Global Manufacturing And Supply Agreement

EXHIBIT 10 (R)


GLOBAL
MANUFACTURING AND SUPPLY AGREEMENT
BETWEEN


ORGANOGENESIS INC.
and
NOVARTIS PHARMA AG.


THIS AGREEMENT is made as of this 11(th) day of August, 1997 by and between Novartis Pharma AG., a corporation organized under the laws of Switzerland, of Lichtstrasse 35, Basle, Switzerland (hereinafter "Novartis") and Organogenesis Inc., a company organized under the laws of the State of Delaware, of 150 Dan Road, Canton, MA 02021, USA (hereinafter "Organogenesis"). This Manufacturing and Supply Agreement (MSA), which relates solely to the manufacture and supply, for sales of Apligraf living skin equivalent in the configurations as defined in the LSA and Annex A (the Territory Annex) of this MSA and meeting applicable national regulatory requirements for manufacturing and control and as indicated in the Quality Assurance Agreement ("Q.A. Agreement) attached to this Agreement as Annex B, is entered into pursuant to the License and Supply Agreement dated as of January 17, 1996 ("LSA") between Organogenesis and Novartis.


The scope of this MSA pertains only to non-cryopreserved Apligraf.


This agreement is intended to be global in its scope, however, it is understood that regulatory, manufacturing and commercialization requirements may vary by geographic region. In such instances, both parties intend to negotiate in good faith to address such variations.


WITNESSETH:


WHEREAS, Novartis and Organogenesis have entered into the LSA relating to the manufacture, use and sale of Apligraf skin and tissue equivalent as described therein and hereinafter referred to as "Product"; and


WHEREAS, Novartis desires to contract with Organogenesis for the manufacture and supply of finished Product which Novartis intends to sell in the Territory as defined in the LSA; and


WHEREAS, Organogenesis possesses the requisite expertise, personnel and facilities for the manufacture and supply of finished Product and is willing to manufacture and supply such Product to Novartis;


NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and conditions herein contained, Novartis and Organogenesis agree as follows:


ARTICLE 1. LSA PROVISIONS - -------------------------


Except to the extent that they are specifically modified by this Manufacturing and Supply Agreement, all provisions of the LSA remain in full force and effect.


ARTICLE 2. DEFINITIONS


The following terms have meanings indicated or referred to below. Other capitalized terms used herein and not defined herein have the meanings ascribed thereto in the LSA.


2.1 "Force Majeure" means any strike, fire, earthquake, flood, governmental
acts or orders or restrictions, failure of suppliers, or any other reason
beyond the reasonable control and not caused by the negligence, intentional
conduct or misconduct of the non-performing party.


2.2 "Person" means any individual, corporation, partnership, company or other
entity.


2.3 "Affiliate", as defined in the LSA, means any corporation or other entity
which controls, is controlled by, or is in common control with a party to
this Agreement. A corporation or other entity shall be regarded as in
control of another corporation or entity if it owns or directly or
indirectly controls more than (40%) of the voting stock or other ownership
interest of the other corporation or entity, or if it possesses, directly
or indirectly, the power to direct or cause the direction of the management
and policies of the corporation or other entity.


2.4 "Product" means Apligraf (previously known as Graftskin in the LSA) living
skin equivalent in the configurations as specified in the LSA and Annex A
of this MSA and any other schedules attached to this agreement. The scope
of this Manufacturing and Supply Agreement pertains only to non-
cryopreserved Apligraf. ***


2.5 "Negligence" means the omission to do something which a reasonable person,
guided by those ordinary considerations which ordinarily regulate human
affairs, would do or the doing of something which a reasonable and prudent
person would not do.


2.6 "Maturation Period" means the period up to *** from the first commercial
sale of the Product in the first Primary Country.


_________________ ***Confidential treatment requested as to certain portions, which portions are omitted and filed separately with the Commission.


2.7 ANNEX A is defined as the country-specific product classification and will be updated regularly by Novartis after each new approval.


2.8 ANNEX B is the Quality Assurance Agreement and specifications.


2.9 ANNEX C is the financial section for the Product.


ARTICLE 3. SUPPLY OF PRODUCT
-----------------------------


3.1 Supply of Product Subject to the provisions of the LSA, Novartis agrees to
-----------------
purchase exclusively from Organogenesis, and Organogenesis agrees to
manufacture for, and sell exclusively to Novartis and/or its Affiliates
and/or Sublicensees during the term of the LSA Novartis' total requirements
for Product on the terms and conditions set forth herein. Novartis for
its' Affiliates and Sublicensees shall source requirements of Product from
Organogenesis in accordance with and pursuant to the LSA and this
agreement.


