ex102to8ka07380004_11132013.htm

AMENDMENT ONE TO COMMERCIAL MANUFACTURING AGREEMENT

This first amendment (the “Amendment”) to that certain Commercial Manufacturing Agreement (the “Agreement”) effective as of February 5, 2013 by and between Pharmacyclics, Inc. a corporation organized under the laws of State of Delaware and having its principal place of address 995 E. Arques Avenue, Sunnyvale, CA 94085 (“Pharmacyclics”), and Lonza Sales Ltd., Münchensteinerstrasse 38, CH-4002 Basel, Switzerland (“Lonza”), is made effective and entered into by and between Pharmacyclics and Lonza as of October 2, 2013 (the “Amendment Effective Date”). Pharmacyclics and Lonza may be referred to herein individually as a “Party” and together as the “Parties.” Unless expressly defined herein, any capitalized term shall have the same meaning provided in the definition of the term in the Agreement.

WHEREAS, the business plans of the Parties are now more fully developed;

WHEREAS, such business plans call for Lonza to purchase [**] for Lonza’s use in the Manufacture of Product for Pharmacyclics; and

WHEREAS, the Parties recognize that the Agreement must be amended to accommodate such business plans and enable Lonza to purchase [**] directly from [**] for Lonza’s use in the Manufacture of Product for Pharmacyclics;

NOW, THEREFORE, for good and valuable consideration, the adequacy of which is hereby acknowledged, the Parties agree to amend the Agreement as follows:

I. Please amend Clause 1 of the Agreement to (i) replace the existing definition of [**] and (ii) add the following new definitions of [**] by inserting such definitions in alphabetical order within the list of existing definitions in Clause 1 of the Agreement.

[**]

II. Please amend Clauses 2.6 and 2.7 of the Agreement to read as follows.

2.6 Supply of Pharmacyclics Information and Raw Materials (excluding [**]). Promptly following the signature of this Agreement, Pharmacyclics shall supply to Lonza all Pharmacyclics Information and such other information or materials that may be reasonably required by Lonza for the purpose of performing the Manufacturing, including, to the extent agreed by the Parties, any Raw Materials designated to be supplied by Pharmacyclics, but excluding [**]. To the extent Pharmacyclics is expected to supply any Pharmacyclics Materials (excluding [**]) to Lonza in the future, prior to effecting such change in sourcing, the Parties agree that they will amend this Agreement to include terms allocating responsibility for quality and timeliness of such Pharmacyclics Materials.

2.7 Raw Materials. At Pharmacyclics’s request [**] by Pharmacyclics, Lonza shall purchase and hold up to [**] of Key Raw Materials (excluding [**]) to serve as safety stock. Pharmacyclics shall be responsible for the cost of Raw Materials (excluding [**]) (i) to the extent that such Raw Materials are used in the manufacture of Batches pursuant to the terms hereof or expire, or (ii) upon termination pursuant to Section 14. Pharmacyclics shall be responsible for the cost of [**] (i) to the extent they expire or (ii) upon termination pursuant to Section 14. Raw Materials (including [**] to the extent Pharmacyclics is responsible for the cost of such [**] pursuant to the immediately preceding sentence) shall be invoiced pursuant to Section 8 [**].

[**] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

III. Please delete Clause 2.9 in its entirety and replace it with new Clause 2.9 set forth below.

[**]. Lonza shall be responsible for [**]under which Lonza will [**] in the quantities and on the dates required to perform its obligations hereunder. Lonza shall not be responsible for [**]. As soon as Lonza is informed of any delay in the delivery of [**] Lonza will promptly notify Pharmacyclics. In the event the [**] are not so delivered and there is any further delay in the arrival of [**] Lonza will within [**] business days inform Pharmacyclics as to whether schedule changes are anticipated, what the new schedule is expected to be and what, if any, additional cost must be incurred and passed through to Pharmacyclics due to the delay. The Parties agree to work collaboratively to adjust the schedule based on the information Lonza can obtain from [**] at such time, but Lonza makes no guarantees as to the completeness or accuracy of such information. Lonza and Pharmacyclics agree to use [**] to mitigate any delay in providing Pharmacyclics Materials and any resultant Manufacturing delay. [**].

Lonza shall at all times [**].

