exv10w3







Exhibit 10.3




CONFIDENTIAL
MATERIALS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS



MANUFACTURING AND SUPPLY AGREEMENT 




     This Manufacturing and Supply Agreement (this “Agreement”) is made as of the date of the last
Party to sign below (the “Effective Date”) by and among OSI Pharmaceuticals, Inc., a Delaware
corporation, with offices at Suite 110, 58 South Service Road, Melville, New York 11747 (“OSI”),
and Davos Chemical Corporation and its affiliates listed on Appendix A, a New Jersey corporation,
with offices at 600 East Crescent Avenue, Upper Saddle River NJ 07458 (the “Distribution Agent”)
and Dipharma SPA with offices at Via Bissone, 5, 20021 Baranzate, MI, Italy and its affiliates,
subsidiaries and controlled companies (the “Manufacturer”). OSI, Distribution Agent and
Manufacturer are referred to herein individually as a “Party” and, together, as the “Parties”.



     WHEREAS, OSI and its collaborator, Genentech, Inc. (“Genentech”), entered into a Manufacturing
and Supply Agreement as of June 4, 2004 (the “OSI/GNE Manufacturing Agreement”), pursuant to which,
among other things, OSI and Genentech agreed to set the terms and conditions under which OSI shall
provide Finished Product (as hereinafter defined) to Genentech;



     WHEREAS, to satisfy its obligations under the OSI/GNE Manufacturing Agreement, OSI desires to
develop and commercialize the active pharmaceutical ingredient, erlotinib hydrochloride (formerly
OSI-774-01, the “Product”) and the drug products manufactured from the Product (Tarceva®
(erlotinib), the “Finished Product”);



     WHEREAS, the Manufacturer desires to manufacture and supply Product to OSI using ** (“470”)
and ** (“380”), collectively the “Starting Materials”;



     WHEREAS, the Manufacturer desires to manufacture the Starting Materials for the purpose of
using such materials to manufacture Product for OSI and, if requested by OSI, to manufacture
Starting Materials for the sale of OSI or its manufacturers for use in their manufacture of
Product;



     WHEREAS, the Manufacturer is willing to manufacture and sell Product and, if requested by OSI,
Starting Materials in accordance with the requirements of this Agreement to OSI through the
Distribution Agent and OSI is willing to purchase the same through the Distribution Agent; and



     WHEREAS, the Distribution Agent desires to purchase from the Manufacturer and then sell to OSI
Product, and to OSI and its manufacturers Starting Materials, manufactured by the Manufacturer in
accordance with the terms and conditions of this Agreement.



     NOW THEREFORE, in consideration of the mutual covenants set forth herein, the Parties agree as
follows:





 




			
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     Section 1. Scope of Agreement.



     1.1 This Agreement shall apply to all purchases of Product and Starting Materials during the
Term (as defined in Section 12). In the event that any purchase orders issued by OSI in connection
with this Agreement (individually, an “OSI Purchase Order” and, collectively, the “OSI Purchase
Orders”) to the Distribution Agent, as well as purchase orders issued by the Distribution Agent in
connection with this Agreement (individually, a “Distribution Agent Purchase Order” and,
collectively, the “Distribution Agent Purchase Orders”) to the Manufacturer conflict with the terms
and conditions of this Agreement, the subject term or condition of this Agreement shall take
precedence unless specifically agreed to by the Parties in writing.



     1.2 OSI agrees to purchase a minimum of ** of its total Product requirements for
Finished Product to be sold in the United States from Dipharma, except as such percentage may be
reduced in accordance with this Agreement.



     1.3 This Agreement does not constitute a purchase order. Purchases under this Agreement shall
be made only with OSI Purchase Orders by OSI to the Distribution Agent and with Distribution Agent
Purchase Orders by the Distribution Agent to the Manufacturer in accordance with Section 3.4.



     1.4 The Manufacturer agrees that all 380 supplied to OSI pursuant to this Agreement shall be
manufactured at its facilities located at Carronno Pertusella Plant, Via Origgio, 23 Caronno
Pertusella (Varese) Italy. The Manufacturer may only change the site of the manufacture of 380 with
the prior written consent of OSI.



     1.5 The Manufacturer agrees that all 470 supplied to OSI pursuant to this Agreement shall be
manufactured at its facilities located at Baranzate Plant, Via Bissone, 5, Baranzate (Milano)
Italy. The Manufacturer may only change the site(s) of the manufacture of 470 with the prior
written consent of OSI.



     1.6 The Manufacturer agrees that all Product supplied to OSI pursuant to this Agreement shall
be manufactured at its facilities located at Mereto Di Tomba Plant, Via XXIV Maggio, 40, Mereto, Di
Tombo (Udine) Italy. The Manufacturer may only change the site of the manufacture of the Product
with the prior written consent of OSI.



     Section 2. Manufacturing; Product and Starting Material Specifications.



     2.1 The Manufacturer shall manufacture Starting Materials and Product supplied to OSI pursuant
to this Agreement in accordance with (i) any applicable current good manufacturing practices as
defined in U.S. regulations and any other equivalent guidelines or standards required by a
governmental authority having jurisdiction over an
activity of a Party or over Product or Starting Materials, including applicable International
Conference on Harmonization Guidelines (“cGMP”), (ii) the applicable specifications set forth in
Exhibit A (“Product Specifications”), Exhibit B (“470 Purchase





 




			
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Specifications”) and, if 380 is not provided by OSI, Exhibit C (the “380 Purchase Specifications”), (iii)
the specifications, methods, processes and procedures, including site of manufacture and all other
requirements as detailed in the OSI contract operations manuals (the “Contract Operations
Manuals”), which are hereby incorporated into this Agreement, and (iv) any other technical or
quality agreements that may be made between the Parties and updated by agreement among the Parties
from time to time.




     2.2 OSI and the Manufacturer will work to qualify the Manufacturer as a supplier of 380 for
the purpose of using 380 to manufacture Product of OSI. All 380 manufactured by Manufacturer shall
be manufactured, handled, stored, and delivered at Manufacturer’s risk and Manufacturer shall
retain risk of loss and title to the 380 until it is incorporated into Product released by OSI. If
OSI desires the Manufacturer to supply 380 to OSI or any of its other manufacturers for the purpose
of using 380 to manufacture Product, Manufacturer hereby agrees to do the same upon additional
written terms mutually agreed by the Parties and the prices set forth in Exhibit D. Such
additional written terms shall be set forth in an amendment to this Agreement or in a separate
agreement executed by the Parties. Any additional costs required to qualify 380 at another
manufacturer will be the sole responsibility of OSI.



     2.3 The Manufacturer shall manufacture 470 for the purpose of using such 470 to manufacture
Product for OSI hereunder. All 470 manufactured by Manufacturer shall be manufactured, handled,
stored, and delivered at Manufacturer’s risk and Manufacturer shall retain risk of loss and title
to the 380 until it is incorporated into Product released by OSI. If OSI desires the Manufacturer
to supply 470 to OSI or any of its other manufacturers for the purpose of using 470 to
manufacture Product, Manufacturer hereby agrees to do the same upon additional written terms
mutually agreed by the Parties. Such additional written terms shall be set forth in a written
amendment to this Agreement or in a separate written agreement executed by the Parties and the
prices set forth in Exhibit D. Any additional costs required to qualify 470 at another
manufacturer will be the sole responsibility of OSI.



     2.4 In addition to the foregoing, no change in the Product Specifications, 470 Purchase
Specifications, 380 Purchase Specifications, the Contract Operations Manuals or to methods,
processes and procedures used to manufacture the Product, 470 or 380 may be made unless (a) OSI and
the Manufacturer agree in writing thereto or (b) such change is required by (i) any regulatory
agency which has jurisdiction over OSI, the Manufacturer and/or Finished Product or (ii) by an
amendment to the U.S. Pharmacopoeia. No such change may be implemented by Manufacturer until OSI
has provided written approval to the Manufacturer as part of OSI’s change control process and such
change is agreed to by the Manufacturer in writing.



     2.5 With each shipment of Starting Materials or Product (as set forth in Section 4), the
Manufacturer shall deliver to OSI and, if directed by OSI, to a third party designated by OSI (each
an “OSI Designee”, and collectively, the “OSI Designees”), a
final Certificate of Analysis (which shall include the results of all required external
testing) from the Manufacturer and all other documentation specified in the relevant Contract
Operations Manual.



3









 





     2.6 With respect to each shipment of Product, the earliest Date of Manufacture for the Product
in such shipment shall not be greater than ** prior to the date such shipment is
delivered to OSI or an OSI Designee unless otherwise agreed upon by the Parties by written consent.
For purposes hereof, the “Date of Manufacture” shall mean the date that final crystallized product
is discharged from the dryer. The Manufacturer shall be required to accept a return of, or
reimburse the Distribution Agent for, or issue a credit to the Distribution Agent, with respect to
any portion of a shipment that turns out to have a Date of Manufacture greater than ** prior
to the date of delivery of such shipment (i.e., “short-dated”) without prior written consent of
OSI. The Distribution Agent shall be required to accept a return of, or reimburse OSI for, or issue
a credit to OSI, with respect to any portion of a shipment that turns out to have been short-dated
without prior written consent of OSI.



