**Exhibit 10.2**

 

*****Text Omitted and Filed Separately**

**CONFIDENTIAL TREATMENT REQUESTED**

**Under 17 C.F.R. §§ 200.80(b)(4) and 230.406**

 

APIManufacturing and Supply Agreement

 

between

 

Biocon Limited

 

and

 

OptimerPharmaceuticals, Inc.

 

May 18,2010

 

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APIManufacturing and Supply Agreement

 

This API Manufacturingand Supply Agreement (**Agreement**) isexecuted on May 18, 2010

 

by

 

**BioconLimited**, a companyincorporated under the laws of India,****havingits registered office at 20th K.M., Hosur Road, Electronics City P.O.,Bangalore 560 100, India (**Biocon**);

 

and

 

**OptimerPharmaceuticals, Inc.,**a company duly organized and existing under the lawsof Delaware, having its principal offices at 10110 Sorrento Valley Rd., Suite C,San Diego, California 92121, U.S.A (**Optimer**).

 

The parties herebyagree as follows.

 

**1.****                                     ****DEFIN****I****TIONS**

 

In this Agreement,unless the text expressly or the context necessarily requires otherwise, eachof the terms set out in bold below and all grammatical variations thereof shallwhen capitalized in the manner shown below have the meaning correspondinglyassigned to such terms.

 

**1.1         ****[***]**.

 

**1.2         ****ActivePharmaceutical Ingredient (API)**means any substanceor mixture of substances intended to be used in the manufacture of a drug(medicinal) product and that, when used in the production of a drug, becomes anactive ingredient of the drug product. Such substances are intended to furnish pharmacological activity orother direct effect in the diagnosis, cure, mitigation, treatment, orprevention of disease or to affect the structure and function of the body.

 

**1.3         ****Actual Annual ProductAmount** has the meaninggiven in section 6.5

 

**1.4         ****Affiliate** means with respect to a party, any Person,whether directly or indirectly, controlling, controlled by, or under commoncontrol with such party or Person, as applicable.  For the purposes of this section 1.4 only,the term “control” means (i) direct or indirect ownership of more thanfifty percent (50%) of the equity having the power to vote on or direct theaffairs of such party or Person, as applicable, or (ii) the power todirect decisions of such party or Person, as applicable, including the power todirect management and policies of such party or Person, as applicable, whetherby reason of ownership, by contract or otherwise.

 

**1.5         ****Applicable Law** means the applicable provisions of anynational, state and/or local statute, law, rule, regulation, administrativecode, ordinance, notification, decree, order, decision, injunction, award,judgment, permit or license, as the case may be, issued by a governmental,judicial or quasi-judicial authority with jurisdiction over a party, thesubject matter of this Agreement or the Compound

 

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or Product,including the applicable regulations of the FDA and all applicable current goodmanufacturing practices, including the cGMPs.

 

**1.6         ****Approval Date** means the date on which Optimer receivesthe first Marketing Authorization.

 

**1.7         ****AvailabilityDate** has the meaning given in section 7.2.

 

**1.8         ****Batch****means the specificquantity of Product produced in a single cycle of a manufacturing process underthe same conditions featuring identical properties.

 

**1.9         ****Batch Record** means a record of all materials, quantities,and process steps used to manufacture and test a Batch.

 

**1.10       ****Binding Forecast**has the meaning given in section 6.3.

 

**1.11       ****Binding Order** has the meaning given in section 7.3.

 

**1.12       ****Biocon Indemnitee** has the meaning given in section 12.1.

 

**1.13       ****Biocon Inventions** has the meaning given in section 14.7.

 

**1.14       ****Biocon Release Documents** has the meaning given in section 7.7.

 

**1.15       ****Campus**meansBiocon’s manufacturing facility located at 20th KMHosur Road, Electronics City, Bangalore - 560 100, India for themanufacture of API.

 

**1.16       ****Capacity Reservation Fee** has the meaning given in section 6.5.

 

**1.17       ****cGMPs** mean the current goodmanufacturing practices and standards for the production of pharmaceuticalintermediates and APIs applicable to both commercial and investigationalquantities of compounds (as applicable), as set forth in: (a) Parts 210and 211 of Title 21 of the U.S. Code of Federal Regulations (21 CFR 210 and 21CFR 211); and (b) European Community Directive 2003/94/EC and the Rules GoverningMedicinal Products in the European Union, Volume 4 (Medicinal Products forHuman and Veterinary Use: Good Manufacturing Practice); in each case, as may beamended from time to time after the Effective Date, including any successor provisions thereto, andas interpreted by ICH Harmonised Tripartite Guideline, Good ManufacturingPractice Guide for Active Pharmaceutical Ingredients.

 

**1.18       ****Commercially Reasonable andDiligent Efforts** means those prompt efforts and the application or commitment ofresources and expertise consistent with the exercise of prudent scientific andbusiness judgment, as applied to other biopharmaceutical products of similarpotential and market size by participants in the biopharmaceutical industryhaving similar resources to the party in question.

 

**1.19       ****Compound**means the molecule Fidaxomicin with themolecular structure set out in Schedule 1.19.

 

**1.20       ****Confidential Information**means any information and data that a party(**Discloser**) may from time to timedisclose, directly or indirectly, via written, graphic, verbal or electronicform or make available to the other party (**Recipient**)

 

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pursuant to thisAgreement, and that are regarded by the Discloser as confidential orproprietary, including information and materials related to sales and productinformation, customer information, manufacturing processes and technology,formulations, information regarding applications and submissions made to anyRegulatory Authority, product plans, product development efforts, marketingstrategies, financial information and projections and other commercial datathat is proprietary or of commercial value. Provided that for each Recipient,Confidential Information shall not include information that:

 

**(a)          **at the time of disclosure, is known publiclyor thereafter becomes known publicly through no fault of such Recipient or itsagents;

 

**(b)          **becomes available to such Recipient otherthan on a confidential basis from a third party who is lawfully in possessionof such information and not subject to a contractual or fiduciary relationshipto the Discloser with respect thereto;

 

**(c)          **was developed by such Recipientindependently of information obtained from the Discloser and such independentdevelopment can be properly demonstrated by the Recipient; or

 

**(d)          **was already known to such Recipient beforereceipt from the Discloser, as shown by its prior written records.

 

**1.21       ****Control** means, with respect to any IntellectualProperty Right, possession by a party of the ability (whether by ownership,license or otherwise) to grant access, a license or a sublicense to suchIntellectual Property Right without violating the terms of any agreement orother arrangement with any third party as of the time such party would be firstrequired under this Agreement to grant such access, license or sublicense.

 

**1.22       ****Dedication Fee**means a sum of [***] from the amount paid by Optimerto Biocon referenced in section 3.3 (which sum represents the fee paid byOptimer for Biocon to undertake the obligations under section 5 of thisAgreement).

 

**1.23       ****Discloser** has the meaning given in section 1.20.

 

**1.24       ****Drug Product**meansa dosage form of the Product in the final immediate packaging intended formarketing.

 

**1.25       ****Effective Date**means the date first set forth in thisAgreement.

 

**1.26       ****Elective Termination Notice** has the meaning given in section 15.4.

 

**1.27       ****EMA** means the European MedicinesAgency and any successor entity.

 

**1.28       ****FDA** means the United States Food and DrugAdministration and any successor entity.

 

**1.29       ****FDCA** means the United States Food, Drug andCosmetic Act and the regulations promulgated thereunder, as each may be amendedfrom time to time.

 

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**1.30       ****Fee Date** means the day in each calendar year whichis the last day of the calendar quarter in which the Approval Date falls.

 

**1.31       *****ForceMajeure*****Event** means any act or event that prevents a party (the **Nonperforming Party**) in whole or in part,from performing its obligations under this Agreement, or satisfying anyconditions to the other party’s obligations under this Agreement, is beyond thereasonable control of and not the fault of the Nonperforming Party and that theNonperforming Party has been unable to avoid or overcome by the exercise ofCommercially Reasonable and Diligent Efforts.****It is clarified that a *ForceMajeure*Event includes, where all of the preceding conditions aremet, each of the following acts or events: shortages in the availability of rawmaterials required for the manufacture of Product, flood, lightning,earthquake, volcanic eruption, landslide, hurricane, cyclone, typhoon, tornado,drought, famine, plague, or other act of God, fire, explosion, war, riot, civildisturbance, act of public enemy, terrorist act, military action, epidemic,shipwreck, action of a court or public authority, or strike, work-to-rule action,go-slow or similar labor difficulty, each on an industry-wide, region-wide ornationwide basis, but does not include, any event where any of the aboveconditions are not met or any act or event caused by or attributable toeconomic hardship, changes in market conditions, insufficiency of funds, orstrikes, work-to-rule actions, go-slows or similar labor difficulties thatare not industry-wide, region-wide or nationwide.

 

**1.32       ****High-Potency Product** means products such as [***].

 

**1.33       ****[***] Equipment**means the [***] equipment used in thedownstream purification of the Product at Park.

 

**1.34       ****Initial Activities**mean all activities to be performed by theparties pursuant to section 3 prior to the manufacture and supply of Product by Biocon to Optimer forthe Territory.

 

**1.35       ****Insolvency Proceeding** means, with respect to a party, that suchparty (a) commences a voluntary case under applicable bankruptcylaws (as now or hereafter in effect), (b) files a petition seeking to takeadvantage of any other laws relating to bankruptcy, insolvency, or compositionfor adjustment of distressed or overdue debts, (c) consents to or fails tocontest within  120 days usingCommercially Reasonable and Diligent Efforts any petition filed against it inan involuntary case under such bankruptcy laws or other laws, (d) appliesfor or consents to, or fails to contest within 120 days using Commercially Reasonable and Diligent Efforts, theappointment of, or the taking of possession by, a receiver or liquidator ofitself or of a substantial part of its property, (e) admits in writing itsinability to pay its debts as they become due, (f) makes a generalassignment for the benefit of creditors, or (g) takes any corporate actionfor the purpose of authorizing any of the foregoing.

 

**1.36       ****Intellectual Property Right** means any right, title or interest in orarising from any business secret, compilation, computer program, copyright,design, device, formula, invention, know-how, logo, manufacturing right,method, pattern, process, product, patent right, patent application, program,reverse know-how, technical data, technique, trademark, or trade secret or anypart, revalidation or renewal thereof and all other information that derivesindependent economic value, actual or potential, from not being generallyknown.

 

**1.37       ****Latent Defect** means a defect that causes aBatch of Product to fail to conform to the Manufacturing Requirements or to thewarranties provided by

 

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Biocon hereunder, which defect is notdiscoverable upon reasonable physical inspection and testing upon receipt, butis discovered at a later time.

 

**1.38       ****Litigation Expense** means any court filing fee, court cost,arbitration fee or cost, witness fee, and any other reasonable fee or cost ofinvestigating or asserting a claim for indemnification under this Agreement.

