Exhibit 10.11

Manufacturing Services Agreement

Between

Patheon Inc.,

and

Patheon Pharmaceuticals Inc.,

and

TransOral Pharmaceuticals, Inc.

October 6, 2006

 

 

Confidential treatment has been requested for portions of this exhibit. These
portions have been omitted from this exhibit and have been filed separately with
the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

Table of Contents

 

ARTICLE 1 INTERPRETATION

   2

1.1

  

DEFINITIONS

   2

1.2

  

CURRENCY

   5

1.3

  

SECTIONS AND HEADINGS

   5

1.4

  

SINGULAR TERMS

   6

1.5

  

SCHEDULES

   6

ARTICLE 2 PATHEON’S MANUFACTURING SERVICES

   7

2.1

  

MANUFACTURING SERVICES

   7

2.2

  

ACTIVE MATERIAL YIELD

   10

ARTICLE 3 PATHEON’S SUPPLY OF PRODUCT

   12

3.1

  

SUPPLY OF PRODUCT

   12

3.2

  

PRODUCT

   13

3.3

  

ORDERS AND FORECASTS

   13

3.4

  

MINIMUM ORDERS

   14

3.5

  

SHIPMENTS

   14

3.6

  

SUPPLY FAILURE

   15

3.7

  

COMPONENTS

   16

3.8

  

PATHEON AUDIT RIGHTS

   18

ARTICLE 4 CLIENT’S OBLIGATIONS

   18

4.1

  

ACTIVE MATERIALS

   18

4.2

  

INVOICES AND PAYMENT

   18

ARTICLE 5 CONVERSION FEES AND COMPONENT COSTS

   19

5.1

  

FIRST YEAR PRICING

   19

5.2

  

PRICE ADJUSTMENTS - SUBSEQUENT YEARS’ PRICING

   19

5.3

  

PRICE ADJUSTMENTS - CURRENT YEAR PRICING

   20

5.4

  

ADJUSTMENTS DUE TO TECHNICAL CHANGES

   21

ARTICLE 6 PRODUCT CLAIMS AND RECALLS

   22

6.1

  

PRODUCT CLAIMS

   22

6.2

  

PRODUCT RECALLS AND RETURNS

   23

6.3

  

PATHEON’S RESPONSIBILITY FOR DEFECTIVE AND RECALLED PRODUCTS

   23

6.4

  

DISPOSITION OF DEFECTIVE OR RECALLED PRODUCTS

   24

6.5

  

CUSTOMER QUESTIONS AND COMPLAINTS

   24

6.6

  

SOLE REMEDY

   25

ARTICLE 7 CO-OPERATION; REGULATORY FILINGS

   25

7.1

  

QUARTERLY REVIEW

   25

7.2

  

GOVERNMENTAL AGENCIES

   26

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

7.3

  

RECORDS AND ACCOUNTING BY PATHEON

   26

7.4

  

INSPECTION

   26

7.5

  

ACCESS

   26

7.6

  

REPORTS

   27

7.7

  

REGULATORY FILINGS

   27

ARTICLE 8 TERM AND TERMINATION

   28

8.1

  

INITIAL TERM

   28

8.2

  

TERMINATION FOR CAUSE

   29

8.3

  

TERMINATION BY CLIENT

   29

8.4

  

OBLIGATIONS ON TERMINATION

   30

ARTICLE 9 REPRESENTATIONS, WARRANTIES AND COVENANTS

   31

9.1

  

AUTHORITY

   31

9.2

  

CLIENT WARRANTIES

   31

9.3

  

PATHEON WARRANTIES

   31

9.4

  

DEBARRED PERSONS

   32

9.5

  

PERMITS

   32

9.6

  

No WARRANTY

   32

ARTICLE 10 REMEDIES ANT INDEMNITIES

   33

10.1

  

CONSEQUENTIAL DAMAGES

   33

10.2

  

LIMITATION OF LIABILITY

   33

10.3

  

PATHEON

   33

10.4

  

CLIENT

   34

10.5

  

REASONABLE ALLOCATION OF RISK

   35

ARTICLE 11 CONFIDENTIALITY

   35

11.1

  

CONFIDENTIAL INFORMATION

   35

11.2

  

CONFIDENTIALITY

   35

11.3

  

CONFIDENTIAL TERMS

   36

ARTICLE 12 DISPUTE RESOLUTION

   37

12.1

  

COMMERCIAL DISPUTES

   37

12.2

  

TECHNICAL DISPUTE RESOLUTION

   37

ARTICLE 13 MISCELLANEOUS

   38

13.1

  

INVENTIONS

   38

13.2

  

INTELLECTUAL PROPERTY

   39

13.3

  

INSURANCE

   40

13.4

  

INDEPENDENT CONTRACTORS

   40

13.5

  

NO WAIVER

   40

13.6

  

ASSIGNMENT

   40

13.7

  

FORCE MAJEURE

   41

13.8

  

ADDITIONAL PRODUCT

   41

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

13.9

  

NOTICES

   41

13.10

  

SEVERABILITY

   42

13.11

  

ENTIRE AGREEMENT

   42

13.12

  

OTHER TERMS

   43

13.13

  

NO THIRD PARTY BENEFIT OR RIGHT

   43

13.14

  

EXECUTION IN COUNTERPARTS

   43

13.15

  

GOVERNING LAW

   43

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

MANUFACTURING SERVICES AGREEMENT

THIS MANUFACTURING SERVICES AGREEMENT (the “Agreement”) made as of the 6th day
of October, 2006 (the “Effective Date”)

BETWEEN:

PATHEON INC., a corporation existing under the laws of Canada;

                                    - and -

PATHEON PHARMACEUTICALS INC.,

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

(Patheon Inc. and Patheon Pharmaceuticals Inc. hereinafter shall be collectively
referred to as “Patheon”),

                                    - and -

TRANSORAL PHARMACEUTICALS, INC.,

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

(hereinafter referred to as the “Client”).

(Patheon and Client may be referred to individually by name or as a “Party” or
collectively as the “Parties”)

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:

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

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 and purchased
by Patheon on behalf of the Client from Clients designee;

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

“Affiliate” means, with respect to a Party to this Agreement:

 

  (a) a business entity which controls such Party; or

 

  (b) a business entity which is controlled by such Party; or

 

  (c) a business entity which is under common control with such Party;

For the purposes of this definition, “control” means, with respect to an entity,
the possession, directly or indirectly, of at least a majority of the share
capital or voting rights of such entity or of the power to direct or cause the
direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise.

“Annual Report” means the annual report as described in Title 21 of the United
States Code of Federal Regulations, Section 314.81(b)(2);

“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 Volume” means the volume of Product to be manufactured in any Year of
this Agreement as set forth in Schedule B hereto and subject to Section 5.3(b)
below;

“Applicable Laws” means all laws, ordinances, rules and regulations of any
governmental or regulatory authority that apply to the Manufacturing Services,
the Products or this Agreement, including without limitation (i) all applicable
federal, state and local laws and regulations; (ii) the U.S. Federal Food, Drug,
and Cosmetic Act (“FDCA”), (iii) regulations and guidelines of the FDA and other
Regulatory Authorities, and ICH guidelines and (iv) cGMPs, and if applicable,
current Good Laboratory Practices promulgated by the FDA and other Regulatory
Authorities.

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

“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;

“Business Day” means a day other than a Saturday, Sunday or a day that is a
federal holiday in the United States;

“cGMPs” means current good manufacturing practices as described in: (i) 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 and (ii) European Community Directive 2003/94/EC
(Principles and guidelines of good manufacturing practice in respect of
medicinal products for human use and investigational medicinal products for
human use); in each case as interpreted by the ICH Harmonized Tripartite
Guideline, any U.S., European, or other applicable laws, regulations or
respective guidance documents subsequently established by a governmental or
regulatory authority, and any arrangements, additions or clarifications agreed
from time to time between the Parties.

“Commencement Date” means the first day upon which the Manufacturing Services
shall commence, which shall be on or about [***];

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

“Confidentiality Agreement” means the Confidentiality Agreement between Patheon,
Inc., and the Client dated August 17,2004.

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

“FDA” means the United States government department known as the Food and Drug
Administration, or any successor organization thereto with respect to the
regulation and authorization of medicinal products in the United States of
America, and each of its territories, districts and possessions and the
commonwealth of Puerto Rico;

“Firm Orders” has the meaning specified in Section 3.3(b);

“Intellectual Property” means any or all of the following and all rights
anywhere in the world in, to and arising out of: patents, patent applications,
trademarks, trademark applications, trade names, trade secrets, Inventions,
copyright and industrial designs;

 

-3-

 

 

[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

“Invention” means any formula, idea, information, innovation, improvement,
development, discovery, computer program, device, trade secret, method,
know-how, process, technique, technology, material 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 and in
accordance with this Agreement but, for greater certainty, does not include the
Active Materials;

“Manufacturing Services” means the manufacturing, quality control, quality
assurance and stability testing, packaging and related services, to be performed
by Patheon as contemplated in this Agreement and described in the Specifications
and the Quality Agreement(s), required, to produce Products from Active
Materials and Components;

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

“Maximum Credit Value” means the maximum value of Active Materials that may be
credited by Patheon pursuant to this Agreement, as set forth on Schedule D;

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

“Product(s)” means the products listed on Schedule A hereto, as such schedule
may be amended from time to time by the mutual written agreement of the Parties;

“Quality Agreements)” means the agreement(s) to be entered into between the
Parties hereto setting out the quality assurance standards to be applicable to
the Manufacturing Services provided by Patheon at the Cincinnati Manufacturing
Site and/or at the Whitby Secondary Manufacturing Site, which agreement(s) shall
be substantially in the form attached hereto as Schedule G;

“Regulatory Authority” means the FDA and any other Authority (including the
European Medicines Agency) involved in regulating any aspect of the conduct,
development, manufacture, market approval, sale, distribution, packaging or use
of the Products.

“Secondary Manufacturing Site” means the facility owned and operated by Patheon
Inc. that is located at 111 Consumers Drive Whitby, Ontario L1N 5Z5.

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

“Specifications” means the file, for each Product, which is provided by the
Client to Patheon in accordance with the procedures listed in Schedule A hereto
and which contains documents relating to such Product, including, without
limitation:

 

  (a) specifications for Active Materials and Components;

 

  (b) manufacturing specifications, directions and processes;

 

  (c) storage requirements;

 

  (d) all environmental, health and safety information relating to the Product
including material safety data sheets; and

 

  (e) the finished Product specifications and acceptance criteria, and packaging
specifications and shipping requirements for each Product;

all as updated, amended and revised from time to time by the Client in writing
in accordance with the terms of this Agreement, and in all cases including
compliance with all Applicable Laws and the Quality Agreement(s);

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

“Territory” means worldwide;

“Third Party Rights” means the Intellectual Property owned or controlled by any
third party;

“Year” means a calendar year occurring after the Commencement Date; provided,
however, the first Year means the period from the Commencement Date up to and
including December 31 of the same calendar year in which the Commencement Date
occurs.

 

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 Headings.

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.

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

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 List and Specifications

Schedule B

   -      Minimum Run Quantity, Annual Volume & Fees

Schedule C

   -      Stability Testing & Validation Activities

Schedule D

   -      Active Materials & Active Materials Credit Value

Schedule E

   -      Batch Numbering & Expiration Dates

Schedule F

   -      Technical Dispute Resolution

Schedule G

   -      Quality Agreement(s)

Schedule H

   -      Quarterly Active Materials Inventory Report

Schedule I

   -      Report of Annual Active Materials Inventory Reconciliation and
Calculation of Actual Annual Yield

Schedule J

   -      Form of Exclusive Components Purchasing Summary

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

ARTICLE 2

PATHEON’S MANUFACTURING SERVICES

 

2.1 Manufacturing Services.

Commencing on the Commencement Date, Patheon shall provide the Manufacturing
Services for the Territory for the corresponding fees specified in Schedules B
and C in order to produce Products for the Client, all in accordance with the
Specifications, Applicable Laws, Quality Agreement(s), and this Agreement.
Patheon shall conduct all Manufacturing Services at the Manufacturing Site or
the Secondary Manufacturing Site and may change the Manufacturing Site and the
Secondary Manufacturing Site for the Products only with the prior written
consent of Client, such consent not to be unreasonably withheld. As part of
Patheon’s performance of the Manufacturing Services, Patheon and the Client
agree that:

 

  (a)

Active Materials. As directed by Client, (i) Client shall supply Active
Materials to Patheon in accordance with the terms of Section 4.1 below; or
(ii) Patheon shall purchase Active Materials on behalf of Client from third
party suppliers approved in writing by Client in such quantities as the Parties
agree are reasonably necessary for Patheon to perform the Manufacturing
Services. For those quantities of Active Materials that Client has requested
Patheon to purchase, Client shall pre-pay to Patheon the cost of the Active
Materials plus an additional 15% as a handling fee. Upon receipt of all Active
Materials (whether such Active Materials were supplied by Client or purchased by
Patheon), Patheon shall conduct a reasonable inspection and release testing of
such Active Materials in accordance with mutually agreed procedures. Patheon
shall use and store all Active Materials provided hereunder in accordance with
Client’s reasonable instructions, the Quality Agreement(s), cGMPs and all other
Applicable Laws. Patheon shall conduct chemical identity testing for all Active
Materials received at the Manufacturing Site or the Secondary Manufacturing
Site, as applicable, within twenty (20) days of such receipt. Further, Patheon
shall conduct full release testing of all Active Materials received at the
Manufacturing Site or the Secondary Manufacturing Site, as applicable, not later
than [***] after the date of receipt in accordance with the procedures and using
the analytical testing methodologies set forth in the Specifications and the
Quality Agreement(s). Patheon shall promptly (and in any event within [***]
following completion of applicable testing) notify the Client in writing of any
failure of the Active Materials to conform to the Specifications for such Active
Materials, and any other problem it may identify with the Active Materials
detected during the inspection and testing process. Patheon shall store the
Active Materials at Patheon’s storage facility at the Manufacturing Site or the
Secondary Manufacturing Site and shall ensure that the Active Materials do not
become subject to any lien or other security interest. The Client shall pay
Patheon

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

[***], for storing Active Materials (if Active Material is a controlled
substance or requires refrigeration, the charge will be [***]) in excess of that
required to support the Firm Order period. Patheon shall use all quantities of
Active Materials provided hereunder for the sole purpose of performing the
Manufacturing Services on behalf of Client and not for any other use or purpose.
The Parties acknowledge and agree that title to all Active Materials shall at
all times belong to and remain in Client. All Active Materials in Patheon’s
possession shall be subject to disposition by Client upon expiration or
termination of this Agreement, and in either such event, Patheon shall deliver
the Active Materials to Client or its designee, at Client’s expense. Patheon
agrees to reasonably cooperate with Client, at Client’s expense, in the filing
of any UCC financing statements relating to the Active Materials as Client may
deem necessary or useful. Patheon’s liability with respect to any lost or
damaged Active Materials shall be as set forth in Sections 2.2 and 10.2(a) and
Article 6.

