Exhibit 10.1

 

 

***Certain identified information has been omitted from this exhibit because it
is both not material and would be competitively harmful if publicly
disclosed.***

 

 

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1K Commercial Supply Agreement

 

(the “Agreement”)

 

 

 

by and between

 

 

 

 

Lonza Sales AG

Münchensteinerstrasse 38
CH-4002 Basel
Switzerland

- hereinafter “Lonza” -

and

Allakos, Inc.

975 Island Drive, Suite 201

Redwood City, CA 94065

USA

 

- hereinafter “Customer” -

Effective as of                          2 April 2020 (the “Effective Date”)

 

 

 

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Table of Contents

Page

1Definitions and Interpretations1

2Performance of Services7

3Project Management9

4Quality10

5Insurance11

6Forecasting, Ordering and Cancellation11

7Delivery and Acceptance14

8Price and Payment16

9Intellectual Property18

10Warranties20

11Indemnification and Liability22

12Confidentiality23

13Term and Termination25

14Force Majeure27

15Notices27

16Miscellaneous28

 

Appendix A – Batch Pricing

 

 

Appendix B - Approved Third Parties

 

 

Appendix C – Cell Bank Storage Pricing

 

 

Appendix D – Additional Capacity Commitments

 

 

 

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Recitals

WHEREAS, Customer is engaged in the development, research and sale of certain
products and requires assistance in the manufacture of Product;

WHEREAS, Lonza and its Affiliates have expertise in the manufacture of products;

WHEREAS, Lonza and Customer previously entered into that certain BLA Services
and Manufacturing Services Agreement dated 1st December 2017 (the “BLA
Agreement”) to provide services related to Customer’s AK002 Product;

WHEREAS, Customer wishes to engage Lonza for Services relating to the
manufacture of the Product as described in this Agreement; and

WHEREAS, Lonza, and/or its Affiliate, is prepared to perform such Services for
Customer on the terms and subject to the conditions set out herein.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and
for other good and valuable consideration, the Parties intending to be legally
bound, agree as follows:

1

Definitions and Interpretations

1.1

Definitions.

“2K Development Agreement”

means, collectively, the 2K Development and Manufacturing Services Agreement
entered into between Lonza AG and Customer on November 1st, 2019 and any
successor agreement thereof.

“Affiliate”

means any company, partnership and/or other entity which directly and/or
indirectly Controls, is Controlled by and/or is under common Control with the
relevant Party.  “Control” means the ownership of more than fifty percent (50%)
of the issued share capital and/or the legal power to direct and/or cause the
direction of the general management and policies of the relevant Party.

“Agreement”

means this agreement incorporating all Appendices, as amended from time to time
by written agreement of the Parties.

“Alternate Manufacturer”

means (i) Customer and each of its Affiliates or (ii) any Third Party that,
[Redacted].

“Applicable Laws”

means all relevant United States, United Kingdom and European Union federal,
state and local laws, statutes, rules, and regulations which are applicable to a
Party’s activities hereunder, including the applicable regulations and
guidelines of any Governmental Authority and in respect of the manufacture of
cGMP Batches all applicable cGMP together with amendments thereto.

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“Approval”

means a marketing approval granted by a Regulatory Authority of Product.

“Approved Territory”

means [Redacted].

“Average Target Yield”

means the expected and targeted Yield for the Process at the Facility
[Redacted].

“Background Intellectual Property”

means any Intellectual Property either: (i) owned and/or controlled by a Party
prior to the Effective Date; and/or (ii) developed and/or acquired by a Party
independently from the performance of the Services hereunder, and, in the case
of Lonza, without use and/or reliance on Customer Materials and/or Customer
Information, during the Term of this Agreement.  Lonza’s Background Intellectual
Property includes the Lonza Patent Rights and Lonza Information.

“Batch”

means the total Product obtained from one fermentation and associated
purification using the Process at a 1000 L scale.

“Batch Price”

means the Price which is payable in respect of Services with respect to a Batch,
which includes preparation, manufacture, quality control, analysis and release
and storage, excluding only the Raw Materials, Raw Materials Fee, Cell Bank
Storage fees and additional storage fees pursuant to Clause 7.3.

“Binding Order”

means the binding commitment of both Parties in relation to the Batches and/or
Services made in accordance with Clause 6.1 and/or 6.2.

“BLA”

means a Biologics License Application and amendments thereto for the Product
filed pursuant to the requirements of the FDA, as defined in 21 C.F.R. § 600 et
seq., for FDA approval of the Product, and any corresponding non-U.S. marketing
authorization application, registration and/or certification, necessary to
market the Product in any country outside the United States.

“BLA Agreement”

has the meaning set forth in the Recitals.

“Campaign”

means a series of cGMP Batches at the Facility.

“Cancellation Fee”

has the meaning given in Clause 6.4.

“Cell Bank”

means Customer’s cell bank and/or cell stock of a rodent or human cell line in
accordance with the Master Batch Record.

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“Cell Bank Storage”

means the storage of Customer’s Cell Bank in accordance with Clause 2.8.

“Cell Line”

means the cell line known as [Redacted].

“Certificate of Analysis”

means a document prepared by Lonza listing tests performed by Lonza and/or
approved External Laboratories pertaining to the cGMP Batch meeting the
Specifications and associated test results.

“Certificate of Compliance”

means a document prepared by Lonza: (i) listing the manufacturing date, unique
Batch number and concentration of Product in such Batch; and (ii) certifying
that such Batch was manufactured in accordance with the Master Batch Record and
cGMP, if applicable.

“cGMP”

means those laws and regulations applicable in the United States, United Kingdom
and European Union, relating to the manufacture of medicinal products for human
use, including current good manufacturing practices as specified in the ICH
guidelines, including ICH Q7A “ICH Good Manufacturing Practice Guide for Active
Pharmaceutical Ingredients”, ICH Q10 “Pharmaceuticals Quality System”, US
Federal Food Drug and Cosmetic Act at 21CFR (Chapters 210, 211, 600 and 610) and
the Guide to Good Manufacturing Practices for Medicinal Products as promulgated
under European Directive 91/356/EEC.  For the avoidance of doubt, Lonza’s
operational quality standards are defined in internal cGMP policy documents.

“cGMP Batches”

means any Batches which are required under the applicable Binding Order to be
manufactured in accordance with cGMP.

“Commencement Date”

means the date of removal of the vial of cells from frozen storage for the
production of a cGMP Batch.

“Confidential Information”

means Customer Information and Lonza Information, as the context requires.

“Customer Indemnitees”

has the meaning given in Clause 11.1.

“Customer Information”

means all technical and other information that is proprietary to Customer and/or
any Affiliate of Customer and that is maintained in confidence by Customer
and/or any Affiliate of Customer and that is, from time to time supplied to
Lonza including any materials supplied by Customer to

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Lonza in accordance with the Master Batch Record.

“Customer Materials”

means any components of Product, and/or other materials of any nature provided
by Customer.

“Disclosing Party”

has the meaning given in Clause 12.1.

“Dispute”

has the meaning given in Clause 16.6.

“Effective Date”

has the meaning set forth in the Recitals.

“EMA”

means the European Medicines Agency, or any successor agency thereto.

“External Laboratories”

means any Third Party instructed by Lonza to undertake any Services which Lonza
is not able to undertake itself as it does not form part of its business
offering, Customer having been notified of the same as part of the Services
proposal and having provided prior written consent to such Third Party and its
designation as an External Laboratory.

“Facility”

means Lonza’s manufacturing facilities in Slough, Berkshire UK and/or such other
Lonza facility as may be agreed upon by the Parties in writing.

“Failed Batch”

means any cGMP Batch that fails to conform with the Specifications and/or is not
manufactured in accordance with cGMP and/or the Quality Agreement.

“FDA”

means the United States Food and Drug Administration, or any successor agency
thereto.

“Force Majeure”

has the meaning given in Clause 14.2.

“Forecast”

has the meaning given in Clause 6.1.1.

“Governmental Authority”

means any Regulatory Authority and any national, multi-national, regional, state
and/or local regulatory agency, department, bureau, and/or other governmental
entity in the United States, United Kingdom and/or European Union.

“GS”

means the glutamine synthetase expression system of which Lonza is the
proprietor.

“GS Licence”

means the licence granted by Lonza (and BioWa Inc.) in respect of the use of GS
and Potelligent CHOK1SV under that certain Non-Exclusive License Agreement
between Lonza, Customer and BioWa Inc., dated 31st October 2013.

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“ICC”

has the meaning given in Clause 16.6.

“Improvements”

has the meaning given in Clause 9.7.2.

“Indemnitor”

has the meaning given in Clause 11.3.

“Initial Storage Term”

has the meaning given in Clause 2.8.1.

“Intellectual Property”

means: (i) inventions (whether or not patentable), patents, trade secrets,
copyrights, trademarks, trade names and domain names, rights in designs, rights
in computer software, database rights, rights in confidential information
(including know-how) and any other intellectual property rights, in each case
whether registered or unregistered; (ii) all applications (and/or rights to
apply) for, and renewals and/or extensions of, any of the rights described in
the foregoing clause (i); and (iii) all rights and applications that are similar
and/or equivalent to the rights and applications described in the foregoing
clauses (i) and (ii), which exist now, and/or which come to exist in the future,
in any part of the world.

“Joint Steering Committee”

has the meaning given in Clause 3.3.

“Latent Defects”

has the meaning given in Clause 7.4.1.

“Lonza Indemnitees”

has the meaning given in Clause 11.2.

“Lonza Information”

means all information that is proprietary to Lonza and/or any Affiliate of Lonza
and that is maintained in confidence by Lonza and/or any Affiliate of Lonza and
that is disclosed by Lonza and/or any Affiliate of Lonza to Customer under
and/or in connection with this Agreement, including any and all Lonza Know-How
and trade secrets.

“Lonza Know-How”

means all technical and other information relating directly or indirectly to the
Process and/or the performance of the Services known to Lonza and/or its
Affiliates from time to time other than Customer Information and information in
the public domain.

“Lonza Operating Documents”

means the corporate standards, standard operating procedures and standard
manufacturing procedures, in each case, used by Lonza for operation and
maintenance of the Facility and Lonza equipment used in the Process, which may
include electronic programs and files, protocols, validation documentation, and
supporting documentation, but excluding

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any of the foregoing that are unique or specific to the Products.

“Lonza Patent Rights”

means all patents and patent applications of any kind throughout the world
relating to the Process which from time to time Lonza and/or any Affiliate of
Lonza is the owner of and/or is entitled to use.

“Lonza Responsibility”

has the meaning given in Clause 7.4.4.

“Manufacturing Regulatory Delay”

means any delay in the manufacture of, and/or delay in Customer’s need for, the
Product as a consequence of a Regulatory Authority finding, ruling and/or
failure of Approval [Redacted].