 

**1.39       ****Loss** means any liquidated or admitted liability,loss, claim, settlement payment, cost, expense, interest, award, judgment,damages, fine, fee, penalty or other charge, including reasonable attorney feesand disbursements and Litigation Expenses.

 

**1.40       ****Manufacturing Requirement** has the meaning given in section 7.7.

 

**1.41       ****Marketing Authorization** means a Regulatory Approval to market andsell a Drug Product in any country in the Territory.

 

**1.42       ****Minimum Volume**means a volume that is:

 

**(a)          **[***] percent of Optimer’s actual quarterlyProduct requirement for the Territory if the installation, qualification andValidation conditions specified in clause (b) below have not been met dueto a reason not attributable to Optimer or its Affiliates or a Force MajeureEvent; or

 

**(b)          **in the event Biocon achieves theinstallation and qualification (as required by this Agreement) of the [***]Equipment at Park, and the parties complete the Validation of all Productmanufacturing processes at Park by the date specified in section 3.1(c), thensolely for the first eight (8) calendar quarters following the Approval Date,[***] percent of Optimer’s actual quarterly Product requirement for theTerritory.  For purposes ofclarification, if Minimum Volumes are determined by this clause (b) forthe first eight (8) calendar quarters following the Approval Date,beginning with the 9th calendar quarter following the Approval Dateand through the term of this Agreement, Minimum Volumes shall be determinedsolely by clause (a) above.

 

**1.43       ****NDA**meansone or more New Drug Application(s), or the equivalent thereof, to make and/orsell commercially Drug Products, filed with the FDA or with a RegulatoryAuthority in any jurisdiction outside of the United States and within theTerritory, and all amendments and supplements thereto filed therewith.

 

**1.44       ****Non-Binding Forecast**has the meaning given in section 6.3.

 

**1.45       ****Optimer Indemnitee** has the meaninggiven in section 12.2.

 

**1.46       ****Park**means Biocon’s manufacturing facilitylocated at Plot No. 2—4, Bommasandra-Jigani Link Road, Bommasandra Post,Bangalore - 560 099, India for the manufacture of API.

 

**1.47       ****Permitted Products**means any non-High-Potency******Products such as[***] or like compounds that can be produced using the [***] Equipment withoutmodification from the state used to produce the Product and without affectingany US or European Regulatory Approval for the manufacture of the Product usingthe [***] Equipment or any other condition specified by the FDA or EMA inconnection with the manufacture of the Product using the [***] Equipment.

 

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**1.48       ****Person** means any natural or juristic person, andincludes any company or other body corporate, any trust, government agency, orgovernment, as well as any firm or association or partnership of two or morePersons.

 

**1.49       ****Product**means the Compound in the form of finishedbulk API.

 

**1.50       ****Prohibited Products**means any High-Potency Products that can beproduced using the [***] Equipment and any non-High-Potency Products that arenot Permitted Products.

 

**1.51       ****Purchase Order** has the meaning given in section 7.2.

 

**1.52       ****Quality Agreement** means that certain Quality Agreement, datedSeptember 16, 2009, between the parties and related to the manufacture ofProduct.

 

**1.53       ****Recall Action**has the meaninggiven in section 8.5.

 

**1.54       ****Recipient**has the meaning given in section 1.20.

 

**1.55       ****Reduction Notice** has the meaninggiven in section 6.5.

 

**1.56       ****Regulatory Approval** means, in relation to a Drug Product or APIfor Drug Product, the registrations, authorizations and approvals of anyRegulatory Authority that are required to be obtained prior to the marketing orsale of product in a jurisdiction in the Territory. Neither a tentativeapproval nor an approvable letter shall be considered a Regulatory Approval.

 

**1.57       ****Regulatory Authority** means, with respect to any country or groupof countries, the governmental or regulatory agency or entity in such countryor group of countries having the responsibility, jurisdiction, and authority toapprove the manufacture, packaging, labeling, marketing or sale of a DrugProduct within such country or group of countries or any successor body to anyof them.

 

**1.58       ****ROW**means any country or market in the worldthat is not included in the Territory.

 

**1.59       ****Rules **has the meaning given in section 19.2.

 

**1.60       ****Specifications**mean the manufacturing, quality control andquality assurance procedures (including, without limitation, those set forth inthe Quality Agreement), processes, instructions and any other attributes thatthe parties agree upon in connection with the manufacture of Product, as previouslyagreed to by the parties and set forth in document number [***] and as may beagreed upon by the parties after the Effective Date or as otherwise required byApplicable Law, Regulatory Authorities or Regulatory Approvals.

 

**1.61       ****Territory**means the United States of America andCanada.

 

**1.62       ****Validated****Facility**meansthe Park, the Campus or another Biocon facility approved by Optimer, and allequipment contained at each such facility, in each case in respect of whichValidation activities have been successfully completed for all processesconnected with the manufacture, storage, handling and shipping of the Product.

 

**1.63       ****Validation or Validated** means establishing, in accordance with

 

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Applicable Law orguidelines issued by the relevant Regulatory Authority (including in all casesthose issued by the FDA and EMA), that the manufacturing and supply activitiesconducted by Biocon pursuant to this Agreement consistently produce Product inaccordance with the Specifications.

 

**1.64       ****Validation Batches** has the meaning given in Section 10.2.

 

**1.65       ****Work Plan**means the work plan previously agreed to bythe parties for the conduct of the Initial Activities regarding [***] and [***]set forth in section 3 and the additional work plan to be agreed to by theparties pursuant to section 3.4.

 

**2.****                                     ****INTERPRETATION ANDCONSTRUCTION**

 

The followingprovisions shall apply to the interpretation and construction of thisAgreement.

 

**2.1               **Captions in this Agreement are for convenienceand identification only and shall not affect the interpretation or constructionof this Agreement.

 

**2.2               **References to sections, clauses or scheduleswithout further specification are references to sections, clauses and schedulesof this Agreement.

 

**2.3               **Any reference to a statute or any provisionof a statute includes a reference to that statute or provision and any rule,regulation, notification, circular, or direction made or issued pursuant tothat statute or provision, as may be from time to time modified or re-enacted,whether prior to or after the date of this Agreement.

 

**2.4               **References to the singular includereferences to the plural and vice versa.

 

**2.5               **Words denoting one grammatical gender areintended to include references to all grammatical genders.

 

**2.6               **References to “include” or “including” shall mean “includewithout limitation” and “including without limitation” respectively.

 

**3.****                                     ****INITIAL ACTIVITIES**

 

**3.1               **Biocon shall use Commercially Reasonable and DiligentEfforts to:

 

**(a)          **Successfully scale-up the fermentation process at Park to [***] capacityas demonstrated by a successful production of a minimum of [***] of Compound;and

 

**(b)          **Procure in its name, install, qualify and validate the [***] Equipmentat Park with a [***].  For purposes ofclarification, Biocon shall own the [***] Equipment subject to its obligationsand the restrictions set forth in this Agreement.

 

**(c)          **Cause the [***] Equipment at Park to be commissioned andfully qualified by [***].

 

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**3.2               **The parties shall cause the Validation of all Productmanufacturing processes, including the******[***] at Park and the [***], at Campusand/or the [***] at Park in such manner and sequence as shall be agreed by theparties in the Work Plan.

 

**3.3               **As compensation for Biocon’s effortspursuant to this section 3, Optimer has paid Biocon an upfront sum of $2.5million which includes the cost of the [***] Equipment at Park ($1.5 million)and a non-refundable Dedication Fee [***]. Biocon acknowledges the receipt ofsaid $2.5 million from Optimer on June 30, 2009 in the amount of [***] andon October 1, 2009 in the amount of [***].

 

**3.4               **As promptly as practical after the EffectiveDate, the parties shall discuss in good faith and agree upon a work plan detailingtheir respective responsibilities and timing of the Initial Activitiesdescribed in this section 3, which work plan shall be consistent withcompleting the Initial Activities as soon as practical and which, together withthe work plan previously agreed to with respect to the [***] and [***] referredto in this section 3, shall constitute the Work Plan.

 

**4.****                                     ****MANUFACTURE AND SUPPLY OFPRODUCT**

 

**4.1               **Biocon shall manufacture the Product inaccordance with the Manufacturing Requirements at Validated Facilities andsupply such manufactured Product to Optimer or its designee(s) againstpayment of the price in accordance with section 9 and subject to the otherterms of this Agreement.

 

**4.2               **Bioconshall obtain Optimer’s prior written approval before Biocon implements anychange in the materials, equipment, process or procedures used to manufactureor test Product that would constitute a major change under cGMPs or that wouldotherwise require a filing with or notification to a RegulatoryAuthority.

 

**4.3               **Biocon shall use CommerciallyReasonable and Diligent Efforts to continuously maintain a sufficient stock ofraw materials required to manufacture the Product in quantities no less thanthose set forth in the applicable Non-Binding Forecast at any time; provided thatsuch quantity does not exceed [***] of Product per calendar quarter.  Biocon shall use and rotate all stock of suchraw materials on a first-in, first-out basis or as otherwise required by cGMPsand other Applicable Laws.  Biocon will use Commercially Reasonable andDiligent Efforts to obtain the  mostcompetitive price for any raw materials required in the manufacture of Productand shall ensure such materials are released for use, in accordance with Biocon’squality system and requirements including the Manufacturing Requirements priorto manufacturing any Batch of Product. Biocon will review its stock levels of raw materials on a regular basisto maintain stock levels in accordance with this section 4.3.  Biocon shall purchase all[***] raw materials and use [***] only in accordance with the [***]specifications most recently agreed to by the parties as set forth in [***],each as applicable to “fresh” or “recycled” [***] used at Park or Campus, or asotherwise required by applicable Regulatory Authorities or by RegulatoryApprovals.  Biocon shall keep Optimerreasonably informed with respect to any changes in [***] prices and shallreasonably cooperate with Optimer should Optimer desire to obtain long-termpricing of [***] supplies.

 

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**4.4               **Optimer or its designee(s) shall usethe Product obtained pursuant to this Agreement solely in the research,development or manufacture of Drug Product in the Territory or in any ROWcountry or market. For clarification, Optimer shall be permitted to sell orotherwise transfer Product to its commercial partners for such commercialpartner’s research, development and commercialization activities related toCompound, Product and Drug Product or any salts, hydrates, solvates,polymorphs, metabolites, prodrugs or analogs thereof, provided that Bioconshall not be obligated to indemnify such commercial partners of Optimer.

 

**5.****                                     ****CAPACITY AND DEDICATEDFACILITIES**

 

**5.1               **Subject to the other provisions of thisAgreement, Biocon shall ensure that the annual manufacturing capacities forProduct at Park together with the annual manufacturing capacities for Productat Campus are sufficient to manufacture at least [***] of Product annually. Theforegoing sentence notwithstanding, Biocon’s obligation to ensure suchmanufacturing capacities shall not apply (i) until both Park and Campusare Validated Facilities (including Validation of the [***] at Park) or (ii) inthe event Optimer has not successfully obtained a Marketing Authorization in theTerritory by [***].

