Exhibit 10.39

 

TECHNOLOGY TRANSFER AND SUPPLY AGREEMENT

 

THIS TECHNOLOGY TRANSFER AND SUPPLY AGREEMENT (this “Agreement”) is made as of
this 22nd day of May, 2012 (the “Effective Date”) by and between Theravance,
Inc., a Delaware Corporation having its principal place of business at 901
Gateway Blvd., South San Francisco, California, 94080 (“Theravance”) and Hospira
Worldwide, Inc., a Delaware Corporation having its principal place of business
at 275 North Field Drive, Lake Forest, Illinois, 60045 (“Hospira”).

 

WITNESSETH:

 

WHEREAS, Theravance owns the rights to the human pharmaceutical compound,
telavancin that is marketed and sold under the name, VIBATIV® (“Product”);

 

WHEREAS, Theravance desires to engage Hospira to perform manufacture, fill, and
finish services with respect to the Product; and

 

WHEREAS, Hospira desires to perform such services for Theravance with respect to
the Product;

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, Theravance and Hospira hereby agree as follows:

 

ARTICLE 1.          DEFINITIONS

 

The following words and phrases when used herein with capital letters shall have
the meanings set forth or referenced below:

 

1.1           “Act” shall mean the United States Federal Food, Drug and Cosmetic
Act (21 U.S.C. 301), as amended from time to time.

 

1.2           “Active Pharmaceutical Ingredient” or “API” means the active
pharmaceutical substance of the Drug in bulk form prior to incorporation into
the Product.

 

1.3           “Active Pharmaceutical Ingredient Specifications” means the
detailed description and parameters of the API set forth on Exhibit 1.3.

 

1.4           “Adverse Drug Experience(s)” has the meaning as set forth in 21
CFR 310.305.

 

1.5           “Affiliate” means, with respect to a party, any corporation,
partnership, joint venture and/or firm which controls, is controlled by or is
under common control with such party.  As used in this Section 1.5, “control”
means:  (a) in the case of corporate entities, direct or indirect ownership of
at least fifty percent (50%) of the stock or shares having the right to vote for
the election of directors; and (b) in the case of non-corporate entities, the
direct or indirect power to manage, direct or cause the direction of the
management and policies of the non-corporate entity or the power to elect at
least fifty percent (50%) of the members of the governing body of such
non-corporate entity.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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1.6           “Applicable Law” means all laws applicable to the manufacture,
processing, packaging, distribution, sale and use of the Product as may be
amended and in effect from time to time, including the Act and the regulations
promulgated thereunder; the Canadian Food and Drugs Act (R.S., chapter F-27) and
related regulations; European Directive 2003/94/EC and 2001/83/EC, and related
legislation; all applicable cGMP; and all corresponding laws, ordinances, rules
and regulations of any other applicable jurisdiction.

 

1.7           “Business Day” shall mean a day which is not a Saturday or Sunday
or a bank or public holiday in San Francisco, California, Chicago, Illinois or
McPherson, Kansas.

 

1.8           “Certificate of Analysis” means a document, signed by an
authorized representative of Hospira, describing the Product Specifications of
and testing methods applied to the Product, and the results thereof.

 

1.9           “Certificate of Compliance” means a document, signed by an
authorized representative of Hospira, attesting that a particular lot, batch or
run was manufactured in accordance with cGMP, Applicable Law, and the Product
Specifications.  The Certificate of Compliance may be included within the
Certificate of Analysis, or separately, if required by Theravance for regulatory
purposes or Applicable Law.

 

1.10         “cGMP” means those principles and guidelines of good manufacturing
practices as set forth in 21 C.F.R. Parts 210 and Part 211; EU Directive
2003/94/EC - guidelines of good manufacturing practices for medicinal products
for human use (EudraLex Vol. 4); Canadian Good Manufacturing Practices as
contained in Canada Food & Drug Regulations C.R.C., c. 870, C.02- C.04; the ICH
Guideline on Good Manufacturing Practice for Active Pharmaceutical Ingredients
(ICH Q7A), as adopted by EU Directive 2004/27; and the corresponding
requirements, of any other applicable jurisdiction.

 

1.11         “Commercial Year” means each period of twelve (12) consecutive
calendar months during this Agreement beginning on January 1st and ending
December 31st, except for the first Commercial Year, which shall commence on the
first day of the month after the month of Theravance’s first bona fide sale of
Product manufactured by Hospira to a non-Affiliate customer after the Product
has received Regulatory Approval for manufacturing at Hospira’s McPherson,
Kansas site and ends on December 31st thereafter.

 

1.12         “Components” means all those vials or component parts of the vials
into which the Drug will be filled, and the labeling, packaging, ancillary
goods, shipping materials and other items to be supplied by Hospira or its
Components supplier(s) to manufacture the Product in accordance with the Product
Specifications.

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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1.13         “Confidential Information” means all information, data, and know
how, whether commercial, financial, technical, operational, or otherwise in any
format, disclosed hereunder by one party or any of its Affiliates to the other
party or any of its Affiliates in connection with this agreement which by its
nature is clearly confidential, or is otherwise marked or designated as
confidential or proprietary, whether disclosed orally in documentary form, by
documentation or otherwise and including the terms of this Agreement, except any
portion thereof which:

 

(a)           is known to the recipient at the time of the disclosure, as
evidenced by its written records or other competent evidence;

 

(b)           is disclosed to the recipient by a Third Party lawfully in
possession of such information and not under an obligation of nondisclosure;

 

(c)           is or becomes patented, published or otherwise part of the public
domain through no fault of the recipient; or

 

(d)           is developed by or for the recipient independently of Confidential
Information disclosed hereunder as evidenced by the recipient’s written records
or other competent evidence;

 

Notwithstanding the forgoing, specific aspects of Confidential Information shall
not be deemed to be within the forgoing exceptions when such exceptions only
apply to more general knowledge or when the relevant specific aspects are
identified using Confidential Information disclosed under this Agreement.

 

1.14         “Drug” means the human pharmaceutical compound, telavancin, a
lipoglycopeptide used for the treatment of Gram-positive pathogens.

 

1.15         “EMA” means the European Medicines Agency and any successor entity.

 

1.16         “Excipient” means [***].

 

1.17         “Excipient Specifications” means the detailed description and
parameters of the Excipient set forth in Exhibit 1.3.

 

1.18         “Facility” means Hospira’s pharmaceutical manufacturing plant at
McPherson, Kansas, or such other manufacturing facility agreed by the parties in
writing.

 

1.19         “FDA” means the United States Food and Drug Administration or any
successor entity.

 

CONFIDENTIAL

 

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1.20         “Health Canada” means the Therapeutic Products Inspectorate of the
Canadian Health Products and Food Branch and any successor entity.

 

1.21         “Manufacturing Process” means any and all processes (or any step in
any process) that is provided to Hospira by Theravance and that will be used to
manufacture the Product, as evidenced in the batch documentation and/or
technology transfer reports.

 

1.22         “Master Batch Record” shall mean the document that defines the
manufacturing methods, materials, and other procedures, directions and controls
associated with the manufacture and testing of the Product, which may be amended
in writing from time to time by mutual agreement of the parties.

 

1.23         “MSDS” means the Material Data Safety Sheet for the Product or the
API containing such information as may be required by applicable government
agencies.

 

1.24         “Product” means VIBATIV® in a 750mg dosage form, filled, finished
and packaged in accordance with the Product Specifications.

 

1.25         “Product Specifications” means those manufacturing, materials,
packaging, labeling, testing, and performance specifications for the Product
filed with the relevant Regulatory Authority, required for the manufacture of
the Product that is to be purchased and supplied under this Agreement, as such
are set forth on Exhibit 1.25 which specifications may be amended by the parties
from time to time in accordance with this Agreement.

 

1.26         “QP” shall mean a qualified person who is entrusted to perform “QP
Testing/ Release” of the Product in the European Union, in accordance with
European Directive 2001/83/EC relating to Medicinal Products for Human Use.

 

1.27         “Regulatory Approval” means any licenses and permits for the
manufacture of the Product at the Facility and all other approvals (including
supplements, amendments, pre- and post-marketing approvals, and pricing and
reimbursement approvals), licenses, registrations or authorizations of a
relevant Regulatory Authority necessary for the distribution, sale or use of the
Product in the Territory.

 

1.28         “Regulatory Authority” means the FDA and/or the EMA or any other
federal, state or local or other regulatory agency, department, bureau or other
governmental entity, which is responsible for issuing Regulatory Approvals of
the Product in the Territory.

 

1.29         “Specially Regulated Waste” means any hazardous waste, toxic waste,
medical waste, nuclear waste, mixed waste, or other waste materials or
by-products, including waste water, which may be subject to or require special
handling, treatment, storage, or disposal under any federal, state or local laws
or regulations intended to address such types of waste materials that arise from
the manufacture of the Product.

 

CONFIDENTIAL

 

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1.30         “Term” means, individually the Initial Term of this Agreement, or
collectively the Initial Term and any Renewal Term, as those defined terms are
used herein.

 

1.31         “Territory” means:  (i) the United States of America, including the
District of Columbia, the Commonwealth of Puerto Rico, all territories and
possessions of the United States of America, United States military bases, and
any other location over which the FDA has jurisdiction to regulate medicinal
products intended for human use; (ii) Canada; and (iii) the European Union (“EU
27”) and any other countries that are later admitted to the European Union by
acceding to the treaties of the European Union.

 

1.32         “Third Party” shall mean a party other than Hospira or Theravance
and their respective Affiliates.

 

1.33         “Waste” shall mean all rejects, improper goods, garbage, refuse,
remainder, residue, waste water or other discarded material, including solid,
liquid, semisolid, or contained gaseous material that arises from the
manufacture of the Product, including rejected, excess or unsuitable materials,
API and Products.  The term Waste shall not include any Specially Regulated
Waste.

 

ARTICLE 2.          TECHNOLOGY TRANSFER PROJECT

 

2.1           General.  The parties shall undertake a technology transfer
project (“Project”) consisting of the activities set forth in Exhibit 2.1
(“Statement of Work”).  Under the Project, Hospira shall assist Theravance in
the technology transfer related to the Manufacturing Process and to obtain the
required sNDA or equivalent approval(s) in the jurisdictions in the Territory. 
Hospira then shall manufacture and deliver Product to Theravance for sale by
Theravance as a human pharmaceutical product.

 

2.2           Commercially Reasonable Efforts.  Each party shall use all
commercially reasonable efforts successfully to complete the Project.  However,
the parties understand and agree that neither of them can guarantee that the
Project will be successful, nor warrants that a marketable product will result
from the Project.

 

ARTICLE 3.          TECHNOLOGY TRANSFER FEES; PROJECT MANAGEMENT

 

3.1           Technical Transfer Fee.  Theravance shall pay to Hospira a
technical transfer fee (“Technical Transfer Fee”) for its work under the Project
in accordance with the payment schedule set forth in Exhibit 2.1.