 

  (b) Conversion of Active Materials and Components. Patheon shall convert
Active Materials and Components into Products.

 

  (c) Quality Control and Quality Assurance. Patheon shall perform the quality
control and quality assurance testing specified in the Quality Agreement(s) and
in Schedule C. Batch review and release to the Client shall be the
responsibility of Patheon’s quality assurance group. Patheon shall perform its
batch review and release responsibilities in accordance with the Specifications,
the Quality Agreement(s) and Patheon’s standard operating procedures, which
Patheon will make reasonably available to Client at the Manufacturing Site or
the Secondary Manufacturing Site upon Clients request.

 

  (d) Components. Patheon shall purchase and test all Components, at Patheon’s
expense, as specified by the Specifications and prior to using such Components
to manufacture Products. Patheon shall store the Components at Patheon’s storage
facility at the Manufacturing Site or the Secondary Manufacturing Site and shall
ensure that the Components do not become subject to any lien or other security
interest.

 

  (e)

Stability Testing. Patheon shall conduct stability testing on the Products in
accordance with the protocols set out in the Specifications and in Schedule C
for the separate fees specified in Schedule C, as required by the FDA or other
Regulatory Authorities or as requested by the Client and in any case on at least
[***] of Product from the Manufacturing Site and [***] of Product from the
Secondary Manufacturing Site at least once per calendar year following the
Commencement Date or more frequently as may be specified in the Quality
Agreement(s). Patheon shall not make any changes to these testing protocols
without prior written approval from the Client. In the event of a

 

-8-

 

 

[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

confirmed stability test failure, Patheon will notify the Client within one
(1) Business Day after such failure and Patheon and the Client 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 Specifications, the Quality Agreement(s), cGMPs or
Applicable Laws. Patheon will provide any and all data and results relating to
the stability testing as may be specified in the Quality Agreement(s) or
otherwise requested by the Client.

 

  (f) Packaging. Patheon shall package the Products as set out in the
Specifications. The Client shall be responsible for the cost of artwork
development for the Products. In addition, Patheon shall make arrangements for
and implement the imprinting of batch numbers and expiration dates for each
batch of Product shipped. 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. The
Client may, in its sole discretion, make changes to labels, product inserts and
other packaging for the Products, which changes shall be submitted by the Client
to all applicable Regulatory Authorities from which approval of such changes is
required. The Client shall be responsible for the cost of labeling obsolescence
due to changes to such labeling made by the Client. Patheon’s name shall not
appear on the label or anywhere else on the Products unless: (i) required by
Applicable Laws; or (ii) Client submits a written request to Patheon for such
use and Patheon expressly consents to such use of its name in writing.

 

  (g) Bill Back Items. The expenses in respect of all third party supplier fees
for the purchase of columns, standards, tooling, PAPR suits (where applicable)
and other project specific items necessary for Patheon to perform the
Manufacturing Services, and which are not included as Components, shall be
charged to the Client at Patheon’s costs, provided that, in each case, such
expenses have received Client’s prior written approval.

 

  (h) Validation Activities. Patheon will assist in the development and approval
of the validation protocols for analytical methods and manufacturing procedures
(including packaging procedures) for the Products as described in Schedule C and
as may be further requested by Client from time to time. The fees associated
with Patheon’s assistance in providing validation development assistance are set
out in Schedule C.

 

  (i)

Samples. Patheon shall retain sufficient quantities of all shipped Product,
Active Materials and Components to perform at least full duplicate quality
control testing. Retained repository samples of all shipped Product, Active
Materials and

 

- 9 -

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Components shall be maintained in a suitable storage facility until one (1) year
after expiry or such longer period as may be required by Applicable Laws. All
such samples shall be available for inspection by the Client at reasonable
intervals upon reasonable notice. Client shall be responsible, at all times, for
the final release of the Product.

 

2.2 Active Material Yield.

 

  (a) Reporting. Commencing on the Commencement Date, Patheon shall monitor on a
quarterly basis the inventory of the Active Materials held by Patheon and shall
provide the Client, within [***] following the last day of the applicable
quarter, with an 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 is received at
the Manufacturing Site or the Secondary Manufacturing Site, as applicable, in
the applicable quarter and that complies with the Specifications at the time
such Active Materials are received.

Quantity Dispensed: The total quantity of Active Materials dispensed at the
Manufacturing Site or the Secondary Manufacturing Site, as applicable, during
the applicable quarter. The Quantity Dispensed for each of the Manufacturing
Site and the Secondary Manufacturing Site is calculated by adding the Quantity
Received at such site to the inventory of Active Materials at such site that
complied with the Specifications at the time such Active Materials were received
by Patheon and have been held at such site at the beginning of the applicable
quarter, less the inventory of Active Materials at such site that complied with
the Specifications at the time such Active Materials were received by Patheon at
such site and are held at the end of such quarter. The Quantity Dispensed shall
only include Active Materials received and dispensed in connection with
commercial manufacturing of Products and, for certainty, shall not include any
Active Materials received or dispensed in connection with technical transfer
activities or development activities agreed to in writing by the Parties during
the applicable period, including, without limitation, any regulatory, stability,
validation or test batches manufactured during such applicable period.

Quantity Converted: The total amount of Active Materials contained in the
Products produced at the Manufacturing Site or Secondary Manufacturing Site, as
applicable, with the Quantity Dispensed (including lab samples required by the
Specifications and any additional Products produced pursuant to Section 6.1 or
6.2) at such site, delivered by Patheon, but not including Products 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
Specifications, the Quality Agreement(s), cGMPs and Applicable Laws.

 

-10-

 

 

[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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

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

Quantity Converted during the Year

Quantity Dispensed during the Year

For each of the Manufacturing Site and the Secondary Manufacturing Site, after
Patheon has produced [***] commercial production batches of Product at such site
and has produced commercial production batches for at least six months at such
site pursuant to this Agreement, the Parties will mutually agree on the target
yield in respect of such Product at such site (each, a “Target Yield”).
Thereafter, Patheon shall strive to maintain Actual Annual Yield levels for the
Product at each of the Manufacturing Site and Secondary Manufacturing Site above
the Target Yield for such site. Notwithstanding the foregoing, the Target Yield
for each such site will be adjusted yearly through good faith negotiations,
which negotiations will take into account the Actual Annual Yield for the
Product for such site over the preceding Year. For clarity, Patheon shall
calculate separate Active Annual Yields and the Parties will agree on separate
Target Yields, in each case as described above, for each of the Manufacturing
Site and the Secondary Manufacturing Site.

 

  (b) Shortfall Calculation. For each of the Manufacturing Site and the
Secondary Manufacturing Site, if the Actual Annual Yield falls more than [***]
below the respective Target Yield for such site in a Year, then the shortfall
for such site for such Year (the “Shortfall”) shall be determined based on the
following calculation:

[(Target Yield – [***]) – AAY] * Active Material Reimbursement Value * Quantity
Dispensed

The Shortfall for each of the Manufacturing Site and the Secondary Manufacturing
Site shall be disclosed by Patheon on the reconciliation report prepared in the
form annexed hereto as Schedule I.

Credit. For each of the Manufacturing Site and the Secondary Manufacturing Site,
if there is a Shortfall for a Product in a Year, then Patheon shall, at Client’s
sole option, either reimburse Client for the amount of any such Shortfall or
credit the Client’s account for the amount of any such Shortfall, in either case
not later than [***] after the end of such

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

Year. Each credit or reimbursement under this Section 2.2 shall be summarized on
the reconciliation report prepared in the form annexed hereto as Schedule I and
shall be promptly reimbursed or credited to Client, as applicable.

 

  (c) Maximum Credit Notwithstanding the foregoing provisions of this
Section 2.2, for both the Manufacturing Site and the Secondary Manufacturing
Site together, Patheon’s liability for Active Materials calculated in accordance
with this Section 2.2 for any Product in a Year shall not exceed, in the
aggregate, the Maximum Credit Value set forth in Schedule D hereto.

 

  (d) Significant Active Materials Loss. Patheon shall notify Client in writing
in the event an amount in excess of in excess of [***] of Active Materials is
damaged, lost or otherwise rendered unusable (including to the extent contained
in any non-conforming Product) by Patheon at any one time (a “Significant Active
Materials Loss”) as soon as practicable following such incident. In addition,
and notwithstanding anything in this Section 2.2 to the contrary, Patheon shall
reimburse Client for such Active Materials within thirty (30) days after
discovery of the Significant Active Materials Loss. For purposes of clarity, any
Active Materials damaged, lost or otherwise rendered unusable in connection with
a Significant Active Materials Loss shall be included in the calculation of the
Quantity Dispensed and any amount paid by Patheon in accordance with this
Section 2.2(d) shall be credited against the amount, if any, to be paid by
Patheon to Client pursuant to Section 2.2(c).

 

  (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.

ARTICLE 3

PATHEON’S SUPPLY OF PRODUCT

 

3.1 Supply of Product.

Commencing on the Commencement Date and during the term of the Agreement,
Patheon shall manufacture and supply all quantities of the Product ordered by
Client in the Territory pursuant to this Agreement. Subject to the Clients
rights to qualify a third party manufacturer under Section 3.6 and Clients
rights under Section 3.6 in the event of a Supply Failure (as defined in
Section 3.6), commencing on the Commencement Date and during the term of this
Agreement, Client shall commit to purchase its entire requirements of Product(s)
for sale in the Territory from Patheon by placing orders for at least [***] of
its requirements of Products in the Territory during any Year from the
Manufacturing Site and its remaining requirements in the Territory during such
Year, as necessary, from the Secondary Manufacturing Site (the “Purchase
Commitment”).

 

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[***] Confidential treatment has been requested for portions of this exhibit.
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separately with the Securities and Exchange Commission.

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3.2 Product.

Patheon hereby covenants that all Product manufactured and supplied to Client
under this Agreement: (a) shall have been manufactured, packaged, tested, stored
and supplied in compliance with the Specifications, the Quality Agreement(s),
cGMPs, Applicable Laws and this Agreement; and (b) shall not be adulterated, or
misbranded within the meaning of the FDCA or other Applicable Laws as of the
time that the Product is transferred to the carrier at Patheon’s shipping point.

 

3.3 Orders and Forecasts.

 

 

(a)

Rolling Forecasts. Concurrent with the execution of this Agreement, the Client
shall provide Patheon with a written non-binding eighteen (18) months forecast
of the volume of each Product that the Client then anticipates will be required
to be produced and delivered to the Client during each month of the eighteen
(18) months period commencing on the Commencement Date, which forecast shall be
used by Patheon solely for advisory purposes. Commencing on the Commencement
Date, such forecast will be updated by the Client monthly on or before the [***]
of each calendar month on a rolling eighteen (18) months basis and in any case
updated forthwith upon the Client determining any time after the Effective Date
that the volumes contemplated in the most recent of such forecasts has changed
by more than [***]. The most recent eighteen (18) months forecast provided by
the Client shall prevail.

 

  (b) Firm Orders. On or before the [***] of each calendar month following the
Commencement Date, the Client shall issue firm written orders (“Firm Orders”)
for the Products to be produced and delivered to the Client on a date not less
than three (3) months from the first day of the calendar month immediately
following the date that the Firm Order is submitted. Such Firm Orders submitted
to Patheon shall specify the Client’s purchase order number, quantity (or, if
more than one shipment is requested, quantities) of Product ordered 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 Firm Orders shall be firm and binding on the Client and shall
not be subject to reduction by the Client.

