Exhibit 10.3


 


Confidential Treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request.  Omissions are designated as “***”.
A complete version of this exhibit has been filed separately with the
Securities and Exchange Commission.


 


KBI BioPharma, Inc. Services Agreement


 


This
Services Agreement (“Agreement”) dated 5 September, 2008 between Senesco
Technologies, Inc, a Delaware company (“Client”) having its principal place
of business at 303 George Street, Suite 420, New Brunswick, NJ 08901
and KBI BioPharma, Inc., a Delaware company (“KBI BioPharma”) having its
principal place of business at 1101 Hamlin Road, Durham, North Carolina 27704
(each a “Party”, collectively the “Parties”).


 


Whereas:


 


Client
desires KBI BioPharma to perform services in accordance with the terms of this
Agreement and KBI BioPharma desires to perform such services.


 


In
consideration of the above statements, which form part of this Agreement, and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the Parties hereto agree as follows:


 


1.             Performance


 


KBI
BioPharma will perform the services (the “Services”) detailed in the proposal
and/or scope-of-work set forth in Attachment One (the “Proposal”) on behalf of
Client in accordance with this Agreement herein incorporating the Proposal and
incorporating the Quality Agreement (applicable only for projects with cGMP
activities) attached hereto as Attachment Two.  In the event of any conflict between this
Agreement and the Proposal, this Agreement shall control.  In the event of any conflict between the
Proposal and any applicable Quality Agreement, the Quality Agreement shall control.


 


Client
shall support and cooperate with the execution of the services and shall not
engage in any act or omission, which may reasonably be expected to prevent or
delay the successful execution of the Services. Such support and cooperation
shall include, but not be limited to, informing KBI BioPharma of global
regulatory strategy for development and approval of the product(s) to the
extent relevant to the Proposal, prompt review and approval of documents
requiring Client’s signature, timely delivery of methods and materials and
prompt response to other similar issues.


 


2.             Compliance with Applicable
Government Regulations


 


KBI
BioPharma will undertake the Services in compliance in all material respects
with applicable laws, rules, regulations and guidelines; provided that the U.S.
Food and Drug Administration (FDA) current Good Manufacturing Practices (cGMP)
shall apply if and only to the extent cGMP activities are specified in the
Proposal.


 


3.             Client Obligations


 


Unless
otherwise agreed to by the Parties in writing, Client is solely responsible, in
each case in accordance with the Proposal, for: (a) provision of complete
and accurate scientific data regarding the Proposal; (b) provision of all
information necessary to effect the reliable transfer of methods to KBI
BioPharma; (c) provision of specific reagents, reference standards or
other materials 


 


1

















 


necessary
for execution of the Proposal; (d) if applicable, review and approve
in-process and finished product test results to ensure conformity of such
results with product specifications, regardless of which party is responsible
for finished product release; (e) preparation of all submissions to
regulatory authorities; and (f) performance of other obligations of Client
set forth in the Proposal.


 


4.             Hazardous Materials


 


Client
warrants to KBI BioPharma that no specific safe handling instructions are
applicable to any substance or material provided by Client to KBI BioPharma,
except as disclosed to KBI BioPharma in sufficient time for review and training
by KBI BioPharma prior to delivery. 
Where appropriate or required by law Client shall provide a Material
Safety Data Sheet and instructions for proper storage for all Client-provided
materials, finished product and reference standards.


 


5.             Facility Visits and Audits


 


Client’s
representatives may visit KBI BioPharma’s facilities during normal business
hours and with prior written notice to observe the progress of the Proposal,
provided that such access does not compromise cGMP compliance or safety.  KBI BioPharma will assist Client in
scheduling such visits, which will be conducted in a manner reasonably required
to protect confidentiality of other clients.Client may conduct one quality
assurance audit per calendar year at no cost in accordance with the provisions
of the Quality Agreement (if applicable). 
Additional audits will be invoiced separately on a time and materials
basis at the then current rate for such services.


 


6.             Regulatory Inspections


 


KBI
BioPharma will promptly notify Client of any regulatory inspections directly
relating to the Proposal in accordance with the terms of the Quality Agreement
(if applicable) incorporated herein. 
Client accepts reasonable and documented costs charged by a regulatory
authority for inspections directly related to the Proposal.


 


7.             Compensation


 


KBI
BioPharma will invoice Client as set forth in the Proposal.  Payments are due thirty (30) days from date
of invoice.  Late payments are subject to
an interest charge of one and one half percent (11⁄2%) per month or, if less, the
maximum legal interest rate per month. 
Failure to bill for interest due shall not be a waiver of KBI BioPharma’s
right to charge interest.


