pursuant to this
Agreement shall be manufactured at its facilities located at Carronno Pertusella
Plant, Via Origgio, 23 Caronno Pertusella (Varese) Italy. The Manufacturer may
only change the site of the manufacture of 380 with the prior written consent of
OSI.
     1.5 The Manufacturer agrees that all 470 supplied to OSI pursuant to this
Agreement shall be manufactured at its facilities located at Baranzate Plant,
Via Bissone, 5, Baranzate (Milano) Italy. The Manufacturer may only change the
site(s) of the manufacture of 470 with the prior written consent of OSI.
     1.6 The Manufacturer agrees that all Product supplied to OSI pursuant to
this Agreement shall be manufactured at its facilities located at Mereto Di
Tomba Plant, Via XXIV Maggio, 40, Mereto, Di Tombo (Udine) Italy. The
Manufacturer may only change the site of the manufacture of the Product with the
prior written consent of OSI.
     Section 2. Manufacturing; Product and Starting Material Specifications.
     2.1 The Manufacturer shall manufacture Starting Materials and Product
supplied to OSI pursuant to this Agreement in accordance with (i) any applicable
current good manufacturing practices as defined in U.S. regulations and any
other equivalent guidelines or standards required by a governmental authority
having jurisdiction over an activity of a Party or over Product or Starting
Materials, including applicable International Conference on Harmonization
Guidelines (“cGMP”), (ii) the applicable specifications set forth in Exhibit A
(“Product Specifications”), Exhibit B (“470 Purchase
 

**   This portion has been redacted pursuant to a confidential treatment
request.

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Specifications”) and, if 380 is not provided by OSI, Exhibit C (the “380
Purchase Specifications”), (iii) the specifications, methods, processes and
procedures, including site of manufacture and all other requirements as detailed
in the OSI contract operations manuals (the “Contract Operations Manuals”),
which are hereby incorporated into this Agreement, and (iv) any other technical
or quality agreements that may be made between the Parties and updated by
agreement among the Parties from time to time.
     2.2 OSI and the Manufacturer will work to qualify the Manufacturer as a
supplier of 380 for the purpose of using 380 to manufacture Product of OSI. All
380 manufactured by Manufacturer shall be manufactured, handled, stored, and
delivered at Manufacturer’s risk and Manufacturer shall retain risk of loss and
title to the 380 until it is incorporated into Product released by OSI. If OSI
desires the Manufacturer to supply 380 to OSI or any of its other manufacturers
for the purpose of using 380 to manufacture Product, Manufacturer hereby agrees
to do the same upon additional written terms mutually agreed by the Parties and
the prices set forth in Exhibit D. Such additional written terms shall be set
forth in an amendment to this Agreement or in a separate agreement executed by
the Parties. Any additional costs required to qualify 380 at another
manufacturer will be the sole responsibility of OSI.
     2.3 The Manufacturer shall manufacture 470 for the purpose of using such
470 to manufacture Product for OSI hereunder. All 470 manufactured by
Manufacturer shall be manufactured, handled, stored, and delivered at
Manufacturer’s risk and Manufacturer shall retain risk of loss and title to the
380 until it is incorporated into Product released by OSI. If OSI desires the
Manufacturer to supply 470 to OSI or any of its other manufacturers for the
purpose of using 470 to manufacture Product, Manufacturer hereby agrees to do
the same upon additional written terms mutually agreed by the Parties. Such
additional written terms shall be set forth in a written amendment to this
Agreement or in a separate written agreement executed by the Parties and the
prices set forth in Exhibit D. Any additional costs required to qualify 470 at
another manufacturer will be the sole responsibility of OSI.
     2.4 In addition to the foregoing, no change in the Product Specifications,
470 Purchase Specifications, 380 Purchase Specifications, the Contract
Operations Manuals or to methods, processes and procedures used to manufacture
the Product, 470 or 380 may be made unless (a) OSI and the Manufacturer agree in
writing thereto or (b) such change is required by (i) any regulatory agency
which has jurisdiction over OSI, the Manufacturer and/or Finished Product or
(ii) by an amendment to the U.S. Pharmacopoeia. No such change may be
implemented by Manufacturer until OSI has provided written approval to the
Manufacturer as part of OSI’s change control process and such change is agreed
to by the Manufacturer in writing.
     2.5 With each shipment of Starting Materials or Product (as set forth in
Section 4), the Manufacturer shall deliver to OSI and, if directed by OSI, to a
third party designated by OSI (each an “OSI Designee”, and collectively, the
“OSI Designees”), a final Certificate of Analysis (which shall include the
results of all required external testing) from the Manufacturer and all other
documentation specified in the relevant Contract Operations Manual.

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     2.6 With respect to each shipment of Product, the earliest Date of
Manufacture for the Product in such shipment shall not be greater than ** prior
to the date such shipment is delivered to OSI or an OSI Designee unless
otherwise agreed upon by the Parties by written consent. For purposes hereof,
the “Date of Manufacture” shall mean the date that final crystallized product is
discharged from the dryer. The Manufacturer shall be required to accept a return
of, or reimburse the Distribution Agent for, or issue a credit to the
Distribution Agent, with respect to any portion of a shipment that turns out to
have a Date of Manufacture greater than ** prior to the date of delivery of such
shipment (i.e., “short-dated”) without prior written consent of OSI. The
Distribution Agent shall be required to accept a return of, or reimburse OSI
for, or issue a credit to OSI, with respect to any portion of a shipment that
turns out to have been short-dated without prior written consent of OSI.
     Section 3. Forecasting Product Requirements. In order to assist the
Manufacturer in planning the production runs for Product, OSI shall use its
commercially reasonable efforts to provide the Manufacturer with forecasted
Product requirements in a timely manner. OSI shall deliver the first “Long Term
Forecast” and “Detailed Product Forecast” (both as hereinafter defined) to the
Manufacturer following execution of this Agreement. OSI and the Manufacturer
shall meet on an annual basis within two months prior to each calendar year to
discuss the manufacturing requirements and pricing for each such calendar year
and the parties’ strategy for process improvements.
     3.1 Long-Term Forecast for Required Product. The first Long Term Forecast
shall set forth OSI’s estimate of the required quantities of Product for each of
the subsequent ** (the “Long Term Forecast”). Following such first Long Term
Forecast, before the closing of each calendar year, OSI shall provide the
Manufacturer with a non-binding rolling Long Term Forecast setting forth OSI’s
estimate of the required quantities of Product for each of the following **.
     3.2 Detailed Product Forecast for Required Product. The first Detailed
Product Forecast shall set forth OSI’s requirements for the Product for each
calendar quarter of the succeeding ** period (the “Detailed Product Forecast”).
Following such first Detailed Product Forecast, OSI shall update the Detailed
Product Forecast on or before the 1st day of each calendar quarter so that each
calendar quarter, the Manufacturer shall have been provided with a rolling
Detailed Product Forecast for each calendar quarter during the ** period
commencing on the first day of the next calendar quarter following the date on
which such Detailed Forecast is submitted. The Detailed Product Forecast shall
be firm, subject to the permissible variances set forth in Section 3.3. If OSI
fails to provide any updated Detailed Product Forecast in accordance with this
Section 3, the Detailed Product Forecast last provided by OSI shall be deemed to
be OSI’s Detailed Product Forecast for the next succeeding twelve (12) month
period.
     3.3 Detailed Product Forecast Variances. Each updated Detailed Product
Forecast may modify the amounts estimated in the previous Detailed Forecast in
accordance with the following limitations:
 

**   This portion has been redacted pursuant to a confidential treatment
request.

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          (a) For the first calendar quarter covered by such updated Detailed
Product Forecast, no change may be made unless the Manufacturer consents.
          (b) For the second calendar quarter covered by such updated Detailed
Product Forecast, no change in excess of a ** volume increase or decrease from
the prior Detailed Product Forecast may be made unless the Manufacturer
consents.
          (c) For the third calendar quarter covered by such updated Detailed
Product Forecast, no change in excess of an ** volume increase or decrease from
the prior Detailed Forecast may be made unless the Manufacturer consents.
          (d) For the fourth calendar quarter covered by such updated Detailed
Product Forecast, no change in excess of a ** volume increase or decrease from
the prior Detailed Product Forecast may be made unless the Manufacturer
consents.
          (e) If OSI desires to exceed the limitations set forth in this
Section 3.3 then the Manufacturer shall make all reasonable efforts to
accommodate such changes, but shall have no obligation to do more.
     3.4 Ability to Supply.
     The Parties acknowledge that the yield of Product manufactured by the
Manufacturer may vary slightly due to technical reasons and up to ** of any
excess or shortage of the quantity set forth in the applicable Distribution
Agent Purchase Order and applicable OSI Purchase Order (the “Maximum Variance”)
and shall be accepted as due performance of the Manufacturer by the Distribution
Agent and OSI.
     The Manufacturer shall notify the Distribution Agent and OSI in writing of
any excess or shortage of Product within or in excess of the Maximum Variance
within five (5) Business Days after the Product is manufactured (“Yield
Notice”). OSI shall purchase from the Distribution Agent and the Distribution
Agent shall purchase from the Manufacturer any excess Product within the Maximum
Variance, and this amount may, in the sole discretion of OSI, be deducted from
the forecasted quantity for the following quarter. OSI shall not be required to
purchase from the Distribution Agent and the Distribution Agent shall not be
required to purchase from the Manufacturer any amounts of Product in excess of
the Maximum Variance from the applicable Purchase Order. In the event of a
shortage of Product to be supplied by the Manufacturer within the Maximum
Variance, the Manufacturer agrees to use its best efforts to remedy such
shortage during the subsequent quarter, if requested by OSI in its sole
discretion.
     In addition, in the event that such shortage arises from the limited supply
of Starting Materials and/or other raw materials, the Manufacturer shall use any
such capacity and available supplies to manufacture Product.
 