 

**5.2               **Any capacity enhancement beyond thequantities mentioned in section 5.1 or as adjusted from time to time willrequire a lead-time and will be negotiated under a separate agreement by theparties.

 

**5.3               **Subject to the provisions of section 6,during the term of this Agreement, Biocon shall cause the [***] Equipment to bededicated solely to the manufacture and supply of Product under this Agreementand shall ensure that the [***] Equipment is not subject to any lien, pledge,security interest or other encumbrances that could reasonably be expected tomaterially impair Biocon’s ability to perform its obligations under thisAgreement, without prior written approval from Optimer. The foregoing sentencenotwithstanding, in the event Park is not successfully made a ValidatedFacility by [***] due to Optimer’s failure to perform its obligations under theWork Plan or in the event Optimer has not successfully obtained a MarketingAuthorization in the Territory by the date specified in clause (ii) ofsection 5.1, Biocon shall be free to make other uses of the [***] Equipmentwhich would not impair Biocon’s ability to later use the [***] Equipment forthe manufacture of Product; *provided,however*, that if and when the Park becomes a Validated Facility,Biocon shall promptly cease such other uses and re-dedicate the [***] Equipmentsolely to the manufacture of Product, provided Optimer has also obtained aMarketing Authorization in the Territory at that time, and subject to theprovisions of section 6.

 

**6.****                                     ****MINIMUM VOLUMES ANDFORECASTS**

 

**6.1               **Subject to the terms and conditions of thisAgreement and consistent with Section 7.2, for each calendar quarterfollowing the Approval Date and during the Term, Optimer shall be required topurchase from Biocon the Minimum Volume of Product or the amount of Product setforth in the Binding Forecast for the applicable calendar quarter; providedthat:

 

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**(a)          **in the event Biocon believes in good faith,due to a *Force Majeure*Event orotherwise, that it may be unable to supply either (i) the entire amount ofProduct specified in a Binding Forecast or (ii) [***] of the amount ofProduct set out in a Non-Binding Forecast for any calendar quarter, Bioconshall immediately notify Optimer of such fact as well as the amount of Productthat Biocon, in good faith, can ensure that it will be able to supply in suchcalendar quarter, and, notwithstanding anything to the contrary in thisAgreement, Optimer shall be entitled to obtain such shortfall from a thirdparty(ies) and such amounts shall not count towards Optimer’s total Productrequirements in the Territory for purposes of calculating Minimum Volumesduring subsequent calendar quarters; and

 

**(b)          **if, in two (2) consecutive calendarquarters, Biocon is unable to supply the amount of Product set forth in theapplicable Binding Forecast and such quantities of Product requested fromBiocon are no more than (i) [***] of Product over the 4 calendar quartersending with the second consecutive calendar quarter in which such supplyfailure occurs, and (ii) [***] of Product per calendar quarter in whichsuch supply failure occurs, then, notwithstanding anything to the contrary inthis Agreement, (iii) Optimer shall be entitled to procure from a thirdparty(ies) the difference between the amount of Product requested from Bioconduring such two consecutive calendar quarters and the amount actually suppliedto Optimer by Biocon during such calendar quarters, and such amounts shall notcount towards Optimer’s total Product requirements in the Territory forpurposes of calculating Minimum Volumes during subsequent calendar quarters,and (iv) beginning with the calendar quarter following the secondconsecutive calendar quarter in which Biocon’s supply failure occurs andcontinuing through the calendar quarter following the calendar quarter in whichBiocon is able to demonstrate to Optimer’s reasonable satisfaction its abilityto supply at least [***] of Product per quarter, Optimer shall only beobligated to purchase from Biocon the lesser of (A) its Minimum Volume orthe amount of Product set forth in the relevant Binding Forecast for suchquarters and (B) the average quarterly amount of product that Biocon wasable to deliver during the two consecutive calendar quarters in which thesupply failure occurred.

 

**6.2               **The provisions set forth in clauses (a) and(b) of section 6.1 shall be in addition to, and are without prejudice to,any other remedies which may be available to Optimer under this Agreement orotherwise as a result of Biocon’s inability to supply Product under thisAgreement, subject to section 18.

 

**6.3               **Approximately six (6) months prior tothe expected Approval Date, Optimer shall provide Biocon with a rollingforecast of its requirements of Product from Biocon for the calendar quarterimmediately following the Approval Date which shall include, withoutlimitation, any Validation Batches as set forth in section 10.2 (the **Binding Forecast**) as well as a forecast forits estimated requirements of Product from Biocon for the calendar quarter nextfollowing (the **Non-Binding Forecast**).Thereafter, during the term of this Agreement, one (1) calendar quarterprior to the beginning of each applicable calendar quarter, Optimer shallprovide Biocon with a Binding Forecast for such quarter together with aNon-Binding Forecast for the subsequent quarter. Without prejudice to theforegoing, Schedule 6.3 contains Optimer’s non-binding, anticipatedforecasts of the quantities of Product required pursuant to this Agreement(which forecasts are subject to

 

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revision inaccordance with this Agreement, are based on the assumption that the ApprovalDate occurs in [***] and shall not be deemed a Non-Binding or BindingForecast). Optimer shall promptly notify Biocon if Optimer believes in goodfaith that the amount which will be specified in the next Binding Forecast willbe more than [***] or less than [***] of the amount in the current Non-BindingForecast for the same calendar quarter. If Optimer notifies Biocon that itbelieves the amount of Product in the next Binding Forecast will be more than[***] of the amount set forth in the current Non-Binding Forecast for the samecalendar quarter, Biocon shall thereafter, subject to the capacity limitationsin section 5.1, use Commercially Reasonable and Diligent Efforts to enable thesupply of such greater amount of Product in such subsequent calendar quarterand shall promptly notify Optimer if it will be unable to supply suchamount.  For purposes of clarification,Biocon shall not be deemed to be in breach of this Agreement if it is unable tosupply an amount of Product in a Binding Forecast which is greater than [***]of the amount set forth in the previous Non-Binding Forecast for the samecalendar quarter.

 

**6.4               **Notwithstanding anything contained insection 5.3 or section 6.3, in the event the amount of Product set forth inOptimer’s Binding Forecast for any calendar quarter beginning with the fourthcalendar quarter after the Approval Date, when combined with the amount ofProduct set forth in Binding Forecasts covering the preceeding three calendarquarters (and only if the provisions of section 6.1(b) were not in effect forany of such four calendar quarters), is below [***] of Product (representing[***] of the maximum amount of Product that can be manufactured in a calendaryear at Campus and Park), Biocon shall be entitled to utilize the dedicatedcapacity at Park to produce Permitted Products in such calendar quarter,subject to the remainder of this section 6.4. Such production of PermittedProducts shall only be undertaken with Optimer’s prior written approval, whichshall not be unreasonably withheld provided Biocon demonstrates and certifiesin writing to Optimer, including through relevant cleaning experimental data(via cleaning validation), that (a) cross-contamination with other PermittedProducts will not affect the quality of the Product to be produced inaccordance with the Specifications pursuant to this Agreement and (b) the useof the dedicated capacity at Park for the production of Permitted Products willnot otherwise adversely affect Biocon’s ability to fully perform its futureobligations under this Agreement.

 

In the event that Biocon is entitled to producePermitted Products pursuant to the preceding paragraph and Biocon has not hadan obligation or use to manufacture any Permitted Product which can bemanufactured using the [***] Equipment for a period exceeding [***] prior tothe beginning of the calendar quarter in which Biocon is so entitled to producePermitted Products, Biocon shall be allowed to use the [***] Equipment in suchcalendar quarter for Prohibited Products, subject to all of the requirementsset forth in the preceding paragraph with respect to the manufacture ofPermitted Products.

 

**6.5               **For each Fee Date beginning with the laterof (a) the first Fee Date following the third anniversary of the Approval Dateand (b) the first Fee Date after Campus and Park are Validated Facilitiescapable of manufacturing at least [***] of Product per year and Biocon isobligated to reserve such capacity for Product pursuant to section 5.1, if both(c) Optimer has not submitted Purchase Orders providing for an aggregate of atleast [***] of Product with Availability Dates within the four calendar quarterperiod ending on the applicable Fee Date and (d) during

 

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such fourcalendar quarters, Biocon did not have an obligation or use to manufacturePermitted Products or Prohibited Products which can be manufactured using the[***] Equipment, then Optimer shall pay Biocon a fee (the **CapacityReservation Fee**) [***] Purchaser Orders with Availability Dateswithin the four calendar quarter period ending on the applicable Fee Date (the **Actual Annual Product Amount**), [***]; *provided,however*, that if the Actual Annual Product Amount is less than[***], the Capacity Reservation Fee shall be [***].  If any Capacity Reservation Fee is due withrespect to any Fee Date in a calendar year, such fee shall be paid within 30 daysof such Fee Date.

 

At any time,Optimer may inform Biocon in writing that it is reducing the minimum annualProduct capacity requirement set forth in the first sentence of Section 5.1 toan amount below [***] (a **Reduction Notice**).  After delivery of a Reduction Notice, Optimershall remain liable to pay any Capacity Reservation Fees pursuant to thepreceding paragraph that accrue on each of (a) the three Fee Dates after thedate of such Reduction Notice, if such date is more than six months prior tothe next Fee Date, or (b) the four Fee Dates after the date of such ReductionNotice, if such date is less than six months prior to the next Fee Date.  The foregoing notwithstanding, in lieu ofpaying any Capacity Reservation Fees required by the preceding sentence afterdelivering a Reduction Notice, Optimer may pay to Biocon a lump sum payment of[***].  Following delivery of a ReductionNotice and after paying any Capacity Reservation Fees or lump sum paymentrequired pursuant to the preceding two sentences following the deliver of aReduction Notice, Optimer shall not be required to pay any further CapacityReservation Fees pursuant to this Section 6.5. Upon the date that Optimer is released from further obligations to payCapacity Reservation Fees due to the delivery of a Reduction Notice, Biocon’sobligations to reserve annual Product manufacturing capacity shall be reducedfor the remainder of the term of this Agreement to the amount set forth in suchReduction Notice, provided that Biocon’s use of the [***] Equipment other thanfor the manufacture of Product shall be limited to the manufacture of PermittedProducts (or, upon Optimer’s prior approval which shall not to be unreasonablywithheld, Prohibited Products) and shall be subject to the demonstration andcertification requirements set forth in clauses (a) and (b) of section 6.4.