 


KBI
BioPharma requires payment of an initial fee, specified in the proposal, prior
to commencement of Services, to account for facilities preparation costs and
resource allocation commitments with respect to Client’s project(s).  Unless otherwise provided in the applicable
Proposal, initial fees are nonrefundable (absent an uncured breach by KBI BioPharma)
and are due and payable at signing, or in any event within five (5) days,
without issuance of an invoice by KBI BioPharma.


 


8.             Taxes


 


Client
will pay (or reimburse in full to KBI BioPharma) any sales, use, gross
receipts, compensating or other taxes, licenses or fees (excluding KBI
BioPharma’s net income and franchise taxes) to be paid by KBI BioPharma to any
tax jurisdiction arising from the Proposal.


 


9.             Change Orders


 


KBI
BioPharma may revise the price for the Services as set forth in the Proposal if
(a) Client revises KBI BioPharma’s responsibilities, the specifications,
the Proposal instructions, procedures, assumptions, processes, test protocols,
test methods, analytical requirements or otherwise requests a modification to
the Proposal, (b) Client’s requirements or any Client-provided 


 


2

















 


information
is inaccurate or incomplete and such inaccuracy or incompleteness results in
increased costs to KBI BioPharma, (c) necessitated by changes to applicable
laws, rules or regulations (d) if necessitated by an event outside
the control of KBI BioPharma, including , without limitation, the events
described in section 16 (Force Majeure) or (e) for other such reasons set
out in the Proposal.  Client will be notified
of such revision via issuance of a Change Order detailing the reasons for the
price revision and subject to Client’s written consent.


 


10.           Shipment


 


Unless
otherwise agreed in writing by the parties, all products, raw materials,
samples components or other materials shipped by KBI BioPharma are delivered
F.O.B. KBI BioPharma’s facilities.  KBI
BioPharma shall package for shipment such product, raw materials, samples,
components or other materials at Client’s expense (including insurance) and in
accordance with Client’s full written and reasonable instructions.


 


11.           Limitations of Liability


 


Notwithstanding
any other provision in this Agreement, KBI BioPharma’s liability for losses to
Active Pharmaceutical Ingredient, bulk drug product, intermediates, samples,
reagents or other materials provided by Client, whether or not incorporated
into finished product, shall in no event exceed the undisputed fair market
value thereof.


 


Notwithstanding
anything herein to the contrary, UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY BE ENTITLED TO INCIDENTAL, INDIRECT,
CONSEQUENTIAL, EXEMPLARY OR SPECIAL DAMAGES, WHETHER OR NOT FORESEEABLE,
ARISING IN CONNECTION WITH THE DEFAULT OR BREACH OF ANY OBLIGATION OF THE OTHER
PARTY UNDER THIS AGREEMENT, THE PROPOSAL, THE QUALITY AGREEMENT OR ANY
APPENDICES OR DOCUMENTS RELATED THERETO, SUBJECT TO SECTION 15 HEREOF.


 


12.           Warranties


 


KBI
BioPharma warrants to Client that (i) it will render the Services in a
manner that meets professional and industry standards for work of a similar nature
and (ii) it will use commercially reasonable efforts to perform the
Services and, to the extent applicable for cGMP services, the Quality
Agreement. EXCEPT AS EXPRESSLY STATED IN THIS
SECTION 12, KBI BIOPHARMA DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED
WITH RESPECT TO THE SERVICES AND ANY MATERIALS PROVIDED HEREUNDER, AND CLIENT
HEREBY WAIVES ALL SUCH WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT OR
FITNESS FOR A PARTICULAR PURPOSE.   Except
as otherwise provided in this Agreement, Client’s sole remedy and KBI BioPharma’s
exclusive obligation under the foregoing warranty in this Section 12 is
for KBI BioPharma, at its option, to either re-perform or correct such services
(without cost or expense to Client, including shipping conforming KBI BioPharma
deliverables to Client) or to refund to Client the amount paid therefore,
including the cost of shipping.  For
avoidance of doubt, Client understands and agrees that the Services are experimental
in nature, that biopharmaceutical process development is subject to certain
inherent risks, and as such nothing in this Agreement shall be construed as a
guarantee or warranty by KBI BioPharma that the Services, or the materials,
data, information of other results produced in connection therewith, will meet
or otherwise satisfy any of the objectives, goals or targets stated in the
Proposal.