 

 

(c)

[***] Year Forecast. On or before the [***] day of [***] of each Year, the
Client shall provide Patheon with a written non-binding [***] -year forecast
(broken down by quarters for the second and third years of the forecast) of the
volume of each Product the Client then anticipates will be required to be
produced and delivered to the Client during the [***] period, which forecast
shall be used by Patheon solely for advisory purposes.

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

3.4 Minimum Orders.

The quantity of Product ordered by Client from Patheon in each shipment must be
equal to or greater than the Minimum Run Quantity set out in Schedule B;
provided, however, that at Client’s request, the Minimum Run Quantity may be
reduced, subject to adjustments in the price of Product under Section 5.3(a)
below.

 

3.5 Shipments.

 

  (a) 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 the Client or Client’s
designee, as applicable. Patheon shall, in accordance with the Client’s
instructions and as agent for the Client, (i) arrange for shipping to be paid by
the Client and (ii) at the Client’s risk and expense, obtain any export licence
or other official authorization necessary to export the Products. The Client
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.

 

  (b) Prior to shipping (or temporarily storing, if requested by the Client) any
order, Patheon shall test each batch of Product manufactured under this
Agreement. Patheon shall conduct all such testing in accordance with the
procedures and using the analytical testing methodologies set forth in the
Specifications, Schedule C and the Quality Agreement(s). Each time Patheon ships
Products to the Client’s designee, it shall provide with each shipment: (i) a
certificate of analysis and certificate of compliance including a statement that
the shipped batch of Product has been manufactured and tested in accordance with
Specifications, the Quality Agreement(s) and Applicable Laws, and, if requested
by Client, completed batch production records; and (ii) the customs
documentation corresponding to such shipment and such other documentation and
information as may be necessary or desirable for complying with import, export
and customs laws, regulations and like requirements, as applicable. The Client
will have sole responsibility for the release of Products to the market. Patheon
shall not ship any Product until Client has completed its final release of such
Product and has given Patheon written notice to ship such Product, such notice
not to exceed seven Business Days from Client’s receipt of release documents
from Patheon. All Product shipped by Patheon, including its packaging, shall
meet all applicable export and customs laws, regulations and like requirements
for the United States.

 

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3.6 Supply Failure.

 

  (a) During the term of this Agreement in which Patheon, for any reason, except
to the extent due to Client’s failure to supply Active Materials, including,
without limitation, force majeure as defined in Section 13.7, fails to supply at
least [***] of the quantities of Product in any two (2) consecutive calendar
quarters in a Year pursuant to Firm Orders submitted by Client pursuant to and
in accordance with the terms and conditions of this Agreement within thirty
(30) days of the dates specified in such Firm Orders in compliance with this
Agreement, then such event shall be deemed a “Supply Failure.”

 

  (b) In the event of a Supply Failure, Client’s obligation under Section 3.1 to
purchase the Purchase Commitment of Product from Patheon shall terminate and
Client shall be free to purchase any amount of Product from any third party for
any purpose without restriction, subject to the terms of Section 3.6(c) below.
Notwithstanding anything to the contrary in Section 3.1 above (including the
Purchase Commitment): (i) Client shall have the right, at any time, to qualify a
third party manufacturer such that such third Party may manufacture and
commercially supply Product to Client in the event of a Supply Failure; and
(ii) as part of such qualification process, such third party may manufacture and
supply for Client, at any time (including during the term of this Agreement),
quantities of Product reasonably necessary for such qualification; provided,
however, that, except as provided otherwise in this Section 3.6 in the event of
a Supply Failure, for so long as the Purchase Commitment is in effect, Client
shall only be allowed to sell (x) [***] of Product produced by such third party
manufacturer, and (in addition to the amounts described in the foregoing part
(x)) (y) annually, [***] of Product produced by such third party manufacturer.
Patheon shall, at Client’s cost, cooperate with Client and assist in the
transfer to Client of all legal and technical documents concerning Active
Materials and Products, including master batch records, validation reports,
stability reports and relevant manufacturer authorizations, existing retention
samples and all such other documents and materials as may be reasonably
necessary or useful for Client to source Products from other qualified third
parties. Client shall reimburse Patheon for all of Patheon’s reasonable time,
material and other costs associated with the qualification of a third party
manufacturer.

 

  (c)

In the event that a Supply Failure occurs and such Supply Failure is the first
Supply Failure to occur during the term of this Agreement, at the written
request of Patheon, if Patheon has taken the necessary steps to ensure that a
Supply Failure will not re-occur, the Parties shall discuss in good faith
reinstating Client’s obligation under Section 3.1 to purchase the Purchase
Commitment from Patheon. If the Parties mutually agree in good faith that
Patheon has remedied the Supply

 

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[***] Confidential treatment has been requested for portions of this exhibit.
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separately with the Securities and Exchange Commission.

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Failure and has taken all steps necessary to ensure that a Supply Failure will
not re-occur, Client’s obligation under Section 3.1 to purchase the Purchase
Commitment from Patheon shall be reinstated, effective three (3) months
following the date of such agreement (such effective date of reinstatement, the
“Purchase Commitment Re-instatement Date”); provided, however, that, (i) the
terms of such re-instated Purchase Commitment may be re-adjusted, as mutually
agreed upon by the Parties, to increase the preparedness of Client in the event
of a subsequent Supply Failure, including without limitation by initially
providing for a smaller Purchase Commitment that increases over a period of
Years to its original amount if there are no subsequent Supply Failures during
such time; (ii) for the Year that the Client’s obligation to purchase the
Purchase Commitment is re-instated, the Purchase Commitment shall be pro-rated
to be only with respect to Client’s requirements for Products for the period
commencing on the Purchase Commitment Re-Instatement Date and ending on the last
day of such Year; and (iii) Client’s obligation to purchase the Purchase
Commitment under Section 3.1 shall be subject to, and modified to the extent
necessary to comply with, any obligations incurred by Client between the date of
the Supply Failure and the date that the Parties agreed that the Purchase
Commitment should be re-instated.

 

3.7 Components.

 

  (a) Components List. Patheon agrees that it shall purchase each Component for
use in the Manufacturing Services only from the supplier designated for such
Component in the Components list attached hereto in Schedule B and which may be
amended by Client from time to time (the “Components List”). Patheon agrees that
it shall not amend the Components List or purchase a Component to be used in the
Manufacturing Services from a supplier other than the supplier designated for
such Component in the Components List without the prior written consent of the
Client. The Components List shall be the Confidential Information of Client.

 

  (b) Reliance by Patheon. Client understands that to ensure an orderly supply
of Components to meet Client’s Firm Orders, it may be desirable for Patheon to
purchase such Components in sufficient volumes to meet the production
requirements for the amount of Product forecasted by Client for the first [***]
in the most recent forecast provided by the Client pursuant to Section 3.3(a) or
to meet the production requirements of any longer period agreed to by Patheon
and the Client in writing. Accordingly, the Client authorizes Patheon to
purchase the Components necessary to satisfy the production requirements for
Products for the first [***] contemplated in the most recent forecast provided
by the Client pursuant to Section 3.3(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 the Client at the
request of Patheon or the Client.

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

  (c) Client’s Responsibility for Cost of Components. If Components ordered by
Patheon in accordance with Section 3.7(b) become obsolete or otherwise no longer
useable in the Manufacturing Services (including, without limitation due to
technical changes in the Manufacturing Services pursuant to Section 5.4 below)
or the Manufacturing Services are cancelled due to a termination of the
Agreement by Patheon pursuant to Section 8.2(a) or 8.2(b) or by Client pursuant
to Section 8.3, Patheon shall use commercially reasonable efforts to cover the
cost of excess Components by: (i) returning such Components to the vendor,
(ii) utilizing such Components in manufacturing products for its other customers
to the extent possible, and (iii) implementing other measures to mitigate the
loss due to such excess Components. To the extent that Patheon is unable to
off-set such loss fully and such loss is due to; (x) a change in the
Specifications pursuant to Section 5.7; or (y) the cancellation of the
Manufacturing Services due to a termination of the Agreement by Patheon pursuant
to Section 8.2(a) or 8.2(b) or by Client pursuant to Section 8.3; then in each
of cases (x) and (y), the Client shall reimburse Patheon for such Components and
its out of pocket expenses but solely to the extent actually incurred by
Patheon. Notwithstanding the foregoing, in no event shall Client be obligated to
reimburse Patheon for quantities of Components that are in excess of the amounts
Patheon was authorized to purchase under Section 3.7(b). Such reimbursement from
the Client shall be due, where applicable, within sixty (60) days of written
notification from Patheon of its failure to cover the corresponding cost.

 

  (d) Patheon’s Responsibility for Cost of Components. If Components expire or
become obsolete or no longer useable in the Manufacturing Services because:
(i) Patheon failed to manufacture and supply the quantities ordered by Client
pursuant to a Firm Order, (ii) quantities of such Components are in excess of
the amounts Patheon was authorized to purchase under Section 3.7(b) above or
(iii) Patheon failed to store the Components as required by the Specifications,
Patheon shall bear the cost of such Components.

 

  (e) Exclusive Component Purchasing Summary. Patheon shall provide Client,
initially upon execution of this Agreement and thereafter on an annual basis,
with a listing of all Components which are unique to the Client, which Patheon
anticipates purchasing pursuant to the terms of this Agreement (in accordance
with rolling forecasts and Firm Orders as per Section 3.3(a) and (b)) in the
form as set out in Schedule J (the “Exclusive Component Purchasing Summary”).
The Exclusive Components Purchasing Summary shall indicate which Components have
a limited shelf-life and which are subject to minimum order quantities as
specified by the supplier.

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

3.8 Patheon Audit Rights.

During the period in which the Purchase Commitment is in force, upon no less
than ten (10) Business Days prior written notice to the Client, Patheon shall
have the right to inspect, through a mutually acceptable designee under
obligations of confidentiality substantially similar to those in Article 11, the
Client’s financial records pertaining to the Products in order to verify
Client’s compliance with the Purchase Commitment; provided, however, that
Patheon may conduct such inspections only during Client’s business hours and no
more than once annually, and agrees that its inspection rights shall only extend
to those of Client’s financial records that are necessary to review in order to
verify Client’s compliance with the Purchase Commitment.

ARTICLE 4

CLIENT’S OBLIGATIONS

 

4.1 Active Materials.

Pursuant to Section 2.1(a) above, in the event Client has determined that it
will supply Active Materials to Patheon, all shipments of Active Materials made
by Client or its designee to Patheon hereunder will be delivered to Patheon DDP
(Incoterms 2000). The Client shall at its sole cost and expense, deliver such
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 the Client on the terms and
subject to the conditions contained in this Agreement (including without
limitation the applicable terms of Section 2.1(a) above).

 

4.2 Invoices and Payment.

Pursuant to the terms of this Agreement, the Client shall pay Patheon for the
provision of the Manufacturing Services and the supply of Product according to
the fees specified in Schedules B and C hereto (such fees being subject to
adjustment, but only in accordance with Article 5 below). Patheon shall send an
invoice to Client for each Firm Order upon the date of shipment of the Product
that is the subject of such Firm Order (such invoice, an “Invoice”). Invoices
shall be sent by fax or email to such fax number or email address as may be
provided by the Client in writing from time to time. Patheon shall also submit
to the Client, with each shipment of Products, a duplicate copy of the Invoice
covering such shipment. Patheon shall include in each Invoice any Inventory or
Components which are to be purchased by Patheon pursuant to the terms of this
Agreement. Each such Invoice shall, to the extent applicable, identify the
Client Firm Order number, Product (or, if applicable, Components and/or
Inventory) numbers, names and quantities, unit price, freight charges and the
total amount to be remitted by the Client. The Client shall pay all such
undisputed Invoices within thirty (30) days of the date of such Invoices,
subject to the Client’s rights under Article 6. All taxes (and any related
penalties or interest) imposed on any payment by Client to Patheon shall be the
sole responsibility of Patheon.

 

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ARTICLE 5

CONVERSION FEES AND COMPONENT COSTS

 

5.1 First Year Pricing.

The fees for the Manufacturing Services and the supply of Product (which fees
include the Component costs set forth on the Components List) for the first Year
are listed in Schedules B and C and are subject to the adjustments set forth in
Section 5.3 below.

 

5.2 Price Adjustments - Subsequent Years’ Pricing.

 

  (a) On January 1 of each Year of this Agreement, Patheon shall be entitled to
an adjustment to the fees (i) for Manufacturing Services in respect of the
Products to reflect inflation, which adjustment shall be in the amount of [***]
unless the Parties otherwise agree in writing; and (ii) [***] provided that the
fees [***].

 

 

(b)

In connection with a fee adjustment pursuant to clause (i) of Section 5.2(a),
Patheon shall deliver to the Client by not later than November 1st of each Year
a revised Schedule B for the following Year and a statement outlining the
percentage increase in the [***], upon which such fee adjustment for the
following Year is based. In connection with all fee adjustments pursuant to
clause (ii) of Section 5.2(a), Patheon shall deliver to the Client by not later
than November 1 st of each Year a revised Schedule B and such budgetary pricing
information or other documentation reasonably sufficient to demonstrate that a
fee adjustment is justified. Fee revisions under this Section 5.2 shall be
effective with respect to any Product ordered after the end of the then current
Year.

