EXHIBIT 2.4(b)(iv)

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 

 

 

 

 

CLINICAL MANUFACTURING agreement

 

 

By and between

 

 

XBiotech USA, Inc.

 

 

And

 

 

JANSSEN RESEARCH & DEVELOPMENT LLC

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

Page

 

Article 1   DEFINITIONS 1             Article 2   CLINICAL PRODUCT MANUFACTURE
AND SUPPLY 5     2.1   Manufacture and Supply. 5     2.2   Materials and
Capacity. 5     2.3   Forecasts. 6     2.4   Purchase Orders 6     2.5  
Packaging. 7     2.6   Delivery of Clinical Products. 7             Article 3  
PRICING; PAYMENT 7     3.1   Supply Price. 7     3.2   Invoices and Payments. 8
            Article 4   TRANSITION 8     4.1   Transition. 8             Article
5   SPECIFICATIONS AND QUALITY CONTROL MATTERS 9     5.1   Compliance with Law.
9     5.2   Clinical Product Requirements. 9     5.3   Specifications. 10    
5.4   Quality Agreement. 10     5.5   Nonconforming Clinical Product. 11     5.6
  Clinical Product Actions. 12     5.7   Manufacturing Site Audits. 12     5.8  
Regulatory Matters. 12     5.9   Person-In-Plant. 13     5.10   Records and
Information Management. 14             Article 6   REPRESENTATIONS, WARRANTIES
AND COVENANTS 14     6.1   Mutual Representations and Warranties. 14     6.2  
Capacity. 15     6.3   Certain Compliance Matters. 15     6.4   No Other
Representations or Warranties. 15             Article 7   CONFIDENTIALITY AND
PUBLICITY 16     7.1   Confidentiality. 16             Article 8   TERM AND
TERMINATION 16     8.1   Term. 16     8.2   Termination by Mutual Agreement. 16

 

 

 i 

 

    8.3   Termination for Material Breach. 17     8.4   Termination for
Convenience. 17     8.5   Effects of Termination or Expiration. 17     8.6  
Survival. 17             Article 9   DISPUTE RESOLUTION 17     9.1   Dispute
Resolution, Generally. 17     9.2   Mediation. 18     9.3   Arbitration. 18    
        Article 10   INDEMNIFICATION 20     10.1   Incorporation of Asset
Purchase Agreement Indemnification Provisions. 20             Article 11  
MISCELLANEOUS 20     11.1   Notices. 20     11.2   Governing Law. 20     11.3  
Assignment. 20     11.4   Designation of Affiliates. 20     11.5   Relationship
of the Parties. 21     11.6   Force Majeure. 21     11.7   Severability. 21    
11.8   English Language. 21     11.9   Waiver and Non-Exclusion of Remedies. 22
    11.10   Further Assurance. 22     11.11   Headings. 22     11.12  
Construction. 22     11.13   Counterparts. 23     11.14   Entire Agreement;
Amendments. 23     11.15   Specific Performance. 23

 

Exhibit List

 

Exhibit A  Initial Forecast Schedule Exhibit B  Specifications Exhibit C 
Compliance with Laws Exhibit D  Policy on Employment of Young People Exhibit E 
Johnson & Johnson Policy for Wood Pallets Exhibit F  Company Records and
Information Requirements Exhibit G  New Formulations Exhibit H  Transition
Matters

 ii 

 

CLINICAL MANUFACTURING AGREEMENT

 

This CLINICAL MANUFACTURING AGREEMENT (this “Agreement”) is entered into as of
December 30, 2019 (the “CMA Effective Date”), by and between JANSSEN RESEARCH &
DEVELOPMENT LLC, a Pennsylvania corporation, having its principal place of
business at 800/850 Ridgeview Drive, Horsham, PA 19044 (hereinafter “Company”),
and XBIOTECH USA, INC., a Delaware corporation, having its principal place of
business at 5217 Winnebago Lane, Austin, TX 78744 (“SUPPLIER”). Company and
SUPPLIER are sometimes referred to herein individually as a “Party” and
collectively as the “Parties”.

 

WHEREAS, XBiotech Inc., an Affiliate of SUPPLIER, and Janssen Biotech, Inc., an
Affiliate of Company, have entered into that certain Asset Purchase Agreement,
dated as of December 7, 2019 (the “Asset Purchase Agreement”); and

 

WHEREAS, pursuant to Section 2.4(b)(iv) and Section 2.4(c)(v) of the Asset
Purchase Agreement, the Parties desire to enter into this Agreement for the
Manufacture and supply of Clinical Products by SUPPLIER to Company, subject to
the terms and conditions set forth herein; and

 

WHEREAS, this Agreement constitutes the Clinical Manufacturing Agreement
contemplated by the Asset Purchase Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the premises and
conditions set forth herein, the Parties agree as follows:

 

Article 1
DEFINITIONS

 

As used in this Agreement, the following terms shall have the meanings set forth
in this Article 1, or if not defined in this Article 1, shall have the meanings
set forth in the Asset Purchase Agreement:

 

“Additional Equipment” shall have the meaning set forth in Section 2.2.2.

 

“Additional Specification” shall have the meaning set forth in Section 5.3.1.

 

“Affiliate” means, with respect to a particular Person and a particular time,
another Person that controls, is controlled by or is under common control with
such first Person at any such time during the Term. For the purposes of this
definition, the word “control” (including, with correlative meaning, the terms
“controlled by” or “under the common control with”) means the actual power,
either directly or indirectly through one or more intermediaries, to direct or
cause the direction of the management and policies of a Person, whether by the
ownership of fifty percent (50%) or more of the voting stock of such Person, by
contract, or otherwise.

 

“Agreement” shall have the meaning set forth in the preamble.

 

“AKA” shall have the meaning set forth in Exhibit C.

 

 

“Backup Equipment” shall have the meaning set forth in Section 2.2.3.

 

“Business Day” means a day other than Saturday, Sunday or any other day on which
banking institutions in New York, New York are closed for business.

 

“Clinical Product” means Product and placebo for use in clinical trials, in the
form of bulk drug substance, pre-filled syringes or vials, in each case as
further described in the Specifications or the Additional Specifications.

 

“Clinical Product Action” shall have the meaning set forth in Section 5.6.1.

 

“Clinical Product Action Notice” shall have the meaning set forth in Section
5.6.1.

 

“Clinical Product Requirements” shall have the meaning set forth in Section 5.2.

 

“CMA Effective Date” shall have the meaning set forth in the preamble.

 

“Company” shall have the meaning set forth in the preamble.

 

“Compound” means the monoclonal antibody known as bermekimab (MABp1), the
sequence of which is set forth in Schedule 1.1(c) to the Asset Purchase
Agreement.

 

“CPR Mediation Procedure” shall have the meaning set forth in Section 9.2.1.

 

“CPR Rules” shall have the meaning set forth in Section 9.3.1.

 

“Current Capacity” means, in the case of Clinical Products [*****] up to [*****]
per month (or up to [*****] per calendar year), in each case irrespective of the
drug concentration in the formulation included in such [*****].

 

“Dispute” shall have the meaning set forth in Section 9.1.

 

“EMA” means the European Medicines Agency or any successor agency(ies) or
authority having substantially the same function.

 

“FCA” shall have the meaning set forth in Exhibit C.

 

“FCPA” shall have the meaning set forth in Exhibit C.

 

“FDA” means the U.S. Food and Drug Administration and any successor agency(ies)
or authority having substantially the same function.

 

“FFDCA” means the U.S. Federal Food, Drug, and Cosmetic Act (21 U.S.C. §301 et
seq.), as amended from time to time.

 

“Firm Order” shall have the meaning set forth in Section 2.3.2.

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 2 

 

“Force Majeure” means any event beyond the reasonable control of the affected
Party, which may include embargoes; war or acts of war, including terrorism;
insurrections, riots, or civil unrest; strikes, lockouts or other labor
disturbances; epidemics, fire, floods, earthquakes or other acts of nature;
acts, omissions or delays in acting by any Governmental Authority (other than
delays incident to the ordinary course of drug development); and failure of
plant or machinery.