**   This portion has been redacted pursuant to a confidential treatment
request.

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     In connection with any shortage in excess of the Maximum Variance, OSI may
cancel the quantity of the Product listed in the Distribution Agent Purchase
Order and corresponding OSI Purchase Order that is unfulfilled or anticipated to
be unfulfilled by providing written notice of such cancellation to the
Distribution Agent and providing a copy of such notice to the Manufacturer. In
such case, OSI may obtain such cancelled quantity of Product from any other
manufacturer or intermediary, with such order being subject to any minimum order
requirements or other reasonable requirements or constraints whether due to
manufacturing scale or otherwise of such other manufacturer or intermediary.
Following receipt of a Yield Notice, OSI shall be available to discuss with
Manufacturer the Manufacturer’s ability to remedy any shortage in excess of the
Maximum Variance. Thereafter, if OSI decides in its sole discretion to obtain
such cancelled quantity of Product from another manufacturer, Manufacturer shall
be liable to OSI for any incremental costs paid by OSI to obtain such cancelled
quantity of Product from another manufacturer, provided that Manufacturer shall
not be liable to OSI for any such incremental costs if OSI cancels such
unfulfilled quantity of Product within sixty (60) days after receipt of a Yield
Notice in order to provide Manufacturer with an opportunity to cure. OSI shall
have no obligation to delay any cancellation during such cure-period. Any
amounts of Product purchased from third party manufacturers pursuant to this
Section 3 shall be deducted from OSI’s purchasing commitment of the Product in
accordance with the Detailed Product Forecast and shall apply against OSI’s
purchase requirements of Product set forth in Section 1.2. For the purposes of
this Agreement, “Business Day” means a day that is not a Saturday, Sunday or a
day on which banks in New York, New York are authorized to remain closed.
     Section 4. Ordering and Delivery of Product.
     4.1 OSI Purchase Orders. OSI shall provide the Distribution Agent with OSI
Purchase Orders (i) detailing its firm orders for Product based upon the
forecasted quantities and in accordance with Section 3, and (ii) specifying the
dates the Product must be made available by the Manufacturer for shipment.
Product shall be delivered by the Manufacturer EXW (Incoterms 2000). For the EXW
delivery, Product must be made available for shipment during normal business
hours on normal Business Days at the Manufacturer’s qualified facility, unless
another facility is agreed upon by the Parties.
     OSI Purchase Orders will be provided to the Distribution Agent six
(6) months in advance of required date when Product must be made available for
shipment. An OSI Purchase Order shall be deemed placed with the Distribution
Agent on the date such OSI Purchase Order is delivered to the Distribution Agent
pursuant to Section 13 hereof (the “Order Date”). Within five (5) Business Days
after the Order Date, the Distribution Agent shall send OSI written notice to
indicate the Distribution Agent’s receipt of the OSI Purchase Order.
     4.2 Distribution Agent Purchase Orders. The Distribution Agent shall
provide the Manufacturer with Distribution Agent Purchase Orders (i) detailing
its firm orders for Product and (ii) specifying the dates Product must be made
available by the Manufacturer for shipment. Such shipping terms and dates
Product must be made available for shipment shall be consistent with those set
forth in the corresponding OSI Purchase Order.

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     The Distribution Agent shall send the Manufacturer the Distribution Agent
Purchase Orders within five (5) Business Days after the Order Date. A
Distribution Agent Purchase Order shall be deemed placed with the Manufacturer
on the date the Distribution Agent Purchase Order is delivered to the
Manufacturer pursuant to Section 13 hereof (the “Distribution Agent’s Order
Date”).
     4.3 Manufacturer Delivery.
     Within five (5) Business Days after the Distribution Agent’s Order Date,
the Manufacturer shall send the Distribution Agent written notice to indicate
the Manufacturer’s receipt of the Distribution Agent Purchase Order. In the
event that the Manufacturer reasonably believes that the Distribution Agent
Purchase Order contains terms inconsistent with the provisions of this
Agreement, the Manufacturer shall inform both Distribution Agent and OSI of such
terms within five (5) Business Days after the Distribution Agent Order Date, and
thereafter Parties shall negotiate in good faith as to how such terms should be
treated.
     In the event that the Distribution Agent provides Distribution Purchase
Orders requiring that Product be made available for shipment within ** of the
Order Date, subject to Manufacturer’s supply obligations in accordance with
Section 3.3(b), the Manufacturer will make reasonable efforts to accommodate
such changes.
     During the Term, the Manufacturer will manufacture and have the Product
delivered or made available for shipment, as the case may be, pursuant to
Distribution Agent Purchase Orders and the terms of this Agreement. Manufacturer
shall prepare and package Product for shipment or delivery as set forth in the
Contract Operations Manual; provided, however, that such packaging shall meet
the customs and regulatory requirements of all applicable governmental
authorities having jurisdiction over such packaging. In addition, the
Manufacturer shall (i) provide to each of OSI and the Distribution Agent the
bill of lading, packing list and Certificate of Analysis for the prepared
shipment at least one (1) Business Day prior to shipment, and (ii) include such
documents with the prepared shipment
     The Manufacturer shall immediately notify the Distribution Agent and OSI of
any anticipated or actual delays in delivering the Product or making the Product
available for shipment on the required dates specified in the Distribution Agent
Purchase Order. If the Manufacturer fails to deliver or make Product available
for shipment in the quantities specified in a Distribution Agent Purchase Order
within five (5) Business Days after the date specified in a Distribution Agent
Purchase Order, then OSI shall have the right to cancel the amount of the OSI
Purchase Order which is unfulfilled by providing written notice of such
cancellation to the Distribution Agent and providing a copy of such notice to
the Manufacturer. Within two (2) Business Days after the delivery of any such
notice of cancellation to the Distribution Agent, the Distribution Agent shall
cancel the amount of the Distribution Agent Purchase Order which is unfulfilled
by providing written notice of such cancellation to the Manufacturer and
providing a copy of such notice to OSI. OSI
 

**   This portion has been redacted pursuant to a confidential treatment
request.

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will have the right to then obtain the unsupplied quantity of Product from any
other manufacturer or intermediary without liability to the Manufacturer or
Distribution Agent, with such order being subject to any minimum order
requirements or other reasonable requirements or constraints whether due to
manufacturing scale or otherwise of such other manufacturer or intermediary. OSI
shall be available to discuss with Manufacturer the Manufacturer’s ability to
remedy such failure to deliver all of the requested Product or make all of the
requested Product available for shipment at the specified date. Thereafter, if
OSI decides in its sole discretion to obtain such unsupplied quantity of Product
from any other manufacturer or intermediary, Manufacturer shall be liable to OSI
for any incremental costs paid by OSI to obtain such cancelled quantity of
Product from another manufacturer, provided that Manufacturer shall not be
liable to OSI for any such incremental costs if OSI cancels such unfulfilled
quantity of Product within sixty (60) days after the date specified in the
Distribution Agent Purchase Order, when the Product was not delivered or made
available for shipment, in order to provide Manufacturer with an opportunity to
cure. OSI shall have no obligation to delay any cancellation during such
cure-period. Any amounts of Product purchased from third party manufacturers
pursuant to this Section shall be deducted from OSI’s purchasing commitment of
the Product in accordance with the Detailed Product Forecast and shall apply
against OSI’s purchasing requirements of Product set forth in Section 1.2.
     The Manufacturer shall be responsible for and agrees to assume any excess
shipping charges related to express shipments, partial shipments, or both, as
necessary to meet any required delivery date.
     Section 5. Pricing; Payment; Inventory
     5.1 Delivery of 380 and/or 470 by OSI to Manufacturer. This Section 5.1
shall only apply to the 380 and/or 470 provided to the Manufacturer by OSI. OSI
shall, at the written request of the Manufacturer, provide the Manufacturer with
380 and/or 470 in such a timely manner and in such amounts based on OSI’s
forecasts so as to enable the Manufacturer to manufacture Product hereunder.
Such requests shall be made by Manufacturer six (6) months in advance of them
being required by the Manufacturer. The Manufacturer will, if reasonably
requested by OSI in writing, agree to hold an inventory of 380 and/or 470 to
enable manufacture of up to nine (9) months forecasted supply of Product. Such
380 and/or 470 will be stored by Manufacturer at no cost to OSI under
appropriate conditions consistent with the requirements of cGMP, the Contract
Operations Manual and other related documentation as may be provided to
Manufacturer by OSI.
     When a shipment of 380 and/or 470 is ready for delivery, OSI shall notify
the Manufacturer of the expected delivery dates (including details of
destination, date and time) to enable delivery and receipt to be coordinated.
Manufacturer shall provide written confirmation of receipt of 380 and/or 470 to
OSI within five (5) Business Days after such receipt.
     5.2 Purchase of Product by the Distribution Agent from the Manufacturer.
Pricing to the Distribution Agent from the Manufacturer for both development
quantities