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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5.3 Price Adjustments - Current Year 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) Reduction in Minimum Run Quantity. If, pursuant to Section 3.4 above,
Client requests that the Minimum Run Quantity for shipments of a Product ordered
by Client be reduced and, as a result of such reduction, Patheon’s costs to
manufacture such Product increase on a per unit basis, the Parties shall
negotiate in good faith an increase in the fee for each such units of Product by
an amount equal to the increase in Patheon’s costs to manufacture such units of
Product.

 

  (b) Volume Reduction. If at any time during a given Year, but no more than
once in a given Year, Patheon determines, acting reasonably and based on the
forecasts and Firm Orders received from the Client for such Year, that the total
quantity of Product to be ordered by Client in such Year will constitute no more
than [***] of the Annual Volume specified in Schedule B hereto for such Year or,
if applicable, any revised Annual Volume for such Year hereinafter agreed to by
the Parties, and, as a result of such reduction, Patheon’s costs to manufacture
such Product would increase on a per unit basis, the Parties shall negotiate in
good faith an increase in the fee for such units of Product by an amount equal
to the increase in Patheon’s costs to manufacture such units of Product. To the
extent that the fee for Manufacturing Services in respect of a Product has been
previously adjusted pursuant to this Section 5.3(b) to reflect reduced volumes,
the adjustment provided in this Section 5.3(b) shall operate based on the fees
attributed to such Product at the time the last of such adjustments were made.
In the event that, following an increase in the price of Products for a given
Year pursuant to this Section 5.3(b), the aggregate purchases of Product by
Client from Patheon for such Year are subsequently greater than or equal to
[***] of the Annual Volume agreed to by the Parties for such Product for such
Year, Patheon agrees to promptly reimburse Client the total of the additional
amounts paid by Client to Patheon pursuant to the increase in the Product price
under this Section 5.3(b) for such Year. It is understood that the Annual Volume
listed in Schedule B is for use by the Parties in calculating adjustments to the
price of Products in accordance with the terms of this Section 5.3(b), and shall
not be construed as a minimum purchase obligation on the part of Client.

 

  (c) No Overlap in Cost Accounting. The Parties agree that, for Product price
increase calculations under Sections 5.3(a) and 5.3(b) above, to the extent that
an increase in a Patheon cost was already accounted for in the calculation of
the increase of the Product price under either Section 5.3(a) or 5.3(b), it
shall not be accounted for in an increase of the Product price under the other
section. For clarity, if, in a given Year, the Product price is increased under
both Sections 5.3(a) and 5.3(b), to the extent an increased cost of Patheon has
already been accounted for in one section, it shall not be accounted for in the
other section.

 

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These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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  (d) Extraordinary Increases in Component Costs. If at any time market
conditions result in Patheon’s cost of Components being materially greater than
the increases forecasted pursuant to Section 5.2(a) above, Patheon shall
promptly notify Client in writing of such material increase, providing Client
with a list of such Components and the amount of the increase in cost of each
Component. For the purposes of this Section 5.3(d), for a particular Component
or Component(s), changes materially greater than normal forecasted increases
shall be considered to have occurred only if: (i) for a particular Component,
the cost of a Component increases by [***] of the cost for that Component upon
which the most recent fee quote was based; or (ii) for all Components, the
aggregate cost for all Components required to manufacture a Product increases 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 Section 5.2(a) or this Section 5.3(d) to reflect an
increase 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.

In connection with a fee adjustment pursuant to this Section 5.3, Patheon shall
deliver to the Client a revised Schedule B (including an updated Components
List) and such budgetary pricing information, adjusted Component costs and other
documentation reasonably sufficient to demonstrate that a fee adjustment is
justified. Such revised fee shall be effective for Firm Orders placed by Client
following Client’s receipt of a revised Schedule B.

 

5.4 Adjustments Due to Technical Changes.

Patheon shall implement Client’s written amendments to the Specifications and/or
the Quality Agreement(s), provided that the fees specified in Schedules B or C
shall be revised as mutually agreed by the Parties in writing to reflect the
increase or decrease in Patheon’s costs necessitated by any such amendment.
Amendments to the Specifications, the Quality Agreement(s) or the Manufacturing
Site or the Secondary Manufacturing Site requested by Patheon will only be
implemented following the written approval of Client, which shall be in Client’s
sole discretion. Fee changes made pursuant to this Section 5.4 shall become
effective only with respect to those orders of Products that are manufactured in
accordance with the revised Specifications. In addition, subject to
Section 3.7(c), the Client agrees to purchase, at Patheon’s out-of-pocket costs
therefor, all Inventory utilized under the “old” Specifications and purchased
and maintained by Patheon in accordance with this Agreement and the
Specifications, in order to fill Firm Orders and in accordance with
Section 3.7(b), to the extent that such Inventory can no longer be utilized due
to the revisions in the 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 and in accordance with
Section 3.7(b) shall be promptly cancelled where possible. Where such orders are
not subject to cancellation without penalty, Patheon shall promptly provide
Client notice of such orders and the amount of such penalty and, at Clients
option, Client shall reimburse Patheon the amount of such penalty or, subject to
Section 3.7(c), purchase such Components from Patheon.

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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ARTICLE 6

PRODUCT CLAIMS AND RECALLS

 

6.1 Product Claims.

 

 

(a)

Product Claims. The Client has the right to reject any portion of any shipment
of Products that deviates from the Specifications, cGMPs, the Quality
Agreement(s) or Applicable Laws or the warranties given by Patheon in
Section 9.3 and such rejection shall not invalidate any remainder of such
shipment not rejected by Client. The Client or its designee 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, the Quality Agreement(s), cGMPs and Applicable Laws
within [***] after the Client’s receipt thereof (or, in the case of any defects
not reasonably susceptible to discovery upon receipt of the Product (such
defects, “Latent Defects”), within [***] after discovery thereof by the Client,
but in no event after the expiration date of the Product). Should the Client
fail to provide Patheon with the Deficiency Notice within the applicable [***],
then the delivery shall be deemed to have been accepted by the Client on the
[***] after delivery or Latent Defect discovery by Client, as applicable. Except
as set out in Sections 6.2, 6.3 or 6.4, Patheon shall have no liability under
this Section 6.1 for any deviations for which it has not received notice within
the applicable [***] period.

 

  (b) Determination of Deficiency. Upon receipt of a Deficiency Notice, Patheon
shall have [***] to advise the Client by notice in writing whether or not it
disagrees with the contents of such Deficiency Notice. If the Client and Patheon
fail to agree within [***] after Patheon’s notice to the Client as to whether
any Products identified in the Deficiency Notice deviate from the
Specifications, the Quality Agreement(s), cGMPs or Applicable Laws, then the
Parties shall mutually select an independent laboratory to evaluate if such
deviation exists. Such evaluation shall be binding on the Parties, and if such
evaluation determines that any Products deviate from the Specifications, the
Quality Agreement(s), cGMPs or Applicable Laws, then those Products shall be
deemed to be properly rejected. If such evaluation results in a determination
that there is no deviation in respect of any such Products, then the Client
shall be deemed to have accepted delivery of such Products.

 

-22-

 

 

[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

  (c) Shortages. Subject to Section 3.6 above, claims for shortages in the
amount of Products shipped by Patheon shall be dealt with as may reasonably be
agreed to by the Parties. Without limiting Client’s rights under Section 3.6, in
the event of a shortage in the amount of Products in a given shipment by
Patheon, Patheon shall include such Products in the next shipment of Products
ordered by Client.

 

6.2 Product Recalls and Returns.

 

  (a) Records and Notice. Patheon and the Client shall each maintain such
records as may be necessary to permit a Recall of any Products delivered to the
Client or customers of the Client. 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 by Client 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 the Client. As used herein, “Recall” shall mean any
action (i) by the Client 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) the Client
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 the Client, having regard to all Applicable
Laws.

 

  (c) Product Returns. The Client shall have the responsibility for handling
customer returns of the Products.

 

6.3 Patheons Responsibility for Defective and Recalled Products.

 

  (a)

Defective Product. In the event the Client rejects Products in accordance with
Section 6.1 and Patheon agrees with Client’s rejection thereof or the Product is
determined by a third-party laboratory pursuant to Section 6.1(b) above to
deviate from the Specifications, the Quality Agreement(s), cGMPs or Applicable
Laws, Patheon shall bear all third party laboratory reasonable testing costs
with respect to such Product, if any, and shall promptly, at the Clients
election, either: (i) refund the invoice price paid by Client for such defective
Products; (ii) offset such

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

 

amount against other amounts due to Patheon hereunder; or (iii) replace such
Products with conforming Products within the shortest possible time without the
Client being liable for payment therefor, contingent upon the receipt from the
Client of all Active Materials required for the manufacture of such replacement
Products. For greater certainty, Patheon’s responsibility for any loss of Active
Materials in connection with defective Product shall be captured and calculated
in the Active Materials Yield under Section 2.2.

 

  (b) Recalled Product. To the extent that a Recall or Product return results
from, or arises out of, a failure by Patheon to provide the Manufacturing
Services in accordance with the Specifications, the Quality Agreement(s), cGMPs
or Applicable Laws, Patheon shall be responsible for the documented
out-of-pocket expenses of such Recall or return and shall promptly, at Client’s
election, either: (i) refund the invoice price paid by Client for such Products;
(ii) offset such amounts against other amounts due to Patheon hereunder; or
(iii) use its commercially reasonable efforts to replace the Recalled or
returned Products with new Products without Client being liable for payment
therefor, contingent upon Patheon’s possession or receipt from the Client of all
Active Materials required for the manufacture of such replacement Products. For
greater certainty, Patheon’s responsibility for any loss of Active Materials in
connection with Recalled Product shall be captured and calculated in the Active
Materials Yield under Section 2.2. To the extent that a Recall or return does
not result from, or arise out of, a failure by Patheon to provide the
Manufacturing Services in accordance with the Specifications, the Quality
Agreement(s), cGMPs or Applicable Laws, Recalls, returns or other corrective
actions shall be made at the Client’s cost and expense.

 

6.4 Disposition of Defective or Recalled Products.

The Client shall not dispose of any damaged, defective, returned or Recalled
Products in relation to which it intends to assert a claim against Patheon
without Patheon’s prior written authorization to do so, unless otherwise
required by Applicable Laws. Alternatively, Patheon may instruct the Client to
return such Products to Patheon at Patheon’s expense. Patheon shall bear the
cost of disposition with respect to any damaged, defective, returned or Recalled
Products in relation to which it bears responsibility under Section 6.1, 6.2 or
6.3 hereof. In all other circumstances, the Client shall bear the cost of
disposition with respect to any damaged, defective, returned or Recalled
Products.

 

6.5 Customer Questions and Complaints.

The Client shall have the sole responsibility for responding to questions and
complaints from the Client’s customers. Questions or complaints received by
Patheon from the Client’s customers shall be promptly referred to the Client.
Patheon shall co-operate as reasonably required to allow the Client to determine
the cause of and resolve any customer

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

questions and complaints. Such assistance shall include follow-up
investigations, including testing. In addition, Patheon shall provide the Client
with all mutually agreed upon information that will enable the Client to respond
properly to questions or complaints relating to the Products as provided in the
Quality Agreement(s). 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 Specifications, the Quality Agreement(s), cGMPs
or Applicable Laws, all costs incurred in respect of this Section 6.5 shall be
borne by the Client.

 

6.6 Sole Remedy.

Except for the remedies provided in Sections 2.2, 3.6 and 10.3, and subject to
the limitations set forth in Sections 10.1 and 10.2, the remedies described in
this Article 6 shall be the Client’s sole remedy for any failure by Patheon to
provide the Manufacturing Services in accordance with the Specifications, the
Quality Agreement(s), cGMPs and Applicable Laws.

ARTICLE 7

CO-OPERATION; REGULATORY FILINGS

 

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 (each, a “Relationship Manager”). 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. As of the Effective Date,
the names and contact information for the Relationship Managers are as follows:

 

For Client:

   TransOral Pharmaceuticals, Inc.    1003 W. Cutting Blvd., Suite 110    Pt.
Richmond, CA 94804    Attn: Dennie Dyer, VP. Operations    Tel.: 510-215-3500   
Fax: 510-215-3535    Email: ddyer@transoral.com

For Patheon:

   Barbara Waltimire    Sr. Business Development Manager    West Coast Region-
Northern California    4712 Hedgewick, CA 94538    Tel.: 510-220-4282    Fax:
510-440-0617    Email: barbara.waltimire@patheon.com

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

7.2 Governmental Agencies.

Subject to Section 7.7, Patheon may communicate with any Regulatory Authority
regarding the Products only if, in the reasonable opinion of Patheon’s counsel,
such communication is necessary to comply with the terms of this Agreement or
Applicable Laws; provided, however, that unless, in the reasonable opinion of
Patheon’s counsel, there is a legal prohibition against doing so, Patheon shall
notify Client reasonably advance of any such communication and permit the Client
to accompany Patheon and take part in any communications with such Regulatory
Authority, and provide the Client with copies of all such communications from
such Regulatory Authority.

 

7.3 Records and Accounting by Patheon.

Patheon shall keep records of the manufacture, testing and shipping of the
Products, and retain samples of such Products as are necessary to comply with
cGMP, Applicable Laws, the Quality Agreement(s), and 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 period of one year following the date of Product expiry,
or longer if required by law at which time the Client will be contacted
concerning the delivery and destruction of such documents.