 


13.           Confidentiality


 


All
information disclosed by a party in connection with the Proposal shall be considered
confidential information.  For the
duration of the Proposal and for a period of five (5) years thereafter,
neither Party shall disclose confidential information disclosed by the other
Party without prior written permission unless such information is (i) disclosed
to an affiliate that is under similar obligation to 


 


3

















 


keep
such information confidential; (ii) is or becomes publicly available
through no fault of the receiving Party; (iii) is disclosed by a third
party entitled to disclose it; (iv) is already known to the receiving
Party as shown by its prior written records; or (v) is required to be
disclosed by any law, rule, regulation, order, decision, decree, subpoena or
other legal process provided that the receiving Party shall give prompt notice
thereof to the disclosing Party and shall cooperate with the disclosing Party
to obtain a confidentiality order or other similar protection.


 


14.           Intellectual Property


 


All
Client Materials  that KBI
BioPharma may have access to in order to perform the Services shall be owned
exclusively by the Client.  Nothing in
this Agreement shall be deemed to grant any rights to KBI BioPharma in any
Client Materials, other than the right for KBI BioPharma to perform the Services
in accordance with the terms of this Agreement. 
For the purposes hereof, “Client Materials” means all Client proprietary
information, intellectual property and developments, including without
limitation, all patents, patent applications, know-how, inventions, design,
concepts, technical information, manuals, instructions which are owned,
licensed or controlled by Client relating to pharmaceutical or diagnostic
products or the development, formulation, manufacture, processing, packaging,
analysis or testing thereof.  In the
event that Client loses or forfeits its rights in such proprietary technologies
during the term of this Agreement for any reason, Client shall provide notice
of same to KBI BioPharma immediately and this Agreement shall be subject to
immediate termination by KBI BioPharma at that time.


 


Any
and all ***, and ***, whether *** of this Agreement (“***”), including without
limitation any *** and *** which are based on Client Materials, shall be ***
KBI BioPharma shall at Client’s request assign to Client or its designee all of
its rights and title in the Custom Intellectual Property, which assignment is
accepted by Client. Prior to the commencement of work hereunder, KBI BioPharma
has or shall enter into agreements with all employees and consultants involved
in the carrying out of this Agreement sufficient to provide Client with the
assignments and licenses set forth in this Agreement.


 


Client
acknowledges that KBI BioPharma, and KBI BioPharma’s personnel, possess and
continuously update proprietary inventions, tools, templates, models,
methodologies, processes, know-how, trade secrets, improvements, and other
intellectual properties and other assets (including but not limited, to
analytical methods, procedures and techniques, computer technical expertise and
software, and business practices, related to the development and
commercialization of biopharmaceuticals, as well as other areas, which have
been independently developed by KBI BioPharma and its personnel), certain of
which may be used, improved, modified or developed by KBI BioPharma in the
course of a rendering Services (collectively, “KBI BioPharma Process Technology”).  Except as otherwise specified herein, KBI
BioPharma, and KBI BioPharma’s personnel, shall retain exclusive right, title
and interest in and to all KBI BioPharma Process Technology and improvements
thereto.


 


15.           Indemnification


 


KBI
BioPharma will indemnify and hold harmless Client, its affiliates and their
officers, directors, agents, and employees against any loss, cost, damage or
expense (a “Loss”) from any lawsuit, action, claim, demand, assessment or
proceeding brought by a third party (a “Claim”) arising directly or indirectly
from (i) the conduct of the Proposal as a result of KBI BioPharma’s gross
negligence or intentional misconduct or inaction or (ii) KBI BioPharma’s
material breach or non-performance of this Agreement; provided that if
such Loss or Claim arises in whole or part from Client’s gross negligence or
intentional misconduct or inaction, then the amount of such loss that KBI
BioPharma shall indemnify Client for shall be reduced by an amount proportional
to Client’s responsibilities for such Loss as determined by a court of
competent jurisdiction.


 


4

















 


Client
will indemnify and hold harmless KBI BioPharma, its affiliates and their
officers, directors, agents, and employees against any Loss or Claim arising
directly or indirectly from (i) Client’s gross negligence or intentional
misconduct or inaction, (ii) Client’s material breach or non-performance
of this Agreement, or (iii) Client’s use, handling, distribution or sale
of the products or other deliverables resulting from a Proposal; provided
that if such Loss or Claim arises in whole or part from KBI BioPharma’s gross
negligence or intentional misconduct or inaction, then the amount of such loss
that Client shall indemnify KBI BioPharma for shall be reduced by an amount
proportional to KBI BioPharma’s responsibilities for such Loss as determined by
a court of competent jurisdiction.