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and commercial quantities of Product is as set forth in Exhibit D (“Pricing”).
These prices shall remain fixed from the Effective Date until December 31, 2006.
Thereafter, the prices may be changed to reflect the following: (A) increased
raw material prices and other increased direct costs actually incurred and paid
by the Manufacturer in arm’s length transactions (e.g., power, heating,
transportation), in each case with any such increase not to exceed **, provided
that the Manufacturer shall provide the Distribution Agent a minimum of ninety
(90) days prior written notice of any proposed price increase and documentation
to the extent and in such detail as to reasonably justify any price increase at
the time of written notification; and (B) decreased cost in the manufacture of
Starting Materials and/or Product due to any process improvements agreed upon by
the parties. In addition, after December 31, 2006, the prices may be changed to
reflect currency fluctuations calculated in accordance with Exhibit D, item 3.
     The Manufacturer shall issue its invoice to the Distribution Agent before
the time of shipment. Each invoice shall set forth, in U.S. Dollars, the
applicable price for the shipment properly determined in accordance with the
provisions of this Agreement. For the avoidance of doubt, payment by the
Distribution Agent will be made in U.S. Dollars based on the actual quantity
delivered, as set forth in Exhibit D (commissions included).
     5.3 Purchase of Product by OSI from the Distribution Agent. Pricing for
both development quantities and commercial quantities of Product purchased by
OSI from Distribution Agent is as set forth in Exhibit D. These prices shall
remain fixed from the Effective Date until December 31, 2005. Thereafter, the
prices may be changed to reflect the following: (A) increased raw material
prices and other increased direct costs actually incurred and paid by the
Manufacturer in arm’s length transactions (e.g., power, heating,
transportation), in each case with any such increase not to exceed **, provided
that the Distribution Agent shall provide OSI a minimum of ninety (90) days
prior written notice of any proposed price increase and documentation (from
Manufacturing Agent and Distribution Agent) to the extent and in such detail as
to reasonably justify any price increase at the time of written notification;
and (B) decreased cost in the manufacture of Product due to any process
improvements agreed upon by the parties. The costs of any such process
improvements will be equally shared by the Manufacturer and OSI. In addition,
after December 31, 2006, the prices may be changed to reflect currency
fluctuations calculated in accordance with Exhibit D, item 3.
     The Distribution Agent shall issue its invoice to OSI at the time of
shipment. Each invoice shall set forth, in U.S. Dollars, the applicable price
for the shipment properly determined in accordance with the provisions of this
Agreement. For the avoidance of doubt, payment by OSI will be made in U.S.
Dollars based on the actual quantity delivered, as set forth in Exhibit D
(commissions included). The payment terms shall be net 30 days.
 

**   This portion has been redacted pursuant to a confidential treatment
request.

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     5.4 Inventory.
     Manufacturer shall provide inventory reports to OSI on a monthly basis.
Such reports shall include the amounts of any inventory of Product, 380 and 470
held by Manufacturer. OSI, or its designee, shall have the right to conduct an
inspection of any physical inventory at Manufacturer’s facility (at reasonable
times, upon reasonable advance notice and in the company of a Manufacturer
representative), provided that OSI shall impose on such designee and procure
such designee to observe the confidentiality obligations set forth in Section 8.
     Section 6. Inspection of Starting Material Shipments.
     6.1 This Section 6.1 shall only apply to the 380 and/or 470 provided to the
Manufacturer by OSI which, by mutual agreement of the Manufacturer and OSI, may
be supplied to the Manufacturer by OSI. The Manufacturer shall inspect the
Starting Material delivered by OSI hereunder for obvious defect and/or shortage
immediately upon receipt and shall provide OSI with written notice of any such
obvious defect and/or shortage, within thirty (30) days after receipt by the
designated facility.
     6.2 Promptly after discovery, but in any event within forty-five (45) days
after delivery of any such Starting Material, the Manufacturer shall provide OSI
with written notice of any adulteration of the Starting Material, non-obvious or
hidden defect, or failure to meet the specifications of the Starting Material as
set forth herein.
     6.3 Obvious defect, shortage, adulteration of Starting Materials,
non-obvious or hidden defect and failure to meet the Starting Material
specifications set forth herein as determined in accordance with this Section 6
shall hereinafter be referred to as “Starting Material Damage”. The Manufacturer
agrees to provide OSI with documentation of Starting Material Damage to confirm
the existence thereof. If both Parties agree that the shipment, or any part
thereof, sustained Starting Material Damage, then OSI shall deliver replacement
Starting Material to the Manufacturer as soon as reasonably practicable
thereafter. The cost of such replacement shall be borne by OSI provided that
such Starting Materials were, during their time at the Manufacturer, stored in
accordance with cGMP and the conditions recommended by OSI and provided that the
Starting Material Damage was not otherwise caused by the negligence or willful
misconduct of Manufacturer.
     6.4 If the Manufacturer, or OSI disagree as to the existence of Starting
Material Damage, they will then submit representative samples of the product in
question to a mutually acceptable independent testing lab and the results of
said lab shall be binding on the Parties. The costs associated with such
submission shall be born by the Party against which the lab decided.
     6.5 Notwithstanding any other provisions of this Agreement, the
Manufacturer agrees, if so requested by OSI, to return to OSI or to the Starting
Material manufacturer, at the direction and expense of OSI, any Starting
Material provided by OSI to

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Manufacturer that sustained Starting Material Damage or otherwise to dispose of
such Starting Material, at the direction and expense of OSI.
     6.6 OSI shall be responsible for all discussions with the Starting Material
manufacturer under this Section 6, and Manufacturer agrees that it shall not
contact any Starting Material manufacturers in connection with the
Manufacturer’s obligations under this Agreement without the written consent of
OSI.
     Section 7. Inspection of Shipments and Facilities. OSI or an OSI Designee,
if directed by OSI, shall inspect all Product delivered to OSI hereunder for
obvious defect and/or shortage immediately upon receipt by OSI. OSI shall
provide the Distribution Agent, with a copy to the Manufacturer, with written
notice of any such obvious defect and/or shortage, within thirty (30) days after
receipt by OSI or an OSI Designee. Within forty-five (45) days after receipt by
OSI or an OSI Designee, OSI shall notify the Manufacturer in writing of any such
Product that does not conform with applicable Specifications. Thereafter,
promptly after discovery, OSI shall notify the Manufacturer in writing of any
non-obvious or hidden defect and/or failure to meet applicable Specifications in
any Product. Obvious defect, shortage, adulteration of Product, non-obvious or
hidden defect and failure to meet applicable Specifications shall hereinafter be
collectively referred to as “Product Damage”.
     OSI agrees to provide the Manufacturer’s quality control department with
documentation of Product Damage to confirm the existence thereof. If all Parties
reasonably agree that the shipment, or any part thereof, sustained or were
subject to Product Damage, then the Manufacturer and/or Distribution Agent
shall, at OSI’s option either: (i) deliver to OSI replacement Product for the
shipment, or any part thereof, that was subject to Product Damage, or, if
directed by OSI, to an OSI Designee, as soon as reasonably practicable
thereafter (but in any event, within ninety (90) days after the official
notification by OSI of such Product Damage), or (ii) refund to OSI (by cash or
credit, at OSI’s discretion) the purchase price paid and other costs and
expenses incurred by OSI with respect to the shipment of Product, or any part
thereof, that was subject to Product Damage.
     If OSI and the Manufacturer disagree as to the existence of Product Damage,
they will make such determination by submitting representative samples of the
shipment to a mutually acceptable independent testing lab and the results of
said lab shall be binding on the Parties. The costs associated with such
submission shall be born by the Party against which the lab decided. If the
Product submitted to the lab is determined by the lab to have sustained or
contain Product Damage, then the Parties shall be deemed to have agreed as to
the presence of such Product Damage.
     Notwithstanding any other provisions of this Agreement, OSI agrees to
return to the Manufacturer, at the Manufacturer’s expense, any Product that
sustained Product Damage, as agreed by the Parties or decided by the independent
testing lab or otherwise, to dispose of such Product, at the Manufacturer’s
expense, under the joint direction of OSI and the Manufacturer.

