--------------------------------------------------------------------------------

Exhibit 10.23
 
CONFIDENTIAL TREATMENT

“Subject to a request for confidential treatment, certain provisions of this
agreement have been intentionally omitted. The omitted portions subject to the
confidential treatment are designated by three asterisks (***). A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.”

Manufacturing Services Agreement

Between

Patheon Pharmaceuticals Inc.

And

New River Pharmaceuticals Inc.

August 18, 2006

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

Table of Contents

ARTICLE 1 INTERPRETATION
1
     
1.1
Definitions
1
     
1.2
Currency
4
     
1.3
Sections and Heading
4
     
1.4
Singular Terms
5
     
1.5
Schedules
5
     
ARTICLE 2 PATHEON’S MANUFACTURING RESPONSIBILITIES
6
     
2.1
Manufacturing Services
6
     
2.2
Standard of Performance
7
     
2.3
Failure to Supply
7
     
2.4
Active Material Yield
7
     
ARTICLE 3 NEW RIVER’S OBLIGATIONS
9
     
3.1
Payment
9
     
3.2
Active Materials
9
     
ARTICLE 4 CONVERSION FEES AND COMPONENT COSTS
10
     
4.1
First Year Pricing
10
     
4.2
Subsequent Years’ Pricing
10
     
4.3
Adjustments to Pricing
11
     
4.4
Adjustments Due to Technical Changes
12
     
ARTICLE 5 ORDERS, SHIPMENT, INVOICING. PAYMENT
13
     
5.1
Orders and Forecasts
13
     
5.2
Reliance by Patheon
14
     
5.3
Minimum Orders
15

i

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT
 
5.4
Patheon Forecast for Active Ingredient
15
     
5.5
Shipments
15
     
5.6
Invoices and Payment
15
     
ARTICLE 6 PRODUCT CLAIMS AND RECALLS
16
     
6.1
Product Claims
16
     
6.2
Product Recalls and Returns
17
     
6.3
Disposition of Defective or Recalled Products
18
     
6.4
Customer Questions and Complaints
18
     
ARTICLE 7 CO-OPERATION
18
     
7.1
Quarterly Review
18
     
7.2
Governmental Agencies
19
     
7.3
Records and Accounting by Patheon
19
     
7.4
Inspection
19
     
7.5
Access
19
     
7.6
Reports
20
     
7.7
FDA Filings
20
     
ARTICLE 8 TERM AND TERMINATION
21
     
8.1
Initial Term
21
     
8.2
Termination for Cause
21
     
8.3
Product Discontinuation
22
     
8.4
Termination upon Regulatory Refusal
22
     
8.5
Obligations on Termination
22
     
ARTICLE 9 REPRESENTATIONS, WARRANTIES AND COVENANTS
23
     
9.1
Authority
23
     
9.2
New River Warranties
23

ii

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT
 
9.3
Patheon Warranties
23
     
9.4
Debarred Persons
24
     
9.5
Permits
24
     
9.6
Compliance with Laws
24
     
9.7
No Warranty
24
     
ARTICLE 10 REMEDIES AND INDEMNITIES
25
     
10.1
Consequential Damages
25
     
10.2
Limitation of Liability
25
     
10.3
Patheon
26
     
10.4
New River
26
     
ARTICLE 11 CONFIDENTIALITY
27
     
11.1
Confidentiality
27
     
ARTICLE 12 DISPUTE RESOLUTION
27
     
12.1
Commercial Disputes
27
     
12.2
Technical Dispute Resolution
28
     
ARTICLE 13 MISCELLANEOUS
28
     
13.1
Inventions
28
     
13.2
Intellectual Properly
29
     
13.3
Insurance
29
     
13.4
Independent Contractors
29
     
13.5
No Waiver
30
     
13.6
Assignment
30
     
13.7
Force Majeure
30
     
13.8
Additional Product
31
     
13.9
Notices
31

iii

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT
 
13.10
Severability
32
     
13.11
Entire Agreement
32
     
13.12
Other Terms
32
     
13.13
No Third Party Benefit or Right
32
     
13.14
Execution in Counterparts
32
     
13.15
Governing Law
32

iv

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

MANUFACTURING SERVICES AGREEMENT
 
THIS MANUFACTURING SERVICES AGREEMENT (the “Agreement’) made as of the 18th day
of August, 2006 (the “Effective Date”)

B E T W E E N:

 
PATHEON PHARMACEUTICALS INC.,

 
a corporation existing under the laws of the State of Delaware,

 
(hereinafter referred to as “Patheon”),

 
- and -

 
NEW RIVER PHARMACEUTICALS INC.,

 
a corporation existing under the laws of the Commonwealth of Virginia,

 
(hereinafter referred to as “New River”).

THIS AGREEMENT WITNESSES THAT in consideration of the rights conferred and the
obligations assumed herein, and for other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each party), and intending
to be legally bound the parties agree as follows:

ARTICLE 1
INTERPRETATION

1.1
Definitions.

The following terms shall, unless the context otherwise requires, have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:

“Active Materials” means the materials listed on Schedule D hereto;

“Active Materials Credit Value” means the value to be attributed to the Active
Materials for the purposes of Section 2.4 of this Agreement, as set forth in
Schedule D hereto;

“Affiliate” means:

 
(a)
a business entity which owns, directly or indirectly, a controlling interest in
a party to this Agreement, by stock ownership or otherwise; or

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(b)
a business entity which is controlled by a party to this Agreement, either
directly or indirectly, by stock ownership or otherwise; or

 
(c)
a business entity, the controlling interest of which is directly or indirectly
common to the majority ownership of a party to this Agreement;

For the purposes of this definition, “control” means the ownership of shares
carrying at least a majority of the votes in respect of the election of the
directors of a corporation.

“Annual Product Review Report” means the annual product review report as
described in Title 21 of the United States Code of Federal Regulations, Section
211.180(e);

“Annual Report” means the annual report as described in Title 21 of the United
States Code of Federal Regulations, Section 314.8 1(b)(2);

“Annual Requirement of Product” means all of New River’s annual requirement of
solid dosage form(s) of the Product in the Territory, including all Product
manufactured under the United States Collaboration Agreement dated as of March
31, 2005 between New River, Shire LLC and Shire Pharmaceuticals Group PLC as
identified in New River’s Form 10-K filing with the Securities Exchange
Commission dated April 1, 2005 or any amendment thereto.

“Annual Volume” means the volume of Product to be manufactured in any Year of
this Agreement as set forth in Schedule B hereto.

“Applicable Laws” means all federal laws, the Laws of the State of Ohio being
the jurisdiction where the Manufacturing Site is located, and the Laws of all
jurisdictions where the Products are manufactured, distributed or marketed;

“Authority” means any governmental or regulatory authority, department, body or
agency or any court, tribunal, bureau, commission or other similar body, whether
federal, state, provincial, county or municipal having proper jurisdiction over
the parties and/or the Products, as the context requires;

“Breach Notice” shall have the meaning ascribed thereto in Section 8

“Business Day” means a day other than a Saturday, Sunday or a day that is a
statutory holiday in the Commonwealth of Virginia or in the State of Ohio;

“cGMPs” means current good manufacturing practices as described in Parts 210 and
211 of Title 21 of the United States Code of Federal Regulations, together with
the latest FDA guidance documents pertaining to manufacturing and quality
control practice, all as updated, amended and revised from time to time, or the
foreign equivalent in those foreign jurisdictions where Patheon has agreed to
supply Product;

“Components” means, collectively, all packaging components, raw materials and
ingredients (including labels, product inserts and other labeling for the
Products), required to be used in order to produce the Products in accordance
with the Specifications, other than the Active Materials;

2

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

“Confidentiality Agreement” means the agreement relating to the non-disclosure
of confidential information between Patheon and New River dated May 31, 2003, as
amended August 25, 2005;

“Deficiency Notice” shall have the meaning ascribed thereto in Section 6.1(a);
“Delivery Date” shall have the meaning ascribed thereto in Section 5.1;

“FDA” means the United States government department known as the Food and Drug
Administration, or any successor entity thereto, or the foreign equivalent in
those foreign jurisdictions where Patheon has agreed to supply Product;

“Failure Period” has the meaning specified in Section 2.3(a);

“Firm Orders” has the meaning specified in Section 5.1(b);

“Intellectual Property” includes, without limitation, rights in patents, patent
applications, formulae, trade-marks, trade-mark applications, trade-names,
Inventions, copyright and industrial designs;

“Invention” means information relating to any data, innovation, improvement,
development, discovery, computer program, device, trade secret, method,
know-how, process, technique or the like, whether or not written or otherwise
fixed in any form or medium, regardless of the media on which it is contained
and whether or not patentable or copyrightable;

“Inventory” means all inventories of Components and work-in-process produced or
held by Patheon in connection with the manufacture of the Products but, for
greater certainty, does not include the Active Materials;

“Laws” means all applicable laws, statutes, ordinances, regulations, rules,
by-laws, judgments, decrees or orders of any Authority;

“Manufacturing Services” means the manufacturing, quality control, quality
assurance and stability testing, packaging, storage, and related services, as
contemplated in this Agreement, and the Quality Agreement, required to produce
Products from Active Materials and Components;

“Manufacturing Site” means the facility owned and operated by Patheon that is
located at 2110 East Galbraith Road, Cincinnati, Ohio 45237-1625;

“Patheon Manufacturing Responsibilities” means Patheon’s responsibilities and
obligations with respect to the provision of Manufacturing Services as set forth
in this Agreement and the Quality Agreement;

3

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

“Permits” shall have the meaning ascribed thereto in Section 9.3(d); “Products”
means the products listed on Schedule A hereto;

“Quality Agreement” means the agreement to be entered into between the parties
hereto setting forth, among other things, the quality assurance standards to be
applicable to the Manufacturing Services provided by Patheon, which agreement
shall be substantially in the form attached hereto as Schedule 0;

“Recall” shall have the meaning ascribed thereto in Section 6.2;

“Run Quantity” means the number of batches of a Product to be produced during
the same cycle of manufacturing as set forth in Schedule B hereto;

“Specifications” means the applicable quality control provisions in the Quality
Agreement, along with the file for each Product which is provided by New River
to Patheon in accordance with the procedures listed in Schedule A, which
contains documents relating to such Product, including, without limitation:

 
(a)
[***];

 
(b)
[***];

 
(c)
[***];

 
(d)
[***];

 
(e)
[***]; and

 
(f)
[***].

all as updated, amended and revised from time to time by New River in accordance
with the terms of this Agreement;

“Technical Dispute” has the meaning specified in Section 12.2;

“Territory” means the United States of America, its territories and possessions;

“Third Party Rights” means the Intellectual Property of any third party other
than (i) Patheon, (ii) New River, or (iii) an Affiliate; and

“Year” means in the first year of this Agreement, the period from the Effective
Date up to and including December 31 of the same calendar year, and thereafter
shall mean a calendar year.

1.2
Currency.

Unless otherwise indicated, all monetary amounts are expressed in this Agreement
in the lawful currency of the United States of America.

1.3
Sections and Heading.

The division of this Agreement into Articles, sections, subsections and
Schedules and the insertion of headings are for convenience of reference only
and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to a Section or Schedule refers to
the specified Section or Schedule to this Agreement. In this Agreement, the
terms “this Agreement”, “hereof”, “herein”, “hereunder” and similar expressions
refer to this Agreement and not to any particular part, Section, Schedule or the
provision hereof.

4

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

1.4
Singular Terms.

Except as otherwise expressly provided herein or unless the context otherwise
requires, all references to the singular shall include the plural and vice
versa.

1.5
Schedules

The following Schedules are attached to, incorporated in and form part of this
Agreement:

 
Schedule A
-
Product Formula and Specifications

 
Schedule B
-
Run Quantity, Annual Volume & Fees

 
Schedule C
-
Stability Testing

 
Schedule D
-
Active Materials & Active Materials Credit Value

 
Schedule E
-
Batch Numbering & Expiration Dates

 
Schedule F
-
Technical Dispute Resolution

 
Schedule 0
-
Quality Agreement

 
Schedule H
-
Quarterly Active Materials Inventory Report

 
Schedule I
 
Report of Annual Active Material Inventory Reconciliation and Calculation of
Actual Annual Yield

5

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

ARTICLE 2

PATHEON’S MANUFACTURING RESPONSIBILITIES

2.1
Manufacturing Services

Patheon shall provide the Manufacturing Services to New River on a non-
exclusive basis. Patheon shall manufacture and supply a [***] of New River’s
Annual Requirement of Product in the Territory and for the fees specified in
Schedules B and C. Patheon may change the Manufacturing Site for the Products
only with the prior written consent of New River, such consent not to be
unreasonably withheld. The parties acknowledge and agree that it would be
reasonable for New River to withhold such consent if Patheon proposes to change
the Manufacturing Site to a location outside the 48 contiguous U.S. states or to
a facility that, in New River’s reasonable judgment, has a poor quality or
safety record. The cost of any such change in Manufacturing Site shall be bone
solely by Patheon. If Manufacturing Services have not commenced within 12 months
of the date of execution of this Agreement due to no fault of Patheon, Patheon
reserves the right to amend the fees set out in Schedules B and C, but in no
event shall any increase in fees exceed the fee adjustment contemplated in
Section 4.2. In providing the Manufacturing Services, Patheon shall perform each
of the following services:

 
(a)
Conversion of Active Materials and Components. Patheon shall convert Active
Materials and Components into Products in accordance with the Specifications and
cGMPs.

 
(b)
Quality Control and Quality Assurance. Patheon shall comply with the obligations
set forth in the Quality Agreement. Each time Patheon ships Products to New
River, it shall provide New River with a certificate of analysis and certificate
of compliance (as defined in the Quality Agreement) and other documentation as
reasonably required by New River for such Products.

 
(c)
Components. Patheon shall purchase and test all Components at Patheon’s expense,
as specified by the Specifications.

 
(d)
Stability Testing. Patheon shall conduct stability testing on the Products in
accordance with the protocols set out in the Specifications. Patheon shall not
make any changes to these testing protocols [***]. New River shall pay the fees
specified in Schedule C for all stability testing that is necessary for
compliance with FDA requirements or is requested by New River. In the event that
any batch of Products fails stability testing, Patheon and New River shall
jointly determine the proceedings and methods to be undertaken to investigate
the causes of such failure, including which party shall bear the cost of such
investigation, provided that Patheon shall not be liable for any such costs
unless there has been a failure by it to provide the Manufacturing Services in
accordance with the Patheon Manufacturing Responsibilities. Patheon will provide
any and all data and results relating to the stability testing to New River
promptly following any request by New River.

6

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(e)
Packaging. Patheon shall package the Products with labels, product inserts and
other packaging as set out in the Specifications. [***]. In addition, Patheon
shall make arrangements for and implement the imprinting of batch numbers and
expiration dates on the packaging of each Product in compliance with all Laws.
Such batch numbers and expiration dates shall be affixed on the Products and on
the shipping carton of each Product as outlined in the Specifications and as
required by cGMPs. The system used by Patheon for batch numbering and expiration
dates is detailed in Schedule E hereto. New River may, in its sole discretion,
make changes to labels, product inserts and other packaging for the Products,
which changes shall be submitted by New River to all applicable governmental
agencies and other third parties responsible for the approval of the Products.
New River shall be responsible for any additional costs related to such labeling
changes when such changes occur. Patheon’s name shall not appear on the label or
anywhere else on the Products unless: (i) required by any Laws; or (ii) Patheon
expressly consents to such use of its name in writing.

2.2
Standard of Performance

Patheon shall provide the Manufacturing Services in accordance with the
Specifications, cGMPs, the Quality Agreement, and all Laws associated with the
manufacture and supply of human pharmaceutical products.

2.3
Failure to Supply

In the event that Patheon is unable to provide Manufacturing Services for the
Product in accordance with the Specifications, the terms of this Agreement, the
Quality Agreement or cGMPs, and such inability is or is likely to subsist on a
[***] (“Failure Period”), the parties agree to work together in good faith
during the Failure Period to resolve the event causing Patheon’s failure to
provide the Manufacturing Services for the Product and to procure the continued
Manufacturing Services for the Product from Patheon as soon as reasonably
practicable following the resolution of the event causing the Failure Period.

2.4
Active Material Yield

 
(a)
Reporting. Patheon shall provide New River with a quarterly inventory report of
the Active Materials held by Patheon in accordance with the inventory report
form annexed hereto as Schedule H which shall contain the following information
for such quarter:

Quantity Received: The total quantity of Active Materials that complies with the
Specifications and is received at a Manufacturing Site during the applicable
period.