 

7.4 Inspection.

The Client 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.

 

  (a) Patheon shall provide the Client with reasonable access at mutually
agreeable times to its Manufacturing Site and Secondary Manufacturing Site, as
applicable, in which the Products are manufactured, stored, handled or shipped
in order to permit the Clients verification of Patheon’s compliance with the
Specifications, the Quality Agreement(s), cGMPs and Applicable 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.

 

  (b)

Patheon shall permit the FDA and other Regulatory Authorities to conduct
inspections of the Manufacturing Site and Secondary Manufacturing Site as they
may request, including pre-approval inspections, and shall cooperate with such
Regulatory Authorities with respect to the inspections and any related matters,
in each case which is related to the Manufacturing Services or Product. Patheon
shall give Client notice within one Business Day of becoming aware of any such
inspections, and keep Client informed about the results and conclusions of each

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

 

regulatory inspection, including actions taken by Patheon to remedy conditions
cited in the inspections. In addition, Patheon will provide Client with copies
of any written inspection reports issued by Regulatory Authorities and all
correspondence between Patheon and Regulatory Authorities, including, but not
limited to, FDA Form 483, Notice of Observation, and all related correspondence,
in each case relating to the Manufacturing Services, Product, or general
manufacturing concerns related to the Product. Patheon agrees to promptly notify
and provide Client copies of any request, directive or other communication of
the FDA or other Regulatory Authority relating to the Manufacturing Services or
Product and to cooperate with Client in responding to such requests, directives
and communications.

 

7.6 Reports.

Patheon will promptly supply on an annual basis and when requested by Client
from time to time, at no additional charge, all available information and data
in its control that the Client reasonably requires in order to complete any
filing for, or apply for, obtain or maintain, regulatory approvals under any
applicable regulatory regime (including any Annual Report that the Client is
required to file with the FDA), including without limitation information
relating to the Manufacturing Site and Secondary Manufacturing Site, Development
Report (as described in ICH guidelines), Manufacturing Services, Product or the
process, methodology, raw materials and intermediates used in the manufacture,
processing, or packaging of the Product, release test results, complaint test
results, all investigations (in manufacturing, testing and storage), and all
information required to be submitted in the CMC section of an IND or a NDA or
other regulatory filings, or required or requested to be provided to any
Regulatory Authority. At the Client’s request, Patheon shall provide a copy of
the Annual Product Review Report to the Client at no additional cost. Any
additional report requested by Client beyond the scope of what is required or
recommended under cGMPs, Applicable Laws and customary FDA or other Regulatory
Authority requirements shall be subject to an additional fee to be agreed upon
between Patheon and the Client. In addition, Patheon shall cooperate with Client
with respect to all reporting obligations relevant to the Product under
Applicable Laws.

 

7.7 Regulatory Filings

 

  (a) Regulatory Authority. As between the Parties, the Client shall have the
exclusive right to and sole responsibility for filing all documents with all
Regulatory Authorities and taking any other actions that may be required for the
receipt and/or maintenance of Regulatory Authority approval for the commercial
manufacture of the Products. Patheon shall assist the Client, to the extent
consistent with Patheon’s obligations under this Agreement, to obtain Regulatory
Authority approval for the commercial manufacture of all Products as quickly as
reasonably possible.

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

  (b) Verification of Data. At least [***] prior to filing any documents with
any Regulatory Authority that incorporate data generated by Patheon, the Client
shall provide Patheon with a copy of the documents incorporating such data so as
to give Patheon the opportunity to verify the accuracy and regulatory validity
of such documents as they relate to the Patheon generated data.

 

  (c) Verification of CMC. At least [***] prior to filing with any Regulatory
Authority the CMC data related to any Marketing Authorization the Client shall
provide Patheon with a copy of such portions of the CMC that incorporate data
generated by Patheon and/or describe the Manufacturing Services performed by
Patheon as well as all supporting documents which have been relied upon to
prepare such portions of the CMC. Such disclosure shall permit Patheon to verify
that the CMC accurately describes the work that Patheon has performed and the
manufacturing processes that Patheon will perform pursuant to this Agreement.

 

  (d) Deficiencies. Within [***] of Patheon’s receipt of the documentation
provided by Client pursuant to Sections 7.7(b) and 7.7(c) above, Patheon shall
(i) complete its verification of such documentation, and (ii) if during such
verification, acting reasonably and in good faith, Patheon determines that any
of the information provided by the Client in accordance with paragraphs (b) and
(c) above is inaccurate or deficient in any manner whatsoever (the
“Deficiencies”), Patheon shall promptly notify the Client (but no later than
three (3) days after such determination by Patheon) in writing of such
Deficiencies, which notice shall include a detailed description of such
Deficiencies and Patheon’s recommendations for correcting them. The Parties
shall cooperate and work together in good faith to have such Deficiencies
resolved as promptly as practicable prior to any pre-approval inspection.

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, 2014 (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 three (3) years each
unless either Party gives written notice to the other Party of its intention to
terminate this Agreement at least 24 months prior to the end of the then current
term.

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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

8.2 Termination for Cause.

 

  (a) Either Party at its sole option may terminate this Agreement upon written
notice to the other Party 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 within [***] following receipt of a written
notice (the “Remediation Period”) of said breach from such Party that expressly
states that it is a notice under this Section 8.2(a) and describes the nature of
such breach in reasonable detail (a “Breach Notice”).

 

  (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; in each case that is
not reversed, dismissed or withdrawn, as applicable, within [***] from the date
of such declaration, filing or assignment.

 

  (c) Patheon may terminate this Agreement upon six months’ prior written
notice, with such written notice to be given within [***] after Patheon receives
written notice from Client of such assignment, if the Client assigns pursuant to
Section 13.6 any of its rights under this Agreement to: (i) an assignee that,
together with its affiliates at the time immediately following the assignment,
(x) does not have assets sufficient to have covered Client’s purchases of
Product for the [***] period immediately prior to such assignment and (y) has
neither assets nor a net worth equal to or greater than the assets or net worth,
as applicable, of Client as of the Effective Date; or (ii) an assignee that is a
competitor of Patheon in the business of manufacturing pharmaceutical products
for third parties and that does not directly or indirectly own or market
pharmaceutical products in its own name.

 

8.3 Termination by Client.

The Client may terminate this Agreement: (i) as to any Product upon thirty
(30) days’ prior written notice in the event that any governmental agency takes
any action, or raises any objection, that prevents the Client from importing,
exporting, purchasing or selling such Product or that is reasonably likely to
have a material adverse impact on Patheon’s ability to perform hereunder;
(ii) upon at least six months’ advance notice if it intends to no longer order a
Product due to that Product’s discontinuance in the market; or (iii) in whole or
as to any Product upon twenty-four (24) months’ prior written notice for any
business reason.

 

-29-

 

 

[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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

TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

8.4 Obligations on Termination.

 

  (a) If this Agreement expires or is terminated in whole or in part for any
reason, then (in addition to any other remedies either Party may have in the
event of default by the other Party):

 

  (i) the Client shall, subject to Client’s right to reject such Products under
Section 6.1, take delivery of and pay for all undelivered Products that are
manufactured and/or packaged prior to the date of termination pursuant to a Firm
Order delivered to Patheon prior to such termination at the price in effect at
the time the Firm Order was placed;

 

  (ii) Patheon shall return to the Client all unused Active Materials (with
shipping and related expenses, if any, to be borne by the Client); and

 

  (iii) Patheon shall reasonably cooperate with Client and assist in the
transfer to Client of all legal and technical documents concerning Active
Materials and Products, including master batch records, validation reports,
stability reports and relevant manufacturer authorizations, existing retention
samples and all such other documents and materials as may be reasonably
necessary or useful for Client to source Products from other qualified third
parties.

 

  (b) Further, if this Agreement is terminated by Patheon pursuant to Sections
8.2(a) or 8.2(b), or in the event of termination by Client pursuant to
Section 8.3, then, subject to Section 3.7(c):

 

  (i) the Client shall purchase, at Patheon’s out-of-pocket costs (including all
costs incurred by Patheon in connection with the purchase and handling of such
Inventory), the Inventory applicable to the Products which was purchased,
produced or maintained by Patheon in contemplation of filling Firm Orders and in
accordance with this Agreement, the Specifications and Section 3.7(b) prior to
notice of termination being given;

 

  (ii) the Client shall reimburse to Patheon the purchase price payable pursuant
to Patheon’s non-cancellable orders with suppliers of Components made prior to
notice of termination being given, provided such orders were made by Patheon in
reliance on Firm Orders and in accordance with this Agreement, the
Specifications and Section 3.7(b); and

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 1, 6 and 10-13 and Sections 3.2, 4.2, 7.3, 7.5-7.7, 8.4, 9.2-9.6 all of
which survive any termination or expiration.

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

ARTICLE 9

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

9.1 Authority.

Each Party covenants, represents and warrants that: (i) it has the full right
and authority to enter into this Agreement and to grant to the other Party the
rights granted to such other Party under this Agreement, (ii) it has obtained
all necessary corporate approvals to enter and execute this Agreement, and
(iii) that it is not aware of any impediment that would inhibit its ability to
perform its obligations hereunder.

 

9.2 Client Warranties.

The Client covenants, represents and warrants that:

 

  (a) the Specifications for each of the Products are its or its Affiliate’s
property and that the Client may lawfully disclose the Specifications to
Patheon;

 

  (b) As of the Effective Date, Client is not aware of any actions or other
legal proceedings against Client, the subject of which is the infringement of
Third Party Rights related to any of the Specifications, or any of the Active
Materials and the Components, or the sale, use or other disposition of any
Product made in accordance with the Specifications;

 

  (c) the Specifications for all Products in the form provided by Client to
Patheon conform to all Applicable Laws; and

 

  (d) prior to the first commercial sale of the Products in a given market, the
Products, if labelled and manufactured in accordance with the Specifications and
in compliance with applicable cGMPs and Applicable Laws, have received the
necessary marketing approvals from applicable Regulatory Authorities for sale
and distribution in such market.

 

9.3 Patheon Warranties.

Patheon covenants, represents and warrants that:

 

  (a) It shall perform the Manufacturing Services in accordance with the
Specifications, cGMPs, this Agreement, the Quality Agreement(s) and Applicable
Laws;

 

  (b) Patheon shall obtain and maintain all necessary licenses, permits and
approvals required by Applicable Laws in connection with the Manufacturing
Services and supply of Product to Client, including, without limitation, permits
related to the Manufacturing Site and Secondary Manufacturing Site;

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

  (c) As of the Effective Date, Patheon has disclosed to Client any and all FDA
Form 483’s, warning letters or similar notices relating to the Manufacturing
Site or Secondary Manufacturing Site and import alerts for any other products
manufactured in the Manufacturing Site or Secondary Manufacturing Site issued
during the last five (5) years; and

 

  (d) Title to all Products sold hereunder, upon payment thereof by Client as
provided herein, shall pass to Client free and clear of any security interest,
lien or other encumbrance.

 

9.4 Debarred Persons.

Patheon covenants, represents and warrants that: (i) neither Patheon nor any of
its employees have been “debarred” by the FDA, or subject to a similar sanction
from another Regulatory Authority; nor have debarment proceedings against
Patheon or any of its employees been commenced; and (ii) it will not in the
performance of its obligations under this Agreement use the services of any
person debarred or suspended by the FDA as described in 21 U.S.C. §335(a) or
(b). Patheon will promptly notify Client in writing if any such debarment
proceedings have commenced or if Patheon or any of its employees are debarred by
the FDA or other Regulatory Authorities. Patheon further covenants, represents
and warrants that it does not currently have, and 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 FDCA.

 

9.5 Permits.

As between the Parties, the Client shall be solely responsible for obtaining or
maintaining, on a timely basis, any permits or other regulatory approvals in
respect of the Products or the Specifications, including, without limitation,
all marketing and post-marketing approvals.

 

9.6 No Warranty.

NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND, EITHER EXPRESSED
OR IMPLIED, BY FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE OR WARRANTY OF MERCHANTABILITY OR WARRANTY OF NON-INFRINGEMENT OF THIRD
PARTY RIGHTS.

 

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ARTICLE 10

REMEDIES AND INDEMNITIES

 

10.1 Consequential Damages.

Except for a breach under Article 11 or for obligations arising out of Sections
10.3 and 10.4 hereof, under no circumstances whatsoever shall either Party be
liable to the other in contract, tort, negligence, breach of statutory duty or
otherwise for (i) any (direct or indirect) loss of profits, of anticipated
savings, of business or goodwill or (ii) for any other liability, damage, costs
or expense of any kind incurred by the other Party of an indirect or
consequential nature, regardless of any notice of the possibility of such
damages.

 

10.2 Limitation of Liability.

 

  (a) Active Materials. Except as expressly set forth in Section 2.2 and Article
6 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 shall not exceed the Maximum Credit Value.

 

  (b) 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 shall not exceed in a Year, in the aggregate, the
following: (i) [***] if the Annual Volume in such Year is less than [***]
tablets of the Product(s); (ii) [***] if the Annual Volume in such Year is
between [***] and [***] tablets of the Product(s); and, (iii) [***] if the
Annual Volume in such Year exceeds [***] tablets of Product(s).