IV. Please amend Clause 3.3 of the Agreement to read as follows.

3.3 Steering Committee. Each Party shall name a mutually agreed upon equivalent number of representatives for the Steering Committee, which shall meet up to [**] times per calendar year, or as otherwise mutually agreed by the Parties. In the event that a Steering Committee dispute cannot be resolved, such dispute shall be escalated to a senior executive of each of Pharmacyclics and Lonza. If such executives cannot resolve the dispute, either Party may pursue a resolution through a court action in accordance with Section 16.4 below. The primary function of the Steering Committee is to ensure the ongoing communication between the Parties and resolve any issues arising under this Agreement. In addition to the primary function described above, the Steering Committee shall also undertake the following responsibilities:

Discuss and seek resolution of issues relating to management of Manufacturing;

Agree to and monitor deadlines and milestones for the Manufacturing;

Discuss and recommend any changes to the Manufacturing (although such changes will not take effect until incorporated herein and made a part hereof by written amendment signed by both Parties).

The Parties will use commercially reasonable efforts to ensure that their representatives attend each meeting and discuss events in good faith with the aim of furthering and successfully concluding the Manufacturing to be performed under this Agreement. At each meeting of the Steering Committee, Lonza shall present to Pharmacyclics [**]. If, within [**] calendar days of the date of the Steering Committee meeting on which the [**] was presented to Pharmacyclics by Lonza (any such period of [**] calendar days, a “Notice Period”), Pharmacyclics provides to Lonza [**]of Pharmacyclics’ desire to utilize a part or all of any [**].

EXECUTION VERSION

V. Please amend Clause 6.1 of the Agreement to read as follows.

6.1 Pharmacyclics shall provide Lonza with [**] on a routine basis, or immediately if a shift in order patterns or volume is recognized by Pharmacyclics. [**]such Forecast Schedule shall be provided to Lonza on the [**]. Subject to Section 6.2 below, Pharmacyclics shall be permitted to order more than the [**] and Lonza shall make commercially reasonable efforts to meet any such order. [**]. At any time, but no more than [**]under this Agreement, Pharmacyclics may increase the [**] by up to [**] and provided that it is commercially reasonable for Lonza to Manufacture the [**] in the ordinary course of Lonza’s operations [**] Lonza shall accept such increase [**] and exert its best efforts to Manufacture and supply the [**] Purchase Orders shall be submitted within [**]by facsimile or in any other written or electronic form. Each calendar year, Lonza and Pharmacyclics shall agree on the [**].

VI. Please amend Clause 6.6 of the Agreement to read as follows.

6.6 At any time following expiration of the [**], but no more than [**], Pharmacyclics may provide Lonza with written notification of Pharmacyclics' request to reduce the [**]. Following such written notification, Pharmacyclics' request will be considered if Pharmacyclics demonstrates by [**] that:

(a) [**];

(b) during the immediately preceding [**] more than [**] of the [**] were [**]; or

If Pharmacyclics wishes to provide [**], Pharmacyclics shall provide evidence [**] that demonstrates the satisfaction of the terms and conditions of such subsection. Upon acceptance by Lonza of such evidence, Lonza shall have [**].

VII. Please amend Clauses 7.1, 7.2, 7.3.1 and 7.3.2 of the Agreement to read as follows.

7.1 Delivery. Product and samples shall be delivered [**] (as defined by Incoterms® 2010) [**]. As applicable, Lonza shall deliver to Pharmacyclics the Certificate of Analysis, the Certificate of Compliance and such other documentation as is reasonably required to meet all applicable regulatory requirements (including cGMP) of the relevant governmental authorities not later than the date of delivery of cGMP Batches (the “Release”). With respect to [**] shall transfer to Pharmacyclics only after [**] in accordance with this provision; provided, that Pharmacyclics shall be [**]. Pharmacyclics shall arrange for [**].

EXECUTION VERSION

7.3. Acceptance/Rejection of Product.

7.3.1 After delivery of Product and [**] in accordance with Clause 7.1, Pharmacyclics shall diligently examine the Product. Notice of all claims (time being of the essence) arising out of visible damage to or total or partial loss of Product in transit shall be provided in writing to Lonza and the carrier within [**] business days (Saturdays, Sundays and Bank or other public holidays excluded) of delivery [**].

7.3.2 Promptly following Release of cGMP Batches by Lonza, Pharmacyclics shall have the right to review the Certificate of Analysis and/or test cGMP Batches to determine compliance with the Specifications and cGMP. Pharmacyclics shall notify Lonza in writing of any rejection of a cGMP Batch based on any claim that it fails to meet Specifications or cGMP within [**] days of the delivery [**] of such Batch, after which time all unrejected cGMP Batches shall be deemed accepted, except in the case of any latent defect in the Product which could not have been discovered by Pharmacyclics through its testing of the Product in accordance with this Article 7 (a “Latent Defect”). Pharmacyclics shall notify Lonza of any Latent Defect within [**] years of delivery [**] of the affected Product. All Product for which such a notice is not delivered during the applicable time period set forth above shall be deemed accepted by Pharmacyclics and Pharmacyclics’s right to reject such Product shall be deemed waived.