Quantity Dispensed: The total quantity of Active Materials dispensed at a
Manufacturing Site during the applicable period. The Quantity Dispensed is
calculated by adding the Quantity Received to the inventory of Active Materials
that complies with the Specifications and is held at the beginning of the
applicable period, less the inventory of Active Materials that complies with the
Specifications and is held at the end of such period. The Quantity Dispensed
shall only include (a) Active Materials received and dispensed in connection
with commercial manufacturing of Products and (b) Active Materials that are
lost, damaged, or destroyed after receipt at a Manufacturing Site, and, for
certainty, shall not include any Active Materials received or dispensed in
connection with technical transfer activities or development activities during
the applicable period, including, without limitation, any regulatory, stability,
validation or test batches manufactured during the applicable period.

7

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

Quantity Converted: The total amount of Active Materials contained in the
Products produced with the Quantity Dispensed (including lab samples and any
additional Products produced in accordance with Section 6.1 or 6.2), delivered
by Patheon, and not rejected, recalled or returned in accordance with Section
6.1 or 6.2 as a result of a failure by Patheon to provide Manufacturing Services
in accordance with Patheon Manufacturing Responsibilities.

[***] after the end of each Year, Patheon shall prepare an annual reconciliation
of Active Materials in accordance with the reconciliation report form annexed
hereto as Schedule I including the calculation of the “Actual Annual Yield” or “
for the Product at the Manufacturing Site during the Year, which AAY is the
percentage of the Quantity Dispensed that was converted to Products and is
calculated as follows:

[***]

After Patheon has produced a minimum of ten (10) commercial production batches
of Product without significant losses and has produced commercial production
batches for at least six (6) months at a Manufacturing Site (collectively, the
“Target Yield Determination Batches”) pursuant to this Agreement, the Parties
will mutually agree on the target yield in respect of such Product at such
Manufacturing Site (each, a “Target Yield”). Thereafter, Patheon shall strive to
maintain Actual Annual Yield levels for each Product above the applicable Target
Yield. Notwithstanding the foregoing, the Target Yield will be adjusted Yearly
through good faith negotiations, which negotiations will take in account the
Actual Annual Yield for the Product over the preceding Year.

 
(b)
Shortfall Calculation. If the Actual Annual Yield [***], then the shortfall for
such Year (the “Shortfall”) shall be determined based on the following
calculation:

[***]

The Shortfall shall be disclosed by Patheon on the reconciliation report
prepared in the form annexed hereto as Schedule I.

 
(c)
Credit. If the Actual Annual Yield for a Product [***], then Patheon shall
reimburse New River the amount of the applicable Shortfall [***]. Each credit
under this Section 2.4 shall be summarized on the reconciliation report prepared
in the form annexed hereto as Schedule I and shall be made in accordance with
Section 5.6. If the Actual Annual Yield for a Product [***] (as set forth in
Section 2.1) of such Product that will be manufactured by Patheon for the
remainder of the term of the Agreement, at New River’s sole discretion. In
addition, if any point during a Year, it is likely, in the reasonable opinion of
New River management, that the Actual Annual Yield for a Product for such Year
will [***], then [***] (as set forth in Section 2.1) of such Product that will
be manufactured by Patheon during the [***]. In any event, the parties shall
make all reasonable efforts to correct through amicable negotiations any failure
of the Actual Annul Yield to meet the respective Target Yield in a Year.

8

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(d)
Maximum Credit. Notwithstanding the foregoing provisions of this Section 2.4,
Patheon’s liability for Active Materials calculated in accordance with this
Section 2.4 for any Product in a Year shall not exceed, in the aggregate, the
maximum credit value set forth in Schedule D hereto.

 
(e)
No Material Breach. It shall not constitute a material breach of this Agreement
by Patheon, for the purposes of Section 8.2(a), if the Actual Annual Yield is
less that the Target Yield.

 
(f)
Significant Losses Not with anything to the contrary in this Agreement, Patheon
shall notify New River of any significant loss of Active Material [***]. Such
notification shall not in any way limit New River’s rights or Patheon’s
obligations under this Section 2.4 with respect to Shortfalls.

ARTICLE 3

NEW RIVER’S OBLIGATIONS

3.1
Payment

Pursuant to the terms of this Agreement, New River shall pay Patheon for the
provision of the Manufacturing Services according to the fees specified in
Schedules 8 and C hereto (such fees being subject to adjustment in accordance
with the terms hereof).

3.2
Active Materials

New River shall at its sole cost and expense, deliver the Active Materials to
Patheon in sufficient quantities and at such times to facilitate the provision
of the Manufacturing Services by Patheon, which Active Materials shall be held
by Patheon on behalf of New River on the terms and subject to the conditions
herein contained. New River shall pay Patheon [***], [***], for storing Active
Materials [***]. If the Active Material is determined to be a DEA Schedule 2
drug or requires refrigeration, [***] per pallet, per month. The parties
acknowledge and agree that all right, title and interest in and to the Active
Materials shall at all times belong to and remain with New River. Patheon agrees
that any Active Materials received by it shall only be used by Patheon to
provide the Manufacturing Services.

9

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

ARTICLE 4

CONVERSION FEES AND COMPONENT COSTS

4.1
First Year Pricing.

The fees for the Manufacturing Services (which fees include Component costs)
through December 31, 2006, are set forth in pricing schedule as listed in
Schedules B and C and are subject to the adjustments set forth in Section 4.3.
Fees are also subject to adjustments for any changes in the process or
equipment, including, but not limited to, inclusion of individual capsule weight
checking.

4.2
Subsequent Years’ Pricing.

The fees for the Manufacturing Services provided pursuant to the terms of this
Agreement during any period following December 31, 2006, shall be determined in
accordance with the following:

 
(a)
Manufacturing and Component Costs. On each Yearly anniversary of this Agreement,
either party shall be entitled to an adjustment to the fees (i) for
Manufacturing Services in respect of the Products to reflect inflation or
deflation, which adjustment shall be based on the increase or decrease in the
United States - Consumer Price Index for All Urban Consumers (CPI-U), published
by the United States Department of Labor, Bureau of Labor Statistics in
September of the then current Year compared to the same month of the preceding
Year, unless the parties otherwise agree in writing; and (ii) for Component
costs to pass on the actual amount of any increase o; as set forth in Section
4.4(c), the decrease in such costs.

 
(b)
Annual Forecast. To the extent that the parties agree that the projections
contained in the rolling forecast provided pursuant to Section 5.1(a)
necessitate that an appropriate adjustment be made to the Manufacturing Services
fees in respect of any Product for such Year, then such fees shall be either
increased or decreased accordingly.

 
(c)
Pricing Basis. New River acknowledges that the fee for Manufacturing Services in
respect of a Product in any Year, following December 31, 2006, is quoted based
[***] specified in Schedule B or thereafter specified in the forecast provided
pursuant to clause (b) of this Section 4.2 for such Year and is subject to
change if the [***]. For greater certainty, if Patheon and New River agree that
the Run Quantity in respect of a Product shall be reduced, whether as a result
of a decrease in estimated Annual Volume or otherwise, and as a result of such
reduction, Patheon’s fees for Manufacturing Services relating to such Product
increase on a per unit basis, then Patheon shall be entitled to an increase in
the fee for Manufacturing Services in respect of such Product by an amount
sufficient to absorb such increase solely for any third party costs related to
Components. Likewise, if Patheon and New River agree that the Run Quantity in
respect of a Product shall be increased, whether as a result of an increase in
estimated Annual Volume or otherwise, and as a result of such increase,
Patheon’s fees for Manufacturing Services relating to such Product decrease on a
per unit basis, then New River shall be entitled to a decrease in the fee for
Manufacturing Services in respect of such Product by an amount sufficient to
reflect such decrease.

10

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

In connection with a fee adjustment pursuant to clause (a) of this Section 4.2,
Patheon shall deliver to New River by [***] of each Year following December 31,
2006 a revised Schedule B and a statement outlining the percentage increase or
decrease, as applicable, in the Consumer Price Index, upon which such fee
adjustment is based. In connection with all fee adjustments pursuant to clauses
(b) and (c) of this Section 4.2, Patheon shall deliver to New River by [***] of
each Yea; including [***], a revised Schedule B and such budgetary pricing
information or other documentation reasonably sufficient to demonstrate that a
fee adjustment is justified, provided that Patheon shall have no obligation to
provide any supporting documents to the extent such documents are subject to
obligations of confidentiality between Patheon and its suppliers. Such revised
fee shall be effective with respect to any Product manufactured or delivered
after the end of the then current Year.

4.3
Adjustments to Pricing.

During any Year of this Agreement the fees set out in Schedule B shall be
subject to adjustment in accordance with the following:

 
(a)
Campaign Pricing. The fees for the Manufacturing Services listed in Schedule B
reflect campaign sizes based upon Annual Volume for each Product. The most
recent annual New River forecast available on October l of the preceding year
will be used to determine the monthly campaign sizes, and therefore, the
corresponding fees applicable for the following year, subject to the
documentation requirement set forth in the paragraph immediately following
Section 4.3(b). Campaign sizes are not subject to monthly changes, but the
frequency may be adjusted to match demand.

 
(b)
Extraordinary Changes in Component Costs. If at any time after December 31, 2006
market conditions result in Patheon’s cost of Components being materially
greater than normal forecasted increases or materially lower than normal
forecasted decreases, then Patheon shall adjust the fee for Manufacturing
Services accordingly to reflect such an increase or decrease with respect to any
affected Products to compensate for such material change in Component costs. For
the purposes of this clause (b), changes materially greater than normal
forecasted increases or materially lower than normal forecasted decreases (as
the case may be) shall be considered to have occurred if: (i) the cost of a
Component increases or decreases by [***] of the cost for that Component upon
which the most recent fee quote was based; or (ii) the aggregate cost for all
Components required to manufacture a Product increases or decreases by [***] of
the total Component costs for such Product upon which the most recent fee quote
was based. To the extent that Component costs have been previously adjusted
pursuant to clause (a) of Section 4.2 or this clause (b) to reflect an increase
or decrease in the cost of one or more Components, the adjustments provided for
in (i) and (ii) above shall operate based on the costs attributed to such
Component (or Components) at the time the last of such adjustments were made.

11

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

In connection with a fee adjustment pursuant to Section 4.3(a) or 4.3(b),
Patheon shall deliver to New River a revised Schedule B and such budgetary
pricing information, adjusted Component costs or other documentation reasonably
sufficient to demonstrate that a fee adjustment is justified, provided that
Patheon shall have no obligation to provide any supporting documents to the
extent such documents are subject to obligations of confidentiality between
Patheon and its suppliers. Such revised fee shall be effective with respect to
any Product delivered or manufactured after the end of the then current Year.

4.4
Adjustments Due to Technical Changes.

 
(a)
In the event that New River requests an amendment to the Specifications or the
Quality Agreement, Patheon shall conduct a technical and cost review of the
proposed amendment. If requested by Patheon, Patheon and New River shall
negotiate in good faith an equitable revision to the fees specified in Schedule
B or C to reflect changes in costs that would result from such amendment. Any
cost increases asserted by Patheon shall be consistent with then-prevailing
market standards, and Patheon will provide New River with documentation
reasonably sufficient to demonstrate that a fee adjustment is justified,
provided that Patheon shall have no obligation to provide any supporting
documents to the extent such documents are subject to obligations of
confidentiality between Patheon and its suppliers. If the Parties agree on a
proposed fee change, the proposed change in the Specifications and/or Quality
Agreement shall be implemented, and the fee change shall become effective only
with respect to those orders of Products that are manufactured in accordance
with the revised Specifications and/or revised Quality Agreement. In addition
[***], all Inventory utilized under the “old” Specifications and purchased or
maintained by Patheon necessary to fill Firm Orders or in accordance with
Section 5.2, to the extent that such Inventory can no longer be utilized under
the revised Specifications. Open purchase orders for Components no longer
required under any revised Specifications that were placed by Patheon with
suppliers in order to fill Firm Orders or in accordance with Section 5.2 shall
be cancelled where possible, and where such orders are not subject to
cancellation without penalty, shall be assigned to and satisfied by New River.

 
(b)
Amendments to the Specifications, the Quality Agreement or the Manufacturing
Site requested by Patheon will only be implemented following the prior approval
of New River, including a technical and cost review by the parties and are
subject to New River and Patheon reaching agreement as to revisions, if any, to
the fees specified in Schedules B or C necessitated by any such amendment.

 
(c)
Patheon and New River may collaborate to identify, target and implement all
potential areas of cost reduction relating to the performance of their
obligations under this Agreement, including the cost of Components and
improvements in processing and Manufacturing Services. Such areas of jointly
developed cost reduction shall be discussed at the quarterly meetings of the
relationship managers as set forth in Section 7.1. Any benefits of such jointly
developed cost reductions or improved efficiencies achieved shall be shared
equally between Patheon and New River after the party who incurred any costs
associated therewith, if any, has recovered its costs.

12

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

ARTICLE 5

ORDERS, SHIPMENT, INVOICING. PAYMENT

5.1
Orders and Forecasts

 
(a)
Rolling Forecasts. Concurrent with the execution of this Agreement, New River
shall provide Patheon with a written, non-binding, [***] of the volume of each
Product that New River then anticipates will be required to be produced and
delivered to New River or its designee during each month of that [***]. Such
forecast will be updated by New River monthly on or before the [***] day of each
calendar month [***] and updated forthwith upon New River determining that the
volumes contemplated in the most recent of such forecasts has changed by more
than [***]. The most recent [***] forecast shall prevail. Patheon shall accept
each written forecast by signing and returning such forecast to New River. The
first three months of rolling forecast for supply of Product shall be binding.

 
(b)
Firm Orders. On or before the [***], New River shall issue firm written orders
(“Firm Orders”) for the Products to be produced and delivered to New River on a
date specified in each Firm Order (the “Delivery Date”), such Delivery Date to
be [***] from the first day of the calendar month immediately following the date
that the Firm Order is submitted. Such Firm Orders shall further specify New
River’s purchase order number, quantities by Product type, monthly delivery
schedule and any other elements necessary to ensure the timely production and
shipment of the Products. The quantities of Products ordered in such written
orders shall be firm and binding on New River and shall not be subject to
reduction by New River. If New River requests an increase in a Firm Order,
Patheon shall use [***] to comply with such increase, [***].

 
(c)
[***] Forecast. On or before the [***] of [***] in each Year, New River shall
provide Patheon with a [***] forecast (broken down by [***] for the [***] and
[***] of the forecast) of the volume of each Product New River then anticipates
will be required to be produced and delivered to New River during the [***].

 
(d)
Delivery. Patheon shall use [***] to deliver 100% of the Products ordered in
Firm Orders on the applicable Delivery Date. If Patheon has learned that any
delivery of Products may be expected to be delivered any time after the Delivery
Date, Patheon shall (0 as soon as practical notify New River or its designee,
(ii) ensure that its own senior management is advised of this issue, and (iii)
develop and implement a remedial plan reasonably calculated to prevent future
late deliveries. In the event that Patheon either (i) delivers to New River
[***] of the Product specified in the Firm Orders for any given [***]; (ii)
delivers to New River [***] of the Product specified in the Firm Orders for any
[***]; or (iii) delivers to New River [***] of the Product specified in the Firm
Orders for any given Year, including the first Year, [***], then New River shall
have the right to reduce the Annual Requirement (as set forth in Section 2.1) of
such Product that will be manufactured by Patheon for the remainder of the term
of the Agreement by [***].

13

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(e)
Regulatory Approval. Except for launch quantities of Product as provided in
Section 5.2(a), New River shall be under no obligation to issue Firm Orders for
Products unless and until New River receives regulatory approval for marketing
of the Product.

5.2
Reliance by Patheon

 
(a)
New River understands and acknowledges that Patheon will rely on the rolling
forecasts and Firm Orders submitted pursuant to Sections 5.1(a) and (b) in
ordering the Components required to meet such Firm Orders. In addition, New
River understands that to ensure an orderly supply of such Components, it may be
desirable for Patheon to purchase such Components in sufficient volumes to meet
the production requirements for Products during part or all of the forecasted
periods referred to in Section 5.1(a) or to meet the production requirements of
any longer period agreed to by Patheon and New River. Accordingly, New River
authorizes Patheon to purchase Components in order to satisfy the production
requirements for Products for the [***] contemplated in the most recent forecast
provided by New River pursuant to Section 5.1(a) and agrees that Patheon may
make such other purchases of Components to meet production requirements during
such longer periods as may be agreed to in writing from time to time by New
River at the request of Patheon or New River. New River shall provide Patheon
with its written authorization to order Components in respect of any launch
quantities of Product requested by New River, which upon acceptance by Patheon
shall constitute a Firm Order. If Components ordered by Patheon pursuant to Firm
Orders or this Section 5.2 are not included in finished Products purchased by
New River after the forecasted month in respect of which such purchases have
been made (or such longer period as the parties may agree) or if such Components
have expired during such period, then New River shall pay to Patheon its costs
therefor (including all costs incurred by Patheon in connection with the
purchase and handling of such Components) within reason; provided, however, that
in the event such Components are incorporated into Products subsequently
purchased by New River or into third party products manufactured by Patheon and
subsequently purchased by a third party, New River will receive credit for any
costs of such Components previously paid to Patheon by New River.