“Master Batch Record”

means the document which defines the manufacturing methods, test methods and
other procedures, directions and controls associated with the manufacture and
testing of cGMP Batches.

“New Customer Intellectual Property”

has the meaning given in Clause 9.2.

“New General Application Intellectual

Property”

has the meaning given in Clause 9.3.

“Party”

means each of Lonza and Customer and, together, the “Parties”.

“Price”

means the price for the Products as specified in Clause 8.1 or for other
Services as set forth in an agreed upon SOW.

“Process”

means Lonza’s and its Affiliates’ platform process for the development and
production of the Product from the Cell Line, including any improvements and/or
modifications thereto that are owned and/or controlled by Lonza and/or any
Affiliate of Lonza from time to time.

“Product”

means the proprietary molecule identified by Customer as AK002, to be
manufactured using the Process as specified in the Specifications and the Master
Batch Record.

“Project Plan”

means the Project Plan as attached to and defined in the BLA Agreement.

“Quality Agreement”

means the quality agreement entered into between the Parties [Redacted], setting
out the responsibilities of the Parties in relation to quality as required for
compliance with cGMP.

“Raw Materials”

means all ingredients, solvents and other components of the Product required to
perform

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the Process and/or Services set forth in the bill of materials detailing the
same (including Resins and membranes but excluding any consumables and/or
wearables).

“Raw Materials Fee”

means the procurement and handling fee [Redacted] of the acquisition cost of Raw
Materials (including Resins) by Lonza that is charged to Customer in addition to
the cost of such Raw Materials.

“Receiving Party”

has the meaning given in Clause 12.1.

“Regulatory Authority”

means the FDA, EMA and any other similar regulatory authorities as may be agreed
upon in writing by the Parties.

“Release”

has the meaning given in Clause 7.1.

“Resins”

means the chromatographic media to refine and/or purify the Products, as
specified in the Master Batch Record and/or Specifications.

“Rules”

has the meaning given in Clause 16.6.

“Services”

means all or any part of the services to be performed by Lonza under this
Agreement (including the manufacture of Product and as set forth in any SOW).

“SOW”

has the meaning given in Clause 6.2.

“Specifications”

means the specifications of the Product agreed between the Parties which may be
amended from time to time in accordance with this Agreement.

“Storage Requirements”

means the Cell Bank storage requirements as set out in the Master Batch Record.

“Subcontractor”

means any Third Party that Lonza uses to perform any part of the Service,
including as a subcontractor and/or delegate, but excluding External
Laboratories.

“Supply Failure.”

has the meaning given in Clause 7.5.2.

“Technology Transfer Notice”

has the meaning given in Clause 9.8.2.

“Term”

has the meaning given in Clause 13.1.

“Third Party”

means any party other than Customer, Lonza and their respective Affiliates.

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“Willful Breach”

means a willful refusal to perform a Party’s obligations under this Agreement,
including, without limitation, if Lonza elects to provide any batch slot
reserved or scheduled for Customer in the Binding Portion of any Forecast to
another customer of Lonza.

“Yield”

means the amount, in kilograms, of Product actually produced from a Batch.

1.2

Interpretation.  In this Agreement references to the Parties are to the Parties
to this Agreement, headings are used for convenience only and do not affect its
interpretation, references to a statutory provision include references to the
statutory provision as modified or re-enacted or both from time to time and to
any subordinate legislation made under the statutory provision, references to
the singular include the plural and vice versa, references to the word
“including” are to be construed without limitation, and neither Party and/or its
Affiliates shall be deemed to be acting “on behalf of” and/or “under the
authority of” the other Party.

2

Performance of Services

2.1

Performance.  Customer hereby retains Lonza to manufacture and supply the
Product and perform other Services as set forth in and in accordance with the
terms and conditions of this Agreement.  Subject to Clause 2, Lonza shall itself
and through its Affiliates, diligently carry out the Services and use
commercially reasonable efforts to perform all Services without any material
defect and according to the Binding Orders, the Specifications, the Master Batch
Record and/or the applicable SOW.  Lonza shall ensure that all of the Services
hereunder are performed at the Facility and/or at a Subcontractor’s facility
which has been approved and audited by Lonza, as applicable, unless Customer has
provided its prior written consent to performance thereof at an alternate
location.

2.2

Personnel and Subcontractors.  Lonza shall retain appropriately qualified and
trained personnel with the requisite knowledge and experience to perform the
Services in accordance with this Agreement.  Lonza may subcontract and/or
delegate any of its rights and/or obligations under this Agreement to perform
the Services solely with Customer’s prior written approval (such approval not to
be unreasonably withheld and/or delayed), provided that such Subcontractors are
appropriately and fully qualified in all respects to perform the applicable
Services, that such Subcontractors are subject to obligations of confidentiality
at least as stringent and as protective of Customer as those obligations of
confidence and non-use imposed upon Lonza, and that such Subcontractors are
subject to obligations to act diligently and in accordance with best practice in
respect of cGMP manufacture as contained in this Agreement.  [Redacted]

2.3

cGMP Batches.  Lonza shall manufacture cGMP Batches to meet the Specification;
[Redacted].  Lonza will not make any changes to the Master Batch Record,
Specifications, Process, Raw Materials or any other item related to the
Product(s) or their manufacture without [Redacted] obtaining Customer’s prior
written approval.

2.4

Supply of Customer Information and Customer Materials.  Customer shall supply to
Lonza all Customer Information and Customer Materials and other information
and/or materials that may be reasonably required by Lonza to perform the
Services, in each case as identified in the Master Batch Record, and hereby
grants Lonza the non-exclusive right to use the Cell Line, the Customer
Materials and the Customer

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Information for the purpose of this Agreement.  Lonza shall not be responsible
for any delays arising out of Customer’s failure to provide Lonza such Customer
Information, Customer Materials or other information or materials as set forth
in the Master Batch Record, and Customer shall be responsible for all additional
costs and expenses arising out of such delay; provided that Lonza shall promptly
give Customer notice if any such failure is preventing and/or delaying Lonza’s
performance.  Lonza shall not use the Cell Line, Customer Materials and/or
Customer Information (and/or any part thereof) for any purpose other than the
performance of the Services under this Agreement.

2.5

Raw Materials.  Lonza shall procure all required Raw Materials as well as
consumables.  Customer shall be responsible for payment for all consumables and
Raw Materials ordered or irrevocably committed to be procured by Lonza hereunder
for the manufacture of Batches pursuant to Binding Orders.  If agreed by the
Parties, upon advance payment by Customer, Lonza shall purchase and hold a
minimum of [Redacted] to serve as safety stock, as well as [Redacted].  Upon
cancellation of any Batch pursuant to a Binding Order or termination of the
Agreement, all such unused Raw Materials shall be [Redacted].

2.6

Use of GS Technology.  Customer acknowledges that the Cell Line uses GS and that
the GS Licence applies to in vivo clinical studies and/or any other commercial
use and/or sale of the Product manufactured using the Cell Line.

2.7

Known Hazards. Lonza acknowledges that it has received from Customer the
Customer Information, together with full details of any hazards relating to the
Cell Line and the Customer Materials, their storage and use.  All property
rights and Intellectual Property rights in the Cell Line and/or the Customer
Materials and/or the Customer Information supplied to Lonza shall remain vested
in Customer.

2.8

Cell Bank Storage.

 

2.8.1

Cell Bank Storage has commenced pursuant to the BLA Agreement, and shall
continue, unless otherwise terminated in accordance with Clause 2.8.6, for
[Redacted] (the “Initial Storage Term”).  Lonza shall store the Cell Bank in
accordance with the Storage Requirements and Lonza shall not transfer the Cell
Bank to a Third Party (other than an Affiliate of Lonza) without Customer’s
prior written consent.  Lonza reserves the right to perform testing of the Cell
Bank which Lonza requires for QA, regulatory or safety purposes.

 

2.8.2

Cell Banks stored at Lonza shall at all times remain Customer’s property
(subject always to the terms of any other agreements or licenses of Customer
with Lonza, and subject to any Third-Party Intellectual Property rights), save
that the Cell Bank shall be subject to a lien in respect of any sums owed under
any agreement by Customer to Lonza.

 

2.8.3

If Customer wishes to withdraw the Cell Bank from storage, it shall give Lonza
[Redacted] prior written notice. Lonza and Customer shall agree a date for the
Cell Bank to be withdrawn. Customer shall be responsible for arranging (and
costs of) collection and shipping. Once the Cell Bank has been withdrawn, Lonza
shall have no further obligations in respect thereof (provided that the
foregoing shall not affect any remedies for breach of an obligation prior to
such withdrawal by Customer).

 

2.8.4

Notwithstanding any other provisions of this Agreement, the price of Cell Bank
Storage is calculated and shall be payable on a [Redacted] basis. Payment

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shall be made [Redacted] prior to the anniversary of storage commencement during
the Term. Customer shall not be entitled to any refund in respect of any partial
use of Cell Bank Storage, unless this Agreement is terminated by Customer other
than pursuant to Clause 13.2.1, in which case Lonza shall refund to Customer the
unused portion of the fees paid in relation to the period after the effective
date of termination.  The initial price for Cell Bank Storage is set out in
Appendix C hereto and shall be subject to review in accordance with Clause 8.6.
If Customer does not pay for Cell Bank Storage by the due date, Lonza shall not
be obliged to continue the Cell Bank Storage and Customer shall be required
within [Redacted] of Lonza’s written notice to arrange collection and shipping
of the Cell Bank, unless Customer cures such payment default within such
[Redacted] period, in which case the Cell Bank Storage shall continue.

 

2.8.5

Lonza shall use reasonable endeavours to protect the Cell Bank from destruction,
theft and/or loss during Cell Bank Storage. Notwithstanding any other provision
of this Agreement, risk of loss or damage to the Cell Bank shall remain with
Customer at all times, except that Lonza shall be responsible for loss and/or
damage of the Cell Bank arising from Lonza’s and/or its Affiliate’s and/or
Subcontractor’s negligence and/or intentional misconduct. Notwithstanding Clause
11.5, the total aggregate liability of Lonza and/or its Affiliates for all
claims (whether in contract, tort, negligence, breach of statutory duty, under
an indemnity, for any strict liability and/or otherwise) in connection with
and/or arising out of Cell Bank Storage shall not exceed [Redacted] under the
BLA Agreement and hereunder.  For clarity, the foregoing limitation of liability
shall not apply with respect to any unauthorized transfer of the Cell Line to a
Third Party.  