3.2 Origin of Product Product shall be manufactured by Organogenesis for
-----------------
purchase and resale by Novartis, its Affiliates and/or Sublicensees under
this Manufacturing and Supply Agreement. Organogenesis may subcontract any
part of the manufacturing process for Product to third parties provided the
Product and the facilities continue to meet the requirements as defined in
this manufacturing and supply agreement and provided that it has received
prior written approval from Novartis, which approval shall not be
unreasonably withheld. Organogenesis agrees not to use subcontractors who
have not met the material regulatory requirements of all countries where
the Product is being sold and distributed. Organogenesis will be obligated
to inform Novartis of any such changes and Novartis will be obligated to
seek regulatory approval for such changes in those nations in which it owns
the registration and such approval is required. Prior to subcontracting
any part of the manufacturing process for Product to Third Parties,
Organogenesis shall offer to subcontract such work to Novartis via
competitive bid. Organogenesis may, in its sole and exclusive discretion,
accept or reject Novartis' offer.


3.3 Manufacturing Facilities and Manufacturing Process
--------------------------------------------------


3.3.1. Regulatory Approval Organogenesis represents that its
-------------------
manufacturing and packaging facilities and process conform, and
will in the future conform, to current Good Manufacturing
Practices promulgated by the regulatory agencies that govern the
markets in which Product is manufactured, sold or distributed.
Novartis shall be promptly notified of any change in
Organogenesis facilities, manufacturing or testing procedures.


3.3.2 Documentation Organogenesis and Novartis shall provide to each
-------------
other all documents and updates with regard to the supply of the
Product which are required by any regulatory agencies, and the
parties shall submit to all inquiries and inspections by such
regulatory agencies. The parties shall promptly notify each other
of all regulatory agency inspections concerning the Product and
in no case shall the written notification be more than two (2)
days after the inspection has been announced.


3.3.3 Facility use Organogenesis agrees that it shall not at any time
------------
manufacture other products in the manufacturing facility to be
used for the manufacture of Product if such manufacture would
jeopardize any regulatory acceptance of such facility for the
manufacture of Product and /or cause any delay in the timely
manufacture and delivery of ordered product.


3.3.4 Facility and equipment investment ***
---------------------------------


3.3.5 Cell Banks Organogenesis shall be responsible for the creation,
----------
maintenance, validation and security of the Master Cell Banks
(MCB) and the Working Cell Banks (WCB). Organogenesis shall be
responsible for the maintenance, and security of a separate off
site storage location as back-up for the MCB and WCB,
Organogenesis shall be responsible for the preparation of all
necessary documentation for the MCB and WCB, i.e., Standard
Operating Procedures, installation records and various checks and
balances therein.


________________ ***Confidential treatment requested as to certain portions, which portions are omitted and filed separately with the Commission.


3.4 Production Plans and Purchase Orders
------------------------------------


3.4.1 Production Plans Immediately upon the execution of this
----------------
agreement, Novartis shall provide to Organogenesis written
production plans of its expected unit requirements for the
Product by geographic region, in order to permit Organogenesis to
project its facilities, equipment and material requirements. Such
production plans shall be provided in three (3) time specific
formats as follows: (a) Long Range Production Plan - Novartis
--------------------------
shall provide, each year beginning immediately upon the execution
of this agreement and thereafter annually on the first day July
of each subsequent calendar year, to Organogenesis a five (5)
year rolling production plan of its expected requirements for the
Product. The first two years of the Long Range Production Plan
shall be provided in monthly increments, the remaining three (3)
years shall be provided in annual increments. (b) Intermediate
------------
Range Production Plan - Novartis shall provide each month, on the
---------------------
last business day of the month or earlier, to Organogenesis a
twenty-four (24) month rolling production plan of its expected
requirements for the Product. *** The Intermediate Production
Plan shall be provided in monthly increments. (c) Short Range
-----------
Production Plan - Novartis shall provide each month, on the last
---------------
business day of the month in which the production plan is
provided, to Organogenesis a weekly production plan for the ***
of the most recent Intermediate Range Production Plan its
expected requirements for the Product. The Short Range Production
Plan shall be *** as referenced in section 3.4.2