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     Section 8. Confidentiality.
     8.1 During the Term, it may be necessary for OSI, the Manufacturer, the
Distribution Agent, OSI Designees and the Starting Material manufacturers to
disclose certain confidential and proprietary information and data to each other
relating to their respective products, including active pharmaceutical
ingredients, Product, Starting Materials, and Finished Product and businesses,
including, but not limited to financial and other business information, product
samples, formulas, manufacturing processes, specifications, drawings, schematics
and other technical, customer and product development plans, forecasts,
strategies and other data. Except as otherwise specifically provided herein, all
such information disclosed by such Party (in such capacity, the “Disclosing
Party”) to another Party (in such capacity, the “Receiving Party”) shall
constitute the “Proprietary Information.”
     8.2 The Disclosing Party shall disclose and supply its Proprietary
Information to the Receiving Party that is necessary for the Receiving Party to
perform its obligations under this Agreement.
     8.3 In consideration of the Disclosing Party’s disclosure and supply of its
Proprietary Information, each Party, as a potential Receiving Party, agrees
that, for a period of ten (10) years from the date of such disclosure, it:
(a) shall use the Disclosing Party’s Proprietary Information exclusively for the
purpose of carrying out the Receiving Party’s obligations under this Agreement;
and (b) shall not disclose, without the express written consent of the
Disclosing Party, any Proprietary Information, including this Agreement, to any
person other than to those employees or agents of the Receiving Party
(“Representatives”) who will be directly involved in fulfilling the Receiving
Party’s obligations hereunder; provided that such Representatives are bound by a
written obligations of confidentiality no less onerous than the terms of this
Section 8. Notwithstanding the foregoing, OSI may disclose Proprietary
Information to its collaborators, Genentech and F. Hoffman La-Roche Ltd.
(“Roche”) (collectively the “Collaborators”) for the global co-development of
the Product and commercialization of the Finished Product provided that such
Collaborators are bound by a written obligations of confidentiality no less
onerous than the terms of this Section 8.
     8.4 Each Party, as a potential Receiving Party, agrees to advise those of
its Representatives who receive Proprietary Information that such information
(a) is proprietary and confidential to the Disclosing Party and (b) shall not be
used or disclosed to anyone except as authorized herein. Each Party further
agrees to take such reasonable precautions as it normally takes with its own
confidential and proprietary information to prevent unauthorized disclosure or
use of such Proprietary Information by it or its’ Representatives or
Collaborators.
     8.5 In the event that the Receiving Party becomes compelled by law, rule or
regulation to disclose this Agreement or any Proprietary Information, including
with respect to filings with the U.S. Securities and Exchange Commission or as
required by a regulatory agency, it will provide the Disclosing Party with
notice as soon as possible,

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and will use reasonable efforts to protect the confidential treatment of such
Proprietary Information.
     8.6 Notwithstanding any of the foregoing, the term “Proprietary
Information” and the obligations of confidentiality and use associated therewith
shall not apply to the following information: (a) information which, at the time
of the Disclosing Party’s disclosure to the Receiving Party, is in the public
domain; (b) information which, after the Disclosing Party’s disclosure to the
Receiving Party, enters the public domain, except where such entry is the result
of the Receiving Party’s breach of this Agreement or otherwise is the result of
any unauthorized disclosure by any of its employees; (c) information which,
prior to the Disclosing Party’s disclosure to the Receiving Party, was already
in the Receiving Party’s possession; or (d) information which, subsequent to the
Disclosing Party’s disclosure to the Receiving Party, is obtained by the
Receiving Party from a third party which is lawfully in possession of such
information and not subject to a contractual or legal obligation to keep such
Proprietary Information confidential.
     8.7 Upon termination of this Agreement, the Receiving Party shall promptly
return to the Disclosing Party the originals and all copies of any Proprietary
Information then in the Receiving Party’s possession. Notwithstanding the
foregoing, Receiving Party may retain one copy of such Proprietary Information
solely for legal archival or regulatory purposes, provided that such retained
Proprietary Information shall continue to be governed by this Section 8.
     8.8 Each Party understands and acknowledges that, due to the unique nature
of each Party’s Proprietary Information, any unauthorized disclosure of any
portion of Proprietary Information may cause irreparable injury to the
Disclosing Party and that no adequate or complete remedy may be available to the
Disclosing Party to compensate for such injury. Accordingly, each Party hereby
acknowledges that the Disclosing Party shall be entitled to injunctive relief in
the event of such unauthorized disclosure by the Receiving Party or any of its
employees in addition to whatever remedies it might have at law. In addition,
the Receiving Party shall indemnify and hold harmless the Disclosing Party from
any loss or harm, including, without limitation, reasonable attorney’s fees and
costs, fees and expenses incurred in the enforcement of the Disclosing Party’s
rights under this Section 8, that are the result of any breach of this Section 8
or the unauthorized use or release of any such Proprietary Information. The
Receiving Party will notify the Disclosing Party in writing immediately upon the
occurrence of any such unauthorized release or other breach of which it becomes
aware.
     Section 9. Quality of Starting Materials and Product; Regulatory Matters;
Auditing Rights; Recordkeeping; Representations and Warranties.
     9.1 The Manufacturer hereby represents, warrants and covenants that:
          (a) at all times during the Term, the Manufacturer’s facilities shall
remain in compliance with, Product and Starting Materials shall be manufactured
and delivered in compliance with (i) applicable provisions of the Federal Food,
Drug and Cosmetic Act, as amended from time to time (the “Act”); (ii) cGMP and
the Contract

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Operations Manuals; (iii) other applicable rules, regulations, and guidance
promulgated under the Act relating to the manufacture of pharmaceutical
products, including, without limitation, those rules, regulations, and guidance
documents applicable to the manufacture of bulk active pharmaceutical
ingredients; (iv) the Product Specifications (in the case of the Product);
(v) the 470 Purchase Specifications (in the case of 470); and (vi) the 380
Purchase Specifications (in the case of 380).
          (b) it shall use its commercially reasonable best efforts to
(i) respond fully and accurately to all inquiries directed to it by the U.S.
Food and Drug Administration and any relevant equivalent U.S. or foreign
regulatory or governmental authorities (the “FDA”) FDA (and it shall notify OSI
of same), (ii) assist OSI in responding to inquiries directed to OSI by the FDA,
and (iii) provide the FDA with such information and data as is requested by the
FDA with respect to the manufacture, use, route of synthesis and testing of
Product and the Starting Materials.
          (c) Manufacturer’s manufacturing facilities are in compliance with the
cGMP and will continue to be in compliance.
          (d) the Manufacturer’s process for manufacturing Product and the
Starting Materials is in conformity with the then current validated
manufacturing process and its conditions at the time the applicable Distribution
Agent Purchase Order is issued.
          (e) it shall comply with all federal, state and local laws, statutes,
rules, regulations and guidelines of any applicable jurisdiction in effect on
the Effective Date or thereafter throughout the Term (“Laws”) applicable to
Manufacturer’s activities and obligations hereunder, including the
manufacturing, handling, storage and delivery of Product and Starting Materials.
          (f) it has or will timely obtain, and will maintain and comply with at
all relevant times throughout the Term, all applicable federal, state and local
permits, licenses, registrations and other governmental authorizations
reasonably required by Law or advisable under Law for Manufacturer to perform
its obligations under this Agreement.
          (g) it shall not manufacture, for itself or any third party, any
hazardous or extremely potent compound or composition of matter which may put at
risk the Manufacturer’s ability to satisfy its obligations to manufacture
Product or Starting Materials.
          (h) The Product and Starting Materials delivered pursuant to this
Agreement shall be delivered to OSI free and clear of any liens or encumbrances
of any kind that arise from any action of the Manufacturer or any of its
employees or agents.
     9.2 Manufacturer agrees to provide to OSI such information and assistance
relating to the manufacture of the Product or Starting Materials as OSI may
reasonably require for purposes of applying for and maintaining all regulatory
approvals for the Product or Starting Materials including but not limited to,
providing OSI with all reports, authorizations, certificates, methodologies, and
other documentation in the possession or

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under the control of Manufacturer relating to the manufacture of the Product (or
any component thereof, including Starting Materials) except for those disclosed
to Manufacturer by a third party under obligations of confidentiality and
non-use.
     9.3 The Manufacturer recognizes and agrees that FDA may elect to inspect
its facilities. The Manufacturer agrees to notify OSI of any scheduled or
unscheduled inspection by FDA and agrees to meet jointly with OSI and Genentech
as soon as practicable, but in any event prior to the inspection if possible, to
discuss an appropriate strategy for the conduct of such inspection. The
Manufacturer agrees to allow OSI to be present at any such inspection by the
FDA. In addition, the Manufacturer agrees that Genentech may send
representatives to the facility being inspected by the FDA to participate in
such FDA inspection to the extent OSI is participating. If OSI does not
participate in such inspection, Genentech may participate as agreed upon between
OSI and Genentech. The Manufacturer shall provide OSI and Genentech with a
reasonable opportunity to review, comment upon and approve any information
Manufacturer intends to disclose to FDA related to the Finished Product, Product
or Starting Materials in connection with such inspection. The Manufacturer
agrees to remedy any deficiencies noted by FDA as promptly as possible at the
Manufacturer’s expense.
     The Manufacturer shall allow OSI, and the OSI Designees and Collaborators
to audit the Manufacturer’s facilities and records (at reasonable times, upon
reasonable advance notice and in the company of a Manufacturer representative)
to the extent OSI deems reasonably necessary to enable OSI to verify compliance
by the Manufacturer with its obligations under this Agreement and to verify
compliance with any statutory or regulatory requirements to which it or OSI are
subject, or which are otherwise applicable to the manufacture of Product or
Starting Materials, provided that OSI shall impose on such OSI Designees or
Collaborators and procure such OSI Designees or Collaborators to observe the
confidentiality obligations of the Receiving Party provided for herein.
     If as a result of any such inspection provided for herein, OSI concludes
that the Manufacturer is not in compliance with any of the foregoing obligations
or requirements, it shall so notify the Manufacturer in writing, specifying such
areas of noncompliance in reasonable detail. If the Manufacturer agrees with
OSI, it shall use its best endeavors to remedy the problems identified as soon
as reasonably practicable. If, on the other hand, OSI and the Manufacturer
disagree with respect to the compliance matters referred to in this Section, the
Parties shall retain a mutually acceptable outside expert to conduct inspections
of the relevant records and facilities. The determination of such expert as to
compliance with any applicable obligations or requirements and the actions
necessary to correct any noncompliance with respect thereto shall be final and
binding unless otherwise agreed in writing by the Parties. The fees and expenses
of such expert shall be borne by the Party against which the expert decides.
     9.4 The Distribution Agent shall allow OSI, its OSI Designees and
Collaborators to audit the Distribution Agent’s facilities and records (at
reasonable times, upon reasonable advance notice and in the company of a
Distribution Agent representative) to the extent OSI deems reasonably necessary
to enable OSI to verify compliance by the Distribution Agent with its
obligations under this Agreement and to