     Section 3. Forecasting Product Requirements. In order to assist the Manufacturer in
planning the production runs for Product, OSI shall use its commercially reasonable efforts to
provide the Manufacturer with forecasted Product requirements in a timely manner. OSI shall deliver
the first “Long Term Forecast” and “Detailed Product Forecast” (both as hereinafter defined) to the
Manufacturer following execution of this Agreement. OSI and the Manufacturer shall meet on an
annual basis within two months prior to each calendar year to discuss the manufacturing
requirements and pricing for each such calendar year and the parties’ strategy for process
improvements.



     3.1 Long-Term Forecast for Required Product. The first Long Term Forecast shall set
forth OSI’s estimate of the required quantities of Product for each of the subsequent ** (the “Long
Term Forecast”). Following such first Long Term Forecast, before the closing of each calendar
year, OSI shall provide the Manufacturer with a non-binding rolling Long Term Forecast setting
forth OSI’s estimate of the required quantities of Product for each of the following **.



     3.2 Detailed Product Forecast for Required Product. The first Detailed Product
Forecast shall set forth OSI’s requirements for the Product for each calendar quarter of the
succeeding ** period (the “Detailed Product Forecast”). Following such first Detailed Product
Forecast, OSI shall update the Detailed Product Forecast on or before the 1st day of each calendar
quarter so that each calendar quarter, the Manufacturer shall have been provided with a rolling
Detailed Product Forecast for each calendar quarter during the ** period commencing on the first
day of the next calendar quarter following the date on which such Detailed Forecast is submitted.
The Detailed Product Forecast shall be firm, subject to the permissible variances set forth in
Section 3.3. If OSI fails to provide any updated Detailed Product Forecast in accordance with this
Section 3, the Detailed Product Forecast last provided by OSI shall be deemed to be OSI’s Detailed
Product Forecast for the next succeeding twelve (12) month period.



     3.3 Detailed Product Forecast Variances. Each updated Detailed Product Forecast may
modify the amounts estimated in the previous Detailed Forecast in accordance with the following
limitations:





 




			
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          (a) For the first calendar quarter covered by such updated Detailed Product Forecast, no
change may be made unless the Manufacturer consents.



          (b) For the second calendar quarter covered by such updated Detailed Product Forecast, no
change in excess of a ** volume increase or decrease from the prior Detailed Product Forecast may
be made unless the Manufacturer consents.



          (c) For the third calendar quarter covered by such updated Detailed Product Forecast, no
change in excess of an ** volume increase or decrease from the prior Detailed Forecast may be made
unless the Manufacturer consents.



          (d) For the fourth calendar quarter covered by such updated Detailed Product Forecast, no
change in excess of a ** volume increase or decrease from the prior Detailed Product Forecast may
be made unless the Manufacturer consents.



          (e) If OSI desires to exceed the limitations set forth in this Section 3.3 then the
Manufacturer shall make all reasonable efforts to accommodate such changes, but shall have no
obligation to do more.



     3.4 Ability to Supply.



     The Parties acknowledge that the yield of Product manufactured by the Manufacturer may vary
slightly due to technical reasons and up to ** of any excess or shortage of the quantity set forth
in the applicable Distribution Agent Purchase Order and applicable OSI Purchase Order (the
“Maximum Variance”) and shall be accepted as due performance of the Manufacturer by the
Distribution Agent and OSI.



     The Manufacturer shall notify the Distribution Agent and OSI in writing of any excess or
shortage of Product within or in excess of the Maximum Variance within five (5) Business Days after
the Product is manufactured (“Yield Notice”). OSI shall purchase from the Distribution Agent and
the Distribution Agent shall purchase from the Manufacturer any excess Product within the Maximum
Variance, and this amount may, in the sole discretion of OSI, be deducted from the forecasted
quantity for the following quarter. OSI shall not be required to purchase from the Distribution
Agent and the Distribution Agent shall not be required to purchase from the Manufacturer any
amounts of Product in excess of the Maximum Variance from the applicable Purchase Order. In the
event of a shortage of Product to be supplied by the Manufacturer within the Maximum Variance, the
Manufacturer agrees to use its best efforts to remedy such shortage during the subsequent quarter,
if requested by OSI in its sole discretion.



     In addition, in the event that such shortage arises from the limited supply of Starting
Materials and/or other raw materials, the Manufacturer shall use any such capacity and available
supplies to manufacture Product.





 




			
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     In connection with any shortage in excess of the Maximum Variance, OSI may cancel the quantity
of the Product listed in the Distribution Agent Purchase Order and corresponding OSI Purchase Order
that is unfulfilled or anticipated to be unfulfilled by providing written notice of such
cancellation to the Distribution Agent and providing a copy of such notice to the Manufacturer. In
such case, OSI may obtain such cancelled quantity of Product from any other manufacturer or
intermediary, with such order being subject to any minimum order requirements or other reasonable
requirements or constraints whether due to manufacturing scale or otherwise of such other
manufacturer or intermediary. Following receipt of a Yield Notice, OSI shall be available to
discuss with Manufacturer the Manufacturer’s ability to remedy any shortage in excess of the
Maximum Variance. Thereafter, if OSI decides in its sole discretion to obtain such cancelled
quantity of Product from another manufacturer, Manufacturer shall be liable to OSI for any
incremental costs paid by OSI to obtain such cancelled quantity of Product from another
manufacturer, provided that Manufacturer shall not be liable to OSI for any such incremental costs
if OSI cancels such unfulfilled quantity of Product within sixty (60) days after receipt of a Yield
Notice in order to provide Manufacturer with an opportunity to cure. OSI shall have no obligation
to delay any cancellation during such cure-period. Any amounts of Product purchased from third
party manufacturers pursuant to this Section 3 shall be deducted from OSI’s purchasing commitment
of the Product in accordance with the Detailed Product Forecast and shall apply against OSI’s
purchase requirements of Product set forth in Section 1.2. For the purposes of this Agreement,
“Business Day” means a day that is not a Saturday, Sunday or a day on which banks in New York, New
York are authorized to remain closed.



     Section 4. Ordering and Delivery of Product.



     4.1 OSI Purchase Orders. OSI shall provide the Distribution Agent with OSI Purchase
Orders (i) detailing its firm orders for Product based upon the forecasted quantities and in
accordance with Section 3, and (ii) specifying the dates the Product must be made available by the
Manufacturer for shipment. Product shall be delivered by the Manufacturer EXW (Incoterms 2000).
For the EXW delivery, Product must be made available for shipment during normal business hours on
normal Business Days at the Manufacturer’s qualified facility, unless another facility is agreed
upon by the Parties.



     OSI Purchase Orders will be provided to the Distribution Agent six (6) months in advance of
required date when Product must be made available for shipment. An OSI Purchase Order shall be
deemed placed with the Distribution Agent on the date such OSI Purchase Order is delivered to the
Distribution Agent pursuant to Section 13 hereof (the “Order Date”). Within five (5) Business Days
after the Order Date, the Distribution Agent shall send OSI written notice to indicate the
Distribution Agent’s receipt of the OSI Purchase Order.



     4.2 Distribution Agent Purchase Orders. The Distribution Agent shall provide the
Manufacturer with Distribution Agent Purchase Orders (i) detailing its firm orders for Product and
(ii) specifying the dates Product must be made available by the Manufacturer for shipment. Such
shipping terms and dates Product must be made available for shipment shall be consistent with those
set forth in the corresponding OSI Purchase Order.



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     The Distribution Agent shall send the Manufacturer the Distribution Agent Purchase Orders
within five (5) Business Days after the Order Date. A Distribution Agent Purchase Order shall be
deemed placed with the Manufacturer on the date the Distribution Agent Purchase Order is delivered
to the Manufacturer pursuant to Section 13 hereof (the “Distribution Agent’s Order Date”).



     4.3 Manufacturer Delivery.



     Within five (5) Business Days after the Distribution Agent’s Order Date, the Manufacturer
shall send the Distribution Agent written notice to indicate the Manufacturer’s receipt of the
Distribution Agent Purchase Order. In the event that the Manufacturer reasonably believes that the
Distribution Agent Purchase Order contains terms inconsistent with the provisions of this
Agreement, the Manufacturer shall inform both Distribution Agent and OSI of such terms within five
(5) Business Days after the Distribution Agent Order Date, and thereafter Parties shall negotiate
in good faith as to how such terms should be treated.



     In the event that the Distribution Agent provides Distribution Purchase Orders requiring that
Product be made available for shipment within ** of the Order Date, subject to Manufacturer’s
supply obligations in accordance with Section 3.3(b), the Manufacturer will make reasonable efforts
to accommodate such changes.