 
(b)
If New River fails to dispose of Components [***] or Product [***]. If the
Product contains an Active Material that is determined to be a DEA Schedule 2
drug or requires refrigeration, [***]. Patheon shall have the option to ship
Product held longer than three months to New River at New River’s expense upon
two weeks written notice to New River.

14

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

5.3
Minimum Orders

New River may only order batches of Products equal to or greater than the
Minimum Run Quantities set out in Schedule B.

5.4
Patheon Forecast for Active Ingredient.

[***] of receiving New River’s first written forecast, pursuant to Section
5.1(a), of its anticipated requirements for the Product for the next succeeding
Year and thereafter [***] from receipt of each additional New River forecast,
Patheon shall submit to New River its written forecast of its anticipated
requirements of the Active Ingredient for the next succeeding Year. The parties
acknowledge that the Active Material is scheduled under the Federal Controlled
Substances Act and that Patheon is required to obtain a quota from the DEA
before manufacturing Products. Patheon shall submit in a timely matter all
necessary documents to request a quota sufficient to meet New River’s forecast
needs. Additional requests shall be submitted by Patheon to DEA in a timely
matter as necessary to reflect changes in New River’s forecast requirements of
Products.

5.5
Shipments.

Shipments of Products shall be made EXW (as such term is defined in INCOTERMS
2000) Patheon’s shipping point unless otherwise mutually agreed. Risk of loss or
of damage to Products shall remain with Patheon until Patheon loads the Products
onto the carrier’s vehicle for shipment at the shipping point at which time risk
of loss or damage shall transfer to New River. Patheon shall, in accordance with
New River’s instructions and as agent for New River, (i) arrange for shipping to
be paid by New River and (ii) at New River’s risk and expense, obtain any export
license or other official authorization necessary to export the Products. New
River shall arrange for insurance and shall select the freight carrier used by
Patheon to ship Products and may monitor Patheon’s shipping and freight
practices as they pertain to this Agreement. Products shall be transported in
accordance with the Specifications.

5.6
Invoices and Payment.

Invoices shall be sent by fax or email to such fax number or email address as
may be provided by New River in writing from time to time. Patheon shall also
submit to New River with each shipment of Products, a duplicate copy of the
invoice covering such shipment. Patheon shall also provide New River with an
invoice covering any Inventory which is to be purchased by Patheon pursuant to
the terms of this Agreement. Each such invoice shall, to the extent applicable,
identify New River’s purchase order number, Product numbers, names and
quantities, unit price, freight charges and the total amount to be remitted by
New River. New River shall pay all such invoices [***] of the date thereof. In
the event that New River disputes any portion of such invoices in good faith,
payment for such invoices shall not be due until the parties resolve such
dispute.

15

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

ARTICLE 6

PRODUCT CLAIMS AND RECALLS

6.1
Product Claims.

 
(a)
Product Claims. New River has the right to reject any portion of any shipment of
Products that deviates from the Specifications, cGMPs or the Quality Agreement,
without invalidating any remainder of such shipment. New River shall inspect the
Products manufactured by Patheon upon receipt thereof and shall give Patheon
written notice (a “Deficiency Notice”) of all claims for Products that deviate
from the Specifications or cGMPs [***] after New River’s receipt thereof (or, in
the case of any defects not reasonably susceptible to discovery upon receipt of
the Product, [***] after discovery thereof by New River, but in no event after
the expiration date of the Product). Should New River fail to provide Patheon
with the Deficiency Notice [***], then the delivery shall be deemed to have been
accepted by New River [***], as applicable. Except as set out in Section 6.2 or
Section 10.3, Patheon shall have no liability for any deviations for which it
has not received notice [***].

 
(b)
Determination of Deficiency. Upon receipt of a Deficiency Notice, Patheon shall
have [***] to advise New River by notice in writing that it disagrees with the
contents of such Deficiency Notice. If New River and Patheon fail to agree [***]
after Patheon’s notice to New River as to whether any Products identified in the
Deficiency Notice deviate from the Specifications or cGMPs, then the parties
shall mutually select an independent laboratory to evaluate if the Products
deviate from the Specifications or cGMPs. Such evaluation shall be binding on
the parties, and if such evaluation certifies that any Products deviate from the
Specifications or cGMPs, New River may reject those Products in the manner
contemplated in Section 6.1(a). If such evaluation does not so certify that a
Product-deviates the Specifications or cGMP, then New River shall be deemed to
have accepted delivery of such Product on the date such evaluation was
completed, but in no event after the expiration date of the Product. The party
to whom such third party laboratory certification is adverse shall bear any
out-of- pocket and/or actual costs that the parties incur in connection with
such evaluation.

 
(c)
Patheon Responsibility. In the event New River rejects Products in accordance
with this Section 6.1, and the deviation is determined to arise from Patheon’s
failure to provide the Manufacturing Services in accordance with the Patheon
Manufacturing Responsibilities, Patheon will credit New River’s account for
Patheon’s invoice price to New River for such defective Products. If New River
shall have previously paid for such defective Products, Patheon shall promptly,
at New River’s election, either: (i) refund the invoice price for such defective
Products; (ii) offset such amount against other amounts due to Patheon
hereunder; or (iii) replace such Products with conforming Products [***] without
New River being liable for payment therefor under Section 3.1, contingent upon
the receipt from New River of all Active Materials and subject to the
availability of Components required for the manufacture of such replacement
Products. In any case in which New River rejects Products in accordance with
this Section 6.1, Patheon shall, subject to the provisions of Section 2.4,
reimburse New River for all costs incurred by New River with respect to Active
Materials used in such non-compliant Products.

16

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(d)
Shortages. Subject to Section 5.1(b), claims for shortages in the amount of
Products shipped by Patheon shall be dealt with as may reasonably be agreed to
by the parties.

6.2
Product Recalls and Returns

 
(a)
Records and Notice. Patheon and New River shall each maintain such records as
may be necessary to permit a Recall of any Products delivered to New River or
customers of New River. Each party shall promptly notify the other by telephone
(to be confirmed in writing) of any information which might affect the
marketability, safety or effectiveness of the Products and/or which might result
in the Recall or seizure of the Products. Upon receiving any such notice or upon
any such discovery, each party shall cease and desist from further shipments of
such Products in its possession or control until a decision has been made
whether a Recall or some other corrective action is necessary. The decision to
initiate a Recall or to take some other corrective action, if any, shall be made
and implemented by New River or its designee. “Recall” shall mean any action (i)
by New River or its designee to recover title to or possession of quantities of
the Products sold or shipped to third parties (including, without limitation,
the voluntary withdrawal of Products from the market); or (ii) by any regulatory
authorities to detain or destroy any of the Products. Recall shall also include
any action by either party to refrain from selling or shipping quantities of the
Products to third parties which would have been subject to a Recall if sold or
shipped.

 
(b)
Recalls. In the event (i) any governmental or regulatory authority issues a
directive, order or, following the issuance of a safety warning or alert with
respect to a Product, a written request that any Product be recalled, (ii) a
court of competent jurisdiction orders such a Recall, or (iii) New River
determines that any Product should be Recalled or that a “dear doctor” letter is
required relating the restrictions on the use of any Product, Patheon will
co-operate as reasonably required by New River or its designee, having regard to
all applicable laws and regulations.

 
(c)
Product Returns. New River shall have the responsibility for handling customer
returns of the Products. To the extent Products are inadvertently sent to
Patheon by New River’s customers, Patheon shall notify New River and follow New
River’s instruction for handling such returned Products, such instruction to be
provided by New River upon notice from Patheon, at New River’s costs.

17

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(d)
Patheon’s Responsibility. To the extent that a Recall or return results from, or
arises out of, a failure by Patheon to provide the Manufacturing Services in
accordance with the Patheon Manufacturing Responsibilities, Patheon shall be
responsible to New River for New River’s documented out of pocket expenses of
such Recall or return. Patheon shall promptly, at New River’s election, either:
(i) refund the invoice price for such Recalled or returned Products; (ii) offset
such amount against other amounts due to Patheon hereunder or (iii) use [***] to
replace the Recalled or returned Products with new Products [***], contingent
upon the receipt from New River of all Active Materials and subject to the
availability of Components required for the manufacture of such replacement
Products. Subject to the limitations set out in Section 10.2, [***]. In all
other circumstances, [***].

6.3
Disposition of Defective or Recalled Products.

Neither party (“Complaining Party”) shall dispose of any damaged, defective,
returned, or Recalled Products in relation to which it intends to assert a claim
against the other party without such other party’s prior written authorization
to do so. Alternatively, the Complaining Party may instruct the other party to
return such Products to Complaining Party at such party’s cost. Complaining
Party shall bear the cost of disposition with respect to any damaged, defective,
returned, or Recalled Products in relation to which such party bears
responsibility under Section 6.1 or 6.2 hereof. In all other circumstances,
[***].

6.4
Customer Questions and Complaints.

New River shall have the sole responsibility for responding to questions and
complaints from New River’s customers. Questions or complaints received by
Patheon from New River’s customers shall be promptly referred to New River.
Patheon shall co-operate as reasonably required to allow New River to determine
the cause of and resolve any customer questions and complaints. Such assistance
shall include follow-up investigations, including testing. In addition Patheon
shall provide New River with all mutually agreed upon information that will
enable New River to respond properly to questions or complaints relating to the
Products as provided in the Quality Agreement. Unless it is determined that the
cause of any customer complaint resulted from a failure by Patheon to provide
the Manufacturing Services in accordance with the Patheon Manufacturing
Responsibilities, all costs incurred in respect of this Section 6.4 shall be
borne by New River.

ARTICLE 7

CO-OPERATION

7.1
Quarterly Review.

Each party shall forthwith upon execution of this Agreement appoint one of its
employees to be a relationship manager responsible for liaison between the
parties. The relationship managers shall meet not less than quarterly to review
the current status of the business relationship and manage any issues that have
arisen, including any ways to improve efficiency or reduce costs associated with
the Manufacturing Services. Patheon’s relationship manager shall take minutes at
such meetings and deliver such minutes to the relationship manager for New River
within a reasonable amount of time following such meetings.

18

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

7.2
Governmental Agencies.

Subject to Section 7.7, each party may communicate with any governmental agency,
including but not limited to governmental agencies responsible for granting
regulatory approval for the Products, regarding such Products if in the opinion
of that party’s counsel, such communication is necessary to comply with the
terms of this Agreement or the requirements of any law, governmental order or
regulation; provided, however, that unless in the reasonable opinion of its
counsel there is a legal prohibition against doing so, such party shall permit
the other party to accompany and take part in any communications with the
agency, and to receive copies of all such communications from the agency.

7.3
Records and Accounting by Patheon.

In conformance with the Quality Agreement, Patheon shall keep records of the
Manufacturing Services and shipping of the Products, and retain samples of such
Products as are necessary to comply with manufacturing regulatory requirements
applicable to Patheon, as well as to assist with resolving Product complaints
and other similar investigations. Copies of such records and samples shall be
retained for a [***] following the date of Product expiry, or longer if required
by law after which Patheon may destroy such records or samples. New River is
responsible for retaining samples of the Products necessary to comply with the
legal and/or regulatory requirements applicable to New River.

7.4
Inspection.

New River or its designee may inspect Patheon reports and records relating to
this Agreement during normal business hours and with reasonable advance notice,
provided a Patheon representative is present during any such inspection.

7.5
Access.

Patheon shall provide New River or its designee with reasonable access at
mutually agreeable times to its Manufacturing Site in which the Products are
manufactured, stored, handled or shipped in order to permit New River’s
verification of Patheon’s compliance with the Patheon Manufacturing
Responsibilities and with all Laws. For greater certainty, the right of access
provided in this Section 7.5 shall not include a right to access or inspect
Patheon’s financial records. Patheon shall notify New River of any inspections
by any governmental agency specifically involving the Products. New River or its
designee reserves the right to be present during any such inspection by any
governmental agency, to review any findings by such governmental agency that are
communicated to Patheon, and to have a reasonable period in which to comment on
any response before such response is sent to the governmental agency. All
audited data shall be treated as Confidential Information of Patheon and New
River or its designee shall not be permitted to remove or copy data without
Patheon’s prior written consent. Any investigation conducted in connection with
an invoice dispute shall not be considered a financial audit under this Section
7.5.

19

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

7.6
Reports.

Patheon will supply on an annual basis, and upon lesser intervals as may be
reasonably requested by New River, all Product data, including release test
results, complaint test results, and all investigations (in manufacturing,
testing and storage), that New River reasonably requires in order to complete
any filing under any applicable regulatory regime, including any annual product
report that New River is required to file with the FDA. At New River’s request,
Patheon shall provide a copy of the Annual Product Review Report to New River at
no additional cost. Any additional report requested by New River beyond the
scope of cGMPs and customary FDA requirements may be subject to an additional
fee to be agreed upon between Patheon and New River.

7.7
FDA Filings.

 
(a)
FDA Filings. New River shall have the sole responsibility for filing all
documents with the FDA and taking any other actions that may be required for the
receipt of FDA Approval for the commercial manufacture of all of the Products.
Patheon shall assist New River, to the extent consistent with Patheon’s
obligations under this Agreement, to obtain FDA Approval for the commercial
manufacture of all Products as quickly as reasonably possible. New River shall
provide Patheon with copies of all FDA filings at the time of submission which
contain chemistry, manufacturing and controls (“CMC”) data regarding the
Product.

 
(b)
Verification of CMC. [***] with the FDA, or a timeframe mutually agreed to by
the parties, the CMC of the New Drug Application (“NDA”) or the Abbreviated New
Drug Application (“ANDA”) filing, as the case may be, New River shall provide
Patheon with a draft copy of the CMC portion of such application, as well as all
supporting documents which have been relied upon to prepare the CMC portion, so
as to permit Patheon to verify that the CMC portion accurately describes the
work that Patheon has performed and the manufacturing processes that Patheon
will perform pursuant to this Agreement.

 
(c)
Pre-Approval Inspection. If New River does not provide Patheon with the
documentation requested under paragraph (b) above within the time stipulated in
that paragraph and if Patheon reasonably believes that Patheon’s standing with
the FDA may be jeopardized, Patheon may, in its sole discretion, delay or
postpone the FDA pre-approval inspection ( until such time Patheon has reviewed
the requested documentation and is satisfied that its contents accurately
describe the Manufacturing Services Patheon has performed and will perform under
this Agreement.

 
(d)
Deficiencies. If in Patheon’s reasonable discretion, Patheon determines that any
of the information provided by New River in accordance with paragraph (b) above
is inaccurate or deficient in any manner whatsoever (the “Deficiencies”),
Patheon shall notify New River in writing of such Deficiencies [***], and
cooperate in good faith with New River to resolve any Deficiencies.

20

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(e)
New River Responsibility. For clarity, the parties agree that in reviewing the
documents referred to in paragraph (b) above, Patheon’s role will be limited to
verifying the accuracy of the description of the Manufacturing Services
undertaken or to be undertaken by Patheon. As such, Patheon shall not assume any
responsibility for the accuracy of the NDA or the ANDA, as the case may be. The
sole responsibility of the preparation and filing of the NDA shall be borne by
New River.

ARTICLE 8

TERM AND TERMINATION

8.1
Initial Term.

This Agreement shall become effective as of the Effective Date and shall
continue until December 31, 2011 (the “Initial Term”), unless terminated earlier
by one of the parties in accordance herewith. This Agreement shall automatically
continue after the Initial Term for successive terms of two (2) years each
unless either party gives written notice to the other party of its intention to
terminate this Agreement at least twelve (12) months prior to the end of the
then current term.

8.2
Termination for Cause.

 
(a)
Either party at its sole option may terminate this Agreement upon written notice
in circumstances where the other party has failed to remedy a material breach of
any of its representations, warranties or other obligations under this Agreement
[***] of said breach that expressly states that it is a notice under this
Section 8.2(a) and sets forth in reasonable detail the nature of such breach.