 

2.8.6

Customer may terminate the Cell Bank Storage by [Redacted] written notice to
Lonza.  Customer shall not be entitled to any refunds in respect of any unused
element of Cell Bank Storage except to the extent Cell Bank Storage is
terminated by Lonza.  Upon termination of this Agreement and/or Cell Bank
Storage and upon payment of all undisputed sums due to Lonza, Customer shall
either arrange for collection of the Cell Bank or instruct Lonza to destroy it,
in which case Customer shall pay Lonza the costs of such destruction.  Lonza may
terminate the Cell Bank Storage solely upon termination of this Agreement by
Lonza or as set forth in Clause 2.8.4.  In the event of termination by Lonza,
except when such termination by Lonza is due to non-payment of undisputed
invoices by Customer, [Redacted].

3

Project Management

3.1

BLA Agreement and Project Plan.  The Parties acknowledge that certain activities
and tasks are being undertaken under the Project Plan (as amended in accordance
with the BLA Agreement) and the BLA Agreement on and after the Effective
Date.  The manufacture of Batches under the BLA Agreement shall be governed
solely by the BLA Agreement and not this Agreement.

3.2

Project Management.  Lonza has appointed a project team responsible for
overseeing the Project Plan, and a project manager as the principal point of
contact with Customer pursuant to the BLA Agreement, and such project team and
project manager shall continue to oversee the Services and other activities
pursuant to this Agreement.  The project team shall have regular teleconferences
with Customer to discuss the progress of the Services, the expectation of the
Parties being that these will usually take place on a weekly basis or as
otherwise agreed by the Parties.  Lonza may change its project

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team and project manager from time to time upon written notice to Customer.  In
the event that any dispute cannot be resolved by the project team, such dispute
shall be escalated to the Joint Steering Committee.  Lonza’s project team shall
coordinate closely with the project team under the 2K Development Agreement.

3.3

Joint Steering Committee.  The Parties have appointed a joint steering committee
(“Joint Steering Committee”) pursuant to the BLA Agreement.  Such Joint Steering
Committee shall continue to perform its applicable functions in relation to this
Agreement.  The Joint Steering Committee shall meet once per calendar quarter,
or at such other frequency as may be necessary and is mutually agreed by the
Parties.  Decisions of the Joint Steering Committee shall be made by consensus,
with each Party having one (1) vote.  In the event that a Joint Steering
Committee cannot reach consensus with respect to a particular matter within its
authority, such dispute shall be escalated to a senior executive of each of
Customer and Lonza who shall confer in good faith on the resolution of the
issue.  Any final decision mutually agreed to by the senior executives shall be
reduced to writing and signed by the Parties and shall then be conclusive and
binding on the Parties.  The Joint Steering Committee shall coordinate closely
with the joint steering committee under the 2K Development Agreement.

The function of the Joint Steering Committee is to ensure the ongoing
communication between the Parties and discuss any issues arising under this
Agreement.  In addition to the function described above, the Joint Steering
Committee shall also take on the following responsibilities:

 

3.3.1

discuss and seek resolution of issues around management of the Services;

 

3.3.2

monitor timelines and milestones for the Services;

 

3.3.3

discuss and recommend any changes to the Services (although such changes will
not take effect until they have been approved in writing by the Parties in
accordance with Clause 16.2); and

 

3.3.4

discuss and seek resolution for any dispute regarding the terms of this
Agreement.

4

Quality

4.1

Quality Agreement.  Responsibility for quality assurance and quality control of
Product shall be allocated between Customer and Lonza as set forth in the
Quality Agreement.  If there is a conflict between the terms and conditions of
this Agreement and the Quality Agreement, the terms and conditions of this
Agreement shall prevail.  Performance by Lonza of all of its obligations under
the Quality Agreement will be considered covered by the Batch Price and no
additional consideration is payable by Customer unless otherwise agreed between
the Parties.  For clarity, the foregoing does not require Lonza to provide
regulatory support other than as set forth in this Agreement and the Quality
Agreement.

4.2

Inspections and Audits.  Provisions regarding inspections by Governmental
Authorities and audits are set out in the Quality Agreement, and include the
following:

 

4.2.1

Customer and its designated representatives shall have the right to witness,
inspect and audit the performance of Lonza’s obligations, at the times, number
of occasions and for durations set forth in the Quality Agreement and as
otherwise agreed by the Parties;

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4.2.2

Customer shall have reasonable access to the facilities, data and records of
Lonza which are related to this Agreement for the purpose of conducting such
inspections and audits, and Lonza shall use reasonable endeavours to ensure that
all External Laboratories provide similar access to the External Laboratories’
facilities, data and records which are related to this Agreement for such
purposes;

 

4.2.3

Customer will have the sole right to correspond with and submit regulatory
applications and other filings to any Governmental Authorities to obtain
approvals to import, export, conduct clinical trials with, and/or sell the
Product, alone and/or in combination with other products when and as Customer
may deem useful and/or necessary.  Accordingly, except as otherwise required by
Applicable Laws and Governmental Authorities’ requirements, Lonza will not
correspond directly with any Governmental Authority with respect to the Product
without, in each instance, first obtaining Customer’s prior written consent (not
to be unreasonably withheld);

 

4.2.4

Lonza will permit any Governmental Authorities to conduct inspections of Lonza’s
Facilities as the Governmental Authorities may request, and will cooperate with
the Regulatory Authorities with respect to the inspections and any related
matters, in each case related to the Product;

 

4.2.5

Lonza shall notify Customer promptly if any Governmental Authority schedules an
inspection or, without scheduling, begins an inspection at a Facility, in each
case, with respect to, and/or that would be reasonably likely to affect, the
Product, and allow Customer to be on site during such inspection; and

 

4.2.6

Customer shall have the right to review the specifications, grades and vendors
of all Raw Materials and components used under this Agreement to manufacture the
Product at the Facility.

4.3

Regulatory Support and Cooperation.  Lonza shall, at the Price as set forth in
the BLA Agreement, provide Customer with regulatory support and cooperation
related to the Product, the Process and seeking and maintaining Approvals as
reasonably requested by Customer from time to time.

4.4

Recalls.  If Customer recalls any Product (voluntarily and/or by order of a
Regulatory Authority) and/or is required to respond to inquiries of Governmental
Authorities relating to the Products, Lonza shall provide reasonable assistance
to Customer in connection with the same.  Customer shall pay Lonza for such
assistance, unless such recall and/or inquiry is due to Lonza’s fault and/or
Lonza is otherwise required to indemnify Customer in relation to such recall
and/or inquiry pursuant to Clause 11.1.

5

Insurance

Each Party shall, during the Term and for [Redacted] after delivery of the last
Product manufactured and/or Services provided under this Agreement, obtain and
maintain at its own cost and expense from a qualified insurance company,
comprehensive general liability insurance including contractual liability
coverage and product liability coverage in the amount of at [Redacted].  Each
Party shall provide the respective other Party with a certificate of such
insurance upon reasonable request.

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6

Forecasting, Ordering and Cancellation

6.1

Forecasting.  Beginning on the Effective Date, and thereafter [Redacted],
Customer will provide Lonza a rolling [Redacted] forecast of the quantity of
Batches it desires Lonza to supply (a “Forecast”), with the first [Redacted] of
each such Forecast binding on each Party (such amounts forecasted in the first
[Redacted] of the Forecast, the “Binding Portion” of a Forecast).  Any Batches
which are forecast in the Forecast which are in excess of the Binding Portion
shall not be binding but shall be subject to Lonza’s available capacity and only
become binding once accepted by Lonza.  [Redacted]

 

6.1.1

Following receipt of a Forecast, Lonza shall notify Customer whether it has
capacity available at the Facility at the requested time for the Batches set out
in the Forecast and the Parties shall promptly discuss any modifications to the
Forecast that may be necessary to enable Lonza to accommodate Customer’s request
for such Forecasted Batches, provided however that:

 

(a)

any Batches set forth in the Project Plan pursuant to the BLA Agreement shall be
manufactured in accordance with the schedule set forth in the Project Plan and
BLA Agreement; and

 

(b)

If Lonza does not have sufficient capacity to supply quantities of Product to
Customer’s Forecasts Lonza will be obligated to provide notice thereof to
Customer [Redacted] after receiving such Forecast.  

 

6.1.2

Once the Parties have agreed on a Forecast, Lonza shall provide Customer with
written confirmation of its acceptance of such agreed-upon Forecast.  The
Binding Portion of each Forecast shall become a binding commitment on both
Parties upon acceptance of such Forecast, subject to Lonza’s right to reschedule
and Customer’s right to delay or cancel such Batches described in Clauses 6.3
and 6.4.

 

6.1.3

Customer will order Batches pursuant to written purchase orders.  Lonza must
accept Customer’s purchase orders for quantities of Batches that are consistent
with the terms of this Agreement and that do not exceed the Binding Portion of
agreed upon Forecasts and will use commercially reasonable efforts to accept
orders exceeding such quantities.

 

6.1.4

[Redacted]

6.2

Additional Services.  To the extent that Customer wishes during the Term of this
Agreement to instruct Lonza to undertake development and/or other services in
relation to the Process and/or the manufacture of Product other than as
expressly set forth in this Agreement, any Binding Order and/or the BLA
Agreement, the Parties shall, acting in good faith and with due expedition,
enter into a written amendment or statement of work to this Agreement (each, a
“SOW”) on terms to be agreed between the Parties, documenting the additional
services required, the price to be charged for such services and any
consequential revisions to the timescales for delivery of such services. No such
SOW will be binding unless and until it is executed by both Parties.  Any
changes and/or amendments to each SOW must also be executed by both Parties.

6.3

Rescheduling.

 

6.3.1

Lonza shall have the right to:

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(a)

reschedule the Commencement Date of any Batch or date of commencement for any
Services upon [Redacted] prior written notice to Customer, provided that the
rescheduled Commencement Date for such Batch or date of commencement for such
Services is [Redacted] from the Commencement Date or the original estimated
Commencement Date in accordance with the applicable Binding Order; and

 

(b)

reschedule the Commencement Date of any Batch or date of commencement for any
Services upon reasonable prior written notice to Customer, provided that the
rescheduled Commencement Date or date of commencement is [Redacted] from the
Commencement Date or date of commencement originally estimated in the Project
Plan.

If Lonza so reschedules any Batch, Lonza’s obligation to provide storage for
such Batch without charge pursuant to Clause 7.3 shall extend to the later of:
(i) [Redacted] after the actual Release of such Batch; or (ii) [Redacted] after
the date such Batch would have been Released if the Commencement Date had not
been so rescheduled.

 

6.3.2

If Customer requests to change the Commencement Date of any Batch, Lonza will
make all reasonable attempts to accommodate the request; provided, however, in
the event that this change would impact other projects scheduled for occupancy
in the designated suite or suites and/or Lonza is not able to secure a project
for the manufacturing space, and for the same dates and duration that would have
been occupied by Customer, Lonza shall provide Customer notice thereof and the
proposed revised schedule, and, to the extent Customer confirms in writing its
request to make such change after receiving such notice, the manufacture of
Customer’s Batch and/or performance of such Services for Customer may be delayed
as set forth in the revised schedule in Lonza’s notice.  Any such delay
requested by Customer of more than [Redacted] shall be considered a cancellation
pursuant to Clause 6.4.