     During the Term, the Manufacturer will manufacture and have the Product delivered or made
available for shipment, as the case may be, pursuant to Distribution Agent Purchase Orders and the
terms of this Agreement. Manufacturer shall prepare and package Product for shipment or delivery as
set forth in the Contract Operations Manual; provided, however, that such packaging
shall meet the customs and regulatory requirements of all applicable governmental authorities
having jurisdiction over such packaging. In addition, the Manufacturer shall (i) provide to each of
OSI and the Distribution Agent the bill of lading, packing list and Certificate of Analysis for the
prepared shipment at least one (1) Business Day prior to shipment, and (ii) include such documents
with the prepared shipment



     The Manufacturer shall immediately notify the Distribution Agent and OSI of any anticipated or
actual delays in delivering the Product or making the Product available for shipment on the
required dates specified in the Distribution Agent Purchase Order. If the Manufacturer fails to
deliver or make Product available for shipment in the quantities specified in a Distribution Agent
Purchase Order within five (5) Business Days after the date specified in a Distribution Agent
Purchase Order, then OSI shall have the right to
cancel the amount of the OSI Purchase Order which is unfulfilled by providing written notice
of such cancellation to the Distribution Agent and providing a copy of such notice to the
Manufacturer. Within two (2) Business Days after the delivery of any such notice of cancellation to
the Distribution Agent, the Distribution Agent shall cancel the amount of the Distribution Agent
Purchase Order which is unfulfilled by providing written notice of such cancellation to the
Manufacturer and providing a copy of such notice to OSI. OSI





 




			
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7









 









will have the right to then obtain the
unsupplied quantity of Product from any other manufacturer or intermediary without liability to the
Manufacturer or Distribution Agent, with such order being subject to any minimum order requirements
or other reasonable requirements or constraints whether due to manufacturing scale or otherwise of
such other manufacturer or intermediary. OSI shall be available to discuss with Manufacturer the
Manufacturer’s ability to remedy such failure to deliver all of the requested Product or make all
of the requested Product available for shipment at the specified date. Thereafter, if OSI decides
in its sole discretion to obtain such unsupplied quantity of Product from any other manufacturer or
intermediary, Manufacturer shall be liable to OSI for any incremental costs paid by OSI to obtain
such cancelled quantity of Product from another manufacturer, provided that Manufacturer shall not
be liable to OSI for any such incremental costs if OSI cancels such unfulfilled quantity of Product
within sixty (60) days after the date specified in the Distribution Agent Purchase Order, when the
Product was not delivered or made available for shipment, in order to provide Manufacturer with an
opportunity to cure. OSI shall have no obligation to delay any cancellation during such
cure-period. Any amounts of Product purchased from third party manufacturers pursuant to this
Section shall be deducted from OSI’s purchasing commitment of the Product in accordance with the
Detailed Product Forecast and shall apply against OSI’s purchasing requirements of Product set
forth in Section 1.2.




     The Manufacturer shall be responsible for and agrees to assume any excess shipping charges
related to express shipments, partial shipments, or both, as necessary to meet any required
delivery date.



     Section 5. Pricing; Payment; Inventory



     5.1 Delivery of 380 and/or 470 by OSI to Manufacturer. This Section 5.1 shall only
apply to the 380 and/or 470 provided to the Manufacturer by OSI. OSI shall, at the written request
of the Manufacturer, provide the Manufacturer with 380 and/or 470 in such a timely manner and in
such amounts based on OSI’s forecasts so as to enable the Manufacturer to manufacture Product
hereunder. Such requests shall be made by Manufacturer six (6) months in advance of them being
required by the Manufacturer. The Manufacturer will, if reasonably requested by OSI in writing,
agree to hold an inventory of 380 and/or 470 to enable manufacture of up to nine (9) months
forecasted supply of Product. Such 380 and/or 470 will be stored by Manufacturer at no cost to OSI
under appropriate conditions consistent with the requirements of cGMP, the Contract Operations
Manual and other related documentation as may be provided to Manufacturer by OSI.



     When a shipment of 380 and/or 470 is ready for delivery, OSI shall notify the Manufacturer of
the expected delivery dates (including details of destination, date and
time) to enable delivery and receipt to be coordinated. Manufacturer shall provide written
confirmation of receipt of 380 and/or 470 to OSI within five (5) Business Days after such receipt.



     5.2 Purchase of Product by the Distribution Agent from the Manufacturer. Pricing to
the Distribution Agent from the Manufacturer for both development quantities



8









 







and commercial
quantities of Product is as set forth in Exhibit D (“Pricing”). These prices shall remain
fixed from the Effective Date until December 31, 2006. Thereafter, the prices may be changed to
reflect the following: (A) increased raw material prices and other increased direct costs actually
incurred and paid by the Manufacturer in arm’s length transactions (e.g., power, heating,
transportation), in each case with any such increase not to exceed **, provided that the
Manufacturer shall provide the Distribution Agent a minimum of ninety (90) days prior written
notice of any proposed price increase and documentation to the extent and in such detail as to
reasonably justify any price increase at the time of written notification; and (B) decreased cost
in the manufacture of Starting Materials and/or Product due to any process improvements agreed upon
by the parties. In addition, after December 31, 2006, the prices may be changed to reflect currency
fluctuations calculated in accordance with Exhibit D, item 3.



     The Manufacturer shall issue its invoice to the Distribution Agent before the time of
shipment. Each invoice shall set forth, in U.S. Dollars, the applicable price for the shipment
properly determined in accordance with the provisions of this Agreement. For the avoidance of
doubt, payment by the Distribution Agent will be made in U.S. Dollars based on the actual quantity
delivered, as set forth in Exhibit D (commissions included).



     5.3 Purchase of Product by OSI from the Distribution Agent. Pricing for both
development quantities and commercial quantities of Product purchased by OSI from Distribution
Agent is as set forth in Exhibit D. These prices shall remain fixed from the Effective Date until
December 31, 2005. Thereafter, the prices may be changed to reflect the following: (A) increased
raw material prices and other increased direct costs actually incurred and paid by the Manufacturer
in arm’s length transactions (e.g., power, heating, transportation), in each case with any such
increase not to exceed **, provided that the Distribution Agent shall provide OSI a minimum of
ninety (90) days prior written notice of any proposed price increase and documentation (from
Manufacturing Agent and Distribution Agent) to the extent and in such detail as to reasonably
justify any price increase at the time of written notification; and (B) decreased cost in the
manufacture of Product due to any process improvements agreed upon by the parties. The costs of any
such process improvements will be equally shared by the Manufacturer and OSI. In addition, after
December 31, 2006, the prices may be changed to reflect currency fluctuations calculated in
accordance with Exhibit D, item 3.



     The Distribution Agent shall issue its invoice to OSI at the time of shipment. Each invoice
shall set forth, in U.S. Dollars, the applicable price for the shipment properly determined in
accordance with the provisions of this Agreement. For the avoidance of doubt, payment by OSI will
be made in U.S. Dollars based on the actual quantity
delivered, as set forth in Exhibit D (commissions included). The payment terms shall be net
30 days.





 




			
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     5.4 Inventory.



     Manufacturer shall provide inventory reports to OSI on a monthly basis. Such reports shall
include the amounts of any inventory of Product, 380 and 470 held by Manufacturer. OSI, or its
designee, shall have the right to conduct an inspection of any physical inventory at Manufacturer’s
facility (at reasonable times, upon reasonable advance notice and in the company of a Manufacturer
representative), provided that OSI shall impose on such designee and procure such designee to
observe the confidentiality obligations set forth in Section 8.



     Section 6.  Inspection of Starting Material Shipments.



     6.1 This Section 6.1 shall only apply to the 380 and/or 470 provided to the Manufacturer by
OSI which, by mutual agreement of the Manufacturer and OSI, may be supplied to the Manufacturer by
OSI. The Manufacturer shall inspect the Starting Material delivered by OSI hereunder for obvious
defect and/or shortage immediately upon receipt and shall provide OSI with written notice of any
such obvious defect and/or shortage, within thirty (30) days after receipt by the designated
facility.



     6.2 Promptly after discovery, but in any event within forty-five (45) days after delivery of
any such Starting Material, the Manufacturer shall provide OSI with written notice of any
adulteration of the Starting Material, non-obvious or hidden defect, or failure to meet the
specifications of the Starting Material as set forth herein.



     6.3 Obvious defect, shortage, adulteration of Starting Materials, non-obvious or hidden defect
and failure to meet the Starting Material specifications set forth herein as determined in
accordance with this Section 6 shall hereinafter be referred to as “Starting Material Damage”. The
Manufacturer agrees to provide OSI with documentation of Starting Material Damage to confirm the
existence thereof. If both Parties agree that the shipment, or any part thereof, sustained
Starting Material Damage, then OSI shall deliver replacement Starting Material to the Manufacturer
as soon as reasonably practicable thereafter. The cost of such replacement shall be borne by OSI
provided that such Starting Materials were, during their time at the Manufacturer, stored in
accordance with cGMP and the conditions recommended by OSI and provided that the Starting Material
Damage was not otherwise caused by the negligence or willful misconduct of Manufacturer.



     6.4 If the Manufacturer, or OSI disagree as to the existence of Starting Material Damage, they
will then submit representative samples of the product in question to a mutually acceptable
independent testing lab and the results of said lab shall be binding on the Parties. The costs
associated with such submission shall be born by the Party against which the lab decided.



     6.5 Notwithstanding any other provisions of this Agreement, the Manufacturer agrees, if so
requested by OSI, to return to OSI or to the Starting Material manufacturer,
at the direction and expense of OSI, any Starting Material provided by OSI to



10









 







Manufacturer
that sustained Starting Material Damage or otherwise to dispose of such Starting Material, at the
direction and expense of OSI.



     6.6 OSI shall be responsible for all discussions with the Starting Material manufacturer under
this Section 6, and Manufacturer agrees that it shall not contact any Starting Material
manufacturers in connection with the Manufacturer’s obligations under this Agreement without the
written consent of OSI.