VIII. Please amend Clauses 8.2, 8.3 and 8.5 of the Agreement to read as follows.

8.2 All prices and charges are inclusive of [**]. Pharmacyclics acknowledges that [**]. Lonza shall review the [**] and provide a credit to Pharmacyclics for any amount overpaid or invoice any amount underpaid based on the estimated values.

8.3 Unless otherwise specified in a Project Plan, invoices for payment of Batches ordered under each Purchase Order shall be issued as follows: (a) [**] percent ([**]%) of the value of the Purchase Order shall be invoiced upon confirmation of the Purchase Order by Lonza and (b) [**] percent ([**]%) of the value of the lot released pursuant to the Purchase Order shall be invoiced upon the earlier of (i) [**] days following Lonza’s Release or (ii) release of Product by Pharmacyclics; provided, that Lonza shall invoice costs for ordering any additional Raw Materials (excluding [**]) pursuant to Clause 2.7 upon request by Pharmacyclics for placement of such an order. All invoices are strictly net and payment must be made within [**] days of the date of invoice. Payment shall be made without deduction, deferment, set-off, lien or counterclaim, except with respect to the [**] percent ([**]%) payment made upon confirmation of the Purchase Order as provided above.

8.5 Price adjustments

(a) In each event of changes to the Process, Manufacturing, or services, or changes to assumptions related to any of the foregoing, including any modification of any kind made to the manner in which such activities are currently conducted (subject, in each case, to Pharmacyclics’ approval when required), Lonza may adjust the applicable Product or service price after discussion with and the consent of Pharmacyclics. [**].

(b) [**] per calendar year, Lonza may adjust the price of Product services in accordance with [**] increase for the immediately preceding calendar year. The new price reflecting such adjustment shall be effective for any Batch or services, as the case may be, for which the commencement date of Manufacturing or commencement of the applicable stage of services, as applicable, is on or after the date of Lonza’s notice to Pharmacyclics of such price adjustment.

EXECUTION VERSION

[**]

IX. Please amend Clause 12.2 of the Agreement to read as follows:

Pharmacyclics shall indemnify Lonza, its Affiliates, and their respective officers, employees and agents from and against any loss, damage, costs and expenses (including reasonable attorney fees) that such Lonza indemnitees may suffer as a result of any Third Party claim arising directly out of (i) any material breach of the warranties given by Pharmacyclics in 11.2 above; or (ii) any claims alleging that the conduct of the Manufacturing or other services hereunder infringe any Intellectual Property rights of Third Parties; (iii) the manufacture, use, sale, or distribution of any Product, including any claims of product liability, or [**]; except, in each case, (x) for claims under subclauses (i)-(iii) hereunder, to the extent that such claims resulted from the negligence, intentional misconduct or breach of this Agreement by any of such Lonza indemnitees [**].

X. Please delete Appendix E in its entirety and replace it with the sheet marked “Appendix E (Amended)” and provided under Attachment A hereto. Please replace the term “Appendix E” with the term “Appendix E (Amended)” at every occurrence throughout the Agreement.

XI. This Amendment to the Agreement shall take effect as of the Amendment Effective Date. This Amendment shall be deemed a part of and incorporated into the Agreement. Except as expressly set forth in this Amendment, all of the terms and conditions of the Agreement shall remain unchanged and are ratified, confirmed in all respects, and remain in full force and effect. In case of any conflict between this Amendment and the Agreement, the terms of this Amendment shall govern.

XII. This Amendment may be executed in counterparts, each of which counterpart, when so executed and delivered, will be deemed to be an original, and all of which counterparts, taken together, will constitute one and the same instrument even if the Parties have not executed the same counterpart. Signatures provided by facsimile transmission will be deemed to be original signatures. Both Parties agree that a photocopy of such facsimile may also be treated by the Parties as an original.

[THE REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

EXECUTION VERSION

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to the Agreement to be executed by their respective duly authorized representatives as of the Amendment Effective Date set forth above.

	LONZA SALES LTD

	By:
		Name:
		Title:

	By:
		Name:
		Title:

	PHARMACYCLICS, INC.

	By:
		Name:
		Title:

EXECUTION VERSION

ATTACHMENT A

EXECUTION VERSION

APPENDIX E (AMENDED)

Pricing Schedule

[**]

Total Price (USD/kg)

[**]