 

“Forecast Schedule” shall have the meaning set forth in Section 2.3.1.

 

“Good Manufacturing Practices” or “GMP” means the then-current good
manufacturing practices required by the FFDCA, as amended, and the regulations
promulgated thereunder by the FDA at 21 C.F.R. Parts 210 and 211, for the
manufacture and testing of pharmaceutical materials, and comparable Law related
to the manufacture and testing of pharmaceutical materials in jurisdictions
outside the U.S., including the quality guideline promulgated by the ICH
designated ICH Q7A, titled “Q7A Good Manufacturing Practice Guidance for Active
Pharmaceutical Ingredients” and the regulations promulgated thereunder, in each
case as they may be updated from time to time.

 

“International Public Organization” means any of the organizations listed in 8
C.F.R. § 316.20, as amended from time to time.

 

“Know-How” shall have the meaning set forth in the IP License Agreement.

 

“Licensed Space” shall have the meaning set forth in the License to Occupy.

 

“Licensed Rights” shall have the meaning set forth in the IP License Agreement,
in respect of licenses granted thereunder by SUPPLIER.

 

“Manufacture” means all activities and processes related to the manufacturing of
any pharmaceutical product, or any ingredient thereof, including purchasing raw
materials and intermediates, producing active pharmaceutical ingredient,
formulating, and all labeling, packaging, in-process and finished product
testing, storage and release of pharmaceutical product or any component or
ingredient thereof, performance of quality assurance activities related to
manufacturing and release of pharmaceutical product, and the performance of
ongoing stability tests and regulatory activities related to any of the
foregoing. When used as a verb, to “Manufacture” means to engage in
Manufacturing activities.

 

“Manufacturing Capacity” means the Current Capacity unless the Parties agree
upon a new Manufacturing Capacity, including in connection with the installation
of Additional Equipment, as provided in Section 2.2.2 below.

 

“Manufacturing Process” means the processes and activities (and each step in the
processes and activities) planned to be used to Manufacture Clinical Products as
described in the master batch record for such Clinical Products, which shall be
mutually agreed by the Parties and documented in writing.

 

“Manufacturing Representative” has the meaning set forth in Section 5.9.

 3 

 

“Manufacturing Sites” means facilities of SUPPLIER or its Affiliates where
Clinical Products are Manufactured from time to time.

 

“Materials” means active pharmaceutical ingredients, raw ingredients,
intermediaries, excipients, processing aids, packaging materials and any other
components used in the Manufacture of Clinical Product.

 

“Nonconforming Clinical Product” shall have the meaning set forth in Section
5.2.

 

“Nonconformity” shall have the meaning set forth in Section 5.2.

 

“Officials” shall have the meaning set forth in Section 6.2.2.

 

“Party” and “Parties” shall have the meaning set forth in the preamble.

 

“Payment” shall have the meaning set forth in Section 6.2.2.

 

“Person” means an individual, sole proprietorship, partnership, limited
partnership, limited liability partnership, corporation, limited liability
company, business trust, joint stock company, trust, incorporated association,
joint venture or similar entity or organization, including a government or
political subdivision, department or agency of a government.

 

“Product” means any pharmaceutical product containing the Compound, including
all dosage forms, presentations, formulations and line extensions thereof,
including a pharmaceutical product which is comprised of the Compound and other
pharmaceutically active compound(s) and/or ingredients, any prototypes thereof
and any variations thereof.

 

“Purchase Order” shall have the meaning set forth in Section 2.4.1.

 

“Quality Agreement” shall have the meaning set forth in Section 5.4.

 

“Quarterly Fee” shall have the meaning set forth in Section 3.1.

 

“Quarterly Manufacturing Capacity” means, with respect to any calendar quarter,
the Manufacturing Capacity for such calendar quarter, being calculated as three
(3) times the Manufacturing Capacity per month.

 

“Regulatory Authority” means any applicable Governmental Authority with
authority over the Manufacture or Exploitation of a pharmaceutical product in a
country or jurisdiction, including (a) in the U.S., the FDA, and (b) in the
European Union, the EMA.

 

“Specifications” shall have the meaning set forth in Section 5.2.

 

“SUPPLIER” shall have the meaning set forth in the preamble.

 

“Term” shall have the meaning set forth in Section 8.1.

 

“Third Party” means any Person other than (a) Company, (b) SUPPLIER, or (c) an
Affiliate of either of Company or SUPPLIER.

 4 

 

“U.S.” means the United States of America, including its territories and
possessions.

 

“UKBA” shall have the meaning set forth in Exhibit C.

 

Article 2
CLINICAL PRODUCT MANUFACTURE AND SUPPLY

 

2.1              Manufacture and Supply.

 

During the Term and pursuant to the terms of this Agreement, SUPPLIER shall
supply to Company all of Company’s requirements of Clinical Products, except as
otherwise permitted by this Agreement or mutually agreed by the Parties in
accordance with this Agreement.

 

2.2              Materials and Capacity.

 

2.2.1        Prioritization. During the Term, and subject to Company’s
compliance with its obligations hereunder, SUPPLIER shall use reasonable best
efforts to maintain capacity adequate to fulfill Company’s requirements of
Clinical Products, as set forth in the applicable Forecast Schedule. If at any
time during the Term, SUPPLIER is unable to Manufacture and supply all of the
quantities of Clinical Products forecasted or ordered by Company hereunder, on
the one hand, and all of the quantities of products desired by SUPPLIER, its
Affiliates and their Third Party customers, on the other hand, due to (a)
shortages of Materials that are used in both the Manufacture of Clinical
Products and in the Manufacture of products for SUPPLIER, its Affiliates or
their Third Party customers or (b) constraints on the capacity at the
Manufacturing Sites, then SUPPLIER shall allocate Materials and capacity
(including, for the avoidance of doubt, the use of any Additional Equipment) (i)
first, to the Manufacture and supply of Clinical Products for Company and (ii)
second, only to the extent of any remaining Materials and/or capacity, to the
Manufacture and supply of products for SUPPLIER, its Affiliates or their Third
Party customers.

 

2.2.2        Additional Equipment. If, at any time during the Term,
notwithstanding SUPPLIER’S compliance with Section 2.2.1, SUPPLIER is unable to
Manufacture and supply all of the quantities of Clinical Products forecasted or
ordered by Company hereunder due to constraints on the capacity at the
Manufacturing Sites, SUPPLIER shall (i) promptly provide Company with written
notice thereof and (ii) promptly provide such information as is reasonably
requested by Company to enable Company to determine whether such constraints
could be alleviated (in whole or in part) through the acquisition of additional
equipment. If Company determines that such constraints could be alleviated (in
whole or in part) through the acquisition of additional equipment, Company may,
in its sole discretion, direct SUPPLIER to (and, upon such direction, SUPPLIER
shall) acquire such additional equipment (“Additional Equipment”) at [*****]
cost. In connection with the acquisition of any Additional Equipment, the
Parties shall agree to an updated Manufacturing Capacity. [*****] shall retain
title to any Additional Equipment following any expiration or termination of
this Agreement, other than the termination of this Agreement by [*****] pursuant
to Section 8.3 (in which case [*****] shall be deemed to have been granted such
title as of such termination).

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 5 

 

2.2.3        Backup Equipment. At any time during the Term, Company may, in its
sole discretion, direct SUPPLIER to (and, upon such direction, SUPPLIER shall)
acquire additional equipment to be used in the event that any of SUPPLIER’S
equipment is temporarily or permanently rendered inoperative (“Backup
Equipment”) at [*****] cost. SUPPLIER agrees that, during the Term, it shall use
any such Backup Equipment only to the extent necessary to Manufacture and supply
Clinical Products for Company, and for no other purpose. [*****] shall retain
title to any Backup Equipment following any expiration or termination of this
Agreement, other than the termination of this Agreement by [*****] pursuant to
Section 8.3 (in which case [*****] shall be deemed to have been granted such
title as of such termination).