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verify compliance with any statutory or regulatory requirements relating thereto
or to which OSI is otherwise subject that are applicable to the handling and
distribution of Product or Starting Materials, provided that such OSI Designees
and Collaborators are bound by written confidentiality obligations no less
onerous than those provided for herein.
     If as a result of any such inspection provided for herein, OSI concludes
that the Distribution Agent is not in compliance with any of the foregoing
obligations or requirements, it shall so notify the Distribution Agent in
writing, specifying such areas of noncompliance in reasonable detail. If the
Distribution Agent agrees with OSI, it shall use its best endeavors to remedy
the problems identified as soon as reasonably practicable. If, on the other
hand, OSI and the Distribution Agent disagree with respect to the compliance
matters referred to in this Section, the Parties shall retain a mutually
acceptable outside expert to conduct inspections of the relevant records and
facilities. The determination of such expert as to compliance with any
applicable obligations or requirements and the actions necessary to correct any
noncompliance with respect thereto shall be final and binding unless otherwise
agreed in writing by the Parties. The fees and expenses of such expert shall be
borne by the Party against which the expert decides.
     9.5 All records relating to the manufacture of Product or Starting
Materials by the Manufacturer hereunder (the “Manufacturing Records”) shall be
retained and archived by the Manufacturer for a period of seven (7) years, or
such longer period as may be required by applicable law or regulation, following
completion of the manufacturer of each specific quantity of Product or Starting
Materials that is intended to be of uniform character and quality and is
produced during the same cycle of Manufacturing Process. Upon OSI’s written
request, Manufacturer shall promptly provide OSI with copies of the
Manufacturing Records. Prior to destroying or otherwise disposing of any such
Manufacturing Records, regardless of whether the seven (7) year period set forth
in this Section 8.5 has expired, Manufacturer will provide OSI a reasonable
opportunity to take possession of the Manufacturing Records at OSI’s own
expense.
     9.6 OSI hereby represents, warrants and covenants that it shall comply with
Laws applicable to its activities and obligations hereunder.
     9.7 The Distribution Agent hereby represents, warrants and covenants:
          (a) no Product or Starting Materials constituting or being a part of
any shipment to OSI or its designees shall at the time of any such shipment be
adulterated within the meaning of the Act, or the rules and regulations
promulgated thereunder, as such law, rule or regulation is constituted and in
effect at the time of any such shipment;
          (b) it shall comply with Laws applicable to its activities and
obligations hereunder;
          (c) all Product and Starting Materials shall be handled, stored and
shipped in accordance with all Laws and the requirements of this Agreement; and

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          (d) it has or will timely obtain, and will maintain and comply with at
all relevant times throughout the Term, all applicable federal, state and local
permits, licenses, registrations and other governmental authorizations
reasonably required by Law or advisable under Law for it to perform its
obligations under this Agreement.
           (e) the Product and Starting Materials delivered pursuant to this
Agreement shall be delivered to OSI free and clear of any liens or encumbrances
of any kind that arise from the actions of the Distribution Agent or any of its
employees or agents.
     9.8 Except as otherwise noted below, in the event that OSI or the
Manufacturer receives any complaint, claims or adverse reaction reports
regarding Product or Starting Materials, including notices from the FDA
regarding any alleged regulatory non-compliance of Product or Starting
Materials, each Party shall within five (5) Business Days, provide the other
with all information contained in the complaint, report, or notice and such
additional information regarding Product or Starting Materials, as may be
reasonably requested. OSI and the Manufacturer shall comply, at a minimum, with
FDA requirements for complaint handling. The Manufacturer shall fully cooperate
with OSI regarding any investigations of Product. If any Party becomes aware
that Product or Starting Materials contain a defect which could or did cause
death or serious bodily injury, such Party shall promptly fax and telephone the
other Parties with a complete (where required by law) description of all
relevant details known to such Party concerning any such incident, including but
not limited to, a description of any defect and such other information which may
be necessary to report the incident to FDA. OSI shall be responsible for
preparing adverse drug reaction reports, administering adverse drug reaction
files relating to Finished Product and filing all such reports with FDA, at its
sole expense.
     9.9 Each Party represents and warrants to the other Parties that: (a) it is
a corporation duly organized, validly existing and in good standing (if
applicable) under the laws of its incorporating jurisdiction; (b) it has all
requisite corporate power and authority to enter into this Agreement; (c) it is
duly authorized to execute and deliver this Agreement and to perform its
obligations hereunder and consummate the transactions contemplated hereby;
(d) upon valid execution of this Agreement by all of the Parties, each Party
shall be bound by the terms of this Agreement; and (e) it has not entered into
any agreement or has agreed to any other obligation that might prevent it from
fulfilling its duties hereunder.
     Section 10. Indemnification and Limitations on Liability.
     10.1 OSI hereby agrees to and shall defend, indemnify, and hold harmless
the Manufacturer and the Distribution Agent and their respective employees,
agents, officers, and directors (each the “Manufacturer Indemnitees” and
“Distribution Agent Indemnitees”, and collectively, the
Manufacturer/Distribution Agent Indemnitees”), from, against, and in respect of,
any and all losses, judgments, damages, liabilities (including but not limited
to product liability), suits, actions, expenses (including attorney’s fees and
expenses), and proceedings (collectively “Losses”) arising from:

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          (a) its material breach of this Agreement;
          (b) any claim, complaint, suit proceeding or cause of action against
any Manufacturer/Distribution Agent Indemnitee, alleging physical injury or
death, brought by or on behalf of an injured third party, or loss of service or
consortium or a similar such claim, complaint, suit, proceeding or cause of
action brought by a spouse, relative or companion of an injured third party due
to such physical injury or death, and in each case arising out of the Product,
except to the extent that such injury, loss or death is attributable to a
failure of any Manufacturer/Distribution Agent Indemnitee to adhere to the
requirements of this Agreement; and
          (c) the negligence or willful misconduct of any OSI Indemnitee (as
hereinafter defined);
     OSI’s indemnification obligation under this Section 10 shall not apply to
Losses to the extent that such Losses are attributable to the negligence or
willful misconduct of any Manufacturer/Distribution Agent Indemnitee.
     10.2 The Manufacturer hereby agrees to and shall defend, indemnify, and
hold harmless OSI and its respective employees, agents, officers, and directors
(the “OSI Indemnitees”) and the Distribution Agent Indemnitees (collectively
with the OSI Indemnitees, the “OSI/Distribution Agent Indemnitees”), from,
against, and in respect of, any and all Losses arising from:
          (a) its material breach of this Agreement; and
          (b) any claim, complaint, suit, proceeding, or cause of action against
any OSI/Distribution Agent Indemnitee, alleging physical injury or death,
brought by or on behalf of an injured third party, or loss of service or
consortium or a similar such claim, complaint, suit, proceeding or cause of
action brought by a spouse, relative, or companion of an injured third party due
to such physical injury or death, and in each case arising out of non-conformity
of the Product to the Product Specifications or non-conformity with relevant
specifications of a Starting Material supplied by Manufacturer hereunder, except
to the extent that such injury, loss or death is attributable to a failure of an
OSI/Distribution Agent Indemnitee to adhere to the requirements of this
Agreement;
          (c) the negligence or willful malfeasance of any Manufacturer
Indemnitee, except to the extent that any of the foregoing are attributable to
the negligence or willful misconduct of an OSI/Distribution Agent Indemnitee.
     10.3 The Distribution Agent hereby agrees to and shall defend, indemnify,
and hold harmless the OSI Indemnitees and the Manufacturer Indemnitees
(collectively, the OSI/Manufacturer Indemnitees”), from, against, and in respect
of, any and all Losses arising from:
          (a) its material breach of this Agreement;