 
(b)
Either party at its sole option may immediately terminate this Agreement upon
written notice, but without prior advance notice, to the other party in the
event that: (i) the other party is declared insolvent or bankrupt by a court of
competent jurisdiction; (ii) a voluntary petition of bankruptcy is filed in any
court of competent jurisdiction by such other party; or (iii) this Agreement is
assigned by such other party for the benefit of creditors.

 
(c)
New River may terminate this Agreement as to any Product at any time [***] in
the event that any governmental agency takes any action, or raises any
objection, that prevents New River from importing, exporting, purchasing or
selling such Product.

 
(d)
In the event that New River assigns pursuant to Section 13.6 any of its rights
under this Agreement, Patheon may terminate this Agreement [***] if, in the
opinion of Patheon acting reasonably, such assignee is not a credit worthy
substitute for New River. In addition, Patheon or the permitted assignee may
terminate this Agreement [***] to the other party if Patheon and the assignee
(i) are commercial competitors; or (ii) have had prior unsatisfactory business
relations.

21

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

8.3
Product Discontinuation.

New River shall provide [***] if it intends to no longer order a Product due to
that Product’s discontinuance in the market.

8.4
Termination upon Regulatory Refusal.

New River may terminate this Agreement as to any Product or in its entirety with
immediate effect, in the event that any applicable Authority, state or local
regulatory approvals, laws, ordinances, or regulations, present or future,
including but not limited to any conditions, amendments, or variations state
that the Manufacturing Site is not suitable or ceases to be suitable for the
manufacture of the Product or suspends, or refuses to grant any approval,
license, permit, or other authorization to manufacture the Product.

8.5
Obligations on Termination.

If this Agreement expires or is terminated, with the exception of Failure to
Supply, in whole or in part for any reason other than for termination by New
River under Section 8.2(a) or (b), then (in addition to any other remedies
Patheon may have in the event of default by New River):

 
(a)
[***]

 
(b)
[***]

 
(c)
[***].

If this Agreement expires or is terminated for any reason, then Patheon shall
return to New River all unused Active Materials ([***]). Following termination
of this Agreement by New River pursuant to Section 8.2(a), 8.2(b), or 8.4,
should New River desire to manufacture Product at a non-Patheon facility,
Patheon shall assist New River in transferring manufacturing of the Product by
providing support for the transfer of the manufacturing process to New River or
an organization named by New River, pursuant to a plan to be negotiated in good
faith and agreed upon by the parties (the “Process Transfer Plan”). Such Process
Transfer Plan [***] and shall also include, without limitation, all
documentation relating to process development, manufacturing procedures, and
product-specific procedures referenced in such manufacturing procedures, test
records and technical documents including testing and characterization of Active
Materials, and any regulatory documents prepared by Patheon to support the
Products. Patheon shall provide New River or its designee with reasonable
assistance and co-operation in the transfer of any know-how or technology
required for the manufacture or validation of the Manufacturing Services by such
third party in a timely manner. In the event New River terminates this Agreement
pursuant to Section 8.2(a) or (b), Patheon shall grant and hereby does grant New
River [***] of any Patheon Intellectual Property necessary for performance of
the Manufacturing Services and New River and Patheon shall share the costs
specified in the Process Transfer Plan for manufacturing transfer activities,
including, without limitation, document duplication and shipping, and associated
time for Patheon personnel.

22

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

Any termination or expiration of this Agreement shall not affect any outstanding
obligations or payments due hereunder prior to such termination or expiration,
nor shall it prejudice any other remedies that the parties may have under this
Agreement. For greater certainty, termination of this Agreement for any reason
shall not affect the obligations and responsibilities of the parties pursuant to
Articles 10, 11 and 12, and Sections 13.1, 13.2, 13.3 and 13.15, all of which
survive any termination.

ARTICLE 9

REPRESENTATIONS, WARRANTIES AND COVENANTS

9.1
Authority.

Each party covenants, represents and warrants that it has the full right and
authority to enter into this Agreement, and that it is not aware of any
impediment that would inhibit its ability to perform its obligations hereunder.

9.2
New River Warranties

New River covenants, represents and warrants that:

 
(a)
New River or its Affiliates have the right to use the Specifications for each of
the Products as contemplated in this Agreement, and that New River may lawfully
disclose the Specifications to Patheon;

 
(b)
to the best of its knowledge, any Intellectual Property, other than Patheon
Intellectual Property, utilized by Patheon in connection with the provision of
the Manufacturing Services (i) may be lawfully used as set out in this Agreement
and the Quality Agreement, and (ii) such use does not infringe any Third Party
Rights;

 
(c)
to the best of its knowledge, there are no actions or other legal proceedings,
the subject of which is the infringement of Third Party Rights related to the
Products;

 
(d)
the Specifications for all Products conform to all applicable cGMPs, laws and
regulations; and,

 
(e)
the Products, if labeled and manufactured in accordance with the Specifications
and in compliance with applicable cGMPs, may be lawfully sold and distributed in
the Territory.

9.3
Patheon Warranties

Patheon covenants, represents and warrants that:

 
(a)
it shall perform the Manufacturing Services in compliance with the terms of this
Agreement, the Quality Agreement, the Specifications and cGMPs;

23

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(b)
it has the necessary facilities, plant, equipment, know-how, procedures, and
personnel at its Manufacturing Site to perform the Manufacturing Services in
compliance with the terms of this Agreement and the Quality Agreement;

 
(c)
each batch of the Product supplied under this Agreement shall be of satisfactory
quality, free from any defects and manufactured strictly in compliance with the
Specifications, the terms of this Agreement and the Quality Agreement;

 
(d)
it has obtained (or will obtain prior to producing Product), and will maintain
and remain in compliance with, all permits, consents, approvals, licenses and
other authorizations or waivers (the “Permits”) during the term of this
Agreement which are required under federal, state and local laws, rules,
guidelines and regulations generally applicable to the production of the Product
at the Manufacturing Site (including without limitation Permits required to
manufacture the Products to fill [***]);

 
(e)
to the best of its knowledge, the Intellectual Property rights used to perform
the Manufacturing Services do not infringe any Third Party Rights; and

 
(f)
it shall convey good title in any Product delivered to New River or its designee
under this Agreement, and that all such Product will be delivered to New River
or its designee free from any security interest, lien, or other encumbrance.

9.4
Debarred Persons.

Patheon covenants that it will not in the performance of its obligations under
this Agreement use the services of any person debarred or suspended under 21
U.S.C. §335(a) or (b). Patheon represents that it does not currently have, and
covenants that it will not hire, as an officer or an employee any person who has
been convicted of a felony under the laws of the United States for conduct
relating to the regulation of any drug product under the Federal Food, Drug, and
Cosmetic Act.

9.5
Permits.

New River shall be solely responsible for obtaining or maintaining, on a timely
basis, any permits or other regulatory approvals (other than those required
under Section 9.3(d)) in respect of the Products or the Specifications,
including, without limitation, all marketing and post-marketing approvals.

9.6
Compliance with Laws.

Each party, in connection with its performance of its obligations under this
Agreement and the Quality Agreement, shall comply with all Laws.

9.7
No Warranty

THE WARRANTIES CONTAINED IN THIS ARTICLE 9 ARE THE SOLE WARRANTIES GWEN BY THE
PARTIES HEREUNDER. PATHEON MAKES NO WARRANTY OF ANY KIND, EITHER EXPRESSED OR
IMPLIED, BY FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT.
PATHEON MAKES NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF
MERCHANTABILITY WITH RESPECT TO THE PRODUCTS.

24

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

ARTICLE 10

REMEDIES AND INDEMNITIES

10.1
Consequential Damages

Except for a breach of Article 11, under no circumstances whatsoever shall
either party be liable to the other in contract, tort, negligence, breach of
statutory duty or otherwise (direct or indirect) for any loss of profits, of
production, of anticipated savings, of business or goodwill or for any
liability, damage, costs or expense of any kind incurred by the other party of
an indirect or consequential nature. The foregoing provision shall not be
construed to limit a party’s indemnification obligation under Section 10.3 or
10.4 of this Agreement for third party claims which may include consequential,
punitive or other types of damages.

10.2
Limitation of Liability.

 
(a)
Active Materials. Except as expressly set forth in Section 2.4 hereof, under no
circumstances whatsoever shall Patheon be responsible for any loss or damage to
the Active Materials. Patheon’s maximum liability for loss or damage to the
Active Materials in a Year [***].

 
(b)
Products. Except to the extent that Patheon has failed to provide the
Manufacturing Services in accordance with the terms of this Agreement or the
Quality Agreement, or has breached its warranties as set forth in Article 9,
Patheon shall not be liable nor have any responsibility for any deficiencies in,
or other liabilities associated with, any Product manufactured by it, including,
without limitation, the costs and expenses of any Recall (collectively, “Product
Claims”). For greater certainty, Patheon shall have no obligation for any
Product Claims, to the extent such Product Claim (i) is caused by deficiencies
with respect to the Specifications themselves and not Patheon’s implementation
of Specifications, the safety, efficacy or marketability of the Products or any
distribution thereof, (ii) results from a defect in a Component that is not
reasonably discoverable by Patheon using the test methods set forth in the
Specifications, (iii) results from a defect in the Active Materials or
Components supplied by New River that is not reasonably discoverable by Patheon
using the test methods set forth in the Specifications, (iv) is caused by
actions of third parties occurring after such Product is shipped by Patheon,
(iv) is due to packaging or labeling defects or omissions for which Patheon has
no responsibility, or (v) is solely due to a breach by New River of its
obligations under this Agreement.

 
(c)
Maximum Liability. Except for any liability arising under Section 10.3,
Patheon’s maximum liability under this Agreement for any reason whatsoever,
including, without limitation, any liability arising under Article 6 hereof or
resulting from a breach of its representations, warranties or other obligations
under this Agreement [***].

25

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

10.3
Patheon.

Subject to Sections 10.1 and 10.2, Patheon agrees to defend, indemnify and hold
New River, its Affiliates, and its or their officers, employees, consultants,
and agents harmless against any and all losses, damages, costs or expenses
([***]), claims, demands, judgments and liability to, from or in favour of third
parties resulting from, or relating to any claim of personal injury or property
damage to the extent that such injury or damage is the result of or due to the
negligence or wrongful act(s) of Patheon, breach of this Agreement or the
Quality Agreement by Patheon, or a failure by Patheon to provide the
Manufacturing Services in accordance with this Agreement, except to the extent
that any such losses, damages, costs, claims, demands, judgments and liability
are due to the negligence or wrongful act(s) of New River, its officers,
employees or agents or Affiliates.

In the event of a claim, New River shall: (a) promptly notify Patheon of any
such claim; (b) use [***] to mitigate the effects of such claim; (c) reasonably
cooperate with Patheon in the defense of such claim; (d) permit Patheon to
control the defense and settlement of such claim, all at Patheon’s cost and
expense; and (e) not make any payment or incur any expenses in connection with
any such claim or make any admission or do anything that may compromise or
prejudice the defense of the claim without the prior written consent of Patheon,
such consent not to be unreasonably withheld or delayed.

10.4
New River.

Subject to Sections 10.1 and 10.2, New River agrees to defend, indemnify and
hold Patheon, its Affiliates, and its or their officers, employees, consultants,
and agents harmless against any and all losses, damages, costs or expenses
([***]), claims, demands, judgments and liability to, from and in favour of
third parties resulting from, or relating to (i) any claim of infringement or
alleged infringement of any Third Party Rights in respect of the Products, and
(ii) any claim of personal injury or property damage to the extent that such
injury or damage is the result of a breach of this Agreement or the Quality
Agreement by New River, including, without limitation, any representation or
warranty contained herein, except to the extent that any such losses, damages,
costs, claims, demands, judgments and liability are due to the negligence or
wrongful act(s) of Patheon, its officers, employees or agents.

In the event of a claim, Patheon shall: (a) promptly notify New River of any
such claims; (b) [***] to mitigate the effects of such claim; (c) reasonably
cooperate with New River in the defense of such claim; (d) permit New River to
control the defense and settlement of such claim, all at New River’s cost and
expense; and (e) not make any payment or incur any expenses in connection with
any such claim or make any admission or do anything that may compromise or
prejudice the defense of the claim without the prior written consent of New
River, such consent not to be unreasonably withheld or delayed.

26

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

ARTICLE 11

CONFIDENTIALITY

11.1
Confidentiality

The parties agree that the provisions of the Confidentiality Agreement shall
apply to all confidential information disclosed by the parties under this
Agreement, and that the activities contemplated and carried out under this
Agreement shall be deemed to be included within the “Business Purpose” as such
term is defined in the Confidentiality Agreement, which agreement remains in
effect in accordance with its terms; provided, however, that in the event the
Confidentiality Agreement expires or is terminated prior to the expiration or
termination of this Agreement, the terms of the Confidentiality Agreement shall
continue to govern the parties’ obligations of confidentiality with respect to
any confidential or proprietary information disclosed by the parties hereunder,
for the term of this Agreement and [***], as though such agreement remained in
full force and effect. The parties agree that any confidential or proprietary
information that satisfies the requirements of Section 5(e) or 5(1) of the
Confidentiality Agreement shall, subject to the remainder of the Confidentiality
Agreement, continue to be considered Confidential Information (as defined
therein) for all purposes other than the disclosures specifically contemplated
by such sections. In addition, in the event a party desires to make a disclosure
pursuant to Section 5(e) of the Confidentiality Agreement (including, without
limitation, any disclosure deemed necessary under applicable federal or state
securities laws or any rule or regulation of a nationally recognized securities
exchange), it shall, except where impracticable, give reasonable advance notice
to the other party of such disclosure, use reasonable efforts to secure
confidential treatment of such information, and provide the other party the
opportunity to comment on any confidential treatment requested prior to the
submission.

ARTICLE 12

DISPUTE RESOLUTION

12.1
Commercial Disputes.

In the event of any dispute arising out of or in connection with this Agreement
(other than a dispute determined in accordance with Section 6.1(b) or a
Technical Dispute), the parties shall first try to solve it amicably. In this
regard, any party may send a notice of dispute to the other, and each party
shall appoint, [***] from receipt of such notice of dispute, a single
representative having full power and authority to solve the dispute. The
representatives so designated shall meet as necessary in order to solve such
dispute. If these representatives fail to solve the matter within one month from
their appointment, or if a party fails to appoint a representative [***] set
forth above, such dispute shall immediately be referred to the Chief Operating
Officer or Executive Vice President, Operations (or such other officer as such
representative may designate) of each party who will meet and discuss as
necessary in order to try to solve the dispute amicably. Should the parties fail
to reach a resolution under this Section 12.1, their dispute will be referred to
a court of competent jurisdiction in accordance with Section 13.15.

27

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

12.2
Technical Dispute Resolution.

In the event of a dispute (other than disputes in relation to the matters set
out in Sections 6.1(b) and 12.1) between the parties that is exclusively related
to technical aspects of the manufacturing, packaging, labeling, quality control
testing, handling, storage or other activities under this Agreement (a
“Technical Dispute”), the parties shall make all reasonable efforts to resolve
the dispute by amicable negotiations. In this regard, senior representatives of
each party shall, as soon as practicable and in any event no later than [***]
after a written request from either party to the other party, meet in good faith
to resolve any Technical Dispute. If, despite such meeting, the parties are
unable to resolve a Technical Dispute within a reasonable time, and in any event
[***] of such written request, the Technical Dispute shall, at the request of
either party, be referred for determination to an expert in accordance with the
provisions of Schedule F. In the event that the parties cannot agree whether a
dispute is a Technical Dispute, Section 12.1 shall prevail. For greater
certainty, the parties agree that the release of the Products for sale or
distribution pursuant to the applicable marketing approval for such Products
shall not by itself indicate compliance by Patheon with its obligations in
respect of the Manufacturing Services and further that nothing in this Agreement
(including Schedule F) shall remove or limit the authority of the relevant
qualified person (as specified by the Quality Agreement) to determine whether
the Products are to be released for sale or distribution.

ARTICLE 13

MISCELLANEOUS

13.1
Inventions.

 
(a)
For the term of this Agreement, New River hereby grants to Patheon a [***] to
New River’s Intellectual Property which Patheon must use in order to perform the
Manufacturing Services under this Agreement.

 
(b)
All Intellectual Property generated or derived by Patheon in the course of
performing the Manufacturing Services, to the extent it is specific to the
development, manufacture, use and sale of the Product that is the subject of the
Manufacturing Services, shall be the exclusive property of New River.