 

3.2           Stability Studies.  If so requested by Theravance, Hospira will
perform stability studies on the Product separate and apart from the Project. 
Hospira will invoice Theravance for any such stability studies at the prices set
forth in Exhibit 3.2.

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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3.3           Changes in Project Scope.

 

(a)           If Theravance requests changes in the Project or the Product
Specifications, or if technical difficulties require that Hospira perform either
additional work or repeat work, and such additional work is required not because
of Hospira’s fault or negligence, Hospira shall within [***] Business Days
provide Theravance with a new or revised proposal with cost estimates for such
changes or additional work, based on its customary per/hour, per/person rates
relative to the work to be performed, including costs for reasonable travel and
sustenance, materials and supplies. If Theravance approves such costs, the
mutually agreeable changes will be documented in writing and signed by both
parties as a change order, and Hospira shall perform such agreed-upon new or
additional work.  Theravance shall pay Hospira’s costs for such additional work
or repeat work performance as set forth in this Agreement.

 

(b)           In the event that Theravance decides to pursue marketing and sales
activities for the Product in countries or geographic regions outside of the
Territory, Hospira shall provide Theravance with all reasonable additional
technical/developmental and regulatory support, including, for example,
regulatory support for Theravance’s supplemental regulatory filings, packaging
and product development, labeling, and Regulatory Authority inspections. Any
additional technical/developmental and regulatory support for such other
countries or geographic regions shall be considered a change in Project scope
and the Parties will agree to the reasonable incremental costs of such
additional support in accordance with Section 3.3(a).  Any additional
pre-approval inspections of the Facility that may be required by relevant
Regulatory Authorities as a result shall be reimbursed in accordance with
Section 7.3(c).

 

3.4           Project Manager.  Each party will appoint an authorized individual
who will have primary responsibility for day-to-day interactions with the other
party for the activities under the Project (“Project Manager”).  Each party will
use all reasonable efforts to provide the other party with at least [***] days
prior written notice of any change in its Project Manager.  All communications
between Hospira and Theravance regarding the conduct of the activities under the
Project will be addressed to its Project Manager.

 

3.5           Technology Transfer Supplies.  Based on Theravance’s Product
Specifications, Hospira will manufacture the Product in compliance with cGMP for
production and regulatory purposes as follows: [***] (“Technology Transfer
Supplies”) at the prices set forth in Exhibit 2.1.  In accordance with a
schedule to be mutually agreed by the parties, Theravance shall issue its
purchase order(s) for such Technology Transfer Supplies at least [***] days
before any requested manufacturing date.  For the sake of clarity, all relevant
provisions of Articles 5, 7, 8 and 9 shall apply to the manufacture and delivery
of the Technology Transfer Supplies.

 

CONFIDENTIAL

 

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ARTICLE 4.          THERAVANCE’S REGULATORY SUBMISSIONS

 

4.1           Regulatory Review.

 

(a)           Upon Theravance’s request, Hospira shall review those portions of
Theravance’s proposed submissions for Regulatory Approval as related to
Hospira’s manufacturing, packaging and quality control procedures before the
submissions are filed with relevant Regulatory Authorities.  Hospira shall
complete its review of any English-language submissions within [***] Business
Days after receipt. For any non English-language submissions, Theravance shall
provide Hospira with a submission translated into English and the parties will
agree on a reasonable period of time that Hospira may require for review of such
submissions.

 

(b)           Upon Theravance’s request, Hospira shall consult with and advise
Theravance in responding to questions from Regulatory Authorities regarding
Theravance’s regulatory submission(s) for the Products, provided, however, that
Theravance shall have the final control over such submissions.  In the event
that any additional review and consultation is required by a Regulatory
Authority (for example, for technical responses to a Regulatory Authority
finding of deficiency, should one arise), Hospira shall provide Theravance with
cost estimates (which shall include a professional services fee at its customary
per/hour, per/person rates relative to the work to be performed, consistent with
its charges to other similarly-situated customers).  If Theravance approves such
costs in writing, Theravance shall reimburse Hospira for such approved costs
upon completion of the work and within [***] days of receipt of Hospira’s
invoice.

 

4.2           User Fees.  Theravance shall pay any Regulatory Authority user
fees which may become payable for the Product.

 

4.3           Ownership of Regulatory Approvals.  The parties agree that
Theravance shall be the sole and exclusive owner of all right, title and
interest in and to all Regulatory Approvals related to the Product and any
submissions for such Regulatory Approvals.  Hospira shall reasonably assist
Theravance in the preparation of all documents necessary to effect Theravance’s
rights in such Regulatory Approval applications and submissions.  Theravance
shall provide to Hospira for its files a final copy of the CMC section of any
such applications and/or submissions for Regulatory Approval.

 

4.4           Qualification of and Purchases from Alternate Sites.  Theravance
shall have the right, in its sole discretion, to qualify manufacturing site(s)
with Third Parties to manufacture and supply the Product during the Term (each,
an “Alternate Supplier”). Theravance may obtain [***] of its requirements of
Product in the Territory from such Alternate Supplier(s) during the Term;
provided, however, that if Hospira is unable to fulfill any of its manufacturing
and supply obligations hereunder then Theravance may obtain such amount of its
requirements of Product that Hospira is unable to supply from such Alternate
Suppliers and for such period of time that Hospira is unable to supply.

 

CONFIDENTIAL

 

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ARTICLE 5.          MANUFACTURE AND SUPPLY OF PRODUCT

 

5.1           Purchase and Sale of Product.  Upon obtaining the first of the
Regulatory Approvals required for manufacturing Product at the Facility,
pursuant to the terms and conditions of this Agreement and during each
Commercial Year, and subject to the exceptions of Section 4.4, Hospira shall
manufacture, sell and deliver Product to Theravance, and Theravance shall
purchase and take delivery of [***] of its requirements for Product in those
jurisdictions within the Territory where Regulatory Approval(s) have been
obtained.  Notwithstanding any of the foregoing, Theravance shall be entitled to
[***] for purposes of [***] and such batches shall [***] to purchase and take
delivery of Product from [***] under this Section 5.1.

 

5.2           Manufacturing Standards.  Hospira will manufacture, package, and
label the Product in accordance with the Product Specifications, cGMP and all
Applicable Laws, as then in effect.  The parties agree that, should Theravance
wish to implement any amendment to the Product Specifications, Theravance shall
provide written notice thereof to Hospira for Hospira’s review and approval,
which approval shall not be unreasonably withheld.  Each party further agrees
promptly to notify the other of any new instructions or changes to the Product
Specifications required by the FDA or Applicable Laws and shall confer with each
other with respect to the best means to comply with such instructions or change
requirements.

 

5.3           Government Approvals.  Hospira agrees to manufacture and supply
those quantities of Product requested in Purchase Orders by Theravance that are
necessary to validate the Facility, obtain Regulatory Approval(s) and build
Theravance’s inventory in anticipation of the commercial sale of the Products
and Theravance shall be required to pay for such Product in accordance with the
terms of this Agreement irrespective of whether the Product ultimately receives
any Regulatory Approvals in the Territory.  Notwithstanding the forgoing or
anything else in this Agreement to the contrary, Theravance shall be entitled to
designate the intended jurisdiction or market within the Territory (e.g. the
United States, Canada or EU 27) for which any Product is to be manufactured,
tested, packaged, labeled and released.

 

5.4           Active Pharmaceutical Ingredient; Excipient

 

(a)           Supply.

 

(i)            Hospira shall manufacture Product for Theravance from quantities
of API and Excipient that Theravance shall supply to Hospira at no cost. 
Theravance shall supply API and Excipient to Hospira in quantities sufficient to
satisfy Hospira’s gross manufacturing requirements of the Product no later than
[***] prior to the scheduled start of API/Excipient compounding.  Hospira shall
use the API and Excipient received from Theravance only for the technology
transfer activities contemplated by this Agreement and the manufacture of
Product for Theravance hereunder.  Theravance shall deliver or arrange for the
delivery of API and the Excipient, [***] pursuant to no-cost purchase orders
that Hospira issues to Theravance.

 

CONFIDENTIAL

 

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(ii)           With each delivery of API/Excipient, Theravance will include a
certificate of analysis, signed by an authorized individual of Theravance (or
its designee) containing basic information regarding the API/Excipient,
including:  (A) the manufacturing date of the batch/lot delivered; (B) the
batch/lot number; and (C) the quantity of API/Excipient in such batch/lot as
shipped to Hospira.  Theravance shall also supply a separate sample (“tailgate
sample”; “satellite sample”) for each container of API/Excipient supplied.

 

(iii)          Within [***] days of Hospira’s receipt of any API or Excipient
supplied by or on behalf of Theravance hereunder, Hospira shall:  (A) perform an
identification test on the API and Excipient and confirm the shipment quantity;
(B) perform any other tests mutually agreed upon in writing; and (C) notify
Theravance of any inaccuracies with respect to quantity or of any claim that any
portion of the shipment fails the identification or other test.  In the event
Hospira notifies Theravance of any deficiency in the quantity or quality of API
and/or Excipient received, Theravance shall promptly ship to Hospira, at
Theravance’s own expense, the quantity of API and/or Excipient necessary to
complete the shipment.  In the event Hospira notifies Theravance that the API
and/or Excipient shipment does not conform to the API Specifications and/or
Excipient Specifications, Theravance shall have the right to confirm such
findings at the Facility.

 

(iv)          If Theravance determines that such shipment of API and/or
Excipient conforms to the API Specifications and/or Excipient Specifications,
the parties shall submit samples of such shipment to a mutually acceptable
independent expert for testing.  If such independent expert determines that the
shipment conforms to the API Specifications and/or Excipient Specifications,
Hospira shall bear all expenses of shipping and testing such shipment samples. 
If Theravance or such independent expert determines that such shipment does not
meet the API Specifications and/or Excipient Specifications, Theravance shall
replace, at no cost to Hospira, the portion of the API and/or Excipient shipment
which does not conform to the API Specifications and/or Excipient Specifications
and bear all expenses of shipping and testing the shipment samples. 
Notwithstanding the foregoing, the independent expert may also determine that
additional sample testing by an independent laboratory is necessary Hospira
shall dispose of any nonconforming portion of any API and/or Excipient shipment
as directed by Theravance, at Theravance’s expense.

 

(b)           Title.  Notwithstanding the [***] terms of Section 5.4(a)(i),
[***] to the API and Excipient while they are in the Facility.  Subject to the
limitation in Section 5.4(c), Hospira shall assume responsibility and risk for
the safekeeping, storage and handling for all shipments of API and Excipient
delivered hereunder and accepted by Hospira.