     Section 7. Inspection of Shipments and Facilities. OSI or an OSI Designee, if
directed by OSI, shall inspect all Product delivered to OSI hereunder for obvious defect and/or
shortage immediately upon receipt by OSI. OSI shall provide the Distribution Agent, with a copy to
the Manufacturer, with written notice of any such obvious defect and/or shortage, within thirty
(30) days after receipt by OSI or an OSI Designee. Within forty-five (45) days after receipt by
OSI or an OSI Designee, OSI shall notify the Manufacturer in writing of any such Product that does
not conform with applicable Specifications. Thereafter, promptly after discovery, OSI shall notify
the Manufacturer in writing of any non-obvious or hidden defect and/or failure to meet applicable
Specifications in any Product. Obvious defect, shortage, adulteration of Product, non-obvious or
hidden defect and failure to meet applicable Specifications shall hereinafter be collectively
referred to as “Product Damage”.



     OSI agrees to provide the Manufacturer’s quality control department with documentation of
Product Damage to confirm the existence thereof. If all Parties reasonably agree that the
shipment, or any part thereof, sustained or were subject to Product Damage, then the Manufacturer
and/or Distribution Agent shall, at OSI’s option either: (i) deliver to OSI replacement Product for
the shipment, or any part thereof, that was subject to Product Damage, or, if directed by OSI, to
an OSI Designee, as soon as reasonably practicable thereafter (but in any event, within ninety (90)
days after the official notification by OSI of such Product Damage), or (ii) refund to OSI (by cash
or credit, at OSI’s discretion) the purchase price paid and other costs and expenses incurred by
OSI with respect to the shipment of Product, or any part thereof, that was subject to Product
Damage.



     If OSI and the Manufacturer disagree as to the existence of Product Damage, they will make
such determination by submitting representative samples of the shipment to a mutually acceptable
independent testing lab and the results of said lab shall be binding on the Parties. The costs
associated with such submission shall be born by the Party against which the lab decided. If the
Product submitted to the lab is determined by the lab to have sustained or contain Product Damage,
then the Parties shall be deemed to have agreed as to the presence of such Product Damage.



     Notwithstanding any other provisions of this Agreement, OSI agrees to return to the
Manufacturer, at the Manufacturer’s expense, any Product that sustained Product Damage, as agreed
by the Parties or decided by the independent testing lab or otherwise, to dispose of such Product,
at the Manufacturer’s expense, under the joint direction of OSI and the Manufacturer.



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     Section 8. Confidentiality.



     8.1 During the Term, it may be necessary for OSI, the Manufacturer, the Distribution Agent,
OSI Designees and the Starting Material manufacturers to disclose certain confidential and
proprietary information and data to each other relating to their respective products, including
active pharmaceutical ingredients, Product, Starting Materials, and Finished Product and
businesses, including, but not limited to financial and other business information, product
samples, formulas, manufacturing processes, specifications, drawings, schematics and other
technical, customer and product development plans, forecasts, strategies and other data. Except as
otherwise specifically provided herein, all such information disclosed by such Party (in such
capacity, the “Disclosing Party”) to another Party (in such capacity, the “Receiving Party”) shall
constitute the “Proprietary Information.”



     8.2 The Disclosing Party shall disclose and supply its Proprietary Information to the
Receiving Party that is necessary for the Receiving Party to perform its obligations under this
Agreement.



     8.3 In consideration of the Disclosing Party’s disclosure and supply of its Proprietary
Information, each Party, as a potential Receiving Party, agrees that, for a period of ten (10)
years from the date of such disclosure, it: (a) shall use the Disclosing Party’s Proprietary
Information exclusively for the purpose of carrying out the Receiving Party’s obligations under
this Agreement; and (b) shall not disclose, without the express written consent of the Disclosing
Party, any Proprietary Information, including this Agreement, to any person other than to those
employees or agents of the Receiving Party (“Representatives”) who will be directly involved in
fulfilling the Receiving Party’s obligations hereunder; provided that such Representatives are
bound by a written obligations of confidentiality no less onerous than the terms of this Section 8.
Notwithstanding the foregoing, OSI may disclose Proprietary Information to its collaborators,
Genentech and F. Hoffman La-Roche Ltd. (“Roche”) (collectively the “Collaborators”) for the global
co-development of the Product and commercialization of the Finished Product provided that such
Collaborators are bound by a written obligations of confidentiality no less onerous than the terms
of this Section 8.



     8.4 Each Party, as a potential Receiving Party, agrees to advise those of its Representatives
who receive Proprietary Information that such information (a) is proprietary and confidential to
the Disclosing Party and (b) shall not be used or disclosed to anyone except as authorized herein.
Each Party further agrees to take such reasonable precautions as it normally takes with its own
confidential and proprietary information to prevent unauthorized disclosure or use of such
Proprietary Information by it or its’ Representatives or Collaborators.



     8.5 In the event
that the Receiving Party becomes compelled by law, rule or regulation to
disclose this Agreement or any Proprietary Information, including with respect to filings with the
U.S. Securities and Exchange Commission or as required by a regulatory agency, it will provide the
Disclosing Party with notice as soon as possible,



12









 







and will use reasonable efforts to protect the confidential treatment of such Proprietary
Information.



     8.6 Notwithstanding any of the foregoing, the term “Proprietary Information” and the
obligations of confidentiality and use associated therewith shall not apply to the following
information: (a) information which, at the time of the Disclosing Party’s disclosure to the
Receiving Party, is in the public domain; (b) information which, after the Disclosing Party’s
disclosure to the Receiving Party, enters the public domain, except where such entry is the result
of the Receiving Party’s breach of this Agreement or otherwise is the result of any unauthorized
disclosure by any of its employees; (c) information which, prior to the Disclosing Party’s
disclosure to the Receiving Party, was already in the Receiving Party’s possession; or (d)
information which, subsequent to the Disclosing Party’s disclosure to the Receiving Party, is
obtained by the Receiving Party from a third party which is lawfully in possession of such
information and not subject to a contractual or legal obligation to keep such Proprietary
Information confidential.



     8.7 Upon termination of this Agreement, the Receiving Party shall promptly return to the
Disclosing Party the originals and all copies of any Proprietary Information then in the Receiving
Party’s possession. Notwithstanding the foregoing, Receiving Party may retain one copy of such
Proprietary Information solely for legal archival or regulatory purposes, provided that such
retained Proprietary Information shall continue to be governed by this Section 8.



     8.8 Each Party understands and acknowledges that, due to the unique nature of each Party’s
Proprietary Information, any unauthorized disclosure of any portion of Proprietary Information may
cause irreparable injury to the Disclosing Party and that no adequate or complete remedy may be
available to the Disclosing Party to compensate for such injury. Accordingly, each Party hereby
acknowledges that the Disclosing Party shall be entitled to injunctive relief in the event of such
unauthorized disclosure by the Receiving Party or any of its employees in addition to whatever
remedies it might have at law. In addition, the Receiving Party shall indemnify and hold harmless
the Disclosing Party from any loss or harm, including, without limitation, reasonable attorney’s
fees and costs, fees and expenses incurred in the enforcement of the Disclosing Party’s rights
under this Section 8, that are the result of any breach of this Section 8 or the unauthorized use
or release of any such Proprietary Information. The Receiving Party will notify the Disclosing
Party in writing immediately upon the occurrence of any such unauthorized release or other breach
of which it becomes aware.



     Section 9. Quality of Starting Materials and Product; Regulatory Matters; Auditing Rights;
Recordkeeping; Representations and Warranties.



     9.1 The Manufacturer hereby represents, warrants and covenants that:



          (a) at all times during the Term, the Manufacturer’s facilities shall remain in compliance
with, Product and Starting Materials shall be manufactured and delivered in compliance with (i)
applicable provisions of the Federal Food, Drug and Cosmetic Act, as amended from time to time (the
“Act”); (ii) cGMP and the Contract



13









 







Operations Manuals; (iii) other applicable rules, regulations, and guidance promulgated under
the Act relating to the manufacture of pharmaceutical products, including, without limitation,
those rules, regulations, and guidance documents applicable to the manufacture of bulk active
pharmaceutical ingredients; (iv) the Product Specifications (in the case of the Product); (v) the
470 Purchase Specifications (in the case of 470); and (vi) the 380 Purchase Specifications (in the
case of 380).



          (b) it shall use its commercially reasonable best efforts to (i) respond fully and accurately
to all inquiries directed to it by the U.S. Food and Drug Administration and any relevant
equivalent U.S. or foreign regulatory or governmental authorities (the “FDA”) FDA (and it shall
notify OSI of same), (ii) assist OSI in responding to inquiries directed to OSI by the FDA, and
(iii) provide the FDA with such information and data as is requested by the FDA with respect to the
manufacture, use, route of synthesis and testing of Product and the Starting Materials.



          (c) Manufacturer’s manufacturing facilities are in compliance with the cGMP and will continue
to be in compliance.



          (d) the Manufacturer’s process for manufacturing Product and the Starting Materials is in
conformity with the then current validated manufacturing process and its conditions at the time the
applicable Distribution Agent Purchase Order is issued.



          (e) it shall comply with all federal, state and local laws, statutes, rules, regulations and
guidelines of any applicable jurisdiction in effect on the Effective Date or thereafter throughout
the Term (“Laws”) applicable to Manufacturer’s activities and obligations hereunder, including the
manufacturing, handling, storage and delivery of Product and Starting Materials.



          (f) it has or will timely obtain, and will maintain and comply with at all relevant times
throughout the Term, all applicable federal, state and local permits, licenses, registrations and
other governmental authorizations reasonably required by Law or advisable under Law for
Manufacturer to perform its obligations under this Agreement.