 

2.2.4        Calculation of Costs; Invoicing. Costs for Additional Equipment or
Backup Equipment shall include, in addition to acquisition costs for such
Additional Equipment or Backup Equipment, all reasonable documented
out-of-pocket costs incurred by [*****] with respect to the acquisition,
installation, testing and validation of such Additional Equipment or Backup
Equipment. [*****] shall include any such costs actually incurred [*****]
together with reasonably detailed supporting documentation therefor.

 

2.3              Forecasts.

 

2.3.1        Monthly Forecast Schedule. On the CMA Effective Date and within the
first two weeks of each month commencing following the CMA Effective Date,
Company shall submit to SUPPLIER a written, good faith rolling forecast of
Company’s monthly requirements for Clinical Products for at least the following
[*****] months or such shorter period remaining under the Term (each such
forecast, a “Forecast Schedule”). The initial Forecast Schedule is attached
hereto as Exhibit A.

 

2.3.2        Binding Commitment. The first [*****] months of each Forecast
Schedule provided by Company shall be a binding commitment on Company to
purchase from SUPPLIER, and, so long as such quantities are within the
then-current Manufacturing Capacity, a binding commitment on SUPPLIER to sell to
Company, the specified volume of Clinical Products set forth therein (each, a
“Firm Order”). For the avoidance of doubt, any months of a Forecast Schedule
beyond the Firm Order period shall be non-binding.

 

2.4              Purchase Orders

 

2.4.1        All Clinical Product shall be supplied pursuant to purchase orders
(each, a “Purchase Order”) submitted by Company to SUPPLIER. Each Purchase Order
shall be consistent with the corresponding Firm Order and shall contain such
Purchase Order number, quantities, order schedule, delivery locations, carrier
information and other information reasonably necessary to permit correct
delivery of Clinical Products for shipment, including such information and in a
format as may be reasonably requested by SUPPLIER.

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 

 

 6 

 

2.4.2        Exclusive Terms. This Agreement and the Quality Agreement set forth
the exclusive contract terms between the Parties for, and shall apply to, all
orders for Clinical Products. Any terms in any Firm Order, Purchase Order,
invoice or other notice submitted by either Party to the other Party that are
different from or additional to the provisions hereof shall be null and void
notwithstanding SUPPLIER’s delivery of, and Company’s acceptance of, Clinical
Products under any Firm Order, Purchase Order, invoice or other notice
containing such terms.

 

2.5              Packaging.

 

SUPPLIER shall be responsible for packaging Clinical Products in accordance with
the Specifications and the Quality Agreement.

 

2.6              Delivery of Clinical Products.

 

SUPPLIER shall deliver Clinical Products to Company DAP (Incoterms 2010) at the
location, and within [*****] days of (before or after) the delivery date,
requested in the applicable Purchase Order. For the avoidance of doubt, SUPPLIER
shall retain risk of loss to any Clinical Product unless and until such Clinical
Product has been delivered to Company at such location as specified in the
applicable Purchase Order. SUPPLIER shall provide Company notice of the
anticipated delivery date at least three (3) days prior to delivery, and if such
anticipated delivery date changes, SUPPLIER shall promptly provide Company
notice of such change.

 

Article 3
PRICING; PAYMENT

 

3.1              Supply Price.

 

3.1.1        Subject to Section 3.1.2, for each calendar quarter during the
Term, Company shall pay SUPPLIER in consideration for the Manufacture and supply
of Clinical Products (which, for the avoidance of doubt, shall include Company’s
right to occupy the Licensed Space pursuant to the License to Occupy) a fee of
[*****] for such quarter (the “Quarterly Fee”). For purposes of this Agreement,
references to “calendar quarters” in this Agreement shall include the calendar
quarters (or partial calendar quarters) (i) beginning on the CMA Effective Date
and (ii) ending on the last day of the Term.

 

3.1.2        If the Term includes any partial calendar quarter, the Quarterly
Fee payable in respect of such partial calendar quarter shall be prorated based
on the number of days in such partial calendar quarter (as compared to the
number of days in a full calendar quarter).

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 

 7 

 

3.1.3        If, during any calendar quarter, SUPPLIER fails to deliver all of
the Clinical Products specified in one or more Purchase Orders to be delivered
to Company during such calendar quarter, the Quarterly Fee payable in respect of
the next calendar quarter shall be reduced by the percentage of Clinical
Products not so delivered as compared to the Clinical Products so specified for
delivery; provided that there shall be no such reduction to the extent such
Clinical Products not so delivered were in excess of the Quarterly Manufacturing
Capacity with respect to such calendar quarter.

 

3.1.4        If Company is entitled to a prorated or reduced Quarterly Fee
pursuant to Section 3.1.2, Section 3.1.3 and/or Section 5.5.2(c), but has
already paid such Quarterly Fee, SUPPLIER shall promptly reimburse Company for
the difference between the Quarterly Fee paid and the prorated or reduced
Quarterly Fee that was actually owed. If the application of Section 3.13 and/or
Section 5.5.2(c) would result in a reduction to a future Quarterly Fee, but no
such future Quarterly Fee is payable hereunder, SUPPLIER shall promptly
reimburse Company in an amount equal to the amount that such future Quarterly
Fee would have been reduced.

 

3.2              Invoices and Payments.

 

3.2.1        The first Quarterly Fee shall be payable within [*****] days of the
CMA Effective Date. Thereafter, invoices with respect to each calendar quarter
(or partial calendar quarter) shall be provided to Company no more than [*****]
days prior to the first day of such calendar quarter. Payment terms will be net
[*****] days after Company’s receipt of an uncontested invoice from SUPPLIER;
provided, however, the actual payment to SUPPLIER from Company or its designee
will not be made until the next scheduled payment run as set forth at
www.ap.jnj.com. Company may contest any invoice or portion thereof if (i) it
reasonably believes that the charges reflected therein do not accurately reflect
a proration or reduction in the Quarterly Fee required under Section 3.1.2,
3.1.3 and/or 5.5.2(c) or (ii) it disputes any of the costs included in such
invoice pursuant to Section 2.2.4, in each case by providing notice to SUPPLIER
of such dispute within [*****] days of its receipt of such invoice Once the
matter is resolved, Company shall pay the appropriate charges. SUPPLIER shall
continue to perform its obligations under this Agreement during such dispute. If
an invoice is disputed in part, SUPPLIER may issue a new invoice in compliance
with this Section 3.2.1 reflecting solely the undisputed charges, and any such
invoice shall be payable within [*****] days after receipt thereof; provided,
however, the actual payment to SUPPLIER from Company or its designee will not be
made until the next scheduled payment run as set forth at www.ap.jnj.com.

 

3.2.2        SUPPLIER shall not invoice Company hereunder, and no claim for
payments will be considered with respect to Clinical Products Manufactured
hereunder prior to both Parties’ duly authorized representatives signing this
Agreement and Company issuing a purchase order number to SUPPLIER with respect
to the services provided hereunder, provided that Company shall use reasonable
best efforts to issue such purchase orders at such times and in such manner as
will facilitate payments in accordance with this Section 3.2.

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 

 8 

 

Article 4
TRANSITION

 

4.1              Transition.

 

4.1.1        During the Term and for the [*****] months after the expiration or
termination of this Agreement, the Parties shall cooperate and use reasonable
best efforts to enable the prompt transition of the Manufacture and supply of
Product from the existing Manufacturing processes of SUPPLIER at the
Manufacturing Sites to new Manufacturing processes of Company at facilities
designated by Company at no additional cost. SUPPLIER shall provide reasonable
technical assistance, including (i) information and Know-How in its control and
related to Product or the Compound (including any information described on
Exhibit H) and (ii) introductions and access to SUPPLIER’S suppliers of
Materials, in each case as requested by Company to facilitate the foregoing.