 

(c)           Loss and Replacement of API and Excipient.  In the event of loss
or damage of any API and/or Excipient delivered hereunder or the failure of
Product to meet Product Specifications, Theravance shall supply to Hospira
replacement API and/or Excipient according to the terms set forth in Section
5.4(a), except as otherwise provided herein.  If the replacement of such API
and/or Excipient results from a negligent act or omission or the willful

 

CONFIDENTIAL

 

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misconduct by Hospira in the manufacture, handling or storage of Product or API
and/or Excipient, Theravance shall supply to Hospira replacement API and/or
Excipient and Hospira shall be responsible for the cost of the replacement API
and/or Excipient equal to Theravance’s purchase cost/kg (as evidenced by
Theravance’s invoices).

 

(d)           Maximum Liability.  Notwithstanding any of the foregoing, in no
event shall Hospira’s liability for such replacement costs of API and/or
Excipient exceed: (i) [***]; (ii) [***]; or (iii) in the event of loss during
the handling and storage of API and/or Excipient (x) prior to the start of
compounding operations; or (y) during storage of the Product after completion of
filling operations and prior to delivery, [***]. For greater clarity, Hospira’s
liability under (iii), above, explicitly excludes loss of API during any and all
aspects of compounding, filling and finishing the API, the Excipient and/or
Product. Theravance expressly acknowledges and agrees that this Section 5.4(d)
states Theravance’s sole remedy, and Hospira’s sole liability, with respect to
any claim arising hereunder for any such loss, damage, or misuse of API and/or
Excipient by Hospira.

 

5.5           Facility; Dedicated Equipment.

 

(a)           Maintenance of Facility.  Hospira shall secure and maintain in
good order, at its sole cost and expense, such current governmental
registrations, licenses and permits as are required by Regulatory Authorities in
order for Hospira to perform all of its obligations under this Agreement. 
Hospira further agrees that at all times during the Term, that it shall maintain
the Facility, and all equipment, machinery, systems, intangibles and contract
rights in use at the Facility in the ordinary course of business, in compliance
with cGMP and Applicable Laws.

 

(b)           Dedicated Equipment; Costs. The parties anticipate that certain
specialized and dedicated equipment (“Dedicated Equipment”) will be required to
manufacture the Product for Theravance.  The list of such Dedicated Equipment
and Hospira’s estimate of the purchase cost is attached in Exhibit 5.5.  Hospira
shall obtain firm quotes from one or more equipment manufacturers and advise
Theravance of the overall costs to be incurred in connection with the purchase,
installation and validation of such Dedicated Equipment.  After Theravance
approves such costs, which approval shall not be unreasonably withheld, Hospira
shall install and validate the Dedicated Equipment and bill Theravance for the
associated costs.  Theravance shall make payment to Hospira no later than [***]
days after Theravance receives Hospira’s invoice for the same.  Title to the
Dedicated Equipment shall be in Theravance’s name.  Hospira shall label such
Dedicated Equipment as Theravance property and evidencing Theravance’s ownership
interests.  Hospira shall use commercially reasonable efforts to maintain the
Dedicated Equipment in good condition, normal wear and tear excepted.  The
parties shall address all issues involving warranty repairs or replacement with
the equipment supplier by mutual accord.  Hospira shall use Dedicated Equipment
only in connection with the manufacture the Product; provided, however, that if
Hospira wishes to use such Dedicated Equipment for manufacture of any product(s)
other than the Product, Hospira and Theravance shall meet and discuss the
technical and practical ramifications of such use and appropriate compensation
to Theravance.

 

CONFIDENTIAL

 

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5.6           Components.  Hospira shall be responsible for the procurement and
qualification of the Components required for the manufacture of the Product. 
Hospira will source all of the Components from suppliers that have been approved
and qualified by Hospira in accordance with Hospira’s internal vendor
qualification and approval processes.  The parties understand and agree that
Theravance will have reviewed and approved the Components and Component
suppliers listed in the Product Specifications.  Under no circumstances shall
Hospira have any liability to Theravance, nor shall Hospira be deemed to be in
breach of this Agreement, if Hospira is unable to supply the Product to
Theravance due to a failure of such suppliers to provide such Components to
Hospira.

 

5.7           Product Labeling.

 

(a)           Hospira shall label the Product in accordance with the Product
Specifications using content provided by Theravance.  Theravance shall control
the content and type of all labeling and packaging (and any changes or
supplements thereto) for the Product and shall have the responsibility, at
Theravance’s expense, for:  (i) ensuring such content is compliant with
Regulatory Approval and all Applicable Law; and (ii) any changes or supplements
to such content, including the expense of securing any approvals required by any
applicable Regulatory Authority for any such changes or supplements.  Hospira
shall be responsible for obtaining such labels (and any changes or supplements
thereto) in accordance with content specified by Theravance.

 

(b)           Any changes to the labeling and packaging shall be communicated to
Hospira in writing at least [***] days prior to the desired implementation date
together with the required documentation specifying the content to be included
in the labeling and packaging, including all necessary photo-ready art (or its
substantial equivalent).  Theravance shall reimburse Hospira for Hospira’s
actual costs of making any changes under this Section 5.7(b) and for the cost of
any labeling that Hospira is unable to use due to such changes.

 

5.8           Off-Site Waste.  If necessary, Hospira shall hire, direct and pay
all costs for a waste contractor to remove all Waste from Hospira’s
manufacturing facility for Product consistent with the Product’s MSDS.  The
costs associated with the removal of Specially Regulated Waste shall be borne by
Theravance.  Hospira shall only dispose of Specially Regulated Waste at sites
and through waste management vendors that have been approved in writing by
Theravance, whose approval shall not be withheld unreasonably.  Hospira shall
document the destruction of any Specially Regulated Waste in writing and provide
copies of such written documentation to an authorized representative of
Theravance.  Theravance maintains the right, but not the obligation, to witness
the actual disposal of Specially Regulated Waste.  Theravance shall, upon
request by Hospira, provide the MSDS for the API and the MSDS for the Product to
Hospira.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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5.9           Delivery.  Hospira shall deliver the Product to Theravance,
[***].  Title to and risk of loss over the Products shall pass to [***]. 
Hospira shall not deliver any Product until both Hospira and Theravance have
released such Product pursuant to the Product Specifications and/or the Quality
Agreement in the form attached here as Exhibit 7.2 (“Quality Agreement”).  [***]
For any shipments outside the United States, Theravance shall be the exporter of
record; provided, however, that Hospira shall assist Theravance in the
preparation of any required export documentation.

 

5.10         [***]  Hospira shall use its best efforts to ensure that [***]. 
Except if caused by events of Force Majeure or other manufacturing, quality
control or other issues beyond Hospira’s reasonable ability to control, [***],
Theravance shall have the right to [***] that Hospira eventually issues for the
Products [***].

 

5.11         Price and Payment.

 

(a)           Price.  Hospira shall invoice Theravance for Product it delivers
to Theravance at the price(s) as set forth on Exhibit 5.11.  Each invoice shall
reference the price of the Product in effect on the date of Hospira’s invoice. 
All pricing is firm through December 31, 2013.  Beginning January 1, 2014 and on
each succeeding January 1st thereafter during the Term, Hospira shall have the
right to increase the price of the Product once annually.  Price increases shall
be effective for deliveries beginning January 1st of each calendar year.  Such
increases shall not exceed [***].  Hospira shall use all reasonable efforts to
provide written notice to Theravance of any anticipated price increase no later
than October 31st of any calendar year.

 

(b)           Payment.  Hospira shall invoice Theravance upon delivery of the
Product.  Theravance shall make payment net [***] days from the date of receipt
of Hospira’s invoice.  Hospira shall include on all invoices the relevant
purchase order number as provided by Theravance.  The currency to be used to
invoice and for payment shall be US Dollars.  Hospira shall send invoices by
email to AP@Theravance.com.

 

(c)           Taxes.  Theravance shall pay all federal, state, county or
municipal sales or use tax, excise, customs charges, duties or similar charge,
or any other tax assessment (other than that assessed against income), license,
fee or other charge lawfully assessed or charged on the manufacture, sale or
transportation of the Product that Hospira manufactures, sells and delivers
pursuant to this Agreement.  In particular, Theravance shall be responsible for
and pay all Prescription Drug User (PDUFA) annual establishment fees with
respect to the Product.  Theravance shall provide Hospira with copies of any
state tax exemption form(s) if it intends to claim exemption for sales or use
taxes in any state(s) where the Product is to be shipped.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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5.12         Inspection; Nonconforming Product.

 

(a)           Documentation; Inspection. Upon completion of the manufacture of
each batch of Product, Hospira will provide Theravance with a Certificate of
Analysis confirming that the batch was manufactured in conformity with the
Product Specifications and all Applicable Laws.  In addition, Hospira will
provide Theravance with a copy of the Master Batch Record and all other
documents and records as required by the Quality Agreement for Theravance’s
release of the batch and such samples of the batch that Theravance may
reasonably request.  For purposes of testing and releasing the Product for sale
in the European Union, Hospira will make available to Theravance its Qualified
Person(s) (“QP”) at one or more of its European Affiliates.

 

(b)           Theravance shall have a period of [***] days from the date of its
receipt of all such documentation (and if, applicable, batch samples) to
inspect, and accept or reject, the corresponding batch as conforming or
non-conforming with the Product Specifications and all Applicable Laws.  If
Theravance rejects the batch, it shall promptly so notify Hospira and provide
the reason for the rejection.  If the reason for the rejection is
non-conformance with Product Specifications and, as a result of further review
and testing, Hospira determines that the Batch does conform to the Product
Specifications, Hospira shall so notify Theravance and the parties shall then
submit samples of such batch to a mutually acceptable independent expert for
testing.

 

(c)           Testing. If such independent expert determines that the batch
conforms to the Product Specifications, Theravance shall bear all expenses of
shipping and testing such batch samples and Theravance shall be responsible for
Hospira’s invoice price of the batch.  If such independent expert determines
that the batch does not meet the Product Specifications, Hospira shall bear all
expenses of shipping and testing the batch samples.  Notwithstanding the
foregoing, the independent expert may also determine that additional sample
testing by an independent laboratory is necessary. Absent manifest error, the
test results of the independent expert (or those of the independent laboratory,
if so referred by the expert) shall be binding on the parties.

 

(d)           Replacement; Disposition of Rejected Product.  Hospira shall use
all reasonable efforts to replace, at no cost to Theravance, that portion of the
batch which does not conform to the Product Specifications or otherwise was not
manufactured in accordance with Applicable Laws [***]; provided, however, that
Theravance provides sufficient replacement API and Excipient to Hospira in
accordance with the provisions of Section 5.4.  Hospira shall dispose of any
rejected Product at its own cost and expense.