          (g) it shall not manufacture, for itself or any third party, any hazardous or extremely potent
compound or composition of matter which may put at risk the Manufacturer’s ability to satisfy its
obligations to manufacture Product or Starting Materials.



          (h) The Product and Starting Materials delivered pursuant to this Agreement shall be delivered
to OSI free and clear of any liens or encumbrances of any kind that arise from any action of the
Manufacturer or any of its employees or agents.



     9.2 Manufacturer agrees to provide to OSI such information and assistance relating to the
manufacture of the Product or Starting Materials as OSI may reasonably require for purposes of
applying for and maintaining all regulatory approvals for the Product or Starting Materials
including but not limited to, providing OSI with all reports, authorizations, certificates,
methodologies, and other documentation in the possession or



14









 







under the control of Manufacturer relating to the manufacture of the Product (or any component
thereof, including Starting Materials) except for those disclosed to Manufacturer by a third party
under obligations of confidentiality and non-use.



     9.3 The Manufacturer recognizes and agrees that FDA may elect to inspect its facilities. The
Manufacturer agrees to notify OSI of any scheduled or unscheduled inspection by FDA and agrees to
meet jointly with OSI and Genentech as soon as practicable, but in any event prior to the
inspection if possible, to discuss an appropriate strategy for the conduct of such inspection. The
Manufacturer agrees to allow OSI to be present at any such inspection by the FDA. In addition, the
Manufacturer agrees that Genentech may send representatives to the facility being inspected by the
FDA to participate in such FDA inspection to the extent OSI is participating. If OSI does not
participate in such inspection, Genentech may participate as agreed upon between OSI and Genentech.
The Manufacturer shall provide OSI and Genentech with a reasonable opportunity to review, comment
upon and approve any information Manufacturer intends to disclose to FDA related to the Finished
Product, Product or Starting Materials in connection with such inspection. The Manufacturer agrees
to remedy any deficiencies noted by FDA as promptly as possible at the Manufacturer’s expense.



     The Manufacturer shall allow OSI, and the OSI Designees and Collaborators to audit the
Manufacturer’s facilities and records (at reasonable times, upon reasonable advance notice and in
the company of a Manufacturer representative) to the extent OSI deems reasonably necessary to
enable OSI to verify compliance by the Manufacturer with its obligations under this Agreement and
to verify compliance with any statutory or regulatory requirements to which it or OSI are subject,
or which are otherwise applicable to the manufacture of Product or Starting Materials, provided
that OSI shall impose on such OSI Designees or Collaborators and procure such OSI Designees or
Collaborators to observe the confidentiality obligations of the Receiving Party provided for
herein.



     If as a result of any such inspection provided for herein, OSI concludes that the Manufacturer
is not in compliance with any of the foregoing obligations or requirements, it shall so notify the
Manufacturer in writing, specifying such areas of noncompliance in reasonable detail. If the
Manufacturer agrees with OSI, it shall use its best endeavors to remedy the problems identified as
soon as reasonably practicable. If, on the other hand, OSI and the Manufacturer disagree with
respect to the compliance matters referred to in this Section, the Parties shall retain a mutually
acceptable outside expert to conduct inspections of the relevant records and facilities. The
determination of such expert as to compliance with any applicable obligations or requirements and
the actions necessary to correct any noncompliance with respect thereto shall be final and binding
unless otherwise agreed in writing by the Parties. The fees and expenses of such expert shall be
borne by the Party against which the expert decides.



     9.4 The Distribution Agent shall allow OSI, its OSI Designees and Collaborators to audit the
Distribution Agent’s facilities and records (at reasonable times, upon reasonable advance notice
and in the company of a Distribution Agent representative) to the extent OSI deems reasonably
necessary to enable OSI to verify compliance by the Distribution Agent with its obligations under
this Agreement and to



15









 







verify compliance with any statutory or regulatory requirements relating thereto or to which
OSI is otherwise subject that are applicable to the handling and distribution of Product or
Starting Materials, provided that such OSI Designees and Collaborators are bound by written
confidentiality obligations no less onerous than those provided for herein.



     If as a result of any such inspection provided for herein, OSI concludes that the Distribution
Agent is not in compliance with any of the foregoing obligations or requirements, it shall so
notify the Distribution Agent in writing, specifying such areas of noncompliance in reasonable
detail. If the Distribution Agent agrees with OSI, it shall use its best endeavors to remedy the
problems identified as soon as reasonably practicable. If, on the other hand, OSI and the
Distribution Agent disagree with respect to the compliance matters referred to in this Section, the
Parties shall retain a mutually acceptable outside expert to conduct inspections of the relevant
records and facilities. The determination of such expert as to compliance with any applicable
obligations or requirements and the actions necessary to correct any noncompliance with respect
thereto shall be final and binding unless otherwise agreed in writing by the Parties. The fees and
expenses of such expert shall be borne by the Party against which the expert decides.



     9.5 All records relating to the manufacture of Product or Starting Materials by the
Manufacturer hereunder (the “Manufacturing Records”) shall be retained and archived by the
Manufacturer for a period of seven (7) years, or such longer period as may be required by
applicable law or regulation, following completion of the manufacturer of each specific quantity of
Product or Starting Materials that is intended to be of uniform character and quality and is
produced during the same cycle of Manufacturing Process. Upon OSI’s written request, Manufacturer
shall promptly provide OSI with copies of the Manufacturing Records. Prior to destroying or
otherwise disposing of any such Manufacturing Records, regardless of whether the seven (7) year
period set forth in this Section 8.5 has expired, Manufacturer will provide OSI a reasonable
opportunity to take possession of the Manufacturing Records at OSI’s own expense.



     9.6 OSI hereby represents, warrants and covenants that it shall comply with Laws applicable to
its activities and obligations hereunder.



     9.7 The Distribution Agent hereby represents, warrants and covenants:



          (a) no Product or Starting Materials constituting or being a part of any shipment to OSI or
its designees shall at the time of any such shipment be adulterated within the meaning of the Act,
or the rules and regulations promulgated thereunder, as such law, rule or regulation is constituted
and in effect at the time of any such shipment;



          (b) it shall comply with Laws applicable to its activities and obligations hereunder;



          (c) all Product and Starting Materials shall be handled, stored and shipped in accordance with
all Laws and the requirements of this Agreement; and



16









 





          (d) it has or will timely obtain, and will maintain and comply with at all relevant times
throughout the Term, all applicable federal, state and local permits, licenses, registrations and
other governmental authorizations reasonably required by Law or advisable under Law for it to
perform its obligations under this Agreement.



          
(e) the Product and Starting Materials delivered pursuant to this Agreement shall be delivered
to OSI free and clear of any liens or encumbrances of any kind that arise from the actions of the
Distribution Agent or any of its employees or agents.



     9.8 Except as otherwise noted below, in the event that OSI or the Manufacturer receives any
complaint, claims or adverse reaction reports regarding Product or Starting Materials, including
notices from the FDA regarding any alleged regulatory non-compliance of Product or Starting
Materials, each Party shall within five (5) Business Days, provide the other with all information
contained in the complaint, report, or notice and such additional information regarding Product or
Starting Materials, as may be reasonably requested. OSI and the Manufacturer shall comply, at a
minimum, with FDA requirements for complaint handling. The Manufacturer shall fully cooperate with
OSI regarding any investigations of Product. If any Party becomes aware that Product or Starting
Materials contain a defect which could or did cause death or serious bodily injury, such Party
shall promptly fax and telephone the other Parties with a complete (where required by law)
description of all relevant details known to such Party concerning any such incident, including but
not limited to, a description of any defect and such other information which may be necessary to
report the incident to FDA. OSI shall be responsible for preparing adverse drug reaction reports,
administering adverse drug reaction files relating to Finished Product and filing all such reports
with FDA, at its sole expense.



     9.9 Each Party represents and warrants to the other Parties that: (a) it is a corporation duly
organized, validly existing and in good standing (if applicable) under the laws of its
incorporating jurisdiction; (b) it has all requisite corporate power and authority to enter into
this Agreement; (c) it is duly authorized to execute and deliver this Agreement and to perform its
obligations hereunder and consummate the transactions contemplated hereby; (d) upon valid execution
of this Agreement by all of the Parties, each Party shall be bound by the terms of this Agreement;
and (e) it has not entered into any agreement or has agreed to any other obligation that might
prevent it from fulfilling its duties hereunder.



     Section 10. Indemnification and Limitations on Liability.



     10.1 OSI hereby agrees to and shall defend, indemnify, and hold harmless the Manufacturer and
the Distribution Agent and their respective employees, agents, officers, and directors (each the
“Manufacturer Indemnitees” and “Distribution Agent Indemnitees”, and collectively, the
Manufacturer/Distribution Agent Indemnitees”), from, against, and in respect of, any and all
losses, judgments, damages, liabilities (including but not limited to product liability), suits,
actions, expenses (including attorney’s fees and expenses), and proceedings (collectively “Losses”)
arising from:



17









 





          (a) its material breach of this Agreement;



          (b) any claim, complaint, suit proceeding or cause of action against any
Manufacturer/Distribution Agent Indemnitee, alleging physical injury or death, brought by or on
behalf of an injured third party, or loss of service or consortium or a similar such claim,
complaint, suit, proceeding or cause of action brought by a spouse, relative or companion of an
injured third party due to such physical injury or death, and in each case arising out of the
Product, except to the extent that such injury, loss or death is attributable to a failure of any
Manufacturer/Distribution Agent Indemnitee to adhere to the requirements of this Agreement; and



          (c) the negligence or willful misconduct of any OSI Indemnitee (as hereinafter defined);



     OSI’s indemnification obligation under this Section 10 shall not apply to Losses to the extent
that such Losses are attributable to the negligence or willful misconduct of any
Manufacturer/Distribution Agent Indemnitee.