6.4

Cancellation of a Binding Order.  Customer may cancel all or any part of a
Binding Order upon written notice to Lonza, subject to the payment of a
cancellation fee as calculated below (the “Cancellation Fee”):

 

6.4.1

In the event that Customer provides written notice of cancellation to Lonza
[Redacted] prior to the Commencement Date of one (1) or more Batch(es), then
[Redacted] of the Batch Price of each such Batch cancelled is payable;

 

6.4.2

In the event that Customer provides written notice of cancellation to Lonza
[Redacted] prior to the Commencement Date of one (1) or more Batch, then
[Redacted] of the Batch Price of each such Batch cancelled is payable; and

 

6.4.3

In the event that Customer provides written notice of cancellation to Lonza
[Redacted]prior to the Commencement Date of one (1) or more Batch, then
[Redacted] of the Batch Price of each such Batch cancelled is payable.  

For the avoidance of doubt: (a) any Batches scheduled to commence [Redacted],
after the date of a notice of Cancellation shall not incur any Cancellation Fee;
(b) no cancellation of a Batch pursuant to any amendments to the Project Plan
which the Parties may agree in accordance with the BLA Agreement shall
constitute a cancellation and no Cancellation Fee set out in this Clause 2.8
shall apply; (c) no

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cancellation of a Batch by Customer as a result of a [Redacted] shall incur any
Cancellation Fee; provided that [Redacted].

6.5

Payment of a Cancellation Fee. The Cancellation Fee shall be payable [Redacted]
of date of an invoice (to the extent not disputed pursuant to Clause 6.7) which
shall be issued by Lonza following receipt by Lonza of Customer’s written notice
of cancellation associated with the cancelled Batch or Services but no earlier
than when such amounts would have been invoiced for such Batch pursuant to
Clause 8.3 absent such cancellation.  The Cancellation Fee shall be reduced by
any payments that Customer has already made for the cancelled Batches and/or
Services.  In addition to the Cancellation Fee, Customer shall pay for all
pass-through costs associated with the cancelled Batch and/or Services,
including the costs of Raw Materials that Lonza has irrevocably incurred in
accordance with a Binding Order and the Raw Materials Fee for such Raw
Materials, in each case, that Customer would have otherwise been responsible for
paying and/or reimbursing pursuant to this Agreement if such Batch had been
manufactured without cancellation.

6.6

Replacement Project.  Notwithstanding the foregoing, Lonza will use commercially
reasonable efforts to secure a new project (but excluding any project for which,
at the time of cancellation, there is a binding obligation on Lonza to conduct
or reserve capacity) for manufacturing space and for the same dates and duration
that would have been occupied by Customer; and then in such case the
Cancellation Fee for each Batch cancelled that is replaced by a batch of the new
project shall be reduced by [Redacted] of the fees associated with such
replacement batch.  Lonza shall use commercially reasonable efforts to identify
and secure a new project(s) (but excluding any project for which, at the time of
cancellation or delay, there is a binding obligation on Lonza to conduct or
reserve capacity) to utilize resources reserved for cancelled or delayed
Services and to the extent such resources were utilized the Cancellation Fee, as
applicable, for cancelled and/or delayed Services shall be reduced by an amount
[Redacted] of the fees associated with such alternative utilization of
resources.

6.7

Disputes.  If Lonza invoices Customer for a Cancellation Fee in accordance with
Clause 6.5 and Customer disputes such invoice, the matter shall be referred to
the Joint Steering Committee for attempted resolution with each Party
cooperating to resolve such dispute and if the Joint Steering Committee does not
resolve such dispute, upon Customer’s request, Lonza shall permit an independent
Third Party reasonably agreed upon by the Parties to inspect the books and
records of Lonza to verify whether such Cancellation Fee was due, and if so, the
amount thereof.

7

Delivery and Acceptance

7.1

Delivery.  All Product shall be delivered EXW (as defined by Incoterms® 2010)
the Facility (the “Release”).  With respect to any Customer Materials, title and
risk of loss shall remain with Customer and shall not transfer to
Lonza.  Customer shall bear the risk of loss of any Customer Materials provided
to Lonza, except Lonza shall bear the risk of loss through the negligence,
neglect and/or intentional misconduct of Lonza and/or its Affiliate and/or
Subcontractor of any Customer Material.  With respect to Product, title and risk
of loss shall transfer to Customer upon Release in accordance with this
provision.

7.2

Certificates of Analysis and Compliance. Lonza shall deliver to Customer the
Certificate of Analysis, Certificate of Compliance and such other documentation
as is reasonably required and/or requested by Customer to meet all applicable
regulatory requirements of the Governmental Authorities not later than the date
of Release of such cGMP Batches; provided that Lonza may, upon notice to
Customer, supply

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certain trade secret information, such as Lonza’s media and feed formulation,
directly to the relevant Governmental Authority instead of supplying it to
Customer.

7.3

Storage.  Customer shall arrange for shipment and take delivery of Product from
the Facility, at Customer’s expense, within [Redacted] after Release or pay
applicable storage costs.  Lonza shall provide storage for Product at no charge
for up to [Redacted]; provided that any additional storage beyond [Redacted]
will be subject to storage being made available at Lonza’s sole discretion and,
if so available, will be charged to Customer at Lonza’s then-standard rates and
will be subject to a separate agreement.  In addition to Clause 8.2, Customer
shall be responsible for all value added tax (VAT) and any other applicable
taxes, levies, import, duties and fees of whatever nature imposed as a result of
any storage (other than taxes on Lonza’s income, employees and/or property).

7.4

Acceptance/Rejection of Batches.

 

7.4.1

Promptly following Release of a Batch, Customer shall inspect such Batch and
shall have the right to test such Batch to determine if it is a Failed
Batch.  Customer shall notify Lonza in writing of any rejection of a Batch based
on any claim that it is a Failed Batch within [Redacted] after Release, after
which time all unrejected Batch(es) shall be deemed accepted.  Notwithstanding
the foregoing, if Customer and/or its designee first discovers that any Batch is
a Failed Batch and such failure would not have been readily discoverable from a
reasonable testing or review of the Products (collectively, “Latent Defects”),
Customer shall have the continuing right to reject the Batch, provided it
notifies Lonza of the Latent Defect within [Redacted] after the discovery of the
Latent Defect provided that such Latent Defect is discovered within the normal
shelf-life of the Batch.

 

7.4.2

For any Batch rejected by Customer, Lonza shall promptly, but in any event
within thirty (30) days after notice of rejection is received by Lonza, conduct
and complete an initial root cause analysis to determine, or establish a plan
for determining, the causes of the failure or non-conformity of the Batch.  If,
pursuant to such initial analysis, Lonza reasonably determines a longer period
of time is needed to complete the full root cause analysis, Lonza shall complete
such full analysis within a mutually agreed timeframe.  Upon completion of such
full analysis, Lonza shall provide Customer with a report detailing the root
causes of such failure or non-conformity of such Batch and Lonza’s action plan
to remediate all issues identified in such report.  Lonza shall give all members
of the Joint Steering Committee at least monthly reports on Lonza’s execution of
any such open action plan.

 

7.4.3

In the event that Lonza believes that a Batch has been incorrectly rejected for
failure to conform with the Specifications, [Redacted].  Lonza may, at its
expense, retain and test the samples of such Batch.  In the event of a
discrepancy between Customer’s and Lonza’s test results such that Lonza’s test
results show no failure or non-conformity to Specifications, or there exists a
dispute between the Parties over the extent to which such failure and/or
non-conformity to Specifications is attributable to a given Party, the Parties
shall cause an independent laboratory promptly to review records, test data and
perform comparative tests and analyses on samples of the Product that allegedly
fails to conform to Specifications.  Such independent laboratory shall be
mutually agreed upon by the Parties.  The independent laboratory’s results shall
be in writing and shall be final and binding save for manifest error.  Unless
otherwise agreed to by the Parties in writing, the costs associated with such

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testing and review shall be borne by the Party against whom the independent
laboratory rules.  The Party against whom the independent laboratory rules will
be required to reimburse the other Party for shipping, storage and other similar
out-of-pocket expenses incurred by the other Party in connection with such
rejected Batch.

 

7.4.4

Lonza shall, at Customer’s sole discretion, replace or provide a full refund for
any Failed Batch, [Redacted] (collectively “Lonza
Responsibility”).  Replacement(s) for Failed Batches shall be made by Lonza as
soon as reasonably possible (after confirmation of Lonza Responsibility if a
determination of Lonza Responsibility is required).  If Customer elects to have
a Failed Batch replaced, Customer shall pay for such replacement Batch and the
Raw Materials used therein (and any money Customer paid towards the Failed Batch
(including for Raw Materials and any Raw Material Fees) shall be credited to the
cost of the replacement Batch and related Raw Materials used in the replacement
Batch).  For clarity, no separate and/or additional Raw Material Fee shall be
payable with respect to Raw Materials used to replace a Failed Batch that is a
Lonza Responsibility and the Batch Price for a replacement of a Failed Batch
shall be no greater than the Batch Price for the Failed Batch.  If any
replacement Batch provided as replacement for a Failed Batch also fails to
conform with the Specifications and/or was not manufactured in accordance with
cGMP, the Master Batch Record and the Quality Agreement, then, at Customer’s
sole discretion, Lonza shall either replace such Batch or shall refund the
amounts paid by Customer for such Batch (including any amounts credited from the
original Failed Batch).

 

7.4.5

Without limiting Clause 11.1, Customer acknowledges and agrees that its sole
remedy with respect to a Failed Batch that is a Lonza Responsibility is as set
forth in this Clause 7.4.5 and in furtherance thereof, Customer hereby waives
all other remedies at law or in equity regarding the foregoing claims. Lonza
shall not be responsible for the cost of Raw Materials or Customer Materials
properly consumed in any Failed Batch except to the extent set forth in this
Clause 7.4.  Upon Customer’s request, Lonza shall use commercially reasonable
efforts to schedule for as soon as reasonably possible the manufacture and
supply of a replacement Batch for any Failed Batch that is not a Lonza
Responsibility provided that Customer shall pay for such replacement Batch and
the Raw Materials used therein.

7.5

Order Fulfillment

 

7.5.1

If Lonza is unable to deliver to Customer any Batch ordered by Customer by its
final agreed scheduled delivery date (i.e., the agreed delivery date set at the
time Lonza freezes its production schedule in advance of the applicable month in
which production will start), due to a Failed Batch or otherwise, Lonza shall
replace such undelivered Batches as soon as reasonably possible.