 

(e)           Deemed Acceptance; Latent Defects.  Any Product that Theravance
does not reject pursuant to this Section 5.12 shall be deemed accepted, and all
claims with respect to Product not conforming with Product Specifications are
waived by Theravance, except as to latent defects which are not discoverable by
the exercise of ordinary diligence and reasonable care, render the Product not
conforming to Product Specifications, and are solely caused by Hospira.  The
parties shall consult to confirm the cause of any latent defect.  If the parties
do not

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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agree as to whether the Product is non-conforming, they shall submit samples of
such Product for independent testing in accordance with Section 5.12(b).  If it
is determined that the Product is non-conforming and the cause of the defect is
attributable to Hospira, then Hospira will replace at no cost to Theravance all
such defective Product with Product that meet the Product Specifications,
subject to the limitation of Section 5.4(d).  All other relevant provisions of
Section 5.12 shall apply to the manufacture and delivery of such replacement
Product.

 

5.13         Miscellaneous.

 

(a)           Approval of Subcontracting.  Hospira shall not subcontract or
otherwise delegate to any Third Party any portion of its obligations under this
Agreement without Theravance’s prior written approval; provided, however, that
the foregoing restriction on subcontracting shall not prohibit Hospira from
subcontracting non-essential or routine tasks involving the Facility generally,
such as janitorial services or other general infrastructure maintenance or
upgrades.

 

(b)           Process Rework.  Process rework created as a result of
Theravance’s changes shall be billed separately at a reasonable fee mutually
agreed upon in writing.

 

(c)           Sub-Lots.  Should Theravance desire Hospira to split a
manufacturing lot of Product into two (2) or more sub-lots during packaging,
Hospira will [***].

 

(d)           Storage Fee.  Theravance will use its commercially reasonable
efforts to take delivery of all Products from the Facility as soon as reasonably
practicable after Hospira’s release of the Product.  A cold storage fee of [***]
shall be due and payable to Hospira if Theravance stores Product at the Facility
for more than [***] days after the date of Theravance’s Product release.  The
cold storage fee can be waived in the event of a discrepancy being investigated
for the batch(es) under investigation.

 

(e)           QP Testing/Release. Hospira shall not charge Theravance for any QP
Testing/Release performed by its QPs as envisaged in Section 5.12(a), if such QP
Testing/Release is performed for a lot or lots of Product destined for the
European Union only, and in lieu of testing and release for United States
designated Product.  However, if Theravance desires or requires QP
Testing/Release of a lot or lots for both the United States and the European
Union, then Hospira will [***] QP Testing/Release of such lot(s).

 

ARTICLE 6.          ORDERS AND FORECASTS

 

6.1           [***] Year Product Supply Forecast.  For capacity planning
purposes, upon its submission for Regulatory Approval, Theravance shall provide
Hospira with a written forecast of its estimated annual requirements of the
Product [***] (“Annual Forecast”).  Thereafter, by [***] of each calendar year,
Theravance shall [***] for the period commencing [***].

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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6.2           First Purchase Order.  The parties shall cooperate in estimating
and scheduling production for Theravance’s first commercial order of Product
approximately [***] in advance of the anticipated date of Regulatory Approval or
Theravance’s desired Product availability date.

 

6.3           Rolling Forecast.  Concurrent with the placing of its first
commercial order of Product, and during each calendar quarter thereafter,
Theravance shall provide to Hospira a good faith, estimated rolling forecast of
the quantity of the Product that Theravance expects to order for [***] (each, a
“Rolling Forecast”).  [***] shall be considered a binding commitment upon
Theravance to purchase quantities described therein and a binding commitment
upon Hospira to produce and deliver such quantities on the delivery dates
described therein (“Firm Order Period”).  [***] shall be non-binding upon the
parties.

 

6.4           Purchase Orders.  Theravance shall submit a purchase order
(“Purchase Order”) to Hospira [***] days prior to the requested delivery date of
the Product.  All Purchase Orders shall be made on or before the first day of
the calendar month by which the [***] days advanced notice period is measured
and shall reference this Agreement and shall be governed exclusively by the
terms contained herein.  Theravance shall set forth in each Purchase Order: 
(i) the quantity of Product ordered; (ii) the amount of API and Excipient
required to fill the Purchase Order; (iii) the specified delivery date and
delivery instructions; and (iv) the price to be paid for the Product. Work will
commence only upon Hospira’s receipt of Theravance’s Purchase Order.

 

6.5           Purchase Order Acceptance.  Hospira will confirm each Purchase
order issued in accordance with Section 6.4 within ten (10) Business Days after
receipt and shall use all commercially reasonable efforts to meet the delivery
dates set forth therein.

 

6.6           Additional Quantities.  Should Theravance order quantities of
Product in excess of [***] over the forecasted amount of the latest Firm Order
Period, Hospira shall not be obligated to supply said additional quantities;
provided, however, that Hospira shall use reasonable commercial efforts to
produce and deliver to Theravance said additional quantities within [***] days
of issuance of the Purchase Order for such additional quantities.

 

6.7           Format of Forecasts and Purchase Orders.  Theravance shall submit
each Rolling Forecast and all Purchase Orders electronically in spreadsheet form
and will specify the quantities of Products in units and the Hospira product
number (list number/inventory number).

 

6.8           Minimum Purchase Requirement.  Beginning with the Commercial Year
during which Hospira manufactures [***] Product pursuant to Theravance’s
forecasts, Theravance agrees to purchase from Hospira in such Commercial Year
(and in each Commercial Year thereafter) a percentage of its Annual Forecast of
the Drug Product in those jurisdictions within the Territory where Regulatory
Approval(s) have been obtained in accordance with the provisions of this
Section 6.8 (“Minimum Purchase Requirement”).  [***] Theravance’s Minimum
Purchase requirements shall be [***], but in no case shall be [***] in any
Commercial Year.  In lieu of Theravance taking delivery of all of the Minimum
Purchase Requirement,

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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Theravance shall have the option to pay for the shortfall of the Minimum
Purchase Requirement at the prices set forth in Exhibit 5.11 and waive Hospira’s
manufacture and delivery obligations for the Product.  In the latter event,
Hospira shall invoice Theravance for the amount payable, and Theravance shall
pay Hospira such amount within [***] days after receipt of Hospira’s invoice. 
Notwithstanding the foregoing, all Product paid for by Theravance shall count
towards the Minimum Purchase Requirement.

 

6.9           Purchase Order Changes; Cancellations

 

(a)           Changes.  If Theravance requests that changes be made to any of
its Purchase Orders within the Firm Order Period, Hospira shall attempt to
accommodate such changes within reasonable manufacturing capabilities and
efficiencies.  If Hospira can accommodate such changes, Hospira shall advise
Theravance of any costs associated therewith.  If Theravance indicates in
writing to Hospira that it should proceed to make the changes, Theravance shall
be deemed to have accepted the obligation to pay Hospira for such costs.  If
Hospira cannot accommodate such change, Theravance shall nonetheless be bound to
its original Purchase Orders.

 

(b)           Cancellations.  If Theravance cancels any Purchase Order within
[***] prior to the start of manufacture, Hospira shall be relieved of its
manufacturing obligations relating to such order and Theravance will pay Hospira
for such canceled order in full.  Notwithstanding the foregoing, Theravance
shall not be liable for any cancellation that is due to its inability to supply
sufficient API and/or Excipient for such Purchase Order requirements, and such
inability is caused by an event of force majeure or other condition not
reasonably within the control of Theravance; provided, however, that Theravance
provides Hospira with no less than [***] days prior written notice of the
impending inability to supply and the date upon which it expects the required
quantities of API and/or Excipient to be delivered to Hospira.

 

6.10         Shortage of Supply.  In the event that Hospira is unable to
manufacture the Product in accordance with Theravance’s Purchase Orders, Hospira
shall notify Theravance within [***].  If the inability is not: (a) caused by an
event of force majeure; (b) attributable in whole or in part to Theravance’s
acts or omissions or breach of its obligations under this Agreement; or
(c) attributable in whole or in part to Hospira’s Component suppliers’ acts or
omissions, then Hospira shall undertake all commercially reasonable measures to
minimize any possible shortage of Product to Theravance as a result of its
manufacturing issues.  If Hospira cannot undertake such measures promptly, then
either party may request that the Project Managers convene a meeting to discuss
possible remedial action.  For any Commercial Year where Hospira is unable to
supply Product for a Firm Order Period, Theravance shall have no Minimum
Purchase Requirement in that Commercial Year and shall be entitled to source all
of its requirements for Product from Alternate Suppliers during the period of
time that Hospira remains unable to supply.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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ARTICLE 7.          QUALITY

 

7.1           Quality Control.  Hospira shall apply its quality control
procedures and in-plant quality control checks on the manufacture, packaging,
and labeling of Product in the same manner as Hospira applies such procedures
and checks to products of similar nature manufactured for sale by Hospira.  In
addition, Hospira will test and release Product in accordance with the test
methods described in Exhibit 7.1 to ensure that Product conforms to the Product
Specifications.  The parties may change the test methods from time to time by
mutual agreement.

 

7.2           Quality Agreement.  The parties shall use all commercially
reasonable efforts to negotiate and execute a quality agreement substantially in
the form of the Quality Agreement attached hereto as Exhibit 7.2 within [***]
days following the Effective Date.

 

7.3           Audit Rights.

 

(a)           General Audit.  Upon [***] days prior written notice to Hospira,
Theravance shall have the right to have representatives visit the Facility
during normal business hours to review Hospira’s manufacturing operations
relating to the Product and assess its compliance with cGMP and quality
assurance standards and to discuss any related issues with Hospira’s
manufacturing and management personnel.  Hospira shall provide Theravance with
copies of Hospira’s manufacturing records (including the Master Batch Record)
and other relevant documentation relating to the Products for the purposes of
assuring Product quality and compliance with agreed-upon manufacturing
procedures. Such general audits shall: (i) be limited to not more than [***]
auditors designated by or representing Theravance; (ii) last for not more than
[***]; and (iii) may be conducted not more than [***] per calendar year.

 

(b)           For Cause Audits.  Theravance shall also have the right to conduct
“for-cause” audits to address significant product or safety concerns as
discovered through Product failures related to Hospira’s manufacture of the
Product.  Product failures would include issues related to stability out of
specification, sterility, labeling or container integrity.  Theravance shall
notify Hospira in writing in advance of the audit and thereafter, Theravance and
Hospira shall mutually determine the timing of the audit.  Each for-cause audit
shall be limited to two (2) auditors for no more than two (2) days, except if
the parties mutually agree that a longer for-cause audit period is necessary.

 

(c)           Regulatory Authority Inspections.  Hospira also agrees to allow
any Regulatory Authority to conduct any inspection of the Facility related to
the manufacture of the Product which such Regulatory Authority may require and
Hospira agrees to reasonably cooperate with the Regulatory Authority in
connection with such inspection. Hospira will provide Theravance with notice of
any such inspection as soon as practicable. In the event that a Regulatory
Authority other than the FDA, Health Canada and the EMA requests or requires an
audit of the Facility related to pre-approval inspection (“PAI”), Hospira shall
be entitled to charge a fee of [***].  This fee shall include PAI preparation
activities and support of the audit.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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(d)           Confidential Information in Audits.  Audits by Theravance or its
designees may involve the disclosure of Confidential Information of Hospira or
other customers of Hospira, and any such Confidential Information shall be
subject to the terms of Article 11 hereof.  The results of such audits and
inspections shall be considered Confidential Information under Article 11 and
shall not be disclosed to Third Parties, [***], unless required by law and only
then upon prior written notice to Hospira or to Theravance as the case may be.