 
(c)
All Intellectual Property generated or derived by Patheon in the course of
performing the Manufacturing Services which are not specific, or dependent upon,
New River’s Product and which have application to manufacturing processes or
formulation development of drug products or drug delivery systems shall be the
exclusive property of Patheon (the “Broader Intellectual Property Rights”).
Patheon hereby grants to New River, [***] to Patheon’s Broader Intellectual
Property Rights to make, have made, use and sell New River’s Product.

 
(d)
Each party shall be solely responsible for the costs of filing, prosecution and
maintenance of patents and patent applications on its own Inventions.

28

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(e)
Either party shall give the other party written notice, as promptly as
practicable, of all Inventions which can reasonably be deemed to constitute
improvements or other modifications of the Products or processes or technology
owned or otherwise controlled by such other party.

 
(f)
Patheon shall cooperate with New River, and at New River’s request and expense,
shall execute any instrument or do such act or thing as may be necessary or
desirable to ensure that any such Intellectual Property referred to in clause
13.1(b) above vest in New River, including without limitation, obtaining the
assignment to such Intellectual Property from its employees by requiring each
such employee to execute a written assignment to Patheon prior to performance of
Patheon’s obligations hereunder.

13.2
Intellectual Properly.

Subject to Section 13.1, all Intellectual Property of New River shall be owned
by New River and all Intellectual Property of Patheon shall be owned by Patheon.
Except as otherwise expressly provided herein, New River and Patheon hereby
acknowledge that neither party has, nor shall it acquire, any interest in any of
the other party’s Intellectual Property unless otherwise expressly agreed to in
this Agreement or subsequently in writing. Each party agrees not to use any
Intellectual Property of the other party, except (i) as specifically authorized
by the other party, (ii) as allowed under Section 13.1, or (iii) as required for
the performance of its obligations under this Agreement. Except as otherwise
expressly provided herein, nothing contained in this Agreement shall be
construed or interpreted, either expressly or by implication, estoppel or
otherwise, as a grant, transfer or other conveyance by either party to the other
of any right, title, license or other interest of any kind in any of its
Intellectual Property.

13.3
Insurance.

Each party shall maintain commercial general liability insurance, including
blanket contractual liability insurance covering the obligations of that party
under this Agreement through the term of this Agreement and for [***] beyond the
expiration date of any Product, which insurance shall afford limits [***] for
each occurrence for personal injury or property damage liability; and (ii) [***]
with respect to product and completed operations liability. If requested each
party will provide the other with a certificate of insurance evidencing the
above and showing the name of the issuing company, the policy number, the
effective date, the expiration date and the limits of liability. The insurance
certificate shall further provide for [***] to the insured of a cancellation of,
or material change in, the insurance. If a party is unable to maintain the
insurance policies required under this Agreement through no fault on the part of
such party, then such party shall forthwith notify the other party in writing
and the parties shall in good faith negotiate appropriate amendments to the
insurance provision of this Agreement in order to provide adequate assurances.

13.4
Independent Contractors.

The parties are independent contractors and this Agreement shall not be
construed to create between Patheon and New River any other relationship such
as, by way of example only, that of employer-employee, principal agent,
joint-venturer, co-partners or any similar relationship, the existence of which
is expressly denied by the parties hereto.

29

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

13.5
No Waiver.

Either party’s failure to require the other party to comply with any provision
of this Agreement shall not be deemed a waiver of such provision or any other
provision of this Agreement.

13.6
Assignment.

 
(a)
Patheon may not assign this Agreement or any of its rights or obligations
hereunder except with the written consent of New River, such consent not to be
unreasonably withheld; provided, however, that Patheon may arrange for
subcontractors to perform specific testing services arising under this Agreement
without the consent of New River.

 
(b)
Subject to Section 8.2(d), New River may assign this Agreement or any of its
rights or obligations hereunder without approval from Patheon; provided,
however, that New River shall give prior written notice of any assignment to
Patheon, any assignee shall covenant in writing with Patheon to be bound by the
terms of this Agreement and New River shall remain liable hereunder. Any
assignment or partial assignment will be subject to a cost review of the
assigned Products by Patheon and is subject to assignee and Patheon reaching
agreement as to revisions, if any, to the fees, failing such agreement, Patheon
or the permitted assignee may terminate this Agreement [***] to the other party.

 
(c)
Notwithstanding the foregoing provisions of this Section 13.6, either party may
assign this Agreement to any of its Affiliates or to a successor to or purchaser
of all or substantially all of its business, provided that such assignee
executes an agreement with the non-assigning party hereto whereby it agrees to
be bound hereunder.

13.7
Force Majeure.

Neither party shall be liable for the failure to perform its obligations under
this Agreement if such failure is occasioned by a cause or contingency beyond
such party’s reasonable control, including, but not limited to, strikes or other
labor disturbances, lockouts, riots, public health quarantines, communicable
disease outbreaks, wars, acts of terrorism, fires, floods, storms, interruption
of or delay in transportation, defective equipment (solely to the extent that
such defects in equipment are not due to Patheon’s negligence and are outside
Patheon’s control), lack of or inability to obtain fuel, power or components
(solely to the extent that the procurement of such components is the
responsibility of New River), or compliance with any order or regulation of any
government entity acting within color of right (a “Force Majeure Event”). A
party claiming a right to excused performance under this Section 13.7 shall
immediately notify the other party in writing of the extent of its inability to
perform, which notice shall specify the occurrence beyond its reasonable control
that prevents such performance. Neither party shall be entitled to rely on a
Force Majeure Event to relieve it from an obligation to pay money (including any
interest for delayed payment) which would otherwise be due and payable under
this Agreement.

30

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

13.8
Additional Product.

Additional products may be added to this Agreement and such additional products
shall be governed by the general conditions hereof with any special terms
(including, without limitation, price) governed by an addendum hereto.

13.9
Notices.

Any notice, approval, instruction or other written communication required or
permitted hereunder shall be sufficient if made or given to the other party by
personal delivery, by telecopier or facsimile communication or by sending the
same by first class mail, postage prepaid to the mailing address, or telecopier
or facsimile number set forth below:

If to New River

New River Pharmaceuticals Inc.
1881 Grove Avenue
Radford, Virginia 24141
Attention: Chief Executive Officer

with a copy to: New River Legal Department
Telecopier No.: 540-633-7979

If to Patheon:

Patheon Inc.
7070 Mississauga Road,
Suite 350, Mississauga, Ontario
LSN 7J8
Attention: President, Patheon U.S.A.
Telecopier No.: 905-812-6705

with a copy to:

Patheon Pharmaceuticals Inc.
2110 East (Galbraith Road
Cincinnati, Ohio 45237-1625
Attention: Director of Legal Services
Telecopier No.: 513-948-6927

or to such other addresses or telecopier or facsimile numbers provided to the
other party in accordance with the terms of this Section 13.9. Notices or
written communications made or given by personal delivery or by telecopier or
facsimile shall be deemed to have been sufficiently made or given when sent
(receipt acknowledged), or if mailed, five days after being deposited in the
United States mail, postage prepaid or upon receipt, whichever is sooner.

31

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

13.10
Severability.

If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.

13.11
Entire Agreement.

This Agreement, together with the Quality Agreement and the Confidentiality
Agreement, constitutes the full, complete, final and integrated agreement
between the parties hereto relating to the subject matter hereof and supersedes
all previous written or oral negotiations, commitments, agreements, transactions
or understandings with respect to the subject matter hereof Any modification,
amendment or supplement to this Agreement must be in writing and signed by
authorized representatives of both parties. In case of conflict, the prevailing
order of documents shall be this Agreement, the Quality Agreement and the
Confidentiality Agreement.

13.12
Other Terms.

The parties agree that no terms, provisions or conditions of any purchase order
or other business form or written authorization used by New River or Patheon
will have any effect on the rights, duties or obligations of the parties under
or otherwise modify this Agreement, regardless of any failure of New River or
Patheon to object to such terms, provisions, or conditions unless such document
specifically refers to this Agreement and is signed by both parties.

13.13
No Third Party Benefit or Right.

For greater certainty, nothing in this Agreement shall confer or be construed as
conferring on any third party, except an Affiliate of the parties, any benefit
or the right to enforce any express or implied term of this Agreement.

13.14
Execution in Counterparts.

This Agreement may be executed in two counterparts, by original or facsimile
signature, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

13.15
Governing Law.

This Agreement shall be construed and enforced in accordance with the laws of
the State of Delaware. The parties expressly agree that the UN Convention on
Contracts for the International Sale of Goods shall not apply to this Agreement.

32

--------------------------------------------------------------------------------

 
CONFIDENTIAL TREATMENT
 
IN WITNESS WHEREOF, the duly authorized representatives of the parties have
executed this Agreement as of the date first written above.

 
PATHEON PHARMACEUTICALS INC.
         
By:
/s/ Ronald R. Schallick            
Date:
10/3/06                            
NEW RIVER PHARMACEUTICALS, INC.
         
By:
/s/ Krish S. Krishnan            
Date:
9/26/06  

33

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

SCHEDULE A

PRODUCT FORMULA AND SPECIFICATIONS

Prior to the commencement of commercial manufacturing of Product under this
Agreement New River shall provide Patheon with originally executed copies of the
FDA approved Specifications. If the Specifications provided are subsequently
amended, then New River shall provide Patheon with revised and originally
executed copies of such revised Specifications. Upon acceptance of the revised
Specifications, Patheon shall provide New River with a signed and dated receipt
evidencing such acceptance of the revised Specifications by Patheon.

34

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

SCHEDULE B

RUN QUANTITY, ANNUAL VOLUME AND FEES

 
·
Annual Volume in all tables represents the sum total capsules for all [***].

 
·
This proposal is based on an Annual Volume of [***] capsules.

[***]
V-Blender/
Batch Size
[***]
[***]
Annual
Volume
(million caps)
[***]
[***]
DEA Schedule
II
III+
II
III+
Run Quality
(batches)
1
2
3
1
2
3
5
1
3
2
3
5
Run Quantity
(bottles)
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

[***]

35

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT
 
[***]
V-Blender/
Batch Size
[***]
[***]
Annual
Volume
(million caps)
[***]
[***]
DEA Schedule
II
III+
II
III+
Run Quality
(batches)
1
2
3
1
2
3
5
1
3
2
3
5
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

[***].

36

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

[***]
V-Blender/
Batch Size
[***]
[***]
Annual
Volume
(million caps)
[***]
[***]
DEA Schedule
II
III+
II
III+
Run Quality
(batches)
1
2
3
1
2
3
5
1
3
2
3
5
Run Quantity
(bottles)
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

[***]

37

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

Manufacturing Assumptions

 
1.
The manufacturing process at Patheon will closely follow the process information
provided by NRP and year-to-date experience with this product at the site.

 
2.
[***].

 
3.
Final blending of granulation will utilize the [***], for the [***],
respectively.

 
4.
The [***] and [***] will also used in processing.

 
5.
Encapsulation will be run using an [***].

 
6.
Capsules for all strengths are size #3, at the following target fill weights:

 
•
[***]

 
•
[***]

 
•
[***]

 
7.
Depending on the total capsule volume mix at the time, a second encapsulator
will be required for the higher volume tiers. Another GKF 1500 encapsulator is
available, but needs to be rebuilt. In addition, a new booth will be required to
house this second machine.

 
8.
It is assumed that capsule checkweighing is not required. If NRP requires
capsules to be checkweighed then evaluation on labor input and yield assumptions
will be necessary.

 
9.
Batch sizes and various campaign runs are proposed against each volume tier and
DEA Schedule options, in the Pricing Tables. It is assumed that each campaign
can be a composite of different strengths, and can be sequenced to minimize
additional cleanup.

 
10.
[***] to be required on all processing steps, if the product is a DEA Schedule
II drug.

Packaging Assumptions

 
1.
The packaging equipment train for bottles of [***] will consist of the following
equipment:

 
•
[***]

 
•
[***]

 
•
[***]

38

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
•
[***]

 
•
[***]

 
•
[***]

 
•
[***]

 
•
[***]

 
2.
No carton is assumed.

 
3.
An outsert will be applied to each bottle.

 
4.
The same bottle and cap will be used for all strengths.

 
5.
[***] will be placed into each shipper.

 
6.
As per request, a bulk price option is also presented. Bulk capsules will be
packed into lined and sealed fiber drums ([***]), in quantity of about [***]
capsules each.

Testing Assumptions

 
1.
Raw material and finished product testing are based on available specifications
and Patheon’s best estimates.

 
2.
Standard product testing such as identity, assay, content uniformity, related
substances is assumed.

 
3.
It is assumed that [***].

 
4.
Testing labor may be subject to change after the final agreement on testing
specifications and requirements.

General Assumptions, Terms and Conditions

Pricing for various campaign runs as listed are provided. However, at the
beginning of each year, the batch size and campaign size selected for the year
will be agreed upon by both parties, based on forecast.

39

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

SCHEDULE C

STABILITY TESTING

Patheon and New River shall agree in writing on any stability testing to be
performed by Patheon in connection with the Products. Such agreement shall
specify the commercial and Product stability protocols applicable to the
stability testing and the fees payable by New River in connection with such
testing.

40

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

SCHEDULE D

ACTIVE MATERIALS
 
Active Materials
Supplier
[***]
Approved contract manufacturers as outlined in the NDA submitted by [***]

 
ACTIVE MATERIALS CREDIT VALUE

For the purposes of the Agreement, the parties agree that the Active Materials
Credit Value shall be as follows:
 
Product
 
Active Materials
 
Active Materials Credit Value
 
[***]
[***]
The actual cost to New River of Active Materials [***]

 
MAXIMUM CREDIT VALUE

Patheon’s liability for Active Materials calculated in accordance with Section
2.4 of the Agreement for any Product in a Year shall not exceed, in the
aggregate, the maximum credit value set forth below:
 
Product
Maximum Credit Value
[***]
(a) [***];
 
(b) [***];
 
(c) [***]

 
41

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

SCHEDULE E

BATCH NUMBERING AND EXPIRATION DATES

Each batch of the Product manufactured by Patheon will bear a unique batch
number using the Patheon batch numbering system. This number will appear on all
documents relating to the particular batch of Product.

Patheon will calculate the expiration date for the product for each batch by
adding the expiration period of the Product supplied by New River to the date of
Manufacture of each batch.

42

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

SCHEDULE F

TECHNICAL DISPUTE RESOLUTION

Technical Disputes which cannot be resolved by negotiation as provided in
Section 12.2 shall be resolved in the following manner:

1.     Appointment of Expert. [***] after a party requests pursuant to Section
12.2 that an expert be appointed to resolve a Technical Dispute, the parties
shall jointly appoint a mutually acceptable expert with experience and expertise
in the subject matter of the dispute. If the parties are unable to so agree
within such [***], or in the event of disclosure of a conflict by an expert
pursuant to paragraph 2 hereof which results in the parties not confirming the
appointment of such expert, then an expert (willing to act in that capacity
hereunder) shall be appointed by an experienced arbitrator on the roster of the
American Arbitration Association.

2.     Conflicts of Interest. Any person appointed as an expert shall be
entitled to act and continue to act as such, notwithstanding that at the time of
his appointment or at any time before he gives his determination, he has or may
have some interest or duty which conflicts or may conflict with his appointment,
provided that before accepting such appointment (or as soon as practicable after
he becomes aware of the conflict or potential conflict) he fully discloses any
such interest or duty and the parties shall after such disclosure have confirmed
his appointment.

 
3.
Procedure. Where an expert is appointed:

 
(a)
Timing The expert shall be so appointed on condition that (i) he promptly fixes
a reasonable time and place for receiving representations, submissions or
information from the parties and that he issues such authorizations to the
parties and any relevant third party for the proper conduct of his determination
and any hearing and (ii) he renders his decision (with full reasons) [***] (or
such other date as the parties and the expert may agree) after receipt of all
information requested by him pursuant to paragraph 3(b) hereof.

 
(b)
Disclosure of Evidence The parties undertake one to the other to provide to any
expert all such evidence and information within theft respective possession or
control as the expert may reasonably consider necessary for determining the
matter before him which they shall disclose promptly and in any event [***] of a
written request from the relevant expert to do so.

 
(c)
Advisors Each party may appoint such counsel, consultants and advisors as it
feels appropriate to assist the expert in his determination and so as to present
theft respective cases so that at all times the parties shall co-operate and
seek to narrow and limit the issues to be determined.