 

4.1.2        In the event that SUPPLIER is unable to fulfill all of Company’s
requirements for Clinical Products (as a result of constraints on capacity,
Force Majeure, insolvency, bankruptcy or otherwise), upon Company’s request,
SUPPLIER shall transfer existing Manufacturing processes for the Compound and
Products to Company (or its designee) and provide reasonable technical
assistance to Company (or its designee), including introductions and access to
SUPPLIER’S suppliers of Materials, to the extent reasonably necessary to enable
Company to Manufacture the Compound and Products during the Term.

 

4.1.3        In the event that SUPPLIER is unable to fulfill all of Company’s
requirements for Clinical Products (as a result of constraints on capacity,
Force Majeure, insolvency, bankruptcy or otherwise), upon Company’s request,
SUPPLIER will transfer any other information and Know-How in its control
reasonably requested by Company in order to enable Company to Manufacture the
Compound and Products during the Term, including (a) complete sets of any
preclinical or clinical data generated by or on behalf of SUPPLIER with respect
to the Compound or any Products, (b) raw data tables with respect to the data
described in clause (a), (c) Chemistry, Manufacture and Control (CMC) data or
information generated by or on behalf of SUPPLIER with respect to the Compound
or any Product, (d) any information described on Exhibit H and (e) any other
Know-How that is necessary or specifically useful for the Manufacture of the
Compound or Products, in each case to the extent that such information or
know-how was not previously provided by SUPPLIER to Company.

 

4.1.4        Any Know-How or Trade Secrets transferred or otherwise provided by
SUPPLIER to Company or its designee pursuant to this Article 4 shall be deemed
to be Licensed Rights, with respect to SUPPLIER as Licensor and Company as
Licensee under the IP License Agreement, unless and solely to the extent such
Know-How or Trade Secrets is Seller Intellectual Property.

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 9 

 

Article 5
SPECIFICATIONS AND QUALITY CONTROL MATTERS

 

5.1              Compliance with Law.

 

SUPPLIER will, and will cause its Affiliates to, comply with applicable Laws,
including GMP, in performing Manufacturing activities with respect to Clinical
Products.

 

5.2              Clinical Product Requirements.

 

SUPPLIER hereby represents, warrants and covenants to Company that Clinical
Products supplied to Company under this Agreement shall be Manufactured in
accordance with the Manufacturing Process, applicable Laws (including GMP), the
Quality Agreement and the policies of Company set forth on Exhibit D and Exhibit
E hereto (the “Manufacturing Methods and Procedures”). SUPPLIER hereby further
represents, warrants and covenants to Company that Clinical Products supplied to
Company under this Agreement shall, at the time of delivery, (a) conform to the
applicable Clinical Product specifications set forth on Exhibit B hereto or, to
the extent applicable, the Quality Agreement (as such specifications may be
amended from time to time in accordance with Section 5.3.2 or the Quality
Agreement, the “Specifications”) or the applicable Additional Specifications,
(b) have at least [*****] months shelf life from the date of filling of the drug
product into syringes or vials and (c) conform to the volume and form (i.e.,
bulk drug substance, prefilled syringes or vials) ((a), (b) and (c)
collectively, the “Clinical Product Requirements”). Any supply of Clinical
Products that does not satisfy the Clinical Product Requirements at the time
that such supply is released by SUPPLIER or its Affiliate to Company is referred
to in this Agreement as “Nonconforming Clinical Product” and shall be regarded
as having a “Nonconformity.”

 

5.3              Specifications.

 

5.3.1        During the Term, SUPPLIER shall use reasonable best efforts to
develop additional formulations of Clinical Products as described on Exhibit G
hereto. SUPPLIER and Company shall cooperate and use reasonable best efforts to
agree on Clinical Product specifications for such additional formulations (such
agreed specifications, as such specifications may be amended from time to time
in accordance with Section 5.3.2 or the Quality Agreement, the “Additional
Specifications”). For the avoidance of doubt, once Additional Specifications
have been agreed, Company shall be permitted to place Purchase Orders in respect
of the Clinical Products represented by such Additional Specifications. If,
during the Term, Company determines that additional formulations of Clinical
Products not set forth on Exhibit G are necessary, SUPPLIER may from time to
time cooperate with Company to develop such formulations and any Additional
Specifications with respect thereto, subject to the mutual agreement of the
Parties with respect to the terms and conditions applicable to the activities
described in this sentence (it being understood that the additional formulations
set forth on Exhibit G hereto are not subject to this sentence and are instead
subject to the first sentence of this Section 5.3.1 and shall be at no
additional cost to Company).

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 10 

 

5.3.2        During the Term, if Company proposes any change(s) to the
Specifications or Additional Specifications based on any requirement, request or
recommendation of a Governmental Authority, Company shall deliver a written
request for such change(s) to SUPPLIER, and SUPPLIER shall reasonably consider
such change(s) in good faith. SUPPLIER shall have final decision-making
authority with respect to such proposed change(s); provided that SUPPLIER shall
implement any such change(s) required, requested or recommended by a
Governmental Authority if such change(s) would not reasonably be expected to
adversely affect SUPPLIER or its Affiliates or any Regulatory Authorization held
thereby. Company shall be responsible for the incremental costs of any
additional resources required to implement any such change(s) requested by
Company.

 

5.4              Quality Agreement.

 

SUPPLIER and Company have entered into that certain Quality Agreement, dated as
of December 19, 2019, relating to the Clinical Products supplied hereunder (the
“Quality Agreement”). SUPPLIER, either by itself or through its Affiliates,
shall perform such quality control or analytical tests on Clinical Products and
provide to Company certifications or other documents, in each case, as may be
provided for in the Quality Agreement, and shall maintain such records as are
reasonably necessary to demonstrate compliance with GMP in the Manufacture of
Clinical Products, as may be provided for in the Quality Agreement.

 

5.5              Nonconforming Clinical Product.

 

5.5.1        Inspection of Clinical Products.

 

(a)               Company will inspect Clinical Products supplied under this
Agreement promptly upon receipt thereof. Subject to the immediately following
sentence, Company shall have [*****] days following the delivery of any order of
Clinical Products to notify SUPPLIER that it has rejected all or any part of
such order in its reasonable and good faith belief that such order contains
Nonconforming Clinical Product, which notice shall be accompanied by a sample of
the allegedly Nonconforming Clinical Product. With respect to latent
Nonconformities and Nonconformities not discoverable by Company within [*****]
days of delivery through the use of reasonable inspection methods and procedures
(a “Latent Nonconformity”), Company shall give notice to SUPPLIER by the first
to occur of [*****] months after delivery thereof or within [*****] days
following detection of any such Latent Nonconformity.

 

(b)               If Company gives timely notice of allegedly Nonconforming
Clinical Products in accordance with Section 5.5.1(a), such Clinical Products
shall be conclusively deemed to be Nonconforming Clinical Products, unless
SUPPLIER delivers a written notice of disagreement (a “Nonconformity
Disagreement Notice”) to Company within fifteen (15) days of receiving notice of
the allegedly Nonconforming Clinical Products from Company. If Company fails to
give timely notice of allegedly Nonconforming Clinical Products in accordance
with Section 5.5.1(a), such Clinical Products shall be conclusively deemed to
have been accepted by Company.

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 11 

 

5.5.2        Nonconformity. The following terms shall apply for Nonconforming
Clinical Product that have not been accepted, or deemed accepted, by Company:

 

(a)               Company shall destroy the Nonconforming Clinical Products or
return them to SUPPLIER, in accordance with SUPPLIER’s written instructions and
at SUPPLIER’s expense; and

 

(b)               SUPPLIER shall, at Company’s request, replace the
Nonconforming Clinical Products; and

 

(c)               SUPPLIER shall reduce the Quarterly Fees owed by Company to
SUPPLIER (or refund the Quarterly Fees paid by Company to SUPPLIER, as
applicable), as if SUPPLIER failed to deliver the quantity of Nonconforming
Clinical Products, in accordance with and to the extent required by Section
3.1.3.