 

7.4           [***]  Notwithstanding the general audit rights in Section 7.3(a),
Hospira will permit [***].  Theravance will provide Hospira with sufficient
advance notice [***] that Hospira may make appropriate arrangements.

 

7.5           Change in Product Specifications; Manufacturing Process.  Each of
Theravance and Hospira agrees that it will not change the Product Specifications
or any aspect of the manufacturing process (including changes to the Components,
equipment, processes or procedures used to manufacture Product) without the
prior written approval of the other party, which approval shall not be
unreasonably withheld, delayed, or conditioned.  Upon agreement, the parties
shall implement all such changes in accordance with the change control
provisions of the Quality Agreement.

 

7.6           Complaints and Adverse Reactions.  Each party shall promptly
advise the other of any complaints, notices of Adverse Drug Experience(s) or
event reports, safety issues or toxicity issues relating to the Products of
which it becomes aware, and which may be the result of, or have an effect on,
the Product manufacturing operations performed by Hospira.  Theravance shall be
responsible for all reporting of such information to Regulatory Authorities. 
Hospira shall promptly evaluate any complaint or notice of Adverse Drug
Experience(s) and reasonably assist Theravance in responding to the same.

 

7.7           Record Keeping.  Hospira shall supply Theravance with such records
documenting the technology transfer work as foreseen in the Project Statement of
Work or as are otherwise requested by Theravance.  Hospira shall retain all
records documenting the technology transfer work and all records relating to the
manufacture of each batch of Products for not less than five (5) years or for
such other period as required by Applicable Law. Thereafter, Hospira shall not
destroy such records without giving Theravance prior written notice and the
opportunity further to store such records or to have such records shipped to
Theravance, at Theravance’s cost and expense.

 

7.8           Failed Batch.  In accordance with the Quality Agreement, Hospira
shall investigate, and cooperate fully with Theravance in investigating, any
batch of the Product that fails to comply with cGMP or fails to meet the Product
Specifications or any Regulatory Authority requirements.  Hospira shall keep
Theravance informed of the status of any investigation and, upon completion of
the investigation, shall provide Theravance with a final written report
describing the cause of the failure and summarizing the results of the
investigation.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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7.9           Product Recalls.

 

(a)           In the event: (i) any Regulatory Authority or other national
government authority issues a request, directive or order that the Product be
recalled; (ii) a court of competent jurisdiction orders such a recall, or
(iii) Theravance or Hospira reasonably determines that Product should be
recalled, the parties shall take all appropriate corrective actions, and shall
cooperate in any governmental investigations surrounding the recall.

 

(b)           In the event that such recall results from a breach of Hospira’s
express warranties under Sections 8.2(a) and 8.2(b), Hospira shall be
responsible for replacing the quantity of Products that were recalled at no cost
to Theravance.  Hospira shall use all commercially reasonable efforts to replace
such Product as soon as practicable.  In addition, Hospira agrees that it shall
be responsible for the administrative expenses of any recall.  For purposes of
this Agreement, the administrative expenses of recall shall include the expenses
of notification and destruction or return of the recalled Product, and any costs
associated with the delivery of replacement Product, but shall not include lost
profits of either party, nor the cost to replace API in excess of the
limitations stated in Section 5.4(d).  In the event that the recall does not
result from the breach of Hospira’s express warranties under this Agreement,
Theravance shall be responsible for the expenses of the recall.

 

ARTICLE 8.          WARRANTIES; COVENANTS AND INDEMNIFICATION

 

8.1           Theravance’s Warranties.  Theravance represents and warrants that:

 

(a)           the API and the Excipient delivered to Hospira pursuant to this
Agreement shall, at the time of delivery, not be adulterated or misbranded
within the meaning of the Act or within the meaning of any other Applicable Law
in which the definitions of adulteration and misbranding are substantially the
same as those contained in the Act, as the Act and such laws are constituted and
effective at the time of delivery, and will not be an article which, under the
provisions of Sections 404 and 505 of the Act, may not be introduced into
interstate commerce;

 

(b)           the API and the Excipient supplied to Hospira hereunder shall have
been manufactured in accordance with all applicable cGMP (including ICH Q7A) and
meet the API Specifications and Excipient Specifications set forth on
Exhibit 1.3;

 

(c)           all specifications, including API Specifications, Excipient
Specifications and Product Specifications that Theravance provides to Hospira
shall conform to the appropriate submissions that Theravance files with the
relevant Regulatory Authorities;

 

(d)           to the best of its knowledge, the Manufacturing Process does not
infringe any patents or know-how of a Third Party;

 

(e)           Theravance’s performance of its obligations under this Agreement
will not result in a material violation or breach of any agreement, contract,
commitment or obligation to which Theravance is a party or by which it is bound
and will not conflict with or constitute a default under its corporate charter
or bylaws; and

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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(f)            it will not sell Product into any regulatory jurisdiction unless
and until it receives the necessary Regulatory Authority approvals.

 

8.2           Hospira’s Warranties and Covenants.  Hospira represents and
warrants to Theravance that:

 

(a)           all Product that Hospira delivers to Theravance pursuant to this
Agreement shall, at the time of delivery, not be adulterated or misbranded
within the meaning of the Act or within the meaning of any other Applicable Law
in which the definitions of adulteration and misbranding are substantially the
same as those contained in the Act, as the Act and such laws are constituted and
effective at the time of delivery and will not be an article which may not under
the provisions of Sections 404 and 505 of the Act be introduced into interstate
commerce;

 

(b)           all Product Hospira delivers to Theravance pursuant to this
Agreement shall, at the time of delivery, be free from defects in material and
workmanship and shall be:  (i) manufactured in accordance and conformity with
the Product Specifications; (ii) manufactured in compliance with all Applicable
Laws, including those relating to the environment, food or drugs and
occupational health and safety, including those enforced or promulgated by the
FDA, Health Canada and EMA (including compliance with cGMP) and (iii) at the
time of delivery free and clear of any and all encumbrances, liens and other
Third Party claims, with good and marketable title thereto transferred to
Theravance.

 

(c)           in its performance of its obligations under the Statement of Work
and this Agreement, Hospira will not knowingly incorporate into the
manufacturing process any patents or know-how of a Third Party for which it does
not have a license that permits it to do so and/or to be able to grant to
Theravance the licenses and other rights otherwise required to be granted to
Theravance hereunder;

 

(d)           Hospira’s performance of its obligations under this Agreement will
not result in a material violation or breach of any agreement, contract,
commitment or obligation to which Hospira is a party or by which it is bound and
will not conflict with or constitute a default under its corporate charter or
bylaws;

 

(e)           the foregoing warranties shall not extend to any nonconformity or
defect which relates to or is caused by API and/or the Excipient supplied by
Theravance to Hospira.  Except for Hospira’s indemnity obligations in
Section 8.3, the replacement provisions of Sections 5.4(c) and (d), 5.12(d) and
7.9(b) shall be Theravance’s sole and exclusive remedy for nonconforming or
defective Products; and

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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(f)            HOSPIRA MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO PRODUCT.  ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
HEREBY DISCLAIMED BY HOSPIRA.

 

8.3           Indemnification by Hospira.  Hospira shall indemnify and hold
harmless Theravance and its Affiliates and their respective officers, directors,
employees, contractors, consultants and agents (each, a “Theravance Indemnitee”)
from and against any and all losses, damages, liabilities, expenses and costs,
including reasonable legal expense and attorneys’ fees (“Losses”), to which any
Theravance Indemnitee may become subject as a result of any claim, demand,
action or other proceeding by any Third Party (a “Claim”) against a Theravance
Indemnitee arising or resulting, directly or indirectly, from: (a) Hospira’s
breach of any representation or warranty set forth in Section 8.2(a-d) and
Section 8.2(f); (b) any infringement of any Third Party intellectual property
right relating to Hospira’s manufacturing processes used in the manufacture of
Product pursuant to this Agreement (excluding infringement due to adherence to
the Manufacturing Process, the API Specifications, the Excipient Specifications,
the Product Specifications, API, Excipient or Product); or (c) any negligent or
wrongful act or omission on the part of Hospira, its employees, agents or
representatives and which relates to Hospira’s performance hereunder. 
Notwithstanding anything to the contrary herein, the foregoing indemnity shall
not apply to the extent such Losses arise out of or result from any material
breach of the representations, warranties and covenants made by Theravance under
this Agreement, or Theravance’s negligent or wrongful acts or omissions or
willful misconduct.

 

8.4           Indemnification by Theravance.  Theravance shall indemnify and
hold harmless Hospira and its Affiliates and their respective officers,
directors, employees, contractors, consultants and agents (each, an “Hospira
Indemnitee”) from and against any and all Losses to which any Hospira Indemnitee
may become subject as a result of any Claim against a Hospira Indemnitee arising
or resulting directly or indirectly from: (a) Theravance’s breach of any
representation or warranty set forth in Section 8.1; (b) any infringement of any
Third Party intellectual property right relating to the Manufacturing Process,
the API Specifications, the Excipient Specifications, the Product
Specifications, API, the Excipient, the Drug or Product (excluding Hospira’s
processes used in the manufacture of the Product pursuant to this Agreement);
(c) the use of or lack of safety or efficacy, sale, administration, import
and/or transport by Theravance or its Affiliates or licensees of the Product
manufactured and supplied by Hospira under this Agreement; and (d) any negligent
or wrongful act or omission on the part of Theravance, its employees, agents or
representatives and which relate to Theravance’s performance hereunder. 
Notwithstanding anything to the contrary herein, the foregoing indemnity shall
not apply to the extent such Losses arise out of or result from any material
breach of the representations, warranties and covenants made by Hospira under
this Agreement, or Hospira’s negligent or wrongful acts or omissions or willful
misconduct.

 

8.5           Conditions of Indemnification.  If either party seeks
indemnification from the other hereunder, it shall promptly give notice to the
other party of any Claim and shall cooperate

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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fully with the other party in the investigation and defense of all such Claim. 
The indemnifying party shall have the option to assume the other party’s defense
in any such Claim with counsel reasonably satisfactory to the other party.  In
the event the indemnifying party assumes such defense, the indemnified party
shall have the right, but not the obligation, to be represented by counsel of
its own selection and at its own expense.  No settlement or compromise shall be
binding on a party hereto without its prior written consent, such consent not to
be unreasonably withheld.