 

7.5.2

If, in any calendar year during the Term, Lonza is unable to deliver to Customer
[Redacted] in such calendar year by their final agreed scheduled delivery dates,
this shall be considered a “Supply Failure,” unless such failure to deliver is
due to the fault of Customer.  If Lonza is unable to replace any Batch within
[Redacted] after the Supply Failure first occurred, Customer may, at its option,
cancel such Batch and Customer shall not be subject to any Cancellation Fee in
respect of such Batch.  [Redacted]

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8

Price and Payment

8.1

Services.  Pricing for the Services provided by Lonza are set out in Appendix A.

8.2

Taxes.  Unless otherwise indicated in writing by Lonza, all Prices and charges
are exclusive of value added tax (VAT) and of any other applicable taxes,
levies, import, duties and fees of whatever nature imposed by and/or under the
authority of any government and/or public authority and all such charges
applicable to the Services (other than taxes on Lonza’s income, employees and/or
property) shall be paid by Customer.  When sending payment to Lonza, Customer
shall quote the relevant invoice number in its remittance advice.  If Lonza is
required to charge and remit any such taxes, it shall itemize all such taxes on
the applicable invoice sent to Customer.

8.3

Invoices and Payments.  Lonza shall issue invoices to Customer [Redacted]of the
Price for the Batches or Services upon commencement thereof and [Redacted] upon
Release of applicable Batches or completion of applicable Services, unless
otherwise agreed in the applicable accepted purchase order.  Charges for Raw
Materials and the Raw Materials Fee for each Batch shall be invoiced upon the
Release of each Batch.  [Redacted] for Resins plus the Raw Materials Fee
relating to such Resins shall be invoiced upon receipt of applicable Resins by
Lonza.  All invoices are strictly net and payment of undisputed amounts must be
made within [Redacted] of date of invoice.

8.4

Repeated Late Payments.  If Customer fails to pay an undisputed invoice within
[Redacted] after the due date as set out in Clause 8.3 on [Redacted] occasions,
then Lonza shall have the option to change the payment terms such that
[Redacted] of the Price for any stage of work shall be payable on commencement
and the price for Raw Materials and Resins and the Raw Materials Fee shall also
be payable [Redacted].

8.5

Late Payments.  If in default of payment of any undisputed invoice on the due
date, interest shall accrue on any amount overdue at the lesser of: [Redacted],
interest to accrue on a day to day basis until full payment; and, upon any
material default of payment of undisputed invoices, Lonza shall, at its sole
discretion, and without prejudice to any other of its accrued rights, be
entitled upon providing [Redacted] notice to suspend the provision of the
Services and/or delivery of Product until all overdue undisputed amounts have
been paid in full including interest for late payments.

8.6

Price Adjustments.

 

8.6.1

Not more than once per calendar year and [Redacted], Lonza may adjust the Price
as follows: [Redacted].  Lonza must give notice of any such Price increase on or
before [Redacted] and such Price increase will be effective as to any Batches
for which the Commencement Date is on or after January 1 of the immediately
following calendar year.

 

8.6.2

In addition to the above, subject to Customer’s written consent (such consent
not to be unreasonably withheld), the Price may be changed by Lonza, upon
reasonable prior written notice to Customer (providing reasonable detail in
support thereof), to reflect: (i) an increase in variable costs (such as energy
and/or Raw Materials, but specifically excluding labor and property costs)
[Redacted] (based on the initial Price or any previously amended Price and (ii)
any material change in [Redacted] that substantially impacts Lonza’s cost and
ability to perform the Services.

 

8.6.3

Notwithstanding Clauses 8.6.1 and 8.6.2 above, if any SOW or amendment is
executed pursuant to this Agreement, then the Price for the Services set forth

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in such SOW or amendment shall not increase [Redacted] following the date of
such SOW or amendment.  For clarity, [Redacted] such SOW or amendment, the Price
may be revised in accordance with Clauses 8.6.1 and 8.6.2.

8.7

Books and Records.  Lonza shall, during the Term and for [Redacted] thereafter,
keep complete, true and accurate books and records necessary for the accurate
and complete calculation of the amounts invoiced for Services hereunder that are
determined on a time and materials basis and/or the pass-through of costs.  Upon
Customer’s request, Lonza shall promptly provide Customer’s designated,
internationally recognized independent accounting firm, which accounting firm
must be reasonably acceptable to Lonza, with copies of such records, in order
that such accounting firm can verify the applicable amounts invoiced to Customer
hereunder.  The accounting firm shall only share with Customer a summary report
on its findings, and such report must also be shared with Lonza.  If the
accounting firm identifies any discrepancy between such amounts charged to
Customer by Lonza, and the amount that should have been charged, Lonza shall
promptly pay the amount of any overpayment to Customer, [Redacted] until repaid
to Customer in full.

8.8

Yield Price Adjustment.  [Redacted].

9

Intellectual Property

9.1

Background Intellectual Property.  Except as expressly otherwise provided
herein, neither Party will, as a result of this Agreement, acquire any right,
title, and/or interest in any Background Intellectual Property of the other
Party.

9.2

New Customer Intellectual Property.  Subject to Clause 9.3, Customer shall own
all right, title, and interest in and to any and all Intellectual Property that
Lonza and its Affiliates, the External Laboratories and/or other contractors
and/or agents of Lonza develops, conceives, invents, first reduces to practice
and/or makes, solely and/or jointly with Customer and/or others, in the
performance of the Services to the extent such Intellectual Property is directed
to an improvement to the Product, Customer Material, Cell Line, Customer
Information and/or Customer Background Intellectual Property, including all
Intellectual Property that is solely a direct derivative of and/or improvement
to the Product, Customer Material, Cell Line, Customer Information and Customer
Background Intellectual Property (collectively, the “New Customer Intellectual
Property”).  For the avoidance of doubt, “New Customer Intellectual Property”
shall include any material, processes and/or other items that solely embody,
and/or that solely are claimed and/or covered by, any of the foregoing
Intellectual Property, but excluding any New General Application Intellectual
Property.

9.3

New General Application Intellectual Property.  Notwithstanding Clause 9.2 and
subject to the license granted in Clause 9.5, Lonza shall own all right, title
and interest in Intellectual Property that Lonza and its Affiliates, the
External Laboratories and/or other contractors and/or agents of Lonza, solely
and/or jointly with Customer, develops, conceives, invents, and/or first reduces
to practice and/or makes in the course of performance of the Services to the
extent such Intellectual Property: (i) is generally applicable to the
development and/or manufacture of chemical and/or biological products and/or
product components; and/or (ii) is an improvement of, and/or direct derivative
of, any Lonza Background Intellectual Property, in each case which does not
include (and the use of which would not disclose) the Product, Customer
Materials, Customer Information and/or Customer Background Intellectual
Property, but excluding all Intellectual Property that is solely a direct
derivative of and/or solely an improvement to the Product, Customer Material,
Cell Line, Customer Information and Customer Background Intellectual Property
(“New General Application

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Intellectual Property”).  For the avoidance of doubt, “New General Application
Intellectual Property” shall include any material, processes and/or other items
that solely embody, and/or that solely are claimed and/or covered by, any of the
foregoing Intellectual Property.

9.4

Further Assurances.  Lonza hereby assigns to Customer all of its right, title
and interest in any New Customer Intellectual Property.  Lonza shall execute,
and shall require its personnel as well as its Affiliates, External Laboratories
and/or other contractors and/or agents and their personnel involved in the
performance of the Services to execute, any documents reasonably required to
confirm Customer’s ownership of the New Customer Intellectual Property, and any
documents required and/or reasonably requested by Customer, but excluding any
document that is Lonza Information, to apply for, maintain and enforce any
patent and/or other right in the New Customer Intellectual Property.

9.5

License to New General Applicable Intellectual Property.  Lonza hereby grants to
Customer a non-exclusive, world-wide, fully paid-up, revocable (solely upon
Lonza’s termination of this Agreement for Customer’s uncurable material breach
of this Agreement, but if Customer contests the claim of such material breach,
the license will not be revoked unless and until such uncurable material breach
is determined to have occurred in accordance with Clause 16.6), perpetual,
transferable license, including the right to grant sublicenses, under the New
General Application Intellectual Property: (a) to research, develop, make, have
made, use, sell and import the Product and reasonable modifications, extensions
and expansions of the Product but no other product; and/or (b) solely as it
relates to the Product and reasonable modifications, extensions and expansions
of the Product but no other product, to the extent necessary to exercise,
exploit and/or otherwise fully enjoy Customer’s rights in and to the New
Customer Intellectual Property.

9.6

License to Perform Services.  Customer hereby grants Lonza a non-exclusive,
revocable license to use the Customer Information, Customer Background
Intellectual Property and New Customer Intellectual Property during the Term
solely for the purpose of fulfilling its obligations under this
Agreement.  Except as express set forth in the prior sentence, Lonza receives no
license, right, title or interest in or to the Product, Customer Information,
Customer Background Intellectual Property and/or New Customer Intellectual
Property and all such rights are reserved by Customer.

9.7

License to the Process and License Back to Improvements.  

 

9.7.1

Lonza hereby grants Customer a non-exclusive, revocable (solely upon Lonza’s
termination of this Agreement for Customer’s uncurable material breach of this
Agreement, but if Customer contests the claim of such material breach, the
license will not be revoked unless and until such uncurable material breach is
determined to have occurred in accordance with Clause 16.6), worldwide license,
with the right to grant sublicenses to Alternate Manufacturers, under the Lonza
Information, and Lonza Background Intellectual Property incorporated into the
Process to make, have made, use, sell, offer for sale and import the Product and
reasonable modifications, extensions and expansions of the Product, provided
such Product and reasonable modifications, extensions and expansions of the
Product, but no other product, may only be made within the Approved Territory.

 

9.7.2

Customer hereby grants to Lonza and its Affiliates a non-exclusive, worldwide,
royalty free, revocable (solely upon Customer’s termination of this Agreement
for Lonza’s uncurable material breach of this Agreement, but if Lonza contests

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the claim of such material breach, the license will not be revoked unless and
until such uncurable material breach is determined to have occurred in
accordance with Clause 16.6) license, with the right to grant and authorize
sublicenses to Third Parties, under Improvements to make, have made, use sell,
offer for sale and import products and provide services, whether for itself or
any Third Party.  For the purposes of the foregoing, “Improvements” means any
material enhancement and/or improvement made by Customer to the Lonza
Information and/or Lonza Background Intellectual Property in the conduct of the
Process transferred to it under this Agreement in accordance with Clause 9.8 to
the extent such enhancement and/or improvement is severable from and does not
utilize, disclose and/or reveal any Customer Background Intellectual Property
and/or Customer Information.

9.8

Technology Transfer to Customer or Alternative Manufacturers.

