Common use of PEG Clause in Contracts

PEG. 3.3.1 During the Term, Customer is responsible for the supply of PEG in sufficient amounts to enable Agilent to manufacture Product ordered by Customer hereunder. Customer shall use commercially reasonable efforts to maintain the License, Manufacturing and Supply Agreement between Customer and Nektar Therapeutics, Corporation (“Nektar”), dated September 30, 2006, as amended, (the “PEG Supply Agreement”), or enter into an agreement with Nektar or another Third Party to obtain supply of PEG for the E10030 molecule. For purposes of clarity, Customer may terminate the PEG Supply Agreement with Nektar; provided that Customer has obtained an alternative source of supply of PEG. Notwithstanding any other provision herein, Agilent shall not be liable for any delays or supply failures associated with (i) Customer’s failure to supply PEG in sufficient amounts to enable Agilent to manufacture Product ordered by Customer or (ii) termination of Customer’s PEG Supply Agreement with Nektar and retention of an alternative source of supply of PEG. Customer shall reimburse Agilent for any reasonable direct costs incurred by Agilent to qualify any alternative source of supply of PEG. Customer shall immediately notify Agilent in writing if Customer reasonably anticipates any delay or shortfall in the supply of PEG in sufficient amounts to enable Agilent to manufacture Product ordered by Customer hereunder. In the event of cancellation or deferment of any Purchase Order due to Customer’s failure to supply sufficient amounts of PEG to enable Agilent to manufacture Product ordered by Customer hereunder, the cancellation and deferment fees set forth in Section 4.7 shall apply. 3.3.2 PEG delivered shall be held by Agilent on behalf of Customer on the terms and conditions contained in this Agreement and in accordance with any mutually agreeable instructions provided by Customer (it being understood that Agilent shall be deemed to have agreed to any written instruction provided to Agilent regarding the handling of PEG if it has not objected to such instruction upon delivery of the PEG to Agilent). Customer shall provide any such written instructions to Agilent at least [**] days prior to delivery of the PEG. Upon receipt of the PEG, Agilent will promptly do a visual inspection of the PEG container to ensure it has not been compromised. Agilent will, promptly, but in no event later than [**] business days of receiving the PEG, notify Customer in writing in accordance with the Quality Agreement in the event that such visual inspection revealed that the PEG was compromised at the time of delivery or was, at the time of delivery, otherwise unusable to manufacture Product. Agilent will conduct raw material release testing of the PEG in accordance with the specification for the PEG consistent with the Quality Agreement. Agilent will provide Customer notice in writing in accordance with the Quality Agreement in the event that the PEG does not comply with the specification for the PEG. In the event that Agilent provides a notification in accordance with this Section 3.3.2, Agilent shall not be liable for any delays or supply failures associated with delivered PEG that, at the time of delivery, was compromised or, at the time of delivery, was otherwise unusable to manufacture Product ordered by Customer hereunder. Agilent acknowledges that all PEG delivered shall remain the property of Customer and Agilent shall clearly identify all such PEG in storage and in its books as goods belonging to Customer. Agilent shall not use any such PEG for any purpose other than for Customer under this Agreement. Agilent shall use first in — first out and first expiry — first out methods of usage. 3.3.3 Subsequent to the completion of the validation Batches for the New Drug Application submission for the Finished Product, Agilent shall reimburse Customer for [**] percent ([**]%) of the invoiced cost of any PEG (which in no event shall be greater than [**] dollars ($[**]) per kilogram) and any associated freight fees in the event that such PEG cannot be used in the Processing of the Product as a result [**]. Agilent shall immediately inform Customer of any loss or damage to the PEG and promptly provide in writing all explanations and evidence relating thereto. 3.3.4 Subsequent to the completion of the validation Batches for the New Drug Application submission for the Finished Product, Agilent shall reimburse Customer for [**] percent ([**]%) of the Cost of the PEG used in the Processing of Product that (i) fails to conform to the Specification, (ii) is not manufactured in accordance with GMP, (iii) is not in Good Condition or (iv) is not free from Latent Defects. For the purposes of calculating the cost of the PEG under this Section 3.3.4, the Parties agree that the cost of the PEG is [**] dollars ($[**]) per Batch in the [**] Process (the “Cost”). Agilent’s reimbursement obligation under this Section 3.3.4 shall be equitably adjusted with respect to any Batch where a portion of the Product produced in such Batch (i) conforms to the Specification, (ii) has been manufactured in accordance with GMP, (iii) is in Good Condition and (iv) is free from Latent Defects. 3.3.5 Agilent shall maintain up-to-date records of all PEG held in inventory and, within the [**] or at such other frequency as the Parties may agree, shall provide to Customer a complete and accurate list of all PEG held by it on the [**]. Such inventory list shall in particular specify the inventory balance of PEG at the relevant date. Agilent shall also provide Customer with written reports on a [**] basis reconciling the quantities of the PEG provided to and held by Agilent, the consumption of the PEG and the estimated yield losses in the Processing. 3.3.6 In addition to the reports set forth in Section 3.3.5, Agilent shall provide to Customer the result of an inventory count to be carried out, under the joint supervision of Agilent and Customer, in accordance with Agilent’s usual year end audit procedures, of all the PEG held by Agilent as of [**] (or such other date as the Parties may agree) of each calendar year, such report to be delivered on or before [**] after such date, or within such other time as the Parties may agree. Agilent shall be responsible for all discrepancies (such as, for example, missing quantities) not accounted for during such yearly inventory count or in connection with the monthly inventory report without regard to the reason for the discrepancy. Each Party shall pay for its own fees under this Section.