 

10.3 Patheon.

Subject to Sections 10.1 and 10.2, Patheon agrees to defend, indemnify and hold
the Client, its Affiliates, officers, employees and agents (collectively,
“Client Indemnitees”) harmless from and against any and all third party actions,
causes of action, losses, damages, costs (including all reasonable legal fees),
claims, demands, judgments and liabilities (collectively, “Third Party Claims”)
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:

 

  (a) a failure by Patheon to provide the Manufacturing Services in accordance
with the Specifications, the Quality Agreement(s), cGMPs and Applicable Laws; or

 

  (b) any misrepresentation, negligence or willful misconduct by Patheon
Indemnitees (as defined in Section 10.4 below); or

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

  (c) any breach by Patheon of any of its obligations or warranties under this
Agreement; or

 

  (d) any claim of infringement or alleged infringement of any Third Party
Rights resulting from the performance of the Manufacturing Services hereunder,
except to the extent such infringement specifically results from Patheon’s use
of the Product formulation and Specifications in each case in the form provided
by Client.

This indemnity shall not apply to the extent such Third Party Claims are:
(x) determined to have resulted from the negligence or wilful misconduct of
Client; or (y) that is subject to Client’s obligation to indemnify the Patheon
Indemnities pursuant to Section 10.4 below. In the event that the Client seeks
indemnification under this Section 10.3 for a Third Party Claim, the Client
shall: (a) promptly notify Patheon of such Third Party Claim; (b) use
commercially reasonable efforts to mitigate the effects of such Third Party
Claim; (c) reasonably cooperate with Patheon in the defense of such Third Party
Claim; (d) permit Patheon to control the defense and settlement of such Third
Party Claim, all at Patheon’s cost and expense. Notwithstanding the foregoing,
Patheon shall not enter into any settlement agreement for such Third Party Claim
that attributes fault or negligence to Client or restricts the future actions or
activities of the Client, without the Client’s prior written consent, with such
consent not to be unreasonably withheld.

 

10.4     Client.

Subject to Sections 10.1 and 10.2, the Client agrees to defend, indemnify and
hold Patheon, its Affiliates, officers, employees and agents (collectively,
“Patheon Indemnitees”) harmless from and against any and all Third Party Claims
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:

 

  (a) any misrepresentation, negligence or wilful misconduct by the Client
Indemnities; or

 

  (b) any breach by the Client of the Client’s obligations or warranties under
this Agreement; or

 

  (c) any claim of infringement or alleged infringement of any Third Party
Rights resulting from the performance of the Manufacturing Services hereunder,
to the extent such infringement specifically results from Patheon’s use of the
Product formulation and Specifications in each case in the form provided by
Client.

This indemnity shall not apply to the extent that such Third Party Claims are:
(x) determined to have resulted from the negligence or willful misconduct of
Patheon; or (y) that is subject to Patheon’s obligation to indemnify the Client
Indemnitees pursuant to Section 10.3. In the event that the Patheon seeks
indemnification under this Section 10.4 for a Third Party Claim,

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

Patheon shall: (a) promptly notify Client of such Third Party Claim; (b) use
commercially reasonable efforts to mitigate the effects of such Third Party
Claim; (c) reasonably cooperate with Client in the defense of such Third Party
Claim; (d) permit Client to control the defense and settlement of such Third
Party Claim, all at Client’s cost and expense. Notwithstanding the foregoing,
Client shall not enter into any settlement agreement for a Third-Party Claim
that attributes fault or negligence to Patheon or restricts the future actions
or activities of the Patheon, without Patheon’s prior written consent, with such
consent not to be unreasonably withheld.

 

10.5     Reasonable Allocation of Risk.

The Parties acknowledge and agree that the provisions of this Agreement
(including, without limitation, this Article 10) are reasonable and create a
reasonable allocation of risk having regard to the relative profits the Parties
respectively expect to derive from the Products.

ARTICLE 11

CONFIDENTIALITY

 

11.1     Confidential Information.

Patheon and Client may from time to time disclose to each other Confidential
Information. “Confidential Information” means any information disclosed by one
Party to the other Party that, if disclosed in tangible form, is marked
“confidential” or with other similar designation to indicate its confidential or
proprietary nature or, if disclosed orally, is indicated orally to be
confidential or proprietary by the Party disclosing the information at the time
of the disclosure and is confirmed in writing as confidential or proprietary by
the disclosing Party within forty-five (45) days after such disclosure.
Notwithstanding the foregoing, Client’s Confidential Information shall include
all records, documents, information, data and Inventions relating to the Active
Materials, Products, or the manufacture or formulation thereof.

Notwithstanding anything herein to the contrary, TransOral may disclose Patheon
Confidential Information to the extent necessary for it to exercise its rights
under this Agreement and to research, develop and commercialize the Product(s),
including submitting Patheon Confidential Information to Regulatory Authorities.

 

11.2     Confidentiality

Each Party shall hold and maintain in strict confidence all Confidential
Information of the other Party. Without limiting the foregoing, neither Party
shall use or disclose the Confidential Information of the other Party, except as
otherwise permitted by this Agreement or as may be necessary or useful to
exercise its rights or perform its obligations under this Agreement (including
in the case of Client, its right to use and disclose the Patheon Confidential
Information to the extent necessary for it to exercise its rights under this
Agreement and to

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

research, develop and commercialize the Product(s), including submitting Patheon
Confidential Information to Regulatory Authorities). The foregoing obligations
of confidentiality, non-use and non-disclosure shall not apply to any
Confidential Information received by a Party hereunder that the receiving Party
can establish by competent proof: (a) was already known to the receiving Party,
other than under an obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of the public domain
at the time of its disclosure to the receiving Party; (c) became generally
available to the public or otherwise part of the public domain after its
disclosure and other than through any act or omission of the receiving Party in
breach of this Agreement; or (d) was subsequently lawfully disclosed to the
receiving Party by a person other than the disclosing Party. Nothing contained
in this Section 11.2 or Section 11.3 shall prevent either Party from disclosing
any Confidential Information of the other Party to the extent reasonable
necessary in prosecuting or defending litigation, complying with applicable
governmental laws, regulations or court orders or otherwise submitting
information to tax or other governmental authorities, in submissions to
Regulatory Authorities, or as a part of patent applications filed on inventions
in accordance with this Agreement; provided that if a Party is required by law
to make any such disclosure, other than pursuant to a confidentiality agreement,
it will give reasonable advance notice to the other Party of such disclosure
and, save to the extent inappropriate in the case of patent applications or the
like, will use its reasonable efforts to secure confidential treatment of such
information. In addition, notwithstanding the provisions of the Confidentiality
Agreement, all information exchanged between the Parties after the Effective
Date shall be deemed to have been disclosed under this Agreement and shall be
subject to the terms of this Article 11.

 

11.3     Confidential Terms

Each Party shall treat the terms of this Agreement as the Confidential
Information of the other Party. Notwithstanding anything to the contrary,
however, each Party may disclose the terms of this Agreement (a) to advisors,
actual or potential investors, acquisition partners, licensees, and others on a
need to know basis under circumstances that reasonably ensure the
confidentiality thereof, or (b) as required by securities or other applicable
laws or regulations. In the event that a Party makes a disclosure of the terms
of this Agreement deemed necessary under applicable federal or state securities
laws or any rule or regulation of a nationally recognized securities exchange,
the Party shall use good faith efforts to obtain confidential treatment for the
disclosure to the extent available. The Party making such a disclosure shall
provide the other Party with reasonable advance written notice of its intent to
make such a disclosure and shall provide the other Party the opportunity to
comment on any confidential treatment requested prior to the submission.

 

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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, within [***] 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 [***] from
their appointment, or if a Party fails to appoint a representative within the
[***] period set forth above, such dispute shall immediately be referred to the
Chief Operating Officer or Executive Vice President, Operations (or such other
officer as they 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, the dispute will be finally
settled by binding arbitration in New York City, New York under the then current
rules of the American Arbitration Association by one (1) arbitrator appointed in
accordance with such rules. The arbitrator may grant injunctive or other relief
in such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the Parties to the arbitration. Judgment may be
entered on the arbitrator’s decision in any court of competent jurisdiction. The
Parties agree that, any provision of applicable law notwithstanding, they will
not request and the arbitrator shall have no authority to award punitive or
exemplary damages against either Party. The costs of the arbitration, including
administrative and arbitrators fees, shall be shared equally by the Parties.
Each Party shall bear the cost of its own attorneys’ fees and expert witness
fees. Nothing in this Section shall preclude either Party from seeking interim
or provisional relief in the form of a temporary restraining order, preliminary
injunction, or other interim relief concerning a dispute prior to or during an
arbitration pursuant to this Section necessary to protect the interests of such
Party.

 

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, labelling, 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, 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 within
[***] 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

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

whether a dispute is a Technical Dispute, the dispute shall be considered a
commercial dispute and its resolution shall be governed by the terms of
Section 12.1 above. 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(s)) to determine whether the Products are to be released for sale or
distribution.

ARTICLE 13

MISCELLANEOUS

 

13.1     Inventions.

 

  (a) Commencing on the Commencement Date and for the term of this Agreement,
Client grants to Patheon, a non-exclusive, limited, paid-up, royalty-free,
non-transferable license, without the right to grant sublicenses, to use that
Client Developed IP (as defined below) which Patheon must use solely for
purposes of performing the Manufacturing Services hereunder on behalf of Client.
For clarity, the foregoing license to Patheon shall expire immediately upon the
completion, expiration or termination of this Agreement.

 

  (b) All Intellectual Property made, generated or derived by or on behalf of
Patheon, either alone or jointly with others, in the course of performing the
Manufacturing Services (the “Client Developed IP”) shall be the exclusive
property of Client, provided that the Client Developed IP shall not include
Patheon Developed IP (as defined below). Patheon agrees to execute all
applications, assignments or other instruments reasonably requested by Client,
in order for Client to establish Client’s ownership of the Client Developed IP
and to obtain whatever protection for the Client Developed IP, including patent
and copyright rights in any and all countries, as Client shall determine.
Patheon further agrees to reasonably cooperate with Client in the process of
securing and enforcing Client’s rights to the Client Developed IP at Client’s
request, and Client shall compensate Patheon for Patheon’s reasonable expenses
incurred as a result thereof.

 

  (c)

All Intellectual Property made, generated or derived by Patheon in the course of
performing the Manufacturing Services that (i) is an improvement to Patheon
Background IP (as defined below) and consists of subject matter generally
applicable to manufacturing processes or formulation development of drug
products or drug delivery systems, and is not specific to, or dependent upon,
the Product(s) or the manufacture thereof and (ii) when used for the
applications described in clause (i) above, do not reveal or disclose any Client
Confidential Information (such Intellectual Property, the “Patheon Developed
IP”), shall be

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

 

the exclusive property of Patheon. Patheon hereby grants to Client, a
non-exclusive, worldwide, paid-up, royalty-free, irrevocable, perpetual,
transferable license, with the right to grant and authorize sublicenses, to the
Patheon Developed IP for purposes of making, using, selling, offering for sale,
importing and otherwise exploiting any Client product or Product Technology (as
defined below).

 

  (d) Notwithstanding the foregoing, the Parties agree that each Party owns and
possesses certain Intellectual Property that (i) was developed or acquired by
such Party prior to the Effective Date of this Agreement, or (ii) is developed
or acquired after the Effective Date by such Party independently outside of this
Agreement (such Intellectual Property, a Party’s “Background IP”) and that,
subject to this Section 13.1, neither Party acquires any rights in the
Background IP of the other Party. With respect to the Client Developed IP and
any process for formulating, filling, finishing, manufacturing, analyzing,
testing, validating the Product(s) or otherwise relating to the Product(s)
(collectively, “Product Technology”), Patheon will not, to its actual knowledge,
incorporate or use therein any Intellectual Property that is covered in whole or
in part by (i) any Patheon Background IP or (ii) any Intellectual Property of a
third party; except in each case, as specifically discussed with and approved in
writing by Client. In the event any Product Technology incorporates or requires
the use of Patheon Background IP, Patheon hereby grants to Client, a
non-exclusive, worldwide, paid-up, royalty-free, irrevocable, perpetual,
transferable license, with the right to grant and authorize sublicenses, to such
Patheon Background IP for purposes of making, using, selling, offering for sale,
importing and otherwise exploiting any Client product or Product Technology.

 

  (e) Each Party shall be solely responsible for the costs of filing,
prosecution and maintenance of patents and patent applications on the Inventions
owned by it in accordance with this Agreement.

 

  (f) Either Party shall give the other Party written notice, as promptly as
practicable, of all Inventions made by or under authority of such Party pursuant
to the activities conducted under this Agreement.

 

13.2     Intellectual Property.

Subject to Section 13.1, all Client Background IP and Client Developed IP shall
be owned by the Client, and all Patheon Background IP and Patheon Developed IP
shall be owned by Patheon. The Client 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 set forth in this
Agreement or agreed to by the Parties in writing. Each Party agrees not to use
any Intellectual Property of the other Party, except as specifically authorized
in this Agreement or by such other Party in writing.

 

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13.3 Insurance.

On or prior to the Commencement Date, 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 a period of three (3) years thereafter, which insurance
shall afford limits of not less than (i) [***] for each occurrence for personal
injury or property damage liability; and (ii) [***] in the aggregate per annum
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 a minimum of [***] written notice 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 the Client 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.