 


16.           Force Majeure


 


Neither
party will be liable for any failure to perform or for delay in performance
resulting from any cause beyond its reasonable control, including, without
limitation, acts of God, fires, floods, or weather, disease, strikes or
lockouts, factory shutdowns, embargoes, wars, hostilities or riots, acts of
terrorism, shortages in transportation, government action or power failure,
provided that such failure to perform shall be excused only to the extent of
and during such disability.  Any time
specified or estimated for completion of performance of Services falling due
during or subsequent to the occurrence of any such events shall be
automatically extended for a period of ninety (90) days to recover from such
disability.  If any part of the Proposal
is invalid as a result of such disability, KBI BioPharma will, upon written
request from Client, and at Client’s sole cost and expense, repeat that part of
the Proposal affected by the disability.


 


17.           Use and Disposal


 


Client
represents and warrants to KBI BioPharma that it has legal title and/or a valid
license to materials, process patents and other intellectual property necessary
to conduct the Proposal and that KBI BioPharma’s performance of the Proposal
will not violate or infringe on the patents, trademarks, service marks or
copyrights of any third party.  Client
further represents and warrants to KBI BioPharma that it will hold, use and/or
dispose of Product and materials provided by KBI BioPharma in accordance with
all applicable laws, rules and regulations.


 


KBI
BioPharma represents and warrants to Client that it has legal title and/or a
valid license to those materials, process patents and other intellectual
property not furnished by Client that are necessary to conduct the Services,
and that KBI BioPharma’s use or application thereof in its performance of the
Services will not violate or infringe on the patents, trademarks, service marks
or copyrights of any third party.  KBI
BioPharma further represents and warrants to Client that it will hold, use
and/or dispose of information and materials provided by Client in accordance
with all applicable laws, rules and regulations.


 


18.           Independent Contractor


 


KBI
BioPharma shall perform the Proposal as an independent contractor of the Client
and shall have complete and exclusive control over its facilities, equipment,
employees and agents.  The relationship
between the parties shall not constitute a partnership, joint venture or agency
nor constitute either party as the agent, employee or legal representative of
the other.


 


19.           Publicity


 


Neither
Party will make any press release or public disclosure or use the name of the
other party or its employees in any advertising or sales promotional material
without the other Party’s express prior written consent.


 


5

















 


20.           Authority


 


Client
grants KBI BioPharma full authority to use any Client supplied materials or
substances *** for the ***. Each party represents and warrants to the other
party that it has the full right and authority to enter into this Agreement and
to perform in accordance with the terms and conditions set forth herein.  Each Party further represents and warrants to
the other Party that it has obtained and will, at all times during the term of
this Agreement, hold and comply with all licenses, permits and authorizations
necessary to perform this Agreement as now or hereafter required under any
applicable statutes, laws, ordinances, rules and regulations of the United
States and any applicable foreign, state and local governments and governmental
agencies.


 


21.           Amendment and Precedence


 


The
Proposal, the terms and conditions herein and any applicable Quality Agreement
constitute the entire agreement between the Parties relative to the Proposal
and may not be modified without the mutual written consent of both Parties. The
Parties agree that the terms and conditions contained in this Agreement shall
prevail over any terms and conditions of any purchase order, acknowledgment
form or other instrument.  Each Party has
had the opportunity to consult with counsel in connection with the review,
drafting and negotiation of this Agreement. 
Accordingly, the rule of construction that any ambiguity in this
Agreement shall be construed against the drafting Party shall not apply.


 


22.           Choice of Law


 


This
Agreement between the Parties governed by these standard terms and conditions
shall be construed and enforced in accordance with the laws of and in the venue
of the State of North Carolina except for its rules regarding conflict of
laws.


 


23.           Dispute Resolution


 


If
a dispute arises between the Parties in connection with this Agreement, the
respective presidents or senior executives of KBI BioPharma and Client shall
first meet as promptly as practicable and attempt to resolve in good faith such
dispute.  If such parties cannot resolve
the dispute, then such dispute shall be referred to mediation in accordance
with the rules of the American Arbitration Association.  The Parties shall participate in the
mediation in a good faith attempt to settle the dispute.  The mediation shall be held in Durham County,
North Carolina.  If mediation fails to
resolve the dispute, such dispute shall be resolved in the jurisdiction of the
defendant by binding arbitration, by a neutral arbitrator, under the rules of
the American Arbitration Association.