 

**6.6               **If Optimer intends to enter into anagreement with a third party with respect to the commercial supply of [***] ofOptimer’s Product requirements in [***], Optimer shall so notify Biocon,including the principal terms of such proposed agreement, and Biocon shallthereafter have a first right of refusal for a period of [***] from the date ofsuch notice by Optimer to agree be the commercial supplier of [***] of Optimer’s[***] Product requirements on substantially the same terms set forth in Optimer’snotice, subject to the following:

 

**(a)          **Such right of refusal shall includediscussions on the quantities [***] to be supplied by Biocon in [***] and suchproduct volumes shall be provided by Biocon [***];

 

**(b)          **Such right of refusal shall not be construedas mandating any minimum volumes, including any [***];

 

**(c)          **Nothing in this section 6.6 shall beconstrued as an obligation

 

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on Optimer’spart to enter into any [***] agreement with Biocon, and Optimer shall remainfree to accept or reject any terms for such an agreement proposed by Biocon,provided Optimer acts in good faith in rejecting such agreement proposed byBiocon; and

 

**(d)          **In the event Optimer (or its Affiliate, asthe case may be) and Biocon do not reach a definitive agreement [***] withinsaid period of [***], Optimer shall have no further obligation to Biocon withrespect to negotiating or entering into any agreement relating to [***] andshall be free to seek competitive bids from third party suppliers and enterinto a definitive agreement with any third party for [***].

 

**7.****                                     ****PURCHASE AND DELIVERYPROCEDURE**

 

**7.1               **During the Term, Optimer agrees to buy fromBiocon and Biocon agrees to sell and supply to Optimer, such quantities of theProduct as may be set forth on purchase orders placed by Optimer in accordancewith the provisions hereof; provided, however, that Biocon shall not be liablefor any inability to supply Product or any shortfall in the supply of Productpursuant to this Agreement, if such inability or shortfall is due to Optimerrequesting an amount of Product in the Binding Forecast for any calendarquarter which is greater than [***] of the amount previously set forth in theNon-Binding Forecast for the same quarter, subject to the provisions of section6.3.

 

**7.2               **No less than three months prior to the datethat a Binding Forecast is due from Optimer for any calendar quarter, Bioconshall provide to Optimer the [***] price per kg applicable to the manufactureof Batches to be supplied during such calendar quarter. Such [***] prices shallbe based upon documented price quotations available to Biocon (which shall beprovided to Optimer upon request) and shall account for any long-term pricingarrangement in place with respect to [***] supplies and existing supplies of[***] on-hand and available for the manufacture of Batches to be suppliedduring such calendar quarter.  Subject tothe provisions of section 6, Optimer shall submit written orders for theProduct in substantially the form of its standard API purchase order (**Purchase Orders**) setting out the quantityof Product required, value per kg, total value of the Purchase Order, the datethe quantity specified in the Purchase Order should be ready for delivery exworks (**Availability Date**),delivery address and instructions for shipping and packaging. The foregoingsentence notwithstanding, the Availability Date for the first Purchase Ordershall not occur prior to six (6) months from the date of such Purchase Orderand the Availability Date for any subsequent Purchase Order shall not occurprior to three (3) months from the date of such Purchase Order. In compliancewith the first sentence of Section 6.1, during each calendar quarter followingthe Approval Date, Optimer shall submit Purchaser Orders which (a) collectivelycover at least an amount of Product equal to the Minimum Volume for thesubsequent calendar quarter or the amount of Product specified in the BindingForecast relating to the subequent calendar quarter and (b) specify anAvailability Date no later than the last day of the subsequent calendar quarter(subject to the limitations in the preceding sentence).

 

**7.3               **Biocon shall respond to Optimer within ten(10) working days after receipt of each Purchase Order of Product, eitheraccepting or rejecting the

 

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order. No ordershall be binding upon Biocon unless accepted by Biocon in writing; providedthat Biocon shall not reject any Purchase Order that is (a) substantially inthe form set forth on Schedule 7.2, (b) does not request an amount ofProduct that (i) is more than [***] per quarter, (ii) is more than [***] of theamount of Product set forth in the prior Non-Binding Forecast for the samecalendar quarter, or (iii) when combined with amounts of Product delivered overthe preceding 12 month period, would equal more than [***], and (c) isotherwise consistent with Biocon and Optimer’s obligations under thisAgreement.  Purchase Orders accepted inwriting by Biocon shall be binding on both the parties (**Binding Orders**). Binding Orders may only beamended if agreed by both parties. In the event of any ambiguity, contradictionor discrepancy between a Binding Order or other documents of the parties andthis Agreement, the provisions of this Agreement shall prevail.

 

**7.4               **Biocon shall notify Optimer immediately ifBiocon determines that it will not be able to meet any of the terms of aBinding Order, including, but not limited to, quantity and AvailabilityDate.  In any event, Biocon shall providesuch notice at least sixty (60) days prior to the Availability Date specifiedin the applicable Binding Order.  Inaddition, Biocon will notify Optimer promptly of any supply constraints (e.g.materials, third party contracts, facilities or capacity) of which it becomesaware that may affect Biocon’s ability to supply the Product in accordance withthis Agreement or any Binding Order.  Forpurposes of clarification, Biocon’s compliance with these notice provisionsshall in no way limit or prejudice any rights or remedies available to Optimerunder this Agreement or otherwise arising out of Biocon’s inability to performits obligations under a Binding Order or otherwise.

 

**7.5               **Biocon shall have the Product in eachBinding Order available for shipment ex works, Bangalore (INCOTERMS 2000) onthe Availability Date, or such other date as may be agreed by the parties. Bioconshall thereafter promptly prepare Product for shipment and arrange for shipmentof Product to a location and by a date designated in writing by Optimer in theapplicable Binding Order. Shipment terms are Ex Works, Bangalore (INCOTERMS 2000). All shipmentsmust be accompanied by a packing slip which describes the articles, states thePurchase Order number and shows the shipment’s destination. Biocon agrees topromptly forward the original bill of lading or other shipping receipt for eachshipment in accordance with Optimer’s instructions. In accordance with Optimer’swritten instructions and at Optimer’s expense, Biocon will arrange for theshipment of Product by the carrier designated by Optimer and for appropriateshipping insurance, and Biocon shall (unless prohibited by Applicable Law) shipProduct to thedestinations designated by Optimer in containersreasonably sufficient for delivery of Product in accordance with theSpecifications. Optimer shall be responsible for carriage, insurance and freight of theProduct so delivered at its sole expense, and for compliance with allApplicable Law requirements to import the Product into the Territory. Alltaxes, duties, charges, imposts, levies and other tariffs payable on thepurchase of the Product by and delivery of the Product to Optimer pursuant tothis Agreement will be borne by and to the account of Optimer.  Biocon shall provide to Optimer a priorwritten estimate of the costs for the shipment services and fees described inthis section 7.5 and inform Optimer of any material changes to such costs andfees.

 

**7.6               **If Optimer or its Affiliate or designee isnot ready to accept shipment of Product on the date set forth in the applicableBinding Order, then

 

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Biocon shall, atcost to Optimer, store such Product in accordance with the Specifications andQuality Agreement, Biocon procedures, and in a manner consistent with customarypractices for pharmaceutical products, until Optimer notifies Biocon that it,or its Affiliate or designee is ready to accept delivery. If Optimer requestsBiocon to store the Product beyond thirty (30) days from the date set forth inthe applicable Binding Order, Optimer shall pay Biocon for the Product as perthe applicable payment terms no later than such 30th dayand Biocon shall store such product at cost to Optimer. Notwithstanding theforegoing, Biocon shall not be obligated to store such Products beyond sixty(60) days from the date set forth in the applicable Binding Order and Optimershall be obliged to accept shipment of such Product prior to such 60th day if requested by Biocon.

 

**7.7               **Bioconshall manufacture, package, label, store and ship Product in accordance withthe Specifications, cGMPs, the Quality Agreement, the NDA and other applicableRegulatory Approvals, and all Applicable Laws. Biocon will notrework any Batch of the Product without Optimer’s prior written consent.  Biocon’s responsibilities andobligations with respect to the manufacture of Product as set forth in thissection 7.7 are hereinafter referred to as the “**Manufacturing Requirements**.” Biocon shall perform such qualitycontrol testing prior to delivery of Product to Optimer as is required toensure that the Product delivered to Optimer under this Agreement complies withthe Manufacturing Requirements and Biocon’s warranties described in section 11,which testing shall include, without limitation, the performance of allrequired release testing and stability testing described in theSpecifications.  Biocon shall performsuch tests itself or, with Optimer’s prior written consent, cause to be testedby a third party, each lot of Product before delivery, and shall provide toOptimer (a) a certificate of analysis containing the quality control testresults for each such lot, and confirming that each such lot of Productconforms to the Specifications (the **Certificateof Analysis**), signed by an authorized Biocon official, (b) a **Certificate of Conformance** confirming thatsuch lot of Product was made in accordance with cGMPs and the process definedin the approved master Batch Record for the Product, signed by an authorizedBiocon official, and (c) copies of documents detailing any deviations from anymanufacturing processes then in effect (the documents and information describedin (a), (b) and (c), the “**Biocon ReleaseDocuments**”). Upon completion of the manufacture and testing of eachlot of Product ordered by Optimer under this Agreement, Biocon shall send allthe Biocon Release Documents to Optimer as well as any other document required to comply with ApplicableLaw prior to shipment of the Product.

 

**7.8               **TheSpecifications may be modified from time to time by written agreement of theparties without the necessity of amending this Agreement. If Optimer requests achange in the Specifications that would result in an increase in Biocon’s costof manufacture, the parties shall discuss what impact, if any, such changeshould have on the price of Product.****** IfOptimer agrees in writing to a proposed price increase to implement suchchange, the price change shall become effective only with respect to thoseBinding Orders of Product that are manufactured in accordance with the modifiedSpecifications.

 

**7.9               **Bioconshall keep complete, accurate, and authentic accounts, notes, data, and recordspertaining to its manufacture, processing, testing, packaging, storage anddistribution of Product, including, without limitation, master

 

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production and control records and Productcomplaint files, in accordance with Applicable Laws.  In addition, Biocon shall retain samples ofProducts and isolated intermediates of each lot manufactured pursuant to thisAgreement for a period of [***] after Optimer’s acceptance of such lot.  The sample size shall be [***] necessary toconduct quality control testing.  Bioconshall retain such records and samples for a period of [***] following the dateof manufacture, or longer if required by Applicable Laws, and, upon request,shall make available to Optimer copies of such records and portions of thesamples.  After such time period, Bioconshall notify Optimer prior to destroying such records and samples and, atOptimer’s request and expense, shall provide such records and samples toOptimer.