     10.2 The Manufacturer hereby agrees to and shall defend, indemnify, and hold harmless OSI and
its respective employees, agents, officers, and directors (the “OSI Indemnitees”) and the
Distribution Agent Indemnitees (collectively with the OSI Indemnitees, the “OSI/Distribution Agent
Indemnitees”), from, against, and in respect of, any and all Losses arising from:



          (a) its material breach of this Agreement; and



          (b) any claim, complaint, suit, proceeding, or cause of action against any OSI/Distribution
Agent Indemnitee, alleging physical injury or death, brought by or on behalf of an injured third
party, or loss of service or consortium or a similar such claim, complaint, suit, proceeding or
cause of action brought by a spouse, relative, or companion of an injured third party due to such
physical injury or death, and in each case arising out of non-conformity of the Product to the
Product Specifications or non-conformity with relevant specifications of a Starting Material
supplied by Manufacturer hereunder, except to the extent that such injury, loss or death is
attributable to a failure of an OSI/Distribution Agent Indemnitee to adhere to the requirements of
this Agreement;



          (c) the negligence or willful malfeasance of any Manufacturer Indemnitee, except to the
extent that any of the foregoing are attributable to the negligence or willful misconduct of an
OSI/Distribution Agent Indemnitee.



     10.3 The Distribution Agent hereby agrees to and shall defend, indemnify, and hold harmless
the OSI Indemnitees and the Manufacturer Indemnitees (collectively, the OSI/Manufacturer
Indemnitees”), from, against, and in respect of, any and all Losses arising from:



          (a) its material breach of this Agreement;



18









 





          (b) any claim, complaint, suit proceeding or cause of action against any OSI/Manufacturer
Indemnitee, alleging physical injury or death, brought by or on behalf of an injured third party,
or loss of service or consortium or a similar such claim, complaint, suit, proceeding or cause of
action brought by a spouse, relative or companion of an injured third party due to such physical
injury or death, and in each case arising out of its storing, handling delivery and/or shipment of
Product; and



          (c) the negligence or willful malfeasance of any Distribution Agent Indemnitee, in performing
this Agreement, except to the extent that any of the foregoing are attributable to the negligence
or willful misconduct of an OSI/Manufacturer Indemnitee.



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



19









 





     10.5 Each of the Parties shall obtain insurance coverages as follows:



          (a) The Manufacturer shall, throughout the term of this Agreement and for ** after its
termination or expiration, obtain and maintain at its own cost and expense from a qualified
insurance company (i.e., an A.M. Best Rating of A- or better), comprehensive general liability
insurance including, but not limited to, contractual liability coverage and standard product
liability coverage. Such policy shall provide protection against any and all claims, demands and
causes of action arising out of its activities under this Agreement. The aggregate annual amount
of coverage shall be a minimum of **. Manufacturer agrees to name OSI as an additional insurer on
all such policies. At OSI’s request, the Manufacturer shall provide OSI with proof of such
coverage. The Manufacturer shall provide OSI with written notice at least thirty (30) days prior
to any cancellation, non-renewal or material change in such insurance which may materially
adversely affect the performance of Manufacturer’s obligations under this Agreement.



          (b) The Distribution Agent shall, throughout the term of this Agreement and for ** after its
termination or expiration, obtain and maintain at its own cost and expense from a qualified
insurance company (i.e., an A.M. Best Rating of A- or better), comprehensive general liability
insurance including, but not limited to, contractual liability coverage and standard product
liability coverage. Such policy shall provide protection against any and all claims, demands and
causes of action arising out of its activities under this Agreement. The aggregate annual amount
of coverage shall be a minimum of **. Distribution Agent agrees to name OSI as an additional
insurer on all such policies. At OSI’s request, the Distribution Agent shall provide OSI with
proof of such coverage. The Distribution Agent shall provide OSI with written notice at least
thirty (30) days prior to any cancellation, non-renewal or material change in such insurance which
may materially adversely affect the performance of Distribution Agent’s obligations under this
Agreement.



          (c) OSI shall, throughout the term of this Agreement and for ** after its termination or
expiration, obtain and maintain at its own cost and expense from a qualified insurance company
(i.e., an A.M. Best Rating of A- or better), comprehensive general liability insurance including,
but not limited to, contractual liability coverage and standard product liability coverage. Such
policy shall provide protection against any and all claims, demands and causes of action arising
out of its activities under this Agreement. The aggregate annual amount of coverage shall be a
minimum of **. At the Manufacturer’s request, OSI shall provide Manufacturer with proof of such
coverage.



     Section 11. Recall.



     11.1 If (a) any regulatory authority withdraws the approval to sell the Finished Product in
such country or issues a directive or request that the Finished Product be recalled for product
safety reasons, (b) any regulatory authority or court of competent jurisdiction issues a request,
directive or order that the Finished Product be recalled or (c)





 




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




20









 









OSI shall reasonably determine that the Finished Product should be recalled, the Parties shall
take all appropriate corrective actions, and shall cooperate in any governmental investigations
surrounding the recall. In the event that such recall results from any cause or event arising from
(x) non-conformity of Product to the Product Specifications, Starting Material manufactured by the
Manufacturer to the Starting Materials specifications or other failure of Manufacturer to fulfill
its obligations hereunder, the Manufacturer shall promptly replace such Product at no additional
cost to OSI or (y) storage, handling or shipment of Product or Starting Materials by the
Distribution Agent or other failure of the Distribution Agent to fulfill its obligations hereunder,
the Distribution Agent shall be responsible for the cost of replacing the Product or Starting
Materials, as the case may be. In all other cases (including a recall resulting from a
mis-specification by OSI), OSI shall be responsible for the cost of replacement Product or Starting
Materials, as the case may be.




     11.2 In the event a regulatory authority orders the withdrawal of Product from the
marketplace, OSI may at its option cancel this Agreement and Manufacturer shall immediately cease
the manufacturing of Product and Starting Materials, provided that (i) OSI shall purchase from the
Manufacturer all Product manufactured from orders prior to such cancellation and pay the prices of
Product thereof immediately, and (ii) OSI shall pay for all Starting Material manufactured to
fulfill such orders.



     11.3 The Parties obligations under this Section 11 shall be in addition to and not limit their
respective obligations under Section 10 (Indemnification).



     Section 12. Term and Termination.



     12.1 This Agreement shall be effective for a period of seven (7) years from the Effective Date
(the “Initial Term”), unless terminated in accordance with this Section 12. Upon expiration of the
Initial Term, it will be automatically renewed for additional terms of two (2) years each unless a
Party gives the other Parties notice of termination at least twelve (12) months before the end of
the applicable term. The Initial Term plus any extensions thereto shall constitute the “Term”.



     This Agreement may be terminated by a Party if:



          (a) upon ** written notice to any other Party of a material failure by such other Party to
perform or observe any covenant, condition or agreement to be performed or observed by it under
this Agreement, unless such breach has been cured within the ** notice period, provided prior to
the effective date of such termination there shall be no restriction on the right of the
Distribution Agent and OSI to purchase Product consistent with its forecasts;



          (b) pursuant to Section 16.1, a Force Majeure preventing performance of another Party
continues for more than three (3) months; or





 




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




21









 










          (c) upon the filing of bankruptcy, reorganization, liquidation, receivership proceedings, or
any other similar action or proceeding with respect to another Party.



     Notwithstanding the foregoing, should Distribution Agent terminate this Agreement or cease to
fulfill its material obligations under this Agreement thereby prompting a termination of this
Agreement, Manufacturer and OSI covenant to (i) promptly negotiate and enter into a replacement
supply agreement (the “Replacement Agreement”) on the same terms and conditions as set forth
herein, with Manufacturer assuming the rights and responsibilities of Distribution Agent, unless
OSI agrees in writing to the substitution of another Distribution Agent for Distribution Agent and
(ii) Manufacturer agrees to continue this Agreement on the same terms and conditions as set forth
herein until the Replacement Agreement is effective, while assuming all of the obligations of
Distribution Agent except those that arise based on this Agreement prior to the Distribution Agent
terminating this Agreement or ceasing to fulfill its material obligations under this Agreement.



     12.2 Notwithstanding any other provisions of this Agreement to the contrary, OSI shall have
the right to immediately terminate this Agreement in the event that:



          (a) the Manufacturer fails an inspection by the FDA for the manufacture of the Product or
Starting Materials and has not cured all deficiencies cited by the FDA to the satisfaction of the
FDA within ** of receipt of notice of such deficiencies from the FDA or by the time set forth by
the FDA, whichever is shorter;



          (b) in the event that the Manufacturer or Distribution Agent is unable, or fails, to supply
Product at levels commensurate with OSI forecasts in accordance with and subject to Section 3;



          (c) in the event that OSI elects to discontinue or curtail substantially development and
commercialization of Finished Product; or



          (d) in the event that market authorization for the Finished Product is withdrawn by the FDA.