 

9.8.1

Upon the written request of Customer and subject to the terms and conditions of
this Clause 9.8 and provided that Customer is not in material breach of this
Agreement (which material breach is incurable or has not timely been cured by
Customer, as the case may be), and provided further that Lonza has not
terminated this Agreement pursuant to Clause 13.2.2, Customer shall be permitted
to transfer the Process to itself and/or another Alternate Manufacturer for the
manufacture of the Product and reasonable modifications, extensions and
expansions of the Product but no other product only within the Approved
Territory.  Unless approved in advance by Lonza in writing, Customer will only
undertake such technology transfer for manufacture of the Product and reasonable
modifications, extensions and expansions of the Product, but no other product,
in the Approved Territory and only by an Alternate Manufacturer.

 

9.8.2

Customer shall provide written notice to Lonza in advance that it wishes to
exercise its rights under this Clause 9.8 (the “Technology Transfer Notice”);
the Technology Transfer Notice must be provided [Redacted] other than in
connection with termination and/or notice of termination of this Agreement
pursuant to an incurable material breach by Lonza under Clause 13.2.  The
Technology Transfer Notice shall provide reasonable details to Lonza about
whether the proposed transfer of the Process is to Customer, to an Alternative
Manufacturer or to another Third Party.  In the case of a proposed transfer of
the Process to a Third -Party or an Alternative Manufacturer, Customer shall
[Redacted], Lonza shall commence performing its obligations under this Clause
9.8.

 

9.8.3

For any transfer permitted under this Clause 9.8, Lonza shall provide reasonably
necessary documents ([Redacted]) to complete such technology transfer.  A
document will be considered “reasonably necessary” if [Redacted] such document
for the manufacture and approval of the Product.

Under no condition shall Customer be permitted to use and/or disclose for any
purpose [Redacted].

 

9.8.4

In the event that Customer requires and/or reasonably requests technical support
in relation to the Process transfer, then Lonza shall make such reasonable
technical support available to Customer, with the scheduling of such technical
support to be mutually agreed upon by the Parties.

 

9.8.5

Customer shall reimburse Lonza for any costs and expenses incurred by Lonza in
connection with producing the documents and providing the support set forth

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in Clauses 9.8.3 and 9.8.4, with costs for Lonza’s internal resources charged on
a man day rate based upon Lonza’s then-prevailing standard charge for technical
support; provided that Lonza agrees to provide [Redacted].

 

9.8.6

As part of the technology transfer, Lonza shall advise Customer of all license
from and/or payment to any Third Party that Lonza has received or pays in
connection with the manufacture of the Product, but excluding any license or
payment applicable to the general operation and maintenance of the Facility and
Lonza equipment that are not unique or specific to the Products.

 

9.8.7

Lonza shall allow Customer reasonable access to, and rights to [Redacted] to the
extent necessary and/or used for the production of Product by Lonza using some
or all of the Process solely for purposes [Redacted] for the Product and
reasonable modifications, expansions and extensions of the Product, but no other
product.

 

9.8.8

For clarity, the technology transfer process described in this Clause 9.8 shall
be instead of and not in addition to the technology transfer process described
in the BLA Agreement for the transfer of the Process for the Product
[Redacted].  The foregoing does not limit any amounts due from Customer to Lonza
as set forth in Clauses 9.8.1 through 9.8.7.

10

Warranties

10.1

Lonza Warranties.  Lonza warrants that:

 

10.1.1

the Services shall be performed in accordance with all Applicable Laws and this
Agreement;

 

10.1.2

upon Release, the Product in cGMP Batches meets the Specifications and was
manufactured in accordance with cGMP, the Master Batch Record and the Quality
Agreement, and title to all Product provided to Customer will pass to Customer
free and clear of any security interest, lien and/or other encumbrance;

 

10.1.3

it and/or its Affiliate holds all necessary permits, approvals, consents and
licenses to enable it to perform the Services at the Facility and it has the
necessary corporate authorizations to enter into and perform this Agreement;

 

10.1.4

to the best of Lonza’s knowledge and belief, without having conducted a
freedom-to-operate analysis on use of the Customer Information, Customer
Background Intellectual Property or Customer Materials, the conduct and the
provision of the Services shall not infringe, misappropriate and/or violate (as
the case may be) any proprietary and/or Intellectual Property rights of any
Third Party;

 

10.1.5

Lonza will notify Customer in writing immediately if it receives and/or is
notified of a claim from a Third Party that the use by Lonza (and/or Customer or
other entity to which the Process is transferred pursuant to Clause 9.8) of the
Process and/or the Lonza Know-How and/or the Lonza Patent Rights for Services
infringes, misappropriates and/or otherwise violates any Intellectual Property
and/or industrial property rights vested in a Third Party;

 

10.1.6

Lonza has never been debarred under the Generic Drug Enforcement Act of 1992, 21
U.S.C. Sec. 335a(a) and/or (b), and/or sanctioned by a Federal Health

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Care Program (as defined in 42 U.S.C. § 1320 a-7b(f)), including the federal
Medicare and/or a state Medicaid program, and/or debarred, suspended, excluded,
and/or otherwise declared ineligible from any Federal agency and/or program.  In
the event that during the Term of this Agreement, Lonza becomes debarred,
suspended, excluded, sanctioned, and/or otherwise declared ineligible; Lonza
agrees to immediately notify Customer.  Lonza also agrees that in the event that
it becomes debarred, suspended, excluded, sanctioned, and/or otherwise declared
ineligible, it shall immediately cease all activities relating to this
Agreement;

 

10.1.7

title to all Product and all New Customer Intellectual Property provided to
Customer under this Agreement shall pass free and clear of any security
interest, lien and/or other encumbrance; and

 

10.1.8

it shall perform all Services hereunder in a professional and workmanlike
manner, with due care and in accordance with all regulatory requirements and
standards and best practices prevailing in the industry, and it shall perform
and document each Service in accordance with the applicable Specifications,
Master Batch Record or SOW;

10.2

Customer Warranties.  Customer warrants that:

 

10.2.1

Customer has and shall at all times throughout the Term of this Agreement have
the right to supply the Cell Line, the Customer Materials and the Customer
Information to Lonza and the necessary rights to license and/or permit Lonza to
use the same for the sole purposes of performing the Services;

 

10.2.2

to the best of Customer’s knowledge and belief, the use of the Customer
Information, Customer Background Intellectual Property or Customer Materials by
Lonza in the course of performance of Services shall not infringe,
misappropriate or violate (as the case may be) any Intellectual Property rights
of any Third Party;

 

10.2.3

Customer will promptly notify Lonza in writing if it receives or is notified of
a formal written claim from a Third Party that Customer Information, Customer
Materials and Customer Intellectual Property or that the use by Lonza thereof
for the provision of the Services infringes, misappropriate or otherwise
violates any Intellectual Property or other rights of any Third Party; and

 

10.2.4

Customer has the necessary corporate authorizations to enter into this
Agreement.

10.3

DISCLAIMER:  THE WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT ARE IN LIEU OF
ALL OTHER WARRANTIES, AND ALL OTHER WARRANTIES, BOTH EXPRESS AND IMPLIED, ARE
EXPRESSLY DISCLAIMED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.

10.4

Debarment.

 

10.4.1

In the event that Customer receives notice from Lonza and/or otherwise becomes
aware that a debarment, suspension, exclusion, sanction, and/or declaration of
ineligibility action has been brought against Lonza; then Customer shall have
the right to terminate this Agreement immediately; provided that if such event
shall occur, Customer shall not have such right of

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termination if Lonza is disputing and defending such action and Lonza is
otherwise able to perform its services in the manner required under this
Agreement.

 

10.4.2

Lonza hereby certifies that it will not knowingly use in any capacity the
services of any individual, corporation, partnership and/or association which
has been debarred under 21 U.S.C. Sec. 335a(a) or (b), and/or listed in the
DHHS/OIG List of Excluded Individuals/Entities and/or the General Services
Administration’s Listing of Parties Excluded from Federal Procurement and
Non-Procurement Programs.

11

Indemnification and Liability

11.1

Indemnification by Lonza.  Subject to Clause 11.5, Lonza shall indemnify
Customer, its Affiliates, and their respective officers, employees and agents
(“Customer Indemnitees”) from and against any loss, damage, costs and expenses
(including reasonable attorney fees) that Customer Indemnitees may suffer as a
result of any Third-Party claim arising directly out of:

 

11.1.1

any breach of this Agreement and/or the Quality Agreement by Lonza, including
the warranties given by Lonza in Clause 10.1;

 

11.1.2

the nonconformity of the Product to the Specifications itself being occasioned
solely by reason of a breach of this Agreement by Lonza and/or the gross
negligence and/or intentionally wrongful acts and/or omissions of Lonza;

 

11.1.3

the gross negligence and/or intentionally wrongful acts and/or omissions of
Lonza and/or any Lonza Indemnitee; and/or

 

11.1.4

any allegation that the Services (excluding solely as a result of use of
Customer Information, Customer Background Intellectual Property and/or Customer
Materials supplied by and/or on behalf of Customer) infringes, misappropriates
and/or otherwise violates any Intellectual Property rights of a Third Party;

except in each case to the extent that such claims resulted from the negligence,
intentional misconduct and/or breach of this Agreement and/or the Quality
Agreement by any Customer Indemnitees.  

Notwithstanding the foregoing, Lonza shall have no obligations under this Clause
11.1 for any liabilities, expenses, and/or costs to the extent arising out of
and/or relating to claims covered under Clause 11.2.

11.2

Indemnification by Customer.  Subject to Clause 11.5, Customer shall indemnify
Lonza, its Affiliates, and their respective officers, employees and agents
(“Lonza Indemnitees”) from and against any loss, damage, costs and expenses
(including reasonable attorney fees) that Lonza Indemnitees may suffer as a
result of any Third-Party claim arising directly out of:

 

11.2.1

any breach of this Agreement and/or the Quality Agreement by Customer, including
the warranties given by Customer in Clause 10.2 above;

 

11.2.2

any claims alleging that the use of the Customer Information, Customer
Background Intellectual Property and/or Customer Materials in the course of
performance of Services infringes any Intellectual Property rights of a Third
Party;

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11.2.3

the manufacture, use, sale, or distribution of the Product by or on behalf of
Customer, including any claims of product liability;

 

11.2.4

the gross negligence and/or intentionally wrongful acts and/or omissions of
Customer and/or any Customer Indemnitee; or

 

11.2.5

any allegation that the use by Lonza of any Customer Information, Customer
Background Intellectual Property and/or Customer Materials supplied by and/or on
behalf of Customer for the purpose of this Agreement (excluding solely as a
result of use by and/or on behalf of Lonza of Lonza Background Intellectual
Property, Lonza Information and/or other material and/or information supplied by
Lonza) infringes, misappropriates and/or otherwise violates any Intellectual
Property rights of a Third Party;

except, in each case, to the extent that such claims resulted from the
negligence, intentional misconduct and/or breach of this Agreement and/or the
Quality Agreement by any Lonza Indemnitees.