 
(d)
Appointment of New Expert. If within the time specified in paragraph 3(a) above
the expert shall not have rendered a decision in accordance with his
appointment, a new expert may (at the request of either party) be appointed and
the appointment of the existing expert shall thereupon cease for the purposes of
determining the matter at issue between the parties save that if the existing
expert renders his decision with 11111 reasons prior to the appointment of the
new expert, then such a decision shall have effect and the proposed appointment
of the new expert shall be withdrawn.

43

--------------------------------------------------------------------------------

 
(e)
Final and Binding The determination of the expert shall, save in the event of
fraud or manifest error, be final and binding upon the parties.

 
(f)
Costs Each party shall bear its own costs in connection with any matter referred
to an expert hereunder and, in the absence of express provision in the Agreement
to the contrary, the costs and expenses of the expert shall be shared equally by
the parties.

For greater certainty, the parties agree that the release of the Products for
sale or distribution pursuant to the applicable marketing approval for such
Products shall not by itself indicate compliance by Patheon with its obligations
in respect of the Manufacturing Services and further that nothing in this
Agreement (including this Schedule F) shall remove or limit the authority of the
relevant qualified person (as specified by the Quality Agreement) to determine
whether the Products are to be released for sale or distribution.

44

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

SCHEDULE G

QUALITY AGREEMENT

45

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

QUALITY AGREEMENT

BETWEEN

NEW R PHARMACEUTICALS INC

AND

PATHEON PHARMACEUTICALS INC

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

Table of Contents

QUALITY AGREEMENT
 
1.
PARTIES
5
       
2.
QUALITY AGREEMENT
5
       
3.
ADMINISTRATIVE INFORMATION
5
       
4.
PRODUCTS
5
       
5.
DURATION OP AGREEMENT
5
       
6.
CONFIDENTIALITY
6
       
7.
SECURITY
6
       
8.
SUPPLY
6
         
8.1.
Premises
6
         
8.2.
Product Specification and Master Production Records
6
         
8.3.
GMP Guidelines
7
         
8.4.
Materials
7
         
8.5.
Master Production Record Approval
8
         
8.6.
Production
8
         
8.7.
Methodology
8
         
8.8.
Standard Operating Procedures
8
         
8.9.
Dates of Manufacture and Expiration
8
         
8.10.
Manufacturing and Equipment Data
9
       
9.
QUALITY ASSURANCE AND CONTROL
9
         
9.1.
Laboratory Control of Materials
9
         
9.2.
In-Process and Finished Product Testing
9
         
9.3.
Release Procedures
10
         
9.4.
Documentation
10

 
2

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT
 

 
9.5.
Retain Sampling
11
         
9.6.
Stability
11
         
9.7.
Deviations and Investigations
12
         
9.8.
Rejection of Product
13
         
9.9.
Dispute Resolution
13
         
9.10.
Regulatory Inspections
13
         
9.11.
Regulatory Actions at New River
14
         
9.12.
Regulatory Investigations
14
         
9.13.
Manufacturing Audits (MA)
14
         
9.14.
Correspondence:
15
         
9.15.
Product Complaints
16
         
9.16.
Product Recalls
16
         
9.17.
Compliance Deficiencies
16
         
9.18.
NDA Field Alerts
16
       
10.
CHANGE MANAGEMENT
16
       
11.
PRODUCT AND PROCESS VALIDATION
17
         
11.1.
Process
17
         
11.2.
Cleaning Validation
17
         
11.3.
Equipment, Computer, Facility, and Utilities Qualification
18
         
11.4.
Laboratory Qualifications
18
       
12.
ANNUAL PRODUCT REVIEW, DRUG LISTING, AND ANNUAL REPORTS
18
         
12.1.
Annual Product Review
18
         
12.2.
Drug Listing
19
         
12.3.
Annual Reports, IND Updates or Other Regulatory Filings
19
       
13.
STORAGE AND SHIPPING
19

 
3

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT
 

 
13.1.
Storage
19
         
13.2.
Packing and Labeling for Transit
19
         
13.3.
Mixing of Product
19
         
13.4.
Shipment of Product to New River
20
       
14.
CONTRACTUAL AGREEMENT
20

APPENDIX I
-
RESPONSIBILITIES MATRIX

APPENDIX II
-
DEFINITIONS

APPENDIX III
-
LIST OF CONTACTS

APPENDIX IV
-
BATCH DOCUMENT AUDIT SCHEDULE

APPENDIX V
-
LIST OF PRODUCTS

APPENDIX VI
-
RELEASE DOCUMENTATION

APPENDIX VII
-
NEW RIVER APPROVED SUPPLIER LIST

APPENDIX VIII
-
PATHEON APPROVED SUPPLIER LIST

 
4

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

1.
PARTIES

This Quality Agreement is effective as of __________, 2006, by and between New
River Pharmaceuticals Inc., a Virginia Corporation having it’s corporate offices
at 1881 Grove Avenue, Radford Virginia 24141 (hereinafter referred to as “New
River”) and Patheon Pharmaceuticals Inc., a Delaware Corporation having a place
of business at 2110 East Galbraith Road, Cincinnati, Ohio 45237 (hereinafter
referred to as “Patheon”).

2.
QUALITY AGREEMENT

This agreement defines the roles and responsibilities of Patheon for services or
materials supplied to New River or affiliates, for commercial distribution or
clinical trial use to ensure compliance with applicable cGMPs. This agreement is
supplemental to and constitutes a part of the Manufacturing Agreement entered
into between New River and Patheon on the same date as noted in Section 1 above
(the “Manufacturing Agreement”). The provisions of this Agreement are intended
to be supplemental to and not in derogation from the terms of the Manufacturing
Agreement and provisions contained herein shall be treated as supplemental to
the Manufacturing Agreement and in particular but without limitation in relation
to the application,, compliance, verification and implementation of cGMP. To the
extent any terms set forth in this Agreement conflict with the terms of the
Manufacturing Agreement, the tents of the Manufacturing Agreement shall control
unless otherwise specified in this Agreement. A responsibilities matrix can be
found in Appendix I it is intended to support the terms of this agreement. The
terms of this agreement take jurisdiction over the information in the
responsibilities matrix should a conflict be noted. Capitalized terms used in
this Agreement shall have the same meaning as set forth in the Manufacturing
Agreement, unless defined in Appendix II or otherwise defined herein.

3.
ADMINISTRATIVE INFORMATION

Contact names will be provided from both sites for key functional areas. Contact
names are provided in Appendix III and may be updated as needed upon written
notice of a Party.

4.
PRODUCTS

A product list is provided in Appendix V and may be updated as needed and
authorized by both parties. In this Agreement, all products in the Appendix will
be referred to as “Products”.

5.
DURATION OP AGREEMENT

This Agreement shall commence on execution by both Parties and subject to the
following provisions of this clause shall expire or terminate on the expiry or
termination of the Manufacturing Agreement. Any section of this Agreement which
has a predefined retention, survival or maintenance period, for example raw data
storage, product complaints and sample retention, shall survive the termination
of this Agreement upon termination of the Manufacturing Agreement for the period
defined in the appropriate section. This Agreement cannot be modified except
with the written approval of both Parties. Specifications and Master Batch
Records may be modified with written authorization font designated Quality
Assurance representatives of both companies.

5

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

6.
CONFIDENTIALITY

Confidential Information shall be governed by the terms of the applicable
Manufacturing Agreement. Both Parties will treat as confidential all data
supplied by the other in connection with the manufacture of the Products.

7.
SECURITY

Patheon has and will maintain controlled access to the Plant through a security
card key or similar system. All visitors will be required by Patheon to sign-in
and be escorted during any site visit. All Third Party visitors will be required
to enter into a confidentiality agreement prior to entering areas being used to
manufacture the New River Products.

8.
SUPPLY

 
8.1
Premises

 
8.1.1
Patheon will manufacture, package, and/or test the Products at the Plant and
will not use or transfer at a later date any of the manufacturing, packaging or
testing operations for the Product(s) to Third Parties or other sites without
the prior written agreement of New River.

 
8.1.2
Patheon will ensure at all times that the premises and equipment comprising the
Plant used to manufacture/supply the Products comply at all times with current
regulatory requirements and are in accordance with the documentation approved by
New River.

 
8.2
Product Specification and Master Production Records

 
8.2.1
Patheon will manufacture, package, and test the Product(s) in accordance with
the most recent version of the Specifications and Master Batch Record (formula,
in-process and release specs, methods, shelf life, and regulatory requirements)
as supplied or approved by New River. All such documentation must be approved by
New River (see section 11).

 
8.2.2
New River will select the API supplier - quality assurance and purchasing
evaluations, which verify compliance by the supply company with cGMP and
Specifications. Patheon will select approved excipient suppliers according to
Patheon Procedures and SOPs, which verify compliance by the supply company with
cGMP and Specifications. New River must approve suppliers. When suppliers are
identified in the NDA or compendial documentation, Patheon will be limited to
those suppliers. Any change from these suppliers must be first approved through
New River’s change control system.

6

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
8.2.2.1
Raw Material Specification

Patheon will obtain excipient from approved suppliers as defined in the
appropriate Regulatory documentation. Patheon will test Raw Materials to the
full Specification unless a supplier Certificate of Analysis (“COA”) is
available from a certified supplier, in which case, complete testing may not be
required upon mutual agreement and written approval by both Patheon and New
River.

 
8.2.2.2
Label Component Specifications

Patheon will use only labels and labeling approved in compliance with
Specifications provided or approved by New River.

 
8.2.2.3
Packaging Component Specifications

Patheon will obtain primary packaging components from approved suppliers as
defined in the appropriate Regulatory documentation and test packaging
components to the full Specification unless a validated supplier COA is
available from a certified supplier. If a COA is available complete testing may
not be necessary upon written approval by New River. Packaging Specifications
must be provided or approved by New River.

 
8.3
GMP Guidelines

Any applicable product license or pharmacopoeia or formulatory requirements
applicable to the manufacture of Product(s) shall be complied with in addition
to cGMP and Specifications.

 
8.4
Materials

 
8.4.1
Materials Procured by Patheon

Patheon is responsible for ensuring that all Raw Materials procured for use in
the Product(s) are in fill compliance with the Specifications in accordance with
8.2. Raw Materials shall be given a recontrol date upon the satisfactory
completion of all-initial testing. Recontrol testing will be performed at
defined time intervals to ensure the chemical and physical stability of the Raw
Materials. New River may audit any Patheon program that allows retesting or
recontrol of Raw Materials.

7

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
8.4.2
Materials Provided by New River

Active Materials provided by New River require acceptance testing by Patheon to
confirm that the Active Materials are in full compliance with the
Specifications. Patheon is responsible for ensuring that all Active Materials
are used correctly, have the correct identity by testing identity on receipt,
and have met the relevant analytical testing requirements for the Batch.

 
8.5
Master Production Record Approval

Patheon may transcribe the information (i.e. formulation, filling work order,
packaging work order) into its own format and must obtain written approval from
New River US Corporate Quality Assurance for each document version before
Manufacturing.

 
8.6
Production

The Products will be Manufactured in accordance with the manufacturing and
packaging procedures set forth in the Specifications and Master Batch Records
and additional internal Patheon site procedures. Such procedures must be made
available for scrutiny during audits by authorized personnel of New River.

 
8.7
Methodology

Patheon will test Raw Materials and Products using the approved methodology
listed in the appropriate Specification.

 
8.8
Standard Operating Procedures

Patheon is responsible for maintaining any Standard Operating Procedures (SOPs)
required to make the Product in accordance with cGMPs and as described in the
NDA or compendial documentation as well as any other regulatory requirements.

 
8.9
Dates of Manufacture and Expiration

 
8.9.1
Date of Manufacture

Patheon will determine the date of manufacture based on site SOPs that identify
the date as the date that the Active Material is mixed or added to the batch
materials.

 
8.9.2
Expiration Date

New River will provide the appropriate approved expiry period so Patheon can
calculate expiration dates for Batches to be manufactured.

8

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
8.10
Manufacturing and Equipment Data

Patheon is responsible for safe keeping and retention of records of machine
usage (previous product produced in non-dedicated machinery), cleaning, any
maintenance(calibration performed, Raw Material batch numbers and certification,
in-process results and parameters, and test results in accordance with and shall
perform all functions in accordance with legal and regulatory requirements and
all Applicable Laws.

9.
QUALITY ASSURANCE AND CONTROL

 
9.1
Laboratory Control of Materials

 
9.1.1
Any Specifications, sampling plans, and test procedures, including changes to
these, should be drafted by Patheon and reviewed and approved by New River.

 
9.1.2
Quality control of Raw Materials supplied by Patheon or by suppliers to Patheon
will be undertaken by Patheon in accordance with the Specifications and methods
approved by New River.

 
9.1.2.1
Patheon is responsible for investigating any laboratory out of specification
(005) results per Patheon’s internal procedures. Each 005 investigation must be
reviewed and approved by Patheon’s designated quality assurance person and must
evaluate if the failure has jeopardized the safety, efficacy or quality of the
Product.

 
9.1.2.2
New River must be notified [***] of the start of a significant “un-planned”
batch or testing deviation. Patheon will forward the completed package upon
conclusion of the investigation.

 
9.1.3
New River must be notified in writing prior to the testing or processing of a
“planned” batch or testing deviation. Approval of such planned deviation must be
given by New River. Patheon will forward the completed package upon conclusion
of the investigation.

 
9.1.4
Any reference standards that are supplied by New River or New River’s Affiliates
must be accompanied by a COA listing the expiration date and any correction
factors that need to be applied.

 
9.2
In-Process and Finished Product Testing

 
9.2.1
Raw Materials and packaging components

 
Patheon will ensure that all materials used are in compliance with the
compendial and/or approved Methods and Specifications.

9

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
9.2.2
Patheon will perform all in-process and finished Product testing using the
Specifications, and Methods of analysis listed in the release documentation list
provided and approved by New River’s Quality Assurance and other applicable
licenses.

 
9.3
Release Procedures

 
9.3.1
Product

Patheon is responsible for ensuring and certifying that the Product has been
made according to cGMPs, the Specifications and procedures documented in the
Master Batch Record. This includes a complete and thorough review of the
executed batch records. Executed batch records will be requested by New River
for periodic review independent of batch investigations conducted for batch or
testing difficulties. The planned frequency of New River full review of batch
records will be outlined in Appendix IV. Patheon will supply requested documents
within 5 days of completion of batch manufacturing and/or packaging and closure
of all related deviations.

 
9.3.2
Certificate of Compliance/Analysis

Prior to release, a Patheon Quality Assurance Representative will sign a
Certificate of Compliance/Analysis confirming that the Product has been
Manufactured, packaged and tested in. accordance with cGMP and Applicable Laws
and meets the requirements of the Master Batch Record and Specifications. These
documents will also include the packaging lot numbers, associated batch expiry
dates, and quantifies in each shipment. The specific lot number will be the lot
number identified on the executed batch record for the finished product being
released. Routine release documentation is identified in Appendix VI.

 
9.3.3
New River Receipts

Release of Products to the market or for use in clinical studies will be
undertaken by New River based on New River’s internal procedures and the
documentation provided by Patheon. Patheon may not release Product to market.

 
9.3.4
New River Confirmatory Testing

New River or its affiliates may perform confirmatory testing to validate
Patheon’s data.

 
9.4
Documentation

 
9.4.1
Requests for Full Documentation

10

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

Patheon agrees to supply New River or its Affiliates with any completed
Manufacturing, packaging, testing, or stability data [***] of request.

 
9.4.2
Patheon will retain, at minimum, batch production records, quality control
testing records, all records of shipments of the Product from Patheon, all
validation data and other documentation relating to the Product for the time
periods required by Applicable Laws with respect to the Product according to
Patheon site procedures.

 
9.4.2.1
Patheon shall make such records and data available for review by New River at
Patheon’s Plant upon [***] prior written notice from New River to Patheon and at
a time mutually agreeable to both New River and Patheon.

 
9.4.3
Patheon shall, upon New River’s request, supply to New River a copy of its
document retention policy. Upon termination or expiration of this Agreement or
prior to destruction of any records, whichever occurs first, Patheon will upon
New River’s written request and at New River’s expense, make copies of such
records and data for New River.

 
9.5
Retain Sampling

 
9.5.1
Retain Samples - Raw Materials

Patheon will retain samples of Active Materials for at least one year beyond the
expiry period of the Products in which such Active Materials were used. The
amount of sample retained will be [***] required to carry out all of the tests
required to determine if the material meets its Specifications.

 
9.5.2
Retain Samples - Products

Patheon will retain samples of the Products for at least one year beyond the
expiry period. The amount of sample retained will be [***] required to early out
all of the tests required to determine if the material meets its Specifications.