     12.3 Upon termination of this Agreement that is not caused by the Manufacturer’s breach of its
obligations under this Agreement, OSI shall purchase from the Manufacturer all Product ordered
prior to such termination and shall pay the prices of Product thereof immediately. In addition, OSI
shall pay for all Starting Materials manufactured in accordance with such orders.



     12.4 Upon termination of this Agreement for any reason, subject to Section 12.3, Manufacturer
shall return to OSI all Starting Materials provided to the Manufacturer by OSI and deliver all
Product inventory to OSI.





 




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




22









 










     12.5 The provisions of this Section 12 as to termination shall not limit or restrict the
rights of any Party to seek remedies or take measure that may be otherwise available to it at law
or equity in connection with the enforcement and performance of obligations under this Agreement.
In any event, upon termination for any reason all amounts owing by a Party to the other Party shall
become immediately due and payable.



     Section 13. Notices. Any and all notices required or permitted to be given under this
Agreement will be in writing and effective and delivered upon receipt, sent by facsimile
transmission with transmission confirmation, mailed postage prepaid by first-class certified or
registered mail, sent by electronic mail, or sent by express courier service, at the respective
addresses, as follows:


If to OSI, to:



OSI Pharmaceuticals, Inc.

58 South Service Road

Melville, New York 11747

Attention: Michael Keech

Telephone Number: (631) 962-2013

Facsimile Number: (631) 962-2023

E-mail Address: mkeech@osip.com



With a copy to:



OSI Pharmaceuticals, Inc.

58 South Service Road

Melville, New York 11747

Attention: Legal Department

Telephone Number: (631) 962-2000

Facsimile Number: (631) 293-2218



If to the Manufacturer, to:



Dipharma Francis S.r.l.

Via Bissone 5

20021 Baranzate di Bollate (MI)

Italy

Attention: Graziano Castaldi

Telephone +39 02 38228250

Facsimile Number: +39 02 38201977

E-mail Address: graziano.castaldi@dipharma.it




23









 







If to the Distribution Agent, to:



Davos Chemical Corporation

600 East Crescent Avenue

Upper Saddle River, New Jersey 07458

Attention: Anthony DelPrete

Telephone Number: 201-995-0070

Facsimile Number: 201-995-0071

E-mail Address: adelprete@davos.com




     Section 14. Dispute Resolution.



     14.1 Each Party will designate an individual (each, a “Representative”) who will have the
authority to represent such Party in all matters concerning the transactions contemplated by this
Agreement. All communications should be addressed to the Party’s designated Representative. The
initial OSI Representative will be Michael Keech. The initial Manufacturer Representative will be
Graziano Castaldi. The initial Distribution Agent Representative will be Anthony DelPrete.



     14.2 In the event that any dispute arises relating to this Agreement, the Representatives
shall promptly meet and attempt to resolve the dispute through good faith discussions. If the
Representatives are unable to resolve any dispute to their mutual satisfaction within the thirty
(30) days after they commence discussions regarding same, and do not agree to extend the time for
resolution of the issue at the end of their meeting, then the matter will be referred to the senior
management of the Parties.



     14.3 If the senior management representatives are unable to resolve any dispute to their
mutual satisfaction within the thirty (30) days after they commence discussions regarding same, and
do not agree to extend the time for resolution of the issue at the end of their meeting, then a
Party may initiate arbitration in accordance with Section 14.4



     14.4 Any claim, dispute, or controversy arising out of or relating to this Agreement that is
not resolved in accordance with the provisions of Section 14.3 shall be finally resolved by
arbitration in accordance with the Rules of the International Chamber of Commerce in effect at the
time, except as may be modified by the Parties in writing. The place of arbitration shall be in
New York if initiated against OSI or the Distribution Agent and in Switzerland if initiated against
the Manufacturer. The award of the arbitrators shall be final and binding upon the Parties and
shall not be subject to appeal to any court, and may be entered in any court of competent
jurisdiction for execution forthwith.



     Section 15. Technology Transfer



     15.1 In the event that (i) OSI determines that the Manufacturer is unable to reasonably meet
its obligations to supply Product or Starting Materials, as the case may by, under this Agreement
and such failure leads to a breach of OSI’s obligations under the OSI/GNE Agreement and (ii) an
Assumption Notice (as defined in Section 16.6 thereof) is delivered to the Manufacturer, Genentech,
as a third-party beneficiary of this



24









 







Agreement, shall have the right to procure some or all of the Product or Starting Materials
that were to be manufactured by the Manufacturer pursuant to this Agreement from a third party
manufacturer. In order to facilitate such transfer of rights and obligations to Genentech the
Manufacturer agrees as follows:



          (a) the Manufacturer shall, within a reasonable time period, but in no event less than thirty
(30) days following written request from Genentech (i) physically transfer such technology,
including without limitation any and all Manufacturing Documentation (as hereinafter defined), to
Genentech or its designee; (ii) disclose to Genentech and its designee(s) the Manufacturing
Process; (iii) provide a license to OSI (with the right to sublicense to Genentech) for any
Proprietary Information that is required to make and have made the Product or Starting Materials,
as the case may be; and (iv) provide all cooperation and assistance reasonably requested by
Genentech to an extent that will enable Genentech (or its designee(s)) to assume with as little
disruption as reasonably possible, the continued manufacture of the Product or Starting Materials,
as the case may be. All information transferred pursuant to this Section 15.1(a) shall be deemed
to be confidential and shall be treated as if it was “Proprietary Information” in accordance with
Section 8; provided that Genentech shall have the right to transfer such information to third party
manufacturers solely in connection with the manufacture of the Product or the Starting Materials,
as the case may be.



          (b) For the purposes of this Agreement, Manufacturing Documentation shall mean all documents
and records describing or otherwise related to the Manufacturing Process or any part of the
Manufacturing Process, including, without limitation, documents and records consisting of or
containing piping and instrumentation diagrams, software logic and descriptions, batch records,
standard operating procedures, including, without limitation, standard operating procedures for
in-process quality control testing, facility layout schematics, equipment and instrumentation
specifications and process trend and variability data as necessary to allow proper equipment
validation and transfer of Product or Starting Materials, as the case may be, manufacture to
Genentech or its designee(s).



     15.2 In the event that, despite Manufacturer having reasonably met all of its obligations
under this Agreement, an Assumption Notice (as defined in Section 16.6) is delivered to the
Manufacturer, Manufacturer shall comply with the provisions set forth in Section 15.1(a), at OSI’s
expense, but only with respect to those items and information necessary for the proper equipment
validation and transferring of manufacture of Product or Starting Materials, as the case may be, to
Genentech or its designee. For avoidance of doubt, this Agreement shall remain in full force and
effect and the Term and termination of this Agreement shall remain subject to Section 12 of this
Agreement, notwithstanding the delivery of such Assumption Notice to Manufacturer pursuant to this
Section 16.6.



     15.3 If this Agreement is terminated by OSI as a result of Manufacturer’s breach of its
obligations under the Agreement, then Manufacturer shall, within a reasonable time period, but in
no event less than thirty (30) days following written request from OSI (i) physically transfer such
technology, including without limitation any and all Manufacturing Documentation (as defined in
Section 15.1(b)), to OSI or its



25









 







designee; (ii) disclose to OSI and its designee(s) the Manufacturer’s production process for
the manufacture of Product or the Starting Materials, as the case may be (the “Manufacturing
Process”); (iii) provide a license to OSI (with the right to sublicense to Genentech) for any
Proprietary Information that is required to make and have made the Product or Starting Materials,
as the case may be; and (iv) provide all cooperation and assistance reasonably requested by OSI to
an extent that will enable OSI (or its designee(s)) to assume with as little disruption as
reasonably possible, the continued manufacture of the Product or the Starting Materials, as the
case may be, pursuant to the conditions reasonably agreed to by the Parties. All information
transferred pursuant to this Section 15.3 shall be deemed to be confidential and shall be treated
as if it was “Proprietary Information” in accordance with Section 8; provided that OSI or
Genentech, as the case may be, shall have the right to transfer such information to third party
manufacturers solely in connection with the manufacture of the Product or Starting Materials, as
the case may be.



     Section 16. Miscellaneous.



     16.1 Force Majeure. If a Party hereto is prevented for a period from complying,
either in whole or in part, with any of the terms or provisions of this Agreement by reason of a
force majeure beyond such Party’s reasonable control, which shall include fire, flood, storm,
strike or lockout, riot, terrorist act, war, rebellion, lack or failure of transportation
facilities, sources of supply or raw materials or power, judicial action, accident, or Acts of God
(a “Force Majeure”), then, upon written notice from such Party to the other Parties, the
requirements of this Agreement so affected (to the extent affected) shall be suspended for the
duration of such Force Majeure. Said Party shall be excused by reason of said Force Majeure only
so long as it is exercising reasonable efforts to overcome said reason.



     16.2 Assurances. Each Party to this Agreement shall execute, acknowledge and deliver
such further instruments and documents, and do all such other acts and things as may be required by
law or as may be necessary or advisable to carry out the intents and purposes of this Agreement.
The Parties will cooperate with each other and offer reasonable assistance in carrying out their
respective responsibilities under this Agreement.



     16.3 Governing Law. This Agreement shall be construed in accordance with the internal
laws of the State of New York without reference to the conflict of laws provisions thereof.