Notwithstanding the foregoing, Customer shall have no obligations under this
Clause 11.2 for any liabilities, expenses, and/or costs to the extent arising
out of and/or relating to claims covered under Clause 11.1.

11.3

Indemnification Procedure.  If the Party to be indemnified intends to claim
indemnification under this Clause 11, it shall promptly notify the indemnifying
Party (“Indemnitor”) in writing of such claim.  The Indemnitor shall have the
right to control the defense and settlement thereof; provided, however, that:
(i) the Indemnitor must obtain the prior written consent of the indemnitee (not
to be unreasonably withheld) before entering into any settlement of such
Third-Party claim; (ii) any indemnitee shall have the right to retain its own
counsel at its own expense; and (iii) if the amount sought in any Third-Party
claim (alone or in aggregate with all other Third-Party claims) (collectively,
“Covered Claims”) exceeds the amounts remaining payable by the Indemnitor
pursuant to Clause 11.5 or the indemnitee otherwise believes that the total
amount payable pursuant to the Covered Claims may exceed the amounts remaining
payable by the Indemnitor pursuant to Clause 11.5, then the Parties shall
discuss and use reasonable endeavours to agree who has conduct and control of
the Covered Claims provided that if the Parties are not able to agree within
thirty (30) days after the indemnitee provides Indemnitor with notice of its
desire to take over control of such Covered Claims (or such shorter period as
necessary to preserve all of the indemnitee’s rights), indemnitee may, at its
election, retain full control over the such Covered Claims unless the Indemnitor
executes a separate agreement with the indemnitee agreeing that it shall pay all
amounts payable in connection with such Covered Claims irrespective of the
limitation of liability in Clause 11.5.  The indemnitee, its employees and
agents, shall reasonably cooperate, at the Indemnitor’s expense, with the
Indemnitor in the investigation of any liability covered by this Clause 11.  If
the indemnitee elects to control the defense of any Covered Claim as permitted
herein, the Indemnitor, its employees and agents, shall reasonably cooperate, at
the Indemnitor’s expense, with the indemnitee in the investigation of any
liability covered by this Clause 11 with respect to such Covered Claim(s).  The
failure to deliver prompt written notice to the Indemnitor of any claim, to the
extent prejudicial to its ability to defend such claim, shall relieve the
Indemnitor of its obligation to the indemnitee under this Clause 11 only to the
extent of such prejudice.

11.4

DISCLAIMER OF CONSEQUENTIAL DAMAGES.  EXCEPT FOR EITHER PARTY’S BREACH OF CLAUSE
12 HEREOF, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
INCIDENTAL, INDIRECT, SPECIAL,

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PUNITIVE OR CONSEQUENTIAL DAMAGES, LOST PROFITS OR LOST REVENUES ARISING FROM OR
RELATED TO THIS AGREEMENT, EXCEPT TO THE EXTENT RESULTING FROM FRAUD, GROSS
NEGLIGENCE, WILLFUL BREACH OR INTENTIONAL MISCONDUCT.  THE PARTIES AGREE THAT
ANY AMOUNT ORDERED TO BE PAID BY A COURT OF COMPETENT JURISDICTION OR AGREED TO
BE PAID PURSUANT TO A SETTLEMENT TO ANY THIRD PARTY IN CONNECTION WITH ANY CLAIM
INDEMNIFIED PURSUANT TO CLAUSE 11.1 AND/OR 11.2 WILL BE DEEMED A DIRECT DAMAGE
NOT SUBJECT TO THE ABOVE DISCLAIMER, EVEN IF SUCH DAMAGE IS OTHERWISE
CHARACTERIZED IN SUCH CLAIM.

11.5

LIMITATION OF LIABILITY.  SUBJECT ALWAYS TO CLAUSE 11.4, EACH PARTY’S LIABILITY
UNDER THIS AGREEMENT SHALL IN NO EVENT EXCEED, [Redacted]; EXCEPT TO THE EXTENT
RESULTING FROM: (i) SUCH PARTY’S GROSS NEGLIGENCE, WILLFUL BREACH AND/OR
INTENTIONAL MISCONDUCT; (ii) SUCH PARTY’S BREACH OF CLAUSE 12 (CONFIDENTIALITY);
(iii) MISUSE OF THE OTHER PARTY’S INTELLECTUAL PROPERTY; AND/OR (iv) CUSTOMER’S
OBLIGATION TO PAY FOR SERVICES PURSUANT TO CLAUSE 8.

11.6

Additional Exceptions.  Nothing in this Agreement shall exclude and/or limit the
liability of either Party for fraud, breach its obligations in respect of
Intellectual Property pursuant to Clause 9 and/or for death and/or personal
injury caused by its negligence and/or for any other liability that may not be
limited and/or excluded as a matter of law.

12

Confidentiality

12.1

Confidentiality Obligations.  A Party receiving Confidential Information (the
“Receiving Party”) agrees to strictly keep secret any and all Confidential
Information received during the Term from and/or on behalf of the other Party
(the “Disclosing Party”) using at least the same level of measures as it uses to
protect its own Confidential Information, but in any case at least commercially
reasonable and customary efforts.  Confidential Information shall include
information disclosed in any form including in writing, orally, graphically
and/or in electronic and/or other form to the Receiving Party, observed by the
Receiving Party and/or its employees, agents, consultants, and/or
representatives, and/or otherwise learned by the Receiving Party under this
Agreement, which the Receiving Party knows and/or reasonably should know is
confidential and/or proprietary.

12.2

Required Disclosures.  Notwithstanding the foregoing, Receiving Party may
disclose to any courts and/or other authorities Confidential Information which
is and/or will be required pursuant to applicable governmental and/or
administrative and/or public law, rule, regulation and/or order.  In such case
the Party that received the Confidential Information will, to the extent legally
permitted, inform the other Party promptly in writing and cooperate with the
Disclosing Party in seeking to minimize the extent of Confidential Information
which is required to be disclosed to the courts and/or authorities.

12.3

Exceptions.  The obligation to maintain confidentiality under this Agreement
does not apply to Confidential Information, which:

 

12.3.1

at the time of disclosure was publicly available;

 

12.3.2

is and/or becomes publicly available other than as a result of a breach of this
Agreement by the Receiving Party;

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12.3.3

as the Receiving Party can establish by competent proof, was rightfully in its
possession at the time of disclosure by the Disclosing Party without obligation
of confidentiality and had not been received from and/or on behalf of Disclosing
Party;  

 

12.3.4

is supplied to a Party without obligation of confidentiality by a Third Party
which was not in breach of an obligation of confidentiality to Disclosing Party
and/or any other Third Party; and/or

 

12.3.5

is developed by the Receiving Party independently from and without use of the
Confidential Information, as evidenced by contemporaneous written records.

12.4

Use and Return of Confidential Information.  The Receiving Party will use
Confidential Information only for the purposes of this Agreement and/or as
otherwise permitted by this Agreement and will not make any use of the
Confidential Information for its own separate benefit and/or the benefit of any
Third Party including with respect to research and/or product development and/or
any reverse engineering and/or similar testing; provided that Customer may test
any materials provided by Lonza including Product and Cell Lines as necessary
for Customer’s quality assurance, quality control or compliance with Applicable
Laws.  The Receiving Party agrees to return and/or destroy promptly (and certify
such destruction) on Disclosing Party’s request all written and/or tangible
Confidential Information of the Disclosing Party, except that one copy of such
Confidential Information may be kept by the Receiving Party in its confidential
files for record keeping purposes only.

12.5

Disclosure to Representatives.  Each Party will restrict the disclosure of
Confidential Information to such officers, employees, professional advisers,
finance-providers, consultants, and representatives of itself and its Affiliates
(and/or in the case of Customer, any Third Party it transfers the Process to in
accordance with this Agreement) who have been informed of the confidential
nature of the Confidential Information and who have a need to know such
Confidential Information for the purpose of this Agreement and/or an applicable
financing and/or acquisition.  Customer may disclose Confidential Information of
Lonza and its Affiliates to potential and actual acquirers provided such
disclosure is limited to the terms of this Agreement and/or work product
provided to Customer by Lonza as a consequence of the provision of the
Services.  Prior to disclosure to such persons, the Receiving Party shall bind
its and its Affiliates’ officers, employees, consultants, potential and actual
acquirers and representatives to confidentiality and non-use obligations no less
stringent than those set forth herein.  The Receiving Party shall notify the
Disclosing Party as promptly as practicable of any unauthorized use and/or
disclosure of the Confidential Information.

12.6

Responsibility for Representatives.  The Receiving Party shall at all times be
fully liable for any and all breaches of the confidentiality obligations in this
Clause 12.6 by any of its Affiliates and/or the employees, consultants and
representatives of itself and/or its Affiliates.

12.7

Equitable Relief.  Each Party hereto expressly agrees that any breach and/or
threatened breach of the undertakings of confidentiality provided under this
Clause 12 by a Party may cause irreparable harm to the other Party and that
monetary damages may not provide a sufficient remedy to the non-breaching Party
for any breach and/or threatened breach.  In the event of any breach and/or
threatened breach, then, in addition to all other remedies available at law
and/or in equity, the non-breaching Party shall be entitled to seek injunctive
relief and any other relief deemed appropriate by the non-breaching Party.

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13

Term and Termination

13.1

Term.  This Agreement shall commence on the Effective Date and, unless
terminated earlier as provided herein, shall remain in full force until ten (10)
years after the Effective Date (the “Term”).

13.2

Termination.  This Agreement may be terminated as follows:

 

13.2.1

by Customer for any reason or no reason, with an effective date of termination
no earlier than [Redacted] after the Effective Date, by providing at least
[Redacted] advance written notice to Lonza;

 

13.2.2

by either Party if the other Party breaches a material provision of this
Agreement and/or the Quality Agreement and fails to cure such breach to the
reasonable satisfaction of the non-breaching Party within [Redacted] following
written notification of such breach from the non-breaching Party to the
breaching Party; provided, however, that such [Redacted] period shall be
extended as agreed by the Parties if the identified breach is incapable of cure
[Redacted] and if the breaching Party provides a plan and timeline to cure the
breach, promptly commences efforts to cure the breach and diligently prosecutes
such cure (it being understood that this extended period shall be unavailable
for any breach regarding non-payment);

Without limiting the generality of Clause 13.2.2, Lonza shall be deemed to have
breached a material provision of this Agreement if: [Redacted];

 

13.2.3

by either Party, immediately, if the other Party becomes adjudicated insolvent,
is dissolved and/or liquidated, makes a general assignment for the benefit of
its creditors, and/or files or has filed against it, a petition in bankruptcy or
has a receiver appointed for a substantial part of its assets and such action is
not reversed within ninety (90) days;

 

13.2.4

by Customer pursuant to Clause 7.5.2 (Uncured Supply Failure);

 

13.2.5

by Customer pursuant to Clause 10.4.1 (Debarment); or

 

13.2.6

by Customer pursuant to Clause 14.1 (Force Majeure).