 

**7.10             **Biocon shall provide Optimerand its representatives with access during reasonable business hours and afterreasonable notice to those areas of Biocon’s manufacturing facilities whereProduct or raw materialsfor Product is manufactured, stored or handled and tomanufacturing records, and testing and control records (including withoutlimitation release and stability records), of Product manufactured by Biocon,so that Optimer and its representatives may perform a quality assurance auditof such facilities and activities. The duration of such quality assurance auditand inspection shall not exceed 15 man days in a year.  Biocon shall allow employees of Optimer or itsdesignee to be present during all manufacturing of the Product.  Use of all information gainedin the course of audits is restricted to the purpose of quality assurance.Likewise, Biocon shall grant similar access to any Regulatory Authority uponreasonable notice so that such Regulatory Authority can perform inspections ofits facilities.

 

**8.****                                     ****INSPECTION AND RECALLS**

 

**8.1          **Optimer may reject delivery of any Batch of Product that does notconform to the Manufacturing Requirements, whether evidenced by the BioconRelease Documents or otherwise. Optimer or its designee will be entitled totest at its own cost to ascertain whether the Product received by it conformsto the Manufacturing Requirements.  Bioconshall also promptly notify Optimer in writing if it becomes aware that anyProducts manufactured by Biocon are defective or do not conform to theManufacturing Requirements or other warranties given by Biocon, which noticeshall identify in reasonable detail the nature of the non-conformity and thelot or Batch of Products affected.

 

**8.2               **In order to reject Product,Optimer must give written notice to Biocon of such rejection within   60 days after receipt  of such Product and specify the reasons forsuch rejection, and if no such notice of rejection is received, Optimer shallbe deemed to have accepted such delivery of Product within such 30 day periodfrom the delivery thereof, except in the case of Latent Defects.  Optimer shall have 10 days after the date ofdiscovery of a Latent Defect in any Product to notify Biocon of rejection ofsuch Product.

 

**8.3         **If Optimer provides a rejection noticepursuant to section 8.2, Biocon shall, as promptly as practicable, notifyOptimer as to whether it agrees or disagrees with the alleged defect.  In the event Biocon disagrees with the defectidentified by Optimer, Product samples from the lots or batches in questionwill be referred to an independent external laboratory acceptable to both theparties for testing and the finding of such laboratory shall be final andbinding on the parties and the cost of

 

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such laboratoryanalysis will be to the account of the party in error with regard to the stateddefect. To the extent any applicable methods of analysis for the Product areset forth in the Specifications or Quality Agreement, such methods shall beemployed by such independent external laboratory in conducting an analysispursuant to this section 8.3.

 

**8.4         **If Biocon agrees with any defect or if anindependent external laboratory agrees with Optimer with respect to theexistence of a disputed defect, Biocon shall replace the defective Product atno additional cost, and as promptly as practicable, but in no event later than[***] of being advised by Optimer in accordance with section 8.2 (if Bioconagreed with the defect) or later than [***] of an independent externallaboratory finding in favor of Optimer (if Biocon disputed the defect).  Biocon will credit Optimer future batches tothe extent it is unable to supply replacement Product in accordance with thetime periods specified in the previous sentence (due to insufficient safetystock or otherwise). Biocon will also credit Optimer the cost of  testing paid by Optimer to any independentexternal laboratory that identified defects in the Product Batches that will bereplaced including, without limitation, any costs incurred by Optimer inshipping and insuring such Product or replacement Product in connectiontherewith.

 

**8.5               **In the event a recall, withdrawal, or fieldcorrection is required or requested by any Regulatory Authority (a **Recall Action**) or if Optimer acting in goodfaith, voluntarily decides to recall any Product manufactured by Biocon,Optimer shall coordinate all recall activities.

 

**8.6               **Biocon will assist Optimer and its designeesin investigating any Recall Action upon request.

 

**8.7               **Biocon shall reimburse all of Optimer’sdirect, reasonable costs actually incurred in connection with the recall andreimburse Optimer for the purchase price paid for the recalled Product, if arecall arises primarily:

 

**(a)          **due to the Product not being manufactured,packaged or delivered by Biocon in accordance with the ManufacturingRequirements and this Agreement, or

 

**(b)          **from an act or omission attributable toBiocon’s negligence, willful misconduct or breach of the Agreement, or

 

**(c)          **from Biocon’s breach of its warrantiesstated in section 11.3.

 

**8.8               **With respect to recalls arising for any reason notmentioned in section 8.7, Optimer shall bear all the costs of such recall andBiocon shall not be liable to reimburse Optimer for the purchase price paid forthe recalled Product and any other related cost or expense.

 

**9.****                                     ****PRICE AND DISCOUNTS**

 

**9.1               **In consideration for the supply of Productpursuant to this Agreement, Optimer shall pay Biocon the price for Product inUnited States dollars and at the rates specified in Schedule 9.1. Allamounts specified in Schedule 9.1 are stated exclusive of applicabletaxes.

 

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**9.2               **Optimer shall pay all Biocon invoicestogether with applicable taxes including in relation to any applicable valueadded tax, service tax, or sales tax within thirty (30) days of receipt of therelevant invoice, in immediately available funds to the bank accountsdesignated by Biocon. Optimer shall not withhold any tax in respect of anypayments to Biocon.

 

**9.3               **Optimer shall further pay and be liable topay interest at the rate of [***] per month on amounts due and unpaid after 60days from the date of receipt of the applicable invoice by Optimer. Withoutprejudice to the foregoing and notwithstanding any other provision of thisAgreement, in the event of any delayed payment beyond 90 days, Biocon shall,until the full amount owed including interest is received, be entitled, at itssole discretion, to withhold further delivery of the Product notwithstandingthe previous acceptance of any Binding Order for such Product andnotwithstanding any other provisions contained in this Agreement.

 

**9.4               **The parties hereby agree to negotiate ingood faith an adjustment to the price of the Product specified in Schedule9.1 to compensate for any increase or decrease in the cost of manufacturingthe Product caused by a variation in the costs of the primary raw materials inexcess of [***] excluding [***] (including due to inflation). The partyrequesting the price adjustment must be able to demonstrate the requisiteincrease or decrease in the price of such primary raw materials through supplierinvoices and/or other means, including, as applicable, the wholesale priceindex published by the Department of Economic Affairs, Ministry of Finance,Government of India.  As part of thenegotiations regarding any price adjustment pursuant to this section 9.4, theparties shall also agree upon the date on which such price adjustment will takeeffect, giving consideration to any stock of primary raw materials Biocon mayhave prior to implementing the price adjustment.

 

**9.5               **The parties further agree to adjust theprice of the Product if the exchange rate between the United States dollar andIndian rupee calculated using the two week moving average from December 15th through December 31st ofany year (the **Two Week Average**) varies by morethan [***] compared to the exchange rate between the United States dollar andIndian rupee as on the Effective Date (the **Base Rate**).  For purposes of this section 9.5 theprevailing exchange rates on any date shall be based on the United Statesdollar—Indian rupee exchange rate as confirmed by the Wall Street Journal,Eastern U.S. edition.  Any priceadjustment required by this section shall be retroactive to January 1 of theyear following the year used to calculate the Two Week Average resulting in theadjustment.

 

For any adjustmentrequired by this section, the price per kg of Product shall be adjusted bymultiplying it by a fraction, the numerator of which is the number of Indianrupees per 1 USD according to the Base Rate and the denominator of which is thenumber of rupees per 1 USD according to the Two Week Average resulting in suchadjustment.  For purposes ofclarification, if, after any price adjustment required under this section 9.5,the Two Week Average calculated at the end of any year varies by less than[***] from the Base Rate, the price per kg of Product for the subsequentcalendar year shall be re-adjusted to the price per kg of Product that would bein effect had no adjustments been made under this section 9.5.  For clarification purposes only, illustativeprice adjustments pursuant to this section are set forth in Schedule 9.5.

 

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**9.6               **In addition to any other discounts or pricereductions provided for under this Agreement, Optimer shall be entitled to adiscount on the price of the Product calculated in accordance with the otherprovisions of this section 9 until such time as the aggregate discount providedto Optimer under this section 9.6 for Product supplied pursuant to thisAgreement amounts to USD $1,500,000 (one million, five hundred thousand UnitedStates dollars only).  The discountpursuant to this section 9.6 in any given year after the Approval Date shall bedetermined in accordance with Schedule 9.6; provided that at no timeduring the term of this Agreement, shall the discount provided to Optimerpursuant to this section 9.6 exceed [***].

 

**9.7               **Both parties agree to formally meet at leastonce a year and review continuous improvement activities, financialresponsibilities and other activities resulting from experience in operatingthe manufacturing process for the Product including potential price adjustmentsin raw materials. Upon mutual agreement of parties to implement such measuresas contemplated under this section:

 

**(a)          **[***]of all cost savings, after subtracting captive and implementation costsachieved by the efforts of Optimer or its marketing partners shall be passed onto Optimer through a price reduction on a per Kg basis effective as of thebeginning of the second full calendar quarter following the calendar quarter inwhich the cost savings are achieved.

 

**(b)          **Cost savings achieved by theefforts of Biocon shall be shared with Optimer at a ratio of [***] to Optimerand [***] to Biocon, after subtracting captive and implementation costs. Thesesavings shall be passed on to Optimer through a price reduction on a per Kgbasis effective as of the beginning of the second full calendar quarterfollowing the calendar quarter in which the cost savings are implemented.

 

**(c)          **A batch size in the range of[***] on a  [***] will be the base fordetermining any process improvements. The batch range on the [***] will bedetermined after the completion of the validation runs on this column.

 

**10.****                              ****REGULATORY MATTERS**

 

**10.1             **Bioconagrees to inform Optimer within 24 hours of notification of any regulatoryinquiry, communication or inspection, which directly or indirectly relates tothe manufacture of the Product, including any notice of inspection or aninspection visit by any Regulatory Authority which involves the Product orcould impact Biocon’s ability to produce the Product.  Optimer, at its option, shall have the rightto have its representatives present at any such inspection by a RegulatoryAuthority.  In the event there arewritten observations (or any other written communication) by a RegulatoryAuthority that involve the Product or could impact Biocon’s ability to producethe Product, or any proposed written response by Biocon to any such inspection,Optimer shall be informed within 24 hours and be provided with copies of alldocumentation within 48 hours, and shall have a reasonable opportunity toreview and comment on the proposed response.

 

**10.2             **Optimershall be responsible for all filings necessary for approval

 

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of the Product. Biocon further agrees to use Commercially Reasonable and DiligentEfforts to assist Optimer, at Optimer’s expense, in obtaining RegulatoryApprovals with respect to  Drug Productin the Territory, including approval of an NDA. Biocon specifically agrees to cooperate with any inspection by the FDAor other RegulatoryAuthority,including but not limited to any inspection prior to approval of an NDA.  The conditions under which Product ismanufactured shall be provided to Optimer for inclusion in Optimer’s regulatoryfilings.  Biocon further agrees toprovide to Optimer all information regarding any aspect of manufacture ofProduct that is necessary and related to Optimer’s regulatory filings.  Biocon shall also provide to Optimer or, atOptimer’s direction,  a RegulatoryAuthority, such amounts of Product as are reasonably necessary for validationtesting or otherwise in connection with any Regulatory Approval (**Validation Batches**).  The parties will agree on the cost of anyValidation Batches, such cost not to exceed the cost for an equivalent amountof Product ordered pursuant to section 7 hereof, and any Validation Batchesshall be included in determining whether Optimer has met its Minimum Volumesfor any applicable quarter.