PEG. 3.3.1 During Initially during the Term, Customer is will be responsible for the supply of PEG in sufficient amounts to enable Agilent to manufacture Product ordered by Customer hereunder. During the Term, the Parties will work together towards the goal of transitioning responsibility for the supply of PEG to Agilent, and with such transition, amend the Sections of this Agreement pertaining to PEG supply and the pricing for the Product accordingly, it being understood that factors outside of Agilent’s control (including the willingness of a PEG supplier to contract with Agilent) may affect Agilent’s ability to assume responsibility for the supply of PEG, and that any failure to do so shall not be considered a breach of this Agreement. While Customer is responsible for supply of PEG, the remaining provisions of Section 3.3 shall apply until they are so amended. 3.3.2 Starting [**] and during the Term, Customer shall use commercially reasonable efforts to maintain a sufficient safety stock of PEG necessary for Agilent to manufacture the Licensequantity of Product in the Binding Forecast over the next [**]; however, Manufacturing not maintaining such safety stock will not be, on its own, a breach of Customer’s obligations under this Agreement. If Customer does not maintain a sufficient safety stock of PEG or otherwise does not deliver PEG in sufficient amounts and by the required delivery dates to enable Agilent to manufacture any applicable Batch, including any Batch that Agilent manufactures to address a Supply Agreement between Deficiency, such Batch shall be deemed to be cancelled by Customer and Nektar Therapeutics, Corporation (“Nektar”), dated September 30, 2006, as amended, subject to the cancellation fees in Section 4.7. 3.3.3 Customer shall deliver sufficient amounts of PEG to Agilent at least [**] but no more than [**] prior to the scheduled commencement of manufacture for the applicable Product. Customer shall use commercially reasonable efforts to enter into an agreement with [**] for supply of the PEG (the “PEG Supply Agreement”), or enter into an agreement if and when Customer chooses, with Nektar or another Third Party to obtain supply of PEG for the E10030 moleculeProduct. For purposes of clarity, Customer may terminate the PEG Supply Agreement with Nektar[**]; provided that Customer has obtained an alternative source of supply of PEG. Notwithstanding any other provision herein, Agilent shall not be liable for any delays or supply failures associated with (i) Customer’s failure to supply PEG in sufficient amounts and by the required delivery dates to enable Agilent to manufacture Product ordered by Customer or (ii) termination of Customer’s PEG Supply Agreement with Nektar [**] and retention of an alternative source of supply of PEG. Customer shall reimburse Agilent for any reasonable direct costs incurred by Agilent to qualify any alternative source of supply of PEG. Customer shall immediately notify Agilent in writing if Customer reasonably anticipates any delay or shortfall in the supply of PEG in sufficient amounts to enable Agilent to manufacture Product ordered by Customer hereunder. In the event of cancellation or deferment of any Purchase Order due to Customer’s failure to supply sufficient amounts of PEG to enable Agilent to manufacture Product ordered by Customer hereunder, the cancellation and deferment fees set forth in Section 4.7 shall apply. 3.3.2 3.3.4 PEG delivered shall be held by Agilent on behalf of Customer on the terms and conditions contained in this Agreement and in accordance with any mutually agreeable instructions provided by Customer (it being understood that Agilent shall be deemed to have agreed to any written instruction provided to Agilent regarding the handling of PEG if it has not objected to such instruction upon delivery of the PEG to Agilent). Customer shall maintain insurance for the PEG supplied by Customer with customary and adequate coverage amounts to cover damage to and risk of loss of PEG while at Agilent’s facility, using reputable national insurance carriers. Customer shall provide any such written instructions to Agilent at least [**] days prior to delivery of the PEG. Upon receipt of the PEG, Agilent will promptly do a visual inspection of the PEG container to ensure it has not been compromised. Agilent will, promptly, but in no event later than [**] business days of receiving the PEG, notify Customer in writing in accordance with the Quality Agreement in the event that such visual inspection revealed that the PEG was compromised at the time of delivery