 

(d)               Disagreement Regarding Nonconformity. If SUPPLIER does not
agree with Company’s determination that any Clinical Products are Nonconforming
Clinical Products and timely delivers a Nonconformity Disagreement Notice, then
the Parties will select an independent Third Party laboratory reasonably
acceptable to each Party to evaluate if the allegedly Nonconforming Clinical
Products meet such requirements. Absent manifest error or fraud, this evaluation
will be binding on the Parties. If the evaluation certifies that the allegedly
Nonconforming Clinical Products do not meet the Clinical Product Requirements,
SUPPLIER will be responsible for the cost of the evaluation. If the evaluation
certifies that the allegedly Nonconforming Clinical Products do meet the
requirements of Sections 5.2(a) and (b), then (1) Company shall be responsible
for the cost of the evaluation, (2) the Clinical Products shall be deemed
accepted, and (3) if SUPPLIER replaced the Nonconforming Clinical Products and
if, as a result of such replacement, the total Clinical Products supplied by
SUPPLIER exceeded the Manufacturing Capacity (on an annual or monthly basis),
Company shall pay SUPPLIER for such Clinical Products.

 

5.6              Clinical Product Actions.

 

5.6.1        Notification. SUPPLIER shall notify Company in writing promptly
following its determination that any event, incident or circumstance related to
safety issues or regulatory concerns has occurred that is reasonably likely to
result in the need for a recall or withdrawal of Clinical Products supplied
under this Agreement (a “Clinical Product Action”), and shall include in such
notice (a “Clinical Product Action Notice”) the reasoning behind such
determination and any supporting facts. Such Clinical Product Action Notice
shall be given no later than five (5) Business Days after such determination is
made; provided that if any Regulatory Authority (a) threatens or initiates any
action to remove Clinical Products from use in clinical trials in any country,
or (b) requires a Party, or any of its Affiliates or (sub)licensees, to
distribute a “Dear Doctor” letter or its equivalent regarding the use of
Clinical Products, then, in either case ((a) or (b)), the Clinical Product
Action Notice shall be given within one (1) Business Day after SUPPLIER becomes
aware of the action, threat or requirement (as applicable).

 

5.6.2        Expenses. Unless and solely to the extent a Clinical Product Action
is necessitated by a Latent Nonconformity (or by the bad faith, willful
misconduct or gross negligence of, or the material breach of this Agreement by,
SUPPLIER), Company shall be solely responsible for all costs arising out of such
Clinical Product Action and shall reimburse SUPPLIER for any out-of-pocket
expenses incurred by SUPPLIER in carrying out a Clinical Product Action. If and
then solely to the extent a Clinical Product Action is necessitated by Latent
Nonconformity (or by the bad faith, willful misconduct or gross negligence of,
or the material breach of this Agreement by, SUPPLIER), SUPPLIER shall reimburse
Company for any out-of-pocket expenses incurred by Company or its Affiliates in
assisting SUPPLIER to carry out a Clinical Product Action.

 12 

 

5.7              Manufacturing Site Audits.

 

SUPPLIER will permit Company to conduct quality assurance audits and inspections
of SUPPLIER’s and its Affiliates’ records and facilities relating to Manufacture
of Clinical Products, during normal business hours, in accordance with the terms
of the Quality Agreement. Each Company representative participating in any such
audit or inspection shall enter into a confidentiality agreement in a form
reasonably acceptable to SUPPLIER and any applicable Affiliate.

 

5.8              Regulatory Matters.

 

5.8.1        SUPPLIER’s Obligations. SUPPLIER shall, and shall ensure that its
Affiliates shall, at their own cost, obtain and maintain throughout the Term any
certificates, permits, licenses and approvals issued by any relevant
Governmental Authority required for the Manufacture of Clinical Products at the
Manufacturing Sites in accordance with this Agreement.

 

5.8.2        Regulatory Approval Cooperation. SUPPLIER shall provide Company
with all supporting data and information relating to the Chemistry, Manufacture
and Control (CMC) of Clinical Products at the Manufacturing Sites that is in the
possession and control of SUPPLIER and necessary for regulatory submissions by
Company, including all records, raw data, reports, authorizations, certificates,
methodologies, batch documentation, raw material specifications, standard
operating procedures, standard test methods, certificates of analysis,
certificates of compliance and other documentation in its possession or under
its control relating to the Manufacturing of the Clinical Products.

 

5.8.3        Regulatory Inspections. SUPPLIER shall permit Company or its
representatives to be present at any visit or inspection by any Regulatory
Authority to the extent related to Clinical Products, or to any Manufacturing
Site or other facility used to Manufacture, to test or to warehouse Clinical
Products or specific to the systems or process used for the Manufacture of
Clinical Products. SUPPLIER shall notify Company within three (3) Business Days
of becoming aware of any planned inspection and within twenty-four (24) hours of
any unplanned or ongoing inspection. SUPPLIER will provide Company copies of all
regulatory reports of inspection, copies of all regulatory correspondence from
Regulatory Authorities and copies of proposed written responses to be provided
to Regulatory Authorities for Company’s review and comment before submission to
any Regulatory Authority. SUPPLIER and Company will also provide daily
inspection summary reports specific to Clinical Products or to any Manufacturing
Site or other facility used to Manufacture, to test or to warehouse Clinical
Products or specific to the systems or process used for the Manufacture of
Clinical Products, in each case, in a format acceptable to both Parties each day
of such an inspection. If SUPPLIER receives any observations or warning from any
Regulatory Authority relating to any Clinical Products or Manufacturing Site or
other facility (if it relates to the Manufacture of any Clinical Products) or to
the systems or process used for the Manufacture of Clinical Products, SUPPLIER
shall within ten (10) Business Days of the date such observations or warning is
received by SUPPLIER, remedy or cause the remedy of the issues identified in
such notice or warning or, if any such issues cannot reasonably be remedied
within such ten (10) Business Day period the Parties will agree on a plan to
resolve such issues within a mutually agreed time period. If the Parties cannot
agree, the matter will be referred to the Head of Quality of each Party for
resolution, by providing written notice to the appropriate contact person
specified in the relevant Quality Agreement.

 13 

 

5.8.4        Additional Support. SUPPLIER may from time to time provide
additional support in furtherance of the Manufacture and supply of Clinical
Products, including support to assist Company in complying with applicable Law
or the requirements of any Regulatory Authority (e.g., the performance of
analytical testing using certain assays in support of demonstrating Phase 2 and
Phase 3 process comparability), subject to the mutual agreement of the Parties
with respect to the terms and conditions applicable to the activities described
in this sentence.

 

5.9              Person-In-Plant.

 

During the Term, SUPPLIER agrees to permit Company’s personnel or duly
authorized representatives to observe and consult with respect to the
Manufacturing of Clinical Products (each such employee or agent a “Manufacturing
Representative”). Each Manufacturing Representative will serve as the Company’s
representative at the Manufacturing Sites during Manufacture of Clinical
Products. SUPPLIER will allow each Manufacturing Representative reasonable
access to (A) all data and information regarding Manufacture of Clinical
Products and (B) to be present during the Manufacture of Clinical Products. Each
Manufacturing Representative will have access only to those portions of the
Manufacturing Sites reasonably related to the Manufacture of Clinical Products
as well as reasonable access to office space, data and communication resources
on an as-needed basis to enable such Manufacturing Representative to carry out
the activities contemplated herein. In no event will any Manufacturing
Representative interfere with, and SUPPLIER will remain fully responsible for,
the Manufacture of Clinical Products. Each Manufacturing Representative will
coordinate closely with SUPPLIER in order to minimize the impact of his/her
presence on operations and will comply with all of SUPPLIER’S policies and
procedures regarding their presence in the Facilities including any training
requirements.

 

5.10          Records and Information Management.

 

SUPPLIER shall comply with the records and information management provisions set
forth on Exhibit F.