 

**10.3             **Biocon shall, at its ownexpense, obtain and maintain the necessary permits required for its manufactureand supply of the Product in accordance with this Agreement, including allrequired facility licenses.

 

**11.****                              ****REPRESENTATION ANDWARRANTIES**

 

**11.1             **Each party represents and warrants to theothers as follows.

 

**(a)          **Such party has, and for the term of thisAgreement will have, all requisite power and authority to enter into andperform all its obligations under this Agreement and to conduct its business asconducted on the date of this Agreement and as proposed to be conducted by theparties pursuant to this Agreement;

 

**(b)          **Such party has taken all actions, obtainedall regulatory, corporate and contractual authorizations, and submitted allnotices or filings required to be submitted, for such party to validly enterinto this Agreement and will use Commercially Reasonable and Diligent Effortsto apply for and obtain all Regulatory Approvals necessary to perform itsobligations under this Agreement;

 

**(c)          **The execution and delivery of, or theperformance of obligations under, this Agreement do not violate or conflictwith any statute, rule, regulation, directive or other law, judgment, order,decree or award applicable to such party, or any provision of such party’sconstituent documents, or any agreement, contract, promise, covenant,undertaking, representation or warranty, applicable to or made by such party;

 

**(d)          **This Agreement constitutes a legal, validand binding obligation on such party enforceable against such party inaccordance with its terms;

 

**(e)          **Such party is the lawful owner or licensee of all ConfidentialInformation disclosed or to be disclosed by such party to the other party underthis Agreement, and it is has the right to disclose all such ConfidentialInformation to the other party;

 

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**(f)           **Such party validly Controls all Intellectual Property Rights licensed bysuch party to the other party pursuant to this Agreement, and it has the rightto license such Intellectual Property Rights; and

 

**(g)          **Each of the above representations andwarranties are true and correct as of the Effective Date.

 

**11.2             **Each of the representations and warrantiescontained in this Agreement are separate and independent and shall not bequalified or limited by any reference to any other representation or warrantyor any other provision of this Agreement or any prior knowledge on the part ofor attributable to the other party or its Affiliates. Each party covenants tothe other that each of the above representations and warranties shall remaintrue and correct during the term of this Agreement.

 

**11.3             ****PRODUCT WARRANTIES**. Biocon represents and warrants thatProduct delivered hereunder will:

 

**(a)          **be manufactured, packaged, labeled anddelivered by Biocon in accordance with the Manufacturing Requirements, relevantRegulatory Approvals, Applicable Law and this Agreement;

 

**(b)          **conform to the Specifications at the time ofdelivery;

 

**(c)          **not contain any contaminant or beadulterated within the meaning of Section 301 of the FDCA, or any otherApplicable Law; and

 

**(d)          **be free and clear of any lien orencumbrance.

 

**11.4             **To the best of Biocon’sknowledge, and subject to Optimer’s warranty contained in section 11.1(f), themanufacture of the Product in accordance with this Agreement will not infringeany Intellectual Property Rights of a third party to which Biocon does not holda valid license.

 

**11.5             **Biocon hereby certifies thatit has not been debarred under the provisions of the Generic Drug EnforcementAct of 1992, 21 U.S.C. §§ 306 and 335a. In the event that Biocon:  (a)becomes debarred; or (b) receives notice of action or threat of action withrespect to its debarment, during the Term, Biocon agrees to notify Optimerimmediately.  In the event that Bioconbecomes debarred as set forth in clause (a) above or Biocon receives notice of action or threatof action as set forth in clause (b) above which Optimer believesin good faith is more likely than not to result in debarment, Optimer will havethe right to terminate this Agreement immediately.

 

**11.6             **Bioconhereby represents and warrants that it has not knowingly used, and Bioconcovenants that it will not knowingly use, in any capacity the services of anyindividual, corporation, partnership, institution or association which has beendebarred under 21 U.S.C. §30.  In theevent Biocon becomes aware of the debarment or threatened debarment of anyindividual, corporation, partnership, institution or association providingservices to Biocon which directly or indirectly relate to Biocon’s activitiesunder this Agreement, Biocon will notify Optimer

 

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immediately. Optimer will have the right to terminate this Agreement immediately inthe event of debarment of such individual, corporation, partnership,institution or association providing services to Biocon in relation to Biocon’sobligations under this Agreement , unless Biocon is able to demonstrate to thereasonable satisfaction of Optimer that such debarment or threatened debarmentwill have no effect on any Regulatory Approval or Optimer’s ability to marketand sell Drug Products incorporating Product manufactured under this Agreement.

 

**11.7             **EXCEPT FOR THE WARRANTIES SPECIFICALLY AND EXPRESSLY GIVEN IN THISAGREEMENT, BIOCON MAKES NO EXPRESS WARRANTIES AND HEREBY EXCLUDES AND DISCLAIMSIN THEIR ENTIRETY ALL IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANYIMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITHRESPECT TO ANY PRODUCT PROVIDED BY BIOCON, EVEN IF BIOCON HAS BEEN ADVISED OFANY PARTICULAR USE OF THE PRODUCT.

 

**12.****                              ****INDEMNIFICATION ANDLIMITATION OF LIABILITY**

 

**12.1             **Optimershall defend, indemnify and hold Biocon and its Affiliates and their respectiveemployees, directors, officers, shareholders and agents (each, a **Biocon Indemnitee**) harmless against anyLoss actually incurred by such Biocon Indemnitee to the extent such Lossdirectly arises from (a) Optimer’s negligence or wilful act or omission in thepossession, use, importation, marketing or sale of Product, (b) Optimer’smaterial breach of this Agreement, or (c) Optimer’s breach of anyrepresentation or warranty set forth in section 11, in each case, except to theextent Biocon is obligated to indemnify any Optimer Indemnitee for such claimor proceeding under section 12.2 below.

 

**12.2             **Bioconshall defend, indemnify and hold Optimer and its Affiliates and theirrespective employees, directors, officers, shareholders and agents (each, an **Optimer Indemnitee**) harmless against anyLoss actually incurred by such Optimer Indemnitee to the extent that such Lossdirectly arises from (a) Biocon’s negligence or wilful act or omission in themanufacture, storage, labeling or delivery of Product; (b) Biocon’s materialbreach of this Agreement; or (c) Biocon’s breach of any representation orwarranty set forth in section 11, in each case, except to the extent Optimer isobligated to indemnify any Biocon Indemnitee for such claim or proceeding underSection 12.1 above.

 

**12.3             **Eachindemnified party agrees to give the indemnifying party prompt written noticeof any matter upon which such indemnified party intends to base a claim forindemnification (an **Indemnity Claim**)under this section 12. The indemnifying party shall have the right toparticipate jointly with the indemnified party in the indemnified party’sdefense, settlement or other disposition of any Indemnity Claim. With respectto any Indemnity Claim relating solely to the payment of money damages andwhich could not result in the indemnified party’s becoming subject toinjunctive or other equitable relief or otherwise adversely affect the businessof the indemnified party in any manner, and as to which the indemnifying partyshall have acknowledged in writing the obligation to indemnify the indemnifiedparty hereunder, the indemnifying party shall have the sole right to defend,settle or otherwise dispose of such Indemnity Claim, on such terms as theindemnifying party, in its sole

 

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discretion, shall deem appropriate, providedthat the indemnifying party shall provide reasonable evidence of its ability topay any damages claimed and with respect to any such settlement shall haveobtained the written release of the indemnified party from the Indemnity Claim.The indemnifying party shall obtain the written consent of the indemnifiedparty, which shall not be unreasonably withheld, prior to ceasing to defend,settling or otherwise disposing of any Indemnity Claim if as a result thereof theindemnified party would become subject to injunctive or other equitable reliefor the business of the indemnified party would be adversely affected in anymanner.

 

**12.4****             **EXCEPT AS PROVIDED IN SECTION 8.7 AND EXCEPTFOR BREACH OF SECTION 13 OR LOSSES ARISING FROM A PARTY’S GROSS NEGLIGENCEOR INTENTIONAL MISCONDUCT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THEOTHER FOR ANY LOST PROFITS, LOST SAVINGS, OR ANY OTHER INCIDENTAL, SPECIAL,EXEMPLARY, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES, EVEN IF SUCH PARTYHAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING OUT OF OR INCONNECTION WITH THIS AGREEMENT. THE FOREGOING NOTWITHSTANDING, NOTHING IN THIS SECTION 12.4SHALL LIMIT EITHER PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS SECTION 12.

 

**12.5**              Notwithstandinganything contained in any other provision of this Agreement, except as providedin section 8 except for breach of section 13, and except Losses caused by aparty’s fraud or fraudulent misrepresentation, each party’s aggregate liabilityfor the entire term of this Agreement to the other party or the other party’sAffiliates and their respective employees, directors, officers, shareholdersand agents, for any Loss arising under, in connection with or otherwise inrelation to this Agreement shall not exceed [***} prior to the time that Bioconhas sold to Optimer at least [***] of Product in any 12 month period and shallnot exceed [***] after the time Biocon has sold to Optimer at least [***] ofProduct in any 12 month period. The foregoing notwithstanding, nothing in thissection 12.5 shall limit either party’s indemnification obligations set forthin this section 12 with respect to bodily injury (including death).

 

**13.****                              ****CONFIDENTIALITY**

 

**13.1****             **Each party agrees that where it is aRecipient, unless it has the prior written consent of the Discloser, it shallonly use Confidential Information of the Discloser in furtherance of thisAgreement. Each party shall treat the terms and conditions of this Agreement asConfidential Information for which it shall be deemed to be a Recipient.

 

**13.2****             **Without prejudice to the generality of theforegoing, each Recipient undertakes that it shall not, whether during the termof this Agreement or for a period of ten (10) years thereafter, itself usesuch information, except as provided in this Agreement, or disclose, publicize,reveal or make available, directly or indirectly, any Confidential Informationto any Person, except for a disclosure required by statute, order of court orotherwise by law (including any disclosure required by the United StatesSecurities and Exchange Commission or by the Securities and Exchange Board ofIndia), or any requirements of any stock exchange on which the securities ofthe Recipient are listed, and then only after first

 

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advising theDiscloser of such requirement with reasonably sufficient notice to afford theDiscloser an opportunity to object or otherwise seek a protective order (exceptin the case of disclosure required by the United States Securities and ExchangeCommission or by the Securities and Exchange Board of India).  Each Recipient may disclose ConfidentialInformation of the Discloser to any of its employees, Affiliates, consultantsor agents provided that such Persons need to know such information for purposesof carrying out the Recipient’s activities under this Agreement and such Personis bound by confidentiality obligations regarding such Confidential Informationthat are at least as strict as those set forth herein.  Each Recipient may also disclose the terms ofthis Agreement without the prior consent of the Discloser to the extentnecessary to permit third parties who are in bona fide discussions with suchRecipient to acquire, by way of merger, asset purchase, equity purchase orexclusive license, all or substantially all of such Recipient’s assets orIntellectual Property Rights to which this Agreement relates or to engage infinancing transactions with such Recipient, to conduct due diligence, providedthat such third parties are bound by confidentiality obligations regarding theterms of this Agreement that are at least as strict as those set forth herein.