13.3

Consequences of Termination.  In the event of termination:

 

13.3.1

by Customer pursuant to Clause 13.2.2 (Material Breach), 13.2.3
(Insolvency),13.2.4 (Uncured Supply Failure), 13.2.5 (Debarment) or 13.2.6
(Force Majeure):

 

(a)

Lonza shall be compensated for Services and Batches rendered up to the date of
termination, including in respect of any Product in-process;

 

(b)

Lonza shall be compensated for all pass-through costs incurred through to the
date of termination, including Raw Materials costs and Raw Materials Fees for
Raw Materials used and/or purchased for use in accordance with Binding Orders;
and

 

(c)

if requested by Customer, Lonza shall supply to Customer Batches in accordance
with Binding Orders placed prior to the effective date of

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termination, with such supply, including the payment therefore, to be undertaken
in accordance with the terms of this Agreement.

 

13.3.2

by Customer pursuant to Clause 13.2.1 (Termination for Convenience) or
termination by Lonza pursuant to Clauses 13.2.2 (Material Breach) or 13.2.3
(Insolvency), to the extent that termination results in the cancellation of any
Services and/or Batches, Customer shall pay to Lonza a Cancellation Fee as per
the terms of Clause 6.4 (such Cancellation Fee not to exceed [Redacted], the
date of termination being taken as the date of notice of cancellation for the
purposes of the application of such Clause. For clarity, no other termination of
this Agreement shall result in Cancellation Fees being owed;

 

13.3.3

Customer shall promptly return to Lonza any Lonza Know-How it may have received
from Lonza pursuant to this Agreement, except to the extent that Customer
retains the right to use such Lonza Know-How, including pursuant to Clause 9
and/or the GS Licence, 2K Development Agreement and/or any other agreement
between or among the Parties or any of their Affiliates subject to the terms of
such agreements;

 

13.3.4

and/or expiration hereunder, Lonza shall promptly return to Customer all
Customer Information and shall dispose of and/or return to Customer (at
Customer’s option and expense) the Customer Materials (and where supplied by
Customer the Cell Line) and any materials therefrom, as directed by Customer;

 

13.3.5

and/or expiration hereunder, Lonza shall promptly return to Customer all
remaining Raw Materials that Customer has paid for; and

 

13.3.6

notwithstanding Clause 6.5, any amounts payable by Customer pursuant to Clauses
13.3.1 or 13.3.2 shall be due [Redacted] of Customer’s receipt of an undisputed
invoice therefor from Lonza.

13.4

Survival.  Expiration or termination of this Agreement for whatever reason shall
not affect the accrued rights of either Lonza and/or Customer arising under
and/or out of this Agreement and all provisions which are expressed to survive
the Agreement shall remain in full force and effect including for the avoidance
of doubt but not by way of limitation Clauses 5 (Insurance), 6.6 (Replacement
Project), 7 (Delivery and Acceptance), 8.7 (Books and Records), 9 (Intellectual
Property), 10 (Warranties), 11 (Indemnification), 12 (Confidentiality), 13.3
(Consequences of Termination), 13.4 (Survival), 15 (Notice) and 16
(Miscellaneous) (to the extent relevant).

14

Force Majeure

14.1

Excused Performance.  If Lonza is prevented and/or delayed in the performance of
any of its obligations under the Agreement by Force Majeure and gives written
notice thereof to Customer specifying the matters constituting Force Majeure
together with such evidence as Lonza reasonably can give and specifying the
period for which it is estimated that such prevention and/or delay will
continue, Lonza shall be excused from the performance and/or the punctual
performance of such obligations as the case may be from the date of such notice
for so long as such cause of prevention and/or delay shall continue.  Provided
that, if such Force Majeure persists for a period of [Redacted], Customer may
terminate this Agreement by delivering written notice to the other Party.

14.2

Definition.  “Force Majeure” shall mean any reason and/or cause beyond Lonza’s
reasonable control affecting the performance by Lonza of its obligations under
the

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Agreement, including any cause arising from and/or attributable to acts of God,
strike, labor troubles, restrictive governmental orders and/or decrees, riots,
insurrection, war, terrorists acts, and/or the inability of Lonza to obtain any
required raw material, energy source, equipment and/or transportation.

14.3

Lonza Affiliates and Suppliers.  With regard to Lonza, any such event of Force
Majeure affecting services and/or production at its Affiliates and/or suppliers
shall be regarded as an event of Force Majeure.

15

Notices

15.1

Notice Addresses.  Any notice or other communication to be given under this
Agreement shall be delivered personally and/or sent by email, or if email is not
available, by first class pre-paid post addressed as follows:

 

15.1.1

[Redacted]

 

15.1.2

[Redacted]

 

or to such other destination as either Party hereto may hereafter notify to the
other in accordance with the provisions of this Clause 15.

15.2

Timing of Delivery.  All such notices and/or other communications shall be
deemed to have been served as follows:

 

15.2.1

if delivered personally, at the time of such delivery;

 

15.2.2

if sent by email, upon confirmation of receipt by the recipient; or

 

15.2.3

if sent by first class pre-paid post, four (4) business days (Saturdays, Sundays
and bank and/or other public holidays excluded) after being placed in the post.

16

Miscellaneous

16.1

Severability.  If any provision hereof is or becomes at any time illegal,
invalid and/or unenforceable in any respect, neither the legality, validity nor
enforceability of the remaining provisions hereof shall in any way be affected
and/or impaired thereby.  The Parties hereto undertake to substitute any
illegal, invalid and/or unenforceable provision by a provision which is as far
as possible commercially equivalent considering the legal interests and the
purpose of the provision.

16.2

Amendments.  Modifications and/or amendments of this Agreement must be in
writing and signed by the Parties.  Lonza shall be entitled to instruct one or
more of its Affiliates to perform any of Lonza’s obligations contained in this
Agreement, but Lonza shall remain fully responsible in respect of those
obligations.  

16.3

Assignment.  Neither Party shall be entitled to assign, transfer, charge and/or
in any way make over the benefit and/or the burden of this Agreement without the
prior written consent of the other which consent shall not be unreasonably
withheld and/or delayed, save that either Party shall be entitled without the
prior written consent of the other Party to assign or transfer, this Agreement:
(i) to an Affiliate; (ii) to any joint venture company of which Lonza or
Customer, as the case may be, is the beneficial owner of at least fifty percent
(50%) of the issued share capital thereof; (iii) to any company with which that
Party may merge or by which that Party is acquired; or (iv) to any company to
which that Party may transfer all or substantially all of its assets and
undertakings pertaining to this Agreement.  No assignment shall relieve any
Party of responsibility

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for the performance of any obligation that accrued prior to the effective date
of such assignment.

16.4

Publicity.  The text of any press release and/or other communication to be
published by and/or in the media concerning the subject matter of this Agreement
shall require the prior written approval of both Lonza and Customer.

16.5

Governing Law.  This Agreement is governed in all respects by the laws of the
State of New York without regard to its conflicts of laws principles.

16.6

Dispute Resolution.  All dispute, controversy and/or claim arising out of and/or
in connection with this Agreement (each, a “Dispute”) shall be finally settled
under the Rules of Arbitration (the “Rules”) of the International Chamber of
Commerce (“ICC”) by three arbitrators appointed in accordance with the Rules, as
modified hereby.  Each Party shall appoint one arbitrator.  The third
arbitrator, who shall act as president of the arbitral tribunal, shall be
jointly nominated by the other two arbitrators within 30 days of the
confirmation of the second arbitrator.  If the president of the arbitral
tribunal is not nominated within this time period, such arbitrator shall be
appointed in accordance with the Rules.  The seat or place of arbitration shall
be in the Borough of Manhattan, New York, New York, USA.  The arbitration shall
be conducted and the award shall be rendered in the English language.  The
arbitrators will have no authority to award any damages prohibited by this
Agreement and/or any remedy that could not have been awarded by a state or
federal court located in the in the Borough of Manhattan, New York, New York,
USA.  The arbitrators’ decisions and awards shall be provided in writing and
shall include the basis on which they are made.  The award rendered by the
arbitrators shall be final, non-appealable and binding on the Parties and may be
entered and enforced in any court having jurisdiction over the Party against
whom the award is being enforced and/or such Party’s assets.  During any
Dispute, each Party agrees to continue to perform its obligations under this
Agreement if and until such performance is excused pursuant to the resolution of
such Dispute.  In addition, each Party hereby submits to the non-exclusive
jurisdiction of the state and federal courts located in the Borough of
Manhattan, New York, New York, USA for purposes of determining the arbitrability
of any Dispute, causing such Party to appear for and participate in such
arbitration and enforcing any award granted by the arbitrators, and each Party
hereby submits to such jurisdiction. Notwithstanding the foregoing, if Lonza
commits a Willful Breach, Customer may, at its election, bring and maintain any
claim against Lonza for such Willful Breach against Lonza in any court of
competent jurisdiction.

16.7

Entire Agreement.  This Agreement contains the entire agreement between the
Parties as to the subject matter hereof and supersedes all prior and
contemporaneous agreements with respect to the subject matter hereof, excluding
for clarity the BLA Agreement and 2K Development Agreement. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original, and all of which together shall constitute one and the same
document.  Each Party acknowledges that an original signature and/or a copy
thereof transmitted by email and/or by .pdf shall constitute an original
signature for purposes of this Agreement.

16.8

Third Party Rights.  The Parties to this Agreement do not intend that any term
hereof should be enforceable by virtue of the Contracts (Rights of Third
Parties) Act 1999 by any person who is not a party to this Agreement.

16.9

Non-Exclusive Nature of Remedies.  Unless otherwise expressly set forth in this
Agreement, no remedies set forth herein shall be considered an exclusive
remedy.  Pursuit or receipt of any remedies by a Party for breach of this
Agreement by the other

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Party does not constitute an election of remedies by such Party to the exclusion
of other remedies potentially available.

16.10

Successors.  Subject to the restrictions on transfer contained in this
Agreement, this Agreement will enure to the benefit of and be binding on the
Parties and their respective successors and permitted assigns.

*  *  *  *  *  *  *

1.1

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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
executed by its duly authorized representative effective as of the date written
above.

LONZA SALES AG

By:

Name

Title

By:

Name

Title

ALLAKOS, INC.

By:

Name:

Title:

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APPENDIX A

[Redacted]

 

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APPENDIX B

[Redacted]

 

 

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APPENDIX C

[Redacted]

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APPENDIX D

[Redacted]

 

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