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          (b) any claim, complaint, suit proceeding or cause of action against
any OSI/Manufacturer Indemnitee, alleging physical injury or death, brought by
or on behalf of an injured third party, or loss of service or consortium or a
similar such claim, complaint, suit, proceeding or cause of action brought by a
spouse, relative or companion of an injured third party due to such physical
injury or death, and in each case arising out of its storing, handling delivery
and/or shipment of Product; and
          (c) the negligence or willful malfeasance of any Distribution Agent
Indemnitee, in performing this Agreement, except to the extent that any of the
foregoing are attributable to the negligence or willful misconduct of an
OSI/Manufacturer Indemnitee.
     10.4 The foregoing indemnification obligations are subject to the
following: (a) the indemnifying Party must be notified by or on behalf of the
indemnified Party in writing promptly after a claim is made, a suit is filed or
an action or investigation is initiated (each, a “Proceeding”) against the
indemnified Party; (b) the indemnifying Party shall be permitted to defend,
control, conduct and prosecute, in the indemnifying Party’s sole discretion and
by counsel of the indemnifying Party’s choosing, the defense of such Proceeding
brought against the indemnified Party; (c) the indemnifying Party shall have the
right in its sole discretion to settle, compromise or otherwise terminate the
Proceeding solely upon the payment of money and each Party expressly agrees that
the indemnifying Party may do so in its name; provided, that, there is no
finding or admission of any violation by any indemnified Party of (i) any law,
rule or regulation or (ii) the rights of any person; and provided, further,
that, no such settlement shall prohibit any indemnified Party from importing the
Product or Starting Materials into the United States; (d) the indemnified Party
shall refrain from settling (or endeavoring to settle, or entering into
settlement negotiations with respect to) any such Proceeding without the
indemnifying Party’s prior written consent which shall in no event be
unreasonably withheld or delayed; (e) except as may otherwise be required by
law, the indemnified Party shall not compromise the position of the indemnifying
Party by admission, statements, disclosure or conduct (collectively,
“Disclosure”) in a way that could prejudice the defense, control, conduct or
prosecution of said cause of action (it being understood that no indemnified
Party shall be deemed to have violated this provision so long as such Party has
acted in good faith to fulfill its obligations under this provision); and
(f) the indemnified Party shall cooperate with the indemnifying Party in the
defense, conduct, prosecution or termination of the Proceeding, including the
furnishing of information and the assistance from employees of the indemnified
Party at the indemnifying Party’s reasonable request and at no charge to the
indemnifying Party. With respect to clause (e) above, the indemnified Party will
provide the indemnifying Party with prompt written notice prior to making any
such Disclosure in order to permit the indemnifying Party to request legal
relief to prevent such Disclosure. If, however, any such request for relief by
the indemnifying Party is denied or is otherwise unavailable, the relevant
indemnified Party may make the Disclosure without any liability to the
indemnifying Party.

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     10.5 Each of the Parties shall obtain insurance coverages as follows:
          (a) The Manufacturer shall, throughout the term of this Agreement and
for ** after its termination or expiration, obtain and maintain at its own cost
and expense from a qualified insurance company (i.e., an A.M. Best Rating of A-
or better), comprehensive general liability insurance including, but not limited
to, contractual liability coverage and standard product liability coverage. Such
policy shall provide protection against any and all claims, demands and causes
of action arising out of its activities under this Agreement. The aggregate
annual amount of coverage shall be a minimum of **. Manufacturer agrees to name
OSI as an additional insurer on all such policies. At OSI’s request, the
Manufacturer shall provide OSI with proof of such coverage. The Manufacturer
shall provide OSI with written notice at least thirty (30) days prior to any
cancellation, non-renewal or material change in such insurance which may
materially adversely affect the performance of Manufacturer’s obligations under
this Agreement.
          (b) The Distribution Agent shall, throughout the term of this
Agreement and for ** after its termination or expiration, obtain and maintain at
its own cost and expense from a qualified insurance company (i.e., an A.M. Best
Rating of A- or better), comprehensive general liability insurance including,
but not limited to, contractual liability coverage and standard product
liability coverage. Such policy shall provide protection against any and all
claims, demands and causes of action arising out of its activities under this
Agreement. The aggregate annual amount of coverage shall be a minimum of **.
Distribution Agent agrees to name OSI as an additional insurer on all such
policies. At OSI’s request, the Distribution Agent shall provide OSI with proof
of such coverage. The Distribution Agent shall provide OSI with written notice
at least thirty (30) days prior to any cancellation, non-renewal or material
change in such insurance which may materially adversely affect the performance
of Distribution Agent’s obligations under this Agreement.
          (c) OSI shall, throughout the term of this Agreement and for ** after
its termination or expiration, obtain and maintain at its own cost and expense
from a qualified insurance company (i.e., an A.M. Best Rating of A- or better),
comprehensive general liability insurance including, but not limited to,
contractual liability coverage and standard product liability coverage. Such
policy shall provide protection against any and all claims, demands and causes
of action arising out of its activities under this Agreement. The aggregate
annual amount of coverage shall be a minimum of **. At the Manufacturer’s
request, OSI shall provide Manufacturer with proof of such coverage.
     Section 11. Recall.
     11.1 If (a) any regulatory authority withdraws the approval to sell the
Finished Product in such country or issues a directive or request that the
Finished Product be recalled for product safety reasons, (b) any regulatory
authority or court of competent jurisdiction issues a request, directive or
order that the Finished Product be recalled or (c)
 

**   This portion has been redacted pursuant to a confidential treatment
request.

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OSI shall reasonably determine that the Finished Product should be recalled, the
Parties shall take all appropriate corrective actions, and shall cooperate in
any governmental investigations surrounding the recall. In the event that such
recall results from any cause or event arising from (x) non-conformity of
Product to the Product Specifications, Starting Material manufactured by the
Manufacturer to the Starting Materials specifications or other failure of
Manufacturer to fulfill its obligations hereunder, the Manufacturer shall
promptly replace such Product at no additional cost to OSI or (y) storage,
handling or shipment of Product or Starting Materials by the Distribution Agent
or other failure of the Distribution Agent to fulfill its obligations hereunder,
the Distribution Agent shall be responsible for the cost of replacing the
Product or Starting Materials, as the case may be. In all other cases (including
a recall resulting from a mis-specification by OSI), OSI shall be responsible
for the cost of replacement Product or Starting Materials, as the case may be.
     11.2 In the event a regulatory authority orders the withdrawal of Product
from the marketplace, OSI may at its option cancel this Agreement and
Manufacturer shall immediately cease the manufacturing of Product and Starting
Materials, provided that (i) OSI shall purchase from the Manufacturer all
Product manufactured from orders prior to such cancellation and pay the prices
of Product thereof immediately, and (ii) OSI shall pay for all Starting Material
manufactured to fulfill such orders.
     11.3 The Parties obligations under this Section 11 shall be in addition to
and not limit their respective obligations under Section 10 (Indemnification).
     Section 12. Term and Termination.
     12.1 This Agreement shall be effective for a period of seven (7) years from
the Effective Date (the “Initial Term”), unless terminated in accordance with
this Section 12. Upon expiration of the Initial Term, it will be automatically
renewed for additional terms of two (2) years each unless a Party gives the
other Parties notice of termination at least twelve (12) months before the end
of the applicable term. The Initial Term plus any extensions thereto shall
constitute the “Term”.
     This Agreement may be terminated by a Party if:
          (a) upon ** written notice to any other Party of a material failure by
such other Party to perform or observe any covenant, condition or agreement to
be performed or observed by it under this Agreement, unless such breach has been
cured within the ** notice period, provided prior to the effective date of such
termination there shall be no restriction on the right of the Distribution Agent
and OSI to purchase Product consistent with its forecasts;
          (b) pursuant to Section 16.1, a Force Majeure preventing performance
of another Party continues for more than three (3) months; or
 

**   This portion has been redacted pursuant to a confidential treatment
request.

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          (c) upon the filing of bankruptcy, reorganization, liquidation,
receivership proceedings, or any other similar action or proceeding with respect
to another Party.
     Notwithstanding the foregoing, should Distribution Agent terminate this
Agreement or cease to fulfill its material obligations under this Agreement
thereby prompting a termination of this Agreement, Manufacturer and OSI covenant
to (i) promptly negotiate and enter into a replacement supply agreement (the
“Replacement Agreement”) on the same terms and conditions as set forth herein,
with Manufacturer assuming the rights and responsibilities of Distribution
Agent, unless OSI agrees in writing to the substitution of another Distribution
Agent for Distribution Agent and (ii) Manufacturer agrees to continue this
Agreement on the same terms and conditions as set forth herein until the
Replacement Agreement is effective, while assuming all of the obligations of
Distribution Agent except those that arise based on this Agreement prior to the
Distribution Agent terminating this Agreement or ceasing to fulfill its material
obligations under this Agreement.
     12.2 Notwithstanding any other provisions of this Agreement to the
contrary, OSI shall have the right to immediately terminate this Agreement in
the event that:
          (a) the Manufacturer fails an inspection by the FDA for the
manufacture of the Product or Starting Materials and has not cured all
deficiencies cited by the FDA to the satisfaction of the FDA within ** of
receipt of notice of such deficiencies from the FDA or by the time set forth by
the FDA, whichever is shorter;
          (b) in the event that the Manufacturer or Distribution Agent is
unable, or fails, to supply Product at levels commensurate with OSI forecasts in
accordance with and subject to Section 3;
          (c) in the event that OSI elects to discontinue or curtail
substantially development and commercialization of Finished Product; or
          (d) in the event that market authorization for the Finished Product is
withdrawn by the FDA.
     12.3 Upon termination of this Agreement that is not caused by the
Manufacturer’s breach of its obligations under this Agreement, OSI shall
purchase from the Manufacturer all Product ordered prior to such termination and
shall pay the prices of Product thereof immediately. In addition, OSI shall pay
for all Starting Materials manufactured in accordance with such orders.
     12.4 Upon termination of this Agreement for any reason, subject to
Section 12.3, Manufacturer shall return to OSI all Starting Materials provided
to the Manufacturer by OSI and deliver all Product inventory to OSI.
 