 

Article 6
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

6.1              Mutual Representations and Warranties.

 

Each of the Parties hereby represents and warrants to the other Party as of the
CMA Effective Date that:

 14 

 

6.1.1        Organization. It is a corporation duly organized, validly existing,
and in good standing under the Laws of the jurisdiction of its organization, and
has all requisite corporate power and authority to execute, deliver, and perform
this Agreement.

 

6.1.2        Binding Agreement. This Agreement is a legal and valid obligation
binding upon such Party and enforceable in accordance with its terms, subject to
the effects of bankruptcy, insolvency, or other Laws of general application
affecting the enforcement of creditor rights, judicial principles affecting the
availability of specific performance, and general principles of equity (whether
enforceability is considered a proceeding at law or equity).

 

6.1.3        Authorization. The execution, delivery, and performance of this
Agreement by such Party have been duly authorized by all necessary corporate
action and do not conflict with any agreement, obligation, instrument, or
understanding, oral or written, to which it is a party or by which it is bound,
nor violate any applicable Law or any order, writ, judgment, injunction, decree,
determination, or award of any Governmental Authority presently in effect
applicable to such Party.

 

6.1.4        No Further Approval. It is not aware of any government
authorization, consent, approval, license, exemption of or filing or
registration with any Governmental Authority under any applicable Law, currently
in effect, necessary for the execution and delivery of this Agreement or any
other agreement or instrument executed in connection herewith.

 

6.1.5        No Inconsistent Obligations. It is not under any obligation,
contractual or otherwise, to any Person that conflicts with or is inconsistent
in any material respect with the terms of this Agreement, or that would impede
the diligent and complete fulfillment of its obligations hereunder.

 

6.2              Capacity.

 

SUPPLIER hereby represents and warrants to Company that (a) as of the CMA
Effective Date, the capacity at the Manufacturing Sites to Manufacture and
supply Clinical Products [*****] will be at least equal to the Current Capacity
and (b) it will have sufficient capacity to Manufacture and supply all of the
Clinical Products included on the initial Forecast Schedule attached hereto as
Exhibit A.

 

6.3              Certain Compliance Matters.

 

6.3.1        No Violation of Law. Notwithstanding any other provision of this
Agreement, neither Party shall be required to undertake any activity or
obligation under this Agreement which it has reason to believe may violate any
applicable Laws; provided, however, a Party which so believes shall promptly
inform the other Party of such belief.

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.

 

 

 

 

 15 

 

6.3.2        Anti-Bribery and Corruption. Neither SUPPLIER nor its Affiliates
will make any payment, either directly or indirectly, of money or other assets,
including the compensation SUPPLIER derives from this Agreement (collectively, a
“Payment”), to government or political party officials, officials of
International Public Organizations, candidates for public office, or
representatives of other businesses or persons acting on behalf of any of the
foregoing (collectively, “Officials”) or other individuals where such Payment
would constitute violation of any applicable Law, including the Foreign Corrupt
Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., and the United Kingdom
Bribery Act. In addition regardless of legality, neither SUPPLIER nor its
Affiliates will make any Payment either directly or indirectly to Officials or
other individuals if such Payment is for the purpose of improperly influencing
decisions or actions to secure a business advantage, including with respect to
the subject matter of this Agreement. SUPPLIER shall have necessary procedures
in place to prevent bribery and corrupt conduct by itself and each of its
Affiliates and subcontractors. All activities will be conducted in compliance
with the U.S. False Claims Act and the U.S. Anti-Kickback Statute. SUPPLIER and
each of its Affiliates and subcontractors shall conduct its activities hereunder
in accordance with the provisions of Exhibit C to this Agreement.

 

6.4              No Other Representations or Warranties.

 

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY OTHER WRITTEN
AGREEMENT EXECUTED BY EACH OF THE PARTIES, THE PARTIES MAKE NO REPRESENTATIONS
OR WARRANTIES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, WRITTEN OR
ORAL, IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND EACH PARTY
SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, INCLUDING ANY EXPRESS OR IMPLIED
WARRANTY OF QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
WARRANTY OF NON-INFRINGEMENT.

 

Article 7
CONFIDENTIALITY and Publicity

 

7.1              Confidentiality.

 

SUPPLIER will, and will cause its Affiliates and its and their Representatives,
to keep confidential and not disclose to any Person (i) the terms of this
Agreement or (ii) any non-public, confidential or proprietary information of
Company or its Affiliates (including information relating to the Business)
obtained pursuant to or in connection with this Agreement and to not use any
such information other than in furtherance of the performance of its obligations
hereunder. The obligations of SUPPLIER under this Section 7.1 shall not apply to
information to the extent such information (a) becomes generally available to
the public without breach of SUPPLIER’S or its Affiliates’ obligations under
this Section 7.1 or under the Asset Purchase Agreement or any Related Document
or (B) is required to be disclosed by Law or any Order; provided, however, that
in the case of the foregoing clause (B), to the extent not prohibited by such
Law or Order, SUPPLIER shall notify Company as early in advance of such
disclosure as is practicable to allow Company to take appropriate measures (and
SUPPLIER shall reasonably cooperate, at the expense of Company, in the taking of
such measures) to preserve the confidentiality of such information.

 

 16 

 

Article 8
TERM AND TERMINATION

 

8.1              Term.

 

This Agreement shall become effective as of the CMA Effective Date and, unless
earlier terminated pursuant to this Article 8, shall continue in full force and
effect until December 31, 2021 (the “Term”); provided that the foregoing shall
not limit any ongoing obligations of SUPPLIER with respect to Clinical Products
ordered prior to the end of the Term, such as the performance of quality
assurance activities or ongoing stability tests, as set forth in this Agreement
or the Quality Agreement, following the end of the Term. Without limiting the
foregoing, if Company requires additional supply of Clinical Products following
the Term to complete then-ongoing clinical trials, then upon Company’s request,
the Parties shall discuss in good faith an extension to the Term in order for
SUPPLIER to provide such additional supply, including with respect to any
modifications to the terms of this Agreement that would apply to such Clinical
Product supply during such extension as may be reasonably requested by either
Party. Any such requested modifications shall be commercially reasonable, and
any such extension shall be subject to the mutual written agreement of the
Parties.

 

8.2              Termination by Mutual Agreement.

 

This Agreement may be terminated at any time upon the mutual written agreement
of the Parties.

 

8.3              Termination for Material Breach.

 

This Agreement may be terminated by either Party if the other Party has
committed a material breach and has failed to remedy such breach within thirty
(30) Business Days following receipt of a written notice of such breach from the
non-breaching Party.

 

8.4              Termination for Convenience.

 

This Agreement may be terminated at any time by Company upon providing at least
sixty (60) days’ prior written notice to SUPPLIER.

 

8.5              Effects of Termination or Expiration.

 

Termination or expiration of this Agreement shall not relieve the Parties of any
liability or obligation which accrued hereunder prior to the effective date of
such termination or expiration. Each Party shall be free, pursuant to Article 9,
to seek, without restriction as to the number of times it may seek, damages,
costs and remedies that may be available to it under applicable Law or in equity
and shall be entitled, following final resolution of a Dispute in accordance
with Article 9, to offset the amount of any damages and costs awarded pursuant
to a final determination under Article 9 against any amounts due to such other
Party under this Agreement. Upon termination or expiration of this Agreement,
SUPPLIER shall transfer to Company all right, title and interest in, to and
under any Inventory (including Clinical Products) in the possession of SUPPLIER
at no cost to Company, and Company will acquire from SUPPLIER good and
marketable title to all such Inventory, free and clear of any Liens.