 

13.5 No Waiver.

Any waiver of the terms and conditions of this Agreement must be explicitly in
writing and signed by both Parties. 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 (including subcontracting any such rights or obligations) except with
the prior written consent of the Client, such consent not to be unreasonably
withheld. Without limiting the foregoing, Patheon shall be fully responsible for
any services hereunder subcontracted by Patheon.

 

  (b) Subject to Section 8.2(c), the Client may assign this Agreement or any of
its rights or obligations hereunder without approval from Patheon; provided,
however, that the Client 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 the Client shall remain liable hereunder.

 

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[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

  (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 without the consent of the
other Party, 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, quarantines, communicable disease
outbreaks, wars, acts of terrorism, fires, floods, storms, interruption of or
delay in transportation, defective equipment, lack of or inability to obtain
fuel, power or components 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.

 

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 (receipt confirmed)
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 the Client:

TransOral Pharmaceuticals, Inc.

1003 W. Cutting Blvd., Suite 110

Pt. Richmond, CA 94804

Attention: Dennie Dyer, VP. Operations

Telecopier No.: 510-215-3535

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

If to Patheon:

Patheon Inc.

7070 Mississauga Road, Suite 350

Mississauga, Ontario L5N 7J8

Canada

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 or Canadian mail, postage prepaid or upon receipt, whichever is
sooner.

 

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 Schedules attached hereto and the Quality
Agreement(s), 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

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

subject matter hereof, including the Confidentiality Agreements. For purposes of
clarity, the subject matter of this Agreement, including the Parties’ exchange
of Confidential Information (as defined in Section 11.1 of this Agreement) in
connection with their performance under this Agreement, shall not be governed by
the terms and conditions of the Confidentiality Agreements. Any modification,
amendment or supplement to this Agreement must be in writing and signed by
authorized representatives of both Parties. In case of conflict between this
Agreement and the Quality Agreement(s), the terms and conditions of this
Agreement shall govern.

 

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 the Client 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 the Client 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 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 New York and the laws of the United States applicable therein,
without regard to any conflicts-of-law principle that directs the application to
another jurisdiction’s law. The Parties expressly agree that the UN Convention
on Contracts for the International Sale of Goods shall not apply to this
Agreement.

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

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

 

PATHEON INC By:   /s/ Steven Liberty Name:   Steven Liberty Title:   Sr. Vice
President, Operations, Canada PATHEON PHARMACEUTICALS INC. By:   /s/ Ronald R.
Schallick Name:   Ronald R. Schallick Title:   VP USA Operations TRANSORAL
PHARMACEUTICALS, INC. By   /s/ Glenn A. Oclassen Name:   Glenn A. Oclassen
Title:   CEO, President, Director By:   /s/ Thomas P. Soloway Name:   Thomas P.
Soloway Title:   Senior Vice President and CFO

 

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

SCHEDULE A

PRODUCT LIST AND SPECIFICATIONS

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

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

SCHEDULE B

MINIMUM RUN QUANTITY, ANNUAL VOLUME AND FEES

[To be provided]

 

Product

  

Minimum Run Quantity

  

Annual Volume

  

Fee (per unit)

•    •    •    • •    •    •    •

COMPONENTS LIST

[To be provided]

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

SCHEDULE C

STABILITY TESTING & VALIDATION ACTIVITIES, IF APPLICABLE

Patheon and the Client shall agree in writing on any stability testing and
validation activities 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 the Client
in connection with such testing. The content of this Schedule C will be
determined as mutually agreed upon by Patheon and Client.

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SCHEDULE D

ACTIVE MATERIALS

 

Active Materials

  

Supplier

Zolpidem Tartrate    Plantex USA, Inc. •    •

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

Zolpidem Tartrate Tablets    Zolpidem Tartrate   

[***]

MAXIMUM CREDIT VALUE

Patheon’s liability for Active Materials calculated in accordance with
Section 2.2 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

Zolpidem Tartrate Tablets   

(a) [***];

 

(b) [***],

 

(c) [***].

 

 

[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

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 the Client to the date
of Manufacture of each batch.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

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 matter:

1. Appointment of Expert. Within 10 Business Days 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 ten (10) Business Day period, 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. Arbitration. The expert appointed in accordance with paragraph 1 above shall
settle Technical Disputes finally by binding arbitration in New York City, New
York under the then current rules of the American Arbitration Association and
conducted in accordance with this Schedule F. The decision of the expert shall
be final, conclusive and binding on the Parties to the arbitration. Judgment may
be entered on the expert’s decision in any court of competent jurisdiction.
Notwithstanding anything to the contrary in this Schedule F, nothing in this
Schedule F shall preclude either Party from seeking interim or provisional
relief in the form of a temporary restraining order, preliminary injunction, or
other interim relief concerning a dispute prior to or during an arbitration
pursuant to this Schedule F necessary to protect the interests of such Party.

3. 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.

4. 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) within
fifteen (15) Business Days (or such other date as the Parties and the expert may
agree) after receipt of all information requested by him pursuant to paragraph
4(b) hereof.

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  (b) Disclosure of Evidence. The Parties undertake one to the other to provide
to any expert all such evidence and information within their 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 within five (5) Business Days 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 their 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 4(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 full 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.

 

  (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(s)) to
determine whether the Products are to be released for sale or distribution.

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TransOral Patheon MSA (Cincinnati and Whitby) EXECUTION DRAFT

 

SCHEDULE G

QUALITY AGREEMENT(S)

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TransOral Patheon MSA (Cincinnati and Whitby) EXECUTION DRAFT

 

QUALITY AGREEMENT

THIS AGREEMENT made as of the • day of • October, 2006

BETWEEN:

TRANSORAL PHARMACEUTICALS, INC.,

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

(the “Client”)

- and -

PATHEON PHARMACEUTICALS INC.,

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

Specific sites covered by this Agreement:

Patheon Pharmaceuticals Inc., 2110 East Galbraith Drive, Cincinnati, OH
45237-1625

(“Patheon”)

(Patheon and Client may be referred to individually by name or as a “Party” or
collectively as the “Parties”)

BACKGROUND: Patheon and the Client entered into a manufacturing services
agreement dated–October 6, 2006 (the “MSA”) under which Patheon agreed to
provide Manufacturing Services involving the Product(s) described in Schedule A
hereto. Under the MSA Client must provide certain Specifications to Patheon for
Patheon to perform the Manufacturing Services and Patheon must operate within
the Specifications. The Parties want to allocate responsibility for procedures
and specifications that impact the identity, strength, quality, and purity of
the Products to ensure that the Manufacturing Services and Product comply with
Applicable Laws and the Specifications.

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

AGREEMENT: In consideration of the rights conferred and the obligations assumed
under the MSA and 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

RESPONSIBILITIES

 

  1.1 This Quality Agreement is a required and integral part of the MSA, is
intended to be read together therewith and shall be subject to the terms and
conditions thereof. This Quality Agreement will be reviewed periodically, but no
less than annually, by the Parties to ensure that the roles and responsibilities
reflect current practice.

 

  1.2 Patheon is responsible for all the operations that are marked with “X” in
the column titled “Patheon” and the Client is responsible for all the operations
that are marked with “X” in the column titled “Client”. If marked with “(X)”,
the designated Party will cooperate. Patheon will not subcontract any of its
duties hereunder except in accordance with, and subject to, Section 13.6(a) of
the MSA.

 

  (a) General

 

           Client    Patheon

(A)

   Provide Specifications.    X   

(B)

   Perform Manufacturing Services, including manufacturing and packaging
Product(s), according to the Specifications.       X

(C)

   Permit cGMP audits of all relevant premises, procedures and documentation by
Client, and permit inspection by Regulatory Authorities.       X

(D)

   Will not subcontract any of the work to a third party without prior written
consent of Client.       X

(E)

   Provide copies of Annual Product Review reports when requested by Client.   
   X

(F)

   Provide copies of information and correspondence necessary to support the
Annual Report when requested by Client.       X

(G)

   Notify and obtain approval from the Client before initiating any proposed
changes to the process, materials, testing, equipment or premises that may
affect the Product(s). Client approval will not be unreasonably withheld.      

X

 

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

           Client    Patheon

(H)

   Notify the Client within one Business Day of receipt of any FDA Form 483’s,
warning letters or the like from Regulatory Authorities 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). Client will review and approve
responses that relate directly to the Product(s) before submitting to the
Regulatory Authority. Patheon reserves the right to respond to such Regulatory
Authorities without approval, if, in the reasonable opinion of Patheons counsel,
it is required to do so.       X

(I)

   Notify the Client within one Business Day of any Regulatory Authority
requests for samples, batch documentation, or other information related to the
Product(s).       X

(J)

   Conduct operations in compliance with all Applicable Laws, including all
applicable environmental, occupational health and safety laws, and cGMP
regulations.       X

(K)

   Investigate all medical and non-medical product complaints related to the
manufacturing of the Product(s).    X    (X)

(L)

   Investigate all manufacturing Product complaints at Client’s request.       X

(M)

   Notify other Party within one Business Day of receipt of information meeting
NDA Field Alert criteria as defined in 21CFR314.81(b)(l).    X    X

(N)

   Initiate NDA Field Alert reports.    X   

(O)

   Initiate and manage Product recalls.    X   

(P)

   Timely liaise with Regulatory Authorities for approval, maintenance and
updating of marketing approval.    X   

 

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

  (b) Validation and Process Testing Activities

 

         Client   Patheon 1.    Establish applicable master 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

 

  (c) Raw Materials

 

         Client    Patheon 1.   Provide the master formula including Bill of
Materials.    X    (Q)   Provide approved supplier list. Client to audit and
approve API suppliers and ensure cGMP compliance where Client stipulates the
supplier. Client stipulated suppliers will be included on Client’s approved
supplier list (attached hereto as Schedule D).    X    (R)   Client to approve
Product specific excipient Component suppliers and ensure cGMP compliance where
Client stipulates the supplies. Client stipulated suppliers will be included on
Client’s approved supplier list (attached hereto as Schedule D).    X    (S)  
Patheon to qualify and approve excipient Component suppliers and ensure cGMP
compliance where Patheon stipulates the suppliers. Patheon stipulated suppliers
will be included on the Patheon approved supplier list (Schedule C).       X (T)
  Provide API specifications.    X   

 

- 4 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

         Client    Patheon (U)   Procure API (including Certificates of
Analysis).    X    (X) (V)   Provide test methods for API (if non-Compendial).
   X    (W)   Validate non-Compendial testing methods for API.       X (X)  
Analyze and release API.       X (Y)   Retain reference sample of API for one
year past the expiration date of the last batch of Product(s) manufactured with
that material in the Product(s) or such longer period required by Applicable
Laws.       X (Z)   Procure inactive ingredients (including Certificates of
Analysis).       X (AA)   Provide test methods and method validation for
inactive ingredients (if non-Compendial).       X (BB)   Analyze and release
inactive ingredients.       X (CC)   Retain reference samples of inactive
ingredients for 3 years or such longer period as required by Applicable Laws.   
   X (DD)   Maintain records and evidence on the testing of raw materials for
five years after the materials were last used in the manufacture of the
Product(s).       X (EE)   At Client’s request, confirm that all bovine,
caprine, or ovine derived raw materials purchased by Patheon for the manufacture
of Product(s) have a BSE/TSE certificate of compliance from the raw material
vendor.       X

 

  (d) Bulk Manufacture

 

         Client   Patheon 2.   Create, control, issue and execute Master Batch
Record. As used herein, “Master Batch Record” means all batch-related
documentation to be executed in connection with the production of a given batch
of Product.      X (FF)   Approve Master Batch Record.    X   X (GG)   Document,
investigate and resolve deviations from approved manufacturing instructions or
Specifications.    (X)   X (HH)   Notify Client of all major (Product impacting)
deviations.      X

 

- 5 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

  (e) Packaging

 

          Client    Patheon 1.    Provide Specifications for packaging
Components.    X    2.    Review and approve labelling proofs.    X    3.   
Provide artwork and labelling 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. Client to qualify and approve
packaging Component suppliers and ensure cGMP compliance where Client stipulates
the supplier. Client stipulated suppliers will be included on its approved
supplier list (attached hereto as Schedule D).    X    7.    Patheon to qualify
and approve packaging Component suppliers and ensure cGMP compliance where
Patheon stipulates the supplier. Patheon stipulated suppliers will be included
on its approved supplier list (Schedule C)       X 8.    Provide test methods
for packaging Components.       X 9.    Procure packaging Components.       X
10.    Analyze and release packaging Components.       X 11.    Maintain records
and evidence on the testing of packaging/labelling materials for five years
after the materials were last used in the packaging/labelling of the Product(s).
      X 12.    Document, investigate and resolve any deviation from approved
packaging instructions or specifications.       X

 

  (f) Testing & Release of Finished Product

 

- 6 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

          Client    Patheon 1.    Provide finished Product Specifications.    X
   2.    Supply / develop analytical test methods for finished Product.    X   
(X) 3.    Test finished Product.       X 4.    Maintain all batch records
(including Master Batch Record) for a minimum of one year past Product(s)
expiration date and supply copies of a subset of such records as agreed upon to
the Client.       X 5.    Notify Client QA of confirmed Out-Of-Specification
results within one Business Day.       X 6.    Retain reference samples of
finished Product for one year past Product(s) expiration date.       X 7.   
Retain reserve sample of finished Product as required by Applicable Laws,
including 21 CFR 211.170(b)(l).       X

 

  (g) Stability Testing (if required)

 

          Client    Patheon 1.    Provide stability testing protocol for
finished Product(s).    X    2.    Store stability samples.       X 3.   
Develop and validate stability indicating assay.       X 4.    Perform stability
testing.       X 5.    Notify the Client of any confirmed stability failure for
Product(s) supplied to the Client within one Business Day.       X 6.    Provide
Client with stability data for each lot enrolled in the stability program on a
quarterly basis.       X

 

- 7 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

ARTICLE 2

COMPLIANCE BETWEEN PRODUCT REGISTRATION AND THE

MANUFACTURING PROCESS

 

2.1 Technical Changes

 

  (a) Patheon will communicate all proposed process changes to the Client for
prior review and approval; the Client’s approval will not be unreasonably
withheld. The Client will determine whether to initiate registration variation
procedures and will maintain adequate control over the quality commitments of
the marketing authorization for Product(s).