 
9.6
Stability

 
9.6.1
Routine/Commercial Stability Program

 
9.6.1.1
Patheon is responsible for maintaining a routine stability testing program for
the Products, and it will be performed per Patheon site SOPs. Patheon will
provide stability data [***] to New River or more frequently if requested by New
River.

 
9.6.1.2
The stability program will be in compliance with any license commitments as
notified by New River. At a minimum one lot of each product, of each strength
and in each package type (largest to smallest) will be placed on stability each
year unless otherwise agreed to in writing by Patheon and New River. The
stability program must comply with ICH and FDA guidelines. The stability
protocol or any changes must be approved by New River.

11

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
9.6.2
Development (Clinical, Registration, R&D) Stability Program

Patheon will be responsible for performing any development stability required to
support the Products. If that development stability is to support projects
initiated by Patheon, then Patheon will develop, execute and write reports for
the program. All protocols for and reports from such work must be approved by
New River.

 
9.6.3
Stability Failures

Any confirmed problems or out of specification (OOS) results which arise as a
result of or during any of the stability programs will be communicated by
Patheon to New River [***].

 
9.6.4
Patheon will supply New River’s Quality Assurance department with completed
stability results [***] of receiving a written request.

 
9.7
Deviations and Investigations

 
9.7.1
Deviations

Any deviation from the process during Manufacture must be fully investigated
according to Patheon’s procedures and will be carefully explained and documented
in the batch records, justified and approved by Patheon’s Quality Assurance
Department, and included in the documentation package.

 
9.7.1.1
Any significant “un-planned” process deviations that may impact the quality,
compliance or regulatory status of a batch will be forwarded to New River via
notification [***] from the discovery of the occurrence.

 
9.7.1.2
Any “planned” process deviation will be presented for approval to New River
Quality Assurance before proceeding with processing.

NOTE: A “deviation” is defined, for purposes of this Section 9.7, as any
anomalous event that may occur during the processing of a Batch that is a
departure from filed specifications, approved procedures or validated processes.
Planned deviations are considered those that occur before a process step is
executed and when a batch can be interrupted to consider the ramifications of
the proposed process or batch instruction deviation.

12

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

All deviations will be provided to New River in a list format with the batch
release documentation as outline in Appendix VI.

 
9.7.2
Failure Investigations and Out Of Specification (OOS) Results

Patheon is responsible for fully investigating any test result or in-process
test that fails to meet Specification per their internal procedures. Each
investigation will be reviewed and approved by Patheon’s designated Quality
Assurance person. The investigation must evaluate if the failure has jeopardized
the safety, efficacy or quality of the product. New River must be notified [***]
of the discovery of a confirmed 005 result.

 
9.7.3
Patheon will notify New River forthwith if any problems are discovered that may
impact products batch(s) previously shipped to New River or its Affiliates
identifying the Batches in question.

 
9.7.4
Some deviations/failures may require that additional testing, stability, or
validation be conducted. This work will be performed by Patheon as agreed by
both Parties.

 
9.8
Rejection of Product

 
9.8.1
Patheon will notify New River in writing of any Batch rejected by Patheon. This
communication should be accompanied by a completed investigation with regard to
the failure and include evaluation of effect of failure on other Batches.

 
9.8.2
New River or its affiliates will notify Patheon of any problems thought to be
due to Manufacture or stability which are found during the distribution of the
Product. When requested by New River, Patheon will promptly perform
investigations for these problems. Investigation reports will be forwarded to
New River as required.

 
9.9
Dispute Resolution

In the event that a dispute arises between Patheon and New River or its
Affiliates in the analysis of the Products, the resolution will proceed
according to the procedures set forth in the Manufacturing Agreement.

 
9.10
Regulatory Inspections

New River’s Director or designate of Quality Assurance will be notified within 1
business day of any inspections by FDA, DEA or similar foreign regulatory
authorities regarding New River Products and Patheon will permit a
representative from New River on-sit; if requested by New River.

13

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

Patheon will notify New River [***] of receipt of any FDA Form 483 observations,
warning letters or the like from regulatory agencies relating to: (i) the
Product(s); (ii) the supply of Product(s) or (iii) the facilities used to
produce, test or package the Product(s). New River will review and approve
responses that relate to the Product(s) before submission to the regulatory
agency. Patheon reserves the right to respond to such regulatory agencies
without approval, if, in the reasonable opinion of Patheon’s counsel, it is
required to do so.

 
9.11
Regulatory Actions at New River

New River or its affiliates will notify Patheon of any regulatory actions on the
Products that may impact Patheon. Additionally, New River will immediately
forward any regulatory correspondence on the Products to Patheon.

 
9.12
Regulatory Investigations

Patheon is responsible for supporting all Batch record investigations associated
with regulatory actions. New River must be notified of any such events [***].

 
9.13
Manufacturing Audits (MA)

 
9.13.1
Annual MA: New River shall have the right to conduct one Manufacturing Audit (as
defined in section 9.13.3) per year. (Such annual Manufacturing Audit to be
hereinafter referred to as an “Annual MA”).

 
9.13.2
Event MA: In addition to the Annual MA, in the event that (i) Patheon receives
483 Observations or a “Warning Letter” from the FDA or any foreign equivalent
outside the USA relating to the Manufacture, packaging testing or labeling of
the New River Product by Patheon, (ii) Patheon has received a DEA “Letter of
Admonishment” or similar notice alleging non-compliance (iii) New River has
rejected a Batch of Product where it has been agreed or determined that such
Product failed to meet Specifications or cGMP or (iv) for circumstances where
New River and Patheon reasonably believe and agree that significant quality
and/or compliance issues exist or have been discovered, New River shall have the
right to conduct additional Manufacturing Audits according to the terms
specified in Section 9.13.3 below (such Event Manufacturing Audit or Audits to
be hereinafter referred to as an “Event MA’).

14

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
9.13.3
Manufacturing Audit: For purposes of this Agreement, the term “Manufacturing
Audit” shall mean an audit of Patheon’s Plant for the Product by employees
and/or agents of New River for purposes of reviewing Patheon’s procedures and
processes used in manufacturing the New River Products. Any such agents shall be
qualified to conduct manufacturing audits, shall comply with all Patheon’s
facility rules regarding safety and security notified by Patheon to New River
and its employees and agents and shall execute a written agreement to maintain
in confidence all information obtained during the count of any such audit except
for disclosure to New River subject to the terms hereof. Each Manufacturing
Audit shall be conducted during Patheon’s normal business hours and [***] to
Patheon in the case of an Annual MA, or with at least 3 working days notice to
Patheon in the case of an Event MA. The dates of the audit will be mutually
agreed upon by the Parties. In all cases New River shall ensure that its
employees or agents will conduct each Manufacturing Audit so as not, insofar as
is reasonably practicable to interfere with the normal and ordinary operation of
Patheon’s Plant. During a Manufacturing Audit, upon New River’s request, Patheon
shall make available for New River’s review and inspection all equipment and
facilities used in or in relation to the Manufacture of a Product, records and
support documents (i.e. manufacturing and analytical) with respect to each Batch
of the Product and other Raw Materials and packaging components used in the
Manufacture or packaging of the Product hereunder. At any such audit, New River
shall have the right to obtain copies of such batch records with respect to New
River product(s), provided however, that New River pays Patheon for its
reasonable costs associated with making such copies. All costs of an Event MA
shall be borne by New River unless the requirement for audit arises as a result
of the negligence of Patheon or the breach of the terms of this Agreement or the
Manufacturing Agreement by Patheon, in which case Patheon shall absorb all costs
associated with the audit.

 
9.13.4
New River or its affiliates or representatives will be escorted at all times by
Patheon personnel.

 
9.13.5
Audit Procedures

 
9.13.5.1
An exit meeting will be held with representatives from Patheon and New River to
discuss significant audit observations.

 
9.13.5.2
New River will provide a written report of all observations [***] to Patheon.
[***] of audit report receipt, Patheon will provide a written response to all
findings that details corrective action to be implemented. Patheon will follow
up to ensure that all corrective actions are implemented. New River may confirm
follow-up action by performing a follow-up audit separate from the Annual MA

 
9.14
Correspondence:

Each Party shall promptly notify the other Party of; and shall provide the other
Party with copies of, any correspondence and other documentation received or
prepared by the notifying Party in connection with any of the following events:

 
9.14.1
Receipt of a 483 Observation Letter or “Warning Letter” from the FDA or any
other Regulatory Authority or any relevant foreign equivalent outside the USA in
connection with the Manufacture, packaging, testing, storage or security of the
Product;

15

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
9.14.2
Any field alert, recall, market withdrawal or correction of any Batch of the
Product; or

 
9.14.3
Any regulatory comments relating to the Manufacture of New River Product(s)
requiring a response or action by the notifying Party.

 
9.15
Product Complaints

New River or its affiliates shall maintain complaint files with respect to the
Product(s) in accordance with cGMP’s. New River or its affiliates are
responsible for receiving and initially investigating any complaints and will
notify Patheon of any complaint that may impact the Product quality Patheon will
investigate Product complaints supplied by New River and provide a report to New
River promptly but [***] from receipt. The investigation shall be completed in
accordance with all cGMP regulations and any other Applicable Laws. New River
shall have responsibility for reporting all complaints relating to the Product
to the FDA and any other Regulatory Authority including, but not limited to,
complaints relating to the Manufacture of the Product as well as adverse thug
experience (ADE) reports.

 
9.16
Product Recalls

New River or its affiliates are responsible for instituting a product recall due
to any defect considered sufficiently serious. New River will notify Patheon of
any recall that may be due to Patheon. Patheon will work with New River and its
affiliates to investigate the recall. Patheon will provide a rapid initial
response and a full report [***].

 
9.17
Compliance Deficiencies

Should Patheon become aware of any issues that could affect the quality, safety,
identity or efficacy of any New River Product produced at their facility,
Patheon will notify New River in writing [***].

 
9.18
NDA Field Alerts

Patheon will notify New River (likewise, New River will notify Patheon) [***] of
receipt of information meeting NDA Field Alert criteria as defined in 21 CFR
314.81(b)(l). New River is responsible for initiating and submitting NDA Field
Alert reports.

10.
CHANGE MANAGEMENT

Product specific Master Batch Records, Raw Material Methods and Specifications,
process control Specifications of intermediates and testing methods and
Specifications and testing methods will be approved by both New River’s Quality
Assurance Department and Patheon’s Quality Assurance Department. No changes to
the above documents may be implemented without the signed authorization from an
authorized member of the New River Quality Assurance Department. All required
regulatory approvals will be obtained prior to implementation. Variations to
established production procedures may be initiated by either Party, but must be
agreed to in writing by the authorized members of the Quality Assurance
Departments of both Parties before implementation. The release status of the
Product produced under a variation will be decided as part of the variation
approval process. Quality Assurance Departments of Patheon or New River will
have the right to assign a final disposition of “rejected” to the batch should
they conclude that such action is appropriate.

16

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

11.
PRODUCT AND PROCESS VALIDATION

 
11.1
Process

New River is responsible for ensuring that the process for Manufacture is
validated. The validation should ensure that the process is capable of
consistently achieving the Product’s acceptance Specifications. Patheon will
generate, internally approve and execute approved validation protocol(s) and may
not use any validation protocol or issue a report unless New River technical
personnel and New River Quality Assurance have first approved. Patheon will
provide all protocols and reports in a timely manner to allow sufficient tune
for review, prior to process requirements. New River will review all protocols
and validation reports promptly, but [***] of receipt.

 
11.2
Cleaning Validation

 
11.2.1
Patheon is responsible for ensuring that adequate cleaning is carried out
between batches of different products to prevent contamination. This is achieved
and verified with the overall cleaning validation program on site.

 
11.2.2
New River will provide available information to establish cleaning limits for
New River Product(s) within 7 business days of the request- The cleaning
procedure and analytical methodology may be reviewed by New River upon request.

 
11.2.3
Patheon is responsible for having appropriate cleaning procedures for all
products manufactured on non-dedicated equipment used to Manufacture New River
Product(s).

 
11.2.4
Patheon is responsible for having appropriate cleaning procedures for New River
product(s) manufactured on dedicated equipment. The cleaning procedure and
analytical methodology must be reviewed and approved by New River prior to use
by Patheon.

17

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
11.3
Equipment, Computer, Facility, and Utilities Qualification

Patheon is responsible for the safe, compliant and efficient working of all
equipment, computer, utility and facility qualification activities associated
with the products, including maintenance. Patheon is also responsible for the
validation and qualification of all equipment, computer, and utilities
associated with the Products. As deemed appropriate, equipment shall be
qualified prior to use by performing Installation Qualification, Operation
Qualification and Performance Qualification (as applicable) using protocols in
accordance with all applicable laws, rules and regulations. Should an issue
become evident that has or could affect the Products, Patheon will notify New
River [***]. Patheon must make available Equipment, Computer, Facility, and
Utilities Qualification data during an Annual or Event MA.

 
11.4
Laboratory Qualifications

 
11.4.1
Patheon is responsible for ensuring that all laboratories are compliant with
cGMPs with regard to systems and equipment qualifications.

 
11.4.2
Patheon is responsible for maintaining appropriate cGMP documentation procedures
in the laboratories (i.e. notebooks, logbooks, sample receipt, sample tracking,
SOPs, etc)

 
11.4.3
Patheon is responsible for ensuring all methodology associated with the
Product(s) is appropriately qualified and/or validated, If analytical work is
performed at Patheon, then New River will also provide any existing analytical
documentation to assist in Methods transfer or Methods validation. Patheon will
not use any validation protocol or issue a report unless New River technical
personnel and New River Quality Assurance have first approved. New River will
review all protocols and reports promptly, but [***].

 
11.4.4
If analytical work is not performed at Patheon’s site, Patheon may elect to
perform an audit on vendors to be used for analytical testing. Should Patheon
decide to sub-contract out any quality control work, or approval from New River
will be required.

12.
ANNUAL PRODUCT REVIEW, DRUG LISTING, AND ANNUAL REPORTS

 
12.1
Annual Product Review

Patheon will perform an annual product review on the Products and will issue a
report to New River [***] after the conclusion of an annual manufacturing cycle.
New River and Patheon will jointly determine the annual reporting cycle. This
report will be a review of any changes in the manufacturing packaging, testing
or validation of the Product in the previous year; a summary of lots made,
released, and rejected; a stability summary. Also, control charting or trend
analysis of key Finished Product parameters will be performed on an annual basis
per Patheon written procedures. Any abnormalities will be explained in the
annual review. This review will be conducted in accordance with 21CFR211.180(e)
and any other Applicable Laws.

18

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
12.2
Drug Listing

Patheon is responsible for drug listing as the Manufacturer of the Product(s)
while New River and its affiliates are responsible for drug listing as the
distributor of the Product(s). New River will provide Patheon copies of all
product labeling including package insert, NBA number, name and address of NBA
holder, and NBC code which includes labeler code, product code, and packaging
code. New River will notify Patheon of the scheduled product launch.

 
12.3
Annual Reports, IND Updates or Other Regulatory Filings

New River is responsible for preparing any Annual Report, IN]) update or other
regulatory filing as required by Applicable Laws, including 21 CFR. 314.7(g)(3),
314.81(b)(2), and/or 601.12 (d), (f)(3). For a routine Annual Report, New River
shall request in writing, [***] prior to the due date, the chemistry,
manufacturing and controls data required for the submission, Patheon will
provide the requested information [***] before the due date. For other
regulatory filings New River will request CMC data from Patheon with appropriate
advance notice. The standard notice period is [***], however, other time periods
shall be satisfactory upon agreement of the parties.

13.
STORAGE AND SHIPPING

 
13.1
Storage

Patheon will ensure that during storage of the Product(s) that procedures are in
place to protect the Products from deterioration, interference, theft, Product
contamination or admixture with any other materials. New River will provide
details of any labeling requirements and container sealing and integrity
requirements.

 
13.2
Packing and Labeling for Transit

The Product(s) will be suitably packed for transit, each pallet or outer
container being labeled in accordance with the approved Specifications and
Applicable Laws.

 
13.3
Mixing of Product

Different lots of a single Product or different types of Products will not be
mixed on a pallet.

19

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
13.4
Shipment of Product to New River

Only approved, finished (unless required by New River), labeled Products will be
shipped by Patheon to New River or Affiliates Distribution Center. Any shipment
of Product from Patheon, which is unapproved, or under quarantine requires prior
written consent by New River’s Quality Assurance. This authorization will be on
a lot by lot basis.