 

**13.3****             **Each Recipient agrees to advise itsemployees, Affiliates, consultants and agents who receive the ConfidentialInformation that such information (a) is confidential to the Discloser and(b) shall not be disclosed to anyone except as necessary to fulfill thepurposes of the provision of such Confidential Information pursuant to thisAgreement.

 

**13.4****             **The Recipient shall, at the Discloser’srequest, return the Discloser’s Confidential Information, in whatever formcontained, including all notes or memoranda made by its employees, agents orrepresentatives obtained or derived from any such Confidential Information,together with any listing that identifies the documents provided; provided,however, that the Recipient’s legal counsel may retain one (1) copy of theConfidential Information in a secure location for purpose of identifying suchRecipient’s obligations under this Agreement.

 

**13.5****             **The Confidential Information disclosed bythe Discloser shall remain the sole and exclusive property and asset of suchDiscloser and the Recipient shall acquire no ownership, right, title orinterest therein by virtue of this Agreement.

 

**13.6****             **Each party further understands andacknowledges that, due to the unique nature of the other party’s ConfidentialInformation, any unauthorized disclosure of any portion of ConfidentialInformation shall cause irreparable injury to the Discloser and that noadequate or complete remedy shall be available to the Discloser to compensatefor such injury. Accordingly, each party hereby acknowledges that the Disclosershall be entitle to injunctive relief in the event of such unauthorized disclosureby the Recipient or any of its agents or employees, in addition to whateverother remedies the Discloser might have at law or in equity.

 

**14.****                              ****INTELLECTUAL PROPERTYRIGHTS**

 

**14.1****             **Biocon acknowledges that Optimer ControlsIntellectual Property Rights in the Compound and the Drug Product andundertakes not to use such intellectual property for any purpose whatsoeverexcept to the extent necessary to

 

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supply Productto Optimer or its designee under this Agreement. Optimer hereby licenses toBiocon during the Term on a fully paid-up, non-exclusive, non-sublicensable androyalty free basis, all Intellectual Property Rights in the Compound and theDrug Product Controlled by Optimer to the extent necessary to manufacture andsupply Product to Optimer pursuant to this Agreement.

 

**14.2****             **Optimer acknowledges that Biocon Controlscertain Intellectual Property Rights or has proprietary know-how in thetechnology or manufacturing process of API and Optimer undertakes not to usesuch Intellectual Property Rights or proprietary know-how except ascontemplated under this Agreement and/or necessary for obtaining RegulatoryAuthorizations for the Product or a Drug Product. Biocon herby licenses toOptimer on a fully paid-up and royalty free basis, all Intellectual PropertyRights in the technology or manufacturing process of the Product Controlled byBiocon to the extent necessary to obtain Regulatory Authorizations for theProduct or a Drug Product and to make full use in accordance with thisAgreement of any Product supplied by Biocon under this Agreement.

 

**14.3****             **Theparties agree that Optimer shall be the sole and exclusive owner of all right,title and interest in and to any NDA filed with the FDA and the other RegulatoryAuthorities outside of the United States, and that Optimer shall be the soleand exclusive owner of any Regulatory Approvals related to the Product or aDrug Product.

 

**14.4****             **Each party shall notify the other as soon aspracticable after becoming aware of any infringement, suspected infringement oralleged infringement of (a) any Intellectual Property Rights of any thirdparty caused by activities conducted by such party under this Agreement and (b) theother party’s Intellectual Property Rights related to this Agreement or theProduct by a third party.

 

**14.5****             **All trademarks, trade names, copyrights,trade secrets, patents or other proprietary rights currently owned by a party,or which such party shall own in the future, in connection with the Compound, Productor Drug Product, shall and shall continue to be owned by such party, and,except as explicitly set forth in this Agreement, the other party shall notacquire or be deemed to acquire any such rights solely by virtue of thisAgreement and the parties’ relationship hereunder.

 

**14.6****             **AllIntellectual Property Rights (a) generated by Biocon in connection withBiocon’s scale-up, Initial Activities and other activities relatedto Product, and (b) generated in theperformance of work conducted under or contemplated by this Agreement byBiocon or Biocon’s employees, agents, consultants, subcontractors or otherrepresentatives, either solely or jointly with employees, agents, consultantsor other representatives of Optimer, including all patent and other intellectualproperty rights therein (collectively, **OptimerIntellectual Property**), will be owned solely by Optimer; *provided, however,* that OptimerIntellectual Property shall not include Biocon Inventions (defined below).  At Optimer’s request and expense, Biocon willprovide Optimer with reasonable assistance to perfect Optimer’s ownershipinterest in Optimer Intellectual Property and in obtaining, securing andmaintaining patents and other intellectual property rights therein.  Biocon shall and shall cause all itsemployees, agents, consultants and subcontractors to sign and deliver toOptimer all writings and do all such things

 

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as may be necessary or appropriate to vest inOptimer all right, title and interest in and to such Optimer IntellectualProperty.  Biocon will promptly discloseto Optimer any Intellectual Property Rights arising under thisAgreement.  Optimer may, in its solediscretion, file and prosecute in its own name and at its own expense, patentapplications on any patentable inventions within the Optimer IntellectualProperty.  Upon the request of Optimer,and at the sole expense of Optimer, Biocon will assist Optimer in thepreparation, filing and prosecution of such patent applications and willexecute and deliver any and all instruments necessary to effectuate theownership of such patent applications and to enable Optimer to file andprosecute such patent applications in any country.

 

**14.7****             **Asused in this Agreement, **Biocon Inventions**means any and all Intellectual Property Rights conceived or made by, orgenerated in the performance of work conducted under this Agreement by, Bioconor Biocon’s employees, agents, consultants, subcontractors or otherrepresentatives that relate to general processes of manufacturing, packaging oranalyzing pharmaceutical products, including any API, and not such processesthat relate specifically to the Compound or Product.  Biocon hereby grants to Optimer a fully-paid,sub licensable, non-exclusive license under Biocon Inventions in so far as suchinventions are useful for the research, development or commercialization theCompound, Product or Drug Product, and solely for the research,development and commercialization of the Compound, Product or Drug Product within the Territory.

 

**15.****                              ****TERM AND TERMINATION**

 

**15.1****             **The terms and conditions of this Agreementshall supersede any term or condition in any order, confirmation or otherdocument furnished by Optimer or Biocon that is inconsistent with these termsand conditions, unless it is mutually agreed between the parties hereto inwriting.

 

**15.2****             **Unless terminated earlier pursuant to thefollowing provisions, the term of this Agreement shall commence on date hereofand shall continue for a period of seven and a half  (7.5) years from the Approval Date.Thereafter, the Agreement may be renewed for such further period upon suchterms and conditions as the parties may mutually agree. Both parties shallnegotiate any such renewal [***] prior to expiration of this Agreement.

 

**15.3****             **Unless otherwise agreed to by the parties,this Agreement shall automatically terminate in the event Optimer does notobtain a Marketing Authorization for a Drug Product in the Territory on orbefore December 31, 2013.

 

**15.4****             **Either party may terminate this Agreementwithout cause by giving at least two (2) years and six (6) monthsadvance notice (**Elective Termination Notice**)to the other party, which Elective Termination Notice may not be given prior tothe fifth (5th) anniversary of the Effective Date but may be givenat any time thereafter. Optimer may also terminate this Agreement without causeand without prior notice provided that if it terminates the Agreement withoutcause and without prior notice, the provision of section 16.3 shall apply.

 

**15.5****             **Optimer may terminate this Agreement forcause and without advance notice to Biocon:

 

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**(a)****          **if, for any two calendar quarters during anycontinuous four calendar quarter period, Biocon is unable to supply the BindingForecast volume of Product in accordance with this Agreement, provided thateach such Binding Forecast volume of Product was no more than (i) [***]per quarter, and (ii) [***] of the previous Non-Binding Forecast for suchquarter, and such Binding Forecast volume of Product does not result in thetotal supply required exceeding [***] in the relevant four calendar quarterperiod;

 

**(b)****          **if there is a recall for which Biocon isobligated to reimburse Optimer pursuant to section 8.7 above;

 

**(c)****          **if Optimer has previously notified Biocon inwriting of a material breach of Biocon’s obligations under this Agreement andBiocon has not cured such breach within sixty (60) days of such notice;

 

**(d)****          **pursuant to sections 11.5 or 11.6; or

 

**(e)****          **if Biocon is subject to any InsolvencyProceedings.

 

**15.6****             **Biocon may terminate this Agreement forcause and without advance notice to Optimer:

 

**(a)****          **if Biocon has previously notified Optimer inwriting of a material breach of Optimer’s obligations under the Agreement andOptimer has not cured such breach within sixty (60) days of such notice;

 

**(b)****          **if Optimer is subject to any InsolvencyProceedings; or

 

**(c)******if for any two calendar quarters during any continuous four calendarquarter period, Optimer does not submit Purchase Orders covering at least theamount of Product set forth in its Binding Forecast for each such quarter;provided that Biocon notified Optimer in writing of the failure in the first oftwo such calendar quarters.

 

**15.7****             **In the event of termination or expiration ofthis Agreement, Biocon shall provide reasonable assistance to Optimer or itsdesignee (at Optimer’s expense if the termination is by Optimer other thanpursuant to section 15.5 or is by Biocon pursuant to section 15.6, or at Biocon’sexpense if the termination is by Biocon other than pursuant to section 15.6 oris by Optimer pursuant to section 15.5) to implement the transfer ofmanufacturing responsibility and process for the Product to anothermanufacturer, provided that Biocon shall not be required to transfer, licenseor disclose any of Biocon’s Intellectual Property Rights to a third party.

 

**16.****                              ****CONSEQUENCES OF TERMINATION**

 

**16.1****             **In the event either party notifies the otherthat it intends to terminate this Agreement (including through an Elective TerminationNotice), Biocon shall immediately stop incurring further costs related to anyon-going Initial Activities.