 

8.6           No Consequential Damages.  NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL
DAMAGES OR LOST PROFITS RESULTING FROM ANY BREACH OF THIS AGREEMENT, EVEN IF THE
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

ARTICLE 9.          INTELLECTUAL PROPERTY RIGHTS

 

9.1           Hospira’s Proprietary Rights.  Hospira has granted no license,
express or implied, to Theravance to use Hospira proprietary technology,
know-how or other proprietary rights:  (a) existing as of the Effective Date; or
(b) developed by or for Hospira on or after the Effective Date outside the scope
of any Project undertaken by Hospira pursuant to this Agreement.

 

9.2           Theravance’s Proprietary Rights.  Theravance has granted no
license, express or implied, to Hospira to use Theravance’s proprietary
technology, know-how or other proprietary rights other than for Hospira’s
technology transfer and manufacturing obligations under this Agreement. 
Theravance shall be the sole owner of any proprietary technology, know-how or
other proprietary rights developed by Hospira pursuant to the Project (“Project
Inventions”), and Theravance shall be entitled to apply for patent protection on
such Project Inventions at Theravance’s expense and risk.  Hospira agrees to
assist Theravance as reasonably necessary to apply for, obtain and maintain
patent protection on Project Inventions, including executing any necessary legal
papers and furnishing information or data in its possession reasonably necessary
to apply for, obtain or maintain such patent protection.  Hospira agrees to
assign, and does hereby assign, such Project Inventions to Theravance without
further compensation.  Hospira shall have no right to use Project Inventions in
the making, having made, using, offering for sale, selling, and/or importing of
Drugs and/or Products other than for the purposes of this Agreement.

 

ARTICLE 10.       TERM AND TERMINATION

 

10.1         Term.  This Agreement shall commence on the Effective Date and,
unless earlier terminated as provided below, shall expire at the end of the
fifth (5th) Commercial Year (“Initial Term”). This Agreement may be extended for
additional terms of one (1) year (each, a “Renewal Term”) upon the mutual
written consent of the Parties; provided, however, that either party shall have
given notice to the other of its intent to renew the Agreement at least [***]
prior to the end of the Initial Term and that the parties have commenced good
faith negotiations on such renewal.

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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10.2         Termination of the Project.  Either party wishing to terminate the
Project shall request in writing a pre-termination consultation with the other
party to review potential concerns and to make reasonable efforts to continue
with this Agreement.  Upon [***] days following said consultation, either party
may terminate the Project or this Agreement upon [***] days prior written notice
to the other party if the terminating party determines in good faith that the
technology transfer for the Product is not technically feasible using
commercially reasonable efforts.  If the Project or this Agreement is terminated
in accordance with this Section 10.2, Hospira shall advise Theravance of
Hospira’s actual technology transfer costs on the Project incurred prior to such
termination.  Theravance will pay to Hospira that portion of the Technology
Transfer Fee that represents: (a) the technology transfer work Hospira has
completed and for which payment has not yet been received; and (b) on a pro rata
basis, all technology transfer work that Hospira has undertaken but not yet
completed as of the date of notice of termination.  In addition, Theravance
shall reimburse Hospira for all of its documented out-of-pocket costs related to
any non-cancelable commitments for raw materials, Components and services that
Hospira has undertaken as part the Project in accordance with the Statement of
Work.

 

10.3         General Termination Rights.  Either party may terminate this
Agreement as follows:

 

(a)           immediately by providing written notice to the other party: 
(i) if proceedings in voluntary or involuntary bankruptcy are initiated by, on
behalf of or against the other party (and, in the case of any such involuntary
proceeding, not dismissed within ninety (90) days); or (ii) if the other party
is adjudicated bankrupt, files a petition under applicable insolvency laws, is
dissolved or has a receiver appointed for substantially all of its property; or

 

(b)           by giving to the other party [***] days’ prior written notice upon
the breach of any warranty or any other material provision of this Agreement by
the other party if the breach is not cured within [***] days after written
notice thereof to the party in default; or

 

(c)           upon notice to the other party should the other party continue to
be unable to perform its obligations under this Agreement for a period in excess
of [***] days by reason of force majeure, in accordance with Section 12.1(a); or

 

(d)           after September 30, 2012, by giving to the other party [***] prior
written notice [***].  The provisions of this Section 10.3(d) shall apply only
[***] and not to the transfer, sale or divestiture of substantially all of the
stock, business and/or assets of Theravance.  In the event Theravance exercises
this termination right, Theravance shall be obligated to order, purchase and
take delivery of [***] of Product from Hospira prior to the effective date of
termination of the Agreement at the then-current prices set forth on
Exhibit 5.11.  In lieu of

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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Theravance ordering and taking delivery of any or all of the [***], Theravance
shall have the option to [***] Hospira’s manufacture and delivery obligations
for such batches.  This obligation shall not be exclusive of any other
obligation owed by or accruing to Theravance prior to the date of termination.

 

10.4         Theravance’s Failure to Purchase Minimums.  If, in any [***]
consecutive Commercial Years after the first Commercial Year, Theravance [***],
Hospira may terminate this Agreement upon [***] days prior written notice to
Theravance.

 

10.5         Accrued Payment Obligations.  Upon termination pursuant to this
Article 10, Theravance shall reimburse Hospira for Hospira’s cost of all
Components purchased and on hand or on order, if such Components were ordered by
Hospira based on Theravance’s Firm Purchase Orders, and such supplies of
Components that cannot be reasonably used by Hospira for other purposes. 
Hospira shall invoice Theravance for all amounts due hereunder.  Payment shall
be made pursuant to Section 5.11(b).  At Theravance’s option and request Hospira
shall ship to Theravance any such remaining supply of Component at Theravance’s
cost.

 

10.6         Return of Inventory and Dedicated Equipment.  In the event of
expiry or earlier termination of this Agreement, Hospira shall return to
Theravance at Theravance’s option and request any Dedicated Equipment, remaining
inventory of API and/or Excipient and Product at Theravance’s expense, unless
termination shall have been as a result of a breach of this Agreement by
Hospira, in which case such inventory shall be returned at Hospira’s expense.

 

10.7         Return of Confidential Information.  Upon expiry or termination of
this Agreement for any reason, each party shall immediately return to the other
all of the other party’s Confidential Information, in any form or medium
disclosed by the disclosing Party (or upon a party’s instructions in writing,
destroy the same and certify its destruction), provided, however, that each
party shall be allowed to retain one (1) copy of the other’s Confidential
Information solely for the purpose of ensuring continued compliance with
Article 11.  For the avoidance of doubt, any such retained copy shall continue
to be protected by the non-use and non-disclosure obligations in Article 11 for
as long as it is in the possession of the receiving party notwithstanding any
early termination or expiration under Section 11.2 or otherwise.

 

10.8         Survival.  The expiry or earlier termination of this Agreement
shall not relieve either party of any obligations that it may have incurred
prior to such expiry or earlier termination, and all covenants and agreements
contained in this Agreement, which by their terms or context are intended to
survive, will continue in full force and effect for a period of three (3) years
unless a different time period is indicated in this Agreement.

 

ARTICLE 11.       CONFIDENTIAL INFORMATION

 

11.1         Nondisclosure.  It is contemplated that in the course of the
performance of this Agreement each party may, from time to time, disclose
Confidential Information to the other.

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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Hospira agrees that, except as expressly provided herein, it shall not disclose
Confidential Information received from Theravance, and shall not use
Confidential Information disclosed to it by Theravance, for any purpose other
than to fulfill Hospira’s obligations hereunder.  Theravance agrees that, except
as expressly provided herein, it shall not disclose Confidential Information
received from Hospira, and shall not use Confidential Information disclosed to
it by Hospira, for any purpose other than to fulfill Theravance’s obligations
hereunder.  Each party shall use reasonable and customary precautions to
safeguard the other party’s Confidential Information, including ensuring that it
will limit the permitted disclosures of the other’s Confidential Information
only to those persons who have a “need to know” such Confidential Information
and ensuring that all employees, consultants and agents who are given access to
such Confidential Information are informed of the confidential and proprietary
nature of such Confidential Information and have contractual or professional
confidentiality and non-use obligations that are at least as restrictive as
those contained in this Agreement.

 

11.2         Exceptions to Duty of Nondisclosure.

 

(a)           Notwithstanding Section 11.1 or any other provisions of this
Agreement, nothing contained in this Agreement shall preclude Theravance from
utilizing Confidential Information of Hospira as may be necessary in prosecuting
the patent rights of Theravance pursuant to Article 9, obtaining Regulatory
Approval(s), manufacturing Product pursuant to the terms and conditions of this
Agreement, or complying with Applicable Laws or court orders (provided, however,
that Theravance uses reasonable efforts to seek confidential treatment of such
information, except as required to file and prosecute such patent applications).

 

(b)           Notwithstanding any other provision of this Agreement, a receiving
party may disclose Confidential Information of the disclosing party if such
disclosure is required by law to be disclosed; provided, however, that the
receiving party gives the disclosing party prompt advance notice of such legal
requirement so that the disclosing party has a reasonable opportunity to apply
for confidential treatment of such Confidential Information or seek other
appropriate equitable relief. The receiving party shall cooperate in good faith
with any such effort by the disclosing party. Should Theravance determine that
this Agreement or any collateral document needs to be filed with the Securities
and Exchange Commission, it will seek customary confidentiality of commercial
terms and sensitive information contained herein or therein through a
confidential treatment request, and consult with Hospira in advance concerning
such request.

 

(c)           The obligations of the parties relating to Confidential
Information shall expire [***] years after the termination of this Agreement.

 

11.3         Public Announcements.  Neither party shall make any public
announcement concerning the transactions contemplated herein, or make any public
statement which includes the name of the other party or any of its Affiliates,
or otherwise use the name of the other party or any of its Affiliates in any
public statement or document, except as may be required by law or

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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judicial order, without the written consent of the other party, which consent
shall not be unreasonably withheld.  Subject to any legal or judicial disclosure
obligation, any such public announcement proposed by a party that names the
other party shall first be provided in draft to the other party.

 

11.4         Injunctive Relief. The parties acknowledge that either party’s
breach of this Article 11 may cause the other party irreparable injury for which
it would not have an adequate remedy at law.  In the event of a breach or
threatened breach, the non-breaching party may be entitled to injunctive relief
in addition to any other remedies it may have at law or in equity

 

ARTICLE 12.       MISCELLANEOUS

 

12.1         Force Majeure and Failure of Suppliers.

 

(a)           Excusable Delay.  Neither party shall be considered to be in
breach of this Agreement if a delay in the performance of any of its duties or
obligations hereunder (except the payment of money) has been caused by or is the
result of an act of God, acts of a public enemy, insurrections, riots,
embargoes, labor disputes, including strikes, lockouts, job actions, boycotts,
fires, explosions, floods, shortages of material or energy, or other
unforeseeable causes beyond the reasonable control and without the fault or
negligence of the party so affected (each an event of “force majeure”).  The
performance of the affected party shall be extended for a period equal to the
period of such delay; provided, however, that the affected party shall give
prompt notice to the other party of such cause, and shall take promptly whatever
reasonable steps are necessary to relieve the effect of such cause and resume
compliance with this Agreement as soon as possible.  Should the event of force
majeure continue for a period longer than [***] days, the party not so affected
may terminate this Agreement in accordance with Section 10.3(c).