 17 

 

8.6              Survival.

 

In the event of termination or expiration of this Agreement, in addition to the
provisions of this Agreement that continue in effect in accordance with their
terms, the following provisions of this Agreement shall survive: Articles 1
(Definitions) (as applicable), 7 (Confidentiality), 9 (Dispute Resolution), 10
(Indemnification) (solely as to activities arising during the Term) and 11
(Miscellaneous); Sections 2.3 (Forecasts), 4.1 (Transition), 5.5 (Nonconforming
Clinical Product), 5.6 (Clinical Product Actions), 6.4 (No Other Representations
or Warranties), 8.5 (Effects of Termination or Expiration) and 8.6 (Survival);
and any other provisions of this Agreement that are necessary to interpret or
effectuate the intent of the foregoing provisions.

 

Article 9
DISPUTE RESOLUTION

 

9.1              Dispute Resolution, Generally.

 

The Parties recognize that a dispute may arise relating to this Agreement (a
“Dispute”). Any Dispute, including Disputes that may involve the parent company,
subsidiaries or Affiliates under common control of any Party, shall be resolved
in accordance with this Article 9.

 

9.2              Mediation.

 

9.2.1        The Parties shall first attempt in good faith to resolve any
Dispute by confidential mediation in accordance with the then current Mediation
Procedure of the International Institute for Conflict Prevention and Resolution
(“CPR Mediation Procedure”) (www.cpradr.org) before initiating arbitration. The
CPR Mediation Procedure shall control, except where it conflicts with these
provisions, in which case these provisions control. The mediator shall be chosen
pursuant to CPR Mediation Procedure. The mediation shall be held in New York,
New York.

 

9.2.2        Either Party may initiate mediation by written notice to the other
Party of the existence of a Dispute. The Parties agree to select a mediator
within 20 days of the notice and the mediation will begin promptly after the
selection. The mediation will continue until the mediator, or either Party,
declares in writing, no sooner than after the conclusion of one full day of a
substantive mediation conference attended on behalf of each Party by a senior
business person with authority to resolve the Dispute, that the Dispute cannot
be resolved by mediation. In no event, however, shall mediation continue more
than 60 days from the initial notice by a Party to initiate mediation unless the
Parties agree in writing to extend that period.

 

9.2.3        Any period of limitations that would otherwise expire between the
initiation of mediation and its conclusion shall be extended until 20 days after
the conclusion of the mediation.

 18 

 

9.3              Arbitration.

 

9.3.1        If the Parties fail to resolve the Dispute in mediation, and a
Party desires to pursue resolution of the Dispute, the Dispute shall be
submitted by either Party for resolution in arbitration pursuant to the then
current CPR Non-Administered Arbitration Rules (“CPR Rules”) (www.cpradr.org),
except where they conflict with these provisions, in which case these provisions
control. The arbitration will be held in New York, New York. All aspects of the
arbitration shall be treated as confidential.

 

9.3.2        The arbitrators will be chosen form the CPR Panel of Distinguished
Neutrals, unless a candidate not on such panel is approved by both Parties. Each
arbitrator shall be a lawyer with at least 15 years experience with a law firm
or corporate law department of over 25 lawyers or who was a judge of a court of
general jurisdiction. To the extent that the Dispute requires special expertise,
the Parties will so inform CPR prior to the beginning of the selection process.

 

9.3.3        The arbitration tribunal shall consist of three arbitrators, of
whom each Party shall designate one in accordance with the “screened”
appointment procedure provided in CPR Rule 5.4. The chair will be chosen in
accordance with CPR Rule 6.4.

 

9.3.4        If, however, the aggregate award sought by the Parties is less than
$5 million and equitable relief is not sought, a single arbitrator shall be
chosen in accordance with the CPR Rules.

 

9.3.5        Candidates for the arbitrator position(s) may be interviewed by
representatives of the Parties in advance of their selection, provided that all
Parties are represented.

 

9.3.6        The Parties agree to select the arbitrator(s) within 45 days of
initiation of the arbitration. The hearing will be concluded within nine (9)
months after selection of the arbitrator(s) and the award will be rendered
within 60 days of the conclusion of the hearing, or of any post-hearing
briefing, which briefing will be completed by both sides within 45 days after
the conclusion of the hearing. In the event the Parties cannot agree upon a
schedule, then the arbitrator(s) shall set the schedule following the time
limits set forth above as closely as practical.

 

9.3.7        The hearing will be concluded in ten hearing days or less. Multiple
hearing days will be scheduled consecutively to the greatest extent possible. A
transcript of the testimony adduced at the hearing shall be made and shall be
made available to each Party.

 

9.3.8        The arbitrator(s) shall be guided, but not bound, by the CPR
Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial
Arbitration (www.cpradr.org) ("Protocol"). The Parties will attempt to agree on
modes of document disclosure, electronic discovery, witness presentation, etc.
within the parameters of the Protocol. If the Parties cannot agree on discovery
and presentation issues, the arbitrator(s) shall decide on presentation modes
and provide for discovery within the Protocol, understanding that the Parties
contemplate reasonable discovery.

 

9.3.9        The arbitrator(s) shall decide the merits of any Dispute in
accordance with the law governing this Agreement, without application of any
principle of conflict of laws that would result in reference to a different law.
The arbitrator(s) may not apply principles such as "amiable compositeur" or
"natural justice and equity."

 19 

 

9.3.10    The arbitrator(s) are expressly empowered to decide dispositive
motions in advance of any hearing and shall endeavor to decide such motions as
would a United States District Court Judge sitting in the jurisdiction whose
substantive law governs.

 

9.3.11    The arbitrator(s) shall render a written opinion stating the reasons
upon which the award is based. The Parties consent to the jurisdiction of the
United States District Court for the district in which the arbitration is held
for the enforcement of these provisions and the entry of judgment on any award
rendered hereunder. Should such court for any reason lack jurisdiction, any
court with jurisdiction may act in the same fashion.

 

9.3.12    Each Party has the right to seek from the appropriate court
provisional remedies such as attachment, preliminary injunction, replevin, etc.
to avoid irreparable harm, maintain the status quo, or preserve the subject
matter of the Dispute. Rule 14 of the CPR Rules does not apply to this
Agreement.

 

9.3.13    EACH PARTY HERETO WAIVES: (1) ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY,
(2) WITH THE EXCEPTION OF RELIEF MANDATED BY STATUTE OR RESULTING FROM THE
WILLFUL MATERIAL BREACH OF THIS AGREEMENT, ANY CLAIM TO PUNITIVE, EXEMPLARY,
MULTIPLIED, INDIRECT, CONSEQUENTIAL OR LOST PROFITS/REVENUES DAMAGES (EXCEPT, IN
EACH CASE, TO THE EXTENT AWARDED TO A THIRD PARTY), AND (3) ANY CLAIM FOR
ATTORNEY FEES, COSTS AND PREJUDGMENT INTEREST.

 

Article 10
INDEMNIFICATION

 

10.1          Incorporation of Asset Purchase Agreement Indemnification
Provisions.

 

This Agreement shall be deemed to be a “Related Document” for the purposes of
Article VII of the Asset Purchase Agreement, and Article VII of the Asset
Purchase Agreement will govern the indemnification obligations of the Parties
with respect to any “Losses”, as such term is defined in the Asset Purchase
Agreement, arising under this Agreement (including, for the avoidance of doubt,
with respect to any “Losses” arising from, relating to or otherwise in
connection with any breach of or failure to perform any covenant or agreement of
SUPPLIER or Company, as applicable, contained in this Agreement).

 20 

 

Article 11
MISCELLANEOUS

 

11.1          Notices.

 

All notices given by one Party to the other Party under this Agreement will
follow the procedures and be delivered to the addresses set forth in Section 9.2
of the Asset Purchase Agreement.

 

11.2          Governing Law.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN
UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

 

11.3          Assignment.

 

Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned, in whole or in part, by either of the Parties without the
prior written consent of the other Party, and any assignment without such
consent shall be null and void, except that either Party may, without the prior
written consent of the other Party, assign (a) any or all of its rights and
obligations under this Agreement to any of its Affiliates (provided that the
assigning Party shall remain responsible for the performance of such assignee
Affiliate) or (b) this Agreement in its entirety to a Third Party acquirer of
that portion of its business relating to the subject matter of this Agreement.
Any successor or assignee of rights and/or obligations permitted hereunder
shall, in writing, expressly assume performance of such rights and/or
obligations.