or was, at the time of delivery, otherwise unusable to manufacture Product. Agilent will conduct raw material release testing of the PEG in accordance with the specification for the PEG consistent with the Quality Agreement. Agilent will provide Customer notice in writing in accordance with the Quality Agreement in the event that the PEG does not comply with the specification for the PEG. In the event that Agilent provides a notification in accordance with this Section 3.3.23.3.4, Agilent shall not be liable for any delays or supply failures associated with delivered PEG that, at the time of delivery, was compromised or, at the time of delivery, was otherwise unusable to manufacture Product ordered by Customer hereunder. Agilent acknowledges that all PEG delivered shall remain the property of Customer and Agilent shall clearly identify all such PEG in storage and in its books as goods belonging to Customer. Agilent shall not use any such PEG for any purpose other than for Customer under this Agreement. Agilent shall use first in — – first out and first expiry — – first out methods of usageusage and endeavor to use a minimum reasonable amount of PEG necessary to manufacture the Product (it being acknowledged and understood that due to PEG handling and other manufacturing practicalities, it is not possible for Agilent to use [**] percent ([**]%) of the PEG provided to Agilent in manufacturing of the Product). 3.3.3 3.3.5 Subsequent to the completion of the validation Batches for the New Drug Application submission for the Finished Product, Agilent shall reimburse credit Customer for [**] percent ([**]%) of the invoiced cost of any PEG (which in no event shall be greater than $[**] dollars ($[**]) per kilogramKilo) and any associated freight fees and taxes in the event that such PEG cannot be used in the Processing of the Product as a result [**]. Agilent shall immediately inform Customer of any loss or damage to the PEG and promptly provide in writing all explanations and evidence relating thereto. 3.3.4 3.3.6 Subsequent to the completion of the validation Batches for the New Drug Application submission for the Finished Product, Agilent shall reimburse Customer for [**] percent (i) [**]%) of the Cost of the PEG used in the Processing of Product that (i) fails to conform to the Specification, ; (ii) is not manufactured in accordance with GMP, [**]; (iii) is not in Good Condition [**]; or (ivv) is not free from Latent Defects[**], provided that [**] of this Section 3.3.6. For the purposes of calculating the cost of the PEG [**] under this Section 3.3.43.3.6, the Parties agree that the cost of the PEG is [**] dollars under this Section 3.3.6 shall be [**] with respect to [**] ($a) [**]; (b) per Batch in the [**]; (c) [**]; and (d) [**] Process (the “Cost”). Agilent’s reimbursement obligation under this Section 3.3.4 3.3.6 for [**] as described in subsection (v) above shall be equitably adjusted with respect to any Batch where a portion of the Product produced in such Batch determined as follows: (iw) conforms to the Specification, [**]; (iix) has been manufactured in accordance with GMP, [**]; (iiiy) is in Good Condition [**]; and (ivz) is free from Latent Defects[**]. 3.3.5 3.3.7 Agilent shall maintain up-to-date records of all PEG held in inventory and, within the [**] or at such other frequency as the Parties may agree, shall provide to Customer a complete and accurate list of all PEG held by it on the [**]. Such inventory list shall in particular specify the inventory balance of PEG at the relevant date. Agilent shall also provide Customer with written reports on a [**] basis reconciling the quantities of the PEG provided to and held by Agilent, the consumption of the PEG and the estimated yield losses in the Processing. 3.3.6 3.3.8 In addition to the reports set forth in Section 3.3.53.3.7, Agilent shall provide to Customer the result of an inventory count to be carried out, under the joint supervision of Agilent and Customer, in accordance with Agilent’s 's usual year end audit procedures, of all the PEG held by Agilent as of [**] (or such other date as the Parties may agree) of each calendar year, such report to be delivered on or before [**] after such date, or within such other time as the Parties may agree. Agilent shall be responsible for all discrepancies (such as, for example, missing quantities) not accounted for during such yearly inventory count or in connection with the monthly inventory report without regard to the reason for the discrepancy. Each Party shall pay for its own fees under this Section.