**   This portion has been redacted pursuant to a confidential treatment
request.

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     12.5 The provisions of this Section 12 as to termination shall not limit or
restrict the rights of any Party to seek remedies or take measure that may be
otherwise available to it at law or equity in connection with the enforcement
and performance of obligations under this Agreement. In any event, upon
termination for any reason all amounts owing by a Party to the other Party shall
become immediately due and payable.
     Section 13. Notices. Any and all notices required or permitted to be given
under this Agreement will be in writing and effective and delivered upon
receipt, sent by facsimile transmission with transmission confirmation, mailed
postage prepaid by first-class certified or registered mail, sent by electronic
mail, or sent by express courier service, at the respective addresses, as
follows:
If to OSI, to:
OSI Pharmaceuticals, Inc.
58 South Service Road
Melville, New York 11747
Attention: Michael Keech
Telephone Number: (631) 962-2013
Facsimile Number: (631) 962-2023
E-mail Address: mkeech@osip.com
With a copy to:
OSI Pharmaceuticals, Inc.
58 South Service Road
Melville, New York 11747
Attention: Legal Department
Telephone Number: (631) 962-2000
Facsimile Number: (631) 293-2218
If to the Manufacturer, to:
Dipharma Francis S.r.l.
Via Bissone 5
20021 Baranzate di Bollate (MI)
Italy
Attention: Graziano Castaldi
Telephone +39 02 38228250
Facsimile Number: +39 02 38201977
E-mail Address: graziano.castaldi@dipharma.it

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If to the Distribution Agent, to:
Davos Chemical Corporation
600 East Crescent Avenue
Upper Saddle River, New Jersey 07458
Attention: Anthony DelPrete
Telephone Number: 201-995-0070
Facsimile Number: 201-995-0071
E-mail Address: adelprete@davos.com
     Section 14. Dispute Resolution.
     14.1 Each Party will designate an individual (each, a “Representative”) who
will have the authority to represent such Party in all matters concerning the
transactions contemplated by this Agreement. All communications should be
addressed to the Party’s designated Representative. The initial OSI
Representative will be Michael Keech. The initial Manufacturer Representative
will be Graziano Castaldi. The initial Distribution Agent Representative will be
Anthony DelPrete.
     14.2 In the event that any dispute arises relating to this Agreement, the
Representatives shall promptly meet and attempt to resolve the dispute through
good faith discussions. If the Representatives are unable to resolve any dispute
to their mutual satisfaction within the thirty (30) days after they commence
discussions regarding same, and do not agree to extend the time for resolution
of the issue at the end of their meeting, then the matter will be referred to
the senior management of the Parties.
     14.3 If the senior management representatives are unable to resolve any
dispute to their mutual satisfaction within the thirty (30) days after they
commence discussions regarding same, and do not agree to extend the time for
resolution of the issue at the end of their meeting, then a Party may initiate
arbitration in accordance with Section 14.4
     14.4 Any claim, dispute, or controversy arising out of or relating to this
Agreement that is not resolved in accordance with the provisions of Section 14.3
shall be finally resolved by arbitration in accordance with the Rules of the
International Chamber of Commerce in effect at the time, except as may be
modified by the Parties in writing. The place of arbitration shall be in New
York if initiated against OSI or the Distribution Agent and in Switzerland if
initiated against the Manufacturer. The award of the arbitrators shall be final
and binding upon the Parties and shall not be subject to appeal to any court,
and may be entered in any court of competent jurisdiction for execution
forthwith.
     Section 15. Technology Transfer
     15.1 In the event that (i) OSI determines that the Manufacturer is unable
to reasonably meet its obligations to supply Product or Starting Materials, as
the case may by, under this Agreement and such failure leads to a breach of
OSI’s obligations under the OSI/GNE Agreement and (ii) an Assumption Notice (as
defined in Section 16.6 thereof) is delivered to the Manufacturer, Genentech, as
a third-party beneficiary of this

24

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Agreement, shall have the right to procure some or all of the Product or
Starting Materials that were to be manufactured by the Manufacturer pursuant to
this Agreement from a third party manufacturer. In order to facilitate such
transfer of rights and obligations to Genentech the Manufacturer agrees as
follows:
          (a) the Manufacturer shall, within a reasonable time period, but in no
event less than thirty (30) days following written request from Genentech
(i) physically transfer such technology, including without limitation any and
all Manufacturing Documentation (as hereinafter defined), to Genentech or its
designee; (ii) disclose to Genentech and its designee(s) the Manufacturing
Process; (iii) provide a license to OSI (with the right to sublicense to
Genentech) for any Proprietary Information that is required to make and have
made the Product or Starting Materials, as the case may be; and (iv) provide all
cooperation and assistance reasonably requested by Genentech to an extent that
will enable Genentech (or its designee(s)) to assume with as little disruption
as reasonably possible, the continued manufacture of the Product or Starting
Materials, as the case may be. All information transferred pursuant to this
Section 15.1(a) shall be deemed to be confidential and shall be treated as if it
was “Proprietary Information” in accordance with Section 8; provided that
Genentech shall have the right to transfer such information to third party
manufacturers solely in connection with the manufacture of the Product or the
Starting Materials, as the case may be.
          (b) For the purposes of this Agreement, Manufacturing Documentation
shall mean all documents and records describing or otherwise related to the
Manufacturing Process or any part of the Manufacturing Process, including,
without limitation, documents and records consisting of or containing piping and
instrumentation diagrams, software logic and descriptions, batch records,
standard operating procedures, including, without limitation, standard operating
procedures for in-process quality control testing, facility layout schematics,
equipment and instrumentation specifications and process trend and variability
data as necessary to allow proper equipment validation and transfer of Product
or Starting Materials, as the case may be, manufacture to Genentech or its
designee(s).
     15.2 In the event that, despite Manufacturer having reasonably met all of
its obligations under this Agreement, an Assumption Notice (as defined in
Section 16.6) is delivered to the Manufacturer, Manufacturer shall comply with
the provisions set forth in Section 15.1(a), at OSI’s expense, but only with
respect to those items and information necessary for the proper equipment
validation and transferring of manufacture of Product or Starting Materials, as
the case may be, to Genentech or its designee. For avoidance of doubt, this
Agreement shall remain in full force and effect and the Term and termination of
this Agreement shall remain subject to Section 12 of this Agreement,
notwithstanding the delivery of such Assumption Notice to Manufacturer pursuant
to this Section 16.6.
     15.3 If this Agreement is terminated by OSI as a result of Manufacturer’s
breach of its obligations under the Agreement, then Manufacturer shall, within a
reasonable time period, but in no event less than thirty (30) days following
written request from OSI (i) physically transfer such technology, including
without limitation any and all Manufacturing Documentation (as defined in
Section 15.1(b)), to OSI or its

25

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designee; (ii) disclose to OSI and its designee(s) the Manufacturer’s production
process for the manufacture of Product or the Starting Materials, as the case
may be (the “Manufacturing Process”); (iii) provide a license to OSI (with the
right to sublicense to Genentech) for any Proprietary Information that is
required to make and have made the Product or Starting Materials, as the case
may be; and (iv) provide all cooperation and assistance reasonably requested by
OSI to an extent that will enable OSI (or its designee(s)) to assume with as
little disruption as reasonably possible, the continued manufacture of the
Product or the Starting Materials, as the case may be, pursuant to the
conditions reasonably agreed to by the Parties. All information transferred
pursuant to this Section 15.3 shall be deemed to be confidential and shall be
treated as if it was “Proprietary Information” in accordance with Section 8;
provided that OSI or Genentech, as the case may be, shall have the right to
transfer such information to third party manufacturers solely in connection with
the manufacture of the Product or Starting Materials, as the case may be.
     Section 16. Miscellaneous.
     16.1 Force Majeure. If a Party hereto is prevented for a period from
complying, either in whole or in part, with any of the terms or provisions of
this Agreement by reason of a force majeure beyond such Party’s reasonable
control, which shall include fire, flood, storm, strike or lockout, riot,
terrorist act, war, rebellion, lack or failure of transportation facilities,
sources of supply or raw materials or power, judicial action, accident, or Acts
of God (a “Force Majeure”), then, upon written notice from such Party to the
other Parties, the requirements of this Agreement so affected (to the extent
affected) shall be suspended for the duration of such Force Majeure. Said Party
shall be excused by reason of said Force Majeure only so long as it is
exercising reasonable efforts to overcome said reason.
     16.2 Assurances. Each Party to this Agreement shall execute, acknowledge
and deliver such further instruments and documents, and do all such other acts
and things as may be required by law or as may be necessary or advisable to
carry out the intents and purposes of this Agreement. The Parties will cooperate
with each other and offer reasonable assistance in carrying out their respective
responsibilities under this Agreement.
     16.3 Governing Law. This Agreement shall be construed in accordance with
the internal laws of the State of New York without reference to the conflict of
laws provisions thereof.
     16.4 Severability. If any provision of this Agreement shall be held to be
invalid, illegal, or unenforceable, the validity, legality, or enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby unless the purposes of the Agreement cannot be achieved. In the event
any provision shall be held invalid, illegal, or unenforceable the Parties shall
use best efforts to substitute a valid, legal, and enforceable provision which
insofar as practical implements the purposes hereof.