 

(b)           Transfer of Production.  If Hospira becomes subject to an event of
force majeure which interferes with production of Product at the Facility, the
parties shall mutually agree on implementation of an agreed-upon action plan to
transfer production of Product to another Hospira plant.  The parties shall,
after the execution of this Agreement and at the request of either party, meet
to discuss and define such an action plan.

 

12.2         Notices.  All notices hereunder shall be delivered as follows:
(a) personally; (b) by facsimile and confirmed by first class mail (postage
prepaid); (c) by registered or certified mail (postage prepaid); or (d) by
overnight courier service, to the following addresses of the respective parties:

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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If to Theravance:

 

Theravance, Inc.

901 Gateway Boulevard

South San Francisco, CA

94080

 

Attention:  [***]

Vice President,

Technical Operations

Facsimile:  [***]

 

If to Hospira:

 

Hospira, Inc.

275 North Field Drive

Lake Forest, Illinois 60045

Attention:    V.P. Contract Manufacturing

Facsimile:    [***]

 

With a copy to:

 

Theravance, Inc.

901 Gateway Boulevard

South San Francisco, CA

94080

 

Attention:  [***]

Senior Vice President,

General Counsel

Facsimile:  [***]

 

With copy to:

 

Hospira, Inc.

Building H1; Department NLEG

275 N. Field Drive

Lake Forest, IL 60045

Attention:    General Counsel

Facsimile:    [***]

 

Notices shall be effective upon receipt if personally delivered or delivered by
facsimile and confirmed by first class mail, on the third business day following
the date of registered or certified mailing or on the first business day
following the date of or delivery to the overnight courier. A party may change
its address listed above by written notice to the other party.

 

12.3         Choice of Law.  This Agreement shall be construed, interpreted and
governed by the laws of the State of Delaware, excluding its choice of law
provisions. The United Nations Convention on the International Sale of Goods is
hereby expressly excluded.

 

12.4         Alternative Dispute Resolution.  The parties recognize that bona
fide disputes may arise which relate to the parties’ rights and obligations
under this Agreement.  The parties agree that except as provided in
Section 11.4, any such dispute shall be resolved by alternative dispute
resolution in accordance with the procedures set forth in Exhibit 12.4.

 

12.5         Assignment.  Neither party shall assign this Agreement nor any part
thereof without the prior written consent of the other party; provided, however,
that:  (a) either party may assign this Agreement to one of its wholly-owned
subsidiaries or its parent corporation without such consent; and (b) either
party, without such consent, may assign this Agreement in connection with the
transfer, sale or divestiture of substantially all of its business to which this
Agreement pertains or in the event of its merger or consolidation with another
company.  Any

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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permitted assignee shall assume all obligations of its assignor under this
Agreement.  No assignment shall relieve any party of responsibility for the
performance of any accrued obligation which such party then has hereunder.  For
the avoidance of doubt Theravance may assign this agreement without Hospira’s
consent to any Third Party to whom it licenses the right to commercialize the
Product.

 

12.6         Entire Agreement.  This Agreement, together with the Exhibits
referenced and incorporated herein, constitute the entire agreement between the
parties concerning the subject matter hereof and supersede all written or oral
prior agreements or understandings with respect thereto.  If there is any
conflict, discrepancy, or inconsistency among the terms of the Quality
Agreement, any Statement of Work, the Agreement or other form used by the
parties, the Quality Agreement will control as regards all issues related to
quality assurance; in all other cases, the Agreement will control.

 

12.7         Severability.  This Agreement is subject to the restrictions,
limitations, terms and conditions of all applicable governmental regulations,
approvals and clearances.  If any term or provision of this Agreement shall for
any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof, and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to be
invalid, illegal or unenforceable, had never been contained herein.

 

12.8         Waiver-Modification of Agreement.  No waiver or modification of any
of the terms of this Agreement shall be valid unless in writing and signed by
authorized representatives of both parties.  Failure by either party to enforce
any such rights under this Agreement shall not be construed as a waiver of such
rights, nor shall a waiver by either party in one or more instances be construed
as constituting a continuing waiver or as a waiver in other instances.

 

12.9         Insurance.  Each party will procure and maintain, at its own
expense, for the duration of the Agreement, and for [***] years thereafter if
written on a claims made or occurrence reported form, the types of insurance
specified below with carriers rated A- VII or better with A. M. Best or like
rating agencies:

 

(a)           Workers’ Compensation accordance with applicable statutory
requirements and shall provide a waiver of subrogation in favor of the other
party;

 

(b)           Employer’s Liability with a limit of liability in an amount of not
less than [***];

 

(c)           Commercial General Liability including premises operations,
products & completed operations, blanket contractual liability, personal injury
and advertising injury including fire legal liability for bodily injury and
property damage in an amount not less than [***] per occurrence and [***] in the
aggregate;

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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(d)           Commercial Automobile Liability for owned, hired and non-owned
motor vehicles with a combined single limit in an amount not less than [***]
each occurrence;

 

(e)           Excess Liability including products liability with a combined
single limit in an amount of not less than [***];

 

(f)            Commercial Crime or Fidelity Bond in an amount of not less than
[***] per occurrence and in the aggregate including an endorsement for Third
Party liability without the requirement of a conviction;

 

(g)           Marine Insurance covering all shipments from warehouse to
warehouse as described on the bill of lading at a full replacement cost.

 

Each party shall include the other party and its Affiliates, directors,
officers, employees and agents as additional insureds with respect to Commercial
General Liability, Commercial Automobile Liability and Excess Liability but only
as their interest may appear by written contract.  Prior to commencement of
services, and annually thereafter, each party shall furnish to the other party
certificates of insurance evidencing the insurance coverages stated above and
shall require at least [***] days written notice to the other party prior to any
cancellation, non-renewal or material change in said coverage.  In the case of
cancellation, non-renewal or material change in said coverage, each party shall
promptly provide to the other party a new certificate of insurance evidencing
that the coverage meets the requirements in this Section.  Each party agrees
that its insurance shall act as primary and noncontributory from any other valid
and collectible insurance maintained by the other party.  Each party may, at its
option, satisfy, in whole or in part, its obligation under this Section through
its self- insurance program.

 

12.10       Exhibits.  All Exhibits referred to herein are hereby incorporated
by reference.

 

12.11       Debarment Warranty.  Hospira and Theravance each represent and
warrant that it has never been, and it will not employ, contract with, or retain
any person or entity directly or indirectly in connection with the services
contemplated by this Agreement, if such a person or entity, as applicable, has
ever been:  (a) debarred or convicted of a crime for which a person or entity
can be debarred under any governmental statute (including 21 USC Section 335a,
as amended (“Section 335a”)) or, to such party’s knowledge, threatened to be
debarred or indicted for a crime or otherwise engaged in conduct for which a
person or entity can be debarred under any governmental statute, including
Section 335a; (b) disqualified under 21 CFR 312.70 or, to such party’s
knowledge, threatened to be disqualified thereunder; or (c) to such party’s
knowledge, threatened to be disqualified or indicted for a crime for which a
person can be excluded by the federal government as set forth by the Department
of Health and Human Services Office of Inspector General at
http://exclusions.oig.hhs.gov and the Excluded Parties List System at
http://epls.arnet.gov, which includes the General Services Administration.  If,

 

CONFIDENTIAL

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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during the term of this Agreement or within three (3) years thereafter, either
Party or any other person or entity directly or indirectly involved in the
services performed under this Agreement is so debarred, disqualified, suspended,
indicted, excluded or, to either Party’s knowledge, comes under investigation by
the FDA or any other Regulatory Authority for debarment, disqualification,
suspension, indictment, or exclusion, the Party will immediately notify the
other Party of same.  Each Party agrees to provide written certification to the
other that it has not used the services of any debarred, disqualified, suspended
or excluded person or entity in any capacity related to the services hereunder
if such certification is requested in connection with any certification
regarding same that the other Party may make to a Regulatory Authority.

 

12.12       Construction. In construing this Agreement, unless expressly
specified otherwise; (a) references to Articles, Sections and Exhibits are to
articles, sections of, and exhibits to, this Agreement; (b) except where the
context otherwise requires, use of either gender includes the other gender, and
use of the singular includes the plural and vice versa; (c) headings and titles
are for convenience only and do not affect the interpretation of this Agreement;
(d) any list or examples following the word “including” shall be interpreted
without limitation to the generality of the preceding words; (e) except where
the context otherwise requires, the word “or” is used in the inclusive sense;
(f) all references to “dollars” or “$” herein shall mean U.S. Dollars; and
(g) each Party represents that it has been represented by legal counsel in
connection with this Agreement and acknowledges that it has participated in the
drafting hereof.  In interpreting and applying the terms and provisions of this
Agreement, the Parties agree that no presumption will apply against the Party
which drafted such terms and provisions.  Any terms or conditions contained in
an invoice that are inconsistent or in conflict with this Agreement shall be
deemed not to be a part of such invoice.

 

12.13       Counterparts and Facsimile Signatures.  This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument.  Signatures provided by facsimile transmission or in Adobe™ Portable
Document Format (PDF) sent by electronic mail shall be deemed to be original
signatures.

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

SIGNATURE PAGE FOLLOWS

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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IN WITNESS WHEREOF, the parties intending to be bound by the terms and
conditions hereof have caused this Agreement to be signed by their duly
authorized representatives as of the date first above written.

 

 

HOSPIRA WORLDWIDE, INC.

 

THERAVANCE, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Anthony N. Cacich

 

By:

/s/ Junning Lee

 

(Signature)

 

 

(Signature)

 

 

 

 

 

Name:

Anthony N. Cacich

 

Name:

Junning Lee

 

 

 

 

 

Title:

Corporate Vice President

 

Title:

Vice President, Technical Operations

 

One 2 One Contract Manufacturing Services

 

 

 

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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Note Regarding Exhibits

 

Exhibits 1.3, 1.25, 2.1, 3.2 and 7.1 to this Agreement are subject to further
revision and updating to reflect final, mutually agreed upon details concerning,
among other things, Active Pharmaceutical Ingredient and Excipient
Specifications, Product Specifications, Technology Transfer Activities,
Stability Studies and Product Test Methods.

 

Any such revisions will be properly reflected in a writing signed by both
parties.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 1.3

 

Active Pharmaceutical Ingredient and Excipient Specifications

 

US/Canada Specification - TLV Drug Substance

 

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 1.3

 

Active Pharmaceutical Ingredient and Excipient Specifications (cont.)