 

**16.2****             **In the event of termination of thisAgreement pursuant to section 15.3:

 

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**(a)****          **Optimer shall reimburse Biocon forreasonable and documented expenses incurred by Biocon until date of terminationfor each of the Initial Activities including but not limited to expensesincurred for the installation of [***] Equipment at Park and purchase of rawmaterial for the Validation and/or initial manufacture of Product, providedthat such reimbursement shall not exceed [***] including any sums previously paid to Biocon pursuant to section 3or prior to the Effective Date for such activities; and

 

**(b)****          **Biocon will pay Optimer the cost price ofthe [***] Equipment after depreciation using straight line over 10 yearsthrough the date of termination and Biocon shall not be obligated to refund theDedication Fee to Optimer.

 

**16.3****             **If Optimer terminates this Agreement withoutnotice and without cause (except by issuing an Elective Termination Notice) inaccordance with section 15.4:

 

**(a)****          **Optimer shall pay and be liable to payBiocon a fee equal to [***] of the sum of:

 

**(i)****           **the total purchase price of Product thatBiocon would have received if Optimer had purchased the amount of Product setforth in the most recent Binding and Non-Binding Forecasts covering the two (2) calendarquarters subsequent to the calendar quarter in which such termination occurred;and

 

**(ii)****          **the total purchase price of Product thatBiocon would have received if Optimer had purchased four (4) additionalquarters of Product, using an estimated quarterly amount of Product equal tothe average amount of Product per quarter actually ordered from Biocon anddelivered in all quarters prior to such termination (excluding the lowest andhighest quarters during such period);

 

**(b)****          **The foregoing notwithstanding, the amountset forth in this section 16.3(a) shall not exceed [***]; and

 

**(c)****          **The foregoing notwithstanding, Biocon shallbe under no obligation to refund the Dedication Fee to Optimer.

 

**16.4****             **If Biocon terminates this Agreement withoutcause, other than by issuing an Elective Termination Notice in accordance withsection 15.4, or if Optimer terminates this Agreement for cause pursuant tosection 15.5, Biocon shall compensate Optimer the cost amount necessary toprocure the Product from a third party supplier and Biocon shall alsocompensate Optimer for any cost differences between Biocon and the third partysupplier for a period of up to six (6) quarters or the remaining term ofthe Agreement, whichever is shorter. Biocon shall also refund a pro rata portion of the Dedication Fee toOptimer for the remaining term of the Agreement had the Agreement not been soterminated, and which pro rata portion shall be calculated on the basis of theDedication Fee being paid for a period of seven and a half  (7.5 years) years from the Approval Date.However, in any event, the aggregate amount payable by Biocon for earlytermination under this section will not exceed [***].

 

**16.5****             **No termination shall have any effect on anyrights or amounts

 

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due whichaccrued prior to the effective date of such termination.

 

**16.6****             **Upon any termination of this Agreement, eachparty shall immediately discontinue use of any Confidential Informationprovided by the other and cause all Confidential Information of the other thatis in its possession to be returned to the Discloser within thirty (30)calendar days of the date of the notice of termination. The foregoing sentencenotwithstanding, each party shall be entitled to retain one copy of the otherparty’s Confidential Information for purposes of record keeping.

 

**16.7****       **For a period of [***] following anytermination of this Agreement, without Optimer’s prior written consent, Bioconshall not, perform manufacturing services for a third party involving themanufacture of any product containing the Compound or salts, hydrates, solvates,polymorphs, metabolites, prodrugs or analogs thereof, or otherwise enable athird party or an Affiliate to manufacture the same. The provisions of section1 (definitions), section 2 (interpretation and construction), section 8(inspection and recalls) and sections 12 through 21, together with anyschedules referred to in such sections, shall survive any expiry or terminationof this Agreement.

 

**17.****                              ****NON-SOLICITATION**

 

**17.1****             **Subject to applicable law relating to thevalidity of such restrictive covenants, neither party shall knowingly solicit,directly or indirectly (except by way of general solicitation to the public),for employment, or otherwise knowingly employ, engage or contract in a positionrelated to or connected with pharmaceutical products, from the date of thisAgreement and until the expiration of six (6) months after the terminationor conclusion of this Agreement, any person who is employed or contracted bythe other party.

 

**17.2****             **In the event of a breach of the foregoingcovenants which results in the hiring of the other party’s employee, the partyin default shall be required to pay the non-defaulting party as fair andreasonable liquidated damages, a sum equivalent to the higher of one (1) year’sgross annual salary for the employee in question that is (i) being paid bythe non-defaulting party or (ii) agreed to be paid by the defaultingparty.

 

**18.****                              *****FORCEMAJEURE***

 

**18.1****             **If a *ForceMajeure* Event occurs, the party whose performance of its obligationsunder this Agreement is prevented by such *ForceMajeure*Event shall be excused from such performance only to theextent and for the time prevented.

 

**18.2****             **When such party is able to resumeperformance of its obligations, it shall immediately give the other partywritten notice to that effect and shall resume performance no later than two (2) businessdays after the notice is delivered.

 

**18.3****             **The relief offered by this section 18 is theexclusive remedy available to a party with respect to a *Force Majeure*Event.

 

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**19.****                              ****GOVERNING LAW ANDARBITRATION**

 

**19.1****             **The laws of England and Wales (withoutgiving effect to their conflict of laws principles) govern all matters arisingout of or relating to this Agreement (including, without limitation, itsinterpretation, construction, performance, and enforcement).

 

**19.2****             **The parties shall endeavor to resolveamicably disputes or differences, if any, arising out of or in connection withthis Agreement through mutual discussions and negotiations between seniorexecutives of Biocon and Optimer. All disputes arising out of or in connectionwith this Agreement, that cannot be resolved within thirty (30) days ofcommencing such negotiations, shall be finally settled under the Rules ofArbitration of the International Chamber of Commerce (**Rules**) by one arbitrator appointed inaccordance with said Rules. The venue for the arbitration shall be London,United Kingdom.  The proceedings shall beconducted in English.

 

**19.3****             **The arbitral award shall be final,conclusive and binding on the parties and may be enforced in any court ofcompetent jurisdiction.

 

**20.****                              ****NOTICE**

 

**20.1****             **Any notice or other communication given orrequired to be given under or pursuant to this Agreement shall be in writingand shall be sent by recognized electronic mail, recognized courier orfacsimile, provided that where such notice is sent by electronic mail orfacsimile, a confirmation copy shall be sent by recognized courier within two (2) workingdays of the transmission by electronic mail or facsimile at the followingaddress of the receiving party, or at such other address as may be notified bythe receiving party to the other in writing, provided such change of addresshas been notified at least ten (10) days prior to the date on which suchnotice has been given pursuant to this Agreement.

 

If to Biocon:

 

Attention:      MuraliKrishnan

Rakesh Bamzai

Legal Department

Biocon Limited, 20 KM,Hosur Road, Electronics City P.O, Bangalore 560 100, India

Facsimile:91-80-2852-3423

 

If to Optimer:

Attention: ChiefExecutive Officer

Optimer Pharmaceuticals, Inc.,10110 Sorrento Valley Rd., Suite C, San Diego, California 92121, U.S.A

Facsimile: 858-909-0737

 

**21.****                              ****MISCELLANEOUS**

 

**21.1****             **Neither this Agreement nor its performanceshall be assigned or delegated by either party to a third party without theprior written consent of the other party, except that such consent shall not berequired in connection with any assignment or delegation by either party to anyAffiliate or subsidiary of such party, to the acquirer of such party through merger,sale of stock or otherwise, to the acquirer of all or substantially all of suchparty’s business or assets to which this

 

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Agreement relates or to an exclusive or co-exclusive licensee of all orsubstantially all of such party’s Intellectual Property Rights to which thisAgreement relates.  Any purportedassignment of rights in violation of or contrary to this section 21.1 is andshall be deemed to be void.

 

**21.2****             **No provision of this Agreement may bewaived, except in writing by the party against whom the waiver is sought to beenforced. No failure or delay in exercising any right or remedy or requiringthe satisfaction of any condition under this Agreement, and no course ofdealing between the parties shall operate as a waiver of any right, remedy orcondition. A waiver provided in writing on one occasion is effective only inthat instance and only for the purpose for which it is given.

 

**21.3****             **The rights and remedies set forth in thisAgreement are the parties’ exclusive rights and remedies, and, except asotherwise expressly provided in this Agreement, neither party has, or will havein the future, any other rights or remedies.

 

**21.4****             **If any provision of this Agreement should beor become entirely or partly invalid or unenforceable, such invalidity orunenforceability shall not affect the validity or enforceability of any otherprovision of this Agreement. The invalid or unenforceable provision, as thecase may be, shall be regarded as replaced by such valid and enforceableprovision that as closely as possible reflects the economic purpose that theparties hereto had pursued with the invalid or unenforceable provision.

 

**21.5****             **Nothing in this Agreement shall, or shall bedeemed to constitute a partnership, joint venture or similar arrangementbetween the parties or to constitute either party as the agent or trustee ofthe other party for any purpose.

 

**21.6****             **Each party shall bear its own costs andexpenses in connection with the preparation, execution and delivery of thisAgreement.

 

**21.7****             **No amendment of this Agreement shall beeffective unless it is in writing and duly executed by all parties to thisAgreement.

 

**21.8****             **This Agreement, including the preamble andschedules and the documents referred to in this Agreement contain all thepromises, agreements, conditions and understandings between and among theparties with respect to the subject matter of this Agreement, and supersede allprior or contemporaneous promises, agreements, conditions and understandings,whether oral or written, with respect to such subject matter, including thatcertain Letter of Intent, dated January 9, 2009, between the parties.  For purposes of clarification, the partieshereby agree that upon the Effective Date, that certain Supply Agreement, datedAugust 29, 2005, between Biocon and Optimer (as assignee of ParPharmaceutical, Inc.) shall be deemed mutually terminated by the partiespursuant to section 8.2 thereof.

 

**21.9****             **The remedies expressly provided in thisAgreement are exhaustive and shall not be cumulative to any other remedies thatmay otherwise be available to the parties.

 

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**21.10****          **No provision of this Agreement shall beconstrued against any party on the ground that it or its counsel drafted thatprovision.

 

[*Signature Page Follows*]

 

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**INTENDINGTO BE BOUND**, the Parties have caused their authorized representatives to sign andexecute this Agreement on their behalf on the day and year first above written.

 

 
| /S/ ARUN CHANDAVARKAR |   | /S/ PEDRO LICHTINGER                   |
|-----------------------|--------|----------------------------------------|
|                  |   |                                   |
| FOR BIOCON LIMITED    |   | FOR OPTIMER PHARMACEUTICALS, INC. |

 

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**SCHEDULE**1.19

 

**[***]**

 

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**SCHEDULE**6.3

 

**[***]**

 

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**SCHEDULE**9.1

 

**[***]**

 

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**SCHEDULE9.5**

 

**FIRST ADJUSTMENT:**

 

[***]

 

**SECOND ADJUSTMENT:**

 

[***]

 

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**SCHEDULE9.6**

 

**[***]**

 

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