 

11.4          Designation of Affiliates.

 

Each Party may discharge any obligation and exercise any right hereunder through
delegation of its obligations or rights to any of its Affiliates. Each Party
hereby guarantees the performance by its Affiliates of such Party’s obligations
under this Agreement, and shall cause its Affiliates to comply with the
provisions of this Agreement in connection with such performance. Any breach by
a Party’s Affiliate of any of such Party’s obligations under this Agreement
shall be deemed a breach by such Party, and the other Party may proceed directly
against such Party without any obligation to first proceed against such Party’s
Affiliate.

 

11.5          Relationship of the Parties.

 

It is expressly agreed that SUPPLIER, on the one hand, and Company, on the other
hand, are independent contractors, and it is further agreed that the Parties
fully intend and expect that the relationship between the two Parties shall not
constitute a partnership, joint venture or agency. Except as expressly provided
herein, neither SUPPLIER nor Company shall have the authority to make any
statements, representations or commitments of any kind, or to take any action
which shall be binding on the other, without the prior written consent of the
other Party to do so. All individuals employed by a Party shall be employees of
that Party and not of the other Party and all costs and obligations incurred by
reason of such employment shall be for the account and expense of such Party.

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11.6          Force Majeure.

 

Both Parties shall be excused from the performance of their obligations under
this Agreement to the extent that such performance is prevented by Force Majeure
and the nonperforming Party promptly provides notice of such Force Majeure
circumstances to the other Party. Such excuse shall be continued so long as the
condition constituting Force Majeure continues and the nonperforming Party takes
reasonable best efforts to remove the condition. Notwithstanding the foregoing,
a Party shall not be excused from making payments owed hereunder because of a
Force Majeure affecting such Party. If a Force Majeure persists for more than
ninety (90) days, then the Parties shall discuss in good faith the modification
of the Parties’ obligations under this Agreement in order to mitigate the delays
caused by such Force Majeure. In the event a Party is prevented from performing
its obligations under this Agreement due to Force Majeure for more than six (6)
months according to this Section 11.6, the other Party shall have the right to
terminate this Agreement upon sixty (60) days’ notice after the expiration of
such period. A termination under this Section 11.6 by either Party shall be
treated as a termination under Section 8.2.

 

11.7          Severability.

 

If any one or more of the provisions of this Agreement is held to be invalid or
unenforceable by any court of competent jurisdiction from which no appeal can be
or is taken, the provision shall be considered severed from this Agreement and
shall not serve to invalidate any remaining provisions hereof. The Parties shall
make good faith efforts to replace any invalid or unenforceable provision with a
valid and enforceable one such that the objectives contemplated by the Parties
when entering this Agreement may be realized.

 

11.8          English Language.

 

This Agreement shall be written in and executed in, and all other communications
under or in connection with this Agreement shall be in, the English language.
Any translation into any other language shall not be an official version hereof
or thereof, and in the event of any conflict in interpretation between the
English version and such translation, the English version shall control.

 

11.9          Waiver and Non-Exclusion of Remedies.

 

Any term or condition of this Agreement may be waived at any time by the Party
that is entitled to the benefit thereof, but no such waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
Party waiving such term or condition. The waiver by either Party of any right
hereunder or of the failure to perform or of a breach by the other Party shall
not be deemed a waiver of any other right hereunder or of any other breach or
failure by such other Party whether of a similar nature or otherwise. The rights
and remedies provided herein are cumulative and do not exclude any other right
or remedy provided by applicable Law or otherwise available except as expressly
set forth herein.

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11.10      Further Assurance.

 

Each Party shall duly execute and deliver, or cause to be duly executed and
delivered, such further instruments and do and cause to be done such further
acts and things, including the filing of such assignments, agreements,
documents, and instruments, as may be necessary or as the other Party may
reasonably request in connection with this Agreement to carry out more
effectively the provisions and purposes hereof.

 

11.11      Headings.

 

The headings of each Article and Section in this Agreement have been inserted
for convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular Article or Section.

 

11.12      Construction.

 

Whenever this Agreement refers to a number of days without using a term
otherwise defined herein, such number refers to calendar days, whether or not
“calendar days” is expressly stated. Except where the context otherwise
requires, (a) wherever used, the singular shall include the plural, the plural
shall include the singular; (b) the use of any gender shall be applicable to all
genders; (c) the terms “including,” “include,” “includes” and “for example”
shall not limit the generality of any description preceding such term and, as
used herein, shall have the same meaning as “including, but not limited to,” and
“including, without limitation”; (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, refer to this Agreement in its
entirety and not to any particular provision hereof; (e) the word “will” means
“shall”; (f) if a period of time is specified and dates from a given day or
Business Day, or the day or Business Day of an act or event, it is to be
calculated exclusive of that day or Business Day; (g) “Dollar”, “USD” or “$”
means U.S. Dollars; (h) references to a particular Person include such Person’s
successors and assigns to the extent not prohibited by this Agreement; (i) a
capitalized term not defined herein but reflecting a different part of speech
than a capitalized term which is defined herein shall be interpreted in a
correlative manner; (j) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein); (k) any provision
under this Agreement requiring the mutual agreement of the Parties or the
consent or approval of a Party shall only be satisfied if made in writing signed
by the relevant Party(ies) and (l) if this Agreement is terminated in accordance
with its terms, the “Term” shall be deemed to end on the effective date of such
termination. The language of this Agreement shall be deemed to be the language
mutually chosen by the Parties and no rule of strict construction shall be
applied against either Party. Each Party represents that it has been represented
by legal counsel in connection with this Agreement and acknowledges that it has
participated in the drafting hereof.

 

11.13      Counterparts.

 

This Agreement may be executed in two (2) or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement may be executed by .pdf or other
electronically transmitted signatures and such signatures shall be deemed to
bind each Party as if they were the original signatures.

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11.14      Entire Agreement; Amendments.

 

This Agreement, including the Exhibits hereto, sets forth the complete, final
and exclusive agreement and all the covenants, promises, agreements, warranties,
representations, conditions and understandings between the Parties with respect
to the subject matter hereof and supersedes, as of the CMA Effective Date, all
prior and contemporaneous agreements and understandings between the Parties with
respect to the subject matter hereof. In the event of any inconsistency between
the body of this Agreement or any Exhibits to this Agreement and the Asset
Purchase Agreement or any other Related Document, this Agreement shall govern
and control with respect to the supply of Clinical Product and the specific
subject matter hereof, and the Asset Purchase Agreement and other Related
Documents shall govern and control with respect to all other matters. There are
no covenants, promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties with respect to the
subject matter hereof other than as are set forth herein and therein. No
subsequent alteration, amendment, change or addition to this Agreement shall be
binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party. In the event of any inconsistency between the body of
this Agreement and any Exhibits to this Agreement, unless otherwise expressly
stated to the contrary in such Exhibit, the terms contained in this Agreement
shall govern and control.

 

11.15      Specific Performance.

 

The Parties agree that irreparable damage would occur and that the Parties would
not have any adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity and as further set forth in Article 9. For the avoidance of doubt, this
Section 11.15 shall not restrict any Party from asserting that the terms and
provisions of this Agreement have not been breached (or would not be breached)
by the actions or omissions (or intended actions or omissions) of such Party.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

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IN WITNESS WHEREOF, the Parties have signed this Clinical Manufacturing
Agreement as of the date first set forth above.

 

 

JANSSEN BIOTECH, INC.

 

By:   /s/ Darren Snellgrove   Name:   Darren Snellgrove   Title:   Chief
Financial Officer Janssen R&D  

 

 

XBIOTECH USA, INC.

 

By:   /s/ John Simard   Name:   John Simard   Title:   President & CEO