3.4.2 Purchase Orders Novartis shall provide Organogenesis with firm
---------------
written "Purchase Orders" for Product for delivery in a defined
period not earlier than *** following receipt by Organogenesis of
such Purchase Orders. Purchase Orders shall be provided weekly
and be issued by Novartis to Organogenesis on the last business
day of the week. Novartis/Organogenesis will apply a *** to
increase flexibility and ability to match supply with demand. A
lot size will not be less than *** and not greater than ***.
Notwithstanding the Short Range Production Plan (Article 3.4.1)
and Purchase Orders, Novartis shall be permitted to revise
purchase order quantities at any time prior *** in the
manufacturing cycle ***. *** Because of the discrete nature of
the ***, Novartis may


________________ ***Confidential treatment requested as to certain portions, which portions are omitted and filed separately with the Commission.


apply an upward adjustment to the original Purchase Order to the
maximum potential number of product units which can be
manufactured from the *** available. *** Upon notification in
writing of a change, Organogenesis shall make its best effort to
comply with the revisions to the Purchase Orders.


With respect to the then current Intermediate Range and Short
Range Production Plans, a Novartis Purchase Order which is
greater than the amount most recently planned for any month is
subject to acceptance by Organogenesis. At no time shall Novartis
place Purchase Orders for Product in quantities that exceed the
maximum manufacturing capacity of Organogenesis at that time, as
defined by the applicable Intermediate and Long Range Production
Plans that are mutually agreed upon and documented by the JOC
unless manufacturing capacity in excess of the applicable
Intermediate and Long Range Production Plans exists and such
orders are acceptable to Organogenesis. Organogenesis shall be
obligated to use its best efforts to meet shipment dates
requested by Novartis.


3.4.3 Labeling Novartis will supply approved printed packaging
--------
components to Organogenesis for the bag label, package insert,
and pH card respectively. Mechanical artwork will be provided to
Organogenesis for the shipper. Specifications for such labeling
will be as defined in the Quality Assurance Agreement (Annex B).
*** for each packaging component supplied by *** accordance with
the pricing schedule as referenced in Annex C. This pricing
schedule will be reviewed annually and negotiated in good faith
between the Parties. Organogenesis will retain the right to
assume procurement of the bag label, package insert, and pH card.
Novartis shall have the right to transfer the responsibility for
procurement of the bag label, package insert, and pH card to
Organogenesis.


If Novartis wishes to institute changes in labeling art work,
both parties will develop a mutually acceptable implementation
schedule. *** labeling and packaging components in accordance
with Novartis art work. Organogenesis shall not alter, change or
in any way modify Novartis supplied art work for any reason,
without written authorization from Novartis. *** beyond those
associated with labeling as required by regulatory agencies
governing the markets in which the Product is manufactured,
distributed or sold, *** .


3.4.4 Materials Responsibility and Obsolescence Organogenesis shall
------------------------
purchase all materials necessary for the manufacturing and
packaging of the Product. Such materials shall meet the
Specifications set forth in Annex B (the QA Agreement) attached
hereto and made a part hereof, which may be amended from time to
time by mutual agreement of the parties. In the case of
termination of this Agreement not caused by Organogenesis, ***


_________________ ***Confidential treatment requested as to certain portions, which portions are omitted and filed separately with the Commission.


***such materials that have been purchased by Organogenesis
against the *** as outlined in the latest Intermediate Range
Forecast given to Organogenesis by Novartis with the exception of
*** for which *** of such material required to produce the *** as
outlined in the latest Intermediate Range Forecast. As a means to
continuous improvement, the purchase plan may be amended from
year to year by mutual agreement of the parties to achieve
optimal levels of service and inventory.


3.4.5 Waste Materials Organogenesis agrees that it will: (a) own all
---------------
waste materials generated by Organogenesis in connection with
receipt, manufacture, packaging, storage, and supply of Product,
including such waste of Product generated as a result of
Organogenesis' negligence; (b) be responsible for the removal,
packaging, storage, receipt, transportation, handling, and
disposal of any such waste in accordance with all national,
state, county and local laws and regulations; (c) be responsible
for the reconciliation and accountability of all ...