 


24.           Assignment


 


This
Agreement between the Parties shall not be assigned in whole or in part by
either Party without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed except that no such consent shall
be required for an assignment by a Party in whole or in part in connection with
a merger or other business combination or sale of all or substantially all
assets.


 


25.           Termination


 


Client
may terminate this Agreement prior to completion of the Proposal by providing
sixty (60) days written notice to KBI BioPharma.  Upon receipt of such notice of termination,
KBI BioPharma will promptly scale down the affected portion of the Proposal and
avoid (or minimize, where non-cancellable) any further related expenses.  In the event that Client elects to terminate
for reasons other than a material breach of this Agreement by KBI BioPharma that
KBI BioPharma fails to cure or commence such cure within thirty (30) days of
written notice of such breach, Client shall pay KBI BioPharma upon receipt of
invoice all of its costs incurred or irrevocably obligated related 


 


6

















 


to
the Proposal, plus, as liquidated damages and not as a penalty, a cancellation
fee equal to twenty percent (20%) of the uninvoiced portion of the total
Proposal as of the effective date of termination.


 


In
the event of a material breach of this Agreement by Client that is not cured
after a thirty (30) day written notice of such breach, KBI BioPharma may
terminate this Agreement prior to completion of the Proposal by giving sixty
(60) days written notice to Client.  Upon
such termination, KBI BioPharma will promptly scale down the affected portion
of the Proposal and avoid (or minimize, where non-cancellable) any further
related expenses.  In addition, Client
shall pay KBI BioPharma upon receipt of invoice all of its costs incurred or
irrevocably obligated related to the Proposal, plus, as liquidated damages and
not as a penalty, a cancellation fee equal to twenty percent (20%) of the
uninvoiced portion of the total Proposal as of the effective date of
termination.


 


The
termination of this Agreement for any reason shall not relieve either Party of
its obligations to the other in respect of: (i) confidentiality; (ii) consents
for advertising purposes and publications; (iii) indemnification; (iv) intellectual
property; and (v) compensation for Services performed.


 


26.           Survival


 


Sections
13, 14, 15, 18, 19, 22, 23 and this Section 26 of the terms and conditions
herein shall survive termination or expiration of this Agreement.


 


27.           Notice


 


Any
notice required to be given pursuant to the terms and provisions hereof shall
be in writing and shall be sent by certified or registered mail, postage
prepaid with return receipt requested, or by nationally recognized overnight
courier, postage prepaid with return receipt requested, or by confirmed
facsimile (with printed confirmation of receipt), to the other Party at the
address first indicated above, or at such other address or addresses indicated
in written notice by a Party from time to time hereafter.  Each notice shall be deemed sufficiently
given, served, sent, or received for all purposes at such time as it is
delivered to the addressee or at such time as delivery is refused by the
addressee upon presentation.


 


28.           Severability


 


In
the event that any one or more of the provisions of this Agreement should be
held for any reason by any court or authority having jurisdiction over this
Agreement, or over any of the Parties to this Agreement, to be invalid,
illegal, or unenforceable, such provision or provisions shall be reformed to
approximate as nearly as possible the intent of the parties, and if
unreformable, shall be divisible and deleted in such jurisdictions; elsewhere,
this Agreement shall not be affected.


 


29.           Waiver.


 


The
waiver by either Party hereto of any right hereunder, or of any failure of the
other Party to perform, or of any breach by the other Party, shall not be
deemed a waiver of any other right hereunder or of any other breach by or
failure of such other Party, whether of a similar nature or otherwise.  No remedy referred to in this Agreement is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to in this Agreement or otherwise available under law.


 


30.           Counterparts


 


This
Agreement may be executed in duplicate and either copy or both copies are
considered originals.


 


7

















 


In
Witness Whereof, the Parties by their authorized representatives execute this
Agreement as of the date first above written


 


 


	
  KBI BioPharma, Inc.

  	
   

  	
  Client

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:  

  	
  /s/
  KHURSHID IQBAL

  	
   

  	
  By:
  

  	
  /s/
  Richard S. Dondero

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:
  

  	
  KHURSHID
  IQBAL

  	
   

  	
  Name:
  

  	
  Richard
  S. Dondero

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:
  

  	
  Senior
  VP and CSO

  	
   

  	
  Title:
  

  	
  VP
  of Research and Development

  	
   

  



 


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