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     16.5 No Assignment. Except as explicitly set forth in this Agreement, no
Party shall assign this Agreement or any part thereof and/or its rights and/or
delegate its obligations under this Agreement without the prior written consent
of the other Parties, except that in case any Party intends to assign this
Agreement in connection with the transfer or sale of all or substantially all of
its assets or business or its merger or consolidation with another company, the
other Parties shall not unreasonably withhold their consent. Any attempted
transfer or assignment without such consent shall be null and void. No permitted
assignment shall relieve the assigning Party of its obligations hereunder
arising prior to such date of assignment. The terms and conditions of this
Agreement shall be binding upon and shall insure to the benefit of the Parties
hereto and their respective successors and permitted assigns.
     16.6 Third Party Beneficiaries. Nothing in this Agreement shall be
construed to create any rights or obligations except among the Parties hereto;
provided, however, that the Parties hereto acknowledge and agree that Genentech
and its successors and permitted assigns shall be deemed a third party
beneficiary of OSI’s rights and all of the Manufacturer’s obligations under this
Agreement. The Parties hereto acknowledge that upon written notice from OSI to
the other Parties (the “Assumption Notice”), Genentech shall be entitled to
directly enforce any of OSI’s rights and all of the Manufacturer’s obligations,
provided, however, that Genentech shall assume OSI’s obligations under this
Agreement. In addition, the Parties hereto acknowledge and agree that OSI and
its successors and permitted assigns shall be deemed a third party beneficiary
of Distribution Agent’s rights and all of the Manufacturer’s obligations to
Distribution Agent under this Agreement.
     16.7 Relationship of the Parties. This Agreement does not constitute a
partnership agreement nor does it create a joint venture, agency relationship or
fiduciary duty between or among the Parties. No Party shall take any action, nor
make any representation to any third party that would be inconsistent with the
foregoing sentence. None of the Parties shall be liable for the representations,
acts, or omissions of any of the other Parties unless expressly provided
otherwise under the terms of this Agreement.
     16.8 Waiver. No delay, waiver, omission or forbearance on the part of any
Party to exercise any right, option, duty or power arising out of any breach or
default by any other Party of any of the terms, provisions or covenants hereof,
will constitute a waiver by such Party of its rights to enforce any such right,
option, duties or power as against the other Party hereto, or its rights as to
any subsequent breach or default by any other Party.
     16.9 Survival. Upon termination or expiration of this Agreement, the
obligations of the Parties under any Confidentiality Agreements between the
Parties, Sections 8 (Confidentiality), 9 (Quality of Product; Regulatory
Matters; Auditing Rights; Recordkeeping; Representations and Warranties), 10
(Indemnification), 11 (Recall), 14 (Dispute Resolution), 15 (Technology
Transfer), 16.3 (Governing Law), 16.6 (Third Party Beneficiaries), 16.9
(Survival), 16.10 (Entire Agreement) and 16.15 (Proprietary Rights) of this
Agreement shall survive.

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     16.10 Entire Agreement. This Agreement, the related Schedules and Exhibits
attached hereto, and any quality or technical agreements between the Parties,
constitute the full understanding and entire agreement between the Parties and
supersede any and all prior oral or written understandings and agreements with
respect to the subject matter hereof. No terms, conditions, understandings, or
agreements purporting to modify, amend, or vary this Agreement shall be binding
except by the execution of a writing specified to be an explicit amendment to
this Agreement duly executed by the Parties hereto. No modification, waiver,
termination, rescission, discharge or cancellation of any right or claim under
this Agreement shall affect the right of any Party to enforce any other claim or
right hereunder.
     16.11 Exhibits. The Exhibits and Schedules to this Agreement are
incorporated herein by reference and made a part hereof, together constituting
the Agreement.
     16.12 Binding Agreement. This Agreement shall be binding upon the Parties
and their respective successors and permitted assigns and shall insure to the
benefit of the Parties and their respective successors and permitted assigns.
     16.13 Headings. The headings used in this Agreement are for convenience of
reference only and are not a part of the text hereof.
     16.14 Counterparts. This Agreement may be executed in triplicate, each of
which shall constitute and original and all of which shall together constitute a
single agreement.
     16.15 Proprietary Rights. This Agreement does not convey to the
Manufacturer or the Distribution Agent any ownership rights in the Starting
Materials, Product or Finished Product (or in any intellectual property rights
of OSI embodied in the same) by implication, estoppel or otherwise except for
the rights expressly granted under this Agreement. Any invention, discovery or
information made, conceived or reduced to practice, or developed by Manufacturer
or Distribution Agent, whether patentable or not, that relates to Product or its
use, Starting Material or its use, or OSI’s Proprietary Information shall belong
to OSI, and Manufacturer and Distribution Agent will promptly disclose and
assign, and cause its and their employees and agents to disclose and assign, to
OSI all right, title and interest in the same, if any, to OSI.
** ** ** ** ** ** ** ** ** **

28

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     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
of the last Party to sign below.

            OSI PHARMACEUTICALS, INC.
      By:   /s/ Robert L. Simon         Name:   Robert Simon        Title:  
Executive Vice President, Pharmaceutical Development and Technical Operations   
 

Date:   27 Oct 05

            DIPHARMA FRANCIS S.r.l.
      By:   /s/ Graziano Castaldi         Name:   Graziano Castaldi       
Title:   Director, Marketing & Sales     

Date:   November 10, 2005

            DAVOS CHEMICAL CORPORATION
      By:   /s/ Anthony DelPrete         Name:   Anthony DelPrete       
Title:   Executive VP     

Date:   11/7/05

 

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Exhibit A
Product Specifications

     
Document Type:
  Document No.: 774RSRM77401.04
 
   
Specification
  Effective Date: 12 JAN 2004
 
   
Material Description:
  Page: 1 of 1
Erlotinib Hydrochloride (formerly OSI-774-01)
[N-(3-Ethynylphenyl)-6,7-bis(2-methoxyethoxy)-4-quinazolinamine
monohydrochloride]
  Supercedes: 774RSRM77401.3
                      (24 Nov 03)

              Parameter   Requirement   Procedure           **   **   **        
 

                      Prepared by:       Date:        
 
  /s/ John Ferrantello           12-Jan-2004    
 
                   
 
                    Manufacturing Approval:       Date:        
 
  /s/ C. Quarterman           12-Jan-04    
 
                   
 
                    QA Approval       Date:        
 
  /s/ P. Mayne           12 Jan 2004    
 
                   
 
                    Regulatory Approval:       Date:        
 
  /s/ DS Wariabharaj           12-Jan-2004    
 
                   

 

**   This portion has been redacted pursuant to a confidential treatment
request.

 

--------------------------------------------------------------------------------

 

Exhibit B
470 Purchase Specifications

     
Document Type:
  Document No.: 774RSRM**.02
 
   
Specification
  Effective Date: 22 APR 2003
 
   
Material Description:
  Page: 1 of 1
**
   
 
  Supercedes: 774RSRM**.01

              Parameter   Requirement   Procedure           **   **   **        
 

                      Prepared by:       Date:    
 
  /s/ John Ferantello           08-Apr-2003
 
               
 
                Manufacturing Approval:       Date:    
 
  /s/ C. Quarterman           08-Apr-03
 
 
 
         
 
                QA Approval       Date:    
 
  /s/ P. Mayne           22 Apr-03
 
               
 
                Regulatory Approval:       Date:    
 
  /s/ C. Boisclair           10-April 2003
 
               

 

**   This portion has been redacted pursuant to a confidential treatment
request.

 

--------------------------------------------------------------------------------

 

Exhibit C
380 Purchase Specifications
Quality Specification
**
Specification #: QSP_045(1.0)1

              Parameter   Requirement   Procedure           **   **   **        
 

 

1   Supersedes Quality Specification 774RSRM**.02 issued on 22 April 2003

 

**   This portion has been redacted pursuant to a confidential treatment
request.

 

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Exhibit D
Pricing

(1)   Base Rate: ** USD/Euro   (2)   Unit Base Pricing for Erlotinib
Hydrochloride, ** and **

      Annual Purchases   Pricing on EX Works Basis       **            
         **

(3) Currency Calculation
     The USD/Euro ratio will be reviewed on ** of each year (starting on **) of
the contract. The rate considered will reflect the ** issued on that day by the
manufacturer’s bank. Evidence of this rate will be provided to OSI on the bank’s
letterhead. Based on this rate, the USD price will be re-calculated and adjusted
if necessary. The adjusted price will become effective on ** and remain in
effect for the **.
 

**   This portion has been redacted pursuant to a confidential treatment
request.

 

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Appendix A
Distribution Agent Affiliates
Davos Chemical CA, Inc.
555 Saturn Blvd.
San Diego, CA 92154