14.
CONTRACTUAL AGREEMENT

Established at New River Pharmaceuticals Inc., 1881 Grove Avenue, Radford,
Virginia 24141

For and on behalf of NEW RIVER PHARMACEUTICALS INC.:

           
NAME
 
TITLE
 
SIGNATURE
 

For and on behalf of PATHEON PHARMACEUTICALS INC.:

           
NAME
 
TITLE
 
SIGNATURE
 

20

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

APPENDIX I

Responsibilities Matrix

Patheon is responsible for all the operations that are marked with “X” in the
column titled “Patheon” and New River is responsible for all the operations that
are marked with C” in the column titled “New River.” If marked with “(X)”, the
designated party will cooperate.

 
(a)
Administrative or Overall

   
New River
 
Patheon
 
1.   
Provide Product Specifications. (Schedule A of MSA)
 
X
 
2.   
Manufacture and package Product(s) according to the Specifications. (Appendix V)
 
 
X
3.   
Permit GMP audits of all relevant premises, procedures and documentation by New
River and permit inspection by regulatory authorities.
 
 
X
4.   
Will not subcontract any of the work to a third party without prior written
consent of New River.
 
 
X
5.   
Provide copies of Annual Product Review reports.
 
 
X
6.   
Provide copies of information and correspondence necessary to support the Annual
Report when requested by New River.
 
 
X
7.   
Notify and obtain approval from New River before initiating any proposed changes
to the process, materials, testing, equipment or premises that may affect the
Product(s). New River approval will not be unreasonably withheld.
 
 
X
8.   
Notify New River within [***] of receipt of any FDA Form 483’s, warning letters
or the like from regulatory agencies relating to: (i) the Product(s); (ii) the
supply of Product(s) or (iii) the facilities used to produce, test or package
the Product(s). New River will review and approve responses that relate to the
Product(s) before submitting to the regulatory agency. Patheon reserves the
right to respond to such regulatory agencies without approval, if, in the
reasonable opinion of Patheon’s counsel, it is required to do so.
 
 
X
9.   
Notify New River within [***] of any regulatory authority requests for samples,
batch documentation, or other information related to the Product(s).
 
 
X
10.   
Conduct operations in compliance with applicable environmental, occupational
health and safety laws, and cGMP regulations.
 
 
X
11.   
Investigate all medical and non-medical product complaints related to the
manufacturing of the Product(s).
 
X
(X)

21

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT
 
12.   
Investigate all manufacturing Product complaints at New River’s request.
 
 
X
13.   
Notify other party within [***] of receipt of information meeting NDA Field
Alert criteria as defined in 21 CFR 314.81(b)(l).
 
X
X
14.   
Initiate and submit NDA Field Alert reports.
 
X
 
15.   
Initiate and manage Product recalls.
 
X
(X)
16.   
Timely liaise with Regulatory Authorities for approval, maintenance and updating
of marketing approval.
 
X
 

 
(b)
Validation and Process Testing Activities

   
New River
 
Patheon
 
1.   
Establish applicable validation plans and maintain a validation program for the
Product(s).
 
X
X
2.   
Qualify (IQ/OQ) facilities, utilities, laboratory equipment and process
equipment.
 
 
X
3.   
Calibrate instrumentation and qualify computer systems used in the manufacture
and testing of the Product(s).
 
 
X
4.   
Prepare all validation protocols and reports, for manufacturing and packaging
operations.
 
(X)
X
5.   
Review and approve master validation plan, and validation protocols and reports
for manufacturing and packaging of the Product(s).
 
X
X
6.   
Maintain appropriate equipment cleaning procedures and cleaning validation
program.
 
 
X
7.   
Provide toxicological information to be used in the development of a cleaning
program.
 
X
 
8.   
Validate analytical test methods for finished Product(s).
 
(X)
X

22

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(c)
Raw Materials

   
New River
Patheon
1.   
Provide the master formula including Bill of Materials.
 
X
 
2.   
Provide approved supplier list. New River to audit and approve API suppliers and
ensure cGMP compliance where New River stipulates the supplier. New River
stipulated suppliers will be included on New River’s approved supplier list
(attached hereto as APPENDIX VII)
 
X
 
3.   
New River to qualify and approve product specific excipient suppliers and ensure
cGMP compliance where New River stipulates the supplier. New River stipulated
suppliers will be included on New River’s approved supplier list (APPENDIX VII).
 
X
 
4.   
Patheon to qualify and approve excipient suppliers and ensure cGMP compliance
where Patheon stipulates the suppliers. Patheon stipulated suppliers will be
included on the Patheon approved supplier list (APPENDIX VII).
 
 
X
5.   
Provide API specifications.
 
X
 
6.   
Procure API (including Certificates of Analysis and Certificates of Compliance).
 
X
 
7.   
Provide test methods for API (if non-Compendial).
 
X
 
8.   
Validate non-Compendial testing methods for API.
 
 
X
9.   
Analyze and release API.
 
 
X
10.   
Retain reference sample of API for [***] of the last batch of Product(s)
manufactured with that material in the Product(s) or such longer period required
by law.
 
 
X
11.   
Procure inactive ingredients (including Certificates of Analysis and
Certificates of Compliance)
 
 
X
12.   
Provide test methods and method validation for inactive ingredients (if
non-Compendial).
 
X
 
13.   
Analyze and release inactive ingredients.
 
 
X
14.   
Retain reference samples of inactive ingredients [***] or such longer period as
required by law.
 
 
X
15.   
Maintain records and evidence on the testing of raw materials [***] after the
materials were last used in the manufacture of the Product(s).
 
 
X
16.   
At New River’s request, confirm that [***] raw materials purchased by Patheon
for the manufacture of Product(s) have a BSE/TSE certificate of compliance from
the raw material vendor.
 
 
X

23

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(d)
Bulk Manufacture

   
New River
Patheon
1.   
Create, control, issue and execute master batch record.
 
 
X
2.   
Approve master batch record.
 
X
X
3.   
Document, investigate and resolve deviations from approved manufacturing
instructions or specifications.
 
(X)
X

 
(e)
Packaging

   
New River
Patheon
1.   
Provide specifications for packaging components.
 
X
(X)
2.   
Review and approve labeling proofs.
 
X
 
3.   
Provide artwork and labeling text (blister, carton, leaflet, label etc.)
specifications.
 
X
 
4.   
Create control, issue and execute master packaging record.
 
 
X
5.   
Approve master packaging record.
 
X
X
6.   
Qualify and approve packaging component suppliers. New River to qualify and
approve packaging component suppliers and ensure cGMP compliance where New River
stipulates the supplier. New River stipulated suppliers will be included on its
approved supplier list (APPENDIX VII).
 
X
(X)
7.   
Patheon to qualify and approve packaging component suppliers and ensure cGMP
compliance when Patheon stipulates the supplier. Patheon stipulated suppliers
will be included on its approved supplier list (APPENDIX VIII).
 
 
X
8.   
Provide test methods for packaging components.
 
(X)
X
9.   
Procure packaging components.
 
 
X
10.   
Analyze and release packaging components.
 
 
X
11.   
Maintain records and evidence on the testing of packaging/labeling materials
[***] after the materials were last used in the packaging/labeling of the
Product(s).
 
 
X
12.   
Document, investigate and resolve any deviation from approved packaging
instructions or specifications.
 
 
X

 
24

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

 
(f)
Testing & Release of Finished Product

   
New River
Patheon
1.   
Provide finished product specifications. (Schedule A of MSA)
 
X
 
2.   
Supply/develop analytical test methods for finished product.
 
(X)
X
3.   
Test finished product. Issue CoA/ CoC (Appendix VI)
 
 
X
4.   
Maintain all batch records for a minimum of [***] past Product(s) expiry date
and supply copies of all such records to New River upon request.
 
 
X
5.   
Notify New River QA of confirmed Out-Of-Specification results within [***].
 
 
X
6.   
Resolve Out-Of-Specifications results and Issue Quality Observation Report prior
to product release.
 
 
X
7.   
Retain reference samples of finished product for [***] past expiration date.
 
 
X
8.   
Retain reserve sample of finished product as required by 21 CFR 211.l70(b)(1)
 
 
X

 
(g)
Stability Testing

   
New River
Patheon
1.   
Provide stability testing protocol for finished Product(s).
 
X
(X)
2.   
Store stability samples.
 
 
X
3.   
Develop and validate stability indicating assay.
 
(X)
X
4.   
Complete stability testing including data review [***] of stability pull, or
earlier as dictated by site SOPs.
 
 
X
5.   
Report stability data annually or more frequently if requested.
 
 
X
6.   
Notify New River of any confirmed stability failure for Product(s) supplied to
New River [***] and [***].
 
 
X

 
25

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

APPENDIX II
DEFINITIONS

“ANDA” means Abbreviated New Drug Application.

“API” means Active Pharmaceutical Ingredient

“APR” means Annual Product Review as defined in 21 CPR 2

“AR or Annual Report means a regulatory update to a New Drug Application (NDA)
or Abbreviated New Drug Application (ANDA) submitted to the FDA (or other such
equivalent agency). Typically minor changes to such applications are submitted
pursuant to 21 CFR 314.70(4

“BSE” means Bovine Spongiform Encephalopathy.

“CofA” means Certificate of Analysis

“Cot” means Certificate of Compliance

“CFR” means the United States Code of Federal Regulations

“cGMP” means Current Good Manufacturing Practice as described in 21 CFR 210 and
211, or its equivalent foreign counterpart.

“DEA” means Drug Enforcement Administration, or its equivalent foreign
counterpart

“Event means an audit initiated by a quality or process event, which warrants
Thither investigation by New River. “FDA” means Food & Drug Administration, or
its equivalent foreign counterpart

“ICH” means the International Committee on Harmonization.

“IQ’ means Installation Qualification.

“MA” means routine or annual Manufacturing Audit

“MSA” means Manufacturing Services Agreement

“Master Batch Record(s)” mean the approved formulation, manufacturing/packaging
instructions, and controls whereby a Batch of Product is manufactured. Master
Batch Records must be written per cGMPs for all clinical, registration,
stability, and commercial manufacturing processes and may be issued repeatedly
of the manufacture of the same Batch of Product

“Methods” means approved analytical testing procedures for Raw Materials,
intermediates and final Product.

26

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

“NDA” means New Drug Application or non-US equivalent thereof applicable to or
referencing of the API to be supplied hereunder relating to the New River
formulation of the finished dose product and owned by New River, and any
supplements to such NDA as may be filed during the term hereof

“NDC” means National Drug Code.

“OOS” means Out of Specification.

“OQ” means Operational Qualification.

“Primary Packaging Component” means a component that is or maybe in direct
contact with the dosage form and labeling.

“TSE” means Transmissible Spongiform Encephalopathy.

27

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

APPENDIX III

LIST OF CONTACTS

(NAME, PHONE, FAX, E-MAIL)
 
ISSUE
NEW RIVER
PHARMACEUTICALS, INC. or
AFFILIATES
PATHEON
PHARMACEUTICALS INC.
Product Release
Andy Romano
[***]
 
Chuck Venable
[***]
 
Investigations
Cheryl Zwirgzdas
[***]
 
Chuck Venable
[***]
 
Regulatory Inspections
Andy Romano
[***]
 
David Leuck
[***]
 
Stability
Andy Romano
[***]
 
Chuck Venable
[***]
 
Validation
Andy Romano
[***]
 
Chuck Venable
[***]
 
Complaints
Andy Romano
[***]
 
Phil Bates
[***]
 
Change Management
Andy Romano
[***]
 
Greg Hammer
[***]
 
Audits
Andy Romano
[***]
 
David Leuck
[***]
 
Regulatory Affairs
Andy Romano
[***]
or
Suma Krishnan
[***]
 
Greg Hammer
[***]
 
Emergency
Cheryl Zwirgzdas
[***]
 
Chuck Venable
[***]
 

28

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

APPENDIX IV
Batch Document Audit Schedule

The primary responsibility for batch document review resides with Patheon
Pharmaceuticals. New River Pharmaceuticals will conduct a graduated plan for
auditing batch documentation. This will supplement the annual cGMP audit, or any
other investigations related to quality or batch incidents.

The following table outlines the plans for New River or its affiliates review of
batch documentation:
 

 
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

 
29

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

APPENDIX V
List of Products
 
Product Name and Strength
Package Configuration
Finished Product
Identification Number
 
[***]
Bulk
 
[***]
Bulk
 
[***]
Bulk
 

 
30

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

APPENDIX VI

Release Documentation

The release documentation for all batches will include a Certificate of Analysis
(COA), a Certificate of Conformance (COC), and a list of all process or testing
deviations for this batch.

A Certificate of Analysis
This document will list the following:

 
•
The Product Name

 
•
The Batch Number

 
•
The Date of Manufacture

 
•
All Analytical Test Results and Specifications

 
•
All Microbiological Test Results

 
•
Certification that all Specifications have been met.

A Certificate of Conformance (
This document will attest to the fact that the batch of products was made in
accordance with all applicable regulations, product licenses, and company
policies. This document will include:

 
•
Product name

 
•
Lot number

 
•
Batch quantity approved

 
•
Expiry date

•
A statement confirming that the batch record conforms to cGMP requirements and
has been reviewed and approved by Patheon’s Quality Assurance.

Patheon’s authorized Quality Assurance personnel will sign the above
certificates.

31

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

APPENDIX VII
New River Approved Supplier List

NOTE: Approval of these API suppliers in pending approval of NRP1O4 NDA by FDA.

 
1.
[***]

 
2.
[***]

32

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

APPENDIX VIII

Patheon Approved Supplier List

Material
Approved Supplies(s)
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

33

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

SCHEDULE H

QUARTERLY ACTIVE MATERIAL INVENTORY REPORT

TO:
NEW RIVER PHARMACEUTICALS INC.

FROM:
PATHEON PHARMACEUTICALS INC.

RE:
Active Materials quarterly inventory report pursuant to Section 2.4(a) of the
Manufacturing Services Agreement dated (the “Agreement”)

 

--------------------------------------------------------------------------------

 
Reporting quarter:
             
Active Materials on hand at beginning of quarter:
 
kg
(A)
       
Active Materials on hand at end of quarter:
 
kg
(B)
       
Quantity Received during quarter:
 
kg
(C)
       
Quantity Dispensed during quarter:
 
kg
 
(A + C - B)
             
Quantity Converted during quarter:
 
kg
 
(total Active Materials in Products produced and not rejected, recalled or
returned)
     

Capitalized terms used in this report have the meanings given to such terms in
the Agreement.

DATE:
         
PATHEON PHARMACEUTICALS NC.
     
Per:
         
Name:
         
Title:
   

 
    ______________________________________
 
1    Excludes any Active Materials received or dispensed in connection with
technical transfer activities or development activities, including, without
limitation, any regulatory, stability, validation or test batches manufactured
during the quarter.
 
34

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

EXECUTION VERSION

SCHEDULE I

REPORT OF ANNUAL ACTIVE MATERIAL INVENTORY RECONCILIATION
AND
CALCULATION OF ACTUAL ANNUAL YIELD.

TO:
NEW RIVER PHARMACEUTICALS NC.

FROM:
PATHEON PHARMACEUTICALS NC.

RE:
Active Materials annual inventory reconciliation report and calculation of
Actual Annual Yield pursuant to Section 2.4(a) of the Manufacturing Services
Agreement dated’ (the “Agreement

 
Reporting Year Ending:
             
Active Materials on hand at beginning of Year:
 
kg
(A)
       
Active Materials on hand at end of Year:
 
kg
(B)
       
Quantity Received during Year:
 
kg
(C)

 
35

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT
 
Quantity during Year:
 
kg
(D)
(A +C - B)
             
Quantity Converted during Year:
 
kg
(E)
(total Active Materials in Products produced and not rejected, recalled or
returned)
             
Active Materials Cost:
$
kg
(F)
       
Target Yield:
 
kg
(G)
       
Actual Annual Yield:
 
kg
(H)
((E/D) * 100)
     

 
    ______________________________________

2    Excludes any Active Materials received or dispensed in connection with
technical transfer activities or development activities, including, without
limitation, any regulatory, stability, validation or test batches manufactured
during the quarter.
 
36

--------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT

EXECUTION VERSION

Shortfall:         $___________________________  (I)

(((H --3% - I)/100) * * D) (if a negative number, insert zero)

Based on the foregoing reimbursement calculation ______________________ will
reimburse __________________the amount of $__________________

Capitalized terms used in this report have the meanings given to such terms in
the Agreement.

DATE:
         
PATHEON PHARMACEUTICALS NC.
     
Per:
   
Name:
   
Title:
   

 
 37

--------------------------------------------------------------------------------