 

  (b) After validation of a process change and at Client’s request, Patheon will
deliver a copy of the validation report and the associated stability data, if
applicable, to the Client.

 

2.2 Labelling / Packaging Material Changes

The Client may initiate changes and will review and approve any changes proposed
by Patheon to labelling or primary packaging, including a change in the supplier
of any labelling or primary packaging Components, before any such change occurs.

 

2.3 Other Changes

Patheon will communicate any proposed changes in storage or shipping to the
Client for review and approval; the Client’s approval will not be unreasonably
withheld. Patheon will also inform the Client of any planned changes in
facilities or equipment that in Patheon’s view may impact Product(s).

Patheon shall ensure the compliance with cGMPs of any testing laboratories that
may be contracted by Patheon to perform its testing of the Product or materials
used in the manufacture of the Product. The use of contract testing laboratories
shall be subject to the prior written approval of Client and therefore be
handled as a technical change (Sec 2.1).

 

2.4 Regulatory Submissions

The Client will timely obtain or maintain all regulatory approvals for the
Products and the Specifications, including, without limitation, all marketing
and post-marketing approvals.

 

- 8 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

2.5 Field Alerts and Recalls

The Client will notify Patheon before filing any NDA Field Alert or initiating a
Recall related to the Product(s). Patheon and the Client will work together to
assure the accuracy of any NDA Field Alert report or Recall notification related
to the Product(s). The Client will have final authority to initiate a Product
Recall or an NDA Field Alert.

ARTICLE 3

MANUFACTURERS RELEASE

 

3.1 Batch review and release to the Client will be the responsibility of Patheon
who shall act in accordance with Patheon’s standard operating procedures. The
Client will have sole responsibility for release of the Product(s) to the
market.

 

3.2 For each batch released by Patheon for shipment to the Client, Patheon will
deliver to the Client a summary list of all deviations, and a certificate of
analysis/certificate of compliance, which will include a statement that the
batch has been manufactured in accordance with the Specifications, this Quality
Agreement and Applicable Laws.

 

3.3 Patheon will notify the Client in the event of (i) any major (product
impacting) deviation during manufacture which affects the quality or efficacy of
the Product(s) or (ii) a confirmed out of specification (OOS) result within one
(1) Business Day of such event. Patheon will provide a copy of the deviation
investigation report as soon as it is available but in no case later than three
(3) Business Days following such event.

ARTICLE 4

BATCH DOCUMENTATION

 

4.1 Patheon will retain originals of all batch documentation (including Master
Batch Records) for one year past the expiry date of the applicable Product(s),
or longer if required by Applicable Laws, after which Patheon will ship the
documentation to the Client.

 

4.2 At the request of the Client, Patheon will provide a copy of any of the
executed batch documents (including the Master Batch Records) relating to
Product(s) to the Client within two Business Days.

 

4.3 The Client will be responsible for the approval of all Master Batch Records
and packaging records.

 

- 9 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

ARTICLE 5

STABILITY

 

5.1 Patheon will perform such stability testing as described in a stability
protocol provided by the Client and agreed to by both Patheon and the Client.

 

5.2 If a confirmed result indicates that a Product(s) failed to remain within
stability Specifications, Patheon will notify the Client within one Business
Day.

 

5.3 Patheon will provide stability data to the Client on an ongoing basis as
agreed to by both Parties.

 

5.4 If the MSA is terminated, Patheon will continue to provide the Client with
stability data supporting the acceptability of the Product(s) until the
applicable Product(s) distributed by the Client reaches the end of its shelf
life.

ARTICLE 6

VALIDATION

 

6.1 Client must ensure that analytical methods and manufacturing and packaging
procedures for the Product(s) are validated, subject to any agreement between
the Parties under which Patheon assumes such responsibilities.

 

6.2 Patheon is responsible for executing the approved validation protocols with
the costs being borne by the Client.

ARTICLE 7

GENERAL

 

7.1 Any communications required under this Agreement will be directed to the
person(s) identified in Schedule B.

 

7.2 Capitalized terms not otherwise defined herein will have the meaning
specified in the MSA.

 

7.3 The Parties agree that, upon the request of either Party, the Parties will
amend the terms of this Agreement to reflect changes in the manufacturing
process and quality assurance for the Product(s) (including with respect to
changes in the formulation of the Product(s)).

 

7.4 If any the terms of this Quality Agreement and the terms of the MSA
conflict, the terms of the MSA will govern.

 

- 10 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

7.5 This Quality Agreement shall terminate upon the termination or expiration of
the MSA. The termination of the Quality Agreement shall not relieve Patheon of
its obligations under Section 5.4 above or either Party of its obligations
hereunder regarding (a) customer complaints, (b) recalls, (c) Inspections by
Regulatory Authorities, (d) Annual Product Review, (e) storage of
Product-specific documents (including Master Batch Records) and (f) storage of
reserve samples.

 

- 11 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

 

TransOral Pharmaceuticals, Inc.     Patheon Pharmaceuticals Inc. Name:        
Name:     Signature:         Signature:     Title:         Title:     Date:    
    Date:    

 

- 12 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

SCHEDULE A

PRODUCT(S)

 

Product(s)

   Dosage Form    Dosage (Strength)

Zolpidem Tartrate CIV

   Tablet    1.75 mg

Zolpidem Tartrate CIV

   Tablet    3.5 mg

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

SCHEDULE B

QUALITY CONTACTS

 

Primary Contacts    Client: TransOral Pharmaceuticals, Inc.    Patheon
Pharmaceuticals Inc.: n Attention: Michael P. Cohrs, Ph.D.    Attention: nNick
Blank Telephone No: (510) 215-3518    Telephone No: n(513) 948-7418 Fax No.:
(510) 215-3535    Fax No.: n(513) 948-7740 e-mail: mcohrs@transoral.com   
e-mail: nnick.blank@patheon.com Secondary Contacts    Client: TransOral
Pharmaceuticals, Inc.    Patheon Pharmaceuticals Inc.: n Attention: Sharon
Sakai, Ph.D.    Attention: nChuck Venable Telephone No: (510) 215-3515   
Telephone No: n(513) 948-7783 Fax No.: (510) 215-3535    Fax No.: n(513)
948-4553 e-mail: ssakai@transoral.com    e-mail: nchuck.venable@patheon.com

 

- 14 -

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

SCHEDULE C

PATHEON APPROVED SUPPLIER LIST

 

Material

  

Supplier

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

 

-15-

 

 

[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

SCHEDULE D

TRANSORAL APPROVED SUPPLIER LIST

 

Material

  

Supplier

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

[***]

  

[***]

 

-16-

 

 

[***] Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted from this exhibit and have been filed
separately with the Securities and Exchange Commission.

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TransOral Patheon MSA (Cincinnati and Whitby)—EXECUTION DRAFT

 

Abbreviations and Definitions

 

ANDA

  

Abbreviated New Drug Application

API    Active Materials, as defined in the MSA) APR    Annual Product Review as
defined in 21 CFR 211.180 (e) AR    Annual Report as defined in 21 CFR 314.81
(b)(2) BSE    Bovine Spongiform Encephalopathy C of A    Certificate of Analysis
C of C    Certificate of Compliance CFR    Code of Federal Regulations cGMP   
As defined in the MSA DEA    Drug Enforcement Administration FDA    Food & Drug
Administration IQ    Installation Qualification MSA    Manufacturing Services
Agreement MSDS    Material Safety Data Sheets NDA    New Drug Application OOS   
Out of Specification OQ    Operational Qualification

Primary Packaging

Materials

   A component that is or maybe in direct contact with the dosage form TSE   
Transmissible Spongiform Encephalopathy

 

- 17 -

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

SCHEDULE H

QUARTERLY ACTIVE MATERIALS INVENTORY REPORT

 

TO:    TRANSORAL PHARMACEUTICALS, INC. FROM:    PATHEON INC. /PATHEON
PHARMACEUTICALS INC. RE:    Active Materials quarterly inventory report pursuant
to Section 2.2(a) of the Manufacturing Services Agreement dated October 6, 2006
(the “Agreement”)

 

Patheon manufacturing facility1:

   _________________       

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 Dispensed2 during quarter:

(A + C – B)

   _________________ kg   

Quantity Converted during quarter:

   _________________ kg    (total Active Materials in Products produced and not
rejected, recalled or returned, including lab samples required by the
Specifications)

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

DATE: ____________

 

PATHEON INC./PATHEON PHARMACEUTICALS INC. Per:     Name:     Title:    

 

1

Report to be provided for each Patheon manufacturing facility manufacturing
Product.

 

2

Excludes any Active Materials received or consumed in connection with technical
transfer activities or development activities agreed to by the Parties in
writing, including, without limitation, any regulatory, stability, validation or
test batches manufactured during the month.

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

SCHEDULE I

REPORT OF ANNUAL ACTIVE MATERIALS INVENTORY RECONCILIATION

AND CALCULATION OF ACTUAL ANNUAL YIELD.

 

TO:    TRANSORAL PHARMACEUTICALS, INC. FROM:    PATHEON INC./PATHEON
PHARMACEUTICALS INC. RE:    Active Materials annual inventory reconciliation
report and calculation of Actual Yield pursuant to Section 2.2(a) of the
Manufacturing Services Agreement dated October 6, 2006 (the “Agreement”)

 

Patheon manufacturing facility3:

     _________________    

Reporting Year ending:

     _________________    

Active Materials on hand at beginning of quarter:

     _________________  kg   (A)

Active Materials on hand at end of quarter:

     _________________  kg   (B)

Quantity Received during Year:

     _________________  kg   (C)

Quantity Dispensed4 during Year:

(A + C - B)

     _________________  kg   (D)

Quantity Converted during Year:

     _________________  kg   (E) (total Active Materials in Products produced
and not rejected, recalled or returned, including lab samples required by the
Specifications)

Active Materials Reimbursement Value:

   $ _________________  /kg   (F)

Target Yield:

     _________________  %   (G)

 

3

Report to be provided for each Patheon manufacturing facility manufacturing
Product.

 

4

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

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TransOral Patheon MSA (Cincinnati and Whitby) – EXECUTION DRAFT

 

Actual Annual Yield:

   _________________________  %   (H)

(( E/D) * 100)

    

Shortfall:

   $_________________________     (I)

(((G – 1% - H)/100) * F * D)

   (if a negative number, insert zero)    

Based on the foregoing reimbursement calculation Patheon will reimburse
________________________ the amount of $_______________.

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

DATE: ____________

 

PATHEON INC./PATHEON PHARMACEUTICALS INC. Per:     Name:   Title:  

 

- 2 -

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TransOral Patheon (Cincinnati and Whitby) – EXECUTION DRAFT

 

SCHEDULE J

[FORM OF] EXCLUSIVE COMPONENTS PURCHASING SUMMARY

Re: Manufacturing Services Agreement dated October 6, 2006 between Patheon Inc.,

Patheon Pharmaceuticals Inc., and TransOral Pharmaceuticals, Inc.

 

Dated:      Product:

 

Component #

   Description    Units of
Measure    Qty/
Annual    Order Qty    Order
Comments    Client Order
Liability    Annual Spend Raw Materials                                       
                        Printed Components                                    
                          

Notes:

 

  •  

Component numbers are for reference only and may change as label copy or
Specifications are updated.

 

  •  

Client Order Liability amount may change as Specifications are revised or
purchase cost vary, but only in accordance with Article 5 of the Agreement.

 

  •  

Packaging components that are noted as run in tandem will be reviewed and have
the quantity adjusted by component with each order.

 

  •  

Consideration is given with each tandem order to balance all items to a common
useage point.

 

  •  

Materials that are being ordered in excess of those required for Firm Orders as
indicated in the Patheon Sales Order Register will follow the Patheon order
policies.

 

  •  

Client Order Liability noted is based on the Component order and may have a
level of in-house materials to cover production requirements during the
receiving and release process.

 

  •  

Client Order Liability will not exceed the total purchased amount plus any
normal process related inventory. Noting that all items are not on order at any
particular time.

 

  •  

Significant requirement reductions for components already produced may increase
inventory liability.

 

Dated __________________ of 200—                  Approved by:      [AUTHORIZED
SIGNATORY]