 

EU Manufacturing QC Release Specification - TLV Drug Substance (Same as
regulatory spec)

 

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 1.3

 

Active Pharmaceutical Ingredient and Excipient Specifications (cont.)

 

Specification for Excipient ([***])

 

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 1.25

 

Product Specifications

 

EU Specification - TLV Drug Product

 

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 1.25

 

Product Specifications (cont.)

 

US/Canada Specification - TLV Drug Product

 

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 2.1

 

Statement of Work

Technology Transfer Activities

 

MILESTONE I:                                   PROJECT INITIATION

 

Start Date:

[***]

 

 

Activities:

· Product and process evaluation

 

· Identify filling line requirements

 

· Initiate technology transfer

 

· Project management

 

 

Fees:

[***]

Payment:

Following kick-off

 

MILESTONE II                                  PRODUCT DEVELOPMENT

 

Start Date:

Upon receipt of product requirements and agreed methods of transfer
documentation [***]

 

 

Activities:

[***]

 

 

Fees:

[***]

Payment:

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 2.1

 

Technology Transfer Activities (cont.)

 

MILESTONE III                                 WATER, CLINICAL AND REGISTRATION
BATCH PRODUCTION

 

Start Date:

[***]

 

 

Activities:

[***]

 

 

Fees:

[***]

 

 

Payment:

[***]

 

MILESTONE IV                                 PROCESS VALIDATION AND REVIEW

 

Start Date:

[***]

 

 

Activities:

[***]

 

 

Fees:

[***]

 

 

Payment:

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 2.1

 

Technology Transfer Activities (cont.)

 

MILESTONE V                                   REGULATORY FILING PREPARATION AND
SUBMISSION

 

Start Date:

[***]

Activities:

[***]

 

 

Fees:

[***]

 

MILESTONE VI                                 COMMERCIALIZATION

 

Start Date:

[***]

 

 

Activities:

[***]

 

 

Fees:

[***]

Payment:

[***]

 

 

Total Fees:

[***]

 

Product Assumptions:

 

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 2.1

 

Technology Transfer Activities (cont.)

 

Product Assumptions (cont’d):

 

[***]

 

Development Fee Assumptions:

 

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 3.2

 

Stability Studies

 

Test No.

 

Test

1

 

[***]

2

 

[***]

3

 

[***]

4

 

[***]

5

 

[***]

6

 

[***]

7

 

[***]

8

 

[***]

9

 

[***]

 

Development Stability

 

[***]

 

Fees:

[***]

 

Commercial Stability

 

 

 

Test Interval (Test #)

Storage Condition

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Fees:

[***]

 

 

Payment:

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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Exhibit 5.5

 

Dedicated Equipment

 

List:

 

-40C Upright Freezer, 23 ft3

 

 

 

Cost:

 

[***]

 

 

 

Timing:

 

TBD

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 5.11

 

Commercial Product Prices

 

Presentation

 

Batch size

 

Package Configuration

 

Commercial Year Volume, units

 

Price per Unit

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Commercial Pricing Assumptions and Terms:

 

[***]

 

 

 

 

 

 

 

 

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 7.1

 

Product Test Methods

 

Telavancin Drug Product Release Testing Method Summary

[***]

 

Telavancin Drug Substance ID Release Testing Method Summary

[***]

 

[***] Release Testing Method Summary

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 7.1

 

Product Test Methods (cont.)

 

[***]

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 7.2

 

Form of Quality Agreement

 

Theravance and Hospira agree to consult and use reasonable efforts to prepare
and complete the Technical & Quality Agreement no later than [***] days after
the Effective Date.  Upon completion, the Technical & Quality Agreement shall be
attached to this Exhibit 7.2 and shall be made an integral part of this
Agreement.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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EXHIBIT 12.4

 

Alternative Dispute Resolution

 

The parties recognize that bona fide disputes as to certain matters may arise
from time to time during the Term which relate to either party’s rights and/or
obligations.  To have such a dispute resolved by this Alternative Dispute
Resolution (“ADR”) provision, a party first must send written notice of the
dispute to the other party for attempted resolution by good faith negotiations
between their respective presidents (or their designee(s), provided any such
designee has the authority to act on behalf of such party to effectuate any such
resolution) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to “days”
in this ADR provision are to calendar days).

 

If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein.  The parties
shall have the right to be represented by counsel in such a proceeding.

 

1.                                       To begin an ADR proceeding, a party
shall provide written notice to the other party of the issues to be resolved by
ADR.  Within fourteen (14) days after its receipt of such notice, the other
party may, by written notice to the party initiating the ADR, add additional
issues to be resolved within the same ADR.

 

2.                                       Within twenty-one (21) days following
receipt of the original ADR notice, the parties shall select a mutually
acceptable neutral having requisite legal and commercial expertise and
credentials (including with respect to the substantive law of the State of
Delaware) to preside in the resolution of any disputes in this ADR proceeding. 
If the parties are unable to agree on a mutually acceptable neutral within such
period, either party may request the President of the CPR Institute for Dispute
Resolution (“CPR”), 366 Madison Avenue, 14th Floor, New York, New York 10017, to
select a neutral pursuant to the following procedures:

 

(a)                                  The CPR shall submit to the parties a list
of not less than five (5) candidates within fourteen (14) days after receipt of
the request, along with a Curriculum Vita for each candidate.  No candidate
shall be an employee, director, or shareholder of either party or any of their
subsidiaries or Affiliates.

 

(b)                                 Such list shall include a statement of
disclosure by each candidate of any circumstances likely to affect his or her
impartiality.

 

(c)                                  Each party shall number the candidates in
order of preference (with the number one (1) signifying the greatest preference)
and shall deliver the list to the CPR within seven (7) days following receipt of
the list of candidates. If a party believes a conflict of interest exists
regarding any of the candidates, that party shall provide a written explanation
of the conflict to the CPR along with its list showing its order of preference
for the candidates.  Any party failing to return a list of preferences on time
shall be deemed to have no order of preference.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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(d)                                 If the parties collectively have identified
fewer than three (3) candidates deemed to have conflicts, the CPR immediately
shall designate as the neutral the candidate for whom the parties collectively
have indicated the greatest preference.  If a tie should result between two
candidates, the CPR may designate either candidate.  If the parties collectively
have identified three (3) or more candidates deemed to have conflicts, the CPR
shall review the explanations regarding conflicts and, in its sole discretion,
may either (i) immediately designate as the neutral the candidate for whom the
parties collectively have indicated the greatest preference, or (ii) issue a new
list of not less than five (5) candidates, in which case the procedures set
forth in subparagraphs 2(a)-2(d) shall be repeated.

 

3.                                       No earlier than twenty-eight (28) days
or later than fifty-six (56) days after selection, the neutral shall hold a
hearing to resolve each of the issues identified by the parties.  Except as
otherwise agreed by the parties or as set forth herein, the ADR proceeding shall
be governed in accordance with the CPR Rules for Non-Administered Arbitration of
International Disputes (the “CPR Rules”).  The ADR proceeding shall take place
in San Francisco, California, unless another location is agreed upon by the
parties.

 

4.                                       In advance of the ADR proceeding, each
party shall submit a proposed ruling on each issue to be resolved, together with
a request for a specific damage award or other remedy for each issue. The
proposed rulings and remedies shall not contain any recitation of the facts or
any legal arguments and shall not exceed one (1) page per issue.

 

5.                                       Except as expressly set forth herein,
no discovery shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.  The
parties agree that disclosure of documents shall be implemented by the neutral
consistent with Mode B in Schedule 1 to the CPR Protocol on Disclosure of
Documents and Presentation of Witnesses in Commercial Arbitration which provides
for the disclosure of documents that each side will present in support of its
case as well as pre-hearing disclosure of documents essential to a matter of
import in the proceeding for which the party has demonstrated a substantial
need, provided, however, that such documents have been identified with
reasonable particularity.

 

6.                                       The hearing shall be conducted
expeditiously over two (2) consecutive days.  Each party shall be entitled to
five (5) hours of hearing time which may be allocated for opening statements,
the presentation of testimony or other evidence, the cross-examination of
witnesses, or closing argument.  The neutral may extend the time allotted for
the hearing only for good cause or upon agreement of the parties.  The parties
agree that the presentation of witnesses and testimony shall be implemented by
the neutral consistent with Mode B in Schedule 3 to the CPR Protocol on
Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration,
which provides for testimony to be presented orally at the hearing, and does not
permit testimony to be submitted through written witness statements,
depositions, or affidavits.  The neutral shall not be permitted to appoint
experts or require the production of evidence that is not offered by the
parties.

 

7.                                       The neutral shall rule on each disputed
issue within fourteen (14) days following completion of the hearing.  Such
ruling shall adopt in its entirety the proposed ruling and remedy of one of the
parties on each disputed issue but may adopt one party’s proposed rulings and
remedies on some issues and the other party’s proposed rulings and remedies on
other issues.  The neutral shall not issue any written opinion or otherwise
explain the basis of the neutral’s ruling or award.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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8.                                       The neutral shall be paid a reasonable
fee plus expenses.  These fees and expenses, along with the reasonable legal
fees and expenses of the prevailing party (including all expert witness fees and
expenses), the fees and expenses of a court reporter, and any expenses for a
hearing room, shall be paid as follows:

 

(a)                                  If the neutral rules in favor of one party
on all disputed issues in the ADR, the losing party shall pay 100% of such fees
and expenses.

 

(b)                                 If the neutral rules in favor of one party
on some issues and the other party on other issues, the neutral shall issue with
the rulings a written determination as to how such fees and expenses shall be
allocated between the parties.  The neutral shall allocate fees and expenses in
a way that bears a reasonable relationship to the outcome of the ADR, with the
party prevailing on more issues, or on issues of greater value or gravity,
recovering a relatively larger share of its legal fees and expenses.

 

9.                                       The rulings of the neutral and the
allocation of fees and expenses shall be binding, non-reviewable (except for an
alleged act of corruption or fraud on the part of the arbitrator), and
non-appealable, and may be entered as a final judgment in any court having
jurisdiction.

 

10.                                 Except as provided in paragraph 9 or as
required by law, the existence of the dispute, any settlement negotiations, the
ADR hearing, any submissions (including exhibits, testimony, proposed rulings,
and briefs), and the rulings shall be deemed Confidential Information.  The
neutral shall have the authority to impose sanctions for unauthorized disclosure
of Confidential Information.

 

11.                                 The neutral may not award any form of
damages or relief prohibited by Section 8.6 of the Agreement.  The parties
hereby waive the right to punitive damages.

 

12.                                 The neutral shall have the authority to
grant injunctive relief and other specific performance.

 

13.                                 The neutral shall, in rendering its
decision, apply the substantive law of the State of Delaware, without regard to
its conflict of laws provisions.

 

14.                                 The hearings shall be conducted in the
English language.

 

CONFIDENTIAL

 

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***CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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