     16.4 Severability. If any provision of this Agreement shall be held to be invalid,
illegal, or unenforceable, the validity, legality, or enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby unless the purposes of the Agreement
cannot be achieved. In the event any provision shall be held invalid, illegal, or unenforceable
the Parties shall use best efforts to substitute a valid, legal, and enforceable provision which
insofar as practical implements the purposes hereof.



26









 





     16.5 No Assignment. Except as explicitly set forth in this Agreement, no Party shall
assign this Agreement or any part thereof and/or its rights and/or delegate its obligations under
this Agreement without the prior written consent of the other Parties, except that in case any
Party intends to assign this Agreement in connection with the transfer or sale of all or
substantially all of its assets or business or its merger or consolidation with another company,
the other Parties shall not unreasonably withhold their consent. Any attempted transfer or
assignment without such consent shall be null and void. No permitted assignment shall relieve the
assigning Party of its obligations hereunder arising prior to such date of assignment. The terms
and conditions of this Agreement shall be binding upon and shall insure to the benefit of the
Parties hereto and their respective successors and permitted assigns.



     16.6 Third Party Beneficiaries. Nothing in this Agreement shall be construed to
create any rights or obligations except among the Parties hereto; provided, however, that the
Parties hereto acknowledge and agree that Genentech and its successors and permitted assigns shall
be deemed a third party beneficiary of OSI’s rights and all of the Manufacturer’s obligations under
this Agreement. The Parties hereto acknowledge that upon written notice from OSI to the other
Parties (the “Assumption Notice”), Genentech shall be entitled to directly enforce any of OSI’s
rights and all of the Manufacturer’s obligations, provided, however, that Genentech shall assume
OSI’s obligations under this Agreement. In addition, the Parties hereto acknowledge and agree that
OSI and its successors and permitted assigns shall be deemed a third party beneficiary of
Distribution Agent’s rights and all of the Manufacturer’s obligations to Distribution Agent under
this Agreement.



     16.7 Relationship of the Parties. This Agreement does not constitute a partnership
agreement nor does it create a joint venture, agency relationship or fiduciary duty between or
among the Parties. No Party shall take any action, nor make any representation to any third party
that would be inconsistent with the foregoing sentence. None of the Parties shall be liable for
the representations, acts, or omissions of any of the other Parties unless expressly provided
otherwise under the terms of this Agreement.



     16.8 Waiver. No delay, waiver, omission or forbearance on the part of any Party to
exercise any right, option, duty or power arising out of any breach or default by any other Party
of any of the terms, provisions or covenants hereof, will constitute a waiver by such Party of its
rights to enforce any such right, option, duties or power as against the other Party hereto, or its
rights as to any subsequent breach or default by any other Party.



     16.9 Survival. Upon termination or expiration of this Agreement, the obligations of
the Parties under any Confidentiality Agreements between the Parties, Sections 8 (Confidentiality),
9 (Quality of Product; Regulatory Matters; Auditing Rights; Recordkeeping; Representations and
Warranties), 10 (Indemnification), 11 (Recall), 14 (Dispute Resolution), 15 (Technology Transfer),
16.3 (Governing Law), 16.6 (Third Party Beneficiaries), 16.9 (Survival), 16.10 (Entire Agreement)
and 16.15 (Proprietary Rights) of this Agreement shall survive.



27









 





     16.10 Entire Agreement. This Agreement, the related Schedules and Exhibits attached
hereto, and any quality or technical agreements between the Parties, constitute the full
understanding and entire agreement between the Parties and supersede any and all prior oral or
written understandings and agreements with respect to the subject matter hereof. No terms,
conditions, understandings, or agreements purporting to modify, amend, or vary this Agreement shall
be binding except by the execution of a writing specified to be an explicit amendment to this
Agreement duly executed by the Parties hereto. No modification, waiver, termination, rescission,
discharge or cancellation of any right or claim under this Agreement shall affect the right of any
Party to enforce any other claim or right hereunder.



     16.11 Exhibits. The Exhibits and Schedules to this Agreement are incorporated herein
by reference and made a part hereof, together constituting the Agreement.



     16.12 Binding Agreement. This Agreement shall be binding upon the Parties and their
respective successors and permitted assigns and shall insure to the benefit of the Parties and
their respective successors and permitted assigns.



     16.13 Headings. The headings used in this Agreement are for convenience of reference
only and are not a part of the text hereof.



     16.14 Counterparts. This Agreement may be executed in triplicate, each of which shall
constitute and original and all of which shall together constitute a single agreement.



     16.15 Proprietary Rights. This Agreement does not convey to the Manufacturer or the
Distribution Agent any ownership rights in the Starting Materials, Product or Finished Product (or
in any intellectual property rights of OSI embodied in the same) by implication, estoppel or
otherwise except for the rights expressly granted under this Agreement. Any invention, discovery
or information made, conceived or reduced to practice, or developed by Manufacturer or Distribution
Agent, whether patentable or not, that relates to Product or its use, Starting Material or its use,
or OSI’s Proprietary Information shall belong to OSI, and Manufacturer and Distribution Agent will
promptly disclose and assign, and cause its and their employees and agents to disclose and assign,
to OSI all right, title and interest in the same, if any, to OSI.



** ** ** ** ** ** ** ** ** **




28









 





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



	 	 	 	 	 
	 	OSI PHARMACEUTICALS, INC.

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


Date:   27 Oct 05




	 	 	 	 	 
	 	DIPHARMA FRANCIS S.r.l.

 	 
	 	By:  	/s/ Graziano Castaldi
 	 
	 	 	Name:  	Graziano Castaldi 	 
	 	 	Title:  	Director, Marketing  & Sales 	 
	 


Date:   November 10, 2005




	 	 	 	 	 
	 	DAVOS CHEMICAL CORPORATION

 	 
	 	By:  	/s/ Anthony DelPrete
 	 
	 	 	Name:  	Anthony DelPrete 	 
	 	 	Title:  	Executive VP 	 
	 


Date:   11/7/05





 









 








Exhibit A




Product Specifications




	 	 	 
	Document Type:

	 	Document No.: 774RSRM77401.04
	 
	 	 
	Specification

	 	Effective Date: 12 JAN 2004
	 
	 	 
	Material Description:

	 	Page: 1 of 1
	Erlotinib Hydrochloride (formerly OSI-774-01)

[N-(3-Ethynylphenyl)-6,7-bis(2-methoxyethoxy)-4-quinazolinamine 

monohydrochloride]

	 	Supercedes: 774RSRM77401.3 

                 
    (24 Nov 03)






	 	 	 	 	 
	 
	 
	Parameter
	 	Requirement
	 	Procedure
	 
	 	 
	 	 
	**
	 	**	 	**
	 	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 
	Prepared by:	 	 	 	Date:	 	 	 	 
	 

	 	/s/ John Ferrantello
	 	 	 	 	 	12-Jan-2004	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Manufacturing Approval:	 	 	 	Date:	 	 	 	 
	 

	 	/s/ C. Quarterman
	 	 	 	 	 	12-Jan-04	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	QA Approval	 	 	 	Date:	 	 	 	 
	 

	 	/s/ P. Mayne
	 	 	 	 	 	12 Jan 2004	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Regulatory Approval:	 	 	 	Date:	 	 	 	 
	 

	 	/s/ DS Wariabharaj
	 	 	 	 	 	12-Jan-2004	 	 
	 

	 	 	 	 	 	 	 	 	 	 







 




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




 









 










Exhibit B




470 Purchase Specifications




	 	 	 
	Document Type:

	 	Document No.: 774RSRM**.02
	 
	 	 
	Specification

	 	Effective Date: 22 APR 2003
	 
	 	 
	Material Description:

	 	Page: 1 of 1
	**
	 	 
	 

	 	Supercedes: 774RSRM**.01






	 	 	 	 	 
	 
	 
	Parameter
	 	Requirement
	 	Procedure
	 
	 	 
	 	 
	**
	 	**	 	**
	 	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 
	Prepared by:	 	 	 	Date:	 	 
	 

	 	/s/ John Ferantello
	 	 	 	 	 	08-Apr-2003
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Manufacturing Approval:	 	 	 	Date:	 	 
	 

	 	/s/ C. Quarterman
	 	 	 	 	 	08-Apr-03
	 

	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	QA Approval	 	 	 	Date:	 	 
	 

	 	/s/ P. Mayne
	 	 	 	 	 	22 Apr-03
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Regulatory Approval:	 	 	 	Date:	 	 
	 

	 	/s/ C. Boisclair
	 	 	 	 	 	10-April 2003
	 

	 	 	 	 	 	 	 	 







 




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




 









 










Exhibit C




380 Purchase Specifications




Quality Specification




**




Specification #: QSP_045(1.0)1





	 	 	 	 	 
	 
	 
	Parameter
	 	Requirement
	 	Procedure
	 
	 	 
	 	 
	**
	 	**	 	**
	 	 	 	 	 










 




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



 
 




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




 









 










Exhibit D




Pricing





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





			
	 	 	 
	Annual Purchases
	 	Pricing on EX Works Basis
	 
	 	 

	**
	 	         
         **








(3) Currency Calculation




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





 




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




 









 










Appendix A




Distribution Agent Affiliates




Davos Chemical CA, Inc.

555 Saturn Blvd.

San Diego, CA 92154